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the daily stirrer

Currency War - The Non Shooting Proxy War That Could Prove More Lethal Than Bullets

It has been clear for some years now that the USA, backed by its main NATO and EU military allies the UK and France (the FUKUS axis has been trying to provoke Russian into firing the shot that will be heard around the world and recognised as the startiung signal for World War Three.
Ironically after the way the US has spent sixty years branding Russia the agressor, the Kremlin leadership has shown restraint and, backed by it's allies China and Iran, has chosen to fight an economic war. There will be less blood but possibly more hardship and death as the poor nations suffer most.
edited by Ian R Thorpe

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Currency War - The Non Shooting Proxy War That Could Prove More Lethal Than Bullets

Contents

The Death Of Petrodollars & The Coming Renaissance Of Investing
What the Latest Currency 'War' is All About
Does It matter If The Dollar Is Replaced?

U.S.A. Threatens To Cut Off China From The US Dollar If They Do Not Uphold Sanctions On North Koreas
Russia & China Declare All Out War on US Petrodollar
The Demise Of Dollar Hegemony: Russia Breaks Wall Streets's Oil-Price Monopoly
Another Oil Exporting State Surrenders: Last Nail In Petrodollar's Coffin
China launches global yuan payment system
US Becoming Isolated As Key Ally Japan Considers Joining China-Led Investment Bank
De-Dollarization Accelerates As More Washington "Allies" Follow Australia To China-Led Bank
China Becomes Global Lender Of Last Resort With Bailout Of World's Most Indebted Oil Company
What the BRICS plus Germany are really up to in the Currency Wars?
De-Dollarization: Russia Ratifies $100 Billion BRICS Bank
De-Dollarization Accelerates: Russia Launches SWIFT-Alternative Linking 91 Entities
Swiss Decoupling Sets The Euro Adrift, Triggers Vast Losses For Banks, And Currency Traders
Russia Propositions Europe: Dump The US$ And I'll Show You My Eurasian Economic Union
Oil price: Britain's North Sea Oil Industry 'Close To Collapse'
The Dollar Versus The Rouble

China Stumps Up To Help Beleagured Russian Economy Is The World About To Return To The Gold Standard?
Is The Chinese Cavalry About To Ride To The Rescue Of Russia's Economy
Don’t believe American lies about Russia
China-Russia currency agreement further threatens U.S. dollar War On Terror - omnibus page




the daily stirrer

Does It matter If The Dollar Is Replaced?

by Phil T Looker

The theme of this omnibus page is that the US dollar is progressively being replaced as the global reserve currency. For many years the dollar has been the currency in which the world's nations settled cross-border transactions and the so called petrodollar became the only currency in which oil could be traded. In recent years however, as other nations, particularly the BRICS group, Brazil, Russia, India, China and South Africa, the leading nations outside the dominant US / European group, have been making moves to end the domination of the US dollar and with it the economic supremacy of the USA.

The Washington government has only itself to blame for this, enabled by the need of other nations to acquire dollars in order to buy in work markets, the USA was able to dictate prices it would pay for imports. And the not-so-clever Harvard economics and political science professors advised politicians to exploit that position ruthlessly. Eventually the world started to become pissed off with America's bullying and with the US military's habit of bombing small, third world nations that resisted the American diktat.

Led by Russia with its vast natural resources and China with its vast labour force which gives it the ability to keep wages low and undercut other exporting nations, and facilitated by modern technology which makes trades between different currency zones simple, the world began to abandon the Dollar.

Dear old Saddam Hussein started it back in 1999 or around then, when he decreed that Iraq would accept Euros, UK Pounds, Russian Roubles, Chinese yuan or Japanese Yen and ther currencies in payment for Iraq's oil (So a decade after his death, the old tyrant may still win his war with America). A few years elapsed, as relations between the USA and the Russian - Chinese alliance deteriorated. About three years ago The Daily Stirrer picked up on the fact that something was happening.

And now it seems the rest of the world is catching on too. From a British point of view, we do not agree with the author of the embedded article, abandonment of the US Dollar worldwide, accompanied by a UK divorce from the EU and rebuilding of British Commonwealth trade links could only benefit the people of the UK. London is the financial capital of the world (in spite of what they guys on wall Street would like to think) and the centre where currencies are traded. Our sycophantic politicians would never admit it as all their blether about 'the special relationship' shows, but America is only a fair weather friend to the UK, they invoke the special relationship when in need of British support to legitimise their wars, but will be quite ruthless in stabbing British interests in the back when it suits them.

The Threat to the Dollar as the World’s Premier Reserve Currency …but does it really matter?

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Reproduced under creative Commons licence)

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RELATED POSTS:
Mainstream Media Reports Truth: West No Match For Russian Military Hardware
Merkel Declares War On “Fake News” EU Brands Russia Today, Sputnik “Dangerous Propaganda”
China launches global yuan payment system
China’s Central Bank has started a global payment system which provides cross-border transactions in yuan. The China International Payment System (CIPS) intends to internationalize the yuan and challenge the US dollar's dominance.

Washington is pushing Kiev to military solution of Donbass conflict
The US is inciting Kiev to end the crisis in eastern Ukraine by force, said the Russian foreign minister citing US support of the recent Ukrainian law on the special self-governing status of Donbass, which Moscow says undermines the Minsk-2 deal.

The Imperatives Behind The New cold War
The ‘new Cold War,’ against Russia, is something of a misnomer, because it differs from the original version, against the U.S.S.R., in that it’s already a hot war, which started in Ukraine as being the key proxy-state for the American Government’s chief foreign-policy aim, of defeating Russia.

The world is dumping the American dollar
Fears for the future of the US dollar
Iran, oil and the US dollar
Obama and Kerry warmongering is about saving the dollar
Collapse of the petrodollar imminent
Obama goes head to head with Russia over the Petrodollar
India and Turkey latest sign - ups to dump the dollar club
Russia, Ukraine and the Petrodollar
Latest Posts

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Suddenly People Are Taking The De- Dolarization Threat Seriously

We have reported extensively on moves by the U.S.A's main geopolitical rivals to deprive the US dollar (Petrodollar) of its status as the global reserve currency. We have told you how China, Russia, Iran and India have cut deals with each other and other nations in which they agree to use each others’ currencies for bi-lateral trade (usually payment is in the currency of the vendor's host nation) while The European Union designed the Euro specifically to be a rival reserve currency and international medium of exchange to the US dollar.
Read more on this story


The Death Of Petrodollars & The Coming Renaissance Of Macro Investing

As well as the concerted effort led by China, Russia and Iran to replace the Petrodollar as the global currency, its status is also being undermined by the shift of financial activity to digital technology and changes in the geopolitical balance. What comes next is all too easy to predict ...

In the summer of 1974, Treasury Secretary William Simon traveled to Saudi Arabia and secretly struck a momentous deal with the kingdom. The U.S. agreed to purchase oil from Saudi Arabia, provide weapons, and in essence guarantee the preservation of Saudi oil wells, the monarchy, and the sovereignty of the kingdom. In return, the kingdom agreed to invest the dollar proceeds of its oil sales in U.S. Treasuries, basically financing America’s future federal expenditures.

Soon, other members of the Organization of Petroleum Exporting Countries followed suit, and the U.S. dollar became the standard by which oil was to be traded internationally. For Saudi Arabia, the deal made perfect sense, not only by protecting the regime but also by providing a safe, liquid market in which to invest its enormous oil-sale proceeds, known as petrodollars. The U.S. benefited, as well, by neutralizing oil as an economic weapon. The agreement enabled the U.S. to print dollars with little adverse effect on interest rates, thereby facilitating consistent U.S. economic growth over the subsequent decades.

An important consequence was that oil-importing nations would be required to hold large amounts of U.S. dollars in reserve in order to purchase oil, underpinning dollar demand. This essentially guaranteed a strong dollar and low U.S. interest rates for a generation.

Given this backdrop, one can better understand many subsequent U.S. foreign-policy moves involving the Middle East and other oil-producing regions.

Recent developments in technology and geopolitics have already kicked off a process to end the era of dollar dominance. This can only have a major impact on global financial markets. The 40-years of stability this system has guaranteed is being dismantled, and that is due in part to the exponential growth of technology which makes cross border trades relitively simple to conclude in the currency of the vendor's nation. Moreover, the current system no longer is in the best interests of the major players in the global oil trade. Developments such as these have begun to exert influence on financial markets and will only grow over time. The upheaval of the petrodollar recycling system will trigger a major change in the way nations with large economies trade with each other.

Technology is also affecting the energy production industry dramatically, and this impact is also growing. Although power generatede by wind and solar farms has proved disappointing, other technologies such as tidal and run-of-river schemes are showing more promise and new ways of extracting fossil fuels, while not living up to scientists' claims are having a significant on supply and prices. The pattern-seeking human mind is built for an observable linear universe, but has cognitive difficulty recognizing and understanding the impact of exponential growth. Albert Einstein is rumored to have described compound interest (another form of exponential growth) as the most powerful force in the universe.

The growth of oil production from new technologies such as hydraulic fracturing (fracking) and horizontal drilling has both reduced U.S. oil imports and led to lower global oil prices. With the U.S. economy more self-reliant for its oil consumption, reduced purchases of foreign oil have led to a drop in the revenues of oil-producing nations and by extension, lower international demand for Treasuries and U.S. dollars. China, now the world’s largest importer of oil, and with ambitions to overtake the USA as the most powerful economy, is no longer comfortable purchasing oil in a currency over which it has no control, and has taken steps that allow it to circumvent the use of the U.S. dollar:

China has signed an agreement with Russia to purchase Russian oil and natural gas in yuan. Iran, India, Turkey and a number of other nations have now added their names to the agreement. As an example of China’s newfound power to influence oil exporters, China has persuaded Angola (the second-largest oil supplier to China) to accept the yuan as legal tender, another move by Beijing to speed up internationalization of the yuan. The incredible growth rates of the Chinese economy and its thirst for oil have given it tremendous negotiating power and will lead other countries to cater to China’s needs at the expense of their historical client, the U.S.

China will launch an oil exchange by the end of the year (Russia has already opened one) where oil trades will be settled in yuan. Note that in conjunction with the existing Shanghai Gold Exchange, also denominated in yuan, any country will now be able to trade and hedge oil, circumventing Petrodollar transactions, with the flexibility to take payment in yuan or gold, or exchange gold into any global currency.

As China further forges relationships through its One Belt, One Road initiative, it will pull other exporters into its orbit to secure reliable supplies from multiple sources, while pressuring the terms of the trade to exclude the U.S. dollar.

The world’s second-largest oil exporter, Russia, is currently under sanctions imposed by the U.S. and European Union (though some EU nations are circumventing this by buying Russian oil through internediaries,) and has made clear moves toward cutting the dollar out of oil and international trade. In addition to agreeing to sell oil and natural gas to China in exchange for yuan, Russia recently announced that all financial transactions conducted in Russian seaports will now be made in rubles, replacing dollars. Clearly, there is a concerted effort from the East to reset the economic world order.

Meanwhile in the USA, THE FEDERAL RESERVE is now in the beginning stages of a shift toward "normalization," which will lead to a reduction of "quantitative easing" (buying US government bonds,) for the U.S. Treasury market. The Fed’s total assets stand at approximately $4.5 trillion, or five times what they were prior to the financial crisis of 2008-09. The goal of the Fed is to “unwind” this enormous balance sheet with minimal market disruption. This is like performing a high-wire act a thousand feet in the air without a safety net. Additionally, at some not-so-distant future date, the U.S. will need to finance enormous and growing entitlement programs, and historical international sources for that financing will no longer be willing to support that endeavor by holding up the price of US bonds.

Market participants could theoretically accept such a de facto devaluation but it is unlikely the banks would tolerate it for long. The accumulation of many small losses in a low-volatility and generally trendless market has robbed them of confidence and the psychological balance to embrace any new model offering unknown consequences. They are frozen with fear that the lower-yield profile of recent years could become permanent in a brave new world .

U.S.A. Threatens To Cut Off China From The US Dollar If They Do Not Uphold Sanctions On North Koreas

The government of the USA has threatend to impose economic sanctions on China if The People's Republic does not adopt the new sanctions imposed against North Korea, the US Treasury Secretary has warned. Steven Mnuchin said that among the actions being considered was a move to cut off Beijing’s access to the US financial system. This seems particularly self defeating even by usual Washington foreign policy standards, China, Russia and Iran have been working for several years to separate themselves from the US dollar (The Petrodollar) and set up an alternative reserve currency for global trade, as has been reported many times in this page and elsewhere on our site.

"Economic warfare against North Korea economic works," Mnuchin said Tuesday at the Delivering Alpha Conference in New York City. "We sent a message that anybody who wanted to trade with North Korea – we would consider them not trading with us." We wonder what planet this Munchkin lives on. The USA has been levying economic sanctions on North Korea for sixty five years, and the communist regime in Pyongyang is still in place and still as defiant as ever.

The Treasury Secretary was not alone in uttering risible threas however, his statement echoed the words of the US envoy to the UN, Nikki Haley, calling the fresh round of sanctions against Pyongyang "historic." Munchkin Mnuchin added "if China doesn’t follow these sanctions, we will put additional sanctions on them and prevent them from accessing the US and international dollar system."

The USA might find that not only difficult to implement, but more harmful to the US and its allies than to China, just as the sanctions on Russia have harmed the economies of EU nations more that Russia's debt free economy. Washington has until now been reluctant to impose economic sanctions on China over fears of possible retaliatory measures from Beijing and the potentially catastrophic consequences for the global economy.

Washington runs a $350 billion yearly trade deficit with China which also holds $1 trillion in US debt. This amounts to an astonishing 28 percent of US Treasury bills, notes and bonds held by foreign governments. The US State Department however, seems more interested in putting pressure on Beijing and other countries trading with Pyongyang as they demand a "supercharged" response to North Korea’s nuclear tests, including imposing sanctions on companies from China and any other country doing business in North Korea. If the U.S.A. tried throwing its weight around as it has will many small countries in the past, it may find itself up against an adversary with just as much weight to throw around.

"I believe the response from the United States and our allies should be supercharged," said Ed Royce, chairman of the House of Representatives Foreign Affairs Committee during a hearing Tuesday, "We need to use every ounce of leverage [...] to put maximum pressure on this rogue regime," he said. Royce also called on Washington to target major Chinese banks, including the Agricultural Bank of China and the China Merchants Bank for dealing with Pyongyang.

He also said China was apparently reluctant to follow through on the sanctions adopted by the UN Security Council (UNSC) against the North. "It’s been a long, long time of waiting for China to comply with the sanctions that we pass and, frankly, with the sanctions that the United Nations passed," he said.

The committee chair went on to say the US could give Chinese banks and companies "a choice between doing business with North Korea or the United States." He added that the US should also "go after banks and companies in other countries that do business with North Korea the same way." We believe that back doors for trade with North Korea were already in place before Russia and China agreed to withhold their veto when the latest sanctions were voted through by the ~United Nations security council.

A Trade War With China Will End Dominance Of US Dollar - RT


Russia To Cut Dependence On U.S. Dollar, Payment Systems

Russia will speed up its project to reduce dependence on the dollar and U.S. international payment systems, and intensify efforts to persuade trading neations to settle cross border transactions in the currency of the vendor nation in response to U.S. sanctions, Deputy Foreign Minister Sergei Ryabkov said on Monday.

Reuters report that Ryabkov said that "we will of course intensify work related to import substitution, reduction of dependence on U.S. payment systems, on the dollar as a settling currency and so on. It is becoming a vital need." The reason for that is that "the US is using its dominating role in the monetary and financial system to impose pressure on foreign business, including Russian companies."

While the world's mainstrewam media has been focused on Syria, Ukraine, Yemen and other trouble spots, the currency war has been simmering on the back burner for almost a decade. Three years ago the MasterCard payment system stopped serving clients of seven Russian banks without warning after Washington imposed its first set of sanctions on Moscow in 2014. In response, the Russian government ordered the creation of a national payment system. With the support of the country's banking system, China and Iran the Brics bloc created new systems for international trade and the Mir charge card was introduced in 2015, although there is no information on what its adoption rate has been in the following years.

As Zero Hedge reported late last month, part of the latest Russian sanctions imposed by the USA are restrictions on the Russian banking and energy sectors: these target Russian firms already hit by earlier rounds of santions, limiting the financing period for them to 14 and 60 days. The new law will also punish individuals for investing more than $5 million a year or $1 million at a time in Russian energy export pipeline projects or providing such enterprises with services, technology or information support, a provision that has drawn strong condemnation from Washington's European allies.

It will be interesting to discover just how the US government intends to enforce these sanctions on non - US businesses and individual foreign nations. The neo - liberals and neo - cons in Washington might cling to a deluded belief that they are still the most powerful nation militarily, but to start trying to impose US laws on transactions conducted between sovereign nations is surely an overreach too far and will not be tolerated.

US energy companies have criticized the tightening of already existing sanctions as damaging for business and the German government has protested strongly that the US action will hit EU nations hard but have little effect on Russia. At the same time, the European Union expressed concerns the new penalties may undermine the bloc’s energy security. European Commission president Jean-Claude Juncker pledged to prepare an "adequate" response and "within days" if the measure hurt the interests of European companies. So far Europe has to elaborate on what, if any, retaliation to the sanctions it will unveil.

The joint bid by Russia, China and Iran to create an alternative to the US dollar (Petrodollar) as the reserve currency, and to eventually replace it is reported throughout this page, go back to our active CONTENTS list to browse the article. Or read other articles on the CURRENCY WARS:

RELATED POSTS:


Russia & China Declare All Out War on US Petrodollar

When Donald Trump defeated Hillary Clinton ("Crooked Hillary") in the 2016 US Presidential Election, the world hoped he would at least attempt to keep his campaign promised and abandon the "perpetual war" foreign policy of his predecessors Barack Hussein Obama and George W Bush (though realists were not betting much money on it actually happening. Six months into his presidency Trump seems to be just as totally in thrall to the Washington War Party and The Deep State as Obmaa, who promised to be the peacemaker and joybringer of the twenty first century, but became the first president to serve two full terms without a single day on which the USA was not at war.

It is only due to the restraint of Russia and China in the face of contstant provocation by the USA and NATO that we are not already in (or indeed out of at the wrong end) a global conflict. Had Hillary Clinton won the presidency, one of her campaign pledges, to directly attack Syria and depose the Assad regime (an ally of Russia and China, the ensuing conflict would probably have destroyed most of what is left of European civilisation by now.

But while Washington has been huffing and puffing, Russia and China have been waging a more subtle kind of war, with the aim of replacing the US dollar (the petrodollar) as the global reserve currency. And it looks as though they are winning. The death of the petrodollar could be imminent which would drastically reduce America’s ability to wage war with other people’s money or protect its business sector from competition.

We have reported the moves to create a trading system in which cross border trades are settled in the national currency of the vendor, and the establishment of global investment banks by both Russia and China. Now the formation of a BRICS gold marketplace, which could easily bypass the U.S. Petrodollar in bilateral trade, continues to take shape as Russia’s largest bank, state-owned Sberbank, announced this week that its Swiss subsidiary has started trading in gold on the Shanghai Gold Exchange.

Russian and Chinese officials have repeatedly signalled that they plan to create a system with China and Iran using 'paper' gold as a means of nullifying the dollar's influence in bilateral trade between economically and politically powerful nations. We reported in 2015 that a number of influential nations and the EU, the world's largest trading bloc had signed up to the system. This latest movement is quite simply the manifestation of a larger game being played out between the great powers.

According to Reuters:

Sberbank was granted international membership of the Shanghai exchange in September last year and in July completed a pilot transaction with 200 kg of gold kilobars sold to local financial institutions, the bank said.

Sberbank plans to expand its presence on the Chinese precious metals market and anticipates total delivery of 5-6 tonnes of gold to China in the remaining months of 2017.

Gold bars will be delivered directly to the official importers in China as well as through the exchange, Sberbank said.

Russia’s second-largest bank VTB is also a member of the Shanghai Gold Exchange.

A transformation of the entire global monetary system is in progress, driven by the decline of the west where self destructive politically correct thinking and corporate greed dominates foreign and economic policy, and the economic ambitions of Russia, China, Iran, and India, Brazil and other emerging economies. The implications of these changes should worry U.S. policy makers because the relationship between the USA and the two regional powers in the Middle East, Israel and Saudi Arabia which for nearly the past half century has been underpinned by the monopoly of the petrodollar in world trade, particularly in oil, the worlds most traded commodity. Now the petrodollar is being attacked while saudi Arabia has been destabilised by increasingly extremist Wahhabi Muslim rulers.

The dollar was established as the global reserve currency in 1944 with the Bretton Woods agreement, commonly referred to as the gold standard. The U.S. leveraged itself into this power position by holding the largest reserve of gold in the world. The dollar was pegged at $35 an ounce — and freely exchangeable into gold.

By the 1960s, a surplus of U.S. dollars caused by foreign aid, military spending, and foreign investment threatened this system, as the U.S. did not have enough gold to cover the volume of dollars in worldwide circulation at the rate of $35 per ounce; as a result, the dollar was overvalued.

When America finally abandoned the gold standard in 1971, the dollar became a pure fiat currency (decoupled from any physical store of value), until the petrodollar agreement was concluded by President Nixon in 1973. The quid pro quo was that Saudi Arabia would denominate all oil trades in U.S. dollars, and in return, the U.S. would agree to sell Saudi Arabia military hardware and guarantee the defense of the Kingdom, which gave the medieval Kingdom military dominance over all the middle east except for Israel. At the time US military hardware held an enormous technological advantage over anything Russia and China had. More recently military analyists have warned that while the USA has been obsessing over the 'rights' of gay and transgender soldiers, both rival powers have surpassed them.

A report by the Centre for Research on Globalalization clarifies the implications of these most recent moves by the Russians and the Chinese in an ongoing drive to replace the US petrodollar as the global reserve currency.


Euroclear Gives Green Light to Russian Bonds

by Phil T Looker

Russia plans to issue more sovereign bonds later this year following its successful May issue, Russian Minister for Economic Development Aleksey Ulyukaev said on Friday. Investors who bought into Russia's sovereign bond sale in May have been vindicated after Euroclear admitted the bonds for settlement last week. The move is interesting because, unlike the USA and most nations in the democratic world, Russia is not running a current account deficit and therefore has no need to borrow money by selling its bonds on international markets in order to fund obligations such as pensions, state employees wages and social welfare payments. Brussels-based Euroclear Bank is one of the two main providers of settlement and related services for securities; the other is Clearstream, owned by Deutsche Börse. These are highly specialised banks for traders in bonds and derivatives. Euroclear began carrying out transactions with Russian Eurobonds on July 28 after more than two months of deliberations following Russia's first Eurobond sale in May. On May 24 Russia issued sovereign debt for the first time since 2013, selling $1.75 billion in ten-year Eurobonds at an annual yield of 4.75 percent. This entry into the bond market might be to raise finance for infrastructure projects but is more likely to be calculated to give Russian finance houses a toehold in this important sector. Both Euroclear and Clearstream declined to take part in the first sale due to pressure from regulators in the EU and US, despite the fact that anti-Russian sanctions imposed by the US and EU against some Russian individuals and entities in 2014 do not include sanctions against the Russian state. On July 6 Euroclear also delayed its participation in the sale of Russian ruble-denominated ten-year OFZ sovereign bonds, worth 20 billion rubles ($305 million). However, Dmitry Polevoy of ING Bank told Vedomosti that the securities were accepted a few days later by the clearing house. Euroclear's decision widens the pool of potential investors in Russian securities, and the bond yield decreased to 4.116 percent the day the news broke. Traders told Bloomberg they expect a significant decrease in the yield on Russian bonds of up to 20 or 30 basis points as a result. Bonds from emerging markets such as Russia are becoming increasingly popular with investors looking for more profitable returns than those gained from Western sovereign debt; an estimated 30 per cent of global government debt is currently offering yields of less than zero. RELATED POSTS: The Real Rate Of Inflation, USA, UK (Europe's is off the scale). The Global Economy Is Bankrupt Economists Just Did Not Want To Understand Why Britain Had To Leave Europe End Of An Era: The Collapse Of The Petrodollar System
Globalists Like Soros Are Now Blatantly Moving Forward Their Totalitarian World Government Agenda
Europe's Bank Crisis Arrives In Germany: €29 Billion Bremen Landesbank On The Verge Of Failure
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The Demise Of Dollar Hegemony: Russia Breaks Wall Streets's Oil-Price Monopoly

by Phil T Looker

Significant moves in the geopolitical chess game have just rendered the huffing and puffing of warmonger Obama meaningless and will break the hold Wall Street exercises in controlling oil prices, at least in markets that supply a huge part of the world demand for oil. The move is part of Vladimir Putin's long-term strategy of decoupling Russia’s economy and especially its very significant export of oil, from the US dollar, in effect responding to Obama's attempts to provoke Russia into starting a shooting war by attacking American interests in the Caucasus and middle east by waging a currency war designed to depose the US dollar as the global reserve currency. Late in November 2015 the Russian Energy Ministry announced that it will begin test-trading of a new Russian oil benchmark. So what you might well say. Well this move has huge signifiucance in terms of global economics. If successful, and there is no reason why it won’t be, the Russian crude oil benchmark futures contract traded on Russian exchanges, will price oil in rubles and no longer in US dollars (the petrodollar). It is part of a de-dollarization move that Russia, China, Iran, India and a growing number of other countries have quietly begun (extensively reported below). Setting an oil benchmark price is the basis of the Wall Street bank's method of controlling world oil prices. The London financial community uses similar techniques to control currency trading. Oil is the world’s most traded commodity. In dollar terms it props up the US economy and gives US companies an immense advantage over non - American competitors. At present the price of Russian crude oil is tied to the Brent price. The problem is that the Brent field, along with the UK's other major North Sea oil fields is in major decline while the US West Texas benchmark is based on fields enjoying a temporary resurgence due to the fracking of shale deposits. Thus Wall Street can use a vanishing benchmark to leverage control over vastly larger oil volumes. A quick look at historic price trends will show that Brent Crude is always a higher price than West Texas Intermediate (WTI). This is not solely because Brent tends to be better quality. The sale of oil denominated in dollars is essential for the support of the US dollar (sic). In turn, maintaining demand for dollars by world central banks for their currency reserves to back the foreign trade of countries like China, Japan or Germany, is essential if the United States dollar is to remain the leading world reserve currency. That status as world’s leading reserve currency is one of two pillars of American hegemony since the end of World War II. Because all nations have to buy dollars to pay for imports of oil and other commodities, countries such as Russia or China find the USA can influence the health of their economied by manipulating the price of dollar. That reserve role of the US dollar, since August 1971 when the USA abandoned the gold standard, has essentially allowed the US Government to run seemingly endless budget deficits without having to worry about interest rates, like having a permanent, unlimited overdraft at your bank. Nations need dollars to pay for their imports, he USA simply forces the dollar exchange rate higher. That has allowed Washington to run up an $18.6 trillion federal debt without major concern. Today the ratio of US government debt to GDP is 111%. In 2001 when George W. Bush took office and before trillions were spent on the Afghan and Iraq “War on Terror,” US debt to GDP was just half, or 55%. The glib expression in Washington is that “debt doesn’t matter,” assumes that the world, Russia, China, Japan, India, Germany–will always buy US debt with their trade surplus dollars. The ability of Washington to hold the lead reserve currency role, a strategic priority for Washington and Wall Street, is vitally tied to how world oil prices are determined. In the period up until the end of the 1980’s world oil prices were determined largely by real daily supply and demand. It was the province of oil buyers and oil sellers. Then Goldman Sachs decided to buy the small Wall Street commodity brokerage, J. Aron in the 1980’s. They had their eye set on transforming how oil is traded in world markets. Russia has just changed it for them. RELATED POSTS:
American dollar dumped?
America's global hegemony broken?
America's true debt disaster
Is the USA leading the collapse of the global economy
How the Wall Street Bankers have rigged markets
A conspiracy of Bankers
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The dollar ponzi scheme keeps US economy afloat
Why printing money has failed the western economies
Imminent collapse of the petrodollar
Russia and China make war on petrodollar while Obama vacillates
Russia and China sign up Turkey and India to moves against dollar
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Another Oil Exporting State Surrenders: Last Nail In Petrodollar's Coffin

Egbert Nobakon

Another Oil Exporting State Surrenders: Last Nail In Petrodollar's Coffin

While record mainland deficits covered by the petroleum sector is nothing new in Norwegian budget history, the 2016 budget did raise some eyebrows. The net inflow to the Norwegian Treasury from North Sea oil will be lower than the required amount to cover the deficit. This has never happened before and is testimony of the sea change occurring in the world of petrodollar recycling.
Throughout this Currency Wars omnibus page we have tried time and again to raise awareness of how dependent economically the USA, the world's largest economy (at the time of writing) has become on the fact that the most valuable traded commodity in terms of gross turnover, is traded in US dollars.

We are not the only ones aware of this, obviously Russia, saudi Arabia, Nigeria, Iran, and other oil produder states and net consumers such as China, Japan and the European Union are too. And there are serious moves underway to replace the US$ as the de facto global currency.
Another Oil Exporting State Surrenders: Last Nail In Petrodollar's Coffin

China launches global yuan payment system

Soon after we started reporting the existence of a currency war, the much more sensible option Russia, China and Iran have chosen in reponse to the provocative warmongering of the USA, as if eager to save us the bother of swatting all those 'American exceptionalism' fans who called us conspiracy theorists, China’s Central Bank has started a global payment system which provides cross-border transactions in yuan. The China International Payment System (CIPS) intends to internationalize the yuan and challenge the US dollar's dominance.
China launches global yuan payment system

What the Latest Currency 'War' is All About

Phil T Looker

When the US prints money, calling the response to its governments financial diarrhea quantitative easing, that's sound economics. When the EU prints money in its futile efforts to prop up the idiotic experiment in financial union that the sigle currency always was, that's 'ever closer union'. But when the Bank of China decides it's in the best interest of the nation to let the yuan slide against other traded currencies instead of rising like a helium balloon as washington and Wall Street require, that's Armageddon.

It took the Bank of China to devaluate the yuan on two consecutive days, by a magring within the 2 percent band that is allowed, for the proverbial globalist soothsayers to go completely apeshit.

The heart of the matter is that Beijing has moved to the next level of a complex game; to liberalize the yuan exchange rate and allow it to free float against the US dollar; and establish the yuan as a global reserve currency. So this is essentially exchange rate policy liberalization, not a currency "war", as the frenetic spin goes from Washington/Wall Street to Tokyo via London and Brussels. The opening skirmishes of the curency war were the founding of a BRICS bank, backed by Russia, and of China's AIIB bank, both designed to weaken the IMF and World Bank.

Former Morgan Stanley non-executive chairman in Asia, Stephen Roach, delivers the predictable hyperbolic, Goddess of the Market orthodoxy, warning about the "distinct possibility of a new and increasingly destabilizing skirmish in the ever-widening global currency war. The race to the bottom just became a good deal more treacherous."

A note written by a group of HSBC analysts is more realistic; "The depreciation pressure on Asian currencies from China's action should fade as the nation isn't aiming at engineering a much weaker yuan. Doing so would contradict the goal of promoting wider global use of the yuan in cross border trades."

But it's Chantavarn Sucharitakul, the Bank of Thailand's assistant governor, who hits the nail on the head Asia-wide; "The long-term impact must be assessed as to whether greater flexibility of the yuan could benefit China's economic reform, while the depreciating yuan could be positive for China's economic growth, which would benefit regional trade as well."

The Bank of China itself, in a statement, stresses it will allow the markets to have more influence over the yuan exchange rate.

And crucially, it also stresses there is no economic basis for the devaluation, pointing to China's enormous current account surplus and humongous foreign exchange reserves.

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If You Look At How Fast Global Trade Is Unravelling, You'll Get Dizzy
Governments constantly make positive noises about the health of their economies although most people who are in work have felt no improvement on the position they were in after the crash of 2008. Wagest are stangnant, employment has reduced somewhat (see below) and while the banks are printing money and the super rich are widening the gap between themselves and ordinary people faster than ever, the real situation is frightening.

Norway's Biggest Bank Joins Push To Abolish Cash
The move by governments to eliminate cash as a means of trading goods and services is moving faster than we imagined. With another global financial crisis looming according to financial journalists and investment experts this is as understandable as it is undesirable for us ordinary punters.

Refugee Crisis Or Existential Battle With USA for Europe
It has been clear for some years now that the USA, backed by its main NATO and EU military allies the UK and France (the FUKUS axis has been trying to provoke Russian into firing the shot that will be heard around the world and recognised as the startiung signal for World War Three.
Nothing is ever as it seems to be however, and views from middle east and far eastern journals suggest the USA is also working at destabilizing EU nations in order to force their support in its wars.

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US Becoming Isolated As Key Ally Japan Considers Joining China-Led Investment Bank

A few days ago the bully - boys in Washington were cock-a-hoop as they claimed to have persuaded the USA’s closest allies and trading partners to shun the Asian Infrastructure Investment Bank (AAIB), backed by China, with Russia and Iran in support. The AAIB is designed to fund and support development across Asia that is meant to rival the US/Japanese-led ADB and begin a seismic shift away from the world’s traditionally US-dominated institutions such as the World Bank and the IMF. Then, much to the chagrin of Washington, the UK joined as a founding member calling it an "unrivaled opportunity." As we and many other observers correctly noted at the time, the move by Britain, and the involvement of Germany in another international finance agency being set up by the BRICS nations (Brazil, India, China, Russia, South Africa,) could well embolden other countries who had expressed an interest initially but been deterred by pressure from Washington to reconsider their support for verious aspects of the de-dollarization movement in world trade. In (very) short order, everyone from Germany to Australia (reported here yesterday) and Luxembourg is suddenly ready to cast their lot with the Chinese despite US warnings that the bank won’t adopt the proper operational standards. We said yesterday the world has woken up to the fact that US criticism of the new venture is very likely nothing more than an attempt by The White House to undermine Chinese regional ambition: "...and that means in short order Australia and South Korea will likely be on board and at that point, the stigma the US has created around membership will have completely disappeared (if it hasn’t already), opening the door for other US “allies” to join despite the bank’s alleged “low” standards." Now, it appears the last valuable friend the US has in the bid to keep China from undercutting the ADB is beginning to consider a bid to join up. Read more on this at :Reuters. RELATED POSTS:

The Business of War: Defense Sales Keep Economies Of Manufacturing Nations Afloat
Tens of thousands have been killed and millions displaced due to 'humanitarian' interventions by the developed nations (led by the USA, France and the UKm the FUKUS axis) in the domestic politics of third world nation. Usually the interventions support rebel groups who if they came to power would be far more oppressive and brutal regime than the one they replaced.

Naked Bankers Go For Gold
... That gold sale in 2013 was a naked short. The seller had no gold to sell. COMEX reported having gold only equal to about half of the short sale in its vaults, and not all of that was available for delivery (quite a lot of it belonged to the german government) In effect the naked shorting of gold could only work because really the right hand was selling to the left hand.

"West's War In Syria Is Part Of A Global war Waged By The USA And Its Dupes Allies Against Russia"
Arthur Foxake brings us a brilliant analysis of the geopolitical picture from the black Sea and Middle East, but ahead of the embed window we get a few of Arthur's own thoughts on the situation

Russia Just Sent out a Message NATO Should Better Listen To
The key paragraph from the latest official Russian naval doctrine is that Putin and his military advisers have sent a clear message that NATO encroachment is unacceptable. To be honest, there is nothing earth shattering in this, The Daily Stirrer and many other alternative media news and analysis sites have been warning for about two years that Obama's foreign policy was making conflict inevitable.

De - dollarization Moves Ahead - Once Again We Told You So,
What Putin Wants
China Warns U.S. to Stop Its Ukrainian Proxy War Against Russia
The World Rejects USA Attempt To Manipulate Venezuela
India's Ruling BJP Party Crushed In Regional Poll
Another Conspiracy Theory Becomes Fact: Oil Collapse Is All About Obama's Proxy War With Russia.
G77 Nations vow to destroy petrodollar and America’s New World Order
American Dollar Dumped
Iran's Oil and the US Dollar
Money From Rock Better Than Money From Air
Strange things are happening in the finance markets, very strange. As the FT and Dow Jones main indexes go up and down faster than a whores knickers, commodity prices are behaving weirdly too.


the daily stirrer

De-Dollarization Accelerates As More Washington "Allies" Follow Australia To China-Led Bank

by Phil T Looker

The global de-dollarization trend continues as it appears the UK’s move to join the China-led Asian Infrastructure Development Bank has indeed shown other US “allies” that spurning Washington’s advice is actually acceptable and concerns about the institution’s “standards” may simply be a diversion aimed at undermining China’s attempt to exercise more influence in its own backyard. Here’s more from the NY Times:

Ignoring direct pleas from the Obama administration, Europe’s biggest economies have declared their desire to become founding members of a new Chinese-led Asian investment bank that the United States views as a rival to the World Bank and other institutions set up at the height of American power after World War II.

The announcement on Tuesday by Germany, France and Italy that they would follow Britain and join the Chinese-led venture delivered a stinging rebuke to Washington from some of its closest allies. It also called into question whether the World Bank and the International Monetary Fund, which grew out of a multination conference in Bretton Woods, N.H., in 1944 and established an economic pecking order that lasted 70 years, will find their influence diminished.

The announcement by Germany, Europe’s largest economy, came only six days after Secretary of State John Kerry asked his German counterpart, Frank Walter-Steinmeier, to resist the Chinese overtures until the Chinese agreed to a number of conditions about transparency and governing of the new entity. But Germany came to the same conclusion that Britain did: China is such a large export and investment market for it that it cannot afford to stay on the sidelines.

South Korea, another US ally that the Obama administration has not-so-subtly lobbied to stay out of the AIIB for the time being, is reportedly reconsidering a bid to join and although reports that Seoul had already committed to the venture appear to have been a bit premature, the country will make a decision this month and is expected to discuss specifics this weekend at a meeting with Chinese and Japanese officials.

This change of mind was perhaps triggered by a story just a few days ago:

"Colossal Defeat" For Obama As Australia Joins China's Regional Bank

Having attacked its "closest ally" UK for "constant accomodation" with China, we suspect President Obama will be greatly displeased at yet another close-ally's decision to partner up with the Chinese-led Asian Infrastructure Investment Bank (AIIB). As The Australian reports, "make no mistake," the decision by Australia's Abbott government to sign on for negotiations to join China’s regional bank, foreshadowed by Tony Abbott at the weekend, "represents a colossal defeat for the Obama administration’s incompetent, distracted, ham-fisted dip­lomacy in Asia."

This is how Greg Sheridan of The Australian reported the move:

The decision by the Abbott government to sign on for negotiations to join China’s regional bank, foreshadowed by Tony Abbott at the weekend, represents another defeat for Barack Obama’s diplomacy in Asia.

The Abbott government is right to make this decision. It had well-founded concerns about the vague and unsatisfactory governance arrangements of the institution when Beijing first invited Canberra to join.

Those arrangements have ­improved since then and Australia is only signing on to negotiate terms of accession.

If the terms are no good, Australia will ultimately walk away.

Canberra’s move follows similar decisions by Britain, Singapore, India and New Zealand.

Make no mistake — all this represents a colossal defeat for the Obama administration’s incompetent, distracted, ham-fisted, dippy diplomacy in Asia.

The Obama administration didn’t want Australia to sign up for the China-led AIIB. The Abbott government rightly feels that it owes Obama nothing. The American President went out of his way to embarrass the Prime Minister Abbott politically on climate change with a rogue speech at the G20 summit in Brisbane. The speech had been billed as dealing with American leadership in Asia and instead was full of ­material designed to embarrass Abbott.

Since then, the Abbott government has felt absolutely zero subjective good will for Obama. This outlook is shared by many of America's erstwhile allies. It’s important to get all the distinctions right here.The Abbott government operates foreign policy in Australia’s national interest. But the Obama administration has neither the continuous presence, nor the tactical wherewithal to carry the support of Canberra, or other allies, on non-essential matters.

The Obama administration has tried to convince both its friends and ­allies not to join the China Bank. Washington desperately did not want Australia to sign up for the China-led AIIB because of the influence the Australians weild among south east Asia's more populous but poorer nations. The Abbott government rightly feels that it owes Obama nothing.

As Sheridan notes in the linked article:

Obama treats allies shabbily and as a result he loses influence with them and then seems perpetually surprised at this outcome. The Asian professionals in Washington regard the Obama administration as particularly ineffective in Asia. The consensus is that the Obama White House is insular, isolated, inward-looking, focused on the President’s personal image and ineffective in foreign policy.

The bottom line is: this is not speculation anymore (nor has it been for a long time despite what Obama worshippers may say). Every shred of objective evidence tells us the dollar’s dominance is coming to an end.

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Russia Outmanoeuvres the west again
While mainstream media (and even some of the more rabidly fascistic left wing bloggers) have been trying to demonize Russia as a way of drumming up public sympathy for Barack Obama's efforts to start a shooting war with Moscow, we Boggart Bloggers and ...

World War Three? Kiev Reinvades Donbass, Deliberate Provocation Trashed Minsk Agreement
When America wants to provoke Russia it uses proxies, a rabble in Libya, Islamic fundamentalists in Syria and Iraq and neo - Nazi thugs in Ukraine. So far Russia has resisted the urge to kick Obama in the balls, but sooner or later the Russia - China - Iran alliance will respond.

Sources: Saudi Arabia Sends over 5,000 Takfiri Terrorists to Yemen

According to as yet unconfirmed reports from Iranian news agency Farsnews, "Saudi Arabia has sent around 5,000 Takfiri mercenaries to fight against the Yemeni army and revolutionary committees," Yemeni Army Commander Colonel Abdel Sattar al-Boushali told FNA on Saturday night.

American dollar being dumped
America's debt disaster
America destoryed by left wing ideologue Obama
Failure of American leadership under Obama
BIS, the bankers bank, is worried by American debt
Turkey and India join Chinese - Russian move to dump Petrodollar
Obama and Russia head to head over Petrodollar
The imminent collapse of the Petrodollar
Russia - Ukraine - Petrodollar Debt crisis
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China Becomes Global Lender Of Last Resort With Bailout Of World's Most Indebted Oil Company

For the past month we have reported the development of the Asian Infrastructure Investment Bank as a strategy by Beijing to reset the post-World War II global economic order by undermining US-dominated multinational institutions, as an attempt to usher in a new era characterized by yuan hegemony, and a bid to entrench China’s regional influence. The AIIB is already hitting its targets, we hear that the China Development Bank (which isn’t the same as the AIIB but will work very closely with it) is throwing out clues as to how Beijing’s new venture will operate. China development bank is set to provide $3.5 billion in financing to Brazil’s deeply indebted Petrobras. The new funding comes 6 years after a $10 billion oil export deal between the company and China and just days after Brazil signed up as a founding member of the AIIB. More, via WSJ:



EU and US talk of war with Russia

The European People’s Party (EPP) the largest political group in the European Parliament, nominated Luxemourgeois nonentity and alcoholic (allegely) Jean-Claude Juncker as President of the European Commission. The party has the support of some of Europe’s most powerful leaders, including German Chancellor Angela Merkel. Made up largely of centre Social Democrat parties and centre right Christian Democrats they command an automatic majority in any vote taken by the European Parliament and are unerringly federalist, globalist and anything but democratic.

And they are unerringly supportive of America's efforts to start a war with Russia.

“The time of talk and persuasion with Russia is over," MEP and Vice-President of the European People’s Party (EPP) Jacek Saryusz-Wolski told a meeting of the European Parliament on Tuesday, 21 April, “Now it’s time for a tough policy, a realistic policy, and concentration on defence and security, because the eastern flank of the EU feels vitally, existentially threatened.”
Read More:
EU and US talk of war with Russia




What the BRICS plus Germany are really up to in the Currency Wars?

by Phil T Looker, 28 February, 2015

RUSSIA DITCHES THE PETRODOLLAR - VIDEO

Watch a video giving the background to the really big story in global news (but you will neither hear nor read of it in mainstream media) - or if you are already aware of the move to dump the US dollar as global reserve currency and the role that has played in creating the current political and economic situation, skip past the video frame to the main story.

The ‘Empire of Obamaland’ is now facing multipe crises. Wars, massive unemployment and economic stasgnation at home, increasing hostility to its foreign policy, global economic chaos, the move led by Russia and China to dump the Petrodollar (the rock on which The Empire of Obamaland, the superpower formerly known as The United States Of America) is founded. Some wars as in Ukraine, by proxy are not going so well. Others, like the one against Islamic State aka ISIS aka ISIL in the middle east are going worse. Disintegration of The American Economic Empire is manifesting itself in moves by wannabe global players towards creating a multipolar world.

The thinkers in the global thinktak capital, Washington, are going bonkers, releasing wacky, propaganda heavy "forecasts" predicting that Russia is about to disintegrate Russia and China is turning into a communist dictatorship (Russia is as ever a mystery wrapped in an enigma and is anyone really stupid enough to think China was ever in the modern era, anything other than a communist dictatorship. So much (imperial) wishful thinking, so little time to prolong hegemony.

The Elephant In The Room that all the people who make these "forecasts" are aware of but refuse to mention is BRICS (Brazil, Russia, India, China, and South Africa). BRICS is worse than the Ebola, Nationalism and the twenty year pause in global warming as far as the 'Masters of the Universe' the shadowy figures that really control the desiny of the western democracies are concerned. True, the BRICS nations experiencing are major problems themselves. Brazil at the moment is totally paralyzed; a long, complex, self-defeating process, now coupled with intimations of regime change by local agents of 'The Masters Of The Universe' minions. Brazil will rebound however.

That leaves the RICs Russia, India and China, aided and abetted by Iran, as the key drivers of the move away from American dominance. For all their contradictions and conflicts, they agree they don’t need to challenge the hegemon directly until their new world order is ready to topple the mighty US dollar.

The key factor in the BRICS + 2 (see below) move against the Petrodollar is The New Development Bank (NDB), reported here before and a key alternative to the IMF in its role as enabler of developing nations. The NDB will rid developing nations of dependence on the US dollar as a reserve currency. According to reports it will be operative by the end of this year.

The NDB,, to quote its prospectus "will finance infrastructure and sustainable development projects not only in the BRICS nations but other developing nations [...] BRICS nations will keep 55 percent of the voting power, and outside their domain no country will be allowed more than 7 percent of votes. But crucially, developing nations may also become partners and receive loans.

So forget about the Western (Rothschild) controlled World Bank, whose capital and lending capacity are never increased by the so-called Western economic powers, the NDB will welcome all comers.

Meanwhile other interesting geo-economic moves are afoot.

Germany, the only economically solvent nation in the Euro zone (European Single Currency system) now exports 50 percent of its GDP. In 1990 it was only 24 percent. For the past 10 years, half of German growth depended on exports. Therefore this giant economy badly needs global markets to keep expanding. And ailing EU, its collective economy dragged down by crazy ruiles on welfare, employment rights, immigration rules and the permacrisis in the Club Mediterranean economic basket case nations, simply does not look able to meet Germany's need.

The result of this is a falling proportion of German exports are now going to destinations within the EU. The growth markey for german manufacturers is Asia. So Germany is having to move away from the Eurozone. That does not entail Germany breaking up the Euro or leaving the EU; that would be interpreted as a nasty betrayal of the cherished Single European Federal State project and "ever closer union.

In that scenario lies the real reason for Germany’s kicking little Greece around, "Either you surrender completely to our demands, or you leave the euro," the Germans are saying in effect. Which is no choice at all for Grece, already on the verge of social breakdown due to E U imposed economic measures.

What Germany wants is to keep a partnership with France and dominate Eastern Europe , relying on Poland as an economic satellite. So expect Greece, Spain, Portugal and Italy to face a German wall of intransigence. So much for European integration, it works as long as Germany dictates all the rules.

The spanner in the works is the nightmare the double craptangle of Greece + Ukraine has exposed. Berlin as a European hegemon is a nightmarish possibility for many nations including Poland that twice suffered at the hands of German occupiers in the twentieth century's wars. The only worse result wuold be a full blown, American-instigated war in Europe’s eastern borderlands against Russia. No wonder Angela Merkel is flying to Moscow to cuddle Putin every few days.

Diplomatically Moscow has been the winner in the opening skirmishes of the curreny wars. They have resisted to respond directly to American military provocation in both Syria and Ukraine and been busy extending their influence in europe, Africa and Asia while Obama blusters but lacks the testicular fortitude to fire the first shot in the war his backers desperately want. And Russia won again when late in 2014 Turkey, fed up with trying to join the EU and being constantly blocked by, who else, Germany and France,(rightly so but Brussels and Washington led them to believe it was in the bag,) decided to pivot to Eurasia for good, ignoring NATO and amplifying relations with both Russia and China.

That happened in the framework of a major ‘Pipelineistan’ game-changer. After Moscow cleverly negotiated the realignment of South Stream Pipeline through Ukraine towards the Turk Stream (though Turkish territorial waters and overland), right up to the Greek border, Putin and Greek Prime Minister Tsipras also agreed to a pipeline extension from the Turkish border across Greece to southern Europe. So Gazprom will be firmly implanted not only in Turkey but also Greece, which in itself will become mightily strategic in European ‘Pipelineistan’.

So Germany, sooner or later, must answer a categorical imperative – how to keep running massive trade surpluses while dumping their euro trade partners. The only possible answer is more trade with Russia, China and East Asia. It will take quite a while, and there will be many bumps on the road, but a Berlin-Moscow-Beijing trade/commercial axis – or the “RC” in BRICS meet Germany – is all but inevitable.

BTW, you won’t read any of that in mainstream media's globalist propaganda sheets.

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Only One Percent Of US Bakken Shale Oil Is Profitable At Current Prices
Obama's strategy to make the USA the worlds leading oil exporter is in ruins. It is entirely in keeping with his record for fuck up and failure that has been the hallmark of his presidency. But what will be the consequences for the world of this latest failure by Obama?

America and UK Lead the World in Climate Scepticism Several times now it has looked as if the climate chance scare was over as the enthusiasm of climate scitentists for changing real world data to fit in with the predictions of their mathematical models has been exposed. But as the scare was never about the environment, but was a scam to redistribute wealth from rich to poor countries, the politicians are throwing their propaganda budgets behind it again.

Germany Alarmed by Aggressive NATO Stance On Ukraine
As the US pro war rhetoric pumps up the tensions between Russia, its allies and the west in Ukrain we revisit once more the truth about which world power has been relentlessly pushing for war since 2009. It isn't Russia or China, though they are not likely to back down.

The failure of American leadership
The American dollar is being dumped in a move led by Russia and China
America's warmongering and the impreatives behind it
US fears for dollar prompt hyper - aggressive foreign policy Iran, oil and the petrodollar
Obama tries and fails to bully Russia
The imminent collapse of the Petrodollar
Obama is letting Russia destroy the Petrodollar
Russia and China sign up India and Turkey to their dollar alternative
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De-Dollarization: Russia Ratifies $100 Billion BRICS Bank

by Phil T Looker

A BRICS Bank - as an IMF alternative and to enable nations to become less dependent on the global reserve currency - was originally discussed at The BRICS Summit in 2012. Then at the 2014 BRICS Summit, the framework for The BRICS Bank was approved as "a system of measures that would help prevent the harassment of countries that do not agree with some foreign policy decisions made by the United States and their allies."

Headquartered in Shanghai and chaired by Russia, this week saw what appears to be the final step in the creation of BRICS New Deverlopment Bank as RT reports, The Russian State Duma has ratified the $100 billion BRICS bank that’ll serve as a pool of money for infrastructure projects in Russia, Brazil, India, China and South Africa. It is expected to start fully functioning by the end of 2015. Isolated?

As RT reports,

The Russian State Duma has ratified the $100 billion BRICS bank that’ll serve as a pool of money for infrastructure projects in Russia, Brazil, India, China and South Africa, and challenge the dominance of the Western-led World Bank and the IMF.

The New Development Bank is expected to start fully functioning by the end of 2015, according to the Russian Finance Ministry.

Russia has agreed to provide $2 billion dollars from the federal budget for the bank over the next seven years.

It will have three-tiers of corporate governance, with a Board of Governors, Board of Directors and a President.

The bank’s board of directors will hold its first meeting in Ufa in Russia in April. Russian Finance Minister Anton Siluanov is likely to become the bank’s first Chairman of the Board of Governors, according to Deputy Finance Minister Sergei Storchak talking on the Russia 24 TV channel.

The decision to establish the BRICS bank, along with a $100 billion reserve currency pool, was made in July 2014. Each of the five member countries is expected to allocate an equal share of the $50 billion startup capital that will be expanded to $100 billion.

The bank will be headquartered in Shanghai, India will serve as the first five-year rotating president, and the first Chairman of the Board of Directors will come from Brazil.

As the infrographic below, put together by Sovereign Man's Simon Black warns, "When you see this happen, you’ll know it’s game over for the dollar.... I give it 2-3 years." russia backs brics bank RELATED POSTS:
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De-Dollarization Accelerates: Russia Launches SWIFT-Alternative Linking 91 Entities

by Phil T Looker

Among the information revealed in The Great Leaks of 2013 were the documents that first exposed the extent to which the USA's National Security Agency (NSA) and UK's surveillance operation GCHQ had been secretly 'monitoring' the SWIFT payments system and recording details of cash flowing between nations and organisations. It appears the revelation was the last straws for Russia, China, and other sovereign nations, spying had gone beyond what could be tolerated spying rigging of markets to maintain and dollar domination began to be seen as a series of hostile acts.

Last year (2014), following threats to remove Russia from SWIFT by the UK government, (which SWIFT rapidly distanced its 'independent-self' from), Russia (and China) announced plans to create its own de-dollarized version. In November, Russia detailed the SWIFT-alternative's launch date around May 2015, and just last month, Medvedev warned of "unlimited reaction" if Russia was cut off from the SWIFT payments system.

So the news that Russia has now launched its own 'SWIFT'-alternative, initially linking 91 credit institutions, suggests de-dollarization is considerably further along than was suspected even those of us determined to put into the public domain a degree truth of what is happening expected (especially as Russia dumps US Treasuries at a record pace). I say a degree of truth because independent bloggers and small groups of contraians cannot hope to gather and publish news on the same scale as traditional broadcasters and publisher. That you will learn nothing of this story and many like it in mainstream media is the perfect illustration of why senior journalist Peter Oborne resigned from The Daily Telegraph recently.

We have covered de - dolarization, the move led by Russia, China and Iran to dump the US Dollar (Petrodollar) as the global reserve currency throughout this omnibis page, but even out determined efforts have until now not managed to find how rapidly the world is turning away from US domination. Sputnik News reports:

Almost 91 domestic credit institutions have been incorporated into the new Russian financial system, the analogous of SWIFT, an international banking network.

The new service, will allow Russian banks to communicate seamlessly through the Central Bank of Russia.

It should be noted that Russia's Central Bank initiated the development of the country's own messaging system in response to repeated threats voiced by Moscow's Western partners to disconnect Russia from SWIFT.

Joining the global interbank system in 1989, Russia has become one of the most active users of SWIFT globally, sending hundreds of thousands of messages per day. In general, SWIFT provides a secure communication network for more than ten thousands of financial institutions around the world, approving transactions of trillions of US dollars.

Earlier this month Russian Deputy Prime Minister Igor Shuvalov expressed confidence that Russia would not be disconnected from SWIFT. In her turn, Russian Central Bank First Deputy Chair Ksenia Yudaeva called upon Russian civilians and financial institutions not to dramatize the current situation.

Russian experts point to the fact that Western businesses would face severe losses if they expelled Russia from the international SWIFT system. On the other hand, the alternative system launched by Russia might reduce the negative impacts caused by measures imposed by the West, including possible disconnection from SWIFT, and diminish Western financial dominance over Russia.

SWIFT (The Society for Worldwide Interbank Financial Telecommunication) is a Belgium-based international organization that provides services and a standardized environment for global banking communicating that allows financial institutions to send and receive messages about their transactions.

Obviously any such system must be able to guarantee the absolute privacy of data, no organisation can tolerate a situation in which its rivals may be able to obtain details of transactions and other trade secrets. The USA faces crises on several fronts, most of these are of its own making and its foreign affairs difficulties are a direct result of Washington's contempt for international law and the sovereignty of other nations.

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The world is dumping the American dollar
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Fears for the future of the US dollar
Iran, oil and the US dollar
Obama and Kerry warmongering is about saving the dollar
Collapse of the petrodollar imminent
Obama goes head to head with Russia over the Petrodollar
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Russia, Ukraine and the Petrodollar
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Swiss Decoupling Sets The Euro Adrift, Triggers Vast Losses For Banks, And Currency Traders

by Phil T Looker, 30 January 2014

swiss france

Nobody is shedding any tears over the news that the deciusion by the Swiss central bank to sever the link that kept The Euro single European currency from the Swiss Franc, it is just another example of really important news you will never read of hear of from mainstream media. It is however bad news for all of us.

The decision by the Swiss National Bank to decouple from the euro sent shockwaves through the financial world and triggered billions of dollars worth of losses for banks, currency dealers and hedge funds all over the globe. Citigroup and Deutsche Bank both reported their losses were in the region of 150 million dollars; it is reported that a major hedge fund Everest Capital’s Global Fund had heavily bet against the Swiss franc, and as a result it now has lost "virtually all its money", in numbers that is $830 million dollars in assets at the end of December. The fund has now been forced to shut down. Several major global currency trading firms have announced that they are now insolvent.

These are only the headline stories we know of so far. The full extent of the financial damage caused by the Swiss National Bank will not be known for months. The same could be said of the slump in oil prices since the middle of last year. These two “black swan events” have caused a domino effect around the world and we can only guess at what the long term outcome may be.

How bad will the brewing financial crisis be? Everyone agrees it will be extremely bad, some say it will be even worse than that. For example, one economics professor at Boston University says that he believes the losses caused by the Swiss National Bank decision will eventually reach into the billions of dollars. And he is on the cautious side ...

“The losses will be in the billions — they are still being tallied,” said Mark T. Williams, an executive-in-residence at Boston University specializing in risk management. “They will range from large banks, brokers, hedge funds, mutual funds to currency speculators. There will be ripple effects throughout the financial system.”

Citigroup, the world’s biggest currencies dealer, lost more than $150 million at its trading desks, a person with knowledge of the matter said last week. Deutsche Bank lost $150 million and Barclays less than $100 million, people familiar with the events said, after the Swiss National Bank scrapped a three-year-old policy of capping its currency against the euro and the franc soared as much as 41 percent that day versus the euro. Spokesmen for the three banks declined to comment.

The enormity of the crisis for U.S. currency traders only became clear today (30 January, 2014) when New York-based FXCM, a publicly traded U.S. currency broker, the largest so far to announce it was in financial trouble after beig hit by a 90-percent drop in its share price. FXCM bosses said the firm would need a $200-$300 million bailout to prevent regulators declaring it insolvent.

Currency traders worldwide are allowed to leverage their accounts 100:1, meaning the customer can bet $100 in the currency exchange markets for every $1.00 the customer has on deposit in its account, this can result in huge gains from unexpected currency price fluctuations or massive and devastating losses, should the customer back the wrong currency.

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Russia Propositions Europe: Dump The US$ And I'll Show You My Eurasian Economic Union

contributed by Phil T. Looker, 5 January

The wheels of bureaucracy turn slowly but they grind exceedingly fine, goes an old business maxim (usually used to warn hot headed young businessmen that tax evasion is not a game for impulsive types). It seems the slow turning of the European Union's bureaucratic wheels is bringing Brussels round to understanding that as a result of the western economic and financial sactions on Russian, it is the European Union member nations that trade most with Russia, and the EU itself that is being hit hardest. Germany was first to publicly admit this in December 2014.

Due mostly to the US led economic war on Russia the German economy economy is now on the brink of recession. Other nations are catching on to the fact that the USA has little to lose as there is hardly any trade between America and Russia, while EU members have little to gain as the USA simply sees the destruction of the Russian economy as a step on the way to global economic hegemony. The former head of the European Commission, and Italy’s former Prime Minister, Romano Prodi told Italian newspaper Messaggero yesterday that the "weaker Russian economy is extremely unprofitable for Italy."


from Prodi's statement:

Lowered prices in the international energy markets have positive aspects for the Italian consumers, who pay less for the fuel, but the effect will be only short-term. In the long-term however the weaker economic situation in countries producing energy resources, caused by lower oil and gas prices, mostly in Russia, is extremely unprofitable for Italy, he said.

“The lowering of the oil and gas prices in combination with the sanctions, pushed by the Ukrainian crisis, will drop the Russian GPD by five percent per annum, and thus it will cause cutting of the Italian export by about 50%,” Prodi said.

“Setting aside the uselessness or imminence of the sanctions, one should highlight a clear skew: regardless of the rouble rate against dollar, which is lower by almost a half, the American export to Russia is growing, while the export from Europe is shrinking.”

The rest of the world is also starting to grasp the reality of the situation: it is not the financial exposure to Russia, or the threat of financial collapse should Russia suffer a major recession: it is the loss of trade that will cause the most economic damage for Europeean economies. Because while central banks can print money, leading to yet another asset bubble which may temporarily boost investor and consumer confidence, they can't conjure trade out of thin air. Keeping the fiat money moveing is the essential driver of confidence in the globalized economy. Trade became king long before central banks begant to print over $1 trillion in bonds each and every year to mask the fact that the developed world is in a deep depression.

Which is why anyone with a pension fund, savings or a job should read and take note of the following report written in yesterday's Deutsche Wirtschafts Nachrichten (German Financial News) with great interest because it goes right to the bottom line. In it Russia has a not so modest proposal to Europe: dump trade with the US, whose call for Russian sanctions has cost you another year of declining economic growth, and instead join the Eurasian Economic Union! Translated from the source (unfortunately in German but if you want to read the whole thing there's always Google Translate though the syntax is somtimes less than perfect):

Russia has presented a startling proposal to overcome the tensions with the EU: The EU should renounce the free trade agreement with the United States TTIP and enter into a partnership with the newly established Eurasian Economic Union instead. A free trade zone with the neighbors would make more sense than a deal with the US.

A western free trade zone with Russia? Linking Europe to the eastern trade bloc being fashioned by Russia, China and Iran? It would indeed make more sense than pandering to Washinggton's global Empire dreams , but then how would Europe feign outrage when the American NSA is found to have spied yet again on its "closest trading partners"?

Because let's be honest with ourselves, the USA hs only ever been friendly to smaller nations while those nations were useful to them.

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IMF Now Ready To Slam The Door On The U.S. And The Dollar

via blacklisted news

As I write this, the news is saturated with stories of a hostage situation possibly involving Islamic militants in Sydney, Australia. Like many, I am concerned about the shockwave such an event will create through our sociopolitical structures. However, while most of the world will be distracted by the outcome of this crisis (for good or bad) for at least the week, I find I must concern myself with a far more important and dangerous situation.

Up to 40 people may be held by a supposed extremist in Sydney, but the entire world is currently being held hostage economically by international banks. This is the crisis no one in the mainstream is talking about, so alternative analysts must.

As I predicted last month in “We Have Just Witnessed The Last Gasp Of The Global Economy,”severe volatility is now returning to global markets after the pre-game 10 percent drop in equities in October hinted at what was to come.

We expected such destabilization after the wrap-up of the Fed taper, and the markets have not disappointed so far. My position has always been that the taper of QE3 made very little sense in terms of maintaining the manipulated illusion of economic health — unless, of course, the Federal Reserve was implementing the taper in preparation for a renewed financial catastrophe. That is to say, the central bankers have established the lie of American fiscal recovery and then separated themselves from blame for the implosion they KNOW is coming. If the markets were to collapse while stimulus is officially active, the tragedy would be forever a millstone on the necks of the banksters. And we can’t have that now, can we?

This is not to say that individual central banks and even currencies are not expendable in the grand scheme of things. In fact, the long-term goal of globalists has been to consolidate all currency systems and central banks under the outward control of the International Monetary Fund and the Bank Of International Settlements, as I outlined in “The Economic Endgame Explained.”

That particular article was only a summary of a dangerous trend I have been concerned about for years; namely the strategy by international financiers to create a dollar-collapse scenario that will be blamed on prepositioned scapegoats. I have no idea what form these scapegoats will take - there are simply too many possible triggers for fiscal calamity. What I do know, though, is the goal of the endgame: to remove the dollar’s world reserve status and to pressure the American people into conforming or even begging for centralized administration of our economy by the IMF.

The delusion perpetuated in the mainstream is that the IMF is a U.S.-dominated institution. I have outlined on many occasions why this is false. The IMF like all central banks is dominated by the international corporate banking cartel. Central banks are merely front organizations for globalists, and I am often reminded of the following quote from elitist insider Carroll Quigley when I hear people suggest that central banks are somehow independent from one another or that the Federal Reserve is itself the singular “source” of the world’s economic ills:

It must not be felt that these heads of the world’s chief central banks were themselves substantive powers in world finance. They were not. Rather, they were the technicians and agents of the dominant investment bankers of their own countries, who had raised them up and were perfectly capable of throwing them down.

The substantive financial powers of the world were in the hands of these investment bankers (also called “international” or “merchant” bankers) who remained largely behind the scenes in their own unincorporated private banks. These formed a system of international cooperation and national dominance which was more private, more powerful and more secret than that of their agents in the central banks.

No one can now argue against this reality after we have witnessed hard evidence of Goldman Sachs dictating Federal Reserve policy, as outlined here. MORE>>

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Comments by German Finance Chief Wolfgang Schaeuble seemed to indicate that the EU's paymaster is ready to let Greek PM Tsipras put continuing Euro single currency membership for Greece to a popular vote. Any such move could affect negotiations with creditors by allowing Syriza to claim it hasn’t betrayed its support base, but a vote also risks plunging the country into turmoil should the gambit backfire

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Most of us are familiar with the concept of GDP as a measure of economic health. If GDP increases, the myth goes, then the economy has grown. It is a measure of how effectively or efficiently we are utilizing our assets to generate wealth. The idea is that the more I invest the more notional returns I can generate. Unfortunately GDP is a false economic measure, it only measures the rate at which money churns around the economic system.
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Oil price: Britain's North Sea Oil Industry 'Close To Collapse'

We were perhaps mistaken in calling this page 'Currency wars' and focusing initially on American attempts to undermine Russia's economy which is overly dependent on oil and gas. That of course is just a skirmish in a much wider economic war that is now hurting those nations that complied with Obama's diktat and imposed economic sanctions on Russia in retaliation for Moscow's refusal to surrender its strategiclly vital satellite state, Ukraine, to NATO and the EU.

Britain, because of our north sea oli interests is one of the hardest hit.

The price of crude oil began to collapse when The United states Of America, the swaggering bully of the world community decided to use its new status as a net exporter of oil, due to the shale boom, to flood world markets, finding because their oil is the most expensive to extract, that their wells were not economically viable, and damage Russia's oil dependent economy. Naturally prices in world markets dropped due to the law of supply and demand. With typical stupid arrogance the Americans demanded that the Arabs and other traditional oil producers cut production to hold up prices.

The arabs and other oil producing nations, sensing Amerca's push to become gobal hegemon had run off track and what they were threatened with was the empty bluster of a bully whose cowardice and weakness has been exposed in effect said, "Fuck the fucking fuck off," by pumping more oil and sending prices crashing even further. Result? Approximately $1trillion worth of new shale fracking projects planned in the USA have been cancelled. If it ended there the world would only have the minor problem of a US / Russia currency war.

Unfortunately the plunging oil price has brought about a "huge crisis" in energy markets, one of the worst hit is the UK's North Sea oil industry, expert have warned. With North Sea oil now selling at below $60 a barrel, it is "almost impossible to make money", Robin Allan, chairman of independent explorers’ association Brindex, told the BBC.

"It's a huge crisis. This has happened before, and the industry adapts, but the adaptation is one of slashing people, slashing projects and reducing costs," he said.

After several days of volatile trading in oil markets, Brent crude, the global benchmark, ended the day down 1 per cent at about $60 per barrel after having risen 3 per cent in early trading. In recent weeks, oil prices have crashed to their lowest levels in five-and-a-half years following falls demand due to weaking in major economies and concerns of a global oil glut.

Up to £55bn worth of North Sea oil projects scheduled for 2015 could be cancelled due to the falling prices, the Daily Telegraph reports.

Concerns over the financial state of the oil industry have increased since Opec voted not to cut production in an attempt to arrest sliding prices when they met in Vienna last month. Iran's oil minister has publically criticised Opec's inaction. Bijan Zanganeh told the country's state petroleum news agency: "The prolongation of the downward trend of the oil price in world markets is a political conspiracy going to extremes."

The US-based oil company ConocoPhillips has already moved to cut 230 out of 1,650 jobs in the UK and some analysts predict that other large firms will make similar cost-cutting announcements in the coming months.

However, the Department of Energy and Climate Change said yesterday that even though reductions in oil prices have proven "very challenging" for companies active in the North Sea, "we have seen very little evidence of new projects being cancelled or deferred in reaction to lower oil prices".

[more]

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Over the last few weeks drum beats could be heard signalling the coming of troops from abroad to lay waste to any foe ahead of them. However, unlike what we first conjure up as troops from an opposing force made up of men and weapons. This battlefield is being waged in the either of the currency markets.

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The Dollar Versus The Rouble

contributors: Ian R Thorpe, Phil T. Looker, Xavier Connolly 18 December, 2014

What a kerfuffle this week about the 'crisis' in Russia and the collapse of the Russian Rouble. To read mainstream media one might think the Rouble is the global reserve currency, whereas it is not even a traded currency on many exchanges (this is not the same as being able to buy Roubles from your bank.) American propagandists are trumpeting the crisis as a triumph for western corporatocracy and say it heralds the reassertion of US dollar supremacy.

Now I know some members of the neo Nazi left and the people who want Barack Obama anointed God - King of The Entire Universe And Everything Else Besides are going to hate me for saying this, they will accuse me of being a Putin fan (I'm not, I'm sure he's a complete bastards but he's Russia's bastard)and many other irrational accusations will be thrown my way, but I'm a realist and unlike lefties who live in la-la-land I look at real world evidence. And I tell you thins:

The Rouble is fundamentally a stronger currency than the dollar which makes what is going on seem very strange?

Russia’s attempt to defend the rouble by pushing up interest rates has inevitably failed miserably. The central bank’s intervention once the currency was on the slide was pointless because the economy’s problems cannot be dealt with by monetary policy alone.

The fall in oil prices has painfully exposed the Russian economy’s dependence upon world consumption at a time of falling demand. Ironically this is not a result of American led economic sanctions which have hurt EU members more than Moscow, but are a result of the Arab response to one of Obama's attempts to shaft Russia. By using the much hyped shale boom to flood the oil and gas market and drive down prices he has pissed off the Arabs who have responded not by cutting production to keep prices up (they're not fools) but by pumping more oil to create a glut. Boggart Blog reported on this yesterday. This has now made oil so cheap America's oil boom is completely fracked, it costs them more to get the stuff out of the ground than they can sell it for. One trillion dollars worth of investment in new fracking projects has been cancelled. Russia has also found itself at the mercy of the Saudis, who might have pushed OPEC to cut output and restore prices, but chose not to. As stated above that was mainly to see off the threat from American shale, but as a bonus also it allowed the Saudis to kick Russia's arse for supporting their enemies in Syria and Iran.

Think it through. OPEC decides to pump oil madly when there is massive over supply. Why? Perhaps to retain market share but there is more to this. The dramatic drop in the price has also been engineered between the US and the Saudis, Qataris and other Gulf states. The impact upon Russia has been planned as punishment for blocking America's path to global hegemony and for propping up Isalamic leaders who refuse to bow to the Wahabi supremacy desired by the Saudi and Qatari royal houses. The risks are truly appalling as many European banks have massive exposure in Russia, fracking development in the US is seriously hampered and Euroland depends on Russian fuel.

The US wild determination to direct the rest of the world by saving the reserve status of the dollar is imperial madness.

Will it work? I doubt Mr Putin and his oligarch mates are suffering any personal inconvenience. As for your ordinary Ivan Ivanovitch in the Russian street, the old 'enemy at the gate' scare will probably serve to justify local hardships. you can bet the reasons cited as to why Russia is at loggerheads with the west will sound very different in Moscow newscasts to those spun by Western news organisations.

But before we start listening to Professor want-War or any other academic idiots or self declared experts as they shill for war, we should think long and hard about the version of events we have been sold. It is the EUSSR and USA adventurism which is causing the problems. It is the unparalleled acts of economic war by the west which are causing his internal problems. Russians have the wit the Ukrainians didn't possess, they know that the fall of Putin would signal the slavery and plunder of their nation as the last obstacle in the west to American corporate hegemony collapsed.

It is sad our politicians have failed do the same for Britain. Their duty was to defend the interests of our country and its people rather than being servile puppets of the USA and EUSSR and obediently parroting the mantras of globalism and multiculturalism. The Russians have the brains to say NO. So should we now we have the chance. in France, Germany Italy and Sweden as well as here in the UK the tide is turning.

There is a bigger picture to all this however. A systemic crisis in emerging markets has been wrought by the massive amounts of new money "printed" (bonds issued by government and bought in by central banks) in the US, UK and EU after the crash of 2008. Small nations and businesses in emerging economies have been encouraged to take on substantial dollar-denominated debts, this has proved increasingly costly as the US currency gained in value. The Russian state is not indebted and is a net creditor to the rest of the world, its balance sheet cannot withstand a continuing drop in the rouble but if the Russians hunker down they are in better shape to ride out their crisis. Meanwhile we must sever the umbilical cord that makes the free world dependent on America. Over to our economics expert. (SKIP to next)

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Are We About To Return To The Gold Standard

by Phil T Looker

If you listen to conventional financial news, they’ll all tell you that the ruble is in freefall, and that the dollar is the place to be. But if you look at the real data and I am a very data-driven person (so long at is not the fairy story data of climate science) take a stroll through the numbers and make an objective comparison between the US dollar and the Russian ruble. Better sit down though, if you are an Obama fan.

Start from the premise that ALL paper currencies are fundamentally flawed.

The global monetary system based on fractional reserve banking is insane — the idea of letting unelected, virtually unregulated central bankers pull as much new money as they can imagine, that money being underwriten by unsecured debt, out of thin air is simply irrational. But some fiat currencies have a more solid base than others. If you want to understand the health of a currency, you must look at the ISSUER of that currency, i.e. the central bank.

As with any business, one of the most important measures of its financial health is its level of solvency. In particular we look at the capital (i.e. net assets) as a percentage of the total balance sheet.

The US Federal Reserve only has a basic capital ratio of 1.26%, razor thin in real terms. (This is down from 4.5% after six years of Obama's loonytoons economics.) That means if the value of the Federal Reserve's assets declines by only 1.26%, the issuer of the world’s dominant reserve currency becomes insolvent.

Meanwhile back in Moscow, the Russian central bank’s basic capital ratio is 12.5%—literally a much healthier figure than the Fed's.

A comfortably positive capital ration is muck like us ordinary punters having a stash of rainy day money. When the brown smelly stuff hits the fan it's what keeps you afloat. You might be able to keep on living hand to mouth for a considerable time, or even accumulating debt by borrowing against future expectations, but only until your car breaks down, or the domestic boiler blows up and you need a new heating system, for example. Then all of a sudden, your lack of capital can become a serious issue.

As it happens Russia is one of the most financially healthy nations in the world. Thus as they, along with China, have been leading a move to abandon the $US by concluding bilateral currency deals with their main partners, we must assume they have prepared for some response. Being the owner of the reserve currency has kept the American economy afloat for thirty years, they were never going to surrender that position lightly.

So where will this all end? I suggest you look at a central bank’s GOLD reserves as a percentage of the money supply, i.e. how much gold backs the money supply, because all the indicators suggest we will move back to a gold based global currency (why else would China be hoarding gold?).

In Russia, gold reserves are 6.2% on the money supply and rising. Last year it was 5.5%, and the central bank is continuing to heavily stockpile more.

How much gold backs the dollar? Precisely zero point zero percent. All that gold Bruce Willis and Samuel L Jackson prevented Jeremy Irons stealing from the vault at the Fed did not belong to the Fed, the Fed doesn’t own gold it merely looks after it for other people. It loudly proclaims this on its own website: "The Federal Reserve does not own gold. Eff off Irons, there's nothing here for you."

What the Fed holds is paper. Its capital is‘certificates’ which are redeemable for US dollars. But there’s not a single ounce of gold backing the US dollar.

So… with no gold and pitifully razor thin solvency levels, it really wouldn’t take much of a shock to topple the dollar.

By comparison, the ruble is much better capitalized and actually has something backing it.

Not that this means you should invest in Roubles, far from it. People who do that would be lucky to see their any of savings again. However hard, publicly available (but not online, for free) numbers clearly demonstrate the discrepancy between pro - western fervour and objective data.

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The numbers of migrants trying to cross from the Libya on the coast of north Africa to one of the EU's southern nations is increasing. Europe's impoverished southern nations can't cope. And in the better off nations of northern Europe immigration is a toxic issue which is fuelling the rise of anti EU parties from France to Finnland in the north and Hungary in the east. What can be done?

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Is The Chinese Cavalry About To Ride To The Rescue Of Russia's Economy

Ed Butt, The Daily Stirrer, 18 December, 2014

After the trials and tribulations of the Russian Rouble in currency markets this week (the Rouble has lost up to ten per cent of its value against the US dollar, excitable types in western media have been declaring the Third World War over. This is somewhat premature, buried under al the hyperbole was a news item that was far more significant that the scant coverage it received suggests.

While The White House, Whitehall and the leaders of western plutocracies crowed about how Putin had caved in, it was quietly announced that Russia had tied up bilateral trade deals with Turkey and India, though adding another two heavily populated nations to the growing club that have abandoned the US dollar as the reserve currency for international trades.

Retaliation was inevitable of course, our friends at Boggart Blog reported on how the American attempt to undermine the Russian economy by flooding the market with cheap oil available thanks to its shale boom has backfired in the longer term. The Arabs, pissed off with America's demands for co-operation in its games and Russia's support for Shia Muslims in the middle east, responded by pumping more oil and forcing prices down further. This has led to $1trillion worth of planned shale feacking projects being cancelled as uneconomic.

So what was loooking like a victory in an early skirmish for the USA is now shaping up to deliver a first round knockout for America's adversaries as the Russian leader prepares to play a trump card.

The Russians and their allies are not fools, they were bound to have kept a card or two un their sleeves as the Americans lashed out against nations involved in the move to abandon the Petrodollar. Amid the huge changes underway in the global economy which are a symptom of de-leveraging from the petro-dollar and the BRICS bloc turning it’s back on the west's wannabe hegemon, new alliances and economic partnerships are being formed. Russia and China are old pals of course so it is no surprise that the worlds second largest economy about to bail-out it’s partner?

From the South China Morning Post: "Russia could fall back on its 150 billion yuan (HK$189.8 billion) currency swap agreement with China if the rouble continues to plunge. If the swap deal is activated for this purpose, it would mark the first time China is called upon to use its currency to bail out another currency in crisis. The deal was signed by the two central banks in October, when Premier Li Keqiang visited Russia.

"Russia badly needs liquidity support and the swap line could be an ideal tool,” said Bank of Communications chief economist Lian Ping. The swap allows the central banks to directly buy yuan and rouble in the two currencies, rather than via the US dollar. Two bankers close to the People’s Bank of China said it was meant to reduce the role of the US dollar if China and Russia need to help each other overcome a liquidity squeeze.

The central banks of China and Russia signed a 3-year, 150 billion yuan bilateral local-currency swap deal today, according to a statement posted on PBOC website, which signals a fully funded deal in support of the currency. Either that, or Russia could sell it’s gold reserves.

Bloomberg reports:

Russia’s surprise interest-rate increase failed to stop the plummeting ruble. Another tool available to repair economic havoc caused by sanctions and falling oil prices: selling gold.

Russia holds about 1,169.5 metric tons of the precious metal, the central bank said last month. That’s about 10 percent of its foreign reserves, according to the London-based World Gold Council. The country added 150 tons this year through Nov. 18, central bank Governor Elvira Nabiullina told lawmakers. The Bank of Russia declined to comment on its gold reserves.

Russia’s cash pile has dropped to a five-year low as its central bank spent more than $80 billion trying to slow the ruble’s retreat. The currency’s collapse combined with more than a 40 percent tumble in oil prices this year is robbing Russia of the hard currency it needs in the face of sanctions imposed after President Vladimir Putin’s annexation of Crimea. A fall in gold prices signals that traders are betting that the country will tap its reserves, according to Kevin Mahn, who oversees $150 million at Parsippany, New Jersey-based Hennion & Walsh Asset Management.

“Russia is at a critical juncture and given the sanctions placed upon them and the rapid decline in oil prices, they may be forced to dip into their gold reserves,” Mahn said. “If it happens it will push gold lower.”

As Winston Churchill once said, "This is not the end, it is not even the beginning of the end, but it is the end of the beginning. World war Three will be fought not in the skies over the Atlantic and Pacific, nor on the great plains of North America or the central asian steppes, but in the dealing rooms and currency exchanges of the world's financial centres. Well it will until the Americans realise they are losing.

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Don’t believe American lies about Russia

Our sanctions caused Russia’s downturn. They protect Big Oil, the well-connected, and make the world more dangerous PATRICK L. SMITH - New York Times

It is true that Russians are besieged. Until you look south and east. China and Iran are long time partners, India and Turkey have just signed trade deals with Mocow. Sanctions the West has insisted on prosecuting in response to the Ukraine crisis — Washington in the lead, the Europeans reluctant followers — are hitting hard, let there be no question. but they are hitting the EU harder. Oil prices are at astonishing lows, probably if not yet provably manipulated by top operatives in the diplomatic and political spheres. This has cause $1trillion of investment in US shale facking projects in the US to be cancelled and now oil prices have fallen so far it is not economical for US producers to get the stuff out of the ground because the fracking process is ludicrously expensive in relative terms.

Russia is isolated. NOT! The USA has mede itself hugely unpopular around the world thuough its heavy handed attempts to dominate seconomically and influence culturally the smaller nations that must deal with it. Russians are hot everywhere. With an energetic activism just as astonishing as the oil prices, Russian officials, Putin in the very visible lead but with swarms of technocrats behind him, are building an extensive network of South-South relationships — East-East, if you prefer — that are something very new under the sun. Some of us were talking about South-South trade and diplomatic unity as long ago as the 1980s.

The siege of the Russian economy (sic), has become a significant catalyst in the the creative response of a nation under ever-mounting pressure. Timothy Snyder, the Yale professor whose fuckwittery on the Ukraine crisis is simply gobsmacking as he acts as cheerleader for those who think World War Three will serve their interests, was raving months ago that Putin is threatening to undermine the entire postwar order. In fact it is Obama who threatens the world order as he pushes trade treaties like TPP and TTIP that demand nations surrender sovereignty over their laws to global corporations.

The most gobsmacking lie is that the west is winning. In fact Russia is advancing this world-historical turn with a considerable assist from its adversaries in the West, where economists addicted to debt have driven nations to the brink of insolvency with no margin against sudden shocks as we reported above. For all the pseuds who pretend to know Schumpeter but know only one thing, the creative destruction bit, how is this as a prime example of the phenomonon?

Consider the size of the Russian economy. It is the world’s No. 2 producer of natural gas and No. 3 producer of oil. In terms of nominal gross domestic product — standard measure — Russia’s economy, at $2.1 trillion, is slightly larger than Italy’s. Another measure, purchasing power parity, values Russia’s economy at $3.5 trillion, but never mind: Even by nominal GDP, a totally false measure based on churn of currency rather than generation of wealth, Russia is the world’s No. 8 economic power. Weight againt that the proportion of Russian GDP that is generated by domestic consumption however and the picture looks very different and a lot more resilient than the western economies with their wafer thin capial ration.

Comfortable now with the sanctions regime, are we?

The cliques in Washington are because the U.S. trades very little with Russia and neither politicians nor academics have a firm grasp of limits. This is cynicism made flesh when you consider Europe’s vulnerabilities. The contagious economic and social crisis is already spreading to nations near Russia’s borders.

As Germans and a few other European nations understand, try to take down this beast and blood will flow everywhere. Now you can see, maybe, why one consequence of the Ukraine crisis is a serious deterioration of relations between America and those known as “the allies,” a term that has masked many complications since the Cold War’s onset.

And the more we learn of what is really happening in Ukraine, the worse the picture gets. And it is not just Ukraine.

Everyone thought that any major monetary policy surprises and/or capital controls today would come from Putin during his annual press conference. Boy were they wrong: just after 2 am Eastern, none other than the Swiss National Bank joined the ranks of the ECB in scrambling to stem the wave of capital flight, not to mention the cost of money, when it announced it too would start charging customers for the privilege of holding cash in its banks, when it revealed a negative, -0.25% interest rate on sight deposits: a step which according to the SNB was critical in maintaining the 1.20 EURCHF floor.

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Believe The Phoney Narrative Or Be Branded a Conspiracy Theorist.
Right now the west is in big trouble, the move led by Russia and China to dump the petrodollar as global currency has provoked the Americans to lead the wesern allies into an economic war that we cannot win. Why not? One word: debt. A shooting war is the only option but it's by no means certain the allies would win that.

American dollar dumped
EU imposes sanctions on Russian oligarchs
Russia, Ukraine, The Petrodollar War and the shooting war
USA Engineered Ukraine Regime Change
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China-Russia currency agreement further threatens U.S. dollar

As long ago as 2010 China and Russia were planning their currency war against the USA when the two nations agreed to let their currencies trade against each other in spot inter-bank markets.The aim of this move is to promote the bilateral trade between China and Russia, facilitate the cross-border trade settlement using the yuan or rouble rather than traders having to settle in US dollars, and benefit their local economies by reducing the cost involved in currency trades, according to Chinese officials.

This constitutes a continuation of efforts by both countries to abandon the U.S. dollar usage in international trade threatens the dollar's reserve currency status.

For example, when Malaysia and Germany exchange goods, the transaction is often denominated in dollars. In particular, oil -- something that all modern economies need -- is denominated in U.S. dollars (hence the appelation 'petrodollar', so the currency is almost as indispensable as oil itself. So long as the dollar remains the reserve currency, it has the effect of propping up the ailing US economy, allowing the U.S.A. to dictate the price it will pay for goods it imports and to carry enormous deficits deficits because its debt is denominated in U.S. dollars and can therefore print unlimited dollars to pay the interest on its $20TRILLION of government debt and inflate its way out of default. America, understandably, wants to protect these privileges.

Some economists claim that the U.S. is so desperate to protect this status it invaded Iraq because the country began selling oil in euros instead of dollars (How Saddam may yet win the war, 2005). Now, the U.S. is allegedly threatening to invade Iran because of the country's desire to use euros or Russian rubles in oil transactions.

Meanwhile, China and Russia are leading a rebellion against the U.S. dollar. This latest move to shift bilateral trade away from it is significant in itself because China-Russian trade, previously denominated in dollars, is currently around $40 billion per year. For Russia, trade with China is larger than trade with the U.S.

As the policy has been extended to Russian exports of oil and natural gas to other nations than China, it threatens the global petro-currency status of the U.S. dollar.

According to statistics compiled by the International Energy Agency, China is now the largest consumer of energy, although the U.S. is still the largest consumer of oil. However, China, now the largest automobile market in the world, is expected to rapidly increase oil consumption so we must expect it will overtake the USA in oil usage in the next few years. Russia is already the second biggest oil exporter and the biggest natural gas exporter in the world. Iran has been the subject of sanctions imposed by the US led United Nations for years, but sells it's oil to China and through intermediaries to traders on the world spot markets.

In other words, the growing importance of Russia, China and Iran in the global energy picture and their phasing out of dollar usage for trading energy commodities is likely to undermine the status of the dollar. Given that other oil producers, including VGenezuela and Nigeria, and oil users such as Australia and Japan are also eager to join the Russo - Chinese bilateral trades system puts even more pressure on the USA.

Russian ambitions against the dollar for energy exports go back to 2006. That year, President Vladimir Putin, who was in his first tenure as president, made plans to set up a rouble-denominated oil and natural gas stock exchange in Russia (how this is being implemented is reported elsewhere in this document).

For China, promoting the use of yuan as a reserve currency for cross border trades is the goal they neee as necessary to their ambition to become an economic superpower. Over the past few years it has allowed its currency to trade against the Malaysian ringgit, the Thai Bhat, the Indian Rupee. This is in addition the currencies of Pakistan, Japan, Ne Zeland, Indonesia, Burma, Australia and South Korea. The Yuan also trades on the London currency exchanges. Just like the deal with Russia, the purpose of these moves is to promote bilateral trade between China and Malaysia and facilitate using the yuan to settle cross-border trade.

Trade is the major reason for the demand of foreign currencies in the first place. So as countries like China and Russia phase out the usage of U.S. dollars for international trade -- including but not limited to oil trade -- its status as the world's reserve currency will continue to slide.

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