As a reminder, nothing lasts forever…
The World Bank’s former chief economist wants to replace the US dollar with a single global super-currency, saying it will create a more stable global financial system.
“The dominance of the greenback is the root cause of global financial and economic crises,” Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank.
“The solution to this is to replace the national currency with a global currency.”
The writing is on the wall for dollar hegemony. As Russian President Vladimir Putin said almost two months ago during the BRICs summit in Xiamen,
“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”
As Pepe Escobar recently noted, ‘to overcome the excessive domination of the limited number of reserve currencies’ is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar.
Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan. This means that Russia – as well as Iran, the other key node of Eurasia integration – may bypass US sanctions by trading energy in their own currencies, or in yuan. Inbuilt in the move is a true Chinese win-win; the yuan – according to some – will be fully convertible into gold on both the Shanghai and Hong Kong exchanges.
The new triad of oil, yuan and gold is actually a win-win-win. No problem at all if energy providers prefer to be paid in physical gold instead of yuan. The key message is the US dollar being bypassed.
China’s plans for oil futures trading go back more than two decades, with the government introducing a domestic crude contract in 1993 and stopping a year later amid an overhaul of its energy industry. But in 2013, we first hinted at the birth of the petroyuan was looming…
In doing so China is effectively lobbing the first shot across the bow of the Petrodollar system, and more importantly, the key support of the USD in the international arena… setting the scene for the petroyuan.
And now, we are within two months of it becoming a reality as China prepares to roll out a yuan-denominated oil contract within the next two months…
“Approval of the trading rules by the securities regulator marks the clearance of a major hurdle toward launch of the contract,” Li Zhoulei, an analyst with Everbright Futures, said by phone.
“The latest rules raised entry threshold for investors from the draft rules, which shows the government wants to avoid volatility when it first starts trading.”
Which, according to Adam Levinson, of hedge fund manager Graticule Asset Management Asia, will be a “wake up call” for investors who haven’t paid attention to the plans.
A Yuan-denominated oil contract will be a “huge story” in the fourth quarter.
“The contract is a hedging tool for Chinese oil companies. We’re convinced Chinese oil companies will be anchor investors in the Aramco IPO.”
All of which fits with recent comments and actions from Russian and Venezuelan officials…
“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal.
Maduro hinted further that the South American country would look to using the yuan instead, among other currencies.
“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.
Additionally, Levison warns Washington that besides serving as a hedging tool for Chinese companies, the contract will aid a broader Chinese government agenda of increasing the use of the yuan in trade settlement… and thus the acceleration of de-dollarization and the rise of the Petro-Yuan.
“I don’t think there’s any doubt we’re going to see use of the renminbi in reserves go up substantially”
Levinson was even more sanguine about China’s growing credit exposure. While Chinese debt-to-GDP continues to rise, we note that Chinese sovereign credit risk has collapsed to 9 year lows…
Which as Levinson notes, “All the issues in China are occurring without fully understanding the asset side of the balance sheet.” He is not concerned about China credit issues in the near-term, defining the near term as the next two years, as “the capacity of the sovereign to deal with an issue, should it occur, is pretty significant and therefore important.”
Which appears to the market’s perspective as China is now the least risky relative to US in four years…
Finally, while he is less concerned about China’s credit, Levinson warns that the lack of volatility as stocks and bonds rally is the “scariest part” of global markets…
“If I am concerned about anything it’s where the level of implied volatility trades,” Levinson said in an interview in Singapore on Tuesday.
“It is extremely low. If there is something to be concerned about in global markets, it’s the endogenous level of where implied volatility is trading.”
Small market declines could escalate quickly, Levinson said.
“You don’t know when an event or an issue is going to present itself,” he said.
“But when it does, the nature of the volatility construct in markets today is such that if you have a modest correction it will turn into a much more severe one in a short period of time, because of the entrenched structural short-selling of volatility.”
Any increase in market turbulence could trigger dramatic selling and the biggest of those events could be a broader adoption of China’s PetroYuan contract… as Levinson says “will be a huge story” in Q4.
zerohedge
Cloggie on Sun, 29th Oct 2017 6:24 am
“Can you say China, Russia?”
Explain yourself dementia man.
The only one who is dementing is you since I explained one hour ago that in case of armed conflict between the US and NK, Russia and China will support NK with weapons.
You can’t hold a thought longer in your brain than 2 seconds, right?
Attention span issues, signs of an early onset of dementia.
Davy on Sun, 29th Oct 2017 6:26 am
clogged, please give the words behind your links or you are talking out your extremist ass
Davy on Sun, 29th Oct 2017 6:29 am
“The only one who is dementing is you since I explained one hour ago that in case of armed conflict between the US and NK, Russia and China will support NK with weapons.”
Explain yourself Mr. 10MIL men under arms on the Korean peninsula. Do you have references for this grand strategy? So are you saying they are allies? What kind of weapons are they going to supply? Please reference this so it is plain to see otherwise you are talking out your ass.
makati1 on Sun, 29th Oct 2017 6:37 am
Cloggie, you have to use no words larger than two syllables when talking to Davy. And keep the sentences short. He has a problem understanding anything more difficult than “See Spot run.”
You could write a book with a hundred reputable sources and he would say the same thing. Denial is not a river in Egypt, but it is a river in Davy Land. lol
Cloggie on Sun, 29th Oct 2017 6:39 am
Where did I say financially untenable world-wide empire to continue to exist?
Nowhere, I said it. The world doesn’t revolve around you, although you would love to think that.
From the top of my head all major powers except pansy Euroland is militarizing.
Pansy Euro-land?
https://www.washingtonpost.com/archive/opinions/1985/05/05/their-wehrmacht-was-better-than-our-army/0b2cfe73-68f4-4bc3-a62d-7626f6382dbd
Macron is pushing for integration of all EU national forces. Currently the EU forces outnumber the US forces with 3:2.
https://en.wikipedia.org/wiki/Military_of_the_European_Union
1.8 mil (+ millions of conscripted reserves)
https://en.wikipedia.org/wiki/United_States_Armed_Forces
1.3 mil (no conscription)
The idea is that the US and China lock horns and inevitably will clash, as the “exceptionalist” US claims to be top dog, where China openly declared last week that they aspire to become #1 by 2050 (I think 2030 is more likely).
That doesn’t match very well, where Europe and Russia will keep their powder dry and build offshore wind parks and produce grain.
The US and China could clash over NK, the South-China Sea, over Chinese oil-supplier Iran, Ps and a range of less likely spots.
Once that happens the future of Europe is guaranteed.
Davy on Sun, 29th Oct 2017 6:50 am
What’s da matter mad kat are your feeling hurt because I make you look an intellectual bum?
Do you have any references for anything you say or do you or do you just croak like a frog. I imagine you look like a frog too.
Davy on Sun, 29th Oct 2017 7:01 am
“Nowhere, I said it. The world doesn’t revolve around you, although you would love to think that.”
WOW, that is the kettle calling the pot black. LMFAO
“https://www.washingtonpost.com/archive/opinions/1985/05/05/their-wehrmacht-was-better-than-our-army/0b2cfe73-68f4-4bc3-a62d-7626f6382dbd”
Please give me words from the reference or else you are talking out your ass. One need only look at the dates to see dumbass in motion:
By Max Hastings; Max Hastings has written 10 books, including “Overlord: DDay, June 6 and 1944.” May 5, 1985
“Macron is pushing for integration of all EU national forces. Currently the EU forces outnumber the US forces with 3:2.”
Last I saw “pushing for” did not mean “is”. Eurotards don’t get along and never will anyway. A grand Eurotard army is a fantasy. Eurotard land will be back to killing each other if it produces more citizens like you.
“https://en.wikipedia.org/wiki/Military_of_the_European_Union 1.8 mil (+ millions of conscripted reserves)”
So what, they can’t project power without US help. They can’t even defend themselves without the US. What a joke your fantasy Eurotard army is.
“The idea is that the US and China lock horns and inevitably will clash, as the “exceptionalist” US claims to be top dog, where China openly declared last week that they aspire to become #1 by 2050 (I think 2030 is more likely). That doesn’t match very well, where Europe and Russia will keep their powder dry and build offshore wind parks and produce grain.”
Dementia man living in his Eurotard fantasy world much like his buddy mad kat.
“Once that happens the future of Europe is guaranteed.”
Dementia man says it is guaranteed. LMFAO, yea in your wet dreams along with Nazi swastikas and black leather beatings.
makati1 on Sun, 29th Oct 2017 7:05 am
Cloggie, if the US military invades NK, the Russians will be in it along with the Chinese. They supplied the NK with weapons in the 50s war and the Chinese supplied the men. I don’t see that changing now. Nor do I see it happening. The US is a paper tiger with no teeth and a lot of hot air.
makati1 on Sun, 29th Oct 2017 7:09 am
BTW: Davy, I no longer read your rants, just those of others. I see your many references to me but ignore them. I don’t debate with spoiled children or delusional adults. I would rather debate with one of your goats. They’re more intelligent and open minded. Bahhhh! lol
Cloggie on Sun, 29th Oct 2017 7:15 am
Please give me words from the reference or else you are talking out your ass.
Even reading the title of the article is too much effort for Davy, who is clearly waiting for his overlord Apneaman to come to his imperial rescue. Davy can’t handle this alone.
Last I saw “pushing for” did not mean “is”. Eurotards don’t get along and never will anyway.
The facts speak a different language, but hey, facts are “anti-American” so do not need to be considered.
https://www.theguardian.com/world/2016/nov/21/support-for-the-eu-on-the-rise-since-brexit-vote-even-in-the-uk
I think that the consistency of European society is much higher than in the US:
https://www.youtube.com/watch?v=hVc1hvD6mCw
yea in your wet dreams along with Nazi swastikas and black leather beatings.
https://www.youtube.com/watch?v=AtW1Lq5c04E
LOL
Davy on Sun, 29th Oct 2017 7:36 am
“Cloggie, if the US military invades NK, the Russians will be in it along with the Chinese.”
Got references mad kat? Are you part of the politburo” or maybe are you a dementia man?
Davy on Sun, 29th Oct 2017 7:39 am
“BTW: Davy, I no longer read your rants, just those of others.”
LOL, is that why you have been responding so much to me lately? I went from the ignore list to the most comment list back to the “I no longer read rant” list. Maybe you don’t know what you are and that is what happens with dementia. Kind of funny you have a new buddy. It used to be widdle g but he is AWOL so now it is the clooged. LOL, you will latch on to anyone who can help you cross the street
Davy on Sun, 29th Oct 2017 7:46 am
“Even reading the title of the article is too much effort for Davy, who is clearly waiting for his overlord Apneaman to come to his imperial rescue. Davy can’t handle this alone.”
Geeze dementia man 2, how hard is it to put the words down that support your wild assertions, revisions, embellishments, and future fantasies?
“The facts speak a different language, but hey, facts are “anti-American” so do not need to be considered.”
Correct facts in a mad kat/clogged world do speak a different fantasy language.
“I think that the consistency of European society is much higher than in the US:”
Sure clog lets see the references with words to that wild assertion based on personal opinion.
BTW, I don’t watch your stupid movies.
Cloggie on Sun, 29th Oct 2017 7:57 am
BTW, I don’t watch your stupid movies.
You got to watch them first before you can judge them to be “stupid”.
Logic isn’t your strongest skill, eh?
Goats are more your level.
Sure clog lets see the references with words to that wild assertion based on personal opinion.
OK:
Most white Americans are fed-up with Washington.
Cloggie on Sun, 29th Oct 2017 9:01 am
Davy’s “Europeans can stand each other” latest:
21-Sep-2017
http://www.independent.co.uk/news/uk/politics/brexit-majority-uk-british-people-stay-in-eu-not-leave-latest-poll-theresa-may-florence-speech-tory-a7960226.html
A 1400-poll resulted in 52-48 in favor of “Remain”. Still split in the middle. The most reasonable outcome would be a “mild Brexit”, like Britain remaining in the Common Market and paying contribution for that privilege and for the rest go separate ways and most important: continental Europe going ahead with a European army without Britain.
Bregret on the rise:
http://www.telegraph.co.uk/news/2017/10/27/remain-voters-increasingly-against-brexit-re-leavers-u-turn/
If a new vote would be organized, the outcome would probably be “Remain”.
Cloggie on Sun, 29th Oct 2017 9:07 am
Hundreds of thousands demonstrate for keeping Spain together… in Barcelona!
http://www.spiegel.de/politik/ausland/katalonien-hunderttausende-demonstrieren-in-barcelona-gegen-abspaltung-a-1175406.html