Here's my summary of the key news overnight in (slightly more) than 90 seconds at 9 am, including news the European Central Bank (ECB) has finally unveiled its 'Big Bazooka' plan to try to solve the Euro-zone crisis.
ECB President Mario Draghi said the bank had agreed to his plan for unlimited buying of government bonds from those governments that sign up to 'strict conditionality' bailout plans. The ECB would then 'sterilise' the money printed to buy the bonds, addressing the concerns of those worried the programme known as 'Outright Monetary Transactions' would be inflationary.
This didn't stop Bundesbank President Jens Weidmann releasing a separate statement after the ECB decision saying he objected to the plan because it was "tantamount to financing governments by printing banknotes". However, the ECB essentially over-rode the Bundesbank's concerns, sidelining the biggest central bank in the Euro-zone. German Chancellor Angela Merkel had separately supported the plan. Germany's 'Die Welt' newspaper reported that: 'Financial Markets cheer the Death of the Bundesbank'
European stocks rose more than 3% and US stocks rose 2% to a fresh four year high. Gold rose to over US$1,700/oz and the New Zealand dollar rose in line with other 'risky' assets to be over 80.2 USc in morning trade. See more at Bloomberg.
See more on the ECB's plan here at Reuters, here at Bloomberg, here at The Telegraph and here at SpiegelOnline.
The ECB's plan is designed to lower bond yields for the likes of Spain and Italy and make their debts more sustainable. However, for the plan to go ahead, Spain or Italy have to ask for a bailout and agree to Greek-style austerity measures, including new tax increases and spending cuts.
This raises the risk that Southern Europe remains mired in a deleveraging spiral where governments cutting spending and increasing taxes succeed only in driving their economies deeper into recession, which increases the relative debt loads. It may avoid the immediate risk of a Euro-zone break up and financial meltdown, but sentences Europe to years of grinding austerity and perma-recession.
The ECB itself reinforced this outlook by forecasting a contraction in the Euro-zone economy in 2012, but also an increase in inflation as various nations push through increases in their sales taxes or GST rates to meet austerity targets.
So what does it mean for New Zealand?
A reduced risk of a Euro-zone financial crisis in the short term appears to improves the outlook for global growth. But Europe looks to be mired for longer in slow growth and there remains the eventual risk that Spain and Italy slide into a deleveraging spiral similar to Greece. Perma-recession in Europe extends the outlook for low interest rates globally, particularly if the ECB is effectively forcing Euro-zone interest rates lower in a strategy some describe as 'Financial Repression', where interest rates are artificially repressed below inflation rates to inflate away debt burdens.
Ultimately, politics will decide what happens in Europe. Elections, changes of government and social disruptions will be the key factors, particularly as unemployment rates soar and the populace revolts against yet more European Union-driven austerity.
Also, it's worth noting the Euro-zone is China's largest trading partner and China's outlook is more important for New Zealand and Australia directly than the Euro-zone. China's economy is slowing sharply at the moment, at least in part because of weak demand for its exports from Southern Europe. Chinese exports to Italy and Spain have fallen 40% in recent months.
75 Comments
Hey Bernard ...did you catch Keen on 6.30 telly endorsing the Bazooka...?
Are you going to get him in...on the chair....and grill him....or are you just swaning along to the Varsity seminar......?
The salivating thought of two economic Giants in the same room...er ...he may have a slight edge in the prediction dept....
It's Friday ....................YaY.
So all the frustrated wannabe's in the world, are into it. Dow up in the clouds (on the back of stuff-all) house prices bubbling along again, growth growth growth.
Watch oil. If real activity happens, watch oil.
If you're into deeper thinking, watch coal too. Last year, it re-took the 'biggest global source of energy' from oil - a warning flag if ever there was one. I suspect that may dip back, and re-cross, but if (real) things really get going - and once the capacitance of stockpiles are worked through - coal will ramp.
Pop will go the weasel.
It's crazy out there PDK.....having a condition helps.
....... d'yer suppose we could get an electician in to electrify that chair ...... then , when Steve Keen is in it , we could grill him properly ?
[ P.S. what's PDK whittering on about this time , " watch oil " he says ....... I've own several wrist watches over the years , never had to do an oil change on them ... ]
Count - re-conditioning is often cheaper. When you're down 60 thou, you can spiral weld and go again.
I may have something developed soon, though, that you may be interested in. Applying renewable energy to agriculture. Will contact when (if!) I've got it to viable stage.
Cool PDK...always interested .
Christov
I interviewed Steve this morning and aim to get the interview up later today. We didn't talk about Big Bazooka. Mostly about Australian and New Zealand debt levels, housing markets and his proposal for a Quantitative Easing for the people.
cheers
Bernard
Looking forward to it Bernard....shld be worth the wait.
Great overview Bernie. I always watch your 90seconds at 9am (7am here in Australia - so perfect timing!) first and then read Macro Morning at MacroBusiness for the broader market wrap.
Keep them coming!
Um Chris ...er ...that's beaudy n all but take care with the Bernie thing , it's like Bernard, Burnhard, The Hickster, Hicksterical, The master of Gloom, Darth Vader, Big B........but Bernie ...? no ,Bernie just wont float.......We couldn't call Cunliffe ...Cunnie for similar reasons.,so you know..eh.,
....... yeah , you could start the day with an overdose of hickeysterical gloomsterisationalysing ....... and follow that by popping some Anti-Hickeystamines , to help you through the day ....
Or you could just hug the partner & the kids , look out upon the sunrise , and think that life is bloody brilliant ......
....... decisions ...... decisions ......
You can do both. I do all the time. The secret is to separate your enjoyment of life, friends and family, from your observation of global events.
It's easy.
If your contentment is reliant on 'good fiscal news', then even in non-constrained times, you could only have been happy half the time. In constrained times, more than that. How sad.
Yes , thankyou , man ........ got it ! ........ separate the events , the family , from the global .......... easy peasy pudding & pie .......
...... OK , here we go then ........ hug the wife , worry about Draghi / hug the kids , worry about the world wide shortage of Watch Oil / look at the sunrise , worry about Bernard's toupe ...........
Yup ...... we're on the same wavelength , at long last ........ Cheers !
You know GBH ....that's really funny , when you've a mind to picture it ....Hug wife , worry, hug kids ..worry........the life bipolar.
GBH - not quite, it appears. A thinking man would have ditched religion, in his early years. He would have then contemplated 'marriage', ditched 'walking up the asile' in a church (as being part of the religion he'd hithertofore ditched), and contemplated the civil alternative 'in the eyes of the law' - which in our time was Muldoon. Then, thinking on, he have realised that the deal was between two human beings, and that the paper/ceremony/title was just crap. So he'd have avoided to connotation, and found a partner cognitively capable of having arrived at the same conclusion.
So if by 'wife' you mean 'partner', we're on the same wavelength. Or are you cognitely constrained by consensus connotation?
But the worry bit - who is worring? I've told you - ad museum - that emotion has to be removed from appraisal. Stating the obvious, and suggesting an altering of course before the iceberg, well, I don't see that as worry.
:)
Okey-diddily-dokily ,then ........ ditch religion , then I can be classed as a " thinking man " ... a ha ....
...... tell the little lady that her moment in church , infront of all her friends & family was a huge mistake , ....... we should've just gone to a registry .......
Right little ball of fun , aren't we , Mr PDK ! ...... I'd rather not be classified as a " thinking man " if that's what it takes .....( not that anyone was ever gonna confuse the Gummster with a thinking man , anyway ...... haaaaaaaaaaaaaa ! )
....... life is just too short to be such a misery guts , me old china !
There you go again - injecting emotion into what was nothing more than a logic-path.
:)
Your life may be nothing more than a " logic-path "...... but for most of us it's an amazing emotional journey , chock full of ups and downs ........
...... and one doesn't have to be religious to enjoy the diversity of religious experience around the world , and to marvel at the spectacular architecture in the cathedrals , mosques , synagogues & temples ....... the art , stained glass windows , frescoes , tapestries .....
In your sterile , logical grey world , of registries , and being serious ...... there isn't much joy , is there ......
...... I'm grateful as hell that I didn't find a partner cognitively capable of agreeing with your conclusions on life .......
And I should be grateful to you types for soaking up the hypocritical (you can enjoy architecture without believing in horseshit) mass who 'have their day in church', but who will never go there again. Also the sub-set - or is it the same set - who need peer-approval for their actions; who's life are they living? They'll cost, those ones - there's always peers dressed/car'd/housed more expensively.....
Your comprehensive skills still lacking - I pointed out that the registry thing was not a goer (you couldn't get that, to much pre-held cranial stuff, one presumes) and that it ends up with tow folk.
What has that to do with fun, enjoyment, ?
Last year, we were one of two couples punting a 65-foot yacht Aucklanf/Tahiti/Hawaii. Early on, the autopilot crapped out, and we were hand-steering 2 hours on, 6 off, round the clock for nearly a month. I suspect that the kind of partner you can rely on to handle a big boat through 6-metre beam seas at night, is rarely also an up-the-asiler. They simply have to have more confidence in themselves, and you can't have that without being able to appraise reality. Dreamland doesn't work.
http://powerdownkiwi.wordpress.com/2012/03/11/dscf4196/
and 3583, 3562, 4366, 3312, 3291, 3232, 3159, 2902, 2678, 2610.
I think myself lucky - got one of the good ones. :)
By the way - do I detect a failed marriage?.............. methinks, etc.
.. " you types " ..... beg pardon , just what do you mean by that ?
you must use a lot of prozac then....I just roll over and get a hug...
regards
Ewe live in Gore , then ? .......... baaaaaaaaaaaaa !
How bout hugging the partner and kids while looking at the Pooter, rejoicing in the knowledge you have not allowed them to stray too near the Black Hole that sucks life from passing inquirors while beckoning with cold comfort......
Nah ....the Sun ....yeah look at the sun, look at the sun....some buggers just put a cloud outside my window....I'll bet that was Bernard.
...... " the pooter " .... where the heck is Wolly ....... in a deep blue funk that he didn't snaffle Bolly's job ?
Love don't live here anymore......! I miss wolly
Me too ! ....... forgive us , Wolly , we'll give you little John-Boy Key's job , instead .......
Cheers Chris.
I'm relaxed on the name. All good fun. You guys are doing a great job over at MacroBusiness.
Go you good thing, as many an Australian rugby commentator might say.
cheers
Bernard
Right ,Bernie it is then...!
.........no ! ..... he once said that he goes off his tits if people call him " Bernie " ...... better stick to calling him the Grizzly Bernard Hero ....... just to be safe ....
Too right he did GBH....but now , after being called all the names in sundry he's fairly relaxed about the name........as long as it starts with B..has an.. er in it....and finishes ard....it will do.
I'll bet you Mrs Hickey calls him Benny Boo Hoo...!
Aw gees I'm in trouble now.!!!!
Bernard,
Do you think Germany will now leave the growing Euro (growing debt mountain) or just keep not paying because the Southern countries will never either:
1. cull the overspending or
2. raise enough money due to the debt spiral of trying to
and thus never qualify.
Is this not just kickig the can again... or "muddling through" as their great plan is self reported to be by the people "running it"...
Tony
The Germans make a lot of noise about having to bail out all these 'irresponsible and lazy' Southern Europeans, but they are locked into the Euro because, ultimately, it's good for Germans.
Germany has benefited over the last decade from the euro being weaker than the Deutschemark would have been. That made German exporters more competitive and they have been exporting their little leather socks off since then.
German unemployment is at record lows as a result, in part because Germany was able to lend to the Southern Europeans at low interest rates, who then used that money to buy Porsche Cayennes and BMW X5s.
Now the Southern Europeans owe the Germans, who can force them to crush their economies and buy up their assets cheaply. An unkind cynic would say this Euro-zone mess has given the Germans the power to dictate terms to Europe in a way that doesn't involve tanks crossing borders...
Ultimately, I think the Germans will stick with the Euro-zone. The political elite there is deeply committed to the political project of the Euro-zone. The voters may not be so keen, but hey, who cares about the voters as long as they have jobs etc.
The bigger problem will be what the voters in Spain and Italy think and do. Those are the real hotspots in the Euro-zone crisis: the politics of Southern Europe.
Keep an eye out for riots and coups.
cheers
Bernard
Will it solve the problem? 'No'
Will it make the ECB insolvent? 'Yes'
Will it delay the inevitable, extend and pretend? 'Yes'
Print babe, Print!!
Inflation can be the only result of this.
No a good time to be an NZ exporter. Euro gets more competitive through currency manipulation and Bollard does nothing....
Actually no, Deflation and a Depression....the black hole is too big to print into.
The black hole is caused by all the private investmant exiting the EU bond market and troubled banks and then consumers stopping spending as they get frightened by the voodoo economics pollies in charge. So its not a bazooka time its a tactical nuke time.....bazooka time was solving Greece....3 years too late and never happened. So unless we are looking at a 5trillion print and keep doing it every year its just going to implode.
The chances of a print of that scale is remote IMHO. With small ones (1 or 2 trillion) all the Govns and RBs are doing is giving the private investors time to exit with voter money.
regards
yes - we will have a 5 or even 10 trillion print eventually... no sweat... it just a push of a few buttions... businesses will not produce at sell cost less than production... this is not the 30s and there is no backing to any paper currency anymore... depression - eventually 'yes'...
"Businesses will not produce", thats right, the businesses will fold and go away.
This is a re-run of the 1930s only on steriods...the debt is way bigger and Keynes said of teh Great Depression we'll get over it we have the resources...today we dont.
Sure print 5 trillion, but if the govn doesnt spend it "profitably" (and it wont) its not going to make a difference. If your defination of eventually is within 5 years, and probably 2, yes OK.
regards
hi steven, hope you are well. central banks have already printed over 20 Trillion, its just off balance sheet in things like currency swaps.... etc. Currency is just digital units today created at noproduction cost. The monetary system is very different to the 30s when they printed lots of money to pay for ww1 then afterwards tried to go back on the gold standard at the same price for gold, forcing the money supply to collapse. On the last partial audit of the fed it revealed it had created and lent out at zero interest 16 trillion. Or to put it another way - how much debt is too much if you can borrow it at zero %? Comparisons with the 30s only go so far as you are not comparing apples with apples. If we tried to go back to the gold standard and set the price of gold where it is today, yes we would have a deflationary depression, that would be a valid comparison with what happened back then. kind regards, eco.
Print babe, Print!!
Inflation can be the only result of this.
No a good time to be an NZ exporter. Euro gets more competitive through currency manipulation and Bollard does nothing....
And that is precisely why Keen should be on the chair..economist ...to enlighten how the pretend and extend. Bazooka installment he has condoned just this morning.....provides a final solution.
He may be right about it relieving pressure on borrowing, by cash strapped members, but how does that in itself play out.....?or do we just make it up as we go along.....ad nauseum.
Ad nauseum? Shimrath Pauls CV?
Christov, perhaps he might also explain to us exactly just who on this planet the ECB will be selling those over-priced bonds too that it intends on purchasing... if the market will not buy them at a 6% yield and in a years time the debt to GDP is even higher... what makes it so sure it can exit this plan and sell them at a far lower yield (which it will need to to get its money back)? if the 'world is a stage' these guys are well under rehersed....Mmmmmm.... idiots at play...
Never buy any investment without at least asking the question, 'Who will I be selling this too?' obviously the ECB either doesn't care or never asked this question then.
Eventually it will have to write them off or down.
That's what they had to do with Greece...
cheers
Bernard
Yeh, its a good thing Greeces problems then are all solved now... yeah!
BH - but surely, QE (or whatever you choose to call it) involves increasing the numeric dosh in the system. If the system isn't growing/cannot grow, then every euro or $ has to be worth less - it being a bidding-war, at least for essentials. That's inflation, no?
What does that then do to to banks - do they chase the numeric value with rate hikes? Or fool themselves with the bigger numbers, even though the purchasing power diminishes?
We're already seeing big players chasing less-than-zero returns as safe havens, no? It all gets different when the cake stops growing.
I think you have to consider everything in the system. If the only thing left in the system is Govn $s after investors and salaried earners have stopped spending (which is 70% of GDP then you have a huge hole...its the NET effect.
Why are they in safe havens? no one takes a neg return unless they see that there is a collapse really soon and assets will collapse in value.
regards
some are accepting negative real returns as a liquidity premium, also unlike you or me these big banks can borrow from the ecb and fed at next to nothing and get a guranteed return by buying treasuries, the large bulk of which are paying a nominal return. Investors and salary earners havent stopped spending, infact house prices are up, wholey because they are spending - as bank returns are getting no where. Real assets are likely to go up in value overall as trillons run out of financial assets to something real.
I dont think you can take some house prices being up as a sign ppl are still spending...though, sure there is no huge contraction....yet.
The problem I have with the idea that real assets will go up in value is the rate of return on them, hence why I dont immediately agree with PDK and you....
Simple example of where Im coming from,
A farm is say 10million, its returning 5% per annum....$500,000k....so you rush in and buy it and say on sell and someone else buys and say its get to $20million, problem is its still only making $500k....or a 2.5% return....ie just how far can the capital value appreciate? there will be no return...
Now that $500k return on the farm is based on a large fossil fuel input....that isnt going to continue so that farm output is going to drop...I dont know to what but its its -50% then the 20million property is now repaying 1.25%....
What I do expect to happen is a 60~75% collapse in asset (farm) prices and the "wise" money will rush out and buy at firesale prices....so that 10million property will be 4million or less maybe even 2 million....then the $250k return makes a lot of sense. This is what happened in the Great Depression....and I see no better model for today.
Now Im happy to discuss this, sure lets see your reasoning. On my reasoning I think the money will simply be "destroyed". The degree of destruction of it is relative mind...it may well be that owning hard assets sees less wealth destruction and are safer than bankrupt banks......
regards
yes, what is happening is really neither inflation or deflation, its really currency destruction. Boy there is a lot we can say about this, more than will fit on this blog.... thats one of the reasons gold will continue to appreciate... in the end its the only money that can actually eliminate debt without destroying the financial system. Central banks are unleasing a tsnami of paper on the world, there really isnt anything else they can do in the end. Its either that or let the system implode. All currencies and treasury debt is little more than digital units of perceived value. You dont own them, your account is credited with their value. What is really owned is the right to offer what is credited to you. Currencies compete with one another, not for value, but for usage. The USD is leading the pack, not because it has the most value but because t gets used most for trading. Whichever currency oil gets sold in wins this competition. All currencies are traded with the USD as it is the medium for oil exchange. The USD must be maintained as the most traded if the other fiat currencies have a chance to survive. Thats why Japan and China will not sell huge amounts of treasury USD debt..the debt they hold - it is their currency! So what? Well all nz imports and exports are priced in usd. In your farm example you assume farm produce remaining constant, it will not be true, though i and many wish it would! Food prices are going to increase. Also not everyone is chasing a 'business' return, most capital just sits.... trying to maintain value..... and speaking of food my wife has lunch ready....
Well we certainly strongly do not agree on gold appreciating. Not on any economics I can "trust" Now sure it could appreciate because of human behavior and thats not to be under-estimated, or because we have gone past peak oil everything is up-sidedown....
I certianly dont agree on gold curing the debt and its at odds with the 1930s....ie the gold stanard and the fixed monetry union are in effect the same thing, and just look at say spain for that outcome, huge unemployment and wage deflation.
Food prices will certainly increase however when ppl are earning no more or thier incomes are declinming other purchases get put aside. And those food increases will be driven by increasing energy cost inputs (deisle, fertilizer etc) so the NET profit for the farm owner will be no better, arguably worse.
regards
1. gold didnt appreciate in the 30s really - it was locked as a fixed rate steven, sure that rate was reset to 35 but that was still too low for the paper that was created.
2. gold is appreciating, whether you believe it is or not. that is because paper is crashing, a while back people were saying the USD was going to crash, but smart people know this is already happing, its just that all currencies are really just derivatives of the USD.
3 the only way out of the debt crisis is the remonetarisation of gold at much higher rates, the market will do this in the end dispite government attempts to hold it down in price to protect and keep the USD in play as the reserve currency.
4 no, that is just plan wrong, the gold standard and the fixed monetary union are not the same thing. All fiat is debt, you canot print more debt to repay other debts then pretend there is less debt and you have solved any debt problem. spain had high unemployment long before joining the euro, that has nothing to do with a gold standard??? their problem is they are not competitive and have politians who spend beyond the countrys means... it is true that fiat allows this to go on far longer than a gold standard would but not true gold causes this.
5 all paper currencies are depreciating against gold and will continue to do so. think that gold is meaningless nowdays? then give thought to why more gold is traded at this time than any other time in world history.
productive farmland is going to become very valuable. world food stocks are at dangerous multi-decade lows
1) Correct so in effect other things had to depreciate, salaries and income. Which is worse and what is happening again in say Spain. Their fixed currency in effect is just like being on the gold standard....that ios making a lot of them un-employed and no where to go.
2) Sure gold is holding its value because a lot of ppl such as yourself are buying into the belief its going up......like I said human behaviour is a big factor.
http://krugman.blogs.nytimes.com/2012/08/26/golden-instability/
"Now, the gold bugs will no doubt reply that under a gold standard big bubbles couldn’t happen, and therefore there wouldn’t be major financial crises. And it’s true: under the gold standard America had no major financial panics other than in 1873, 1884, 1890, 1893, 1907, 1930, 1931, 1932, and 1933. Oh, wait."
3) No I dont believe it will, if it does the depression it unleashes will be un-believeable.
4) They have the same effect, you cant or dont want to see it....I cant help you there.
5) See 2) or,
http://krugman.blogs.nytimes.com/2012/08/24/gop-intellectual-decline-mo…
In terms of farms, yes I agree the point is however you buy it and you will never see the capital returned, however you will be eating. Indeed hopefully NZ will. Food however could be like oil it will have a price that ppl cannot afford...at that point its bye bye Govn or bye bye private land ownership, welcome to the long civil defence emergency.
regards
as ive pointed out before kruman has it wrong, it was printing too much credit paper by the money powers that caused those recessions/bubbles. history still stands at gold 3500 - vs fiat at zero.
gold is not going up because the general public are buying it, its turnover is in the trillions a year - much more than the public could afford. the smart money is moving away from fiat debt to gold, its now becoming obvious the euro, nor the usd will survive.
you are mistaken steven as you havnt lived though a currency collapse before. europe is sitting on 12000 tonnes of gold and at 10000 an ounce it solves the sovereign debt/solvency problems and the liquidity ones. its why europe (and the us) keep most of their foreign reserves in gold, central banks are not stupid - they are run by some of the best of the best. they know what they are doing is only posponing the inevitable.
one day people will wake up to the fact that holding someone elses paper denominated leveraged debt obligations is not a good way to hold wealth, that day is rapidly approaching, the sooner it gets here the better off the world will be.
OK, well while I consider PK far from perfect I certianly find him far closer to the mark then most others, Steve Keen/Minski excepted. The inflationistas are I think way wrong, the hole that is being created will be too big and open too fast to print into. Not that maybe they couldnt print that much if they really wanted to but their performance in the last 4 years shows they are way to far behind the curve. Greece and Ireland could have been fixed fairly cheaply...we are way past that now.
Im afraid you are wrong if you think smart money is going to gold, you just have to look at German and US treasuries to see there is a lot of money hiding in there at a negative yield. So the options are they are all stupid to accept losing money......stupid and rich dont tend to go together, not first generation anyway....or they see safety as more important than making $s....or they see huge deflation and expect firesales and for that they will need cash....so want to be liquid (which begs the Q when the wise rush out of US Tbills where is the US going to go).
Personally I think there is a lot of simpletons or worried money in gold hence its price....ie printing = inflation = buy gold or, store wealth becasue bad times are coming = buy gold. The situation is I think far more complex, far more. Now its possible it might turn out to be the right bet, but thats what it is for me, betting I see inadequate logic....
CDIs etc are stupid, yet created by some of the smartest because their feet are not on the ground. Hence why I agree when PDK says its a game of musical chairs....at some point thise 1s and 0s have to be convereted to hard assets and those hard assets can never return the capital let alone interest....therefore it will disappear....poof gone.
When it comes down to it, paper money is a proxy for energy/work and gold is the same thing....and as we have seen with oil above $100USD the world's economy cant sustain that hence recession and worse.
regards
In fact your quite right Steven as the current level of negatie yeild being held in U.S. funds is 9.43trillion......as the Age of safety over-rides bullish behavior.
Cash hoarding. A record $9.43 trillion -- enough cash to buy 120 of the biggest companies in the Standard & Poor's 500-stock index -- is now sitting in money market mutual funds, bank savings accounts and CDs, according to Crane Data.
But all that cash isn't making anyone rich.
"The rate of return is effectively zero," Crane says. "How much of the $9 trillion is scared money is arguable. But the overall numbers are gigantic."
Getting no return, however, has not stopped Bruce Tepper, 67, and his 66-year-old wife, Nancy, from squirreling away excess cash in a money market checking account. "It's earning next to nothing, but the money is accessible," he says.
Rich retrenching. Even the richest of the rich, the One Percent, are thinking defense first, according to "The 2012 Survey of Affluence and Wealth in America" from American Express Publishing and Harrison Group. One Percenters put 56% of their free cash into savings and money market accounts in the first quarter, up from 24% in 2007. In contrast, they are investing only 44% in financial markets, down from 76% five years ago.
"Their speculative impulse is way, way down," says Harrison Group Vice Chairman Jim Taylor, adding that the mega-rich now equate the stock market with "real risk."
Time will prove all things steven. The money going to Tbills is largely QE leveraged money, as the QE money is certainly not being lent out to real productive businesses. As to a broke government debts being a 'safe haven' as you put it, I say time will tell that to be a big mistake, lets wait a few years and see who is correct then.
LOL
Maybe you can prove that its QE money and not "real" ppls 'real" money?
I dont consider the US a safe haven long or even medium term, today however its a game of relaitive that others play....they precieve it to be safer than most anywhere else.. I also think when the in-evitable bun fight starts all the QE that is abroad will be pulled back to the USA.....that will indeed be mayhem. At that point our banks wont be able to roll over short term debt or certainly not cheaply.
"wait a few years" indeed, its very few I think....longest I can conceive we stay on this peak oil plateau is 2018...really though that is pushing it IMHO....another 5 years seems way to long....for poil anyway.
There are clearly a lot of possible triggers to the drop.
1) A lot depends on who wins in Nov, if its Obama we stagger on for a while, if its Romney I dont give us a year.
2) Dropping off the oil plateau as above.
3) EU she go boom...
1 and 3 seeming to be vying for the "honour".
Im sure there are lots of "minor' (black swans) others, all capable of tripping us...
regards
'Maybe you can prove that its QE money and not "real" ppls 'real" money?'
Yes - easy - the FED is the largest holder now - that's not even including the multi-trillion currency swaps done with other central banks to make it look like foreigners are still buying, while foreigners maybe not selling - they are certainly not buying either - they are putting funds elsewhere... a crash in the bond markets will be the end of paper currency... maybe that day is a few years away... maybe it might be tomorrow - it all depends on how central banks act... to date they will do whatever is necessary to protect the t-bill market of course...
exactly - smart people are moving to safe havens - real assets - but what is a real asset? easily portable? not taxable (unlike land)?, not perishable (like food) and accepted worldwide at an standard price for payment? - its gold, and only gold steven.
Its not the simpletons who are buying gold - they aren't buying - they are all knocking gold as the simpletons don't understand international finance - they all believe the governments and central banks will solve the problem for them, its the smart money buying the physical, esp out of Asia, Russia and the Middle East.
It is the gold for oil deals that will be the final step of monetarising gold in the end.
But like I said time will prove all things.
There's nothing wrong with " Kruman " .......
www.kruman.com ....... if you want quality air , and lots of it , these guys even manage to out-do your stodgy old pontificating economists , ... economist ........
I'm fully pumped after that little link there GBH,,,I need to go decompress in the chamber .
Steady. Hasn't happened yet. The Goldman Sachs alumni Mario.One simply flapped his jaw. Because it "will be" sterilised it won't be "printing". Goldman Sach alumni Mario.Two is waiting in the wings. An encore of the goldman sachs greek solution.
News: Last night a gentlemen from Argentina offered me a printing machine. But this morning I decided against, but to have another holiday on the “Wet –Coast” looking after the real stuff - gold in stead.
On you Walter...hang in there.....glad to see you gave up your life of crime, albeit ,it lasted 5minutes......sadly if you contacted the Argentinian , Interpol now have you on watchlist...just like on trade me.
Well well not me snippy, but I did tell you it was not going to rocket to $5000 oz by 2012 / or even $2000 oz by Dec2012 as some Gold evangelists were touting here as recently as January 2012.
Spread your eggs snippy ...spread those eggs...and be happy to tic along, too many people do the lot wanting the Big Payday.
Author of " the currency wars " , Jim Rikards , reckons gold will go to $US 44 000 per ounce , when the world goes back onto a gold standard ......
...... gotta be better investing than buying houses in Auckland .......
Too right GBH , but you just gotta live long enough for that to happen.....I'm going into condo's on Mars...won't be too long now.
When you buy gold it is not an investment in the pure sense of the word, it is pure speculation, because it doesn't produce an income. You're not investing in gold, you're speculating. Now my shares for example, which have risen 12% in 2 months (bragging rights) are an investment because they get dividends. Woop woop
20% gold, 80% silver then?
Stevo reckons his matress is safe snippy, but ah, I dunno if I'm comfortable leaving my money there with all that rolling and hugging going on.....might get crinkled or wotnot.
...... yup , the gold's not safe there , alotta action on steven's mattress tonight ....... the new flock of Dorpers has just arrived .......
gold should be at us$2400 if it had kept up with inflation over the last 30 years
No, gold should be at usd7500 NG if it had kept up with 'wage inflation'.... you are mistakenly using CPI fantasy figures....
Hey Hugh : The missus tells me ( through her connections with the Philippine community ) that a large group of Filippino carpenters has arrived in Christchurch , for the re-build .....
...... do you know of this ?
Are there no unemployed locals to do the work ?
...... has the council approved bamboo flats & hi-rises ?
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