"Full Fledged Panic" - World Economic Crisis Moving to a New Stage - Global Capitalism Running Out of Road

[barrym]

The German working and middle classes took a hit on their living standards 10 years ago. They will not be happy to pay off other peoples' debt. An economic union of Europe, without an equal social and political union, would be a disaster, liable to fracture. Given that the EU project was one entered into by separate capitalist states, all wanting to benefit themselves at others expense and to jointly knock back the rights and benefits gained post war by social democracy and trade unionism, that isn't going to happen.

+100 That is the real crux, Germany, i.e. German pols, i.e. Merkel, won't allow what they call a resource transfer model for the €, where their money gets used by wasters like us. This is very different to the Germans supporting the ECB, where they insist on inflation control as the only policy. Any common currency/monetary union that would require the well off to support the less well off is not on the German agenda.

Meanwhile the pundits (or at least that arch capitalist that morning ireland uses) push on with their 'fiscal common market' agenda - thus ensuring, in the short term, a German based guarantee for their betting. The only change they see possible is what is called the "N€uro" the Northern members (I assume not including us) split off from the others. This is even better for the spivs - only the rich and famous in the market, rampant capitalism for all.....

The US debt is now becoming a real problem, with China getting very jumpy about the potential for the collapse of the dollar. Other countries, who have healthier economies so far, are now panicking about hot money seeking a refuge in their currency, driving it up and making their exports unaffordable. The indebted, bankrupt countries are trying to restore value to their economies by cutting social spending and wage cutting, driving up the rate of exploitation of people working. This is simply not working, but making indebtedness worse.

Yes, part of the wider issues, rampant free market gambling by dealers ensures that everyone's economy is under pressure.

I'm reading "Prosperity without growth" by Tim Jackson, a little bit 'knitted' and maybe a little bit naive, but a source of really interesting data about the consequences of the headlong pursuit of growth as the only objective of the present economic policies. I don't suppose it is required reading in the Dept of Finance or the ECB, and certainly not in the City of London.

Video here -
[ame="http://www.youtube.com/watch?v=NZsp_EdO2Xk&feature=player_embedded"]‪Tim Jackson's economic reality check‬‏ - YouTube[/ame]

I am more than ever glad that I won't be around for the inevitable war(s) that will be the outcome of the the present mess, viz Putin's latest diatribe against US monetary policy, but I worry terribly about the future of my children and grandchildren.

[C. Flower]

Currency is based on trust. People have trusted the Dollar & the Euro as a form of payment. But maybe the Dollar has been trusted 14 Trillion times too many worldwide. The Euro is worth whatever it is worth minus the debts of the PIIGS and others. It's the old DM and a few Francs thrown in.

My guess is that the Dollar will collapse taking a few other currencies with them and the Euro will be devalued significantly but won't disappear.

Some currency will survive to take the place of the dollar as you mentioned, but it will buy you a lot less precious metal than the dollar does at the moment. Those with money are converting to gold and will purchase the new preferred reserve currency when it emerges in due course.

Interesting times

A heard someone yesterday estimate that gold would be 5,000 dollars an ounce, if correctly priced against the currency, if it were to revert to the gold standard.

In theory, the US holds a lot of gold.

Of course, India, the fastest growing economy and population, is full of the stuff. Everyone who has a spare cent buys it as jewelry.

I doubt if Ireland has had much since the rivers were panned back in the days of Tara.

A reversion to gold backed currencies would mean increased, not reduced, global imbalances, and a horrible contraction of economies.

The US has dominant military power, and is the reserve currency, able to print dollars at will, but the Chinese sent a message to the US two days ago wanting to talk very seriously about dollar devaluation (given that their profits/savings are substantially in dollars).

A Chinese ratings agency downgraded the dollar the day before yesterday.

When the big bond repayments fall due in September, it's hard to see that they can all be paid.

[TotalMayhem]

I doubt if Ireland has had much since the rivers were panned back in the days of Tara.

You're wrong here, plenty gold in Monaghan.

Everyone who has a spare cent buys it as jewelry.

Jewelry is a rather stupid investment, bullion or coins make much more sense. Silver and gold CombiBars are quite popular these days.

[C. Flower]

You're wrong here, plenty gold in Monaghan.

Jewelry is a rather stupid investment, bullion or coins make much more sense. Silver and gold CombiBars are quite popular these days.

Not when people have been buying and hoarding for generations.

For national holdings, there is a list here of who has what. I don't know how reliable it is.

http://en.wikipedia.org/wiki/Gold_reserve

But it in not, in any case, a solution to the crisis. It is inconceivable to think of a capitalist world economy in which currencies are tied to gold. That collapsed back in the 1970s at Bretton Woods. The can has been being kicked, one way or another, down the road and has landed "where we are".

[TotalMayhem]

For national holdings, there is a list here of who has what. I don't know how reliable it is.

We'll never know how much of this is actually "paper gold" or certificates. The LBMA is running a nice "fractional reserve" Ponzi scheme, making gold from thin air to keep the gold price artificially low. I hear, they had some trouble with deliveries of real gold lately.

[DCon]

We'll never know how much of this is actually "paper gold" or certificates. The LBMA is running a nice "fractional reserve" Ponzi scheme, making gold from thin air to keep the gold price artificially low. I hear, they had some trouble with deliveries of real gold lately.

There are rumours of a Gold margin hike tomorrow.

Should be good for $20 - $40 decrease in price if true

There’s a bit of buzz about that tomorrow may see a hike in the Gold margin requirements. If true, this is likely to see some reasonable size liquidations, and put a dampener on the recent rush into the metal on safe haven demand.

http://www.forexlive.com/blog/2011/0...n-hike-rumour/

[Apjp]

A heard someone yesterday estimate that gold would be 5,000 dollars an ounce, if correctly priced against the currency, if it were to revert to the gold standard.

In theory, the US holds a lot of gold.

Of course, India, the fastest growing economy and population, is full of the stuff. Everyone who has a spare cent buys it as jewelry.

I doubt if Ireland has had much since the rivers were panned back in the days of Tara.

A reversion to gold backed currencies would mean increased, not reduced, global imbalances, and a horrible contraction of economies.

The US has dominant military power, and is the reserve currency, able to print dollars at will, but the Chinese sent a message to the US two days ago wanting to talk very seriously about dollar devaluation (given that their profits/savings are substantially in dollars).

A Chinese ratings agency downgraded the dollar the day before yesterday.

When the big bond repayments fall due in September, it's hard to see that they can all be paid.

No country in the world has nearly as much mineral wealth as ireland via silver, zinc and some harder to reach gold. As we also have an underground saudi arabia you can see why the bankers contrived our economic collapse after the lesser collapse of 2000.

Sent from my GT-I5500 using Tapatalk

[Captain Con O'Sullivan]

True. Irish leprechauns with their little baskets of gold are the new masters of the universe.

[C. Flower]

DCon and TM - would you explain "paper gold" and "the gold margin" for the uninitiated (me) ?

[DCon]

DCon and TM - would you explain "paper gold" and "the gold margin" for the uninitiated (me) ?

Paper Gold is trading on Gold derivatives (essentially trading on the gold price without any gold changing hands).

This type of trading is typically done on margin so you are allowed buy/sell 10/20/50 times the value of cash you have in your account.

If the margin increases, you either need to boost the cash in your account or close some of your trades so typically a margin increase will see a lot of open trades closed.

[bolshevik]

Paper Gold is trading on Gold derivatives (essentially trading on the gold price without any gold changing hands).

This type of trading is typically done on margin so you are allowed buy/sell 10/20/50 times the value of cash you have in your account.

If the margin increases, you either need to boost the cash in your account or close some of your trades so typically a margin increase will see a lot of open trades closed.

And really "trading" here means "betting" in normal people speak...

[C. Flower]

Paper Gold is trading on Gold derivatives (essentially trading on the gold price without any gold changing hands).

This type of trading is typically done on margin so you are allowed buy/sell 10/20/50 times the value of cash you have in your account.

If the margin increases, you either need to boost the cash in your account or close some of your trades so typically a margin increase will see a lot of open trades closed.

Is this like the kind of trading that saw a NY trader have to accept delivery of a few hundred tonnes of sugar last year, when caught holding the "promise to buy" or is it a Paddy Powers game with no link to any actual gold ?

[TotalMayhem]

TM - would you explain "paper gold"

Plain and simple:

What is "Paper Gold"?

The term paper gold means you have a piece of paper acting as a substitute for the physical gold. With paper gold, you don't own the gold; you own a promise to receive physical gold. In plain English, it means you are a creditor of the corporation issuing the paper gold certificate, thus subject to counterparty risks. Owning the physical gold has no counterparty risk and is fully under your control.

Here's an in depth analysis as to how the scheme works:

LBMA Operates a Fractional Reserve Gold System

And these folks do play hard ball:

You Don't Mess With The LBMA - Assassination Attempt On Silver Market Manipulation Whistleblower?

[C. Flower]

Plain and simple:

Here's an in depth analysis as to how the scheme works:

LBMA Operates a Fractional Reserve Gold System

And these folks do play hard ball:

You Don't Mess With The LBMA - Assassination Attempt On Silver Market Manipulation Whistleblower?

Thanks. So they may be "selling" you gold they don't own ?
If no-one minds, I'll move these posts across to the "Goldwatch" thread.

[TotalMayhem]

Thanks. So they may be "selling" you gold they don't own ?

No, they don't sell you gold at all, only a piece of paper that you may redeem for real gold* or trade.

I estimate that as much as 50,000 tonnes of gold has been sold that does not exist. That is equivalent to all the gold reserves in the world that are yet to be mined, or put another way, 25 years of gold production. That is the grand-daddy of all short positions! The fractional reserve operation of the LBMA is likely to be the next Madoff scandal, except multiplied by 100…a 5 trillion dollar fraud as opposed to a 50 billion dollar fraud.

says Adrian Douglas: LBMA OTC Market – “Alchemists” Turn Paper into Gold

* And who would want to store a large amount of gold rather unsecured at home? I remember a case being reported not too long ago at ZH that the LBMA couldn't make good on the promise of a large delivery not too long ago, quite embarrassing.