Category: Global Economy


 

Who Needs The United States? Not Russia And China

 

Russia and China have just signed what is being called “the gas deal of the century”, and the two countries are discussing moving away from the U.S. dollar and using their own currencies to trade with one another.  This has huge implications for the future of the U.S. economy, but the mainstream media in the United States is being strangely quiet about all of this.  For example, I searched CNN’s website to see if I could find something about this gas deal between Russia and China and I did not find anything.  But I did find links to “top stories” entitled “Celebs who went faux red” and “Adorable kid tugs on Obama’s ear“.  Is it any wonder why the mainstream media is dying?  If a particular story does not fit their agenda, they will simply ignore it.  But the truth is that this new agreement between Russia and China is huge.  It could end up fundamentally changing the global financial system, and not in a way that would be beneficial for the United States.

Russia and China had been negotiating this natural gas deal for ten years, and now it is finally done.  Russia is the largest exporter of natural gas on the entire planet, and China is poised to become the world’s largest economy in just a few years.  This new $400 billion agreement means that these two superpowers could potentially enjoy a mutually beneficial relationship for the next 30 years

Russia reached a $400 billion deal to supply natural gas to China through a new pipeline over 30 years, a milestone in relations between the world’s largest energy producer and the biggest consumer.

President Vladimir Putin is turning to China to bolster Russia’s economy as relations sour with the U.S. and European Union because of the crisis in Ukraine. Today’s accord, signed after more than a decade of talks, will allow state-run gas producer OAO Gazprom (GAZP) to invest $55 billion developing giant gas fields in eastern Siberia and building the pipeline, Putin said.

It’s an “epochal event,” Putin said in Shanghai after the contract was signed. Both countries are satisfied with the price, he said.

Of course countries sell oil and natural gas to each other all the time.  But what makes this deal such a potential problem for the U.S. is the fact that Russia and China are working on cutting the U.S. dollar out of the entire equation.  Just check out the following excerpt from a recent article in a Russian news source

Russia and China are planning to increase the volume of direct payments in mutual trade in their national currencies, according to a joint statement on a new stage of comprehensive partnership and strategic cooperation signed during high-level talks in Shanghai on Tuesday.

“The sides intend to take new steps to increase the level and expansion of spheres of Russian-Chinese practical cooperation, in particular to establish close cooperation in the financial sphere, including an increase in direct payments in the Russian and Chinese national currencies in trade, investments and loan services,” the statement said.

In my recent article entitled “De-Dollarization: Russia Is On The Verge Of Dealing A Massive Blow To The Petrodollar“, I warned about what could happen if the petrodollar monopoly ends.  In the United States, our current standard of living is extremely dependent on the rest of the world continuing to use our currency to trade with one another.  If Russia starts selling natural gas to China without the U.S. dollar being involved, that would be a monumental blow to the petrodollar.  And if other nations started following the lead of Russia and China, that could result in an avalanche from which the petrodollar may never recover.

And it isn’t just the national governments of Russia and China that are discussing moving away from the U.S. dollar.  For example, the second largest bank in Russia just signed a deal with the Bank of China “to pay each other in domestic currencies”

 

Read More Here

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Bloomberg

French Recovery Fades as Manufacturing, Services Contract

Photographer: Balint Porneczi/Bloomberg

An employee removes excess felt from berets inside the factory of 174-year-old… Read More

French manufacturing and services unexpectedly shrank this month, highlighting President Francois Hollande’s struggle to revive the euro area’s second-largest economy.

A Purchasing Managers Index of factory activity dropped to 49.3 from 51.2 in April, while a services gauge fell to 49.2 from 50.4, Markit Economics said today in London. Economists had forecast readings above 50, the level that divides expansion from contraction.

Hollande is grappling with an economy that stagnated in the first quarter as both investment and consumer spending fell. After two years in office, his government has yet to achieve two consecutive quarters of expansion, a performance that has driven jobless claims to an all-time high of 3.3 million and his own popularity to a record low.

 

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French economy contracts while rest of eurozone keeps expanding

The headquarters of the European Central Bank (ECB) in Germany.

The strong pace of growth in the eurozone’s private sector eased very slightly this month, with drastic price cuts preventing any further slowdown, surveys showed yesterday.

Slower growth in activity at factories took the shine off an unexpected pickup in the service industry, although the bloc’s recovery appears to be gaining traction.

“This doesn’t change the picture of the eurozone having one of its best growth spells in the past three years. It’s broad-based – with the one exception being France,” said Rob Dobson, senior economist at survey compiler Markit.

Markit’s Composite Purchasing Managers’ Index, based on surveys of thousands of companies across the region and seen as a good indicator of growth, edged down to 53.9 from April’s near three-year high of 54.0, matching the forecast in a Reuters poll of analysts.

 

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Eurozone’s 18-month-long recession may be over, economic surveys suggest

French factories

The Osram factory in Molsheim. French factories returned to growth with their strongest performance in 17 months. Photograph: AFP/Getty

Hopes of a recovery in the eurozone were lifted after private sector firms across the region reported a rise in output for the first time in 18 months, leading to predictions that the single currency bloc is on the cusp of exiting recession.

A strong performance by German manufacturers and a halt to the headlong decline in French business activity gave the eurozone a much needed boost after the area slipped into reverse last year.

With the US manufacturing sector expanding at a faster pace in July, the main blot on the global economic recovery was a decline in manufacturing output in China that some economists have warned could force Beijing to renew its stimulus spending or risk a hard landing.

China’s manufacturing sector tempered the eurozone data, slowing to an 11-month low as new orders faltered and the job market darkened.

The flash HSBC/Markit Purchasing Managers’ Index (PMI) fell to 47.7 this month from June’s final reading of 48.2, marking a third straight month below the 50 threshold between expansion and contraction for China.

As if to highlight concerns that global growth is slowing, Caterpillar, the US construction and mining business that is considered a bellwether of global business activity, downgraded its forecast for the pace of the global recovery this year and next.

Alexandra Knight, an economist at National Australia Bank, said the weak Chinese PMI posed a problem for countries that relied on exports to China.

“It adds to the concern about the outlook for demand, and brings into question just how strong Chinese commodities demand will be,” she said.

 

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Daily International News

 

Employees stand near pipes made for the South Stream pipeline at the OMK metal works in Vyksa in the Nizhny Novgorod region, April 15, 2014.

Employees stand near pipes made for the South Stream pipeline at the OMK metal works in Vyksa in the Nizhny Novgorod region, April 15, 2014.

Reuters

— Russia’s controversial South Stream pipeline, which would transport gas via the Black Sea into Europe towards the end of the decade, received support from Turkey on Wednesday when Ankara said it may let the conduit pass through its territory.

Turkey would consider granting access for the line if Moscow made such a request, Energy Minister Taner Yildiz said.

The subject is one of a series of issues including increased gas supply, gas price revisions and nuclear power that Turkey and Russia are set to discuss during talks in Ankara next week, according to Turkish officials.

The future of the 2,400-km (1,490-mile) line from Russia via the Black Sea to Bulgaria and from there further into the European Union, avoiding Ukraine, has been cast into doubt because of Russia’s annexation of Crimea from Ukraine.

The Ukraine crisis has intensified EU efforts to reduce energy dependence on Russia, while Moscow has long sought to curb its reliance on Ukraine as the main pipeline route for sending Russian gas to Europe, its biggest market.

The European commissioner for energy, Guenther Oettinger, said in March that discussions with Russia over South Stream’s regulatory approval in the European Union were on hold.

The EU delay could offer an opportunity to Turkey, where gas demand is rising fast.

“We are open to assessing any request for the line to pass through Turkey’s territory,” Yildiz told reporters when asked about South Stream.

“It is said that there could be such a demand. If there is a request, we will consider it,” said Yildiz, due to hold talks with Alexander Medvedev, deputy head of Russian state-controlled Gazprom, in Ankara on Monday.

South Stream would carry around 60 billion cubic meters (bcm) of gas a year to Europe towards the end of the decade, enough to meet more than 10 percent of its annual demand.

Officials said Russia’s annexation of Crimea created a risk for Turkey, noting 12.5 percent of its gas supplies passed through Ukraine, and that steps to prevent a supply problem could be on the agenda next week.

In a letter to European leaders last week, President Vladimir Putin warned Russia would cut natural gas supplies to Ukraine if it did not pay its bills and said this could lead to a reduction of onward deliveries to Europe.

To eliminate such transit risk for Turkey, Ankara proposes to have South Stream enter land in the Thrace region of northwest Turkey rather than Bulgaria, to avoid routing it directly from Russia into an EU country.

“That way Russia will be able to feed directly with the line the Marmara region of Turkey, which has the highest level of consumption,” said an analyst, who declined to be identified.

The construction of a second Blue Stream pipeline, complementing an existing one that runs under the Black Sea from Russia to central Turkey, could also come onto the agenda soon, sources close to the matter said.

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Radio Free Europe/Radio Liberty

Russian President Vladimir Putin (right) speaks at a meeting with top officials on gas deliveries to Ukraine at his Novo-Ogaryovo state residence outside Moscow on April 10.

Russian President Vladimir Putin (right) speaks at a meeting with top officials on gas deliveries to Ukraine at his Novo-Ogaryovo state residence outside Moscow on April 10.

By RFE/RL
Russian President Vladimir Putin has sent a letter to leaders of 18 European countries warning of a suspension of gas supplies to Ukraine if Kyiv does not pay off its $2.2 billion gas debt.

The Kremlin said on April 10 that Putin told the European leaders that the “critical situation” over Ukraine’s debt could impact the transit of Russian gas to much of Europe.

He wrote that the state-controlled energy giant Gazprom would be “compelled to switch over to advance payment for gas deliveries” for Ukraine and that if Ukraine remains unable to settle its debt, Gazprom “will completely or partially cease gas deliveries.”

Putin raised concerns about Ukraine siphoning off gas from pipelines leading to Europe and said Ukraine needed some 11.5 billion cubic meters of gas, worth some $5.5 billion, to fill the country’s underground storage tanks.

Putin also wrote Russia is prepared to take part, along with the European Union, in efforts to restore Ukraine’s economy.

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Aid to Ukraine not forever: Putin

Vladimir Putin

MOSCOW. — Russia does not recognise the legitimacy of Ukraine’s new authorities, but continues its economic assistance to its crisis-hit neighbour, a situation that will not last forever, Russian president Vladimir Putin said yesterday.
“As you know, our partners in Europe recognise the legitimacy of the current Kiev authorities, but are doing nothing in order to support Ukraine; not a single dollar, not a single euro,” Putin said.

“The Russian Federation doesn’t recognise the legitimacy of the authorities in Kiev, but will continue to give it economic support and subsidise Ukraine’s economy with hundreds of millions and billions of dollars for now.

“This situation, of course, can’t continue eternally,” the Russian leader added.
He demanded that Russia remain disciplined and fulfil all contract obligations with Ukraine, but added that the country must be prepared to replace Ukrainian goods and correct state defence orders.

“I ask you to be disciplined and fulfil all contract obligations with our Ukrainian partners, but we need to be prepared for any development in the situation . . . including import replacements,” Putin said during a meeting of senior officials.

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Little expected from Ukraine talks

Updated: 04:53, Thursday April 10, 2014

Little expected from Ukraine talks

The US says it is going into an upcoming meeting with Russia, Europe and Ukraine on the crisis in the former Soviet republic with low expectations.

‘I have to say that we don’t have high expectations for these talks, but we do believe it is very important to keep that diplomatic door open and will see what they bring,’ Victoria Nuland, assistant secretary of state for European affairs, said on Wednesday.

US and EU diplomats have agreed with Russia to hold four-way negotiations involving Ukraine next week to de-escalate the worst European security crisis in decades.

An EU diplomat said the talks would likely be held on April 17 in Vienna.

In signs that Russia will continue its pressure on the Ukraine, President Vladimir Putin has warned the country may begin requiring advance payment for gas supplies unless Ukraine comes to the negotiating table over its unpaid energy bills.

 

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Bank of China Centre

Wikimedia.org

Author Baycrest

Attribution Share Alike 2.5 Generic

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BERLIN Thu Mar 13, 2014 6:35am EDT

(Reuters) – China’s top envoy to Germany has warned the West against punishing Russia with sanctions for its intervention in Ukraine, saying such measures could lead to a dangerous chain reaction that would be difficult to control.

In an interview with Reuters days before the European Union is threatening to impose its first sanctions on Russia since the Cold War, ambassador Shi Mingde issued the strongest warning against such measures by any top Chinese official to date.

“We don’t see any point in sanctions,” Shi said. “Sanctions could lead to retaliatory action, and that would trigger a spiral with unforeseeable consequences. We don’t want this.”

The interview was conducted on Wednesday, the same day that the EU agreed a framework for sanctions that would slap travel bans and asset freezes on people and companies accused by Brussels of violating the territorial integrity of Ukraine.

German Chancellor Angela Merkel, who has taken the lead in trying to mediate in the crisis, has said the measures, which mirror steps announced by the United States, will be imposed on Monday unless Russia accepts the idea of a “contact group” to resolve the crisis diplomatically.

Using her toughest rhetoric since the crisis began, she warned in a speech in parliament on Thursday that Russia risked “massive” political and economic damage if it did not change course in the coming days.

Russia’s Deputy Economy Minister Alexei Likhachev responded by promising “symmetrical” sanctions by Moscow.

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I stumbled onto this blog ( The Last Great Stand) today and  found something  that  I  felt  I  needed to  share.  There  is  so  much  information here.  So  much research and  data  has  been  compiled that I was  compelled. 

For those  who are teetering on the  fence……

It is  time  to open your  eyes  and  see the possibilities of what  our  future could very  well be. 

Do  we  know  for  sure any of this  will take place?

No one  can  be  100% sure.

Was  anyone 100% sure  that the  Great Depression  would take  place?

I am  betting that  those  who took  their lives  after the  crash  , never in their  wildest  dreams  thought anything quite like that  would take  place.     I am  also  willing to  bet  they  would have laughed at  anyone warning them of  the  impending doom  about  to  descend on their prosperous lives.

Still feeling strong  in your  convictions  of  ridicule and  conspiracy theory labeling?

How many listened  when the financial trouble  of  2008 was being  discussed?

It hit  most  like a  runaway train.

Question is  ……has it  rattled  your  sense  of  reality  enough to  bring you out of  your little  idyllic  dream world?

If  it  has , then do not let the  length  nor the  volume  of  information  in these presentations  deter you.  Here  you  will find  information  you  may  already  be  aware  of  and  items  that  had  never even  occurred to you.  In  either  case  it is  well worth the  time invested.

I  hope  you  will give it a  go ,  you have  nothing to  lose  but a  bit  of  time  and  so  much  to  gain.

For those  who are  still poo pooing good luck to  you .  I  sincerely  wish you  well.

~Desert Rose~

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MY PERSONAL PREDICTIONS IN DETAIL
JUST USING COMMON SENSE
(WITH A TOUCH FROM PARTS I-IX)

 

For anyone interested in learning just how screwed the U.S. is, I am doing what will end up being about 10 Part Series. Many people laugh when you mention the Dollar collapsing and Martial Law. I’m afraid it’s no laughing matter. I put these together to explain to the nay sayers as best I could:

by reasonvoice

The Last Great Stand

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The Last Great Stand

 

Part I: Saudi Arabia Acting Like an Anchor Weight Around the Petrodollar…

by reasonvoice

..

The largest oil exporter in the Middle East has teamed up with the second largest consumer of oil in the world (China) to build a gigantic new oil refinery and the mainstream media in the United States has barely even noticed it.  This mammoth new refinery is scheduled to be fully operational in the Red Sea port city of Yanbu by 2014.  Over the past several years, China has sought to aggressively expand trade with Saudi Arabia, and China now actually imports more oil from Saudi Arabia than the United States does.  In February, China imported 1.39 million barrels of oil per day from Saudi Arabia.  That was 39 percent higher than last February.  So why is this important?  Well, back in 1973 the United States and Saudi Arabia agreed that all oil sold by Saudi Arabia would be denominated in U.S. dollars.  This petrodollar system was adopted by almost the entire world and it has had great benefits for the U.S. economy.  But if China becomes Saudi Arabia’s most important trading partner, then why should Saudi Arabia continue to only sell oil in U.S. dollars?  And if the petrodollar system collapses, what is that going to mean for the U.S. economy?

Those are very important questions, and they will be addressed later on in this article.  First of all, let’s take a closer look at the agreement reached between Saudi Arabia and China recently.

The following is how the deal was described in a recent China Daily article….

In what Riyadh calls “the largest expansion by any oil company in the world”, Sinopec’s deal on Saturday with Saudi oil giant Aramco will allow a major oil refinery to become operational in the Red Sea port of Yanbu by 2014.

The $8.5 billion joint venture, which covers an area of about 5.2 million square meters, is already under construction. It will process 400,000 barrels of heavy crude oil per day. Aramco will hold a 62.5 percent stake in the plant while Sinopec will own the remaining 37.5 percent.

At a time when the U.S. is actually losing refining capacity, this is a stunning development.

Yet the U.S. press has been largely silent about this.

Very curious.

Read More Here

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The Last Great Stand

Part II: The Beginning of the End of the Petrodollar: And The United States

by reasonvoice



Throughout history, empires and their civilisations have come and gone. During the first part of the last century, the US quietly built its empire, first in the North and Central Americas and in South America. Soon after the Second World War, the US worked to maximise the advantages it gained, and the power it assumed, between 1943 and 1945, from its victory over Germany and Japan, and as a consequence of massive Soviet casualties, and large British debt and financial burden caused by the war. The USA assumed the leading role in the Western world by, on one hand, containing the Soviet Union and preventing the spread of communist revolution beyond the borders of the Soviet bloc; and on the other hand, ensuring uncontested American supremacy within the Western world.

During the Cold War years, there was little or no challenge to the dominant position of the US in the Western world. However, with the end of the Soviet Union in 1991, the knot tying the basic objectives of the US global strategy together began to come unravelled. Once the communist danger was off the table, American supremacy ceased to be an automatic requirement of the Western system.

Since 20 September 2002, the US government has abandoned its former multilateral approach to global affairs, and adopted an imperial posture known as the so-called Bush doctrine.

This new agenda is based on militarist and imperial values with some theocratic overtones. This current agenda looks much like what some people see in US foreign policy at the end of the 19th century, and the beginning of the 20th, when the US actively sought to dominate the entire Caribbean basin, Central America and even the western Pacific.

Six months after the Bush doctrine was announced, the new American doctrine was applied as a justification for an unprovoked war against Iraq by the neo-conservative administration of the US government. Toppling Saddam Hussein’s regime without the support of the UN, and in the face of strong opposition from traditional US allies, was a clear presentation of a new unilateralist American foreign policy. The “regime change” in Baghdad was not an isolated event, but only an opening salvo in a much broader neo-conservative agenda. The neo-conservatives ‘advocate a paradigm shift in which the United States spreads American values by asserting American power-by force, if necessary’. This agenda seeks to reshape American hegemonic practices according to old imperial doctrines, but with new post-colonial political and military tools.

Since 2005, there is a looming crisis brewing over Iran. In the media the phantom of Iran “threat” is being amplified across the world. In order to justify a military operation against Iran, the neo-conservative rulers of the US have started a demonization campaign against this country, presenting the latest incarnation of America’s enemy, in much the same way Saddam Hussein was in the run-up to the invasion of Iraq. They have put a lot of effort into making people believe that Iran is ruled by dangerously crazy people who are trying to make a nuclear bomb, and that they would not hesitate to bomb one or more US cities. In view of such a danger, the only answer is to wage a preventive war. Speculations about possible U.S.-Israel attacks on Iran have reached a stage of war propaganda by Western media. A recent report by the Oxford Research Group revealed that any bombing of Iran by U.S. forces, or by their Israeli allies, would result in the unnecessary death of many innocent lives.

Many observers view the US neo-conservative clique and its agenda as a conspiracy. This article, however, is based on the premise that they are merely part of a larger equation of global economic and political conditions. This view is rooted in an understanding that vested interests representing the energy, electronics, weapons, and influential segments of the media and communications industries in the US are always entrenched in key sectors of government. These interests are concerned with maintaining their privileged position. And key elements of the US economic and political elite are now responding directly to changes in global conditions that have arisen since the end of the Cold War. This is not a conspiracy. It is only business as usual.

Since the end of the Cold War, the US has waged four wars – two in Iraq, one in the former-Yugoslavia, and one in Afghanistan- and is threatening more. All this aggression is not the result of a paranoid theory, but simply a convergence of political and economic interests, travelling under the rubric of “war on terror”. This argument is not based on the image of a few evil people, conspiring in secret, against the people for their evil aims. However, diverging from conspiracy theory does not ignore the fact that indeed there are real conspiracies, criminal or otherwise. In particular, the US political landscape is littered with examples of illegal political, corporate and government conspiracies, such as Watergate, and the Iran-Contra scandal.

Having said that I generally consider the belief in conspiracy theories a pointless diversion of focus, and waste of energy. While real conspiracies have existed throughout history, history itself is not a conspiracy.

Since the end of the Cold War, the power of the United States is in decline. Particularly its share of world trade and manufacturing is substantially less than it was just prior to the end of the Cold War, and its relative economic strength measured against the EU and the East Asian economic group of Japan, China and Southeast Asia is similarly in retreat. The persistent use of US military power can be viewed as a reaction to its declining economic power and not merely as a response to the post-Cold War geopolitical picture. The American neo-conservative leaders see the military power of the US ‘as a trump card that can be employed to prevail over all its rivals’, and thus stop this decline. This is what the Bush administration is trying to achieve: to create a militarised world in which the strength of the US military forces can change and re-define the rules of the game. This is a clear goal, a specific agenda, which does not constitute a conspiracy. It is merely the way in which the system currently works, and the US is taking advantage of existing structural opportunities. This article is an attempt to provide primarily a macroeconomic explanation to the origins of and motivations behind the recent US policies shaped by the neo-conservative Bush administration.

Read More Here

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The Last Great Stand

Part III: Why Are We Letting China Buy American companies?

by reasonvoice

CAN YOU IMAGINE THE INFLATION ALL  HITTING THE SYSTEM AT ONCE?

IN MY OPINION, THAT PUTS THE STOCK MARKET’S REAL VALUE AT LESS THAN AN OUNCE OF GOLD WHEN THE FINANCIAL HOUSE OF CARDS FINALLY DOES COME CRASHING DOWN. ITS ALMOST COMPLETELY WORTHLESS, REGARDLESS OF THE NUMBER IT READS. OF COURSE STOCKS ARE GOING TO PLUNGE!

This takeover, the largest takeover of a US company by a Chinese firm, represents a precedent that will damage the American economy and cost jobs in the long run.

It also may have emboldened China. Weeks after permission was granted by Washington, Beijing claimed the airspace over some contested islands in the East China Sea as “a defense identification zone.” Chinese saber rattling forced the Pentagon to dispatch two unarmed B-52 bombers to fly in the airspace to send a message to China that it was overstepping its bounds.

China’s ambitions are multi-pronged and the Smithfield Foods transaction is another questionable invasion by Beijing. Currently, American authorities only evaluate foreign takeovers on the basis of national-security issues or shareholder rights and securities laws. But these criteria are inadequate.

A fairer test in the case of Smithfield, and future buyout attempts by China, should also require reciprocity: Only corporations from countries that allow Americans to buy large companies should be allowed to buy large American companies.

That’s not the case with China, Middle Eastern sheikhs or Russians. Critics of reciprocity label this as protectionism. It’s not. It’s protectiveness.

Here’s why.

Last year, Chinese banks were also allowed for the first time to buy several financial institutions. Next year, in the absence of curbs, China will likely launch a bid for a sizeable resource company. This was last attempted in 2005, when a Chinese oil giant bid $18.5 billion to buy Unocal Corporation. Congress and the media reacted negatively and the Chinese withdrew the bid.

But Wall Street has been lobbying to allow China in to make big takeovers so it can earn larger fees.
They and others argue that restricting China would be unfair and foolish because American companies have been allowed to invest billions in China. But investments there are restricted to “green fields” — high-risk start-up operations or minority ownership. The fact is that Coca-Cola or General Motors or Maytag cannot take control of an existing, established Chinese rival.

Smithfield has become the branch plant of its new proprietor — a holding company called Shuanghai International Holdings Limited, the biggest meat processor in China. But the ultimate beneficial owner is the Chinese government, and Shuanghai answers to the politics, policies and edicts of Beijing. This is the nature of “China Inc.”

The Smithfield buyout is a great loss because the company has become a huge exporter, to Japan and elsewhere, and has developed, with taxpayer assistance, systems and technologies that are best in class.

Of course, that was why it became a target and why China Inc. overpaid to get it. But the only American beneficiaries will be a handful of investors. The rest of Smithfield’s stakeholders, and the American economy, will be bruised.

The damage includes the fact that Smithfield’s technology, research and development and patents will be transferred to the Chinese parent company. Smithfield will be hollowed out and the head office will be moved to China. Talent will leave.

Read More Here

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The Last Great Stand

Part IV: Get Ready America. It’s Going to be US In the Nike Sweatshops Very Soon!

by reasonvoice

  • The Role These Chinese Buys Will Play In Our Downfall
  • What is FRACTIONAL RESERVE BANKING and why does it matter?
  • I talked about our lack of ability to PRODUCE for ourselves if we had to. 
  • The Article Talks About the Chinese Investments

HOW IS ALL THIS WORKING TOGETHER?

THINK… NONE OF THIS FACTORS OUR DOMESTIC FINANCIAL WOES

ARTICLE BELOW DOES AN UNREAL JOB EXPLAINING THE CURRENT TRANSITION

What Russia has done is allow the Chinese to become the wholesale brokers of Russian oil. The deal is between Russian Rosneft the biggest oil company in the world and  China’s Sinopec.  The deal is valued at $85 billion and will supply China with 100 million tons of Crude oil. On top of that LNG (Liquid Natural Gas) deal was signed that will sell 3 million tons of LNG per year to China as well . The energy deals between the two partners is worth $270 Billion over the course of 25 years. Over 21 trade deals in total have been signed by the two powers and none of them have anything to do with the dollar.

imply incredible is what I can say that has transpired in the last 6 years since the collapse of the US economy in 2008. Folks what we are witnessing right now is the final paragraphs of the final chapter that was the US economic superpower. I am not kidding you nor am I using any form of hyperbole when I say that this year is critical. Though I do not posses a crystal ball to tell you “EXACTLY” when the end will come, what I do posses is major market as well as global indicators that can give me an idea as to a time frame.

Using the vast amount of data at my fingertips what I can tell you is this: 2014 is the year to prepare and get your life in order and I will detail this as clearly as I can to show you why.

  • First and foremost there is a major global reconfiguration away from the dollar as a the preferred means of trade settlement.

I have often stated that the largest economies have taken strategic steps already to trade in a world without the dollar.  The chief architects of this plan are the Russians and Chinese and what they have done and are doing is dismantling with precision the petro-dollar supremacy. Case in point, Russia is the largest oil producer in the world and they have back in 2013 set up a deal with the Chinese. That deal was the first major shot into the Dollar’s armor as world reserve currency and it’s grip to the pricing of oil

So what does it mean? Simple the largest oil producer is handing off the distribution of it’s product to the largest economy in world (China) to sell it in YUAN bypassing the dollar!!!  In order to put this in proper perspective you have to get into your head that the entire Petro-Dollar scheme was based off the idea of cheap Saudi oil supplied perpetually. Well that reality is coming apart in a major way, lets take a second and look at Saudi oil and it’s history.

Read More Here

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The Last Great Stand

Part V: The Coming Economic Enslavement of Communism

by reasonvoice

Experts Warning of Coming Global Financial MeltdownThis all is starting to make a lot of sense now. In the last month there has been 8 mysterious death of 8 bankers across the globe. Maybe they knew something and were trying to warn others before its too late. From Bank of America’s head of global technical strategy warning that the U.S. dollar is in serious trouble, to Capitol One’s unprecedented policy change where they will now show up at Credit Card users homes to collect on debts, it seems even the big banks are going into panic mode.

In spite of all the government media propaganda, the warning signs are getting harder and harder to ignore. The fact is, our economy has teetered on the edge of the financial abyss for quite some time; and with the government now racking up over $1 trillion dollars a year in debt, it’s only a matter of time before the house of cards comes crashing down.U.S. about to hit the Debt Ceiling Yet Again…We are now only a couple of weeks away from another possible government default, as Treasury Secretary Jack Lew warns the government will run out of money to pay the nation’s bills, unless congress yet again raises the federal debt limit.

As part of the so-called budget deal that reopened the government last October, Congress suspended the $16.7-trillion debt limit through Feb. 7, 2014. With that deadline now passed, we’re now only weeks away from another possible default, causing some to wonder how much more this economy can take. In fact, former Harvard Economist Terry Burnham is so worried that he pulled all of his money out of Bank of America, and started warning everyone that they might want to consider doing the same.

Read More Here

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The Last Great Stand

Part VI: China Starts To Make A Power Move Against The U.S. Dollar

by reasonvoice

With the Chinese buying up and owning our few (relative) existing factories, we will be weak and at the mercy of others. We will be beyond any level of weakness the United States has ever known. In comes FEMA Cammps…

In order for our current level of debt-fueled prosperity to continue, the rest of the world must continue to use our dollars to trade with one another and must continue to buy our debt at ridiculously low interest rates.  Of course the number one foreign nation that we depend on to participate in our system is China.  China accounts for more global trade than anyone else on the planet (including the United States), and most of that trade is conducted in U.S. dollars. 

This keeps demand for our dollars very high, and it ensures that we can import massive quantities of goods from overseas at very low cost.  As a major exporting nation, China ends up with gigantic piles of our dollars.  They lend many of those dollars back to us at ridiculously low interest rates.  At this point, China owns more of our national debt than any other country does.  But if China was to decide to quit playing our game and started moving away from U.S. dollars and U.S. debt, our economic prosperity could disappear very rapidly.  Demand for the U.S. dollar would fall and prices would go up.  And interest rates on our debt and everything else in our financial system would go up to crippling levels.  So it is absolutely critical to our financial future that China continues to play our game.

Unfortunately, there are signs that China has now decided to start looking for a smooth exit from the game.  In November, I wrote about how the central bank of China has announced that it is “no longer in China’s favor to accumulate foreign-exchange reserves”.  That means that the pile of U.S. dollars that China is sitting on is not going to get any higher.

In addition, China has signed a whole host of international currency agreements with other nations during the past couple of years which are going to result in less U.S. dollars being used in international trade.  You can read about many of these agreements in this article.

This week, we learned that China started to dump U.S. debt during the month of December.  Many have imagined that China would try to dump a flood of our debt on to the market all of a sudden once they decided to exit, but that simply does not make sense.  Instead, it makes sense for China to dump a bit of debt at a time so that the market will not panic and so that they can get close to full value for the paper that they are holding.

As Bloomberg reported the other day, China dumped nearly 50 billion dollars of U.S. debt during the month of December…

China, the largest foreign U.S. creditor, reduced holdings of U.S. Treasury debt in December by the most in two years as the Federal Reserve announced plans to slow asset purchases.

The nation pared its position in U.S. government bonds by $47.8 billion, or 3.6 percent, to $1.27 trillion, the largest decline since December 2011, according to U.S. Treasury Department data released yesterday.

This is how I would do it if I was China.  I would try to dump 30, 40 or 50 billion dollars a month.  I would try to make a smooth exit and try to get as much for my U.S. debt paper as I could.

So if China is not going to stockpile U.S. dollars or U.S. debt any longer, what is it going to stockpile?

It is going to stockpile gold of course.  In fact, China has been voraciously stockpiling gold for quite some time, and their hunger for gold appears to be growing.

According to Bloomberg, more than 80 percent of the gold that was exported from Switzerland last month went to Asia…

Read More Here

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The Last Great Stand

Part VII: U.S. Stock Market Takes a Dive – Is The Bubble Beginning to Pop?

by reasonvoice

THIS ARTICLE IS IN MY SERIES FOR ONE REASON, AND ONE REASON ONLY. 

NO ONE CAN PREDICT EXACTLY WHEN THE CRASH IS GOING TO HAPPEN.
THERE ARE TOO MANY VARIABLES THIS TIME, vs. THE HOUSING BUBBLE. 
IN A LATER PIECE I WILL DESCRIBE HOW I SEE IT ALL FITTING TOGETHER…
BUT FOR NOW… JUST FACTS IN PARTS I-VII

In regard to the U.S. stock market bubble it’s not a question of if it will pop, but rather of when (and what excuse the so called experts that denied that it was coming will use to distract from the real cause). They’ll tell you it was due to slow downs in emerging markets, some disappointing jobs report or lower than expected corporate earnings, but this is like blaming a blade of grass that a soap bubble lands on for its demise. Bubbles pop because they are bubbles. Once they are inflated the result is inevitable. The wind may carry it a bit farther than expected (QE3) but sooner or later the laws of nature always prevail.

Read More Here

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The Last Great Stand

Part VIII: 25 Fast Facts About The Federal Reserve – Please Share With Everyone You Know

by reasonvoice

Most Americans are under the illusion the FED is somehow part of our government. Whether that would be a good thing or a bad thing is really irrelevant, because it’s not. The FED is an independently owned bank that operates for the benefit of one group of people and one group of people only… the owners of the Fed.

As we approach the 100 year anniversary of the creation of the Federal Reserve, it is absolutely imperative that we get the American people to understand that the Fed is at the very heart of our economic problems.  It is a system of money that was created by the bankers and that operates for the benefit of the bankers.  The American people like to think that we have a “democratic system”, but there is nothing “democratic” about the Federal Reserve.  Unelected, unaccountable central planners from a private central bank run our financial system and manage our economy.  There is a reason why financial markets respond with a yawn when Barack Obama says something about the economy, but they swing wildly whenever Federal Reserve Chairman Ben Bernanke opens his mouth.  The Federal Reserve has far more power over the U.S. economy than anyone else does by a huge margin.

THE FED IS THE BIGGEST PONZE SCHEME IN THE HISTORY OF THE WORLD, and if the American people truly understood how it really works, they would be SCREAMING for it to be abolished immediately.  The following are 25 fast facts about the Federal Reserve that everyone should know…

#1 The greatest period of economic growth in U.S. history was whenthere was no central bank.

#2 The United States never had a persistent, ongoing problem with inflation until the Federal Reserve was created.  In the century before the Federal Reserve was created, the average annual rate of inflation was about half a percent.  In the century since the Federal Reserve was created, the average annual rate of inflation has beenabout 3.5 percent, and it would be even higher than that if the inflation numbers were not being so grossly manipulated.

#3 Even using the official numbers, the value of the U.S. dollar has declined by more than 95 percent since the Federal Reserve was created nearly 100 years ago.

#4 The secret November 1910 gathering at Jekyll Island, Georgia during which the plan for the Federal Reserve was hatched was attended by U.S. Senator Nelson W. Aldrich, Assistant Secretary of the Treasury Department A.P. Andrews and a whole host of representatives from the upper crust of the Wall Street banking establishment.

#5 In 1913, Congress was promised that if the Federal Reserve Act was passed that it would eliminate the business cycle.

#6 The following comes directly from the Fed’s official mission statement: “To provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.”

#7 It was not an accident that a permanent income tax was also introduced the same year when the Federal Reserve system was established.  The whole idea was to transfer wealth from our pockets to the federal government and from the federal government to the bankers.

#8 Within 20 years of the creation of the Federal Reserve, the U.S. economy was plunged into the Great Depression.

#9 If you can believe it, there have been 10 different economic recessions since 1950.  The Federal Reserve created the “dotcom bubble”, the Federal Reserve created the “housing bubble” and now it has created the largest bond bubble in the history of the planet.

#10 According to an official government report, the Federal Reserve made 16.1 trillion dollars in secret loans to the big banks during the last financial crisis.  The following is a list of loan recipients that was taken directly from page 131 of the report…

Citigroup – $2.513 trillion
Morgan Stanley – $2.041 trillion
Merrill Lynch – $1.949 trillion
Bank of America - $1.344 trillion
Barclays PLC – $868 billion
Bear Sterns – $853 billion
Goldman Sachs – $814 billion
Royal Bank of Scotland – $541 billion
JP Morgan Chase – $391 billion
Deutsche Bank – $354 billion
UBS – $287 billion
Credit Suisse – $262 billion
Lehman Brothers – $183 billion
Bank of Scotland - $181 billion
BNP Paribas – $175 billion
Wells Fargo – $159 billion
Dexia – $159 billion
Wachovia – $142 billion
Dresdner Bank – $135 billion
Societe Generale – $124 billion
“All Other Borrowers” – $2.639 trillion

Read More Here

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The Last Great Stand

Part IX: Explaining The Federal Reserve, Inflation, and the Economic Bubbles About To BURST In Layman’s Terms

by reasonvoice

DO YOU EVER WONDER?

Ever wonder about why our economy is in trouble? How can so many people can be in so much debt at the same time? Does it seem strange to you no matter how hard one works, and in spite of all the advances in society, most hard working people cannot escape the treadmill of perpetual debt?

Why are so many families losing their homes to foreclosure? Why are many households dependent upon credit cards to supplement their income? Why does it take TWO spouses to maintain a household when it used to take just one? Why have so many retirement savings been wiped out? Why do prices always creep up?

Did you know that close to 1/3 of all income taxes are consumed just to pay interest on the Federal Debt? (National Debt currently 17 TRILLION DOLLARS , or about $165,000 per household.) Think about it. Every penny that you pay in income tax from January 1 – April 1 is consumed just to pay interest on Federal debt, much of it to foreign banking families!  And let’s not forget the Government’s unfunded future liabilities, estimated at 75 TRILLION. (an additional $750,000+ per household.)

Add those staggering sums to the 11 Trillion in total consumer debt (mortgages, car loans debt, credit cards, etc), student loan debt (1 Trillion more), State debt, County debt, City/Town debt, small business debt, big business debt, and you will see that the total of these debts actually exceeds (BY FAR) the amount of money supply in circulation.

So, how can such astronomical debt ever be repaid? Well, if you haven’t figured it out yet – IT CAN’T. The only way for society to service just the interest on these monstrous debts is to constantly inject new debts into the system.

Finally, on top of all your Federal, State, gasoline, and local taxes, (30% – 40% of your gross income) and on top of your personal debt service burden (another 25%-50%), there’s this thing called “inflation”, or  ”the cost of living.” What exactly is “the cost of living?” What causes it? Why does a dollar buy less and less each year while wages stay flat?

Is the stress of perpetual debt and rising prices keeping you up at night? How many strokes, heart attacks, and even suicides are induced by financial stress each year? Money and debt may even have led to your drinking problem, or perhaps even to  depression. Debt may have been the underlying cause of your divorce or that of some couple that you know.

You know in your gut that something isn’t right in this country. But you don’t have the “Economics education” to figure it out. It all seems too complicated for you to put your finger on, so you just keep slaving away to pay interest and taxes as your dollar buys less and less. All you can do is keep working like a dog and leave the matter to the Wall Street “experts” and politicians to handle for you.

But it’s all quite simple really. So simple in fact, even a dummy can understand it when it is broken down to basic elements.

Read More Here

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The Last Great Stand

Part X: A Storm is Brewing on the Horizon – Martial Law Before 2016?

by reasonvoice

All Out Political Revolution and War is Upon America in 2014?????

Problems I See As Unavoidable:

This is a perfect chance for my two cents on the monetary system. Parts I – IX gave all the technical reasons the Dollar doesn’t stand a chance in the long run. I think it’s far more common sense than all those technical reasons, but I wanted to shut up all the nay sayers. 

First, I think we can assume a worthless Dollar is VERY bad. That takes away our ability to import things we don’t produce domestically. That means whatever we use to sustain ourselves as a nation has to be here. Let’s think about it: As Part III put, we have not only outsourced almost all of our production capability overseas for cheap labor, what little production capacity we have left is being rapidly bought up by the Chinese so they can get out of our Dollar and retain something of value: namely our production capability. 

How do 300 million people survive if we can’t import anything and don’t produce squat because we are a “service” economy now? Short answer? We don’t. Not enough for everyone. That means if you have food, people will do whatever is necessary for them and their loved ones. Chances are if you have none, you’ll do the same. THAT is how a worthless Dollar plays out. Period. There will be a TON of violence for those without somewhere safe, heavily stocked with food, and well protected. 

NOW, THE MILLION DOLLAR QUESTION: DO WE EVER GET TO THAT POINT?

1. Hyperinflation: 

  • Right now the Fed is monitizing our debt to the tune of about 85 BILLION per month. That is over $5 TRILLION OUT OF THIN AIR since Obama took office. What does that mean? It means they are printing that money out of thin air. That does two things. First, it debases our currency as can be seen by one look at the dollar index. LOOK YOURSELF! The dollar has been in free fall. The ONLY thing saving the Dollar is that it is still the world reserve currency… but don’t get too excited because I’ll get to that later. Don’t count on that continuing for long. In addition to debasing the currency, it creates inflation. MASSIVE INFLATION.
  • The government tells us inflation is like 2%. Um. Ok. Gas went from under $2.00 to close to $4.00. What is that? Food prices are going up – but NOTHING like they will be soon. The same bag of dog food I used to get for $9.50 is now about $13.00. What is that if not inflation? That doesn’t sound like 2% to me. Anyone in your family who does the food shopping KNOWS food prices are going up much more than 2%.
  • We have not even begun to feel the inflation that is coming as a result of the printing presses Obama and his economic advisors have been running around the clock.
  • As I mentioned we use a system of banking called Fractional Reserve Banking. Everyone knows banks have been tight on lending money. Familiarize yourself with how Fractional Reserve Banking works, and imagine when the full extent of all this printed money IS actually all in circulation. OMG. Prices will SKYROCKET… and I’m still not even touching the reserve currency status yet. I’m assuming we still have that thus far. Stay tuned for more on that. 
  • Remember those baby boomers on fixed incomes? How are those skyrocketing prices going to work out for them? Expect ramped up foreclosures and parents moving back in with their kids. As more people experience financial hardship they’ll buy less stuff, causing companies to cut back MORE – that means more layoffs, more foreclosures, and the cycle keeps going. This is when I see the Dow ultimately dipping to around 5,000.
  • Furthermore, if there are skyrocketing prices, and super high unemployment, how will people feed their families? Hmmm. I sense this could create some MAJOR problems. I fully predict neighbor will be robbing neighbor trying to feed starving family members, so you better be armed and ready to protect your food…. oh wait… Obama wants your guns. Wow.

2. Healthcare: Even without the atrocity otherwise known as Obamacare, the costs of healthcare have already been increasing exponentially, so healthcare is potentially the first domino in a long line of dominos that ultimately bring down the financial strength of this nation. How? I am a simple man, so I’ll use simple arithmetic:

  • We have the largest generation in American history just entering retirement. Consequently, as a nation we will face the largest expenditures for healthcare probably in human history, but at the very least in American history. Where are these baby boomers going to get the money to pay those medical bills? The “stock market” (which is a term I will use generally for retirement investments) is where most of this enormous group of Americans have the bulk of their wealth tied up. Not all do, but a huge majority of them.
  • Prior to the 2008 crash it was estimated about 40% of Americans had enough money saved for retirement. Let’s be REALLY optimistic and say that after the crash 35% still had enough. First of all, that would be LUDICROUS, but lets assume so anyway. It’s obviously a MUCH lower number.
  • As the baby boomers begin to cash in those investments for their ungodly high medical bills and their retirement living in general, the stock market is inevitably going to drop as money is pulled out. It MIGHT not be so bad if Generation X or their employers were contributing even a fraction of what their baby boomer parents did to replace the withdrawls. HOWEVER, the reality is that so many Generation X ‘s are out of work or underemployed, so there is NOWHERE NEAR enough going in to replace what will be coming out. Furthermore, about 50% of the money in the stock market right now is “Institutional Investors.” When the Fed is lending at 0%, why not borrow and invest speculatively if you’re a huge financial institution?
  • Guess what? BUBBLE #1: We have another stock bubble brewing, but that is the smallest of the bubbles presently brewing. At some point, the institutional investors will begin the selloff and start to get out of the overpriced market while the getting is good. In an attempt to minimize losses to their retirement funds, the mom and pops of the country are going to be scrambling to get out as fast as they can. Prices will be dropping like a rock as institutions pull out in volume, and mom and pop always panic. It’s like clockwork. THEN, stocks REALLY start to drop like a ROCK as everyone is trying desperately to get into CASH. On a side note, when the market bottoms out and the mom and pops are all cleaned out and devastated, THAT is when the institutional investors will jump back in at low prices and ride the wave back up that screws the average investor again. It’s a cycle. That’s assuming we’re not under Martial Law by then- but I’ll get to that in a bit.
  • As stock prices drop, eventually we’ll see a mad selloff driven by fear like in 2008. In turn, since corporations could care less about the welfare of their employees, and they only care about the almighty shareholder – it will be LAYOFF time. MASSIVE LAYOFFS will be needed to cut costs so share prices stay up as much as possible. The more people continue to get laid off, you can count on the cycle of people not making their mortgage payments to start up again. THEN, another super round of foreclosures will begin. Banks still haven’t gotten rid of all the previous foreclosures on the books from 2008, so expect prices of homes to drop faster than you can say FAST as the selloff begins again.
  • More people pull out of the market, leads to more layoffs, leads to more jobless, leads to more foreclosures, and the cycle will be rapid. I could easily see the Dow and an ounce of gold both being around $5,000. Yes – I said 5,000. I am very well aware we’re at 16,000 now. But how you ask? Calm down, I’m getting there.

 

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Enlarge Photo

Photo by: Marko Drobnjakovic

A woman walks past a local bank set on fire in Kiev’s Independence Square, the epicenter of the country’s unrest, in Ukraine on Feb. 25. The Obama administration is hoping the crisis in Ukraine will breathe new life into its stalled efforts to pass legislation reforming the International Monetary Fund in Congress this year. (associated press)

Administration sees crisis in Ukraine as opportunity to pass IMF reforms

By Patrice Hill-

The Washington Times

The crisis in Ukraine has unexpectedly breathed new life in the Obama administration’s stalled efforts to pass legislation reforming the International Monetary Fund in Congress this year.

Administration aides have seized on the crisis as an opportunity to piggyback the reforms to the global financing agency long sought by President Obama, which give a greater voting share on the IMF board to rising developing economies such as China and Brazil, onto a bill providing $1 billion in loan guarantees for Ukraine’s West-leaning government.

The aid package — and the IMF’s potential role in aiding the new government in Kiev — will likely come up when Mr. Obama meets for the first time with new Ukrainian Prime Minister Arseniy Yatsenyuk at the White House Wednesday.

Under the administration’s assistance plan, the IMF would lead Western efforts to provide Ukraine with as much as $35 billion in loans in exchange for Ukraine adopting much-needed reforms in its corruption-riddled economy. But the quick action that is needed to help Ukraine avert a default within months may be jeopardized if Congress continues to block the reform bill with its $63 billion increase in the IMF’s lending authority.

Moreover, Treasury Secretary Jack Lew said the U.S. cannot take an aggressive leading role in addressing the crisis, as many in Congress demand, unless lawmakers acts on the reforms. The U.S. in the past has had effective veto power over IMF programs, but the administration’s failure to obtain additional lending power to the international agency from Capitol Hill has been eroding its influence there.

“It is imperative that we secure passage of IMF legislation now so we can show support for the IMF in this critical moment and preserve our leading influential voice in the institution,” Mr. Lew told the Senate Finance Committee, noting that many members of Congress have been “at the forefront of international calls in urging the Fund to play a central and active first-responder role in Ukraine.”

Credibility at stake

International finance analysts say the U.S. will lose credibility in the eyes of the world if it continues to call for action to help the new government in Kiev while holding back the IMF reforms that make that possible. In addition to the IMF receiving increased lending authority in the bill, Ukraine would get greater authority to borrow funds it needs from the IMF to stabilize its ailing economy.

“Since it was the U.S. that spearheaded the 2010 IMF reforms, the legitimacy of U.S. leadership is at stake,” said Jo Marie Griesgraber, executive director of New Rules for Global Finance. “Congressional approval is the only remaining impediment” preventing the reforms from taking effect, she said, as most of the IMF’s other 136 members have already approved them.

“We have heard the calls from Congress for stronger U.S. leadership on Ukraine. This would be an excellent time for Congress to approve the IMF reforms,” she said. “This is a win-win for members of Congress who wish to strengthen U.S. global leadership, specifically its position on Ukraine vis—vis Russia, without additional costs to U.S. taxpayers.”

The administration and IMF proponents argue that the increased IMF lending authority would do little to increase the budget deficit since it involves a reprogramming of funds already approved by Congress for emergency IMF loans during the 2009 financial crisis.

While Republican leaders earlier this year were willing to accept the reforms, they sought unsuccessfully for concessions from the administration in return. Some Republican members of Congress have balked at the legislation, contending that the $314 million on-budget cost is not negligible while the IMF lending programs leave U.S. taxpayers open to potentially large costs if borrowers do not repay their loans — something that has never happened in the IMF’s history.

“According to the Congressional Research Service, the U.S. has never lost money on quota commitments. In fact, there is some nominal interest earned on these commitments,” said Ms. Griesgraber.

 

Read More Here

 

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Bloomberg

 

Ukraine Aid Measure Approved With IMF Link House Opposes

 

By Derek Wallbank and David Lerman Mar 12, 2014 7:26 PM CT

The Senate Foreign Relations Committee approved an aid package for Ukraine that will face opposition from Republicans over changes in U.S. funding for the International Monetary Fund.

The Democratic-led panel voted 14-3 today for a bill that would give Ukraine $1 billion in loan guarantees it’s seeking as Russian forces occupy the Crimean peninsula. It also would authorize sanctions against Ukrainians and Russians deemed responsible for corruption and violence.

The measure, which had bipartisan support in the panel, “sends a message to Russia and the world that we support Ukraine,” said Democratic Senator Robert Menendez of New Jersey, the panel’s chairman.

U.S. House Speaker John Boehner earlier today rejected attempts by Democrats and the Obama administration to tie additional funds for the IMF to a Ukraine aid package.

“This IMF money isn’t necessary for dealing with this Ukraine crisis that we see today,” Boehner, an Ohio Republican, told reporters in Washington. House Republicans have resisted proposals to increase funds for the IMF for years.

The IMF overhaul is backed by the Obama administration, chief executive officers of major U.S. companies and Republican former secretaries of state Henry Kissinger and Condoleezza Rice, who have said funding the IMF would help Ukraine.

Senate Timing

Ukraine’s prime minister, Arseniy Yatsenyuk, went to the Capitol tonight after meetings in Washington with President Barack Obama and Secretary of State John Kerry. Speaking to reporters after he met in a closed-door session with Foreign Relations Committee members, Yatsenyuk said he wasn’t concerned about the time that it might take for Congress to approve the requested economic assistance.

“It always takes time to make good things,” he said.

He called the U.S. pledge of $1 billion in loan guarantees “the first real and concrete step how to stabilize the situation in my country, and we praise it.”

While Senate Majority Leader Harry Reid told reporters he hoped the measure approved today can be taken up by the full Senate tomorrow, Adam Jentleson, a spokesman for the Nevada Democrat, said the legislation may not be considered before members leave for a break until March 24. The Senate may depart as soon as tomorrow.

Three Republicans voted against the Senate measure in the committee: Senators James Risch of Idaho, John Barrasso of Wyoming and Rand Paul of Kentucky.

 

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The New Republic

ECONOMICS MARCH 13, 2014

If Ukraine Defaults, They Can Blame House Republicans

Ukraine needs loans to avoid a default and they need them fast. Last week, Secretary of State John Kerry pledged $1 billion to support Ukraine, but that money is now caught up in a political fight in Congress. Democrats want to include long-overdue reforms to the International Monetary Fund that would allow Ukraine to borrow more from the fund, but Republicans are opposed – unless, of course, Democrats will agree to a one-year delay of an IRS rule. “Let’s make sure we all understand something: The IMF money has nothing to do with Ukraine,” House Speaker John Boehner said on Thursday. But they do: They’d allow Ukraine to borrow 60 percent—around $600 million—more from the IMF.

In 2010, the G20 countries agreed to changes to the IMF that would transfer $63 billion from an emergency fund to the main fund and give emerging countries a larger representation on the board. For the U.S., the implications are minor. It does not increase our contributions to the fund and slightly reduces our voting power, but we retain veto power over major policy decisions. More than 130 countries have already approved of these reforms, but they cannot go into effect until Congress passes them.

 

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The New Zealand Herald

 

IMF team to remain in Ukraine

WASHINGTON (AP) The head of the International Monetary Fund says an IMF fact-finding team in Ukraine will begin negotiations with authorities to develop an economic reform program that could lead to financial help from the lending organization.

Christine Lagarde said Thursday the team that went to Ukraine March 4 and normally would return to Washington to report to the IMF board will now remain until March 21.

 

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WASHINGTON Wed Mar 12, 2014 11:37am EDT

 

U.S. Treasury Secretary Jack Lew testifies before the Senate Budget Committee about the President's 2015 Budget on Capitol Hill in Washington, March 12, 2014. REUTERS-Kevin Lamarque

1 of 2. U.S. Treasury Secretary Jack Lew testifies before the Senate Budget Committee about the President’s 2015 Budget on Capitol Hill in Washington, March 12, 2014.

Credit: Reuters/Kevin Lamarque

 

 

(Reuters) – The United States is hearing that its refusal to approve previously negotiated reforms for the International Monetary Fund could reduce the nation’s influence at the institution, Treasury Secretary Jack Lew said on Wednesday.

U.S. lawmakers have been reticent to approve the IMF quota reforms that were agreed to in 2010 and would give developing countries a bigger say at the international lender.

The reforms would not reduce Washington’s power at the IMF, where the United States is the sole country with veto power.

The Obama administration hoped Congress would tack approval of the IMF quota reforms onto legislation for an aid package for crisis-stricken Ukraine, but the outlook for that happening remains uncertain.

 

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SYDNEY — Finance chiefs from the 20 largest economies agreed Sunday to implement policies that will boost world GDP by more than $2 trillion over the coming five years.

Australian Treasurer Joe Hockey, who hosted the Group of 20 meeting in Sydney, said the commitment from the G-20 finance ministers and central bankers was “unprecedented.”

The world economy has sputtered since the 2008 financial crisis and global recession that followed. Progress in returning economic growth to pre-crisis levels has been hampered by austerity policies in Europe, high unemployment in the U.S. and a cooling of China’s torrid expansion.

The centerpiece of the $2 trillion commitment made at the Sydney meeting is to boost the combined gross domestic product of G-20 countries by 2 percent above the levels expected for the next five years, possibly creating tens of millions of new jobs. World GDP was about $72 trillion in 2012.

The G-20 combines the world’s major industrialized and developing countries from the United States to Saudi Arabia and China, representing about 85 percent of the global economy.

The communique from the meeting said signs of improvement in the global economy are welcome but growth remains below the rates needed to get people back into work and to meet their aspirations.

 

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Exclusive: EU executive sees personal savings used to plug long-term financing gap

LONDON Wed Feb 12, 2014 6:00pm EST

A picture illustration taken with the multiple exposure function of the camera shows a one Euro coin and a map of Europe, January 9, 2013. REUTERS/Kai Pfaffenbach

A picture illustration taken with the multiple exposure function of the camera shows a one Euro coin and a map of Europe, January 9, 2013.

Credit: Reuters/Kai Pfaffenbach

(Reuters) – The savings of the European Union’s 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis, an EU document says.

The EU is looking for ways to wean the 28-country bloc from its heavy reliance on bank financing and find other means of funding small companies, infrastructure projects and other investment.

“The economic and financial crisis has impaired the ability of the financial sector to channel funds to the real economy, in particular long-term investment,” said the document, seen by Reuters.

The Commission will ask the bloc’s insurance watchdog in the second half of this year for advice on a possible draft law “to mobilize more personal pension savings for long-term financing”, the document said.

Banks have complained they are hindered from lending to the economy by post-crisis rules forcing them to hold much larger safety cushions of capital and liquidity.

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ZeroHedge

Europe Considers Wholesale Savings Confiscation, Enforced Redistribution

At first we thought Reuters had been punk’d in its article titled “EU executive sees personal savings used to plug long-term financing gap” which disclosed the latest leaked proposal by the European Commission, but after several hours without a retraction, we realized that the story is sadly true. Sadly, because everything that we warned about in “There May Be Only Painful Ways Out Of The Crisis” back in September of 2011, and everything that the depositors and citizens of Cyprus had to live through, seems on the verge of going continental. In a nutshell, and in Reuters’ own words, “the savings of the European Union’s 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis, an EU document says.” What is left unsaid is that the “usage” will be on a purely involuntary basis, at the discretion of the “union”, and can thus best be described as confiscation.

The source of this stunner is a document seen be Reuters, which describes how the EU is looking for ways to “wean” the 28-country bloc from its heavy reliance on bank financing and find other means of funding small companies, infrastructure projects and other investment. So as Europe finally admits that the ECB has failed to unclog its broken monetary pipelines for the past five years – something we highlight every month (most recently in No Waking From Draghi’s Monetary Nightmare: Eurozone Credit Creation Tumbles To New All Time Low), the commissions report finally admits that “the economic and financial crisis has impaired the ability of the financial sector to channel funds to the real economy, in particular long-term investment.”

The solution? “The Commission will ask the bloc’s insurance watchdog in the second half of this year for advice on a possible draft law “to mobilize more personal pension savings for long-term financing“, the document said.”

Mobilize, once again, is a more palatable word than, say, confiscate.

And yet this is precisely what Europe is contemplating:

Read More Here

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