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Russia And China Officially Announce A “New Global Reserve Currency”

Russia And China Officially Announce A “New Global Reserve Currency”

And once again, as happens often with consequential news in the United States and the West, no one has noticed and no one seems to care.

If you’ve blinked over the last month, you may have missed it…

China and Russia are taking their shot at the U.S. dollar. And as often happens with consequential news in the United States and the West, no one seems to notice or even care.

Since the beginning of the year, I have been writing about the possibility of Russia and China challenging the US dollar’s global reserve status. Now, it’s happening.

It shouldn’t be any surprise to those paying attention that Russia and China are strengthening their economic ties amidst continued Western sanctions on Russia as a result of the country’s war in Ukraine.

What may surprise some people, however, is that Russia and the BRICS countries, including Brazil, Russia, India, China, and South Africa, are officially working on their own “new global reserve currency,” RT reported in late June. Nobody even seemed to notice.


“The issue of creating an international reserve currency based on a basket of currencies of our countries is being worked out,” Vladimir Putin said at the BRICS business forum last month.

And of course, as Russia has been cut off from the SWIFT system, it is also pairing with China and the BRIC nations to develop “reliable alternative mechanisms for international payments” in order to “cut reliance on the Western financial system.”

In the meantime, Russia is also taking other steps to strengthen the alliance between BRIC nations, including re-routing trade to China and India, according to CNN:

President Vladimir Putin said Wednesday that Russia is rerouting trade to “reliable international partners” such as Brazil, India, China and South Africa as the West attempts to sever economic ties.

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

Refinery Shuts Down Due To Lack Of Crude

Refinery Shuts Down Due To Lack Of Crude

A South African refinery has shut down operations and declared force majeure on the supply of petroleum products due to a delay in the shipment of crude, which highlights the fact that the physical market for crude is tight these days despite a slump in paper-traded oil futures.

Sasol, the biggest fuel producer in South Africa, was forced to declare force majeure on refined product deliveries because of delays in the crude oil supplied to its 108,000 barrels per day (bpd) refinery Natref, a company spokesperson told South Africa-based financial news outlet Fin24 on Saturday.

“These delays have impacted availability of crude oil feedstock for processing at Natref, which necessitates the shutdown of its Natref refinery,” the spokesperson said.

“In the circumstances, Sasol Oil will not be in a position to fully meet its commitments on the supply of all petroleum products from July 2022,” said the company, adding that it hopes the issue would be resolved soon and the refinery could resume production at full capacity by the end of this month.

The stoppage at Sasol’s Natref refinery now means that South Africa’s entire oil refining capacity is currently out of service, according to Bloomberg’s estimates. Other refineries have closed down production since COVID erupted, either because they would be converted to terminals or because of operational issues. Only Sasol’s synthetic fuel output using coal as a feedstock, of which South Africa has huge amounts, remains fully operational.

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

World in Chaos

In South Africa, the currency has fallen hard as riots have devasted the country. They looted the mall, except for the bookstore. The former South African President Jacob Zuma turned himself in to begin a 15-month sentence for contempt of court. This has sent the country into a tailspin. Contempt of court is an abuse of judicial power, for they claim they can lock anyone up for any reason whatsoever.

In Greece, there are thousands of people protesting against the discrimination of people who have not been vaccinated and the mandatory vaccinations and other measures imposed by the Greek government to tackle the pandemic in Athens. There are far worse viruses that have taken place, yet governments have not destroyed the economies and taken such totalitarian measures. This in itself has raised skepticism as to what is really going on when the death rate is minimal.

In Britain, 47% of those with COVID have been vaccinated. In Australia, the mob stormed the government as in ancient Roman times resulting in chaos on the streets of Melbourne just hours before the city entered its fifth lockdown. The protesters have marched through the CBD, saying if they do not act, he will get away with it again. What I am hearing is that many are starting to say they would rather die in freedom than live in prison indefinitely. This is our problem. Governments will NEVER admit a mistake, and the fact that they are so involved with the vaccines, we have nobody to offer independent verification of anything.

Meanwhile, the Biden Administration wants to shut down all dissent and has been putting pressure on Big Tech to shut down people who disagree with the administration.

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

Over 70 Killed As South Africa “Crumbles” Despite Military Intervention

Over 70 Killed As South Africa “Crumbles” Despite Military Intervention

South Africa could be on the verge of collapse, and all the warning signs are there.

The looters have targeted foreign shops, shopping centers, distribution centers/warehouses, and raided gun shops. Shortages are beginning with food, fuel, and ammo. 

Over 70 have reportedly been killed since social unrest began last week after ex-president Jacob Zuma was jailed for failing to appear at a corruption inquiry. Supporters of Zuma, the nation’s first Zulu president, have been on a looting spree that has crippled KwaZulu-Natal and parts of Johannesburg and disrupted national supply routes, resulting in food and fuel shortages in the affected area.

According to the Consumer Goods Council of South Africa, more than 600 stores have been looted with hundreds millions of dollars in damage.

President Cyril Ramaphosa deployed the military to quell the unrest, but nothing has worked so far worked.

Civilians are defending their own communities and running low on food, fuel, and ammo; supply chains are destroyed, and it wasn’t quick, about a week, as the country faces collapse.

On Tuesday, Sapref refinery near Durban, operated by Shell and BP, had shuttered operations due to civil unrest.

There’s also news that the country’s top chicken and meat processor, Rainbow Chickens Ltd., was raided by looters, which means widespread food shortages could be imminent.

Allegedly, some security firms are reporting police are “low on ammunition.”

Supposedly from a security group, looters are targeting all the gun shops.

Community members have set up private patrols to defend their community from rioters.

Someone explains that the unrest from Zulu rioters is to starve out the “Whites/Indians.” The unknown person said this could be “civil war.”

More scenes of the chaos.

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

“All The Jobs Are Gone” – Africa Facing ‘Complete Economic Collapse’ As Virus Spreads

“All The Jobs Are Gone” – Africa Facing ‘Complete Economic Collapse’ As Virus Spreads

The COVID-19 pandemic and lockdowns across the African continent could trigger an economic collapse, according to one United Nations (UN) official, who spoke with Associated Press (AP). 

Ahunna Eziakonwa, the UN Development Program regional director for Africa, warned that the pandemic would likely result in job losses for millions of people, many of whom are already low-income, have no savings, and have no access to proper healthcare. 

“We’ve been through a lot on the continent. Ebola, yes, African governments took a hit, but we have not seen anything like this before,” Eziakonwa said. “The African labor market is driven by imports and exports and with the lockdown everywhere in the world, it means basically that the economy is frozen in place. And with that, of course, all the jobs are gone.”

We’ve warned over the last month that a virus crisis looms in Africa. A little more than half of the continent’s 54 countries have imposed lockdowns, curfews, and or travel bans to mitigate the spread of the virus. 

Places like South Africa, where the military has enforced “unprecedented” Martial law-style lockdowns through mid-April, is an attempt to thwart social uprisings as 370,000 jobs have likely been lost.  

For the 1.3 billion that inhabit the continent, widespread lockdowns are triggering vicious economic downturns, couple that with a public health crisis, and it could be a perfect storm that results in social unrest. 

Eziakonwa said unless the virus spread can be controlled – then up to 50% of all estimated growth for Africa’s travel, services, mining, agriculture and the informal sectors could be lost. An extended period of subpar economic growth could be seen across the continent in the quarters ahead.

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

How to Deal with Rolling Blackouts: Notes from South Africa

How to Deal with Rolling Blackouts: Notes from South Africa

Editor’s note: By now, just about everyone has heard about the difficulties occurring in South Africa. The violence is palpable, the corruption is an everyday fact, and utilities such as water and electricity are no longer a given. Not only that, but the cost of these utilities has become prohibitive, so conservation is a necessity. Backup power, such as solar or generators, have become a necessity for many families.

Now people in California are dealing with rolling blackouts due to PG&E’s new policies during wildfire season.

In this article, a regular reader from South Africa shares some of the tips for starting out with generators and backup power that have made it easier to deal with the continuous rolling blackouts and outrageous prices for electricity.  ~ Daisy


Living in South Africa we have had our share of rolling blackouts nationally. The cause: nefarious activities. The result being us forced to find ways to ensure we are not affected as badly.

The problem is better now, but it has highlighted that it is not just a South African problem, but in actual fact a Western world problem. We all are totally reliant on a massive aging infrastructure that can come tumbling down like a house of cards, with or without help.

Another problem is the cost to keep the national system operational. In some areas, it is not a priority to resolve the regular failures.

For getting started with backup power, remember that NEEDs vs WANTs –  a huge price difference.

  • UPSs – with like 2 up to 8 100ah batteries. Good for a number of hours depending on use – most cost-effective solution
  • Generators – works for some, but cheap ones cost more as they damage some electrical appliances over time.
  • Solar inverters and panels – power failures, what is that? And you save a lot of money afterward IF YOU DO IT RIGHT.

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

Backup Power on a Budget: Notes from South Africa

Backup Power on a Budget: Notes from South Africa

Editor’s note: By now, just about everyone has heard about the difficulties occurring in South Africa. The violence is palpable, the corruption is an everyday fact, and utilities such as water and electricity are no longer a given. Not only that, but the cost of these utilities has become prohibitive, so conservation is a necessity. Backup power, such as solar or generators, have become a necessity for many families.

In this article, a regular reader from South Africa shares some of the tips for starting out with generators and backup power that have made it easier to deal with the continuous rolling blackouts and outrageous prices for electricity.  ~ Daisy


Living in South Africa we have had our share of rolling blackouts nationally. The cause: nefarious activities. The result being us forced to find ways to ensure we are not affected as badly.

The problem is better now, but it has highlighted that it is not just a South African problem, but in actual fact a Western world problem. We all are totally reliant on a massive aging infrastructure that can come tumbling down like a house of cards, with or without help.

Another problem is the cost to keep the national system operational. In some areas, it is not a priority to resolve the regular failures.

For getting started with backup power, remember that NEEDs vs WANTs –  a huge price difference.

  • UPSs – with like 2 up to 8 100ah batteries. Good for a number of hours depending on use – most cost-effective solution
  • Generators – works for some, but cheap ones cost more as they damage some electrical appliances over time.
  • Solar inverters and panels – power failures, what is that? And you save a lot of money afterward IF YOU DO IT RIGHT.

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

Good Times…

Good Times…

My son wanted to know why it is that Venezuela (a topic that gets discussed around the dinner table at home) chose such painfully, obviously asinine policies.

After much thought I explained it thus.

Hard times create strong men. Strong men create good times. Good times create weak men. Weak men create hard times.CLICK TO TWEETI’d seen it before somewhere and so I dug it up. Here it is in a different form.

We bipeds don’t change. I’ve come to realise not to fight it, just see it for what it is and make sure you’re positioned accordingly…for your friends family and those you care about. Speaking of which you should consider joining our family.

No special offers, no steak knives, no wild ridiculous promises – simply rational analysis and positioning for a macro world we’ve never encountered before. EVER! That’s both exciting and terrifying at the same time.

We’re Bad

At literally everything. We buy high, sell low, look to what Johnny next door is wearing, what car he drives. We get taken in and scammed by shysters, we believe in the unbelievable.

Which brings me swiftly to EM where fund managers desperate for yield dived into the fire over the last few years. Now the inevitable pain is hitting as default fears mount for “BATS” as the emerging-market rout deepens.

Turkey’s implied default odds climbed to highest since 2008 and over in the land of great steaks default risk in Argentina is …ahem…substantial.

As Bloomberg points out:

  • Argentina’s implied default probability over the next five years climbed this month to 41 percent, the highest since Mauricio Macri’s government ended the nation’s decade-long legal battle with most holdout creditors.
  • Turkey’s implied default odds during that span rose to 31 percent, the highest since the 2008 global financial crisis.
  • Brazil’s implied default odds increased to 18 percent, the highest since the country’s worst-ever recession deepened in late 2016.
  • South Africa’s implied default odds soared to 15 percent, the highest since Donald Trump’s election in November 2016.

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

Rand Tumbles As Government Warns Of “Catastrophe” Unless ‘Land Reform’ Allowed

In a barrage of headlines that sparked chaos in FX algo markets, The South African government proclaimed proudly that it is opposed to illegal land grabs (sparking a rally in the rand) before humans realized that this is mere statement of fact and that the entire reason for this process is to ‘legalize’ land grabs through reform.

As Deputy President David Mabuza said, the nation will “slide into catastrophe” if land reform doesn’t take place.

“The majority of our people are poor and homeless,” he told lawmakers in Cape Town Thursday.

“Our resources to carry out reform are limited.”

And the reaction is now getting real as the Rand nears two-week lows once again…

Notably, the rand is behaving more erratically this month than it did during the height of the power struggle between Jacob Zuma and Cyril Ramaphosa in December. The rand’s one-month historical volatility is now at its highest level since December 2016 and the currency is headed for its worst August performance against the dollar on record, on track for a 9 percent drop.

As Bloomberg notes, President Cyril Ramaphosa has embraced land expropriation without compensation as a means to achieve equality and racial justice, and in a bid to steal a march on populist opponents before elections in 2019. A planned amendment to the constitution is still a work in progress, with public hearings on the matter concluding next month.

Yesterday saw UK PM Theresa May confirm her support of Ramaphosa’s “land reforms” as long as they’re legal…

“The UK has for some time now supported land reform that is legal and transparent and generated through a democratic process. I discussed it with President Ramaphosa during his visit to Britain earlier this year and will discuss it with him again later today,” she said.

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

Weekly Commentary: Turkey (Nudged Over the Cliff)

Weekly Commentary: Turkey (Nudged Over the Cliff)

The Turkish lira sank 13.7% in chaotic Friday trading. The lira’s 21.0% “worst week in 17 years” collapse pushed y-t-d losses to 41.1%. Turkish 10-year yields spiked to almost 21%, before retreating somewhat. After beginning the year at 155, Turkey sovereign credit default swaps (CDS) spiked 166 bps during Friday trading (up 199 bps for the week) to 437 bps (high since Feb. 2009).
EM Contagion Effects gained momentum this week. Friday trading saw the Argentine peso hit 3.8% and the South African rand sink 2.7%. For the week, the Argentine peso fell 6.6%, the South African rand 5.5%, the Brazilian real 4.0%, the Hungarian forint 2.2%, the Romanian leu 2.1%, the Polish zloty 2.2% and the Mexican peso 1.8%. On the (local) bond yield front, 10-year yields in Brazil jumped 66 bps, Russia 40 bps, Hungary 15 bps and South Africa 13 bps. As global “hot money” frets faltering liquidity and the next shoe to drop, Brazilian equities sank 5.9% (as Brazil sovereign CDS jumped 24 bps to 237 bps).

August 10 – Bloomberg (Lionel Laurent): “Turkish President Recep Tayyip Erdogan has been standing firm as investors dump his country’s assets at an alarming pace, saying: ‘They have got dollars, we have got our people, our right, our Allah.’ European banks with substantial investments in Turkey will hope some of that divine providence rubs off on them, too, after sticking with a bet that has gotten more perilous over time.”

Fears of contagion this week were not limited to the emerging markets. With significant exposure to Turkey, European bank stocks were slammed in Friday trading. Unicredit sank 4.7% and ING Groep fell 4.3%. The big German banks, Deutsche Bank and Commerzbank, dropped 4.1% and 3.5%. European Banks (STOXX600) fell 1.9% Friday.

August 10 – Financial Times (Claire Jones, Ayla Jean Yackley and Martin Arnold): “The eurozone’s chief financial watchdog has become concerned about the exposure of some of the currency area’s biggest lenders to Turkey – chiefly BBVA, UniCredit and BNP Paribas – in light of the lira’s dramatic fall…

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

If You Think the Water Restrictions in California Are Tough, Check Out Cape Town

If You Think the Water Restrictions in California Are Tough, Check Out Cape Town

Remember earlier in the year when the news was abuzz about Day Zero in Cape Town, South Africa?  According to the press at the time, the day was looming when the city of 3.74 million people would run completely out of water. First, the date of Day Zero was heralded as April 16th, then May 11th, then June 4th.

Calculating Day Zero took into account maximum evaporation (based on temperature and wind) and existing patterns in agricultural and urban use—an equation that considered both natural and man-made conditions. (source)

Now, they’re saying the disaster has been averted for now, but that it could happen in 2019. And if you think the water restrictions in California are tough, wait until you see what they’re doing in Cape Town.

So how did Cape Town avoid Day Zero?

Day Zero was delayed by a combination of things. Fortunately, there was some rainfall, and citizens went to great effort to reduce their water usage.  There was a public campaign to basically scare Capetonians into compliance with conservation efforts.

Late last year, as the South African government faced the prospect of its largest city running out of water, they took an unprecedented gamble.

The government announced “day zero” – a moment when dam levels would be so low that they would turn off the taps in Cape Town and send people to communal water collection points.

This apocalyptic notion prompted water stockpiling and panic, caused a drop in tourism bookings, and raised the spectre of civil unrest.

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

The 11 Cities Most Likely To Run Out Of Drinking Water

As of Sunday afternoon, the dreaded “day zero” – the day residents of the city of Cape Town, South Africa, will need to begin queuing for drinking water after supplies sink below the threshold of sustainability – was estimated to be Nov. 11, 2018.

The shortage is the result of South Africa’s worst drought in 100 years…

And with city government efforts to secure alternative water supplies progressing slowly, Cape Town (pop. 440,000) is on track to become the first major world city to run out of water.

Hiring security forces to guard water supplies and forcing residents to ration their use must be unimaginably frustrating for the city’s government. But during a press conference late last month, Patricia de Lille, Cape Town’s mayor, expressed another secondary annoyance that, in some ways, is even more profoundly disturbing.

A disaster that was until recently only imaginable by writers of dystopian science fiction is playing out in front of our eyes: And what’s worse: Nobody seems to care.

“We have reached the point of no return,” Patricia de Lille, Cape Town’s mayor, warned this month. With anger in her voice she added: “It is quite unbelievable that a majority of people do not seem to care.”

But they should – if only because they’re city might be next:

As the BBC notes, over one billion people lack access to water and another 2.7 billion find it scarce for at least one month of the year. A 2014 survey of the world’s 500 largest cities estimates that one in four are in a situation of “water stress”.

Here’s a list of 11 other major cities where the taps may soon run dry, courtesy of the BBC.

Sao Paulo

Brazil’s financial capital and one of the 10 most populated cities in the world went through a similar ordeal to Cape Town in 2015, when the main reservoir fell below 4% capacity.

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

Worst Drought in Capetown in 112 Years – Part of the Cycle

QUESTION: Marty,

Any thoughts/comments regarding the impending water shortage in Capetown? As a person who has much historical knowledge, are you aware of a major city such as Capetown ever running out of water? Or is this truly a historical first?

Love your blog as it covers so much information and isn’t just corporate financial data like so many others.

Your loyal reader from

Alan.

ANSWER: South Africa will score this season the worse drought since 1904 right on schedule on the 112-year cycle (1/2 224). We must respect that the climate is changing back to a dry cold period and this has impacted South Africa. This is also part of the cycle we see with rising food prices into 2024. Just as we have seen the coldest periods in the USA back to 1899, we are witnessing the worst drought in Capetown also back to the same general period. Unfortunately, yes they can run out of water on this cycle. It will be a very close call.

Who will drink the last glass of water in Cape Town?

Who will drink the last glass of water in Cape Town?

Because Cape Town sits between picturesque beaches and mountains, it is a favored travel destination. And, its weather during the summer is described as “almost too perfect.” That’s in part because it rains very little in the summer in this second most populous city in South Africa.

Water, water everywhere, but not a drop to drink

Trouble is, starting in 2015 the rainy season never arrived. One year, then two years and now three years of extreme drought have brought the city’s water supplies almost to exhaustion. Barring extraordinary rains or even more draconian cutbacks in water usage than have already occurred, Cape Town officials say they will have to turn off water to most household taps and businesses sometime in April. They’re calling it “Day Zero.” Hospitals and essential public facilities will be exempt. Most residents would have to line up at designated water supply stations for a daily allocation of 25 liters.

Cape Town’s current troubles were not necessarily foreseeable in the usual sense. Yearly long-range weather forecasts raised no alarmswhen they were released since they did not predict an extreme drought for that year.

The causes of the city’s water problems are, in fact, multiple. First, Cape Town’s population has risen 80 percent since 1994 (the end of white rule) to 3.75 million people putting extraordinary demands on its water system. Second, average rainfall has been gradually decreasing for decades and has reached its lowest since 1933. Comparable records before that are not available. One calculation cited in the above linked article is that the current drought is the worst in more than 300 years. Another calculation suggests the multi-year drought is a once-in-a-millennium event. Third, climate change is almost certainly increasing the likelihood of such a drought though there is no way to prove the link to this particular drought.

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

Climate Bellwether? With Cape Town Almost Out of Water, “Day Zero” Looms

Climate Bellwether? With Cape Town Almost Out of Water, “Day Zero” Looms

In less than three months, residents in South African city could be lining up for rationed water under armed guards. “Is this the new normal?”

Tree trunks stand in the critically low Theewaterskloof Dam in Villiersdorp, South Africa, Jan. 23, 2018. (Photo: Reuters)

Tree trunks stand in the critically low Theewaterskloof Dam in Villiersdorp, South Africa, Jan. 23, 2018. (Photo: Reuters)

For residents of Cape Town, “Day Zero” is getting closer.

That’s the day when taps in the drought-stricken coastal South African city are projected run dry, and its residents would be forced to head to police-guarded distribution sites to obtain their daily ration of water.

“Anyone who works in climate change knows that we’ve given lots of quite doomsday-esque scenarios in the last two decades. This is the first one which I’ve really seen come true.”
—climatologist Simon Gear
The city warned last week that the day was “now likely to happen.” And on Monday, the city, citing a drop in dam levels, moved the projected day up from April 22 to April 12.

“We have reached a point of no return,” Cape Town Mayor Patricia de Lille said last week announcing tightened water restrictions for the city’s 4 million residents. Starting Feb. 1, residents face a 50 liter per day limit (13.2 gallons). [For comparison, Americans’ daily home use is 88 gallons of water, the EPA says.]

When Day Zero hits, the limit will be 25 liters per day, to be collected at one of 200 water collection points. Agence France-Presse reports: “With about 5,000 families for each water collection point, the police and army are ready to be deployed to prevent unrest in the lines.”

USA Today, however, reported that “Each collection point will accommodate around 20,000 people per day.”

Cape Town is being described as the first major city in the developed world that would run out of water.

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

Olduvai IV: Courage
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Olduvai II: Exodus
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