Russia Hosts First BRIC Summit, India-Pakistan Meet

The world's biggest emerging market powers will seek to craft a united front on repairing the global financial system when they meet for the first formal BRIC summit on Tuesday.

Before the leaders of Brazil, Russia, India and China meet, a summit of the Shanghai Cooperation Organization (SCO) of Central Asian powers will also underline the growing international stature of China and Russia.

The four BRIC nations -- which account for 15 percent of the $60.7 trillion global economy -- will focus on ways to reshape the financial system after the economic crisis.

But immediate agreement on practical steps among the members of this loose and untested bloc appears most unlikely.

"These four countries are all quite influential in international economic development, and I think if in the meeting they raise some proposals and initiatives, that would be fair and reasonable,"  said Wu Hailong, a senior Chinese Foreign Ministry official.

"Especially, some countries have proposed establishing a super-sovereign currency, and I think their impetus is ensuring the security of each country's foreign currency reserves."

Chinese and Russian officials have in recent days played down talk of a discussion on a new supranational reserve currency to reduce dependency on the U.S. dollar.

The BRIC term was coined by Goldman Sachs economist Jim O'Neill in 2001 to describe the growing power of emerging market economies. Tuesday's summit in the Russian Urals city of Yekaterinburg marks a step towards cohesion as a group.
     
India, Pakistan

A one-on-one meeting between Indian Prime Minister Manmohan Singh and Pakistani President Asif Ali Zardari is planned on the sidelines of the SCO summit and could help break the ice between the two nuclear-armed powers.

The SCO summit is likely to produce general pledges to work together more closely for regional development and security.

Iran, while only an observer member of the SCO, has again stolen much of the attention at the SCO summit.

Doubt hangs over whether President Mahmoud Ahmadinejad will attend the SCO summit this year, defying street demonstrations that have decried his re-election last week as rigged.

He did not arrive on Monday, when the SCO opened its two-day summit, but he may arrive on Tuesday.

As part of proposals to rebuild the financial system, Russian President Dmitry Medvedev has made proposals on giving a greater role to the International Monetary Fund's Special Drawing Rights that echo ideas from Chinese central bank chief Zhou Xiaochuan.

Australia's Central Bank Sees No Pressing Need for Rate Cut

Australia's central bank saw no "pressing need" to cut interest rates at its  recent monthly policy meeting given signs of stabilization at home and abroad, though it judged there was  scope to ease further if necessary.

Minutes of its June policy meeting showed the Reserve Bank of Australia (RBA) looked for a gradual  economic expansion to get underway later in the year, supported by the lagged effect of past monetary and  fiscal easing.

"Board members did not see a pressing case for any further action at this meeting, though they viewed the  inflation outlook as affording scope for some further easing of monetary policy, if that were to be needed to  support demand at a later stage," the minutes showed.

The board thus chose to keep the official cash rate unchanged at 3.0 percent for a second month. The rate  had previously been slashed by 425 basis points over eight months. Financial markets are currently pricing in only a slight chance of any further easing, and for the first hike in rates to come within 12 months.

The minutes noted that this easing, coupled with aggressive fiscal action by the Labor government, "represented the largest macroeconomic policy stimulus over recent decades."

The full effect of this stimulus was yet to be felt, so the board judged that maintaining current rates  would be consistent with fostering economic growth and low inflation while leaving plenty of flexibility to  respond to events.

The board saw signs of stabilization in the global economy, though they felt the most likely outcome would  be for only subdued growth for the next year or two.

Board members took particular note of a strong recovery in Chinese industrial production and an  improvement in other east Asian economies, including Japan.

China has become increasingly important as a major buyer of Australian resource exports and its economic  health is considered vital to the domestic outlook.

"While some uncertainty about the durability of China's economic recovery inevitably remained, there were  reasonable grounds to expect that the Chinese economy would continue to record solid growth outcomes," the RBA  concluded.

At home, the latest economic data suggested the downturn in Australia would prove less severe than in most  other developed countries, while expanding spare capacity should lead to declining inflation.

"Recent information had not led to any downward revision to the outlook; if anything, some indicators had  been on the stronger side," the minutes showed.

转发：Unusually Precious Silver

 

Unusually Precious Silver Dear Whiskey Shooter, If you've been paying attention at the bar this week, you'll know that I'm in one of those confessional moods. So I think it's very fitting that my publisher Joe Schriefer just happened to send this bit of news across my desk this week… "It's a chance for your readers to get their hands on some incredible silver coins," Joe told me, "and I know how much you've been wanting to offer them a chance to get some silver." And he was right. As much as I love gold, I love silver even more. I'd talk about it and why you should own it all day if I got the chance. But you haven't got all day so I'll keep it short… Silver is many things. It's honest money…it's much easier for the non-millionaires among us to acquire and hoard…it's an industrial necessity…but it's also a joy to own. There's just some silver you shouldn't part with so easily…silver that should be passed down through generations… It's my pleasure to offer you this rare opportunity to get that kind of silver. And even though this isn't an investment, this coin has already doubled its initial offering price. To find out why and to learn more about this perfect bit of silver. Sincerely, Gary Gibson Managing Editor, Whiskey & Gunpowder

The Silver Lining Behind the Depressionary Cloud

 

Gary's Note: Bill Jenkins looks at the state of the dollar compared to other currencies…and the oldest currency of all. Enjoy. And send your questions and comments to gary@whiskeyandgunpowder.com. Whiskey & Gunpowder By Bill Jenkins May 22, 2009 Pylesville, Maryland, U.S.A. The Silver Lining Behind the Depressionary Cloud On the grand scale, the U.S. dollar is still the major gladiator in the currency and economic arena. It is like a punch-drunk prizefighter, staggering, but still on its feet…wobbling, but able to inflict substantial damage on its economic opponents, those who would carelessly trade against it. "The U.S. accumulated $9 trillion dollars of debt in 240 years, and in a mere year and a half, adds another $8 trillion? And for what? The credit markets are still frozen solid," writes analyst Christopher Laird from Financial Sense. "Over $1,000 trillion of leveraged markets are unwinding, and if you add up all the central bank efforts...it adds up to $15-20 trillion." Couldn't have said it better myself. ~~~~~~~~~~~~~~Special~~~~~~~~~~~~~~ All Those People Laughed at You When You Bought Gold... Wouldn't you love to throw it back in their face? Drive past their house in your Lamborghini on the way to your private jet? So you can fly to your private island? Now's your chance. One simple move that can turn $10,000 into $1,509,000. But I warn you... Only one in 100 people can probably handle this. Are you one of them? Only you can decide... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ In short, both in the United States and abroad, the so-called "Herculean efforts" to stem the tide of the crises amount to little more than spitting in the ocean. Credit card defaults are up 44%. With millions out of work already, and millions more to be added to their dreary clique, defaults on credit cards aren't going to be the only thing rising. Reports emerged last week that currently 25% of all homeowners are "upside down" in their mortgages — that is, they owe more than their house is currently worth. That is a huge number. Many will try to stick it out for as long as they can. After all, they have to live somewhere, might as well stay put as long as they can afford it. The question becomes, how long will that be? While job losses may have slowed in the last 30 days, they are still skyrocketing. And there is no guarantee that they won't begin to re-accelerate. But Americans are used to paying more for things than what they are worth. Frankly, the commonplace use of credit cards has "taught" us that you can pay 30% more for anything you want, and it's still OK. Of course, that 30% premium figure only applies if you pay off your balance in 12 months. If you carry your debt with the convenience of "minimum payments," you'll pay dearly for that expense. Consumer debt has climbed to $2.6 trillion — up 24% from 2004. A good part of that is new spending. But the ever-increasing portion is the service on the debt. That's the "secret" to banks getting rich, the miracle of compound interest. Of course, it is only a benefit as long as the debt does not compound faster than the ability to pay it. After that point, the borrower has the lender by the nose, and he begins to be a double liability. The first is that he owes the money; the second is the increased likelihood he will not pay. Because truthfully, when the borrower must decide whether to buy food or to pay his MasterCard, food will always win. So will shelter. But even though Americans have grown steadily more and more comfortable with the idea of paying too much for things, that is ready to change. I reported to you a few weeks ago that people were paying down credit card debt and increasing their savings. Don't expect it to last, though. I doubt that both can exist simultaneously for very long. Debt will cease to be serviced as savings grow. There is also another corollary to that statement. Spending will cease (or at least dramatically slow) as savings increases. Americans do not have enough to do both. As the citizenry, so is the government. The United States is bankrupt. Is there any feasible way to deny this? We have seen dollar strength in the last year as financials around the world have unwound their positions and brought their money back to the U.S. "safe haven." But watching people flock into Treasuries is like watching people board the Titanic. It was said that "God himself could not sink this ship." But I remind you, "Do not be deceived, God is not mocked." What we are doing nationally is wrong. Inflation is theft. God judges theft. Period. ~~~~~~~~~~~~~~Special~~~~~~~~~~~~~~ The "Forever Oil Crash" Has Already Begun The era of "cheap oil" is long gone...but there are two investments that could give you a powerful shield against the fallout ahead — and have the potential to soar, despite the current market turmoil. Keep reading... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ And that's not all. One of our nation's founding principles was "No taxation without representation." But we are taxing our children and grandchildren while they have no say in the matter. They have been disenfranchised before they even had a chance to vote! Imprudent. Insidious. Immoral. The Fed finally released the results of the "stress tests" on U.S. banks last week...what a crock! Of 19 banks, only 10 of them need additional capital. Well, isn't that nice? And they only need to "raise" $75 billion. But how? Additional stock offerings? Bank of America would only need to find buyers for 2.6 billion shares at the current price. Citi would only need just under two billion shares sold. And GMAC? Only a paltry 958,000,000. (Maybe they should think about selling bonds...) Here's the skinny: These three banks, and seven others, will be "required" to raise this capital. But "required" is a funny way to phrase it. It implies consequences. But what is the penalty for failing to raise the capital? And just as importantly, where is it going to come from? Well, the government won't let the banks fail. So it will threaten a takeover if the banks don't raise the capital independently. Once they cannot raise it independently, they will sidle up to the public teat for more taxpayer milk, and the government will effectively own them anyway. There's no such thing as a free lunch. And when the government gives out free money, you can bet there are enough strings attached to tie down a herd of wild elephants. We also saw the jobs report last week, which we commented on briefly earlier. And, yes, the numbers showed improvement. A forecast of 600,000 was eclipsed by a loss of only 539,000. Still above a half million. For those keeping score, that should put us above the three million mark for 2009. Do you still think consumer spending will continue to increase? All of this debt, both public and private, puts unrelenting pressure on a currency. Add that to external pressures we have recently discussed, like the China/Argentina $10 billion currency swap. This is the sixth nation with which China has initiated such an action. Its impact? Just this: For all the trades taking place between these two nations, no money has to be converted into dollars. Lack of dollar buying means the dollar grows weaker yet. Because, honestly, much of the dollar strength we've seen in the last year has been the unwinding of positions that eventually required "parking" wealth into U.S. dollars. But without that support, combined with the Treasury's commitment to unlimited printing of money and the administration's commitment to unlimited spending of money, the dollar is going to be in real trouble. Even now we are starting to see other currencies flex their muscles a bit. The Commodity Dollars — currencies in countries where natural resources dominate the GDP — were going to be the strength of the currency bulls going forward. One such commodity that requires a good look is silver. Often called the poor man's gold, silver is a precious metal that is only fractionally the value of gold, $10-15/ounce, versus $900/ounce. But that view may one day change. Did you know that 90% of all the silver that has ever been mined no longer exists? That's because it is a lot more versatile than gold in many industrial applications. The downside is that it gets mined, used and lost. So, that naturally limits supply…and sets it up for just as much of a percentage increase in value as gold. ~~~~~~~~~~~~~~Special~~~~~~~~~~~~~~ New: Pros and Beginners Love My "Bread-and-Butter Easy" Options Plays On Sept. 16, the Dow rose 1.4%. My readers booked a 150% gain that same day. On Oct. 6, the Dow fell 3.6%. And my readers booked a 168.75% gain. Up markets — down markets — it doesn't matter. I tell you what to do. I tell you when to do it. Huge, fast gains with options have never been this easy…read more. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ In the event of currency default, which is not out of the picture, although I know it sounds drastic, silver coins are much more easily used as currency than gold, simply because of the relative value. Think of it like this: If a society abandons its currency for hard money, which would be easier to spend on a week's worth of groceries...a $50 silver eagle or a $4,000 gold Krugerrand? Of course, you could clip the coins as necessary, but if you have a $25 bill, good luck clipping its value out of the Krugerrand! Besides that, silver is currently cheaper and easy to acquire. But we're talking about a day that has not arrived yet and may not for some time. I just want you to know that when it comes, you'll have many ways to play it. Like, for instance, with metals producers like Canada and Australia. Regards, Bill Jenkins Bill said the magic word: silver. Gold is the perfect way to store the wealth of kings and nations, but silver is what circulates through a hard money economy. Silver's been currency even longer than gold has been money. And there's a reason prudent families have passed their wealth down through the generations in the form of silver objects (I've been told that silver has unique anti-bacterial properties which is why it makes the best tableware, but I haven't run any tests myself). In response to Adrian Ash's article yesterday, a Shooter sends this… Perhaps part of this economic fraud crisis serves the interests of those pitching and peddling gold, and one has to just know the elite certainly haven't overlooked this lucrative market to bleed even more the poor boobs in Hicksville, USA, who rush out to buy it by the pound. And when gold gets up to $3k an ounce, will the proverbial "they" in power pull the plug, one way or the other, including, but NOT limited to making it a criminal offense to own it...the same way FDR did??!! Oh hell yes; stake your life on it. Does anyone think "they" will permit the great unwashed to prosper?! Offer me a pound of gold for a 50 pound bag of potatoes when everyone is starving and see who'll give up the potatoes...damn few I'll wager. You all buy your gold for the Great Bad Times; my supply of precious metal will be X grains of lead encased in a thin cover of copper; with that precious metal anything I would need will be attainable when the country/world is in complete collapse. Good point. The commies have a history of outlawing gold ownership. And when things get really bad, superior force and firepower have a way of supplanting voluntary exchange. I still think getting some silver is a good idea… Metal producers in Canada and Australia aren't a bad idea either…in fact they're a downright fantastic idea. Our own resource expert Alan Knuckman has found a way to hack into the millionaire's market of the resource-trading world. As you read this he's making plays in silver and miners in Canada and Australia…plus oil, wheat and more. What are you waiting for? Read more here. The inestimable Bill Bonner stopped by our Baltimore HQ yesterday on his way to luncheon with Dr. Ron Paul in the District. Your Whiskey editor wasn't invited — and he's okay with that…really — but I did manage to say a quick hello to Bill before he left. I did not, however, get a chance to comment on what he wrote in a recent issue of The Daily Reckoning… Foreign holders are already nervous. They've seen the mess the US has gotten itself into. They read the headlines. They watch the news. They know that the US is running a budget deficit this year equal to four times the biggest budget deficit ever — a record set just last year. It is as if a runner broke the record in the 100-yard dash...and then ran the course four times faster a year later. This is not progress. This is spooky. The Chinese already let the US know they were worried. "We trust you to protect the value of our assets," they said to the American Treasury secretary. And as long as they trust the US to keep its promises and protect its money, they'll continue to hold US dollar investments — notably, US Treasury bonds. But just wait until the US loses their trust. In a matter of minutes, China could dump enough US dollars to set off alarms all over the world. All of a sudden dollar holders would rush for the exits — each one trying to get out before the others. In minutes, the dollar market could collapse...taking down US Treasury bonds with it. Ooo…exciting. Or at least it would be if you're properly positioned…not so much if you're heavily invested in US Treasury bonds. For more details on this, make sure to tune in to our upcoming Retirement Recovery Series webinar. We aim to make 71% in three weeks when the Treasury bubble inevitably pops. It's free to opt in, do so here and watch it May 29 at 3:00 p.m. See you then. And with that let me say Happy Memorial Day, Shooters. Anti-state libertarian or no, we honor those who've lain down their lives to defend their country. Enjoy your weekend. Regards, Gary Gibson Managing Editor, Whiskey & Gunpowder

Stocks fizzle ahead of holiday

NEW YORK (CNNMoney.com) -- Stocks slumped at the close of Friday's session, ending the week little changed, as investors went into a holiday weekend with lingering concerns about the economy.
The Dow Jones industrial average (INDU) lost 15 points, or 0.18%, to close at 8277.3. It was the Dow's fourth straight loss, but it still managed to end the week with a slight gain.
The S&P 500 (SPX) index slipped 0.15% to 887 but was up 0.5% for the week. The Nasdaq composite (COMP) slid about 0.2%.
Stocks seesawed in early trading before heading higher in the afternoon as concerns about the U.S. credit rating abated. But the market soldoff near the closing bell.
Analysts said the market lacked conviction Friday because many investors were absent ahead of the Memorial Day holiday. U.S. markets will be closed Monday for the observance.
Meanwhile, the dollar fell to its lowest level in five months against a basket of currencies. Bonds slumped, with the yield on the 10-year note climbing to a 6-month high.
Energy stocks showed early strength as oil prices remained solidly above $60 a barrel.
Shares of financial services companies were under pressure after BankUnited FSB went under Thursday, becoming the largest bank failure of the year.
Looking ahead, the sense of economic optimism that lifted the market some 30% over the past few months will be put to the test next week by a number of key indicators.
"The market has been the beneficiary of less bad news in terms of macro economic data and better-than-expected corporate earnings," said Quincy Krosby, chief investment strategist at the Hartford. "In the next phase, investors will have to see a continuation of less bad news evolving into positive data."
A key home price index, durable goods orders and a revision of first-quarter gross domestic product are all on tap for next week.
Additionally, the fate of troubled automaker General Motors will be in focus. GM bondholders face a Tuesday deadline to make concessions under the troubled automaker's restructuring plans. The company could face bankruptcy if it fails to make the turnaround required by the government by the end of the month.