India Joins Asian Dollar Exclusion Zone, Will Transact With Iran In Rupees

Two weeks ago we wrote a post that should have made it all too clear that while the US and Europe continue to pretend that all is well, and they are, somehow, solvent, Asia has been smelling the coffee. To wit: "For anyone wondering how the abandonment of the dollar reserve status would look like we have a Hollow Men reference: not with a bang, but a whimper... Or in this case a whole series of bilateral agreements that quietly seeks to remove the US currency as an intermediate. Such as these: "World's Second (China) And Third Largest (Japan) Economies To Bypass Dollar, Engage In Direct Currency Trade", "China, Russia Drop Dollar In Bilateral Trade", "China And Iran To Bypass Dollar, Plan Oil Barter System", "India and Japan sign new $15bn currency swap agreement", and now this: "Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says."" Today we add the latest country to join the Asian dollar exclusion zone: "India and Iran have agreed to settle some of their $12 billion annual oil trade in rupees, a government source said on Friday, resorting to the restricted currency after more than a year of payment problems in the face of fresh, tougher U.S. sanctions." To summarize: Japan, China, Russia, India and Iran: the countries which together account for the bulk of the world's productivity and combined are among the biggest explorers and producers of energy. And now they all have partial bilateral arrangements, and all of which will very likely expand their bilateral arrangements to multilateral, courtesy of Obama's foreign relations stance which by pushing the countries into a corner has forced them to find alternative, USD-exclusive, arrangements. But yes, aside from all of the above, the dollar still is the reserve currency... if only in which to make calculations of how many imaginary money one pays in exchange for imaginary 'developed world' collateral.

Greek Bondholder Talks Stalled, Agreement Unlikely By Monday Deadline

We were not at all surprised to learn this morning that not only has an agreement not been met ahead of Monday's critical Eurozone FinMin meeting (the first of many for 2012) in Brussels, but talks have "stalled". Dow Jones reports: "Talks between Greece and its private sector creditors over a debt writedown plan appeared to stall Saturday as the banks' top negotiator left Athens amid signs of fresh disagreements over how much Greece would pay its bondholders in the future. Officials close to the talks said they may not conclude before a meeting Monday of euro-zone finance ministers where a second bailout which will keep Greece from defaulting is supposed to be discussed. Without a deal on the write-down of the debt held in private hands, the loan can't be released. Institute of International Finance chief Charles Dallara, who has been negotiating with Greek officials on the bond swap plan for the last two days, left Athens Saturday as hurdles remained over the interest rate the new bonds would pay private sector creditors. "Right now there are no talks. There will be consultations with the EU and the IMF to determine where we stand and then we'll see. It (negotiations) has again become complicated with the new demands over the coupon," said a person with direct knowledge of the talks." Which is why any statements that Greece, or the ECB, has all the leverage are total rubbish - if Greece wanted to get the deal done over Hedge Funds' dead bodies, it would have. It hasn't. And yes, a forced cram down of UK-indentured Greek bonds is still a possibiliy, but we will shortly make all too clear that should Greece proceed with this last ditch scorched earth approach, it would mean a complete overhaul of the entire PIIGS bond market, and why a sell off in €800 billion of it would be imminent.

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Jim Sinclair’s Commentary

This is the worst nightmare of the fat cats in Miami, Greenwich and the Hamptons.
Compliments of CIGA David from www.madisonstyle.com

The Hague opens international financial tribunal Posted on January 20, 2012 by maxkeiser
An international tribunal to settle financial disputes throughout the world has opened in the Dutch city of The Hague on Monday. The tribunal’s name, PRIME Finance, stands for Panel of Recognized International Market Experts in Finance. The team of judges includes almost 100 people, whose work will be supported by international legal and market experts. The establishment of new legal institution has been supported by the City of The Hague and the Dutch Ministry of Economic Affairs, and will be housed in The Hague’s Peace Palace. It is also home to the United Nations International Court of Justice and the Permanent Court of Arbitration.
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Jim Sinclair’s Commentary

QE to infinity. Gold will range $1700 to $2100.

Fed’s Latest Easing Could Cost $1 Trillion: Economists Published: Thursday, 19 Jan 2012 | 2:09 PM ET
By: Jeff Cox
CNBC.com Senior Writer
The Federal Reserve is likely to step in with $1 trillion worth of easing that could be announced as soon as this month, according to a growing consensus of economists who see the recent uptick in economic growth as unsustainable.
With the Fed’s Open Market Committeeset to meet next week, expectations are rising that the languishing housing market will drive the central bank to buy up mortgage-backed securities.
The goal of the purchases will be to drive down interest rates even further from current record-low levels, and, less obviously, to spur confidence that more monetary tools remain to stimulate the economy.
Of course, the announcement also could push stock prices higher, as did the Fed’s last balance sheet expansion begun in November 2010.
Just a few months ago, market observers speculated that another round of quantitative easing — QE3, in this case — would be politically infeasible and probably unnecessary given hopes for better growth in 2012.
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Jim Sinclair’s Commentary
You can conclude a few very important points from this:

1. QE will go to infinity before facts overwhelm MOPE and it hits the fan.

2. The credit event about to occur in Greece will not be deemed a default because the largest 5 US banks carry 97% of the so-called insurance, credit default swaps, therefore if Greece defaults (a credit event condition determined by an organization made up of major US banks and investment houses ) those banks would be hammered into financial hell.

3. Gold’s true range in 2012 will be $1700 to $2100.

World Bank fears Europe’s crisis could set off deeper global slump than Lehman collapse
The World Bank has slashed its global growth forecast and told developing nations to prepare for the worst, warning that Europe’s debt crisis could trigger an even deeper slump than the post-Lehman collapse three years ago. By Ambrose Evans-Pritchard
3:49PM GMT 18 Jan 2012
"The global economy has entered a dangerous phase. The financial system of the largest economic bloc in the world is threatened by a fiscal and financial crisis that has so far eluded policy-makers’ efforts to contain it," said the bank in its Global Economic Perspectives.
"The possibility of further escalation of the crisis in Europe cannot be ruled out. Should this happen, the ensuing global downturn is likely to be deeper and longer-lasting than the recession of 2008/2009 because countries do not have the fiscal and monetary space to stimulate the global economy. Activity is unlikely to bounce back as quickly."
"An escalation of the crisis would spare no one," said Andrew Burns, the key author. "Developing countries should hope for the best and plan for the worst. If these downside risks materialised there is not much developing countries can do to prevent it. But they can prepare for it."
The report said rich countries had used up their fiscal and monetary shock absorbers after the Lehman crisis. While some poorer states still have the means to cushion the blow, many have already pushed fiscal deficits and credit growth to the limits of safety.
"Developing countries would have much less fiscal space than in 2008 with which to react to a global slowdown. As a result, if financial conditions deteriorate, many of these countries could be forced to cut spending pro-cyclically, thereby exacerbating the cycle."
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Jim Sinclair’s Commentary
If you wish to build something beautiful and lasting you cannot be a whining child or a destroyer.
You cannot be a coward financially or physically.
You cannot fail to meet the opposition head to head.
You must keep to the high road but without any concern of injury.
You cannot be a Wall Street sociopath so common to the young financial industry today.
You cannot lead hiding behind a bush which in this technical world involves renting an IP address in Dubai or China.
Great was the manliness of Hamilton and Burr. You must have white hair.

Jim’s Mailbox

January 20, 2012, at 11:19 am
by Jim Sinclair 

Jim,

I would like to suggest that there may be another element to non-demand related cost push inflation which assists in producing increases in economic growth.
The hardware industry has seen some spectacular price increases over the last five years which most would attribute to the increased costs of raw materials like oil, copper, steel and so on. During a routine recent order for drywall I was notified that the mid-grade drywall we purchased which has water-resistant qualities is no longer available and there is now standard drywall or a much more expensive mold guard. The mold guard costs about 15-20% more than the corresponding previous mid-grade drywall did. Standard drywall increased in price by approximately 25% at the beginning of 2012. What we are witnessing is a trend toward higher priced goods. Most of us are familiar with the attempts to discontinue production of the ever economical standard incandescent light bulb in favour of the compact fluorescent.  CFL bulbs on average can cost nearly 4 times as much as a standard incandescent.  Paint is another industry where on top of spectacular price increases due to the increased cost of oil, there has also been a clear move toward greener, higher priced paints.  In many cases there is federal legislation which is mandating much of this change and it now seems manufacturers are following suits in industries not necessarily under watch by the federal government, whereby they are discontinuing old, standard products in favour or new more expensive items. 
When someone looks only at gross domestic product or revenue they are not necessarily aware of the entire picture.  It is quite possible (as the mining industry would be very familiar with), that an increased cost of the product for sale will drive revenue growth although it may not be a product of demand.
So the argument of a recovery, which as you have stated is merely a bounce along the bottom, is even more controversial when considering that the inflation which we know is created by the increase in the supply of money is being assisted by legislation and manufacturers efforts to discontinue popular low priced products in favour of much more expensive items that in many cases perform similarly.
Marc "The In-Trench CIGA"

Jim,

You said it first!
The IMF is now looking for money because Europeans has no solutions to help Greece and Hungary and the other European PIGS.
The money at the ECB will be used to help the European banks.
At the end (QExx) all the money will come from the Fed.

Best regards,
CIGA Christopher


IMF Seeks to Raise Lending Power by Up to $500 Billion Amid Europe Crisis By Simon Kennedy – Jan 18, 2012 11:09 AM MT
The International Monetary Fund is proposing to raise its lending capacity by as much as $500 billion to insulate the global economy against any worsening of Europe’s debt crisis.
The Washington-based lender is aiming to increase its resources after identifying a potential need for $1 trillion in financing in coming years, an IMF spokesman said in a statement. The IMF is studying options and will not comment further until it has consulted its members, the fund said. To incorporate a cash buffer, the lender is seeking a total $600 billion.
IMF Managing Director Christine Lagarde said yesterday her staff is looking at ways to expand the fund’s war-chest, which currently has about $385 billion available. While euro-region nations have already pledged to contribute 150 billion euros ($192 billion), the U.S. has said it has no plans to make new bilateral loans and leaders of Group of 20 nations ended last year at odds over the issue.
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Accumulation In Copper, Euro, Gold

Eric De Groot at Eric De Groot - 1 hour ago

Copper's green box breakout marks yet another transition from accumulation to markup phase. How many are even watching copper at this point? See chart 1. Chart 1: Copper (JJC) And Copper Diffusion Index (DI): The death of the Euro is highly advertised by likely premature. Looks like the crowded Euro short trade, accumulation illustrated by high DI readings, will be pressured soon. The... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

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We Are Just Postponing The Problem

Admin at Marc Faber Blog - 2 hours ago

If we look at U.S. government debt, it reached 1 trillion dollars in 1980 and in the year 2000 we were at 5 trillion dollars. So between 2000 and 2011 we’ve grown 3 times and the expansion of the debt will continue. The day interest rates go up for whatever reason, the cost of financing will also become burdensome. I’m negative about the outlook for the world because we are trying to solve the crisis created by excessive debt growth and excessive leverage with even more credit and leverage, which will just postpone the problem. - *in CNBC* *Marc Faber is an international investor k... more » 

 

2012 Asia-Pacific Commodity Outlook Conference

Admin at Jim Rogers Blog - 2 hours ago

Jim Rogers, internationally known commodity expert and best-selling author, will be the keynote speaker for the 2012 Asia-Pacific Commodity Outlook Conference in Singapore, sponsored by CME Group. The Outlook Conference will cover the supply and demand outlook for key agricultural and soft commodities; base and precious metals; energy products including petroleum and crude oil; and raw materials. The conference, to be held February 22 and 23 at Singapore's Grand Hyatt Hotel, is intended for General, Finance, Operations, Purchasing and Sales executives anywhere in the commodity pro... more » 

 

Raid on gold and silver rebuffed/silver rises above $32.00 in access market/No deal on Private Greek debt

Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 3 hours ago

Good morning Ladies and Gentlemen: Before commencing we finally witnessed 3 banks enter the banking morgue.  The FDIC holiday for the boys is now over. Here are the latest entrants; 1. American Eagle Savings Bank of Boothwyn PA 2. First State Bank of Stockbridge GA 3. Central Florida State Bank, Bellview FL. may they rest in peace. end I wrote to the CFTC last night suggesting to them that

Peter Boettke Explains Austrian Economics

In this very informative interview between The Browser and Peter Boettke, the professor of economics discusses the contributions made by the Austrian School, and explains the various nuances of the economic school by way of recent books by "Austrians." He also explains what we can learn from Mises and Hayek, and argues that economics is the sexiest subject.

Ron Paul on FOX News w/ Neil Cavuto 01/21/12

Yes, The War for the Internet Has Begun

[Ed. Note: Related.]
by Anthony Wile, The Daily Bell:
By now anyone who uses the Internet seriously, and plenty who don’t, is aware of the arrest of six-foot-seven, 300-pound Kim Dotcom, an outsize figure in the business of facilitating Internet downloads.
The problem with his company, Megauploads, according to the US Justice Department and the FBI that carried out the arrest, is that his brainchild allowed users to traffic in “stolen” – copyrighted – entertainment on which no royalties had been paid.
In this article, I’ll comment on the arrest of Kim Dotcom and try to show how this one action is actually the beginning of an entirely new phase of what we may call the Internet Wars.
I’m not the first to notice this. As Kurt Nimmo and Alex Jones, of Infowars fame, pointed out in an article posted today entitled “The Great Internet Wars Have Begun,” we wake up to an entirely new Internet era this weekend.
Read More @ TheDailyBell.com

Ron Paul Highlights – South Carolina CNN Debate 01/19/12

[Ed Note: Posted this yesterday. Bumping it back to the top... because it's awesome. ]

Economic Collapse Amids a Mini-Recovery

by Bob Chapman, GlobalResearch.ca:
If the entire financial system does not come down upon our heads and if we do not have another war, global growth is going nowhere in the year’s ahead. We had a mini-recovery, but it cost $1.8 trillion. We had a second recovery and that cost $1.5 trillion. We are entering a third of what is becoming yearly recoveries that will probably cost $1.3 trillion. In other worlds without these massive injections of money and credit we would probably be in a deflationary depression.
As a result of overspending and poor financial choices state, county and local governments continue layoffs, increase taxes, cut services and attempt to pay back unemployment loans from the Federal government by creating more debt, by floating additional bond issues. The people who run these governments just do not get it. They expect the next bull market is just around the corner and it isn’t. In 2014-2015 we can expect a housing inventory at banks of 9.8 million homes, all for sale. That guarantees no housing recovery for years to come.
The massive exodus of good paying jobs, one million a year, due to free trade, globalization, offshoring and outsourcing and the loss of 450,000 manufactures will soon end, as a number of countries debate trade barriers. Such protectionism will initially cut back on world demand and the expansion of world debt. Austerity is already a by ward and means restrained spending as well. Governments will become more onerous with additional regulation and taxes, because they have no intention of really cutting spending. We have been waiting for more than three years for debt reduction and saving and it has not as yet really materialized on an ongoing basis. We ask, are American consumers capable of reducing debt and savings? If they do will personal consumption of GDP fall from 70% to lower levels? The answer is of course it will.
Read More @ GlobalResearch.ca

Precious Metals Stocks: Diversify, Seriously

by John Rubino, DollarCollapse.com:
Gold and silver mining stocks will be the dot-coms of the second half of this decade. Yet most of the people who bet on them will lose money because they ignore the first rule of speculative sectors, which is that no matter how well the sector does, most of its constituent companies will fail.
This rule applies wherever hot money is chasing untested concepts, but it’s uniquely valid for mining, where reserves are uncertain until actually dug up, mines can cave in without warning, local laws can change in unfavorable ways, and managements frequently make dumb acquisitions. These risks make even the most attractive mine something of a crapshoot. Two recent examples:
Read More @ DollarCollapse.com

EL-ERIAN: We’re Suffering From ‘A Crisis In Capitalism’

by Simone Foxman, BusinessInsider.com:

Most everyone agrees the global capitalist system has failed on two main counts–growth and fairness, writes PIMCO CEO Mohammad El-Erian in a column published today in the Financial Times.
He argues that continuing failure to address both (not just one) of these problems not only constitutes a “crisis,” but “raises legitimate questions about the model itself.”
If the system is going to continue, three things have to happen:

• Capitalism is prone to occasional market failures, and the world has to accept this.
• Global imbalances, created by the rise of countries like China, have become unsustainable and must be addressed.
• Global institutions must transform to fairly represent the global population in order to adequately recognize and deal with problems.

Read More @ BusinessInsider.com

Things That Make You Ask “Huh?”

Jim Cramer Plugs Microsoft on CNBC:
http://www.cnbc.com/id/15840232?video=3000068514&play=1
Bill Gates “Insider Trading” Report on MSFT Over The Last Year (-$7,686,713,657):
http://www.finviz.com/insidertrading.ashx?oc=902012&tc=7

Mike Maloney on Credit-Based Money, Feudalism, and Financial Enslavement

Italian and Spanish Banks See Billions Withdrawn

Italian and Spanish banks suffered the largest outflows of depositors’ money last year as customer fears over the safety of money held at Southern European lenders escalated.
by Harry Wilson, Telegraph.co.uk:
More than €100bn (£83bn) of deposits were withdrawn in the 11 months to the end of November last year, with €61bn taken out of Italian banks, the largest overall outflow of money from any eurozone banking system, according to Credit Suisse.
Spanish banks suffered the second largest withdrawals at €48bn, equal to just under 3pc of total Spanish bank deposits, while Greek banks recorded the largest percentage fall in deposits with €42bn withdrawn, equal to a fifth of the country’s total deposit base.
Together Greek, Portuguese, Irish, Spanish and Italian banks suffered net withdrawals totalling close to €150bn, exacerbating their already considerable funding problems.
The peripheral country outflows were in marked contrast to the eurozone’s two largest banking markets. French banks recorded deposit inflows worth €132bn, increasing France’s deposit base by 7pc to €1.9 trillion.
Read More @ Telegraph.co.uk

Gold Confiscation, a Reality? Part III

by Julian D. W. Phillips, GoldSeek.com:
The issues facing the developed world’s financial systems are ones of liquidity and solvency, among others. The assumptions of liquidity levels proved horribly incorrect! The request of the IMF to lift their resources from $380 billion to $980 billion and the currency swaps between the U.S. and Eurozone confirm that (these may still prove inadequate). Many markets, which reserve managers had considered to be deep and liquid, proved to be the exact opposite with assets-selling only at a large discount. This was even true of some AAA-rated assets, showing that credit ratings offered no effective guide to liquidity. Many central banks had to rely on bi-lateral currency agreements with other central banks, principally the US Federal Reserve.
The situation is heading for even stormier waters on both sides of the Atlantic. But true to history, the gold market remained liquid throughout the financial crisis. This was the case even at the height of liquidity strains in other markets –a reflection of the size, low market concentration, and flight to quality tendencies of gold. As we said earlier: the Swedish Riksbank used its gold reserves at the height of the crisis to finance temporary liquidity assistance.
Read More @ GoldSeek.com

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