From the Summit of the Moral High Ground

The disputed area of the South China Sea  Long time followers of this blog will know that much of my understanding of what is going on in the world comes from the inimitable golden jackass,  Jim Willie CB . It is his analysis which points to a fundamental shift in the global economic stakes and that shift is in an eastward direction. I keep looking for the signs he has been pointing to in his recent offerings and Bloomberg reports that China has imported more gold in the first five months of 2012 than the UK holds. Yesterday the Financial Times  reported that Iran had been importing tonnes of gold in the first five months of 2012. Over at Zero Hedge the supposition becomes that not only is China directly importing gold but it is demanding gold rather than US$ from its trading partners. The Jackass hypothesis it seems is borne out by events. And whilst we are on the subject of gold, analysis shows that the UK's sale of gold in 1999 to 2001 directly assisted on...

The so-called Global Financial Crisis is a term so widely used that it has earned its own acronym of GFC . When first seen, it seemed like girl friend club or some such, since many friends use GF loosely to refer to sweethearts. The GFC is falsely named, since it is more accurately described as a global monetary war with the USGovt vigorously defending its franchise in the USDollar for crude oil and trade settlement, and for bank reserves management. Take either away, and the other departs quickly, leaving the United States vulnerable to a quick ticket to the Third World marred by price inflation and supply shortage, even isolation in ring fences. On its own devices, the US is in as bad shape as the worst of the PIIGS nations. The USGovt debt is above 100% of GDP finally. The annual deficit of $1.5 trillion could not be financed in normal methods. So the USFed is the adopted buyer of last resort, purchasing over 80% of new and recycled US debt issuance. The Interest Rate ...

The BRICS nations You may have seen the news that Britain is going to lend £10 billion to the IMF to prop up the Euro along with a number of other countries to make a total fund of £400 billion (or thereabouts). The two 'abstainers' are the US and Canada. First it is important to realise that the £10 billion is entirely hypothetical. It is simply an entry in a ledger somewhere saying DEBIT IMF loan, CREDIT Creditors, there is no actual money changing hands and no one will have to pay anything it is all just an electronic intangible. Britain once and within my life-time found itself in a position where it was forced to borrow money from the IMF, extract taken from  nationalarchives.gov.uk Devaluation of the pound  The left wing of the Labour Party defeated the Public Expenditure White Paper in the Commons in March 1976. Subsequently, Harold Wilson resigned and James Callaghan took over as Prime Minister. Around this time, investors became convinced that ...

What an incredibly complex confusing and treacherous month. It can be safely said that 80% of the activity is almost totally kept from the public. The financial system is breaking in an accelerated fashion. Compare to some grisly horror movie where a man is strapped in a chair. The more he moves, the tighter the bindings pull on his gasping throat and pressed nether stones. The most significant two factors at work are the Iran sanctions and their powerful backfire, and the futile efforts in Europe to stem the banking center collapse. The anti-USDollar federation that spans widely across the globe is gathering strong momentum. Financial aggression is being met by financial alternative development. As Greece moved off the daily news fabrication factory, the reality of a collapse in Spain and Italy has moved to the front center of observations.  Meanwhile, the American nitwits continue to argue over Quantitative Easing when it never stopped, and in fact, went global under t...

A very important objective change has taken place in the gold market. Its price is not moving above the resistance established in the 1600 to 1900 wide berth range. Its price is not moving below support in the same wide permitted range. When the gold price has approached the 1800 level recently, all manner of naked soldiers emerge with imaginery swords to whack the price down, to bring it under heel. The ruse has a high cost in the real world though, as the gold cartel has been forced to shed an enormous supply of gold as punishment for each naked short episode. The opponents to fraudulent controlled manipulated markets have emerged in force to respond. They fight from the East. They fight for a fair and equitable market. They are poking holes in the floor of the syndicate helm where legs fall through. Demand for the gold core has become acute with pitched battles. The financial presss reports none of it.  In desperation, the cartel has conducted regular and routine raids of t...

World leaders meet next week to discuss  the future of the US as the world's reserve currency One of the facts of life over the last 40 years has been that the U.S. dollar is the world’s sole global reserve currency. This is despite the fundamental factors underlying the U.S. balance of payments, which has been awful over that entire time. Nevertheless, the dollar ruled the global monetary system through these four decades and appears to be doing so still. But is that coming to an end? Next week there is a meeting of the BRICS nation over the use by the U.S. of the SWIFT system to block Iran from selling its oil. The BRICS nations are buyers of that oil. Their views on Iran’s nuclear policies do not go as far as refusing to buy their oil. The SWIFT system is the system used to make international payments and covers most acceptable currencies. This use of the international monetary system as a war machine has surprised and angered these nations who are meeting next week to d...

The Chinese Yuan Standard According to the International Monetary Fund by 2016 the economy of China will be larger than that of the United States, but recent research from the University of Pennsylvania now indicates that this has already happened. The proof that was presented is irrefutable that in real terms the US economy produced goods and services worth US$14.6 trillion in 2010 but China's GDP (gross domestic product) was US$14.8 trillion. The situation is set to worsen as the US is falling further behind, every day. US growth was 1.7% and China's is 9.2% in 2011. Beijing has become so powerful that it can now dictate economic policy to the US. China has approximately US$1.9 trillion of debt whilst the US has US$145 trillion. China's reserves are US$3.2 trillion, the US has nothing and borrows nearly 50% of all the money it spends from China. China's tax revenues grew 30% last year whilst the US revenues fell. China has 810 million workers, the US 145 m...

Historical Archive This article is preserved as part of the historical record of this blog. It was originally written by Dr Willie (The Golden Jackass) and is republished here with permission as part of an ongoing effort to preserve historical economic commentary that has since become unavailable. The content has not been substantively altered, although the HTML, accessibility and formatting have been updated to meet modern web standards. On Monday, the first gold contracts denominated in the Chinese Renminbi (also known informally as "yuan") came to the Hong Kong market. Analysts have been quick to note the implications of a yuan-denominated contract, realising that the new contract could drive nearly three times as much demand as the dollar-denominated contract. Looking at the yuan product from the macro view, a move into gold is about more ...