As "Abenomics" Has So Far Failed to Produce Positive Results for Main Street, Japan's Prime Minister May Be Preparing for Constitutional Change

Abe must know that the hodge-podge economic program he has named "Abenomics" isn't really any program and that it won't work. Japanese consumer sentiment index for July dropped 0.7 to 43.6, following the spike in the consumer price index which turned positive in June but was not accompanied by any rise in wages.

Abe's Plan B is probably "wag the dog", and he seems to be getting ready on two fronts.

First, Yomiuri Shinbun reports that he has made one of the personal advisors of Boy-wonder (aka Toru Hashimoto, mayor of Osaka City) a Special Advisor to the Cabinet, ostensibly to advise the administration on economic growth strategies. Boy-wonder is ecstatic that Mr. Taichi Sakaiya will act as a strong, direct pipe between the Abe administration and his failing party (Japan Restoration Party). Abe needs Japan Restoration Party's vote to change the Constitution.

Second, as Kyodo News reports, he is bringing an active, high-ranking officer of Air Self Defense Force into the Cabinet Secretariat to be in charge of national security and crisis management (i.e. collecting intel on China and North Korea). Major General Jun Nagashima is 52 years old, and the first high-ranking officer of Japan's Self Defense Force to be advising the Cabinet.

As to his so-called "Abenomics", even the International Monetary Fund has some doubts, which was totally ignored by the Japanese media who reported on their latest IMF assessment of Japan. Only Bloomberg Japan reported it, but that news outlet has a rather small audience in Japan. Here's what IMF thinks of Abe's plan to hike sales tax and "Abenomics", according to Bloomberg (English) (8/5/2013; emphasis is mine):

Japan’s plan to double a sales tax by 2015 to improve its finances has triggered some concern within the International Monetary Fund’s board.

While IMF directors “generally” supported the plan, “a few” expressed concern over a possible hit to growth, the fund said today in a statement summarizing the view of its executive board. The term “a few” is used by the IMF to mean between two and four. It urged the country to gradually increase the levy to “at least 15 percent” to bring down its public debt over the medium term, according the IMF’s staff report of its annual review of Japan.

...“An incomplete version of Abenomics would be unlikely to sustain the current strong growth,” Jerry Schiff, IMF mission chief for Japan, said during a conference call today. “In such a case, over-reliance on fiscal and monetary stimulus could also generate important costs for the rest of the world.”

Schiff said the IMF supports the plan to increase the consumption tax.

(Full article at the link)

If IMF actually thinks it is even remotely possible to bring Japan's fiscal health back, with the government debt more than double the GDP, it is delusional.

Japan should remember what IMF recommendations have done to Greece, Spain, Portugal, and most recently Cyprus.

Then again, Japan probably thinks this time is different, because Japan is not Greece (or Spain, or anyone else).

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Cyprus Poll After Deposit Grab: 84% Think "Crisis Is Fault of Country’s Political, Economic and Social Systems"

In other words, congrats, Germany, EU, ECB, IMF. You did it.

From Zero Hedge (4/28/2013; emphasis is mine):

One Month Later: What Cyprus Thinks In The Aftermath Of Its Bank Sector Collapse?

Curious what the Cypriot people think just over a month after the most dramatic European banking sector collapse in years, and subsequent first bank sector bail-in and depositor impairment ever? Courtesy of Bloomberg, which summarizes a poll conducted via Symmetron and posted in Kathimerini Cyprus we now have an idea of what the still stunned Cypriot population thinks.

The Cyprus financial crisis is fault of country’s political, economic and social systems, not foreign institutions such as troika, according to 84% of Cypriots in poll by Symmetron published today in Kathimerini Cyprus. Poll also showed:

• Of 800 people questioned, 68% said bankers were most responsible for crisis, 63% said politicians next most to blame, 48% said central bank

• 79% said previous President Demetris Christofias and his govt is more to blame vs 13% for current administration led by President Nicos Anastasiades

• 54% said it was mistake for parliament to vote against 1st loan deal

• 68% said they don’t have enough money to meet direct needs, pay financial obligations

• 70% said personal economic situation to worsen over next 12 months

• 92% no longer trust central bank

• 66% said current govt actions to confront crisis not enough

• 64% against exit from euro area

• 73% said faithful implementation of loan agreement won’t lead country out of crisis

• Symmetron conducted poll April 22-26; margin of error +/-3.5 percentage points

So, Cyprus citizens now say everyone's deposit should have been taken away, not just deposits above 100,000 euro. And no exit from euro. And "government is not doing enough!"

The Cyprus Deposit Grab will be a successful template if people elsewhere are like Cyprus citizens. As far as Germany goes (also posted by Zero Hedge), that's what any government should do to the citizens - grab citizens' assets to reduce the government deficit.

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Obama's Carbon Tax Plan with IMF, G-20, World Bank with Iran as Model

Speaking of anthropogenic global warming caused by CO2 (reference to the previous post), the Team Obama has a great plan for you, which probably will be forced on to you via the presidential executive order.

It'll be for the interest of people in the United States, they will say, just like the deposit theft in Cyprus will be in the interest of people in Cyprus. (By the way, Russians may have already transferred their money out of Cyprus, leaving Cypriot citizens and businesses to pay for their own bail-out, I mean bail-in. 100% haircut? More like a decapitation.)

If you look at the players - US Treasury, IMF, G-20, World Bank (who cites Iran as success), you know they are up to no good.

Just like so-called housewives (employees of TEPCO PR subcontractor) shaping the "more electricity and more nuclear power are good for you" message for naive fellow housewives and their kids, they suggest a clever way to make people feel good about being taxed and having the standard of living lower while their money goes to bureaucrats in foreign countries:

call the carbon tax an “offset” instead of a “tax,” and downplay economic costs to “focus on framing green policies as a way to reach an ambitious and positive social goal

How they take us for fools.

From Fox News opinion page, by Phil Kerpen (3/21/2013; emphasis is mine):

Here comes Team Obama's carbon tax

The Treasury Department’s Office of Environment and Energy has finally begun to turn over documents about its preparations for a carbon tax in response to transparency warrior Chris Horner’s Freedom of Information Act request. The documents provide solid evidence that the Obama administration and its allies in Congress have every intention of implementing a carbon tax if we fail to stop them.

The Office of Environment and Energy, if you’ve never heard of it, is housed in Treasury’s Office of International Affairs and exists principally to wait for authority to administer the revenue from a cap-and-trade scheme or carbon tax. And, apparently, to trick Americans into supporting the tax to provide it the money. So the documents they’ve reluctantly released are worth a careful look.

There’s the G-20 report titled “Mobilizing Climate Finance,” which pegs the price tag at $2.1 trillion “of investment requirement” in a “global carbon market.”

There’s the helpful IMF report from Ian Parry of the Fiscal Affairs Department on “Public Sources of Climate Finance.” Parry’s stated goal for the United States is “raising revenue and putting it to good use.”

He suggests a $25 per metric ton carbon tax – right in the middle of the range suggested by the discussion draft legislation recently released by U.S. Rep. Henry Waxman, the top Democrat on the House Energy and Commerce Committee – and noted that $25 billion a year could be sent abroad “for climate finance.”

He singles out aviation and maritime fuels as “under-taxed” and suggests new taxes on fuels or directly on aircraft and ship operators. Parry notes that this “will harm developing countries” – for the simple reason that it’s economically harmful -- and concludes “compensation needed for fairness.” (Obama recently asked Congress to OK another $65 billion in increased IMF dues, no doubt so we can receive more of this kind of advice.)

By far the biggest document is from the World Bank. It’s titled “Inclusive Green Growth: The Pathway to Sustainable Development.” The document itself is posted on the World Bank website, but that doesn’t mean its use at the U.S. Treasury Department doesn’t require scrutiny. The report notes that “some observers, mostly in high-income countries, have argued against the need for more growth, suggesting that what is needed instead is a redistribution of wealth.” It seems this “remains more relevant for high-income countries” like the United States.

The report goes on to outline how a carbon tax could be used to drive a massive redistributive scheme based on – believe it or not – Iran as a model of success: “The political economy of reform will likely require compensatory transfers to the middle class. In the Islamic Republic of Iran… 80 percent of households received significant transfers—no doubt contributing to the success of the reform.” It continues: “In the end, the redistributive impacts of a carbon price scheme depend on how revenues from the scheme are used.”

Such a redistributive scheme is a key element of carbon tax proposals from Waxman and from Barbara Boxer, the chair of the Senate Environment and Public Works Committee.

It’s easy to foresee a “gas stamps” program much like food stamps that would provide a taxpayer-funded gas purchasing card to people up to some multiple of the federal poverty level. Much like ObamaCare, a policy driving up costs would be paired with a huge new welfare program that would foster government dependency and political loyalty.

The World Bank paper also advises Treasury on how to convince the public. It says to call the carbon tax an “offset” instead of a “tax,” and downplay economic costs to “focus on framing green policies as a way to reach an ambitious and positive social goal (such as becoming carbon neutral by 2050 or becoming a leader in solar technologies).”

This advice helps explain why an administration so heavily invested in implementing a carbon tax attempts to deny any such thing is going on.

What else are they hiding? At least 10,000 emails from 2012 alone. Horner has filed suit, and Treasury can only stonewall for so long.

One thing that’s already clear is that the preparations to pursue a carbon tax are very much proceeding in earnest.

We need to be ready to fight back.

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Germany, IMF Wanted 40% Haircut of Deposits in Cyprus, Settled for 9.9% Instead

(UPDATE) The vote is delayed till at least Monday March 18, as the government may not have enough votes to do the bidding of Euro overlords... The banks may remain closed on Tuesday.

=======================================================

It's an outright theft, but since it's official government entities doing this, it's not called theft but bailout. The Cypriot government even calls it "a new beginning". (1984, anyone?)

In exchange for the 10 billion euro bailout for the Cypriot banks and supposedly saving 8,000 jobs, the EU demanded that the Cypriot government confiscate 6.75 to 9.9% of deposits at the banks and exchange it with the bank "equity" (what kind of joke is this?), and that the interest on deposits be charged with 20 to 25% tax. These thefts are supposed to raise up to 7.5 billion euros.

They did it after the last financial markets in the world (US) closed for the weekend. People cannot withdraw money over the weekend, as ATMs have been stopped. (Zero Hedge has more information on the theft, including this post.)

According to reports, Germany and IMF initially wanted 40% of deposit money confiscated, not 9.9%.

I think it's a trial balloon to see if they can get away with the theft, and if they do then to replicate elsewhere in the EU periphery, for a start.

From ekathimerini.com (2/16/2013; emphasis is mine):

Shock in Cyprus as bailout brings bank account haircut

The Eurogroup reached on Friday night an unprecedented decision for bailing out Cyprus that dictates a haircut on all bank accounts on the island’s banks with immediate effect, while cash withdrawals are not allowed for the time being, generating unrest.

Along with loans adding up to 10 billion euros from the European Support Mechanism, Cyprus will have to find another 7-7.5 billion euros from privatizations and from a 6.75 percent one-off haircut on all bank accounts with a balance up to 100,000 euros, rising to 9.9 percent on accounts exceeding 100,000 euros.

Already bank customers are gathering outside major and cooperative banks, Skai television reported on Saturday morning, as angry depositors demand their money.

Depositors will get shares of the banks they are clients of in return for the capital lost, of the same value as the haircut their accounts have suffered.

This is estimated to fetch some 6 billion euros to the state, bridging most of the gap between the 10 billion euros the ESM is offering to Cyprus and Nicosia’s requirements of an estimated 17 billion.

This is the first time in the eurozone that a levy has been imposed not on the interest of bank accounts but on the capital itself. In addition to that there is a levy on interest, too, and an increase in the 10 percent corporate tax that has been one of the main driving forces behind Cyprus’s financial progress after the 1974 Turkish invasion, generating growth by attracting foreign direct investment.

Notably, the account haircut does not affect bank accounts in Cypriot bank branches based in Greece, according to sources from the Greek Finance Ministry.

Tax on interest will amount to between 20 and 25 percent.

Changes will have to be ratified by the House of Representatives, the republic’s parliament within the weekend, while an emergency cabinet meeting is taking place on Saturday morning in Nicosia to assess the situation.

Finance Minister Michalis Sarris has postponed his official visit by two days and will now go to Moscow on Wednesday.

Cyprus state broadcaster CyBC reported on Saturday that German Finance Minister actually entered the Eurogroup meeting on Friday proposing a 40 percent haircut on Cypriot bank accounts. Sarris stated on Saturday that this had also been the proposal of the International Monetary Fund.

Sarris stated in Brussels that in view of the threat from the European Central Bank for banks in Cyprus to shut down and chaos to ensue, the increase in interest taxation and the haircut to bank accounts became necessary. “A disorderly default, that was a genuine possibility, has been averted,” he said.

“It allows our economy to proceed decisively to a new beginning.”

He also noted that after the dramatic meeting of the eurozone ministers a further slashing of salaries and pensions has been avoided and confidence in Cypriot economy is restored. He qualified the bailout funds loaned to Cyprus as sustainable and manageable and will not constitute an unbearable weight on the next generations. “It spreads the load on this and on the following generations,” he said.

IMF head Christine Lagarde said "the Fund has always said it would support a solution that is viable, and this agreement fulfills this condition, so my recommendation to our board will be for contributing in the funding of the package."

Opposition leader Antros Kyprianou, the General Secretary of leftist AKEL, accused the government of not consulting the other parties, saying that "the government bears full responsibility for developments in the economy as instead of choosing the road of consensus it has decided to go it alone."

Cyprus's parliament is set to vote on the measure on Sunday. The "threat" is the same old, same old, which was used by Ben Bernanke and Hank Paulson when they demanded $700 billion to save the US banks in fall 2008 (at that time, extraordinarily big amount of money): "It would be chaos and catastrophe otherwise."

The governments world over say the same thing, with slight variations. In case of the Japanese one, the line was "We didn't tell you about core melt, or extent of damage at Fukushima I Nuke Plant because if we had done so it would have been chaos and panic...blah blah blah..."

The banks in Cyprus won't open until Tuesday.

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Chinese Banks to Pull Out of IMF Annual Meeting in Tokyo

To spite the host country because of the row over Senkaku Islands, it seems.

Both Japan and China have much serious problems to attend to, be that their economies, finance, and in case of Japan radiation contamination from the ongoing nuclear accident which no one pays attention to these days. Instead, they focus on these pieces of real estate that promise untold rich natural resources.

From Fox Business News citing Dow Jones Newswire (10/2/2012):

Japan's territorial dispute with China could finally be spilling onto the global stage.

Several big Chinese banks say they've canceled participation in the high-profile annual meeting of the World Bank and International Monetary Fund--to be held in Tokyo next week--as well as in the constellation of events taking place alongside. Some of the banks say they've also pulled out of another big financial-industry conference scheduled to take place in the western Japanese city of Osaka at the end of the month.

Most of the banks haven't given a reason for their last-minute no-shows. But the withdrawals come amid an escalating tit-for-tat between China and Japan, which recently nationalized a set of islands in the East China Sea that are also claimed by Beijing. China has shown its displeasure by canceling some diplomatic events and sending patrol boats into what Japan considers its territorial waters--with one group going through Tuesday. Some Japanese companies have reported falling demand for their goods in China and unusually strict inspections as well as processing delays at Chinese ports.

"Quite frankly, it's Japan-China relations," said an official at the Tokyo branch of the Agricultural Bank of China, explaining why the bank was pulling out of both IMF-related events and the Osaka conference, which is sponsored by Belgium-based SWIFT, a group set up by financial institutions to handle transactions. The bank is still sponsoring and participating in a meeting of the Institute of International Finance--a global association of financial institutions--that is taking place in Tokyo at the same time as the IMF meeting, another official said.

The moves by the Chinese banks are the latest sign that souring relations between Asia's two biggest economies are starting to affect the broader, economic realm, and go beyond regional squabbling. The annual meeting of the IMF and World Bank is the largest single gathering of finance and economic officials, non-governmental organizations and bankers. Organizers estimate some 20,000 delegates will be in Tokyo for a range of meetings and seminars, taking place Oct. 9-Oct. 14.

(Full article at the link)

I guess China's thinking goes like this: "China is so important for global economy, and everyone wants China to be there in the important meetings like IMF/World Bank events. By not attending the event, the member nations will put pressure on Japan to be more accommodative to China's request, for the global economy depends on China's well-being." Something like that.

The Dow Jones article has this comment from a Singapore-based author:

"The point is really about China being a global player," said Fraser Howie, a Singapore-based co-author of "Red Capitalism," a book on China's financial system. "China may rightly demand a seat at the head table, but what signal does it send when they go off in a huff over these types of issues. Such boycotts are pointless. They only harm China and make China out to be a unstable and unreliable partner."

Well, many Asians including Japanese and Chinese are myopic, physically. Maybe that also affects the way they perceive and think broadly, while enabling them to focus intensely on issues close at hand.

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IMF, World Bank to Help Japan's "Recovery" by Holding Annual Meeting in Tokyo in October

How nice of them.

Japan is probably a great choice, because the country is about the only place in the world where both IMF and World Bank can hold their meetings in peace, without loud protests going on against them and their officials and the police battling the protesters.

In fact, very idealistic (read "naive") people, both young and not so young, on Twitter are saying "Oh, maybe we can appeal to these world leaders about our bad government starting nuclear power plants against our wish!"

Sorry boys and girls. IMF, or World Bank, is probably the last place you want to appeal for the nuclear-free world.

As the Secretary General of the Japan Secretariat for the 2012 Annual Meetings of the International Monetary Fund and the World Bank Group, Ministry of Finance proudly recollects in the statement below, the last time Tokyo was selected to host the IMF/World Bank annual meeting was in 1964, the year Tokyo Olympics was held. A proud moment for the nation (at least the Olympics was). Secretary General Naka says Japan wants the repeat.

His words eerily echo those bizarre, off-the-mark PR commercials made by the Ministry of Finance to appeal to the world how Japan has recovered from the earthquake of March 11, 2011 (no mention of tsunami or nuke accident).

From the website set up by Japan's Ministry of Finance, "2012 Tokyo Annual Meetings - International Monetary Fund World Bank Group", Introduction:

With growing uncertainty facing the global economy, cooperation and partnership among the countries has never been more important. The Annual Meetings of the International Monetary Fund and the World Bank Group, to be held in Tokyo in October 2012, will aim to promote global economic stability and to deliver a promising new start.

Following the first Tokyo Annual Meetings in 1964, this will mark the second time that these meeting are held in Tokyo.
Together with the Tokyo Olympics that were held in the same year, the 1964 Annual Meetings were an opportunity to promote Japan to the world and one of the driving forces behind Japan’s post-war new start.

A half century has passed since.
Japan presented itself as a candidate nation to host the 2012 Annual Meetings in hopes of once again achieving a new start.
We want the people of the world to see a nation that is in the process of a strong recovery following the devastating earthquake.

We want to demonstrate the underlying power of the Japanese economy through our unique advanced technologies and services, and by conducting a global event with perfect efficiency.

At the Annual Meetings here in Japan, where the importance of partnership and solidarity is well understood and appreciated, we want to strengthen the bonds between the countries and forge the global resolve to sweep away the uncertainty surrounding the global economy.

October 2012: From Tokyo, a promising new start for Japan and the global economy

Hiroshi Naka

Secretary General
The Japan Secretariat for the 2012 Annual Meetings of the International
Monetary Fund and the World Bank Group,
Ministry of Finance, Japan

(I'm embarrassed reading this blurp... The original Japanese is just as embarrassing. It reads like it was written by a copy writer at Dentsu or Hakuhodo. Maybe it was...)

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IMF's Strauss-Kahn Wants Eurozone Growth, and Doesn't Want Eurozone Growth

It must be the translation, I hope.

According to AP, Director General of the IMF Dominique Strauss-Kahn said in Greece Tuesday:

there was a need "to have something more dynamic, which is something where the center of the eurozone will be stronger because you can't have a single currency and not have at the same time a coordinated economic policy. And that's the big weakness."

?????

Now, can you figure out what the hell he meant? Did he speak Greek? Did he speak French? Did AP use Google translation? What am I missing?

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Secret Gold Swap Between BIS and Commercial Banks

People noticed something strange had been going on when they saw a footnote entry of 380 tonnes of gold in the annual report of B.I.S., Bank of International Settlements - the central bank for the world's central banks.

The news has been floating around in gold circles since last week.

UK's Telegraph reports:

"It takes a lot to spook the solid old gold market. But when it emerged last week that one or more banks had lent 380 tonnes of gold to the Bank of International Settlements in return for foreign currencies, there was widespread surprise and confusion.

"The news that a mystery bank has just pawned the family jewels gave traders a jolt – nervous about the sudden transfer of almost 20pc of the world's annual gold production and the possibility of a sell-off.

"In a tiny footnote in its annual report, the bank disclosed its unusually large holding of gold, compared with nothing the year before. The disclosure was a large factor in the correction of the gold price this week, which fell below $1,200 for the first time in more than a month.

"Concerns hinged on whether the BIS could potentially sell on this vast cache of bullion in the event of a default, flooding the market with liquidity. It appears to have raised $14bn for whoever's been doing the swapping – small fry on the currency markets, but serious liquidity in the gold market." [The article continues.]

The transaction looks like a tripartite one, involving BIS, IMF, and commercial (bullion) banks, whose names include the usual suspects who have wrecked havoc in the global financial markets in the past two years - Goldman Sachs, Deutsche Bank, JP Morgan, HSBC, Barclays, UBS, Societe Generale.

The Telegraph article, citing a gold expert, says it is just a "swap" and not a "lease", and therefore gold is not going to be released into the market.

I'm not so sure. Instead of sitting on the gold for the duration of the swap, BIS could make good use of the gold by leasing it to commercial bullion banks earning additional interest, and the bullion banks would sell it in the market for higher-yielding debt instruments.

Why now?

Jesse's Café Américain says and I agree:

"I think the answer can be found in the setup of the market. Gold was knocking on the door of resistance at $1260, a key point that could have triggered a break away rally. At the same time, according to figures provided in his daily Comex commentary, there were an extraordinary number of contracts standing for delivery in silver and especially gold. Indeed, if the numbers are correct, a breakaway rally would have encouraged almost 2 million ounces of gold to be demanded of the Comex, a call on their 2.64 million ounces of dealer supply that could have literally 'broken the bank.'

"As Volcker and Greenspan have both said, the central banks must stand ready to sell gold into the market to prevent its price from rising and displacing the confidence of the markets in the power of the central banks to manage their currency markets."

It looks like gold selling continues this week. Gold is again below $1,200, down $13.

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Gordon Brown Is Coming to US for IMF Job

"to tackle world poverty", according to UK's Mirror.

Brown's heading to US for IMF role (5/16/2010 Mirror.co.uk)

"Gordon and Sarah Brown are prepared to make a life-changing move to the USA with their boys.

"The couple indicated to friends they see their long-term future there - with the ex-PM tipped to head the International Monetary Fund in Washington when the job comes up in 2012.

"Former Chancellor Mr Brown was widely praised for his role in fighting the global financial crisis. And before the election, as the Browns discussed their options with friends, Sarah said she expected him to take "one more big job".

"A source said: "The unspoken assumption was it would absolutely not be a Tony-and- Cherie style retirement into riches, lucrative speaking dates and globe-trotting.

""Gordon would relish the IMF job - not for the status - for a chance to tackle world poverty.""

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EU's Defense Plan for Euro

According to AP, EU ministers have agreed on the Euro "defense package", and it is bigger than rumored.

Here's the details:

- 60 billion euro (US$76 billion) from the European Commission
- 440 billion euro (US$560 billion) bilateral backing from eurozone countries
- 220 billion euro (US$280 billion) from IMF
- Grand total: 720 billion euro (US$917 billion)

The entire EU countries, even those not using euro as their currency, will have to contribute (the EC part). The IMF members are on the hook for the IMF portion.

The Asian markets are responding favorably so far, even though they will be on the hook to rescue euro. If the IMF quota is used to determine the contribution, Japan will be asked to pay over 13 billion euro (US$17 billion), and China 8 billion euro (US$10 billion).

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Max Keiser Interviewed by Helen Skopis of Athens International Radio

on April 9, 2010, on Greek debt crisis and IMF.

Max Keiser is basically saying that the Greek sovereign debt crisis and the Euro currency tumble that ensued was "manufactured" so that the European Central Bank would be discredited and Euro wouldn't dethrone US dollar as world reserve currency. By who? The Federal Reserve, Wall Street banks, UK banks and Bank of England.

Keiser calls it "financial terrorism". He's urging Greek people to stand up and take back their sovereignty. [That would mean pulling out of the European Union.]

Commenting on Greece's upcoming short-term debt auction, he says the outcome of the auction has nothing to do with the market force. It has to do with whether the Greek government "gives up" and cedes control to IMF. If it does, the auction will go well, according to Keiser. It is 100% political, he says. Political operatives using market to impose economic and political dictatorship.

People should not be paying for bankers' mistakes, but people have been made to, all over the world. Thus the No-Pay Movement he mentions in the interview, which is from Matt Taibbi's article.

(Long time ago I wrote a term paper in Development Economics class in my B-school discussing IMF's role in developing countries. In it, I said IMF was a distortion and should be abolished. I got C.)

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All That Glitters - Gold Makes All-Time High

on India rumor, and very real U.S. dollar plunge.

---------------------------------------------------
Update (8:22 PM PST): IMF sold 10 tons of gold to Sri Lanka. The latest gold price from Kitco.com:

----------------------------------------------------

Spot gold hit $1,187.40 per ounce today (still trading). This is a screen capture from a gold site Kitco.com.


The Indian government is rumored to be negotiating with IMF for the purchase of the remainder of IMF's gold (another 200 tonnes). (Here's thestreet.com's article.)

Big-shot hedge fund billionaires (Paul Tudor Jones, John Paulson, David Einhorn) have all gone long on gold. (Read the article on MarketWatch.)

Many dismiss it as "bubble". (Gold was $1045 when this article was published in early October.)

Many think gold is still "undervalued" (here and here and here).

So far, I'm very happy with my investment in gold ('paper' gold, in the form of leveraged ETN - exchange-traded notes). I wish I had had a courage to double the position when it was less than half the price of what it is at today.

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Gold Jumps to All-Time High (Nominal) on IMF Gold Sale News

Gold surges to new record high (11/3/09 AFP via Breitbart)

"Gold surged to a new record high price of 1,085.07 dollars an ounce Tuesday, a day after an announcement of a massive sale of gold by the International Monetary Fund to India.

"Prices in London hit 1,085.07 dollars per troy ounce and New York prices reached 1,084.70 dollars, breaking records set last month.

"The latest surge came a day after the International Monetary Fund announced it sold 200 tonnes of gold to India's central bank over a two-week period last month for a total of 6.7 billion dollars to bolster its finances.

"The IMF said the transaction, which was in the process of being settled, involved daily sales that were phased over a two-week period during October 19-30. "

It was off-the-market transaction. India's gold reserve is now 557.7 tonnes, or 6% of the country's foreign reserve.

It was widely speculated that it would be China who would grab IMF gold. China (1054 tonnes, 0.9% of foreign reserve) may still go for the remaining half. Other contenders include Russia (524 tonnes, 4% of foreign reserve), any of the Gulf states, and South East Asian countries.

During this sales operation, gold price had a minor correction. It went from $1065 on October 19 to $1026 on October 28, and ended October 30 at $1045. So, the much-dreaded correction was mere $39, or 3.7% at most.

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Oil Is to Stop Being Priced in US Dollar??

Drudge Report headline (4:00pm PST):

ARAB STATES LAUNCH SECRET MOVES WITH CHINA, RUSSIA, FRANCE TO STOP USING DOLLAR FOR OIL TRADING... DEVELOPING...

Rick Santelli of CNBC apparently broke the news earlier, and I found the video (around 1:30 mark). Santelli is saying the UK's Independent will break the news tomorrow.

Now, on Sunday I posted this about IMF: "IMF the De Facto Global Central Bank Printing Fiat Money". The power that be seems to have planned everything.

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IMF the De Facto Global Central Bank Printing Fiat Money

that's the SDR (Special Drawing Right).

THE IMF CATAPULTS FROM SHUNNED AGENCY TO GLOBAL CENTRAL BANK (Ellen Brown, 10/1/09 Web ot Debt)

“A year ago,” said law professor Ross Buckley on Australia’s ABC News last week, “nobody wanted to know the International Monetary Fund. Now it’s the organiser for the international stimulus package which has been sold as a stimulus package for poor countries.”

"The IMF may have catapulted to a more exalted status than that. According to Jim Rickards, director of market intelligence for scientific consulting firm Omnis, the unannounced purpose of last week’s G20 Summit in Pittsburgh was that “the IMF is being anointed as the global central bank.” In a CNBC interview on September 25, Rickards said, “They’ve issued debt for the first time in history. They’re issuing SDRs. The last SDRs came out around 1980 or ’81, $30 billion. Now they’re issuing $300 billion. When I say issuing, it’s printing money; there’s nothing behind these SDRs.”

IMF is doing WHAT? Issuing the SDRs backed by... nothing?

So I looked and found the following article from no other than IMF itself. And I learned that the SDRs are not only backed by nothing (it's nothing more than a "concept"), but IMF is giving them away for free.

IMF Injecting $283 Billion in SDRs into Global Economy, Boosting Reserves (Glenn Gottselig, 8/28/09 IMF Survey Online)

"With much of the world still mired in recession, the IMF took action to bolster its members’ reserves through an allocation of SDRs, or Special Drawing Rights.

"The allocation, equivalent to $250 billion, was made on August 28 and will be followed by an additional, albeit much smaller, allocation of $33 billion on September 9. With the two allocations totaling roughly $283 billion, the outstanding stock of SDRs would increase nearly ten-fold to total about $316 billion.

"There are no notes or coins denominated in SDRs, nonetheless the SDR does play a role as an interest-bearing international reserve asset. The allocation of SDRs by the IMF boosts member countries’ reserves because SDRs can be turned into usable currencies. Once the SDRs have been added to a member country’s official reserves, the country can voluntarily exchange its SDRs for hard currencies, such as the U.S. dollar, euro, yen, or pound sterling, through voluntary trading arrangements with other IMF member countries."

What is the SDR? IMF explains as follows:

"The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members."

In other words, it's a form of debt, which allows the holder to lay a claim on the "freely usable currencies of IMF members". Much like the U.S. Treasury debt, which is backed by nothing but the government's promise to give the holder a claim on the future money that the U.S. government will collect from hapless taxpayers. The value of the SDR is currently determined by a basket of four currencies, Euro, British Pound, Japanese Yen, and U.S. Dollar, and the SDR pays interest at 0.25%.

Now these $316 billion newly minted claims on four IMF member currencies have been already distributed throughout the world. It is another wealth transfer, as "$110 billion of the combined allocations will go to emerging market and developing countries, including over $20 billion to low-income countries." (IMF)

Out of nothing, the IMF member countries (just about every country in the world) have been given free claims to four leading currencies that are freely exchanged in the world market. (Here's the table that shows the SDR allocations.)

How could this not be highly inflationary?

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IMF Wants to Collect from Banks

If you've been deriding those who mentions NWO (New World Order; Mr. Kissinger's remark after 2:00 mark) as "conspiracy nuts", it's staring right in your face if you care to recognize. The so-called conspiracy is not done in some dark, smoke-filled back room. It's in your face.

IMF, an institution no developing country wanted to deal with any more before the financial crisis and the global recession triggered by it, is back to wheeling and dealing. The crisis has been God-sent for their raison d'être; it clearly revitalized the institution, with funds pouring in from China, Japan, and Russia, dispensing money and austerity programs again to countries who suddenly found themselves facing insolvency.

Feeling confident that it is finally becoming what it was designed back in 1944 in Bretton Woods, IMF has started to talk like the global central bank.

IMF presses for tax on banks' risky behaviour (10/2/09 Guardian UK)

"The International Monetary Fund today threw its weight behind a new tax on the global financial sector designed to limit risky speculative behaviour and help the world's poorest countries.

"Dominique Strauss-Kahn, the IMF's managing director, said banks and other big financial institutions were responsible for systemic risk and it was only right that they provided resources to mitigate those threats to the world economy."

With due respect (meaning I don't have much respect), I disagree with Strauss-Kahn's assessment that banks and financial institutions were responsible for systemic risk. The ones who were truly responsible were the central banks, and one in particular, the U.S. Federal Reserve, and politicians who need central banks to print money for their grandiose government policies and projects. Mr. Strauss-Kahn was the Finance and Economy Minister under Lionel Jospin's cabinet from 1997 to 1999, and has been the Managing Director of IMF since November 2007.

And who will define what the "risky behavior" is? IMF bureaucrats under the direction of member countries' politicians?

And why should IMF direct banks to help the world's poorest countries? Whatever tax is assessed on banks' activities, it will ultimately be paid by the taxpayers of mostly developed countries where those "risky" banks reside. It will be paid either through increased fees for bank transactions, or through outright bailout.

That will be on top of the extra burdens that the taxpayers are straddled with in the form of "stimulus" programs, new taxes, and bank bailouts.

The finance minister of Brazil, host to 2016 Olympics, expressed support for IMF as 'central bank':

Brazil would support "central bank" role for IMF (10/2/09 Reuters)

"ISTANBUL, Oct 2 (Reuters) - Brazil would support the International Monetary Fund acting as a kind of global central bank, offering liquidity and currency swaps, Brazilian Finance Minister Guido Mantega said on Friday.

"Such a role for the IMF would be part of increasing coordination in global policy and efforts to fix economic imbalances between countries, Mantega told reporters at the semiannual meeting of the IMF in Istanbul."

What the hell is "economic imbalances between countries"? That some countries are richer than the other? Is that something bad?

Toward the end of the article,

"The idea of the IMF effectively becoming a global central bank is one of many ideas for radical reform informally discussed by officials and academics around the world over the past year."

Sorry. That idea may seem "radical", but it's hardly new. As I said earlier, that was exactly the original intent when IMF was created along with what has become World Bank in 1944 at Bretton Woods. (For more on the subject, I highly recommend The Creature from Jekyll Island: A Second Look at the Federal Reserve)

You know what's next: global currency. Oh wait, they have been talking about that for quite some time already (China wants one and UN wants one). Maybe they have already picked the name for the currency then. Oh wait again, John Maynard Keynes already picked the name: it's "Bancor".

Technocrats in regional and global organizations like EU, IMF, World Bank are increasingly dictating how we live our lives. If you are not a 'globalist' and if you still insist on national sovereignty (not to mention regional or local sovereignty), you might be accused of being a "racist", a popular word these days to describe any opposition to official policies.

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War Bill H.R. 2346 Is Set To Be Approved, After All

Supplemental Appropriations Act of 2009 (H.R. 2346) is set to be approved, after negotiations between House and Senate and the White House resulted in the "compromise".

U.S. Lawmakers to Vote on $106 Billion War Measure
(6/12/09 Bloomberg):

"U.S. lawmakers are set to approve a $106 billion war-spending bill after President Barack Obama said he would use “every legal and administrative remedy available” to block the release of photos of troops abusing detainees."

There goes Freedom of Information, and that was the position of the administration to begin with.

"Lawmakers crafting the war-spending bill also defeated an attempt to remove from it a “cash for clunkers” provision offering as much as $4,500 to those trading in cars for more fuel-efficient models.

"Senator Dick Durbin of Illinois, the chamber’s No. 2 Democrat, estimated the provision would result in 250,000 cars being traded in. It would cost taxpayers $1 billion."

So they managed to put this back in, just like they wanted from the beginning. And this applies only to new car purchase, and as long as the new car's fuel efficiency is better than your old car that's OK. It would cost only $1 billion, and taxpayers are going to pay for it anyway. A chump change.

By the way, Mr. Durbin apparently made some shrewed investment decision back in September 2008 after he was in discussions with Messrs. Paulson and Bernanke (sorry, Dr. Bernanke) along with his Congressional colleagues, before the market started to crash in earnest in late September-early October. On September 19, the day he sold his mutual fund holdings, Dow had a huge up-day; it ended at 11,388. Then he put his money on Berkshire Hathaway by October 2, which shows there is some justice left in the world. (Didn't Martha Stewart have to go to prison for insider trading?)

"The bill also will approve an Obama request for $108 billion in aid, mostly in the form of a line of credit, to the International Monetary Fund to help it deal with the global recession. Lawmakers appropriated $5 billion to secure the aid."

Uh huh. It also happens to come with over $100 billion loan guarantee to IMF.

If IMF thing is in, World Bank thing should be in, too. To fight poverty in the world. Oh I see. It's a war. War against poverty. Only $4 billion. Big deal, right?

What compromise? It sure looks like the administration got everything they wanted. Here's my post when the bill was still in negotiation. The bill will also authorize Treasury Secretary Geithner to instruct IMF to sell part of IMF's gold. China must be laughing and saying "Oh, thank you so much, Timmy". Tim will also get to beat up on various development banks to adopt green gas accounting.

I don't think the U.S. economy will have much chance of surviving, not to mention thriving, under the government like this. Today's stock market agrees with me. It is selling off all day, just quietly selling off.

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Extras in War Bill H.R.2346

Supplemental Appropriations Act of 2009 (H.R. 2346), otherwise widely referred to as "war funding bill", has already passed the House and the Senate, and currently is in a negotiation phase to reconcile the differences between the House version and the Senate version.

Not just the amount, which was originally $90 billion, has increased to over $100 billion as the bill went through Congress, but it seems to have acquired quite a lot of "extras" attached to the bill that are getting some media attention (such as here, and here).

So, after finally obtaining the bill number from someone's blog, I went to the Library of Congress THOMAS to take a peek at the text of the bill and see what are the extras. (Here's the link for THOMAS, but the system times you out so often you have to keep entering the search query. This link won't time you out but doesn't reflect the provisions that are struck out.)

Department of Commerce
$40 million economic development assistance program

Department of Justice
Salaries and expense money for various departments

Executive Office of the President and Fund Appropriated to the President
$1.5 billion for pandemic preparedness and response including swine flu

Judiciary, SEC
Salaries and expense

Department of Homeland Security
Salaries and expenses for US Customs, Immigration, Coast Guard

FEMA
$30 million for Operation Stonegarden [Doesn't this sound like there's something sinister in the background? Why is a disaster-relief agency engaged in border patrol? Here's more on this FEMA operation.]

Department of Health and Human Services
$82 million for refugee and entrant assistance

Legislative Branch
$72 million for Capitol Police

Department of State
$655 million for worldwide security protection

Bilateral Economic Assistance
$2.8 billion for economic support fund for Afghanistan, Iraq, Somalia, Congo (bulk of it is for Afghanistan)

General Provisions
$285 million for global financial crisis to help developing countries [How could we help when our house is in disorder?]
$3.7 billion for International Development Association [That's part of World Bank to combat poverty in the world.]
$356 million for debt relief under International Development Association

Climate change mitigation and greenhouse gas accounting
Treasury Secretary to make sure that multilateral development banks adopt and implement greenhouse gas accounting

Additional assistance to Georgia
$42 million

Other Matters
Increase IMF quota by 4.9 billion SDR (= $7.6 billion; US$1 is SDR 0.645799)
loan to IMF up to 75 billion SDR (=$116 billion)
Authorize Treasury Secretary to instruct the US executive director of the Fund to sell up to 12,965,649 ounces (367 metric tons or 405 short tons) of the Fund's gold (that would result in $12 billion proceeds)

Detainee Photographic Records Protection Act of 2009
A covered record (a photograph that was taken between September 11, 2001 and January 22, 2009 and duly certified by Secretary of Defense) shall not be subject to disclosure under the Freedom of Information Act.

As the bill is in the negotiation stage, many provisions are being struck out. The above information is likely to change; some of it may be already obsolete, while new provisions may be being added.

The contention seems to be IMF and Detainee Photographic Records Protection Act. Many lawmakers find it hard to approve both.

Neither is related to supplemental appropriation for wars, is it?

Nor greenhouse gas accounting, nor salaries at SEC.

(Business is indeed as usual on Capitol Hill. Don't they know we are broke?)

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China Wants To Buy IMF Bonds If Issued

First it was Japan, then Russia, and now China. They all want to loan money to IMF, International Monetary Fund. Japan already did back in February.

China explores buying $50bn in IMF bonds (6/5/09 Financial Times):

"China is “actively considering” buying up to $50bn of International Monetary Fund bonds, the country’s State Administration of Foreign Exchange has said."

"Friday’s statement by China said any investment would be made according to its usual criteria of “safety and reasonable returns”, but made no mention of Beijing’s wish for more power in IMF decision-making, in return for financial support.

"Safe, which controls almost $2,000bn of China’s foreign exchange reserves, added it was ready to help the IMF explore more ways to raise finance."

Russia ready to invest $10 bln in IMF bonds-Kudrin (5/27/09 Reuters, via Guardian UK):

"Russia is ready to invest up to $10 billion in bonds which may be issued by the International Monetary Fund (IMF), Finance Minister Alexei Kudrin said on Wednesday.

"The IMF has said it is considering issuing bonds on top of the funds it is receiving from some members, as well as through a Special Drawing Rights issue. The bond issue would be a first for the Washington-based global institution."

IMF Signs $100 Billion Borrowing Agreement With Japan (2/13/09 IMF announcement):

"Japan has provided the IMF with an additional $100 billion to bolster the Fund's lendable resources during the current global economic and financial crisis.

"Managing Director Dominique Strauss-Kahn and Shoichi Nakagawa, Minister of Finance of Japan, signed the terms of Japan's $100 billion commitment on February 13 under a borrowing agreement designed to temporarily supplement the Fund's financial resources.

"The initial period of the commitment by Japan is for one year, and may be extended by the IMF for up to a total of five years if warranted by the Fund's liquidity situation and its actual and prospective borrowing needs. Each drawing will carry interest at the interest rate on the IMF's Special Drawing Rights, which is currently 0.62 percent."

Japan's loan is almost as large as one-third of total IMF quotas, which stood at US$325 billion as of March 31, 2009. (Data: IMF)

All these three countries are said to want to have more say in IMF, as well as more influence in international economic and financial matters which have been dominated by the US.

The following is the quotas of China, Russia, and select countries measured in IMF's SDR. The country's quota roughly translates to voting power (influence). For China and Russia to exert more power at IMF, they indeed need something extra. As of June 5, 2009, US$1 is SDR 0.645799. (Data: IMF)

• China: 8,090 million SDR (3.72% of total quotas)
• Russia: 5,945 million SDR (2.74%)
• Japan: 13,312 million SDR (6.13%)
• Saudi Arabia: 6,985 million SDR (3.21%)
• France: 10738 millin SDR (4.94%)
• UK: 10,738 million SDR (4.94%)
• Germany: 13,008 million SDR (5.99%)
• US: 37,149 million SDR (17.09%)

I personally think the move by China and Russia, even of Japan, is their effort to ditch at least some of the US dollar denominated foreign reserves they are stuck with: US Treasuries and agency bonds. All three countries have LOW gold reserves (see this wiki page on official gold reserve), their currencies just as "fiat" as the US dollar. Euro has some gold backings, toward which Russia seems to be shifting more. On the other hand, IMF HAS GOLD. 3,217 metric tons of it.

When IMF actually issue its notes or bonds, what will be the collateral? Its gold (if it is indeed IMF who owns it, not the members)? US Treasury Department issues Treasury securities with the government's words that they will be repaid; in other words, they are mortgaging the future tax revenues from the productive citizens and businesses of the US. IMF does not have such productive citizens. So..?

I suppose IMF can issue debt based on the potential future cash flow from the countries who will borrow from IMF. (Wait, isn't that concept what got us into trouble - Mortgage-Backed Securities?? Hmmm.. I don't see this ending well.)

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10-Year Anniversary of Gordon Brown's Gold Sale

Gordon Brown, before he became prime minister, was the Chancellor of Exchequer. One fine day in May 1999, he decided that Great Britain needed to rid herself of some gold.

Between July 1999 and March 2002 the British Government sold 395 tonnes of gold, almost 60% of the UK's gold reserves, at a near-bottom price: average price of $280 (£186) per ounce. Mr. Brown then put the proceeds into Euro, US dollar, and Japanese yen.

The Gordon Brown Gold Rally Indicator flashes buy signal
(4/20/09, Michael J. Kosares, usagold.com):

The article has a nice chart showing how Gordon Brown insisting that IMF should sell gold can be used as an indicator for a fresh bull-run on gold. The article is very much worth reading, too.

It has a link to IMF's Q&A site about gold sale. There you can find that the IMF gold is priced at $88 per ounce on their balance sheet as of February 2008, that 2,814 metric tons of gold out of total 3,217 tons can be restituted (returned) to the member countries at about $56 per ounce.

I'm trying to find WHY (these days that's my theme) Gordon Brown decided to sell that much gold. So far, I can't find any (that's another theme). Here's Times London's article from 2 years ago. They think it might have been to prop up Euro.

Goldfinger Brown’s £2 billion blunder in the bullion market
(4/15/07, Times Online)

"GATHERED around a table in one of the Bank of England’s grand meeting rooms, the select group of Britain’s top gold traders could not believe what they were being told.

"Gordon Brown had decided to sell off more than half of the country’s centuries-old gold reserves and the chancellor was intending to announce his plan later that day."

Just like that.

And he did it by auction. According to one gold trader quoted in the article,

“The joke in the market was that Gordon had guaranteed he would get the worst price,” said the former gold dealer Dominic Hall. “The world and his grandmother shorted the market...."

10 years later, gold is approaching $1,000 for the 4th time in 2 years. It is trading at $982 per ounce today.

(And who bought that Gordon Brown's gold, cheap, at those auctions?)

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