This is an interesting article by Jeff Thomas of Doug Casey’s International Man. It presents a good continuation to the thoughts shared by Frank Suess in his recent MV commentary titled “The Power and Hypocrisy of Propaganda”.
The average person in the First World receives more information than he would if he lived in a Second or Third World country. In many countries of the world, the very idea of twenty-four hour television news coverage would be unthinkable, yet many Westerners feel that without this constant input, they would be woefully uninformed.
Not surprising, then, that the average First Worlder feels that he understands current events better than those elsewhere in the world. But, as in other things, quality and quantity are not the same.
The average news program features a commentator who provides “the news”, or at least that portion of events that the network deems worthy to be presented. In addition, it is presented from the political slant of the controllers of the network. But we are reassured that the reporting is “balanced,” in a portion of the program that features a panel of “experts.”
Jim Rickards says buy gold now… before it’s too late
Jim Rickards, portfolio manager at West Shore Funds and author of the forthcoming book, Death of Money, explains the dynamic behind the price moves (disclosure: West Shore Funds does invest in gold).
“One of the reasons gold did so poorly in 2013 was because 500 tons were taken from [the gold ETF] GLD warehouse by authorized dealers and dumped on the market,” he tells us in the video above. Rickards says most of that gold went to China, but China is storing it so it is “not going to see the light of day for 300 years.”
As a result, Rickards says, the floating supply of gold declined, and less supply and more demand created a “good technical setup” for higher prices.
Strong Swiss franc – will we see negative interest rates in Switzerland?
On March 24th, the International Monetary Fund advised the Swiss National Bank (SNB) to consider charging banks on excess reserves if the franc rises further against the euro. In response to the crisis in Crimea, the Swiss franc’s safe haven status has, once again, led to upward pressure in the currency as it is sought for safety by international investors.
The Zurich-based SNB set a minimum exchange rate floor of 1.20 versus the Euro in September 2011 to shield Switzerland from deflation and a recession after investor anxiety caused by the euro region’s debt crisis pushed the franc close to parity with the single currency.
Last week, the SNB confirmed the floor. The SNB would maintain the cap on the franc for now and is able to support it with negative interest rates if needed, Board Member Fritz Zurbruegg said.
“We’ve stressed that we have an array of assets that can be used to defend the minimum exchange rate,” Zurbruegg said yesterday in Zurich, responding to a question about how the SNB would react to the European Central Bank cutting its deposit rate. “From an operational point of view, we’re ready to use negative rates as a reinforcement” if so required, he said.
China rebalancing toward a consumption economy
What happens next in China is critical to financial markets and to the global economy. Keep it on your radar.
Deutsche Bank revised down their 2014 GDP growth to 7.8% from 8.6% previously and their 2015 growth forecast to 8.0% from 8.2%. Their forecast reflects a slower-than-expected start to the year and an expectation that as export growth returns as a source of support to growth the government will scale back investment further in order to rebalance growth away from investment and towards consumption.
With growth slowing in Q1 towards the bottom of the government’s 7% – 8% ‘comfort zone’, DB expects there will be some modest monetary and fiscal stimulus – much of which has perhaps already been announced. Hence, they expect Q1 will mark the low-point of growth this cycle at perhaps 7.4%.
China’s shadow banks at risk of a property crash?
An increasing number of commentators are concerned about Beijing’s ability to rein in credit growth and rebalance the economy more towards domestic demand and services and away from commodity-intensive fixed asset investment.
However, in Hong Kong and China itself, faith in the ability of the government to correct the excesses created by the 2009 stimulus program has, if anything, increased under the current regime.
Yet, argue the skeptics, capital outflows and falling property values could create cascading losses in China. For the bears to be right, it will be because of a combination of factors starting with a big decline in property values. The bear argument has several components. Start with the reversal in China’s currency policy, which had seen the renminbi steadily appreciate over the past few years.
Today, the sudden depreciation in the renminbi makes both holding the Chinese currency less attractive and makes renminbi-denominated investments in China less attractive. That is particularly true of property, which has long been the favored investment destination of the growing number of plutocrats on the mainland.
International monetary system headed for collapse – dollar down 90%!
Financial expert and best-selling author, James Rickards, thinks the “international monetary system is headed for a collapse.”
According to Rickards, when the next collapse comes, it is going to be bigger than the last one. It’s going to be exponentially bigger. The five biggest banks were too big to fail in 2008, today they are bigger. They own a larger percentage of the total banking assets. . . . When you double or triple the scale of the system, you don’t double or triple the risk. You increase the risk by an exponent that could be 10 times or 100 times greater.”
On the Fed engineering another 2008 type bailout, Rickards claims, “The last crisis was barely enough for the Fed to contain. They have used up all their dry powder. They can’t take the balance sheet any higher. They are already insolvent. . . . The game is up.”
Rickards foresees big inflation because the U.S. dollar’s buying power will shrink. Rickards predicts, “Imagine gas at $20 a gallon and bread at $10. That’s what we’re talking about.” So, if big inflation is coming, what about gold? Rickards says, “When I say the price of gold is going to $7,000 or $9,000 per ounce, which I expect it will, what I am really saying is the dollar is going to collapse 80% or 90% or more.” It did in the 1970’s. None of this is unprecedented. It all happened before.”
How Obama crippled a Russian bank with a stroke of a pen
Modern day power games – all it takes is a stroke of the pen. He may not take shirtless horseback rides across the steppes, or have a black belt in judo, but on Thursday (March 20), President Obama sent a message to Russian president Vladimir Putin about strength. Specifically, economic strength.
The message was this: Whenever I decide to, I can pick up a pen, and kill a significant financial institution in your country. Obama’s victim was the St. Petersburg-based Bank Rossiya.
In response to Russia’s takeover of Ukraine’s Crimean peninsula, Obama (yesterday) authorized the Treasury Department to add 20 members of Putin’s inner circle, as well as Bank Rossiya, to the Office of Foreign Asset Control’s list of “specially designated nationals.” The designation makes the individuals named ineligible to do business with U.S. financial institutions, which is likely a major personal inconvenience. But for Bank Rossiya, the designation is something like the kiss of death.
Tymoschenko: “Time to grab guns and kill damn Russians”
A phone conversation between former Ukrainian PM Yulia Tymoshenko’s and Nestor Shufrych, former deputy secretary of the National Security and Defense Council of Ukraine, was uploaded on YouTube and has received much attention.
Tymoshenko confirmed the authenticity of the conversation on Twitter. She tweeted “The conversation took place, but the ‘8 million Russians in Ukraine’ piece is an edit. In fact, I said Russians in Ukraine – are Ukrainians. Hello FSB 🙂 Sorry for the obscene language.”
According to Tymoschenko, Ukrainians must take up arms against Russians so that not even scorched earth will be left where Russia stands. She has not clarified who exactly she wants to nuke.
Putin bashing continues – while Timoshenko seeks war…
Some are concerned that the recent developments in Crimea signals the revival of cold war patterns. Others, and certainly world “leaders”, appear to crave for the very same. At least the current-day continuation of pit bull politics (brainless bite reflexes…) do raise concerns and questions as to their ultimate motives.