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Why A Flu Outbreak In China Can Spook Global Markets

Why A Flu Outbreak In China Can Spook Global Markets

When people talk about empires of the past, they generally mean Rome and Britain. But the biggest and in some ways most interesting empire was built and run by the Mongols in the 13th and 14th centuries. At it’s peak it stretched from China to Eastern Europe, which is more territory than Rome ever controlled.

Across that expanse there was free trade and unrestricted movement of people via the original “Silk Road” network. For a while there was a single currency which was accepted everywhere. 

Genghis Khan — think of him as the Mongols’ (gleefully bloodthirsty) George Washington — organized his army along what we today would call colorblind lines. Instead of units based on clans and tribes, he mixed and matched soldiers of varied backgrounds and trained them to be loyal to one another regardless of origin. He also ordered his men to marry women from conquered cities, and to integrate into local cultures.

And he loved technology, collecting engineers and other people with useful skills from conquered lands and putting them to work developing new weapons and better agricultural practices.

“Pax Mongolica,” in short, had all the makings of a nascent modern system, hundreds of years before the Industrial Revolution. 

Then came the Black Death. 

Free movement of people allowed the disease to move quickly and uncontrollably. Local populations panicked and closed themselves off, frequently slaughtering their Mongol governors in the process. Trade collapsed, the Silk Road went dark and the Mongol empire expired. 

Now fast forward to today’s world, where virtually anyone can fly or drive to virtually any other country — and millions each year do so. Trade is a huge part of most major national economies. A handful of currencies are accepted pretty much everywhere, while locals mix with visitors in melting pot mega-cities of 20 million-plus inhabitants, all breathing the same air. 

…click on the above link to read the rest of the article…

Back in the (Great) Game: The Revenge of Eurasian Land Powers

Back in the (Great) Game: The Revenge of Eurasian Land Powers

What is left roaming our wilderness of mirrors depends on the mood swings of the Goddess of the Market. No wonder an effect of Eurasia integration will be a death blow to Bretton Woods and “democratic” neoliberalism, says Pepe Escobar.


Get ready for a major geopolitical chessboard rumble: from now on, every butterfly fluttering its wings and setting off a tornado directly connects to the battle between Eurasia integration and Western sanctions as foreign policy.

It is the paradigm shift of China’s New Silk Roads versus America’s Our Way or the Highway. We used to be under the illusion that history had ended. How did it come to this?

Hop in for some essential time travel. For centuries the Ancient Silk Road, run by mobile nomads, established the competitiveness standard for land-based trade connectivity; a web of trade routes linking Eurasia to the – dominant – Chinese market.

In the early 15th century, based on the tributary system, China had already established a Maritime Silk Road along the Indian Ocean all the way to the east coast of Africa, led by the legendary Admiral Zheng He. Yet it didn’t take much for imperial Beijing to conclude that China was self-sufficient enough – and that emphasis should be placed on land-based operations.

Deprived of a trade connection via a land corridor between Europe and China, Europeans went all-out for their own maritime silk roads. We are all familiar with the spectacular result: half a millennium of Western dominance.

Until quite recently the latest chapters of this Brave New World were conceptualized by the Mahan, Mackinder and Spykman trio.

The Heartland of the World

Mackinder

Halford Mackinder’s 1904 Heartland Theory – a product of the imperial Russia-Britain New Great Game – codified the supreme Anglo, and then Anglo-American, fear of a new emerging land power able to reconnect Eurasia to the detriment of maritime powers.

…click on the above link to read the rest of the article…

Iran diary: bracing for all-out economic war

Iran diary: bracing for all-out economic war

While the dogs of war bark, the Ancient – and New – Silk Road goes on forever and a civilization with a long and proud history gets on with life

Dawn comes to Imam Reza shrine in Mashhad. Photo: Asia Times/Pepe Escobar

Dawn comes to Imam Reza shrine in Mashhad. Photo: Asia Times/Pepe Escobar

PetroYuan Futures Open – Over 10 BillIon Notional Trades In First Hour

After all the preparation, all the expectation, cheerleading and doomsaying, China’s Yuan-denominated crude oil futures contract began trading tonight and appears to be off a good start with well over 10 billion yuan notional traded within the first hour.

So far it has tracked WTI futures well, trading at around a $2 premium to WTI (when translated from yuan to USD)…

Additionally, well over 23,000 contracts have traded within the first hour for a notional trading volume of over 10 billion yuan – more than $1.5 billion notional… signaling significant demand.

Offshore Yuan is moving in sync with ‘Petroyuan’ futures – as WTI tends to track the USD.

As we most recently noted, after numerous “false starts” over the last decade,  the “petroyuan” is now real and China will set out to challenge the “petrodollar” for dominance. Adam Levinson, managing partner and chief investment officer at hedge fund manager Graticule Asset Management Asia (GAMA), already warned last year that China launching a yuan-denominated oil futures contract will shock those investors who have not been paying attention.

This could be a death blow for an already weakening U.S. dollar, and the rise of the yuan as the dominant world currency.

But this isn’t just some slow, news day “fad” that will fizzle in a few days.

A Warning for Investors Since 2015

Back in 2015, the first of a number of strikes against the petrodollar was dealt by China. Gazprom Neft, the third-largest oil producer in Russia, decided to move away from the dollar and towards the yuan and other Asian currencies.

Iran followed suit the same year, using the yuan with a host of other foreign currencies in trade, including Iranian oil.

During the same year China also developed its Silk Road, while the yuan was beginning to establish more dominance in the European markets.

But the U.S. petrodollar still had a fighting chance in 2015 because China’s oil imports were all over the place. Back then, Nick Cunningham of OilPrice.com wrote

Despite accounting for much of the world’s growth in demand in the 21st Century, China’s oil imports have been all over the map in recent months. In April, China imported 7.4 million barrels per day, a record high and enough to make it the world’s largest oil importer. But a month later, imports plummeted to just 5.5 million barrels per day.

That problem has since gone away, signaling China’s rise to oil dominance…

The Slippery Slope to the Petroyuan Begins Here

…click on the above link to read the rest of the article…

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…

 

 

 

New Silk Road Could Change Global Economics Forever

 New Silk Road Could Change Global Economics Forever

Part 1: The New Silk Road

Beginning with the marvelous tales of Marco Polo’s travels across Eurasia to China, the Silk Road has never ceased to entrance the world. Now, the ancient cities of Samarkand, Baku, Tashkent, and Bukhara are once again firing the world’s imagination.

China is building the world’s greatest economic development and construction project ever undertaken: The New Silk Road. The project aims at no less than a revolutionary change in the economic map of the world. It is also seen by many as the first shot in a battle between east and west for dominance in Eurasia.

The ambitious vision is to resurrect the ancient Silk Road as a modern transit, trade, and economic corridor that runs from Shanghai to Berlin. The ‘Road’ will traverse China, Mongolia, Russia, Belarus, Poland, and Germany, extending more than 8,000 miles, creating an economic zone that extends over one third the circumference of the earth.

The plan envisions building high-speed railroads, roads and highways, energy transmission and distributions networks, and fiber optic networks. Cities and ports along the route will be targeted for economic development.

An equally essential part of the plan is a sea-based “Maritime Silk Road” (MSR) component, as ambitious as its land-based project, linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and the Indian Ocean.

When completed, like the ancient Silk Road, it will connect three continents: Asia, Europe, and Africa. The chain of infrastructure projects will create the world’s largest economic corridor, covering a population of 4.4 billion and an economic output of $21 trillion.

 

…click on the above link to read the rest of the article…

Libertarian Party Calls for Release of Ross Ulbricht, Gov’t Are Real Perps in Silk Road Case

Libertarian Party Calls for Release of Ross Ulbricht, Gov’t Are Real Perps in Silk Road Case

The Libertarian Party calls for dismissal of the unfounded criminal charges against alleged Silk Road founder and operator Ross Ulbricht, whose trial is set to begin tomorrow, and for the resignation of the New York prosecutors who trumped up charges against an innocent man.

Silk Road is a website that allows its users to maintain their privacy while trading goods and services by using Tor, an open network that protects anonymity, and the digital currency Bitcoin for payment.

Because the site is alleged to accommodate the buying and selling of illegal drugs, prosecutors have charged Ulbricht with a slew of crimes: narcotics trafficking, computer hacking, money laundering, engaging in a criminal enterprise, and conspiracy to traffic in fraudulent IDs.

The prosecution has failed to identify a single victim of any of the alleged offenses.

This trial grossly oversteps the bounds of a properly limited government: one that protects the lives, liberty and property of its citizens against perpetrators who would do them harm – and no more.

The perpetrators in this case are the FBI, which shut down Silk Road and may have illegally hacked the site, and New York prosecutors involved in this case.

…click on the above link to read the rest of the article…

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