Willie this week fits with my "disintermediation of the finanosaurs" thesis...
The (hardly empty) rhetoric reveals the underlying power shift to emerging markets from the developed nations that are responsible for the financial crisis. Bank power is shifting east. THIS IS A MAJOR POINT IN THE PARADIGM SHIFT UNDERWAY. The old game is over. The new accountable system is being constructed outside the US-UK shadows of control, with an intolerance for future criminal abuse. The Paradigm Shift continues. With it comes clear movement in the financial structure underpinning away from the USDollar and toward hard assets.
More complicated trade platforms are being constructed right now, behind the scenes, with little or no publicity or exposure. The primary parties involved are Germany, Russia, China, and Brazil. They will integrate buyer and seller with attendant systems, like a matchmaker busybody who believes this young man and that young woman should meet. One consultant working directly on such systems wrote, “Once the meltdown occurs, the evolving system will not require reserve currencies any longer, since 95% of all transactions will be barter and/or sophisticated counter trade via a new exchange platform that is being designed and will be up an running in early 2010. This new exchange will pretty much eliminate banks from being the bottleneck in conducting trade locally, regionally, nationally, and internationally. Welcome to a very different new world order.” The process will take time, but seems to be born soon from crisis bathwater. It is not installing new devices for speculation, but actual construction of platforms in progress unbeknownst to US media networks. The new system will enable trade from region to region in time, designed to cut out entirely the profligate ‘deadbeat’ nations that might include the United States. They essentially ride like a grand armada of parasites on the back of global trade in vessels US$ bearing a brand, extracting blood like a global tax. Trade in the new system will NOT be built atop bonds that are easily the object of fraud.
TRADE SETTLEMENT OUTSIDE THE USDOLLAR
The Chinese must hurry to establish the Yuan currency in global trade more broadly and deeply, so as to increase its recorded volume before 2010. They intend to win a higher weight in the new Intl Monetary Fund basket calculus set for revision next year. The Chinese Govt and bankers have a project, a goal, and a deadline. They wish to pursue a path to establish the Yuan as a global reserve currency, the third alongside the USDollar and the Euro. Their chosen path in execution is to enable the Yuan to be used on a broader basis in global commerce. During the year 2010, the Intl Monetary Fund will recalibrate the Special Drawing Rights, and reset the weights for the basket pseudo-currency according to actual global trade. So Beijing has an objective to lift the Yuan usage globaly, thus enabling more reserve status. To do so, sufficient Yuan currency must be available. So far they are using a two-part strategy. First, they issue large tranches of Yuan swaps within installed facilities (cited before many times) in nations overseas. Second, they permit Hong Kong banks to issue loans intended to further trade (also cited before), a project already underway with the support of the Peoples Bank of China. The Yuan loan program has 440 firms in Shanghai and Guangdong with current participation. They are making genuine progress. The pieces of the puzzle are coming together, and investors must detect the pattern toward a goal.
China must manage the appreciation of the Yuan in response to higher demand, a task made easier by supply mini-floods. To be sure, less US$ demand will be seen in international trade contract settlement as a result, A KEY UNDERMINE TO THE USDOLLAR. China cannot supplant the USDollar from the top down within banking circles. So they will do so from the grassroots in contract trade settlement, the bottom up. In time, the US$ fortress will be pretty, shiny, and full of cheesy fake marble, but it will wash away to the sea. In time even OPEC will accept Yuan for oil payments, a forecast made two years ago.
China & Brazil make further progress to sidestep the USDollar in trade, as China establishes its global swap facility for trade with other nations. Given China’s primary role in global trade, and the sour sentiment by exporters, the USDollar will gradually lose status for international settlements. Their bilateral trade pact announced is coming to fruition, as platforms are being built. The development has been blessed from the high priests at the Bank For Intl Settlements, something the US-UK bankers must be very bothered to observe. At the BIS offices in Basel Switzerland, China’s central bank governor Zhou Xiaochuan and Brazil’s Central Bank president Henrique Meirelles heralded progress of the bilateral deal at the meeting. Zhou revealed plans to directly use of Yuan currency with Brazil instead of the global swap facility. Brazil needs more integrated development. The largest nation in South America (population 190 million) needs capital formation, needs development of delivery systems for transportation, and especially needs the enormous exploration & production facilities constructed for the gigantic Tumi oil & gas project. Watch China gobble up the majority of the Tumi energy output, and cut out the Americans, whose relations have not been cultivated with Latin America. US leaders are too pre-occupied with oil in Iraq and heroin in Afghanistan, the other strategic commodities.
The Yuan currency swap venture will continue for China. The Peoples Bank of China has arranged six bilateral currency swaps in large volume. They currently total 650 billion Yuan (=US$95 billion) since December with Malaysia, Argentina, Hong Kong, and several European nations. The facility acts like an Import-Export Bank. Under the arrangements, a counter-party center can lend the Yuan provided by the PBOC to domestic commercial entities toward pay for imports. Chinese exporters are thus paid in their own currency, eliminating exchange rate risks and reducing the cost of fund transfers. Thus the bypass of the US$ in settlements.
PLAYING THE I.M.F. ANGLE
China plays the I.M.F. & Western bankers like a fiddle, lining up a grand gold purchase off-market. The real story is the opposite of the official story of an IMF gold dump. China continues to threaten the establishment, forcing a reaction, even exploiting political leverage. China, by announcing its increased gold reserves from 600 to 1054 tonnes, has indirectly given open cannon warning to the USTreasurys in order to obtain a mountain of IMF gold as booty. Itself low on funds, the Intl Monetary Fund finally approved the transfer of $13 billion in gold bullion in exchange for various crappy paper owned by China, probably USTreasurys and USAgency Mortgage Bonds. Choosing the lower labor intensive route, using the global banker windows, China will acquire 400 more tonnes of gold. Refusal would have meant purchase of gold in the open market, an option still open to them. The IMF will hold more USTBond confetti and less gold. One must wonder if no more gigantic gold sales can be designed from large vaulted supplies. The last large available quantity has been jacked.
SECRECY & THE INSIDER TRADE
Bank holiday plan execution must be kept as surprise, since reactive preparations undermine the impact of the vast theft planned, both overt (from devaluations) and hidden (from stolen accounts). Those who wait to take action lose all opportunity to benefit, and will surely lose significantly. The major central banks are very likely accumulating gold bullion on a net basis. Surely the Chinese, Russians, and Arabs are. If a planned US bank system shutdown occurs, its powerful effect would be muted by publicity of an unfolding, hence reducing insider profit potential. The pristine pure-bred Ruling Elite would be forced to share benefits with unwashed unworthy Plebeians. People would remove deposits from banks likely to be gobbled by Wall Street zombies, as withdrawals could later be limited. People would transfer money out of the USDollar and into the Euro or Gold or Oil, before a grand US$ devaluation occurs. Next comes the threat of capital controls, limiting currency transfers across the border. The insider trade of the century will likely remain within the domain of the big bankers and other predators who have succeeded in looting the wealth of the nation. If word of the plan spreads, then people can prepare and take defensive action. No opportunity will be afforded those who wait until the news breaks. They will be subjected to different price structure on assets, perhaps a big quantum change, with the US$ lower, competing currencies higher, gold higher, and all commodities priced in US$ terms higher, led by crude oil and industrial metals. Pay little attention to formal denials, and those by the intellectual servant harlots. They have offered little truth or fair warning of crisis in the last several years. Prepare!!
http://www.financialsense.com/fsu/editorials/willie/2009/0723.html
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