Our country has been sowed with seeds of prosperity, harvested, and is now being hulled. The husk of America is being discarded and when the land is barren once again, will be bought for pennies.
I wish that we were as smart as one other nation and come to the realization that we have been victims of a criminal conspiracy. Kind of like Iceland did.
allstaractivist note: Due to the introduction of High-Frequency Trading in 1998 (not to mention the recent collapse of stock markets across the globe), the average investor really has no place in the markets anymore. There may be two sensible investments however, as part of a well diversified “safe haven” wealth protection scheme. Barring the worst case scenario of WWIII and fiat currency losing all value, (in which case physical or barter will rule) the traditional Currency ETF may be a smart move. With markets crashing all over the world though, choose your ETF wisely. The Swiss franc seems to be the safest for now. You can alternatively, invest in the HFT funds themselves (all two of them). Virtu (Virtu Financial Inc.VIRTU.S.: Nasdaq) is the most successful and has only lost money one single day out of six years. Their nearest competitor, KCG Holdings, Inc. (KCG) –NYSE, has also gained during this global crash. Unlike Virtu however, they have suffered losses in the past. Physical Gold will probably hold steady and be a safe bet since the BRICS are moving to a gold backed currency, but it has dipped $22 in the market crashes too. Of course if you are positioned badly right now, it may already be too late. Better hurry up and find shelter quick cause a shit storm’s a comin… I’m one of the lucky ones though, I don’t have any wealth to worry about! 🙂
Forex Glossary
Find definitions for key Forex trading terms along with introductions to the concepts, people and entities that impact
Safe Haven Currency
A currency which is considered “safe” during a geopolitical turmoil.
Safe haven currencies are usually those heavily traded, thus most liquid, and/or not affected by a given geopolitical turmoil-one that takes a neutral stance. Some traders turn to these currencies for funding to avoid volatility.
The Swiss Frank (CHF) and the US Dollar (USD) are known as safe haven currencies. While not a currency, Gold (XAU) is also a safe haven for people looking to protect their money.
Investing in currencies remains a foreign concept to most investors for two major reasons. First of all, the average investor does not have the knowledge to determine how currencies fit into their portfolio and they do not know which currencies to own. The second factor has to do with how an investor will gain access to currencies. (For related reading, see Currency ETFs Simplify Forex Trades)
Whether you have ever invested in currencies in the past or not, I suggest you continue reading to determine if currency ETFs are a good fit for your portfolio. The obvious benefit of a currency ETF is diversification away from a traditional equity portfolio. They also could hedge a portfolio against situations such as a bear market or the demise of the U.S. dollar. TUTORIAL: Forex Currencies
Lesson 6: Fundamental Analysis
6.2 Reaction of the Forex Market to a Fundamental Release
Lets take one through an example of how to use a fundamental data release to trade Forex. Then we will show an example of a political crisis.
Release of a Fundamental Indicator (Non-Farm Employment Change)
On November 3rd, 2006, the United States Department of Labor released a monthly report called the Non Farm Payroll. This fundamental indicator (the term for a report or release) measures the change in employment in the United States for the previous month, excluding the farming sector.
For this release the figures came in above expectations of economists. As a result the Dollar strengthened that day as the data suggested that the labor sector of the US economy was doing better than expected.
As you can see, on November 3rd, there was a huge surge as price moved downward from around 1.2770 to 1.2680, a move of 90 points, or “pips” in forex lingo. There aren’t any other candles in the surrounding time period where price moves as much as the 30 minutes after the release of the Non Farm Employment data.
A Political Crisis
Nukes This chart shows the reaction of the currency market to a geopolitical crisis. In this crisis, North Korea detonated a nuclear weapon in a test of their nuclear capabilities. How a particular currency will respond to geopolitical dangers depends on many factors. Here, the Japanese Yen suffers because it is a neighbor of North Korea and because the two countries have tense relations they are opposed to each other militarily. Obviously, any attack by North Korea on Japan would damage the Japanese economy. When traders got wind of these developments on Friday, October 6th, they sold the Yen and bought the Dollar. The price changed around 100 pips, meaning the amount of Yen you needed to get one Dollar went up from 117.90 to 118.90. Or, in other words it now cost one more Yen to buy a US Dollar.
Safe Haven
Since a nuclear test by North Korea is very Yen negative, the Dollar would do better since it’s the opposite currency in this particular pair. The Yen’s weakness withstanding, the Dollar would have still gained on this geopolitical event because it is considered a “safe haven” currency. During times of danger, investors will move their money out of riskier investments and put them into more stable ones. Since the US is the sole superpower left in the world, it naturally attracts those investors that want to park their money in a safer economy.
The US’s “safe haven” status doesn’t always work in times of danger in the world. If there is a geopolitical event that directly affects the United States, such as a terrorist attack, or something less immediate, such as military posturing against a state like Iran investors might sell the Dollar. Traders would be worried that the threats might come to action and there would be a war between the two countries. A war with Iran weakens the Dollar because the US economy is so tied to the oil market, of which a large proportion travels through the Persian Gulf. A military engagement against Iran would disrupt oil deliveries and cause hardship for the American economy in other ways. So, as we mentioned before, there are many factors to consider during a political crisis to see what effect it will have on a particular currency.
Good work, Evangelist Anita. I had completely missed this. Yes, China is soon to convert to a gold backed currency created in collaboration with The BRICS, the very same reason we killed Qaddafi in Libya. WWIII is closer than most think. First there is a currency war, then a trade war, then actual war.
For more background on this story, I encourage you to read my previous post that explains how China, in cooperation with the rest of the “BRICS” nations, have developed a new currency that is not fiat and backed up by actual physical gold. This new currency is meant to replace the United States Dollar as the world’s reserve currency. Economists agree that were this to happen, our money would be instantly devalued by anywhere from 10% to 30% and lead to either hyper-inflation or deflation. Some say the dollar could lose half it’s value eventually (we are a retail/consumer based economy after all) and might even enter free fall. A wheelbarrow of cash for a loaf of bread. War would probably result well before any of this happened.
It would seem that China has given up on ever collecting what we owe (can you blame them?) and is writing off (selling) our debt. The recent move by them to devalue their Yuan is a buffer in preparation of this loss. A weaker Yuan will encourage their domestic sales as well as lessen the impact of defaults due to a soon collapsing real estate bubble. Unfortunately, American consumers won’t benefit from China’s cheaper imports due to the dollar losing it’s reserve status and hence, consequent value. We will probably be at war by then anyway. China knows our country has been financially finished for a long time, our threats of war ring hollow since to some degree, our mutual destruction is assured. China can either stay with us in a financially abusive relationship, or break free and incur our military wrath. Given a choice like that, Russia (a BRICS member nation) will likely join China in a counter attack since we have been attacking them with varied sanctions over Ukraine anyway. Both countries have a vested interest in getting away from us economically and breaking our financial control via the IMF. They would rather accomplish that without live fire but our government seems determined otherwise. You will only get the truth from foreign and alternative media not beholden to the US.
We may not have much longer now, the bully on the block is cruising for a bruising but don’t worry, all those responsible for getting us into this mess will either be safely underground or off-planet “WTSHTF“.
Monday, August 17, 2015
by Mike Adams, the Health Ranger
(NaturalNews) EXCLUSIVE: Mainland Chinese dissidents have handed Natural News the following bombshell story. (Two minor updates / corrections are now included in this story, see below.)The Tianjin explosion was waged as an act of “kinetic retaliation” by the Pentagon in response to China’s currency war Yuan devaluation, according to dissident sources from mainland China. The Chinese government has put in place unprecedented secrecy surrounding the mysterious explosion, and aggressive police state tactics are now being invoked to control the flow of information surrounding this event.
“Last week’s explosions sent massive fireballs into the sky and hurled burning debris across the industrial area at the world’s 10th-largest port, burning out buildings and shattering windows kilometres away,” reports the Daily Mail UK.
The Chinese government’s official explanation for the explosion, which has now killed 114 people, is a complete whitewash. China is going to declare regional martial law in the next 18 days, Natural News has learned, in order to exercise total control over the movement of people and information. The government has banned reporters from entering the area and has begun arresting bloggers who promote what the government calls “conspiracy theories” regarding the cause of the massive explosion.
China has blacked out reporting on Tianjin in exactly the same way the U.S. media blacked out reporting on Dr. William Thompson, the CDC whistleblower who admitted the CDC buried evidence linking vaccines to autism. In both China and the United States, when the government doesn’t want the citizens to know something, it censors the story across the entire state-run media, invoking “information totalitarianism.”
Both before and after the massive explosion, the Chinese government has been flying “black helicopters” in formation across Beijing. (Update: Previously, this article stated the helicopters began flying after the explosion, but we have been corrected on this point, as helicopters were witnessed in the sky in the days before the explosion as well.) Chinese dissidents took numerous photos of these helicopters and were able to deliver these exclusive pictures to Natural News:
A warning shot from the United States: Don’t crash the dollar or sell our debt
Chinese dissidents have told Natural News they have reason to believe the attack on Tianjin is a warning shot from the United States, which is terrified that China is on the verge of announcing its own gold-backed currency while declaring a fire sale on U.S. debt holdings.
The actions would collapse the U.S. dollar and destroy the U.S. economy, sending the United States into economic freefall. The “Rod of God” weapon deployment by the U.S. Pentagon, we’re told, was America’s “shot across the bow” to send a powerful warning message to China while disguising the attack as a domestic chemical explosion.
Timeline of events: China devalues currency, then Pentagon strikes in mere hours
Consider the calendar of events in all this:
August 11, 2015: China devalues the Yuan by 1.9%, sending “shockwaves” around the world and setting off a “devastating” impact to the U.S. economy.
August 12, 2015: Tianjin struck by Pentagon’s secret “Rod of God” weapon, a space-based top-secret kinetic weapon that can be dropped from high orbit to strike almost any land-based target. The weapon instantly destroys six city blocks on the edge of the city of Tianjin, sending a message to China that’s eerily similar to the message sent by the United States in the dropping of the world’s first atomic weapons on Hiroshima and Nagasaki in World War II. (Yes, the USA is willing to drop weapons of mass destruction on civilian populations. It has already done it twice!)
(For those following the Shemitah, the dropping of atomic bombs on Japan also occurred during a Shemitah year, in the month of august, 1945, exactly 70 years ago. This is precisely TEN Shemitah cycles ago, or what might be called a “deca-Shemitah.”)
August 16, 2015: Obama issues stern warning “…about the presence of Chinese government agents operating secretly in the United States,” reports The New York Times. “And it comes at a time of growing tension between Washington and Beijing on a number of issues: from the computer theft of millions of government personnel files that American officials suspect was directed by China, to China’s crackdown on civil liberties, to the devaluation of its currency.”
The Pentagon’s secret space-based weapons
The “Rod of God” weapon consists primarily of a kinetic weapon arriving with unimaginable kinetic energy… more than a small tactical nuclear weapon, in fact, giving it the appearance of a tactical nuke.
U.S. websites are now speculating that the Tianjin explosion was a U.S. space-based weapons test involving a “Rod of God” weapon dropped from orbit. “The [resulting] lake [crater] in China proves a 5 kiloton blast, possibly nuclear or possibly from a space based ‘rod from God’ (pictured to the left) weapon [was] deployed by the space plane,” says The Unhived Mind.
“After looking through the images of the soviet nuclear tests, the new lake in China appears to have been made by a slightly sub surface burst of at least a 5 kiloton nuclear bomb… This was NOT an accident and the fracture pattern around the crater proves a sub ground burst. If it was a sub ground burst, then a small nuclear weapon is the biggest possibility because once a nuke has to push dirt, the blinding flash will not happen. A slightly subsurface detonation would explain why camera sensors did not get strange artifacts. And if it was not a nuke, it was something else incredibly huge, but not a fuel air bomb because fuel air bombs will not leave craters.”
When instructed from the ground, the targeting satellite commands its partner to drop one of its darts. The guided rods enter the atmosphere, protected by a thermal coating, traveling at 36,000 feet per second–comparable to the speed of a meteor. The result: complete devastation of the target, even if it’s buried deep underground.
“When required these projectiles can be commanded to dive, singly or en masse, at targets on the Earth’s surface, smashing into the victim at orbital speed. As the projectile’s kinetic energy is released, the blast would be equivalent to a large conventional bomb,” explains Armaghplanet.com.
China to declare martial law as total control of information and people kicks into high gear
Martial law will be declared across Beijing in the coming days, dissidents have told Natural News. Meanwhile, the Chinese government — which runs a massive state-controlled firewall that snoops into all internet traffic and blocks VPN access — has added “Tianjin” as a red flag keyword to its internet traffic filtering.
Local police raids have already begun at the locations of bloggers and independent journalists who have attempted to report true stories on what really happened at Tianjin. The Chinese government is engaged in a total cover-up.
Natural News has learned that the Chinese government is now setting up roadside checkpoints near and around both Tianjin and Beijing. Additional security measures now in place to control the movement of people include:
• All hotels are reporting details of visitors to the government, including passport numbers, nationalities, names and phone calls made from the rooms.
• Tourists who don’t stay in hotels are now required to register with local police or risk arrest. The Chinese government has mandated that it must know the location of every person at all times.
• Red armbands are now being worn by workers to indicate they are serving as Stasi-like obedient police snitches. The red armbands indicate total obedience to the government, and the workers wearing them have all been trained in how to spot dissident behavior. It’s China’s version of “If you see something, say something” just as was pushed in the United States.
• In preparation for China’s Sep. 3 celebration for the defeat of Japanese occupation — it’s the 70th anniversary — China has banned Japanese writing in most of its large cities. Government propaganda runs 24/7, condemning the Japanese and the horrifying war crimes committed by Japanese soldiers against China. (It’s true, the Japanese committed unimaginable atrocities such as mass-raping women and then chopping them into pieces with machetes to destroy the “evidence.”)
• Helicopter patrols are now routinely witnessed across Beijing and Tianjin, where military choppers are flying in formation as a show of strength.
• Massive populations of laborers are now living in underground dwellings, underneath the clean, high-tech buildings of Beijing that seem like world-class architectural achievements. (Update: Previously, this story stated “underground cities” but we have been corrected on this point and have updated the description to “underground dwellings.” Essentially, they are below-ground mass housing basements.)
If this war escalates, it could unleash a global currency war of attrition
If this covert war between China and the United States continues to escalate, it would ultimately devastate the economies of both nations. Both China and the USA are currently experiencing shockwaves in their stock markets as bubble economies built on debt begin to unravel.
In these times of shaky financial foundations, it doesn’t take much to topple public faith and unleash a mass exodus away from currencies and markets. It’s also clear that the United States considers currency games to be acts of war while justifying “kinetic responses” to such events.
This is all fully aligned with the government policies set in motion by President Obama in 2011. “Washington will to [sic] consider using conventional weaponry in response to a cyber-attack on the United States, according a new US strategy,” reported The Telegraph:
The White House’s strategy statement on cybersecurity said the United States “will respond to hostile acts in cyberspace as we would to any other threat to our country”.
“We reserve the right to use all necessary means – diplomatic, informational, military, and economic – as appropriate and consistent with applicable international law, in order to defend our nation, our allies, our partners and our interests,” the May 16 document said.
Pentagon spokesman Colonel Dave Lapan confirmed that the White House policy did not rule out a military response to a cyber-attack.
Just as Chinese influence in surrounding countries may spur fears of dominance, so efforts to pursue traditional American national interests can be perceived as a form of military encirclement. Both sides must understand the nuances by which apparently traditional and apparently reasonable courses can evoke the deepest worries of the other. They should seek together to define the sphere in which their peaceful competition is circumscribed. If that is managed wisely, both military confrontation and domination can be avoided; if not, escalating tension is inevitable.
If the United States defines currency war attacks as “cyber attacks,” then we may have just witnessed the first application of that new war doctrine, where electronic “attacks” are met with kinetic responses from the Pentagon.
Let us all hope this doesn’t escalate even further, or America will likely find itself on the losing side of any war involving economics, currencies or cyber warfare.
America was once almost universally regarded as a land of opportunity, where almost anything was possible. And for good reason! In other lands, the heavy hand of government and a controlled economy stifled upward mobility and kept the people impoverished except for a relative few who possessed most of the nation’s wealth and also pulled the political strings. But here in America, the government was restrained by the chains of the Constitution, and the people prospered.
This contrast between the collectivist old world and America helps explain why many wanted to come here from distant lands and why even today many still want to come here.
In America almost anyone, no matter how poor, could pull himself up by the bootstraps into the middle class and in some cases beyond if he were willing to work hard enough. Home ownership a major component of what we call the American dream was achievable. So was starting a business. In fact, so many succeeded in converting their American dreams into American realities that our country quickly developed a burgeoning middle class, dwarfing the small or virtually nonexistent middle classes in other countries.
But for many of us, pursuing the American Dream seems more elusive than in the past. Even during a period of “recovery,” the economy is not too good, and many are out of work. In fact, many well paying jobs that helped give America its reputation as a land of opportunity have been moved out of the country.
Why? Part of the reason for the “giant sucking sound” of jobs exiting America was the creation of NAFTA, the North American Free Trade Agreement (see page 22). Yet when NAFTA was proposed, its promoters promised that it would create jobs and prosperity. Similarly, promoters of the free trade agenda today promise that entering into other multinational arrangements such as hobbling all of North America with the EU will also create jobs and prosperity.
Nonsense! In this special report, we show not only that the free trade agenda will not solve our nation’s economic woes, but that it is a dangerous and deceptive bait and switch. In a nutshell: The free trade agenda is not about creating genuine free trade (which would mean almost no government involvement), and it is not confined to the issue of trade; it is instead about transferring economic and political power to regional arrangements as steppingstones to global governance under the guise of free trade.
This agenda is farthest advanced in Europe, where the architects of European order proposed a Common Market. But by design, this supposed free trade zone has since morphed into the EU, a government of Europe (see page 16).
If we continue down the road of the free trade agenda, the promised jobs will not materialize any more than they did with NAFTA. But as bad as the economic consequences may be, they will pale in comparison to the political consequences. If the United States were to be submerged in a supranational government, the Constitution would become a dead letter, and America would be ruled by multinational bureaucracies and elites.
On the other hand, if we preserve our national independence, we will still possess the means under our Constitution to solve our own problems. One problem, most Americans agree, is that the federal government has grown too big far exceeding its constitutional mandate. Transferring power to supranational tribunals is going in the opposite direction of where we need to go.
The American Dream was more achievable when government was much more limited than today. We should be optimistic about making this great dream as bright as ever if we preserve our Constitution and country.
Because of what is at stake, we encourage you to read the articles that follow and to become involved.
— Gary Benoit
Send your letters to: The New American, P.O. Box 8040, Appleton, WI 54912. Or e-mail: editorial@thenewamerican.com. Due to volume received, not all letters can be answered. Letters may be edited for space and clarity.
The purpose of this article is to provide an overview of some of these structural issues in the hope that more citizens will be encouraged to consider how the federal finances flow through the immediate world around us – our household budget, our business, farm or place of work, our municipality – and the government-sponsored organized crime and fraud draining us, so we can begin to implement real solutions.
Ultimately, the fiscal cliff is the tip of the iceberg of our economic and cultural woes. Our problems are deeper. The more of us there are, who are prepared to look honestly at our situation and take responsibility for it, the sooner authentic solutions will become possible and emerge.
As we look over the fiscal cliff into our financial abyss, now is a good time to “Come Clean” about the real state of our lives, our communities, and our economy, starting with the U.S. federal finances that flow deeply and intimately throughout every aspect of our lives.
U.S. Federal Finances: 22 Challenges
Here are the most significant challenges we must address to put our federal fiscal house in order. Each includes a brief description. Click on the link that follows for more discussion of the particular challenge, including examples and stories from my experience as well as other recommended references.
Facing the challenges of the reengineering of the federal budget can seem overwhelming and can even reduce us to a sense of hopelessness. You ask yourself, “I am only one person, what can I do?” Let me assure you that indeed each one of us can do a lot.
First of all we can act to protect our families and ourselves as much as possible from being drained and defrauded. Tremendous energy and resources can be gained when you stop feeding the parasite, and instead feed yourself and those whom you love. This includes putting as much distance between you, your health, and your resources and the people and institutions that are currently harming and harvesting you. It also includes shifting where we invest our time and resources, including building new skills.
Second, we can save time by not pursuing fake solutions – things that make us feel good temporarily, but lead to no real change, and distract us and drain more resources.
Third, our shift of consciousness can have a profound impact on the general shift in consciousness that is underway. Indeed, a shift in consciousness is required for real solutions to gain popular momentum.
Finally, we can organize with family, with friends, with neighbors, with colleagues and with local organizations to bring transparency to federal finances in our area and look for ways to reengineer those finances which help rebuild the economy in a manner that serves us well and those around us. Finding ways of attracting young people and advanced technology back to Main Street and shifting current expenditures on things which drain communities – such as lottery sales and hard narcotics – back into productive activities and enterprises is critical to this effort.
I call this process “Coming Clean.” As each one of us comes clean and withdraws from that which is harmful to ourselves and to others and instead engages with that which brings life and vitality, the easier it is for the next person to do so as well.
There is a wealth of information at the Solari website (solari.com) and available to subscribers of the Solari Report to help you explore the many options for you to Come Clean. In response to requests of subscribers, we will publish a collection on Coming Clean in book form this Spring. If you sign up for our updates, you will be notified when it is available. You can sign up for updates here: http://solari.com/updates/ and subscribe to the Solari Report here: http://solari.com/store/solari_report/ .
I have found that Coming Clean is a lifelong process – a journey. Start with what saves you time, gives you energy and work out from there. Each person is different, with each of us having our own unique talents and situations.
Conclusion
I do not have confidence in solutions that can be crafted inside the Washington beltway. The current financial challenges in the federal budget reflect deeply ingrained conflicts and even violent tensions within our society. I do have confidence in extraordinary environmental health and financial wealth that is possible if each one of us takes responsibility to proceed to Come Clean and build our future regardless.
Consider this an invitation to begin. As the composer John Cage once said, “Begin anywhere.”
From Wikipedia, the free encyclopedia BRICS is the acronym for an association of five major emerging national economies: Brazil, Russia, India, China, and South Africa.[2] The grouping was originally known as “BRIC” before the inclusion of South Africa in 2011. The BRICS members are all developing or newly industrialised countries, but they are distinguished by their large, fast-growing economies and significant influence on regional and global affairs; all five are G-20 members.[3]As of 2014, the five BRICS countries represent almost 3 billion people which is 40% of the world population, with a combined nominal GDP of US$16.039 trillion (20% world GDP) and an estimated US$4 trillion in combined foreign reserves.[1][4] As of 2014, the BRICS nations represented 18 percent of the world economy.[5]Brazil held the chair of the BRICS group in 2014, having hosted the group’s sixth summit in 2014.The BRICS have received both praise and criticism from numerous quarters.[6][7][8] The term, “BRICS”, was coined by economist Jim O’Neill in his publication, Building Better Global Economic BRICs.[9
Brazil hosted, on the 14th, 15th, and 16th July 2014, the 6th Summit of Heads of State and of Government of BRICS, held in Fortaleza and Brasília. The Summit adopted the Fortaleza Declaration and Action Plan, the Agreement on the New Development Bank, the Treaty for the Establishment of a BRICS Contingent Reserve Arrangement and agreements among BRICS Development Banks and Export Credit Insurance Agencies (available here)
At its 6th Summit, the BRICS emphasized social inclusion and sustainable development. The debate was be informed by the theme “Inclusive growth: sustainable solutions”. The Summit inaugurated the second cycle of BRICS. Each member country has hosted one meeting of Leaders.
The Fortaleza Summit showcased BRICS accomplishments and the discussions leading to the realization of its vast potential. Since its first Summit, in 2009, BRICS has consolidated its position as a positive force for the democratization of international relations and for the enhancement of existing institutions of international governance. It has also forged an impressive partnership carrying out cooperation initiatives in more than 30 areas between its members.
Among other topics, the Leaders discussed the Contingent Reserve Arrangement (CRA) and the New Development Bank (NBD). The CRA is an additional line of defense available to the BRICS countries in scenarios of Balance of Payments’ difficulties. The NBD will finance infrastructure and sustainable development projects.
In Brasília, on the 16th, a working session was held between the Leaders of BRICS and the Heads of State and/or Government of South America. The dialogue between BRICS Leaders and their South American counterparts reflects the priority accorded to developing countries in the BRICS outreach strategy.
On the 14th, in Fortaleza, as part of the BRICS Summit, the following meetings were held: Finance Ministers and Central Bank Governors meeting, Trade Ministers meeting, Development Bank Presidents meeting, Business Forum and a session of the Business Council of the BRICS.
The Academic Forum of the BRICS was held in Rio de Janeiro, on the 18th and 19th March 2014; the meeting of the Think Tanks Council was also held in Rio de Janeiro, on the 17th March 2014.
We are in global depression which started in 2007 and is going to continue indefinitely, Jim Rickards, economist and author of “Currency Wars: The Making of the Next Global Crisis,” told RT.
China’s central bank is injecting a combined 500 billion Yuan into the country’s top banks – a move signaling the deep concerns of an economic slowdown in China. A downturn in China`s economy, as investment is scaled back in Chinese real estate, has prompted economists to forecast further financial defaults and slowing economic growth in the second half of the year. Will this monetary easing fix China’s short-term problem and put it back on the path to prosperity in the long-term? Erin from “Boom Bust” asked economist, Jim Rickards, in her show.
RT:The Chinese Central bank is now offering stimulus. Is this a part of a new round of “currency wars”?
Jim Rickards: Yes, that is right. I think this is one long “currency war”. We are now getting into more of a battle, more of a confrontation. The US dollar is the only strong currency that cannot last: the US cannot have a strong currency, because we are desperate for inflation. We have done all the quantitative easing, we have raised the zero, we have issued further guidance, we have done a twist, and we have done three versions of QE. We have done everything possible. The only thing left is to try to cheapen the currency and in fact the dollar is getting stronger. The Fed might not have minded a stronger dollar. Six months ago it did look like the economy was getting stronger. We saw strong second quarter GDP. So it was a little bit of a good day. And Europe was desperate for the help: they were stepping into recession. Japan`s economy collapsed in the second quarter. So you could see the feds saying “ok…we will have a stronger dollar and give Europe and Japan a break”. But that is over. Now the US is becoming a loser and we are the ones who need to take a break. The only way to get it is a cheaper dollar. I would look for that in the months ahead.
RT:PIMCO says that Chinese growth will slow to 6.5% over the next year and this is despite the official 7.5% target now in place. Do you think PIMCO is right?
JR: Yes, it is about to go down further. I have been going for Chinese growth to get to 3 or 4%. I would say that China`s growth is already at 4%. I know they print 7.5%. But about half of the GDP they produce is wasted. So if I build a $5 billion train station in a small town that is $5 billion of GDP- this money is completely wasted because 10 people getting on the train are not going to pay for a $5 billion station. So you go around China with these ghost cities we have talked about before… So it is generating GDP, but it is completely wasted. If you adjusted the published GDP figures for the amount of waste, their actual growth is probably already roughly 4%. That is going to go lower.
RT:China is slowing the other BRICS, except for India is slowing, and Europe is slowing. Who is going to pick up the slack?
JR: Nobody, we are in a depression. This is a global depression. It started in 2007 and it is going to continue indefinitely. Depressions are structural, monetary solutions are cyclical: you cannot solve a structural problem with a cyclical remedy – monetary policy will not work. What it could do eventually is cause inflation. So far people say: “Where is the inflation?…We printed trillions of dollars, there is no inflation”. That is because we would have had deflation, extreme deflation, but for the money printing. It did produce inflation to the extent that it offset the deflation… The world is in depression, we are not getting out of it.
RT:In the last year or so we haven’t seen any notable economic crises in North America or in Europe. So are the pressures building towards another crisis, and if so where? Is it just globally?
JR: It will erupt somewhere, it will emerge somewhere but it will spread globally. I think there are a couple of candidates. One is obviously US stocks, that is a bubble. Maybe China is more likely. We talked about China`s economy slowing down- that is the case. The worst case is that the credit bubble collapses. Chinese savers – you know they are a wealthy country – they credit a lot of wealth. They don`t have many places to go. They can`t invest in foreign stocks, they don`t trust their own stock market… the banks pay them nothing. So they are putting all money in real estate and also wealth management products, these are structure products like CDO`s but they have real estate behind them. Their sponsors raise money in these funds; give you a wealth management certificate. And then they take money and put it into real estate. But the real estate is not producing, it is all speculation, it is all a bubble. That bubble will collapse…
Published time: July 15, 2014 18:14
Edited time: July 16, 2014 12:54
The group of emerging economies signed the long-anticipated document to create the $100 bn BRICS Development Bank and a reserve currency pool worth over another $100 bn. Both will counter the influence of Western-based lending institutions and the dollar.
The new bank will provide money for infrastructure and development projects in BRICS countries, and unlike the IMF or World Bank, each nation has equal say, regardless of GDP size.
Each BRICS member is expected to put an equal share into establishing the startup capital of $50 billion with a goal to reach $100 billion. The BRICS bank will be headquartered in Shanghai, India will preside as president the first year, and Russia will be the chairman of the representatives.
“BRICS Bank will be one of the major multilateral development finance institutions in this world,” Russian President Vladimir Putin said on Tuesday at the 6th BRICS summit in Fortaleza, Brazil.
The big launch of the BRICS bank is seen as a first step to break the dominance of the US dollar in global trade, as well as dollar-backed institutions such as the International Monetary Fund (IMF) and the World Bank, both US-based institutions BRICS countries have little influence within.
“In terms of escalating international competition the task of activating the trade and investment cooperation between BRICS member states becomes important,” Putin said.
Russia, Brazil, India, China and South Africa account for 11 percent of global capital investment, and trade turnover almost doubled in the last 5 years, the president reminded.
Each country will send either their finance minister or Central Bank chair to the bank’s representative board.
Membership may not just be limited to just BRICS nations, either. Future members could include countries in other emerging markets blocs, such as Mexico, Indonesia, or Argentina, once it sorts out its debt burden.
BRICS represents 42 percent of the world’s population and roughly 20 percent of the world’s economy based on GDP, and 30 percent of the world’s GDP based on PPP, a more accurate reading of the real economy. Total trade between the countries is $6.14 trillion, or nearly 17 percent of the world’s total.
The $100 billion crisis lending fund, called the Contingent Reserve Arrangement (CRA), was also established. China will contribute the lion’s share, about $41 billion, Russia, Brazil and India will chip in $18 billion, and South Africa, the newest member of the economic bloc, will contribute $5 billion.
The idea is that the creation of the bank will lessen dependence on the West and create a more multi-polar world, at least financially.
“This mechanism creates the foundation for an effective protection of our national economies from a crisis in financial markets,” Russian President Vladimir Putin said.
The group has already created the BRICS Stock Alliance an initiative to cross list derivatives to smooth the path for international investors interested in emerging markets.
Russia has also proposed the countries come together under an energy alliancethat will include a fuel reserve, as well as an institute for energy policy
“We propose the establishment of the Energy Association of BRICS. Under this ‘umbrella’, a Fuel Reserve Bank and BRICS Energy Policy Institute could be set up,” Putin said.
Documents on cooperation between BRICS export credit agencies and an agreement of cooperation on innovation were also inked.
Bringing emerging economies closer has become vital at a time when the world is guttered by the financial crisis and BRICS countries can’t remain above international problems, said Brazil’s President Dilma Rousseff.
She cautioned the world not to see BRICS deals as a desire to dominate.
“We want justice and equal rights,” she said.
“The IMF should urgently revise distribution of voting rights to reflect the importance of emerging economies globally,” Rousseff said.
BRICS countries near development bank deal to rival IMF, WB
Published time: July 09, 2014 15:51
Edited time: July 11, 2014 12:27
President of the Federative Republic of Brazil Dilma Vana Rousseff, Prime Minister of the Republic of India Manmohan Singh, second left, President of the Russian Federation Vladimir Putin, President of the People’s Republic of China Xi Jinping and President of the Republic of South Africa Jacob Zuma, from left, pose for group photographs. (RIA Novosti)
The emerging economies of Brazil, Russia, India, China and South Africa, are a couple of days from agreeing the $100 billion BRICS development bank, as well as a $100 billion currency pool. It could challenge global lenders like the IMF and World Bank.
The bank will be called the New Development Bank, and will provide finance for infrastructure projects. Its creation will meet the needs of emerging and poorer economies according to Russian Finance Minister Anton Siluanov.
In a speech Wednesday he confirmed the funding would be divided equally, Russia will contribute $2 billion in initial capital for the BRICS bank over seven years.
The bank will start with $10 billion in cash and $40 billion in guarantees. The $50 billion will be eventually built up to $100 billion.
The bank will be able to start lending in 2016, the minister says.
The final decisions concerning the creation of the bank are expected to be made by the BRICS leaders at a summit in Brazil on 14-16 July.
Apart from the BRICS countries other UN members may also participate in the bank’s development, but their total share won’t exceed 45 percent.
The location of the headquarters is still not decided, but Siluanov said the two favorite cities are Shanghai and New Delhi.
BRICS leaders are also expected to sign an agreement to establish an additional $100 billion fund to steady the currency markets.
“We have reached an agreement that, in the current conditions of capital volatility, it is important for our countries to have this buffer a so-called “mini-IMF”- a financial organization which could quickly react to capital outflow, providing liquidity in hard currency, in particular in US dollars,” Siluanov said.
The need arose after the long inflow of cheap dollars which fueled a boom in the BRICS countries for a decade reversed into a sharp outflow in 2013.
Even though the new bank will be a small rival to the World Bank which has capital of $223 billion, or the International Monetary Fund, it will serve as a reminder to the US of the shift in the global economy towards the developing world.
Currently BRICS countries make up over 40 percent of the world’s population and account for about 20 percent of global GDP.
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