Perspectives on the global economic changes

[chanakyaa]

From ZeroHedge..

Click the link below for the entire video
http://youtu.be/VBPZ58dzjfE

[chanakyaa]

Putin signs law on national card payment system

Russian President Vladimir Putin has signed into law a bill to create a national card payment system, the Kremlin press service said Monday. The Russian parliament approved the bill last month. Plans to establish a national card payment processing system emerged in response to Ukraine-related sanctions that saw several Russian banks denied service by global powerhouses Visa and MasterCard, troubling the general public and raising concern over the security of the country's financial system.

Read more: http://voiceofrussia.com/news/2014_05_0 ... stem-5579/

[svinayak]

“I’ve abandoned free market principles to save the free market system.” Bush 12/16/2008

[TSJones]

“I’ve abandoned free market principles to save the free market system.” Bush 12/16/2008

That was in reference to the TARP program which has mostly been paid back to the US Treasury. So what does that have to do with the situation now days?

[panduranghari]

From ZeroHedge..

Click the link below for the entire video
http://youtu.be/VBPZ58dzjfE

A few points
US unemployment is going to sky rocket
Tapering will not be seen through
Japan is double QE of US though economy less than third is size
All japanese banks are fcuked
Most japanese debt held internally compared to US
China is slowing down faster than reported
Brazil and canada screwed doubly because they depend on china for most of gdp
Canadian house prices are going to drop like a ton of bricks
Argentina has discovered black gold and the new president in oct may turn the country around after 3 years
ASEAN nations may suffer repeat of 1997 asian crisis
India has good forex reserves unlike brazil and south africa
European banks are precarious
US still the only blue water navy so US RULZ

Some i agree with some i dont.

Most talk focussed on stock market investment perspective. No benefit for those who have no money to burn.

[Austin]

How does Japan manages with such huge debt which is like 200 % of GDP even if most of it is held internally ?

Is Internal Debt a good thing and something not to be worried about ?

[akashganga]

How does Japan manages with such huge debt which is like 200 % of GDP even if most of it is held internally ?

Is Internal Debt a good thing and something not to be worried about ?

From japanese experience it is clear that internal debt can keep climbing up and up as long as you have healthy main street economy with big export trade surplus and a large foreign exchange reserve. Wait for another generation or so and you will find uncle sam's internal debt at much higher percentage than japanese and still whole world trading and accepting US dollars.

[panduranghari]

Yen carry trade was a great game of the past with certain returns. It was, at that time, cheaper to do a carry trade than risk the futures market. My understanding is now that game has no future as futures give better returns.

Hope some gurus will clarify this.

[chanakyaa]

How does Japan manages with such huge debt which is like 200 % of GDP even if most of it is held internally ?

Is Internal Debt a good thing and something not to be worried about ?

From japanese experience it is clear that internal debt can keep climbing up and up as long as you have healthy main street economy with big export trade surplus and a large foreign exchange reserve. Wait for another generation or so and you will find uncle sam's internal debt at much higher percentage than japanese and still whole world trading and accepting US dollars.

Very soon countries themselves will become "too big to fail" (TBTF), and the world will, reluctantly (fooled) to bail everyone out in the name of keeping demand, output, and growth. Christine LaGarde and her IMF thugs must be already working on that...

[Austin]

Japanese currency Yen has lost the reserve currency status over the period of year perhaps the huge Public Debts and QE turned out to be nail in the coffin.

Seems to be Japan is sitting on a far bigger bubble of Debt and QE , lets see in the next 2-3 years how things shape up for them.

[TSJones]

http://finance.yahoo.com/news/fannie-ma ... ector.html

Fannie Mae and Freddie Mac will have returned $213.1 billion to taxpayers by the end of June in return for the $187.5 billion in aid they received after being placed under the government's wing at the height of the financial crisis.

[Prem]

Brics to Launch Contingency Fund in July
http://www.nasdaq.com/article/brics-to- ... 0506-01941

BRASILIA--Brazil, Russia, India, China and South Africa are set to launch a contingency fund during a July summit in Brazil, Brazilian Finance Minister Guido Mantega said Tuesday.The $100 billion fund is meant to be a buffer for the group of emerging economies known as the Brics countries.Answering questions on a television talk show, Mr. Mantega said Brazil's inflation will slow in the coming months. "It is already declining," he said, adding that the country's central bank has the power to continue fighting price increases with higher interest rates.Mr. Mantega said that public spending isn't behind higher inflation, as many critics have persistently claimed. The culprit is, he said, a series of incidents such as droughts in the U.S. and Brazil that made food more expensive.Given current conditions, he said, "there is no room for [a] lower inflation target." Brazil's official target is for 4.5% annual inflation, with a margin of tolerance of two percentage points up or down. Inflation is currently at around 6%.Mr. Mantega said that "the conditions are there" for private banks to increase lending, but that high interest rates mean they see it fit to park their money in other investments instead of risky loans to consumers and businesses. State-controlled banks need to be replaced by private lenders, "it is my dream," he said during the Espaço Público talk show on the TV Brasil channel.

[panduranghari]

[panduranghari]

[Austin]

^^ So it indicates that China is the World greatest net creditor and US the largest debtor

Janet Yellen’s Bathtub Economics: Excuse Me Doctor—There’s Bubbles In That Tub!

[panduranghari]

No Austin. It's not as simplistic as it seems.

It effectively shows Americans are living a life which is way beyond the standard one can live for anywhere else and china is subsidising this the most. It also means Chinese cannot just flip the switch and have a higher standard of living because along with Chinese most of the world is subsidising USA.

[TSJones]

No Austin. It's not as simplistic as it seems.

It effectively shows Americans are living a life which is way beyond the standard one can live for anywhere else and china is subsidising this the most. It also means Chinese cannot just flip the switch and have a higher standard of living because along with Chinese most of the world is subsidising USA.

you are completely incorrect. The world is beating a path to buy US treasuries. Nobody is forcing them to buy. You want some other reserve currency? Fine, then do what is necessary to have one. Otherwise ...........you'll just have to deal with the US dollar.

[chanakyaa]

http://finance.yahoo.com/news/fannie-ma ... ector.html

Fannie Mae and Freddie Mac will have returned $213.1 billion to taxpayers by the end of June in return for the $187.5 billion in aid they received after being placed under the government's wing at the height of the financial crisis.

Freddie and Fannie are monopoly housing finance providers. They provide subsidized housing rates. Without them no one would lend at 3.5% for 30 years. When their bosses are controlling interest rates, it is very easy to make money. However, the return of $213bn on $187bn of aid from lender of last resort, i.e. Fed, is not a positive return on a risk adjusted basis. Wonder where federal reserve got the money from?

[TSJones]

Wonder where federal reserve got the money from?

Sigh.

[panduranghari]

Freddie and Fannie are monopoly housing finance providers. They provide subsidized housing rates. Without them no one would lend at 3.5% for 30 years. When their bosses are controlling interest rates, it is very easy to make money. However, the return of $213bn on $187bn of aid from lender of last resort, i.e. Fed, is not a positive return on a risk adjusted basis. Wonder where federal reserve got the money from?

Through peak exorbitant privilege. At least that's how I understand it.

[akashganga]

Wonder where federal reserve got the money from?

Sigh.

Federal reserve creates US dollars out of thin air. They can print as much US dollars as they want. Actually it is easier than printing for them. All they do is add as many zeroes as they want at the end of their balance in their computer records. This is a fact and not a joke.

[TSJones]

^^^Actually it goes a bit deeper than that. What it really is, is the full faith and credit of the US banking system. As long as the Fed doesn't breach that, then they can get away with creating fiat money however much they want. If they breach that trust then Zimbabwe results. the public will panic. But that is a very big *if*.

What is the "faith and credit" of the US banking system?

Very simple.

That is the ability to make loans and thereby generate business. At least it sounds simple doesn't it?

[Theo_Fidel]

And the willingness of people to work/trade for dollars. All of India will drop what its doing to try and earn a dollar.

Nothing else matters, not printing, deficit , QE1, QE2 QE3, etc.

The ultimate back stop is of course the $16 Trillion of new cumulative wealth Americans and the American economy generates every year. Think about that for a moment. In 10 years $160 Trillion of wealth. Turns the deficit into a rounding error does it not.

[TKiran]

Where is the dollars hiding? It was 2 trillions $ in china in 2009. It still is the same in china as on today. 1.5 trillions $ in Japan in 2009, still the same today.

In 2009 external debt was 9 trillion $ for US. Now after 5 years it is 16 trillions $. So 7 trillion external debt added in 5 years, but where is that money?

[TSJones]

Where is the dollars hiding? It was 2 trillions $ in china in 2009. It still is the same in china as on today. 1.5 trillions $ in Japan in 2009, still the same today.

In 2009 external debt was 9 trillion $ for US. Now after 5 years it is 16 trillions $. So 7 trillion external debt added in 5 years, but where is that money?

If you are asking about US treasuries, that would be the Fed Reserve, the retail US banking system, gigantic hedge funds all over the globe, Social Security Administration, various other US government agencies, pension funds global, etc and finally last but not least individual investors all over the globe.

[TSJones]

The ultimate back stop is of course the $16 Trillion of new cumulative wealth Americans and the American economy generates every year. Think about that for a moment. In 10 years $160 Trillion of wealth. Turns the deficit into a rounding error does it not.

Like I said, the ability to make loans and generate business.

...the quickest way to the top of the bank is to be a rainmaker, that is to be a highly successful loan officer, a super salesman.

[Austin]

And the willingness of people to work/trade for dollars. All of India will drop what its doing to try and earn a dollar.

You can bet most of India would rather earn their Rupee or Gold .....may be you are talking of NRI's

Nothing else matters, not printing, deficit , QE1, QE2 QE3, etc.

Then why the sweat and pain why even maintain those statistics if it dint really matter at all .....just keep printing and be merry.

[Neshant]

The ultimate back stop is of course the $16 Trillion of new cumulative wealth Americans and the American economy generates every year. .

Its amazing how fast the "new wealth" generated from 2000 to 2008 from huge leveraged bets placed on housing evaporated into thin air. I'm certain all major banks in the US are in fact insolvent and have been so since 2008.

Since then all kinds of schemes have been implemented to re-constitute that wealth by inflating the value of housing and all leveraged bets based on housing - which must be frighteningly massive.

There is a lot of bogus "new wealth" being created that way. Nobody knows when but history shows it all comes out in the wash. I do think the ones who created this mess are trying to use the machinery of govt and their control over the monetary system to shift the maximum amount of their losses onto the backs of others.

The great thing about 2008 however is that many people are aware of this scam thanks to the internet - something else the banking goons want to control & monitor. A lot of these western democracies are slowly sliding into an Orwellian nightmare with govt monitoring citizens for the benefit of corporate & banking goons. It is to supress anyone opposing their (private bank) control of the system via NSA, "terrorist" laws, and other nefarious means. Eventually the western democracies will be democracies only in name.

As Andrew Jackson said, it is from the control & corruption of money that all mischief springs (I paraphrase).

[Austin]

Paul Craig Roberts Warns "The US Economy Is A House Of Cards"

[TKiran]

TSJ, US GDP is the ultimate guarantor of continuance of the Giant Ponzi scheme. What if there is disruption to US consumption? What if there is a wealthy nation and it wants to buy off US assets?

[Theo_Fidel]

Neshant,

That is silly.

The private housing stock in the USA is worth well north of $80 Trillion and $ Trillions are spent every year maintaining it in top quality. The capital base has not disappeared even if the bankers and their fees continue to squeeze that base. Every year America generates $16 Trillion of new wealth, of which you & I play a small part. A small part of this wealth is used to maintain the capital stock. This is not bogus wealth. Honestly this is not up for revisionism.
---------------------------

BTW USA capital assets exceed $200 Trillion at last count. Now which fool hardy nation wants to try and buy this off!!

[Neshant]

There is no 16 trillion of anything being generated - you'd been conned by charlatan hare brained economists who have no understanding of wealth creation.

The main reason for all the market rigging & money printing is to hold up the bogus (over)-valuation of all ASSets in the US and indeed all of the western world.

As an example, most of these economists inhabit useless parasitic middle man "industries" like banking which produce nothing yet constitute a large portion of the GDP. Finance, Insurance, Real Estate (FIRE) by and large are wealth consuming (and in many cases wealth destroying) and not wealth producing industries.

However even bogus "industries" like banking with bogus contributions to GDP pale in comparison to the ultimate bogus metric for conjuring wealth ---- leverage. That 8 letter word is what has already cooked the goose of all western economies.

Simply put when real estate values fall and a company is leveraged 40 to 1 on average with multiple layers of leverage above that inverted pyramid, there is no coming back from that. That loss has to be borne by some entity in the end and there just aren't enough suckers around to fleece. What's happening now is merely a papering over of that mess to forestall the realisation among the masses that they've been had.

Currently, a vast amount of debt is being spent in the name of stimulus and a vast amount of value being destroyed/misallocated in the economy through money printing & market rigging. This can't end well - surely.

Mises has some great quotes on this.

[TSJones]

TSJ, US GDP is the ultimate guarantor of continuance of the Giant Ponzi scheme. What if there is disruption to US consumption? What if there is a wealthy nation and it wants to buy off US assets?

If there is disruption of US consumption then we will have deflation and the dollar will get stronger. Way stronger. If you have any dollars left that is. Right now there just isn't that demand in the US and we're having a stubborn unemployment problem. Walmart and the Dollar General Stores sales are down. The working class just doesn't have the cash to spend. The Fed is trying to stimulate demand with low interest rates and QE stimulus but the economy is stubborn. China is not doing much better. It's slowing down also. I hope that will give everybody a break on commodity prices eventually.

BTW, practically all countries print money to the amount they think the economy will allow, including India. It's not just the US. China controls their currency in order to export. All countries manipulate. It's just the US is more transparent about it than a lot of other countries.

[Theo_Fidel]

Neshant, you are being incoherant now. Don’t turn your angst against the bankers into an attack on the hard labor of the workers. The workers are still working and generating wealth. They are the only ones holding up the entire system. If you think the GDP of a country is a ponzi scheme where does one even begin. By your analogy we should all stop working and head for vanvas. The wealth of the USA is built on definite wealth creation at the bottom and middle tiers. It indeed is a shame that the bankers have found a way to siphon increasing amounts of that effort up to themselves. Much of it by by the financing and mortgaging and electronic gambling industries as you point out. But all of their fees and wealth is underwritten by the ability of USA workers to produce wealth. No workers and the Hedgefunds of the world will implode overnight. The workers create the wealth the USA and the USA dollar rests on.

[DavidD]

Neshant, you are being incoherant now. Don’t turn your angst against the bankers into an attack on the hard labor of the workers. The workers are still working and generating wealth. They are the only ones holding up the entire system. If you think the GDP of a country is a ponzi scheme where does one even begin. By your analogy we should all stop working and head for vanvas. The wealth of the USA is built on definite wealth creation at the bottom and middle tiers. It indeed is a shame that the bankers have found a way to siphon increasing amounts of that effort up to themselves. Much of it by by the financing and mortgaging and electronic gambling industries as you point out. But all of their fees and wealth is underwritten by the ability of USA workers to produce wealth. No workers and the Hedgefunds of the world will implode overnight. The workers create the wealth the USA and the USA dollar rests on.

Very good note. In the end, humans over the past thousands of years have become wealthier by becoming more productive. Whereas each man often couldn't even only produce enough food for his family 1000 years ago, now a farmer can produce enough food to feed thousands. With that said, economists and associated professions (e.g. bankers) aren't useless parasites either. They help to ensure the efficient allocation of wealth, so that more of what we produce is invested in sectors where there is public demand. That is, they help to ensure that supply meets demand as smoothly as possible. It's unfortunate that they siphon off so much wealth in the process, but in the end, a nation can only be rich if it produces.

[Austin]

In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss the warning from legendary stock market speculator Jesse Livermore that speculation is “not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.” And, yet, speculation has become the economic model for a nation of stupid and mentally lazy speculator-taxpayers. They also discuss splat collateralized debt obligations and fracking Walden Pond to pay off our bad debts. In the second half, Max interviews Steve Keen, author of “Debunking Economics,” about housing bubbles, falling wages and why Mom & Pop investors are always wrong.

http://rt.com/shows/keiser-report/15789 ... ax-keiser/

[Austin]

Observations from my recent travels in the Land of the Free

[Neshant]

The workers are still working and generating wealth. They are the only ones holding up the entire system. If you think the GDP of a country is a ponzi scheme where does one even begin. By your analogy we should all stop working and head for vanvas. The wealth of the USA is built on definite wealth creation at the bottom and middle tiers.

A small proportion of real productive output is wealth. A large proportion however is nothing more than smoke & mirrors. As I mentioned, the banking "industry" is supposedly worth many trillions of dollars. Yet it produces absolutely zero and lives as a parasite would off a host. Its filled with millions of "working professionals" who do absolutely nothing other than wear suits and sit in offices looking like they are doing something useful. Its only source of profits is scamming it from the productive economy and placing leveraged bets with the wealth of producers to raid for bailouts.

So how does this useless middleman industry have a component in GDP measure? In reality, its value is negative yet it shows up as a positive.

GDP measurements are thus all wrought with fraud. The more banking & bullsh&tting you have in an economy, the larger the GDP since it all involves gambling with leverage. But what happens once those leveraged bets implode as it did in 2008.

That's what Mises meant (I think) when he said :

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

[Neshant]

With that said, economists and associated professions (e.g. bankers) aren't useless parasites either. They help to ensure the efficient allocation of wealth, so that more of what we produce is invested in sectors where there is public demand. That is, they help to ensure that supply meets demand as smoothly as possible. It's unfortunate that they siphon off so much wealth in the process, but in the end, a nation can only be rich if it produces.

The whole idea of some "wise men" sitting up in ivory towers dictating fiddling around with interest rates (aka price fixing) as if they are some all-knowing oracle is absurd. What part of that is capitalism and who says they can predict supply & demand?

Capitalism is based on the free market dictating supply and demand, not some guys in an ivory tower.

Inevitably these guys end up corrupt since they control the money printing press. They print up money and hand it out to their cronies the private banks who in turn give them kickbacks when they leave office. Why else do you think certain Wall St companies are willing to pay Bernanke $250K to give a speech and Geitherner (ex-Treasury Secretary) millions to join their hedge fund.

[TSJones]

Neshant serious question. Do you or do you not think the bankers (read that actuary underwriters) know what the demands for loans are and more importantly know what the demand will be at various levels of interest rates?

Did you know that a good actuary can predict credit card demand by interest rate, also default rates by interest rate as well as mortality rate of the debtor there of? ........well into the future? Also predict whne uou are most likely to default.....well into the future? Big data, buddy........