Wednesday, 29 February 2012
Gold is to play a role as a hedge and a safe haven, but is unlikely to play a formal role in the international monetary system, according to Chatham House.
The International Swaps and Derivatives Association (ISDA) will consider the question of whether Greece has defaulted, in a meeting at 11:00am GMT on Thursday, March 1, 2012.
Tuesday, 28 February 2012
It remains possible that a private investor who did not voluntarily agree to their "haircut" losses on their Greek bond holdings might call upon credit default swap (CDS) insurance issuers to honour their obligations and compensate for bond holders' losses. Prolonged litigation is the likely defence strategy.
Monday, 27 February 2012
Friday, 24 February 2012
The "voluntary" haircut which private Greek bondholders "agreed" to was “as voluntary as a confession to the Spanish Inquisition”, according to the Financial Times report of comments by the chief executive of Commerzbank. The reporting of this by the UK based Financial Times might mark the beginning of the unravelling of "the spin" on the Greek issue.
Nick Dunbar's video explains how Greece and Goldman Sachs entered into off-market swaps using fictitious exchange rates to hide Greek debt from Europe.
"The IMF wants to provide less than the one-third of the total it provided in previous bail-outs", and, "the IMF and European Commission are concerned that the current size of the European Stability Mechanism [rescue fund] won't be enough to quiet markets", according to Der Spiegel. The G20 continues to pressure Germany into providing more financial support.
Thursday, 23 February 2012
Greece has not been rescued yet, despite recent media relief. The second bail-out remains conditional upon Greece implementing the agreed but unpopular measures, within five days. The risk of financial contagion will remain until European finance ministers approve Greece's remedial actions, and until private bondholders agree to their haircuts, which has not yet happened. If any bondholder who refuses a haircut exercises CDS bond insurance, financial repercussions would be global.
Saturday, 18 February 2012
Exclusion of Iran from Belgium's SWIFT funds transfer system reduces the value of Iran's - and everyone's - foreign currency holdings, and reduces global confidence in the international financial system and the global reserve currency. Iran is not the only potential "enemy" of the west.
If western central banks are suppressing the gold price by selling gold down as is claimed by GATA and others, then the west is subsidising Chinese accumulation of gold. The west sells gold to support their currencies. The west would thus be transferring control of any new global gold or yuan linked reserve currency to China, which would seem to conflict with western strategic interests.
Friday, 17 February 2012
If any Greek or other debt default, or "haircut", is not deemed a default then credit default swap (CDS) debt insurance will not be called upon. That would render CDSs useless, leaving lenders with uninsured losses. That in turn would destroy confidence in the CDS market, which would render sovereign debt uninsurable and therefore unsellable. This would make European sovereign debt rollover more difficult, or impossible for broke nations. That would in turn place a greater financial burden on Europe who would be insurers of last resort. I acknowledge Jim Sinclair and Eugene Stiglitz for their commentary on this matter.
Clearly China is at least partially "switching" out of the US dollar into gold; reflecting waning confidence in the global reserve currency. It will be interesting to see how much, if any, they divert into the Euro (which I believe would be a strategic mistake). See "China reduces US debt holdings", with thanks to Jim Sinclair and Forbes.
See "The state bank of India lures rail employees with discounted gold coins", with thanks to Mineweb.
Wednesday, 15 February 2012
Julian Phillips discusses growing needs for central banks to repatriate gold in "The politics of central bank gold holdings", in which he further confirms mainland China's strategy to accumulate large national gold holdings. I acknowledge Mineweb.
I acknowledge Mineweb for this news: "World's first yuan-denominated gold ETF makes weak HKSE debut".
Tuesday, 14 February 2012
I found this article interesting: "Where you should hold your gold to avoid possible confiscation". I acknowledge Julian Phillips and Mineweb.
Mainland China continues to seek stakes in uranium deposits to support plans to have at lest 70GW of nuclear power generation capacity by 2020, according to David Talbot in his interview with Geoff Candy. China has restated their pre-Fukushima nuclear objectives.
Renewable energy can not effectively provide nation-wide base load electric power. For the foreseeable decade at least, only coal, gas, oil and nuclear energy sources can provide that electricity at reasonable cost. Storage of electricity from sunny and windy times remains too expense despite decades of battery research. See "Funding shortage threatens Germany's energy revolution".
George Soros' criticism of Germany's inherent values of financial prudence is based soundly on Keynesiamism. Although taught universally for decades, there is growing scepticism about some of Keynes' doctrines. The IMF has already concluded that the second Greek bail-out is now not big enough to achieve the intended rescue purposes. Therefore a third bail-out would be required should the current Greek economy be sustained.
Forty-three elected members of the Greek parliament were disendorsed and expelled from their Pasok and New Democracy parties because they did not vote for the austerity bill. The usurpation of parliamentary votes by political parties is now common practice in democracies around the world, and only adds to growing social unrest.
Monday, 13 February 2012
Such a headline has not appeared in global mainstream media. Why not? It should be major news that Greece receives a second bail-out despite submitting fraudulent national accounts for the first bail-out, which failed.
Sunday, 12 February 2012
How could any proposed centralised clearing house act as ultimate guarantor for such a huge market? The $700 trillion derivatives market continues to grow rapidly, opaquely to public scrutiny.
Saturday, 11 February 2012
Thursday, 9 February 2012
Wednesday, 8 February 2012
Chinese commercial acumen contrasting with western over-indebtedness, and the demise of western currencies, will not guarantee China's eventual economic dominance. China's gathering might over the longer term will not come without setbacks on the way, for at least three reasons. Political risk will increase as a young and unwise minority born into great wealth increasingly flaunt their huge inherited riches. Much wealth has been amassed through favourable Chinese Communist Party connections.
Global focus will return to scrutinise the US currency after the euro crisis comes to a head. Unsustainable US national, federal and state debts, and perpetual quantitative easing, I believe will demand the scrutiny of international markets. This forecast is simply my opinion.
The Greek government missed another deadline for spending cuts agreed for their next bail-out, as the public strikes and protests against austerity, according to Business Spectator's "Boiling point of a Greek bail-out", which I acknowledge. Lurching towards default with untrustworthy national accounts, Greek maladministration will require the euro to be restructured or fail.
Tuesday, 7 February 2012
Saturday, 4 February 2012
Culturally embedded "black" economies will require at least a generation to shift into the northern European style tax system demanded for the euro currency's survival. The problem of shifting collective popular attitudes towards cash economies for the required fiscal reforms, is intractable. Falsification of Greek national accounts prior to their first bail-out betrays acceptance of entrenched dishonesty to the highest level.
Thursday, 2 February 2012
Shipping rates continue to fall, having never recovered after collapsing by 90% in 2008, measured by the "Baltic Dry Index" (BDIY:IND). Low rates reflect market expectations that international trade will remain very low or decline further.
Wednesday, 1 February 2012
See "China enhances position as world No. 1 gold producer - but where's it all going?" published by Mineweb. We have observed before that it would be to China's significant strategic advantage to participate strongly in any new world currency system, after