Monday, June 8, 2009

When China awakes, it will shake the world. - Napoleon Bonaparte

Update 19-6-09 China’s Got a New Currency…
and It Sure AIN’T the Dollar

Update on SCO and BRIC 17-6-09 De-Dollarization: Dismantling America’s Financial-Military Empire The Yekaterinburg Turning Point

This is a well written explanation of the beginning of the end for the dollar and why it is occurring. It may take a few years, but there is no doubting the lucidity here. Long but exceptional article.

Update on BRIC 12-6-09 Emerging BRIC powers and the new world order

China's ascendency bodes dark days
for the American economy.

There are actually quite a few Americans and Others who still think that US economic hegemony will save the world from collapse. And we will live happily ever after. They are still thinking this is a downturn in the business cycle and that the stock market rally proves things will go back to 'normal' in a year or two.

It seems like a psychotic break with reality when one reads the progress China is making with harmonious oil and gas contracts globally - and China isn't using bombs to seal the deal either. The alliance of the BRIC countries has surpassed the power of the US now, with all its military prowess.

Anyone who does not see the fall of the dollar coming must seriously be still reading the business cycle fairytale told by American media. Below are just a few of the current articles which are not presented as important in Western news - but which I suspect determine the future of international relations.

Iran Signs Major Gas Deal With China;
Is Europe Next?

By Bruce Pannier, RFE/RL
June 6, 2009
Iran has found its long-sought-after partner to help develop part of the world's largest natural-gas field, even as the possibility of linking it to a future pipeline to Europe seemed to rise.

China came out the big winner on June 3 when representatives from the China National Petroleum Corporation (CNPC) and the National Iranian Oil Company (NIOC) met in the Chinese capital and signed a $4.7 billion contract for developing Phase 11 of the South Pars gas field. South Pars, shared between Iran and Qatar, has estimated gas reserves of some 14 trillion cubic meters, enough to supply Europe's gas needs for about a quarter of a century.

The CNPC's gain is the French energy company Total's loss. In 2004, Total signed a memorandum of understanding with NIOC to develop Phase 11, one of 24 sections that make up the Iranian part of South Pars, and among those with the highest potential.

However, according to Iranian officials, the French company delayed signing the final agreements for too long, despite warnings from Tehran that time was running out. Total said just a few months ago it would not be ready to sign such a contract for some time yet.
Total, in an official statement released on June 3, said it still wants to be part of the deal, but that does not appear to be an option.

However, the Iranian government is offering the French company an opportunity to participate in the development of other sections of South Pars and in the production of liquefied natural gas.
NIOC managing director Seifollah Jashnsaz, who was in Beijing for the signing, told reporters he hoped daily production at the site would reach some 50 million cubic meters (some 18 billion cubic meters annually).

The deal is a boon for China because the country's continued economic growth hinges on access to energy resources. Iran profits not only from the Chinese investment but also from a high-profile agreement that demonstrates Tehran can attract partners to major projects, despite international sanctions.
Read entire article

South Pars Gas Field
South Pars Gas field is the biggest independent gas reserve in the world which is shared by Iran ‎and Qatar

Geithner Goes Begging In China;
What It Means To You …

Money and Markets
June 05, 2009
So this is what it’s come to: Our Treasury Secretary, Timothy Geithner, has to jet off to Beijing to beg for mercy from our biggest global creditor. He has to sit by and be lectured in the ways of finance by Chinese officials. He has to endure the laughter of Chinese students at Peking University, who openly scoffed at his reassurances that “Chinese financial assets are very safe.”

And he has to abandon plans to pressure China on its currency.

The Obama administration had previously been arguing that the yuan was undervalued, artificially subsidizing Chinese manufacturers at the expense of U.S.-based firms.
The bottom line? The balance of world financial power is shifting and not in a good way for America.

Worse, I see no evidence that we’re doing anything about it! Instead, we get a bunch of happy talk and spin, with little or no action.

Washington Happy Talk vs.
Reality on the Ground in China

Before, during, and after Geithner’s China trip, the Washington spin machine was shifting into overdrive. I’ve already seen a few reports calling Geithner’s trip a success. Geithner himself has been making statements like the following: “I’ve actually found a lot of confidence here in China, justifiable confidence, in the strength and resilience and dynamism of the American economy and I think a very sophisticated understanding … of the steps we’re taking and why they’re so important not just to the United States but to China and the rest of the world.”

Excuse me, but does anyone believe that for a second? I sure as heck don’t. And neither do the Chinese. The reality on the ground in China is much more skeptical and severe. For example, Bloomberg recounted a conversation in which Geithner was lectured about U.S. profligacy: Yu Yongding, a former central bank adviser who acted as the interviewer for The China Daily newspaper, told Geithner: “I worry about details. We will be watching you very carefully.” Read entire article

China influence to grow faster
than most expect: Soros

Sun Jun 7, 2009
By Edmund Klamann

SHANGHAI (Reuters) - Financier George Soros said on Sunday that China's global influence is set to grow faster than most people expect, with its isolation from the global financial system and a heavy state role in banking aiding a relatively swift economic recovery.

He reiterated his cautious views regarding the surge in global stock markets, although he said it may have further to go given liquidity in the markets and that many investors are still sitting on the sidelines.
"In many ways, Chinese banking has benefited from being isolated from the rest of the world and is in better shape than the international banking system," he told an audience at Shanghai's Fudan University.

China's extensive capital controls have helped to shield its financial institutions from the worst of the global financial crisis. "The influence of the state is also greater. So when the government says 'lend', banks lend," Soros added. "This puts China in a better position to recover from the recession and that is in fact what has happened."

New loans by Chinese banks surged to record levels in the first quarter, spurring optimism over recovery prospects for the world's third-largest economy.
POSITIVE FORCE "China is going to be a positive force in the world and the market, and as a consequence, its power and influence are likely to grow. Personally, I believe it's going to grow faster than most people currently expect," Soros said. Read entire article

Russia, China should dump dollar in trade
- Medvedev

Fri Jun 5, 2009
MOSCOW (Reuters) - Russia and China should consider switching to domestic currencies in bilateral trade without going to the dollar, Russia's president Dmitry Medvedev said in an interview with Kommersant daily published on Friday. China has already entered similar agreements with Brazil and Belarus.

The deal involves a currency swap agreement between the two countries. Trade turnover between Russia and China reached about $50 billion in 2008 and is set to increase.
"I think that we can think about such positions, for example the rouble against yuan," Medvedev was quoted by Kommersant as saying. Russia's own attempt to switch to the rouble in bilateral trade with Belarus has so far not been successful.

Leaders of Brazil, Russia, India and China, known by their BRIC acronym, are meeting in the Russian city of Yekaterinburg on June 16 to discuss the role of the dollar in the global financial system among other issues.

Medvedev said bilateral currency deals between trade partners ease impact of the economic crisis in an environment when many countries have difficulties tapping international capital markets.

Russia to build large-scale gas pipelines to China


Russia will build two large-scale gas pipelines to China within five years, the head of Russian gas giant Gazprom said here Tuesday after signing a deal with China's biggest energy firm.
Read entire article

The cautious seldom err. -Confucius

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