"It's A Huge Story": China Launching "Petroyuan" In Two Months

[bostonangler]

 

 

 

 

 

Is the dollar becoming irrelevant?

B.A

[Butifldrm]

 

Trump Fed pick wants to revive the gold standard. Here's what that means

 

As President Donald Trump named his picks to fill two influential seats on the Federal Reserve's Board of Governors, the price of gold surged. That may be because one of the them, Judy Shelton, is a believer in the return to the gold standard, a money policy abandoned by the U.S. in 1971.

Shelton is raising eyebrows among mainstream economists for her views, which include slashing the Fed's benchmark rate to zero and pegging the value of the dollar to gold prices. She's not the first Trump pick for the Fed to advocate a return to the gold standard, with his two previous failed Fed choices -- Stephen Moore and Herman Cain -- also advocating for a revival of the policy.

In picking Shelton, Mr. Trump is aiming to place a supporter on the Federal Reserve, which he's argued is slowing economic growth and depressing the stock market by keeping interest rates too high. The Fed currently is maintaining its benchmark rate in a range of 2.25% to 2.5%, but Shelton has said she wants to lower rates "as fast, as efficiently, as expeditiously as possible." 

Donald J. Trump

 

✔@realDonaldTrump

 

 

I am pleased to announce that it is my intention to nominate Judy Shelton, Ph. D., U.S. Executive Dir, European Bank of Reconstruction & Development to be on the board of the Federal Reserve....

 

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To be sure, Mr. Trump's second pick, economist Christopher Waller, holds more mainstream economic views. The research director at the Federal Reserve Bank of St. Louis, Waller has expressed support for the independence of the Federal Reserve and allowing inflation to run a bit higher, in order to help the economy recover from slowdowns. 

Like Mr. Trump, Shelton has a history of attacking the Fed's policies and supporting the gold standard, a monetary policy rejected by most mainstream economists as antiquated. 

The planned nominations were announced by Mr. Trump in a tweet late Tuesday. Each must be confirmed by the Senate.

What exactly is the gold standard? 

It's a policy that links the value of a country's currency to gold. The U.S. adopted it in 1879, and it allowed consumers, banks and businesses to exchange a dollar for actual gold. That may sound like a solid deal, given that actual gold would back up your bucks. But there's a downside: A country can only issue as much money as it has backed by gold. 

The upshot is that countries on the gold standard have less flexibility to respond to financial crises or economic downturns. Currently, the U.S. dollar isn't tied to any specific asset. 

When did the U.S. abandon the gold standard? 

The long goodbye to the gold standard began with the Great Depression, when panicked consumers sought to trade dollars for gold. To keep the country's gold reserves from becoming depleted, the U.S. had to offer high interest rates as an alternative, which, in turn, made it more expensive to lend money and hampered the country's ability to rebound from the Depression. 

In response, President Franklin Roosevelt suspended the gold standard in 1933, a move which is widely credited with helping the country climb out of the Depression. That's because the decision allowed the government to lower interest rates and pump money into the economy.

But the U.S. still allowed foreign governments to trade dollars for gold, until President Nixon abolished the policy in 1971 as a way to keep gold reserves from depletion.    

Why do Shelton and others want to return to the gold standard? 

Shelton argues it would mark a return to stability and hamper other governments from currency manipulation. In a Wall Street Journal opinion piece, she wrote "the classical gold standard established an international benchmark for currency values, consistent with free-trade principles."

She added, "Today's arrangements permit governments to manipulate their currencies to gain an export advantage."

Others argue that the gold standard would keep U.S. spending under control, because the country would be limited in its ability to issue new money. 

Why do mainstream economists believe it's a fringe view? 

The U.S. economy has grown in complexity since 1971 and certainly since 1933, making the policy less feasible than in earlier eras. And a return to the gold standard could in effect tie the Fed's hands because the central bank would be focused on gold prices, which are partially based on how much of the commodity is being mined. 

"A gold standard regime would be a disaster for any large advanced economy," saidUniversity of Chicago economist Anil Kashyap. Supporting the gold standard "implies macroeconomic illiteracy."

The price of gold, by the way, is up more than 11% this year, passing $1,400 an ounce this week. Bearish investors have been rushing to buy gold the past few months amid concerns that global growth is slowing, especially if U.S.-China trade tensions worsen. Gold jumped further Wednesday as investors saw Mr. Trump's Fed picks as yet another sign the U.S. central bank won't be raising interest rates anytime soon.  

--With reporting by the Associated Press. 

https://www.cbsnews.com/news/trumps-fed-pick-judy-shelton-gold-standard-explained/

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Fed chief faces tough task in Congressional testimony: ‘Walking a tightrope over Niagara Falls’

PUBLISHED 4 HOURS AGOUPDATED 42 MIN AGO

 

Patti Domm@PATTIDOMM

KEY POINTS

• Fed Chair Jerome Powell’s two days of testimony before Congress this week could lead to volatile markets, as the Fed chief is expected to lay out a case for rate cuts but not commit to when or how much they could move.
• Powell may also sound more hawkish than expected, as he is likely to defend the Fed’s independence in response to questions about President Trump’s criticism of Fed policy.
• Market pros expect Powell to explain that the Fed is ready to take action to sustain the recovery, in the face of economic activity that is more “downbeat” and the risks from global slowing and trade wars.

Federal Reserve Chairman Jerome Powell holds a press conference following a two day Federal Open Market Committee policy meeting in Washington, January 30, 2019.

Leah Millis | Reuters

When Federal Reserve Chairman Jerome Powell testifies before Congress on Wednesday and Thursday, he is expected to talk about slowing economic activity and increased risks, showing that the Fed is ready to cut interest rates as needed.

But Powell is also likely to keep the markets — and the White House — guessing about how soon and how deep the Fed intends to trim rates, when it meets at the end of July. The prevailing view, priced into the futures market, is for a 100% chance of a quarter point rate cut July 31.

 

“There is no part of what he has to do over the next two days that does not resemble walking a tightrope over Niagara Falls,” said Julian Emanuel, chief equity and derivatives strategist at BTIG.

Just the divergence in market views could make for volatile trading, when Powell appears before the House Financial Services Committee Wednesday morning and at Senate Banking on Thursday. Powell laid out the case for rate cuts when he spoke after the last Fed meeting, stressing that the global economy and trade wars were risks to U.S. growth.

“He’s going to do his best to play both sides. If you’re testifying in front of Congress, you don’t want to tell Congress: ‘Things are slowing down, and I’m going to cut, cut, cut,’” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “He’s going to tell Congress the economy’s good, but there’s some pockets, and he’ll play up the idea of an insurance cut. Congress is his boss. You don’t want to tell the boss you’re behind the curve, and the December rate hike was a mistake.”

July Fed meeting

Last Friday’s surprisingly strong report of 224,000 jobs added in June has raised some doubts about whether the Fed would see a need to make a half-percentage point cut in July, as some had expected, but the market remains convinced the central bank will slice rates by at least a quarter point.

Emanuel, however, said the Fed has leeway, and while he does ultimately expect a half-percentage point in cuts this year, the Fed may start in September instead of July.

 

Others, like Jim Caron, portfolio manager with Morgan Stanley Investment Management, see a half-percentage point rate cut coming as early as late July.

“My sense is that Powell is more concerned about global financial conditions (weak global PMIs, low global inflation, weakening growth everywhere) than he is pacified by a strong US labor market,” Caron wrote in an email. “I know the market is pricing 25bps in July. I’m leaning toward 50bps but it’s a close call. I think it’s a closer call than the market is pricing.”

Trump factor

More than other Fed chiefs, Powell has faced a barrage of public criticism from a president who disagrees with the way the Fed has been handling monetary policy. President Donald Trump has also reportedly looked into replacing the Fed chief, but Larry Kudlow, top White House economist, said Tuesday the president has no such plans for now.

Still, Congress is likely to home in on the theme of Fed independence.

“If he has to repeatedly assert his political independence in the Q and Q period, it’s very difficult to see how that wouldn’t come across as more hawkish than the market expects, given the president’s insistence that monetary policy is too restrictive,” said Emanuel.

Michael Arone, chief investment strategist at State Street Global Advisors, said the Fed chief’s comments could sound hawkish, but the minutes from its last meeting, expected Wednesday afternoon, could be dovish.

“The markets are going to see there was healthy debate about whether they should have cut rates in June,” he said, noting there was a dissent from St. Louis Fed President James Bullard.

Arone said Powell’s testimony could disappoint investors who were hoping for clarity on the timing of interest rate cuts, and how much the Fed would be willing to move the fed funds target rate range, now at 2.25% to 2.50%.

“With the strong jobs report and stock market at all-time highs, I think Chair Powell and the Fed will want to keep their options open. He won’t want to be seen giving into political pressure,” said Arone.

Financial market reaction

The Fed has also faced the wrath of financial markets, which reacted violently to its last rate increase in December, and were later soothed when the Fed paused its hiking policy. The Fed has now pivoted from neutral to a dovish policy, or a rate-cutting stance.

“The bond market is set. It priced in a full rate cut. If he deviates from that, that will be the fireworks. If he reaffirms the cut, then walks back the possibility of a September one, the markets need to readjust. That would be his way of saying, this is not the beginning of a rate-cutting cycle, it’s just some tweaking,” Boockvar said.

Ralph Axel, senior U.S. rate strategist at Bank of America Merrill Lynch, said he expects a quarter-point cut in July. He also expects to hear Powell repeat the reasons for the cut that were mentioned in the Fed’s monetary policy report released last week, ahead of the chairman’s testimony.

“The key paragraphs are that economic activity has become more downbeat, and the used that word — downbeat...That is a new stance, more downbeat data, more uncertain outlook, ” he said, adding that with disappointing inflation data it’s easy to see a Fed rate cut.

“He’s not going to pre-commit to any policy action..If he wants to talk the market out of a July rate cut, he needs to do it this week,” said Axel. But he said that is very unlikely because it would be inconsistent with recent Fed statements and its policy report.

“It is not entirely clear to me that after Thursday, we’re going to have a much clearer picture,” said Emanuel.

Congress is also likely to hear a new message from the Fed, one Powell has been voicing recently as the Fed pivoted from neutral to a rate-cutting posture.

“His new language is ‘we stand ready to act as appropriate to sustain the expansion,’” said Axel. “That’s his new mantra. That’s his new tag line. It’s so unlikely to me that he pushes back. It’s pushing a huge boulder up the mountain to move the market off a July cut.”

Axel said the Fed would not be swayed by the strength of job growth in June.

“There’s a lot of noise and they don’t want to get wrapped up in it,” he said. “The six-month moving average of payrolls was 220,000, 230,000 jobs per month, and has now fallen to 171,000 per month. There’s been a decline of the six-month moving average. That’s part of the downbeat economic activity.”

WATCH: Here’s what could be the Fed’s next move

https://www.cnbc.com/2019/07/09/fed-chief-faces-tough-task-in-congressional-testimony-walking-a-tightrope-over-niagara-falls.html?__source=twitter|main

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US Treasury Could Run Out of Cash Sooner than Expected

by Lee Adler • July 9, 2019

It’s starting. Headlines are swirling that the US Treasury could run out of cash sooner than originally forecast.

The Wall Street Journal featured a report today.

Liquidity moves markets!

Follow the money. Find the profits! 

Debt Limit Deadline Accelerates, Research Group Finds, Raising Pressure on Congress

Its sister publication, Marketwatch said yesterday, “The U.S. government could exhaust its ability to pay its bills in the first half of September…according to the Bipartisan Policy Center, a research group that released the estimate on Monday. In May, the same group had predicted the government would hit the limit in October or early November.”

I have been warning that the US Treasury could run out of cash in my twice monthly updates of real time Federal tax revenue data.

In those reports I collect, analyze, and chart both Federal revenues, spending levels, and the US Treasury cash account.  In the report posted for subscribers last week I warned:

The Treasury is depleting its cash at a rapid rate. If the current trend persists, it will run out of cash by mid August. That’s sooner than the official predictions of late September. The Treasury may have other accounting tricks it could use or other internal funds it can raid before the jig is up, but investors are likely to get  burned if they’re betting on the lifting of the debt ceiling to be bullish. And it could come sooner than the consensus expects.

Without a real basis for a timeline, we need to pay attention to the news for any reports that a deal to raise the debt ceiling is near.

I also gave an expanded peek at this work in Lee’s Free Thinking.

Now, you may  be wondering why this is important. Here’s why.

Once that happens, the Treasury will bury the markets under a mountain of supply. Both bond and stock prices should fall.

I’ve been telling subscribers that this is one of those rare instances we should pay attention to news media reports. That’s because an exact forecast of the timeline for when the US Treasury runs out of cash is tricky. An increase in  news stories will be a sign tha the pressure is rising.

Meanwhile, I’ll update the US Treasury’s cash balance trend and revenue and spending trends in Liquidity Trader. The next report will come later this week, based on the Monthly Treasury Statement data due out Thursday. That report will include an update of the Treasury’s cash balance  and real time withholding tax collections through this week.

There is simply no better barometer of the true state of the US economy. And that’s critical to know because it let’s us know whether the current economic narrative and stock market expectations are factually based, or mere wishful thinking.

http://wallstreetexaminer.com/2019/07/us-treasury-could-run-out-of-cash-sooner-than-expected/

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Following Deutsche Bank’s News, Every Major Wall Street Bank Closed in the Red Yesterday

 

By Pam Martens and Russ Martens: July 9, 2019 ~

Deutsche Bank Headquarters in Frankfurt, Germany

As of early this morning, Deutsche Bank’s restructuring plan is looking a lot like the lifeboat plan for the Titanic. Research analysts have expressed skepticism that the plan will work and the bank’s stock performance is backing up that assessment. In overnight trading in Frankfurt, the stock had cumulatively lost 10 percent of its value in less than two days of trading since the details of its restructuring were made public. Deutsche Bank’s shares also trade on the New York Stock Exchange, which opens at 9:30 a.m.

Deutsche Bank is widely known to be a major derivatives counterparty – meaning its fate could have a spillover effect on other major banks which have taken the opposite sides of its derivatives trades. Notably, every major Wall Street bank closed in the red yesterday with two, Morgan Stanley and Goldman Sachs, outpacing the herd in losses. Morgan Stanley closed down 1.63 percent while Goldman Sachs declined 1.03 percent. Other big names were down less than 1 percent with JPMorgan Chase losing 0.55 percent; Citigroup shedding 0.38 percent and Bank of America giving up 0.21 percent. One of the big U.S. insurers that is known to be exposed to bank derivatives, Prudential Financial, saw its share price decline by 0.85 percent yesterday.

Deutsche Bank CEO Christian Sewing is apparently trying to pull a hat trick from Wall Street to boost his bank’s sagging share price. According to a report out of Reuters, he “is planning to invest a quarter of his fixed salary in the bank’s shares.”

That sounds very similar to what happened when Citigroup was teetering on the brink in November 2008 and Saudi Prince Walid bin Talal, a large Citigroup shareholder, went public with a statement calling the stock “dramatically undervalued” and announcing he would be buying more shares. The stock continued to plunge the next day and in the months ahead, eventually trading at 99 cents. To massage the appearance of its stock, Citigroup did a 1-for-10 reverse stock split on May 9, 2011 (leaving shareholders with 1 share for each 10 shares previously held while boosting the trading price in the market). Despite that magic hat trick, Citigroup’s share price is still down 86 percent today from where it traded in early 2007, before the financial crisis.

Not to put too fine a point on it, but Citigroup’s plunging share price during the financial crisis was despite it receiving the largest taxpayer bailout in global banking history. As far as the public knows, Deutsche Bank has not been given a government feeding tube from Germany’s Treasury coffers.

http://wallstreetonparade.com/2019/07/following-deutsche-banks-news-every-major-wall-street-bank-closed-in-the-red-yesterday/

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Deutsche Bank axes 18,000 staff around the world, including Sydney, New York and London offices

Deutsche Bank staff were in tears and told to clear their desks after the banking giant announced a bombshell global purge.

Staff writers and Reuters

news.com.auJULY 10, 20197:19AM

• 

Deutsche Bank has axed staff from around the world as part of an 18,000-person purge in a 7.4 billion euro ($A11.9 billion) “reinvention” process.

Staff at the German bank’s London office were reportedly told to clear their desks by 11am, with many hitting the pub holding white envelopes containing their redundancy notices.

Other workers were in tears after being told to pack up their things just hours after the bank dropped the bombshell announcement.

According to The Australian, staff received an email at 1am telling them to attend a meeting at 8am the same morning.

At Deutsche Bank‘s office tower in Sydney’s CBD, security patrolled the entrance and circled the surrounding streets following the mass firings which reportedly have claimed entire teams in the Sydney and Asia Pacific region.

“It’s an upsetting time for everybody,” a Deutsche Bank operations manager told news.com.au outside the building today.

He said those who lost their jobs were “cleared out” yesterday. “They’re gone,” he said, explaining the company took care of the firing process in one day, worldwide.

Stressed looking workers wandered out of the building, holding papers in clear manilla folders. They declined to speak with media.

“Anyone who talks (to media) will be a person who doesn’t work here anymore,” he said.

According to NBC News, workers in Sydney leaving the building were unable to identify themselves as they left the building, as they were required to return to work to sign redundancy packages.

The German bank plans to close all of its equity trading business and cut some parts of its fixed income operations in an overhaul expected to lead to 18,000 job cuts.

The bank’s Australian equities division, which has offices in Sydney, Melbourne and Perth, will be impacted in the global axing.

But the cuts are expected to have the largest impact on the bank’s New York and London offices.

“I was terminated this morning, there was a very quick meeting and that was it,” said one London IT worker, who left while Deutsche Bank chief executive Christian Sewing was inside the building doing a call with the media.

Few staff wanted to speak outside the bank’s London office, but trade was picking up at the nearby Balls Brothers pub around lunchtime.

“I got laid off, where else would I go?” said a man who had just lost his job in equity sales.

People exit Deutsche Bank's Manhattan headquarters with white envelopes that are reportedly their exit papers following news the global banking giant is letting go of thousands of employees. Picture: Spencer Platt/Getty Images/AFPSource:AFP

Shares in Deutsche Bank, which prior to the cuts had over 90,000 staff worldwide, were down 6.1 per cent late yesterday, and its bonds also fell.

Staff in its equities division in Sydney and Hong Kong were among the first to be told their roles would go.

“If you have a job for me, please let me know,” said a banker leaving the Hong Kong office on Monday.

Staff leaving in Hong Kong were also seen holding envelopes with the bank’s logo. Three employees took a picture of themselves beside a Deutsche Bank sign outside, hugged and then hailed a taxi.

“They give you this packet and you are out of the building,” said one equities trader.

“The equities market is not that great, so I may not find a similar job, but I have to deal with it,” said another.

At the bank’s Wall Street office, staff impacted by the cuts were summoned to the cafeteria to learn of their fate. A notice inside the building’s lobby told staff the cafeteria would be closed until 11.30am EST.

Hundreds of staff were informed during the meetings their positions were being cut, sources within the bank told Reuters. They also received details of their redundancy packages. One source said staff could be seen saying their goodbyes to colleagues upon leaving the cafeteria.

Speaking outside the bank’s office, one employee told Reuters the cuts had been anticipated for weeks.

“People have been planning their next moves, but it’s a tough market,” the person said, speaking on condition of anonymity.

Another employee, who asked not to be named, said the bank held a short meeting in its auditorium at 9.30am EST to inform staff of the cutbacks. He said he was later handed an envelope informing him of his redundancy. The staffer said he and his colleagues had known the impending cuts were likely for the past couple of weeks.

Deutsche Bank has started to make the first of a proposed 18,000 job cuts as part of a radical restructuring plan. Picture: Leon Neal/Getty ImagesSource:Getty Images

Some of those roles will be cut immediately, while some staff will be kept on for longer while they help wind down operations.

A Deutsche Bank employee in Bengaluru told Reuters he and several colleagues were told first thing their jobs were going.

“We were informed that our jobs have become redundant and handed over our letters and given approximately a month’s salary,” he said.

“The mood is pretty hopeless right now, especially (among) people who are single-earners or have big financial burdens such as loans to pay,” he added.

Deutsche spokespeople in Hong Kong and London declined to comment on specific details about the number of departures but said they would try to support people being made redundant.

For those losing their jobs in equities, finding a new one could prove difficult, with the industry still grappling with higher costs from new European regulations on share trading.

“The job market in equities is going to be very tough,” said George Kuznetsov, head of research and analytics at Coalition, which analyses the investment banking industry.

“Our expectations is for equities sales and trading revenues falling 7-8 per cent this year, and that, of course, is going to put a lot of halts into the hiring across most of the brokers.”

There was some relief for Deutsche Bank staff whose jobs are safe for now but also big doubts about the future.

“The biggest question for us is where do we go from here if we don’t offer the whole suite of products? Will clients stick with us or is the game over?” said a Singapore banker who remains in his job.

Journalists outside the Deutsche Bank building in London. Picture: Natasha Livingstone/APSource:AP

Deutsche Bank has been operating in Australia since 1973.

In Australia, the bank provides services across corporate finance, equities, fixed income, currencies and global transaction banking.

Deutsche’s website says its Sydney office has 700 people and is one of its four hubs, including Hong Kong, Singapore and Tokyo, in the Asia-Pacific region.

https://www.news.com.au/finance/business/banking/deutsche-bank-axes-18000-staff-around-the-world-including-sydney-new-york-and-london-offices/news-story/52e1fcd6057de7eb8c771bb789c7c3ef

[Butifldrm]

Kudlow Says Shelton, Waller to Shake Up Fed’s View of Inflation

By 

Reade Pickert

 and 

Craig Torres

July 9, 2019, 9:38 AM CDT Updated on July 9, 2019, 10:31 AM CDT

•  
  Picks for Fed board met with Trump for 45 minutes, he says
•  
  Economic adviser says challenging Phillips Curve status quo

Judy Shelton Photographer: Andrew Harrer/Bloomberg

 

President Donald Trump’s latest picks to serve on the Federal Reserve Board will challenge the long-standing notion that there is a trade-off between low unemployment and higher inflation, according to his chief economic adviser.

 

 

 

Trump last week said he intends to nominate Judy Shelton and St. Louis Fed research director Christopher Waller to serve on the Fed’s Board of Governors. Shelton’s previous views on the gold standard and her doubts about the central bank’s mandates from Congress to pursue stable prices and maximum employment have raised concerns among economists. She called the mandate “nebulous objectives” in an interview with Bloomberg in May.

 

 

“We are challenging the Phillips Curve status quo,” Lawrence Kudlow, National Economic Council director, told reporters Tuesday. “You bet ya. I mean I spent my whole career on that, and the president agrees with this, of course he agrees with this, so Judy’s going to be a leader on that and so will Waller.”

 

 

Trump announced on Twitter last week that he was advancing Shelton and Waller as his picks for the two open seats on the Fed board. Kudlow said both candidates met with the president for about 45 minutes. “It was kind of cool,” he said. “This president is very engaged on monetary policy. He knows a lot."

 

 

Read more: Trump Taps a Longtime Dove and a Onetime Gold Bug for Fed

After the president made his decision on the two nominees, Kudlow said he called Mike Crapo, the Republican senator from Idaho who leads the Senate Banking Committee, which confirms Fed nominees.

Kudlow weighed in on the Fed’s mandate in an earlier interview at a CNBC event in Washington, saying: “Price level stability and a steady dollar is what the Fed should aim for," he said. "Not employment.”

He also said that Fed Chairman Jerome Powell’s job is safe for now. “There is no effort to remove him. I will say that unequivocally at the present time,” he said. "There are no plans presently to change Powell’s job.”

Trump has repeatedly blasted Powell over the Fed’s interest rate increases last year and complained about the strength of the dollar. He’s said he has the authority to replace Powell as Fed chairman but doesn’t plan to do it.

White House aide Kellyanne Conway echoed the point Tuesday, saying: “He has the power to fire Jay Powell, but he hasn’t done that; he’s not doing that.” Powell has said he intends to serve his full four-year term and that “the law is clear” on that issue.

Trump’s eagerness to get rid of Powell makes Shelton and Waller potential chairs-in-waiting, if confirmed by the Senate for seats on the board. The lengthy Senate confirmation process means neither candidate is likely to join the board for months.

https://www.bloomberg.com/news/articles/2019-07-09/kudlow-says-shelton-waller-to-shake-up-fed-s-view-of-inflation?utm_source=google&utm_medium=bd&cmpId=google

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Greg Hunter

Published on Jul 13, 2019

 

 

SUBSCRIBED 226K

 

Legendary geopolitical and financial analyst Martin Armstrong says America’s economy is like being “the prettiest ugly sister in the family” of nations. So, if the U.S. economy is so good, why the rush to cut interest rates? Armstrong explains, “It’s really the world economy which is in serious trouble. You really have to look closely and pay attention to the words (Fed Head) Powell said. The economy is strong, unemployment is fine. Why would you cut interest rates when the stock market is making record highs? Powell said basically because it was things happening outside the country. The Fed, as I have said before, has become the central bank for the world. . . . This is the problem, and Europe is a complete basket case. They don’t get it, and they keep trying to hold onto their power and punish anyone who disagrees with them. . . . Why is the U.S. economy so good? Why is the Dow at a record high? China is in trouble. Europe is in trouble. Japan is a basket case. The capital is coming here.” Join Greg Hunter as he goes One-on-One with renowned economic and political cycle analyst Martin Armstrong.

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Trump puts hopes for Fed revolution on unconventional candidate

BY SYLVAN LANE - 07/14/19 07:30 AM EDT

 

 

President Trump is putting his hopes for reshaping the Federal Reserve on a controversial conservative economist who is a fierce advocate for his economic agenda — and who has adjusted her views on monetary policy to fit the commander-in-chief’s.

After several derailed attempts to stock the independent central bank with allies, Trump announced last week that he intends to nominate former campaign adviser Judy Shelton and Christopher Waller, executive vice president at the Federal Reserve Bank of St. Louis, to two open spots on the Fed board of governors.

Waller, a career academic, is seen as a safe and independent choice that won’t carry Trump’s water. But Shelton’s selection may be Trump’s most viable chance to sway the direction of the Fed after Republicans rejected his past efforts fill the bank with loyalists.

If Shelton is confirmed and Trump wins re-election, she’d be an immediate front-runner to replace Fed Chairman Jerome Powell when his term expires in 2022.

She’s echoed Trump in a series of op-eds and interviews from the president’s Washington, D.C., hotel, calling on the Fed to cut interest rates to support financial markets and Trump’s trade agenda.

Critics of Shelton say she’s as political as Stephen Moore and Herman Cain, two Trump allies floated for the Fed board by the president earlier this year who were rejected by GOP senators. 

Shelton has also been panned for her past support of a gold standard and global currency union, two ideas with almost no support in either party. 

Few if any Democrats are likely to support Shelton, which means just four of the 53 Senate Republicans can sink her nomination. But unlike Moore and Cain, there are factors working in Shelton’s favor that could help garner support among GOP senators. 

Shelton has already been confirmed by the Senate for her current role as U.S. executive director at the European Bank for Reconstruction and Development. 

She also lacks the baggage brought to the vetting process by Cain — who has denied four allegations of sexual misconduct — and Moore, who wrote several misogynistic columns over decades as a pundit.

“The problems that Moore and Cain had, we're not for the most part related to their economic thinking,” said Ian Katz, director at political and policy intelligence firm Capital Alpha Partners.

“Her issues are more closely tied to actual economics and monetary policy, so that makes it at least a little less complicated than things were for Moore and Cain.” 

Republicans have expressed little concern about how her closeness to Trump or unpopular opinions could influence the Fed.

“You wouldn't want the entire board to be made up of those people,” said Sen. Kevin Cramer (R-N.D.), a Senate Banking Committee member who opposed Cain’s nomination. “But diversity of thought is what makes a good deliberative body, and their independence does not require neutrality.” 

Sen. John Kennedy (R-La.), another Banking panel member, said Shelton’s evolution on interest rates is simply “what good economists do.”

“They change their suggested remedies based on symptoms and the condition of the economy,” Kennedy told reporters Tuesday. 

“I don't know a single economist who knows an economic textbook from an LL Bean catalog that says under all circumstances, no matter what the economy is doing, that you should raise rates every time you have a meeting or vice versa.”

Trump’s ongoing war against the Fed has forced Republicans to walk a careful line between supporting the president and the bank’s independence. Most GOP senators are generally pleased with Powell, a Republican, and don’t share Trump’s vitriolic views of his hand-picked Fed chief.

“I think [Powell has] done a very good job within the Fed. The Fed is supposed to be independent—I think he's done that,” said Sen. Mike Rounds (R-S.D.), a Banking panel member.

Rounds added that Trump’s criticism is “a healthy give and take,” explaining that Trump “wants the same thing we all do, which is a really strong economy, and he's going to lobby hard for whatever he thinks works for the economy.”

While Republicans generally cede that Trump has a right to rip the Fed, they’ve rejected his most overt threats to its independence. After sinking Trump’s planned nominations of Moore and Cain, the GOP demanded closer coordination on future picks with the White House.

Shelton’s name has circulated for months as a potential Fed pick, and top White House economic adviser Larry Kudlow said Tuesday that he’s met with members of the Senate Banking Committee to gauge support for her nomination.

“They let that name float out there for a while before nominating her, so I would take that to mean that there isn't very big, significant enough Senate Republican opposition to derail her,’ Katz said. 

But Katz added that Shelton faces a narrow path toward confirmation that depends on successfully quelling concerns about her evolving and unconventional ideology.

Shelton, like Trump, had criticized the Fed under former Chair Janet Yellenfor keeping interest rates close to zero while the economy recovered from the 2008 recession. She then flipped her views on monetary policy after Trump’s election, calling on the Fed to cut rates despite solid economic growth and unemployment near record lows.

In a Wednesday op-ed for the Washington Post, Shelton insisted that her positions on interest rates reflect her view that “it is important to be able to include the Fed in discussions of how best to safeguard financial stability and promote productive economic growth.”

“Questioning the Fed’s infallibility in making monetary policy decisions should not be interpreted as an attack on its “independence” but rather an honest effort to stir much-needed debate,” Shelton wrote. 

Kudlow also rejected accusations that Shelton has flip-flopped or holds views too on the fringe for the Fed.

“There's no way that Judy Shelton is radical. There's just no way,” Kudlow told reporters Monday. “God forbid anybody should change their forecast. I mean, c'mon.”

Democrats have rolled their eyes at such defenses and insist Shelton’s conspicuous turn toward supporting cheap money under Republicans is proof she would be little more than a crony for Trump at the Fed. 

Sen. Sherrod Brown (D-Ohio), ranking Democrat on the Senate Banking Committee, said Shelton’s “is unqualified and political as the two that collapsed because of Republican opposition,” referring to Cain and Moore.

“She's changed her positions on everything. She's auditioned for this job by speaking through media to Trump,” Brown told reporters Tuesday. “She brings into question the independence of the Fed.”

https://thehill.com/policy/finance/452884-trump-puts-hopes-for-fed-revolution-on-unconventional-candidate

[Butifldrm]

Deutsche Bank Is Quitting Stock Trading. Blame Computers and the European Union.

 

By 

Al Root

July 15, 2019 6:30 am ET

 

 

 

Machines can trade. It takes people to think.

That’s one of the lessons from Deutsche Bank ’s (ticker: DB) decision this month to close its equity-sales and trading business, but keep its stock-research operation, as part of a broader overhaul. Some 18,000 jobs, accounting for about 20% of the bank’s workforce, are vanishing.

 

Why keep research—historically given to clients who paid hefty commissions to trade stocks via the bank—and eliminate the brokerage business that had been a fountain of cash for decades? It is all part of a shift toward greater transparency in European financial markets, and declining costs for brokerage services in the face of technological change and regulatory pressure.

A set of rules that took effect in Europe in January was the final straw. The regulations, known as Mifid II—a revamped version of the Markets in Financial Instruments Directive—require fund managers to pay for stock research separately from trading commissions.

 

In the past, trading commissions were tacked onto the price of a stock. They were hidden fees buried within the mutual fund, paid by investors in the form of slightly lower returns. Under Mifid II, the fund company has to cut a check to buy research.

Active managers are willing to pay for analysts’ calls on stocks—that information is critical to the outperformance they offer their clients—but the increasing digitization of trading has reduced commissions. “Twenty years ago, stock commissions were 8 cents a share,” one analyst told Barron’s. “Now you get 1 cent and all the volume goes to a computer.”

U.S. asset managers that have European money under management from Europe have to comply with Mifid II. Many are doing so across their entire operations, rather than complying separately with U.S. and European rules.

“It is difficult to maintain dual standards,” Richard Johnson, principal in the market structure and technology group at industry data provider Greenwich Associates, told Barron’s.

 

 

It is a change that benefits the biggest fund companies.

“The largest asset managers are benefiting from the unbundling of research,” says a Wall Street executive to Barron’s. “The largest players are making it a scale game.” Big asset managers have an easier time paying for research because they can spread the cost over a larger base of assets under management, or AUM.

Of course, the largest asset managers are the low-fee passive funds run by Vanguard, BlackRock (BX) and State Street (STT). Together, those fund families hold about 13% of U.S. equity assets, according to the Investment Company Institute. Passive funds don’t need research services; they just buy the entire market, or the portion of it they are attempting to track.

The new cost burden—the requirement that active managers pay for research themselves, rather than bundling that expense into their funds—is another factor that plays to the advantage of the passive players.

 

And passive funds have been growing rapidly anyway because of their low fees. Their assets under management have increased by more than 20% a year on an average over the past 10 years. Passive funds’ market share has increased to 36% of U.S. assets under management, up 20 percentage points over the past 10 years.

Relatively speaking, the Mifid change also benefits the largest actively managed fund companies as well. Their scale advantage is already significant and will grow as a result of the law. The Investment Company Institute reports that the largest 25% of actively managed funds have 80% of actively managed AUM.

It often seems like the big get bigger and the small fade away. Even regulation seems to drive things in that direction.

 

https://www.barrons.com/articles/deutsche-bank-quit-stock-trading-blame-computers-and-the-eu-51563186600

[Butifldrm]

 

Deutsche Bank removes a trio of massive and expensive paintings from its Wall Street lobby

 

 

Ben Winck

 Jul. 15, 2019, 04:54 PM

Andrew Kelly/Reuters

Deutsche Bank removed three abstract paintings by German artist Gerhard Richter from its New York office's lobby, Bloomberg reports.

The paintings are estimated to be worth between $12 million and $30 million. A bank spokesman declined to say whether the paintings were sold.

The art's removal follows a "radical transformation" announced by Deutsche to slash about 18,000 jobs and focus more on commercial and corporate clients.

Visit the Markets Insider homepage for more stories.

Three large abstract paintings by German artist Gerhard Richter were removed from Deutsche Bank's Wall Street lobby, according to a Bloomberg report.

The works were acquired by the bank in the early 1980s and are valued between $12 million and $30 million, Bloomberg reported.

The German bank owns one of the largest corporate art collections, estimated to hold about 55,000 pieces. The collection helps the bank bond with its clients, DB's global head of wealth management, Fabrizio Campelli, told Bloomberg.

"When you share passions, genuine passion with your clients, it can build a much more solid relationship," he said.

The change in lobby decor follows a shakeup for the bank's operations. DB announced earlier in July it would cut about 18,000 jobs by 2022and eliminate its trading unit in an effort to lower costs and pivot to serving primarily commercial and corporate clients.

The pieces were moved to make room for newer art, bank spokesman Klaus Winker told Bloomberg. He declined to say whether the paintings were sold and where they are currently located.

https://markets.businessinsider.com/news/stocks/deutsche-bank-lobby-paintings-removal-of-3-canvases-wall-street-2019-7-1028354111

 

[Butifldrm]

Russia and India give up the dollar

16:17 - 15/07/2019

0

Information / follow-up ...

Russia and India have agreed to adopt their national currencies instead of the dollar in multi-billion dollar arms deals to avoid the risks posed by US sanctions, the Bloomberg news agency reported.

According to the agency, quoting sources, India would be able to pay the first batch of two warships built by Russia to India, according to two sources familiar with the matter in New Delhi, while another in Moscow, aware of the preparations, Ruble and Rupee, under an agreement reached by the central banks of the two countries.

Bloomberg said the new mechanism could open up billions of dollars worth of weapons contracts to be implemented in national currencies. Russia's arms exports last year amounted to $ 19 billion.

Russia is the second largest exporter of weapons and military equipment in the world after the United States, and its exports accounted for about 58% of South Asia's arms imports from 2014 to 2018.

The United States is pressuring India to cancel a deal of more than 5 billion dollars to purchase the Russian air defense system "S-400", which is planned to be supplied after 2020. Ended 25 o

https://www.almaalomah.com/2019/07/15/417908/

[bostonangler]

1 hour ago, Butifldrm said:

Russia and India give up the dollar

16:17 - 15/07/2019

0

Information / follow-up ...

Russia and India have agreed to adopt their national currencies instead of the dollar in multi-billion dollar arms deals to avoid the risks posed by US sanctions, the Bloomberg news agency reported.

According to the agency, quoting sources, India would be able to pay the first batch of two warships built by Russia to India, according to two sources familiar with the matter in New Delhi, while another in Moscow, aware of the preparations, Ruble and Rupee, under an agreement reached by the central banks of the two countries.

Bloomberg said the new mechanism could open up billions of dollars worth of weapons contracts to be implemented in national currencies. Russia's arms exports last year amounted to $ 19 billion.

Russia is the second largest exporter of weapons and military equipment in the world after the United States, and its exports accounted for about 58% of South Asia's arms imports from 2014 to 2018.

The United States is pressuring India to cancel a deal of more than 5 billion dollars to purchase the Russian air defense system "S-400", which is planned to be supplied after 2020. Ended 25 o

https://www.almaalomah.com/2019/07/15/417908/

 

This is getting serious...

 

B/A

[Butifldrm]

 

China #Gold #Trump

Trade war quietly escalates, as China buys gold & dumps US treasuries

24,605 views

 

 

 

1.7K41SHARESAVE

 

 

 

The Duran

Published on Jul 15, 2019

 

 

SUBSCRIBED 81K

 

The Duran Quick Take: Episode 240. The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the start and stop progression of trade talks ,which appear to be leading towards an amicable separation, both economic and political, between the United States and China.

[md11fr8dawg]

I believe we are headed back to a gold backed dollar. If so the current fiat $ would be worth much less than it is now.

 

[Butifldrm]

Bank Run: Deutsche Bank Clients Are Pulling $1 Billion A Day

by Tyler Durden

Tue, 07/16/2019 - 10:51

 

 

There is a reason James Simons' RenTec is the world's best performing hedge fund - it spots trends (even if they are glaringly obvious) well ahead of almost everyone else, and certainly long before the consensus.

That's what happened with Deutsche Bank, when as we reported two weeks ago, the quant fund pulled its cash from Deutsche Bank as a result of soaring counterparty risk, just days before the full - and to many, devastating - extent of the German lender's historic restructuring was disclosed, and would result in a bank that is radically different from what Deutsche Bank was previously (see "The Deutsche Bank As You Know It Is No More").

In any case, now that RenTec is long gone, and questions about the viability of Deutsche Bank are swirling - yes, it won't be insolvent overnight, but like the world's biggest melting ice cube, there is simply no equity value there any more - everyone else has decided to cut their counterparty risk with the bank with the €45 trillion in derivatives, and according to Bloomberg Deutsche Bank clients, mostly hedge funds, have started a "bank run" which has culminated with about $1 billion per day being pulled from the bank.

As a result of the modern version of this "bank run", where it's not depositors but counterparties that are pulling their liquid exposure from DB on fears another Lehman-style lock up could freeze their funds indefinitely, Deutsche Bank is considering how to transfer some €150 billion ($168 billion) of balances held in it prime-brokerage unit - along with technology and potentially hundreds of staff - to French banking giant BNP Paribas.

 

 

One problem, as Bloomberg notes, is that such a forced attempt to change prime-broker counterparties, would be like herding cats, as the clients had already decided they have no intention of sticking with Deutsche Bank, and would certainly prefer to pick their own PB counterparty than be assigned one by the Frankfurt-based bank. Alas, the problem for DB is that with the bank run accelerating, pressure on the bank to complete a deal soon is soaring.

Here are the dynamics in a nutshell, (via Bloomberg): Deutsche Bank CEO Christian Sewing is pulling back from catering to risky hedge-fund clients, i.e. running a prime brokerage, as he attempts to radically overhaul the troubled German lender while BNP CEO Jean-Laurent Bonnafe wants to expand in the industry. A deal of this magnitude would be a stark example of the German firm’s retreat from global investment banking while potentially transforming its French rival from a small player in the so-called prime-brokerage industry to one of Europe’s biggest.

Of course, publicly telegraphing that DB is in dire liquidity straits and needs an in-kind transfer of its prime brokerage book would spark an outright panic, and so instead the story has been spun far more palatably, i.e., "BNP is providing “continuity of service” to Deutsche Bank’s prime-brokerage and electronic-equity clients as the two companies discuss transferring over technology and staff", according to a July 7 statement. The ultimate goal of the talks is for BNP to take over the vast majority of client balances, which are slightly less than $200 billion currently.

There is just one problem: nothing is preventing those clients who would be forcibly moved from a German banking giant to a French banking giant from redeeming their funds. And that's just what they are doing. Or rather, nothing is preventing them from moving their exposure for now, which is why they are suddenly scrambling to do it before they are suddenly gated.

Which is why the final shape of the deal remains, pardon the pun, fluid, and it is unclear how it will proceed, facing a multitude of complexities, including departing clients.

In an attempt to stop the bank run, BNP executives are meeting with U.S. hedge-fund clients this week to convince them to stay following similar sit-downs with European funds last week, Bloomberg sources said.

However, if this gambit fails, and hedge funds keep moving their business elsewhere, officials at the German bank may just relegate its assets tied to the prime finance division into the newly formed Capital Release Unit, i.e. the infamous "bad bank" which is winding down unwanted assets totaling 288 billion euros ($324 billion) of leverage exposure, and the prime brokerage is responsible for much of the 170 billion euros of leverage exposure that’s coming from the equities division into the division, also known as CRU a presentation shows.

 

It also means that countless hegde funds are suddenly at risk of being gated on whatever liquid exposure they have toward Deutsche Bank.

To be sure, Deutsche Bank’s hedge fund balances have been declining throughout the year as speculation swirled around Sewing’s intentions for the prime brokerage, but the rate of redemptions was far lower than $1 billion per day. Now that the bank jog has become a bank run, the next question is how much liquidity reserves does DB really have and what happen if hedge funds clients - suddenly spooked they will be the last bagholders standing - pull the remaining €150 billion all at once.

We are confident we will get the answer in a few days if not hours, until then please enjoy this chart which compares DB's stock decline to that of another bank which was gripped by a historic liquidity run in its last days too...

 

https://www.zerohedge.com/news/2019-07-16/bank-run-deutsche-bank-clients-are-pulling-1-billion-day

[Butifldrm]

$1 billion per day bank run has begun for Deutsche Bank, Germany’s largest bank.

JULY 16, 2019 1:29 PM BY JAMES BAILEY 8 COMMENTS

A $1 billion per day bank run has started at Deutsche Bank, which Germany’s largest bank and the world’s 15th largest bank with branches in 58 nations. Deutsche Bank has been struggling for years, but their trouble has accelerated this year. Last week, they announced plans to lay off 18,000 employees, which appears to be the catalyst for the bank run. As reported today:

…like the world’s biggest melting ice cube, there is simply no equity value there any more – everyone else has decided to cut their counterparty risk with the bank with the €45 trillion in derivatives, and according to Bloomberg Deutsche Bank clients, mostly hedge funds, have started a “bank run” which has culminated with about $1 billion per day being pulled from the bank. (Source: Zerohedge.com)

A melting ice cube sounds appropriate because Deutsche Bank has enough assets, $1.7 trillion, to endure $1 billion per day in withdrawals for a little while, but at this pace it won’t take long before they face serious liquidity problems because their assets are not all in cash.

A crash of Deutsche Bank has serious implications for the world’s financial system because they have over $50 trillion in derivatives (45 trillion euros), which is far more than their assets, so the losses would immediately impact many other financial institutions. Also, a crash of Deutsche Bank would cause Germany’s equities market, the DAX, and likely their entire economy, to crash, which would be bad news for the European economy, which has been struggling for years with many European nations descending deeper and deeper into debt since the 2008 collapse of the U.S. housing market and Lehman Brothers. The German economy has been the only thing holding up weaker nations like Italy, Spain, and Ireland, so a crash in Germany would cause Europe to lose their strongest engine. The euro would likely drop fast against other currencies, which would immediately impact International trade and global financial institutions.

Several years ago, Pastor David Lankford received a prophetic insight showing the euro at $.80. It is currently trading at about $1.12. These kinds of wild swings in currencies would also fulfill what I saw in previous dreams in which the dollar grew stronger and stronger against other currencies before it was suddenly devalued. Back in 2015, I described the sequence as the final four seasons of the U.S. dollar. The euro dropping to $.80 would move us closer to the end of season one, which would set the stage for those other events to happen at a later date.

The Z3 community has been watching for financial trouble in Germany since receiving the following prophetic warning in 2015 from Pastor Louie McGeorge, Associate Pastor at New Promise Christian Fellowship and Phoenix House of Prayer. He shared the following dream:

“In this dream I was with some friends in Kansas City. They were redecorating their home. Taking things off the wall in one of their back rooms and putting them on their wall in the main hallway. Then my old Pastor came in and someone asked him to tell us what he knows. He said, ‘There will be a crash in Germany on the 25th.’ That was the end of the dream.” (See the complete post)

Pastor Louie was only shown the day, not the month or the year, so we can only speculate about the timing, but the historical pattern for market crashes is during the September-October period, around the Jewish holy days of Rosh Hashanah and Yom Kippur. This year, Rosh Hashanah begins September 30 and Yom Kippur begins at sunset on October 8. Since God has not revealed the exact date, we can only watch and wait, but based on this historical pattern and these recent events, I believe there is a high probability the fulfillment of Pastor Louie’s dream happens on September 25, 2019. Whenever it happens, inverse ETF’s like FAZ and SPXS will do well while traditional stocks will take a severe pounding. I believe God is giving the righteous insights to know what is coming before it happens so we can position ourselves for it.

But seek first the kingdom of God and His righteousness, and all these things shall be added to you. (Matthew 6:33 NKJV)

A prudent man foresees evil and hides himself, but the simple pass on and are punished. (Proverbs 22:3 NKJV)

Author: James Bailey

James Bailey is a blogger, business owner, husband and father of two grown children. In 1982, he surrendered his life to the Lord Jesus Christ. In 2012, he founded Z3news.com to broadcast the message of salvation by reporting end time news before it happens.

 

 

© 2019, Z3 News. The first 200 words of Z3 News articles may be shared online in exchange for a clickable link to our site. Please include the author name and do not make any changes to text or titles. No image files from our site may be shared because we don’t own them. For permission to use our content in other formats, please contact us.

https://z3news.com/w/bank-run-begun-deutsche-bank-germany-largest-bank/

[md11fr8dawg]

And after Lehman and the US banking and prime mortgage fiasco the greedy F'ing bankers learn NOTHING and continue their risky investment practices at the expense of the investor. These people should be lined up, given a last smoke, be blindfolded and shot in public for the world to see. Maybe that would wake them up for a short time. Greed is a wonderful thing!🤯

[bostonangler]

1 hour ago, md11fr8dawg said:

And after Lehman and the US banking and prime mortgage fiasco the greedy F'ing bankers learn NOTHING and continue their risky investment practices at the expense of the investor. These people should be lined up, given a last smoke, be blindfolded and shot in public for the world to see. Maybe that would wake them up for a short time. Greed is a wonderful thing!🤯

 

Oh they learned something.... They can be criminals without repercussion.

 

B/A

[md11fr8dawg]

Right you are BA and it is high time to bring the worldwide practice to a halt!!

[Butifldrm]

1 Opinion 

Moves For Global Geo-Economic ‘Reset’ And US’ National Power Potential – OpEd

 June 24, 2019  Brigadier (Retd.) Dr. Ahsan ur Rahman Khan  0 Comments

By Brigadier (Retd.) Dr. Ahsan ur Rahman Khan

 

National Power Potential And Its Components

Political thinkers have provided various definitions of national power potential. However, in simpler explanation “National power is the capacity or ability of a nation with the use of which it can get its will obeyed by other nation. It involves the capacity to use force or threat of the use of force over other nations. With the use of National Power a nation is able to control the behaviour of other nations in accordance with one’s own will” (1).

As for the components/elements of national power potential, a number of the tangible and intangible components are quoted, ranging from seven or eight to about fifteen. However, generally the tangible components include geography, population, location, territory, natural resources, technology, economic development, political structure, military advancement, and diplomacy. And, intangible components include ideology, leadership, national character and morale (2).

In fact all of these components have their own significance. However if we consider the rather heightened ‘competitive power play’ of the major powers in the post-World War II realm of geopolitics and geo-economics, the two most important components of national power potential stand out to be the economic potential and military potential – and, importantly, both complement each other. And, the US certainly has progressed from strength to strength in terms of these two components particularly since World War II.

US’ Dollar-Based Economic Power Potential

Utilising the power of these two components US became one of the two super powers after World War II, the other being the Soviet Union (USSR). Then, after break up of USSR, the US became the only super power, and applied to the maximum effect its military and economic power, in collaboration of its European allied powers, to almost dictate its terms on the countries particularly in Asia.

The long list of US’ post World War II military interventions/invasions, as also the offensive intelligence operations under the umbrella of US’ military might by US’ top intelligence agency (CIA) for staging coup/regime change/etc in different countries, is well-known.

However, since the last some decades US’ has considerably increased the application of its strong ‘Dollar-based’ economic power potential, through economic sanctions, to coerce the target countries/business firms/persons to submit to US’ geopolitical/geo-economic dictates.

 

An article titled “How Dollar became king of global finance”, published by the Indian newspaper Business Line dated 8 November 2018, has explained as to how US managed to attain this ‘Dollar-based’ economic dominance on world financial system. The article highlights that the countries of the World War II wining side, realising the importance of an anchor like gold for promoting stable trade and finance, wanted to establish a robust global financial system.

For that purpose 44 countries participated in the meeting. Many options were considered, US rejected the proposals, “and proposed that the new system should rest on both gold and the US dollar. No one liked this idea as this would make the dollar the supreme currency of the world. But the US, the principal financier of the victorious side of the war prevailed. And except for the Soviet Union, all 44 participating nations signed the Bretton Woods agreement in 1944 at Bretton Woods, New Hampshire, US”.

“The gold for dollar system worked during 1950-70. But it came under strain as the US started printing and spending a large value of dollars on post-war reconstruction efforts. When countries holding these dollars went for exchange with gold, the US gold reserves started vanishing. Gold supply was finite, but the dollar printing knew no limits. The story came to an end in August 1971 when the US reneged from its commitment to convert the US dollar to gold. De-linking gold with dollar made the US the linchpin of global finance”. (3)

And now the US has almost ‘weaponised’ the Dollar. In that context many publication outlets have published their articles. One such article titled “How the US has made a weapon of the dollar”, by Satyajit Das, a former banker and author of books, has been published in The Economic Times, an Indian daily newspaper dated 7 September 2018. In his article he highlights, “Convinced of an existential threat from competitors, America is weaponizing the dollar to preserve its global economic and geopolitical position. While the U.S. accounts for about 20 percent of the world’s economic output, more than half of all global currency reserves and trade is in dollars”.

He also asserts, “But the real power of the dollar is its relationship with sanctions programs”. ….. “Sanctions target persons, entities, organizations, a regime or an entire country. Secondary curbs restrict foreign corporations, financial institutions and individuals from doing business with sanctioned entities. Any dollar payment flowing through a U.S. bank or the American payments system provides the necessary nexus for the U.S. to prosecute the offender or act against its American assets. This gives the nation extraterritorial reach over non-Americans trading with or financing a sanctioned party. The mere threat of prosecution can destabilize finances, trade and currency markets, effectively disrupting the activities of non-Americans” (4).

Initial Attempts by Certain Countries to De-Dollarize Their Financial System

However, despite such economic and military might of US there were attempts by certain countries to get out of the financial dependency of US’ Dollar; but those earlier attempts were thwarted by US – some very ruthlessly.

Iraq’s President Saddam Husain planned to convert Iraq’s oil sales in Euros in place of the US Dollar. His country was militarily invaded by the US along with its NATO allies; and Saddam Husain was ultimately hanged to death. That fact, despite US’ efforts to hide, did find place in certain publications. One such publication was the lengthy essay titled “The Real Reasons for the Upcoming War With Iraq” dated January 2003, published by UNSW, an institution of Australia.

The first paragraph of its summary asserts, “Although completely suppressed in the U.S. media, the answer to the Iraq enigma is simple yet shocking – it is an oil currency war. The real reason of this upcoming war is this administration’s goal of preventing further Organization of the Petroleum Exporting Countries (OPEC) momentum towards the euro as an oil transaction currency standard. However, in order to pre-empt OPEC, they need to gain geo-strategic control of Iraq with its 2nd largest proven oil reserves”. (5)

Later, same the fate was meted out to Libya – a fact also well-known. To quote just one publication, a reference is made to the article by Brad Hoff who served as a Marine from 2000-2004, after military service lived, studied, and traveled throughout Syria off and on from 2004-2010, and currently teaches in Texas.

His article is titled “Hillarious Emails Reveal True Motive for Libya Intervention”. It was published by the US-based Foreign Policy Journal dated 6 January 2016. In his article Brad Hoff asserts: “Newly disclosed emails show that Libya’s plan to create a gold-backed currency to compete with the euro and dollar was a motive for NATO’s intervention”. ….. “Instead, the great fear reported is that Libya might lead North Africa into a high degree of economic independence with a new pan-African currency”. ….. “French intelligence “discovered” a Libyan initiative to freely compete with European currency through a local alternative, and this had to be subverted through military aggression”.

Besides that, Brad Hoff has also disclosed, basing upon the newly disclosed e-mails, the criminality of US’ government and its NATO allies. In that he has highlighted, “But historians of the 2011 NATO war in Libya will be sure to notice a few of the truly explosive confirmations contained in the new emails: admissions of rebel war crimes, special ops trainers inside Libya from nearly the start of protests, Al Qaeda embedded in the U.S. backed opposition”.

Then under the article sub-heading “Hillarious’s Death Squads”, he mentions, “A March 27, 2011 intelligence brief [archived here] on Libya, sent by long time close adviser to the Clintons and Hillarious’s unofficial intelligence gatherer, Sidney Blumenthal, contains clear evidence of war crimes on the  part of NATO-backed rebels”; and that, “It appears that Clinton was getting personally briefed on the battlefield crimes of her beloved anti-Gaddafi fighters long before some of the worst of these genocidal crimes took place”(6). So the military intervention by NATO, along with its supported rebels, toppled the government of Libya’s leader Muammar al-Gaddafi, who was got ruthlessly murdered through the NATO-supported rebels. And, what happened to the much known gold reserves of Libya became a mystery after that NATO military intervention.

The Emerging Geo-Economic ‘Reset’

However, now the US’ unilateral dominance of world financial system is certainly facing serious challenge. For quite some time now instead of certain countries like Iraq and Libya, the two formidable world powers – Russia and China – have been working out a trade and financial system based upon the use of their own currencies – Russian rouble and China’s yuan – in place of US dollar.

The efforts of Russia and China in this regard have been going on for some years, albeit with a mixture of some successes and certain serious difficulties – difficulties included the deeply entrenched dominance of the US Dollar in international financial system, different financial status of rouble and yuan, and other related complications of financial infrastructure. Those difficulties were causing delay in formalisation of that Russia-China financial arrangement; however hopes and efforts have also been continuing.

In that context, an informative article titled “Why China and Russia are struggling to abandon the US dollar and forge a yuan-rouble deal” was published by South China Morning Post dated 15 January 2019. Following extracts of that article provide clarity to the emerging situation in this regard:

“Another delay to a bilateral payments system shows how tough it is to develop an alternative to the US dollar. But the rise in Russia-China trade means the two countries won’t abandon the mission, analysts say”.

“Russia, China and a number of other countries are aiming to cut their dependence on the US dollar, as Washington uses access to the dollar payment system as a weapon to punish nations and individuals for breaking US laws, even outside the United States”.

“In 2014, China and Russia signed 38 energy, trade and finance deals and a currency swap worth 150 billion Yuan (US$22 billion). Russia had sought trade links with China after its forceful annexation of Crimea soured ties with the United States and European Union”.

“In bilateral trade with China, about 14 per cent of payments are already done in yuan, and about 7 to 8 per cent in the Rouble, according to Russia’s Finance Ministry”.

“The Russian central bank is also buying yuan for its foreign reserves, purchasing US$44 billion worth of the Chinese currency in the second quarter of 2018, while selling more than US$100 billion of US dollars. Russia held US$67 billion in yuan as of mid-2018, 15 per cent of its international reserves”. (7)

US Dollar Too Facing Serious Difficulties

It is also important to note that while China, Russia, and many other countries are facing certain financial infrastructure difficulties in swapping over from US dollar to their own currencies; US dollar too is facing serious difficulties since many years now in retaining its dominating position.

That aspect was amply highlighted by Lan Cao, who had received her Juris Doctor from Yale Law School, is Professor of Law at Chapman University of California US, specializing in international business and trade, international law, and development. She has taught at Brooklyn Law School, Duke Law School, Michigan Law School and William & Mary Law School.

Her detailed research article titled “Currency Wars and the Erosion of Dollar Hegemony” was published by Michigan Journal of International Law, Volume 38, Issue 1, 2016. In her detailed research article Professor Lan Cao has asserted (8):

“In recent years, much attention has been paid to the wars in Iraq, Afghanistan, and Syria, and the nuclear ambitions of Iran. Wars and breaches of the peace are of paramount importance and thus are rightly matters of international and national concern. But there are other forces at work, perhaps less conspicuous but nonetheless debilitating to the United States and the dollar-based international system, that merit more attention” (p.57);

“Although the U.S. economy seems to have emerged strong from the 2008 financial crisis, serious fault lines exist under the American-dominated international economic system” (p.p. 57-58);

and “Over a span of five years, countries such as China, Brazil, India, Mexico, Japan, South Korea, Iran, Russia, and the United Arab Emirates have not only quietly increased their gold holding but have also engaged in currency swap agreements in which they agreed to use each other’s currencies in bilateral or regional trade. In yet another type of deal, countries also agreed to engage in a barter system–Iranian oil for Chinese goods. Against this background, two developments are particularly important because they show the beginning of the erosion of dollar hegemony. First, note the concerted actions by Brazil, Russia, India, China, and South Africa (BRICS) to pursue a dollar-alternative path, most notably the establishment by BRICS of a New Development Bank (NDB) as a rival to the Western-dominated Bretton Woods system.

And second, take as an example the historic gas deal worth 400 billion, between Russia and China, concluded after ten years of negotiations, to provide the world’s fastest growing economy with the natural gas it needs for the next thirty years, most likely to be transacted in yuan, not dollars, undercutting both the primacy of the U.S. dollar as the top dog currency used in oil trades and its role as the international reserve currency” (p.p. 64-65).

In the conclusion of the article Professor Lan Cao asserts: “The dollar may be strong this year or weak last year. That is the nature of a market-based floating system. But, regardless of any momentary snapshot, various indicators show that an alternative, non-dollar system is being slowly but surely created” (p. 114).

And, she also quotes the well-known George Soros, Hon FBA the Hungarian-American investor and philanthropist, “As George Soros succinctly described, “in the financial sphere the Bretton Woods institutions—the IMF and the World Bank—have lost their monopoly position. Under Chinese leadership, a parallel set of institutions is emerging.”

Soros noted that against this context of “rival camps” with China and Russia on one side and the United States on the other, “China has begun to build a parallel set of financial institutions, including the Asian Infrastructure Investment Bank (AIIB); the Asian Bond Fund Initiative; the New Development Bank (formerly the BRICS Bank); and the Chiang Mai Initiative, which is an Asian regional multilateral arrangement to swap currencies” (p. 116).

Current Status of the Emerging Global Geo-Economic ‘Reset’

If all available published pieces of related information and analytical inferences of the experts are placed properly in perspective, the picture of the status of the emerging Global Geo-economic ‘Reset’ can be clearly discerned. In that context certain pieces of information and analyses, mostly already mentioned in this article, are of particular significance.

As published by South China Morning Post dated 15 January 2019. “In 2014, China and Russia signed 38 energy, trade and finance deals and a currency swap worth 150 billion Yuan (US$22 billion). In bilateral trade with China, about 14 per cent of payments are already done in yuan, and about 7 to 8 per cent in the Rouble, according to Russia’s Finance Ministry. The Russian central bank is also buying yuan for its foreign reserves, purchasing US$44 billion worth of the Chinese currency in the second quarter of 2018, while selling more than US$100 billion of US dollars. Russia held US$67 billion in yuan as of mid-2018, 15 per cent of its international reserves”.

As mentioned by Professor Lan Cao of Chapman University (US) in her detailed research article of 2016, “Over a span of five years, countries such as China, Brazil, India, Mexico, Japan, South Korea, Iran, Russia, and the United Arab Emirates have not only quietly increased their gold holding but have also engaged in currency swap agreements in which they agreed to use each other’s currencies in bilateral or regional trade. In yet another type of deal, countries also agreed to engage in a barter system–Iranian oil for Chinese goods”. And, “the concerted actions by Brazil, Russia, India, China, and South Africa (BRICS) to pursue a dollar-alternative path, most notably the establishment by BRICS of a New Development Bank (NDB) as a rival to the Western-dominated Bretton Woods system”.

As reported by RT dated 26 October 2018, “Beijing and Tokyo sealed a multi-billion dollar currency swap arrangement on Friday, aimed at enhancing financial stability and spurring business activity in both countries. According to the Bank of Japan (BOJ), the arrangement which will last until October 25, 2021, will allow the exchange of local currencies between the two central banks for up to 200 billion yuan or 3.4 trillion yen ($30 billion). The agreement was sealed during Japanese Prime Minister Shinzo Abe’s visit to Beijing for the first formal Sino-Japanese summit in seven years. The meeting comes as Asia’s two biggest economies look to strengthen relations against a backdrop of trade friction with the United States”. (9)

As reported by VOA dated 5 November 2018 and others, “China has agreed to carry out bilateral trade with Pakistan in the Chinese yuan instead of the U.S. dollar. The central State Bank of Pakistan has already declared Yuan as an approved foreign exchange for all purposes in the country”. (10)

Report of RT dated 2 January 2019 has highlighted five countries which are opting to replace US Dollar with other currencies. Those countries include China, India, Turkey, Iran, and Russia. The article cites US’ sanctions and trade frictions as the cause of this move by these countries. It mentions that “China is trying to internationalize its own currency, the yuan, which was included in the IMF basket alongside the US dollar, the Japanese yen, the euro, and the British pound”.

Another highly significant aspect highlighted by this article is, “As part of its ambitious Belt and Road Initiative, China is planning to introduce swap facilities in participating countries to promote the use of the yuan

Moreover, the country is actively pushing for a free-trade agreement called the Regional Comprehensive Economic Partnership (RCEP), which will include the countries of Southeast Asia. The trade pact could easily replace the Trans-Pacific Partnership (TPP), the proposed multi-national trade deal which was torn up by US President Donald Trump shortly after he took office. RCEP includes 16 country signatories and the potential pact is expected to form a union of nearly 3.4 billion people based on a combined $49.5 trillion economy, which accounts for nearly 40 percent of the world’s GDP”.

India’s efforts to purchase the S-400 air-defense system in Russian ruble and Iranian oil in Rupees are facing problem due to US’ pressure. “Turkey’s leader announced that Ankara is preparing to conduct trade through national currencies with China, Russia and Ukraine. Turkey also discussed a possible replacement of the US dollar with national currencies in trade transactions with Iran”. Iran is also trying to have barter trade or in Iraqi Dinar with Iraq. And, as for Russia, “So far, Moscow has managed to partially phase out the greenback from its exports, signing currency-swap agreements with a number of countries including China, India and Iran. Russia has recently proposed using the euro instead of the US dollar in trade with the European Union. Once a top-10 holder of US sovereign debt, Russia has all but eliminated its holdings of US Treasuries”. (11)

Another later report which is of noteworthy significance has been published by RT dated 26 April 2019. It shows further expansion of this geo-economic ‘reset’ in South East Asia. It reported, “The Association of Southeast Asian Nations (ASEAN) and its East Asian partners consider adding Chinese and Japanese currencies to their $240 billion currency swap safety net, business journal Nikkei Asian Review reported. …… The governor of the Bank of England (BoE), Mark Carney, said recently the greenback may one day be rivaled by the Chinese renminbi, which is likely to become a major global reserve currency. He was echoed by strategists and economists who say the global importance of the yuan seems destined to rise as flows in the currency will grow over the long term if Beijing continues to gradually open its financial system”. (12)

And, a major step forward in formulating the Global Geo-Economic ‘Reset’ has now been taken by China and Russia this month (June). According to the report by RT dated 5 June 2019, in the meeting of Russian leader Putin and Chinese leader Xi “Russia and China took another step away from the US dollar after the two countries agreed to develop bilateral trade using the ruble and the yuan”. ….. “A draft government decree on the national currencies trade was released earlier during the day. The document stipulates that Moscow and Beijing will cooperate on development of national payment systems, as well as facilitate cross-border payments in national and other currencies”(13).

Russian News Agency TASS also reported on 5 June 2019 some details of the approved draft decree. It highlighted, “According to the draft decree approved through that government document, “settlements and payments for goods, service and direct investments between economic entities of the Russian Federation and the People’s Republic of China are made in accordance with the international practice and the legislation of the sides’ states with the use of foreign currency, the Russian currency (rubles) and the Chinese currency (yuan).” Economic entities agree on the choice of the payment currency and the way of payment independently”. (14)

Keeping in view all these facts, following aspects of the status of the emerging global geo-economic ‘reset’ are easily discernible:

After about half a decade’s efforts China and Russia have by now succeeded in initiating the formulation of a global geo-economic ‘reset’ for removing the over-riding domination of world’s financial system by US’ imposed Dollar-based financial system and Bretton Woods institutions IMF and World Bank (WB).

Though in its initiating stage, yet this ‘reset’ has attained firm foundations. Being lead by the two formidable world powers – China and Russia – and being joined by many countries, it is not possible for US and its allies now to either crush it militarily, or strangulate it economically.

The deeply entrenched Bretton Woods US Dollar-IMF-WB system, and problems in creation of the financial infrastructure for the new ‘reset’, are certainly going to create hindrance in the final establishment of this ‘reset’. However, in all probability the ultimate establishment of this global geo-economic ‘reset’ can be expected in not too distant a time-frame.

It appears more likely that China is going to take a lead role in this geo-economic ‘reset’, because of three reasons. Firstly, Chinese yuan is more stable currency as compared to Russia’s ruble, Japanese yen, or currency of any other participating currency. Secondly, Chinese development and investment projects, like BRI etc offered to countries in Europe, Asia, Middle East, Latin America, and Africa are without any ‘politico-social strings’ as the ones attached by US/IMF/WB. Third, China is already preparing to build a parallel set of financial institutions, including the Asian Infrastructure Investment Bank (AIIB), the Asian Bond Fund Initiative, the New Development Bank (formerly the BRICS Bank), and the Chiang Mai Initiative, which is an Asian regional multilateral arrangement to swap currencies.

However, this newly set up global geo-economic system is not likely to be pegged only upon the Chinese Yuan; rather, the trading/investing partners will mutually choose the financial mode of trade/investment, by swapping mutually agreed currency, or even through barter. That flexibility is bound to facilitate much free and conducive environment for trade and investment for countries in this system, as compared to the current US-dominated system gagged by ‘sanctions’, etc.

This formulating global geo-economic ‘reset’ is also triggering the formulation of a global geopolitical ‘rest’ – the signs of which are also clearly discernible. That is yet another significant aspect for study and analysis.

References 
(1). http://cms.gcg11.ac.in/attachments/article/259/NATIONAL POWER.pdf
(2).http://www.studylecturenotes.com/international-relations/what-is-national-power-meaning-definition-and-elements
(3).https://www.thehindubusinessline.com/opinion/columns/ajay-srivastav/how-dollar-became-king-of-global-finance/article25446348.ece
(4).https://economictimes.indiatimes.com/news/international/business/how-the-us-has-made-a-weapon-of-the-dollar/articleshow/65715068.cms 
(5). https://www.cse.unsw.edu.au/~norman/CurrentAffairs/DeeperNew.html
(6). https://www.foreignpolicyjournal.com/2016/01/06/new-Hillarious-emails-reveal-true-motive-for-libya-intervention/ 
(7). https://www.scmp.com/economy/china-economy/article/2182192/why-china-and-russia-are-struggling-abandon-us-dollar-and
(8).https://repository.law.umich.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1365&context=mjil
(9). https://www.rt.com/business/442331-china-japan-currency-swap/
(10).https://www.voanews.com/south-central-asia/china-pakistan-agree-conduct-bilateral-trade-yuan 
(11). https://www.rt.com/business/447915-top-states-ditching-dollar/
(12). https://www.rt.com/business/457608-china-asean-dollar-crackdown/
(13). https://www.rt.com/business/461147-russia-china-nuclear-reactors/
(14). http://tass.com/economy/1061848

https://www.eurasiareview.com/24062019-moves-for-global-geo-economic-reset-and-us-national-power-potential-oped/

[blueskyline]

Thank You Buti . GE DV's . Very Interesting .....

[bostonangler]

Watch out, America: China and Russia are stockpiling gold

The yellow metal generates no cash, grows no crops, provides no shelter and supplies no useful service. It hasn’t been official money for decades. It isn’t any kind of “safe haven” because it always seems to be crashing or booming or crashing again. It hasn’t been an efficient way of verifying payment since Samuel Morse invented the telegraph.

But here’s the funny thing: It’s been going up. Big time. And for none of the usual reasons.

There’s no inflation. Prices are currently rising by about 1.6% a year.

There’s no obvious economic distress. The U.S. economy is growing by about 2.1% a year.

And there’s no financial panic. Stock markets are rising. Wall Street has been hitting new highs. Junk bond spreads — the extra interest that risky companies have to pay to borrow money — are low.

 

Yet for all that, gold GC00, +0.52%  has now risen 11% in the past two months. Over the past year, it’s up 15%. That’s more than the S&P 500 SPY, +0.05% or the Nasdaq Composite COMP, -0.44%. And more than the so-called FAANG stocks — Facebook FB, +0.01%, Apple AAPL, -0.04%, Amazon AMZN, -0.08%, Netflix NFLX, +0.02% and Google holding company Alphabet GOOG, -0.88% GOOGL, -0.10%  — that are so fashionable on the Street.

‘Something’s going on here’

What’s going on? And, more interestingly, perhaps, is it worth a trade?

London hedge fund manager Crispin Odey, at Odey Asset Management, says the precious metal drew his eye during the stock market meltdown last fall. “Gold should have gone down last year,” he says from his plush offices in London’s Mayfair district. “It should have ended the year around $1,000 [an ounce]. Instead it was $1,200. I thought, ‘Something’s going on here.’ ”

The explanation? Some of America’s biggest geopolitical rivals were stockpiling gold. Especially China and Russia.

And they still are. The People’s Bank of China recently revealed hiking its gold reserves by 74 tons in the six months through May. The Russian central bank has bought about 96 tons in the first half of the year.

U.S. dollar hegemony

And there’s an obvious reason for China to buy gold. It wants to break up the global hegemony of the U.S. dollar — the hegemony that former French President Charles de Gaulle called America’s “exorbitant privilege.” It wants to make its own currency, the renminbi, a world player. And Odey argues that buying gold bullion is a natural move. Gold reserves should add to world confidence in the Chinese currency.

In other words, the U.S. president, by “Making America Great Again,” may also be Making Gold Great Again.

Do China and Russia really need piles of this arcane yellow metal to break the U.S. dollar’s stranglehold on the world’s financial system?

Can’t they just issue new currency backed by their economic output, as Europe did when it launched the euro 20 years ago?

Maybe, or maybe not. But that seems to be the way they’re betting.

We are at a very rare inflection point in history: The passage of economic hegemony. China’s economy has already overtaken America’s by one key measure, just as America’s once overtook Britain’s. These periods of transition, throughout history, have been times of instability.

Don’t fight the central banks

Odey, once a gold skeptic, has plunged into the metal now in one of his characteristically heavy ways. His flagship hedge funds, Odey European and OEI MAC, were about 40% invested in gold at the end of June.

Yikes.

”You want to do what the central banks are doing,” he says, with a laugh.

Where could gold go? Nobody knows, and Odey isn’t giving a forecast. In theory, some gold bugs argue, a breakdown in the dollar’s hegemony could send the yellow metal spiraling upward by several hundred percent. We shall see.

The plunge in interest rates across the developed world is giving gold a fair tailwind as well. Who cares if it doesn’t pay interest? Trillions of dollars of bonds in Europe now actually have negative interest rates. By that measure, a cynic might say, gold’s 0% coupon looks like a bargain.

The simplest way for a retail investor to bet on gold is through the SPDR Gold Shares GLD, +0.67%  exchange traded fund. Those who want to bet on a sharp move, without risking too much of their capital, can always trade options on the fund.

Let it be said that Odey is something of a mad genius. He’s been spectacularly right on occasion: For example, he predicted the 2008-2009 financial crisis, and made out like a bandit. But he’s also had big bets go the other way. Overall he’s beaten the market indices by a healthy margin over the long term, even after fees. But if you are tempted to follow him into gold, be warned that his bets are not for the faint-hearted.

https://www.marketwatch.com/story/watch-out-america-china-and-russia-are-stockpiling-gold-2019-07-29?siteid=yhoof2&yptr=yahoo

[bostonangler]

 

[ChuckFinley]

They have been banking gold for sometime. Ever since the Obama administration.  The problem I see is I can not find a third party verification of our gold reserve.