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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: THE ANT who wrote (108944)	12/13/2014 1:47:01 PM
From: Haim R. Branisteanu	1 Recommendation Recommended By 3bar Respond to of 218435

How the Rising Dollar Could Trigger the Next Global Financial Crisis John Mauldin \| Dec 11, 2014 mauldineconomics.com Missed Last Week's Article? This week’s Outside the Box continues with a theme that I and my colleague Worth Wray have been hammering on for some time: the very real potential for a rising dollar to trigger the next global financial crisis. We are concerned about the consequences of multi-speed economic growth around the world and the growing divergence between major central banks. In our opinion, if these trends persist, they likely mean (1) a major US dollar rally, (2) a rapid unwind of QE-induced capital flows to emerging markets, (3) a hard slide in fragile emerging-market and commodity-exporter currencies, and (4) financial shocks capable of ushering in a new global financial crisis. Alongside true macro legends like Kyle Bass, Raoul Pal, Luigi Buttiglione, and Raghuram Rajan, Worth and I have written about this theme extensively in 2014 (“Central Banker Throwdown,” “Every Central Bank for Itself,” “The Cost of Code Red,” “Sea Change,” “A Scary Story for Emerging Markets”). Now it’s quickly becoming a mainstream macro theme on almost everyone’s radar. Virtually every economist and investment strategist on Wall Street has a view on the US dollar and the QE-induced carry trade into emerging markets… and anyone who doesn't should start looking for a different job. My response to this post to an Israeli economist brookings.edu Thank you for the article, I read about this situation in news release of the BIS, FT and the Economist. In a globalized economic world you cannot have a two speed or multiple speed economic development and the key to keep the world economy together is more or less uniform economic growth and structural and fiscal harmonization otherwise all will fall apart. Massive tax evasions, if by loopholes or illicit actions, money laundering as a result of graft or bribes are the main drivers that are impeding a unified development and economic growth. Globalization cannot be reversed and therefore economic growth must quickly realign itself to a similar pace which is in the realm of the politician by fine tuning fiscal and structural policies to arrive to a harmonized economic structure with total elimination of tax evasions, if by loopholes or illicit actions and money laundering. Unfortunate politician aside of being clueless on those issue they are highly selfish and self-interested for a variety of reason and only luck may save the world economies. There are plenty of such events described in the Israeli financial press, with the most notorious being with the Israeli banks and their senior managers if in business conduct or their personal conduct that go unpunished. The best and closes example is Netanyahu who throw the country into turmoil and new elections just to stay in power and overcome deep rooted problems arising from the growing aspect of economic problems, social economic inequality and deep rooted corruption. “Startups” and new ideas or developments cannot last forever and bring in a stream of investment to cover up for all the fiscal policies failings and deep rooted corruption that only enrich the few, that are well connected with the ruling administration, beyond imagination Similar situations are in other bigger economies around the world and this is the true problem. The CB’s of major economies are the pupils of another crook and clueless economist and who instilled the wrong monetary theories into many Central Bankers that where his pupils. The US recovered not because of QE which had very marginal influence on the whole US economy after 2010/11 but because the huge development in the oil and gas “fracking” industry with an employment multiplier of 6 to 8 well above the average number of 4 new workplaces, not to mention the drastic improvements of the US balance of payments and diminishing stream or petrodollars. In a very similar way the Israeli economy stayed afloat as a result of the NG discoveries and the high energy prices which made those discoveries economically viable by grossly overcharging the Israel Electrical Corporation, and not because Stanley Fisher economic genius which policies only brought more social economic inequalities and a real estate bubble in great part from various forms of money laundering that gave the State of Israel more power as a real estate speculator by not releasing building permits in accordance with the population growth and demographic developments. I see Stanley Fisher due to his monetary policies and economic advice to the Israeli government as a perverse white collar offender and not an economic savior. There is little chance that policy maker around the world and more specifically in Europe will wake up to instill the structural reforms needed and that the CB’s around the world will realize that QE is not a solution, but a temporary bandage at best for the failure of fiscal and economic structural reforms. Most economists still did not adjust to the notion of a global economy and still run localized economic models to decide on monetary and fiscal policies. Elvira Nabiullina of Russia combined with Putin policies, is a great and vivid example, and the exchange rate of the Russian rubble is the best present result of ill-conceived national political agenda and internal economic policies which failed astonishing due to graft bribes and ever more greed by the overpowering state and local tycoons. Borrowing money should cost money, zero interest rates are the wrong monetary policy, and savings are the bedrock for economic growth not consumption that is greater than demographic needs, which is the main driver of healthy harmonized world GDP growth. A business that cannot survive with 1% or 2% basic interest rates is not a viable business and only churns money and is a drag on GDP growth and therefore the alarm at the BIS as many businesses formed based on ZERO interest rates which business will fail if rate rise. What globalization has done and few have grasped it is the fact that now the world economies move in unison more than ever before (Archimedes laws would ring a bell). The first lesson that was not learned was the WWI war and the turmoil that followed the initial euphoria after the war, and the notion that greed is good, that triggering the Great Depression which started in the US and spread worldwide triggering WWII, in search of cheap labor and natural resources, aside from the pure racist tendencies, which were more state acts of retribution and revenge grown from the results of WWI. We are again at a tripping point after avoiding the first major debacle by a paper thin margin but if no action will be taken and soon of harmonizing the above the world will tip into a deeper recession /depression and inevitably followed by war to settle accounts and growing resulting grievances.

To: THE ANT who wrote (108944)	12/14/2014 11:05:05 PM
From: carranza2	1 Recommendation Recommended By RJA_ Read Replies (2) \| Respond to of 218435

In some very complicated operations I don't pretend to understand, the Fed has begun to drain the huge stock of banks' excess reserves and at the same time raise short term interest rates while leaving long term rates low. Seems like the first baby steps towards raising rates. soberlook.com and soberlook.com I wonder if the PhDs at the Fed have considered the price of oil in all this. The Saudis and their OPEC buddies are doing more to spur growth in the US than the Fed seems to have done. And more quickly. Their intentions are not entirely benign, however, as it seems that one of their goals is to put pressure on US oil production which has skyrocketed thanks to fracking. Mr. Putin is not happy as the value of Russia's oil exports will go down significantly, no doubt creating some domestic political issues for him and, coincidentally, putting a lid on some of his adventures. Putin takes the harder hit, for sure. If I were an American policymaker, I'd somehow find a way to support the domestic frackers so that they're incentivized to produce. Our national security is too important to allow us to continue to depend on Mid East oil in this crazy day and age. If global economic growth takes place thanks to lower oil prices, oil demand will go up and so will prices. This is all good since any growth related to lower oil prices would not be a function of finance but to more or less organic factors - prices actually set by supply and demand for energy. Could it be that we're entering a virtuous economic cycle? One we can't presently appreciate until growth spurred by a lower price of oil shows up? One that sees us reduce military spending designed to protect ME energy sources? The stock markets surely don't think so. Who knows.