USD

You two eloquently put the point across, that CB's paving another path to higher risk of inflation and that the EM's fighting to remain competitive (voluntary slaves) within its globalized structure which gives free markets the reason to exist.


What is really sad is that EM's willingly give up their resources and ignore labour force & production domestically whereas AE's instruments of domination or monopoly such of WB & IMF make sure these EM's remain en-debted or politically unstable some how. If you see deeply much of these EM's are the ones that have the basic raw materials and real asset. And what ever money they make, and the is the only real money, from selling their resources or providing cheaper labour force; then they some how invest back in AE's. Their hard earn money goes back to AE's to run more bubbles, credit that inflates AE's, create more global debt as good and services now are expensive.

I keep say what the world needs is to rethink its policies on consumption, we need to reduce consumption, waste and conserve. Look towards as much as domestic as we can and then demand should only be catered from surplus's, no need to over produce, what we dont consume we waste, price integrity (market price) should be a global metric system over cost (labour+materials) Introduce fair trade across the world. We deserve to live happy. This is very possible all we need to do is wake up and make others around us more enlightened.

regional economic predominancy; this is what it is with all that comes with./
let s take the case of Asiapac integration. During the eighties nineties latam countries has evolved thrugh erratic cycles with phase of expansion and pahse of austerity measures. That has been accompanied by regional integration within mercosur and so on/ the us has been the recipeint of this austerity package principally california massachusset and few other state. Again it was a period of superbear market on commodities. hte giant phelps mining is an example of market opening in south america.
asiapac integration comes with all new things, new oil maritime road, new deployment, a changing geostrategy in north asia and all this with the support of the financial market and especially the actual framework of the last chang mai initiative on interest rate swap for instance.

where do u position auckland?

we have entered in a period when thinking out of the box become a standard and all the market and economic mecanism of easy money, tightning monetary policy dont foreceably work.
i totally agree with what u say but something major is happening. as i told earlier commodities supercycles with its 3phases, investment, production, commercialisation that is gonna last at least twenty years. we r fueling the monetary mass in circulation in comparison with the existing gold volumes and the upcoming gold volumes even if we have been out since bretton woods. what some call contraction of economic condition is perceived as dispersion and dilatation of monetary aggregate. By converging their monetary policy between the ecb the boe and fed they have created a future environment for the third phase of inflation creation without an oil shock driven by demand as u mentioned first from emerging nations. the mass in circulation used to buyback cmbs rmbs and so on has been also injected in countries like brazyl south africa australia vietnam romania bulgaria. As for south africa and australia the dynamic existed since ten years.
this period of fueling an overseas demand can last years before it comes back fueling the production capacity of developed nations. the ratio of return on investment on delocalisation is of 1 to 4 and more and we have to mind that this is a period when a multinational earned its living but of the book.

my target for the price of GOLD at first 1298/1350 then lets go the 2300 level.

What's the greater risk to developed economies right now, inflation or deflation? The global debate remains far from a consensus, as epitomized by the divergence between collapsed U.S. government bond yields and soaring gold prices. For the developed world, it's clearly deflation, argues the Economist.


Economist: 4th Jun 2010
"In America, the euro area and Japan, deflation is either uncomfortably close or a painful reality, despite near-zero interest rates and other efforts by central banks. In the year to April core consumer prices rose by a mere 0.9% in America, the slowest pace in four decades. In the euro area they rose by 0.7%. And in Japan, which has battled falling prices for more than a decade, they fell by 1.5%.

Nor is there much reason to expect a sudden turnaround. Broad measures of money and credit growth are stagnant or shrinking in all three places. Unemployment is high and there are large gaps between the economies actual output and their potential. In the euro area, especially, austerity plans will further sap domestic demand. Thankfully, there is unlikely to be a sudden price plunge, not least because ordinary people still expect consumer prices to rise modestly, and these expectations of future inflation help anchor actual prices. But the short-term balance of pressures clearly points downward.

So, too, does the balance of risks. Deflation, if it becomes entrenched, is more dangerous than most forms of inflation. When prices fall consumers put off their purchases in anticipation of even greater bargains later, condemning the economy to a vicious cycle of weak spending and sliding prices. In heavily indebted economies falling prices would increase the real burden of consumers and governments debts."

Yet for many emerging market economies, the opposite is true. Recent data has shown that inflation is the greater risk for potentially overheating economies such as China, India, and Brazil. Which means we could be headed for a world torn in opposite directions, as if quartered, by very different monetary phenomena. As the developed world keeps interest rates low, in a bid to deep deflationary forces at bay, they will in turn be keeping interest rates lower around the world. This is will be due particularly to the massive global influence of U.S. monetary policy, thus exacerbating inflationary forces in the developing world.

Now Here's the Alternative or Opposite View

We've talked before about how loose monetary policy in deflation-fearing developed nations is a huge problem for their inflation-fearing emerging market neighbors.

Research by the International Monetary Fund confirms that liquidity in developed nations (Advanced Economies, AE) indeed flows into emerging markets (EM), thanks to today's global financial market linkages.

Thus the easy money policy of the West becomes the easy money policy for the world, even when the developing world is trying to tighten its policy. Begs the question! Why?

Well, if emerging markets tighten monetary policy too much, by raising their interest rates, it will
increase the flow of capital into their economies since interest rates will still remain low in developed nations. (Money tends to chase higher returns via interest rates)
Thus as they try to reduce domestic liquidity by tightening monetary policy with higher interest rates, they will be hit by a counter-productive inflow of global liquidity chasing higher interest rates, which sort of kills their attempt to tighten. Higher relative interest rates also lead to currency appreciation, which many emerging markets are loathe to endure since it hurts export competitiveness.
That's how easy money in America and Europe becomes easy money everywhere, and it's already priming potential emerging market asset bubbles:


IMF:
"Capital inflows have resumed in EMs that came out relatively unscathed from the crisis. Such flows could be driven by a combination of push and pull factors. Historically, accommodative monetary policies in AEs have been associated with rising capital flows to EMs. Continued easy policies in the near term in AEs could thus push even more capital to EMs. At the same time, EMs that are recovering briskly from the crisis with better fiscal sustainability indicators than AEs may continue to pull capital by offering promising investment opportunities in a high growth macroeconomic environment. Overall, such inflows are just returning to pre-crisis levels. Although they do not generally pose a problem yet, surges in such flows going forward may complicate policy challenges for EMs recovering quickly from the crisis."

That's why emerging markets could be the next bubble we inflate. There's certainly no shortage of bullishness for emerging markets stocks. Just beware that there are huge concerns all investors should have in regards to how much control foreig

dont give a chance to the bear in controlling the panique. what will come will come all will depend on how u sail the storm. One banker says "build ur business as it can endure rough seas". well the focus is not on the correction but on the big picture, the macro economics operations that sustain the coming events. We all agreed and repeated that it is a commodities supercycles especially for gold. Unfortunately we r not coming in stagflation neither deflation but in consolidation period that is gonna last around three years with amplitude of thousand points. Manage the amplitude of the storm and u'll get out of the crisis but not without collateral.
to come back to macro economic event i mean the big ops the one that has been laid down more than decades ago.
ASk yourselves what is coming on the other side of the river.