Re: Secret moves launched by China, Russia, Japan, France, Arab States to end the Dol
woops...
India to pay gold instead of dollars for Iranian oil. Oil and gold markets stunned
DEBKAfile Exclusive Report January 23, 2012, 5:57 PM (GMT+02:00) Tags: India China sanctions Iranian oil European Union
Iranian oil for India
India is the first buyer of Iranian oil to agree to pay for its purchases in gold instead of the US dollar, DEBKAfile's intelligence and Iranian sources report exclusively. Those sources expect China to follow suit. India and China take about one million barrels per day, or 40 percent of Iran's total exports of 2.5 million bpd. Both are superpowers in terms of gold assets.
By trading in gold, New Delhi and Beijing enable Tehran to bypass the upcoming freeze on its central bank's assets and the oil embargo which the European Union's foreign ministers agreed to impose Monday, Jan. 23. The EU currently buys around 20 percent of Iran's oil exports.
The vast sums involved in these transactions are expected, furthermore, to boost the price of gold and depress the value of the dollar on world markets.
Iran's second largest customer after China, India purchases around $12 billion a year's worth of Iranian crude, or about 12 percent of its consumption. Delhi is to execute its transactions, according to our sources, through two state-owned banks: the Calcutta-based UCO Bank, whose board of directors is made up of Indian government and Reserve Bank of India representatives; and Halk Bankasi (Peoples Bank), Turkey's seventh largest bank which is owned by the government.
An Indian delegation visited Tehran last week to discuss payment options in view of the new sanctions. The two sides were reported to have agreed that payment for the oil purchased would be partly in yen and partly in rupees. The switch to gold was kept dark.
India thus joins China in opting out of the US-led European sanctions against Iran's international oil and financial business. Turkey announced publicly last week that it would not adhere to any sanctions against Iran's nuclear program unless they were imposed by the United Nations Security Council.
The EU decision of Monday banned the signing of new oil contracts with Iran at once, while phasing out existing transactions by July 1, 2012, when the European embargo, like the measure enforced by the United States, becomes total. The European foreign ministers also approved a freeze on the assets of the Central Bank of Iran which handles all the country's oil transactions.
However, the damage those sanctions cause the Iranian economy will be substantially cushioned by the oil deals to be channeled through Turkish and Indian state banks. China for its part has declared its opposition to sanctions against Iran.
DEBKAfile's intelligence sources disclose that Tehran has set up alternative financial mechanisms with China and Russia for getting paid for its oil in currencies other than US dollars. Both Beijing and Moscow are keeping the workings of those mechanisms top secret.
January 25th, 2012, 08:04
vector7
Re: Secret moves launched by China, Russia, Japan, France, Arab States to end the Dol
Who's really to blame for America's catastrophic financial meltdown and devastating national recession? Contrary to what the "Occupy Movement" might tell you, it's not greedy Wall Street executives. No, as one of America's top financial professionals reveals in this shocking new book, the real culprit is economic warfare, with our foreign enemies exploiting our lurking financial weaknesses.
In Secret Weapon, Kevin D. Freeman unveils how all the evidence—including motive, means, and opportunity—points to America's foreign enemies as deliberately pushing our economy over the brink.
In this stunning exposé, Freeman reveals:
The evidence linking Communist China and Islamic finance to economic warfare against the United States.
Why initial reports linked the 2008 stock market crash to economic terrorism—and why the Obama administration continues to look the other way.
How the financial attack unfolded—and how the perpetrators tried to cover their tracks.
Why you should expect another financial attack even more devastating than the last one—and how you can protect yourself from it.
In Secret Weapon you'll learn what our enemies know and what the Obama administration has chosen to ignore—that our financial system is profoundly vulnerable to financial terrorism, and that we are being targeted for further and even more destructive attacks by our enemies, who want to cripple America as the world's leading economy.
If you want to protect yourself and protect our country, then you need to read Secret Weapon to understand how we have entered a new age of warfare—an age our enemies want to make the Dark Ages of the United States.
On GBTV Glenn Beck is talking with Kevin Freeman about the 2008 crash that is economic terrorism against USA.
Who's really to blame for America's catastrophic financial meltdown and devastating national recession? Contrary to what the "Occupy Movement" might tell you, it's not greedy Wall Street executives. No, as one of America's top financial professionals reveals in this shocking new book, the real culprit is economic warfare, with our foreign enemies exploiting our lurking financial weaknesses.
In Secret Weapon, Kevin D. Freeman unveils how all the evidence—including motive, means, and opportunity—points to America's foreign enemies as deliberately pushing our economy over the brink.
In this stunning exposé, Freeman reveals:
The evidence linking Communist China and Islamic finance to economic warfare against the United States
Why initial reports linked the 2008 stock market crash to economic terrorism—and why the Obama administration continues to look the other way
How the financial attack unfolded—and how the perpetrators tried to cover their tracks.
Why you should expect another financial attack even more devastating than the last one—and how you can protect yourself from it.
In Secret Weapon you'll learn what our enemies know and what the Obama administration has chosen to ignore—that our financial system is profoundly vulnerable to financial terrorism, and that we are being targeted for further and even more destructive attacks by our enemies, who want to cripple America as the world's leading economy. If you want to protect yourself and protect our country, then you need to read Secret Weapon to understand how we have entered a new age of warfare—an age our enemies want to make the Dark Ages of the United States.
January 26th, 2012, 04:32
samizdat
Re: Secret moves launched by China, Russia, Japan, France, Arab States to end the Dol
thanks, Vector. If you peek at GBTV, I´d appreciate pointers toward good free clips about 3 times a month. He normally presents a pretty profound perspective, and I've lost track of him.
January 26th, 2012, 14:09
American Patriot
Re: Secret moves launched by China, Russia, Japan, France, Arab States to end the Dol
Just a thought here.
The definition of "Terrorism" itself has several "defined" definitions, however, each country has their own ideas, judicial systems, and even individuals since they all disagree.
The problem is there is only ONE definition of what terrorism actually is.
Terrorism is the use of any methods that cause people to become fearful. That's all there is to it.
Piracy is terrorism.
Gang activity to intimidate, rob, rape, murder and scare people into not talking to the cops, or giving up their belongings is terrorism.
Any CRIMINAL activity that terrorizes a victim is terrorism.
Economic Activity is defined as:
The term economic terrorism is strictly defined to indicate an attempt at economic destabilization by a group. More precisely, in 2005 the Geneva Centre for Security Policy defined economic terrorism in the following terms:
Contrary to "economic warfare" which is undertaken by states against other states, "economic terrorism" would be undertaken by transnational or non-state actors. This could entail varied, coordinated and sophisticated or massive destabilizing actions in order to disrupt the economic and financial stability of a state, a group of states or a society (such as market oriented western societies) for ideological or religious motives. These actions, if undertaken, may be violent or not. They could have either immediate effects or carry psychological effects which in turn have economic consequences.[1]
January 31st, 2012, 23:29
vector7
Re: Secret moves launched by China, Russia, Japan, France, Arab States to end the Dol
Quote:
Originally Posted by samizdat
thanks, Vector. If you peek at GBTV, I´d appreciate pointers toward good free clips about 3 times a month. He normally presents a pretty profound perspective, and I've lost track of him.
Here is the the follow up interview with both Kevin Freeman and Lieutenant General William G. Boykin looking into rogue nations Economic Warfare against the United States...
On 25 December 2011, the government of Peoples Republic of China and Japan unveiled plans to promote direct exchange of their currencies. This agreement will allow firms to convert the Chinese and Japanese currencies directly into each other, thus negating the need to buy dollars. This deal between China and Japan followed agreements between China and numerous countries to trade outside the sphere of the US dollar. A few weeks earlier, China also announced a 70 billion Yuan ($11 billion) currency swap agreement with Thailand.
After visiting China, the Prime Minister of Japan Yoshihiko Noda went on to India and signed another currency swap agreement with the government of India. These currency agreements in Asia came in a year when the countries of the Association of South East Asian Nations (ASEAN) (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam) were seeking to deepen ways to strengthen their firewall to protect their economies from the continued devaluation of the US dollar. In the year of the ‘Eurozone crisis’ when the future of the EURO as a viable currency was fraught with uncertainty, many states were reconsidering holding their reserves in the US dollar.
Moreover, in the face of the neo-liberal orthodoxy of the Bretton Woods institutions (especially the IMF) swap agreements were proliferating in all parts of the globe. The Latin Americans established the Bank of the South and are slowly laying the groundwork for a new currency, the SUCRE. As in Asia, the Bank of the South will be one of the fundamental institutions of the Union of South American Nations that has been launched in Latin America in order to guarantee the independence of the societies of Latin America. Not to be left as the only region holding dollars, the leaders of the oil rich states of the Gulf Cooperation Council have been buying gold while announcing as long ago as 2009 the intention to establish a monetary union with a common currency. In Africa there are plans for the strengthening of the financial basis of the African Union but so far there has not been the same kind coordinated regional plans for financial independence. During the period of the debate on the debt crisis in the USA, the Nigerian central bank governor Lamido Sanusi announced that Nigeria plans to invest 5 to 10 percent of its foreign exchange reserves in the Chinese currency – the Yuan also known as the renminbi (RMB).
These accelerated Swap agreements – (agreements between two or several countries (bilateral vs. multilateral) on exchanging currencies in times of crisis) – came a decade after the countries of ASEAN established the Chiang Mai Initiative (CMI). In the aftermath of the Asian economic crash and the currency attack by speculators of the financial services industry, the CMI had been established to promote financial cooperation among the ASEAN countries with regional collaboration on currency issues high on the agenda. Initially when the CMI was launched, the government of China had been lukewarm to the goals of the CMI but over decade, especially after the 2007-2008 Wall Street crash, the preliminary partnership that was called ASEAN plus three (Viz ASEAN countries plus China, Japan and Korea) matured to the point where the ASEAN Swap Agreements have now been expanded to the Chiang Mai Initiative Multilateralization (CMIM) agreement, and a set of rules with structured mechanisms for financial regionalism to work for the development of Asian bond markets. These three pillars of the new Asian economic cooperation – CMIM, Asian Bond Markets and bilateral swap agreements – mark a new stage in the international political order.
This week we will examine the implications of the Chinese/ Japan currency swap in the context of the internal discussions in China about the consolidation of socialism. In 2011, China overtook Japan as the second largest economy in the world, and every expansion increases internal and external pressures on the socialist goals of the People’s Republic of China. More importantly, it is crucial to recollect the competitive devaluations and currency wars of the last depression so that the decline of the dollar can be managed in a way that avoids the recourse to open confrontation of the last depression. It is worth remembering that one of the goals of the fascists in the last depression was to roll back socialism.
In our contribution this week we will examine the implications of the swap agreement between China and Japan and the pressures on other regions to delink from the dollar. The conclusion will argue that this swap is one more nail in the coffin of the dollar as the international reserve currency.
‘CHINA, JAPAN TO BACK DIRECT TRADE OF CURRENCIES’
This was the headline in the financial press as Bloomberg News and other news sheets of the financial world reported the agreement on settling trade between the two countries in Yen and RMB instead of dollar. With US $340 Billion of transactions in 2010 between the two countries, both being each other’s biggest trading partner, the deal is a clear break away from US financial domination. This Bloomberg Report stated,
‘Japan and China will promote direct trading of the Yen and Yuan without using dollars and will encourage the development of a market for companies involved in the exchanges, the Japanese government said.
Japan will also apply to buy Chinese bonds next year, allowing the investment of renminbi that leaves China during the transactions, the Japanese government said in a statement after a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing yesterday. Encouraging direct Yen- Yuan settlement should reduce currency risks and trading costs, the Japanese and Chinese governments said. China is Japan’s biggest trading partner with 26.5 trillion Yen ($340 billion) in two-way transactions last year, from 9.2 trillion Yen a decade earlier.
The pacts between the world’s second- and third-largest economies mirror attempts by fund managers to diversify as the two-year-old European debt crisis keeps global financial markets volatile.
‘Given the huge size of the trade volume between Asia’s two biggest economies, this agreement is much more significant than any other pacts China has signed with other nations.’
Less than two weeks later, in the first week of January 2012, the President of South Korea Lee Myung-bak travelled to China to discuss a ‘bilateral strategic partnership.’ This discussion on bilateral partnership between South Korea and China took place in a context where the Republic of South Korea did not want to be left behind. Ostensibly the visit to China was to discuss the recent passing of Kim Jung IL of North Korea but Chinese media reported that China, Japan and South Korea were hammering out the basic framework for a free trade agreement between the three biggest economies in East Asia.
These agreements will have implications for the dollar as the global reserve currency and there will be increased pressures for the Chinese currency to be internationalized as other societies follow the lead of Japan and seek swap agreements outside of the dollar.
SLOW EROSION OF THE POWER OF THE DOLLAR AND MANAGING THIS NEW MULTIPOLAR CURRENCY ENVIRONMENT
Japan is one of closest allies of the United States. There are thousands of US troops stationed in Japan, but the Japanese, like all peoples of the world, have been losing money as the US dollar was devalued over the past three years. This devaluation has taken the form of what the US authorities called quantitative easing. There has been two such quantitative easings since the 2009 as the United States unloaded more fiat currency on the world. Whatever the name (devaluations or quantitative easing) all countries in the world were thinking of finding ways to escape being hostages to the US dollar and Central Bank governors from Brazil to India and beyond are working to protect their societies from these devaluations. Asian central banks together hold some $3,3 Trillion in reserves, amounting to an impressive 46 percent of the world’s total national reserves. The government of China has vowed to reduce its holding of US dollars and in 2011. The China Daily newspaper reported that, ‘According to data from the US Treasury Department, China’s holdings of US Treasury bonds stood at $1.1326 trillion by the end of November 2011, $1.5 billion down from the previous month. It was the second successive month that the amount had declined, and the lowest reserve level seen since July 2010. China made six monthly cuts of US debt in 2011, the department’s data showed, trimming its holdings by $27.5 billion from the end of 2010. Yet despite the reductions, China remains the top buyer of US Treasury securities.”
What was left unsaid was the plan of the political leadership of China for a deft management of the reductions so that the international political economy is not drastically affected leading to unforeseen circumstances.
Over the past decade numerous officials from the National People’s Congress, the Central Bank and the commercial sectors have been stating that China has to reduce its holdings of US bonds and diversify into other currencies. When, over five years ago, Parliamentary vice-chairman Cheng Siwei, called for the diversification of Chinese reserves away from US bonds, the implicit assumption was that China would diversify and buy European bonds. This was before the full hollowness of the European project became manifest to the world.
PRESSURES TO INTERNATIONALIZE CHINESE CURRENCY
The Chinese economy has registered an average of over 10 per cent growth in the past thirty years. This has been the most successful transformation of an economy in the recorded history of political economy, but the pundits do not like to point to the socialist foundations of China and the sacrifices made by the Chinese people to transform their society. Mao Zedong called the currency of China, the Renminbi, and the people’s currency. Renminbi is the official name of the currency introduced by the Communist People’s Republic of China at the time of its foundation in 1949. The other name for the currency is the Yuan. Hence the Chinese currency is known by a number of names (including the Kuai).
As a low wage economy, the hard work of the Chinese producers has made the society a force to be reckoned with and the currency attractive to other countries seeking a refuge from the dollar. The political leaders in China have been careful about the pace and nature of the internationalization of the currency. The leaders have slowly allowed Hong Kong to become an offshore renminbi financial centre by allowing authorized institutions in Hong Kong to offer renminbi services such as deposit taking, currency exchange, remittance and trading in RMB denominated bonds. Since 2009 when the Chinese government opened this slight door to the internationalization of its currency, other financial centres such as Macau and Singapore have been hoping to get into the offshore RMB business.
These regional pressures for the internationalization of the RMB came up against the hard reality that for the full internationalization of the currency, for the RMB to become a global currency, the government of China would have to establish capital markets and ensure the full convertibility of capital account. The balance of forces within China would then shift in favour of the one per cent who would then privatise state assets at a faster rate. In the present international system, opening such capital markets beyond the tightly controlled stock exchanges would open up the Chinese currency to the kind of full scale attack and speculation that was witnessed in the Asian financial crisis in 1997. Thus far the Chinese state has held the line against the expansion of capital markets in ways that would undermine the stability of the society.
The economy of China is a mixed economy with the state-owned enterprises dominating the economy. Of the ten largest companies on the Shanghai Stock Exchange, eight are state owned. With the growth and power of the Chinese economy, the Chinese capitalists have expanded with a large number of billionaires. These billionaires do not control political power and the Chinese state continues to subsidise food, education and transportation services. There are many limitations to the nature of the Chinese political system, especially the hothouse of growth and accumulation that is creating a fundamental environmental hazard for the majority of the citizens. The growing inequalities and the massive push for the reversal of socialist gains since 1949 are now compounded by an alliance between capitalists in Singapore and the US who are calling for speeding the internationalisation of the RMB.
It is in this context where the December 25 agreement to allow Japan to ‘apply to buy Chinese bonds next year’ becomes significant. It is again worth quoting the press reports of the December 25 agreement. According to the British Broadcasting Corporation, ‘The two leaders also agreed to allow the Japan Bank for International Cooperation to issue Yuan-denominated bonds in China, the first time a foreign government body has been allowed to do so. At the same time Japan said it was also looking to buy Chinese government bonds, a move that analysts believe may prove to be mutually beneficial to both nations. ‘By adopting Chinese bonds as a part of official foreign exchange reserves, Japan is labelling Chinese bonds as an investable asset,’ according to Takuji Okubo of Societe Generale Tokyo.
‘This should encourage Japanese private investment into Chinese bonds, as well as into other Asian emerging currencies. Such a development in turn should help develop offshore currency trading in Japan.’
This new collaboration between China and Japan has been underlined by the Japanese Foreign Minister Koichiro Gemba who on Tuesday said that ‘Japan will seek to take a less inward-looking stance when it comes to diplomacy in the Asia-Pacific region.’ In the words of the China daily newspaper the Foreign Minister said that, ‘Japan will look to enhance diplomatic ties with China based on mutually beneficial goals. With China, this year marks the 40th anniversary of normalizing diplomatic ties, we will aim to deepen the mutually beneficial relationship based on common strategic interests,’ Gemba said in his first foreign policy speech in parliament.
He went on to say that Japan plans to proactively make ‘concrete efforts’ to strengthen its ties with China and establish more ‘open and multilayered networks’ in the best interests of both countries
Ever alert to these shifts in the global currency and financial markets, the British Chancellor of the Exchequer, George Osborne, travelled to Hong Kong in January and offered London as the western base for the coming internationalization of the RMB. Osborne was vociferously making a plea to make London the leading centre for trading the Chinese currency. This conservative Chancellor was exposing the opportunism of the British and demonstrating the short memory of the British hoping that the Chinese have forgotten the Opium Wars.
UNITED STATES SENATE CURRENCY BILL
While the British were declaring their willingness to embrace the RMB, the US Senate has gone about increasing the war of words against China. In the failure to compete in the so-called ‘marketplace,’ sections of the US political leadership have for years been complaining that China should allow open markets for its currency and for its currency to appreciate more rapidly. There are two sections of the US political establishment pushing against the Chinese currency. The first are those allied to Wall Street and the currency speculators who want to be able to trade in the Chinese currency and to do to China what was done to Malaysia, Taiwan, Thailand and other Asian economies in 1997. The second pressure is coming from those sections of capital who complain that China is flooding US markets.
While these two sections do not agree they support the information war against China, this information war carries the refrain that the renminbi is undervalued by 25-30 percent against the dollar, which means Chinese exports to the US become 25-30 percent cheaper, while US goods exported to China are more expensive.
Even though China has allowed its currency to appreciate a little in the last two years, the two sections of capital in the US hostile to China have said that this is not enough. In October 2011 the US Senate passed S.1619, the Currency Exchange Rate Oversight Act of 2011, and a bill to address China’s ongoing currency manipulation, by a vote of 63-35.
One year earlier one commentator for Time Magazine had noted correctly that the real challenge for the United States was to change its consumption patterns.
‘We’ve seen this movie before. From July 2005 to July 2008, under pressure from the US government, Beijing allowed its currency to rise against the dollar by 21 percent. Despite that hefty increase, China’s exports to the US continued to grow mightily. Of course, once the recession hit, China’s exports slowed, but not as much as those of countries that had not let their currencies rise. So even with relatively pricier goods, China did better than other exporting nations.
Look elsewhere in the past and you come to the same conclusion. In 1985 the US browbeat Japan at the Plaza Accord meetings into letting the yen rise. But the subsequent 50 percent increase did little to make American goods more competitive. Yale University’s Stephen Roach points out that since 2002, the US dollar has fallen in value by 23 percent against all our trading partners, and yet American exports are not booming. The US imports more than it exports from 90 countries around the world. Is this because of currency manipulation by those countries, or is it more likely a result of fundamental choices we have made as a country to favor consumption over investment and manufacturing?’
TRANSITIONS: END OF DOLLAR HEGEMONY AND THE NEW INTERNATIONAL FINANCIAL ARCHITECTURE
This commentary on the need for the US to transform its economy and live within its means fell short of outlining a more fundamental problem, that of the military management of the international system and the outmoded imperial impulses that stem from the kind of militarism that now reflect US society. While the Japanese and the Chinese were deepening economic relations, the US political leaders were intensifying its bellicose rhetoric about Chinese military buildup in the South China Sea and pushing forward the idea of a Trans-Pacific Partnership (TPP) Agreement. Japan was being wooed to become a key anchor of the US dominated TPP.
The China/Japan currency swap was a bold move on the part of these two economic giants in Asia. There are historic difference between the Chinese and Japanese, especially the experiences of the 1930’s Japanese occupation of China and the Rape of Nanking. Notwithstanding these historic differences the US debt of over US $ 14 trillion along with the inability of the US political leaders to effectively tackle the growing debt has awoken many that the US dollar as the international reserve currency is on its last legs.
In May 2009, Nouriel Roubini in a contribution to the New York Times on the Almighty Renmimbi summed up the decline of the dollar in this way,
‘This decline of the dollar might take more than a decade, but it could happen even sooner if the US did not get its financial house in order. If China and other countries were to diversify their reserve holdings away from the dollar — and they eventually will — the United States would suffer. It would take a long time for the renminbi to become a reserve currency, but it could happen. The resulting downfall of the dollar may be only a matter of time.’
Nouriel Roubini was writing this warning to alert the US rulers to shift gears because of the rise of China. He called for a strategy of investments to recover the US economy declaring, ‘Now that the dollar’s position is no longer so secure, we need to shift our priorities. This will entail investing in our crumbling infrastructure, alternative and renewable resources and productive human capital — rather than in unnecessary housing and toxic financial innovation. This will be the only way to slow down the decline of the dollar, and sustain our influence in global affairs.’
China and Japan have taken a decisive step to diversify their reserve holdings away from the dollar. What is more fundamental is the new rush by other states to join in this new regional currency arrangement. Republic of South Korea is knocking to become central to this swap arrangement while other members of ASEAN are watching these developments carefully.
The Eurozone crisis has narrowed the ability of the US to respond negatively to the China/Japan currency swap. Importantly, the capitalist crisis in Europe has stiffened the spine of those elements of the Chinese society who proclaim that the principal task of China is to bail out its own people and transform the economy to benefit the 1.3 billion citizens.
These left forces in China are calling for the consolidation of socialism and for vigilance to halt the power of those who are calling for a speedy internationalization of the RMB. These social elements understand the realities behind the call for opening capital markets in China.
It is the left and the progressive forces in China who agree with Mao that the RMB is the people’s currency and that the most important currency is the Chinese people. It is not usual for this writer to quote from Time magazine, but in the arguments of Fareed Zakaria on the question of overvalued currency, this author would concur, ‘The Real Challenge from China: Its People, Not Its Currency.’
‘China is beginning a move up the value chain into industries and jobs that were until recently considered the prerogative of the Western world. This is the real China challenge. It is not being produced by Beijing’s currency manipulation or hidden subsidies but by strategic investment and hard work. The best and most effective response to it is not threats and tariffs but deep, structural reforms and major new investments to make the U.S. economy dynamic and its workers competitive.’
And Zakaria might have added that the US cannot be competitive as long as it imprisons the best of the young people of colour in the prison industrial complex.
The lessons learnt from the last capitalist depression are that competitive devaluations, trade wars, currency disputes and new alliances sow the seeds of hostilities and provide the climate for incidents.
Incidents then spin out of control beyond diplomacy. The contagion from the capitalist crisis will spread and the forces of socialist transformation will have to be even more alert and vigilant to balance the formation of a regional currency block while supporting the creation of the multipolar world to end the era of dollar and pound/sterling hegemony. Those regions of the world that have not awoken to the slow demise of the dollar need to pay closer attention. Planned diversification away from the dollar is preferable to rushed monetary unions. The African peoples have a lot of lessons to learn from both the capitalist crisis in Europe and the new financial arrangements between China and Japan. Venezuela receives shipment of gold, says it has withdrawn $9 billion from foreign banks
By Associated Press, Published: January 30
CARACAS, Venezuela — Venezuela repatriated a final shipment of gold from foreign banks Monday, saying the country has withdrawn a total of $9 billion in its gold reserves and moved it to the country’s Central Bank.
The shipment of 14 metric tons (15 tons) brought the total amount of gold shipped to Venezuela since November to 160 metric tons (176 tons), Central Bank President Nelson Merentes said.
President Hugo Chavez in August initially announced a plan to retrieve about 211 metric tons (233 tons) held in U.S. and European banks.
Merentes didn’t explain the change, but said about 85 percent of Venezuela’s gold reserves are now held in the country.
State television showed images of a convoy of armored trucks guarded by soldiers as the gold was ferried from Caracas’ airport to the Central Bank.
Merentes did not say from where the shipment had arrived, nor in which foreign banks Venezuela still has gold.
While some economists have questioned the move, Chavez has said having the gold in Venezuela will help protect the oil-exporting country from economic troubles in the U.S. and Europe.
March 22nd, 2012, 16:53
vector7
Re: Secret moves launched by China, Russia, Japan, France, Arab States to end the Dol
China and Australia have signed a currency swap agreement in a bid to promote bilateral trade and investment.
It will allow for the exchange of local currencies between their central banks, worth up to 30bn Australian dollars ($31bn; £20bn) over three years.
The deal is expected to reduce cost for businesses, as they will be able to settle trade terms in local currency.
It is the latest in a series of similar deals signed by Beijing as it seeks a more global role for the yuan.
"The main purposes of the swap agreement are to support trade and investment between Australia and China, particularly in local-currency terms," the Reserve Bank of Australia said in a statement.
'Stamp of approval'
China has been trying to promote the yuan as an alternative global reserve currency to the US dollar.
It has signed currency deals with many of its trading partners, including Hong Kong and Japan.
That has seen a rise in the amount of Chinese trade being settled in yuan instead of US dollars.
Analysts said the latest deal with Australia, which is one of the biggest supplier of minerals and natural resources such as coal and iron ore to China, is a major step in Beijing's quest for a global role for its currency.
"It puts a major stamp of approval on the Chinese Yuan and is a shot in the arm in the process of its internationalisation," said Dariusz Kowalczyk of Credit Agricole CIB.
At the same time, analysts said the currency swap agreements would also see a slight opening up of China's tightly controlled capital markets, as trade partners with these agreements would have more options to invest in yuan-denominated assets.
Such a move has been cited as key to the yuan becoming more internationally acceptable as a reserve currency. More on This Story
The largest oil exporter in the Middle East has teamed up with the second largest consumer of oil in the world (China) to build a gigantic new oil refinery and the mainstream media in the United States has barely even noticed it. This mammoth new refinery is scheduled to be fully operational in the Red Sea port city of Yanbu by 2014.
Over the past several years, China has sought to aggressively expand trade with Saudi Arabia, and China now actually imports more oil from Saudi Arabia than the United States does. In February, China imported 1.39 million barrels of oil per day from Saudi Arabia. That was 39 percent higher than last February. So why is this important? Well, back in 1973 the United States and Saudi Arabia agreed that all oil sold by Saudi Arabia would be denominated in U.S. dollars. This petrodollar system was adopted by almost the entire world and it has had great benefits for the U.S. economy. But if China becomes Saudi Arabia's most important trading partner, then why should Saudi Arabia continue to only sell oil in U.S. dollars? And if the petrodollar system collapses, what is that going to mean for the U.S. economy?
Those are very important questions, and they will be addressed later on in this article. First of all, let's take a closer look at the agreement reached between Saudi Arabia and China recently.
In what Riyadh calls "the largest expansion by any oil company in the world", Sinopec's deal on Saturday with Saudi oil giant Aramco will allow a major oil refinery to become operational in the Red Sea port of Yanbu by 2014.
The $8.5 billion joint venture, which covers an area of about 5.2 million square meters, is already under construction. It will process 400,000 barrels of heavy crude oil per day. Aramco will hold a 62.5 percent stake in the plant while Sinopec will own the remaining 37.5 percent.
At a time when the U.S. is actually losing refining capacity, this is a stunning development.
Yet the U.S. press has been largely silent about this.
Very curious.
But China is not just doing deals with Saudi Arabia. China has also been striking deals with several other important oil producing nations. The following comes from a recent article by Gregg Laskoski....
China's investment in oil infrastructure and refining capacity is unparalleled. And more importantly, it executes a consistent strategy of developing world-class refining facilities in partnership with OPEC suppliers. Such relationships mean economic leverage that could soon subordinate U.S. relations with the same countries.
Egypt is building its largest refinery ever with investment from China.
Shortly after the partnership with Egypt was announced, China signed a $23 billion agreement with Nigeria to construct three gasoline refineries and a fuel complex in Nigeria.
Essentially, China is running circles around the United States when it comes to locking up strategic oil supplies worldwide.
And all of these developments could have tremendous implications for the future of the petrodollar system.
If you are not familiar with the petrodollar system, it really is not that complicated. Basically, almost all of the oil in the world is traded in U.S. dollars. The origin of the petrodollar system was detailed in a recent article by Jerry Robinson....
In 1973, a deal was struck between Saudi Arabia and the United States in which every barrel of oil purchased from the Saudis would be denominated in U.S. dollars. Under this new arrangement, any country that sought to purchase oil from Saudi Arabia would be required to first exchange their own national currency for U.S. dollars. In exchange for Saudi Arabia's willingness to denominate their oil sales exclusively in U.S. dollars, the United States offered weapons and protection of their oil fields from neighboring nations, including Israel. By 1975, all of the OPEC nations had agreed to price their own oil supplies exclusively in U.S. dollars in exchange for weapons and military protection.
This petrodollar system, or more simply known as an "oil for dollars" system, created an immediate artificial demand for U.S. dollars around the globe. And of course, as global oil demand increased, so did the demand for U.S. dollars.
Once you understand the petrodollar system, it becomes much easier to understand why our politicians treat Saudi leaders with kid gloves. The U.S. government does not want to see anything happen that would jeopardize the status quo.
A recent article by Marin Katusa described some more of the benefits that the petrodollar system has had for the U.S. economy....
The "petrodollar" system was a brilliant political and economic move. It forced the world's oil money to flow through the US Federal Reserve, creating ever-growing international demand for both US dollars and US debt, while essentially letting the US pretty much own the world's oil for free, since oil's value is denominated in a currency that America controls and prints.
The petrodollar system spread beyond oil: the majority of international trade is done in US dollars. That means that from Russia to China, Brazil to South Korea, every country aims to maximize the US-dollar surplus garnered from its export trade to buy oil.
The US has reaped many rewards. As oil usage increased in the 1980s, demand for the US dollar rose with it, lifting the US economy to new heights. But even without economic success at home the US dollar would have soared, because the petrodollar system created consistent international demand for US dollars, which in turn gained in value. A strong US dollar allowed Americans to buy imported goods at a massive discount – the petrodollar system essentially creating a subsidy for US consumers at the expense of the rest of the world. Here, finally, the US hit on a downside: The availability of cheap imports hit the US manufacturing industry hard, and the disappearance of manufacturing jobs remains one of the biggest challenges in resurrecting the US economy today.
So what happens if the petrodollar system collapses?
Well, for one thing the value of the U.S. dollar would plummet big time.
U.S. consumers would suddenly find that all of those "cheap imported goods" would rise in price dramatically as would the price of gasoline.
If you think the price of gas is high now, you just wait until the petrodollar system collapses.
In addition, there would be much less of a demand for U.S. government debt since countries would not have so many excess U.S. dollars lying around.
So needless to say, the U.S. government really needs the petrodollar system to continue.
But in the end, it is Saudi Arabia that is holding the cards.
If Saudi Arabia chooses to sell oil in a currency other than the U.S. dollar, most of the rest of the oil producing countries in the Middle East would surely do the same rather quickly.
And we have already seen countries in other parts of the world start to move away from using the U.S. dollar in global trade.
For example, Russia and China have agreed to now use their own national currencies when trading with each other rather than the U.S. dollar.
That got virtually no attention in the U.S. media, but it really was a big deal when it was announced.
A recent article by Graham Summers summarized some of the other moves away from the U.S. dollar in international trade that we have seen recently....
Indeed, officials from China, India, Brazil, Russia, and South Africa (the latest addition to the BRIC acronym, now to be called BRICS) recently met in southern China to discuss expanding the use of their own currencies in foreign trade (yet another move away from the US Dollar). To recap:
China and Russia have removed the US Dollar from their trade
China is rushing its trade agreement with Brazil
China, Russia, Brazil, India, and now South Africa are moving to trade more in their own currencies (not the US Dollar)
Saudi Arabia is moving to formalize trade with China and Russia
Singapore is moving to trade yuan
The trend here is obvious. The US Dollar’s reign as the world’s reserve currency is ending. The process will take time to unfold. But the Dollar will be finished as reserve currency within the next five years.
Yes, the days of the U.S. dollar being the primary reserve currency of the world are definitely numbered.
It will not happen overnight, but as the U.S. economy continues to get weaker it is inevitable that the rest of the world will continue to question why the U.S. dollar should automatically have such a dominant position in international trade.
Over the next few years, keep a close eye on Saudi Arabia.
When Saudi Arabia announces a move away from the petrodollar system, that will be a major trigger event for the global financial system and it will be a really, really bad sign for the U.S. economy.
The level of prosperity that we are enjoying today would not be possible without the petrodollar system. Once the petrodollar system collapses, a lot of our underlying economic vulnerabilities will be exposed and it will not be pretty.
Tough times are on the horizon. It is imperative that we all get informed and that we all get prepared.
March 26th, 2012, 15:12
vector7
Re: Secret moves launched by China, Russia, Japan, France, Arab States to end the Dol
South Africa will this week take some initial steps to unseat the US dollar as the preferred worldwide currency for trade and investment in emerging economies.
Thus, the nation is expected to become party to endorsing the Chinese currency, the renminbi, as the currency of trade in emerging markets.
This means getting a renminbi-denominated bank account, in addition to a dollar account, could be an advantage for African businesses that seek to do business in the emerging markets.
The move is set to challenge the supremacy of the US dollar. This, experts say, is the latest salvo in the greatest worldwide currency war since the 1930s.
In the 30s, several nations competitively devalued their currencies to give their domestic economies an advantage over others.
And this led to a worldwide decline in overall trade volumes at the time.
The north will be pitted against the entire south in a historic competitive currency battle – whose terrain has moved to the Indian capital New Dehli – where the Brics (Brazil, Russia, India China and South Africa) nations will assemble next week.
China seeks to find new markets for its currency and to lobby to internationalise it throughout the Brics states.
For China this is not a new game. In 2009, senior Chinese banking officials issued a statement that the international monetary system was flawed owing to an unhealthy dependence on the US dollar and called for a “super-sovereign” international reserve currency.
Experts say Beijing’s first step is to internationalise its currency (by expanding its reach beyond China), liberalise it (to allow its value to be determined by the market instead of actively managing it as they currently do) and then make it a reserve currency for many nations in the developing world.
Africa’s largest bank, Standard Bank, says in a research document: “We expect at least $100 billion (about R768 billion) in Sino-African trade – more than the total bilateral trade between China and Africa in 2010 – to be settled in the renminbi by 2015.”
The bank anticipates that the use of the renminbi will lower transaction costs in Africa, thus lowering the barriers to doing business.
It also says that the Chinese will be more successful in transacting in renminbi in Africa than anywhere else because most currencies are weak and somewhat localised.
Not only will the US dollar be challenged, but also the entire international financial regime – led by the World Bank and the International Monetary Fund – which has been dominant since the end of World War II.
South Africa’s place in the emerging international financial regime is set to be enhanced.
Zou Lixing, vice-president of the Institute of Research of the China Development Bank, told the Brics preparatory meeting recently that “although the economic aggregate of South Africa is small relative to the Brics, South Africa provides a gate for the Brics to get access to the huge African market”.
The five-member nations have collectively called for an end to the tacit agreement between the US and Europe that ensures that the head of the World Bank is an American citizen, and the International Monetary Fund head is European.
They have proposed that an emerging market candidate be fielded when the term of the current World Bank head, Robert Zoellick, expires in three months.
Fundacao Vargas, a member of the Brazilian delegation, said Brics could confront “existing governance structures”, and seek to strengthen the blocs’ influence in established institutions like the World Bank and the International Monetary Fund, while creating alternatives.
The demand for greater political say in international affairs dovetails with China’s expected rise as a financial superpower in the next eight years.
Vargas showed the preparatory meeting projections indicating that China’s economy will have eclipsed that of the US by 2020, hence the promotion of the renminbi as the preferred currency of the south.
The renminbi has traditionally traded at a deliberately lower exchange rate, which gave a huge boost to China’s domestic economic sectors and enabled its booming industrialisation and growth.
The US and other trading partners have long accused China of being a “currency manipulator”.
Last week, Brazil declared its commitment to keep its own currency – the real – low. Its finance minister, Guido Mantega, reiterated his November 2010 declaration that a global currency war has broken out.
He said: “We do not want to lose our manufacturing sector.
We will not sit back and watch while other countries devalue their currencies.”
Brazil and China cried foul last year when, through a slew of initiatives dubbed QE2 – Quantitative Easing Two – the US indirectly devalued its currency by pumping about $600 billion into its economy to protect the economy from sliding back into recession.
South African economists were in two minds about the moves to extend the influence of the renminbi.
Economist and academic Peter Draper told City Press recently that the decision to establish a Brics development bank and to enlarge the renminbi's sphere “is political and related to the current political dynamics within the World Bank” and the established international financial system.
Tom Wheeler of the South African Institute of International Affairs said developments in New Delhi (India) were “giving substance to the previously (and) loosely arranged economic block”.
- City Press
April 25th, 2012, 20:03
vector7
Re: Secret moves launched by China, Russia, Japan, France, Arab States to end the Dol
Gold’s London AM fix this morning was USD 1,638.75, EUR 1,244.68, and GBP 1,014.83 per ounce. Yesterday's AM fix was USD 1,632.00, EUR 1,240.97 and GBP 1,014.42 per ounce.
Silver is trading at $30.85/oz, €23.43/oz and £19.10/oz. Platinum is trading at $1,550.00/oz, palladium at $671.25/oz and rhodium at $1,350/oz.
Gold fell $3.80 or 0.23% in New York yesterday and closed at $1,638.20/oz.
Gold has been trading mostly sideways in Asia and within a narrow 8 point spread. In European trading it remains near the close seen in New York yesterday.
The perfect storm trifecta of bad political and economic news yesterday out of France, Holland and Germany led to risk off and falls in many markets. Gold performed well and was resilient considering the sell off seen in equity markets.
Dutch Prime Minister Mark Rutte speaks in parliament today after tendering his Cabinet’s resignation to break a deadlock over further austerity.
French President Nicolas Sarkozy and Francois Hollande will face off in a 2nd round ballot on May 6th and the prospect of Hollande taking power is making European markets jittery.
The euro region has government debt at 87.2% of GDP last year, which is the highest since the start of the euro in 1999.
Manufacturing data from Europe and China contracted in data released yesterday showing how economic conditions appear to be deteriorating.
With the euro zone political landscape in crisis mode and data showing business contracting many investors are putting their capital in dollars and US Treasuries.
So far gold has not been a prime beneficiary of these risks but this will likely change soon – especially if financial conditions deteriorate which seems very likely.
Gold has recently displayed short term correlations with paper assets such as equities and bonds but these correlations will again be shown to be fleeting as gold’s long term inverse correlation with paper assets will reassert itself in the coming months.
Mexico, Russia and Central Banks Continue Diversifying into Gold
While gold demand from the western investors and store of wealth buyers has fallen in recent months, central bank demand continues to be very robust and this is providing strong support to gold above the $1,600/oz level.
IMF data released overnight shows that Mexico added 16.8 metric tons of gold valued at about $906.4 million to its reserves in March.
Russia continued to diversify its foreign exchange reserves and increased its gold reserves by about 16.5 tons according to a statement by its central bank on April 20.
April 26th, 2012, 05:07
samizdat
Re: Secret moves launched by China, Russia, Japan, France, Arab States to end the Dol
I'm not savvy about $$, & or investments, the mechanics, forex, banksters, fed reserve even less comex etc. Perhaps someone can call BS on silver for instance as a hot riser, precious commodity underpriced historically by ratio & in high demand and manipulated low until "it's time" (to make $$, rise....dip, dive, sky etc. Silver for example just shot up &&& down $1.50 in about a nanosecond.
What's the real deal on the agit-prop ie. (Pan Asia Gold Exchange)June 2012...Hong Kong Mercantile Exchange?
I will post the two articles below separately which lead me to wonder about this situation, fyi.
Sorry. I could not copy the articles as they are copywrited.
What one perceives from the info, which I don't know is reliable is that big US$ like MorganStanley kept silver low to gain on their borrowed shorts...and they'll likely do the reverse pretty soon. Much inference is made of a triad collusion w/ trans asian axis sellout of the USD by bama-geithner & Bben and a "correction" of the supply-demand curve on pms w/ Hong Kong & Pan-asian performing a "shanghai" on the cmex.
On September 21, 2012, America’s Most Popular Investment Will Reach its
Use-by Date
It will be as a civilization-altering development that will jam up our credit lines…mute the roar of our mighty military engine…topple the world’s biggest monopoly…and send shockwaves across markets…finally bringing the Curtain down on Capitalism…
Dear Reader:
My name is James Dale Davidson.
In 1984, I launched a financial newsletter called Strategic Investment with Lord William Rees-Mogg (former Editor-in-Chief of The Times London, Vice Chairman of the BBC and confidant of powerful figures like Margaret Thatcher and Lord Rothschild).
With the launch of this newsletter I made an equally “outrageous” prediction.
At the height of Soviet power, I predicted that Communism would fall by the end of the decade.
So radical was my forecast at the time that it was rendered rank nonsense by the “guardians of conventional thinking.”
A reviewer in Newsweek dismissed it as “an unthinking attack on reason.”
And the Wall Street Journal categorically denounced it as no more than the natterings of a “dopey aunt.”
Then on January 1, 1989, I told my sometimes friend Bill Clinton (we had the same tutor at Oxford) and a room full of other skeptical political titans, that the Berlin Wall would soon fall.
To the shock of almost the entire planet, on the eve of the new decade, the Wall came down, and revolutions swept away communist regimes from Budapest to Bucharest.
This was an event that according to the so-called experts “no one could have predicted.”
Yet for readers of Strategic Investment, it came as no surprise at all.
In fact, we had been preparing for this momentous event for the better part of the decade.
We knew exactly why Communism was doomed to collapse. We also knew that when it did, that although it would be seen by many as a triumphant event, it would also cause violent disruptions in the global marketplace, and alter the equation of the game for many an economic player. And if you weren’t on the right side of this shift, you might find yourself scrambling for new meaning and methods in an entirely new world order…
But if you were on the right side, you could seize opportunities that only come along once or maybe twice in a century…
I come to you today, to make the same kind of polarizing market prediction I made back then…
And although I’m sure the media mafia will once again be swift to reject my proclamation, I implore you to hear me out and listen to my reasoning…
For I believe, just like the Fall of the Berlin Wall became the defining moment that marked the end of Communism, so too will this event become the defining moment that will mark the end of Capitalism…at least as we know it…
So passionate and assured of my reasoning (and I believe you will be too once I present the evidence) that it has compelled me to come out of retirement and release this video, to fire the distress flare (if you will) about the titanic event that could erupt just weeks from now…
So destabilizing is this event that the biggest names in politics and finance have tried everything in their power to prevent it…and for some years they succeeded. But due to America’s weakening economic and military muscle, we are finally coming up against resistance from our neighbors and trading partners…
For generations it appeared that the Empire’s power and reach knew no bounds. But in the past few years, we have been crushed under the monumental financial stress of policing the globe, launching failed wars, securing oil and other strategic assets, bailing out “buddies” and zombie banks.
And this has all been at a time when our Social Security and Medicare costs are sky-rocketing (Their unfunded liabilities have been growing by $5 trillion annually - at a rate of more than 33% of GDP – while the economy has grown at a rate of less than 1% annually over the past four years). And our tax revenues and T-Bill sales are plummeting…
In short: We have lost our leverage…
We have reached the physical limit on our exercise of power…and we are no longer having as much success at bullying the world into getting what we want, whether it be oil, gas, credit, trading agreements…or any other such strategic assets…
Our Bloated Empire is starting to feel the pains and consequences of Her Crimes of Consumption…
But now, since we are losing the war on the physical front, our leaders are igniting a new war on the cyber-front…employing “virtual vandalism” and other acts of info-terrorism, in order to delete any kind of evidence that might suggest that major swings in sentiment are occurring right now in the demand for America’s most powerful investment…even going so far as to propose censorship laws so draconian that it has moved China, and more than 10,000 Internet sites, including ones as big and as powerful as Wikipedia to strike out against them…
But I have tapped into my contacts and my sources from across the global geopolitical plains, and gathered inside intelligence from some of the highest offices and from some of the biggest money-movers-and-shakers in the business (it’s probably why Strategic Investment was often referred to as “An Investors CIA”), and I have uncovered a pivotal development, which I believe will set off the most violent economic reversal we’ve ever known…
“Final Curtain for Capitalism”
Civilization is about to confront its greatest crisis ever.
It’s why I have been impelled to return from retirement…and produce this video…for I have been warning that this day would arrive for many years now.
And I am returning to the public eye to complete the job I began long ago…It will be the fulfillment of my life’s work. It’s why I founded institutions like the National Taxpayers Union, Agora Publishing, and Newsmax. It’s why I advocated through eight administrations…and why I helped move 32 States to call for a balanced budget amendment to the US Constitution – (a change which if it had not been squelched by Washington’s powerful lobby groups could’ve spared you from the terrible day of reckoning that could now be only weeks away…)
And though this day will usher in one of the most tumultuous transitions in all of human history, it doesn’t mean you have to get crushed by it. If you understand the events going on in the world at the moment, including the fundamental reasons that are driving them, then you need not panic. You can start preparing right now for the cataclysmic upheaval ahead. While you may have to do some immediate and dramatic repositioning of your portfolio, and maybe even your life, you could stand to reap great rewards in the era ahead…
In fact, I believe more money will be lost (and made) in the 18 months following this event than ever before.
And in this video I’ll tell you how it will be done…I’ll even give you the names of some of the exact investments that I predict will be on the winning side of the equation…
That’s where subscribers to Strategic Investment always had an extraordinary edge over the average investor who relies on mainstream information flows.
In fact, even once the world finds out about this event , the media and its mollified listeners will still fail to truly understand the fundamental forces behind it…
The media with all its bells and whistles, sensational sound-bites and meaningless montages, is designed not to educate you, but to entertain you…not to answer questions, but to question answers…to detract and distract…amuse and confuse…paralyze and terrorize…motivating investors to make decisions based on their emotions and not on logic…which almost always, as I’ve witnessed through four decades of crises, cause investors to make all the wrong choices at all the wrong times…selling when they should buy…and buying when they should sell…
The media’s employees are like birds skimming for bugs on the surface of the water, shying too far away from the deeper currents and undertows, to know, care or dare where they are tending…
But at Strategic Investment, we are like marine biologists, diving deep to discover the secrets beneath the surface…
And we do it, by applying a completely novel approach to the art of forecasting…
It’s an approach we call Megapolitics.
Predicting “the Impossible”
Lord William Rees-Mogg and I first invented the theory of Megapolitics in the ‘80s, and it is one on which we have based all our forecasts to date, including the ones we set out in our 3 best-selling books (Blood in the Streets, The Great Reckoning and The Sovereign Individual.)
And we believe it is the reason behind our success, and the reason why we have been able to predict (and even profit) off events that others claimed were “impossible”…and why everyone from the World Bank to Heads of State…from the titans of yesterday to the titans of today have subscribed to our advice…
It’s how we predicted:
Black Monday (over 6 months before it happened.) We warned readers that America would soon experience another 1929-style stock market crash that would catch investors with the shock of their lives, erasing virtually overnight all the profits (and more) that it had taken them the better part of the decade to gain. Experts were almost unanimous in denying such a thing could happen. Caught in the throes of what was at the time our greatest market boom ever, they refused to see reason. But come October 1987, world markets began to hemorrhage in what became the most violent sell-off of the century.
The Japanese Depression of the '90s and 2000s. Once again, at the height of the unprecedented Japanese stock and real estate market boom of the ‘80s, experts got completely blinded by Japan’s Rising Sun! In fact, the consensus was almost unanimous. Japan was about to take over the world.
We said otherwise. We forecast that it would slip into a deep depression…from which it would be difficult to return. We even went so far as to say that Japan’s stock market crash would match or exceed the 89% loss that Wall Street suffered after its 1929 crash. Decades later, Japan’s stock market is still 80% off its 1989 high!
The Rise of a Whole New Wave of Islamic Terrorism in the 90s and 2000s…and how it would displace Marxism as the new ideology of confrontation with the West. This again was at a time when no one wanted to hear it, let alone report on it…and we forecast that they wouldn’t really start hearing about it until our tallest buildings were toppled. Once again, this was a Megapolitical event that we knew would impact global markets on a profound scale, and for which few would be prepared. Caught atop the dizzying heights of the dotcom boom, no one could even see that war was brewing on the geopolitical ground…let alone understand the profound implications it would have on their investments…But a momentous reversal in sentiment was about to occur, as New Economy type stocks were about to be dumped for Strategic assets…war and oil would become the new names of the game again…
The Micro-Media Revolution. And in my book The Sovereign Individual published on the eve of the millennium I made sweeping predictions about how the rise of the Internet, and other such micro-media technologies would have the power to subvert and destroy the macro-state…and redefine media (and life) at the margin. The events I wrote about in my book back then are beginning to unfold right now at a breath-taking pace…
This is the power of Megapolitics.
And once you understand the theory behind it, you’ll start to see the world as it really is….
Megapolitics is the prism through which we look back into the past…in order so that we can peer into the future…
I’ll tell you about this radical new way of looking at the world in this video.
Armed with this unique and powerful forecasting tool, the mysteries of the markets’ muddied waters will start to clear…and the geopolitical and economic fog will begin to lift…
By understanding the fundamental reasons that drive economies and shape markets, you can take back control of your life and your finances…
In fact, in one of my favorite reviews to date, the famous Internet billionaire Peter Thiel (co-founder and creator of revolutionary innovations such as Paypal and Facebook) recently wrote me and said:
“I am an extremely big fan of your writings, which have shaped my thinking about the markets (and the macro world as a whole) perhaps more than anything else.”
The Biggest Moment in Megapolitics Maybe Just Weeks Away Now
In an overlooked article published in the Tehran Times on January 12th, 2012 Iran (the world’s second largest oil producer) made a shocking announcement…one that the western media establishment has suppressed…
It stated that starting this Iranian calendar year (which began March 20th) Iran would make its first dramatic move away from the Petrodollar…
This is a game-changing move…one that I believe will spread around the world like wildfire…and which I predict by the end of summer will bring an end to the 39-year secular bull market in dollars.
America’s most popular investment will have finally reached its use-by date.
And the consequences for every single American will be so dire, it will be difficult at first to accept, let alone believe.
It’s why Washington has spent over ten years and four trillion dollars trying to thwart it.
And until recently it succeeded (if only just)…
The preservation of Petrodollar Power was the real reason we went to war with Iraq.
It is the real reason behind all the strife we are igniting today with Iran…
It’s the real reason why all our trade and economic, information and military wars are now reaching a boiling point…
It’s the real reason why – in yet another history-making event - Wikipedia and over 10,000 other web sites recently went dark…
And it’s the real reason why the wife of my sometimes friend Bill Clinton (and current Secretary of State) is trying to create draconian laws that (if passed) would deliver a terrible blow against the freedom of information…and why Hillary recently announced that “we are in an information war. And we are losing that war.”
In the past, western media outlets enjoyed a monopoly on the coverage of world news.
But today a growing number of viewers from across the world tune into various alternative foreign media outlets to get a fresh take on current events.
It’s a numbers game. And we are clearly losing that game.
For instance, the most striking example of this comes from the launch of the RT Media Empire…which within just seven years has become the most dominant and pervasive force in media of all time.
RT stands for Russia Today.
It currently holds a record number of viewers on YouTube, boasting over two thirds of a billion hits…
CNN International in contrast is struggling to reach an audience of just 1% of RT’s size!
And,more viewers in Washington and New York today tune into the English version of RT than tune into almost any other foreign-based international news channel.
The days of American media monopolies are over.
I predicted, 25 years ago, that this Megapolitical event would occur…long before the producers of these alternative media empires had even graduated from high school!
But mark my words: It is merely the symptom (and not the cause) of the real transformation that is going on in the world right now…and while this transformation will bring great peril, it will also bring great promise…and for those who keep listening - an opportunity for great profits too! The Petrodollar Was the Ultimate Monopoly
The Petrodollar was a game-changing deal that Washington made with OPEC 39 years ago.
At the time OPEC wanted to create a Petrocurrency in which to trade its oil. This currency however was to be made up of a basket of currencies, which although was to include the dollar, was also to include gold, the Japanese yen, the French franc, the British pound and the German mark.
America had recently hit peak oil and had abandoned the gold standard.
After racking up enormous debts on a failed war (Vietnam)…we were fast running out of oil…of gold…and of money…
And the inflation monster, which had barely raised its head since World War II, was suddenly back from the grave…terrorizing the streets again…
Plus our supremacy was being challenged by the remarkable rise of the emerging markets of the East (like Japan, South Korea and Taiwan)…
Something had to be done.
And the Powers that Be, spied an ingenious little way to keep the empire’s engine running….
President Nixon convinced King Faisal of Saudi Arabia to accept U.S. dollars (and only dollars) as payment for oil. In exchange, he pledged to protect the Saudi Monarchy, and all its oil fields, from anyone who might choose to seize them…enemies like the Soviet Union, Libya and Israel, and many other interested parties.
The King agreed.
And by 1975, he had got all the other OPEC members to agree too.
The Petrodollar Was Born
And so successful was it, that it made the dollar go viral…and mounted Capitalism’s biggest monopoly ever…
It was a Megapolitical innovation that won for the Empire, and each and every citizen in it, all kinds of special privileges…
Megapolitics are the big events that change history.
They are usually either a technological or monetary innovation that tip the balance of power into the hands of its creators and alter the equation of the game.
Two of the greatest Megapolitical innovations of all time were gunpowder and Guttenberg’s printing press.
But they were technological innovations.
The Petrodollar is a monetary innovation.
But its impact in the last 39 years has been equally as powerful.
It was the deal that would rewrite history and shift the balance of power back heavily into America’s favor.
What it did was essentially create a 39-year secular bull market for dollars…as all oil-importing countries would now have to stuff their Central bank vaults full of dollars so they could pay for their oil.
Now in order to acquire those dollars, they would either have to borrow them off America, or they would have to work for it, by manufacturing and selling all manner of goods and products to us…
The Japanese sold us Kawasaki’s and luxury cars.
The Taiwanese sold us TVs, telephones and electronics.
The South Koreans sold us air-conditioners, fridges, washing machines and all manner of modern conveniences.
And the Chinese sold us toys and trinkets, gadgets and gizmos.
And while all these foreign oil-importing nations had to toil through sweat, blood and tears to earn their Petrodollars in order to pay for their oil, we merely had to print them…
A New World War Was Launched
But this war wasn’t a military one fought with guns and grenades.
This one was a consumer war fought with low-cost unskilled labor and mega-manufacturing plants.
The goal was to simply win the custom of the American consumer.
The reward was not kingdoms and countries, or gold and precious metals, but rather it was merely paper dollars, printed without limit, at virtually no cost, by the only institution in the world with the power to do so: the Federal Reserve.
It became like Christmas every day for the American consumer.
Santa would arrive at ports all over America, with sea-containers full of all sorts of goodies and gadgets, made by his worker elves at home…and sold at mercifully modest costs to the American consumer.
But it wasn’t just cheap goods that Americans won.
We also won cheap credit!
You see all these nations who were competing to sell goods to us began to accumulate vast stores of surplus dollars in their vaults. And rather than let these dollars just sit there and gather dust, they decided to lend them back to America and collect the albeit pithy (yet better than nothing) interest rate we gave them on the loan.
And thus the phenomenon, now infamously known as Petrodollar Recycling, was born.
And it was this phenomenon that gave birth to our unprecedented 30-year secular bull-market in U.S. bonds…(one Warren Buffett is quoted to have dubbed as one of the most “extraordinary” bubbles in financial history…a bubble by the way that is just moments away from bursting…with terrifying implications for every single American, particularly retirees and baby boomers whose pension funds and retirement accounts are simply stuffed with them – whether they know it or not! I’ll tell you how to prepare for the bursting of the American bond bubble in just a moment.)
The Petrodollar Privilege Had Power
In short: it allowed us to live beyond our means…print unlimited amounts of money at virtually no cost…spend more than we earned… consume more than we produced... import more than we exported…
It allowed us to borrow excessive amounts of money at obscenely low rates…and build up enormous trade and budget deficits with few adverse effects…
It allowed us to build a mighty military machine and undertake expensive missions right round the globe…
We expanded our Empire…and extended its reign…
Seen in this light, the importance of the Petrodollar comes into perspective.
You can see why we would be prepared to go to war over it.
The Petrodollar is now the last thread that is holding the American Empire together.
But it’s about to go poof…Capitalism is About to Find Itself
Without a Currency
Iran has announced its historic launch of the world’s first commodity exchange that will trade oil in currencies other than the U.S. dollar…
This will mark OPEC’s latest attempt to move away from the Petrodollar.
In fact, in 2006, a report titled Iran Next U.S. Target sighted the launch of this exchange as Americas #1 threat, hailing it to be the real “economic weapon of mass destruction.”
The report was voted by alternative media outlet, Project Censored as one of the top 10 censored stories of the year.
By 2008, despite all U.S. efforts to crush it, Iran managed to successfully and silently get a version of this exchange up and running…
This first version of it, however, was merely to establish its validity on global commodity markets…So rather than actively engage in Petrodollar Warfare with America by selling its oil and gas in other non-dollar denominated currencies, it merely offered petroleum-based products instead…
But this year that is set to change.
Iran’s Oil Bourse will offer oil on the open market for the first time in currencies other than the U.S. dollar.
This is the real reason why we are levying sanctions on Iran, and anyone else who dares do business with them.
This is the real reason why we’re sending warships to the Strait of Hormuz, and why we’re accusing Iran of building Weapons of Mass Destruction.
But it doesn’t make sense.
The IAEA (International Atomic Energy Association) has just completed a full inspection of Iran’s nuclear capabilities, and confirmed that there is no evidence Iran has decided to actually build nuclear weapons.
What’s more, we have 2,150 nuclear warheads. And even by the most ambitious of estimates it would take Iran about 10 years to build two at most.
And if Iran’s two nuclear warheads by 2020 are so dangerous, then why have we allowed North Korea and Pakistan to build literally hundreds of them!
So now Washington is bullying the entire globe to boycott all trade with Iran.
But that doesn’t make sense either.
For example, Iran has been trading with mega-economies like India, Japan, South Korea for over two decades. These are not relationships that are going to be severed anytime soon by third-party sanctions. They’ve been trading over hundreds of billions of dollars worth of oil and other commodities with Asia alone for a long time…not to mention dozens of other nations.
Iranian oil is an integral part of many nations’ lifeblood.
And while America is running around bullying everyone with sanctions and saber rattling, nations the globe over are quietly and silently doing their own private little deals…deals that are collectively worth over a trillion dollars… The World Has Begun to Blindside the Dollar
China, Russia, Brazil, Venezuela, Argentina, South Africa, Malaysia, Indonesia, South Korea, Columbia, to name but a few, are all doing direct deals and swaps with one another.
They’re basically blindsiding the dollar.
For example:
The Dollar Has Drowned In The Yellow Sea! Hands down, Japan and China landed the biggest punch to the Petrodollar in December 2011 when the two G20 giants announced plans to dump the dollar and trade only in Yuan and Yen. Value: Minimum $339 billion.
The BRICS Are Now Glued Together! Brazil, Russia, India and China (South Africa too) agreed to establish mutual lines of dollar-free credit. According to IMF figures – Value: $170 billion.
You’ll Hear of Asian Contagion No More! Watch out for the “Chiang-Mai Multi-lateralized Initiative”! It is already in effect. And it links the economies of the 10 ASEAN nations – plus China, Japan, South Korea and the Monetary Authority of Hong Kong in a super-liquid juggernaut kitty of non-dollar credit and local currencies. Value: $120 billion.
Weeks Ago, Tsunami-Tattered Japan Threw India A $15 billion Lifeline. This “little” agreement gives India immediate access to $15 billion worth of yen to help it buy its Iranian oil.
And the Silk Road is Now Being Paved With Yuan and Dirhams. On Tuesday, January 17th, 2012, China threw the dollar into one more ditch, when it penned yet another “greenback-less” agreement – this time with the United Arab Emirates. Value: $5.5 billion. And this is just one of more than ten such deals that we’ve seen inked by the Asian Giant in recent years.
The world has begun to enter an unprecedented new era of monetary co-operation. Instead of raising voices and guns – they are raising solutions.
And U.S. sanctions to curb the flow of Iranian oil are now hitting a kink. Though you won’t hear about this from the mainstream media (where the word Petrodollar has been practically banned since 2007).
But the word Petrodollar and the details of new Swap Lines are bandied about every day on alternative media stations like RT, Al Jazeera and China Central Television.
And this is just the beginning…
Commerce is Freeing Itself of Fiat Currencies
We are re-entering a New Era of Barter and Exchange.
To circumvent U.S. sanctions, Iran and China, even back in 2010, started their own little “oil-for-refineries” program. You see, Iran is not only far from atomic; it’s also far from modern…
With its creaky and crumbling infrastructure, OPEC’s second largest oil and gas producer can’t even refine its most abundant natural resource: crude oil... To this day, it still has to export nearly all of its crude and later import it back as gasoline, kerosene and other petroleum products – and they usually do this at a loss.
What’s more, it has new Super-Fields (that were discovered in 1999) that have boosted its country’s proven reserves to150 billion barrels – but this “little” asset has still hardly been developed.
So as China’s thirst for Iranian oil continues to grow (49% last year alone) and trade mechanisms to pay for it keep getting cut off, the two are swapping oil for infrastructure.
China’s already signed up to build what will become two of the largest oil projects Iran’s seen in years.
And this is just but one example, where the dollar has been cut out of foreign trade, and has been replaced by good old barter and exchange.
Iran’s oil swaps with various nations are projected to reach 500,000 barrels per day once the third phase of an ambitious plan to further barter and refine oil is completed. That’s more energy than the Department of Defense (the world’s largest single oil consumer) burns each day! These new pumps and pipelines are slated to come online in the next 12 months.
But it’s not only foreigners that are dumping the dollar.
Americans, displeased with Washington’s fiscal recklessness, are dumping it too!
A recent report in The New York Times has announced the birth of an entirely new currency in the U.S. – the BerkShare.
Also, Jim Rogers (one of the world’s shrewdest investors) has denounced the dollar too, saying if something isn’t done soon to resurrect it, it will “lead to a huge decline in the standard of living of U.S. citizens like nothing we’ve seen in nearly a century.”
And Bill Gross, the world’s biggest bond investor has advised all his clients that if they had just one investment idea, it should be an investment in a non-dollar, non-euro currency.
As Brazilian economist and strategist Ricardo C. Amaral, recently said:
“The US dollar served its purpose since the end of WWII and became the major foreign exchange reserve currency…(but) the days of the U.S. dollar playing that special role…has reached the end of the line…today that system is very sick.”
The Fiats are Falling
But all this is part of a much wider trend…one I predicted would occur in my book The Sovereign Individual in 1998.
In this book I alerted readers that we were about to go from an era of macro-states to micro-states…macro-currencies to micro-currencies…
In Europe in the 16th Century there were literally thousands of forms of exchange, and thousands of states (feudal systems).
Now Europe is down to 16 major states and one major currency.
But I believe the trend is about to reverse.
In fact, just like the break up of the Soviet Union, so too will we now see the break up of the European Union…and of the Euro…
But the greatest (and most shocking) event of all…the one that most Americans will not even be able to imagine, let alone believe…will be the break up of our own Confederacy, and of our own Currency…and of Capitalism itself. Sure the word will be bandied about, but it will take on a whole new form…
I’ll tell you about that new form in a moment…
...
People everywhere are hesitant and worried. You see it in their faces. Hear it in their conversations. See it reflected in polls and see it registered in the ballot box.
Just as an invisible, physical change of ions in the atmosphere signals that a thunderstorm is imminent, even before the clouds darken and lightning strikes, so too are there now premonitions in the air. One person after another, each in his own way, senses that time is running out on a dying way of life…
As I talk to you now, the walls of my den are lined with diplomas, awards and personalized photos of me with some of the mightiest Mega-political figures in living memory.
I’m surrounded by my gilded achievements – the snapshots from the greatest moments of my of my life’s work. A legacy, that if I’m honest, I am quite proud of.
But one thing I’ve learned from studying 6,000 years worth of history is that being encircled by plaques and shelves of the world’s best books means nothing if they are merely part of some “estate”…
And why just rust, when things are really starting to get interesting…and when 40 years of my forecasts are coming to a head…
The airplane and Internet have brought us closer together but Washington and the worker have never been further apart.
This is why I’m coming out of retirement.
I don’t want to be tucked safely away in my home in Buenos Aires… or rambling around my vineyard in New Zealand.
That’s too easy.
That’s not what I’ve strived for.
It’s been great gravy, yes, but that’s not what it’s all about…
It’s about: You... Your family… Your friends… Your future…
That’s why I’m hoping you’re hearing me right now.
And I’d argue with Shakespeare’s Hamlet. The “Undiscovered Country” is NOT the end – but merely the beginning…
Yes, the transition ahead will be rough.
Punters will guess…
Politicians will lie…
History will repeat...
It is repeating right now…
Rome is burning…
But that’s precisely why I’m breathing fire back into what I believe is my crowning achievement… Strategic Investment…
In 1969, when I started airing Washington’s dirty secrets – fighting for those who didn’t have the sway or access that I did – I quietly questioned my role…
Was I being fierce or foolish?
But like all things, time did tell...
Turns out, young and brash (along with 3 bestsellers) has lead to bold and brazen…
...
All the best,
James Dale Davidson
(Author of Blood in the Streets, The Great Reckoning and The Sovereign Individual)
May 22nd, 2012, 18:22
American Patriot
Re: Secret moves launched by China, Russia, Japan, France, Arab States to end the Dol
Communism/Socialism are FORCED markets. Capitalism is not a forced situation.
People will still TRADE, BARTER and BUY things regardless of the economic situation.
So, Capitalism "will not fall" like Communism. It might fall apart, but it will never be gone.
June 6th, 2012, 21:10
vector7
Re: Secret moves launched by China, Russia, Japan, France, Arab States to end the Dol
I think this might be a good time for Americans to start paying more attention to not just Europe, but what is happening in the Far East. The following editorial is from China Daily, the Communist Chinese Party newspaper for foreign consumption.
Escaping the dollar trap
By Zhang Monan (China Daily)
Direct yen-yuan trading is another step in China’s bid to extricate itself from excessive dependence on US currency
As part of efforts to boost bilateral trade and investment, China and Japan started direct trading of their currencies in Shanghai and Tokyo on June 1.
Allowing the yuan to directly trade with another major currency other than the US dollar will help China in its efforts to acquire a wider trading and financial presence.
The biggest lesson China has learned from the global financial crisis is that it should push for reforms of the international monetary system and accelerate the internationalization of the yuan. It has also become increasingly evident that the dollar-dominated global monetary system has not only interrupted the world’s normal economic growth mechanism, but also caused global economic and financial chaos. The “dollar trap” can be found in every corner of the world.
The establishment of the “dollar era” during the latter half of the 20th century was to a large degree a consequence of the United States’ decisive role in the making of global market rules and institutions. The US dollar has thus become the center of the world’s monetary system while other countries, either export or resources-dependent, have to peg their currencies to the dollar, thus weakening the independence of their monetary policies.
Such an imbalance has resulted in “appreciation against the dollar, but depreciation at home” for some currencies and aggravated the imbalances in global trade. Against this backdrop, how to gradually depeg their currencies from the dollar and increase their monetary independence has become a pressing concern for some countries.
For a long time, China only allowed the yuan to be directly traded with the dollar and all transactions with other currencies had to be via the greenback. As a result, the value of the yuan and its issuance have been influenced by the monetary policies of the US. This has made it difficult for a real exchange rate of the yuan to be established.
The internationalizing of the yuan has accelerated since 2010, especially this year with the HSBC issuing yuan bonds in London in April, a move that started the establishment of another offshore financial center of the yuan besides Hong Kong, and the World Bank’s agreement with China’s central bank for commissioned investment in China’s inter-bank securities market.
China remains Japan’s largest trading partner. In 2011, the bilateral trade volume increased to a record high of $344.9 billion, an increase of 14.3 percent year-on-year. However, 60 percent of the bilateral trade volume between the two countries is settled via the dollar, thus bringing both countries increased transaction costs and settlement risks and prompting them to raise the ratio of trade settlements via their own currencies.
There have been great motivations within Japan for direct trading of yen with the yuan. Japan’s accelerated industrial and population ageing over the past decade has been a key factor in its failure to pull out of a lingering recession. To alleviate the impact of the yen’s appreciation upon its economy, Japan began moving its focus of economic growth overseas in the 1980s. Under such a strategy, some Japanese enterprises that have lost advantages at home have moved their manufacturing and operation bases overseas in pursuit of bigger profits.
Since the catastrophic earthquake and the ensuing tsunami in March last year, Japan has accelerated the shift of its industrial development and investment to other countries, especially to China. In this context, direct yuan-yen trading without the involvement of the US dollar will not only offer more opportunities for Japan’s industrial and trade growth, it will also promote deeper Asian economic integration.
Past practices indicate that if a currency is to become a leading international currency, it starts from acquiring pricing and settlement position in the trade of international bulk commodities, especially energy sources, as indicated by the establishment of the dollar’s hegemony in world’s energy trade over the past decades. The formation of a “dollar, oil dollar and commodity dollar” cycle, a closed cycle of global capital flow, has to a large extent decided the distribution of global wealth.
A key element to judge whether a country’s currency is a leading international currency is its share in global foreign reserves. According to the International Monetary Fund, more than 60 percent of global foreign reserves was in US dollars by the end of the third quarter of 2011. Behind the dollar are the euro, sterling and the yen, the yuan is only accepted by a few countries as a reserve currency. Despite facing a tortuous path before its internationalization, the yuan’s direct trading with the yen marks a substantial step forward in China’s bid to extricate itself from excessive dependence on the US dollar. Depegging from the dollar will facilitate its process of free conversion with other currencies and make it play a bigger role in global wealth distribution.
The author is an economics researcher with the State Information Center.
(China Daily 06/06/2012 page 8 )
- I took the liberty of putting the last portion of the editorial in bold so as to highlight the phrase “global wealth distribution.” This is an important issue going forward as the West collapses due to indebtedness and incompetence.
June 22nd, 2012, 21:55
vector7
Re: Secret moves launched by China, Russia, Japan, France, Arab States to end the Dol
And while the expansion of the "dollar exclusion zone" was actually quite glaring to anyone who dared to look, one thing was obvious: it was confined to Asia. No more courtesy of the following FT headline: "Brazil and China agree currency swap."
More: "Brazil has provided a vote of confidence in China’s efforts to promote the renminbi as a reserve currency by becoming the biggest economy yet to agree a swap deal with Beijing.
Brazil and China announced the R$60bn (US$29bn) local currency swap after a bilateral meeting between Wen Jiabao, the Chinese premier, and Dilma Rousseff, Brazil’s president, on the sidelines of the Rio+20 environmental summit in Rio de Janeiro."
“It is a measure that reinforces the economies of both countries,” Guido Mantega, Brazil’s finance minister, said late on Thursday night.
Well, that... and also a measure which shows that one by one every country in the world is starting to think of the post-dollar world.
China has launched an aggressive campaign of “currency swap diplomacy”, signing about 20 such agreements over the past four years with countries ranging from Argentina to Australia and the United Arab Emirates.
While these have been largely symbolic – only Hong Kong so far has had to activate its swap line after a shortage of renminbi in the territory in 2010 – they are seen as helping the long march of the internationalisation of the Chinese currency.
They are inactive only as long as they are not activated. And that, as the Federal Reserve bank of JPMorgan the United States has shown can be done with just the flip of a switch.
What happens next is usually best summarized by the following chart which has long been one of our favorites.
