World Bank

Gold may not be money, but the proceeds from selling it sure is, at least to the IMF, which moments ago announced that it has received government approval to "transfer the profits from gold sales low-income countries." Reuters reports that "The International Monetary Fund has received approval from its member nations to transfer the profits from gold sales conducted a few years ago to a fund to help low-income nations, IMF chief Christine Lagarde said on Thursday. "We have just reached the threshold of enough approval from our membership to transfer the existing gold profit to meet the financing needs of our low-income countries," she said at a news briefing opening the fall meetings of the IMF and World Bank." What was left unsaid is that the bailout needs of the high-income countries, once the debt crsisis comes back with a vengeance as it always does - which as the Keynesian uberminds have demonstrated can only be "solved" with more debt, more monetization, and more pent up inflation - will make sure that gold prices jump right back to new highs at which point the IMF can sell another batch of gold to fund the "poor countries" again, and so on, repeating the process until all fiath is extinguished, or until the IMF runs out of gold, whichever comes first.

• Hilsenrath: Tense Negotiations Inside the Fed Produced Muddled Signals to Markets (WSJ)
• Biggest US Foreign Creditors Show Concern on Default Risk (BBG)
• Shutdown Costs at $1.6 Billion With $160 Million Each Day (BBG)
• What default? Republicans downplay impact of U.S. debt limit (Reuters)
• Top Bankers Warn on U.S. Debt Proposal (WSJ)
• India to stick with austerity despite looming election (Reuters)
• Japan's Current-Account Surplus Plunges (WSJ)
• Amazon Wins Ruling for $600 Million CIA Cloud Contract (BBG)
• German Factory Orders Unexpectedly Fall on Weak Recovery (BBG)
• Britain's Higgs, Belgium's Englert win 2013 physics Nobel prize (Reuters)
• Supreme Owner Made a Billionaire Feeding U.S. War Machine (BBG)

Overnight trading over the past week has been a bipolar affair based on algo sentiment about what is coming out of D.C. But which the last session was optimistic for some inexplicable reason that a deal on both the government shutdown and the debt ceiling out of DC was imminent, today any optimism is gone in the aftermath of the latest comments by Boehner on ABC, in which he implied that a US default is not unavoidable and that it would be used as more political capital, as it would be once again blamed on Obama for not resuming negotiations. As a result both global equities and US futures are down sharpy in overnight trading. And since the government shutdown, better known as a retroactively paid vacation, for everyone but the Pentagon (whose 400,000 workers have been recalled from furlough) continues it means zero government economic statistics in today's session with the only macro data being the Fed-sourced consumer credit report at 3 pm. This week also marks the unofficial start of the Q3 reporting season in the US with Alcoa doing the usual opening honous after the US closing bell tomorrow. JPMorgan’s and Wells Fargo’s results on Friday are the other main ones to watch to see just how much in reserves are released to pretend that banks are still making money.  As usual, expect disinformation leaks that send the market sharply higher throughout the day, which however will only make the final outcome that much more painful, because as during every US government crisis in the past, stocks have to plunge so they can soar again.

This may become the most important article I’ve ever written. But whether it becomes that article or dwells in anonymity is up to you, the reader.

Here is Part Two of our exclusive interview with World Bank Whistleblower Karen Hudes in which I discuss with Ms. Hudes the need to end an immoral fractional reserve banking system that continually drains the wealth of citizens without their consent and without their knowledge.

As Angela Merkel prepares for her third term - in whatever odd coalition that lurches from the election - the following four charts may surprise many that believe in the core European nations' dominance uber alles. As Bloomberg's Niraj Shah notes, Merkel may find rebalancing the German economy, as its reliance on exports increases, harder than ever. The low levels of growth, high trade balances, excepotionally low consumption and homeownership, and growing "shadow" economy all point to a European core that is far from the beacon of stability so many assume it to be.

An exclusive SmartKnowledgeU interview with World Bank Whistleblower Karen Hudes, in which we discuss the growing adoption of competitive currencies to fiat such as gold and silver, the reasons why the masses still largely remain ignorant of banking criminality, and the turniing tide against immoral Central Banking activities.

With the value of the rupee plunging to new lows, the current account deficit at an all-time high and inflation running at nearly a ten-percent annual clip, India is in serious economic trouble. Indeed many are beginning to wonder whether the country is edging toward a replay of the events in the summer of 1991. Back then, an acute balance of payments crisis forced New Delhi into the indignity of pawning its gold reserves in order to secure desperately needed international financing. At a small public event the other week, Duvvuri Subbarao, the outgoing head of the central bank conceded that policymakers rarely learn from their mistakes: "...in matters of economics and finance, history repeats itself, not because it is an inherent trait of history, but because we don’t learn from history and let the repeat occur."

The first signs are emerging that the cult-like status given to the world's central bankers is starting to wane, with significant market implications.

While the world is gripped in yet another great distraction over the great "will he, won't he" start World War III debate, things that are unsustainable remain unsustainable. Such as Japan's debt, and specifically the amount of cash interest that the nation with the 230% debt/GDP (and rising interest rates) will have to pay to service its gargantuan balance sheet. According to a document seen by Reuters, Japan expects to spend a record $257 billion to service its debt during the next fiscal year. The amount to be allocated for debt-servicing for the year that will begin on April 1 is nearly as large as the gross domestic product of Singapore, which the World Bank put at $275 billion at the end of 2012. More disturbing, this is a 14% increase in the debt interest cost in just one year. And yes, it is unsustainable absent an epic inflationary episode to "inflate away the debt", something that Abenomics has so far failed in achieving despite some hopeful early glimmers in crushing the Yen.

One of the most published academics on gold in the world is Dr Brian Lucey of Trinity College Dublin (TCD) and he and another academic who has frequently covered the gold market, Dr Constantin Gurdgiev have just this week had an excellent research paper on gold published.

They have researched the gold market, along with Dr Cetin Ciner of the University of North Carolina and their paper,  ‘Hedges and safe havens: An examination of stocks, bonds, gold, oil and exchange rates’ finds that gold is a hedge against US dollar and British pound risk due to “its monetary asset role.”

A new study carried out by the economists at the World Bank has examined the risks that coastal cities around the world face due to global warming’s effect on extreme weather events, and rising sea levels. The study determined the cost of flooding in 136 of the world’s largest coastal cities by matching average annual losses against the city’s gross domestic product (GDP), and predicted that by 2050 the cost could reach $1 trillion a year, if governments don’t start to take the “prophecies of doom” more seriously and prepare strategies to minimise the effects of severe weather and build flood defences. Over 40% of those costs will likely occur in just four global cities; New Orleans, Miami, and New York in the US, and then Guangzhou in China.

The sharpening international geopolitical competition over natural resources has turned some strategic resources into engines of power struggle. Transnational water resources have become an especially active source of competition and conflict, triggering a dam-building race and prompting growing calls for the United Nations to recognize water as a key security concern. With the era of cheap, bountiful water having been replaced by increasing supply and quality constraints, many investors are beginning to view water as the new oil. Political and economic water wars are already being waged in several regions, reflected in dam construction on international rivers and coercive diplomacy or other means to prevent such works. The World Bank estimates that such constraints are costing China 2.3% of GDP. In short, we must focus on addressing our water-supply problems as if our lives depended on it. In fact, they do.

In the aftermath of the global financial crisis, world leaders repeated a soothing mantra. There could be no repeat of the Great Depression, not only because monetary policy was much better (it was), but also because international cooperation was better institutionalized. And yet one man, the American former intelligence contractor Edward Snowden, has shown how far removed from reality that claim remains. Prolonged periods of strain tend to weaken the fabric of institutional cooperation. The two institutions that seemed most dynamic and effective in 2008-2009 were the International Monetary Fund and the G-20; the credibility of both has been steadily eroded over the long course of the crisis. The Snowden affair has blown up any illusion about trust between leaders – and also about leaders’ competence.

Today average Brazilians are having trouble making ends meet paying for everyday products or household goods. Riots erupted in Brazil against the Pope’s visit to Rio de Janeiro.