ECB Hands Italy An Ultimatum: ‘Obey EU Budget Rules Or We Won’t Save You’

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With the Washington Post stepping up to put a floor under US stocks Thursday afternoon by reporting that President Trump would meet Chinese President Xi Jinping at next month’s G-20 summit (while the headline soothed the market, it doesn’t change the fact that, as with everything involving the Trump administration, this too remains subject to change), investors have apparently overlooked the latest ominous headlines out of Italy. To wit, Reuters reported that the ECB won’t come to Italy’s rescue if its government or banks run out of cash unless the Italian government first secures a bailout from the European Union. Of course, this would almost certainly require that the populist coalition end its ongoing game of fiscal chicken with Brussels and abandon its  dreams of lowering the retirement age and extending a basic income to the Italian people – policies that would effectively secure a political future for M5S and the League. 

In effect, the ECB’s latest trial balloon is tantamount to blackmail: Either the Italians agree to fall back in line and obey European budgetary guidelines, or the central bank will sit back and watch as bond yields surge, providing the ratings agencies even more ammunition to cut Italian debt to junk – effectively guaranteeing a Greece-style banking crisis as the liquidity taps are turned off. Continue reading

U.S., Russia Vie For European Gas Dominance

Trump

 

WASHINGTON: U.S. legislation renewing and tightening sanctions on Russia, stalled in the House of Representatives, was not passed before the U.S. and Russian presidents met at the G20 summit in Hamburg. The proposed bill had already received criticism not only from Russia but also from Germany and Austria about the impact sanctions may have on Europe’s gas supply.

Europe and the United States need not worry: Energy markets have undergone significant transformation in favor of importers, and Russia’s tough talk warning against sanctions is little more than posturing. Russia needs Europe as a market for its oil and gas. Continue reading

China, Russia Alliance Deepens Against American Overstretch

 

– China and Russia allied on Syria and North Korea
– Beijing & Moscow economic & monetary ties deepen
– Trump needs Russia in order to maintain balance of power in superpower triumvirate
– Sino-Russian relations currently in their “best time in history” says Chinese President ahead of G20

– China, Russia call for calm diplomacy on Syria, Korea
– China, Russia “fed up with Washington’s pursuit of hegemony”
– US is “biggest source of global strategic risks” according to China state media
– Important calm and diplomacy prevails to prevent nuclear war

Last week a UN report stated that nationalism, protectionism and attitudes of “my country first” posed threats to the United Nation’s global goals. It seems that now more than ever Trump must get relations with the super powers, onto an even keel.

Trump is aware that the US has similar issues with Russia and that it must get Putin on side to a degree or at least neutral in order to confront the more powerful China. The US needs to work with President Xi Jinping on globally important matters such as North Korea. But there are elephants in the room which also must be confronted, namely currency manipulation, trade, climate change and deepening tensions in the South China Sea.

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Struggle for Influence in Africa

BERLIN (Own report) – Overshadowed by the dispute on free trade and the Paris Climate Agreement, the German government has found acceptance for its Africa policy initiatives at the G20 summit in Hamburg. The G20 states in Hamburg have backed the “Compact with Africa” initiative, Berlin seeks to use for gaining new influence on the African continent. The “Compact” includes measures enabling industrial nations, such as Germany, to set their preferred conditions for investments in individual African countries. The German government has chosen Tunisia, Ghana and Côte d’Ivoire as its partners. Whereas Tunisia already serves as a low-wage site for German enterprises, Côte d’Ivoire is still under decisive French influence, something Berlin would like to change with the help of its “Compact for Africa.” In general, “Compact” is intended to help Germany intensify its economic influence in Africa, following all the failed attempts over the past few years. From the perspective of Germany’s establishment, time is running out because China, the rival on the global stage, has already risen to become the most important economic partner for numerous African countries.

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The ‘Inevitable War’ Between the U.S. and China

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Chinese soldiers of the People’s Liberation Army Navy stand guard in the Spratly Islands, known in China as the Nansha Islands, on February 10. The Spratlys are the most contested archipelago in the South China Sea. Stringer/Reuters

 

Roughly 15 years ago, a Chinese fighter jet pilot was killed when he collided with an American spy plane over the South China Sea. The episode marked the start of tensions between Beijing and Washington over China’s claim to the strategic waterway. So in May, when two Chinese warplanes nearly crashed into an American spy plane over the same area, many in China felt a familiar sense of nationalist outrage. “Most Chinese people hope China’s fighter jets will shoot down the next spy plane,” wrote the Global Times, China’s official nationalist mouthpiece.

Though little talked about in the West, many Chinese officials have long felt that war between Washington and Beijing is inevitable. A rising power, the thinking goes, will always challenge a dominant one. Of course, some analysts dismiss this idea; the costs of such a conflict would be too high, and the U.S., which is far stronger militarily, would almost certainly win. Yet history is riddled with wars that appeared to make no sense. Continue reading

China’s Stealth Devaluation Continues Despite Lew Blasting “Unacceptable” FX Practices

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The US Dollar has traded within a relatively “stable” band against the offshore Yuan for much of the last six weeks…

But when compared to the collapse of the Yuan “basket” – as PBOC devalued against the rest of the major trading partners – the ‘stealth’ devaluation is obvious… Continue reading

It’s not checkmate yet: Beijing to counter US-led Trans-Pacific Partnership trade pact

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China to speed up talks on regional accord in face of landmark Trans-Pacific Partnership deal

China will seek to quicken the pace of its free-trade negotiations with other Asia-Pacific economies to counter a mammoth Washington-led trade pact in the region, observers say.

The United States and 11 other countries that in total make up 40 per cent of the world’s economy scored a landmark Trans-Pacific Partnership (TPP) deal in Atlanta on Monday.

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The Greatest Heist of All Time

An article from 2009 that couldn’t be more relevant today:

 

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Germany is conquering Europe without firing a shot.

Nov. 9, 1989, was a momentous day. It was the day the Berlin Wall came crashing down. The Soviet empire began to retreat from Europe, releasing the Continent from the clutch of communism.

Nineteen years later, another—possibly even greater—event shook the world, one that had a similar emboldening effect on Europe. The sudden collapse of America’s banking system in September 2008 opened the way for the emergence of a European economic superpower—and for the nation hijacking it.

Last fall, America stood in stunned silence as it witnessed the largest corporate bankruptcy in history (Lehman Brothers), the largest insurance company failure in history (American International Group) and the largest corporate seizure in the history of finance (Fannie Mae and Freddie Mac).

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Military Encounters Between Russia and the West on the Rise

Military encounters between Russia and the West have increased dramatically in recent months, according to a report released in early November. The report released by European Leadership Network (eln) documents 40 of Russia’s instigated incidents over the last eight months, and says military tension between nato and Russia has not been higher since the Cold War ended.

“These events add up to a highly disturbing picture of violations of national airspace, emergency scrambles, narrowly avoided midair collisions, close encounters at sea, simulated attack runs and other dangerous actions happening on a regular basis over a very wide geographical area,” the report’s executive summary states.

The world has been fixated on the Ukrainian crisis, but this report shows that Russian aggression extends far beyond the borders of Ukraine. Continue reading

US and China: The Fight for Latin America

According to Robert Valencia, China is vying for greater economic influence in Latin America, to include possibly constructing and operating an alternative ‘Panama Canal’ through Nicaragua. One unanticipated consequence of this burgeoning US-China rivalry, Valencia observes, is that it might push Latin American countries closer together.

During the first weekend of June, U.S. President Barack Obama and Chinese President Xi Jinping met in California to discuss cyber espionage and territorial claims in the Pacific Rim. While tension on these topics has hogged the headlines, the fight for influence in another area could be even more important—Latin America. Other emerging markets in Africa, where China has an overwhelming influence due to foreign direct investment in mining and oil, also offer economic opportunities, but Latin America has an abundance of natural resources, greater purchasing power, and geographic proximity to the United States, which has long considered Latin America as its “backyard.” Continue reading

Saudi Arabia may seek IMF sway in exchange for riches

Saudi Arabia, which has more than $500bn in foreign assets, may demand a greater share of voting rights at the International Monetary Fund in exchange for providing the lender with more money.

Saudi Arabia’s reserve position at the Washington-based fund more than doubled to SR18.2bn ($4.9bn) last year from SR7.4bn in 2010, according to Saudi central bank data. In 2007, it had a SR2.7bn position with the IMF, the data showed. The cost to insure Saudi debt on Jan 31 was less than half the Middle East sovereign average, according to data provider CMA.

The IMF’s Managing Director Christine Lagarde, who visits the kingdom’s capital on Feb 4, has urged members states to contribute $500bn in new lending resources to avoid a 1930s-style global depression. Saudi Finance Minister Ibrahim al-Assaf last week said that the world’s top oil exporter may be willing to raise its contribution to the fund.

“The Saudi government will be looking for a greater say in the disbursement and that is where the more difficult negotiations will take place,” Crispin B. Hawes, director for the Middle East and North Africa at the Eurasia Group, said by telephone from London.

The IMF is pushing China, Brazil, Russia, India, Japan and oil-exporting nations to be the top contributors, according to a G-20 official, who spoke on condition of anonymity last month because the talks are private. The fund wants a deal struck at the Feb 25- 26 meeting of G-20 finance ministers and central bankers in Mexico City, the official said.

Full article: Saudi Arabia may seek IMF sway in exchange for riches (Arabian Business)