A Transmission Belt of German Supremacy

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ROME/BERLIN (Own report) – German politicians and media are intensifying pressure on Rome in anticipation of today’s EU Commission verdict on Italy’s national budget. Already last week, EU Budget Commissioner Günther Oettinger announced, in reference to the Italian deficit, that the Italian government must “correct” its draft budget. Media reports refer to a “black week” for Rome. Negative reporting – like rating agencies’ devaluation of Italy’s creditworthiness – can contribute to the destabilization of Italy’s financial and credit markets. The country’s current downward spiral threatens to re-escalate the banking crisis. Whereas Berlin insists that the EU take sharp measures against deficits, Germany’s Finance Minister at the time, Wolfgang Schäuble had prevented the EU Commission from taking measures against excessive surpluses, which the commission sees as potentially just as destabilizing. Germany has been achieving these surpluses year after year.

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Italy Declares War on Merkel and the EU

Italy Declares War on Merkel and the EU

 

If there were ever any doubts that the leaders of the Euroskeptic coalition that now runs Italy has a plan to defy the European Union its proposed budget should quell them. Both Deputy Prime Ministers, Luigi Di Maio of Five Star Movement and Matteo Salvini of The League, were adamant about locking horns with European Union leadership over all issues of sovereignty between now and May’s European Parliamentary elections.

Their budget proposal which included both tax cuts and universal income blew past the EU budget limit of 2.0% of GDP, coming in at 2.4%. It has put their Finance Minister, Giovanni Tria, in a difficult position because Tria doesn’t want to negotiate this budget with Brussels, preferring a less confrontational, read more pro-EU, approach. 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

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

BRICS in a multipolar world

This week, South Africa is hosting the 10th annual gathering of BRICS (Brazil, Russia, India, China, and South Africa). When the first BRIC summit was held in 2009 (South Africa was added in 2010), the world was in the throes of a financial crisis of the developed world’s making, and the increasingly dynamic BRIC bloc represented the future. By coming together, these countries had the potential to provide a geopolitical counterweight to the West.

But Western commentators have long underestimated that potential, forcing BRICS to demand greater representation in global-governance institutions. In 2011 and 2012, BRICS challenged the process of selecting leaders at the International Monetary Fund and the World Bank. But, lacking a united front behind them, a European (Christine Lagarde) and an American (Jim Yong Kim) continued to preside over those organizations. And though BRICS did get these institutions to reform their voting structures to give developing countries greater weight, the US and Europe still wield disproportionate power. Continue reading

IMF: Venezuela’s inflation could top 1 million percent by end of 2018

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One million Venezuelan bolivar is today worth just over $8.

 

Inflation in Venezuela could top 1 million percent by the end of this year, according to the International Monetary Fund (IMF).

Shortages in food, water, medicine and electricity, as well as high crime, plague millions of Venezuelans, said Alejandro Werner, head of the IMF’s Western Hemisphere department. Continue reading

The U.S. Dollar: A Victim of Its Own Success

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America’s most powerful weapon of war does not shoot, fly or explode. It’s not a submarine, plane, tank or laser. America’s most powerful strategic weapon today is the dollar.

The U.S. uses the dollar strategically to reward friends and punish enemies. The use of the dollar as a weapon is not limited to trade wars and currency wars, although the dollar is used tactically in those disputes. The dollar is much more powerful than that.

The dollar can be used for regime change by creating hyperinflation, bank runs and domestic dissent in countries targeted by the U.S. The U.S. can depose the governments of its adversaries, or at least blunt their policies without firing a shot. Continue reading

The Road to War: China vs the US

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In 2016 Steve Bannon, President Donald Trump’s former chief strategist, declared that there was no doubt, in his mind, that the US would go to war with China in the South China Sea in the next five to 10 years.

A US-Chinese military conflict would be on top of a vow by Trump in his inaugural presidential address, to not only take on radical Islamic terrorism but to “eradicate it from the face of the Earth.” This would be done by building up America’s already supreme military. “Our military dominance must be unquestioned,” the billionaire businessman, who now controlled the most powerful political office in the world, declared in his first address to the nation.

A year and a half after that speech, the United States is not at war with China, but its economic saber-rattling is arguably the beginning of a confrontation between the world’s largest and second-largest economies. Trump’s tariff threats against not only China but Europe, Canada, Mexico and its other trade partners, are also symbolic of a shift in US foreign policy towards a more isolationist stance – one that may not strictly be due to Trump’s belligerent personality. This article will get into the antecedents of this economic and military showdown and point the way to some possible future scenarios, including a war in space. Continue reading

Leaked Chinese Memo Warns Of “Thucydides Trap” With US, “War Is Unavoidable”

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A series of leaked internal documents reveal that China’s military reforms are aimed at allowing Beijing to “manage a crisis, contain a conflict, win a war” and overtake the United States in military strength, according to the Express.

The leaked documents were published by the Central Military Commission in February for the purpose of spreading President Xi Jinping’s “thought on strengthening the armed forces”.

If the reforms go ahead, they will lead to heightened tensions with China’s neighbouring countries, including Japan, in the East and South China Seas and the US. –Express Continue reading

Trade war threats get real as US and China impose tariffs

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Donald Trump has turned his threats of a trade war into reality. (Photo: AP)

 

US President Donald Trump fired the biggest shot yet in the global trade war by imposing tariffs on $US34 billion ($46 billion) of Chinese imports. China immediately said it would be forced to retaliate.

The duties on Chinese goods started at 12:01 am Friday in Washington (2:01 pm AEST), which was just after midday in China. Another $US16 billion of goods could follow in two weeks, Trump earlier told reporters, before suggesting the final total could eventually reach $US550 billion, a figure that exceeds all of US goods imports from China in 2017.

US customs officials will begin collecting an additional 25 per cent tariff on imports from China of goods ranging from farming plows to semiconductors and airplane parts. China’s officials have previously said they would respond by imposing higher levies on goods ranging from American soybeans to pork, which may in turn prompt Trump to raise trade barriers even higher.

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Eurocracy

All roads continue to lead to Berlin, the powerhouse that runs and dictates Europe’s future. In this case, Berlin is spearheading an effort to keep Italy subjugated before an economic crisis (it’s already capitalizing off of) gets politically out of hand as it did in Greece, which is now a German vassal state. It’s Germany’s goal to create a United States of Europe and economic levers are but one tactic in harmonizing Europe how it sees fit in achieving that end.

 

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ROME/BERLIN (Own report) – Following massive complaints from Germany, Italy’s President Sergio Mattarella blocked a euroskeptic from becoming his country’s finance minister, appointing an IMF man – favored by Berlin – to be prime minister. The democratically elected 5-Star Movement (M5S) and the far-right Lega Nord majority’s opportunity to form a government was thereby denied. Euroskeptic Paolo Savona, a renowned career economist, was rejected because he could not have insured the maintenance of the EU’s common currency. Under his administration, resistance to Berlin’s austerity dictate could have been expected, whereas the newly appointed Prime Minster Carlo Cottarelli passed the test a few years ago as the Rome government’s austerity commissioner (“Mr. Scissors”). Savona’s nomination is the result of Italy’s growing euroskepticism, which, in the meantime, is also shared by other economists. “Germany profits, Italy loses” through the introduction of the euro, concludes Savona’s alternative candidate to the post of finance minister.

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US cannot stop China’s innovation advancements

It would appear that the US is seriously worried about China’s technological advancements. Fearing the loss of the last comparative advantage over the Asian superpower has caused a genuine concern over national defense and competitiveness among America’s ruling elite.

The US using every possible means to curb Asia’s technological rise, including the banning of sales of essential chips to ZTE for seven years, invoking Section 301 of the Trade Act to investigate China’s “unfair trade practices” and barring investment in the information-technology sector. The Donald Trump administration’s target might be the Asian power’s “Made in China 2025”, a strategy meant to make China self-sufficient in an array of technologies.

The 301 investigation was meant to slow down China’s technological advancements by imposing stiff tariffs on a host of Chinese imports and barring the sales of US technology to Chinese firms. In addition, the anti-China faction of the US Congress and the Trump administration have barred Chinese investment in technology sectors. Continue reading

U.S. Hints at China Truce as World Warns of Trade-War Threat

Mnuchin speaks during a briefing at the IMF spring meetings April 21. Photographer: Andrew Harrer/Bloomberg

 

  • Treasury’s Mnuchin considers China trip amid trade dispute
  • China’s Commerce Ministry confirms U.S. has requested visit

U.S. Treasury Secretary Steven Mnuchin said he’s considering a trip to China amid a trade dispute with Beijing that finance chiefs warn could derail the global economic upswing.

Mnuchin said he’s “cautiously optimistic” of reaching an agreement with China that bridges their differences over trade. Continue reading

Turkey Will Repatriate All Gold From The US In Attempt To Ditch The Dollar

 

After VenezuelaGermanyAustria and the Netherlands prudently repatriated a substantial portion (if not all) of their physical gold held at the NY Fed or other western central banks in recent years, this morning Turkey also announced that it has decided to repatriate all its gold stored in the US Federal Reserve and deliver it to the Istanbul Stock Exchange, according to reports in Turkey’s Yeni Safak. It won’t be the first time Turkey has asked the NY Fed to ship the country’s gold back: in recent years, Turkey repatriated 220 tons of gold from abroad, of which 28.7 tons was brought back from the US last year.

According to the latest IMF data, Turkey’s gold reserves are estimated at 591 tons, worth just over $23 billion. This makes Ankara the 11th largest gold holder, behind the Netherlands and ahead of India. Continue reading

America’s “Actual” GDP: The Shocking Truth

 

Saturday last we offended the pieties.

We reckoned that democracies — being shortsighted — tend toward vast accumulations of debt.

In response, reader Tom B. dealt with us as follows:

The committed ignorance of pseudointellectual arrogance and their refusal to take an economics class on the uses of the FIAT dollar is stunning! It’s the reason Warren Buffet [sic] smiles every time “financial experts” demagogue debt!

Congrats, Daily Reckoning, you’re consistently ignorant!

It is with high honor that we accept Tom’s congratulations.

True consistency is a rare feat in this world… even if consistently ignorant. Continue reading