U.S. Sanctions Push Putin Toward His Dream of A New Financial System

Although Monday’s sanctions will hurt Russia in the short term, they will also force Putin to step up his efforts to weaken U.S. influence over the global economy, which so far has been “little more than wishful thinking because of the difficult reforms it would require”

A little over a year ago, in early March 2013, the Russian state energy czar Igor Sechin made his American debut at an oil summit in Houston, Texas, reportedly accompanied by armed guards equipped with a K-9 unit. The speech he gave that day at the СERAWeek conference, an annual gathering of energy titans from around the world, was part of a pit stop for Sechin. He was on his way to a more high profile event, the funeral of his old friend Hugo Chavez, the truculently anti-American President of oil-rich Venezuela. But since he was passing through the Western hemisphere anyway, Sechin clearly felt it was worthwhile to court some American investors. “I call for us to work together,” he told the audience that day, according to Russia’s Vedomosti daily, “to drive our business for mutual benefit.” Continue reading

Russia, China leading efforts to bypass U.S. as IMF reforms stall on Capitol Hill

Russia, China and other major developing countries — angry about the stalemate on Capitol Hill that has blocked approval of a reform plan that would give them a bigger voting share at the International Monetary Fund — are pushing to go ahead with the reforms without waiting for the United States.

U.S. and IMF officials insist that the reforms — including changes in voting shares designed to reflect shifts in the global economy and a doubling of the IMF’s lending authority — cannot go into effect without approval by Congress, as the U.S. continues to wield veto power over major decisions and activities of the IMF under current voting formulas. Continue reading

Citigroup’s Schofield: Global Economy ‘May Be Heading Into Grumbling Discontent’

While the turmoil surrounding Ukraine wasn’t enough to derail a strong U.S. stock rally, the East-West conflict could bode ill for the global economy, says Mark Schofield, head of interest rate strategy at Citigroup.

“All-in-all, it feels as if we may be heading into a summer of grumbling discontent, rather than the steady and progressive U.S.-led recovery that had become the consensus view around the start of the year,” Schofield writes in a commentary obtained by CNBC. Continue reading

World risks deflationary shock as BRICS puncture credit bubbles

The world is one financial downturn, one major terrorist attack or one regional war away from collapse. 9/11 happened when the U.S. was on the brink of another economic bubble whereas the downturn of 2008 was a bubble created during the Clinton years in which it was only a matter of time before it popped.

As matters stand, the next recession will push the Western economic system over the edge into deflation

Half the world economy is one accident away from a deflation trap. The International Monetary Fund says the probability may now be as high as 20pc.

It is a remarkable state of affairs that the G2 monetary superpowers – the US and China – should both be tightening into such a 20pc risk, though no doubt they have concluded that asset bubbles are becoming an even bigger danger. Continue reading

MARC FABER: We’re In A Gigantic Financial Asset Bubble That Could Burst Any Day

In an interview with Bloomberg TV, he says we are in a “gigantic financial asset bubble.” He also thinks the bubble could burst at any moment.

“I think we are in a gigantic financial asset bubble. But it is interesting that that despite of all the money printing, bond yields didn’t go down. They bottomed out on July 25, 2012 at 1.43% on the 10-years. We went to over 3.0%. We’re now at 2.85% or something thereabout. But we’re up substantially. Now, this hasn’t had an impact on stocks yet. In fact, it pushed money into the stock market out of the bond market. But if the 10-years goes to say 3.5% to 4.0%, then the 30-year goes to close to 5.0%, the mortgage rates go to 6.0%. That will hit the economy very hard.” Continue reading

The BRICs Have Hit a Wall

Major emerging markets are suffering — and frankly that’s not very surprising

Only a short time ago, the world’s emerging markets, especially the BRICs — Brazil, Russia, India and China — were supposed to be the saviors of the global economy. As the West sank into a recession in the wake of the 2008 financial crisis, China, India and many other developing economies continued to post strong growth, helping to prevent the world economy from tumbling into an even deeper and more painful downturn. As the U.S. and Europe struggled to recover, talk that the giants of the developing world were destined to take their place at the top of global economic and political affairs accelerated.

Now, however, with the opening of 2014, many emerging markets look like they’re the ones that need saving. Investors are fleeing markets from Latin America to Asia, tanking currencies, stocks and sentiment. The good money is now betting on the once battered advanced nations. While stock markets in the U.S. and Japan have soared, those in the developing world have slipped. Continue reading

US taper risks fresh crisis, says Deutsche Bank

Deutsche Bank says policymakers have become so used to “throwing liquidity” at structural problems that asset prices had become distorted and risked triggering a fresh crisis

Scaling back the Federal Reserve’s massive bond-buying programme risks throwing the global economy into disarray next year, Deutsche Bank has warned, with lenders unable to cope with higher borrowing costs, despite stronger economic growth. Continue reading

Wider use of RMB abroad opens prospects for banks and SMEs

The growing stature of the Chinese yuan in global trade and finance has brought exciting opportunities in yuan-related businesses, said Standard Chartered Group CEO Peter Sands in Beijing on Tuesday.

The renminbi is now among the most actively traded currencies in the world as the Chinese government moves to make it easier for the yuan to flow across its borders.

“We are very excited at the prospects of the renminbi becoming even more integrated into the global economy,” said Sands, who is accompanying British Prime Minister David Cameron on his second visit to China since taking office. Continue reading

This one number explains how China is taking over the world

Whether it’s the renminbi/yuan or the Euro, for example, the world could indeed live on without the Dollar and has already created a way to circumvent it — just as the BRICS nations are attempting to launch their own internet system, separate from the currently U.S. dominated version. This article serves as a case-in-point.

RMBChart

 

An announcement Tuesday by the obscure-sounding Society for Worldwide Interbank Financial Telecommunication, better known as SWIFT, may not get much ink. China’s currency, it reported, was used in 8.66 percent of global trade finance transactions in October, the group said. It’s now the No. 2 most widely used currency for trade finance, supplanting the euro.

But that is a lot more important than it might sound. It gives an important window into how the global economy is changing–and why America’s long reign of economic dominance is at risk. Continue reading

Hartz IV for Everyone

BERLIN/BRUSSELS/WASHINGTON (Own report) – New records in German foreign trade are provoking massive international criticism of Berlin’s concentration on exports. According to reports, the German economy has achieved a foreign trade surplus of 20.4 billion Euros in September – a new record. It is estimated that for 2013, German companies’ exports will exceed by around 200 billion Euros the amount imported. That is the world’s highest national import-export gap. Protests are growing because many of the customer countries for German products thereby are driven into debt, as was the case in the crisis countries of the southern Euro zone. Other than the EU Commission threatening Berlin with an official reprimand, the US Secretary of Finances is accusing the German government of threatening the stability of the global economy. The IMF is also emphatically insisting that Germany rein in its export offensive. It is based on the low-wage policy, initiated by the SPD-Green government coalition – and continued by the CDU-SPD grand coalition – which provides a decisive competitive advantage to German industry. During those administrations, Germany was the sole EU nation with decreasing real wages. Continue reading

China, Europe Agree on Currency Deal

China entered into a sizable currency swap deal with the eurozone this month that represents a stride toward establishing the yuan and euro as key world currencies. The agreement also means fewer U.S. dollars will be used in commerce between China and Europe.

“The agreement is one of the largest currency deals between China and a non-Asian trading partner,” Alanna Petroff wrote for CNN Money on October 10. Continue reading

U.S. opens door to Chinese investors

The United States faces a massive US$8 trillion infrastructure investment bill, and is courting Chinese investors since many of its own local governments are in financial difficulties, according to a US Chamber of Commerce report.

“The US is poised to undertake the most significant expansion and modernisation of its infrastructure since the 1950s,” the chamber said in its report.

“This is taking place in the context of significant pressure on federal and local budgets. The pressing need for capital to modernise US infrastructure is creating substantial new opportunities for Chinese investors.” Continue reading

Ned Goodman:The dollar is about to be dethroned as the world’s de facto currency (Video)

The Fed will very likely never ‘taper’.  If so, there will be a bond sell off which would quickly spiral out of control. Quantitative easing, or QE, will be permanent until it eventually causes a collapse.

The Fed not tapering is also supported by Egon von Greyerz, the founder of Matterhorn Asset Management in Switzerland, in an interview just two days ago.

The ‘day of reckoning’ is indeed coming. The question is not if, but when.

On Sept. 15, Canadian billionaire Ned Goodman spoke at the Cambridge House regarding the U.S. dollar, and the state of the Western economies. In his nearly eight minute speech, the 75 year old CEO of Dundee Capital Markets and Chancellor of Brock University painted a picture of the upcoming change in reserve currency control by the U.S., and how the dollar will soon be replaced as nations around the world rush to get rid of their currency reserves.

Ned Goodman: In my view, the dollar is about to become dethroned as the world’s de facto currency. I’ll tell you how I came to that conclusion so quickly… the new President of China, Xi Jinping, his first visit on the day of his becoming President, was at his request to meet with Mr. Putin. And he immediately made a deal with Mr. Putin to get all the oil that he needs, which he can buy in Renminbi.

We’re headed to a period of stagflation, maybe serious inflation, but stagflation for sure, and the United States will be losing the privilege to print at its will, the world’s reserve currency. A period that’s going to be very inflationary, and I can tell you that before that happens, it is likely that it is going to get quite ugly. – Ned Goodman, Cambridge House Continue reading

“Major Shortage Of Physical Gold” Has Fed Greatly Concerned

As the world awaits the Fed’s decision, today a 42-year market veteran told King World News there will be no tapering and that the gold will soar “after the Fed has surprised the market tomorrow.”  Greyerz also warned KWN that to further complicate matters for the Fed, there is a “major shortage of physical gold” ahead of their decision.  Below is what Egon von Greyerz, who is founder of Matterhorn Asset Management out of Switzerland, had to say.

Greyerz:  “Eric, it is important to consider what the truly important factors are that will determine what will happen to the world, its people, and to the global economy.  If we look around, what do we find?  We find a world that is financially, politically, and morally bankrupt. Continue reading

MARC FABER: Not Even Gold Will Be Able To Save You From What Is Coming

When you print money, the money does not flow evenly into the economic system. It stays essentially in the financial service industry and among people that have access to these funds, mostly well-to-do people. It does not go to the worker. I just mentioned that it doesn’t flow evenly into the system. Continue reading