World braces for euro split

trackwhack

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A bit more than making sense. Gold is coming back into fashion. Not as a jewellery item nor as a gold standard. It has always denominated the wealth of nations. And now its coming back as the same. No more US dollars reserves as advertised by the government of India. But number of tons of the precious stuff.
central banks holding gold is hardly enough. the wealth reserves of a nation should be held by the people. and thankfully 95% of the gold in India is held by the public.

Just because ECB has 500 tons of gold does not mean that when the shit hits the fan they are gonna pay back their saving clients with gold bullion. gold is a hedge against the ECB going down. It is not a hedge against the economy and thereby the public suffering.

Based on the fact that Britains national debt crossed 510% of GDP by the end of the last year and is projected to hit 525% of GDP by the mid of this year, the 300 metric tonnes of gold that Bank of England holds wont even cover for the interest payments for a year on total outstanding debt.

Remember, India airlifted 50 tons of gold to the Bank of England in 1991 as collateral. Today the RBI has close to 750 tonnes of gold and Bank of England has 300 tonnes of gold. While Britain is heading for 600% of GDP as debt, India is sitting pretty at 120% of its GDP as total debt. how times have changed.
 

wrigsted

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I am surprised how people believe in such news. Euro is a very close to the heart experiment for most Europeans and they are not going to abandon it so soon.
Not here in Denmark. We said no to the the Euro by referendum in '92 '93 and again in 2000. Politicians wept, and the people laughed:rofl:

All the major parties and all their money would have us to say yes. It was something like 90% of the Parliament who begged us to say yes.

From Wiki. Danish Maastricht Treaty referendum, 1992:
"As the Maastricht Treaty could only come into effect if all members of the European Union ratified it, the Edinburgh Agreement, negotiated in the months following the referendum, provided Denmark with four exceptions which eventually led to Denmark ratifying the Maastricht Treaty in a 1993 referendum."

One of the exceptions was, NO EURO!

That is why the EU stuff is no longer going to referendums here in Europe:rolleyes:
 
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panduranghari

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central banks holding gold is hardly enough. the wealth reserves of a nation should be held by the people. and thankfully 95% of the gold in India is held by the public.

Just because ECB has 500 tons of gold does not mean that when the shit hits the fan they are gonna pay back their saving clients with gold bullion. gold is a hedge against the ECB going down. It is not a hedge against the economy and thereby the public suffering.

Based on the fact that Britains national debt crossed 510% of GDP by the end of the last year and is projected to hit 525% of GDP by the mid of this year, the 300 metric tonnes of gold that Bank of England holds wont even cover for the interest payments for a year on total outstanding debt.

Remember, India airlifted 50 tons of gold to the Bank of England in 1991 as collateral. Today the RBI has close to 750 tonnes of gold and Bank of England has 300 tonnes of gold. While Britain is heading for 600% of GDP as debt, India is sitting pretty at 120% of its GDP as total debt. how times have changed.
Yes well said. The common man holding gold in India made Bharat a ' Sone Ki Chidiya' desired by all and sundry. Now with estimated 20000 tons of gold held by common man in India, Indian house wives are holding an enormous future buying power. Ever seen that trash programme called ' Real Housewives of Orange County'? I hope we wont see such in India when gold is revalued!! :p

We need Euro. The world needs Euro so that there is a currency in which oil can trade in. Euro will replace in dollar in the oil trading function. It will however never give Europeans the buying power that Americans got due to the Dollar. Euro or barter? Take your pick.

Personally I find the convenience of fiat paper money too good to be true. We will still have banks but no Fractional Reserve Banking.
 

Sakal Gharelu Ustad

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central banks holding gold is hardly enough. the wealth reserves of a nation should be held by the people. and thankfully 95% of the gold in India is held by the public.

Just because ECB has 500 tons of gold does not mean that when the shit hits the fan they are gonna pay back their saving clients with gold bullion. gold is a hedge against the ECB going down. It is not a hedge against the economy and thereby the public suffering.

Based on the fact that Britains national debt crossed 510% of GDP by the end of the last year and is projected to hit 525% of GDP by the mid of this year, the 300 metric tonnes of gold that Bank of England holds wont even cover for the interest payments for a year on total outstanding debt.

Remember, India airlifted 50 tons of gold to the Bank of England in 1991 as collateral. Today the RBI has close to 750 tonnes of gold and Bank of England has 300 tonnes of gold. While Britain is heading for 600% of GDP as debt, India is sitting pretty at 120% of its GDP as total debt. how times have changed.
I do not know what sources you used for arriving at above figures. The debt for Britain is pretty well contained under 90% of GDP. For Italy and others it is slightly above 110% and hence a cause of concern. Even for Greece the figure is around 165%.

Here are few sources of data:
UK National Debt - Current, Recent, Historical Charts Tables
Economy of Greece - Wikipedia, the free encyclopedia
http://online.wsj.com/article/SB10001424052748703789104576272891515344726.html
Given that they are developed nations with extensive social security they can very well afford public debt around 100% as they can cut expenditure if need arises. Even the current debt level of India can be a pain if our growth rate falters below 6%.

Also for some reason I find people here to be too fascinated by gold. It is just another commodity to hedge against. Given, that US economy is in turmoil everyone is going towards gold as compared to $ for safety. As far as central banks are concerned, they have much more flexibility and amount of gold do not matter to them.
 

The Messiah

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Euro or barter? Take your pick.
Barter would be in India's favour if used for purchasing oil.

We used barter system with iraq when it was sanctioned and just signed deals with iran to pay half the amount in goods rather than currency.
 
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trackwhack

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I do not know what sources you used for arriving at above figures. The debt for Britain is pretty well contained under 90% of GDP. For Italy and others it is slightly above 110% and hence a cause of concern. Even for Greece the figure is around 165%.

Here are few sources of data:
UK National Debt - Current, Recent, Historical Charts Tables
Economy of Greece - Wikipedia, the free encyclopedia
Comparing Debt Ratios - WSJ.com
Given that they are developed nations with extensive social security they can very well afford public debt around 100% as they can cut expenditure if need arises. Even the current debt level of India can be a pain if our growth rate falters below 6%.

Also for some reason I find people here to be too fascinated by gold. It is just another commodity to hedge against. Given, that US economy is in turmoil everyone is going towards gold as compared to $ for safety. As far as central banks are concerned, they have much more flexibility and amount of gold do not matter to them.
chief, please differentiate between government debt and national debt. They are not the same thing. here is a link I posted for someone else on another thread.
Daily chart: The debtors' merry-go-round | The Economist


Once again, for those just getting into economics

National Debt and Government debt are not the same thing.
 

Sakal Gharelu Ustad

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chief, please differentiate between government debt and national debt. They are not the same thing. here is a link I posted for someone else on another thread.
Daily chart: The debtors' merry-go-round | The Economist


Once again, for those just getting into economics

National Debt and Government debt are not the same thing.
Sorry, did not see you mentioned national debt.

But national debt is in no way a head-ache for the government or investment purpose. Individuals and firms can borrow from anywhere and invest anywhere, the government or central bank do not need to cover it up. Individuals/firms are free to default and no one thinks about them except the creditors or stock holders.

Given, the fact that UK is a big financial hub, they would definitely have high financial debt. So, I do not see a big case to rejoice this fact.
 

panduranghari

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I do not know what sources you used for arriving at above figures. The debt for Britain is pretty well contained under 90% of GDP. For Italy and others it is slightly above 110% and hence a cause of concern. Even for Greece the figure is around 165%.

Here are few sources of data:
UK National Debt - Current, Recent, Historical Charts Tables
Economy of Greece - Wikipedia, the free encyclopedia
Comparing Debt Ratios - WSJ.com
Given that they are developed nations with extensive social security they can very well afford public debt around 100% as they can cut expenditure if need arises. Even the current debt level of India can be a pain if our growth rate falters below 6%.

Also for some reason I find people here to be too fascinated by gold. It is just another commodity to hedge against. Given, that US economy is in turmoil everyone is going towards gold as compared to $ for safety. As far as central banks are concerned, they have much more flexibility and amount of gold do not matter to them.
Stop drinking government sponsored Kool aid.
 

panduranghari

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trackwhack; said:
Once again, for those just getting into economics

National Debt and Government debt are not the same thing.
It's got to be repaid either way.
 

Ray

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Greece is asking for another election.

It is said that the Communists will come back stronger.

They are against the EU.

Anything can happen.

A dream gone sour!
 

H.A.

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Conflicting views could anyone explain

Crude prices drop.

Oil prices fell sharply in Asian trade today as investors fretted over political uncertainty in the Euro zone, while concerns over softer US energy demand also weighed, analysts said.

New York's main contract, West Texas Intermediate crude for delivery in June was down $1.33 to $92.65 per barrel while Brent North Sea crude for June shed $1.15 to $111.09 in afternoon trade.

"Oil prices remained under pressure as Euro area politics continued to be in focus," Barclays Bank said in a commentary.

"Speculation that Greece may exit the single currency caused European stocks, peripheral euro area bonds, the euro and commodities to sell off," it added.

Greece's political stalemate remains at the centre of investors' thoughts, overshadowing better-than- expected Euro zone economic growth data yesterday.

The debt-stricken country is poised to hold fresh elections on June 17 after last-ditch talks on forming a new Government broke up without agreement.

The new polls follow an inconclusive election on May 6 when a majority of Greeks voted against harsh austerity measures Athens took on in return for a massive EU-IMF bailout late last year.

With no guarantee that the fresh vote will produce a viable Government, the prospects are for continued volatility and uncertainty over the country's future in the 17-nation Euro zone.

Top Euro zone leaders have so far offered mixed signals on their resolve to keep Greece in the bloc.

Germany's Angela Merkel and France's Francois Hollande offered support yesterday, while International Monetary Fund chief Ms Christine Lagarde raised the possibility that the country could leave the Euro zone in an orderly fashion.
Which is good, but Sensex fell sharply and below 16k mark.

Indian benchmark indices, the Nifty and the Sensex, shed over 1.8 per cent in the afternoon session today amid fears of contagion in the Euro zone.

At 12.13 p.m., the 30-share BSE index Sensex was down 334.52 points or 2.05 per cent at 15,993.73 and the 50-share NSE index Nifty was down 95.85 points or 1.94 per cent at 4,846.95.

Volume toppers during the session were HDFC, SBI, Tata Motors, Tata Steel and L&T. Among 30-share Sensex, GAIL and TCS were the only gainers.

Tata Motors (down 6.94 per cent), HDFC (down 5.01 per cent), BHEL (down 4.24 per cent), ICICI Bank (down 3.42 per cent) and Tata Steel (down 3.24 per cent) were the major laggards.

All BSE sectoral indices were trading in the red. Among them, auto, metal, power and bank stocks were the worst-hit with each down by over 2.3 per cent.

The Nifty and the Sensex opened with a large gap down amid fears of contagion in the Euro zone.

The Nifty opened at 4,875.30, down 68 points over Tuesday's close. The Sensex opened at 16,132.68, a gap down of 196 points.

"It's a sell-off," said a dealer from an Indian brokerage. "With Greece not able to form a coalition government and announcing fresh elections in June, investors have panicked."

Marketmen said that institutions were unwinding positions in Europe on fears of the Greek electorate voting for anti-austerity again in June.
Article 1: Business Line : Markets / Commodities : Oil falls sharply on Euro zone worries

Article 2: Business Line : Markets / Stock Markets : Sensex plummets below 16K on Euro zone woes
 

Sakal Gharelu Ustad

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That is one of the reasons I am out of the stock market. Those who did not learn lessons in 2008 will be learning a lesson again, but won't get another chance to make amends. Consider it like a friendly advice.
There is no denial to the fact that there are business cycles but historically stocks have outperformed govt. bonds by 6% and have given a higher return than anything else. But with high returns come high risk and therefore the volatility.

It's got to be repaid either way.
There is a problem if govt. defaults. Individuals and firms default all the times.
 

panduranghari

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Barter would be in India's favour if used for purchasing oil.

We used barter system with iraq when it was sanctioned and just signed deals with iran to pay half the amount in goods rather than currency.
Barter worked fine in the past. But you should have things that other person wants so that you can buy the things from him that you need. 3 eggs do not really equal 2 oranges or 5 apples. Its not ideal exchange.

I am a follower of the Austrain school of economics. Antal Fekete is my hero. The current directors of central banks of US and UK and many other countries are of the Chicago school.
If you are interested please read this essay by Antal Fekete who has explained in detail the old village fayres and the barter system.

http://www.professorfekete.com/articles/AEFArchitectureForANewWorldFinancialSystem.pdf


When you pay a debt of $100 by writing a cheque on your bank account,
the debt is not extinguished, it is merely transferred to your bank. If you pay it
by handing over a $100 Federal Reserve note, the debt is not extinguished either
but is transferred to the Federal Reserve bank that has issued the note.
Ultimately the U.S. Treasury is responsible for all the liabilities of the Federal
Reserve. Under these monetary arrangements the total dollar debt outstanding
can only grow, never contract, even if there is a net reduction of debt in the
economy. All debt presumed to have been extinguished will ultimately show up
as an increase in the indebtedness of the U.S. government. No matter how you
look at it, the desire to retire debt is frustrated by the lack of an ultimate
extinguisher in the system. The consequences are frightening.
Let's draw a biological, nonetheless valid and convincing analogy by
looking at the human metabolism. The elimination of toxic waste from the
human body is of paramount importance. Bowel movement and passing water
are the two main forms of excretion. If either of these processes is blocked
permanently, death becomes inevitable. It is no different with the economy,
albeit death may be longer in coming. The economy uses credit all the time, and
some of it will turn out to be toxic even in the best of circumstances. If there is
no way to eliminate this toxic waste from the system, that is to say, if there is no
ultimate extinguisher of debt, then death is near. In the world economy, gold is
the main agent of detoxification.
The tragedy is that the captains of the world economy refuse to realize
that runaway debt is the logical consequence of their having exiled gold from
the international monetary system in 1971. They try to cure the bad effects of
too much debt, or the presence of toxic debt in the system by introducing more
of it. They have no idea how total debt could be decisively reduced and toxic
debt safely eliminated.
They are playing a very dangerous game with the welfare of the people.
When credit collapse finally comes, production disappears, employment shrinks,
law and order break down. We are running into an unprecedented crisis with our
eyes blindfolded. Wishful thinking will not coax out "green shoot
 
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trackwhack

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Sorry, did not see you mentioned national debt.

But national debt is in no way a head-ache for the government or investment purpose. Individuals and firms can borrow from anywhere and invest anywhere, the government or central bank do not need to cover it up. Individuals/firms are free to default and no one thinks about them except the creditors or stock holders.

Given, the fact that UK is a big financial hub, they would definitely have high financial debt. So, I do not see a big case to rejoice this fact.
Your ignorance shows. If what you said was true then Bank of America, Citibank, AIG, Barclays, Credit Suisse and many many other would not exist as of today. The total TARP funds in the US alone was 7 TRILLION . Thats right, not Billion, but Trillion. So dont give me bull about its not a headache for governments.
 

Sakal Gharelu Ustad

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Your ignorance shows. If what you said was true then Bank of America, Citibank, AIG, Barclays, Credit Suisse and many many other would not exist as of today. The total TARP funds in the US alone was 7 TRILLION . Thats right, not Billion, but Trillion. So dont give me bull about its not a headache for governments.
Dude banks are different and do not forget they let Lehmann fail. There is no problem in letting some banks fail. Read more about bank runs and learn to count the zeroes in trillion and billion.
 

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