Perspectives on the global economic changes

[Gyan]

I think Clinton also created Taliban and brought China in WTO. Big time achievements. Obama is creating his own legacy with continuing QE, ISIS and starting cold war with Russia.

[Austin]

Looks like Peter Schiff lost his dad , One of his speech posted by him

[chanakyaa]

(Image Source: ZeroHedge)


Very logical way about thinking about the problem...

There’s No Way to Avoid Default Without Raising the Debt Limit, Treasury Says

[chanakyaa]

While in Brasil, regime change waar is in its the final stages...

Lawyers to File Rousseff Impeachment Request by Tuesday, Folha Says

[Suraj]

Movements on the US treasury holdings:
MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES
Big moves from India (up) and Belgium (down) in the past year. The latter according to this article holds Chinese custodial accounts:
China's Selling Tons of U.S. Debt. Americans Couldn't Care Less

Overseas creditors have played a key role in financing America’s debt as the nation borrowed heavily to pull the economy out of recession. Since 2008, foreigners have more than doubled their Treasury investments and now own about $6.1 trillion.

China has led the way, funneling hundreds of billions into Treasuries as the Asian nation boomed and it bought dollars to limit the gains in its currency.

Now that’s changing. This year alone, China’s holdings have fallen about $200 billion as it raises money in support of its flagging economy and stock market. If the pattern holds, it would be the first time that China has pulled back from Treasuries on an annual basis. The tally includes Belgium, which analysts say is home to Chinese custodial accounts.

The Chinese pullback has led some to raise troubling questions about the U.S.’s ability to borrow and refinance its obligations at ultra-low rates year after year. It’s also reignited long-held concerns, made over the years by both Republican and Democratic politicians, that China’s ownership of U.S. debt is a threat to America’s independence.

Homegrown demand for Treasuries suggests there’s no reason to panic.

American funds have purchased 42 percent of the $1.6 trillion of notes and bonds sold at auctions this year, the highest since the Treasury department began breaking out the data five years ago. As recently as 2011, they bought as little as 18 percent at auctions.

As a group, U.S. investors of all types have also stepped up their holdings of Treasuries since they fell to a low in mid-2014. In 2015, that share has climbed 2.1 percentage points to 33.1 percent of the U.S. government debt market.

That might not sound like much, but the annual increase -- which has pushed up Americans’ holdings to a record $4.3 trillion -- would be the first since 2012.

[Austin]

China still seems to hold the largest amount in US Debt.

Are countries buying those debt anticipating an interest rate hike and the flow of capital to US market and need to defend their own currency , something like 2013 scenario ?

[Suraj]

Bonds fall in value on a rate hike. It suggests American funds are betting there won't be one, or that the discount on the expectation of a small one has already been priced in.

[Austin]

Yes I believe hearing Peter Schiff for long market has factored on 0.25 % bond rate hike

^^ BTW why is India not buying Gold instead of purchasing US Bonds

[Austin]

[panduranghari]

Why is India buying US bonds and not gold?

Remember for a central banker, he has to see the whole of the economy. Buying gold works for common man. But a central bank buying gold is called Gold Open Market Operation or GOMO for short. GOMO is net negative for the common man. Currently the pervasive effects of GOMO are not perceptible as we are living within a glass bowl looking outside (like a gold fish) - a FOFOA analogy. We cannot really differentiate between physical plane and monetary plane. The monetary plane covers the physical plane. The consequence is we know the price of everything but the value remains anonymous until the monetary plane collapses within itself like a red giant collapses and turns into black hole. And as with a black hole nothing escapes including The current valuations given to things, like a Gaitonde fetching 22 crores in an auction. This is a realm of monetary plane. monetary plane prevents one from seeing value. When you confuse value for price, you are mixing up physical plane and monetary plane. The purchase of Gaitonde could be perceived as wasteful deflationary spending, in many ways works for us common man.

The central banker however thinks differently.

For all that, he seems anxious. “Central bankers have had enormous responsibilities thrust on them to compensate, essentially, for the failings of the political system. And my worry is we don’t have sufficient tools to do that, but we’re not willing to say it. And, as a result, we push as hard as we can on the existing tools, and they may create more risk in the system.” An early critic of quantitative easing, Rajan picked a very public fight this January, accusing the US Fed of reining in QE without considering the effect on emerging economies, not least the period of capital flight and investor panic in India, prior to his arrival at the RBI.
“Six years since the financial crisis, central banks still have their foot fully on the accelerator . . . [pushing] credit into emerging markets,” he says. “We don’t know how this will end . . .  It may end smoothly, if we let the air out of these inflated markets slowly, or by a series of mini-crises. But it may be more dramatic if, one fine day, suddenly the world realises the US is going to raise interest rates quite quickly . . . then the air will go out much faster.

[RoyG]

Simple fact of the matter is with global dollar reserves on a general decline at almost 1% a year (which is going to speed up soon), Central Bankers have no other choice but to consider other peg alternatives for the medium to long term. You only have two choices: SDR or Gold.

Things seem to be going in golds favor. Central Banks are hording the stuff. It gives certain degree of commonality for foreign trade, especially wrt oil and other commodities. We may see a 40-50% backing of all major currencies including the Euro if it manages to survive.

If I were the Saudis, i would work with the SCO to end the proxy war in Syria and Iraq and create a Sunni buffer state. In return, I would quietly nudge the GCC countries to hold consultations with Russia and China to coordinate all future actions on global supply and create a quota mechanism for pricing oil in non dollar currencies to slowly wean the world off dollars.

With the Russians and Iranians marching toward their doorstep, the Saudi monarchy simply cannot rely on the Americans any longer for security. If they decide to hold out, the Russians and Iranians will simply keep marching. Why do they have to agree to a Sunni buffer state when the royals are on the backfoot?

It will be a gradual process given the widespread use, functionality and stability of the NYMEX-IPE and SWIFT systems.

Russia could very well be the host of a oil bourse which could rival the NYMEX in the future.

What you want to do is keep your buyers buying, and provide stability while slowly picking up the pace toward a dollar exit.

This is where I see things going as of now.

[Austin]

^^ Thanks Pandu ,Roy

Self-Indebted: US-Based Investors Buyout Treasury Bonds Dumped by China

[panduranghari]

Austin,

Listen on youtube to videos by Jeff Gundlach of Doubleline or Bill Gross of Janus or Mohd. El-Erian of Pimco. They will explain why the treasuries are being bought hand over fist. They will go into a lot of details which will fill in the blanks for you.

[RoyG]

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.”

The FED Chairman calling for prosecution of top financial execs.

This is like Musharraf blaming ISI for Jihad.

[Austin]

Pandu will check , Thanks

The FED Chairman calling for prosecution of top financial execs.

This is like Musharraf blaming ISI for Jihad.

I too found it very amusing hence posted it , its people like Bernanke and Greenspan suddenly see the Truth when they are out of office but when they are in they do exactly the same.

[Austin]

RBI Guv Raghuram Rajan blasts IMF for being soft on easy money policies of West

http://www.financialexpress.com/article ... es/153617/

Reserve Bank of India (RBI) Governor Raghuram Rajan today took his umbrage against the accommodative monetary policies of the developed nations to the doors of the IMF and blamed it for remaining a sideline player and even praising such polices which are wreaking havoc in emerging markets.

Multilateral lenders like IMF must look out for and contain the spillover effects of the near-decade long easy flow of hot money, he said.

His comments are significant as the Governor, who was a chief economist at the Fund earlier, is slated to address the IMF meeting next month in Turkey.

“The International Monetary Fund is supposed to look at these (easy money polices) in a global sense, but the IMF has been sitting on the sidelines, and even applauding these kinds of policies ever since they were initiated and hasn’t really questioned the value of these kinds of policies,” Rajan said.

There were rumours that Rajan is looking for the top job at the Fund post the RBI stint. But he denied the rumours.

Addressing an event on G-20 consultation meeting, organised by the foreign policy think tank Gateway House, Rajan was quick to add that he was “not pointing finger at any central bank. We haven’t got mandates for the world. And I want to argue that we are in a world that nothing prevents these kinds of policies. There is nobody looking at them.”

Explaining his position further the Governor, who has for long been critical of the ultra-loose money policies of the Western nations and had gone public with his criticism thrice in recent past, said though the IMF does spillover studies, “these spillover studies invariably say this is good for that country and therefore good for the whole world. So I think we need to examine these issues.”

Rajan admitted that across the world central banking mandates are domestic, as “no central bank has a mandate for the world. Its mandate is purely domestic…what are you going to do to elevate employment and growth.

“It has to worry about the world only at second level… if I do something which creates problems for another country and as a result demand from that country falls off from my country’s, I should take that into account. I don’t care if I destroy the other country completely, so long as it doesn’t import from me I am okay. That kind of domestic mandate is actually in every country.”

As a way out he called for political mandate and consensus to ensure better coordinated monetary policies.

“We need a political consensus to go beyond domestic mandate in this integrated world where the monetary policy affects each other. It may be a sensible way to move forward,” the monetary economist-turned-central-banker said.

Recalling crises in Mexico, the Southeast Asia currency crisis, and the Argentine and the Brazilian crises, he said these were the spillover results of the low interest policies of the major economies in the 1990s as they tried to revive their banks post the emerging market crisis of the 1980s.

Calling for a better multi-lateral lending system to insulate the emerging and developing markets from the vulnerabilities of capital flight, Rajan said there is an urgent need to strengthen the existing multi-lateral system.

“Given that we have capital flows and certainly it’s very hard to separate good from bad (money), we probably need a global safety net to ensure that those who accept capital and who use it have liquidity protection in case the capital runs out.

“Typically, the IMF is supposed to do such kind of activities. But unfortunately, because of the past history, certainly in Asia and to some extent in Latin America, there is an enormous stigma in going to the IMF. That is why countries in these regions are developing regional arrangements rather than going to multilateral institutions,” Rajan said.

Talking about deflation, Rajan said there is a very strong fear, especially in the US given its historical experience in the 1930s, that if deflation takes hold then we will have a Japan-like experience and will have to write-off 15-20 years of growth.

[Austin]

Something not mentioned in the news but what Rajan mentioned yesterday and I saw on Bloomberg TV , Since QE did not work its time for West to carry out structural reforms.

He also mentioned like the US deflation fears were not valid

[Prem]

China Calls for New Global Reserve Currency to Replace Dollar
http://schiffgold.com/key-gold-news/chi ... eterschiff

n yet another sign of its growing prominence on the global financial stage, China called for a new world reserve currency to replace the dominant dollar.
An ABC news report said China is showing “growing assertiveness” on revamping the world economy:
The surprise proposal by Beijing’s central bank governor reflects unease about its vast holdings of U.S. government bonds and adds to Chinese pressure to overhaul a global financial system dominated by the dollar and Western governments.”As we reported earlier this week, a Chinese bank will soon join the London Bullion Market Association’s (LBMA) silver price-setting process. Earlier this month, the yuan passed the yen to become the fourth most-used currency for global payments. And it appears increasingly likely that the yuan will soon be included in the IMF’s Special Drawing Rights basket, currently comprised of the US dollar, euro, yen, and the British pound. As reported in the Economic Times of India:
China’s yuan ‘ticks all the right boxes’ for inclusion in the International Monetary Fund’s SDR list of global reserve currencies, the biggest international bank in China, HSBC, said in a report on Tuesday.”
China has been stockpiling gold as part of its strategy to raise the stature of the yuan on the world stage. After announcing its reserves for the first time since 2009 in July, the world’s largest consumer of gold has upped its holdings steadily. The Chinese gold stash increased another 1% in September.
A growing lack of faith in the US dollar may well underlie China’s proposal for a new reserve currency.
The financial crisis has highlighted how America’s economic problems — and by extension the dollar — can wreak havoc on nations around the world. China is in a bind. To keep the value of its currency steady — some say undervalued — the Chinese government has to recycle its huge trade surpluses, and the biggest, most liquid option for investing them is U.S. government debt.”
Foreign central banks are selling US government bonds at the fastest rate on record.
As Peter Schiff has argued, it appears China is slowly working to untether itself from the dollar and allow its currency to float more freely:

[TSJones]

In an Oliver Twist/Tiny Tim voice:

Please sir, can I have another Schiff video?

[panduranghari]

In an Oliver Twist/Tiny Tim voice:

Please sir, can I have another Schiff video?

IN Fagin's voice,

Interview of Peter Schiff about the conviction of his father, Irwin Schiff

[youtube]v=ZJ-B2oYMvls[/youtube]

[Austin]

^^ Link does not work , heres the interview

[Austin]

Russia’s banking system is under pressure from introduction of Basel 2-3 standards

MOSCOW, October 22. / TASS /. Russia’s banking system is under pressure from the introduction of standards Basel 2-3, German Gref, president of Russia’s largest savings bank Sberbank, said at a meeting with investors in London.

"The Central Bank revokes two to three banking licenses a week. This year, 77 banks lost their licenses. We are under pressure from the introduction of Basel 2 and Basel 3," he said.

[Austin]

What is the significance of Basel 2 and 3 standards ? Do our banks in India follow these standards too ?

[panduranghari]

Yes they do. As RBI signed up to it. Rajan help design these norms. For eg. KYC - Know Your Customer compliance is a part of Basel 3. Basel 4 and 5 are in the pipeline.

http://www.bis.org/bcbs/basel3/b3summarytable.pdf

Its a way to prevent economic warfare. But it means big brother watching all the time. It also means tax haevens will cease to exist.

[Austin]

^^ Got it , Thanks

US shale producers have $150bn in debt – Rosneft CEO

[panduranghari]

Iceland does what the US won’t: 26 top bankers sent to prison for role in financial crisis

n stark contrast to the record low number of prosecutions of CEO’s and high-level financial executives in the U.S., Iceland has just sentenced 26 bankers to a combined 74 years in prison.

The majority of those convicted have been sentenced to prison terms of two to five years. The maximum penalty in Iceland for financial crimes is six years, although hearings are currently underway to consider extending the maximum beyond six years.

[Austin]

Ep. 114: ECB Opens The Door To More QE , Also has a short obituary to his father Irwin Schiff

[TSJones]

Oh, goody, goody gum drops! Thank you!

More QE ! Please....well QE ended October 2014 for the Federal Reserve. But QE anywhere will suffice....and twice as nice.

[Austin]

Oh, goody, goody gum drops! Thank you!

More QE ! Please....well QE ended October 2014 for the Federal Reserve. But QE anywhere will suffice....and twice as nice.

Your wish might just be granted and we might have a QE4

Federal Reserve plans more QE, not rate rise, says Jerome Booth

[Neshant]

In the 2nd half of the program,
Max Keiser has a discussion with Sandeep Jaitly

[Austin]

^^ Nice One , Check this video of Max and Stacy guess with College student this month , He mentions how his early career started and used to do what he calls fraud ( lookback trade ) at wall street the Q&A session is interesting too

[panduranghari]

[panduranghari]

When it comes to low-wage positions, companies like Amazon are now able to precisely calibrate the size of its workforce to meet consumer demand, week by week or even day by day. Amazon, for instance, says it has 90,000 full-time U.S. employees at its fulfillment and sorting centers—but it plans to bring on an estimated 100,000 seasonal workers to help handle this year’s peak. Many of these seasonal hires come through Integrity Staffing Solutions, a Delaware-based temp firm. The company’s website recently listed 22 corporate offices throughout the country, 15 of which were recruiting offices for Amazon fulfillment centers, including the one in Chester.

This system isn’t unique to Amazon—it pervades the U.S. retail supply chain. Many companies choose to outsource shipping work to so-called third-party logistics providers, which in turn contract the work to staffing companies. At some of Walmart’s critical logistics hubs, multiple temp agencies may be providing workers under the same roof. The temp model also extends far beyond retail. The housekeeper who cleans your room at a Hyatt hotel may not work for Hyatt, but for a temp firm you’ve never heard of, for less money and fewer benefits than a direct hire. “It's the standard operating model," said Nelson Lichtenstein, a labor historian at the University of California, Santa Barbara. "The entire service economy is based on this kind of hyper-flexibility. If you don't have it, it sends costs way up."

For employers, the appeal of this system is obvious. It allows companies to meet demand while keeping their permanent workforce at a minimum, along with all the costs that go with it—payroll taxes, benefits, workers' compensation costs and certain legal liabilities. 1 (When Amazon warehouse workers around the country claimed they were victims of wage theft in a Supreme Court case last year, Integrity, not Amazon, was named as the defendant.) For employees, though, it means showing up to work every day with the knowledge that you are always disposable. You are at least one entity removed from the company where you work, and you are only as good as your last recorded input in a computerized performance monitoring system. In the event that something goes wrong in your life—illness, injury, a family crisis—you have few, if any, protections. And yet for Americans like Jeff, this precarious existence now represents one of the only remaining potential paths to a middle-class life.

LIfe and Death of an Amazon Temp

[Austin]

What Will It Mean If the Yuan Gets Reserve-Currency Status?

At least $1 trillion of global reserves may migrate to yuan
Successful bid would boost Xi's economic reform efforts

[Austin]

World Bank Ease of Doing Business Report 2016

http://www.doingbusiness.org/~/media/GI ... Report.pdf

[Austin]

Stastics look good for obama

CNN:Obama's economy in 10 charts

[Austin]

Ep. 115: Fed Continues To Extend And Pretend On Rate Hikes

[Austin]

Worth watching in Full for the Man he Was , Irwin Schiff


Irwin Schiff Was Right, Sept 29th 2001

[Austin]

Russian debt servicing cost rising warns FM.


Siluanov: Russia spends on debt service is already 1% of GDP
Interfax

The cost of servicing the public debt reached 650 billion Russian rubles. per year, or 0.8% of GDP, Finance Minister Anton Siluanov at the parliamentary hearings in the Federation Council on Tuesday.

According to him, the Ministry of Finance takes at relatively high interest rates and debt service, "replacing" other costs in the budget. This is another argument in favor of the need to contain the budget deficit, the share of debt service is necessary not to increase, but rather reduced, the minister said.

"Growing maintenance costs, so once one factor we can not increase the budget deficit, the debt today, dear, we are in the order of 10-11% per annum, respectively, the larger the loan, the greater the maintenance costs will crowd out other important expenses. Today, the cost on debt service - 650 billion rubles., or 0.8% of GDP, t. e. 4% of the total costs, "- said the Minister. He recalled that in the history of the country was a time "when it is not looked at the cost of borrowing, borrowed to the max, resulting in debt service hindered spending measures in the field of social policy, they squeezed all other costs."

Russia's states debt in 2016 was estimated by the Ministry of Finance, 15.6% of GDP, in 2013 this figure was 11.4% of GDP.

[Austin]

Not sure I posted this before but Mike Maloney (goldsilver.com) talking , its informative watch