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Headed for a Sudden Stop

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  • #31
    Re: Headed for a Sudden Stop

    Originally posted by FRED View Post
    The iTulip thesis is that as peso denominated assets (Argentina domestic capital) fled into the dollar in 2001, dollar denominated assets (Argentina domestic capital) will flee into gold.
    well, as i said in another thread, the gold market is big enough to meet any demand in terms of money, just not in ounces.

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    • #32
      Re: Headed for a Sudden Stop

      Originally posted by jk View Post
      if bond holders sell in any size, first to whom do they sell? and then where do they put their money? what bathtub is big enough for this elephant?

      capital flight from the u.s. dollar isn't even possible in any size unless the dollar is first hugely devalued.
      There are not enough exits, political correct financial hubs, yes.
      A new one just established.

      http://www.bloomberg.com/news/2011-0...singapore.html
      The World Bank started collaborating with Singapore on a hub to help countries address the challenges of urbanization two years ago, followed by the opening last year of an Infrastructure Finance Center of Excellence in Singapore, Zoellick said. Those will now be joined by units such as International Finance Corp., the bankís private investment arm, and the Multilateral Investment Guarantee Agency, its private sector guarantee arm.
      International Finance Corp.ís new asset management company and Government of Singapore Investment Corp. are already cooperating on a commercially run global infrastructure fund, Zoellick said. The private investment arm will also explore ways of working with Singapore-based commercial banks and companies to make debt and equity investments in emerging markets available to global investors, he said.

      http://www.gic.com.sg/
      http://en.wikipedia.org/wiki/Interna...ce_Corporation



      http://web.worldbank.org/WBSITE/EXTE...K:4607,00.html

      Itís a partnership that was further deepened by the launch last year of an Infrastructure Finance Center of Excellence, IFCOE, in Singapore Ė in recognition of the strong demand for services in infrastructure.
      We have seen some of the potential already. A project supported by IFCOE in Chongqing, China involving securitization of future toll road revenues is expected to reach financial closure this year. An Infrastructure Guarantee Fund in Indonesia is now established and operational. There is also a public- private partnership toll road project in Vietnam; support to ASEAN in the preparation and implementation of the ASEAN Connectivity Master Plan; and the establishment of a regional mediation center for infrastructure PPP projects.

      Today we are building on these successes. Singapore will become a multidimensional hub of the World Bank Groupís knowledge and financial activities Ė for both Asia and some global enterprises.

      The Singapore Hub will be a unique center that encapsulates our commitment not just to mutual learning but to pragmatic decentralization. To deliver on this purpose, we expect this Hub to grow to some 70 professional staff over the next three years. We are investing in Singapore as a knowledge economy and financial services center.

      Developing countries have become a key source of growth and opportunity. In East Asia, private investments have accomplished a great deal but key restraints remain. We need to unlock private sector interest in infrastructure and bring more investors to the table. We need an integrated approach to support practical solutions for jump-starting the public-private partnership market.

      Our new Singapore Hub can help meet those needs. This will be the first combined World Bank Group office outside Washington able to offer products and services from across the Bank Group to our clients. The Hub will be a Bank Group center that will foster training and capacity building through our World Bank Institute, building on the already very successful urban leadership training program in partnership with the Lee Kuan Yew School of Public Policy.

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      • #33
        Re: Headed for a Sudden Stop

        public-private partnerships: how many years has it been since we started talking about them as having a big future? it looks like that future is, increasingly, now.

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        • #34
          Re: Headed for a Sudden Stop

          Originally posted by jk View Post
          well, as i said in another thread, the gold market is big enough to meet any demand in terms of money, just not in ounces.
          just a little arithmetic. tried to find the size of the gold market, this source asserted that in nov '09 all the gold ever mined was worth about $5trillion. of course, at the time gold was selling at about $1100/oz. so if it's now around $1900, that implies that all the gold ever mined is now worth (19/11)*5= $8.6 trillion. if that has to expand to accommodate serious capital flight out of the dollar, gold has a lot more work to do on the upside.

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          • #35
            Re: Headed for a Sudden Stop

            Originally posted by jk View Post
            just a little arithmetic. tried to find the size of the gold market, this source asserted that in nov '09 all the gold ever mined was worth about $5trillion. of course, at the time gold was selling at about $1100/oz. so if it's now around $1900, that implies that all the gold ever mined is now worth (19/11)*5= $8.6 trillion. if that has to expand to accommodate serious capital flight out of the dollar, gold has a lot more work to do on the upside.
            So tens of trillions in US$ bonds are liquidated into US$s, then those US$s are used to purchase gold. What is the estimated daily volume of available physical gold. In other words, of the $8.6T in current gold value, how much is for buy/sale at any given time? Seems the float wouldn't be anywhere close to what would be needed in a short time frame associated with a run on the dollar. I suppose central banks can do what they do behind closed doors and without timely reporting. However, institutions and others less tied in would be hard pressed to get into gold fast enough. Perhaps we should think in terms of gold not yet mined and include that potential total in the overall market. Surely, no known reserve would remain private in such a rush. That would be a case for confiscation. Hugo seemed to think so anyway.

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            • #36
              Re: Headed for a Sudden Stop

              Originally posted by jk View Post
              just a little arithmetic. tried to find the size of the gold market
              Here's another source for the size of the global gold market:

              http://www.zealllc.com/2011/goldob.htm

              Originally posted by ZealLLC
              According to the World Gold Council, about 170,000 metric tons of gold have been mined in all of world history. Though a little has been lost (unrecoverable shipwrecks, electronics, dental work), the vast majority is still around. Do the math and this works out to a staggering $9.8t worth of gold at $1800 per ounce!
              However, if a paper market collapses, not all of its wealth will be readily transferable into different asset class. As selling intensifies, prices drop. I like the quote from runtogold.com: "The system does not collapse but evaporate."

              Great-Credit-Contraction-Liquidity-Pyramid.jpg
              Last edited by Sharky; 09-08-11, 05:16 AM.

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              • #37
                Re: Headed for a Sudden Stop

                Originally posted by Sharky View Post
                [/SIZE][/FONT][ATTACH=CONFIG]4054[/ATTACH]
                This is a great visual summary: Lays out the problem (and consequent solution) in one easy-to-grasp graphic, with all the numerical information you need clearly displayed. Thanks for posting it!

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