Perspectives on the global economic changes

[chanakyaa]

Ummmh...

Who is going to see BOP crisis? Yoos? The BOP problem exists even today. Aren't the differences between exports and imports paid for using empty IOU promises for decades now? It hasn't stopped providers of imports from sending real goods fully knowing empty IOUs they are getting in exchange are not worth anything.

In 1991 or for that matter even today, India did not produce anything that the world was convinced that they wanted (or couldn't get from alternate sources), which prevented India from issuing IOUs to get out of the hole. Thus India had to let go of what she thought was valuable (i.e. Gold) and currency depreciation. Doesn't appear to be similarities with situation with India, but I may be missing something.

Britain's BOP crisis right after the WWII was quite different.
THE BRITISH BALANCE-OF-PAYMENTS PROBLEM (PDF, 1945)

[panduranghari]

That is true- nothing has happened yet. But it does not mean it wont happen ever?

Macroeconomic Forces Underlying Trade Deficits

What this means is that the United States is bound to run an overall trade deficit with the rest of the world when combined US savings of the household, business, and government sectors are negative, as they have been for some years. To finance the trade deficit, the United States is obliged to borrow or attract investment from the rest of the world, making a global US trade deficit inevitable.

According to SoberLook;



And according to Federal Reserve



Their trade deficit is worse than forecast. Where will they get the money that they need from? QE is the only way. And for QE to reach the people, Helicopter Janet will be unleashed. Gold...get yourself some.

[A_Gupta]

The come-back of North American manufacturing?

http://www.pddnet.com/news/2016/04/us-e ... eness-2020
U.S. Expected to Surpass China in Manufacturing Competitiveness by 2020

The United States is expected to overtake China as the most competitive nation for manufacturing over the next few years, according to a recent survey of manufacturing executives.

Deloitte's 2016 Global Manufacturing Competitiveness Index showed that U.S. manufacturing competitiveness rose from fourth in the world in 2010 to second this year — and that it's expected to assume the top spot by 2020.

The report ranked nations' manufacturing climates according to the survey responses of more than 500 senior executives at global manufacturing companies.

Deloitte analysts attributed the rising perception of U.S. manufacturing to heavy investments in both talent and technology, as well as a strong energy market, high labor productivity and the sector’s focus on exports.

“The U.S. is currently among the top nations unlocking advanced manufacturing technologies including smart, connected products and factories, predictive analytics and advanced materials that are core to future competitiveness,” said Craig Giffi, who leads Deloitte's U.S. automotive sector.

In addition, Canada and Mexico joined the U.S. among the top 10 nations in this year's index, and all three nations are expected to remain at that perch in 2020.

The analysis suggested that five Southeast Asian nations — India, Indonesia, Malaysia, Thailand and Vietnam — could roar into the top 15 in coming years amid low labor costs, agile manufacturing operations and favorable demographics.

Overall, however, Deloitte analysts suggested that the BRIC countries — the developing large economies of Brazil, Russia, India and China — would lag due to political complications and low oil prices affecting the former two nations.

[Austin]

Janet Yellen disagrees strongly with Bernie Sanders

http://money.cnn.com/2016/04/08/news/ec ... -stack-dom

Yellen defends all that the Fed has done since 2008

On Thursday, Yellen outlined all the ways the Fed has stepped up regulation after the 2008 financial crisis -- details Sanders wasn't quite strong on in a recent interview with the New York Daily News editorial board.

Banks have to hold more money -- This is to prevent what happened in 2008 when some financial institutions didn't have enough cash (or cash equivalents) on hand to make their payments to other banks and creditors.
The Fed "stress tests" big banks -- Twice a year, the Fed takes a deep look at the finances of each bank and sees what would happen under various crisis scenarios. The Fed then recommends fixes to some banks to make them stronger.
Banks now have to submit "living wills" -- Much like a personal will, the bank has to spell out what would happen to its assets and stuff if it "died" like what happened to Lehman Brothers in the crisis.

"We've made considerable progress," Yellen said, speaking on a panel where all four living Fed chairs were interviewed together for the first time ever by CNN's Fareed Zakaria

[chanakyaa]

The come-back of North American manufacturing?

http://www.pddnet.com/news/2016/04/us-e ... eness-2020
U.S. Expected to Surpass China in Manufacturing Competitiveness by 2020

The story (and the entire manufacturing renaissance) should make anyone bit skeptical and it could be as mythical as last 3-4 years of Oil/Gas renaissance/independence stories. With $15 minimum labour wage increase recently passed in California and New York, how the hell can it be competitive with the Chinese sweat shops? The way home grown Oil/Gas stories (some are true) were used to crash the oil price from 80s-90s to 30s/40s, I wonder if the drum beating of manufacturing come-back is used to bring back some of the manufacturing back to YooS. There absolutely nothing wrong with that, because they are their own companies, but that does not mean it is purely competitive.

One more thing the entire story of recent rise in manufacturing may be the result of clever changes to accounting and classification of what qualifies as "manufactured" in US and China, which also needs close scrutiny to put such news in perspective. Check this out..

How To Create A Manufacturing Renaissance - Change The Definition

[Neshant]

Another gold going to the moon advocate.

We are definitely going to be herded into digital currencies controlled by private banking crooks at some point.

Its all a question of how the banking crooks will close off the escape routes to ensure all people are entrapped in the digital currency slaughterhouse.

[youtube]R7enXdJAuHA&t=703s[/youtube]

[Neshant]

Harry Dent's Deflation Theory

Says everything including gold will fall in value. Only USD (outside the banking system) will rise, says he.

[youtube]93ea7QTDYN4&nohtml5[/youtube]

[Neshant]

Italy's banks are about to go belly up, withdraw your cash out of the banks immediately or you will get bailed in (I.e have your savings stolen by bankers) to keep the bank solvent.

https://ca.finance.yahoo.com/news/italy ... ector.html

[Austin]

Its there. Anyway http://www.financialsensenewshour.com/b ... 0402-2.mp3

Thanks what Jim says to increase gold price an ounce by 10000 but if that happens it would also raise the price of gold n products whr gold is used exponentially overnight

[Neshant]

A bit more doom to round off your weekend.

Haven't been getting enough doom lately so I'm doing my part.

[Neshant]

1st instance of banker bail-in aka deposit confiscation now occurring in Europe.

Get out of European banks if you're in it. The situation looks slippery.

Austria orders bail-in on Heta creditors: – Subordinate debt: 100% haircut – Senior debt: 54%

Today, the Austrian Financial Market Authority (FMA) in its function as the resolution authority pursuant to the Bank Recovery and Resolution Act (BaSAG – Bundesgesetz über die Sanierung und Abwicklung von Banken) has issued the key features for the further steps for the resolution of HETA ASSET RESOLUTION AG. The most significant measures are:

[*] a 100% bail-in for all subordinated liabilities,
[*] a 53.98% bail-in, resulting in a 46.02% quota, for all eligible preferential liabilities,
[*] the cancellation of all interest payments from 01.03.2015, when HETA was placed into resolution pursuant to BaSAG,
[*] as well as a harmonisation of the maturities of all eligible liabilities to 31.12.2023.

According to the current resolution plan for HETA, the wind-down process should be concluded by 2020, although the repayment of all claims as well as the legally binding conclusion of all currently outstanding legal disputes will realistically only be concluded by the end of 2023. Only at that point will it be possible to finally distribute the assets and to liquidate the company.

http://investmentwatchblog.com/breaking ... r-debt-54/

[panduranghari]

Gold price rising to 10k means the world will be a lot different from what it is now. The war between Dollar and gold is long over and DOLLAR lost this war. The current battle is between Euro and Dollar.

And here the price of gold will decide who wins it.

If dollar price of gold rises beyond a short range as managed by the longs and shorts of the COMEX, then there is a loss of confidence issue with dollar. As dollar was supposed to be as good as gold (not in gold standard terms since 1971). After dollar came off gold exchange standard in 1971, the gold price rose to 850. Then it fell. Some attribute it to Volcker raising the federal funds rate to 20% from 5%. It could be. But it could also be, because there was no credible alternative to the dollar. USA could have raised the price of its official gold from 42.20 to say 850 and carried on with the game. They did not because they were haemorrhaging gold until 1971. and they would still have lost more gold inevitably because all things leading to 1971 would have happened again. For dollar to be accepted over the world, gold price has to low and the only way to do that is to get people to not buy it. One way to do that is to make gold expensive to mine. Second way was keep the price managed by doing price discovery using paper markets. It worked until there was no alternative to dollar. Fed even got BOE and SNB to sell their gold for 250$/oz. Indians kept buying gold keeping the South African mines running.

Tuesday, January 1, 2002 - Launch of euro transactional currency
Friday, February 8, 2002 - GOLD ABOVE $300
Monday, December 1, 2003 - GOLD ABOVE $400
Thursday December 1, 2005 - GOLD ABOVE $500
Monday, April 17, 2006 - GOLD ABOVE $600
Tuesday, May 9, 2006 - GOLD ABOVE $700
Friday, November 2, 2007 - GOLD ABOVE $800
Monday, January 14, 2008 - GOLD ABOVE $900
Monday, March 17, 2008 - GOLD ABOVE $1000
Monday, November 9, 2009 - GOLD ABOVE $1100
Tuesday, December 1, 2009 - GOLD ABOVE $1200
Tuesday, September 28, 2010 - GOLD ABOVE $1300
Wednesday, November 9, 2010 - GOLD ABOVE $1400
Wednesday, April 20, 2011 - GOLD ABOVE $1500
.....

Gold will go up as no one needs to support the bloated balance sheet of US by using and storing dollars.

Euro does not need high or low price of gold.





Rickards talks about Misesian theory of marginal utility and debunks Marxian Labour theory of value. Unless we understand this, rising gold price will astound you.

JM 2P Theory.

[chanakyaa]

What tools does the Fed have left? Part 3: Helicopter money

Could the central bank implement an MFFP on its own? Some have suggested an alternative approach in which the central bank prints money and gives it away—so-called “people’s QE.” From a purely economic perspective, people’s QE would indeed be equivalent to a money-financed tax cut (Friedman’s original helicopter drop, although perhaps more targeted). The problem with this policy, which would certainly be illegal in most or all jurisdictions, is not its economic logic but its political legitimacy: The distribution of what are effectively tax rebates should be subject to legislative approval, not determined unilaterally by the central bank. I’ll return to the issue of MFFP governance in a moment...

Now this is a clever idea that only a central banker can deliver no matter how f*#^$ed up it sounds..

...
To illustrate, imagine that the U.S. economy is operating well below potential and with below-target inflation, and monetary policy alone appears inadequate to address the problem. Assume that, in response, Congress approves a $100 billion one-time fiscal program, which consists of a $50 billion increase in public works spending and a $50 billion one-time tax rebate. In the first instance, this program raises the federal budget deficit by $100 billion. However, unlike standard fiscal programs, the increase in the deficit is not paid for by issuance of new government debt to the public. Instead, the Fed credits the Treasury with $100 billion in the Treasury’s “checking account” at the central bank, and those funds are used to pay for the new spending and the tax rebate. Alternatively and equivalently, the Treasury could issue $100 billion in debt, which the Fed agrees to purchase and hold indefinitely, rebating any interest received to the Treasury. In either case, the Fed must pledge that it will not reverse the effects of the MMFP on the money supply (but see below).
...

Other such wonderfool ideas can be found here....

http://www.brookings.edu/blogs/ben-bernanke

[Neshant]

Central banking policy is wrapped up in the most fanciful jargon and complex movement of paper.

But in the end, all it amounts to is either :

1) robbing someone else
2) printing money (see #1)

But man can they ever spin a tale of pseudo-science around the entire fraud with graphs, charts, equations and plain old slick talking.

[Gyan]

USA will create crisis in some other part of the world to keep money flowing into dollar.

[ArmenT]

World's largest private coal company, Peabody Energy, files for Chapter 11 Bankruptcy.

Leading global coal producer Peabody Energy Corp (BTU.N) filed for U.S. bankruptcy protection on Wednesday after a sharp drop in coal prices left it unable to service debt of $10.1 billion, much of it incurred for an expansion into Australia.

The Chapter 11 bankruptcy filing ranks among the largest in the commodities sector since energy and metal prices began to fall in mid-2014 as once fast-growing markets including China and Brazil started to slow.
...
...
Debt troubles for Peabody date to its $5.1 billion leveraged buyout of Macarthur Coal in 2011, just when prices peaked for the metallurgical coal that the Australian company supplies to Asian steel mills.

As metallurgical coal demand fell, particularly in China, Peabody's financial woes intensified. The company wrote down $700 million on its Australian metallurgical coal assets last year.

[Neshant]

[svinayak]

Is one world currency possible.
https://www.youtube.com/watch?v=WPKymVF57Mg

http://dailyreckoning.com/one-world-one ... -currency/

1969: The French and others recognized the United States was printing too many dollars. At the time, foreigners could still exchange dollars for gold, and there was a run on Fort Knox. The IMF created the SDR to smooth the rough monetary seas, issuing 9.3 billion SDRs through 1972.

1979: U.S. inflation soared out of control, past 14%. Oil-producing countries fretted the value of their dollar reserves was plunging. The IMF issued 12.1 billion SDRs through 1981.

2009: In response to the Panic of 2008, the IMF issued 182.7 billion SDRs during August and September.



The most provocative proposition in Rickards’ book, however, isn’t hidden global inflation. It’s this: Before the SDR can assume its role as the new leading global asset, China must accumulate a much larger stash of gold. And the gold price is being manipulated for the express purpose of making sure China gets it relatively cheaply.

We’ve long chronicled China’s gold accumulation. When we interviewed Mr. Rickards last year, he explained the rationale: “They want to be in a position where they just raise their hand and say to the world, ‘Hey, we’ve got our gold, now we’re a player. Now when the international monetary system collapses and the world has to reconfigure the system, we get a big seat at the table.’”

In The Death of Money, Rickards goes a step further: He says Western powers are making room at the table for China — using the precise mechanism we described in our “Zero Hour” scenario. Western central banks have “leased” their gold to commercial banks, and those commercial banks have sold that gold to Asian buyers — including the Chinese central bank.

“The gold price must be kept low,” Rickards writes, “until gold holdings are rebalanced among the major economic powers, and the rebalancing must be completed before the collapse of the international monetary system.”

The metric the power brokers are using to judge when China is ready to take its seat at the table? Gold reserves as a percentage of GDP. Recall the Chinese central bank last disclosed its gold holdings in April 2009 — 1,054 tonnes. Conservative estimates put that figure today at 2,710 tonnes. And as you see from the before-and-after tables nearby, it won’t take much more before China’s gold-GDP ratio equals America’s.

“The United States and China have a shared interest in keeping the gold price low,” Rickards writes, “until China acquires its gold… Once the rebalancing is complete, probably in 2015, there will be less reason to suppress gold’s price, because China will not be disadvantaged in the event of a price spike.”

[Singha]

Smug report in washington post


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The Americas
How Brazil, the darling of the developing world, came undone
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Why Brazil may be dealing with an impeachment during the Olympics
Play Video1:44
Brazil’s president is in trouble. President Dilma Rousseff could be facing an impeachment hearing over the summer, right when the country is hosting the world for the Olympic Games. (Dom Phillips,Nick Miroff,Jason Aldag/The Washington Post)
By Nick Miroff and Dom Phillips April 15 at 5:00 AM
BRASILIA — It was called the “Brazil model,” or simply “the Lula model,” back when this country’s economy was roaring and its president, Luiz Inácio Lula da Silva, was a superstar of the developing world.

By balancing support for big business with big social-welfare programs, the union boss turned statesman presided over an era of growth that lifted tens of millions of Brazilians out of poverty. Lula’s presidency cut a new template for a Latin American left that had long insisted class struggle and revolution were the only road to fairness. The coronation came when Brazil was chosen to host the 2016 Summer Olympics, confirming its rise as a global power.

Now Brazil is limping to the Games. Its economy is facing its worst crisis since the 1930s. A Zika virus epidemic rages. And on Sunday, lawmakers will vote on whether to impeach President Dilma Rousseff, Lula’s hand-picked successor. Impeachment appears increasingly likely.

[Zika’s terrifying path]

“We are in an extraordinary situation,” said Otaviano Canuto, the top International Monetary Fund official for Brazil, in an interview. “And it is even more extraordinary because the political dynamic overshadows everything else.”

Supporters and opponents of the impeachment of President Dilma Rousseff protest in Brazil
View Photos Brazilians take to the streets as lawmakers weigh whether to impeach the president.
If two-thirds of the lower house votes to remove Rousseff, and a similar measure clears the upper chamber, Rousseff will be suspended. Senators will then have 180 days to conduct hearings, raising the possibility that while the world’s athletes are jumping, diving and racing for Olympic glory, lawmakers will be conducting impeachment proceedings against the president on live television.

The plunge that Rousseff and the country have taken has laid bare the frailty of Brazil’s commodity-driven growth. Big parts of the Brazil model, it turns out, were glued together with kickbacks, dirty money and lies.

Rousseff herself is not accused of illegal personal enrichment but of improperly using money from government banks to cover budget gaps. A separate inquiry is examining whether her Workers’ Party benefited from an illegal campaign-finance scheme, which could lead to an annulment of her victory and force new elections.


[As Lula faces charges, a divided Brazil wonders: What’s next?]

Rousseff and her supporters, Lula chief among them, have likened the impeachment push to a slow-rolling political “coup,” a loaded term in a country that lived under military rule between 1964 and 1985.

Yet there is little doubt Rousseff would not be facing the mutiny if she were not so politically weak, with an approval rating of 13 percent. The country is facing a 3.8 percent economic contraction for the second year in a row. In a telling sign of how investors and business leaders view the president’s economic policies, every step that takes her closer to impeachment seems to bring a rally on Brazil’s stock market.

“She’s a bad manager, and she’s behaved irresponsibly,” said Eduardo Mufarej, the chief executive of a 5,000-employee company that makes educational materials for private schools.

Vote to impeach Brazil's Rousseff moves one step closer
Play Video1:10
Committee members in Brazil's lower house of Congress voted to recommend impeaching President Dilma Rousseff by a vote of 38 to 27, sending it to the full lower house for a vote on April 17. Rousseff faces charges of breaking budget laws to support her re-election in 2014. (Reuters)
Enrollment in the private school system was 7.8 million students in 2014, but since then, nearly a million students have gone back to the public system because their parents can no longer afford tuition, Mufarej said.

The Lula approach
Lula grew up poor and never finished high school, but his masterstroke as leader was speaking like a populist while governing as a pragmatist. He put conservative bankers in his cabinet and did not attack business leaders or the United States. It was a marked contrast to Venezuela’s Hugo Chávez, who stood for the more confrontational version of Latin American leftism.

Latin America had been simmering with ideological tensions for decades, and Brazil was no different, with a walled-off elite and a huge underclass living in squalor.

Lula, who was elected in 2002, worked diligently to build political consensus. He dramatically expanded a program known as Bolsa Família that provided welfare payments to families whose children showed up for classes and vaccinations, and it became the signature social program of his presidency.


With the economy humming from a global commodity boom and Lula’s government passing the pie around, more than 30 million poor Brazilians found a foothold in a new, aspiring middle class. Lula left office in 2010 with an 87 percent approval rating, so high that President Obama called him “the most popular politician on Earth,” telling reporters: “I love that guy.”

The riches flowing from Brazil’s mines, oil fields and farms fueled a consumer spending binge, but they patched over the structural problems that made Brazil a creaky, onerous place to do business.

A privatization plan to build much-need roads and railways faltered. Productivity remained low since the workforce was badly trained and poorly educated. Companies wasted thousands of hours deciphering a greedy tax system. And all the while, the old way of making deals — lubricated with graft — went unchanged.

Big construction and energy companies grew fat on state contracts and government loans under Lula and Rousseff, and the opportunities for illegal enrichment were infinite. Slush money poured into political campaigns.

The dirt from those years is now being unearthed by a hard-charging team of prosecutors and a tough lower-court federal judge, Sérgio Moro, who is overseeing the investigation of a bribery scheme at national oil company Petrobras. Through wiretaps, raids, arrests and plea deals, the probe has exposed spider webs of corruption throughout Brazil’s elite.

[Brazil’s economy tanks as multibillion-dollar corruption scandal expands]


At least 130 people, including company executives, former lawmakers and others in the pay-to-play scheme have been jailed at one point or another. Nearly two-thirds of federal lawmakers are undergoing some form of investigation or legal probe.

Rousseff lacks her predecessor’s back-slapping personal touch, and critics say she has governed rigidly and intervened in the economy with disastrous results. That criticism extends to her 2012 decision to force power companies to slash electricity rates. As the boom years ended, “a combination of mistakes created a crisis of confidence” in her leadership, said Rafael Cortez, a political analyst at the Sao Paulo consulting firm Tendências.

If lawmakers vote to remove her, she would be replaced by Vice President Michel Temer, her former running mate turned political enemy. Known for his flashy suits and slicked-back hair, he has also been named in the Petrobras inquiry and is potentially facing his own impeachment process.

[Hundreds of thousands protest throughout Brazil]

Next in line is lower-house leader Eduardo Cunha, the figure leading the drive to oust Rousseff. He also happens to be under investigation on suspicion of money laundering, corruption and allegedly funneling $5 million in kickbacks into Swiss bank accounts.

In all, federal police think as much as $12 billion was siphoned from Petrobras, once one of the world’s mightiest oil companies.

Much of the affair has come to light through the “Car Wash” investigation, which has reached all the way to Lula. Brazilians were shocked last month to see him taken in for questioning by federal police amid allegations that he received properties and other gifts from former government contractors. Rousseff tried to appoint Lula to her cabinet as chief of staff, a move that would afford him broad legal protections, but a judge blocked the attempt, opening yet another courtroom battle.


With both sides digging political trenches, anger has surged in a famously easygoing country whose unofficial national symbol is a beach sandal.

“I don’t remember another moment in Brazilian history when passions were as visceral as they are now,”said Ricardo Boechat, a popular radio and television commentator. “Not even during the military dictatorship.”

A symbol of polarization
With the expectation of large pro- and anti- demonstrations outside Congress during the impeachment vote, prison laborers were brought into the capital last week to put up a separation barrier between the two sides. The structure was the most poignant symbol yet of Brazilians’ polarization.

It has become something of a cliche to say that Brazil will inevitably emerge stronger from the corruption investigations and the political bonfire they’ve kindled. Another possibility is that the damage will be so extensive that the country and its politicians will languish in scandal and cynicism for years to come.

[Brazil’s new hero is a nerdy judge who is tough on official corruption]

No single figure has emerged as a strong, corruption-free alternative to Brazil’s current leaders. Lula would be eligible to run again in 2018 and has all but said he plans to do so, meaning he could soon be back in power — if he does not end up in prison for corruption. He remains popular among Brazilians who remember his presidency as the best years of their lives.

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“This whole crisis is about the possibility that Lula will run again in 2018,” said Wagner Santana, the secretary general of the metalworkers union where Lula was president in the late 1970s, before he went on to found the Workers’ Party.

Santana sees the anti-corruption drive as a witch hunt and the impeachment attempt against Rousseff as a naked power grab. But many Brazilians, including quite a few who once cheered Lula, are fed up.

Santana’s office at the union’s shiny headquarters on the industrial outskirts of Sao Paulo looks out on new condominium towers that sprouted during the boom, but also the slums that have grown with the crisis. Between them is a massive Volkswagen plant, the largest in South America, where many of the union’s rank and file are employed.

The plant has the capacity to produce 390,000 cars a year, Santana said. This year it will make fewer than half that number.

Read more:

Will Brazil impeach its president? Here’s a handy guide to the process

Does Brazil’s new speaker of the lower house want the government to fail?

Zika exposes class differences in Brazil, where most victims are poor


Nick Miroff is a Latin America correspondent for The Post, roaming from the U.S.-Mexico borderlands to South America’s southern cone. He has been a staff writer since 2006.

Dom Phillips is The Post's correspondent in Rio de Janeiro. He has previously written for The Times, Guardian and Sunday Times.

[Christopher Sidor]

^^^
There is a lot of truth in what was written, that is if one ignores the tone. Lula did massive handouts. He gave his people fish. He did not gave his people the tools and skills to catch a fish and make sure that the infra to fish was fair the just. And the Brazilian people loved him for that. There in lies the tale of woe. This can be seen in India too in different forms.

[Austin]

International Monetary Fund 2015

[Neshant]

This whole taxation, cash ban, banker bail-ins & bonuses, monetary corruption and wealth confiscation trend in the west is moving in a very scary direction.

No mention of the fact that the wealth produced by workers in productive society actually belongs to the workers.

Western governments increasingly assume the attitude that all wealth is the property of the government and private bankers who control the govt will decide how much the people get to keep.

Unless India avoids mindlessly apeing the west's corruption of capitalism and banker cronyism.... and unless India avoids the growth of the useless middleman "industry" called banking which is the source of corruption & theft from productive society - it too will be sucked into a vortex of destroying productive society.

[Neshant]

The selective leaking of information from the so called Panama Papers is suspicious.

Hardly any western leaders named.

[Austin]

^^ I just read one leader named and highlighted in many Western MSM during Panama Paper scandal Putin

[Austin]

Peter Shiff : Real Economic Earthquake Is In Our Future, Not Our Past

[chanakyaa]

Brazil impeachment backers take strong lead in Congress vote

[Christopher Sidor]

This is not good. Just as excessive price is bad so is too low a price. Just as excessive price hurts so does a low price. The sweet spot is something in the middle where it does not hurt our economy while does not discourage our march towards non-carbon energy sources.

Grand Oil Bargain Is Victim of Saudi Arabia's Iran Fixation ---- Bloomberg dated 18-April-2016


The cons of low price
1) It enables non-efficient companies to hide behind low input costs.
2) It discourages the growth of alternative energy sources.
3) It discourages the rush to be more efficient.


The Cons of high price
1) It mis-allocates capital. Consider the current case where several Central banks have to monitor their banks exposure to Oil&Gas sector.
2) It recedes the incentive for resource rich countries to reform and integrate with the world. These countries tend to become insular or have a holier-than-though attitude. Consider the case of former President of Brazil Lula who claimed that the 2008 financial crisis was "caused by white men with blue eyes"

KSA is being as pragmatic as ever. Without Iran acceding to the agreement, it makes no sense for KSA to loose revenue and market share just to see Iran reap the benefit. After all the world will see it as KSA cut back its production which it did not have to, but Iran did not. Hence Iran is more dependable supplier than KSA.
In case of Iran which was whip lashed by the American sanctions and which has just come out of the sanctions what its deputy oil minister had said also makes sense.

Iran had no intention of voluntarily sanctioning itself.

Iran needs the revenue to rebuild its economy. Desperately.

The Shale boom has put a floor on the price of the hydro Carbon energy sources. Atleast for the next 7-8 years. If the price of Oil & Gas goes up the shale fields and oil tar sand fields will be bought back into Production driving the price down. Added to this the push to non-hydrocarbon energy sources world over will be a further factor.

[Neshant]

All of central banking is about mis-allocation of capital. Some guy sitting up in an ivory tower printing money (aka counterfeiting) and setting interest rates (aka price fixing) under a delusion that he knows what's best inevitably leads to disaster.

[chanakyaa]

China Launches Yuan Gold Fix To "Exert More Control Over Price Of Gold"

Overnight a historic event took place when China, the world's top gold consumer, launched a yuan-denominated gold benchmark as had been previewed here previously, in what Reuters dubbed "an ambitious step to exert more control over the pricing of the metal and boost its influence in the global bullion market." Considering the now officially-confirmed rigging of the gold and silver fix courtesy of last week's Deutsche Bank settlement, this is hardly bad news and may finally lead to some rigging cartel and central bank-free price discovery. Or it may not, because China would enjoy nothing more than continuing to accumulate gold at lower prices.

The first Chinese benchmark price, derived from a 1 kg-contract traded by 18 participants on the Shanghai Gold Exchange (SGE), was set at 256.92 yuan ($39.69) per gram on Tuesday, equivalent to $1,234.50/ounce.

China's gold benchmark is the culmination of efforts by China over the last few years to reform its domestic gold market in a bid to have a bigger say in the bullion industry, long dominated by London where the global spot benchmark price is currently set. As is well known, as the world's top producer, importer and consumer of gold, China has balked at having to depend on a dollar price in international transactions, and believes its market weight should entitle it to set the price of gold.

The new benchmark may not be an immediate threat to London, but industry players say over time China could set the price of the metal, especially if the yuan become fully convertible.

Cited by Reuters, Pan Gongsheng, deputy governor of the People's Bank of China which has been disclosing gold purchases every month since last summer, said that "the Shanghai gold benchmark will provide a fair and tradable yuan-denominated gold fix price ... will help improve yuan pricing mechanism and promote internationalization of the Chinese gold market."

The mechanics of the Shanghai fix are comparable to those of London: the benchmark price will be set twice a day based on a few minutes of trading in each session. The London benchmark, quoted in dollars per ounce, is set via a twice-daily auction on an electronic platform with 12 participants.

The 18 trading members in the yuan price-setting process includes China's big four state-owned banks, foreign banks Standard Chartered and ANZ, the world's top jewelry retailer Chow Tai Fook and two of China's top gold miners.

When discussing the Chinese gold fix previously, World Gold Council CEO Aram Shishmanian said that "it is a stepping stone to a new multi-axis trading market consisting of London, New York and Shanghai and signals the continuing shift in demand from West to East."

"As the market expands to reflect the growing interest in gold by Chinese consumers, so too will China's influence increase on the global gold market."

It may already be working: according to Reuters, one reason for today's spike in silver is due to "heavy buying of silver in Shanghai, and that has triggered buying in gold as well," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Finally, when Chinese capital capital flight into Canadian real estate and offshore tax havens is curbed, we expected that gold could well follow the path of bitcoin, which has doubled since our article presenting it as an attractive alternative to avoiding Chinese capital controls.

[chanakyaa]

This is not good. Just as excessive price is bad so is too low a price. Just as excessive price hurts so does a low price. The sweet spot is something in the middle where it does not hurt our economy while does not discourage our march towards non-carbon energy sources.

Grand Oil Bargain Is Victim of Saudi Arabia's Iran Fixation ---- Bloomberg dated 18-April-2016

Not sure if this is good or bad, but the dramatic decline in oil prices and the cracks developing in the OPEC cartel is a fantastic example of real life application of "Prisoner's Dilemma" (in co-operation of MSM) to break the oil monopoly....(detailed post later).

[panduranghari]

Eric Hunsader: The Financial System is 'Absolutely, Positively Rigged'
And the abuses are getting worse, not better
Eric Hunsader, founder of Nanex, has been at the vanguard of warning about the dangers and the rampant fraud that the rise of high-frequency trading (HFT) algorithims have let loose in today's financial markets.

Every once in a while I look at longer term fundamentals l and, when I did that study, I had to verify it many different times and many different ways because I just didn’t believe it. Basically, between 2 and 3:00am -- you buy at 2:00am and sell at 3:00am -- you would have captured half of the gains and none of the draw down since 2005, which is just unbelievable that it would have that kind of weight. You would expect every hour, over a long period of time, to be equal. It should be randomly equal. But certainly the early morning hours really stand out. And I don’t have an answer.
I would have thought after I first published that chart last August the anomaly would have been ameliorated or something would have shifted because now the information is out there and I know a lot of people saw that chart – it was widely talked about. I would have expected an effect. But the only effect seems to be it has accelerated to be more egregious than it was before.

[panduranghari]

ECB not reducing rates further means, Fed is even more trouble. They cannot hold. If they raise the house of cards comes down. If they cut them, it will be the coup de grâce.

I wonder what Janet will do?

[Christopher Sidor]

^^^^
Janet will raise rates. Please note her remit is the stability of American economy and having the highest optimum employment possible. As far as the world's economy is concerned, she will resist as long as she is sure that her raising the rates will not adversely impact the American economy. She held of last time, this time most likely she will not. Let us not forget US economy is doing great.

Offcourse her raising interest rates is going to be horrid for the Unicorns(Yahoo, Uber, AirBnb, Flipkart, etc) as well as the Gold sector and the emerging markets like India. Nothing we can do about it, just grin and bear it. Somebody somewhere had said something about exorbitant privilege being held by America in the recent past.

[TSJones]

if Yellen raises interest rates then it makes it easier for other countries like India and China to sell things to the US.

as for China tying the Yuan to the price of Gold to control it?

..........and sell their manufactured stuff to who exactly?

Like we can't make their junk somewhere else?

[panduranghari]

^^^^
Janet will raise rates. Please note her remit is the stability of American economy and having the highest optimum employment possible.

Then she should have raised the rates in March. As the numbers now are worse than what they were in March.

As far as the world's economy is concerned, she will resist as long as she is sure that her raising the rates will not adversely impact the American economy.

As said the PMI's were better leading to last meeting than what they are leading to this months meeting. Then why would she raise?

She held of last time, this time most likely she will not.

Why should she not hold? Raising rates in decreasing numbers is not wise.

Let us not forget US economy is doing great. .

Based on what exactly? Stock market> or Bond market>

[chanakyaa]

^^^^
Janet will raise rates.

How any rate hikes do you project in 2016? 1, 2 or 3?

[Austin]

David Stockman Interview - Japan, Stock Markets, Oil, Banking Crisis in 2016 & China 30x Ponzi

[Neshant]

[Christopher Sidor]

^^^^
Janet will raise rates.

How any rate hikes do you project in 2016? 1, 2 or 3?

I believe that question has already been answered in the release of latest MoM of Fed FOMC. It is expected that there will be two hikes this year each of 25 bps, I.e. 0.25%. Though with the negative interest rates being the norm in certain countries and with PRC doing it own round of easing this number might go up. I wonder what will happen next year, 2017.

[Neshant]

China's share of he SDR at the IMF is being increased.

A clue as to what's to come.