Perspectives on the global economic changes

TSJones · Post by **TSJones** » 07 Jan 2014 20:44

Neshant wrote:a good old fashioned Ponzi scheme.

... which no doubt is what ALL of banking is.

______________

India Savings Deposit Scam Collapse Leaves Thousands Penniless

http://www.bloomberg.com/news/2014-01-0 ... iless.html

Sudipta Sen was on the run when police arrested him on April 23 at Hotel Snow Land, a resort with views of the Himalayas in Sonamarg, India, about 2,700 kilometers northwest of his Kolkata base.

Sen’s Saradha Realty India Ltd., the anchor of an empire that took in small deposits and promised payouts of land, apartments or a refund of clients’ money with interest rates as high as 24 percent, was defaulting on thousands of deals. Employees of Sen’s media companies hadn’t gotten paychecks in months. As cash dried up, 1.74 million customers saw savings vanish, Bloomberg Markets magazine will report in its February issue.

The upheaval didn’t end with Saradha. Panicked depositors rushed to pull money from similar companies. Since April, more than 34 people have committed suicide, 13 of them Saradha agents and investors. A 50-year-old domestic helper south of Kolkata in Baruipur, one of many hubs of Sen’s activities, set herself ablaze after losing 30,000 rupees ($482).

Saradha Group, the parent of Saradha Realty, was among hundreds of unlicensed deposit-taking enterprises that serve India’s poor -- and skirt regulators.

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Undermining Confidence

Harm to small investors undermines confidence in the financial system. When Indians lose cash, they put money into physical assets such as gold, which India imports, Shah says. That reduces household capital that powers the economy.

India raised the tax on gold imports three times in 2013 to curb demand and tackle a record $87.8 billion current-account deficit that weakened the rupee in August to an all-time low of 68.845 to the dollar.

“Beyond the actual dollars lost, these Ponzi schemes contaminate people’s confidence, and the financial markets become weak,” Shah says. “To have a comprehensive, vibrant economy, you need to have households that have confidence in an array of financial institutions and products, whether it’s a bank or mutual funds.”

Except that's not banking. That's a real estate investment scam. I always take the view that if it sounds too good to be true (excessive high rates of return) then it usually is not true.

TSJones · Post by **TSJones** » 07 Jan 2014 20:46

panduranghari wrote:
Neshant wrote:We'll see where gold prices head in the next few years.

The "stronger economy" looks 100% bogus to me. There is not a single new productive industry that has come into existence.

It is the same feeling I had about the "stronger economy" from 2002 to 2008. I could not see what productive industry was powering so called economic growth. For a while I thought I did not understand economics. Eventually reality caught up.

Right now there is absolute zero powering economic growth and the jobs created are not high skilled professions. Everyone knows the stock market is being rigged.

Its just a question of how long this game can go on and what the aftermath of the inevitable crash looks like once reality once again catches up.
But gold price will fall. You need to understand gold price is not the real price discovery from the digging of the earth. It also includes a lot of paper gold like ETF. IMO the current comex price is the paper price mostly.

That's why you limit precious metals to a 15 to 20 percent of your portfolio. Unless of course you are sure everything is a house of cards and is going to collapse.

Can't lose!

panduranghari · Post by **panduranghari** » 07 Jan 2014 22:27

^^ I am not limited to 15% of my portfolio in PM. I am into gold. I am into physical gold 90%. i.e 90% of my wealth is in Gold. Stored in Switzerland so not even in personal possession. There is about 2% in silver which I am selling regularly. I am not into platinum or palladium as they are non monetary metals. I have the rest in cash. I even sold 3 properties recently in the UK. The proceeds I in turn converted into a precious metal of preference i.e. gold.

I do not care about the price of gold. It gives me the leeway to ensure my kids have enough money to pursue their dreams.

Christopher Sidor · Post by **Christopher Sidor** » 07 Jan 2014 23:19

TSJones wrote:
Neshant wrote:a good old fashioned Ponzi scheme.

... which no doubt is what ALL of banking is.

______________

India Savings Deposit Scam Collapse Leaves Thousands Penniless

http://www.bloomberg.com/news/2014-01-0 ... iless.html

The questions that one should be asking is why are not our commercial banks or mutual funds able to serve these people?

Neshant · Post by **Neshant** » 08 Jan 2014 10:30

panduranghari wrote:Stored in Switzerland so not even in personal possession.

I will never understand how anyone can consider Switzerland a safe place to keep their wealth. Its full of bankers and corruption money that periodically vanishes into the pockets of the Swiss bankers. Its economy is built entirely on attracting corruption, bribery & mafia money as well as cheating large bank CUSTOMERS of their wealth whenever possible.

These banking gundas had for years stashed away Nazi gold & money stolen from Jews murdered during WWII and claimed they did not have any of it until some insider spilled the beans. All the while for decades, they made a quite fortune off it.

I also remember reading that the descendants of the Emperor of Ethiopia Haile Selassie tried to claim wealth he has stashed in banks there for them - only to be met with denials from the Swiss bankers that such wealth existed.

In short, these guys are #1 chores.

Also in times of crisis, small countries (e.g. Iceland, Ireland, Greece..etc) tend to collapse with astonishing speed and swallow up wealth like a mini black hole.

Do not place your wealth there as in times of crisis, you'll never get any of it back. Always keep your wealth close at hand preferably within gun shot range.

I can't remember who coined the phrase for gold but it rings true time and again - "If you don't hold it, you don't own it."

Neshant · Post by **Neshant** » 08 Jan 2014 10:39

TSJones wrote: Except that's not banking. That's a real estate investment scam. I always take the view that if it sounds too good to be true (excessive high rates of return) then it usually is not true.

Banking in general is less an industry and more a scam.

There nothing of value this useless middleman industry creates that justify its size of multi-trillions of dollars. Since it produces nothing of value, the only way it can obtain such a large share of the wealth of society is by stealing it from those that produce the wealth.

Fiat money, inflation, taxation, bailouts & bonuses, market rigging, political bribery, currency manipulation, stuffing ex-employees into regulatory & governmental positions and more recently.. outright fraud without prosecution is the way that wealth is stolen.

Austin · Post by **Austin** » 08 Jan 2014 12:04

panduranghari wrote:^^ I am not limited to 15% of my portfolio in PM. I am into gold. I am into physical gold 90%. i.e 90% of my wealth is in Gold. Stored in Switzerland so not even in personal possession. There is about 2% in silver which I am selling regularly. I am not into platinum or palladium as they are non monetary metals. I have the rest in cash. I even sold 3 properties recently in the UK. The proceeds I in turn converted into a precious metal of preference i.e. gold.

I do not care about the price of gold. It gives me the leeway to ensure my kids have enough money to pursue their dreams.

WoW ! Never seen some one having so much Faith in Gold ..........Wish I could say your Faith will Save you one Day

panduranghari · Post by **panduranghari** » 08 Jan 2014 16:26

Neshant wrote:
panduranghari wrote:Stored in Switzerland so not even in personal possession.
I will never understand how anyone can consider Switzerland a safe place to keep their wealth. Its full of bankers and corruption money that periodically vanishes into the pockets of the Swiss bankers. Its economy is built entirely on attracting corruption, bribery & mafia money as well as cheating large bank CUSTOMERS of their wealth whenever possible.

These banking gundas had for years stashed away Nazi gold & money stolen from Jews murdered during WWII and claimed they did not have any of it until some insider spilled the beans. All the while for decades, they made a quite fortune off it.

I also remember reading that the descendants of the Emperor of Ethiopia Haile Selassie tried to claim wealth he has stashed in banks there for them - only to be met with denials from the Swiss bankers that such wealth existed.

In short, these guys are #1 chores.

Also in times of crisis, small countries (e.g. Iceland, Ireland, Greece..etc) tend to collapse with astonishing speed and swallow up wealth like a mini black hole.

Do not place your wealth there as in times of crisis, you'll never get any of it back. Always keep your wealth close at hand preferably within gun shot range.

I can't remember who coined the phrase for gold but it rings true time and again - "If you don't hold it, you don't own it."

Thanks for your POV. I had thought about all these things. The problem was when the amount in possession started adding up it was insane to store it at home. There was a problem with safety deposit box in London which were raided 3 years ago and contents confiscated. You had to prove you owned it to get it back. Of course not a problem but a hassle nevertheless.

Have you heard of James Turk who started gold money?

http://www.goldmoney.com/FAQ/Metal-Storage#ID108

What I bought until 2009 I store with Gold Switzerland

http://goldswitzerland.com/storage-precious-metals/
http://goldswitzerland.com/why-goldswit ... servation/

Rest with Gold Money.

I cannot afford private security which Brinks provide for Goldmoney and goldswitzerland.

Austin · Post by **Austin** » 08 Jan 2014 16:36

This is suppose to be official number for Debt for US and World

http://www.usdebtclock.org/world-debt-clock.html

Looking at these numbers countries like Germany ( 212 % ) , France ( 269 % ) , England ( 481 % ) have so high external Debt to GDP Ratio and even Public Debt Ratio approaching 90 % ... compared that to US for 101 % for external Debt to GDP and 79 % for Public Debt.

why are these European countries even solvent and how do they survive such high exterday debt 200 % more than GDP and How does the Euro survive ?

panduranghari · Post by **panduranghari** » 08 Jan 2014 16:57

Austin wrote:
panduranghari wrote:^^ I am not limited to 15% of my portfolio in PM. I am into gold. I am into physical gold 90%. i.e 90% of my wealth is in Gold. Stored in Switzerland so not even in personal possession. There is about 2% in silver which I am selling regularly. I am not into platinum or palladium as they are non monetary metals. I have the rest in cash. I even sold 3 properties recently in the UK. The proceeds I in turn converted into a precious metal of preference i.e. gold.

I do not care about the price of gold. It gives me the leeway to ensure my kids have enough money to pursue their dreams.
WoW ! Never seen some one having so much Faith in Gold ..........Wish I could say your Faith will Save you one Day

Only buy as much gold as you understand was what my father told me.

Christopher Sidor · Post by **Christopher Sidor** » 08 Jan 2014 19:01

Goldman to JPMorgan Say Sell Emerging Markets After Slide --- Bloomberg Dated 8-Jan-2014

"Only when the tide goes out do you discover who's been swimming naked." Well time is coming closer to see who has been swimming naked again

“The world not long ago was so mesmerized by the emerging markets without distinguishing the good from the bad,” Stephen Jen, a partner at SLJ Macro Partners LLP who correctly predicted the selloff in developing nations last year, said in a phone interview from London on Dec. 18. “The cost of capital will start to normalize and that’s when we see the truth being revealed in these markets.”
...
...
“There will be a competition for marginal capital flows,” Zervos said in a phone interview on Dec. 20 from New York. “There will be winners and losers.” Investors should favor the Mexican peso, South Korean won and Indian rupee, while avoiding the rand, real and rupiah, she said.
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Even a small capital outflow and increase in borrowing costs will have adverse impacts on governments and companies in developing countries as debt levels increased, according to Morgan Stanley.

Neshant · Post by **Neshant** » 08 Jan 2014 19:01

Have you heard of James Turk who started gold money?

If troubled times do arrive, it will be very easy for govts to simply dip into his GoldMoney vaults in Switzerland, Singapore or wherever and do a "bail-in" on it. Basically just steal it as was the case in Cyprus.

US recently got Switzerland to hand over a long list of depositors for tax purposes. I don't think its a stretch that they could ask Switzerland to detail the contents of various lockers for a "special tax". They won't take the gold itself. Just a note saying you have the gold so the 50% "wealth tax" can be levied.

Govts & bankers will throw everyone under the bus well before they let their own power & wealth erode.

Austin · Post by **Austin** » 08 Jan 2014 21:21

US trade deficit drops to its lowest since 2009 ( RT )

The US trade deficit has fallen to its lowest level since October 2009, with the trade gap dropping 12.9 percent to $34.3 billion, the Commerce Department stated on Tuesday. The deficit stood at $39.3 billion in October. Exports have soared to record levels, while weak oil prices have kept the import bill down. The report contributes to existing postulation that the economy is positioned for faster growth based on assessments of employment, manufacturing and consumer spending.

TSJones · Post by **TSJones** » 09 Jan 2014 07:10

Indian stock market investors reaped dividends in 2013

http://www.financialexpress.com/news/in ... dy/1214206

Austin · Post by **Austin** » 09 Jan 2014 19:52

‘Wave of disaster’ brewing in U.S. as more borrowers miss payments on housing bubble-era loans

Austin · Post by **Austin** » 09 Jan 2014 19:54

A housing bubble in UK ?

In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss the Ka-Boom! and Ka-Bust! economics of extinction in the UK property market as Thatcher’s slow-motion housing time-bomb ticks away under the British economy, where demand continues to outstrip supply by a factor of 2-to-1 and where one woman being forced out of social housing complains: “I’m sure if they had their way, they would kill us. I really believe that.” In the second half, Max interviews Liam Halligan of the Telegraph about austerity, extinction economics, bitcoin and all those towns up North, of which Max can only name three.

http://rt.com/shows/keiser-report/episo ... eiser-232/

Neshant · Post by **Neshant** » 12 Jan 2014 10:37

banking is a parasitic scam that drains the productive energies of society

US to EU: Use More Public Funds to Backstop Your Banks

U.S. Treasury Secretary Jack Lew has a message for the European Union: use public tax dollars to bail out your banks.

Speaking in Paris on Tuesday, Lew encouraged the EU—which responded to the 2008 financial crash by imposing devastating austerity cuts to social safety nets and and slashing public expenditures—to create shared institutions to save failing banks.

"The more capital that there is in European banks, and the stronger the backstops are, the better it is for the European economy, the U.S. economy and the world economy," he said.

According to a Reuters analysis, Lew's Tuesday speech is part of a two day tour —that also includes Berlin and Lisbon—to "convey concerns about the euro zone's need to revitalize banks crippled by a debt crisis."

http://www.blacklistednews.com/US_to_EU ... 36iqG.dpuf

Neshant · Post by **Neshant** » 12 Jan 2014 10:58

1930s-style debt defaults likely, says IMF research

Many advanced economies are likely to require financial repression, outright debt restructuring, higher inflation and a variety of capital controls, a new research paper commissioned by the International Monetary Fund (IMF) has warned.

The magnitude of today's debt in Western economies will mean fiscal austerity will not be sufficient, Harvard economists Carmen Reinhart and Kenneth Rogoff said in the report, as policymakers continue to underestimate the depth and duration of the downturn.

http://www.cnbc.com/id/101307602

Austin · Post by **Austin** » 12 Jan 2014 16:04

Neshant wrote:1930s-style debt defaults likely, says IMF research

Many advanced economies are likely to require financial repression, outright debt restructuring, higher inflation and a variety of capital controls, a new research paper commissioned by the International Monetary Fund (IMF) has warned.

Isnt that a tall thing to ask for any Western Politician to do even if it is the right thing to do .... what kind of capital controls are they asking for ?

The magnitude of today's debt in Western economies will mean fiscal austerity will not be sufficient, Harvard economists Carmen Reinhart and Kenneth Rogoff said in the report, as policymakers continue to underestimate the depth and duration of the downturn.

http://www.cnbc.com/id/101307602

Western countries that have chosen austerity route like those in EU are not really growing beyond perhaps Germany .....and country that have chosen to print money like US are adding growth at the cost of rising debt.

No one had figured out how to remain austere and still get growth ....atleast its not so successful yet.

Austin · Post by **Austin** » 12 Jan 2014 16:18

Japan's Debt Problem Visualized

svinayak · Post by **svinayak** » 12 Jan 2014 21:34

svinayak · Post by **svinayak** » 12 Jan 2014 21:37

list of 20 countries ranked by current account balance. Could you explain why socialist leaning countries like Germany, China, Netherlands, Norway, Russia, Japan, Singapore, Sweden and Denmark are in the top 20, while the USA has the highest debt to The PRC's socialist banks in the world? Thanks.

1. Germany
$ 238,500,000,000

2 China
$ 193,100,000,000

3 Saudi Arabia
$ 164,800,000,000

4 Kuwait
$ 80,330,000,000

5 Netherlands
$ 77,020,000,000

6 Norway
$ 71,870,000,000

7 Russia
$ 71,430,000,000

8 United Arab Emirates
$ 66,560,000,000

9 Switzerland
$ 63,820,000,000

10 Qatar
$ 61,590,000,000

11 Japan
$ 60,800,000,000

12 Singapore
$ 51,440,000,000

13 Taiwan
$ 49,920,000,000

14 Korea, South
$ 43,340,000,000

15 Sweden
$ 36,310,000,000

16 Iraq
$ 29,540,000,000

17 Libya
$ 27,170,000,000

18 Nigeria
$ 20,350,000,000

19 Malaysia
$ 18,640,000,000

20 Denmark
$ 17,440,000,000

chola · Post by **chola** » 12 Jan 2014 21:52

Why bring up socialism as a defining trait? You can point out that a good chunk of the list are economically backwards raw resources producers like Russia, Nigeria, Saudi Arabia, etc. You can also say that except for the oil/raw material producers the list have mostly free market democracies.

In general political science, socialist states usually runs heavy debt to GDP ratios since they spend on stuff with no-return for public welfare.

Singapore, South Korea, Japan and probably China are closer to national socialism (like Germany in the 1930s and '40s.)

US owes China because the Chinese want US paper. It is not a strength for China. The person charge here is the US because it runs the world's reserve currency.

panduranghari · Post by **panduranghari** » 13 Jan 2014 18:55

Acharya wrote:list of 20 countries ranked by current account balance. Could you explain why socialist leaning countries like Germany, China, Netherlands, Norway, Russia, Japan, Singapore, Sweden and Denmark are in the top 20, while the USA has the highest debt to The PRC's socialist banks in the world? Thanks.

The problem with this list is the denomination used to measure the current account balance is in the currency of a third country.

Because US has debt in its own currency, it can if it chooses, settle the debt. The settlement will be in USD of course as the international contracts are denominated in USd. The situation from 1968 is very poignant, as France which was increasing scared of its accumulating USD reserves was unsure if the gold will be exchangeable. And this lead to France withdrawing from the London Gold Pool. When France withdrew, it started a domino fall when others demanded they be paid in gold and they started redeeming it USD for gold. It lead to the closure of Gold window by Nixon on 15 Aug 1971.

Until then and even after that USA went from one oil crisis to another, which eventually culminated in the SD deciding they need to guarantee oil for the future. They struck a defense deal with Al Saud family. Which still stays. Unless Iran is given preference indicating Saudi oil stock is running low.

Neshant · Post by **Neshant** » 16 Jan 2014 10:43

an example of how a guy can give a long speech without saying anything.

the guy is banker material alright

Medtronic CEO: Rich cadence of product launches in pipeline

http://finance.yahoo.com/video/medtroni ... 00817.html

Austin · Post by **Austin** » 16 Jan 2014 18:51

Boost borrowing limit and spend trillions, but taper carefully – Lagarde tells US

svinayak · Post by **svinayak** » 17 Jan 2014 10:41

U.S. does not spend, it just prints dollars (as much as needed). This pyramid, which will be covered as any pyramid. The whole trick is that it has served over the past decades. The collapse of the Soviet Union supported the U.S. economy for the next 20 years. Today, the U.S. strategy - to have time to use their unlimited budget and military power to create conditions in which the Anglo-Saxons retain the status of "first", "golden billion". This can not end anything but a third world war, and it has already begun

Prem · Post by **Prem** » 18 Jan 2014 00:08

Energy is gradually decoupling from economic growth
http://ftalphaville.ft.com/2014/01/17/1 ... ic-growth/

According to BP’s Energy Outlook, which was released this week, global energy demand will continue to grow until 2013, but that growth is set to slow, driven by emerging economies — mainly China and India.Some notable points from the presentation slides on that front:Energy consumption grows less rapidly than the global economy, with GDP growth averaging 3.5% p.a. 2012-35. As a result energy intensity, the amount of energy required per unit of GDP, declines by 36% (1.9% p.a.) between 2012 and 2035. The decline in energy intensity accelerates; the expected rate of decline post 2020 is more than double the decline rate achieved 2000-2010.
Fuel shares evolve slowly. Oil’s share continues to decline, its position as the leading fuel briefly challenged by coal. Gas gains share steadily. By 2035 all the fossil fuel shares are clustering around 27%, and for the first time since the Industrial Revolution there is no single dominant fuel. Taken together, fossil fuels lose share but they are still the dominant form of energy in 2035 with a share of 81%, compared to 86% in 2012. Among non-fossil fuels, renewables (including biofuels) gain share rapidly, from around 2% today to 7% by 2035, while hydro and nuclear remain fairly flat. Renewables overtake nuclear in 2025, and by 2035 they match hydro.In our outlook, demand growth slow s and non-OPEC supplies rise – both as a result of high prices. We assume that OPEC members cut production over the current decade. As a result, spare capacity will exceed 6 Mb/d by 2018, the highest since the late 1980s.The market requirement for OPEC crude is not expected to reach today’s levels for another decade before rebounding. While we believe that OPEC members will be able to maintain discipline despite high levels of spare capacity, cohesion of the group is a key oil market uncertainty. The challenging decade ahead for OPEC, however, is unlikely to be a repeat of the 1980s. At that time, spare capacity peaked at over 10 Mb/d and the group’s share of global supply dropped well below 30%.
The problem for Opec countries is that what they make up in prices as a result of production cuts they lose in national income revenues. Also, the higher prices stay (at the cost of Opec income revenues), the more alternative producers are encouraged to offset Opec’s production base.If Opec buckles, however, and prices collapse, this could have extremely complex implications for global growth, especially if the deflation that transpires is not recognised as a supply-side shock rather than a demand-side collapse.

svinayak · Post by **svinayak** » 18 Jan 2014 03:41

The Economist

Today's ‪#‎Dailychart‬ matches the value of entire countries' listed firms to individual western companies. All the shares available in India are worth roughly the same as Nestlé; Egypt's are equal to Burger King. This suggests that emerging economies need deeper, more liquid markets, and investors need more perspective http://econ.st/1demQ9T

panduranghari · Post by **panduranghari** » 18 Jan 2014 21:22

Acharya wrote:U.S. does not spend, it just prints dollars (as much as needed). This pyramid, which will be covered as any pyramid. The whole trick is that it has served over the past decades. The collapse of the Soviet Union supported the U.S. economy for the next 20 years. Today, the U.S. strategy - to have time to use their unlimited budget and military power to create conditions in which the Anglo-Saxons retain the status of "first", "golden billion". This can not end anything but a third world war, and it has already begun

I disagree.

In 1980, US switched from being a global creditor nation with a balance of payment (BOP) surplus to a global debtor nation with a structural BOP deficit. The US gave up control over its trading partners' economic policies in exchange for a seemingly unlimited credit card.

By late 1982, U.S. funded debt had tripled to about $1.25 TRILLION. But the "permanent" debt ceiling still stood at $400 Billion. All the debt ceiling rises since 1971 had been officially designated as "temporary!" In late 1982, realizing that this charade could not be continued, The U.S. Treasury eliminated the "difference" between the "temporary" and the "permanent" debt ceiling.
The way was cleared for the subsequent explosion in U.S. debt. With the U.S. being the world's "reserve currency," the way was in fact cleared for a debt explosion right around the world. It was also cleared for five of the biggest bull markets in history.

The global stock market boom of 1982-87
The Japanese stock market/real estate boom of 1988-90
The Dow (and then Nasdaq) led boom - late 1994 to March/April 2000
The great global real estate boom of 2002-06
The global stock market revival of 2006-07

Do you think maybe, just maybe, that the credit card the US received in 1980 wasn't unlimited after all?

In September, 1980, the USG ordered the building of the USS Theodore Roosevelt aircraft carrier for $4.5b, followed by the USS Abraham Lincoln and USS George Washington both ordered in 1982, the USS John C. Stennis and USS Harry S. Truman ordered in 1988, the USS Ronald Reagan in 1994, the USS George H.W. Bush in 2001 and the still under construction PCU Gerald R. Ford in 2008 (with two more in the planning stage).

Today the US has 11 commissioned aircraft carriers of which 7 were built using the credit card. And just like a private yacht, it's not so much the purchase price that kills you, but the crew and maintenance. Imagine putting both the purchase and the crew and maintenance on your Visa credit card. What's that old saying about the two happiest days in a man's life?

panduranghari · Post by **panduranghari** » 18 Jan 2014 23:33

I am 90% into physical gold.

Here is the reason why.

Suraj · Post by **Suraj** » 19 Jan 2014 00:58

Jeff Gundlach had a great recent presentation of his thesis on recent investing trends. His primary statement about gold is that there was a gold vs real estate relationship in the last two years; as gold prices peaked, he noticed several clients diversifying out of gold into depressed real estate. Whether it will flow back into depressed gold now from RE and stocks, remains to be seen.

chanakyaa · Post by **chanakyaa** » 19 Jan 2014 07:25

panduranghari wrote:
Acharya wrote:U.S. does not spend, it just prints dollars (as much as needed). This pyramid, which will be covered as any pyramid. The whole trick is that it has served over the past decades. The collapse of the Soviet Union supported the U.S. economy for the next 20 years. Today, the U.S. strategy - to have time to use their unlimited budget and military power to create conditions in which the Anglo-Saxons retain the status of "first", "golden billion". This can not end anything but a third world war, and it has already begun
I disagree.

In 1980, US switched from being a global creditor nation with a balance of payment (BOP) surplus to a global debtor nation with a structural BOP deficit. The US gave up control over its trading partners' economic policies in exchange for a seemingly unlimited credit card.

By late 1982, U.S. funded debt had tripled to about $1.25 TRILLION. But the "permanent" debt ceiling still stood at $400 Billion. All the debt ceiling rises since 1971 had been officially designated as "temporary!" In late 1982, realizing that this charade could not be continued, The U.S. Treasury eliminated the "difference" between the "temporary" and the "permanent" debt ceiling.
The way was cleared for the subsequent explosion in U.S. debt. With the U.S. being the world's "reserve currency," the way was in fact cleared for a debt explosion right around the world. It was also cleared for five of the biggest bull markets in history.

The global stock market boom of 1982-87
The Japanese stock market/real estate boom of 1988-90
The Dow (and then Nasdaq) led boom - late 1994 to March/April 2000
The great global real estate boom of 2002-06
The global stock market revival of 2006-07

Do you think maybe, just maybe, that the credit card the US received in 1980 wasn't unlimited after all?

In September, 1980, the USG ordered the building of the USS Theodore Roosevelt aircraft carrier for $4.5b, followed by the USS Abraham Lincoln and USS George Washington both ordered in 1982, the USS John C. Stennis and USS Harry S. Truman ordered in 1988, the USS Ronald Reagan in 1994, the USS George H.W. Bush in 2001 and the still under construction PCU Gerald R. Ford in 2008 (with two more in the planning stage).

Today the US has 11 commissioned aircraft carriers of which 7 were built using the credit card. And just like a private yacht, it's not so much the purchase price that kills you, but the crew and maintenance. Imagine putting both the purchase and the crew and maintenance on your Visa credit card. What's that old saying about the two happiest days in a man's life?

To be honest, I struggled a bit to understand the disagreement, other than agreeing on the maxing out on the credit card point.

svinayak · Post by **svinayak** » 19 Jan 2014 10:40

Suraj wrote:Jeff Gundlach had a great recent presentation of his thesis on recent investing trends. His primary statement about gold is that there was a gold vs real estate relationship in the last two years; as gold prices peaked, he noticed several clients diversifying out of gold into depressed real estate. Whether it will flow back into depressed gold now from RE and stocks, remains to be seen.

this is a localized phenomenon

Suraj · Post by **Suraj** » 19 Jan 2014 12:27

It was good enough send gold prices down and make it the worst performing asset category during 2013. That counts for much more than how local it is as a phenomenon, or not.

panduranghari · Post by **panduranghari** » 19 Jan 2014 14:59

To be honest, I struggled a bit to understand the disagreement, other than agreeing on the maxing out on the credit card point.

World war not happening.

US fought Vietnam war in the red.

No war since has been fought in the black.

The disagreement is only about the expectation of world war or US engaging in protracted war.

Perhaps I could have been more coherent.

panduranghari · Post by **panduranghari** » 19 Jan 2014 15:04

Suraj wrote:It was good enough send gold prices down and make it the worst performing asset category during 2013. That counts for much more than how local it is as a phenomenon, or not.

Using only 2013 is ingenious. If we compare asset classes since 2008 Lehmann crisis, silver and gold are the best asset classes.
However the fund managers being traders cannot see beyond their bonus at the year end.

panduranghari · Post by **panduranghari** » 19 Jan 2014 15:07

In local currency terms it's still better than all asset classes.

chanakyaa · Post by **chanakyaa** » 19 Jan 2014 19:32

Hariji, you are always coherent. It must have been one off, tail event.

On the topic of wars fought in black or red, I red a fascinating book long time ago on Rothschilds (the House of Rothschilds). These guys financed Europe's wars in 1800s, as the public financed was not developed as it is today. I believe most of these wars were fought in red (i.e borrowed money). Not sure about how world's most sophisticated looters (I.e. king and queen of England) financed their wars.

ramana · Post by **ramana** » 19 Jan 2014 22:46

Piracy?