BOUblog

Boudine:

China’s Central Bank Injects $23.4 Billion as Yuan Intervention Drains Funds:
China’s central bank injected the most funds via open-market operations in six months and cut lenders’ reserve ratios, adding cash as it buys yuan to prop up the exchange rate and tries to arrest a stock-market slide.

US stocks reverse in final hour; Dow falls 205 points
The move erased some of the stock market’s heavy losses from a day earlier when concerns over a slowdown in China’s economy rattled global markets and knocked down the Dow Jones industrial average more than 588 points.

Chinese Central Banker Blames Fed For Market Rout:
While the western mainstream media meme is that “this is all China’s fault” – despite the fact that the real break happened after the FOMC Minutes last week – Xinhua reports that China central bank blames wide-spread expectations of a Fed rate hike in September for the global market rout… demanding The Fed “remain patient.”

US oil finishes below $40 for first time since 2009:
US benchmark West Texas Intermediate (WTI) for October delivery dropped $2.21 to $38.24 a barrel on the New York Mercantile Exchange, its first below-$40 close since February 2009.

Boudine:

Washington’s Financial / Currency War on China: Eclipsing of US Dollar by Yuan
Mahdi Darius NAZEMROAYA | 30.08.2015 |

The Chinese are in the process of displacing the monopoly of the US dollar. They are dropping their US Treasury bonds, stockpiling gold reserves, and opening regional distribution banks for their own national currency. This will give them easier access to capital markets and insulate them from financial manipulation by Washington and Wall Street.

Fearing the eclipsing of the US dollar and the Bretton Woods system by a rival financial architecture the US response has been an attempt to damage the Chinese markets and increase the value of China’s currency. China has responded through regulations in the market and then quantitative easing of its currency to maintain the low prices of Chinese manufactured goods and exports.

Using speculation as a psychological weapon and market manipulation, the US launched a financial strike against the Chinese. This was done through an attempt to sink or crash the Chinese stock market and hurt investor confidence in the Chinese economy and its stocks. Beijing, however, reacted quickly by imposing controls on investment withdrawals. This prevented the snowballing of stock selloffs and defused the US financial bomb.

As the price of renminbi began to rise Beijing began quantitative easing to devalue its national currency as a means of continuing export trade. The US Congress and White House began to loudly object. The accused the Chinese of financial manipulation and demanded that Beijing do nothing to readjust the value of the renminbi. What the folks in the Washington Beltway wanted was for the Chinese to let the value of the renminbi to rise as a means of disrupting China’s economy and market.

Boudine:

Why China May Cause the Next Crash duurt 11 minuten.

Boudine:

Return to Crisis: Things Keep Getting Worse

by Mike Whitney

While the slowdown in China may be the spark for recent volatility, it certainly isn’t the cause. There’s a growing consensus that the real problem originated in 2008 when the Fed refused to write-down the debts from the insolvent banking system thus creating the conditions for another calamitous financial crisis sometime in the future. And while the Fed’s zero rates and titanic doses of liquidity might have helped to ease the symptoms by flooding the system with cash, the underlying issues remain the same. Thus, as the medication has worn off, the virus has reappeared stronger than ever revealing the ineffectiveness of the Fed’s remedies and the urgent need for alternate therapies.

Stocks are massively overpriced due to the setting of interest rates below the rate of inflation which creates a subsidy for speculators. The policy has had the precise effect that the Fed intended, it has generated a humongous asset bubble in stocks and bonds transferring trillions of dollars to Wall Street banks and financial institutions. According to Yale economist Robert Shiller, the only time stocks have been this “high or higher were in 1929, 2000, and 2007—all moments before market crashes.”

While it’s always possible that the markets could stabilize or stocks could rebound sharply, it’s more likely that we have reached a tipping point where the excesses are about to be wrung from the system through an excruciating downturn followed by an inevitable currency crisis. We expect the six year-long fake recovery to end much like it did in 1929, where one demoralizing selloff followed the other, and where the crashing of stock prices fueled the publics distrust of the central bank, the government and all of the nations main institutions.

Stocks Tumble on Weak Chinese Data

Recession confirmed as Canada’s GDP shrank in 2nd quarter

Global Trade In Freefall: South Korea Exports Crash Most Since 2009

Putin Says Dump Dollar

By RT‎

September 01, 2015 “Information Clearing House” – “RT” – Russian President Vladimir Putin has drafted a bill that aims to eliminate the US dollar and the euro from trade between CIS countries.

This means the creation of a single financial market between Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and other countries of the former Soviet Union.

“This would help expand the use of national currencies in foreign trade payments and financial services and thus create preconditions for greater liquidity of domestic currency markets”, said a statement from Kremlin.

The bill would also help to facilitate trade in the region and help to achieve macro-economic stability.

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‘China V-Day parade sending multiple messages to Asia and West’ – Pepe Escobar duurt 9 minuten.

Boudine:

China: Reformers and Compradors

By James Petras

September 11, 2015 “Information Clearing House” – China’s wealthiest classes have secured their recent fortunes through various means, both legal and illegal: These include (1) the privatization of public enterprises; (2) the savage exploitation of cheap labor after destroying workers rights , protections and social welfare legislation; (3) large-scale, long-term corruption of government officials; (4) the often violent state-sponsored land-grabs from towns, villages and farmers and the land transfer to private investors; (5) real estate speculation; (6) changes in state regulatory policies leading to oligopolistic control of markets; (7) large-scale tax evasion, money laundering and offshore transfers of profits and (8) state policies dictating low wage and salaries and repressing workers collective action.

The Communist leadership’s pursuit of an ‘export-oriented’ growth model, based on reducing labor costs to secure competitive advantages in world markets, coincided with the emergence of aggressive Chinese capitalists intent on increasing their profits and concentrating private wealth.