Monthly Archives: July 2015

Central Bank Lies & Consequences

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“We now have two examples in three years of a major central bank simply walking away from its supposedly most fundamental obligation. The lies upon which fractional reserve banking exists are beginning to catch up to it. Citizens everywhere in the Eurozone now have good reason to wonder if their banks will be next. After Cyprus and Greece, why should anyone believe anything the ECB says?  If the ECB is willing to shut banks in a crisis, what assurance do we have that the Bank of England, Federal Reserve or the Bank of Japan won’t do the same? Answer: None. Today’s highly leveraged banks can fail very fast, stretching the capacity of even the strongest central banks.”

http://www.thedailybell.com/news-analysis/36381/Central-Bank-Lies–Consequences/

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Living with Venezuela’s high inflation

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“As the world watches the Greek debt crisis unfold, the economy of a country in another corner of the planet is also struggling, and some experts are even trying to draw similarities.  Venezuela has the world’s highest inflation, leaving many facing shortages and soaring prices.  While the government of president Nicolas Maduro says this is the result of an ‘economic war by capitalists and the United States against the country’s socialist revolution’, critics say the high inflation rate is simply showing the government’s economic incompetence.  The BBC’s Daniel Pardo explains how inflation affects what Venezuelans buy every day, like the popular snack called Arepa.”

http://www.bbc.com/news/world-latin-america-33427761

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The real sign that Greece’s financial turmoil is getting worse

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“Here is a slightly surprising sign that Greece is in the classic throes of a bank run: car sales jumped by 47pc in April. It was the 20th consecutive month that car registrations of new and used vehicles has risen.  People living in a country gripped by financial turmoil often worry about the security of their money. If it’s in a bank, it can be caught up in capital controls or lost through insolvency. Better, then, to spend it. And the purchase of choice is often a car.  This makes motor vehicle sales a decent proxy for financial turmoil (under some circumstances).  Ordinary Greeks are taking their money of the financial system and spending it on ‘hard’ assets.”

http://www.telegraph.co.uk/finance/economics/11599513/The-real-sign-that-Greeces-financial-turmoil-is-getting-worse.html

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Could Ukraine default in July next to Greece?

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“Next to Athens, Kiev too could fail by the end of July. Now, the Ukrainian government seeks to re-structure its debts. However, little progress has been made in negotiations with the creditors.  Since the beginning of 2015, Ukraine has been facing a deep economic crisis, hit with a national currency devaluation by 70 percent and a massive essential G-D-P drop. As the deadline for the next bond repayment is nearing, the country’s Finance Minister Nataliya Jaresko doesn’t rule out the possibility of Kiev suspending the looming pay-off.”

http://www.presstv.ir/Video/2015/07/01/418393/Ukraine-West-Russia-

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Loads of Debt: A Global Ailment With Few Cures

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“As central banks like the Federal Reserve and the European Central Bank have printed trillions of dollars and euros, markets in stocks and bonds, as well as other types of assets, have responded optimistically, sometimes reaching highs that were unthinkable seven years ago in the depths of the financial crisis.  Central banks can make debt less expensive by pushing down interest rates. Crucially, though, they cannot slash debt levels to bring much quicker relief to borrowers. In fact, lower interest rates can persuade some borrowers to take on more debt. Many countries are now in a position where their governments and companies live in fear of an increase in interest rates.”

http://www.nytimes.com/2015/06/30/business/dealbook/trillions-spent-but-crises-like-greeces-persist.html

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The world’s largest megacity, with more people than Canada, Argentina, or Australia

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“China’s Pearl River Delta is swallowing up nearby cities.  As the largest urban area in the world, the region features a population of roughly 42 million housed inside a 2,700-square-mile perimeter.  The Pearl River Delta is made up of nine cities, each boasting populations above 1 million. And China is combining them all into one giant megacity.  It’s bigger than Canada (pop: 35 million), Australia (pop: 23 million), and Argentina (pop: 41 million).  The PRD began as a rural region with an agriculture-based economy. Urbanization didn’t take off until the early 1990s, when factories and big business flocked to the region and brought with them millions of new residents.”

http://www.businessinsider.com/chinese-mega-city-has-more-people-than-canada-argentina-or-australia-2015-7

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Iron Ore Slumps to Lowest Since at Least 2009 in China

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“Iron ore retreated to the lowest level in at least six years as a rout in China’s stock markets threatened to hurt demand in the largest buyer just as the biggest producers plan to raise output.  Ore with 62 percent content delivered to Qingdao sank 10 percent to $44.59 a dry metric ton on Wednesday, according to Metal Bulletin Ltd. That’s the lowest price on record dating back to May 2009, the data show. The raw material was until the past several years traded predominantly through annual benchmark prices. Compared with those benchmarks, this would be the lowest since 2005, data compiled by Clarkson Plc show.”

http://www.bloomberg.com/news/articles/2015-07-08/iron-ore-collapses-to-record-low-as-commodities-sink-on-china

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John Templeton, R.I.P.

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“John Templeton was one of the greatest stock pickers of the last century.  He began his fortune in a crisis market.  The year was 1939. The Great Depression was still on, and Nazi Germany had just invaded Poland and kicked off World War II.  It was in this environment of fear and pessimism that Templeton (just a few years out of college) invested $10,000 in 104 US stocks selling for $1 or less.  Four years later, his profits would prove him right. He sold his portfolio for a 300% gain. It was the beginning of what would turn into one of the largest investment empires in the world.  In 1962 Templeton renounced his US citizenship. He became a citizen of the Bahamas, which has no income tax.”

http://www.internationalman.com/articles/doug-casey-on-a-man-who-starved-the-beast-of-100-million

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Microsoft plans 7,800 layoffs, $7.6 billion Nokia write-down

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“After cutting its workforce by around 18,000 over the past year, Microsoft is readying another round of heavy layoffs. The company will cut 7,800 jobs over ‘the next several months.’ Many of the dismissals will come from Microsoft’s phone business, which joined the company’s newly formed ‘Windows and Devices Group’ in June. Microsoft is writing-down a large portion of its value in the coming months — $7.6 billion — which is essentially a tacit admission that paying so much money for the flailing company was not the most financially sound decision.”

http://www.engadget.com/2015/07/08/microsoft-job-cuts-2015/

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Another Chinese Firm Defaults on Its Dollar Bond

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“Coal importer Winsway Enterprises Holdings Ltd. became the nation’s second company to default on a dollar-denominated bond this year.  The Hong Kong-listed company isn’t able to pay $13.2 million of semi-annual interest due Friday on $309.3 million of notes that mature next year, according to a Hong Kong stock exchange filing on Friday. A 30-day grace period expired May 8 after it skipped the payment April 8 and hired advisers to restructure its debt.  The recent missed payments are the latest challenge for foreign investors in China who may need to navigate unfamiliar means of recourse to a defaulted company’s assets.”

http://www.bloomberg.com/news/articles/2015-05-08/china-defaults-mount-as-coal-company-winsway-misses-bond-coupon

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