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Posts Tagged ‘World Bank

U.S. Corp and the impending IMF merger

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by Robert Denner
of Daily Economic Update
Posted December 1, 2011

BEEN LOTS OF TALK AROUND LATELY REGARDING THE COLLAPSE OF THE U.S. DOLLAR AND WHAT THAT WOULD MEAN FOR THE UNITED STATES OF AMERICA AND THE WORLD. There has also been a lot of talk about the Federal Reserve Bank of the United States of America and how unhappy the people of the US are getting with this largely unknown organization.

These two forces are converging together in what could be a very serious and detrimental way as it relates to the average US citizen. This article will rely heavily on flawed analogies to help the lay person understand the inner workings of both the IMF and the Federal Reserve Bank. This is not to be taken as an academic piece and I would ask that it not be judged as such. This is meant to help those people that have recently woken up to the reality that their country has been hi-jacked and those that are desperate to get up to speed as quickly as possible. So let’s jump right into the thick of it shall we? First we need to start with what I hope are simple lessons so that you can take what I am about to teach you and apply it to the real world.

There is one thing that bankers and computer people love to do and that is to use big scary acronyms to scare off the simple folk. So here is your first lesson.

IMF and the SDR

So right off the bat we are using acronyms that mean absolutely NOTHING to the lay person and yet that is an actual sentence believe it or not… IMF stands for the International Monetary Fund. The SDR is short for Special Drawing Rights and is the currency of the IMF. The International Monetary Fund is a private bank that is used to help sovereign nations engage in international commerce. Just like if you owned a company and you used bank A, and your supplier used Bank B, the IMF would be the bank that both banks A and B used to transfer payments and credits back and forth to each other. To Company A and B (using Bank A and B) it would be seamless.

But the IMF does a whole lot more for the global economy. They are the creditor of last resort for a lot of countries. For if you want to engage in international commerce in the free world (meaning the world now) you must be a part of the IMF system. Should a country that is part of this system become over leveraged because of mismanagement and debt accumulation, the IMF stands ready to come to the rescue. To understand how this relationship has worked in the past (and the present); I MUST go into some history. I will keep it brief I promise.

To understand how the global monetary/commercial world works you have to go back to the end of World War II. Following the war the United States was alone as a major industrial power. The rest of the industrial countries were in shambles. The United States was also nearly alone as a producer of oil. It is this later point that needs to be highlighted.

The United States used its vast oil reserves and coupled it with a highly trained industrial labor force and put it to work in its vast expanse of industrial capacity to re-build the rest of the world. It is this fact that is at the very center of our current monetary system some 60 years later. So I will start with my first analogy…

The US Corp could be seen as a huge company like General Motors. Following WWII US Corp was the only company left with the capacity to make things and it had the working capital and energy to do what it wanted. US Corp went out into the world and started to acquire other businesses. First was Japan Corp which US Corp had beaten into a pulp during the war. US Corp decided that it was in its own best interest to build Japan Corp back up but it needed to make sure that it never again could threaten US Corp the way it did in WWII.  Japan Corp used its own currency called the YEN and US Corp obviously used the Dollar. So to make this all work, US Corp had to make sure that the workers at Japan Corp didn’t feel like the last of their country was being taken from them. To keep them vested in the viability of their own country it was very important to let them keep their own currency and their own political structure, albeit greatly modified under the surface. We allowed Japan Corp to keep their figurehead CEO (the Emperor) and we installed a new board of directors (Democratic institutions). We linked the Bank of Japan to US Corp’s bank the Federal Reserve Bank through a new institution called the International Monetary Fund and the World Bank.

If we were to compare this to General Motors this would be like GM buying another company and bringing it under the umbrella of the GM brand. So in this case Japan is like Pontiac and they are given free rein to run their subsidiary the way they see fit, SO LONG as they abide by the parent companies rules.

This setup worked wonderfully and within a decade Japan Corp was back on its feet and was supplying cheap labor and products for US Corp and with every single barrel of oil Japan Corp bought on the international market it further linked them with our monetary system.  To keep the Japanese citizens from feeling that it was the US Corp in charge of everything we came up with the International Monetary Fund and the World Bank. Of course these institutions were funded initially by the United States and Great Britain and as such they were just pseudo US institutions. But it worked and the Japanese subsidiary of US Corp gladly bought oil and products from the United States in its own currency (the Yen) but it was linked via the IMF to the US Dollar. For you see US Corp linked everything that the industrial world needed to the US Dollar. All gold/oil/silver/food/etc were priced first in US Dollars and depending upon the relative “strength” of your currency to the US Dollar, this would dictate how much of your currency it would take to purchase a barrel of oil or an ounce of gold. This gave US Corp a huge advantage in the world as we produced almost everything anyways. We had most of the world’s oil supply and a very large portion of the food supply. We were the largest producer of the big complex things the world needed to rebuild. We allowed the smaller subsidiaries to produce the little stuff we needed or wanted. Japan Corp was great at the later, supplying us with small radios and other cool electronic gadgets.

US Corp built a company with dozens and dozens of subsidiaries, each one of them bringing something to the table either large or small. And as the world re-built, other countries wanted to get in on the good times and they voluntarily sold themselves to US Corp. Other countries were very reluctant to join our big happy company. Those countries fell into two groups. Either they were affiliated with Russia Corp or they wanted to stay neutral. But in a world that was moving fast towards globalization it became apparent that each country would have to choose a side lest they be shut out of the global market. For remember that the only way to gain access to US Corp’s vast array of markets and supplies is to be a part of the IMF/World Bank. It was the only way to convert your currency to other currencies (like the US Dollar to buy OIL!!).

I will end this history lesson there as I could get sucked in for hours explaining how US Corp and Russia Corp went to economic(and sometimes real) war with each other and how Russia Corp tried to have it both ways by linking themselves partially to the IMF to gain access to US Corps vast supplies and labor.

I will leave that to YOU to go out and study on your own as it is a story to rival any fictional book you have ever read. The important thing to take away here is that the International Monetary Fund and the World Bank are institutions that were created by the United States and Great Britain. It is a global system that allows countries using different currencies to exchange their goods and services with each other almost seamlessly. Remember also that the system was setup INITIALLY to allow US Corp to control the world’s most important supplies. Things like FOOD, OIL, COMMODITIES (gold,silver,etc) and the rest. At the time this system was created it was the United States that was supplying the lion’s share of these items. But as the decades have come and gone, these items have increasingly come from other parts of the world.  And a good portion of these countries are ones that were FORCED into our system either out of necessity or by direct manipulation of their country by forces outside their borders(meaning the US and the IMF).

CONFESSIONS OF AN ECONOMIC HITMAN

This next part of our story is centered on how the US has maintained its spot at the top of the economic order even in the face of massive budget deficits and seemingly unending debt loads. The title of this section is called Confessions of an Economic Hit Man, as I give a nod to a book of the same name written by a man named John Perkins. Mr. Perkins is a trained economists and his specialty was international finance. His job was to go out into the world and sell foreign leaders on US Corp and to convince them to get on board with our system. Or more importantly, it was his job to make sure that they were forever caught up in our system and that they did not attempt to leave our company.

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Federal Reserve policy mixed with extreme weather has put the world on a fast track to revolution and war

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by David DeGraw
of AmpedStatus
Posted August 25, 2011

THERE ARE MANY FACTORS THAT CLEARLY DEMONSTRATE WHY IT WOULD BE DISASTROUS for the Federal Reserve to repeat their vicious Quantitative Easing (QE) policy. If you want to know a significant reason why they cannot get away with another round of QE, here is an equation for you:

(Quantitative Easing + Extreme Weather = Revolution + World War III)

From the very beginning we knew that the Federal Reserve’s QE program was going to cause the cost of food to rise and the dollar to decline in value, and that these intended results would lead to an increase in poverty and civil unrest.

Are food prices approaching a violent tipping point?

A provocative new study suggests the timing of the Arab uprisings is linked to global food price spikes, and that prices will soon permanently be above the level which sparks conflicts. There is a specific food price level above which riots and unrest become far more likely. That figure is 210 on the UN FAO’s price index: the index is currently at 234, due to the most recent spike in prices which started in the middle of 2010 [coinciding with QE2].

Lastly, the researchers argue that current underlying food price trends – excluding the spikes – mean the index will be permanently over the 210 threshold within a year or two. The paper concludes: “The current [food price] problem transcends the specific national political crises to represent a global concern about vulnerable populations and social order.” Big trouble, in other words. The next part of the study identifies that the serious unrest in North Africa and the Middle East also correlates very closely with [the QE2] food price spike. Bar-Yam also notes: “Several of the initial riots in North Africa were identified in news stories as food riots.” From there, the researchers make their prediction of permanently passing the 210 threshold in 12-24 months.

In other words, if the Fed engages in another round of QE, the global unrest that they have already ignited will go hyperbolic. Before getting into the details on how the Fed deliberately made these food prices spike, let’s look at another new study, which also helps demonstrate the obvious, extreme weather is linked to war:

Climate cycles linked to civil war, analysis shows

Changes in the global climate that cut food production triggered one-fifth of civil conflicts between 1950 and 2004. Cyclical climatic changes double the risk of civil wars, with analysis showing that 50 of 250 conflicts between 1950 and 2004 were triggered by the El Niño cycle, according to scientists. El Niño brings hot and dry conditions to tropical nations and cuts food production, to outbreaks of violence in countries from southern Sudan to Indonesia and Peru.

Solomon Hsiang, who led the research at Columbia University, New York, said: “We can speculate that a long-ago Egyptian dynasty was overthrown during a drought. This study shows a systematic pattern of global climate affecting conflict right now. We are still dependent on climate to a very large extent.” Mark Cane, a member of the team, said global warming would have greater climatic impacts than El Niño, making it “hard to imagine” it would not provoke conflicts. [read full report]

Put all these factors together and you have, “The Road Through 2012: Revolution [and/or] World War III.”

In summation, Ben Bernanke and the Fed’s economic central planners were clearly aware of the hostile climate and weather patterns when they engaged in QE2. The Fed’s infamous policy, as I said before, “deliberately threw gasoline all over those brush fires. QE2 was another economic napalm bomb from the global banking cartel.” They knew that they were deliberately attacking (sacrificing) tens of millions of people, but that was secondary to keeping their global Ponzi scheme going by pumping another $2.1 trillion into their fraudulent, insolvent banking system through both QE programs. This is why Ben Bernanke is guilty of crimes against humanity. Now, let’s revisit what I’ve been reporting on for the past year:

Centrally Planned Economic Repression

The IMF has a well-worn strategy that they use to conquer national economies. As I warned four months ago, we have now progressed into Step 3.5: World Wide IMF Riots. Back in October, in a TV interview with Max Keiser, we discussed leaked World Bank documents that revealed the IMF’s strategy. I stated the following:

“They have a four-step strategy for destroying national economies. We are about to enter what they would call Step Three. Step Three is when you’ve looted the economy and now food and basic necessities all of a sudden become more expensive, harder to get to. And then, Step 3.5 is when you get the riots. We are headed to, as the IMF said, and as they plan, Step 3.5: IMF Riots. That’s what’s coming…”

Fast-forward four months to today, and now we see country after country rebelling against high food prices. Since our October interview, food prices have spiked 15%. According to new World Bank data, since June 2010, “Rising food have pushed about 44 million people into poverty in developing countries.”

As Federal Reserve Chairman Ben Bernanke announced another round of Quantitative Easing (QE2), those of us paying attention knew that the trigger had been pulled and Step Three had been executed. It was a declaration of economic war, an economic death sentence for tens of millions of people – deliberately devaluing the dollar and sparking inflation in commodities/basic necessities. It was a vicious policy that would impact people from Boston to Cairo.

When QE2 was announced, I warned: “Food and Gas Prices Will Skyrocket, The Federal Reserve Just Dropped An Economic Nuclear Bomb On Us.” I also wrote: “The Federal Reserve is deliberately devaluing the dollar to enrich a small group of a global bankers, which will cause significant harm to the people of the United States and severe ramifications throughout the world. The Federal Reserve’s actions are already causing the price of food and gas to increase and will cause hyperinflation on most basic necessities.”

To be clear, there are several significant factors contributing to rising food prices, such as extreme weather conditions, biofuel production and Wall Street speculation; but the Federal Reserve’s policies deliberately threw gasoline all over those brush fires. QE2 was another economic napalm bomb from the global banking cartel.

In a recent McClathy news article entitled, “Egypt’s unrest may have roots in food prices, US Fed policy”, Kevin Hall reports:

“‘The truth of the matter is that when the Federal Reserve moved on the quantitative easing, it did export inflation to a lot of these emerging markets. There’s no doubt that one of the side effects of the weak dollar and quantitative easing has been rising commodity prices. It helped create this bullish environment for commodities. This is a very delicate balancing act.’

It’s a view shared by Ed Yardeni, a veteran financial market analyst, who reached a similar conclusion in a research note to investors. He joked that Fed Chairman Ben Bernanke should be added to a list of revolutionaries, since his quantitative easing policy, unveiled last year in Wyoming, has provoked unrest and change in the developing world

‘Since he first indicated his support for such a revolutionary monetary change, the prices of corn, soybeans and wheat have risen 53 percent, 37 percent and 24.4 percent through Friday’s close,’ Yardeni noted. ‘The price of crude oil rose 19.8 percent over this period from $75.17 to $90.09 this (Monday) morning. Soaring food and fuel prices are compounding anger attributable to widespread unemployment in the countries currently experiencing riots.’”

The people throughout the Middle East and Northern Africa, on the fringe of the Neo-Liberal economic empire and most vulnerable to the Fed’s inflationary policies, are the first to rebel. The conclusion that we reach, the unfortunate reality of our current crisis: the Federal Reserve and global economic central planners have declared war on us. We are under attack. We must remove Ben Bernanke from power and hold him and the rest of the global banking cartel accountable. We must also break up the “too big to fail” banks. This a message I, along with many others who have analyzed our economic situation, have been repeating over and over for the past three years.

Hopefully, a critical mass of people will soon understand this reality and back it up with non-violent civil disobedience before riots and violence rip our society apart. For these reasons, let’s all go to Wall Street on September 17th and show these tyrants that we’ve had enough.

S&P downgrades US credit rating to AA+, and more

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Daily Bell Briefs
Posted August 08, 2011

S&P downgrades U.S. credit rating to AA+

The United States lost its top-notch triple-A credit rating from Standard & Poor’s Friday, in a dramatic reversal of fortune for the world’s largest economy. … This came after a confusing day of reports: Standard & Poor’s told the U.S. government early Friday afternoon that it was preparing to downgrade the U.S.’s triple-A credit rating but U.S. officials notified S&P that it had made a $2 trillion mathematical error. The error was in the calculation of the U.S. debt-to-GDP ratio over time and was based on a misreading of what the correct congressional baseline was, government sources indicated. They said that once informed of the error S&P revised its rate-cut rationale to emphasize the political aspects of the country’s debt situation. “A judgment flawed by a $2 trillion error speaks for itself,” a Treasury spokesperson said. – CNBC

Dominant Social Theme: You cannot trust the private sector with this sort of thing… the State knows better.

Free-Market Analysis: We have been suggesting for quite a long time now, perhaps ten years or more, in various books, editorials and publications, that the US monetary and political system was in serious trouble and would eventually face a severe “reality check.” Today, we see the headwinds of reality crashing into the structural edifices that have been erected as a means of population control and economic enslavement. The US dollar is a license to steal, one that has been granted via legal tender laws, and the heist has now been revealed to millions during this dawning era of what we call, the Internet Reformation. The US political establishment – in this case the Treasury Dept. – can criticize S&P’s downgrade all they like, but the truth of the matter is that the US is broke and soaked in a sea of unsustainable debt. To whine about a $2 trillion “error” – that isn’t really an error at all, considering the Treasury Dept. is disputing S&P’s misuse of “congressional baseline” numbers that somehow accurately forecasts the “U.S. debt-to-GDP ratio over time” – is nothing short of laughable. Suffice to say, why should anyone, including S&P base any of their numbers on congressional baseline numbers when all the government does is tell one lie after another? Does anyone with any semblance of understanding of the fiat-money system really believe that the “wise leaders” acting/running the US are going to master the great ship’s rudder and pull off a last minute “miracle-manouver,” thus avoiding the treacherous shoals it is destined to crash into? We think Hurricane Reality is about to teach the “Captains of Fantasy” and their believers a severe lesson. Now S&P cannot come out and say that, but we can.

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Asian Markets slip on U.S. credit downgrade

International markets trembled over the weekend following an unprecedented downgrade of the United States’ sovereign credit rating by the agency Standard & Poor’s. Analysts had feared that the downgrade, in combination with the spiraling European debt crisis, could send overseas investors into a panic and undermine the strength of the global economy. … As of 11 p.m. EST on Sunday, Japan’s Nikkei index had fallen 1.3 percent to 9,178.03, a drop of 121.85 points. Hong Kong’s Hang Seng was down 3.71 percent at 20,169.41, while the South Korean composite index KOSPI had fallen 3.01 percent to 1,885.27. Australia’s S&P/ASX 200 index slipped 1.2 percent to 4,055.80, while New Zealand’s NZX 50 declined 2.49 percent to 3,194.82. In the Middle East, Israel’s TA-25 market fell 7 percent to close at 1,074.27, its biggest decline since 2000. Egypt’s EGX30 fell 4.2 percent. Other markets showed more measured losses: the Abu Dhabi Securities Exchange General Index fell 2.5 percent, while Dubai’s exchange closed 3.7 percent down. … In spite of the S&P downgrade, few on Wall Street are expecting investors to pull out of Treasuries on a large scale, since the bonds are still seen as relatively safe. – Huffington Post

Dominant Social Theme: Don’t believe all the hoopla; US government debt is a safe and stable investment.

Free-Market Analysis: How anyone can suggest that there is anything safe about US government bonds, especially now, is beyond us. But we would expect nothing different of an article that appears in the Huffington Post, a mainstream media player to be sure. To think that people should act like the US Congress and try and solve the fiat-money debt problem by investing in the very problem itself – US debt – is foolish, in our opinion. The article, not surprisingly, mentions nothing about honest money as a safehaven option – despite that fact that gold, trading above $1,700 as of this writing, is up more than 50% in purchasing power over the last three-years alone against the US dollar. Does the US dollar, or dollar denominated debt, sound like an investment that is “relatively safe” to you?

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China blasts U.S. debt problems, urges new global reserve currency

China on Saturday condemned the “short-sighted” political wrangling in the United States over its debt problems and said the world needed a new global stable reserve currency. “China, the largest creditor of the world’s sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China’s dollar assets,” China’s official news agency said in a commentary. “International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country,” it said. – Reuters

Dominant Social Theme: It’s time to let Christine Lagarde and the other “wise leaders” at the IMF run the world’s money.

Free-Market Analysis: Well this certainly comes as no surprise. We have been ringing the bell on this one for while now. In fact, we ran a staff report back in March 2009, titled China Wants IMF to Manage New One-World Currency. The essence of what we said in that article, as well as many others dealing with Money Power’s insatiable desire to fasten a global currency yoke on the entire world’s population, is that out of the fiat-manufactured chaos we have today, it is likely that global order will be promoted as the cure to all our monetary ills. The IMF, a globalist organization to be sure, along with the World Bank, will be marketed by the establishment politicians, NGO think tanks and mainstream media outlets as the only logical way to alleviate the markets of their instability and overall confusion. The eurozone experiment alone should be enough of a wakeup call – for anyone that cares to see – that by stitching together a bunch of systemically bankrupt nation’s fiat currencies does nothing to aleviate the rot inherent in the design and nature of the money-stuff-system itself. We truly hope the world escapes from the grasp of the globalist’s fiat-fangs and that this plan of unification does not become a reality. What the world needs, in our opinion, are private currencies competing in a free-marketplace where governments have no involvement in either the issuance of currency or its management. Let the market decide what to use as money and keep the State and unelected global government agencies out of it.

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ECB says will “actively implement” bond-buying

The European Central Bank said on Sunday it would “actively implement” its controversial bond-buying programme to fight the euro zone’s debt crisis, signaling it will buy Spanish and Italian government bonds to halt financial market contagion. … “The Euro system will intervene very significantly on markets and respond in a significant and cohesive way,” a euro zone monetary source said, speaking shortly before the statement was released. … The ECB statement sought to justify the buying by saying it was “designed to help restoring a better transmission of our monetary policy decisions taking account of dysfunctional market segments and therefore to ensure price stability in the euro area.” – Reuters

Dominant Social Theme: The dysfunction of the invisible hand must be slapped with oversight and active intervention.

Free-Market Analysis: This is getting just silly. Think about it for a minute. Here comes the ECB to create a US-style Plunge Protection Team that can “intervene” whenever the “wise leaders” feel it is necessary – all for the purposes of shoring up confidence in a dying fiat-money central banking system. The arrogance of Money Power to think that people cannot see this for what it is – blatant manipulation – is simply flabergasting. The ‘Net dissects the obviousness of such planning and exposes the desperate attempts of those who believe they are smarter than the free market. The name of the game is global power via global governance. To achieve that end, the power elite‘s agents will do just about anything in the face of Hurricane Reality to try justify the means. Once again, the problem facing the world today is the fraudulent nature of the global central banking system and the monetary units they peddle. Creating another manipulation-arm to intervene and “fix” the illusion is no solution at all.

Welcome to hyperinflation hell: Following currency devaluation, Belarus economy implodes, sets blueprint for developed world future

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by Tyler Durden
Posted Zero Hedge, May 25, 2011

A ‘91-STYLE MELTDOWN IS ALMOST INEVITABLE.” So says Alexei Moiseev, chief economist at VTB Capital, the investment-banking arm of Russia’s second-largest lender, discussing the imminent economic catastrophe that is sure to engulf Belarus following the surprise devaluation of the country’s currency by over 50%. “Unless Belarus heeds Russia’s call for mass privatization of state assets, it is headed for “hyperinflation, massive un- and under-employment, and a shutdown of production” Moiseev concludes.

Ah: “privatization” as Greece is about to learn, the lovely word that describes a fire sale of assets to one’s creditors, courtesy of a “globalized” new world order. Ironically, this is precisely the warning that will be lobbed at each country in the developed world, as the global race to devalue currencies, first against each other on a relative basis, and ultimately against hard currencies, or on an absolute basis, as the world realizes that there simply is not enough cash flow to cover the interest payments on a debt load, in both the public and private sectors, that continues to rise at an astronomic rate, even as the world prepares to exit from the latest transitory, centrally-planned bounce in the Great Financial Crisis-cum-Depression that started in earnest in 2007 and has been progressing ever since.

Ultimately, Belarus will succumb to hyperinflation, as will each and every other government seeking to devalue its currency (hint: all of them): “Unless Belarus heeds Russia’s call for mass privatization of state assets, it is headed for “hyperinflation, massive un- and under-employment, and a shutdown of production,” VTB’s Moiseev said. The ruble will slide to 10,000 per dollar, he added.” Of course, this is the primary side effect of attempting to avoid formal bankruptcy through currency devaluation. And all those who continue to believe deflation is an outcome that will be allowed by the Fed, need to look just to the former Soviet satellite to see what lies in store for everyone currently doing all in their power to devalue their currency.

First look at the Belarus Ruble chart below: this is what always happens to every country that resolutely continues to live outside its means. Always.

And here are some additional observations from Bloomberg on the country that everyone in the media continues to ignore, yet which will very soon be the model for virtually everyone else engaging in central planning warfare.

The Belarusian central bank let the managed ruble weaken by 36 percent versus the dollar on May 24 as demand for dollars and euros from importers and households threatened to derail an economy already laboring under a current-account deficit equal to 16 percent of gross domestic product. Russia and other former Soviet partners last week agreed to give Belarus a $3 billion loan and urged President Aleksandr Lukashenko’s government to sell $7.5 billion of assets to replenish the state’s coffers.

Finance ministers from former Soviet nations agreed in Minsk on May 19 to give Belarus up to $3.5 billion over three years, with the first $800 million payment expected in the week after a separate meeting on June 4, Russian Finance Minister Alexei Kudrin said in Moscow yesterday. The Nationalnyi Bank Respubliki Belarus set its official dollar-ruble rate at 4,931 for today’s trading, from 3,155 on May 23, according to its web site. Trading of foreign currency between companies, banks and individuals needs to stay within a 2 percent range of the daily rate, the regulator said May 23, when it announced the devaluation and reintroduced restrictions lifted on the interbank market on April 19 and for households on May 11.

Devaluing the currency will only worsen the situation for Belarus, VTB’s Moiseev said.

“The main problem is that the economy produces goods which consist of little else than a combination of imported spare parts,” he said. “So devaluation only makes things worse.” Belarus’s economy effectively collapsed in 1991 as the disintegration of the Soviet Union eliminated natural markets for the country’s exports of farm machinery, textiles and agricultural products. The catalyst for the country’s imploding economy: socialism and price controls. Sound familiar?

Lukashenko reintroduced controls on prices and the currency and re-nationalized some companies and infrastructure after coming to power in July, 1994, on a platform of “market socialism.” The nation’s economy returned to growth in 1996, according to World Bank data.

At the Minsk Refrigerator Plant Co. shop in the capital today, about 20 people queued in drizzling rain to use their rubles to buy fridges. While the shop didn’t open on the day of the devaluation, most of the models in the store already had ‘Sold Out’ stickers on their doors. “I came on Saturday and it was a nightmare, the store was stormed by people who wanted to spend their rubles because of rumors about the devaluation,” said Nikolay, a 74-year-old pensioner who declined to provide his last name. His entire savings of 6 million rubles now buy one fridge compared with three before the devaluation, he said.

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The Breakdown Draws Near

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by Chris Martenson
Posted originally April 19, 2011

THINGS ARE CERTAINLY SPEEDING UP, AND IT IS MY CONCLUSION that we are not more than a year away from the next major financial and economic disruption. Alas, predictions are tricky, especially about the future (credit: Yogi Berra), but here’s why I am convinced that the next big break is drawing near.

In order for the financial system to operate, it needs continual debt expansion and servicing. Both are important. If either is missing, then catastrophe can strike at any time. And by ‘catastrophe’ I mean big institutions and countries transiting from a state of insolvency into outright bankruptcy.

In a recent article, I noted that the IMF had added up the financing needs of the advanced economies and come to the startling conclusion that the combination of maturing and new debt issuances came to more than a quarter of their combined economies over the next year. A quarter!  

I also noted that this was just the sovereign debt, and that state, personal, and corporate debt were additive to the overall amount of financing needed this next year. Adding another dab of color to the picture, the IMF has now added bank refinancing to the tableau, and it’s an unhealthy shade of red:

Banks face $3.6 trillion “wall” of maturing debt: IMF

(Reuters) – The world’s banks face a $3.6 trillion “wall of maturing debt” in the next two years and must compete with debt-laden governments to secure financing, the IMF warned on Wednesday. Many European banks need bigger capital cushions to restore market confidence and assure they can borrow, and some weak players will need to be closed, the International Monetary Fund said in its Global Financial Stability Report.

The debt rollover requirements are most acute for Irish and German banks, with as much as half of their outstanding debt coming due over the next two years, the fund said.

“These bank funding needs coincide with higher sovereign refinancing requirements, heightening competition for scarce funding resources,” the IMF said. When both big banks and sovereign entities are simultaneously facing twin walls of maturing debt, it is reasonable to ask exactly who will be doing all the buying of that debt?  Especially at the ridiculously low, and negative I might add, interest rates that the central banks have engineered in their quest to bail out the big banks.

Greek T-Bill Sale Fails to Allay Fear

Greece’s Public Debt Management Agency paid a high price to sell €1.625 billion of 13-week Treasury bills at an auction Tuesday, amid persistent speculation that the country will have to restructure its debt.

The 4.1% yield paid by Greece, which means it now pays more for 13-week money than the 3.8% Germany currently pays on its 30-year bond, is likely to increase concern over the sustainability of Greece’s debt-servicing costs. Greek debt came under heavy selling pressure Monday after it emerged that the country had proposed extending repayments on its debt, pushing yields to euro-era highs.

Greek two-year bonds now yield more than 19.3%, up from 15.44% at the end of March.

With Greek 2-year bonds now yielding over 19%, the situation is out of control and clearly a catastrophe. When sovereign debt carries a rate of interest higher than nominal GDP growth, all that can ever happen is for the debts to pile up faster and faster, clearly the very last thing that one would like to see if avoiding an outright default is the desired outcome.  How does more debt at higher rates help Greece?

It doesn’t, and default (termed “restructuring” by the spinsters in charge of everything…it sounds so much nicer) is clearly in the cards.  The main question to be resolved is who is going to eat the losses — the banks and other major holders of the failed debt, or the public?  I think we all know the most likely answer to that one.

“Contagion” is the fear here. With Ireland and Portugal already well down the path towards their own defaults, it is Spain that represents a much larger risk because of the scale of the debt involved. Spain is now officially on the bailout watch list, because it has denied needing a bailout, which means it does.

Spain is now at the ‘grasping at straws’ phase as it pins its hopes on China riding to the rescue:

European officials are hoping that the bailout for Portugal will be the last one, and debt markets have broadly shown both Spain and Italy appear to be succeeding in keeping investors’ faith.

Madrid is hoping for support from China for its efforts to recapitalize a struggling banking sector and there were also brighter signs in data showing its banks borrowed less in March from the European Central Bank than at any point in the past three years.

If Spain is hoping for a rescue by China, it had better get their cash, and soon. As noted here five weeks ago in “Warning Signs From China,”  a slump in sales of homes in Beijing in February was certain to be followed by a crash in prices. I just didn’t expect things to be this severe only one month later:

Beijing March New House Prices Plunge 26.7% M/M

BEIJING (MNI) – Prices of new homes in China’s capital plunged 26.7% month-on-month in March, the Beijing News reported Tuesday, citing data from the city’s Housing and Urban-Rural Development Commission. Average prices of newly-built houses in March fell 10.9% over the same month last year to CNY19,679 per square meter, marking the first year-on-year decline since September 2009.

Home purchases fell 50.9% y/y and 41.5% m/m, the newspaper said, citing an unidentified official from the Housing Commission as saying the falls point to the government’s crackdown on speculation in the real estate market.

March Home Transactions in 30 Major Cities Fall 40.5% Y-o-Y

Housing transactions in major Chinese cities monitored by the China Index Research Institute (CIRI) dropped 40.5% year-on-year on average in March, a month when home buying typically enters a seasonal boom period.

Transactions rose month-on-month in 70% of the cities monitored, including five cities where transactions were up by more than 100% on a month earlier, secutimes.com reported on Wednesday, citing statistics from the CIRI. [CM note: month-on-month not useful for transactions as volumes have pronounced seasonality]

Beijing posted a decrease of 48% from a year earlier; cities including Haikou, Chengdu, Tianjin and Hangzhou saw drops in their transaction volumes month-on-month, according to the statistics. Meanwhile, land sales fell 21% quarter-on-quarter to 4,372 plots in 120 cities in the first quarter of 2011; 1,473 plots were for residential projects, the statistics showed.

The average price of floor area per square meter in the 120 cities dropped to RMB 1,225, down 15% m-o-m, according to the statistics.

Real estate is easy to track because it always follows the same progression.  Sales volumes slow down, and people attribute it to the ‘market taking a breather.’  Then sales slump, but people say “prices are still firm,” trying to console themselves with what good news they can find in the situation. Then sales really drop off, and prices begin to move down. That’s where China currently is. What happens next is also easy to ‘predict’ (not really a prediction because it always happens), and that is mortgage defaults and banking losses, which compound the misery cycle by drying up lending and dumping cheap(er) properties back on the market.

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Hacker Group Anonymous brings peaceful revolution to America: will engage in civil disobedience until Bernanke steps down

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by Tyler Durden
Originally posted Zero Hedge, March 12, 2011

THE WORLD’S MOST (IN)FAMOUS HACKER GROUP – Anonymous – known for effectively shutting down their hacking nemesis security firm (with clients such as Morgan Stanley and, unfortunately for them, Bank of America)- HBGary, advocating the cause of Wikileaks, and the threat made by one of its members that evidence of fraud by Bank of America will be released on Monday 14 March, has just launched communication #1 in its Operation “Empire State Rebellion.” The goal engage in “a relentless campaign of non-violent, peaceful, civil disobedience” until Ben Bernanke steps down and the “Primary Dealers within the Federal Reserve banking system be broken up and held accountable for rigging markets and destroying the global economy effective immediately.

The Anonymous manifesto:

  • We are a decentralized non-violent resistance movement, which seeks to restore the rule of law and fight back against the organized criminal class.
  • One-tenth of one percent of the population has consolidated wealth in unprecedented fashion and launched an all-out economic war against 99.9% of the population.
  • We are not affiliated with either wing of the two-party oligarchy. We seek an end to the corrupted two-party system by ending the campaign finance and lobbying racket.
  • Above all, we aim to break up the global banking cartel centered at the Federal Reserve, International Monetary Fund, Bank of International Settlement and World Bank.
  • We demand that the primary dealers within the Federal Reserve banking system be broken up and held accountable for rigging markets and destroying the global economy, effective immediately.
  • As a first sign of good faith we demand Ben Bernanke step down as Federal Reserve chairman.
  • Until our demands are met and a rule of law is restored, we will engage in a relentless campaign of non-violent, peaceful, civil disobedience.
  • In our next communication we will announce Operation Empire State Rebellion.

Glorious Chairman Ben – our free advice to you: change your e-mail password…

Opening a renminbi savings account in the U.S.

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by Simon Black
Originally posted January 12, 2011

http://www.sovereignman.com

In its latest step to make the renminbi a competing global reserve currency, China’s predominantly state-owned Bank of China will now let individuals open renminbi savings accounts… in the United States.

EFFECTIVE  IMMEDIATELY, BOC’s US individual customers can now open a renminbi denominated savings account with a $500 equivalent minimum balance. The bank also offers certificates of deposit in 6-month and 1-year terms with a minimum of $1,000 equivalent.

The account opening procedures are simple– there is an application form, a W-9 tax form, and a signature card.  Applicants are also required to provide a government-issued ID and one other form of identification such as a credit card, employee ID card, insurance card, etc. You do have to show up in person.

Businesses can also open renminbi accounts with a $5,000 equivalent minimum and requisite entity paperwork like Articles of Organization, etc. At this time, renminbi cash cannot be withdrawn from the account, though I would expect this to change eventually. The bank does provide currency exchange services between dollars and renminbi at its Chinatown branch in New York; current limits are up to $4,000 per day, and $20,000 per year.

China doesn’t do anything overnight, and I believe the government is executing a long-term plan to make Shanghai the world’s leading financial center… and as a part of that plan, for the renminbi (or some derivative) to become a fully-convertible competing global reserve currency.

We’re already seeing significant signs of this– many sovereign nations are holding renminbi in reserve instead of just dollars, and Chinese cross border settlement is now frequently being transacted in renminbi instead of dollars because of new clearing and settlement platforms that have been established in Hong Kong.

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