Thread: The strongest economy in the world

Originally Posted by Panda

Originally Posted by larvidchr

Why is that Panda ? surely there is a much greater security against the Euro ending up like the Dollar, the much more conservative economies in Europe would never allow the creation of Euro bonds not based on real value, the members of the Euro is by treaty forced to stay within certain inflation levels and currency values and thus cannot issue bonds or print Euros like they want it would take a lot of very different minded economies to agree on this.

Just like some of the the old Euro economies just now refuse to make any more big stimulus plans even though the US and England are asking them to.

What do you think about these sentiments ?

One of the main problems of having just one countries/ blocs currency as the worlds default trading currency is that it becomes a sought after commodity to stash away just like gold used to be. That increases demand and forces the value up to unnatural levels out of balance with productivity or debt.
The best way to avoid such an abnormal demand would be to spread the new world trading currency across as many stable currencies as possible. That way it would be virtually impossible for investors to distort the value of any one subordinate currency. Throw in gold as well to keep the playing field even more level.

Using the Euro as the worlds default trading currency wouldn't be good for the EU unless they had a lot of surplus productivity to absorb the expected demand for Euros or were prepared to borrow to sustain their economy, as an abnormally strong Euro would price them out of a lot of markets. Same, same USA right now.

Thanks Panda I understand better now, so why not just use gold again then ? sorry for all the questions

Originally Posted by larvidchr

Thanks Panda I understand better now, so why not just use gold again then ? sorry for all the questions

Probably because there is not enough of the stuff to go around.

Some interesting stats in Wiki.

"Gold reserves (or gold holdings) are held by central banks as a store of value. In 2001, it was estimated that all the gold ever mined totaled 145,000 tonnes.[1] One tonne of gold equated to a value of US$30.27 million as of February 14, 2009 ($941.35/troy ounces)[2]. The total value of all gold ever mined would be US$4.39 trillion at that price.[note 1]

Official gold reserves - Wikipedia, the free encyclopedia

I recall reading somewhere that if gold was to replace paper money for trade its value would have to increase to about $25,000 an ounce. Not sure if thats right, but sounds reasonable.

People are already buying gold that doesn't exist, except on paper.

Originally Posted by Panda

People are already buying gold that doesn't exist, except on paper.

Thanks again.
Yes I think we had something about that in this thread before, more gold being sold that recorded mined gold, and to stay away from that, and only buy gold you actually can hold in your hand.

Unemployment (U3) is inching up. Oregon and Nevada now have U3 rates of 10% unemployment.

California’s Unemployment Rate Rises to 26-Year High (Update1)

By Bob Willis
March 20 (Bloomberg) -- California’s jobless rate surged in February to the highest level since 1983 while unemployment in Oregon and Nevada climbed above 10 percent for the first time in more than two decades.


Unemployment in California rose to 10.5 percent from 10.1 percent in January, its Employment Development Department reported today in Sacramento. Neighboring Oregon’s jobless rate rose a full percentage point to 10.8 percent, and Nevada’s increased to 10.1 percent.



“The West Coast is more heavily dependent on real estate and the decline there has been more pronounced” than in the rest of the U.S., said Sung Won-Sohn, an economics professor at California State University-Channel Islands in Camarillo, California. “We are not seeing any signs of stabilization in the job market.”
Unemployment across the nation may top 9 percent by the end of the year, according to economists surveyed by Bloomberg, and it could go higher. The national jobless rate rose to 8.1 last month, the highest in more than a quarter century, and the economy has lost 4.4 million jobs since the recession began in December 2007.



At least 19 states have so far reported individual employment figures for February. The rest of the states will be reporting through the end of next week and the Labor Department in Washington will collate the figures on March 27.

Link & Entire: California’s Unemployment Rate Rises to 26-Year High (Update1) - Bloomberg.com

^ Gold star for the lesson, Panda.

Very true Panda. One of the reasons that the USD has been stronger than it 'should have been' since the crisis is demand- banks worldwide were pulling in USD's to sure up their capital ratio's. The reserve currency has to be changed to a more representative measure, something I've maintained for years actually. It was fine for the US when it was the lions share of the worlds international trading economy- it is not now.

One of the reasons for the recent weakness of the USD is said to be divestment by China- it is gradually altering it's foreign reserves towards a more representative, rather than USD based currency profile. Allegedly. (these things are of necessity kept quiet). Apparently, it is divesting longer dated T bonds and buying shorter term instruments, as well as hard commodities.

As far as the current scare about printing money, I'd just like to put this in perspective. Of course, the first concern expressed is that printing money is inflationery- some quarters are even panicing about hyper-inflation. Very few in serious economic circles are though. The concern at the moment is staving off Deflation- which would lead to a deep, prolonged recession considerably worse than we have yet. Right now the concern is deflation, not inflation.

Enjoying reading all the comments. Maybe I'll learn something. Being an engineer type guy, seems to me the USD value will depend a lot upon how much other nations "print money" to stem economic down turn in their countries. It's all relative isn't?

Originally Posted by Norton

It's all relative isn't?

Originally Posted by larvidchr

so why not just use gold again then ?

Originally Posted by larvidchr

sorry for all the questions

It's OK they love it. Especially on a slow Sunday afternoon.

Originally Posted by larvidchr

so why not just use gold again then ?

Some are.....

Informal poll:

How many job losses will there be for the month of March, 2009?

Less than 250,000?

250-499,000?

Over 500,000?

Over 600,000?

Over 650,000 jobs lost in March 2009?

More than 4.4 million Americans have lost their jobs since the recession started in December 2007 and more than 12.5 million are currently out of work. The Labor Department reported that 651,000 people lost their jobs in February, an 8.1% increase from the prior month.

This is the third straight month where 650,000 or more jobs have been lost. Monthly U.S. job losses have more than doubled since the fall of Lehman Brothers on Sept. 15, 2009.
Here are the staggering numbers:

Month Total job losses Unemployment rate

September 2008 321,000 6.2%

October 2008 380,000 6.6%

November 2008 597,000 6.8%

December 2008 681,000 7.2%

January 2009 655,000 7.6%

February 2009 651,000 8.1%

Prediction: Job losses will hit 650,000 or more in March. The Labor Department will report preliminary numbers for March 2009 on April 3, which will be used to judge this prediction.

Link: Over 650,000 jobs lost in March 2009? | The Industry Standard

Here is a summary on the potential effects of the increase in the money supply, deflation & possible inflation and hyper-inflation.

MM, I predict over 600K jobs loses for March 2009...

On another note, was watching Bill Maher last night and the topic of Glenn Beck came up... Every one on the panel tarred GB with the same brush, including Madeline Albright... In a single word, he's 'nutz'...

About time for some good news, for a change -

Existing home sales spike 5%

Realtors group says sales of existing homes rose in February. Prices tumble more than 15%.

Sales of existing homes unexpectedly rose in February, recovering from a sharp drop in the previous month, according to an industry report released Monday.
The National Association of Realtors said that existing home sales rose last month to a seasonally adjusted annual rate of 4.72 million million units, up 5.1% from a rate of 4.49 million in January. February sales were down nearly 5% from year ago levels.
Economists surveyed by Briefing.com were expecting existing home sales to decline to 4.45 million.
The report said first-time buyers made up half of all purchases in February, and that sales of distressed properties accounted for about 45% of all transactions.
Sales were unexpectedly strong in the West, with activity increasing more than 30% over last year.

Existing home sales rise - Mar. 23, 2009

Seems that was against all estimates.

The stock market is up well too, on this news plus Geithners toxic asset rescue plan.

Originally Posted by sabang

The stock market is up well too, on this news plus Geithners toxic asset rescue plan.

Not to be one of those Nattering Nabobs of Negativism I've railed on about but the market being up today is simply a Bear Market rally....

I have it on good authority that BKKAndrew pronounced some while ago that the print-money policy respose would then result in those still with assets seeking an asset class that will avoid being hyper-inflated away.

Gold/land/property/guns/commodities

In fact, anything without a picture of a dead president on it.

Looks like this stage of the collapse is now commencing.

This by an American from a blog I follow....

"Listen people…..the media is bought and paid for. anything that they say needs to be researched again and again to find the real truth. media today is a joke….CNBC is case in point. (I don’t watch it anymore)
Media makes it’s living by selling ads on the media and most of them are the same companies they talk about and interview so they will not piss them off with hard questions that expose anything that will have them pull their ads…

people right now “want” to hear good news so that is what the media (and all the paid off cronies therein) are going to say.

Housing is NOT better today than yesterday. Bank sales are up due to the overwhelming amount of property the banks now own and have to get rid of.

So let me ask you this. If a house that sold in 2002 for 500,000.00 dollars was re-sold in 2006 for 900,000.00 and then repossessed by the bank in 2008 and sold at auction for 375,000.00 3 weeks ago is that a “good” sign of housing getting better?
Fuck no, it is not. it is mearly a bank owned firesale.

No one but me apparently goes out in the real world and drives around and sees in person the houses that are still sitting with for sale signs that have had for sale signs in the yard over a year now…. still today, as I drove around yesterday to check all the ones in my town for progress, still there, unsold…..

get out people and look around and judge for yourself in your own towns.

any asshat in the housing sector that is going on the air and talking housing up and saying everything is looking up is just plain lying to you…..unless they consider a sale at auction from a bank repossession sold for 70% of it’s value a good sign….

anyone can have a firesale…..firesales of homes by banks is not what I consider good news"

Originally Posted by Muadib

MM, I predict over 600K jobs losses for March 2009...

Are there that many jobs left? The losses may go that high for March, but I think the next big round of cutting will come after 1Q09 earnings (losses) are announced.

As for the prop market, I heard rumours that many of the buyers are from overseas.

Originally Posted by Boon Mee

Not to be one of those Nattering Nabobs of Negativism I've railed on about but the market being up today is simply a Bear Market rally....

Yes a +7% single day rally means little. Daily market peaks and valleys are not an indicator of economic health. I await with interest for your post when the market drops 7% in one day.

Originally Posted by Norton

I await with interest for your post when the market drops 7% in one day.

Obama's fault. No question.

Panda's been saying it for ages. Now the Chinese are saying it.

This from their central bank website...

"China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.

more

Originally Posted by Spin

Panda's been saying it for ages.... Now the Chinese are saying it.

so have the germans, the iranians, the russians... the whole world is tired of the U.S. using its currency for manipulating their budget.


China Urges New Money Reserve to Replace Dollar



SHANGHAI — In another indication that China is growing increasingly concerned about holding huge dollar reserves, the head of its central bank has called for the eventual creation of a new international currency reserve to replace the dollar.
In a paper released Monday, Zhou Xiaochuan, governor of the People’s Bank of China, said a new currency reserve system controlled by the International Monetary Fund could prove more stable and economically viable.
A new system is necessary, he said, because the global economic crisis has revealed the “inherent vulnerabilities and systemic risks in the existing international monetary system.”
While few analysts believe that the dollar will be replaced as the world’s dominant foreign exchange reserve anytime soon, the proposal suggests that China is preparing to assume a more influential role in the world. Russia recently made a similar proposal.
China’s bold idea, released more than a week before world leaders are to gather in London for an economic summit meeting, also indicates that Beijing is worried that its huge dollar-denominated foreign reserves could lose significant value in coming years.
China has the world’s largest foreign exchange reserves, valued at nearly $2 trillion, with more than half of those holdings estimated to be made up of United States Treasuries and other dollar-denominated bonds.
On March 13, China’s prime minister, Wen Jiabao, said he was concerned about the safety of those assets, particularly because huge economic stimulus plans could lead to soaring deficits in the United States, which could sink the dollar’s value.
Should China lose its appetite for Treasuries, the United States’ borrowing costs could rise, making it more costly for Washington to carry out economic stimulus packages and for Americans to pay off their mortgages.
Nicholas Lardy, an economist and China specialist at the Peterson Institute in Washington, said that through its proposal, China was indicating that the dollar’s long dominance was unfair, allowing the United States to run huge deficits by borrowing from abroad, and that the risks to holders of Treasuries were growing.
“Chinese are quite concerned that the large U.S. government deficits will eventually lead to inflation, which will erode the purchasing power of the dollar-denominated financial assets which they hold,” Mr. Lardy said. “It is a legitimate concern.”
The timing of the Chinese announcement, analysts said, could also be aimed at giving Beijing more leverage to negotiate with the United States and other nations in London on trade and on proposals about how to stabilize the global economy.
But China is cautious when it discusses buying or selling Treasuries, for fear of sending a signal that could significantly affect currency markets. So in a separate announcement on Monday, China said it would continue to buy Treasuries, something the United States has encouraged.
In Mr. Zhou’s essay, published in English and Chinese on the central bank’s Web site, he said the international community should consider expanding the International Monetary Fund’s Special Drawing Rights.
Such a proposal has been suggested before by developing countries. But the United States has always been wary that this could be inflationary and affect the central role of the dollar.
Special Drawing Rights are based on the value of the dollar, euro, pound and yen, but have been little used except as an accounting entry by international organizations.
Mr. Zhou said the goal of reforming the international monetary system was to “create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run.”
Keith Bradsher contributed reporting from Beijing.