The Finance Thread

[Ramarena]

24 minutes ago, IronRam 70.3 said:

A JP Morgan, Rothschild system I understand?

 

Am I right in thinking that a few Middle Eastern/North African countries had an alternative system......

 

........and have a substantial investment of High Explosives deposited there via Uncle Sam and her allies! Or is it all anti-war conspiracy stuff? 

I think your referring to an attempt by Gaddafi to turn Libya's banking system back to the gold standard, he aimed to have an African gold dinar for trade. Many people have suggested this is why he was ousted as the West (USA) did not want a rival for their currency. I think it spooked a lot of people (bankers and politicos) in the West, however I will leave the conspiracy theory there.

Other than that I believe Guernsey uses full reserve banking and a government study in Iceland recommended a return to full reserve, but I'm not sure if they are seriously moving towards that.  

[LesterRam]

can you see a recession hitting next year?

[Ramarena]

44 minutes ago, LesterRam said:

can you see a recession hitting next year?

U.K or global? 

I've been saying since last year, that I expect to see a U.K recession around 2018. However the global economy is very soft and all the indicators are only pointing one way. So I would expect to see the global economy in recession next year if it isn't already, obviously there are many factors in play so it's never an exact science to predict but between 2016 and 2018 is very likely. 

As for the U.K, it's a tough one to judge, the only things propping up the U.K at the moment are the housing market, consumer debt and immigration (as mentioned in the OBR's report on the Autumn Statement). I have no doubt a recession will be coming along within the next few years as we are coming to the end of the business cycle anyway. 

That said there are big problems for the us, we have a monstrous trade deficit, huge housing bubble, consumer debt approaching crisis levels again, struggling tax receipts despite alleged record levels employment and claims of good GDP growth, E.U referendum and all this is against a backdrop of low interest rates, low inflation and plumeting oil prices which should be providing a stimulus to household budgets. 

Factor in a global recession and it's hard to us keeping our heads above water, the only question is do we go under in 2016/17/18, we were dragged down in 2008, what's to stop it happening again? Ironically the Chancellor is saying he's fixed the roof while the sun is shining. I don't see it, we have the same unbalanced economy we had in 2008, except this time it's got a bigger deficit and overall debt.

 

[SillyBilly]

3 hours ago, IronRam 70.3 said:

3 hours ago, IronRam 70.3 said:

A JP Morgan, Rothschild system I understand?

 

Am I right in thinking that a few Middle Eastern/North African countries had an alternative system......

 

........and have a substantial investment of High Explosives deposited there via Uncle Sam and her allies! Or is it all anti-war conspiracy stuff? 

How much gold is in Fort Knox? That will send you on a journey of discovery and conspiracy!

Personally when it comes to gold I wouldn't believe it unless I had it in my hand. If you think fractional reserve banking is murky, just wait until you're introduced to COMEX!

There are lots of conspiracy theorists out there when it comes to alternative systems, usually pedalled by gold bugs that also flog you the stuff. I do, however, think that if any country genuinely threatens the system with a viable alternative they'd be "ganged up" on very swiftly.. There is just too much to lose to not defend it. Can't see it though, everyone is all in!

 

[SillyBilly]

7 hours ago, Ramarena said:

U.K or global? 

I've been saying since last year, that I expect to see a U.K recession around 2018. However the global economy is very soft and all the indicators are only pointing one way. So I would expect to see the global economy in recession next year if it isn't already, obviously there are many factors in play so it's never an exact science to predict but between 2016 and 2018 is very likely. 

As for the U.K, it's a tough one to judge, the only things propping up the U.K at the moment are the housing market, consumer debt and immigration (as mentioned in the OBR's report on the Autumn Statement). I have no doubt a recession will be coming along within the next few years as we are coming to the end of the business cycle anyway. 

That said there are big problems for the us, we have a monstrous trade deficit, huge housing bubble, consumer debt approaching crisis levels again, struggling tax receipts despite alleged record levels employment and claims of good GDP growth, E.U referendum and all this is against a backdrop of low interest rates, low inflation and plumeting oil prices which should be providing a stimulus to household budgets. 

Factor in a global recession and it's hard to us keeping our heads above water, the only question is do we go under in 2016/17/18, we were dragged down in 2008, what's to stop it happening again? Ironically the Chancellor is saying he's fixed the roof while the sun is shining. I don't see it, we have the same unbalanced economy we had in 2008, except this time it's got a bigger deficit and overall debt.

 

Given the 2008/09 crash was caused by a combination of the relaxation of underwriting standards and the low interest rates set by the Fed after September 11, I wonder what sort of crisis we are going to get after 7 YEARS+ of 0 rates?

For other readers, the price of money is the key to the whole concept of capitalism. By price, we of course mean interest rate. Capitalism functions by the process of creative destruction. Simple really. If a company borrows money, if it doesn't put it to work efficiently and with return outweighing borrowing costs then it is destroyed. The market is left open to those who utilized the capital effectively. However, if you reduce the cost of money (of borrowing), you distort the decision making process involved in the allocation of capital (how it is put to work) and ultimately the equilibrium of an economy. You keep in business the companies capitalism would ordinarily destroy (which creates growth).  That is where we are at and it is why we have a "zombie" economy, where the parasite (the banking industry) plays around with free money, bidding up assets (which they think is growth) while the wider economy sits on life support.

As an example of how this plays out in the wider economy...say we borrow vast amounts of money to build an additional 3 steel furnaces at ultra low interest rates, it fits we probably wouldn't have made this decision if the cost of money was high (or basically couldn't have afforded to). Alternatively we may have ramped up capacity slower, building capacity in phases and offsetting cost with income/profit over time. The distortion for the economy is that productive capacity, through low interest rates, has effectively been brought forward in time by what is effectively a central bank manipulation. In doing the expansion, we may have inadvertently  done several things:

- Grew a business that is not financially robust enough to withstand a return to higher interest rates (termed a "zombie" company).  This backs the central banks into a corner of keeping rates lower for longer (and starts a viscious circle of creating more zombies) and therefore being unable to ever raise rates again.

- Created capacity in a market which doesn't really need it (i.e. it was the interest rate, not the market need that led the business decision). This can create an artificial production boom (like the American shalers) where suddenly everyone borrows huge amounts to fund projects (at what was high prices), this can then alter the price of the commodity by distortion of the normal supply curve moderated by interest rates. Cue commodities depression (and note the effects of low interest rates manifest themselves often years later).

- "Stolen" future development (GDP) - lowering the cost of money and thus pushing forward projects that would have taken place over many years, if at all. Cheap debt bringing "demand" forward at the expense of future growth. Look at China with its ghost cities and investment projects - it propped up its economy by bringing construction forward a couple of decades. That doesn't work as its misallocation of capital, you can't centrally plan capitalism within a capitalistic framework (what exists in China), the debts are going bad in China and they are exporting the deflation and economic malaise to the world now.

Basically, they have completely ****** up the entire balance of the economy since 08/09 and it will have profound implications. It can't not have.

[SillyBilly]

So, we have issued trillions of cheap debt since the last crisis which doesn't have the return on it for viability in a normal interest rate environment. In other words its toxic debt. Their model for growth is more debt. They can't raise rates as that destroys the zombie economy, which now is the economy. Yet, they can't keep rates this low as it increases the misallocation of capital and the number of zombies. They can't do anything. They can only print more money to delay reality a week, month or year longer.

 

[SillyBilly]

This graph since 13 almost has gone up in a straight line, it is unbelievable. Japan have trebled the monetary base now in about 7-8 years. The take home message is to sustain the same results you have to go harder and bigger each time. Which means the stimulus (or QE) has to go larger to keep the system propped up. I'd suggest when things start going up in a near vertical straight line you should start to question whether they are losing control.

 

[Ramarena]

So what say you Mrs Yellen?

[Ramarena]

On 14 December 2015 at 23:18, reveldevil said:

Going back to the oil situation, I work for a small firm in the oil industry, last 3 months has seen orders from the North Sea companies drop 90%, offset somewhat by a rise in demand from the far east.

However, all the north sea companies say they expect demand to ramp up again by March 2016, can anyone see any reason this would be so, because I'm struggling to see it.

Going back to this. Look's the oil rout is really starting to bite. 

http://www.bloomberg.com/news/articles/2015-12-15/oil-rout-to-claim-more-victims-after-first-norwegian-bankruptcy-ii79ob4h

Obviously this is the exploratory area of the industry, showing that investment next year will be low, as you would expect.

[Shang]

With the new agreement in Paris, and there being clear agreement across the board about keeping temperature rises below 2 degrees, surely it makes no sense for companies to keep looking for oil?

[SillyBilly]

Markets have been up all week which wasn't expecting. I have Bloomberg on now to see how U.S reacts. I guess its the bond market/high yields which we really should be watching.

[SillyBilly]

For those interested in Armstrong, these are his key points:

- DJ to 23,000+ (capital moving from bonds to stocks). Then collapse in stocks. A 2 year roller-coaster.

- Gold to rocket to c. $5000 into 2017 (bearish short term, this will be a flash rise).

- Sovereign debt crisis (which he claims to be in constant progression from 2015.75) to reach its peak into 2017. This year period or so running through 2016 to be a progressive build up to the end of the 35 year bond bull run. Massive bond defaults.

- China to continue to bottom until 2020

- USD to continue to rise

I think it will be interesting to come back to this post and judge him on this. Those are massively bold calls relative to what you'd hear elsewhere.

[SillyBilly]

Hike.

[Zag zig]

15 minutes ago, SillyBilly said:

Hike.

Yawn (not at you S.B), but just an over hyped can kicker, move along for now, nothing to see.

[Ramarena]

35 minutes ago, Zag zig said:

Yawn (not at you S.B), but just an over hyped can kicker, move along for now, nothing to see.

Indeed. Although I would have sent no chance of this, back in the summer. 

I wonder what effect this will have on the U.K and the wider global economy?

[Zag zig]

32 minutes ago, Ramarena said:

Indeed. Although I would have sent no chance of this, back in the summer. 

I wonder what effect this will have on the U.K and the wider global economy?

Reality still needs to bite mate, S.B has made many quality posts touching on the Western and indeed the wider Global debt fuelled binge, which without being an harbinger of doom, crisis is an understated word. Meantime the elite's puppets will do all they can to keep this illusion perpetually in play. 

Just occasionally, obvious cracks appear in everyday life. Me I like to keep things simple, but whenever I wonder whether the architects of pain are still in control of this modern Bank crisis, I take a look at the F.D.I.C list of bank failures.

So far this year, it's pretty low key https://www.fdic.gov/bank/historical/bank/index.html  some years it gets a bit hairy and you think, this is it, the F.I.A.T system is imploding, cue another can kicker.

When rates rise and bank foreclosures in the states are seemingly daily, I might worry a bit, break out the tin foil hat and stock up on corned beef. 

So to answer your question more directly, not a lot in my opinion on the grand scheme of things, credit is still too cheap, but don't rule out a downturn, massively hyped by the Beeb and other true paid harbingers of doom.

 

 

 

[Zag zig]

1 hour ago, SillyBilly said:

For those interested in Armstrong, these are his key points:

- DJ to 23,000+ (capital moving from bonds to stocks). Then collapse in stocks. A 2 year roller-coaster.

- Gold to rocket to c. $5000 into 2017 (bearish short term, this will be a flash rise).

- Sovereign debt crisis (which he claims to be in constant progression from 2015.75) to reach its peak into 2017. This year period or so running through 2016 to be a progressive build up to the end of the 35 year bond bull run. Massive bond defaults.

- China to continue to bottom until 2020

- USD to continue to rise

I think it will be interesting to come back to this post and judge him on this. Those are massively bold calls relative to what you'd hear elsewhere.

Bold or pre conditioned?

Do wonder looking at this very pro US and D stance, if as quite a few anti Armstrong critics suggest, during his spell in the State hotel he might have been lent on. I know, I know, one for the conspiracists but he's not been the same since to me. Beginning to sound a bit Jim Sinclair now. He'd hate to be thought of in that manner ha.

Agree will be interesting to judge him in future, suppose he gets credit for at least making the calls. Can't say they are too outlandish either because I can hear the arguments for all coming true. Gold is the biggie from current levels.

 

[ketteringram]

1 hour ago, Zag zig said:

Yawn (not at you S.B), but just an over hyped can kicker, move along for now, nothing to see.

I know. While I am no fan of can kicking..... Let's face it , you know the alternative is just too weird to contemplate! 

[Zag zig]

1 minute ago, ketteringram said:

I know. While I am no fan of can kicking..... Let's face it , you know the alternative is just too weird to contemplate! 

Yeah, beats taking it out on the Dog.

[Rev]

3 hours ago, Shang said:

With the new agreement in Paris, and there being clear agreement across the board about keeping temperature rises below 2 degrees, surely it makes no sense for companies to keep looking for oil?

Easy to say when you don't depend on it for your income!

I did hear a environmental expert say the other day that in order for the UK to meet its obligations under Paris, it would have to immediately cease oil and gas production, and close all gas and coal power stations too!