We have been saying for years that there is a global economic war underway. We have warned that Putin has long intended to attack America with a particular obsession with the reserve currency status of the United States’ dollar. Now, Voice of Russia states that it is time for the attack on the dollar to commence. This is a departure from the previous message on March 28 which stated:
“Russia is fully in control of the petrodollar and could cause the Dow Jones industrial average to plummet as it has never done before. One can wave the Stars and Stripes as long as one likes, but it’s a fact that the Russians can turn the US economy upside down . . . So far, Moscow has been in no rush to resort to extreme measures. Russia is going to react in a mirror-like way . . .”
Lately, China has led the BRICS efforts to dislodge the dollar from its position as the main global currency, but the “sanctions war” between Washington and Moscow gave an impetus to the long-awaited scheme to launch the petroruble and switch all Russian energy exports away from the US currency . Continue reading
Citigroup Inc.’s capital plan was among five that failed Federal Reserve stress tests, while Bank of America Corp. won approval for its first dividend increase since the financial crisis.
Lenders announced more than $60 billion of dividends and stock buybacks after the Fed approved capital plans for 25 of the 30 banks in its annual exam. Citigroup, as well as U.S. units of Royal Bank of Scotland Group Plc, HSBC Holdings Plc and Banco Santander SA, failed because of concerns about the quality of their processes, the central bank said yesterday in a statement. Zions Bancorporation failed after its capital fell below Fed minimums in a simulation of a severe economic slump.
The Inteligencia Financiera Global blog (Global Financial Intelligence Blog) is honored to present an exclusive interview with economy world expert Jim Rickards. Jim is the author of the bestseller “Currency Wars: The Making of the Next Global Crisis” and the forthcoming, “The Death of Money: The Coming Collapse of the International Monetary System”.
Jim, as you know, China is now the world’s largest consumer of gold. While the WGC states that its “record” demand in 2013 was only 1,065.8 tonnes, the China Gold Association estimates “gold consumption” was 1,176 tonnes. On the other hand, several pundits like Koos Jansen say that the real China gold demand was much more than 2,000 tonnes last year. Who should we believe?
- There are many estimates of official and non-official accumulation of gold in China. The truth is that no one knows the exact number because China is non-transparent about the total amount of gold coming into the country and its own mining output, and it is not-transparent about how much of that gold goes for personal acquisition and now much to government reserves. So, all analysts, myself included, are working with imperfect or incomplete information. We do know that some gold comes into China using military channels and is not reported to any authority. As a result, even the best estimates may be too low. The best guide is to assume China has some target in mind, probably 5,000 tonnes or higher, and will continue to accumulate through diverse channels until that target is reached. My estimate is that China will announce it has over 5,000 tonnes of gold in early 2015. It probably has at least 3,000 tonnes today.
RT: The US President said that we’re not facing a new Cold War yet. He has also called on Russia to be deeply isolated – how do these points come together, how do they even work side by side?
Lawrence Freeman: First of all you should not believe what President Obama says. We are in a very dangerous situation that could escalate to a world war. The decisions that President Obama’s made are not his own. He is a effectively a tool of Wall Street and the British financial system, and they have declared war on Russia and President Putin because of the leadership role that Russia plays in the whole Eurasian continent, which is moving in a different direction.
Legendary investor Jeremy Grantham says the US Federal Reserve is killing the recovery of the world’s biggest economy and the ”next bust will be unlike any other”.
Mr Grantham – the cofounder and chief investment strategist at the $US112 billion ($123 billion) Boston-based fund manager GMO –said he wouldn’t invest his clients’ money in US stocks for at least the next seven years because of the Fed’s ”misguided policies”.
Mr Grantham has an impeccable track record, having called both the internet bubble and then the US housing bubble. In November he said he believed the US sharemarket could rise another 30 per cent, although he believed it was overvalued, before crashing again.
For anyone who, or knows someone who, naively thinks Russia doesn’t have both the capability and the guts to pull the trigger, this is a must-read. It also goes to show you that the Cold War had never died, but had simply gone into a new phase. The phase of which America is going through, and is almost finalized. The US is now stuck with a leader who draws a new line in the sand, or makes a concession, every time another is breached. The Russians smell blood and they, along with the Chinese, won’t stop capitalizing on the opportunities until America is reduced to a third world country. They, who know America lives by an honor system, do not, which makes it even more easier to keep hammering away.
There is a cynicism in the relationship between Russia and the US, being played out in the Crimean crisis, which is deep, rooted in history and shows that the triumph of capitalism over communism wasn’t the end of the power game between these two nations.
The depth of mistrust between the two was highlighted in the interview given by Hank Paulson, the former US treasury secretary, for my recent BBC Two documentary, How China Fooled The World.
The excerpts I am about to quote never made it into the film, because they weren’t relevant to it. But they give a fascinating understanding of the complex relationship between Washington and Moscow. Continue reading
World’s second largest economy is facing ‘serious challenges’ and many companies with high debts are being forced to the wall
China is braced for a wave of industrial bankruptcies as its slowing economy forces companies with sky-high debts to the wall, the country’s premier has said.
Premier Li Keqiang told lenders to China’s private sector factories they should expect debt defaults as the world’s second largest economy encounters “serious challenges” in the year ahead. Continue reading
SAN LUIS OBISPO, Calif. (MarketWatch) — Imagine, you’re in the exciting new 21st century. Civilization still exists on Planet Earth. Wall Street’s still in business. But you’re still asking: Why can’t we hear the next crash? Are we deaf? No. The warnings are always long and loud. So why can’t we “hear” them? In fact, it’ll get worse. Here’s why…
Yes, crashes will keep coming: History lesson: The 1929 crash led to the Great Depression. On March 20, 2000 we warned: “Next crash? Sorry, you’ll never hear it coming.” Few listened. The 1990’s dot-com mania led to Wall Street losing $8 trillion in the 2000-2003 bear-market recession. Nothing changed. Another round of warnings roared from 2004 into 2008. Few listened. Another crash. Wall Street lost even more, $10 trillion. Continue reading
Combine this with Bank of America’s warning that “the US Dollar is in trouble” and you can see that the cliff America is heading towards without brakes isn’t too far away.
While we will have more to say about the disastrous December TIC data shortly, which was released early today, and which showed a dramatic plunge in foreign purchases of US securities in December – the month when the S&P soared to all time highs and when everyone was panicking about the 3% barrier in the 10 Year being breached and resulting in a selloff in Tsy paper – one thing stands out. The chart below shows holdings of Chinese Treasurys (pending revision of course, as the Treasury department is quite fond of ajdusting this data series with annual regularity): in a nutshell, Chinese Treasury holdings plunged by the most in two years, after China offloaded some $48 billion in paper, bringing its total to only $1268.9 billion, down from $1316.7 billion, and back to a level last seen in March 2013! Continue reading
China’s Xi Jinping has cast the die. After weighing up the unappetising choice before him for a year, he has picked the lesser of two poisons.
The balance of evidence is that most powerful Chinese leader since Mao Zedong aims to prick China’s $24 trillion credit bubble early in his 10-year term, rather than putting off the day of reckoning for yet another cycle.
This may be well-advised for China, but the rest of the world seems remarkably nonchalant over the implications. Brazil, Russia, South Africa, and the commodity bloc are already in the cross-hairs. Continue reading
That at least is the conclusion reached by a frightening chart that has been making the rounds on Wall Street. The chart superimposes the market’s recent performance on top of a plot of its gyrations in 1928 and 1929.
The picture isn’t pretty. And it’s not as easy as you might think to wriggle out from underneath the bearish significance of this chart. Continue reading
Last week’s ‘thunderbolt’ ruling on eurozone rescue policies by Germany’s top court marks a serious escalation of Europe’s governance crisis and may ultimately force Germany to withdraw from the euro, the country’s most influential magazine has warned.
A sweeping report by Der Spiegel said the court ruling amounts to a full-blown showdown between Germany and the European Central Bank over the methods to shore up southern Europe’s debt markets.
“It is nothing less than a final reckoning with the crisis-management strategy pursued by the ECB. The German justices insist that the German constitution sets limits on the ECB’s crisis strategy. In a worst-case scenario, the Court could forbid Berlin from contributing to efforts to save the euro or even force Germany to leave the currency zone entirely,” it said. Continue reading