New Gulf currency ‘Khaleeji’ poised to be Gold backed – Another Nail in the USD Coffin?

New Currency Symbol for the Khaleeji (which means of the Gulf)

• As reported in my earlier post Single Regional Currencies – Gulf Cooperation Council and Latin America , many counties are moving quickly to create  a single regional currency to replace the USD. The USD is viewed by many as a severe risk to the world economy. Its appreciation since last July has caused severe disruption to many economies. Eastern European countries that borrowed heavily in USD found themselves in deep deep trouble as the USD rose against their local currencies. Their debt burden increased astronomically. Many countries in Eastern Europe are about to default on their debts.
   
• The deleveraging can only go on for so long. Once completed the USD will resume it downward momentum and plunge to unheard of level. The USD is as good as toast. The Middle East Gulf Cooperation Council (GCC) is moving aggressively to limit its exposure to the upcoming collapse of the USD. It has now formalized the new regional currency Khaleeji which will be back by Gold.
   
• Stefan Pernar reports in New Gulf currency ‘Khaleeji’ poised to be Gold backed to remove ‘Riba’ :
    
  Again, bad news about this week and even those of us who made all the right moves early on can not help but feel anxious about what seems to come next: act two of the global financial and thus economic meltdown . This is indeed not the time for a little ‘I-told-you-so’ victory dance. Yes, gold as well as silver are storming to new heights .
   
  Yes, global trade collapses . Yes, Asian economies are in free fall as a result. Yes, Japan’s economy is crashing into an economic depression .  And yes again, global stock markets seem to inevitably march forward and over the edge of a precipice , while eastern European countries, the UK as well as Switzerland are following the nosedive of the Icelandic dodo falcon. Once the dust has settled we may have very well witnessed the worst recession in 100 years . On the background of this picture, news of GM considering to file for chapter 11 and China continuing to prep the world for a departure from US bonds comes almost as an afterthought. Everything points to something big happening real soon now and it smells like panic is taking over. Nothing new in the west nor the east – however watch the middle. The middle east to be specific.
   
  There is something that is not only new, but something that for the most part has been overlooked by the majority of the news outlets that at least I use to frequent. When GCC leaders concluded their 29th annual summit meeting in Muscat, Oman at the 31st of Dec 2008 with a final approval for the creation of a single currency for the six-nation economic bloc the I certainly did not hear about. Meet the Khaleeji . It is the upcoming common currency of the Gulf Cooperation Council (GCC) scheduled to go live in 2010 . In light of the worsening financial crisis earlier worries of a delay until 2015 have apparently been dispelled.
   
  That I have not heard about the Khaleeji until about a week go is surprising to me for two reasons. Firstly, the common currency for the GCC has apparently been mulled since at least 2002 by the IMF giving more than enough time for the word to spread. Secondly – and here is when it becomes interesting: speculation is about for the GCC currency to be backed by gold . And why shouldn’t it ? Not only has the introduction of a then still called ‘ Islamic Gold Dinar ‘ as a global currecny been suggested since early 2001 . No, in addition a group of Saudi businessmen has purchased gold to the tune of $3.5 Billion in an off market transaction in November 2008.
   
  Add to that impressions of the world renowned Dubai Gold Souk and I would be very surprised if gold does not at least become a major component in the basket of goods lending punch to the new currency. 
   

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Jim Rogers – Federal Reserve Caused the Economic Crisis. Abolish the World Bank & IMF !

Source : Paul Joseph Watson

• In an interview with Sir David Frost on Al Jazeera television, veteran investor Jim Rogers pinned the blame for the economic crisis squarely at the feet of the Federal Reserve, and said that the World Bank and the IMF should be abolished, not given more power, if a recovery is to be made.
   
• Rogers strongly slammed Obama’s stimulus package, pointing out that more good money was being thrown after bad, and that the bailouts were only making things worse. The veteran investor said that the U.S. was following the same disastrous policies as Japan in propping up companies that should be allowed to fail, and that the same consequences would be reaped as much as 20 years into the future.
   
• The way the system is supposed to work, when times like this come, the solid people, the competent people, take over the assets from the incompetent people and then you start over again from a sound base, this is what South Korea did, this is what Russia did, and they did fine. What they’re doing this time is they’re taking the assets away from the competent people and giving them to the incompetent people and saying now you compete with the competent people with their assets and their money – it’s terrible economics and it’s not going to work, it hasn’t worked before and it’s not going to work this time,” said Rogers.
   
• Rogers said that price had to be paid for 15 years of excess, but that the crisis could have been overcome in two or three years had zombie companies and banks been allowed to go to the wall.
   
• “The central bank in the United States, the Federal Reserve, would not let people fail,” said Rogers, pointing out that had former Fed chairman Alan Greenspan let Long Term Capital Management fail in 1998, both Bear Stearns, Fannie Mae and Lehman Brothers would still be in business, “because people would have taken such a hit, and so many people would have been fired, these bozos that were doing this sort of thing, that you would not have had these problems.”
   
• “The way the system is supposed to work is when you make a mistake you go broke, he refused to let people go broke, he saved his friends and now we’re all having to pay for them,” added Rogers.
   
• Asked if he had any respect for the World Bank and the IMF, Rogers responded, “Zero….the best thing that would happen would be if we could abolish the World Bank and the IMF, they were set up in 1945 and ’46 with very sound goals and very sound aspirations – they have far far far left behind those aspirations and goals, they’re now run by people who do little more than take care of themselves….look at their projects and you would be mortified.”

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Eastern Europe Economic Collapse & Looming Debt Defaults

Source : http://www.rec.org/ 

• The economic condition in Eastern Europe is far worse than many thought. I have highlighted the riots and social unrest in Latvia and Lithuania earlier. Eastern European economies are collapsing like dominoes and they will take Western Europe down. Mike Whitney writes in Eastern European Economies About to Explode in a Chain Reaction of Debt Defaults :
    
  Eastern Europe is about to blow. If it does, it could take much of the EU with it. It’s an emergency situation but there are no easy solutions. The IMF doesn’t have the resources for a bailout of this size and the recession is spreading faster than relief efforts can be organized. Finance ministers and central bankers are running in circles trying to put out one fire after another. Its only a matter of time before they are overtaken by events. If one country is allowed to default, the dominoes could begin to tumble through the whole region. This could trigger dramatic changes in the political landscape. The rise of fascism is no longer out of the question. 
    ……….
  Foreign capital is fleeing at an alarming rate; nearly two-thirds gone in matter of months. Deflation is pushing down asset prices, increasing unemployment, and compounding the debt-burden of financial institutions. It’s the same everywhere. The economies are being hollowed out and stripped of capital. Ukraine is teetering on the brink of bankruptcy. Poland, Latvia, Lithuania, Hungary have all slipped into a low-grade depression. The countries that followed Washington’s economic regimen have suffered the most. They bet that debt-fueled growth and exports would lead to prosperity. That dream has been shattered. They haven’t developed their consumer markets, so demand is weak. Capital is scarce and businesses are being forced to deleverage to avoid default. All of Eastern Europe has gotten a margin call. They need extra funds to cover the falling value of their equity. They need a lifeline from the IMF or their economies will continue to crumble. 
    ….
  Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region’s GDP. Good luck. The credit window has slammed shut.
    
  Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets. They are five times more exposed to this latest bust than American or Japanese banks, and they are 50pc more leveraged (IMF data). (Ambrose Evans-Pritchard UK Telegraph) 
     
• This looks like 1920-1939 all over again. The trigger for World War 2 was Europe. Mike Whitney mentioned above : “The rise of fascism is no longer out of the question.” . This statement is pretty startling. It harkens back to the rise of National Socialism – Nazi Party. Remember too: Italy’s Mussolini !  Is the world heading towards another World War ?
   
• The collapse of Eastern Europe will set off a chain reaction and bring down Western Europe. So the EU will not get off likely. This depression is spreading out of control like the recent wild fire in Australia.
   
• With the collapse of Eastern European economies and the likely default of all their debts, their currencies are crumbling. Eastern European currencies crumble as fears of debt crisis grow :
   
  Hungary’s forint fell to an all-time low on Monday, and Poland’s zloty slumped to the lowest in five years on plunging industrial output. Half of all loans to the private sector in Poland are in foreign currencies so borrowers face a severe debt shock after the 40pc fall of the zloty against the euro since August.
    
  “We’re nearing the level were things could get out of hand,” said Hans Redeker, currency chief strategist at BNP Paribas.
   
  The mushrooming crisis has already started to spill over into Germany’s debt markets, lifting credit default swaps on German five-year bonds to a record 70 basis points. The gap between French and German CDS spreads has narrowed abruptly for the first time since the credit crisis began. “Investors are beginning to ask whether Germany is going to have to pay for the rescue of Eastern and Central Europe,” he said.
   
  A report by Moody’s released on Tuesday said the region’s banks were coming under severe stress as the property bust combines with a rising debt burden. “Local currency depreciation is a major risk to East Europe banks,” it said.
   
  There are contagion worries for Western banks that have lent $1.74 trillion (£1.22bn) to the ex-Soviet bloc — split between $1 trillion in foreign loans and $700bn in local currency debt through subsidiaries.
   
  Austria’s banks are the most exposed with the share of risk-weighted assets tied to the region reaching 54pc for Raffeisen and 38pc for Erste Bank. The exposure of Germany’s Bayern Bank is 48pc, Italy’s UniCredit is 45pc, and Swedbank is 29pc.
   
  The region needs to roll over $400bn in foreign debts this year, equivalent to a third of total GDP, raising concerns that it may need a massive rescue programme from the International Monetary Fund and the European institutions.
    
  Dominique Strauss-Kahn, the IMF’s chief, said he expected a “second wave of countries to come knocking” after earlier bail-outs of Latvia, Hungary, Ukraine, and Belarus — as well as Iceland and Pakistan. The fund is scrambing to raise more money to cover the possible eruption of major crises in several countries simultaneously. The Japanese have already agreed to supply an extra $200bn. 
   
• We are on the knife edge of a worldwide collapse, at most a few weeks away. Stock and bond markets worldwide will collapse pretty soon. Last night’s DJIA plunge of 298 points is a harbinger of the financial tsunami to come!

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Russian Industrial Output Falls 20% – Stock Market Halted

• The Russian bear is feeling the chill of economic winter. Financial Times reports in Russian industrial output falls 20% :
    
  Russia’s industrial production plunged 20 per cent in January, a fall that could herald a much larger than expected drop in gross domestic product this year, economists fear.
   
  The decline was its largest month to month drop since records began seven years ago. “The horrendous industrial production data in January have left no doubt that the economy has come to a screeching halt,” said Ivan Tchakarov, chief Russia economist for Nomura, the investment bank. “This indicates that the combined effect of the credit squeeze in the banking sector and falling global and domestic demand has filtered through to the real economy.”
    
  Russia’s president Dmitry Medvedev underlined the Kremlin’s concern with the worsening situation when he sacked four regional governors yesterday, the first time so many senior officials have been purged in years.
      …..
  Russia was hit hard by the combination of the global credit crunch and the falling price of oil last autumn. A one-third fall in the value of the rouble since the summer has crippled demand at home and caused an artificial shortage of credit. Russian officials are already describing their country as in recession.
   
  Igor Yurgens, an adviser to Mr Medvedev, said the government was mapping out scenarios for growth to fall from 6.3 per cent in 2008 to anywhere between zero and minus 10 per cent this year depending on whether the oil price falls further, whether international credit markets reopen and on how sharply the global recession hits China.
    ….
  Economists linked the sharp fall in January output to the virtual paralysis of the financial system as the government sped up a rouble devaluation that created a lucrative one-way bet for anyone to change roubles for dollars, rather than lend them to the real economy.
   
  Bankers say non-payments spiralled during the devaluation and rouble liquidity dried up. The banking system is still frozen with most second and third tier borrowers unable to find funds. However, the rouble appears to have stabilised, at least temporarily, and authorities are hoping the banks will begin lending again. 
   
• Yesterday (17 Feb) Russian stock market crashed again and trading was halted. Russian stocks tumble, trading suspended :
    
  Russian stocks tumbled Tuesday, prompting the RTS and the Micex stock exchanges to suspend trading for one hour at 4:05 p.m. Moscow time. The dollar-denominated RTS stock index plunged 9.4%, while the ruble-denominated Micex stock index fell 9.6%. The decline in Russia followed a tumble in oil prices and declines on global stock markets. In New York, the Market Vectors Russia ETF which tracks the Russian markets, tumbled 14.4%.

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John Williams – Hyper-Inflation Down the Road!

• John Williams of www.shadowstats.com, gives his views on the deflation-inflation debate. Although we are facing deflation now, with the amount of money the FedRes has created out of thin air, hyper-inflation will kick in soon.
   
• The American government is bankrupt with debts of US$65.5T. There is no way of paying off these debts apart from hyper-inflating it away! John recommends buying Gold.

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Ron Paul – Stimulus is a Waste of Money!

• Only 5 copies of a 1000 pages Bill for the entire House to read in less than 24 hours? This US$787B stimulus is a massive Con Job ! Sheeple are being fleeced big time.
   
• Ron Paul is right : it is a Waste of Money. The bankster controlled government is the cause of our problems. Abolish the FedRes, let the printing of money be controlled by the government as was the case before 1913. Bring back the Gold Standard.
   
• Stop all these bankster, military industrial complex (MIC) created wars. Reduce defence spending and stop trying to rule the world. Use the savings to rebuild the infrastructure of America.

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GEAB Forecast – 4th quarter 2009 – Global Systemic Crisis: Global Geopolitical Dislocation !

• Global Europe Anticipation Bulletin (GEAB) has released their latest forecast N°32. They are anticipating the collapse of the USD and America. The result is global geopolitical unrest and likely war. As America collapses, there will be a power vacuum. The world will re-align itself into various region with similar interest for mutual survival. GEAB N°32 :
   
  Back in February 2006, LEAP/E2020 estimated that the global systemic crisis would unfold in 4 main structural phases: trigger, acceleration, impact and decanting phases. This process enabled us to properly anticipate events until now. However our team has now come to the conclusion that, due to the global leaders’ incapacity to fully realise the scope of the ongoing crisis (made obvious by their determination to cure the consequences rather than the causes of this crisis), the global systemic crisis will enter a fifth phase in the fourth quarter of 2009, a phase of global geopolitical dislocation.
   
  According to LEAP/E2020, this new stage of the crisis will be shaped by two major processes happening in two parallel sequences:
   
  A. Two major processes:
  1. Disappearance of the financial base (Dollar & Debt) all over the world
  2. Fragmentation of the interests of the global system’s big players and blocks
   
  B. Two parallel sequences:
  1. Quick disintegration of the current international system altogether 2. Strategic dislocation of big global players.
   
  We had hoped that the decanting phase would give the world’s leaders the opportunity to draw the proper conclusions from the collapse of the global system prevailing since WWII. Alas, at this stage, it is no longer possible to be optimistic in this regard (1). In the United States, as in Europe, China and Japan, leaders persist in reacting as if the global system has only fallen victim to some temporary breakdown, merely requiring loads of fuel (liquidities) and other ingredients (rate drops, repurchase of toxic assets, bailouts of semi-bankrupt industries,…) to reboot it. In fact (and this is what LEAP/E2020 means ever since February 2006 using the expression « global systemic crisis”), the global system is simply out of order; a new one needs to be built instead of striving to save what can no longer be saved. 


Orders in the manufacturing sector, Quarter 4 2008 (Japan, Eurozone, United Kingdom, China, India) - Sources : MarketOracle / JPMorgan

• Our leaders have messed up and did not implement corrective changes that will resolve the current crisis. But instead have bowed to the money power of the banksters. GEAB adds :
     
  History is not known to be patient, therefore the fifth phase of the crisis will ignite this required process of reconstruction, but in a harsh manner: by means of a complete dislocation of the present system, with particularly tragic consequences in the case of several big global players, as described in this 32nd issue of the GEAB (see the two parallel sequences).
   
  According to LEAP/E2020, there is only one very small launch window left to prevent this scenario from shaping up: the next four months, before summer 2009. Practically speaking, the April 2009 G20 Summit is probably the last chance to put on the right tracks the forces at play, i.e. before the sequence of UK and then US defaults begin (2). Failing which, they will lose their capacity to control events (3), including those in their own countries for many of them; and the world will enter this phase of geopolitical dislocation like a “drunken boat”. At the end of this phase of geopolitical dislocation, the world will look more like Europe in 1913 rather than our world in 2007.
   
  Because they persisted in bearing the ever-increasing weight of the ongoing crisis, most states, including the most powerful ones, failed to realise that they were planning their own trampling under the weight of History, forgetting that they were merely man-made organisations, only surviving because they matched the interest of a large majority. In this 32nd edition of the GEAB, LEAP/E2020 has chosen to anticipate the fallout of this phase of geopolitical dislocation so far as it affects the United-States, EU, China and Russia.  
   
  It is high time for the general population and socio-political players to get ready to face very hard times during which whole segments of our societies will be modified (4), temporarily disappear or even permanently vanish. For instance, the breakdown of the global monetary system we anticipated for summer 2009 will indeed entail the collapse of the US dollar (and all USD-denominated assets), but it will also induce, out of psychological contagion, a general loss of confidence in paper money altogether (these consequences give rise to a number of recommendations in this issue of the GEAB).
   
  Last but not least, our team now estimates that the most monolithic, the most « imperialistic » political entities (5) will suffer the most from this fifth phase of the crisis. Some states will indeed experience a strategic dislocation undermining their territorial integrity and their influence worldwide. As a consequence, other states will suddenly lose their protected situations and be thrust into regional chaos. 
       
• As mentioned in my earlier posts, we are entering a period that looks increasingly like the period in between the 2 World Wars. Great social upheaval, riots, poverty, social injustice, high unemployment…. and it led to World War 2. As the sole remaining super power America collapses, the world will be fragmented into sub regions. And new regional powers will rise and assert themselves. Countries that were once a protectorate of America will feel vulnerable. My feeling is that the EU will bite the economic depression bullet, expand and move on. Russia and its allies will tough it out. How these geopolitical dislocations will play out for Asia, Americas and Africa remain to be seen. Asia will no doubt align itself with China and Japan. Will Africa be merged with the Americas? Who knows?
   
• Keep in mind what happened last year on 1st Oct 2008, America formally activated its AFRICOM, the United States Africa Command :
   
  The United States Africa Command (USAFRICOM or AFRICOM) is a Unified Combatant Command of the United States Department of Defense that is responsible for U.S. military operations and military relations with 53 African nations – an area of responsibility covering all of Africa except Egypt. Africa Command was established October 1, 2007 as a temporary sub-unified command under U.S. European Command, which for more than two decades was responsible for U.S. military relations with more than 40 African nations. Africa Command was formally activated October 1, 2008, during a public ceremony at the Pentagon attended by representatives of African nations posted in Washington, D.C.
   

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