World on course for next crisis, warns Gordon Brown
The global economy is heading towards another meltdown despite the lessons of the last financial crisis, Gordon Brown has warned. 

By Emma Rowley 6:51PM BST 16 May 2011
The former prime minister said that unless leaders take more action, the recent credit crunch could prove just the "trailer" to a string of crises.
"In 2008, when we were hours away from ATMs running out of money, small businesses being unable to pay their staffs, and schools and hospitals closing down through lack of cash flow, it felt as if the crisis of the century was upon us," he wrote in US magazine Newsweek.
"But if the world continues on its current path, the historians of the future will say that the great financial collapse of three years ago was simply the trailer for a succession of avoidable crises that eroded popular consent for globalisation itself.
"Those who believe that the world has learned from the mistakes that led to the crash are mistaken."
Mr Brown said the "resolve" to act seen immediately after the crisis has been replaced by indecision and vested interest. He urged politicians at the next G20 summit, which takes place in Cannes in November, to take control of a globalised financial system which is still "perilously" unregulated.
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The History Of The World's "Reserve" Currency: From Ancient Greece To Today 

Submitted by Tyler Durden on 05/18/2011 09:33 -0400

1 Kilo Gold Futures Start Trading On Hong Kong Merc 

Submitted by Tyler Durden on 05/17/2011 20:48 -0400

As of 8 pm Eastern, the Comex' monopoly to the precious metals futures is over. As we reported previously, today, at 8 am local time, is when the Hong Kong Mercantile exchange would start trading the inaugural Asian precious metal futures contract: the 32 ounce /1 kilo/ gold futures. In the first 30 minutes of trading it appears to have been a subdued session, with just 22 contracts changing hands in the August 2011-June 2012 frame. How this trading will impact prices: nobody knows (yet). The spot price of gold has barely budged in the past hour. That said, now that PM futures fragmentation is starting, we expect that within 2 years we will have various deranged HFT algos trading tonnes of gold, quote stuffing globally, and otherwise creating one of the most volatile trading environments imaginable. And since we know you are asking: the margin schedule for the HKMerx will be kept and listed by the same LCH.Clearnet that hikes and lowers Irish and Portuguese bond margins by 10% on an almost weekly basis. Let see now how the Comex hikes its gold margins with impunity if it has competition that keeps margins "artificially" low, and provides disgruntled Comex clients with an alternative venue that accepts far less cash collateral to trade. 

 

 

 

 

Guest Post: The End Of History 

What we are witnessing is the ideological exhaustion of “Western liberal democracy” and therefore the last gasp of the fraud upon which it rests: the state, even its best form. No longer able to hide behind the Jeffersonian dream of constitutional freedom and order or the Lincolnian myth that the dream could be preserved at the expense of the principle upon which it was founded, the American state’s demise proves that “the final form of human government” has not yet arrived – not because a final form shouldn’t have arrived but because, for those who have had so much fun during historical times, the aftermath won’t be any fun. On the contrary, it will be “a very sad time” 

 

 

 

 

Strategic Alpha On QE, Greece And UK Inflation 

I am now of the opinion that the US will have to go back to fighting deflation soon and that Q/E (probably in a different form) will be needed. Massive inflationary impacts look to be delayed (for now): Whilst I am happy to accept that Bernanke may have delayed or stopped a deep depression for now and that he has made a lot of Wall St. guys very rich, the whole idea of the Q/E programme was supposed to be, if we are to believe him, to create growth and set the economy back on a sustainable growth path, reduce unemployment and cure the housing problem by getting banks to lend and the consumer spending. Mate, you failed! Unemployment is still at 9% (and a lot more if you look at the real stats over 22%), the participation rate is falling and the amount on food stamps is over 4mln! Housing is spiralling lower again as prices continue to fall and banks, whilst having their balance sheets ballooned by free money still sit on hidden toxic waste from the sub-prime issue and refuse to lend at competitive rates. 

 

 

 

 

UK And US Data Shows Stagflation Threat Deepening - Asian Gold Demand Remains Very High 

Submitted by Tyler Durden on 05/18/2011 07:19 -0400

U.K. unemployment claims rose in April at the fastest pace since January 2010, showing the very fragile nature of the recent tentative economic recovery. Government spending cuts, austerity measures and accelerating inflation are clearly beginning to impact embattled consumers. In the U.S., stagflation is also an increasing, if unacknowledged, threat as the classic symptoms of inflation - slow growth, high unemployment and inflation are present. Weak U.S. factory output and home building data yesterday suggests that the world's largest economy is slowing down again. Official inflation figures in the U.S. remain benign but hedonic adjustments and many adjustments to the methodology of calculating inflation in the last 20 years mean that that the Consumer Price Index is no longer an accurate measure of real inflation in the economy. This macroeconomic risk coupled with continuing geopolitical risk is supportive of gold continuing to receive safe haven demand. The launch of the new Hong Kong Commodity Exchange will result in Asia having an even bigger say in prices of commodities and precious metals. The exchange is backed by China’s biggest bank and a Russian tycoon and will challenge established markets and exchanges in Europe and the U.S. 

 

 

 

 

 

US Economic Worries Hit 2 Year High 

Submitted by Tyler Durden on 05/18/2011 07:42 -0400

According to Gallup, attempts to distract the US population with trivial side stories is failing spectacularly, as 74% of survey respondents have responded that the economy is the "most important problem" facing America today, which is the highest percentage in two years, and since the market lows in March 2009. So even as the market has doubled, this appears to have done little for the average American who is now more concerned about the true "economy" than ever since the Great Financial Crash, and not merely the one indicated by the Russell 2000. Chalk one more failure to Ben's attempt at forcing the wealth effect upon the great unwashed. 

 

 

 

 

 

World Bank Sees Dollar Reserve Status Ending Over Next Decade 

Submitted by Tyler Durden on 05/18/2011 09:25 -0400

In a report released yesterday titled "Multipolarity: The New Global Economy", that other "bailout" organization, the World Bank, says that due to the developing world's pronounced greater growth curve through 2025 (expected to grow at 4.7% compared to 2.3% for the developed countries), the outcome will be that "The balance of global growth and investment will shift to developing or emerging economies." More importantly, as the FT summarized, a "different international monetary system will gradually evolve, wiping out the US dollar’s position as the world’s main reserve currency." As a result of these "inevitabilities" (which will be interested to see how they are attained considering according to a recent report, the world will need to double its debt to double it GDP, so where all this new debt will come from we don't really know), there are three potential scenarios: i) A status quo centered on the US dollar, ii) A system with the Special Drawing Rights (SDR) as the main international currency, iii) A multicurrency system. And while this obviously covers every possible outcome so absolutely no value added there, the WB is focused on outcome iii and believes that the dollar will gradually shift away from its current position of reserve currency prominence. This is not surprising: after all it is none other than World Bank president Robert Zoellick who recently predicted a return to the gold standard and an end to USD hegemony. Our advice to Bob: stay away from penthouse suites at the Sofitel. 

 

 

 

 

 

Is This Why DSK Is Housed In A Ward For Inmates With Infectious Diseases 

Submitted by Tyler Durden on 05/18/2011 10:10 -0400

Yesterday when we broke the news that DSK was housed in Rikers Island "West Facility" reserved for inmates with infectious diseases, we speculated, jokingly we hoped, that this may be due to his affliction with a certain sexually transmitted disease. Alas, if what the the NY Post reports this morning ends up being true, the situation may be substantially more serious: "Dominique Strauss-Kahn may have more to worry about than a possible prison sentence. The IMF chief's alleged sex-assault victim lives in a Bronx apartment rented exclusively for adults with HIV or AIDS, The Post has learned. The hotel maid, a West African immigrant, has occupied the fourth-floor High Bridge pad with her 15-year-old daughter since January -- and before that, lived in another Bronx apartment set aside by Harlem Community AIDS United strictly for adults with the virus and their families." Oops.