Tin Foil Hats, Economic Reality and the Total Perspective Vortex

[pmbug]

... Russian presidential adviser Sergei Glazyev proposed plan of 15 measures to protect country’s economy if sanctions applied, Vedomosti newspaper reports, citing Glazyev’s letter to Finance Ministry. According to Vedomosti as Bloomberg reported, Glazyev proposed:

• Russia should withdraw all assets, accounts in dollars, euros from NATO countries to neutral ones
• Russia should start selling NATO member sovereign bonds before Russia’s foreign-currency accounts are frozen
• Central bank should reduce dollar assets, sell sovereign bonds of countries that support sanctions
• Russia should limit commercial banks’ FX assets to prevent speculation on ruble, capital outflows
• Central bank should increase money supply so that state cos., banks may refinance foreign loans
• Russia should use national currencies in trade with customs Union members, other non-dollar, non-euro partners

... if Russia were to take the baton, and other BRIC countries, already furious by the recent US decision to not boost their IMF status, follow suit, then Obama's life is about to become a living nightmare. Especially, if that most important BRIC member - China - does any of the many things it can do to indicate if, in this brand new Cold War, it is with or against the US...

http://www.zerohedge.com/news/2014-...nk-sp-proposes-scorched-earth-retaliation-aga

 

[pmbug]

Several Russian media outlets have reported that Russia, Kazakhstan and Belarus, that currently form the Eurasian customs union, will sign an agreement in May to accelerate the formation of an economic union and a joint currency: Altyn.
...
Russia’s economy is eight times smaller than that of the US, but by forming a new ‘empire’ on top of a vast amounts of resources this economic block will be a serious threat for the US petrodollar. Russia is now speaking openly about getting rid of the US dollar for trading energy, it’s building its own payment system and closing gas export deals with China - the other Asian empire. The Eurasian Economic Union will be a powerful stab at the US dollar hegemony.

By the way, in Kazakhstan “Altyn” means … gold.

http://www.ingoldwetrust.ch/forming-of-eurasian-economic-union-and-joint-currency-accelerates

 

[pmbug]

I missed this one a month ago:

The US dollar's position as the base currency for global energy trading gives the US a number of unfair advantages. It seems that Moscow is ready to take those advantages away.

The existence of "petrodollars" is one of the pillars of America's economic might because it creates a significant external demand for American currency, allowing the US to accumulate enormous debts without defaulting. If a Japanese buyer wants to buy a barrel of Saudi oil, he has to pay in dollars even if no American oil company ever touches the said barrel. Dollar has held a dominant position in global trading for such a long time that even Gazprom's natural gas contracts for Europe are priced and paid for in US dollars. Until recently, a significant part of EU-China trade had been priced in dollars.

Lately, China has led the BRICS efforts to dislodge the dollar from its position as the main global currency, but the "sanctions war" between Washington and Moscow gave an impetus to the long-awaited scheme to launch the petroruble and switch all Russian energy exports away from the US currency .

The main supporters of this plan are Sergey Glaziev, the economic aide of the Russian President and Igor Sechin, the CEO of Rosneft, the biggest Russian oil company and a close ally of Vladimir Putin. Both have been very vocal in their quest to replace the dollar with the Russian ruble. Now, several top Russian officials are pushing the plan forward.
...

More: http://voiceofrussia.com/2014_04_04/Russia-prepares-to-attack-the-petrodollar-2335/

Gives some context to Rickards' Tweet.

 

[pmbug]

...
According to the Prime news agency, on April 24th the government organized a special meeting dedicated to finding a solution for getting rid of the US dollar in Russian export operations. Top level experts from the energy sector, banks and governmental agencies were summoned and a number of measures were proposed as a response for American sanctions against Russia.

The"de-dollarization meeting” was chaired by First Deputy Prime Minister of the Russian Federation Igor Shuvalov, proving that Moscow is very serious in its intention to stop using the dollar. A subsequent meeting was chaired by Deputy Finance Minister Alexey Moiseev who later told the Rossia 24 channel that"the amount of ruble-denominated contracts will be increased”, adding that none of the polled experts and bank representatives found any problems with the government's plan to increase the share of ruble payments.
...

http://voiceofrussia.com/2014_05_13/Russia-strives-to-exclude-the-dollar-from-energy-trading-5138/

 

[pmbug]

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.
...

http://www.bloomberg.com/news/2014-05-21/russia-signs-china-gas-deal-after-decade-of-talks.html

This was a key deal for Russia to lessen their dependence upon Europe for trade.

 

[rblong2us]

da managements getting a bit upset about it all -

http://www.itv.com/news/story/2014-05-21/prince-of-wales-accused-of-comparing-putin-to-hitler/


Prince of Wales 'compared Putin to Hitler'

 

[pmbug]

Eric King: “Dr. Roberts, there is this International Economic Forum in St. Petersburg (Russia). I know the U.S. has pulled out, but does the high level of attendance, despite Washington’s pressure, indicate fading U.S. influence?”

Dr. Roberts: “Yes. One of the advisors to Putin had publicly complained that Washington had put unprecedented pressure on American and European countries not to attend. But it turns out that present at this forum, which began yesterday and continues today and tomorrow, there are official delegations from 62 countries, and the CEOs of 146 of the major companies in the world....

...

... it does mean that the dollar will be more vulnerable because the exercise of the United States, publicly, by its power, has been diminished by the response of other countries.”

http://kingworldnews.com/kingworldn...Putins_Threat_Just_Stunned_U.S._&_Europe.html

 

[rblong2us]

interesting thoughts from jim Willie on the Belgium USTBond purchases -

http://www.marketoracle.co.uk/Article45825.html

 

[pmbug]

Eric King: “Ben, I know you had a chance to meet former Greek Prime Minister George Papandreou very recently. It was fascinating what transpired. Can you share that with KWN listeners (and readers) around the world?”

Davies: “Yes. It was very interesting. I was at a conference listening to him speak. He very kindly gave me a small audience afterwards. I found it very revealing. I asked a very contentious question and he had the good grace to answer it in a very thoughtful manner....

“What I actually asked him was, “Were you aware of the comments by the former Bundesbank Vice President and former ECB (European Central Bank) board member, Jürgen Stark, where he suggested that the entire financial system is ‘pure fiction’ and that it was vulnerable to a collapse because of all this infinite money that’s been created?” I went on to ask, “Had policymakers at the highest level discussed a change of the monetary order when you were in charge of the Greek political system?”

He (Papandreou) was very thoughtful about this. He said to me, “Yes, beyond austerity, beyond reforms, there had been deep conversations about how to change the monetary order.” I asked, “Did this include a gold standard?” What he told me was, “It was about exploring a basket of currencies that could involve an asset like that (gold).”

I asked, “Are you referring to an SDR (Special Drawing Right)?” And he said, “Yes. It would be along those lines.” He wasn’t trying to hide anything. He was very candid about it. But it was a very interesting exchange. It’s not often that you have these conversations.”

http://kingworldnews.com/kingworldn..._Admits_To_Talks_On_New_Reserve_Currency.html

 

[ancona]

Very interesting snip. It would appear that The Brotherhood of Darkness is no longer worried about maintaining radio silence on this one, since the good little sheep don't seem to be struggling too much on their way to the slaughter house.

 

[pmbug]

... Putin advisor Sergey Glazyev ... published an article in Russian Argumenty Nedeli, in which he outlined a plan for "undermining the economic strength of the US" in order to force Washington to stop the civil war in Ukraine. Glazyev believes that the only way of making the US give up its plans on starting a new cold war is to crash the dollar system.
...
Glazyev's set of countermeasures specifically targets the core strength of the US war machine, i.e. the Fed's printing press. Putin's advisor proposes the creation of a "broad anti-dollar alliance" of countries willing and able to drop the dollar from their international trade. Members of the alliance would also refrain from keeping the currency reserves in dollar-denominated instruments. Glazyev advocates treating positions in dollar-denominated instruments like holdings of junk securities and believes that regulators should require full collateralization of such holdings. An anti-dollar coalition would be the first step for the creation of an anti-war coalition that can help stop the US' aggression.

Unsurprisingly, Sergey Glazyev believes that the main role in the creation of such a political coalition is to be played by the European business community because America's attempts to ignite a war in Europe and a cold war against Russia are threatening the interests of big European business. Judging by the recent efforts to stop the sanctions against Russia, made by the German, French, Italian and Austrian business leaders, Putin's aide is right in his assessment. Somewhat surprisingly for Washington, the war for Ukraine may soon become the war for Europe's independence from the US and a war against the dollar.

http://www.zerohedge.com/news/2014-...ti-dollar-alliance-halt-us-foreign-aggression

 

[pmbug]

China has announced it will allow the direct trade between its yuan national currency and the British pound later this week. Analysts said the move was designed to further internationalize the unit.
...
Sterling and yuan would be directly swapped without using the US dollar as an intermediary, the trade platform noted.

"The move will promote the bilateral trade and investment between China and the United Kingdom and facilitate the use of renminbi and pound in the cross-border trade settlement," CFETS commented.
...

http://www.dw.de/china-to-start-direct-trade-between-yuan-and-british-pound/a-17717188

 

[pmbug]

A little over a month ago, when Russia announced the much anticipated "Holy Grail" energy deal with China, some were disappointed that despite this symbolic agreement meant to break the petrodollar's stranglehold on the rest of the world, neither Russia nor China announced payment terms to be in anything but dollars. ... This changed rather dramatically overnight when in a little noticed statement, Gazprom's CFO Andrey Kruglov uttered the magic words (via Bloomberg):

GAZPROM READY TO SETTLE CHINA CONTRACTS IN YUAN OR RUBLES: CFO

In other words just as the US may or may not be preparing to export crude - a step which would weaken the dollar's reserve status as traditional US oil trading partners will need to find other import customers who pay in non-USD currencies - the world's two other superpowers are preparing to respond. And once the bilateral trade in Rubles or Renminbi is established, the rest of the energy world will piggyback.

...

But wait, there's still more, because it is not just Gazprom. As the PBOC announced overnight, PBOC Assistant Governor Jin Qi and Russian central bank Deputy Chairman Dmitry Skobelkin led a meeting held yesterday and today in Shanghai. The meeting discussed cooperating on project and trade financing using local currencies. The meeting discussed cooperation in bank card, insurance and financial supervision sectors.

In other words, central bankers of China and Russia discussed how to replace the dollar with Rubles and Yuan. ...

More: http://www.zerohedge.com/news/2014-...-dollar-settle-china-contracts-yuan-or-rubles

 

[ancona]

Once the petro dollar goes away, it is essentially over for the greenback. When other countries begin to realize that their fiat can be used for trades and there is no need to "pay the vig", buy dollars and use those, they will do so.

 

[pmbug]

Before the crucial visit to Beijing next week, the governor of the Russian Central Bank, Elvira Nabiullina met Vladimir Putin to report on the progress of the upcoming ruble-yuan swap deal with the People's Bank of China and the Kremlin used the meeting to let the world know about the technical details of its international anti-dollar alliance.
...
It seems that the Kremlin chose the all-in-one approach for establishing its anti-dollar alliance. Currency swaps between the BRICS central banks will facilitate trade financing while completely bypassing the dollar. At the same time, the new system will also act as a de facto replacement of the IMF, because it will allow the members of the alliance to direct resources to finance the weaker countries. As an important bonus, derived from this "quasi-IMF" system, the BRICS will use a part (most likely the "dollar part") of their currency reserves to support it, thus drastically reducing the amount of dollar-based instruments bought by some of the biggest foreign creditors of the US.
...

More: http://voiceofrussia.com/2014_07_03/BRICS-is-morphing-into-an-anti-dollar-alliance-6229/

 

[pmbug]

France's political and business establishment has hit out against the hegemony of the dollar in international transactions after US authorities fined BNP Paribas $9 billion for helping countries avoid sanctions.

Michel Sapin, the French finance minister, called for a "rebalancing" of the currencies used for global payments, saying the BNP Paribas case should "make us realise the necessity of using a variety of currencies."

He said, in an interview with the Financial Times on the sidelines of a weekend economics conference: Europeans "are selling to ourselves in dollars, for instance when we sell planes. Is that necessary? I don't think so. I think a rebalancing is possible and necessary, not just regarding the euro but also for the big currencies of the emerging countries, which account for more and more of global trade."

Christophe de Margerie, the chief executive of Total, France's biggest company by market capitalisation, said he saw no reason for oil purchases to be made in dollars, even if the benchmark price in dollars was likely to remain.

"The price of a barrel of oil is quoted in dollars," he said. "A refinery can take that price and using the euro-dollar exchange rate on any given day, agree to make the payment in euros."

One chief executive of a CAC 40 industrial group said he supported Mr Sapin's push.

"Companies like ours are in a bind because we sell a lot in dollars but we do not always want to deal with all the US rules and regulations," he said.
...

http://gata.org/node/14171

Are we going to push Europe into Russia's (the BRIC's) corner on this issue?

I wasn't online over the holiday weekend. I see ZH also covered this issue:

... via Bloomberg:

NOYER: BNP CASE WILL ENCOURAGE ‘DIVERSIFICATION’ FROM DOLLAR

Here is the full google translated segment:

Q. Doesn't the role of the dollar as an international currency create systemic risk?


Noyer: Beyond [the BNP] case, increased legal risks from the application of U.S. rules to all dollar transactions around the world will encourage a diversification from the dollar. BNP Paribas was the occasion for many observers to remember that there has been a number of sanctions and that there would certainly be others in the future. A movement to diversify the currencies used in international trade is inevitable. Trade between Europe and China does not need to use the dollar and may be read and fully paid in euros or renminbi. Walking towards a multipolar world is the natural monetary policy, since there are several major economic and monetary powerful ensembles. China has decided to develop the renminbi as a settlement currency. The Bank of France was behind the popular ECB-PBOC swap and we have just concluded a memorandum on the creation of a system of offshore renminbi clearing in Paris. We have very strong cooperation with the PBOC in this field. But these changes take time. We must not forget that it took decades after the United States became the world's largest economy for the dollar to replace the British pound as the first international currency. But the phenomenon of U.S. rules expanding to all USD-denominated transactions around the world can have an accelerating effect.

In other words, the head of the French central bank, and ECB member, Christian Noyer, just issued a direct threat to the world's reserve currency (for now), the US Dollar.
...

http://www.zerohedge.com/news/2014-07-04/punishing-france-us-just-accelerated-demise-dollar-0

 

[pmbug]

...
Are we going to push Europe into Russia's (the BRIC's) corner on this issue?

Um, yeah, it looks like we will.

...
According to the NYT, the money laundering crackdown is "bound for another European financial center: Germany. State and federal authorities have begun settlement talks with Commerzbank, Germany’s second-largest lender, over the bank’s dealings with Iran and other countries blacklisted by the United States, according to people briefed on the matter. The bank, which is suspected of transferring money through its American operations on behalf of companies in Iran and Sudan, could strike a settlement deal with the state and federal authorities as soon as this summer, said the people briefed on the matter, who were not authorized to speak publicly.

The contours of a settlement, which the authorities have only begun to sketch out, are expected to include at least $500 million in penalties for Commerzbank, the people added. Although prosecutors were still weighing punishments, the people briefed on the matter said that the bank would most likely face a so-called deferred prosecution agreement, which would suspend criminal charges in exchange for the financial penalty and other concessions.

It's not just Commerzbank - a settlement with the smaller bank will merely pave the way for the punishment of the biggest bank of all (in terms of groiss derivative notional held): Deutsche Bank.
...

http://www.zerohedge.com/news/2014-...rackdown-shifts-bnp-commerzbank-deutsche-bank

 

[pmbug]

China designated a clearing bank in Seoul for yuan transactions in South Korea on Friday, coinciding with a visit by President Xi Jinping, as Beijing promotes greater use of its currency overseas, AFP reports.
...
A joint communique endorsed Thursday by Xi and his South Korean counterpart Park Geun-Hye also pledged to strengthen efforts to launch direct trading between the yuan and the won.

http://voiceofrussia.com/news/2014_...-to-direct-trade-in-national-currencies-4477/

 

[ancona]

Looks to be gaining both traction and speed now.

 

[mmerlinn]

Looks to be gaining both traction and speed now.

July 1st was the straw that broke the camel's back.

Watch what happens between now and October 20th, just in time for the elections.