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Who Benefits Most From Cheap Oil?
Who Benefits Most From Cheap Oil?
We are living in a world obsessed with oil and its price movements. Some time back, when all the trade pundits were predicting a stable 100$ benchmark, the prices fell… and how! The current fall in the oil price has been particularly harsh and excruciating for some of the prominent players such as Russia and Venezuela. To add fuel to the fire, on March 16, 2015, the oil price plummeted to a 6-year low level of 42.98 dollar per barrel. With the possible addition of Iranian oil to the global oil supply, the refusal of OPEC to cut down its production levels, rising US crude inventory and weak global demand, one can easily predict that cheap oil is here to stay. These are testing times for global economy where a simple question arises: Who benefits the most from cheap oil?
The answer is not one but the two Asian Giants: India and China, who are among the biggest global importers of oil.
Source: EIA
India
With a projected growth rate of more than 7.8% in 2015, India is all set to grow more than China according to the IMF and World Bank. With a consumption of more than 3 million barrels of oil per day, India is the fourth largest global consumer of oil in the world. Since the country imports around 80% of its total crude oil requirement, cheap oil has drastically reduced India’s import bill and current account deficit from the previous years. As per India’s current finance minister, the country might even achieve a current account surplus in the fourth quarter of 2015. Moreover, India has recently de-regulated the price of diesel and petrol and brought it in line with the international rates. The deregulation of fuel has reduced its retail cost which has resulted in reduction of the overall inflation rate.
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Washington Blinks: Will Seek Partnership With China-Led Development Bank
Washington Blinks: Will Seek Partnership With China-Led Development Bank
Don’t look now, but Washington just blinked. As we’ve documented exhaustively over the past week, pressure has been building steadily for the US to strike some manner of conciliatory tone towards China with regard to the Asian Infrastructure Investment Bank, a China-led institution aimed at rivaling the US/Japan-backed ADB. Britain’s decision to join China in its new endeavor has prompted a number of Western nations to throw their support behind the bank ahead of the March 31 deadline for membership application. Because the AIIB effectively represents the beginning of the end for US hegemony, the White House has demeaned the effort from its inception questioning the ability of non-G-7 nations to create an institution that can be trusted to operation in accordance with the proper “standards.” Now, with 35 nations set to join as founders, it appears Washington may be set to concede defeat. Here’s more, via WSJ:
The Obama administration, facing defiance by allies that have signed up to support a new Chinese-led infrastructure fund, is proposing the bank work in a partnership with Washington-backed development institutions such as the World Bank.The collaborative approach is designed to steer the new bank toward economic aims of the world’s leading economies and away from becoming an instrument of Beijing’s foreign policy. The bank’s potential to promote new alliances and sidestep existing institutions has been one of the Obama administration’s chief concerns as key allies including the U.K., Germany and France lined up in recent days to become founding members of the new Asian Infrastructure Investment Bank.
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The new order emerges
The new order emerges
China and Russia have taken the lead in establishing the Asian Infrastructure Investment Bank (AIIB), seen as a rival organisation to the World Bank and the Asian Development Bank, which are dominated by the United States with Europe and Japan.
These banks do business at the behest of the old Bretton Woods* order. The AIIB will dance to China and Russia’s tune instead.
The geopolitical importance was immediately evident from the US’s negative reaction to the UK’s announcement this week that it would join the AIIB. And very shortly afterwards France, Germany and Italy also defied the US and announced they might join. In the Pacific region, one of America’s closest allies, Australia, says she is considering joining too along with New Zealand. The list of US allies seeking to join is growing. From a geopolitical point of view China and Russia have completely outmanoeuvred the US, splitting both NATO and America’s Pacific alliances right down the middle.
This is much more important than political commentators generally realise. We must appreciate that anything China does is planned well in advance. Here is the relevant sequence of events:
• In 2002 China and Russia formally adopted the founding charter for the Shanghai Cooperation Organisation, an economic bloc that today contains about 35% of the world’s population, which will become more than 50% when India, Pakistan, Iran, Afghanistan and Mongolia join, which is their stated intention. Russia has the resources and China the manufacturing power to develop the largest internal market ever seen.
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There’s Brussels And Then There’s Real People
There’s Brussels And Then There’s Real People
Once again, a look at Greece and the Troika, because it amuses me, it angers me, and also because it warms my cockles, in an entirely metaphorical sort of way. The Troika members love to make it appear (and everyone swallows it whole) as if in their ‘negotiations’ with Greece all sorts of things are cast in stone and have no flexibility at all. Humbug.
First, another great piece by Rob Parenteau (via Yves Smith), who lays it out in terms so simple they can’t but hit the issue square on the nose. For Europe and the Troika, there’s Greece, and then there’s the rest. No money for the Greeks lining up at soupkitchens (not even for the soupkitchens themselves), but $60 billion a month for the bond market. The $200 million anti-poverty law – a measly sum in comparison – that Athens voted in this week is a no-no because Greek government has to ask permission for everything in Brussels first, says Brussels, no matter that that only prolongs the suffering. It’s not about money, in other words, it’s about power, and the Greeks must be subdued.
Both the financial and the political press have by now perfected their picture of Yanis Varoufakis as a combination of some kind of incompetent blunderer on the one hand, and a threat the size of Vladimir Putin on the other, while the rudeness of German FinMin Schäuble is not discussed at all. The media are no longer capable of reporting anything outside of their propaganda models. The ‘middle finger’ video turns out to be a fake, but who cares, it’s done its damage. Parenteau:
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US “Isolated” As Key Ally Japan Considers Joining China-Led Bank
US “Isolated” As Key Ally Japan Considers Joining China-Led Bank
Well, that escalated quickly.
Just a week ago it appeared Washington had managed (for the time being at least) to convince the US’ closest allies to refrain from joining the Asian Infrastructure Investment Bank, a sinocentric institution aimed at promoting development across Asia that is meant to rival the US/Japanese-led ADB and begin a seismic shift away from the world’s traditionally US-dominated institutions such as the World Bank and the IMF. Then, much to the chagrin of Washington, the UK joined as a founding member calling it an “unrivaled opportunity.”
As we and many other observers correctly noted at the time, the move by Britain could well embolden other countries who had expressed an interest initially but been deterred by pressure from Washington to reconsider their bids for membership. In (very) short order, everyone from Germany to Australia to Luxembourg was suddenly ready to cast their lot with the Chinese despite US warnings that the bank won’t adopt the proper operational standards. As we said yesterday, the world is now wise to the fact that US criticism of the new venture is very likely nothing more than an attempt by The White House to undermine Chinese regional ambition:
…and that means in short order Australia and South Korea will likely be on board and at that point, the stigma the US has created around membership will have completely disappeared (if it hasn’t already), opening the door for other US “allies” to join despite the bank’s alleged “low” standards.
Now, it appears the last valuable friend the US has in the bid to keep China from undercutting the ADB is beginning to consider a bid to join up. Here’s more from Reuters:
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Cracks In Washington’s Empire
Cracks In Washington’s Empire
Washington’s EU vassals might be finding their backbone. Britain, Germany, France, and Italy are reported to have defied Washington’s orders and applied to join the Chinese-led Asian Investment Bank. Australia, Japan, South Korea, Switzerland and Luxembourg might also join.
Washington uses its development banks such as the Asian Development Bank, the World Bank, along with the IMF, in order to exercise financial and political hegemony. These banks are crucial elements of American economic and political imperialism.
The Chinese-led bank will, of course, be much more effective. The Chinese will use the bank to actually help countries and thereby make friends and grow trust, whereas Washington uses its banks for domination by force.
This new bank, together with the BRICS Bank, will provide countries with escape routes from Washington’s domination.
The Evil Empire is beginning to crack. It will crack more as the Russian-Chinese alliance unfolds its potentials and when European capitals understand that hegemonic Washington has put their existence at risk in order to try to prevent Russia’s rise. The crazed American and British neocon nazis, and their dupes among the populations, comprise the greatest human threat that the world has ever known. The sooner the Evil Empire collapses, the safer the world will be.
Here is the report:
http://thebricspost.com/eu-allies-defy-us-to-join-china-led-asian-bank/#.VQe4BCkRW-M
Plan B? Major European “Allies” Desert Obama, Join China-led Infrastructure Bank
Plan B? Major European “Allies” Desert Obama, Join China-led Infrastructure Bank
It appears the sea of de-dollarization has reached the shores of Europe. With Australia and UK having already moved in the direction of joining the China-led AIIB, The FT reports that France, Germany, and Italy have now all agreed to join the development bank as ‘pivot to Asia’ appears to be Plan B for Europe. As Greg Sheridan previously noted, “the saga of the China Bank is almost a textbook case of the failure of Obama’s foreign policy,” but as The FT concludes, the European decisions represent a significant setback for the Obama administration, which has argued that western countries could have more influence over the workings of the new bank if they stayed together on the outside. As Forbes notes, this leaves Obama with 3 uncomfortable options…
As The FT reports,
France, Germany and Italy have all agreed to follow Britain’s lead and join a China-led international development bank, according to European officials, delivering a blow to US efforts to keep leading western countries out of the new institution.The decision by the three European governments comes after Britain announced last week that it would join the $50bn Asian Infrastructure Investment Bank, a potential rival to the Washington-based World Bank.
…
The European decisions represent a significant setback for the Obama administration, which has argued that western countries could have more influence over the workings of the new bank if they stayed together on the outside and pushed for higher lending standards.
The AIIB, which was formally launched by Chinese President Xi Jinping last year, is one element of a broader Chinese push to create new financial and economic institutions that will increase its international influence. It has become a central issue in the growing contest between China and the US over who will define the economic and trade rules in Asia over the coming decades.
This follows Australia and UK…
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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.
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World Bank forecast causes markets to tumble
World Bank forecast causes markets to tumble
Copper prices fell and shares plummeted across Europe as markets reacted to the World Bank’s decision to cut its economic forecasts for this year and next.
The price of copper, regarded as a barometer of global economic demand, fell as much as 8% to a low not seen for more than five years after the World Bank said the world economy was too reliant on the US.
The bank blamed reduced prospects for growth in the eurozone, the state of finances in Japan and some big emerging economies for its decision to cut its 2015 global growth forecast to 3% from 3.4%.
Germany’s Dax index fell 0.75%, dragged down by steel producer ThyssenKrupp, which fell 3.6%. In France the CAC index dropped 0.9% as rival steel company ArcelorMittal lost 4.5%.
In London, copper miner Antofagasta fell more than 10% and was the biggest loser in the FTSE 100 index, which was down 1.3%. All the 10 worst performers in the index, including Glencore and oil producer BG Group, were commodities companies. Brent crude fell 1.7% to $45.78 a barrel.
“Europe has been pretty sluggish, China’s still got that property overhang, Japan’s entered recession. You’ve got the US and UK going fine, so it’s a patchy global growth picture – but it’s one that has definitely deteriorated from six months ago,” UBS analyst Daniel Morgan said.
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U.S. & ‘International Banks’ Finance Ukraine’s Civil War Washington’s Blog
U.S. & ‘International Banks’ Finance Ukraine’s Civil War Washington’s Blog.
On November 26th, Ukraine’s Prime Minister, Arseniy Yatsenyuk, said, “Our cabinet has resumed the program of activity and cooperation with the International Monetary Fund (IMF), the European Bank for Reconstruction and Development (EBRD) and other banks. Today international investors are not ready to go to the country, but international banks are ready to help us. … We would not have survived without the international assistance.”
In a related news-report, the investigative journalist who goes by the pseudonym “Tyler Durden” headlined at his zero hedge website on November 25th, “Hacked US Documents Said To Reveal Extent Of Undisclosed US ‘Lethal Aid’ For Ukraine Army,” and he posted the documents, which seem authentic, and which include U.S. supplies of “400 sniper-rifles, 2,000 assault-rifles, 720 hand-held grenade launchers, 200 mortars with more than 70,000 mines, 150 stingers, 420 antitank missiles and so on.” Also shown there is an authorization signed by President Obama authorizing the U.S. Secretary of State, to “direct the drawdown of up to $5 million in defense articles and services of the Department of Defense and military education and training to provide immediate military assistance for the Government of Ukraine, to aid their efforts to respond to the current crisis,” and “to direct the drawdown of up to $20 million in nonlethal commodities and services from any agency of the United States Government,” for the same purpose.
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Wealth Inequality Is Not A Problem, It’s A Symptom – The Automatic Earth
Wealth Inequality Is Not A Problem, It’s A Symptom – The Automatic Earth.
NPC Dedication, George Washington Masonic Memorial, Alexandria, VA Nov 1 1923
The article in question is Charles Hugh Smith’s Why Nations (and organizations) Fail: Self-Serving Elites, and the book he references is Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu and James Robinson.
Charles starts off by saying:
The book neatly summarizes why nations fail in a few lines:
(A nation) is poor precisely because it has been ruled by a narrow elite that has organized society for their own benefit at the expense of the vast mass of people. Political power has been narrowly concentrated, and has been used to create great wealth for those who possess it.
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