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Game Changer - The New BRICS Development Bank
#1
This, assuming it is not sabotaged and with Russia and China involved I just don't see that easily happening, is a real game changer, I think. Wave farewell, albeit slowly, to dollar hegemony. For me it will be interesting to see how the City of London adapt to this over the next few years. And the US will suffer most of all, because their Treasury Market is going to suffer a great deal over the next decade or so.

Quote:New Development Bank: BRICS bank may be a game changer for emerging countries


Shobhan Saxena, ET Bureau


  • [*=center]
    [*=center]FORTALEZA (BRAZIL): On July 14, within three hours of Air India One touching down at Fortaleza, prime minister Narendra Modi's cavalcade left a star hotel to enter another down the road where

(Tough negotiations, a common…)

FORTALEZA (BRAZIL): On July 14, within three hours of Air India One touching down at Fortaleza, prime minister Narendra Modi's cavalcade left a star hotel to enter another down the road where Chinese president Xi Jinping was staying. The Chinese leader too had landed in this northeastern city just a few hours ago.

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As soon as they settled in, the two leaders began chatting, with their talks bouncing from one topic to another: Mansarovar route for Indian pilgrims, trade and people-to-people contact. During the course of their meeting which was planned for 40 minutes but lasted an hour and 20 minutes, the Chinese leader summarized the essence of the meeting: "When India and China meet, the whole world watches."
As the leaders of the two countries were having their "fruitful meeting", in a room at the Fortaleza Convention Centre, diplomats from the BRICS (Brazil, Russia, India, China and South Africa) countries were busy thrashing out the details of the New Development Bank to be announced the next day. Amid unending rounds of black coffee and backroom talks, negotiations over the bank's headquarters and first presidency lasted until the eleventh hour.
Win-win Situation
"We pulled it off 10 minutes before the end of the game," said a Brazilian diplomat, requesting anonymity. "The Chinese got the headquarters. The Indians got the first presidency. The South Africans got a regional headquarters. We were happy to facilitate all this. And the Russians were happy that finally there is a bank that could challenge the IMF and World Bank."
Often mocked at as an "impractical idea", the creation of the bank is the first major achievement of the BRICS countries since they got together in 2009 to press for a bigger say in the global financial order run by the International Monetary Fund and the World Bank. "It will help contain the volatility faced by diverse economies as a result of the tapering of the United States' policy of monetary expansion," Rousseff said, after the signing of the document. "It is a sign of the times, which demand reform of the IMF," she added.
While the announcement about the new bank reflects the growing influence of the BRICS, which account for almost half the world's population and about one-fifth of global economic output, it also made huge political statements on behalf of the five leaders.
For Rousseff, who faces a re-election in October, it was a great achievement at home; for Putin, who has been sidelined by the Western governments, it was a moment of acceptance; for Xi, who has promised to take China to new heights, it was an assertion of China's growing power; for Zuma, who recently won an election, it was reiteration of his role as Africa's main leader; and for Modi, it was his first chance to make an impression at a big global gathering.
Game-changer
An unknown quantity in this part of the world, Modi hasn't received much coverage in the Brazilian media before or after his election. But, in the run-up to the BRICS summit a few articles and TV reports have taken note of the Indian prime minister. An article this week in Brasil Economico, a reputed national daily, described Modi as a "pro-business" leader who "loves designer kurtas" and "likes to take quick decisions".

There were also some articles which suggested that Modi may not be very excited about the idea of the BRICS bank. But speaking, in English, at the summit, the Indian leader threw his weight behind the initiative.
"An open international trading regime is critical for global economic growth as the global economic environment remains uncertain and recovery was still fragile despite improved prospects," Modi said in his address. He even suggested broadening of the BRICS agenda. "We must encourage engagement between our states, cities and other local bodies," Modi said, calling for BRICS to be driven by "peopleto-people" contact.
The new Indian government's enthusiasm for BRICS shows how important this grouping has become. On Wednesday, as the focus shifted to Brasilia where the BRICS leader held a joint meeting with all South American presidents and Modi had a one on one with Dilma Rousseff, the Brazilian president besides meeting members of the Indian community in Brazil, Indian diplomats were quite upbeat about the BRICS bank.
"The biggest achievement of the document is that it will be governed through 'one country, one vote' model. All fears of this turning into a Chinese bank are baseless," said an Indian diplomat who was part of negotiations.
"With the first bank president coming from India, we will play a major role in its structuring and policies. Just imagine an Indian heading an international bank in Shanghai. It's a game changer." With India and China and three other emerging countries working so closely on global finance, the rest of the world will be watching BRICS with even more interest.

The shadow is a moral problem that challenges the whole ego-personality, for no one can become conscious of the shadow without considerable moral effort. To become conscious of it involves recognizing the dark aspects of the personality as present and real. This act is the essential condition for any kind of self-knowledge.
Carl Jung - Aion (1951). CW 9, Part II: P.14
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#2
Quote:

BRICS New Development Bank Evidence of Global Development

Added by Ashley Poag on July 19, 2014.
Saved under Ashley Poag, Brazil, Economy, World
Tags: brics


[Image: BRICS_leaders_in_Brazil.jpeg]
BRICS (Brazil, Russia, India, China and South Africa) announced Tuesday, July 15, that they have plans to establish the New Development Bank (NDB) at the sixth annual summit meeting. The purpose of the bank is to facilitate infrastructure development in the participating, underdeveloped, countries. Globally the NDB is evidence that underdeveloped countries, particularly BRICS, are growing economically.
The bank will be based in Shanghai and will have an Indian president for six years . The Board of Directors Chair will be from Brazil and the Board of Governors Chair will be from Russia. South African President, Jacob Zuma, feels Africa has great need for the bank. This "will change the face of global economics," he said.
Over the past decade, BRICS countries have become more powerful economically. As members of the primarily European and US controlled World Bank, they felt they did not have enough say in how developmental finances were allocated. Developing countries like South Africa and China have more than doubled their share of world trade by trading with each other. Each year emerging countries portion of world trade have increased an average of 0.8 percent. Since as early as 2003, developing countries have steadily out performed developed counties in exports. A major gap between the two has existed since 2008. The BRICS NDB is evidence of this global economic development of emerging countries.
The World Bank reports that there is a $1 trillion gap in infrastructure investment. There is a high level of demand for things like electricity in South Africa. It is estimated that 70 percent of the population do not have access to power. Low-income countries understand that basic infrastructure is the foundational key to economic growth. Despite their rapid growth, BRICS still only has an 11 percent vote in the International Monetary Fund. Efforts to give the countries a larger say failed in 2008 and 2010, because more developed nations did not want to make larger contributions. The reasons range from political to financial and differ from county to country.
In response to these challenges, BRICS created the NDB. Global financial leaders are hoping that the bank creates less rigorous lending practices that make countries like South Africa hesitant to borrow. Often restrictions hinder borrowers from creating and administering their own polices and procedures. There are also contingents and structural adjustment programs that some countries find strenuous. Overall, the organization wants lending practices to be much more efficient for developing countries. Once ratified by the parliaments of participating countries, the bank hopes to start lending in two years. Voting weight appears to be shared equally among members of BRICS. Each country has contributed $10 billion creating $50 billion in startup money. The NDB Contingency Reserve Arrangement (CRA) will provide additional protection in the event that a country can not make balance and payment obligations. The CRA has been set at $100 billion.
BRICS' creation of a bank for new development is evidence of global development of lower-income countries. If the group's actions go as planned the bank will continue to fuel shifts in the global market place. Emerging economies will continue to grow in the event NDB achieves this and successfully lends to under-developed countries.
By Ashley Poag

Read more at http://guardianlv.com/2014/07/brics-new-...RV4bDYT.99
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The shadow is a moral problem that challenges the whole ego-personality, for no one can become conscious of the shadow without considerable moral effort. To become conscious of it involves recognizing the dark aspects of the personality as present and real. This act is the essential condition for any kind of self-knowledge.
Carl Jung - Aion (1951). CW 9, Part II: P.14
Reply
#3
From the Washington Post:

Quote:

What the new bank of BRICS is all about



  • [email=?subject=What%20the%20new%20bank%20of%20BRICS%20is%20all%20about%20from%20The%20Washington%20Post&body=http%3A%2F%2Fwapo.st%2F1l7qLur][/email]

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By Raj M. Desai and James Raymond Vreeland July 17

[Image: BrazilBRICSSummit-07675.jpg]
Leaders of the BRICS nations, from left, Russia's President Vladimir Putin, India's Prime Minister Narendra Modi, Brazil's President Dilma Rousseff, China's President Xi Jinping and South Africa's President Jacob Zuma, pose for a group photo during the BRICS summit in Fortaleza, Brazil, Tuesday, July 15, 2014 (Silvia Izquierdo/Associated Press).
As World Cup fever recedes, this week in Fortaleza heads of state from Brazil, Russia, India, China, and South Africa (the so-called BRICS countries) agreed to establish a New Development Bank (NDB) at their summit meeting. They will have a president (an Indian for the first six years), a Board of Governors Chair (a Russian), a Board of Directors Chair (a Brazilian), and a headquarters (in Shanghai). What is the purpose of this BRICS bank? Why have these countries created it now? And, what implications does it have for the global development-finance landscape?
The "what" is relatively straightforward. The NDB has been given $50 billion in initial capital. As with similar initiatives in other regions (see below), the BRICS bank appears to work on an equal-share voting basis, with each of the five signatories contributing $10 billion. The capital base is to be used to finance infrastructure and "sustainable development" projects in the BRICS countries initially, but other low- and middle-income countries will be able buy in and apply for funding. BRICS countries have also created a $100 billion Contingency Reserve Arrangement (CRA), meant to provide additional liquidity protection to member countries during balance of payments problems. The CRAunlike the pool of contributed capital to the BRICS bank, which is equally sharedis being funded 41 percent by China, 18 percent from Brazil, India, and Russia, and 5 percent from South Africa.
Next, the "why." As we have discussed in our research, the rising economic strength of the BRICS countries has outpaced increases in their voice at the World Bank and the International Monetary Fund (IMF). South-South economic cooperation has expanded dramatically in recent years. Brazil now has more embassies in Africa than does the United Kingdom. China has become Africa's most important trading partner. The value of South-South trade now exceeds North-South trade by some $2.2 trillionover one-quarter of global trade. Low-income countries have also seen unprecedented growth in "SouthSouth" foreign aidwith China, Brazil, and India all becoming larger donors. So, these BRICS institutions are partly just the result of a two-decades long process of greater economic engagement by and among developing nations.
In the meantime, long-standing dissatisfaction with Bretton-Woods institutions has also pushed BRICS towards a developing-countryalternative to global development finance. We have seen this before. In the late 1960s, Andean nations created the Corporación Andina de Fomento(CAF), also known as the "Development Bank of Latin America," as a way of bypassing the stringent rules imposed by the World Bank on infrastructure loans. In the early 2000s, partly as a reaction to a widely perceived failure of the IMF to stop currency speculation during the Asian Crisis, 10 ASEAN nations plus China, South Korea, Japan established a network of bilateral currency swap agreements that would become he Chiang Mai Initiative. In 2009 seven Latin American countries signed an agreement to establish the "Bank of the South" or BancoSur to fund regional development and social protection, and in which each member nation would have one vote. Both of these latter efforts were launched, in part, as a response to the Bretton-Woods enforcement of conditions on countries seeking emergency loans. So it is with the NDB and the CRA; said the official statement, "International governance structures designed within a different power configuration show increasingly evident signs of losing legitimacy and effectiveness."
Although the BRICS comprise over one-fifth of the global economy, together they wield about 11 percent of the votes at the IMF. But reform to the governance of the Bretton-Woods institutions has encountered a number of roadblocks. In 2008 and again in 2010, quota reform at the IMF was intended to double total financial commitments from all member countries, while at the same time giving BRICS countries larger voting shares. Because this required additional contributions by member governments of richer countries, several balked for different reasons.
Smaller European countries, whose quota shares would be reduced by the changes, opposed quota reform on the grounds that their contributions to total official development assistance would be undermined if their voting strength were diminished at the IMF. In the United Stateswhose shares would not be reduced by quota reformthe Congress failed to approve increased capital contributions to the IMF. In the one recent effort to pass quota reform, Democrats in the House of Representatives tried to sneak an amendment into a loan guarantee for Ukraine that would have authorized the increased quota, but then withdrew the amendment, bowing to Republican opposition. Thus, the one time the Congress has considered IMF quota reform has been as a rider in an unrelated bill.

These developments show the political tightrope on which countries must walk when it comes to global development finance: while low- and middle-income countries have legitimate claims about their exclusion from the governance of the Bretton-Woods institutions, richer countries cannot cede too much influence over these institutions to developing nations and still justify large contributionsin particular, to the World Bank's International Development Association every three years, and to the IMF as part of quota reformsto their restless voters, especially during difficult economic times.
What are the implications of the BRICS institutions for international development finance? Developing nations hope that BRICS bank/CRA may eventually challenge World Bank-IMF hegemony over matters such as: funding for basic services, emergency assistance, policy lending, and funding to conflict-affected states. The World Bank's own estimates point to a $1 trillion infrastructure investment "gap" in developing countries. Existing multilateral development banks are able to fill approximately 40 percent of that gap. So, the fact that a BRICS bank aims to make electricity, transport, telecommunications, and water/sewage a priority is important; the demand for infrastructure is expected to grow sharply as more countries transition out of low-income status. In terms of scale, it has been suggested thatafter a couple of decades, should membership be expanded, and should co-financing by governments and private investors be mobilizedthat BRICS Bank loans could dwarf World Bank loans. This type of success has been seen with the CAF, which now funds more infrastructure in Latin America than the World Bank and the Inter-American Development Bank combined.
Whether the BRICS institutions go the way of the more successful CAF on the one hand, or the way of the as yet unutilized Chiang-Mai Initiative orBancoSur on the other, will ultimately depend on two other factors: risk management and coordination.
Presumably a BRICS bank and reserve fund will need to ensure a high-quality loan portfolio that maximizes developmental impact, but keeps defaults to a minimum (for expanding the scale of lending operations, it would also be important to make profits on its loans). And so the problem of surveillance will have to be tackled. Unfortunately, the track record of regional initiatives on surveillance does not bode well. The Chiang Mai Initiative, for example, was simply unable to devise and implement a system of monitoring and surveillance, and eventually resigned itself to requiring countries using its credit lines to undergo surveillance by the IMF! The result: not a single Asian nation has used credit through the initiative.
Meanwhile, given the abundance of evidence that multilateral economic initiatives work best when their principal stakeholders are able to resolve coordination problems, the possibility of serious intra-BRICS disagreements could prevent these new institutions from operating at capacity. Hugo Chavez's dream of BancoSur supplanting both the World Bank and IMF in Latin America foundered on a series of disagreements on issues such as: the bank's tax-free status, the role of concessional finance, relationships with the private sector, transparency rules, and the need for environmental safeguards.
The structural disparity between China and the rest of the BRICS members (the Chinese economy being larger than the economies of all other BRICS combined) is at the heart of the matter for any BRICS institution. China's dominant position makes coordinationin terms of operations and funding prioritiesdifficult to imagine. At one point, all other BRICS countries have expressed concern with Beijing's economic policies and currency regime. Brazilian and Indian central bankers spoke out against the undervalued Yuan in 2009 and 2010, but to little effect. Ongoing trade disputes among developing countries also threaten unity. Last year WTO member states reached a deal on trade facilitation in Bali but India, among a group of developing nations, has threatened to withdraw support for the protocol over the issue of food security. A joint communiqué of BRICS trade ministers remains vague about whether BRICS countries commonly support the Bali agreement. These, along with a host of other intra-BRICS disputes, could limit the effectiveness of the NDB/CRA. For now, they seem to have been papered over amid the excitement surrounding the Fortaleza agreements. But they will, ultimately, determine whether the developing world has finally found a viable alternative to Bretton Woods.
Raj M. Desai is Associate Professor of International Development at the Edmund A. Walsh School of Foreign Service and in the Department of Government at Georgetown University, and a Non-resident Senior Fellow at the Brookings Institution. James Vreeland is Associate Professor of International Development at the Edmund A. Walsh School of Foreign Service and in the Department of Government at Georgetown University



The shadow is a moral problem that challenges the whole ego-personality, for no one can become conscious of the shadow without considerable moral effort. To become conscious of it involves recognizing the dark aspects of the personality as present and real. This act is the essential condition for any kind of self-knowledge.
Carl Jung - Aion (1951). CW 9, Part II: P.14
Reply
#4
Nice headline this, from The Guardian:

Quote:The Brics development bank can release Africa from World Bank tyranny

Africa desperately needs reliable and cheaper long-term development finance. The Brics leaders may well have found the answer

[Image: The-Brics-country-leaders-011.jpg]'The Brics bank could also be a vital source of finance for infrastructure that Africa so desperately needs.' Photograph: Lan Hongguang/Xinhua Press/Corbis

The leaders of the Brics countries Brazil, Russia, India, China and South Africa have signed a treaty in the Brazilian city of Fortaleza to launch a Brics development bank.
The bank will rival the US- and European-led World Bank and its private lending affiliate, the International Finance Corporation, which have dominated development finance since the second world war. The Brics bank is positioned as a financial institution that will provide developing countries with alternative funding minus the punishing strings attached to World Bank lending, which strip recipient countries of the power to make their own policies. It also promises to make lending processes for developing countries faster, simpler and cheaper.
The Brics members will set up a $100bn contingency reserve pool (called the contingent reserve arrangement, or CRA), to help members who face sudden foreign capital flights. China will contribute $41bn, Russia, Brazil and India $18bn each, and South Africa $5bn.
Developing countries have long failed to get industrial nations to either give them a bigger say in decision-making at the World Bank and IMF, or to get these institutions to ease up on punishing and inappropriate structural adjustment programmes (that wealthy countries themselves would never implement in their own economies) in return for funding.
The new bank and the contingency fund are therefore the first real and practical attempts by developing countries to create a monetary, development-finance and trade alternative to the IMF, World Bank and the dominance of the US dollar.
The bank's creation will have to be ratified by the parliaments of the individual Brics countries. The hope is that it will start lending two years after ratification. But disputes over such things as voting rights and where the bank should be situated have so far delayed this process. China lobbied to host it, but India feared the domination of Chinese financial institutions. South Africa wanted Johannesburg as a "neutral" venue and also to serve as an African infrastructure bank.
"Africa feels the bank should be established here, particularly because the greater need for the bank is on the continent of Africa," Jacob Zuma, the South African president, told the World Economic Forum on Africa last year in Cape Town. South Africa's argument was too narrow, however; and it appears, according to documents prepared for the summit, that the bank will be based in Shanghai.
Africa desperately needs reliable and cheaper long-term development finance, without restrictive World Bank and IMF conditions. The Brics bank could also be a vital source of finance for infrastructure that Africa so desperately needs. But it could also provide finance to expand Africa's manufacturing sectors so crucial if the continent wants to create jobs, and reduce inequality and poverty.
The mere presence of a Brics bank that does not adhere to the structural adjustment philosophy of the World Bank and IMF could strengthen the hands of African governments to produce more independent and relevant national development policies, rather than the "one size fits all" approach enforced by traditional lenders.
The Brics bank could also help Africans to secure better investment deals in their negotiations with traditional multilateral banks and the private sector.
However, there is no guarantee that a Brics bank would not attach conditions as onerous as those of the World Bank or other development banks or that it would prioritise the development and infrastructure policies important to African economies, rather than just the Brics economies. Most current development banks in individual states, such as the Brazilian development bank, lend at market rates to African countries.
Also, there is absolutely no guarantee that the Brics bank will be more development-oriented than other developmental banks.
Africans will have to strike smart partnerships with the Brics bank, through African development banks, state-owned enterprises and the private sector. And, crucially, the bank will have to be based on good corporate governance. It must pursue lending that is ecologically sustainable, and must promote inclusive economic growth and development.
The shadow is a moral problem that challenges the whole ego-personality, for no one can become conscious of the shadow without considerable moral effort. To become conscious of it involves recognizing the dark aspects of the personality as present and real. This act is the essential condition for any kind of self-knowledge.
Carl Jung - Aion (1951). CW 9, Part II: P.14
Reply
#5
From RT:

Quote:

The Brics development bank can release Africa from World Bank tyranny

Africa desperately needs reliable and cheaper long-term development finance. The Brics leaders may well have found the answer

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[Image: The-Brics-country-leaders-011.jpg]'The Brics bank could also be a vital source of finance for infrastructure that Africa so desperately needs.' Photograph: Lan Hongguang/Xinhua Press/Corbis

The leaders of the Brics countries Brazil, Russia, India, China and South Africa have signed a treaty in the Brazilian city of Fortaleza to launch a Brics development bank.
The bank will rival the US- and European-led World Bank and its private lending affiliate, the International Finance Corporation, which have dominated development finance since the second world war. The Brics bank is positioned as a financial institution that will provide developing countries with alternative funding minus the punishing strings attached to World Bank lending, which strip recipient countries of the power to make their own policies. It also promises to make lending processes for developing countries faster, simpler and cheaper.
The Brics members will set up a $100bn contingency reserve pool (called the contingent reserve arrangement, or CRA), to help members who face sudden foreign capital flights. China will contribute $41bn, Russia, Brazil and India $18bn each, and South Africa $5bn.
Developing countries have long failed to get industrial nations to either give them a bigger say in decision-making at the World Bank and IMF, or to get these institutions to ease up on punishing and inappropriate structural adjustment programmes (that wealthy countries themselves would never implement in their own economies) in return for funding.
The new bank and the contingency fund are therefore the first real and practical attempts by developing countries to create a monetary, development-finance and trade alternative to the IMF, World Bank and the dominance of the US dollar.
The bank's creation will have to be ratified by the parliaments of the individual Brics countries. The hope is that it will start lending two years after ratification. But disputes over such things as voting rights and where the bank should be situated have so far delayed this process. China lobbied to host it, but India feared the domination of Chinese financial institutions. South Africa wanted Johannesburg as a "neutral" venue and also to serve as an African infrastructure bank.
"Africa feels the bank should be established here, particularly because the greater need for the bank is on the continent of Africa," Jacob Zuma, the South African president, told the World Economic Forum on Africa last year in Cape Town. South Africa's argument was too narrow, however; and it appears, according to documents prepared for the summit, that the bank will be based in Shanghai.
Africa desperately needs reliable and cheaper long-term development finance, without restrictive World Bank and IMF conditions. The Brics bank could also be a vital source of finance for infrastructure that Africa so desperately needs. But it could also provide finance to expand Africa's manufacturing sectors so crucial if the continent wants to create jobs, and reduce inequality and poverty.
The mere presence of a Brics bank that does not adhere to the structural adjustment philosophy of the World Bank and IMF could strengthen the hands of African governments to produce more independent and relevant national development policies, rather than the "one size fits all" approach enforced by traditional lenders.
The Brics bank could also help Africans to secure better investment deals in their negotiations with traditional multilateral banks and the private sector.
However, there is no guarantee that a Brics bank would not attach conditions as onerous as those of the World Bank or other development banks or that it would prioritise the development and infrastructure policies important to African economies, rather than just the Brics economies. Most current development banks in individual states, such as the Brazilian development bank, lend at market rates to African countries.
Also, there is absolutely no guarantee that the Brics bank will be more development-oriented than other developmental banks.
Africans will have to strike smart partnerships with the Brics bank, through African development banks, state-owned enterprises and the private sector. And, crucially, the bank will have to be based on good corporate governance. It must pursue lending that is ecologically sustainable, and must promote inclusive economic growth and development.




The shadow is a moral problem that challenges the whole ego-personality, for no one can become conscious of the shadow without considerable moral effort. To become conscious of it involves recognizing the dark aspects of the personality as present and real. This act is the essential condition for any kind of self-knowledge.
Carl Jung - Aion (1951). CW 9, Part II: P.14
Reply
#6
From RT

Quote:Nobel Prize winning economist praises $100 bn BRICS bank created to counter Western dominance

Published time: July 18, 2014 16:38Get short URL

[Image: stiglitz-brics-bank-interview-.si.jpg]Nobel Laureate in economics and former World Bank chief Joseph Stiglitz (Reuters / Ana Martinez)

BRICS, Banking, Brazil, China, Global economy, Globalization, India, Russia,South Africa, USA

Nobel Prize-winning economist Joseph Stiglitz has praised the new development bank founded this week by the BRICS countries for creating a financial institution that could counter the Western-dominated IMF and World Bank.
Stiglitz, a professor at Columbia University and former chief economist for the World Bank, said the New Development Bank marks a "fundamental change in global economic and political power." He added that the effort by Brazil, Russia, India, China, and South Africa (BRICS) could revitalize the way funds are distributed to developing nations in a changing global economy that the "old institutions" like the International Monetary Fund and the World Bank have not adequately recognized.
"The existing institutions just don't have enough resources," Stiglitz told Democracy Now. "They have enough for 2, 3, 4 percent. So, this is adding to the flow of money that will go to finance infrastructure, adaptation to climate changeall the needs that are so evident in the poorest countries."
On Tuesday, the group of emerging economies signed the long-anticipated document to create the $100 bn bank and a reserve currency pool worth over another $100 bn.
The new bank will provide money for infrastructure and development projects in BRICS countries, and unlike the IMF or World Bank, each nation has equal say, regardless of GDP size.
Each BRICS member is expected to put an equal share into establishing the startup capital of $50 billion with a goal to reach $100 billion. The BRICS bank will be headquartered in Shanghai, India will preside as president the first year, and Russia will be the chairman of the representatives.
[Image: stiglitz-brics-bank-interview.jpg]Leaders representing Brazil, Russia, India, China and South Africa attend the VI BRICS Summit in Fortaleza July 15, 2014 (Reuters / Nacho Doce)

Stiglitz said the BRICS bank has the potential to "get more resources to the developing countries in ways that are consistent with their interests and needs" while forcing American-controlled institutions to recognize monetary and economic contributions of the BRICS nations that deserve a say in global investment decisions now dominated by the West.
"What I hear now is the developing countries, emerging markets, China and the other countries, saying, We're paying the tune. We're the big players now. We have the resources. We're where the reserves are. And yet, you don't want to let us play even a fair share in the role, reflecting the size of our contributions in the economy, in trade,'" Stiglitz said.
"And so, that's one of the real grievancesI think valid grievances. And it's hard for an institution where the governance is so out of tune with current economic and political realities to be as effective as it could be."
Stiglitz pointed out that governance rules for the IMF and the World Bank have not changed adequately enough since their creation in 1944, as the United States has refused to substantially modify its hold over the institutions' functions.
"So, this new institution reflects the disparity and the democratic deficiency in the global governance and is trying to restart, to rethink that," he said.
Despite the potential for the BRICS bank to revitalize the methods in which developing nations receive investment capital, Stiglitz said it's too early to tell whether the five emerging-market nations' effort will be considerably different from the older institutions. Nevertheless, the negotiations to this point signal a willingness from the nations to work together, he said.
"What it is really saying is that in spite of all of the differences, the emerging markets can work together, in a way more effectively than some of the advanced countries can work together."
The shadow is a moral problem that challenges the whole ego-personality, for no one can become conscious of the shadow without considerable moral effort. To become conscious of it involves recognizing the dark aspects of the personality as present and real. This act is the essential condition for any kind of self-knowledge.
Carl Jung - Aion (1951). CW 9, Part II: P.14
Reply
#7
Note the pentagon table they are sitting at...:Hookah:
"The philosophers have only interpreted the world, in various ways. The point, however, is to change it." Karl Marx

"He would, wouldn't he?" Mandy Rice-Davies. When asked in court whether she knew that Lord Astor had denied having sex with her.

“I think it would be a good idea” Ghandi, when asked about Western Civilisation.
Reply
#8
from Naked Capitalism:

Yves here. I've refrained from saying much about the announcement of the plan to establish a $100 billion development bank by the BRICs nations (Brazil, Russia, India, and China) because the hype is ahead of the reality. Yes, it is true that the US has been abusing its role as steward of the reserve currency. QE has been a huge bone of contention in all emerging markets, since hot money has flooded in, while the Fed has, in an insult to the collective intelligence of the leaders of these countries, tried claiming that it has nothing to do with the influx. And they are bracing themselves for the tidal retreat when the Fed starts tightening. The US' efforts to use sanctions to punish Russia have also focused the minds of these countries.

However, the formation of a development banks falls vastly short of the infrastructure needed for any country's currency (or a basket of currencies) to displace the dollar. This measure doesn't come close to representing a threat. It is at most a statement of intent to get more serious. But setting up any kind of basket takes international cooperation (and not among the BRICs alone) when this group can't even settle their petty differences and agree on candidates for leadership of international agencies. In addition, a reserve currency replacement candidate needs to run consistent trade deficits to get its currency into international circulation. None of these nations are prepared to hurt workers by sending demand offshore to do that. A deep bond market is another requirement, and none of the BRICs have that either.
The US could lose reserve currency status through a catastrophe that severely damages its economy, like a massive natural disaster or unforeseen consequences of having its aggressions escalate into a hot war. But the actions the BRICs are taking don't rise to any kind of threat, and unless they take vastly more concerted actions, are unlikely to displace the dollar in the next ten years.

An interesting aspect of this talk is the difference of views between Michael Hudson and Leo Panitch. Hudson is bullish on the BRICs plans, Pantich much less so.




Bio
Michael Hudson is a Distinguished Research Professor of Economics at the University of Missouri, Kansas City. His two newest books are "The Bubble and Beyond" and "Finance Capitalism and its Discontents," available on Amazon.
Leo Panitch is the Canada Research Chair in Comparative Political Economy and a distinguished research professor of political science at York University in Toronto. He is the author of many books, the most recent of which include UK Deutscher Memorial Prize winner The Making of Global Capitalism: The Political Economy of American Empire and In and Out of Crisis: The Global Financial Meltdown and Left Alternatives. He is also a co-editor of the Socialist Register, whose 2013 volume is entitled The Question of Strategy.
Transcript
Is the New BRICS Bank a Challenge to US Global Financial Power?PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore.
Will a new international bank challenge American global financial hegemony? Well, at recent meetings in Brazil, the five BRICS countriesthat's Brazil, Russia, India, China, and South Africahave created a new international bank called the NDB or New Development Bank, and it's been given $50 billion in initial capital. The BRICS bank works on an equal-share voting basis, with each of the five signatories contributing $10 billion. The capital base is used to finance infrastructure and, quote, sustainable development projects in BRICS countries initially, but other low- and middle-income countries will be able to buy in and apply for funding.
BRICS countries have also created a $100 billion contingency reserve arrangement (CRA), meant to provide additional liquidity protection to member countries during balance-of-payments problems and other financial shocks. The CRA, unlike the pool of contributing capital to the BRICS bank, which is equally shared, is being funded 41 percent by China, 18 percent by Brazil, India, and Russia, and 5 percent from South Africa.
The new bank is being described as a challenge to the IMF and the World Bank, that is, a challenge to American global financial power. But is it, as Vijay Prashad wrote, neoliberalism with southern characteristics?
Now joining us to discuss all of this first of all, in Toronto, is Dr. Leo Panitch. He's the Canada research chair in comparative political economy and a distinguished researcher professor of political science at York University. He's the author of The Making of Global Capitalism: The Political Economy of American Empire.
And also joining us is Michael Hudson.
Michael, are you in New York?
MICHAEL HUDSON, PROF. ECONOMICS, UMKC: Yes, I am.
JAY: You're in New York.
Michael, joining us from New York, is a distinguished research professor of economics at the University of Missouri-Kansas City. Newest book is two newest books: The Bubble and Beyond and Finance Capitalism and Its Discontents.
Thank you both for joining us.
LEO PANITCH, PROF. POLITICAL SCIENCE, YORK UNIV.: Glad to be here, Paul.
JAY: So, Michael, kick us off. How significant a development is this?
HUDSON: I think it's much more significant than any of the press has said. The press treats it almost as if, well, they're very small, and what do these countries have to do. Think of the BRICS as doing on the government level what Occupy Wall Street has been advocating. When they say a new development bank, they don't mean they want to be like the World Bank or the IMF. They want a different kind of development.
But also it's not only a development bank, but it's the $100 billion currency scheme. They are trying tothey've been driven into a mutual economic defense alliance by the U.S. sanctions against Russia, by the threats against China, not letting it invest in the U.S. on national security grounds. They've forced other countries really into let us do whatever we want with you, there is no alternative, and we're going to do to you what we did to Ireland and Greece, and that's it.
Well, basically what the BRICS are saying in their new bank and their clearing house is, yes, there is an alternative. We don't have to be like neoliberalism. Their critique of the World Bank and the IMF isn't that they're not given big enough quotas; it's they disagree with the whole philosophy of the World Bank and the IMF that is subsidizing economic dependency, food dependency, and basically anti-labor parties that result in budget deficits, that then governments are told, well, in order to finance your foreign debt and your budget deficit, you have to sell off your water, your natural resources, your privatization. The BRICS banks, they're not going to go to the member countries and saying, you have to sell off your water supply and raise prices in order to pay us.
JAY: Right. Let me bring Leo in here.
So, Leo, what do you make of Michael's take? How significant is all this?
PANITCH: Well, I think it's very significant, and it is designed to give these large developing capitalist countries more room for maneuver vis-à-vis the American state and the European Central Bank and the IMF and the World Bank. But I think the significance he's attaching to it is remarkably overblown. There's no evidence that their purposes are indeed not to apply conditionality to loans. There's loads of evidence with the nonoperationability of the Bank of the South, which was the bank created in Latin America that the Brazilianswhich have made it nonoperational by insisting it be a very conventional development bank which in fact goes to the markets and therefore is constrained by the markets in terms of interest rates to be charged, etc., conditionalities, as opposed to Bolivia and Venezuela that wanted it to operate on very different, not market principles. The Brazilians don't want that and don't want it for the new bank. And I don't think it's just a matter of the Brazilians. The Chinese don't want it either. There's a much deeper factor why it's not so significant, although it does give them some room for maneuver in their operations. But the main reason is that it's embedded in countries, even with China, that don't have the very, very, veryas Michael knows very welldeep financial markets that is needed for this kind of bank to play that kind of role.
JAY: Okay. Leo, hang on one second. That's sort of a second point. Let Michael respond to your first point. Your first point is that this is not something against a neoliberal strategy; this is some independent maneuver of countries that do work within a neoliberal strategy. So what do you make of that?
PANITCH: Well, let me just to emphasize that look at who was just elected as the government of India. Look at the extent to which even the Workers Party has been keen to integrate further into global capitalism. Let's look at the way in which China has just begun to remove some of its financial restriction. And let's look at what the ANC now represents. So, sure, they want more room for maneuver, but within the framework of buying into capitalist globalization and being extremely dependent on it.
JAY: Okay, Michael, you can respond.
HUDSON: Neoliberalism is not simply an economic philosophy. It's interwoven with American foreign policy. Take the case of Ireland when it bailed out the banks a few years ago. Europe was coming to an agreement, and the IMF, with Ireland to write down the debts until Tim Geithner called from the Treasury and said, wait a minute, you can't write down the debts, because American banks have written credit default insurance, and American banks will take a bath because we've be that Ireland will pay; so don't bail it out. So Europe and Ireland both surrendered and said, okay, we're going to follow you. Same thing in Greece. The IMF even got into an argument with the E.U., saying, you can't be that bad against Greece, you can't really force it into so deep a recession. The U.S. got on the phone and said, wait a minute, the American banks have written default insurance. You can't write it down. If you do, we're all going to have to pay through the nose, and we're not going to take the loss. So at issue isn't bank profits or capitalism; it's specifically the United States. And it's the United States that has the veto on the IMF, the United States that has the veto on the World Bank.
And basically I think what's motivated the BRICS, these countries together, is they have one thing in common: they're all under attack by the United States economically, and in Russia's case militarily, with sanctions. And so what Russia is trying to do is say, look, right now the United States can make a threat against us. They can say, if you don't do what we want militarily or politically or economically, we can block your currency payments, we can block the banks, and we can strangle you.
So what Putin in his press conference for the BRICS said was the state was the distinguishing feature is we're not putting in dollars into these banks, we're putting in our own currencies, and the loans will be made in our own currencies. And the fact is that governments can create as much of their own currency as they want. They don't have to go to the market in principle.
Now, what Leo says is absolutely true. If Brazil, which is still run pretty much by the banks, insist in having the banks go to the market, then it will be tied in a knot. But if Russia, China, and the other countries use modern monetary theory and say, okay, our treasuries are going to print the money to develop and we don't need Wall Street, then you'll have a [crosstalk]
JAY: Okay, let Leo jump in.
Leo, go ahead.
PANITCH: Well, Michael, if you were advising them they might, although there would there would be very, very heavy, as you would admit, sacrifices that they then would have to bear. But these are states that reflect their class structures, these are states that like the United States reflect powerful forces within it. And what you're proposing is not something that any of the dominant capitalists in any of these countries, whether, you know, foreign mining companies in South Africa or ambitious Chinese multinationals, want to happen.
Moreover, the notion that they're not interested in convertibility into American dollarsI mean those particular domestic capitalists in those countriesis absurd. Sure, Putin can spout off all he wants about the ludicrous notion of the ruble as a international reserve currency with none of the infrastructural capacity to make it such, but this is not a practical alternative. That's not to say it isn't designed to do is you say, to give them some both rhetorical and maybe institutional room for maneuver. But let's not overblow this, for heaven's sake.
HUDSON: Okay, it's notthere was no attempt by Russia to make the ruble a convertible currency. What Russia wants to do is to nominate its trade in rubles, just as China's denominating its trade in yuan, so that the United States cannot use its banks to do what they've done in the case of Argentina and say, we can block any payment going through the banking system just like after the Shah was overthrown in Iran, Iran tried to pay its foreign debts, the new regime, and Chase Manhattan acted on behalf of the U.S. government and blocked Iran's payment, forcing it into default, causing a crisis. Now, Iran is an observer member of the Shanghai Cooperation Organization that's part of the BRICS, and the whole attempt is to make an alternative, is to avoid the dollar. It's not to make the ruble an international currency; it's to get free of the dollar and hence free of the kind of sanctions that the United States has just escalated against Russia today, free of the monetary sanctions, and free of the ability of the U.S. to use the dollarized system as a political solution.
PANITCH: I know that's their objective. I don't disagree with you that that's their objective. I think we if we're assessing the significance of this, I think we have to assess the likelihood of this. We have to assess what the most powerful forces inside their own countries wanted this respect, how many eggs they're going to put in this basket, what is the capacity of these countries to operate outside of international financial markets in which the dollarby which we really mean very powerful financial institutions headquartered in the West with the states that represent themof continuing to exist.
HUDSON: You're right. This is a dialectic at work, and it's the dialectic between national interests and the vested interests within the country. You're seeing that in the United States right now over the Argentine crisis, where the banks and the Treasury Department and the White House all wanted the Supreme Court to overrule Greece's ruling about the debt defaults. And these class interests are themselves in conflict, and very often, just as American foreign policy has been captured by the neoliberals and neocons, this can hurt many of the most vested interests here, same thing in Russia and China. So it's a whole dialectic [crosstalk]
JAY: Michael, I want to just refocus this, 'cause the first part of the argument was whether the strategic objective of this bank is actually anti-neoliberal, 'cause it seems to me there's two different issues here. If they want to have more room for their own sovereign interests within this whole neoliberal financial system, that's one thing. It's another thing to say that they want that, plus they want that to avoid things like structural readjustments and all the various privatizations and attack on Social Security net and lowering wages. I mean, it seemed to me at the beginning you were suggesting they want to go against those kinds of policies, and Leo asked or said there's no evidence of that. So what's the evidence of that?
HUDSON: If you read Putin's press conferences that he has given explaining his aimsand they're available on Johnson's Russia List that has both his and Lavrov's, the foreign minister's comments, you see that they've spelled this out exactly, that the neoliberalism is not only privatization, but it's the idea: what's really at issue is are economies going to be planned by Wall Street and financial interests, or are they going to be planned by governments,
PANITCH: Come on.
HUDSON: with a view towards raising living standards.
PANITCH: Michael, no country has privatized more, no ruling class has privatized more than the oligarchy around Putin. They've taken that country's wealth and put it in their back pockets. And even if it is officially still owned by the states, it's in their back pockets. Let's not turn Putin and his cronies into the vanguard of a new socialist society, for heaven's sake.
HUDSON: I cannot argue with that, Leo. You're absolutely right.
PANITCH: It's very important we not do this.
HUDSON: The question is: what's the evidence that there is a break from the neoliberalism? I mean, another break that they've all said is, well, neoliberalism really means the dollar standard and it means lending money in dollars for imports. For instance, one of the things that the BRICS conference said was, we will be lending money in domestic currency. Now, that's very important, because the World Bank doesn't lend money in domestic currency. That means it doesn't lend money for land reform, for agriculture, for all of the expenses that are met domestically for labor to develop agriculture, to develop industry. It only lends dollars, basically to buy U.S. exports of infrastructure, U.S. engineering exportsand European. So making loans in domestic currencies for domestic developmentfor instance, China would love to see Latin America, instead of producing hard cash plantation crops, it would love to see it produce wheat and food. This would have a byproduct: it could feed itself, as Argentina's now doing, and it could export. So a shift [crosstalk] financing to wheat away from other things would be a big change.
PANITCH: Again, I don't know what evidence you have that China has not played an enormously massive role in producing export-oriented monocultures in South America. In fact, the Landless People's Movement, whose main theme is that, you know, we have such a massive population, we need a diversified agriculture to feed it, it doesn't target any longer the United States as imposing that upon Brazil, for heaven's sake! Brazil, sure, is looking for room for maneuver in terms of diversifying its exports by concentrating on monocultures, as is Argentina with soy, to be sent to China. I mean, I don't think that one should look at these ruling classes in the Global South with rose-colored glasses, even though we want to be able to recognize the extent to which the American state is indeed the imperial state governing, superintending this global capitalism, and we need to, of course, be critical of it. But that doesn't mean we need to be naive about what these other states are.
HUDSON: No, what I said is that the exports that China is trying to developand you're absolutely right; of course it's promoting exports to itselfare different from the kind of development exports the United States wants. Their economies are so asymmetrical, the United States doesn't want food exports, because it wants the world to become dependent on American grain and American agriculture. That's been the basis of American foreign policy since World War II. So just shifting to grain and to foodgrains, as opposed to other cash crops, is something that at least in emergency the countries will be able to feed themselves, which they're not able to do under under the current system.
JAY: Okay. Leo, let's dig in a little further just how significant, this. Now, the size of the economies we're talking about are massive. My understanding is South-to-South trade is now larger than North-to-South trade by $2 trillion, and that's about a quarter of global trade. So is the potential here of these countries seeking to build some kind of a more independent financial structure significant? I mean, you said earlier there's a deeper issue here, and I kind of cut you off. What's the deeper significance here?
PANITCH: Well, obviously, these are very important developing capitalist countries. Unfortunately, they're developing capitalist countries rather than developing socialist countries. That's what's happened even with the Workers Party in Brazil and the ANC and the South African Communist Party. All the more so it now happened with the right-wing-led India. And it's happening with a vengeance with a Communist Party that is very venally turning its elite into a capitalist class. So it's a developing capitalist country. That's significant historically. It certainly undermines the old notion that capitalism was underdeveloping the Global South. The people used to blame the United States for that. We now see that there's a rapid development, which the United States has encouraged through free-trade and neoliberalism, very much so. That said, it'll be much more difficult to integrate those countries within the American empire than it was to integrate the former imperial countries of Europe and Japan, for reasons that have to do with the lack of military occupation, that have to do with differences in religion, culture, history, language, etc. That's certainly true and it's significant.
But the important thing that's going on now that's much, much more significant is the participation of these countries in guaranteeing, in the wake of this crisis through the G20 and through their very active cooperation in this, that the crisis would not lead to the re-imposition of tariff protection, it would not lead to the imposition of and extension of capital controls, all of the things that occurred during the depression in the 1930s when there was a breakdown of capitalist globalization. These countries are opposed to this.
Now, insofar as we might see a break from Russia under pressure from the United States, that would take much more the form of a right-wing nationalism led by this Russian oligarchy than it would be something progressive, unfortunately, given the balance of forces in Russia.
But the main thing is that these countries are not getting off the capitalist globalization bandwagon. They're looking for more room for maneuver within it.
JAY: Okay. So, Michael, if I understand, your main argument isin some ways it's not that different, in some respects, from what Leo was saying. You're not saying they're getting off the whole capitalist bandwagon. What you're saying they're doing is buying themselves a little more room in terms of their foreign policy.
HUDSON: There is a very broad range over what they can do. And if you look at what is the most likely of common denominator, it's exactly what Leo said. The common denominator is it's their capitalists against the U.S. capitalists, it's their saying, what can we do to be free of the U.S. banks and Wall Street and the City of London and the financial extractive loans. At least the neoliberal plans today have gone beyond trying to finance infrastructure development. The financial system in the West is almost entirely extractive now, not productive. The capitalist class in the countries that Leo's mentioned want at least some bank to do some productive loans that they can benefit from, rather than having the U.S. come in and grab everything for itself like a privatization on behalf of the U.S. You see this kind of fight going on in Greece right now, where the eurozone said, Greece as to privatize its natural resources to pay the debt. Half the privatization last year was to be the sale of its gas rights.
PANITCH: And you know who's buying [crosstalk]
HUDSON: Well, it turned out that Gazprom [incompr.] And Europe said, never mind; don't sell them. We don't want Russia. Only us, not Russia.
PANITCH: But do you know who's buying the Port of Piraeus,
HUDSON: The Chinese.
PANITCH: one of the largest and more. China.
HUDSON: China.
PANITCH: Chinese capitalists.
HUDSON: Right.
PANITCH: So, I'm sorry, I don't see the world in terms of competition amongst the capitalist classes of the world in the sense you're speaking of. I think there is a very deep integration on the part of the leading capitalists in these countries, including the domestic ones, into globalization. I think that's true of Vale in Brazil.
JAY: That's the world's largest iron ore company.
PANITCH: That's the world's largest iron ore company, which, sure, is competing with other iron ore companies. But it doesn't see itself as aligned against the American bourgeoisie or the American capitalist class. This is not right.
And moreover, I think that these capitalist classes very much want access to the deep financial markets of London and New York. They don't want to leave them; they want to be part of them. They want access to them. Indeed, they've been floating bond us in those marketsdangerously, in terms of volatility. So I thinkand it has to be said the reason they do so is that their financial markets, their bond markets, even the European bond market relative to the London/New York access, remain extremely weak, extremely vulnerable. So it's also a matter of where the deep institutional strength of capitalism is.
I would make one other point. I don't think that finance, even Wall Street and Londonthe City of London finance is merely parasitic. I think it facilitates, it underwrites, it's very important in terms of hedging for all of the integrated production that goes on between China and the United States, between South Africa and Europe. This plays a functional role for all these value chains. Of course there's loads of speculation in this, but it means that industry is linked up with this speculation. These aren't separated compartments. And you can't unscramble them.
HUDSON: I see that I'm emphasizing the geopolitical much more than you of nobody's talking about Brazil and other countries not interacting with the London and New York money markets. What they don't want to do is to have the U.S. government and U.S. banks act as a threat, a threat against their countries. And of course they're trying to keep theirhave other options apart from being tied into the U.S. as a system of control. They want to break free of U.S. control, basically, and European control is a satellite of the United States.
PANITCH: Yeah. But since politics and economics aren't so easily separated, their continuing interest and increased interest in being linked economically and financially means that the American state, given its superintending role of Wall Street and the City of London, will continue to have power vis-à-vis them. They would like to, as we've agreed, they'd like to have more room for maneuver in the face of that enormous power of the American Empire, but they are not interested in breaking from it.
JAY: Okay, guys, this is a wonderful beginning to a very complicated subject, and we are going to pick this up again. So I'd like to just say to you our viewers, if you have questions you'd like me to ask, 'cause we'll ask both these gentlemen to come back and carry on this discussion, below the video make your comment, or you can just write to contact (at) therealnews (dot) com, or you can go @therealnews on Twitter, send in your questions and comments, and we will pose them to our guests.
Leo, Michael, thank you very much for joining us.
PANITCH: Glad to be here, Paul.
"We'll know our disinformation campaign is complete when everything the American public believes is false." --William J. Casey, D.C.I

"We will lead every revolution against us." --Theodore Herzl
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#9
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 thing 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.
"We'll know our disinformation campaign is complete when everything the American public believes is false." --William J. Casey, D.C.I

"We will lead every revolution against us." --Theodore Herzl
Reply
#10
Lauren Johnson Wrote: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!
"There are three sorts of conspiracy: by the people who complain, by the people who write, by the people who take action. There is nothing to fear from the first group, the two others are more dangerous; but the police have to be part of all three,"

Joseph Fouche
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