The PIIGS and BRICs Man Talks SDRs

Stacy Summary:  Care to comment @snoot?

72 comments on “The PIIGS and BRICs Man Talks SDRs
  1. Paul says:

    I don’t really care if I’m 1st.

  2. Marc Authier says:

    We have gold. The hell with virtual money.

  3. Troy Ounce says:

    A new currency will only make a difference when it cannot be manipulated by politicians or bankers.

    Until such time this effort will fall under the famous “pretend and extend” policy

  4. Bonn says:

    Dumb US politicians and US fed nobody belives a word that comes outta thier mouths Dont they get that ??????
    Hic ;-)

  5. Mike/Liverpool says:

    Morning X-Files people!

    Mike

  6. Troy Ounce says:

    If CPM is a front for Goldman Sachs and Wall Street banks have the PM prices by the balls, why are we staring at the Kitco gold price?

  7. Chenjeshu says:

    China Worker News:

    A string of 11 suicides in this year alone at the Foxconn factory.

    http://www.vancouversun.com/business/Suicides+Apple+maker+spotlight+China+migrant+workers/3080153/story.html

    Foxconn responds by raising wages 20%

    http://www.reuters.com/article/idUSTOE64R04G20100528

    “Strike Forces Honda to Shut Plants in China”

    http://www.nytimes.com/2010/05/28/business/global/28honda.html?src=busln

    and from the article:

    http://www.businessweek.com/news/2010-05-28/honda-aims-to-resolve-china-strike-soon-as-possible-update2-.html

    ” Trade unions and employers appear to be reporting a growing number of strikes in China, although there are no official numbers, according to the International Labor Organization. A shortage of labor is shifting bargaining power to workers, said Chang-Hee Lee, a Beijing-based industrial relations specialist at the ILO.

    More than 90 percent of companies based in China’s Pearl River Delta region, which includes Guangzhou, reported labor shortages that added up to about 2 million workers”

  8. Mr Grinch says:

    I think the USPS or UPS is already using SDR’s as an equivalent shipping or insurance currency conversion vs USD….Euro.. on labels.

  9. Bill Stewart says:

    One could assume :

    SDR 1st
    CNY 2nd

  10. Creative Destruction says:

    @Stacy

    Thank you so much!!! I love seeing it everytime. Creative Destruction on Max Keiser.

    Did you see the latest from Marc Faber:

    http://www.youtube.com/watch?v=9Lc9MlR-VQ0&feature=related
    and
    http://www.youtube.com/watch?v=SEAQKT79kfY

  11. GGees says:

    @ Stacy

    Please enough already about Snoots paranoia on SDR

  12. Creative Destruction says:

    @ Snoot

    There is an international law, actually it was a law even before the formation of nations, and that law is if I can kick your ass I dictate the terms of social interaction. That includes the currency, morality, legality and culture itself.

  13. Creative Destruction says:

    First!!!

    Goodnight everybody.

  14. fake frances snoot says:

    Those SDR thingies confuse me..I just get paid really well by the BIS brothers ;-)

  15. harry_w says:

    @ Stacy,

    The SDR basket will need to balanced by BRIC currencies, to maintain it’s value as G7 currencies devalue due to a declining economic base.

    The powers that be won’t want to hook themselves to a gold or commodity standard, which would undermine their control.

    I might add chocolate biscuits to the basket too, finally a currency you can eat.

  16. Fibon11235 says:

    SDR if it maintains the Bankocracy ,,,,,lol.. soon I expect

    Why dont the lizard aliens show themselves with a SDR lol lol
    The way things are going my guess in 4-16 months as my guess is based on nothing more than a gut feeling of accelerating deterioration. It feels out of control already so a SDR lol

    Within that article
    They say 20 yrs the dollar may not be so dominant ha ha ha
    Havin a laugh 20 yrs,,, I wonder if its stupidity or deliberate miss info…
    War war war war war war mmm? how many to prop up a dollar or two dear?

  17. @harry_w, Let’s see what luck BRIC have rebalancing the SDR basket in their favor later this year. XAU, XAG and XPD too.

  18. @Fibon11235, Maybe it will take WWIII to bring on Bretton Woods II. Or the threat of WWIII.

  19. Funny, I thought francessnoot never slept. It always seemed her Basel II proscribed investments worked for her.

  20. If the CNY becomes the next internat’l. reserve, there goes Chinese manufacturing.

  21. ronron says:

    is it snoots birthday?

  22. frances snoot says:

    @Stacy:
    How to describe the paling flower that ever dying twists and turns in O’Neill’s lapel?

    That scent upon the planet yet anew shall waft within all the houses where small children sleep innocent upon the dawn.

    The tremors; the horrors; the waking death.

    “While the right medicine needed to avoid fiscal train wrecks is well known, the main constraint to fiscal consolidation and discipline is that weak governments around the world lack the political power and willingness to implement austerity.”

    http://www.project-syndicate.org/commentary/roubini25/English

    They speak of poison as though it were medicine.

  23. frances snoot says:

    The conversation concerning the global gold standard has been discarded:

    http://www.project-syndicate.org/commentary/ocampo5/English

    José Antonio Ocampo, a professor at Columbia University, is a former United Nations Under-Secretary-General for Economic and Social Affairs, and former Finance Minister of Colombia.

    http://www.australia.to/2010/index.php?option=com_content&view=article&id=662:global-economy-reform-dollar-based-reserve-system&catid=96:idn-bureau&Itemid=160

    “Accordig to Ocampo, there are essentially three alternatives to reform the current system. The first — and in a sense inertial solution — is to let it evolve into a multi-currency arrangement. The second is to gradually move into a system based on a truly global reserve asset.

    Since the SDRs have already been created, and have received increased attention by the G-20 during the current crisis, the obvious solution is to strengthen this mechanism of international cooperation.

    The third is to create a new institution, either Keynes’ International Clearing Union or a Global Reserve Bank that would issue a global currency (“Bancor” in Keynes’ proposal) and serve as bank of the world’s central banks. However, negotiating the creation of a new global institution would be a daunting task, says Ocampo.

    Still another solution would be a return to gold — the “barbarous relic” in Keynes’ terminology. But this would be swimming against the tide of history, as the monetary history of the world since the 19th century has been a movement away from gold and toward placing fiduciary currencies at the centre of modern monetary systems. Thus, although some voices have been heard calling for the return to a form of gold standard, this would be a non-starter, warns Ocampo.”

  24. frances snoot says:

    “1.Volatile capital flows. Considerable volatility in capital flows—episodes of large flows and “sudden stops”—create significant problems for economic management.
    2.Adjustment. There is no automatic or smooth adjustment mechanism to current account imbalances, which have prevailed for long periods of time. When adjustment occurs, it is asymmetric, falling more heavily on deficit, non reserve issuing countries, rather than on surplus countries or reserve issuing deficit countries.
    3.Narrow asset supply. The use of a narrow set of national currencies in international trade and asset transactions partly reflects economies of scale, but it implies that shocks emanating from the “core” transmit instantly and rapidly to the rest of the world. A liquidity crisis, and the subsequent flight to safety, results in a run into these currencies and dislocations elsewhere, notwithstanding the strength of fundamentals. The stability of the system also depends critically on the stability of the core.”

    http://www.imf.org/external/np/speeches/2010/051110.htm

    These are the three bogies that are being considered in the moves to the new multilateral exchange. The focus is not upon the currency, because the reform will be within the context of exchange. The reboot of the sdr constituents will, of necessity, support this new system of exchange function.

    The old system, the dollar synthetic acting as index for internationally traded currencies, will be redundant.

  25. frances snoot says:

    Heh, Fake Frances. Can you share some of that wealth with Billy Bob or me? Snoots just sets at that air laptop like Debbie Doomer, morning-noon-night, less’n Ma chucks somethang at her. She ain’t brangin’ in no do-re-mi.

    I could use some of that air BIS money. What’z they callin’ it? SDR? Sounds furin to me.

    We gotsta keep our gold safe fur them times when that SDR thang starts to cookin’. Yep. Mine’s underneath thisn’ hair trailah. Next to Grannie’s teeth.

    God-rest-her-soul.

    Cleetus
    CFA

  26. ronron says:

    a fake snoot. hahaha.

  27. frances snoot says:

    @ronron:
    A fiat snoot.

  28. ronron says:

    @Snoot. yep. thanks for the laugh. hahaha. :-)

  29. stacyherbert says:

    @snoot – if imitation is the sincerest form of flattery, do you feel flattered?

  30. ronron says:

    there’s 2 ways to create money. work with your hands or kick with your feet. there gonna use the boots.

  31. frances snoot says:

    @Stacy:
    Will the Counterfeit Snoot Please Stand Up!?

    Wait-a-minute…gotta marketing ideedee:

    http://www.hilaryshepherd.com/rantsnraves/wp-content/uploads/2008/01/redneck-barbie.jpg

  32. dan valley says:

    comment?

  33. dan valley says:

    @Snoot….Gold…. SDR…The determining factor is how much of humanity will be left at the time.

  34. frances snoot says:

    Airybody read that O’Neeel thang?

    He sure do beat all.

    Snoot’s got hur nose to it right bout now. Wonduren when she gonna come up fur air.

  35. frances snoot says:

    Yep. Austerity or else.

    “Overall, we think it is most unlikely that any increased role for the SDR would significantly alter the broader dominance of the USD as the reserve asset of choice—the incumbency advantages of the USD are likely to dominate for the foreseeable future. This need not be cause for concern in the rest of the world, as long as the US delivers sustainable fiscal policy over the very long term. long-term structural risks in the global economy.”_O’Neill, Buchanan

    Taking our eyes off the currency and onto the exchange reform:

    http://www.brettonwoodsproject.org/art-566113

  36. ronron says:

    scroll to interpole and the list. interesting? http://www.financialsense.com/fsu/editorials/willie/2010/0526.html

  37. frances snoot says:

    http://www.un.org/ga/president/63/letters/recommendationExperts200309.pdf

    Recommendations by the Commission of Experts of the President of the General Assembly on reforms of the international monetary and financial system–19 March 2009

    “To resolve this problem a new Global Reserve System—what may be viewed as a greatly expanded SDR, with regular or cyclically adjusted emissions calibrated to the size of reserve accumulations—could contribute to global stability, economic strength, and global
    equity. Currently, poor countries are lending to the rich reserve countries at low interest rates. The dangers of a single-country reserve system have long been recognized, as the accumulation of debt undermines confidence and stability. But a two (or three) country reserve system, to which the world seems to be moving, may be equally unstable. The new Global Reserve System is feasible, non-inflationary, and could be easily implemented, including in ways which mitigate the difficulties caused by asymmetric adjustment between surplus and deficit countries.”

  38. frances snoot says:

    Stiglitz sees the eurozone problems emanating from a disfunctional exchange rate function:

    “The US has been complaining about China’s refusal to allow its exchange rate to appreciate relative to the dollar. But the euro system means Germany’s exchange rate cannot increase relative to other eurozone members. If the exchange rate did increase, Germany would find it more difficult to export, and its economic model, based on strong exports, would face a challenge. At the same time, the rest of Europe would export more, GDP would increase, and unemployment would decrease.”

    http://www.guardian.co.uk/commentisfree/2010/may/05/reform-euro-or-bin-it-greece-germany

    The essence of reform to the system will be an autonomous, non-trade-regulated multilateral exchange rate system: irregardless of affect on present currency values/asset denominations.

    Focusing on currency ties to domestic markets as a mitigating factor in reform is nonsensical.

    Within the context of the new system, domestic currency will be divorced from the trade vehicle used for exchange- export/import-for regions, and the cross-border flow of capital will be strictly regulated through this system of exchange.

  39. Brian says:

    This is less a question of “will” and more like a question of when.

    The GDS (Global Dollar Standard) will be the preferable banking monetization instrument of the SDR and will be implemented after November, 2011. This is fact.

    The good thing is that it will be weighted by a basket of hard assets. The bad news is that it will cut the price of gold in half or more.

    Jump on board the gold bull why it lasts but liquidate no later than September of 2011….

  40. frances snoot says:

    “Why do you sit here all alone?” said Alice, not wishing to begin an argument.

    “Why, because there’s nobody with me!” cried Humpty Dumpty. “Did you think I didn’t know the answer to that? Ask another.”

    “Don’t you think you’d be safer down on the ground?” Alice went on, not with any idea of making another riddle, but simply her good-natured anxiety for the queer creature. “That wall is so very narrow!”

    “What tremendously easy riddles you ask!” Humpty Dumpty growled out. “Of course I don’t think so! Why, if ever I did fall off—which there’s no chance of—but if I did—” Here he pursed his lips and looked so solemn and grand that Alice could hardly help laughing. “If I did fall,” he went on, “the King has promised me—ah you may turn pale, if you like! You didn’t think I was going to say that, did you? The King has promised me—with his very own mouth—to—to”

    “To send all his horse and all his men, ” Alice interrupted, rather unwisely.

    “Now, I declare that’s too bad!” Humpty Dumpty cried, breaking into a sudden passion. “You’ve been listening at doors—and behind trees—and down chimneys—or you couldn’t have known it!”

    “I haven’t, indeed!” Alice said very gently. “It’s in a book.”
    (Lewis Carroll Through the Looking-Glass)

  41. Brandon Sanks says:

    Gold should be the reserve currency period. The fiats ones like the USD, Euro, Yen, The Swiss Franc, Sterling all have Issues. China should let people buy the Yuan. However the Yuan has a ways to go.

  42. Brandon Sanks says:

    I fear any Reserve currency controlled by the IMF. They are financial terrorist. They have pretty much ruined every nation they have ever gotten invovled with.

  43. WL says:

    Hendry to Stiglitz

    “can I tell you about the real world”

    http://www.youtube.com/watch?v=E4MAifsp-8E

  44. frances snoot says:

    Yeah, WL. Hendry not a shill for rich people? He has to go to the laundromat just like everybody else, right? Maybe he should, “watch his rhetoric a little bit”:

    http://www.businessinsider.com/hugh-hendry-vs-jeffrey-sachs-2010-5

  45. frances snoot says:

    If there’s not enough capital in the world to recapitalize the banks under basel iii, what’s the point of the austerity measures?

  46. stacyherbert says:

    @snoot – there’s not enough capital in the world pre-b3, they can suspend all accounting for the next two decades and the reality will be that the debts will still be toxic; one major flaw with the current system is that on the one hand we have casino capitalism in which all of our ‘wealth’ is mostly debt based asset appreciation and, yet, simultaneously there is deep hostility to people who work for a living and especially if they try to earn more than what Walmart is willing to pay, so servicing the debt even at casino gulag zero rates becomes impossible, toppling the ponzi

  47. WL says:

    There is not enough to fund to the upcoming US debt obligations

    MARKETS
    AT A GLANCE

    Eric Sprott
    David Franklin

    Sprott Asset Management LP
    Royal Bank Plaza
    South Tower
    200 Bay Street
    Suite 2700, P.O Box 27
    The US government raised $705 billion worth of new debt in 2008. The debt was raised to
    pay for a $455 billion budget deficit and $250 billion in “supplemental appropriations” for the
    wars in Iraq and Afghanistan. In 2009, the US government will (and must) sell $2.041 trillion
    in new debt. This debt will pay for a projected budget deficit of $1.845 trillion, supplemental
    appropriations of $196 billion for Iraq and Afghanistan, a fund for pandemic flu response and
    a line of credit to the IMF. In fiscal 2009, the United States must find buyers for almost
    three times the debt that was issued last year.
    Table A presents the ownership breakdown of current outstanding US debt as of September
    2008. Each of the debt buyers presented will have to buy three times the debt that they
    bought last year, by September 2009, in order to balance the accounts of the United States
    Government.
    TABLE A
    Ownership of US Debt
    September 20081
    Holder Ownership %
    1. Intragovernmental Holdings2 $4,212,428,000,000 42%
    2. Foreign and International Holders $2,801,900,000,000 28%
    3. Mutual Funds $617,700,000,000 6%
    4. State and Local Governments $535,700,000,000 5%
    5. Federal Reserve3 $480,272,000,000 5%
    6. Other Investors $471,500,000,000 5%
    7. Pension Funds – Private $289,700,000,000 3%
    8. US Savings Bonds $194,300,000,000 2%
    9. Pension Funds – State and Local Governments $167,200,000,000 2%
    10. Depository Institutions $130,900,000,000 1%
    11. Insurance Companies $123,200,000,000 1%
    TOTAL US Public Debt $10,024,800,000,000 100%
    Given the current state of the economy, it seems frighteningly apparent that a threefold
    increase in debt purchases by the account holders listed above is a mathematical
    impossibility. There is simply not enough money in the present economy to support a tripling
    bond issue in the normal course of business. To confirm this, we have grouped together
    similar debt holders in order to assess their potential buying capability for fiscal 2009, which
    ends on September 30th.

    http://docs.google.com/viewer?a=v&q=cache:5cbFpoZGbIoJ:sprott.com/Docs/marketsataglance/June_2009.pdf+sprott+us+debt&hl=en&gl=ca&pid=bl&srcid=ADGEEShEe2KdzS27PbJtDprnocU0cjSxsDzEGbwNtQbThN7xQ9Dekg9wC-nbKeNHZ0v8GYXUFPLuOnIvZuYZ6szPtfJRrMKOCOmaXsHDpa9ZlsatGp3bnXyGHiVnm8CvnxqjhrJo2uj2&sig=AHIEtbQTC0IUbdrvpURS0KdGc2lc0e8juw

  48. frances snoot says:

    Austerity measures benefit no one but the bankers.

  49. frances snoot says:

    they can suspend all accounting for the next two decades

    “The entire process of allegedly cleaning up the banks is envisaged to take place over a period of 20 years. At the same time, participation in the Steinbrück plan is entirely voluntary. The proposal from one SPD finance expert that the government’s “bad banks” policy be made obligatory was struck down following a wave of opposition from bank CEOs.”

    German cabinet agrees “bad banks” plan for unloading “toxic assets”
    By Stefan Steinberg
    16 May 2009

    http://www.wsws.org/articles/2009/may2009/bank-m16.shtml

    What’s being ignored is the application of the term “toxic” is one of the arbitrary discretions deigned to the BIS committee.

    And the application of the “medicine” of austerity applies to only one class of citizen: the poor and disadvantaged.

  50. WL says:

    Hendry is no shill. He has Tourette Syndrome, tells it like it fucking well IS

  51. frances snoot says:

    He’s a freaken asset manager, not Joan of Arc, WL.

  52. frances snoot says:

    http://www.bis.org/review/r100427e.pdf?noframes=1

    “In summary, the present arrangement is not able to enforce an effective discipline on national economic policies in a reliable, timely and symmetric way; it cannot ensure that the global monetary policy stance is appropriate to global conditions; and by encouraging countries to accumulate huge official reserves, which finance the current account deficits of the reserve currency country, it tends to feed large and persistent global imbalances…

    In reviewing the potential alternatives to the present “non-system”, a first necessary step is to clear the ground from seemingly “simple” and “automatic” solutions. A return to a regime of fixed exchange rates or a move to full and universal exchange rate flexibility are the two polar cases most frequently considered. I would argue that neither is feasible or desirable…
    If we exclude the two “pure” exchange rate regimes, the only option available is that of a “managed” system based on international cooperation. However, it would be misleading to suppose that the starting point of any reform must be the choice of the exchange rate regime.”

    Speech by Mr Fabrizio Saccomanni, Director General of the Bank of Italy, at the Chinese Academy of Social Sciences, Beijing, 15 April 2010.

    Not the starting point, but the focal point. Right now the system is being readied for that inevitability, as the rest of Saccomanni’s essay entails.

  53. frances snoot says:

    “The outline of a new international monetary system is being drafted within the G20 and in the broad fora of the academic community of the public opinion. The main pillars of a new system – a stability oriented anchor for macroeconomic policies; an open multilateral trading
    system; a more resilient and risk-averse regulatory regime; a reserve regime based on a multilateral asset – are in different stages of construction. The world economy shows signs of recovery but it is essential that the pace of reform is not slowed down. It is imperative to reduce significantly the risk for the world economy of a devastating crisis such as the one we have just experienced. This requires to tackle the potential sources of instability that lie in our very imperfect international monetary arrangements.”

    Oh. The G20. Drafts?

    MULTILATERAL ASSET?

    I haven’t seen anything on this: have you?

  54. frances snoot says:

    “The above proposal – to use multilateral credit liabilities as reserve
    assets – is evolutionary in nature and, while it addresses a critical flaw
    in the current international monetary system, an equally critical one –
    the means of payment – would still need to be addressed.

    The new ICA would clear transactions denominated in members’
    own currencies by crediting and debiting their clearing accounts. These
    clearing accounts would, in fact, constitute the international reserves of
    the system, held for the member countries by the ICA and valued using
    a trade-weighted basket of all members’ currencies. Thus the clearing
    process would change the ownership of reserves and reinstate the original
    intent of the Bretton Woods Agreement to maintain public control of
    international payments. It would also permit exchange rate adjustments
    over a set period of time in response to changes in reserve levels,
    preserving the valid role of market forces in shaping currency values
    through trade and investment flows while ensuring that speculators
    would no longer dominate the process. ”

    http://www.fondad.org/uploaded/Fondad-GlobalImbalancesRemedies/Fondad-GlobalImbalancesRemedies-Chapter10.pdf

  55. ronron says:

    @Snoot. i think they mean some speculators. hahaha.

  56. frances snoot says:

    We’re not to be privy to the Queen’s purse, ronron. The “speculators” are a nomer meaning “those who hath handled pears previously”.

    Looks like everyone is sharing the debt equally. How very egalitarian of them.

  57. frances snoot says:

    Ground level will be very dry in the system of tiered liquidity. And we all get to live on the ground floor.

    How COZY!

  58. ronron says:

    @Snoot. all we has to do is service the debt. nice of them.

  59. frances snoot says:

    Yes. Protect and serve. Under Austerity We Forge this more Perfect Union.

    WAIT A MINUTE, Ronron. You gotta write the Emancipation Proclamation.

    Under 2000 words. On my desk by noon tomorrow.

    Okay? (And don’t forget to make it SOUND nice like the last one)

  60. Pez says:

    To hell with SDRs! First one to develop a death ray machine takes it all.

  61. ronron says:

    @Snoot. i’m no writer, maybe harry?

  62. Pez says:

    I final straw is when the elites make currency out of various animal droppings. However, This will at least promote/insure currency circulation.

  63. FiatMentalist says:

    Too late Pez yak dung has already been tried.

  64. Pez says:

    How much YDG converts to USD?

  65. frances snoot says:

    The people will hear when the writer matches authority and origin to voice in a way to enable the people’s understanding of their own autonomy, ronron.

  66. frances snoot says:

    We could give Harry a go, but he never likes my projects.

  67. frances snoot says:

    by zen0
    on Thu, 05/27/2010 – 23:12
    #378425

    http://www.bankofcanada.ca/en/speeches/2009/sp191109.html

    “In general, alternatives to the dollar as the reserve currency would not materially improve the functioning of the system. While reserve alternatives would increase pressures on the United States to adjust, since “artificial” demand for their assets would be shared with others, incentives for the surplus countries that have thwarted adjustment would not change. The common lesson of the gold standard, the Bretton Woods system and the current hybrid system is that it is the adjustment mechanism, not the choice of reserve asset, that ultimately matters.” (zerohedge comments link)

    Exactly: the adjustment mechanism aka exchange function.

  68. ronron says:

    @Snoot. harry will do what he’s told. we were here first.

  69. dan valley says:

    Lacky pony kriffs crumpet leech……(PUFF of Acrid Smoke)……Honey,,,,? I hope you didnt just SDR on the new carpet.

  70. frances snoot says:

    Give em hell, Harry.

  71. mike king says:

    What planet is this writer from?????
    2020….weak dollar…..blah blah blah…..
    In 2 years….max 3, the people in the United States will be so poor they will be unable to rebel. There will be immense civil unrest worldwide and the Euro will be collapsed deliberately along with the pound and other controlled world currencies. The dollar being the finaly! Inflation will be in the stratosphere and it is ALL AGENDA by acquired “tools” by the people controlling the money supply. This is about deliberate currency rebirth and it will be accomplished amidst chaos of the world in 2012 or 13-14 the latest. It is about eventual formation of a singular world governing body which the people controlling the money supply will control (as they control the USA now.)

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