America's default, in Russian. - page 29
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BRICS moving away from the dollar
The main economic event in China's Hainan is the signing of a financial document. The five countries have signed their willingness to pay in currencies other than dollars. The BRICS countries will now be able to give loans to one another in their national currencies.
:) not BRICS, but BRUKI.
If you don't have a quid, you have to speak Russian.
:) not BRICS, but BRUKY.
Since it's without a quid, we should speak Russian.
Volodya, do I look like I'm joking? - Not at all.
Okay. On a more serious note, why AUD? Is there a lot of gold? Is that the only reason?
Purely technically for me the chiff chart looks a bit more convincing. If you bury the USD and the EUR in advance. And then we are in the forex market. Why would you make a deposit with big expenses when converting the dough to exotics? It is enough to put one percent of the deposit in a long term buy on AUD with 100/1 leverage and the deposit is well diversified. And if you're really confident in AUDe, then buy more...
BRICS moving away from the dollar
The main economic event in China's Hainan is the signing of a financial document. The five countries have signed their willingness to pay in currencies other than dollars. The BRICS countries will now be able to give loans to one another in their national currencies.
Quote:
"The U.S. understands that the era of the dollar is nearing its end. Why does China need dollars? Within China, the yuan is in circulation, in many Asian countries the population also prefers the yuan. Therefore, there are almost 3-3.5 billion people who can buy any goods and services with yuan and they do not need USD for anything, the expert says. The situation is the same in India and countries where Indians live, which is 1.5-2 billion people who use rupees in trade."
Alaverdi, on the subject of Japan's default - Japan is currently the world's second-largest holder of foreign reserves after China. Japan's reserves are more than $1 trillion in dollar terms
More details of the US budget deal are surfacing in the media:
- Government intends to cut budget deficit by $4 trillion over 12 years or less
- By 2015 the deficit will be cut to 2.5% of GDP, by the end of the decade to 2% of GDP.
- Negotiations with Congress may be scheduled for May
- Bush programme tax cuts to be abolished
- Defense funding will be cut by $400 billion over the next 10 years.
(с)
The USD is going to be covered in copper soap and cheese, not today, but tomorrow. And my favourite broker has accounts in AUD as well. You could open an AUD account and almost painlessly turn all the pindo hedgehogs into aussie hedgehogs before it's too late.
I think AUD has almost reached its ceiling, it is going to stagnate or even roll back a bit.
If you are interested in stability and not in deposit currency gains, then chif or pound is no worse.
Imha, of course. I should hardly be held as an expert in long term investing.
The notion of foreign exchange reserves has recently become very outdated.
Gold is one thing - it has risen $260 to $1,450 in the last 10 years.
It is another thing to have a currency which has fallen by 550% in purchasing power over the same 10 years.
As they say feel the difference.
The USA has the largest gold reserves in the world.
1. THE USA
The US is the leader in terms of gold reserves. The country has 8133 tons of the precious metal in its vaults. 78, 9% of the U.S. foreign exchange reserve is in gold.
2. Germany
The country, which is far ahead of the USA, is Germany. Germans are storing 71.5% of their foreign currency reserves in gold, which makes 3.412 tons.
3. THE IMF
The IMF holds a gold reserve of 3,217 tons, which it uses to stabilise the international market. For example, the IMF has recently decided to sell part of its gold reserves in order to provide loans to crisis-hit countries.
4. France
More than half of the currency reserves of France are kept in gold - 72.6%. This amounts to 2, 487 tons of the precious metal.
5. Italy
According to the World Gold Council, the Bank of Italy holds 2702.6 tons of gold. This represents about 66.5% of the country's foreign currency reserves.
6. China
China is the world's largest producer of gold. Since 2003 it has increased its reserves of the precious metal by 76% to 1,054 tonnes. The world's sixth largest gold reserve is estimated at 2.13 trillion dollars.
7. Switzerland
Prudent Switzerland stores 41.1% of its foreign currency reserves in gold. This amounts to 1,041 tons.
8. Japan
Only 2.2% of the country's foreign currency reserves are in gold. Today, the Bank of Japan holds 765.2 tons of the precious metal.
9. Netherlands
In contrast to Japan 61.7% of the foreign exchange reserves of the Netherlands are in gold. This amounts to 612.5 tons of precious metal.
10. European Central Bank
The European Central Bank is the last in the top ten with 666.5 tons of gold in its vaults.
More details of the US budget deal are surfacing in the media:
- The government intends to cut the budget deficit by $4 trillion over 12 years or less
- By 2015 the deficit will be cut to 2.5% of GDP, by the end of the decade to 2% of GDP .
- Negotiations with Congress may be scheduled for May
- Bush program tax cuts will be eliminated
- Defence funding will be cut by $400 billion over the next 10 years.
(с)
Obama's deficit reduction is just words
14.04.2011 17:45, Fedorov Michael, analyst (RIC-Finance)
President Barack Obama announced upcoming grandiose cuts in the budget deficit. But it is too late; they should have done it in 2005-2006, and now the debt has become excessive.
4 trillion over 12 years - that is 300-350 billion a year with a current deficit of 1.4 trillion would not be enough to stop the debt accumulation of the US government. It is elementary maths; at the beginning of this year, the debt was $14 trillion. With interest income accrued and a deficit of 1.4, by the end of the year it would be 16 trillion. If we cut 300 billion in spending, the debt would of course be lower, to 15.7 trillion (about 12%), but it would be higher. (12% roughly), but that essentially has no effect on debt reduction, either in nominal terms or as a share of GDP. Nominal GDP will clearly not rise by 12%, so the debt-to-GDP ratio will also increase and the situation will be even worse in the coming year.
At the same time, with spending cuts, there will be no real growth in the economy. It does not matter whether the reduction comes from taxes or cuts in spending. It will reduce the stimulus for the economy, and if the multiplier effect is taken into account, the loss to the economy will be greater than the deficit reduction. It is too late to drink the borjomi when your kidneys are gone.
In order to stop the growth of the debt, it is necessary to cut spending or increase taxes by 1.5-2 trillion dollars a year to give the budget a surplus that would cover the interest on the debt and additionally 100-200 billion to repay the debt principal. This means a severe recession with a drop in GDP by dozens of percent in the first five years. Only then will the growth of the debt in nominal terms stop and slightly shrink. And for all those 5 years, there will be no inflation as such because of the recession, i.e. it will not help to reduce the debt, through depreciation. And in the best case scenario, the US GDP by 2015-16 will have 12 trillion USD. GDP per year, with a debt of 12-13 trillion. But this 12 trillion GDP will no longer be dependent on government spending.
Then there will be 10 years of bills to pay. The high tax burden will impede economic growth, but the recession will recede, there will still be sluggish economic growth and there will be a slight inflation. The debt-to-GDP ratio will start to fall more substantially. All in all, it will take America at least 15 years to solve the debt problem.
The world will also go into a prolonged recession. Because U.S. consumption would collapse and the balance of payments would become deficit-free, due to a drastic reduction in imports.
But no one will ever do such a thing. Otherwise it is all talk and half-measures. I think the Americans themselves are very well aware of the situation. And they know very well that it is impossible to pay the debt. So, in my opinion, they do not really care how much debt they have, 14 trillion. 20 or 30, 100% of GDP or 200%. It does not matter, he is dead anyway, and he will not get any livelier or deader. The main thing for them is to sell trades, pretend something is going on, and that investors buy U.S. debt. Without buying, there will be a collapse. And the Obama cut is just an action designed to attract the next batch of buyers. To create the illusion that something is being done. America needs it to buy time which is very important to them.
Many are probably thinking why not cause inflation or default on debt. There is no problem. Yes we can do that, but we must not forget a very important point, the US economy is not self-sufficient. It is like an addict dependent on capital inflows from outside. The world has been investing a trillion quid a year in the US for decades. And that inflow is the basis for at least a third of the economy. If there is no capital inflow, a third of the economy will simply disappear. So excessive inflation or default is not the best way out.
There is a way out for them. It is to rebalance their economy, increase production, increase exports and reduce imports. Thereby making their economy more self-sufficient. And when they do that, it will be easy to default or turn on inflation. That is why Geithner and Clinton have been screaming on every corner for the last two years. That China is deliberately undervaluing its currency and should strengthen the yuan. That is why Obama once said that American companies must bring production back to the United States. So they set a goal to increase exports from the US by 2 times in the next few years. And as long as they do so the debt can grow as much as they like, any monetary policy can be implemented. The main thing is not to have a collapse, the main thing is to buy debt. The main thing is to have time to rebalance the economy.
And in these conditions, you have to be very careful about balancing. It is possible that in order to buy more time. It will be necessary to arrange one more recession, to repeat the year 2008. So that once again there will be a withdrawal in quality and the trades will be bought. But in my opinion, they do not have time to do it. They will run out of treja buyers before they can make their economy self-sufficient. Without a recession, they have a year at the most, if a recession repeats, two. And then it will be a disaster.