Executive Summary Many nations are losing faith in the USD as a reserve currency. Obama of course is not instilling any confidence as an offset since he plans on spending his way out of a recession. A feat no one has ever done and one that every economist says is impossible but who knows what a Kenyan born American President can do if given a chance.
The Details Russia has been holding meetings with the Arab states, China and France. The discussions focus on ending reliance on the USD in international oil trade. They are proposing a switch to a basket of currencies including the euro, yen, Chinese Yuan, gold, and a new currency from Arab oil producing nations. Russia also said they would take the Chinese Yuan in trade. China imports oil and gas from the Russian Federation. This is a sure sign that the Yuan is moving forward as a convertible currency to be used in international trade.
ALBA This is a leftist bloc created by Chavez of Venezuela consisting of Venezuela, Bolivia, Cuba, Nicaragua, Honduras, Dominica, Saint Vincent, Antigua and Barbuda. Ecuador was in there but in July announced it would pull out. The President of Ecuador has also announced that he will be going to a basket of currencies and take his country off of the USD. Now Ecuador is a dollarized economy. Alba is also talking of sanctions against Honduras so it is doubtful Honduras will be included. This does not leave much. They are talking of moves to press ahead with a new currency called the Sucre to replace the dollar. We wait and watch but this does not look like it has legs and is probably not going anywhere anytime soon.
Implications For now we are not going to deal with the ALBA and their proposed Sucre. When and if we see it we will deal with it. Russia, China and France leaving the USD is significant. The ARAB states going to their own currency is also significant. This is going to hurt the USD and also the Euro. As these currencies get watered down more and more it will take more of them to buy a gallon of fuel. This leads to hyperinflation. There will thus be penalties for countries that dilute their fiat money too much which is all of them. Interesting to watch this one unfold. Look for new bank wire systems the USA is not going to be able to monitor.
What to Do Weather the storm the USA, UK, Germany, Italy, France and Australia started with the OECD and tax treaties. It is their last dying gasp and the end of their world economic domination fantasies. Obama is close to being thrown out of the White House as not being qualified by a Federal Court. Even if Obama survives this, it damaged him thus stopping him from running for reelection for sure. The UK is in a shambles. Germany is in awful shape as is Italy and many EU countries. They see their economic end coming and decided to take a shot at those banking offshore because they could still get away with it and grab some money to slow down their descent and hurt the offshore banking jurisdictions. When the new currencies pop up we will have banking solutions in these currencies. We are closely watching everything and will be in there first with currency and banking solutions. We say over and over again get out of these high tax police states with their fiat money. They are going to take desperate measures as their economic situation becomes more and more desperate. You one day soon may not be able to get out and will wish you left when you had the chance. If you see any real signs of change or the people threatening the leaders of these countries to start behaving responsibly or risk a revolution let us know because we do not see any such signs at all. After the dollar and Euro collapses you might see some unrest of a significant proportion.
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Article added to SearchWarp.com on 10/20/2009 11:35:35 AM. View other articles written byAurelia Masterson(1,257)
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