Bharat Rakshak

In TRUMPED! A Nation on the Brink of Ruin… And How to Bring It Back, David Stockman brings us an insider-turned-iconoclast’s report on how 30 years of financial and political misrule by the Washington/Wall Street elites have brought the U.S. to the brink of ruin.

He shows that the Fed’s destructive ZIRP and QE policies have buried Flyover America in debt while clobbering it with shrinking real wages and vanishing job opportunities. At the same time, the bicoastal elites have prospered mightily from the massive inflation of financial assets in the Wall Street casino and the debt-fueled expansion of Imperial Washington’s domestic rackets and global interventions.

Stockman argues that Donald Trump’s improbable candidacy happened because Flyover America has had enough of a rigged system that benefits the few but has failed to delivery economic recovery and real prosperity at home and a safer and more stable world abroad.

Stockman’s book is no testimonial on behalf of Trump’s candidacy, and contends that much of what he advocates is wrong-headed or downright reprehensible. But it does salute him as the rallying force for Main Street political insurrection because the existing regime of Bubble Finance on Wall Street and statist aggrandizement in Washington threatens incalculable harm.

Stockman also argues that there remains a way forward. He suggests the “political outlaw” who considers himself to be the world’s greatest dealmaker would need to “make ten great deals” to bring American back from the brink. These include a Peace Deal, a Jobs Deal, a Sound Money Deal, a Super Glass-Steagall Deal, A Liberty Deal and five more.

In this trenchant, wide-ranging and unvarnished account, Stockman draws on his unique 40-year career in Washington and Wall Street. After a career as a Capitol Hill staffer, two-term member of Congress and ultimately as President Ronald Reagan’s budget director, Stockman then went to Wall Street. For two decades as an investment banker and private equity investor he had a front row seat as the nation’s financial markets mutated into today’s Bubble Finance casinos.

Gyan wrote:But no, there will not be any crash. Just infinite stagnation.

Austin wrote:Chart of The Day: Corporate Debt-To-GDP Ratio At Peak Recession Levels

panduranghari wrote:Austin,

Please watch the extended crash course which is freely available on Martensons website. It will change the way you see 'things'.

Here is the link
http://www.peakprosperity.com/crashcourse

Gyan wrote:There will not be any large scale panic Crash in USA. USA Will simply increase fiscal deficit and print money.

Gyan wrote: Even if the whole world collapses, USA will just stand relatively taller.

Gyan wrote:USA Is too powerful and world is NOT about justice.

Negotiations between EU and UK cannot start until after German elections next year, says former European council president...

Former Federal Reserve Chairman Alan Greenspan voiced concern that the U.S. economic and political system could be undermined by what he called “crazies.”

“It is the worst economic and political environment that I’ve ever been remotely related to,” Greenspan, 90, told a conference in Washington Tuesday evening sponsored by Stanford University and the University of Chicago.

On the economic front, the U.S. is headed toward stagflation -- a combination of weak demand and elevated inflation, according to Greenspan. “Politically, I haven’t a clue how this comes out.”

“We’re not in a stable equilibrium,” he said. “I hope we can all find a way out because this is too great a country to be undermined, by how should I say it, crazies.”

Greenspan, who served from 1974-1977 in the Republican presidential administration of the late Gerald Ford, declined to comment on Wednesday when asked whom he was referring to.

In his comments on Tuesday, Greenspan traced the rise of populism in the U.S. all the way back to 1896, when William Jennings Bryan gave his “Cross of Gold” speech at the Democratic Party national convention opposing the gold standard.

Greenspan repeated his concern on Tuesday that increased government spending on social security and healthcare are crowding out private investment and leading to slower economic growth. He bemoaned the fact that neither presidential candidate was talking about reining in those expenditures. “Nobody wants to discuss it” for fear of a political backlash, he said.

In the past, Republican administrations on average countenanced bigger expansions in these entitlement outlays than Democrats, Greenspan said. In that regard, former Democratic President Bill Clinton -- Hillary’s husband -- “turned out to be the best Republican,” he said.

panduranghari wrote:He wrote an essay while he was a young man on how important gold is in the financial system and all through his professional career he tried his best to keep it out of the financial centre stage. What a hypocrite.

Russia’s central banker, Elvira Nabiullina, continues to be the most impressive central banker in the world. It appears she has completely rejected Keynesian money pumping orthodoxy and its strange new view that a little price inflation is good. She holds the heroic view that it is investment and increasing efficiencies that boost growth in an economy.

Reports Bloomberg: Nabiullina has a message for Russian businesses that may be finding it difficult to adapt to positive real interest rates: get used to it.

The Bank of Russia will continue its “moderately tight” monetary policy, with the inflation rate now below its benchmark for the past eight months, Nabiullina told a banking conference in the Black Sea resort city of Sochi today. Keeping real interest rates stable in positive territory is an “important condition for healthy economic growth,” she said.


The main drivers of growth should be “fixed investment, structural changes in the economy and efficiency increases,” Nabiullina said. “It’s necessary to safeguard household deposits against inflationary depreciation to support a high level of savings and to create the conditions to transform them into investment.”


“We see the stability of rates — their predictable and gradual decrease as far as inflation slows — as an important factor in stabilizing the economy,” she said. It’s also “one of the conditions for a shift to growth, based in particular on higher labor productivity and efficiency.”

The establishment of a clearing bank in the US will promote the growth of renminbi activity in the US and help accommodate an increase in volumes and demand for renminbi products and services,” said Timothy Geithner, former US Treasury secretary and co-chair of the working group. Michael Bloomberg, former New York City mayor, co-chairs the group, along with Henry Paulson, another former US Treasury secretary.

On October 1 the renminbi begins an exciting new chapter in its journey to becoming a global currency.

On that day the Chinese currency will officially enter the Special Drawing Right (SDR) currency basket, joining the US dollar, the euro, the Japanese yen and the British pound in the elite “club” of global reserve currencies.

The IMF’s decision to admit the renminbi to this select grouping marks an important seal of approval because it signifies that the renminbi is widely used and widely traded, even though it is still subject to some capital account restrictions.

A currency does not need to be part of the SDR basket to become a reserve currency; Similarly, SDR inclusion does not automatically translate into reserve-currency status. It is ultimately up to central banks to decide whether to hold assets denominated in a particular currency — and how much to hold.

What, then, is the significance of the renminbi joining the SDR basket, given the SDR is not a currency and few goods and services are priced in it?

First, it is a clear recognition of the renminbi’s development as a global medium of exchange. The “people’s currency” is now both widely-used (ranked fifth by SWIFT, a network that banks around the world use to move money) and widely traded (ranked eighth by the Bank for International Settlements, a central bank for central banks).

More importantly, admittance into the SDR basket serves as a harbinger: the renminbi’s role in the global arena will continue to expand across the board.

The renminbi’s current share of global payments is less than 2 per cent, whereas the dollar and the euro together account for more than 70 per cent. As companies and investors step up their use of the Chinese currency, this share will rise.

We believe that by 2020 half China’s trade will be settled in its own currency, from 26 per cent in 2015. Improved payment systems such as China’s Cross-Border International Payment System will help oil the wheels of this activity, while the IMF’s seal of approval should boost confidence that the renminbi is liquid and stable.

Similarly, the renminbi’s share of global central bank reserves will also increase. At the moment, the dollar and the euro together account for nearly 85 per cent of the world’s reserves, while the renminbi is not even recorded in the IMF’s regular surveys on central bank holdings. Come October 1 this will change: the renminbi will be separately identified in the IMF’s official reserves database, while the RMB proportion of central banks’ reserves will grow.

This is borne out by an HSBC survey conducted earlier this year of 77 central banks together managing more than half the world’s reserves. Thirty-two indicated they already hold investments denominated in renminbi — up from three in 2012. The findings also showed the renminbi’s share of global reserves will rise to 7 per cent in 2020 and 10 per cent by 2025. Also, the central banks’ polled indicated they might invest up to 6.7 per cent of reserves in the renminbi by 2025; up from 5.5 per cent a year earlier.

Granted, central banks and reserves managers will not all buy renminbi assets overnight, but the trend is clear. In fact, the Monetary Authority of Singapore announced in June it would include its renminbi financial investments as part of official foreign reserves.

Meanwhile, the gradual liberalisation of China’s capital account is opening new ways for overseas investors — including central banks — to buy into a widening array of RMB-denominated assets. Take the recently announced Shenzhen-Hong Kong Stock Connect scheme. It expands the list of mainland-listed companies in which overseas investors can trade; it also widens the range of Hong Kong-listed stocks mainland investors can trade.

Another area of opening is China’s domestic bond market, already the world’s third-largest, after the US and Japan and with huge growth potential. China has systematically rolled out measures to increase the level of foreign participation.

Last year China reopened the so-called Panda Bond market, again allowing foreign entities to issue renminbi-denominated debt on the mainland. In February the authorities opened the China Interbank Bond Market to investors such as foreign banks and pension funds. In August the World Bank became the first entity approved to issue SDR-denominated bonds in China.

In many ways, October 1 represents the culmination of more than a decade of change for what was once an almost exclusively domestic currency. But more change will come as the renminbi moves steadily towards becoming a truly international currency that is used by companies, investors and individuals around the globe.

Peter Wong is deputy chairman and chief executive of Hong Kong and Shanghai Banking Corporation.