Thursday, April 25, 2019

The Unraveling of American/Russian Relations — Paul Craig Roberts

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by Paul Craig Roberts, Paul Craig Roberts:

Dear Readers: I agree that the official Las Vegas story seems to be unraveling. A public mass shooting should be transparent, not opaque. I think we explored the story long enough to discover that without knowing the facts, we cannot arrive at an explanation with confidence.

It is time to move on to another unraveling—that of US/Russian relations. This unraveling is far more serious as it threatens life on earth. I have warned of the consequences of Washington threatening Russia’s security by breaking agreement after agreement, by placing missile bases on Russia’s borders, by orchestrating anti-Russian coups in former Soviet provinces, and by a continuing volley of false accusations against Russia. There is no act more reckless and irresponsible than to make one nuclear power fear nuclear attack from another.

Alert observers have become aware of the mounting danger. Canadian professor Michel Chossudovsky writes that Washington has taken nuclear war from a hypothetical scenario to a real danger that threatens the future of humanity. https://www.globalresearch.ca/towards-a-world-war-iii-scenario-breaking-the-big-lie/5348384

Mikhail Gorbachev, the Soviet leader who worked with President Ronald Reagan to end the Cold War and the threat of nuclear Armageddon, has appealed to President Trump and President Putin to hold a summit meeting and bring an end to the rising tensions. Gorbachev wrote in the Washington Post that “it is far from normal that the presidents of major nuclear powers meet merely on the margins of international gatherings.” This is especially the case as “relations between the two nations are in a severe crisis.” http://www.informationclearinghouse.info/48004.htm

Gorbachev’s warning could be an understatement. Last March, General Viktor Poznikhir, the deputy commander of the Russian military’s Operation Command expressed concern that Washington could be preparing a surprise nuclear attack on Russia. See https://dninews.com/article/moscow-us-missile-systems-europe-may-lead-sudden-nuclear-attack-russia andhttp://www.newsweek.com/russia-us-global-missile-defense-lead-nuclear-war-europe-591244 andhttps://www.yahoo.com/news/russian-officials-u-global-missile-192829855.html

Had any such statement from the Russian high command been issued anytime during the 20th century Cold War era, the President of the United States would have immediately contacted the Soviet leader and given every assurance that no such plan or intentions toward Russia existed. As far as I can tell, the Trump White House let this ominous announcement pass unremarked. If this is the case, it must have provided confirmation to the Russians’ conclusion.

For some time I have pointed out that the entirety of the West, both the US and its vassal states, continue to ignore very clear Russian warnings. Gilbert Doctorow has made the same point. https://www.strategic-culture.org/news/2017/10/10/deaf-ear-dire-russian-warnings.html

Perhaps the most clear of all was Putin’s public statement that “Russia will never again fight a war on its own territory.” If Washington’s EU vassals did not hear this clear warning that they are courting their nuclear destruction—especially the Poles and Romanians who have mindlessly hosted US missile bases—they are as deaf as they are stupid.

One Russian official told the idiot British government to its face that if the British threat to first use nuclear weapons is directed at Russia, if such an attempt is made, Great Britain will disappear from the face of the earth.

There is no doubt that that would be the case.

So why do Washington’s impotent vassals talk tough to Russia, a government that only desires peace and has threatened Britain in no way. Nor has the Russian government threatened France, Germany, Italy, Belgium, Greece, Spain, Portugal, the Netherlands, Sweden, Norway, Denmark, Finland, or any of the former Eastern European vassals of the Soviet Union that exchanged their captivity to the Soviet Union for captivity to Washington. Russia has not even threatened Ukraine, which Russia could wipe out in a couple of minutes. Why are all of these countries, apparently led by mindless, gutless two-bit politicians, aligned with Washington’s false propaganda against Russia?

The answer is money. The vassals are paid to go along with the lies. As Alain of Lille said as long ago as the 12th century, “not God, not Caesar, but money is all.”

What are the forces driving Washington’s provocation of Russia? There are three, and they comprise a vast conspiracy against life on earth.

One is the Neoconservatives. The Neoconservatives were convinced by the Soviet Collapse that History has chosen not the proletariat but American “democratic capitalism” as the socio-politico-economic system for the world, and that this choice by History conveys on America the status of the “indispensable, exceptional” country, a status that places America above all other countries and above international law and, indeed, America’s own laws.

Read More @ PaulCraigRoberts.org

WORLD’S LARGEST OIL COMPANIES: Deep Trouble As Profits Vaporize While Debts Skyrocket

by Steve St. Angelo, SRSrocco:

The world’s largest oil companies are in serious trouble as their balance sheets deteriorate from higher costs, falling profits and skyrocketing debt.  The glory days of the highly profitable global oil companies have come to an end.  All that remains now is a mere shadow of the once mighty oil industry that will be forced to continue cannibalizing itself to produce the last bit of valuable oil.

I realize my extremely unfavorable opinion of the world’s oil industry runs counter to many mainstream energy analysts, however, their belief that business, as usual, will continue for decades, is entirely unfounded.  Why?  Because, they do not understand the ramifications of the Falling EROI – Energy Returned On Invested, and its impact on the global economy.

For example, Chevron was able to make considerable profits in 1997 when the oil price was $19 a barrel.  However, the company suffered a loss in 2016 when the price was more than double at $44 last year.  And, it’s even worse than that if we compare the company’s profit to total revenues.  Chevron enjoyed a $3.2 billion net income profit on revenues of $42 billion in 1997 versus a $497 million loss on total sales of $114 billion in 2016.  Even though Chevron’s revenues nearly tripled in twenty years, its profit was decimated by the falling EROI.

Unfortunately, energy analysts, who are clueless to the amount of destruction taking place in the U.S. and global oil industry by the falling EROI, continue to mislead a public that is totally unprepared for what is coming.  To provide a more realistic view of the disintegrating energy industry, I will provide data from seven of the largest oil companies in the world.

The World’s Major Oil Companies Debt Explode Since The 2008 Financial Crisis

To save the world from falling into total collapse during the 2008 financial crisis, the Fed and Central Banks embarked on the most massive money printing scheme in history.  One side-effect of the massive money printing (and the purchasing of assets) by the central banks, was that it pushed the price of oil to a record $100+ a barrel for more than three years.  While the large oil companies reported handsome profits due to the high oil price, many of them spent a great deal of capital to produce this oil.

For instance, the seven top global oil companies that I focused on made a combined $213 billion in cash from operations in 2013. However, they also forked out $230 billion in capital expenditures.  Thus, the net free cash flow from these major oil companies was a negative $17 billion… and that doesn’t include the $44 billion they paid in dividends to their shareholders in 2013.  Even though the price of oil was $109 in 2013; these seven oil companies added $45 billion to their long-term debt:

As we can see, the total amount of long-term debt in the group (Petrobras, Shell, BP, Total, Chevron, Exxon & Statoil) increased from $227 billion in 2012 to $272 billion in 2013.  Isn’t that ironic that the debt ($45 billion) rose nearly the same amount as the group’s dividend payouts ($44 billion)?  Of course, we can’t forget about the negative $17 billion in free cash flow in 2013, but here we see evidence that the top seven global oil companies were borrowing money even in 2013, at $109 a barrel oil, to pay their dividends.

Since the 2008 global economic and financial crisis, the top seven oil companies have seen their total combined debt explode four times, from $96 billion to $379 billion currently.  You would think with these energy companies enjoying a $100+ oil price for more than three years; they would be lowering their debt, not increasing it.  Regrettably, the cost for companies to replace reserves, produce oil and share profits with shareholders was more than the $110 oil price.

There lies the rub….

One of the disadvantages of skyrocketing debt is the rising amount of interest the company has to pay to service that debt.  If we look at the chart above, Brazil’s Petrobras is the clear winner in the group by adding the most debt.  Petrobras’s debt surged from $21 billion in 2008 to $109 billion last year.  As Petrobras added debt, it also had to pay out more to service that debt.  In just eight years, the annual interest amount Petrobras paid to service its debt increased from $793 million in 2008 to $6 billion last year.  Sadly, Petrobras’s rising interest payment has caused another nasty side-effect which cut dividend payouts to its shareholders to ZERO for the past two years.

Read More @ SRSrocco.com

The Gold-Backed-Oil-Yuan Futures Contract Myth

by Koos Jansen, BullionStar:

On September 1, 2017, the Nikkei Asian Review published an article titled, “China sees new world order with oil benchmark backed by gold”, written by Damon Evans. Just below the headline in the introduction it states, “China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry”. Not long after the Nikkei piece was released ‘the story’ was widely copied in sensational analyses throughout the gold space. However, ‘the story’, as presented by Nikkei, doesn’t make sense at all. Allow me to share my 2 cents in addition to what I shared previously on the Daily Coin.

All the rumours and analyses on gold, oil and yuan that are making rounds now in the blogosphere are based on the Nikkei article. But the Nikkei article itself contains zero official sources. Basically, the whole story has been invented by Damon Evans. So, let’s start addressing the claims made in the Nikkei piece.

It’s true that the Shanghai Futures Exchange (SHFE) – not to be confused with the Shanghai Gold Exchange (SGE) – has recently set up a subsidiary called the Shanghai International Energy Exchange (INE), for foreign enterprises to trade a new oil futures contract denominated in yuan which is expected to be launched later this year (product symbol: SC). Specifications of the contract can be read here. In all official sources, though, there is no mention of gold. Officially this contract is not “convertible into gold”.

The only vague connection I could find is that the INE “will accept foreign exchange as … trading margin”. If this includes gold – which technically is not foreign exchange – we will see. In any case, even if gold will be used as trading margin that doesn’t mean the contract is “backed by gold”.

The Nikkei headline clearly reads “China sees new world order with oil benchmark backed by gold”. In this context, the word “backed” for most readers will refer to a fixed parity. In the past, for example, there was a fixed parity between gold and the US dollar; this meant the dollar was backed by gold through the US Treasury; dollars could be redeemed for gold at a fixed price and vice versa. In case of the Nikkei story it would imply a fixed parity between yuan, or oil (this is not clear), and gold. But how would China back anything with gold? Would China’s central bank (the PBOC) defend a fixed price of gold in yuan? And it would do so through an oil futures contract? Impossible.

Quickly ‘the story’ by Nikkei transformed through the blogosphere where analysts suggested the gold in SGE vaults would back the yuan. The problem with this theory is that gold in SGE vaults, (i) isn’t owned by the Chinese government, and (ii) isn’t allowed to be exported from the Chinese domestic market (not very convenient for foreign oil producers). Then analysts suggested the gold in vaults of the Shanghai International Gold Exchange (SGEI) would do the job. But SGEI gold, (i) isn’t owned by the Chinese government either, and (ii) can only have been sourced in the international gold market, payed for with US dollars. So much for the oil-gold trade circumventing US dollars as presented by Nikkei.

Now, let’s zoom in on the logic behind the phrase “crude oil futures contract priced in yuan and convertible into gold”. Futures contracts are an agreement between two traders about the future price of i.e. a commodity (usually denominated in a currency, in the case of the INE contract yuan). There can be no third asset, commodity or currency involved in a futures contract. It cannot be that upon physical delivery of SC – when oil is exchanged for yuan – one of the two traders will say, “you know what, I don’t want yuan (or oil), I want gold”. And, needless to say, the Chinese government will not mingle in the futures trade. The PBOC will not jump in when a SC short or long demands gold. Again, the new INE oil futures contract denominated in yuan will have nothing to do with gold.

What is possible is that when a SC short delivers oil in exchange for yuan, he is then free to buy gold with the proceeds. One can do so directly on the SGEI where three physical gold products denominated in yuan are listed.

Though, be reminded, currently no oil producer is prohibited from buying gold (or something else for that matter) when paid in US dollars. That’s actually the very function of money. Money is used, since ancient times, for what is called indirect exchange. Stuff is sold for money, and with that money all other stuff can be bought. Gold can be bought with the proceeds from oil sales since … forever. An oil futures contract will not suddenly change all that. In the Nikkei piece one analysts was quoted saying:

It’s a transfer of holding their assets in black liquid to yellow metal. It’s a strategic move swapping oil for gold, rather than for U.S. Treasuries, which can be printed out of thin air.

But oil producers are free to buy gold with their moneys (yuan or dollars) with or without the new futures contract. The INE contract will not remove an obligation i.e. for Kuwait to invest in U.S. Treasuries. So, what will change when this new oil-yuan futures contract is launched?

Also bear in mind that futures are hardly ever physically delivered. Futures are used for hedging and speculation. In general, commodities are physically traded in the spot market. Oil for dollars, chocolate for Swiss francs, Dutch cheese for euros, etcetera. Futures contracts are not necessarily needed to sell oil for yuan. Nikkei wrote:

China’s move will allow exporters such as Russia and Iran to circumvent U.S. sanctions by trading in yuan.

But effectively, Venezuela, Russia and Iran can sell their oil to China in exchange for yuan as of this very moment, before the oil-yuan futures contract is live. They also could have done so three years ago. So, in my very humble opinion the new INE contract will not be the instant game changer everybody is talking about.

Perhaps also noteworthy, one commentator on the Nikkei story wrote:

China just announced that any oil-exporter that accepts yuan for oil can convert the oil to gold on the Shanghai Gold Exchange and hedge the hard currency value of the gold on the Shanghai Futures Exchange.

My comments on this paragraph:

  1. As shown above China hasn’t announced anything but an oil-yuan futures contract. Gold has nothing to do with it.
  2. Yuan can technically be spend on gold at the SGE, but gold in the Chinese domestic market (SGE system) is not allowed to be exported. Gold from the SGEI is allowed to be exported but is bought in the international market via yuan with US dollars.
  3. Foreign enterprises, like oil producers, cannot hedge gold on the Shanghai Futures Exchange. The SHFE is not open for international customers. There’s only a spot deferred product listed on the SGE, which is comparable to a futures contract, through which foreign enterprises can hedge gold in yuan. But why would oil producers buy gold and subsequently hedge the metal in yuan. Their end position would be merely exposure to the price of yuan. Why then, not buy a yuan denominated bond with an interest rate? Or hold gold without the hedge?

Prior to publication of the Nikkei article in question I got an email from Evans. He asked me if “China will tie a gold guarantee to the new oil contract?”. I replied, “No. I would be surprised if they did that”. But my quote wasn’t selected for the final publication. The piece only quoted analysts singing the same song. In my view, that’s not what sound journalism is about. First of all Evans didn’t use any official sources, and second he picked analysts that confirmed his bias.

Aside from all the inaccuracies in the Nikkei article, what stands out for me is that indeed a large number of countries is willing to trade oil in yuan and the new INE futures contract is important for this development as it allows oil producers and users to hedge directly in renminbi. And so the INE contract will support oil for yuan trading. That’s what the article should have focussed on.

Although not much has happened yet*, it’s clear Asia wants to get rid of the petrodollar, and it will be interesting to see how this initiative develops.

Read More @ BullionStar.com

Gold Rush: Russia Stockpiling Bullion Like There’s no Tomorrow

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from Sputnik News:

The Central Bank of Russia has recently been buying bullion at an unprecedented pace. According to Argentine financial expert Gabriel Rubinstein, this policy is aimed at protecting the Russian economy in the event of crisis situations, including against dollar-related “manipulations” by the US.

“Countries stockpile gold for strategic and defensive reasons; for instance, in caserelations between nations are damaged and their currencies lose their value,” Gabriel Rubinstein, a financial consultant and former representative of the Argentine Central Bank, told Sputnik Mundo.

If there is such a situation, according to the expert, gold reserves would be the basis for a new currency or other valuable assets in the future.

“Gold, this eternal financial resource, has a real value if compared to other financial assets. The Russian government believes that it’s better to have more gold resources than dollars. Hypothetically speaking, if Russia holds tons of US dollars and the US wanted to damage its economy, this would be possible through currency manipulations,” Rubinstein said, adding that gold guarantees against such a scenario.

The Russian Central Bank has significantly increased the pace of its gold purchases. In the period between January and September 2017, the regulator bought 4.2 million troy ounces of the precious metal worth over $5 billion, 15 percent more than in the same period last year.

As of October 1, the Russian Central Bank holds $73.6 billion in gold reserves, compared with $65.5 billion a year ago, according to its data.

Russia increased its purchases of bullion after sanctions were imposed by the United States and the European Union following the 2014 referendum in Crimea and the beginning of a military conflict in eastern Ukraine. Since then, according to the World Gold Council, the Russian Central Bank has been adding some 100 tons to its gold reserves each six months, more than any other central bank in the world.

Read More @ SputnikNews.com

How Socialism Ruined Venezuela

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by Rafael Acevedo and Luis B. Cirocco, Mises Institute:

In order to understand the disaster that is unfolding in Venezuela, we need to journey through the most recent century of our history and look at how our institutions have changed over time. What we will find is that Venezuela once enjoyed relatively high levels of economic freedom, although this occurred under dictatorial regimes.

But, when Venezuela finally embraced democracy, we began to kill economic freedom. This was not all at once, of course. It was a gradual process. But it happened at the expense of the welfare of millions of people.

And, ultimately, the lesson we learned is that socialism never, ever works, no matter what Paul Krugman, or Joseph Stiglitz, or guys in Spain like Pablo Iglesias say.

It was very common during the years we suffered under Hugo Chávez to hear these pundits and economists on TV saying that this time, socialism is being done right. This time, the Venezuelans figured it out.

They were, and are wrong.

On the other hand, there was a time when this country was quite prosperous and wealthy, and for a time Venezuela was even referred to as an “economic miracle” in many books and articles.

However, during those years, out of the five presidents we had, four were dictators and generals of the army. Our civil and political rights were restricted. We didn’t have freedom of the press, for example; we didn’t have universal suffrage. But, while we lived under a dictatorship, we could at least enjoy high levels of economic freedom.

A Brief Economic History of Venezuela

The economic miracle began a century ago, when from 1914 to 1922, Venezuela entered the international oil race. In 1914, Venezuela opened its first oil well. Fortunately, the government did not make the mistake of attempting to manage the oil business, or own the wells. The oil wells were privately owned, and in many cases were owned by private international companies that operated in Venezuela. It wasn’t totally laissez-faire, of course. There were tax incentives and other so-called concessions employed to promote exploration and exploitation of oil. But most industries — including the oil industry — remained privatized.

Moreover, during this period, tax rates in the country were relatively low.

In 1957, the marginal tax rate for individuals was 12 percent. There was certainly a state presence, and the public sector absorbed 20 percent of GDP. But, government spending was used mainly to build the country’s basic infrastructure.

The area of international trade was relatively free as well — and very free compared to today. There were tariffs that were relatively high, but there were no other major barriers to trade such as quotas, anti-dumping laws, or safeguards.

Other economic controls were few as well. There were just a few state-owned companies and virtually no price controls, no rent controls, no interest-rate controls, and no exchange-rate controls.

Of course, we weren’t free from the problems of a central bank, either. In 1939, Venezuela created its own central bank. But, the bank was largely inactive and functioned primarily defending a fixed exchange rate with the US dollar.

Moving Toward More Interventionism

Despite the high levels of economic freedom that existed during those years, government legislation started to chip away at that freedom. Changes included the nationalization of the telephone company, the creation of numerous state-owned companies, and state-owned banks. That happened in 1950. The Venezuelan government thus began sowing the seeds of destruction, and you can see the continued deterioration in the level of economic freedom in the decade of the 1950s.

In 1958, Venezuela became a democracy when the dictatorship was overthrown. With that came all the usual benefits of democracy such as freedom of the press, universal suffrage, and other civil rights. Unfortunately, these reforms came along with continued destruction of our economic freedom.

The first democratically elected president was Rómulo Betancourt. He was a communist-turned-social democrat. In fact, while he was in exile, he founded the Communist Party in Costa Rica and helped found the Communist Party in Colombia as well. Not surprisingly, as president, he started destroying the economic institutions we had by implementing price controls, rent controls, and other regulations we hadn’t had before. On top of that, he and his allies created a new constitution that was hostile to private property.

In spite of this — or perhaps because of it — Betancourt is almost universally revered in Venezuela as “the father of our democracy.” This remains true even today as Venezuela collapses.

Of course, compared to today, we had far greater economic freedom under Betancourt than we do in today’s Venezuela. But, all of the presidents — with one exception — who came after Betancourt took similar positions and continued to chip away at economic freedom. The only exception was Carlos Andrés Pérez who in his second term attempted some free market reforms. But, he executed these later reforms so badly and haphazardly that markets ended up being blamed for the resulting crises.

The Rise of Hugo Chávez

Over time, the destruction of economic freedom led to more and more impoverishment and crisis. This in turn set the stage for the rise of a political outsider with a populist message. This, of course, was Hugo Chávez. He was elected in 1998 and promised to replace our light socialism with more radical socialism. This only accelerated the problems we had been facing for decades. Nevertheless, he was able to pass through an even more anti-private-property constitution. Since Chávez’s death in 2013, the attacks on private property have continued, and Chávez’s successor, Nicolás Maduro, promises only moreof the same. Except now, the government is turning toward outright authoritarian socialism, and Maduro is seeking a new constitution in which private property is almost totally abolished, and Maduro will be allowed to remain in power for life.

A Legacy of Poverty

So, what are the results of socialism in Venezuela? Well, we have experienced hyperinflation. We have people eating garbage, schools that do not teach, hospitals that do not heal, long and humiliating lines to buy flour, bread, and basic medicines. We endure the militarization of practically every aspect of life.

The cost of living has skyrocketed in recent years.

Let’s look at the cost of goods in services in terms of a salary earned by a full college professor. In the 1980s, our “full professor” needed to pay almost 15 minutes of his salary to buy one kilogram of beef. Today, in July 2017, our full professor needs to pay the equivalent of 18 hours to buy the same amount of beef. During the 1980s, our full professor needed to pay almost one year’s salary for a new sedan. Today, he must pay the equivalent of 25 years of his salary. In the 1980s, a full professor with his monthly salary could buy 17 basic baskets of essential goods. Today, he can buy just one-quarter of a basic
basket.

Read More @ Mises.org

Senior Hungarian Gov’t Minister Says Soros ‘Agent of Satan’ Attacking Christianity

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by Dan Lyman, Russia Insider:

We couldn’t agree more.

“We see the great European attacks against families, in which Soros and his comrades want to destroy the independence and values of nation states for the purpose of watering down the Christian spirit of Europe …”

The Hungarian government has established itself as a steadfast opponent of George Soros and the globalist agenda at the political and social levels, but now they have taken the battle spiritual, warning Soros is executing a Satanic scheme to destroy Europe.

András Aradszki, Hungary’s State Secretary for Energy, delivered a speech to fellow parliamentarians titled, “The Christian duty to fight against the Satan/Soros Plan,” in which he warned of an all-out attack on Christianity, traditional values, and the nuclear family.

“We see this with abortion, euthanasia, same-sex marriage, and the forced politicization of gender theory. The Soros mercenaries do not cite the Holy Father’s thoughts on this,”

he said.

“We see the great European attacks against families, in which Soros and his comrades want to destroy the independence and values of nation states for the purpose of watering down the Christian spirit of Europe with the forced settlement of tens of millions of migrants. But the fight against Satan is a Christian duty.”

“Yes, I speak of an attack by Satan, who is also the angel of denial, because they are denying what they are preparing to do — even when it is completely obvious.”

he continued.

“They frantically try to prove that there is no quota, there is no compulsory settlement, and the Soros Plan does not exist.”

Aradszki spoke on the power of prayer in combating the Satanic-Islamic influence looming over Europe, and the importance of Christians banding together to stand against it, saying,

“the rosary is the strongest weapon against evil and it is capable of changing history. George Soros will also experience this.”

He also used his address to stress the importance of a new ‘national consultation,’ which is essentially a questionnaire and information campaign directed at voters to educate them on the ‘Soros Plan’ – specifically as it pertains to forced ‘refugee resettlement’ and border controls – and also to garner their feedback on how they would see it handled by the Hungarian government.

The survey, which can be read in full here, goes into great detail about the collusion between Soros and the EU in their agenda to overwhelm the native, Christian population of Europe with primarily Islamic foreigners from Africa and the Middle East via ‘refugee resettlement’ quotas imposed by Brussels, the re-opening of Hungary’s recently secured border, and the political and economic targeting of non-compliant countries.

Read More @ Russia-Insider.com

End of Petrodollar: Rise of Economic Protectionism to Reshape Global Trade

from Sputnik News:

The era of petrodollar recycling is drawing to an end as shifts in technology and international politics render it redundant, meaning the US is entering volatile times.

Kristian Rouz — The rise of economic protectionism and nationalism in politics of the recent years, including the gradual implementation of US President Donald Trump’s agenda and Brexit reshaping the contours of European trade, are poised to bring an end to the petrodollar recycling. These developments signal the first overhaul of international economic relations since the Nixon administration in the early 1970s in the United States.

The petrodollar system entailed the end of the gold standard in the US, which had its national currency pegged to the value of gold at $35 per ounce in the aftermath of World War II. However, the severe challenges that global economy faced in the late 1960s pushed the administration of Richard Milhous Nixon to abandon the system.

“The essence of the deal was that the US would agree to military sales and defense of Saudi Arabia in return for all oil trade being denominated in US dollars,” The Huffington Post explains.

The shale revolution in oil productionin the early 2010s rendered this system irrelevant in the US, as North America is becoming increasingly independent of crude oil imports and has, in fact, increased its own oil and petrochemical exports under President Trump.

However, President Trump’s push for greater protectionism faces obstacles, mainly in the form of a significant Saudi investment in US Treasury bonds accrued over the past 40 years. The petrodollar system has allowed Saudi Arabia to increase its foreign reserves, and many other prominent oil-producing nations have followed the same foreign investment pattern.

The US, on its part, was able to increase its money supply by printing dollars, which has produced major dollar devaluation, by over 30 percent since the early 1980s. Subsequently, other oil importers, in order to pay for energy, had to buy US dollars first.

According to Foreign Policy magazine, “It does matter slightly that the trade typically takes place in dollars. This means that those wishing to buy oil must acquire dollars to buy the oil, which increases the demand for dollars in world financial markets.”

This has guaranteed a sustainable demand for the dollar in overseas markets, supporting its FX rate: during the period of ultra-high inflation in the late 1970s, whilst domestic prices in the US were advancing at a 20 percent per annum pace, the dollar held its position firmly in the foreign markets.

The end of the petrodollar system would mean lower demand for the US dollar internationally, on the one hand, and would hinder the US Federal Reserve’s ability to print greenbacks and get away with it, on the other.

Many economies are trading oil in their respective currencies, including mainland China and Russia, and Russia and Venezuela, whilst Iran and several Middle-Eastern oil producers are exploring similar deals with the EU.

Read More @ SputnikNews.com

Majority Of Republicans Support Preemptive Strike On North Korea, Déjà Vu Edition

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by Eric Blair, Activist Post:

After just a few short months of being propagandized, a recent poll conducted by Quinnipiac University revealed that a majority of Republicans (46{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to 41{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}) now support a preemptive strike on North Korea.

Newsweek reports:

An increasingly hostile relationship between the U.S. and North Korea has Americans considering a preemptive strike on the country—and many Republicans are all for it. About 46 percent of Republicans support a preemptive strike on North Korea today—compare that with just 42 percent of Republicans who say they don’t support it, according to a new Quinnipiac University poll.

The poll also showed a large majority of Republicans (63{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to 29{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}) believe that it’s more important to “take away North Korea’s nuclear weapons” than to “avoid war.”  Nearly opposite views are held by people identifying as Democrats (24{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to 69{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}).

Previously viewed as aggressive invasion, the United States has normalized preemptive war.

George W. Bush and Dick Cheney argued that Iraq was such a threat that they must be bombed and invaded to prevent a very unlikely attack “at home.”  A majority fell for it.

Remember “45 minutes to a mushroom cloud?” Remember Secretary Powell disgracing himself at the UN with vials of anthrax and diagrams of “mobile chemical weapons labs?”

It’s important to remember the lies that promoted preemptive wars as they’re being rolled out once again.

The change in public policy from a supposed defensive nation to an aggressive war machine was called the “Bush Doctrine.”  Obama continued the policy as if it was standard operating procedure.

When the Obama Administration argued that the US must preemptively strike Libya’s ruler Gaddafi in support of a “rebel” uprising, the majority fell for it. They told us it was a preemptive “humanitarian war.”  They said the operation would only take days. And of course Republicans went along with it because the war machine pays their bills.

Obama, who came into office and received a Nobel Peace Prize after just 8 months, became the first president to spend every day at war. Obama also exported twice as many weapons as the Bush Administration. In his final year as president, the US dropped 26,171 bombs around the world. Some could argue he was the most warlike president ever.

Anti-war activists finally stood up to this preemptive war agenda when Obama wanted to launch yet another in Syria. Using the same script Obama cited “humanitarian reasons,” aka Assad was killing his own people. As it turned out, Assad was fighting Western-backed terrorist militias just as Gaddafi was in Libya. Americans had enough. They called Congress in record numbers to oppose the aggression.

Both Iraq and Libya wars have been absolute disasters. No honest person can claim the people of those nations are better off after the US-backed mass murder and destruction. But if the goal was to weaken stable nations to strengthen certain neighboring opponents, then it may be mission accomplished.

Read More @ ActivistPost.com

Blacklist, Monsters Among US

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by Gordon Duff, New Eastern Outlook:

Hundreds of thousands travel freely among us, some even live as our neighbors, teach in our schools, borrow from our banks. They are war criminals, they have murdered, raped, run narcotics, been involved in arms and sex trafficking and are, in some cases, honored as heroes.

Who are these individuals, those brutalized by war, those who murder children, who wipe out villages, who arm and aid ISIS or run heroin out of Afghanistan? Who are those who have strafed the beaches of Gaza, gunning down running children or driven bulldozers over huddling families? Let us take a quick look.

Today the US is considering blacklisting the Iranian Republican Guards who have been fighting ISIS for years. This is Trump of course, infamous fraudster whose endless coffers have silenced dozens, even hundreds of sex assault victims. He is the “decider.”

When I served in Vietnam as a Marine, I expected to be blacklisted from travel after returning. Units I served with were accused of murdering civilians and some of those I served with abused civilians though when I was present, I physically intervened on more than one occasion. As a low ranking non-commissioned officer, I couldn’t be everywhere and the orders to kill civilians came from the top, from Annapolis grads who stressed body counts and not asking embarrassing questions. Thus, I was surprised when I was never questioned, never put under prohibition, never asked to account for my actions where millions of innocents had been slaughtered.

I see not just the same thing today, I see so much worse. There is no question that the US is involved in, as with Vietnam, pushing brutal dictatorships on freedom loving people around the world. We did it in Afghanistan, we did it in Iraq, we tried it in Syria and by my own accounts we are still aiding ISIS, still trying to subject millions to brutal slavery.

We are doing it in nation after nation, perhaps in every nation.

How many Americans are involved? It used to be only military. Now contractors are involved, tens of thousands, up to 400,000, some American paid, some paid by Saudis or big corporations. They operate everywhere, stealing oil and minerals, running human slaves, overseeing the world’s drug trafficking, all fully partnered with governments, able to move at will across any border, running private airlines, running torture prisons, concentrations camps, leaving behind endless mass graves of their victims and no questions asked.

Then there are the insidious tech companies, something we will get into later, who set a new standard of evil.

Long ago, America turned a blind eye to those who choose to fight for Israel. The big lie, that Israel had been attack by Arabs in 1967, sent so many to train and fight, not knowing the whole thing a farce, fiction and propaganda.

Decades later, Americans train in Israel, they come back like Jonathan Pollard, one of thousands, to spy on America, to continue to serve their “foreign princes,” as long prohibited by the constitution. While in Israel, they ethnically cleanse, they man sniper towers, they bulldoze homes or, less well known, they train ISIS, supply them with intelligence and even command their units in the field.

When they return to the US, their crimes are honored, never punished and their clear violation of US law forgiven, never questioned even if, as is suspected to be the case, they continue to serve a foreign master while enjoying American citizenship.

For others, the “contractors,” American trained military serve around the world for a series of criminals and despots, engaged in unspeakable brutality for fat paychecks. Worst of all is Erik Prinz, now candidate for US Senate in Wyoming, whose Blackwater Group in its various guises has been the worse of the worst.

Each nation has their mercenaries, their war criminals, those who recruited ISIS fighters from 80 nations, who gave them travel papers, who supplied their modern American weapons, who protected them and their businesses.

ISIS partnered with a dozen governments, Turkey, Jordan, Ukraine, Egypt, Saudi Arabia, Qatar, the UAE, Romania, Bulgaria, Azerbaijan Georgia, India, Britain, Germany, Poland and others.

The American planes that supplied air cover for ISIS, where are those pilots? The Israeli and Turkish pilots as well? Who flew the helicopters that moved ISIS from place to place? Who sold them the Raytheon missiles? How were they delivered?

When ISIS stole entire factories and billion in antiquities, who marketed it all, who profited, who ran the London auction houses?

Who sent 12,000 oil trucks, more than half formerly licenses for American roads, to Iraq and Syria to move oil for ISIS? Did anyone ever suspect that ISIS was also Exxon, BP, Haliburton or Bechtel? We did.

Let’s talk about the Kurds who guarded the ISIS oil trucks as they loaded and drove through the capitol of Erbil and through Kurdish held Duhoc right into Turkey? Everyone involved is a terrorist, why are none of them blacklisted?

Americans who served in Afghanistan all saw the drug traffic there, watched the poppy fields planted, the fertilizer and irrigation projects by USAID that addicted and killed millions around the world. Where did the money go?

When the Panama Papers was published, why were records of the drug money included, money that included dozens of top US officials along with the few listed in Pakistan?

Read More @: Journal-NEO.org

Russia and China Strengthen Their Alliance, Weakening the US Dollar in the Process – Nathan McDonald

by Nathan McDonald, Sprott Money:

Month after month, year after year, the mighty King Dollar is slowly being weakened, its monopolistic grip as the fiat reserve currency of the world steadily lessening. To many, this reality passes them by, as they are blissfully ignorant to the facts, living their lives without knowing the true ramifications that this will have on their lives.

People have simply taken for granted the reality that they live in and the power that comes along with having the unique status of “reserve currency of the world”. This has granted the United States the ability to expand its empire and military might, despite the fact that it is utterly bankrupt, with its debt levels just recently exceeding the stunning $20 trillion mark. This is a debt that will never be repaid.

Yet, it has not just been the United States that has benefited. Their closest allies have also experienced a trickling down effect and benefited from the close relationships they have formed with their ally and chief trading partner.

Indeed, it has been a good ride, but like all rides, eventually they must come to an end. This is exactly where we stand now. The ride is slowing down and not because the passengers want to get off, but because those waiting in line are demanding their turn.

China and Russia have been increasingly growing closer and closer as the years go on. They have been forced into this uncanny partnership due to the numerous economic sanctions placed on Russia and the ratcheting rhetoric used against China.

This partnership is not one that should be overlooked, as these two economic powers possess a stunning amount of not just military force, but also natural resources – the latter of which they continue to gobble up from lesser nations at a feverish pace.

Two resources that both countries desire, seemingly above all else, are oil and gold.

Russia, luckily, has a massive reserve of oil under the ground, being the world’s largest producer of oil in the world , and China needs it to keep its economic engine running. Both have large reserves of gold both in the ground and in stockpile.

Therefore, it comes as no surprise to anyone following this story to see that both countries are once again moving even closer together, supplanting the need to settle in USD, and establishing the first ever Yuan to Ruble payment system .

This has to have the United States government and the elites who control the fiat based system worried. The need to have US dollars, also known as the “Petro Dollar”, is what drives their might and power.

They cannot have countries simply abandoning this system haphazardly and setting up their own payment methods, and this is exactly what has led to so many countries in the middle east being ransacked for even thinking about doing so.

Read More @ SprottMoney.com

The Spanish Civil War, revisited

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by Pepe Escobar, The Asia Times:

Puigdemont’s political twist could invoke a lethal response from Madrid: suspension of Catalonia’s government

Call it theatre of the absurd – with a lethal subtext. Under pressure from all corners – even Donald Tusk, president of the EU Council – in his fateful date with destiny Carles Puigdemont, President of Catalonia, came up with some last-minute judo dialectics. He issued a non-denial denial Unilateral Declaration of Independence from Spain. What was declared was immediately suspended; the Republic of Catalonia lasted for six seconds.

 Catalan President Carles Puigdemont signs a declaration of independence at the Catalan regional parliament in Barcelona, on October 10, 2017. Photo: Reuters/Albert Gea
Catalan President Carles Puigdemont signs a declaration of independence at the Catalan regional parliament in Barcelona, on October 10, 2017. Photo: Reuters/Albert Gea

The deft political gambit left Madrid predictably bewildered. Prime Minister Mariano Rajoy, a.k.a. nano-Franco, issued an ultimatum; you have five days to say if you declared independence or not.

Independent of the answer, Madrid’s nuclear option remains on the cards; infamous article 155 of the Constitution, which calls for the suspension of Catalonia’s government and parliament from six to 12 months.

Yet that may come with a twist; a 155 in slow motion, parallel to the hazy offer of starting a process, in six months maximum, leading to Spanish constitutional reform. Madrid needs Catalonia for this reform to succeed. So, essentially, Puigdemont just needs to say “no” for the train to start rolling.

It’s way more complex than it seems. The Catalan extreme left, up to the last minute, was trying to convince Puigdemont to proclaim unconditional independence. At the same time, those six seconds left Catalan unionists predictably furious. Moderates for their part prefer to see a faint light at the end of the tunnel.

The problem is that even with discreet back channels in place, Madrid’s strategy is to ultimately force a fissure in the independentist coalition; secession inside Catalonia to prevent secession from Spain. So far, the fissure has been prevented by some members of the Catalonian Parliament signing a declaration of support for the – still non-existent – republic.

Scrap that constitution

The President of the Cantabria region, Miguel Ángel Revilla, sums it all up: Rajoy is to blame. Revilla worries that “50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of Catalans want to leave Spain. Four years ago, that was not the case.” He stresses how a “Catalan statute – approved by the Catalans and the Spanish Parliament – was impugned by the Constitutional court, so they had to be mad, right? It did not deal with independence, it was a pact, delineating a series of obligations.”

So the unwillingness of the Spanish government to talk, according to Revilla, is what led to the current impasse. No wonder; Rajoy is closely advised by former Prime Minister José María Aznar.

The extremely reactionary administration in place in Madrid could have defused the bomb even before the referendum, by mobilizing sectors of the working class in Catalonia whose first language is Spanish, not Catalan; many of these view the independence dossier as a “war of the elites”.

Madrid though opted for Franco-ist repression tactics. King Felipe VI had one chance to appeal for calm and reunite the nation; he chose to play Scaremonger-in-Chief. EU “leaders” stuck to platitudes, like Rothschild favorite Emmanuel Macron extolling his “profound” vision of an integrated Europe and Chancellor Angela Merkel abdicating from her role of Dispenser of Wisdom; after all, this is not Crimea.

The European Commission (EC), losing the scarce credibility it still possessed, sharply ignored its own “core values”; the rights of national minorities enshrined in Article 2 of the EU founding treaty, as well as Article 21 of its charter of fundamental rights.

Podemos has some decent ideas to “save Spanish democracy”.

Yet there seems to be only one sensible road map ahead.

  1. Kick out the incompetent, nano-Franco administration, which does not want any dialogue; a tough call in a nation so viscerally conservative as Spain.
  2. Explain to everyone in Catalonia, especially the different strands of the working class, what independence would mean in practice – something the current “leaders” are incapable of. Catalonia – one of the EU’s wealthiest regions – in or out of the EU? Trading in which currency? Without an army? Able to manage a neighboring hostile power (Spain) and not recognized by France?
  3. Launch a comprehensive national dialogue process to reform the outdated 1978 constitution – privileging a modern, federal charter, emphasizing more consensus among regions, and considering the concerns of at least 25{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of hardcore independentists in Catalonia.

None of this seems to be on the cards – and that’s why the real tragedy is only beginning. Spain is already broken – and there will be no turning back.

Calling Rosa Luxemburg

The temptation to strike parallels with Europe a century ago are strong. What about adapting Rosa Luxemburg’s latest, searing essay before she was assassinated in January 1919; “You stupid henchmen! Your ‘order’ is built on sand.” At the same time Rosa Luxemburg warned the Left about the petty-bourgeois nationalisms emerging after the collapse of the Habsburgs (the exception was Czechoslovakia.)

Read More @ ATimes.com

Hungary PM Viktor Orban BLASTS “Soros plan” to bring extremists into Europe and destroy Christianity

by Alex Christoforou, The Duran:

George Soros is using mass immigration to destroy Europe’s “cultural and ethnic identity”

Hungary’s Prime Minister continues to take the fight to globalist billionaire George Soros.

Viktor Orbán told an international conference on the persecution of Christians taking place in Budapest…

“To us, Europe is a Christian continent and we would like to keep it that way, and although we may not be able to preserve all of it, we would at least like to save the little slice of it that the Good Lord entrusted to the Hungarians.”

“A group of Europe’s intellectual and political leaders want to create a mixed society that would completely change the continent’s cultural and ethnic identity, and Christian nature, within just a few generations.”

Orban noted that Hungary is offering much needed help to persecuted Christians in the Middle East and Africa, contrasting this with EU policy which he stated was following the “Soros plan” to bring extremists into Europe.

The Gateway Pundit reports…

Whilst Hungary sought to offer aide at source, working directly with churches and providing assistance on the ground, the EU was ‘’bringing trouble over here”, he warned, in the form of Islamic extremism.

“Hungary, however, is doing the opposite of what Europe is currently doing. We are doing what we must do according to local Christian leaders…We are providing assistance to enable people to move back to their homes’’, he explained, detailing Hungarian government projects aimed specifically at the prevention of persecution against Christians.

Projects include the reconstruction of homes and churches of terrorized Christian communities in Iraq, Syria and Lebanon in cooperation with Hungarian Interchurch Aid, the provision of scholarships for persecuted Christian youth, and the founding of a Hungarian-funded Catholic university.

 

The outspoken leader, a thorn in the side of the EU and a vocal critic of open borders European leaders, warned that the brutal, and often unreported, atrocities committed against Christians in the Middle East and elsewhere could become a reality in a not too distant European future.

“The greatest danger threatening us today is the indifferent silence of the European elite who are renouncing their Christian roots, despite the fact that the fate of Middle Eastern Christians should wake Europe up to the fact that, no matter how unbelievable it may still seem, what happened there could also happen to us”, he stressed.

Acknowledging that discrimination against Christians in the West was unjust and discriminatory, it remains tolerable in comparison with the brutal situation in the Middle East and Africa, Orbán continued, reciting shocking figures on the scale of atrocities being committed against Christians in ISIS controlled territories, particularly in Iraq.

The popular leader called on his European counterparts to urgently put aside “politically correct speech and human rights cautiousness” and to do everything in their power to protect persecuted Christians.

Returning to the European context, Orbán warned that ‘’the world must understand that what is at stake today is nothing less than the future of the European way of life and our own identity.’’

Only days ago, a spokesman for Prime Minister Orbán’s government stated that the implementation of the ‘’Soros plan’’ is making headway in the institutions of the European Union, clearly being reflected in policy proposals, with hundreds of representatives of Soros’ Open Society Foundations lobbying and promoting recommendations that the EU take in a million asylum-seekers a year, funding to the tune of billions the distribution of migrants across EU member states.

Read More @ TheDuran.com

King Dollar is Dead? Biggest Paradigm Shift in 100 Years: China and Electric Cars at Forefront

by Mish Shedlock, Mish Talk:

Steen Jakobsen, Saxo Bank Chief Economist and CIO, says the biggest change in 100 years is underway. He points to events in China and with electrification of cars.

This is a guest post by Jakobsen.

Macro Digest: The 19th Party Conference – The biggest Paradigm shift in 100 years?

I think next week’s 19th China Communist Party’s Conference is the single biggest event this year – a confirmation a true paradigm shift

China leads world in credit creation, growth and now in most technology fields… My take remains that President Xi will focus on quality over quantity, that pollution reducing is the number one social issue and that The Party is taking more and more control. The net output will be:

  • Lower than expected growth next 18 month (while China converts economy from export engine to one of productivity gains – President Xi wants 2010 GDP per Capita doubled (Rule of 72= 72/7{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} GDP per year = 10 years) which means objective of 7{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} growth per year, but most of this will be productivity driven which means investment first (hence lower growth) then higher
  • Reduction of pollution = Electrification of cars – BDY says by 2030 100 pc of cars will be EV – this catapult China to leadership in battery, E-engines, and pollution reduction (Don’t forget that from 1900 to 1910/13 the US went from 100{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} horse carriages to 100{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} cars!)
  • High ratio of R&D and innovation to gain leadership China is already, but will be even more dominant in E-commerce, payments and Fintech. (See Mckinsey report below)
  • Slow gradual openness in capital account, more access to market for foreigners and BIG FOCUS on converting global trade from US$ to CNY [Yuan vs Dollar]
  • Weaker CNY post conference
  • Big negative credit & growth impact on rest of the world

Changes comes much faster than we human beings like – our brain is simply not designed to accept quick changes, and one of the few short comings of the brain is that it likes (and uses) the recent past to extrapolate the future. We think linear but world evolves super log-normal. An excellent example is the pictures below from New York in 1900 and 1913. Notice the difference and that in the space of 13 years only.

 

I think the next 13 years will surpass those years in terms of change, dynamics and how we act, analyze and live.

China is changing and has changed more than market gives it credit for – the Anglo-saxon economist’ keeps focus on banking system and debt, but unlikely western world China can accelerate growth through release of productivity – The US with President Trump has chosen to “retire” from the global economy on a fundamentally flawed concept of America 1st while China is growing its importance, probably best illustrated by this chart:

Now China also wants a new world order in commodities . China will allow exporters to avoid US$ payments for Yuan or Gold!

China is enjoying US’ indecision on foreign policy, which seems to be driven by indecision, spur of the moment changes and randomness opposite this sits China, with its One Belt, One Road, Asian Development Bank and the Shanghai Cooperation Organisation – There is in excess of 3 billion people in this alliance – and with Pakistan and India joining in 2015 that number will be 4 billion by 2050.

The future belongs to the countries and companies which can command the consumers, no one is better placed than China (and India).

We are witnessing a geo-political reality show where one hegemonic power, the US, almost voluntarily is given up its dominance. The result is clear to me:

The King Dollar is dead, Long live the King CNY!

Steen Jakobsen

Mish View – Dollar Not Dead Yet

A paradigm change is indeed underway, but it will be led by cars (autonomous driving and electrification), demographics (aging boomers), the demise of pension plans, a revolt by millennials, and a squashing of the current political class.

A currency crisis is inevitable but it’s too soon to say gold gold will be back in the picture. Some suggest SDRs, but I dismiss that idea.

Read More @ MishTalk.com