Financial Explosion: Global Debt Crosses the $100 Trillion Mark

Has Risen by $30 Trillion Since 2007; $27 Trillion Is “Foreign-Held”

While the US may be rejoicing its daily stock market all time highs day after day, it may come as a surprise to many that global equity capitalization has hardly performed as impressively compared to its previous records set in mid-2007. In fact, between the last bubble peak, and mid-2013, there has been a $3.86 trillion decline in the value of equities to $53.8 trillion over this six year time period, according to data compiled by Bloomberg. Alas, in a world in which there is no longer even hope for growth without massive debt expansion, there is a cost to keeping global equities stable (and US stocks at record highs): that cost is $30 trillion, or nearly double the GDP of the United States, which is by how much global debt has risen over the same period. Specifically, total global debt has exploded by 40% in just 6 short years from  2007 to 2013, from “only” $70 trillion to over $100 trillion as of mid-2013, according to the BIS’ just-released quarterly review.

It should come as no surprise to anyone by now, but the only reason why global stocks haven’t plummeted since the Lehman collapse is simple: governments have become the final backstop for onboarding risk, with a Central Bank stamp of approval – in other words, the very framework of the fiat system is at stake should global equity levels collapse. The BIS admits as much: “Given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers,” according to Branimir Gruic, an analyst, and Andreas Schrimpf, an economist at the BIS.

It should also come as no surprise that courtesy of ZIRP and monetization of debt by every central bank, debt has itself become money regardless of duration or maturity (although recent taper tantrums have shown what will happen once rates start rising across the curve again), explaining the mindblowing tsunami of new debt issuance, which will certainly never be repaid, and whose rolling will become impossible once interest rates rise. But of course, under central planning that is not allowed. As Bloomberg reminds us, marketable U.S. government debt outstanding has surged to a record $12 trillion, up from $4.5 trillion at the end of 2007,  according to U.S. Treasury data compiled by Bloomberg. Corporate bond sales globally jumped during the period, with issuance totaling more than $21 trillion, Bloomberg data show.

And as we won’t tire of pointing out, China’s credit expansion over this period is easily the most important, and overlooked one. Which is why with China out of the epic debt issuance picture, and with the Fed tapering, all bets are slowly coming off.

Bloomberg also comments, humorously, as follows: “concerned that high debt loads would cause international investors to avoid their markets, many nations resorted to austerity measures of reduced spending and increased taxes, reining in their economies in the process as they tried to restore the fiscal order they abandoned to fight the worldwide recession.” Of course, once gross government corruption and incompetence made all attempts at austerity futile, and with even the austere nations’ debt levels continuing to breach record highs confirming there was never any actual austerity to begin with, the push to pretend to reign debt in has finally faded, and the entire world is once again engaged – at breakneck speed – in doing what caused the great financial crisis in the first place: the issuance of record amounts of unsustainable debt.

All of the above is known. What may not be known is just who is issuing, and respectively, purchasing, this global debt-funded spending spree, especially in a world in which one’s debt is another’s asset. Here is the BIS’s answer to that question:

Cross-border investments in global debt markets since the crisis

Branimir Grui? and Andreas Schrimpf

Global debt markets have grown to an estimated $100 trillion (in amounts outstanding) in mid-2013 (Graph C, left-hand panel), up from $70 trillion in mid-2007. Growth has been uneven across the main market segments. Active issuance by governments and non-financial corporations has lifted the share of domestically issued bonds, whereas more restrained activity by financial institutions has held back international issuance (Graph C, left-hand panel).

Not surprisingly, given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers (Graph C, left-hand panel). They mostly issue debt in domestic markets, where amounts outstanding reached $43 trillion in June 2013, about 80% higher than in mid-2007 (as indicated by the yellow area in Graph C, left-hand panel). Debt issuance by non-financial corporates has grown at a similar rate (albeit from a lower base). As with governments, non-financial corporations primarily issue domestically. As a result, amounts outstanding of non-financial corporate debt in domestic markets surpassed $10 trillion in mid-2013 (blue area in Graph C, left-hand panel). The substitution of traditional bank loans with bond financing may have played a role, as did investors’ appetite for assets offering a pickup to the ultra-low yields in major sovereign bond markets.

Financial sector deleveraging in the aftermath of the financial crisis has been a primary reason for the sluggish growth of international compared to domestic debt markets. Financials (mostly banks and non-bank financial corporations) have traditionally been the most significant issuers in international debt markets (grey area in Graph C, left-hand panel). That said, the amount of debt placed by financials in the international market has grown by merely 19% since mid-2007, and the outstanding amounts in domestic markets have even edged down by 5% since end-2007.

Who are the investors that have absorbed the vast amount of newly issued debt? Has the investor base been mostly domestic or have cross-border investments grown at a similar pace to global debt markets? To provide a perspective, we combine data from the BIS securities statistics with those of the IMF Coordinated Portfolio Investment Survey (CPIS). The results of the CPIS suggest that non-resident investors held around $27 trillion of global debt securities, either as reserve assets or in the form of portfolio investments (Graph C, centre panel). Investments in debt securities by non-residents thus accounted for roughly one quarter of the stock of global debt securities, with domestic investors accounting for the remaining 75%.

The global financial crisis has left a dent in cross-border portfolio investments in global debt securities. The share of debt securities held by cross-border investors either as reserve assets or via portfolio investments (as a percentage of total global debt securities markets) fell from around 29% in early 2007 to 26% in late 2012. This reversed the trend in the pre-crisis period, when it had risen by 8 percentage points from 2001 to a peak in 2007. It suggests that the process of international financial integration may have gone partly into reverse since the onset of the crisis, which is consistent with other recent findings in the literature.

This could be temporary, though. The latest IMF-CPIS data indicate that cross-border investments in debt securities recovered slightly in the second half of  2012, the most recent period for which data are available.

The contraction in the share of cross-border holdings differed across countries and regions (Graph C, right-hand panel). Cross-border holdings of debt issued by euro area residents stood at 47% of total outstanding amounts in late 2012, 10 percentage points lower than at the peak in 2006. A similar trend can be observed for the United Kingdom. This suggests that the majority of new debt issued by euro area and UK residents has been absorbed by domestic investors. Newly issued US debt securities, by contrast, were increasingly held by cross-border investors (Graph C, right-hand panel). The same is true for debt securities issued by borrowers from emerging market economies. The share of emerging market debt securities held by cross-border investors picked up to 12% in 2012, roughly twice as high as in 2008. *

Source: BIS | Zero Hedge

Deluded Currency Cultists Believe The Dollar Is Invincible

At the onset of the derivatives collapse in 2007/2008 it would have been easy to assume that most of America was receiving a valuable education in normalcy bias.

In 2006, the amount of ego on display surrounding mortgage investment was so disturbingly grotesque anyone with any true understanding of the situation felt like projectile vomiting. To watch the smug righteousness of MSNBC and FOX economic pundits as they predicted the infinite rise of American property markets despite all evidence to the contrary was truly mind blowing. When the whole system imploded, it was difficult to know whether one should laugh, or cry.

The saddest aspect of the credit crisis of 2008 was not the massive chain reaction of bankruptcies or the threat of institutional insolvency. Rather, it was the delusional assumptions of the public that the grand mortgage casino was going to go on forever. There is nothing worse than witnessing the victim of a Ponzi scheme defend the lie which has ultimately destroyed him. As much as I am for people waking up to the nature of the crisis, there comes a point when those who are going to figure it out will figure it out, and the rest are essentially hopeless.

The cultism surrounding the U.S. economy and the U.S. dollar is truly mind boggling, and by “cultism” I mean a blind faith in the fiat currency mechanism that goes beyond all logic, reason and evidence.

In recent weeks it has become more visible as global financiers play both sides of the Ukrainian conflict, luring Americans into a frenzy of false patriotism and an anti-Russo-sports-team-mentality. My personal distaste for Vladimir Putin revolves around my understanding that he is just as much a puppet of the International Monetary Fund and international banks as Barack Obama, but many Americans hate him simply because the mainstream media has designated him the next villain in the fantasy tale of U.S. foreign policy.

Open threats from Russia that they will dump U.S. treasury bond holdings and the dollar’s world reserve status if NATO interferes in the Ukraine have been met with wildly naive chest beating from dollar cultists. I am beginning to see the talking points everywhere.

“Let them dump the dollar, Russia’s holdings are minimal!” Or, “Let them throw out Treasuries, they’ll just be shooting themselves in the foot!” are the battle cries heard across the web. I wish I could convey how insane this viewpoint is, especially in light of the fact that many alternative economic analysts, including myself, have been predicting just such a scenario for years.

Despite the childish boastings of the dollar devout, there is an extraordinarily good possibility that the life of the greenback will be snuffed out in the near term. Here are the facts…

1) Russia will not be alone in its decouple from the dollar system. China, our largest foreign creditor, and India (a supposed ally) have clearly sided with Russia on the Ukranian issue. China has stated that it will back Russia’s play in the event that sanctions are brought to bear by NATO, or if a shooting conflict erupts.

2) China has already been slowly dumping the dollar as a world reserve currency using bilateral trade agreements with numerous countries, including Russia, India, Australia, Brazil, Germany, Japan, etc. These agreements allow FOREX currency swaps and export/import purchases to be made with China without the use of the dollar. China has been preparing itself for a divorce from U.S. economic dependence for at least a decade. The idea that they would actually follow through over political tensions should NOT surprise anyone if they have been paying attention.

3) A total drop of the dollar or U.S. treasury bonds by Russia and China would send shock waves through global markets. Russia is a major energy supplier for most of Europe. China is the largest export/import nation in the world. If they refuse to accept dollars as a trade mechanism, numerous countries will fall in line to abandon the greenback as well. The fact that so many Americans refuse to acknowledge this reality is a recipe for disaster.

The only advantage the U.S. has traditionally offered in terms of international trade has been the American consumer, whose unchecked debt spending partly fueled the rise of the industrialized East, not to mention the biggest credit bubble in history. The role of America as a consumer market is collapsing today, however. The mainstream media and the Federal Reserve can blame the steady decline in retail sales on the “weather” all they want, but negative indicators in global manufacturing often take many months to register in the statistics, meaning, this destabilization began long before the days turned cold.

4) China has been shifting away from export dependency since at least 2008, calling for a larger consumer based market at home. This process of enriching the Chinese consumer has almost been completed. The lie that China “needs the U.S.” in order to survive economically needs to be thrown out like the utter propaganda it is.

5) China (and most of the world) has ended new dollar purchases for their FOREX reserves, and has no plans to make new purchases in the future.

6) China executed the second largest dump of U.S. Treasury bonds in history in the past month.

7) Russia, China, and numerous other countries, including U.S. “allies”, have been calling for the end of the dollar’s world reserve status and the institution of a new global basket currency using the IMF’s Special Drawing Rights (SDR). Even Putin has suggested that the IMF take over administration of the global economy and issue the SDR as a world currency system. This flies in the face of those who argue that the IMF is somehow “American run”. The truth is, the IMF is run by global banks and no more answers to the U.S. government than the Federal Reserve answers to the U.S. government.

8) The Federal Reserve has been creating trillions of dollars in fiat just to prop up U.S. markets since 2008, and we are still seeing a considerable decline in global manufacturing, retail, personal home sales, and a general malaise in consumer demand. Without a full audit, there is no way to know exactly how much currency has been generated or how much is floating around in foreign markets. Any loss of world reserve status would send that flood of dollars back into the U.S., most likely ending in a hyperinflationary environment.

9) Another rather dubious argument I see often is the claim that the Federal Reserve and the U.S. Treasury could simply “negate” a Treasury dump by refusing to acknowledge creditor liabilities. Or, that they could simply print what they need to snap up the bonds, much like the German government tried to do during the Weimar collapse. Unfortunately, this plan did not work out so well for the Germans, nor has it worked for any other nation in history, so I’m not sure why people think the U.S. could pull it off. However, this is the kind of cultism we are surrounded by. These folks think the U.S. economy and the dollar are untouchable.

Yes, the Fed and the Treasury could hypothetically erase existing liabilities, but what dollar cultists do not seem to grasp is that the dollar’s value is not built on Treasury purchases. The dollar’s value is built on faith and reputation. If a nation refuses to pay out on its debts, this is called default. A default by the U.S. would immediately damage the reputation of bonds and dollars as a good investment. Global markets will refuse to purchase or hold any mechanism that they think will not earn them a profit. How many investors today are anxious to jump into Greek treasury bonds, for instance?

Finally, it is unwise to operate on the assumption that foreign creditors will accept dollars as payment on U.S. Treasury bonds if they believe the Federal Reserve is monetizing the debt. When Weimar imploded under the weight of currency devaluation, many foreign governments refused to accept the German mark as payment. Instead, they demanded payment in raw commodities, like coal, lumber and ore. Expect that China and other debt holders will demand payment in U.S. goods, infrastructure, or perhaps even land.

10) Most treasury holdings in foreign coffers are not long term bonds. Rather, they are short term bonds which mature in weeks or months, instead of years. Dollar proponents constantly cite the continued accumulation of treasury bonds by other governments as a sign that the dollar is still desirable as ever. Unfortunately, they have failed to look at the nature of these bond purchases. When China rolls over millions in short term bonds and replaces them with other short term bonds, this does not suggest they have much faith in America’s long term ability to service its debt. It would also make sense that if China had plans to remove itself from the dollar system, they would move into short term bonds which can be liquidated quickly.

11) China is on the fast track to becoming the largest holder of physical gold in the world. Russia has also greatly expanded its gold purchases. Whatever losses they might suffer from a dump of their Treasury bond investments; it will be more than made up in the incredible explosion in precious metals prices that would follow.

12) The most common argument against the dollar losing world reserve status has been that such a shift would be “impossible” because no other currency in the world has the adequate liquidity needed to replace the dollar in global trade. These people have apparently not been paying attention to the Chinese yuan. China has been quietly issuing trillions in yuan denominated bonds, securities and currency around the world. Current estimates calculate around $24 trillion created by the PBOC and the banks under its control.

Mainstream talking heads are calling this a “debt bubble.” However, this debt creation makes perfect sense if China’s plan is to create enough liquidity in its currency in order to offer a viable alternative to the U.S. dollar. Linking the yuan to the IMF’s basket currency would complete the picture, forming a perfect dollar replacement while dollar cheerleading-economists stand dumbstruck.

13) China’s retreat away from dollar denominated investments has left a hole in the U.S. bond market. Recently, that negative space was filled by an unexpected source; namely Belgium. A country whose GDP represents less than 1% of total global GDP buying more U.S. bonds than China? The whole concept sounds bizarre. Here is the capital coming from?

Think about it this way – Belgium is the political center of the European Union and a haven for international financiers. There are more corporate cronies, lobbyists, bureaucrats, and foreign dignitaries in Belgium than in all of Washington D.C. But more importantly, Belgium struck a deal with the IMF in 2012 to begin pumping SDR denominated funds into “low income economies”. I would suggest that this funding flows both ways, and that now, the IMF is feeding capital into Belgium in order to buy U.S. Treasury Bonds. That is to say, the IMF is going to start using smaller member countries with limited savings as proxies to purchase U.S. debt using IMF money.

The ultimate danger of the IMF (run by internationalists, not the U.S. government) pre-positioning itself as the primary buyer of U.S. debt is that when the U.S. finally defaults (and it will), the IMF is likely to become the “guardian angel” of the U.S. economy, offering aid in exchange for total administrative control of our financial system, and the institution of the SDR as a world reserve replacement for the dollar.

14) The serious prospect of regional conflict or world war over tensions between the Ukraine and Russia, Japan and China, the U.S. and Syria, the U.S. and Iran, the U.S. and North Korea, etc., could make the effort of exposing the plan to shift economic power into a one world system centralized under the IMF almost meaningless. How many people will truly care about the financial power grab by banking elites if it drifts under the surface of catastrophic engineered wars? They’ll be too busy hating and fighting artificially created boogeymen to pay attention to the real globalist culprits.

I have been pointing out for quite a long time that globalists need a “cover event”; a disaster, an economic war or a shooting war, in order to provide a smokescreen for the collapse of the dollar. Alternative analysts have been consistently correct in predicting the trend towards the dump of the dollar. Years ago, we were laughed at for suggesting China would shift towards a consumer based economy and away from U.S. dependence. Today, it is mainstream news. We were laughed at for suggesting that nations like Russia and China would drop the dollar as a reserve currency. Today, they are already in the process of doing it. And, we were laughed at for suggesting that Russia or China would use their debt holdings as leverage against the U.S. in the event of a geopolitical conflict. Today, they are openly making threats.

I have to say, I’ve grown tired of the dollar cultists. How many times can a group of people be wrong and still argue with those who have been consistently right? The answer is that zealots never actually escape their own delusions, even when their delusions lead them and those around them to ruin. I suspect that in the face of complete dollar collapse, they will still be rationalizing the chaos and pontificating on our “lack of understanding” while the theater burns down around them.

Delivered by The Daily Sheeple

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Contributed by Brandon Smith of Alt Market.

- See more at: http://www.thedailysheeple.com/deluded-currency-cultists-believe-the-dollar-is-invincible_032014#sthash.JgkqgbsO.dpuf

New Report on Wall Street Bonuses and the Minimum Wage

The $26.7 billion in bonuses Wall Street banks handed out in 2013 would be enough to more than double the pay for all 1,085,000 full-time U.S. minimum wage workers, according to an Institute for Policy Studies analysis of New York State Comptroller bonus figures released this morning.

IPS also calculated the differential between the economic stimulus effect of the Wall Street bonuses versus what might be expected with an equivalent increase in minimum wage worker earnings. If the $26.7 billion had gone into the pockets of minimum wage workers, the U.S. GDP would be expected to grow by about $32.3 billion, more than triple the $10.4 billion boost expected from the Wall Street bonuses.

The full IPS report “Wall Street Bonuses and the Minimum Wage” is attached. It will be available online shortly at this link.

For more information, contact:

Sarah Anderson, report author and Global Economy Project Director, Institute for Policy Studies, sarah@ips-dc.org, tel: 202 787 5227

Elaine de Leon, Communications Director, Institute for Policy Studies, elaine@ips-dc.org, tel: 202 787 5271

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Institute for Policy Studies turns Ideas into Action for Peace, Justice and the Environment. We strengthen social movements with independent research, visionary thinking, and links to the grassroots, scholars and elected officials. I.F. Stone once called IPS “the think tank for the rest of us.” Since 1963, we have empowered people to build healthy and democratic societies in communities, the US, and the world. Click here to learn more, or read the latest below.

Missing MH370: Oil rig worker thinks he saw plane go down in flames

A flight route on a map is seen during a news conference about the search and rescue operation to find the missing Malaysia Airlines flight MH370 at Phu Quoc Airport on Phu Quoc Island on March 12, 2014. -- PHOTO: REUTERS

SINGAPORE: In yet another twist to the mystery of Malaysia Airlines flight MH370, a New Zealand oil rig worker has come forward to say he believes he saw the airplane on fire right around the time it disappeared.

Mike McKay, a worker on the "Songa Mercur" drilling platform in the South China Sea, sent an email to his bosses detailing his version of events.

He said he "observed the plane burning at high altitude...in one piece" about 50-70km from his location, Business Insider reported.

He gave coordinates for the location of the rig, which recently moved from Cuba to the shores of Vietnam.

McKay's employer confirms that the letter, posted online by several news outlets on Thursday, is authentic.

McKay, who carries a New Zealand passport, said that he tried to contact Malaysian and Vietnam officials about what he saw "several days ago", adding that he had received no confirmation that they got his message.

"I believe I saw the Malaysian Airlines plane come down. The timing is right," McKay said in the email.

"I observed (the plane?) burning at high altitude.

"While I observed the burning (plane) it appeared to be in ONE piece."

"From when I first saw the burning (plane) until the flames went out (still at high altitude) was 10-15 seconds.

“There was no lateral movement, so it was either coming toward our location, stationary (falling) or going away from our location," he wrote.

Vietnamese officials confirmed to ABC News that they had received the letter. But they found nothing in the water at the location specified by McKay.

Given the apparent location of the rig, and the original flight path of MH370, it is possible that McKay is correct, the report said.

But that would also seem to discount the theory that the plane turned and headed in the complete opposite direction, as some military authorities have claimed.

Meanwhile, officials are expanding their search for the still-missing plane, and the 239 people on board. There are several reports indicating that the plane may have veered off its intended flight path and changed direction before disappearing from radar, but those reports conflict as to where, exactly it went.

At least 10 countries are involved in the Malaysian-led search for the missing jet, which carried passengers from at least 13 different countries, although most of the passengers were Chinese citizens. – The Straits Times/ANN

Was flight MH370 lost in an aeronautical black hole or did catastrophic power failure prevent air traffic control plotting its every move?

• Boeing 777's transponder should provide information to traffic controllers
• But at 1.20am on Saturday, transponder on flight MH370 stopped working
• Experts baffled by loss of communication and subsequent lack of debris
• One theory links 20 defence tech experts on board to electronic warfare
• Another suggests a bomb went off while plane flew over Malaysian jungle
• There are also 'aeronautical black holes' in the region that could mean the plane is hundreds - or even thousands -  of miles away from searches
• Nuclear experts are now using a 'infrasound' to find out if an explosion took place at the altitude of the plane 

By ELLIE ZOLFAGHARIFARD and SARAH GRIFFITHS and VICTORIA WOOLLASTON

With technology tracking our every move, it seems incredible that a plane carrying 239 passengers could vanish into thin air.

Yet despite flight data recorders, location transponders and radio communication, the Malaysia Airlines Boeing 777 disappeared on a midnight flight out of Kuala Lumpur on Friday.

Experts are baffled by the loss of communication, with some putting forward theories of mid-air bomb explosions, disappearance into an 'aeronautical black hole' and an attempt at electronic warfare. 

Scroll down for video...

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Despite flight data recorders, location transponders and radio communication, the Malaysia Airlines Boeing 777 disappeared on a midnight flight out of Kuala Lumpur on Friday

The mystery has deepened after reports emerged that relatives have been able to call the mobiles of their missing loved ones.

Professor William Webb, a fellow of the Royal Academy of Engineering, told MailOnline: ‘The phones definitely won't be working. They'll be underwater, out of coverage and by this time out of battery.

‘So there's absolutely no way they could be used for triangulation.

 

‘As to why they are "ringing" it'll be the same as if they were out of coverage - in some cases it may ring before going to voicemail.’

Some reports claim the phones are just ringing and ringing however.

Telecoms expert Alan Spencer told MailOnline that if the phones are really ringing, they can categorically not be under the sea.

He added that the phones will only be ringing if they are ‘switched on, not in water, the battery is charged, and [they are] near a mobile cell site.’

This means that if the phones are genuinely ringing, the plane needs to have landed on land – not in the sea – and be in a location where there is cell service, rather than in the middle of a jungle, for example. 

Meanwhile, the disappearance of the aircraft may be explained by a deliberate cutting of power to the plane’s communication instruments.

Dr Martyn Thomas from the Institution of Engineering and Technology, told MailOnline that he thinks a sudden decompression of the plane may have taken place and effectively knocked out the pilot and passengers – as well as the communication equipment.

In this scenario, the plane could have flown on using its autopilot without any human influence and ‘could be anywhere within about 2,000 miles’.

Another possibility is that the plane fell into an 'aeronautical black hole' in the region, according to Stewart John, an aeronautical expert and Fellow of the Royal Academy of Engineering.

Radar is used to track planes over land in inhabited areas but when planes venture over remote lands, such as the inner part of Russia or over the jungles of Malaysia, the only way of tracking them is the aircraft sending back information at regular intervals, he explained.

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The search for the missing aircraft has widened considerably after previous prediction of its whereabouts proved fruitless. It remains a mystery how a Boeing 777 could have disappeared without a trace in such relatively shallow seas

WHAT COULD HAVE HAPPENED TO THE BLACK BOX?

The black box - which is actually orange - is used to record any instruction sent to the aircraft as well as conversations on radio and between the crew. 

When a plane is lost, the black box pings at a certain frequency for between 30 to 70 days and it can be detected within around five or six miles.

The box itself is designed to withstand the high impact of a plane crash, the pressures of the deep sea and the high and low temperatures of fire and ice.

‘But search parties could miss it if they are not close enough or are not detecting the correct frequency’, Dr Stewart John told MailOnline.

There also remains the possibility that a powerful enough force, such as a bomb, could have completely destroy the black box on the Malaysia flight.

The black box may also be too deep in the ocean for the recovery team to find. 

Honeywell’s black box units, for instance, emit signals that can be heard from 2.8 miles deep.

If the aircraft remained airborne after the last check-in it could still be hundreds of miles away from where people are searching.

Dr John thinks it is more likely that the aircraft was destroyed by an ‘explosive decompression’ – likely be a bomb on-board the plane.

He said that if a door or window was blown out, a pilot would be able to manage the situation. He explained that the catastrophe ‘had to be explosive [for the aircraft] to fall down from the sky…it would be more than just a panel blowing out’.

He added: ‘If they lost both engines, the pilot would have around 20 minutes - roughly equivalent to 70 to 80miles - to glide down from an altitude of 30,000 feet.’

However, Dr Martyn Thomas from the Institution of Engineering and Technology (IET) believes that a civil or military tracking device must have clocked the aircraft’s location.

Aircraft are mostly tracked by secondary radar over land. 

Over large distances planes automatically transmit a four digit ‘squawk’ code showing its identification and altitude.

A system called Automatic Dependent Surveillance Broadcast (ADS-B) is used for when aircraft are out of normal radar range, such as over remote regions or oceans.

‘Aircraft ping out their location speed, heading and altitude, which are broadcast and logged. You can track any flight,’ Dr Thomas said.

Airplanes also send information to an airline about their performance and emergency warning data. ‘But appears none was received’ for the flight in question, he said.

‘It seems as if it took off, climbed to 30,000ft and maintained a level heading, then in the last few seconds started to turn right,’ Dr Thomas added.

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The interior of the cockpit of a Boeing 777, similar to the one that disappeared early Saturday morning

‘It is known where the aircraft was within tens of metres when it lost contact,’ he explained, so it seems that there was ‘either a deliberate cutting of power to communications instruments such as radios and transponders, or a catastrophic event.’

HOW ARE FLIGHTS TRACKED?

On board a plane there are cockpit voice and flight data recorders – the ‘black boxes’ – which each include a ‘pinger’ that sends a transmission up to 30 days after submersion underwater.

In the black box is an ASD-B flight transponder which, unlike the GPS in a car, broadcasts its location by sending information back to air traffic controllers every second.

Crews are also able to speak to their airline through discrete radio channels. 

The missing aircraft was comfortably at a stage of flight when the pilot would have had plenty of time to report any mechanical problems to Air Traffic Control. 

Black boxes on commercial aircraft also contain cockpit voice recorders which could provide some insight into what went wrong on that plane at 1am on Friday morning.

It remains a mystery why no one can make contact with the box.

‘Something stopped communication instruments in the cockpit or there was a catastrophic failure – but it is very hard to understand,’ he added.

In a more radical theory, the possibility of electronic warfare has also been raised following confirmation that there were at least 20 passengers onboard from Texas-based Freescale Semiconductor. Each of these passengers had specialist knowledge of electronic technology for defence applications.

This could include ‘cloaking’ technology that uses a hexagonal array of glasslike panels to bend light around an object, such as plane, according to a report in Beforeitsnews.com.

Other techniques may have been used to jam signals, allowing the plane to vanish from radar detection without its security systems being activated.

‘It is conceivable that the Malaysia Airlines Flight MH370 plane is “cloaked,” hiding with hi-tech electronic warfare weaponry that exists and is used,’ Beforeitsnews.com wrote.

‘In fact, this type of technology is precisely the expertise of Freescale that has 20 employees on board the missing flight.’

‘These were people with a lot of experience and technical background and they were very important people,’ Mr Mitch Haws, Global communications officer for the tech company, said.

The company recently launched a major initiative dedicated to serving radio frequency power needs of U.S. aerospace and defence sector.

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The plane would also have been fitted with an indestructible black box recorder and a beacon to continue transmitting its location should it land in water

The mystery of why no debris has been found at sea or over land is also leaving experts baffled, but there is a theory that if the plane crashed in the jungle, tall rubber trees, which are common in the region, could cover the crash site easily. 

Dr John said: ‘If it came down in a controlled way, it would carve a path through the trees – you would see a kind of runway – so it’s got to be a catastrophe and something out of the normal.’

On Monday, the head of the organisation that monitors the nuclear test ban treaty said he has asked its experts to see if they detected an explosion at the altitude of the missing plane.

Lassina Zerbo, executive director of the Comprehensive Nuclear Test Ban Treaty Organisation (CTBTO) explained to a news conference that experts can use 'infrasound; - or infrasonic sensors - to monitor the planet  for atmospheric nuclear explosions.

'There's a possibility, it's not absolute, that the technology like the Infrazone could be able to detect an explosion,' he said in response to a question by CBS News. 

Infrasound are acoustic waves with very low frequencies that are inaudible to the human ear are called infrasound.

'Infrasound is produced by a variety of natural and man-made sources: exploding volcanoes, earthquakes, meteors, storms and auroras in the natural world; nuclear, mining and large chemical explosions, as well as aircraft and rocket launches in the man-made arena,' the CTBTO said.

WHY ARE THE PHONES STILL RINGING?

After three days, wouldn’t the phone batteries be dead by now? 

Not necessarily. Smartphones are renowned for their poor battery life and will typically last up to around 24 hours. But the batteries on older, feature phones can last much longer. 

For example, the Nokia 100 boasts a standby battery life of a staggering 35 days. Smartphone batteries can also last longer if the handset isn’t being used, and especially if the phone is in Flight Mode. 

However, if the phone is in Flight Mode, it switches off all wireless activity meaning calls wouldn’t be able to connect, effectively ruling out this theory.  

If the phone batteries are dead, wouldn’t the call go straight to voicemail?

In a word, yes. However, the process of sending the call to voicemail can differ depending on the service provider. 

For example, the majority of phones will go straight to voicemail, or callers will get an out of service message if voicemail hasn’t been set up. 

This will occur even if the phone is underwater, or not near a cell signal. 

However, some service providers will ring once or twice before the phone goes to voicemail, or cut off. This may explain the reports that claimed phones rang before seeming to hang up. 

Some reports claim the phones are just ringing and ringing though. How is this possible?

Telecoms expert Alan Spencer told MailOnline that if the phones are really ringing, they can categorically not be under the sea. 

Although he added that the phones will only be ringing if they are ‘switched on, not in water, the battery is charged, and [they are] near a mobile cell site.’

This means that if the phones are genuinely ringing, the plane needs to have landed on land – not in the sea – and be in a location where there is cell service, rather than landing in the middle of a jungle, for example. 

Why can’t network operators locate the phones?

A number of family members have asked the network operators why they can’t use the phone’s signal to locate the missing people. 

Professor William Webb, a Fellow of the Royal Academy of Engineering, told MailOnline: ‘The phones definitely won't be working. They'll be underwater, out of coverage and by this time out of battery. 

‘So there's absolutely no way they could be used for triangulation. 

‘As to why they are ‘ringing’ it'll be the same as if they were out of coverage - in some cases it may ring before going to voicemail.’

What about the T3212 timer I’ve read about? 

The T3212 is a timer that causes a phone to periodically send a message to the network saying where it is. 

But Professor Webb said this only works when the phone is turned on and it is in coverage. It won't work when the battery is dead.

What about reports that passengers are appearing online, on the QQ social network?

When people sign into social networks including QQ, as well as Facebook, they appear online. 

This is the case whether they’ve signed in on a phone, tablet, PC, and laptop. If missing passengers are shown as online, they may not be using the service on their phone. Instead they may still be logged in on another device. 

If this other device shuts down or goes into standby, however, or there is a long period of inactivity, the social network will log them out, which may explain why some accounts went from online to offline over a period of three days.

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Malaysia's Department Civil Aviation Director General, Azharuddin Abdul Rahman, pictured left, with Malaysian Airlines CEO Group Ahmad Jauhari Yahya, pictured right, during a press conference on the new search area

The Malaysia Airlines Boeing 777 disappeared along with 239 people on a midnight flight out of Kuala Lumpur on Friday.

On board were cockpit voice and flight data recorders – the ‘black boxes’ – which each include a ‘pinger’ that sends a transmission up to 30 days after submersion.

It was with an ASD-B flight transponder which, unlike the GPS in a car, broadcasts its location by sending information back to air traffic controllers every second.

Crews are also able to speak to their airline through 'discrete radio channels', according to aviation expert John Goglia, writing on the Forbes website.

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A cabin crew of Division 918 of the Vietnam Air Force is onboard a flying Soviet-made AN-26 during the search operations

'A complete electrical failure is extremely unlikely because of redundancies in the system’ he said.

THE UNANSWERED QUESTIONS

How can a plane simply disappear?

Why can't we make contact with the black box?

Why are the passengers' phone still ringing? And why are they showing as being online?

Why is there no debris?

Why would the plane do a u-turn to Kuala Lumpur?

If it was an act of terrorism, why has no organisation come forward?

Why did Malaysia Airlines report inconsistent times for the disappearance of the craft?

‘Especially the ram air turbine which uses the power of the wind generated by the aircraft’s motion in flight to generate electricity which would power critical navigation and communication systems, as well as flight controls.

'But even if the aircraft had a complete electrical failure, the aircraft could have continued to fly.'

He goes on to argue the plane could have eventually flown to an area where it would have been picked up again by radar, suggesting it was 'too early to speculate' on what has caused the disappearance.

Currently all that is known is the missing flight underwent ‘a steep and sudden descent’ and changed its heading.