Global Wealth Distribution 2013

Credit Suisse have just released their latest Global Wealth Databook 2013

The most interesting point is this diagram representing Global Wealth distribution:

distribution of wealth around the world for 2013

Global Wealth Pyramid 2013

If you have a net worth of over 1m USD then congratulations – you have done extremely well. You are in the top 0.7% of the Worlds Population. You lucky, lucky, lucky …. Staggering. Conversely almost 70% of the world have less than 10k USD wealth.

Here’s an interesting quote from the report:

Apart from the rich lists, which cover a relatively small number of named individuals, there is a  scarcity of information on wealth holdings above USD 1 million. Survey details are patchy at best, and official statistics based on tax returns are often inadequate given the complexity of  wealth ownership arrangements.

Download a copy of the PDF report here – its interesting reading. And while you are there grab a copy of the Global Wealth Report 2013 – it’s worth a skim too.

© Copyright MMXIII RagingGoldenBull.com

IMF “to admit mistakes” in handling Greek debt crisis and bailout – My response…

Here is a short piece that I felt I had to interject at The Guardian (UK)

RagingGoldenBul unleashes on The Guardian (UK) about the IMF (International Mafia Federation)

RagingGoldenBul unleashes on The Guardian (UK) about the IMF (International Mafia Federation)

😉

RagingGoldenBul – 05 June 2013 6:54pm

Recommend: 77

Let us not ponce about the proverbial bush here my brethren:

The IMF (short for: International Mafia Federation) is nothing more than another phony instrument created by the US government, for the US government, along with World Bank at that infamous Bretton Woods (1944) meeting where they strong armed the rest of the world over 21 long, grueling, and I would put it to you arduous days (blood must have been pouring from the poor delegates ears after day 12) while the world was still at WAR. Picture it.

Oh how they seized their chance, dragged in John Maynard Keynes (UK in collusion – special relationship you know), and invented a crock, because no one had any choice. No Choice.

It is well known that M. Lagarde (after they ditched DSK) let the cat out of the “bail-in” bag way too early for the FedReserve, and the ECB, and thus both the Bernanke and the Draghi are now sour-pusses. After those trillions of USDs that helicopter Ben printed-up, M. Lagarde blew it in one momentary lapse of reason. Now Ben will bail-out himself of the picture at end of the current term as Governor of the Fed.

Everyone knows that “Bail-ins” are coming now to a Bank near you real soon….Are you ready for that?

Why does anyone listen to a word these guys (International Mafia Federation) say anymore? Why do they point to them as if they are credible?

It all leads back to one thing – US Dollar hegemony, and anything to keep that puppy alive – alas brethren, the end is nigh.

Please excuse my rather fruity and colorful language (sausage I hate US English 😉 )…

Original Article:

The International Monetary Fund is to admit that it has made serious mistakes in the handling of the sovereign debt crisis in Greece, according to internal reports due to be published later on Wednesday.

Documents presented to the Fund’s board last Friday will reveal that the Washington-based organisation underestimated the damage austerity would cause to the eurozone country, which has required two bailouts in the past three years.

The Wall Street Journal reported that the papers would say that financial support from the Fund, the European Central Bank and the European Commission had bought time for Greece but had only been made possible because the IMF had bent its own rules to make the country’s debt look more sustainable than it was. According to the WSJ report, Greece failed to meet three of the Fund’s four tests to qualify for help.

A Fund spokeswoman said: “We will be publishing a number of papers on Greece later today. The board met last Friday to discuss several documents on Greece including the review of its programme and its annual economic assessment.”

Greece became the first eurozone nation to require a bailout by the international community in 2010, but needed a second round of financial assistance in early 2012 when a deep recession and high interest payments threatened to send its debts spiralling out of control.

The so-called troika of the IMF, ECB and EC forced private sector bondholders to write down the value of their Greek bonds in an attempt to bring the country’s debts down to sustainable levels of 120% of national income by 2020.

Christine Lagarde, the managing director of the Fund, has said many times over the past year that Greece should now be in a position to pay off its debts, but the WSJ reports that IMF staff believe this cannot be said with any certainty.

In Athens, officials reacted with barely disguised glee to the news.

The report confirms what Greek officials have long said: that the first bailout of uncompromising budget cuts and tax increases, the price of 110 bn euro in emergency funds in May 2010, was the wrong prescription for a country not only batting a monumental debt load but rampant tax evasion and a flourishing black economy.

Under the weight of such measures – applied across the board and hitting the poorest hardest – the economy, they said, was always bound to dive into an economic death spiral. “For too long they [troika officials] refused to accept that the programme was simply off-target by hiding behind our failure to implement structural reforms,” said one insider. “Now that reforms are being applied they’ve had to accept the bitter truth.”

The Greek media recently quoted IMF managing director Christine Lagarde describing 2011 as a “lost year” partly because of miscalculations by the EU and IMF. The authoritative Kathimerini newspaper said the report identified a number of “mistakes” including the failure of creditors to agree to a restructuring of Greece’s debt burden earlier – a failure that had had a disastrous effect on its macro-economic assumptions.

“From what we understand the IMF singles out the EU for criticism in its handling of the problem more than anything else,” said one well-placed official at the Greek finance ministry. “But acknowledgement of these mistakes will help us. It has already helped cut some slack and it will help us get what we really need which is a haircut on our debt next year.

See the full story: http://www.guardian.co.uk/business/2013/jun/05/imf-admit-mistakes-greek-crisis-austerity#comment-24097893

© Copyright MMXIII RagingGoldenBull.com

Video — The Ascent of Money: A Financial History of The World by Niall Ferguson

Niall Ferguson is a historian extraordinaire and this is a stonking documentary. Careful it is four hours long! As Niall says in the documentary:

Not Knowing this stuff can seriously affect your wealth.

http://www.niallferguson.com/about

© Copyright MMXIII RagingGoldenBull.com

John Embry on Gold and Silver

Here is a recent interview with John Embry for the Hera Research Newletter (HRN):

HRN: Thank you for joining us today. Let’s talk about gold stocks.

John Embry: Gold stocks represent a tremendous value in relation to the price of gold and to the fundamentals of the sector. There has been tremendous shorting activity by hedge funds and, as a result, dedicated gold funds have experienced redemptions. Retail investors, who are natural buyers of these stocks, have been annihilated by the price action. This has created one of the finest opportunities, if not the finest opportunity, that I have ever seen.

HRN: Do you have a short term price target?

John Embry: I don’t look at short term price charts for gold. In a market as heavily interfered with as this one, charts can be made to look any way you want in the short run. As I see it, if you don’t like gold at these prices, then you must like currencies. My partner Eric Sprott often says, the U.S. dollar is the best looking horse in the glue factory. If the U.S. dollar is the world’s strongest currency, that’s the best endorsement for gold that I can think of.

HRN: Do you believe that currencies are losing value?

John Embry: The fact is that economies are slowly melting down. The problem is excessive debt in almost every corner of the world. The only way to deal with the debt is through aggressive growth, but fabricating growth through more debt won’t work. The idea that you can get the economy to move forward by creating even more debt just doesn’t wash. We can’t service the existing debt, even at artificially low interest rates. I don’t see any easy way out. We have to get the excessive debt out of the financial system. Either policy makers are going to create mounting inflation or there will be a deflationary debt collapse.

HRN: Europe seems to be a case in point. Do you think the Euro will break up?

John Embry: The Eurocrats who constructed the currency aren’t going to give it up easily. The key is how much the Germans are going to go along with. They realize that there’s a huge loss for them if the Euro falls apart. I wouldn’t want to be in German Chancellor Angela Merkel’s shoes. Germany is trapped in the Euro because it relies on exports and German banks hold the debt of other European countries. Despite the bailouts and the inflationary policies of the European Central Bank (ECB), Germany doesn’t have much choice.

HRN: How can European governments solve their debt problems?

John Embry: The problem is that it would take a horrific debt collapse to set the stage for future expansion. There is no politician on earth that wants that to happen on their watch. Consequently, policy makers will resist deflation and we’re going down the opposite road, which means mounting inflation or possibly hyperinflation. I don’t think politicians will change the system. I think the system will change the politicians.

HRN: Can the economy recover in a high inflation scenario?

John Embry: Creating even more debt is not going to work. To me, high inflation is the most corrosive thing that can happen to an economy or to a country. I’m really worried that neoclassical, Keynesian economists like Paul Krugman, who are prescribing even more debt, will bring about a collapse.

HRN: Are these problems the result of Keynesian economics?

John Embry: If you really applied Keynesianism as Keynes originally envisioned it, the government was supposed to run surpluses when the economy was growing to pay for the deficits that would be created during downturns. That’s been conveniently forgotten. We’ve had an astounding build up of debt. I don’t think people fully realize how serious this is. I’m amazed at how complacent people are. We’ve never been in a position like this in the entire history of the world.

HRN: Why do you think people are so complacent?

John Embry: I think it’s cognitive dissonance. When confronted with something that’s really unpleasant, and to which there’s no easy solution, the average person will basically block it out and look for somebody to tell them that everything is fine. The mainstream news media and the government are doing that as we speak. Consequently, the average person doesn’t have a chance of understanding what’s going on. The man in the street doesn’t have a clue what’s coming.

HRN: What about investment professionals?

John Embry: I have a lot of close friends who have been in the investment business for 40 years and they don’t want to hear it.

HRN: Won’t the Federal Reserve and other central banks simply bail out the system?

John Embry: They think that printing money will buoy the markets and that that’s good, but it won’t solve any of the problems. Although you may get a momentary lift in the financial markets, when it plays itself out we’ll be back in the same situation, but with money that’s being systematically destroyed.

HRN: Does printing money work in the short term?

John Embry: There are nominal prices and real prices. Printing money is very deceptive and people are confused by its effects. I am only interested in real returns, not nominal returns. If you have a nominal return that’s caused by inflation, you’re losing money because governments tax nominal gains.

HRN: Can governments inflate their way out of debt?

John Embry: The U.S. federal government, for example, has reached a stage where forty cents of every dollar spent at the federal level is borrowed and a lot of that money has been printed. There has never been a case in history where that hasn’t led to financial disaster. If you study any empirical evidence, they’re in a hopeless position. They’ve only been able to get away with it so far because the U.S. dollar is the world reserve currency. If the United States wasn’t able to print money and was trapped in the European Union, it would just be a massive Spain.

HRN: So, governments can’t inflate away their debt?

John Embry: Inflation is the easier, more expedient route to take, but I would not rule out an accident. For example, if policy makers push austerity too far they could trigger a deflationary spiral that would be impossible to reverse. I subscribe to the Austrian theory of economics. In his book Human Action, Ludwig von Mises wrote that there is no way to avoid the collapse of a credit boom and that more credit expansion simply destroys the currency.

HRN: Don’t inflationary policies help banks and support the financial system?

John Embry: The ECB could do another Long-Term Refinancing Operation (LTRO) or the Federal Reserve could buy more U.S. Treasuries in the open market but that’s not really solving the problem. If you actually evaluated the banking system and marked all the assets to market, the system would be insolvent.

HRN: And the basic problem is too much debt and leverage?

John Embry: The over the counter (OTC) derivatives situation is so surreal I can’t begin to express it. Correctly calculated, the notional value of all OTC derivatives is in excess of one quadrillion dollars globally. The vast majority are related to interest rates. Central banks have to keep creating liquidity to prevent these instruments from collapsing.

HRN: What can the Federal Reserve and other central banks do?

John Embry: They’re lost either way. They’re running a massive lab experiment with monetary policy and don’t have a clue what the outcome is going to be.

HRN: Do you think the U.S. economy can grow its way out of debt?

John Embry: When I was a kid back in the 1950’s, most women didn’t work. Americans maintained their standard of living by putting a second person to work. When that was expended they made up the difference by going into debt and, eventually, they used their homes as cash machines. Now student loans total more than $1 trillion. I just don’t see where the consumer demand is going to come from going forward. You can’t get blood out of a stone.

HRN: What do you think the outcome is going be?

John Embry: I believe that before this is over we’ll have a new currency system, probably backed by gold.

HRN: Do you support the gold standard?

John Embry: One of the greatest periods of wealth creation was when we had a gold standard in the second half of the 19th century. It’s hard to believe that it’s going to be 41 years since there has been gold backing for any of the major currencies in the world. That is what has allowed the massive build up of debt that we have today. If there had been a gold standard, we wouldn’t be in the position we are in. Western governments don’t want the gold standard because it restricts their ability to dole out favors.

HRN: But the gold standard doesn’t prevent financial panics.

John Embry: There are always going to be financial panics, but, under the gold standard they tend to be short term. If we had had a gold standard, there would have been a number of cleansing periods where excess debt was eliminated. The Federal Reserve allowed the build up of debt that led to the stock market bubble and crash of 1929 and to the Great Depression, which was followed by World War II. It took about a decade to build up the debt and more than a decade to deal with the fallout. It’s taken more than 40 years to build up the debt we have today and I don’t know how long it’s going to take to correct it.

HRN: What does this mean for the average person?

John Embry: I think living standards of most people in the world, particularly in the West are going to decline precipitously. The Federal Reserve recently reported that the net worth of the median American family has fallen nearly 40% since 2007 after adjusting for inflation. Before this all plays out, I think the percentages are going to be far larger.

HRN: Do you foresee any wider impact on society?

John Embry: When I was growing up in the United States after World War II, I didn’t realize how remarkably fortunate we were as a society to have such a strong middle class. Seldom in history has there been a middle class to equal what transpired in the U.S. and Canada from the 1950s to the 1980s. We basically took it for granted because that’s all we ever knew. The middle class in the United States is disappearing. What happens is that you have massive poverty and a small wealthy class. It’s one of the worst things that can happen to a society and it can lead to civil unrest. If there’s no reason to buy into the system, people will act up.

HRN: Do you view gold and silver as commodities?

John Embry: I view gold and silver as monetary metals. The mainstream news media conflates gold and silver with industrial commodities, but they’re really a competitor to the currency system. Gold is the antithesis of paper money.

HRN: I’ve read that central banks are buying gold.

John Embry: Confidence in currencies is misplaced. There is a strong flow of gold from West to East. The Chinese, Indians, Russians and Vietnamese know perfectly well what’s going on with the U.S. dollar and the Euro. They are buying physical gold and the West has been stupid enough to sell it to them.

HRN: What’s your view on China?

John Embry: I’m not optimistic on China in the short run. The People’s Bank of China (PBoC) recently cut bank reserve requirements by 150 basis points to stimulate 1.2 trillion yuan ($190 billion) of new lending because they don’t want growth to fall from around 8% to 7%. As I see it, they’ve dined out on Western profligacy for 20 years and have become the most unbalanced economy in the world. An inordinate amount of China’s economic activity is generated by exports and by all manner of capital spending on manufacturing, real estate, infrastructure and more. The slowdown in the world economy has revealed massive overcapacity in many sectors.

HRN: Can China develop a consumer-driven economy?

John Embry: The idea that China’s economy can morph into a consumer-driven economy is preposterous. The very same consumers are employed in sectors like manufacturing where there is massive overcapacity. If the world slides into another global recession, which is not beyond the realm of possibility, I don’t see how China stays out of it and if they don’t then there’s no engine of growth left in the world.

HRN: So, even with a rising middle class, China remains dependent on exports?

John Embry: The fact is that China has become the world’s manufacturer but the ability of their two largest customers, Europe and the United States, to consume is being constrained. China is not going to be able to keep selling more year over year. The HSBC manufacturing index has fallen to recessionary levels.

HRN: It has been predicted that China will become the world’s largest economy. Do you think that’s true?

John Embry: I think China will probably dominate the 21st century. The U.S. dominated the 20th century but it went through some very tough times in the first half of the century.

HRN: With a slowdown in China, what’s your view on commodities like copper or crude oil?

John Embry: In the short term, I’m worried about commodities. In a deep global recession, I expect there will be extreme monetary debasement, which will hold up the nominal prices of commodities more than supply and demand factors would suggest.

HRN: Do you foresee a bear market in commodities?

John Embry: We are in a short-term bear market that will be arrested by monetary debasement.

HRN: But there are value buying opportunities?

John Embry: Given my views on currencies, commodities that are already depressed could be decent repositories for wealth. I like agricultural products. As the global economy continues to develop, I think the supply of food is going to be a major issue.

HRN: How can investors protect their assets in a global recession?

John Embry: The only things I’m comfortable holding are precious metals and, because they are so cheap now, precious metals mining shares.

HRN: Where do you think the price of gold will end up?

John Embry: I’m more concerned with how many ounces I own than with how many U.S. dollars I can get for them at any given point in time. Gold and paper money are going in opposite directions.

HRN: Thank you for your valuable time.

John Embry: It was my pleasure.

© Copyright MMXII RagingGoldenBull.com

Yra Harris predicts Gold will Close Higher at Year End

Yra Harris is called a “trader’s trader.” He says the latest deal on Greek debt is just

“pretend and extend. . . . “

The real problem is Spain because they’re big, they’re in debt and they have 27% unemployment.” Everyone in the Western world is dealing with the sovereign debt mess by printing money and suppressing interest rates.

 

Harris predicts:

“As long as real yields are negative, of course, gold is going to go up.”

Harris is afraid inflation could get out of control and says:

“It’s like being a little pregnant, you can’t really control it. Nothing destroys democracy like inflation–end of story.”

If Democrats and Republicans can’t reach a deal to avoid the so-called “fiscal cliff,” then Harris contends,

“Deflation . . . is bullish for gold because everybody knows what the central bank will do to answer the call . . . the Fed will become that much more aggressive.”

No matter what, Harris is betting that

“gold will be higher by the end of the year.”

© Copyright MMXII RagingGoldenBull.com

Quote – Voltaire on The Real Value of Paper Money

Voltaire

a sketch of the young Voltaire

Voltaire – A hell of a guy

 

“Paper money eventually returns to its intrinsic value – zero.”

Voltaire believed back in the 1700’s that paper money was worthless – Did he know that the Federal Reserve was coming later down the road of time?

François-Marie Arouet, known by his nom de plume Voltaire, was a French Enlightenment writer, historian and philosopher, and someone who understood that paper money was not really money. We know that too know …

© Copyright MMXII RagingGoldenBull.com

Mark Carney Announced as next Governor of the Bank of England

A shock and surprise announcement from George Osbourne today as he announced the Canadian Mark Carney as the next Governor of the Bank of England. Do not doubt that this is one of the top jobs in the UK.

Mr. Mark Carney will be next Governor of the Bank of England

George Osbourne defended his decision by stating that Mr. Carney was:

“The outstanding Central Banker of his generation.”

He also said that he was the best man for the job in the whole world bar none. I think it speaks more for how unsuitable the home grown UK talent was than anything else.

This is the first time since the creation of the Bank of England back in 1694 that it has been governed by a non British subject, in this case a Canadian. But Mr. comes highly qualified for the job.

He has managed arguably the best economy in the world Canada which has not had one bank bailout. In fact he has come through with his reputation enhanced. He understands Capital Markets. He worked for Goldman Sachs for 13 years (possibly not such a good thing! Could this be a case of Goldman getting “their man” into the BoE, and a “printer” into the system?). He speaks fluent French, went to Oxford University, already lived in the UK for a decade, his wife and children are British subjects, and he will apply for British citizenship.

Mr. Carney is also the current chairman of the board of the Financial Stability Board (FSB) which in itself is a considerable achievement and vote of confidence as this organization includes all G20 nations

This is a slap in the face for Mr. Paul Tucker who was touted as the next Governor . Too bad, LIBOR scandal for sure screwed that one up, and his dealings with Mr Bob Diamond.

In another departure from the norm he will only serve a 5 year term instead of the more usual 8 year, and Charlie Bean will stay on serving his current term.

Big Question: How will this effect the UK money printing practices and will we see more Quantitative Easing with Mr. Carney at the helm?

© Copyright MMXII RagingGoldenBull.com