Perspectives on the global economic changes

Austin · Post by **Austin** » 17 Mar 2015 10:42

A_Gupta wrote:http://profit.ndtv.com/budget/governmen ... ing-747152

New Delhi: Pressed by the government for a greater say, the International Monetary Fund (IMF) on Monday promised to look into alternatives to make the country a top ten shareholder as the US was "not ratifying" the quota reforms at the multilateral lending agency.

In a meeting with IMF chief Christine Lagarde, who is on a two-day India visit, Finance Minister Arun Jaitley pitched for early implementation of IMF quota reforms to give a more say to emerging economies like India.

Ms Lagarde, who also called on President Pranab Mukherjee and met Prime Minister Narendra Modi, emphasised that IMF is a global multilateral institution where countries like India must have a bigger say.

"Finance Minister Arun Jaitley during his meeting with IMF Managing Director Christine Lagarde called for early implementation of the 2010 IMF quota and governance reform," an official statement quoted him as saying.

Earlier in the day, the IMF chief said in a lecture at a college here that the US is "not ratifying" the quota reforms that would facilitate larger roles of emerging economies at the multilateral institution.

The IMF is looking at alternatives to realign quotas that will put India into the top 10 shareholders, she said.

[/quote

Not surprising the alternates in form of BRICS bank and China Bank for APAC have come for the reason IMF reform is held hostage for political reason.

Whats the point in having a multilateral bank if its reform is held hostage by a single country just because they dont want to see the other economically growing countries have a say

panduranghari · Post by **panduranghari** » 17 Mar 2015 15:10

Have you noted the AIIB is promoted in the western press as Chinese Bank. Not a pan Developing world initiative. Just like the COMEX broke SGE, they will do the same with AIIB.

Christopher Sidor · Post by **Christopher Sidor** » 17 Mar 2015 22:10

US is truly and deeply into the Web 2.0 bubble or the second dot-com bubble. Added to this, is the fact that QE and its variants have jacked up the prices of certain assets way out of proportions to their intrinsic or real value. And finally factor in the fact that most of the economist are of the view that the US Fed will start raising up the interest rates by the middle of this year.

The Fuzzy, Insane Math That's Creating So Many Billion-Dollar Tech Companies ---- Bloomberg dated 17-March-2015

From the article

The Fuzzy, Insane Math That's Creating So Many Billion-Dollar Tech Companies wrote: Here's the secret to how Silicon Valley calculates the value of its hottest companies: The numbers are sort of made-up. For the most mature startups, investors agree to grant higher valuations, which help the companies with recruitment and building credibility, in exchange for guarantees that they'll get their money back first if the company goes public or sells. They can also negotiate to receive additional free shares if a subsequent round's valuation is less favorable.
...
...
The practice obfuscates the meaning of a valuation, which can become dangerous down the road because private investors aren't taking the same risks a public-market shareholder would. By the time a company does go public, the valuation it got from VCs may not align with its balance sheet.
...
...
Some VCs defend the practice by saying valuations are just a placeholder number, part of an equation fueled by other, more important factors. Those can include market share, growth projections, and a founder's ego.
...
...
For Uber to get to $40 billion or Airbnb to $20 billion, you'd need to get a little creative with the variables underlying that logic. Since private tech companies often lack earnings or enough historical data to inform projections—or, in the case of Snapchat, any significant revenue.

In other words most of the valuations of the Web 2.0 or Social 2.0 companies are made up.

Austin · Post by **Austin** » 17 Mar 2015 22:52

panduranghari wrote:Have you noted the AIIB is promoted in the western press as Chinese Bank. Not a pan Developing world initiative. Just like the COMEX broke SGE, they will do the same with AIIB.

Its a form of economic warfare in the end something US would play to its strength.

I dont expect US to give up its control over global financial institution or welcoming any one developed any where that would undermine the current one where it controls.

chanakyaa · Post by **chanakyaa** » 18 Mar 2015 06:48

Austinji, looks like someone heard your prayers

http://www.treasury.gov/press-center/pr ... l9999.aspx

Testimony of Secretary Lew before the House Financial Services Committee on the National Advisory Council on International Monetary and Financial Policies
...

The international financial institutions — the International Monetary Fund (IMF) and multilateral development banks (MDBs), including related multilateral trust funds — are a critical part of the President’s efforts to bolster national security and drive long term prosperity. Our investments in these institutions promote our strategic interests and international stability. They help unlock the next generation of export markets for America’s businesses and workers, while fostering private sector development and entrepreneurship
....

The IMF Quota Reforms and U.S. Influence
Critically, we are seeking Congressional approval of the IMF quota and governance reforms.

A well-resourced and effective IMF is indispensable to achieving our economic and national security interests, protecting the health of the U.S. economy, and enhancing the prosperity of America’s workers. As the largest shareholder in the IMF and the only country with veto power over major IMF decisions, we have a great deal of influence within this critical institution. The proposed reforms will put the IMF’s finances on more stable footing over the long-term, help modernize the IMF’s governance structure, and preserve America’s strong leadership role in shaping the institution.
....

Conclusion
U.S. leadership in international financial institutions enables us to influence how and where resources are deployed — often on a scale that we cannot achieve through our bilateral programs alone. However, bipartisan support is required to ensure that influence remains as strong today as it has been over the past several decades.

Austin · Post by **Austin** » 18 Mar 2015 08:33

I believe the pleading game to US Congress has been going for quite some time now atleast since 2010.

The point is why should countries around the world should be hostage to US Congress decision for what should be these countries legitimate right.

The emergence of new banks like BRICS or AIIB has emerged due to failure of IMF to do its job well.

panduranghari · Post by **panduranghari** » 18 Mar 2015 18:35

Watch as price of gold drops. Could get to as low as 600$ an oz from current levels. May be even 400$.

Neshant · Post by **Neshant** » 18 Mar 2015 19:59

I doubt BRICS will trust the IMF even if a brics origin chairman is installed at the helm of the IMF.

Austin · Post by **Austin** » 18 Mar 2015 20:57

panduranghari wrote:Watch as price of gold drops. Could get to as low as 600$ an oz from current levels. May be even 400$.

what would that signify ?

panduranghari · Post by **panduranghari** » 19 Mar 2015 01:11

Well a few things;
1. It means -Dirty float is over and its officially confirmed. Dirty float means the currency exchange rates tend to fluctuate between a pre determined range. End of the dirty float means the co-ordinated actions between the 60 members of Bank Of International Settlements go down the drain. Every currency is at the mercy of its reserves. For eg. RBI has to buy its rupees overseas using its dollar or euro reserves. If they don't, the rupee falls against the dollar and other currencies. Small countries like SL, BD, Nepal, Maldives etc. will need Indian help to keep their trade alive. The collateral damage is west will try to launch currency war against rupee. I use rupee as an example.
2. It means- a separation between the paper and physical markets. Remember COMEX paper sets the price. The price discovery does not happen at individual level(means small transactions in magnitudes of million do not set price but few transactions between the bullion banks like JPM,GS etc. determine the price).
3. It means - Small nations who have low dollar reserves will put up their gold as collateral for liquidity. They would hope that once this crisis has abated they will recoup their gold.
4. It means- USD will rise and rise to a level we currently cannot imagine. Perhaps US dollar index will be at 100 or perhaps at 99.9
5. It means- Global trade will slow down exacerbating the crisis and all central banks will be dousing fire with some or whatever petrol they can get their hands on. i.e. QE.

TSJones · Post by **TSJones** » 19 Mar 2015 04:27

in order for gold to drop that low it means the Federal Reserve raised interest rates. And that is not happening right now with demand so weak. US workers just aren't spending. US Treasuries are the preferred assured investment for most of the entire world.

ramana · Post by **ramana** » 19 Mar 2015 08:47

There was a former Fed Reserve Governor who said they are looking for perfect timing to take out the $3T money that was printed. If left too long i market it will cause inflation. If taken out too early will cause recession.

He was on NPR today morning i.e. 3/18..

ldev · Post by **ldev** » 19 Mar 2015 09:55

http://www.bis.org/publ/work483.pdf

This is a BIS paper published in January of this year. Gives a very good overview of US$ credit outside the US.

What this means is that US$ value today is determined by demand for dollar assets or liquidity needed to meet maturing dollar liabilities, rather than the price of gold or any other commodity i.e. the size of the financial markets predominantly denominated in US$ now so overshadows the "real" economy that it's a case of the tail wagging the dog!! e.g non US borrowers have $8 trillion in borrowings, all but $ 1 trillion of it booked outside the US.

The Chinese are not far behind, having created the equivalent of $14 trillion in commercial borrowings since 2008 for total domestic credit of $23 trillion. Folks who binge on credit, have no need to be worried, if the US withdraws from the global markets the Chinese will be more than happy to increase the size of their debt markets from $23 trillion upward!!

PS: There is already inflation in food and real estate the world over, (but they dont consider that as inflation!!) furthermore fuel prices have not really fallen in the rest of the world because of the rise of the US$ and any reduction in the price of oil is being nullified by increase in taxes at the pump. So I dont know what the Fed guy is talking, probably disinformation. All that excess money is lying with the Fed as excess reserves and the only people who get loans are the mega rich hedge fund types speculating in real estate and commodities So long as China has excess capacity to manufacture and wages do not rise, there will be no inflation in the US for manufactured goods.

Suraj · Post by **Suraj** » 19 Mar 2015 10:06

'Inflation' is getting cynically redefined. They don't call it inflation anymore, until there are people waiting lines for it, or burning worthless currency. Until then, numbers can be massaged any number of ways to show benign inflation. Yet, moderate inflation is treated as a necessary tool to devalue extant debt and make it easier to pay off.

panduranghari · Post by **panduranghari** » 19 Mar 2015 13:23

ldev wrote: What this means is that US$ value today is determined by demand for dollar assets or liquidity needed to meet maturing dollar liabilities, rather than the price of gold or any other commodity i.e. the size of the financial markets predominantly denominated in US$ now so overshadows the "real" economy that it's a case of the tail wagging the dog!! e.g non US borrowers have $8 trillion in borrowings, all but $ 1 trillion of it booked outside the US.

When was it ever different? US dollar has its value because of its use. Does Zimbabwe dollar have any value now? No. even Zimbabweans do not use it.

The subtlety of gold price dropping is- financial institutions are hoarding dollars as they need it more than anything else as dollar is in extreme shortage.

The financial plane which covers the physical plane is at the moment connected through US dollar. This gives the assets values which are denominated in USD. the connection will be severed when the dollar glut becomes a self induced and self sustaining spiral

The Chinese are not far behind, having created the equivalent of $14 trillion in commercial borrowings since 2008 for total domestic credit of $23 trillion. Folks who binge on credit, have no need to be worried, if the US withdraws from the global markets the Chinese will be more than happy to increase the size of their debt markets from $23 trillion upward!!

No one will use RMB. Its suffers from the same, if not worse, fate than USD. In essence, RMB has nothing new to offer that dollar is offering now.

PS: There is already inflation in food and real estate the world over, (but they dont consider that as inflation!!) furthermore fuel prices have not really fallen in the rest of the world because of the rise of the US$ and any reduction in the price of oil is being nullified by increase in taxes at the pump. So I dont know what the Fed guy is talking, probably disinformation. All that excess money is lying with the Fed as excess reserves and the only people who get loans are the mega rich hedge fund types speculating in real estate and commodities So long as China has excess capacity to manufacture and wages do not rise, there will be no inflation in the US for manufactured goods.

There is in reality no inflation noted as this is considered a new normal.

Please critique this and tell me what I have missed. http://forums.bharat-rakshak.com/viewto ... 7#p1805157

panduranghari · Post by **panduranghari** » 19 Mar 2015 13:25

Suraj wrote:'Inflation' is getting cynically redefined. They don't call it inflation anymore, until there are people waiting lines for it, or burning worthless currency. Until then, numbers can be massaged any number of ways to show benign inflation. Yet, moderate inflation is treated as a necessary tool to devalue extant debt and make it easier to pay off.

What is your definition of deflation and in what way do you think it differs from hyperinflation? I would appreciate your reply.

ramana · Post by **ramana** » 20 Mar 2015 05:11

http://www.npr.org/2015/03/18/393748257 ... licate-one

...
ALAN BLINDER: Surprisingly - very surprisingly - basically all of it went to idle cash in the bank.

GOLDSTEIN: This is Alan Blinder. He was vice chairman of the Fed back in the '90s. He says one goal of creating all that money was to get banks to lend more. That really hasn't happened yet.

BLINDER: You can ask me - the next question is how come banks haven't reached this point already? And my answer is, damned if I know- it's a puzzle to me.

GOLDSTEIN: The economy will start humming again at some point. Banks will start lending out all that money, and if that happens too fast, it could be a problem. Inflation could take off. To be clear, that hasn't happened yet. Inflation is still low. Eventually, though, Fed officials will start destroying the money they created, start winding down quantitative easing. But figuring out exactly when to do this is fraught. Do it soon, you plunge the economy back into another recession. Wait too long, and inflation takes off.

BLINDER: What the Fed is worrying about every minute of every day is getting the timing right. So that is exactly the art of the exit - getting the timing right.

GOLDSTEIN: The Fed always worries about this. But right now, Blinder says, there's so much money out there that even a small misjudgment could have big consequences. On top of that, the Fed has never done this before. David Blanchflower was at the Bank of England during the financial crisis. He says the Fed did the right thing with quantitative easing. But he says during the crisis, central banks were making it up as they went along, and they're still making it up now.

DAVID BLANCHFLOWER: They don't have a nice chapter in a textbook to tell them what they should do. They've never done it before. They're struggling.

GOLDSTEIN: So the Fed doesn't know what's going to happen when they finally wind down QE?

BLANCHFLOWER: Absolutely not. Sorry. They absolutely don't know.

GOLDSTEIN: That sounds terrifying.

BLANCHFLOWER: It is - it is terrifying.

GOLDSTEIN: The Fed has laid out a basic plan. First, raise short-term rates. That's the part everybody's talking about at today's meeting. Then, when the economy seems strong enough, start slowly pulling that QE money out of the economy. Blanchflower says it's likely to be years before things are back to normal. Jacob Goldstein, NPR News.

Austin · Post by **Austin** » 20 Mar 2015 16:04

Max Keiser: Financial Rock ‘N’ Roll

http://www.theepochtimes.com//n3/128853 ... ck-n-roll/

TSJones · Post by **TSJones** » 20 Mar 2015 19:15

You can stop hyperinflation dead in its tracks rather quickly by outlawing the old worthless currency and issuing new currency in fewer amounts making it relatively scarce. Whether or not you can get the government to stop spending so much is a different matter entirely. I won't go into political matters.

Deflation OTOH, cannot be so easily solved. Demand once killed can be very hard to restart. Merely issuing more currency may not help. Why? Because various factors in the economy may be working against it such as private enterprise may be practicing severe austerity trying to make do with fewer or part time workers coupled with deep resistance to wage hikes, global outsourcing to cheaper manufacturers, etc. You can also have political problems voicing in support of further austerity. But again, I won't go into political matters.

So hyper inflation may be easier to fix without considering political factors. People are desperate for a valued currency instead of having to barter or use gold and silver. Lack of demand however can be a mean m*fo once started. Gold and silver won't necessarily fix deflation.

Suraj · Post by **Suraj** » 20 Mar 2015 21:35

panduranghari wrote:
Suraj wrote:'Inflation' is getting cynically redefined. They don't call it inflation anymore, until there are people waiting lines for it, or burning worthless currency. Until then, numbers can be massaged any number of ways to show benign inflation. Yet, moderate inflation is treated as a necessary tool to devalue extant debt and make it easier to pay off.
What is your definition of deflation and in what way do you think it differs from hyperinflation? I would appreciate your reply.

How is the classical definition in any way meaningful ? We'd just be 'zerohedging'. They keep saying the whole thing's going to collapse according to classical definitions, but the Fed fakery keeps the whole edifice up, so far. Hyperinflation was claimed to be due in ~~2011~~, ~~2012~~, ~~2013~~ and ~~2014~~, and now we're grappling with deflation instead. I don't think any of the policies are putting money in the hands of people and giving them the confidence to spend. It's just helping cover the mistakes of the big financial entities.

UlanBatori · Post by **UlanBatori** » 20 Mar 2015 22:35

What is the Mullahs' opinion on 2 things:
1. Although inflation is present in reality (prices of most things have gone up: check airfares, groceries, everything), the bank interest rate is at Islamic rates (0.000001%). How are ppl on fixed-income from fixed-income securities surviving? Isn't this absolutely catastropic? I mean, one would expect long-term rates of return to average 8 percent, hain? Why is there no yelling and screaming about this from any political party or even the AARP? The banks actually charge you money to bank there!! My real worry is whether this can happen in India banks as well, since they try to ape the Yoo Ess system.

2. Although real estate seems to have recovered somewhat, home prices are not really rising that much. Is employment and business expansion totally stuck?

Suraj · Post by **Suraj** » 20 Mar 2015 23:10

UlanBatori wrote:How are ppl on fixed-income from fixed-income securities surviving? Isn't this absolutely catastropic?

It is. Laddering fixed deposits / CDs used to be a good approach at one time. Pretty much useless today. Inflation doesn't just show up in the form of price rises, but as stealth inflation. For example, look closely at cereal boxes. It's not your imagination that they look smaller than before; companies are keeping prices same while lowering quantity.

Elsewhere, the US seems to be following the bogeyman approach towards scaring the populace to get them to take their minds off the financial repercussions they face. "There will be death panels", "they'll take your guns away" etc. Elsewhere, there's an effort to transfer wealth from the younger to older generation via additional welfare programs to make up for the real income losses. The ones holding the short end in the process are the young millennials.

Indian banking and financial system is a lot better off than this situation of essentially 0 interest rates for close to 4 years, in the US so far. The US is stuck in its own Japan malady. Despite the higher purported GDP growth, and fall in joblessness, the Fed still has no confidence to take rates off the 0% area. Normally we'd be seeing 2-3% rates at least.

chanakyaa · Post by **chanakyaa** » 20 Mar 2015 23:51

Some agreements with Suraj-ji there..

1. Although inflation is present in reality (prices of most things have gone up: check airfares, groceries, everything), the bank interest rate is at Islamic rates (0.000001%). How are ppl on fixed-income from fixed-income securities surviving? Isn't this absolutely catastropic?

It is a disaster. Pension and insurance companies who traditionally focused on fixed income to asset/liability matching, are switching to alternative assets/equities etc. In part, banking and insurance can continue to participate in fixed income because the beauty of statutory leverage offered to them by law. It keeps the system going. Without the inherent leverage, they would have left fixed income long time ago. Take a look at the 30-yr fixed mortgage in Yoo Ess. It is effectively subsidized by the fed. No one want to lend money at 3.5% for a mortgage, so govt. agencies end up subsidizing it by making mortgages, which otherwise wouldn't see single penny from the private sector.

Most importantly, the reported inflation numbers are inaccurate or flat out lie. Workers pay their paycheck go up by 2% but the cost of coffee/groceries and others are rising at 7-8%; effectively transferring wealth from individuals to the private sector. It is clever way of taxing citizens to keep the system going forever.

Why is there no yelling and screaming about this from any political party or even the AARP? The banks actually charge you money to bank there!! My real worry is whether this can happen in India banks as well, since they try to ape the Yoo Ess system.

Poolitikal parties will not scream. They are the one playing/facilitating this game. Others are screaming, but they recognize that the alternatives are worst. As far as this happening to Indian banks; the banks are not the cause of the problem. I believe the difference between developed and developing world interest rate is not healthy.

2. Although real estate seems to have recovered somewhat, home prices are not really rising that much. Is employment and business expansion totally stuck?

Assuming you are referring to Yoo Ess. In absence of strong economic growth drives, less expansion of credit, less investment, jobs and income growth will be tepid. Average home price growth will follow.

TSJones · Post by **TSJones** » 21 Mar 2015 00:28

the S&P 500 Index fund or ETF beats the frijoles out of the CD/Money Market accounts investing shibboleth.

5 year return average 15.3% per year
10 year average 7.6% per year
20 year average 9.8% per year

the above S&P 500 Index figures were taken from the Independent Adviser for Vanguard Investors news letter.

Suraj · Post by **Suraj** » 21 Mar 2015 00:59

Equity performance disproportionately benefits the wealthiest in US. Stock ownership among the poorer fixed income households has been falling for decades.

panduranghari · Post by **panduranghari** » 21 Mar 2015 03:07

UlanBatori wrote: 1. Although inflation is present in reality (prices of most things have gone up: check airfares, groceries, everything), the bank interest rate is at Islamic rates (0.000001%). How are ppl on fixed-income from fixed-income securities surviving? Isn't this absolutely catastropic? I mean, one would expect long-term rates of return to average 8 percent, hain? Why is there no yelling and screaming about this from any political party or even the AARP?

Have you ever stretched a rubber band until it breaks? You can feel the resistance grow gradually and observe the smooth thinning of the band until finally it loses its continuity and the two parts snap back stinging your fingers. A tiny observer of this exercise, perhaps a flea resting on your thumb (or an economist

), one who doesn't really understand rubber bands, might swear that it could be stretched forever. The smooth change in the stretching rubber gives little warning of the abrupt (sometimes painful) deformation that is coming. This is where we are today. The dollar standard is like a stretched rubber band. It has been stretched and stretched, but it cannot provide the unrestricted money that we need today. They think it can. And that's why they are spewing it out in quantitative easy money boatloads.

The politicians won't say anything because they have no solutions. Most politicians in most countries have only one solution- dolenomics.

If long term rates even increase by 2% from where we are, there will be lots of blood in the streets. There are many who are living hand to mouth and they are just about making do. If repayment on the home loan rises by £100 where will they bring that extra money? The reality is the people were never ready, are not ready and won't be ready to face the outcome of the snapped rubber band. We can prepare as well as we can. But it won't be enough. Paradigm will change- in the way we live, look at things, approach things. Though it may sound bad, it's the most positive development that will be welcomed by all.

Don't believe anything I have written. Au contraire run away from me taking your children with you. I put this words on paper as that is exactly how I understand it. Besides, TIME will prove all things.

UlanBatori · Post by **UlanBatori** » 21 Mar 2015 03:27

I don't disagree, but run away where? Buy real estate with all one's pennies? And then what? Get a lawnmower and a shotgun and try to protect one's investment? Stocks are about the only available alternative, hain? I am totally out of ideas.

Suraj · Post by **Suraj** » 21 Mar 2015 04:09

Own fixed assets and gold. Despite all the talk about gold, central banks have been net buyers continuously for the last 5 years, increasing every year. For assets, keep costs nominally fixed, i.e. fixed rate loans. That way inflation benefits you.

TSJones · Post by **TSJones** » 21 Mar 2015 04:20

the central banks buy gold because it is essentially free up to a certain point, as long as their economy can support the additional fiat currency. So purchases spaced out over time get a dollar cost averaging effect. never mind the fact gold has dropped precipitously over the last five years doesn't hurt them, the gold was essentially free.

Neshant · Post by **Neshant** » 21 Mar 2015 08:05

panduranghari · Post by **panduranghari** » 21 Mar 2015 13:32

UlanBatori wrote:I don't disagree, but run away where? Buy real estate with all one's pennies? And then what? Get a lawnmower and a shotgun and try to protect one's investment? Stocks are about the only available alternative, hain? I am totally out of ideas.

Agree with Suraj saar.
Gold. I should add - physical. not ETF, not shares, not paper substitutes.
Hard assets. If you can afford a Gaitonde, then why not. If you can afford a Gaitonde, then I am willing to be your personal advisor for a small fee.
Real Estate. Long term fixed mortgage with a reasonable amount of land adjoining it.

Rest all is too much risk. Especially stocks.

UlanBatori · Post by **UlanBatori** » 21 Mar 2015 16:46

AoA! Just found out what a 'Gaitonde' is. Looks like what I see when my glasses are fogged up and the car is headed into a swamp. But.. powerful colors!

Econ Experts here seriously need to watch such fun movies as
The Day After

Barefoot Gen
Which of course assumes that even after such an event someone will be around who has lots of authority and money and power, so some "System" may exist.

How I Live Now (2013)
Again, this is not a total massacre and collapse.

I don't think any book has really looked in depth through the scenarios of total economic collapse.

So I should get an AK47 so that I can go pay a vijit to whoever owns pissikal gold and Gaitondes, hain? This is the flaw in these schemes to own physical anything. If society really breaks down to the point that major institutions collapse or one can't get into the vault to retrieve one's stuff, I wonder if one can really trade a painting for anything other than a plastic sheet as rain protection - and that if one finds a crazy art collector at that time.
In gold, one finds that Gold Funds are actually stocks of gold mine corporations, so it is as close as one can come to actually owning a gold mine as is practical: Even if one is the 'paper' owner of a gold mine, one only gets the privilege of sitting in the desert with an AK-47 until a snake says hello on one's musharraf. If one owns Real Estate, and there is a market crash, one can try going out there and defending it with an AK-47 against all those desperate people looking for a place to shelter from the elements - or a piece of Real Estate to own for themselves.

If one is going to go down the streets carrying Physical Gold in such a time, one might as well (never mind).
There needs to be another thread:

How to survive after the stock market and currencies collapse.

Some in-depth looks at how refugees from genocide survived and eventually thrived, might be a good place to start. But again, they did not survive in total economic collapse of the place where they went to: the survivors perhaps found jobs with those who still had money to pay to others for services. Think about it: how many of us would hire someone if we were ourselves terrified of losing everything? If everyone was just scrambling to survive and the world was one huge refugee camp with no authority left?

chanakyaa · Post by **chanakyaa** » 21 Mar 2015 18:25

panduranghari wrote:Have you noted the AIIB is promoted in the western press as Chinese Bank. Not a pan Developing world initiative. Just like the COMEX broke SGE, they will do the same with AIIB.

Agree. Not just that they are marketing it is as a chinese institution, joining of esteemed phreign countries from Gotus sphere is making AIIB somehow legitimate. As if it was needed.

View from Bankok: Challenges abound for China's AIIB push

Gyan · Post by **Gyan** » 21 Mar 2015 19:45

Is it possible that USA-UK combine are encouraging anarchy in Ukraine and Iraq to protect the safe haven status of Dollar?

Vamsee · Post by **Vamsee** » 21 Mar 2015 20:44

UB ji,

Everything depends on 1) What we assume will happen 2) It actually happening.

One can always come up with even greater dooms day scenario to make any amount of preparation look inadequate. We can always imagine the yellow stone super volcano exploding or gamma ray bursts from space making gold/art worthless.

I am personally skeptical of civilizational collapse and mad max world type of scenarios despite reading a lot of zerohedge type sites

I watch the episodes of "doomsday preppers" but have no intention to follow them.

If they are right and things really go that direction, then best of luck to them.

Personally I will not buy Gold/Art because they are not income producing assets. Their "value" is simply dependent on what others are willing to pay.

Similarly Fixed income investments at this point cannot even keep up with the inflation. So they are also not a worthy place to put money.

That leaves 2 categories 1) Real assets - Land, commercial property etc In fact if someone holds it in more that one country (India as back up & US as primary) it is probably more "safe" because if things really go nasty in one country, you can go to other country with some capital so that we are not standing on road with begging bowl

The other option is Investing in equities in multiple countries. Say buying Nestle stock (not ADR. Direct stock) in Switzerland (Europe), Buying stocks in India as NRI/OCI. The beauty of this is that right now everything is in digital form so you can manage sitting anywhere in the world.

I have been hearing about people claiming that world will come to an end 2000/2008/2012 and now 2015(?) If we buy into that and keep money under the mattresses, I am afraid by the time we retire, we will be in financial doghouse.

It is dangerous to make predictions but I will make one anyway. The gold bubble is burst. For 20 years its price did not go anywhere. Then it rose suddenly for a few years. Now the bubble is burst again.

Gold is probably a good thing if you want to maintain the purchasing power, but not for increasing purchasing power. Fixed investment is even worse. At these interest rates, one would actually lose purchasing power by going into them.

Net Net... it all depends on our assumption of the future and the actual future

UlanBatori · Post by **UlanBatori** » 21 Mar 2015 21:46

The demise of gold has been predicted since someone invented Seals showing backsides of Harvard professors at Mohenjodaro, but has not quite happened yet. All else aside, even if Bibi-behen-houri log abhor it, it has some neat and unique electrical properties, and supply is limited in the Universe per latest theories. Pt will also find more demand when H2-air reaction becomes the norm for automobile and aircraft power generation.

I think what Mullah Su-Raj meant by "fixed assets" is to get loans from suckers at 3% and use it to buy real estate and sit back watching it appreciate at 10%. Very Chankian, but the closest I want to get to being a landlord/ranch/real estate tycoon is that I own half a parking space (motorcycle, not A380) at an airport or two, and maybe a few pakistans in office space through a Real Estate mutual fund (which is basically a bunch of suckers paying a big company to go invest in real estate, paying the Fund Manager $$M). At least I save on the cost and hassle of the shotgun and shells and gun license.

Likewise, the closest I want to get to keeping gold stashed under the mattress, is to own 1 or 2 portoilets at some gold mines through a mutual fund. This has the obvious problem of losing $$ when gold shares plunge (as over the past 2 years) but as they say, it's fine unless I have to sell

If the market goes belly-up, is the mine operator any more likely to say

to the shareholders, than a robber (or Morarji-2) is to take the stashed gold from under my pillow after murdering me?

If the entire stock market goes bust, will the nbd grocery store be able to get food? Credit won't work, the trucking company won't be able to use a credit card to buy fuel. I doubt if the subsistence farmer down the road will be able to pay me a fair price ($500B or so in hyperinflated dollars) for my Monet (I only have a calender, not a painting

)?

Will diversification across continents work? Last go-around, I think the desi Shtock Market (Sensex) crashed worse than the DOW, and the India-based funds went down like 60 to 70 percent vs. US-focused funds 50%. And net result is that Dollar is now 62 vs. <30 of the fine, always 'promising' Indian rupee b4 'US crash'. The Fidelity Diversified International Fund pretty-much tracked major US equity funds. The TRowe Price New Asia fund (heavily India-weighted) tanked much worse. So hiding anywhere in the world appears to be a non-starter, unless one goes into Venezuela or North Korea and accepts starvation as the norm.

Try to grow tomatos and acquire a taste for squirrel and gopher meat, I think. Maybe for deer meat in winter. And learn to hunt and skin and barbecue these or eat them raw since fuel will be too expensive too and you don't want the fragrance of cooking meat to reveal to your neighbors that you have food.

All in all, the best news I've seen is this. When one is past the Design Life, one has to wonder at the point in trying to survive through the next 20 years to recover from one of these catastrophes. Maybe buy stock of sleeping-pill manufacturers.

chanakyaa · Post by **chanakyaa** » 21 Mar 2015 22:33

Der Spiegel Online: Nazi Extortion & Greek Loans

In the meantime, I had never heard about this memorial that has bones of victims of the Nazi killings in Distomo, features as part of the village's memorial to the massacre. What a unique way of remembering.

TSJones · Post by **TSJones** » 21 Mar 2015 23:55

[Edited personal attack on another member and banned for seven days. ramana]

However, when the US economy completely collapses and frees the rest of the world from its clutches there may be a problem in getting to your gold in Switzerland. Just ask the European Jews during and after WWII. The Swiss were somewhat forgetful about their accounts from what I understand. Some 30 to 40 years later, the US Attorney General and the US Treasury Department helped the Swiss to remember.

Suraj · Post by **Suraj** » 22 Mar 2015 01:13

It's impossible to have an agreement on how to hold ones asset in preparation of a black swan event because it depends entirely on ones own sense of fear or paranoia about such an event. Those who greatly fear the collapse of fiat money will go live on an Idaho hill with enough stocks of food, water and ammunition, lots of farmland and their own homestead. Those who are relatively sanguine will happily hold most of their wealth in paper money and not worry about an adjustable rate mortgage or other loan instrument. It's not really worthwhile asking others what you should do. The question to ask yourself is, just how paranoid are you ?

panduranghari · Post by **panduranghari** » 22 Mar 2015 03:43

It's not about doom gloom. It's about Understanding.

FOFOA wrote:Fear is the main emotional motivator in any currency collapse, just like it is in financial market meltdowns. And as we saw even just last night, the herd can stop on a dime and reverse course 180 degrees overnight, from greed to fear, based on a single news item.

The initiating spark of hyperinflation (currency collapse) is the loss of confidence in a currency. This drives the fear of loss of purchasing power which drives people to quickly exchange currency for any economic good they can get their hands on. This drives the prices of economic goods up and empties store shelves, which causes more panic and fear in a vicious feedback loop.

The printing of wheelbarrows full of cash is the government's response to price hyperinflation (currency collapse), not its cause. This uncontrollable (knee-jerk) government response happens in some cases, but not all. Let me repeat: The massive printing that first comes to mind when anyone mentions hyperinflation is not the cause, it is an effect, in the common understanding of hyperinflation which is the collapse of a currency.