VACACIONES OCTUBRE 2016 ( CLICK ON LINK)
Up and Down Wall Street
The Danger From Deutsche Bank
By roiling the markets, it and other European financial institutions could push up rates, hurting the global economy.
By Randall W. Forsyth
What’s German for “too big to fail?”
There probably is some “alphabetic procession,” as Mark Twain described the multisyllabic monstrosities of mashed-up German words in his musings on “The Awful German Language,” to describe the status of the world’s biggest financial institutions. Perhaps even worse are the linguistic proclivities of 21st century bureaucrats, who have dubbed them G-SIBs, for globally systemically important banks.
Either in German or government-speak, too big to fail is how to describe Deutsche Bank, and that would be true even if didn’t share its name with its fatherland. But worries on that score, which had been a low rumble for months, have erupted in recent weeks. And recalling another of Twain’s aphorisms, history seemed to rhyme, if not repeat.
Deutsche Bank’s equity (ticker: DB for its American depository receipts) and debt securities plunged last week, amid reports that hedge funds had withdrawn money held as collateral at the bank for their derivatives transactions and other positions. That recalled the exodus by hedge funds from Lehman Brothers shortly before its collapse almost exactly eight years ago.
The storm had been brewing since the U.S. Justice Department was reported in mid-September to be seeking a $14 billion penalty for Deutsche Bank’s alleged transgressions in the mortgage bubble and bust. That brought a denial from Angela Merkel’s government that a bailout of the bank was contemplated. Given the long record of pronouncements in previous crises that there was no chance of an action—followed often by a bailout—markets heard the rhyme of Lehman’s history.
Friday brought some relief, however, as Deutsche’s chief, John Cryan, sent a message to his troops that the bank had “strong fundamentals” and that reports of hedge funds’ collateral withdrawals had aroused “unjustified concerns.” Perhaps even more importantly, an Agence France Presse story on Friday said the bank is close to settling with the DOJ for $5.4 billion—more than 60% less than the $14 billion penalty leaked earlier in reports. (Where did the latter number come from? There seems a coincidental symmetry with the 13 billion euro [$14.6 billion] tax bill the European Union sent to Apple [AAPL] in late August, which CEO Tim Cook described in straightforward English as “total political crap.”)
Coincidences abound in the whole Deutsche episode, which sent the bank’s shares tumbling to lows not seen in decades and yields on its bonds and the cost of insuring its debt soaring. It is an ill wind that blows no good, however. The Wall Street Journal reported on Friday that some hedge funds had handsomely profited by shorting Deutsche stock—including some of the very ones that were said to have yanked their collateral, news of which helped propel the stock lower. Another coincidence, no doubt.
Failure of Deutsche was never an option. As for the $14 billion supposedly sought by the DOJ, that number isn’t realistic. “U.S. regulators want to squeeze as much out of DB as they can, but it would make no sense for them to push DB into a capital crisis in the process of doing so, and no sense for DB to agree to such terms,” writes Kathleen Shanley of the razor-sharp and fiercely independent Gimme Credit.
That doesn’t mean investors in Deutsche Bank’s securities are off the hook. Its stock market capitalization totaled about $18.1 billion, even after a sharp 14% rebound on Friday, which no doubt was assisted by short-covering. Whatever the impetus, the pop in DB managed to push its market value above “troubled Twitter,” to about $16.3 billion, according to the ever-ebullient, if not bullish, Doug Kass, head of Seabreeze Partners.
Before the end-of-week rally, Deutsche’s common stock traded for around a quarter of its book value, weighed down by the market’s massive haircut from the stated value of its assets, as well as the uncertainty about how many pounds of flesh could be extracted by regulators.
That isn’t all. “The elephant in the room is DB’s $60 trillion derivatives book,” writes Michael Lewitt, editor of the Credit Strategist letter. This sum represents the gross exposure of the bank’s contracts, many of which are long positions that would be offset by short exposures, resulting in a much smaller net position. That’s in a perfect world, he contends. If, in a financial crisis, counterparties can’t meet their obligations, this netting of positions won’t occur. In any case, “DB’s net exposures are sufficiently large to blow up the financial system,” Lewitt warns.
The deep discount to book also reflects the potential for a highly dilutive capital issuance. In catch-22 fashion, that in turn makes it harder to raise needed equity to bolster the balance sheet. And politics also preclude a bailout. Germany, which has mandated austerity for other euro-zone countries, would find it difficult to bail out its biggest banks, Gimme Credit’s Shanley observes. All of these complications come back to the simple fact that, eight years after the financial crisis, some institutions remain too big to fail. Which also suggests that they’re too big to bail out.
ALL OF THIS STUFF ABOUT big European banks and their derivatives exposure would seem rather foreign back in the U.S.A., outside the leafy enclaves of Connecticut, where many hedge funds reside (and some of the biggest suckle on the public teat of taxpayer subsidies). But some U.S. homeowners stand to pay for the market roilings caused by Deutsche and other big, financially stressed European banks.
“Dollar funding stress is back,” according to Citigroup’s money-market research team. The negative headlines last week sharply pushed up European banks’ funding costs, resulting in the highest spike in dollar borrowings from the European Central Bank since the European crisis of 2012-13, they write.
To be sure, U.S. money-fund reforms set to take effect in mid-October have helped to push up short-term rates, notably the benchmark London interbank offered rate, as I’ve written previously (“Is the Market Doing Yellen’s Dirty Work?” Aug. 10). Libor is the base rate for many U.S. loans, including some home mortgages. Three-month Libor has risen by more than 50 basis points (one-half of a percentage point) over the past year, to 0.8456%, while the Fed has boosted its federal-funds target range just 25 basis points, to 0.25-0.5%.
That’s real dollars and cents for U.S. homeowners. In a commentary, David Kotok of Cumberland Advisors quotes Madeline Schnapp, whom he describes as a “superb economist and researcher of the housing market in the West”:
Taking a $700,000 adjustable-rate mortgage tied to Libor, a 25-basis-point rise in the loan rate to 3.5% from 3.25% would increase the monthly payment about $100, to $3,150, which would be “tolerable.” But if Libor jumps to 1.5%, the resulting rise in the adjustable rate mortgage to 4.25% would boost the monthly payment to around $3,500. “Yikes!” she writes. As for loans that were as much as 97% of the original purchase price, what happens to high-priced San Francisco Bay Area properties bought on that kind of shoestring?
She notes that sales there have been trending lower, on a year-over-year basis. And prices have rolled over in two Bay Area counties, with a third county flat, “suggesting that we may be at or near a top,” she adds. One month doesn’t make a trend, but back East, there also are well-advertised toppy signs at the high end.
If the rise in Libor impinges on the housing market, the Federal Reserve would have another reason to go slow on further rate hikes. A rate increase in December has a 59% probability, based on Bloomberg’s data on fed-funds futures. But odds are against a further boost in 2017.
Indeed, the probability of the Fed’s target range remaining at the current 0.25%-0.5% are roughly equal to the chance of it hitting 0.75%-1%.
OCTOBER MEANS POSTSEASON BASEBALL and stock market volatility. To show that anything could happen on either score, this year could see a once-improbable matchup of the Boston Red Sox and the Chicago Cubs.
October has a fearsome reputation for stock investors from the crashes of 1929 and 1987, but, according to the Stock Trader’s Almanac by Jeffrey and Yale Hirsch, the month actually is a “bear killer.” October “turned the tide in 12 post–World War II bear markets: 1946, 1957, 1960, 1962, 1974, 1987, 1990, 1998, 2001, 2002, and 2011.” But the best Octobers followed horrid Septembers. The month just concluded managed to end basically flat on the S&P 500, with the boost from a nice 0.8% gain on Friday.
There is one important exception the Hirsches note: October is the worst month in election years, according to their records, which date back to 1950. The S&P 500 averages a 0.7% decline and the Dow industrials average a 0.8% decline. But the more-volatile Nasdaq and Russell 2000 small-cap index do appreciably worse, with average setbacks of 2.1% and 2.6%, respectively.
Of course, nothing is average about this election year. Despite the risk of negative market reactions to political surprises leading up to the Nov. 8 election, Barclays ’ strategists don’t profess worry. If the financial and economic backdrop “is supportive of greed, rather than fear, the markets are unlikely to adopt worst-case interpretations of political events—the reaction to Brexit being a case in point,” they comment.
The S&P 500 gained some 3.3% for the third quarter in the wake of the United Kingdom’s vote to leave the European Union. That was bolstered by the Fed remaining on hold and the Bank of England easing. Central banks, rather than politics, seem the more reliable backstop for the markets.
Macri pushes at Argentina’s closed door
At the end of the world, as Argentines call their southernmost province of Tierra del Fuego, a heavily subsidised industrial hub has managed to survive as what must be one of the most dysfunctional business models on the continent.
“In the assembly plants of Tierra del Fuego, often the only thing that is Argentine is the packaging, the manuals and perhaps the odd wire. Ninety per cent of the inputs come from abroad. That has to change,” says Miguel Ponce, a former undersecretary for industry and trade.
The tax-free zone on the desolate archipelago 500 miles from Antarctica, where goods cost two to three times what they do in neighbouring countries, is only the most egregious example of a business culture in Argentina that is often more reliant on protectionism than entrepreneurial vigour.
In a push to prove to the world that his country is “open for business”, Argentina’s investor-friendly president Mauricio Macri last week held a business forum that saw almost 2,000 international and local executives descend on Buenos Aires.
Offering them some $240bn of investment opportunities in sectors such as infrastructure, energy and mining, Mr Macri hopes that increased investment and competition will help to revitalise corporate culture in Argentina’s stagnant economy.
“We have to let some of the old business people die off so that new ones can emerge,” said Gustavo Grobocopatel, an Argentine farmer who reviles Argentina’s business class as a cadre of cliquey and oligopolistic companies that is more at home lobbying politicians than competing on an international stage.
In a country where populism has thrived in recent decades, the sweeping changes to Argentine politics represented by Mr Macri’s election last year contrasts starkly with ingrained business practices that Mr Ponce likens to “hunting in the zoo”.
“Argentina needs a new business class that is more conscious of its country, and which thinks about the long term,” says Martin Migoya, chief executive of software company Globant, one of Latin America’s six “unicorns”, tech start-ups now worth over $1bn, four of which are from Argentina.
“For 50 years Argentina did not create great companies,” he added, likening the traditional Argentine executive’s attitudes to those of a small-time street vendor.
Despite the emergence of innovative and fiercely competitive companies such as Globant, many local businesses remain hesitant to invest in the new Argentina. “Some patience is required . . . for mindsets to change,” said Peter Orszag, vice-chairman of investment banking at Lazard, who flew in from New York to attend Argentina’s “mini-Davos”.
Persistent economic crises have only worsened the problem posed by Argentina’s cosseted business class. “For decades many Argentine companies were more worried about immediate issues affecting them over the next two or three months, rather than years,” said Sergio Kaufman, who runs Accenture’s operations in Argentina. “Argentina has been stuck in a very closed model that looks more like something out of the 1950s or 1970s, when we really need to be thinking about 2050 or 2070,” he added.
But Argentina’s struggle to boost competitiveness and productivity are not just the fault of companies themselves, argues Ignacio Stegmann, the president of IDEA, a business forum. He points out that there are serious problems in the country’s infrastructure, tax system and bureaucracy that also pose problems.
Even so, both business and union leaders in Argentina are “behind the times”, insists Mr Ponce. “There is still no understanding of the importance of integrating into value chains.
Often the world is seen as more of a threat than an opportunity,” he says.
Opposition lawmaker and presidential hopeful, Sergio Massa, even proposed suspending imports for four months to defend local producers and jobs that are suffering from an “uncontrolled” rise in imports since the new government took power — even though almost 90 per cent of imports are used as inputs. Some observers have interpreted the move by Mr Massa, who until now has been supportive of most government policies, as early manoeuvring ahead of midterm elections next year.
Nevertheless, Mr Kaufman is optimistic. While he argues that Mr Macri’s electoral term of four years will not be enough to ensure lasting change, he says there is now broad consensus among mainstream politicians about the direction the country must take, despite day-to-day bickering. “The waves may look big and choppy, but that’s just on the surface. The deeper currents are strong and more aligned.”
The Next Financial Crisis Will Come from Europe!
A Cake-Eaters Paradise
By: Captain Hook
Thing about it is, once people have something they feel loss if they lose it, so they fight like hell to keep things they like - especially free money. And as alluded to above, bankers, politicians, and oligarchs are amongst the most desperate in this regard, which is why they will do anything, and have their dogs do despicable acts (like war), to keep the free money party going.
And make no mistake; money for these types is in fact free now. (i.e. ZIRP, NIRP, etc.) If the public wants to borrow money, they must still pay premiums to the ruling class (the characters mentioned above), however if you roll in the 'right circles', the money is free and it's unlimited - or is it? If this is true, why then does the money printing need to be sterilized? Why does the Fed pay the commercial banks for keeping their reserves on deposit when they could theoretically make more by lending it out to the public?
The answer to this question is found in the money multipliers. If the banks allow the public access to all that money, they will spend it, and then the money multipliers will turn positive, and then prices will start rising, and accelerating inflation would take hold. And this would be bad for the economy in a world with increasingly infinite resources, which is why the powers that be are being so sticky about letting any of this money out to the public. No, they would rather issue unlimited currency to themselves, buy up everything, and put everybody else on welfare because the 'capital markets' will be preserved in the absence of accelerating inflation, which of course could lead to some degree of hyperinflation under the right circumstances - circumstances involving out of control cake eating bureaucrats who don't understand what's really going on.
Enter the growing chorus (see here, here, and here) of just such people into the game now, where because economies are stalling all over the world, something needs to be done right? And since money printing has worked so well for the ruling classes, it makes perfect sense that by giving a little to the plebs, things should work out swimmingly here as well - right? This is of course why we have increasing calls for helicopter money and QE for the people, because the more loose minded (cake eating) members of the ruling classes are getting desperate to hold onto their power, and are will take a chance. In this regard, if the monthly chart of the Dow / CRB Ratio below has any predictive value, while stocks may still have further to go on the upside with Hillary still in the race for the White House, still, profound Fibonacci resonance related resistance is approaching, where a reversal lower would be an 'inflation signal'. (See Figure 1)
So you see, whether it be under Hillary's or Trumps watch in coming years (although it's difficult seeing Hillary making much beyond the election given her health), it won't matter, the people will rebel if they are excluded from the free money party much longer, meaning some version / combination of conventional QE, QE for the people, or helicopter money is on its way.
That's what the party in precious metals has been telling us all year now, given a correction is presently in the works, evidenced in the turn higher in stocks to precious metal ratios, with a monthly plot of the Dow / XAU Ratio shown below. As you can see the rally last week has held the ratio below the large round number at 200 so far, but don't be fooled by that, as it's still most likely on its way to a 38.2% retracement when the dollar($) turns back up. (See Figure 2)
Why would the $ turn higher with the economy in the States looking like it's ready to roll over?
Doesn't this mean currency debasement rates would accelerate under such conditions, sending the $ lower? Yes, that's true - but that's true for everybody, which would not necessarily affect the $ adversely. No, the thing to keep your eye on is the US election. As discussed previously, if it becomes apparent Hillary won't make it through the election, all that status quo money that being used to prop stocks will want to come out all at the same time because of the uncertainty associated with not knowing what Trump will do if he wins - and the stock market would have a problem in October. This would send the $ higher and precious metals lower temporarily - at least until they see that Trump's plans would be no worse than the status quo's as far as money printing goes. (i.e. because it would take a great deal of money printing to fulfill all his promises.) (See Figure 3)
Just to be clear then, what we see happening in the coming weeks and months is this: 1) Precious metals enjoying buoyancy until options expiry on the 16th at the outside, and then another round of more intense selling due to a $ rally associated with general equity weakness as a result of status quo players abandoning stocks as soon as it becomes accepted Hillary's White House chances are a joke short of completely rigged ballots. That is to say, they would be rigged anyway, but Trump would still win due to a landslide; 2) October could be one of the worst month's in stock market history, rivaling 1987, which is the only way precious metals would decline given the backdrop, because of panic associated with liquidity conditions and deleveraging. (i.e. margin debt is close to the highs.)
So bottom line, while nobody knows the future, if the last two weeks of September and October are as bad as possible, an unexpected outcome in precious metals could be the result.
To counter this thinking then, and to give you an alternate (but less likely) view, if the correction in precious metals continues unabated into mid September, this would likely mark the end of the move, creating a very attractive buying opportunity. Again however, if on the other hand, precious metals (especially the shares) rally into mid-month (think options expiry on the 16th), then the bottom in the correction will likely not be seen until next month - seasonal strength patterns be damned. And it just so happens open interest put / call ratios (true sentiment) partially support this view, with the ratios for NUGT, JNUG, GLDX and others (see here) allowing for robust bounces into expiry, given if the ratio for GDX (in particular because its so big) doesn't rise with prices (why would it if precious metals are a 'no-brainer' and hedgers are exhausted), then any strength running into the 16th should be muted.
Further supporting a still cautionary view on expected outcomes for precious metal shares moving forward, we have the fact precious metal indexes put in monthly outside down reversals in August (see Figure 3 above), heavily bolstering the propensity for further weakness at some point in September, at a minimum. Again, it's the same story. To an extent, liquidity is everything in financial markets. So, no matter the 'fundamentals', once the hedge funds start selling uncontrollably, nothing, I mean nothing, will survive such an on slot. Everything would be affected, where the margin clerks would force those off side to literally throw the baby out of the kitchen window with the bathwater.
Thing is, hedge funds have never been more long silver. They are at a record in spite of open interest backing off some 35,000 contracts over the past month or so. So the set-up for an unscheduled liquidation by these idiots has also never been higher correspondingly.
I cannot stress the above understanding enough given the present set-up. Never has there ever been such a set-up - so be careful. If you think the status quo boys and girls are infallible you're not thinking, not to mention they will keep pushing right to the end. Therein, if stocks / precious metal shares remain firm into options expiry mid-month and things keep getting worse for Hillary, like she stops making public appearances completely, assume the worst. And again, while core positions are mandatory of course, don't assume precious metal shares would survive a market wide panic with margin debt levels where they are.
While such concerns might obviously prove unfounded in the end, again, there's never been a set-up like this one, so just be aware.
See you next time.
The Coming Confrontation with North Korea
Richard N. Haass
A clear message that central banks are not all-powerful
Credibility is mostly about managing expectations, writes Eswar Prasad
by: Eswar Prasad
But the result has been as much confusion as clarity. Transparency has fed the belief that central banks control the destinies of economies and financial markets, and that there is a clear mapping between monetary policy decisions and economic outcomes, and vice versa.
The financial crisis and its aftermath entrenched this myth. The actions of the Fed and other major central banks prevented financial and economic implosions. Central banks have since tried almost single-handedly to prop up economic growth, fend off deflation and maintain financial stability.
The notion that central banks are economic saviours has taken hold. So when reality falls short of this exalted ideal, central bankers face opprobrium.
At a time of heightened economic uncertainty, financial markets look to central banks for certainty. The challenge for central bankers is to provide as much information as they can, but not set up unrealistic expectations about what they know and can deliver.
Central banks in emerging markets face heightened challenges. They have less credibility and little margin for error. In August 2015, China’s central bank freed up the renminbi to allow market forces a greater role in determining its exchange rate. This move unleashed mayhem in currency and stock markets worldwide. A press conference was held two days after the policy shift, a lifetime in financial markets. In the interim, markets assumed the worst.
Clearly, effective and timely communication is important. Sometimes, it can even substitute for action. But too much transparency has its own risks. Markets can create a one-way bet in currency or bond markets, complicating an already complex juggling act among multiple objectives. To prevent its currency’s value from plummeting, a central bank has two options — raise interest rates or use foreign exchange reserves to support the currency.
Just the notion that the central bank might raise interest rates aggressively, at least briefly, in order to protect the currency helps fend off speculators. As a respected emerging market central banker once told me, some “creative ambiguity” about the central bank’s policy reaction function generates room for manoeuvre.
The communication challenge becomes trickier when there is not a clear message. In the Fed’s case, ambiguous messages about the timing of the next rate rise reflect the ambiguity in economic signals. Low unemployment indicates a tight labour market but wage and inflation data suggest otherwise.
Central bankers must not pay undue heed to media narratives, which are often dominated by the short-term horizons of bond traders, hedge funders and investment managers. It is of far greater consequence whether a central bank ensures price and financial stability over the longer horizons that affect ordinary peoples’ lives.
Getting communication right is one of the biggest challenges for central bankers. For it affects both their credibility and effectiveness, which are as much about managing expectations as about direct effects on the economy and financial markets. The right approach may be to clarify where central banks plan to take the economy, but not exactly about how they plan to get there.
The writer is a professor at Cornell University and senior fellow at Brookings
Going the Way of the Denarius
by Jeff Thomas
History repeats. (Or it rhymes, depending on your choice of words.)
Throughout history, there has been an extraordinary tendency for governments (and cultures) to follow similar paths. Even regarding eras thousands of years apart, we see people behaving in much the same way, over and over. This is particularly true in the case of “wrong moves.”
Over and over, people and their governments make the same mistakes, seemingly never learning from past errors.
Why should this be? In fact, how is this even possible? Surely, if a government in the 21st century were to make egregiously bad decisions, they are unlikely to be the same bad decisions that were made in, say, Rome, in the 4th century.
The reason, in two simple words, is “human nature.” Human nature remains the same throughout time. Two thousand years ago, governments were typically made up of egotistical, self-centred dictatorial types, who were far more concerned with their own power than in the general welfare of their people. Today, politics remains a magnet for such people. They therefore will revert to type when faced with the very same problems.
Should we cut spending to give the taxpayers a break? No, we should increase taxation and give more to ourselves.
If we spend more than we receive in taxes, should we cut back our expenditures, or should we go into debt? We’ll go into debt, and put the debt on the shoulders of the taxpayers.
If the debt grows to be beyond what can ever be repaid, should we cut back expenditures, or should we allow the economy to collapse? Well, we’re sorry to see the economy collapse, but rather than deny ourselves, get out the fiddle and let Rome burn.
The denarius was the coin of the realm during the centuries when Rome was a republic.
Although the gold solidus was used as a storage of wealth, the silver denarius was equal in value to a day’s wages for a common labourer and, as such, was more useful as the primary unit of exchange. During this time, it was a stable currency. However, as Rome turned into an empire, all that conquest in foreign lands became extremely costly and it was decided that one way to offset such costs was to devalue the denarius. Each successive emperor added a bit more base metal than the previous one and, by the time of Diocletian, there was no silver in the coin at all, only bronze.
During this same period, Rome experienced dramatic inflation – a predictable outcome when the coin of the realm is degraded. The population was in decline as well.
If this sounds familiar, it should. Modern governments have a tendency to make precisely the same mistakes with regard to currencies. First, empire-building drains the coffers to the point that maintaining a sound economy is no longer possible, then successive “emperors” make the decision to debase the currency in an effort to keep the party going a bit longer.
Of course, “inflating the problem away” never actually works. Just as Rome went into an irreversible decline, so the empire of today is self-destructing, due, in part, to monetary debasement.
So, is the present-day situation identical to fourth-century Rome? Well, not quite. It’s probably safe to say that, had Diocletian figured out that the coin of the realm could be done away with entirely; that is, had he realised he could replace it with paper notes with his picture on them, he might well have done so. Certainly, modern “emperors” have first created redeemable silver certificates, then subsequently supplanted those certificates with notes that were backed by nothing. (At least Diocletian issued bronze coins, whose value, whilst small, was at least real.)
But the modern-day monetary magician has one more rabbit left to pull out of the hat.
Those who believe that the dollar (as well as the euro and other fiat currencies) is on its last legs are inclined to say, “At least, after the collapse of the dollar, there will be no choice but to return to a gold standard. That will put an end to any inflation, plus put the world back on a solid monetary footing.” But this may be wishful thinking.
The U.S. Federal Reserve remains steadfast in its position that precious metals are a barbarous relic.
Certainly, from their point of view, this is true. After all, it’s difficult to fiddle with the value of gold, as it retains its intrinsic value. Two thousand years ago, the purchasing power of an ounce of gold was roughly what it is today. And, whilst the average person may prefer the stability of precious metals, governments have a strong dislike for the limitations that this places on them. Governments prefer to be able to fiddle with the value of currency for their own purposes just as the emperors of old did.
What I believe is most likely to occur as the dollar collapses is that the Federal Reserve will “come to the rescue” with a new currency. Not a paper one, that has obvious problems, but one that “solves all the problems of paper currency.” The new currency may well be more of a credit card – to be used for literally all monetary transactions. And the electronic currency will have an added feature (at least from the point of view of the government). Since it’s electronic, every time the user purchases so much as a candy bar, the purchase is registered in the government data centre. No monetary transaction of any kind can be made, except through the use of the card. (This latter requirement will no doubt be justified as being necessary to control terrorism.)
And the electronic dollar may only be the first of its kind. It should not be surprising if other governments see the benefit of an electronic currency as their sole form of currency and create their own.
So, does this mean that precious metals truly may become the barbarous relic, as governments tell us?
Not necessarily. After all, many countries have taken a painful hit as a result of the dollar being the world’s default currency. When the dollar crashes, they will take a further hit. They will not want to recreate that problem by allowing the U.S. to simply begin dealing in a new “ultra-fiat” currency.
Many of the world’s governments are stocking up on yellow metal like never before. It remains to be seen whether they, too, will create their own electronic currencies, whether they will switch to gold-backed currencies, or whether they will attempt a combination of the two.
If, in fact, electronic currency becomes the norm, of one thing we can be sure: The emperors will devalue it, as needed. It will, ultimately, fail and, perhaps sooner, perhaps later, the world will return to the barbarous relic as it has done countless times for the last 5,000 years. The only uncertainty will be when.
Les doy cordialmente la bienvenida a este Blog informativo con artículos, análisis y comentarios de publicaciones especializadas y especialmente seleccionadas, principalmente sobre temas económicos, financieros y políticos de actualidad, que esperamos y deseamos, sean de su máximo interés, utilidad y conveniencia.
Pensamos que solo comprendiendo cabalmente el presente, es que podemos proyectarnos acertadamente hacia el futuro.
Gonzalo Raffo de Lavalle
Las convicciones son mas peligrosos enemigos de la verdad que las mentiras.
Quien conoce su ignorancia revela la mas profunda sabiduría. Quien ignora su ignorancia vive en la mas profunda ilusión.
“There are decades when nothing happens and there are weeks when decades happen.”
Vladimir Ilyich Lenin
You only find out who is swimming naked when the tide goes out.
No soy alguien que sabe, sino alguien que busca.
Only Gold is money. Everything else is debt.
Las grandes almas tienen voluntades; las débiles tan solo deseos.
Quien no lo ha dado todo no ha dado nada.
History repeats itself, first as tragedy, second as farce.
We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.
Archivo del blog
- ► marzo (165)
- ► febrero (150)
- ► enero (170)
- ► diciembre (177)
- ► noviembre (196)
- VACACIONES OCTUBRE 2016
- THE DANGER FROM DEUTSCHE BANK / BARRON´S MAGAZINE
- MACRI PUSHES AT ARGENTINA´S CLOSED DOOR / THE FINA...
- THE NEXT FINANCIAL CRISIS WILL COME FROM EUROPE / ...
- A CAKE EATERS PARADISE / SAFE HAVEN
- THE COMING CONFRONTATION WITH NORTH KOREA / PROJEC...
- A CLEAR MESSAGE THAT CENTRAL BANKS ARE NOT ALL--PO...
- GOING THE WAY OF THE DENARIUS / CASEY RESEARCH INT...
- ▼ oct 05 (8)
- ► septiembre (182)
- ► agosto (205)
- ► julio (205)
- ► junio (199)
- ► mayo (194)
- ► abril (246)
- ► marzo (280)
- ► febrero (268)
- ► enero (245)
- ► diciembre (236)
- ► noviembre (233)
- ► octubre (137)
- ► septiembre (271)
- ► agosto (278)
- ► julio (269)
- ► junio (265)
- ► mayo (195)
- ► abril (252)
- ► marzo (279)
- ► febrero (256)
- ► enero (257)
- ► diciembre (223)
- ► noviembre (251)
- ► octubre (253)
- ► septiembre (103)
- ► agosto (165)
- ► julio (174)
- ► junio (182)
- ► mayo (159)
- ► abril (155)
- ► marzo (183)
- ► febrero (156)
- ► enero (143)
- ► diciembre (157)
- ► noviembre (181)
- ► octubre (174)
- ► septiembre (191)
- ► agosto (185)
- ► julio (184)
- ► junio (137)
- ► mayo (117)
- ► abril (167)
- ► marzo (166)
- ► febrero (136)
- ► enero (155)
- ► diciembre (163)
- ► noviembre (174)
- ► octubre (102)
- ► septiembre (188)
- ► agosto (171)
- ► julio (182)
- ► junio (182)
- ► mayo (107)
- ► abril (152)
- ► marzo (154)