One week ago, 2Y German Bunds tumbled after a Reuters report came out, according to which the ECB was looking for ways to lend out more of its huge pile of government debt to avert a freeze in the €5.5 trillion repo market that underpins the financial system, manifesting in the surge in short-term Bunds. The effect of that particular report lasted for all of one day as the market realized that no matter what the ECB does, the collateral shortage is likely to persist.
Fast forward to today, when the same thing happened, only this time, to the long end, when Reuters reported that, in advance of its March 2017 meeting, the ECB was considering sending a “formal signal after its policy meeting next Thursday that the program will eventually end.” As a result, Bund futures quickly slid to session low, dropping ~30 ticks in 10 minutes, on the back of the Reuters report.
In other words, tapering is coming. However, the ECB is not sure what form said tapering will take, especially since the primary message to be delivered is that QE will be extended beyond March, when it was originally scheduled to end, even if it is modestly (or not so modestly) reduced.
Reuters notes that even skeptics of more stimulus on the bank’s Governing Council “have accepted that an extension beyond the current expiry date of March is inevitable given weak underlying inflation and heightened political risk.”
However, the question remains how to structure that extension. According to Reuters, much of the preparatory staff work has focused on a six-month extension at a steady pace of 80 billion euros per month, an option favored by many as growth is sluggish, inflation lacks momentum and political risk from key elections keeps the chances of market volatility high, three sources said.
But some have indicated they would favor an extension at lower volumes, for example nine months at 60 billion euros a month, fearing that a straight extension could make the program appear open-ended, two of the sources said.
A compromise under discussion would be to signal the program’s eventual end, possibly in the bank’s forward guidance, indicating that the purchases cannot be extended indefinitely. Another option is not to specify monthly purchase volumes, essentially making them dependent on economic developments, the sources said, similar to what the BOJ has done with its curve control operation. That would allow the ECB to buy up to 80 billion euros without requiring it to spend the full amount.
“Coupled with the extension, there’s a sense that you need to send a signal, also for the hawks, that we will not be in the QE (quantitative easing) business forever,” one of the sources said. “We’re not talking about tapering. We’re talking about a signal.”
Actually, you are talking about tapering. However, the reason you don’t want to use that word is because when Bernanke uttered it in 2013, it unleashed the infamous Taper Tantrum in the US and globally, leading to a plunge in bond yields.
There is another problem: with the US tightening at a time when demand for US debt will have to stay constant or rise to fund Trump’s fiscal stimulus, it would be up to Japan and Europe to provide the “helicopter money” to fund US economic growth as DB explained. Even a small hint that this is going away, and suddenly the Trump stimulus is looking very shaky.
Sure enough, as Reuters admits, some proponents of the extension fear an ill-timed signal about reduced buying in future could heighten market volatility, potentially undoing some of the benefits of the scheme.
To be sure, it is not a done deal yet:
Extending the asset buys would require the ECB to ease some of its self-imposed restrictions, a sensitive debate as most options on the table raise legal or political concerns, facing varying degrees of opposition within the Governing Council.
Still, ECB President Mario Draghi seemed to dismiss those concerns this week, arguing that the program was sufficiently flexible, suggesting that parameter changes would not stand in the way if policymakers opted for the extension.
However, with a spate of economic and political events in the first two weeks of December, it just may be that a tapering announcement by the ECB is the catalyst that finally blows over the house of cards market that has soared since November 8 on nothing but hope and lack of concrete news.
The Indian Prime Minister announced on 8th November 2016 that Rs 500 and Rs 1,000 banknotes would no longer be legal tender. Linked are Part-I, Part-II and Part-III updates on the rapidly encroaching police state.
The economic and social mess that Modi has created is unprecedented. It will go down in history as an epitome of naivety and arrogance due to Modi’s self-centered desire to increase tax-collection at any cost.
Indian jewelry merchant
Fear has gripped the bullion market, for one is deemed to be guilty until proven otherwise. People with perfectly legal cash are afraid of cameras recording their purchases and having to pay outrageous bribes. After an adjustment period people will buy more — not less — gold. For now, the gold market has gone mostly underground with the gold price hovering around US$1,700 per ounce. Did Modi want to boost the informal economy?
The Cultural and Political Undercurrent
The individual has been reduced to a cog in a big machine that exists in Modi’s imagination. The country is expected to rally behind him, for his glory. The IMF is going along with Modi, for in their simplistic view, enforcing western-style institutions on India will lead to the replication of western economic development and the rule of law in India.
Not that increasingly totalitarian and centralized governing institutions work even in the West, but in the alien culture— irrational and tribal — of India, they rapidly mutate and become very corrupt. That is, unless such institutions are run by Europeans. But the days when Britain ruled India are over.
In the irrational and extremely tribal society of India, where calculation and planning are much more difficult, institutions must be much more decentralized than in the West if they are to function properly. At the moment Modi is doing the exact opposite: rapidly increasing his centralized control.
Modi and the other fake-elites are not the only people responsible for the mess. The real poison comes from society itself. India’s salaried middle class has been given western education. But the concept of critical thinking and reasoning never really got any traction in India’s society. The situation has steadily worsened since the British left 69 years ago.
Similar to other Indian institutions, the education system has continued to deteriorate. Members of the middle class, while retaining their superstitions, did learn the superficial mechanics, but devoid of any deeper meaning. In their simplistic, mechanical thinking (for complex thinking never evolves until one has critical thinking), they came to believe that superficially copying western institutions should be the way forward for India.
Moreover, the salaried middle class that supports to Modi, is currently unaffected by the currency ban and hence can claim the moral high ground. It is the hungry, wretched and starving people, the small businesses, the real backbone of the economy, that are worst affected.
Politicians within Modi’s party and in the opposition have struggled to oppose Modi effectively, for they are all corrupt. Given the irrationality of Indian society, people tend to communicate in slogans and sound-bites, not through argumentation. The slogan they have been given by Modi is: If you oppose demonetization, you are hiding unaccounted for, corrupt money.
What most in the self-centered salaried middle class forgot to consider is that their paper-shuffling jobs will soon be at enormous risk, as the cascading effect of the harm done to small businesses will eventually destroy their own jobs. Within three weeks, people are getting laid off across the country. The middle class will also suffer from the inevitable increase in crime that the hunger and desperation of poor people is likely to bring about.
Factories are closing. Millions of the most vulnerable are rapidly losing jobs. Hunger, poverty and famine are on its way. Is this Modi’s version of Mao’s cultural revolution?
Indian institutions had to mutate to cater to the underlying culture. Institutions of India as left by the British are now rapidly degrading, with Modi acting as the catalyst. India will become more totalitarian as the last vestiges of democracy and the associated liberties are destroyed.
It is hard to believe that India can continue to exist as a single unit for long. The problem is that nothing in India is structured to allow for a peaceful breakup. Secession is not recognized in the constitution or in the law, ensuring that any breakup will be accompanied by massive violence and pain, perhaps worse than what happened in 1945, when India and Pakistan split up.
Laid off from jobs, people now visit religious institutions — here a Sikh institution — for free food
Photo via punjab-spectrum.com
Money Monopoly
It would have been almost impossible for me to believe that a single person would be able to bring a large, complex, and extremely diverse society like India to a sudden standstill.
One could change the government, change some important laws, or even impose dictatorship, but it is almost impossible to quickly and significantly change the direction of the Titanic.
Despite my pessimism about India, I had not considered that there could have been a single key issue that would fundamentally change society, stall the economy, and throw society into utter confusion, desperation and depression – but Modi found a way.
Banning 88% of the monetary value of the currency in circulation, which catered to 97% of consumer transactions, meant that the economy went into a traumatic shock, throwing financial commitments and contracts out of gear. Now a vicious cycle is underway.
Fiat currency is fully under the government’s control. This paper-based currency system is extremely corrupt, as it has no inherent value of its own. All its perceived value is derived from regulatory edicts and citizens have to look to the government for directions. Control over the printing press gives the government autocratic control over inflation, deflation, and credit.
I realize now that monopolistic control over the currency is an even worse problem than I thought. As a result of Modi’s decrees, the concept of money has died for a large section of society.
Social Engineering
A simple instruction led to a ban on 88% of the monetary value of the currency. Even if this had been well-planned, the decision was so drastic that it would have required massive and continuous tinkering. It was horribly planned though, requiring a series of patch-up jobs.
The government has continued to release new instructions on how much banks could convert, to whom and on what basis, what would be taxed, and what would be deemed to be illegal cash. No one really knows what the latest rules are and even the banks are confused. One wonders if Modi himself still knows what he wants.
The government had no way to replace the old banknotes by new ones. Merely printing the notes would have required at least six months. Distributing these to villages, which can be tens of kilometers from the nearest bank, would have taken a lot longer.
In the meantime whatever good money is still available — the 12% of the still-legal tender — is rapidly going out of circulation, disappearing below the mattresses of the relatively rich. ATMs and banks are constantly running out of cash to dispense.
With every passing day, the queues have grown longer and longer. Old people, the disabled and women (unless they were prepared to endure sexual harassment) had no way to convert their currency. They were hoping for the queues to shorten and become more orderly. This is no longer going to happen.
By November 24, the government realized that even this chaotic conversion could not be sustained. It gave notice that the conversion of old banknotes was to be abruptly discontinued.
With the end of conversion those who have no bank accounts — 50% of the India’s population — are now left in a situation in which their banned currency has indeed become toilet-paper.
In a country in which the vast majority of people survive on a dollar or two or often much less per day, whatever they had has been stolen by the government, taxed away indirectly. Could there be a worse tax than this?
Theoretically, they can still walk into a branch of the Reserve Bank of India, which only has a handful of branch offices around the country, in order to convert Rs 500 bills. Rs 1,000 bills will no longer be converted at all.
Modi now expects these poor people to travel hundreds of kilometers and spend a fortune to change Rs 2,000 or so ($30) at the most. Apparently, Modi cannot even do primary school math.
Those who think Modi is in favor of the free-market should pay attention to what the concept actually means to him and his followers. To them, the free-market means the ability of the government to confiscate the property of poor people — for example, their land for infrastructure — for the so-called “greater good”, to be handed over to corporations or the State.
Tourists trapped in “Incredible India”, left to perform on the streets or beg, for a return ticket to Delhi
Photo via hindustantimes.com
This is the irony of India. The communist revolutions of China and Russia were at least partly about getting rid of the entrenched middle class, a.k.a the “bourgeoisie”. The Modi-led revolution in India is about the salaried middle class trying to get rid of poor people — India’s deeply entrenched caste system does not allow for poor people to be seen as human beings.
There will eventually be blowback from the poor people and it will not be pleasant for the members of the salaried middle class. But irrational as they are, they cannot yet foresee what is likely to come next.
The government has also given notice that it will tax all the cash deposited that it thinks is somehow suspicious at a minimum rate of 50% and will require the remaining 50% to be frozen for four years.
Interest rates are now falling, helping out debtors and the well-connected, to the detriment of savers, while destroying the future economy by interfering with the efficient allocation of capital.
Demonetization has not Achieved any of the Claimed Benefits
Modi claimed that this demonetization would flush out fake currency bills. Not many have turned up, certainly not in any unusual quantities. Perhaps Pakistan is now vindicated, as it had been accused of printing most of the fakes.
Despite the fact that the new bills have been in circulation for less than three weeks, fakes of the new banknotes have already begun are circuating – to such an extent that many people are refusing to accept the new bills. The new bills — even when they are not fake — are badly printed with many errors.
These are not fakes, but defective new banknotes
Photo via indian24news.com
The new bills of Rs 2,000, with a face-value twice as large as the largest of the old banknotes, are proving very efficient for giving and taking bribes.
Finally, with a large part of the country’s cash now removed from circulation and having moved into the banking system, the cash reserve ratio has been increased, as excess liquidity in the banking system has flooded into the bond market. This has driven bond yields lower against the RBI’s wishes, which is moreover in danger of running short of collateral for its repo operations.
As a next step, the government will issue “market stabilization bonds” to soak up excess liquidity in the banking system. Thus private capital has been crowded out, moving into the hands of Modi’s government.
Protests have started in isolated pockets. I am tempted to side with them, but I am fully aware that any counter-revolution or organized protest virtually always involves a heavy-handed approach. The opposition will be no different from Modi’s brigade, and the next sociopath to come after Modi will probably be even worse than he is.
Photo credit: PTI
Protest against demonetization
Conclusion, for Those Living in India
Once social engineering of this size has started, people will and should take steps to protect themselves and their families. Decisions should be made today, not tomorrow.
People’s money in banks is frozen and can no longer be used for purposes involving cash. Every indication is that this money will stay frozen, as Modi wants coerce people into invest their money according to his preferences: into low-interest bonds or negative-yielding infrastructure projects.
Any rational person should be to trying to avoid getting stuck in what is a rapidly emerging police state that will control people’s finances and eventually their entire lives. It will probably be best to take as much investment-related money as one can out of the system, or even better out of India.
A few escape routes still exist for the time being. By law it is still possible to move out US$250,000 per year outside India. This window cannot stay open too long. Until it is shut, one still has the option to move money into foreign currency or investments in more productive instruments outside of India. One should also be able to store gold with an offshore entity in a country that respects private property.
Many rich Indians already do the above, all legally. They own swaths of properties in HK, Singapore, and Thailand, and increasingly also in Canada and New Jersey (USA). Many directors of Indian public companies are officially resident in Singapore, to avoid becoming a puppet of the extra-ordinarily corrupt and rapacious Indian government, which has been made much worse by Modi.
With India’s institutions now rapidly degrading and the salaried middle class having been zombified, risks are extremely high. Explore your options before the encroaching police state closes the remaining avenues of escape.
Of course, being totally incompetent, India’s government cannot enforce a full-blown police state, but that will not stop massive damage to the economy and what will bring about chronic and frequently acute anxiety among Indians.
India will fundamentally change going forward, in a very negative way. It may eventually disintegrate, a possibility for which one should be prepared.
As the month of November 2016 comes to a close, members of the lower classes who must convert their soon-to-be-paid salaries to cash will face even greater desperation.
Late last week, we reported that in its latest push to limit and/or halt capital outflows, China unveiled new capital controls meant to stem further capital flight disguised as outbound M&A by clamping down with tighter controls on Chinese companies seeking to invest overseas, intensifying efforts to slow a surge in capital fleeing offshore amid tepid growth and an uncertain economic outlook. Beijing was said to focus on “extra-large” foreign acquisitions valued at $10 billion or more per deal, property investments by state-owned firms above $1 billion and investments of $1 billion or more by any Chinese company in an overseas entity unrelated to the investor’s core business. The new controls would apply to deals yet to receive approval from China’s top economic planning agency.
It did not end there.
One month after we noted a Bloomberg report that China was preparing to impose curbs on Bitcoin – which has in the recent past become a widely accepted mechanism to bypass capital controls – including policies restricting domestic bitcoin exchanges from moving the cryptocurrency to platforms outside the nation and imposing quotas on the amount of bitcoins that can be sent abroad, overnight we learned that China was taking a page out of the Indian demonetization playbook, and was curbing gold imports in another attempt to clamp down on capital leaving the country.
As the FT reported, some banks with licences have recently had difficulty obtaining approval to import gold, they said — a move tied to China’s attempts to stop a weakening renminbi by tightening outflows of dollars, the banks added.
To summarize, in just the past month, China has unveiled at least three distinct sets of “controls” aimed at curbing capital flight out of China, at a time when as Goldman calculated recently, the true extent of capital outflows if far greater than what is reported by the central bank.
Then, overnight, the PBOC added a fourth unique form of “capital control” when China’s central bank announced it would limit the amount of renminbi that Chinese companies and individuals can remit outside the country, “imposing a cap for the first time in more than two decades”, according to the SCMP, to stem the yuan’s outflow as the currency plumbs daily lows.
As the Hong Kong publication reports, companies domiciled in China will be limited to net currency outflows equivalent to 30 per cent of the owners’ equity, according to Order No. 306 issued Monday by the People’s Bank of China. Commercial banks should “utilise an integrated prudential management for cross-border payment in both foreign currency and yuan,” according to the central bank’s statement.
Among the other rules established by the PBOC in setting yuan-denominated loans to overseas entities, are the following, courtesy of Bloomberg and Reuters:
Onshore corporates can only make yuan loans within quota; banks should stop handling business if cos use up quota
Lender also has to have been registered for at least a year; borrower has to be a related entity
Lender can’t make personal loan to overseas borrower, and also can’t use debt financing for purpose of an overseas loan to a foreign entity
Party making a yuan loan to an overseas entity must first register the loan with SAFE; must keep loan within a certain limit which wasn’t specified
Lenders should have shareholding relationships with borrowers
Banks need to strictly examine whether use of yuan funds offshore is genuine and appropriate
Interest rates for loans need to be above 0%
Tenor should be 6 mos to 5 yrs; loans with maturities of 5 yrs or above need to be registered at local PBOC branches
If lenders can’t justify why borrowers don’t repay debt on time, banks need to stop handling new business and report it to local PBOC branches
This is a stunning reversal in government policy, which had previously encouraged the renminbi’s worldwide usage, part of a long-term strategy to internationalise the currency, culminating with the renminbi’s admission into the IMF’s SDR basket. Needless to say, the latest announcement will hardly impress the IMF which has been pushing for less government control of the currency.
As SCMP notes, among the other measures, not listed above to halt capital flight, the central bank has instituted a range of measures to plug gaps where the currency could be remitted amid its 7 per cent slump this year against the US dollar, from banning Chinese citizens from buying insurance policies offshore, to requiring credit card companies to seek currency licenses.
* * *
Two days ago, Horseman Global’s Russell Clark asked “Is China running out of money.” With every incremental “capital control” the answer is becoming increasingly obvious.
After soaring over 15% in the post-Trump period, Caterpillar shares are halted this morning ahead of a presentation at Credit Suisse Annual Industrial Conference. The presentation shows cost cuts, layoffs, and admits that 2017 consensus estimates are "too optimistic."
Other highlights:
CATERPILLAR ON TRACK FOR OVER $2B COST REDUCTION FOR 2016
CAT: COST CUTS INCL COMBINED/REDUCED FUNCTIONS, FEWER PEOPLE
CAT: FIRST CALL 2017 CONSENSUS ESTIMATE $3.25 TOO OPTIMISTIC
CAT: FIRST CALL '17 CONSENSUS EST. $38B SALES TOO OPTIMISTIC
It is said that history has a sense of irony. The latest US election is not an exception.
Consider the following…
1. Donald Trump campaigned aggressively on trade… particularly his opposing of the fact that the US gets taken advantage of by foreign nations via bad trade deals.
2. Trump wins the Presidency on November 8, 2016.
3. US trade gets royally screwed in the currency markets.
This is not conspiracy theory. Since Trump won the Presidency, Japan has absolutely SHREDDED the Yen relative to the $USD. In a mere three weeks, the Yen/ $USD pair has collapsed an astounding 12%.
That doesn’t sound like a huge deal, so look at the longer-term chart.
That is a massive currency crash. The Bank of Japan has accomplished in three weeks what previously took six months and a $100 BILLION+ expansion of a massive QE program.
The real problem with this is that it is forcing the $USD sharply higher, triggering a potential crisis the debt markets as the $10 TRILLION US Dollar carry trade ignites.
If you’re unfamiliar with the concept of a carry trade, it occurs when you borrow in one currency, usually at a very low interest rate, and then invest the money in another security, whether it be a bond, stock or what have you, that is denominated in another currency.
Globally over $10 TRILION of $USD is doing this right now. $10 Trillion: an amount greater than the economies of Japan and German combined.
Every tick higher in the $USD… means more of this trade blowing up. Already, it’s leading credit stress in Asia.
Another Crisis is brewing… the time to prepare is now.
If you've yet to take action to prepare for this, we offer a FREE investment report called the Prepare and Profit From the Next Financial Crisis that outlines simple, easy to follow strategies you can use to not only protect your portfolio from it, but actually produce profits.
We made 1,000 copies available for FREE the general public.
Gallup first began asking if Americans trusted the mainstream media in 1972. America’s trust and confidence in mainstream media stood at its highest level back in 1976 at 72%. Of course, that was due to the investigative journalism regarding Vietnam, and naturally Woodward and Berstein, with the Watergate scandal.
Following that period, the media began to attack the right with Reagan. By the late 1990s, the Americans’ trust in the media fell steadily into the low to mid 50% level.
Following 2005, the trust in mainstream media dropped into the mid 40% range. It has consistently been below a majority level ever since the 2007 economic decline. However, after the 2016 election and the extreme bias for Hillary, where virtually 99% of mainstream media deliberately tried to manipulate the people to vote for Hillary, the trust factor has collapsed to 32%. When they polled just conservative Republicans, it was 14%. So the 32% level is the average American.
Our models on the confidence in American mainstream media using the Gallup Poll data projects a sharp decline into 2019/2020, which is the bottom of the current 8.6-year Economic Confidence Model. This will be 43 years from high. Note that 2007 was 31 years from that peak. It was 2007 and the collapse in the economy that has marked the collapse in public confidence in government and the media.
We should expect that the media will viciously attack Donald Trump in a futile effort to cling to some level of importance and to desperately try to demonstrate that they were not wrong with 99% of the media endorsing Hillary. But the media willingly conspired to make Hillary president. They will now try to vindicate themselves by trashing Trump at every possible chance. They will now fuel the civil divide and help lay the foundation for the collapse of the United States itself by turning left against right. Even the New York Post wrote that what they were witnessing was the end of journalism. They will do everything to try to change Congress in 2018. It appears that will be their last stand. The younger generation does not buy newspapers and magazines. Their end is near.
Trump summoned the mainstream TV media to Trump Tower for a meeting. Whether he can persuade them to stop the supporting of civil unrest remains to be seen. Lester Holt, Charlie Rose, George Stephanopoulos and Wolf Blitzer all headed to this private meeting. All have demonstrated outrageous bias and have disgraced the very purpose of a free press as they all tried to influence the people rather than report the news. Even Saturday Night Live made fun of how biased mainstream media has been…
Is Janet Yellen trying to crash stocks to screw Trump?
Ever since the $USD began its bull market run in mid-2014, the Fed, lead by Janet Yellen, has intervened whenever the $USD cleared 98.
The reason for this was the following…
Over 47% of US corporate sales come from abroad. With the $USD spiking, pushing all other major currencies generally lower, US corporate profits began to implode. As we write this today, profits have fallen to 2012 levels.
Note when this whole profit massacre began.
Because of this, the Fed has “talked down” the $USD anytime it began to push higher.
Until today…
Since it was announced that Trump won the Presidency, the Fed has allowed the $USD to ramp straight up. It is currently over 101…and the Fed hasn’t said a word.
So we ask again… is Janet Yellen trying to crash stocks to screw Trump?
We all know the Yellen Fed is one of the most political in history with Fed officials openly donating money to the Clinton campaign.
Now Trump has won… the $USD soars to 101… and suddenly the Fed is silent? Not one Fed official has appeared to talk about putting off a rate hike or some other statement that might push the $USD lower…
This could literally crash stocks through any number of means:
1) China implements a massive one-off devaluation of the Yuan.
2) The $10 Trillion US Dollar carry trade blows up.
3) The $199 Bond Bubble implodes as debt deflation ripples through the financial system.
4) The $555 Trillion derivatives market based on interest rates ignites courtesy of a bon sell-off.
Another Crisis is brewing… the time to prepare is now.
If you've yet to take action to prepare for this, we offer a FREE investment report called the Prepare and Profit From the Next Financial Crisis that outlines simple, easy to follow strategies you can use to not only protect your portfolio from it, but actually produce profits.
We made 1,000 copies available for FREE the general public.
We recently learned how serious these criminals are about stealing the sovereignty of every person on planet earth. Actually, most people are willingly handing over their sovereignty to the banks/government and have no idea what they are actually doing.
When India banned, made illegal, the 500 and 1000 rupee banknotes, this move effected every 1 out of 7 people on planet earth. That means that every 7th person, anywhere and everywhere, you come in contact with may have been effected by this cash ban.
Our individual sovereignty is tied directly to our ability to move freely about. When every step we make is tracked by the bank/government, our sovereignty is gone forever. Freely trading commerce is one of the cornerstones of human sovereignty. Without the ability to conduct business with whom we wish, when we wish, we are nothing more than cattle to the overlords of the land.
An expat living in Thailand sent me an email last week, at the height of India blowing apart because the idiotic decision by Prime Minister Modi to eliminate the two most used bank notes in India. The email was to inform me that Thailand would be implementing a new policy in the early part of 2017 to completely eliminate coins from circulation. South Korea has already taken measures to eliminate coins from circulation.
Here is a google translation from the Korean website wikitree.co.kr (once you arrive you will need to translate from Korean language)
From next year, you can get the change of cash that you bought and paid at a convenience store on your transportation card.
In the mid to long term, not only transportation cards but also remittance to credit cards and accounts will be promoted, and the industry will be expanded to retail sector such as marts and pharmacies.
The Bank of Korea announced on the 21st [November] that it will provide a service to charge prepaid transportation cards at convenient stores from the first half of next year (2017) as the first stage of the demonstration project to realize “a society without coins”.
What’s happening in Thailand? Well, the government doesn’t even bother with trying to cover up the “scheme” to move people onto the tax farm – currency enslavement awaits for all that enter the great Bangkok Baht giveaway!!!
“Want to win a million baht? Go for e-payment,” says Thailand’s junta, offering a lucky draw as an incentive to use the new online payment scheme “PromptPay.” The government wants to encourage citizens to use the service for business, in an effort to bring some of the massive informal Thai economy onto the books and boost tax revenues.
As Southeast Asian economies struggle and tax income misses budget targets, Thailand’s finance minister is hopeful that a nationwide e-payment scheme can add tax revenue of THB100 billion a year to the coffers.
Finance Minister Apisak Tantivorawong has estimated the move will save banks and businesses a combined THB75 billion a year, though other policymakers expect it could take some time for businesses to change their habits. Cash and checks now make up 80 percent of transactions.
A coup in May 2014 ended months of political unrest, but the generals have struggled to revive Southeast Asia’s second-largest economy as exports and consumption remain weak.
What about the most populace country on the planet: China? Well, they are, currently, in fourth place in use of digitized currency behind the U.S., Europe and Brazil. While none of these countries have eliminated cash from circulation, the banks/government make is sound “trendy”, convenient and oh so cool to never use cash. Why force a policy change when you can convince the people to hand over their freewill?
Although China still has some way to go before it catches up with countries such as the US and Sweden, the speed at which China has made the shift from cash towards cashless has surprised many. Non-cash payments have been growing by around 40 per cent a year and last year China moved into 4th place in the world for non-cash payments after the US, Europe and Brazil.
There are many reasons for China’s rapid transition away from cash. One is urbanisation, as non-cash payments are becoming both easy and popular. This is especially the case in top-tier cities such as Shanghai, Shenzhen and Beijing where it is both trendy and convenient to pay without using cash.
There is a huge variety of choices when it comes to making cashless payments and China UnionPay has definitely helped to encourage this, particularly in the case of debit cards, which outnumber credit cards in China by 10 to one. China has more than 4 billion cards on issue – almost enough for each adult to have about three each.
Mobile payments have also taken off in China – it has the largest proportion of people in the world using their mobile phones to make payments, online and physically.Source
The purpose of going cashless is not for our “convenience”, it is specifically for the purpose of “saving the banks” and tax collections. Governments and banks could care-less about what is convenient for us. They are only concerned with how much of our wealth they can extract from every person who has any currency.
The population of South Korea is 50.22 million people or said another way about 1/6th the size of the United States. India, on the other hand, is populated by 1.33 BILLION people while there are 7.4 BILLION populating the world. With Thailand making moves to remove cash/coins from the people we need to add their population to the mix as well. With more than 68.22 Million people this brings the number of people that are being forced by their government to use digital currency to a whopping 1.45 BILLION people. If you add 40% of China’s population of 1.35 BILLION that equates to approximately 540 million people the number of people currently living within a cashless society breaches 2 Billion people or said another way 1 out of every 3.5 people we come into contact with everyday. Every 4th person you greet has nothing to do with cash. This does not take in
account the top 3 nations using digitized currency for their transactions. If the U.S., Europe and Brazil were calculated we would be well below 1 out of 3 people never using cash for any transaction.
Some people that are reading this are telling themselves “so what?” those are distant far off lands that have nothing to do with the U.S. and this will never happen here. Well, not so fast.
Larry Summers, who is like an embedded tick at the Treasury Department of the United States, has called for the elimination of the $100 bill. With the elimination of the largest denominated bank note from circulation this would effectively kill the use of cash. Why? Because it would eliminate most of the total cash value from circulation in one-fell-swoop.
With $1.2 trillion in cash in circulation, as of July 2013 (now three year old information), not just in the United States but around the world, removing the $100 bill would deal a serious blow to the cash balance in circulation. Maybe not the amount of pieces of paper, but the cash value removed would be huge. Imagine going to a casino and hitting a blackjack table for $2,000 and the cashier hands you bundles of $50 bills (40) or worse, bundles of $20 bills (100)! $2,000 payout at a casino is not that a big deal. Having to handle the sheer volume of bank notes could potentially be a problem for the person receiving the windfall of paper.
If you have any misguided notion that a cashless society is not coming, just keep telling yourself that every time you use a debit card, credit card or your phone for your next purchase. With the elimination of cash we effectively hand over our individual human sovereignty to the banks and the government.
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In his annual address to the nation, Russian President Vladimir Putin struck an unusually conciliatory tone on Thursday, saying Moscow wanted to get on with the incoming U.S. administration and was looking to make friends not enemies: “We are ready to cooperate with the new U.S. administration. We have a shared responsibility to ensure international security.”
“We don’t want confrontation with anyone. We don’t need it. We are not seeking and have never sought enemies. We need friends,” Putin told Russia’s political elite gathered in the Kremlin’s grand hall.
This year’s speech is a marked contrast to prior addresses, in which Putin lashed out at the West and the United States in particular. He did however note that any U.S.-Russia co-operation would have to be mutually beneficial and even-handed. Shortly after Trump’s victory, Putin said the President-elect may help restore tattered U.S.-Russia relations, and analysts said he was unlikely to want to dial up anti-Western rhetoric before Trump’s inauguration in January.
Putin also said he was hoping to find common ground with Washington on fighting global terrorism, a reference to Syria where Moscow is backing President Bashar al-Assad, while the outgoing U.S. administration has supported anti-Assad rebels. Russia hopes Trump will give Russia a freer hand there and cooperate militarily to fight Islamic State.
“We hope to unite our forces with the United States in the fight against the real threat, not the fictional one – international terrorism,” he said. The president also emphasized the need “to strengthen non-proliferation regimes,” noting that “attempts to upset the strategic balance are extremely dangerous and could lead to a global catastrophe.”
The tide has now turned in the Syrian conflict in favor of Putin’s ally, President Bashar al-Assad, whose grip on the Middle East country is increasing as Trump seems set to cut back support for rebel groups and focus U.S. efforts on fighting Islamic State.
The Russian leader also expressed hope of a better relationship with European countries. “Unlike some of our foreign colleagues, who see Russia as an opponent, we aren’t looking for enemies and never have done, we need friends,” Putin said, however he added that “we will not allow any infringement on the interests of the Russian Federation and we will manage our own destiny without tips and unsolicited advice.”
This too contrasted sharply with last year’s speech, when Putin lashed out at Turkish President Recep Tayyip Erodogan after his air force shot down a Russian warplane near the border with Syria. Since then Russian relations with Turkey have seen a vast improvement.
Putin reached out to the entire world when he said that he stands for “the safety and the possibility of development, not for just the chosen few, but for all countries and peoples, for respect for international law and the diversity of the world.”
The president also said that Russia’s policy towards its Asian partners, China and Japan, is not opportunistic or a response to the deterioration in US-relations, but based on Russia’s plans for long-term development. “Once again, I stress that Russia’s active [Asia] policy is not dictated by some opportunistic considerations of today, not even by the cooling in relations with the United States or the European Union, but by long-term national interests and trends of global development,” the president said.
The Russian leader devoted much of his more than hour-long speech to the economy as he prepares to seek re-election in early 2018, blaming domestic factors for holding up growth, including a lack of investment, inadequate competition and shortcomings in the business climate, very much as has been the recent case in the US. There’ll be an “insignificant” decline in Russia’s economy this year after a contraction of 3.7 percent in 2015, Putin said. Inflation should end the year at a record low of less than 6 percent, then slow to the central bank’s 4 percent target in 2017, he said. The country’s difficulties over the last two years have only made it stronger, he said.
The relentless dollar rally continues to slam the Turkish lira, which has been printing fresh all time lows on a daily basis, and today has been no exception, tumbling over 1.8%, and pushing the USDTRY to an all time high above 3.50.
Source: BBG
The collapse is driven by numerous factors: the rally in oil, the strength in the U.S. dollar, the surge in global bond yields, ongoing political uncertainty, signs of weakening economic growth from macro indicators are all weighing on the currency as well as Turkish stocks, which were down over 2%, making them underperformers among peers, according to Gulsen Ayaz, director of institutional sales at Istanbul-based Deniz Invest. Historically, Turkey has been sensitive to rising oil prices, with its high current account deficit having recently benefited from the slump in commodity prices which now is reversing.
According to Morgan Stanley there is little to look forward to for Lira bulls: the bank expects the Lira to hit 3.60 per dollar in about 6 months, and 3.70 by the end of 2017.
“This forecast is at the bearish end of the range of forecasts currently published by Bloomberg, though we expect the consensus to shift towards our forecasts soon… “Risk remains that these forecasts are hit earlier than expected.” Indeed, at this rate 3.60 may be hit by the end of the week.
Morgan Stanley also writes that the government’s moves to encourage replacement of FX contracts with liras “address the symptoms of the underlying problems affecting the currency, rather than addressing the causes of currency weakness.”
If the drop is not halted, the lira may fall as much as 2%, which marks the worst single daily drop for the Lira since the failed coup in July.
However, it is unclear just how Turkey can arrest the drop: last week the Turkish central bank hiked rates for the first time in over two years, defying pressure from Erdogan who has been pressuring it to lower rates, to prop up the currency. However, as the chart above shows, it has yet to have any impact.