"What we have seen over this past year or two is a number of inexperienced 'world leaders' who have pushed so hard on various topics they've painted themselves into corners." -- Gregory Copley.
U.S. in particular ... is "rabidly, desperately trying to stop any consideration of a diplomatic solution to the Ukraine conflict. So the U.S. is all for the continuation of the war. and it doesn't seem to President Biden to matter how much this will cost."
Washington is making all the wrong moves, Beijing the right ones.
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"The latest development between Iran and Saudi Arabia...underscores that unlikely shifts in power and relations are possible."
“The benefits to Israel from some kind of rapprochement with Iran would be huge,” he added.
- Yonatan Touval, Middle East analyst
Israel’s former spymaster has called for his country to explore whether a rapprochement with Iran is possible following a dramatic breakthrough in relations between Tehran and Riyadh last week.Efraim Halevy, the former director of Israel’s Mossad spy agency, made the comments on Wednesday evening in an interview on CNN.
Describing the deals as “very startling”, Halevy urged Israeli leaders not to “prejudge” the deal but to find ways of working with the new development.
“[Israel should] understand what it is that brought the Iranians to their rapprochement with Saudi Arabia,” said Halevy.
Halevy went on to ask whether “the time has come for Israel also to seek a different policy towards Iran”.
Israel should explore in a “concealed manner” the possibility of rapprochement between Israel and Iran, said Halevy.
While Halevy accepted that such a possibility might be low, he cautioned that such a deal between Iran and Saudi Arabia also looked inconceivable just weeks ago.
Following Chinese-led negotiations, Tehran and Riyadh agreed to resume diplomatic relations last week and reopen embassies within two months, according to a statement released by both sides.
That China could pull off such an agreement should be more deeply analysed, said Halevy.
The Chinese format could provide a “different approach to the Iranian-Israeli conflict” which Tel Aviv had not previously considered, added the former spy chief.
“We had a very, very good relationship with Iran under the previous leadership of the Shah. There is no real conflict of interest between Israel and Iran.
"We don't have a territorial confrontation. We don't have a common border and there is no real reason that there should be a state of war between Israel and Iran,” said Halevy.
'Unlikely power shifts are possible'
Yonatan Touval, an analyst at the Israeli Institute for Regional Foreign Policies (Mitvim), called the remarks “wise”.
“I very much hope that the Israeli government, or at least its security establishment, hears them,” said Touval, speaking to Middle East Eye.
As part of the deal, there is no suggestion that Iran placed conditions on Saudi Arabia drawing closer to Israel.
There have been growing rumours that there could be a normalisation deal between Saudi Arabia and Israel.
Israel and Saudi Arabia do not have official diplomatic relations, but Crown Prince Mohammed bin Salman met secretly with Prime Minister Benjamin Netanyahu in the kingdom in 2020, according to several Israeli media reports at the time.
Saudi Foreign Minister Faisal bin Farhan Al Saud earlier this year also said that the kingdom will not normalise relations with Israel until Palestinians are granted statehood.
Nonetheless, Touval notes that the Israeli establishment has a responsibility to examine such opportunities.
“Indeed, the latest development between Iran and Saudi Arabia – assuming it materialises – underscores that unlikely shifts in power and relations are possible,” said Touval.
“The benefits to Israel from some kind of rapprochement with Iran would be huge,” he added.
Only yesterday the Saudi finance minister, Mohammed Al-Jadaan said that Saudi investments in Iran could happen "very quickly" as long as the agreements were respected and upheld.
“Assuming the understanding [between Israel and Iran] would be primarily security-related, such a development would dramatically decrease tensions with the Iranian proxy of Hezbollah, which probably poses the greatest security threat to Israel right now,” Touval argued.
As well as concluding some understanding with Iran on its nuclear programme, a rapprochement “might also help Israel turn its focus to its real existential threat: that of its continued occupation of the West Bank and its ongoing conflict with the Palestinians,” he said.
[END REPORT]
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The USA will do just about anything to stop the rise of the multipolar order but it's too late. Now situations signaling the rise are snowballing; the more the USA tries to stop it, the faster it's happening.
Xi Jinping, multipolar order is unstoppable. Pavel, Ukraine one last chance. Legion of Doom. U/1 - YouTube - The Duran's Alex Christoforu today
MoA - Geopolitical Rumblings Leave U.S. Behind (moonofalabama.org) published today
Start text:
Over the last month we have seen astonishing geopolitical developments.
In February China publicly lambasted U.S. hegemony, launched a global security initiative and offered a peace plan for Ukraine.
On March 10 China mediated an agreement which restored relations between Saudi Arabia and Iran.
On March 15 Moscow rolled out the red carpet for the Syrian President Bashar al-Assad.
Yesterday al-Assad and his wife Asma arrived in the UAE for talks with Sheikh Mohammed
Also yesterday Iran and Iraq signed a security cooperation agreement that will stop the CIA sponsored Kurdish activities against Iran.
Also yesterday King Salman of Saudi Arabia invited the President of Iran to a visit in Riyadh.
For the last 30 years the U.S. considered the Middle East as its backyard. Twenty years ago it illegally invaded Iraq and caused 100,000nds of death and decades of chaos. Now China, by peaceful means, changed the balance in the Middle East within just one month.
Today China's President Xi arrived in Moscow for three days of talks with Russia's President Putin. An article by President Putin was published in the People's Daily while Russian media published a signed article by President Xi.
The U.S. is afraid that China's peace initiative for Ukraine will gain ground. It has openly come out against a cease-fire and peace talks. I had thought that was for Ukraine to decide?
It is likely that Putin will publicly endorse the Chinese peace plan while the U.S. is paranoid that peace might indeed happen. It may even want to sabotage the Saudi Iranian deal.
China's people are by the way the most happy in the world.
Xi and Putin are now running the multilateral global show. Biden and the hapless 'unilateral' people around him are left aside.
Posted by b on March 20, 2023 at 10:21 UTC
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See also Pundita: Xi meets Putin in Moscow over next three days -published at noon.
Putin-Xi Meeting Could Herald End of 'Dollar Hegemony' and US Dominance (sputniknews.com) -- By James Tweedie, published 3 hours ago. Full text of report:
Chinese President Xi Jinping's visit to Moscow for in-depth talks with Vladimir Putin has provoked angry responses from Washington and Europe. Hong Kong-based political and financial analyst Angelo Giuliano explains why the summit can be seen as a threat to Western hegemony.
Closer economic ties Russia and China could spell the end of the dollar's primacy in trade and even US imperialist hegemony.
Chinese President Xi Jinping arrived in Moscow on Monday for three days of talks with his Russian counterpart Vladimir Putin.
The meeting had already provoked a flurry of angry statements and political diversions, including the International Criminal Court's attempt to accuse Putin of child abduction and Washington's rejection of Beijing's blueprint for peace in Ukraine.
Washington's Downfall?
Angelo Giuliano told Sputnik that ever-deepening cooperation between the two Eurasian giants had "far reaching consequences for the 'collective West'."
"China and Russia are very complementary," Giuliano explained. "Russia has the natural resources that China is lacking and China has a very large industrial/manufacturing base and financial strength."
Crucially, China can help Russia bypass sanctions imposed by Western countries following the launch of the military operation in Ukraine.
Moreover, "Both countries are preparing for a possible wider confrontation with the collective West," Giuliano stressed. "Both countries are already in a de-facto alliance."
"The end of the dollar hegemony would initiate the downfall of the US, the end of the exorbitant privilege to print the global currency, to constantly finance trade deficit by issuing US debt which not meant to be repaid, a de-facto 'Ponzi scheme'," Giuliano said. "This would mean the end of lavish US lifestyle at the expanse of the Global South."
A new international financial system, in competition with the US-based 'Bretton-Woods' institutions like the World Bank and International Monetary Fund (IMF), could be opened up to any country which wants to join, the expert said.
Its selling point would be "a much more democratic system without the veto vote applied in the US controlled World Bank and IMF," Giuliano said. "Many countries have shown interest and the shift could be gradual."
More and more Western leaders are describing Beijing in terms such as "systemic challenge" or even an "opponent," and new data shows China's manufacturing sector is now bigger than the US and European union combined.
"China is already leading in 37 out 44 technologies, the West is definitely seeing this as a challenge in the long run," Giuliano pointed out. "But it is just unavoidable as China has a much larger population and has 10 times more STEM (science technology engineering mathematics) graduates than the US.
More and more Western leaders are describing Beijing in terms such as "systemic challenge" or even an "opponent," and new data shows China's manufacturing sector is now bigger than the US and European union combined.
"China is already leading in 37 out 44 technologies, the West is definitely seeing this as a challenge in the long run," Giuliano pointed out. "But it is just unavoidable as China has a much larger population and has 10 times more STEM (science technology engineering mathematics) graduates than the US."
Chris Devonshire-Ellis, Chairman of Dezan Shira & Associates with a thirty-year investment and business career in China, Russia and Asia, wrote that Russia and China are likely to strengthen military as well as economic cooperation.
Regional security will be high on the agenda, with the 22-year-old Shanghai Cooperation Organisation (SCO) set to be "enhanced" and expanded to include such countries as Belarus, Bahrain, the Maldives, Myanmar, Kuwait, and the United Arab Emirates (UAE).
"This will give the SCO regional coverage over the complete Eurasian land mass to the borders of Eastern Europe, as well as include significant gains in the Middle East and South-East Asia," Devonshire-Ellis wrote. "This is likely to be seen as the world ‘beyond the West’ within a new Cold War and has specific ramifications in the energy and trade sectors."
He predicted the West would dub the expanding SCO a ‘threat to NATO’ and use it to justify a military build-up in Europe and prolong the conflict in Ukraine.
But "Russia and to some extent China view NATO as the initial problem as it has expanded eastwards," Devonshire-Ellis pointed out, and the SCO will become "the security front line between the two."
The rejection of China's 12-point peace plan for Ukraine by Washington and Brussels shows how the West's rhetoric on the conflict has become "shrill, increasingly prone to conspiracy theories, misinformation and warmongering."
"The danger here is that the rest of the world has a vested interest in this conflict too, essential supply chains have been disrupted in both food and energy and have created real stress factors in multiple developing nations," Devonshire-Ellis warned.
He explained that Beijing's interest in peace stemmed from Ukraine's membership of its 'Belt and Road' initiative to secure trade routes to Europe and Africa. China has provided loans to improve Ukraine's ports, roads, and rail infrastructure. It is also the country's biggest trade partner, the source of 14.4 per cent of Ukraine's imports and buying 15.3 per cent of its exports.
[END REPORT]
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Xi accompanied by "enormous" delegation from China. Major decisions with Putin, but will probably stop short of announcing outright alliance between Russia and China. Yet no question this is Xi preparing to ask Russia for help in looming war with the US/NATO.
The Duran discusses what they know of the situation, including major reorganizations of China's government since Xi took over for third term:
Xi Jinping meets Putin. AUKUS, preparing for conflict - YouTube - The Duran - 19 minutes, posted 5 hours ago.
"What we're looking at is a naval arms race, which the Chinese are going to win."
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AVDIIVKA DEFENSE LINES COLLAPSED - Russia entered SW Avdiivka; entered Stepove; reaching Berdychi - YouTube - 4 minutes, posted an hour ago
The commentator is so excited by the sudden turn of events he can be a little hard to understand in parts but the map illustrations he uses are easy to follow.
Going now to Intel Slava Z to see what they have to say. Their latest report, which is less recent than the one above but I include it to back up the claim that things have been happening pellmell:Ukrainian sources acknowledge the deterioration of the situation in the Avdiivka direction and the actualization of the threat of encirclement of the city. After the advance of our troops at Krasnogorovka and Stepovoe, a threat was created to Orlovka, through which the main communications go. Plus, there are battles on the southern outskirts of Avdiivka, where ours today are feeling the enemy's defenses.At the same time, large-scale assault operations by PMC "Wagner" in Artemovsk are reported, where the situation, according to the statements of the Armed Forces of Ukraine, is also deteriorating. In addition, there are reports of fighting in the direction of Konstantinovka south of Artemovsk.
t.me/intelslava/46036
Mar 20 at 08:25
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[...]
Much of the action involves creating alternatives to the dollar as the world’s default currency. If you can keep your reserves in another currency or park them in physical assets like gold or commodities, the thinking goes, you’re halfway to safety.
Take China, for whom supplanting and discrediting the dollar is a key component of its “winning without fighting” campaign known a detailed in the book Unrestricted Warfare. The sanctions push, however necessary, has accelerated China’s quest to defeat the dollar, and many other nations are taking note.
While a chorus of experts still insists that there’s no alternative to the dollar, this is untrue. The dollar will dominate as long as it serves the interest of those who use it. Once the dollar begins placing assets at risk, alternative tools of commerce are certain to emerge. And they already are.
Make no mistake: a shift away from the dollar would be a huge blow to America’s international standing. The days of being able to print limitless amounts of currency could end, along with our ability to buy foreign goods cheaply.
Stark proof that a new game is afoot filtered out of Davos last month. Saudi Arabia’s Finance Minister, Mohammed Al-Jadaan, made the stunning announcement that—for the first time in 48 years — the world’s biggest oil producer was open to trading in currencies other than the US dollar.
That’s a far cry from the deal Richard Nixon cut with King Faisal decades ago to solely accept dollars as payment for oil. (In exchange, Nixon agreed to protect the Kingdom from Soviet, Iranian and Iraqi aggression.) That pact laid the groundwork for a strong dollar as oil money began to flow through the Federal Reserve.
Today, China imports 1.4 million barrels of oil a day from Saudi Arabia (up 39% over the past year), making it the Kingdom’s largest customer. Which is why both sides are seeking cheaper alternatives to using dollars for every transaction. With Aramco investing in a massive new refinery in China, the relationship will only deepen.
The Saudi shift is only the latest data point. At the 2022 BRICS summit in Beijing, Vladimir Putin announced plans to expand the Shanghai Cooperation Organization (SCO) and develop an alternative for international payments using a currency basket of Chinese RMB yuan, Russian rubles, Indian rupees, Brazilian reals, and South African rand. For reference, the SCO is the world’s largest regional organization, representing 40% of the world’s population and 30% of global GDP.
A new currency is only part of the picture. China is pioneering new exchanges to shift commodity trading from Western institutions like the troubled London Metal Exchange and the New York Mercantile Exchange.
Even the Europeans have gotten into the act, by creating a special-purpose vehicle — INSTEX — to facilitate non-dollar, non-SWIFT humanitarian transactions with Iran to sidestep U.S. sanctions. Russia, predictably, expressed interest in participating and the first transaction was completed in March 2020 to facilitate a medical equipment sale to Iran to combat COVID.
Russia and Iran are also developing a gold-backed stablecoin, oil traders are already using the UAE’s dirham to settle oil trades and the Indian rupee is finally being positioned as an international currency.
The beat goes on: China’s Cross-Border Interbank Payment System (CIPS) processes only 15,000 transactions a day — Western-favored CHIPS moves 250,000 daily — but it’s growing. Russia offers its own System for Transfer of Financial Messages to allow users to bypass SWIFT.
Even the Swiss-based Bank for International Settlements — Hitler’s banker— is getting into the act, creating a renminbi liquidity line to support contributing central banks in times of crisis. So far, the central banks of Chile, Hong Kong, Indonesia, Malaysia, and Singapore have subscribed.
In the 21st century, a currency’s value — including the dollar — will become increasingly competitive. If there is less demand for dollars, the value of the dollar will decline. Everything will become more expensive. Not all at once, but over time — making deficit spending more costly or, unthinkably, impossible.
It’s not farfetched to imagine the US experiencing a debt crisis because no one shows up to buy its bonds. The US dollar will become just one more currency, among many. And ultimately, if the dollar loses it shine, so will the ability of the US to project power.
To stem this tide, hard choices must be made: like strategically reducing our enemy count even as we continue to support allies like Ukraine. Perhaps most difficult, the US must get its economic house in order by – once and for all – finally figuring out how to live within its means.
Jay Newman was a senior portfolio manager at Elliott Management and is the author of “Undermoney,” a thriller about the illicit money that courses through the global economy.
First part of the Post article:[END REPORT]
Everywhere you turn there’s chatter about the ongoing US economic sanctions against Russia. The Russian Central Bank, Russian banks, Russian companies, Russian oligarchs — and anyone caught helping them — have seen their fortunes entangled since Moscow invaded Ukraine just over a year ago.********
From Davos to Aspen, American Treasury officials tout the unprecedented scale and scope of this powerful economic weapon.
And why not? The effort has been impressive. The US government task forces have beached scores of yachts, grounded planes, blocked hundreds of millions of dollars of central bank assets and cut Russian financial institutions off from the global SWIFT financial system.
Sanctions are an ancient game: in 432 B.C., Athens crushed its rival — Megara — by banning their traders from Athenian marketplaces.
For the US government in the 21st century, economic sanctions aren’t merely second nature, they’ve become a central tool of foreign policy. More than 10,000 people and dozens of countries are subject to sanctions worldwide.
But more than 100 countries haven’t signed on to those efforts. Which is why oil from the Urals still flows to Asia,Turkey and most of Africa, while grain stolen from Ukraine is winding up across the Black Sea in Russia.
Meanwhile, the profits of this illicit trade is finding its way to places like Dubai, now chockablock with “sanctioned” Russians looking for real estate.
This isn’t to say that we shouldn’t support Ukraine: we should — and we must. But while it makes sense to financially cripple our avowed enemies — Russia, China, Iran, North Korea — coalitions are forming around ways to avoid existing sanctions and to protect against the risk of future sanctions.
[...]
India is forever young.
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Aye, that is the question because China simply might not have the capacity to be much help in smoothing over inevitable differences that will arise as the deal is put into practice. And of course Washington will do everything in its power to push the deal to fail.
Moon of Alabama's Bernhard looks at the pitfalls after he reviews details of the agreement:
MoA - China's Prestigious Middle East Deal May Soon See Challenges (moonofalabama.org): Full text:
China's Prestigious Middle East Deal May Soon See Challenges
The big deal between Saudi Arabia and Iran, which China mediated, may soon lead to new trouble.
The deal included security clauses:
[C]onfidential clauses were inserted into the Beijing Agreement to assure Iran and Saudi Arabia that their security imperatives would be met. Some of these details were provided to The Cradle, courtesy of a source involved in the negotiations:
- Both Saudi Arabia and the Islamic Republic of Iran undertake not to engage in any activity that destabilizes either state, at the security, military or media levels.
- Saudi Arabia pledges not to fund media outlets that seek to destabilize Iran, such as Iran International.
- Saudi Arabia pledges not to fund organizations designated as terrorists by Iran, such as the People’s Mojahedin Organization (MEK), Kurdish groups based in Iraq, or militants operating out of Pakistan.
- Iran pledges to ensure that its allied organizations do not violate Saudi territory from inside Iraqi territory. During negotiations, there were discussions about the targeting of Aramco facilities in Saudi Arabia in September 2019, and Iran’s guarantee that an allied organization would not carry out a similar strike from Iraqi lands.
- Saudi Arabia and Iran will seek to exert all possible efforts to resolve conflicts in the region, particularly the conflict in Yemen, in order to secure a political solution that secures lasting peace in that country.
According to sources involved in the Beijing negotiations, no details on Yemen’s conflict were agreed upon as there has already been significant progress achieved in direct talks between Riyadh and Yemen’s Ansarallah resistance movement in January. These have led to major understandings between the two warring states, which the US and UAE have furiously sought to undermine in order to prevent a resolution of the Yemen war.
In Beijing however, the Iranian and Saudis agreed to help advance the decisions already reached between Riyadh and Sanaa, and build upon these to end the seven-year war.
The Saudi pledges are significant for Iran. Since last October there had been on and off protests and riots combined with terrorist attacks by Sunni militants in Baloch region in southeast Iran and terrorist attacks in northwest Iran by Sunni Kurdish militants which had crossed over from north Iraq.
The protests were fueled by Iran International, a Saudi funded channel in London. That channel is now moving to Washington DC where it seems to have found new funding. Saudi Arabia was also financing the Kurdish and Baloch rebels. They have now stopped their attack in Iran. Today Iran announced an amnesty for some 22,000 people who had been arrested during the riots:
[Iran’s judiciary head Gholamhossein Mohseni Ejehi] said a total of 82,656 prisoners and those facing charges had been pardoned. Of those, some 22,628 had been arrested amid the demonstrations, he said. Those pardoned had not committed theft or violent crimes, he added.The Iranian pledges have likewise solved Saudi Arabia security problems. There will be no more attacks on its oil infrastructure.
An additional item in the Cradle report is also significant:
On a slightly separate note related to regional security — but not part of the Beijing Agreement — sources involved in negotiations confirmed to The Cradle that, during talks, the Saudi delegation stressed Riyadh’s commitment to the 2002 Arab peace initiative; refusing normalization with Tel Aviv before the establishment of an independent Palestinian state, with Jerusalem as its capital.This is of course bad for Israel which had hoped to drag Saudi Arabia onto its site to then attack Iran. That has for now become impossible. The China mediated deal is also a red flag for Washington:
[T]he agreement undercuts the posture of the U.S. in the region. The U.S. has downsized in Syria after withdrawing forces in 2021 from Afghanistan.The deal also comes as Saudi Arabia is demanding certain security guarantees, a steady flow of arms shipments and assistance with its civilian nuclear program in order to normalize relations with Israel, a major U.S. ally, the White House confirmed on Friday.
Speaking to reporters, National Security Council spokesperson John Kirby said the U.S. was “informed” about the Saudi Arabia-Iran talks but played no role in them.
One wonders if the recent anti-Chinese campaign was launched because the U.S. knew of the deal and tried to interrupt it.
The deal may well have implementation issues:
China’s role in the Saudi-Iranian deal is momentous. However, Beijing may find that its relations in the region are undermined by failures in its implementation.
...
As the broker of the deal, or at least the third-party country listed in the statement, the key question is whether China will — or even can — realistically underwrite or support the translation of the agreement into practice. The first issue is one of capabilities. Unlike Washington, China’s power projection capabilities are highly limited. With its sole foreign military base in Djibouti, and no substantial security architecture in the region, Beijing would be unable to enforce the deal with the use — or threat — of force.While this very absence of military might may be a source of soft power for China in the eyes of regional states, given that it signals a genuine desire to avoid interfering in other states’ affairs, Beijing cannot protect key assets in the region or respond to transgressions. Beijing is still reliant on Washington in this regard.Who's are the 'key assets' in the region? Are they not owned by the countries they are in? If Iran and the Saudis hold onto the agreement there is no need for the U.S. to be there. Beijing is certainly not relying on anything Washington could do there.
The second, and far more pressing, issue is one of willingness. China’s role in brokering the deal is unlikely to see it raise its head above the parapet if violence or tensions erupt. Beijing has expended decades of diplomatic effort to cultivate good relations with all regional states. We are simply unlikely to see China risk blowing it all by siding with one partner at the expense of the other.The author seems to believe that China should take sides. If the agreement holds, there will be no need to do that. If it doesn't hold China will mediate again until peace returns.
Fundamentally, this deal comes down to the two regional states (and indeed the other GCC states). If they play ball, China can claim a monumental victory in Middle Eastern diplomacy. If, as is more likely, tensions surface, Beijing will find that it has overstretched. It will almost certainly be unable and unwilling to act as a guarantor of the deal. For a quick diplomatic win, China has placed its policy of neutrality in jeopardy. The current question from China’s perspective is whether it will retain the respect of all parties if the agreement fails.The real implementation problems the deal and China will face are not the ones the author quoted above mentions.
The U.S. does not like the deal because it diminishes its role in the region. Israel does not like the deal because it lessens its chances to go after Iran:
The U.S. and Israel don’t look kindly on the news of the diplomatic breakthrough. They first fear that China is increasingly assertive in its role in the region, and the U.S. does not want to experience what Britain experienced in Suez in 1956: a watershed moment signaling its global decline. The U.S. stood up to Britain, France and Israel who combined to attack Egypt after its leader Gamal Abdel Nasser nationalized the Suez Canal. The event is seen as the final act of the British Empire before joining the more powerful U.S. imperium.
...
If the agreement does accomplish the goal of truly bringing peace and amity between the two rivals, China may then enjoy a Suez moment: when the world signals the end of the American Empire like what happened to the British.Both, Israel and the U.S, are capable and likely willing to do whatever is necessary to prevent an implementation of the deal. They can probably use their good relations with the United Arab Emirates to make things difficult. False flag attacks in Iran and in Saudi Arabia could be a way to do that. If a new 'Iranian' drone attack happens in Saudi oil fields or new 'Saudi financed' terrorist attack in Iran happen the deal could indeed be scrapped.
One hopes that China and the other parties involved in the deal are conscious of that.
[END REPORT]
I am sure they are very consciousness of the challenges that will be mounted against the deal.
*********
On Friday John Batchelor interviewed someone who actually knows what he's talking about regarding a banking crisis:
This morning the Associated Press published their latest report on the disaster, which features this great quote from somebody I never heard of before:
Monday will surely be a stressful day for many in the regional banking sector, but today’s action dramatically reduces the risk of further contagion.
-- Economists at Jefferies
The AP's entire report is posted here:
U.S., U.K. try to stem fallout from Silicon Valley Bank collapse [Video] (aol.com) - KEN SWEET - March 13, 2023, 6:09 AM
NEW YORK (AP) — Governments in the U.S. and U.K. took extraordinary steps to stop a potential banking crisis after the historic failure of Silicon Valley Bank, even as another major bank was shut down.
The UK Treasury and the Bank of England announced early Monday that they had facilitated the sale of Silicon Valley Bank UK to HSBC, Europe's biggest bank, ensuring the security of 6.7 billion pounds ($8.1 billion) of deposits.
British officials worked throughout the weekend to find a buyer for the UK subsidiary of the California-based bank. Its collapse was the second-largest bank failure in history.
U.S. regulators also worked all weekend to try to find a buyer. Those efforts appeared to have failed Sunday, but U.S. officials assured all depositors that they could access all their money quickly.
The announcement came amid fears that the factors that caused the Santa Clara, California-based bank to fail could spread.
In a sign of how fast the financial bleeding was occurring, regulators announced that New York-based Signature Bank had also failed and was being seized on Sunday. At more than $110 billion in assets, Signature Bank is the third-largest bank failure in U.S. history.
The near-financial crisis left Asian markets jittery as trading began Monday. Japan’s benchmark Nikkei 225 sank 1.6% in morning trading, Australia’s S&P/ASX 200 lost 0.3% and South Korea’s Kospi shed 0.4%. But Hong Kong’s Hang Seng rose 1.4% and the Shanghai Composite increased 0.3%.
In an effort to shore up confidence in the banking system, the Treasury Department, Federal Reserve and FDIC said Sunday that all Silicon Valley Bank clients would be protected and able to access their money. They also announced steps that are intended to protect the bank’s customers and prevent additional bank runs.
“This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the agencies said in a joint statement.
Under the plan, depositors at Silicon Valley Bank and Signature Bank, including those whose holdings exceed the $250,000 insurance limit, will be able to access their money on Monday.
Also Sunday, another beleaguered bank, First Republic Bank, announced that it had bolstered its financial health by gaining access to funding from the Fed and JPMorgan Chase.
In a separate announcement, the Fed late Sunday announced an expansive emergency lending program that’s intended to prevent a wave of bank runs that would threaten the stability of the banking system and the economy as a whole. Fed officials characterized the program as akin to what central banks have done for decades: Lend freely to the banking system so that customers would be confident that they could access their accounts whenever needed.
The lending facility will allow banks that need to raise cash to pay depositors to borrow that money from the Fed, rather than having to sell Treasuries and other securities to raise the money. Silicon Valley Bank had been forced to dump some of its Treasuries at at a loss to fund its customers’ withdrawals. Under the Fed’s new program, banks can post those securities as collateral and borrow from the emergency facility.
The Treasury has set aside $25 billion to offset any losses incurred under the Fed’s emergency lending facility. Fed officials said, however, that they do not expect to have to use any of that money, given that the securities posted as collateral have a very low risk of default.
Monday will surely be a stressful day for many in the regional banking sector, but today’s action dramatically reduces the risk of further contagion.Economists at Jefferies
Analysts said the Fed’s program should be enough to calm financial markets.
“Monday will surely be a stressful day for many in the regional banking sector, but today’s action dramatically reduces the risk of further contagion,” economists at Jefferies, an investment bank, said in a research note.
Though Sunday’s steps marked the most extensive government intervention in the banking system since the 2008 financial crisis, its actions are relatively limited compared with what was done 15 years ago. The two failed banks themselves have not been rescued, and taxpayer money has not been provided to the banks.
President Joe Biden said Sunday evening as he boarded Air Force One back to Washington that he would speak about the bank situation on Monday. In a statement, Biden also said he was “firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”
Regulators had to rush to close Silicon Valley Bank, a financial institution with more than $200 billion in assets, on Friday when it experienced a traditional run on the bank where depositors rushed to withdraw their funds all at once. It is the second-largest bank failure in U.S. history, behind only the 2008 failure of Washington Mutual.
Some prominent Silicon Valley executives feared that if Washington didn’t rescue the failed bank, customers would make runs on other financial institutions in the coming days. Stock prices plunged over the last few days at other banks that cater to technology companies, including First Republic Bank and PacWest Bank.
Among the bank’s customers are a range of companies from California’s wine industry, where many wineries rely on Silicon Valley Bank for loans, and technology startups devoted to combating climate change. Sunrun, which sells and leases solar energy systems, had less than $80 million of cash deposits with Silicon Valley. Stitchfix, the clothing retail website, disclosed recently that it had a credit line of up to $100 million with Silicon Valley Bank and other lenders.
Tiffany Dufu, founder and CEO of The Cru, a New York-based career coaching platform and community for women, posted a video Sunday on LinkedIn from an airport bathroom, saying the bank crisis was testing her resiliency. Given that her money was tied up at Silicon Valley Bank, she had to pay her employees out of her personal bank account. With two teenagers to support who will be heading to college, she said she was relieved to hear that the government’s intent is to make depositors whole.
“Small businesses and early-stage startups don’t have a lot of access to leverage in a situation like this, and we’re often in a very vulnerable position, particularly when we have to fight so hard to get the wires into your bank account to begin with, particularly for me, as a Black female founder,” Dufu told The Associated Press.
Silicon Valley Bank began its slide into insolvency when its customers, largely technology companies that needed cash as they struggled to get financing, started withdrawing their deposits. The bank had to sell bonds at a loss to cover the withdrawals, leading to the largest failure of a U.S. financial institution since the height of the financial crisis.
Treasury Secretary Janet Yellen pointed to rising interest rates, which have been increased by the Federal Reserve to combat inflation, as the core problem for Silicon Valley Bank. Many of its assets, such as bonds or mortgage-backed securities, lost market value as rates climbed.
Sheila Bair, who was chairwoman of the FDIC during the 2008 financial crisis, recalled that with nearly all the bank failures then, “we sold a failed bank to a healthy bank. And usually, the healthy acquirer would also cover the uninsured because they wanted the franchise value of those large depositors so optimally, that’s the best outcome.”
But with Silicon Valley Bank, she told NBC’s “Meet the Press,” “this was a liquidity failure, it was a bank run, so they didn’t have time to prepare to market the bank. So they’re having to do that now, and playing catch-up.”
[END REPORT]
********
Bonus:
It certainly is unknowable if NATO is on the ropes, China is brokering a deal between Iran and Saudi Arabia, Mexico wants to join BRICS, and a banking crisis is careening into a global disaster.
Have a nice day!
The BRICS group was formed in 2009 as a way to challenge the dominance of the Western-led institutions such as the IMF and the World Bank. The BRICS have created their own development bank and contingency reserve fund to support their economic growth and stability. The BRICS also cooperate on various issues such as climate change, terrorism, health and education. The BRICS represent about 40% of the world’s population, 30% of the world’s GDP and 20% of the world’s trade.
The above percentages will skyrocket if all the present candidates joion BRICS.
Background on BRICS expansion:
The New Candidate Countries For BRICS Expansion - Silk Road Briefing
November 09, 2022
If accepted, the new proposed BRICS members would create an entity with a GDP 30% larger than the United States, over 50% of the global population and control of 60% of global gas reserves.
By Chris Devonshire-Ellis
The Russian Foreign Minister, Sergey Lavrov has stated that ‘over a dozen’ countries have formally applied to join the BRICS grouping following the groups decision to allow new members earlier this year. The BRICS currently includes Brazil, Russia, India, China and South Africa.
It is not a free trade bloc, but members do coordinate on trade matters and have established a policy bank, the New Development Bank, (NDB) to coordinate infrastructure loans. That was set up in 2014 in order to provide alternative loan mechanisms from the IMF and World Bank structures, which the members had felt had become too US-centric. The Asian Infrastructure Investment Bank (AIIB) was set up by China at about the same time for largely the same reasons and to offer alternative financing than that provided by the IMF and World Banks, which were felt to impose political reform policies designed to assist the United States in return for providing loans. Both the NDB and AIIB banks are Triple A rated and capitalised at US$100 billion. The NDB bank shares are held equally by each of the five members. In total, the BRICS grouping as it currently stands accounts for over 40% of the global population and nearly a quarter of the world’s GDP. The GDP figure is expected to double to 50% of global GDP by 2030. Expanding BRICS will immediately accelerate that process. [...]
Above report continues with world map graphic and individual listings of candidate countries; posted before Mexico's announced bid to join BRICS.
MEXICO
Mexico Plans to Join BRICS Amid Growing Tensions with US | Eurasia Media Network
By:Newsdesk
March 12, 2023Mexico has expressed its interest in joining the BRICS group of emerging economies, which currently consists of Brazil, Russia, India, China and South Africa. The Mexican Foreign Minister, Marcelo Ebrard, said that Mexico shares the vision and values of the BRICS and hopes to deepen its cooperation with them in various fields, especially in medicine and trade.
Mexico’s move comes amid growing tensions with its northern neighbor, the United States, over issues such as immigration, border security, trade and human rights. The US has imposed tariffs on Mexican goods, threatened to cut off aid and demanded that Mexico do more to stop the flow of migrants from Central America. Mexico has also faced criticism from the US for its handling of the Covid-19 pandemic and its alleged interference in the Venezuelan crisis.
Mexico sees the BRICS as an alternative platform to diversify its foreign relations and increase its global influence. Mexico is the second-largest economy in Latin America after Brazil and has a population of more than 120 million people. It also has a strong manufacturing sector that competes with China in some markets. Mexico has already established close ties with China, which is its second-largest trading partner after the US. Mexico has also participated in several BRICS summits as an observer and guest.
However, Mexico’s bid to join the BRICS faces some challenges and uncertainties. The BRICS group has not formally announced any criteria or process for admitting new members, although Russia has suggested that it could expand by five countries in 2023. The BRICS also have different interests and agendas that may not always align with Mexico’s. For instance, Mexico may have to balance its relations with China and India, which are rivals in Asia. Mexico may also have to deal with the possible backlash from the US, which may see Mexico’s alignment with the BRICS as a threat to its regional hegemony.
The BRICS group was formed in 2009 as a way to challenge the dominance of the Western-led institutions such as the IMF and the World Bank. The BRICS have created their own development bank and contingency reserve fund to support their economic growth and stability. The BRICS also cooperate on various issues such as climate change, terrorism, health and education. The BRICS represent about 40% of the world’s population, 30% of the world’s GDP and 20% of the world’s trade.
[END REPORT]
********
Summary of Russian Army strikes against Ukrainian infrastructure facilities [today]:
Targets were hit in the following cities and regions
▪️Kyiv and region
▪️Kharkov
▪️Odessa and region
▪️Nikolaev region
▪️Dnepropetrovsk and region
▪️Krivoy Rog
▪️Vinnytsia and region
▪️Ternopil region
▪️Ivano-Frankivsk region
▪️Sumy region
▪️Lviv region
We are aware of blackouts and power outages in the following cities and regions:
.Kyiv
▪️Kharkov
▪️Kirovograd
▪️Dnepropetrovsk
▪️Zaporozhye region
▪️Ivano-Frankivsk
▪️Zhytomyr region
▪️Vinnytsia region
Has the third world war begun? A famously prescient anthropologist thinks so. The post below is from Bernhard at Moon of Alabama, published today:
MoA - Emmanuel Todd on the Third World War (moonofalabama.org)
The French Le Figaro has an interview with the well-known anthropologist Emmanuel Todd.
Emmanuel Todd: «La Troisième Guerre mondiale a commencé»
"The third world war has begun" is his new thesis. Todd is quite famous for correctly predicting the devolution of the Soviet Union long before it happened. He was quite alone at that time.
I once had a piece on Todd's later predictions for the U.S. and Europe which still seems spot on. I also quoted him in a piece on social decline as a national security issue.
Unfortunately the Figaro piece is paywalled. But Arnaud Bertrand has done us the favor of translating the gist. Here is his slightly edited thread:
Arnaud Bertrand @RnaudBertrand - 15:42 UTC · Jan 13, 2023Emmanuel Todd, one of the greatest French intellectuals today, claims that the "Third World War has started."
Small 🧵 translating the most important points in this fascinating interview.
He says, "It's obvious that the conflict, which started as a limited territorial war and is escalating to a global economic confrontation between the whole of the West on the one hand and Russia and China on the other hand, has become a world war."
He believes that "Putin made a big mistake early on, which is [that] on the eve of the war [everyone saw Ukraine] not as a fledgling democracy, but as a society in decay and a “failed state” in the making. [...] I think the Kremlin's calculation was that this decaying society would crumble at the first shock. But what we have discovered, on the contrary, is that a society in decomposition, if it is fed by external financial and military resources, can find in war a new type of balance, and even a horizon, a hope."He says he agrees with Mearsheimer's analysis of the conflict: "Mearsheimer tells us that Ukraine, whose army had been overtaken by NATO soldiers (American, British and Polish) since at least 2014, was therefore a de facto member of the NATO, and that the Russians had announced that they would never tolerate Ukraine in NATO. From their point of view, the Russians are therefore in a war that is defensive and preventive. Mearsheimer added that we would have no reason to rejoice in the eventual difficulties of the Russians because since this is an existential question for them, the harder it would be, the harder they would strike. The analysis seems to hold true."
He however has some criticism for Mearsheimer:
"Mearsheimer, like a good American, overestimates his country. He considers that, if for the Russians the war in Ukraine is existential, for the Americans it is basically only one 'game' of power among others. After Vietnam, Iraq and Afghanistan, what's one more debacle? The basic axiom of American geopolitics is: 'We can do whatever we want because we are sheltered, far away, between two oceans, nothing will ever happen to us'. Nothing would be existential for America.
Insufficient analysis which today leads Biden to proceed mindlessly. America is fragile. The resistance of the Russian economy is pushing the American imperial system towards the precipice. No one had expected that the Russian economy would hold up against the 'economic power' of NATO. I believe that the Russians themselves did not anticipate it.
If the Russian economy resisted the sanctions indefinitely and managed to exhaust the European economy, while it itself remained, backed by China, American monetary and financial controls of the world would collapse, and with them the possibility for United States to fund their huge trade deficit for nothing. This war has therefore become existential for the United States. No more than Russia, they cannot withdraw from the conflict, they cannot let go. This is why we are now in an endless war, in a confrontation whose outcome must be the collapse of one or the other."
He firmly believes the US is in decline but sees it as bad news for the autonomy of vassal states:
"I have just read a book by S. Jaishankar, Indian Minister of Foreign Affairs (The India Way), published just before the war, who sees American weakness, who knows that the confrontation between China and the US will have no winner but will give space to a country like India, and to many others. I add: but not to Europeans. Everywhere we see the weakening of the US, but not in Europe and Japan because one of the effects of the retraction of the imperial system is that the United States strengthens its hold on its initial protectorates. As the American system shrinks, it weighs ever more heavily on the local elites of the protectorates (and I include all of Europe here). The first to lose all national autonomy will be (or already are) the English and the Australians. The Internet has produced human interaction with the US in the Anglosphere of such intensity that its academic, media and artistic elites are, so to speak, annexed. On the European continent we are somewhat protected by our national languages, but the fall in our autonomy is considerable, and rapid. Let's remember the Iraq war, when Chirac, Schröder and Putin held joint anti-war press conferences."
He underlines the importance of skills and education: "The US is now twice as populated as Russia (2.2 times in student age groups). But in the US only 7% are studying engineering, while in Russia it is 25%. Which means that with 2.2 times fewer people studying, Russia trains 30% more engineers. The US fills the gap with foreign students, but they're mainly Indians and even more Chinese. This is not safe and is already decreasing. It is a dilemma of the American economy: it can only face competition from China by importing skilled Chinese labor."
On the ideological and cultural aspects of the war: "When we see the Russian Duma pass even more repressive legislation on 'LGBT propaganda', we feel superior. I can feel that as an ordinary Westerner. But from a geopolitical point of view, if we think in terms of oft power, it is a mistake. On 75% of the planet, the kinship organization was patrilineal and one can sense a strong understanding of Russian attitudes. For the collective non-West, Russia affirms a reassuring moral conservatism."
He continues: "The USSR had a certain form of soft power [but] communism basically horrified the whole Muslim world by its atheism and inspired nothing particular in India, outside of West Bengal and Kerala. However, today, Russia which repositioned itself as the archetype of the great power, not only anti-colonialist, but also patrilineal and conservative of traditional mores, can seduce much further. [For instance] it's obvious that Putin's Russia, having become morally conservative, has become sympathetic to the Saudis who I'm sure have a bit of a hard time with American debates over access for transgender women in the ladies' room.
Western media are tragically funny, they keep saying, 'Russia is isolated, Russia is isolated'. But when we look at the votes at the UN, we see that 75% of the world does not follow the West, which then seems very small.
With an anthropologist reading of this [divide between the West and the rest] we find that countries in the West often have a nuclear family structure with bilateral kinship systems, that is to say where male and female kinship are equivalent in the definition of the social status of the child. [Within the rest], with the bulk of the Afro-Euro-Asian mass, we find community and patrilineal family organizations. We then see that this conflict, described by our media as a conflict of political values, is at a deeper level a conflict of anthropological values. It is this unconscious aspect of the divide and this depth that make the confrontation dangerous."
There you go. Is he right on everything? I don't know, but Emmanuel Todd is certainly always a very singular and interesting thinker, with a vastly different analysis from the depressingly predictable bad takes that usually dominate French media.
Todd's thinking rhymes well with that of Radhika Desai and Michael Hudson as reproduced at Naked Capitalism.
Economists Radhika Desai & Michael Hudson Explain Multipolarity, Decline of US Hegemony - Original here
Yves Smith introduces it:
Yves here. Some rousing weekend listening! Radhika Desai and Michael Hudson are launching a bi-weekly talk show, Geopolitical Economy Hour. The opening segment gives an overview, starting with the breakdown of US dominance and how it has been accelerated ironically by self-defeating efforts to preserve the system. It seems trivial at this point to observe that American defense of its hegemony has helped forge a strong Russia-China alliance. But will this partnership wind up dominating other countries, and stymie the development of a truly multipolar order?
Good food for thought ...
Posted by b on January 14, 2023 at 14:52 UTC |
