Friday, 30 December 2011
"Banks globally sold $707.6 trillion of over-the-counter derivatives as of June 30 , about 18 percent more than the $601 trillion at the end of 2010, according to data published by the Bank for International Settlements last month."
Tuesday, 27 December 2011
The US Fed may well be forced into underwriting a third Greek bail-out. A Greek sovereign default may well be more seriously harmful to the US economy than to Europe or Greece, because
Friday, 23 December 2011
Use of the Chinese yuan for international trade settlement is now thirteen times larger than in 2010. Diversification away from the US dollar is increasing, as its role as the global reserve currency starts to decline.
Tuesday, 20 December 2011
Monday, 19 December 2011
The Financial Times reports "Wukan villagers form own administration".
Saturday, 17 December 2011
Twenty-nine banks have been declared "too big to fail", gaining G20 priority for survival. That embeds into their corporate decision making psyche that they should be specially immune to market forces, like Greece is.
- David Bassanese, p33 Australian Financial Review, Dec 17-18, 2011.
Friday, 16 December 2011
Christine Lagarde, the managing director of the International Monetary Fund (IMF), stated that the financial crisis is "not only unfolding but escalating", according to the Financial Times article: "IMF chief warns over 1930s-style threats", in which she warns of rising global protectionism and economic depression.
In working to protect the Euro with financial instruments to insure troubled countries against default, the European Financial Stability Facility (EFSF) has explicitly identified the risk that the Euro could break up, or cease to be lawful, according to the Financial Times.
Wednesday, 14 December 2011
For my refutation of "Gold bull market on last legs - Gartman", see this recording. Gold may well decline to $1475 as he predicts, but a 20% fall is only one criterion for a bear market as he claims: more criteria are required to confirm a bear market. Gold's 30% fall during 2008 did not end the bull market.
Chinese demand for physical gold increases with widening prosperity across the population whose culture has valued gold highly for millennia. In September 2011 China started installing 2000 gold bullion vending machines. I believe the central committee has a policy to encourage popular accumulation of private gold holdings to complement central bank and other government holdings, to strengthen China's gold backing, and their global economic and political clout, and to
Monday, 12 December 2011
The Euro banking crisis remains unsolved according to "Eurozone banking system on the edge of collapse". The last crisis summit only produced another plan. Gold is being sold heavily again, suggesting possible co-ordinated central bank selling to contrive confidence in the Euro. I acknowledge JSMineset. Join us for Free Live Stock Market Briefings.
A sequence of US regulatory relaxations permitted US client funds to be held in progressively more risky investments than US treasuries. See: Tiny Rule Change at Heart of MF Global Failure: William D. Cohan.
Sunday, 11 December 2011
Co-ordinated central bank selling of gold on Thursday, 8 December, to support the Euro and US dollar, has been reported. That report, by Deutsche Boerse owned MNI, has been deleted from the internet. I acknowledge Goldseek Radio for this news. See "[MNI] retracts report about central bank gold sales". Go here to understand the gold price in terms of currencies.
Saturday, 10 December 2011
Germany has submitted to US demands that sovereign debt holders be immune to "haircuts" if sovereign debt be restructured. Private sector involvement in debt restructuring is now officially over, according to "EU Summit Clarifies Fiscal Union...". Haircut risk has been transferred away from sovereign debt holders, banks, and bond insurers.
The latest EU crisis summit produced only a blueprint which can't yet guarantee the tighter fiscal union announced. Neither the EU, nor the summit attendees, has authority to "embed" fiscal or deficit controls in "national constitutions", as announced. The intended tighter fiscal union can only be achieved after significant constitutional, legislative, political or cultural changes in each and every Euro-zone nation. And it will take much more than a Greek constitutional amendment to reduce entrenched corruption and inefficiencies, and to guarantee Greek fiscal responsibility. I acknowledge Deutsche Boerse Group's article.
Friday, 9 December 2011
Investing in ETFs, ensure that the fund owns the underlying asset outright, and does not create synthetic holdings constructed from derivatives. Regularly check that the ETF price accurately tracks the underlying asset price. Type "USO:$WTIC" or "GLD:$GOLD" into StockCharts.com to check. I acknowledge Chris Waltzek of GoldSeek for this advice.
Futures broker Ann Barnhardt describes how the CME's failure to act as the clearing house backstop amplified the destructive MF Global aftermath, and destroyed confidence in the futures market leading her to close her brokerage. Barnhardt claims the CME did not fulfil fiduciary duties to ensure counterparty obligations were met.
Thursday, 8 December 2011
The price of gold is being influenced by: declining confidence in the Euro, the global reserve currency and other western fiat currencies; gold's traditional role as reliable money; and growing Chinese popular wealth. I found this article "How gold is ‘fixed' and what drives the real price" interesting. Disclaimer: I am not in a position to verify the accuracy of any of the assertions made in the article. I acknowledge Mineweb for this article.
-o0o-For an overview of the fundamentals of the gold price, viewed as a currency, see this recording.
No EU summit meeting, nor Merkel or Sarkozy, can guarantee that Greece will actually implement the tighter financial controls needed to save the Euro. Market confidence needs to be manipulated into trusting Greek national finances. That sentiment will depend upon collective belief about future Greek behaviour, as opposed to the actual reality of Greek behaviour. Shifting global belief is always a mammoth task.
Friday, 2 December 2011
Thursday, 1 December 2011
Either: every Euro-zone nation agrees to surrender some national fiscal responsibility; or the Euro will disintegrate. Survival of the Euro requires complete market confidence in the individual fiscal responsibility of every Euro-zone nation and its sovereign debt. That dilemma ostensibly ensures Euro dissolution. But there is a greater dilemma.
The test of successful IMF support for Europe will be measured by German bond yields. Re-established confidence in the Euro currency will be apparent only after Germany can again borrow at traditionally low yields, and with successful bond sales.