World Financial Markets In Panic

China Crashes: Shanghai Composite Plunges 5.4% Amid Record Trading, Biggest Tumble Since 2009

Those who have been following the ridiculous moves in the Shanghai Composite in recent months, knew it was only a matter of time before yet another major stock market (one which recently surpassed the Nikkei for the second largest spot in the world) crashed violently, further eroding faith in the centrall-planned “price discovery” process. The only question was when.


Following our report last night about China’s change in collateral rules, in which we noted that none other than the PBOC was now eager to pop the equity bubble following the PBOC simultaneously fixing the CNY significantly stronger (implicit tightening) and enforced considerably stricter collateral rules on short-term loans/repos – a move which according to estimates from Shenyin Wanguo Securities, would disqualify some 1.25 trillion yuan in corporate bonds as repo collateral, or 60% of all outstanding corporate bonds listed on China’s two stock exchanges – we were not surprised to see the tumble in the market-traded Yuan (which crashed the most in 6 years), and the surge in interest rate swaps, coupled by the plunge in corporate bonds.


That said, we summarized it as follows:
The PBOC has aggressively taken action to reduce leverage in stock and bond market speculation
The PBOC has tightened monetary policy – raising FX and cutting collateral availability
The PBOC has created a major squeeze in USDCNY – stalling carry trades


We concluded as follows: “We will see what kind of fallout this creates but for now stocks are holding up as FX and bond markets are turmoiling.”


* * *


We didn’t have long to wait, because literally a few short hours after we wrote that sentence, this happened:
CHINA’S SHANGHAI COMPOSITE INDEX DROPS 5% AMID RECORD TRADING


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Putin stockpiles gold as Russia prepares for economic war

Russia’s central bank added to its reserves of bullion in the third quarter, according to the latest report from the World Gold Council.

By Andrew Critchlow, Commodities editor
13 Nov 2014

Russia has taken advantage of lower gold prices to pack the vaults of its central bank with bullion as it prepares for the possibility of a long, drawn-out economic war with the West.

The latest research from the World Gold Council reveals that the Kremlin snapped up 55 tonnes of the precious metal – far more than any other nation – in the three months to the end of September as prices began to weaken.

Vladimir Putin’s government is understood to be hoarding vast quantities of gold, having tripled stocks to around 1,150 tonnes in the last decade. These reserves could provide the Kremlin with vital firepower to try and offset the sharp declines in the rouble.

Russia’s currency has come under intense pressure since US and European sanctions and falling oil prices started to hurt the economy. Revenues from the sale of oil and gas account for about 45pc of the Russian government’s budget receipts.
The biggest buyers of gold after Russia are other countries from the Commonwealth of Independent States, led by Kazakhstan and Azerbaijan.

In total, central banks around the world bought 93 tonnes of the precious metal in the third quarter, marking it the 15th consecutive quarter of net purchases. In its report, the World Gold Council said this was down to a combination of geopolitical tensions and attempts by countries to diversify their reserves away from the US dollar.

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Russia may ban the circulation of the United States dollar.

The State Duma has been submitted a relevant bill

Moscow. Farid Akbarov – APA. Russia may ban the circulation of the United States dollar.

The State Duma has already been submitted a relevant bill banning and terminating the circulation of USD in Russia, APA’s Moscow correspondent reports.

If the bill is approved, Russian citizens will have to close their dollar accounts in Russian banks within a year and exchange their dollars in cash to Russian ruble or other countries’ currencies.

Otherwise their accounts will be frozen and cash dollars levied by police, customs, tax, border, and migration services confiscated.

After the law enters into force, it will be impossible to obtain cash dollar in Russia. The ban or termination of the US dollar will not apply to the exchange operations carried out by Russian Central Bank, the Russian government, ministries of foreign affairs and defense, the Foreign Intelligence Service and the Federal Security Service.

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Russians and Chinese are ditching the dollar as Europeans start using renminbi in their reserves

by Simon Black on October 17, 2014 Sovereignman.com

At present, US dollar accounts for roughly 61% of the world’s foreign exchange reserves.

It’s still a safe bet for most, not because the currency is actually strong, but because so many others are already so reliant on it.

Between those with reserves in and pegs to the US dollar, many countries have given their allegiance, and now have a vested interest in the health of the currency.

Due to this common interest, a sort of unofficial, involuntary alliance has been formed between them all.

Together, they’re all playing along, pretending that everything is fine. If the dollar collapses, they’re all screwed, so they’ve got to get each other’s backs.

From the throne of the world’s reserve currency, the Federal Reserve, with the power to print the US dollar, feels dangerously omnipotent.

They can get away with just about anything. For now.

The central bankers get to print dollars and spend them at current prices, before the stuff hits the wider market and diminishes its overall value.


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U.S. Mint Sells Over 750,000 Ounces Of Silver In One Day

The market reacted to the big drop in the paper price of silver by a huge increase in Silver Eagle purchases.  September was turning out to be a much stronger month compared to July and August even before the last update of the month.

On Monday, the U.S. Mint reported 3,375,000 sales for the month.  Then this evening, I checked to see if they had updated their figures.. which they did in A BIG WAY.

In one day, the U.S. Mint sold 766,000 Silver Eagles, more than all the Gold Eagles sold to date.  Actually, is was more than double the 379,000 oz of Gold Eagles sold this year.

If we look at the chart below, sales of Silver Eagles in September, were double that of July and August:

Silver Eagle sales were quite strong in the beginning of the year and started to slow down in June.  However, the manipulated lower price of silver motivated investors to ramp up the purchases making September one of the three strongest months of the year.

Only January and March were stronger than the 4,140,000 Silver Eagle sales in September.  The total for the first three-quarters of the year is 32,251,000.

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Federal Judge: Stockton pensions can be cut in California bankruptcy

UT San Diego reports:

Public-employee pensions are not protected when a city goes belly-up, according to a ruling Wednesday by the judge overseeing Stockton’s much-watched federal bankruptcy case. Judge Christopher Klein’s few words have re-energized the state’s disheartened pension-reform movement – and left the nation’s most-powerful pension fund reeling.

One can’t go a day in Sacramento without hearing about a “historic” piece of legislation or a “groundbreaking” decision, but the Stockton case – held in a downtown Sacramento courthouse – could change everything on the pension front. Klein said in the verbal ruling that pensions are just another contract: “Impairing contractual obligations – that’s what bankruptcy is all about.”

Until now, there has been no way for California cities to get out from underneath the overly generous pension promises they have made to public employees over the past 15 years, the result in part of a pension-increasing bonanza spurred by 1999 legislation championed by the California Public Employees’ Retirement System.

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Judge rules Stockton can sever CalPERS pensions; Wall Street approves

By Dale Kasler Published: Wednesday, Oct. 1, 2014 – 12:12 pm

 A bankruptcy judge handed CalPERS and organized labor a decision they've long feared Wednesday, declaring the city of Stockton has the right to reduce pension payments and even sever ties with the powerful pension fund.

 The verbal ruling from U.S. Bankruptcy Judge Christopher Klein was groundbreaking. It pierced CalPERS’ aura of invincibility and made clear, for the first time, that public employee pensions in California aren't sacred. Two years after Stockton filed for bankruptcy protection, buried under more than $200 million in bond debt, a judge has declared that a municipality can walk away from its obligations to the California Public Employees’ Retirement System.

 Klein’s ruling was prompted by a legal protest from Franklin Templeton Investments, which is due to be repaid just $4 million on a $36 million loan it made to the city during better economic times. Franklin wants a better deal from Stockton even if it comes at the expense of the pensions.

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Super-Rich Rush To Buy “Italian Job” Style Gold Bars

Super-Rich Rush To Buy “Italian Job” Style Gold Bars

Economic uncertainties trigger rush for 12.5kg gold bars, worth about £300,000 each

The super-rich are looking to protect their wealth through buying record numbers of “Italian job” style gold bars, according to bullion experts.


The number of 12.5kg gold bars being bought by wealthy customers has increased 243pc so far this year, when compared to the same period last year, said Rob Halliday-Stein founder of BullionByPost.


“These gold bars are usually stored in the vaults of central banks and are the same ones you see in the film ‘The Italian Job’,” added David Cousins, bullion executive from London based ATS Bullion.

The bars which are made from pure gold and are worth more than £300,000 each at today’s prices of $1,223 (£760) an ounce.

The sales of 1kg gold bars, worth about £25,000 each, has doubled during the three months ended August, when compared to the same period last year, according to ATS Bullion sales figures.

Sales of the more popular gold coins such as the quarter ounce sovereign and one ounce Krugerrand have also doubled this year, according to figures from BullionByPost.

Mr Halliday-Stein said that while most customers arrange for secure storage of the larger bars in secret vaults operated by Brinks, some customers have taken physical delivery of the 12.5kg bars. The small coins can also be sent in the post.

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Five Reasons To Own Gold

Five Reasons To Own Gold

UK Hints At Next Reserve Currency, To Issue Chinese Yuan-Denominated Bond

By Tyler Durden on 09/15/2014 From Zerohedge.com

Yuanification continues around the world. As The USA attempts to corral its allies in a ‘broad coalition’, an increasing number of people – including domestic economic policy advisors – are shifting away from the USD as primary reserve currency. However, the move by British Chancellor of the Exchequer George Osborne, announced Friday, is likely the most notable yet in the world’s de-dollarization. As Xinhua reports, the British government intend to be the first nation (ex-China) to issue Renminbi denominated bond and to use the proceeds to finance the government’s reserves of foreign currency. Osborne described this dialogue outcome as "a historic moment" and a statement of British confidence in the potential of the RMB to become "the main global reserves currency".

As Xinhua reports,

British Chancellor of the Exchequer George Osborne announced Friday that the British government intend to issue a Renminbi denominated bond and to use the proceeds to finance the government’s reserves of foreign currency.

"I can now announce that the UK government intend to be the first national government outside of China to issue a bond in China’s currency. We issued bonds in U.S. dollar before, now we will be issuing a bond in RMB," said Osborne in the press release of the Sixth China-UK Economic and Financial Dialogue (EFD).

Chinese Vice Premier Ma Kai and Osborne concluded the meeting of the Sixth China-UK Economic and Financial Dialogue in London.

Osborne described this dialogue outcome as "a historic moment" and a statement of British confidence in the potential of the RMB to become "the main global reserves currency".

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De-Dollarization Continues:Russia, China agree on more trade currency swaps to bypass dollar

Rt.com

The Russian and Chinese central banks have agreed on a draft currency swap agreement, which will allow them to increase trade in domestic currencies and cut the dependence on the US dollar in bilateral payments.

“The draft document between the Central Bank of Russia and the People’s Bank of China on national currency swaps has been agreed by the parties,” and is at the stage of formal approval procedures, ITAR-TASS quotes the Russian regulator’s office on Thursday.

The Russian Central Bank is not giving precise details on the size of the currency swaps, nor when it will be launched. It says this will depend on demand.

According to the bank, the agreement will serve as an additional instrument for ensuring international financial stability. Also, it will offer the possibility to obtain liquidity in critical situations.

“The agreement will stimulate further development of direct trade in yuan and rubles on the domestic foreign exchange markets of Russia and China,” the Russian regulator said.


Currently, over 75 percent of payments in Russia-China trade settlements are made in US dollars, according to Rossiyskaya Gazeta newspaper.

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Argentina blames US for debt woes, denies default

By Paula Bustamante

Buenos Aires (AFP) – Argentina blamed the United States for the legal battle that forced it to miss a debt payment and, despite ratings agencies’ declarations to the contrary, denied being in default.

Ratings agency Fitch declared Argentina in "restrictive default" Thursday after 11th-hour talks failed to resolve the country’s dispute with two US hedge funds that refuse to accept a write-down on their Argentine bonds.

Fitch’s label echoed the "selective default" declared Wednesday by Standard & Poor’s. Both terms indicate that Argentina has defaulted on one or more of its financial commitments but continues to meet others.

US District Judge Thomas Griesa has blocked Argentina from paying its "exchange creditors" — those who agreed to take a 70-percent write-down after the country’s 2001 default — without also paying two American hedge funds that took it to court demanding full payment.

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Deutsche Bank, HSBC Accused of Silver Fix Manipulation

By Patricia Hurtado Jul 25, 2014

Deutsche Bank AG (DBK), HSBC Holdings Plc (HSBA) and Bank of Nova Scotia were accused in a lawsuit of rigging the price of billions of dollars in silver, an allegation similar to earlier suits involving the London gold fix.

The banks unlawfully manipulated the price of the metal and its derivatives, an investor claims in a complaint filed yesterday in federal court in Manhattan. The banks abused their position of controlling the daily silver fix to reap illegitimate profit from trading, hurting other investors in the silver market who use the benchmark in billions of dollars of transactions, according to the suit.

“The extreme level of secrecy creates an environment that is ripe for manipulation,” according to the complaint. “Defendants have a strong financial incentive to establish positions in both physical silver and silver derivatives prior to the public release of silver fixing results, allowing them to reap large illegitimate profits.”

The lawsuit is the latest to be brought against banks alleging manipulation of a benchmark. Suits have been filed against Deutsche Bank and Bank of Nova Scotia, HSBC and other banks in federal court in New York over allegations involving the London gold fix

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When you see this happen, you’ll know it’s game over for the dollar.

Bill Holter says the new BRICS Bank is just another nail in the Dollar's coffin. It's half as big as the IMF and it gives countries the ability to escape the dollar and the jurisdiction of the US and the DOJ. The world has had enough of the US, witnessed by Germany's recent expulsion of the CIA station chief. It's all beginning to rapidly unravel. Be prepared! Podcast >>>

Probably one of the the best news letters I have come across is Simon Black's SovereignMan, I love the way he relates all the coming economic events to past history. This has all happened before in a previous time and place.

by Simon Black
www.sovereignman.com

July 15, 2014
Malaga, Spain

Exactly 70 years ago to the day, hundreds of delegates from 44 nations were busy at work in Bretton Woods, New Hampshire creating a brand new financial system.

World War II had just ended. Europe was in ruin.

And since the US was simultaneously the largest economy in the world, the primary victor in the war, and the only major power with its productive capacity intact, it was easy to dictate terms: the dollar would dominate the new system.

Every nation would hold dollars as the primary reserve currency, and the dollar would be redeemable for gold at $35/ounce.

Also, global commerce would be conducted and settled in dollars, and these settlements would clear through the US banking system.

Naturally this created substantial demand from foreign governments who needed to begin accumulating dollars for trade and reserves.

So through a variety of programs, from the Marshall Plan to the IMF and World Bank, the US began flooding the world with dollars.

Initially everything went according to plan.

But soon the US government realized something important– foreign demand for the dollar was so strong that they could get away with printing more dollars than they had gold.

This allowed them to run all sorts of deficits and spending initiatives– more war, more welfare, more waste… all with minimal accountability.

Initially the consequences were insignificant.

Sure, the price of gold in London was a few dollars higher than in the US (they called this the ‘gold window’).

But demand for the dollar was still strong. So why bother changing?

By 1971, the situation had gotten far worse. Another decade of war, excessive spending, trade deficits, and money printing had pushed many foreign nations to their breaking points.

Foreign nations’ dollar reserves far exceeded the US government’s gold holdings. And with confidence waning, many began redeeming their dollars for gold.

Only days later, Richard Nixon put a stop to this and unilaterally terminated the US dollar’s convertibility to gold.

Think about the magnitude of this decision: Nixon was effectively defaulting on US obligations to the rest of the world– a complete betrayal of their trust.

Yet despite this massive shock that reset the global financial system, the dollar somehow managed to remain the world’s #1 reserve currency.

You’d think they would have been grateful, thanking their lucky stars that the rest of the world gave them a second chance. But no.

Over the past 43 years, the US has continued to print, devalue, and mismanage the dollar.

Along the way, they’ve created epic bubbles and financial shocks.

They’ve run up the biggest deficits and debt levels ever seen in the history of the world.

They’ve bickered internally to the point of shutting down government.

They’ve passed arrogant, painful regulations and commanded the rest of the world to comply under threats tantamount to financial homicide.

They’ve unleashed their tax and securities authorities to terrorize anyone doing business with the US.

They’ve totally ignored foreign pleas to restructure the IMF and World Bank.

They’ve slammed foreign banks with record fines simply for doing business with nations that the US doesn’t like.

They’ve waged pointless wars. They’ve spied on their allies. They’ve meddled in other nations’ affairs.

And they’ve demonstrated absolutely no willingness or ability to improve.

Simply put, other nations are done. Fed up, really. And it’s not just words.

Consider that in a matter of months, the US will be overtaken by China as the world’s largest economy.

Not to mention, the total combined GDPs of China, India, Russia, and Brazil are roughly the same as the US and EU combined.

Just as the US was the biggest player back in 1944, China is the biggest player today. So it seems clear that the renminbi will become a critical component of a new financial system.

The renminbi already has experienced rapid growth as a dollar alternative for trade; in May, cross-border settlement surged 52% from the year prior.

Renminbi settlement banks are being set up from London to Canada, and the central banks of both France and Luxembourg have signed agreements for renminbi clearing.

There have already been numerous Western companies (like McDonalds) that have issued renminbi-denominated bonds.

And even the provincial government of British Columbia issued a renminbi bond earlier this year. It was a whopping five times oversubscribed.

I’d expect within the next 2-3 years we’ll start seeing trade settlement in renminbi, even when none of the parties are in China.

Today, for example, a transaction between a Paraguayan merchant and a company in Angola will likely settle in US dollars.

Soon, I think we’ll start seeing that transaction done in renminbi. And once that happens, you’ll know it’s game over for the dollar.

Shortly after, national governments in western countries will issue renminbi bonds (perhaps Greece or Portugal will be first). And eventually, even the US government itself.

Today, 70 years after Bretton Woods, leaders from China, Russia, India, Brazil, South Africa, and several other nations are hard at work in Fortaleza, Brazil creating a new development bank that will compete against the US-controlled World Bank.

This is a major step in an obvious trend towards a new financial system. Every shred of objective data is SCREAMING for this to happen.


It’s a different world. Everyone realizes it except for the US government, which is still living in the past where they’re #1 and get to call all the shots.

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Group’s political influence is growing

China Daily Web Editor: Wang Fan

The Fortaleza summit of the BRICS leaders is a milestone. For the first time, the meeting of the group’s five members is not merely a business forum but is branded with strong political elements.  [Special coverage]

Global politics – including unrest in Iraq and Ukraine – are part of the summit discussions.

The political aspects are reflected in the Fortaleza Declaration issued by the leaders on Tuesday.

The proportion of the agenda that is devoted to political elements greatly outweighs that of previous years. For the first time the discussions include political coordination. The first part of the leaders’ private dialogue dealt with global governance and regional crises. The second part deals with economic and financial cooperation.

Observers said the inclusion of the political agenda would give developing nations an increasingly united voice, and thus more clout on major global issues.

To that end, the sixth BRICS summit has embarked on a course that positions the group for a bigger role in both the political and economic spheres of the world, and to compete with Western countries for an equal voice.

The BRICS nations account for 29.6 percent of the world’s territory, and more than 42 percent of its population. Last year, the members’ combined GDP was 21 percent of the world’s total. Despite slowing growth, the members’ economies have expanded twice as fast as those of developed countries.

Understandably, after building strong economic bonds, the BRICS group wants to see a new international political architecture to serve their long-term strategic interests.

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BRICS bank to be headquartered in Shanghai

FORTALEZA, Brazil – The emerging-market bloc of BRICS on Tuesday announced plans to establish a development bank and a contingent reserve arrangement (CRA).

 The five members of the group – Brazil, Russia, India, China and South Africa – laid out the designs of the New Development Bank (NDB) and the CRA in a declaration released following their sixth summit in this Brazilian city.

 The NDB, to be headquartered in Shanghai, will have an initial authorized capital of 100 billion US dollars, and its initial subscribed capital of 50 billion dollars will be equally shared among founding members, according to the Fortaleza Declaration.

 The Africa Regional Center of the NDB will be established in South Africa concurrently with the headquarters, added the document.

 The CRA, with an initial size of 100 billion dollars, "will have a positive precautionary effect, help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements," said the declaration.

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Germany Said to Review ‘No-Spy’ Purchasing Rules Amid U.S. Row

By Cornelius Rahn and Amy Thomson Jul 11, 2014

Germany’s Interior Ministry is reviewing rules for awarding government contracts for computer and communications equipment and services as a political rift with the U.S. widens, people familiar with the matter said.

The ministry will probably issue new purchasing guidelines in the coming weeks to replace its “no-spy-order” dated April 30, said the people, who asked not to be named because the deliberations are private. Details are being worked out, and may require suppliers of components of a bidder’s goods or services to guarantee they don’t hand over confidential data.

Any tightening of procurement procedures could affect U.S. technology companies such as International Business Machines Corp. (IBM), Cisco Systems Inc. (CSCO) and Microsoft Corp. (MSFT) as they vie for government contracts. U.S.-German tensions escalated yesterday after Germany expelled a top intelligence officer from the U.S. embassy in Berlin.

“They’ll come under scrutiny, those contracts with U.S. suppliers, as they come up for renewal,” said Andrew Rose, a London-based security and risk analyst at Forrester Research. “There is a definite point here about privacy and respect that Germans are trying to draw a line under.”

German federal and local agencies spend $28 billion on technology and communications hardware and services annually, of which at least 1 billion euros ($1.4 billion) of contracts are handled by the Interior Ministry.

Pamela Mueller-Niese, a ministry spokeswoman, didn’t immediately answer phone calls and an e-mail seeking comment. Marie-Ann Maushart, an IBM spokeswoman, and Nadine Papenfuss, a Microsoft spokeswoman, declined to comment, as did Patrick Rothwell, a representative for Cisco.


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Most Americans Now Receive Government Benefits; We've Crossed The Tipping Point

Forbes

Obamacare has pushed us over the entitlements tipping point.  In 2011 some 49.2 percent of U.S. households received benefits from one or more government programs—about 151 million out of an estimated 306.8 million Americans—according to U.S. Census Bureau data released last October.

Currently, around 6 million to 7 million Americans who have signed up for Obamacare are receiving taxpayer-provided subsidies (though the administration’s numbers cannot be trusted, it’s all we have to work with).  There are another 3 million who have signed up for Medicaid.

That means some 10 million Americans—or a total of about 161 million—are now getting government subsidies (though the final number might be somewhat lower since some may have been receiving benefits already).

"52 percent of U.S. households—more than half—now receive benefits from the government"

Thus, perhaps 52 percent of U.S. households—more than half—now receive benefits from the government, thanks to President Obama.  And Mr. Entitlement is just getting started.  If Obamacare is not repealed millions more will join the swelling rolls of those dependent on government handouts.

“When the public discovers they can vote themselves money from the public treasury, the [American] experiment will be over”-Tocqueville 1838

Conservatives have long dreaded the day when the U.S. crossed the halfway mark because of all the implications for individual and fiscal responsibility. As Benjamin Franklin reportedly said, “When the people find that they can vote themselves money, that will herald the end of the republic.”  They learned that from the 2008 election and turned out in big numbers again in 2012.

It’s not that all of those Americans are “takers,” as former Republican presidential candidate Mitt Romney suggested.  Some 42 million are seniors receiving Social Security and Medicare.  They aren't getting something for free; they faithfully paid into the system for decades with the expectation that they would be getting it back at retirement. And they deserve every penny they get—or may not get if Social Security or Medicare has to cut benefits.

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One Of The World's Largest Energy Majors Sees No Reason For Petrodollar

Most of the world buys energy and commodities with the Dollar. This is considered the world reserve currency, basically the U.S. tends to protect the worlds largest oil producers in the world if they price there oil in U.S. dollars. This is considered the petrodollar system by evidence that countries such as Saudi Arabia and Kuwait receive protection and Iran and Syria who sell in other currencies don't. There is an ever increasing demand for the U.S. Dollar due to increasing demand for world energy. If that demand begins to decrease due to de-dollarization the effects of over printing the U.S. currency will begin to be felt just like a country who does not have world reserve currency status, inflation and hyperinflation could become a possibility. The petrodollar system replaced the gold convertibility of the dollar in the early seventies. The U.S. is really beginning to piss off the world as evidenced by more and more articles like the one below. 

The US dollar is still the world's most widely held reserve currency, accounting for nearly 33 per cent of global foreign exchange holdings at the end of last year, according to IMF data. That ratio has been declining since 2000, when 55 per cent of the world's reserves were denominated in US dollars. It does seem to be the goal of the U.S. to maintain the free flow of oil and energy at market prices and be priced in U.S. dollars.

Zerohedge.com

Submitted by Tyler Durden on 07/05/2014

The USA is fast running out of friends to support its 'exorbitant privilege'. Having alienated the Germans over NSA-eavesdropping, 'boomerang'd the Russians into de-dollarization, tariffed and quantitatively eased China into diversification, and finally 'punished' France into discussing the dollar's demise; it appears no lessor person than the CEO of Total (the world's 13th biggest oil producer and Europe's 2nd largest), believes "There is no reason to pay for oil in dollars." Clearly, based on Christophe de Margerie's comments, that we have passed peak Petrodollar.


As Reuters reports,

Oil major Total's chief executive said on Saturday the euro should have a bigger role in international trade although it was not possible to do without the U.S. dollar.

Christophe de Margerie was responding to questions about calls by French policymakers to find ways at EU level to bolster the use of the euro in international business following a record U.S. fine for BNP.

"There is no reason to pay for oil in dollars," he said. He said the fact that oil prices are quoted in dollars per barrel did not mean that payments actually had to be made in that currency.

French Finance Minister Michel Sapin said on Thursday that euro zone finance ministers would discuss ways of boosting use of the euro in international trade in their next monthly meeting on Monday.

"It would be a way to protect businesses when, outside of U.S. territory, they carry out transactions that are perfectly legal in the country they belong to," he said.
So even a major beneficiary of the status quo appears to see the end in sight for the Petrodollar.

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The Global Economic Crisis Is Accelerating As We Enter The Last Half Of 2014

This is an excellent article by Michael Snyder. Don't let the record stock prices dissuade you, there are some serious problems in the domestic U.S. and international economies. 

18 Signs That The Global Economic Crisis Is Accelerating As We Enter The Last Half Of 2014

Michael Snyder

Economic Collapse Blog

A lot of people that I talk to these days want to know “when things are going to start happening”.  Well, there are certainly some perilous times on the horizon, but all you have to do is open up your eyes and look to see the global economic crisis unfolding.  As you will see below, even central bankers are issuing frightening warnings about “dangerous new asset bubbles” and even the World Bank is declaring that “now is the time to prepare” for the next crisis.  Most Americans tend to only care about what is happening in the United States, but the truth is that serious economic trouble is erupting in South America, all across Europe and in Asian powerhouses such as China and Japan.  And the endless conflicts in the Middle East could erupt into a major regional war at just about any time.  We live in a world that is becoming increasingly unstable, and people need to understand that the period of relative stability that we are enjoying right now is extremely vulnerable and will not last long.  The following are 18 signs that the global economic crisis is accelerating as we enter the last half of 2014…

#1 The Bank for International Settlements has issued a new report which warns that “dangerous new asset bubbles” are forming which could potentially lead to another major financial crisis.  Do the central bankers know something that we don’t, or are they just trying to place the blame on someone else for the giant mess that they have created?

#2 Argentina has missed a $539 million debt payment and is on the verge of its second major debt default in 13 years.

#3 Bulgaria is desperately trying to calm down a massive run on the banks that threatens of spiral out of control.

#4 Last month, household loans in the eurozone declined at the fastest rate ever recorded.  Why are European banks holding on to their money so tightly right now?

#5 The number of unemployed jobseekers in France has just soared to another brand new record high.

#6 Economies all over Europe are either showing no growth or are shrinking.  Just check out what a recent Forbes article had to say about the matter…

Italy’s economy shrank by 0.1% in the first three months of 2014, matching the average of the three previous quarters. After expanding 0.6% in Q2 2013, France recorded zero growth. Portugal shrank 0.7%, following positive numbers in the preceding nine months. While figures weren’t available for Greece and Ireland in Q1, neither country is showing progress. Greek GDP dropped 2.5% in the final three months of last year, and Ireland limped ahead at 0.2%.

#7 A few days ago it was reported that consumer prices in Japan are rising at the fastest pace in 32 years.

#8 Household expenditures in Japan are down 8 percent compared to one year ago.

#9 U.S. companies are drowning in massive amounts of debt, but the corporate debt bubble in China is so bad that the amount of corporate debt in China has actually now surpassed the amount of corporate debt in the United States.

#10 One Chinese auditor is warning that up to 80 billion dollars worth of loans in China are backed by falsified gold transactions.  What will that do to the price of gold and the stability of Chinese financial markets as that mess unwinds?

More >>>

Bank of Thailand stresses growing role of yuan

China and Russia are really moving forward on dedollarization of the worlds currency, as evidenced in the following couple of articles, I would expect this pace to pick up in the near future.

Erich Parpart
The Nation

The Chinese yuan is becoming more and more important in world trade, so investors are well advised to use the currency in future trade and investment to lower the risk of fluctuations, the Bank of Thailand said yesterday.

Chantavarn Sucharitakul, assistant governor for the Financial Markets Operations Group, said the use of the yuan as a trade and investment currency was noticeably increasing because of the size and growth potential of the Chinese economy and Beijing's policy to encourage the use of the yuan in world trade.

"Investors have more interest in using the yuan to trade and invest, as seen by the move of the United Kingdom, which has offered itself as the centre for trade that uses the yuan, or the Russians, who have agreed to use domestic currencies for their bilateral trade," she said.

The use of a domestic currency for transactions between countries will provide more options in trading for other regions.

There are many factors that are needed for a currency to become a proper international currency, such as its flexibility, robust cash flow within the capital market and debt in the financial market in order to keep the cost of transactions as low as possible.

Britain's decision to become the centre for trade using the yuan as a settlement currency - the yuan will be directly quoted within the China Foreign Exchange Trade System - is similar to what Australia, Malaysia, Russia and Thailand have done before. 


It is also part of the Bank of Thailand's plan, since it realised the important of the yuan in the future.  More >>>

China plans investment bank to break World Bank dominance

Looks like China and Russia are really moving forward on dedollarization of the worlds currency!

rt.com

China is moving forward with a plan to create its own version of the World Bank, which will rival institutions that are under the sway of the US and the West. The bank will start with $100 billion in capital.

The Asian Infrastructure Investment Bank (AIIB) will extend China’s financial reach and compete not only with the World Bank, but also with the Asian Development Bank, which is heavily dominated by Japan. The $100 billion in capital is double that originally proposed, the Financial Times (FT) reported.

A member of the World Bank, China has less voting power than countries like the US, Japan, and the UK. It is in the ‘Category II’ voting bloc, giving it less of a voice. In the Asian Development Bank, China only holds a 5.5 percent share, compared to America’s 15.7 percent share and Japan’s 15.6 share.

At the International Monetary Fund, China pays a 4 percent quota, whereas the US pays nearly 18 percent, and therefore has more influence within the organization and where loans go.

“China feels it can’t get anything done in the World Bank or the IMF so it wants to set up its own World Bank that it can control itself,” the FT quoted a source close to discussions as saying.

To date, 22 countries have expressed interest in the project, including oil-rich Middle Eastern nations, the US, India, Europe, and even Japan, the FT reported.

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China Finds $15 Billion of Loans Backed by Fake Gold Trades

By Bloomberg News Jun 26, 2014

China’s chief auditor discovered 94.4 billion yuan ($15.2 billion) of loans backed by falsified gold transactions, adding to signs of possible fraud in commodities financing deals.

Twenty-five bullion processors in China, the biggest producer and consumer of gold, made a combined profit of more than 900 million yuan from the loans, according to a report on the National Audit Office’s website.

Public security authorities are also probing alleged fraud at Qingdao Port, where copper and aluminum stockpiles may have been pledged multiple times as collateral for loans. Steps by the Chinese government to rein in credit by raising borrowing costs in recent years created a surge in commodities financing deals that Goldman Sachs Group Inc. estimates to be worth as much as $160 billion.

“This is the first official confirmation of what many people have suspected for a long time — that gold is widely used in Chinese commodity financing deals,” said Liu Xu, a senior analyst at Capital Futures Co. in Beijing. “Any scaling back by banks of gold-backed financing deals might lead to a short-term reduction in Chinese imports and also spur some sales by companies looking to repay lenders.”

As much as 1,000 metric tons of gold may have been used in lending and leasing deals in China, where commodities including metals and agricultural products are used to get credit amid lending restrictions, according to World Gold Council estimates.


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Austria defies US, EU over South Stream during Putin visit

Austria's OMV and Russia's Gazprom have signed a deal for the Austrian section of the controversial South Stream gas pipeline that bypasses Ukraine. Austria's president, Heinz Fischer, has rejected US and EU criticism.

Austrian energy company OMV and Russia's Gazprom signed a contract on Tuesday for the construction of the South Stream pipeline's Austrian section.
It came just hours before Russian President Vladimir Putin arrived in Vienna for a one-day visit.
While OMV general director Gerhard Roiss said the South Stream pipeline would "ensure energy security for Europe, particularly for Austria," the US embassy in Vienna launched a thinly veiled attack on the move.
In a statement, it said that trans-Atlantic unity had been essential in "discouraging further Russian aggression" and that the Austrians "should consider carefully whether today's events contribute to that effort."
In a meeting with Austrian president Heinz Fischer, Putin slammed the criticism by saying that "our American friends... want to supply Europe with gas themselves. They do everything to derail this contract..."
Fischer also defended the project, stating that "no one can tell me why... a gas pipeline that crosses NATO and EU states can't touch 50 kilometers (31 miles) of Austrian territory."

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30 Reasons The Bear Phase In Gold Ends This Summer

www.jsmineset.com

Here are the 30 reasons, 23 new and 7 set in cement, of why the Bear phase in the bull market for gold ends this summer without any new lows.

1. The New definition of warfare is economic. Sanctions against Russia and the implications for the Petrodollar

2. FACTA and the universal long arm of the US government via any transaction internationally that passes even momentarily through the dollar as a contract settlement mechanism. The negative implications for the dollar’s future as a contract settlement mechanism internationally.

3. EU split over sanctions due to Russian energy demand and Russian business interests.

4. Middle East Western Hegemony and Arab Spring is defunct.

5. Iran to assist in Iraq if asked, which is the failure of "Misssion Accomplished."

6. Iraq oil production challenged by ISEL.

7. Kurds emboldened by ISEL.

8. US relationship with Saudi Arabia and Qatar is strained.

9. BRICs uniting economically and politically as a standalone force.

10. China expands Yuan/Renminbi as an international currency.

11. China’s China Sea energy tensions with Japan and Vietnam.

12. USA’s position on the China Sea crisis where Japan is concerned.

13. The militarization of Japan.

14. The distinct scent of inflation.

15. General dissatisfaction with answers to questions to Chair Yellen regarding FOMC meeting last week

16. IMF reduced expectations of US economic recovery.

17. US Zombie Banks as defined by banks leveraged generally 30 to 35 times the size of their capital of total OTC derivative exposure.

18. Condition of the flooded municipal bond market.

19. Decline in volume with rise in value of equities, making equity price shadows our reality.

20. Totally irrational exuberance driven by hyper liquidity.

21. Hyper liquidity can become hyper inflation via the velocity of money in a crisis of confidence of the dollar. Therefore hyperinflation will be a currency motivated event.

22. Reaction in the momentum equity leaders of the last 2 years burning a public.

23. Strength of the utilities group which has historical attachment to tops in equity markets.

Old problems:

24. The one quadrillion, one hundred and forty four trillion dollars real size of the OTC derivatives market.

25. Economic underpinning of the dollar in jeopardy as recovery sputters globally

26. Absurd size of the Fed balance sheet and lack of marketability of significant size legacy derivative positions.

27. Taper of QE and little Belgium to the QE rescue.

28. China and Russia on the sell side of the US treasuries.

29. MY RA exposes consideration of invasion of retirement accounts, and GOTS (Get out of the system) as a defense strategy.

30. The huge drop out of the labor pool in the US, making employment figures sketchy at best.

Source/link >>>

Anti Private Federal Reserve Banking System Opposition Growing in Germany

 In Germany, if you don’t support Central Banking, this apparently means you are a Nazi. Is the major media lying by not offering an opposing view?  Take a look at the video, judge for your yourself, do we get the opposing view in the U.S.?

Shanghai to Start International Gold Trading in 4Q

China definitely wants to increase it's presence in gold trading, with the probable announcement of QE 4 the prices of gold and silver will really start to move up. - Gary

By Bloomberg News Jun 20, 2014

China, the world’s biggest gold user, will start international gold trading in Shanghai’s free-trade zone in the final quarter of this year, according to a city government official.

“We will aim to commence trading in the fourth quarter,” Zheng Yang, head of Shanghai’s financial services office, said today in a conference in the city. The nation’s central bank earlier this week approved the trading platform to be included in the zone’s banking system.

China, also the world’s largest bullion producer, is seeking to step up its presence in the global gold market at a time when the industry is discussing changes to the century-old fixing benchmark in London used to trade and value the metal. The country overtook India as the largest user last year as the biggest price drop in more than three decades spurred purchases, the World Gold Council said in February.

“The new platform is to attract foreign investors and to get China more influence in the global bullion market,” said Liu Xu, an analyst at Capital Futures Co. in Beijing.

Qualified investors can open accounts with the four designated banks including Industrial & Commercial Bank of China Ltd. to trade gold in the area, the People’s Bank of China’s Shanghai head office said June 18.

The free-trade zone is a testing ground for liberalizing interest rates and currency usage. The Shanghai Gold Exchange, the country’s biggest physical bourse for the precious metal, is considering allowing the use of offshore yuan in gold trading in the zone, Bloomberg News reported on June 4.

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China to start direct trade between yuan and British pound

www.dw.de/

China has announced it will allow the direct trade between its yuan national currency and the British pound later this week. Analysts said the move was designed to further internationalize the unit.

China's Foreign Exchange Trade System (CFETS) said Wednesday the Asian nation would start direct trade between the renminbi and the British pound on Thursday.
Sterling and yuan would be directly swapped without using the US dollar as an intermediary, the trade platform noted.
"The move will promote the bilateral trade and investment between China and the United Kingdom and facilitate the use of renminbi and pound in the cross-border trade settlement," CFETS commented.
Perfect timing

China has long had direct currency trade with the US and has recently added Japan's yen, the Australian, New Zealand and Canadian dollars, Russia's ruble and the Malaysian ringgit to its options.
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