Perspectives on the global economic changes

panduranghari · Post by **panduranghari** » 27 Jun 2015 14:55

Chilarai saar,

Its good that you do your own due diligence. Most neither have the time nor the understanding to do the same. They outsource this to their fund manager or financial advisor.

I wrote a post sometime back . http://forums.bharat-rakshak.com/viewto ... 2#p1839022

Can you critique it? I would be the most thankful.

Austin · Post by **Austin** » 27 Jun 2015 22:53

Global economy may be slipping into 1930s-like depression, warns Rajan

London, June 26:

Reserve Bank of India (RBI) Governor Raghuram Rajan has asked central banks from across the world to define “new rules of the game” as he warned that the global economy may be slipping into problems similar to those faced during the Great Depression of the 1930s.

Rajan, who has been warning against competitive monetary policy easing by central banks, however, said the situation is different in India, where the RBI still needs to bring down lending rates to spur investments.

‘Debate central bank action’

“We need rules of the game in order to effect a better solution. I think it is time to start debating what should the global rules be on what is allowed in terms of central bank action,” he said at a London Business School (LBS) conference here last evening.

“I am not going to venture a guess as to how we establish the new rules of the game. It has to be an international discussion, an international consensus, built over time after much research and action,” Rajan said.

“But I do worry that we are slowly slipping into the kind of problems that we had in the 1930s in attempts to activate growth. And, I think it’s a problem for the world. It’s not just a problem for the industrial countries or emerging markets; it’s now a broader game,” the RBI Governor noted.

Investment concerns

Asked specifically about interest-rate cuts from an Indian perspective, he said: “I try to shut out market reactions as far as I can. We (India) are still in a situation where we have to spur investment and I am worried more about that.”

“So I shut out the asset price (hike) reaction and think more about ‘is this going to bring bank lending rates down’ and, therefore, channel cheaper credit into firms and then they will invest. However, the issue gets much more complicated for other markets,” he said.

The RBI Governor was addressing the ‘Perspectives’ conference organised by AQR Asset Management Institute at the LBS campus on the subject of ‘The Central Banker Perspective’.

He highlighted the tremendous pressure for growth which, in turn, creates enormous pressure on central banks to take action.

Rajan stressed that seven years on from the economic crisis, central banks have done a lot.

Shifting growth

“The question is are we now … in trying to produce growth out of nowhere … shifting growth from each other, rather than creating growth.

Of course, there is a past history of this during the Great Depression, when we got into competitive devaluation,” he warned.

Rajan also highlighted the need for countries to work together on capital flows.

“We have to become more aware of the spill-over effects of our actions. And the rules of the game that we have — what is allowed and what is not allowed — need to be revisited,” he said.

chilarai · Post by **chilarai** » 28 Jun 2015 12:20

panduranghari wrote:Chilarai saar,

Its good that you do your own due diligence. Most neither have the time nor the understanding to do the same. They outsource this to their fund manager or financial advisor.

I wrote a post sometime back . http://forums.bharat-rakshak.com/viewto ... 2#p1839022

Can you critique it? I would be the most thankful.

aiyoo no saar for me .. anyway i would hardly qualify to comment on that piece. All i know is that if the whole inverted pyramid collapses, i would probably have much to worry than just my investment. If you would be hoarding gold just for such a day , i fear you may well have to be ready to physically protect it as well.

Neshant · Post by **Neshant** » 28 Jun 2015 17:37

Greece objective : get as much money as possible and then default

EU objective : Get Greece to "borrow" as much from the IMF to pay European banks before that default

IMF objective : Lagarde was put as head of the IMF by Europe to facilitate the above.

She'll feign surprise when Greece defaults on all those IMF loans she's been handing out to them - as if it wasn't planned all along.

member_29058 · Post by **member_29058** » 28 Jun 2015 18:43

Rajan did not imply world economy slipping into new Great Depression: RBI http://timesofindia.indiatimes.com/busi ... 853924.cms?

http://timesofindia.indiatimes.com/busi ... 853924.cms

With Raghuram Rajan's comments on 1930s-like problems resurfacing having created a flutter, the RBI on Sunday said the governor did not imply there being an imminent risk of the world economy slipping again into the Great Depression as that was caused by "many factors".

The Reserve Bank, however, added Rajan indeed said that "the policies followed by major central banks around the world were in danger of slipping into the kind of beggar-thy-neighbour strategies that were followed in the 1930s".

"The Great Depression was a period of great turmoil, caused by many factors and not just beggar-thy-neighbour policies. Governor Rajan did not imply or suggest that there was any risk of the world economy, which is in steady recovery notwithstanding uncertainties like those in the Euro area, slipping into a new Great Depression."

What is wrong with this guy? Why does he indulge in loose talk? This is not the first time. He keeps throwing nonsense.

RoyG · Post by **RoyG** » 28 Jun 2015 18:44

China needs to maintain 4 trillion in reserves for a GDP that's ~ 10 trillion because oil is denominated in USD ? Sounds like hogwash to me. China's exports as a percentage of its GDP is going down. They have also been making noises about permitting capital account convertibility. While I don't fully understand the implications of such a change, I think that the government's ability to control the economy tightly by maintaining low rates of consumption along with high rates of savings will be taken away. People could just move their money elsewhere.

Why is it hogwash? Dollars for oil = dollars for everything else. IMF and other lending institutions are well developed. It has been convenient for them to hold that much although this has slowly been changing.

The only thing China's increasing military might is causing, is for countries like Japan, S. Korea, India, Philippines, Indonesia, Vietnam to increase military co-operation with each other directed squarely at China, if not build outright alliances, with the backing of the US. Russia is irrelevant. This is also OT.

I agree with you on the point that the Sino-Russia axis is threatening neighbors, but on the whole it is keeping the US at a distance and allows them to take on a bigger role in the Middle East. When you're slowly trying to move away from transacting in dollars, being able to defend yourself is paramount. Saddam found out the hard way.

What does this have to do with my claim that the US printing dollars and *holding the rest of the world in thrall* is a bogeyman. My point is those policies had a cost to go along with whatever advantages that might have accrued. One of the costs was to export US jobs abroad wholesale. What's stopping China from doing the same today ?

What do you think is stopping them?

panduranghari · Post by **panduranghari** » 28 Jun 2015 21:44

Neshant wrote:Greece objective : get as much money as possible and then default

EU objective : Get Greece to "borrow" as much from the IMF to pay European banks before that default

IMF objective : Lagarde was put as head of the IMF by Europe to facilitate the above.

She'll feign surprise when Greece defaults on all those IMF loans she's been handing out to them - as if it wasn't planned all along.

Greece wont default. They will pay. You watch. Its political brinkmanship. Nothing more. Think through it.

You are right about Greece's objective.

The EU and IMF objectives are quite opposite that what you can think. IMF depends on the current financial system surviving. EU does not care. Only if you spend some time in understanding the Eurosystem, you will see what I mean. Of course, the Greeks will be given a final say by the Greek government. Because, they do not want to pull out. But if they say, we held a referendum and the people want us to pull out, then who can prevent the inevitable? Wont you agree?

But here is the opinion of the person who has an ear on the ground.

link

Yanis Varoufakis wrote:“A Syriza government will leave the private creditors alone. After all they hold less than 20% of our debt. It makes no sense to open a front against them, with all the legal ramifications that would entail. The fact that the bulk of the debt is in the hands of the official sector means that, if there is the political will, it can be restructured in a long afternoon.”..............
Varoufakis is not completely sure about Germany’s apparent tough stance, however: “German officials have always barked louder than their bite,” says Varoufakis.............
Polls continue to show that Greeks wish to keep the euro as their currency. It is difficult to see SYRIZA truly play hard-ball with Brussels knowing that the scenario in which Greece would abandon the euro is not a real threat. Can a voluntary exit from the EMU be completely ruled out for Greece? According to Varoufakis, there is no “Grexit” card up the sleeve.

“If it is in my power to determine,” he explains, “Greece will neither want to leave the euro nor threaten to do so. We should not have entered the euro – this is crystal clear, but once in, it is disastrous to remove one’s-self from the Eurozone voluntarily.

“That does not mean we should lower our heads and do as we are told lest we are thrown out. No, we should veto misanthropic policies within the euro, demand debt restructuring within the euro, and never give them the opportunity to claim that we opted out of the euro voluntarily. If they want us out, they should kick us out with no help from us. In so doing, however, they will be bringing down their own houses too…”

RoyG · Post by **RoyG** » 28 Jun 2015 22:38

He's right. It's not nonsense. He predicted the crash of 2008 when all those idiot western economists were telling the world that everything is fine and interest rates are fantastic. What is wrong with you?

TSJones · Post by **TSJones** » 29 Jun 2015 03:49

Greece will start "capital controls " on its economy. Banks in Greece will not open on Monday.

http://www.nbcnews.com/news/world/greec ... ay-n383286

Legarde says no more help from IMF if Greece doesn't make a payment.

http://finance.yahoo.com/news/imf-wont- ... 29980.html

vina · Post by **vina** » 29 Jun 2015 09:05

Oh well. Greece finally shafted the creditors today and told them to F*ck off. I have no problem with that, other than the fact that it is 5 years too late. They forgot the fundamental rule of "problem solving" which is .

If you cant solve a problem,
1. Expand the problem
2. Make it everyone else's problem, somebody will solve it.

Now 5 years ago, if they did what they are doing now , it would be a "European" problem and the entire Oireo Oiseaulses would have bailed them out. But they are doing it now, when the Oireos are recovering and it is a too small a problem to be bothered about and they are being given the birdie. The Germans forget that their recovery was driven in large parts by a weak euro which was a consequnce of he peripheral zone weaknees. The periphery endured savage cuts so that Frau Merkel could run her housewife like economic policy and stiff the others!

Well, never too late. The Greeks are going to stiff the IMF and the Oireo oiseaulses. They are going to endure savage pain for the next 3 years, but there is light the end of the tunnel.

The Germans are going to see their currency head the Switzerland way and their exports hit the Kakkoose in 3 years. Good going. Frau Merkel needs to pull her head out of where sun doesnt shine and bail the greeks out, start an expansionary fiscal policy and just spend like there is no tomorrow.

Stock markets globally went down the toilet. ANyways, dhoti shivering me as always being the cowardly Yindoo is a survival artiste, alive and kicking.

Neshant · Post by **Neshant** » 29 Jun 2015 09:15

There is no capital to control. Its all been withdrawn and has since fled the country.

The upcoming default has been well televised to insure no Greek loses his/her life savings.

The question then is - who ends up eating the loss.

33% of the loss has been transferred to the IMF via "loans" to Greece which will not be repaid in full. The other half of the loss will be borne by the European banks which should really be eating 100% of the loss, not just 50%.

That's the reason Europe was eager to put Lagarde as head of the IMF. To transfer the Greek bad loans onto the rest of the suckers (i.e. the world's taxpayers). Amazingly India was stupid enough to put an additional 10 billion into the IMF coffers supposedly for a larger say at the IMF. That was a real dumb decision.

But after this Greek default, no Asian creditor will ever be trusting the IMF no matter who is nominated to lead that organization. I suspect this is the reason the AIIB came into existence.

Neshant · Post by **Neshant** » 29 Jun 2015 09:23

Legarde says no more help from IMF if Greece doesn't make a payment.

The horse has already bolted from the stable with her playing an active role in it.

To do some grandstanding now about how she's keeping a watchful eye and will be prudent with the IMF funds is laughable. She's already offloaded bad Greek debt onto the IMF. That was her purpose being put in the IMF chair by Europe to begin with. Once she's out of the IMF, the corruption cases pending against her will be dropped and she'll be offered a job in the European banking sector for doing their bidding - kind of like Bernanke who's now a consultant to a few hedge funds & banks as a reward for giving them bailouts.

Yagnasri · Post by **Yagnasri** » 29 Jun 2015 09:30

Now there is a talk of North EU nations v/s poor South EU nations etc.

srin · Post by **srin** » 29 Jun 2015 13:17

Does Ukraine still want to join the EU ?

panduranghari · Post by **panduranghari** » 29 Jun 2015 17:28

The two classes are not the Labour and the Capital, the rich and the poor, the proletariat and the bourgeoisie, or the workers and the elite. The two classes are the Debtors and the Savers. "The easy money camp" and "the hard money camp". History reveals the story of these two groups, over and over and over again. Always one is in power, and always the other one desires the power.

1. Debtors - "The easy money camp" likes to spend (and redistribute) money it did not earn, either by borrowing it, taxing the savers for it, or printing it. They like easy money because it is always and everywhere constantly inflating, easing the repayment of their debts. Greece as it is now. Funny the Greek government wants to let Greek people decide. The people do not even understand the problem..

2. Savers - "The hard money camp" likes to live within their means and save any excess for the future. They prefer hard money (or in some cases "harder" money) because it protects their savings and forces the debtors to work off their debts. Those who do not want to bail out Greece, AGAIN.

The government has called a referendum, but its not one in legal context. It perhaps it mainly to judge the opinion of people to show the trioka what they will do. But we know Greeks fooled Troy by using a Trojan horse. I doubt they can fool Trioka using a referendum horse. According to information on internet, referendum can be called only for matters of national security and not for foreign relationships.

srin · Post by **srin** » 29 Jun 2015 18:21

It is actually more a political crisis than an economical one.

You can't have a monetary policy divorced from a political policy regarding pensions, taxation (which are political issues - vote gainers/losers)
And you really don't have a union if one section doesn't care about the well-being of the other. No well to-do province of any country wants to kick out a poor province. And yet, that's what Germany is ready to do.

It is a structural flaw. Greece is just an early symptom.

panduranghari · Post by **panduranghari** » 29 Jun 2015 19:17

srin wrote:It is actually more a political crisis than an economical one.

Exactly.

srin wrote:You can't have a monetary policy divorced from a political policy regarding pensions, taxation (which are political issues - vote gainers/losers)
And you really don't have a union if one section doesn't care about the well-being of the other. No well to-do province of any country wants to kick out a poor province. And yet, that's what Germany is ready to do.

It is a structural flaw. Greece is just an early symptom.

Perhaps incomplete truth?

IMHO, this is a surprise only if you haven't been paying attention for the last few months.

Syriza was elected with these mandates:
1. Get a relaxation of austerity;
2. Stay in the EU; and
3. Retain the Euro.

These mandates are sufficently contradictory to leave the Greek government in a weak negotiating position - denied the nuclear option of "FU We're Leaving".

Tsipras and Varoufakis have spent the last 5 months telling everyone:
1. Greece is broke and can never pay the Troika debt, or meet the payment schedule;
2. Greece does not want to continue to run up debts by continuing to play "Extend and Pretend", borrowing more money to meet debt payments;
3. Greeks are suffering terribly under austerity; and
4. The only deal the Troika will take is for increasingly severe austerity and more debt by Extend and Pretend.

http://forums.bharat-rakshak.com/viewto ... 0#p1837700

I have said this before and I say it again. Don't believe all the noise, and there's a tonne of it right now. They don't know what they are talking about. The euro survives and thrives regardless of how the European debt crisis is ultimately resolved, and no countries will leave the euro. In fact, there are countries trying to get in, and none that will leave short of a coup, revolution or state failure, which isn't even a consideration right now. And even if that happens, the euro will still survive and thrive while the country that leaves will suffer greatly, the local hyperinflation that will ensue being the least of their problems. Isn't leaving the Euro the thing that everyone has advised Greeks. But why are they not leaving?

Spend some quality time with the Eurosystem's balance of payments http://www.ecb.europa.eu/stats/external ... ex.en.html and marvel at how remarkably balanced Europe is with the rest of the world. Then compare that with the US balance of payments http://www.census.gov/foreign-trade/index.html . As just a quick example, in February(one month) the Eurozone imported only €1.6 billion more goods than it exported. The US, on the other hand, imported $35.5 billion more goods than it exported, and February was the lowest month yet from Last Feb(2014) for the US. Of course that's just goods. For services, the US exported $0.1 billion more services than it imported. How much of that do you think was "Wall Street financial services"? Europe also exported more services than it imported, but only €2.8 billion.

So for goods and services combined, the Eurosystem ran a trade deficit of €0.5 billion in Feb, while the US ran only a $35.4 billion deficit. Looking back at 2014 (just to get a full year's picture) the US ran a $500 billion goods and services deficit for the year. The Eurosystem (even with those lazy PIIGS) actually ran a trade surplus for the year, exporting more goods and services than it took in! So how can that be? As a currency representing a community of more than 300 million (or is it 400) people, the euro is quite healthy compared to the dollar!

Of course there is a huge imbalance inside Europe between the states running a large surplus and those running a large deficit. But with a shared currency the adjustment pressure for such an imbalance is foisted elsewhere, not on the currency. It lands squarely on the politicians, who couldn't be a more deserving bunch of A-holes. For the dollar, the structural deficit and debt of the US places a massive devaluation pressure directly on the dollar. But for Europe the currency is balanced with no (or very little) adjustment pressure.

The economic flow of goods and services within Europe will of course have to contract as the imbalance retreats. If the euro weakens on the global currency stage Europe will start running an overall trade surplus again, like China, which will soften the blow of a contracting internal economy. If the euro strengthens, things like cheaper oil will help soften the contraction. Internally the politicians have their hands full. No doubt! Externally, the euro is just fine. To the euro, the politics of the PIIGS and Germany are little more than a sideshow.

And did anyone mention gold yet? Check what constitutes the 1st line of Eurosytem balance sheet? Google it. Anything that would appear to seriously threatens the euro, like an outright sovereign debt default, would explode the price of gold which would simultaneously rescue the euro balance sheet and kill the dollar. Euro is the only currency in the world that has severed the link to gold and to a nation state

RoyG · Post by **RoyG** » 29 Jun 2015 21:09

Neshant wrote:There is no capital to control. Its all been withdrawn and has since fled the country.

The upcoming default has been well televised to insure no Greek loses his/her life savings.

The question then is - who ends up eating the loss.

33% of the loss has been transferred to the IMF via "loans" to Greece which will not be repaid in full. The other half of the loss will be borne by the European banks which should really be eating 100% of the loss, not just 50%.

That's the reason Europe was eager to put Lagarde as head of the IMF. To transfer the Greek bad loans onto the rest of the suckers (i.e. the world's taxpayers). Amazingly India was stupid enough to put an additional 10 billion into the IMF coffers supposedly for a larger say at the IMF. That was a real dumb decision.

But after this Greek default, no Asian creditor will ever be trusting the IMF no matter who is nominated to lead that organization. I suspect this is the reason the AIIB came into existence.

Neshantji,

There won't be any major craziness for now. Greece = EU, EU = Greece. Just sit back and relax. Greece will bite the bullet and agree to Germany's terms. It'll still be bad.

https://vine.co/v/eJIYH0uIhae

Meanwhile, the Puerto Ricans have started with Massa:

Puerto Rico’s governor says island cannot pay back $70 billion in debt

http://www.washingtonpost.com/business/ ... story.html

Rajan, Venkatesh, Gurumurthy, Vaidyanathan, etc. are idiots onlee.

RoyG · Post by **RoyG** » 29 Jun 2015 22:49

And the russians are sitting back with their 1000+ tons of gold, eating some fine caviar.

TSJones · Post by **TSJones** » 29 Jun 2015 22:54

PR wants to declare bankruptcy but their state constitution may not let them. they may need a state constitutional referendum to do it.Plus they will need support of the federal court system. So they got some political issues to settle. Also investors bought PR bonds because they were tax free but most investors have already dumped them. Speculators and hedge funds have picked up most of the bonds on the prospect of paying pennies on the dollar and making huge gains if the fed steps in. that may not happen though . so it looks like the speculators may lose their penny investments if PR can solve their political problems. They have passed a VAT tax, and increased sales and property taxes. So PR is trying to take tough measures.

It should be noted however that in US law bond holders superceed all others.

TSJones · Post by **TSJones** » 29 Jun 2015 23:55

White House says no federal bailout for PR

http://finance.yahoo.com/news/white-hou ... 16211.html

Vayutuvan · Post by **Vayutuvan** » 30 Jun 2015 02:11

^holy $h1te.

chanakyaa · Post by **chanakyaa** » 30 Jun 2015 05:41

...That's the reason Europe was eager to put Lagarde as head of the IMF. To transfer the Greek bad loans onto the rest of the suckers (i.e. the world's taxpayers). Amazingly India was stupid enough to put an additional 10 billion into the IMF coffers supposedly for a larger say at the IMF. That was a real dumb decision...

Greece Will Default To IMF Tomorrow, Government Official Says
Clever way of unloading default on savers of the world. Time to shutter the f&%#king Eye-MF.

..Greece = EU, EU = Greece. Just sit back and relax. Greece will bite the bullet and agree to Germany's terms. It'll still be bad...

Yup, yup. This is nothing other than the dog and the pony show.

Bringing the PR in the mix, in the Greek salad and just before the Yoos elections is a nice master plot to create a purrrfect storm.

chanakyaa · Post by **chanakyaa** » 30 Jun 2015 06:00

Articles of Agreement of the Asian Infrastructure Investment Bank (Aiib)

prahaar · Post by **prahaar** » 30 Jun 2015 12:06

srin wrote:It is actually more a political crisis than an economical one.

You can't have a monetary policy divorced from a political policy regarding pensions, taxation (which are political issues - vote gainers/losers)
And you really don't have a union if one section doesn't care about the well-being of the other. No well to-do province of any country wants to kick out a poor province. And yet, that's what Germany is ready to do.

It is a structural flaw. Greece is just an early symptom.

Srinji, EU states are not provinces. EU is not a nation, it is a cartel formed for economic benefit. EU is supposed to be the first super state formed purely on secular credentials like Economy, Market, etc. Nationalism is a curse world in post-modern Europe (officially and for the narrative brokers there). But people in Europe are normal humans, who love their language/culture/nation and feel no love for a brother-EU-state.

nandakumar · Post by **nandakumar** » 30 Jun 2015 15:18

A lucid account of the Greek crisis by a professor of University of Chicago's Booth School of Business. It is written in the form of a series of questions and anaswers.
http://faculty.chicagobooth.edu/anil.ka ... june29.pdf
The interesting point is that Greek should have done earlier (2010) what it is bound to do now. I think this also the point that Vina made in one of his posts two days ago. The IMF doesn't come out smelling of roses. That is something that Neshant has been hammering time and again on this forum.

18) What should have been done to avert this crisis?
Greece should have defaulted in 2010. Its debt burden then was unsustainable and nothing since
then has changed this. It is true that financial markets were much more jittery at that time, but
the money that was raised to pay off the creditors in that bailout could have been diverted to
support Greece and other weak countries. Once the bad rescue of 2010 was undertaken, it was
inevitable that some form of debt relief was going to be necessary.
Imagine how different the political dynamics in Europe would have been if the German and
French banks had been explicitly bailed out.
Edited once for an additional observation.

srin · Post by **srin** » 30 Jun 2015 17:35

prahaar wrote:
srin wrote:It is actually more a political crisis than an economical one.

You can't have a monetary policy divorced from a political policy regarding pensions, taxation (which are political issues - vote gainers/losers)
And you really don't have a union if one section doesn't care about the well-being of the other. No well to-do province of any country wants to kick out a poor province. And yet, that's what Germany is ready to do.

It is a structural flaw. Greece is just an early symptom.
Srinji, EU states are not provinces. EU is not a nation, it is a cartel formed for economic benefit. EU is supposed to be the first super state formed purely on secular credentials like Economy, Market, etc. Nationalism is a curse world in post-modern Europe (officially and for the narrative brokers there). But people in Europe are normal humans, who love their language/culture/nation and feel no love for a brother-EU-state.

Agree and hence, it is a political crisis. It is not a "union" - more of a "disunion".
Income (ie taxation) is local and hence political. And to win votes, will tend downwards unless they have something to lose
Expenditure (ie pensions, etc) is local and hence political. And to win votes, will tend upwards unless they have something to lose.
But monetary policy is set in Brussels and buffered from local vote politics. So there is enormous incentive to workaround the EU constraints.

TSJones · Post by **TSJones** » 01 Jul 2015 19:26

Greece default: Why isn't gold budging?

http://finance.yahoo.com/news/greece-de ... 32056.html

First off, investors expect the Greek crisis will be contained.

Victor Thianpiruiyam, commodity strategist at ANZ: "The market seems a little more confident with the situation now. There seem to be reassurances from euro zone officials that the contagion risk from Greece will be relatively small if any at all.

"Of course, we are in unchartered territory at the moment, so if something happens that raises the level of uncertainty or risk or contagion, gold should benefit from that. It's unclear what the exact trigger or event could be at the moment," he continued. "I would be buying gold as an insurance against this but there's no guarantees it's going to get a bid."

Secondly, gold's longer-term fundamentals remain weak.

Ric Spooner, Chief Market Analyst CMC Markets: "People have an eye on longer term fundamentals the potential for higher interest rates, rising U.S. dollar (Exchange: .DXY), no real signs of inflation on the horizon - and finally the possibility of ongoing softness in jewelry demand in China with economic conditions there softening," he said.

"I would look to sell into strength whenever there are corrective rallies in gold. I expect it will fall to $1,000 in the next six to 18 months. When the Federal Reserve's rate hiking cycle starts gold will likely be a casualty."

Vayutuvan · Post by **Vayutuvan** » 01 Jul 2015 21:23

padnuranghari: Here is something for you.

"I would look to sell into strength whenever there are corrective rallies in gold. I expect it will fall to $1,000 in the next six to 18 months. When the Federal Reserve's rate hiking cycle starts gold will likely be a casualty."

Is it per ounce? That would make gold $200 per oz. I was always a little skeptical about gold. What are its industrial uses?

TSJones · Post by **TSJones** » 01 Jul 2015 22:12

^^^You should read that as falling *to* $1000 per ounce. That would be losing about $170 per ounce at today's market price.

I have no idea if this will actually happen however.

Theo_Fidel · Post by **Theo_Fidel** » 01 Jul 2015 23:13

srin wrote:It is actually more a political crisis than an economical one.

You can't have a monetary policy divorced from a political policy regarding pensions, taxation (which are political issues - vote gainers/losers)
And you really don't have a union if one section doesn't care about the well-being of the other. No well to-do province of any country wants to kick out a poor province. And yet, that's what Germany is ready to do.

Up to a point.

What is destroying Greece is its
early retirement system + young people leaving + generally low productivity.

You can survive one or two of these items but not all three. For instance France has a good retirement system but it is also extremely productive and has more young folks who stay. Same with Italy.

WRT Greece already it is estimated 20% of GDP is spent on pensions and wages. A third of the population is retired and lives off pension from government. It doesn’t help that Greeks are extremely long lived so early retirement equals 30-40-50 years of pension draw. Only 18% of people over age 60 work, while in the USA it is more like 50%. These are things you can survive if you are already a wealthy nation, meaning your ancestors invested heavily and left you a first class country, but not if you are Greece.

Bailout won't matter, Greece will be back at the feeding trough in no time.

Think of the broad numbers.

Total Population : 11 Million
Retirees drawing pension : 2.7 Million (Tough statistic – Every year another 150,000 are being pushed out of working onto the pension system)
Unemployed : 1.5 Million
Working : 3.8 million

Last year alone 200,000 working age youth left the country.

There is no way to square this circle unless the population situation changes.
Greece needs a way to get 60% of its above 60 year old population into the workforce.
Needs to find a way to raise its relatively low productivity.
Needs to find a way to attract young people and make them stay in productive jobs.
They could start by competing for young educated immigrants.

TSJones · Post by **TSJones** » 02 Jul 2015 01:41

Greece has few natural resources other than the sea and tourism. Its love affair with socialism is well documented. The government was seen as a source for jobs and benefits. Somewhere the idea of national productivity got lost with its people immigrating mostly to the western hemisphere. As far as I can see they are still eat up with it and unrequited about socialism.

Western Anatolia was part of Greek civilization 1000's of years until the Turks drove them out. They've never recovered. They have suffered invasion after invasion. So I suppose they deserve some pity. Unfortunately history has shown if you get to feeling sorry for yourself, you are screwed.

Vayutuvan · Post by **Vayutuvan** » 02 Jul 2015 01:56

TSJ: Misread *to* as *by* mea culpa. I made my SHQ sad/happy for a moment (sad/happy depending on whether she wanted to sell what she has or get more when it went down to $200

).

panduranghari · Post by **panduranghari** » 02 Jul 2015 02:56

vayu tuvan wrote:padnuranghari: Here is something for you.

"I would look to sell into strength whenever there are corrective rallies in gold. I expect it will fall to $1,000 in the next six to 18 months. When the Federal Reserve's rate hiking cycle starts gold will likely be a casualty."
Is it per ounce? That would make gold $200 per oz. I was always a little skeptical about gold. What are its industrial uses?

Yes it will drop to 200$/oz or may be even less. You should read Robert Prechter and his Elliot Wave theories. Post 1980's, he has ALWAYS been wrong about his predictions. But he will be correct on 1 prediction he made in 2001 - Gold will drop to 200$/oz. It will be his 15 minutes of fame. He will be on TV and newspapers. Remember that name. He is a nice guy, however. He still has a lot of character, in spite of being on the wrong side of the market for most of his career.

Theo_Fidel · Post by **Theo_Fidel** » 02 Jul 2015 03:55

P saar,

Gold @ $200/oz is unlikely. In the early 2000 when gold dropped to $400/oz it was because the price of oil dropped to $10/barrel. It suddenly became incredibly cheap to chew-up the earths crust for gold and a bunch of miners were profitable @ $400/oz. I don't see oil dropping that far. Shale stuff is expensive to produce. I expect it to bounce along just about keeping up with inflation maybe at worst get to $800/oz where a bunch of miners are unprofitable. Right now it is well below the inflation adjusted line of $1300/oz. So it should return to that price at some point. Question is when.....

Vayutuvan · Post by **Vayutuvan** » 02 Jul 2015 05:15

PR did not default today. My second cuz twice removed is off the hook for now. How is this going to unfold in the coming months is the million dollah question.

chanakyaa · Post by **chanakyaa** » 02 Jul 2015 06:43

Greece has few natural resources other than the sea and tourism. Its love affair with socialism is well documented. The government was seen as a source for jobs and benefits. Somewhere the idea of national productivity got lost with its people immigrating mostly to the western hemisphere. As far as I can see they are still eat up with it and unrequited about socialism.

Western Anatolia was part of Greek civilization 1000's of years until the Turks drove them out. They've never recovered. They have suffered invasion after invasion. So I suppose they deserve some pity. Unfortunately history has shown if you get to feeling sorry for yourself, you are screwed.

Not many disagreements here, but what current episodes bring out in focus is the attitudes of the lenders who, knowingly extended credit to a country whose accounting shenanigans, love for socialism, and entitlement attitude are well documented. Greece saga is like watching a football (soccer) match. Greece is the football, players are the parties kicking the football in a boring fixed-match, and there are some Indians sitting in the stadium who purchased the tickets (i.e. contributed to IMF funds), seeing their purchase go waste (i.e. Greece's selective IMF default). Ahh!! the sponsors of the match are the financiers who know very well the power of lending money to someone who does not have the ability to pay!!

Neshant · Post by **Neshant** » 02 Jul 2015 07:31

Singha · Post by **Singha** » 02 Jul 2015 09:33

anatolia used to be ruled by regional governors of the persian empire and indeed had much of greek culture. these governors and their greek 'mercenary' armies were defeated by alaksindr in one major battle. then he defeated the main army of darius-III in two major battles (one was gaugamela near mosul) further east and brought down the empire. darius was murdered by an ally on the run, who in turn was executed by alaksindr later.

alaksindr had captured the wife ,daughter and mother of darius-III after the 2nd battle and kept them in his entourage for 10 years until his final victory. the mother died at some point, and the grandmother perhaps later. he married the daughter who was murdered later by his first wife roxanna.

darius-III apparently made several peace overtures to alaksindr offering upto half his empire, ransom for captives etc...but the headstrong alaksindr was always more after personal glory and conquest than establishing a stable empire...the network of floundering and unsustainable 'hellenic' bantustans with their out-of-place tiny greek elites having no link to the general population he left behind in a long line from alexandria to gandhara were rolled up within a generation and that was the end of it.

athens won. spartan types left nothing except blood and war...and glory and the clash of spear on shield..all too brief

Neshant · Post by **Neshant** » 02 Jul 2015 11:45

TSJones wrote:Unfortunately history has shown if you get to feeling sorry for yourself, you are screwed.

True dat.