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Posted
  • Location: 4 miles north of Durham City
  • Location: 4 miles north of Durham City

    Simon Johnson: Goldman Is About To Be Blacklisted And Possibly Banned In Europe

    MIT professor Simon Johnson raises some provocative scenarios in regards to Goldman's participation in Greece's scheme to obfuscate its debt levels.

    In particular, he expects a full audit of the company, and perhaps some kind of ban:

    http://www.businessinsider.com/simon-johnson-goldman-is-about-to-be-blacklisted-and-possibly-banned-in-europe-2010-2

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    As harve has touched on, re inflation and interest rates, its a hell of complicated set up to understand correctly (nobody does imho), the news always presents it very clean, simplistically and wrong.

    Go Greek strikes Go.... It's not often I support strikes, but in this I do. They are absolutely right that Greece does not need more lending. It can't afford what it owes full stop, they still need t

    Afraid not, old bean; China has been a Communist People's Republic since, when, 1947? Just because it's a Tory government that's doing all the kow-towing makes not a jot of difference...But I bet that

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    Posted
  • Location: Sth Staffs/Shrops 105m/345' & NW Snowdonia 219m/719'
  • Location: Sth Staffs/Shrops 105m/345' & NW Snowdonia 219m/719'

    The EU has been riddled with corruption for years... this refers to 2007 accounts..

    The auditors for the EU have refused to sign off the bloc's financial accounts - for the 13th year in a row.

    A report by the European Court of Auditors (ECA) criticises nearly every major area of the EU's expenditure.

    The auditors say there are weaknesses across the board and complain of neglect and presumed attempts at fraud.

    The European Commission has blamed member states for audit failings....

    Edited by kar999
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    Posted
  • Location: 4 miles north of Durham City
  • Location: 4 miles north of Durham City

    Greece has greatly damaged its chances of an EU bail-out by lashing out at Germany over war-time atrocities and accusing Italy of cooking its books to hide public debt.

    http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7309861/Greek-rescue-in-danger-as-deputy-prime-minister-attacks-Nazi-Germany.html

    I'm going to say it again. Each nation in Europe needs monetary reform: -

    http://www.monetary.org

    http://www.moneyreformparty.org.uk/

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    Posted
  • Location: Sth Staffs/Shrops 105m/345' & NW Snowdonia 219m/719'
  • Location: Sth Staffs/Shrops 105m/345' & NW Snowdonia 219m/719'

    Greece has greatly damaged its chances of an EU bail-out by lashing out at Germany over war-time atrocities and accusing Italy of cooking its books to hide public debt.

    Recalling my studies of WW1 & particularly WW11, there is no love lost between the Greeks, the Italians and paticualrly the Germans even today. So it's not suprising Nationalistic comments are being banded about.

    One of the impacts of the 1930's Great Depression was an increase in nationalism and support for parties from both the far right and left.

    This current global financial crisis was never just going to have an economic fallout. I'm not suggesting WW111 is about to break out, but I'd expect to see a lot more protectionism and finger pointing erupting.

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    Posted
  • Location: Tunbridge Wells, Kent
  • Location: Tunbridge Wells, Kent

    This current global financial crisis was never just going to have an economic fallout. I'm not suggesting WW111 is about to break out, but I'd expect to see a lot more protectionism and finger pointing erupting.

    Every single other attempt at globalisation in history has broken down leading to firstly protectionism and secondly war. I first wrote about this on these boards in 2008 and I still don't see anything to suggest this time will be any different. If anything the stakes are even higher given the future shortages in natural resources.

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    Posted
  • Location: 4 miles north of Durham City
  • Location: 4 miles north of Durham City

    Every single other attempt at globalisation in history has broken down leading to firstly protectionism and secondly war. I first wrote about this on these boards in 2008 and I still don't see anything to suggest this time will be any different. If anything the stakes are even higher given the future shortages in natural resources.

    Yup.

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    Posted
  • Location: Christchurch, New Zealand
  • Location: Christchurch, New Zealand

    Every single other attempt at globalisation in history has broken down leading to firstly protectionism and secondly war. I first wrote about this on these boards in 2008 and I still don't see anything to suggest this time will be any different. If anything the stakes are even higher given the future shortages in natural resources.

    WWIII is my big worry. When governments come under economic hard times they need to re-focus the country and having a common enemy the country can unite against is the usual strategy.

    Probable hot spots include:

    - Falklands (Agentina and UK confrontation)

    - Taiwan (China and US confrontation

    - Iran (Israel, US and Iran confrontation)

    - India & Pakistan

    - India, Pakistan, Afganistan, Iran & Iraq confrontation

    - Europe implosion

    - US implosion

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    Posted
  • Location: 4 miles north of Durham City
  • Location: 4 miles north of Durham City

    US Congressman Dennis Kucinich (who ran for president) pushed the idea of reform of our debt-based monetary system on Fox News earlier this week.

    This is excellent. The video is here: -

    http://www.economics...y-reform-on-fox

    Edited by PersianPaladin
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    Posted
  • Location: 4 miles north of Durham City
  • Location: 4 miles north of Durham City

    HYDERABAD: Expressing helplessness over power cuts and shortage of supply, Chief Minister K Rosaiah said in the present scenario, it is inevitable to impose restrictions.

    http://www.expressbu...v7MFxnS0yZ7ng==

    Can the Indian economy keep growing given the fuel situation? Expect smaller levels of growth as the contraction in activity continues.

    An Observer investigation reveals how rich countries faced by a global food shortage now farm an area double the size of the UK to guarantee supplies for their citizens

    http://www.guardian....frica-land-grab

    The food situation isn't great either.

    Edited by PersianPaladin
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    Posted
  • Location: Dorset
  • Location: Dorset

    The biggest story of the last week or two (economical wise) has to be Google/China IMO.

    This could well be a underplay of the great economic struggle of the next 2 decades and it's interesting to see how the US administration(See Google) plays against the Chinese government.

    Alot of interesting little insights so far.

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    Posted
  • Location: Rochester, Kent
  • Location: Rochester, Kent

    Greece is set to contract 2% this year, here.

    This news can only hasten the (potential) Greek default since it's interest rates that it pays on it's debt will have to increase, and it won't be able to raise money on the bond market, either.

    Meanwhile China looks set to carry on accumulating commodity metals since their price collapse last year on the evidence that LME stocks in Cu are low (this may be a fair-weather signal that demand outside China for construction materials is now increasing) However, the USD strengthening relative to GBP and EUR, is spooking the field since commodity metals are priced in USD.

    Cu prices seem to be stable for the time being after recently soaring to over £5k/t, but accumulated stock piles in both US and China could flood the market and prices could collapse but gains and/or losses are likely to be related to currency fluctuations rather than increase/decrease in supply or demand.

    If Greece default expect GBP to head to parity against USD, and watch LME Cu prices soar accordingly - any more Greek default signals must mean that speculation, once again, in the commodity metals markets, will become rife - with a knock on potential to short US Treasury Bonds on the premise that the USD is overvalued rather than GBP/EUR being undervalued.

    Edited by VillagePlank
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    Posted
  • Location: Dorset
  • Location: Dorset

    Washington is not happy with China atm

    The fixed rate and undervaluation off the Yuan, the lack of freedom and independency and freedom for US firms in China(which prevents them from competing successfully), the bullying legal tactics used, see the Rio Tinto Employees in China, when somebody says no. The availability of cheap money from the Chinese Government to buy Non-Chinese firms, the list is pretty endless.

    Democrats in particular see this as a major problem, which is costing US jobs and is preventing the US from closing the trade gap with China.

    Longer Term there is a realisation that the major inbalances need to be corrected so that China's asset booms don't infect the world.

    Anyway, open protectionism is out of the question, so we come to Google. The Theory seems to be lets encourage US companies in China to flex, make china out as the baddies (easy as they are really) if the world sees that US firms cannot compete in China we they can start to prevent Chinese companies competing in the US.

    China really needs to play this carefully as there is alot at stake, it has few friends in Asia or any of the markets for it's exports and due to its size and strength won't be able to get away with things for much longer.

    Re the above VP, the USD is overvalued IMO, but most largely against the Yuan, since the Yuan is pegged against the dollar any depreciation of the USD is a worldwide depreciation of the Yuan currently, brake the bond and let the currencies settle for the benefit of everyone, not that you can personally of course. !

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    Posted
  • Location: 4 miles north of Durham City
  • Location: 4 miles north of Durham City

    The economics of peak oil are explicated using three indicative models: linear decline; oscillating decline; and systemic collapse. While these models are not to be considered as mutually exclusive, a case is made that our civilisation is close to a critical transition, or collapse. A series of integrated collapse mechanisms are described and are argued to be necessary. The principle driving mechanisms are re-enforcing (positive) feedbacks:

    • A decline in energy flows will reduce global economic production; reduced global production will undermine our ability to produce, trade, and use energy; which will further decrease economic production.

    • Credit forms the basis of our monetary system, and is the unifying embedded structure of the global economy. In a growing economy debt and interest can be repaid, in a declining economy not even the principle can be paid back. In other words, reduced energy flows cannot maintain the economic production to service debt. Real debt outstanding in the world is not repayable, new credit will almost vanish.

    • Our localized needs and welfare have become ever-more dependent upon hyper-integrated globalised supply-chains. One pillar of their system-wide functioning is monetary confidence and bank intermediation. Money in our economies is backed by debt and holds no intrinsic value; deflation and hyper-inflation risks will make monetary stability impossible to maintain. In addition, the banking system as a whole must become insolvent as their assets (loans) cannot be realised, they are also at risk from failing infrastructure.

    • A failure of this pillar will collapse world trade. Our 'local' globalised economies will fracture for there is virtually nothing produced in developed countries that can be considered truly indigenous. The more complex the systems and inputs we rely upon, the more globalised they are, and the more we are at risk from a complete systemic collapse.

    Source: -

    http://www.theoildrum.com/node/6309

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    Posted
  • Location: Christchurch, New Zealand
  • Location: Christchurch, New Zealand

    It is looking increasingly likely that Greece is about to implode financial. That has the potential to bring down the Euro. Could it happen during the UK election? It should make the outcome very interesting.

    http://www.zerohedge...urope-warns-civ

    John Taylor of the world's largest currency hedge fund FX Concepts, whom we recently presented as opining that the Euro would drop to $1.20, is pretty much certain what the final outcome from the events in Europe will be: "The powerful elite political forces, and their co-opted market allies, involved in this fanciful decision-making can not control the economic reality that will eventually destroy Greece and Europe."

    Edited by Scarf-Carrot-Coal
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    Posted
  • Location: 4 miles north of Durham City
  • Location: 4 miles north of Durham City

    It is looking increasingly likely that Greece is about to implode financial. That has the potential to bring down the Euro. Could it happen during the UK election? It should make the outcome very interesting.

    http://www.zerohedge...urope-warns-civ

    John Taylor of the world's largest currency hedge fund FX Concepts, whom we recently presented as opining that the Euro would drop to $1.20, is pretty much certain what the final outcome from the events in Europe will be: "The powerful elite political forces, and their co-opted market allies, involved in this fanciful decision-making can not control the economic reality that will eventually destroy Greece and Europe."

    A bit of an early call, but I think he's dead on.

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    Posted
  • Location: Dorset
  • Location: Dorset

    Not been around much recently, but the downgrading of the Greek government debt brought me out of hiding.

    Estimates are roughly 50% that Greece will officially default on it's debt. This doesn't mean that everybody losses their Money (France and Germany that have approx 70% of Greek Government debt).

    Instead the official default will likely come as a suspension of debt repayments or at the bare minimum a suspension of interest payments on the bonds.

    Longer term the question remains over whether or not Greece stays as part of the Euro, approx 5-10% chance that is will come out. Not very likely IMO.

    The real problems come with the rest of the PIGS, will they do a similar thing ?.

    Looking at the wider picture across all the developed nations, government debt of the developed world is due to hit 100% of GDP this year. This is considerably up on the last 50 years and is the highest it's ever been, this is unsustainable and a correction of developed world living standards is inevitable.

    However not to be doom and gloom I don't subscribe to peak oil, this just isn't the way that markets work. Markets through the price mechanism will match supply to demand albeit sometimes in an artificial way.

    There is no doom and gloom for the economy over the next 20 years just a continued movement of economic power which has happened countless times over the last 200 years and will always happen.

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    Posted
  • Location: Tunbridge Wells, Kent
  • Location: Tunbridge Wells, Kent

    It would be in the interests of Greece's economy to withdraw from the Euro but the political will is strongly against this given that a Greek withdrawal would probably spell the end of the Euro as Spain, Portugal and Italy would surely follow.

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    Posted
  • Location: Christchurch, New Zealand
  • Location: Christchurch, New Zealand

    It would be in the interests of Greece's economy to withdraw from the Euro but the political will is strongly against this given that a Greek withdrawal would probably spell the end of the Euro as Spain, Portugal and Italy would surely follow.

    The first country that pulls out of the Euro and re-issues its old currency will come off best. However, this will mean the countries still left with the euro will implode. It doesn't look good.

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    Posted
  • Location: 4 miles north of Durham City
  • Location: 4 miles north of Durham City

    Not been around much recently, but the downgrading of the Greek government debt brought me out of hiding.

    Estimates are roughly 50% that Greece will officially default on it's debt. This doesn't mean that everybody losses their Money (France and Germany that have approx 70% of Greek Government debt).

    Instead the official default will likely come as a suspension of debt repayments or at the bare minimum a suspension of interest payments on the bonds.

    Longer term the question remains over whether or not Greece stays as part of the Euro, approx 5-10% chance that is will come out. Not very likely IMO.

    The real problems come with the rest of the PIGS, will they do a similar thing ?.

    Looking at the wider picture across all the developed nations, government debt of the developed world is due to hit 100% of GDP this year. This is considerably up on the last 50 years and is the highest it's ever been, this is unsustainable and a correction of developed world living standards is inevitable.

    However not to be doom and gloom I don't subscribe to peak oil, this just isn't the way that markets work. Markets through the price mechanism will match supply to demand albeit sometimes in an artificial way.

    There is no doom and gloom for the economy over the next 20 years just a continued movement of economic power which has happened countless times over the last 200 years and will always happen.

    Cheap oil will not come out of the ground for much longer. That is essentially what Peak Oil means. It doesn't mean that there won't be any more oil in the ground, it just means that it will be far more expensive to extract regardless of technological improvements (which are in turn dependent on primary energy). This all has ramifications for economic growth. I actually think we are facing the bumpy plateau: -

    http://peakoilentrep...e-bumpy-plateau

    Oil reserves exaggerated by one-third: -

    http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7500669/Oil-reserves-exaggerated-by-one-third.html

    Edited by PersianPaladin
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    Posted
  • Location: 4 miles north of Durham City
  • Location: 4 miles north of Durham City

    Government debt in Greece is just the first in a series of European debt bombs that are set to explode. The mortgage debts in post-Soviet economies and Iceland are more explosive. Although these countries are not in the Eurozone, most of their debts are denominated in euros. Some 87% of Latvia's debts are in euros or other foreign currencies, and are owed mainly to Swedish banks, while Hungary and Romania owe euro-debts mainly to Austrian banks. So their government borrowing by non-euro members has been to support exchange rates to pay these private sector debts to foreign banks, not to finance a domestic budget deficit as in Greece.

    http://neweconomicpe...-debt-wars.html

    I particularly like this quote from Professor Hudson: -

    Gordon Brown already has shown his colors in his threats against Iceland to illegally and improperly use the IMF as a collection agent for debts that Iceland doesn't legally owe, and to blackball Icelandic membership in the EU.

    Confronted with Mr. Brown's bullying – and that of Britain's Dutch poodles – 97% of Icelandic voters opposed the debt settlement that Britain and the Netherlands sought to force down the throat of Althing members last month. This high a vote has not been seen in the world since the old Stalinist era. It is only a foretaste

    Edited by PersianPaladin
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    Posted
  • Location: Dorset
  • Location: Dorset

    Thanks PP I am aware of peak oil, it essentially refers to the peak in the amount of oil supply, the key to whether or not peak oil is reached is the global economies ability to pay market price for the oil as determined by the supply/demand price mechanism. If we are prepared to buy oil at $120 for example then this makes the extra supply feasible from a price perspective.

    Deep sea oil drilling of oil is getting more advanced by the decade, we are currently drilling and building platforms that 20 years ago wouldn't have been dreamed of.

    The explosion of electric/hybrid cars over the next decade, coupled with a new build of next generation nuclear power stations in the west will greatly help to dampen demand in the longer term.

    The OPEC countries know this which is why Saudi for example are limiting the amount of extra supply they want to produce long term 5+ years even though they have the resources to up it.

    Re Europe, Greece would be mad to leave the Euro by it's own accord. It would have to be forced out by the other members.

    By and Large the Ex-Soviet countries have done better out of this recession than many had though IMO, Poland is doing OK now, C and S not too bad, The Baltics have had a torrid time with an over inflated Construction boom with house prices falling over 50% in places. However the fall has happened and has happened quickly. The Bad debts have been realised and written down and a much slower, lower, steady improvement looks to be on the cards over the next few years.

    Unlike the UK they didn't have the money to try and prop things up and so reached a natural bottom much sooner(and more painfully probably).

    A big concern for the western world looks to be inflation again !.

    During a recession extra capacity is created in an economy by making people redundent and reducing production below the level that can be maintained without the increase in investment of fixed costs such as a new factory. This extra capacity increased the growth rate that can be reached without triggering internal inflation.

    A few big IF's coming up, but IF the western world is growing again and IF we continue our consumer growth without investment then inflation is the result, with the countries that devalue the most prone. Unlike other recessions we don't have the extra capacity IMO.

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    Posted
  • Location: 4 miles north of Durham City
  • Location: 4 miles north of Durham City

    Thanks PP I am aware of peak oil, it essentially refers to the peak in the amount of oil supply, the key to whether or not peak oil is reached is the global economies ability to pay market price for the oil as determined by the supply/demand price mechanism. If we are prepared to buy oil at $120 for example then this makes the extra supply feasible from a price perspective.

    Deep sea oil drilling of oil is getting more advanced by the decade, we are currently drilling and building platforms that 20 years ago wouldn't have been dreamed of.

    The explosion of electric/hybrid cars over the next decade, coupled with a new build of next generation nuclear power stations in the west will greatly help to dampen demand in the longer term.

    The OPEC countries know this which is why Saudi for example are limiting the amount of extra supply they want to produce long term 5+ years even though they have the resources to up it.

    Despite all technological increases; the North Sea oil supply of easy-to-extract crude has depleted. The costs and the EROEI (Energy Return On Energy Invested) are going to rise regardless. Saudi Arabia has most likely past its peak since the largest field there (Ghawar) has reduced its output steadily over the years and with greater investment in offshore. People like Richard Heinberg and Dr. Colin Campbell have essentially stated that we need a Saudi Arabia's worth of oil supply every 4 years to offset decline. Such replacements are not in the pipeline (excuse the pun).

    Things like natural gas and coal and nuclear are not going to replace oil without a large contraction in economic growth. That is inevitable. There are shortages in natural gas particularly in the USA, and global coal and uranium supplies are under great strain. I am interested in how feasible electric-cars could actually be, given that they will need to be based on a totally different engine and lithium-batteries (of which materials require oil to manufacture and lithium is in short supply and mostly dependent on mining in South America). I think bio-methane or biogas would be better for cars - but even here, we will never ever produce as much output as the fossil fuel age.

    Having said that; with enough sense and a careful transition we should be able to avoid a total disaster at least in Europe. It is depressing how much of the worlds' food and material systems are dependent on oil (including things like pesticides).

    The drop in demand is a reflection of the increased price that arises from constrained supply of cheap fossil fuels. Less people will be able to afford to pay for higher oil prices, thus impacting the extent of economic growth. The price then comes down as a response to lower demand, demand slightly increases thereafter in response (albeit high debt to GDP ratios impair it) which is then met with another price-spike as the supply constraints are met again. That is essentially what the Peak Oil bumpy-plateau means. There are other things to be factored in such as speculation, etc.

    I'm pretty convinced that the leverage-fraud and bailout bubbles were an attempt to create demand-destruction in order to reduce the intensity of the coming peaks in the bumpy plateau: -

    http://peakoilentrepreneur .com/the-bumpy-plateau

    The attempt, however, has not been particularly successful in terms of oil consumption (except for a brief window of a few months heading into 2009 which may have been critical for certain US operations). Economists like Jeff Rubin even think $225 barrel is on the cards by 2012: -

    http://www.heatingoi...bal-economy201/

    I personally don't think oil will reach $225 a barrel for the reasons that Dr. Colin Campbell articulates: - http://www.reuters.com/article/idUSTRE63539420100406

    Its a complex area though, that is for sure.

    Edited by PersianPaladin
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    Posted
  • Location: Dorset
  • Location: Dorset

    Topically the US Pentagon has just come out to say that we only have 2 more years before oil supply will nolonger really meet demand.

    I think the £2 a litre mark is probably only 24-36 months away and people should really be adopting to that now.

    Equally those with oil fired heating might want to consider changing to GAS or Electric, I will looking into it.

    Good news for Greece on the debt front in that it managed to sell it's 12 month rolling debt paying an interest rate of 4.5%.

    Quite why they are only selling the debt for in a 12 month bond is beyond me...Short termism of the worst kind.

    The key with Greece isn't how much money Germany and France are prepared to lend them(at still a high interest rate), it's whether or not they can reduce the debt they are in. We all know that your financial situation only gets better when you get more money in than you spend, Greece has yet to demonstrate this, I think we have to wait until next months report on the greek finances.

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