Timing the Great Reset – BRICS

Behind Korea, Iran & Russia Tensions: The Lurking Financial War

Alistair Crooke
12/31/2017

… From the US perspective, President Putin has declared himself to be an opponent to dollar special privilege when, at the BRICS summit in September 2017, he insisted on “the BRIC countries’ concerns over the unfairness of the global financial and economic architecture which does not give due regard to the growing weight of the emerging economies”. Putin further stressed the need to “overcome the excessive domination of a limited number of reserve currencies”. Russia consequently has duly earned American wrath for this stance. Saddam Hussein and Muamar Gaddafi both questioned the dollar hegemony, and look what happened to them.

Financial war, of course, is nothing new.  … General Hayden, the former director of first the NSA and subsequently of the CIA, has characterised financial war as the primary means of warfare in the twenty-first century, and sanctions as its Precision Guided Munitions (PGMs). (In 2012) Washington blocked international clearing for every Iranian bank, froze $100 billion in Iranian assets overseas, and curtailed Tehran’s potential to export oil.  The consequence was a severe bout of inflation in Iran that debilitated the currency.

Then, in 2014, Saudi Arabia engineered the oil price drop against US shale oil production, but also to punish Russia for its support for President Assad. And to rub salt into the wound, the US Treasury facilitated a ‘bear raid’ on the Rouble, which only was brought to a halt by China quietly intervening in the foreign exchange market, to prevent a collapse of the currency.  It was clear at this point, that China, Russia and Iran shared a common strategic interest to establish a currency zone, with the depth of markets and infrastructure, to operate independently of the dollar sphere.  These states have made it very clear that they are committed to a long-term strategy to stop using the US dollar, as their primary currency, in global trade. …

The key here is China: China’s economy is about nine times that of Russia. … Treasury Secretary Mnuchin, in September, warned China that the US could (cut) off access to the U.S. financial system (the Treasury’s ‘neutron bomb’ of blocking the SWIFT clearance system) – if China failed to impose sanctions against North Korea, sufficient to satisfy the US demand. …

China, too, it would appear, shares Mr Hayden’s view that today’s conflicts primordially are geo-financial. … China has more to lose in any financial war (because of its US Treasury holdings), and there is anyway, nothing that can substitute for the dollar, with its unique market depth. But … China and Russia and the BRICS have been thinking and preparing – as best they can – for an escalation of financial war … .

As Alasdair Macleod suggests, “look at this from China’s point of view. The People’s Liberation Army’s most influential strategist, Major-General Qiao Liang, laid out his overall strategic philosophy at a book-study forum of the Communist Party’s Central Committee in Autumn 2015. His view can be taken to be that of the Chinese leadership.”  As Qiao puts it:

The U.S. (avoids domestic price) inflation by letting the dollar circulate globally. (Then in order) to avoid a dollar devaluation (due to running) out of dollars … the Americans came up with (the) financial economy (using money to make money, which) is much easier than the real (industry-based) economy. …

Since August 15, 1971, the U.S. has gradually stopped its real economy and moved into a virtual economy. It has become an “empty” economy state. Today’s U.S. Gross Domestic Product (GDP) has reached US$18 trillion, but only $5 trillion is from the real economy.

By issuing debt, the U.S. brings a large amount of dollars from overseas, back to the U.S.’s three big markets: the commodity market, the Treasury Bills market, and the stock market. The U.S. repeats this cycle to make money: printing money, exporting money overseas, and bringing money back. The U.S. has thus become a financial empire.

Macleod comments: “In other words, America’s wealth is sustained by a pump-and-dump operation facilitated by the dollar’s reserve status, replacing genuine industrial production. …”.

“The first cycle identified by Qiao was the expansion of dollars aimed at creating a boom in Latin America in the mid-seventies. The second cycle was aimed at South-East Asia, which expanded on the back of a dollar that weakened from 1986 onwards. From 1995, the dollar began to strengthen, culminating in a bear-raid on the Thai baht, which spread to Malaysia, Indonesia and other countries in the region. The Asian Tiger phenomenon was created and destroyed, not by the countries themselves, but by the flood and ebb of dollar ownership and investment. Qiao notes that China escaped being caught up in this US-inspired operation”.

“Qiao then turns his attention to the contemporary cycle (in 2015) of dollar management, claiming it was now aimed at China. In his words:

“… The U.S. dollar was strong for six years. Then, in 2002, it started getting weak. Following the same pattern, it stayed weak for ten years. In 2012, the Americans started to prepare to make it strong. They used the same approach: create a regional crisis for other people. …

If we acknowledge that there is a U.S. dollar index cycle and the Americans use this cycle to harvest from other countries, then we can conclude that it was time for the Americans to harvest China. Why? Because China had obtained the largest amount of investment from the world. …

And here lies the crux of China’s strategy.  It will be some years before the Yuan assumes the status of a major reserve currency …, but China dominates world trade, and is in a position at any time henceforth to tie oil (and commodities) to gold – as they originally were. … And Russia’s central bank has opened an office in Beijing, specifically tasked with resolving the technical aspects of gold deliveries from Russia into China. …

And, in October 2015, China inaugurated its International Payments System (CIPS). CIPS has a cooperation agreement with the private, Belgium-based SWIFT international bank, clearing system, through which virtually every global transaction must transit, but in the event of China being excluded from SWIFT, as Mnuchin so hinted in September, China and Russia will be able to clear through CIPS.

So far, China’s policy has been to avoid instigating a disruption to the dollar sphere, preferring not to risk having global trade dislocated … . Venezuela has already set the ball rolling by refusing to accept oil payments in dollars … .

The operational launch of the Chinese Yuan denominated oil futures option … holds the prospect for displacing the petro-dollar system, especially if Saudi Arabia agrees to sell crude to China in Yuan (perhaps as part of China buying a stake in the Aramco offering).

China has other options … . It might simply switch to trading goods exclusively in Yuan, thus displacing the dollar completely as the medium for transactions. China and Russia would almost certainly be joined by … the BRICS (Brazil, Russia, India, China, South Africa), as well as by their Eurasian partner countries of the Shanghai Cooperation Organization (SCO) — comprising a population of well over 3 billion people, some 42% of the entire world population.

But because China still owns large quantities of US Treasuries and dollar reserves, for the moment she might prefer more time before executing such a coup de grace. So the bigger question … is what will be the effect on ‘risk free’ US Treasury values in the wake of a major segment of the global economy going its own way?  And what too, will be the ability of the US government then to finance its debt … ? (This is largely rhetorical. Since they would no longer be needed to back-stop international trade, they would naturally tend to go down in price and their yield would go up. The author had already established – although I didn’t quote him on this – that sabor rattling, fear mongering, and destabilization is used by the U.S. to create the insecurity that drives investors to Treasuries as a safe-haven. If necessary, war could be a last resort.)

Source

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Posted in banking system, bond market crisis, financial collapse, financial crash, financial system, Geopolitics, international banking, international trade, Investing, money system, oil trade, stocks and bonds, u.s. foreign policy, world currencies, world finance, world trade, World War III, wwiii | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Timing the Great Reset – Japan

Currencies Are Trading In A False Paradigm

March 16, 2017
brucewilds.blogspot.hk / By: Bruce Wilds

… Concern over the future of both the yen and the euro (will) become more of an issue. Both the yen and the euro have major problems going forward and while people point to the fact that behind the dollar America stands with a rapidly growing national debt it is nothing compared to the issues Japan and the Euro-zone face. …

A major cause of the Euro-zone problem is growing inequality among its members exacerbated by the lack of system-wide bank protection which causes money and wealth to flee the weaker countries and their failing banks. Japan faces an entirely different problem while national debt is an issue for the central banks that issue both currencies. Japan’s debt is much larger and the country faces a demographic crisis that leaves it forced to support a population comprised of citizens far too old to work. …

Like many Americans, I have railed against our growing debt and questioned whether it would destroy the dollar, however, when looking at the miserable alternative currencies before us the dollar is without a doubt king. …

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Posted in banking system, bonds, international banking, international trade, Investing, u.s. dollar, Uncategorized, world currencies | Tagged , , , , , | 1 Comment

Timing the Great Reset – Europe will not Survive

The Rise and Fall of the Eurodollar

Tyler Durden
12/31/2017

… Branching out from his earlier point, Snider explains that (in the 1960s, leading up to Nixon closing the gold window) the eurodollar system was deliberately adopted to help undermine Bretton Woods – and secure the dollar’s hegemony – by offering foreign banks a way to get their hands on dollars, and then use those dollars to pump up their balance sheets.

But because there’s no analogous system (now) that would help the world financial establishment wean itself off of the dollar, Snider argues that we’re earlier in the transition process than some of his peers would have readers believe. …

(That way when Nixon closed the gold window in 1971) there was already an alternate means in place, operating for a very long time, and which all of the global participants were used to. So that when Nixon ended convertibility it was – I don’t want to say it was a seamless transition, but in operational terms it was. Because there was already another mechanism in place, in operation, at the time.

And I think that’s what’s missing (now). We don’t have another settlement mechanism that is actually in place and operating right now that can replace the Eurodollar. I think that various parties want to do something about that. But they’re running into problems … .

Any kind of weekend surprise would be catastrophic. Because there’s no way, there’s no mechanism currently in place to allow that to happen.

So that’s why I think that we’re earlier in the process of transition between reserve currencies than later.

(Source: ZeroHedge, including podcast.)

(And among the comments below the article, JIMSJOE2 says:)

Eurodollars are what dollars held in foreign markets are called … . Starting last August  … capital flight out of Europe … caused a dollar, (Eurodollar), shortage … by the end of (2016) causing massive dollar strength which we saw. This prompted the FED to ask all central banks to flood the international system with dollars. China … sold billions in treasuries for dollars and then sold dollars complying with the FED. China … since early 2017 has been buying billions monthly in treasuries restocking what they had previously sold. … Russia also has been buying treasuries and now are over $100 billion so the idea being promoted on the web that these two countries want to collapse and abandon the dollar is just total nonsense. … .

China is at least 10 years from having a large enough and liquid enough bond market to compete with treasuries. Europe has no federalized bond market backed by all member countries so this leaves treasuries as the only game in town. …

The largest consulting firm on the planet, Armstrong Economics, has computer models which track both domestic and international capital flows and they have forecast that in 2018 Europe collapses as both the Monetary and the Sovereign Debt Crisis hits along with the pension crisis. Just recently Italy announced they are working on the plan to abandon the euro, another bank there is in trouble, many German cities and provinces are broke from the migrant cost, two weeks ago mayors across France ask the government for help as they are also broke for the same reason and the pension crisis has hit Spain and will run out in 2018. This is when the shit hits the fan … .

Just recently Martin Armstrong and his staff were in Europe meeting with clients. China is so concerned about Europe they flew in PBOC officials and met in London. He then flew to Brussels and met with EU officials and to say they are in panic mode is an understatement. They all finally realized that Europe is not only going to collapse but has been since 2011 as capital is running out. …  Europe will not survive in its present form.

Now back in 2009 the models forecast that the Dow would hit 22,000 then 23,000 and onto eventually around 40,000 all due to the capital flight out of Europe. First two targets have been hit. … The FED needs and wants a much weaker dollar and to stop the capital from flowing out of Europe to dollars and US equities but except for jawboning they are powerless. …

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The Magic Shale Trick

The great U.S. shale oil economic miracle is a debt mirage. The SRSrocco Report has this to say on December 16, 2017, after sampling 33 “shale weighted” oil/gas energy and production (E&P) companies:

If we add up the funds borrowed by the U.S. E&P companies (negative free cash flow), plus the stock issuance, we have the following chart:

Thus, the U.S. E&P companies tapped into an additional $212 billion worth of funding over the last six years to produce uneconomical shale oil and gas. …

So, how much money would these U.S. E&P companies need to make to pay back these funds?

Good question.  If we assume that the U.S. shale oil companies will be able to produce another 10 billion barrels of oil, they would need to make $21 a barrel profit to pay back that $212 billion.  However, they haven’t made any profits in at least the past six years, so why would they make any profits in the next six years? …

Unfortunately, investors … do not realize they will never receive their investment back.  It was spent and burned years ago to continue the Great U.S. Shale Energy Ponzi Scheme. …

So, the U.S. shale energy industry is STEALING & SWINDLING energy wherever it can to stay alive.  This is the perfect example of the Falling EROI (Energy Returned On Investment) forcing an industry to CANNABLIZE itself (and the public) to keep from going bankrupt. …

At some point, the shale energy industry will collapse upon itself leaving one hell of a mess behind.  While it’s hard to predict the timing of the event, it will likely occur within the next 2-5 years.

Check back for new articles and updates at the SRSrocco Report.

 

Posted in economic statistics, economy, financial crash, Investing, market crash, market timing, oil trade, stock market, trading and speculation, u.s. debt, u.s. economy, water resources | Tagged , , , , , | 1 Comment

The Sound of Hillary

… in the mountains of defeat.

Posted in American Culture, coverups, humor, Politics, society, U.S. Politics, US Politics | Tagged , , , , , , , , , , | 1 Comment

SubPrime Auto going Unpaid

These PE Firms Are About To Get Crushed By Their Subprime Auto Bets

Overall, subprime car loans — those extended to people with credit scores of 620 or lower — have increased 72 percent since 2011. Last year, about 20 percent of all new car loans went to subprime borrowers. …

Of course, the turnaround strategy was ‘simple.’ Given that subrpime (sic) auto collateral held up well during the great recession, private equity investors figured they were sitting on rock solid collateral that would holdup under even the most egregious loosening of underwriting standards.  Therefore, given that there was ‘no downside’, lenders wholeheartedly embraced deteriorating underwriting standards, like stretching out terms so borrowers could ‘afford’ cars they couldn’t really afford, as a way to grow their loans books. 

Alas, it didn’t work … . The $3 billion bet on subprime auto lenders hasn’t played out precisely to plan … .

First, taking a look at auto loans provided by traditional banks and credit unions, one can see some marginal deterioration in subprime auto loans.  That said, the deterioration is certainly nothing substantial … .

But, a drastically different picture emerges when looking at just the auto loans originated by America’s auto finance captives.  To our great ‘shock’, auto OEMs in the U.S. seem to have been much more “flexible” on underwriting standards over the past couple of years resulting in delinquency rates that nearly rival those last experienced at the height of the great recession. …

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Posted in economic statistics, Financial World, Investing, u.s. debt, u.s. economy | Tagged , , , , , | 1 Comment

Democrats

I saw this meme today, and I’m paraphrasing it.

The Democrats are the world’s most successful hate group. They attract (exploit) poor people who hate rich people, black people who hate white people, gay people who hate straight people, feminists who hate men, environmentalists who hate human productive activity, bratty college kids who hate their parents, journalists who hate republicans, and for that matter democrats attract republicans who hate Trump.

Posted in American Culture, democracy, Politics, socialism, society, U.S. Politics, US Politics | Tagged , , | Leave a comment