China's Economic Growth Could Be Halved If Euro Woes Deepen: IMF

HONG KONG, Feb 7 Asia Pulse

China's economic growth could be halved this year if ongoing European woes deepen, due to their certain impact on trade and domestic demand of the world's No. 2 economy, the International Monetary Fund (IMF) said Tuesday. 

The IMF's Beijing office said China's growth would fall by around 4 percentage points from the expected 8.25 per cent gross domestic growth (GDP) for 2012 if the global GDP falls by 1.75 percentage points from the expected 3.25 per cent. 

It stressed that the risks to China from Europe are therefore both large and tangible. 

"The global economy is at a precarious stage and downside risks have risen sharply. The most salient risk is from an intensification of feedback loops between sovereign and bank funding pressures in the euro area, resulting in more protracted bank deleveraging and sizable contractions in credit and output in both Europe and elsewhere," the IMF Resident Representative Office in China said in an outlook report. 

"Should such a tail risk of financial volatility emanating from Europe be realized, it would drag China's growth lower. The channels of contagion would be felt mainly through trade, with knock-on effects to domestic demand." 

China will have to respond with a significant fiscal package, executed through central and local government budgets, if such a downside scenario becomes, reality, the global lender said. 

"A fiscal package -- of around 3 per cent of GDP -- should be the principal line of defense," it said. 

It suggested that China's stimulative measures could include further reductions in social contributions or consumption taxes, direct subsidies to the purchase of consumer durables, corporate incentives to expand investments that reduce pollution and energy use, fiscal support for smaller enterprises, advancing plans for social housing, and scaling up investments in the social safety net. 

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Gold falls as Greek debt crisis back in spotlight

By The Associated Press

Gold prices are falling as the Greek debt crisis returns to the spotlight. That's renewing concerns about the potential impact that Europe's financial troubles may have on the global economy. 

Gold fell nearly 1 percent Monday to settle at $1,724.90 an ounce. 

France and Germany are warning Greece's leaders that they need to approve new reforms or risk bankruptcy. Greece could default on a bond repayment next month without another installment of bailout loans. 

Separately, the International Monetary Fund says a sharp downturn in Europe could cut China's economic growth rate nearly in half. China, the world's second-largest economy, is a huge importer of commodities. 

In other trading, copper, oil and corn are lower. Silver, other energy products and wheat are higher.

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MPC keeps base rate and quantitative easing on hold again

The Monetary Policy Committee voted unanimously to keep the base rate on hold and maintain the quantitative easing programme at Pounds 275bn earlier this month, minutes of the meeting have revealed. 

All nine members opted to keep the base rate at its historic low of 0.5% and voted for no more QE at their January meeting, as they have for the last two months. 

The minutes show that the MPC judged the majority of large banks have not yet passed on higher funding costs to their lending rates fully, meaning there is a risk of tightening credit conditions in the near term. 

They also reveal that there has been little change in inflation expectations, with MPC members believing that inflation will continue to fall sharply in the coming months. 

The MPC says considerable downside risks from the global economy remain, but notes that there have been positive developments over the past month, with actions by the European Central Bank helping reduce the immediate risk of severe difficulties in the European banking sector. 

(c) 2012 Mortgage Strategy. Provided by ProQuest LLC. All rights Reserved.

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The Coming Collapse of the U.S. Dollar and Federal Reserve?

By T.S. Phillips

Here’s another newsflash you may have read about before. About one hundred years ago, just before the Federal Reserve act of 1913, our nation was the most prosperous in the world. The U.S. had virtually no national debt. We had the largest middle class in the world and Mom stayed home to raise the kids!

What many Americans are still clueless about is that there is nothing “Federal” about the Federal Reserve and they have no reserves. They are a private corporation owned by private bankers. To illustrate how this monetary system operates. Let’s assume the U.S. government needs 10 billion dollars. The FRB (Federal Reserve Bank) prints 10 billion from their printing press and loans it to the government in exchange for a 10 billion bond. The government now owes 10 billion to the FRB, and to add insult to injury, owes interest on top of it. In fact, most of our taxes presently go towards paying only the interest from the debt we owe! In my opinion, the Federal Reserve system of banking is simply a monetary system designed to control and enslave the U.S. government and its citizens.

The Federal Reserve Act of 1913 came into law on Dec. 23rd, 1913 at 06:02PM, in Washington, DC. To quote former President Woodrow Wilson:

“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.”

-Woodrow Wilson, after signing the Federal Reserve into existence.

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