Perspectives on the global economic changes

Austin · Post by **Austin** » 29 Sep 2015 13:23

^^ What do you mean by End Game has truly began ? I dont understand the graph there.

nandakumar · Post by **nandakumar** » 29 Sep 2015 13:56

Austin wrote:^^ What do you mean by End Game has truly began ? I dont understand the graph there.

Could it be that the graph he is referring to the share price of Glencore the commodity trading company?

panduranghari · Post by **panduranghari** » 29 Sep 2015 13:59

Look at Glencore's balance sheet. Their exposure to derivatives is in excess of $20 billion.

For eg. I owe money to you, I am beholden to you in legal terms. I am obligated to repay you. Glencore until last year was the one who was in control of some commodity suppliers and financing institutions. These institutions were beholden to Glencore. And now the table has turned. Glencore went to the regulators and courts to ensure they got paid. Now the creditors wil take Glencore to courts. $20 b in derivatives unwind is going to be messy. Some one has to come into bail them out. Who? Glencore is in trouble and the counter parties are trying to hedge their exposure.

Look at this;

Bloomberg wrote:
Derivatives traders started demanding upfront payments to protect against a default by the company, the first time that’s happened since 2009, according to data provider CMA.
The cost of five-year credit-default swaps jumped so high that they effectively were pricing in 54% odds that the company defaults, CMA data show “Glencore management need to make an official announcement to calm nerves,” said Darren Reece, a money manager at GAM Holdings AG in London, which oversees $127b

Read what set off the problems at Lehmann brothers. This is serious stuff. As usual the financial pandits are telling us 'AALL IZZ WELL'

Austin · Post by **Austin** » 29 Sep 2015 15:54

Isnt a $20 billion dollar exposure to derivative a small drop in the Ocean for trillion dollar derivative market ? I mean it could be bad of Glencore itself but not for the market as such

panduranghari · Post by **panduranghari** » 29 Sep 2015 18:42

Austin wrote:Isnt a $20 billion dollar exposure to derivative a small drop in the Ocean for trillion dollar derivative market ? I mean it could be bad of Glencore itself but not for the market as such

I would like to correct myself and say the derivative exposure of Glencore is 30 billion dollar not 20.

To call 20b$ derivative exposure as a small drop in ocean of trillion dollar derivative market is being very careless with the use of English language.

I wrote this post in response to your question then - http://forums.bharat-rakshak.com/viewto ... 2#p1839022

Everyone playing up in the top zone always has one eye on that single ~~rupee~~ dollar note. The perceived value of that single one ~~rupee~~ dollar note is imputed into every single contract in that upper pyramid. This is why everyone has their eye on it. Everyone knows it is not even worth the paper it is printed on, but they also know that as long as everyone else values it, it will hold its value which is the only thing holding up that entire top structure. This is called a network good that emerges from the network effect. Something has value only because a lot of people think it has value.

If you were to diminish the value of that single ~~rupee~~ dollar by, say, 90%, then the whole top structure devalues 90% compared to the bottom pyramid instantly. No flow of funds is required. The reduced value is simply imputed to every quantum point in the pyramid. And no one would ride that devaluation out voluntarily when they could simply consolidate beforehand. So everyone is looking at that rupee thinking, believing, that they are quick enough to outrun everyone else at the first sign of trouble.

Everyone wants to out run the devaluation. That is the point. The unwind of 30b $ derivatives will set off a nuclear chain reaction. And the CB have run out of ammunition to contain it. The other companies connected to the derivatives of Glencore like Deutsche bank (the biggest derivative holder amongst the big banks) will need to accept the losses which will lead to something much worse. The point is there is no one who can stop it. The only option is you got to consolidate before hand. Do you think India will be spared in this? Why did RR ease today? He had to. But what if in October the Fed raises rates, the divergence between the policies of the 2 banks will lead to outflow of funds from within the country.

To make the holding of INR attractive, RR will have to raise the rates.

Everything is connected.

Listen to this- he is certainly whom everyone listens to on the wall st.

edit - old article http://moneymorning.com/2011/10/12/deri ... o-explode/

worth a read to understand derivatives.

Austin · Post by **Austin** » 01 Oct 2015 19:02

It's 2006 All Over Again

Check out the video it has some old interview with Peter Schiff of 2006 when the Housing Bubble began.

See how many panelist out there making fun of him and laughing at his face , saying these talks of Peter are good to sell Newsletter

panduranghari · Post by **panduranghari** » 02 Oct 2015 12:02

Austin wrote:Nice Speech usual Peter Schiff

I agree with 95% of what Schiff has said except the last part where he says US can avoid hyperinflation.

Austin · Post by **Austin** » 03 Oct 2015 09:03

China has disclosed its reserves to IMF , Comes with $11 trillion in number ?

http://www.bloomberg.com/news/articles/ ... eform-push

Total foreign-exchange reserves were $11.5 trillion in the second quarter, up from $11.4 trillion in the previous quarter, the IMF reported Wednesday. The U.S. dollar accounted for 63.8 percent of total allocated reserves, compared to 64.1 percent.

The Cofer database breaks down global holdings by seven currencies: the U.S. dollar, euro, the pound, Japanese yen, Swiss franc, Australian dollar and Canadian dollar.

Austin · Post by **Austin** » 03 Oct 2015 09:40

panduranghari wrote:Listen to this- he is certainly whom everyone listens to on the wall st.

Quite Nice Indeed , Heard some stuff that I never got from David or Peter. Would certainly follow him.

He ends by saying the times before like 87 , 2000 would look better compared to whats expected ahead

Austin · Post by **Austin** » 03 Oct 2015 11:06

panduranghari you will like this

chanakyaa · Post by **chanakyaa** » 04 Oct 2015 06:17

It is going to get very tough for Australia in coming months. Commodity fueled economy has been contracting for some time now...it is about to get worse

Australia Is "Going Down Under": "The Bubble Is About To Burst", RBS Warns

Austin · Post by **Austin** » 04 Oct 2015 11:44

Bade · Post by **Bade** » 05 Oct 2015 03:40

http://www.nytimes.com/2015/10/04/opini ... .html?_r=0

Austin · Post by **Austin** » 05 Oct 2015 22:10

Bernanke calls for prosecutions of top financial execs over 2008 meltdown

http://on.rt.com/6t3b

Former Federal Reserve Chairman Ben Bernanke, who led the US through the financial meltdown of 2008, said that top financial executives should have been prosecuted for their role in creating the worst economic crisis since the Great Depression.

Speaking to USA Today, Bernanke blamed the US Justice Department for going after the firms instead of focusing on the individuals who had been running huge American corporations.

“It would have been my preference to have more investigation of individual action, since obviously everything that went wrong or was illegal was done by some individual, not by an abstract firm,” Bernanke said in the interview.

But the decision to prosecute individuals is not it the hands of the Federal Reserve which he chaired from 2006 to 2014, Bernanke said.

“The Department of Justice and others are responsible for that, and a lot of their efforts have been to indict or threaten to indict financial firms. Now a financial firm is of course a legal fiction; it’s not a person. You can't put a financial firm in jail.”

At the same time, the 71-year-old praised his institution for handling the financial meltdown saying they had done everything in order to avoid the repetition of the Great Depression of the 1930s.

“I think there was a reasonably good chance that, barring stabilization of the financial system, that we could have gone into a 1930s-style depression,” he told USA TODAY. “The panic that hit us was enormous — I think the worst in US history.”

Austin · Post by **Austin** » 05 Oct 2015 23:06

srin · Post by **srin** » 05 Oct 2015 23:58

TPP has been signed. I'm expecting some non-sense restrictions about IPR and hoping for some analysis from MSM on pharma products and how it might affect Indian exports.

Austin · Post by **Austin** » 07 Oct 2015 11:25

FORBES: In Global Payments, Chinese Yuan Surpasses Japanese Yen

http://www.forbes.com/sites/kenrapoza/2 ... anese-yen/

The Chinese yuan is now bigger and bigger than the Japanese yen, meaning the currency is inching its way to becoming a truly global currency.

While China policy makers still have a ways to go before the currency is free-floating like the rest of the world’s major currencies, the yuan surpassed the yen in global payments according to the Society for Worldwide Interbank Financial Telecommunications, best known as Swif.

The yuan currently accounts for 2.8% of global payments as of August, compared with 44.8% for the dollar, 27.2% for the euro and 8.5% for the British pound. The Chinese currency has been gaining traction, mainly as a commodity currency used between large exporters in Australia and elsewhere who are turning to the yuan instead of the dollar.

“In overtaking the yen to break into the world’s top four payment currencies, the yuan has passed another milestone in its rapid evolution and now looks set to become the leading global currency from Asia,” says Diane Reyes, Global Head of Payments and Cash Management at HSBC. “Growing use of the yuan for cross-border trade and investment

shows that demand isn’t simply driven by China’s domestic markets but that the currency’s becoming deeply embedded into the international economy.”

The yuan is well on its way to become a top three currency and is likely to replace the British pound within five years. This is especially true if the yuan becomes part of the Special Drawing Rights currency basket at the International Monetary Fund.

Also in August, Chinese authorities increased the trading ban on the yuan with the dollar, allowing for a 4% move in either direction instead of a 2% move. The market immediately shorted the yuan against the dollar and it’s been trading in the 6.30s since. Prior to the August decision it was around 6.13 to the dollar.

Back in 2012, the yuan was ranked No. 12 on the Swift list with less than 1% of global payments share.

Austin · Post by **Austin** » 07 Oct 2015 11:26

Gold Will Breakout as Rate Hike Myth Dies – Peter Schiff's Gold Videocast

panduranghari · Post by **panduranghari** » 07 Oct 2015 14:39

srin wrote:TPP has been signed. I'm expecting some non-sense restrictions about IPR and hoping for some analysis from MSM on pharma products and how it might affect Indian exports.

TPP without India and China and Africa is a completely toothless organisation. Multi-lateral world is more or less dead. We are entering an era of bilateral alliances and deals.

chanakyaa · Post by **chanakyaa** » 08 Oct 2015 06:41

Why prop-up these irrelevant institutions? Haven't they lived waaayy past their expiration dates??

India’s Raghuram Rajan urges IMF and World Bank reforms

panduranghari · Post by **panduranghari** » 08 Oct 2015 15:00

panduranghari wrote:
srin wrote:TPP has been signed. I'm expecting some non-sense restrictions about IPR and hoping for some analysis from MSM on pharma products and how it might affect Indian exports.
TPP without India and China and Africa is a completely toothless organisation. Multi-lateral world is more or less dead. We are entering an era of bilateral alliances and deals.

And on cue the Mises Institute agrees. link

But why would protectionist governments who spend their time hampering markets by giving monopolies and other kinds of privileges at national level, open markets at the international level? The very fact that governments are negotiating in the name of free trade should be suspicious for any libertarian or true advocate of free trade.

Murray Rothbard opposed NAFTA and showed that what the Orwellians were calling a “free trade” agreement was in reality a means to cartelize and increase government control over the economy. Several clues lead us to the conclusion that protectionist policies often hide behind free trade agreements, for as Rothbard said, “genuine free trade doesn’t require a treaty.”

The first clue is the intergovernmental and top down approach. Intergovernmentalism is nothing more than a process governments use to mutualize their respective sovereignties in order to complete tasks they are not able to accomplish alone. Nation-states are entities which rarely give up power. When they finalize agreements, it is to strengthen their power, not to weaken it. On the contrary, free trade requires a decline of governments’ regulatory power.

Also, free trade does not require interstate cooperation. On the contrary, free trade can be and has to be done unilaterally. As freedom of speech does not need international cooperation, freedom to trade with foreigners does not need governments and treaties. Similarly, our government should not rob their population with corporatist and protectionist policies just because others do. Anyone who believes in free trade does not fear unilateralism. The simple fact that bureaucrats and politicians do not conceive of the international economy outside of a legal frame settled by intergovernmental agreements is sufficient to show the mistrust they express toward individual freedom. This reinforces the conviction that these agreements are driven by mercantilist preoccupations rather than genuine free trade goals.
Extending Regulatory Control Beyond Your Own Borders

The second clue concerns the intense conflicts between governments on these agreements characterized by a high degree of technicality. History shows that multilateralism leads toward deadlock. The failure of the Doha Round is the cause of the proliferation of bilateral and regional initiatives. The contentious relations between governments come from the will of some states to dictate their norms to other countries’ producers through an international harmonization process. But this is the exact opposite of free trade. As economic theory shows us, exchange and the division of labor is not based on equality and harmonization but rather on differences and inequality. Furthermore, the technicality and secrecy surrounding free-trade agreements favor mercantilism and protectionism to the extent that technical regulations are used to favor producers who are politically well connected.

The Trans Pacific Partnership (TPP) is a good illustration of this balance of power. It was at first an agreement between four countries (Brunei, New-Zealand, Singapore, and Chile.) which tried to resist some neighbors’ commercial influence, especially China. Then the United States came and convinced more countries (Australia, Malaysia, Peru, Vietnam, Canada, Mexico, and Japan) to join the negotiations. Let’s also notice that most of the countries invited are already bound by regional or bilateral agreements with the United States. China remains excluded from the process. This governmental drive toward regulatory hegemony is obviously the complete opposite of free trade. Indeed, free trade supposes letting consumers peacefully choose what products they want to promote rather than determining what is available through bureaucratic coercion.
Consolidation of Monopolies

The third clue concerns the vigor with which governments have tried over several decades to impose at the international level a more constraining legal framework for so-called “intellectual property.” The first initiatives appear in 1883 and 1886 with the Paris Convention for the Protection of Industrial Property and the Bern Convention for the Protection of Literary and Artistic Works. Amended several times during the twentieth century, the initiatives embrace, respectively, 176 and 168 states. These conventions are placed under the auspices of the World Intellectual Property Organization (WIPO), an international bureaucracy which joined the United Nations system in 1974. A turning point came in 1994 with the signature of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) administrated by the World Trade Organization (WTO). It is now incorporated as an essential part of the administration of international commerce and benefits from the WTO’s sanction mechanisms.

In 2012 we endured a fresh attempt by our governments to reduce our freedom to create and share intellectual works with the Anti-Counterfeiting Trade Agreement (ACTA). And, if we look at the negotiations mandates of these trade agreements, we can see they all include a chapter on the reinforcement of “intellectual property” rights. Intellectual property has become a key concept of the international economy. But this must not hide its illegitimacy.

As Vilfredo Pareto remarked, “From the point of view of the protectionist, treaties of commerce are … what is most important for a country’s economic future.” Each time a new “free trade” treaty is enacted, what is seen is the attenuation of tariff barriers, but what is not seen is the sneaky proliferation and harmonization of non-tariff barriers impeding free enterprise and creating monopolies at an international scale at the expense of the consumer. It’s time for genuine free trade.

Austin · Post by **Austin** » 09 Oct 2015 07:26

China Launches Yuan-Based International Payment System

MOSCOW (Sputnik) – China launched the first phase of its China International Payment System (CIPS) in Shanghai on Thursday, allowing cross-border transactions in the Chinese national currency, the yuan.

CIPS’ first phase provides clearing and settlement services, according to the People’s Bank of China announcement. Its launch is said to remove hurdles to the yuan’s internationalization by reducing transaction costs and processing times.

Up to 19 major banks were named as direct participants in CIPS, with 38 Chinese banks and up to 140 foreign financial institutions named as indirect participants.

The launch bolsters China’s efforts to join the International Monetary Fund’s (IMF) Special Drawing Rights (SDR) basket. An announcement on the State Council’s website cited SWIFT transaction services data as calling the yuan one of the world’s top five payment currencies last November.

CIPS is vying to overtake SWIFT in the region. Developed and administered by the People’s Bank, the system operates from 9 am to 8 pm Beijing time (01:00-12:00 GMT).

Local media reported that the Beijing-based Industrial and Commercial Bank of China (ICBC), one of the 19 direct CIPS participants, has cleared its first transaction of 35 million yuan ($5.5 million) in Singapore.

Another direct participant, Standard Chartered Bank said it had also cleared its first transaction with the Swedish home furnishing retailer IKEA through CIPS.

Additionally, China has adopted the IMF's Special Data Dissemination Standard (SDDS), a move also seen to further internationalize the yuan.

Read more: http://sputniknews.com/business/2015100 ... z3o2GXpfn8

Austin · Post by **Austin** » 09 Oct 2015 07:29

Currency Crises Come Quickly; Don't Be Too Late To Prepare

Austin · Post by **Austin** » 10 Oct 2015 22:02

Fed Worried Cost of Living Not Rising Fast Enough

Austin · Post by **Austin** » 12 Oct 2015 22:04

David Stockman Explains the Deficit ( Good Discussion Watch it )

panduranghari · Post by **panduranghari** » 14 Oct 2015 12:17

Earnings forecast.

and this. images are too large.

http://www.merkinvestments.com/images/2 ... -chart.jpg

http://www.merkinvestments.com/images/2 ... -table.jpg

Gold is ripe for an epic fall in dollar value.

Austin · Post by **Austin** » 14 Oct 2015 15:03

Warren Buffett: 'America's never been greater

"Our kids are going to live so much better than we do now," Buffett said.

Even though economists are growing concerned about U.S. and global growth, Buffett isn't freaking out. He pointed to signs the U.S. housing market -- a key cog in the overall economy -- is gaining steam. Buffett also cited strong sales at furniture stores as evidence of real estate strength.

panduranghari · Post by **panduranghari** » 14 Oct 2015 17:09

Austin wrote:Warren Buffett: 'America's never been greater

From your favourite financial writer- David Stockman;

The Warren Buffet Economy- Why its days are Numbered Part 1
Read part 2 and 3 as well.

Buffet is the example of everything which is wrong with America.

Austin · Post by **Austin** » 14 Oct 2015 23:07

Pandu , I will check the video , Thanks
Well as long as he makes money everything is right for him,Personally Speaking for Warren

Austin · Post by **Austin** » 14 Oct 2015 23:08

Time for the seven-year itch

https://www.valueresearchonline.com/sto ... ?str=29067

chanakyaa · Post by **chanakyaa** » 15 Oct 2015 04:24

While re-gime change in She-reeya has faltered, re-gime change carnival in Brasil is going strong.

Brazil president Dilma Rousseff attacks opposition 'coup' plot

Austin · Post by **Austin** » 15 Oct 2015 18:21

Good Read

Bloomberg:Time Is Running Out on U.S. Frackers

Austin · Post by **Austin** » 15 Oct 2015 18:30

Corporate America's Epic Debt Binge Leaves $119 Billion Hangover

Companies' ability to service debt is lowest since 2009
Balance-sheet deterioration is `alarming,' Goldman Sachs says

TSJones · Post by **TSJones** » 15 Oct 2015 20:12

Just a respite from endless Schiff videos........

http://finance.yahoo.com/news/china-sel ... 00250.html

In other words, the world is not choking on U.S. debt, instead, there is a relative shortage of it.

As always, it is easy to predict the end of the world, as we saw on the night of the "blood moon," and again on Sept. 23 (another date with supposed apocalyptic significance). But the end of days never arrived.

Austin · Post by **Austin** » 15 Oct 2015 23:14

member_29001 · Post by **member_29001** » 16 Oct 2015 02:39

Contrarian opinion - not sure when it was published.

https://contrarianopinion.wordpress.com/economy-update/

panduranghari · Post by **panduranghari** » 16 Oct 2015 14:43

ysnarayanan saar

That was a good essay.

Its more or less summed up in this video.

This essay is even better. https://contrarianopinion.wordpress.com ... unlearned/

Well only of people and politicians followed the right Karl. Instead of Marx, if they had followed Menger. The economic ideas espoused by Marx will impoverish so many. If you want to be on the right side of the transfer of wealth, dump your stocks, bonds and buy physical gold. You wont get an opportunity like this in your lifetimes again.

Austin · Post by **Austin** » 17 Oct 2015 15:34

panduranghari wrote:From your favourite financial writer- David Stockman;

The Warren Buffet Economy- Why its days are Numbered Part 1
Read part 2 and 3 as well.

Buffet is the example of everything which is wrong with America.

Good Read from part 2 http://davidstockmanscontracorner.com/t ... ed-part-2/

In fact, once Greenspan took the helm and his apparently atavistic embrace of gold standard money melted-down under the Wall Street furies of October 1987, the finance ratio erupted. As shown below, it has never looked back and at 5.5X national income has reached a point that would have been unimaginable on the morning of Black Monday.

Stated differently, under a regime of honest money and market determined financial prices, the combined value of corporate equities and credit market debt would not have mushroomed by 8X—- from $11 trillion to $93 trillion—- during the past 27 years. For crying out loud, the nominal GDP grew by only 3.5X during the identical span. In effect, the US economy has been capitalized at higher and higher rates for no ascertainable reason of fundamental economics.

Indeed, there is no reason why the 260% ratio of equity and credit market debt to GDP that was recorded in 1986 should have risen at all. At that point Paul Volcker had completed his historic task of extinguishing runaway commodity and CPI inflation and had superintended a solid recovery of real economic growth.

Arguably, therefore, the US economy was carrying about the right amount of finance. And, at that healthy ratio, today’s $17.7 trillion economy would be carrying about $43 trillion of combined market equity and credit market debt.

Part 3 http://davidstockmanscontracorner.com/t ... ed-part-3/

the better part of St. Warren’s fortune was manufactured in the Eccles Building. Even he backhandedly admitted as much in his famously gratuitous letter thanking the Fed for bailing out the financial system (and his investment in Goldman, Well Fargo and other financial institutions) during the so-called financial crisis.

I understand now why Warren is the cheer leader of US current economy

panduranghari · Post by **panduranghari** » 17 Oct 2015 23:25

Buffet's father has written this. I don't blame the saint warren from taking the idea of American exceptionalism even further. What is sad is people think that is the thing that they should do too! Only if money was just money and nothing more!

http://z822j1x8tde3wuovlgo7ue15.wpengin ... uffet3.pdf

Is there a connection between Human Freedom and A
Gold Redeemable Money? At first glance it would seem
that money belongs to the world of economics and
human freedom to the political sphere.
But when you recall that one of the first moves by
Lenin, Mussolini and Hitler was to outlaw individual
ownership of gold, you begin to sense that there may be
some connection between money, redeemable in gold,
and
the rare prize known as human liberty.
Also, when you find that Lenin declared and
demonstrated that a sure way to overturn the existing
social order and bring about communism was by
printing press paper money, then again you are
impressed with the possib
ility of a relationship between
a gold
-
backed money and human freedom.
In that case then certainly you and I as Americans
should know the connection. We must find it even if
money is a difficult and tricky subject. I suppose that if
most people were asked
for their views on money the
almost universal answer would be that they didn't have
enough of it.
In a free country the monetary unit rests upon a fixed
foundation of gold or gold and silver independent of the
ruling politicians. Our dollar was that kind
of money
before 1933. Under that system paper currency is
redeemable for a certain weight of gold, at the free
option and choice of the holder of paper money.

FDR signs Glass Steagall Act in 1933

Clinton repeals Glass Steagall Act in 1999

The act separated the financial sector into safer, deposit-taking commercial banks and risk-taking investment banks – Wall Street.

Suraj · Post by **Suraj** » 18 Oct 2015 01:54

I agree with you on the impact of the repeal of the Glass Steagall Act. While many things are often blamed on the big bank cartel as a CT, that was a perfect example of stupid legislation destroying a meaningful firewall between regular banking and investment banking.