This means the creation of a single financial market between Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and other countries of the former Soviet Union.
It appears Russia is close to taking the next big step towards de-dollarization and killing the petro-dollar as Vladimir Putin’s “dream” of ruble-based pricing of its domestically-produced oil is on the verge of realization. SPIMEX (The St. Petersburg International Mercantile Exchange) is actively courting international oil traders to join its emerging futures market, which as Bloomberg reports, is designed “to create a system where Russian oil is priced and traded in a fair and straightforward way.”
Step-by-step Russia, China and other emerging economies are taking measures to reduce their dependence on the US dollar, and as SputnikNews detailed, F. William Engdahl warns – referring to Russia’s crude oil benchmark initiative – this move could deal a dramatic blow to the “petrodollar’s” dominance. Continue reading »
This article was written by Brandon Smith and originally published at his Alt-Market website.
Editor’s Comment: As Brandon Smith makes eloquent in this article, a global showdown is looming, and the long-standing alliance between the United States and Saudi Arabia is likely to be broken, as self-interest drives new alliances in the era of global SDR currencies, and the end of the dollar’s special status on the world market.
Oil prices have been deliberately skewed to a level that would disrupt entire nations, and test markets while a flood of resources is pulling out the safety net and things grind to a halt. As these events unfold in the near future, much of the ample corrupt between the Saudis and the secret government wing of the U.S. government is likely to surface… and there is much evil and misdeeds to draw from.
One More Casualty Of The 9/11 Farce – The Petrodollar
by Brandon Smith
It’s been about 15 years now since passenger airliners struck the World Trade Center towers on 9/11, and we are still suffering the consequences of that day, though perhaps not in the ways many Americans might believe. Continue reading »
It seems the end really is nigh for the U.S. dollar.
And the mudfight for global dominance and currency war couldn’t be more ugly or dramatic.
The Saudis are now openly threatening to take down the U.S. economy in the ongoing fallout over collapsing oil prices and tense geopolitical events involving the 9/11 cover-up. The New York Times reports:
Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars’ worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks.
China has been working for years to establish global currency status, and will strengthen the yuan by backing it with gold in moves clearly designed to cripple the role of the dollar. Zero Hedge reports: Continue reading »
“…a moratorium on printing new high denomination notes would make the world a better place.”
– Larry Summers, Harvard Professor
… and the world would be a much better place without …
esterday we reported that the ECB has begun contemplating the death of the €500 EURO note, a fate which is now virtually assured for the one banknote which not only makes up 30% of the total European paper currency in circulation by value, but provides the best, most cost-efficient alternative (in terms of sheer bulk and storage costs) to Europe’s tax on money known as NIRP.
That also explains why Mario Draghi is so intent on eradicating it first, then the €200 bill, then the €100 bill, and so on. Continue reading »
EURUSD just broke to a 1.05 handle, its lowest since April. With EURUSD now down 9 big figures from Draghi’s mid-October jawboning, the US Dollar index (heavily-weighted to EUR) is soaring, reaching back above to its highest since March. Bearing in mind that Fed’s Fischer says that the worst of USD’s impact on the US economy is yet to come, we may have a problem.…
So many of the exact same patterns that we witnessed just before the stock market crash of 2008 are playing out once again right before our eyes. Most of the time, a stock market crash doesn’t just come out of nowhere. Normally there are specific leading indicators that we can look for that will tell us if major trouble is on the horizon. One of these leading indicators is the junk bond market. Right now, a closely watched high yield bond ETF known as JNK is sitting at 35.77. If it falls below 35, that will be a major red flag, and it will be the first time that it has done so since 2009. As you can see from this chart, JNK started crashing in June and July of 2008 – well before equities started crashing later that year. A crash in junk bonds almost always precedes a major crash in stocks, and so this is something that I am watching carefully.
And there is a reason why junk bonds are crashing. In 2015 we have seen the most corporate bond downgrades since the last financial crisis, and corporate debt defaults are absolutely skyrocketing. The following comes from a recent piece by Porter Stansberry… Continue reading »
There has been a litany of layoff announcements recently: Biogen said yesterday that it would axe 11% of its people. ESPN would lay off 4% of its people. Twitter a couple of days ago said it would slash its workforce by 8%. Microsoft and HP are currently very busy shedding tens of thousands of workers.
Caterpillar announced over 10,000 layoffs last month. Intuit kicked off a new round of layoffs this summer. Permanently troubled former highflyer Groupon is laying of 1,100 folks. Even startups. Zomato, based in India, is laying of 300 folks, many of them in the US. Flipagram laid off 20% of its workers. And on and on. Even Snapchat. Continue reading »
For the first time since September 2013, The USD Index just signalled a “death cross.” Three of the last four times that the 50-day moving-average crossed below the 200-day moving-average, The USD Index tumbled significantly.
This makes sense as the rate-hike odds (and implicitly timing) continues to plunge.
– Russia Is Going To Pass A Law Formally Dumping The U.S. Dollar (Economic Collapse, Sep 2, 2015):
Russian President Vladimir Putin has introduced legislation that would deal a tremendous blow to the U.S. dollar. If Putin gets his way, and he almost certainly will, the U.S. dollar will be eliminated from trade between nations that belong to the Commonwealth of Independent States. In addition to Russia, that list of countries includes Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan and Uzbekistan. Obviously this would not mean “the death of the dollar”, but it would be a very significant step toward the end of the era of the absolute dominance of the U.S. dollar. Most people don’t realize this, but more U.S. dollars are actually used outside of the United States than are used inside this country. If the rest of the planet decides to stop accumulating dollars, using them to trade with one another, and loaning them back to us at ultra-low interest rates, we are going to be in for a world of hurt. Unfortunately for us, it is only a matter of time until that happens.
When I first read the following excerpt from a recent RT article, I was absolutely stunned…
Russian President Vladimir Putin has drafted a bill that aims to eliminate the US dollar and the euro from trade between CIS countries. Continue reading »
H/t reader M.G.:
“On the World economy, this is a huge story, and if it does happen, the US dollar will lose one of its most stalwart supporters, Japan.
If Japan adopts the electronic currency no media will discuss (regardless most nations now use it in lieu of the US dollar), and join with the east in direct trade, leaving the dollar out, the US dollar will be down to itself (the USA) and the struggling Euro zone.
This would be a huge blow for the power of the dollar. Until Fukushima, Japan was the biggest US lender and dollar holder……..
Why is nobody covering this story?”
– Sanctions could lead to Russia-Japan currency swaps (RT, Sep 3, 2015):
The Japan Bank for International Cooperation (JBIC) says the country is leaning towards direct ruble-yen currency swaps, as Western sanctions are making it difficult to conduct business using US dollar transactions.
“We’re now studying that [the effects of ruble devaluation]. We need some of the swap arrangements with the local banks. We are elaborating opportunities with Russian banks such as Gazprombank, VTB, VEB… Because of the US sanctions, we cannot use the US dollar anymore, we have to switch to other currencies,” JBIC’s senior managing director Tadashi Maeda told Sputnik news agency on Thursday on the sidelines of the Eastern Economic Forum (EEF) in Vladivostok. Continue reading »
Something is afoot as de-dollarization escalates around the world. With CNY/RUB trading volumes up a stunning 400% year-over-year to record highs, and hot on the heels of China’s (and much of EM Asia) dumping dollar assets, Russian President Vladimir Putin has just unleashed a new bill aiming to completely eliminate the US dollar from the trade of goods.
As Putin explained last year… trade in Rubles and Yuan will weaken the dollar’s influence…
And it appears to be happening…. Continue reading »
The virtuous circle that has sustained the dollar and buoyed USD assets for decades has definitively been broken. Now, with China’s Treasury liquidation serving to exacerbate the pressure from the demise of the petrodollar, it’s critical to take stock of accumulated petrodollar reserves in order to understand how large the unwind could ultimately be in a worst case scenario. As it turns out, narrowly focusing on official FX reserves could understate the size of petrodollar accumulation by some $2.5 trillion.
– Why The Great Petrodollar Unwind Could Be $2.5 Trillion Larger Than Anyone Thinks (ZeroHedge, Aug 29, 2015)
– It’s Official: China Confirms It Has Begun Liquidating Treasuries, Warns Washington (ZeroHedge, Aug 27, 2015):
As Bloomberg reports, “China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter. Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. China has communicated with U.S. authorities about the sales.”
– What China’s Treasury Liquidation Means: $1 Trillion QE In Reverse (ZeroHedge, Aug 27, 2015):
The size of the epic RMB carry trade could be as high as $1.1 trillion. If China were to liquidate $1 trillion in reserves (i.e. USTs) in order to stabilize the yuan in the face of the carry unwind, it would effectively offset 60% of QE3 and put around 200 bps of upward pressure on 10Y yields. So in effect, China’s UST dumping is QE in reverse – and on a massive scale.
Full article here:
– Why It Really All Comes Down To The Death Of The Petrodollar (ZeroHedge, Aug 22, 2015):
Last week, in the global currency war’s latest escalation, Kazakhstan instituted a free float for the tenge causing the currency to immediately plunge by some 25%. The rationale behind the move was clear enough. What might not be as clear is how recent events in developing economy FX markets stem from a seismic shift we began discussing late last year – namely, the death of the petrodollar system which has served to underwrite decades of dollar dominance and was, until recently, a fixture of the post-war global economic order.…
– China chooses her weapons (Gold Money Aug 20, 2015):
China’s recent mini-devaluations had less to do with her mounting economic challenges, and more to do with a statement from the IMF on 4 August, that it was proposing to defer the decision to include the yuan in the SDR until next October
The IMF’s excuse was to avoid changes at the calendar year-end and to allow users of the SDR time to “adjust to a potential changed basket composition”. It was a poor explanation that was hardly credible, given that SDR users have already had five years to prepare; but the decision confirming the delay was finally released by the IMF in a statement on Wednesday 19th. Continue reading »
– Gold Jumps After China Reveals It Bought Another 19 Tons In July (ZeroHedge Aug 14, 2015):
Putting what China has just done in very simple context: China announces an increase in its gold holdings of over 58% (June and July)… and then it devalues its currency by nearly 5% in one week.
Even the most brainwashed Keynesians should be able to figure out what is going on by now.
– Dollar Tumbles As Fed Rate Hike Suddenly Looking Very Uncertain To Goldman, Bank Of America (ZeroHedge, Aug 12, 2015):
After China’s shocking currency devaluation, which some more conspiratorially-minded observers have concluded was China’s retaliation to the west for the IMF’s recent snub that pushed back China’s evaluation for inclusion into the SDR to some indefinite point in 2016, the only question on everyone’s mind is whether the Fed will delay or outright cancel any imminent “data-dependent” rate hikes as a result of the implicit tightening of monetary conditions thanks to China, and the dramatic appreciation of the USD which would not have taken place without China.
And so it begins …
– China’s Record Dumping Of US Treasuries Leaves Goldman Speechless (ZeroHedge, July 22, 2015):
On Friday, alongside China’s announcement that it had bought over 600 tons of gold in “one month”, the PBOC released another very important data point: its total foreign exchange reserves, which declined by $17.3 billion to $3,694 billion.
We then put China’s change in FX reserves alongside the total Treasury holdings of China and its “anonymous” offshore Treasury dealer Euroclear (aka “Belgium”) as released by TIC, and found that the dramatic relationship which we first discovered back in May, has persisted – namely virtually the entire delta in Chinese FX reserves come via China’s US Treasury holdings. As in they are being aggressively sold, to the tune of $107 billion in Treasury sales so far in 2015.
We explained all of his on Friday in “China Dumps Record $143 Billion In US Treasurys In Three Months Via Belgium“, and frankly we have been surprised that this extremely important topic has not gotten broader attention.
Then, to our relief, first JPM noticed. This is what Nikolaos Panigirtzoglou, author of Flows and Liquidity had to say on the topic of China’s dramatic reserve liquidation
Looking at China more specifically, it appears that, after adjusting for currency changes, Chinese FX reserves were depleted for a fourth straight quarter by around $50bn in Q2. The cumulative reserve depletion between Q3 2014 and Q2 2015 is $160bn after adjusting for currency changes. At the same time, a current account surplus in Q2 combined with a drawdown in reserves suggests that capital outflows from China continued for the fifth straight quarter. Assuming a current account surplus in Q2 of around $92bn, i.e. $16bn higher than in Q1 due to higher merchandise trade surplus, we estimate that around $142bn of capital left China in Q2, similar to the previous quarter.
JPM conclusion is actually quite stunning:
This brings the cumulative capital outflow over the past five quarters to $520bn. Again, we approximate capital flow from the change in FX reserves minus the current account balance for each previous quarter to arrive at this estimate (Figure 2). Continue reading »
– Weak Dong Forces Vietnam Central Bank To Devalue Currency (Again) (ZeroHedge, May 6, 2015):
Having put off the decision to devalue the Vietnamese currency in March, the Dong has pressured the weaker limit (1% trading band) of the reference rate ever since. This has led to Vietnam’s central bank devaluing the dong reference rate to 21,673 (from 21,458) for the 2nd time this year. This is the softest the dong has ever been relative to king dollar, pushing them deeper into the currency wars.
Martin Armstrong The System Will Crack And One World Currency Is Coming
– Dollar Suffers Worst Month In 4 Years – Ends Record Streak Of Gains (ZeroHedge, April 30, 2015):
After an unprecedented 9 months in a row of gains, for a greater-than-27% gain, The US Dollar slumped in April. Down 3.5%, this is the biggest monthly drop for the greenback since April 2011 (near the end of QE2).
As we noted yesterday, this could be a major problem as a USD-reversal is likely to drive the great unwind of consensus positioning… Continue reading »
– The Great Unwind Begins: US Dollar Plunges To 2-Month Lows (ZeroHedge, April 29, 2015):
Just when you thought it was safe to pile all your money (at maximum leverage) into USD-denominated assets, the greenback plunges… The last 4 days have seen the 2nd biggest drop in 6 years. This has very significant consequences for a world that has become entirely consensus-based across at least 5 major themes… This poses a problem for talking-heads: if USD strength as indicative of US economic strength… what does a plunging USD imply?
The Strong Dollar regime has changed…
This suggests the huge consensus trades surrounding the inexorable USD strengthening are all in trouble also… Continue reading »
– Boston Fed Admits There Is No Exit, Suggests QE Become “Normal Monetary Policy” (ZeroHedge, April 26, 2015):
Perhaps it was inevitable. After all, the term “QEfinity” entered the financial lexicon long ago and there were already quite a few commentators out there suggesting that it may now be too late to remove the punchbowl, meaning an “exit” will not only prove difficult, but may well be impossible.
Take Makoto Utsumi, who oversaw foreign-exchange policy at the Japanese Ministry of Finance from 1989-1991, for example. Utsumi recently said a BoJ QE exit was out of the question “for the foreseeable future” and went on to note that “even the thought of an exit is a nightmare.” Meanwhile, it’s virtually impossible to say what effect Fed tightening will have in both the Treasury and corporate bond markets given the lack of liquidity in both and then there’s EM where carnage unfolded in 2013 after a certain bearded bureaucrat said the wrong thing about the direction of Fed policy.
Given all of this, we’re not surprised to learn that in a new paper entitled “Let’s Talk About It: What Policy Tools Should The Fed ‘Normally’ Use?”, the Boston Fed is now suggesting that QE become a permanent tool at the disposal of the Fed. After all, “financial stability” depends on it… Continue reading »
– Presenting De-Dollarization In One Simple Map (ZeroHedge, April 24, 2015):
Sometimes a picture is indeed worth a thousand words (or a thousand yuan) which is why we present the following map which shows all of the countries that have joined the China-led Asian Infrastructure Investment Bank with no comment other than to say “spot the odd G-7 nations out”…