Not Ready for a Real War

While on his way to the African Land Forces Summit in Tanzania last weekend, Gen. Mark A. Milley, the U.S. Army Chief of Staff, complained that “Today, a Major in the Army knows nothing but fighting terrorists and guerrillas, because he came into the Army after 9/11. But as we get into the higher-end threats, our skills have atrophied over 15 years.” According to the New York Times, the Army’s top commander expressed concern over whether his forces could fight a large land war where an “established adversary” (meaning a rival national power) could bring sophisticated air defenses, tanks, infantry, naval power and even cyber-weapons into battle. He apparently left out the threat of enemy air power, though both Russia and China are capable of challenging the U.S. and its allies in that arena as well.

Washington, China, and the Rise of the Renminbi: Are the Dollar’s Days as the Global Reserve Currency Numbered?

Abstract

The U.S. dollar has dominated the international monetary system since the end of World War II. While the U.S. economy has generated weak growth since 2009, and accumulated a large sovereign debt, the dollar’s status as an international medium of exchange and reserve currency has not diminished. The Chinese renminbi (RMB), however, barely visible in international trade or financial flows just three years ago, appears to be blossoming. China is now the world’s largest trading nation, and more corporations, particularly in Asia, are beginning to invoice their business in RMB. The Chinese regime is calling for a reform of the international monetary system to expand the internationalization of the RMB. Speculation has begun about whether the U.S. dollar could be supplanted by the RMB. Such a development would jeopardize the enormous economic advantages that the U.S. has enjoyed by possessing the world’s dominant currency. Moreover, it would signal a relative decline in American prestige and global leadership. The answer to the dollar’s potential decline is not to seek obstacles to China’s or any other nation’s economic success, but to change fiscal and monetary policies at home in order to maintain the dollar’s competitiveness.The U.S. dollar has dominated the international monetary system for approximately 70 years. While the U.S. economy has generated weak growth over the past six years and accumulated a large sovereign debt, the dollar’s status as an international medium of exchange and reserve currency (currency held by foreign central banks) has defied the odds and has not diminished.

Study finds contaminants in California public-water supplies

SAN FRANCISCO Nearly one-fifth of the raw groundwater used for public drinking water systems in California contains excessive levels of potentially toxic contaminants, according to a decade-long U.S. Geological Survey study that provides one of the first comprehensive looks at the health of California’s public water supply and groundwater.

One of the surprises in the study of 11,000 public supply wells statewide is the extent to which high levels of arsenic, uranium and other naturally occurring but worrisome trace elements is present, authors of the study said.

Public-water systems are required to bring many contaminants down to acceptable levels before supplying customers. But the findings highlight potential concerns involving the more than 250,000 private wells where water quality is the responsibility of individual homeowners, state officials said.

“The Greek Endgame Is Here”: Probability Of IMF Default Now 70%, Says Deutsche Bank

As the farcical negotiations between Greece and its creditors unfold ahead of a June 5 IMF payment and as Alexis Tsipras is forced to spread false hope just to avoid a terminal bank run, a picture of the Greek endgame has emerged.

We’ve discussed the political implications of both an agreement or a Grexit and we’ve also taken an in-depth look at what a missed IMF payment means for the country’s EU creditors. On the political front, the troika is intent on sending a strong message to leftist political parties (such as Spain’s Podemos and Portugal’s “ascendant” socialists) that using the threat of a euro exit as a way to extract austerity concessions is not a viable negotiating strategy. What this amounts to is an attempt on the part of the “institutions” to subjugate the political process to economics. In terms of skipping a payment to the IMF — who, as a reminder, effectively paid itself earlier this month by allowing Greece to tap its SDR reserves to pay the bills — there are a number of cross acceleration concerns which you can review by referring to the following graphic:

Greece raids IMF emergency account to avoid unprecedented default

And they’re already another two weeks away from running out of cash. The can can’t be kicked down the road forever.

 

Athens is forced to tap reserves at an escrow account at the IMF after reports suggest the Fund will not participate in a fresh Greek bail-out

Greece avoided an unprecedented default to the International Monetary Fund today after raiding an emergency cash account at the Fund, in a major sign the country is edging ever closer to stiffing its senior creditor.

Athens tapped €650m from an escrow account at the IMF, scraping together a further €100bn in cash reserves to avoid going into arrears, said Syriza MP Dimitris Vitsas.

China Looking To Reposition Renminbi As Global Currency

China has already made its aim to establish the renminbi as a global currency, possibly even replacing the American dollar as the world’s reserve currency. Recent moves to ramp up the gradual liberalization of the renminbi, which is currently allowed to trade only within a narrow trading band, and other actions suggest that China may be preparing for a major push to establish its currency as a major global reserve currency.

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Traditionally speaking, the American dollar has acted as this reserve currency. The dollar is the most widely used currency in the world, and most commodities, such as oil, are priced in dollars. Many countries keep huge dollar reserves on hand to facilitate trade. China, for example, is believed to have some 3.2 trillion dollars worth of reserves. Even the tiny city-state Singapore has over 250 billion dollars in reserves.

The “Fracking” Revolution Comes to China

With some predicting China will import 79% of its oil by 2030, could domestic shale gas extraction help China meet its energy needs?

As shale gas fever sweeps through Beijing, analysts are looking at the costs and benefits of extracting what is increasingly a controversial source of energy. But for China, with its growing middle class, the immediate and long-term demand for energy has the potential to spark a revolution in shale gas before sufficient and safe technological know-how and regulations are developed.

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The emergence of shale gas is a game changer. Countries that have traditionally relied on hydrocarbon exports for political clout (the Persian Gulf, Russia, Venezuela) will inevitably lose some of their petro power. Europe could become less energy dependent on Russian supply by importing liquid natural gas (LNG) from North America and by exploiting the potentially significant shale gas deposits in Poland and other countries. Australia, which has significant deposits and much of the pre-existing infrastructure to begin extraction, could see its clout in the energy politics of the region increase– forcing a significant redraft of Canberra’s “Australia in the Asian Century” White Paper.

Exclusive: U.S., Britain to agree emergency oil stocks release

A formal request from the United States to the UK to join forces in a release of oil from government-controlled reserves is expected “shortly” following a meeting on Wednesday in Washington between President Barack Obama and Prime Minister David Cameron, who discussed the issue, one source said.

Full article: Exclusive: U.S., Britain to agree emergency oil stocks release (Reuters)