Game Changer - The New BRICS Development Bank

[Lauren Johnson]

[Magda Hassan]

from Golem XIV

There was recent announcement that the BRICS have agreed to launch a new Development bank with a $100 billion currency pool to aid countries with liquidity shortfalls. The major backer of the bank is China contributing $41 billion.

The bank will I have no doubt clear and settle certainly in Yuan and perhaps in Roubles. It will have good working relationships with Hong Kong.

Of more interest to me is that it will be headquartered in Shanghai.

It seems very clear that the Chinese and their economic allies in India and Russia as well as all the countries who are fellow travellers and variously disgruntled with Washington's high handedness are aiming at increasingly by-passing the dollar. The raft of bilateral agreements to settle in Yuan or Roubles that have been signed between China, Russia, Australia, Iran, various South American countries and the EU all serve notice that the days of the dollar's pre-eminence are now numbered.

Of course the reserve status of the dollar is important for how much debt the US can carry. But even if the Yuan and the euro begin to account for a far larger proportion of international settlement this does not eradicate the dollar's importance nor its status. obviously the euro is aiming at being used to settle gas contracts and possibly some oil contracts. If America continues to piss off Iraq's new dictators then they could well decide to settle their contracts in euros or roubles or Yuan.

But I think there are two further important step to watch for. One is to do with banks, the other with courts.

The other half of the power the dollar gives America is that settlement of contracts in dollars means every nation has large dollar accounts which it uses to settle accounts and pay debts. These accounts are held in the small number of global Custodial banks. I think, from memory there are about 4 majors and they are all American: Citi, JPMorgan Chase, Bank of NY Mellon, State Street. These banks house trillions and are one of the choke points used by international lawyers.

When Washington wants to enforce its will on a nation or when American vulture funds want to sue a crippled debtor the Custodial banks are the choke point they use. When Elliott Associates wanted to sue Argentina they did so by taking the Custodial banks that held Argentina's money, to court and got those banks to freeze Argentina's accounts. So the first thi(Iran-contra scandal)(1987)ng I am waiting for is for the emergence of a non-American, Asian or at least Asian based bank to become a major Custodial bank.

The second thing I am looking out for is for that bank to be based NOT in NY. The bank cannot be based in NY because if it was then it would be subject to American law and specifically it would come under the jurisdiction of Wall Street's ( and therefore Washington's) court, which is the Southern District Court of Manhattan. Where you will find the lovely and completely independent Judge Griesa.

Griesa is Wall Street's hanging judge. And his last judgement against Argentina and in favour of the Vultures was upheld by the US supreme court. That decision meant that Argentina will now be crippled with copy-cat appeals for payment from bond holders who had previously agreed to accept a lower settlement. More than that the judgement deals a huge blow to sovereignty in general setting a powerful precedent against any idea of sovereigns having the ability to protect themselves in bankruptcy. A protection that the private companies, including vulture funds themselves DO ENJOY. The ruling rules in favour of one strand of international law the strand which greatly favours private capital and ignores the other older strand such as the Calvo doctrine) which gives pre-eminence to sovereign not private rights.

America is the home of vulture funds and houses the court that rules in their favour. Those courts ruling over those banks is a major part of the projection of American power abroad. Set up a non-american bank to house those funds, and put it in a non American jurisdiction where American courts and Washington's political power is not served and America will have been dealt an entirely peaceful but crippling blow.

So the choice of Shanghai for eth new bank is interesting. There is little attraction in avoiding American political power if you saddle yourself with another equally aggressive power such as China. So what is needed is a place beyond Washington's reach but also not tied to closely to either China or Russia. Who would want a custodial bank subject to courts in Moscow or Beijing? Shanghai is a good place. It is less tied to Chinese banking interests than Hong Kong but still protected from America the way that Singapore, for example, might not be.

If you want to cripple American ability to enforce its will on other nations setting up a major Custodial bank outside of Manhattan would be a very good step. The steps taken so far increasingly by-passing the dollar when settling international accounts in favour of euros or Yuan followed by setting up a lending facility for nations in trouble that is not in dollars, avoids dollar accounts in American banks and is not controlled by the IMF are all the necessary steps which lead up to breaking the stranglehold of American custodial banks and the court which rules them.

I shall be watching.

from Golem XIV

There was recent announcement that the BRICS have agreed to launch a new Development bank with a $100 billion currency pool to aid countries with liquidity shortfalls. The major backer of the bank is China contributing $41 billion...

...If you want to cripple American ability to enforce its will on other nations setting up a major Custodial bank outside of Manhattan would be a very good step. The steps taken so far increasingly by-passing the dollar when settling international accounts in favour of euros or Yuan followed by setting up a lending facility for nations in trouble that is not in dollars, avoids dollar accounts in American banks and is not controlled by the IMF are all the necessary steps which lead up to breaking the stranglehold of American custodial banks and the court which rules them.

I shall be watching.

Spot on & great find!

Yes, great article.

I thought Iran already was trading in other currencies than US$s?

[Lauren Johnson]

I thought Iran already was trading in other currencies than US$s?

The issue is bigger than trading in other currencies. As I understand the issues, banking and legal institutions ratified by the BRICS nations are just starting to be set up. This is a much bigger task than trading in other currencies. It has to do with how vast capital pools are loaned and stored. Right now, you got huge money center banks or you can go pound sand.

In a world of Economic Hit Men and their Jackals, this will not be easy.

[Magda Hassan]

Everything Will Be SDR Compliant

September 11, 2014 JC Collins 12 Comments
Staring Marathon Man
By JC Collins
Every once in a while you come across a quote that is so clear and concise in the message it is attempting to communicate that all things simply fall into the slots assigned them. The quote below from Marathonman commenting over at Zero Hedge today is such a………well, quote:
"You know I've been thinking this stupid ass sanction business is meant to hurry along the death of the dollar. China, Russia, and the BRICS finish the work and usher in the new SDR type system and the US regime gets to play like, hey it wasn't our fault. This regime if not incompetent is most certainly evil."
Marathonman has managed to explain in three colorful sentences what I've been communicating since January in blog post after blog post, and I'd like to thank him for the clarity his comment will bring to thousands. Thank you friend.
Let's keep in mind that the sanctions, in essence, are somewhat of a separate issue from the reality on the ground in eastern Ukraine. Though the media likes to present both issues as if they are directly connected, I propose that they are indeed separate.
One, the civil war in eastern Ukraine is a proxy war being fought between the U.S. and Russia over the geopolitical control of Europe. As stated in the early post today titled The Devil's Tears, Europe and North America have been connected at the hip for 600 years and specific western industrial interests intend to keep it that way.
If Russia is successful in guiding Ukraine back into the fold it is highly likely that Europe will be ripped away from the western geopolitical sphere and 6 centuries of cultural symbiosis will shift eastward.
Two, sanctions on Russia, and the Russian response is a part of the scripted Hegelian Dialectic which we have been discussing here for the last 9 months. As Marathonman so astutely stated, the sanctions are planned to move the BRICS countries away from the dollar and setup SDR compliant alternatives to the western dominated system, all for the purpose of plausible deniability so the American populace does not awaken to the fantasy world of false economics.
There are a few dead giveaways to this plan. The obvious one is that every time the west applies sanctions it pushes Russia and China, including the peripheral trade partners, closer together and further away from the dollar. This effect is never discussed openly in the western media and only a handful of alternative websites even mention it.
If this cause and effect was accidental or unintended, the media would have relentless coverage of it until our brains were numb. But they don't draw any attention whatsoever to the dropping of the dollar around the world or the implementation of the SDR compliant BRICS Development Bank and Contingency Reserve Fund.
See the posts:
BRICS and the Bank for International Settlements
The Days of July BRICS Still Seek SDR Solution
And this tells us exactly what we need to know about the plan that is unfolding.
Every storyline needs a protagonist and antagonist. In this case the west, Europe, America, and western Ukraine, are the good guys. While Russia and eastern Ukraine are the bad guys, China is completely left out of this storyline in the media because China cannot be labeled as the bad guy in this situation until later in the story, near the climax, when the surprise ending hits us and the full revelation of the method is revealed.
I've started a News Feed tab which I attempt to update daily. The intent is to include links to daily news stories which are in someway related to this transition in the economic system of the world.
Just today alone the following stories have appeared:
Ruble, Yuan Pave Way for Dollar Substitution
China and Russia in Talks to Create Alternative to Swift
There's so much news coming so fast on a daily basis that it is difficult to keep up with. And all the western media can focus on is Putin the bad guy and mindless entertainment for the disorganized masses.
It was two weeks ago that Britain stated that Russia should be banned from the SWIFT system, and what do you know, now Russia and China are about to implement there own version of SWIFT. But this is not surprising because I wrote here back on June 10th how China was going to setup there own version but the code for it was still going to be written around the base algorithm of the SWIFT system. After all, both systems must eventually work together and be SDR compliant.
From the post Cras In Transitu:
Other evidence that the separation of west and east is manufactured is the soon to be implemented CIPS, or China International Payment System, which is built upon the SWIFT system and will use ISO 20022 for the clearing of RMB trade payments.
The scripted story moves into another chapter and the proxy war for resource control and positioning in the new multilateral system continues as we head towards the end of September and the yuan denominated Shanghai Gold Exchange. The next big event in this process will be the internationalization of the renminbi. Which is why Russia is taking the play so China can stay squeaky clean. JC
http://philosophyofmetrics.com/2014/09/1...compliant/

[Lauren Johnson]

As much as we keep hearing how the abandonment of the dollar is the end of Anglo-American Empire, how come the S&P 500, etc. keep hitting new highs. Are these guy idiots. Don't they realize this is the end of game? I have said a number of times, is the fix in?

OK, so, is the fix in?