As G8,7,6 declines Putin and Xi build alternative global economy


Putin and Xi (Picture: RT)

 

While Germany’ Merkel and France’s Macron lecture the world on politically correct globalism and  President Trump turns his back on Obamaesque arse kissing and lectures former foreign partners of the US on common sense, ahead of a G-7 (or rather, G-6+1 and soon to be 5 + 2 as Italy’s Eurosceptic government sides with Trump,) summit in Quebec, exposing the very real fragmentation of the western liberal consensus continues.

If the US, isolated by the other, quits G7 (as Trump, based on his track record, well might,) that will leave Germany, Japan, UK, France, Italy and Canada. All of these have their own problems which eventually must override the airy – fairy ideas of academics about global approaches to problems. Global approaches may justify lost of expensive jollies for politicians and academics and look great on paper but seldom have any effect on local problems.

Trump’s controversial imposition of import tariffs signals a US crackdown on unfair foreign trade practices, such as dumping cheap, shoddy goods from low labour cost areas in western markets at prices with which domestic manufacturers cannot hope to compete. Meanwhile, almost unreported by mainstream media (link goes to Bloomberg, I picked it up from a financial services news feed that I should not be accessing without a subscription, but hey, ‘fair use’)  an important meeting between China’s leader Xi Jinping and Russian President Vladimir Putin is of far greater significance than the posturings of the G6 minnows, as, like bad tempered lap dogs, they yap at Trump.

Putin and Xi held their first meeting this year on Thursday ahead of the June 9 Shanghai Cooperation Organization meeting – an eight-member group led by China and Russia – which will be held in the port city of Qingdao. The two governments are in constant touch however. China and Russia are of course leading the move to replace the Petrodollar as the global reserve currency and are playing an increasingly pivotal role in international crises such as Syria and the South China Sea.

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China’s Oil Futures Market Gains Momentum

“WTF has China’s new oil futures market to do with us Minds punters?” you might well ask.

It is in fact going to affect us all not just commodities traders, oil speculators and hedge fund managers. The thing is the Chinese (and their BFFs The Russians and Iranians did not just set up this venture because they fancied dabbling in the oil trade.

The launch of the gold backed Petroyouan on the Shanghai financial markets is the culmination of several years manoeuvreing by China and its allies to create a rival trading system to the Petrodollar which has dominated international trade for over forty years. I reported on the news HERE and in several other posts.

Few people are aware of how reliant the US economy has become on the position of the US$ as the global reserve currency. This is because mainstream media never reports on it and TV pundits dare not mention it for fear of losing their lucrative gigs as talking heads on TV. I have talked about it since the very beginning, when Saddam Hussein decided he didn’t need the Petrodollar, modern technology could trade his oil for any currency he fancied. And we all know what happened to him.

Nothing will change overnight, or next month or for several months, but gradually we will see a further shift of economic power from west to east. And that will affect prices, jobs, our standards of living and much more

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Petro-yuan: China To Launch Renminbi As Reserve Currency & Take Down Petro-dollar

China’s launch of a Yuan-backed oil futures market could shatter the US dollar dominance of the crude oil market, a goal China and Russia, with support from, Iran, have been working towards for at least five years. The US dollar will not give up the top spot easily however so we can expect interesting times ahead for business and trade.

The long awaited yuan-backed crude oil futures market was launched at the end of last month in Shanghai. China is the world’s biggest oil consumer, with eyes on rival benchmarks Brent and WTI as well as the US currency. Beijing sees the US dollar dominated oil market as standing in the way of it’s becoming the world’s largest economy.

Trading of the new oil futures contracts for September settlement started on the Shanghai International Energy Exchange at 440.20 yuan ($69.70) per barrel, reports Chinese daily the South China Morning Post. Some 18,540 lots have reportedly been sold and purchased so far.

“The question number one is whether China will be able to make the oil market its demand market, and not the oil supply market traded in dollars, which it is now,” Vladimir Rozhankovsky, Global FX Investment analyst comented, according to geopolitics.co. China has recently overtaken the US as the world’s number one oil buyer.

If the world trade enters into a death spiral of reciprocal economic sanctions, keeping oil trade in dollars will be a matter of strategic importance, or a matter of survival for the US,” the analyst added, referring to the recent spate of tit for tat export tariffs imposed by China and the USA.

As a result of these, Washington can deliberately undermine the image of the petro-yuan by attacking Chinese stock, which could result in the devaluation of the yuan, making Chinese oil futures less attractive, Rozhankovsky said. However, the US has some major disadvantages on which the petro-yuan can capitalize. First, the US dollar is still overvalued in currency markets, making domestic oil production very expensive. Second, while Russia and Iran have overland pipelines, the United States does not have transatlantic pipelines to its major markeys in Europe, and tankers are costly and highly risky, the analyst added.

“The trade war between the US and China has already begun. China has plans to promote the renminbi as a reserve currency and there is no better move than to purchase raw materials in its national currency. It can save money on the currency conversion and become less dependent on the US dollar,” Stanislav Werner, head of the analytical department of Dominion, commented in whatreallyhappened.com

Werner notes that the oil market is worth $14 trillion at the moment, and is bigger than the Chinese economy. “The first trading sessions were volatile, but this is a typical story for new financial instruments. The US has a serious reason to get nervous, because in many ways the hegemony of the US dollar came from oil trading in dollars,” he said.

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The world is dumping the American dollar
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Iran, oil and the US dollar
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China’ s Low Key Launch Of Its Challenge To Petrodollar Supremacy

petrodollar
Goodbye petrodollar, hello petroyuan? 

We have been blogging and commenting for several years on moves by Russia, China and Iran to replace the US dollar as the global reserve currency, or at least to create a serious rival to the dollar hegemony. There can be no greater threat to the established order (or to the global banking cartel’s dreamed of New World Order,) than the emergence of a serious rival to the dollar. As economic game-changers go there is none bigger or more disruptive than a yuan-denominated settlement system for crude oil contracts, especially when set it is set up up by the largest importer of crude on the planet and the second largest exporter of hydrocarbons.

Given the level of U.S. provocations of Russia and China over the past few years and the recent return to cold war conditions with a new arms race on the cards, perhaps we ought to be happy that the Russians and Chinese seem to prefer currency wars to shooting wars as both have demonstrated they have formidable arsenals of advanced weapons and it is far from certain the U.S.A. and NATO could take on either, let alone both simultaneously.

And yet Beijing’s strategy seems to be a softly softly approach. Oil trades are already being conducted in petro-yuan at the Shanghai International Energy Exchange is on hold. This may be related to US sabre rattling and concern that the US deep state, having no economic response to the move may react rashly if presented with a fait accompli. Thus the fact that China and its partners chose to play down the official launch of the new settlement system is understandable. There was room for some euphoria following the launch, Brent Crude soared to $71 a barrel for the first time since 2015. West Texas Intermediate (WTI) reached the highest level in three years at $66.55 a barrel; then retreated to $65.53.

The launch also signalled a series of “firsts” for China’s trade links with the west, including the first opportunity for overseas investors to access a Chinese commodity market. Significantly, US dollars will be accepted as deposit and for settlement. In the near future, a basket of currencies will also be accepted as deposit. This is entirely in line with the Sino – Russian policy of moving their economic partners towards conducting trades in the currency of the vendor nation.

Will the launch of the petro-yuan be a deathblow to the petrodollar and U.S. economic dominance and the birth of a new era in trade relations? It will but the change is likely to take years rather than weeks. Many variables have to be considered, the most important being China’s capacity to manipulate and eventually dominate the global oil market.

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Back to Contents table

If You Look At How Fast Global Trade Is Unravelling, You’ll Get Dizzy

Governments constantly make positive noises about the health of their economies although most people who are in work have felt no improvement on the position they were in after the crash of 2008. Wagest are stangnant, employment has reduced somewhat (see below) and while the banks are printing money and the super rich are widening the gap between themselves and ordinary people faster than ever, the real situation is frightening.

Norway’s Biggest Bank Joins Push To Abolish Cash

The move by governments to eliminate cash as a means of trading goods and services is moving faster than we imagined. With another global financial crisis looming according to financial journalists and investment experts this is as understandable as it is undesirable for us ordinary punters.

Refugee Crisis Or Existential Battle With USA for Europe

It has been clear for some years now that the USA, backed by its main NATO and EU military allies the UK and France (the FUKUS axis has been trying to provoke Russian into firing the shot that will be heard around the world and recognised as the startiung signal for World War Three.
Nothing is ever as it seems to be however, and views from middle east and far eastern journals suggest the USA is also working at destabilizing EU nations in order to force their support in its wars.

Do Recent US Naval Disasters Confirm Russia’s Electronic Weapons Claims

Two recent collisions in the South China Sea involving US warships and merchant vessels operating legitimately in the area have led to the US Navy cancelling all operations and standing down its fleet. What could have caused such a dramatic action, you might well ask. We wish we had a definitive answer but governments tend to remain tight lipped on such embarrassing stories.

When the USS John S McCain limped into Singapore, holed on the waterline after colliding with a tanker however, we were reminded of a story that resurfaced concerning a strange incident in 2014 involving a United States warship.

uss_john_s-_mccain_ddg-56-collision-damage-800x565
USS John McCain after collision (Image source: worpress)

The most disturbing part of this story for US military strategy was not the fact that ten American sailors were lost, although that is what grabbed the headlines. More sinister was that the incident came only two months after the US Destroyer The Fitzgerald collided with a cargo ship off Japan, with seven deaths resulting from the accident. And in May 2017 the cruiser Lake Champlain crashed into a South Korean fishing boat, fortunately no lives were lost on that occasion.

So what is going on. US Navy ships should have the most advanced naval technology in the world – apart from the British Navy of course 🙂 – and ought to have been aware of other vessels in the area in ample time to take evasive action.

According to a report first published in 2014, the USS Donald Cook experienced a total failure of its electronics systems, disabling weapons, tracking technology and navigation equipment after being buzzed by two Russian air force Sukhoi Su24 aircraft. Now the Su24 is an old design and by today’s standards not a sophisticated warplane. According to Russian sources however, the attack jets carry electronic weapons that can cripple the US Navy’s missile defence system.

Russia-1 television’s Vesti programme claimed an electronic warfare device called “Khibiny” was used by a Russian pilot to completely deactivate the defence systems of the USS Donald Cook in a 2014 encounter in the Black Sea. In the past this blog has reported that we learned from an Iranian nuclear scientist who is a friend of one of our contributors that Iran had jointly developed with Russia and China, a range of Electronic Weapons based on technologies first proposed by the scientist Nikolai Tesla, after whom the Tesla car company was named, whose work was sidelined in the west because of the threat it posed to commercial interests.

Reports coming out of the weapons and military technology industry more recently have suggested there was substance to that claim.

The US’ Aegis system, manufactured by Lockheed Martin, and carried by most modern American ships, is designed to protect a fleet against attacks by aircraft, and cruise and ballistic missiles. Other systems are in place to protect ships against less sophisticated weapons such as a boat pack with explosives being set on course to ram them.

But the Vesti broadcast (on Russian state controlled TV it should be noted) claimed the pilot of a Sukhoi Su-24 jet was able to deactivate “the whole ship’s systems” with “powerful radio-electronic waves” during the fly-by incident three years ago, around the time of Russia’s annexation of Crimea.

“You don’t need to have expensive weapons to win [a war], powerful radio-electronic jamming is enough,” the report concluded. At the time this was dismissed as kremlin propaganda in response to Obama’s boasts about US technical superiority.

At the time the US military confirmed the Donald Cook, a guided missile destroyer, had encountered a pair of Su-24s that repeatedly flew near it in the Black Sea. But a spokesman, Army Col Steve Warren, said then: “The Donald Cook is more than capable of defending itself against two Su-24s.”

Both President Donald Trump and his Secretary of State, Rex Tillerson, have hinted that relations between the countries hitting a low point may be in some way connected to these incidents.

During a meeting with his Russian counterpart, Sergei Lavrov, earlier this month, Tillerson said the world’s “two foremost nuclear powers cannot have this kind of relationship”.

And before an off-camera meeting with Tillerson, Russia’s President Vladimir Putin commented in an interview that “one could say that the level of trust on a working level, especially on the military level, has not improved, but rather has deteriorated”.

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Can Britain Dodge Being Dragged Into N. Korean War?

nuclear-war-kim-jong-un-747786

Fat Boy Kim makes his favourite kind of music (picture source)

Britain has been America’s principle ally and shared the role of global peacekeeper since the end of World War Two. With the major powers of east and west closer to open conflict than at any time since the 1960s as US provocation of Russia in the middle east and Ukraine and of China in South East Asia has raised tension to the point at which a small error could trigger some very big bangs, once more there is a strong possibility the USA will call on Britain to legitimize another regime change adventure.

Could Britain’s government formally refuse Donald Trump’s call for help in waging war against North Korea, so long as Kim Jong-un does not strike Hawaii or the US mainland. It is after all not our fight, we have recently responded to calls for support in Syria, Libya, Iraq and South Sudan, even though that support has often taken the form of deploying a token force.

Britain’s membership of NATO does not automatically oblige us to participate in a conflict between Trump’s America and Kim’s North Korea, even if the latter attacks US military bases in the Pacific. Although Article 5 of the North Atlantic Treaty states that an attack on one NATO member is an act of aggression against the entire military alliance, the application of this provision is limited only to attacks on member states’ territories in North America, Europe and the Atlantic.

Consequently, if Kim’s warheads strike US military bases in the Pacific, the US could ask for Britain’s assistance, but cannot formally compel the UK and other NATO allies to join the military efforts against North Korea.

There is a precedent of course. When asked to support the war in Vietnam, the then Prime Minister Harold Wilson refused, saying he had doubts about the legitimacy of the war that the North Vietnamese had not posed any threat to the USA and under the terms of the United Nations Charter the North Vietnamese had a right to self determination, even if that meant a communist regime taking power, an outcome that was anathema to Washington.

Britain itself suffered from the limited scope of Article 5 in the early 1980s, when the caveat prevented then-Prime Minister Margaret Thatcher from invoking NATO’s collective self-defense provision over the Argentinian invasion of the Falklands.

Article 5 has only been invoked on one occasion: after the terrorist attacks in New York and Washington on 9/11, 2001.

The US, however, may exercise informal pressure to ensure Britain’s support in the military confrontation with Kim’s regime.

The UK’s impending withdrawal from the EU will, according to some foreign policy pundits,  make Britain more dependent for on its transatlantic partner, as evidenced by British PM Theresa May’s plans for an extensive trade treaty with the US, which may mitigate the negative economic effects of Brexit. However, once unconstrained by suffocating EU bureaucracy, Britain will be free to negotiate trade deals with anybody and many nations including China and India are eager to trade with us. Bullying on trade might not give Washington as much leverage as they would like.

Consequently, Britain may be unwilling to permanently damage the so-called “special relationship” with the US by failing to back up its key ally in the war against North Korea, especially if the latter acts as an aggressor. We can only hope that as previously reported, the intervention of Russia and China may once again avert an escalation of the crisis into full scale conflict.