My critique of Paul Craig Roberts’ critique of Putin

My critique of Paul Craig Roberts’ critique of Putin

 

by Don Hank

 

Recently, Paul Craig Roberts wrote an article criticizing Putin for thinking he can partner with the US. Roberts thinks this is naive, and indeed it would be naive if Putin really thought that way. But he doesn’t (I make it a point to read all of Putin’s speeches and interviews in the original Russian, much of which is not reported in the West, which picks and chooses the items that, out of context, make Putin look worse. In fact, Putin is a gifted statesman and has crafted a winning strategy that most Westerners, and even many Russian analysts, fail to grasp).

Almost any Western analyst is going to fail when writing about Russia because Western thinking is not applicable to Russia or China and few can grasp Eurasian thinking unless they have lived in Asia, studied the cultures and can read the languages.

Westerners have been conditioned for years into believing that the world needs, and will always have, a hegemon who can simply punish countries that “misbehave” and straighten them out at its whim. It doesn’t have to be polite or apply time-tested standards of fairness, because the hegemon defines fairness as it goes. Thus the Western way that the US has modeled for the world is to simply boss other nations around in the crudest and rudest way — as Victoria Nuland did when she was interacting with some top level Russian diplomats, sneering that they had “lost” (referring to the Cold War), implying they must now come to heel and obey their masters. Putin, by contrast, is modeling a mature and professional approach that has a universal appeal.

Eurasians no longer believe in the hegemon fairy tale. They are busy reinventing mutual respect and sovereignty of nations and are in turn garnering the respect of the rest of the world. This fact is crucial to interpreting the actions of China and Russia. Heavy handed Western writers have been trying for years to drive a wedge between Russia and China by suggesting that one or the other will eventually try to gain the upper hand and become king of the world. Yet the harder these propagandists try, the closer they drive the two countries together — to the extent that they are nearly inseparable at this point. And by that I mean economically/financially as well as militarily. The US government still believes in the cave man approach but the Eurasians have discovered that treating people with respect garners respect for them. Why would they abandon this approach as long as it works?

So why does Putin keep trying to negotiate politely with the evil Washington government as though he were dealing with peers, and why does he not use his enormous military power in Ukraine as Roberts (and, BTW, a lot of Russians) thinks he should?

Simply put, he is buying time, getting his last ducks in a row. (Note that each of Putin’s speeches gets a little bit stronger as he and his Eurasian partners gain strength).

Although Roberts was once assistant secretary of the treasury for economic policy, oddly, he does not enter into economics and finance in his analysis, and yet, for Putin, the long term strategy is all about economics and finance.

Here is why I say Putin is buying time.

Russia and China are working feverishly to accomplish at least 2 goals behind the scenes:

1–Establish the RMB as the new world reserve currency.

2–set up a parallel SWIFT-like system of international money transfers, initially between the BRICS countries but later the world. See this, for example.

Why must the Eurasians do this?

Because even if they are superior to the US militarily, they need to become financially independent to prevent a lot of useless bloodshed. The US uses the dollar as a weapon, punishing its perceived enemies by freezing accounts, preventing transfers, imposing economic sanctions, seizing bank accounts (incl those of non-Americans living abroad) and generally seeking to paralyze them financially. Examples include the US-imposed record fine of $8 billion against French bank BNP Paribas in retaliation for that bank’s having made a dollar-denominated transfer to Iran (which was not illegal in France; the US’s rationale: since the transaction was denominated in dollars, it was illegal because the US is the legal owner of all dollars, the world reserve currency under the Bretton Woods agreement); and, on a smaller scale, seizure of foreigners’ cash, as with the IRS’s seizure of $8000 from the bank account of a Venezuelan man residing in Panama who had once lived in the US (not reported in the media. My banker told me the story).

The Eurasians, witnessing the results of this financial bullying, have made amazing strides in a very short time in achieving the 2 goals mentioned above, as I reported here and here.

As for the plan to make the RMB the fall-back reserve currency, that project is well underway, as shown in my translation and analysis here.

But one crucial step remains and that is to create and test the new Eurasian cash transfer system designed to bypass the US-controlled SWIFT system. Before this is accomplished, Russia and its Eurasian partners are still vulnerable to one last Western ace in the hole, and that is the freezing of money transfers anywhere in the world, as outlined here.

Reports on the target date for the new interbank transfer system differ widely but I think we can assume, based on Putin’s mild mannered behavior, that this is not yet accomplished.

Now just imagine if Putin had long ago played the military card in Ukraine and simply defeated the Ukrainian army that bombs its own citizens. Would US allies have rushed to join the Eurasian bank AIIB? They may have thought better of it knowing that Eurasia includes Russia. But Russia played the nice guy, bided its time, and these countries saw the AIIB as an opportunity to get out from under the obsolescent World Bank and IMF. The only main US allies who have not yet joined are Canada and Japan, and even that could change.

Putin plays a long game, a strategy virtually unknown in the West and not well understood even by the best American minds.

But not to fear: we will see it in action (non-military to be sure) soon enough.

So should we be worried?

Once the last piece in the Eurasian strategy is in place, I think we will see that Putin was not kidding when he talked about mutual respect. While the US has consistently sought to lord it over its trading partners, both militarily and economically, and has actually sought to bankrupt them via World Bank loans (see the book “Confessions of an Economic Hit Man” by John Perkins), the Eurasians focus on garnering and keeping the trust of all their partners. Unlike US elites, they are keenly aware of a key fact: The only way to get rich and stay rich is to trade with partners in ways that benefit both parties so that even poor partners become richer, boosting sales and loan transactions. And the best way to expand trade is to treat existing partners fairly and with respect. Making even one partner poor or showing a lack of respect undermines the trust that the rest have invested in you.

Now why didn’t we think of that?

 

What Adolf did with malice, Merkel does with kindness

What Adolf did with malice, Merkel does with kindness

They’re just as dead…

by Don Hank

 

Germany is finding out what cosmic justice is (if you are a Christian, you call it divine justice).

Back in 2011, Germany pledged 100 million euros to support the Arab Spring. Angela Merkel was from the government and was here to help.

It may have been supported with all the best of intentions, but the Arab Spring started wars that immediately got out of control and brought terror, chaos and mass emigration to the Middle East, which is still ablaze now, 4 years later. The people who warned this would happen were very effectively silenced by the German government, which is very good at this sort of thing, having practiced at it since the 30s.

Thus, the promised democracy didn’t materialize and thousands upon thousands died.

Germany, undaunted, and always wanting to be the hero that saves the day, offered the immigrants refuge in Germany. Just as the Kanzlerin had forgotten that it was her and her allies’ support for the Arab Spring that brought them there, Angela Merkel carelessly forgot to tell them there would be a limit to the number of them taken in.

During the first days of the immigrant wave, she spoke via news sources, scolding and threatening with legal consequences all the countries that refused to open their doors as she had done, suggesting to the world that they were selfish scrooges while she was a morally superior Joan of Arc.

Then all of a sudden, reality slapped Angela in her angelic face: German capacity was overburdened.

So she found herself obliged to do what some of the other, more realistic, nations had done – the ones she had scolded for doing what she was now doing. She closed Germany’s borders.

But so what? Germany is the biggest exporter in Europe and the 2nd biggest in the world after China, thought Merkel. We’ll let them in once we get a little richer. And then we’ll…

OOOOOPPPS!!! Volkswagen, one of the main drivers of German exports was spotlighted by the EPA as a fraud, having lied about emissions from VW diesels! It will cost the company up to $18 billion dollars!

Today, VW stocks are down 25% and that could be just the beginning.

There’s more than one moral here (but a euro says Frau Merkel will not learn any of them):

1– Respect the sovereignty of other countries. Trying to export democracy – especially to a country that already has a democratically elected government and respects its minorities (think Syria) – will have unexpected consequences, such as causing untold harm to the country you wanted to “help” and bringing ruin to your own country.

2 – Don’t let success go to your head. You could go from rags to riches overnight. So don’t set yourself up as the savior of the world with infinitely deep pockets.

3 – If you are helping others, don’t throw stones at those who are not doing what you are doing. They might just be smarter than you. There are a lot of immigrants who made it to Austria or Hungary, for example, but not quite to Germany and are seriously PO’d as they contemplate the closed border; and some other countries who bowed to pressure from Merkel to open their borders and let in immigrants are now stuck with a lot of disgruntled immigrants insisting to go to Germany, where they are no longer wanted by the Chancellor whose heart was bigger than her brain.

Merkel has a problem that she wouldn’t have if she had had a little foresight and common sense.

The German nation killed a lot of people in the Third Reich by being mean and selfish.

Now they are killing them with kindness in the Fourth.

They’re just as dead either way, Angela.

Frau Kanzlerin, can the world ask you a favor?

No more favors, please.

Thank you!

Don Hank

 

Russian sanctions hurt (II)

Russian sanctions hurt (II)

 

by Don Hank

I have shown in a previous commentary that sanctions against Russia have really hurt. But not the Russians. They boomeranged on the US. How? By strengthening economic and military relations between Russia/Eurasian region and the rest of the world (eg, the accession of almost all US allies to the AIIB), military and economic coalition with China, lucrative contracts with the Saudis, India, etc.

As the icing on the cake, today I was translating an article in the Chinese economic daily finance.sina.com which shows that Russia in June sold a record amount of oil to China, and this, according to the article, for two reasons:

1—The Saudis obligingly raised their Asian benchmark oil prices selectively for Asia only, giving Russia the edge as an oil seller. (See the below time line for clues as to why the Saudis did this).

2—These oil deals with China are settled in yuan (RMB) making them more attractive to China in terms of both monetary policy (strengthening the RMB) and economics.

The latter fact is bad news for the dollar. The main thing propping up the USD is country-to-country trade settled in USD. The whole purpose of the petrodollar agreement with the Saudis in 1973 was to oblige them to accept payment only in USD for the purpose of maintaining an artificially high value of the dollar. Now Saudi Arabia itself is in fact sabotaging that deal, while sticking to the letter of it. This was a stroke of genius on someone’s part, and I think that someone was Russian President Putin.

Look at what Putin had been up to since no later than the end of 2014:

Timeline of Russia-Saudi negotiations.

1—December 2014, Putin meets with Saudi Intel Chief in Moscow

http://en.trend.az/world/arab/2218066.html

2—April 2015 King Salman bin Abdulazziz el-Saud calls Putin, sets up visit in June. (Was this motivated by the outcome of the Dec meeting?)

http://en.kremlin.ru/events/president/news/49304

3—June 2015, Saudis raise benchmark oil price for Asia

http://www.reuters.com/article/2015/06/05/us-saudi-oil-price-idUSKBN0OL04720150605

4—June 2015, Russia signs 6 nuclear energy contracts with the Saudis (quid pro quo for the raised Asian oil prices?)

http://uk.reuters.com/article/2015/06/19/uk-saudi-russia-nuclear-idUKKBN0OZ10R20150619

5—July 2015, Russia announces sale of Iskander missiles to Saudis (more quid pro quo for the raised Asian oil prices?)

http://www.presstv.com/Detail/2015/07/04/418758/Russia-Saudi-Arabia-Iskander-missile-Yemen

There are no coincidences in events involving Russia. The tit-for-tat here is obvious. The Saudis got beefed up defenses and nuclear energy deals. Russia got a chance to sell more oil. Of course, for obvious reasons, the paper trail here omits the main details. The Saudis never disclose all the details of their agreements with other countries. But anyone who pays attention and knows what to look for can easily extrapolate the hidden details of these bargains.

Watch for more surprises soon.

As Donald Trump said: The decision makers in US policy are stupid.

Don Hank

 

PS: Speaking of stupid policy, did you happen to read about that fist fight that broke out in the Japanese Parliament over the latest change in the Japanese constitution allowing their armed forces to join with the US in its military adventures? An increasing number of Japanese are waking up to the insanity of US military policy and want nothing to do with US wars designed to be lost. Yet establishment thugs managed to pass this potentially disastrous piece of legislation, almost certainly under pressure from the war hawks in Washington.

Russian and US tactics are as different as day and night. Russia makes offers that tempt and reward. The US applies pressure and threats to punish.

Which side is winning?

Russian Sanctions hurt

Sanctions against Russia hurt

 

Don Hank

 

A reader tells me that the sanctions against Russia have been hurting them financially.

This is the perception throughout the West so far, unless you read reports from off the beaten trail. And then you see can easily through the lies.

You see, Western oligarchs are focused on keeping the world poor while robbing the little guy, and that is becoming an open secret. Eastern leaders can see this as a huge opportunity for doing business in ways that make everyone richer and better off. All they need to do is avoid the clumsy mistakes of the US oligarchs, and that is easy.

I have been forwarding articles showing that sanctions are not hurting Russia at all. They are gaining ground much faster than we are. Almost every one of our allies turned their backs on the World Bank (US based and led) and went over to the Chinese AIIB. This is a step toward dedollarization of world trade, which the Western press ignores pointedly (I pointed this out here http://www.renewamerica.com/columns/hank/141009)

In fact, the drop in the ruble is a huge boon for Russia, enabling them to sell more competitively to trade partners.

Then the Saudis struck deals with Russia for more powerful arms than we had ever sold them. That too is money in Russia’s bank.

Then about a week ago, almost every Middle Eastern leader met with Putin in Moscow, showing that they are pivoting away from the US and trusting Russia. For Putin that was like taking candy from a baby, because when a country’s government and oligarchs have cheated and lied repeatedly, eventually no lone trusts them. And that government is Washington.

In June Russia broke a record, selling more oil to China than the Saudis ever had sold them! The trade with China bypasses the dollar, using RMB only. Another major step toward dedollarization and loss of prestige for the dollar.

The Saudis are cooperating by charging more for their oil sold to Asia than is sold to the West. This helps Russia tremendously and is a clear signal that those closed door deals with the Saudis involved concessions to Russia in exchange for those weapons deals.

Now Russia is making deals with India for joint oil projects. These will almost certainly be denominated in currencies other than the dollar, another step in devaluing the USD.

Then there is the New Silk Route, a joint project with China to connect far flung regions for trade. Will the trade deals be in dollars? What do you think?

Rather than harming Russia, the sanctions drove them into the arms of our one-time allies. I don’t think they are coming back. My communications with Europeans shows they no longer trust the US, particularly since the bogus US subprime paper sold all over Europe, which set the stage for the current crisis there. Virtually every educated European knows this and, while their leaders remain discrete, they are waiting patiently for Washington to fall.

Russia’s new deals and sales of arms and oil are an indirect product of our sanctions and Russia is stronger now in trade and in world prestige than it ever was before.

Sanctions not only failed but they wound up greatly strengthening Russia!

The old Wolfowitz policy of encircling Russia has failed miserably as any fool knew it would. Russia is quickly emerging as the winner. Our policy makers are, to paraphrase Trump, STUPID!

It all reminds me of the Japanese emperor Hirohito in the last days of the war. He refused to believe that Japan could lose, even after the first nuke fell on one of his cities.

So the US dropped another.

Each of Putin’s actions is like one of those nukes, greatly curtailing US strength and prestige. Yet, Washington, caught in a paroxysm of normalcy bias, continues to forge ahead with its horrible policies, somehow convincing itself that it will win.

Let us hope and pray that whoever is elected our next president will start reversing these disastrous fraudulent foreign and financial policies that make America poor and garner the ridicule of nations.

And you know what? He may not have much choice.

The elites are doing an about face

 

by Don Hank   August 25, 2015

 

George Friedman, CEO of Stratfor, seems to be following the lead of other prominent Neocon elites. Recently, Kissinger and Soros both warned against taunting the Russian bear or escalating the Ukraine conflict. This was remarkable for them, because they had always generally supported, at least by their actions and words, the Wolfowitz doctrine of encircling Russia, and indeed, Soros even admitted that one of his foundations had aided in the Maidan coup, as I pointed out here.

Now comes George Friedman and joins them in backtracking, reluctantly admitting here that maybe attacking the Russian ally Iran was never such a brilliant idea. He says the problem with this idea is that the plan might fail and thereby strengthen the Iranian position while weakening Israel’s position. No kidding.

I wrote to George via his Stratfor site and asked why no one ever mentions Daniel Greenfield’s famous speech on the MAD (Mutually Assured Destruction) principle, which that author skillfully demonstrates would effectively prevent a nuclear power (he doesn’t explicitly mention Iran) from attacking another. Israel is known to possess a nuclear arsenal.

I had mentioned Greenfield’s comments on MAD here in the context of the rush to war against Iran – which, nota bene, even the Israeli military leaders knew to be an unnecessarily risky idea.

So when you say “I stand with Israel,” are you saying you stand with these wise military leaders who oppose war with Iran or with the minority who want to take that needless risk?

See the problem with that slogan?

Below is my response to George:

 

Thank you for this report.

I find it intriguing that no commentator ever mentions, in the context of Israel vs Iran, Daniel Greenfield’s speech on the MAD principle, which prevents nuclear powers from attacking each other. The Israeli government is aware of Greenfield’s writings and certainly, many have read this speech and know this theory makes common sense. Since it is known that Israel and the US are nuclear powers and that neither would sit back and let Iran attack Israel, Iran, in the real world, would never nuke Israel. Further, any nuclear explosion in Israel would kill and harm millions of Palestinians and other Arab neighbors. The whole world would turn against Iran and that would end Iran’s ability to ever trade with any country again. It would, in a word, be suicide. In other words, the war hawks in Israel are directing an inordinate and unjustified amount of time and energy at preventing an impossibility.

It is obvious to me that the only reason Israeli war hawks keep beating the drums in Iran’s direction is that they want to stay on the good side of the Saudis, who they perceive as having the power to crush them via their protégés like ISIS.

Why not address this side of the story some time? It would not hurt your credibility and would almost certainly boost your readership.

END OF LETTER

 

When you see the elites distancing themselves from their past strongly held positions, it’s not because they had a change of heart or “saw the light.” It’s because an external force or forces have made it impossible to sustain those positions and they woke up to this reality.

Despite all the setbacks that Eurasia (mostly Russia and China) have suffered (such as the recent collapse of the Chinese stock market), this region has so far avoided, for the most part, the extravagance of Western Keynesianism – unbridled money printing, borrowing more than they can ever pay down or back to pay for reckless spending – and despite the “socialist” tag, neither of them spends, as a percentage of GDP, even a fraction of what Western “developed” countries spend on welfare or social programs. The Neocons haven’t a leg to stand on, and now the upper echelons aren’t in fact standing.

Further, Eurasia has managed to demonstrate the vast potential of its economic power and prestige, for example, via the new investment bank, the AIIB, to most of our “allies,” over 50 of which became founding members, as I pointed out here.

On top of that, Russia and China have been doing impressive joint military exercises lately, demonstrating not only that they possess the hardware to back down any opponent, but that they are a team. I am amused at analysts who discuss Russian military capability in great detail without ever mentioning that there is in fact no such thing as the “Russian” military. In today’s world, there is only a joint Russian-Chinese military that we must contend with – and get along with, like it or not. And while there are still US “allies,” most are only reluctant and leaning away from the constant wars made in USA.

I say all that to remind you of why the elites, like Soros, Kissinger and Friedman, are changing their tune. They simply have no choice. Reality is facing them like a brick wall, foiling their schemes of world dominance. I say this cautiously, but it would seem that Neoconservatism is dead for all practical purposes.

The elites, who had everything to lose, were the first to notice the tectonic plate shift in geopolitics.

The rest of America needs to pay attention.

 

Chinese monetary policy expert spills the beans, but not to the West

Warning from top Chinese monetary policy maker

My translation of a report in Economic Daily (Jingji Ribao) on the July 20, 2014 interview with Chen Yulu re. RMB internationalization follows below.

Note: RMB is the acronym for China’s national currency, the renminbi, also known as the yuan (not to be confused with the Japanese yen). Renmin means “the People” in Chinese, while “bi” means currency – hence, the People’s currency.

Background: As of 2013, the RMB has been convertible in current accounts (but not capital accounts). Until then, if you wanted to convert the RMB into one of the non-dollar currencies, you generally had to first convert your RMB into dollars, a cumbersome process that discouraged investors from making many transactions.

Why I decided to translate this article:

I first found this article in a Japanese language translation and decided to find the original, linked below.

Not at all surprisingly, I found no translation of it into English anywhere (except for an atrocious machine rendition that does not merit the descriptor “translation”). Why no surprise? I had already had experience with the huge black holes in the Western financial press, as reported here (the term “dedollarization” in that report is for all intents and purposes synonymous with “RMB internationalization”as used hereinbelow).

Why this article was not run in the Western press:

While many of the facts cited by Mr. Chen are to be found in the Western press and also in English language articles posted in China (for example, by the Bank of China), the time frames of Mr. Chen’s predictions of the RMB’s internationalization growth differ shockingly even from those reported in Chinese publications posted in English. Obviously, the Chinese don’t dare tell us the truth and I can’t blame them.

Mr. Chen tells his Asian audience that the RMB internationalization index (RII) will exceed that of all currencies except the US dollar and the euro within anywhere from 3 to 5 years, whereas other forecasts in English language journals estimate that time frame at 15 or more years. The idea seems to mitigate what most will see as bad news and to avoid any counter-measures from the Western central bankers (although it could be that they are also in on the plot). It strikes me that if Mr. Chen were just spouting hype to sell the rmb, then he and the rest of the economic bosses, eg, at the Bank of China, would post these things in English. But since they post them only in Chinese (and also allowed on Japanese site to post a translation of this interview), it seems that the West is being kept in the dark. The fact that rmb clearing centers are opening all over Europe is also an important, and ominous clue as to what is happening behind the curtain. One could make the case that the vast majority of our ‘allies’ are in fact quietly sabotaging the dollar. And if you were a European and your finances had been wrecked by the US derivatives bubble, you  would understand the sentiment behind that. In fact, the sanctions against Russia also dealt Europe a dangerous blow, and yet, their governments don’t dare defy Washington and go their own way. Think about it. France’s BNP Paribas was fined by the US for a misdemeanor that is perfectly legal in Europe and they lost 9 billion dollars to an increasingly ruthless hegemon. Who today is truly sympathetic to the US government?

The World Bank had estimated in 2013 that China’s economy “will become the [world’s] largest by 2030.” Well, that happened last week. Can you see that we are being kept in the dark? 

This article was translated by an ordinary citizen (who happens to be a professional translator) free of charge, for both investors and ordinary middle class citizens who will need to be prepared for a collapse of the dollar sooner than most would expect, at least if we trust the media that are being paid good money to prepare us but refuse to do so or are perhaps also hapless victims of normalcy bias.

Finally, while Mr. Chen says the RMB is not intended to challenge the dollar, now that the Chinese economy exceeds ours, guess what will happen to the dollar once the RMB internationalization index surpasses the dollar’s.

Hint: the main ingredient in the value of any currency is trust. Western monetary policy aims at 2% annual inflation and cheekily calls that “stabilization,” routinely causes bubbles in various markets and fosters the creation of essentially worthless derivatives denominated in the US dollar. Chinese policy has, so far at least, not fallen into anything resembling this kind of irresponsible behavior. European markets were hit hard by this corrupt US monetary policy and they are not happy. This is, in my judgment, why the RMB clearing centers have been established all over Europe (as well as elsewhere) but not in the US, whose investors apparently want to go down with their own ship.

I am convinced that all or most of our allies have lost all trust in the US government and are quietly deserting the ship.

My only question is: what took them so long?

Don Hank

Author’s email: zoilandon@msn.com

http://finance.sina.com.cn/money/forex/20140722/054019778623.shtml

Internationalization of the RMB is not a challenge to other currencies

05:40, July 22, 2014 Economic Daily, I have something to say (11 participants)

Staff reporter: Zhang Wei Zhang Lichen

On July 20, the Renmin University of China issued the “2014 Renminbi (6.1546, 0.0044, 0.07%) internationalization report,” which shows that in 2013 the rmb internationalization index (RII) further accelerated. The report notes that the internationalization of the RMB is not intended to challenge the US dollar or other international currencies; the renminbi is taking on more international monetary functions, rooted in the internal demands of the international market.

Since the beginning of 2012, the People’s [Renmin] University of China has been releasing a series of annual research reports on the internationalization of the RMB, and has proposed an RMB internationalization Index (RII), which objectively describes of the extent of Chinese yuan use in overall international economic activities. The index not only tracks trends in 3 areas, namely, global renminbi-denominated trade, financial transactions and foreign exchange reserves, but enables a convenient horizontal comparison with other major international currencies. On July 20, upon release of the “2014 RMB internationalization Report,” Economic Daily reporters on issues relating to the internationalization of the RMB were granted an exclusive interview with Chen Yulu, a member of the Central bank Monetary Policy Committee and president of Renmin University of China.

According to data in a recently released report, by the end of 2013, the RII reached 1.69, as compared to 0.92 at the beginning of the year, a gain of 84%. What is the reason for this rapid growth?

Chen Yulu: The RMB internationalization Index (RII) accelerated further in 2012, due to high-growth, reaching 1.69 by the end of 2013. In contrast, over the same period the international status of the dollar remained stable, while the euro, and British pound rose only moderately, and the internationalization of the yen declined slightly.

This is because China is number one in global trade, and currently has the world’s second largest FDI (Foreign Direct Investment) inflows and the third largest direct investment outflows. In cross-border trade, more and more companies are using RMB settlement. In 2013 the share of trade in goods settled in RMB exceeded 10%. In terms of investment, foreign direct investment in RMB 448.13 was billion while overseas direct investment amounted to 85.61 billion RMB, the total reached 1.9 times over the same period last year. This is the main reason for the rapid growth in the RII.

According to the latest data, in 2014, the first and second quarter RII’s were 1.74 and 1.96, respectively. By the end of this year, based on a conservative estimate, the RII is expected to climb to 2.40. Following system reform and the release of dividend policy, RMB direct investment and credit in international markets will significantly increase. If the  BRICS Development Bank and the China Latin America Cooperation Forum proceed smoothly, an optimistic forecast for the RII by the end of 2014 might be in excess of three. Barring any major adverse events, the international use of the renminbi will exceed the levels of the yen and the British pound in anywhere from 3 to 5 years, with the RMB becoming the world’s third largest currency after the dollar and the euro.

The accelerated process of RMB internationalization seems to suggest a challenge to the status of dollar, the euro and other international currencies. What do you think?

Chen Yulu: The internationalization of the RMB is not going to challenge the dollar or other international currencies. In fact, the RMB is assuming more international monetary functions as a result of internal demand in the international market. In particular, the international financial crisis in 2008 demonstrated that there are significant contradictions in the current international monetary and financial landscape. For example, the United States accounts for 20% of the global total economy, but supplies 52% of international currency as a public good. The spirit is willing but the flesh is weak. In the last two years, a number of international financial centers in Europe have been actively showing intensive demand for RMB-traded products, and have signed RMB clearing agreements with China. This shows that the RMB internationalization is a phenomenon that has developed in response to adjustments in international economic and trade patterns, with the chief motivation coming from international market demand. China’s push can be seen as an echo of this demand.

Secondly, China has become the world’s second largest economy, and this entails a greater responsibility and obligation to provide global public goods, including the response to the global liquidity shortage. Thus it has become the lender of last resort, participating in global currency market rate pricing, establishment of a stable international currency exchange rates system and so on. Due to China’s own increased economic strength, this is the default option for creating a stable monetary and financial environment for global economic development.

We also need to note that the yuan is far from becoming a core international currency, and does not pose a threat to the status of the dollar or the euro. Therefore, we need to consider the larger pattern and see the internationalization of the RMB as a natural response to adjustments in the international economic and financial situation, without assigning it too many other interpretations.

Currently, the establishment of offshore markets is the main thrust of the RMB internationalization process. Can you give us an overview of the global offshore RMB market? How will it impact the development of Chinese enterprises and financial institutions

Chen Yulu: Hong Kong is still the world’s largest offshore yuan market, where we find not only the most important clearing platform of cross-border trade in RMB, but also the largest pool of offshore renminbi funds. The central government has expressed clear support for entering a new stage of domestic development following the construction of offshore financial centers in Hong Kong. Elsewhere in Asia, in addition to Singapore and Taiwan and Macau, Seoul has followed suit with the signing of an RMB clearing agreement.

A number of international financial centers in Europe, such as London, Frankfurt, Luxembourg, Paris and Zurich are actively expressing the desire to establish offshore financial centers. This year, China signed RMB clearing agreements with Germany, Britain, France, Luxembourg and other countries. This is likely to cause a reversal, with the size of the European market lagging significantly behind Asia. In addition, almost all international financial centers are being established on fears of falling behind in the offshore renminbi business. This means that in addition to Asian high yield and European new markets, the RMB offshore market development will be a fast-growing trend in the global situation.

From a domestic perspective, the offshore market provides domestic enterprises new financing channels, and allows companies to take advantage of low-cost funds in overseas markets, solving difficult financing problems; at the same time, it also provides a financing platform for enterprises “going offshore,” and is conducive to fostering international competitiveness in local multinational companies. In addition, the offshore market can encourage Chinese financial institutions to accept otherwise-daunting international competition, improve service levels and innovation capacity as quickly as possible, and for China’s benefit, create favorable conditions for carrying forward capital account reform.

What challenges is the establishment of current offshore yuan markets facing?

Chen Yulu: Right.  Although the establishment of offshore renminbi markets is accelerating, some of the main obstacles must be overcome as quickly as possible. First, we  lack an efficient, secure and cost-effective offshore renminbi clearing system. This affects the willingness of domestic and foreign enterprises and financial institutions to use the renminbi and restricts the scope of offshore renminbi transactions. We need to set up a global offshore RMB clearing system of international scope as soon as possible, transforming it into a gross settlement system functioning in real time corresponding to the operating time.

Second, the current legal framework for offshore RMB market system has not yet been established. The establishment of the offshore RMB market must tackle conflicts in the field of international law, improving as soon as possible the terms of confidentiality, and implementing strict anti-money laundering procedures to curb the use of offshore financial centers to achieve illicit transfer of funds abroad. We also need to strengthen tax collection of international taxes on Chinese territory, to combat tax evasion and prevent loss of tax revenue.

Third, the offshore renminbi financial product chain and financial service capabilities of financial institutions are not yet ideal. The offshore business of Chinese financial institutions in general is still restricted to the traditional deposits, loans and international settlement business. There is an urgent need to achieve breakthrough innovation in financial product development. In addition to requiring more Chinese financial institutions to take on added functions, we must also encourage foreign financial institutions to develop businesses and innovative products.

Fourth, once the offshore financial market reaches a certain size, it will impact on the mechanism of onshore market interest rate and exchange rate formation, which may weaken the effectiveness of monetary policy, creating new challenges for the domestic financial regulatory system. Offshore renminbi market transactions will make interest rate and exchange rate determining mechanism more complex, and even affect yuan pricing. This requires the combination of two-rate marketizing reform, and the application of the scientific method in research and in the regulation of the monetary policy system. Establishment of a new macro-prudential financial regulation mode, accommodation of the offshore market within the monitoring range, strengthening international cooperation in financial supervision, and ensuring a smooth-running offshore RMB markets, and rapid, sound development.

 

Book/DVD list for your April 15 Tea Party

Book/DVD list for your April 15 tea party

 

By Donald Hank

The local tea party in Lancaster PA seems to have been organized by 2 fine ladies who, on the tea party web site, also recommend a book list for invitees. Good for them. Much of the list, apparently originating with Ron Paul, is made up of the True Liberals, or libertarians, like Ludwig van Mises, Friedrich Hayek, Ayn Rand and many others.

I emailed these ladies and thanked them for doing this and then said there were a few other books that Americans ought to read.

I wrote:

For today’s world, the most important information – most of which your school and/or college probably made sure you missed – is the story of the socialist dictators of the 20th century.

An invaluable contribution to your list would be “Harvest of Sorrow” by Robert Conquest, describing the slaughter of millions of Ukrainian farmers, “Son of the Revolution” by Liang Heng and Judith Shapiro, an eye-witness account of the Chinese Cultural Revolution, and the 3 disk DVD set China, a Century of Revolution, directed by Sue Williams (one of the co-producers was Karma Hinton, my first Chinese teacher). You will immediately see the unmistakable similarity between the Red Guard and ACORN.

Further DVDs: Repentance, a top-notch surrealistic Russian film (RU title: Pokayanie) about a Stalin like figure, Est-Oueste (East-West), an excellent film about a French family that visits the Soviet Union in the early post-WW II years and is trapped there. The Chinese film To Live is also an artistic masterpiece but at the same time, a realistic portrayal of the tragedy of Mao’s Great Leap Forward and Cultural Revolution.

Others: A somewhat tedious but trail blazing book “The Black Book of Communism” was written by a group of French communists under Stéphane Courtois who decided to come clean about the death toll of the 20th century, namely, almost 100 million innocents slaughtered throughout the world in the name of “social justice.”

Further, the Russian film Nest of Noblefolk (RU: Dvorjanskoe Gnezdo), an adaptation of the Turgenev story, shows the remarkable similarity between the mid 1800s and our 60s, with the elite classes talking about the same ideas that threw our society into moral and social turmoil. Shot in the Russian countryside, it is a cinema buff’s delight, with gorgeous photography, period-correctness in all aspects, soulful Russian gypsy music, a gripping love story with 2 intertwined love triangles and a surprise ending.

Note, however, that Turgenev’s best description of the early revolutionaries is given in his novel “Fathers and Sons,” which reflects the ideas that we considered revolutionary in our 1960s. In reality, we were a century later than the Russians in introducing ordered chaos, which is why freedom survived so long here. Nothing stands in the way of totalitarianism now – except you. And you know what? I believe in you.

Best,

Don Hank

TEA PARTIES AROUND THE NATION (find yours here):

http://www.illinoisfamily.org/news/contentview.asp?c=34348

Still the United States of America?

Still the United States of America?

Commentary by Donald Hank

On the campaign trail, Barack Obama once intoned “this will always be the United States of America.”

But will it?

You decide, after reading this issue of Laigle’s forum.

 

China to the world: clean up after me

China relegates the US to bottom floor, occupies penthouse

China recently became a member of the G20 and lost no time in taking over, demanding that other, richer, countries clean up her environment.

Let me give you some background here.

The first time I visited Hong Kong, I stayed in a rundown hotel near the outskirts of the town.

As soon as I had settled into my room, I looked out the window and saw a strange sight. Off a few thousand yards, situated on a hillside, was an apartment or condo complex with about 6 stories, each of which had an awning, all except the top story, which was a penthouse. Each of the awnings was totally covered with garbage of various kinds, including ordinary kitchen refuse.

I had spent time in Mainland China and had lived and studied for years in Taiwan, all places where humans and filth coexist peacefully under the strangest conditions. But I had never seen anything like this.

I found a few workers downstairs and asked them why each of these awnings was so full of garbage. I was sure they would be able to give me an explanation.

Get ready now. The following is a rough translation of what their spokesman said, with a big smile on his face:

Here in this part of China every person who lives above someone else has tossing rights to any roof below him. The person on the first floor has to put up with garbage from any other floor that might fall on his porch roof. The closer you are to the top, the less garbage you have to put up with. They guy on top is king! Nobody can throw garbage on him. So that is why everyone wants to live on the top floor.

Get ready, America, for your new king! You have granted China tossing rights over you, and she is a very, very messy neighbor – or maybe I should say, bed partner.

Read about it here.

Donald Hank

 

Homosexual activism reaches Biblical proportions

Below are the words of a radical homosexual activist to Linda Harvey, a godly woman who has thus far stood almost alone against the homosexual agenda. This man, like legions of his cohorts, thinks orthodox Christians are judgmental and should be punished by homosexual activists. here is his stern warning:

“You are very much being watched!  All you jeebus-lovin-christers rights will slowly be taken away one by one the more you try to press your beliefs down our throats. Beware. We are everywhere and you will never know it. Watch your mouth. Watch your actions. We are watching them my friend and we are many and we are rich and we are very well educated and very powerful. …”

Now if you think this sort of threat by homosexuals is a new phenomenon, know that there is nothing new under the sun. Approximately 2,000 B.C., as Lot was preparing a meal for some heavenly visitors in a house just outside the city of Sodom, some men from this town surrounded the house and said “Where are the men who came to you tonight? Bring them out so that we may have sex with them.”

Lot pleaded with them not to “do this wicked thing,” but they replied:

“Get out of our way. This fellow came here as an alien and how he wants to play the judge,” and then threatened Lot with harm: “We’ll treat you worse than them!”

You see? According to their way of thinking, the activists of Sodom had a right to have sex with anyone, even someone who did not want to have sex with them. And when a godly man defended the rights of his visitors to be left unmolested, the Sodomites were enraged and threatened him.

Nothing has changed since then. There was a brief interlude of some 1800 years when Christianity held sway in Europe, then briefly in the USA, where Christians like William Penn, the Quakers, Puritans, Anabaptists and many others came to escape from European wickedness.

But now, scarcely 300 years after they came to this safe haven, it is in the hands of the ones they were trying to escape.

Now where do we go?

Not long ago, a pastor in my home town, a sweet mild mannered man, preached from Romans 1, quoting Paul’s unflattering words about homosexual behavior.

Shortly thereafter, his home burned to the ground. Coincidence perhaps?

If you think I am over-reacting, check out this site, but make sure the kids aren’t watching.

Olavo de Carvalho: Ask John McCain

The eminent Brazilian columnist Olavo de Carvalho, who escaped a Latin tyrant by coming to this country, and for whom present-day America is therefore déjà vu, has been contacting the news media with his fervent plea to ask John McCain why he refused to ask tough questions of Obama about his background. De Carvalho says this kind of non-reaction by McCain and the press is exactly what preceded the rise of the far-left Lula to power in his country. So far Mr. de Carvalho has been stonewalled, just like he had been back home. One well-known US press representative who has been involved in government work that should have put him in a position to evaluate the precariousness of our position, wrote back poo-pooing his message and telling him this story about Obama’s lack of proper birth certificate is all just hype.

The real story here is the complicity of the news media, which stands like a phalanx behind the cover-up of a gigantic story of an apparent illegal alien usurping the presidency and refusing to produce the documents produced by every other president since the founding of this Republic.

http://www.youtube.com/watch?v=ZhWoxb59qXQ

 

Man sues feds to stop bailout

Larry Baumgarner, from Egg Harbor, NJ, is suing to stop the bailout.

Read more.

Larry contacted Laigle’s a while back with the story and we decided to take a wait-and-see approach. Sure enough, he has filed his suit. Larry writes:

Hello Laigle’s Forum,

Thought you’d like this. The response to my injunction to stop the bailout has been overwhelming. The publishing of the article in the Atlantic City Press was accompanied by about 100,000 e mails that went out. The leader of the Virginia Fair Tax organization wanted to be the first to call the federal court Monday morning. Like it was an honor to be the first ones into the fray of which they were. Ralph Nader’s coordinator called Sunday and told me she had called Ralph to support my federal action.  Haven’t heard from Ralph but into the court house they called. Then the Free Texans got into the act and on and on and on until the phone system about melted down at the federal court. Needless to say the federal court was not amused.  I was. Lol.

Some woman who has a talk show in Chicago wrote the Press and nominated me for citizen of the year. Some talk show in Texas got it and it was the subject of last night’s show.  Some outfit in Florida got it from somebody in Texas and somebody in Oregon got it from somebody in Alaska and are all calling the court. A guy from Oklahoma who ran for Senator from the state as an independent and lost, who got 56,000 votes, called and supports me and is trying to get those people to call the court.  They’re going to have to get more phones. Lol. That’s only a part of it.  The e mails are being forwarded around to other people all over the country. It kind of exploded.  I can’t keep up with the e mails or the calls which are coming in from all over the country.  So that’s how the response has been.  I read the e mails and laugh. I’m a hero, a patriot, the bravest man in America, and a host of the things. It’s a hoot!  It’s taking a life of its own. 

So call the Court early and often and vent!!! Lol. It can be very therapeutic.  Some woman from Charlottesville Virginia said she called six times so far. And she’s going to keep calling until they stop the bailout. Lol. They laughed when I sat down at that piano……. Hahahahaha.  Thought you’d be interested.   

      Stay tuned.  cya  Larry  

 

Illegals cost CA 9 billion/yr

http://www.marketwatch.com/news/story/Californias-Budget-Problems-Exacerbated-Illegal/story.aspx?guid={F27711D3-5E6B-4F20-AE75-232794B069A1}

 

Phillip Berg’s strange behavior

http://contrariancommentary.blogspot.com/

 

Illegal immigration opponent killed, undocumented murderer guilty as sin, free as a bird (it’s a great country?)

http://www.americanthinker.com/2008/11/hitandrun_death_in_a_sanctuary.html