Turkey, ‘Axis of Gold’ and the End of US Dollar Hegemony

 

Introduction

With a ‘Hard Brexit’ looking more likely and Trump’s inauguration this week, 2017 is well and truly under way.

What we expect the year to hold is probably not even half of what it really will. But from what we know, the upcoming French and German elections, referendums, geopolitical crises, steps towards reverse globalisation and a third of global government debt yielding negative interest rates, governments are already prompting central banks and investors to turn to the one asset that has survived millennia of financial and monetary crises.

One that is highly liquid and convertible into other currencies – gold.

Change of French presidents weakens Western front against nuclear Iran

The outgoing French President Nicolas Sarkozy spoke more forcefully and frankly than any other Western leader about the real danger of a nuclear-armed Iran and accepted that it would have to be tackled by military action. He was also stood out as one of the few French leaders of recent times prepared to fight for French and Western Middle East interests.

The role of French special forces, navy and air forces, alongside US and British forces, was pivotal in the campaign to overthrow Libya’s Muammar Qaddafi. In recent weeks, he placed French units on standby in case President Obama decided to intervene in Syria. In the event, the US president pulled back from an operation that was planned to have involved Saudi and GCC armies as well.

France’s successful military showing in the Libyan war brought no political or economic rewards. Indeed, Paris shelled out a million dollars it could ill afford to pay for it. Sarkozy’s opponent Francois Hollande did not make this an issue in his campaign, but it was certainly not lost on the French voter. The French Muslim voter no doubt settled scores with Sarkozy for his ban on the veil and pro-Israeli policies and may even have cost him the presidency, although this issue too did not come to the fore in electioneering.

Full article: Change of French presidents weakens Western front against nuclear Iran (DEBKAfile)

This is Germany’s Moment!

It appears the current phase of Europe’s debt crisis is entering its last hour. We’ll know soon, but it’s possible the weekend of May 5, 2012, will be remembered as a transformative moment in the history of Europe.

Once again, the nation at the center of it all is Germany.

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Finally, there’s the run-off presidential election in France, which could have enormous impact on Germany and Europe. From the moment the debt crisis began in 2008, the responsibility of fixing it has rested primarily on the German-French axis. Truth be told, President Sarkozy’s main responsibility has been to embrace the solutions coming from Berlin, giving them added legitimacy in the eyes of Europe and the rest of the world.

If Socialist candidate Francois Hollande is elected, Germany loses its French toady.

That’s not all. When it comes to solving Europe’s debt woes, Hollande’s view is the antithesis of that of Angela Merkel and German public opinion. He’s already stated that he won’t support the fiscal pact as it currently exists. When it comes to Europe’s finances, he said last week, “It’s not for Germany to decide for the rest of Europe.” He also believes that instead of austerity, the solution to Europe’s debt woes is printing and spending more money. “So many people in Europe are waiting for our victory,” he said recently, “I don’t want a Europe of austerity, where nations are forced on their knees.”

Read between the lines of that statement. This man isn’t merely campaigning for leadership of France, he’s making a play for leadership of Europe. In another recent address, Hollande told supporters that “the people of Europe expect that we, the people of France, will provide Europe with another perspective, another direction, another orientation.”

They say Hollande lacks personality and charisma. Well, he makes up for it in audacity. He sincerely believes the rest of Europe wants him elected so France can replace Germany at the helm of Europe!

That’s never going to happen. France lacks both the financial health and political muscle to replace Germany as the arbiter of this crisis. Nevertheless, France’s dissension under Hollande could throw Europe into financial and political turmoil. Der Spiegel reported recently that “for France’s neighbors and the fight against the sovereign debt crisis in Europe,” Hollande’s election “will set everything back to square one.”

As you can see, Europe’s financial crisis isn’t even close to being over—though it is likely entering a new, more exciting, more dramatic, more sobering chapter!

It’s possible, likely even, that the convergence of these events—the widespread resistance to German-imposed austerity, the renaissance of nationalism, Spain’s imminent default, the collapse of the Dutch government, and the inconveniently timed national elections in Greece and France—will produce a moment of historic importance. As this unfolds, don’t take your eyes off the nation at the center of it all.

As Ambrose Evans-Pritchard wrote, “The epicenter of Europe’s political crisis may soon be Germany itself.”

We must watch for Germany’s response. It will have a colossal impact on Europe, and on the rest of the world.

Full article: This is Germany’s Moment! (The Trumpet)

Collapsing Europe is in crisis and the U.S. bailout option, for once, is not available

Despite the fact that Europe is in the Northern Hemisphere, the downward swirl of the euro this month took a reverse direction and started going left — counterclockwise. Maybe it is the first part of the Mayan prediction that gravity will fail later this year and we will all go flying off into space. But certainly it indicates that the euro crisis is still very much with us — and deepening. Political developments further diminish chances for a settlement — if attainable at all — without a breakup, perhaps of the European Union itself and not just the countries using the euro.

The erosion of the Schengen Agreement, which permitted free movement within the EU, is an important indicator of how far the political situation has deteriorated. Opposition to free movement as a fundamental principle of European integration is fueled by rising unemployment, growing xenophobia, as well as legitimate concern that Western Europe will continue to be flooded with illegal immigrants from North Africa, sub-Saharan Africa and South Asia.

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With a quarter of Spain’s workforce unemployed — approaching 50 percent among younger workers — providing a tough test for the conservative government’s belt-tightening, the rating agencies now call Madrid an increasingly bad risk, raising the cost of refinancing debt. (Much of that debt was created by regional governments to which the former ruling Socialists gave free rein.) With Spain representing almost 5 percent of the EU’s gross domestic product, a bailout is beyond the present capacity of the European Central Bank to finance.

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Socialist presidential candidate Francois Hollande — if he wins the French runoff election — poses yet another threat, unless he could forget his campaign promises to blow his nation’s budget with new entitlements. A France headed back into higher subsidies, more protectionism and more voter-purchasing welfare would be a crushing blow for the European unification that Paris had done so much to sponsor since World War II.

The U.S., always the essential midwife to postwar European reconstruction, stability and prosperity, is turning inward in one of its most bitterly fought presidential contests in generations. Spain’s role as the second-largest foreign investor in Latin America after the U.S. has implications for American exports — just one small example of the bad news for the American economy as Europe’s troubles deepen.

The Obama administration’s strategy of “leading from behind” is less than adequate to help the EU, the world’s largest economy, in its hour of crisis. But facing its own domestic economic problems in an acute stage, even a Romney administration would, at least early on, have to give European issues lower priority — no matter how much they would impinge on the U.S. economy and American security.

 

Full article: Collapsing Europe is in crisis and the U.S. bailout option, for once, is not available (World Tribune)

France Holds Round One of Presidential Election

Voters in France are casting ballots for their favorite among 10 candidates vying to become the country’s next leader.  A second-round face-off is likely between incumbent President Nicolas Sarkozy and Socialist Francois Hollande.  VOA’s Lisa Bryant talks with voters in Aulnay-sous-Bois, one of dozens of poor, immigrant-heavy Paris suburbs where many residents feel the candidates have ignored them.

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But Hermemin believes Sarkozy will likely be elected to a second term.  He says Hollande lacks leadership experience, which France’s current president has shown during difficult economic times.

Full article: France Holds Round One of Presidential Election (Voice of America)