Posts Tagged Wen Jiabao
The Seeds For An Even Bigger Crisis Have Been Sown
Posted by TheRedPillGuide in Economy, Finance, News, Silver & Gold on July 11, 2012
via: ZeroHedge
by: Tyler Durden
July 11, 2012
On occasion of the publication of his new gold report (readhere), Ronald Stoeferle talked with financial journalist Lars Schall about fundamental gold topics such as: “financial repression”; market interventions; the oil-gold ratio; the renaissance of gold in finance; “Exeter’s Pyramid”; and what the true “value” of gold could actually look like. Via Matterhorn Asset Management.
By Lars Schall
Ronald Stoeferle, who is a Chartered Market Technician (CMT) and a Certified Financial Technician (CFTe), was born October 27, 1980 in Vienna, Austria. During his studies in business administration and finance at the Vienna University of Economics and the University of Illinois at Urbana-Champaign in the USA, he worked for Raiffeisen Zentralbank (RZB) in the field of Fixed Income / Credit Investments. After graduating, Stoeferle joined Vienna based Erste Group Bank (http://www.erstegroup.com), covering International Equities, especially Asia. In 2006 he began writing reports on gold. His five benchmark reports on gold such as “A Shiny Outlook” and “In Gold We Trust” drew international coverage on CNBC, Bloomberg, the Wall Street Journal and the Financial Times. Since 2009 he also writes reports on crude oil. The latest gold report by Stoeferle was published today.
Lars Schall: What is “financial repression“ according to Ronald Stoeferle?
Ronald Stoeferle: Financial repression as a perfidious form of redistribution. It always means a combination of incentives and restrictions for banks and insurance companies, which cause the investment universe to be substantially reduced for investors. This means that capital is channelled away from the asset classes that it would flow into in a more liberal environment.
I sincerely believe that financial repression will continue to crop up in many shapes and sizes over the coming years. However, the long-term costs of the lack in efforts made towards consolidating national finances are substantial. While low bond yields in the short run suggest that the saving measures are on course, one has to bear in mind that this has mainly been achieved by market interventions.
Therefore, we regard the gradual transfer of assets as a disastrous strategy in the long run.
What happens is that none of the previous problems of misallocation are resolved, but instead redistribution takes place (at the beginning mostly invisibly) and problems are dragged out, having to be addressed later. As the dependence on these measures rises, so does the collateral damage to be expected later, and the seeds for an even bigger crisis have been sown.
L.S.: What does all that mean for gold?
R.S.: Negative real interest rates are an important cornerstone of financial repression. And negative real interest rates represent the perfect environment for the gold price. During the 20 years of the gold bear market in the 1980s and 1990s, the average real interest rate level was around 4%. Real interest rates were negative in only 5.9% of all months. The situation in the 1970s, however, was completely different: real interest rates were negative in 54% of the months. Since 2000 real interest rates have been negative for 51% of the time, which constitutes an optimal environment for gold. Due to the overindebtness (that I am also discussing in my report), I believe that this trend will continue.
The USD Trap Is Closing: Dollar Exclusion Zone Crosses The Pacific As Brazil Signs China Currency Swap
Posted by TheRedPillGuide in Economy, Finance, News on June 22, 2012
via: ZeroHedge
June 22, 2012
By: Tyler Durden
When the US Dollar is ultimately dethroned as the world’s reserve currency (and finally gets rid of all those ridiculous three letter post-Keynesian economic “theories”) nobody will have seen it coming. Well, nobody except for the following headlines: ““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“, “Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says“, “India Joins Asian Dollar Exclusion Zone, Will Transact With Iran In Rupees.” And while the expansion of the “dollar exclusion zone” was actually quite glaring to anyone who dared to look, one thing was obvious: it was confined to Asia. No more courtesy of the following FT headline: “Brazil and China agree currency swap.”More: “Brazil has provided a vote of confidence in China’s efforts to promote the renminbi as a reserve currency by becoming the biggest economy yet to agree a swap deal with Beijing. Brazil and China announced the R$60bn (US$29bn) local currency swap after a bilateral meeting between Wen Jiabao, the Chinese premier, and Dilma Rousseff, Brazil’s president, on the sidelines of the Rio+20 environmental summit in Rio de Janeiro.”
