Secret Iran Gold holdings leaked: Iran holds same amount of Gold as United Kingdom and is buying more.

Target 73.31

from zero hedge…

<<Does anyone seriously think the global recovery is still intact? Based on what? Does anyone think that stagnant/declining wages, falling real estate values, skyrocketing prices for materials and energy, and belt-tightening by bankrupt States are ideal foundations for higher profits? Anyone who doesn’t realize the quake in Japan is a tragic load dumped on a fragile addict’s quivering back (i.e. the global recovery) will undoubtedly be surprised by how fast the global economy will start unraveling. Anyone who kept their eyes open is only wondering how a debt and propaganda-fueled recovery lasted this long.>>

I repost this article,  which was posted in zerohedge.

From Alasdair Macleod of FinanceAndEconomics.Org

We have already passed the point of no return on our journey into hyper-inflation for many paper currencies, and investors seeking to protect themselves from currency debasement should understand why. This opening statement is valid even if we ignore today’s abounding systemic risks.

There is a simple reason why monetary inflation becomes an exponential phenomenon. As currency is debased, an increasing quantity of money is required to achieve the same real-money effect.  For example, if the quantity of money is increased 25%, the initial benefit to the issuer is a tax of that amount on the holders of previously-existing money stock.  To achieve the same tax in real terms for a second time requires a further expansion of 31.25% of the original monetary units, and continuing with subsequent 25% expansions on increasing totals we obtain our exponential series of monetary inflation.

In practice, the realisation of the loss of purchasing power a currency suffers depends on how quickly it is transmitted into the general price level, and this can vary considerably; but eventually it is reflected in prices. So we need to consider the likelihood of an improvement in government finances sufficient to eliminate reliance on funding through the printing of money, which is the root of this evil. It is here that governments have great difficulties, which lie generally in the nature of government bureaucracy.

In government departments, there is always a complex and expensive structure designed to ensure compliance with the wishes of the executive, and to ensure that public money is properly used. This is why boxes are ticked; why it is so important to employ gender and race equality officers to ensure a department complies with government policy. The process, therefore, overrides the result, and nothing can change this. So when a government restricts public spending, there is no cut in bureaucracy; on the contrary, often more bureaucracy is required to administer the cuts and monitor the results.

The consequence is that restraint in public sector spending always feeds through disproportionately to cuts in services, leading to public outcry. And this is precisely the problem faced in Britain today. The Coalition government has adopted a hard line on public spending, following the profligacy of the previous socialist administration. This corrective approach is creating uproar, not only from users of government services and civil servants, but also from the intelligentsia who fail to properly understand the true cost of public services. So Keynesian economists are providing the public with an intellectual argument against the cuts by claiming they are recessionary, and opposition to them is growing.

What has become lost in the political debate is that at no time is the Coalition government actually cutting public spending: it is set to rise in every year of this Parliament.[i] The pain expressed so loudly in all sections of the community is solely the result of a reduction of the increase in previously planned expenditure. It is evidence that bureaucracy triumphs over services provided, and it is an illustration of the extreme difficulties politicians face in merely reducing the rate of increase of public expenditure.

These difficulties have their roots in the current situation, but a glimpse at the future also confirms government spending has to rise exponentially, with welfare and other future liabilities compounding at an alarming rate.  We know that there are more pensions to provide and people are living longer, requiring increasingly expensive care services; and that all this is expected to be funded from the public purse. Less appreciated are the long-term destructive effects of inflation on private sector savings and nominal cost of providing state welfare. In other words, inflation itself has directly increased the burden on the state, and indirectly has ensured there is little private capital to fund any shortfall.  Consequently, future public spending is firmly tied to an exponentially accelerating path.

In most Western democracies it is already too difficult for politicians to face up to this reality.  Instead, they pursue policies conceived through hope rather than any realistic assessment of the prospects, dreaming of an economic recovery that will bring public sector borrowing back under control. This allows governments and their independent statisticians to concoct tables showing economic growth, an improvement in tax revenues, and a reduction in welfare costs as employment improves. There is no actual evidence to support this optimism.

A detailed critique showing why economic recovery is a forlorn hope is beyond the scope of this article; but if the private sector is expected to regenerate itself without savings, no sustainable recovery can possibly occur.  It will also require an historical precedent: an economy increasingly under government command to actually succeed. Furthermore, governments continue to believe that all that is required is the stimulation of further bank credit, when it was excessive levels of bank credit that created the economic crisis in the first place: this is the quackery of prescribing port to cure gout. And there is very little evidence that meaningful economic recovery is developing.

The supposed economic recovery of 2010 was merely statistical, with governments using monetary inflation to puff up the numbers,[ii] and not the start of an improving economic trend. Furthermore, targeting tax increases at high earners discourages the most successful elements in society from further productive effort, and encourages them to redirect their efforts at tax avoidance instead. The consequence of these simple policy errors is to make economic recovery even more remote and reduce actual tax collected, and so spread-sheet forecasts of lower government deficits are even less likely to be achieved.

For all these reasons, we can see that socialistic government policies rely on accelerating monetary inflation. As inflation accelerates, it becomes increasingly difficult to escape the compounding effect of this exponential arithmetic.

The only way the exponential loss of purchasing power that results from monetary inflation ends is through the complete collapse of fiat currencies.  Whether this is brought on by a financial crisis or through hyperinflation is irrelevant: the result is the same.  Furthermore, quantitative easing programmes have merely accelerated the trend. Particularly worrying is the dramatic expansion of the monetary base in the US, which has greatly exceeded our theoretical example of 25% by increasing 168% over the last two years.  While this is routinely explained as a policy response to the banking crisis, it has the likely effect of accelerating future government demand for printed money even more, speeding up its inevitable demise.

For those of us who will be victims of the collapse of paper money, there is little point in hoping that more port will somehow cure our gout: it will not. Nor can we turn to our leaders for salvation: they know not what they do. And to this rough law of the exponential trend of monetary growth we must add the abounding systemic risks present today, which we have ignored in order to simplify this analysis.

from Scott Minerd of Guggenheim via ZeroHedge

‘Imagine You’re Irish’

To help explain why I believe a broader financial crisis is coming to Europe, let me start with a quick story. Imagine for a moment that you’re an Irish citizen. Needless to say, you have many concerns about your country’s economic situation. The unemployment rate is 13.7 percent and climbing, your economy continues to contract, your nation’s debt-to-GDP ratio is 97 percent and rising (up from 44 percent just two years ago), your national deficit has ballooned to a whopping 30 percent of GDP, your government is caught in a debt trap, and its borrowing costs have increased 75 percent year-to-date. If expressed in current market rates, the interest payments on your government’s debt obligations could easily account for 7 percent of GDP, or roughly one third of annual tax revenues. To put this into perspective, the situation facing the Irish government is akin to waking up everyday only to realize that one-third of your salary is gone before you even think about paying for the necessities of life.

Fiscally, everything is heading in the wrong direction in Ireland. However bad it may be, the country’s solvency is a secondary concern. If you’re an Irish citizen, the more pressing issue is what you’re going to do about your banking deposits. Your domestic Irish bank posted a 2.4 billion euro net operating loss in 2009 and is projected to nearly double its losses in 2010. The entire domestic Irish banking system has essentially failed, but the government wants you to believe that everything is fine. After all, the International Monetary Fund, the European Central Bank, and the European Union member countries have cobbled together an 85 billion-euro rescue package of which approximately 35 billion euros is set aside for the banking system.

In addition to the bailout, the Irish government has assured you that it will guarantee your deposits, therefore, there’s no need to worry.

Then you get a hold of the Central Bank of Ireland’s most recent Credit, Money, and Banking report (publicly available on the internet). You see that total deposits for Ireland’s dwindling base of domestic credit institutions were roughly 496 billion euros as of October 2010. Some quick math tells you that this is more than three times Ireland’s GDP, and 14 times the scope of the current banking system bailout package. You start to wonder, “If I try to get my money from the bank at the same time everyone else does, where is the government going to get the euros to pay everyone?” You can’t think of an answer. Then you start to feel silly. “Why am I even bothering with all this worry?” you ask yourself. “I’ll just go down to the bank and take my money out now before things get worse. I can give it to a multi-national bank and sleep better at night.”

It seems trite, but this little scenario is essentially what’s happening today. The Irish banking system is literally experiencing a run on its banks. According to the most recent banking update from the Central Bank of Ireland, total deposits in Irish banks declined more than 5 percent (28 billion euros) between August and October alone.

watch?v=jllJ-HeErjU&feature=player_embedded

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8166198/Germany-faces-its-awful-choice-as-Spain-wobbles.html

Most EU sovereign debt is held by banks within the eurozone. The weaker states, (Greece, Ireland, Portugal, Spain and Italy) are increasingly unable to service their loans, which they have been doing by borrowing more in the open market when the loans roll over. Some have already ceased to be able to function, i.e. Greece, while Ireland is close. This is causing the banks holding these loans to have to consider the possibility of default. Weakness in the banking system would damage the economies of the eurozone countries, harming tax receipts and impacting the ability of the states to service their debt. Thus the prevention of damage to the banking system is the reason why the EU does not want to permit member states to default. So… they are funding a bail out fund to lend to the weakest countries that can’t borrow on the open market. This merely replaces the damage done by default with damage inflicted by other means.  The burden of this bailout fund is being borne by the healthier states, through increased borrowing and increased taxation. The increased borrowing increases the interest burden, and pushes indebtedness towards levels where the credit worthiness of the healthier borrowers becomes questionable. The increased taxation bears down on economic activity, all of which acts as a brake on economic activity. Damaged economies produce lower tax receipts so the health of the healthier nations deteriorates. The possibility of escape can only come from economic activity accelerating, and yet the policies being implemented are diminuishing the possibility of this occurring.

Thus taking on more debt and forcing the bail outs on the weak, such as has happened with Ireland, will not work. It is merely delaying the inevitable, and demonstrates the politicians’ fundamental failure to comprehend the situation. Added to this is the suspicion in which the politicians are held, since their routine deceit and contempt for their constituents, the sovereign peoples of europe whose interests they are meant to represent, will now fuel the fury they will face when the effects of their policies are felt in people’s real lives.