Prominent Hedge Fund Manager Sees Dollar Losing Reserve Currency Status

While the liberal democracies, having allowed Cultural Marxists to infiltrate government at every level and implement socially and economically disruptive policies Ray Dalio, founder of Bridgewater, the world’s biggest Hedge Fund believes now is a good time to reflect on China’s progress towards its goal of replacing the USA as the world’s most powerful nation.

China’s growth as the size if its economy closes rapidly on that of the USA, speaks for itself, but Dalio adds:

“To have such rates of improvements in so many areas and for so many people has made it the greatest economic miracle ever.”

 

And from what Dalio has seen, he believes that the very impressive results that the Chinese leadership and the Chinese people produced came about primarily because of the powerful combination of a) China’s opening up and reforming following an extended period of isolation that led to a fast catching up (especially in the coastal regions of China) with the advanced developed world, and b) the power of the Chinese culture and it’s related ways of operating.

Crucially, Dalio points out that, if you haven’t spent time in China, you need to get any stereotypes you might have out of your mind because it’s not how it was. This is not your father’s communism. It is “socialism with Chinese characteristics” that has been significantly and very effectively reformed, which has made it much more vital, creative, and economically free.

Dalio’s ‘romantic’ view of a paternal China is definitely not the mainstream narrative:

“From my experiences and from what I am told by Chinese who should know, I believe Chinese leadership seeks to run the country the way they believe a good family should be run, from the top down, maintaining high standards of behavior, putting the collective interest ahead of any individual interest, with each member knowing their place and having filial respect for those in the hierarchy so the system works in an orderly way. One of China’s leaders who explained this concept to me told that the word “country” consists of two characters, state and family, which influences how they view their role in looking after their state/family.

One might say that the Chinese government is paternal. For example, it regulates what types of video games are watched by children and how many hours a day they play them. As a broad generalization, when the interest of the country (like the family) is at odds with the interest of the individual, the interest of the country (like the interest of the family) should be favored over the interest of the individual. Individuals are parts of a greater machine. As a result of this perspective, the system seeks to develop, promote and reward good character and good citizenship. For example it gives people a social credit score that rates the quality of their citizenship. And each person is expected to view themselves as parts of the greater whole.

This management from the top down includes visualizing what China 5, 10 and 20 years in the future should be like and then making and managing detailed multiyear plans to build out that vision, with the goal being to make China as great as it can be. China is run more like a giant company with many subsidiaries, some within the government’s direct control and some within its indirect control.

But, as the fund manager notes, while Chinese culture has been evolving, it has at its most fundamental level been operating in similar ways for many hundreds or even thousands of years and the results of operating that way are knowable in an approximate way.

I have recently been researching the rise and fall of reserve currencies, which led me to study the rises and declines of the world’s most powerful countries. That led my research team and me to put together the following indices of the relative powers of leading countries since 1500. These indices are a combination of six sub-indices that measure six different types of power:

1) innovation & competitiveness,

2) domestic output,

3) share of world trade,

4) financial-center size and power,

5) military strength, and

6) reserve-currency status.

…and they show when different countries reached their peaks relative to the rest of the world.”

And to support his position he has put together an impressive set of statistics showing how global and regional powers from Portugal in the west and China in the east, in the late medieval era, rose to economic dominance in the west, and how as Portugal declined to be replaced by Spain, then France, then The British Empire and finally the USA all rose to dominate while they had a stable culture and strong values, and all declined when political factors undermined that cultural stability and government started to medle in private affairs.

China on the other hand, dominated in the east from around 1200 to 1900 CE only being challenged by the British and the Japanese in India from the mid nineteenth century. China’s social system had stagnated through isolation, while Jaoan’s had been revitalised by contact forst with Portuguese and Dutch traders and then US government and business interests.

After the communists took over China’s still stagnant society the nation became even more isolated until the idealist Mao Tse Tung was replaced by equally totalitarian but more pragmatic leaders who opened up the country economically and allowed individualism and enterprise to flourish. The reformed communist party opened up the economy but maintained the cultural stability based on family, community and tradition.

And judging by Dalio’s take on American culture, it is clear where he thinks this is going…

“Most fundamentally, the US is a country in which individuals, individualism, and individual property rights are perceived to be of paramount importance it is directed from the bottom up (e.g., through “one man, one vote” democracies that empower people to choose their leaders), being revolutionary is considered a good thing, and conflict is valued more than harmony.

Rather than respecting top down control most American have a strong preference to keep government from interfering with their most individual choices. Character development is a personal or family issue, not a government issue (which leaves it largely neglected in areas with broken families, especially if they’re poor).

Rather than there being a long-term top down vision for the country and a plan to achieve that vision, in the capitalist and democratic system such directions are more bottom up determined based on commercial and popularity considerations.”

Thus Dalio comes to the conclusion that as the USA continues to fragment socially it’s economic decline will also continue, while the Chinese, bound by their strong and stable culture, will continue to forge ahead, with the inevitable result that the US$ will lose its reserve currency status, something which is already happening as we have reported HERE. Of course, the world’s largest hedge fund manager avoids directly slamming America’s ‘dream’ or supporting China’s central planners:

“I’m not saying which system is better. Each culture/system has its pros and cons that I’m not going to get into now.

I believe that the important thing to know are that while there will be trade wars and trade truces they aren’t the most important things. ”

So, in summary, “it’s not the economy, it’s the culture stupid!”

The Demise Of Dollar Hegemony: Russia Breaks Wall Streets’s Oil-Price Monopoly

Significant moves in the global chess game have just rendered the huffing and puffing of warmonger Obama meaningless and will break Wall Street’s monopoly in controlling oil markets. The move is part of Vladimir Putin’s long-term strategy of decoupling Russia’s economy and especially its very significant export of oil, from the US dollar, in effect …

Naked Bankers Go For Gold

… That gold sale in 2013 was a naked short. The seller had no gold to sell. COMEX reported having gold only equal to about half of the short sale in its vaults, and not all of that was available for delivery (quite a lot of it belonged to the german government) In effect the naked shorting of gold could only work because really the right hand was selling to the left hand.

The Demise Of Dollar Hegemony: Russia Breaks Wall Streets’s Oil-Price Monopoly
In a move that went almost completely unreported in mainstream media, Russia has recently opened a market for the trading of physical and ‘paper’ oil (futures) in Moscow in Roubles. This is the most blatant challenge yet to the domination of the US dollar in world trade.

China launches global yuan payment system
China’s Central Bank has started a global payment system which provides cross-border transactions in yuan. The China International Payment System (CIPS) intends to internationalize the yuan and challenge the US dollar’s dominance.

EU and US talk of war with Russia

The European People’s Party (EPP) is the largest political group in the European Parliament, and they are unerringly supportive of America’s efforts to start a war with Russia. “The time of talk and persuasion with Russia is over,” MEP and Vice-President of the EPP told a meeting on Tuesday, 21 April, “Now it’s time for a tough policy, and concentration on defence and security …”

This Is Why The US Just Lost Its Superpower Status According To Larry Summers

As more and more countries flock to join the Chinese led Asian Infrastructure Investment Bank after Britain, France Australia, India and other traditional US allies defied Washington to associate themselves with China’s initiative, conservative economic pundit Larry Summers once a contender for the chairmanship of the Federal Reserve delivered a sharp rebuke …

The True Debt Disaster America Faces – Only A Fraction Of Government Debt Is Known To The Public

Politicians and the media talk about the $17 trillion debt the US Government owes to creditors. They are lying, the $17 trillion is a fraction of what america owes. The real figure is $200 trillon. And Obama’s loonytoons economics are driving that up at an accelerating rate.

U.S. versus Russia War: Top Russian Politics Scolar Stephen Cohen Tells The Truth

We have been blogging for four years about the US drive for war, provocation of Russia in Syria, Iraq, Ukraine and elsewhere made it obvious. But I’m just a news junkie with a strong sense of curiosity and have wondered why the US seems set on this course. Good to see experts like Stephen Cohen, a prominent expert on, Russia are coming onside.

Does It matter If The Dollar Is Replaced?

“Without delving too deeply into Austrian economic and capital theory, just let me point out that money printing disrupts the structure of production by fraudulently changing the “price discovery process” of capitalism. Capital is allocated to projects that will never be profitably completed. Bubbles get created and collapse and businesses are suddenly damaged en mass, thus, destroying wealth. (Zero Hedge)”

What the BRICS plus Germany are really up to in the Currency Wars?

The move led by Russia and China to dump the Petrodollar has escalated into a currency war, not the kind of war we assciate Obama with but give him time. Some wars as in Ukraine, by proxy are not going so well. Others, like the one against Islamic State aka ISIS aka ISIL in the middle east are going worse. Disintegration of The American Economic Empire is manifesting itself in moves by wannabe global players towards creating a multipolar world …

 

Russia Just Sent out a Message NATO Should Better Listen To

The key paragraph from the latest official Russian naval doctrine is that Putin and his military advisers have sent a clear message that NATO encroachment is unacceptable. To be honest, there is nothing earth shattering in this, The Daily Stirrer and many other alternative media news and analysis sites have been warning for about two years that Obama’s foreign policy was making conflict inevitable.

De – dollarization Moves Ahead – Once Again We Told You So,

What Putin Wants

China Warns U.S. to Stop Its Ukrainian Proxy War Against Russia

The World Rejects USA Attempt To Manipulate Venezuela

India’s Ruling BJP Party Crushed In Regional Poll

Another Conspiracy Theory Becomes Fact: Oil Collapse Is All About Obama’s Proxy War With Russia.

G77 Nations vow to destroy petrodollar and America’s New World Order

American Dollar Dumped

Iran’s Oil and the US Dollar

As Brussels Moved A Million Migrants Into The EU,Google Europe Moved $23 Billion To Bermuda Tax Haven In 2017

 

'I am going to test your heart under stress. Listen to what I am shouting. BILLION DOLLAR CORPORATIONS LEGALLY AVOID INCOME TAX.'Image: http://www.cartoonstock.com/

While the virtue – signalling lefties and university brainwashed millennials are creaming themselves over the United Nations Pact On Migration, which they see as a big step towards a borderless world; while they chirrup in unison as usual missing the point of what a borderless world would mean. “Oh those lovely dark skinned people will come by the million to live among us and enrich our culture with their enlightened ways and cultural traditions,” they forget that those enlightened ways and traditions include throwing homosexuals off high buildings, stoning women and publicly beheading adulterers.

Whether they think that is a good or bad thing is a matter of opinion. However other implications of a borderless world are not, and our virtue – signalling compatriots might be horrified to learn what other freedoms of movement a borderless world might facilitate alongside unrestricted movement of people. News of Google’s latest and perfectly legal thanks to progress in globalisation, move to protect its obscene levels of profit from taxation in the European Union involve a financial device known as the Double Irish Dutch Sandwich (DDIS). Be careful not to confuse this with A Dutch Reverse Steamboat, which falls into a very different category of activities.

The DIDS accounting strategy involves using a Netherlands-based subsidiary to shift royalties paid in Europe – Google EU is headquartered in Dublin – to Google Ireland Holdings, the company’s Bermuda-based affiliate. According to a Google filing with the Dutch Chamber of Commerce, the search giant channelled 19.9 billion euros ($22.7 billion) through such a structure to its company in the Bermuda tax haven in 2017, around 4 billion euros ($4.5 billion) more than 2016, Reuters reported.

The arrangement, a variation on the dear old ‘Luxembourg Structure’ allowed Google to reduce its tax bill for operations within the EU to single-digit levels,  roughly one-quarter of the official rate for those tax jurisdictions.

But little can be done about it because, as Google likes to remind us, it is perfectly legal.

“We pay all of the taxes due and comply with the tax laws in every country we operate in around the world,” Google said in a statement.

“Google, like other multinational companies, pays the vast majority of its corporate income tax in its home country, and we have paid a global effective tax rate of 26% over the last 10 years.”‘

The DIDS strategy, which involves an employee of the Netherlands company who works in Dublin, sending invoices for ‘management services relating to royalties on patents,’ to an employee of each national operation in the EU (these employees also work in Dublin.) The national offices (which are pigeon holes in mail drop addresses, the accounts people who deal with the invoices actually work in – you guessed it, Dublin.) Then the accounts department of the Bermuda company, the staff of which all work in Dublin, send an invoice for something vague like ‘financial consultancy relating to royalties on patents’ to European headquarters (in Dublin you may remember,) where it is dealt with by someone who may have handled all the transactions in the chain without ever leaving Dublin. This  allows Google to avoid US income taxes and European withholding taxes. However, thanks to recent changes in Irish law (which followed pressure from the EU), the favorable treatment is slated to end in 2020. That will be a bit of a bugger because they’ll have to move back to Luxembourg. Or maybe not.

The goal of a budgetary proposal in Ireland’s 2015 budget was to shut down the use of so-called “Double Irish” and “Double Irish Dutch Sandwich” structures commonly used by U.S. multinationals, such as Google, Microsoft, and Facebook, among others, to significantly reduce their worldwide effective tax rate on royalties derived from the exploitation of intellectual property .

Because the Irish proposal only addresses revenue from royalties on patents, does it really put an end to the Double Irish structures (with or without the Dutch sandwich) or US corporations exploiting the favourable treatment Ireland offers to hide profits offshore? In a word, No. At least not if your accountants have more brain cells than tits or testicles as the case may be. The same benefits can be achieved by only slightly modifying the existing structures to avoid triggering the new proposed rules, For example by moving Google Europe Holdings (Ireland) Ltd. from Dublin to Google Europe Holdings (Malta) Ltd. whose offices are in …………… Dublin.

The Double Dutch structures are useful for a few reasons. Primarily, Ireland has a 12.5 percent corporate income tax rate for active “trading” income, is English speaking, and is highly educated. Also Ireland uses a management and control standard for determining residency, thus it is possible to protect income earned by the top-tier subsidiary from Irish taxation by placing management in another country (an Irish Non Resident company.)

Thanks to the box checking culture of the US public sector, profits can be entirely avoided by ensuring lower-tier subsidiaries to be disregarded for U.S. tax purposes, because all of the non-U.S. activities are considered to be conducted by a single entity. The only factor that has been altered by the Irish proposals is the residency clause. Under the proposals, moving management and control of an Irish company to a Caribbean nation with which Ireland does not have a tax harmonisation treaty covering corporate residency will no longer achieve the desired objective.  Under the treaty with Malta however, it is possible to form an INR, as under existing structures, with its management and control in Malta. Pursuant to the treaty between Malta and Ireland (which will not be overridden by the new proposal), the INR, though trading solely in Ireland, should be treated as a resident of Malta, and not Ireland (See Article 4(3) of the treaty). Malta does not impose any tax on royalties derived from patents or other intellectual properties.
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CURRENCY WARS
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Europe’s Bank Crisis Arrives In Germany: €29 Billion Bremen Landesbank On The Verge Of Failure

… yesterday we observed a surprising development involving Deutsche Bank, namely the bank’s decision to quietly liquidate some of its shipping loans. Reuters reported, “Deutsche Bank is looking to sell at least $1 billion of shipping loans [a market sector] whose lenders face closer scrutiny from the European Central Bank.

Macron and Merkel Agree Eurozone Tax Integration

Hausfrau Volksfuhrer Merkel and Grandmothertrucker Macron France and Germany have agreed to introduce a single Eurozone budget and shared emergency funds for the bloc, as the brussels bureaucrats and globalist puppet leaders try to push the European Union (EU) towards deeper, globalist integration after the Brexit vote

The Demise Of Dollar Hegemony: Russia Breaks Wall Streets’s Oil-Price Monopoly

Significant moves in the global chess game have just rendered the huffing and puffing of warmonger Obama meaningless and will break Wall Street’s monopoly in controlling oil markets. The move is part of Vladimir Putin’s long-term strategy of decoupling Russia’s economy and especially its very significant export of oil, from the US dollar, in effect …

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Anti Austerity Protests Bring European Capitals To A Standstill

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The Folly Of Trying To Inflate Away Debt

As the debt crisis grinds on and the creit crunch mutates into the credit famine the clueless politicians and even more clueless economists and academics who advise them can only think of one course of action. That is to inflate away their debt problem by devaluing currency to the extent at whic a bag of potatoes or wheat grain costs $£€ 1 trillion. Inflation is the cruellest tax, destroying the savings and pensions of sensible people and rewarding irresponsibility.

Feeding The Monster

As Spain’s economy nears collapse and economists call for Europe’s taxpayers to stump up still more money for a bigger bailout fund to save bankrupt nations, The Daily Stirrer economic expert under his new nom de plume explains why efforts to save the Euro are throwing good money after bad.

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Wall Street Journal Discovers How Algorithms Broke The Financial Markets

This blog and the other websites controlled by Greenteeth Digital Publishing have always warned against the tendency to be fooled by the hyperbole that is attached to concepts like Artifical Intelligence, Machine Learning and Algorithms.

“Algorithms will always make better decisions that humans because they are not hampered by emotions,” the people who long for they day when all humans will have processors implanted in our brains so our every action can be controlled by that bunch of fascist nerds who run Google. These people are not human enough to understand emotions are a vital part of decision making just as undefinable qualities humans possess are what propelled us to the top of the food chain.

One of the areas in which we are told machines have already surpassed humans is trading in the financial markets. Computer Algorithms can trade shared many times in a minute, which has been responsible for the crazy fluctuations we have seen over the past few years in stock markets. Computers, algorithms and mathematical models of various market sectors look at the numbers but do not see the bigger picture.

“Governments to ban petroleum fuelled vehicles by 2050 scream the headlines.”
“Buy Tesla, buy NIO, Buy Frarday Future the algorithms tell the automated trading systems seeing the likelyhood that these stocks will rocket in value. Go long on cobalt says the wise human trader, seeing after in depth research that sales of EVs in nations which have cut subsidies on green vehicles have collapsed, but calculation that despite technical and practical problems not being talked about (if you live in mountainous country, forget that Tesla, they’re rubbish at getting up hills,) EVs have a future as city cars and short range delivery vehicles. Cobalt is an essential component of lithium – ion battery packs, there are not enough cobalt reserves to make battery packs for a tenth of the number of vehicles now on the world’s roads and lithium is not exactly plentiful when we consider the amount needed to provide batteries for 1.4 billion vehicles (the estimated number on the road in 2017.

Logically, when news of a cut in subsidies, or the threat posed by China controlling 90% of the world’s cobalt reserves his the financial news feeds, algorithms will pick it up, stocks are going to crash in price, but demand for cobalt will still be there.

Rather belatedly (it’s algorithms spooked by the massive losses suffered in global markets towards the end of 2017 perhaps, )it seems the wall Street Journal has picked up on this flaw in algorithm driven trading.

Since about two years after the last great crash in 2008, markets rose in what appeared to be an irreversible trend, driven by  the $£€ trillions of Quantitative Easing cash central banks [umped into the major economies. Algorithms were programmed to ‘buy the dip’ while frontrunning (an illegal insider trading practice,)  every buy , virtually nobody – except for a few “fringe”, “fake news” blogs – complained about the threat posed by algo trading and thee accompanying deterioration in market stability.

Algorithm  – driven trading enables trades to be conducted so quickly it is almost impossible to police this practice. A few financial pundits and bloggers who tried to warn that the practice would artificially inflate share prices were dismissed as fake news merchants as the official line that the economies of the liberal democracies were first recovering strongly and then forging ahead as demonstrated by competely false measures like the Dow Jones Industrial Index and The Financial Times 100 share index.

In December 2018 it looks as if the financial centres are entering their first ‘bear’ market since the 2008 crash, which those with long memories will recall was brought about by banks’ and investment funds’ exposure to dodgy debt derivatives (toxic debt,) and now as then politicians, media and regulators launched witch hunts as they sought scapegoats (anyone but the guilty banks of course,) and tried to deflect blame from the real culprit, then the irresponsible risks taken by traders looking for quick profit, this time, in their quest to help commercial banks make risk free profits the central banks, supported by governments, have pushed the cause of “computerized trading.”

*

An article on the front page of The Wall Street Journal, 26 December 2018, titled “Behind the Market Swoon: The Herdlike Behavior of Computerized Trading”, features contributions from a number of WSJ writers who collectively opine that “behind the broad, swift market slide of 2018 is an underlying new reality: Roughly 85% of all trading is on autopilot—controlled by machines, models, or passive investing formulas, creating an unprecedented trading herd that moves in unison and is blazingly fast.”

Absolutely true, furthermore a majority of the “autopilot” trading is also on the upside, that is on the assumption that a stock already trading at its highest valuation ever will go even higher. Strangely government finance chiefs, bankers and financial journalists did not see fit to mention this  for several years. Of course, to new media readers, the story is all too familiar: after all we bloggers and citizen journalists have covered all of this not just on occasions when markets dipped sharply lower, but more importantly in the times when on an almost daily basis they soared to new, ever crazier heights, making an eventual crash inevitable.

From the WSJ article:

Today, quantitative hedge funds, or those that rely on computer models rather than research and intuition, account for 28.7% of trading in the stock market, according to data from Tabb Group–a share that’s more than doubled since 2013. They now trade more than retail investors, and everyone else.

Add to that passive funds, index investors, high-frequency traders, market makers, and others who aren’t buying because they have a fundamental view of a company’s prospects, and you get to around 85% of trading volume, according to Marko Kolanovic of JP Morgan.

Deutsche Bank argues that momentum has emerged as the most important force in markets, something we have claimed for years:

However, one key reason why trading has become so complicated for most, and certainly the algos, is that there is currently virtually no momentum in the market – with the MTUM ETF which tracks momentum stocks having its worst month and quarter since its 2013 inception – results in making any attempt to piggyback on the market a money-losing trade.

Bad news for those whose savings or pension pots are invested in index tracking funds. But what does it mean in plain English. Let’s turn to that WSJ article again and some quotes from traders who after a week of crazy fluctuations are suddenly very concerned about maret conditions:

Boaz Weinstein, founder of credit hedge fund Saba Capital Management LP, said the market had been underpricing uncertainty. Now it’s taking into account political issues “at the same time as the Fed is hiking, the economy is slowing, and a lot of people are feeling like the best days for markets are over,” he said.

Mr. Weinstein says there are dangers building in the junk-bond market. One worry, he says, is that so many junk bonds—he estimated about 40%—are held by mutual funds or exchange-traded funds that allow their investors to sell any day they like, even though bonds inside the funds are hard to sell.

When enough investors want to cash out, such a fund has to start selling bonds. But without much liquidity, finding buyers could be hard.

A selloff could start simply, he said. “It has its own gravity.”

The punchline to all this is delivered by COOPERMAN [Sorry US reders, that joke will only be accessible to UK readers of a certain age 🙂 ] :

Electronic traders are wreaking havoc in the markets,” says Leon Cooperman, the billionaire stock picker who founded hedge fund Omega Advisors.

There is much more in the full WSJ article, which also addresses a collapse in market liquidity, the a knock on effect from equity markets to the credit market. If that happens, and it seems to be happening already, the stage it set for an almighty crash, but let’s face it, afall from around 26000 to 21600 between December 1 and close of business on December 24, followed by a 1100 point rally on 26 December is not sane trading, unless we accept that the behaviour of the electronic herd is “the new sanity.”

Pundits were not talking about algorithm driven, high frequency EFT trading “wreaking havoc in the markets” when the indexes were soaring ever higher. 2018 has been a terrible year for financial traders, the wild fluctuations have become more exaggerated than ever while public trust has fallen below decimal zero and is heading from absolute zero. This maybe explains why the WSJ article reports on the previously unmentioned aspect of what the force that propelled markets to such unrealistic heights. For around a  decade now High Frequency Trading by computer, algorithm driven decision making  and various other computer based trading technologies including the ridiculously misnamed Artificial Intelligence Systems that so many people not old enough to understand how computers actually work place such great faith in, have been overruling the professional traders most vital tool, gut instinct. Computers and their algorithms and Artificial Intelligence only do what their human programmers, who are rarely people who have ever been equity, currency or commodity traders, instruct them to. Thus they  simply accentuate momentum either up, or down by frontrunning the orders from investors

HFTs can only frontrun the flow of orders,to elaborate on the brief explanation in the opening paragraphs, looking at figures on financial news feeds only visible on the deep web it seems that after the massive sell off in December fund managers needed to tie up cash over the quarter end (I’m not going to go into why, I’m an IT systems person not a fund manager,) and placed orders for around $60 billon-worth of equities to bed-and-breakfast their cash for tax reasons. And the algorithms, having noted the sell off, followed their programmed instruction to “buy the dip” to the tune of that $60 billion.

In the process, instead of adding liquidity to the market, the HFTs sucked liquidity out of it. It’s good that mainstream media is finally reporting on the problem which will ultimately kick off the next big crash and possibly bring down the corporatist economy, i.e.  the takeover of the market by computerized trading.

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– a crash which, however, will only be made possible by the Fed blowing the biggest asset bubble in history to monstrous proportions, something which the WSJ article does at least acknowledge in its final paragraph:

“It’s not just about the equity market throwing a temper tantrum, it’s far deeper than that,” said David Rosenberg, chief economist at Gluskin Sheff & Associates in Toronto. “This is a much broader global liquidity story.”

Encouraged by signs of economic strengthening, the Fed has been gradually raising interest rates from rock-bottom levels and selling back the trillions of dollars in bonds it bought in the postcrisis years. The central bank says the roll-back of stimulus is smooth. Others aren’t so sure what comes next. There has never been such a huge stimulus, and one has never before been unraveled.

Some believe there’s a hidden risk in debt that consumers and companies took on when borrowing was inexpensive. The Fed’s campaigns were  “fundamentally designed to encourage corporate America to lever up, which makes them more vulnerable to rising borrowing costs,” said Scott Minerd, chief investment officer at Guggenheim Partners. “The reversing of the process is actually more powerful,” he said.

Read the full WSJ article here.

 

EU To Reduce Dependence On US Dollar As Sanctions Hit Trade With Iran

Source: https://eaworldview.com/

Plans to reduce European Union dependence on the US dollar have been rumoured for a while now, as China’s alternative to the Petrodollar continues to gain strength. The EU is not signing up to the move by Russia, China and the other BRICS bloc nations to replace the dollar but are thinking involvement with the emerging economies bid to break US economic hegemony will improve the 27 member Union’s ability to run an independent foreign policy without having to fear US bullying through sanctions for opposing Washinton’s attempts to dominate global political and economic events. The EU plan was unveiled on Wednesday by the European commission.

The proposal has gained support among European Union member states as companies in EU countries have felt presured to withdraw investments from Iran by the threat of punitive secondary sanctions from the US for any nation which permits its citizens or business community to trade with the Shi’ite Muslim theocracy.

The EU, unlike the US, wants to maintain the nuclear deal with Iran signed in 2015, but needs to deliver on its side of the bargain by increasing trade with Tehran. Less likely to be discussed in mainstream media is that European arms manufacturers, particularly those in Britain, Germany, France and, surprisingly perhaps, Sweden, will benefit greatly from a new arms race if they are in a position to supply both sides.

Iranian rulers are becoming impatient as the EU strives to create a financial mechanism to shield European exporters and importers from the effects of US sanctions on corporations, banks and individuals that continue to trade with Iran. US secondary sanctions can be applied on any European firm with links to the US market. I find this rather surprising as back in the 1960s when I studied economics, it was common knowledge that jurisdictions with lax trade regulation regimes like Panama or The Bahamas could be used to obfuscate paper trails and evade sanctions, tariffs and taxes.

The commission is perhaps reluctant to use Gibraltar’s port facilities for trans — shipping goods bound eventually for Iran because of the uncertain position of The Rock post Brexit. Instead Brussels is focusing on increasing the use of the euro in energy markets by creating a financial vehicle to facilitate settlement of oil contracts in the single currency, thus bypassing sanctions by avoiding any dollar transactions. Along with other such bilateral agreement systems, the plan is part of a longer-term move to “de-dollarise” the world economy.

Measures included in the EU policy involve using the euro as default currency in energy contracts agreed between EU member states and non-EU countries, as well as the creation of euro-denominated price benchmarks for crude oil. The EU is one of the world’s largest energy importers.

The commission press release also suggests the EU must develop “a full range of trustworthy interest rate benchmarks” in and a fully integrated instant payment system acceptable in all financial markets. The bloc will also seek to develop the role of the euro in foreign exchange markets.

In launching the long-term plan, EU economic affairs commissioner, Pierre Moscovici, said: “A wider use of the euro in the global economy yields important potential for better protecting European citizens and companies against external shocks and making the international finance and monetary system more resilient.”

The commissioner added these plans came “at a time where the recent global trends, the emergence of new economic powers along with the development of new technologies are supporting a potential shift towards a more diversified and multipolar system of several global currencies”.

Responding to the EU announcement an Iranian official said:
“Based on the news I recently received and was confirmed by a European commissioner, from now on, the EU is going to ditch the US dollar and just use the euro in the financial transactions of all European oil deals with other countries,” said Iran’s nuclear chief, Ali Akbar Salehi, on Thursday.

Speaking to reporters, the head of the Atomic Energy Organization of Iran (AEOI) said the amount of these transactions is more than €300 billion. “Previously, the EU used to pay 85 percent of the money for the oil it purchased from other countries in US dollars, but now with this new mechanism, all the money will be paid in euros,” he said.

Once the mechanism takes effect, the US dollar will be isolated as a global currency, and the US will no longer be able to use dollars in the current dominating way, Salehi added.

His comments came one day after the EU commission presented its plan to reduce the dollar’s overwhelming dominance of the global economy and to strengthen the role of the euro, particularly for energy transactions. There will be a lnee jerk reaction from the left of US politics, to blame Donald Trump for this development, the EU have already accused the Trump Administration of weaponising the reserve currency, although that is unfair because the US has used its position as holder of the reserve currency as a political weapon since the 1960s. In fact the move towards de-dolarisation, led by China, Russia and Iran, has been going on for some years now, the initial moves having been made early in the Obama era, though even before Obama took office there was widespread dissatisfaction with the way the USA used dollar dominance to influence political developments outside its borders. It has alredy attracted many trading partners, perhaps US economic belligerence is an attempt to combat this. If so it is the wrong approach.

European capitals have become increasingly frustrated with the global dominance of the dollar as a reserve currency, which hands the United States unparalleled diplomatic and economic power in a globalized world. This hostility was exacerbated when economic sanctions imposed on Russia after it’s annexation of Crimea in 2014. Many European nations were hit harder by those sanctions than Russia.

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Company Wants To Implant Microchips In “Hundreds Of Thousands” Of Workers

Not so long ago the idea that thousands of people would volunteer to have microchips implanted into their hands seemed like something out of a TV series about a dystopian future society, but it is already becoming a reality.  Thousands of fanatical technology worshippers, as crazily devoted to their deity as any medieval religious cult it seems, have already had microchips implanted, by a Swedish company. There is a near stampede to get chipped and the company behind the scheme claims it is now working with very large global employers to implement RFID chipping on the corporate level.

Jowan Osterlund, CEO of the company, Biohax, recently told a UK newspaper The Daily Telegraph  that they have been talking with a “major financial services firm” that has  “hundreds of thousands of employees”

from The Daily Telegraph:

Biohax, a Swedish company that provides human chip implants, told the Telegraph it was in talks with a number of UK legal and financial firms to implant staff with the devices.

One prospective client, which cannot be named, is a major financial services firm with “hundreds of thousands of employees.”

Global corporations face increasing criticism of their authoroitarian management cultures and cavalier attitudes to  ethical and human rights issues. And with horror stories about hacking and cyber attacks constantly in the news, the corporate paranoia of these security-obsessed corporations is driving a rush to adopt this sort of technology.  If all of your employees are chipped, you will always know where they are, and you will always know who has access to sensitive areas or sensitive information. Current RFID technology is not like GPS however, it has limited range and cannot be used to track people outside the workplace. But emplyees smart phones and other internet enabled devices are designed to do that.

According to Osterlund, Biohax, the procedure to implant a chip takes “about two seconds”, and it is usually implanted in the hand

A syringe is used to place the chip in an area between the thumb and forefinger, according to the report. Osterlund said the procedure is similar to ear piercing and takes “about two seconds.” The microchips operate via “near field communication” technology, similar to what is used by no-contact bank cards.

“In a company with 200,000 employees, you can offer this as an opt-in,” Osterlund told the Telegraph.

Right now, many companies use security badges, and many of us are familiar with working in organisations that issue chipped identity cards. Biohax and tech fans say implanted chips are no different except that unlike security badges, which can be lost, stolen or forged,  or taken off and locked in a desk drawer, an implanted chip is much more permanent and much more secure, and that is one of the big selling points.  The following is what the chief medical officer of Biohax recently told Fox News

“The chip implant is a secure way of ensuring that a person’s digital identity is linked to their physical identity. It enables access management in a way that protects individual self-sovereignty and allows users to control the privacy of their online activity,” Dr. Stewart Southey, the Chief Medical Officer at Biohax International, told Fox News.

Of course once this technology starts to be implemented, there will be some workers, and one would hope, almost 100% of trade union leaders that will object. But if it comes down to a choice between getting the implant or losing their jobs, how many workers do you think will choose to become unemployed?

(Subversive types might be interested to know if they obtain a circular neodymium magnet about 15mm diameter and atach it with the north pole next to the skin with surgical tape, leaving it in place for 48 hours, it will effectively neutralise the chip. Doing this might get you fired of course so make sure your union will support you)

Some people will sacrifice their jobs before they will accept this return to medieval serfdom, but given the ease with which corporate propaganda has persuaded people to accept Microsoft’;s ‘not-fit-for-purpose’ operating system, shift so much of their personal data to an electronic networking medium that offers less security than a prison without walls or use a search engine or a social media platform that will not just track users around the web after they leave those sites, but also invade your personal files and mine data from them that can be used to build ‘psychological profiles’ of us and enable people who buy that information to ‘target’ us more efectively with advertising, persuading the masses to accept being chipped is not going to be a hard sell..

Personally, I will never let anyone embed a chip in my body.  But just like with so many other things (sic), most of the population will simply choose to accept the “new technology” because everybody else is doing it. We have already accepted contactless payment cards. Initially we were told the contactless feature on newly issued cards was only for payments up to £30 in Britain, but on holiday in Europe recently I noticed restaurant staff were trying to used it for bills of over €100, and a car hire clerk tried to use it for a €400 payment. And as a former IT professional who worked on securing systems for years, I can tell you this technology is highly insecure. My bank gives me the option of not enabling the feature but many banks are now insisting contactless is the preferred method of use. It’s the future, they chorus in a bid to make us feel inadequate.

OK, if you are affluent and are only buying a sandwich for lunch and end up paying for the tuna and mayo wrap and diet coke the person behind you at the till is having, it doesn’t hurt much but consider what could happen if somebody on a tight budget had their contactless card details skimmed. The equipment needed to ‘skim’ these cards and steal account details is very cheap and easy to obtain.

Here’s a query that was posted on a tech forum earlier this year: When my old debit card expired and a new one was sent, it came with this new feature. I wanted a way to disable it since each time I was scanning my RFID access card in my wallet, the detectors at work were picking up the debit card too. They’d beep twice and sometimes get confused. Not only this, but while my bank promises it’s secure, I’d rather not have a feature I don’t intend to use on the off-chance that it’s not.

Most methods of disabling the contactless feature on a debit or credit card involve physically mutilating the card, which I don’t like the idea of. A less destructive method is to locate where the rfid chip is positioned in your card and put a half inch square of copper tape (available from gardening stores or websites) over it on the back of the card.

In my experience when corporate businesses, the banks or technology companies tell us some innovation is for our benefit, either making life more convenient, or our finances more secure, in reality it is for their benefit. In my omnibus page Cashless Society I have reported many times on moves to eliminate the use of coinage and banknotes in the developed nations. It is claimed the reasoning behind this is to reduce crime and make financial activity more convenient. In fact a big part of the push to dump cash is to enable the electronic tracking of even our smallest purchases, the better to divine our habits and lifestyle choices from collected data.

Nothing is ever what it seems to be and RFID chip implants are no different. Apart from privacy issues and the principle of personal liberty, we must ask, as Marcus Tullius Cicero did two thousand years ago, Cui Bono. Who benefits? I’ll give you a clue, it isn’t people like you or me.

Elites Losing The War On Cash? Sweden U-Turns On ‘Cashless Society’ Agenda

image: https://gsiexchange.com/

Sweden was until now proudly leading the advance in the War On Cash, the neo – Maoist ruling elite had pushed the idea that a cashless society, with all financial activity moved to electronic media would protect citizens from crime and be more convenient. There was no mention when the idea was pitched by politicians and bankers that in a cashless society we would completely surrender control of our money to banks, and our privacy in financial matters to government security agencies. Yes, every electronic financial transaction is recorded, your spending habits are tracked, and while disreputable organisations like Google, Facebook and Twitter will sell that information to anybody who can afford to pay, governments can use it against you in many other ways.

In a surprise turnaround Sweden’s Riksbank this weekend has  become the first central bank in the 21st century to take concrete measures to ensure that cash does not disappear as a means of payment from the financial system, in opposition to corporate efforts to force retail customers away from cash. To achieve that the Riksbank proposes, in a document published on its website, to mandate that all banks and financial institutions continue to offer cash services.

The policy initiative comes in response to a recent proposal suggestion by the Riksbank Committee that only the country’s six major banks should be obligated to continue offering cash services.

That prompted a reaction from Sweden’s competition watchdog, which argued that the plan would distort competition as it would affect only a few of the nation’s banks. In response, the Riksbank has opted to apply the rule to “all banks and other credit institutions that offer payment accounts.”

There was also a disagreement between the RiksbankCommittee (a political overseer,) and the central bank’s senior management over what deposit facilities should be offered. While the Committee recommended that banks should only be obliged to provide deposit facilities to businesses, the Riksbank believes it is important for banks to also offer deposit services to private citizens:

“This is a service that consumers can reasonably expect of credit institutions. There must also be symmetry between withdrawal and deposit facilities. In the Riksbank’s view, there is otherwise a risk that the possibilities for individuals to make deposits will decrease even further in the future. For most consumers, it would also be difficult to understand why they can withdraw cash from an account but not make deposits.”

For yearsnow, both the ultra progressive Swedish the government and the Riksbank management have been pushing for a “cashless society.” The Riksbank has over 1,000 articles posted on its website on the “cashless society“. The emphasis worked: between 2013 and 2017, the amount of cash in circulation dropped by 35%, earning Sweden a reputation as the world’s “most cashless nation”.

Many of Sweden’s bank branches had stopped handling cash altogether, but now will have to begin doing so again. Many of them are not happy about it arguing that access to cash should be the sole responsibility of the state and not private banks.

“To secure access to cash is a collective good that the state should reasonably be responsible for,” the Swedish Financial Supervisory Authority said. It’s an opinion that’s shared by ATM provider Bankomat, which argued that it should be the state’s responsibility to ensure that citizens have access to cash since the handing of notes and coins is such an important — and expensive — part of a country’s infrastructure.

Shops and restaurants, could also be affected by a suggestion that retail operations which provide public services, such as pharmacies, transport services, food shops and petrol stations, should also “be included in an obligation to accept cash.”

One likely result of this is that many people who struggle to navigate the digital system, or who don’t have credit cards, in particular the elderly, no longer have to fear finding themselves locked out of the country’s payment system.’ There is also that section of society known as ‘the underclass – and yes Sweden does have them despite government efforts to present the nation as a socialist utopia in which things like poverty, crime, prostitution and begging are unknown. Sweden’s parliament has also launched a review on the impact of going cashless too quickly as it excludes the financial needs of the elderly, children and tourists who rely on cash.

It is a dramatic u-turn for a country that not so long ago was further along the path toward eliminating cash than just about any other advanced economy. Sweden enlisted its citizens as largely willing guinea pigs in an economic experiment that was doomed from the start — negative interest rates. People quick on the uptake will have worked out in such a system we, the punters pay the bank to gamble with our hard earned. But a negative interest rate policy (NIRP) has its limits with consumers as long as cash remains an alternative because while you have to pay for the privilege of having money in the bank, stuffing it in a matress or under the floorboards is free. And that is the true explanation of the eagerness to eliminate cash. It was not for our protection or our convenience, but to make stealing from us easier for banks, financial services companies and governments.

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Why The Western Democracies Are Failing


For too long the democratic nations of the world, which are mostly in North America and Europe, with some outposts such as Autralia, have followed the lead of The United States of America both economically and socially. And the USA has been leading us to disaster for fifty years.

Forget this week’s utter fiasco of Brett Kavanaugh’s appointment to the upreme court, and the utterly pathetic attempt by the Democrats to prevent President Tump’s nominee’s conformation. It doesn’t matter whether Brett Kavanaugh becomes a justice of the Supreme Court or not; one more Deep State lackey will change nothing.

For years, the Courts and elected assemblies of has looked the other way as the banking cartel colaborated with central banks and global corporations to rob one class of citizen (ordinary, working people) and reward another (the elite).

As a result, the American economic empire faces a catastrophic crisis as wealth concentrates in fewer hands, and the debts of the have nots (both nations and individuals, become overwhelming. The resurgence of nationalism in Europe is one symptom, the increasing number of regional conflicts and rising tensions between the western democracies and the non – democratic eastern bloc, is another. And the upsuge in Islamic fundamentalism is the third and probably the most dangerous. All this is being played out to the accompaniment of internal schisms, social breakdowns, and dangerous political scuffles.

Why, you might well ask.

If you work by the hour, the boss can buy your time. That’s what it really means to say someone is “rich” – he has more time because he can control not only his own, but yours, too.

Somebody who had $1,000 worth of stocks in 1971 could buy approximately 250 of the average working man’s hours. Today, that $1,000 worth of stocks is worth about $28,000… which, at today’s $26-per-hour average, will buy 1,077 hours of the typical working man’s time – four times as much as in 1971.

In other words, compared to the wage earner, the capitalist is four times as rich.

Invert it, and you see about the same thing. A working man would have had to labor for 212 hours to buy the 30 Dow stocks in 1971. Today, his time is much less valuable; he has to sweat for over 1,100 hours to buy the Dow.

It is this hollowing out of the middle class (not the middle class in the British sense, where the class system is much more complicated,) that is behind the chaos in the democratic world. The group in the middle is getting smaller, the’poor’ are growing exponentially in number and the rich are getting richer and more out of touch with the realities other classes face. It cannot end well.

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