Posted at 7:23 PM (CST) by & filed under In The News.

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Corporate Bonds Are The IEDs Of Monetary Central Planning: They Will Be Exploding Along Wall Street Soon
by David Stockman • July 2, 2014

Corporate bonds are the financial IEDs (improvised explosive devices) of monetary central planning. The Fed’s sustained, heavy-handed financial repression has generated the greatest ever scramble for yield, and it is now entering its seventh year. Consequently, speculators and bond fund managers are all in the same side of the boat. And all but the most intrepid traders are scared to death to short the Fed, fearing that any day it might uncork yet another round of bond market repression.

So we have basically a highly artificial one-way market in corporate bonds—both investment grade and high yield. Very recently yields in the latter touched an all-time low of 4.87%, meaning that after inflation and taxes there is virtually no room for losses on securities that are called “junk bonds” for a reason. Likewise, the investment grade index yield is down to 2.97%, leaving almost no margin for risk relative to the allegedly risk free rate on treasuries.

What this means is that the $5 trillion corporate bond market is badly mispriced. Yet history proves time and again that sub-economic yields do not stay that way indefinitely. Eventually the normalize—either because the Fed finally cools down it printing presses or owing to an unexpected shock, such as a surge of inflation, that triggers a sell-off.

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Posted at 7:21 PM (CST) by & filed under Jim's Mailbox.

Jim,

We will see if Father Winter helps Putin and Gazprom as usual.  Ukraine will use IMF loans to buy NG from EU.

While the EU/US may have temporarily outfoxed the Russians, it will in the end be a bigger trap for the West.  If the EU will be the supplier to Ukraine, then where will it get the additional NG?  I doubt they can increase LNG from Qatar fast enough to make up the deficit.   Likewise, I doubt Gazprom will increase shipments.  So, will Slovakia and other Central EU countries allow their economies to stall and citizens freeze to help Ukraine?  I doubt it.  So, the West has taken the bait, and the EU will likely suffer significantly this winter.

CIGA Craig

Ukraine-Europe Gas Link to Run at Capacity This Summer
By Ladka Bauerova Jul 8, 2014 2:36 AM MT

A pipeline allowing Ukraine to import gas from Europe will start running at full capacity in September, providing vital fuel supplies as winter approaches with the prospect of no shipments from Russia.

The Vojany pipeline from Slovakia has been booked to ship 10 billion cubic meters a year until 2019, or about 20 percent of Ukraine’s demand, said Tomas Marecek, chairman of the link’s operator, Eustream AS.

Ukrainian utility NAK Naftogaz booked the majority of the pipeline’s capacity for the five-year period, while the rest was reserved by European utilities, he said.

A pipeline allowing Ukraine to import gas from Europe will start running at full capacity in September, providing vital fuel supplies as winter approaches with the prospect of no shipments from Russia.

The Vojany pipeline from Slovakia has been booked to ship 10 billion cubic meters a year until 2019, or about 20 percent of Ukraine’s demand, said Tomas Marecek, chairman of the link’s operator, Eustream AS. Ukrainian utility NAK Naftogaz booked the majority of the pipeline’s capacity for the five-year period, while the rest was reserved by European utilities, he said.

“The European Commission pressured us, so we found a compromise solution,” Marecek said. “Using the Vojany pipeline is compatible with the EU energy laws and at the same time doesn’t violate any of Eustream’s existing contracts. We had it confirmed by both the EU and Russian Foreign Minister Lavrov.”

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Posted at 7:54 PM (CST) by & filed under In The News.

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.

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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."

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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.

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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.

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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.

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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
Cary Huang

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

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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.

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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.

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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.

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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.

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Posted at 11:40 PM (CST) by & filed under In The News.

By "Punishing" France, The US Just Accelerated The Demise Of The Dollar
Tyler Durden on 07/04/2014 15:04 -0400

Not even we anticipated this particular "unintended consequence" as a result of the US multi-billion dollar fine on BNP (which France took very much to heart). Moments ago, in a lengthy interview given to French magazine Investir, none other than the governor of the French National Bank Christian Noyer and member of the ECB’s governing board, said this stunner at the very end, via Bloomberg:

NOYER: BNP CASE WILL ENCOURAGE ‘DIVERSIFICATION’ FROM DOLLAR

Here is the full google translated segment:

Q. Doesn’t the role of the dollar as an international currency create systemic risk?

Noyer: Beyond [the BNP] case, increased legal risks from the application of U.S. rules to all dollar transactions around the world will encourage a diversification from the dollar. BNP Paribas was the occasion for many observers to remember that there has been a number of sanctions and that there would certainly be others in the future. A movement to diversify the currencies used in international trade is inevitable. Trade between Europe and China does not need to use the dollar and may be read and fully paid in euros or renminbi. Walking towards a multipolar world is the natural monetary policy, since there are several major economic and monetary powerful ensembles. China has decided to develop the renminbi as a settlement currency. The Bank of France was behind the popular ECB-PBOC swap and we have just concluded a memorandum on the creation of a system of offshore renminbi clearing in Paris. We have very strong cooperation with the PBOC in this field. But these changes take time. We must not forget that it took decades after the United States became the world’s largest economy for the dollar to replace the British pound as the first international currency. But the phenomenon of U.S. rules expanding to all USD-denominated transactions around the world can have an accelerating effect.

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Ukraine army regains control of Slavyansk
President Petro Poroshenko orders national flag to fly over rebel stronghold after armed pro-Russian separatists flee
Chris Johnston and agencies
theguardian.com, Saturday 5 July 2014 07.13 EDT

Ukrainian troops have regained control of the key eastern city of Slavyansk from pro-Russian rebels in what could mark a turning point in the country’s three-month battle to maintain its independence.

The city, which houses one of Ukraine’s largest weapons storage facilities, fell to the insurgents on 6 April and had become a stronghold for pro-Russian separatists.

Petro Poroshenko, who was elected president in late May after vowing to quickly resolve Ukraine’s worst crisis since independence in 1991, ordered his forces to raise the national flag over the city.

"Local residents are handing over [to government forces] the weapons abandoned by the rebels," he said. "This is the disarmament I was talking about when I unveiled my peace plan for resolving the situation in the east."

Government forces began a fresh offensive against the rebels earlier this week after Poroshenko allowed a ceasefire agreement to lapse. The separatists lost one tank and one other armoured vehicles as they tried to break through Ukrainian lines, prompting them to flee Slavyansk to Kramatorsk, 12 miles south of the city.

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Even With Sanctions, U.S. Sales to Russia Hit New High
By Ian Talley
Jul 3, 2014 12:34 pm ET

So much for those sanctions.

U.S. efforts to penalize Russia for its actions in Ukraine appear to have done little to stem exports of U.S. goods to the country.

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The U.S. announced targeted sanctions against several Russian companies and individuals in March, but U.S. trade data published Thursday shows exports to the country were the highest on record at $1.2 billion in May.

The sanctions, organized with Europe and other major industrialized nations over Moscow’s alleged actions to destabilize its former client state, sparked investor flight out of Russia, led the ruble to tumble and pushed the economy into a recession. Russian markets have since recovered somewhat, but investors have been wary of an escalation in the sanctions battle.

Demand for U.S. products apparently hasn’t been hit, however, and in fact jumped 21% from the previous month.

The data also showed signs that demand is picking up in two of America’s largest export markets, Europe and China, where weak growth has hobbled the U.S. and global recoveries. Exports to the European Union were up nearly 4%, driven by a surge in buying from the U.K., the Netherlands, Spain and Ireland.

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Posted at 12:52 PM (CST) by & filed under In The News.

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Jim Sinclair’s Commentary

Mr. Williams shares the following with us.

- Payroll Gains Were Bloated by Seasonal-Factor Shenanigans; Unemployment Numbers Remained Inconsistent, Not Comparable Month-to-Month
- June Unemployment: 6.1% (U.3), 12.1% (U.6), 23.1% (ShadowStats)
- Economy Remains in Serious Trouble
- Trade Deficit Should Hammer Second-Quarter 2014 GDP, Subtracting In Excess of 1.0% from Initial Headline Growth Estimate
- Revisions to Real Construction Spending Showed Further Downside to First-Quarter GDP; May Detail Suggested a Negative Contribution to Second-Quarter GDP Growth

"No. 638: June Labor Data, May Trade Deficit, Construction and Median Household Income"
Web-page:
http://www.shadowstats.com

 

British MPs urge watchdog to probe price-rigging in gold market
By Sam Fleming and Daniel Schäfer in London
July 2, 2014 6:48 pm

British MPs have called on the UK’s financial watchdog to investigate allegations of price-rigging in the London gold market after a senior regulatory executive said that there may have been co-ordinated attempts to manipulate a crucial benchmark.

Members of the influential parliamentary Treasury select committee pressed the Financial Conduct Authority to act after hearing evidence on Wednesday from gold market analysts who believe there is scope to rig the daily price-setting process and that it has probably been exploited frequently.

“If this evidence is even half true, the regulators need to find a way of acting much more quickly,” Andrew Tyrie, chairman of the committee said. “Were they to conclude that their powers are inadequate, they should tell parliament.”

The London gold fix is a twice-daily auction process, controlled by four banks, that is used by everyone from central banks to jewellers and gold miners to set a reference price for bullion. It came under renewed scrutiny this May when the FCA fined Barclays £26m for price rigging by an options trader.

The watchdog so far has not launched a broader probe into the gold fix’s panel members – which includeBarclays, HSBC, Scotiabank and Société Générale and formerly Deutsche Bank.

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Posted at 10:10 AM (CST) by & filed under In The News.

Six months after marijuana legalization: Colorado tax revenue skyrockets as crime falls
Thursday, July 3, 2014 9:40 EDT
By Daniel Wallis

DENVER (Reuters) – At the Native Roots Apothecary, a discreet marijuana shop in a grand old building in Denver’s busy 16th street shopping mall, business is so brisk that customers are given a number before taking a seat to wait their turn.

There are young men in ball caps, nervous-looking professionals in suits, and the frail and elderly. Staff say customers have been flocking to their outlets since Colorado voted to allow recreational pot use for adults from January.

Six months on, Colorado’s marijuana shops are mushrooming, with support from local consumers, weed tourists and federal government taking a wait-and-see attitude.
Tax dollars are pouring in, crime is down in Denver, and few of the early concerns about social breakdown have materialized – at least so far.

“The sky hasn’t fallen, but we’re a long way from knowing the unintended consequences,” said Andrew Freeman, director of marijuana coordination for Colorado. “This is a huge social and economic question.”
Denver, dubbed the “Mile High” city, now has about 340 recreational and medicinal pot shops. They tout the relaxing, powerful or introspective attributes of the crystal-encased buds with names like Jilly Bean, Sour Diesel and Silverback Kush.

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The jobs report knows: Americans aren’t planning to take a summer vacation
With just 15% of Americans planning to take an actual vacation, hiring at US hotels and restaurant slows compared with last year
Posted by Jana Kasperkevic
Thursday 3 July 2014 19.55 BST

Buried within Thursday’s jobs report was an interesting titbit: US hotel and restaurants are not preparing for the summer like they did last year.
Economists and lawmakers view the jobs report as good news. The US economy gained 288,000 jobs, and the unemployment rate dropped to 6.1%. One economist even said the report is "as good an excuse as any to enjoy the weekend’s fireworks." Yet as Americans struggle to make do with their stagnant wages and the bills that never seem to stop piling up, one thing has to go: vacations. So as businesses anticipate a slower summer, thousands of restaurant and hotel workers are left without work.

While the leisure and hospitality sector added thousands of jobs these past few months, the overall number is much lower than last year. In the three months leading up to June last year, according to a 2013 employment situation report, about 204,000 jobs were created for hotel and restaurant workers. That number was later adjusted to 137,000, according to the US Bureau of Labor Statistics. The June 2014 report released on Thursday showed 116,000 jobs created by the hotels and restaurants in the past three months – 21,000 fewer than last year.

Whether it’s lack of business in the months leading up to the summer, or fewer reservations for the months ahead, firms are expecting a quieter season.

This should come as no surprise. The first few months of 2014 saw the US economy shrink at a rate not seen since the 2008 financial crisis. While the 2.9% contraction in GDP might have come as a surprise to some economists, average Americans have been tightening their wallets for months.

Trips to the supermarket are getting more and more expensive, with prices of meat up 7.7% and dairy up 4.2%. The monthly rent checks are not shrinking, either. In fact, Goldman Sachs recently noted that rent prices are bound to keep going up in the next few months. Yet the average hourly earnings went up by just 23¢ since the beginning of the year.

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China plans investment bank to break World Bank dominance
Published time: June 26, 2014 13:50 
Edited time: June 27, 2014 14:22

China is moving forward with a plan to create its own version of the World Bank, which will rival institutions that are under the sway of the US and the West. The bank will start with $100 billion in capital.

The Asian Infrastructure Investment Bank (AIIB) will extend China’s financial reach and compete not only with the World Bank, but also with the Asian Development Bank, which is heavily dominated by Japan. The $100 billion in capital is double that originally proposed, the Financial Times (FT) reported.

A member of the World Bank, China has less voting power than countries like the US, Japan, and the UK. It is in the ‘Category II’ voting bloc, giving it less of a voice. In the Asian Development Bank, China only holds a 5.5 percent share, compared to America’s 15.7 percent share and Japan’s 15.6 share.

At the International Monetary Fund, China pays a 4 percent quota, whereas the US pays nearly 18 percent, and therefore has more influence within the organization and where loans go.

“China feels it can’t get anything done in the World Bank or the IMF so it wants to set up its own World Bank that it can control itself,” the FT quoted a source close to discussions as saying.

To date, 22 countries have expressed interest in the project, including oil-rich Middle Eastern nations, the US, India, Europe, and even Japan, the FT reported.

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June Full-Time Jobs Plunge By Over Half A Million, Part-Time Jobs Surge By 800K, Most Since 1993
Submitted by Tyler Durden on 07/03/2014 09:29 -0400

Is this the reason for the blowout, on the surface, payroll number? In June the BLS reports that the number of full-time jobs tumbled by 523K to 118.2 million while part-time jobs soared by 799K to over 28 million!

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Looking at the breakdown of full and part-time jobs so far in 2014, we find that 926K full-time jobs were added to the US economy. The offset: 646K part-time jobs.

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Something tells us that the fact that the BLS just reported June part-time jobs rose by just shy of 800,000 the biggest monthly jump since 1993, will hardly get much airplay today. Because remember: when it comes to jobs, it is only the quantity that matters, never the quality.

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… just in case there is any confusion why there is zero real wage growth (for two months in a row now), and why it will take a few more months before experts start tossing the word stagflation a little more casually.

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Posted at 2:27 PM (CST) by & filed under In The News.

China plans investment bank to break World Bank dominance
Published time: June 26, 2014 13:50
Edited time: June 27, 2014 14:22

China is moving forward with a plan to create its own version of the World Bank, which will rival institutions that are under the sway of the US and the West. The bank will start with $100 billion in capital.

The Asian Infrastructure Investment Bank (AIIB) will extend China’s financial reach and compete not only with the World Bank, but also with the Asian Development Bank, which is heavily dominated by Japan. The $100 billion in capital is double that originally proposed, the Financial Times (FT) reported.

A member of the World Bank, China has less voting power than countries like the US, Japan, and the UK. It is in the ‘Category II’ voting bloc, giving it less of a voice. In the Asian Development Bank, China only holds a 5.5 percent share, compared to America’s 15.7 percent share and Japan’s 15.6 share.

At the International Monetary Fund, China pays a 4 percent quota, whereas the US pays nearly 18 percent, and therefore has more influence within the organization and where loans go.

“China feels it can’t get anything done in the World Bank or the IMF so it wants to set up its own World Bank that it can control itself,” the FT quoted a source close to discussions as saying.

To date, 22 countries have expressed interest in the project, including oil-rich Middle Eastern nations, the US, India, Europe, and even Japan, the FT reported.

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Violent clashes as Palestinians demand justice after teenager’s body found
Discovery of body, thought to be Mohamed Abu Khdeir, prompts claims he was killed by Jewish extremists in revenge attack
Peter Beaumont in Shuafat, East Jerusalem
The Guardian, Wednesday 2 July 2014 14.58 EDT

Tensions between Israelis and Palestinians escalated further on Wednesday, with the discovery of a body believed to be that of a 17-year-old Palestinian boy who had been abducted hours earlier from an Arab neighbourhood of East Jerusalem.

The badly burned body, thought to be that of Mohamed Abu Khdeir, was found in an area of forest to the west of the city a day after the funeral of three Israeli teenagers who were kidnapped and killed three weeks ago. The discovery prompted widespread accusations from Palestinians that he had been murdered by Jewish extremists in a revenge attack.

Most prominent to make that charge was Palestinian president Mahmoud Abbas who accused extremist Israeli settlers of "killing and burning a little boy" and demanded Israel "hold the killers accountable … [and] mete out the strongest punishment against the murderers if it truly wants peace".

While the identity and motive of the kidnappers remain unclear, Palestinians were quick to blame "settlers" for the killing – allegations that were not immediately refuted by Israeli political figures.

As news of Khdeir’s disappearance spread, hundreds of Palestinian youths fought running battles for hours with Israeli police who fired plastic coated rounds and stun grenades as pillars of smoke billowed from burning tyres.

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History in the making: Is Europe shifting allegiance to Russia?
Published July 2, 2014,
By Zine Larbaoui

A country in the heart of Europe openly defies its partners by aligning with Putin. While European leaders were considering the possibility of imposing additional sanctions against Russia, Austria has rolled out the red carpet Tuesday for…Russian President Vladimir Putin.

On the sidelines of the visit, Austria signed a score of bilateral cooperation with Russian areas such as infrastructure, communications, medicine, innovation …

In addition, the Austrian energy company OMV has also signed an agreement with the Russian gas company Gazprom to confirm its participation in the construction of a gas pipeline, the South Stream. The 2,446 kilometers long pipeline would provide this country in the heart of Europe, Russian gas, bypassing Ukraine, plagued by serious political unrest for several months. Its route crosses the Black Sea south of the Crimea and Bulgaria, Serbia, Hungary and Slovenia, to arrive at Baumgarten, Austria (see map below), where the gas will be dispatched to their client states in central Europe, including Germany.

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BOT stresses growing role of yuan
Erich Parpart
The Nation

BANGKOK: — The Chinese yuan is becoming more and more important in world trade, so investors are well advised to use the currency in future trade and investment to lower the risk of fluctuations, the Bank of Thailand said yesterday.

Chantavarn Sucharitakul, assistant governor for the Financial Markets Operations Group, said the use of the yuan as a trade and investment currency was noticeably increasing because of the size and growth potential of the Chinese economy and Beijing’s policy to encourage the use of the yuan in world trade.

"Investors have more interest in using the yuan to trade and invest, as seen by the move of the United Kingdom, which has offered itself as the centre for trade that uses the yuan, or the Russians, who have agreed to use domestic currencies for their bilateral trade," she said.

The use of a domestic currency for transactions between countries will provide more options in trading for other regions.

There are many factors that are needed for a currency to become a proper international currency, such as its flexibility, robust cash flow within the capital market and debt in the financial market in order to keep the cost of transactions as low as possible.

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Russia Delivers 2nd Batch of Jets To Iraq As USA Unloads 4000 Hellfire Missiles
Tyler Durden

The battle for favoritism among the ‘apparent’ leaders in Iraq continues. Russia just delivered the second batch of Sukhoi fighter jets (which will be flown by Iraqi pilots and "are ready to provide air support to the armed forces"), and the US unloaded 4,000 additional Hellfire missiles to support Iraq’s fight against the Islamist insurgents. While this morning the intelligentsia of mainstream media proclaimed "the situation in Iraq is calming down" predicated on the fact that oil prices were lower and stocks at record highs, we suspect the additional war material  to Iraq will do nothing but increase the determination of the "Islamic State" to increase its Caliphate.

As Bloomberg reports, the proxy war favoritism continues in Iraq…

The U.S. readied to sell Iraq thousands of missiles and a second batch of Russian Sukhoi combat jets arrived in Baghdad as foreign powers moved to help Iraqi forces battle an al-Qaeda offshoot.

The U.S. State Department has told lawmakers informally that the Obama administration wants to sell Iraq more than 4,000 additional Hellfire missiles to support its fight against the Islamist insurgents, according to people familiar with the plan.

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Paul Craig Roberts – The Entire U.S. Gold Hoard Is Now Gone
June 27, 2014

Today former US Treasury official, Dr. Paul Craig Roberts, told King World News that the entire United States gold hoard, including gold supposedly held at the Fed for other countries, is now gone.  This is very bad news for Germany and other countries which have trusted the Fed to safely store their gold.  Below is what Dr. Roberts had to say in this remarkable interview.

Eric King:  “Dr. Roberts, I know you’ve seen the report on Bloomberg about Germany (all the sudden) supposedly being happy with storing their gold at the New York Fed.  It seemed to be a propaganda piece.  What was your take when you saw that?”

Dr. Roberts:  “Clearly what that means is that the United States doesn’t have the gold and cannot deliver it — and has forced Germany to come to terms with that, and to stop asking for it since it can’t be delivered….

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Posted at 3:08 PM (CST) by & filed under General Editorial.

Dear CIGAs,

We are looking for your feedback as to where to hold our next Q&A Sessions. We are currently looking at holding sessions in the following cities:

  • August 2nd – Hamptons NY, or Kentucky/Tennessee.
  • Mid to end of September – St Louis, MO or Nashville, TN.
  • Mid October – Jackson Hole, WY or Sioux Falls, SD.
  • Mid November – San Francisco, CA.

If you are interested in attending any of these sessions, please email us at [email protected] and let us know in the subject line which session you are interested in attending.

Thanks for your feedback and we look forward to seeing you there!

Dan Duval
JSMineset Editor