Archive for May, 2014

It occours to me the Australian Budget it could be a GST – increase ploy.

PM Abbot could not increase the GST in the Budget, as it was one of his main election promises. But all the announced Welfare (hospital beds etc) and Education cuts, it could be simply a ploy to push someone else (the Federation States)  what he wanted to do all along. Increase the GST.

Interesting. Even more interesting will be July – when the green and Labor will have a Senate majority, togheter.

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Ok this is not confirmed and nobody will ever confirm.

As I heard that Greystone mercenaries (ex SEAL, SAS soldiers) (the infamous Blackwater in Iraq) are helping the Ukrainian army dressed up in SOKOL special police force (like the US SWAT) (Font German Bild magazine – naturally denied by Greystone) – I always wondered who was on the other side…as they were particularly good at their job.

Finally I found that TIME interviewed the other side, the commander of the paramilitary force Wolves’ Hundred (so called because their famous Russian cap is made of wolf instead of sheepskin.

They would be the real “Inglorious bastard” of the Quentin Tarantino movie.

As a unit they were founded by the Czar Nicholas II and their motto was to defend Mother Russia and the Orthodox Church with any mean at any cost. They fought alone for 2 years against the USSR after the fall of the CZAR.

Then they got dismantled, some units still remained due to their ferocity and used as punitive squadrons to be inserted behind Germany Nazi lines to kill and be killed (as they were always outnumbered and would be shot if they returned to the USSR). Naturally they did it with extreme diligence and violence – practically against anyone they met (Germans, civilians and Russian).

Putin reinstated them in 2005 as a paramilitary unit (so it is deniable), even if they paycheck comes from the Russian states.

Since then they always been deployed in the worst conflicts like Checenya and going on with their job.Image

 

 

At the moment the market is rallying, but there is no volume. It is all about Fed money and algos “hot money” (the millisecond trade in and out).

Fisher (one of Federal Reserve  presidents) expressed concern at almost no volatility in markets.

The Bundesbank (Germany Federal Reserve) warned “we see risks – despite the fact that markets are calm,” and perhaps incredibly suggested investors “flatten all risks now to avoid the herd behavior.”

The last time volatility was so low it was in 2007. Well, this time you can’t say I have not been warned.

I am not panicking, but alert. And you should be.

Well, when I found this news scouring the net this morning I could not write about it.

Both Businessweek and Bloomberg report (for us in Australia also NINE and SMH)

Italy will include prostitution and illegal drug sales in the gross domestic product calculation this year, a boost for its chronically stagnant economy and Prime Minister Matteo Renzi’s effort to meet deficit targets.

Drugs, prostitution and smuggling will be part of GDP as of 2014 and prior-year figures will be adjusted to reflect the change in methodology, the Istat national statistics office said today. The revision was made to comply with European Union rules, it said.

Well, as usual Italy does things in style (or let’s say they have the ability to tease themselves). While US, UK and also Australia recur to all dodgy system to improve the data (otherwise why would you feel poorer by the day? – for example if the Dow Jones 30 constituents of 1982 we re the same (only 2 companies are the same from 1982) the Dow Jones would be now approximately 4,000).

Again, the US last year changed the base year for GDP calculations

at least Italy has fun with it.

PS The news is true!

UPDATE

– Apparently this new calculations will be implemented in  all EUROPE!

– Finally Italy will have a GDP growth even better then China (real GDP growth -0.5%, estimated illegal activities (by the various Mafias) 17%)….Italian GDP +16.5% (well in reality, averaged out would be more a +11%…take that China at just 7.2%!! Too funny. And they complained of Berlusconi!

Gold

Posted: May 22, 2014 in Uncategorized
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Gold tried to breakthrough spurred by Ukraine by failed and now it looks like consolidating around USD 1,280/1,325.

It is very difficult, but it looks like prepping for moving higher (USD1,400/1,480). But it needs a catalyst that could be

– New Indian Government stopping the restrictions on gold purchases (it looks like they will do, so to sop the gold smuggling

– A geopololitical risk like Ukraine being invaded (I do not think so – Putin just need to destabilise it.

– Deflation in Europe

-Real interest rate spike in the US (hard to tell, but food inflation in the US is high and skilled job unemployment is under the long range term…these two factors are currently hidden from the macro data…but if they come out in the media they could wreak havoc)

– A stock related risk event, that we are still missing

– (remote) the financial details of the Russia-China deal that could agree that the settlement will be in Yuan Rouble rather than US Dollar (it would be a crucial decision, but I do  not think that people will realize the systemic shift that such an event could provoke. Practically a serious dent in the US Dollar as reserve currency)

Cold War Reloaded

Posted: May 21, 2014 in Uncategorized
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What Ukraine has done for the world is to push all the world in a Cold War scenario.

The fear is fortunately not nuclear – world war 3 …but financial.

Putin is trying not to invade Ukraine, but his red line is that Ukraine must not be coherently under the US influence. Chaos or a federalisation will be enough.

But already Mevdev (now Russian PM) already told us that we are back in the Cold War 2.0.

But now the Russian are smarter. They understand that the core of the US Power is the US Dollar as reserve currency and that is what they are aiming at.

Putin is almost signing a mega contract for a Russian -Chinese pipeline. Maybe it will push for the price to be paid in Yuan.

Already Hong Kong banks like HSBC and Standard Chartered have a lot or reserves in Chinese Yuan.

In July there is a BRICS conference in Brasil (and Brasil is quite against US due to the currency war) where the BRICS Development Bank (sort of IMF for third countries) will be launched. And maybe now in USD.

Russia is studying an alternative to the VISA/Mastercard system payment, after the sanctions .

The fact is that the US Dollars in 2000 was the currency of choice for 55% of global transaction and in 2013 was 33%. Other currencies increased, in the same time, 400% (China does not disclose that data so other will include certainly Euro…but you could guess the Yuan increased a lot – China is aiming to make it fully convertible in 2018).

The US certainly knows this and replicates old Cold War scenario weaponizing all the Balcanic and ex USSR country and helping the Pacific Rim (Philippines, Vietnam, Australia mainly). It is quietly pushing Japan to leave its pacifist constitution. And UK is “leaving” Europe for the US.

Europe is struggling as military and “democratically” is linked to the US. But economically and energy is linked to Russia.

So back to the future!

European elections

Posted: May 20, 2014 in Uncategorized
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The 25 May there are the European election (also a vast arrays of local elections (28 national one for the EU, One Europe wide plus the Ukrainian election).

The polls indicate a big rise of the “anti” party (against Euro, against immigration, against Europe…but not very constructive).

Economically Europe is improving, but normal people are still struggling. Specially the fiscal pressure in South Europe is unbearable.

Also Draghi (EU Central bank) of ECB will look closely.

He (backed by the French) wants a Quantitative Easing also for Europe, but Germany, as usual, is recalcitrant. But in a sense is looking at the strength of the Euro and could start otherwise. But QE for Europe, due to the Germans, will always be a weapon of last resort in case of risk of deflation