Aug 242015
 
What is a currency war? Currency wars are also referred to as “competitive devaluations.” They occur when a number of nations seek to deliberately depreciate the value of their domestic currencies. The goal is to stimulate their respective economies. You see, a weaker currency will make a nation’s exports more competitive in global markets and simultaneously makes imports more expensive. Higher export volumes increase economic growth, while more expensive imports encourage consumers to shift to local alternatives instead of imported products. While currency devaluation is a common occurrence in the foreign exchange market, the hallmark of a currency war is that a number of nations engage in devaluation attempts simultaneously. Presently, more than 20 countries have reduced interest rates or implemented measures to ease monetary policy from January to April 2015. And in August, China – the world’s second-largest economy – jumped on board in a major way, placing a strain on the world reserve currency, the U.S. dollar… Currency Wars: China Has U.S. Dollar on Puppet Strings Peter Schiff, CEO of Euro Pacific Capital and best-selling author of “Crash Proof,” issued a warning about currency wars and an impending U.S. dollar collapse. He spoke to Newsmax TV on Aug. 11: “We’re on the verge of a much worse financial crisis than the one we went through in 2008, and it’s going to take the form of a currency crisis. You’re talking about currency wars. America is going to win the currency war, which is a race to the bottom, and you don’t want to win a currency war because a currency war is different from most wars in that the object is to kill yourself and unfortunately, we’re going to succeed.” You see, no other country has had this much impact on the U.S. monetary policy in quite some time – or arguably, ever. The U.S. Federal Reserve must now reconsider the dollar’s role in foreign exchange markets as it decides whether to raise interest rates this year. “It is very possible that we could see a 10% to 15% drop in the exchange rate against the U.S. dollar in the next week or two,” Duncan Innes-Ker, of the Economist Intelligence Unit, told The Guardian on Aug. 13. In an Aug. 13 report, Morgan Stanley analysts Hans Redeker, Ian Stannard, and Sheena Shah said China has exported “deflationary pressure” for global central banks to depress their countries’ own exchange (more…)
Aug 242015
 
What is a currency war? Currency wars are also referred to as “competitive devaluations.” They occur when a number of nations seek to deliberately depreciate the value of their domestic currencies. The goal is to stimulate their respective economies. You see, a weaker currency will make a nation’s exports more competitive in global markets and simultaneously makes imports more expensive. Higher export volumes increase economic growth, while more expensive imports encourage consumers to shift to local alternatives instead of imported products. While currency devaluation is a common occurrence in the foreign exchange market, the hallmark of a currency war is that a number of nations engage in devaluation attempts simultaneously. Presently, more than 20 countries have reduced interest rates or implemented measures to ease monetary policy from January to April 2015. And in August, China – the world’s second-largest economy – jumped on board in a major way, placing a strain on the world reserve currency, the U.S. dollar… Currency Wars: China Has U.S. Dollar on Puppet Strings Peter Schiff, CEO of Euro Pacific Capital and best-selling author of “Crash Proof,” issued a warning about currency wars and an impending U.S. dollar collapse. He spoke to Newsmax TV on Aug. 11: “We’re on the verge of a much worse financial crisis than the one we went through in 2008, and it’s going to take the form of a currency crisis. You’re talking about currency wars. America is going to win the currency war, which is a race to the bottom, and you don’t want to win a currency war because a currency war is different from most wars in that the object is to kill yourself and unfortunately, we’re going to succeed.” You see, no other country has had this much impact on the U.S. monetary policy in quite some time – or arguably, ever. The U.S. Federal Reserve must now reconsider the dollar’s role in foreign exchange markets as it decides whether to raise interest rates this year. “It is very possible that we could see a 10% to 15% drop in the exchange rate against the U.S. dollar in the next week or two,” Duncan Innes-Ker, of the Economist Intelligence Unit, told The Guardian on Aug. 13. In an Aug. 13 report, Morgan Stanley analysts Hans Redeker, Ian Stannard, and Sheena Shah said China has exported “deflationary pressure” for global central banks to depress their countries’ own exchange (more…)
May 082015
 
The Next Empire – :Part Four A New Central Bank From Doug Casey’s Internationalman.com. http://www.internationalman.com/articles/the-next-empire Editor’s Note: Russia has ratified an agreement on the New Bank for Development set up by BRICS and has ratified the equivalent of1$00B solidifying it role in the China formed Asian Infrastructure Investment Bank (AIIB) at the beginning of this month. Here is an April 15th article about AIIB in the ‘South China Seas’. Click Here In recent decades, China and Russia have been expanding their economic powers dramatically and have periodically complained that their seats at the IMF table are unrealistically low, considering their importance to world trade. In 2014, China officially replaced the US as the world’s largest economy, yet the IMF has consistently sought to minimise China’s place at the table. It would seem that the West believes that it’s holding all the cards and that the Chinese and other powers must accept a poor-sister position, if they are to be allowed to sit at the IMF table at all. The West somehow does not seem to recognise that, if frozen out, the other powers have the ability to create alternatives. As with the SWIFT system, the Asian powers have reacted to US overreach, not by going away licking their wounds, but by creating a second IMF. The Russian State Duma (the lower house of the Russian legislature) have now created the New Development Bank. It will have a $100 billion pool, to be used for the BRICS countries. Its five members will contribute equally to its funding. It will be centered in Shanghai, India will serve as the first five-year rotating president, and the first chairman of the board of directors will come from Brazil. The first chairman of the board of governors is likely to be Russian Finance Minister Anton Siluanov. It’s therefore structured to be truly multinational. In creating all of the above entities, the BRICS will, in effect, have created a complete second economic world. In the latter days of the British Empire, we Brits seemed to be under the illusion that, even as our power base crumbled, we might somehow retain control by threats and bluster. The UK was utterly wrong in this and only succeeded in alienating trading partners, colonies, and allies by doing so. The same is happening again today. China, Russia, and the rest of the world, when faced with American threats and bluster, (more…)
May 072015
 
The Next Empire – :Part Three The End of Dollar Hegemony and A New Swift System From Doug Casey’s Internationalman.com.  http://www.internationalman.com/articles/the-next-empire Editor’s Note: In this article Russia is given credit as the initiator of a New Swift system, however, in reality it was Russia and the rest of the BRICS nations that put together the New Development Bank. That is the backbone of the New Swift system. Now this back bone includes the AIIB banking system. The BRICS New Development Bank (NDB) – a key alternative to the IMF enabling developing nations to get rid of the US dollar as a reserve currency – will be operative by the end of this year. The NDB will finance infrastructure and sustainable development projects not only in the BRICS nations but other developing nations. Since the Bretton Woods Conference in 1944, the US dollar has reigned supreme as the world’s default currency. In 1944, the US held more gold than any other country, but in 1971, the US went off the gold standard, and since then, the dollar has been a fiat currency. The US has become increasingly cavalier in its abuse of the dollar—often at the expense of other countries. Russia and China dealt with the latest round of strong-arm tactics by the US to adhere to the petrodollar by creating the largest energy agreement in history. This and all trade between the two countries will be settled in the ruble and the yuan. Russia has since been active in creating agreements with other fuel customers, also bypassing the petrodollar. In creating these agreements, the Asian powers have unofficially announced the demise of the petrodollar. For decades, the US has applied its muscle to other countries, using the petrodollar. So, the Sino-Russian agreement stands, not only to end the petrodollar monopoly, but to create a decline in US power over the world, generally. A New SWIFT System Presently, the vast majority of economic transfers in the world pass through the SWIFT system, located in Brussels but controlled by the US. In recent years, the US has barred, or threatened to bar, other countries from the SWIFT system, effectively making it impossible for banks to transfer money and, by extension, causing the collapse of their banking systems. Russia has responded by creating its own SWIFT system. It’s entirely likely that, if Russian trading partners, such as Iran, are barred from the use (more…)
Mar 302015
 
  March 29, 2015 12:00 am JST MASAHIRO OKOSHI and SHOGO AKAGAWA, Nikkei staff writers for Asian Review Chinese President Xi Jinping delivers a speech at the Boao Forum, in Boao, Hainan Province, on Saturday. © Kyodo BOAO, China/BERLIN — More than 40 countries are likely to become founding members of the China-led Asian Infrastructure Investment Bank.      Russia is the latest to announce that it will participate in the AIIB. It did so Saturday when Igor Shuvalov, first deputy prime minister, expressed the intention during the Boao Forum in China’s southern Hainan Province.      The announcement came a day after Brazil’s decision to join the bank. The office of Brazil’s president issued a statement Friday that Brazil had accepted China’s invitation. This means four of the five BRICS will join; only South Africa has not committed.      Meanwhile, Australian finance minister Mathias Cormann said at the Boao Forum that Canberra will officially announce on Sunday morning.      China’s finance ministry has said the Netherlands and other countries will follow suit.      Denmark also announced Saturday that it will join. Northern European countries are getting ready to jump in. A Swedish finance ministry official told the Nikkei that Sweden is mulling founding-member status. The Finnish government is said to be deliberating the matter as well.        Speaking at the Boao Forum on Saturday, Chinese President Xi Jinping expressed confidence about Beijing’s steady progress toward establishing the AIIB. “We will welcome with open arms moves to finish the important job in partnership with our friends around the world,” he said.      While Xi is calling for international relations to be based on cooperation and mutual benefit, he is moving to strengthen China’s international ties via the country’s economic clout. He also wants China to play a central role in Asian diplomacy.      In October, 21 countries reached a basic agreement to establish the AIIB. More have since expressed their intention to be a part of the institution. The deadline to sign on is Tuesday.      Japan and the U.S. remain wary of China’s intentions with the bank.      Separately, Brazil, Russia, India, China and South Africa have agreed to establish a new BRICS development bank to support economic development in Africa as well as in Central and South America. Original article Here Share this:FacebookLinkedInTwitterGoogleTumblrPinterestReddit (more…)
Mar 232015
 
Global institutions, including the International Monetary Fund (IMF) and the World Bank, have endorsed a China-led international bank, despite opposition from the U.S. “We are comfortable with the idea of a bank that puts together finance for infrastructure, because our view is that there is a huge need for infrastructure in emerging markets countries,” David Lipton, the first deputy managing director of the IMF, told CNBC early on Monday.The $50-billion Asian Infrastructure Investment Bank (AIIB) is being established to meet the need for greater infrastructure investment in lower- and middle-income Asian countries. It comes amid complaints by China and other major emerging economies that they lack influence in institutions such as the IMF, the Asian Development Bank and the World Bank.Support for the AIIB has gathered speed in Europe this month, with the U.K. the first country to sign up, followed by Germany, France and Italy and then Luxembourg and Switzerland.However, Washington has expressed misgivings, officially because of concerns about standards of governance and environmental and societal safeguards. Unofficially, the country’s is thought to be worried about sacrificing its clout in Asia to China, as well as piqued by criticism of slow reforms in the IMF and World Bank.China ‘leader of the world’“China is now the leader of the world,” Sri Mulyani Indrawati, managing director of the World Bank, told CNBC on Sunday in Beijing.“They (Chinese leaders) try to show that they have sound principles in not only presenting a development solution, but also in establishing this new institution and that is why many of the countries now are becoming members of this institution.”Jim McCaughan, CEO of Principal Global Investors, said that China’s move was part of a bid to establish theyuan as a global currency—and that the U.S. might be more positive towards the AIIB then its official statements suggested.“I think Washington will collaborate; I do not think it will officially join, but I think they will collaborate, at least behind the scenes,” McCaughan told CNBC early on Monday, adding that the bank was part of a “bigger picture.”“Ultimately, Chinese economic policymakers, I believe, are pushing towards the idea of the renminbi as a reserve currency… this is one small step in that direction, having a multilateral institution that they can lead,” McCaughan said.http://www.cnbc.com/id/102526769 Share this:FacebookLinkedInTwitterGoogleTumblrPinterestReddit (more…)
Dec 312014
 
On Sept. 11, Pastor Lindsey Williams, former minister to the global oil companies during the building of the Alaskan pipeline, announced the most significant event to affect the U.S. dollar since its inception as a currency. For the first time since the 1970’s, when Henry Kissenger forged a trade agreement with the Royal house of Saud to sell oil using only U.S. dollars, China announced its intention to bypass the dollar for global oil customers and began selling the commodity using their own currency. Lindsey Williams: “The most significant day in the history of the American dollar, since its inception, happened on Thursday, Sept. 6. On that day, something took place that is going to affect your life, your family, your dinner table more than you can possibly imagine.” “On Thursday, Sept. 6… just a few days ago, China made the official announcement. China said on that day, our banking system is ready, all of our communication systems are ready, all of the transfer systems are ready, and as of that day, Thursday, Sept. 6, any nation in the world that wishes from this point on, to buy, sell, or trade crude oil, can do using the Chinese currency, not the American dollar. – Interview with Natty Bumpo on the Just Measures Radio network, Sept. 11 This announcement by China is one of the most significant sea changes in the global economic and monetary systems, but was barely reported on due to its announcement taking place during the Democratic convention last week. The ramifications of this new action are vast, and could very well be the catalyst that brings down the dollar as the global reserve currency, and change the entire landscape of how the world purchases energy. Ironically, since Sept. 6, the U.S. dollar has fallen from 81.467 on the index to today’s price of 79.73. While analysts will focus on actions taking place in the Eurozone, and expected easing signals from the Federal Reserve on Thursday regarding the fall of the dollar, it is not coincidence that the dollar began to lose strength on the very day of China’s announcement. Since China is not a natural oil producing nation, the question most people will ask is how will the Asian economic power get enough oil to affect dollar hegemony? That question was also answered by Lindsey Williams when he pointed out a new trade agreement that was signed (more…)
Dec 312014
 
A bank clerk counts Chinese yuan banknotes at a branch of Industrial and Commercial Bank of China in Huaibei (Reuters/Stringer) and Russian ruble banknotes (Reuters/Ilya Naymushin) 11.8K1.1K12 Tags Banking, China, Currencies, Russia and the global economy China and Russia have effectively switched to domestic currencies in trading using financial tools as swaps and forwards, as they seek to reduce the influence of the US dollar and foreign exchange risks. The agreement signed in the end of October comes into force Monday, December 29, and provides a currency swap of CNY150 billion (up to US$25 billion). READ MORE: Defying the dollar Russia & China agree currency swap worth over $20bn The country’s Foreign Exchange Trade System will carry out similar transactions with the Malaysian ringgit and the New Zealand dollar. From now on yuan swaps are available for 11 currencies on the foreign exchange market. “China won’t stop yuan globalization or capital account opening because of the volatility in emerging market currencies,” Ju Wang, a senior currency strategist at HSBC Holdings Plc in Hong Kong told Bloomberg. China has set up bilateral currency swap lines with more than 20 countries and regions since 2009, including Switzerland, Brazil, Hong Kong, Indonesia and South Korea, Xinhua News reported in July. A swap is a financial tool to ease transactions by exchanging certain elements of a loan in one currency, like the principal or interest payments into an equivalent loan in another currency. Currency forward is an obligation of two parties to convert an agreed amount of one currency into another by a certain date at an exchange rate specified at the moment of signing the deal. Russia and China have long been looking for ways to cut the dollar’s role in international trade. The question is significant for China as 32 percent, or $4 trillion of its foreign exchange reserves are in US bonds, which means there is a vulnerability to fluctuations in the exchange rate. READ MORE: Russia’s biggest bank launches financing in Chinese yuan Russia’s foreign exchange reserves are worth $398 billion, and the US dollar accounts for about $162.45 billion. The country’s economic growth has slowed amid a standoff with Western countries over the Ukrainian conflict. After the country’s financial sector faced EU and US sanctions it became hard for Russian businesses to raise finance in the West. Chinese authorities are particularly interested in currency swap lines with developing countries, (more…)
Nov 222014
 
Global Reserve Currency and the  Russia China Trade Deal “This is a big F__king Deal.” Joe Biden to the President. The establishment of trade agreements that do not perform by using the USD as the exchange medium has just begun. The current trade agreements between Russia and China will reach the equivalence of $200 billion dollars USD in the next 5 years. If Russia and China are able to expand these agreements and China continues its expansion of trade agreements and exchange centers for the yuan around the world, as it has been doing more aggressively for the past 2 years, the pressure to establish a new global exchange system will get to the tipping point for the Global Reserve Currency (GSR) and it will change. USD currency as the GSR will be finished. The adopting of a new GSR and new global trading procedures will most surely burst the “Money Bubble” and the global fiat currency will be gone. Read the article watch the video by Mike Maloney. Mike Read this short article from Reuters Russia-China trading settlements in yuan increases 800% Published time: November 21, 2014 16:04 Get short URL Reuters / Jason Lee  Settlements in yuan between China and Russia have increased ninefold in annual terms between January and September 2014, says the Chinese Ministry of Economic Development. “The settlement in national currencies between China and Russia in bilateral trade amounted to about 2 percent in 2013. There has been a significant growth in 2014. In particular, the use of the yuan in mutual settlements increased nine times in the first nine months of 2014.” TASS quotes Lin Zhi, head of the Europe and Central Asia Department of the Chinese Ministry of Economic Development. READ MORE: Ruble-yuan settlements will cut energy sales in US dollars – Putin “About 100 Russian commercial banks are now opening corresponding accounts for settlements in yuan. The list of commercial banks where ordinary depositors can open an account in yuan is also growing.” the official said. On November 18 Russia’s Sberbank became the first Russian bank to begin financing letters of credit in Chinese yuan. READ MORE: Russia’s biggest bank launches financing in Chinese yuan Half of the trade between Russia and China could be carried out in yuan and rubles provided China removes restrictions on currency transactions for Russian banks, said Deputy Finance Minister Aleksey Moiseyev in September. The restrictions don’t (more…)
Oct 162014
 
Pepe Escobar is the roving correspondent for Asia Times/Hong Kong, an analyst for RT and TomDispatch, and a frequent contributor to websites and radio shows ranging from the US to East Asia.short URL Published time: October 15, 2014 11:52 http://rt.com/op-edge/196148-saudiarabia-oil-russia-economic-confrontation/ A fisherman pulls in his net as an oil tanker is seen at the port in the northwestern city of Duba.(Reuters / Mohamed Al Hwaity) Rosneft Vice President Mikhail Leontyev: “Prices can be manipulative …Saudi Arabia has begun making big discounts on oil. This is political manipulation, Arabis is being manipulated, which could end badly.” A correction is in order; the Saudis are not being manipulated. What the House of Saud is launching is“Tomahawks of spin,” insisting they’re OK with oil at $90 a barrel; also at $80 for the next two years; and even at $50 to $60 for Asian and North American clients. The fact is Brent crude had already fallen to below $90 a barrel because China – and Asia as a whole – was already slowing down economically, although to a lesser degree compared to the West. Production, though, remained high – especially by Saudi Arabia and Kuwait – even with very little Libyan and Syrian oil on the market and with Iran forced to cut exports by a million barrels a day because of the US economic war, a.k.a. sanctions. The House of Saud is applying a highly predatory pricing strategy, which boils down to reducing market share of its competitors, in the middle- to long-term. At least in theory, this could make life miserable for a lot of players – from the US (energy development, fracking and deepwater drilling become unprofitable) to producers of heavy, sour crude such as Iran and Venezuela. Yet the key target, make no mistake, is Russia. A strategy that simultaneously hurts Iran, Iraq, Venezuela, Ecuador and Russia cannot escape the temptation of being regarded as an “Empire of Chaos” power play, as in Washington cutting a deal with Riyadh. A deal would imply bombing ISIS/ISIL/Daesh leader Caliph Ibrahim is just a prelude to bombing Bashar al-Assad’s forces; in exchange, the Saudis squeeze oil prices to hurt the enemies of the “Empire of Chaos.” Yet it’s way more complicated than that. Sticking it to Washington Russia’s state budget for 2015 requires oil at least at $100 a barrel. Still, the Kremlin is borrowing no more than $7 billion in 2015 from the usual “foreign investors”, plus $27.2 (more…)