Headed for a Sudden Stop

[astonas]

Re: Headed for a Sudden Stop

[/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!

[Sharky]

Re: Headed for a Sudden Stop

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

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

[Bundi]

Re: Headed for a Sudden Stop

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.

[jk]

Re: Headed for a Sudden Stop

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.

[jk]

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.

[bill]

Re: Headed for a Sudden Stop

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 bank’s private investment arm, and the Multilateral Investment Guarantee Agency, its private sector guarantee arm. International Finance Corp.’s 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 It’s a partnership that was further deepened by the launch last year of an Infrastructure Finance Center of Excellence, IFCOE, in Singapore – 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 Group’s knowledge and financial activities – 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.

[jk]

Re: Headed for a Sudden Stop

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.

[FRED]

Re: Headed for a Sudden Stop

in eric's most recent piece he listed "emergency measures" as a topic to be discussed, which fred then said would be addressed in a follow up piece. fred also referred to this thread about a sudden stop.

re-reading eric's piece from 3 years ago, a question occurred to me. if there is to be capital flight from the u.s. and from the dollar, where would capital GO? what market or markets are big enough to receive the waves of money we're discussing?

in early 2009, according to the bis [quoted in wikipedia's article on the bond market] the global bond market was then worth around $82trillion, of which the u.s. bond market was $32trillion. those numbers have risen in the intervening almost-3 years. so let's say the u.s. bond market is currently $35trillion. 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.

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.

[jk]

Re: Headed for a Sudden Stop

in eric's most recent piece he listed "emergency measures" as a topic to be discussed, which fred then said would be addressed in a follow up piece. fred also referred to this thread about a sudden stop.

re-reading eric's piece from 3 years ago, a question occurred to me. if there is to be capital flight from the u.s. and from the dollar, where would capital GO? what market or markets are big enough to receive the waves of money we're discussing?

in early 2009, according to the bis [quoted in wikipedia's article on the bond market] the global bond market was then worth around $82trillion, of which the u.s. bond market was $32trillion. those numbers have risen in the intervening almost-3 years. so let's say the u.s. bond market is currently $35trillion. 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.

[TheServant]

Re: Headed for a Sudden Stop

Even though this data is from 2007-2008, it is probably worth noting that the White House (Rahm Emanuel) oversees the US Census Bureau as of February.

[doom&gloom]

Re: Headed for a Sudden Stop

Headed for a Sudden Stop

iTulip has since 1999 warned that in a protracted financial crisis the US, a net debtor, is vulnerable to withdrawal of foreign capital and capital flight, producing inflation and a severe economic contraction known in the economics literature as a Sudden Stop.

*snip*

Could THIS be what is preventing a 'sudden stop' at present? China has been accumulating gold. LOTS of gold. It may not be so 'far out' as to think we are buying off our debt-masters to keep things calm at the present time. perhaps they are giving us back lots of 'dead presidents' in exchange?

and for the record, I am not a GATA 'guy' or adherent. I just see this a different way...

(all bolding and colors are theirs, not mine)

http://news.goldseek.com/GoldSeek/1243605552.php



-- Posted Friday, 29 May 2009 | Digg This Article | Share this article | Source: GoldSeek.com


This past Tuesday evening I found myself reading a snippet from Enrico Orlandini’s, DTAnalysis [DT stands for “Dow Theory”] - where Mr. Orlandini opined,

"I believe the [U.S.] trade gap will surprise people and continue to shrink and may even turn positive for the first time in decades. Unfortunately, this will only facilitate the flow out of the US dollar and bond and that’s not a good thing.”

With Enrico being “technically oriented” and me being more fundamentally oriented, I recall how I intuitively did not believe the U.S. Census Bureau’s published U.S. Trade numbers and how I might go about proving that they were falsified:



My primary field of research is focused on precious metals; namely, gold and silver, and I know that recent reports indicate that various countries are contemplating repatriating their sovereign gold reserves. Further, the U.S. Treasury and Federal Reserve have balked at GATA’s recent Freedom of Information [F.O.I] requests and demands for an independent, verifiable audit of the Sovereign U.S. Gold Reserve – thus a little bit of forensic investigation of U.S. gold exports was in order.

I just needed to figure out how to access the relevant numbers.

The United States Geological Survey [USGS] publishes monthly Mineral Industry Surveys designed to provide a macro-import/export-overview of the U.S. precious metals [gold] industry. The data in these surveys is supplied to the USGS principally by industry trade groups such as the World Gold Council as well as official sources like the U.S. Census Bureau:


source: USGS Feb. 09 Mineral Industry Survey

I took special note of how 2,920 metric tonnes of “Gold Compounds” had been exported from the U.S. in 2008. This number seemed BIGGER than BIG – because the U.S is only alleged to have stockpiles of sovereign gold of 8,100 metric tonnes while annual U.S. mine production of gold is roughly 228 metric tonnes. This figure of 2,920 metric tonnes is equal to 36 % of all alleged sovereign U.S. gold stocks or more than 14 times annual U.S. gold mine production. So, I was left wondering, “just what is/are ‘gold compounds’?

I contacted the USGS and queried a qualified individual [who had working knowledge of this data stream] about the definition of “Gold Compounds”. I was told that, according to the U.S. Census Bureau – who supplies not only the definition but the actual reported numbers, gold compounds were typified by industrial type products containing low percentages/amounts of actual gold content – like gold paint.

I then reasoned with the USGS person, if such were the case, why would U.S. exports have increased in 2008 to nearly 3,000 metric tonnes [when the Global Economy was slowing and the U.S. Dollar was strong] from 2007, when U.S. exports totaled approximately 2,000 metric tonnes [when the U.S. Dollar was weaker and the Global Economy was booming]? I noted that this was counter-intuitive and made no fundamental economic sense:


source: USGS Feb. 08 U.S. Mineral Industry Survey

When confronted with reason, the individual for the USGS agreed that the data, as published, did not make logical sense and explained that the U.S. Census Bureau was questioned as to the veracity of this particular line item in their data.

I asked the USGS employee if the gross weight or the gross value [not shown in the table but known to the USGS] of the “Gold Compounds” was queried.

The individual confirmed that their query to the U.S. Census Bureau dealt with the gross value being assigned to these exported goods.

I responded rhetorically, “being an issue of gross value – then let me guess that the U.S. Census Bureau is assigning an astronomically high value to these goods. Such a high value would be COMPLETELY INCONSISTENT with what the U.S. Census Bureau claims these items are- namely, industrial goods. The values being reported would be more in line with these goods being gold bullion or equivalents”.

The individual from the USGS confirmed my reasoning when he responded, “that would be CORRECT”.

The Implications

Ladies and gentlemen, the foregoing data and discussion with the USGS individual is proof that the United States of America [or criminal elements within its Treasury and/or The Federal Reserve] “HAS” surreptitiously exported physical gold - and continues to do so. It is confirmed. The exports are likely coin melt [or gold compound, if you prefer] from the great gold confiscation back in 1933; or alternatively, this terminology is being used to disguise physical repatriation of foreign gold bullion formerly on deposit with the N.Y. Federal Reserve. Such repatriations are recorded as “exports” in U.S. Trade data. Public acknowledgement of same would scream like a siren call that the global financial community has totally lost faith in American financial stewardship – hence the need to do so on the sly.

This is being done in a vain/desperate/losing battle to satiate “off the charts” global demand for physical gold bullion arising from the profligacy of the American Empire’s two previous Administrations and to prop up the failing U.S. Dollar.

Over the course of 2007 / 2008 – more than 5,000 metric tonnes of “Gold Compounds” have been exported from the United States of America representing more than 62 % of reported sovereign U.S. gold reserves or about 24 times annual U.S. mine production.

5000 metric tonnes = 160 753 733 troy ounces [$128 billion+ at today’s prices]

The fact that industry funded trade groups like the World Gold Council and other professional gold consultancies, who shall remain nameless, have not reported these facts negates their credibility and illuminates them as dupes or willing shills. These fraudulent or ignorant organizations deserve to be shuttered and disbanded.


U.S. Trade Data Is Bogus

The value of these bullion exports significantly “skew” the doctored U.S. Trade numbers [coincidentally, also prepared by the U.S. Census Bureau] in an attempt to convey a picture that the U.S. financial position is improving.

The reality is this, when gold exports are backed-out, the U.S. Trade picture is decidedly worse.

The United States of America claims to possess a little more than 8,100 metric tonnes of sovereign gold stored principally at Fort Knox, Kentucky, West Point, N.Y., the Denver Mint and The New York Fed. The sovereign U.S. gold reserve has not been independently audited since the 1950’s during the Eisenhower Administration. GATA’s freedom of information requests are all about ensuring that the 8,100 metric tonnes of U.S. sovereign gold is still owned by the U.S.

In April, 2008 the Federal Reserve responded to GATA’s request, releasing hundreds of pages of worthless information with significant portions redacted. They also claimed that they were withholding hundreds of additional pages of documents. The status of the withheld documents is currently under appeal.

These stonewalling tactics – withholding details - are eerily similar to those employed by Messer’s Bernanke, Paulson and Geithner refusing to divulge frank details as to “who” the beneficial recipients were of TARP and TALF funds.

No credible audit of the Sovereign U.S. Gold Reserve will EVER be allowed – because the gold is simply not there.

Hope you have some.

Rob Kirby is proprietor of Kirbyanalytics.com and sales agent for Bullion Custodial Services. Subscribers to the Kirbyanalytics newsletter can look forward to a weekend publication analyzing many recent global geo-political events and more. Subscribe to Kirbyanalytics news letter here. Buy physical gold, silver or platinum bullion here.

[plinko]

Re: Headed for a Sudden Stop

I want to believe we're more than 70% through stage 4, about to transition into stage 5, just my opinion looking at the news lately, unless some newfound dollar strength occurs via bad news in the euro or china. I apologize for not backing this up with facts.

[Slimprofits]

Re: Headed for a Sudden Stop

We're in the midst of stage four?

[ocelotl]

Re: Headed for a Sudden Stop

Athough my personal experience of the 1995 Mexican sudden stop is influenced by the geopolitical events that preceded it, IMHO we can mention that part of the process for it is a worsening of the inner political arena. The capital flight has to be preceded by a series of events that tend to worsen the exterior view on a country in steps. At this moment, the image about US is not that of a colapsing regime, rather, the hope built internationally on the policies set up by Obama are holding many of us foreigners. A set of policies directed to rebuild the infrastructure and the manufacturing base within US borders may be the ideal as seen from outside.

A run to trade protectionism, or a reconstruction of the FIRE Economy may be seen as an attemp to finance the restructuration of US economy on the backs of us foreigners, and that may not bee agreed upon. Such a situation may be one of the triggers to capital flight.

¿Can the human kind, over that situation, revert to asset based currencies? We have been for two whole generations under the rule of fiat currencies. Money will be needed until the basic needs of the whole human population (breathing air, water, food and shelter) can be provided without human intervention, and even then, greed and codice will keep asset property running.

[metalman]

Re: Headed for a Sudden Stop

bump...

Sept. 2008...

Most economists reading will be taken aback by the suggestion that the US might be the victim of capital flight and a Sudden Stop. The US has long been the recipient and beneficiary of flight capital as other nations experienced financial crisis. But a world ordered by poor nations financing the rich with their "excess savings" is an environment where long standing beliefs can be turned upside down, and fast. It remains to be seen what happens to the euro as the financial crisis spreads to Europe. The dollar, at least temporarily, may benefit.