Iran Sanctions Are Damaging The Dollar

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Painful sanctions on Iran have demonstrated the long reach of the U.S. Treasury, forcing much of the globe to fall in line and cut oil imports from Iran despite widespread disagreement over the policy. Yet, we are only in the first few chapters of what may ultimately be a long story that ends with the erosion of the power of the U.S. dollar.

The role of the greenback in the international financial system is the reason why the U.S. can prevent much of the world from buying oil from Iran. Oil is traded in dollars, and so much of international commerce is based in dollars. In fact, as much as 88 percent of all foreign exchange trades involve the greenback. Continue reading

Meet Turkey’s New Sovereign Wealth Fund Chairman, Who Has “Now Taken Public Companies Prisoners”

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What does a man who already controls pretty much everything in his country  from politics to the judiciary to defense  give to himself? How about direct takeover of his country’s sovereign wealth fund?

President Recep Tayyip Erdogan has appointed himself chairman of Turkey’s sovereign wealth fund after recent promises to exert greater influence over the economy. He’s nixed the old guard management and hand-picked their replacements, in a move his political rival, presidential candidate who lost the June election, Muharrem Ince, has aptly described as taking “public companies prisoners”.

And not to be one to break medieval sultanate tradition, he’s further named his son-in-law and Finance Minister Berat Albayrak as deputy chairman. Continue reading

The Global Financial System Is Unraveling, and No, the U.S. Is Not Immune

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The “recovery”/Bull Market is in its 10th year, and yet central banks are still tiptoeing around as if the tiniest misstep will cause the whole shebang to shatter: what are they so afraid of?

The cognitive dissonance/crazy-making is off the charts:

On the one hand, central banks are still pursuing unprecedented stimulus via historically low interest rates, liquidity and easing the creation of credit on a vast scale. Some central banks continue to buy assets such as stocks and bonds to directly prop up the “market.” (If assets don’t actually trade freely, is it even a market?) Continue reading

Is the “Melt-up” Back?

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Nothing remains of February’s correction but a quaint memory.

The stars are back in their courses… the angels are back on duty… and the Perfections are back within sight.

Both the S&P and Nasdaq have returned to record highs, while the Dow Jones is within an ace of its own.

More good cheer came by way of the Commerce Department yesterday…

Its bean counters inform us that second-quarter growth exceeded its own original 4.1% reading. Continue reading

Iran Sanctions, Emerging Markets And The End Of Dollar Dominance

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The trade war is a rather strange and bewildering affair if you do not understand the underlying goal behind it. If you think that the goal is to balance the trade deficit and provide a more amicable deal for U.S. producers on the global market, then you are probably finding yourself either confused, or operating on blind faith that the details will work themselves out.

Case in point, the latest reports that the U.S. trade deficit is now on track to hit 10-year highs, after a 7% increase in June. This is the exact opposite of what was supposed to happen when tariffs were initiated. In fact, I recall much talk in alternative media circles claiming that the mere threat of tariffs would frighten foreign exporters into balancing trade on their own. Obviously this has not been the case. Continue reading

Greece’s Bailout May Be Over, but Not Its Economic Woes

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A ripped off Greek national flag flutters in central Athens on July 22, 2015. (Louisa Gouliamaki/AFP/Getty Images)

 

Underlying obstacles to job creation and entrepreneurship remain

After eight years, Greece has finally exited bailout territory, and the European Union is making a strong case that the program was a success.

While Greece may have ended the bailout process, the underlying issues that wrecked its economy in the first place remain largely intact. Continue reading

Will Impeachment Make the Market Decline?

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Trump has said that if he left office, the stock market would decline. Those who are against Trump have actually made comments like: “It’s a ridiculous remark — the kind of thing a Latin American dictator or a Middle Eastern strongman would say to keep supporters in line.” This was carried by CNBC and all this is, is opinion and they then market that as fact. We cannot address such issues from a personal opinion perspective. Why have I said it would create volatility and disrupt the world economy? Simply said, history repeats. Continue reading

Erdogan Warns Trump That Alliance Is at Risk as Tensions Climb

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U.S. President Donald Trump, left, walks with Recep Tayyip Erdogan, Turkey’s president, ahead of an event in in Brussels, Belgium. (Photographer: Marlene Awaad/Bloomberg)

 

(Bloomberg) — Turkey’s President Recep Tayyip Erdogan warned the U.S. that its decades-long alliance with the country is at risk after rising political tensions between the two nations erupted and helped stoke a financial crisis that shook global markets.

Erdogan, in an editorial Friday in the New York Times, cited Turkey’s cooperation with the U.S. dating back to the Cuban missile crisis and the Korean War as evidence of a long-standing partnership between the NATO allies. But he added that more recent disputes over a failed 2016 coup, the conflict in Syria and sanctions imposed this week against top Turkish officials and the country’s steel industry were straining that alliance to its breaking point.

“Before it is too late, Washington must give up the misguided notion that our relationship can be asymmetrical and come to terms with the fact that Turkey has alternatives,” Erdogan wrote. “Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies.” Continue reading

Turkey Default Risk Spikes to 2008-2009 Crisis Levels; Possible Contagion, Warns Russell Napier

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Source: Bloomberg, Financial Sense® Wealth Management. Past performance is no guarantee of future results.

 

All focus is on Turkey right now as their currency goes into freefall and 5-year credit default swaps (insurance against default) have now spiked to levels last seen during the 2008-2009 financial crisis. Continue reading

Americans Live In A World Of Lies

The US government and the presstitutes that serve it continue to lie to us about everything. Today the Bureau of Labor Statistics told us that the unemployment rate was 3.9%. How can this be when the BLS also reports that the labor force participation rate has declined for a decade throughout the length of the alleged economic recovery and there is no upward pressure on wages from full employment. When jobs are plentiful, people enter the labor force to take advantage of the work opportunities. This raises the labor force participation rate. When employment is full—which is what a 3.9% unempoyment rate means—wages are bid up as employers compete for scarce labor. Full employment with no wage pressure and no rise in the labor force participation rate is impossible. Continue reading

Maduro admits failure: ‘No more whining . . . We need to make Venezuela’ (great again)

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During a speech in which the power went out while he was on live television, Venezuela’s socialist president admitted his economic model has “failed.”

“The production models we’ve tried so far have failed and the responsibility is ours, mine and yours,” President Nicolas Maduro told his ruling PSUV party congress on July 30. Continue reading

IRGC Chief Calls Out Rouhani Over Iran’s Economic Woes

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(Photo Credit: Radio Liberty)

 

Maj. Gen. Mohammad Ali Jafari is demanding immediate action to stop the rial’s freefall.

In an exceedingly rare public rebuke, the head of Iran’s Islamic Revolutionary Guards Corps has called out his country’s president, Hassan Rouhani, demanding that he do more to gain control of the nation’s economy, which appears to be in a rapid death spiral ahead of implementation next week of the first round of U.S. sanctions. Continue reading

Iran’s currency plummets further to 112,000 rial per dollar

The Iranian rial plunged to 112,000 for each US dollar Sunday on unofficial markets, a further decline from 97,500 rials on Saturday. Another 29 people were arrested on charges of disrupting the economy and corruption. With tougher sanctions in store, the outlook is bleak. Continue reading

Russia Is Preparing For A “Perfect Storm” In The Global Economy

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In recent months, Russia – some claim – has “strenuously prepared for Putin’s meeting with Trump”.

What does this mean?

Firstly, in April the Central Bank of the Russian Federation dumped nearly a half of US Treasuries that it had on its balance sheet, reducing their stock from $96.2 billion to $48.7 billion. Continue reading

Prepare for a Chinese Maxi-devaluation

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The news is being dominated by breathless headlines about the new trade war between the U.S. and China. But this trade war has been brewing for years and came as no surprise to readers of my newsletter, Project Prophesy. In fact, the new trade war is simply a continuation of the currency wars that began in 2010.

I’ve warned for over a year that President Trump’s threats of tariffs should be taken seriously, while most of Wall Street discounted Trump’s talk as mere bluster. Now the trade wars are here as we expected, and they will get much worse before they are resolved.

Currency wars arise in a condition of too much debt and too little growth. Economic powers try to steal growth from their trading partners by devaluing their currencies to promote exports and import inflation. Continue reading