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The Rise Of The Yuan Continues: LME To Accept Renminbi As Collateral
The Rise Of The Yuan Continues: LME To Accept Renminbi As Collateral
As far-fetched as the notion may be to those who are wedded – by choice, by misguided beliefs, or by virtue of being completely beholden to the perpetuation of the status quo – to idea that the dollar will forever retain its status as the world’s reserve currency, the yuan is set to play a critical role in global finance, investment, and trade going forward.
We’ve long argued that the BRICS bank, the AIIB, and to an even greater extent, the Silk Road Fund, will help to usher in a new era of yuan hegemony in international investment and trade. A number of recent developments support this, including Beijing’s push for the renminbi to play an outsized role in loans doled out through the AIIB, the denomination of loans from the BRICS bank in yuan, and China’s aggressive investment in Pakistan and Brazil via the Silk Road initiative (here and here).
As for financial markets, China recently confirmed the impending launch of a yuan denominated gold fix which conveniently dovetailed with the LBMA’s acceptance of the first Chinese banks to participate in the twice-daily auction that determines London gold prices.
Now, in the latest sign of yuan proliferation and penetration, the renminbi will be accepted as collateral by the LME along with the dollar, the euro, the pound, and the yen.
Here’s WSJ with more:
China’s domestic stock market may be in turmoil but the country’s currency, known as the yuan or renminbi, is making a seemingly relentless push deeper into the global financial system.The latest step: the London Metal Exchange, the world’s largest venue for trading metals where $15 trillion of metals was traded last year, is set to accept yuan as collateral for banks and brokers that trade on its platform.
…click on the above link to read the rest of the article…
Russia Readies Fuel Deliveries To Athens, Will Support Greek “Economic Revival”
Russia Readies Fuel Deliveries To Athens, Will Support Greek “Economic Revival”
Russia and Greece have a “special relationship of spiritual kinship and religious and historical affinity,” Vladimir Putin said yesterday, following the BRICS summit in Ulfa.
Over the course of the unfolding crisis in Greece, Athens has at various times gone out of its way to remind Angela Merkel that allowing the country to crash out of the currency bloc may force the Greeks to turn to their other international “friends” (to use Nigel Farage’s words) for assistance. Facing economic sanctions from the EU in connection with its alleged role in destabilizing Ukraine not to mention a spiteful anti-trust suit against Gazprom, the Kremlin has been more than happy to use the rising tensions between Athens and Brussels to its geopolitical advantage.
So far, discussions between Russia and Greece have revolved primarily around energy, and several months back, when negotiations between Athens and creditors began to deteriorate in earnest, reports began to surface that Moscow may consider advancing Greece some €5 billion against the future proceeds from the Greek portion of the proposed Turkish Stream natural gas pipeline.
Although the loan never materialized, the agreement on the pipeline did, and it was held up last week as proof that Greece is “no one’s hostage.”
Now, that contention will be put to the test as Greece faces the prospect of a “swift time-out” from the eurozone if PM Alexis Tsipras can’t convince parliament to agree to a new term sheet from creditors which seeks the implementation of a number of draconian measures in exchange for a third bailout. Of course, as we notedearlier today, a “time-out” is a polite way of saying “get the hell out,” and in the event of a messy exit and forced redenomination, an acute cash and credit crunch will likely mean a shortage of critical imports and, in short order, a humanitarian crisis.
…click on the above link to read the rest of the article…
Putin Leads BRICS Uprising
Putin Leads BRICS Uprising
There’s been a virtual blackout of news from this year’s seventh annual BRICS summit in Ufa, Russia. None of the mainstream media organizations are covering the meetings or making any attempt to explain what’s going on. As a result, the American people remain largely in the dark about a powerful coalition of nations that are putting in place an alternate system that will greatly reduce US influence in the world and end the current era of superpower rule.
Let’s cut to the chase: Leaders of the BRICS (Brazil, Russia, India, China and South Africa) realize that global security cannot be entrusted to a country that sees war as a acceptable means for achieving its geopolitical objectives. They also realize that they won’t be able to achieve financial stability as long as Washington dictates the rules, issues the de facto “international” currency, and controls the main levers of global financial power. This is why the BRICS have decided to chart a different course, to gradually break free from the existing Bretton Woods system, and to create parallel system that better serves their own interests. Logically, they have focused on the foundation blocks which support the current US-led system, that is, the institutions from which the United States derives its extraordinary power; the dollar, the US Treasury market, and the IMF. Replace these, the thinking goes, and the indispensable nation becomes just another country struggling to get by. This is from the Asia Times:
“Leaders of the BRICS… launched the New Development Bank, which has taken three years of negotiations to bring to fruition. With about $50 billion in starting capital, the bank is expected to start issuing debt to fund infrastructure projects next year. They also launched a foreign-exchange currency fund of $100 billion.
…click on the above link to read the rest of the article…
The U.S. And EU Will Collapse Regardless Of Economic ‘Contagion’
The U.S. And EU Will Collapse Regardless Of Economic ‘Contagion’
In order to understand what is really going on around the globe in terms of the collapsing economy, we must set aside false mainstream versions of reality. When it comes to the EU and its current fiscal turmoil, it is very important to, in some respects, ignore Greece entirely. That’s right; forget about all the supposed drama surrounding Greek debt obligations. Will they find a way to pay creditors? Will they default? Will they make a deal with Russia and the BRICS? Will there be last-minute concessions to save the system? It doesn’t matter. It’s all a soap opera, an elaborate Kabuki theater run by international financiers and globalists.
It is most important to remember the fundamentals. Greece will default on its debts. Period. There is no way around it. Maybe Greece makes a deal today, maybe it makes a deal tomorrow; but eventually, the country’s ability to stretch out its resources in order to meet its exponential liabilities will end. It is inevitable, and no last-minute “deal” is going to change the math at the core of it all.
Why are so many economists so worried about a little country like Greece? It’s all due to a great lie: a dishonest narrative being perpetuated by the establishment that if Greece falls, defaults or leaves the EU, this could trigger a domino effect of other nations hitting a debt wall and following suit. The lie embedded in this narrative is the claim that Greece will cause a “contagion” through the act of default. Let’s be clear – there is no contagion. Multiple countries within the EU have developed their own debt problems in spite of Greece over the past couple of decades, not because of Greece. Each of these countries, from Italy, to Spain, to Portugal, etc. has its OWN sovereign debt disasters to deal with caused by its own fiscal irresponsibility. The only legitimate reason for a so-called contagion is the fact that these countries have been forced into socialist interdependency through the EU structure.
…click on the above link to read the rest of the article…
Russian Pivot: Greece Will “Probably” Join BRICS Bank, Official Says
Russian Pivot: Greece Will “Probably” Join BRICS Bank, Official Says
Greece has very little in the way of bargaining power with European creditors. Outside of gimmicks like tapping its SDR reserves, Athens has no cash to make payments to the IMF in June and, perhaps more importantly, there’s very little in the way of wiggle room when one looks at revenues versus spending (see below), meaning Greece will also struggle to pay public sector employees which, in combination with Greeks’ consternation about the safety of their deposits, could contribute to social unrest and put unwelcome political pressure on PM Alexis Tsipras and his Syriza party that swept to power just five months ago on a defiant (and apparently naive) anti-austerity platform.
The troika (and Germany) knows this of course and they are also acutely aware that Spain’s Podemos and Portugal’s Socialists are watching the Greek drama closely for the slightest indication of concessions from the IMF or from the EU. In other words, the standoff is now just as much about politics as it is about economics, and the ‘institutions’ do not want any Syriza sympathizers to be able to say that Greece made anyone blink by threatening an exit from the currency bloc. What all of the above means is that for better or worse, Greece has essentially no leverage because for many European officials, trading austerity concessions for the right to maintain the idea of euro indissolubility is no longer a desirable outcome as it could embolden anti-austerity governments in larger, more influential countries. All of that said, Greece still has one card to play: the so-called ‘Russian pivot’.
…click on the above link to read the rest of the article…
China and the Gold Bugs
China and the Gold Bugs
A Popular Myth
One of the most persistent story lines among gold bugs and market participants who foresee the collapse of the dollar goes something like this:
China and many emerging markets including the other BRICS are looking for a way out of the global fiat currency system. That system is dominated today by the U.S. dollar. This dollar dominance allows the U.S. to force certain kinds of behavior in foreign policy and energy markets.
Countries that don’t comply with U.S. wishes find themselves frozen out of global payment systems and find their banks unable to transact in dollars for needed imports or to get paid for their exports. Russia, Iran, and Syria have all been subjected to this treatment recently.
China does not like this system any more than Russia or Iran but is unwilling to confront the U.S. Head-on. Instead, China is quietly accumulating massive amounts of gold and building alternative financial institutions such as the Asia Infrastructure Investment Bank, AIIB, and the BRICS-sponsored New Development Bank, NDB.
When the time is right, China will suddenly announce its actual gold holdings to the world and simultaneously turn its back on the Bretton Woods institutions such as the IMF and World Bank. China will back its currency with its own gold and use the AIIB and NDB and other institutions to lead a new global financial order.
Russia and others will be invited to join the Chinese in this new international monetary system. As a result, the dollar will collapse, the price of gold will skyrocket, and China will be the new global financial hegemon. The gold bugs will live happily ever after. The only problem with this story is that the most important parts of it are wrong.
…click on the above link to read the rest of the article…
“Brazil Just Getting Worse and Worse”
“Brazil Just Getting Worse and Worse”
The “B” in the falling BRICS…
Brazil is in a tough spot. Led by weak investment and plummeting confidence, growth, after slowing markedly since mid-2013, came to a virtual halt in 2014. This largely reflects the impact of diminished competitiveness, the erosion of policy credibility, owing to a persistent deterioration of fiscal outcomes and above-target inflation, and a worsening of external conditions for the country.
Risks to the outlook are significantly to the downside, and include adverse ramifications from the ongoing corruption probe concerning Petrobras, the possibility that fiscal policy goals may not be fully met, and energy and water rationing.
External downside risks emanate from a tightening of global financial conditions, geo-political tensions, and contagion from adverse developments in other emerging economies.
These risks could conflate if they were to combine with domestic policy shortfalls, and would threaten macro and financial stability.
The phrase, “threaten macro and financial stability,” is official-speak and central-banker jargon for a resounding economic and financial crash. It’s Brazil’s doomsday scenario.
This was written not by some doom-and-gloomer, but by the IMF. It how its report on Brazil starts out.
The report never mentioned “austerity,” the classic IMF prescription to make sure the teetering country’s sacred bondholders – mostly financial institutions – don’t end up holding the bag. But “austerity” has become object of derision. So the report bandies about the exact synonym, “fiscal consolidation,” after initiating it promisingly:
Fiscal consolidation should proceed without delay along the announced lines, while monetary policy should remain tight to bring inflation to target.
State-owned Petrobras, the country’s largest company, the once shining knight and in the once most promising industry, has been torn apart by corruption allegations that go all the way up the political ladder. And things have essentially ground to a halt.
…click on the above link to read the rest of the article…
Westward ho on China’s Eurasia BRIC road
Westward ho on China’s Eurasia BRIC road
“…it is imperative that no Eurasian challenger (to the U.S.)
emerges capable of dominating Eurasia
and thus also of challenging America”
Zbigniew Brzezinski, The Grand Chessboard, 1997
What’s in a name, rather an ideogram? Everything. A single Chinese character – jie (for “between”) – graphically illustrates the key foreign policy initiative of the new Chinese dream.
In the upper part of the four-stroke character – which, symbolically, should be read as the roof of a house – the stroke on the left means the Silk Road Economic Belt, and the stroke on the right means the 21st century Maritime Silk Road. In the lower part, the stroke on the left means the China-Pakistan corridor, via Xinjiang province, and the stroke on the right, the China-Myanmar-Bangladesh-India corridor via Yunnan province.
Chinese culture feasts on myriad formulas, mottoes – and symbols. If many a Chinese scholar worries about how the Middle Kingdom’s new intimation of soft power may be lost in translation, the character jie – pregnant with connectivity – is already the starting point to make 1.3 billion Chinese, plus the overseas Chinese diaspora, visualize the top twin axis – continental and naval – of the New Silk Road vision unveiled by President Xi Jinping, a concept also known as “One Road, One Belt”.
…click on the above link to read the rest of the article…
America’s Global Dominance (Since WW II) Has Just Ended
America’s Global Dominance (Since WW II) Has Just Ended
On March 22nd, I headlined “Why the Western Alliance Is Ending,” and I listed the recent events which indicate that the Western Alliance doesn’t have much longer to go. And, now, it has actually already ended. The handwriting is on the wall, for everyone to see; it’s so out-in-the-open, as of today.
Here is what has just happened (as reported in German Economic News, and translated by me), which virtually brings down the curtains on America’s dominance of the world — a dominance that started when World War II ended in 1945:
March 21: “GEOPOLITICS: Washington nervous: China, Japan and South Korea forge an Alliance.” This news story reports: “For the first time in three years, the foreign ministers of the three countries met. They agreed on Saturday in Seoul to work towards a summit of their leaders, and to take on problems with the interpretation of history [which have separated them till now]. They also expressed their intention to continue to work for a free trade agreement and for new multi-party talks on North Korea’s controversial nuclear program.”
Here’s the important context of that: The U.S. in WW II conquered Japan, which had invaded China and conquered Korea; but, now, Japan, China and South Korea are moving toward one-another, while China, and indirectly the BRICS group of rising economic powers as a whole — Brazil, Russia, India, China and South Africa — are making their move past the previous U.S.-European control of the world. Furthermore, these Asian powers are collectively inviting North Korea to move toward them, and to join this group, which would finally bring an end to the stalemated hostilities between South and North Korea. So: welcome to the 21st Century! (For more details on that, see the terrific news reporting in GEN.)
…click on the above link to read the rest of the article…
A Day In The Life Of A Falling BRIC
A Day In The Life Of A Falling BRIC
It’s not that long ago, in 2001, that Jim O’Neill, then still with Goldman Sachs, coined the term BRICs, for the fast emerging markets of Brazil, Russia, India and China. O’Neill saw a global power shift from the west to these four nations happening. Fast forward to today, and we see Russia under multiple attacks, including economic ones, from the west, as India just announced the second rate cut this year and China is attempting controlled demolition of the possibly biggest financial bubble in the history of the world.
And Brazil? If anything, it’s falling even faster off its pedestal than the other three nations. And in Brazil, it’s as much corruption scandals as it is the financial crisis and the plunge in oil revenues that take center stage. The stories have long been simmering, but they all came together in the media yesterday.
First, a seemingly minor one. Eike Batista was once the richest man in Brazil, and one of the 10 richest men on the planet, having made a fortune in gold mining and later oil. Then he went on to become probably the one man to lose the most money in the shortest time, going from $32 billion in early 2013 to minus $5 billion or so a little over a year later, impossible to pin down exactly for numerous reasons, but spectacular for sure.
…click on the above link to read the rest of the article…
ECB Warns UK: Excluding Russia From SWIFT “Could Undermine Confidence In The Whole System”
ECB Warns UK: Excluding Russia From SWIFT “Could Undermine Confidence In The Whole System”
As “isolated” Russia signs a military deal with Cyprus, agrees bilateral trade with Greece, ratifies the $100 billion BRICS Bank, and offers to trade advanced anti-aircraft missiles to Iran, it seems threats of more sanctions against Putin and his nation are finding resistance from an unexpected place. With British PM David Cameron re-demanding that Russia be excluded from the SWIFT global financial payments system, none other than ECB Governing Council member Ewald Nowotny has exclaimed, “one has to be very careful here, exclusion of Russia from Swift would be very problematic because it could potentially undermine confidence in this system as a whole.”
As Der Standard reports (via Google Translate),
A SWIFT exclusion of Russia as a sanction against the EU-Ukraine Moscow because of the crisis had last been suggested by British Prime Minister David Cameron. Nowotny said he had spoken with EU Commissioner for Economic Affairs Pierre Moscovici… the question of the Russia-EU sanctions.“I pointed out that one has to be very careful here,” the governor said. Exclusion of Russia from Swift “we would see as very problematic because it could potentially undermine confidence in this system as a whole”.
Austria would advocate a pragmatic way. His warning was not so much related to Austria, but on the credibility of the SWIFT system. This international payment system should be a neutral service, Nowotny said.
For Austria exclusion of Russia from Swift would have no immediate effect. However, Russia could then put retaliation, “and, of course, would have implications for all companies doing business in Russia there”. But he assumed that it would not come to such a step. He would not comment on the sanctions, “only if sanctioned, this is not the appropriate field.”
…click on the above link to read the rest of the article…
De-Dollarization: Russia Ratifies $100 Billion BRICS Bank
De-Dollarization: Russia Ratifies $100 Billion BRICS Bank
A BRICS Bank – as an IMF alternative and to enable nations to become less dependent on the global reserve currency – was originally discussed at The BRICS Summit in 2012. Thenat the 2014 BRICS Summit, the framework for The BRICS Bank was approved as “a system of measures that would help prevent the harassment of countries that do not agree with some foreign policy decisions made by the United States and their allies.” Headquartered in Shanghai and chaired by Russia, this week saw what appears to be the final step in the creation of BRICS New Deverlopment Bank as RT reports, The Russian State Duma has ratified the $100 billion BRICS bank that’ll serve as a pool of money for infrastructure projects in Russia, Brazil, India, China and South Africa. It is expected to start fully functioning by the end of 2015. Isolated?
The Russian State Duma has ratified the $100 billion BRICS bank that’ll serve as a pool of money for infrastructure projects in Russia, Brazil, India, China and South Africa, and challenge the dominance of the Western-led World Bank and the IMF.The New Development Bank is expected to start fully functioning by the end of 2015, according to the Russian Finance Ministry.
…click on the above link to read the rest of the article…
Could the U.S. Become the Unrivaled Superpower Again?
Could the U.S. Become the Unrivaled Superpower Again?
That Grand Narratives based on short-term trends are often wrong should not surprise us.
Two of the most durable and least-questioned narratives of the past 15 years are:
1. The world is becoming multipolar, meaning that rising power centers such as the BRIC nations (Brazil, Russia, India and China) are expanding their share of the global economy, at the expense of the U.S. and to a lesser degree, Europe and Japan. In sum: the U.S. is no longer the dominant superpower, but merely one power among many.
2. The U.S. dollar is in a long-term decline due to money-printing by the Federal Reserve and the world’s desire for an alternative to the dollar as the world’s default reserve currency.
Having written extensively on the complex dynamics of currencies (in particular, the strength of the U.S. dollar) since 2011, I am skeptical that these two narratives are correct for the simple reason that the dynamics do not align with these results.
Why the Rising U.S. Dollar Could Destabilize the Global Financial System (November 13, 2014)
What Will Benefit from Global Recession? The U.S. Dollar (October 9, 2012)
Could the U.S. Dollar Rise 50%? (January 12, 2011)
…click on the above link to read the rest of the article…
‘BRICS becoming a significant alternative voice in the international arena’ — RT Op-Edge
‘BRICS becoming a significant alternative voice in the international arena’ — RT Op-Edge.
BRICS could emerge as a voice for an alternative world view and development model as there is a good scope to take the relationship forward, Rajiv Sikri, former secretary at India’s Ministry of External Affairs, told RT.
Russian President Vladimir Putin is heading to India with one-day visit. The meeting between President Putin and Indian Prime Minister Modi promises deals on natural gas and new nuclear power for India. As for Russia, it is seeking to expand its energy links with Asia to counter sanctions from the US and its allies in the West.
Rajiv Sikri argues that India is very interested in close cooperation with Russia, while energy, arms sales and technology are the key sectors for developing the Russia-India partnership. He added that India would not support sanctions against Russia.
RT: In his interview before the visit President Putin said that Russia is aiming at becoming the major energy supplier to Asia as Western markets grow more and more complicated. Does India see this as an opportunity?
…click on the above link to read the rest of the article…
