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  • #46


    Equities markets hit recent highs... Investors moving away from bond markets. "Equity markets stay strong despite economic uncertainty" BBC News - Equity markets stay strong despite economic uncertainty
    £ down 1.8% against euro on Feb 1. Fitch ratings etc BBC News - Pound sees biggest one-day fall against euro since 2010 Of course this has very little to do any real 'improvement' in euroland, it's just that Japan is buying euro debt as a hedge against it's planned reflation.
    US and UK bond edge head higher...

    Slightly more amusingly the IMF have 'censured' Argentina saying it's demands for better GDP and inflation data have "not been sufficient". Basically the IMF is saying "you're lying". Not a word about the Greek fraud...

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    • #47
      "Venezuela Launches First Nuke In Currency Wars, Devalues Currency By 46%

      While the rest of the developed world is scrambling here and there, politely prodding its central bankers to destroy their relative currencies, all the while naming said devaluation assorted names, "quantitative easing" being the most popular, here comes Venezuela and shows the banana republics of the developed world what lobbing a nuclear bomb into a currency war knife fight looks like:

      VENEZUELA DEVALUES FROM 4.30 TO 6.30 BOLIVARS
      VENEZUELA NEW CURRENCY BODY TO MANAGE DOLLAR INFLOWS
      CARACAS CONSUMER PRICES ROSE 3.3% IN JAN."


      I hope you're stocking up on butter astralis for my cookies. Oops I forgot - it is verboten due to EUSSR dictats -shame huh. Silver up 9% this year... Japanese yen nosediving against the $ when the BoJ hasn't even begun buying. More 'QE's' in the west almost have to happen to keep our bond rates low when others rise - otherwise you default, which is realistically the only option long term. There is not a hope in hell that the US can ever repay $16trillion to which Obama is adding $4 trillion per year nor can the UK repay it's creditors - nor anyone else! They are going to try to printing their way out of debt... devalue everything. The race to 'growth' means the race to the bottom through devaluation and decreasing value in everything. Your $10 will be worth $7 before the end of the year but because the man on the street has more of them he feels like it's getting better. Soon we shall all wish we did as Iceland did and let the banks go the way of any failed enterprise in an allegedly 'capitalist' market. Government interference in the markets should be prohibited - if that means abolition of the Fed and other 'central banks' bring it on. Nor should 'customs unions' enable international capital transfer as in the eurozone. Nor should certain financial practices such as putting all your losses into derivatives to be sold on be permitted. Markets have to reflect some reality and risk. At present they do not and this is why we are seeing governments (who believe all wisdom lies within their grasp simply because they are 'elected' - one would think they consider themselves 'anointed' into some 'mystery') feel they have the right to devalue everything we own.

      I am seriously considering the nunnery before my contemplation of 'active resistance' goes further.

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      • #48
        I hope you're stocking up on butter astralis for my cookies.
        U.S. 10-Year Yields Fall Most in 10 Weeks on Europe - Bloomberg

        LOL, i think you will have to wait some time for them.

        10-year treasury yield: 1.95%.

        and we were hearing from the WSJ about the same inflation worries when it was 3.7%.

        Two Point Nine One - NYTimes.com
        There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

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        • #49
          Well you know it's true when they start denying it! :whome:

          So here we go... the known embezzler of the Russian financial Ministry, aka in the gold markets (I am told) the "Moscow buyer", none other than the Deputy Minster of Finance in Russia at the G20 conference up and denies any 'currency war'!

          "There is no competitive devaluation, there are no currency wars," Storchak told reporters. "What's happening is market reaction to exclusively internal decision making." G20 meets under currency war cloud - Telegraph You can look into the previous 'allegations' made against this 'Gentleman' simply by starting with Wikipedia where you will find;

          2007-11; "suspicion of "attempting large-scale embezzlement from the Russian state budget through fraud"... "It may be said without exaggeration that the best finance and economy experts, including the incumbent and former finance minister deputies, were involved in a plan in recent years to embezzle large amounts of state funds," said Alexander Bastrykin (who later 'resigned'), the head of the Investigation Committee at the Prosecutor's Office. On 31 January 2011, Russia's Investigative Committee announced that all charges had been dropped against Storchak, for lack of evidence."

          Good man our Sergei, no dirt on him. Well Russian gold reserves have increased year on year from 2010... "The amount of gold Russia added to its stockpile is almost triple the weight of the Statue of Liberty, according to Bloomberg." http://www.marketoracle.co.uk/Article39010.html Our spotless man Sergei is naturally part of this Russian gold buying policy and for him - or anyone else for that matter - to admit that a 'currency war' was underway would devalue currencies over night and force up the price of the gold that Russians want (wisely) to hoard. You hear of 'bulls' and 'bears' in the equities markets but we should consider 'dragons' perhaps in regard to the Russian gold buying spree.

          Anyway onward... Well the Japanese yen has dropped 15% this year so far (20% since mid November '12) and the BoJ hasn't even started buying assets on the bond markets - that isn't due to start until 2014 (unless the new Governor of the BoJ who takes over in April changes his mind - which is highly likely). Just the forecasting of 'QE' in 2014 has achieved some of the results that 'Abeconomics' wished. One question is will Japan go bust and be the first to default? Some think so - among them Kyle Bass (who predicted the 'sub prime' property collapse) and George Soros; "Soros Said to Make $1 Billion Since November on Yen Bet" Soros Said to Make $1 Billion Since November on Yen Bet - Bloomberg Haven't had time to short the yen myself :( but good luck to them! Others think not stating. Jesper Koll, managing director and head of Japanese equity research at JP Morgan Securities Japan being one who's 'rebuttal' of the Bass analysis is here; Cooler Heads: The Rebuttal to Kyle Bass's Japan Market Meltdown Scenario from JPMorgan's Jesper Koll and Masaaki Kanno - Forbes To me the crux of Koll's argument is this;

          "As to who is or would buy JGBs (Japanese Government bonds), the answer for the present and foreseeable near term future is: the Bank of Japan. BOJ is already committed to buying the entire debt out to a maturity of three years and a new governing board to be installed in April may extend the range to three to five years. Interest rates will rise only as much as BOJ will allow. This is why foreigners and domestic institutions are still buying the bonds." That however leads to more inflation in my opinion and ultimately to Wiemar economics.

          So onwards again... All of this you would expect to have some effect on the gold market. Well it has... We have a new phrase from zerohedge's 'Monetary Metals' and that is "Backwardation". To quote him "This means that one could make a profit by simultaneously selling a gold bar and buying a February contract. One would still have one’s gold plus a little extra." Basically paper money is becoming so worthless that you can make a profit from buying a gold coin today, selling it next month and at the same time ordering another gold coin the month after. You would have the same amount of gold and a profit. Wondering why Russia wants gold still? I personally am in silver and the same is probably true but I don't have time to watch the markets 24/7 so am more medium term.

          Of course underlying all this financial profiteering and shenanigans there is the debt... I don't mean UK or US or even eurozone debt but the whole lot - world debt. For the last 10 years this has been rising at 11% per year... from $80 trillion to over $200 trillion. Growth in GDP can never match that. To paraphrase Kyle Bass the world has never been so much in debt in peace time... you know where this is heading right? Well Mr Bass is not afraid to call it... war.

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          • #50
            snapper,

            tell me, what is the end result if every currency depreciates? and i mean this in the basic econ 101 sense.
            There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

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            • #51
              It is not possible to depreciate every single currency for the same %. At least not simultaneously.
              No such thing as a good tax - Churchill

              To make mistakes is human. To blame someone else for your mistake, is strategic.

              Comment


              • #52
                of course not simultaneously. but the end result of a "currency war" is not the same as that of a tariff war, where everyone is worse off. if everyone depreciates, then everyone is back where they started.
                There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                Comment


                • #53
                  Except the citizens, who now can buy less then before.
                  No such thing as a good tax - Churchill

                  To make mistakes is human. To blame someone else for your mistake, is strategic.

                  Comment


                  • #54
                    Originally posted by Doktor View Post
                    Except the citizens, who now can buy less then before.
                    Well, those with savings concentrated in bank deposits in some cases.

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                    • #55
                      Originally posted by astralis View Post
                      snapper,

                      tell me, what is the end result if every currency depreciates? and i mean this in the basic econ 101 sense.
                      As Dok points out simultaneous devaluation by all would be almost impossible to orchestrate in practical terms. More than this some nations, for example 'Northern Bloc' eurozone nations (Germany etc) do not require nor desire much devaluation if any while some, such as the eurozone 'PIGS' would benefit from greater devaluation... One rate of devaluation doesn't fit all. The implication of a 'currency war' means precisely that a simultaneous devaluation by all trade partners could NOT be 'managed' as you suggest... it is the inability to manage it that leads to 'competitive devaluation' which is what a currency war is. The raising of tariffs and 'protectionist' policies derives from the fact that one rate doesn't fit all; say Germany devalues 5-10% and then says enough while others continue to devalue competitively, well the Germans don't want more inflation so what do they do? Impose import tariffs. There is already a Franco - German rift on euro devaluation;

                      "So it should come as no surprise that France’s president Francoise Hollande, whose largely unreformed labor market has kept unit labor costs so high that French goods—luxury items, food, aircraft—are struggling in world markets, should want the Eurozone to set a “realistic,” i.e. lower, exchange rate for the euro. German’s economy minister, Philipp Roesler, whose country went through the pain of labor market reform and wage restraint, and is having no trouble exporting goods, responds with a definite “nein.” “The objective must be to improve competitiveness and not to weaken the currency.” This is not a theoretical battle. Morgan Stanley estimates that if there were no euro, it would take $1.53 to buy a deutschemark, and only $1.23 to buy a French franc. So from France’s point of view the euro, at say $1.33, is over-valued, while from Germany’s it is undervalued." Currency Wars | The Weekly Standard

                      Madame Lagarde of the IMF seems to have some hope of the 'managed approach' as you suggest. She commented “We think that talk of currency wars is overblown. People did talk about their currency worries. The good news is that the G-20 responded with cooperation rather than conflict today.” Christine Lagarde plays down talk of currency wars - Telegraph Given the recent IMF record of mistakes I don't have alot of faith in them - they have already admitted, since their last Greek bond buyback and loan late last year, that Greece will need MORE cuts or another cash injection - in other words that they got it wrong yet again in Greece!

                      The real trouble though is that one rate of devaluation doesn't fit all - Japan needs a greater devaluation than the US, Greece greater than Germany (which sadly is impossible in the 'straightjacket' of the single currency). The Japanese say they will aim for 2% inflation, in the UK inflation is expected to rise to 3%, the US is now reducing Government spending. The 'managed approach' is impossible to coordinate in practice. If one country goes further than is absolutely necessary in order to gain a competitive advantage you have an act of 'currency war'. Which begs the question what is 'absolutely necessary' and who decides? I cannot see the 'managed approach' working. Also because some countries have a higher inflation rate at the start than others they will have to stop devaluing sooner than others - Japan can devalue further than China.

                      Originally posted by Skywatcher View Post
                      Well, those with savings concentrated in bank deposits in some cases.
                      A good point. For some countries banks, Spain for example, devaluation would help the banks as it also devalues their debts. For the US and UK, where are banks have largely refinanced at the public expense, that is the banks debts are now sovereign debts, it serves to devalue the sovereign debt. While it may be true that 'QE'/devaluation is aimed at promoting growth the resulting inflation actually devalues debt and if even I can see that you can bet that these 'financial experts' are also aware that they devaluing debt by stealth. In the US and UK though devaluation would actually strengthen the banks relative to the sovereign.

                      I forgot to post the Kyle Bass link so here he is



                      I do not fully agree with him that war is 'inevitable' as he more or less implies. It's an old argument that war is caused by financial needs... Well I don't buy that. Sparta didn't have 'money' and waged war against Athens, though perhaps Corinth was economically threatened. He does make some good points though... The size of the European banks; Germans banks 'assets' being 340% of German GDP is a colossal threat. Talk about 'too big to fail'... The European 'banking union' is a time bomb waiting to go off. This of course is why they can't let the 'PIGS' default and devalue... If one large domino falls the entire system will collapse. There is simply no way that the eurozone could 'bail out' it's banking system without massive printing of money and resulting inflation. A 'currency war' that did result in protectionist import taxes which would amount to 'sanctions' in all but name would certainly make war more likely but in my view does not make it 'inevitable'. I also disagree with Mr Bass about the US property market, while borrowing may be cheap the US has to cut Government spending to maintain deficit credibility - the Hayman Capital graphs themselves show that real 'permanent unemployment' has ignored the cyclical fluctuation that he speaks of in regard to the property market.

                      In a more historical light it could all be said to have started with the dot-com bubble. When the Fed raised interest rates in 2000 and burst the bubble what happened? Interest rates went down again almost immediately... Money went into a 'safer' market - housing. When interest rates went up again in 2006-7 the property bubble collapsed but this followed into the collapse of banks. The really dangerous move was to refinance the banks publicly so that as I said above the banks debts are now sovereign debts. They literally cannot increase interest rates now or the bond bubble collapses and the sovereigns default - the only option is printing our way out of debt or default.
                      Last edited by snapper; 18 Feb 13,, 10:49.

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                      • #56
                        A quick note of Mr Bass's war thinking. Nuclear weapons rule out another WW2 scenario so what will a future 'world war' look like? There may be odd skirmishes about forsaken rocks in the middle of nowhere but you cannot 'invade China' or anywhere else large scale for fear of provoking the unthinkable retaliation. In fact a future 'war' is far more likely to be a trade war and what is a currency war but a trade war?

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                        • #57
                          We're not converting any currency into gold. We just keep the gold we already own and are pulling some of it out of foreign hands.

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                          • #58
                            Originally posted by kikbus
                            As the Earth people, I can tell you never trust the European. They very good at lying.My goodness African brothers and sister, I love you. But do you forgot the white rubblish slave and massacre the African for hundreds of years? Numerous black Africans die at evil slavery trading. Tens of millions black die at the most dirty,shameful behaviors in human history .

                            Go to hell ,French.get out of Mali,shame on you.

                            our goodness African brother and sister, go away with the European (white rubbish). Our Asian people never bully and slave you. we are ture friend .
                            White rubbish huh ,,go check out prisons ,, ?? in fact fuck off from here racist bastard

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