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Daily Archives: October 16, 2013

Interest rates may rise next year, says Bank of England chief economist | Business | The Guardian

Interest rates may rise next year, says Bank of England chief economist | Business | The Guardian. (source)

Aim to keep borrowing costs low could be thwarted by stronger than expected growth and unusually weak productivity

Bank of England has warned it may be necessary to raise interest rates by 2014

A top Bank of England official has warned it may be necessary to raise interest rates as early as 2014 Photograph: Yui Mok/PA

The Bank of England warned that interest rates might rise as early as next year as its chief economist said Threadneedle Street’s desire to keep borrowing costs low for several years could be thwarted by a combination of stronger than expected growth and unusually weak productivity.

Spencer Dale, one of the nine members of the rate-setting monetary policy committee, said the UK was currently growing at an annual rate of 3-4% and the Bank could not be certain when it might need to tighten policy.

Following guidance issued by the Bank in August, the City is expecting interest rates to remain on hold at their record low of 0.5% until at least 2015. But Dale said in a Guardian interview that in certain circumstances an increase could happen as soon as 2014.

“What we are clear about is what the state of the economy will be like when we raise interest rates. What we are not as clear about is whether that is two years ahead, three years ahead, or one year ahead. But it is clear that we are thinking of years not months,” Dale said.

The Bank said in August that unless there was a risk from inflation or an over-heating property market it would only start thinking about raising interest when unemployment had come down to 7% from 7.7% currently, something it did not expect until 2016. But the recovery in the economy seen since the spring has left many in the City convinced that the Bank will be forced to take action before then.

Dale said that “forward guidance” had been useful in explaining how the Bank was likely to behave, and that he was “nervous that some people may be thinking we are going to raise rates just because we are going to have strong growth”.

“By doing that [forward guidance], we reduce the likelihood that people, when they see a few quarters of strong growth, expect us to raise rates. We have reduced the likelihood of a premature raising of rates.”

But Dale said he could not say for sure how long the period of 0.5% interest rates would last. “The economy looks as if it is growing at something like 3-4% annualised. Bank rate is at 0.5%, something that would have been unthinkable a few years ago. The big message is that monetary policy is going to remain loose for a considerable period of time. I can’t be sure whether that means it will be tightened in 2015 or 2016. It could be 2015. It could be a bit earlier than that or a bit later.”

Asked whether the Bank could raise rates as early as next year, Dale replied: “Conceivably it could be 2014. But it would have to be in a world where you had quite strong growth, perhaps stronger than you have got now, and a recovery in productivity weaker than I would expect.”

Dale said the biggest downside risk to the economy was a renewed crisis in the euro area. “We have seen some of the near term tensions ease, but the fundamental challenges are immense.”

But he added that there was also a chance that the economy would grow far more strongly than currently expected.

“If you take business surveys at face value and base your view of the economy purely on them it would suggest that the economy is growing in at a rate in excess of 4%. We might be misjudging it. It could be that the economy is coming back more quickly than we think.

“I am aiming off of that slightly. I am aware of the fundamental challenges facing our economy. In particular, real incomes remain weak and we are not going to see a strong pick up in consumption until we see that.”

Dale said that the economy was still 3% smaller than at its peak before the deep recession of 2008-09 and that the Bank was alive to the risk that a premature increase in borrowing costs could choke off recovery. He added that if markets failed to get the message and pushed up long-term interest rates to a level that impinged on the recovery, the Bank’s monetary policy committee would act. “The natural thing would be to do more quantitative easing and loosen policy to stimulate the economy.”

Dale said he welcomed the fact that the housing market was recovering, and saw no immediate threat of a bubble. It was “great” for the construction sector that more houses were being built, and the increase in mortgage approvals boosted demand for professional services and led to greater labour mobility. “It is good for consumption, because there is quite strong evidence that when people move home they go out and change the carpets and buy new furniture. We are moving from a housing market in deep freeze to where it is thawing and helping the recovery.”

Dale said that one difference from previous cycles was that there was now a financial policy committee at the Bank of England armed with the tools to tackle any problems from the housing market.

He said “bitter experience” had shown what could happen when the housing market was allowed to overheat. “I don’t think that’s where we are now but are very active to that risk. The Bank as a whole is. The monetary policy committee is. Most importantly, the financial policy committee is.”

Asked if the Bank was being complacent, he replied: “We are not being complacent. We are looking at this very closely.”


Iran hints for more nuclear concessions – Middle East – Al Jazeera English

Iran hints for more nuclear concessions – Middle East – Al Jazeera English. (source)

Diplomats offer to scale back uranium enrichment; next round of talks with world powers planned for early November.

Details have remained largely secret, which the Iranian foreign minister said showed “seriousness” [Reuters]
The latest round of talks between Iran and world powers have concluded in Geneva, with Iran indicating a willingness to scale back uranium enrichment, as well as allowing for snap inspections of its nuclear sites as part of a new proposal to end a decade-long standoff with world powers.

Full details of Iran’s proposals, presented during two days of negotiations in Geneva with six world powers, have not been made public.

Normally, the less negotiators leak news, the more it shows the seriousness of the negotiations and the possibility of reaching an agreement.

Mohammad Javad Zarif, Iranian foreign minister

But, in a clear sign of hope, the two sides agreed to hold follow-up negotiations on November 7 and 8 in Geneva, a Western diplomat told Reuters news agency as the current two-day talks drew to a close.

“We hope that this is a beginning of a new phase in our relations,” Iran’s foreign minister, Mohammad Javad Zarif, told reporters on Wednesday.

After a six-month hiatus, Iran and the United States, Russia, China, France, Britain and Germany began negotiations in earnest on Tuesday to end a long impasse.

Both sides sought to dampen expectations of any rapid deal at the meeting, the first since President Hassan Rouhani was elected in June pledging to scrap the politics of confrontation to ease Iran’s international isolation.

After the first day of talks in Geneva, Iranian Deputy Foreign Minister Abbas Araqchi suggested Tehran was prepared to address long-standing calls for the UN nuclear watchdog to have wider and more intrusive inspection powers.

He also told the official IRNA news agency that measures related to its uranium enrichment were part of the Iranian proposal, but hinted the Islamic Republic was not inclined to make its concessions quickly.

Diplomats said other proposals Iranian envoys had made regarding eventual “confidence-building” steps included halting 20 percent enrichment and possibly converting at least some of existing 20 percent stockpiles to uranium oxide suitable for processing into reactor fuel.

“Neither of these issues are within the first step [of the Iranian proposal] but form part of our last steps,” Araqchi said without elaborating, in comments reported on Wednesday.

‘We need to keep talking’

Iran did not intend to renounce all enrichment “under any circumstances”, the Russian state news agency RIA quoted an unidentified Iranian delegation source as saying.

Western officials have repeatedly said that Iran must suspend enriching uranium to 20 percent fissile purity, their main worry, before sanctions are eased.

“Are we there yet? No, but we need to keep talking,” a Western diplomat said as talks resumed on Wednesday.

But Iran, diplomats said, has made much more concrete proposals than in the past, to the point that Tehran’s negotiators were concerned about details being aired in public before they had had a chance to sell them back in Tehran.

Catherine Ashton, the European Union foreign policy chief, praised the talks as “substantive and forward-looking” in a statement she read on Wednesday evening. The White House also spoke positively about the meeting, saying Iran showed “a level of seriousness and substance that we have not seen before.”

Zarif said in a post on Facebook that secrecy was working in the negotiators’ favour.

“Normally, the less negotiators leak news, the more it shows the seriousness of the negotiations and the possibility of reaching an agreement,” he said.


Gold Price Premiums Hit Record in India – 8% Above London Spot | A Lightning War for Liberty

Gold Price Premiums Hit Record in India – 8% Above London Spot | A Lightning War for Liberty. (source)

This story is just further proof of the complete and total mess that has been made of the Indian gold market over of the course of this year due to government intervention. The other part of the problem is that when you are dealing in physical supplies you can’t just deliver paper contracts. Somehow I don’t think that would cut it for Indians on festival days or their daughters’ weddings.

From Reuters:

(Reuters) – Gold premiums in India, the world’s biggest buyer of the precious metal, hit a record $100 an ounce, about 8 percent over London prices, on a shortage of supplies to meet festival demand, traders said on Tuesday.

“There are no supplies in the domestic market, and there is a little demand due to festivals… what little supplies that come, go to exporters,” Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation (GJF) told Reuters.

Most suppliers in Mumbai and Kolkata have started quoting premiums in excess of $100 an ounce above London prices, more than double the $40 charged last week, Bamalwa said.

Gold imports have virtually dried up in India after the federal government introduced the 80/20 rule, creating confusion among government officials on its implementation and halting shipments for about two months.

The World Gold Council has said India’s gold demand could rise as much as 15 percent this quarter to 300 tonnes as pent-up demand following a good monsoonkeeps the country on track for yearly demand estimated at 1,000 tonnes.

If that demand number is correct, then India and China alone are on track to consume 75% of the world’s total gold production in 2013. Fortunately for them, Western investors are more than comfortable accepting pieces of paper.

Full article here.

The Gravity Of Our Situation | Zero Hedge

The Gravity Of Our Situation | Zero Hedge. (source)

We have heard all day long what a dismal wreck the Republican Party is about to become, or has, courtesy of the “Wheel of Misfortune” among others. In light of this “fold” we though the following “infographic”, courtesy of Jim Quinn’s Burning Platform, would help with a “fair and balanced” perspective ofjust how irresponsible Washington has become, and that at the end of the day, there is no difference between “our” team and “their” team.

Greece lifts immunity of Golden Dawn MPs – Europe – Al Jazeera English

Greece lifts immunity of Golden Dawn MPs – Europe – Al Jazeera English. (source)

Six lawmakers from far right Golden Dawn party have their immunity from prosecution revoked as part of crackdown.

The probe into Golden Dawn was prompted by the murder of a hip hop artist by a self-confessed neo-Nazi supporter [AP]
Greece’s Parliament has voted to lift the immunity from prosecution of six lawmakers from the far right-wing Golden Dawn party, as part of a crackdown into the party’s activities after the murder of an anti-fascist musician last month.

A majority of over two-thirds in the 180-seat chamber voted to lift the immunity of George Germenis, Efstathios Boukouras and Panagiotis Iliopoulos on Wednesday.

In addition, party spokesman Ilias Kassidiaris and fellow lawmakers Ilias Panagiotaros and Chrysovalantis Alexopoulos will be called to answer lesser charges, a process that will first require parliamentary approval.

Kassidiaris and Panagiotaros were already indicted earlier this month, and conditionally freed, on the charge of belonging to a criminal organisation.

Golden Dawn leader Nikos Michaloliakos, his deputy Christos Pappas and lawmaker Yiannis Lagos are already being held in Athens’s high security Korydallos prison over the case.

The probe into Golden Dawn was prompted by the murder of hip hop artist Pavlos Fyssas by a self-confessed neo-Nazi supporter in September.

Witnesses have since testified that senior party members were involved in migrant beatings, extortion and possible arms smuggling.

The authorities are also moving to cut the party’s access to state funding, in a vote to take place on Thursday.


Creeping Capital Controls At JPMorgan Chase? | Zero Hedge

Creeping Capital Controls At JPMorgan Chase? | Zero Hedge. (source)

A letter sent to a ZH reader yesterday by JPMorgan Chase, specifically its Business Banking division, reveals something disturbing. For whatever reason, JPM has decided that after November 17, 2013, it will halt the use of international wire transfers (saying it would “cancel any international wire transfers, including recurring ones”), but more importantly, limits the cash activity in associated business accounts to only $50,000 per statement cycle. “Cash activity is the combined total of cash deposits made at branches, night drops and ATMs and cash withdrawals made at branches and ATMs.

Why? “These changes will help us more effectively manage the risks involved with these types of transactions.” So… JPM is now engaged in the risk-management of ATM withdrawals?

Reading between the lines, this sounds perilously close to capital controls to us.

While we have no way of knowing just how pervasive this novel proactive at Chase bank is and what extent of customers is affected, what is also left unsaid is what the Business Customer is supposed to do with the excess cash: we assume investing it all in stocks, and JPM especially, is permitted? But more importantly, how long before the $50,000 limit becomes $20,000, then $10,000, then $5,000 and so on, until Business Customers are advised that the bank will conduct an excess cash flow sweep every month and invest the proceeds in a mutual fund of the customer’s choosing?

Full redacted letter below:

Pakistani minister killed in suicide bombing – Central & South Asia – Al Jazeera English

Pakistani minister killed in suicide bombing – Central & South Asia – Al Jazeera English. (source)

Police say a suicide bomber has killed at least eight people in northwestern Pakistan, including a provincial government minister, as the country marked the Muslim festival of Eid al-Adha.

Israullah Gandapur, the minister of law for Khyber Pakhtunkhwa province, was killed on Wednesday in his home near the city of Dera Ismail Khan as he greeted residents of his home village who had come to celebrate the first day of Eid.

More than 30 people were wounded in the attack, including the minister’s elder brother, said Irfan Mahsud, the assistant commissioner, Dera Ismail Khan, located nearly 300km southwest of the capital, Islamabad.

“I saw so many dead people and injured people crying for help,” said eyewitness Haseeb Khan, whose new white holiday clothes were drenched in blood. “There were arms, legs and heads everywhere.”

The attacker first killed the guard at the house and then blew himself up inside the guest room of the minister’s residence, another police official said.

The minister was rushed to the hospital in critical condition but died along the way.

The suicide bomber had managed to break into the area despite “very tight security”, the Provincial Health Minister Shaukat Yousafzai told AFP news agency.

Wednesday’s attack involved 8-10 kilograms of locally made explosive, Inayat Ullah, a bomb disposal expert, told AFP.

Group claims responsibility

Ansar al Mujahideen, a group allied to but not part of the Pakistani Taliban, claimed responsibility for the attack.

The group’s spokesman, Abu Baseer, said it was in retaliation for the deaths of men killed during a July jailbreak in the same city.

He was referring to a major operation by fighters from the al-Qaeda-linked Pakistani Taliban who disguised themselves as police and broke 250 prisoners out of a jail.

The province is ruled by Pakistan Tehreek-e-Insaf (PTI), a party led by former cricketer Imran Khan, which favours peace talks with the Taliban.

Gandapur is now the third lawmaker from the province to have been killed following the general elections on May 11.

Farid Khan and Imran Khan Mohmand, killed in separate attacks in June, were also members of the PTI party.

The main Pakistani political parties including PTI last month backed a government proposal to formally seek negotiations with the militants, who have been waging a war against the state since 2007.

The Taliban have said they are open to talks, but they also say they will not disarm, do not recognise the Pakistani constitution, and will not talk to the government until the army pulls back from their strongholds and all their prisoners are released.


Non-Participation As An Effective Weapon Against Tyranny

Non-Participation As An Effective Weapon Against Tyranny. (FULL ARTICLE)

Legitimate revolution takes time, patience and fortitude. Unfortunately, this is a strategic concept that is lost on many Americans today who suffer from a now common ailment of attention deficit disorder and an obsession with immediate gratification. Even some who have their hearts in the right place and who work to defend and resurrect our nation’s founding ideals seem to believe that any action to defeat corrupt oligarchy must be effective immediately, otherwise, it’s not worth the attempt. History, of course, teaches us the opposite.

The American rebellion against the British monarchy was not an abrupt or immediate affair. Anger and unrest over the trespasses of King George simmered for decades. The first British troops stationed with the intent to stifle colonial freedoms arrived in Massachusetts in 1768. The Boston Massacre took place in 1770, and still, the Founders refused to leap into open retaliation. Lexington Green and the “shot heard around the world” did not take place until April 19, 1775. The Revolution took years to culminate into an actual physical war. So what did the colonists do in the meantime? Sit on their hands?

In fact, early Americans employed economic tactics against their enemy long before they picked up muskets and powder. British imports were turned away or destroyed. Clothing and other items normally shipped from Europe to be sold in the colonies were boycotted, while colonists began producing all of their own survival necessities. They refused to participate in the system that was designed to enslave them and this gave them a foundation on which to launch their eventual fight for liberty. Without efforts in economic independence, the American Revolution may not have ever taken place….


Thousands protest in flood-hit Chinese city – Asia-Pacific – Al Jazeera English

Thousands protest in flood-hit Chinese city – Asia-Pacific – Al Jazeera English.

Ecuador Approves Oil Drilling in Amazon Rain Forest

Ecuador Approves Oil Drilling in Amazon Rain Forest. (FULL ARTICLE)

OSCAR LEÓN, TRNN PRODUCER: On October 3, 2013, Ecuador’s National Assembly authorized the project to drill for oil in the Yasuní national forest, which is a biosphere reserve and home of endemic tribes and unique animal species.

It is estimated by the Ecuadorian government that in that area, there are around 920 millions barrels of crude oil, for which Ecuador could get up to 7 billion dollars, maybe more, some say much more, over the next 30 years. This accounts for 20 percent of the country’s oil reserves.

The Ecuadorian National Assembly passed the legislation, with 108 votes in favor against 25 authorizing the operation of the oil fields.

GABRIELA RIVADENEIRA, NATIONAL ASSEMBLY CHAIRWOMAN (SUBTITLED TRANSL.): We will drill for oil in blocks 31 and 43. The intangible zone is excluded, which is the south of the park, of course….


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