You had better memorize the term: de-dol-la-ri-za-tion

Some say it was Colonel Muammar Qaddafi, who wanted to dethrone the dollar, and so he paid for it with his own life. Others say it was Iraq’s President Saddam Hussein, who wanted to make settlements in a currency other than the US dollar, and he was hanged. Now it is Russia and China, which want to do the same. Just days ago an agreement was signed to this effect.

(i) Russia and China have decided to begin to make mutual settlements increasingly in their respective national currencies, and

(ii) they have decided to bypass the SWIFT system, introducing their own instead.

Moscow has also revealed lately that Russia has stopped using the US dollar and the SWIFT system for settlements in arms trade.

The exchange of goods between Russia and China is significant; Russian weaponry has a lot of clients around the globe. On the other hand both countries, and especially China, have large dollar reserves. And both states are under attack from the West, be it economic sanctions against Moscow, be it American trade war against Beijing.

To administer punishment for such a daring act was a child’s play in the case of Libya and Iraq: the two countries were swiftly dealt with. What can one do with a nuclear superpower on the other hand and Asia’s largest economic tiger on the other?
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Enslavement of people through debt is a perfect enslavement

If the American economy is doing so well, why did FED suddenly become so mild in its rhetoric during the last session? At the previous meeting in March, none of the FOMC Committee members was willing to lower interest rates, now there are 7 members who want to pump cheap money into the market. Perhaps it was the reaction to Draghi’s speech in Vilnius, in which the ECB chief announced further bond purchases and stated that he “will use all possible means” to boost the European economy before his term ends in autumn.

It looks like currency wars will continue and the central banks will continue to compete with each other in easing their policies. The markets are happy about this, and stock prices in the USA are setting new records. For European citizens, Draghis’ announcement is rather a threat to their savings. If the ECB introduces the negative interest rate, the sums on their accounts will slowly but surely melt. We have warned about this several times.Data from the retail trade and from orders in industry show that American citizens are not doing so well either. Even in April, i.e. before the new steps Trumps in the trade war, they performed very weakly. Why is that? Unemployment is at its lowest level for 50 years, inflation is low and American companies paid record dividends in the first quarter. Nevertheless, consumers are not willing to spend much. It is because, despite full employment, wages are not raised. Another factor is the huge indebtedness of Americans. An example: only the debts made with credit cards amount to 1 trillion dollars! The point is: the interest rate on loans in the USA remains low, but the interest rate on credit cards is growing and currently averages 17% annually. This means that Americans have to pay 170 billion dollars in interest every year!
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Endless economic decline and ever lower interest rates: It’s the demographics, stupid

We have been anticipating the future for our readers for four years now. We have the key to understanding the mechanism behind today’s geopolitical and economic reality and it is demographics. While many do not dare to speak out, we do. To the establishment the social justice philosophy is more important than reality. Equality is a new religion which has superseded Christianity. The trouble is that the real world does not comply with the rules of social justice. If one had fully understood the demographic reality in the sixties and seventies, speculation in real-estate would be a no-brainer. Many still believe that populations keep increasing and urbanization will go on for the foreseeable future. So as is the case with the inertia of thinking, many people believe this process will continue. Since European populations began to shrink, investment in real estate can turn into a giant disaster.

Since 2015 we have been telling our readers that interest rates would never go up again. Yes, they may increase a little for a limited time, but even the FED board members knew they were joking when they made the economic community believe that the financial markets would normalize again.

Because the demographic reality in South Korea is even worse than that of Japan, the country’s industrial conglomerates are desperate for young workers from the northern neighbour. When President Trump called Kim Jong Un Rocketman, and the pundits were hysterical about a possible war, we repeatedly wrote that peace was just a matter of time. Now the animosity between the Koreas is a thing of the past and the two states are slowly working on reunification.

In 2017 the average financial journalist never heard of a mini-bot (mini-bills of Treasury) while our readers were fully informed. We once pointed to the possibility of Italy introducing the mini-bot as a parallel currency.

Gefira Financial Bulletin #35 is available now

South Africa – Europe’s Future
South Africa’s economy collapses
Interest rates will go down forever

In 2016, when the bitcoin traded at 1000 dollars we suggested to our readers to have a close look at the crypto currency, and when the crypto crashed, we repeated that we still thought it would re-bounce to 100 000 dollars. At the time of this writing bitcoin is trading at 9 300. As for gold we were less enthusiastic, but we argued that we still saw it as a safe haven, protecting investors again currency swings. But now financial reality starts to sink in, and central banks do not see light at the end of the tunnel, we see a bright future for the yellow metal

We have to admit, though, that up to now we have been wrong about the oil price: it still stands at around 50 to 60 dollars a barrel. Here we are witnessing two different trends: the global economy is not growing anymore, while China is slowly joining the club of industrialized societies with an ever-shrinking population. That explains why the demand for oil is growing at a slower pace.

With the price below one hundred dollars, more than 50% of the US oil production is economically unsustainable, so once it begins to falter, the oil price will go up, entailing a significant economic crisis. In the September 2018 Gefira bulletin, we wrote that “Tensions between Saudi Arabia and Iran will increase after the midterm elections in November. We can expect a limited tanker war, as we saw during the Iraq-Iran war, with instances of oil tankers being attacked. Such a “tanker war” started when Iraq attacked the oil terminal and oil tankers at Kharg Island in early 1984. Afraid of American intervention, the Iranians limited their retaliatory attacks to Iraqi shipping, leaving the strait open to international traffic.” We do not know who is behind the attacks. There are enough parties who want to draw the US into a war with Iran.

Many analysts believe that the emergence of China results in the decline of the US hegemony; they argue that a multi-polar world will distribute power more equally and keep the US in check. We see that the rot in the West is much deeper even though most residents will regard their countries as healthy and wealthy. As famous historian Oswald Spengler wrote, we are witnessing the end of modern Western Societies. With the decline of the West, regional powers will fight for their chair at the table, and the reemergence of the Ottoman Empire has just begun. While the Turkish lira is plunging, there is no sign President Erdoğan will yield.

We also framed the question, will Europe become an Islamic or an African continent? If immigration from sub-Saharan Africa supersedes that from North Africa, European destiny will change course. In such a case, our future will look more like that of South Africa. While geographically South Africa is not a part of Europe, the modern South African society has been built by Western nations. The country’s development has always stood out. In this Gefira we have a closer look at the Rainbow Nation. Last month CNN proudly announced that “South Africa makes history as women make up half of the cabinet for the first time”. It forgot to say that the country is socially and economically collapsing. Read more in Gefira 34

Mini-Bots – Thorn in the Eye of Brussels, Rescue for Rome

The renunciation of one’s own sovereignty costs a lot. If a country decides to join the Eurozone, it must accept that it will not be able to devalue its currency in the event of an economic crisis. The Italian Lega is now trying to fulfil its election promises, even though the state coffers are empty. The solution? A parallel currency.

The idea is nothing new. What Claudio Borghi, the economic expert of the Lega Nord, came up with was tried out by Argentine society at the turn of the century: in 2001 the government in Buenos Aires launched “cuasimonedas” to plug its debt hole. Each province issued treasury bonds to meet payment obligations. The most popular became the Patacones of Buenos Aires province, which were given mainly to those employed in the state sector and social recipients, but with which one could pay everywhere.

The introduction of Argentina’s parallel currency initially led to chaos in the country: the rich transferred their dollars abroad (a total of more than 100 billion), the poor and the middle class had no choice and immediately spent the Patacones they received in fear of them becoming worthless overnight. However, this spurred consumption and helped the economy to get back on its feet. The good 2002 and 2003 harvests and the rising commodity prices on the world markets also helped to ease the financial situation of this eighth-largest country in the world. Argentina survived the crisis because it was able to devalue its money and because it has the most fertile soil in the world.
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The New Tanker War – Trump Pampers the US Shale Oil Industry

The situation in the Gulf of Oman is getting worse. After the attacks on two tankers, Khamenei said that he would never sit at the negotiating table with the US again.So Iran will continue its nuclear program till the Israeli strategists interpret its advancement as unacceptable and will have Iranian targets attacked. Up to this time a new tanker war is more likely than 30 years ago, of which Gefira warned already in autumn 2018. Our forecasts proved correct.

The attacks could indeed have been carried out by Iranians, and it is quite possible that they were a provocation of the Americans. Such a hypothesis is justified by the analysis of the history of the conflict between the Great Satan and Iran. In August 1953, MI6 and CIA overthrew democratically elected Prime Minister Mohammed Mossadeq for wanting to nationalize the British Anglo-Iranian Oil Company (now BP). The company earned huge sums, of which Iran received hardly anything. The CIA’s Shah Reza Pahlavi, installed in place of Mossadeq, guaranteed the US that Iran would not cross over to the Soviet Union. With the help of the Americanshe founded the secret service SAVAK, which suppressed the population, tortured and committed numerous murders.The Americans were not bothered by this for decades, but today they are outraged by the violation of human rights in Iran: indeed by the violation of their interests in the region.
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The road to modern wars

President Trump pursues a policy combining military threat with economic warfare and his aim is to restore American hegemony especially in view of the rising contender: China. Beijing has been acquiring technological knowledge and started expanding beyond the borders, having easier access to Central Asia and the Pacific than Americans.

In 2015, when Trump stood for election, we wrote: “Trump’s war rhetoric is very popular with his audiences and is a step beyond Obama’s statement about American exceptionalism. In New Hampshire, Trump nearly declared war on China as he stated: ‘Take a look at China what they have done, they have taken our money, our jobs, our base, our manufacturing, and we owe them 1.5 trillion dollars that’s like a magic act, they have taken everything, and we owe them money.’ Mr Trump did not tell his audience that bringing back jobs comes at a cost. China’s GDP per capita is around 7,500 dollars, while the GDP per capita of the US is about 55,000 dollars. The China rhetoric is unambiguous; China stole what belongs to the US, and there is no need to repay US debt owed to China. The world should brace for Mr Trump as the 45th president of the USA.”

Gefira Financial Bulletin #34 is available now

A hand of cards or the ongoing events
Anti-Semitism of Indigenous Europeans?
Greater Israel

President Trump wants to dictate to the whole world, but, taking into account the fact that the United States is now in conflict with Cuba, Venezuela, Iran, Syria, Russia, China and North Korea, a big war is not to be expected any time soon, so much so that the military interventions in Afghanistan, Iraq, Pakistan, Yemen and Libya appear to be inconclusive. Washington has an arsenal of other measures and these include:

fighting a war by proxy like the financing Afghan resistance to Russians in the eighties of the previous century.
imposing economic sanctions and blocking bank accounts. This has worked very well against small countries. It seems to be less effective in the case of Iran and almost ineffective in the case of Russia. China and Russia are accelerating their efforts to set up alternative payment systems and Europeans – recall Germany’s adherence to the Nord Stream 2 project in defiance of American pressure – are not willing to cooperate with the United States in this respect.
sparking coloured revolutions like the 2004 Orange Revolution in Ukraine or the 2009 Green Revolution in Iran. The strategy has not always worked as expected: the attempt to overthrow the Venezuelan government has failed.

As an aside we might notice that these revolutions might also be used the the West’s enemies. They can only occur in politically and economically unstable societies and that is – increasingly – the plight of the United States and Europe, both riven with ethnic and religious divides. Iran, Turkey, Russia and China can arm factions within Europe and thus destabilize these countries from the inside, as the Americans have done in Syria. The Turkish government has an extensive network of Diyanet mosques that can distribute weapons in the suburbs of Paris, Lyon and Marseilles.

Washington is in two minds about its foreign policy. The Democrats wanted to continue the interference in the Middle East and especially in Syria, where during President Barack Obama’s tenure the Jihadists of almost every political hue were armed to expel President Bashar al-Assad. The Jewish lobby in Washington is striving for a confrontation with Iran, which may prove to be costly, though. The coalition forged by Tehran with Lebanon, Syria, and Iraq is viewed as a direct threat to Israel, which means that Tel Aviv will sooner or later have President Trump bomb Iran. Recall the 1981 Israeli raid on the Iraqi nuclear reactor.

Source: AIPAC pro-Israel Lobby

Though most of Trump’s supporters are not interested in a war with Iran, the tensions are likely to escalate. The Turks have already indicated that they are not prepared to pay a higher price for oil and may try to circumvent sanctions. Rumour has it that the Chinese have stopped buying Iranian oil. Probably the Chinese brought this news to deceive the American administration. The world economy cannot afford a high price for energy. If the American voter sees the oil price rise at the pump as a result of another useless war, this will not help President Trump in the elections on November 3, 2020. Alas! Read more in Gefira 34

UKRAINE: Are we in for a white revolution, assassination or coup d’etat?

“I request you to release of duty the head of security, the attorney general and the minister of the defence,” said Ukraine’s President Volodymyr Zelensky in his inaugural speech which he delivered on 20th of May. Were the head of security, the attorney general and the minister of the defence listening? Obviously they were and this might spring them into action. Is it only their posts that the new president is after? Or their heads as well?

While addressing both houses of parliament, Volodymyr Zelensky appealed to the deputies to have new laws passed abolishing the immunity of the members of the legislative and imposing severe punishments for those who have enriched themselves illegally. Ultimately, much to the disbelief of the present, the new head of state said he was dissolving parliament with immediate effect, which means that also the deputies have just lost their well-paying jobs.

Will a coalition form between them and the three ministers who already know they are not tolerated by Volodymyr Zelensky? Is what the new president said a show of political zeal for his so numerous voters (73% of the ballot)? Is he backed by such strong powers that he does not need to reckon with the consequences?

Pundits have been and are still pointing to the political inexperience of the new president. Inexperienced he might well be, but even so would he be acting so foolishly right at the start of his tenure, turning his potential allies and important figures into his bitter enemies? Or were they his bitter enemies anyway and Volodymyr Zelensky merely forestalled their insidious action that is brewing anyway?
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