Politically-motivated sanctions see shift from dollar - Putin

[Butifldrm]

Politically-motivated sanctions see shift from dollar - Putin

Published time: October 24, 2014 12:40 
Edited time: October 24, 2014 20:24

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Russian President Vladimir Putin (RIA Novosti / Vitaly Belousov)

 

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The sanctions imposed on Russia by the US and the West, among other financial blunders, are mistakes that have triggered the world to de-dollarize. Russian President Putin describes this as like “cutting down the branches, upon which they are sitting.”

Putin said that sanctions have an overall negative effect on the entire global community, and actually motivate countries to seek financial sovereignty from the status quo.

President Putin was speaking at 11th annual meeting of the Valdai International Discussion Club in Sochi, Russia. The panel was fittingly called, "The World Order: New Rules or a Game without Rules."

“Politically-motivated sanctions have intensified the trend of economic and financial sovereignty, the desire of countries and regions would like to secure themselves against outside pressure,” he said.

 

 

 

Dependence on a single global power will decrease, and new reserve currencies, such as the yuan and ruble, are already starting to emerge.

READ MORE: Defying the dollar Russia & China agree currency swap worth over $20bn

“Now, an increasing number of countries are attempting to move away from dollar dependence and to establish alternative reserve currencies and settlement systems,” the President said.

Maintaining global equilibrium becomes difficult when everyone stops playing by the rules, the President said, citing the precedent of the Cyprus bailout and the “politically-motivated” sanctions against Russia over its action in Ukraine.

READ MORE: Russia brings WTO complaint over ‘illegal’ US sanctions - Medvedev

“Now they risk losing confidence as the leaders of globalization. My question is- why would they do it? The prosperity of the US depends on its investors, those that own dollar debt,” he said.

“I think our American counterparts are sawing the branch they are sitting on,” Putin said,

 

Russia’s President Vladimir Putin (L) and US President Barack Obama (AFP Photo / Eric Feferberg)

 

Putin warned of the danger of mixing politics and economics, especially when nations are so deeply financially intertwined.

The West and Russia have increasingly become divided over the crisis in Ukraine, in which Russia accuses foreign powers of stirring up sentiment, and the West seeks to punish Russia for reclaiming Crimea.

READ MORE: Lavrov: West’s ‘colonial-style’ sanctions on Russia have little to do with Ukraine

US and EU sanctions against Russia include bans on long-term loans from Western capital markets, and bars the import of high tech oil equipment and technology, as well as weaponry to Russia.

Despite the cold diplomatic exchanges in the past year, Russia is ready for dialogue to normalize relations, the President said.

The annual panel includes the President and Prime Minister of Russia, who meet with the club members, both Russian and foreign experts in international affairs.

The club was created in September 2004 to promote dialogue between the Russian and international intellectual elite, and meets each year in a different Russian region. The name ‘Valdai’ comes from the lake where the first conference was held in Veliky Novgorod.

 

In the last decade, over 600 experts from 47 countries have participated in the talks.

 

http://rt.com/business/198968-sanctions-russia-wto-trade/

 

 

 

 

 

 

 

 

Ruble Set to Become Regional Reserve Currency, Ulyukayev Says

 

 

 

 

By Maria Levitov and Paul Abelsky  Nov 24, 2010 9:50 AM CT  

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Russia’s ruble is becoming a regional reserve currency, Bank Rossii First Deputy Chairman Alexei Ulyukayev said.

“It’s reasonable to think of the Russian ruble as a regional reserve currency for the countries of the former Soviet Union,” and other nations that have “a traditionally large share of trade with Russia,” Ulyukayev said in an interview in Moscow today.

“This is seen in increasing volumes of settlements in rubles, including between third parties,” he said. “Trade partners are accumulating rubles and investing them, there are significant volumes of ruble Eurobonds placements by issuers including non-residents of Russia and investors of different levels are viewing the ruble as an instrument of payment and savings.”

To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@bloomberg.net;Maria Levitov in Moscow at mlevitov@bloomberg.net

To contact the editor responsible for this story: Willy Morris at wmorri

http://www.bloomberg.com/news/2010-11-24/ruble-set-to-become-regional-reserve-currency-ulyukayev-says.html

 

Edited October 26, 2014 by Butifldrm

[Butifldrm]

Putin Accuses U.S. of Blackmail, Weakening Global Order

By Stepan Kravchenko  Oct 25, 2014 4:48 AM CT  

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Photographer: Oliver Bunic/Bloomberg

President Vladimir Putin said, “The Cold War has ended. But it ended without peace... Read More

Vladimir Putin accused the U.S. of behaving like “Big Brother” and blackmailing world leaders, warning there was no guarantee for global security in one of his sharpest-ever swipes at Russia’s Soviet-era adversary.

Blamed by the U.S. and the European Union for fueling the conflict in eastern Ukraine, Putin said the Cold War’s “victors” are dismantling international laws and relations. The U.S. is acting like the “nouveau riche” as global leader, and today’s conflicts risk toppling the world order, he told the annual Valdai Club in the Black Sea resort of Sochi.

“The Cold War has ended,” Putin said yesterday. “But it ended without peace being achieved, without clear and transparent agreements on the new rules and standards.”

Russia has clashed with the U.S. over conflicts from Syria and Ukraine to its granting of asylum to fugitive American government intelligence contractor Edward Snowden in 2013, souring relations to levels not seen since the fall of the Iron Curtain. With sanctions over Ukraine pushing his nation to the brink of recession, Putin has blamed the U.S. for pressuring EU countries to penalize Russia. Earlier this month, he warned them to remember the “consequences discord between major nuclear powers could bring for strategic stability.”

‘External Enemy’

Putin, who enjoys near-record approval levels of 85 percent at home, is intensifying his rhetoric in the face of worsening domestic problems, including the flagging economy and broader public frustration “over how history has played out for Russia,” said Joerg Forbrig, senior program officer at theGerman Marshall Fund of the U.S.

“There’s a whole number of issues domestically that drive Putin to pursue the policy that he’s pursuing,” Forbrig said by phone today. “Basically he needs an external enemy in order to rally the elite and the population behind him. And he has succeeded, even if only temporarily.”

Putin said “global anarchy” will grow without clear mechanisms to resolve crises. The U.S.’s “self-appointed” leadership has brought no good for other nations and a unipolar world amounts to a dictatorship, he told the group of invited foreign and Russian academics and analysts in Sochi.

“The United States does not seek confrontation with Russia, but we cannot and will not compromise on the principles on which security in Europe and North America rests,” State Department spokeswoman Jen Psaki said in response yesterday in Washington.

Ukrainian Integrity

Psaki said the U.S. was committed to the sovereignty and territorial integrity of Ukraine, where more than 3,700 people have died in fighting between government troops and insurgents who want to split from the country and join Russia. The U.S., which accuses Putin’s government of supplying the rebels with cash, arms and fighters, will continue to cooperate with Russia on other issues, including destroying nuclear stockpiles and Syria’s chemical weapons cache, she said.

“Our focus is on continuing to engage with Russia on areas of mutual concern, and we’re hopeful that we’ll be able to continue to do that,” Psaki said. “We still certainly have disagreements on some issues.”

Putin also attacked globalization, which he said has “disillusioned” many countries and risks hurting trust in the U.S. and its allies. More nations are trying to escape dependence on the dollar as areserve currency by forming alternative financial systems, according to the Russian leader.

Reserves Shrinking

Russia doesn’t want to restore its empire or have a special place in the world, Putin said. While it’s not seeking superpower status in international relations, it wants its interests to be respected, he said.

While Ukraine’s crisis isn’t the prime cause of Russia’s worsening ties with the U.S and its allies, attempts are being made “once again to create the image of an enemy, as during the years of the Cold War” and to divide the world, Putin said.

Russia’s annexation of Crimea in March, which triggered the U.S. and EU sanctions, complied with United Nations norms and followed an armed seizure of power in Kiev, Putin said.

The takeover of the Black Sea peninsula followed the ouster of Russian-backed President Viktor Yanukovych following violent street protests in Kiev in which more than 100 people, most of them demonstrators, were killed. Putin also for the first time said his government had helped Yanukovych flee to Russia, after which lawmakers in Kiev voted the Ukrainian leader out of power.

Russia wouldn’t “mindlessly burn up” foreign currency reserves to defend the ruble, Putin said, as he acknowledged that the reserves were shrinking from interventions in the market. Under pressure from sanctions and falling oil prices, the ruble fell to a record low yesterday against the central bank’s target dollar-euro basket.

Biggest Nationalist

The sanctions undermine World Trade Organization rules and Russia remains ready for dialogue over normalizing economic ties, he said. Even so, Russia won’t “beg for anything” in response to the measures, nor is it walling itself off from the world, according to Putin.

The Russian people sense danger and are rallying around their leader, said Putin, who described himself as the country’s biggest nationalist. Putin said that while President Barack Obama sees Russia as a threat, Russia didn’t seek a confrontation with the U.S.

“External pressure, just as in the past, is only consolidating our society, not weakening it,” he said.

He rejected a claim attributed to the Kremlin’s first deputy chief of staff, Vyacheslav Volodin, that “without Putin, there is no Russia.” The president told his audience that “Russia can get by without people like me.”

To contact the reporter on this story: Stepan Kravchenko in Moscow atskravchenko@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net Michael Winfrey, Alex Devin

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http://www.bloomberg.com/news/2014-10-24/putin-accuses-u-s-of-blackmail-says-global-order-weakening.html

ECB Weighs First Step to Buying Yuan for Foreign Reserves

By Stefan Riecher and Jeff Black  Oct 11, 2014 8:11 AM CT  

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Photographer: Andrew Harrer/Bloomberg

Speaking in Washington yesterday, former Bundesbank President Axel Weber predicted a... Read More

The European Central Bank will discuss next week whether to begin laying the groundwork to add the Chinese yuan to its foreign-currency reserves, according to two people with knowledge of the matter.

Governing Council members gathering inFrankfurt for their Oct. 15 mid-month meeting will consider the move, said the people, who asked not to be named because the discussions aren’t public. Should officials eventually decide to buy the currency, initial purchases would be small and might start in a year at the earliest, one of them said.

Such a measure by the ECB would mark a major step in the internationalization of China’s currency, also known as the renminbi. While China is the world’s second-largest national economy, the yuan isn’t ranked among the most-held foreign reserve assets, according to data from the International Monetary Fund. The U.S. dollar leads at 61 percent of holdings.

The agenda of the Governing Council is confidential, an ECB spokesman said, declining to comment further on the matter.

Speaking in Washington yesterday, former Bundesbank President Axel Weber predicted a greater international role for the yuan.

“The emergence of the renminbi will be a big factor,” he said. “You will have an appreciation of the renminbi.”

The ECB’s push comes against a backdrop of global central bank diplomacy to ease the way for China’s currency, after a series of swap agreements on emergency liquidity.

Basket Review

Officials will review the IMF’s basket of so-called Special Drawing Rights, which doesn’t currently include the yuan, by 2015, according to the fund’s website. China hopes its currency can join, Li Bo, head of the People’s Bank of China’s second monetary policy department, said in Hong Kong in March. The basket currently includes the dollar, euro, pound and yen.

“It’s inevitable that the yuan will gain more and more market share in the global economy, especially as the euro loses strength in the market on fundamentals,” said Jorge Mariscal, emerging marketschief investment officer for UBS Wealth Management. “Over time it’s going to become the third reserve currency in the world” after the dollar and euro, he said.

The U.K. said Oct. 9 it has picked banks to sell its first yuan-denominated bonds as it seeks to develop Europe’s offshore trading center for the currency. The proceeds will be used to finance Britain’s reserves. In March, Germany’s Bundesbank and the PBOC agreed to cooperate in payment clearing and settlement in renminbi.

“Due to the size of China’s economy and its importance in global trade and, potentially, finance, the renminbi might ultimately come to challenge the U.S. dollar,” ECB Executive Board member Yves Mersch said in a speech in February. “The authorities and investors need to prepare for a world in which the renminbi will play a much more important role.”

To contact the reporters on this story: Stefan Riecher in Washington at sriecher@bloomberg.net; Jeff Black in Frankfurt at jblack25@bloomberg.net

To contact the editors responsible for this story: Emma Charlton at echarlton1@bloomberg.netFergal O’Brien

http://www.bloomberg.com/news/2014-10-10/ecb-weighing-first-step-to-buying-yuan-for-foreign-reserves.html

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[Butifldrm]

CEO Went Against the Petrodollar and Dies a Mysterious Death. Who Holds a Monopoly on the Truth?

The World of Energy

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Marin Katusa, Chief Energy Investment Strategist

Last month in these pages, I wrote:

Patrick de la Chevardière, CFO of Total SA (which is France’s largest energy company), has publicly announced that Total is looking to finance its share in the $27-billion Yamal LNG project using euros, yuan, Russian rubles, and any other currency but US dollars.

“The effect of US sanctions was that Yamal LNG will be prevented from raising any dollar financings,” Patrick de la Chevardière stated in London at a news briefing.

Patrick de la Chevardière’s boss was Total SA CEO Christophe de Margerie. De Margerie is now dead: he died under mysterious conditions last week, when just after midnight a snowplow and his private jet collided at a Moscow airport.

Back in university (yes, over 18 years ago now), I actually worked at the Vancouver International Airport. Because I was a young buck going to university, I got the night shift: I was responsible for bringing planes into the bays, where passengers unload and the plane gets refueled.

One has better odds of being struck by lightning at an airport than being hit by a snowplow—or any other ground support.

Is it a coincidence that the one CEO who went against the petrodollar is now dead?

To understand the consequences of being on the wrong side of the Colder War, you really need to read my new book.

Maybe Christophe de Margerie had a falling out with Putin… As I wrote last month, his company is part of the charge to kill the petrodollar… but perhaps something happened behind closed doors.

In my book, part of a chapter focuses on “mysterious deaths” and how they’re linked to being on the wrong side of the political equation. Whether it’s going against Putin or against the petrodollar, there are many who have fallen on both sides.

But back to de Margerie and Total.

Total has yet to complete the financing. Did de Margerie fail to deliver what he promised to Putin—which was that he would invest $27 billion into the Russian Yamal LNG plant? Did the EU28 prevent Total from closing the financing under pressure from the French government? De Margerie and French President François Hollande were close friends.

De Margerie was outspoken in his support for Putin’s agenda; he believed Russia was a good partner for Europe. While we don’t know for sure whose toes de Margerie stepped on, we know how this story ended last week.

If Total doesn’t close the $27 billion financing to move forward with the Yamal LNG project, then we will know that the powers that be (whether French government, EU28, or the US) stepped in to prevent an attack on the petrodollar.

The world is turning its back on the US Under Obama

As an American, you may not like what I’m going to say, but it needs to be said: America is losing face internationally under President Obama’s leadership. Obama’s failed foreign policy was challenged publicly at the podium at the most recent 69th United Nations general assembly.

On September 27, Russia’s Foreign Minister Sergei Lavrov started out his speech by challenging America’s undemocratic actions of late, stating:

The US-led Western alliance that portrays itself as a champion of democracy, the rule of law and human rights within individual countries, acts from a completely opposite position in the international arena, rejecting the democratic principle of the sovereign equality of states enshrined in the UN Charter and tries to decide for everyone what is good or bad.

Lavrov uses the election in Crimea as an example, stating:

“It was precisely the aggressive assault on these rights that compelled the population of Crimea to take its destiny in its own hands and make a choice in favor of self-determination.  This was an absolutely free choice no matter what has been invented by those who were, in the first place, primarily responsible for the internal conflict in Ukraine.

The attempts to distort the truth and to hide the facts behind blanket accusations have been undertaken at all stages of the Ukrainian crisis.

The vast majority of North America has a strong bias against Russia or any election results involving the Eastern blocs and specifically Russia. When I bring up the fact in any media interview that the takeover of Crimea by Russia was the result of a free election, my interviewers immediately dismisses that election as a fraud. They state that it was staged and fixed and ignore the data. The fact is that the vast majority of the population of Crimea are Russians who speak Russian and who see themselves as Russian… so it makes total sense that they freely voted to join Russia instead of wanting to be under the rule of an unfriendly regime in Kiev.

Many years ago, a well-known media personality was involved in the promotion of a company looking for an investment. He was pitching Doug Casey and me, and as Doug’s analyst I began to question the media personality regarding the details of his pitch. His only response to my very pointed questions was, “Look, kid, don’t let the details interfere with my story—it’s a good story.”

This is essentially what most of the Western media outlets are doing—distorting the facts so that they fit neatly into the story they want to tell.

But back to Lavrov’s speech at the UN; he also called out the US for its failed foreign policy by stating (emphasis mine):

Washington has openly declared its right to the unilateral use of military force anywhere to advance its own interests. Military interference has become common, even despite the dismal outcome of the use of power that the US has carried out over recent years.

The sustainability of the international system has been severely shaken by NATO bombardment of Yugoslavia, intervention in Iraq, the attack against Libya and the failure of the operation in Afghanistan.

Lavrov is speaking from experience. When Obama openly declared, “We are drawing a red line” regarding Syria in 2013, it was Lavrov who threw out a lifeline for our president, suggesting that Russia should work with the US to get rid of the sarin gas and other WMDs, rather than invading against the wishes of Congress and the American people.

I am not at all sympathetic to the Russian cause, but rather look at the facts, the data, and more important, the actual events to form my opinion. The harsh reality is that Obama, as much as the Western media will deny it, is comparable to the Wizard of Oz.  The current US president is a confused and weak leader hiding behind a curtain: the American flag.

Russia is standing up to Obama and his failed foreign geopolitical policies. Unfortunately for us, the rest of the world is taking notice.

It would be nice if the Western media would remember that nobody has a monopoly on the truth.

http://www.caseyresearch.com/cdd/ceo-went-against-the-petrodollar-and-dies-a-mysterious-death.-who-holds-a-m

[leanonme]

Good thread going here!

[Butifldrm]

Good thread going here!

Thanks leanonme,  The following is video by Jim Rickards who does a pretty good breakdown of this situation, and our alliance with Saudi.

 

Edited October 29, 2014 by Butifldrm

[Maggie123]

Thank You Buti For Keeping Us Up With The Great Articles And Videos... Important News For Us To Follow!

[gymrat76541]

The world is attempting to tell this spoiled child to play nice with the rest of the world but he is throwing a fit! LOL

I hardly think that the world will EVER use the Ruble as the world's currency! LOL

[yota691]

The world is attempting to tell this spoiled child to play nice with the rest of the world but he is throwing a fit! LOL

I hardly think that the world will EVER use the Ruble as the world's currency! LOL     

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Read more: http://dinarvets.com/forums/index.php?/topic/189706-«dubai-gold»-launches-a-couple-of-new-indian-rupee-futures/#ixzz3HarosUKK

[TBomb]

Quantitative easing is finally over. Here’s what it accomplished...


Monetary policy is usually pretty dull stuff. But during the last six years, the Federal Reserve’s unprecedented quantitative easing program became a high-stakes economic experiment that generated a surprising amount of divisive political fodder.

The Fed first began QE, as it’s known, in November 2008, shortly after Lehman Brothers collapsed and the government began bailing out banks to prevent a full-blown financial panic. The Fed’s plan was to supercharge the economic stimulus it was trying to create through traditional maneuvers such as cutting short-term interest rates. Ben Bernanke, who was Fed chairman at the time, was an expert on the Great Depression and the misguided actions of the Fed during that period, which arguably made the depression worse. He was determined to play a more constructive role in helping the economy recover.

Under QE, the Fed would purchase bonds in the open market, to take relatively safe assets out of circulation and force investors to buy riskier assets such as stocks. That, in theory, signaled the Fed’s support for prudent risk-taking, to lure gun-shy investors back into financial markets and restart the flow of money after the crisis. It also pushed down long-term interest rates, because stronger demand for bonds means issuers can pay less to investors who buy them. With sales of homes, cars and other things plunging in late 2008, the Fed hoped cheap money would help lure skittish consumers back into the market.

But quantitative easing went on far longer than just about anybody anticipated back in 2008, with the Fed ultimately amassing a massive $4 trillion portfolio of bonds. The central bank, now led by Janet Yellen, made the last of its scheduled bond purchases this month and has now affirmed that QE is officially over. The debate over its effectiveness, however, will go on for years, as new economic data rolls in and unintended consequences of the program become apparent.

Most economists agree that QE provided the kind of short-term stimulus the Fed intended. “One thing that is undeniable is that its introduction succeeded in driving a major turning point in consumer and investor sentiment,” Patrick O’Hare of research firm Briefing.com wrote recently. Here’s how a few major economic indicators changed after QE began:

S&P 500 stock index: up 129% since Nov. 25, 2008, the day the Fed announced its first quantitative easing effort

Real GDP (adjusted for inflation): up 9.8%.

Unemployment rate: down 1 percentage point

Consumer confidence index: Up from 44.9 to 94.5 (Conference Board)

Average weekly earnings, adjusted for inflation: up 0.7%

Inflation rate: up from 1.1% to 1.7%

Auto sales: up 61%

Housing starts: up 56%

Average 30-year mortgage rate: down 1.9 percentage points

Those figures clearly reflect an economy that has improved since the dark days of the Great Recession—but they hardly settle the question of whether QE has been effective. It’s impossible to untangle how much of the improvement would have happened as part of the normal economic cycle and healing after a recession, and how much was directly due to Fed intervention. And some elements of the economy—especially wage growth—remain far weaker than they should.

The economy recovered faster after prior recessions when there was no QE at all, which has generated quixotic campaigns to “kill the Fed” and concern on Capitol Hill over whether the Fed is too powerful. While campaigning for the Republican presidential nomination in 2011, Texas Gov. Rick Perry called quantitative easing “treasonous” and warned that if Bernanke went to Texas, “we would treat him pretty ugly.” (Economists still haven’t figured out what Perry was talking about.)

Winners and losers

Still, QE has caused some collateral damage. Super-low interest rates have been great for borrowers but lousy for savers, with current rates on money-market funds and CDs so low they may as well be zero. QE arguably put a floor beneath stock prices, because the Fed showed a willingness to inflate the price of such assets. Investors who got the message cashed in on one of the best bull markets in history. But there were still a lot of retirees and other thrifty investors who chose to keep their money out of stock and in the safest possible assets after the 2008 crash. They’ve been big losers under QE.

Some economists also argue that super-low interest rates have compelled companies to borrow and hoard money—or use it for stock buybacks that benefit shareholders but nobody else—instead of investing it in ways likely to make the economy grow. And it's not clear everything will go smoothly once interest rates start to go back up. "How do we wind down quantitative easing and normalize interest rates?" Mark Zandi, chief economist of Moody's Analytics, testified before Congress earlier this year. "It is going to be tricky, and I'm sure there are going to be a few bumps along the way."

The real test of QE will probably come down to inflation and whether there are any ugly surprises ahead. Fed critics have been squawking about the risk of runaway inflation since QE began, since buying vast sums of bonds does potentially put more money into circulation. But inflation hawks have been dead wrong the whole time, with inflation now so low — around 1.7% -- that economists are more worried about deflation than inflation. While focused on the Fed “printing money” through QE, many inflation worrywarts have overlooked the importance of wages, which usually spike during periods of inflation and even contribute to it; for the past six years, however, wages have barely budged.

High inflation could still materialize, since economic trends often take years to play out. There could be other unforeseen aftereffects of quantitative easing, such as a stock-market pullback now that the Fed has stopped pumping helium into the market. But it seems more likely that QE will go out with less drama than it generated during its existence. If monetary policy becomes dull once more, the Fed succeeded.

https://finance.yahoo.com/news/quantitative-easing-is-finally-over--here-s-what-it-accomplished-182947394.html

 

 

 

 

The Federal Reserve’s experiment in quantitative easing is coming to an end

The Federal Reserve’s $3 trillion experiment in stimulating the nation’s economy is slated to come to an end this week -- a sign of the central bank’s growing confidence in the recovery as well as a tacit acknowledgement of the limits of its powers to boost growth.

The decision to stop pumping money into the economy is expected to come when Fed officials wrap up their two-day meeting in Washington on Wednesday. The program, known as quantitative easing, was originally intended to be a one-time injection of money into a financial system in shock during the darkest days of the crisis in 2008. But over the past six years, the central bank has turned to the program to try to remedy everything from lackluster hiring to a moribund housing market.

The Fed’s continued reliance on the program highlights not only its commitment to lifting the economy, but also its misjudgments earlier on. The central bank was too optimistic about the recovery, and paused quantitative easing twice only to decide later that its earlier efforts had been too modest.

“In 2008, 2009, I did not expect this,” said Don Kohn, who was then vice chairman at the Fed and now is a senior fellow at the Brookings Institution. “I didn’t really anticipate the need to continue doing more.”

Still, Fed observers credit the central bank, first under Chairman Ben Bernanke and now led by Chair Janet Yellen, with ultimately sticking with its efforts to lift economic growth. Critics said the measures would undermine the dollar in global currency markets and unleash a wave of inflation, but neither has happened. Indeed, inflation has run below the Fed’s 2 percent target.

“It’s not been distracted by the criticism,” said Paul Sheard, chief global economist at ratings company Standard & Poor’s. “You sometimes may lose a little bit of nerve. They stuck to it.”

Today, the economy is enjoying roughly 3 percent annual growth and the unemployment rate has fallen below 6 percent. Yet millions of Americans still have been jobless for more than six months, and millions more hold part-time jobs when they want full-time work. Wages have barely budged.

Studies have shown that quantitative easing has reduced unemployment and pushed down mortgage rates. But Fed officials have had to temper any enthusiasm over those improvements with the recognition that the economy is far from healed.

“These developments are encouraging,” Yellen said of the gains in the job market in a speech this summer. “But it speaks to the depth of the damage that, five years after the end of the recession, the labor market has yet to fully recover.”

The Fed is not alone in charting the course for the nation’s economy. Though independent, it shares that task with the White House and Congress. But those arms of government essentially withdrew from the world of economic policymaking by the beginning of 2013, leaving the Fed alone to try to resuscitate an economy that some warned could be due for a decade or more of pain.

The Fed normally operates by changing its target for short-term interest rates. A higher rate puts a lid on the economy by encouraging saving and making it more expensive for businesses and households to borrow money. A lower rate helps boost growth as cheap money spurs demand.

In the 2008 crisis, the Fed first lowered its key interest rate to zero. It was the economic equivalent of flooring the gas -- but it still wasn’t enough to launch the recovery out of the worst downturn since the Great Depression.

So in the fall of that year, the Fed launched round one of quantitative easing. The Fed was seeking to prevent the market for mortgage-backed securities from crumbling amid a massive selloff by investors as homeowners fell behind on their loans. The Fed stepped in to buy $500 billion worth of securities, essentially propping up the market by pumping it full of money. The central bank didn’t actually print money -- as some critics have accused it of doing --- but instead added to the reserves that banks hold at the Fed.

Even so, it was an aggressive move with what, at the time, seemed like a hefty price tag. And at first, policymakers sought credit. Then-Fed Chairman Ben Bernanke declared the economy was sprouting “green shoots” thanks to new stability in money market mutual funds and the nascent refinancing boom spurred by lower mortgage rates.

But while economists generally agreed that effort helped the country avert another depression, the swift recovery that has historically accompanied downturns remained elusive.

The Fed kept lowering its expectations for economic growth. And so officials found themselves returning to the pump time and again.

The Fed believed the type of massive bond purchases it deployed to salvage the mortgage market had the potential to support a broader swath of the economy. They could help reduce long-term interest rates, encouraging businesses and consumers to borrow and spend money. Lower rates could also force skittish investors to take new risks. And, most importantly, the boost to the recovery would hopefully translate into new jobs for millions of Americans.

What the central bank didn’t realize was how much stimulus it would actually take to make a dent.

The Fed eventually learned that “this is a low potency monetary policy instrument,” Sheard said. “You need to double-down or triple-down.”

The double-down clocked in at $600 billion and came in 2010. The buds Bernanke had predicted failed to bloom. By the time of the Fed’s annual summit in the Grand Tetons in summer 2010, the unemployment rate was still above 9 percent, a surge in hiring had evaporated and inflation was dropping.

“The incoming data suggest that the recovery of output and employment in the United States has slowed in recent months, to a pace somewhat weaker than most [Fed officials] projected,” Bernanke said in a speech at the conference. “I believe that additional purchases of longer-term securities … would be effective in further easing financial conditions.”

A few months later, the Fed announced it would pump another $600 billion into the economy by purchasing long-term Treasury bonds. The move was a hit on Wall Street, as stock markets cemented their steady climb out of the trough of the recession.

But the stimulus was starting to attract criticism both from inside and outside the central bank. Some were concerned that the run up in the size of the Fed’s balance sheet could eventually result in an outbreak of inflation. There were also fears that the central bank was distorting the financial marketplace and creating incentives for investors to take dangerous risks.

“Monetary policy is not Thor’s hammer. It is an awesome weapon. But it has limitations,” Dallas Fed President Richard Fisher said in a speech in late 2011. “If we deploy it incorrectly, we might level more than interest rates and destroy that which we seek to create. And if we let it fly too far from our grasp, we may never get it back.”

Dissent within the ranks of the central bank grew more frequent after decades of relative consensus. The critiques came not just from those who opposed the stimulus, but also from some of its most ardent supporters. They worried that the Fed hadn’t gone far enough. The $600 billion stimulus ended in the middle of 2011, just as improvement in the unemployment rate seemed to stall. Meanwhile, inflation was still subdued and hiring was stuttering.

“When the [short-term interest] rate is at zero, we’re faced with a set of bad options,” St. Louis President James Bullard said in an interview. “I did not think we would have to return to QE3.”

Bullard was using the nickname for the Fed’s third round of so-called quantitative easing -- the triple-down. This time, the central bank was determined not to let the recovery slip again. There were no limits to the program when it was launched in fall 2012. The Fed promised to keep pumping money into the economy until it was convinced that the job market was healthy.

Once again, the announcement fueled a rally on Wall Street. The refinancing boom kicked into overdrive as mortgage rates hit historic lows. The country has added over 200,000 jobs a month this year, and the unemployment rate is closing in on what is considered a normal level.

But two years and more than a trillion dollars of stimulus later, there remain pockets of weakness that the Fed cannot seem to touch.

Central bank officials have repeatedly pointed to government spending cuts as counteracting their efforts to jumpstart the recovery. Wages have stagnated since the recession despite the bull market on Wall Street, prompting criticism that the central bank’s policies have primarily benefited wealthy households -- a charge that causes some officials to bristle. And early this year, the economy unexpectedly shrank – an anomaly that forced the Fed to push back its forecast for a full recovery once again.

Officials struggled to decide when to call it quits. The first hints in spring 2013 that the Fed was considering scaling back its bond purchases sent markets into freefall. Long-term interest rates shot up, causing mortgage rates to jump a percentage point over a few months. The spike contributed to a slowdown in the housing market, undermining the Fed’s ability to a move lest it endanger the recovery. Officials finally announced in December that it would begin wrapping up the program.

"Whenever you get into something new, it really helps to have a clear plan for how to get back out again later," said Andrew Levin, a research fellow at the International Monetary Fund who worked at the Fed for more than two decades.

Though the bond purchases are ending, the Fed is still maintaining its easy-money stance by keeping its target for short-term interest rates at zero. Still, the debate inside the central bank has shifted from boosting the economy to letting the recovery stand on its own. Whether it falters will be the ultimate test of the success of the central bank’s grand experiment.

“It’s not just measuring the benefits. It’s still important to see what the ultimate costs are going to be,” said Elizabeth Duke, a former member of the Fed’s board of governors. “You can’t really judge those until it’s completely unwound.”


http://www.washingtonpost.com/blogs/wonkblog/wp/2014/10/28/the-federal-reserves-experiment-in-quantitative-easing-is-coming-to-an-end/

 

 

 

US ends QE today: Why Indian markets will continue to get 'easy money'


NEW DELHI: As widely expected, the US Federal Reserve is likely to end its third 
round of the so-called quantitative easing program or QE3, when it concludes its 
two-day policy meet today.

The central bank has employed three rounds of 
bond-buying programs, since the 2008 crisis, to stabilize the economy and 
support the financial system, which pushed the asset prices higher across the 
world.

Strong global liquidity and the BJP victory in the general 
elections were prim ..


http://economictimes.indiatimes.com/articleshow/44969798.cms

 

 

 

What a long strange trip it’s been for the Federal Reserve as QE set to end today



Markets await Fed
To borrow from Jerry Garcia and the Grateful Dead, what a long strange trip it’s been for the Federal Reserve.

Six years after the collapse of Lehman Bros. and the onset of the financial crisis, the U.S. central bank is poised today to wrap up a stimulus program known as quantitative easing, or QE3 to mark the third round, when it releases its policy statement this afternoon.

The Fed has been gradually cutting back on the amount of asset purchases it makes each month under the controversial program. Once valued at $85-billion (U.S.) a month, it’s now down to just $15-billion, and that’s expected to end today.

The central bank, though, is expected to take pains to ease market jitters that arise every time Fed stimulus is brought into question.

While QE is expected to end, and the Fed’s benchmark interest rate won’t move from effectively zero, markets will be closely watching the language in the 2 p.m. (ET) statement from the Federal Open Market Committee, or FOMC, the policy-setting panel.

In particular, investors will be looking for the promise that rates will remain at rock bottom for a “considerable time” after QE ends.

And this time, there’s no scheduled post-statement news conference, which means Fed chair Janet Yellen won’t be speaking, and what you see is what you get.

Keep an eye, too, on the U.S. and Canadian dollars, the latter of which is closing in on the 90-cent mark today.

“We expect an end to QE and a cautious tone that links the expectations for interest rate hikes to upcoming data releases; this is well priced into markets, however there is some risk for a brief [u.S. dollar] rally late today,” said chief currency strategist Camilla Sutton of Bank of Nova Scotia.

Here’s what some observers are watching for:

“You could be forgiven for thinking that the Fed is not about to end QE today. The reaction in markets has not exactly been what many predicted, with investors apparently sanguine about the prospect of life without regular bond purchases by the U.S. central bank. It is the commitment to low interest rates that is maintaining calm, and expectations are for a dovish Fed decision that will assuage fears about a premature rate hike.” Brenda Kelly, IG

“On any measure, there has been a sea change in expectations for Fed policy over the course of the last month. Forward rates markets have pushed the expected timing of the first Fed hike three months further into the future, the first material shift in market expectations for U.S. policy rates for a year. Ahead of the September FOMC meeting, 50 per cent of analysts expected the Fed to drop the ‘considerable time’ reference immediately, and those that did not mostly expected it to go at this meeting. Now, 80 per cent of analysts expect the reference to remain unchanged in today’s statement … and almost none expect it to be dropped altogether. Against this background, it is not easy to see how the statement can ‘out-dove’ such dovish expectations and we see the short-term risks skewed to a positive [u.S. dollar] reaction.” Adam Cole, Royal Bank of Canada

“We’re also seeing evidence that people are anticipating a more dovish Fed in response to the slowdown in the euro zone and the disinflation that has been gripping many of the major economies. A survey compiled by CNBC showed that market participants are already scaling back their rate hike expectations to July, from June previously. There's also been a lot of suggestions that it could be put back further to the end of next year, while some have even speculated about the potential for QE4 even with QE3 only expected to come to an end this month. These expectations are far more dovish than what we had a couple of months ago before that sell-off in the markets knocked everyone's confidence. If they're correct though, this is positive for the markets and could help them push beyond the current highs if confirmed by the Fed.” Craig Erlam, Alpari

“It would appear … that markets are in essence banking on the prospect that the Federal Reserve will do everything in its power to anchor interest rate expectations at, or below, current levels, hence last night’s strong finish for U.S. markets … It remains unlikely that the Fed will deviate from its timetable of pulling back from its bond buying program. We can therefore expect the Fed to call time on the remaining $15-billion of monthly bond buys, but in an attempt to push out interest rate expectations it will probably leave the language of the statement unchanged, leaving intact the key phrase to keep interest rates low for ‘a considerable amount of time.’ Any attempt to alter the language in anything other than a dovish fashion could well see markets take fright.” Michael Hewson, CMC Markets



http://www.theglobeandmail.com/report-on-business/top-business-stories/what-a-long-strange-trip-its-been-for-the-fed-as-qe-set-to-end/article21361421/

 

 

 

Are we really saying goodbye to QE forever?

To believe Wednesday will truly mark the beginning of the end of Fed stimulus, you’d have to believe that we are in the beginning stages of a legitimately robust recovery.

At long last, it’s here: On Wednesday, the Federal Reserve is expected to announce the end of its stimulative bond-buying program, known as quantitative easing.

Or at least that’s what a lot of headlines will read. Technically, the program won’t be ending because the Federal Reserve will still keep on its books the trillions of dollars of longer-term government debt and mortgage bonds that it has bought since the first round of QE in 2008. And the Federal Reserve argues that keeping these bonds off the market will continue to have stimulative effects.

Federal Reserve officials have made it clear that its cessation of bond buying hinges on the continuing improvement of the U.S. economy. If things get worse, the Fed assures us, they won’t hesitate to start bond buying once again. But the conventional wisdom is that, even if the economy isn’t a strong as we’d like, it’s strong enough to no longer need the Fed to continue to pile on support, and that we’re beginning the process of returning to something that looks more like pre-crisis Fed policy.

It would be nice if market participants could actually agree on what all these years of bond buying has done for the economy. But they can’t. So it’s not surprise that why no one can agree on what the end of QE will actually mean for the markets or the economy.

Take, for instance, the disconnect between the Federal Reserve’s own predictions for inflation and the future path of interest rates and what the bond markets think will happen. As Jim O’Sullivan, chief U.S. economist at High Frequency Economics, points out in a recent note to clients, the bond market is predicting that inflation will continue to fall below the Fed’s goals and that interest rates will be 150 basis points below what the Fed is hoping for by the end of 2015.

O’Sullivan thinks that the difference can be summed as a disagreement between the Fed and the bond market over how well the economy will be doing a year from now. The Fed is more optimistic than the bond market when it comes to employment and inflation, and something, eventually “will have to give,” he writes. “We expect bond yields to rise as market expectations for Fed policy adjust.” Even a scenario in which the Fed ends up “lowering their projections somewhat,” Sullivan argues, “would entail higher bond yields.”

But others point out that the Fed has been consistently overoptimistic in recent years, so why should we expect anything different next year? Jim Bianco, president of Bianco Research, points to recent comments by St. Louis Federal Reserve Bank President James Bullard that declining inflation expectations suggest that the central bank should hold off ending QE altogether. Bullard’s about-face on QE, which just a few months ago he was certain would end this fall, is evidence of the Fed’s unmerited optimism. As Bianco said last week in a conference call with clients:

“
I have argued and will continue to argue that the Fed is going to get out of QE on the October 28th meeting. They’re going to taper $15 billion and they’re done. If you ask the Fed whether they are done with QE forever, they will tell you, “Yes.” If you put them under truth serum and ask them that, they would still tell you, “Yes.” As was the case after QE1 and after QE2, they were dead serious—“We’re done. This experiment is done forever.”

Then, we had a 17% correction in stocks after QE1 ended and the Fed freaked out and gave us more money printing to stop it (QE2). When QE2 ended stocks had a 20% correction and again the Fed freaked out and gave us Operation Twist. This eventually morphed into more money printing.

In other words, the Fed said it was done before, but that’s only because it was too optimistic about the future health of the economy. So the central bank may end QE tomorrow, but the chances that the Fed will rev up its bond-buying machine in the near future are significant.

Bianco believes the main goal of QE is to prop up the stock market with the hope that an expensive stock market will give people the confidence to spend. Fed officials would probably argue that higher asset prices are merely a second-order effect of their policy and that they are primarily trying to lower interest rates in an effort to get businesses to invest. But either way, the policy requires growth in demand to organically materialize within the economy so that there are people and firms willing to invest at these new low interest rates.

And it’s this last part that really hasn’t come to fruition. Job gains continue to accelerate, but wage growth is flat. Economic growth in 2014 might end up a tick above last year, but it’s still far below what you would normally see in a recovery. To believe Wednesday will truly mark the beginning of the end of Fed stimulus, you’d have to believe that we are in the beginning stages of a legitimately robust recovery. There’s some evidence to support this notion, but don’t expect the jury to return with a decision anytime soon.

http://fortune.com/2014/10/29/federal-reserve-quantitative-easing/

 

 

 

US Fed ends QE stimulus programme

29 October 2014 Last updated at 14:19 ET 

The US Federal Reserve has announced it is ending its quantitative easing (QE) stimulus programme begun in 2008.

The Fed said it was confident the US economic recovery was on track, despite weakness in the global economy.

The targets for inflation and reduction in unemployment were not under threat, the Fed said in a statement.

The central bank, which also said it would not raise interest rates for a "considerable time", has gradually cut back QE since last year. 

"The Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability," the Fed said in a statement.


http://www.bbc.com/news/business-29823798

 

 

 

 

Fed decision day guide: Will low inflation delay end of QE?

Here’s what to look for when the Federal Open Market Committee releases its policy statement at 2 p.m. today in Washington. Federal Reserve officials won’t provide new economic projections, and Chair Janet Yellen isn’t scheduled to give a post-meeting press conference.


With the FOMC poised to halt bond purchases, ending its third round of so-called quantitative easing, policy makers may want to underscore they are troubled by falling inflation and price expectations.

The Fed will “express concern about consistent undershooting of inflation,” said Jonathan Wright, who worked at the Fed’s division of monetary affairs from 2004 until 2008 and now teaches economics at Johns Hopkins University in Baltimore. The committee will “go into reverse to some extent,” restoring language it dropped in July expressing a warning that low inflation poses a risk to economic performance.

The committee in September said it “judges that the likelihood of inflation running persistently below 2% has diminished somewhat since early this year.” Thirty-three of 62 economists in a Bloomberg survey said they expect the FOMC to retain that language at this week’s meeting.

Still, reports since September have shown inflation has decelerated. Prices as measured by the personal consumption expenditures index rose 1.5% from a year earlier in August, down from a 1.7% gain in May. The inflation gauge has fallen short of the Fed’s 2% target for 28 consecutive months.

Policy makers, including regional Fed Presidents William C. Dudley of New York, Charles Evans of Chicago and Narayana Kocherlakota of Minneapolis, have in recent days mentioned below-target inflation as a risk that weighs against raising interest rates too soon.

Roberto Perli, a partner at Cornerstone Macro LP in Washington, said that while the committee would likely acknowledge some threat, its worry may be diminished because energy has been the biggest factor holding down inflation.

“Oil is something the Fed has no control over,” Perli, a former Fed economist, said in a video commentary for clients.

The Brent Crude Oil Index has declined 23% this year.

The end of QE?

The end of QE: Economists in the Bloomberg survey were almost unanimous, with 62 of 64 saying the FOMC will end its third round of asset purchases at this week’s meeting. Yellen pledged to do just that following the committee’s Sept. 17 session if progress continued toward the Fed’s goals on unemployment and inflation.

Fed St. Louis President James Bullard, who doesn’t vote on policy this year, said Oct. 16 the central bank should consider a delay in ending the program in light of falling inflation expectations. “That option will be on the table” and “there is a possibility” the group could reduce monthly purchases by $10 billion at the meeting and leave the final $5 billion reduction for December, according to Perli.

Still, ending QE “is a nearly universal expectation,” said Dana Saporta, an economist at Credit Suisse Securities USA in New York. “It would be quite a statement by the FOMC if they don’t.”

Even with the end of QE, the Fed will still hold a record $4.48 trillion balance sheet accumulated during the three rounds of asset purchases. That will continue to keep a lid on borrowing costs by limiting the supply of securities trading on public markets and keeping yields lower than they otherwise would be.

Interest Rates

Still “considerable”: Eighty percent of economists in the Bloomberg survey predicted the Fed will continue to say it will be appropriate to hold the target interest rate near zero for a “considerable time” after bond buying ends. Thomas Costerg, an economist at Standard Chartered Bank in New York, said recent market volatility and signs of slowing global growth will cause the Fed to act with caution.

The Fed’s benchmark rate has remained at zero to 0.25% since December 2008. The median forecast from committee members last month called for the rate to hit 1.375% at the end of next year, implying a mid-2015 start to increases.


The strategy going into this meeting is really ‘do no harm’
.
“The strategy going into this meeting is really ’do no harm’,” Costerg said. “Given the recent market volatility, it doesn’t do any harm to keep it for now.”

Yellen is scheduled to hold a press conference after the FOMC’s next meeting in December. That would give her a better opportunity to mute the market’s reaction to changes in the committee’s forward guidance, Costerg said.

Unemployment

And “significant”: Sixty-four percent of economists in the Bloomberg survey expect the committee also to hang on to its language describing “significant underutilization of labor resources” despite U.S. unemployment falling in September to 5.9%, its lowest level since 2008.

“With U-6 currently at 11.8%, there is still a long way to go,” Philip Marey, senior U.S. strategist at Rabobank Groep in Utrecht, the Netherlands, wrote in an Oct. 27 note to clients, referring to a measure of unemployment that includes not only the jobless, but also workers who can only get part- time employment and people who have given up their search for work.

Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, said there was “some chance” — though less than 50% — that the committee would alter the language on labor markets. One possible change, according to Saporta: The committee could simply drop the word “significant” when referring to underutilization of labor resources.

Global Demand

Global growth: The committee is sure to discuss whether weak global demand, from Europe to China, is a threat to U.S. growth. Minutes of the Sept. 16-17 FOMC meeting published Oct. 8 revealed that worry and helped trigger the most volatile week for U.S. stocks since the financial crisis. Still, the group could opt not to highlight the issue in its statement.

“The Fed will be walking on eggs” in addressing global growth, Standard Chartered’s Costerg said. “I’m not sure they will want to bring that up in the statement. It will show up in the minutes” due out Nov. 19.

Dissenters: Dallas Fed President Richard Fisher and Philadelphia’s Charles Plosser dissented in September when the FOMC stuck with the “considerable time” phrase. Each has warned that keeping rates too low for too long could trigger higher inflation or lead to instability in financial markets. If the committee’s forward guidance remains unchanged, expect the same dissents, Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York, wrote to clients.

The Minneapolis Fed’s Kocherlakota may dissent because he wants the FOMC to express greater urgency about raising inflation to its 2% target, said Ward McCarthy, chief financial economist at Jefferies LLC in New York and a former Richmond Fed economist.

“There is a reasonable chance Kocherlakota dissents because he feels there is not enough of a defence of the inflation target and not enough emphasis on the inflation objective in the dual mandate,” McCarthy said.

http://business.financialpost.com/2014/10/29/fed-decision-day-guide-will-low-inflation-delay-end-of-qe/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+FP_TopStories+(Financial+Post+-+Top+Stories

 

 

 

Fed ends QE3 and sends upbeat signals on economy 

WASHINGTON (MarketWatch) — The Federal Reserve voted on Wednesday to end its bond-buying stimulus program commonly known as QE3 and sent several upbeat signals to markets that it was not worried about global weakness, low inflation or a wobble in financial markets.

In the statement, the Fed left unchanged its pledge that rates would remain near zero for a “considerable time.” 

But it qualified the statement, saying that if the economy improves faster than expected, than the first rate hike could come sooner than anticipated.

The statement also made a major change to the Fed’s view on labor markets. Instead of seeing “significant underutilization” in the labor market, which was in the September statement, the Fed now said that underutilization in labor resources “is gradually diminishing.” 

On inflation, the U.S. central bank dismissed concern with the drop in inflation expectations seen in financial markets. It said that surveys of longer-term inflation expectations have “remained stable.” It said that low inflation has been held down by low energy prices and “the likelihood of inflation running persistently below 2% has diminished somewhat since early this year.”

Ian Shepherdson, chief U.S. economist at Pantheon Macroeconomics, said the Fed statement made was an “incremental shift towards the hawks.” He forecast the Fed will hike rates in the spring of next year. 

U.S. stocks SPX, -0.40% sagged immediately after the statement. Read Market Snapshot for more

The U.S. economy has been performing well this year after a weak first quarter. Economists are forecasting the best nine-month stretch of growth since 2005-2006, with growth expected over 3%.

But weakness in Europe, recent strength of the dollar DXY, +0.64% , and also consistently low readings of U.S. inflation has raised concern that the U.S. economy might not be able to sustain growth above a 3% rate for very long.

Also see: Streaming news from the Fed decision 

The Fed has been steadily tapering its bond buying program this year down from $85 billion per month as the labor market has shown impressive improvement. The central bank was only purchasing $15 billion in assets in October.

The Fed has purchased $1.6 trillion in bonds in this latest round of asset purchases. Its balance sheet is now close to $4.5 trillion, up from around $800 billion prior to the financial crisis.

Severe market volatility raised the possibility that the Fed might delay its planned ending of QE3 until December but the central bank decided to move ahead.

With the Fed bond buying ended, markets will now focus on when the Fed will raise interest rates. 

There are sharp divisions among Fed officials on the timing of the first rate hike.

Before the statement was released, the market was expecting the first rate hike in October 2015, a few months later than the “mid-2015” guidance from key allies of Fed Chairwoman Janet Yellen.

Yellen has repeatedly stressed that the decision to hike rates will be data driven.

As a result of the changes to the statement only one member of the ten-member Open Market Committee dissented – Narayana Kocherlakota, the president of the Minneapolis Fed and the most ardent dove on the committee.

Two hawks who had dissented in September — Richard Fisher of the Dallas Fed and Charles Plosser, the president of the Philadelphia Fed —support the Fed policy statement.

http://www.marketwatch.com/story/fed-ends-qe3-and-sends-upbeat-signals-on-economy-2014-10-29


-------------------------------------------------------


Read what Fed says on ending QE stimulus 

WASHINGTION (MarketWatch) — The following is the Federal Reserve’s statement after the central bank ended a long-running program of bond purchases, or “quantitative easing,” meant to stimulate the U.S. economy. 

Read: Fed ends QE3 and sends upbeat signals on economy: http://www.marketwatch.com/story/fed-ends-qe3-and-sends-upbeat-signals-on-economy-2014-10-29

Information received since the Federal Open Market Committee met in September suggests that economic activity is expanding at a moderate pace. Labor market conditions improved somewhat further, with solid job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing. Household spending is rising moderately and business fixed investment is advancing, while the recovery in the housing sector remains slow.

Inflation has continued to run below the Committee’s longer-run objective. Market-based measures of inflation compensation have declined somewhat; survey-based measures of longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators and inflation moving toward levels the Committee judges consistent with its dual mandate.

The Committee sees the risks to the outlook for economic activity and the labor market as nearly balanced. Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year.

The Committee judges that there has been a substantial improvement in the outlook for the labor market since the inception of its current asset purchase program. Moreover, the Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability.

Accordingly, the Committee decided to conclude its asset purchase program this month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress — both realized and expected — toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments.

The Committee anticipates, based on its current assessment, that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program this month, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.

However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Stanley Fischer; Richard W. Fisher; Loretta J. Mester; Charles I. Plosser; Jerome H. Powell; and Daniel K. Tarullo.

Voting against the action was Narayana Kocherlakota, who believed that, in light of continued sluggishness in the inflation outlook and the recent slide in market-based measures of longer-term inflation expectations, the Committee should commit to keeping the current target range for the federal funds rate at least until the one-to-two-year ahead inflation outlook has returned to 2 percent and should continue the asset purchase program at its current level

http://www.marketwatch.com/story/read-what-fed-says-on-ending-qe-stimulus-2014-10-29

 

 

 

 

Fed chief Janet Yellen has been engineering an exit from the QE stimulus scheme

Continue reading the main story Related Stories

• Peston: QE end is whimper not bang
• US unemployment rate at six-year low

The US Federal Reserve has announced it is ending its quantitative easing (QE) stimulus programme begun in 2008.

The Fed said it was confident the US economic recovery would continue, despite a global economic slowdown.

The targets for inflation and reduction in unemployment were on track, the Fed said in a statement.

The central bank, which also said it would not raise interest rates for a "considerable time", has gradually cut back QE since last year.

'Sufficient strength'

The statement suggested that although the jobs market is strengthening, it is still not back to normal, which is why interest rates are being held.

"The Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability," the Fed said.

Analysts said the news was in line with expectations.

"The Fed's announcement is exactly what everyone expected," said Wayne Kaufman, chief market analyst at Phoenix Financial, in New York.

"The Fed sees enough improvement in economic activity to end QE, but at the same time, it will keep low rates because it isn't yet seeing what it wants to see as far as inflation goes," he said.

 

Several analysts seized on the Fed's comments about slack in the labour market. Previous policy statements have referred to "significant underutilization of labor resources".

Wednesday's statement left out the word "significant".

Paul Ashworth, chief US economist at Capital Economics, said: "In light of the latest drop in the unemployment rate to below 6%, the dropping of "significant" could be, well... significant."

Brian Jacobsen, strategist at Wells Fargo Funds Management, added: "I was pleasantly surprised that they removed the reference to there being significant underutilization of labour resources.

"I think that is a hat tip to some of the progress being made in the labour market."

US shares were down ahead of the statement and continued to drift lower after the news was announced.

'Milestone'

QE started in November 2008 amid the financial crisis and fears that the US, and the rest of the world, might be facing another great depression.

The Fed's traditional ammunition, cutting interest rates, was running low - there was one more cut the following month, taking the main interest rate target down to practically zero.

So the central bank began buying financial assets and creating new money to pay for them.

In total, the Fed has added $3.7tn worth of assets to its holdings, about an eightfold increase.

BBC economics correspondent Andrew Walker said that although the US economy is improving, the moderate unemployment rate does not tell the whole story.

"There are still many people working part-time who would rather have longer hours, and many people not looking for jobs who are not counted as unemployed but would actually like to work. And long term unemployment is still a serious problem.

"The end of QE will nonetheless be an important milestone in the repair of the US economy," he said.

Recent data has pointed to increase spending by consumers and businesses. However, the housing market is still struggling and pay is stagnant.

There is concern about the long-term impact of the US's persistent low inflation, which risks undermining consumer spending as people delay purchases in the hope that prices will fall further.

Edited October 30, 2014 by TBomb

[Butifldrm]

The world is attempting to tell this spoiled child to play nice with the rest of the world but he is throwing a fit! LOL

I hardly think that the world will EVER use the Ruble as the world's currency! LOL

gymrat,  I hardly think Putin is a spoiled child, I am going to post an article from a man who I believe is a true patriot of the Republic of the United States of America.  You may be too young to remember him.  He was Assistant Treasury Secretary under Ronald Reagan.  I hope you take the time to read his analysis, then associate it with the economic times ahead of this country including Iraq, because Iraq's currency is pegged to the dollar, I think it's very important we follow these events.  

 

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts' latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West and How America Was Lost.

 

Vladimir Putin Is The Leader Of the Moral World — Paul Craig Roberts

October 25, 2014 | Categories: Articles & Columns | Tags: |  Print This Article

 

Vladimir Putin Is The Leader Of the Moral World

Paul Craig Roberts

Dear Friends,

Vladimir Putin’s remarks at the 11th meeting of the Valdai International Discussion Club are worth more than a link in my latest column. These are the remarks of a humanitarian political leader, the like of which the world has not seen in my lifetime. Compare Putin to the corrupt war criminal in the White House or to his puppets in office in Germany, UK, France, Japan, Canada, Australia, and you will see the difference between a criminal clique and a leader striving for a humane and livable world in which the interests of all peoples are respected.

In a sane Western society, Putin’s statements would have been reproduced in full and discussions organized with remarks from experts such as Stephen F. Cohen. Choruses of approval would have been heard on television and read in the print media. But, of course, nothing like this is possible in a country whose rulers claim that it is the “exceptional” and “indispensable” country with an extra-legal right to hegemony over the world. As far as Washington and its prostitute media, named “presstitutes” by the trends specialist Gerald Celente, are concerned, no country counts except Washington. “You are with us or against us,” which means “you are our vassals or our enemies.” This means that Washington has declared Russia, China, India, Brazil and other parts of South America, Iran, and South Africa to be enemies.

This is a big chunk of the world for a bankrupt country, hated by its vassal populations and many of its own subjects, that has not won a war since it defeated tiny Japan in 1945 by using nuclear weapons, the only use of such terrible weapons in world history.

As an American, try to image any known American politician, or for that matter any professor at Harvard, Princeton, Yale, or Stanford capable of giving an address to an educated discussion group of the quality of Putin’s remarks. Try to find any American politician capable of responding precisely and directly to questions instead of employing evasion.

No one can read Putin’s remarks without concluding that Putin is the leader of the world.

In my opinion, Putin is such a towering figure that Washington has him marked for assassination. The CIA will use one of the Muslim terrorists that the CIA supports inside Russia. Unlike an American president, who dares not move among the people openly, Putin is not kept remote from the people. Putin is at ease with the Russian people and mingles among them. This makes him an easy target for the CIA to use a Chechnya terrorist, a Jihadist suicide bomber, or the traditional “lone nut” to assassinate Putin.

The immoral, wicked, and declining West is incapable of producing leadership of Putin’s quality. Having defamed Putin, assassinating him will cause little comment in the Western media.

Here are Putin’s remarkable remarks:

Meeting of the Valdai International Discussion Club

24 October 2014, Sochi

Vladimir Putin took part in the final plenary meeting of the Valdai International Discussion Club’s XI session. The meeting’s theme is The World Order: New Rules or a Game without Rules.

This year, 108 experts, historians and political analysts from 25 countries, including 62 foreign participants, took part in the club’s work.

The plenary meeting summed up the club’s work over the previous three days, which concentrated on analysing the factors eroding the current system of institutions and norms of international law. 

PRESIDENT OF RUSSIA VLADIMIR PUTIN: Colleagues, ladies and gentlemen, friends, it is a pleasure to welcome you to the XI meeting of the Valdai International Discussion Club. 

It was mentioned already that the club has new co-organisers this year. They include Russian non-governmental organisations, expert groups and leading universities. The idea was also raised of broadening the discussions to include not just issues related to Russia itself but also global politics and the economy. 

n organisation and content will bolster the club’s influence as a leading discussion and expert forum. At the same time, I hope the ‘Valdai spirit’ will remain – this free and open atmosphere and chance to express all manner of very different and frank opinions.    

Let me say in this respect that I will also not let you down and will speak directly and frankly. Some of what I say might seem a bit too harsh, but if we do not speak directly and honestly about what we really think, then there is little point in even meeting in this way. It would be better in that case just to keep to diplomatic get-togethers, where no one says anything of real sense and, recalling the words of one famous diplomat, you realise that diplomats have tongues so as not to speak the truth.

 

We get together for other reasons. We get together so as to talk frankly with each other. We need to be direct and blunt today not so as to trade barbs, but so as to attempt to get to the bottom of what is actually happening in the world, try to understand why the world is becoming less safe and more unpredictable, and why the risks are increasing everywhere around us.

Today’s discussion took place under the theme: New Rules or a Game without Rules. I think that this formula accurately describes the historic turning point we have reached today and the choice we all face. There is nothing new of course in the idea that the world is changing very fast. I know this is something you have spoken about at the discussions today. It is certainly hard not to notice the dramatic transformations in global politics and the economy, public life, and in industry, information and social technologies. 

Let me ask you right now to forgive me if I end up repeating what some of the discussion’s participants have already said. It’s practically impossible to avoid. You have already held detailed discussions, but I will set out my point of view. It will coincide with other participants’ views on some points and differ on others.

As we analyse today’s situation, let us not forget history’s lessons. First of all, changes in the world order – and what we are seeing today are events on this scale – have usually been accompanied by if not global war and conflict, then by chains of intensive local-level conflicts. Second, global politics is above all about economic leadership, issues of war and peace, and the humanitarian dimension, including human rights. 

The world is full of contradictions today. We need to be frank in asking each other if we have a reliable safety net in place. Sadly, there is no guarantee and no certainty that the current system of global and regional security is able to protect us from upheavals. This system has become seriously weakened, fragmented and deformed. The international and regional political, economic, and cultural cooperation organisations are also going through difficult times.

Yes, many of the mechanisms we have for ensuring the world order were created quite a long time ago now, including and above all in the period immediately following World War II. Let me stress that the solidity of the system created back then rested not only on the balance of power and the rights of the victor countries, but on the fact that this system’s ‘founding fathers’ had respect for each other, did not try to put the squeeze on others, but attempted to reach agreements.

The main thing is that this system needs to develop, and despite its various shortcomings, needs to at least be capable of keeping the world’s current problems within certain limits and regulating the intensity of the natural competition between countries.

It is my conviction that we could not take this mechanism of checks and balances that we built over the last decades, sometimes with such effort and difficulty, and simply tear it apart without building anything in its place. Otherwise we would be left with no instruments other than brute force.

What we needed to do was to carry out a rational reconstruction and adapt it the new realities in the system of international relations.

But the United States, having declared itself the winner of the Cold War, saw no need for this. Instead of establishing a new balance of power, essential for maintaining order and stability, they took steps that threw the system into sharp and deep imbalance.  

The Cold War ended, but it did not end with the signing of a peace treaty with clear and transparent agreements on respecting existing rules or creating new rules and standards. This created the impression that the so-called ‘victors’ in the Cold War had decided to pressure events and reshape the world to suit their own needs and interests. If the existing system of international relations, international law and the checks and balances in place got in the way of these aims, this system was declared worthless, outdated and in need of immediate demolition. 

  

Pardon the analogy, but this is the way nouveaux riches behave when they suddenly end up with a great fortune, in this case, in the shape of world leadership and domination. Instead of managing their wealth wisely, for their own benefit too of course, I think they have committed many follies.   

We have entered a period of differing interpretations and deliberate silences in world politics. International law has been forced to retreat over and over by the onslaught of legal nihilism. Objectivity and justice have been sacrificed on the altar of political expediency. Arbitrary interpretations and biased assessments have replaced legal norms. At the same time, total control of the global mass media has made it possible when desired to portray white as black and black as white. 

In a situation where you had domination by one country and its allies, or its satellites rather, the search for global solutions often turned into an attempt to impose their own universal recipes. This group’s ambitions grew so big that they started presenting the policies they put together in their corridors of power as the view of the entire international community. But this is not the case.

The very notion of ‘national sovereignty’ became a relative value for most countries. In essence, what was being proposed was the formula: the greater the loyalty towards the world’s sole power centre, the greater this or that ruling regime’s legitimacy.

We will have a free discussion afterwards and I will be happy to answer your questions and would also like to use my right to ask you questions. Let someone try to disprove the arguments that I just set out during the upcoming discussion.

The measures taken against those who refuse to submit are well-known and have been tried and tested many times. They include use of force, economic and propaganda pressure, meddling in domestic affairs, and appeals to a kind of ‘supra-legal’ legitimacy when they need to justify illegal intervention in this or that conflict or toppling inconvenient regimes. Of late, we have increasing evidence too that outright blackmail has been used with regard to a number of leaders. It is not for nothing that ‘big brother’ is spending billions of dollars on keeping the whole world, including its own closest allies, under surveillance.

Let’s ask ourselves, how comfortable are we with this, how safe are we, how happy living in this world, and how fair and rational has it become? Maybe, we have no real reasons to worry, argue and ask awkward questions? Maybe the United States’ exceptional position and the way they are carrying out their leadership really is a blessing for us all, and their meddling in events all around the world is bringing peace, prosperity, progress, growth and democracy, and we should maybe just relax and enjoy it all?   

Let me say that this is not the case, absolutely not the case.

A unilateral diktat and imposing one’s own models produces the opposite result. Instead of settling conflicts it leads to their escalation, instead of sovereign and stable states we see the growing spread of chaos, and instead of democracy there is support for a very dubious public ranging from open neo-fascists to Islamic radicals.  

Why do they support such people? They do this because they decide to use them as instruments along the way in achieving their goals but then burn their fingers and recoil. I never cease to be amazed by the way that our partners just keep stepping on the same rake, as we say here in Russia, that is to say, make the same mistake over and over.

They once sponsored Islamic extremist movements to fight the Soviet Union. Those groups got their battle experience in Afghanistan and later gave birth to the Taliban and Al-Qaeda. The West if not supported, at least closed its eyes, and, I would say, gave information, political and financial support to international terrorists’ invasion of Russia (we have not forgotten this) and the Central Asian region’s countries. Only after horrific terrorist attacks were committed on US soil itself did the United States wake up to the common threat of terrorism. Let me remind you that we were the first country to support the American people back then, the first to react as friends and partners to the terrible tragedy of September 11.

During my conversations with American and European leaders, I always spoke of the need to fight terrorism together, as a challenge on a global scale. We cannot resign ourselves to and accept this threat, cannot cut it into separate pieces using double standards. Our partners expressed agreement, but a little time passed and we ended up back where we started. First there was the military operation in Iraq, then in Libya, which got pushed to the brink of falling apart. Why was Libya pushed into this situation? Today it is a country in danger of breaking apart and has become a training ground for terrorists. 

Only the current Egyptian leadership’s determination and wisdom saved this key Arab country from chaos and having extremists run rampant. In Syria, as in the past, the United States and its allies started directly financing and arming rebels and allowing them to fill their ranks with mercenaries from various countries. Let me ask where do these rebels get their money, arms and military specialists? Where does all this come from? How did the notorious ISIL manage to become such a powerful group, essentially a real armed force?  

 

As for financing sources, today, the money is coming not just from drugs, production of which has increased not just by a few percentage points but many-fold, since the international coalition forces have been present in Afghanistan. You are aware of this. The terrorists are getting money from selling oil too. Oil is produced in territory controlled by the terrorists, who sell it at dumping prices, produce it and transport it. But someone buys this oil, resells it, and makes a profit from it, not thinking about the fact that they are thus financing terrorists who could come sooner or later to their own soil and sow destruction in their own countries.

Where do they get new recruits? In Iraq, after Saddam Hussein was toppled, the state’s institutions, including the army, were left in ruins. We said back then, be very, very careful. You are driving people out into the street, and what will they do there? Don’t forget (rightfully or not) that they were in the leadership of a large regional power, and what are you now turning them into?

What was the result? Tens of thousands of soldiers, officers and former Baath Party activists were turned out into the streets and today have joined the rebels’ ranks. Perhaps this is what explains why the Islamic State group has turned out so effective? In military terms, it is acting very effectively and has some very professional people. Russia warned repeatedly about the dangers of unilateral military actions, intervening in sovereign states’ affairs, and flirting with extremists and radicals. We insisted on having the groups fighting the central Syrian government, above all the Islamic State, included on the lists of terrorist organisations. But did we see any results? We appealed in vain.

We sometimes get the impression that our colleagues and friends are constantly fighting the consequences of their own policies, throw all their effort into addressing the risks they themselves have created, and pay an ever-greater price.  

Colleagues, this period of unipolar domination has convincingly demonstrated that having only one power centre does not make global processes more manageable. On the contrary, this kind of unstable construction has shown its inability to fight the real threats such as regional conflicts, terrorism, drug trafficking, religious fanaticism, chauvinism and neo-Nazism. At the same time, it has opened the road wide for inflated national pride, manipulating public opinion and letting the strong bully and suppress the weak.

Essentially, the unipolar world is simply a means of justifying dictatorship over people and countries. The unipolar world turned out too uncomfortable, heavy and unmanageable a burden even for the self-proclaimed leader. Comments along this line were made here just before and I fully agree with this. This is why we see attempts at this new historic stage to recreate a semblance of a quasi-bipolar world as a convenient model for perpetuating American leadership. It does not matter who takes the place of the centre of evil in American propaganda, the USSR’s old place as the main adversary. It could be Iran, as a country seeking to acquire nuclear technology, China, as the world’s biggest economy, or Russia, as a nuclear superpower. 

Today, we are seeing new efforts to fragment the world, draw new dividing lines, put together coalitions not built for something but directed against someone, anyone, create the image of an enemy as was the case during the Cold War years, and obtain the right to this leadership, or diktat if you wish. The situation was presented this way during the Cold War. We all understand this and know this. The United States always told its allies: “We have a common enemy, a terrible foe, the centre of evil, and we are defending you, our allies, from this foe, and so we have the right to order you around, force you to sacrifice your political and economic interests and pay your share of the costs for this collective defence, but we will be the ones in charge of it all of course.” In short, we see today attempts in a new and changing world to reproduce the familiar models of global management, and all this so as to guarantee their [the US’] exceptional position and reap political and economic dividends. 

But these attempts are increasingly divorced from reality and are in contradiction with the world’s diversity. Steps of this kind inevitably create confrontation and countermeasures and have the opposite effect to the hoped-for goals. We see what happens when politics rashly starts meddling in the economy and the logic of rational decisions gives way to the logic of confrontation that only hurt one’s own economic positions and interests, including national business interests.

Joint economic projects and mutual investment objectively bring countries closer together and help to smooth out current problems in relations between states. But today, the global business community faces unprecedented pressure from Western governments. What business, economic expediency and pragmatism can we speak of when we hear slogans such as “the homeland is in danger”, “the free world is under threat”, and “democracy is in jeopardy”? And so everyone needs to mobilise. That is what a real mobilisation policy looks like. 

Sanctions are already undermining the foundations of world trade, the WTO rules and the principle of inviolability of private property. They are dealing a blow to liberal model of globalisation based on markets, freedom and competition, which, let me note, is a model that has primarily benefited precisely the Western countries. And now they risk losing trust as the leaders of globalisation. We have to ask ourselves, why was this necessary? After all, the United States’ prosperity rests in large part on the trust of investors and foreign holders of dollars and US securities. This trust is clearly being undermined and signs of disappointment in the fruits of globalisation are visible now in many countries.  

 

The well-known Cyprus precedent and the politically motivated sanctions have only strengthened the trend towards seeking to bolster economic and financial sovereignty and countries’ or their regional groups’ desire to find ways of protecting themselves from the risks of outside pressure. We already see that more and more countries are looking for ways to become less dependent on the dollar and are setting up alternative financial and payments systems and reserve currencies. I think that our American friends are quite simply cutting the branch they are sitting on. You cannot mix politics and the economy, but this is what is happening now. I have always thought and still think today that politically motivated sanctions were a mistake that will harm everyone, but I am sure that we will come back to this subject later. 

We know how these decisions were taken and who was applying the pressure. But let me stress that Russia is not going to get all worked up, get offended or come begging at anyone’s door. Russia is a self-sufficient country. We will work within the foreign economic environment that has taken shape, develop domestic production and technology and act more decisively to carry out transformation. Pressure from outside, as has been the case on past occasions, will only consolidate our society, keep us alert and make us concentrate on our main development goals.

Of course the sanctions are a hindrance. They are trying to hurt us through these sanctions, block our development and push us into political, economic and cultural isolation, force us into backwardness in other words. But let me say yet again that the world is a very different place today. We have no intention of shutting ourselves off from anyone and choosing some kind of closed development road, trying to live in autarky. We are always open to dialogue, including on normalising our economic and political relations. We are counting here on the pragmatic approach and position of business communities in the leading countries.  

Some are saying today that Russia is supposedly turning its back on Europe – such words were probably spoken already here too during the discussions – and is looking for new business partners, above all in Asia. Let me say that this is absolutely not the case. Our active policy in the Asian-Pacific region began not just yesterday and not in response to sanctions, but is a policy that we have been following for a good many years now. Like many other countries, including Western countries, we saw that Asia is playing an ever greater role in the world, in the economy and in politics, and there is simply no way we can afford to overlook these developments.

Let me say again that everyone is doing this, and we will do so to, all the more so as a large part of our country is geographically in Asia. Why should we not make use of our competitive advantages in this area? It would be extremely shortsighted not to do so.

Developing economic ties with these countries and carrying out joint integration projects also creates big incentives for our domestic development. Today’s demographic, economic and cultural trends all suggest that dependence on a sole superpower will objectively decrease. This is something that European and American experts have been talking and writing about too.

Perhaps developments in global politics will mirror the developments we are seeing in the global economy, namely, intensive competition for specific niches and frequent change of leaders in specific areas. This is entirely possible.

There is no doubt that humanitarian factors such as education, science, healthcare and culture are playing a greater role in global competition. This also has a big impact on international relations, including because this ‘soft power’ resource will depend to a great extent on real achievements in developing human capital rather than on sophisticated propaganda tricks.

At the same time, the formation of a so-called polycentric world (I would also like to draw attention to this, colleagues) in and of itself does not improve stability; in fact, it is more likely to be the opposite. The goal of reaching global equilibrium is turning into a fairly difficult puzzle, an equation with many unknowns.

So, what is in store for us if we choose not to live by the rules – even if they may be strict and inconvenient – but rather live without any rules at all? And that scenario is entirely possible; we cannot rule it out, given the tensions in the global situation. Many predictions can already be made, taking into account current trends, and unfortunately, they are not optimistic. If we do not create a clear system of mutual commitments and agreements, if we do not build the mechanisms for managing and resolving crisis situations, the symptoms of global anarchy will inevitably grow.

Today, we already see a sharp increase in the likelihood of a whole set of violent conflicts with either direct or indirect participation by the world’s major powers. And the risk factors include not just traditional multinational conflicts, but also the internal instability in separate states, especially when we talk about nations located at the intersections of major states’ geopolitical interests, or on the border of cultural, historical, and economic civilizational continents.

Ukraine, which I’m sure was discussed at length and which we will discuss some more, is one of the example of such sorts of conflicts that affect international power balance, and I think it will certainly not be the last. From here emanates the next real threat of destroying the current system of arms control agreements. And this dangerous process was launched by the United States of America when it unilaterally withdrew from the Anti-Ballistic Missile Treaty in 2002, and then set about and continues today to actively pursue the creation of its global missile defence system.

Colleagues, friends, I want to point out that we did not start this. Once again, we are sliding into the times when, instead of the balance of interests and mutual guarantees, it is fear and the balance of mutual destruction that prevent nations from engaging in direct conflict. In absence of legal and political instruments, arms are once again becoming the focal point of the global agenda; they are used wherever and however, without any UN Security Council sanctions. And if the Security Council refuses to produce such decisions, then it is immediately declared to be an outdated and ineffective instrument.

Many states do not see any other ways of ensuring their sovereignty but to obtain their own bombs. This is extremely dangerous. We insist on continuing talks; we are not only in favour of talks, but insist on continuing talks to reduce nuclear arsenals. The less nuclear weapons we have in the world, the better. And we are ready for the most serious, concrete discussions on nuclear disarmament – but only serious discussions without any double standards.

What do I mean? Today, many types of high-precision weaponry are already close to mass-destruction weapons in terms of their capabilities, and in the event of full renunciation of nuclear weapons or radical reduction of nuclear potential, nations that are leaders in creating and producing high-precision systems will have a clear military advantage. Strategic parity will be disrupted, and this is likely to bring destabilization. The use of a so-called first global pre-emptive strike may become tempting. In short, the risks do not decrease, but intensify.

The next obvious threat is the further escalation of ethnic, religious, and social conflicts. Such conflicts are dangerous not only as such, but also because they create zones of anarchy, lawlessness, and chaos around them, places that are comfortable for terrorists and criminals, where piracy, human trafficking, and drug trafficking flourish.

Incidentally, at the time, our colleagues tried to somehow manage these processes, use regional conflicts and design ‘colour revolutions’ to suit their interests, but the genie escaped the bottle. It looks like the controlled chaos theory fathers themselves do not know what to do with it; there is disarray in their ranks.

We closely follow the discussions by both the ruling elite and the expert community. It is enough to look at the headlines of the Western press over the last year. The same people are called fighters for democracy, and then Islamists; first they write about revolutions and then call them riots and upheavals. The result is obvious: the further expansion of global chaos.

Colleagues, given the global situation, it is time to start agreeing on fundamental things. This is incredibly important and necessary; this is much better than going back to our own corners. The more we all face common problems, the more we find ourselves in the same boat, so to speak. And the logical way out is in cooperation between nations, societies, in finding collective answers to increasing challenges, and in joint risk management. Granted, some of our partners, for some reason, remember this only when it suits their interests.

Practical experience shows that joint answers to challenges are not always a panacea; and we need to understand this. Moreover, in most cases, they are hard to reach; it is not easy to overcome the differences in national interests, the subjectivity of different approaches, particularly when it comes to nations with different cultural and historical traditions. But nevertheless, we have examples when, having common goals and acting based on the same criteria, together we achieved real success.

Let me remind you about solving the problem of chemical weapons in Syria, and the substantive dialogue on the Iranian nuclear programme, as well as our work on North Korean issues, which also has some positive results. Why can’t we use this experience in the future to solve local and global challenges?

What could be the legal, political, and economic basis for a new world order that would allow for stability and security, while encouraging healthy competition, not allowing the formation of new monopolies that hinder development? It is unlikely that someone could provide absolutely exhaustive, ready-made solutions right now. We will need extensive work with participation by a wide range of governments, global businesses, civil society, and such expert platforms as ours.

However, it is obvious that success and real results are only possible if key participants in international affairs can agree on harmonising basic interests, on reasonable self-restraint, and set the example of positive and responsible leadership. We must clearly identify where unilateral actions end and we need to apply multilateral mechanisms, and as part of improving the effectiveness of international law, we must resolve the dilemma between the actions by international community to ensure security and human rights and the principle of national sovereignty and non-interference in the internal affairs of any state.

Those very collisions increasingly lead to arbitrary external interference in complex internal processes, and time and again, they provoke dangerous conflicts between leading global players. The issue of maintaining sovereignty becomes almost paramount in maintaining and strengthening global stability.

Clearly, discussing the criteria for the use of external force is extremely difficult; it is practically impossible to separate it from the interests of particular nations. However, it is far more dangerous when there are no agreements that are clear to everyone, when no clear conditions are set for necessary and legal interference.

I will add that international relations must be based on international law, which itself should rest on moral principles such as justice, equality and truth. Perhaps most important is respect for one’s partners and their interests. This is an obvious formula, but simply following it could radically change the global situation.

I am certain that if there is a will, we can restore the effectiveness of the international and regional institutions system. We do not even need to build anything anew, from the scratch; this is not a “greenfield,” especially since the institutions created after World War II are quite universal and can be given modern substance, adequate to manage the current situation.

This is true of improving the work of the UN, whose central role is irreplaceable, as well as the OSCE, which, over the course of 40 years, has proven to be a necessary mechanism for ensuring security and cooperation in the Euro-Atlantic region. I must say that even now, in trying to resolve the crisis in southeast Ukraine, the OSCE is playing a very positive role.

In light of the fundamental changes in the international environment, the increase in uncontrollability and various threats, we need a new global consensus of responsible forces. It’s not about some local deals or a division of spheres of influence in the spirit of classic diplomacy, or somebody’s complete global domination. I think that we need a new version of interdependence. We should not be afraid of it. On the contrary, this is a good instrument for harmonising positions.

This is particularly relevant given the strengthening and growth of certain regions on the planet, which process objectively requires institutionalisation of such new poles, creating powerful regional organisations and developing rules for their interaction. Cooperation between these centres would seriously add to the stability of global security, policy and economy.  But in order to establish such a dialogue, we need to proceed from the assumption that all regional centres and integration projects forming around them need to have equal rights to development, so that they can complement each other and nobody can force them into conflict or opposition artificially. Such destructive actions would break down ties between states, and the states themselves would be subjected to extreme hardship, or perhaps even total destruction.

I would like to remind you of the last year’s events. We have told our American and European partners that hasty backstage decisions, for example, on Ukraine’s association with the EU, are fraught with serious risks to the economy. We didn’t even say anything about politics; we spoke only about the economy, saying that such steps, made without any prior arrangements, touch on the interests of many other nations, including Russia as Ukraine’s main trade partner, and that a wide discussion of the issues is necessary. Incidentally, in this regard, I will remind you that, for example, the talks on Russia’s accession to the WTO lasted 19 years. This was very difficult work, and a certain consensus was reached.

Why am I bringing this up? Because in implementing Ukraine’s association project, our partners would come to us with their goods and services through the back gate, so to speak, and we did not agree to this, nobody asked us about this. We had discussions on all topics related to Ukraine’s association with the EU, persistent discussions, but I want to stress that this was done in an entirely civilised manner, indicating possible problems, showing the obvious reasoning and arguments. Nobody wanted to listen to us and nobody wanted to talk. They simply told us: this is none of your business, point, end of discussion. Instead of a comprehensive but – I stress – civilised dialogue, it all came down to a government overthrow; they plunged the country into chaos, into economic and social collapse, into a civil war with enormous casualties.

Why? When I ask my colleagues why, they no longer have an answer; nobody says anything. That’s it. Everyone’s at a loss, saying it just turned out that way. Those actions should not have been encouraged – it wouldn’t have worked. After all (I already spoke about this), former Ukrainian President Yanukovych signed everything, agreed with everything. Why do it? What was the point? What is this, a civilised way of solving problems? Apparently, those who constantly throw together new ‘colour revolutions’ consider themselves ‘brilliant artists’ and simply cannot stop.

I am certain that the work of integrated associations, the cooperation of regional structures, should be built on a transparent, clear basis; the Eurasian Economic Union’s formation process is a good example of such transparency. The states that are parties to this project informed their partners of their plans in advance, specifying the parameters of our association, the principles of its work, which fully correspond with the World Trade Organisation rules.

I will add that we would also have welcomed the start of a concrete dialogue between the Eurasian and European Union. Incidentally, they have almost completely refused us this as well, and it is also unclear why – what is so scary about it?

And, of course, with such joint work, we would think that we need to engage in dialogue (I spoke about this many times and heard agreement from many of our western partners, at least in Europe) on the need to create a common space for economic and humanitarian cooperation stretching all the way from the Atlantic to the Pacific Ocean.

Colleagues, Russia made its choice. Our priorities are further improving our democratic and open economy institutions, accelerated internal development, taking into account all the positive modern trends in the world, and consolidating society based on traditional values and patriotism.

We have an integration-oriented, positive, peaceful agenda; we are working actively with our colleagues in the Eurasian Economic Union, the Shanghai Cooperation Organisation, BRICS and other partners. This agenda is aimed at developing ties between governments, not dissociating. We are not planning to cobble together any blocs or get involved in an exchange of blows.

The allegations and statements that Russia is trying to establish some sort of empire, encroaching on the sovereignty of its neighbours, are groundless. Russia does not need any kind of special, exclusive place in the world – I want to emphasise this. While respecting the interests of others, we simply want for our own interests to be taken into account and for our position to be respected.

We are well aware that the world has entered an era of changes and global transformations, when we all need a particular degree of caution, the ability to avoid thoughtless steps. In the years after the Cold War, participants in global politics lost these qualities somewhat. Now, we need to remember them. Otherwise, hopes for a peaceful, stable development will be a dangerous illusion, while today’s turmoil will simply serve as a prelude to the collapse of world order.

Yes, of course, I have already said that building a more stable world order is a difficult task. We are talking about long and hard work. We were able to develop rules for interaction after World War II, and we were able to reach an agreement in Helsinki in the 1970s. Our common duty is to resolve this fundamental challenge at this new stage of development.

Thank you very much for your attention.

VLADIMIR PUTIN (commenting on statements by former Prime Minister of France Dominique de Villepin and former Federal Chancellor of Austria Wolfgang Schuessel): I would like to begin by saying that overall I agree with what both Wolfgang and Dominique have said. I fully support everything they said. However, there are a few things I would like to clarify.

I believe Dominique referred to the Ukrainian crisis as the reason for the deterioration in international relations. Naturally, this crisis is a cause, but this is not the principal cause. The crisis in Ukraine is itself a result of a misbalance in international relations.

I have already said in my address why this is happening, and my colleagues have already mentioned it. I can add to this, if necessary. However, primarily this is the outcome of the misbalance in international relations.

As for the issues mentioned by Wolfgang, we will get back to them: we will talk about the elections, if necessary, and about the supply of energy resources to Ukraine and Europe.

However, I would like to respond to the phrase “Wolfgang is an optimist, while life is harder for pessimists.” I already mentioned the old joke we have about a pessimist and an optimist, but I cannot help telling it again. We have this very old joke about a pessimist and an optimist: a pessimist drinks his cognac and says, “It smells of bedbugs,” while an optimist catches a bedbug, crushes it, then sniffs it and says, “A slight whiff of cognac.”

I would rather be the pessimist who drinks cognac than the optimist who sniffs bedbugs. (Laughter)

Though it does seem that optimists have a better time, our common goal is to live a decent life (without overindulging in alcohol). For this purpose, we need to avoid crises, together handle all challenges and threats and build such relations on the global arena that would help us reach these goals.

Later I will be ready to respond to some of the other things mentioned here. Thank you.

BRITISH JOURNALIST SEUMAS MILNE (retranslated from Russian): I would like to ask a two-in-one question.

First, Mr President, do you believe that the actions of Russia in Ukraine and Crimea over the past months were a reaction to rules being broken and are an example of state management without rules? And the other question is: does Russia see these global violations of rules as a signal for changing its position? It has been said here lately that Russia cannot lead in the existing global situation; however, it is demonstrating the qualities of a leader. How would you respond to this?

VLADIMIR PUTIN: I would like to ask you to reword the second part of your question, please. What exactly is your second question?

SEUMAS MILNE (retranslated from Russian): It has been said here that Russia cannot strive for leading positions in the world considering the outcomes of the Soviet Union’s collapse, however it can influence who the leader will be. Is it possible that Russia would alter its position, change its focus, as you mentioned, regarding the Middle East and the issues connected with Iran’s nuclear program me?

VLADIMIR PUTIN: Russia has never altered its position. We are a country with a traditional focus on cooperation and search for joint solutions. This is first.

Second. We do not have any claims to world leadership. The idea that Russia is seeking some sort of exclusivity is false; I said so in my address. We are not demanding a place under the sun; we are simply proceeding from the premise that all participants in international relations should respect each other’s interests. We are ready to respect the interests of our partners, but we expect the same respect for our interests.

We did not change our attitude to the situation in the Middle East, to the Iranian nuclear programme, to the North Korean conflict, to fighting terrorism and crime in general, as well as drug trafficking. We never changed any of our priorities even under the pressure of unfriendly actions on the part of our western partners, who are lead, very obviously in this case, by the United States. We did not even change the terms of the sanctions.

However, here too everything has its limits. I proceed from the idea that it might be possible that external circumstances can force us to alter some of our positions, but so far there have not been any extreme situations of this kind and we have no intention of changing anything. That is the first point.

The second point has to do with our actions in Crimea. I have spoken about this on numerous occasions, but if necessary, I can repeat it. This is Part 2 of Article 1 of the United Nations’ Charter – the right of nations to self-determination. It has all been written down, and not simply as the right to self-determination, but as the goal of the united nations. Read the article carefully.

I do not understand why people living in Crimea do not have this right, just like the people living in, say, Kosovo. This was also mentioned here. Why is it that in one case white is white, while in another the same is called black? We will never agree with this nonsense. That is one thing.

The other very important thing is something nobody mentions, so I would like to draw attention to it. What happened in Crimea? First, there was this anti-state overthrow in Kiev. Whatever anyone may say, I find this obvious – there was an armed seizure of power.

In many parts of the world, people welcomed this, not realising what this could lead to, while in some regions people were frightened that power was seized by extremists, by nationalists and right-wingers including neo-Nazis. People feared for their future and for their families and reacted accordingly. In Crimea, people held a referendum.

I would like to draw your attention to this. It was not by chance that we in Russia stated that there was a referendum. The decision to hold the referendum was made by the legitimate authority of Crimea – its Parliament, elected a few years ago under Ukrainian law prior to all these grave events. This legitimate body of authority declared a referendum, and then based on its results, they adopted a declaration of independence, just as Kosovo did, and turned to the Russian Federation with a request to accept Crimea into the Russian state.

You know, whatever anyone may say and no matter how hard they try to dig something up, this would be very difficult, considering the language of the United Nations court ruling, which clearly states (as applied to the Kosovo precedent) that the decision on self-determination does not require the approval of the supreme authority of a country.

In this connection I always recall what the sages of the past said. You may remember the wonderful saying: Whatever Jupiter is allowed, the Ox is not.

We cannot agree with such an approach. The ox may not be allowed something, but the bear will not even bother to ask permission. Here we consider it the master of the taiga, and I know for sure that it does not intend to move to any other climatic zones – it will not be comfortable there. However, it will not let anyone have its taiga either. I believe this is clear.

What are the problems of the present-day world order? Let us be frank about it, we are all experts here. We talk and talk, we are like diplomats. What happened in the world? There used to be a bipolar system. The Soviet Union collapsed, the power called the Soviet Union ceased to exist.

All the rules governing international relations after World War II were designed for a bipolar world. True, the Soviet Union was referred to as ‘the Upper Volta with missiles’. Maybe so, and there were loads of missiles. Besides, we had such brilliant politicians like Nikita Khrushchev, who hammered the desk with his shoe at the UN. And the whole world, primarily the United States, and NATO thought: this Nikita is best left alone, he might just go and fire a missile, they have lots of them, we should better show some respect for them.

Now that the Soviet Union is gone, what is the situation and what are the temptations? There is no need to take into account Russia’s views, it is very dependent, it has gone through transformation during the collapse of the Soviet Union, and we can do whatever we like, disregarding all rules and regulations.

This is exactly what is happening. Dominique here mentioned Iraq, Libya, Afghanistan and Yugoslavia before that. Was this really all handled within the framework of international law? Do not tell us those fairy-tales.

This means that some can ignore everything, while we cannot protect the interests of the Russian-speaking and Russian population of Crimea. This will not happen.

I would like everyone to understand this. We need to get rid of this temptation and attempts to arrange the world to one’s liking, and to create a balanced system of interests and relations that has long been prescribed in the world, we only have to show some respect.

As I have already said, we understand that the world has changed, and we are ready to take heed of it and adjust this system accordingly, but we will never allow anyone to completely ignore our interests.

Does Russia aim for any leading role? We don’t need to be a superpower; this would only be an extra load for us. I have already mentioned the taiga: it is immense, illimitable, and just to develop our territories we need plenty of time, energy and resources.

We have no need of getting involved in things, of ordering others around, but we want others to stay out of our affairs as well and to stop pretending they rule the world. That is all. If there is an area where Russia could be a leader – it is in asserting the norms of international law.

QUESTION: The peaceful process between the Palestinians and Israelis has completely collapsed. The United States never let the quartet work properly. At the same time, the growth of illegal Israeli settlements on the occupied territories renders impossible the creation of a Palestinian state. We have recently witnessed a very severe attack on the Gaza Strip. What is Russia’s attitude to this tense situation in the Middle East? And what do you think of the developments in Syria?

One remark for Mr Villepin as well. You spoke of humiliation. What can be more humiliating than the occupation that Palestine has been experiencing all these years?

VLADIMIR PUTIN: Regarding Palestine and the Israeli conflict. It is easy for me to speak about this because, first, I have to say and I believe everyone can see that our relations with Israel have transformed seriously in the past decade. I am referring to the fact that a large number of people from the former Soviet Union live in Israel and we cannot remain indifferent to their fate. At the same time, we have traditional relations with the Arab world, specifically with Palestine. Moreover, the Soviet Union, and Russia is its legal successor, has recognised Palestinian statehood. We are not changing anything here.

Finally, regarding the settlements. We share the views of the main participants in international relations. We consider this a mistake. I have already said this to our Israeli partners. I believe this is an obstacle to normal relations and I strongly expect that the practice itself will be stopped and the entire process of a peaceful settlement will return to its legal course based on agreement.

We proceed from the fact that that Middle East conflict is one of the primary causes of destabilisation not only in the region, but also in the world at large. Humiliation of any people living in the area, or anywhere else in the world is clearly a source of destabilisation and should be done away with. Naturally, this should be done using such means and measures that would be acceptable for all the participants in the process and for all those living in the area.

This is a very complicated process, but Russia is ready to use every means it has for this settlement, including its good relations with the parties to this conflict.

DIRECTOR, KIEV CENTER FOR POLITICAL AND CONFLICT STUDIES MIKHAIL POGREBINSKY: Mr President, I have come from Ukraine. For the first time in 70 years, it is going through very hard times. My question has to do with the possibility of a settlement. In this connection, I would like to go back in history. You mentioned that there was a moment when a trilateral format was under consideration: Russia-Ukraine-Europe. Back then, Europe did not agree to it, after which a series of tragic events took place, including the loss of Crimea, the death of thousands of people and so forth.

Recently, Europe together with Ukraine and Russia agreed that this format is possible after all; moreover, a corresponding resolution was passed. At that moment, there was hope that Russia together with Europe and Ukraine would manage to reach agreement and could become the restorer of peace in Ukraine. What happened next? What happened between Moscow and Brussels, Moscow and Berlin – because now the situation seems completely insane? It is unclear what this might lead to. What do you think happened to Europe?

VLADIMIR PUTIN: You know, what happened can be described as nothing happened. Agreements were reached, but neither side complied with them in full. However, full compliance by both sides might be impossible.

For instance, Ukrainian army units were supposed to leave certain locations where they were stationed prior to the Minsk agreements, while the militia army was supposed to leave certain settlements they were holding prior to these agreements. However, neither is the Ukrainian army withdrawing from the locations they should leave, nor is the militia army withdrawing from the settlements they have to move out of, referring, and I will be frank now – to the fact that their families remain there (I mean the militia) and they fear for their safety. Their families, their wives and children live there. This is a serious humanitarian factor.

We are ready to make every effort to ensure the implementation of the Minsk agreements. I would like to take advantage of your question to stress Russia’s position: we are in favour of complete compliance with the Minsk agreements by both sides.

What is the problem? In my view, the key problem is that we do not see the desire on the part of our partners in Kiev, primarily the authorities, to resolve the issue of relations with the country’s southeast peacefully, through negotiations. We keep seeing the same thing in various forms: suppression by force. It all began with Maidan, when they decided to suppress Yanukovych by force. They succeeded and raised this wave of nationalism and then it all transformed into some nationalistic battalions.

When people in southeast Ukraine did not like it, they tried to elect their own bodies of government and management and they were arrested and taken to prison in Kiev at night. Then, when people saw this happening and took to arms, instead of stopping and finally resorting to peaceful dialogue, they sent troops there, with tanks and aircraft.

Incidentally, the global community keeps silent, as if it does not see any of this, as if there is no such thing as ‘disproportionate use of force’. They suddenly forgot all about it. I remember all the frenzy around when we had a complicated situation in the Caucasus. I would hear one and the same thing every day. No more such words today, no more ‘disproportionate use of force’. And that’s while cluster bombs and even tactical weapons are being used.

You see, under the circumstances, it is very difficult for us in Russia to arrange work with people in southeast Ukraine in a way that would induce them to fully comply with all the agreements. They keep saying that the authorities in Kiev do not fully comply with the agreements either.

However, there is no other way. I would like to stress that we are for the full implementation of the agreements by both parties, and the most important thing I want to say – and I want everyone to hear that – if, God forbid, anyone is again tempted to use force for the final settlement of the situation in southeast Ukraine, this will bring the situation to a complete deadlock.

In my view, there is still a chance to reach agreement. Yes, Wolfgang spoke about this, I understood him. He spoke of the upcoming elections in Ukraine and in the southeast of the country. We know it and we are constantly discussing it. Just this morning I had another discussion with the Chancellor of Germany about it. The Minsk agreements do stipulate that elections in the southeast should be held in coordination with Ukrainian legislation, not under Ukrainian law, but in coordination with it.

This was done on purpose, because nobody in the southeast wants to hold elections in line with Ukrainian law. Why? How can this be done, when there is shooting every day, people get killed on both sides and they have to hold elections under Ukrainian law? The war should finally stop and the troops should be withdrawn. You see? Once this is achieved, we can start considering any kind of rapprochement or cooperation. Until this happens, it is hard to talk about anything else.

They spoke of the date of the elections in the southeast, but few know that there has been an agreement that elections in southeast Ukraine should be held by November 3. Later, the date was amended in the corresponding law, without consulting anyone, without consulting with the southeast. The elections were set for December 7, but nobody talked to them. Therefore, the people in the southeast say, “See, they cheated us again, and it will always be this way.”

You can argue over this any way you like. The most important thing is to immediately stop the war and move the troops away. If Ukraine wants to keep its territorial integrity, and this is something we want as well, they need to understand that there is no sense in holding on to some village or other – this is pointless. The idea is to stop the bloodshed and to start normal dialogue, to build relations based on this dialogue and restore at least some communication, primarily in the economy, and gradually other things will follow. I believe this is what should be achieved first and then we can move on.

PROFESSOR OF POLITICAL SCIENCE, DIRECTOR OF THE CENTER FOR GOVERNANCE AND PUBLIC POLICY AT CARLETON UNIVERSITY (OTTAWA) PIOTR DUTKIEWICZ: Mr President, if I may I would like to go back to the issue of Crimea, because it is of key importance for both the East and the West. I would like to ask you to give us your picture of the events that lead to it, specifically why you made this decision. Was it possible to do things differently? How did you do it? There are important details – how Russia did it inside Crimea. Finally, how do you see the consequences of this decision for Russia, for Ukraine, for Europe and for the normative world order? I am asking this because I believe millions of people would like to hear your personal reconstruction of those events and of the way you made the decision.

VLADIMIR PUTIN: I do not know how many times I spoke about this, but I will do it again.

On February 21, Viktor Yanukovych signed the well-known documents with the opposition. Foreign ministers of three European countries signed their names under this agreement as guarantors of its implementation.

In the evening of February 21, President Obama called me and we discussed these issues and how we would assist in the implementation of these agreements. Russia undertook certain obligations. I heard that my American colleague was also ready to undertake some obligations. This was the evening of the 21st. On the same day, President Yanukovych called me to say he signed the agreement, the situation had stabilized and he was going to a conference in Kharkov. I will not conceal the fact that I expressed my concern: how was it possible to leave the capital in this situation. He replied that he found it possible because there was the document signed with the opposition and guaranteed by foreign ministers of European countries.

I will tell you more, I told him I was not sure everything would be fine, but it was for him to decide. He was the president, he knew the situation, and he knew better what to do. “In any case, I do not think you should withdraw the law enforcement forces from Kiev,” I told him. He said he understood. Then he left and gave orders to withdraw all the law enforcement troops from Kiev. Nice move, of course.

We all know what happened in Kiev. On the following day, despite all our telephone conversations, despite the signatures of the foreign ministers, as soon as Yanukovych left Kiev his administration was taken over by force along with the government building. On the same day, they shot at the cortege of Ukraine’s Prosecutor General, wounding one of his security guards.

Yanukovych called me and said he would like us to meet to talk it over. I agreed. Eventually we agreed to meet in Rostov because it was closer and he did not want to go too far. I was ready to fly to Rostov. However, it turned out he could not go even there. They were beginning to use force against him already, holding him at gunpoint. They were not quite sure where to go.

I will not conceal it; we helped him move to Crimea, where he stayed for a few days. That was when Crimea was still part of Ukraine. However, the situation in Kiev was developing very rapidly and violently, we know what happened, though the broad public may not know – people were killed, they were burned alive there. They came into the office of the Party of Regions, seized the technical workers and killed them, burned them alive in the basement. Under those circumstances, there was no way he could return to Kiev. Everybody forgot about the agreements with the opposition signed by foreign ministers and about our telephone conversations. Yes, I will tell you frankly that he asked us to help him get to Russia, which we did. That was all.

Seeing these developments, people in Crimea almost immediately took to arms and asked us for help in arranging the events they intended to hold. I will be frank; we used our Armed Forces to block Ukrainian units stationed in Crimea, but not to force anyone to take part in the elections. This is impossible, you are all grown people, and you understand it. How could we do it? Lead people to polling stations at gunpoint?

People went to vote as if it were a celebration, everybody knows this, and they all voted, even the Crimean Tatars. There were fewer Crimean Tatars, but the overall vote was high. While the turnout in Crimea in general was about 96 or 94 percent, a smaller number of Crimean Tatars showed up. However 97 percent of them voted ‘yes’. Why? Because those who did not want it did not come to the polling stations, and those who did voted ‘yes’.

I already spoke of the legal side of the matter. The Crimean Parliament met and voted in favour of the referendum. Here again, how could anyone say that several dozen people were dragged to parliament to vote? This never happened and it was impossible: if anyone did not want to vote they would get on a train or plane, or their car and be gone.

They all came and voted for the referendum, and then the people came and voted in favour of joining Russia, that is all. How will this influence international relations? We can see what is happening; however if we refrain from using so-called double standards and accept that all people have equal rights, it would have no influence at all. We have to admit the right of those people to self-determination.

 

Link to this page: http://eng.news.kremlin.ru/news/23137

[gymrat76541]

Personally I like reading sci-fic.

Doom & gloom time again?

The dollar is still king! USA USA USA

I ain't believing that the Russian Ruble, the Indian Rubie, or the North Korean dong is taking over! LOL

[Butifldrm]

Personally I like reading sci-fic.

Doom & gloom time again?

The dollar is still king! USA USA USA

I ain't believing that the Russian Ruble, the Indian Rubie, or the North Korean dong is taking over! LOL

gym. the Ruble will not be King.  It will be the SDR.

[easyrider]

gym. the Ruble will not be King.  It will be the SDR.

bingo!!!! hmm the dinar will also be in the SDR basket as well.

Personally I like reading sci-fic.

Doom & gloom time again?

The dollar is still king! USA USA USA

I ain't believing that the Russian Ruble, the Indian Rubie, or the North Korean dong is taking over! LOL

the dollar hasnt been king for quite a while gym only the illusion has been through manipulation and QE which by the way is a JOKE!

 

 

 

1. Quantitative easing (QE) is an unconventional monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective.

Edited October 31, 2014 by easyrider

[TBomb]

HERE'S ANOTHER "TAKE" ON PUTIN - I REALLY LIKE CHARLIE ROSE - 

 

 

Khodorkovsky Sees 1917-Like Crisis Nearing Under Putin

By Boris Korby and Halia Pavliva  Oct 3, 2014 2:29 AM MT  

 

PLEASE VISIT THE LINK AT BOTTOM TO WATCH THE VIDEO

 

Oct. 3 (Bloomberg) -- On “Charlie Rose,” a conversation with Mikhail Khodorkovsky. He was once the richest man in Russia and the chairman of Yukos Oil. He spent more than a decade in a Siberian prison after being convicted of tax evasion, embezzlement and money laundering in a series of show trials. He was pardoned last winter, and he now devotes his efforts to reform in Russia. "Charlie Rose" airs weeknights on Bloomberg Television at 8p & 10p ET.

 

 

 

 

 

Mikhail Khodorkovsky, the one-time oil tycoon who spent a decade in President Vladimir Putin’s prisons, said Russia is nearing an economic crisis that could fuel an uprising similar to the country’s 1917 revolution.

“I fear that Putin is going to bring the country to a crisis much more quickly than many would like,” Khodorkovsky, 51, said in an interview with Charlie Rose in New York. Russia could end up seeing “a repeat of 1917 when a person brings the country to an economic crisis, and we are certainly moving right in that direction.”

Deteriorating economic conditions may spark the sort of discontent that helped put an end to Russia’s Czarist autocracy a century ago, he said, referring to the turmoil that swept the Bolsheviks into power under Vladimir Lenin and led to the creation of theSoviet Union. Russia’s economy is teetering on the brink of recession as international sanctions linked to the conflict in Ukraine stunt growth.

Related:

• Putin Lures Russia Scholars With Chilled Vodka, Raw Octopus
• Orphaned Russian Oil Heads to U.S. West on Asia Overflow

Khodorkovsky, once Russia’s richest man with a fortune of $15 billion, funded opposition parties before his arrest and campaigned from prison for Russia to develop a civil society. He was freed after receiving a presidential pardon in December. Khodorkovsky maintained his innocence after being convicted for tax evasion, money-laundering and oil embezzlement, saying the cases against him were retribution for financing political parties that opposed Putin. The Kremlin has denied that.

Photographer: Bartek Sadowski/Bloomberg

Former oil tycoon Mikhail Khodorkovsky.

“All authoritarian regimes, especially ones like this that aren’t based on an ideology but on an individual person, are highly unstable,” Khodorkovsky said. “In order to retain power, such authoritarian leaders are forced to burn the field all around themselves, which is what Putin is doing.”

European Ties

Closer integration with Europe is essential for Russia’s development, he said.

“We are part of Europe,” Khodorkovsky said in the interview at Bloomberg headquarters in New York. “All of our culture is European. All of our traditions are European.”

Putin’s annexation of Crimea in March and subsequent fighting between pro-Russian rebels and Ukrainian forces has prompted investors to pull money out of the country. Russia has denied involvement in the conflict.

Standoff in Ukraine

The ruble has lost 14 percent against the dollar over the past three months alone, more than any other currency tracked by Bloomberg. Net outflows from Russian assets totaled $75 billion in the first half of 2014, compared with $61 billion in all of last year, data from the country’s central bank show. The ruble fell 0.4 percent to 39.7310 as of 11:33 a.m. in Moscow.

Russia’s economy will expand 0.5 percent next year, the International Monetary Fundsaid this week, cutting its previous growth forecast in half amid fallout from the conflict in Ukraine and the weaker currency.

Swiss Exile

Khodorkovsky, who has been living in exile in Switzerland since his release, said last month’s house arrest of Russian billionaire Vladimir Evtushenkov is the result of shifting political influence within the Kremlin.

Yukos Oil Co., Khodorkovsky’s company, was dismantled and sold at auction, mostly to state-run OAO Rosneft, to cover $27 billion in back taxes after his imprisonment. Yukos’s market value peaked at $35.7 billion in October 2003. Khodorkovsky had a fortune of $15 billion in 2004, according to Forbes magazine.

Putin, who served eight years as president before becoming prime minister, is likely to be re-elected in a ballot planned for 2017, Khodorkovsky said.

“The method by which he will get this victory will depend on how events develop,” he said. “He could get the victory relatively honestly, because right now, this national chauvinism is supporting his popularity rating.”

 

http://www.bloomberg.com/news/2014-10-03/khodorkovsky-sees-1917-like-crisis-nearing-under-putin.html

Edited October 31, 2014 by TBomb

[TBomb]

http://www.charlierose.com/watch/60454764  THIS IS THE LINK TO THE ENTIRE FIRST HALF OF THE INTERVIEW - AND YOU MAY FIND THE SECOND HALF AT THIS SAME SITE.

[gymrat76541]

The Russian central bank’s gambit worked for all of about two minutes yesterday.

That’s how long the ruble rallied after policy makers surprised investors by ratcheting up the benchmark interest rate 1.5 percentage points to 9.5 percent this afternoon. After that, it was right back to declines for the world’s worst-performing currency, with losses swelling to as much as 3.6 percent against the dollar, the biggest drop in three years.

While the rate increase was a full percentage point bigger than analysts expected, it was what policy makers opted not to do -- revamp their foreign-exchange intervention program -- that got traders’ attention the most and turned sentiment back against the ruble. Speculation a plan would be unveiled to allow the Bank of Russia to be less predictable and more aggressive in its interventions had fueled the biggest rally in the ruble yesterday since at least 2003, briefly snapping a rout that had seen the ruble slip 7.9 percent this month.

“The rate increase alone doesn’t change anything,” Dmitry Polevoy, chief economist for Russia at ING Groep NV, said by e-mail yesterday. “The central bank either doesn’t understand the root of the problem or is afraid to act. Or both.”

The ruble has been plunging as Russians pull capital out of the country amid a stand-off with the U.S. and its allies over President Vladimir Putin’s actions in Ukraine. Sanctions imposed by the White House and the European Union have shut Russian companies out of foreign capital market and threaten to push the $2 trillion economy into recession.

The ruble weakened 3.3 percent to 43.0140 per dollar at 8:34 p.m. in Moscow yesterday, the biggest daily drop since August 2011. Against the central bank’s target basket of dollars and euros, the currency dropped 3.1 percent to 47.9267.

Goldman Sachs Group Inc. and Commerzbank AG said policy makers should have scrapped the intervention rules to gain more freedom to smoke out speculators by selling dollars without warning or limit. Russia has spent $71 billion of its reserves to defend the ruble this year.

Central Bank Governor Elvira Nabiullina raised the benchmark rate by 1.5 points to 9.5 percent, the biggest tightening since Russia’s March incursion in Crimea and compared with the median forecast in a Bloomberg survey of 31 economists predicting a 50 basis point increase.

The Bank of Russia, which is fighting to keep price growth from speeding up, will be ready to start monetary easing if “external conditions improve” and inflation shows a “stable downward trend,” according to its statement today.

Under the current rules, the central bank automatically intervenes to defend the ruble once it reaches the boundary of its trading band. Once it has spent $350 million supporting the currency, the central bank moves the band by 5 kopeks. It repeats the process each time the currency falls by 5 kopeks.

Policy makers are showing “consistency” by sticking to their plan of moving to a free floating exchange rate only in 2015, according to Vladimir Osakovskiy, chief economist for Russia at Bank of America Corp. in Moscow.

The central bank said in an e-mailed statement to Bloomberg News yesterday that its intervention policy didn’t change yesterday, when the ruble gained as much as 5.1 percent per dollar. The monetary authority only intervenes at the edge of its corridor for the ruble, it said. The Bank of Russia’s rates statement made no mention of exchange-rate policy.

[Butifldrm]

Ruble Steadies After Russian Central Bank Free Float

 

 

Ilya Naymushin / Reuters

 

 

An employee uses a machine to count Russian rubles.

Russia's ruble held steady on Wednesday after several days of volatile trading and a Central Bank decision to float the currency, with investors cautious after the bank warned of large forex market interventions to punish "speculators."

At 0900 GMT, the ruble was less than 0.1 percent weaker against the dollar at 46.38 but was less than 0.1 percent stronger at 57.85 versus the euro.

The moves were far more timid than in recent days, when there were intra-day swings of several percent after statements by President Vladimir Putin and other Russian leaders intended to support the ruble.

"Interesting how the ruble has found a level floor given the current mix of factors at this point in time," Timothy Ash, chief emerging markets analyst at Standard Bank, said in a note.

"Near-term trends will be determined by how these factors change, in particular oil prices, the conflict in Ukraine and sanctions," he said.

The ruble has fallen nearly 30 percent versus the dollar this year, with most of the decrease coming in the last three months as sanctions made it harder for banks and companies to refinance debts and tumbling oil prices hurt government revenue.

Prices for benchmark Brent crude futures, which slipped below $81 a barrel on Wednesday and were near their lowest since 2010, applied new pressure, as did reports of shelling in eastern Ukraine despite a fragile cease-fire.

Factors lending support included comments in which German Chancellor Angela Merkel said Tuesday there were no plans at present for further economic sanctions on Russia over the Ukraine crisis, and a Central Bank move to restrict those betting against the ruble.

On Monday, the Central Bank let the currency float, a step it had planned by the end of the year as part of a shift to an inflation-targeting regime.

Although regular interventions will stop, the bank said it would keep the market in check and punish those betting against the ruble by carrying out large, ad hoc interventions.

http://www.themoscowtimes.com/business/article/ruble-weakens-further-against-dollar-and-euro-in-volatile-early-trade/510990.html

• • Reuters
  • Nov. 12 2014 11:06
  • Last edited 12:24

Russian Central Bank Rebalances Reserves: Less Dollars More Euros

• Reuters
• Nov. 12 2014 18:01
• Last edited 18:01

Russia's Central Bank said Wednesday it had boosted the amount of euros and reduced the amount of U.S. dollars in its foreign currency reserves in the first three months of the year.

The Central Bank releases data on its foreign currency holdings with a time lag of several months to minimize its impact on the forex market. The bank has said it intends to diversify its forex holdings away from the dollar and towards emerging market currencies.

The Central Bank said in a document on its website it had reduced the amount of dollars in its forex reserves from 45.4 percent on Dec. 31 2013 to 43.3 percent by March 31 this year.

The bank also said it had increased the amount of euros in its reserves to 43.7 percent by the end of March from 41.1 percent at the end of last year.

At the start of 2014, the Central Bank had 44.8 percent of its reserves in dollars and 41.5 percent in euros, the bank said in a separate annual report for last year.

http://www.themoscowtimes.com/business/article/russian-central-bank-rebalances-reserves-less-dollars-more-euros/511044.html

[Butifldrm]

BRICS leaders arrive in Brisbane for G20 Summit
November 14, 2014, 3:22 pm

 

Photo taken on Nov. 14, 2014 shows a light show in Brisbane, Australia. The G20 Summit is to be held in Brisbane on Nov. 15 to Nov. 16 [Xinhua]

BRICS leaders have arrived in Brisbane, Australia to participate in discussions on boosting global trade during the annual G20 Leaders Summit.

 

The five leaders will also attend a BRICS meet on the sidelines, where they will discuss individual ratification of the newly-formed $100 billion BRICS Bank and the $100 billion Contingency Reserve Arrangement (CRA) by lawmakers in the five countries.

South African President Jacob Zuma was the first among the BRICS leaders to arrive in Brisbane earlier on Thursday, followed by Indian Prime Minister Narendra Modi who is attending the Group of 20 gathering for the first time.

Modi and Chinese President Xi Jinping are also traveling to Canberra for bilateral visits and discussions with Australian Prime Minister Tony Abbott. Both Xi and Modi will address the Australian parliament, along with Japanese Prime Minister Shinzo Abe and UK Premier David Cameron.

This year’s G20 priorities have been listed as “Strategies to stimulate growth” and “Building global economic resilience”.

The bloody civil war in Syria had overwhelmed talks about global economics in last year’s G20 Summit in Russia.

“Thanks to the Australian presidency, the Brisbane Summit meeting has finally returned the G20 to a “business-like” track. Rather than finger pointing and blame-shifting, member countries are now trying to work together on a series of policies to revitalize economic growth,” says He Fan, advisor to the Chinese government, writing for The BRICS Post.

Meanwhile, ahead of landing in Brisbane on Friday, Russian President Vladimir Putin lauded the economic trajectory of BRICS.

Putin said the GDP of the BRICS countries calculated at the purchasing power parity is greater than that of the G7, the Group of major industrialized nations.

“As far as I know, the GDP of BRICS is $37.4 trillion, while that of the G7 is $34.5 trillion. And if we go and say: ‘No, thank you, we are going to do this and that here on our own, and you can do it the way you want it,’ this will only add to the imbalances. If we are really set to resolve some issues, we should do that together,” he said.

http://thebricspost.com/brics-leaders-arrive-in-brisbane-for-g20-summit/#.VGlEE1CsjvZ

Edited November 17, 2014 by Butifldrm

[TBomb]

Ian BremmerInfluencer

President at Eurasia Group

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Russia's Collapse in 5 Stats

Dec 16, 2014

• 299Views
• 13Likes
• 4Comments

• 
   

 

After a stunning currency collapse, Russia is now fully in the grips of an economic crisis. How deep is the chaos? Here are five stats that put Russia’s woes in context.

Ruble Riot

Russia’s currency entered free fall this week, hitting a record low of 80 rubles to the dollar today before recovering slightly. The ruble has lost over half its value this year, making it the worst-performing currency among the 170 tracked by Bloomberg. Passed on the way down: the Ukranian hryvnia.

Recession Looming

Russia's economy has been slowing for some time, and is now poised to fall into recession. In early December, Russia's economy ministry was forced to revise its estimate of 1.2 percent growth for 2015 down to a 0.8 percent contraction. Since then, oil—which makes up 50 percent of government revenue—has continued to slide, falling below $60 this week. Russia's central bank warns of a contraction of 4.7 percent in 2015 if oil prices stay at that level on average.

Surging Borrowing Costs

The economic chaos is making it significantly more expensive for Moscow to borrow money. Dollar-denominated bond yields rose above 7.5 percent, meaning the cost of international borrowing for Russia is now higher than Rwanda, the Ivory Coast and Kenya, according to the FT. Russia's 10-year local bond yield, the interest rate the government has to pay to borrow, jumped more than 2 percent to 15.36 percent.

Brain Drain

In addition to money, Russia is bleeding talent, as ordinary Russians vote with their feet. In the first eight months of this year, Bloomberg reports, more than 200,000 people left Russia—more than any full year since Vladimir Putin took control.

Capital Flight

Russia is watching money head for the exits too. Capital outflows for 2014 are estimated at $134 billion, according to the Financial Times. 2015 is likely to see a similar exodus, with the Central Bank yesterday forecasting $120 billion in departing capital.

What Does It Mean?

So far, economic chaos hasn't dented the popularity of Russian's president. Putin won “man of the year” this week for the 15th year running in a Russian poll. His aggressive foreign policy has only strengthened his domestic political standing. Russia's currency collapse is bad news for Russians, but for the rest of the world, the problem is more geopolitical than economic.

Edited December 16, 2014 by TBomb

[new york kevin]

Butifidrm : I appreciate these articles. I only read the first 2. I see this as indicating the pressure the West is placing on Russia for it's starting regional conflicts in Georgia, Crimea, and others as taking a big bite out of Russia's sails. After all Valad has been trying to push the USD out of the limelight for years and years and where have their efforts gotten them? No real progress. This of course is old news to U.S. An us here in DV land. Everyone is aware that the R in BRICS stands for Russia, and what their plans for world domination with their new world order currency are. How can they move forward when their own currency the Ruble, a foundation currency in their nefarious plan, has tanked by 40-50% since the Wests sanctions were supplied. When were they applied April or June of this year?

While we must always take the actions and news regarding our adversaries seriously, and without being dismissive either, My impression of this article is that it is all onesided propaganda. Kinda like the "report" the Dems put out selling out our soldiers in the CIA and their support staff, under the mantle of the Senate Security something, is merely propaganda. Nothing more. Yes, the CIA has soldiers who do you think first went into Afganistan and Iraq. Remember Air America. How was America served by releasing NAMES that now have fatwa's on them. But I digress.

The USD is the premier Reserve Currency because the world financial market chose it to be so. If the world market and the IMF did not determine it to be so than a different currency would be first and we wouldn't. Yet we are cuz overall on the world stage we are doing pretty good. Domestically the U.S. Gov is screwing the citizens, massively shrinking the middle class if not outright destroying it/us/me. Bringing in more and more Socialistic policies etc, while calling it anything other than what it is.

[Butifldrm]

Butifidrm : I appreciate these articles. I only read the first 2. I see this as indicating the pressure the West is placing on Russia for it's starting regional conflicts in Georgia, Crimea, and others as taking a big bite out of Russia's sails. After all Valad has been trying to push the USD out of the limelight for years and years and where have their efforts gotten them? No real progress. This of course is old news to U.S. An us here in DV land. Everyone is aware that the R in BRICS stands for Russia, and what their plans for world domination with their new world order currency are. How can they move forward when their own currency the Ruble, a foundation currency in their nefarious plan, has tanked by 40-50% since the Wests sanctions were supplied. When were they applied April or June of this year?

While we must always take the actions and news regarding our adversaries seriously, and without being dismissive either, My impression of this article is that it is all onesided propaganda. Kinda like the "report" the Dems put out selling out our soldiers in the CIA and their support staff, under the mantle of the Senate Security something, is merely propaganda. Nothing more. Yes, the CIA has soldiers who do you think first went into Afganistan and Iraq. Remember Air America. How was America served by releasing NAMES that now have fatwa's on them. But I digress.

The USD is the premier Reserve Currency because the world financial market chose it to be so. If the world market and the IMF did not determine it to be so than a different currency would be first and we wouldn't. Yet we are cuz overall on the world stage we are doing pretty good. Domestically the U.S. Gov is screwing the citizens, massively shrinking the middle class if not outright destroying it/us/me. Bringing in more and more Socialistic policies etc, while calling it anything other than what it is.

new york kevin, a lot has a happened in the geopolitical arena since those first two post were made.  In 6 weeks time price per barrel of oil went tumbling down in Rocket speed.  the Sanction were a drop in the bucket to the demise of the Ruble.  Today Russia is in an all out currency crisis.  Now I'm leaning more toward desperate countries do desperate things.  

 

Seems like Russia is being put into a pretty desperate position.

 

< Older Newer >

Reckless Congress 'Declares War' on Russia

written by ron paul

thursday december 4, 2014

Today the US House passed what I consider to be one of the worst pieces of legislation ever. H. Res. 758 was billed as a resolution “strongly condemning the actions of the Russian Federation, under President Vladimir Putin, which has carried out a policy of aggression against neighboring countries aimed at political and economic domination.”

In fact, the bill was 16 pages of war propaganda that should have made even neocons blush, if they were capable of such a thing.

These are the kinds of resolutions I have always watched closely in Congress, as what are billed as “harmless” statements of opinion often lead to sanctions and war. I remember in 1998 arguing strongly against the Iraq Liberation Act because, as I said at the time, I knew it would lead to war. I did not oppose the Act because I was an admirer of Saddam Hussein – just as now I am not an admirer of Putin or any foreign political leader – but rather because I knew then that another war against Iraq would not solve the problems and would probably make things worse. We all know what happened next.

That is why I can hardly believe they are getting away with it again, and this time with even higher stakes: provoking a war with Russia that could result in total destruction!

If anyone thinks I am exaggerating about how bad this resolution really is, let me just offer a few examples from the legislation itself:

The resolution (paragraph 3) accuses Russia of an invasion of Ukraine and condemns Russia’s violation of Ukrainian sovereignty. The statement is offered without any proof of such a thing. Surely with our sophisticated satellites that can read a license plate from space we should have video and pictures of this Russian invasion. None have been offered. As to Russia’s violation of Ukrainian sovereignty, why isn’t it a violation of Ukraine’s sovereignty for the US to participate in the overthrow of that country’s elected government as it did in February? We have all heard the tapes of State Department officials plotting with the US Ambassador in Ukraine to overthrow the government. We heard US Assistant Secretary of State Victoria Nuland bragging that the US spent $5 billion on regime change in Ukraine. Why is that OK? 

The resolution (paragraph 11) accuses the people in east Ukraine of holding “fraudulent and illegal elections” in November. Why is it that every time elections do not produce the results desired by the US government they are called “illegal” and “fraudulent”? Aren’t the people of eastern Ukraine allowed self-determination? Isn’t that a basic human right?

The resolution (paragraph 13) demands a withdrawal of Russia forces from Ukraine even though the US government has provided no evidence the Russian army was ever in Ukraine. This paragraph also urges the government in Kiev to resume military operations against the eastern regions seeking independence. 

The resolution (paragraph 14) states with certainty that the Malaysia Airlines flight 17 that crashed in Ukraine was brought down by a missile “fired by Russian-backed separatist forces in eastern Ukraine.” This is simply incorrect, as the final report on the investigation of this tragedy will not even be released until next year and the preliminary report did not state that a missile brought down the plane. Neither did the preliminary report – conducted with the participation of all countries involved – assign blame to any side. 

Paragraph 16 of the resolution condemns Russia for selling arms to the Assad government in Syria. It does not mention, of course, that those weapons are going to fight ISIS – which we claim is the enemy -- while the US weapons supplied to the rebels in Syria have actually found their way into the hands of ISIS!

Paragraph 17 of the resolution condemns Russia for what the US claims are economic sanctions (“coercive economic measures”) against Ukraine. This even though the US has repeatedly hit Russia with economic sanctions and is considering even more! 

The resolution (paragraph 22) states that Russia invaded the Republic of Georgia in 2008. This is simply untrue. Even the European Union – no friend of Russia – concluded in its investigation of the events in 2008 that it was Georgia that “started an unjustified war” against Russia not the other way around! How does Congress get away with such blatant falsehoods? Do Members not even bother to read these resolutions before voting?

In paragraph 34 the resolution begins to even become comical, condemning the Russians for what it claims are attacks on computer networks of the United States and “illicitly acquiring information” about the US government. In the aftermath of the Snowden revelations about the level of US spying on the rest of the world, how can the US claim the moral authority to condemn such actions in others?

Chillingly, the resolution singles out Russian state-funded media outlets for attack, claiming that they “distort public opinion.” The US government, of course, spends billions of dollars worldwide to finance and sponsor media outlets including Voice of America and RFE/RL, as well as to subsidize “independent” media in countless counties overseas. How long before alternative information sources like RT are banned in the United States? This legislation brings us closer to that unhappy day when the government decides the kind of programming we can and cannot consume – and calls such a violation “freedom.”

The resolution gives the green light (paragraph 45) to Ukrainian President Poroshenko to re-start his military assault on the independence-seeking eastern provinces, urging the “disarming of separatist and paramilitary forces in eastern Ukraine.” Such a move will mean many more thousands of dead civilians. 

To that end, the resolution directly involves the US government in the conflict by calling on the US president to “provide the government of Ukraine with lethal and non-lethal defense articles, services, and training required to effectively defend its territory and sovereignty.” This means US weapons in the hands of US-trained military forces engaged in a hot war on the border with Russia. Does that sound at all like a good idea?

There are too many more ridiculous and horrific statements in this legislation to completely discuss. Probably the single most troubling part of this resolution, however, is the statement that “military intervention” by the Russian Federation in Ukraine “poses a threat to international peace and security.” Such terminology is not an accident: this phrase is the poison pill planted in this legislation from which future, more aggressive resolutions will follow. After all, if we accept that Russia is posing a “threat” to international peace how can such a thing be ignored? These are the slippery slopes that lead to war.

This dangerous legislation passed today, December 4, with only ten (!) votes against! Only ten legislators are concerned over the use of blatant propaganda and falsehoods to push such reckless saber-rattling toward Russia. 

Here are the Members who voted “NO” on this legislation. If you do not see your own Representative on this list call and ask why they are voting to bring us closer to war with Russia! If you do see your Representative on the below list, call and thank him or her for standing up to the warmongers.

Voting “NO” on H. Res. 758:

1) Justin Amash (R-MI)

2) John Duncan (R-TN)

3) Alan Grayson, (D-FL)

4) Alcee Hastings (D-FL)

5) Walter Jones (R-NC)

6) Thomas Massie (R-KY)

7) Jim McDermott (D-WA)

8 George Miller (D-CA)

9) Beto O’Rourke (D-TX)

10 Dana Rohrabacher (R-CA)

Reprinted with permission from author's Facebook page.

 

 

Russian Currency Collapse Accelerates Despite Central Bank Rate Hike

• By Howard Amos
• Dec. 16 2014 21:22
• Last edited 21:33

Maxim Zmeyev / ReutersRussian ruble and U.S. dollar bank notes are seen in this file illustration picture taken in Moscow.

The Russian currency crashed past 100 against the euro Tuesday, the latest milestone in a currency rout that has rapidly gained momentum despite a huge emergency rate hike from the Central Bank.

One ruble became worth less than one euro cent at 3:13 p.m., according to data from the Moscow Exchange. At the same time, the Russian currency plummeted to 80.1 against the U.S. dollar.

The crash took the ruble's fall Tuesday to 20 percent, the largest one-day currency movement since the financial crisis of 1998 and compounding a 10 percent tumble the previous day.

The ruble later reduced its losses, and at 9 p.m. had stabilized around 8 percent weaker against the greenback at 70 and 11 percent down versus the euro at 89.

The Russian currency has now fallen 55 percent against the dollar since the beginning of the year, making it the worst performing currency in the world in 2014.

"The Central Bank's credibility is in tatters,” said Timothy Ash, an emerging-markets analyst at Standard Bank, in a note to investors Tuesday.

Earlier Tuesday, the ruble jumped sharply, strengthening as much as 10 percent to 58.1 rubles against the dollar, following an overnight announcement from the Central Bank that it was increasing interest rates to 17 percent from 10.5 percent.

But the gains were short-lived, as oil price weakness and sentiment once again intensified pressure on Russia's tumbling currency.

Brent crude dropped below $60 a barrel, reaching $59.02, a level not seen since 2009 on Tuesday.

Prime Minister Dmitry Medvedev convened a meeting to discuss the financial situation Tuesday, according to a government press release.

The gathering was attended by Deputy Prime Minister Igor Shuvalov, Kremlin economic aide Andrei Belousov, Finance Minister Anton Siluanov, Economic Development Minister Alexei Ulyukayev and Central Bank chairwoman Elvira Nabiullina, the press release said.

Ulyukayev said after the meeting a set of measures to stabilize the situation had been discussed, including measures to boost access to hard-currency liquidity from the Central Bank and legislative initiatives to support banks and empower the regulator, according to news agency RBC.

With its largest interest rate hike since the 1990s, the Central Bank bet Tuesday that a higher return on deposits and savings would make the ruble more attractive, easing the pressure exerted by a declining oil price and Western sanctions on Moscow imposed as a result of the Ukraine crisis.

Central Bank chairwoman Elvira Nabiullina said Tuesday that Russians that they should get used to living in a “new zone,” according to an interview on state-owned television channel Rossia-24.

The Central Bank, which has already spent over $70 billion of its foreign currency reserves this year defending the ruble, will likely be forced into market interventions, analysts at Sberbank CIB said in a note to investors Tuesday.

“Meaningful currency interventions must follow the huge Central Bank rate hike,” the analysts said.

Despite speculation of intense political pressure on the Central Bank to try to tame the ruble without frittering away Russia's currency reserves, President Vladimir Putin has not commented on the currency's dramatic recent decline.

The market turbulence was caused by “emotions and a speculative mood,” Putin's spokesman Dmitry Peskov said Tuesday, according to Russian news agency RIA Novosti.

The ruble's tumble in recent days has sparked heavy criticism of Russia's authorities from investors and lawmakers.

"The fall of the ruble and the equity market is not only a reaction to the low price of oil and sanctions but to a distrust of the government's economic measures," former Finance Minister Alexei Kudrin wrote on Twitter in the early hours of Tuesday morning.

Others said that the Central Bank and her chairwoman Elvira Nabiullina had disastrously miscalculated the situation.

"Lack of action had left the stability of the very financial system at stake. I am not sure whether Nabiullina can survive this," analyst Ash said.

“It has only to be a matter of time before the rating agencies respond with ratings downgrades, likely to junk status.”

Edited December 16, 2014 by Butifldrm

[Butifldrm]

 

On the Brink of War and Economic Collapse — Paul Craig Roberts

December 12, 2014 | Categories: Articles & Columns | Tags: |  Print This Article

 

On the Brink of War and Economic Collapse

Paul Craig Roberts

On occasion a reader will ask if I can give readers some good news. The answer is: not unless I lie to you like “your” government and the mainstream media do. If you want faked “good news,” you need to retreat into The Matrix. In exchange for less stress and worry, you will be led unknowingly into financial ruin and nuclear armageddon.

If you want to be forewarned, and possibly prepared, for what “your” government is bringing you, and have some small chance of redirecting the course of events, read and support this site. It is your site. I already know these things. I write for you.

The neoconservatives, a small group of warmongers strongly allied with the military/industrial complex and Israel, gave us Granada and the Contras affair in Nicaragua. President Reagan fired them, and they were prosecuted, but subsequently pardoned by Reagan’s successor, George H.W. Bush.

Ensconced in think tanks and protected by Israeli and military/security complex money, the neoconservatives reemerged in the Clinton administration and engineered the breakup of Yugoslavia, the war against Serbia, and the expansion of NATO to Russia’s borders.

Neoconservatives dominated the George W. Bush regime. They controlled the Pentagon, the National Security Council, the Office of the Vice President, and much else. Neoconservatives gave us 9/11 and its coverup, the invasions of Afghanistan and Iraq, the beginning of the destabilizations of Pakistan and Yemen, the U.S. Africa Command, the invasion of South Ossetia by Georgia, the demise of the anti-ABM Treaty, unconstitutional and illegal spying on American citizens without warrants, loss of constitutional protections, torture, and the unaccountability of the executive branch to law, Congress, and the judiciary. In short, the neoconservatives laid the foundation for dictatorship and for WW III.

The Obama regime held no one accountable for the crimes of the Bush regime, thus creating the precedent that the executive branch is above the law. Instead, the Obama regime prosecuted whistleblowers who told the truth about government crimes.

Neoconservatives remain very influential in the Obama regime. As examples, Obama appointed neoconservative Susan Rice as his National Security Advisor. Obama appointed neoconservative Samantha Power as U.S. Ambassador to the United Nations. Obama appointed neoconservative Victoria Nuland as Assistant Secretary of State. Nuland’s office, working with the CIA and Washington-financed NGOs, organized the U.S. coup in Ukraine.

Neoconservatism is the only extant political ideology. The ideology is “America uber alles.” Neoconservatives believe that History has chosen the United States to exercise hegemony over the world, thereby making the U.S. “exceptional” and “indispensable.” Obama himself has declared as much. This ideology gives neoconservatives tremendous confidence and drive, just as Karl Marx’s conclusion that history had chosen the workers to be the ruling class gave early communists confidence and drive.

This confidence and drive makes the neoconservatives reckless.

To advance their agenda neoconservatives propagandize the populations of the U.S. and Washington’s vassal states. The presstitutes deliver the neoconservatives’ lies to the unsuspecting public: Russia has invaded and annexed Ukrainian provinces; Putin intends to reconstitute the Soviet Empire; Russia is a gangster state without democracy; Russia is a threat to the Baltics, Poland, and all of Europe, necessitating a U.S./NATO military buildup on Russia’s borders; China, a Russian ally, must be militarily contained with new U.S. naval and air bases surrounding China and controlling Chinese sea lanes.

The neoconservatives and President Obama have made it completely clear that the U.S. will not accept Russia and China as sovereign countries with economic and foreign policies independent of the interests of Washington. Russia and China are acceptable only as vassal states, like the UK, Europe, Japan, Canada, and Australia.

Clearly, the neoconservative formula is a formula for the final war.

All of humanity is endangered by a handful of evil men and women ensconced in positions of power in Washington.

Anti-Russia propaganda has gone into high gear. Putin is the “new Hitler.”
Daniel Zubov reports on a joint conference held by three U.S. think tanks.
The conference blamed Russia for the failures of Washington’s foreign policy. Read this article:http://sputniknews.com/columnists/20141205/1015538604.html to see how neoconservatives operate in order to control the explanations. Even Henry Kissinger is under attack for stating the obvious truth that Russia has a legitimate interest in Ukraine, a land long part of Russia and located in Russia’s legitimate sphere of influence.

Since the Clinton regime, Washington has been acting against Russian interests. In his forthcoming book, The Globalization of War: America’s Long War against Humanity, Professor Michel Chossudovsky presents a realistic appraisal of how close Washington has brought the world to its demise in nuclear war. This passage is from the Preface:

“The ‘globalization of war’ is a hegemonic project. Major military
and covert intelligence operations are being undertaken
simultaneously in the Middle East, Eastern Europe, sub-Saharan
Africa, Central Asia and the Far East. The US military agenda
combines both major theater operations as well as covert actions
geared towards destabilizing sovereign states.

“Under a global military agenda, the actions undertaken by the
Western military alliance (US-NATO-Israel) in Afghanistan, Pakistan,
Palestine, Ukraine, Syria and Iraq are coordinated at the highest
levels of the military hierarchy. We are not dealing with
piecemeal military and intelligence operations. The July-August
2014 attack on Gaza by Israeli forces was undertaken in close consultation
with the United States and NATO. In turn, the actions in
Ukraine and their timing coincided with the onslaught of the attack
on Gaza.

“In turn, military undertakings are closely coordinated with a
process of economic warfare which consists not only in imposing
sanctions on sovereign countries but also in deliberate acts of destabilization
of financial and currency markets, with a view to undermining
the enemies’ national economies.

“The United States and its allies have launched a military adventure
which threatens the future of humanity. As we go to press, US
and NATO forces have been deployed in Eastern Europe. US military
intervention under a humanitarian mandate is proceeding in sub-Saharan
Africa. The US and its allies are threatening China under President Obama’s
‘Pivot to Asia’.

“In turn, military maneuvers are being conducted at Russia’s
doorstep which could lead to escalation.

“The US airstrikes initiated in September 2014 directed against
Iraq and Syria under the pretext of going after the Islamic State are
part of a scenario of military escalation extending from North Africa
and the Eastern Mediterranean to Central and South Asia.
The Western military alliance is in an advanced state of readiness.

“And so is Russia.”

As I have often remarked, Americans are an insouciant people. They are simply unaware. Suppose they were aware, suppose that the entire population understood the peril, could anything be done, or have the insouciant Americans fallen under the control of the police state that Washington has created?

I don’t think there is much hope from the American people. The American people cannot tell genuine from fake leadership, and the ruling private elites will not permit real leaders to emerge. Moreover, there is no organized movement in opposition to the neoconservatives.

The hope comes from outside the political system. The hope is that the House of Cards and rigged markets erected by policymakers for the benefit of the One Percent collapses. David Stockman regards this outcome as a highly likely one. The collapse that Stockman sees as being on its way is the same collapse about which I have warned. Moreover, the number of Black Swans which can originate collapse are even more numerous than the ones Stockman correctly identifies. Some financial organizations are worried about a lack of liquidity in the fixed income (bonds) and derivatives markets. Barbara Novack, co-chair of Black Rock, is lobbying hard for a derivatives bailout mechanism.

David Stockman’s article is important. Read it until you understand it, and you will know more than most everyone. http://www.lewrockwell.com/2014/12/david-stockman/duck-and-cover%E2%80%A8/

Many will ask: If the wealth of the One Percent is vulnerable to economic collapse, will war be initiated to protect this wealth and to blame the Russians or Chinese for the hardships that engulf the American population? My answer is that the kind of collapse that I expect, and that David Stockman and no doubt others expect, presents government with such social, political, and economic insecurity that organizing for a major war becomes impossible.

Whereas the political impotence of the American people and the vassalage of the Western World impose no constraints on Washington, economic collapse brings revolutions and the demise of the existing order.

As hard as collapse would make it for people to survive, the chances for survival are higher than in the event of nuclear war.

[TBomb]

MARGINALIZATION ISN'T HELPING US MUCH. I'M NOT SAYING I'M IN COMPLETE AGREEMENT WITH RUSSIA'S MOVES, BUT THE US CERTAINLY IS STUCK IN POLARIZING PUTIN AND FROM MY EXPERIENCE IN RESEARCHING, MORE OFTEN THAN NOT, WHEN WE DO SOMETHING LIKE THIS, IT'S TYPICALLY ALL ABOUT MONEY.

 

I HAVE TO WONDER IF THERE IS SOME KIND OF CONNECTION BETWEEN WHAT'S GOING ON WITH RUSSIA, OUR CURRENCY, AND THE ORDER OF THESE SURVIVAL KITS? YES, THERE MIGHT BE SOME KIND OF GOVERNMENTAL ACCOUNTING REASON THEY ORDERED THESE KITS BY THE COMPTROLLER OF THE CURRENCY, BUT WHAT IF IT'S FOR ANOTHER REASON?

 

SEVERAL MONTHS AGO, I WATCHED A REPORT GIVEN BY THE HEADS OF THE IMF, AND THEY STATED THAT THEY FELT CONFIDENT THAT WHEN CONGRESS CAME BACK IN "THE FALL" THAT THEY WOULD BE VOTING TO PASS/IMPLEMENT "ADVISED" REFORMS PUT FORTH BY THE IMF TO OUR GOVT.  I'VE NOT SEEN THESE REFORM AGREEMENTS VOTED ON/OR PASSED YET.

 

WHY HAVEN'T/AREN'T THEY? 

 

THANKS BUTI...IT'S VERY GOOD TO SEE AS MUCH OF BOTH SIDES OF AN ISSUE AS WE ARE ABLE.  

 

http://dinarvets.com/forums/index.php?/topic/192418-us-treasury-quietly-ordering-surival-kits-for-us-bankers/

Edited December 16, 2014 by TBomb

[yota691]

 

Rising Russian ruble after the Ministry of Finance started selling foreign currency

 

      Wednesday   17   December   2014 | 15:39

 

 

 

 

The most prominent in the news

 

 

 

 

A trader at a large Russian bank said it could not rule out the central bank interventions

 

Russian ruble rose sharply on Wednesday amid volatile trade after the Ministry of Finance said it had begun to sell foreign currency. 
The Russian currency has come under pressure severe sale this week, the central bank was forced to raise its key interest rate 650 basis points in an emergency intervention failed to support the ruble . 
By 0825 GMT, the ruble rose about three percent against the dollar to 65.52 and 4.2 percent against the euro to 81.50. 
In spite of this recovery is modest still ruble down 50 percent, almost against the dollar this year, which renewed memories of the crisis in 1998 when the Russian currency collapsed within a few days. 
This constitutes a major challenge to President Vladimir Putin, who threatens to drop the ruble popularity partly based on the achievement of stability and prosperity, as this decline undermines the credibility of Russia in front of investors. 
Traders said the market that export companies may sell the dollar and an eye on the collection of the next tax. 
said a trader in a large Russian bank that he can not rule out the central bank interventions. 
"The strength of the ruble looks artificial and therefore can be traced back to the central bank ... and perhaps export companies

[TBomb]

 

With Ruble in Free Fall, the U.S. Pushes Putin to the Edge December 17, 2014 | 00:54 GMT

 

AnalysisTuesday marked a difficult day for Russia President Vladimir Putin on both the economic and foreign policy fronts. In the early hours of Dec. 16, the Russian Central Bank announced an increase of its benchmark interest rate from 10.5 percent to 17 percent - the largest such hike since 1998. While this decision helped the ruble strengthen for a few hours, the currency then went into a free fall, at one point losing 20 percent of its value and hitting record lows at 80 rubles to the dollar. The ruble finally stabilized in the afternoon, likely due to a Central Bank intervention, and toward the end of the day it strengthened in value, indicating a possible second monetary intervention. Though the escalating economic crisis in Russia puts Putin's government in a precarious position, it could pose strategic challenges for the United States and Europe as well.

The ruble had been gradually weakening for months before its dramatic decline on Tuesday, with the currency losing about half its value since the beginning of the year due to Western sanctions, lower oil prices and declining market confidence. Should Tuesday's interest rate increase fail to stabilize the currency in the short term, the Central Bank could implement additional interest rate hikes, currency interventions or even capital controls to stem the ruble's decline.

What is a Geopolitical Diary? George Friedman Explains.
 

On the surface, the Kremlin has worked to present a calm and organized reaction to the ruble's collapse. Putin's spokesman, Dmitry Peskov, assured the public that the Central Bank is acting independently and that Putin did not plan to hold any new or extraordinary meetings on the topic that day. Minister for Economic Development Alexei Ulyukayev - following a meeting with Prime Minister Dmitri Medvedev, Central Bank chief Elvira Nabiullina and other top policymakers - reported that Russia's leadership is not considering capital controls to ameliorate the crisis. A video shown on Russian television, reminiscent of a Hollywood-style movie trailer, promoted an upcoming press conference by Putin on Dec. 18 highlighting Russia's strength and defiance of the West. Russian state media also largely minimized the ruble fall. Nevertheless, the impact of the ruble's fall could be felt as Russian banks saw increased demand for foreign currency and cash, while some businesses - such as Russia's online Apple store - temporary stopped sales. 

Meanwhile, the White House announced Tuesday that U.S. President Barack Obama will sign the Ukraine Freedom support Act of 2014, which passed Congress over the weekend. The bill lays the groundwork for possible additional sanctions on Russia and includes provisions for military support to Ukraine later this week. The president's move will initiate the deadlines for the separate sanction elements of the bill. The act is structured in a way that gives Obama great flexibility in whether to implement all or only some of the sanctions, but it requires the president to apply sanctions on the Russian defense and energy sectors. Sanctions on Gazprom are also possible if the company significantly decreases natural gas supplies to NATO members, Ukraine, Georgia or Moldova. 

The most severe of the defense sector sanctions (depending on how many of the act's optional elements Obama decides to implement) would still only have a limited effect on the Russian defense industry, since it does not depend on business or banking inside the United States. Meanwhile, the energy sector sanctions could have more significant effects on the activities of U.S. oil majors involved in projects inside Russia. The act may directly target their ability to conduct business if they continue their activities in Russia. Other sanctions targeting Russian energy companies that rely on equipment imported from the United States are optional. 

Overall, the act gives Obama tools to target specific parts of the Russian economy, though apart from some areas of the energy sector, most of these would have only limited effects on the country. Nonetheless, the act is noteworthy because the United States has decided to move on the bill just as Russia experienced its worst financial day in several years. Washington is making a point that rather than easing tensions by relaxing existing sanctions, it has the capability to increase pressure on Moscow. The message here is clear: The United States has Putin on the edge, and it can push him over if it so desired.

However, the United States knows that it can be dangerous to push Russia too far. A collapse of the Russian economy would be felt throughout Europe's economy and those of the rest of the former Soviet space (including countries like Ukraine that are dependent on Western financial assistance). It could have security implications as well. Indeed, Russian Foreign Minister Sergei Lavrov stated in an interview Dec. 15 that Moscow has the right to deploy nuclear weapons in Crimea. This statement came a week after a U.S. deputy secretary of defense, speaking at a U.S. Senate hearing, floated the idea of deploying tactical nuclear weapons in Europe. While both Russia and the West have escalated their rhetoric over the Ukraine crisis, the United States and the European Union certainly do not want the standoff to reach the point where action or buildups on the nuclear front become realistic, particularly at a time when Moscow feels under attack by the West. 

It is still too soon to gauge the extent of the damage of Russia's current financial crisis. But Putin is well aware of the impacts of major economic crises on past Russian governments, as it was Russia's 1998 financial crisis that ushered in the downfall of former Russian President Boris Yeltsin and facilitated Putin's own rise to power. At the same time, the United States and the European Union understand that a pushing a nuclear-armed country as large and powerful as Russia toward full-scale collapse can have serious unintended consequences, and such an aim ultimately may not be in their interest, despite the standoff over Ukraine. Thus, both Putin and the West will have to grapple with the dilemmas posed byTuesday's events in order to avoid a larger crisis.

 

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