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Central Bank of India
23 июня, 21:09

Can India ETFs Continue to Shine After Rajan Exit?

Raghuram Rajan exit and new FDI rules that would allow companies like Apple to open own stores in India bring India ETFs in focus.

02 марта 2015, 00:03

Australia's Mining Bust Turns Towns Into Ghost Towns; Expect Interest Rate "Shock and Awe"

As Australia's mining boom turns to bust, Towns are Dying the Death of a Thousand Cuts as Miners Leave in Droves. Locals say the main street of Dalby resembles a ghost town these days – a sad indication of a mining boom ending too soon for some. Things have taken a turn for the worse since the glory days of the mining construction boom, with companies responding to falling commodity prices by pulling the plug on new projects and laying off workers across the Surat Basin. The increasing exodus of workers, investment and money from the mining towns has left houses empty and businesses struggling, with many of those left behind wondering what to do next. Di Reilly, owner of Mary’s Commercial Hotel on Dalby’s Cunningham St, said much had changed since 2013 when thirsty miners packed into the pub every Friday and Saturday night. “We used to open the old bar up and the whole place would be chock-a-block,” she said. Things were going so well that Ms Reilly began a revamp of the pub before the numbers tapered off, leaving her with a half-renovated bar and plummeting income. The old bar now sits unrenovated and empty, a dusty reminder of plans gone awry. “They were saying it was going to last 10 years but it hasn’t,” she said. “I was going to do the whole pub up, so I was banking on it that they would be here a little longer than they were, but it just stopped all of a sudden. It just got cut off.” The impact on her bottom line has been astonishing, with turnover last December down $100,000, slashed in half from the previous year. Down the road, electronics retailer Colin Fountain speaks of the boom in the past tense. “I’ve definitely noticed a slowdown. Sometimes when you look down the street you’d think you were in a ghost town,” he said. Further west in Chinchilla, the effects of the mining construction boom have mainly been felt in the real estate sector, where rents and house prices doubled from cashed-up workers arriving in the town. Long-term residents said many pensioners had been forced to leave because of high housing prices and now that prices had fallen some weren’t coming back. One real estate agent said “a hell of a lot” of property was on the market – about 400 houses were for rent or sale and buyers were scarce.Record Low Interest Rates On February 3, and in response to tumbling oil and mineral prices, and irrational deflation worries, Australia Cut Interest Rates to Record Low. Australia cut its benchmark interest rate to a record low of 2.25% Tuesday, joining a procession of central banks that have eased policy settings this year in response to the deflationary impact of tumbling oil prices. The 0.25-percentage-point cut represents a dramatic shift for the Reserve Bank of Australia—which ended 2014 with a message to financial markets that interest-rate stability was likely to feature again in 2015, to help underpin certainty for businesses and support the economy as a mining-investment boom fizzles out. The Australian dollar fell sharply on the announcement of a cut, dropping to a fresh 5½-year low, while the stock market surged to the highest level since May 2008. The Reserve Bank of Australia joins the Monetary Authority of Singapore, Reserve Bank of New Zealand, European Central Bank, Bank of Canada and the central banks of India, Denmark and Switzerland in either announcing substantial policy shifts or easing monetary settings—in some cases dramatically—since Jan. 1. Throughout last year, Australia’s central bank repeatedly stressed it would be appropriate for rates to remain stable for some time. It removed that reference on Tuesday, leaving open the door to more cuts. In Tuesday’s statement, Mr. Stevens said the jobless rate—currently 6.1%—would likely peak a little higher than had been anticipated. Definitions Needed I need a definition of "little" and also a definition what had been "anticipated". The statement made by Stevens can literally mean anything. Most likely, little really means little. And given that central bankers are totally clueless, it's highly likely what had been anticipated was far too low. Thus, vagueness aside, I will bet on the "over" line, "way over" in fact. With no recession in 23 years, and with wages and prices of goods dramatically out of line with the rest of the world, and with one of the world's biggest property bubbles, the upcoming recession in Australia will be a doozie. Expect Interest Rate "Shock and Awe"  Australia has room for 9 quarter point cuts before zero is hit. But cuts won't happen that way. Accompanied by some sort of shock-and-awe statement, I expect Australia to cut rates 100 basis points or more at some point. Addendum - "Houses and Holes" - Tweet from Steve Keen Shortly after finishing the above, I heard from Steve Keen who emailed ... "Good read mate--I've tweeted it. It's rather weird to watch my home country as an observer from England now. A colleague describes Australia's economic policies as 'Houses and Holes', and that about sums it up. Now all that's left is a property bubble and flogging our real estate to overseas borrowers--which coincidentally pretty much describes economic policy in the UK as well." Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.comMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

05 февраля 2015, 12:36

Australia Coming Apart at the Seams

With the huge spotlight on Europe, Greece, the US Dollar, Canada, Switzerland, and China, it's easy to lose track of major things outside of mainstream attention. Like what? Like Australia. Australian Government on Brink of Collapse  Conservatives swept into power into Australia in September of 2013 in the biggest Labour rout in history. In December of 2013 I wrote Australia's Alleged Conservatives Surrender to Unions; Currency Madness Everywhere. Shockingly, Australian conservatives may not last even one full term. Three days ago The Australian reported Queensland election 2015: Labor on brink of forming government. My friend Brisbane Bear, from down under reported ... Hey Mish, We have experienced the biggest political earthquake I have ever seen in my home state of Queensland. The government has lost power after one term. The Queensland Premier lost his seat. This after winning the biggest landslide win in history with a mandate to fix the financial mess created by Labor. They held 79 seats to 7. And now they lost. This sort of volatility is now the norm. People hate austerity. People know the party is over and are very surly and angry. These are good elections to lose as there are no easy answers, only very hard, unpopular decisions. We are in for one hell of a ride. Regards Brisbane BearI asked BB what this all meant. He replied ... Massive impact! Federal election is just under 2 years away. The Prime Minister Tony Abbottis in serious trouble and will battle to hold the top job. A leadership spill is rumored. Meaning of Liberal What follows may not make much sense unless one understands the meaning of "Liberal" in Australian politics. Liberals Believe: In the inalienable rights and freedoms of all peoples; and we work towards a lean government that minimises interference in our daily lives; and maximises individual and private sector initiative In government that nurtures and encourages its citizens through incentive, rather than putting limits on people through the punishing disincentives of burdensome taxes and the stifling structures of Labor's corporate state and bureaucratic red tape. In those most basic freedoms of parliamentary democracy - the freedom of thought, worship, speech and association. In short, we simply believe in individual freedom and free enterprise; and if you share this belief, then ours is the Party for you. Simply put, liberal means conservative to US readers. With that in mind, let's continue. Prime Minister Leadership is Terminal Please consider Tony Abbott Leadership Now ‘Terminal’. Former Victorian premier Jeff Kennett has unloaded on Tony Abbott’s “terminal” leadership, saying he must be dumped “as quickly as possible” or risk destroying the Coalition government. Liberal MPs Dennis Jensen and Warren Entsch last night publicly declared that the Prime Minister no longer had their support, while former Howard government cabinet minister Mal Brough vouched only “qualified support” for Mr Abbott and demanded he scrap the proposed $5 Medicare co-payment. Mr Kennett, who led Victoria between 1992 and 1999, said Mr Abbott had lost the support of both the Liberal Party base and the broader public. “I think sadly the realisation has dawned on most politicians that where the leadership of the party is now terminal. It needs to be resolved as quickly as possible so that the party can move on,” Mr Kennett told ABC Radio. “Now I say that sadly. I feel very sorry for Tony. He’s a man of very good values. But most of where we are at the moment as a government is self-inflicted. We are 12 weeks away from the 2015 budget and we haven’t passed the 2014 budget.Liberal MP Dennis Jensen Calls on Tony Abbott to Resign Yesterday, the Sydney Morning Herald reported Liberal MP Dennis Jensen Calls on Tony Abbott to Resign. Tony Abbott's leadership has been rocked by a political earthquake and is under imminent threat, with backbench MPs variously calling for the Prime Minister to resign, for a party room ballot next week and expressing doubt he can revive his political fortunes. A day after Mr Abbott used a National Press Club address to dig in and signal unhappy MPs would have to blast him out of office, backbench MPs were in open revolt at the direction of his government on Tuesday night. Liberal MP Dennis Jensen on Tuesday became the first MP to publicly call on Mr Abbott to step aside after weeks of leadership speculation and rising panic on the government backbench about the Coalition's dire position. Foreign Minister Julie Bishop ruled out directly challenging Mr Abbott for the leadership but has reserved the right to put up her hand if someone else moved to force him to declare the position vacant and hold a ballot. Other MPs join in criticism of Tony Abbott Queensland Liberal National Party backbencher Warren Entsch told Fairfax Media on Tuesday night that he supported a party room ballot as soon as next week when parliament sits for the first time in 2015. "It [the leadership] needs to be resolved," he said. Jensen added that he didn't believe there was anything Mr Abbott could now do to save his leadership, just a day after the Prime Minister gave a major speech at the National Press Club designed to regain support and buy him some time.Government in Treacherous Waters The Australian reports Government in Treacherous Waters.  The Abbott government is being destroyed before our eyes. The Liberal Party’s frustrations and divisions have cracked wide open. It has taken only 17 months for a sizeable section of the party to announce that Tony Abbott has failed as PM and needs to be liquidated. The internal chaos that ruined the former Labor government has now penetrated the Abbott government. While Abbott’s chances of staging a poll recovery were unlikely, the internal convulsion makes this virtually impossible. As Abbott fights, the debate is shifting to discussion about a new leadership team. Australia now stares down the gun barrel of a third partyroom assassination of a PM in five years. Is there anybody stupid enough to think our politics is not broken? US Version of Story On February 3, the Wall Street Journal reported Australia Cuts Interest Rates to Record Low. Australia cut its benchmark interest rate to a record low of 2.25% Tuesday, joining a procession of central banks that have eased policy settings this year in response to the deflationary impact of tumbling oil prices. The 0.25-percentage-point cut represents a dramatic shift for the Reserve Bank of Australia—which ended 2014 with a message to financial markets that interest-rate stability was likely to feature again in 2015, to help underpin certainty for businesses and support the economy as a mining-investment boom fizzles out. Gov. Glenn Stevens said the decision to come off the sidelines for the first time in 18 months was driven by concern that Australia’s resource-rich economy was facing another year of below-average growth. The Australian dollar fell sharply on the announcement of a cut, dropping to a fresh 5½-year low, while the stock market surged to the highest level since May 2008.No Mention of Massive Political Crisis There was not one mention in the Journal of massive, and unprecedented political turmoil. Instead we see this ... The Reserve Bank of Australia joins the Monetary Authority of Singapore, Reserve Bank of New Zealand, European Central Bank, Bank of Canada and the central banks of India, Denmark and Switzerland in either announcing substantial policy shifts or easing monetary settings—in some cases dramatically—since Jan. 1. Australia faces a slowing global economy, especially slowing demand of China for natural resources. A housing bust, baked in the cake is going to tremendously exacerbate Australia's woes. And icing on the ruins is the potential return of Labour. 2013 Flashback Mish Flashback May 2, 2013: Australia Manufacturing Collapses as Commodity Supercycle Stalls; Labor and Unions Wrecked Australia. Labor and Unions Wrecked Australia The labor party and unions wrecked Australia. This was invisible for years because a housing boom and China-fueled commodity boom masked the untenable nature of wage and property bubble growth. Now, it's payback time. On September 14, prime minister Julia Gillard, leader of the Australian Labor Party will be thrown out of office in a landslide. Unfortunately, it will take years for Australia to recover from the damage caused by Labor. Addendum - Comments from Steve Keen Steve Keen blames both parties. Via email, Keen says "The damage began under Labor with Hawke and Keating, was turbocharged by the Liberals under Howard, and simply maintained by Rudd/Gillard Labor. And unions have lost significant power all the way through--they've been bystanders, not active participants. It's instead been a series of distortions caused by a neoliberal philosophy that is shared by both parties." Hmm. Parties talk differently but act the same. Where have we seen that before? In the US, it's on war, bailouts, and spending that always goes up. Romneycare and Obamacare were the same. For political purposes people pretend differences exist when they don't, except on some social issues.2012 Flashback Mish Flashback September 4, 2012: By 2015 Hard Commodity Prices Will Collapse; Australia's Mining Boom Dies (and the Official Denials Start) I have been calling for a base metals bust for some time, fueled by a slowdown in China. Michael Pettis at China Financial Markets has been saying the same thing. Indeed, it is analysis from Pettis that influenced my views in the first place.In that post I quoted Australian prime minister (at that time) Julia Gillard who said "There is no question about whether we have a boom, the issue is whether we make it last. Let’s be clear, reports of the mining boom's death are exaggerated." I responded ... It is not up to Australia at all whether the boom is over or not. The boom is entirely dependent on what China does or doesn't do. Moreover, there is no question the boom is over. The real question is "How big is the bust?" Question of Faith Some put their faith in hyperinflation, commodity supercycles, and the belief China could expand forever. I put my faith elsewhere. Thanks once again to those who helped me reach the right conclusions. Michael Pettis and Steve Keen are in that group. I mentioned both Pettis and Keen above, and both of them recently in Financial Blogger Profile of "Mish" on Equities.Com. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

16 декабря 2014, 20:26

Gold Imports ‘Phenomenal’ In India - 571 Percent Surge To 150 Tonnes in November

Gold Imports ‘Phenomenal’ In India - 571 Percent Surge To 150 Tonnes in November India's gold imports were over a staggering 150 tonnes in November and have seen a "phenomenal" rise in India, according to India’s Trade Secretary, Rajeev Kher. A few weeks ago we said that the death of the Indian gold market was greatly exaggerated. The latest gold import data out of India confirms this. The import restrictions on gold that were imposed on Indians in August of 2013 were lifted at the end of last month. Despite the fact that the restrictions were still in place gold importation in November surged an incredible 571% relative to the same month last year at over 151.58 tonnes. This was an increase of 38 percent from 109.55 tonnes a month earlier, trade ministry data showed on Tuesday. The Indian government had recognised the socially destructive impact of the 80:20 scheme - which obliged importers to export 20% of it’s gold imports before bringing in another shipment – by pushing business into the hands of smugglers and thereby empowering criminality while losing out on the 10% duty currently charged on all gold imports. It had been assumed that, because demand was being met by these “informal” supplies, the relaxing of the 80:20 policy would not have a dramatic impact on gold imports into India. That remains to be seen. Smuggling networks are now well established and arguably could provide cheaper gold than government-sanctioned channels. The restrictions were put in place because the appetite of the growing Indian middle classes for gold was causing India to run large trade deficits. It is believed that it was also a misguided attempt at financial repression of gold in order to discourage Indians from buying physical gold. There were concurrent attempts to get Indians to open bank accounts and indeed to own digital and paper gold. This highlights once again how deeply Indians feel about gold in that demand for this single commodity or form of money - could skew the trade deficit in such a dramatic way. India officially imported $5.6 billion worth of gold in November. The trade deficit increased to $16.9 billion in the same period despite the cost of oil imports being low. This is putting pressure on the rupee which is currently valued at almost 63 to the dollar. The central bank appears happy enough at this level as it will help boost exports which have been booming. However, India’s trade secretary - Rajeev Kher - has said that any level below 62 rupees to the dollar would cause him to be a “little more concerned.”   Russia’s drastic rate hike of 6.5% up to 17% is likely to further unnerve the Indian government as it tries to balance insatiable public demand for gold with the need to rein in the deficit. If the rupee falls more, India will be forced to raise rates to discourage capital flight. However, taking the longer term view, it must be said that – as a country that imports between 25% and 33% of the global gold supply – India will be well placed when currency wars deepen and the inevitable world-wide monetary reset occurs. India’s imports are around the 1,000 metric tonne mark and global gold production is just under 3,000 metric tonnes. We believe that it will be eastern countries who will determine monetary policy when that time comes. As Russia’s foreign minister Lavrov has pointed out the seven countries led by the BRICS nations now have a larger combined GDP than the western G7. The old adage that “those who own the gold make the rules” will likely come to pass again. As it did in 1945, when the U.S. was the largest holder of gold in the world which enabled it to dictate the terms of the new Bretton Woods monetary system. This seems likely given the affinity that the people, governments and central banks of India, China and the East have for gold as a store of value. Essential Guide to  Storing Gold Bullion In Singapore MARKET UPDATE Today’s AM fix was USD 1,199.25, EUR 960.25 and GBP 763.95 per ounce. Yesterday’s AM fix was USD 1,210.75, EUR 974.53 and GBP 772.41 per ounce. Spot gold slid $30.40 or 2.49% to $1,191.70 per ounce yesterday and silver plummeted $0.87 or 5.12% to $16.14 per ounce despite no market moving news or developments.  Gold in USD - 5 Days (Thomson Reuters) Gold in Singapore was flat overnight in Asia prior to gold bouncing back from yesterday’s biggest drop this year and is over 2% higher today as buyers accumulate after yesterday’s dip. Traders await the policy statement from the U.S. Federal Reserve meeting tomorrow. Gold fell yesterday as U.S. manufacturing data beat estimates supporting the case for higher borrowing costs next year. Federal Reserve officials meet today and tomorrow to debate the possibility of rising U.S. interest rates, which have been near zero since 2008. Silver for immediate delivery rose 2.5% to $16.70 an ounce, after plunging by 5.1% yesterday. Platinum was little changed at $1,209.88 an ounce. Palladium added 0.3% to $800.38 an ounce. Holdings in gold-backed ETPs dropped 3 metric tons to 1,608.2 tons as of yesterday, Bloomberg data showed.  Silver in USD - 5 Days (Thomson Reuters) The world's second largest gold consumer surprised analysts and discarded a rule for traders to export 20% of all gold imports.  This change led to gold imports surging to 151.58 tonnes in November, an increase of 38% from 109.55 tonnes a month earlier, noted the trade ministry data yesterday. Indian gold imports had risen hugely and the government should examine the impact of last month's revision of the so-called 80:20 rule commented Trade Secretary Rajeev Kher. The global price of crude oil plummeted through $60 a barrel for the first time in five years with almost no signs producers are ready to tackle a glut. Brent futures slid as much 3.3% to its lowest since May 2009 in London. Crude oil fell about 45% this year as OPEC (Organization of Petroleum Exporting Countries) sought to defend market share amid a U.S. shale boom that’s exacerbating a global glut. The group, responsible for 40% of the world’s supply, will refrain from curbing output, U.A.E. Energy Minister Suhail al-Mazrouei said over the weekend. Get Breaking News and Updates On Gold Here    

15 февраля 2014, 05:20

20 Signs That The Global Economic Crisis Is Starting To Catch Fire

Submitted by Michael Snyder of The Economic Collapse blog, If you have been waiting for the "global economic crisis" to begin, just open up your eyes and look around.  I know that most Americans tend to ignore what happens in the rest of the world because they consider it to be "irrelevant" to their daily lives, but the truth is that the massive economic problems that are currently sweeping across Europe, Asia and South America are going to be affecting all of us here in the U.S. very soon.  Sadly, most of the big news organizations in this country seem to be more concerned about the fate of Justin Bieber's wax statue in Times Square than about the horrible financial nightmare that is gripping emerging markets all over the planet.  After a brief period of relative calm, we are beginning to see signs of global financial instability that are unlike anything that we have witnessed since the financial crisis of 2008.  As you will see below, the problems are not just isolated to a few countries.  This is truly a global phenomenon. Over the past few years, the Federal Reserve and other global central banks have inflated an unprecedented financial bubble with their reckless money printing.  Much of this "hot money" poured into emerging markets all over the world.  But now that the Federal Reserve has begun "tapering" quantitative easing, investors are taking this as a sign that the party is ending.  Money is being pulled out of emerging markets all over the globe at a staggering pace and this is creating a tremendous amount of financial instability.  In addition, the economic problems that have been steadily growing over the past few years in established economies throughout Europe and Asia just continue to escalate.  The following are 20 signs that the global economic crisis is starting to catch fire... #1 The unemployment rate in Greece has hit a brand new record high of 28 percent. #2 The youth unemployment rate in Greece has hit a brand new record high of 64.1 percent. #3 The percentage of bad loans in Italy is at an all-time record high. #4 Italian industrial output declined again in December, and the Italian government is on the verge of collapse. #5 The number of jobseekers in France has risen for 30 of the last 32 months, and at this point it has climbed to a new all-time record high. #6 The total number of business failures in France in 2013 was even higher than in any year during the last financial crisis. #7 It is being projected that housing prices in Spain will fall another 10 to 15 percent as their economic depression deepens. #8 The economic and political turmoil in Turkey is spinning out of control.  The government has resorted to blasting protesters with pepper spray and water cannons in a desperate attempt to restore order. #9 It is being estimated that the inflation rate in Argentina is now over 40 percent, and the peso is absolutely collapsing. #10 Gangs of armed bandits are roaming the streets in Venezuela as the economic chaos in that troubled nation continues to escalate. #11 China appears to be very serious about deleveraging.  The deflationary effects of this are going to be felt all over the planet. The following is an excerpt from Ambrose Evans-Pritchard's recent article entitled "World asleep as China tightens deflationary vice"... China's Xi Jinping has cast the die. After weighing up the unappetising choice before him for a year, he has picked the lesser of two poisons. The balance of evidence is that most powerful Chinese leader since Mao Zedong aims to prick China's $24 trillion credit bubble early in his 10-year term, rather than putting off the day of reckoning for yet another cycle. This may be well-advised for China, but the rest of the world seems remarkably nonchalant over the implications. #12 There was a significant debt default by a coal company in China last Friday... A high-yield investment product backed by a loan to a debt-ridden coal company failed to repay investors when it matured last Friday, state media reported on Wednesday, in the latest sign of financial stress in China's shadow bank sector. #13 Japan's Nikkei stock index has already fallen by 14 percent so far in 2014.  That is a massive decline in just a month and a half. #14 Ukraine continues to fall apart financially... The worsening political and economic circumstances in Ukraine has prompted the Fitch Ratings agency to downgrade Ukrainian debt from B to a pre–default level CCC. This is lower than Greece, and Fitch warns of future financial instability. #15 The unemployment rate in Australia has risen to the highest level in more than 10 years. #16 The central bank of India is in a panic over the way that Federal Reserve tapering is effecting their financial system. #17 The effects of Federal Reserve tapering are also being felt in Thailand... In the wake of the US Federal Reserve tapering, emerging economies with deteriorating macroeconomic figures or visible political instability are being punished by skittish markets. Thailand is drifting towards both these tendencies. #18 One of Ghana's most prominent economists says that the economy of Ghana will crash by June if something dramatic is not done. #19 Yet another banker has mysteriously died during the prime years of his life.  That makes five "suspicious banker deaths" in just the past two weeks alone. #20 The behavior of the U.S. stock market continues to parallel the behavior of the U.S. stock market in 1929. Yes, things don't look good right now, but it is important to keep in mind that this is just the beginning. This is just the leading edge of the next great financial storm. The next two years (2014 and 2015) are going to represent a major "turning point" for the global economy.  By the end of 2015, things are going to look far different than they do today. None of the problems that caused the last financial crisis have been fixed.  Global debt levels have grown by 30 percent since the last financial crisis, and the too big to fail banks in the United States are 37 percent larger than they were back then and their behavior has become even more reckless than before. As a result, we are going to get to go through another "2008-style crisis", but I believe that this next wave is going to be even worse than the previous one. So hold on tight and get ready.  We are going to be in for quite a bumpy ride.        

14 февраля 2014, 04:24

20 Signs That The Global Economic Crisis Is Starting To Catch Fire

Michael Snyder Activist Post If you have been waiting for the "global economic crisis" to begin, just open up your eyes and look around.  I know that most Americans tend to ignore what happens in the rest of the world because they consider it to be "irrelevant" to their daily lives, but the truth is that the massive economic problems that are currently sweeping across Europe, Asia and South America are going to be affecting all of us here in the U.S. very soon. Sadly, most of the big news organizations in this country seem to be more concerned about the fate of Justin Bieber's wax statue in Times Square than about the horrible financial nightmare that is gripping emerging markets all over the planet.  After a brief period of relative calm, we are beginning to see signs of global financial instability that are unlike anything that we have witnessed since the financial crisis of 2008.  As you will see below, the problems are not just isolated to a few countries.  This is truly a global phenomenon. Over the past few years, the Federal Reserve and other global central banks have inflated an unprecedented financial bubble with their reckless money printing.  Much of this "hot money" poured into emerging markets all over the world.  But now that the Federal Reserve has begun "tapering" quantitative easing, investors are taking this as a sign that the party is ending.  Money is being pulled out of emerging markets all over the globe at a staggering pace and this is creating a tremendous amount of financial instability.  In addition, the economic problems that have been steadily growing over the past few years in established economies throughout Europe and Asia just continue to escalate.   (adsbygoogle = window.adsbygoogle || []).push({});  The following are 20 signs that the global economic crisis is starting to catch fire... #1 The unemployment rate in Greece has hit a brand new record high of 28 percent. #2 The youth unemployment rate in Greece has hit a brand new record high of 64.1 percent. #3 The percentage of bad loans in Italy is at an all-time record high. #4 Italian industrial output declined again in December, and the Italian government is on the verge of collapse. #5 The number of jobseekers in France has risen for 30 of the last 32 months, and at this point it has climbed to a new all-time record high. #6 The total number of business failures in France in 2013 was even higher than in any year during the last financial crisis. #7 It is being projected that housing prices in Spain will fall another 10 to 15 percent as their economic depression deepens. #8 The economic and political turmoil in Turkey is spinning out of control.  The government has resorted to blasting protesters with pepper spray and water cannons in a desperate attempt to restore order. #9 It is being estimated that the inflation rate in Argentina is now over 40 percent, and the peso is absolutely collapsing. #10 Gangs of armed bandits are roaming the streets in Venezuela as the economic chaos in that troubled nation continues to escalate. #11 China appears to be very serious about deleveraging. The deflationary effects of this are going to be felt all over the planet. The following is an excerpt from Ambrose Evans-Pritchard's recent article entitled "World asleep as China tightens deflationary vice"... China's Xi Jinping has cast the die. After weighing up the unappetising choice before him for a year, he has picked the lesser of two poisons. The balance of evidence is that most powerful Chinese leader since Mao Zedong aims to prick China's $24 trillion credit bubble early in his 10-year term, rather than putting off the day of reckoning for yet another cycle. This may be well-advised for China, but the rest of the world seems remarkably nonchalant over the implications.#12 There was a significant debt default by a coal company in China last Friday... A high-yield investment product backed by a loan to a debt-ridden coal company failed to repay investors when it matured last Friday, state media reported on Wednesday, in the latest sign of financial stress in China's shadow bank sector.#13 Japan's Nikkei stock index has already fallen by 14 percent so far in 2014.  That is a massive decline in just a month and a half. #14 Ukraine continues to fall apart financially... The worsening political and economic circumstances in Ukraine has prompted the Fitch Ratings agency to downgrade Ukrainian debt from B to a pre–default level CCC. This is lower than Greece, and Fitch warns of future financial instability.#15 The unemployment rate in Australia has risen to the highest level in more than 10 years. #16 The central bank of India is in a panic over the way that Federal Reserve tapering is affecting their financial system. #17 The effects of Federal Reserve tapering are also being felt in Thailand... In the wake of the US Federal Reserve tapering, emerging economies with deteriorating macroeconomic figures or visible political instability are being punished by skittish markets. Thailand is drifting towards both these tendencies.#18 One of Ghana's most prominent economists says that the economy of Ghana will crash by June if something dramatic is not done. #19 Yet another banker has mysteriously died during the prime years of his life.  That makes five "suspicious banker deaths" in just the past two weeks alone. #20 The behavior of the U.S. stock market continues to parallel the behavior of the U.S. stock market in 1929. Yes, things don't look good right now, but it is important to keep in mind that this is just the beginning. This is just the leading edge of the next great financial storm. The next two years (2014 and 2015) are going to represent a major "turning point" for the global economy.  By the end of 2015, things are going to look far different than they do today. None of the problems that caused the last financial crisis have been fixed.  Global debt levels have grown by 30 percent since the last financial crisis, and the too big to fail banks in the United States are 37 percent larger than they were back then and their behavior has become even more reckless than before. As a result, we are going to get to go through another "2008-style crisis", but I believe that this next wave is going to be even worse than the previous one. So hold on tight and get ready.  We are going to be in for quite a bumpy ride. This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here. 

05 января 2014, 17:37

The Future of Money is Here: Zero Trust Digital Currency Contracts

 BoomBustBTC contract Note: New subscriber content available below. I have created derivatives for Bitcoin that work exclusively on the Bitcoin network. They are capable of literally replacing the role of the large money center and investment banks. YES! This is a big thing. I will hopefully have a limited use beta example of the first product for the viewers of the show to experiment with. These products have been designed as zero trust contracts (meaning it was designed to eliminate the human judgment factor, thereby nearly completely automating the entire transaction). Currently, trust issues that the conventional OTC banking system products incur severely hamper free flowing capital markets. Greed begets inefficiencies. Digital zero trust contracts (as opposed to physical legal contracts) “theoretically” eliminate litigation and court involvement and expensive dispute resolution through means of the legal system. My BoomBust contracts allows anonymous parties to swap exposure in and out of Bitcoin from many widely traded currencies. (USD, EUR, YEN, CNY, etc.).   The state of the capitalist union today is ripe for Bitcoin activity to explode if knowledge of the platform spreads. Just to list of few catalysts: The lack of trust in the world’s reserve currency, the USD. The financial controls in the world’s most populous nations, India and China. The Pan-European sovereign debt crisis The confiscation of bank deposits in Cyprus (EU Bank Depositors: Your Mattress Is Starting To Look Awfully Attractive - Bank Risk, Reward & Compensation) and Ireland (As Forewarned, Irish Savers Have Just Been "Cyprus'd", And There's MUCH MORE "Cyprusing" To Come) and eventually anywhere banks are overleveraged and/or undercapitalized. The billions of the great “unbanked” of the world, in both 3rd world nations and even in the most developed nations on earth, ex. right here in the US. The paltry returns on loans and bank deposits as well as the unsubstantiated bubble returns on risk assets – all stemming from the Fed’s unprecedented 6 year global ZIRP real time experiment. I commented on this back in 2008 (A real life, real time example of the Great Global Macro Experiment)and it’s still running strong. Possible uses for the BoomBust contracts: Simple investment/speculation Those who want to gain exposure to a foreign or digital currency can easily enter into a swap to gain said exposure without actually having to purchase said currency (other than BTC, of course). Hedging The swap can be used as a simple hedge for any party that has large exposure to BTC, USD, EUR, etc., such as a retailer with low margins and high volume, ex. Chinese widget manufacturer or smartphone OEM, that accepts bitcoin but wants to hedge out the volatility and market risk. The BoomBust contracts can be layered, levered and/or compounded to make more complex hedges as well. Capital flight/mobility & Banking System Bail-in protection Parties who are domiciled in free flowing capital hostile states that have tight capital controls, ex. China, India, and now France with its 75% effective wealth confiscation scheme, etc. that have banned or limited BTC trading by banks and/or individuals can take advantage of the BoomBust contracts to gain multi-currency exposure without explicitly violating the law. Take note that the systems with the tightest capital controls have been the one’s exhibiting the most aggressive stance to bitcoin. Unfortunately, they don’t seem to understand what Bitcoin is and what it can do. I stand to educate the masses. See below… Cyprus banks closed on a Friday and announced confiscation of assets over the weekend. These BoomBust contracts could have been used to move monetary value outside of the Cyprus banking system assuming the participants had a store of Bitcoin (it is rumored that this is how some of the Russian money was removed over the weekend). Let’s assume a small businessman would like to purchase $1M euro worth of bitcoin, yet is concerned that the BTC volatility may cause more of a loss than the Cypriot capital controls. He buys the BTC then hedges his large BTC position into EUR. He proceeds to do that with a quarter of his monthly cashflows, building up a sizeable, fully hedged position in cyberspace (thus, effectively offshore) and outside of the fragile Cyprus banking system. The Cyprus banks pull the trigger to confiscate funds and the Russian bank depositor has significant funds mobile and ready to deliver anywhere in the internet connected world within minutes, even on a Sunday afternoon. Another example of dealing with a company with tight capital controls would be India. India has extremely tight capital controls that have (IMHO) hampered its economic progress relative to China, despite having similar populations and the advantage of a large indigenous English speaking population stemming from British occupation (easier to do business with the larger capitalist nations when more of your constituents speaks the native tongue). India has effectively outlawed trading in bitcoin, but Indians can still participate in the evolution of money by taking advantage of the liberalised remittances scheme of the Central Bank of India, a person can remit up to 75,000 USD offshore annually. These monies can end up in a Bitcoin friendly jurisdiction (amazingly enough, like the US), and be used to purchase BTC hedged, via BoomBust contracts, back into rupees or the currency of choice. indian BTC program This can also work the other way around, which would actually be quite advantageous to the Indian government and potentially make them rethink the real world practicality of capital controls. Even in a country that has capital controls and fears Bitcoin may threaten its banks, a decentralized near friction free currency exchange would be beneficial solely do to international remittances from expats in foreign workers. A real world example are Indians that I know who lose significant money because of PayPal and Western Union fees (not to mention bank wire fees). Indians can send BoomBust digital contract rupee locked BTC home on a deferred basis. The registered exchange or ATM in India however could only be one-way so that it only accepts BTC from the Indian general public in exchange for rupees and not the other way around. Spread Arbitrage On Dec 13th, the EUR/USD exchange rate was roughly .78x, thus if one were to have sold 1 BTC into EUR than purchased USD, a $10.66 spread could have been realized over buying the USD with EUR directly. arbitrage opp  Notice the differences in prices throughout the SAME MARKETS, contingent upon exchange. BTC markets  I am happy to discuss this with institutional and professional subscribers whenever possible. All paying subscribers (click here to subscribe) can download this introduction to our institutional level report on investing in cryptocurrencies:  Digital Currencies' Risks, Rewards & Returns - An Into Into Bitcoin Investing For Longer Term Horizon. There will be much more to follow in the upcoming days. Below is the brief summary as how we have computed the following ratios: Excess Risk Adjusted Return Excess Risk Adjusted Return is defined as returns over and above the required return on asset based on its risk characteristics. BITCOIN being a very volatile asset, the required return of the currency has been computed using the CAPM (Capital Asset Pricing Model) approach. CAPM equation requires a variable known as Return on Market Portfolio (a portfolio comprising of all risky assets, conventional as well as alternative assets like antiques, currencies, private equity investments, etc.). For equity investments, general Market Index shall suffice but in our case the investment is altogether different (Digital Currency) and the conventional market index will be a bad proxy. Best Proxy in our case shall be a diversified Currency Portfolio – comprising all global as well as digital currencies. As such there exists no known proxy/Index consisting all Currencies, We have approximated it by using MSCI – EM Currency Index. The Index comprises a basket of 25 emerging market currencies.  Excess Risk Adjusted Return = (Return on Asset) – (Required Return on asset based on its risk characteristics) Return on Asset (Ra) = Return on B ITCOIN for different periods like 3M, 6M 12M, etc. Required Return on Asset = RFR + ? * (Rm – Ra) RFR = Current US I year Treasury Yield Beta = Covariance of (Returns on Asset & Returns on comparable Index) divided by Variance of (Index Returns) Rm = Long term return on comparable Index, (in our case which is the Currency Index return comprising 25 Emerging Market currencies) What's so eery is that now even Ben Bernanke and I actually agree upon something...  “Digital currencies may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system.”  US Federal Reserve Chairman Ben Bernanke        

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21 октября 2013, 15:04

Are Wal-Mart’s Troubles in India Growing?

Wal-Mart's case has been forwarded to the Central Bank of India. Does that shift indicate a bigger problem for the retailer?

19 сентября 2013, 09:02

Learning from Lehman: Lessons for Emerging Markets from the Financial Crisis

Originally appeared at the Fung Global Institute By Liu Mingkang When the U.S. investment bank Lehman Brothers collapsed five years ago, emerging-market economies did not hold many of the toxic financial assets – mainly American subprime mortgages – that fueled the subsequent global financial crisis. But they were deeply affected by the drop in world trade, which recorded a peak-to-trough decline of at least 15 per cent, with trade finance also contracting sharply, owing to a shortage of dollar liquidity. Have policymakers responded appropriately since then? Soon after the crisis erupted, the G-20 countries embraced massive stimulus packages, unconventional monetary policies in the advanced economies, and major institutional efforts, such as the Dodd-Frank financial-reform legislation in the United States and the Basel III initiative to strengthen banking standards. China’s RMB4 trillion stimulus package, unveiled in November 2008, restored confidence in global commodity markets. Led by strong Chinese growth, emerging markets stabilized. Since 2009, quantitative easing (QE) by the U.S. Federal Reserve has resulted in record-low interest rates around the world. But, while the resulting surge in capital flows to emerging markets stimulated economic growth, it also inflated asset bubbles. Now, with the Fed publicly considering an end to its massive, open-ended purchases of long-term securities and foreign capital fleeing home from emerging markets, many fear that Asia’s economies could come crashing down, as they did in the late 1990’s. Leverage in some emerging markets’ household and corporate sectors has reached record levels. China’s annual economic growth has slowed to around 7.5 per cent, while Indonesia and India – and, outside Asia, Brazil and South Africa – are experiencing sharp downward pressure on their exchange rates. Moreover, there has been no major reform of the global financial architecture. China’s renminbi is internationalizing, but its share of global payments remains relatively small, with the dollar retaining its role as the world’s main reserve currency. And, while regulatory reform is progressing, its effectiveness in addressing the weaknesses exposed by the global financial crisis will depend not only on the new rules that emerge, but also on the consistency and quality of their implementation. There has been commendable progress on the Basel III capital requirements for banks, with 25 of 27 Basel Committee members having issued final rules. Likewise, the impact of regulatory changes resulting from major legislation and policy directives in the United States, Europe, and the United Kingdom on banking, insurance, financial-transaction taxes, anti-money laundering, and cyber-space is likely to be substantial. Although rules on shadow banking have yet to be formulated, another problem exposed by the crisis has abated: America’s external deficit has shrunk to a much more manageable 2-3 per cent of GDP, accompanied by drops in the surpluses run by Japan and China. Global trade rebalancing has arrived. Still, fiscal conditions in the advanced economies remain unsustainable, with many OECD members’ debt levels hovering around 100 per cent of GDP. Japan, which has one of the world’s highest debt/GDP ratios, currently well over 200 per cent, is engaging in a risky experiment with further monetary stimulus to try to target 2 per cent annual inflation. In many advanced economies, both monetary and fiscal policies have reached the limits of their effectiveness. The key questions now are whether global economic growth is self-sustaining without QE, whether emerging markets’ output will continue to rise strongly, albeit at a slower pace, and whether current global financial-reform efforts will be sufficient to prevent another crisis in emerging markets. Given the high degree of trade and financial globalization that now characterizes the world economy, there is no doubt that the slowdown in the advanced economies, which account for two-thirds of global GDP, will undermine emerging-country growth. Indeed, the threat to withdraw QE is already having an enormous impact on emerging economies’ asset markets. As real interest rates and risk premia begin to rise, the level of global trade and investment will decline. In the coming years, emerging markets will most likely struggle with implementation of global financial regulatory standards, which apply mostly to more sophisticated financial markets. They will also confront a rapidly changing external environment and a growing need to manage capital flows more effectively, which will require much closer coordination between central banks and financial regulators. Indeed, perhaps the most important lesson learned in the aftermath of the collapse of Lehman Brothers is that we can no longer afford to examine problems in terms of individual institutions and from regulatory “silos.” The global economy’s high degree of interconnectivity, interdependence, and complex feedback mechanisms imply that one weak hub can bring down the entire system. In other words, the world needs a systemic approach to deal with systemic risks and system failures. Unfortunately, there may be little hope of strengthening global financial governance as long as implementation and enforcement of rules remain at the national level. Like other emerging markets, China is committed to financial stability and playing its role in reforming the global financial system. China was one of the first countries to sign up to the Basel III standards, and further renminbi internationalization will be implemented in a prudent and pragmatic manner. Domestic financial reforms will focus on strengthening policy coordination and moving toward market determined interest rates and exchange-rate flexibility. All of these steps will contribute to sustainable domestic growth and a more stable global financial system. Other major emerging economies’ policymakers would be wise to act with the same purpose in mind.

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18 сентября 2013, 16:40

Confusion behind big drop in Indian gold imports

Ahead of the festival season, India hiked gold import duties another 10-15% this week, raising jewelry import taxes alongside to give domestic jewelers a break. It's the latest in a series of hikes on gold taxes as the country tries to narrow its trade gap by stemming demand for the metal. Much has been made of the plummeting in gold imports in August, but this may have been due to a new central bank policy ordering 20% of imported gold be set aside for export, with the remainder going into jewelry. Don't beat yourself up for not being able to figure out what this means. Industry experts can't decipher the rule either, and imports/exports have both frozen in the meantime. Gold dipped below $1,300 per ounce overnight, but is now -0.6% at $1,302.Gold ETFs: GLD, IAU, SGOL, PHYS, AGOL, DGL, UBG, DGP, UGL, DZZ, GLL, DGZ, UGLD, DGLD, GLDI. Post your comment!

17 сентября 2013, 21:59

India Escalates Gold Capital Controls, Hikes Duty On Gold Jewerly Imports To 15%

Anyone following the Indian economy and capital markets has been witness to what is the worst case outcome for a modern-day central banker: on one hand forced to keep inflation down, on the other fighting a fierce capital outflow which recently shocked Rupee holders by send the currency to all time lows against the dollar and sending gold priced in INR to record highs. All of this is, of course, happening as India fights tooth and nail to keep its monthly trade deficit under control, not overpay for oil, and keep businesses running now that inflation expectations are becoming unanchored. And, as we have reported previously, the biggest scapegoat to the Indian central bank and government is, understandably, gold, which has been the source of much of the population's "wealth preservation" currency outflow. As a result, India has unleashed the most unprecedented series of gold "capital controls" ever seen in a modern nation, shy of confiscation (and even that may be imminent). Today, India added yet another more measure to its list of prohibitions that seek to minimize the size of the gold market available to citizens, yet which will only result in even more interest and demand in the yellow metal. As Reuters reports, India increased its import duty on gold jewellery from 10 percent to 15 percent, setting it higher than the duty on raw gold in a move to protect the domestic jewellery industry. Why is the government doing this? Simple: "To protect the interests of small artisans, the customs duty on articles of jewellery ... is being increased," the ministry said. Somehow we doubt the ministry actually cares about the small artisans as much as it cares about making gold imports even more prohibitive and which only serve to exacerbate the country's current account deficit, which in turn will inevitably result in even more USD-outflows, INR weakness, economic and market instability, more central bank intervention, the eventual selling of Treasury bonds, more gold purchases, and so on. More on today's latest capital control move from Reuters: The government has also curbed raw gold imports through measures including three duty hikes this year to a record 10 percent. The central bank has put tight restrictions on importers that have sharply curtailed supplies. India imported gold jewellery worth $137.57 million between April and July - a fraction of overall bullion imports, which were valued at $2.9 billion in July alone. The world's biggest buyer of bullion, India imported a record 162 tonnes in May, creating a headache for the government which is trying to rein in a wide current account deficit and support a weak rupee. Gold is the biggest non-essential item in India's import bill although jewellery is a tiny fraction of the purchases. The hike in the duty on jewellery was demanded by the domestic industry on concerns over imports of cheaper jewellery from Thailand, Malaysia and elsewhere. "This is a good move for the local industry and it will support the manufacturing sector," said Haresh Soni, chairman of the All India Gems and Jewellery Trade Federation. So while this latest escalation in the fight of one particular central bank with gold will merely lead to the next, we can now update our list of all capital control actions taken by India in 2013 alone, which now looks as follows. Jan 21 - The government raises the gold import duty by 2% to 6%. Jan 22 - The government more than doubles the duty on raw gold to 5%. Jan 30 - Finance Minister P. Chidambaram says there are no plans for additional taxes or curbs on gold imports. Feb 1 - The Reserve Bank of India (RBI) plans to introduce three or four gold-linked products in the next few months. Feb 6 - The RBI says it would consider imposing value and quantity restrictions on gold imports by banks. Feb 14 - The central bank relaxes rules on gold deposit schemes offered by banks by allowing lenders to offer the products with shorter maturities. Feb 20 - The Trade Ministry recommends suspending cheaper gold jewellery imports from Thailand. Feb 28 - India keeps its gold import duty unchanged in its annual national budget, defying industry expectations. Feb 28 - India proposes a transaction tax of 0.01% on nonagricultural futures contracts, including for precious metals. March 1 - The Finance Minister appeals to people not to buy so much gold. March 18 - The Reserve Bank of India says it is examining banks that sell gold coins and wealth management products to identify "systemic issues", with a view to closing any legal loopholes. April 2 - The Finance Ministry suggests it is unlikely to raise the import tax on gold further to avoid smuggling and would instead introduce inflation-indexed instruments. May 3 - The RBI restricts the import of gold on a consignment basis by banks. June 3 - The Finance Minister says India cannot afford high levels of gold imports and may review its import policy. June 5 - India hikes the gold import duty by a third, to 8%. June 21 - Reliance Capital halts gold sales and investments in its gold-backed funds. June 24 - India's biggest jewellers' association asks members to stop selling gold bars and coins, about 35% of their business. July 10 - India's jewellers announce they might continue a voluntary ban on sales of gold coins and bars for six months. July 22 - The RBI moves to tighten gold imports again, making them dependent on export volumes, but offers relief to domestic sellers by lifting restrictions on credit deals. July 31 - India hopes to contain gold imports well below the 845 tonnes that were shipped last year, the Finance Minister says. Aug 13 - India hikes the import duty on gold for a third time in 2013, to 10%. Duties for silver and platinum are also increased to 10%. The customs duty on gold ore bars, ore, and concentrate are increased to 8% from 6%. Aug 14 - India turns the screws on gold buying again, banning imports of coins and medallions and making domestic buyers pay cash. Aug 29 -  India considers plan to allow commercial banks to buy gold direct from ordinary citizens Sept 19 - India hikes import duty on gold jewerly to 15%         

17 сентября 2013, 17:54

Gold Is Not A Safe Haven? Tell That To People In Indonesia

Today’s AM fix was USD 1,317.25, EUR 985.74 and GBP 828.67 per ounce. Yesterday’s AM fix was USD 1,314.75, EUR 984.83 and GBP 825.17 per ounce.   Gold fell $13.70 or 1.04% yesterday, closing at $1,309.50/oz. Silver dropped $0.49 or 2.21%, closing at $21.70. At 2:55 EDT, Platinum fell $15.76 or 1.1% to $1,433.74 /oz, while palladium rose $5.50 or .8% to $702.00/oz. Gold inched up from its five week low, gaining on the weak U.S. dollar plus increased safe haven demand prior to the U.S. Fed's policy meeting which starts today.  Gold in Indonesian Rupiah, 2000 to Today - (GoldCore) Yesterday Goldman Sachs said that a ‘dovish’ taper would likely limit the downside to gold prices but said that a more hawkish taper than currently expected would likely precipitate a further decline in gold prices. Goldman Sachs have a habit of making big and loud market calls such as their call for oil to rise to $200 a barrel when oil had already surged from $50 a barrel in March 2007 to $140 a barrel in September 2008.  Soon after that call, oil fell from $140 a barrel to a low of $32.40 a barrel at the end of 2008. Their call should be seen as another contrarian buy signal.  The CHART OF THE DAY shows how the Indonesian rupiah, like all currencies has devalued consistently in recent years and remains close to record nominal highs in gold terms. There are concerns that Indonesia’s record current account deficit and consistently large trade deficits  may deter  foreign investors and add pressure on the rupiah, the worst-performing currency in Asia in recent months. The currency has weakened nearly 15% against the dollar since the start of June and 20% against gold since June 28th - from 12.235 million rupiah per ounce (12,235,000/oz) to 14.728 rupiah (14,728,000/oz) per ounce. This  compares with the 10% drop in India’s rupee leading the rupiah to be the worst performer in Asia during the period. The recent losses are simply a continuation of the devaluation seen in recent years.  Since 2000, the rupiah has fallen by nearly 600% against gold from 2.174 million rupiah per ounce in 2000 to over 14.755 million rupiah per ounce today.  The Bank Indonesia has embarked on its most aggressive tightening since 2005, joining Brazil and India in taking steps to support their currencies. The prospect of reduced U.S. monetary stimulus and QE may be prompting investors to sell government bonds internationally. Government debt has been supported by the Federal Reserve’s extremely radical debt monetisation programmes - electric money creation to buy government debt. Indonesia’s foreign-exchange reserves have declined as the central bank defended the rupiah, but the Indonesian Central Bank (BI) still has $92.6 billion foreign exchange reserves. Unlike many large debtor nations such as the U.S. which hold little or no foreign exchange reserves, Bank Indonesia (BI) said in August that the $92.6 billion will be enough to protect the rupiah from further devaluation and the consequences of that devaluation.  Cross Currency Table - (Bloomberg) Bondholders are demanding higher yields to hold its debt. According to Bloomberg, Indonesia sold $1.5 billion of dollar-denominated Islamic bonds this month at the highest yield since 2009, its reserves are near the lowest level in almost three years, and foreigners have pulled out $2.66 billion from local equities since the start of June.  The trade deficit widened to a record in July as an export slump extended to a 16th month, while the expanding middle class increased purchases of manufactured goods and fuel. However, Indonesia is solvent unlike the U.S. government and the Federal Reserve.  U.S. Public Debt, 1972 To 01/01/13 - (Bloomberg) The U.S. Federal Reserve is insolvent and has liabilities of over $3.2 trillion and yet has capital of just $60 billion. Therefore, it is leveraged by fifty to one, akin to a highly leveraged hedge fund.  The U.S. government's national debt is heading rapidly to $17 trillion and the off balance sheet liabilities are now estimated by respected economists at between $100 trillion and $200 trillion. The national finances of the UK, Japan and many European countries are akin to those of the U.S. and they are also either insolvent or close to insolvency. Therefore, the dollar and all currencies will continue to devalue and debase against finite and rare gold in the coming months and years.  Thinking of buying gold? Click here to download and read our free guide to buying gold.        

16 сентября 2013, 15:13

(Ir)Rational Overnight Exuberance On Summers Withdrawal Sends Futures To All Time Highs

While the only market moving event of note had nothing to do with the economy (as usual), and everything to do with the Fed's potential propensity to print even more dollars and inject even more reserves into the stock market (now that Summers the wrongly perceived "hawk" is out) some other notable events did take place in the Monday trading session. Of note: while India's August inflation soared far higher than the expected 5.7%, rising to 6.1% from 5.79% (making life for the RBI even more miserable, as it is fighting inflation on one hand, and a lack of liquidity on the other), in Europe inflation decelerated to 1.3% from 1.6% in July driven by a drop in energy prices, while core inflation was a tiny 1.1%. In a continent with record negative loan growth this is to be expected. Additionally, as also reported, Merkel appears to be positioned stronger ahead of this weekend's Federal election following stronger results for her CDU/CSU, if weaker for her broader coalition. In Libya, oil protesters said they would continue stoppages at oil terminals until their demands are met in yet another startling outcome for US foreign intervention. Finally, some headline on Syria noted a Kerry statement "will not tolerate avoidance of a Syria deal", while Lavrov observed that it may be time to "force Syria opposition to peace talks." And one quote of the day so far: "Don't want market to become excessively exuberant" from the ECB's Mersch- just modestly so? So with those largely irrelevant factual news out of the way, we go back to the only story largely meaningless story that matters: the market's reaction to who may or may not be the new printer supervisor and do Wall Street's bidding. Market Re-Cap from RanSquawk Stock and credit markets gained ground overnight in Asia and Europe this morning as market participants reacted to press reports that Lawrence Summers called US President Obama and withdrew his name for the Fed chairman job. Given that this will now likely spur speculation that the more dovish Yellen will end up succeeding Bernanke resulted in an aggressive short squeeze which in turn saw USTs gain over 1 point and Bunds to open up over 50 ticks relative to Friday’s closing level. While basic materials led the move higher, oil & gas related stocks underperformed amid lower energy prices which were not only weighed down by reports of an agreement between the US and Russia over Syria handing over its chemical weapons, but also after French President's office reported that Britain and the US agreed to press for strong UN resolution on Syria with detailed and binding dates. In terms of EU related commentary, ahead of next week’s general election German Chancellor Merkel and her allies have scored a resounding win in the German state of Bavaria, securing an absolute majority of 101 of 180 parliamentary seats in Bavarian state elections. Elsewhere, economists at Deutsche Bank revised up Eurozone GDP growth from -0.7 to -0.4 (2013E) and from 0.8% to 1.1% (2014E) given the broad-based improvement in leading indicators, pointing to a sustainable recovery. Going forward, market participants will get to digest the release of the latest Empire Manufacturing report, as well as Industrial and Manufacturing production reports for the month of August. Overnight news bulletin from Ran and Bloomberg: Treasuries surge, led by 5Y and 7Y notes,  10Y yield approaches month’s low as Lawrence Summers withdraws candidacy to replace Bernanke after liberal and moderate Democrats began signaling concerns to White House. Summers exit is “huge” for risk-on trades, Pimco’s Bill Gross tweeted yesterday Former Treasury Secretary Geithner remains firm that he will not be considered for Fed chairmanship, WSJ reported in post on Twitter feed WTI and Brent crude prices under pressure following reports that France, Britain and US agree to press for strong UN resolution on Syria with detailed and binding dates, according to French President's office According to television exit polls, German Chancellor Merkel and her allies have scored a resounding win in the German state of Bavaria, ahead of next week’s general election Fed meeting begins tomorrow with decision, updated eco projections and Bernanke press conference Wednesday; many expect $10b-$15b tapering of asset purchases Republicans accused the Obama administration of ceding its leverage in Syria by backing off a threat of military action; House Intelligence Committee Chairman Mike Rogers said the U.S.-Russia deal will offer openings for American enemies in the region to increase their influence EU lawyers gave the U.K. victories in fights over financial regulation that will boost the country’s standing in a power struggle over the future of banks and securities trading in the 28-nation bloc EU attempts to centralize control of failing banks stumbled under a German-led attack that may imperil efforts to restore confidence in the euro zone’s financial system Sovereign yields slide. EU peripheral spreads widen. Asian and European stocks, U.S.  equity-index futures gain. WTI crude and gold fall, copper gains Asian Headlines Japanese markets were closed due to Respect for the Aged Day. PBOC governor Zhou said China's economic situation is stable and that China is to encourage financial innovation. Zhou added that China is to improve financial controls, deepen financial reform, promote deposit insurance and is to support setting up of banks. EU & UK Headlines According to television exit polls, German Chancellor Merkel and her allies have scored a resounding win in the German state of Bavaria, ahead of next week’s general election. ECB’s Praet said as long as inflation expectations are well anchored, the ECB has room to maneuver and there was a discussion of a rate cut at the last meeting. If tensions are increasing, we can always change the gap between our different interest rates. Praet added that the ECB has leeway to deal with Fed withdrawal. Economists at Deutsche Bank revised up Eurozone GDP growth from -0.7 to -0.4 (2013E) and from 0.8% to 1.1% (2014E) given the broad-based improvement in leading indicators, pointing to a sustainable recovery. S&P’s chief sovereign ratings officer Kraemer said France has yet to demonstrate it can consolidate spending, after the country revised its public deficit forecasts last week. US Headlines Lawrence Summers called US President Obama on Sunday and withdrew his name for the Fed chairman job, citing a possible acrimonious confirmation process. Summers had been seen as one of the front-runners for the position, and had been seen by many as leaning against extended quantitative easing. PIMCO's Bill Gross said Summers's exit makes Monday huge for risk on trade and that stocks should do very well. Gross added that Monday is also a huge day for yield curve trades. Equities Stock and credit markets gained ground overnight in Asia and Europe this morning as market participants reacted to press reports that Lawrence Summers called US President Obama and withdrew his name for the Fed chairman job. While basic materials led the move higher, oil & gas related stocks underperformed amid lower energy prices which were not only weighed down by reports of an agreement between the US and Russia over Syria handing over its chemical weapons, but also after French President's office reported that Britain and the US agreed to press for strong UN resolution on Syria with detailed and binding dates. FX EUR/USD and GBP/USD advanced overnight, with GBP/USD touching on highest level since mid-January, amid prospects of a more dovish candidate (Yellen) potentially taking over the helm at the Fed. At the same time, interest rate differential flows (USTs bid) had an adverse impact on USD/JPY, which not only fell below the 100DMA, but also the 50DMA line in the process as market participants were forced to square longs. Even though the rally by gold and silver was short lived following reports that Summers called US President Obama on Sunday and withdrew his name for the Fed chairman job, the bid tone by commodity related currencies remained intact. In turn, AUD/USD advanced to its highest level since late June and briefly traded above the technically important 100DMA line at 0.9377. Commodities UBS said Summers's withdrawal is short-term positive for Gold and that Fed chairman wont change longterm view on gold. - Hedge funds and money managers slashed bullish bets in futures and options of the U.S. gold markets for the first time in 5 weeks. Net longs in gold were cut by 16,466 lots, or 16%, to 84,929, its biggest weekly percentage loss since early August. Speculators also trimmed bullish bets in the silver and copper futures and options markets, according to the CFTC. US and Russia reach Syria weapons agreement. The US and Russia have managed to come to an agreement regarding Syrian President Bashar al-Assad to hand over chemical weapon stockpiles to the international community with a deadline of mid-2014 for their removal or destruction. (FT-More) - On the topic, Assad has said that agreeing to give up chemical weapons is a great victory for his country and Russia. “Syria as a state genuinely seeks to avert another war of lunacy on itself and countries in the region, contrary to the efforts of warmongers in the US who seek to inflame a regional war,”. - However the White House has insisted that US military strikes remained an option despite its deal with Russia to secure chemical weapon stockpiles through a United Nations resolution. CME has lowered Henry Hub natural gas index future initial margins for specs by 20.7% to USD 633.00 per contract from USD 798.00 . * * * DB's Jim Reid recaps the full weekend narrative: Well a highly anticipated week has started with a bang as late last night Summers pulled out of the race to be the next Fed Governor after what was becoming an increasingly difficult political battle for him to win. In a week where the FOMC will likely start to taper QE (more below), the market will at the margin see his withdrawal as one which prolongs unorthodox policy for longer - partly because it moves the more dovish Yellen up the favourites list for the new job. The market reaction has been unsurprisingly positive. On the equities side, S&P500 futures jumped as high as 1711 (+22pts) early in the Asian trading session but has since settled back at around 1707 (or +1.1%). The Hang Seng is (+1.1%) is up by a similar amount. The USD index is 0.5% lower this morning driven by moves in the AUDUSD (+1%), EURUSD (+0.5%) USDJPY (-0.5%). On the fixed income side, UST trading is closed in Japan today due to holidays, but treasury futures have traded up around 30 ticks (+0.8%). Given their underperformance in August, the EM space is probably where we will see outsized moves today. Indeed, the Asia ex-Japan IG index is quoted 10bp tighter this morning. Asian EM sovereign 5yr CDS is also quoted tighter across the board led by Indonesia, Thailand and Malaysia which are all 9-10bp lower. Indonesian USD bonds are 15bp better at the open while the IDR bonds are more than 25bp firmer this morning. EM currencies such as the ZAR and MXN are both trading stronger against the USD. So with Summers withdrawing from the Fed race, the two other top contenders mentioned by President Barack Obama for the Fed job are Janet Yellen and Donald Kohn, the Fed's current vice and previous Fed vice chairpersons respectively. A number of media reports suggest that it’s still possible that Obama could turn to other “dark horse” candidates such as former Treasury Secretary Timothy Geithner or former Fed Vice Chairman Roger Ferguson. Geithner though was quoted this morning reaffirming his disinterest in leading the Fed (WSJ). The Summers news has kicked off a hotly anticipated week. The unequivocal highlight is the two-day FOMC concluding on Wednesday. DB’s economists expect that the Fed will trim its mortgage purchases by $5 billion and its Treasury purchases by $10 billion, thereby reducing monthly buying to $35 billion apiece for a total of $70 billion. This seems broadly in line with market expectations. Indeed, a Reuters poll showed the consensus call is for asset purchases to be cut by $10 billion, which is less than earlier estimates after a disappointing August payrolls and last Friday’s weaker-than-expected retail sales (0.2% vs 0.5% expected) and consumer confidence survey (76.8 vs 82.0). Outside of the taper debate, we will also be looking out for Bernanke’s postmeeting comments particularly with respect to the Fed forward guidance given that the Fed will also be providing updated economic forecasts extending through to 2016. Outside of the Fed, there have been other market-positive stories over the weekend. The first of these was that the Syrian government will commit to a US-Russian agreement to eradicate its chemical weapons by the middle of 2014. The agreement, which was cautiously welcomed by the Obama administration, probably lessens the threat of a US military strike in Syria in the near term. However, the agreement does require the Assad government to provide a “comprehensive listing” of weapons within a week and if not complied with, Secretary of State John Kerry warned that “there’s no diminution of options” available to the United States. Nonetheless, the diplomatic breakthrough has seen crude oil trade 0.8% weaker this morning and is probably contributing the broad risk-on overnight. The other story of note is in Germany where Angela Merkel’s allies secured an absolute majority of 101 of 180 parliamentary seats in Bavarian state elections yesterday. The strong showing for the conservatives bodes well for Merkel heading into this weekend’s federal elections and provides some hope for investors that are looking for political continuity. However, the junior member of Merkel’s coalition, the pro-business Free Democrats won only 3% of the vote in Bavaria, leaving them short of the 5% threshold needed to enter parliament, which could have a bearing if repeated in this week’s national vote. Looking out over the rest of the week ahead, we have a full data docket in the US which will be give us a number of timely updates on the state of US housing and manufacturing. The data flow starts with today’s industrial production and Empire Fed manufacturing reports. This will be followed by Tuesday’s CPI and NAHB homebuilders index, Wednesday’s housing starts and permits and Thursday’s existing home sales and Philly Fed. In Europe, politics remains the focus in the last week of campaigning before German federal elections on Sunday 22nd. The important data releases are August's inflation and July's trade reports over the next two days. Germany’s ZEW survey is out on Tuesday and flash consumer confidence readings are released on Friday. In terms of the central banks, Draghi will be speaking at a SME conference in Berlin this morning and the Bank of England’s meeting minutes will be released on Wednesday. A quieter week is in store for Asia. Tokyo is closed today while Chinese markets are closed on Thursday and Friday due to the mid-Autumn festival (the Hong Kong Stock Exchange is shut on Friday only). In terms of data, Japan’s August trade data will be published on Thursday.        

12 сентября 2013, 07:29

A SmartKnowledgeU Exclusive Interview with World Bank Whistleblower Karen Hudes: "The World Will Reject Central Bankers"

Recently, courageous World Bank whistleblower Karen Hudes was gracious enough to grant SmartKnowledgeU a thought-provoking interview regarding her thoughts about where we stand and where we are heading in this global monetary crisis and currency war. As I’ve told people for nearly a decade now about the necessity of trading in paper currency for the real money of physical gold and physical silver, Ms. Hudes echoes my sentiments about massive global banking criminality and fraud when she states, “Don’t take us for our word. Look at the proof we are going to give you.”  With my persistent exhortation to convert rapidly devaluing paper currency into physical gold and silver money for a decade corroborated by a 460% rise in gold and a 500% rise in silver against the USD during this period, as well as recent massive inflation, sometimes as much as 100%, in food staples such as bread in Argentina and onions in India, the necessity of trading in paper for gold and silver bullion should be self-evident. Add to this discourse the recent free-fall of emerging market currencies like the Rupee, and the recent 5 to 0 vote by the Federal Deposit Insurance Corporation (FDIC) against insuring overseas deposits held in US banks, and everyone should have the proof they need that conversion of paper currencies into physical gold and physical silver will be their savior during these continuing highly immoral Central Banker driven currency wars. In fact, we wrote about these emerging currency wars more than 3 years ago in our article, “In the REAL World Series of Poker, the Stakes are Default of Sovereign Debt”. Despite gold and silver’s recent price consolidation after a few weeks of very rapid price recovery and our recent warnings in our writings that gold would experience a short-term bout of weakness (and it did, right on cue), when this current consolidation period ends, gold and silver will resume their price trajectory upward again.  Below are some of the key points of Part I of my  interview with Ms. Hudes: Regarding the "revolving door" of banker criminality at the global level: “The banks are all interconnected…there’s one big conglomerate…These bankers have a group of board members that migrate from one bank to another.” Regarding why so many people still are unaware of the underlying criminal actions of banking conglomerates: “The bankers have bought up all the media to keep people ignorant of their agenda… These central banks are nothing but crooks. They have no right to buy up all the media and trick all the citizenry…we have documented this. It’s not just that we are saying this and you may or may not believe us. We have documented this…These private groups have seized power that they’re not entitled to and they did it secretly…Anybody inside the world bank that saw money going in the wrong direction, that saw the accounting was not adding up, was getting fired.” Regarding if Central Bankers are concerned that awareness of their nefarious crimes against humanity are coming to the forefront of global consciousness: “We have fired these Central Bankers. And there is going to be more and more accountability…A lot of these [bankers] understand that there will be a day of reckoning” for them because more and more of the world’s citizens are awakening to what bankers really are up to these days, and they are not happy with what they are discovering about the banking industry. On why more and more people will be increasingly turning away from paper currencies and towards the use of sound money to store their wealth: “Paper has no intrinsic value. It is only valuable if people agree that it has value. Fiat currencies are now under siege and we have a limited amount of time to set up alternative monies. If we have permanent gold backwardation, international trade will simply stop and we will have a world depression that will make what happened in the 1930s and 2008 look like nothing.”  (Editor's note: Is it not ironic that even today people do not understand that Warren Buffet, who constantly claims gold has no intrinsic value, is a shill for the banking industry, as is his right hand man, Charlie Munger, who deliberately and deceptively stated a few years back that "gold is a great thing to sew onto your garments if you're a Jewish family in Vienna in 1939 but civilized people don't buy gold", thereby ensuring that all Berkeshire Hathaway minions would forever not buy a single ounce of physical gold as the bankers continued to precipitously devalue fiat currencies as a consequence of their currency wars.)   Regarding how the US has maintained its hegemony over global banking organizations: “Through secrecy, through buying up the media. The American citizens are learning what is being done in their name [by US bankers], and they are not happy about it.”   Furthermore, Ms. Hudes stated that the BRIC nations are moving further and further away from the Western banking system of control by setting up their own system where the net difference of imports over exports must be settled in gold and not in fiat currencies. She continues, “usually when there is a power transition between countries, the way they resolve this is through war…you can do this peacefully if you bring all the parties involved” together. If the Western Banking cartel tries to enforce their wealth destroying policies upon the rest of the world, this is when we are relegated to war. In conclusion, Ms. Hudes says that there are a lot of insiders at the World Bank disenchanted with the system that are helping her expose the misdeeds of the world’s top bankers and that as this misdeeds are being exposed, the world is beginning to reject Central Banking as a concept as they, for the first time, begin to fully understand the constant negative effect of Central Banking policies on their lives for the first time. Finally, here is the link to Karen Hudes's lodged complaints against global banking criminal activities. Stay tuned for more interesting topics in part 2 of this interview next week, when Ms. Hudes reveals that certain elements of the US military are now revolting against banker-driven wars and against the politicians that lobby for these unnecessary wars. Furthermore, in part 2, Ms. Hudes  discusses what Germany has done to retaliate against the US for the Central Bankers' refusal to return Germany's 300 tonnes of gold. (Republishing rights: this article may be republished only if it is republished in its entirety with all links and the author attribution below intact. All violations of these republishing terms will be considered a copyright violation.)       About the author: JS Kim is the founder and Managing Director of SmartKnowledgeU, a fiercely independent research & consulting firm with a focus on intelligent, dynamic investment strategies to avoid the wealth destruction of quantitative easing and Central Banks’ currency wars. Sign up for our free newsletter on our homepage to learn the best ways to buy gold and buy silver. Follow us on twitter @smartknowledgeu