- Brexit: Worst Case Scenario For EU; Armageddon Promise Now Exposed As Pack Of Lies
Submitted by Michael Shedlock via MishTalk.com,
Project Fear predicted economic meltdown if Britain voted leave. Where are the devastated high streets, job losses and crashing markets?
In other Brexit news, Sweden warns the UK about cutting corporate taxes. How should the UK respond? Who is in control?
What Happened to Promised Armageddon?
The Guardian reports Brexit Armageddon was a Terrifying Vision – but it Simply Hasn’t Happened.
Unemployment would rocket. Tumbleweed would billow through deserted high streets. Share prices would crash. The government would struggle to find buyers for UK bonds. Financial markets would be in meltdown. Britain would be plunged instantly into another deep recession.
Remember all that? It was hard to avoid the doom and gloom, not just in the weeks leading up to the referendum, but in those immediately after it. Many of those who voted remain comforted themselves with the certain knowledge that those who had voted for Brexit would suffer a bad case of buyer’s remorse.
The financial markets are serene. Share prices are close to a record high, and fears that companies would find it difficult and expensive to borrow have proved wide of the mark. Far from dumping UK government gilts, pension funds and insurance companies have been keen to hold on to them.
City economists had predicted an immediate rise in the claimant count measure of unemployment in July. That hasn’t happened either. This week’s figures show that instead of a 9,000 rise, there was an 8,600 drop.
Pack of Lies Clearly Visible
Armageddon fears were purposely over-hyped from the beginning. Now reality has set in.
Project fear backfired. People can easily see what liars David Cameron and the nannycrats in Brussels were.
Project Remain: Where are the admissions “We were wrong?”
Worst Case Scenario for EU
That the UK has gone on as normal has to be one of the worst fears for the nannycrats in Brussels. There is life, not death after Brexit. What country will be next to figure that out?
Some rough times are likely ahead for the global economy, including the UK. But in the long run, Brexit will be a good thing for the UK, which means it will be a bad thing from the point of view of Brussels.
Sweden Warns U.K. Against Aggressive Tax Cuts Amid Brexit Talks
The nannycrats are now worried that the UK will do something smart, like lower corporate taxes again.
Today, Sweden Warns U.K. Against Aggressive Tax Cuts Amid Brexit Talks.
The U.K. should avoid any drastic steps to cut corporate taxes, or similar measures, as it prepares to start talks on leaving the European Union, Swedish Prime Minister Stefan Loefven said.
If the U.K. wants some time to think about the situation, this will also give EU countries some time,” Loefven told Bloomberg after giving a speech in Stockholm on Sunday. “On the other hand, you hear about plans in the U.K. to, for example, lower corporate taxes considerably. If they, during this time, begin that kind of race, that will of course make discussions more difficult.”
Stellar Opportunity for UK to Set Example for the World
By all means the UK should precisely make things more difficult.
Everyone says, Brexit terms need to be negotiated. Actually, the UK can pick up its marbles and go home. Who could stop the UK from doing just that?
On July 11, I wrote Stellar Opportunity for UK to Set Example for the World.
In that post I proposed among other things a recommendation “The UK should preemptively stick it to the EU by slashing its corporate tax rate to 10%, lower than any country in the EU.”
I was unaware at the time that UK chancellor George Osborne had already decided to cut taxes, but by a lesser amount than I suggested.
Precise Way to Start Negotiations with EU Mules: Get France to Piss and Moan
In a follow-up post I wrote Precise Way to Start Negotiations with EU Mules: Get France to Piss and Moan.
Michel Sapin Pisses and Moans
First Step in Training a Mule
There’s an old saying “The first step in training a mule is to hit it as hard as you can in the head with a stick.”
I don’t really advise that with mules, but it is the precise thing to do to EU nannycrats.
The first step in training EU mules is to hit them in the head as hard as you can with a stick. Osborne just smacked French and German mules
— Mike Shedlock (@MishGEA) July 11, 2016
Reflections on Clearness
“It’s clear that the UK can’t participate in the big decisions involving the EU’s future,” said Emmanuel Macron, France’s economy minister.
Well, it’s equally clear the EU cannot participate in big decisions involving the UK’s future.
And with his plan to cut corporate taxes, chancellor Osborne just hit nannycrat mules in Germany, France, and Belgium in the head with not a stick, but a brick.
Trade War the Right Way
The UK should preemptively stick it to the EU by slashing its corporate tax rate to 10%, lower than any country in the EU.
Set Example for the World
Shed of inane EU rules and regulations coupled with the freedom to do anything it wants, the UK has a golden opportunity to embrace the benefits of genuine free trade and growth via low taxes.
I have often stated the first country that fully embraces free trade, regardless of what any other country does, will come out stunningly ahead.
The UK now has that chance.
Negotiation Progress
#eu Sweden is pissing and moaning along with Germany and France about UK tax rates. I call this progress. Advantage UK in Negotiations.
— Mike Shedlock (@MishGEA) August 21, 2016
I suggest the UK cram it straight down their throats by lowering taxes to 10% right now. This will set proper the negotiation tone and inform the nannycrats in Brussels who calls the shots.
France and Germany threatened to make things difficult for the UK. But as I have stated all along, the UK, not the EU, has the upper hand in these negotiations.
Import/export math proves the point. The UK imports more from the the EU than it exports to them.
For details, please see “No Cherry Picking” Says Merkel; Risk of Global Trade Collapse says Mish.
The more the EU pisses and moans, the more successful Brexit will be for the UK.
- Silver Is in a Different World, Report 21 August, 2016
Measured in gold, the price of the dollar hardly budged this week. It fell less than one tenth of a milligram, from 23.29 to 23.20mg. However, in silver terms, it’s a different story. The dollar became more valuable, rising from 1.58 to 1.61 grams.
Most people would say that gold went up $6 and silver went down 43 cents. We wonder, if they were on a sinking boat, tossing about in stormy seas, if they would say “that lighthouse went up 5 meters.”
To our point last week, what would be the utility of a lighthouse that you measured from your boat which is going down and up, but mostly down? Would you wonder if lighthouses had another purpose, any other use? If you could make money betting against other sailors, on the lighthouse’s next position, would you care?
“Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.” – Warren Buffet
Of course, what Buffet doesn’t mention is that we’re forced to use paper certificates of government debt as if it were money. This debt is losing value as the government racks up ever more implausible amounts of it ($19.5T at the moment). Meanwhile, lenders are offered lower and lower interest rates to finance this growing monument to economic insanity.
Surely anyone from Mars would be scratching his head at this, too.
Unfortunately, Nixon’s gold default almost exactly 45 years ago to the day removed the extinguisher of debt. When you pay off a debt usinggold, the debt goes out of existence. When you pay a debt using dollar, the debt is merely shifted. So the debt grows—must necessarily grow—at an exponential rate.
Also unfortunately, Nixon’s gold default also unhinged the rate of interest. It began to shoot the moon. It eventually peaked at an insane high (and historically unprecedented) level in 1981. Since then, it has been falling and now it keeps hitting insane low (and unprecedented) levels.
You can get yourself out of the loop by buying gold, but you cannot effect the debt, interest rate, or banking system. You are disenfranchised. Instead, we have monetary policy administered the way the Soviet Union had food prices set by bureaucratic diktat.
The problem is not that gold cannot have any utility. It had it, once. The problem is that the government has locked up gold’s utility. What’s left gold is just betting on the price action in the casino.
Sooner or later, that price action is going to come to an ignominious end. Contra the Quantity Theory of Money, the value of the dollar will go to zero. This will not be because its quantity rises to infinity. It will be because gold owners no longer wish to risk holding dollars, for fear of counterparty default.
About the best we can say is that today is not that day.
Read on for the only the only true picture of the supply and demand fundamentals that ultimately drive the price action. But first, here’s the graph of the metals’ prices.
The Prices of Gold and Silver
Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. It rose significantly this week.
The Ratio of the Gold Price to the Silver Price
For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.
Here is the gold graph.
The Gold Basis and Cobasis and the Dollar
Price
Well, well, well. Look at that. The abundance of gold (i.e. the basis, the blue line) falling all week, and the scarcity rising. Indeed, we see now this pattern has been going since the end of June. The same pattern holds true for farther-out contracts.
This means that someone, or millions of someones—do not get too caught up in the fallacy of famous market players—is buying physical gold metal. In that time, speculators have not been eager to buy more. So the net result is that the fundamentals have nearly caught up to the price.
The Gold Price and Fundamental
The gold market may not be screaming “buy” yet—today is not that day—but it’s no longer screaming “danger”.
It is interesting to see that the speculators—who are really betting against the dollar, even if they don’t always know it—sometimes go their own way. Perhaps they see a central banker in the news, or the jobs report disappoints. Buy, buy!
No animal species can survive by cannibalism—by members eating other members. And speculators cannot drive the market by continually buying from one another, giving them both profits (as they reckon it, in dollars) and ever-rising price. Eventually either the fundamentals change and the speculators are proven right. Or the speculators give up, or get flushed out. This time, the speculators are proven right. They put their dollars in harm’s way, particularly since the end of April when the softening fundamentals fell below the market price. They continued to fall all the way through late June. But the market price did not follow this trajectory.
The Silver Basis and Cobasis and the Dollar Price
Silver is in a different world.
We do see a falling basis and rising cobasis this week. However, it’s just tracking price. That is rising dollar price (i.e. falling silver price) corresponds with rising cobasis. As speculators reduce their positions, the price falls a bit.
It has a long way farther to fall, before it catches down to the fundamentals.
© 2016 Monetary Metals
- Summary Of Recent Fed Statements: Spot The Common Theme
Actually, scratch that: the one thing that becomes clear after skimming this selection of select statements by Fed committee members over the past few months, is that there is absolutely no common theme.
Seven years after the crisis, the Fed not only continues to fly blind, but the degree of disagreement among members has never been greater. Which is helpful to know 5 days before Yellen’s Jackson Hole speech this coming Friday is expected to reveal a new, less “omnipotent” Fed, one which will push for more fiscal stimulus just so the Fed has more debt to monetize the next time it has to ease, since thanks to “r-star” we now know it can hike rates at most just 1-2 times before it is forced to resume easing by way of QE as the rate of ~1% will not be nearly enough to provide the needed stimulus economic stimulus to offset the next economic contraction.
Source: Goldman Sachs
- As The Vancouver Housing Market Implodes, The "Smart Money" Is Rushing To Get Out Now
Three weeks after we suggested that the Vancouver housing bubble had popped in the aftermath of the implementation of the July 25 15% property tax in British Columbia targeting the Chinese free for all in Vancouver real estate, we got confirmation of that last week when we reported that only one word could describe what has happened to Vancouver housing in the past month: implosion.
Zolo, a Canadian real estate brokerage, which keeps track of MLS home sales in real-time and reports prices as an average rather than the “benchmark price”, showed as of last week a major correction underway in most Metro Vancouver markets. According to the website, the City of Vancouver currently has an average home price of $1.1 million, down 20.7% over the last 28 days and down 24.5% over the last three months. The average detached home is $2.6 million, down 7% compared to three months ago.
The number of transactions has likewise slammed shut: while August is typically one of the slowest months for real estate transactions, MLS sales data from the first two weeks of the month shows what many have been hoping for during the last few years of escalating prices. According to MLS listing data, there were only three home sales in West Vancouver between Aug. 1 and 14 this year, compared to 52 during the same period last year. That’s a decrease of 94%.
In short, the Vancouver housing bubble has poppsed, and not surprisingly the “smart money”, which rode the bubble all the way up, has duly noticed, and wants out. Immediately.
As Bloomberg reports, the Ontario Teachers’ Pension Plan is quietly seeking buyers for a minority stake in its C$4 billion ($3.1 billion) real-estate portfolio in Vancouver, including office towers and shopping malls, according to people familiar with the matter.
Cadillac Fairview, the real-estate unit of Canada’s third-biggest pension fund, is looking to raise about C$2 billion from the sale. Cadillac Fairview has hired CBRE Group Inc. and Royal Bank of Canada for the sale.
According to Bloomberg, Cadillac Fairview is the latest pension group seeking to reduce its holdings in the Vancouver commercial market, where prices have reached record highs amid an influx of foreign cash even as new supply drives up vacancy rates. Ivanhoe Cambridge and the Healthcare of Ontario Pension Plan are seeking about C$800 million for their office towers in Burnaby, British Columbia, just outside of Vancouver.
The Cadillac Fairview portfolio, which hasn’t yet started marketing, includes 14 properties in downtown Vancouver and Richmond, with some of Canada’s largest shopping centers, office towers, and historic buildings up for grabs. The assets include a portfolio of waterfront properties including Waterfront Centre, a 21-story tower on the harbor built in 1990; the 238,000-square-foot PricewaterhouseCoopers Place; and The Station, a historic property built in 1912 that serves as North America’s largest transport hub, currently pending approval for an added office tower.
The liquidation has a whiff of panic as some of the country’s biggest retail assets are also in the mix, such as the Pacific Centre, a downtown retailer with 1.6 million square feet for which Cadillac Fairview submitted a proposal this year to expand. It’s the third-most profitable shopping mall in Canada, according to brokerage Avison Young, with C$1,599 in sales per square foot Bloomberg adds. The center also contains eight office towers of two million square feet, including 701 West Georgia and the HSBC building.
In recent years, alongside the plain vanilla housing bubble, commercial real estate soared too, as demand for Vancouver offices sent prices of properties to record highs in recent transactions, including the purchase by Anbang Insurance Group – another notorious Chinese offshore buyer – of the Bentall Centre.
Meanwhile, a warning sign had emerged even before the July property tax hike as the vacancy rate in the city rose to a 12-year high of 10.4% as of June 30 as tenants absorbed 1 million square feet of new space since the same time last year, according to Avison Young.
It is only set to get worse, because in a rerun of what happened to the Alberta office market in early 2015 after oil cratered, additional space is set to flood the market, with six office towers under construction for delivery as soon as this year totaling about 802,700 square feet, and 10 buildings proposed for the city, including Cadillac Fairview’s Waterfront Tower, according to Avison Young’s mid-year 2016 report. Despite the vacancy, rental rates for the best quality assets in Vancouver are the highest in Canada and some U.S. cities such as Chicago and L.A. at about C$30 a square foot, Avison Young said.
And so, Vancouver – after enjoying years of unprecedented upside in both residential and commercial real estate – is on the edge of full blown, freely falling hangover, just like the one the OECD prudently warned about three months ago, when it said that a “disorderly housing market correction” notably in Toronto and Vancouver, is the biggest threat to Canada’s economy, one which “would damp residential investment and private consumption, and could threaten financial stability.” One can now add commercial investment and consumption to that list as well.
In the coming months, if not weeks, we will find out just how accurate the OECD’s gloomy forecast was.
- OPEC Ignites Biggest Short Squeeze In History: Hedge Funds Cut Oil Shorts By Most On Record
Ever since the February crash, when oil tumbled to 13 years lows, and when OPEC started releasing tactical headlines at key inflection points about an imminent oil production freeze (which not only never arrived but has since seen Saudi Arabia’s output grow to record levels) which we first suggested were meant to trigger a short squeeze among headline scanning HFT algos, our suggestion was – as is often the case – dismissed as yet another conspiracy theory.
Six months later, this conspiracy theory is now a widely accepted fact, and as Bloomberg reports tonight, “well-timed” OPEC talk of a potential deal to freeze output, has “forced bears” into a historic squeeze and helped push oil close to $50 a barrel, prompting West Texas Intermediate from a bear to a bull market in less than three weeks.
“This is all courtesy of some very well-timed comments from the Saudi oil minister,” said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. “They’ve been successful over the last year in jawboning the market, and this is the latest example.”
And while one can debate whether OPEC’s “headline” leaks are timed to coincide with near-record short positions on WTI, one thing is certain: the past week saw the biggest crude oil short squeeze on record as money managers cut bets on falling prices by the most ever.
According to Bloomberg, Hedge funds trimmed their short position in WTI by 56,907 futures and options during the week ended Aug. 16, the most in data going back to 2006. And, as one would expect following yet another record short squeeze similar to the one experienced earlier in the year, WTI futures rose 8.9% to $46.58 a barrel in the report week and closed at $48.52 a barrel on Aug. 19. WTI is up more than 20 percent from its Aug. 2 low, meeting the common definition of a bull market.
Money managers’ short position in WTI dropped to 163,232 futures and options. Longs, or bets on rising prices, increased 0.1 percent, while net longs advanced 56 percent, the most since July 2010.
“This was a very short market so we were bound to get some covering,” said Stephen Schork, president of the Schork Group Inc., a consulting company in Villanova, Pennsylvania. “
Schork added that we “probably won’t hear a lot from OPEC with prices up here, but if we get down to where we were a few weeks ago we can expect to hear more.”
Ironically, even if OPEC does agree to a production freeze, it will be because its biggest members are already pumping at flat-out record levels, said Chakib Khelil, the group’s former president. Saudi Arabia, Iran, Iraq and non-member Russia are producing at, or close to, maximum capacity, Khelil said in a Bloomberg Television interview on Aug. 17. Saudi Arabia told OPEC that its production rose to an all-time high of 10.67 million barrels a day in July, according to a report from the group.
Saudi Energy Minister Khalid Al-Falih said that the talks may lead to action to stabilize the market. What he means is that while Saudi Arabia production levels will be “frozen” at an all time high, a level beyond which it could not produce even if it wanted to, all of its peers will be locked into a substandard output rate, which is also why few if any of them will agree to the proposal to be discussed next month in Algiers.
Meanwhile, as even OPEC tries to ignite HFT algo short squeezes (one wonders who OPEC’s financial advisor inthis regard is), US shale is rapidly coming back on line: as reported on Friday, there has been an upsurge in drilling as prices have climbed. U.S. producers added oil rigs for an eighth week, the longest run since April 2014, according to Baker Hughes Inc. data on Aug. 19. Even the traditionally conservative EIA increased its domestic output forecast for 2017 to 8.31 million barrels a day from 8.2 million projected in July, according to its monthly Short-Term Energy Outlook released Aug. 10.
“In the U.S., DUC completion and the drilling of new wells are changing the production outlook,” Morse said. “We might see U.S. production rise next year instead of falling.”
For those who trade based on flashing red headlines, and not Econ 101, rising production means falling prices, absent a comparable increase in demand, which however with China close to filling its Strategic Petroleum Reserve, is about to enter freefall.
Finally, now that virtually all weak hands have covered, it is time for the “flip” trade, as oil resumes its slide, and shorts once again pile on, just as Morgan Stanley forecast when it said that the mega short squeeze would finally end last week. Tomorrow we will find out if MS was correct.
- Multipolar World Order: Economics Vs. Politics
Submitted by Frederico Pieraccini via Stratgic-Culture.org,
International tensions have in recent years often led to conflicts between nations, leaving countries to face complicated choices. The world is under constant change, and the most direct results are political instability over vast areas of the globe combined with economic, cultural and often military confrontations. The economic priorities of cooperation and development are increasingly being sacrificed on the altar of protection of geopolitical interests. It is a return to the past where strategic interests prevailed over the economic model prescribed by modern capitalism.
Nations like Russia, China and Iran have in recent years accelerated their rise on the global arena, expanding vital aspects of this in such areas as energy supply, transit of goods, the type of currency used in trade, defense of national borders, the granting of use of airspace, military–industrial cooperation with other nations, the joint fight against terrorism, and a general defense of the principle of national sovereignty. Washington has tried in every way to prevent this growing multipolarity, desperately trying to prolong its two-decade-old unipolar world.
It is in this general climate that Beijing, Moscow and Tehran have had to engage with Western economic reactions in the process of defending their strategic interests. As a result, we have increasingly witnessed in recent years a conflict between economic convenience and politically driven policy decisions. The most difficult challenge faced by these challengers of the status quo lies increasingly in the complicated question of how to manage a situation where geopolitical interests have to fit into a global financial system largely managed and manipulated by Europeans and Americans.
Currently the international financial system, as I have written many times before, is an American affair. The dollar stands as the dominant currency in relation to other financial institutions, and the whole global economic system is mainly conducted through the American currency. But the paradigm is changing, especially in recent years, thanks to supra-national entities like the AIIB and BRICS. Inevitably the IMF’s currency basket will have to incorporate the yuan, starting the process of the slow erosion of the dollar's dominance. The IMF, after years of wasting time trying to delay this event, will welcome from the October 1st, 2016, Beijing as an integral part of the reserve-currency system. Of course one of the most critical aspects is still the private banking sector and how the SWIFT payment system will work, given that it currently lies within the Euro-American orbit. Altogether this blend of public and private sector produces a situation where it is easy to see that the global economic system and its rules are often decided in Washington (IMF, World Bank), New York (Wall Street, FED), London (LSE), Basel (BIS) and Frankfurt (ECB), excluding all the other nations. The financial system is dominated by central banks, international bodies and the huge conglomerate of private banks, all strictly of a North Atlantic orientation.
It is easy to understand that nations not aligned with Western interests suffer retaliation, threats and damage from a financial system that is controlled by Euro-American interests.
The pressure imposed on nations like Iran, Russia and China in recent years has increased significantly, jeopardizing global stability. The real possibility of proposing an alternative economic system that is not so easily manipulable by the West has allowed not only Beijing, but especially Moscow and Tehran, to respond in a very effective manner to Western geopolitical intimidation. The Western reaction to the development of the Iranian nuclear program, as well as the Crimean issue, demonstrated clearly the consequences that come with defending strategic interests.
Initially it was Iran. With the acquired nuclear capability, Israel poses a direct strategic threat to the existence of the Islamic Republic. Tehran has decided to give priority to its own national interests by developing its own nuclear program. The objective is the production of a nuclear device to use as a deterrent, effectively creating a balance of power. Of course the decision sparked a vehement response from the West, and once the military option was discarded, an economic strangulation of the country commenced. Iran’s expulsion from the global banking system (SWIFT), as well as international sanctions, especially in 2007-2013, have had serious repercussions for the Iranian state in terms of profits from imports and exports, especially in the area of oil and gas.
The economic burden has been high, the country facing difficulties financing internal growth. This pushed Tehran to try and change the situation to their advantage by bypassing impediments and penalties. This decision forged important partnerships, especially with Russia, China and India, and strongly contributed to the implementation of an alternative economic channel. Tehran's move was strongly appreciated in the region by small countries seeking opportunities for mutual gains. Important Chinese and Indian investments in the Islamic Republic, Moscow’s constant military exports to Iran, and the selling and buying of gas and oil in different currencies rather than the dollar created a context in which, for the first time, the international economic pressure fueled by Washington was not able to change the course of events.
Iran, thanks to the assistance and financial support of its main allies, managed to render irrelevant the sanctions and banking restrictions imposed on it. It is this aspect more than any other that led to the nuclear negotiation process initiated by the West. Iran was found in the revolutionary situation of being able to pursue its strategic objectives (nuclear weapons as a deterrent to a nuclear Israel) without succumbing to economic pressure. The importance of this outcome can never be stressed enough. For the first time in a long time, a nation not aligned with Western wishes was able to defend its strategic interests without suffering the negative effects of an adverse international system, with its arsenal of speculation, penalties, or simply illegal actions like the removal from the SWIFT system.
When confronting geopolitical and economic interests, it is hard not to mention the two giants such as China and Russia. Both countries, as global superpowers, necessarily need to constantly balance strategic objectives, often geopolitical, with international economic cooperation. The Ukrainian coup, with the reunification of Crimea, or the construction on the “Spratly Islands” in the South China Sea, are two forward-looking examples of how geopolitical interests have become a main priority for Beijing and Moscow. The power that China has accumulated in economic terms gives it a great advantage: Western nations are unable to apply economic aggression. This leaves China free to pursue its main political objectives, such as establishing security on its maritime boundaries, enforcing national integrity, and expanding its influence and commercial facilities across the continent, without fear of incurring economic punishment. The West is already unable to sanction China let alone apply any vetoes from the private banking sector, or even worse, a possible embargo. China is the factory of the world, and any economic pressure would end up producing unacceptable losses for the West.
After years of disagreements over Chinese territorial claims in the South China Sea, all that Washington managed to do was obtain an irrelevant judgment from an international tribunal thousands of miles away from the disputed area. China pursues its claims without much caring for the actions and rhetoric of the West, focusing instead on ensuring its strategic focal points.
The coup in Ukraine, and the subsequent reunification of Crimea, showed unequivocally how Russia’s nuclear weapons deter American aggression. The possibility of NATO actively participating in the war Kiev started against the east of the country amounted to zero, due to the conventional military power of the Russian Federation. Nevertheless in such a scenario, we cannot overlook the effect of sanctions, and the attempts of international isolation, that Russia is subjected to. Moscow, during the Ukrainian crisis, took the difficult but necessary decision to preserve its geopolitical interests at the expense of its economic interests. The stakes were too high to be able to give preference to financial calculations. Sevastopol and the Black Sea Fleet are fully part of the strategic deterrent that has saved the world from a possible confrontation between NATO and Russia in Ukraine. In such a scenario, even the collapse in oil prices has not affected Moscow’s decisions even as it is damaging to the Russian economy.
Like with Iran, for Russia the choice to defend at all costs its national interests has forced a policy of “looking towards the east”. The multiple, all-encompassing agreements with Beijing have proven that Western economic power is increasingly frail and can be ignored.
The events involving Iran, China and Russia are an epilogue in international relations. They convey an uplifting message to countries with less capacity to resist Western military aggression or withstand financial aggression. It is still too early to appreciate the effects of this change on small nations and their policies, since they are still reliant on assistance from their strong allies. In scenarios like this, the economic impact is not negligible and is often the decisive factor in balancing priorities. It is difficult to imagine a country that places geopolitical interest ahead of the nation's economy.
Some recent examples of this Western arrogance can be seen in energy transit through pipelines. The Middle East suffered untold death and destruction in Iraq and Syria because of plans to disrupt the construction of a pipeline connecting Iran and Europe that passed through Syria and Iraq. A similar situation was seen in the discussed links between South Stream, North Stream or Turkish Stream. In this case all the transit countries (Bulgaria, Greece, Hungary, Serbia and Slovenia) had enormous problems fulfilling their agreements. Unfortunately, it is in such circumstances that Western economic blackmail reaches its peak, often managing to block or slow down such strategically important gas or oil corridors. Smaller countries are forced to give up important sources of development in order to avoid running the gamut of economic restrictions or even international sanctions.
One way to resist international finance is through a national economic system that is in many respects highly independent. This is how the world should view the alternative international systems of the likes of the BRICS Bank and the Asian Infrastructure Investment Bank (AIIB). In the near future, countries vulnerable to international speculative attacks will be able to embark on politically favorable projects through the AIIB or BRICS Bank. The multipolar future is not just for superpowers like China and Russia but also represents a huge opportunity to raise Third World countries up from unacceptable levels of poverty. The aim of Sino-Russian relations is nothing less than providing the necessary tools to other nations to resist international pressures from traditional financial channels (World Bank, IMF). Allowing these nations to pursue their own national strategic interests opens possibilities that only a multipolar world can offer.
The transition from a unipolar to a multipolar reality has already changed many aspects of international relations. Military options for superpowers against one another have become a less viable option thanks to economic ties and the nuclear balance. Some of the ultimate tools to influence events, namely manipulation and financial terrorism, have less and less effect on superpowers and tend to actually favor the creation of an alternative economic system.
The evolution of these events is easily predictable. With more integration of the world’s nations, the dollar's influence will gradually be reduced, but the decline of the United States’ unipolar moment will accelerate. The effects will be increasing international cooperation and a transformation that will guide our world toward a full multipolar age.
A revolution that will change everything like nothing in recent history is taking place, forever altering the delicate balance upon which international relations hitherto rested.
- Olympic Gold Medals Have Almost Zero Gold In Them
The 2016 Rio Summer Olympic Games are already 51% over budget, with the total cost expected to be in the $4.6 billion range. With that in mind, Visual Capitalist's Jeff Desjardins notes that the organizers have tried their best to cut costs.
One area of compromise?
The Olympic gold medals, which weigh 500g (1.1 lbs) and are 85mm (3.3 in) in diameter, are gold in name only.
OLYMPIC GOLD MEDALS HAVE ALMOST ZERO GOLD IN THEM
Today’s infographic comes from JM Bullion and it shows the real amount of metal in gold, silver, and bronze medals, along with the hypothetical cost of awarding solid gold to winning athletes.
Courtesy of: Visual Capitalist and JMBullion - The Fed Launches A Facebook Page… And The Result Is Not What It Had Expected
While it is not exactly clear what public relations goals the privately-owned Fed (recall Bernanke’s Former Advisor: “People Would Be Stunned To Know The Extent To Which The Fed Is Privately Owned“) hoped to achieve by launching its first Facebook page last Thursday, the resultant outpouring of less than euphoric public reactions suggest this latest PR effort may have been waster at best, and at worst backfired at a magnitude that matches JPM’s infamous #AskJPM twitter gaffe.
Here are some examples of the public responses to the Fed’s original posting: they all share a certain uniformity…
We wonder how long the Fed pulls a “blogger Ben Bernanke”, and starts moderating, if not outright blocks, all Facebook comments.
- "I Don't Give A Shit About Them" – Philippines President Threatens To Quit "Son Of A Bitch" United Nations
While the US media is obsessing over what could happen to the US if the diplomatic debacle that is Donald Trump becomes president (as opposed perhaps to the pathological liar and State Department-for-hire that is HIillary Clinton), the Philippines has a living, breathing example of the worst that a person who has zero regard for the status quo or the establishment, can unleash. Or perhaps the best. We are talking about the country’s new president, Rodrigo Duterte, who most recently made headlines for calling the US ambassador to his country an “annoying, homosexual, son of a bitch“, yet whose policies, unorthodox as they may be, are working when after some 400 drug dealers were killed in the Philippine government’s “war on narco-politics”, reportedly another 500,000 turned themselves in.
In Duterte’s latest outburst, the Philippine president has threatened that the country could leave the UN, after the organization urged the Philippines to stop executing and killing people linked to drug business and threatened that “state actors” could be punished.
“Maybe we’ll just have to decide to separate from the United Nations. If you’re that rude, son of a bitch, we’ll just leave you,” Duterte told reporters in Davao, quoted by Bloomberg.
“I don’t give a shit about them,” he added. “They are the ones interfering. You do not just go out and give a shitting statement against a country.”
Calling the UN “inutile”, Duterte said the Philippines could invite China, African nations and other countries to create a rival international body. He went further, slamming the UN’s response to other global issues.
Cited by RT, Duterte said “Look at the iconic boy that was taken out from the rubble and he was made to sit in the ambulance and we saw it,” Duterte said. The picture of Omran Daqneesh, a five-year-old Syrian boy has recently gone viral around the globe. “Why is it that [the] United States is not doing anything? I do not read you. Anybody in that stupid body complaining about the stench there of death?”
The Philippine leader also slammed the US for its own human rights record, citing the string of shootings involving police and black men that have sparked protests in the U.S. “Why are you Americans killing the black people there, shooting them down when they are already on the ground?” he asked. “Answer that question, because even if it’s just one or two or three, it is still human rights violations.”
The angry tirade at the news conference in Davao City came after the UN’s special rapporteur on summary executions, Agnes Callamard, urged the Philippines to stop extrajudicial executions and killings, saying “state actors” could be punished for the “illegal killings.”
In many ways, Duterte’s response to the UN report is comparable to that by Turkey’s president Erdogan, who has not taken kindly to European (and US) criticism for cracking down on, firing or arresting nearly 100,000 people following July’s failed Turkish coup.
Meanwhile, in the Philippines, about 900 people have been killed by unidentified attackers since May, when Duterte was elected, and another 665 died at the hands of security forces, according to the national police chief.
Duterte, however, has vehemently denied these accusations, and said that the police only fired in self-defense, while he also lashed out at the UN. He shrugged off the prospect of repercussions that could follow as a result of his remarks.
“I don’t give a shit about them. They are the ones interfering,” Duterte said. He also wondered whether UN officials were indeed threatening to jail him and repeated that he was ready to sacrifice his life and presidency for his country.
Needless to say, Duterte has developed a reputation for being very outspoken. As such, we, for one, would be quite entertained by the prospect of an unfiltered and uncut real time summit between Duterte and Trump, should the latter be elected on November 8. We are confident millions of others would too.
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