BRICS risk ‘sudden stop’ as dollar rally builds

The stock of capital flowing into emerging markets has doubled from $4 trillion to $8 trillion since the Lehman Crisis, chasing a catch-up growth story that looks tired and has largely sputtered out in Brazil, Russia and South Africa.

Much of the money has gone into debt, with falling economic returns. This is the next shoe to drop in the festering saga of global imbalances. All it will take is a gear-shift by the US Federal Reserve and the inevitable dollar surge that follows. It was the Volcker Fed that set off Latin America’s defaults in the early 1980s. It was the mighty dollar that set off Mexico’s Tequila crisis, and then the East Asian chain-reaction in the 1990s.

The troika pulls its separate ways

Firstly, there’s the curious name of “troika”, tagged to the trio of the International Monetary Fund (IMF), the European Commission, and the European Central Bank (ECB). It’s a Russian word that, according to eurosceptic essayist Emmanuel Todd, can stand for the European malaise all by itself.

After a rough start, the members of the “troika”, brought together at the start of 2010 to orchestrate the Greece bailout, still find it hard to pull in the same direction. Far from subsiding, tensions are rising to a peak, as are the criticisms pouring in from both leaders and citizens of European and emerging countries.

‘Naive’ to Think Gold Isn’t Manipulated Too, Fund Manager John Butler Says

Gold and silver didn’t even begin to seriously sell off until about fifteen minutes afterthe big dollar index rally was done, so to pin yesterday’s precious metal price action on the currencies is laughable.

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One of the other reasons that the sell-offs in the metal are hitting the shares so hard, is that mutual funds are feeling the effects of massive redemptions…and they have to sell whether they want to or not.  The markets are very illiquid…and this just makes matters worse.

But the one big question you should be asking yourself is this…”Who is buying all these shares that the precious metals investors are selling in such a panic?“  Think about it.  Somebody is…and whoever they are [and I have my suspicions] they have infinitely deep pockets…and are the very definition of “strong hands”.

Financial Markets Are at Risk of a ‘Big Data’ Crash

Regulators and investors are struggling to meet the challenges posed by high-frequency trading. This ultra-fast, computerized segment of finance now accounts for most trades. HFT also contributed to the “flash crash,” the sudden, vertiginous fall in the Dow Jones Industrial Average in May 2010, according to U.S. regulators. However, the HFT of today is very different to that of three years ago. This is because of “big data.”

Fed Reserve suggests quant easing for EU zone

FRANKFURT (Reuters) – A top U.S. Federal Reserve official urged the European Central Bank on Tuesday to consider employing a U.S.-style quantitative easing programme to counter slowing inflation and recession in the euro zone.

The ECB has engaged in bond purchases in the past but has always withdrawn an equivalent amount of money from markets to ensure its interventions are neutral for the money supply, fearful of stoking inflationary pressures.

Germany to Store Europe’s Energy

Power transition will result in domineering monopoly.

Whether it’s storing money, gold, armaments or sustainable energy, 2013 has seen Europe’s largest country rapidly gobble up key assets, positioning it as continental chief operating officer.

Recently Germany’s government approved €150 million of new investment capital to maintain its Energy Transition policy, or Energiewende. The program is managed by the Ministries of Economics, Environment, Education and Research.

This phase of stimulus is dubbed “sustainable power grids” and comes as part of the government’s sixth stage of energy research. Once created, these power grids will act as smart distribution centers managing supply and demand. The research has established an “Internet of Energy,” which forecasts a 10 percent reduction in domestic utility costs and a 20 percent reduction for commercial businesses.

Trade Policy and Economic Decline

In a book titled SELLING US OUT, J.R. Martin writes of Chinese companies “exploiting loopholes in the U.S.-China tax treaty signed by the Reagan administration in 1986.” He asks what the Founding Fathers would say about our current trade deficit, and our indebtedness to communist-ruled China. Martin asks, “What would Washington and Adams think about the corrupt and destructive power of the two major political parties in America? How would they judge today’s capitalism?”

Asia’s Currency War

Global finance chiefs may have denounced it, but that has not stopped Japan joining other central banks in driving its exchange rate lower. With Australia and South Korea forced to respond, will the Asia-Pacific region be the main battleground in a global currency war?

BARRON’S: There Were Two Gigantic, Suspicious Sales Of Gold On Friday That Caused The Price To Plunge

A lot of gold bugs think the price is being manipulated somehow, or that there’s some divergence between what’s going on in “paper” gold (gold prices that are tied to ETFs) and what’s going on in physical gold (people buying ingots or jewelery).

Randall W. Forsyth at Barron’s fans the flames of goldbug conspiracy theorists a bit this weekend, arguing that there have been suspicious sales in gold seen on the exchanges (probably driven by the ETFs).

He writes:

These improbable moves have made gold bugs suspicious, which isn’t unusual. Folks who own gold do so because they don’t trust the status quo, especially when it comes to government-issued paper money. But just because you’re paranoid doesn’t mean somebody isn’t out to get you. They point to bursts of selling on Friday, April 12, which resulted in prices plunging by more than 5%, and to dumping that resumed the following Monday in Asia, early in the day when markets are illiquid. That culminated in a 9% collapse by the time the New York market had settled. But a seller who wanted to unload a large position at the optimal price would have done precisely the opposite—liquidate as discreetly as possible. Instead, sellers dumped the equivalent of more than 300 tons of the metal in staccato-like blasts during those sessions.

A worldwide undersea gold rush is coming

An undersea gold rush could be coming soon with the rising cost of minerals and advancements in technology opening the seafloor to mining – environmental concerns not withstanding.

The United Nations International Seabed Authority (ISA) last week published a study on what frameworks would be necessary to ensure that mining is done responsibly. Commercial mining operations could begin as soon as 2016, but ISA acknowledged that there will be “inevitable environmental damage” and identified a “Catch-22″ where firms have not demonstrated appropriate competency and skills but must first start mining to gain them.

François Hollande calls for ‘European political union’ within two years

A beleagured President François Hollande went on the offensive today calling for an “economic government” for the Eurozone and “political union” in Europe within two years.

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In a two hour press conference at the Elysee Palace, Mr Hollande announced a string of new initiatives including a four point plan for rapid progress towards a more federal Europe.

France and Germany: A tale of two countries drifting apart

A political, economic and demographic divide has opened up between France and Germany. And, if that were not trouble enough, a new Pew Research Center survey suggests that these two countries, which have for decades been the driving force behind European integration, increasingly see the world through different lenses.

The Franco-German alliance was based on rough equality between these two continental powers. In the 1980s, West Germany’s economy and population were slightly larger than France’s, but not overwhelmingly so, and French economic growth actually exceeded its neighbour’s.