2ndlook

The Shape Of Things To Come Part – II

Posted in Business, Current Affairs, Environment, European History, Gold Reserves, Media, Uncategorized by Anuraag Sanghi on October 15, 2008

On March 14th 2008, this blog talked about how

It is being whispered that Barran Wolfet and his team members, Sorg Goros and Rim Joggers had played a major role in the enhancement of these gold stocks – and the formation of IMAR. Initially named as Global Financial Reserve Authority for Development, the IMAR idea was first tossed out over a dinner at the famous Les Ambassadeurs eatery – which offers a classic cuisine by the Ducasse-trained chef, Jean-François Piege.

The US Electoral outcome

There is (seemingly) harmless speculation that next US President may appoint Warren Buffett as the Treasury chief

The two were asked at the beginning of their second presidential debate who would be a good replacement for current Treasury Secretary Henry Paulson who is standing down at the end of the current administration.

“I think the first criteria, would have to be somebody who immediately Americans identify with. Immediately say we can trust that individual,” said McCain. Buffett, chief of the Berkshire Hathaway holding company, has supported Obama in the race for the White House.

Barack Obama’s chance of a lifetime

If Barack Obama wins on 4 November, as looks likely, he’ll inherit an economic mess rivalled only by the one that faced Franklin Roosevelt in 1933.

Everyone is saying …

There is rising chorus that the new President (whoever it may be) should do what Roosevelt did. What they are not saying, but meaning is, do what Roosevelt did. Krugman, this year’s Nobel prize winner, has also suggested that Barrack Obama should emulate Roosevelt’s actions need.

Among the many things that Roosevelt did, the merits of which are debatable, there is one action that made the US into a super power. If only for a short while of 70 years.

Roosevelt nationalized gold.

Nationalization of gold enabled the US Governments to enter costly wars like WW2, Vietnam War, and now the Iraq and Afghan Wars. This allowed to US to walk into the WW2 with 25,000 tons of gold – and impose Bretton Woods on the world. And the nationalization of gold also impoverished the Americans – apart from the poor.

Gold production (from Ghana, South Africa, Australia, Canada, Papua New Guinea, America, etc.,) was controlled by the Anglo Saxon Bloc – and the world’s largest private reserves of gold, in India were controlled by the British. It is this choke on gold reserves that enabled thes sustenance of US as a superpower.

And now they are trying it again.

The methodology

And how do the US ‘thought leaders’ suggest that new President do it … when victory is within grasp, and Obama Faces A New Choice

The opposite argument is that the political costs of voicing pessimism are prohibitive, that there is plenty of opportunity to prepare voters for drastic action after election day, and that a candidate risks worsening conditions by sounding strong warnings. The classic example to support this case is the 1932 Depression-era campaign of Franklin Delano Roosevelt, who said little or nothing while campaigning in 1932 to indicate the contours of his New Deal program.

What are they pulling over our eyes…

This again very interesting. Roosevelt’s economic plan was surprise. Obama (or McCain, doesn’t matter who), will do something similar. Read this with the Warren Buffet silver play and his (possible) appointment as Treasury Chief, and the game becomes clear.

Nationalize gold again?

But What Was Warren Buffet Doing …

Buffett’s Purchases Push Silver Past $7 an Ounce said the New York Times

Separately yesterday, Phibro, a commodities-trading firm, confirmed that it was the dealer for all the silver purchases by Berkshire. Phibro is a unit of the Travelers Group, in which Berkshire has a major stake. Last week, a Canadian investor filed suit in United States District in New York, contending that Phibro had moved silver from warehouses in the United States to hidden locations in an effort to mislead traders about supplies and push the price higher. A Phibro official denied all the charges yesterday.

How did Warren Buffet buy such a large amount of silver without disturbing the market?

The silver purchases by Berkshire Hathaway were made in London, a center of activity in the silver market. The purchases were done with over-the-counter contracts, in which Mr. Buffett bought silver for delivery at future dates. Since he began he has accepted delivery of 87.51 million ounces, which are apparently now sitting in the vaults of London bullion banks. The remaining 42.2 million ounces must be delivered between now and March 6.

60 days from now … Warren Buffet Handle The US Treasury?

Sometime, back there was speculation that Warren Buffet could be a possible choice of US Treasury Chief. This news was sparsely reported – originating with AFP. Google search showed this up only with a few Indian sites and journals.

What does this mean as possible policy outcome? Do a Quicktake – and then a 2ndlook.

Ben Bernanke says a ‘savings glut is the problem …

Ben Bernanke joins a long list of Western propagandists, who find specious’ ways to blame others for Western problems. His most recent propaganda gem was to blame Asia for a savings glut.’

a satisfying explanation of the recent upward climb of the U.S. current account deficit requires a global perspective that more fully takes into account events outside the United States. To be more specific, I will argue that over the past decade a combination of diverse forces has created a significant increase in the global supply of saving–a global saving glut–which helps to explain both the increase in the U.S. current account deficit and the relatively low level of long-term real interest rates in the world today.

After Ben Bernanke opened the flood gates of such logic with ‘helicopter drop of dollars’ and ‘printing press technology’, and now the savings glut’ – others such ‘economists’ have rushed in to do another tom-tom dance around this logic.

A so called economist, weighed in with two bits, Dani Rodrik: Who killed Wall Street?

…the true culprits lie halfway around the world. High-saving Asian households and dollar-hoarding foreign central banks produced a global savings “glut,” which pushed real interest rates into negative territory, in turn stoking the US housing bubble while sending financiers on ever-riskier ventures with borrowed money. Macroeconomic policymakers could have gotten their act together and acted in time to unwind those large and unsustainable current-account imbalances. Then there would not have been so much liquidity sloshing around waiting for an accident to happen.

The Real Culprits …

Ben Bernanke is not even mentioned even once. Bernanke’s printing press and helicopters are not mentioned even once. The evasion of Federal Reserve on M3 figures is completely ignored. But, Alan Greenspan is mentioned once. China which has funded the US to the extent of US$2 trillion is buried without mention. Japan which has funded the US to the extent of US$1 trillion is ignored.

I rest my case

But Asians countries whose reserves are getting wiped due to dollar depreciation – are instead mentioned as culprits.

Wow.

This is a new level in brazen-ness. Keep it up, Dani boy. This fraud may yet happen. And Warren Buffet may give cover to this fraud.

Greenspan & Bernanke share Nobel for eCONomics

Posted in America, Business, Current Affairs, Gold Reserves, India by Anuraag Sanghi on March 12, 2008

Thus Spake Ben Bernanke

U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press … that allows it to produce as many U.S. dollars as it wishes at essentially no cost. … …the Fed could find other ways of injecting money into the system–for example, by making low-interest-rate loans to banks or cooperating with the fiscal authorities … If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation. Remarks by Governor Ben S. Bernanke, Before the National Economists Club, Washington, D.C. November 21, 2002 (ellipsis mine)

Let The Games Begin

US Debt to GDP Ratio |  Morgan Stanley Estimates. Click for a larger image.

US Debt to GDP Ratio | Morgan Stanley Estimates. Click for a larger image.

In the last 5 years, more than US$10 trillion were printed and the world is awash with dollars. That is a low estimate. US Govt. has stopped revealing M3 money numbers.

Where did this money go? How was this used? Lendings by US commercial banks in the period 2000 to 2004 soared by altogether USD 1,500bn to USD 6,750bn. In the European Monetary Union lending to the private sector by monetary financial institutions (MFI) climbed from roughly EUR 6,200bn end-1999 to not quite EUR 8,700bn at the end of last year.” Allianz Report, Dresdner Bank. The recipients of this largesse, mainly Western banks have made (it is whispered) bad loans worth 300-400 billions dollars. I am confident that the actual figure is much higher.

The loans story does not end there.

These loans were in turn sold and re-sold, then packaged and mortgaged, derived and contrived – finally ballooning into the ‘sub-prime’ crisis. Welfare payouts by another name? Who will pay for this “lending”? US Consumers are not repaying their housing loans.

Some one has to!

How Every US Dollar Is SpentBillions Are Not Big Anymore

The ICBC IPO received subscriptions of half a trillion dollars! IMF estimates of funds with Sovereign Wealth Funds (SWFs) is US$2-3 trillion – and “foreign assets under management of SWFs could reach US$6–10 trillion by 2013“. The same IMF study also estimates that global financial assets are currently valued at US$190 trillion. Commodity prices are going through the roof.

Very soon, major movements will be measured in trillions – thanks to the humongous printing presses, that the US has used in the last few years. Daily trading volumes total US$1.5 trillion in the Forex Markets. To that add trading volumes of debt markets, stock markets and commodity markets. Combined global trading volumes now cross US$3.0 trillion – and growing.

This degree of hysterical trading had made the US$ into a giant wrecking ball – which goes out of control very few years.

The Mystery Of Indian GrowthAsians Are Funding The US

Total US debt has crossed 300% of GDP (Federal+State+Corporate+Household sectors).

What this means is that if every income earning member of the US were to assign 30% of their income, every year, for the next 25 years (at current interest rates and borrowing rates) ), US debt will come to possible close to zero level. Government debt in comparison to GDP is fluctuating between 50% to now nearly 100%. Some claim that the debt burden is actually declining.

Who is stuck with this hoard of dollars – getting devalued daily. China (with more than 1 trillion dollars), Japan (another trillion dollars), Russia (400 billion dollars), India (300 billion dollars) are the top 4 countries.

I hereby nominate the US Federal Reserve for the Nobel Prize for Conmanship. They truly deserve it.

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