Following a year of threats that the west would kick Russia out of SWIFT, Moscow finally took the plunge and created its own international payment system alternative. And now, seeing how easy and fast it can be done, here comes China next with its own "China International Payment System" or CIPS, as one after another major global powers wave goodbye to a dollar-based, Washington-controlled (and NSA-supervised) international funds-transfer protocol. One that no longer relies on the US Dollar.
- 5 Things to Watch in February’s Jobs Report (WSJ)
- Draghi Declares Victory for Bond-Buying Before It Starts (BBG)
- Apple Pay Sign-Ups Get Tougher as Banks Respond to Fraud (WSJ)
- As World’s Hottest Economy Unravels, Nigerians Feel the Squeeze (BBG)
- EU discontent over French budget deal's 'political bazaar' (Reuters)
- Foreign Takeovers See U.S. Losing Tax Revenue (WSJ)
- Goldman Shareholders’ Hope for Bigger Payout Dashed by Fed (BBG)
- Europe Stocks Headed for 31% Surge This Year Amid QE, Citi Says (BBG)
- Dollar revs up for jobs data, euro bonds rally on ECB (Reuters)
Throughout history, political, financial, and military leaders have sought to create empires. Great Britain owned the 19th century but lost its empire due largely to costly wars. The US took over in the 20th century and, like Rome, rose as a republic, with minimal central control, but is now crumbling under its own governmental weight. Invariably, the last people to understand the collapse of an empire are those who live within it. Americans remain hopeful that the dramatic decline is a temporary setback from which they will rebound...Not likely.
When investor preferences are risk-seeking, overly loose monetary policy can have a disastrous effect by promoting reckless speculation and enhancing the ability of low-quality borrowers to issue debt to yield-starved investors. This encourages malinvestment and financial distortions that then collapse, as we saw following the tech and housing bubbles. Those seeds have now been sown for the third time in 15 years. In fact, the present moment likely represents the best opportunity to reduce exposure to stock market risk that investors are likely to encounter in the coming 8 years.
"None dare call it a “currency war” because that would be counter to G-10/G-20 policy statements that stress cooperation as opposed to “every country for itself”, but an undeclared currency war is what the world is experiencing. Close to the same thing happened in the 1930’s, a period remarkably similar to what many countries’ policies resemble today.... Negative/zero bound interest rates may exacerbate, instead of stimulate low growth rates in all of these instances, by raising savings and deferring consumption... Asset prices for stocks, high yield bonds and other supposed 5-10% returning investments, become stretched and bubble sensitive; Debt accumulates instead of being paid off because rates are too low to pass up – corporate bond sales leading to stock buybacks being the best example. The financial system has become increasingly vulnerable only six years after its last collapse in 2009.... Central banks have gone and continue to go too far in their misguided efforts to support future economic growth."
As "isolated" Russia signs a military deal with Cyprus, agrees bilateral trade with Greece, ratifies the $100 billion BRICS Bank, and offers to trade advanced anti-aircraft missiles to Iran, it seems threats of more sanctions against Putin and his nation are finding resistance from an unexpected place. With British PM David Cameron re-demanding that Russia be excluded from the SWIFT global financial payments system, none other than ECB Governing Council member Ewald Nowotny has exclaimed, "one has to be very careful here, exclusion of Russia from Swift would be very problematic because it could potentially undermine confidence in this system as a whole."
- Goldman Employees Reaped $2 Billion From 2008 Options Last Year (BBG)
- On Bush turf, Obama blames immigration woes on Republicans (Reuters)
- Tougher Internet rules to hit cable, telecoms companies (Reuters)
- Russia's Gazprom says can exempt rebel-held areas from Ukraine gas contract (Reuters)
- Allianz Says Pimco Seeing ‘Substantially’ Lower Outflows (BBG)
- Merkel Faces Stepped-Up Dissent on Greek Bailout in Party (BBG)
- SEC Probes Companies’ Treatment of Whistleblowers (WSJ)
- 2-Year Trek From Turf to Table Delays Cheaper U.S. Beef (BBG)
- Turkish jets violate Greek air space (Kathimerini)
While faith in Japanese 'economics' is starting to falter (borne out by the split in the BoJ and endless macro data disappointments), trust in TEPCO and its governmental operators must be about to hit a new record low. Having promised and given up on the ice-wall strategy to stop radioactive water leaking into the ocean, Bloomberg reports TEPCO officials have admitted that it’s investigating the cause of a spike in radiation levels (23,000 becquerels/liter vs the legal limit of 90) in drainage water that it believes subsequently leaked into the Pacific ocean from the wrecked Fukushima nuclear power plant. The bigger problem, as NBC reports, TEPCO failed to report the leak for 10 months!
As a frequent contributor to Bloomberg, I would welcome the opportunity to debate this with Barry.
What say you @ritholtz ? : )
Western "Boots On The Ground" In Ukraine: Britain Sends 75 "Military Advisers" To Combat "Russia-Backed Aggression"Submitted by Tyler Durden on 02/24/2015 14:33 -0500
In what we believe is the first touchdown of Western 'boots-on-the-ground' in Ukraine, Britain's David Cameron stated today that British military personnel are to be deployed to Ukraine for the first time in the next few weeks to provide advice and training to government troops. As The Guardian reports, Britain would be “the strongest pole in the tent”, and argued for tougher sanctions against Moscow if Russian-backed militias in eastern Ukraine failed to observe the ceasefire. The MoD said up to 75 personnel would begin to deploy to Ukraine from next month as Cameron warned sanctions could become "materially different" and held out SWIFT exclusion once again. We suspect Putin will not be impressed at the 'encroachment'.
Oh, you didn’t notice that World War Three is underway, actually has been for more than year? Well, that’s because most of it has been taking place in the banking sector, which for most people is just an alternative universe of math. The catch, which many people either miss or don’t care about, is that the math doesn’t add up.
** Greek Bank Runs Accelerate as Possible ‘Grexit’ Looms
** Fatigue with Greek Crisis Breeding Massive Complacency
** Ukraine a Significant Setback for NATO
** India Demand To Rise To 35 - 40 Tonnes This Month
** Gold Oversold - Fundamental and Technical Position Good
Three months ahead of schedule, Russia announces the launch of its own 'SWIFT'-alternative, linking 91 credit institutions initially, suggests de-dollarization is considerably further along than many expected (especially as Russia dumps US Treasuries at a record pace).
Here's a plan where the drachma will be more desirable than the euro after Greece defaults on anything euro denominated and backs its redeemable drachma with fractional gold. Upon default euros drop, drachma pops!
- Greece to submit loan request to euro zone, Germany resists (Reuters)
- Ukrainian forces start to quit besieged town (Reuters)
- Bank of Japan maintains policy, no surprises (FT)
- China Considering Mergers Among Its Big State Oil Companies (WSJ)
- Soros Shifts to Europe, Asia as Investors Cut U.S. Equities (BBG)
- Putin tells Kiev to let troops surrender as Ukraine ceasefire unravels (Reuters)
- Venezuela Squanders Its Oil Wealth (BBG)
- Swiss prosecutor raids HSBC office, opens criminal inquiry (Reuters)