Tuesday, June 3, 2014
BRICS Countries Gearing Up to Launch $100Bln Multilateral Bank
BRASILIA — The five BRICS nations will likely agree to fund their $100 billion development effort equally, giving them the same rights in a new multilateral bank that could start lending in two years, a senior Brazilian government official told Reuters Thursday.
Capitalization of the bank was one of the main sticking points in the sometimes tortuous negotiations among the emerging powers to create a joint lender to finance infrastructure projects in developing nations.
The new bank would symbolize the growing influence of emerging economies in the global financial architecture long dominated by the United States and Europe through the International Monetary Fund and World Bank.
Negotiations to create the lender have dragged on for two years, with some members growing weary of China's desire to have a bigger stake in the bank by putting in more capital. But this hurdle is being overcome.
"The majority wants an equal sharing of the capital and there is no other specific proposal on the table," said the official, who is directly involved in the negotiations. "This is not going to be a problem."
Leaders of Brazil, Russia, India, China and South Africa are expected to sign a treaty to launch the bank officially when they meet at a BRICS summit in the northern Brazilian city of Fortaleza on July 15.
The bank, which will have start-up capital of $50 billion, will have to be ratified by the countries' legislatures and could begin lending in two years, said the official, who requested anonymity because he was not authorized to speak publicly.
Of that start-up capital, the countries will put in a total of $10 billion in cash and $40 billion in guarantees, which will be used to raise capital on international markets.
The new development bank would help cover growing demand for project financing that has not been fully met by global multilaterals, which for years have been heavily criticized for meddling in the domestic policies of sovereign borrowers.
"The bank will look into the finances of borrowers, but never intervene in their economic affairs," said the official. "Any country can join the bank with a $100,000 share. The idea is to provide them loans at a lower cost than what they would individually get in markets."
The BRICS will also decide if the bank will be based in New Delhi, Shanghai, Johannesburg or Moscow. Brazil will not offer headquarters because of upcoming presidential elections that could delay negotiations, the official said.
Later, the group will have to choose an executive "with experience in the financial sector" to lead the bank in a five-year presidency that will rotate among the founding members.
In five years the bank's capital should double to $100 billion through capitalization from funding members, debt emissions or contributions from new members. The BRICS will hold a minimum of 55 percent of the bank's shares.
Credit to The Moscow Times
America’s Insatiable Demand For More Expensive Cars, Larger Homes And Bigger Debts
One of the things that this era of American history will be known for is conspicuous consumption. Even though many of us won't admit it, the truth is that almost all of us want a nice vehicle and a large home. They say that "everything is bigger in Texas", but the same could be said for the entire nation as a whole. As you will see below, the size of the average new home has just hit a brand new record high and so has the size of the average auto loan. In the endless quest to achieve "the American Dream", Americans are racking up bigger debts than ever before. Unfortunately, our paychecks are not keeping up and the middle class in the United States is steadily shrinking. The disparity between the lifestyle that society tells us that we ought to have and the size of our actual financial resources continues to grow. This is leading to a tremendous amount of frustration among those that can't afford to buy expensive cars and large homes.
I remember the days when paying for a car over four years seemed like a massive commitment. But now nearly a quarter of all auto loans in the U.S. are extended out for six or seven years, and those loans have gotten larger than ever...
In the latest sign Americans are increasingly comfortable taking on more debt, auto buyers borrowed a record amount in the first quarter with the average monthly payment climbing to an all-time high of $474.
Not only that, buyers also continued to spread payments out over a longer period of time, with 24.8 percent of auto loans now coming with payment terms between six and seven years according to a new report from Experian Automotive.
That’s the highest percentage of 6 and 7-year loans Experian has ever recorded in a quarter.
Didn't the last financial crisis teach us about the dangers of being overextended?
During the first quarter 0f 2014, the size of the average auto loan soared to an all-time record $27,612.
But if you go back just five years ago it was just $24,174.
And because we are taking out such large auto loans that are extended out over such a long period of time, we are now holding on to our vehicles much longer.
According to CNBC, Americans now keep their vehicles for an average of six years and one month.
Ten years ago, it was just four years and two months.
My how things have changed.
And consumer credit as a whole has also reached a brand new all-time record high in the United States.
Consumer credit includes auto loans, but it doesn't include things like mortgages. The following is how Investopedia defines consumer credit...
Consumer credit is basically the amount of credit used by consumers to purchase non-investment goods or services that are consumed and whose value depreciates quickly. This includes automobiles, recreational vehicles (RVs), education, boat and trailer loans but excludes debts taken out to purchase real estate or margin on investment accounts.
As you can see from the chart below, Americans were reducing their exposure to consumer credit for a little while after the last financial crisis struck, but now it is rapidly rising again at essentially the same trajectory as before...
Have we learned nothing?
Meanwhile, America also seems to continue to have an insatiable demand for even larger homes.
According to Zero Hedge, the size of the average new home in the United States has just hit another brand new record high...
There was a small ray of hope just after the Lehman collapse that one of the most deplorable characteristics of US society – the relentless urge to build massive McMansions (funding questions aside) – was fading. Alas, as the Census Bureau today confirmed, that normalization in the innate desire for bigger, bigger, bigger not only did not go away but is now back with a bang.
According to just released data, both the median and average size of a new single-family home built in 2013 hit new all time highs of 2,384 and 2,598 square feet respectively.
And while it is known that in absolute number terms the total number of new home sales is still a fraction of what it was before the crisis, the one strata of new home sales which appears to not only not have been impacted but is openly flourishing once more, are the same McMansions which cater to the New Normal uberwealthy (which incidentally are the same as the Old Normal uberwealthy, only wealthier) and which for many symbolize America’s unbridled greed for mega housing no matter the cost.
There is certainly nothing wrong with having a large home.
But if people are overextending themselves financially, that is when it becomes a major problem.
Just remember what happened back in 2007.
And just like prior to the last financial crisis, Americans are treating their homes like piggy banks once again. Home equity lines of credit are up 8 percent over the past 12 months, and homeowners are increasingly being encouraged to put their homes at risk to fund their excessive lifestyles.
But there has been one big change that we have seen since the last financial crisis.
Lending standards have gotten a lot tougher, and many younger adults find that they are not able to buy homes even though they would really like to. Stifled by absolutely suffocating levels of student loan debt, many of these young adults are putting off purchasing a home indefinitely. The following is an excerpt from a recent CNN articleabout this phenomenon...
The Millennial generation is great at many things: texting, social media, selfies. But buying a home? Not so much.
Just 36% of Americans under the age of 35 own a home, according to the Census Bureau. That’s down from 42% in 2007 and the lowest level since 1982, when the agency began tracking homeownership by age.
It’s not all their fault. Millennials want to buy homes— 90% prefer owning over renting, according to a recent survey from Fannie Mae.
But student loan debt, tight lending standards and stiff competition have made it next to impossible for many of these younger Americans to make the leap.
This is one of the primary reasons why homeownership in America is declining.
A lot of young adults would love to buy a home, but they are already financially crippled from the very start of their adult lives by student loan debt. In fact, the total amount of student loan debt is now up to approximately 1.1 trillion dollars. That is even more than the total amount of credit card debt in this country.
We live in a debt-based system which is incredibly fragile.
We experienced this firsthand during the last financial crisis.
But we just can't help ourselves.
We have always got to have more, and society teaches us that if we don't have enough money to pay for it that we should just go into even more debt.
Unfortunately, just as so many individuals and families have found out in recent years, eventually a day of reckoning arrives.
And a day of reckoning is coming for the nation as a whole at some point as well.
You can count on that.
Credit to Economic Collapse
Monday, June 2, 2014
Bring Your Own Guillotine: Anti-Monarchy Protests Break Out Across Spain
The news of Spain's King Carlos' abdication this morning warranted barely a headline in the US media. However, once again, the simmering social unrest of nations full of repressed citizens burst into action aswidespread anti-monarchy protests erupted across Spain. On the heels of last week's European elections that saw extreme left and extreme right parties, it seems the Spanish monarchy's move has lit the blue touch paper in a nation still suffering from record high unemployment and record high suicide rates. Protesters carried guillotines and chanted "Neither king nor master" and "Long live the struggle of the working class" demanding a referendum.
A Pre-Franco Republic flag covers a guillotine at one anti-monarchy protest...
Cities all over Spain and outside the territory held demonstrations to demand a referendum for the citizens is to choose the form of government. The Puerta del Sol and the Plaza Catalunya, the main points
"Spain is republican", "at the Third", "referendum now." And dozens. Hundreds. Thousands of messages flooded social networks after the announcement of the abdication of the king. 's citizens mobilized and called from concentrations 20 hours in the streets of cities all over Spain and outside the territory to require that a people to decide the form of state and the probate process does not continue.
Political parties that have joined so far, this petition are Izquierda Unida, and we Equo. The tricolor was flown Monday in some municipalities and even the building of Les Corts Valenciennes. In most cases they have been representatives of leftist parties, mainly IU, which personam have placed the flags, although the City of Altafulla (Tarragona) affixing the Republican banner has been driven by the team of government.
Public live narrated what has happened in the streets, the Puerta del Sol in Madrid as the main reference point for mobilization:
22.42 The largest concentration took place in Madrid's iconic Puerta del Sol This is followed by the Plaza Catalunya in Barcelona. Concentrations were replicated throughout Catalunya, Tarragona, Girona and Lleida. As in the Basque Country, which highlights the Bilbao, with thousands of people at the Arriaga square. In Seville's Plaza Nueva in Granada, Valencia, Zaragoza, Salamanca, Burgos, Palma de Mallorca, in various cities of the Principality of Asturias, Extremadura. The cry has been resounding: image demonstration in Logroño.
22.38 In the following link you can see a photographic look at the various concentrations: The tricolor wanders throughout Spain.
22.35 At all points of Spain concentrations were performed. From Murcia to Asturias. Dozens (if not hundreds) of thousands of people have taken to the streets by the Republic and to claim that citizenship is to choose on the continuity of the monarchy.
22.33 A protester in the Puerta del Sol: "In 78 decided to put on the throne the puppet dictator Now let's put the son of the dictator puppet I say. defect." says Tristan, which is defined as a student and worker precarious, reports Irene White.
22.30 After the ceremony in the Plaza Catalunya, protesters have begun to move to the Sant Jaume square, home to the Government and the City of Barcelona, ??reports Europa Press.
22.26 Thousands of people have also taken to the streets in Galicia to demand a referendum in favor of a "Galician Republic." Image of Europa Press:
22.20 In Paris, hundreds of people have also focused to claim the right of Spaniards to decide in a referendum. The mobilization was organized through social networks by the collective support in Paris for the match and we Garnet Tide, a network of international meetings aimed at coordinating the Spanish immigrants. "Neither thieves nor Bourbons. People decide. Can" was among the slogans of concentration, which mainly Spanish residents gathered in the French capital, reports Europa Press.
22.18 Protesters prevents the mouth of the Madrid Metro New glass dome at the center of the Puerta del Sol closes, specifically block fence that opens and closes automatically from inside the mouth Metro and gives access to Renfe, reports Irene White.
22.14 In the summer resort of Casa del Rey also protest against the monarchy. Concentration in Palma de Mallorca. Royalty Efe:
22.12 According to sources in the government delegation, 200 people gathered in Toledo, 400 in Albacete, Cuenca and other 200 300 in Guadalajara, reports Europa Press.
22.10 Overview of the Puerta del Sol The best summary of the number of people who have gone to the bullring. Royalty Efe:
22.05 Some of the slogans chanted in the Puerta del Sol, "Neither king nor master"; "No two without three, republic again"; "Long live the struggle of the working class"; "The Bourbons sharks."
21.48 "The abdication of such a controversial figure is an opportunity to question the institution of monarchy and to open a debate about whether there should be no. believe that people should be able to decide if they want the head of state is a monarch "says Aymara de la Torre, International Relations student from Madrid, reports Irene White. Attendees talk about social rights, to advance, the need for change in Spain. Younger asked to participate in a new process. They think they live in a country where they could not be participants and believe that this is the time to do so, reports Mario Ruiz, also from the Puerta del Sol
21.44 Overview of the concentration in Barcelona. Reuters photo:
Just good news that Spanish bond yields are all time record lows... or there would be real problems in the country!!
Credit to Zero Hedge
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