Economy & Banks

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Sums it up really ...

So what will actually happen then? Is life going to be as difficult as it has been for the last few years, indefinitely? i.e. stagnant wages and everything getting more expensive. Could things actually get worse?

QE and artificially low interest rates are simply shoring up the banks and cheap Govt borrowing

When interest rates finally go up (and they will) it's not just mortgage payers who'll be fucked

What is a 'natural' interest rate? Interest rates are artificial but their very nature, as is the value of the fiat currency they set.

Interests rates will not go up, they have been replaced by QE as the process to control the money supply. They are in effect very similar monetary policy devices however QE has the benefit of being far more transparent as the newly printed money can be simply accounted for by one and all.

Whereas interest rates use 'borrowed' money that people 'hope' will one day be paid back, but hasn't happened yet.

The game has changed.
QE is a better way of doing things.

http://www.zerohedge.com/news/2013-11-13/goldman-congratulates-its-280-newly-promoted-managing-directors

comments are great

What a healthy focus on the ethnicity and gender of the people in that list.

well apart from that bit obvs

i was more refering to the 2800ft of extra rope required
killing is much funnier than racism

america's debt
http://www.zerohedge.com/news/2013-10-22/another-one-trillion-dollars-1000000000000-debt

Unfortunately, most Americans don't realize just how bad things have gotten

maybe that's because most Americans have their own debt concerns,

[

It seems like pretty much everybody – homeowners, students, those who are ill and without health insurance, and, of course, credit card holders – is up to their neck in debt that can never be repaid. 77% of US households are seriously indebted and one in seven Americans has been pursued by debt collectors.
](http://www.orbooks.com/catalog/creditocracy/)
.. some are addressing this issue,

[

Rolling Jubilee is a Strike Debt project that buys debt for pennies on the dollar, but instead of collecting it, abolishes it. Together we can liberate debtors at random through a campaign of mutual support, good will, and collective refusal. Debt resistance is just the beginning. Join us as we imagine and create a new world based on the common good, not Wall Street profits.
](http://rollingjubilee.org/)

i remember back in the 70's when it was the third world debt that was being asked to be written off
come full circle and the west is in such deep crap that it is hoping to have it's debts cancelled

all in 40 years

us student debt hits 1tn
us student are half as in debt as the uk as a whole ... parties must be mighty fine

http://www.zerohedge.com/news/2013-11-14/federal-student-loans-surpass-1-trillion-delinquency-rate-soars-all-time-high

Does america really matter so much anymore?

Closer to home this is a little more worrying - france just looks like a car crash that has been twenty years in the making and they're not turning back now.

http://www.insee.fr/en/themes/info-rapide.asp?id=26&date=20131114

beginning of the end for the dollar

http://www.zerohedge.com/news/2013-11-21/china-fires-shot-across-petrodollar-bow-shanghai-futures-exchange-may-price-crude-oi

One oil futures contract does not a revolution make. Particularly if the sellers still sell in dollars. It'll be a nice way for commodities traders to take a punt on the FX, though.

[B][B]*Big week ahead...pieces of the puzzle ... the Art of War.*[/B][/B]

The holiday shortened Thanksgiving week looks like it could be an important one. The Dec COMEX month is upon us and there are only 3 days left before first notice with 126,000 contracts still outstanding. This translates to 12.6 million ounces which will surely shrink over the next 3 days but the question is "by how much"?
This is an important question because there are only 589,000 ounces held by dealers in the registered category.

We had a similar situation last December and the COMEX brought in a million ounces to make delivery. From that point forward the inventories have bled a gusher, COMEX total Gold has gone from 11.5 million ounces to about 7 million while the dealer side has dropped from 3.5 million to under 600,000 ounces, the latter is a roughly 80% bleed. GLD which is another "source" for metal has dropped from 1,300 tons to about 850 over the last 12 months. We are also aware of a 1,300 ton "shortfall" in the inventory held by the BOE. These large decreases in inventories are now well documented and this metal has moved "East" to China, India, Russia and others. This is just one piece to the puzzle.
It will be quite interesting to see just how many contracts actually stand for delivery. The obvious "potential" is that "too many" stand and ask for Gold that is simply not available to deliver. This would be an obvious catastrophe. The "timing" is also quite interesting because we learned this week that 23 nations have now set up "non Dollar" swaps to be used to settle trade. The big question now is whether or not the Saudis will accept anything other than Dollars. The current negotiations with Iran could very well be the blasting cap that sets this whole thing in motion, Saudi Arabia (and Israel) will be hopping mad if a deal gets done that turns out to be a "bad deal".
The "timing" was interesting, it is, VERY! ... because late yesterday Jim Sinclair wrote publicly that he has been in meetings regarding the origins of "cash" metals markets. He had spoken previously of 6 different metals exchanges that would afford no leverage whatsoever and declared yesterday that he has made the decision to back the Singapore Physical Precious Metals Exchange with his knowledge, reputation and financially. Jim's message to the us can be found here http://www.jsmineset.com/2013/11/22/my-mission-on-our-behalf/ .
He has accepted the position of executive chairman of the exchange so without a doubt his heart and soul is in this for the end game.
For those of you have studied or wondered about "Free Gold", this is how it begins. True "cash and carry" exchanges will destroy the West's ability to price Gold using leverage and unbacked contracts. Currently there is virtually "no cost" for JP Morgan, Goldman, Barclays, Morgan Stanley or any other investment house to "sell" Gold. All they need to do is "push a button" and literally millions of so called ounces hit the markets and thus push the price down. "Cash exchanges" will offer the opportunity to arbitrage metal from the paper exchanges.
We will arrive at a "two tier" market in Gold and Silver.
In some respects we have already. India is currently paying 20% above paper Gold market prices to obtain metals. There are also premiums (though not nearly as high) for the Chinese to buy Gold. Here in the U.S., Silver Eagle and Maple pricing is some 15-20% above COMEX pricing. (Interesting to note that though prices dropped this week on the COMEX, premiums expanded by the same amount leaving cash prices nearly unchanged). So yes, we already have a glimpse at a "two tier market" but if I had to guess, these cash exchanges will "arbitrage" the remaining metals held in the West. They will buy and ask for delivery knowing full well that they can sell to cash buyers in the East at far higher prices...thus making an arbitrage profit AND draining the remaining scraps at the bottom of our barrel.
THIS is truly big news!
It inevitably had to happen sooner or later because Mother Nature has been demanding it for years. This "cash and carry" concept will ultimately reprice Gold and Silver to much higher levels and probably multiples of their current prices. The West has been fighting the tide since 1971 and now looks to have lost the war with this current battle arrangement. The East on the other hand has acted in harmony with nature. They were patient and methodical for years upon end and now look to end the "financial war" without ever firing a single bullet. Let me remind you that history has shown that the winners of war end up with the losers Gold, it has always been this way. However, this "war" was different. The East used our own "bullets" (Dollars) against us by producing product, selling that product to the West and earning more "bullets"...which have been used to "buy" our Gold.

We have no one to blame other than ourselves because we sat back and allowed this to happen. Don't get me wrong, this was "planned", it was planned by the Chinese years and years ago. In the words of Sun Tzu in his book of military strategy 'The Art of War' .... "The supreme art of war is to subdue the enemy without fighting". This is essentially what has been, is and will happen.
Gold is gone, it will soon be "priced" by those who "have it".

post on zerohedge

http://www.zerohedge.com/news/2013-11-25/how-gold-price-manipulated-during-london-fix

Could you summarise that for me please? Something close to Key Stage 3 language please.

tl;dr Precious metals commodities are as fiat as anything else in the world.

gold may* or may not* rise in the near term* / mid term* or long term*

*delete where appropriate

tl;dr Precious metals commodities are as fiat as anything else in the world.

I thought's FIAT were famous for rust?

Rusty roof, damp cellar.

Or something.

We should check our gutters cos it's gonna rain? OK

An interesting read off the original Bloomberg link about a deal Goldman Sachs is cutting with Venezuela.
What is Goldman Sachs doing with Venezuela's gold
Per the article:

• Venezuela is borrowing about $1.6 billion from Goldman for seven years.
  
• Venezuela is collateralizing that borrowing with 1.45 million ounces of gold, valued at US$1.8 billion at today’s prices (90% of the value of the gold)
  
• The physical gold is to be delivered and held at the Bank of England.
  
• The collateral will be subject to margin calls as the price of gold increases or decreases.
  
• Venezuela is paying about 8 percent a year for this loan.
  
  

Methinks GS has a cunning plan to get its hands on Chavez's legacy.

It's a collateralised loan, with a 10% haircut on the collateral, to be held in escrow.

That actually seems like a straightforward transaction, no?

well if gs weren't involved yes

i refer you to the posters last line

Which one? That it's a straight forward deal, albeit not a great one for Venezuela?

Trickledown economics explained:

9 Out Of 10 Americans Are Completely Wrong About This Mind-Blowing Fact - YouTube

Posting here because I just UTFS and found this thread instead of dumping my query in AQA. Apologies if this has already been done to death.

For years Gordon Brown told us that the years of economic boom and bust were over and that we were on the track towards long term, sustainable economic growth. Of course we all know how wrong he turned out to be but the underlying ideal of long term sustainable economic growth still underpins a lot of the economic discourse I hear in the news. I understand how growth in the economy is linked to jobs and incomes and hopefully increases in standards of living, however what I don't understand is how long term, indefinite growth can ever be sustainable when it is ultimately dependent on a scarce supply of resources.

I can see all sorts of partial solutions (such as efficiency or innovation) that might keep any prospect of imminent collapse a little beyond the horizon but they don't solve the problem forever.

Presumably this is something that our pre-eminent economists will have thought deeply about and I'd be intrigued to learn more. I wonder if people could point me towards some sources (preferably non-technical) where I could read up on how perpetual growth can be made to work as a keystone of our economic policy?