jueves, 6 de octubre de 2016

(30) Over Reach of the Financial-Military Complex and the New Multi-Polar World Order | Katehon think tank. Geopolitics & Tradition




Over Reach of the Financial-Military Complex and the New Multi-Polar World Order

These broad topics are deeply related, and the resolution of one will have strong ramifications for the others. They are not separate categories except as an organizer for the academic and political minds of today. Information gleaned from many books, the western mainstream media (MSM), alternate media (being for the most part various websites), and from other sources in Asia and Europe provides a broad base from which to formulate a perspective on current events.
There are some broad trends that should be obvious. Financially, the 'western' world is operating as a debt laden consumer society, competing with the rising strengths of China and Russia as co-leaders in an at best multi-polar world. Militarily, the U.S. and its allied NATO countries remain dominant, but that dominance is reckoned on the threats of a failed "full spectrum dominance" military, backed by an official first strike nuclear capability and policy.
As for the environment – the consumer society run by corporations with zero environmental concerns, and the military fighting for control of resources and for control of the financial world are dominant topics in the MSM, leaving the environment to change almost unheralded. These changes would be seriously aggravated by a larger war and /or significant financial changes.
There are two main ways to examine these faultlines. It can be done region by region, highlighting the impacts on the populations of defined areas. There are, however, no isolated regions, as one bleeds (literally) into another, with the global context quickly encroaching into any discussion of one country or region. Another examination could be approached from the genres mentioned above, in which an attempt to precis the global aspects of each would again bleed (literally, financially, and metaphorically!) one into the other. A third approach would take an even less well defined train of thought approach, following the bleeding as it encircles the world.
Good-bye Palestine
Palestine is the best place to start as it is the topic on which I had my first article posted online many years ago, at Palestine Chronicle. Without detailing the current events around then until now, it leads to the proposition that perhaps Netanyahu has achieved what he wants – a one state solution.
It is not a pretty one state solution, as it carries horrible complications. But the Palestinian people appear to have been effectively divided and controlled (the word conquered cannot be used yet, and hopefully never will be). Abbas and the Palestinian Authority seem to be fully complicit with the Israeli military occupation, guarding their own little sphere of influence and power.
Talk of a two state solution is just that – talk. The 'wall' encloses many of the settlements along with much prime Palestinian land (with many other settlements remaining in the West Bank). It serves not so much for a two state solution but as a manner to control the many bantustan style enclaves restricting the movement and freedoms of the Palestinian people. More talk simply provides more time to build more settlements while destroying more Palestinian settlements and encroaching upon more Palestinian land.
The only country that could currently affect change is the United States. It is very inconvenient for the U.S. to do anything because of the large influence AIPAC has on Congress and the various neocon/right wing think tanks spread throughout the country. Obama and Netanyahu have their differences, but the U.S. remains financially and militarily committed to Israel.
This is where it gets tricky, going beyond the current paradigm into the changing global situation. Israel is more or less allied with Saudi Arabia and other Gulf states in its rhetoric against Iran, and in its military actions from the annexed Golan Heights. The Arab states are where Israel wants them to be – at war with each other, impoverished, divided, and ineffective domestically. Israel is apparently aiding ISIL/al-Qaeda against Assad while controlling their own border in Syria's Golan Heights, cooperating with the Saudis in their manic fear of Iran, arguing then making good with Turkey and Egypt, and – this is even trickier to decipher – turning its trade and financial outlook towards Asia.
Gaza
All that goes without even touching Gaza. Is this to be a part of Netanyahu's one state? It would be dangerous to count it fully in from the Jewish perspective as the 1.5 million Palestinians imprisoned there would tip the demographic balance into uncertain territory if its population were included within Israel proper. Egypt does not want them, not for the financial burden nor for the political burden of a defiant people. The elimination of the population by violent means is not sufferable even for the Israelis under current conditions, nor is their any place for them to be removed to.
A free Gaza is not likely in the works, and it would be high conjecture to explore the various implications and ramifications were that feasible.
Perhaps though, Gaza is convenient. It is convenient like the talks for a two state solution, providing a distraction while more West Bank settlements are built. Convenient in that it carries the rhetoric of violent Islam, allowing the ongoing dogma against Iran, and in general providing a significant fear factor, a significant, different, and outlawed 'other' to be a domestic source of unity. It is convenient as well for carrying that fear factor abroad to harvest support from its western admirers. It might also prove to be convenient for Israel's exploration and extraction of carbon resources under the Mediterranean.
It would seem then, that Israel is comfortable in its miserable neighbourhood. But that neighbourhood has changed and will change significantly more. The U.S.' military entanglements and its increasingly violent actions in the Middle East are for the most part its attempts to assert its global dominance financially.
Asia Rising
Many years ago, the New York Times Thomas Friedman mentioned the "hidden fist" of the military that kept the U.S. economy going. That 'fist' has long been visible, increasingly so in the Twenty-first Century. Its most dangerous and threatening turn has been its recent overthrow of the Ukrainian government and its replacement with a corrupt (same old same old!) neonazi government. Now with NATO encroaching onto Russia's borders and the U.S. moving military and black ops personnel into Ukraine, the U.S. is setting itself up to create a scenario that would help lead to the breakup of Russia itself. That takes the presentation from one of analyzing a particular region or country to examining the overarching military and financial paradigms.
Back to Israel, momentarily. Israel along with several other significant western countries and against U.S. wishes, has signed up for membership in the Asian Infrastructure Investment Bank (AIIB) set up to remove the influence of the U.S. controlled/sponsored Asian Development Bank, the World Bank, and other Washington consensus institutions. The largest part of Israeli trade is now with Asia and not the western countries. And perhaps not insignificantly, Israel is not selling drones to Ukraine, but they are to Russia.
Follow the money…why would Israel, along with Germany, France, the U.K., and many other countries (significantly, Russia), sign up for a Chinese dominated bank against the wishes of its long time sponsor, the U.S.? What do they see occurring that is not presented to the world in the MSM? What is China doing that is so attractive financially to many other countries without any military threat obvious or implied? What is the "carrot" without the "stick"?
U.S. declining
It is impossible to separate China/Asia/Russia rising and the U.S. declining as they are highly intertwined financially. It is worth it to try and look at the U.S.' financial situation first, as that has huge ramifications for what is happening in Asia, Eurasia, and China and Russia in particular.
Essentially, the U.S. is broke. The value of the U.S. dollar over the last century has dropped to near worthlessness in its comparative purchasing power. Fortunately for the U.S., and unfortunately for the rest of the world, the U.S. can 'print' as much money as it needs without fully debasing the currency as it is currently the world's "reserve" currency, the one that up to now everyone needed in order to have international financial transactions.
Without getting into the details of how the Federal Reserve Bank (a private bank, not a government bank) and the Treasury Department work together rather incestuously, the end result is a massive U.S. debt load that will never be able to be repaid – unless hyperinflation sets in a la Zimbabwe, or the dollar is revalued (devalued) unilaterally, or a gold standard is re-established with its value being rather astronomical in order to support the size of the debt/dollar.
Beyond that huge debt load, the economy is not recovering. The statistical figures are all manipulated and the markets are all manipulated, providing a thin veneer of financial respectability over an enormous black hole of debt. The employment participation rate (as compared to the unemployment figure) is the lowest it has been in decades – many fewer people are working. New job creation is mainly for lower paid service work. The rate of home ownership has been declining. Net worth for the middle class is declining and the income disparity between those in control and the rest of the population is increasingly very large.
The stock market continues its positive run, supported by trillions of dollars of government 'printed' dollars at zero or near zero interest rates borrowed and leveraged for various financialized schemes, including a lot of companies buying back their own stocks in order to inflate their value and pay them larger dividends and bonuses. The Baltic Dry Index (a measure of demand for shipping capacity) has declined precipitously after the 2007-08 recession.
China owns a lot of the debt. China has its own financial problems within its domestic and global economies but it is the U.S.' main creditor and carries 21 per cent of U.S. foreign owned debt, or ten per cent of all U.S. debt. Should China decide at any time to sell its U.S. reserves, it could simply put the dollar into shock, creating a quick and immediate devaluation to the point of making it worthless.
But the Chinese are operating much more carefully than this. They have openly stated that the world needs another reserve currency, or a basket of currencies, and it is working towards eliminating the stranglehold that the US$ has on international commerce and finance.
Russia - neither collapsing, nor isolated
Russia enters into the picture as both military and financial roles. Both China and Russia are within the U.S.' military containment policy under the idea of global hegemony as expressed by the likes of Zbigniew Brzezinski, Robert Kagan (spouse of Victoria Nuland), and the other neocon elites.
Russia is obviously reluctant to surrender to U.S. dictates and has been very effective in deflecting its military and economic attempts at destabilization. After suffering the economic depredations from the west during the Yeltsin era, then watching the aggressive military actions of the U.S. from Yugoslavia through Afghanistan, Iraq, and Libya (among others), Russia balked at supporting U.S. efforts to overthrow Assad in Syria.
Next up was the U.S. created (see Kagan, Nuland, above) neonazi takeover of the Ukrainian government and the currently frozen military front lines in Luhansk and Donetsk after a successful rebellion against the Kiev right sector/nazi forces. NATO has approached Russia's border. Western sanctions have been applied however ineffectively. A raid on the ruble and the devaluation of oil prices have coincided with the military aggression and trade sanctions.
Russia is doing well, not in spite of the sanctions, but because of the sanctions. The ruble suffered a large depreciation at first, but since has recovered and stabilized, with the current interest rate set at 12.5 per cent (I well remember when I carried a set mortgage at 12 per cent, while the official rate rose to over 20 per cent). Russia's debt load is very small in relation to its foreign reserves/gold reserves and in relation to the GDP.
It is forecast that Russian GDP will fall two or three per cent over the year, but that has two caveats. First is that the GDP is probably one of the worst and most easily manipulable statistics available; secondly, by comparison, if the U.S.GDP was measured accurately and without using manipulated statistics such as the consumer price index (inflation), it would be showing declines year over year since 2008.
In other areas, the Russian economy is doing well. Sanctions have forced Russia to repatriate its manufacturing, and many businesses are improving technologically and financially because of this. Agriculture, always a difficult area for financial survival, has been reinvigorated by Russia's counter-sanctions against various western agricultural producers.
Ironically, the U.S. is not stopping trade with Russia in three important areas. First is the space station, reliant on Russian rocket power for supplies and access. Next, the U.S. purchases about twenty per cent of its uranium from Russia – more US$ to support Russia's favorable trade balance and foreign reserves! To top it off, U.S. oil imports include eight per cent of its total imported from Russia.
Isolation is not a problem for Russia. China has become a major industrial, military, and financial partner, along with the other BRIC nations. Much of Latin America, most of Asia, and many African countries, independently and through their Chinese connections, are working with Russia. Importantly, Egypt is working with Russia for trade, and the triangle of Iran-Russia-China is strengthening.
Several European countries are expressing a distaste for sanctions and several are having lower level officials attending Moscow's May 09 Victory Day parade, along with many other global leaders outside the EU, most importantly, China's president Xi Jinping. The Chinese leader intends to visit Crimea during his visit. The visit coincides with two Chinese warships showing the flag in the Black Sea alongside Russian ships. That isolated feeling is certainly not the reality.
The World Island – and the New Silk Road
Eurasia as a whole – the World Island – is a natural economic unit. It is entirely sustainable through its various geographic regions for all resource materials - agriculture, mining, forestry, fishing, natural gas, oil, coal, water. These may not all be distributed equally, but given the land mass and the possibilities for trade and transportation, that only creates the natural idea of a New Silk Road to incorporate trade throughout all regions.
Both China and Russia have large industrial sectors, large technological sectors, and trained and well educated work forces. India has a large and technologically savvy work force. Iran has many resources and a strong technological base. Germany – well, that is where Eurasia finds a dividing line, the artificial boundary of the New Cold War as manipulated by the U.S.
Europe is a natural trade partner with other elements of the World Island. Unfortunately its sycophantic puppet leaders of the EU/NATO have been sucked into the two main artificial fears created by the U.S. - fear of terror/Islam and fear of Russia. What it truly amounts to is the U.S. fear of losing its dominant global position should Europe, or even part of Europe, align itself with the rest of the World Island by joining in the infrastructure development being initiated by China and Russia.
The leaders of France, Germany, and the U.K. in particular appear to be only interested in maintaining their own power and control among the world elite. Their wilful ignorance – or natural stupidity – allows the U.S. to continue to dictate to them what their foreign – and indeed domestic – policies should be. But cracks in European/NATO unity are apparent.
One of the major faultlines is the new Asian Infrastructure Investment Bank. Originating with China, this new bank has received applications for participation from many countries around the world. Significantly, most of the G7 countries (not Canada!) have signed on, as has Israel as mentioned above. Huge sums of money are to be spent/earned by supporting infrastructure development throughout Asia and Europe: high speed rail lines, highways, internet connections, pipelines, bridges, seaports, mines, airports, tech centres, schools, hospitals, and a host of supporting structures required for a growing wealthier society.
The U.S. fear of losing its dominance is well grounded, not militarily but financially. Should the US$ be slowly sidelined as the hegemonic fiat currency – or perhaps rapidly sidelined due to the weight of its own domestic 'house of cards' weaknesses – the New World Order will not be quite what the U.S. neocons envisioned in their original concept of the idea. The neocon wars serve several purposes: the destabilization of any organized opposition, especially in the Middle East vis a vis Israel and resources; the support of domestic military industries, about the only industries growing in the U.S. today; and along with the latter, control of other regions to bolster the use of the US$ as the reigning global fiat currency.
Thus the two are intertwined – war and finances. Their uses/abuses by the U.S. are its waning attempts to prevent the rise of a multipolar world – which already it truly is – or worse for the U.S. – a singular world order peacefully trading within itself without using the US$.
Last as always – the environment
Burdened with an enormous and growing consumer oriented human population the earth's environment is changing. How adaptable it all is only time will tell. Pollutants are dispersed throughout all parts of the world, Antarctic to Arctic, from the depths of the oceans to the summits of it land masses. Along with concerns about environmental changes many chemical pollutants enter our environment from the procurement of resources (e.g. mining, fracking, transportation), and their refinement into consumer products. These pollutants are widespread, including among others DU weapons, chemical sprays used militarily and in agriculture, and the unstable wastes from nuclear reactors.
Until something happens to the economy or to human health in general to require human behaviour to alter, not much will be accomplished beyond a lot of greenwashing and a few technological fixes while the last profits are squeezed out of the industrial-military complex.
The worst scenario comes back to the military. It is one of the largest consumers of oil based energy and its use of depleted uranium weapons and the threat of nuclear weapons and the latent threat of damaged nuclear power plants makes war the dirtiest of industries. The current face off between the U.S. and Russia, instigated by the U.S. Maidan coup that ousted a legal democratically elected (if corrupt) government, presents the ultimate threat of nuclear war.
The complete insanity of that seems to escape the proponents of the Wolfowitz Doctrine who uphold the strategy of a winnable nuclear war. Depleted uranium weapons are bad enough, but the use of nuclear weapons would be devastating for many if not most life forms on earth. Beyond the initial destruction from the weapons and the associated radiation poisoning, the 400 plus nuclear plants in the world would either have been destroyed initially or would self-destruct as local infrastructures and services failed in the war's aftermath. The result would be 400 Chernobyl/Three Mile Island/Fukushima's to radiate the planet for hundreds of years to come.

Outcomes unknown
Unfortunately, many humans are terribly short-sighted and intent on 'winning' at whatever cost. Hopefully the balancing power of Russia, China, India and other countries not aligned with the U.S. will be able to moderate the craziness that is widespread in the U.S./NATO today. Russia is doing its best to not become involved with U.S. instigated wars whether in Syria, Ukraine, or anywhere else in the world. China is supporting Russia as the Chinese are well aware that the U.S. views them as another threat to their global hegemony.
The U.S. fiat currency will collapse – all fiat currencies have. The U.S. is lashing out violently at the world trying to support its near hegemonic control of international finance. The World Bank, the International Monetary Fund, the Bank of International Settlements (based in Basel), national central banks, and other powerhouses of the current financialized world market are now having to deal with the new AIIB, the Latin American Bank of the South, and the BRICS Development Bank.
John Kerry's recent trip to Sochi indicates a slight ratcheting down of U.S. hubris. Kerry also remonstrated Poroshenko for his idiotic statements abouty retaking the airport at Donetsk. Ironically, even the suggestion of a New Cold War indicates that there is no longer a unipolar world tipped in favour of the U.S.
Which way events of today will turn is obviously an unknown. There are too many possible scenarios from the calm settlement of rational ideas overcoming military lunacy to its obverse, a world destroyed by that military lunacy.
The broad trends working through our societies today – the interplay of a financialized world, the militarization of domestic and foreign policies, and the understated importance of global climate change – are in a period of dramatic change.
I offer no solutions. That is out of my abilities, out of my range of influence, as events are turning now on their own energies, propelled by the actions of the powerful state actors of the world. I do not believe that anything I can do will have much bearing on the outcomes….yet at the same time while many other people suffer in so many significant ways beyond my experience, it behooves me to continue to observe and to try and synthesize the various sets of information as best as possible into a coherent whole. Interesting times, with big changes already in process.

(29) Tambaleante TPP apunta hacia el declive de EU | El Financiero




Tambaleante TPP apunta hacia el declive de EU

La política interna de EU podría sufrir un duro descalabro si el Congreso no ratifica el Acuerdo de Asociación Transpacífico y de paso afectar a China que busca posicionarse como la potencia en la región.

Cuando se escriba la historia de la decadencia del poder estadounidense, la debacle del Acuerdo de Asociación Transpacífico (TPP, por sus siglas en inglés) puede que no se merezca un capítulo entero, pero sin duda será más que una nota a pie de página.

El TPP es un acuerdo comercial que abarca 12 países del Pacífico con una población colectiva de unos 800 millones de habitantes — casi dos tercios más que la del mercado único de la Unión Europea (UE) — y con una participación del 40 por ciento del comercio mundial. También se ha convertido en una de las pruebas más importante del liderazgo estadounidense en Asia y en el mundo.

Desafortunadamente, los dos principales candidatos presidenciales están compitiendo para ver cuál de ellos odia más al TPP, y el presidente Barack Obama no es capaz de pasar algo en el Congreso, así es que las posibilidades de que sea ratificado por EU están desapareciendo rápidamente. Si no se ratifica, este fracaso de la política interna estadounidense resonará a través de Asia en un momento en el que China está buscando activamente reemplazar a EU como la potencia hegemónica regional.

China fue deliberadamente excluida del acuerdo, a pesar de ser una nación del Pacífico y la más grande potencia comercial de bienes del mundo. Desde el punto de vista de Beijing, el inminente fracaso del TPP es un motivo de regocijo, aunque sea desconcertante. Es el más reciente ejemplo — siendo el "Brexit" el otro — de los peligros de la democracia popular, lo que demuestra que un país nunca debe dejar los asuntos de interés nacional en manos de las masas desinteresadas y desinformadas.

Parte del problema son los contradictorios mensajes de la administración Obama. Mientras que al TPP se le ha descrito de manera informal como el "club de todos-menos-China" y como a una "OTAN económica", EU se ha esforzado en negar en público que no tiene nada que ver con contener a Beijing.

Esto ha obligado a la administración a tratar de vender el TPP nacionalmente como si fuera cualquier otro acuerdo comercial en un momento en el que muchos desconfían de este tipo de acuerdos. La ocasión en la que el Sr. Obama llegó a estar más cerca de revelar la verdadera justificación del TPP — la que podría tener una mejor oportunidad de convencer al público estadounidense — sucedió en enero de 2015. "China quiere determinar las normas para la región de más rápido crecimiento en el mundo", dijo el presidente Obama. "Eso pondría a nuestros trabajadores y a nuestros negocios en desventaja. ¿Por qué permitiríamos que eso ocurriera? Nosotros deberíamos determinar esas normas".

Ashton Carter, secretario de Defensa de EU, ahondó todavía más en abril del año pasado cuando dijo: "Pasar el TPP es tan importante para mí como lo es otro portaaviones". Ambas afirmaciones son ciertas, aunque Carter probablemente sobreestimó el valor de sus portaaviones. Al no adoptar el TPP, EU de hecho cederá el derecho de determinar las reglas comerciales y económicas en la región de más rápido crecimiento del mundo.

¿Hay plan B?

Incluso Japón — que considera el ascenso de una agresiva China su principal amenaza existencial — está contemplando la posibilidad de unirse a la Asociación Económica Regional Integral (RCEP, por sus siglas en inglés) que China prefiere si EU no ratifica el TPP. Ese acuerdo cubriría a las 10 naciones de la Asociación de Naciones del Sudeste Asiático (ASEAN, por sus siglas en inglés), y además a Australia, Nueva Zelanda, China, India, Japón y Corea del Sur. Esta asociación regional no sólo excluiría a EU, sino que también incluiría peores garantías para la propiedad intelectual, para la libertad del Internet, para los derechos de los trabajadores, y para la fauna y el medio ambiente.

Beijing — con su desdén por la libertad del Internet, por los derechos humanos y por la protección del medio ambiente, y con su práctica de ignorar la malversación cuando hace negocios en el extranjero — se asegurará de no ejercer presión para tener tales estándares en ningún acuerdo comercial.

Algunos observadores en EU y en Asia confían en que la Sra. Clinton, de ser elegida, reviviría el TPP con otro nombre. Pero eso tomaría un largo tiempo y, para entonces, es probable que el acuerdo ya haya fallecido. Mientras tanto, China va a ejercer presión al máximo en apoyo de alternativas que excluyan a EU. La mejor oportunidad para que EU frene la erosión de su influencia y de prestigio en Asia es que Obama y el Congreso fuercen el paso del acuerdo durante la sesión saliente después de la elección en noviembre y antes de la toma de posesión del nuevo presidente en enero.

Si esto no sucede, EU se habrá causado un daño a sí mismo; le habrá cedido una enorme influencia a China; y habrá asegurado que los futuros acuerdos comerciales sean mucho peores para las compañías estadounidenses, para los trabajadores y para el planeta.

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(28) Deutsche Bank stock claws back losses on possible help from Berlin — RT Business




Deutsche Bank stock claws back losses on possible help from Berlin

German politician accuses US of waging 'economic war' against Deutsche Bank
The stock price in Germany's biggest bank has risen in three consecutive sessions, trading on Thursday at about $13.66 per share. The bank stock has gained over 22 percent since falling to a three-decade low on September 30, down about 46 percent this year.
Deutsche Bank has been a headache for investors in recent weeks since reports the bank is facing a $14 billion fine from US regulators for mis-selling mortgage-backed securities before the global financial crisis of 2008.
The fine is almost as big as Deutsche's market value. It caused worries that Berlin would have to bail out the bank, but the German government has so far ruled out any state aid.
The bank's stock traded higher on Thursday after media reports Berlin is seeking to negotiate with the US to help Deutsche Bank settle the issue.

Berlin faces 'difficult dilemma': To bailout Deutsche Bank or not http://on.rt.com/7ql1 
— RT (@RT_com)

Earlier this week, investors' confidence in Deutsche strengthened due to the rumors that the bank had managed to settle the fine for around $5.4 billion, less than half the of the initial sum.
Concerns over the bank's viability are still in the wind, despite rallying shares. Deutsche Bank stock is down over ninety percent since their peak of $127.81 in April 2007.
"Deutsche Bank is among the banks that need to continue to adjust to convince investors that its business model is viable and has addressed the issues of operational risk arising from litigation," said Peter Dattels, a senior figure within the International Monetary Fund's capital markets division, as quoted by Business Insider.

(27) Going nuclear | The Economist




Going nuclear

Angry over sanctions, Russia suspends an arms-control deal

THE list reads like a hostage-taker's demands. Russia wants America to roll back the expansion of NATO, repeal the Magnitsky Act, end sanctions and pay compensation for Russia's losses. Until it does, Vladimir Putin declared this week, Russia will stop abiding by an agreement regulating the disposal of plutonium. Russia was forced to act, Mr Putin claimed, because of "the threat to strategic stability posed by America's hostile actions" (and its failure to deliver on its end of the deal). The move is a reminder that, unlike America, Russia is happy to throw nuclear arguments into the mix when it does not get its way.
The suspension of the Plutonium Management and Disposal Agreement (PMDA) is a message intended not so much for Barack Obama as for his successor. "Russia does not plan to work seriously with America" until a new administration arrives in 2017, says Andrey Kortunov, head of the Russian International Affairs Council. Mr Putin's demands serve as a "wish list" should the next American president seek to restore the relationship.
Tensions between Russia and America have been building over Syria, where ceasefire efforts have failed and Russian jets continue to pound rebels in Aleppo. On October 3rd, the day Mr Putin issued his decree, American officials announced they were pulling out of talks with Russia over Syria. "Russia failed to live up to its own commitments," the State Department declared. Since the war in Ukraine, according to Samuel Charap of the International Institute for Strategic Studies, a think-tank based in London, Russia and America have managed to protect some islands of co-operation, such as over Iran's nuclear programme. Now, he says, the tensions have "begun to sweep over those islands".
Russia's willingness to invoke its nuclear might for political aims is alarming. A year after annexing Crimea in 2014, the Kremlin announced it could deploy nuclear weapons there. Even before suspending the PMDA, Russia had eroded the spirit of nuclear co-operation that prevailed after the end of the cold war. For the past three years, America has alleged that Russia is in breach of the 1987 Intermediate-range Nuclear Forces treaty (INF) because it has tested a ground-launched cruise missile with prohibited range. Russia has also refused to discuss limits on tactical nuclear weapons, the anticipated follow-up to the New START strategic weapons treaty of 2010. Mr Putin snubbed Mr Obama's final Nuclear Security Summit earlier this year.
Russia's complaint that it has observed the PMDA more diligently than America does have some substance. Dogged by delays and rising costs in building a special facility to dispose of its plutonium, Mr Obama has opted for a cheaper method of treatment than the one specified in the agreement. Russia has declined to consent to this, putting America in technical breach of the deal.
To keep the spirit of the agreement, America could press ahead with getting rid of its excess plutonium. Russia says it has no intention of using its stockpile for new warheads. Ridding the world of some of the stuff would make it marginally safer. The danger of suspending the PMDA is not so much in leaving more plutonium about, but in demonstrating that the Kremlin considers nuclear security just another bargaining chip.

(26) The IMF sends a signal on political risk realities — FT.com




The IMF sends a signal on political risk realities


Nations like China, whose economies have become more sophisticated, undertake multiple stages of production in-country rather than simply being a final assembly point for components manufactured abroad © AFP

Warnings that the global economy is about to sink into a morass of protectionism have been a staple for years. First, the September 11 attacks were predicted to throw sand in the wheels of globalisation. Then the global financial crisis was going to provoke governments to re-erect the trade barriers of the 1930s. And when the world somehow survived those, resentment at the rise of China would ensure that global economic policy descended into a destructive game of competitive currency devaluation.
None of those risks materialised. But as the expansion of world trade has slowed over the past few years, familiar warnings about the political risks to growth have re-emerged.
There can be little doubt that in western Europe and the US, economic populism, incorporating a rejection of globalisation, has been on the rise. But unless Donald Trump is elected as US president in a month's time, in which case all bets are off, there is not much evidence that the world economy is about to be fractured by the widespread re-emergence of trade barriers.
The International Monetary Fund warned this week that political risk was one of the biggest threats to the world economy, though without mentioning Mr Trump and his protectionist threats by name. But, to its credit, the fund has also recently accepted that, although global trade growth has been weak, there is not much sign that protectionism is to blame.
In the two decades before the global financial crisis, trade grew about twice the speed of world gross domestic product; since 2012, it has only just kept pace. But the IMF found that around three-quarters of the recent slowdown simply reflected weaker economic growth overall, particularly in investment. Another chunk has most likely been caused by changes in supply chains. Nations like China, whose economies have become more sophisticated, now undertake multiple stages of production in-country rather than simply being a final assembly point for components manufactured abroad.
Naturally, the fund gives its regulation warning of the danger that trade barriers may restrain commerce. But despite the documented rise of "murky protectionism", or blocks on trade implemented insidiously through regulations rather than tariffs, such measures seem to have had little effect.
This could undoubtedly change if the populists come to power in the US and Europe, assuming they are serious about what they say. The kind of wholesale import tariffs canvassed by Mr Trump would kick off a trade war, while the desire by the likes of France's Marine Le Pen to tear up the EU single market would cause profound damage to Europe's economy and the wider trading system. The UK's Brexit referendum result in June has already unleashed calls for protectionism and interventionism from those who regard the EU as a constraint on government regulation rather than an excessive example of it.
But unless and until these political risks materialise, there is no need to panic about trade, and the best way of keeping it expanding is simply to encourage overall economic growth.
For the moment, the responsibility for supporting globalisation rests with central bank governors and finance ministers rather than trade officials. Monetary policy should err heavily on the side of easing, and those countries with fiscal space should use it. Beyond that, the state of trade and globalisation requires watchful vigilance, not alarm. Repeated warnings that the world is about to slide back into a protectionist nightmare have been proved wrong. They may well be again.

miércoles, 5 de octubre de 2016

(25) World debt hits $152tn record, says IMF — FT.com




World debt hits $152tn record, says IMF


© Reuters

The world is $152tn in the red — a record-breaking level of debt, according to the International Monetary Fund.
The figure, more than two times the size of the global economy, comes from the fund's latest Fiscal Monitor and is, officials claim, the most accurate measure of the world's debt burden ever calculated.
"Global debt is at record highs and rising," said Vitor Gaspar, director of fiscal affairs at the fund.
The figures highlight the apparent paradox between ultra-low interest rates imposed by many central banks in an attempt to encourage borrowing and boost sluggish economies, and the dangers that arise from excessive debt levels.
While the IMF did not call for rapid prepayment of debt, it warned that in some countries the unprecedented level of borrowing by companies was too high.
"Excessive private debt is a major headwind against the global recovery and a risk to financial stability," said Mr Gaspar. "The Fiscal Monitor shows that rapid increases in private debt often end up in financial crises. Financial recessions are longer and deeper than normal recessions."
Levels of borrowing have substantially outpaced global growth in recent years, rising from 200 per cent of gross domestic product in 2002 to 225 per cent last year.
While two-thirds of the debt is held by the private sector, governments' borrowing requirements have also ballooned since the global financial crisis.


Nevertheless, officials at the fund — which is holding its annual meetings with the World Bank in Washington this week — want governments to act to boost growth.
Calls for what are often dubbed "growth-friendly fiscal policies" have grown from the IMF and other multilateral institutions as concern has mounted that the world's central banks have been left with too much of the burden to lift the global economy.
Mr Gaspar emphasised that debt levels were not high everywhere. "The sharp diversity across countries is a reminder of the need to tailor policy diagnosis and prescription to the specific conditions prevailing in each country," he said.
Most of the debt is concentrated in the world's richest economies, although China has markedly increased borrowing in recent years. While low income countries have relatively low levels of debt, many have sharply increased borrowing in recent years.
The fund also said that companies would help raise growth if they shrank their balance sheets by reducing their size, although it acknowledged the process would take time.
He added that countries entering a financial recession with a weak fiscal position were likely to lose more growth than countries that manage to counter shocks by spending more.
Central banks have cut interest rates to all-time lows and engaged in mass bond buying in response to the global financial crisis. Although most economists think their actions have helped, there is also a broad consensus that the economy will remain below par unless governments do more.
The debt burden figure is based on data collected by the IMF and the Bank for International Settlements from 113 countries, which together make up more than 94 per cent of global GDP. Fund officials have worked on the project over the past year.

(24) A shaky trade pact that signals American decline — FT.com




A shaky trade pact that signals American decline


Actress Susan Sarandon protests against the TPP at Democratic National Convention in July © Getty

When the history of the decline of American power is written, the debacle of the Trans-Pacific Partnership may not deserve an entire chapter but it will definitely be more than a footnote.
The TPP is a trade agreement covering 12 countries in the Pacific with a collective population of about 800m, nearly two-thirds more than that of the EU single market, and a 40 per cent share of world trade. It has also become one of the most important tests of American leadership in Asia and the world.
Unfortunately, the two main presidential candidates are competing to see which of them hates TPP more and President Barack Obama is unable to push anything through Congress so the chances of its being ratified by the US are fading fast. If it is not ratified, this failure of American domestic politics will reverberate through Asia at a time when China is actively seeking to replace the US as the regional hegemon.
China was pointedly left out of the agreement, despite being a Pacific nation and the world's biggest goods trader. Seen from Beijing, the impending failure of TPP is a joyous, if baffling, occasion. It is the latest example — Brexit being another — of the dangers of popular democracy, proving that a country should never leave questions of national interest in the hands of the uninterested and uninformed masses. China's leaders are no doubt wondering what sort of superpower allows a minority of voters in rust-belt swing states to damage the interests of the entire nation in such an obvious way.
Part of the problem is mixed messaging from the Obama administration. While TPP has been described informally as the "anybody-but-China club" and an "economic Nato", the US has been at pains to deny in public that it has anything to do with containing Beijing.
This has forced the administration to try to sell TPP at home as just another trade deal at a time when many are suspicious of such deals. The closest Mr Obama has come to revealing the real rationale behind TPP — the one that might have a better chance of convincing the American public — was in January 2015. "China wants to write the rules for the world's fastest-growing region," he said. "That would put our workers and our businesses at a disadvantage. Why would we let that happen? We should write those rules."
Ashton Carter, US defence secretary, went further in April last year when he said: "Passing TPP is as important to me as another aircraft carrier." Both of these statements are true, although Mr Carter probably overestimated the value of his aircraft carriers. By failing to adopt TPP, the US will in effect cede the right to set trade and economic rules in the world's fastest-growing region. In the words of a senior Japanese diplomat, this will hand Beijing a "golden opportunity to establish a trade system in Asia under Chinese leadership".
Even Japan, which considers the rise of an aggressive China to be its number one existential threat, is considering joining the China-favoured Regional Comprehensive Economic Partnership if the US fails to ratify TPP. That agreement would cover the 10 nations of the Association of Southeast Asian Nations, plus Australia, New Zealand, China, India, Japan and South Korea. Not only would that regional partnership exclude the US but it would also include worse safeguards for intellectual property, internet freedom, workers' rights, wildlife and the environment.
In these areas and from the perspective of American corporations, TPP is the "gold standard", as Hillary Clinton described it when she was a member of the Obama administration.
With its disdain for internet freedom, human rights and environmental protection, and its practice of turning a blind eye to malfeasance where it does business abroad, you can be sure Beijing will not push for such standards in any trade agreements.
Some observers in the US and Asia are optimistic that Mrs Clinton, if elected, will revive TPP under another name. But that would take a long time and by then the deal will probably be dead. In the meantime, China will push hard for alternatives that exclude the US. The best chance for America to curb the erosion of its influence and prestige in Asia is for Mr Obama and Congress to force the agreement through in the lame-duck session after the election in November and before the inauguration of the new president in January.
If this does not happen, the US will have shot itself in the foot, ceded enormous influence to China and ensured that future trade deals are much worse for American companies, for workers and for the planet.

(23) ¿Nueva guerra a la vista? Arabia Saudí cambia a EEUU por Rusia




¿Nueva guerra a la vista? Arabia Saudí cambia a EEUU por Rusia

Esto podría llevar a la construcción de nuevas relaciones entre el reino y otros países, especialmente Rusia, expresó el analista internacional Serguei Filatov en una entrevista a Izvestia.
JASTA se convirtió en ley el 28 de septiembre después de bloquear el Congreso de Estados Unidos el veto del presidente Barack Obama, que se opuso de manera categórica a su aceptación. La ley permite a los familiares de las víctimas del 9/11 demandar a Arabia Saudí por su presunta participación en los ataques terroristas de 2001.
El analista Filatov identificó seis implicaciones de esta decisión. En primer lugar, este paso puede conducir a una revisión fundamental de las relaciones políticas entre Washington y Riad, lo que no es rentable para ninguno de ellos. El politólogo llama la atención sobre la declaración hecha por el canciller de Arabia Saudí en el momento del voto.
"Llamamos al Congreso a tomar todas las medidas necesarias para evitar las consecuencias catastróficas y peligrosas de tal decisión," dice el documento. Sin embargo, el Congreso ignoró esta advertencia.
En segundo lugar, después de la votación, el Ministerio de Asuntos Exteriores de Riad dio una respuesta aún más fuerte a las posibles consecuencias de la aceptación del acto. "El detrimento de los cimientos de la soberanía del Estado que durante cientos de años han sido la base de las relaciones internacionales tendrá un efecto negativo". En su opinión, el Congreso de Estados Unidos ha socavado todos los principios y la ley va a crear un "precedente peligroso" y causará "la erosión de la soberanía nacional de todos los países, incluyendo Estados Unidos."
En tercer lugar, en medio de la guerra siria, el empeoramiento de las relaciones políticas entre los Estados Unidos y Arabia Saudí debilita de manera inmediata y drástica la posición de Estados Unidos en este conflicto y en la región.

La cuarta consecuencia consiste en que el tribunal de Estados Unidos puede fácilmente confiscar los activos de Arabia Saudí en los bancos estadounidenses que, según diversas estimaciones, ascienden a cientos de miles de millones de dólares. Como resultado, el sistema financiero de Estados Unidos pone inmediatamente bajo su manejo estas grandes sumas de dinero. No será la primera vez: los 210.000 millones de dólares que pertenecían al gobierno de Gadafi congelados en los bancos de Estados Unidos nunca han sido devueltos a las nuevas autoridades de Libia.

El quinto punto de las reflexiones del especialista indica que inmediatamente después de la publicación de la sección clasificada del informe sobre el 9/11, las autoridades saudíes amenazaron con la venta de sus valores norteamericanos adquiridos por $750 mil millones de dólares. Esta venta puede tener unas consecuencias impredecibles para el mercado financiero internacional ya frágil.
Y por último, los congresistas de EEUU demostraron que para ellos, quedarse con unos millones de dólares extra es más importante que mantener relaciones estratégicas con el aliado clave de Estados Unidos en el Medio Oriente.
"En esta situación, en un futuro próximo se espera la visita de uno de los más altos dirigentes del reino saudí a Moscú. Sobre todo ahora que la presencia militar rusa en Siria está creciendo", concluye Filatov.    

(22) The United States vs Germany: A Global Financial War - Equedia Investment Research




The United States vs Germany: A Global Financial War

The rope in the global financial tug-of-war is unraveling.
Not long ago, one of the most important members of the European Union just voted to leave the Union.
The aftermath of that departure is still boiling.
Yet, that is just the beginning.
Deutsche Bank, Germany's largest bank, has now lost nearly 50% of its value this year.
That's a dagger in the world's financial system because not only is Deutsche Bank Germany's largest bank, it's Europe's largest investment bank, and one of the world's largest lenders.
Coincidentally, it also happens to be the biggest lender to Donald Trump's real estate business – we'll have to save the conspiracy theories for another time.
By now I am sure you've heard, watched, and read numerous explanations for why Germany's largest bank is in trouble.
Yes, we're in a period of low-interest rates, making it even harder for banks to make money.
Yes, it took on a lot of risk as a result.
And yes, the recent fine imposed on the German bank by the US Department of Justice is the straw that broke the camel's back.
But that's not the whole story – not even close.
There is much more than meets the eye.  In fact, it is global political warfare at its finest.
Here goes…

Germany vs. the United States


Germany and the United States aren't friends.
Beneath the façade of friendly meetings and media gatherings, the two countries have been fighting against each other for some time.
So where do we begin?
Back in October 2012, I wrote a story on how Germany – the world's second largest gold holder – wanted its gold back from abroad.
This was during a time when gold was climbing to new highs.
Then, just a few months later in January 2013, Germany announced to the world that it would repatriate its gold that was held abroad in "safe-keeping".
Only, most of Germany's gold were in the hands of the United States.
Perhaps the Germans no longer felt that its gold was safe in the hands of the Americans.
And perhaps they were right because, for unexplained reasons, the United States wouldn't give it back.
Over the next two years, between 2013-2014, not one ounce of German gold was transferred back from the US and very little came back from France.
This forced Germany to issue a media friendly statement.
Via my Letter, "Where Gold is Really Going," 2014:
"… As Bloomberg kindly put it:
"Germany has decided its gold is safe in American hands.
Surging mistrust of the euro during Europe's debt crisis fed a campaign to bring Germany's entire $141 billion gold reserve home from New York and London.
Now, after politics shifted in Chancellor Angela Merkel's coalition, the government has concluded that stashing half its bullion abroad is prudent after all.
"The Americans are taking good care of our gold," Norbert Barthle, the budget spokesman for Merkel's Christian Democratic bloc in parliament, said in an interview. "Objectively, there's absolutely no reason for mistrust."
Now get this.
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In 2015, Germany finally ended up getting 100 tonnes of gold back from New York…after it said it would leave the gold in American hands.
Germany also received 110 tonnes back from Paris.
If Germany's gold were "safe in American hands," and that there was "absolutely no reason for mistrust," why bring any back at all?
Take a look at this chart:
As you can see in 2012, gold was trading near its all-time high.
If conspiracies theorists are right, and the US doesn't have the gold it claims it has (which is possible considering how much gold left the United States during the Bretton Woods system), could it be that the US gave away all of Germany's gold, and had to buy it back in order to pay Germany back?
Perhaps – especially considering that right after Germany said it wanted its gold back, the price of gold appeared to have been manipulated down on numerous occasions, leading to the possible theory that it was done to allow the US, and other US banks, to buy it back at a cheaper price.
Regardless, how do you think Germany felt when it told its people it would get it's gold back, only to tell them a year later that it couldn't?
It doesn't take a genius to know the Germans aren't happy.
But the gold repatriation mistrust is just one of many things.
Via my Letter, "Nations Unite", in 2014:
"Over the past year, the United States has increasingly aggravated its allies…
…The U.S. just pissed off France but now it's picking on one of the world's largest economies and head of the Eurozone, Germany.
Over the past year, the U.S. has increasingly pushed the wrong German buttons.
First, as I mentioned last week, it seems that the U.S. won't be returning Germany's gold back to its rightful owner.
But then there's also spying scandal after spying scandal by the U.S. on Germany's top officials, and recently a CIA was caught directly soliciting a German double agent.
But now, the U.S. has just pushed Germany closer to the edge by punishing one of Germany's largest banks for the same kind of money laundering that BNP was allegedly engaged in.
…The recent actions by the U.S. on Germany is much more serious than it appears.
Underneath the distraction of the World Cup, Germany has asked the top US intelligence official to leave country – a signal that the Germans have had enough.
So while things appear rosy on the big screen under the guise of Germany's World Cup victory, things have actually gotten so bad between the two nations that Germany may potentially block American tech companies from implementing equipment in Germany.
To sum it up, Germany just told the world that it might sanction American companies from procuring contracts in Germany…without using the word sanction."
And my prediction was right: Things are much more serious than they appeared.
In 2015, less than a year after the above incidents, the United States goes after one of Germany's largest companies, and the world's largest automaker, Volkswagen.
A year later after that, the US is now going after Bosch, Germany's largest auto supplier.
Of course, it's not to say that the Germans, or Europeans, haven't been fighting back.
The EU just imposed a €13 billion fine on Apple for back taxes over a deal with the Irish government.
In fact, Apple CEO Tim Cook called it, "total political crap."
And yes, that's precisely what it was.
Shortly after, Germany and France told the world that they have virtually ended negotiations over the US push to establish a Transatlantic Trade and Investment Partnership (TTIP).
Via the Telegraph:
"The Transatlantic pact intended to unite Europe and North America in a vast free trade zone is close to collapse after France called for a complete suspension of talks, accusing the US of blocking any workable compromise."Political support in France for these negotiations no longer exists," said Matthias Fekl, the French commerce secretary.
"The Americans are offering nothing, or just crumbs. That is not how allies should negotiate. There must be a clear and definite halt to these talks, to restart them later on a proper basis," he said.
Sigmar Gabriel, the German economy minister, said over the weekend that talks were going nowhere. "The negotiations with the US have de facto failed because the Europeans would naturally not submit to American demands…"
As you can see, tensions between Germany have been brewing for quite some time…

Back to Deutsche Bank

After all of that, are you surprised that the US Department of Justice is now penalizing Germany's Deutsche bank more than 10 times the amount they asked for from any of its US peers – or other peers for that matter?
Via FT:
"The DoJ is asking for 10-times more from Deutsche than they asked for from any of its US peers, with no disclosure – it is extortion," said Davide Serra, founder of Algebris, which invests in the junior debt of European banks."
First, it's an attack on Germany's gold; then, it's an attack on its largest bank; then an attack on its largest company; then an attack on its largest auto supplier; and now an all-out attack on its bank once again.
Are these simply coincidences, or is there something much more brewing underneath the surface?

The Battle for the World


In order of magnitude, China, United States and Germany are the world's largest exporters.
But there's a big difference between one of them.

The United States is the only one with a growing trade deficit.


Conversely, China and Germany's trade surpluses continue to swell, year after year.
In 2010, China dethroned the United States as the world's number one manufacturer.
So far this year, Germany has once again become the world's largest automaker. It's also home to the biggest manufacturing company in the world, Volkswagen.
Everything that the United States built its economic foundation on is not only being challenged by China and Germany, but it's being cannibalized.
But why attack Germany? Why not China?
There are many reasons – China's military and nuclear power, China's large holdings of US debt, China's power in Asia – but simply put, Germany is a much easier target.
Now recall my Letter from last week where I explained what happens when a country's (Japan in this case) surplus swells.
"All of the dollars going into Japanese banks caused rapid deposit growth.
When banks hold deposits, they have to lend it out or be forced to pay interest on those deposits.
So in order to make money, the banks have to lend those deposits out – otherwise, they would lose money.
All of the dollars entering Japan caused a massive credit boom, which fueled the Japanese stock market which had stocks trading at 100-times plus PE multiples. It also sent property prices skyrocketing.
But the surplus kept getting bigger and bigger because the US didn't deflate because it didn't run out of money. The US kept on printing and Japan kept on absorbing all of those printed US dollars."
This is precisely what is happening with Germany and its Deutsche bank.
In fact, Germany may even overtake China as the country with largest trade imbalance in the world.
"(Germany) is likely to register the world's largest trade surplus this year, according to the Organisation for Economic Co-operation and Development, at $324 billion (against China's $314 billion), and will amass a record current-account surplus of 9.2% of gross domestic product."
In other words, all of the issues stemming from Deutsche Bank taking on too much risk and making too many loans, are the result of Germany's record-setting trade surplus.

Give Back, Or Else We'll Take it Back


When you sell more to the rest of the world but don't contribute back by spending more, people get angry.
Via FT:
"The German surplus is often viewed by New Keynesian economists such as Paul Krugman and Ben Bernanke as a detriment to aggregate demand in the rest of the world. This is increasingly difficult to eradicate through lower interest rates, which are already at the zero lower bound, or ZLB.
Put simply, Germany's net exports add to German GDP, while subtracting from GDP elsewhere.
In a world characterised by secular stagnation, this can contribute to low global growth rates."
But to make matters worse, Germany and its Chancellor Angela Merkel believe that the current situation is one of economic success and not failure, so they have been reluctant to address the issue.
Again via FT, July 2016:
"There is growing pressure from the IMF and the European Commission to take steps to reduce (Germany's) surplus but, in the main, this has fallen on deaf ears in Berlin. The consequences of ignoring this quandary could be profound."
So if Germany won't listen, then the only solution is to put them in a place where they have to.
In my view, that is precisely why Germany and its largest bank are being attacked.
Now get this, via Marketwatch:
"The Bundesbank's (Germany's central bank) balance sheet rose to €1.2 trillion in July from €222 billion when monetary union started in January 1999.
…the German central bank's balance sheet has expanded faster than that of the Eurosystem (the ECB and the constituent national central banks) as a whole.
The Bundesbank's balance sheet now encompasses around 37% of Eurosystem assets of €3.3 trillion (computed on a net basis that strips out individual central banks' claims and liabilities against each other under the Target-2 payments system), against 32% at the inception of EMU.
…The Bundesbank has always been skeptical about risks from undue holdings of dollars. It has now, on the external portion of its balance sheet, replaced dollar risk by assets of much greater potential concern – multiple claims on partner central banks standing behind an array of highly indebted euro zone countries.
This is because of the reemergence…of large persistent claims under the Target-2 system, now back to €660 billion at the end of July, not far from the euro-crisis peak level of €751 billion in August 2012.
The re-appearance of large Target-2 imbalances…points to strains caused by the reluctance of German creditor banks to channel funds back to peripheral euro countries, which have transferred euros to Germany to purchase goods and services or buy assets."
In other words, Germany has benefited from the Euro, but has been reluctant to "share the wealth."
Which is why, in my opinion, Germany – along with its banks and corporations – are now being aggressively attacked.
Or you could simply say that Germany is being attacked because they're resisting the emerging new world order.
Regardless, I suspect that one way to transfer and relinquish some of Germany's massive asset holdings is to force Germany into a bailout scenario – especially considering that the Bundesbank is building its assets (i.e. lending money) in direct competition with the ECB, while the central banks in countries such as Italy and Spain are building liabilities to the ECB.
We're already witnessing massive capital outflows from Deutsche Bank and if something isn't done soon, we could see the potential collapse of one of the world's largest lenders.
This will no doubt trigger a massive domino effect of financial contagion on a global scale.
Deutsche Bank is so deeply connected with other banks and financial institutions around the world that the effects of its failure would send shockwaves across the entire European financial system and abroad.
Some are even calling Deutsche Bank the next Lehman Brothers.
Of course, I don't think that Germany or the US – or anyone for that matter – will allow that to happen.
What I do foresee is that Germany's central bank will either be forced to step in, or a behind-the-scenes political negotiation will take place which will lead to the fine from the DOJ to be dropped significantly- with conditions of course.
All of which leads to yet another rush to safe haven assets, such as gold.

Whip Out the Foam


If the culmination of these events hasn't opened your eyes to everything that I have been warning you about over the past years, then I am not sure what will.
Things are frothy all around the world.
Chinese billionaire Wang Jianlin – who made his fortune in the country's real estate market – is now warning that the Chinese Real Estate market is spiraling out of control.
In fact, he told CNNMoney in an exclusive interview Wednesday that, "It's the "biggest bubble in history."
And if you read my Letter from last week, you'll know just how that bubble became so big.
Meanwhile, Joe Baratta, the top dealmaker at Steve Schwarzmann's $356 billion Blackstone Group issued a stark warning.
Via Bloomberg:
"Speaking at the WSJ Pro Private Equity Analyst Conference in New York, Baratta said that "for any professional investor, this is the most difficult period we've ever experienced", adding that "You have historically high multiples of cash flows, low yields. I've never seen it in my career.
It's the most treacherous moment."
Barratta wasn't the only one. Tad Rivelle, a fund manager at the $195 billion TCW Group, also issued a warning through his newsletter that, "the time has come to leave the dance floor."
Again, where do people go when they can no longer make money from the stock market or bonds?

Post-Election Outcome


Last week, I said:
"I expect that while the US dollar has been strong in anticipation of a Fed hike, the US Dollar will likely fall against the Yen, Euro, Canadian, and Aussie dollar, going into the New Year and maybe even before.
So don't be surprised to see gold climb higher as the US dollar drops in value."
But many of you asked how this would play out once the US election is over.
So here are my thoughts.

Trump Victory


If Trump wins, we're going to see a massive rise in fiscal spending and government deficit, leading to more money printing, thus digging the US into an even bigger debt hole.
Furthermore, if he imposes tariffs on China and Mexico, and does indeed bring more jobs back to the US, we're going to see inflation because it will cost more to produce goods, and those costs will be passed onto the consumer.
Perhaps that is Trump's plan in negotiating with the Fed: Indulge the Fed by borrowing more money from them through a massive onslaught of fiscal spending, while giving the Fed the ability to reach the inflation target through the higher cost of goods.

Hilary Victory 


If Hilary wins, we'll still see a rise in fiscal spending, but we're also going to see a lot of free gifts for society – gifts that will cost a lot more than she proposes.
Furthermore, she'll likely force a national minimum wage target, which will also add to the costs of producing goods in the US, which will also be passed onto the consumer, leading to inflation.
However, as we have already witnessed, the wage hikes in other States have already led to a loss of jobs. Without a Trump-like regulation on imports, it would most certainly cause corporations to look elsewhere for cheaper labor.
In other words, it doesn't matter who really wins at this point because we're going to see more spending and more debt either way.
Governments are no longer looking at how much debt and money has ballooned over the last decade – they're simply looking at how much its growing relative to the year prior.
This new normal has consequences, and almost all of them lead to the devaluation of our money.
No wonder the smart money continues to pour into gold…
Next week, I going to tell you why contrary to what you're being told, we may be on the verge of a commodities bull market.