Jim Sinclair’s Commentary
Step by step, the settlement dollar is challenged.
Beijing, Seoul agree to direct trade in national currencies
4 July, 17:26
China designated a clearing bank in Seoul for yuan transactions in South Korea on Friday, coinciding with a visit by President Xi Jinping, as Beijing promotes greater use of its currency overseas, AFP reports.
China’s central bank has authorised the Bank of Communications, the country’s fifth largest lender, to undertake yuan clearing business in the South Korean capital, the People’s Bank of China (PBoC) said in a statement.
The announcement came as Chinese President Xi Jinping wrapped up a state visit to South Korea on Friday. China is seeking to make the yuan – also known as the renminbi – used more internationally in keeping with the country’s status as the world’s second biggest economy behind the United States.
A joint communique endorsed Thursday by Xi and his South Korean counterpart Park Geun-Hye also pledged to strengthen efforts to launch direct trading between the yuan and the won.
Jim Sinclair’s Commentary
If you get away with 0.03% why not 30% next time?
Spain Issues Retroactive 0.03% Tax on Bank Deposits to "Boost Economic Growth and Job Creation"
Via translation from Libre Mercado, Spain will retroactively tax bank deposits to January 1, 2014 stating the move will boost growth and job creation.
Guru Huky correctly labeled the tax for what it is "More than a tax, this looks like a mini seizure of deposits. Someone likely needs a few million and to balance the books."
Jim Sinclair’s Commentary
A weakening petro dollar.
UPDATE 1-Total CEO calls for bigger euro role in oil payments
Sat Jul 5, 2014 7:12am EDT
(Reuters) – Oil major Total’s chief executive said on Saturday the euro should have a bigger role in international trade although it was not possible to do without the U.S. dollar.
Christophe de Margerie was responding to questions about calls by French policymakers to find ways at EU level to bolster the use of the euro in international business following a record U.S. fine for BNP.
"Doing without the (U.S.) dollar, that wouldn’t be realistic, but it would be good if the euro was used more," he told reporters.
"There is no reason to pay for oil in dollars," he said. He said the fact that oil prices are quoted in dollars per barrel did not mean that payments actually had to be made in that currency.
French Finance Minister Michel Sapin said on Thursday that euro zone finance ministers would discuss ways of boosting use of the euro in international trade in their next monthly meeting on Monday.
"It would be a way to protect businesses when, outside of U.S. territory, they carry out transactions that are perfectly legal in the country they belong to," he said.
Russia Rushes To Seal Ukraine-Bypassing Gas Pipeline: Lavrov Pays Bulgaria A Visit
Tyler Durden on 07/07/2014 10:03 -0400
As we remarked two weeks ago, when observing the recent developments surrounding the suddenly all-important South Stream gas pipeline bypassing Ukraine entirely, and instead traversing the Black Sea before crossing Bulgaria, Serbia, Hungary and terminating in the Austrian central European gas hub of Baumgarten, we said that all of Europe is suddenly focused on if and how Russia will make headway with a project that may be the most important one for not only Europe’s energy future but the impact Russia will continue to have over Germany et al. And of course, Ukraine. Because should Russia find a way to completely bypass Kiev as a traditional transit hub for Russian gas, it would make the country, and its ongoing civil war, completely irrelevant not only for Russia, but worse, for Europe, the IMF, and Ukraine’s staunch western "supporters and allies" as well.
Showing just how Europe perceives the Russian "South Stream" threat was a comment from a recent NYT article, in which Günther Oettinger, Europe’s top energy official, was quoted as saying that the Ukraine crisis “has slowed down our progress on South Stream considerably… We can’t just give in to the Russians every time.” Alas, since the Russians control the all important gas, Europe has zero choice.
This explains why even as the western media finally remembered over the weekend there was a Ukraine civil war going on following an advance by the Kiev army to retake some rebel strongholds in the Donbas region, with some wondering what if anything Putin would do in retaliation, what Putin, or rather his envoy Sergei Lavrov were actually doing, was completely ignoring the Ukraine situation (where the West has long since conceded the loss of Crimea to the Kremlin) and instead focusing on securing the successful launch of the South Stream (remember: the second South Stream goes online, Ukraine becomes irrelevant). And since Russia already signed another historic agreement with Austria in June, which positioned the AAA-country (with some surprising emerging bank troubles subsequently) squarely against its fellow European peers, it was the turn of the other South Stream countries, namely Bulgaria.
China opens HK$100 billion door to German investors
The agreement, which allows investments in both Shenzhen and Shanghai, is expected to help both those markets as well as the yuan’s globalisation
PUBLISHED : Monday, 07 July, 2014, 3:38pm
UPDATED : Monday, 07 July, 2014, 6:57pm
China will allow investors in Germany to spend up to 80 billion yuan (HK$100 billion) in its two stock exchanges — a move that will help boost those fragile markets and further internationalise the Chinese currency.
In a joint press conference with visiting German Chancellor Dr Angela Merkel, Premier Li Keqiang also announced that six documents in economic cooperation would be signed between the two governments during her visit.
Investors in Germany will be allowed to participate in both the Shanghai and Shenzhen bourses through the Renminbi Qualified Foreign Institutional Investor scheme, which was introduced in 2011.
A few other countries, including Britain and France, have a similar arrangement.
Last week, China granted 80 billion yuan to investors in South Korea under the programme during President Xi Jinping’s visit. Analysts said the move would help China’s struggling stock market, and yuan-denominated investment will help the internationalisation of yuan
Virtual Economy’s Phantom Job Gains Are Based on Statistical Fraud
And More Fraud Is in the Works
Paul Craig Roberts
Washington can’t stop lying. Don’t be convinced by last Thursday’s job report that it is your fault if you don’t have a job. Those 288,000 jobs and 6.1% unemployment rate are more fiction than reality.
In his analysis of the June Labor Data from the Bureau of Labor Statistics, John Williams (www.ShadowStats.com) wrote that the 288,000 June jobs and 6.1% unemployment rate are “far removed from common experience and underlying reality.” Payrolls were overstated by “massive, hidden shifts in seasonal adjustments,” and the Birth-Death model added the usual phantom jobs.
Williams reports that “the seasonal factors are changed each and every month as part of the concurrent seasonal-adjustment process, which is tantamount to a fraud,” as the changes in the seasonal factors can inflate the jobs number.
The monthly unemployment rates are not comparable, so one doesn’t know whether the official U.3 rate (the headline rate that the financial press reports) went up or down. Moreover, the rate does not count discouraged workers who, unable to find a job, cease looking. To be counted among the U.3 unemployed, the person must have actively looked for work during the four weeks prior to the survey. The U.3 rate automatically declines as people who have been unable to find jobs cease trying to find one and thereby cease to be counted as unemployed.
There is a second official measure of unemployment that includes people who have been discouraged for less than one year. That rate, known as U.6, is seldom reported and is double the 6.1% rate.
Jim Sinclair’s Commentary
How to make friends and influence people.
Merkel says U.S spying allegations are serious
By Andreas Rinke
BEIJING Mon Jul 7, 2014 10:38am EDT
(Reuters) – German Chancellor Angela Merkel said on Monday allegations that a German man had worked as a double agent for U.S. intelligence were serious and, if true, were a clear contradiction of what cooperation between partners is supposed to be about.
The case risks further straining ties with Washington, which have been sorely tested by revelations last year of large-scale snooping on Germany by the U.S. National Security Agency (NSA).
"If the reports are correct it would be a serious case, "Merkel told a news conference in Beijing, standing next to
Chinese Premier Li Keqiang.
"If the allegations are true, it would be for me a clear contradiction as to what I consider to be trusting cooperation between agencies and partners."
The White House and State Department have so far declined to comment on the arrest of a 31-year-old employee of Germany’s BND foreign intelligence agency.
According to intelligence and political sources, the man admits passing documents to a U.S. contact.
Jim Sinclair’s Commentary
Economic war takes many faces.
Russia approves creation of BRICS foreign exchange fund
July 7, 2014 Alexei Lossan, RIR
The Russian Government has approved a draft agreement on the creation of a $100 billion fund by Brazil, Russia, India, China, and South Africa to steady currency markets.
The Russian Government signed a draft agreement on the creation of a $100 billion pool of currency reserves that the BRICS countries are forming to guard against financial shocks. According to the document, the countries’ dollar reserves will remain on the balance sheets of their central banks. However, these reserves can be made available at the request of one of the parties.
Vasily Yakimkin, a senior lecturer at the Russian Presidential Academy of National Economy and Public Administration (RANEPA), says two substructures are being created under the project. The stabilisation fund with capital of $100 billion would be a direct competitor with the IMF. China would contribute $41 billion, Brazil, Russia and India, $18 billion each and South Africa $5 billion. The second substructure would be a new development bank will come into being with a start-up capital of $50 billion, with each country contributing $10 billion. “As expected, the agreements on the creation of these structures will soon be signed at the summit of the heads of the BRICS countries in Brazil on July 15,” Yamikin says. “The structures will start functioning starting in 2015.” He adds that each of the BRICS countries wants to host the headquarters of the new institution.
The Stunner From Today’s Round Table Debate To "Fix" The London Gold Fix
Submitted by Tyler Durden on 07/07/2014 15:54 -0400
As those following the saga of the rigged for decades and soon to be history (in its curent incarnation) London gold fix know, today was the date when the World Gold Council held its "Modernising the London Gold Fix: IOSCO and beyond" round table session.
Specifically, as the WGC explained, "The World Gold Council will be holding a round table debate on the reform of the London Gold Fix and the modernisation of the London gold market. Many aspects of the existing price benchmark process are viewed favourably by market participants, however, other elements are in need of reform if IOSCO compliance is to be achieved. The World Gold Council is seeking views from both users and service providers on the optimal characteristics of any reformed system. We will also debate whether IOSCO compliance is enough or should the industry be seeking to modernise more than just the price benchmark?"
Among the various panels that took place were the following:
What do users want to see in a reformed benchmark?
This session will ask the users of the London Gold Fix what they would like to see in terms of reform. What aspects of the Gold Fix are desirable and what aspects should be changed? What are the optimal characteristics of a reformed system?
Market-led options for achieving IOSCO compliance
This session will discuss options for a reformed or alternative price setting mechanism. It will discuss existing alternative price-setting mechanisms and the pros and cons of each. Service providers will be asked to share their views on any new benchmarks and supporting platforms under consideration that may have arisen due to developments in the silver industry.