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Friday, May 06, 2011

THE VICTORY AND THE FAILURE

(clicking on the titled link we are directed to  article "The Libyan War, American Power and the Decline of the Petrodollar System " )

WE WOULD LIKE TO POINT OUT THE BUYING OF 100 TONNES OF GOLD FROM THE STATE OF MEXICO,WHICH ACCORDING TO THE NATURAL ECONOMIC LAWS,SHOULD CREATE A RISE ON THE PRICES OF THE PRECIOUS METALS,NOWADAYS. EVEN IF SOME BIG INVESTORS LIKE SOROS ,WERE SELLING OUT ,THIS CANNOT BALANCE SUCH A BIG PURCHASE  AND EXPLAIN THE INSTANT DOWN FALL OF THE PRICES.
THANK YOU ALL FOR YOUR ATTENTION AND SUPPORT


A) Mexican Central Bank Quietly Buys 100 Tons of Gold
Mexico has quietly purchased nearly 100 tons of gold bullion, as central banks embark on their biggest bullion buying spree in 40 years.


The purchase, reported in monthly data published by Mexico’s central bank, is the latest in a series of large gold buys by emerging market economies intent on diversifying reserves away from the faltering US dollar.

China, Russia and India have acquired large amounts of gold [GCCV1 1487.60 6.20 (+0.42%) ] in recent years, while Thailand, Sri Lanka and Bolivia have made smaller purchases.

Central banks became net buyers of gold last year after two decades of heavy selling – a reversal that has helped propel the price of bullion to a series of record highs.

On Wednesday gold was trading at about $1,510 a troy ounce, down 4 percent from a nominal record high of $1,575.79 reached on Monday.

As a result of Mexico’s purchase, central banks, sovereign wealth funds and other so-called “official sector” buyers are on track to record their largest collective purchase of gold since the collapse of the Bretton Woods system, which pegged the value of the dollar to gold, in 1971.

GFMS, a precious metals consultancy, had predicted that the official sector would make net gold purchases of 240 tons this year, compared with a post-Bretton Woods peak of 276 tons in 1981.

Philip Klapwijk, GFMS executive chairman, told the Financial Times that forecast “might turn out to be conservative” in light of Mexico’s surprise move.

The dollar [.DXY 73.99 -0.21 (-0.28%) ] has plunged 10 percent against the world’s major currencies since January and is trading near an all-time low.

Mexico bought 93.3 tons of gold in February and March, according to the central bank, in a haul valued at $4.5 billion at current prices and equivalent to 3.5 percent of annual mined output.

The country’s foreign exchange reserves have ballooned since last summer, buoyed by its interventions in the currency market to prevent the peso from appreciating.

“[The buying] seems to confirm there’s an appetite now among emerging economies with large forex reserves to add to their gold reserves,” said Matthew Turner, precious metals strategist at Mitsubishi, the Japanese trading house.

“Gold is seen as one way in which to diversify away from the dollar or euro-denominated assets.”

Although gold has quintupled in value over the past decade, it has fallen back in recent days led by a 20 percent tumble in the price of silver.

Just as central banks unwittingly marked the bottom of the market a decade ago with large sales of gold from their reserves, some investors fear that the current rush to buy may signal a top.

SOURCE GLOBAL RESEARCH


B)FEARS AND FAILURE

From G.D.P. to private-sector payrolls, from business surveys to new claims for unemployment insurance, key economic indicators suggest that the recovery may be sputtering.
And it wasn’t much of a recovery to start with. Employment has risen from its low point, but it has grown no faster than the adult population. And the plight of the unemployed continues to worsen: more than six million Americans have been out of work for six months or longer, and more than four million have been jobless for more than a year.

 It would be nice if someone in Washington actually cared.

 It’s not as if our political class is feeling complacent. On the contrary, D.C. economic discourse is saturated with fear: fear of a debt crisis, of runaway inflation, of a disastrous plunge in the dollar. Scare stories are very much on politicians’ minds.

 Yet none of these scare stories reflect anything that is actually happening, or is likely to happen. And while the threats are imaginary, fear of these imaginary threats has real consequences: an absence of any action to deal with the real crisis, the suffering now being experienced by millions of jobless Americans and their families.

 What does Washington currently fear? Topping the list is fear that budget deficits will cause a fiscal crisis any day now. In fact, a number of people — like Erskine Bowles and Alan Simpson, the co-chairmen of President Obama’s debt commission — have settled on a specific time frame: terrible things will happen within two years unless we make drastic spending cuts.

 I have no idea where that two-year deadline comes from. After all, what we do in the next couple of years hardly matters at all for U.S. solvency, which mainly depends on what we’ll do in the long run about Medicare and taxes. And, for what it’s worth, actual investors — people putting real money on the line — are notably unworried about any near-term fiscal crisis: the Treasury Department continues to have no trouble selling debt and remains able to borrow very cheaply, indicating high confidence on the part of investors that debts will be repaid in full.

 Do the scare-mongers even believe their own stories? Maybe not. As Jonathan Chait of The New Republic notes, the politicians most given to apocalyptic rhetoric about the deficit are also utterly opposed to any tax increase; they argue that debt is destroying America, but they’d rather let that happen than accept even a dime of higher taxes. Yet the inconsistency and probable insincerity of their fear-mongering hasn’t stopped it from having a huge effect on policy debate.

 The deficit isn’t the only unfounded fear. I’ve written before about misguided inflation fear, but, for now, let me focus on a new issue that has suddenly begun to loom large in opinion pieces and remarks on talk shows: fear of a disastrous plunge in the dollar. (Who sends out the memos telling people what to worry about, and why don’t I get them?)

 What you would never know from all the agitated dollar discussion is that the recent dollar slide is actually tiny compared with big drops in the past, notably under the administration of George W. Bush and during Ronald Reagan’s second term. And you’d also never know that those earlier dollar slides, far from hurting the economy, were beneficial, because they helped U.S. manufacturing compete on world markets.

 Which brings me back to the destructive effect of focusing on invisible monsters. For the clear and present danger to the American economy isn’t what some people imagine might happen one of these days, it’s what is actually happening now.

 Unemployment isn’t just blighting the lives of millions, it’s undermining America’s future. The longer this goes on, the more workers will find it impossible ever to return to employment, the more young people will find their prospects destroyed because they can’t find a decent starting job. It may not create excited chatter on cable TV, but the unemployment crisis is real, and it’s eating away at our society.

 Yet any action to help the unemployed is vetoed by the fear-mongers. Should we spend modest sums on job creation? No way, say the deficit hawks, who threaten us with the purely hypothetical wrath of financial markets, and, in fact, demand that we slash spending now now now — which might well send us back into recession. Should the Federal Reserve do more to promote expansion? No, say the inflation and dollar hawks, who have been wrong again and again but insist that this time their dire warnings about runaway prices and a plunging dollar really will be vindicated.

 So we’re paying a heavy price for Washington’s obsession with phantom menaces. By looking for trouble in all the wrong places, our political class is preventing us from dealing with the real crisis: the millions of American men and women who can’t find work.

BY PAUL KRUGMAN

A version of this op-ed appeared in print on May 6, 2011, on page A27 of the New York edition with the headline: Fears And Failure.

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