Perspectives on the global economic meltdown- (Nov 28 2010)
Re: Perspectives on the global economic meltdown- (Nov 28 20
Well the total toxic derivatives are in neighborhood of least 20 to 30 times that 5T not being spent! If i am not mistaken the total world GDP is around 80 Trillion. What you term as liquidity crisis is more a confidence crisis or least heading for that. I believe financial voo-doo practiced by some of the "too big to fail" has made a mockery of sound economy prudence that a traditional bank is suppose to practice. Inflating away the way fed is can only keep real interest rates negatives for long time to come if not a few decades! The net erosion of wealth is real and targets productive section of society. The huge bubble in most every commodity is not only caused by increased demand!
The world needs savers as that only can help finance a next good idea for improvement in productivity for any real wealth generation. the keynesian monetary expansion being used to ward of recession is proving to be ineffective IMHO.
The world needs savers as that only can help finance a next good idea for improvement in productivity for any real wealth generation. the keynesian monetary expansion being used to ward of recession is proving to be ineffective IMHO.
Re: Perspectives on the global economic meltdown- (Nov 28 20
Basically the money earned and wealth generated by Middle Class is being transferred to old money (class-elite) by QE.
Re: Perspectives on the global economic meltdown- (Nov 28 20
More like 'confiscated'.vic wrote: transferred to old money (class-elite)
Think of the logic, the elite crash the system to terrify the folks into bailing them out and then the common folk put their money into the same banks at 0% or -2% interest, then they use the spoils of that system to enrich themselves further. Heads I win and Tails you lose...
Re: Perspectives on the global economic meltdown- (Nov 28 20
Oh, I think the Fed will eventually get its money that it has spent back out of the system. Actually, it is quite good at that.
But if you are talking about the US government overall, unfortunately, it is going to take a bath on one particular aspect of the whole Great Recession. That would be the Fanny Mae and Freddie Mac mortgages that were assumed on the sub prime mortgage market. Not only was this deliberately done by the government to spur "home ownership" among the disadvantaged and less fortunate of our citizens but it continued when the government knew it was not working but kept up anyway in order to forestall a panic that was going to occur due to the derivative market flogging of the failed mortgages, that so far, nobody has gone to jail for.
The total tab for this will be about $250 Billion plus the demise of government back mortgage programs Fannie Mae and Freddie Mac which was a good program, it just should have been better regulated and made acutarily sound with reserves made for systemic failure. There are other costs to the government: the unemployment program extension to 99 weeks, 1 in five households on food assistance, etc.
While all of this was happening the goverrnment spent a trilion dollars (I think, well at least 500 billion) on the Afghanistan and Iraq war WHICH WAS NEVER PUT ON THE BOOKS during the years it was spent. It is reflected in the total debt of the US government however. Not to mention the years of veterans benefits and medical assistence that will be required for decades to come.
So, the tax paying public citizenry is being told by rich billionaires like Pete Peterson, that social security is the problem, or QE3 or 4 is the problem, when the *real* problems are never, ever, mentioned.
Despite all of this, I have every confidence that the overall debt of the US government will in the future become a smaller percentage of the GDP than it is now. The process is already at work. I would also point out that the middle class can and should and acutally already does, invest in the stock market. Its the one true way that they can participate in the economy. Dollar cost averaging over the years is the secret.

But if you are talking about the US government overall, unfortunately, it is going to take a bath on one particular aspect of the whole Great Recession. That would be the Fanny Mae and Freddie Mac mortgages that were assumed on the sub prime mortgage market. Not only was this deliberately done by the government to spur "home ownership" among the disadvantaged and less fortunate of our citizens but it continued when the government knew it was not working but kept up anyway in order to forestall a panic that was going to occur due to the derivative market flogging of the failed mortgages, that so far, nobody has gone to jail for.

The total tab for this will be about $250 Billion plus the demise of government back mortgage programs Fannie Mae and Freddie Mac which was a good program, it just should have been better regulated and made acutarily sound with reserves made for systemic failure. There are other costs to the government: the unemployment program extension to 99 weeks, 1 in five households on food assistance, etc.
While all of this was happening the goverrnment spent a trilion dollars (I think, well at least 500 billion) on the Afghanistan and Iraq war WHICH WAS NEVER PUT ON THE BOOKS during the years it was spent. It is reflected in the total debt of the US government however. Not to mention the years of veterans benefits and medical assistence that will be required for decades to come.
So, the tax paying public citizenry is being told by rich billionaires like Pete Peterson, that social security is the problem, or QE3 or 4 is the problem, when the *real* problems are never, ever, mentioned.
Despite all of this, I have every confidence that the overall debt of the US government will in the future become a smaller percentage of the GDP than it is now. The process is already at work. I would also point out that the middle class can and should and acutally already does, invest in the stock market. Its the one true way that they can participate in the economy. Dollar cost averaging over the years is the secret.
Re: Perspectives on the global economic meltdown- (Nov 28 20
U.S. economy to 'grow' 3% under new GDP calculation
By using the new method the debt/GDP ratio will certainly go down.
By using the new method the debt/GDP ratio will certainly go down.
In July of 2013, the U.S. gross domestic product will officially grow three percent, due to a few additions to the statistics that economists have been using to calculate GDP for years.
Re: Perspectives on the global economic meltdown- (Nov 28 20
Doesn't make any difference whether you peg it under the new definition as 3% growth or 2.5% under the old definition, the debt/GDP ratio is going to go down. By some estimates 30% or more by 2023 *if* the sequester or something similar continues. We'll know by the delaying of congressional mandated approval of raising the debt limit which has already occured.paramu wrote:U.S. economy to 'grow' 3% under new GDP calculation
By using the new method the debt/GDP ratio will certainly go down.
In July of 2013, the U.S. gross domestic product will officially grow three percent, due to a few additions to the statistics that economists have been using to calculate GDP for years.
Re: Perspectives on the global economic meltdown- (Nov 28 20
The US will inflate, go through economic collapse, and then return to a semi-gold standard. We'll be better off than the rest of the world but it'll still hurt. Best thing about this will be that Keynesian economics will finally be chucked into the garbage just like communism. Idiots like Krugman with his Nobel prize and fancy shmancy degree couldn't predict the economic crisis in 2008 while other economists who were ridiculed by these leftists and the media were bang on. It's a shame that they are predicting another crisis and the same people who were duped the first time are being duped again by clinging onto the same economic model that got us into this mess in the first place.
"Economics isn't a complicated subject...Economists make it complicated." -MR Venkatesh
"Economics isn't a complicated subject...Economists make it complicated." -MR Venkatesh
Re: Perspectives on the global economic meltdown- (Nov 28 20
And as soon as I write bad stuff about it, here is what Freddie Mac does:
http://finance.yahoo.com/news/freddie-m ... 09716.html
Go figure. Sheesh.
"The White House has estimated taxpayers might end up seeing a $51 billion profit on the federal funds injected in Fannie Mae and Freddie Mac if the two companies remain in conservatorship through fiscal year 2023."
Unbelievable. This has to be one of the greatest financial reversals in history (in an already developed economy).
Yo, John Maynard Keynes, you is my hero! ( I don't care if he was gay or not.) The Austrian School sucks very bad air! heh.
http://finance.yahoo.com/news/freddie-m ... 09716.html
Go figure. Sheesh.

"The White House has estimated taxpayers might end up seeing a $51 billion profit on the federal funds injected in Fannie Mae and Freddie Mac if the two companies remain in conservatorship through fiscal year 2023."
Unbelievable. This has to be one of the greatest financial reversals in history (in an already developed economy).

Yo, John Maynard Keynes, you is my hero! ( I don't care if he was gay or not.) The Austrian School sucks very bad air! heh.
Last edited by TSJones on 09 May 2013 13:04, edited 1 time in total.
-
- BRFite
- Posts: 1435
- Joined: 13 Jul 2010 11:02
Re: Perspectives on the global economic meltdown- (Nov 28 20
There are basically two schools of thought which emerged after the Great DepressionRoyG wrote:The US will inflate, go through economic collapse, and then return to a semi-gold standard. We'll be better off than the rest of the world but it'll still hurt. Best thing about this will be that Keynesian economics will finally be chucked into the garbage just like communism. Idiots like Krugman with his Nobel prize and fancy shmancy degree couldn't predict the economic crisis in 2008 while other economists who were ridiculed by these leftists and the media were bang on. It's a shame that they are predicting another crisis and the same people who were duped the first time are being duped again by clinging onto the same economic model that got us into this mess in the first place.
"Economics isn't a complicated subject...Economists make it complicated." -MR Venkatesh
1) Keynesian
2) The Austrian School
Keynesian thought said that government should pick up the economic slack when private sector retrenches. What the Austrian school says is that government spending will cause massive economic damage. But if one looks at it closely the Austrian school of thought is only against extreme Keynesian practice. In other words Austrian school says that if government is reckless than it will lead to ruin. Keynesian never said that government should be reckless or print money like there is no tomorrow, a path which certain central European nations, notably Germany and Austria followed post World War I.
In more than two decades of japan's stagnation, despite the massive stimulus initiated by japan, inflation never jumped more than 5% and has continued to fall. So printing more money is not going to cause inflation. What will cause economic destruction is following the path of Wiemar Germany or Zimbabwe or Austria once the Austrian empire fell.
Also if one follows the path of today's European austerity then be prepared for 25% unemployment and youth unemployment of over 60%. The Europeans have a history of making a bad things worse. They converted a bad recession of early 1930s into the worlds greatest depression. They for all practical purpose wrote the text book on hyper inflation in 1920s. And now too they are hell bent on taking the worst medicine for the cure.
Re: Perspectives on the global economic meltdown- (Nov 28 20
And a tip of the hat to you for pointing out the differences between the two economic schools of thought!
I think cultural differences must be accounted for in whatever economic path is chosen.
For instance, the Japanese are super savers. They squeeze their money until the juice runs out and gives cries of anguish. So that has to be taken into consideration. In the US, a huge percentage of the population has no idea of what it means to do without and save. So when they retire they only have social security. They depend on a loose, quick reacting, dynamic economy to pick up their slack. I don't condemn them but hopefully that culture will slowly change. But the economic path has to be carefully chosen in regards to these cultural tendancies. One is an island with a failed dream of empire, the other, a former frontier society that doesn't want to think about future consequences. Education is the key.
I think cultural differences must be accounted for in whatever economic path is chosen.
For instance, the Japanese are super savers. They squeeze their money until the juice runs out and gives cries of anguish. So that has to be taken into consideration. In the US, a huge percentage of the population has no idea of what it means to do without and save. So when they retire they only have social security. They depend on a loose, quick reacting, dynamic economy to pick up their slack. I don't condemn them but hopefully that culture will slowly change. But the economic path has to be carefully chosen in regards to these cultural tendancies. One is an island with a failed dream of empire, the other, a former frontier society that doesn't want to think about future consequences. Education is the key.
Re: Perspectives on the global economic meltdown- (Nov 28 20
Meanwhile are we seeing a budget surplus!! Time for the next round off stupid unfunded wars and economic weirdos and of course taxcuts for the wealthy.
http://www.aei-ideas.org/2013/05/whoa-i ... t-surplus/
http://www.aei-ideas.org/2013/05/whoa-i ... t-surplus/
The US government ran a surplus of $112 billion in April 2013, according to the Congressional Budget Office, $52 billion more than a year ago. Now, April is usually a good month for the treasury thanks to income tax payments. Still, the surpluses recorded in April 2012 and 2013 were the first seen in that month since 2008. More good news: Revenue for the first seven months of the fiscal year is up 16%, or $220 billion, from the year-ago period.
To the number crunchers at Potomac Research, the combo of those surging revenues and the sequestration spending cuts points to a stunning possibility:
… official forecasters will have to radically alter their projections this summer. The CBO forecast of $845 billion in red ink this year, 5.3% of GDP, is hopelessly outdated; the deficit will fall well below 5% of GDP, perhaps to about $700 billion. Then the improvement really takes hold – instead of the official forecast of a $616 billion deficit in fiscal 2014, we’d anticipate something like $500 billion, close to 3% of GDP. And in fiscal 2015, the deficit could drop below 2% of GDP, perhaps to $300 billion.
Call us crazy, but if the economy finally lifts off in 2014-2015, with GDP growth in the 4% neighborhood — with the sequester still in place – a surplus by fiscal 2015 is not totally out of the question.
Re: Perspectives on the global economic meltdown- (Nov 28 20
dont know where to post this. enron & grandma millie
http://www.youtube.com/watch?v=DOLNWF5QMxY
http://www.cbsnews.com/8301-18563_162-620795.html
http://www.youtube.com/watch?v=DOLNWF5QMxY
and other such happy talk.Employee 1: "All the money you guys stole from those poor grandmothers in California?
Employee 2: "Yeah, Grandma Millie man.
Employee 1: "Yeah, now she wants her f-----g money back for all the power you've charged right up, jammed right up her a—for f-----g $250 a megawatt hour."
http://www.cbsnews.com/8301-18563_162-620795.html
Re: Perspectives on the global economic meltdown- (Nov 28 20
^^^^^^ Enron no longer exists and its CPA auditors, Arthur Andersen, has for all intent and purposes been effectively destroyed.
Re: Perspectives on the global economic meltdown- (Nov 28 20
Arthur Andersen just morphed into Accenture.
Re: Perspectives on the global economic meltdown- (Nov 28 20
But they are no longer auditing financial statements. And because of the Enron debacle CPA's no longer offer consulting services.
Re: Perspectives on the global economic meltdown- (Nov 28 20
Thanx for posting that Shaardula,
Cautionary tale on what goes inside the shark tank...
Cautionary tale on what goes inside the shark tank...
Re: Perspectives on the global economic meltdown- (Nov 28 20
GDP numbers like inflation numbers and increasingly unemployment numbers are all bogus.paramu wrote:U.S. economy to 'grow' 3% under new GDP calculation
A combination of unemployment & under-employment where jobs are increasingly of the MickeyD variety plus rising debt spent on useless things like banking cannot possibly create any real productive output.
Who believes the stock market is not being rigged with money printing from the federal reserve?
We'll see how this ends.
Re: Perspectives on the global economic meltdown- (Nov 28 20
Please remember that the stock market under general circumstances, anticipates and if necessary, discounts. It doesn't wait for the acutal event to happen. Finance 101. ...............*Black Swan events excepted of course.*Neshant wrote:GDP numbers like inflation numbers and increasingly unemployment numbers are all bogus.paramu wrote:U.S. economy to 'grow' 3% under new GDP calculation
A combination of unemployment & under-employment where jobs are increasingly of the MickeyD variety plus rising debt spent on useless things like banking cannot possibly create any real productive output.
Who believes the stock market is not being rigged with money printing from the federal reserve?
We'll see how this ends.
-
- BRFite
- Posts: 1435
- Joined: 13 Jul 2010 11:02
Re: Perspectives on the global economic meltdown- (Nov 28 20
That is good news. But this is about the US Budget. What about the Debt-to-GDP ratio? Having a budget surplus in good times, is fine, but what is even better is to have some slack before the bad times start, i.e. Low Debt-to-GDP ratio, balanced Current Account and so on. The Budget is one part and not the main.Theo_Fidel wrote:Meanwhile are we seeing a budget surplus!! Time for the next round off stupid unfunded wars and economic weirdos and of course taxcuts for the wealthy.
http://www.aei-ideas.org/2013/05/whoa-i ... t-surplus/
The US government ran a surplus of $112 billion in April 2013, according to the Congressional Budget Office, $52 billion more than a year ago. Now, April is usually a good month for the treasury thanks to income tax payments. Still, the surpluses recorded in April 2012 and 2013 were the first seen in that month since 2008. More good news: Revenue for the first seven months of the fiscal year is up 16%, or $220 billion, from the year-ago period.
To the number crunchers at Potomac Research, the combo of those surging revenues and the sequestration spending cuts points to a stunning possibility:
… official forecasters will have to radically alter their projections this summer. The CBO forecast of $845 billion in red ink this year, 5.3% of GDP, is hopelessly outdated; the deficit will fall well below 5% of GDP, perhaps to about $700 billion. Then the improvement really takes hold – instead of the official forecast of a $616 billion deficit in fiscal 2014, we’d anticipate something like $500 billion, close to 3% of GDP. And in fiscal 2015, the deficit could drop below 2% of GDP, perhaps to $300 billion.
Call us crazy, but if the economy finally lifts off in 2014-2015, with GDP growth in the 4% neighborhood — with the sequester still in place – a surplus by fiscal 2015 is not totally out of the question.
Re: Perspectives on the global economic meltdown- (Nov 28 20
Since the above message is a response to Theo, I hope he doesn't mind me responding to it also.
The US government like most corporations, does not depend on revenue streams that may arrive in irregular bursts. So it borrows. If revenue over time increases, or if the rate of spending over time is slowed down, then the need for borrowing lessens and the amount borrowed becomes a reduced factor. While all of this is happening, previously issued bonds mature and are presented for payment. What has happend over the past 12 years is that the government kept issuing more bonds (borrowing) to cover its defecit spending *and* the maturation of its previously issued bonds. Now *if* the assumption that the US government will run a surplus is true, then the government doesn't have to keep borrowing for the maturation of its previously issued bonds. Its just gotta make sure its spending is covered as authorized by Congress. I'll go one step further, all the government has to really do is lower the *frequency* of its borrowing to improve the debt to GDP ratio.
in my view, as a Keynesian, the government must keep borrowing even under budget surplus conditions because the entire US economy is based upon its Treasury debt/bonds. That is the banking system, everything. This debt is the sine qua non of financial instruments to hold reserve requirements and it is highly liquid if you need to get your money back out for emergencies.
Then you've got Apple Corporation. They have almost $200 billion in cash reserves and they are issuing $15 billion in corporate bonds! Holy molely!
It's alll about not wanting to pay taxes on their foreign earnings so they are borrowing to bring cash back into the US. 
The US government like most corporations, does not depend on revenue streams that may arrive in irregular bursts. So it borrows. If revenue over time increases, or if the rate of spending over time is slowed down, then the need for borrowing lessens and the amount borrowed becomes a reduced factor. While all of this is happening, previously issued bonds mature and are presented for payment. What has happend over the past 12 years is that the government kept issuing more bonds (borrowing) to cover its defecit spending *and* the maturation of its previously issued bonds. Now *if* the assumption that the US government will run a surplus is true, then the government doesn't have to keep borrowing for the maturation of its previously issued bonds. Its just gotta make sure its spending is covered as authorized by Congress. I'll go one step further, all the government has to really do is lower the *frequency* of its borrowing to improve the debt to GDP ratio.
in my view, as a Keynesian, the government must keep borrowing even under budget surplus conditions because the entire US economy is based upon its Treasury debt/bonds. That is the banking system, everything. This debt is the sine qua non of financial instruments to hold reserve requirements and it is highly liquid if you need to get your money back out for emergencies.
Then you've got Apple Corporation. They have almost $200 billion in cash reserves and they are issuing $15 billion in corporate bonds! Holy molely!


-
- BRF Oldie
- Posts: 17249
- Joined: 10 Aug 2006 21:11
- Location: http://bharata-bhuti.blogspot.com/
Re: Perspectives on the global economic meltdown- (Nov 28 20
Yesterdin I heard a radio adv by quicken loans. They promise to offer/transfer 3.9% home mortgage loans even if
- your house value is much less than the loan amount
- your current equity is not upto required amount
I wonder if US is housing market is returning to pre2007 situation. I know/assuming that these are for existing loans only and not new loans, but...
- your house value is much less than the loan amount
- your current equity is not upto required amount
I wonder if US is housing market is returning to pre2007 situation. I know/assuming that these are for existing loans only and not new loans, but...
Re: Perspectives on the global economic meltdown- (Nov 28 20
What would it take for Yuan to become as reserve currency and what criteria does it take for a currency to be declared as reserve currency ?
There are some country who maintains currency from Australia and Canada in small proportion in reserve currency besides Euro and Dollar.
There are some country who maintains currency from Australia and Canada in small proportion in reserve currency besides Euro and Dollar.
-
- BRF Oldie
- Posts: 17249
- Joined: 10 Aug 2006 21:11
- Location: http://bharata-bhuti.blogspot.com/
Re: Perspectives on the global economic meltdown- (Nov 28 20
^ let us see how it will look like between India and china.
The trade balance between China and India is about $30b in china's favor. what would china prefer, a payment in Rs or Yuan or USD?
If it is Yuan,what conversion rate should India use to buy yuan, a conversion with USD as intermediatery currency or direct conversion between Yuan and INR? If so who/how decides the conversion rate? Who in China want to buy Indian Rs to release Yuan? How much of Yuan currency RBI should maintain, only to cover china trade balance or others too, if so would others accept Chinese yuan?
I don't think anyone, including Chinese, believe in china.
The trade balance between China and India is about $30b in china's favor. what would china prefer, a payment in Rs or Yuan or USD?
If it is Yuan,what conversion rate should India use to buy yuan, a conversion with USD as intermediatery currency or direct conversion between Yuan and INR? If so who/how decides the conversion rate? Who in China want to buy Indian Rs to release Yuan? How much of Yuan currency RBI should maintain, only to cover china trade balance or others too, if so would others accept Chinese yuan?
I don't think anyone, including Chinese, believe in china.
Re: Perspectives on the global economic meltdown- (Nov 28 20
Recently China did currency swapping with Brazil , Russia and Japan with their respective currency ...from what i know Russia and China trade with each other not through dollar but in their own currency
China and Brazil sign agreement to trade in their local currencies , China and Russia abandon the dollar in new bilateral trade agreement,China And Japan Move Away From Dollar, Will Conduct Bilateral Trade Using Own Currencies
So then how do these countries determine their trading rates without going through some intermediate currency ?
From what i understand the only reason why the Chinese currency is not accepted is reserved currency is because they are not full convertible and they lack bond market , I posted a news which mentioned that they are planning to do yuan capital-account convertibility by year end.
So its perhaps a matter of time that Yuan would gain a reserve currency status ,may be depending on what those Communist Folks think when its appropriate time to do so.
China and Brazil sign agreement to trade in their local currencies , China and Russia abandon the dollar in new bilateral trade agreement,China And Japan Move Away From Dollar, Will Conduct Bilateral Trade Using Own Currencies
So then how do these countries determine their trading rates without going through some intermediate currency ?
From what i understand the only reason why the Chinese currency is not accepted is reserved currency is because they are not full convertible and they lack bond market , I posted a news which mentioned that they are planning to do yuan capital-account convertibility by year end.
So its perhaps a matter of time that Yuan would gain a reserve currency status ,may be depending on what those Communist Folks think when its appropriate time to do so.
Re: Perspectives on the global economic meltdown- (Nov 28 20
Right now, China uses a "market basket" of currencies of its choosing to establish a conversion factor. They have allowed the conversion rate to increase and thus avoided US charges of currency manipulation. According to some sources they are currently within a 8% goal valuation if they would let the currency free float. So I suppose they will eventually get there when the time suits them.Austin wrote:Recently China did currency swapping with Brazil , Russia and Japan with their respective currency ...from what i know Russia and China trade with each other not through dollar but in their own currency
China and Brazil sign agreement to trade in their local currencies , China and Russia abandon the dollar in new bilateral trade agreement,China And Japan Move Away From Dollar, Will Conduct Bilateral Trade Using Own Currencies
So then how do these countries determine their trading rates without going through some intermediate currency ?
From what i understand the only reason why the Chinese currency is not accepted is reserved currency is because they are not full convertible and they lack bond market , I posted a news which mentioned that they are planning to do yuan capital-account convertibility by year end.
So its perhaps a matter of time that Yuan would gain a reserve currency status ,may be depending on what those Communist Folks think when its appropriate time to do so.
Re: Perspectives on the global economic meltdown- (Nov 28 20
I saw a documentary where it was mentioned that US only penalised once China for Currency manipulation which was some time in early 90's after that US has avoided doing so as it would hurt them as much as it would hurt china and could start its own little currency/trade war.
Re: Perspectives on the global economic meltdown- (Nov 28 20
PRC was made a WTO member even though it is not a free market economy
PRC currency was plugged to $ in 1994 and it has not changed much
They dont a have a basket of currency to get the real exchange rate. This is still a state control subject
State controls the central bank/monetary policy and this has no interaction to the external market.
The total foreign participation in the Entire Chinese stock market is less than $500M
Some of these facts were given by a fund manager who operates from Singapore and travels to HK often.
PRC currency was plugged to $ in 1994 and it has not changed much
They dont a have a basket of currency to get the real exchange rate. This is still a state control subject
State controls the central bank/monetary policy and this has no interaction to the external market.
The total foreign participation in the Entire Chinese stock market is less than $500M
Some of these facts were given by a fund manager who operates from Singapore and travels to HK often.
Re: Perspectives on the global economic meltdown- (Nov 28 20
Hmmm. Here is what Wiki has to say about Renminbi:Acharya wrote:PRC was made a WTO member even though it is not a free market economy
PRC currency was plugged to $ in 1994 and it has not changed much
They dont a have a basket of currency to get the real exchange rate. This is still a state control subject
State controls the central bank/monetary policy and this has no interaction to the external market.
The total foreign participation in the Entire Chinese stock market is less than $500M
Some of these facts were given by a fund manager who operates from Singapore and travels to HK often.
Since 2005, the renminbi exchange rate has been allowed to float in a narrow margin around a fixed base rate determined with reference to a basket of world currencies. The Chinese government has announced that it will gradually increase the flexibility of the exchange rate. China has initiated various pilot projects to "internationalize" the RMB in the hope that it will become a reserve currency over the long term.[5][6] Lately, however, appreciation actions by the Chinese government, as well as quantitative easing measures taken by the Federal Reserve and other major central banks, have caused the renminbi to be within as little as 8% of its equilibrium value by the second half of 2012.[7]
Re: Perspectives on the global economic meltdown- (Nov 28 20
Wiki is not a source of truth
Re: Perspectives on the global economic meltdown- (Nov 28 20
I has wondered why the tiny republic of san marino had such a grand embassy in delhi aurangzeb road.....how could they even afford such properties and why they needed to be in delhi when we dont even know it exists let alone trade or visit.
This sheds some light...its more discreet version of switzerland..a good place to put in funds under the radar
http://www.nytimes.com/1995/09/23/your- ... ino.t.html
Its also surrounded nd protected by italy on all sides
This sheds some light...its more discreet version of switzerland..a good place to put in funds under the radar
http://www.nytimes.com/1995/09/23/your- ... ino.t.html
Its also surrounded nd protected by italy on all sides
Re: Perspectives on the global economic meltdown- (Nov 28 20
Comparative Monthly Avg. Exchange Rates: Relative to Chinese RenminbiTSJones wrote:Hmmm. Here is what Wiki has to say about Renminbi:Acharya wrote:PRC was made a WTO member even though it is not a free market economy
PRC currency was plugged to $ in 1994 and it has not changed much
They dont a have a basket of currency to get the real exchange rate. This is still a state control subject
State controls the central bank/monetary policy and this has no interaction to the external market.
The total foreign participation in the Entire Chinese stock market is less than $500M
Some of these facts were given by a fund manager who operates from Singapore and travels to HK often.
Since 2005, the renminbi exchange rate has been allowed to float in a narrow margin around a fixed base rate determined with reference to a basket of world currencies. The Chinese government has announced that it will gradually increase the flexibility of the exchange rate. China has initiated various pilot projects to "internationalize" the RMB in the hope that it will become a reserve currency over the long term.[5][6] Lately, however, appreciation actions by the Chinese government, as well as quantitative easing measures taken by the Federal Reserve and other major central banks, have caused the renminbi to be within as little as 8% of its equilibrium value by the second half of 2012.[7]
Here is a plot of how Chinese currency behaved over last 4 years. As can be seen, at the most exchange rate wrt USD has seen about 7.5% depreciation by 2nd half of 2012. So in other words it has only reached half way towards its supposed equilibrium value! If one plots from 2005, then appreciation would be close to about 25%
Comparative Monthly Avg. Exchange Rates: Relative to Chinese Renminbi last 13 years
-
- BRFite
- Posts: 1027
- Joined: 11 Aug 2016 06:14
Re: Perspectives on the global economic meltdown- (Nov 28 20
Had these countries been trading only in RMB then I would have agreed that this is a step towards RMB becoming a currency for all international trade. But Bazil and Japan will not trade in RMB. That is the point.Austin wrote:Recently China did currency swapping with Brazil , Russia and Japan with their respective currency ...from what i know Russia and China trade with each other not through dollar but in their own currency
China and Brazil sign agreement to trade in their local currencies , China and Russia abandon the dollar in new bilateral trade agreement,China And Japan Move Away From Dollar, Will Conduct Bilateral Trade Using Own Currencies
So then how do these countries determine their trading rates without going through some intermediate currency ?
From what i understand the only reason why the Chinese currency is not accepted is reserved currency is because they are not full convertible and they lack bond market , I posted a news which mentioned that they are planning to do yuan capital-account convertibility by year end.
So its perhaps a matter of time that Yuan would gain a reserve currency status ,may be depending on what those Communist Folks think when its appropriate time to do so.
Re: Perspectives on the global economic meltdown- (Nov 28 20
The Biggest Economic Story Of The Year Has Been Fooling Economists Around The World
http://www.businessinsider.com/global-i ... z2T6Y73PJS
The big story this year is not the US spending sequester, the China slowdown or the ongoing European recession," says Ethan Harris, Bank of America Merrill Lynch's top global economist.
"The big story is inflation, or more precisely, the lack thereof."
From Harris' note to clients on Friday:...After peaking in the summer of 2011, inflation has steadily fallen globally and in both the emerging and developed markets economies (Chart 1) Our global inflation index goes back to 1996 and over that period inflation has averaged 3.1% overall, 1.9% in DM and 6.6% in EM; the corresponding numbers for this March were 2.2%, 1.3% and 4.0%. Of course there are some exceptions: inflation has been defying gravity in the UK for a number of years and is high in some major EM economies such as Brazil and Mexico.The weakness has come as a surprise to economic forecasters and an even bigger surprise to many market participants. Critics of the major central banks have repeatedly warned that easy policy would lead to runaway inflation. However, in reality inflation is falling, not rising...Harris ran twenty years worth of numbers and showed that a growing monetary base, which is happening thanks to quantitative easing, does not correlate well with inflation.Bank Of America Merrill Lynch
"For example, Table 1 shows the correlation between the growth in the US monetary aggregates and CPI inflation at various lag lengths," he wrote. "The correlation is always small and half of the time has the wrong sign – strong money growth “causes” low inflation."Below is BAML's inflation surprise index. As you can see, economists have been overestimating inflation around the world.
http://www.businessinsider.com/global-i ... z2T6Y73PJS
Re: Perspectives on the global economic meltdown- (Nov 28 20
What does the article below mean? extinction..
Would not the open market or even black market set the price of gold if it went ballistic and the commodity exchanges were shut down?
Would not the open market or even black market set the price of gold if it went ballistic and the commodity exchanges were shut down?
Daily Bell: Where is the price of gold headed from here?
Antal Fekete: The price of gold is headed for extinction. I for one don't believe that the price of gold is headed for five digits. Long before that might happen, permanent backwardation* would shut down the gold futures markets. Gold could no longer be purchased at any price. Gold would only be available through barter. World trade is facing an avalanche-like transformation flattening out monetary economy into barter economy. Practically all economists, financial writers and market analysts have missed this possible scenario. They don't see the greatest economic contraction ever staring them in the face. They don't see the coming tsunami of unemployment. Very few see deflation as indicated by the progressive disappearance of cash gold. It never occurred to Bernanke that the new Federal Reserve notes he is printing galore could also go to purchase physical gold, causing the gold basis to shrink. Once the gold basis* goes permanently negative, the total U.S. debt, all $16 trillion of it, will not be worth one ounce of gold. That will pull the rug from underneath the international monetary system. Barter is the ultimate in deflation, and that is what the world economy is getting.
http://www.thedailybell.com/29047/Antho ... oma-Bridge
Re: Perspectives on the global economic meltdown- (Nov 28 20
And a good place to get Cyprussed no doubt.Singha wrote:I has wondered why the tiny republic of san marino had such a grand embassy in delhi aurangzeb road.....
This sheds some light...its more discreet version of switzerland..a good place to put in funds under the radar
Certain countries setup these so called "havens" in the hopes that third world rich men put their money there. Later some excuse is used to clean out all the accounts Libya style.
Cyprus, San Marino, Singapore, Cayman, Switzerland..etc - all untrustworthy.
Re: Perspectives on the global economic meltdown- (Nov 28 20
Stock market is being rigged to keep pensions solvent and create a false sense of recovery.
But for how long can this rigging go on.
Maybe the people who got carried away back in 1999 and wrote book that the DOW was going to 40,000 might yet turn out to be right - in a strange way.

But for how long can this rigging go on.
Maybe the people who got carried away back in 1999 and wrote book that the DOW was going to 40,000 might yet turn out to be right - in a strange way.

-
- BRFite
- Posts: 374
- Joined: 17 Mar 2010 04:12
Re: Perspectives on the global economic meltdown- (Nov 28 20
US stocks are sugar high thanks to actions of Fed chief Ben. Fed will do whatever it takes to keep it that way. At these levels PE multiples are very high historically even using forward earnings. US is in unchartered territory. It is hard to predict how it will all end. Whichever way it ends will be bad for ordinary folks in the US either due to high inflation/hyper inflation or due to massive deflation and loss of wealth.Neshant wrote:Stock market is being rigged to keep pensions solvent and create a false sense of recovery.
But for how long can this rigging go on.
Maybe the people who got carried away back in 1999 and wrote book that the DOW was going to 40,000 might yet turn out to be right - in a strange way.