Bharat Rakshak

panduranghari wrote:And I find Stockman still does not say allocate more to gold. He calls it insurance. But later he says why- he is calling for deflation. Stockman is a DEFLATIONIST.

VKumar wrote:Estimated Public Sector NPA are about 25% of all outstanding loans and add another 10% already settled, the thing to watch out is how banks can recover most of these huge assets through collateral, personal guarantees, sale of promoter shares pledged. There will be a domino effect if recoveries are pursued aggressively.

Austin wrote:

panduranghari wrote:And I find Stockman still does not say allocate more to gold. He calls it insurance. But later he says why- he is calling for deflation. Stockman is a DEFLATIONIST.

Deflationist or not , Stockman analysis is more thorough and robust compared to say Peter Schiff or other folks , though I tend to listen to all of them and have respect for them

Gyan wrote:
These Articles show that recovery rate falls to less than 2% of the defaulted debt when aggressive recovery is pursued

SriKumar wrote:So Austin mian, after listening to them over what is your perspective? I did watch the Stockman video and I've heard from other sources what Schiff tends to suggest might happen given all the QE that happened. Do you agree with them that there is a major issue coming down the pike?

There has been much discussion about eliminating the “zero lower bound” by eliminating paper currency. But such a radical and difficult approach as eliminating paper currency is not necessary. Much as during the Great Depression—when countries were able to revive their economies by going off the gold standard—all that is needed to empower monetary policy to cut interest rates as much as needed for economic stimulus now is to change from a paper standard to an electronic money standard, and to be willing to have paper currency go away from par. This paper develops the idea further and shows how such a mechanism can be implemented in a minimalist way by using a time-varying paper currency deposit fee between private banks and the central bank. This allows the central bank to create a crawling-peg exchange rate between paper currency and electronic money; the paper currency interest rate can be either lowered below zero or raised above zero. Such an ability to vary the paper currency interest rate along with other key interest rates, makes it possible to stimulate investment and net exports as much as needed to revive the economy, even when inflation, interest rates, and economic activity are quite low, as they are currently in many countries. The paper also examines different options available to the central bank to return to par when negative interest rates are no longer needed, and the associated implications for the financial sector and debt contracts. Finally, the paper discusses various legal, political, and economic challenges of putting in place such a framework and how policymakers could address them.

Donald TuskVerified account
‏@eucopresident
This is a critical moment. Risk of break-up is real as #UKinEU negotiations very fragile. Handle with care. What is broken cannot be mended
9:21 AM - 15 Feb 2016

Italy, the eurozone's third-largest economy, is in a full-blown banking crisis. Four small banks were rescued late last year. The big ones are teetering. Their stocks have crashed. They're saddled with nonperforming loans (defined as in default or approaching default). We're not sure that the full extent of these NPLs is even known.

The number officially tossed around is 201 billion euros. But even the ECB seems to doubt that number. Its new bank regulator, the Single Supervisory Mechanism, is now seeking additional information about NPLs to get a handle on them.

Other numbers tossed around are over 300 billion euros, or 18% of total loans outstanding.

The International Monetary Fund shed an even harsher light on this fiasco. It reported last year that over 80% of the NPLs were corporate loans. Of all corporate loans, 30% were nonperforming, with large regional differences, ranging from 17% in some of the northern regions to over 50% in some of the southern regions. The report:

High corporate NPLs reflect both weak profitability in a severe recession as well the heavy indebtedness of many Italian firms, especially SMEs, which are among the highest in the Euro Area. This picture is consistent with corporate survey data which shows nearly 30% of corporate debt is owed by firms whose earnings (before interest and taxes) are insufficient to cover their interest payments.

These NPLs piled up over the years because banks have been slow to, or have refused to, write them off or sell them to third parties at market rates. Recognizing the losses would have eaten up the banks' scarce capital. Reality would have been too ugly to behold.

The study found that the average time for writing off bad loans has jumped to over six years by 2014. And this:

In 2013, on average less than 10% of bad debt, despite already being in a state of insolvency, was written off or sold. The bad debt write-off rate varies significantly across the major banks, with banks with the highest NPL ratios featuring the lowest write-off rates. The slow pace of write-offs is an important factor in the rapid buildup of NPLs.

Now, to keep the banks from toppling, the ECB has an ingenious plan: It will buy these toxic assets or accept them as collateral in return for cash.

That's what the Italian Treasury told reporters, according to Reuters. Oh, but the ECB is not going to buy them directly. That would violate the rules; it can only buy assets that sport a relatively high credit rating. And this stuff is toxic.

So these loans will get bundled into structured Asset Backed Securities, or ABS, and sliced into different tranches. The top tranches will be the last ones to absorb losses. A high credit rating will then be stamped on these senior tranches to make them eligible for ECB purchases, though they're still backed by the same toxic loans, most of which won't ever be repaid.

Neshant wrote:^^

why do I feel like I just sat through an infomercial

Ladies and gentlemen, the current monetary policy environment is fuelling the imagination of some academics with regard to how the "leg room" of monetary policy could be increased. Their proposal is to do away with cash entirely.

The interest rate policy currently pursued by the Eurosystem, and also by the other European central banks, shows that the zero lower bound is not a fixed floor for central bank interest rates. That said, there is no disputing the possibility of a "flight to cash" if interest rates venture too far below zero. If cash were to be abolished, central banks would be able to broadly enforce negative interest rates.

But as I see things, that would be wrong and an entirely disproportionate response to the monetary policy challenges close to the zero lower bound. I believe that the right approach is more a question of strengthening the growth forces in the euro area, thereby a return to higher nominal interest rates.

A clear distinction should, however, be made between the discussion motivated by monetary policy about abolishing cash and the current debate about imposing restrictions on cash usage. Both the proposal to impose caps on cash transactions as well as the initiative to do away with the €500 banknote would, it is claimed, help to combat terrorist financing and money laundering.

The aims pursued by these measures are certainly worthy of support. I, however, am doubtful as to whether terrorists or criminals can really be deterred from illegal activities by imposing a cap on cash transactions or doing away with large-denomination banknotes - just take the calls now being raised in some quarters of the USA to abolish the USD100 note because it is still considered to be "too big".

The Bundesbank takes a neutral stance with regard to the various forms of payment. It sees its role in assisting and supporting the general public in using those payment methods which they wish to use. To this end, we have made it our job to ensure that the cash in circulation maintains its high quality and that the supply is sufficient. At the same time, the TARGET system that we operate is pivotal to the handling of cashless payment transactions.

German citizens value cash very highly, and that's quite simply a fact. For them, it offers a whole range of advantages. These merits, alongside many other interesting findings, are described in detail in an article in the Annual Report. On balance, cash is still the most popular means of payment in Germany, with just under 80% of all transactions at the point of sale being settled using cash.

A study conducted by the Bundesbank shows that Germany, together with Austria, are at the vanguard by international standards when it comes to paying by cash.5 Incidentally, we will also be publishing a research newsletter on this study today. These research newsletters are a new series of publications by the Bundesbank, which, in future, will present important research findings, at regular intervals, to a specialist audience in a brief and concise manner.

Although the significance of cash payments has decreased in recent years, payment behaviour itself is only changing gradually. Payments by card or by smartphone, as well as online purchases appeal to the young, technology-savvy generation in particular. These means of payments are on the increase, but they are by no means undergoing rapid growth.

One factor that probably plays a role here is that, in contrast to what some believe, cash is not a particularly expensive means of payment. In terms of costs per transaction, cash payments are much cheaper than both debit card and credit card payments. As for costs in relation to the transaction amount, which generally tends to be higher when making payments by card, cash is admittedly more expensive than debit card payments, but is still cheaper than making payments by credit card.

As you can see, there are a number of strong arguments that speak in favour of cash. It is hardly surprising, then, that surveys show that more than three-quarters of the population - or even more - state that they could not do without cash. Bearing that in mind, I would consider it disastrous if the general public were to be given the impression that the mooted abolition of the €500 note and imposition of caps on cash usage were the first steps towards abolishing cash entirely.

All eyes may be on cash right now, but it would be unwise to ignore the far-reaching changes that may well transform the area of cashless payment systems at some point in the future.

Blockchain technology is seen as the key innovation in this regard, allowing as it does values to be transferred cheaply and comparatively anonymously, while bypassing centralised authorities such as banks, card companies and clearing houses.

Similarly, I can also well imagine that it will soon be possible to use digital currencies, such as bitcoins, which are based on this technology, to trade in financial products, such as shares, bonds or derivatives in decentralised systems. This would, of course, present a challenge for the existing payment and settlement systems.

It therefore stands to reason that not only financial service providers, but also central banks are investigating whether this very interesting technology is actually suitable for mass use. This is why the Bundesbank is, inter alia, also a member of a working group on this topic at the Bank for International Settlements in Basel.

The decade-long surge in foreign-currency reserves held by the world’s central banks is coming to an end.

Global reserves declined to $11.6 trillion in March from a record $12.03 trillion in August 2014, halting a five-fold increase that began in 2004, according to data compiled by Bloomberg. While the drop may be overstated because the strengthening dollar reduced the value of other reserve currencies such as the euro, it still underlines a shift after central banks -- with most of them located in developing nations like China and Russia -- added an average $824 billion to reserves each year over the past decade.
Beyond being emblematic of the dollar’s return to its role as the world’s undisputed dominant currency, the drop in reserves has several potential implications for global markets. It could make it harder for emerging-market countries to boost their money supply and shore up faltering economic growth; it could add to declines in the euro; and it could damp demand for U.S. Treasury bonds.

“It’s a big challenge for emerging markets,” Stephen Jen, a former International Monetary Fund economist who’s co-founder of SLJ Macro Partners LLP in London, said by phone. They “now need more stimulus. The seed has been sowed for future volatility,” he said.

Stripping out the effect from foreign-exchange fluctuations, Credit Suisse Group AG estimates that developing countries, which hold about two-thirds of global reserves, spent a net $54 billion of this stash in the fourth quarter, the most since the global financial crisis in 2008.

China, the world’s largest reserve holder, together with commodity producers contributed to most of the declines, as central banks sold dollars to offset capital outflows and shore up their currencies. A Bloomberg gauge of emerging-market currencies has lost 15 percent against the dollar over the past year.

China cut its stockpile to $3.8 trillion in December from a peak of $4 trillion in June, central bank data show. Russia’s supply tumbled 25 percent over the past year to $361 billion in March, while Saudi Arabia, the third-largest holder after China and Japan, has burned through $10 billion in reserves since August to $721 billion.

Euro’s Decline

The trend is likely to continue as oil prices stay low and growth in emerging markets remains weak, reducing the dollar inflows that central banks used to build reserves, according to Deutsche Bank AG.

Such a development is detrimental to the euro, which had benefited from purchases in recent years by central banks seeking to diversify their reserves, according to George Saravelos, co-head of foreign-exchange research at Deutsche Bank.
The euro’s share of global reserves dropped to 22 percent in 2014, the lowest since 2002, while the dollar’s rose to a five-year high of 63 percent, the International Monetary Fund reported March 31.

“The Middle East and China stand out as two regions that are likely to face ongoing pressures to run down reserves over the next few years,” Saravelos wrote in a note. The central banks there “need to sell euros,” he said.

The euro has declined against 29 of 31 major currencies this year as the European Central Bank stepped up monetary stimulus to avert deflation. The currency tumbled to a 12-year low of $1.0458 on March 16, before rebounding to $1.0922 in New York Monday.
Growth Slows

Central banks in emerging nations started to build up reserves in the wake of the Asian financial crisis in the late 1990s to safeguard their markets for periods when access to foreign capital dries up. They also bought dollars to limit appreciation in their own exchange rates, quadrupling reserves from 2003 and boosting their holdings of U.S. Treasuries to $4.1 trillion from $934 billion, data compiled by Bloomberg show.

Two weeks ago, a 32-container train from Wuyi, China arrived in Tehran, Iran. You might think the arrival of cargo by rail would be no big deal, but in this case you’d be wrong. This was the first journey of its kind between the two cities, and it shortened the typical (ship-based) travel time separating them by 30 days. This new connection is among the first visible signs of a massive trade network that China is currently constructing across Eurasia. The Silk Route is being rebuilt.....

Indian Prime Minister Narendra Modi is spending this week promoting his “Make In India” campaign, an ambitious program designed to turn the subcontinent into a “global manufacturing hub.” Modi’s vision is grand: he hopes to create 100 million manufacturing jobs in the next 6 years and spur the development of a middle class that will power the Indian economy for years to come

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It’s hard to imagine that anyone – in India or elsewhere – will succeed at putting the productivity genie back in the bottle. But focusing on what worked in China is a recipe for disappointment. It’s time to rethink the Make In India campaign, and it’s best to do so soon. Without a new strategy, Modi’s manufacturing mantra may mean malaise for millions. And worse, it may mean India never emerges into a developed nation.

Neshant wrote:I see bubbles bursting everywhere: Top academic



Vikram Mansharamani, a lecturer at Yale University, speaking on CNBC.

Leading US economists, including Noble Economics Prize winning Paul Krugman, claim that debt in an economy, especially the world’s most debt-bloated economy, the United States “doesn’t matter.” Just keep the borrowing cycle growing and all will be fine. Krugman argued in his New York Times column, “…this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; US debt is, to a large extent, money we owe to ourselves.”

Debt doesn’t matter?

Come again, my ever-so-learned professor? There is a sly rhetorical trick in your language and dishonesty in your argument: “We owe to ourselves?” Does that mean I and my creditor bank are just part of the same happy family? Is “ourselves” the Peoples’ Bank of China to whom “we” American taxpayers, through our government in Washington, owe trillions in debt? Or the Japanese Central Bank?

Are you telling me that it doesn’t matter if I run up so much credit card debt charging 25% annual interest to pay my monthly living costs as millions of Americans are forced to do? It doesn’t matter if I borrow $100,000 from my bank to finance a college education so I can get a job that doesn’t anymore exist in the USA because so many companies have out-sourced to Asia? It doesn’t matter if I incur mortgage debt on a home I bought in 2006 at the peak of the sub-prime real estate bubble? It doesn’t matter that I got the loan by lying to my local bank about my ability to pay the huge mortgage because he didn’t care so long as he could turn around and sell that worthless mortgage risk to Goldman Sachs or another Wall Street bank that “bundled” my high-risk home mortgage with hundreds of other mortgages around the country, creating what the bankers call collateralized mortgage obligations?

Debt implosion of 2007

In the summer of 2007, the more that $4 trillion debt pyramid in the US real estate mortgage-backed securities sector began to implode. That implosion triggered the largest collapse of credit in world history, a collapse which has left the economies of the USA and of the European Union in their worst condition since the creation of the dollar system at Bretton Woods, New Hampshire in 1944.

On July 29, 2007 the head of the German banking regulator, Bafin, and the German Minister of Finance, Peer Steinbrück, held a press conference to announce that the German State, together with leading private and public banks, was organizing an emergency rescue of Germany’s IKB Deutsche Industriebank. IKB was a bank originally set up in 1924 to facilitate payment of German industrial war reparations under the Dawes Plan.

That 2007 crisis marked the second time in its history that the IKB played an historic role in the context of unsound American banking practices. IKB had been convinced by Deutsche Bank head, Josef Ackermann, to buy new, exotic high-yielding securities issued by New York banks, securities known as sub-prime mortgage-backed securities. Sub-prime as in high-risk. Ackermann openly admitted he knew about the IKB problem because his own Deutsche Bank had unloaded the high-risk US bonds onto a naive, incompetent management at IKB. That event, the collapse of IKB, triggered a global financial Tsunami that weighs the world economy to the present.

What is debt or money?

Ultimately money, especially in a world where money is a pure paper commodity—fiat money so-called as it is not tied to gold or silver or other tangible values like land—is a question of “confidence.” The confidence in this case is ultimately in the “full faith and credit of the Government of the United States of America.” And that confidence has been backed always, ultimately, by military power, political power, power to buy or control the lawmakers and administrators—Presidents, Congressmen, judges.


Today, in the first months of 2016, the US is almost nine years into that debt implosion process with no end in sight. The Federal Reserve, the privately owned watchdog for the large Wall Street banks, timidly raised key US bank interest rates from zero by a mere 0.25% on December 15, 2015. They did so after months of cat-and-mouse games with financial markets, hinting that things were returning to “normal.” A month later, that same Fed indicated it had miscalculated. Today the US financial economy is going into a new downward spiral led by debt.

US Oil Junk Bond Crisis

The implosion of the US debt pyramid today is led by energy companies facing impossible conditions in a market where oil and gas prices are lowest in 13 years with no recovery in sight. On February 25, Bloomberg reported that the US oil bust could claim two of its biggest victims yet. Energy XXI Ltd. and SandRidge Energy Inc., oil and gas drillers with a combined $7.6 billion of debt, could not pay interest on their bond debts.

If we listen to Paul Krugman, that doesn’t matter because “we owe the debts to ourselves.” They have until the middle of next month to either pay the interest, work out a deal with their creditors or face a default that could tip them into bankruptcy.

The US shale oil companies over the past seven years became the new “saviors” of Wall Street banks desperate to find new areas of profit in a collapsing economy. They literally threw money at the booming US shale oil industry. Much of the debt the shale companies took on was what is known in Wall Street as “junk bonds.” The term is a reference to the fact that if the borrower company, say SandRidge Energy, goes bankrupt, the holders of their junk bonds are holding just that–junk.

The nearly four million barrels a day rise in USA oil production since 2009 came overwhelmingly from unconventional, high-cost shale oil ‘fracking.’ It has been held up until now by Wall Street bankers willing to keep adding new credit to the distressed companies, hoping against hope for a rise in oil prices. Since June, 2014, however, US oil prices have gone from $103 a barrel to around $30 today. Most shale companies need at least $60 a barrel to break even. Now the day of reckoning is fast approaching as the Wall Street banks, led by JP Morgan Chase, are deciding to cut credits, to stop throwing good money after bad as the saying goes.

Since the deal between the foolish US Secretary of State John Kerry and Saudi King Abdullah in September, 2014 to flood the world with cheap Saudi oil to create a crisis in the Russian ruble amid US sanctions, the worst hit in the unfolding crisis has been the US oil and gas industry, mainly unconventional, costly shale oil and gas. They have sold off hundreds of oil fields, eliminated an estimated two hundred fifty thousand jobs and slashed billions of dollars from capital spending and stock dividends.

As more shale energy companies go bankrupt in coming weeks, there will be no new lending for unconventional oil for decades. Oil Price.com, a trade newsletter notes, “JP Morgan was first to finally get defensive and is ready to start serious oil credit redeterminations, without waiting for the traditional examination period in April. The banks are finally feeling the risks of unrestricted lending to the shale…The US shale industry is changing forever and there won’t be this kind of “free money.”

The collapse of the US energy junk bond market is spreading like a cancerous metastasis to the entire US junk bond market that includes borrowers like Toys R’ Us to high-tech IT borrowers. US companies have a total of $1.32 trillion in junk debt maturing between now and 2020, according to Standard & Poor’s. That includes $92.3 billion coming due this year, followed by $160.9 billion in 2017 and $272.5 billion in 2018, according to a report in the Wall Street Journal of February 21.

Consumers of debt…

A further indicator of the true state of the US debt-bloated economy is the fact that the world’s largest retail group, WalMart, just announced it will close 154 of its giant stores that sell everything from food to garden equipment to toys. Over the past two years hundreds of America’s giant shopping malls have been abandoned as store chains like J.C. Penney, Kmart, Radio Shack and Sears close thousands of outlets.

Indebted American consumers are the main reason. A recent study showed that in 2015 the average American household had $129,579 in debt — $15,355 of it on high-interest credit cards. Just because the Federal Reserve has a zero interest rate policy doesn’t mean Chase or other Visa card issuers charge zero. They still charge from 13% to 25% depending on the credit history.

Total consumer debt today is a staggering $11.91 trillion, almost 70% of GDP. It is even worse than the bare statistics. The American household is forced into debt increasingly because the rise in the cost of living has exceeded income growth over the past 12 years. Median household income has grown 26% since 2003, but household expenses have outpaced it significantly — with medical costs growing by 51% and food and beverage prices increasing by 37% in that same span. The average US household pays a total of $6,658 in interest cost on home, cars, credit card debt per year, 9% of the average household income of $75,591. That is being spent on interest alone, not on new shoes for the kids or dining out with the family. This is the real reason the Federal Reserve is in a gigantic pickle regarding raising interest rates to “normal”—it would blow up the near $12 trillion consumer pyramid of debt along with corporate debt.

‘Students of debt’

With jobs in the oil and gas sector vanishing, companies going bankrupt, households choking in debt, real unemployment not the mythical 5% declared by the US Labor Department but more like 23% according to John Williams’ Shadow Government Statistics, another source of debt is assuming alarming dimension. That is student debt, a new factor that 25 years ago was almost negligible. Today students must borrow to finance college.

Today total outstanding student loan debt in the US is $1.2 trillion. Only home mortgage debt is higher. About 40 million Americans hold student loans and about 70% of bachelor’s degree recipients graduate with debt. Those who graduated in 2015 left college holding an average of $35,051 before earning their first paycheck to pay that debt off. One in four student loan borrowers are either in delinquency or default…

Are we still to believe that such debt doesn’t matter because “we owe it to ourselves” Professor Krugman. With such professors claiming to teach economics, it is no wonder that the American Hegemon is going bankrupt. Debt is a strategic factor in the existence of any national economy, and has historically been the factor that ruins nations, the United States included.

F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook”.

TSJones wrote:...now it all comes out about the Bangledesh hack,,,,,,,

http://www.nbcnews.com/tech/tech-news/h ... st-n536526

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A spelling mistake in an online bank transfer instruction helped prevent a nearly $1 billion heist last month involving the Bangladesh central bank and the New York Federal Reserve, banking officials said.

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The hackers breached Bangladesh Bank's systems and stole its credentials for payment transfers, two senior officials at the bank said. They then bombarded the Federal Reserve Bank of New York with nearly three dozen requests to move money from the Bangladesh Bank's account there to entities in the Philippines and Sri Lanka, the officials said.

Four requests to transfer a total of about $81 million to the Philippines went through, but a fifth, for $20 million, to a Sri Lankan non-profit organization was held up because the hackers misspelled the name of the NGO, Shalika Foundation.

Hackers misspelled "foundation" in the NGO's name as "fandation", prompting a routing bank, Deutsche Bank, to seek clarification from the Bangladesh central bank, which stopped the transaction, one of the officials said.

There is no NGO under the name of Shalika Foundation in the list of registered Sri Lankan non-profits. Reuters could not immediately find contact information for the organization.

Deutsche Bank declined to comment.
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