The End of a Dollar Dominated World

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The End of a Dollar Dominated World

Postby Endovelico » Thu Feb 19, 2015 11:37 am

Russia Launches Own 'SWIFT' Service

Ekaterina Blinova — Almost 91 domestic credit institutions have been incorporated into the new Russian financial system, the analogous of SWIFT, an international banking network.

The new service, will allow Russian banks to communicate seamlessly through the Central Bank of Russia. It should be noted that Russia's Central Bank initiated the development of the country's own messaging system in response to repeated threats voiced by Moscow's Western partners to disconnect Russia from SWIFT.

SWIFT (The Society for Worldwide Interbank Financial Telecommunication) is a Belgium-based international organization that provides services and a standardized environment for global banking communicating that allows financial institutions to send and receive messages about their transactions.

Joining the global interbank system in 1989, Russia has become one of the most active users of SWIFT globally, sending hundreds of thousands of messages per day. In general, SWIFT provides a secure communication network for more than ten thousands of financial institutions around the world, approving transactions of trillions of US dollars.

Earlier this month Russian Deputy Prime Minister Igor Shuvalov expressed confidence that Russia would not be disconnected from SWIFT. In her turn, Russian Central Bank First Deputy Chair Ksenia Yudaeva called upon Russian civilians and financial institutions not to dramatize the current situation.

Russian experts point to the fact that Western businesses would face severe losses if they expelled Russia from the international SWIFT system. On the other hand, the alternative system launched by Russia might reduce the negative impacts caused by measures imposed by the West, including possible disconnection from SWIFT, and diminish Western financial dominance over Russia.

http://sputniknews.com/business/20150213/1018240631.html
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Re: The End of a Dollar Dominated World

Postby Typhoon » Thu Feb 19, 2015 5:14 pm

So a commdity supported country with the GDP the size of Italy decides to set it's own exchange system and "it's the end of the US dollar dominated world".

This belongs in Levitas.
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Re: The End of a Dollar Dominated World

Postby YMix » Thu Feb 19, 2015 5:18 pm

The dollar's demise has been a topic since I joined Spengman's, back in 2007. I imagine some people have been at it far longer.
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Re: The End of a Dollar Dominated World

Postby Endovelico » Thu Feb 19, 2015 5:43 pm

YMix wrote:The dollar's demise has been a topic since I joined Spengman's, back in 2007. I imagine some people have been at it far longer.


No single fact will destroy the dollar dominance, but we have been witnessing a succession of actions which, together, may lead exactly to that. Russia has just sold $22 billion US Treasury bonds, and mostly applied the money in the purchase of gold. Also increased trading (including oil and gas) in currencies other than dollars will contribute to the weakening of the dollar. Let's see how long it will take before something snaps...
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Re: The End of a Dollar Dominated World

Postby Parodite » Thu Feb 19, 2015 6:03 pm

Endovelico wrote:
YMix wrote:The dollar's demise has been a topic since I joined Spengman's, back in 2007. I imagine some people have been at it far longer.


No single fact will destroy the dollar dominance, but we have been witnessing a succession of actions which, together, may lead exactly to that. Russia has just sold $22 billion US Treasury bonds, and mostly applied the money in the purchase of gold. Also increased trading (including oil and gas) in currencies other than dollars will contribute to the weakening of the dollar. Let's see how long it will take before something snaps...


I read somewhere (mea culpa no url) a pretty good prediction of a snap; the chain of events that will follow when push comes to shove with Greece's bankruptcy and leaving the Euro that will topple the house of cards of the 800+ trillion toxic lavender mountain of derivative securities. By then it is time to pack your bags and get your camping gear from the attic. At the G20 the banks have made sure that in that case all leftover value will first flow back to them as the ultimate and final bail-out.
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Re: The End of a Dollar Dominated World

Postby Typhoon » Thu Feb 19, 2015 6:38 pm

YMix wrote:The dollar's demise has been a topic since I joined Spengman's, back in 2007. I imagine some people have been at it far longer.


I can vaguely recall such similar claims during the 1970's after Nixon closed the gold window, the so-called oil crisis, and the episode of high inflation although it was far from clear at the time as to what could replace the US dollar. Perhaps gold was advocated by the usual suspects.

During the years of the Bubble Economy in Japan, many pundits predicted that the Japanese Yen would soon replace the US dollar as the currency standard.

Their <sarc>intellectual heirs</sarc> are now predicting that same thing for the PRC Renminbi.
However, China is going to need far far more stability and transparency before that comes to pass.

Also, after the Euro was created . . . rather an amusing prediction in retrospect.

It took two World Wars and one Great Depression for the world to switch from the British Pound to the American Dollar as the currency standard.
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Re: The End of a Dollar Dominated World

Postby Typhoon » Thu Feb 19, 2015 6:40 pm

Endovelico wrote:
YMix wrote:The dollar's demise has been a topic since I joined Spengman's, back in 2007. I imagine some people have been at it far longer.


No single fact will destroy the dollar dominance, but we have been witnessing a succession of actions which, together, may lead exactly to that. Russia has just sold $22 billion US Treasury bonds, and mostly applied the money in the purchase of gold. Also increased trading (including oil and gas) in currencies other than dollars will contribute to the weakening of the dollar. Let's see how long it will take before something snaps...


The US Treasury bond market has a size of about $18 trillion, so $22 billion is a tiny pimple on it's behind.

All this means is that Russia needs the money.

Singapore holds more US Treasuries than Russia.
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Re: The End of a Dollar Dominated World

Postby Simple Minded » Thu Feb 19, 2015 8:39 pm

The Earth's temperature is rising at 1 C per century,
the oceans are rising at 3 millimeters per year,
the polar ice caps are melting,
peak oil was hit just a few years ago,
and you guys are worrying about the end of the US dollar?

Priorities, priorities, priorities.
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Re: The End of a Dollar Dominated World

Postby Simple Minded » Thu Feb 19, 2015 8:54 pm

Typhoon wrote:
During the years of the Bubble Economy in Japan, many pundits predicted that the Japanese Yen would soon replace the US dollar as the currency standard.


IIRC, according to at least one "expert," based on real estate value per square foot, at one point the emperor's palace was worth more than all of California, and Tokyo was worth more than all of Canada.
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Re: The End of a Dollar Dominated World

Postby Typhoon » Thu Feb 19, 2015 10:06 pm

Simple Minded wrote:
Typhoon wrote:
During the years of the Bubble Economy in Japan, many pundits predicted that the Japanese Yen would soon replace the US dollar as the currency standard.


IIRC, according to at least one "expert," based on real estate value per square foot, at one point the emperor's palace was worth more than all of California, and Tokyo was worth more than all of Canada.


Possibly.

Minato-ku is a ward in Tokyo; near the Imperial Palace:

Image

A lot of companies, banks, and individuals were caught up in the Bubble Economy, especially the property part.

The fact that they could use property to leverage purchasing more property to leverage purchasing more property . . . did not help.

There was a word coined for this activity: zaitech or financial engineering.

What happened in Japan later went global during the last global financial crisis.
Once the Bubble Economy burst, many bankrupt banks and companies were, and continue to be, kept afloat through contrived means
although the rationale for doing so was a bit different.

There was no proper shakeout, balancing of the books, and holding those responsible to account -> decades of deflation and missed opportunities.

Sounds familiar, no?
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Re: The End of a Dollar Dominated World

Postby Simple Minded » Fri Feb 20, 2015 12:18 am

Bubbles are impossible to prevent. It is part of human nature.
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Re: The End of a Dollar Dominated World

Postby Typhoon » Sat Feb 21, 2015 4:44 pm

Simple Minded wrote:Bubbles are impossible to prevent. It is part of human nature.


Probably.
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Re: The End of a Dollar Dominated World

Postby Endovelico » Tue Mar 10, 2015 12:07 am

And now it's China's turn...

China Completes SWIFT Alternative, May Launch As Soon As September
Submitted by Tyler Durden on 03/09/2015 18:16 -0400

One of the recurring threats used by the western nations in their cold (and increasingly more hot) war with Russia, is that Putin's regime may be locked out of all international monetary transactions when Moscow is disconnected from the EU-based global currency messaging and interchange service known as SWIFT (a move, incidentally, which SWIFT lamented as was revealed in October when we reported that it announces it "regrets the pressure" to disconnect Russia).

Of course, in the aftermath of revelations that back in 2013, none other than the NSA was exposed for secretly 'monitoring' the SWIFT payments flows, one could wonder if being kicked out of SWIFT is a curse or a blessing, however Russia did not need any further warnings and as we reported less than a month ago, Russia launched its own 'SWIFT'-alternative, linking 91 credit institutions initially. This in turn suggested that de-dollarization is considerably further along than many had expected, which coupled with Russia's record dumping of TSYs, demonstrated just how seriously Putin is taking the threat to be isolated from the western payment system. It was only logical that he would come up with his own.

There were two clear implications from this use of money as a means of waging covert war: i) unless someone else followed Russia out of SWIFT, its action, while notable and valiant, would be pointless - after all, if everyone else is still using SWIFT by default, then anything Russia implements for processing foreign payments is irrelevant and ii) if indeed the Russian example of exiting a western-mediated payment system was successful and copied, it would accelerate the demise of the Dollar's status as reserve currency, which is thus by default since there are no alternatives. Provide alternatives, and the entire reserve system begins to crack.

Today, we got proof that it is the second outcome that is about to prevail following a Reuters report that China's international payment system, known simply enough as China International Payment System (CIPS), which serves to process cross-border yuan transactions is ready, and may be launched as early as September or October.

According to Reuters, the launch of the will remove one of the biggest hurdles to internationalizing the yuan and should greatly increase global usage of the Chinese currency by cutting transaction costs and processing times.

It will also put the yuan on a more even footing with other major global currencies like the U.S. dollar, as CIPS is expected to use the same messaging format as other international payment systems, making transactions smoother.

CIPS, which would be a worldwide payments superhighway for the yuan, will replace a patchwork of existing networks that make processing renminbi payments a more cumbersome process.

In other words, while the west was using every provocation involving the Ukraine civil war as an opportunity to pressure Russia into developing its own cross-border payment system, it achieved not only just that but it also pushed China to accelerate the roll out of its own international payment system, in the process telegraphing to the world that the USD is replacable as a reserve currency and giving any other nations (such as the BRICs) the green light to think of SWIFT as an alternative to either the Russian or Chinese payment system (which with enough political and financial stimulus, they would be delighted to do).

But what is most disturbing is just how quickly the Chinese regime change is coming:

"If it's all smooth, (the launch) will be in September or October. If there is a need for a bit more time, we are still confident about (rolling it out) before the year-end," said the source, who declined to be named because he is not authorized to speak to the media.

The system was expected to be launched in 2014 but was delayed by technical problems, with most market participants anticipating it would not come on stream before 2016.

Needless to say, China will be delighted to have its own unified payment system, one that will further internationalize the Renminbi which at least check had become one of the top five payment currencies in November 2014, overtaking both the Canadian and the Australian dollar based on SWIFT data.

Until now, cross-border yuan clearing has to be done either through one of the offshore yuan clearing banks in the likes of Hong Kong, Singapore and London, or else with the help of a correspondent bank in mainland China.

"Misunderstandings under the current clearing system happen from time-to-time due to different languages and codings. The CIPS is a breakthrough since it will offer a united platform and enhance efficiency," said Raymond Yeung, an analyst at ANZ in Hong Kong.

The launch of CIPS will enable companies outside China to clear yuan transactions with their Chinese counterparts directly, reducing the number of stages a payment has to go through.

It will also make it far more difficult for the NSA to track payments to and from the mainland when such compromised intermediaries as SWIFT are used.

(...)

http://www.zerohedge.com/news/2015-03-09/de-dollarization-encircles-globe-china-completes-swift-alternative-may-launch-soon-s


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Re: The End of a Dollar Dominated World

Postby noddy » Tue Mar 10, 2015 3:14 am

yes. china has started doing more direct trading and will continue to do so.

yes, this means more trade and its stability is now chinas direct concern and they will look after their concerns.

yes, this means the previous anti american sentiment caused by external games in local politics will take on "chinese characteristics" hehehheh.
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Re: The End of a Dollar Dominated World

Postby Simple Minded » Tue Mar 10, 2015 3:56 am

noddy wrote:yes. china has started doing more direct trading and will continue to do so.

yes, this means more trade and its stability is now chinas direct concern and they will look after their concerns.

yes, this means the previous anti american sentiment caused by external games in local politics will take on "chinese characteristics" hehehheh.


Personally, I'm in favor of the free market. When the world demands more than one boogey man, suppliers will accommodate demand, and a greater number of customers will be better satisfied.

Let the marketing of culpable boogey men begin, er, uh, I mean continue.
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Re: The End of a Dollar Dominated World

Postby Heracleum Persicum » Tue Mar 10, 2015 6:15 am

.


Putin signs law on ratification of $100 billion BRICS New Development Bank deal



The BRICS New Development Bank (NDB) was set up to challenge two major Western-led giants – the World Bank and the International Monetary Fund.

NDB's key role will be to serve as a pool of currency for infrastructure projects within a group of five countries with major emerging national economies - Russia, Brazil, India, China and South Africa.



Well, folks, in hindsight, all those "sanctions" against Iran was a "kiss of death" for American financial hegemony

Yes, it brought hardship to Iranian economy but it "woke up" Brazil, India, Russia, China, South Africa probably even Europe that things gotto change

Now, there is an alternative SWIFT, alternative "World Bank", and alternative "world currency" and pretty much all sorts of alternatives

Was a silly idea, that sanction

In hindsight, all our beloved America enacting last lately is a "net loss"

Question is, who were pushing for "sanctions" against our beloved Persia ? ?

You guessed it :lol:

.
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Re: The End of a Dollar Dominated World

Postby noddy » Tue Mar 10, 2015 11:36 am

makes me wonder why all the non anglo countries havent done direct trade for decades now.

the anglo zionist reptillian merkins dont have that much control, their must be other reasons.

no complaints if they do get it happening, it wont be the end of the world and all the zero hedge horror stories of deflation dont add up against the zero hedge horrors stories of debt, the 2 outcomes do cancel each other out.
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Re: The End of a Dollar Dominated World

Postby Doc » Tue Mar 10, 2015 9:52 pm

Does "BRICS" mean the way the member economies are falling? ;)
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Re: The End of a Dollar Dominated World

Postby Zack Morris » Sat Mar 14, 2015 12:33 am

noddy wrote:makes me wonder why all the non anglo countries havent done direct trade for decades now.

the anglo zionist reptillian merkins dont have that much control, their must be other reasons.


There's probably more mutual distrust between these countries than of the Anglo Reptilians.
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Re: The End of a Dollar Dominated World

Postby noddy » Sat Mar 14, 2015 2:13 am

Zack Morris wrote:
noddy wrote:makes me wonder why all the non anglo countries havent done direct trade for decades now.

the anglo zionist reptillian merkins dont have that much control, their must be other reasons.


There's probably more mutual distrust between these countries than of the Anglo Reptilians.


zig-zackery :)
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Re: The End of a Dollar Dominated World

Postby Heracleum Persicum » Tue Mar 17, 2015 6:52 pm

.


Europeans defy US .. join China-led development bank


.

France, Germany and Italy have all agreed to follow Britain’s lead and join a China-led international development bank, according to European officials, delivering a blow to US efforts to keep leading western countries out of the new institution.

The decision by the three European governments comes after Britain announced last week that it would join the $50bn Asian Infrastructure Investment Bank, a potential rival to the Washington-based World Bank.

Australia, a key US ally in the Asia-Pacific region which had come under pressure from Washington to stay out of the new bank, has also said that it will now rethink that position.

The European decisions represent a significant setback for the Obama administration, which has argued that western countries could have more influence over the workings of the new bank if they stayed together on the outside and pushed for higher lending standards.

..

Britain tried to gain “first mover advantage” last week by signing up to the fledgling Chinese-led bank before other G7 members. The UK government claimed it had to move quickly because of the impending May 7 general election. The move by George Osborne, the UK chancellor of the exchequer, won plaudits in Beijing.

Britain hopes to establish itself as the number one destination for Chinese investment and UK officials were unrepentant. One suggested that the White House criticism of Britain was a case of sour grapes: “They couldn’t have got congressional approval to join the AIIB, even if they wanted to.”

.



.
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Re: The End of a Dollar Dominated World

Postby Endovelico » Tue Mar 17, 2015 9:55 pm

Moscow Exchange launches Chinese Renminbi futures

From 17 March the Moscow Exchange has started trading in a futures contract on the currency pair Chinese Renminbi — Russian rouble

The launch has been driven by a substantially increasing Renminbi turnover on the Exchange, growing volume of settlement in the currency between Russia and China as well as newly arising demand for hedging of such transactions.

Andrey Shemetov, First Deputy CEO of Moscow Exchange, said:
"The launch of the CNY/RUB futures is the next step made by the Moscow Exchange to offer a full range of Renminbi instruments and hedging tools to participants. We expect that the new contract will be liquid and in-demand as other Exchange's derivatives, and facilitate the trade turnover between China and Russia".

The contract is cash-settled against the Moscow Exchange CNY/RUB fixing.
The contract's expiry dates are every 15th day of March, June, September and December.
IM size is 12%.
Metallinvestbank will act as the market maker for the contract.

Moscow Exchange's turnover in the Chinese Renminbi grew 700% in 2014 to RUB 395 bln (CNY 48 bln). The record average daily trading volume of CNY 541 mln was seen in October.

Currently, the Moscow Exchange's derivatives market offerings include nine FX futures: USD/RUB, EUR/RUB, EUR/USD, AUD/USD, GBP/USD, USD/JPY, USD/CHF, USD/UAH, USD/CAD, and USD/TRY, as well as three options: USD/RUB, EUR/USD, and EUR/RUB.

http://www.moex.com/n8971/?nt=201


Russia is increasingly "isolated"... Collapse is expected soon... :D
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Re: The End of a Dollar Dominated World

Postby Typhoon » Thu Apr 02, 2015 2:30 pm

chindit13 - Tue, Mar 31, 2015 - 07:51 AM

Russia's Supposed Low Debt Level is Meaningless

Occasionally around the web one will see comments that Russia is in a good position because it has a relatively low level of sovereign debt. I think this belief is meaningless for three reasons.

(Now I understand that in the interlubes the Leprechaun-sky has many admirers, but I am not trying to come between anyone so disposed and his bromance; this is about sovereign debt in general and Russia in particular.)

The first reason Russia’s debt level is meaningless is because the country is a serial defaulter. Anyone who takes exception to that statement can ask John Meriwether, Dave Modest or Marty Scholes, among others. Also, one can sometimes find, in a Goodwill Store, a framed Tsarist bond from the turn of the century. Life imitates art, but sovereign debt becomes art. Russia stiffed bond holders as recently as 1998, and that remains fresh in the minds of those without a man-crush.

The second reason is that Putin runs Russia’s finances in a manner slightly different, but every bit as deceptively, as any other nation-state. For example, the Sochi Olympics, the most expensive in history, were theoretically funded largely by the private sector. What that means in Russia is that favored oligarchs were given contracts, Putin brow-beat Russian banks to lend the oligarchs money, and the oligarchs put in margins that would make Steven Jobs weep. Anyone who attended or watched the Games would be hard pressed to guess where all that money went. The athletes’ quarters were hardly the Savoy or Claridges, Michelin gave no stars to the dining halls, and the Faberge brothers did not design the ski jump. Since the games ended and the facilities have sunk into a state of disrepair (it takes a keen eye to spot the difference), and billions of dollars of loans owed by the oligarchs to Russian banks have defaulted, which required Vlad to dip into one of Russia’s pension funds to clean up.

Granted no country has handled its debt any better, but the point is that Russia is no paradigm of fiscal virtue.

The third reason why the low level of debt is meaningless applies not only to Russia, but to all countries. Whether Russia has an ostensible 30% of GDP’s worth of debt or 250% like Japan, Russia shares one important trait with everyone from Japan to Greece to Uncle Sam: they will never pay back the debt. Never.

Greece is in hot water today not because they can’t pay their debt, but because they can’t sell their debt. If a government can sell its debt, or rather so long as a government can sell its debt, the level of it on its books is irrelevant. Greece erred because it became clear it could not service its outstanding paper, so it lost the ability to hoodwink the market and sell more.

Nobody really thinks any sovereign is ever going to pay, but governments can continue to issue new debt if somebody believes that it can at least service it. Bill Gross, when he was running a few trillion at PIMCO, did not buy USTs because he thought Uncle Sam would honor it. He bought because one, he figured a serial printer could at the very least service the paper with fiat that garnered some degree of confidence, and two, because he believed a Greater Fool would buy it off of him if Gross ever decided or needed to sell.

Serial printers have an advantage Greece, as an EU member, did not have. Japan can sell debt because the BoJ can print the yen to service, even repay it. The US can sell debt because Yellen can conjure the lucre to cover it on behalf of Treasury. Putin can sell debt because he can print rubles. Greece cannot print euros, so it needs someone who can (Draghi) to stand behind it and feed its addiction.

Not one sovereign, however, will ever repay any of its debt, at least not without rendering its fiat meaningless. Thus, those who can sell paper maintain the illusion that their debt is good, and they modulate the decline in the value of their fiat by simply servicing outstanding debt, not repaying it. The corpus of every bond just gets rolled over and added to, so long as the illusion of accountability remains.

It can all fall apart in two ways, though one is more likely than the other. One is a collective realization that all Emperors are buck naked, which is to say an admission by the Fools that said same fools are the Greatest (or last holding the bag), and that no government ever is going to repay its debt in any form that will retain value. The more likely scenario---one faced by Greece, Argentina, and soon Japan---is that even servicing outstanding debt is not possible. For example, even though Japan can print yen, its printers do take the occasional day off. Current mathematics has Japan utilizing 41% of its total revenues just in service of outstanding JGBs. A rise across the yield curve of about 1.8% would absorb total Japanese Government tax revenue, leaving nothing for running the place. Yes, the BoJ could print to fill the void, but even as smitten as Japanese are with their Emperor, such printing would be the point when a collective “eeeeeeeehhhhhhhhhhhhh?” (you have to have lived in Japan to understand that term) is uttered by the bond-buying populace and the yen would evaporate.

Thus, Russia’s debt level should not, and does not, make any real money managers feel comfortable loading up on its paper. Its paper might not be any worse than others, but it is certainly no better.
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