Part 2:
BACKDOC: WHEN A DEAL IS NOT REALLY A DEAL!
THE LAST STATEMENTS REALLY SAY IT ALL.
THE BRITS WILL NEVER JOIN THE EURO! THEY WILL NEVER GIVE A BAILOUT! MMMM CAN'T IMAGINE WHY? HEE HEE
THEY WILL NEVER ALLOW PASSPORT FREE TRAVEL!
THEY WILL NEVER BE PART OF A EUROPEAN SUPER STATE! MMMM
I SEE THIS AS A TERRIBLE LOSS FOR THE EURO! MASSIVE!
THE MIGRANT FREE LUNCH PROGRAM GETS NEUTERED AS WELL!
DOC IMO
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BACKDOC: WHEN A DEAL IS NOT REALLY A DEAL!
THE LAST STATEMENTS REALLY SAY IT ALL.
THE BRITS WILL NEVER JOIN THE EURO! THEY WILL NEVER GIVE A BAILOUT! MMMM CAN'T IMAGINE WHY? HEE HEE
THEY WILL NEVER ALLOW PASSPORT FREE TRAVEL!
THEY WILL NEVER BE PART OF A EUROPEAN SUPER STATE! MMMM
I SEE THIS AS A TERRIBLE LOSS FOR THE EURO! MASSIVE!
THE MIGRANT FREE LUNCH PROGRAM GETS NEUTERED AS WELL!
DOC IMO
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Thunderhawk: European Union Leaders Agree 'Brexit' Deal
The United Kingdom has reached a deal with the EU to help ensure that Britain will remain in the 28-nation bloc.
The agreement was first announced by Lithuanian President Dalia Grybauskaite. European Council President Donald Tusk has also confirmed "unanimous support" for the deal aimed at keeping Britain in the EU.
Czech Prime Minister Bohuslav Sobotka called the agreement a "decent compromise."
The new arrangement includes:
an "emergency brake" on EU migrants claiming work benefits that will last for seven years; it will apply to an individual for no more than four years;
an exemption for Britain from further political integration and elements of an accord to ensure fair treatment of financial and economic arrangements between euro-zone and non-euro-zone states;
an EU-wide indexation system for payments of child benefit for workers whose children live in another EU state;
the right for Britain to supervise financial institutions and markets to preserve stability.
Leaders met in Brussels to address the ongoing migrant crisis and its effects on the European Union. Prime Minister Cameron had threatened to rescind the UK's membership in the EU if conditions were not met to satisfy Euroskeptics. The Visegrad bloc, including the Czech Republic, Hungary, Slovakia, and Poland, had fiercely opposed the UK's terms.
Now that Cameron has reached a deal with European leaders, he will have to sell it to the British public.
"Tomorrow I will present this agreement to Cabinet and on Monday I will make a statement to Parliament," Cameron said at a newsconference after the Friday Brussels working dinner, saying he would announce the date of the Brexit (Britain staying or exiting the EU) referendum soon.
He also stressed that the agreement does not prevent the possibility of future reforms.
"There is absolutely nothing in this agreement that stops further reform taking place," he said, reiterating that "reform does not end today."
"The EU is not perfect. There is a need for further and continuing reform. But the UK is the best place to do that from the inside. Our plan for Europe gives us the best of both worlds. It underlines our special status through which we will be in the parts of Europe that work for us…but we'll be out of the parts of Europe that don't work for us," he said.
Now that an agreement has been reached, Cameron has vowed to campaign in favor of Britain remaining in the EU.
"I believe we are stronger, safer and beter off inside a reformed European Union. And that is why I will be campaigning with all my heart and soul to persuade the British people to remain in the reformed European Union that we have secured today," he said.
Still, the deal allows the UK to be exempt from the principle of an "ever closer union."
"We will never join the Euro. We will never be part of Eurozone bailouts, never part of the passport free area, a European army or a European superstate."
http://ift.tt/1mOqtzG
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BACKDOC: I GUESS GENERAL ELECTRIC AND NOW BOEING COULDN'T TAKE IT ANYMORE!
WITH SEEMINGLY THE WHOLE WORLD GETTING CONTRACTS WITH IRAN,THE BIG BOY CAN'T TAKE IT ANYMORE!
IT'S TIME TO MAKE THE DONUTS AND QUIT CRYING! HEE HEE
https://www.youtube.com/watch?feature=player_embedded&v=V9AbeALNVkk#t=0
The United Kingdom has reached a deal with the EU to help ensure that Britain will remain in the 28-nation bloc.
The agreement was first announced by Lithuanian President Dalia Grybauskaite. European Council President Donald Tusk has also confirmed "unanimous support" for the deal aimed at keeping Britain in the EU.
Czech Prime Minister Bohuslav Sobotka called the agreement a "decent compromise."
The new arrangement includes:
an "emergency brake" on EU migrants claiming work benefits that will last for seven years; it will apply to an individual for no more than four years;
an exemption for Britain from further political integration and elements of an accord to ensure fair treatment of financial and economic arrangements between euro-zone and non-euro-zone states;
an EU-wide indexation system for payments of child benefit for workers whose children live in another EU state;
the right for Britain to supervise financial institutions and markets to preserve stability.
Leaders met in Brussels to address the ongoing migrant crisis and its effects on the European Union. Prime Minister Cameron had threatened to rescind the UK's membership in the EU if conditions were not met to satisfy Euroskeptics. The Visegrad bloc, including the Czech Republic, Hungary, Slovakia, and Poland, had fiercely opposed the UK's terms.
Now that Cameron has reached a deal with European leaders, he will have to sell it to the British public.
"Tomorrow I will present this agreement to Cabinet and on Monday I will make a statement to Parliament," Cameron said at a newsconference after the Friday Brussels working dinner, saying he would announce the date of the Brexit (Britain staying or exiting the EU) referendum soon.
He also stressed that the agreement does not prevent the possibility of future reforms.
"There is absolutely nothing in this agreement that stops further reform taking place," he said, reiterating that "reform does not end today."
"The EU is not perfect. There is a need for further and continuing reform. But the UK is the best place to do that from the inside. Our plan for Europe gives us the best of both worlds. It underlines our special status through which we will be in the parts of Europe that work for us…but we'll be out of the parts of Europe that don't work for us," he said.
Now that an agreement has been reached, Cameron has vowed to campaign in favor of Britain remaining in the EU.
"I believe we are stronger, safer and beter off inside a reformed European Union. And that is why I will be campaigning with all my heart and soul to persuade the British people to remain in the reformed European Union that we have secured today," he said.
Still, the deal allows the UK to be exempt from the principle of an "ever closer union."
"We will never join the Euro. We will never be part of Eurozone bailouts, never part of the passport free area, a European army or a European superstate."
http://ift.tt/1mOqtzG
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BACKDOC: I GUESS GENERAL ELECTRIC AND NOW BOEING COULDN'T TAKE IT ANYMORE!
WITH SEEMINGLY THE WHOLE WORLD GETTING CONTRACTS WITH IRAN,THE BIG BOY CAN'T TAKE IT ANYMORE!
IT'S TIME TO MAKE THE DONUTS AND QUIT CRYING! HEE HEE
https://www.youtube.com/watch?feature=player_embedded&v=V9AbeALNVkk#t=0
Thunderhawk: Boeing secures Iran license
Boeing Co. said Friday that it received a license from the U.S. government to begin commercial discussions with Iranian airlines, opening the door to what could be the first U.S. jet deliveries to the Islamic Republic since the 1970s
Iranian carriers are among the oldest fleets in global aviation following decades of sanctions that have left them unable to leverage an advantageous geographical location and a domestic market of nearly 80 million people, reports WSJ. Rapidly growing Persian Gulf neighbors in Qatar, the United Arab Emirates and Turkey have exploited their position and new-technology jets to fuel rapid expansion in commercial aviation, the paper said.
Iran is seeking to quickly catch up and refresh its airlines with new aircraft, with leasing industry officials forecasting the country could support 300 to 600 new planes.
“The license permits us to engage approved airlines to determine their actual fleet requirements,” a Boeing spokesman said.
Airbus Group SE in January signed a cooperation agreement with Iranian officials for the purchase of 127 new aircraft that range in size from single-aisle jets all the way to its double-deck A380. Earlier this month, a joint venture between Airbus and Italy’s Finmeccanica SpA said Iran Air was purchasing as many as 40 small turboprop aircraft.
Boeing, which last year provided maintenance manuals to Iranian airlines, will be looking for government cues on how to cultivate long-dormant commercial ties in the potentially fertile market.
“We understand that the situation in the region is complicated and ever changing and we will continue to follow the U.S. government’s guidance as it relates to conducting business with Iran,” the Boeing spokesman said.
General Electric Co. said it, too, has submitted an application for a license to sell engines and spare parts to Iranian airlines, but has not yet been granted approval, according to a company spokeswoman.
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BACKDOC: IT SEEMS GREECE AND AT LEAST PART OF SPAIN WILL ULTIMATELY GO WITH THE SILK ROAD TRADING PACT THAT CHINA IS PROMOTING! DOC IMO
Thunderhawk: Iran, Spain keen to broaden bilateral ties
Iranian Deputy Foreign Minister Majid Takht-Ravanchi in a meeting with his Spanish counterpart Ignacio Ybáñez here discussed bilateral ties and regional developments.
During the meeting on Friday night, Takht-Ravanchi pointed to the two countries' age-old relations and the positive image of Spain before the Iranian officials and people, and underlined the need for the broadening of ties between the two countries in political, economic and cultural fields.
The Spanish deputy foreign minister, for his part, said that his country is pursuing the constructive dialogue with Iran in all areas, especially in economic cooperation.
Takht-Ravanchi arrived in Spain on Thursday for a periodic diplomatic dialogue with Spanish officials on ways of consolidating bilateral ties.
Iranian and Spanish foreign ministry officials meet and confer with each other every six months to hold diplomatic talks.
Diplomat said periodic talks between Iranian and Spanish political officials indicates interest of the Spanish policy makers to boost ties with Tehran after the Vienna nuclear
In a relevant development earlier today, Takht-Ravanchi met with the Spanish Foreign Minister José Manuel García-Margallo, during which the two sides exchanged viewpoints on bilateral ties, regional and international developments.
Ravanchi reiterated that the two countries' relations are as deep as history, adding that the Spanish government and nation enjoy a special status in the Iranian public opinion.
He welcomed the Spanish companies' broad presence in the post JCPOA atmosphere Iran in which the presence of three Spanish ministers in Iran has marked a turning point in bilateral ties and signaled the two sides' merchants, industrialists and businesspeople positively.
The two sides meanwhile were agreed that the fields of bilateral cooperation include infrastructures, transportations especially in rail field, express trains, agriculture, mining and energy fields.
On the Syrian crisis, he referred to the ongoing human catastrophe there and expressed hope that all regional and trans-regional players involved in it will both contribute to the implementation of the ceasefire and facilitate the humanitarian contributions.
'Such an approach will pave the path for the beginning of the political talks and decision making on the future of Syria by the Syrian people themselves,' he said.
The deputy foreign minister meanwhile noted that the continuation of massacring the innocent Yemeni people is occurring amid the silence of the international society.
'The situation is very awe-inspiring there and it is a grave mistake made by certain countries that have assumed the elimination of a huge portion of the Yemeni people is possible, as that is a hallucination which will never be materialized in the real world,' he emphasized.
The Spanish top diplomat, too, in the meeting remembered the good memories of his memorable and very successful recent visit of Iran and expressed delight over Iran's investment in Spain's refinery industry section.
'The Spanish government supports the private and industrial sectors involved in that process,' he said.
José Manuel García-Margallo meanwhile called the international agreement on need for forwarding humanitarian aids for the war-stricken Syrian nation and expressed hope that relying on both sides' cooperation, as well as the other regional countries' assistance peace and stability will once again return to Syria and the terrorists will be uprooted there.
He also expressed deep regret over the lingering human catastrophe in Yemen, reiterating that Madrid has done all its best through both the European and the international channels aimed at progressing with the political process in Yemen.
http://ift.tt/1mOqtzK
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BACKDOC: YOU CAN DE-PEG THE DOLLAR FROM OIL BUT YOU CAN'T DEPEG EVERY CURRENCY IN THE WORLD!
THE UNIVERSAL CURRENCY AFFECTS EVERY ASPECT OF OUR ECONOMIES WORLD WIDE AND NO MATTER WHO WANTS TO STOP DEFLATION THEY WILL NEVER DO IT UNTIL OIL PRODUCTION BECOMES CONTROLLED! THIS PROBLEM HAS ONLY ONE CONCLUSION WITHOUT A DEAL AND THAT IS A CURRENCY CRISIS!
I PRAY THAT CAN BE AVOIDED BUT ITS NOT LOOKING GOOD AT THE MOMENT! DOC IMO
Mountainman: SCRAP the "NONSENSE" in this ARTICLE and The "HIGHLIGHTED" SENTENCE is The MAIN VALUED POINT....IMO....."THEY" want a CARBON TAX in the NEW REALITY.......Plain and Simple w/ These Folks!!!!!!!! Blessings,Mountainman
Thunderhawk: US Has ‘Energy Gluttony’ Bringing About Petroleum Collapse
The United States shows greed for energy exploration by promoting new oil and gas deals that are moving the world closer to a petroleum collapse, nonprofit organization Sustainable Energy Institute Founder Jan Lundberg said.
Anastasia Levchenko — On Thursday, US Bureau of Ocean Energy Management (BOEM) announced the Obama administration intends to offer about 45 million acres in the Gulf of Mexico for oil and gas development in two lease sales in March.
"Do we really need all this energy? The United States has energy gluttony," Lundberg said on Friday. "Energy sphere is corrupt…common people know that things will go wrong, oil accidents will happen spoiling water and there will be release of carbon dioxide killing our planet."
According to BOEM Director Abigail Ross Hopper, Gulf of Mexico lease sales reflect the US administration's commitment to facilitate the orderly development of offshore energy resources while protecting the human, marine and coastal environments.
"Without a raw conservation ethics, without a nature-oriented culture, the destruction and waist is going to go on until we have a petrol collapse."
The only solution that can avert the upcoming environmental catastrophe is a world-wide law for a carbon fee, or a carbon tax, he added.
The area lease sales are scheduled to take place on March 23 in New Orleans, Louisiana. The two offshore sales in March are the ninth and tenth ones under the Obama administration’s Outer Continental Shelf Oil and Gas Leasing Program for 2012-2017.
The Sustainable Energy Institute was established in 1988 to to reduce dependency on oil while lessening pollution. In 2000, Lundberg also founded Sail Transport Network started that seeks to resurrect renewable-energy travel and freight.
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JamJam: Hmmmm. Riddle me this Batman.
We have a full Brexit. We have Boeing and GE (RECIEVING) YOU HEAR THAT..? RECIEVING A LICENSE TO DO BUSINESS IN IRAN. HMMMM. REALLY?
WOW. CHINAS HEAD OF SEC REMOVED? HAHAAHAHA
IMF SAYS HALL ASSETS..LOL G20 MEETING THIS COMMING WEEK? I THINK WE WE ARE BOILING LAVA RIGHT NOW.
I dont know bout u guys but suttin happened..lmao. WOW. ME LIKEY.
BACKDOC: BINGO!!! ACTIONS MEAN THINGS!
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Mountainman: Sheesh......These IRANIANS Must have MAPS/BLUEPRINTS and PROGRAM after Program......That has UNLOCKED and TAKEN OFF w/ROCKET FUEL.....because THEY are RUNNING their ECONOMY...."AS IF IT NEVER STOPPED"!!!!!!!!......IMO Blessings,Mountainman
Thunderhawk: Rosatom: Construction of Bushehr II, III N. power plants to start
Head of Russia's Rosatom State Atomic Energy Corporation Sergey Kiriyenko announced on Friday that his company will start building two more nuclear powers plants in Bushehr province in Southern Iran in the coming weeks
'We have set the date for construction of two new nuclear plants in Bushehr with our Iranian partners,' Kiriyenko said on Friday.
He underlined that Russia and Iran have signed an important agreement on construction of three nuclear power plants in Bushehr province.
'We have also signed an agreement for construction of eight nuclear power plants for Iran,' Kiriyenko added.
In March 2014, Rosatom and the Atomic Energy Organization of Iran (AEOI) reached an agreement to construct at least two more nuclear power plants in Bushehr.
On November 11, 2014, Iran and Russia signed a deal to build up two new nuclear reactors on the site of the Bushehr Nuclear Power Plant.
In December, AEOI Deputy Chief and Spokesman Behrouz Kamalvandi announced that Iran has started building two new nuclear power plants in the Southern province of Bushehr.
'We have entered the executive phase of the construction of these two nuclear power plants based on the contract signed between Tehran and Moscow in March to construct the plants,' Kamalvandi said.
Judging the information released by the two sides so far, it seems that Russia will be in charge of building two more reactors for the development of Bushehr power plant, and Iran will build the needed facilities.
Salehi has on different occasions announced that Iran is ready to continue its mutual cooperation with Russia in peaceful nuclear energy.
The Islamic Republic signed the Bushehr contract with Russia in 1995 and the nuclear power plant reached its full capacity by August 2012. It is located about 18 kilometers South of the provincial capital.
The original plan of the Bushehr Nuclear Power Plant included three phases of development. According to the plan Bushehr should have three power plants each with a 1000MW power-generation capacity.
According to Iran's 20-year vision plan, the country should have enough nuclear plants to produce 20,000MW of nuclear-generated power by 2025.
http://ift.tt/1mOqtzO
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BACKDOC: THE DECISION WILL BE TO DEAL WITH DEBT AND BECOME SECURITIZED OR GO BANKRUPT!
Thunderhawk: Backdoc Alert
Corporate defaults are on the rise, with 3 more this week
Less than two months into 2016, and corporate defaults are on the rise.
Three U.S.-based oil and gas companies defaulted this week, lifting the global tally for 2016 to 19, according to Standard & Poor’s.
Not surprising given the pressure on oil prices, the energy sector continues to account for the bulk of the defaults at six, followed by metals and mining at four, said Diane Vazza, head of global fixed income research. “Volatile oil and commodity prices have led to higher levels of both downgrades and defaults in these sectors since late 2014,” Vazza said.
The remaining defaults span a range of sectors from media to banking to consumer goods.
S&P lowered its ratings on Paragon Offshore PLC PGNPF, -2.27% to D, or default, from CC, after the company said it was filing for Chapter 11 bankruptcy protection, and had entered talks with its bondholders and other creditors.
The agency lowered its ratings on Energy XXI Ltd. and its unit EPL Oil & Gas Inc. to D from CCC-plus, after that issuer missed an interest payment on senior notes. “We believe the company will not make this payment before the 30-day grace period ends and that it will likely reorganize under Chapter 11,” said S&P.
The agency lowered ratings on Venoco Inc. and its parent Denver Parent Corp. to D from CCC-plus, after that company missed an interest payment on senior notes. S&P isn’t expecting the payment to be made within the 30-day grace period.
Junk-rated bonds are showing negative returns for the year so far, based on the Bank of America Merrill Lynch U.S. High Yield Index. The index is showing a negative return of 2.9% for the year so far, and is down about 8% in the last six months. The option adjusted spread over Treasurys has widened to 817 points as of Thursday from 695 basis points at year-end.
By comparison, the investment-grade index is showing a positive return of 0.6% for the year so far, and 0.2% for the last six months. Treasurys are showing a positive return of 3.1% for the year and 2.9% for the last six months.
Of the 19 defaults in the year so far, seven were missed interest payments, five were distressed exchanges, four came after bankruptcy filings, two because of de facto restructuring and one because of a missed principal and interest payment, said S&P.
The latter default was by brokerage RCS Capital Corp., which has since filed for Chapter 11. Other defaults outside of the energy sector include Slap Shot Holdings Corp., the owner of Sports Authority Inc., which missed an interest payment in January.
Forest products company Verso Paper Holdings LLC missed an interest payment in January, while Constellation Enterprises LLC had a distressed exchange in early February.
S&P said the U.S. distress ratio, a measure of how many non-investment-grade issues are trading at more than 1,000 basis points above comparable Treasurys, started the year at 29.6%, the highest level since mid-2009. The distress ratio has been elevated since December of 2014, a signal that companies need more capital.
The number of global weakest links—or issuers rated at CCC or lower, placing them close to default—rose to 218 as of Jan. 27, from 195 as of Dec. 14. That is also the highest level since December 2009.
http://ift.tt/1mOqweX ... 2016-02-19
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BACKDOC: THERE IS STRONG SUSPICION THAT CHINA IS DUMPING US TREASURY BONDS.
WITH THE YIELD CURVE HEADED TO ZERO, IT SEEMS MORE LIKE A TRAP FOR INVESTORS!
THE FED IS ON RECORD THAT THEY MAY CHARGE EXIT FEES ON BONDS PROHIBITING INVESTORS FROM FLEEING! DOC IMO
Thunderhawk: Backdoc Alert
Some say China is behind the dollar’s weakness
China may be rebalancing its foreign currency reserves—driving the dollar lower in the process
The dollar’s weakness against the euro and yen over the last two months has frustrated traders as well as central bankers in Europe and Japan who’ve watched their currencies strengthen despite looser monetary policy.
Many market strategists have blamed the currencies’ resilience on investors seeking safe harbor from turbulent global markets. But others believe it’s an inadvertent consequence of a mysterious policy shift by one of the U.S.’s largest economic rivals: China.
In recent months, the People’s Bank of China has been rebalancing its massive foreign currency reserves, which were worth $3.231 trillion at the end of January. To do this, the PBOC, the Chinese central bank, has likely sold dollars and dollar-denominated assets like U.S. Treasurys in favor of government debt from eurozone countries and Japan, said Douglas Borthwick, head of currency trading at Chapdelaine & Co.
The necessary purchase of euros EURUSD, +0.1980% yen USDJPY, -0.56% needed to fund these transactions has supported both currencies against the dollar, even as the U.S. currency strengthened against other rivals in the G-10, Borthwick said.
Since mid-December, the euro has risen 1.1% against the dollar and the yen has gained 6.7%. Meanwhile, the dollar has strengthened by 1% against the yuan USDCNY, +0.1013% in China’s onshore market.
China’s rebalancing follows a decision in mid-December to begin measuring the yuan’s value against a trade-weighted basket. Previously, the yuan was primarily viewed against the dollar.
Borthwick said recent communiqués from China suggest the central bank is increasingly concerned with managing the value of the yuan, also known as the renminbi, against the basket, and not against the dollar, which necessitated the shifting reserves.
A long time coming
Chinese officials have been advocating for such as shift for at least five years.
On June 19, 2010, Yu Yongding, a former adviser to the People’s Bank of China, suggested in the China Securities Journal the country should reduce its dollar holdings to protect itself from a sharp depreciation in the U.S. currency.
But Chinese officials have been more concerned with the recent surge in the dollar’s value since 2011, which has dragged the yuan higher, weighing on the competitiveness of Chinese exporters.
“Over the last five years, they’ve been seeking to diversify their reserves in a more prudent manner, Borthwick said. “Either they would base their reserves on the SDR or on a trade weighting. And by the looks of it, they’ve gone with the trade weighting.”
According to China’s foreign-exchange authority, the largest constituents of the index are the U.S. dollar, at 26.4%, the euro at 21.4% and the yen at 14.7%.
It also includes the British pound, Hong Kong dollar, Australian dollar, New Zealand dollar, Singapore dollar, Swiss franc, Canadian dollar, Malaysian ringgit, Russian ruble and Thai baht.
China doesn’t publish details about the composition of its foreign reserves, and its process for managing the value of the yuan remains opaque. But China’s reserves declined by a total of more than $200 billion in January and December, according to official data, which Borthwick said supports the idea that China has been swapping Treasurys for assets denominated in other currencies.
Read: SocGen claims China is only months away from burning through its currency reserves
Don’t believe the hype
Investors are worried that capital flight and China’s efforts to fend off speculators will drain reserves, possibly forcing the country to allow its currency to depreciate sharply. But a report published earlier this month by Gavekal Dragonomics argued that claims of capital flight from the Chinese economy have been overexaggerated.
The report, published earlier this month, showed that domestic renminbi deposits actually rose in 2015. Household deposits rose by 10% and corporate deposits rose by 14%.
“There are few signs that people are withdrawing renminbi and switching into dollars on a large scale,” said Chen Long, the China economist at Gavekal and the report’s author.
Buying by the PBOC helped turn the yield on the 10-year Japanese government bond negative earlier this month, and it’s also one of the reasons why the yen has remained buoyant, despite the Bank of Japan’s efforts to weaken it, Borthwick said.
Indeed, speculation that China has been selling Treasurys en masse has intensified as of late.
The dollar has been relatively stable against most of its G-10 rivals over the last two months, as the chart below shows. It illustrates the buck’s value versus the Canadian dollar, New Zealand dollar, Australian dollar, Swedish krona, Norwegian krone, Swiss franc, British pound, euro and yen.
Large investors and market strategists alike believe the yuan will depreciate against the dollar as China struggles with slowing economic growth and the fallout from nonperforming loans.
Kyle Bass, founder of hedge fund Hayman Capital Management, said he’s placed a massive bet against the yuan on the expectation that China will need to choose between deleveraging its financial system and defending its currency from speculators.
But Borthwick believes the yuan’s value relative to the buck will be more or less stable this year as policy makers shift their focus to the trade-weighted basket.
“The idea that there’s immense capital flight leaving China is misplaced,” Borthwick said.
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BACKDOC: THE PROBLEM WITH DEBT IS IT BECOMES WORSE WHEN YOU HAVE DEFLATION!
WITH CHINA TRYING TO DEFEND ITS CURRENCY MARKETS HAVE HELD UP SOMEWHAT BUT WITH THE TRADING RESTRICTIONS LIFTED TODAY, I PREDICT A SIGNIFICANT DROP WILL OCCUR BY CHINA!
A MASSIVE DROP MAY FORCE THEM TO DUMP THE REMAINING TREASURY BONDS THEY HAVE TO DEFEND THEIR CURRENCY OR POSSIBLY DEVALUE THEIR CURRENCY INSTEAD!
EITHER WAY WE ARE IN A TENUOUS SITUATION! DOC
Thunderhawk: Opinion: Chilling ways the global economy echoes 1930s Great Depression era
Protectionism, shaky debt, and weak banking systems have consequences
One view of what caused the Great Depression in the 1930s is that the Federal Reserve failed to prevent a collapse in the money supply.
This is the famous thesis of Milton Friedman’s and Anna Schwartz’s A Monetary History of the United States, 1867-1960, and it was, more or less, the view of Ben Bernanke when he was chairman of the Federal Reserve.
The global economy today resembles that of the 1930s in several ominous ways.
Financial author Edward Chancellor recently called attention to a paper written by Caludio Borio, head economist at the Bank of International Settlements, that provides a fuller picture of the causes of the Great Depression. The paper also draws parallels between global economic conditions that led to the rise of protectionism in the 1930s and our situation now.
The paper’s thesis is that “financial elasticity” characterizes both the pre-Depression global economy and today’s global economy. Elasticity refers to the buildup of capital imbalances such as money flows into emerging markets because of low rates in developed markets.
Free flowing capital to emerging markets
As Chancellor tells it, the gold exchange standard established in the 1920s allowed U.S. and U.K. bonds to be used together with gold in exchange transactions among central banks. This arrangement encouraged growth in foreign lending.
Specifically, the U.S. lent money to emerging markets in Latin America and Central Europe. Investors in the U.S. enjoyed higher returns for seemingly little extra risk as defaults were initially low.
However, lending standards began to loosen, and American investors brought their dollars home after the Fed hiked rates in 1928. Money flowed into U.S. stocks, among other things, which, of course were poised for a crash.
Capital flow reversal
This reversal of capital flows, combined with a drop in commodity prices, destabilized the emerging markets by 1929, sending their commodity producers into bankruptcy. In 1930, several South American countries devalued their currencies and defaulted on their debt.
The crisis spread to Austria, Germany, and eventually to Britain, a heavy lender to Central Europe. Britain eventually devalued its currency, but in the U.S. the Fed actually raised rates in late 1931 to stem gold outflows. A banking panic ensued, as the U.S. finally “felt the full force of the world depression,” according to Chancellor.
The result of these debt problems was the institution of capital controls. Capital no longer flowed freely among countries. International trade slowed due to tariffs, and foreign debts were not repaid. Economist John Maynard Keynes himself favored the move away from globalization, and Chancellor quotes him as writing, “Let goods be homespun, and, above all, let finance be primarily national.”
Today’s similarities with the 1930s
Now, as in the 1930s, the global economy is stretched. A low interest-rate regime in the developed world has encouraged lending to emerging markets. Additionally, China’s and Europe’s banking systems are burdened with bad debts.
Moreover, last year, as Chancellor reports, emerging markets experienced their first capital outflows in nearly three decades, and that movement of capital appears to be continuing in 2016. Ratings agencies have downgraded South Africa and Brazil sovereign debt, while commodity prices continue to plunge.
Protectionism is in the air with the European Union and the U.S. imposing tariffs on Chinese steel. Also, anti-immigration sentiment is rising.
Although the additional restrictions imposed by a gold standard don’t exist today, the peg of Chinese yuan to the U.S. dollar DXY, -0.26% is unsustainable in Chancellor’s opinion, as may be the euro EURUSD, +0.1980%
So much elasticity or the buildup of imbalances can be painful during the process of restoring balance. Therefore, regarding monetary policy, it’s important, according to Borio, to lean “against the build-up of financial imbalances even if near-term inflation remains low and stable.”
Borio’s paper was written in August 2014, so it’s difficult to know what advice he’d have for the Federal Reserve today. But in his paper, he notes that the imbalances that low rates and elasticity produce may “return us to the modern-day equivalent of the divisive competitive devaluations of the interwar years; and, ultimately, [trigger] an epoch-defining seismic rupture in policy regimes, back to an era of trade and financial protectionism and, possibly, stagnation combined with inflation.”
http://ift.tt/1L3bKqJ? ... 55df223586
Mountainman: Just a "RECAP DATE"........NO.....NOT DINAR RECAPS......A RECAP DATE of AUGUST 8,1927.......Some May Not REMEMBER my Post from the Past where I Brought Forward the "FACT" that the 12 Pulled "THEIR" MONEY OUT "Before" the MARKET CRASH of 1929........
So the MAIN POINT is......as SOLOMON said......"THERE IS "NOTHING" NEW UNDER THE SUN".........HISTORY repeats itself AGAIN....
WHY???....... to PROGRESSIVELY "TRANSFER" CONTROL in this CURRENT MARKET....(REPRICING,CORRECTION,DEBT SELL OFF)etc....... You get the Point.....
So SINCE it Worked in the PAST....."THEY" say.....Let's TWEAK IT for The "NEXT" MONEY MADE to ORDER"......=for The WORLD MARKETS......but The "SUBSTANCE" of OUR OBJECTIVE....."REMAINS the Same"....
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IMO......REMEMBER to "START" the NEW REALITY....."THEY" have to "DEFLATE"....So to Speak the OLD REALITY........(8)........ !!!!!!!! Blessings,Mountainman
BACDOC: NITE ALL!!!
Mountainman: Night HAWK/DOC.....And KTFA ..........Blessings,MM
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