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Tuesday, 28 February 2012

Lengthy credit default swap litigation likely

It remains possible that a private investor who did not voluntarily agree to their "haircut" losses on their Greek bond holdings might call upon credit default swap (CDS) insurance issuers to honour their obligations and compensate for bond holders' losses.  Prolonged litigation is the likely defence strategy.

Money printing floods the globe

The global money supply has increased by $10 trillion during the last eighteen months, according to Egon von Greyerz. [1]  This is approximately one sixth of total global annual GDP, which is a little over $60 trillion per annum.

Monday, 27 February 2012

Interminable European money printing assured

Private buyers of peripheral European bonds are likely to have completely dried up.  Chief executive Martin Blessing stressed "that Commerzbank wouldn't buy any more sovereign debt in Europe's financially troubled nations".[1]

Friday, 24 February 2012

"Voluntary" Greek bond haircut was compulsory

The "voluntary" haircut which private Greek bondholders "agreed" to was “as voluntary as a confession to the Spanish Inquisition”, according to the Financial Times report of comments by the chief executive of Commerzbank.  The reporting of this by the UK based Financial Times might mark the beginning of the unravelling of "the spin" on the Greek issue.

China likely to support euro

The anomalously high euro reflects expectations that China will provide financial support to Europe and the euro, argues Jim Sinclair.

How Goldman Sachs helped falsify Greece's national accounts

Nick Dunbar's video explains how Greece and Goldman Sachs entered into off-market swaps using fictitious exchange rates to hide Greek debt from Europe.

Germany resists expansion of rescue fund

Thursday, 23 February 2012

Gold pledge prevents drachma escape from euro

Greece has pledged its 111 ton national gold reserve to secure their second bail-out, according to Mineweb.  "The option of leaving the Eurozone and surviving independently has now gone", according to Julian Phillips, whose article I acknowledge.

Greek bail-out status clarification

Greece has not been rescued yet, despite recent media relief.  The second bail-out remains conditional upon Greece implementing the agreed but unpopular measures, within five days.  The risk of financial contagion will remain until European finance ministers approve Greece's remedial actions, and until private bondholders agree to their haircuts, which has not yet happened.  If any bondholder who refuses a haircut exercises CDS bond insurance, financial repercussions would be global.

Saturday, 18 February 2012

Gold's status as reliable currency boosted

Exclusion of Iran from Belgium's SWIFT funds transfer system reduces the value of Iran's - and everyone's - foreign currency holdings, and reduces global confidence in the international financial system and the global reserve currency.  Iran is not the only potential "enemy" of the west.

Western transfer to China of control of global reserve currency

If western central banks are suppressing the gold price by selling gold down as is claimed by GATA and others, then the west is subsidising Chinese accumulation of gold.  The west sells gold to support their currencies.  The west would thus be transferring control of any new global gold or yuan linked reserve currency to China, which would seem to conflict with western strategic interests.

Friday, 17 February 2012

CDS and therefore sovereign debt markets under threat

If any Greek or other debt default, or "haircut", is not deemed a default then credit default swap (CDS) debt insurance will not be called upon.  That would render CDSs useless, leaving lenders with uninsured losses.  That in turn would destroy confidence in the CDS market, which would render sovereign debt uninsurable and therefore unsellable.  This would make European sovereign debt rollover more difficult, or impossible for broke nations.  That would in turn place a greater financial burden on Europe who would be insurers of last resort.  I acknowledge Jim Sinclair and Eugene Stiglitz for their commentary on this matter.

Chinese reduction of US dollar holdings continues

Clearly China is at least partially "switching" out of the US dollar into gold; reflecting waning confidence in the global reserve currency.  It will be interesting to see how much, if any, they divert into the Euro (which I believe would be a strategic mistake).  See "China reduces US debt holdings", with thanks to Jim Sinclair and Forbes.

Chinese gold accumulation accelerates

"Gold market watchers believe China has been surreptitiously stockpiling gold as a means to diversify its reserves."  See "Chinese central bank big Q4 gold buy" courtesy of Mineweb and Reuters.

India promotes popular gold ownership

Wednesday, 15 February 2012

Central banks' trend to repatriate national gold holdings

Julian Phillips discusses growing needs for central banks to repatriate gold in "The politics of central bank gold holdings", in which he further confirms mainland China's strategy to accumulate large national gold holdings.  I acknowledge Mineweb.

Chinese yuan-denominated gold ETF

I acknowledge Mineweb for this news: "World's first yuan-denominated gold ETF makes weak HKSE debut".

Tuesday, 14 February 2012

Where to hold gold

I found this article interesting:  "Where you should hold your gold to avoid possible confiscation".  I acknowledge Julian Phillips and Mineweb.

Renewed Chinese uranium demand forecast

Mainland China continues to seek stakes in uranium deposits to support plans to have at lest 70GW of nuclear power generation capacity by 2020, according to David Talbot in his interview with Geoff Candy.  China has restated their pre-Fukushima nuclear objectives.

German energy policy

Renewable energy can not effectively provide nation-wide base load electric power.  For the foreseeable decade at least, only coal, gas, oil and nuclear energy sources can provide that electricity at reasonable cost.  Storage of electricity from sunny and windy times remains too expense despite decades of battery research.  See "Funding shortage threatens Germany's energy revolution".

Soros' criticism of German policy

George Soros' criticism of Germany's inherent values of financial prudence is based soundly on Keynesiamism.  Although taught universally for decades, there is growing scepticism about some of Keynes' doctrines.  The IMF has already concluded that the second Greek bail-out is now not big enough to achieve the intended rescue purposes.  Therefore a third bail-out would be required should the current Greek economy be sustained.

Greece betrays failure of most western democracies

Forty-three elected members of the Greek parliament were disendorsed and expelled from their Pasok and New Democracy parties because they did not vote for the austerity bill.  The usurpation of parliamentary votes by political parties is now common practice in democracies around the world, and only adds to growing social unrest.

Monday, 13 February 2012

Canada opens door to uranium trade with China

Greece to receive another bail-out despite falsifying accounts for first failed bail-out.

Such a headline has not appeared in global mainstream media.  Why not?  It should be major news that Greece receives a second bail-out despite submitting fraudulent national accounts for the first bail-out, which failed.

Gold price spike

The gold price spiked up momentarily by more than $30, before returning to pre-existing levels, shortly after 23:00 GMT = 10:00am AEDT (Sydney), Monday morning.  See Kitco's chart below.

Sunday, 12 February 2012

Taxpayers to guarantee $700 trillion derivatives market?

How could any proposed centralised clearing house act as ultimate guarantor for such a huge market?  The $700 trillion derivatives market continues to grow rapidly, opaquely to public scrutiny.

Saturday, 11 February 2012

Portugal might cause next euro crisis

Portugal needs adjustments to their 2011 bail-out package.  Germany would be ready to agree to more flexible terms for their 78M euro package.

US joins China in opposing EU aviation tax

The US now joins China and other nations in considering retaliating against the EU's carbon tax on international aviation.  This is a very rare case of public alignment of Chinese and US interests. (p15 AFR Feb11-12, 2012)

Thursday, 9 February 2012

Unemployment worse than stated - Bernanke

The US Federal Reserve chairman Ben Bernanke said the 8.3% US unemployment rate understates weakness in the labour market.  "We still have a long way to go

Wednesday, 8 February 2012

China's economic dominance is not guaranteed

Chinese commercial acumen contrasting with western over-indebtedness, and the demise of western currencies, will not guarantee China's eventual economic dominance.  China's gathering might over the longer term will not come without setbacks on the way, for at least three reasons.  Political risk will increase as a young and unwise minority born into great wealth increasingly flaunt their huge inherited riches.  Much wealth has been amassed through favourable Chinese Communist Party connections.

US currency will be under scrutiny next

Global focus will return to scrutinise the US currency after the euro crisis comes to a head.  Unsustainable US national, federal and state debts, and perpetual quantitative easing, I believe will demand the scrutiny of international markets.  This forecast is simply my opinion.

Euro collapse seems inevitable

The Greek government missed another deadline for spending cuts agreed for their next bail-out, as the public strikes and protests against austerity, according to Business Spectator's "Boiling point of a Greek bail-out", which I acknowledge.  Lurching towards default with untrustworthy national accounts, Greek maladministration will require the euro to be restructured or fail.

Tuesday, 7 February 2012

Saturday, 4 February 2012

Greek and Italian fiscal reform impossible

Culturally embedded "black" economies will require at least a generation to shift into the northern European style tax system demanded for the euro currency's survival.  The problem of shifting collective popular attitudes towards cash economies for the required fiscal reforms, is intractable.  Falsification of Greek national accounts prior to their first bail-out betrays acceptance of entrenched dishonesty to the highest level.

Thursday, 2 February 2012

International trade continues to decline

Shipping rates continue to fall, having never recovered after collapsing by 90% in 2008, measured by the "Baltic Dry Index" (BDIY:IND).  Low rates reflect market expectations that international trade will remain very low or decline further.

Wednesday, 1 February 2012

China building gold reserves

See "China enhances position as world No. 1 gold producer - but where's it all going?" published by Mineweb.  We have observed before that it would be to China's significant strategic advantage to participate strongly in any new world currency system, after

Euro exit would restore Greek sovereignty

Greeks clearly defend their sovereignty in strongly opposing ceding fiscal control to Europe.  Greece would achieve greater control over their sovereignty by withdrawing from the Euro.  Greece partially ceded

China bans Brazil's iron ore ships

China has banned Brazil's super large iron ore bulk carriers from delivering iron ore to China.

CDS insurance failure bankrupted MF Global

MF Global failed because a 50% bond "haircut" they suffered was deemed not to be a default, so their credit default swap (CDS) insurance against default did not deliver the promised cover, even though the issuers kept the premium.