Comerciantes De Varejo Forex Comerciantes Hit By Swiss Turmoils

Resumo semanal de 9 a 13 de novembro: dificuldades do Euro: do lento crescimento europeu às turbulências políticas na Grécia e em Portugal O semanário resume as últimas notícias do mundo das ações e finanças, notícias monetárias e de commodities, bem como artigos informativos interessantes para comerciantes. Notícias da semana: o protesto grego contra a austeridade, os portugueses expulsam o governo de direita e os BCE Draghi insinuam mais estímulos, enquanto os números do PIB da zona do euro são mais fracos do que o esperado. Parece uma tempestade perfeita para o euro. ECB insinuando mais estímulos: quais são os novos no mundo: eventos, indicadores econômicos e políticas Notícias do mercado de câmbio: notícias do mercado de produtos básicos: notícias do mercado de ações: Notícias da empresa: Baixar MetaTrader 5 Copyright 2000-2017, MQL5 Ltd. Interviews 07202016 - Ronnie Stoeferle: 8220IN GOLD WE TRUST8221 Ronald-Peter Stferle, Managing Partner amplificador Investment Manager no Incrementum discute com o co-fundador da FRA Gordon T. Long, os pontos-chave do seu recente relatório de 2016, 8220In Gold, nós confiamos.8221 Ronald nasceu 1980 em Viena, Áustria , É um Técnico de Mercado Chartered (CMT) e um Técnico Financeiro Certificado (CFTe). Durante seus estudos em administração de empresas e finanças na Universidade de Economia de Viena e na Universidade de Illinois em Urbana-Champaign, trabalhou para o Raiffeisen Zentralbank (RZB) no campo de Renda Fixa de Investimentos de Certificado. Após a formatura, participou de vários cursos em Economia Austríaca. Em 2006, ingressou no Erste Group Bank, com sede em Viena, abrangendo ações internacionais, especialmente a Ásia. Em 2006, ele também começou a escrever relatórios sobre o ouro. Seus seis relatórios de referência, chamado In GOLD, confiamos na cobertura internacional da CNBC, Bloomberg, Wall Street Journal e Financial Times. Foi premiado com o segundo analista de ouro mais preciso da Bloomberg em 2011. Em 2009, ele começou a escrever relatórios sobre petróleo bruto. Ronald gerenciou 2 cestas de mineração de ouro, bem como 1 cesta de mineração de prata para o Grupo Erste, que superou seus benchmarks desde a sua criação. Em 2014, ele publicou um livro sobre Investimento austríaco 8220. Um dos principais aspectos do relatório é que estamos novamente em um mercado competitivo.8221 Objetivo do preço do ouro para junho de 2018: USD 2.300 gerentes de fundos de hedge e investidores estavam comprando ações de ouro e mineração de um casal De meses atrás e agora estamos entrando no que a Dow Theory chama de ritmo de participação pública. 2,300 USD é nosso objetivo de longo prazo, que se baseia no fato de que estamos esperando taxas de inflação crescentes. No momento, temos uma tremenda desaceleração global e o forte USD aumentou ainda mais essa desaceleração. Contudo, está confirmado que o ouro está aumentando em todas as moedas. E este é um sinal forte para um mercado de touro. O mundo acreditava que o Fed aumentaria as taxas de juros, mas isso não aconteceu e agora, com o Brexit, definitivamente estaremos nesse ambiente de taxa de juros atual por mais tempo, os EUA podem até mesmo implementar taxas de juros negativas. 8220 A única coisa óbvia no meio disso é que os bancos centrais são realmente bons em encontrar desculpas para não aumentar as taxas, agora a desculpa é Brexit.8221 A força do dólar teve enormes consequências para as commodities. Existe uma correlação negativa muito alta entre a força do USD e a saúde dos mercados de commodities. Além disso, vimos os efeitos nos mercados emergentes que são altamente dependentes de um dólar barato, o aumento do dólar atuou como uma alta de tarifas. Expansão do balanço do banco central: 2007 vs 2015 8220Houve rumores sobre o dinheiro do helicóptero e estou quase certo de que será implementado.8221 Com experiências monetárias, os bancos centrais têm se envolvido em uma aposta de tudo ou nada, na esperança de que eventualmente Promover a recuperação sustentada e sustentada que se prometeu há muito tempo. Os índices de alavancagem dos bancos centrais e os tamanhos dos balanços em relação ao PIB aumentaram enormemente após a crise financeira de 2008. Por fim, não ajudou o Bank of Japan (BoJ) a ter levado essa loucura, vários passos além dos seus pares, conseguiram que o BCE tenha sido comparativamente conservador, mas atualmente está fazendo o melhor para alcançar. 5.000 anos de dados confirmam: as taxas de juros nunca foram tão baixas quanto hoje em dia. As taxas de juros mais longas ficam baixas, quanto mais frágil o sistema se tornará.8221 As taxas de juros negativas são uma das últimas esperanças que os políticos se apegam. Enquanto isso, 5 áreas monetárias (títulos do governo com valor superior a US $ 8 trilhões têm rendimentos negativos até o vencimento). Quando a bolha centralmente planejada em títulos finalmente explode, será bem claro o quão valiosa é uma apólice de seguro sob a forma de ouro. A situação a longo prazo para bancos centrais.8221 As conseqüências a longo prazo das taxas de juros baixas são desastrosas (por exemplo, agravamento Das bolhas do mercado imobiliário e do mercado de ações, potenciais falências de fundos de pensão e seguradoras) Normalização das taxas de juros arriscaria um colapso do crédito ou, em vez disso, uma recessão Índice do dólar norte-americano ponderado pelo comércio (lhs) e a taxa efetiva dos fundos federais (RHs) 8220A dólar forte Sem dúvida, tem consequências para a indústria transformadora, enquanto um USD forte também é deflacionário.8221 O Fed quer um dólar mais fraco, mas isso não acontece em um dia, é um processo. Estamos a fazer um caso muito forte para uma recessão acontecendo nos EUA e terá consequências globais. Uma recessão é uma coisa muito normal, é semelhante à sua necessidade de dormir. É uma maneira para o sistema se reabastecer. 8220Se o Fed falhar com a normalização das taxas de juros, a narrativa já em ruínas da recuperação econômica poderia entrar em colapso.8221 Estamos comparando os preços do petróleo deste ano com os últimos anos e no ano passado o grande mergulho nos preços do petróleo começou em julho, então apenas faça isso Teremos taxas de inflação crescentes. Mas não é só isso que existem muitos fatores que indicam taxas de inflação crescentes. O fato de as ações de ouro e mineração terem feito tão bem desde o início do ano é indicativo de que a inflação será um grande tópico. Valor da produção de ouro versus volume das compras de ECB e BoJ QE 2016 8220 A empresa precisa ser minada fisicamente, seu suprimento global é extremamente estável, garantindo um seguro contra o intervencionismo monetário e um sistema monetário endógenamente instável8221 A um preço de USD 1.200 por onça, o O BCE teria comprado 4.698 toneladas de ouro no primeiro trimestre de 2016 (que é mais de 6 vezes o valor do ouro extraído globalmente). Se o programa QE europeu continuar como planejado, seria equivalente (assumindo que os preços não mudam) para o valor de 21.609 toneladas de ouro (12 do estoque total de ouro de 183.000 toneladas já extraídas). Adicionando o volume do BoJ: o equivalente seria 39.625 toneladas de ouro em 2016 Incrementum Inflação Sinal 8220 Em Longo Prazo: Se as Moedas Desprezam, o Ouro deve Apreciar.8221 É um guia para alocações de investimentos em nossos fundos dependendo da mensagem de sinais que nós Transferir alocações para dentro ou para fora dos ativos sensíveis à inflação. Sinal proprietário baseado em dados derivados do mercado como resposta à importância do impulso da inflação Reação mais curta do que as estatísticas comuns de inflação Pela primeira vez em 24 meses, o sinal de inflação incremental indica que uma tendência de inflação de pleno direito está em andamento. O mercado é um maximizador de dor .8221 No poker você tem que trazer alguns chips para a mesa e não é coincidência que a China esteja comprando ouro massivamente. Não só o banco central, mas também os indivíduos. Banqueiros centrais simplesmente não gostam de falar de ouro. Eles fingem que está apenas deitado no porão. Eu acho que já estamos nos estágios iniciais de um padrão inflacionário, mas é importante nunca descartar um evento deflacionário. Indo para frente, devemos nos preparar para mais intervenção do governo e intervenção dos bancos centrais. Estamos vendo que o medicamento ainda não funciona, eles continuarão a dar doses. 8220Nesta experiência monetária global em que estamos, isso só faz sentido manter ouro.8221 07152016 - Jeff Snider: COMO LARGAS POSSÍVEIS COMPRAR CONTINUAR A APOIAR UM MERCADO QUE ESTÁ SENDO EM UMA PREMISSÃO FUNDAMENTAMENTE FLAWED FRA Co-fundador Gordon T. Long E Jeffrey Snider, chefe de pesquisa de investimentos globais da Alhambra Investment Partners discutem os ganhos, o yuan chinês, o iene japonês e a queda da credibilidade dos bancos centrais. Como chefe da Global Investment Research para Alhambra Investment Partners, Jeff lidera os esforços de pesquisa de investimento e fornece contato próximo à base de clientes da Alhambras. Jeff ingressou na Atlantic Capital Management, Inc. em Buffalo, NY, como estagiário enquanto realizava estudos no Canisius College. Depois de se formar em 1996 com um diploma de Bacharel em Finanças, Jeff assumiu as operações dessa empresa, adicionando ao processo de gerenciamento de portfólio e estoque. Em 2000, Jeff mudou-se para a West Palm Beach para se juntar a Tom Nolan com o Atlantic Capital Management da Flórida, Inc. No início da década de 2000, ele começou a desenvolver a capacidade de pesquisa para a qual a ACM é conhecida. Como parte da equipe de gerenciamento de portfólio, Jeff foi parte integrante do crescimento da ACM e da construção dos serviços abrangentes de gerenciamento de pesquisa e, em seguida, transformou essa pesquisa de investimentos em desempenho de investimento excepcional. Como parte desse esforço de pesquisa, Jeff escreveu e publicou inúmeros relatórios de investimento detalhados que contrariaram a opinião estabelecida. Ao longo de quase um ano e meio de corrida ao pânico em 2008, Jeff analisou e relatou a deterioração da economia e dos mercados. No início de 2009, enquanto a sabedoria convencional se concentrou em uma penúria quase perpétua, sua próxima série de relatórios forneceu informações sobre o processo de finalização formativo da contração econômica e uma revisão abrangente de fatores que levaram à ressurreição dos mercados. Em 2012, após a fusão entre a ACM e Alhambra Investment Partners, Jeff veio a bordo da Alhambra como chefe da Global Investment Research. 8220 Não há dúvida de que o lucro tem sido insuficiente.8221 O que é ainda mais preocupante é que nem a linha superior está caindo, mas o fluxo de caixa está caindo dramaticamente e isso afeta o crédito junto com tudo o resto. Sem ganhos e sem fluxo de caixa, isso nos coloca em um ambiente de alto risco. A única coisa que tem mantido o mercado tem sido a recompra bancária excessiva que saiu do fluxo de caixa e, em menor grau, emprestado. Mas emprestar é difícil quando você não tem o fluxo de caixa para justificar as classificações de crédito. 8220Quando as recompras compradas podem continuar a suportar um mercado que está em uma premissa fundamentalmente falho8221 Tivemos 4 a 5 trimestres de queda de receita, mas o mercado dos EUA parece ignorá-lo. Em algum momento, a realidade deve entrar. Mas também é importante notar que os problemas comerciais são um fator sistêmico para o declínio nos ganhos. As importações de chinas estão abaixo de 17 anos, mas essas importações provêm basicamente dos mercados emergentes e mercados de commodities. Eles também emprestaram mais de 9 trilhões de dólares nos últimos 7 anos, que de repente conseguiram muito caro para eles, acho que há mais dor por vir. 8220 A saúde do Yuan está ligada à economia global e ao fato de que a economia global está tropeçando.8221 Menos crescimento na China, combinado com menos crescimento em todo o mundo, aumenta o risco financeiro, que alimenta mais relutância em canalizar dólares para a China tornou-se um círculo vicioso. Os chineses não têm escolha senão continuar em uma direção, eles estão em uma rocha em um lugar difícil. À medida que o Yuan chinês caiu, o iene tem aumentado de força. Isso se tornou um grande problema para o Japão adicionar à sua lista já perdida de problemas para lidar. Uma fratura é provável ao virar da esquina, a China e o Japão não podem demorar muito sem desvalorizar o iene. Os mercados estão reavaliando o que os bancos centrais podem realmente fazer. E o que os mercados descobriram foi que os bancos centrais são realmente tão poderosos como todos acreditam que são e o Japão é um exemplo perfeito disso. Não importa o que o BOJ faça, esse Yen continua a avançar. Ele se encaixa no paradigma da economia, o risco financeiro, todos reavaliando o que os bancos centrais são capazes de, etc. Os mercados estão reavaliando os bancos centrais porque vêem esse ambiente monetário apertado apesar dos esforços dos bancos centrais para estimular o combustível. 8220Alguns grandes estoques bancários europeus são indicativos de uma crise bancária recebida. Vemos que taxas de juros baixas ao redor do mundo ficam mais baixas com cada dia que passa, isso é indicativo de condições monetárias apertadas. As baixas taxas não são estimulantes.8221 TROUBLING MATTERS OF DEBATE 8220 A mais preocupante coisa para mim atualmente é que não há muitas respostas disponíveis.8221 O que eu vejo é um regime de moeda global instável pelo qual estamos completamente despreparados. Não há uma solução que tenha sido apresentada que permita uma moeda estável para assumir o euro em dólares que claramente não funciona. Geralmente, os bancos centrais podem solucionar problemas de liquidez, mas não conseguem solucionar problemas de solvência. Nós vemos que o ciclo do crédito virou de empréstimos inadimplentes assim e assim por diante. A idéia por trás da QE para o Japão, a América e a Europa foi iniciar uma recuperação robusta. Agora que os bancos centrais perderam credibilidade e suporte. Então você tem todas as conseqüências não intencionais que chegam com quase zero dinheiro. Temos quase zero descobertas de preços e o risco é muito mispriced. 8220 Os fabricantes de políticas e os economistas simplesmente ficaram sem idéias.8221 O desespero é um grande papel de por que os mercados estão reavaliando os bancos centrais. Se voltarmos 20 anos, onde Alan Greenspan era um gênio e ele nem fazia nada, tudo o que ele fazia era conversar e ele fazia uma carreira sem falar. Não importa o que ele fez, ele foi levado como um gênio. Enquanto 20 anos depois, Janet Yellen parece um idiota torpe, não importa o que faça. Todas as suas ações se mostram tão desesperadas porque a credibilidade ficou desapontada. O Fed foi forçado a agir e, sendo forçado a agir, apenas destacou o que o Fed não pode fazer. 8220 A alocação de recursos é o principal benefício da descoberta de preços, é o sangue da vida da economia. Quanto mais prejudicamos a descoberta de preços, mais situações fatais se tornarão.8221 Precisamos olhar para isso como uma oportunidade a longo prazo. Agora que o poder dos bancos centrais chegou à superfície e a credibilidade foi disparada, ele, por sua vez, abre a porta para soluções credíveis. O fato é que a economia não é nada como o que deveria ser e as pessoas sabem que algo está errado e a mudança é necessária. 06302016 - Ellen Brown: O QUE VOCÊ PRECISA SABER SOBRE A PARCERIA DE COMÉRCIO E INVESTIMENTO TRANS-ATLÂNTICO (TTIP) A Autoridade de Repressão Financeira é acompanhada por Ellen Brown, um autor bem conhecido e advogado de reformas financeiras. O co-fundador da FRA, Gordon T. Long, fica com Ellen para discutir uma miríade de tópicos, incluindo o TTIP, a Monsanto, a Blockchain Technology e o banco de fiança em 1982. Ellen Brown é uma autora americana, candidata política, advogada, palestrante e advogada de medicina alternativa e reforma financeira, mais prominente bancário público. Brown é o fundador e presidente do Public Banking Institute, um grupo de reflexão não partidário dedicado à criação de bancos públicos. Ela também é presidente da Third Millennium Press e é autor de doze livros, incluindo Web of Debt e The Public Bank Solution, além de mais de 200 artigos publicados. Ela apareceu em programas de televisão por cabo e rede, rádio e internet, incluindo uma discussão sobre a Fox Business Network sobre a dívida de empréstimo de estudantes com o Instituto Cato8217s Neil McCluskey, uma história característica sobre derivativos e dívidas na rede russa RT, 6 e a Thom Hartmann Show8217s 8220Conversões com Grandes Mentes.8221 Ellen Brown correu para o Tesoureiro da Califórnia na eleição primária estatal de Califórnia em junho de 2014. PARCERIA DE COMÉRCIO E INVESTIMENTO TRANS-ATLÂNTICO (TTIP) A Parceria Transatlântica de Comércio e Investimento (TTIP) é um acordo comercial proposto entre a União Européia e os Estados Unidos, com o objetivo de promover o comércio e o crescimento econômico multilateral. O governo americano considera o TTIP um acordo complementar para a Parceria Transpaciente (TPP). O acordo está em negociações em curso e suas três principais áreas são: regulação específica do acesso ao mercado e regras e princípios mais amplos e modos de cooperação. O acordo polêmico foi criticado e oposto por sindicatos, instituições de caridade, ONGs e ambientalistas, particularmente na Europa. O Independent descreve a gama de impactos negativos, como a redução das barreiras regulatórias ao comércio para grandes negócios, como lei de segurança alimentar, legislação ambiental, regulamentos bancários e os poderes soberanos de nações individuais8221, ou mais crítico como um assalto às sociedades européias e americanas por As corporações transnacionais8221 e The Guardian notaram a crítica da natureza democrática de TTIP8217s das conversações de portas fechadas8221, 8220 influência de poderosos lobistas8221 e a capacidade potencial de TTIP8217 para minar a autoridade democrática do governo local8221 Um elemento mais fraco desse acordo comercial é o ISDS, uma disputa de investidor Que é um tribunal canguru garantido. As empresas cujos lucros foram prejudicados por algumas ações do governo podem levar esses governos locais ao tribunal. Mas ainda não é um tribunal verdadeiro, é um painel de 3 advogados que são pagos pelas corporações. A questão é que essas corporações podem processar o governo, mas o governo não pode processar as empresas. É uma rua de sentido único, na qual essas corporações não precisam prestar atenção às autoridades legais. É um tribunal criado para o melhoramento das corporações. Além disso, eles não só podem processar seus lucros perdidos, mas também podem processar por lucros futuros perdidos. 8220 Este não é o governo das pessoas para as pessoas, e sim o governo pelas corporações e para as corporações.8221 MONSANTO E O TTIP 8220Monsanto agora pode começar uma fábrica na Europa, o que vai completamente contra o que os europeus têm lutado por anos. Este acordo desperdiça tudo o que os europeus alcançaram nesse tipo de proteção.8221 Um dos objetivos desses acordos é fazer com que o mundo use as nossas regras e não as regras dos BRICS. Assim que Gaddafi começou a falar sobre seu sistema bancário de ouro para o norte da África, ele se tornou um alvo. Saddam Hussein fez o mesmo que levaria euros para o petróleo, o que é contrário a todo o dólar do petróleo. A história mostra que alguém que se afasta deste sistema torna-se um alvo. Se você passar pela banca, os que controlam sua própria criação, Venezuela, Brasil e Rússia etc. estão enfrentando grandes águas. Além disso, não há dinheiro suficiente no sistema por causa da natureza do sistema, onde os bancos criam dinheiro e cobram juros. Mas, idealmente, você precisa de uma autoridade central que possa colocar algum dinheiro lá fora. Eu acho que o dividendo nacional é uma ótima idéia, os suíços apenas tiveram um referendo, mas não passou. No entanto, é ótimo para eles considerar isso. 8220 O dinheiro não deveria vir de nós, de nossos representantes eleitos, ou de nossos bancos centrais que deveriam representar-nos, mas eles não representam a si mesmos. O Federal Reserve não está lá para servir nosso interesse, eles estão lá para servir os bancos.8221 O blockchain é visto como a principal inovação tecnológica da Bitcoin, pois é como prova de todas as transações na rede. Um bloco é a parte atual de uma cadeia de blocos que registra algumas ou todas as transações recentes e, uma vez concluída, entra no bloco como banco de dados permanente. Cada vez que um bloco é concluído, um novo bloco é gerado. Há um número incontável de tais blocos na cadeia de blocos. Os blocos estão ligados um ao outro em ordem linear, cronológica adequada, com cada bloco contendo um hash do bloco anterior. Para usar o banco convencional como uma analogia, o bloco é como um histórico completo de transações bancárias. As transações de Bitcoin são inseridas cronologicamente em uma cadeia de blocos apenas como são as transações bancárias. Blocks, enquanto isso, são como extratos bancários individuais. Com base no protocolo Bitcoin, o banco de dados blockchain é compartilhado por todos os nós que participam de um sistema. A cópia completa da cadeia de blocos possui registros de cada transação do Bitcoin já executada. Pode, portanto, fornecer informações sobre fatos como a quantidade de valor que pertencia a um determinado endereço em qualquer momento do passado. A tecnologia da cadeia de bloqueios definitivamente pode revolucionar o sistema bancário. É importante entender que neste ponto, quase todas as alternativas são melhores do que o que atualmente temos no lugar. Os bancos não conseguiram chegar a um plano válido porque eles não têm o dinheiro que estão criando muito dinheiro apenas para eliminar a aparência. 8220Banks criam dinheiro em seus livros em resposta ao nosso pedido de empréstimo.8221 Agora sabemos que basicamente criamos o dinheiro. Quando tiramos um empréstimo, o banco leva o seu IOU e o transforma em dinheiro, e é aí que o dinheiro vem. Nós, o mutuário, somos aqueles que monetizam o nosso próprio IOU, o banco simplesmente o torna oficial. 8220Estamos em direção a uma sociedade sem dinheiro.8221 O argumento para ir sem dinheiro é toda essa teoria monetarista de que há uma quantidade específica de dinheiro no sistema e os bancos centrais controlam o dinheiro que está lá jogando com as taxas de juros. Eles reduziram a taxa de juros para zero e ainda temos deflação, e agora a teoria é baixá-la abaixo de zero, o que claramente piora. Isso significa que você está pagando dinheiro para manter seu próprio dinheiro no banco. A razão pela qual as pessoas estão acordando agora é porque eles foram ferrados. O equilíbrio está a inclinar as pessoas que estão sofrendo estão começando a despertar para os motivos por que. 06272016 - Peter Boockvar: BREXIT: 8220 ESTÁ TAMBÉM EXPANDANDO LOTE DE LINHAS DE FALHA NA UE COM BUREAUCRACY 038 O PUSH BACK CONTRA O 8216RULING CLASS8217 FRA O co-fundador Gordon T. Long é acompanhado por Peter Boockvar ao discutir as conseqüências de Brexit e o Efeitos sobre a economia futura. Peter é o principal analista de mercado do The Lindsey Group, uma empresa macroeconômica e de pesquisa de mercado fundada por Larry Lindsey. Antes de ingressar no The Lindsey Group, Peter passou um breve período de tempo na Omega Advisors, um fundo de hedge baseado em Nova York, como um macro analista e gerente de portfólio. Antes disso, ele era um empregado e parceiro da Miller Tabak Co por 18 anos, onde era estrategista de patrimônio e gerente de portfólio com Miller Tabak Advisors. Ele se juntou a Donaldson, Lufkin e Jenrette em 1992 em seu departamento de pesquisa de vínculo corporativo como analista junior. Ele também é presidente da OCLI, LLC e OCLI2, LLC, fundos de investimento imobiliário. Peter se formou magna cum laude com um B. B.A. Em finanças da Universidade George Washington. O choque vai levar a um pensamento de tipo caótico, mas, embora este seja um inconveniente gigantesco e motivo de contínua desaceleração econômica, ao longo do tempo, o Reino Unido se ajustará e trocará com a Europa da mesma forma que a Noruega e a Suíça. Para o resto da Europa, isso levanta a questão de outros países decidirem sair. Eu acho que ter o euro é algo de que eles querem fazer parte, mas isso é um grande risco, sem dúvida.8221 Isso também está expondo muitas falhas dentro da UE com burocracia e a recusa contra a classe 8220ruling8221. O fracasso da UE em Bruxelas em resolver o problema dos refugiados é uma grande preocupação, mas a imigração foi uma decisão emocional de curto prazo. Certamente, se não fosse a questão da imigração, acho que é bastante óbvio que eles deveriam votar para permanecer.8221 ESTRUTURA BANCÁRIA DA UE 8220 Em uma base bancária, eles estão sendo esmagados pelo BCE e as taxas de juros negativas. Essa é a maior ameaça para o sistema bancário europeu e suas folhas bancárias superaventadas com muitos empréstimos improdutivos. Não é o voto no Reino Unido.8221 Devemos lembrar quais os fundamentos subjacentes que enfrentamos todos os dias. Ou seja, desacelerando o crescimento econômico globalmente. Nos Estados Unidos, os ganhos em queda, a queda das margens de lucro, a perda de credibilidade por parte de todos os banqueiros centrais e do Fed. Além disso, é uma bolha de preços de ativos nos últimos seis anos que nos deixa sem margem de segurança para enfrentar todos esses ventos contrários. A União Européia pode se ajustar a isso, porque este é um despertar gigantesco e eles têm duas escolhas: eles deixam isso sangrar ou eles dizem, você sabe, temos que mudar nossos caminhos, e algumas coisas para melhor podem Venha disso.8221 8220 A história de crescimento global continua a ser muito desafiada, os preços dos ativos continuam muito caros e os banqueiros centrais perderam credibilidade. Esses são os riscos que as pessoas deveriam concentrar-se principalmente neste momento.8221 A China8217s está a abrandar há anos. Quem não sabe que China8217 está passando por desafios Mesmo o mercado de ações chinês está abaixo de 50 de onde estava em 2007. It8217s ainda faz parte de uma imagem mais ampla de crescimento lento. Após as reações de curto prazo ao joelho, vender o euro, vender a Libra, o dólar tem seus próprios problemas. O Fed está preso em 37 pontos base ao longo deste ciclo econômico. Provavelmente, não aumentaram as taxas até a expansão após a próxima recessão. Então, é fácil vender outras moedas para comprar o dólar agora, o dólar tem seus próprios problemas. 8220 A resposta justa a essa pergunta é qual será a moeda deixada em pé. E a única resposta para isso será ouro e prata, e isso certamente se reflete hoje. O dólar está começando um salto no joelho, mas eu não acredito em um dólar forte, porque eu acho que ele mesmo enfrenta grandes virezas.8221 O Fed não está aumentando as taxas de juros e a economia dos EUA está diminuindo. Passar do crescimento atual para a recessão não é tão longe de um salto. O determinante disso é o que os preços dos ativos fazem, na verdade. Se o SampP500 voltar para 1800, então as chances de um aumento de recessão. A razão pela qual o mercado de ações é usado como o fator balanço é porque as duas últimas recessões foram lideradas por uma queda nos preços dos ativos, nas ações de tecnologia e nos preços da habitação. Nós temos nossa terceira bolha na nossa frente. Tt8217s se manifesta principalmente nos mercados de crédito, mas se você diminui os preços dos ativos, pois ele reage para a realidade econômica global, que em si poderia nos derrubar. Nos EUA, o consumidor é a única coisa que nos impede de uma recessão, e uma queda nos preços dos ativos pode orientar os consumidores do ponto de vista psicológico. 8220 O Fed não tem política agora. Eles eram tão claros sobre como eles iriam facilitar, e eles estiveram nas nuvens sobre como eles vão sair, eles estão presos, eles estão presos e eles essencialmente estão escrevendo política com os dedos cruzados.8221 O O crescimento dos EUA provavelmente continuará a desacelerar, nós viamos bens duráveis ​​hoje que eram muito fracos, vimos os gastos de capital do núcleo dentro de um mínimo de cinco anos, em um nível visto pela última vez há 10 anos, e isso foi antes que as incógnitas maiores chegassem Fora da Europa. O crescimento continuará a diminuir e os preços dos ativos continuarão a diminuir. Em uma temporada e campanha eleitoral, é quando as pessoas são ouvidas 8217. Onde isso vai socialmente, quem sabe. Depende de muitas coisas diferentes. As pessoas estão ouvindo suas vozes, e espero que a classe dominante esteja ouvindo. Penso que todo o espaço da mercadoria tem fundo. Eu acho que os investidores precisam olhar para onde é mais doloroso olhar. Isso continua sendo mercados emergentes que já passaram por um mercado urso de cinco anos e têm avaliações muito melhores do que o resto do mundo.8221 Na Europa agora, você vai ver massacre, mas provavelmente haverá alguma oportunidade lá. Pode haver oportunidades no Reino Unido onde a venda está ocorrendo devido à libra mais fraca. 8220I8217m muito nervoso sobre o mercado de ações dos EUA, que é um dos mais, se não o mais, caro no mundo.8221 05272016 - John Rubino: A DEFLAÇÃO É UM RESULTADO DIRECTO DE NOSSOS TENTATIVOS PARA CRIAR A INFLAÇÃO POR DINHEIRO FÁCIL John Rubino De DollarCollapse e co-fundador da FRA, Gordon T. Long discute os efeitos do aumento do comércio eletrônico, juntamente com o aumento da tecnologia e as conseqüências que enfrentamos de percepções erradas das autoridades financeiras. John Rubino é autor de Clean Money: Picking Winners no Green Tech Boom (Wiley, dezembro de 2008), co-autor, com o GoldMoneys James Turk, do The Collapse of the Dollar e como lucrar com isso (Doubleday, janeiro de 2008), E autor de How to Profit from the Coming Real Estate Bust (Rodale, 2003). Depois de obter um MBA de Finanças da Universidade de Nova York, ele passou a década de 1980 em Wall Street, como comerciante de moeda, analista de capital e analista de lixo eletrônico. Durante a década de 1990, ele foi um colunista destacado da TheStreet e um colaborador freqüente do Investidor Individual, Investidor Online e Consumers Digest, entre muitas outras publicações. Ele agora escreve para CFA Magazine e edita DollarCollapse e GreenStockInvesting. As grandes cadeias de varejo são geralmente vistas como barômetros de boa qualidade da saúde do consumidor. E, como o pseudo-capitalismo da dívida compulsiva de hoje em dia, o consumidor impulsiona a economia, os números que saem das cadeias de varejo acima mencionadas devem ser motivo de preocupação. As empresas de comércio eletrônico como amazonas estão tornando mais fácil e fácil ficar em casa. As mulheres agora estão cada vez mais comprando suas roupas no conforto de suas casas, o que tornará a necessidade de centros comerciais obsoletos. Além disso, ao aumentar a taxa de salário mínimo na América, todas as cadeias de fast food começaram a automatizar caixas com quiosques. O McDonalds já começou a fazer isso e esta nova direção destacou a menor necessidade de trabalho humano no setor varejista. Armazéns e fábricas costumavam empregar muitas pessoas em todo o mundo, agora com o aumento da tecnologia, e particularmente na América, esses lugares tornaram-se amplamente automatizados. Em muitos casos, você não precisa de bartenders, garçons e caixas. Todas essas tarefas podem ser automatizadas através da tecnologia. 8220 Odeio ser apocalíptico, mas o fato é que temos muitas tempestades que estão jogando na mesma direção e estão se alimentando um ao outro como um link. Para vincular a política monetária e dinheiro barato à robótica. Se você é um CEO e o dinheiro é barato, você vai investir na robótica. Essas tendências aceleraram a mudança para a robótica e essa onda vai chocar as pessoas e deixar muitos sem emprego.8221 Quando as taxas de juros são baixas, é um sinal para o mercado pedir muito dinheiro. Ao longo das últimas décadas devido a essas baixas taxas de juros, as empresas do mundo começaram empréstimos em massa de dinheiro para construir fábricas. Este excesso de capacidade de massa, por sua vez, conduz a deflação. for example when you build too much steel you cannot just stop operations at the given plant the plant must continue to run to at least break the variable cost, which in the long run drops the price of steel. 8220Deflation is a direct result of our attempts to create inflation through easy money.8221 Cheap money was not going to bring demand forward any more than two years, but what it would do is create a dramatic over supply. We have had 9 trillion leveraged into the emerging markets that basically went into fueling overcapacity for the past several years. When you get overcapacity you lose price power and then cash flows begin to be depleted. This was easily predictable, there was no economist that would say otherwise, however the mistake was that they thought we had some sort of recovery happening or they ignored that and thought Japan had the right approach. 8220The people making high level financial decisions the past decade are clueless. They have no idea what the consequences of their decisions are. The people in charge now are getting exactly the opposite of what their predecessors expected when they implemented QE, and ran massive government deficits.8221 This is going to force another wave of major layoffs. We already have a gutted middle class we are killing the golden goose that actually buys consumer products. Maybe what was really missed is that all of this economics was based on a standalone country. We live in a globalized economy now that has labor arbitrage, and the central banks have underestimated the global impacts of these policies. 8220We are at the point where there are no more options. Anything we do from now on will have some sort of unintended consequences that will come back to bite us.8221 The Japanese Central Bank and the ECB both took steps to devalue their currencies and they got the opposite result the currencies went up. If we have gotten to the point where all the emergency measures central banks implement do not seem to work then it cant be interpreted as a sign that we are coming or have come to the end of this process. 8220The narrative has now been shifted to a massive move of increasing central banks balance sheets that will be based on fiscal spending of infrastructure.8221 James Rickards in his new book, 8216The New Case for Gold8217 argues that to get the dollar down and force inflation into the system a way to do it is for the government to drive up the price of the gold. The enemy of the government has been gold, but it can also be the friend of the government in a crisis situation. Similarly, Catherine Austin Fitts argues the 1 has sucking wealth out of the US society for the past few decades and they have basically stolen just about as much as they think they can steal. Now it is in their interest to go back to sound money to protect what they have stolen. This is another reason for the gold standard to eventually look useful to the people in charge. 05252016 - YRA HARRIS: WE8217RE IN A WHOLE NEW BALLPARK 8211 THE FED8217S OWN MECHANISM MAY BE BROKEN FRA Co-founder Gordon T. Long discusses with Yra Harris about the yield curve of US Treasury bonds along with the G7 meeting and the effect of Germany and ECB on the rest of the world. Yra Harris is a recognized Trader with over 32 years of experience in all areas of commodity trading, with broad expertise in cash currency markets. He has a proven track record of successful trading through combination of technical work and fundamental analysis of global trends historically based analysis on global hot money flows. He is recognized by peers as an authority on foreign currency. In addition to this he has Specific measurable achievements as a member of the Board of the Chicago Mercantile Exchange (CME). Yra Harris is a Registered Commodity Trading Advisor, Registered Floor Broker and a Registered Pool Operator. He is a regular guest analysis on Currency amp Global Interest Markets on Bloomberg and CNBC. He has been interviewed for various articles in Der Spiegel, Japanese television and print media, and is a frequent commentator on Canadian Financial Network, ROB TV. LOW ON 210 YIELD CURVE It looks like we have another temporary bottom. After we took out that previous level we were talking 120 basis points, but now we8217re trading at 95. The big problem is going to be the 75 basis point area, but we8217ve already taken out the lows that were made in 2007-2008. What it reflects is that the Fed is flattening as they8217re talking about raising rates. Usually with this flattening of the curve, the 210 which is called the 8220investor8217s curve8221 instead of the 8220speculator8217s curve8221, indicates one of two things. Firstly, rates are either too high or going too high on the short end relative to what the market perceives is its potential growth in the future. They8217re getting nervous. 8220Usually I would say this is a very solid indicator and that the Fed has really waited too long to do anything. Which flies in the face of everything we8217ve heard in the last two weeks.8221 There is a dynamic in play in the global markets. With the vast amount of central bank purchases, they have skewed the markets so badly that the markets are trying to get a read on what this all means. Because everything is relative value, 60 of the developed market bonds are in negative territory. That skews everything, so we can8217t get a real feel for what this curve means. If that8217s the reason the curve is flattening, then we8217re in a whole new ballpark because it8217s a global phenomenon at a level we8217ve never seen before and that8217s going to affect everything. It breaks the Fed8217s own mechanism. 8220Bond markets need to be a signally mechanism to be effective, and if you8217ve broken the signalling mechanism, well, we8217re flying here in uncharted territory then it becomes a question of, who8217s in the pilot8217s seat8221 That8217s what the world is trying to figure out: do the people in the pilot8217s seat know what they8217re doing and have confidence in what they8217re doing or are we really flying blind here 530 CURVE FLATTENING The 5s30s is where speculators like to play and that curve is actually flattening more as they seem to be able to exert more pressure, but that might be reflective of relative value. In a yield-starved world, yield-starved because central banks have so dynamically shifted everything everything through their massive purchases, people are stuck having to really reach for things. 8220The 530 is more dynamically telling me that the Fed may be erring in raising rates, that they waited too long.8221 People in Europe have 310 of GDP yield. It8217s not even enough to cover their budget situations. Europe is in a very difficult situation here. That might mean the Fed has waited too long. THE PREVIOUS G7 MEETING IN SHANGHAI 8220I dont think anything major came out of Shanghai because I8217ve been around this business for a long time and nothing could8217ve kept that quiet.8221 Maybe something did take place, but then we consider June of 1998, when the Chinese were much more concerned, and two weeks before Bill Clinton goes to China, Bob Rubin makes a speech about the strength of the Dollar and the US Treasury started buying Yen and selling Dollars contrary to what Rubin said. The Chinese were very upset with the weakening of the Yen and put pressure on the US to try and correct it. Now in Shanghai, we get the sense that the Chinese were displeased with the recent 30 depreciation of the Japanese Yen and made their voices known. If you tied that into Shanghai, you can see that the Japanese sent a signal saying, 8216when we have displeasure, and since we8217re an autocratic government, we can move in a very quick, dynamic fashion. And when we move, we8217ll disrupt the markets, so you better take care of this situation cause we believe the Yen is too weak against the Yuan.8217 So now the Japanese are unhappy, so this will get interesting. The Japanese have voiced their concern with this one sided depreciation. SPECULATION ON RESULTS OF THE G7 MEETING The Japanese could seriously weaken the Yen if they started buying other countries8217 bonds. So there was a conservative effort by the BOJ to buy US treasuries and European debt. 8220Any time a central bank intervenes or starts to buy some of these assets in an aggressive manner, it8217s being done to weaken your currency. There8217s no better way to word it.8221 The Swiss are actively intervening in the market, the Norwegians are maintaining stability. If the BOJ were to start buying US Treasuries, the Dollar-Yen would weaken dramatically cause that would be a central bank policy to directly weaken their currency by buying other countries8217 assets. They will be warned against doing that, but the Japanese retail investors and pension funds are under a lot of pressure to deliver some modicum of return with negative rates in Japan hampering their ability to achieve a positive return. 8220What I think the biggest issue the G7 will speak to is what I call the Larry Summers Agenda he8217s trying to get a global fiscal stimulus.8221 He wants everyone to bring forward all their infrastructure spending now. It would make the Chinese very happy, but it certainly seems to be a desire to craft some type of global fiscal stimulus to take the pressure off the fiscal monetary policy. People talk about the Chinese, but the Germans are much more a propagator of current account surpluses, but they save and save and save. 8220We are totally opposed to nations using their currencies to gain a trade advantage. There will be a lot spoken about the need for fiscal stimulus.8221 THE PROBLEM OF EUROPE Europe is 27 different situations looking for a common policy, and that just can8217t possibly happen. Germany has full employment and budget surplus, current account surplus, and it sits there with negative interest rates, then everything you8217ve told me is wrong. What has to happen is you get very robust inflation in Germany, cause you8217re keeping rates way below whatever metric is used. 8220Your work is in financial repression. Nobody in the world right now is more financially repressed than the German people.8221 We have the German constitutional court ruling against these OMTs and the ability of the ECB to actually perform fiscal policy through their monetary policy. The markets are complacent. The European bond markets have yields that are preposterous. 8220Germany is Europe8217s credit card the ECB, yes, they can print money but they have no credibility without the German credit card.8221 No one would buy German debt without someone guaranteeing it. There is no Euro bond. It doesn8217t exist. People keep saying they need it, but in order to do that there has to be someone guaranteeing that credit, and that8217s the Germans. European debt is at 8-9 and this is going to be the wild card. They have swallowed the concept that the ECB is some sort of brilliant organization with credibility. It has x amount of balance sheet assets which are growing tremendously. The ECB would be equivalent to the Great Depression in 1932 Austria, when the credit gestalt went under. The ECB sits in that role. If the Germans say they8217re not going to be a part of this, the world blows apart financially. They8217re hoping to pile all this on so the world will tell the Germans they can8217t leave. This is such a surreptitious way of forcing them to be the guarantors. Meanwhile the ECB is buying 80b more Euro8217s worth of credit every month. They don8217t even have to buy it. They8217re doing it because they need product. They8217re in a hurry to keep piling all this debt on the ECB, who kept saying 8216we8217ll do whatever it takes8217 and the market accepted that, and over the course of this 8220whatever it takes8221 they kept piling on this debt. 8220If you want to see an accord, there8217s going to be a fiscal stimulus accord.8221 FRA Co-founder Gordon T. Long is joined by Kristin Tate in discussing her book and the outlook of Millennials on the upcoming US election. KRISTIN TATE is is a political columnist and author of Government Gone Wild. In her book she says D. C. politicians are shipping our friends and family overseas to fight in wars we shouldn8217t be fighting. They monitor our emails, record our phone calls, and peer into our snail mail. They spend our hard-earned cash on things no disciplined family would buy. They tell us who we can marry and what we can put in our bodies. They throw us in overcrowded prisons for smoking pot. They take lavish trips around the world, staying in five-star hotels8230 and it comes straight out of our paychecks. This isn8217t freedom Government Gone Wild is a brash, bold ride through the carnival of absurdities that our broken system has become. This isn8217t about Democrats vs. Republicans8230 it8217s about inspiring hard working Americans to give a damn so we can take our country back. This is your wakeup call. You8217re not anywhere near as free as you think you are 8211 but you can be. We8217re not as prosperous as we once were 8211 but we can be. GOVERNMENT GONE WILD 8220You could really open my book on any random page and start reading and not be confused.8221 If you want Millennials to not be apathetic you have to get their attention in a way that will let you keep their attention. They grew up with technology and have a shorter attention span, so it8217s unrealistic to expect a young person who8217s not already politically involved to pick up some long boring book. The book takes the reader through various topics everything from social issues to taxes to foreign affairs. 8220The main message throughout this book is that whenever too much government gets involved, usually our freedoms are eroded.8221 Once you get young people interested, once you get the conversation going, it8217s usually easier to keep their attention. The battle8217s getting their attention initially. The book is a really light read, filled with a lot of shocking facts that a lot of people don8217t know about our government, but it8217s presented in a very fun way. 8220One thing I really try to show Millennials is how we really need to start demanding accountability from our politicians.8221 We8217re scraping to get by and all this money we8217re using to pay our taxes are going toward these sanctimonious politicians to live like kings and queens. There8217s a lot of things we can do to turn this country around, but you8217ve got to show young people why they have to care and why they need to demand accountability from our politicians. ON THE SPECTRUM BETWEEN BERNIE SANDERS AND DONALD TRUMP Poll after poll shows that Millennials tend to be more socially accepting of diverse lifestlyles, so maybe more socially to the left, but we8217re also fiscally conservative. It8217s kind of libertarian. 8220I would say that I tend to be a representation of that socially more liberal and fiscally conservative. It8217s kind of libertarian.8221 Even if they don8217t know what the word 8216libertarian8217 means, if you ask them about these issues many young people want the government to stay out of our personal lives and out of our wallets. A few decades ago, something like gay marriage was very controversial, but this generation has grown up with these social issues and they are a little closer to home than previous generations. 8220I see the future of the Republican party as being a little bit more libertarian, and if these older Republicans don8217t start understanding that you8217re going to keep seeing younger Millennials flock to the Democrats because they really see these social conservative issues as deal-breakers.8221 CURRENT ELECTION ISSUES You have a record number of Millennials living with their parents, the job market is awful, and you do have a lot of young people who do have college degrees working low wage jobs. We8217re depressed, and that8217s why Bernie Sanders is doing so well. He8217s sending a message that sounds positive to young people about the future, even though socialism would destroy this generation. A lot of young people don8217t realize that when they hear him talk about income inequality and wealth distribution. 8220If the Republicans or Hilary Clinton want to grab some of this Millennial vote, they need to start showing young people how their policies will lead to jobs and how their policies will bring prosperity to all Americans. That8217s what young people care about.8221 They get these soundbites of positivity from Bernie and that sounds better than anything else they8217ve heard. That8217s why they8217re so excited about Bernie. It8217s depressing, but young people are all about bumper sticker politics if you want to get their attention you need to spread your message in catchy, easy to understand ways. Bernie Sanders doesn8217t really need to show young people how he8217s going to make these things a reality because right now he8217s the only one giving them any hope at all. 8220There8217s a lack of understanding of what capitalism is, but the fact that young people say they like free enterprise gives me home that fiscal conservatives can still spread their message to young people effectively.8221 The movements behind Bernie and Trump are very similar. People are fed up with the Republicans and the Democrats. The voters are fed up with these establishment bureaucrats who do not look out for the people, on both sides of the aisle. That8217s why they flock to Bernie Sanders. 8220Although I don8217t love Trump or Bernie, the fact that both of them are so popular does give me hope because they8217re both outsiders and it shows me that people want something new and that they understand that the system is broken.8221 If Hilary gets the nomination, young people will continue to be frustrated. Hopefully they8217ll start to understand once they get into the job market, they8217ll understand that we need more capitalism and less socialism. 8220I do think that politics as we know it is changing forever in the US. I think this whole notion of having two establishment parties is crumbling8230 I see more apathy than ever, but I also see in some other way more awareness of what8217s going on.8221 It8217s easier to hold people more accountable because of technology, and this increased awareness of what our politicians are doing and this connectiveness because of technology will only make the two party system crumble even more. We8217re seeing this huge movement toward outsiders, toward politicians who are not career bureaucrats, and we8217ll continue to see that in future elections. 8220More government involvement is not what we need we have too much socialism right now capitalism is our friend, the job market is our friend, a great corporate environment is our friend. I want Millennials to wake up to this stuff and hopefully vote in a way that would lead to these for a free market policy down the road.8221 05132016 - Wolf Richter 8211 TRANSPORTATION RECESSION SIGNALS RETAIL PROBLEMS AHEAD Financial Repression and the Structural Concerns for the Retail Market FRA co-founder Gordon T. Long is joined by Wolf Richter to discuss the struggling retail market and its subsequent impact on the U. S economy as a whole which are a result of the recent financial crisis. Wolf Richter is the founder of Wolf Street Corp. In his cynical, tongue-in-cheek manner, he muses on wolfstreet about economic, business, and financial issues, Wall Street shenanigans, complex entanglements, and other things, debacles, and opportunities that catch his eye in the US, Europe, Japan, and occasionally China. You can subscribe to his free emails and keep in touch with Wolf Richters research and news through his cynical, tongue-in-cheek manner, he muses on wolfstreet about economic, business, and financial issues. He has over twenty years of C-level operations experience, including turnarounds and a VC-funded startup. He earned his BA and MBA in Texas and his MA in Oklahoma, worked in both states for years, including a decade as General Manager and COO of a large Ford dealership and its subsidiaries. But one day, he quit and went to France for seven weeks to open himself up to new possibilities, which degenerated into a life-altering three-year journey across 100 countries on all continents, much of it overland. He has written two books: BIG LIKE: CASCADE INTO AN ODYSSEY and TESTOSTERONE PIT. Concerns of Financial Repression Under financial repression the money that you earn does not compensate for the forward inflation on your investment. This is slowly eating up the savings of investors and bond holders in a period of low inflation, and is done so by the central bank to help aid governments and debtors in paying off the massive pileups of debt. We can expect this trend of financial repression is to go on for the time being due to the position most corporate firms and the government is in right now, as most economists believe a slight increase in interest rates would be catastrophic for the economy. We are in a booming online retail environment which is not going to slow down any time soon. The problem with retail space is a structural problem due to the surge in online shopping. Everywhere we look in urban environments there are strip malls on every corner of the neighborhood and multiple outlets for the same retail store exist all across the states. With the drop in consumption in goods and services, a recession in the goods produced within the U. S. On a weekly basis we are seeing more and more stores shed employees and closing stores all across the country in order to cut operation costs and stay afloat. This creation of demand is just smoke and mirrors At the same time consumers are growing older, and had planned to live off their savings However, over the past years due to the shocks to the FIRE economy we have seen virtually zero growth in their savings. Causing shifts in their purchasing patterns towards cheaper and more affordable goods, trying to save on all levels and spend as less as possible. This all stems from financial repression, there have been no increases in demand but we still see an immense amount of retail space, creating a false sense of demand to consumers, showing promise of a improving economy at a time where it is nearly impossible to thrive. When you have a transportation recession like this, it tells you something about the goods produced in the economy in the United States, and its not over. There has been a large increase in stalled transportation vehicles including trucks and trains which simply have gone out of business due to a lack of demand in the market. This shows us the effects of the 2008 financial crisis still linger on heavily even today. The lack of demand and surplus of supply in many sectors of the economy including retail is continuously putting the U. S economy in a downward spiral and has kept it on the brinks of another recession. If service economy gives, if it starts to break apart even in a minor way I think well have a recession. Luckily the service economy is still holding on and showing signs of improvement and growth. However, if the service economy gives out even in a minor way, the impact on the rest of us considering the tight situation at the moment will certainly throw the U. S into another recession within the coming fiscal year. Factoring the decline in goods produced is a great concern for the U. S since the goods consumed market is already collapsing. This causes an alarm for even more concern in the economy, since the financial crisis even under financial repression we are still seeing a steady rise in debt. This debt carried over from the financial crisis affects every major company in the world. When these companies can no longer hold their own Wolf Richter believes that we will have a real risk for credit default. The Changing of the credit cycle What concerns me the most the amount of corporate debt, the amount of government debt and state municipal debt thats out there since the financial crisis Credit rating companies have begun downgrading almost everything, meaning companies are no longer able to lend, and losing faith in many companies which can no longer continue doing business. The rise in bankruptcy alone should be a definitive sign of the turning credit cycle. This is not limited to any single industry, oil, energy, and retail especially companies are going bankrupt as their debts and expenses simply cannot keep up with the demand that is required to keep them running. In total there were about 3500 commercial bankruptcies, and thats up 33 from a year ago Right now it is the number of small companies that are making headlines in failure to overturn their debt into sustainability. So even though there has been an increase in bankruptcies filed this year there is still a large sum of debt which is held in majority by the big fish of the sea. This provides us with further affirmation of the psychological behaviors of consumers in the economy hinting it to a difficult time for not only continuing to run business as usual but also for entrepreneurs. As the demand is simply not as it used to be in the past, and should expect a slow and painful recovery out of this worldwide debt. Abstract Written by: Saad Gohir sgohirryerson. ca 05122016 - Satyajit Das: DISCUSSES FINANCIAL REPRESSION 038 THE AGE OF STAGNATION FRA Co-founder Gordon T. Long is joined by Satyajit Das in discussing the consequences of financial repression and current policy making, along with the effects of the Chinese economy. SATYAJIT DAS is an internationally respected expert in finance, with over 35 years experience. Das presciently anticipated many aspects of the global financial crisis in 2006. He subsequently proved accurate in his warnings about the ineffectiveness of policy responses and the risk of low growth, sovereign debt problems (anticipating the restructuring of Greek debt), and the increasing problems of China and emerging economies. In 2014 Bloomberg nominated him as one of the fifty most influential financial thinkers in the world. Mr. Das is the author of a number of key reference works on derivatives and risk management. Das is the author of two international bestsellers, Traders, Guns amp Money (2006) and Extreme Money (2011). His latest book is A Banquet of Consequences (2015) (published in North America as Age of Stagnation ). He was featured in Charles Fergusons 2010 Oscar-winning documentary Inside Job, the 2012 PBS Frontline series Money, Power amp Wall Street, the 2009 BBC TV documentary Tricks with Risk, and the 2015 German film Whos Saving Whom. VIEWS ON FINANCIAL REPRESSION It started around 2008 and prices relate to debt. Fundamentally, the way the surprises were dealt with were in a very old fashioned way to grow and inflate their way out of debt. As we know, this process hasn8217t really worked, and there8217s really only two choices left. One of them is to default, which is hugely unpalatable because writing off peoples8217 savings like that has consequences for future consumption, and a huge amount of wealth loss in the world. The other option is financial repression, which is a way of managing excess debt. The most common way is by very high levels of taxation. 8220I dont think people, when talking about financial repression, are talking about taxation as being something that shouldn8217t happen.8221 There8217s obviously a point of taxation which is to run social services and infrastructure and government, but at some point under the condition of high debt it starts to bring taxation rates up for the simple reason of using the state to absorb everyone8217s debt, in other words socialize the debt and then try to use the taxes to pay it off. That can be hugely unproductive for the economy but we8217re starting to see it happen around the world. The next stage is what we call financial repression, where we start to devalue the debt. The most important way we can see that is through a period of low interest rates. 8220People forget that since 2008, we8217ve had over 600 interest rate cuts globally. Interest rates are pretty much around zero around the world.8221 Roughly 30 of global government bonds are trading at negative yields. Either you have nominal yields that are positive but below the rate of inflation to use that to try and ease the purchasing power of debt. Alternatively as we8217re now finding that because inflation is low and the debt levels are so high, we8217ve gone to negative interest rates. There8217s something perverse about negative interest rates because people get very technical about it. This is actually a way of writing down the debt, and are very dangerous, as the market8217s reaction to the negative interest rates in Japan and Europe have proven. Firstly, there8217s no real proof that these types of policies are going to create growth or inflation. They8217ve been put in place to write down the debt. First we have -5 interest rates, and after ten years we8217ve written off half the debt. That8217s now a sort of stealth tactic the central banks and policy makers have put in place. Everybody knows that they said, look, in the next crisis we8217re going to cut interest rates and interest rates are so low that we8217re going to have to go to negative territory, but we all know that if we go to negative territory people are just going to take money out of the bank and just hold the cash. 8220They8217re going to have to stop people from taking out cash, and the interesting way that8217s being channeled by policy makers is that they8217re pretending that banning cash is necessary to prevent criminality or terrorism.8221 There are also other forms of financial repression as well, like redirecting investment. There8217s a whole variety of these measures that we see come into play, and it all has to do with the fact that they try to use these measures to deal with the debt crisis. 8220I would argue that it8217s not going to be able to be dealt with, and it creates enormous social and political pressures What we8217re going to see is a period of financial repression, which is very, very dangerous.8221 POLITICAL EXTREMISM AND POLICY MAKING We8217re starting to see signs of this via the political extremism that8217s starting to come about. The reason these popular extremist policies are being promoted in the United States and elsewhere is because financial repression and the lack of honesty of dealing with the world8217s financial and economic problems. If you look at this period of history and the way the Europeans have deal with the European Debt Crisis, it8217s almost single-handedly created parties like Ciudadanos in Spain, but in Germany these policies would never have gotten any sort of traction. Even the German Finance Minister has said that these parties are really the creation of the economic policies that people are playing around with, and that8217s setting up this confrontation we see in play between Germany and the European Central Bank. 8220I honestly don8217t know how it8217s going to end. In the 1920s and 1930 when similar pressures built up, it didn8217t actually have a very good ending.8221 THOUGHTS FOR THE NEXT YEAR (12-14 MONTHS) 8220I think, fundamentally, we know what the problems are: it8217s debt.8221 It built up in the system, it8217s not properly funded, we know the global imbalances are unsustainable, and add on top of that the financialization of the economy where people are rewarded for trading claims on real cash flows and real assets. 8220You have financial institutions which are too big to fail but too big to jail, and frankly, too big to regulate or too big to manage.8221 So all of those we know, and on top of that there8217s climate issues, resource scarcity, so we8217ve got a very toxic set of problems. Things are going to play out in one of three scenarios. One is the 8216Lazarus economy8217, where all the skeptics are wrong and everything goes back to normal. It8217s not likely, but it might happen. The most likely one is a period of stagnation, which might happen with a 70 chance. What happens is we8217re stuck in this environment of very low growth, disinflation, the debt keeps building up, we use policies like financial repression and low interest rates in a predominant way, and we stretch this out for as long as we possibly can. One lesson we learned from Japan is that we can8217t do this for a very long time. The policy makers are going to try to keep this game going for as long as possible. The problem is that it8217s not sustainable. The last scenario is the one with the 30 chance, which is the crash. The question is whether that happens suddenly, or if we get gradually to where the system breaks down. You have all these nodes of instability going on and it8217s all held together by chicken wire, which is basically central banks putting more and more money in and coming up with more and more far fetched and less effective schemes. The crucial thing that people forget is that this is the ultimate act of faith. The central bankers who completely misread things in the lead-up to 2007 and contributed to the crisis have suddenly after that becomes the saviors. 8220At some point in time it8217ll turn into, 8216oh dear, the emperor has no clothes, they don8217t actually know what they8217re doing8217.8221 What people need to keep in mind is that it8217ll be very different from 2007-2008. The problem is much bigger, and the emerging markets that were a source of strength in 2008 and provided demand for the people in advanced economies, along with abundant savings that helped push the problem, are no longer a source of strength. The third thing is the fact that the policy makers are all wrong. The social and political pressures are in a much worse place than 2007-2008 and socially the tensions are starting to build up. 8220Whatever happens now will be far more difficult to control than they were in 2007-2008 and I think essentially we are at a very dangerous inflection point And the one thing I do know is if something cannot go on, it won8217t go on, and if something happens it happens suddenly.8221 The central banks have this under control for the moment, but in complex systems they tip over extremely suddenly and extremely quickly, and none of us know what the trigger will be, but there will be a trigger and in hindsight it would be obvious it was the trigger. 8220Everyone now is chasing risky assets because it8217s the only way they can feed themselves.8221 INVESTMENT DIRECTION AND PREPARATION 8220In this crazy world of the 1980s onward, we sort of reversed priority and put capital gains first, income next, and security of capital last.8221 You have to think about how to recover, rather than worry about capital gain. One of the key things is to find things that people need: food, oil, scarce resources, and guns (security). 8220You8217re looking for areas that are absolutely crucial in the terms of the actual needs of ordinary people, and that will be protected.8221 The policies are hugely repressive because they8217re forcing people to take risks with their savings, and intentionally they8217re going to go broke or grow poorer over time. 8220I8217m actually astonished, when you mentioned pitchforks earlier, that investors haven8217t picked up their pitchforks and gone after some of these policy makers, though given time I suspect that8217s going to happen.8221 The pre-2008 period was very sound, but after that the Chinese Public Bureau placed a strong emphasis on social stability and launched a program to create employment opportunities. What that8217s done is increased the amount of debt in China. In 2000 the amount of debt was 2T. In 2007 it went to 7T. In 2014 it8217s 28T. It8217s gone up by a factor of 14 times. 8220You can8217t have that kind of growth being leveraged by debt in a financial system without consequences.8221 If you look at where the money8217s gone, it8217s this massive overcapacity in their industries, there8217s a lot of real estate about 15-20 of China8217s GDP is tied up in real estate. It8217s inevitable that they8217re going to have some problems. The last few debt crises that happened in China, the States stepped in, created asset management companies, bought the bad loans to the banks, selected government guarantees on some bonds, and sold it back to the same banks and let time to take care of the problem. The problem now is the bad debt problem is much larger, and they8217re not going to have the same GDP growth that they had. The way that they8217re trying to deal with this is by keeping deposit rates low and the system very liquid so the banks can gradually absorb these losses. 8220I think the best case is that China becomes like Japan, which is putting all these bad debts on their balance sheet and gradually slowing down.8221 The problem is if they miscalculate, the problem is bigger and comes upon them in a way that is much quicker that you could potentially get a banking meltdown. The problem with that is that would spread from China out very quickly because there8217s about a trillion dollars of exposure that far end lenders have to Chinese banks and Chinese companies. 05122016 - Charles Hugh Smith 8211 WHY OUR STATUS QUO FAILED 038 IS BEYOND REFORM The Financial Repression Authority is delighted to have Charles Hugh Smith, prolific writer on the web and author of the highly acclaimed book, Why Our Status Quo Failed and is Beyond Reform. FRA Co-Founder, Gordon T. Long delineates with Charles on the core topics that are mentioned in his book as well as go over key diagrams to supportive diagrams. Charles Hugh Smith is the Publisher of the site 8220Of Two Minds8221. From its humble beginnings in May 2005, Of Two Minds now attracts some 200,000 visits a month and has been listed No. 7 in CNBC8217s top alternative financial sites. His commentary is featured on a number of sites including: Zerohedge. The American Conservative, Peak Prosperity and AOL8217s Daily Finance site (dailyfinance. He has written eight books. Charles Hugh Smith graduated from the University of Hawaii, Manoa in Honolulu. Charles Hugh Smith currently resides in Berkeley, California and Hilo, Hawaii. Mr. Smith8217s articles, which critique the status quo, had influence from Braudel8217s historical account of early capitalism. Smith8217s economic works stress the value and efficacy of decentralizing power and wealth, the individual8217s power of self-determination and the value of community, which in his view has been diminished by the state. His blog covers an eclectic range of timely topics: finance, housing, Asia, energy, long term trends, social issues, healthdietfitness and sustainability. 8220I wanted to encapsulate in a very short form that the status quo is broken and it is not going to be able to solve the problems. In order for us to move forward we first need to accept this reality.8221 The core thesi s in this book is that humanity has 6 problems which are interconnected: Entrench poverty: There are hundreds of millions of people who remain in severe poverty and they do not have access to resources to better their situations. The idea that we are going to reach every human on the planet has been proven incorrect. Using more of everything in a world of finite resources: We have to adopt a de-growth model, which is to make better use of the resources we have instead of just relying on consuming more. Wages is the only way we have of distributing the output of an economy: The share of our national output that is going to wages is declining. The rise of automation and technology has decreased the demand for human labour and this will continue as a trend into the indefinite future. When you consolidate power in a central state you consequently give an upper hand to the wealthy to have influence over that centralized power: I call it cartel state capitalism and we see it everywhere where the industries are controlled by a handful of players who have a great degree of influence. Depending on credit for everything. We are borrowing from the future to fund present day consumption. The current system pays people regardless of their productivity and contribution: People need work, they need livelihoods and they need a positive social role within their community. Paying them to sit home and do nothing creates a whole new assortment of problems. People need work and a sense of importance and contribution. It is all the central planning arrangements and policies that have been implemented since the 2008 Financial Crisis. One new normal is the federal government ownership of student debt. It is now on this incredible increase where the government is buying all of the student loans because it is the only way to mask the bankruptcy of the student loan system. The GDP in the US, EU, Japan and other developed economies has been subpar. It has been barely over 1 and it is being driven by extraordinary expansion of debt. More debt is working against us because there is not enough real wealth being generated to pay for it. Throwing more debt at it does not work. Another new normal is this increasingly popular practise of growing more debt to hide your nonperforming loans. 8220The problem is that the debt is inextinguishable. The central banks can do a great job in creating liquidity but they cannot solve solvency problems. And this is suggesting the central issue that debt is a solvency problem now8221 The fed creates money out of thin air and buys more assets and then it levels off until markets and the economy weaken. Then the Fed ramps up the balance sheet again which is shown by the stair step pattern of the figure. The Feds balance sheet never declines it only plateaus briefly and then goes up again. The new normal is that central banks are cropping up markets because if the markets collapse to their true value it would reveal the bankruptcy of the entire system. In The New Normal 8220recovery,8221 the percentage of the population with a job has advanced all the way back up to where it was 40 years ago, in the late 1970s. During booms eras many more people were employed, but today we are at employment levels similar to that of the 1970s. Fewer people are working and they are earning less money if we were to adjust for inflation, it8217s stagnation. 8220Most of the gains that have been registered are flowing to the top 5. This is not just because of a few greedy people at the top have taken the gains, but also the factor of mixing global competition with technology places a premium on workers who have the skillet set to generate value with increasing technology. Just working in a factory or doing some white collar job does not create a premium in an economy that is pressured by global competition and automation. 8220 Money velocity has been falling and everybody is concerned as to why it is doing so, but the fact of the matter is that there is no growth. The jobs themselves are paying minimal which is why people are dropping out of the labour force to start their own personal endeavour of sorts. 8220A notable feature of the chart is the divergence being shown in 2008-2009 and this is when we went into hyper printing of money to put the system on life support. The productivity numbers in the developed world has fallen off there is lack of growth. Growth in present day is not real, the growth we are seeing is artificial.8221 8220We all know the system broke since the last crisis. We now need structural reform of entitlements. We need a new form of capitalism that is more accessible to people and that is not just controlled from the top through central planning. We are having a hyper-monetary policy where the status quo is looking to central banks to solve all the problems by issuing more debt and liquidity. These problems cannot be solved this way we have to deal with the reality that we need deep structural reforms.8221 If you observe caterpillars in construction sites you will notice the driver has many levers in front of him to control. An economy is managed the same way, there are many levers to pull, but we are running the economy pulling the same lever and that is monetary policy. The other levers are fiscal policy which we are not using, public policy, and taxation policy and so on. These are elements that come out of the political process, it is on political leaders to realize this and make appropriate decisions. 8220One of the things you can have a lot of faith in is mankind. It will reset, we will survive and we will come out of it, but unfortunately it leads to crises and it is always the innocent that are most burdened.8221 04292016 - Anthony Wile: The Emerging Legalized Cannabis Industry and the Rising Latin Star, Colombia. FRA Co-founder, Gordon T. Long is joined by Anthony Wile, Founding Chairman and CEO of The Wile Group, to discuss the future of the emerging legalized Cannabis Industry on a global scale, along with the war on drugs and the next upcoming star in the global theater, Colombia. Mr. Anthony Wile, founding Chairman and CEO of The Wile Group Ltd.. is an active investor, business strategist and consultant, financial markets commentator, publisher and author. Mr. Wile founded The Daily Bell, where he served as chief editor until February 2016. He now publishes Wile Reports, a free subscription publication with new material from Anthony Wile and occasional introductions to investment opportunities of potential interest that are being supported by The Wile Group. Mr. Wile is the author of High Alert: How the Internet Reformation is causing a financial hurricane and how to profit from it. Ron Paul has said, 8220 High Alert should be read by everyone who wishes to educate themselves about the dangers fiat money poses to American liberty and prosperity. I wish I could get every member of Congress to read this book.8221 8220I think the entire world is repressed as a service to benefit a very few.8221 I believe that people should be able to invest their capital in whatever way they want to. Bottom line is, we should not be trying to organize society in a way that monetarily determines who is and who isnt capable of making decisions for themselves. Special Session of the General Assembly UNGASS 2016 8211 The meeting happened as a results of several factors: Some sovereign nations have been jumping ahead of international policy and making their own rules and regulations regarding the war on drugs. Canada is an example of a country that has moved in its own direction to establish a national marketplace for the distribution of medicinal cannabis products. Canadas recently elected Prime Minister Trudeau has made it very clear by some time in spring 2017, there will be legislation in place for an adult use recreational cannabis marketplace. The world is changing in this respect, and rightfully so. Authorities discuss how to reduce drug use, which surely we can all agree on, is a noble topic to talk about, but more importantly we must ask, how do we reduce the demand Too much attention is spent on the supply side of the equation. I think its important we begin to consider the demand side as well. A major idea is that if you8217re going to educate somebody, you need to know who you are talking to. Today the demand side of the industry is unknown other than as a group, an umbrella which you dont deal with as a whole rather, you deal with individual people within the system. The regulation of the industry, like it or not, will ensure that the drugs will be maturely distributed, and as a result of that you will get the appropriate data. 8220If we open up the system and have a rational understanding that the demand already exists 8230 We are not talking about normalizing drugs we are talking about creating a highway system that develops the communication ability for those who wish to impart their views on how you should reduce consumption of these products. By doing this you remove the black market from the distribution side, which then cuts off funding to the 8216terrorism8217 of the war on drugs.8221 If you want to make a change and cease the funding of these illegal organizations throughout the world, then you must simply cut off their funding source. In many cases, these funds are related to the war on drugs. The rest of the world is beginning to realize that the problem can be alleviated through a mature discussion that recognizes human nature being what it is, and that it is individuals who are deciding for themselves to consume these products. We dont endorse it we are simply saying that we must get to know who these people are - profile, understand and get to know people on a personal and real level. 8220This is a big boys8217 game that will be handled by the big boys when it comes to the determination of what the products are and how they8217re distributed.8221 Without a doubt there are investment opportunities in this arena, but people should take their time and not rush in. The regulatory environment has not yet shaped itself. That will determine where the profit margin will lie. Big change is coming, for instance, in distribution. Some of the largest associations in Canada have come out saying that they are behind this shift towards a pharmacy distribution model. This immediately puts an X over the revenues that would have belonged to the licensed producers in Canada who distribute through the mail. Today they have the whole vertical, but tomorrow they wont. As a result, those investments are dramatically affected and thus the viability of anybody who invested in those investments. Areas of negative environmental impact can be alleviated if the focus is on the cultivation in areas that can generate a positive environmental impact. You will see in the coming future that international bodies will be quite focused on the environmental side of this new industry in which the standards can be determined upfront by the private sector with support of agencies that see this is in fact the better way to approach this. There is a lot of discussion happening at this point in time within the international circles of how best to embrace, monitor, secure and develop international trade in this industry. For investors who want to get involved in this big shift, I suggest to pay attention to the nations that on a production side are leaving a positive environmental footprint, and are producing medicinal-grade products which are standardized at legitimate price points. 8220In the war on drugs, Colombia has suffered more than any other nation on Earth.8221 Colombia desires to rehabilitate its reputation. The aftermath of the war is a way for Colombia to recreate the way they are viewed by the world. The country is far from backwards in regards to their research capabilities. Their universities are top notch. There is more than enough capability and infrastructure for Colombia to establish a new role in the world with respect to their contribution in pharmaceutical products. The government has paved the way for a legal business to develop in Colombia. Colombia has means to be a world leader in a scientific and technological way for how these products should be standardized, regulated, and distributed and pave the way by example. BUSINESS OPPORTUNITIES IN COLOMBIA 8220I dont see a country in the world today that offers as much opportunity as Colombia.8221 I try to stay away from global stock markets as much as possible. I am more interested in generating real wealth with real businesses that generate positive and sustainable cash flow. Were focused in private equity and in Colombia. There are so many areas of Colombia which have been sealed off for decades, inaccessible and totally under-explored in terms of natural resources. There is great opportunity for investing 8211 real estate, tourism, a myriad of opportunities exist. I also think the hemp industry in Colombia is going to develop rapidly were conducting due diligence on that now. It is a nation that is about to spring forward in many ways. ECONOMIC SHIFTS IN SOUTH AMERICA The Latin American nations surrounding Colombia are unfortunately lagging far behind. They are not learning as much as they should be from the example of Venezuela. After Colombia, the next rising star would be Chile. It is a country that offers reasonable stability, but it is still difficult to compare the opportunities it offers with those of Colombia. 8220At the end of the day, the leading nation in Latin America, in terms of growth, opportunity, and economic prosperity, is undoubtedly Colombia.8221 FRA Co-founder, Gordon T. Long is joined by Harry Dent to have a detailed discussion about the state of the global economy and how investors can be prepare themselves for the turmoils to come. Harry S. Dent, Jr. is the Founder of Dent Research, an economic forecasting firm specializing in demographic trends. His mission is Helping People Understand Change. Using exciting new research developed from years of hands-on business experience, Mr. Dent offers unprecedented and refreshingly understandable tools for seeing the key economic trends that will affect your life, your business, and your investments over the rest of your lifetime. Mr. Dent is also a best-selling author. In his book The Great Boom Ahead, published in 1992, Mr. Dent stood virtually alone in accurately forecasting the unanticipated boom of the 1990s and the continued expansion into 2007. In his new book, The Demographic Cliff, he continues to educate audiences about his predictions for the next great depression, especially between 2014 and 2019 that he has been forecasting now for 20 years. Mr. Dent is the editor of the Economy amp Markets newsletter and has created the HS Dent Financial Advisors Network. Mr. Dent received his MBA from Harvard Business School, where he was a Baker Scholar and was elected to the Century Club for leadership excellence. At Bain and Company he was a strategy consultant for Fortune 100 companies. He has also been the CEO of several entrepreneurial growth companies and a new venture investor. Since 1988 he has been speaking to executives and investors around the world. He has appeared on Good Morning America, PBS, CNBC, CNN, FOX, Bloomberg, and has been featured in USA Today, Barrons, Investors Business Daily, Entrepreneur, Fortune, Success, US News and World Report, Business Week, The Wall Street Journal, American Demographics, Gentlemens Quarterly and Omni. WHAT IS FINANCIAL REPRESSION 8220Financial repression is how the central banks hijack the free market.8221 Other than from the aftermath of WWII, this is the first time that governments around the world have just begun frantically printing money to offset the downturns. The most important thing to understand is that central banks do not just set short term rates they print money and buy their own bonds to set long term rates to zero. 8220When you are a baby boomer approaching retirement, due to financial repression you will get zero adjust for inflation returns. Baby boomers are being forced to go into the stock market on higher yield assets and get crucified.8221 Pushing long term rates so low forces people to go into stocks and other financial assets as well as allows firms on Wall Street to leverage up. When this happens you get massive misallocation of investment, and have companies borrowing money to buy back their own stocks to engineer mergers that wouldnt be possible without such low rates. This bubble we are in, which is greater than any we have been in before, is going to burst and when it does it will wipe out all the excess gains. This financial repression is just going to destroy wealth faster than it artificially built up. It comes down to central banks admitting that they created a bubble, but they wont because nobody wants to take blame for it while theyre in office. It is a lifetime consumer spending cycle. Most people do not enter the workforce until theyre 20 then they go on a huge spending cycle which eventually slows down at the age of 39 because people buy their largest home well before they peak in spending. We peak at age 46 and continue the trend because of automobile purchasing and especially with QE the affluent people go to school longer which is followed by their kids and so on. Therefore peak spending for these people happens 6 years later, and it has been magnified due to QE since these are the same people who of the entire population are the ones who tend to own financial assets. 8220The combination of financial repression, QE, and extreme income inequality has seriously butchered the middle class in America.8221 It is a graph of the birth index adjusted for immigration, and then projected forward 46 years for the peak spending of the average person. This is why since 2008 governments have been doing endless QE and stimulus just to keep the bubble going enough so that the affluent people can at least continue spending. This demographic trend will continue to point down until 2022 which is when the next generation comes along. Authorities have been able to hold off the burst as long as they wealthy continue to spend, but they are not anymore. 8220We are in a bad yield geopolitical cycle, and it is clearly getting worse and it will hit bottom at around 2020.8221 The productivity that was created in the 1900s from inventions like the automobile and so on is not present today. Today our economic progression is being backed by Facebook and watching the new viral videos. The point is that these 4 cycles have turned down only twice in the last century before this. It was in the early 1930s, the great depression, and the next major stock crash in the mid 70s. Governments are fighting the impending crash tooth and nail and have resorted to emergency measures such as zero interest rates and in some cases even negative interest rates. 8220This is going to be the final bubble. Its going to be like the great depression, like the 1974-1975 crash, and without a doubt it will be the worst stock market crash you will see in your lifetime and it is going to happen by roughly end of 2017.8221 8220This chart is for people who intend to sit in the market, hoping to get another 5-10. From it we can see that since November 2014, we have gone nowhere and we are right now at the bottom of the rounder top and I am confident it will not go up from here.8221 Europe going to be in deep trouble. Banks are failing in Italy like no tomorrow, and I predict by end of the year Italy will be the next Greece, effectively marking the end of the Euro Zone. They already have immigration problems, debt problems, and slowing growth despite endless stimulus. China on the other hand, has the biggest stock market in the world and it crashed by 45 in 2 months, and I predict it is going to crash again by the end of this year. So what can the Fed and central banks in Europe do about that Once that happens it is going to send a shockwave in commodities and especially real estate, since it is the Chinese after all who are buying all the cutting edge real estate throughout the world. 8220The next US President might as well walk into office and openly admit that this is a bubble and talk about actions to deal with it, rather than being like his predecessors and claim job creation and economic growth there is just no chance.8221 HOW CAN INVESTORS PROTECT THEMSELVES 8220Right now you have to get out and do not listen to your stock broker. This is not the time to be taking risk it is the time to be prudent.8221 The idea is to realize that this is a once in a lifetime reset and you have to simply get out of the way. Everything is a bubble thats ready to pop, just simple get out of risk assets as much as you can. You can either gamble and get 5-10 return or lose 60-70 by end of 2017. Bubbles build on denial because everyone benefits, even the average person has a lower mortgage than car payments because of the bubble and zero interest rates. It is because of the fact that everyone benefits that everyone goes in denial. PRECIOUS METALS AND THE US DOLLAR 8220This is a deflationary crisis, and it is the one time that gold will not do well.8221 Gold is a bubble as well. Gold went up 8x in 10 years, there are not many bubbles bigger than the gold bubble and now it is bursting. It is bursting because a lot of the gold bubble happened after 2008 as a result of the crisis, and gold went up the most when people thought the massive money printing would lead to inflation but it didnt. It didnt because deflation is a trend when debt bubbles deleverage, money that was created out of thin air disappears. Most of the time in cycles, we either have moderate or extreme inflation, but this is the one time we have deflation and therefore I do not want to be in gold or in commodities. 8220The USD has been the best currency it goes up versus other currencies as it did in 2008. We are still the best house in a bad neighborhood.8221 China is going to be the biggest urban disaster in modern history. They have 250 million people that are not even registered citizens working low paying jobs that are primarily focused on building infrastructure for nobody. And when this crash comes, those people are done for. When stocks crash, price earnings ratios collapse, and risk premiums go up on everything. So if I was in stocks, I would rather be in pharmaceuticals, health and wellness etc. These are the stocks to buy when the Dow goes down to 5500. 04132016 - Jeff Berwick: 8220THEY8217RE TRYING TO BRING EVERYONE INTO THE BANKING SYSTEM SO THEY CAN ESTABLISH A ONE-WORLD CENTRAL BANK 038 TAXATION SYSTEM8221 FRA Co-founder Gordon T. Long is joined by Jeff Berwick in discussing the article Central banks beat Bitcoin at own game with rival supercurrency , the central banking system, and blockchain technology. Jeff Berwick is the founder of The Dollar Vigilante. CEO of TDV Media amp Services and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the worlds freedom, investment and gold conferences including his own, Anarchapulco. as well as regularly in the media including CNBC, Bloomberg and Fox Business. Jeffs background in the financial markets dates back to his founding of Canadas largest financial website, Stockhouse, in 1994. In the late 90s the company expanded worldwide into 8 different countries and had 250 employees and a market capitalization of 240 million USD at the peak of the tech bubble. To this day more than a million investors use Stockhouse for investment information every month. He has since started numerous businesses including TDV Offshore and TDV Wealth Management to help others internationalize their assets. FIAT CURRENCIES AND BITCOIN There8217s going to be a lot of chaos this year, beginning in January with the worst first month of the world stock market in history. A lot of financial leads have been warning about it, even saying this is a debt jubilee and will end up in utter collapse if people aren8217t careful. 8220I think by 2018 they8217ll be bringing in a one world currency All Fiat currencies, including the US Dollar, are going to collapse sometime between 2015-2020.8221 The market came up with a solution. Launched in 2009, Bitcoin is a free market currency, and one of the ways that we can avoid this total collapse. RESPONSE TO AMBROSE-EVANS PRITCHARD 8220It looked like a propaganda piece, like it was written by the Bank of England as a press release.8221 In no way does this new central bank crypto-currency compete or defeat Bitcoin in any way. In fact, central banks are extremely worried about Bitcoin. They8217re trying to bring everyone into the banking system so they can establish a one-world central bank and taxation system. They planned to create a system that impoverishes people to get the wealth into the hands of the 0.0001. They want to collapse the entire system so they can bring in a new system. We8217re reaching the end of that plan, when every government is insolvent with debt. The US Federal Reserve has essential kept interest rates at zero for eight years, because if interest rates rise the US government would quickly be insolvent. 8220With 19T worth of debt, if the interest rate rose to 10, a very low level, that8217d be almost 2T a year in interest payments alone.8221 They8217re trying to delay that and get everyone into the banking system first. If you try to open a new bank account, it8217s very difficult and they want to know every detail because it8217s going into a central database so no one can evade taxes. Then they8217re going to go even further with negative interest rates and really impoverish people. If people start getting into Bitcoin, they can8217t control it. The only way would be to turn off the internet or the power. Bitcoin is an internet-based currency that8217s completely decentralized. To get rid of it, they8217d have to remove it from the millions of computers around the world, and that8217s almost impossible. If you control the money supply, you control the governments. That8217s what the Federal Reserve and all central banks do. 8220The governments do not control the big decisions. It8217s the people behind the scenes who control the money, who tell the government what they want done, and that8217s been going on for decades.8221 Bitcoin cannot be fraudulent because it8217s open-source software. Anyone who wants to can look at the code. There8217s no CEO, there8217s no central office, and it8217s on so many computers they can8217t stop it. Central banks want to tax everything and control the economy. 8220I don8217t call things like Bitcoin a revolution so much as an evolution. It8217s creating something that circumvents the entire system completely.8221 Blockchain type technology could change everything, and goes beyond just money. This could be where everything is based. This technology is also starting to being used be for governance, starting in Africa, as a system of private property. Eventually it could be used to replace the government. 8220Your average person still doesn8217t know what a big deal is going on behind the scenes, but this is going to revolutionize the world There8217s going to be so many things built on top of this technology that it8217s going to change the world.8221 BACK TO THE ARTICLE 8211 RSCOIN Central banks will get rid of fiat currency and use RSCoin instead, but since it8217s a crypto-currency it can be tracked even more. The population will likely use it, but it does not 8220beat Bitcoin at its own game8221. RSCoin will supposedly be good as it gives the government and central bank more control over the money system, and this will apparently make us less prone to boom-bust cycles. However, the central bank8217s control over interest rates is what creates boom-bust cycles in the first place. THOUGHTS FOR THE FUTURE You want to get your assets out of the banking system, especially anti-system sorts of investments and trades and speculations, ad moving assets out of your own country. 8220You want to get assets internationalized. That8217s the new diversification in my opinion: not stocks, bonds, or cash, it8217s where your assets are, in what countries are they, and under what structures are they.8221 We8217re headed for a collapse, and how it plays out is anyone8217s guess. This is going to be a time talked about in history for centuries, after the collapse happens. We have a global fiat currency that is just computer bits controlled by central bankers with no intrinsic value, and they will return to that. 8220Do your own research. There8217 a lot more going on out there than most people know.8221 04102016 - Michael Oliver 8211 LIBERTARIANISM, AUSTRIAN ECONOMICS 038 MOMENTUM STRUCTURAL ANALYSIS 8211 Part II 8211 Analytics This is the second installment of a two part series in which FRA Co-founder, Gordon T. Long and Michael Oliver, Founder of Momentum Structural Analysis (MSA) break down momentum charts and their unique distinctions in understanding the foundations of Momentum Structural Analysis. 8220What we do is we measure means we do not just lay a moving average on a price chart which doesnt help at all. One of the great things that momentum analysis does is it finds repetitive market action which can be seen better compared to looking at a price chart. MSA is always focused on the different trends a market might have because markets never have one trend. They may have long term trends which within them consist of counter-cyclical sub-trends which if you8217re are not cognizant of can really hurt you. What we try to do with momentum is, since we cannot totally ignore price because it is nonetheless part of the momentum measuring process, we measure price bars in relation to averages of our choice. We oscillate monthly bars in relation to the averages and we get a visual construct of the market once we create the momentum chart which often reveals alarming data.8221 Price is comfortably at the high points and far away from any major pivotal lows but from looking at the momentum chart once you break the structure, the rally that followed confides itself to the underlying side of the violated momentum chart. 8220The market was a dead man walking and all it was doing from January to august was bumping his head on something he couldnt get through and finally he just gave up. 8220 If you were going into an asset that couldnt be dumped overnight but you had to have committee meetings etc. annual momentum gave you the warning. It gave you time to reorient yourself to the new reality. At this point annual momentum had not broken down, so all the activity at point 1500 was lateral action in price and momentum. But from looking at the price chart, you could plot an uptrend line going back to a pivotal low in 2004 and connect it with other lows giving you a good price chart trend line. And still sticking to price, you could draw a horizontal line through the two lows of 2007 which gives you these two lines converging. When you opened in Jan 2008 you were almost 100 points above the low in August, giving you a cushion. On momentum however, you opened below the flow, so again the situation where the moving average changed and you opened at the wrong place at the wrong time. Even the price chart accommodated the break in annual momentum, but as soon as price lows are removed and you ran stops, the market became oversold. This instance leads to a double digit percent rally, the rally is inconsequential to momentum but important to price. In present case, the rally will likely play around in the upper 2000s, not making a new high. If this rally is similar to the rallies in 2008, which occurred after price came down and joined momentum, took out previous price lows and made the picture very clear that you8217re in a bear market. 8220It is a fact you have to live with tops especially in stocks are tough to catch.8221 Gold is up 17 in the year thus far and this shift is quite significant when you put it on a momentum chart based on spreads. When you plot all these variables together, I predict many seismic shifts to occur, and not just stock declines, but upturns in gold as well. 8220Right now I believe we are in a bear market and this is a bear market rally. It is also important to not just look at a market you have to look at things that are inverse or related to it. I would therefore look at gold and commodities in their relationship to the SampP.8221 Many price chart advocates would look at gold and say you8217re having problems from being against a channel top, but on the contrary momentum says that same channel tops will be transitory. 8220If oil collapsed in 2012 versus when it really did in 2014, it would have severely damaged the stock market, particularly the SampP. Oil waited until the latter part of 2014 which is the same time the SampP began going sideways and which is also where we are now. In effect, by oil holding off, it held back its need to replenish.8221 From looking at the price chart you see a sideways action of sorts, but you can interpret it as a price chart advocate as a basing action preceding another leg up, the lows were rising more rapidly than the highs. Then coming down in the late summer, you managed to close below the 3 year moving average. This average was important because in the years prior to 2014, there were a few pullbacks to this average which held throughout. When you convert this to the momentum chart, it shows a descending pattern. Now what is going on in oil is that you8217re building a base. It is possible the low that was made last month as well as the addition of the rally is a setup for a potential final low. When you look at quarterly momentum you see a major pending upside breakout. From looking at the momentum chart you would be shocked. But for this to happen you have to firstly finish the downside, and once that happens and oil closes at any month in the current quarter at 41.20 or higher then you have broken out of quarterly momentum leading me to believe oil will go to roughly 60. 8220Now what I am looking at is lesser time scales, even weeklies and trying to find a credible downturn that indicates the rally is over.8221 In 2011 people were very comfortable in believing gold was in a congestion zone. For the next year it teetered sideways, and was rationalized to be the next leg for the upside. The problem was that in January you have this price drop from late 2011 to a low in 2012. But when you came down in January, it didnt do any damage to the price chart but it created an uptrend line on the annual momentum chart and it also took out a major previous low on gold. After this there was a mass amount of time where price didnt break down, it oscillated until finally in 2013 momentum broke down in a decaying pattern. Ever since the summer lows in 2013, gold has gently oscillated downwards but also came above that level repeatedly, so we can interpret this level as a midpoint. But during the decline in gold in 2013, most people were looking for collapses but we were not. Looking at the momentum chart you see a different picture, you see horizontal action. The point at which momentum broke through that base was when price reached 1140-1160, a level well below the current market. 8220I think gold has broken out on annual and quarterly momentum it has paid its dues and Im getting secondary evidence from foreign exchange. I believe now is a time to be long gold stocks more than gold.8221 04102016 - Michael Oliver 8211 LIBERTARIANISM, AUSTRIAN ECONOMICS 038 MOMENTUM STRUCTURAL ANALYSIS 8211 Part I 8211 Philosophy This is the first installment in a two part series in which FRA Co-founder Gordon T. Long delineates the foundations for Momentum Structural Analysis with Michael Oliver, Founder of Momentum Structural Analysis (MSA). Michael Oliver entered the financial services industry in 1975 on the Futures side, joining E. F. Huttons International Commodity Division, headquartered in New York City8217s Battery Park. He studied under David Johnston, head of Huttons Commodity Division and Chairman of the COMEX. In the 1980s Oliver began to develop his own momentum-based method of technical analysis. He learned early on that orthodox price chart technical analysis left many unanswered questions and too often deceived those who trusted in price chart breakouts,8221 supportresistance etc. In 1987 Oliver, along with his futures client accounts (Oliver had trading POA) technically anticipated and captured the Crash. At that point Oliver began to realize that his emergent momentum-structural-based tools should be further developed into a full analytic methodology. In 1992 he was asked by the Financial VP and head of Wachovia Banks Trust Department, then headquartered in Winston-Salem, NC, to provide soft dollar research to Wachovia. Within a year Oliver shifted from brokerage to full-time technical research. Oliver is the author of The New Libertarianism: Anarcho-Capitalism and has lead MSA in providing its proprietary technical research services to financial and asset management clients continually since 1992. 8220Everybody thinks they have a handle on what momentum means. If you8217re a momentum trader that means you chase ups and downs, and this is not what I do. Price in many aspects is delusional, so I de-trend price and look at price through its momentum action I create momentum charts and analyze that, then reference price secondarily.8221 MOMENTUM STRUCTURAL ANALYSIS The core of technical analysis is very much outdated for it being based on price chart analysis. It is about time for a change, while it is better than fundamental analysis in some respects there is still many deficiencies embedded in price chart analysis which are overcome through momentum structural analysis. 8220It is important to realize that Austrian economists are the key bulwark against central banks. They are very important, and have good analysis which I always agree with, however their timing is lacking and thats where I come in. It is one thing to be right, and another to be right in a timely manner.8221 One concept which I adhere to which is pre-politics and pre-economics, is that man is a conceptual being. Man formulates concepts, ideas, circumstances etc. with an underlying basis of some sort of measurement. But there is always a unit of measurement which man needs to build concepts around so that these concepts have consistent validity overtime. It is essential to have a unit of measurement which remains stable from this stability you begin to measure and form concepts. The problem with the financial world is that we all use measurements in dollars and it is by no means a stable measurement. Additionally the growth in dollars within the economy is not distributed uniformly everywhere, investors have preferences which tend to shift. Because of this, this unit of measure, the dollar, has to be views with extreme skepticism you cannot introduce meager metrics like the CPI to compensate. A well-known orthodox technician, Bob Farrell had 10 rules of investing and 1 was markets always return to the mean. This is a widely accepted assumption and a widely overlooked one by trend followers. 8220Markets breathe, and failure to acknowledge this is suicide.8221 What we do is we measure means we do not just lay a moving average on a price chart which doesnt help at all. One of the great things that momentum analysis does is it finds repetitive market action which can be seen better compared to looking at a price chart. MSA is always focused on the different trends a market might have because markets never have one trend. They may have long term trends which within them consist of countercyclical sub-trends which if you8217re are not cognisant of can really hurt you. What we try to do with momentum is, since we cannot totally ignore price because it is nonetheless part of the momentum measuring process, we measure price bars in relation to averages of our choice. We oscillate monthly bars in relation to the averages and we get a visual construct of the market once we create the momentum chart which often reveals alarming data. 8220You get a totally different view of the trend reality in the market when you see it through a momentum chart versus a price chart.8221 Where momentum plays its greatest role and it is also where most money is lost or made is at the market peaks and bottoms. This is where you experience great swings to your benefit or to your loss. Contact Usyeah, lets head for susans refuge But I will never become a full vegan though, unless life doest leave me with no other way out would you smuggle some sausage or hunt some meat for meus in the calm, at times . I think she would tolerate it, if she wouldnt know or have to see it We could barbecue it near by creek or something, before we return to garden work etc pretending to be safe under a chemtrailed southern france sky We could also try to find a sheck in my country, ya know, even Bilderbergers appreciate it a lotTo Switzerland, southern Germany or Italy it wouldt be close to go too well, think it over PS: btw, who needs a boat in the wonderful alps HA I guess it8217s looking like a jobless, cashless recovery now Why We039re Headed Toward A quotCashless Societyquot t. coCJnFYg5MNb mdash zerohedge (zerohedge) June 28, 2015 Excess crude production affecting China8217s refined oil market The current surplus of crude oil production may have affected downstream operations around the world, with China having three times cancelled price adjustments this year due to an excess of finished oil products in storage, reports the China Business Journal. The Standard Definition of Money is in Error The standard definition of money is given in terms of its three functions: 1: Money is a medium of exchange. 2: Money is a measure of value. 3: Money is a store of value. Number 1 is at best misleading. Numbers 2 and 3 are simply wrong, and these things are easy to show. It is also easy to show that this is important. First, the actual definition of money: 1: Money is a token, or instrument, of demand, which is exchanged for goods or services. Or simply: Money is demand. 2: Money is a measure of demand. 3: Money is a store of demand. WHERES THERE A CRASH WORLDS ECONOMY COLLAPSING. HEADLINES JUNE 2015 EUROPE ECB sees growth faltering as it presses on with QE SampP cuts ratings on European banks EU Car Registration Growth Slows In May Eurozone Industrial Production Growth At 3-month Low Below Forecast Europe8217s largest insurer Allianz to cut sales costs, jobs CoCos cross-holdings are good way to blow up the European banking system Eurozone Investor Confidence Falls To 4-Month Low GERMANY German GfK Consumer Confidence Set To Fall In July German Private Sector Growth Slowest In Five Months German business confidence falls sharply in June German Construction Sector Activity Falls To Four-Month Low In May German machinery orders drop in April German Business Confidence Falls To 4-Month Low German ZEW Investor Confidence At 7-month Low German economic sentiment drops to 7-month low German Business Insolvencies Rose 5.3 In March MAN eyes 2,000 job cuts in VW-led trucks revamp GERMANY PERIPHERY Hungary Industrial Production Growth Eases As Estimated Czech Industrial, Construction Output Growth Slows In April Slovakia Industrial Production Growth Eases Sharply In April Slovakia April Retail Sales Fall At Steepest Rate In 18 Months Croatia Industrial Sales Growth Eases In April Latvia Retail Sales Growth Slows For Second Month Latvia Q1 Growth Revised Lower Romania Industrial Sales Fall In April Bulgaria Industrial Production Growth Slows In May SWISS SECO Cuts Swiss GDP Growth Forecast Swiss May exports fall as strong franc hits demand Swiss industrial pump maker cuts jobs to counter strong Swiss franc Nestle cuts 15 of its Africa workforce Nestle cutting jobs in Africa DENMARK Denmark Consumer Confidence Falls For Third Month In June Denmark Industrial Production Falls In April FINLAND Finland Q1 GDP Contracts Finland Unemployment Rate Rises To 13-Year High In May Finland Retail Sales Fall For Second Straight Month In May Finland Car Sales Fall For Second Month In May Finland8217s Economic Output Drops In April Finland Retail Sales Fall In April Fi nland8217s Industrial Production Declined For The Sixth Straight Month In April SWEDEN NIER Lowers Sweden8217s Growth Outlook Sweden GDP Growth Slows In Q1 Sweden Retail Sales Growth Eases For Second Month Sweden Economic Sentiment Weakens In June Sweden Manufacturing Growth Eases In May Riksbank sees rise in risks to Swedish economy 8211 households continued debt build NORWAY Norway8217s Statoil shed 1,500 jobs, simplifies structure to cut costs Norway to raise capital buffer for banks Norway Industrial Production Falls In April FRANCE French Unemployment Hits Record High: 80 Consecutive Month Of Rising Joblessness French Unemployment Surges By Most In 7 Months To New Record High French Manufacturing Confidence Drops Unexpectedly In June French business confidence falls in June French Industrial Output Falls Unexpectedly French industrial output falls unexpectedly Air France-KLM revenue down 6, load factor down YoY French new car registrations fall 4 in May French Consumer Spending Re bounds Less Than Expected In April ITALY Italy Exports Declined In April Italian Luxury Fashion Prada Profit Fell 42, Net Income 44 Italy Industrial Production Falls Unexpectedly In April Italy industrial output falls unexpectedly Italy Service Sector Growth Slows More Than Expected In May SPAIN amp PORTUGAL Spain8217s Service Sector Growth Moderates In May Portugal Industrial Production Falls In April GREECE Greece Q1 Jobless Rate Rises SampP downgrades Greece deeper into junk Greece Industrial Production Growth Slows Sharply In April Greece misses IMF payment in warning shot as showdown with Europe escalates SOUTH EUROPE Cyprus Q1 Unemployment Rate Climbs Malta Economic Growth Slows In Q1 Turkey March Jobless Rate Rises Turkey8217s GDP Growth Slows In Q1 U. K. UK Growth Forecast Cut On Weaker Q1 GDP: CBI CBI Downgrades U. K. Growth Outlook EEF Lowers U. K. Manufacturing Growth Forecast U. K. Oil amp Gas net loss widens U. K. Retail Sales Slowed U. K. Retail Sales Growth Slows In June: CBI U. K. Manufacturers8217 New Orders Fall In June U. K. Automotive Marketplace Auto Trader Profit Falls U. K. Household Finance Outlook Weakens In June U. K. Construction Output Falls Unexpectedly In April U. K. Industrial Output Growth Slows In April U. K. Home Retail8217s Argos unit posts 1Q drop in sales U. K. Supermarket Chain Sainsbury8217s Q1 Sales Fall U. K. Manufacturing output dips in April U. K. House Price Growth Slowest Since 2013 UK Service Sector Growth At 5-Month Low U. K. Halifax House Prices Fall For First Time In 3 Months Ireland Industrial Production Growth Eases Sharply In April Protests break out in Greece calling for EU exit Banks in Greece have failed to open on Monday following failure to strike a financial deal with EU leaders on Friday leading to protests calling to leave the European Union WHERES THERE A CRASH WORLDS ECONOMY COLLAPSING. HEADLINES JUNE 2015 U. S. The US Is Already In A Recession Real Hourly Earnings Drop To Lowest In 2015 Manufacturing Jobs Decline For The 3rd Month Teenage summer jobs fall to an historic low The Job Market Will Get Much Worse, JPMorgan Warns 93 Million People No Longer Counted In The Work Force 93 Million Americans Remain Out Of The Labor Force 2014 Real Unemployment Rate Was 42.9, Not 5.5 70 million Americans teetering on edge of financial ruin 47 of Americans would have to Borrow or Sell to Cover an Expense of 400 29 of Americans over 55 have zero retirement savings Thousands of Detroit residents have water cutoff Food Banks In New York Are Running Out Of Food Big city, big need: NYC food bank ask for 16 million to combat growing need America8217s Discouraged, Underpaid Workforce Turns To Drugs Economic Confidence Tumbles Back To 2015 Lows Excluding Obamacare And The 8220Harsh Winter8221, Q1 GDP Tumbled -1.4 Final Q2 GDP Revision Confirms 3rd Negative GDP Quarter Of The 8220Recovery8 221 U. S. Weekly Jobless Claims Edge Higher U. S. Weekly Jobless Claims Unexpectedly Inch Up To 279,000 North Dakotas employment picture continues to worsen These 15 states still havent recovered jobs lost in recession People in these 4 states saw their incomes fall in early 2015 U. S. FURTHER BAD NEWS U. S. Productivity Tumbles 3.1 In Q1, More Than Previously Estimated Lowest US Worker Productivity In 22 Years U. S. corporate profits sink 5.9, biggest drop since 2008 Fed8217s Beige Book Hints At Sputtering Economy US Imports Drop 3.3 Chicago Business Barometer Unexpectedly Indicates Contraction In May U. S. state spending growth to slow in 2016 U. S. posts budget deficit of 82.4 billion in May Rising cost on U. S. rate swaps raises worries Wikileaks Reveals Full Text Of Trans-Pacific Partnership U. S. to investigate imports of corrosion-resistant steel Poppy cultivation has risen sharply since the beginning of the US occupation Fed says stress test models will stay a secret Goldman Warns Healt hcare Costs Will Continue To Rise Record Trillion 2015 Stock Buybacks Announced, Bigger Than Peak QE U. S. foreclosure activity up in May as bank repossessions rise Cities, States Shun Moody8217s For Blowing The Whistle On Pension Liabilities Another Day, Another US Dollar Flash Crash U. S. 30-Year Mortgage Rates Jump Above 4 How Fund Managers Use ETF Phantom Liquidity To Avert A Meltdown Why Goldman Sachs Is Diving Back Into High-Speed Stock Trading QE Begins to Screw Investors Luxury Co. Chairman Afraid The Poor Will Rise Up Against Rich What Keeps A Billionaire Awake At Night: Envy, Hatred, Social Warfare And The Homebuilder Plunges 12 Fund managers dump government bonds, rout continues Fund Manager: A Derivatives Bomb Exploded Within The Last Two Weeks All Hell Broke Loose and I Bet You Didn8217t Notice 8211 Bond market breaking Experts Throw Up All Over 8220Made Up, Phony, Smoke And Mirrors8221 Numbers Student Debt Cancellations Begin: Government To 8220Forgive8221 3.6 Billion Phill y Fed Admits QE widens inequality Capex Recovery Is Worst In History, BofAML Says The sneaky way credit card companies trick you into paying up to 36 interest Chicago Faces 2.2 Billion Bank Payout After Rating Cut to Junk Corinthian Bankruptcy Caps Biggest U. S. Education Meltdown Ferrovial, Macquarie put up for sale concession in Chicago toll road Germany approves contentious road toll U. S.MANUFACTURING US Services PMI Misses By Most On Record, Tumbles To Lowest Since January U. S. factory activity growth at slowest since October 2013: Markit U. S. industrial output hurt by weakness in manufacturing, mining U. S. Durable Goods Orders Fall More Than Expected In May US Manufacturing PMI Slumps To Weakest Since Oct 2013 New York Manufacturing Index Unexpectedly Indicates Contraction In June New York Manufacturing Index Unexpectedly Turns Negative In June U. S. Industrial Production Unexpectedly Drops In May US Empire Fed Manufacturing Survey Plunges To Lowest Since January 2013 Nonfarm Produc tivity Collapses Greater Than Expected 3.1, Unit Labor Costs Rise U. S. Non-Manufacturing Index Falls Much More Than Expected In May U. S. Service Sector Grows At Slowest Rate In Over A Year In May ISM Services Plunges To 13 Month Lows As Post-Weather Bounceback Fades Factory Orders Drop 6 From Year Ago In Sixth Consecutive Drop U. S. Factory Orders Pull Back More Than Expected In April US Manufacturing PMI Weakest Since Jan U. S.CONSUMER Consumers Are Not Following Orders U. S. consumer sentiment index falls in June No Consumer Economy With Stagnant Incomes, Rising Basic Expenses Curious 8220Strong8221 Retail Sales: US Already Applying 8220Double8221 Seasonal Adjustments Consumer Comfort Plunges As Buying Climate Crashes Most Since Lehman Personal Consumption Expenditure dropped to its lowest since Feb 2014 May Consumer Spending Has Biggest Annual Drop Since Great Financial Crisis Consumer sentiment drops to six-month low in May U. S. RETAIL Caterpillar Global Retail Sales Decline For 30th Consecutive Month Goodyear to shut down UK manufacturing plant, cut 360-390 jobs McDonalds Reports 12th Consecutive Month Of Declining Global Sales Colt Defense, 179-Year-Old Gunmaker, Files for Bankruptcy Barnes amp Noble reports loss again as Nook sales plunge General Mills to cut jobs under new restructuring plan Standard Life to close Singapore insurance arm, take 70.6 million loss Technology company Synnex May quarter revenue dropped 5.8, downbeat outlook Micron Tech sales fall on lower DRAM pricing GM taking 600 mln charge on Venezuelan currency Irrigation equipment maker Lindsay8217s profit, sales fall Pharmaceutical company Bristol-Myers to close sites, cut 100 jobs Bed Bath amp Beyond Earnings Fell 15 In May United Airlines to end service at NYC8217s JFK airport after losses Commercial plane orders slow jetmakers focus on backlog Delta cuts passenger unit revenue guidance after industry metric declined 5.5 Boeing plans to further slow 747 jet production in 2016 FedEx swings to quarterly net loss Gap To Fire Thousands, Close A Quarter Of All Specialty Locations Bouygues CEO says telecoms unit was lossmaking in first-quarter Auto and Home Insurer Allstate8217s May Catastrophe Losses Reach 178 Million CarMax Slowing Market For Used Cars Sales Big Chocolate Manufacturer Hershey to Cut 300 Jobs, Cuts Sales Forecast Again Steelmaker Nucor projects disappointing Q2 earnings News Corp to cut jobs, shift resources to digital media Starbucks to close Its La Boulange pastry shops FedEx profit and revenue fall short FedEx to take 2.2 billion charge on pension accounting change HSBC8217s investment bank to shed clients, assets in profitability push HSBC To Fire 50,000, One In Five Jobs, To Fund Dividends To Shareholders HSBC Joins JPMorgan: Prepares To Unveil Up To 20,000 Job Cuts GM to lay off workers, cut production at Michigan small-car plant Channel Stuffing The Economy: There Has Never Been More Cars 8220On The Sidelines8221 Boutique retailer Francesca8217s offers weak outlook, same-store sales Women8217s retailer Christopher amp Banks swings to loss, cuts outlook Sears Hometown and Outlet Stores profit plunged 42 in Q1 Burlington Retailer Chain Blew It Clothing and accessories retailer Gap sales fall in May Furniture and home-appliance retailer Conn8217s profit down 44 Women8217s apparel retailer Ascena profit falls 27 on higher costs Tiffany Sales Declined 4.9 Dollar Tree to shed 330 stores Weird Nationwide Walmart Closures Spark Conspiracy Theories U. S.HOMES U. S. Housing Starts Pull Back More Than Expected In May America8217s Housing Problem: Buying And Renting Are Both Unaffordable Rental Permits Soar Most Since 1990 Housing Starts Plunge 11 As April 8220Bounce8221 Fades American homeowners still drowning in mortgage debt Greenspan Dashes Recovery Hopes: 8220Housing Stagnation Is Here To Stay8221 Minimum-wage workers need 2 roommates to afford a San Francisco apartment Home builder Hovnanian8217s quarterly loss widens Home Down Payments Hit Three-Year Low Canadian oil group cuts long-term growth forecast Mexico Industrial Production Growth Slows More Than Expected Brazil Retail Sales Drop Most On Record, Goldman Warns Will Get Worse Brazil Factories Shed Jobs In Fastest Pace In Six Years Amid Downturn Dirty Roller Scroller Mum to show art by son who starved after benefits slashed 8220When he died from malnutrition, he weighed just over five stone.8221 WORLD ECONOMY COLLAPSING. WORLD GROWTH FORECAST 8211 HEADLINES JUNE 2015 The World8217s Biggest Economies Are About to Feel the Impact of China8217s Slowdown World Bank lowers 2015 global growth forecast World Bank Lowers Global Growth Outlook Urges Fed To Hold Off Rate Hike IMF Panics 8211 Slashes US Growth Forecasts OECD downgrades outlook for global growth OECD: G20 Economic Growth Eases In Q1 OECD indicators cast doubt on U. S. rebound OECD cuts Canadas growth forecast on oil slump OECD cuts South Koreas growth forecast to 3 India Leading Index Declines In May PBOC lowers China 2015 GDP, CPI growth forecasts China Central Bank Slashes Inflation, Growth Forecasts South Korea announces stimulus, cuts 2015 growth view MAS Survey: Singapore 2015 GDP Growth Revised Lower Malaysia Leading Index Falls In April Japan Leading Index For April Revised Down Australia Leading Index Falls 0.3 In April Australia Leading Index Slips In May 8211 Westpac New Zealand GDP Slows in Q1, Mining down 7.8, Agriculture down 2.3 ECB s ees growth faltering as it presses on with QE SampP cuts ratings on European banks Latvia Q1 Growth Revised Lower SECO Cuts Swiss GDP Growth Forecast Finland Q1 GDP Contracts Finland8217s Economic Output Drops In April NIER Lowers Sweden8217s Growth Outlook Sweden GDP Growth Slows In Q1 Riksbank sees rise in risks to Swedish economy 8211 households continued debt build SampP downgrades Greece deeper into junk UK Growth Forecast Cut On Weaker Q1 GDP: CBI CBI Downgrades U. K. Growth Outlook EEF Lowers U. K. Manufacturing Growth Forecast Excluding Obamacare And The 8220Harsh Winter8221, Q1 GDP Tumbled -1.4 Final Q2 GDP Revision Confirms 3rd Negative GDP Quarter Of The 8220Recovery8221 The US Is Already In A Recession Real Hourly Earnings Drop To Lowest In 2015 No Consumer Economy With Stagnant Incomes, Rising Basic Expenses Canadian oil group cuts long-term growth forecast WORLD ECONOMY COLLAPSING. WORLD UNEMPLOYMENT 8211 HEADLINES JUNE 2015 OECD Warns: 40 Million People Will Be Out Of Work Next Year South Korea Jobless Rate Unexpectedly Rises In May Malaysia Airlines CEO says carrier 8216technically bankrupt8217, set to cut jobs, rout Europe8217s largest insurer Allianz to cut sales costs, jobs MAN eyes 2,000 job cuts in VW-led trucks revamp Swiss industrial pump maker cuts jobs to counter strong Swiss franc Nestle cuts 15 of its Africa workforce Nestle cutting jobs in Africa Finland Unemployment Rate Rises To 13-Year High In May Norway8217s Statoil shed 1,500 jobs, simplifies structure to cut costs French Unemployment Hits Record High: 80 Consecutive Month Of Rising Joblessness French Unemployment Surges By Most In 7 Months To New Record High Greece Q1 Jobless Rate Rises Cyprus Q1 Unemployment Rate Climbs Turkey March Jobless Rate Rises Teenage summer jobs fall to an historic low U. S. Weekly Jobless Claims Edge Higher Manufacturing Jobs Decline For The 3rd Month The Job Market Will Get Much Worse, JPMorgan Warns 93 Million People No Longer Counted In The Work Force 93 Million Americans Remain Out Of The Labor Force 70 million Americans teetering on edge of financial ruin 47 of Americans would have to Borrow or Sell to Cover an Expense of 400 29 of Americans over 55 have zero retirement savings 2014 Real Unemployment Rate Was 42.9, Not 5.5 U. S. Weekly Jobless Claims Unexpectedly Inch Up To 279,000 North Dakotas employment picture continues to worsen These 15 states still havent recovered jobs lost in recession People in these 4 states saw their incomes fall in early 2015 Goodyear to shut down UK manufacturing plant, cut 360-390 jobs Colt Defense, 179-Year-Old Gunmaker, Files for Bankruptcy General Mills to cut jobs under new restructuring plan Standard Life to close Singapore insurance arm, take 70.6 million loss Pharmaceutical company Bristol-Myers to close sites, cut 100 jobs Gap To Fire Thousands, Close A Quarter Of All Specialty Locations Big Chocolate Ma nufacturer Hershey to Cut 300 Jobs, Cuts Sales Forecast Again News Corp to cut jobs, shift resources to digital media Starbucks to close Its La Boulange pastry shops HSBC To Fire 50,000, One In Five Jobs, To Fund Dividends To Shareholders HSBC Joins JPMorgan: Prepares To Unveil Up To 20,000 Job Cuts GM to lay off workers, cut production at Michigan small-car plant Dollar Tree to shed 330 stores Brazil Factories Shed Jobs In Fastest Pace In Six Years Amid Downturn That story is stunning. To think another human being signed off on that man to survive on 40 a week. Yet we have far less talented people feeding on the trough to the tune of millions a year. Disgusting. As usual. X22Report Spotlight: Private Western Central Banks, AIIB, Cyber Attacks, Censorship amp The Economic Collapse youtubewatchv8p5ynx2j6ZQ The Portuguese (legal) expression 8220depositrio infiel8221 refers to a person or entity that holds another8217s goods 8220in bad faith8221. Either by refusing to return it, or diverting its benefits, selling it outright, or by debasing its value by any means. If the money is 8220European8221, not 8220Greek8221, if it is printed, if the people have legitimate claims on deposits the banks (which were often physical, to begin with), then the correct thing to do is to print it, hand it over to the people who have legitimate claims on it. If they want to buy stuff, offer payment facilities that do not involve physical cash. Let the derivatives and other abstract financial creditors swallow their beards 8211 and ponytails. Putting real money in the hands of real people who have legitimate claims on it would involve a fraction of the 8220funny8221 artificial financial claims. And would boost the real economy and real GDP to new heights immediately. And would enact a material, real-world sort of Glass Steagall. In acto Which probably would displease several 8220important8221 interests. Andy Perry says: Three weeks ago I posted this: In Greece there will have to be another election in short order. And the EU political elite will actively try to influence the outcome of this election as a political player. Greece debt crisis: vote yes to stay in the euro, says Juncker 8211 live updates Guardian just now Interesting. President Dilma (Rousseff) in the USA. To meet Obama, roomfuls of investors and businesspeople, and 8230 Henry Kissinger, the war criminal and arch human rights apostate and violator. Whose espoused policies resulted in her arrest and torture by the military dictatorship in her youth. Paul C Juncker: what a piece of shit He is talking about the EU being democratic LOL What a fool I think that Greece as an exporting country also for tourism could use the same system Denmark follows with still is keeping it8217s own currency the Danish Krone. As tourist you pay the Danish and the Greeks Euro8217s, in return you get useless local Viking currency with holes in it or Drachmas. The problem is that you could easily be attacked by hedge funds hyenas looking for a quick buck manipulating the currency up, breaking it8217s Euro-Peg. We have seen that happen in Swiss but this could also happen in Denmark or Sweden. Maybe Greece adopting the Rubel wouldn8217t be a bad idea at all since if Greece get8217s it8217s energy from Russia a rising Rubel will help to lift off Greeces economy because energy prices will be rock stable to build further the emerging economy. Russian sanctions are simply too ridiculous, Europe is shooting itself in the head. Europe needs Russia and Russia needs Europe. 8220For countries like the US that have lost industries to Asia8221 I love these euphemisms 8212 reminds me of that 1.5 billions that MFB Global 8220vaporized8221. Strewth. Anyway, interesting article nonetheless8230 But of course Greek could simply keep using the Euro, why not The absurdity of a consult of last resource: a GDP chart of what we know to be fudged, numbered mis-directs and then 8220forecasting8221 8211 lol 8230 your planet8217s future From ZERO 8211 8216The Biggest Problem Facing The World Today: 9 Countries Have Debt-To-GDP Over 300 8211 and that a whopping 39 countries have debt-to-GDP of over 1008217 Really. 8211 8216Are we not overlooking the appropriate, natural and observable fact 8230The Biggest Problem Facing The World Today: The Monetary Religion When we observe richest 100 people get richer, your GDP rises By all means, to maximize human apathy, you would come up with yet another GDP chart. Fake a 4.2 million word tax code, that nobody understands, to a gun fight that would be an intentional 8216fake8217 The Most Dishonest Number in the World: LIBOR Black The too the Genie is clearly out of the bottle 8211 More and more and more people will lose their jobs for money due to technological unemployment. Currently, only 10 percent of jobs robots could do are actually done through robotic technology. Think of Greece as a money farm without GDP taxation sources. Hold your breath till 2525 8211 exhale 8230how8217s your particular money farmor should I say your banker8217s money farm doing Can we also make the natural instinct for research, observation that robots taking over jobs is only a threat in a monetary theology paradigm no so, in an advanced, debtless civilization. Ghost Protocol FInancial Advisor Practice Journal by journaloffinance. in 1. Ghost Protocol Volume 68 February 2012 F IN A N C IA L A D V IS O R PRACTICE JOURNAL JOURNAL OF THE SECURITIES ACADEMY AND FACULTY OF e-EDUCATION SAFE UPDATES KEEP INFORMEDThe Securities Academy and Faculty of e-Education Editor: CA Lalit Mohan Agrawal 2. Ghost Protocol INDEXMonth: February 2012Title: Ghost Protocol Will US Economy Save The World AgainEditor. CA Lalit Mohan Agarwal 68th Financial Advisor Practice JournalS. No. Section Name Topic 1.1 Editorial Preamble: Ghost Protocol Schadenfreude 1.2 Stock Markets Souring Sentiment On India 3rd Week of December: Sensex up 247 points Sensex to face many headwinds ahead 4th Week of December: Sensex down 284 points Sensex, Nifty plunge 24 in a terrible year How could you allocate your assets in 2012 1st Week of January: Sensex up 413 points Indias Sensex gains in New Years Eve 2nd Week of January: Sensex up 287 points Sensex posts highest weekly close in five weeks 3rd Week of January: Sensex up 584 points Sensex gains for 3 consecutive weeks 4th Week of January: Sensex up 495 points Rupee, Sensex climb to 11-week high 2.1 Indian Economy India Must Leave Inaction Behind 2.2 International US Dollar Regaining Ground Will the US economy save the world again 2.3 Warning Signals Europes Vicious Spirals The Straits of America Emerging Markets: Will it fall in 2012 Indias Year of Living Stagnantly 3.1 Currency Market Address Basics 3.2 Commodity Market Duty hike on G old 4 Financial Sector Transforming Tomorrow World Economic Forum 4.1 Financial Advisors Beating the Burnout at Davos 4.2 Financial Planners The Great Transformation: Shaping New Models 4.3 Risk Management Consultants Taking Back Globalisation High Food Prices: A Blessing in Disguise 4.4 Credit Counsellors Leaders slam eurozone foot-dragging on debt 4.5 Issues Of The Present Fallout from the crisis could last the rest of this decade At World Economic Forum, Fear of Global Contagion Dominates 5. Central Banks European Banking Authority Stress Tests 6. Inflation Inflation: Tackle it Effectively 7 Knowledge Resource Indias Anti-Corruption Contest The Worlds Major Economies Share Many More Words From The Managing Trustee Vulnerabilities Than Is Commonly Supposed. 3. Ghost ProtocolEditorial preamble1.1 GHOST PROTOCOL The protracted financial and economic crisis discredited first the American model of capitalism, and then the European version. Now it looks as if the Asian approach may take some knocks, too. Coming after the failure of state socialism, does this mean that there is no correct way of organizing an economy In the aftermath of the subprime crisis and the collapse of Lehman Brothers, fingers were pointed atthe United States as an example of how badly things could go wrong. The American model furtherweakened first by the Iraq invasion, and then by the financial crisis. Anyone who dreamed of theAmerican way of life now looked stupid. Immediately after Lehman Brothers collapse, German Finance Minister Peer Steinbrck put thisdiagnosis as a challenge not only to the US, but also to other countries notably the United Kingdom that had Americanized their financial system. The problem, Steinbrck argued, layin over-reliance on highly complex financial instruments, propagated by globalizedAmerican institutions. Criticism of America did not stop there. Steinbrcks successor, Wolfgang Schuble, persisted in the same tone, attacking clueless American monetary policy, whichwas supposedly designed only to feed the American financial monster. But such criticism ignores the problems faced by banks that did not use or deal in complex financialproducts. Bank regulators had long insisted that the safest possible financial instrument was a bond issuedby a rich industrial country then the outbreak of the eurozones sovereign-debt crisis, with its roots in laxgovernment finance in some countries. Critics now had a new focus. Naturally, many conservative Americans weredelighted by the imminent failure of what they saw as Europes tax-and-spendmodel, with its addiction to a costly and inefficient welfare state. They were not theonly critics. The chairman of China Investment Corporation, Jin Liquin, commentedskeptically on a proposed Chinese bailout of Europe, which he called a worn-outwelfare society with outdated welfare laws that induce dependence and sloth. But such criticism captures only one small part of Europes difficulties. The fiscal problems of Greeceand Spain were also the result of spending a great deal on high-technology and high-prestige projects:facilities for the Olympic Games, new airport buildings, and high-speed train links. And Spain and Irelandbefore the crisis did not have a fiscal problem, owing to the rapid economic growth produced by a real-estate boom that seemed to promise a new era of economic miracles. One of the most widely used Chinese terms of recent years is (xng zi l hu), best translatedas schadenfreude: to rejoice in other peoples misfortune. Asian critics looking at America and Europe could easily convince themselves that the Western model ofdemocratic capitalism was collapsing. 4. Ghost Protocol But havent similar capital investments and soaring property prices also been an increasingly important part of Chinas transformation since the 1990s Chinese citizens are now not only frustrated with the high-speed trains increasingly obvious imperfections and inadequacies, but are also wondering whether their government has set the right priorities. Shadenfreude comes in several flavors. Russias Prime Minister Vladimir Putinand Argentinas President Christina Kirchner liked to think that their versions ofa controlled economy and society built in the aftermath of default on foreign debtoffered a more viable alternative to cosmopolitan international capitalism. Bothnow face major problems with disillusioned populations. In short, the worlds major economies share many more vulnerabilities than is commonly supposed. A response to global challenges based simply on schadenfreude may promote a short-term sense of well-being, as people often like to think how lucky they are to have escaped a mess that originated elsewhere. But soon they encounter their own problems indeed, todays global economy is a riot of slipping economic models. And tomorrow the cacophony will be even louder. So, is there any absolutely sure way of organizing economic life If the quest is for a way of securingperpetual security or dominance, then the answer is no. In a market economy, however, competitionrapidly leads to emulation, and high profits associated with an original innovation turn out to betransitory. From a longer-term perspective, there are only temporary surges of relative wealth, just asthere are only temporary surges of apparent success in a particular way of doing business. During the Industrial Revolution in Western Europe in the late eighteenth and early nineteenth centuries, the pioneers and innovators in textiles, steel, and railroads were not, on the whole, rewarded withimmense riches: their profits were competed away. The late nineteenth and the twentieth centuryproduced a different sort of growth, because public policies and resources could be used to protectaccumulated wealth from the otherwise inevitable erosion stemming from competitive pressure. Underpinning comparisons of different models is the wish to find an absolutely secure way of generatingwealth and prosperity, and the belief that a sensibly ordered state could somehow capture and eternalizethe fruits of economic success. Like it or not, states cannot organize themselves in that way any more than individuals can. 5. Ghost Protocol1.2 STOCK MARKETS Souring Sentiment on India India is definitely not in the good books of brokerages as Ruchir Sharma, MD amp global head of emerging markets at Morgan Stanley points out, the sentiment on India is souring. In his book - Breakout Nations, Sharma says the focus must shift to other emerging economies beyond China and India. The operating assumption is that the bear market regime is still on. We know that the popular thing to ask just now is will 2012 be any different from 2011 and the key thing to remember here is that markets dont care about calendar years. So just because a new year begins doesnt mean a new trend is about to begin. The bear market regime looks most entrenched in emerging markets. The big surprise in 2011 is how resilient the US market has been and the factthat the Q4 of this year, the US economy in the midst of all this talk of a global slowdown is likely to posta GDP growth rate in the 3.5 to 4 range, which is an extraordinary performance. However, many emerging markets, which we thought were going to be the superstars, are beingquestioned. So, at this time last year, the big debate was that when will India overtake China as the fastestgrowing economy in the world, that debate is now being turned on its head which is that both India andChina are slowing down and the question is which economy will slow down even more in 2012The trend reversals take place just when the conventional wisdom becomes verystrong. So, over the past decade, it became popular to say - the decline of the Westand the rise of the rest. That trend could well start showing some signs of reversal, the two economies showing the maximum resilience at this stage are US andGermany in the midst of this entire turmoil. In US and Germany even the expectations became very low and hence, thoseexpectations are now being easily surpassed. At the same time, in the emerging markets expectations gottoo high, in terms of what they could achieve, and those are now being undershot. Markets trade at themargin, in terms of what the rate of change is and the rate of change seems to be more positive in thosemarkets and more negative in emerging markets. On the US dollar I am more confident. The US dollar over the past decade, on an inflation adjusted trade weighted basis has lost one third of its value. We were looking at some of our long term charts and it shows that the US dollar now is at the cheapest level it has ever been in its history. So, it is competitive and a lot of the emerging market currencies have become quite expensive and so the big reversal is taking place. For many foreign investors a big part of the returns in emerging markets, over the past few years camefrom currency appreciation and that trend has exhausted itself. Hence, I think that in the US dollar todayis quite likely that the bear market we saw in the dollar, over the past decade where it lost a third of itsvalue is coming to an end and we are likely to see a higher dollar versus many currencies over the nextfew years. However, these currency trends take a long time to play out but thats the sort of nature ofgame in currencies, where the trends tend to reverse. 6. Ghost ProtocolThere has been a lot of talk here about the rupees performance and how its one of the worst performingcurrencies in the world. We think it was high time that the rupee corrected. At our per capita income, weneed an undervalued currency not an overvalued currency to be able to grow. The rupee now has corrected for that. If you look at it on inflation adjustedbasis, on a three-year basis the rupee has virtually unchanged. So, this has really been an event of this year and markets always do that, which is that they dont price something in for long time and then in a digitalmanner they price something in a very short span of time which is what hashappened with the rupee. Barring some sort of macro economic crisis, it does seem to me that the rupeesbig decline is over but all the other emerging market currencies are still quite overvalued. The Indian stock market today is back to where it was in December 2005 in on inflation-adjusted terms. But, the behavior of the Chinese market is in fact more disturbing. The Chinese stock market today is basically where it was 5 years ago. It is even worse if one does an inflation adjusted return. But the real story here to me and the real risk could be China which is that people are so used to seeing China print growth numbers of 8-9 every year. If China grows at less than 7 even for a couple of quarters in 2012 that could really shock a lot of people because no one expects China to do that. Since1997, China has not recorded a growth rate of less than 8 in any single year. To see them adjust to thatrealty could be something, which could send a lot of tremors in the global market. China has accounted for about 50 of incremental oil demand over the past decade and 75 ofincremental oil demand over the past three years. If China has a bit of a wobble it may sort of contaminatethe whole emerging market universe. Then you end up getting a clearing out process, where some of thecommodities importing nations gain the new leadership and a new bull market begins on the back of this. But the market has been sensing much more trouble than what the analyst have let on. However, in emergingmarkets, the way we are positioning ourselves in the coming decade will be very different from the pastdecade. The leaders of the past decade included commodities, were all driven by the China growth story andwe think that in the decade going forward, it is bound to change as most things do once the decade is over. Sentiment about India has already soured quite a bit. And, there is no catalyst apart from lower commodity prices which gets us a sustainable bounce. We cannot have a bull market begin where every time the index in India goes up by 5-10 because of global factors commodity prices led by oil also go up by 5-10 that becomes self defeating. We need that psychology to break for us to get a sustainable advance. Until then its hard to sort of get out of this bear market regime. In the previous bull market, which took place from 2003-2007, we were pretty clear about that, but that was due to global factors, including whathappened in India. However, what we got was that emerging markets had a terrible time in the 1990s andtheir balance sheets were cleaned out after that both at the corporate level and at the government. Valuations became very cheap and then from 2003 we have this flood of easy money, starting out fromthe US and booming demand in the developed world that shot up the emerging market growth rates. 7. Ghost ProtocolSo, emerging markets till 2002 were averaging a growth rate of about 3.5, from 2002 onwards thegrowth rate doubled to 7 and that was the average till 2007. What happened in India was exactly similarthat a growth rate was 5.5-6 and 2003 onwards our growth rate went up to 8.5-9. Hence, everyone here in India thought this is about us, but in fact it was a rising tide that was lifting all boats and that boom came to an end in 2007, when in 2009 and 2010 we all used monetary and fiscal stimulus to try and revive that boom, which took place from 2003-2007 and we were able to carry that on for a short while. However, in the end whats happening in India is that the growth rate is coming back to its trend line of possibly around 6-7.Some people tell that in India if you get a growth rate of 6-7, it is still very good compared to what theglobal economy is going to see. However, the point here is few things need a major adjustment process. Alot of our companies, our macro economic finances are geared towards the growth rate of 8-9 and thatadjustment to a 6 growth rate or 7 growth rate really requires a lot of pain, especially at our sort of percapita income level. Also, the signaling process is not that strong currently. If you look at the priorities of the government, itsstill is very much about how to redistribute the pie rather than grow the pie. When thats happening that isnot a very encouraging sign. The incentive is still to get something like a Food Security Bill passed ratherthan get any major new reforms passed. Thats what they did in 2003 to 2007 where they spent a lot, butthey were able to sustain because of high revenue growth. Now its the opposite, which is that they thinkthat this revenue growth slowdown is just temporary in nature and it will end soon and we can sustain thisspending. But, this growth rate is not going back to 8-9 any time soon and we cant keep spending at theway that we did over the past five to seven years. That is a real disappointment to people like us who want the India story to shine out there. Investors are afickle minded lot and what they tell you today, you should not take too seriously because often in six-12months the views can change. But a lot of hype about India is deflating very quickly. 8. Ghost Protocol3rd week of December 2011: Sensex up 247 points Daily review 161211 191211 201211 211211 221211 231211 Sensex 15,491.35 (112.01) (204.26) 510.13 128.15 (74.66) Nifty 4,651.60 (38.50) (68.90) 148.95 40.70 (19.85) Weekly review 161211 231211 Points Sensex 15,491.35 15,738.70 247.35 1.60 Nifty 4,651.60 4,714.00 62.40 1.34Sensex to face many headwinds aheadBSE gains over 1, broader market down Indias benchmark share indices ended over 1 higher in the week to December 23. However, the broader market continues to remain weak as investors shunned investments in mid-caps and small-cap shares. For the week ended December 23, the 30-share Sensex ended at 15,738.70 up 247.35 points or 1.60. The SampP CNX Nifty closed at 4,714 rising 62.40 points or 1.34. On Monday, Markets ended lower for the fourth straight session, slumping to fresh 2-year lows in intra-day trades, after recent data vindicated that Indias economic growth is slowing down. The Sensex touched a fresh 28-month low of 15,191 and the Nifty touched a low of 4,560, the lowest level for both indices since21082009. On Tuesday, share indices ended lower further for the 5th straight session. On Wednesday benchmark shares indices ended over 3 higher, snapping a five day losing streak. OnThursday, share indices ended higher again, led by banks after slump in food inflation to 4-year lows, rekindled hopes of rate cut by the central bank sooner than expected. Food inflation eased sharply to 1.8in the year to December 10, from an annual 4.35 rise in the previous week. Food inflation fell sharply toa near four-year low as prices of essential items like vegetables, onion, potato and wheat declined. The RBI governor Thursday said that Indias GDP will be below 7.6. In its second quarter review ofmonetary policy 2011-12 the central bank had revised the baseline projection of GDP growth for 2011-12downwards to 7.6 from 8 earlier. Indian stocks ended lower on Friday on rising concerns that Indiasgrowth is likely to be lower than the central banks revised forecast of 7.6 for 2011-12.This week trading volumes were thin due to the upcoming Christmas holidays. The trend may continue inthe coming week as well with many markets shut for year-end holidays. For the Indian markets, nextweek will be important given the FampO expiry on Thursday. Markets will also be partly driven by thepolitical developments, as the parliament resumes after the Christmas break to debate the New LokpalBill. Focus may soon shift to January and outlook for New Year. Foreign institutional investors have been selling everyday in our market. They have been net sellers oflocal stocks worth more than 500 million so far in 2011, a far cry from record net inflows of more than29 billion in 2010. The market sentiment also dampened after global equity research firm CLSA cut itsforecast for Indian economic growth to 6.7 for the current fiscal year from its earlier projection of 7.3,as high interest rates take a toll, with policy inertia and corruption scandals hurting confidence. 9. Ghost Protocol4th week of December 2011: Sensex down 284 points Daily review 231211 261211 271211 281211 291211 301211 Sensex 15,738.70 232.05 (96.80) (146.10) (183.92) (89.01) Nifty 4,714.00 65.00 (28.50) (44.70) (59.55) (21.95) Weekly review 231211 301211 Points Sensex 15,738.70 15,454.92 (283.78) (1.80) Nifty 4,714.00 4,624.30 (89.70) (1.90)Sensex, Nifty plunge 24 in a terrible year The BSE Sensex closed 0.6 lower on Friday and posted its first annual fall in three years as a combination of near double-digit inflation, high interest rates, slowing domestic growth and policy inaction turned off investors already shaken by global headwinds. The benchmarks fall in 2011 was only the second annual decline in a decade. The Sensex ended down 0.57 at 15,454.92 on Friday. Terrible and peculiar is how market-men described calendar 2011.The benchmark indices fell 24 per cent and the Indian market wasamong the worst performer in the world during the year. Market experts are of the opinion that high interest rates, rising inflation, leadership crisis, slower GDP growth rate and the depreciating rupeestill continue to be major concerns. The year started with rising crude oil prices due to political turmoils inoil-producing countries such as Libya. By then Europe had alreadybecome a worry with countries like Greece and Ireland having run uphuge debts. But what triggered the fall in the markets was the Augustdowngrade by Standard amp Poors of the US ratings. Soon, markets theworld over lost ground. Indian markets followed suit. The depreciation of the rupee was the last straw for the Indian markets. The falling rupee accompanied byrising crude oil and fertiliser prices, squeezed profit margins of companies. The BSE Bankex fell 32 percent this calendar year, while IT and pharma indices fell 15.62 per cent and 13.2 per cent respectively. The BSE FMCG index, the best performing sector for the year, grew about 9.3 per cent during the year. Volumes in the cash market dropped through the year while that of the derivatives market increased. There was not good news in the IPO market either. According to estimates, a total of Rs 14,000 crore wasmobilised through IPOs. IPOs finished up the wealth of the investors. Retail investors were caught at thefag end of the bust. Most of the scrips are trading 70-80 per cent below their listing prices. This year was terrible for our markets. Next year may also start on shaky ground. Corporate earnings needto grow, only then will the confidence among the investors come back. 10. Ghost Protocol YearlyQuarterly Review Month December December December December March June Sept. December 2007 2008 2009 2010 2011 2011 2011 2011 Sensex 20,206.95 9,647.31 17,464.81 20,509.09 19,445.22 18,845.87 16,453.76 15,454.92 Points Base (10,559.64) 7,817.50 3044.28 (1,063.87) (599.35) (2,392.11) (998.84) Base (52.26) 81.03 17.43 (5.19) (3.08) (12.69) (6.07)Dalal Street sheds 24.64 in 2011 on interest rates, inflation, rupee fall, global uncertaintiesThe bellwether BSE Sensex shed 24.64 in 2011 in the wake of high inflation, higher interest rates, depreciating local currency, slowing domestic growth and global uncertainties. This is the first annual fallin the Sensex in the last three years. Seven out of 13 sectoral indices on the BSE have done worse than theBSE Sensex in 2011, while only the fast-moving consumer goods (FMCG) index bucked the trend andended the year with positive returns of over nine per cent. The Sensex had reflected the general negative sentiment, when it closed 0.57 or 89 points down at15454.92 points on the last day of 2011 on Friday. For the full year, the Sensex shed 5,054 points from its2010 close of 20,509.09 points. However, in dollar terms the fall of the Sensex is even steeper at 36.74. A depreciating rupee, usually, erodes the take-home value of foreign institutional investors (FII) investments. The Dollex-30 index ofthe BSE, which captures the dollar value of Sensex, slid from 3,761.83 points at the end of 2010 to2,379.90 points on Friday. The fall in the Dollex-30 could be attributed to a steep fall of about 16 in therupee against the dollar in 2011. The rupee, which touched Rs 43.85 per dollar on July 27, closed at Rs53.01 on Friday. 11. Ghost ProtocolHow could you allocate your assets in 2012 Its that time of the year when investors ask what the coming year will hold for them. If only the markets go by predictions, we could all be rich. Since they dont, it is not a great idea to reallocate assets based on the market view alone. Taking a market view means tuning the allocation to macro realities so that losses are reduced. The tactical asset allocation exercise is, therefore, about risk assessment of risk factors, and the agility to rework if assumptions dont materialise. The negative run in the equity market has made everyone anxious. Bad news comes in every day and themarkets are enveloped by pessimism. Many see 2012 as a lost yearfor equity since the much-needed economic reforms, may nothappen. Corporate profitability has taken a hit and lower industrialproduction numbers point to lower growth in sales. There is alsolittle hope of foreign investors returning to India with a highallocation since the macro-economic fundamentals do not look good. There are two points to consider before deciding on equity allocationin 2012. First, the equity markets lead the changes in the economiccycle. This means that the markets will bottom out much before all the indicators turn positive. To waitfor things to improve before making an investment means to make a late entry, this also translates into adelayed participation in the next up cycle. Second, bear markets require an acute eye for a bottom-upinvesting, choosing companies carefully for their ability to bounce back. Investors were enamoured in 2011 by the high returns on short-term debt and deposits. In 2012, if the interest rate policy eases due to a lower inflation level and the need to support economic growth, these products will be the first to respond to such changes. The return in short-term debt will directly map where the policy rates are and will come down with it. Fixed maturity plans and deposits may begin to offer lower interest rates, and slowly, move down in the popularity stakes. Gold has been the default choice for investors who did not like the riskof the equity markets and high rates of inflation. As we look at 2012, itis obvious that the circumstances that pushed up gold prices may notcontinue in the future. If no new shocks are expected, gold can begin itslong-awaited correction. Any contraction in the economic cycle is not good news for real estate or commodities. At the turn of the cycle, both real estate and commodities tend to suffer a correction, many a times doing so ahead of the cycle. Allocating assets means acting on the basis of information we now have, and making decisions in the present after making reasonable assumptions about the future. The focus needs to be on risk, notreturn alone. We will then know what to look for and the kind of adjustments to make in the future. 12. Ghost Protocol1st week of January 2012: Sensex up 413 points Daily review 301211 020112 030112 040112 050112 060112 Sensex 15,454.92 63.00 421.44 (56.72) (25.56) 10.65 Nifty 4,624.30 12.45 128.55 (15.65) 0.30 4.15 Weekly review 301211 060112 Points Sensex 15,454.92 15,867.73 412.81 2.67 Nifty 4,624.30 4,754.10 129.80 2.81Indias Sensex Gains in New Years Eve Indian stocks advanced this week on hope that 2012 will be different from 2011 and the central bank may cut borrowing costs to stoke economic growth as inflation slows. The BSE India Sensex rose 2.67 percent to 15,867.73 this week, the most since the period ended Dec. 2. The SampP CNX Nifty rose 2.81 percent to 4,754.10. Globally, Tim Condon of ING Financial Markets believes that it is going to be another year of ranged trading for risk assets. quotThe data has come in prettysolidly out of the US and thats helping sentiment to some degree, but the situation in the eurozoneremains very difficult and investors are going to be dealing with uncertainty on the European debt crisis atleast into the beginning of the year. So, choppy conditions are probably going to prevail. quot2nd week of January 2012: Sensex up 287 points Daily review 060112 090112 100112 110112 120112 130112 Sensex 15,867.73 (34.08) 350.37 10.77 (138.35) 117.11 Nifty 4,754.10 (4.10) 106.75 11.40 (29.70) 34.75 Weekly review 060112 130112 Points Sensex 15,867.73 16,154.62 286.89 1.81 Nifty 4,754.10 4,866.00 111.90 2.35BSE Sensex posts highest weekly close in five weeksThe BSE Sensex rose to its highest weekly close in five weeks on Friday, on hopes renewed policyreforms by the government and easing inflation will give a much needed boost to the countrys slowingeconomy. quotThere is a growing consensus that we are going to see good news on the policy front by thegovernment. Secondly, one is getting more comfortable with the way macroeconomic indicators havebehaved in the last few days. India formally eliminated restrictions on foreign investment in its single-brand retail sector, opening thedoor to the likes of Swedish furniture giant IKEA to open stores in Asias third-largest economy. Thegovernment is also drawing up plans to allow foreign airlines to invest in its hard-pressed airline sector. 13. Ghost Protocol3rd week of January 2012: Sensex up 584 points Daily review 130112 160112 170112 180112 190112 200112 Sensex 16,154.62 34.74 276.69 (14.58) 192.27 95.27 Nifty 4,866.00 7.90 93.40 (11.50) 62.60 30.20 Weekly review 130112 200112 Points Sensex 16,154.62 16,739.01 584.39 3.63 Nifty 4,866.00 5,048.60 182.60 3.75Sensex gains for 3 consecutive weeks, Up 8 on FII money The market showed excellent performance for the third consecutive week led by strong inflow of money, tracking positive global cues. Gradual easing of funding problems in the eurozone, improvement in the economic data of United States, appreciation of rupee and October-December quarter earnings helped the market to rally nearly 8 in three weeks. Indian markets were among the top gainers in Asia. The Nifty jumped 3.75 for the week while the Sensex added584 points or 3.63 in the last five trading sessions. Foreign institutional investors stepped into India with strong footing, taking exposure to about Rs 6,000crore worth of equity shares since the beginning of 2012, very encouraging as compared to net sellers ofRs 3,642 crore in 2011. The BSE index, which slumped almost a quarter in 2011, has risen nearly 8percent since the New Year began. Morgan Stanley said it expects the Sensex to rise 14 percent in 2012 on the likelihood of better returns oninvestments and attractive valuations on an absolute basis. Neeraj Dewan, director at Quantum Securities said, quotThe Vodafone (VOD. L) judgment is also good formarket. it will boost foreign investment in India. quot The Supreme Court ruled on Friday that the countrystax office has no jurisdiction over Vodafones (VOD. L) purchase of mobile assets in India, which comesas a relief to the telecom giant that has been fighting a 2.2 billion tax bill in a long-running dispute. First, the global markets are supporting and then we are hoping that some action will be taken byReserve Bank of India (in the policy review next week),quot Dewan said. Indias headline inflation slowed in December to a two-year low as food price pressure easeddramatically, but manufactured products inflation edged up from November. The rupee notched up a third consecutive week of gains, rising 2.41 percent. It was the biggest weeklyrise since last week of October, according to Thomson Reuters data. 14. Ghost Protocol4th week of January 2012: Sensex up 495 points Daily review 200112 230112 240112 250112 260112 270112 Sensex 16,739.01 12.72 244.04 81.41 Republic 156.80 Nifty 5,048.60 (2.35) 81.10 30.95 Day 46.40 Weekly review 200112 200112 Points Sensex 16,739.01 17,233.98 494.97 2.96 Nifty 5,048.60 5,204.70 156.10 3.09Rupee, Sensex climb to 11-week highSensex ends above 17K this week The Sensex rose for a sixth straight session on Friday to a 11-week high as foreign investors continued to buy local stocks on indication of a policy shift towards reviving growth, with an increase in global risk appetite also aiding sentiment. Foreign funds have pumped in more than 1.5 billion into beaten-down Indian shares this month, in sharp contrast to net outflows of about 500 million in 2011. Reliance Industries and Infosys led the rise. Reliance rose 3.7, while Infosys jumped 2.2 The Federal Reserve surprised financial markets by saying it expected to leave U. S. benchmark borrowing costs at effectively zero until at least late 2014, considerably later than some investors had expected. And at home, an unexpected cut in the cash reserve ratio (CRR) by the Reserve Bank of India boosted investors sentiments in the market. The RBI in its third quarter policy review cut the CRR, the amount against deposits which commercial banks have to keep as liquid assets such as cash, by 50 basis points to 5.5 from 6. This step will release Rs 320 billion into the system. The main 30-share BSE index closed 2.96 up at 17,233.98, its highest closing level since November 9.Jagannadham Thunuguntla, head of research at SMC Investments and Advisors said, quotI think its becauseof loads and loads of liquidity and above that the Fed statement that probably they will keep interest rateslow till late 2014. Its value taking plus liquidity support. quotThe benchmark has added about 11 percent so far this year. It had shed nearly a quarter last year, makingit one of the worst performers in the world. quotThis is tomfoolery. We were the worst performing market last year and the best performing market thisyear. What has changed Nothing, quot said Arun Kejriwal, a strategist at Research firm KRIS. He saidforeign institutional investments, an improved rupee and ground-level pessimism of last year have driventhe stocks up this month. The rupee touched an 11-week high on Friday on the back of dollar inflows with a growing number offoreign exchange dealers and treasury officials saying that the local currency is on course to gain furtherin the coming weeks. The rupee rose 1.5 from Wednesdays close of 50.11 against the dollar to end theday at 49.31 to the USD, with the gain fuelled partly by exporters selling dollars after being caught on thewrong foot in terms of the direction of the currency. 15. Ghost Protocol2.1 INDIAN ECONOMY India Must Leave Inaction Behind Many Indians are entering 2012 with a sense of unease. The economy is slowing, infrastructure remains terrible, poverty is ever-present, and corruption seems an intractable problem. These are all legitimate concerns. But, please, take a step back and look at the big picture. And take another step back and look at the really big picture. For most of the past 2,000 years, wealth and power wereconcentrated in those parts of the world with the largest populations - that is, the civilisations of what istoday India and China. Then, around 500 years ago, the countries of Europe began their dominance. Theindustrial revolution allowed, for the first time in human history, small states to accumulate wealth andpower out of proportion to their populations. With the 21st century well underway, it is becoming clear that the past 200 years have been a deviation. The big nations - China and India - are making a comeback, and we are now returning to the historicalnorm. But size itself does not automatically confer either wealth or power. A big state still has to take theright steps to maximise its natural advantage. So, when we ask if this will be a good century for India, we are really asking what India is doing toconvert its size into increased wealth and power. The answer is: so far, not much. Look at what China hasaccomplished in the past three decades. It has transformed from an agriculture-driven to a manufacturing-driven economy. Its per capita GDP has grown ten-fold. It has built over a thousand universities, achieving the fastest increase in university enrolment in the history of mankind. Life expectancy at birthhas increased from 66 to 73 years, and the infant mortality rate has decreased by 60. Chinese checkers Chinas economic strength has funded an increasingly forceful foreign policy. It is building a world-class navy, striking long-term deals for resources in Africa and South America, and - closer home - securing potential strategic footholds in Indias backyard. China is busy constructing commercial ports in Pakistan, Myanmar, Bangladesh and Sri Lanka in what analysts have called a quotstring of pearlsquotstrategy. If commercial ports one day lead to basing rights for Chinas navy, this string ofpearls could well strangle India. Looking out from Beijing, Chinas leaders see around them a host of weak states, and only one thingstanding between them and complete domination of the entire Asian continent: a powerful India. Enter the Elephant India has several important advantages over China. If it uses them correctly, it can credibly challenge Chinas would-be supremacy in Asia. First, India has demographic tailwinds that China can only dream of. Chinas disastrous one-child policy has turned that country (1.8 births per woman and 20 of the population under the age of 15) into the demographic 16. Ghost Protocolequivalent of a Western European nation. India, by contrast, is not only large like China, but also young(31 of population under 15) and growing (2.7 births per woman). Second, Indias corporate sector is far stronger than Chinas. Indian businesses, led by English-speaking management of global calibre, will conquer global markets, just as American businesses did in the second half of the 20th century. Most companies in China, where domesticpower derives from connections with the state and where export cost advantages depend on an under-valued currency, lack the capacity to become true multinationals. Third, India has the most talented base of technology workers in the world. Currently they are under-utilised in the outsourcing sector. India must take them out of the back office (where they use their minds to develop intellectual property for overseas clients) to the front office(where they will develop intellectual property for Indian firms). Indian firms that move from back officeto front will capture far more of the global value chain in technology than they do currently. These are just some of the advantages that can give Indias economy thesustained growth it needs to fund a more aggressive foreign policy againstChina. Already India has begun to replace its ageing military hardware. Only a strong economy can ensure India has the capacity to match Chinasongoing defence build-up. Only a strong India can halt and roll backChinas incursions into the Indian Ocean area. Above all, India has one more thing that China does not: a relationshipwith the US bolstered by shared values. The two democracies have comea long way since the US slapped sanctions on India following the 1998nuclear tests. Now they consider themselves strategic partners, and arecooperating across a wide range of matters, from trade to military training to intelligence sharing. But the US and India need to do more. They need to develop an alliance that is as broad, deep and strongas the Anglo-American alliance was in the 20th century. Just as the US and the UK worked together topreserve freedom last century, so must the US and India this century. As the great nations of Asia re-emerge from centuries of economic stagnation, China has gotten a bighead start. If the 21st century is to be a good one for India, it must leave inaction behind and begin on thepath to global power. 2012 would be a good time to start. 17. Ghost Protocol2.2 INTERNATIONAL US Dollar Regaining Ground Portuguese-speaking concierges have of late been much in demand in New York hotels. A record number of Brazilians are floating around the city on shopping expeditions and could do with all the local help possible. The people of a country with one of the most expensive currencies in the world are flocking to a nation where the currency is about as cheap as it has ever been. Adjusting for relative inflation differentials, the US dollar by mid-2011 was at the lowest level against currencies of its trading partners in itsfloating rate history, which dates back to the end of the Bretton Woods system in the early 1970s. While the Brazilian real is an extreme case, lying at one end of the valuationspectrum, the multilingual cacophony on Fifth Avenue suggests touristsfrom other parts of the world too are finding the US a bargain. Tourism onits own hardly dictates a currencys trend but other data - from US exports toforeign direct investment, or FDI, inflows - reaffirm the greenbacks highlycompetitive position. After steadily declining for many decades, the US share of global exports is beginning to tick higher from a low of 8 in 2008. FDI inflows have picked up meaningfully over the past decade and are currently running at 1.5 of US GDP compared to the mere 0.5 share in 2002. These flows are all working to narrow the US current account deficit from a peak of nearly 7 of GDP at the height of the US consumption boom in 2007 to 3 now. The long-talked-about trade imbalance should narrow even more in the years ahead as the US import bill forenergy falls further and some manufacturing moves back home. These trends are already in progress but areyet to be recognised by the conventional wisdom. From a low of 68 in 2005, the US is now 78 self-sufficient in termsof its overall energy needs. The ramp up in production of shale gas withnew technological breakthroughs has played a meaningful role in cuttingdown the US import bill for energy. Perhaps more surprisingly, USimports of oil too have declined over the past five years, not just due toweak demand but also on account of an onshore production boom inplaces such as North Dakota, higher efficiency as well as greater use ofbiofuels and unconventional liquids such as shale oil. Meanwhile, a recent report by the Boston Consulting Group, or BCG, suggests that the US manufacturingsector is set for a major revival. China used to be the clear choice to build a manufacturing plant forglobal suppliers because of its low-cost labour, cheap currency and significant government incentives toattract foreign investment. But over the past five years, the renminbi has appreciated 20 against thedollar and Chinas annual inflation rate has averaged 1 more than that of the US inflation. Pay andbenefits between 2005 and 2010 rose 19 annually for the average factory worker in China while the costof employing US labour increased by only 4. 18. Ghost ProtocolBCG estimates that by 2015, manufacturing in the US will be just as economical as in China for many goodsmade for North American consumers. With multinationals likely to bring some production work for the North American market back to the US, the countrys trade deficit could further narrow. The situation was very different a decade ago when China was just joining the WTO and the US dollar was in the midst of a powerful bull market. Between 1991 and 2001, the greenback appreciated by more than 30 on a trade-weighted and inflation-adjusted basis. That undermined the competitiveness of the manufacturing sector and contributed to the record widening of the US current account deficit. The dollar bear market of the past decade more than reversed the earlier gains with currencies of many emerging markets rising the most instead. The Brazilian real appreciated by more than 200 against the dollar overthe past decade, followed by other commodity-exporting currencies suchas the Russian rouble and the Chilean peso that more than doubled invalue during that period. Booming exports, surging capital inflows andstable to falling inflation rates, all abetted the trend of emerging marketcurrency strength. However, as is the nature of markets, the pendulum swung too far and is probably now retracing its path. Many emerging market currencies have depreciated significantly against the dollar over the past few months. The popular explanation is that the currency weakness is a function of heightened risk aversion arising from troubles in euroland. That can explain some of the volatility, but the bigger story may well be that the dollar is on a comeback trail as many of factors that led to its decline and the rise of emerging market exchange rates have exhausted themselves. Some of the worlds weakest currencies in 2011 belonged to thosecountries running a large current account deficit and with inflation ratesmuch higher than the US. The South African rand, the Turkish lira andthe Indian rupee fell by 15-20 against the greenback. The currentaccount deficits of these economies ran at anywhere between 3 and9 of GDP while inflation was close to double digits in India andTurkey. Similarly, the Brazilian real, the Chilean peso and Polish zlotydeclined by around 10 largely due to their current account deficitpositions of 2.5-5 of GDP though all of these countries had less of aninflation problem. To be sure, if capital flows return with the sort of fervour seen in many years of the past decade, then thelarge current account deficits will get funded easily and not be a drag on the currencies. However, riskappetite is unlikely to get anywhere near as high as in the heydays of the 2000s. The psychological scarssuffered during the serial financial crises take a long time to heal, and so will keep risk-seeking behaviourin check. Further, the domestic fundamentals of many emerging markets are deteriorating now after thevast improvements from the low expectations base of a decade ago. 19. Ghost ProtocolTraditional metrics such as inflation rate differentials and current account positions that long dictatedexchange rate movements but were forgotten in the last decades mad rush to chase growth in emergingmarkets are back on the ascendant and that situation is likely to persist for the foreseeable future. Valuationhas never been a good timing tool on the currency marketplace and deviations from fair value can persist foryears at a run. Usually, some catalyst is needed to correct the misalignment, and once the process begins, itcan happen in very quick time. In this regard, the sharp weakness of many emerging market currencies overthe past few months and, conversely, the sudden strength of the dollar is notstrange behaviour. Interestingly, while the rupees recent fall appears dramatic, on a three-year basis, the Indian currency is, in fact, unchanged on aninflation-adjusted and trade-weighted basis. While the rupee now appears to have more than made for its past overvaluation, currencies such as theBrazilian real still have a very expensive feel about them. Relatively high commodity prices arepreventing a bigger decline of the real. When commodity prices come unhinged due to a likely fall-off in commodity demand from China, the real will correct rather abruptly. The real story here is that the dollar appears to have turned the corner after a decade of underperformance. Its fundamentals are improving as evident in the narrowing current account gap and the underlying US economy is more competitive than it has been in a long time. On the other side of the equation, many economies from those in Europe to the big emerging markets are grappling with all sorts of local problems and theirexchange rates are no longer that competitive. Markets always price in any change at the margin and thedollar could be in a bull market for the next few years as its fundamentals improve relative to the rest ofthe world. Fifth Avenue may yet again become a primarily English-speaking zone. 20. Ghost ProtocolWill the US economy save the world again Just when it seemed the end was near, Uncle Sam seems to be coming back, staggering to his feet like Bruce Willis in one of the old Die Hard movies. In case you missed them, the plots are all roughly the same: despite a hangover and a bit of flab, armed with just a revolver and a pack of cigarettes, Bruce saves the day - no matter how many machine guns and explosives the baddies have, or how muscular they might be. A number of the latest indicators suggest that after years of beating, theres a chance that Uncle Sammay be on the verge of just this kind of last reel Hollywood comeback. Certainly there are plenty of reasons we shouldnt expect Uncle Sam to come tottering out of the flamesnow, if ever. Although the Iraq war is purportedly over, an endless, expensive war in Afghanistancontinues - at least 113 billion in 2011 alone. Between wars and social spending, the massivegovernment deficit keeps getting more massive. The expensive yet inadequate health-care system eats13 of GDP and seems likely to grow even more expensive as the Baby Boomers get older. Nor are things much better outside the government Over 1.5 million homes are in foreclosure, andanother 3.5 million homeowners are late with their mortgage payments. Unemployment is officially 8.6but unofficially some economists say it may be nearer to 20. Even, Americans themselves arent veryoptimistic about the situation. Yet almost despite itself, the American economy seems to be looking up. The endless euro crisis is one reason. In investing as in most of life, its always the alternative that counts, and right now, in comparison with Europe, the US looks positively stable. With a euro collapse still a real possibility, many investors have been looking West. SampP may now say Treasury bonds are just AA, but the investment world evidentlydisagrees - or at least thinks the other alternatives are worse. Treasuries rose nearly30 this year, bid up in part by investors seeking a safe haven. All that demand hashelped push yields on the 10-year bond down to just 1.9, making them essentiallyzero after inflation. In September, they dropped even further, to 1.67, their lowest level since 1945. US stocks had a good year too - relatively. Most of the worlds major stock exchanges fell a quarter or more in 2011, making the SampP 500s flat performance (actually a decline of .003) seems like a sort of triumph. Some of these numbers were driven by fear, but other homegrown indicators are also positive. Private sector hiring is up in the US - 325,000 new jobs in December, much higher thanthe forecast number of 178,000 jobs. Layoffs seem to be bottoming out. 21. Ghost Protocol Construction and manufacturing are both up, slightly. Perhaps most positively of all, demand for steel is actually higher now in the US than in Europe or Asia. US oil imports have tumbled in the past few years, thanks in part to the rapidgrowth of natural gas production. Imports have declined from 60.3 in 2005 to49.3 in 2010, driven by a rise in biofuel production and new drilling in the Gulfof Mexico. At the same time, the discovery of vast deposits of shale gas is leadingsome analysts to predict that the US will eventually become a net natural gasexporter. At present, government analysts estimate that there is enough gas aroundnow to sustain the country at present rates of consumption for more than a century - double their reserve estimates just two years ago. US companies are also sitting on at least 2.1 trillion in cash - some of it retained profits, some of it loan proceeds - all of it waiting to be ploughed into something. These iron mountains might seem prudent at the moment, given fears of a new credit crash, but between restless shareholders, leveraged-buy-out buccaneers, and legislators hungry for cash, the situation wont last forever. The United States of America is the richest economy in the world. There are any numbers of great universities, a solid corporate legal structure, fabulous logistics networks, and as an added bonus, wages that havent really risen in 40 years. Historically, too, investors should be reassured by the US. No matter how hard times might be or howstrongly anti-business the rhetoric gets, the government has almost always found a place for business inthe lifeboat. For better and worse, commercial interests have been looked after by virtually everypresident since the early days of the Republic. 22. Ghost Protocol2.3 WARNING SIGNALSEuropes Vicious Spirals The euro crisis shows no signs of letting up. While 2011 was supposed to be the year when European leaders finally got a grip on events, the eurozones problems went from bad to worse. What had been a Greek crisis became a southern European crisis and then a pan-European crisis. Indeed, by the end of the year, banks and governments had begun making contingency plans for the collapse of the monetary union. None of this was inevitable. Rather, it reflected European leaders failure to stop a pair of vicious spirals. The first spiral ran from public debt to the banks and back to public debt. Doubts about whethergovernments would be able to service their debts caused borrowing costs to soar and bond prices toplummet. But, critically, these debt crises undermined confidence in Europes banks, which held many ofthe bonds in question. Unable to borrow, the banks became unable to lend. As economies then weakened, the prospects for fiscal consolidation grew dimmer. Bond prices then fell further, damaging European banks even more. The European Central Bank has now halted this vicious spiral by providing thebanks with guaranteed liquidity for three years against a wide range of collateral. Reassured that they will have access to funding, the banks again have theconfidence to lend. Cynical observers suggest that the ECBs real agenda is to encourage the banks to buy the crisiscountries bonds. But that would only further weaken the banks credit portfolios at a time whenEuropean regulators are desperate to strengthen them. The ECBs decision to provide the banks withunlimited liquidity does not solve governments debt problems, nor is that its intent. But it at leastprevents the debt problem from creating banking problems, which, in turn, worsen the debt problemwithout end. Europes second vicious spiral runs from fiscal consolidation to slow growth and back to fiscalconsolidation. Tax increases and cuts in public spending are still needed there is no avoiding this reality. But these demand-reducing measures also reduce economic growth, causing deficit-reduction targets to bemissed. Getting fiscal consolidation back on track then requires more spending cuts, which depressgrowth still further, causing budget performance to worsen even more. At some point, recession and unemployment will provoke a political reaction. Angry electorates will boot out austerity-minded governments. And uncertaintyabout what kind of governments come next will not reassure investors or positivelyinfluence growth. Interrupting this second vicious spiral will require jump-starting growth, which, under currentcircumstances, is easier said than done. The external environment is not favorable. Economic growth inthe United States is still weak, and growth in emerging markets seems poised to slow. So what are Europes policymakers to do Nothing is guaranteed. But Europe can still escape its viciousspirals if everyone does their part. 23. Ghost ProtocolThe Straits of America Macroeconomic indicators for the United States have been better than expected for the last few months. Job creation has picked up. Indicators for manufacturing and services have improved moderately. Even the housing industry has shown some signs of life. And consumption growth has been relatively resilient. But, despite the favorable data, US economic growth will remain weak and below trend throughout 2012. Why is all the recent economic good news not to be believedFirst, US consumers remain income-challenged, wealth-challenged, and debt-constrained. Disposable income has been growing modestly despite real-wagestagnation mostly as a result of tax cuts and transfer payments. This is notsustainable: eventually, transfer payments will have to be reduced and taxes raised toreduce the fiscal deficit. At the same time, US job growth is still too mediocre to make a dent in the overall unemployment rate and on labor income. The US needs to create at least 150,000 jobs per month on a consistent basis just to stabilize the unemployment rate. Indeed, firms are still trying to find ways to slash labor costs. Moreover, the recent bounce in investment spending (and housing) will end, with bleak prospects for 2012, as tax benefits expire, firms wait out so-called tail risks (low-probability, high-impact events), and insufficient final demand holdsdown capacity-utilization rates. And most capital spending will continue to be devoted to labor-savingtechnologies, again implying limited job creation. At the same time, even after six years of a housing recession, the sector is comatose. With demand for new homes having fallen by 80 relative to the peak, the downwardprice adjustment is likely to continue in 2012 as the supply of new and existing homescontinues to exceed demand. Up to 40 of households with a mortgage 20 million could end up with negative equity in their homes. Thus, the vicious cycle offoreclosures and lower prices is likely to continue. Given anemic growth in domestic demand, Americas only chance to move closer to its potential growthrate would be to reduce its large trade deficit. But net exports will be a drag on growth in 2012, for severalreasons: The dollar would have to weaken further, which is unlikely, because many other central banks have followed the Federal Reserve in additional quantitative easing, with the euro likely to remain under downward pressure and China and other emerging-market countries still aggressively intervening to prevent their currencies from rising too fast. Slower growth in many advanced economies, China, andother emerging markets will mean lower demand for US exports. 24. Ghost Protocol Oil prices are likely to remain elevated, given geopolitical risks in the Middle East, keeping the US energy-import bill high. It is unlikely that US policy will come to the rescue. On the contrary, there will be a significant fiscal drag in 2012, and political gridlock in the run-up to the presidential election in November will prevent the authorities from addressing long-term fiscal issues. Given the bearish outlook for US economic growth, the Fed can be expected toengage in another round of quantitative easing. But the Fed also faces politicalconstraints, and will do too little, and move too late, to help the economysignificantly. Moreover, a vocal minority on the Feds rate-setting Federal OpenMarket Committee is against further easing. In any case, monetary policy canaddress only liquidity problems and banks are flush with excess reserves. Most importantly, the US and many other advanced economies remains in the early stages of a deleveraging cycle. A recession caused by too much debt and leverage (first in the private sector, and then on public balance sheets) will require a long period of spending less and saving more. This year will be no different, as public-sector deleveraging has barely started. Finally, there are those tail risks that make investors, corporations, and consumers hyper-cautious: theeurozone, where debt restructurings or worse, breakup are risks of systemic consequence the outcomeof the US presidential election geo-political risks such as the Arab Spring, military confrontation withIran, instability in Afghanistan and Pakistan, North Koreas succession, and the leadership transition inChina and the consequences of a global economic slowdown. Given all of these large and small risks, businesses, consumers, and investors have a strong incentive towait and do little. The problem, of course, is that when enough people wait and dont act they heightenthe very risks that they are trying to avoid. 25. Ghost ProtocolEmerging MarketsWill Emerging Markets Fall in 2012Emerging markets have performed amazingly well over the last seven years. In many cases, they have faroutperformed the advanced industrialized countries in terms of economic growth, debt-to-GDP ratios, countercyclical fiscal policy, and assessments by ratings agencies and financial markets. As 2012 begins, however, investors are wondering if emerging markets may be due for a correction. TheWorld Bank has just downgraded economic forecasts for developing countries in its 2012 GlobalEconomic Prospects, released this month. For example, Brazils annual GDP growth, which came to ahalt in the third quarter of 2011, is forecast to reach 3.4 in 2012, less than half the 7.5 rate recorded in2010. Reflecting a sharp slowdown in the second half of the year in India, South Asia is slowing from atorrid six years, which included 9.1 growth in 2010. Regional growth is projected to decelerate further, to 5.8, in 2012.Three possible lines of argument empirical, literary, and causal, each admittedly tentative and tenuous support the worry that emerging markets economic performance could suffer dramatically in 2012.The empirical argument is simply historically based numerology: emerging-market crises seem to comein a 15-year cycle. The international debt crisis that erupted in mid-1982 began in Mexico, and thenspread to the rest of Latin America and beyond. The East Asian crisis came 15 years later, hittingThailand in mid-1997, and spreading from there to the rest of the region and beyond. We are now another15 years down the road. So is 2012 the year for another emerging-markets crisisThe hypothesis of regular boom-bust cycles is supported by a long-standing scholarly literature, such asthe writings of the American economist Carmen Reinhart. But I would appeal to an even older source: theOld Testament in particular, the story of Joseph, who was called upon by the Pharaoh to interpret adream about seven fat cows followed by seven skinny cows. Joseph prophesied that there would come seven years of plenty, with abundant harvests from anoverflowing Nile, followed by seven lean years, with famine resulting from drought. His forecast turnedout to be accurate. Fortunately, the Pharaoh had empowered his technocratic official (Joseph) to save grain in the seven years of plenty, building up sufficient stockpiles to save the Egyptian people from starvation during the bad years. That is a valuable lesson for todays government officials in industrialized and developing countries alike. 26. Ghost ProtocolFor emerging markets, the first seven-year phase of plentiful capital flows occurred in 1975-1981, withthe recycling of petrodollars in the form of loans to developing countries. The international debt crisis thatbegan in Mexico in 1982 catalyzed the seven lean years, knownin Latin America as the lost decade. The turnaround year, 1989, was marked by the first issue ofBrady bonds (dollar-denominated bonds issued by LatinAmerican countries), which helped the region to get past thecrisis. The second cycle of seven fat years was the period of recordcapital flows to emerging markets in 1990-1996. Following theEast Asia crisis of 1997 came seven years of capital drought. The third cycle of inflows occurred in 2004-2011, persistingeven through the global financial crisis. If history repeats itself, itis now time for a third sudden stop of capital flows toemerging markets. Are a couple of data points and a biblical parable enough to takethe hypothesis of a 15-year cycle seriously Perhaps, if we havesome sort of causal theory that could explain such periodicity tointernational capital flows. Here is a possibility: 15 years is how long it takes for individualloan officers and hedge-fund traders to be promoted out of theirjobs. Todays young crop of asset pickers knows that there was acrisis in Turkey in 2001, but they did not experience it first hand. They think that perhaps this time is different. If emerging markets crash in 2012, remember where you heard itfirst in ancient Egypt. 27. Ghost ProtocolIndias Year of Living Stagnantly Will 2012 prove to be a year of renewal for India, or another annus horribilis No country progresses unerringly, but India cannot afford another politically and economically torpid year like 2011. For India, last year is a year best forgotten. India has been so deeply mired in political paralysis that the Nobel laureate economist Amartya Sen recently said that the country has fallen from being the second best to the second worst South Asian country, and that it is currentlyno match for China on social indicators. This is a damning comment on a country that held suchpromise just a short time ago. In early January, the American social critic James Howard Kunstler described India as a nation with onefoot in the modern age and the other in a colorful hallucinatory dreamtime. Kunstlers view is harsh, butperhaps prophetic: Indias climate-change-related problems are doing heavy damage to the food supply. Their groundwater is almost gone. The troubles of the wobbling global economy will take a lot of pep outof their burgeoning tech and manufacturing sectors. Indeed, suddenly, Indias economy has begun spinning out of control. Last year, the countrys GDPgrowth slowed, manufacturing plummeted, and inflation and corruption grew uncontrollably. Elected andunelected government officials alike, including cabinet ministers, members of parliament, and civilservants, were implicated in corruption scandals. For the first time ever, Indias government failed toenact even a single piece of legislation, much less undertake any economic reforms, restore price stability, or address widespread civil disorder. As the Indian business analyst Virendra Parekh has observed: The second fastest-growing economy inthe world now has the unenviable distinction of having the fastest falling financial markets in Asia. Moreover, the fortunes of the rupee are. tightly linked with the euro, which is in the throes of anexistential crisis. Furthermore, weaknesses in agriculture, energy, infrastructure, and governance haveall contributed to Indias current crisis, and the crisis will most likely continue in 2012.Another concern is nuclear power. In 2008, the United States and India agreed to a civil nuclear deal thatwould allow India to expand its nuclear-power capability. In 2010, Indias parliament passed the CivilLiability for Nuclear Damage Bill, a precondition for activating that agreement. But, following Japans Fukushima nuclear disaster in March 2011, safety concerns surrounding nuclearpower are large and mounting. Local farmers, fishermen, and environmentalists have spent months protesting a planned six-reactornuclear-power complex on the plains of Jaitapur, south of Mumbai. In April, the protests turned violent, leaving one man dead and dozens injured. India will certainly see more anti-nuclear clashes in 2012.At the heart of Indias current malaise is a paradox: rapid growth in real income has not been matched bygenuine advances in living standards. If the countrys fundamental problems are to be addressed, Indianeeds a government with the determination, integrity, and intelligence to meet the complex demands ofmodern governance in the twenty-first century. 28. Ghost Protocol3.1 CURRENCY MARKET Address Basics The recent depreciation of the rupee to historic levels has created a near - panic situation. Various solutions are being proffered: from interventions by the RBI to curbs on forex outflows. A calmer assessment of the situation makes it clear that the panic is misplaced and what is needed is deeper introspection. We need solutions rather than knee-jerk reactions and short-term fixes. But, markets are like a pressure cooker. Every one hears the whistle and heads for the door. Very few people actually see the pressure building. The pressure has been building because the macroeconomic situation over the last couple of years has turned adverse and we have not taken enough steps to address the issue early enough. All the ingredients for the rupee fall have been there for some time: for the last year, portfolio flows haveslowed down or even partially reversed, our current account deficit will shoot beyond the 3 target, theEuropean crisis has reduced global liquidity, a lot of borrowings from 2007 are due for repayment now, our inflation has been high and FDI has slowed down significantly. So, rather than handle the rupee fall, we should try and manage the underlying causes that have led to rupee falling. Most of the underlying causes - inflation, euro crisis, repayments, etc - are beyond our control. So whatneeds to be done is: (a) give growth impetus as inflows will increase the moment confidence in ourgrowth is back, (b) boost inflows, especially long-term flows, and (c) reduce foreign exchange volatility. For getting growth back, the script is becoming clearer: we need fiscal control and easier interest ratescenario. There seems to be a consensus that if interest rates are hiked any more, it will start affectinggrowth. This means that the responsibility of tackling inflation now rests with the government with fiscalmeasures. It needs to reduce the fiscal deficit and, at the same time, initiate supply-side reforms. This willget confidence in growth back. We also need to boost inflows - rather than impose curbs on foreign exchange outflow. Inflows areusually in three forms: short term, medium term and long term. Short term is usually debt and quasi debt. The RBI has already eased the curbs on such short-term lending to boost inflows. The medium-term forexreserves essentially consist of portfolio inflows in the Indian stock markets. Last year has been bad for FIIinvestments as we have seen net outflows. But once growth returns, so will the FIIs. FDI represents thelong-term forex reserves. These can improve only if we start taking hard decisions about foreigninvestments Because foreign investment without allowing majority controlling stakes is equal toportfolio investments. So far, policy ambiguity has led to investors postponing FDI investments. Lastly, we need to ensure that rate adjustments are continuous and not have the kind of sharp volatility wehave witnessed. This can be done by classifying our forex reserves in more granular terms and having alot more information around kinds of flows, the composition of reserves, etc. More information anddiscussion would mean quicker short-term adjustments rather than a huge pressure build-up and a largeadjustment in one quarter. No doubt these are tough times. And alot of the above is easier said than done. But we should use therupee fall as a catalyst to address deeper economic issues and get India on the growth path once again. But the margin for error is now small and getting smaller. We need to act now 29. Ghost Protocol3.2 COMMODITY MARKET Duty Hike on Gold Consumers will have to shell out more for gold and silver jewellery, bars and coins. The cash-strapped government on raised import and excise duties on gold and silver, hoping to mop up about 600 crore in additional revenue and contain its burgeoning current account deficit as the financial year draws to a close. Platinum and diamonds, too, will now attract an import duty of 2. A government notification said customs and excise duties would be levied on the value of gold and silver instead of a fixed amount. This will allow the government to benefit from the rise in gold prices. Ad valorem duty, which rises automatically when the value of a product goes up, is preferred from the point ofview of tax policy as its facilitates easier credit besides capturing value addition at each stage. While the import duty on gold has been fixed at 2 of the value instead of the earlier Rs 300 per 10grams, that on silver has been pegged at 6 against Rs 1,500 per kg. Excise duty on gold has been fixedat 1.5 of the value against the earlier rate of Rs 200 per 10 grams. Silver will attract excise of 4compared to Rs 1,000 per kg earlier. At a 2 rate, the import duty on gold will double to over Rs 540 per 10 grams at current prices. The oldrates were fixed four to five years ago. In the last few years, prices have increased substantially so thechange has been made to bring duties in line with market prices. India is the worlds largest importer of gold. The metal is the third-largest import itemafter crude oil and capital goods. In 2010, about 92 of Indias gold demand was metthrough imports and the rest from recycled gold and other sources. quotGold importsalone have contributed nearly 40 basis points to the 130-basis-point increase in Indiascurrent account deficit between FY08 and FY11,quot global research firm Macquarie saida recent report. In first three quarters of FY12 alone, India imported 45.5 billionworth of gold and silver, up 53.8 over the year-ago period. quotThe move is possibly aimed at easing the negative balance of payments position as gold and silverimports have grown despite prices rising, quot said Madan Sabnavis, chief economist at Care Ratings. quotUnlikeother raw materials like machinery and fertilisers, gold and silver dont add to economic productivity asthey are stashed away in bank lockers or cupboards. quotIndias bullion traders stayed away from placing fresh orders after a nearly 90 percent hike in gold importduty was announced. In the short term traders and consumers may hesitate to buy into higher prices, theincreased duty is unlikely to have significant impact on Indias gold appetite in the longer term, tradersand analysts said. Some time later people will digest the price rise. India is the worlds largest importer of gold and its households have the largest holdings of the metal, according to data from the World Gold Council. Gold is popular for cultural, historical and financial reasons. Gold is seen as a safe haven that will preserve a familys wealth over generations. There is more trust in gold bullion than paper assets such bank deposits, stocks and bonds as they have protected people throughout the world from periods of deflation (banks and governments can go bust) stagflation (papermoney and bonds lose value), and hyperinflation (paper money and bonds really lose value). 30. Ghost Protocol4. FINANCIAL SECTOR: TRANSFORMING TOMORROW World Economic ForumAs per a Call for Action report published by Geneva-based World Economic Forum (WEF) ahead of itsannual summit in Davos, Switzerland, quotThe world faces significant and urgent challenges that weighheavily on prospects for future growth and on the cohesion of our societies. quot Among the major challengesfor 2012, the report listed out issues like decelerating global growth and rising uncertainty, highunemployment and potential protectionist policies of different countries. The call to tackle these challenges has been made by the 11-member Global Issues Group (GIG) of theWEF, which comprises of IMF Chief Christine Lagarde, World Bank President Robert Zoellick, WTODirector-General Pascal Lamy, OECD Secretary - General Angel Gurria, among others.4.1. FINANCIAL ADVISORS:Weigh impact on investors:Beating the Burnout at Davos Burnout is a condition associated with exhaustion, stress, pessimism, cynicism, withdrawal and a bunker mentality. These symptoms are worrying in an individual, but can be disastrous in world affairs. In the run-up to the annual meeting of the World Economic Forum in Davos, there is a distinct sense of burnout in the air. I hope that this years meeting will help to form a new model of leadership capable of overcoming this malaise. After a year characterised by major upheavals, many feel likewe are watching a global system disintegrate: financial and debt crises, unemployment, political paralysis, social inequality, food and energy crises, and the list goes on. Faced with so many simultaneous andinterrelated problems, our leaders are stretched to their limits. At the same time, the systems and safeguards that underpin our existence as aglobal community are struggling to cope with todays complex set of risks. Theusual reaction to all this is to call for stronger leadership. Yet, events during thepast year have shown, time and again, the limits of leadership in its traditionalform. Preoccupied with domestic concerns, rushing from one crisis to the next, leaders have made little tangible progress. Instead, we have mainly witnessed short-term fixes in a rapidly unravelling world. No wonder, then, that ordinary people are losing trust in our leaders. The various Occupy and Spring movements around the world are signs of this understandable frustration and distress. There is an urgent need to act. As well as finding new models to collaborativelyaddress all our globalchallenges, we also need to form a new-model of leadershipthat is effective in the modern world: leadership that emphasises both vision andvalues in order to overcome the current challenges. It is this combination that canprovide leaders with a compass to guide their decision-making. 31. Ghost Protocol Vision is needed to interpret and deal effectively with a globalised world. Technological progress, interconnectivity and the dispersion of power have all contributed to a complex new reality, which requires clear-sightedness. Vision is also vital to enable leaders to glimpse the opportunities that lie ahead and rigorously pursue them, rather than succumbing to the paralysis of burnout. Values areneeded to create trust and underpin any action taken. But the values of true leadership must go deeperthan short-term shareholder profit or the next election poll only then will there be a real connection andmeaningful interaction, between the people and their leaders. In todays world, both power and information are widely dispersed, and, therefore, decisions can only be implemented if people understand the rationale behind them. Vision provides the long-term reason and values provide direction and purpose. It is telling that, despite the dire economic outlook, we have reached record participation numbers for our 2012 annual meeting in Davos. This demonstrates the fact that leaders feel the need to come together in order to collectively and collaboratively address the daunting global challenges that lie ahead of us. Davos provides a real opportunity for leaders from business, government and civil society to hone a collective vision and build collaborative values. This annual meeting, in particular, will be important if we are to replace our currentradar system of short - term, situational crisis management, with a compass providingclear direction and guidance based on long-term values. The main topic on the top ofeveryones minds in Davos will inevitably be the rebalancing and deleveraging that isreshaping the global economy. But let us not forget that the purpose of the annual meeting is also to ensure that leaders exercise theirresponsibilities with moral integrity, and that the entrepreneurial spirit is harnessed for the public interest. The theme of this years annual meeting is The Great Transformation: Shaping New Models, preciselybecause we are in an era of profound change that urgently requires new ways of thinking instead of justmore business-as-usual. Leadership based on vision and values will go a long way to regaining trust and beating the burnout, butonly if leaders themselves can prove through concrete actions that social responsibility and moralobligations are not just empty words. 32. Ghost Protocol4.2 FINANCIAL PLANNERSValue unlocking for all stakeholders:Davos-Klosters, Switzerland 25-29 JanuaryThe Great Transformation: Shaping New Models The contextual change at the top of minds remains the rebalancing and deleveraging that is reshaping the global economy. In the near term, this transformation is seen in the context of how developed countries will deleverage without falling back into recession and how emerging countries will curb inflation and avoid future economic bubbles. In the long term, both will play out as thepopulation of our interdependent world not only passes 7 billion but is also interconnected throughinformation technology on a historic scale. The net result will be transformational changes in social values, resource needs and technologicaladvances as never before. In either context, the necessary conceptual models do not exist from which todevelop a systemic understanding of the great transformations taking place now and in the future. It is hubris to frame this transition as a global management problem of integratingpeople, systems and technologies. It is an indisputable leadership challenge thatultimately requires new models, bold ideas and personal courage to ensure that thiscentury improves the human condition rather than capping its potential. Thus, theAnnual Meeting 2012 will convene under the theme, The Great Transformation:Shaping New Models, whereby leaders return to their core purpose of defining whatthe future should look like, aligning stakeholders around that vision and inspiringtheir institutions to realize that vision. Some introductory ideas by Professor Klaus Schwab on the theme of the Annual Meeting 2012 Over the last three years, the world has been engulfed by political, economic and, particularly, financial crisis management. We have lost sight of the fundamental transformation that the world is undergoing and of whereconventional modes of decision-making have become outdated. What we clearly need are new models for global, regional, national and businessdecision-making which truly reflect that the context for decision-making has beenaltered in unprecedented ways. Let me outline the four new models I considermusts if we are to successfully push beyond the current impasse in addressing thecritical challenges. First, a new model is needed to account for the fundamental power shifts that have already and are continuing to take place. I am thinking not only of the seismic shifts of geopolitical and geo-economic power from West to East and from North to South, but also of the need to integrate new non-state actors who want to have their say and the capability to do so. Power has become much more 33. Ghost Protocoldistributed. Thus, we need new models where governance processes on all levels integrate thesenewcomers in the most collaborative way. In the old world, it was hard power hierarchical power that was decisive then came soft power thecapability to have a convincing message. But today, we need to integrate empowered newcomers in whatI call collaborative power the capability to exercise collaborative power will determine the future onthe business, national, regional and global levels. A second new model is needed to acknowledge that we live together in a multicultural, multi-ethnic and multi-religious world. Prevailing values will have to increasingly accommodate diversity with substantial challenges for national and individual identities. We will only make lasting progress by recognizing that we are different but interdependent. Thus, we have to cultivate a much greater feeling of regional and global togetherness. A third new model is needed to seriously address the social impact ofglobalization and the new wave of technological innovation. Growing inequitieswithin and between countries and rising unemployment are no longer sustainable andare triggering social protests, as witnessed throughout the world. We must rethink ourtraditional notions of economic growth and global competitiveness, not only byfocusing on growth rates and market penetration, but also, equally if not moreimportantly by assessing the quality of economic growth. How is growth to be achieved in the future How sustainable is it and at what cost to the environmentHow are the gains distributed What has become of the family and community fabric, as well as of ourculture and heritage The time has come to embrace a much more holistic, inclusive and qualitativeapproach to economic development, based on the stakeholder and not on a pure shareholder concept. We need a fourth new model for job creation. The global economy is growing more slowly, productivity is still making substantial progress and unemployment is skyrocketing. We also know that hundreds of millions of people will enter the job market in the next decade. In addition to the productivity increases driven by greater resource efficiency, the industry model is changing and moving upscale, where fewer people can produce much more value. The key to mitigating a catastrophic situation is to provide young people with the capability to create their own jobs: to move from the pure concept of unemploymentto the concept of micro-entrepreneurship. This will require fundamental changes in educational systems, nurturing a societal spirit of entrepreneurial risk-taking, allowing true gender equality to integrate theother half of hidden talents and making innovation and the support of innovation a key imperative inpublic and private life. The success of any national and business model for competitiveness in the futurewill be less based on capital and much more based on talent. I define this transition as moving fromcapitalism to talentism. I have outlined only four of the new models that form part of the great transformation regionally andglobally to illustrate that we are at a historic inflection point. In Davos, we will discuss many moreaspects of the great transformation, particularly how they create new business models. Davos is the placewhere we must individually and collectively have the foresight, the commitment and collaborativepower to shape the new models needed to safeguard our global future, and to respond to the expectationsand hopes of the hundreds of millions of people who presently feel left out. 34. Ghost Protocol4.3 RISK MANAGEMENT CONSULTANTSEducate and Engineer EnforceTaking Back Globalization The World Economic Forums annual gathering is normally little more than a toast to the benefits of increasing global GDP, trade, and investment. But this years meeting comes at a time when economic expansion can no longer be taken for granted, and when the uneven benefits of past growth are sparking mass social unrest. So it is little wonder that doomsday scenarios about the seeds of dystopia and the risks of rolling back the globalization process are being dangled in Davos. Theworlds economic and political leaders stand warned: do globalization better, or it will be derailed by thegrowing legions of the discontented. Leaders would be unwise to ignore this warning. Discussions in Davos must go beyond how to rectify theimbalances in developed countries debt-to-GDP ratios. They must finally pay attention to the widerimbalances generated by unfettered globalization. These imbalances are more evident in the global food system. Globalization has been wholeheartedlyembraced in the service of feeding the world: bilateral and multilateral trade agreements have been put inplace to allow food to flow from food-surplus to food-deficit regions. Yet this model has failed spectacularly. The food bills of the Least DevelopedCountries (LDCs) increased five - or six-fold between 1992 and 2008. Imports nowaccount for around 25 of their current food consumption. The more they are toldto rely on trade, the less they invest in domestic agriculture. And the less theysupport their own farmers, the more they have to rely on trade. Countries that fallinto this vicious cycle leave their citizens vulnerable to historically volatile priceson international markets, which mean increased hunger and insecurity. Despite the persistent challenges of hunger and food inequality, people are told to embrace more openmarkets, more trade, and more globalized economic processes. Yet open markets do not function asperfectly as many at Davos would like to think. Food moves where purchasing power is highest, notwhere the need for it is most urgent. Trade and investment agreements are the gateways through which globalization passes on its way toredefining a countrys economic landscape, and they are increasing at an impressive pace. There are 6,092bilateral investment agreements currently in force, with 56 concluded in 2010 alone. That growth reflectsthe flawed economic model of the pre-crisis years, which relied on indifference to where growth camefrom, how sustainable it was, and who was benefiting from it. If we are to learn anything from the ongoing crisis, it must be to start asking the right questions. Everynew bilateral agreement, every chapter of globalization, should be measured against new criteria. Howsustainable and how evenly spread will the macroeconomic benefits be Will they facilitate genuinedevelopment and provide dignified opportunities to those who become economically displacedGlobalization must be taken back for the interests of the many. 35. Ghost ProtocolHigh Food Prices: A Blessing in Disguise High food prices may turn out to be a blessing in disguise for African farmers, said the head of the United Nations World Food Program. quotYou can look at hunger as a Malthusian nightmare, or you can look it as a tremendous opportunity because everyone has to eat, quot said WFP Executive Director Josette Sheeran, referring to a theory that once population growth exceedsagricultural production, people will be forced to return to subsistence-level conditions. quotIf you solve hunger, you create jobs up the entire hunger chain. The world cant feed itself in 2050without the African farmer having its time in the sun, so I believe the time has come for the Africanfarmer, quot she said. The worlds agricultural growth potential is in Africa, where yields are a tenth of what they could be withproper investment and conditions, Ms. Sheeran said. quotIn the meantime, its going to take some real global coordination to ensure you dont have nations whoare so vulnerable to the price swings that are happening, quot she said. Describing the soaring prices of 2008-2009 as the quotperfect storm, quot Ms. Sheeran says food security was awakeup call for world leaders. quotWere in much better shape today as far as managing those shocks for the most vulnerable nations, andother nations that have the capacity have put in place mechanisms to ensure they can manage this. Globalfood reserves are replenished, quot she says. quotIf you dont have food, you have three choicesyou can revolt, you can migrate or you can die. Its very important that world has a backup plan for those three things. quot 36. Ghost Protocol4.4 CREDIT COUNSELORSResolve convertibility and recompensation issue:Leaders slam eurozone foot-dragging on debt Saturday January 28, 2012 DAVOS The eurozones debt burden hung heavily over Davos on Saturday as global economic leaders turned their fire on EU politicians for failing to come to grips with the crisis. At the forefront of concerns were write-down talks in Greece, which had dragged into the weekend and now threaten to overshadow an EU summit on Monday designed to showcase the continents plans to escape the debt trap. But senior officials from outside the eurozone also argued Europe has not got on top of the long-termproblems undermining the single currency, and needs to move further and faster in integrating eurozoneeconomies. quotThe fact that were still, at the start of 2012, talking about Greece again is a signthat this problem has not been dealt with, quot British finance minister George Osbornetold a public panel of senior finance officials. quotThe danger here is that the tail wagsthe dog throughout this crisis, in other words the inability to deal with the specificproblems in the periphery causes shockwaves across the whole European economyand the world economy. quot Canadas central bank chief Mark Carney, who chairs the international bank regulator the Financial Stability Board, said Europes woes were holding back the recovery and had effectively cut global growth by one per cent. European and eurozone officials at the World Economic Forum, an annual get - together of the great and the good in global business and politics, have spent the weeks attempting to drum up optimism on the debt talks. But as the five-day talking shop drew to an end, Greek leaders were still locked in talks with privatelenders over the details of a plan to wipe 100 billion euros from their sovereign debt - and thus avoid amessy default. And another dispute was looming, as European officials said that Germany waspushing for the European Commission to take control of the Greek budget, and Athenssources hit back angrily, dubbing this quotout of the question. quotThe drawn-out talks have undermined attempts to contain the crisis and shore upbigger eurozone economies, to the frustration of leaders from the emerging economiesand the rest of the developed world. quotYou need decisive action. You need overkill. Confidence must come from decisive actions fromgovernments, quot declared Donald Tsang, chief executive of Hong Kongs autonomous regionaladministration. 37. Ghost Protocol quotTwo months ago in Greece you could make do with a 20 per cent haircut, now even 50 per cent is not easy. Maybe 70 per cent is needed, so do it quickly. You need resolution and decisiveness. quot A Greek finance ministry official reported quotgreat progress concerning technical and legal mattersquot but said there quotis still a lot of work left to do, quot leaving it open as to whether there would be a deal this week. World Bank chief Robert Zoellick praised the European Central Bank for increasingliquidity for eurozone banks to enable them to buy more sovereign debt, but warned thatthis could only be a stop-gap measure. quotIm glad the ECB took action. But this buys time, you still have to act, quot he said, as theworld waits to see if Mondays summit will produce agreement on a new quotfiscalcompactquot setting in stone the blocs deficit-cutting strategy. quotNo one is immune in the current situation. Its not just a eurozone crisis its a crisis that could have collateral, spillover effects in the rest of the world, quot IMF director Christine Lagarde warned delegates. quotNow is the time. There has been a lot of pressure building in order to see a solution come about, quot she said, urging International MonetaryFund members to give her the 500 billion dollars she needs to stock as a bail-out fund. quotAnd its for that reason that Im here, with my little bag, to collect a bit of money, quot she said, to laughter and applause. Osborne, a eurosceptic who is glad that Britain stayed out of the euro, nevertheless said he hoped that Europe would overcome its woes. But, in an implicit rebuke for a reluctant Germany, he said thiswould have to mean permanent fiscal transfersquot between stronger and weakermember states. quotThats what is required to make a single currency work, quot he said, arguing that Europe will either have to make the ECB its lender of last resort, pool its debt through joint eurobonds or through direct budget transfers. The eurozones woes were again underlined when credit rating agency Fitch cut the ratings of five of its members including Italy and Spain, citing their poor finances and vulnerability to sharp turns in market sentiment. The Davos forum ends on Sunday, at which point the financial worlds eyes will switchto Brussels and the much anticipated EU summit. 38. Ghost Protocol4.5 ISSUES OF THE PRESENTFreedom to get amp fail in the system of free enterprise:Fallout from the crisis could last the rest of this decade DAVOS, Switzerland Economist Nouriel Roubini, nicknamed quotDr. Doomquot for his gloomy predictions in the run-up to the financial meltdown four years ago, says the fallout from that crisis could last the rest of this decade. Roubini, widely acknowledged to have predicted the crash of 2008, sees tough times ahead for the global economy and is warning that without major policy changes things can still get much worse. Until Europe radically reforms itself and the U. S. gets serious about its own debt mountain, Roubini said, the world economy will continue to stumble along to thedetriment of large chunks of the worlds population who will continue to see their living standards underpressure, even if they have a job. Economist who foresaw 08 crash warnsconflict with Iran could cause globalrecession: He also warned that a conflict with Iranover its controversial nuclear program could lead to aglobal recession. He said the biggest uncertainty is the possibility of aconflict with Iran over its nuclear program that involvesIsrael, the United States, or both. That could lead oilprices now hovering around 100 a barrel to spike to150 per barrel, and lead to a global recession. Were looking at little growth in half the world: Looking at economic prospects this year, heagreed with the International Monetary Funds latest forecast that the global economy is weakening and said he might be quoteven slightly more bearishquot on its prediction of 3.3 percent growth in 2012. He painted a grim picture of the eurozone in recession and key emerging markets in China, India, Brazil and South Africa slowing down, partly related to weakness in the eurozone. Roubini predicted that the U. S. economy, the worlds largest, will grow by just 1.7-1.8 percent this year, with unemployment remaining high. The government, he added, was quotkicking the can down the roadquot and nottaking measures to increase productivity and competitiveness. quotWe live in a world where there is still a huge amount of economic and financial fragility, quot he said. quotThere is a huge amount of uncertainty macro, financial, fiscal, sovereign, banking, regulatory, taxation and there is also geopolitical and political and policy uncertainty. quot 39. Ghost ProtocolquotThere are lots of sources of uncertainty from the eurozone, from the Middle East, from the fact that theU. S. is not tackling its own fiscal problem, from the fact that Chinese growth is unbalanced andunsustainable, relying too much on exports and fixed investments and high savings, and not enough onconsumption. So its a very delicate global economy, quot Roubini said. Unemployment and economic insecurity have become big issues from the Mideast to the Occupy WallStreet movement in the U. S. and protests from Israel and India to Chile and Russia and at the sametime there is rising inequality between rich and poor. quotAll these things lead to political and social instability, quot he said. quotSo we have to reduce inequality. Wehave to give growth to jobs, skills, education, and increase human capital so workers can compete. quotRoubini called for a major change in policy priorities: We have to shift our investmentfrom things that are less productive like the financial sector and housing and real estate to things that aremore productive like our people, our human capital, our structure, our technology, our innovation. Roubini said slow growth in advanced economies will likely lead to quota U-shaped recovery rather than atypical V, quot and it may last for another three to five years because of high debt. quotOnce you have too much debt in the public and private sector, the painful process could last up to adecade, where economic growth remains weak and anemic and sub-par until we have cleaned up thebalance sheet and invested in the things that make us more productive for the future, quot he said. 40. Ghost Protocol At World Economic Forum, Fear of Global Contagion Dominates DAVOS, Switzerland -- They came, they feasted on smoked sturgeon and black truffle risotto, drank liquor paid for by global banks, endured dozens of security checks, and tried not to fall down in the snow. They talked about the perilous state of the global economy and the future of capitalism. Then, they headed back to their home countries -- many in chauffeured limousines, some by private jet. But as the people who run much of the planet wrapped up the annual festival of influence known as the World Economic Forum on Saturday, any sense of achievement was hard to discern. The participants arrived amid elevated unemployment in many economies, worries about government budget deficits, and fears that contagion from a financial crisis in Europe could infect the rest of the world. They went home with all of these worries intact, and perhaps reinforced. Nouriel Roubini, the economist who is known as quotDoctor Doom, quot noted thatworld leaders are divided on a great array of crucial issues, from arguments overtrade imbalances and currency valuations to the threats posed by Iran and NorthKorea and the challenge of climate change. quotOn all these issues that require international coordination, there is noagreement, quot he said during a Saturday morning panel. quotIts a world of chaos thatcan lead to potential conflicts. quot European officials confronted a palpable sense of impatience and resentment from their counterparts, drawing accusations that they have imperiled the fate of the globe by repeatedly failing to prop up ailing member states. In private conversations here this week, senior officials from the US, Europe andAsia expressed a mixture of resignation and alarm that Greece may yet default onits government debts, despite several efforts by eurozone members to cobbletogether a credible rescue. Some warned that such an outcome could spookinvestors into pulling funds out of larger economies such as Italy and Spain, raising the prospect of defaults in those countries. A few suggested this couldeventually trigger the breakup of the eurozone and the end of its shared currency, an event that could produce panic rivaling that seen after the investment bankinggiant Lehman Brothers collapsed more than three years ago. 41. Ghost Protocol In a riveting address here on Saturday, Hong Kong leader Donald Tsang recalled his place at the epicenter of the Asian financial crisis in the late 1990s, and the experience of the 2008 global credit pullback, asserting that the current situation is worse. quotIve never been as scared as now about the world, what is happening in Europe, quot he said. Hong Kong faces little direct exposure to potential defaults on European government bonds, Tsang added, but the global financial system is now so interconnected that this confers no protection. He wondered aloud about the health of financial institutions that trade with Hong Kongs banks and the potential for trouble rippling out from the eurozone. We do not know how deep this hole will be when the whole thing implodes on us. Nobody is immune. Tsang merely voiced publicly the same perspectives expressed privately in recent days by his counterpartson multiple continents. He urged European leaders to demonstrate a sense of responsibility as globalcitizens, accusing them of putting the worlds economy at risk by failing marshal a plausibly large rescuefund. He contrasts this with Hong Kongs own brush with crisis more than a decade ago. quotWe were very much left to ourselves, and we overcame it, quot Tsang said. quotIn Europe now, you needdecisive action, you need overkill. You need to inspire confidence. That confidence must come in thedecisive action of government, working together. And do it quickly. quotBut conversations here this week only underscored the sense that Europe is politicallyincapable of acting in unison. Though the eurozone shares a common currency, it iscomprised of 17 different countries with often-sharp differences over policy -- not tomention history, tradition, culture and language. Many experts have called for the issuance of Euro bonds by the European CentralBank and backed by the credit of member countries as the most powerful way todemonstrate the communitys resolve toward supporting troubled members. Germanyhas consistently opposed such proposals, unwilling to direct its prodigious savings atsaving members it views as profligate -- not least, Greece. quotYou spend money you dont have on the bills of others, and thats the wrong incentive in a functioning market economy, quot German finance minister Wolfgang Schaeuble said earlier in the week, shooting down a question about Euro bonds. quotAt the end, you have to pay your bills. If you spend at the risk of others, its a strong temptation. Everyone will fail on this temptation. That would be the wrong method in fighting the causes of the current crisis. quot 42. Ghost ProtocolAmong policymakers and investors alike, the sense has taken hold that pair ofEuropean rescue funds -- collectively holding perhaps 1 trillion in lending capacity-- is insufficient to assuage the markets fears. Bailing out Spain and Italy couldabsorb four times that sum, according to Roubini. Many European officials are hoping to receive an expanded assist from theInternational Monetary Fund, a once unthinkable prospect for an institutiontraditionally employed to support developing countries facing crises. The funds managing director, Christine Lagarde, has been seeking to drum up afresh 500 billion to attack the crisis, using Davos as an elaborate fundraisingplatform. quotThe IMF is a tool, but we need to have a toolkit, quot Lagarde told forum participantsSaturday morning, later holding up her purse as a prop. quotIm here with my little bagto actually collect a bit of money. quotBut that request has received a cool reception from major fund shareholders. TheUnited States, the IMFs largest contributor, has signaled unwillingness to allowmore fund finances to flow to Europe until the eurozone deploys its own resourcestoward an aggressive rescue. Japans economic policy minister Matohisa Furukawaechoed that position on Saturday. quotSpeaking of the role of the IMF, I think that the most important thing is Europe itself make utmostefforts, quot he said. quotThen, IMF can support the European countries. quot Underlying the debate over whether and how Europe can erect an effective firewall are deeper doubts about the continents ability to grow. As many states address budget deficits, they are cutting spending and pressuring labor to accept lower wages -- measures that sap their economies of spending power. Slow growth itself tightens financial straits by reducing government revenues, prompting investors to take their money elsewhere, which raises borrowing costs. quotThe eurozone is going to be in recession this year, quot said Robert Shiller, the Yale economist who warned of both the technology and housing bubbles in the United States. quotThe U. S. may not. The world may not. Its not going to be a great year, though. quot 43. Ghost ProtocolThe one source of cheerier conversation here this week has been the relatively strong growth in so-calledemerging markets, such as China, India, Brazil and Turkey. But theseeconomies have been slowing in recent months. Now, concerns aboutEuropes problems are amplifying concerns. A weak Europe translates into fewer orders for goods from developingcountries. As European banks seek to bolster their balance sheets, theyare pulling funds out of developing economies and bringing them home-- a trend that could prevent even healthy firms in fast-growing marketsfrom getting their hands on cash needed to expand and hire, furthercrimping growth. quotYoure going to see a credit contraction as the banks pull back, quot World Bank President Robert Zoellickwarned. All of which means that as the masters of finance and heads of government filter out of this ski resort inthe Swiss Alps, the anxiety gnawing at the global economy continues unchecked. The damage could runbeyond an economic slowdown, further undermining public faith in the institutions that now governmodern life. For decades, as crises have assailed developing countries from Indonesia to Argentina, the powers-that-be in the United States and Europe have counseled orthodox advice: Get your fiscal house in order live within your means act decisively and resolutely. Yet now that crisis is hitting the wealthy world, leaders are avoiding the hardest decisions and hoping to muddle through -- all while exporting their afflictions to multiple shores. quotThis has got to have effects on influence, perceptions of power in the world thatare going to be quite significant for years to come, quot Zoellick said. quotWhatever we see come out over thecourse of this year and the next year, the world is never going to go back to the way it was. quot 44. Ghost Protocol5. CENTRAL BANKS European Banking Authority 45. Ghost ProtocolThe problems will increase as European sovereigns and banks need to find 1.9 trillion euros to refinancematuring debt in 2012. European banks need 500 billion euros in the first half of 2012 and 275 billioneuros in the second half. They need to raise 230 billion euros per quarter in 2012 compared to 132 billion euros per quarter in2011. Since June 2011, European banks have been only able to raise 17 billion euros compared to 120billion euros for the same period in 2010. The funding problem of European banks will be compoundedby the need of sovereigns to raise funds. Investors have been steadily reducing their exposures to European countries. The bailout fund and theIMF with around 200-250 billion euros each cannot absorb the issuance. This means that European banks will be coerced to buy government bonds, which are then pledged ascollateral to borrow unlimited funds from the European Central Banks or national central banks. The ECBhas reduced Euro interest rates and lengthened the term of emergency funding of banks to three years witheasier collateral rules. This perpetuates the circular flow of funds with governments supporting banks that are in turn supposedto bail out the government. Weaker Eurozone countries may meet their debt requirements through thesemeasures, but it will merely worsen the problems of the banking sector. The tighter credit conditions come at a difficult time for India, which runs both budget and trade deficits. Its infrastructure investment programme, viewed as a crucial driver of growth, requires foreign financing. Indian companies also face challenging refinancing schedule. Foreign currency debt that matures within the next 12 months or so is now around 40-50 of Indias 314billion of currency reserves. European banking problems will also be a key channel by which thecontinents debt problems will be transmitted to countries like India. Certainly, we are all Europeans now 46. Ghost Protocol6. INFLATION Tackle It EffectivelyFirst we were in denial about inflation: the supply-shock explanation fell flat with very good productionnumbers in FY2011, likely to be replicated this year. The excuse that the poor were less poor and eatingmore was used to show that inflation was due to prosperity, with the MGNREGA being the motivator. While this factor could be at play at the margin, it has not been decisive and is no longer harped on. TheRBI is firing away at inflation with a relentless policy of rate hikes, which has not worked quite the way itwas expected to. But we need to know how this inflation has come to tackle it appropriately. The answer seems to be a shrug. One way to tackle this issue is to actually analyse threadbare themechanics of inflation. This is so because inflation combat has to be a joint action from various ends andcannot be the sole responsibility of one agency, which today is the RBI. The accompanying table providesthe contribution of various products to inflation along with the ministry or agency responsible. To calculate the contribution of various sectors to inflation, the weighted change in the overall WPI andindividual products has been calculated. Various products have then been grouped under differentministries that oversee their operations. The major cause of price increase has been noted so that therespective body can address price issue. There are multiple factors that have contributed to inflation. The highest share has come from the so-called core sector: non-food, non-fuel manufactured products over which the RBI has control. Globally, prices of metals have started declining, but we have not seen that in India. So, around 40 of inflation may be attributed to possible demand-pull pressures. While global prices have come down, the rupee has depreciated, nullifying those gains. We can see that there are various arms of the government that should take some responsibility for inflation. First, the agriculture ministry has to review its policy of minimum support prices (MSP). The MSPs have been increased relentlessly by the Commission on Agricultural Costs and Prices (CACP) to reward farmers. While production has increased for cereals and to a certain extent in pulses, it has had the tendency toincrease benchmark prices in the market resulting in higher inflation. Second, the ministries of petroleum and finance have tried to align the prices of petroleum products to themarket, which actually makes us work on a delicate three-dimensional trade-off: higher prices, fiscaldeficit and health of oil marketing companies. Around 11 of inflation has resulted from this factor. Third, the ministry of consumer affairs has to address the issue of warehousing and the WarehouseDevelopment and Regulatory Authority should put in a structure to improve storage to cut down on 47. Ghost Protocolwastage in fruit and vegetables. Around 40 of our horticulture output goes waste due to absence of coldstorages. In this segment, we have witnessed high growth and where supply outstrips demand provided we canharness it through lower wastage. These organs need to make the system more efficient. While thecontribution to inflation was negative in December, it was as high as 8.18 in October, prior to thedecline in prices. Fourth, the area of milk, dairy products, eggs, meat and so on comes under the department of animalhusbandry. Higher cost of animal feed and fodder has hiked the cost of production of these products. Thesignificant aspect of these prices is that they are never mean-reverting, which happens for horticulture andcereal products. Fifth, the higher prices of textile products have to be looked at jointly by the finance ministry whichhiked taxes on readymade garments and the ministry of agriculture, which oversees the MSP. Sixth, there is the global factor in the form of oil prices that directly impacts the prices of domestic crudeas well as non-regulated oil products. Global prices translate into domestic ones through the exchange ratemechanism. The RBI could have a role to play in stabilising exchange rates to smoothen price volatility. The inflation matrix is, hence, quite complex and there is evidently no singular solution. And theconundrum really is that as every constituent is impacted by inflation - as the producer of a productconsumes other products whose prices are increasing, there is an inherent motivation to increase onesown price to maintain the standard of living. This inflationary spiral, or rather the vicious circle, needs to be broken, and it appears that it can happenonly in the medium run. Roughly 70 of inflation can be addressed by various departments while the balance, which includesglobal influences, would still be beyond anyones purview. What is most important is that all thesedepartments should start talking to one another. 48. Ghost Protocol7. KNOWLEDGE RESOURCE Indias Anti-Corruption Contest India ended 2011 amid political chaos, as the much-awaited Lokpal Bill, aimed at creating a strong, independent anti - corruption agency, collapsed amid a welter of recrimination in the parliaments upper house, after having passed the lower house. The episode, which leaves the bill in suspended animation until its possible revival at the next session, raises fundamental issues for Indian politics which will need to be addressed in the New Year. The need for the bill Lokpal loosely translates as ombudsman was first mooted in 1968, but eightsubsequent attempts to create one had never reached a parliamentary vote. The credit for impartingurgency to an issue that had become a hardy perennial of Indian politics goes to the mass campaign thatcoalesced around a Gandhian leader, Anna Hazare, who insisted that a Jan Lokpal Bill (PeoplesOmbudsman) drafted by his followers had to be enacted in toto. Two well-publicized fasts by Hazare, attended by hundreds of thousands and breathlessly covered byIndias news channels, pushed the government to expedite preparation and consideration of a bill. Thedraft differed in many respects from Hazares, but it retained what most people sought an independentagency with its own investigative resources and prosecutorial powers. After parliamentarians were summoned back to work after Christmas in an unprecedented extendedwinter session, the bill passed the Lok Sabha (the lower house), where the ruling coalition commands anarrow majority. But the governments attempts to entrench the law in a constitutional amendment, thereby elevating the authority of the office, failed to command the necessary two-thirds support. Still, thebills passage after 43 years of stalemate was little short of historic. The action then shifted to the Rajya Sabha (the upper house), where the government lacks a majority. After a session lasting until midnight, punctuated by the introduction of 187 amendments (most by theopposition but some by coalition allies of the ruling Congress Party), the government pleaded incapableof processing all the amendments in time. Agitated members shouted their dissatisfaction (one rathermelodramatically tearing up the draft bill), and the Rajya Sabhas chairman, Indian Vice-President HamidAnsari, halted the proceedings without a vote. All sides have flung accusations at each other. Some allege that the governments bill, by requiring asimilar ombudsman in each of Indias states, was an assault on Indian federalism. Others claim that thegovernment colluded in the disruptions in the Rajya Sabha, because it knew that it could not win the votesome, preposterously, suggest that the government did not want the bill to pass still others claim that itwould have created such a weak Lokpal that it was not worth passing. The government has grimlysuggested that it would go back to the drawing board with a view to reviving the bill during theparliaments budget session, due in March. Whatever happens, the need to tackle corruption is undeniable. In a recent survey by the anti-corruptionwatchdog group Transparency International, 54 of Indian respondents said that they had paid bribes inthe last two years, in interactions with police, bureaucrats, and even educational institutions. 49. Ghost ProtocolWhile the media have tended to focus on big-ticket corruption, such as that revealed by ongoing scandalsconcerning on the allocation of spectrum to telecom companies or the organization of the CommonwealthGames, petty corruption has often affected people more directly. The mass outpouring of support for thequirky Hazare reflected the genuine frustration that most Indians feel over the corruption that assails theirdaily lives, rather than a clear understanding of Hazares proposals to combat it. Every time a poor pregnant woman must bribe an orderly to get a hospital bed (to which she is entitled),or else deliver her baby on the floor every time a widow cannot get the pension that should be hers byright, without bribing a clerk to process the papers and every time a son cannot obtain his fathers deathcertificate without greasing the palm of a petty municipal official, Indians know that the system has failedthem. They are right to vent their anger at endemic graft. Indeed, corruption in India is far broader and deeper than the headlines suggest. The Lokpal will not be apanacea. It is one instrument among many that are needed, along with reforms to increase transparency, protect whistleblowers, prevent tax evasion, clean up campaign financing, and reduce officialsdiscretionary power, which allows them to profit from the power to permit. Inspectors and prosecutors can catch only some criminals India needs to change the system so that fewercrimes are committed. Corruption isnt only high-level governmental malfeasance overcoming it requiresnothing short of a change in Indians mindset. For every Indian bribe-taker, there is a bribe-giver lookingfor a shortcut or an undue advantage. To paraphrase Mahatma Gandhi, we need to be the change that wewish to see in India. Corruption will not end until Indians stop giving bribes as well as stop taking them. Freedom from Economics This is the time of the year when we all wallow in an orgy of reflections, predictions and forecasts. The year 2012 isgiving all the usual crystal-ball gazers immense trouble not only have the Mayans predicted the world is going to end in 2012, confusing the issue, nobody seems to want to stick their necks out for what promises to be an impossibleyear. But, well begun is half done 2012 could be said to have not just begun well but on a perfect chronological note. Since the year began on the weekly holiday of a Sunday, people all over the world could celebrate New Years Eve without having to worry about getting up early to go to work the morning after. 50. Ghost Protocol THE WORLDS MAJOR ECONOMIES SHAREMANY MORE VULNERABILITIES THAN IS COMMONLY SUPPOSED mi7safe. org Alka Agarwal Alka Agrawal Managing Trustee Mi7 Financial Literacy Mission A crash course of financial literacy Missions Seven Charitable Trust 120714, Lajpat Nagar, Kanpur - 208005 Phone 0512-2295545, 9450156303, 9336114780 E-mail at: safemi7safe. org Financial Advisor Practice Journal February 2012 Volume 68 Ghost Protocol Will US Economy Save The World Again Co-Editor: Ankur Agrawal