As a reminder, nothing lasts forever…
The World Bank’s former chief economist wants to replace the US dollar with a single global super-currency, saying it will create a more stable global financial system.
“The dominance of the greenback is the root cause of global financial and economic crises,” Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank.
“The solution to this is to replace the national currency with a global currency.”
The writing is on the wall for dollar hegemony. As Russian President Vladimir Putin said almost two months ago during the BRICs summit in Xiamen,
“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”
As Pepe Escobar recently noted, ‘to overcome the excessive domination of the limited number of reserve currencies’ is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar.
Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan. This means that Russia – as well as Iran, the other key node of Eurasia integration – may bypass US sanctions by trading energy in their own currencies, or in yuan. Inbuilt in the move is a true Chinese win-win; the yuan – according to some – will be fully convertible into gold on both the Shanghai and Hong Kong exchanges.
The new triad of oil, yuan and gold is actually a win-win-win. No problem at all if energy providers prefer to be paid in physical gold instead of yuan. The key message is the US dollar being bypassed.
China’s plans for oil futures trading go back more than two decades, with the government introducing a domestic crude contract in 1993 and stopping a year later amid an overhaul of its energy industry. But in 2013, we first hinted at the birth of the petroyuan was looming…
In doing so China is effectively lobbing the first shot across the bow of the Petrodollar system, and more importantly, the key support of the USD in the international arena… setting the scene for the petroyuan.
And now, we are within two months of it becoming a reality as China prepares to roll out a yuan-denominated oil contract within the next two months…
“Approval of the trading rules by the securities regulator marks the clearance of a major hurdle toward launch of the contract,” Li Zhoulei, an analyst with Everbright Futures, said by phone.
“The latest rules raised entry threshold for investors from the draft rules, which shows the government wants to avoid volatility when it first starts trading.”
Which, according to Adam Levinson, of hedge fund manager Graticule Asset Management Asia, will be a “wake up call” for investors who haven’t paid attention to the plans.
A Yuan-denominated oil contract will be a “huge story” in the fourth quarter.
“The contract is a hedging tool for Chinese oil companies. We’re convinced Chinese oil companies will be anchor investors in the Aramco IPO.”
All of which fits with recent comments and actions from Russian and Venezuelan officials…
“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal.
Maduro hinted further that the South American country would look to using the yuan instead, among other currencies.
“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.
Additionally, Levison warns Washington that besides serving as a hedging tool for Chinese companies, the contract will aid a broader Chinese government agenda of increasing the use of the yuan in trade settlement… and thus the acceleration of de-dollarization and the rise of the Petro-Yuan.
“I don’t think there’s any doubt we’re going to see use of the renminbi in reserves go up substantially”
Levinson was even more sanguine about China’s growing credit exposure. While Chinese debt-to-GDP continues to rise, we note that Chinese sovereign credit risk has collapsed to 9 year lows…
Which as Levinson notes, “All the issues in China are occurring without fully understanding the asset side of the balance sheet.” He is not concerned about China credit issues in the near-term, defining the near term as the next two years, as “the capacity of the sovereign to deal with an issue, should it occur, is pretty significant and therefore important.”
Which appears to the market’s perspective as China is now the least risky relative to US in four years…
Finally, while he is less concerned about China’s credit, Levinson warns that the lack of volatility as stocks and bonds rally is the “scariest part” of global markets…
“If I am concerned about anything it’s where the level of implied volatility trades,” Levinson said in an interview in Singapore on Tuesday.
“It is extremely low. If there is something to be concerned about in global markets, it’s the endogenous level of where implied volatility is trading.”
Small market declines could escalate quickly, Levinson said.
“You don’t know when an event or an issue is going to present itself,” he said.
“But when it does, the nature of the volatility construct in markets today is such that if you have a modest correction it will turn into a much more severe one in a short period of time, because of the entrenched structural short-selling of volatility.”
Any increase in market turbulence could trigger dramatic selling and the biggest of those events could be a broader adoption of China’s PetroYuan contract… as Levinson says “will be a huge story” in Q4.
zerohedge
Davy on Thu, 26th Oct 2017 6:23 pm
OH, on the mudslinging, everything said over the years is documented here on the site, Ape. I will venture to say you are the most disgusting mudsling mother fucker on this site historically and in aggregate. The shit you said in the past is horrible and dehumanizing. I am thinking lately you went on some meds because you have been trying very hard to control your assholness. You have been kind of aloof lately with your climate change posts except for your clog battles which has been similar to my mad kat battles. You hate Americans so any American that does not toe the west coast Canadian line of hating themselves was a target until the medication. I guess with the gang in tatters you had to step in and protect the old man mad kat because he is a bit ragged lately. He has been taking a beating with widdle G AWOL. Double LOL.
Davy on Thu, 26th Oct 2017 6:24 pm
“Davy, seeking alpha is not a reliable info source.”
Mad kat, what part of the article is unreliable? Did you read it? Do you want to debate any part of it?
Davy on Thu, 26th Oct 2017 6:26 pm
“The US has no gold.”
Mad kat, do you have any links on that with reliable references?
makati1 on Thu, 26th Oct 2017 6:28 pm
Ap, Davy has problems beyond living in a dying country. I am not a psychiatrist but it is obvious he has a need to be #1 everywhere. His immature name calling and putdowns are proof.
As you mentioned, he has to attack anyone who doesn’t want to live in Davy Land. I seem to be his favorite target currently because I live a happy, free and safe life here in the Ps.
He has a few ‘gang members’ here that also have reality/mental problems. They do provide entertainment when I am not busy with more important activities. Have a great day.
Davy on Thu, 26th Oct 2017 6:32 pm
Mad kat did you read the article because it calls into question a lot of your previous comments? Do you want to debate the article or talk about your hurt feelings?
makati1 on Thu, 26th Oct 2017 6:34 pm
America’s legal and subsidized drug pushers.
“Pharmaceutical Firm Makes Billions by Fueling Opioid Crisis”
https://www.globalresearch.ca/pharmaceutical-firm-makes-billions-by-fueling-opioid-crisis/5615121
“Since 1999, two hundred thousand Americans have died from overdoses related to OxyContin and other prescription opioids….
Within five years of its introduction, OxyContin was generating a billion dollars a year….
Opioids, in fact, now kill more than fifty thousand Americans a year, ten thousand more than AIDS did at the peak of that epidemic — more, too, than gun homicides and motor-vehicle accidents. Opioid overdoses are now the leading cause of death for Americans under the age of fifty.”
Sliding down the slippery slope to the 3rd world…
Davy on Thu, 26th Oct 2017 6:38 pm
mad kat, this is Davy, do you want to debate the article I mentioned? It has relevance to the PO posted article. Your global research article has nothing to do with it. mad kat are you listening?
makati1 on Thu, 26th Oct 2017 7:00 pm
Davy, I don’t debate with immature, spoiled children with mental problems.
Davy on Thu, 26th Oct 2017 7:09 pm
What you mean mad kat is your previous comments are duds so an excuse will get you off the hook. LOL. Ok, maybe clogged will read it and we can debate it.
Apneaman on Thu, 26th Oct 2017 7:10 pm
On path to de-dollarization: World tired of funding US military adventurism – Max Keiser 5:10
https://www.youtube.com/watch?v=JC7QEqxZCIs
fmr-paultard on Thu, 26th Oct 2017 8:35 pm
aptard do you know Canada is supportting ukraine is a big way?
Apneaman on Thu, 26th Oct 2017 9:46 pm
fmr-paultard, I’m aware they are supporting them, but you’ll have to define ‘big way’ for me. That could mean anything from a country to country group-hug to giving them half the GDP or anything in between. Go ahead, knock me out with stats and highly emotional click bait articles and all that good stuff. You are aware that I gave up on the humans in 2012 right? The end draws nearer and all the little details no longer matter. Right now all I care about is when is the Voltaren I rubbed on my back & hips going to kick in and when is the codeine solution I drank right after the rub going to hit me. Oh and I have some ribs in the oven….gotta keep an eye on them. I think I need a shower too because I just got back from painting someones ceiling and have tiny paint spatter all over me – don’t want to drag that shit to bed. See fmr-paultard, these are the things that are sorta important to me. The rest don’t matter and is out of my hands anyway. Thanks fer calling.
makati1 on Thu, 26th Oct 2017 10:37 pm
No Davy, what I mean is that I don’t debate with immature, spoiled children with mental problems anymore.
makati1 on Thu, 26th Oct 2017 11:03 pm
“Lets look a some facts on ‘One Belt…One Road’:
It connects 65 countries and 4.4 billion people.
In 2016 Chinese companies signed 8,158 contracts in 61 countries worth $150b.
In 2016 China’s trade with the One Belt…One Road countries reached $953b.
Over the next 10 years China will spend $2 trillion on ‘One Belt…One Road’ infrastructure, and, more amazingly, they are not asking the investee countries and corporates to pay it back; 80% of the money spent will be a perpetual bond, with only the interest needed to be paid. The principal is never returned.”
http://www.zerohedge.com/news/2017-10-26/postcard-brave-new-world-order
Things, they are ah changing!
makati1 on Thu, 26th Oct 2017 11:06 pm
BTW: the US trade deficit with China has averaged over $250B/year. Guess who will be supplying that $2T? The US consumer. And there will be billions left over for other projects. lol
J. H. Wyoming on Fri, 27th Oct 2017 12:22 am
This article was followed yesterday by a huge long thread that has been replaced by a much shorter one. My posts are gone as well as many others. I don’t know why – just an observation.
Boat on Fri, 27th Oct 2017 1:03 am
mak,
If we trade elsewhere than Chine I fear they will be like you. Sitting in a high rise on the dole.
Cloggie on Fri, 27th Oct 2017 1:34 am
This article was followed yesterday by a huge long thread that has been replaced by a much shorter one. My posts are gone as well as many others. I don’t know why – just an observation.
No worries, the forum software is just a little rusty. Just scroll upwards to “makati1 on Thu, 26th Oct 2017 7:00 pm” and you will discern a text string “previous 1 2 3”. Just click on previous and your lost posts will be displayed again in full glory.
makati1 on Fri, 27th Oct 2017 1:50 am
Boat, There is no one else but China for the US to trade with that has the same goods at the same prices. So, the Chinese know they have a captive buyer until the US goes down. Not to mention that a lot of the parts for stuff made elsewhere also come from China.
The new Silk Road is going to open up a large part of the world to Chinese goods. Soon they will bypass the US in trade. The US is dying, Boat. I hope you are preparing for that event.
Boat on Fri, 27th Oct 2017 2:06 am
mak,
Robots and digital tech manufacturing will Replace Cina and the need for cheap labor. But hey, I wish China the best. I like XI more than cheeto.
Theedrich on Fri, 27th Oct 2017 2:08 am
The Dems want welfare, the Repubs warfare. On Tuesday, 2017 Oct 24, Senator Rand Paul gave an excellent exposition of the wholesale corruption in the U.S. Senate, where at most 15% of the Senators are interested in helping the country avoid the abyss. The others (Republicans In Name Only, or “RINOs,” plus all Demonics) seek only to maintain their own power and sinecures.
Altogether, in any case, their lordships are maintaining on life support the farcical regime of the United States, which has grown rich mainly by hitherto not oppressing its population the way the majority of other countries in history have done. That growth, however, is now ending, since the governmental commissars have become bloodsuckers and their hypocrisy in starting wars by provoking other nations into alleged acts of war against America is today widely known. In addition, nuclear weaponry is becoming more and more widely available as a means of defense against megalomaniac Yankeeland. Also, the financial scams which amount to killing the goose that lays the golden eggs are taking their toll: the national debt is currently $20 trillion and rising faster than ever before.
The perverse genosuicidism promoted by Christianity and its guilt-preachery leaves White males with no reason to live, and the consequently void-filling narcotics plague which subterraneanly funds the Congress and lower functionaries is eviscerating the race which made the country. The Pentagonians fantasize that high-tech weaponry, electronic gadgetry and cybernetics will save a land which has lost its will to live. But that fantasy will preserve the Judeo-Cretin masses only so long. Parasites always end up killing their host.
makati1 on Fri, 27th Oct 2017 3:42 am
Boat, I would not count on tech replacing humans. A few robotic factories exist now but there are thousands of factories in China alone. Perhaps tens of thousands around the world and they will not be replaced by robots or tech. Not ever. The financial system will collapse and end the age of tech long before that can happen. Computer controlled machines have existed for over 60 years, but they still have not replaced humans. I was installing them in factories in the 80s.
“The first NC machines were built in the 1940s and 1950s,”
https://en.wikipedia.org/wiki/History_of_numerical_control
Davy on Fri, 27th Oct 2017 5:03 am
“There is no one else but China for the US to trade with that has the same goods at the same prices. So, the Chinese know they have a captive buyer until the US goes down. Not to mention that a lot of the parts for stuff made elsewhere also come from China.”
Got references? I think you are talking out your ass and showing how stupid you are about the economics of trade. There are many studies that say a US trade war with China will be bad for each sides in different ways BUT the US would be forced into producing more of the cheap products China produces. This will mean more low paying jobs eventually. There is also plenty of other 3rd world countries to choose from. From my point of view we need less consumerism and that would be a great place to start. Stop trading with China. Consumerism is the primary source of many of our ills. That said I am not sure we can stop consumerism without a collapse. Systematically everything is tied to growth, development, and consumption.
makati1 on Fri, 27th Oct 2017 5:11 am
“Lies And Distractions Surrounding The Diminishing Petrodollar”
“I will go into greater detail in my next article as to why the dollar and the U.S. economy in general has actually been slated for deliberate demolition and how this will likely come about.”
http://www.alt-market.com/articles/3303-lies-and-distractions-surrounding-the-diminishing-petrodollar
Foreign Policy argued in 2009 that oil trade in dollars is “nothing more than a convention.” I would actually agree with that in part; it is indeed a convention that can change dramatically at any given moment. But, Foreign Policy asserts that there would be no consequences for the U.S. if and when the change takes place and the dollar loses petrostatus. This is absurd. Trillions in dollars are held overseas and the singular function of those dollars is to fulfill international trade based on the “convention” of the dollar’s world reserve status. What purpose do those dollar’s serve if world reserve status is abandoned? The answer is none.
All of those dollars would come flooding back into the U.S. through various channels. Market psychology would immediately trigger a massive loss in the dollar’s international value, not to mention incredible inflation would be spiking here at home. This process has already begun, and it is looking more and more like the next couple of years will bring a vast “reset” (as the IMF likes to call it) in the hegemony of certain currencies.”
I look forward to reading about how he expects ‘The Great Leveling’, I have been talking about, will continue to evolve.
Davy on Fri, 27th Oct 2017 5:24 am
Dedollarization is not happening from China it is happening from the FED. There will be clearly a dollar shortage if the Fed begins to shrink its balance sheet. China is stepping in to help its corporate sector with dollar liquidity. As you can see if you take the anti-American emotions out of this subject it becomes an issues of governments and corporations use all the financial tools at hand to good use. This is what China is doing successfully in this case with dollar debt issues. Notice in the article this offering is eagerly anticipated.
“China Issues First Dollar Bond Since 2004, Bails Out Corporate Liquidity”
http://tinyurl.com/ya4ohsza
“Bloomberg reports that China began marketing its first sovereign dollar bonds since 2004 following a week when Chinese leaders in Beijing outlined a greater role for the nation on the world stage. The Ministry of Finance is offering $1 billion of five-year notes at a spread of 30 to 40 basis points over Treasuries, and the same amount of 10-year debt at a premium of 40 to 50 basis points, according to people familiar with the offering, who aren’t authorized to speak publicly…China is offering the bonds unrated, in a break with traditional practice by sovereigns in the region when they sell dollar notes. S&P Global Ratings last month followed Moody’s Investors Service in cutting China’s sovereign rating, citing soaring debt and increased economic and financial risks.”
“Despite investors falling over themselves to get hold of these Chinese sovereigns, we have sympathy for Reuters’ warning about dollar lending to China’s over-leveraged corporate sector. Even so, this is an unrated issue by a country infamous for credit-fueled growth, weak rule of law, and selective respect for international norms. It’s one thing to lend money to the Chinese government, but this will serve as a benchmark for pricing debt sales by other Chinese borrowers, some of them far more opaque. Too late. If the Treasury General Account on the Fed’s balance sheet is replenished to late 2016 levels and the Fed begins to taper, bank reserves will be extinguished and dollar liquidity is going to tighten significantly in the coming months – as we explained here. With about $10 trillion of offshore dollar debt – with maybe a $1-2 trillion belonging to China – this will make it more difficult for EM banks to roll dollar funding. China’s dollar borrowing by its corporate sector has been on a tear – with Bloomberg reporting record dollar-bond issuance of $144 billion by Chinese companies so far in 2017.”
Cloggie on Fri, 27th Oct 2017 5:31 am
Power struggle within the Republican Party.
http://www.spiegel.de/politik/ausland/donald-trump-koennte-machtkampf-mit-republikanern-gewinnen-aus-3-gruenden-a-1174957.html
Der Spiegel fears that Trump will win this struggle and will become the absolute master of the Republican Party. Reasons:
1. Trump represents the #1 Reps-dream with his tax reform
2. Solid support from his voter base
3. Trump intimidates opponents within the party
Let’s hope so.
Davy on Fri, 27th Oct 2017 5:35 am
First mad kat, the last part of your comment is that your words or a reference because you do not have parenthesis? Learn how to properly reference articles so we know what you are saying and what they are saying!
“What purpose do those dollar’s serve if world reserve status is abandoned? The answer is none.”
At the moment there is no alternative to the dollar for fulfilling international trade at the level it is now used. The dollar can shrink in use but only so much. It is not going to be abandoned without the whole global system collapsing. There is nothing on the drawing board at the moment to supplement the dollar. What China and Russia are doing at the moment is mostly talk and just bilateral trade around the edges. It is good efforts are being made to offer alternatives. Alternatives generally mean better resilience.
“All of those dollars would come flooding back into the U.S. through various channels. Market psychology would immediately trigger a massive loss in the dollar’s international value, not to mention incredible inflation would be spiking here at home.”
Same old song and dance of the anti-American anti-Dollar addicts. This is an unproven hypothesis. If this were to happen I can guarantee the rest of the world is not in a vacuum protected from this hurt. This will be because the rest of the world is collapsing. Connect the dots mad kat.
Davy on Fri, 27th Oct 2017 5:45 am
The Eurozone looks pretty shaky in the south!
“Catalan Chaos Continues As Secessionists Prepare Independence Motion”
http://tinyurl.com/yb3jxn3k
“At the same time, there are unconfirmed reports that police are closing off roads around the regional parliament. Meanwhile, the Spanish senate has been debating the implementation of Article 155 in Madrid. Rajoy told lawmakers that Spain faced an exceptional situation and asked them to support his proposal on Article 155. The Spain Report shows video of Rajoy receiving a standing ovation.”
“DEUTSCHE BANK: Italy’s 3 big problems could trigger the next financial crisis — and bring the euro down with it”
http://tinyurl.com/y8fbasgn
“Italy’s inclusion, however, is an interesting one, with its problems neatly summed up by Reid and his team in their analysis. Italy is, they said: “A country nearing an election and with high populist party support, with a generationally underperforming economy, a comparatively huge debt burden, and a fragile banking system which continues to have to deal with legacy toxic debt holdings ticks a number of boxes to us for the ingredients of a potential next financial crisis.” Those three problems could, if badly managed, end up causing catastrophic harm to not only Italy, but also the wider eurozone. “We can assume that if Italy does create a crisis it will likely risk triggering an existential crisis for the economic area as a whole,” the team said, having argued that Italy is “perhaps the first line of defense” to any break up of the eurozone.”
“Now, however, the ECB is looking to slowly wind up its QE, with the central bank widely expected to taper its bond purchases from €60 billion per month to just €40 billion a month within its next couple of meetings. “The question we find ourselves asking however is what happens when the ECB slows down the rate of purchases, bond markets start to reverse, and the cost of financing this debt load rises?” — they asked. “Growing out of this debt burden would in theory be the most logical explanation, but evidence of Italy’s post Euro adoption experience (see Figure 47) suggests this will be extremely hard.”
Cloggie on Fri, 27th Oct 2017 5:47 am
http://russia-insider.com/en/russia-triples-gold-reserves-preparation-full-scale-economic-war-united-states/ri21333
http://russia-insider.com/en/politics/russia-hoarding-gold-alarming-rate-next-world-war-will-be-fought-currencies/ri17308
(Russia-Insider is written/editted by Anglos sympathetic towards Russia)
Russian gold reserves were never higher as now.
Russia is preparing for a currency war, that is for a future where currency is no longer a neutral value container. Letting yourself being paid in currency A is a favor towards the owner of currency A.
Davy on Fri, 27th Oct 2017 5:54 am
More economic rot in the south
“My Big Fat Greek Tax Scam”
http://tinyurl.com/y8kef93a
“At the same time, this creates all sorts of distortions in the economy. Greek corporates are issuing bonds at a 200bps tighter spread than the Greek sovereign, Greek banks are starved of liquidity as Greeks shift capital overseas or into mattresses and government economic data is questionable at best. In fact, quite a few Greeks attributed the recent economic recovery to an increased use of credit cards which government statistics do a better job of capturing—as opposed to a true recovery. During my dozens of meetings with Greeks, I always asked the same questions; “What percentage of Greece’s economy is off the books?” 20 to 30% “Are you hiding money offshore?” Of course “How many secret Cypriot companies do you control?” At least 2”
“Is it any wonder that the economy has struggled recover? When you enact excessive taxes and regulations, people will always sidestep them with high frictional costs and losses for the overall economy – particularly if the enforcement policy wavers between lax and corrupt. How Greece eventually solves these problems will tell you a lot about how far the economic recovery can actually go. In the interim, it’s always helpful to know that paying with cash gets you a free glass of wine and when you have run out of cash; the “broken” credit card-reader will miraculously work…”
makati1 on Fri, 27th Oct 2017 5:56 am
Davy, there are no “anti-American emotions” just facts. The facts are that Russia, Iran, China and a lot of other countries are getting rid of the dollar’s control over their sovereignty. It started years ago, not with a recent Fed activity.
(2012)
“10 Reasons Why The Reign Of The Dollar As The World Reserve Currency Is About To Come To An End”
http://theeconomiccollapseblog.com/archives/10-reasons-why-the-reign-of-the-dollar-as-the-world-reserve-currency-is-about-to-come-to-an-end
(2013)
“http://theeconomiccollapseblog.com/archives/9-signs-that-china-is-making-a-move-against-the-u-s-dollar”
http://theeconomiccollapseblog.com/archives/9-signs-that-china-is-making-a-move-against-the-u-s-dollar
(2014)
“China And Putin May Have Just Screwed America’s Future, And Your Retirement With It”
https://www.westernjournalism.com/us-dollar-losing-reserve-currency-status/
(2014)
“PDAC: Is China Buying Gold to Eliminate US Dollar as World Reserve Currency?”
https://investingnews.com/daily/resource-investing/us-dollar-gold-goodman-currency-russia/
(2015)
“The Dollar is Slowly Losing its Status as the Primary Reserve Currency”
http://www.visualcapitalist.com/the-dollar-is-slowly-losing-its-status-as-the-primary-reserve-currency/
(2017)
“How China Just ‘Reset’ the Global Monetary System With Gold”
http://www.newsmax.com/Finance/PeterReagan/china-gold-monetary-system/2017/09/09/id/812544/
It’s only a matter of time…
Davy on Fri, 27th Oct 2017 6:02 am
“Russia is preparing for a currency war, that is for a future where currency is no longer a neutral value container. Letting yourself being paid in currency A is a favor towards the owner of currency A.”
Explain that a little further cloggie? Do you understand that currencies have a zero sum gain in the long run for everyone?
“Global currency wars a risky zero-sum game for world economy”
http://tinyurl.com/y9u82yq3
“It is a mistake as currency devaluation in the long run is a zero sum game. There may be some short term benefits, but, as everyone joins in, it ends up a no-win situation. It raises the spectre of a dangerous currency war breaking out, increases trade tensions and exposes global investors to more risk in the process. Currency devaluation is like pyramid selling. It may work temporarily for countries which are the first in to use it, but other countries adopting the strategy at a later stage will see any potential benefits cancelled out as other nations join in the devaluation merry-go-round. The global economy is in disarray right now and the last thing it needs is a currency war, increasing trade tensions and heightened market uncertainty. It is time for global policymakers to work together and settle differences. For currency devaluation to work effectively, it must be backed up by other complementary measures. Monetary, fiscal and currency policies all need to be pulling in the same direction to ensure the resulting stimulus is channelled to maximum effect.”
Davy on Fri, 27th Oct 2017 6:08 am
Mad kat, all those references look like a Christmas tree. Can you go into each article and give us some detail. You are just a google brat that does not understand what you are saying so you grab headlines. This is intellectually lame.
Davy on Fri, 27th Oct 2017 6:09 am
“China’s yuan slips to 7th place in global trade finance – SWIFT”
http://tinyurl.com/yag9awx2
“HONG KONG, May 25 (Reuters) – China’s yuan slipped to the seventh-most actively traded currency in the league tables for global trade finance, transaction service provider SWIFT said. A struggling overseas offshore market in the renminbi has hurt the usage of the Chinese currency in global trade in recent months and the latest ranking is yet another indicator of the bearish sentiment surrounding the currency by global companies. In a presentation posted on its website dated May 23, the latest ranking for April places the renminbi behind the swiss franc with a global market share of 1.60 percent. In comparison, the U.S. dollar was at the top of the heap with a 42.1 percent market share followed by the euro at 31.1 percent. It comes a day after Moody’s Investors Service downgraded China’s credit ratings on Wednesday for the first time in nearly 30 years.”
Cloggie on Fri, 27th Oct 2017 6:11 am
The Eurozone looks pretty shaky in the south!
Davy can’t tell the difference between the Eurozone and Catalonia and doesn’t understand Italian finance.
Everybody loves to point at the Italian public deficit but chose to ignore the general Italian financial picture.
The real surprise is that Italy is financially the most stable country in Europe, more so than Germany.
What?!
EU27 sustainability ranking 2012:
https://fbkfinanzwirtschaft.files.wordpress.com/2012/12/eu27-nachhaltigkeitsranking.png
This graph comes from a US-friendly source (all western European MSM are US-friendly, this is after all the US empire)
– Italy is the most stable country (stable as in able to fulfill its future payment obligations)
– The US is the worst, even worse than Greece
Explanation: public debt is only one factor of a countries finances, an elementary fact that self-styled financial experts like Davy should know, but doesn’t because of his eagerness to discern weak spots in European finances.
The crucial point is that where in Eastern Europe and Russia most people own their homes, Italy is the only western country where that applies as well. Bingo! Who cares about 140% public debt if the entire population owns its own homes. In fact, poor Italian public finances is a direct result of Italian tax evasion, a national past-time. They prefer to pay off their homes instead. Some would call it corruption, others would call it applied libertarianism.lol In the worst case Italy’s public debt problem can be solved by forcing the Italian public to take a small mortgage on its own homes of a few thousand euro. Italy’s debt is after all the debt of the Italian people.
Italy has a growth rate of 1.5%, which is fine since Italy was already a rich country and will become even richer.
There is absolutely little “shaky” about the Eurozone. In fact the declining QE from 60 to 30 billion monthly is a sign of strength; the EU-economy no longer needs stimulus.
In my own province Brabant for instance the economy is overheating, approaching 3% growth and employers can’t find sufficient employees:
https://fd.nl/economie-politiek/1209197/brabantse-arbeidsmarkt-raakt-oververhit
Housing prices in Eindhoven are soaring, my modest home is now ten times the value (300k euro) I bought it for in the end of the eighties.
Chips machines maker ASML now wants to build a gigantic logistic center of 40,000 m2 so they can send their machines to anybody on this planet who wants to produce microchips:
https://www.ed.nl/asml/asml-wil-nieuwe-megahal-op-deel-van-runstraat-in-veldhoven~abbe09d9/
The current economic climate is better than ever before, even better than during the dot-com craze. The sky is the limit.
makati1 on Fri, 27th Oct 2017 6:20 am
Cloggie, we both know that Davy lives in his own little world of delusion. I have decided to ignore him until he grows up and gets rational. That probably means forever.
I might not agree with all of your thoughts and ideas, but I respect them as they come from someone who actually lives in the area he talks about. Not in some backwater area of the US.
Davy on Fri, 27th Oct 2017 6:34 am
“Davy can’t tell the difference between the Eurozone and Catalonia and doesn’t understand Italian finance.”
Come on clogged, are you telling me the southern part of the Eurozone present no risk. What a crock of shit. The Southern European financial rot sure is inconvenient to your golden decade that is for sure.
“EU27 sustainability ranking 2012: https://fbkfinanzwirtschaft.files.wordpress.com/2012/12/eu27-nachhaltigkeitsranking.png”
That was 6 years ago cloggie. Plus cloggie that is a dubious graph in German. How about giving us some back up with the discussion.
“Explanation: public debt is only one factor of a countries finances”
No shit Sherlock how about all the other debt in Europe?
“Italy has a growth rate of 1.5%, which is fine since Italy was already a rich country and will become even richer.”
No it isn’t because you have to service that huge debt hence the reason the ECB is buying all that southern European debt.
“There is absolutely little “shaky” about the Eurozone. In fact the declining QE from 60 to 30 billion monthly is a sign of strength; the EU-economy no longer needs stimulus.”
More like desperation. Europe is in a debt trap now. Any way it goes is going to hurt.
“The current economic climate is better than ever before, even better than during the dot-com craze. The sky is the limit.”
It is a bubble cloggie and you can’t even see that. It is driven by QE and ultra low rates. If rates normalized a huge amount of European corporations would be insolvent. Europe is almost as bad as China in this respect. Also you can’t cherry pick you good and bad. Your northern Europe is gutting the south through the Euro.
Davy on Fri, 27th Oct 2017 6:36 am
“Cloggie, we both know that Davy lives in his own little world of delusion.”
Mad kat, why not say something and quit being like the little Chihuahua at a big dog fight. Why not engage yourself in the debate instead of showing how hurt your feeling are.
Cloggie on Fri, 27th Oct 2017 6:50 am
That was 6 years ago cloggie. Plus cloggie that is a dubious graph in German. How about giving us some back up with the discussion.
The situation has not changed much since, only EU public debt is decreasing.
The dark blue bars are public debt (“explicit debt”) and here is Italy indeed the worst, worse than the US.
But more important are the light-blue bars (“implicit debt”), representing future liabilities like health care, pensions, hand-outs, public expenditure (libraries, swimming pools, infrastructure) which simply means that current levels can’t be maintained. And here Italy is best and the US worst, worse than Greece.
It is exactly like Lawrence Kotlikoff said it is, but nobody wants to hear the bad news:
https://www.brookings.edu/opinions/the-federal-debt-is-worse-than-you-think/
http://www.npr.org/2011/08/06/139027615/a-national-debt-of-14-trillion-try-211-trillion
This corresponds somewhat with the graph that says that US “debt” (liabilities rather) are 1337% of US GDP is something like 15 * 1337 = ca. 211 trillion
Davy on Fri, 27th Oct 2017 6:58 am
“This corresponds somewhat with the graph that says that US “debt” (liabilities rather) are 1337% of US GDP is something like 15 * 1337 = ca. 211 trillion”
Geeze, cloggie, then tally up all forms of Eurotard debt too. You and mad kat are a fools trying to take the stance that everything bad is happening in the US. It is so easy to dissect the two of you because I admit to the US problems but I am not going to listen to you distort and magnify them as well as listen to you tell me you have a golden decade ahead and mad kat say Asia is the future. You both look hilarious.
Cloggie on Fri, 27th Oct 2017 7:03 am
Here are the 2015 data:
https://www.stiftung-marktwirtschaft.de/fileadmin/user_upload/Generationenbilanz/EU-Nachhaltigkeitsranking_2016_Diagramm.png
Same picture, Italy the best.
you tell me you have a golden decade ahead
You know very well that the phrase “Golden Decade for Europe” doesn’t come from me but from someone really in the know and that ain’t you:
https://www.youtube.com/watch?v=PM9_PrBoq9Q
But you are too jealous to even consider that idea.
Hello on Fri, 27th Oct 2017 7:16 am
Clog, I meant to ask.
What is a “golden decade”?
Everybody swimming in gold able to buy more useless plastics from china? Or everybody so well off, that compassion and guilt will lead to the complete negroization of europe?
Cloggie on Fri, 27th Oct 2017 7:33 am
Clog, I meant to ask.
What is a “golden decade”?
10 years of uninterrupted growth of say 1.5-3%/year.
Everybody swimming in gold able to buy more useless plastics from china? Or everybody so well off, that compassion and guilt will lead to the complete negroization of Europe?
Current illegal immigration is very low, like 100,00/year. In 5-10 years time the right will have taken over from the left and the borders will be closed hermetically.
https://www.youtube.com/watch?v=FtjiLQrkznU
“AfD: Longing for your country”
Hello on Fri, 27th Oct 2017 8:16 am
Clog. Tolerance is proportional to affluence.
A golden decade is bad news.
Besides, why do you want to have growth? Growth never solves problems, but creates different new ones.
People living on manhatten island are not any happier even though manhatten had stellar growth since it was a humble new amsterdam farm/trade town.
Cloggie on Fri, 27th Oct 2017 8:37 am
Clog. Tolerance is proportional to affluence. A golden decade is bad news.
I understand that. I’m still angry with Heinberg that he didn’t deliver with peak oil.lol So no social revolution from that direction.
On a positive note, tolerance is inverse proportional with the number of invaders in your country. Take for instance Calais (73,000) and its “jungle camp” (6,000).
Result: 49% FN voters.
I didn’t say I want growth; I have nothing to want. But I suspect that your Swiss Hildebrandt could be correct with this golden decade forecast, for better and for worse.
Davy on Fri, 27th Oct 2017 9:46 am
clogged, you are living in a fantasy world of debt and unfunded liabilities. You are just one of the gullible ones that is blinded by false affluence. Your example is without explanation. Show me the data and explain. Just saying here is the data and it is good is just peddling your prejudice opinion. All I need to do is talk to my wife on what is up in Italy and she is not talking a golden decade.
rockman on Fri, 27th Oct 2017 10:49 am
Cloggie – “…the role of the IMF as a replacement mechanism for simply paying in yuan for the current dollar-yuan exchange rate.” And thus the point I keep making and most still want to ignore: if China is using the petrodollar denominated price of oil by converting that price to yuan based upon the current yuan/US$ exchange rate then they are paying in petrodollars whether any US $ are transferred from a Chinese account to that of the oil seller. Thus the buyer can instantly convert the yuan to $’s. Or any other currency…once they convert to $’s.
Which takes us full circle back to the title if this article: what is a “petroyuan”? Maybe I’ve missed it but I’ve yet to see a definition. Does it mean, for instance, that Iran will sell oil to a Chinese company and accept yuan as payment? Yuan that is not a function of the yuan/US$ exchange rate? Fine: then how does Iran determine the price based INDEPENDENTLY on the yuan?
Which brings us to a critical point I’ve yet to addressed: will an oil exporter, like Iran, sell oil to a Chinese company for an amount of yuan that’s 10% less based on the yuan/US$ exchange rate? If so wouldn’t it be smart for that Chinese company to sell that oil to Japan and pocket that 10% as easy profit? Or go the other way: Iran offers the Chinese company the same oil for 10% more in yuan then the current yuan/US$ exchange rate. Why would the Chinese company pay 10% more then it could buy the same oil for in US$’s?
The only way for there to be a “petroyuan” (or a “petroeuro”, ” petropeso”, etc) is if the vast majority (perhaps all) of the sellers price their oil in that country’s denomination. IOW the USA doesn’t decide what currency denomination the oil exporters use… the oil sellers do. China cannot force any oil exporter to price its oil in yuan. And if an oil exporter choose to it would be based on the yuan/US$ exchange rate. Which, again, determines there is no such thing as a petroyuan.
I finds it very frustrating to see so much space taken up with the petroyuan meme and yet no one bothers to answer the most basic question: what is the petroyuan? How about you? LOL.
rockman on Fri, 27th Oct 2017 10:56 am
Wyoming – “This article was followed yesterday by a huge long thread that has been replaced by a much shorter one. My posts are gone as well…”. May be it doesn’t show up on you display but this thread has been broken up into 3 segments. That’s done when it gets long. Sometimes tricky to find: the portion selection (1,2,3) is found to the upper right of the third post on this page.
Cloggie on Fri, 27th Oct 2017 12:16 pm
And thus the point I keep making and most still want to ignore: if China is using the petrodollar denominated price of oil by converting that price to yuan based upon the current yuan/US$ exchange rate then they are paying in petrodollars whether any US $ are transferred from a Chinese account to that of the oil seller. Thus the buyer can instantly convert the yuan to $’s. Or any other currency…once they convert to $’s.
For China it is not the same! If there are oil producers willing to accept yuan for their oil, then China no longer needs to worry about acquiring dollars to pay for the oil. They can even print new yuan to pay for the oil. What the buyer is going to do with these yuan, either save it, or spend it in China and try to change it for dollar (if somebody is interested) is a matter for the seller of oil.
what is a “petroyuan”? Maybe I’ve missed it but I’ve yet to see a definition. Does it mean, for instance, that Iran will sell oil to a Chinese company and accept yuan as payment?
Yes exactly that. It is simply a transaction oil against yuan. Nothing more esoteric than that. And no direct link to the $.
will an oil exporter, like Iran, sell oil to a Chinese company for an amount of yuan that’s 10% less based on the yuan/US$ exchange rate?
Yes, that is very well a possibility. In the future oil-transactions there is a new aspect of currency competition, that didn’t exist before. In the old days all oil transactions were in dollar, that was a given. And secretly backed by the US military/Navy in the Gulf. So you had your dollars and next you could hunt the oil market for the best bargain.. in dollar. Now there are more options and hence more complexity, certainly if the euro and perhaps yen will enter the currency competition as well.
And if an oil exporter choose to it would be based on the yuan/US$ exchange rate. Which, again, determines there is no such thing as a petroyuan.
That neutrality does not exist. The US has declared Iran an enemy, so Iran is not likely to do the US a favor and accept dollars and will be happy to at least sell partially to China, if Iran thinks it can spend these yuan on Chinese markets.
Cloggie on Fri, 27th Oct 2017 1:17 pm
“You are aware that I gave up on the humans in 2012 right?”
I gave up on you after reading three of your posts, apneaman.