` Hungary PM ` Voices ' his Opinion against `Economic Sanction's ' on ` Russia ' as not in Interest of Europe '

#AceFinanceNews – HUNGARY – March 28 – Hungary has voiced its opinion against the EU imposing a round of economic sanctions on Russia over Ukraine.

According to Prime Minister Viktor Orban has said. “Economic Sanctions are in the third round and it would be fortunate to avoid these because it is not in the interests of either Europe, or much less Hungary,” Orban was quoted as saying by the business daily Vilaggazdasag on Friday.

For a long time now Hungary has relied on Russia to supply around 80 percent of its natural gas requirement’s and to that end, Russia is also Hungary’s largest trading partner outside the European Union.

Ace News Services 2014

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#ace-news-services-2014, #economic, #eu, #europe, #european-union, #hungary, #russia, #sanctions

#US : `Federal Reserve Tightens Rules’ on `Foreign Banks’ to make them hold `Higher Reserves’

#AceFinanceNews says that `United States Federal Reserve‘  has tightened its rules for `Foreign Banks’ operating in the `US’ to `Hold Higher Reserves’ and prevent another 2008 Financial Crisis

In 1935, Cret designed the Seal of the Board o...

In 1935, Cret designed the Seal of the Board of Governors of the Federal Reserve System. (Photo credit: Wikipedia)

The Federal Reserve has tightened the rules for foreign banks operating in the US, forcing them to hold higher reserves to make them responsible for losses and provide extra solvency in case of another crisis.

Foreign lenders holding $50 billion in US assets will have to establish a subsidiary that will also need to follow the same risk management and liquidity standards as the biggest national banks do.

The Federal Reserve extended the deadline by which foreign banks must comply and meet all the requirements, until July 2016, one year later than originally proposed.

The Fed board approved the decision by a 5 – 0 vote.

The move should “help address the sources of vulnerability” revealed by the crisis, the new chair of the Fed Janet Yellen said.

Before the financial crisis broke in 2008, foreign banks moved from a traditional lending to broker-dealing, where they borrowed dollars in short–term money markets and sold it abroad.

However, the crisis made vulnerable all the lenders equally regardless of the operations they had been involved in, which made foreign players“disproportionate users” of the emergency lending facilities established by the Fed, as USA Today quotes Fed Governor Daniel Tarullo.

Major foreign players on Wall Street like Deutsche Bank and Barclay’s, had pushed back against the Fed’s decision. The new law will squeeze their lending, and raise costs of doing business as lenders will need to transfer costly capital from Europe.

However Sally Miller, the CEO of the Institute of International Bankers in New York, who considers the new Fed rules beneficial to the economy, still thinks that the restrictions were too onerous.

“We continue to have a fundamental disagreement with the Fed about the appropriateness and necessity of applying an extra layer of US bank capital requirements,” as USA today quotes Mrs Miller.

The Fed was ordered to toughen its regulations for large banks that could threaten the entire financial system under the Dodd-Frank Act that Congress passed in 2010 in response to the financial crisis.

RT 

 

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EUropean Economic Community – Prelude To The EU

Euro Disaster  Peace, When It Loses The War.’ and details of the massive amounts of cash moved out of Germany during the war to safeguard the future of German domination against the economic collapse of losing the Second World War against EUropean Union. AND connections with organisations like The Bilderberger’s, Council for Foreign relations, Tri Lateral Commission and other arms of the New World Order.

Around the end of 1939, most of Europe was either consciously or unconsciously under the influence of the economic concept of England. Over recent years, however, it has been swept out of European countries, politically, militarily and economically. Politically the three-power pact has given honour once again to the ancient figures of life, people and room. It has also established a natural order and a neighbourly way of co-existing as the ideal of the new order. The foundation of English economics, which is the basis of the balance of powers, has been militarily destroyed. And economically, a change has come about after the political and military development, the shape of which is easy to describe, but whose final significance is very difficult to evaluate. I can only repeat, that the changing order that is happening now has to be ranked as one of the greatest economic revolutions in history. It signifies a reversion of the economy of Europe to a time before the English concept of building an overseas Europe, i.e. an awareness of one’s own country.

The Discussion so far and its Results

Discussions about questions relating to Europe started as the power of the NSADP grew. At the Congress of Europe in Rome from 14th to 20th November 1932, Alfred Rosenberg developed, for the first time in front of an international forum, thoughts and ideas that have moved us since. No one, who fights for a new economic order in Europe, can ignore these perceptions and conclusions. The economic and political wheel was set in motion, when the NSDAP declared the militarization of the German economy. It is to the credit of the journal ‘Germany’s Economy’ that it first seized these questions in 1932, kept on bringing them up and stuck doggedly to those original perceptions. The idea of German economic self- sufficiency in the new political sense and the German economic militarization are synonymous with this journal. Besides this, Daitz, the ambassador, has earned the special credit of being the first to have related German economic history to the present time. Part II of his selected speeches and essays, which appeared in 1938 under the title ‘Germany and the European Economy’, summarizes his concepts formed between 1932 and 1938. The Italian, Carlo Scarfoglio, delivered with his book ‘England and the Continental Mainland’, a decisive historical contribution to the consciousness of the European continent. Meanwhile German and Italian economic policy drew the political consequences from the historical lessons that were learnt during the blockade and learnt again during the sanctions. The speech made in Munich in 1939 by the leader of the Reich’s farmers, R. Walther Darre, at the 6th Great Lecture at the Commission of Economic Policy of the NSDAP, takes a special place in the discussion at that time. Its theme was “The market order of the National-Socialist agricultural policy – setting the pace for a new foreign trade order.”

While our leader maintained the hope of reaching a peaceful agreement with England, the route for European economic unity remained problematic. The end of 1939 was a decisive point and it was natural that the years 1940-1941 heralded the new economic and political order. The writer, in particular, developed and extended in speech and writing the intellectual fund of the new economic policy, which has been translated into most languages, so that today everywhere the great constructive texts are known. These contexts revolve around the following issues:

  1. Theory about the Reich and the European economy.

  1. The historic, cultural, and economic significance of the German economic order.

  1. The foundations of the future economic relationships between the states.

  1. The nature of the European economic community.

On 25th June 1940 the Reich’s Economic Minister, Funk, publicised in his official capacity his thoughts, which underlined the development so far and thus gave them state sanction. In October, the journal ‘German Economy’ summarised for the first time the principles of European co-operation, the fundamental principles of German foreign trade, Germany’s export economy and ways and means of promoting export. It did so in a popular review “About A New Europe”, providing an overview of the important problem of European economic fusion. Around the end of 1940 the Berlin historian Fritz Rorig finally outlined in his book “Hanseatic Essence” the historical foundations of the greatest economic and political achievement by the Germans.

I am clear in my mind that total clarity is to be found in the principle questions: The necessity is recognised for a political order for the economic co-operation of the people. The nature of the new order : awareness of tradition, using up one’s own economic resources, long-term economic agreements and fair relations, is affirmed. The economic inter-dependence is underlined by fate. The economic unity of Europe is thus clear.

Economic Practice:

Even practical economic life has increasingly allowed entry to new thoughts. I am able to see the decisive steps in the start and realisation of the following points:

  1. In the increasing payment traffic through Berlin.

  1. In the exchange of experiences in various areas of economic life. Thereto belong also the statements of ministers and business people, the calls made by special advisers and the collective tackling of important tasks relating to the economy. Even the specialist is surprised, once he has taken the trouble to put together all the connections. Today they are already legion.

  1. In the signing of long-term economic agreements between the Reich and the other European states, which the public is aware of, there can be no doubt that such agreements are those of the future.

Of course, that cannot prevent unclear points and new problems from arising, which become clear at the time when the situation is reviewed.

Problems Related to the Economic Community of Continental Europe

These unclear points primarily relate to the concept of economic direction, the extent of solidarity and neighbourly attitude, the development of one’s own powers, the care to maintain the standard of living and the question of raw material purchase from foreign countries. It is natural that one or another issue will take priority of interest, depending on the set of conditions that prevail. It should be attempted at this point to give a reply, albeit a summary one.

There can be no doubt that the concept of direction of the economy, or rather its leadership, is as novel as it is revolutionary. Its classification is all the more important, as the fate and consequence of European co-operation depend principally on a new consistent form of economic understanding. The Anglo-Saxon view of economics is dead: consequently, even the so-called ‘classical’ national economy is no longer classical, but it has survived. So what it comes down to is that a new understanding arises to do with ideology and terminology, which represents a sound basis for agreement and co-operation. Relating to this, one must point out the following in detail:

  1. Economic direction is not a momentary emergency solution, instead it forms the core of new theory and practice. First of all, it takes the place of individual egotism and the automatic autonomy of the Anglo-Saxon precept.

  1. Economic direction is not identical to the tendencies of a centrally planned economy. It does not seek to cancel the individual or to administer through the state operators.

  1. Economic direction really means the following: the new instruction of the creative and constructive power of the individual in relation to the whole system; the creation of a consistent economic view and an attitude towards the economy; the selection of important tasks through political leadership and the state’s final decision on all questions about economic power. Beyond this, the economy is free and responsible to itself.

The degree of solidarity of the individual economies and their neighbourly attitude is characterised by three guidelines:

Firstly, it is limited in regard to its own economic development by the recognition that the utilisation of individual resources represents not only a requirement of the new economic precept, but is the very foundation for economic activity. The European economic community has no interest in leaving any abilities or possibilities unutilised.

Secondly, it contains the obligation that, because of Europe’s freedom, consideration is given firstly to continental Europe regarding any matter related to economic activity. Not only should the shared fate of the European people be emphasized, but the fact should also be stressed that the supplementation of the European economies beyond their borders is possible and sought after.

Thirdly, it must be maintained that, above all else, the spirit of the individual economies may not be allowed to go against the spirit of neighbourly co-operation.

The question of developing one’s own powers refers to the problem of mono-cultures, of industrialisation of the agrarian south-east and the awakening of new needs.

An answer can easily be given to the first question. Mono-cultures are the result of the same economic precept that made the world market price the determining factor in the economy. According to that precept, people and land are the vestiges of some by-gone age. Europe is well on the way to destroying these mono-cultures with initiatives ranging from land improvements and growing new crops to discovering new local resources. All these have the same aim, which is to develop the economy and broaden its basis. Germany and the whole of Europe can only greet these efforts with gratitude.

The industrialisation of the south-east poses a particular problem regarding these questions. As I am unable to handle this problem – like all other problems – here in a comprehensive and exhaustive manner, because the industrialisation of economies is theoretically a difficult problem, I can only say as follows:

  1. Just as it is in the nature of things that each country will strive to utilise its available resources for its own production, so will there will be a knock-on effect for other economic partners.

  1. If, as is the case in the South-east European countries, there is heavy over-population in the countryside, then there are only three possibilities to solve it: itinerant workers, a permanent emigration and an ‘intensivisation’ of the local economy, a term correctly created by Dr. Ilgner for the problem of industrialisation. Itinerant workers can only form a part solution. Besides, it only applies to agricultural and construction workers and gone on for ages. Permanent emigration from Europe is just as false as impossible. There just remains the intensivisation of the economies of south-east Europe as the way to self-help.

3. The economies should make it possible for an independent life according to the modern economic view. The intensivisation of their economies therefore is right for the time.

4. The old features of industrialisation, which evolved from the price collapses in countries with agriculture and raw materials, have to now belong to the past. Europe is a communal living area. Only through a joint development of economies – and not through independence from one another – can protection against crises be achieved.

5. The tasks that have to be solved in Europe are so big that the powers needed to do so have to be released by an intensivisation of the each economy. This can be easily done by employing the workers that have been liberated in new branches of the economy.

Without affecting the difficult questions of purchasing power, it can be regarded as proven that the joint work to build up Germany’s and the south-eastern states’ in the area of industrialisation lies in the direction of the intensivation of interest of the whole continent.

One important and until now completely overlooked task in this regard exists and that is the awakening of new needs in the south-eastern countries. It is because, in those countries, wealth has grown and will gradually continue to grow, as a result of the reliable purchase of agricultural products and available raw materials at adequate price levels. According to the principle in economics that giving equals taking, peoples’ living habits there will have to change, otherwise one day the process will come to a halt. Germany’s ability to absorb the products from the south-east is practically infinite, whereas creating a demand for German goods there is not only a matter for economic intensivation but also one of modifying the people so they consume more. This task is of such importance that it has to be considered from the very outset, so that the south-eastern European economies are elevated after the war.

Equally important as the industrialisation of south-east Europe is the question of the standard of living in the north. Their economic development and high standard of living, which underpin their lives though all economic conditions, should not be mistaken. This standard of living has grown considerably during the 19th century and around the time of the world war due to free trade, so that various circles view world economic events with particular concern. From a German viewpoint, only the following points can be made:

Firstly, a higher standard of living is also the aim of the German government. The German people not only understand this well, but also through its fight wants to ensure European civilisation and culture. This fight will benefit the whole of Europe, and with it the north.

Secondly, despite being connected successfully to England and its economic system (one should not ignore the countless economic troughs that feature there), the economies of the north whose fate and greatness are very closely linked to Germany.

Thirdly, the northern states’ difficulties are going through a temporary phase of adjustment. In the long-term, this will bring about a lasting advancement, rather than destruction, for their economies’ foundations.

Maintaining a high standard of living is not an insoluble problem. To finish, I now come to the problem of purchasing raw materials from overseas markets. A leading south-east European economist once wrote about this principal question: “Unlike the war, we were in the following situation: in order to import raw materials from overseas countries, we bought goods from west European countries with foreign exchange. In the area of continental Europe there is no gold. Everything had to pass through the system of clearing – goods sold against goods. We have no product that can be sold to North or South America. That means that the leading nations are obliged to acquire and distribute to us the raw materials that we need. The leading nations of Europe can supply, with its capacity, enough products to overseas countries with which to acquire raw materials. The one question is whether exchange will ever happen… Even before the new order is introduced, and without even joining in with the Axis powers, we stand in solidarity outside Europe with its traffic of goods…”

 

 

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Is the US Dollar losing its grip as the top-dog of World Currencies!

Over the past few years many economies have gone through massive change, none more than the United States of America. Having survived the 2008 crisis  and been able to re-float the economy, ever cautiously! The question of how, has never reared its ugly head until now! The link to the video l have added to the bottom of this post, lets you the people decide, about what really when on behind closed doors, to save the almighty dollar!

The fact that Germany deposited a vast amount of their Gold could lead some to believe this was to support an ailing economy, but others would argue it was just the best place to store their most precious possession! The action of the Federal Reserve, to refuse the auditors of Germany’s  Bundesbank access to check their deposit, could lead some to believe that it has been secured against some massive debt, to support the US Dollar maybe! Or it could just be a misunderstanding and it will all be made clear very soon!

Either way one fact is that of the 9 strong rooms in the Federal Reserve, the auditors were not allowed to view more than one, and not allowed in the room to touch or check their most valued asset!

After many years of studying currency providers and watching from the sidelines as people gambled on the stock-markets risking millions of £’s and $’s everyday, one thing is sure ,without people having faith in the currency, people start divesting themselves of their share portfolios, as in the news over the past 12 months many billionaires have done!

So when l see or hear about theses types of actions ,involving a currency l always remember the simple phrase ” There is  no Smoke without Fire” so once again l will watch and see how this latest story unfolds, and see if this time, the US Dollar and its mighty power over the world, finally loses its grip, and the top-dog on the world stage, is replaced by a mongrel that has been snapping at its heels for a long time, namely China!

More soon: Editor – link to video – https://www.youtube.com/watch?v=NyemAwLD2N0&feature=youtu.be

#acedebtnews, #acefinancenews, #acenewsservices, #china, #currency, #deutsche-bundesbank, #economic, #federal-reserve-system, #federalreserve, #germany, #politics, #united-states

Fiscal Regeneration As Economy Slows

Federal Open Market Committee

Federal Open Market Committee (Photo credit: DonkeyHotey)

Members of the Federal Reserve’s policy-setting committee pared back their expectations for short-term U.S. economic growth as a result of tepid consumer spending and employment growth, Federal Open Market Committee minutes reveal. The FOMC warned that a potential intensification of the European debt crisis and the looming fiscal cliff also present ‘significant downside risks’ to the outlook. As such, the FOMC considered new policy options, including a large-scale asset purchase program and the extension of the Fed’s low-rate pledge to jump-start the economy.

#ben-bernanke, #economic, #economic-growth, #european-sovereign-debt-crisis, #federal-open-market-committee, #federal-reserve-system, #fomc, #unemployment

Public and private debt and the imbalances of global savings

ECB

ECB (Photo credit: AlphaTangoBravo / Adam Baker)

ODA GNP

ODA GNP (Photo credit: Wikipedia)

Introductory speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements 06/07/2012

It was both simple and to the point and it set me thinking about, how with the ECB {lender of last resort} quite an apt title given the present situation that the  Euro Zone countries find themselves.

In his speech he made 7 distinct remarks, that l will comment after each one!

First remark: 

My first remark is inspired by the very title of this session. In advanced countries, the average public debt to GNP ratio is 100%. In emerging countries, the figure is 30%. This is a very wide gap, and it represents one of the global economy’s largest imbalances. And one of the least mentioned. It also represents a complete reversal of the situation compared with just over twenty years ago. At that time, I remember well, I was chairman of the Paris Club, and emerging countries came to ask for the rescheduling of their debt.

My Comment: 

The part of this remark l found most of interest was simply 20 years ago emerging countries asked to reschedule their debt, this has now led to their figure being 30% of GNP ratio! Whereas at the time and we are talking 1992 a time of high interest rates and collapse of the property market and massive property portfolio losses, has a debt ratio of 100%! Now this can lead very easily to an assumption l will not make,but safe to say, that when interest rates were high and banks, insurance companies and finance houses were losing money, due to massive repossessions! Nobody was aware that in fact they were coining it in offshore domains by building portfolios of property assets themselves. So for the lender on the face of it they were losing ,in fact they were losing to gain.

This was the first time the borrowers of this country were taken for a ride and it enabled the ability using these massive portfolios,to get asset ownership  transferred  to an offshore domain! Also this allowed the raising of capital to build hedge funds that one day would eventually lead to the next financial crisis in 2008!

Second Remark:

Second remark, global demand is still fairly concentrated on the advanced countries. Not only is their debt higher, but their savings (as a ratio of GNP) are lower. The G7 countries alone still account for 56% of global consumption. The problem is clear. How can we hope to raise our level of consumption if we need to reduce our level of debt and increase our
savings? And if the advanced countries’ consumption stops growing, what will happen to global economic growth and particularly that of emerging countries with entirely export-oriented economies?

My Comment:

This has a hidden meaning of ” Debt Ratios ” is not clearly sign-posted for most people, but reveals itself,in what is not being said! Not so much by the speaker but the wording! In so much as we all know that debt causes a lack of income for purchasing power, leaving the economy of any country in a lack lustre state of growth! As any country is reliant on the ability to grow by borrowing!,In the late 1990’s most people had a savings account! This was called a ” rainy day fund ” but gradually this became eroded by ever-increasing consumerism! So now we have the lowest amount of savers in           ” real terms ” ever as people’s views on saving, moved from safe havens of respectability, to evermore riskier investments! Of course hoping for the ever larger returns of scale, enter bankers and especially the greedy ones! Now with burgeoning hedge funds as their property portfolios had grown with rising house prices, they were forever on the look out for that ever-growing band of risk takers! So with their especially designed products they entered the investment market, using those people wanting a great return on their hard-earned cash!

This l called ” O P M ” or ” Other Peoples Money” as it was just like a drug to the investment bankers and their products were designed, for a win win situation! In their favor of course and just like shearing sheep they went to the slaughter, but with the economy on the up ,their wool would grow back and they could be sheared again!

We know the upshot and of course we know the winners and losers and also we know as is stated in the second remark! We need to raise our level of savings and reduce our indebtedness? How of course exports but not us exporting to emerging countries and making the profits! No! They export and we pay the prices that will eventually move higher and higher as they amass wealth like the other rich countries have done for years.

This l have called the “cleft stick syndrome” as there is no way out as savers have nothing to save as they live in a world of ” Buy Now Pay Later ” or payday loans! So to fuel the economy all we do is print more money as in Quantitative Easing and inject it into the community to repay debt! You get the picture!

Third Remark:

Which brings me to my third remark: we need the emerging countries to continue investing their savings in advanced countries. We therefore need properly functioning international financial markets. In a world where the savings and financing needs are so geographically dislocated, properly functioning financial markets are a prerequisite for economic growth.
But, today the capital markets appear very unsettled and full of anomalies, and not just in Europe.

For example, certain sovereigns (the USA and UK for example) borrow today at historically very low nominal interest rates and at negative real interest rates despite the fact that their deficits are around 10% of GNP and that doubts exist regarding the future evolution of their debt levels.

Another anomaly: large corporations have accumulated unprecedented cash
reserves (several trillions of dollars) despite numerous highly profitable and
unexploited investment opportunities around the world, unsatisfied infrastructure needs and investment bottlenecks in commodities production.

My Comment: 

This remark l find the most interesting and requires a little consideration of     ” All that goes around comes around ” or my favourite ” We Reap What We Sow” and when it comes to wanting help, countries remember! The first paragraph says it all and we are asking a question ” We Need ” emerging countries to invest into advanced countries! There reply is evermore evident as swathes of London is now owned not by Londoner’s but by wealthier Chinese and our emerging countries cousins!

Why do they have to invest in our failing economies when they can acquire numbers of assets, by just waiting in the wings until we collapse! Why do they need to invest their money into our country when they can pick it up for a song when we can no longer keep our triple A ratings! Finally why do they need to lend us money when we cannot afford to repay what we owe, other than to control us and get us to do their bidding!

My personal feeling is if they need money from people we called second-rate citizens and we would provide contracts at best profitability for ourselves, are they now going to say ” Whatever you need ” just ask! No they are going to make us pay and pay to prove they can!

Fourth Remark:

We can identify two reasons for this situation:

The first is the general and exceptional uncertainty weighing on the global economy. Uncertainty makes liquid and safe assets more attractive. It makes investment less attractive. It can therefore partly explain the phenomena that I have mentioned.

The second reason is more structural: a malfunctioning of our financial
intermediation mechanisms. There are doubts about the solidity of banks in
numerous countries. Debt markets are profoundly disrupted and International movements of capital have been highly volatile over the last two years.

My Comment:

This is quite self-explanatory but hides one vital piece of information and the reason why we cannot ever return to boom or bust! The reason is hidden in the text of what  is not said and that is the word ” liquid” or as l prefer to call them ” fluid assets” meaning ever-changing! The actual fact that liquid has three states of wet, solid and in between has elude scientists for generations! The actual point of change is as vital to the asset as it is to the freezing and liquid state, but in financial terms this is not as clear! When you acquire an asset you acquire a version of itself in frozen or liquid form and are not aware of when its state will change! As in financial terms a frozen asset is a solid investment ” as in banking assets ” and a liquid asset is termed as changing and not as safe, even though we rely on liquid assets as we rely on solid! They are not the same because they are ever-changing making it impossible to quantify their true worth!

So the second paragraph only bear’s out the fact of how this liquid asset form has led to malfunctioning of financial markets, debt and borrowing ratios being out of alignment and capital markets unable to function as once they did! Due to undue pressure of the volatile markets!

Fifth Remark:

The intervention capacities of central banks are of course limited. They can remedy temporary market disruptions and situations of liquidity caused by uncertainty.Recently they have intervened to an unprecedented extent, as reflected in their balance sheets. But they cannot permanently substitute financial markets and banks when financial inter-mediation malfunctions. Likewise, low or zero interest rates can contribute to stabilising the economy in periods of crisis, but if maintained over a protracted period, they can create distortions, encourage the formation of bubbles and create risk for long-term investors.

Indeed, on this topic, I would like to make one observation. The question of monetary financing of deficits was raised by David Thesmar. Such financing cannot in any way resolve the problem of the dislocation between savings and investment, either at the national level or at the global level. Some central banks have developed large-scale public debt acquisition programmes. They have done so for reasons relating to immediate macroeconomic stabilisation… to go beyond the zero-interest rate limit. The Euro-system as well intervened on a much smaller scale when malfunctioning debt markets prevented the effective transmission of monetary policy impulses. There is not a single central bank that is seriously considering
the monetisation of deficits with the more or less declared intention of reducing the weight of debt via inflation. In my view, this notion is nothing more than a financial analyst’s fantasy. In fact, over the last six months, we have seen constant confirmation of the anti-inflationary stance of monetary policy with, for example, the FED actually establishing a quantitative definition of price stability for the first time (in fact, identical to the one used by the (Euro-system).

My Comment: 

This remark has a small number of areas that need exploring and relate to the how we got into the present situation? As we know high interest rates provide good savers returns and low-interests the reverse! So given the present global situation, should we be looking at higher or lower interest rates? Also remember with higher interest rates we fuel inflation as borrowing is lower and people need higher wages, so they borrow even more! Whereby lower interest rates make us more content and we still borrow but can afford the repayments, until austerity measures are imposed! Then people want to borrow even more and when lending becomes risky to banks after a crisis, they like the stock market pull in their horns in and ride out the storm!

So we have a dislocation between savings and investment and we cannot rectify ,one without the other as they need to be in balance! The ideal situation would be low debt, higher savings to lending ratios and affordable public services! Of course we can only achieve one of the three ,can you guess which one?

Well it is higher savings and the government will lead us very soon down the savings path by the means of investment into government bonds! Until now the sole domain of the public purse and these are now dwindling as tax receipts are down and investment into the country is at an all time low! So one avenue remains the ” tax payer ” they are now ready for shearing not by the banking fraternity but by our ” trusted government ” but with one problem ” How do they get us to part with our cash ” ? Simple by applying another scheme lost in translation ” Save As You Earn” to your pay-slip and telling all you ” Pay As You Earn ” people it is for the good of your country! Remember ” Patriotism” and we all stand together and help each other!

So close all tax loop holes [ except those that are not able to be seen] and show they can be trusted and then apply the cou de grat and we are sheared and paying to save our own money!

Sixth Remark:

Our immediate priority is therefore to construct or reconstruct the mechanisms and structures of a sound and efficient financial inter-mediation framework. That is why, at the euro area level, the financial union project is fundamental. At the global level, the FSB’s role is crucial in developing a robust technical, regulatory and prudential architecture, adapted to the interconnection of our economies.

My Comment:

This is a remark that sends a chill into anyone who understands the sheer consequence of this strategy! The fact that the Euro Zone now wants a fiscal policy has not l am sure passed anyone by! The fact that this would control all countries finances under one roof and who can be trusted to control this huge pot of money? Well not a single one, is eligible as all countries shouting for this job  have huge debts and massive lending! And one thing you never give any debtor is more money!

The last part of this remark is about the FSB acting as a control mechanism! Even though it is a paper tiger with no teeth and even less knowledge of the market they police!

So personally ” We do not need a fiscal union or policy or any other document ” we need ” GOOD FINANCIAL MANAGEMENT OF THEIR DEBTS” and nothing more!

Seventh Remark:

Seventh and last remark: fiscal policy and debt management. Here, I would say that we are all guilty of a certain degree of ambiguity, both at the market level and at the political level:

On the one hand we want public debt markets that are broad, deep and liquid,
because they form the base on which our entire financial system is built. In
particular, government bonds are the safest and the most liquid assets. They act as reserves of value for a large number of investors, starting with the central banks themselves which hold them as foreign currency reserves or as monetary policy collateral.

And on the other hand we want solvent States, i.e. with perfectly controlled deficits and levels of public debt, which logically places limits on the growth of public debt markets.

My Comment:

This remark on the face of it seems a little like an analogy! As did ” Social Media ” sites all under that  word ” free” account, sharing and widgets! All that was riddled with lies as all they wanted was your information! So it could be used and abused for financial gain! So why should fiscal and debt management work on the face of it? As we already have proof it does not – witness Libor and Euribor!

Conclusion:

This contradiction is known by economists as the “Triffin dilemma”. It was first identified in relation to the U.S. balance of payments deficits and the value of the dollar, but it can also be applied to fiscal equilibrium. The economy needs a growing volume of risk-free assets, but the more they are issued, the more risky they become.We cannot totally side-step this dilemma, but we can avoid making it worse. It is clearly not good for major developed countries to find themselves in a situation where their solvency is put into question, or to allow markets to think that under certain circumstances, they may be unable to honour all their commitments. But this is what we have done in Europe, against the better judgement of the ECB, by introducing the principle of private sector involvement. The idea is attractive in theory. However, its consequences for financial stability are extremely negative. There has never been any doubt about whether the United Kingdom or the United States would honour their debts. Today they are enjoying very favourable interest rates compared with Spain and Italy even though the latters’ fiscal fundamentals are better. I know that some attribute this difference in borrowing conditions to the actions of the UK and U.S. central banks. I do not agree. I believe that Europe has a major project ahead of it to recreate a broad, deep and liquid public debt market that is completely and unambiguously free from insolvency risk.

This last part was the conclusion and bears no remarks from me other than to say, whatever we are told was not the truth and what we found out was not the truth and eventually we find out that it is not the truth! So why should we believe those that covered up from the beginning will they not cover up at the end?

     

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