Falling Interest Rates / Steel Prices

[errolanderson]

Believe negative central bank rates is a tactic to force banks to lend money .This is a desperate attempt to spur the economy by the central bank as banks they lend to are forced to move the money out into the economy as sitting on it is actually a cost.

Bizarre . . . .

Doubt cutting Italian rates for example into deeper negative territory is going to fix anything in an already hooped economy. To me, this forces money into the economy suggesting riskier loans?

Bizarre . . . .

[ado089]

I would also be keeping an eye on junk bond rates. There is a sub prime crisis brewing in the resource sector bond market. It's likely to be the next trigger.

[errolanderson]

One other thought . . . .

Deflation is incredibly rare, but consumers respond by not spending on non-essentials.
This contributes to economic stagnation.

This is a nightmare for central bankers as they have limited power to stop this. That's why (IMO) QE has been a failure. It did not allow central bankers to regain control via a burst of inflation.
But it did create an amazing stock market bubble

IMO this money printing is now setting up as a global currency war, a situation that appears similar to what happened in the 1930s.

That's my fat opinion for what it's worth. Just wish central bankers would just stop printing money as it does nothing to regenerate an economy and ultimately makes a recovery much longer to achieve in my opinion.

[sumdumguy]

The way the dollar is falling, not wise at all to cut interest rates unless you want a Chrétien 60 cent dollar.

[rkaiser]

"Setting up a global currency war"????
There has been a currency war going on forever. In fact every war is about money. The current currency war is well under way and even though we are being led to believe that war in the Ukraine and war in the middle east are due to Putin and so called radical religious terrorists who are out to kill to defend the image of their god. (OMG people wake up).

The current system of the world is based on debt and more debt is the only way it will not come crashing down. Do you get that cotton???????

News today from a source other than CBC or CTV which according to most on this site would make it a conspiracy source.

Holy shit...................

The world’s most rich and powerful businessmen, heads of state, and even celebrities are gathering in Davos, Switzerland for the 43th annual Davos ‘World Economic Forum’ to discuss business among the glitz and glamor.

Monarchs, CEOS, tech billionaires, and musicians descend upon Europe’s highest city January 21-24.

The theme of this year’s conference is ‘The New Global Context’, oil prices, climate change, the rise of China, deflation across the Eurozone, the Russia-Ukraine conflict, and income inequality are set to top the agenda.

Away from Switzerland, all eyes will be on the European Central Bank and its President Mario Draghi, who is widely expected to announce at least a €500 billion quantitative easing package for Europe, as the Eurozone hasn’t managed to get its economy growing after nearly 5 years in recession.

Elections in Greece on Sunday also have the EU worried of a so-called ‘Grexit’ from the euro.

Leading up to the event, anti-poverty charity Oxfam has warned of the unprecedented economic inequality gripping the world. According to Oxfam, the richest one per cent will own more than half of the world's wealth by next year. Their share is soaring and went from 44 to 48 per cent in just five years.

Economist Lew Rockwell believes those trying to fix things in Davos are the ones who brought about the economic problems in the first place.

“It’s a meeting of the very rich and the politicians they own. They live the life of Riley at the expense of everyone else. There is a world recession going on- and it’s getting worse,” Rockwell told RT.

The International Monetary Fund has cut its 2015 and 2016 forecast for global growth for every major economy, except for the United States.

“The people that are making the trouble and coming up with the alleged solutions are responsible for the situation as it is,” Rockwell said.

While the more power and wealth of the world assemble at the ski resort, the rest of the world is struggling to get back on track.

As the world’s elite gather protestors have a history of meeting on the outskirts to protest what they see as a meeting of bigwigs.

RT's correspondent Erin Ade is reporting live throughout the duration of the forum, which RT's Boom Bust will be following throughout the week.

Only 400 people attended the first forum in 1971, organized by German academic Claus Schwab from the University of Geneva. Schwab organized the event and invited local industrialists, scholars, and politicians, hoping to form a ‘European Committee’, as it was first dubbed.

Since then, participation has expanded to more than 40 world leaders and 2,500 businessmen, as well as a sea of journalists. Bloomberg News reports that the event brings in $52 million to the town of Davos, and more than $80 million to the greater Swiss economy. Hotel prices are known to double, if not triple or quadruple during the forum. Tickets for participants run at $50,000 per person.

[rkaiser]

Economic War, BRICS, and the Power of Self-Sufficiency


Column: Economics

Region: Russia in the World





grain_103400568The toughest, most resilient people as both individuals and as societies all generally have one thing in common – self-sufficiency. This by no means suggests isolationism, but rather the ability to survive, even thrive through one’s own work using resources at their own disposal.

As a principle, self-sufficiency, self-reliance, and individualism defined young nations like the United States, catapulting it upon the world stage as a global leader after spending time racked in debt and in England’s shadow. By establishing its own industry, its own institutions (including those of a financial nature) and its own military might, the United States transcended the tangled webs of interdependency locking Europe’s ever-shifting, fragile alliances together.

The evolution of human civilization along the lines of socioeconomics and technology has changed the roles, effectiveness and relevancy of those industries and institutions that had once made America great and in turn, those nations that had attempted to emulate such features have now all found themselves within the same boat – the boat of globalization.

Globalization is the hitherto pinnacle of interdependency, crippling any nation that falls foul of those sitting at the center of this entangled geopolitical order. There are many examples of nations that haven fallen foul including Cuba, Iraq, Iran and more recently Russia. In each case, respective economies depended heavily upon imports or exports or both. The response in defense against crippling economic warfare is self-sufficiency.

In Cuba, urban agriculture became a necessity long before it became a trend in urban centers elsewhere around the world. Iran has become independent in many aspects including arms manufacturing. Iraq, it can be said, was ultimately undone by sanctions combined with military invasion and occupation by the United States. Now in Russia, we see a nation first shifting its markets toward friendlier allies, then attempting to develop itself from within.

Combined with the overall instability of a global system of interdependencies ran by an inept, greedy and self-destructive oligarchy centered upon Wall Street and London, economic warfare is a serious and continuous threat to all nations. And while headlines are dominated by America’s economic war on Russia at the moment, amid that war many of the United State’s closest allies have suffered as well.

France had planned on selling Russia two Mistral-class amphibious assault ships for a total of 1.2 billion Euros. Because of pressure on France to support NATO’s proxy war against Russia in Ukraine, the delivery of the vessels has been indefinitely suspended. In addition to losing the 1.2 billion Euros for the contract already paid for by Russia, there is an additional penalty of 251 million Euros. Because of France’s tangling interdependencies with the US, European Union, and England, it is incapable of making a decision that represents its own best interests and those of the French people.

Similar scenarios have played out across Southern Europe where Russia’s South Stream Pipeline was to run but has now since been canceled due to US, British and EU pressure.

Likewise for Russia, instead of building their own amphibious assault ships, they have decided to depend on the French which was clearly a mistake.

In theory, for nations capable of building their own ships, cars, electronics or producing their own food and energy, the whims of foreign interests have much less impact. In practice, such nations are difficult to come by, and vulnerabilities in the form of sociopolitical and economic interdependencies are a feature of nearly every nation’s geopolitical standings.

Self-Sufficiency as a Matter of National Defense

The BRICS nations, Brazil, Russia, India, China, and South Africa, as well as other growing developing nations particularly in Southeast Asia, would do well to not only learn the dangers of interdependencies, but the merit of proactive self-sufficiency, not as a knee-jerk reaction, but as a proactive form of national defense.

Everything from industry to agriculture and even human health is becoming increasing dependent on advanced technology. Nations lagging behind in terms of education, research, and development are likely to fall prey to monopolies controlled from beyond their borders. A nation dependent on another is not only not truly a free and independent nation state, it is also immensely vulnerable to the meddling of those nations who control these monopolies.

Washington and Riyadh’s grip on the petrodollar is one example of this. Their ability to then manipulate global energy prices has been regularly used as an economic weapon against its enemies, most recently Russia. While a clumsy and unsustainable weapon to wield, the world would be a far better and more stable place if the firewalls of socioeconomic independence were stronger.

Should Russia prevail, it is hoped that while they will likely continue reaping the benefits of their resource-based export economy, they will also look inward for another source of strength to augment, then eventually replace their vulnerable interdependencies. Other BRICS nations would be wise to begin doing so long before it becomes a necessity. For nations like Brazil, who has invested decades in developing energy independence, such a proposition is much more in reach.

Ultimately, self-sufficiency as an individual or as a nation or bloc of nations does not mean isolationism. It means being able to thrive without, and thriving twice as much with. While it is difficult to convince industries and entrepreneurs to steer toward this more sustainable ground, tying self-sufficiency in with national defense can allow for measures otherwise shortsighted business sectors would reject. In the long run, say in Russia, business leaders who eagerly pursued globalism as a means toward riches are surely regretting their shortsightedness now. Sanctions force Russia, under pressure, to implement measures that should have been put in place years ago.

Tying self-sufficiency to national security, particularly now in Russia where jobs and prosperity are in peril is not a long stretch, especially considering that Russia’s current economic woes are part of what is essentially an attack on Russian sovereignty, peace and prosperity to begin with.
First appeared: http://journal-neo.org/2015/01/20/economic-war-brics-and-the-power-of-self-sufficiency/