Sunday, May 24, 2015

Secret Pentagon Report Reveals US "Created" ISIS As A "Tool" To Overthrow Syria's President Assad

From the first sudden, and quite dramatic, appearance of the fanatical Islamic group known as ISIS which was largely unheard of until a year ago, on the world's stage and which promptly replaced the worn out and tired al Qaeda as the world's terrorist bogeyman, we suggested that the "straight to beheading YouTube clip" purpose behind the Saudi Arabia-funded Islamic State was a simple one: use the Jihadists as the vehicle of choice to achieve a political goal: depose of Syria's president Assad, who for years has stood in the way of a critical Qatari natural gas pipeline, one which could dethrone Russia as Europe's dominant - and belligerent - source of energy, reaching an interim climax with the unsuccessful Mediterranean Sea military build up of 2013, which nearly resulted in quasi-world war.
The narrative and the plotline were so transparent, even Russia saw right through them. Recall from September of last year:
If the West bombs Islamic State militants in Syria without consulting Damascus, LiveLeak reports that the anti-ISIS alliance may use the occasion to launch airstrikes against President Bashar Assad’s forces, according to Russian Foreign Minister Sergey Lavrov. Clearly comprehending that Obama's new strategy against ISIS in Syria is all about pushing the Qatar pipeline through (as was the impetus behind the 2013 intervention push), Russia is pushing back noting that the it is using ISIS as a pretext for bombing Syrian government forceand warning that "such a development would lead to a huge escalation of conflict in the Middle East and North Africa."
But it's one thing to speculate; it's something entirely different to have hard proof.
And while speculation was rife that just like the CIA-funded al Qaeda had been used as a facade by the US to achieve its own geopolitical and national interests over the past two decades, so ISIS was nothing more than al Qaeda 2.0, there was no actual evidence of just this.
That may all have changed now when a declassified secret US government document obtained by the public interest law firm, Judicial Watch, shows that Western governments deliberately allied with al-Qaeda and other Islamist extremist groups to topple Syrian dictator Bashir al-Assad.
According to investigative reporter Nafeez Ahmed in Medium, the "leaked document reveals that in coordination with the Gulf states and Turkey, the West intentionally sponsored violent Islamist groups to destabilize Assad, despite anticipating that doing so could lead to the emergence of an ‘Islamic State’ in Iraq and Syria (ISIS).
According to the newly declassified US document, the Pentagon foresaw the likely rise of the ‘Islamic State’ as a direct consequence of the strategy, but described this outcome as a strategic opportunity to “isolate the Syrian regime.” 
And not just that: as we reported last week, now that ISIS is running around the middle east, cutting people's heads of in 1080p quality and Hollywood-quality (perhaps literally) video, the US has a credible justification to sell billions worth of modern, sophisticated weapons in the region in order to "modernize" and "replenish" the weapons of such US allies as Saudi Arabia, Israel and Iraq.
But that the US military-industrial complex is a winner every time war breaks out anywhere in the world (usually with the assistance of the CIA) is clear to everyone by now. What wasn't clear is just how the US predetermined the current course of events in the middle east.
Now, thanks to the following declassified report, we have a far better understanding of not only how current events in the middle east came to be, but what America's puppermaster role leading up to it all, was. 
From Nafeez Ahmed: Secret Pentagon report reveals West saw ISIS as strategic asset Anti-ISIS coalition knowingly sponsored violent extremists to ‘isolate’ Assad, rollback ‘Shia expansion', originally posted in Medium.
Hypocrisy

The revelations contradict the official line of Western government on their policies in Syria, and raise disturbing questions about secret Western support for violent extremists abroad, while using the burgeoning threat of terror to justify excessive mass surveillance and crackdowns on civil liberties at home.
Among the batch of documents obtained by Judicial Watch through a federal lawsuit, released earlier this week, is a US Defense Intelligence Agency (DIA) document then classified as “secret,” dated 12th August 2012.
The DIA provides military intelligence in support of planners, policymakers and operations for the US Department of Defense and intelligence community.
So far, media reporting has focused on the evidence that the Obama administration knew of arms supplies from a Libyan terrorist stronghold to rebels in Syria.
Some outlets have reported the US intelligence community’s internal prediction of the rise of ISIS. Yet none have accurately acknowledged the disturbing details exposing how the West knowingly fostered a sectarian, al-Qaeda-driven rebellion in Syria.
Charles Shoebridge, a former British Army and Metropolitan Police counter-terrorism intelligence officer, said:
“Given the political leanings of the organisation that obtained these documents, it’s unsurprising that the main emphasis given to them thus far has been an attempt to embarrass Hilary Clinton regarding what was known about the attack on the US consulate in Benghazi in 2012. However, the documents also contain far less publicized revelations that raise vitally important questions of the West’s governments and media in their support of Syria’s rebellion.”

The West’s Islamists

The newly declassified DIA document from 2012 confirms that the main component of the anti-Assad rebel forces by this time comprised Islamist insurgents affiliated to groups that would lead to the emergence of ISIS. Despite this, these groups were to continue receiving support from Western militaries and their regional allies.
Noting that “the Salafist [sic], the Muslim Brotherhood, and AQI [al-Qaeda in Iraq] are the major forces driving the insurgency in Syria,” the document states that “the West, Gulf countries, and Turkey support the opposition,” while Russia, China and Iran “support the [Assad] regime.”
The 7-page DIA document states that al-Qaeda in Iraq (AQI), the precursor to the ‘Islamic State in Iraq,’ (ISI) which became the ‘Islamic State in Iraq and Syria,’ “supported the Syrian opposition from the beginning, both ideologically and through the media.”
The formerly secret Pentagon report notes that the “rise of the insurgency in Syria” has increasingly taken a “sectarian direction,” attracting diverse support from Sunni “religious and tribal powers” across the region.
In a section titled ‘The Future Assumptions of the Crisis,’ the DIA report predicts that while Assad’s regime will survive, retaining control over Syrian territory, the crisis will continue to escalate “into proxy war.”
The document also recommends the creation of “safe havens under international sheltering, similar to what transpired in Libya when Benghazi was chosen as the command centre for the temporary government.”
In Libya, anti-Gaddafi rebels, most of whom were al-Qaeda affiliated militias, were protected by NATO ‘safe havens’ (aka ‘no fly zones’).

‘Supporting powers want’ ISIS entity

In a strikingly prescient prediction, the Pentagon document explicitly forecasts the probable declaration of “an Islamic State through its union with other terrorist organizations in Iraq and Syria.”
Nevertheless, “Western countries, the Gulf states and Turkey are supporting these efforts” by Syrian “opposition forces” fighting to “control the eastern areas (Hasaka and Der Zor), adjacent to Western Iraqi provinces (Mosul and Anbar)”:
“… there is the possibility of establishing a declared or undeclared Salafist Principality in eastern Syria (Hasaka and Der Zor), and this is exactly what the supporting powers to the opposition want, in order to isolate the Syrian regime, which is considered the strategic depth of the Shia expansion (Iraq and Iran).”
The secret Pentagon document thus provides extraordinary confirmation that the US-led coalition currently fighting ISIS, had three years ago welcomed the emergence of an extremist “Salafist Principality” in the region as a way to undermine Assad, and block off the strategic expansion of Iran. Crucially, Iraq is labeled as an integral part of this “Shia expansion.”
The establishment of such a “Salafist Principality” in eastern Syria, the DIA document asserts, is “exactly” what the “supporting powers to the [Syrian] opposition want.” Earlier on, the document repeatedly describes those “supporting powers” as “the West, Gulf countries, and Turkey.”
Further on, the document reveals that Pentagon analysts were acutely aware of the dire risks of this strategy, yet ploughed ahead anyway.
The establishment of such a “Salafist Principality” in eastern Syria, it says, would create “the ideal atmosphere for AQI to return to its old pockets in Mosul and Ramadi.” Last summer, ISIS conquered Mosul in Iraq, and just this month has also taken control of Ramadi.
Such a quasi-state entity will provide:
“… a renewed momentum under the presumption of unifying the jihad among Sunni Iraq and Syria, and the rest of the Sunnis in the Arab world against what it considers one enemy. ISI could also declare an Islamic State through its union with other terrorist organizations in Iraq and Syria, which will create grave danger in regards to unifying Iraq and the protection of territory.”
The 2012 DIA document is an Intelligence Information Report (IIR), not a “finally evaluated intelligence” assessment, but its contents are vetted before distribution. The report was circulated throughout the US intelligence community, including to the State Department, Central Command, the Department of Homeland Security, the CIA, FBI, among other agencies.
In response to my questions about the strategy, the British government simply denied the Pentagon report’s startling revelations of deliberate Western sponsorship of violent extremists in Syria. A British Foreign Office spokesperson said:
“AQ and ISIL are proscribed terrorist organisations. The UK opposes all forms of terrorism. AQ, ISIL, and their affiliates pose a direct threat to the UK’s national security. We are part of a military and political coalition to defeat ISIL in Iraq and Syria, and are working with international partners to counter the threat from AQ and other terrorist groups in that region. In Syria we have always supported those moderate opposition groups who oppose the tyranny of Assad and the brutality of the extremists.”
The DIA did not respond to request for comment.

Strategic asset for regime-change

Security analyst Shoebridge, however, who has tracked Western support for Islamist terrorists in Syria since the beginning of the war, pointed out that the secret Pentagon intelligence report exposes fatal contradictions at the heart of official pronunciations:
“Throughout the early years of the Syria crisis, the US and UK governments, and almost universally the West’s mainstream media, promoted Syria’s rebels as moderate, liberal, secular, democratic, and therefore deserving of the West’s support. Given that these documents wholly undermine this assessment, it’s significant that the West’s media has now, despite their immense significance, almost entirely ignored them.”
According to Brad Hoff, a former US Marine who served during the early years of the Iraq War and as a 9/11 first responder at the Marine Corps Headquarters in Battalion Quantico from 2000 to 2004, the just released Pentagon report for the first time provides stunning affirmation that:
“US intelligence predicted the rise of the Islamic State in Iraq and the Levant (ISIL or ISIS), but instead of clearly delineating the group as an enemy, the report envisions the terror group as a US strategic asset.”
Hoff, who is managing editor of Levant Report — ?an online publication run by Texas-based educators who have direct experience of the Middle East?—?points out that the DIA document “matter-of-factly” states that the rise of such an extremist Salafist political entity in the region offers a “tool for regime change in Syria.”
The DIA intelligence report shows, he said, that the rise of ISIS only became possible in the context of the Syrian insurgency?—?“there is no mention of US troop withdrawal from Iraq as a catalyst for Islamic State’s rise, which is the contention of innumerable politicians and pundits.” The report demonstrates that:
“The establishment of a ‘Salafist Principality’ in Eastern Syria is ‘exactly’ what the external powers supporting the opposition want (identified as ‘the West, Gulf Countries, and Turkey’) in order to weaken the Assad government.”
The rise of a Salafist quasi-state entity that might expand into Iraq, and fracture that country, was therefore clearly foreseen by US intelligence as likely?—?but nevertheless strategically useful?—?blowback from the West’s commitment to “isolating Syria.”

Complicity

Critics of the US-led strategy in the region have repeatedly raised questions about the role of coalition allies in intentionally providing extensive support to Islamist terrorist groups in the drive to destabilize the Assad regime in Syria.
The conventional wisdom is that the US government did not retain sufficient oversight on the funding to anti-Assad rebel groups, which was supposed to be monitored and vetted to ensure that only ‘moderate’ groups were supported.
However, the newly declassified Pentagon report proves unambiguously that years before ISIS launched its concerted offensive against Iraq, the US intelligence community was fully aware that Islamist militants constituted the core of Syria’s sectarian insurgency.
Despite that, the Pentagon continued to support the Islamist insurgency, even while anticipating the probability that doing so would establish an extremist Salafi stronghold in Syria and Iraq.
As Shoebridge told me, “The documents show that not only did the US government at the latest by August 2012 know the true extremist nature and likely outcome of Syria’s rebellion”?—?namely, the emergence of ISIS?—?“but that this was considered an advantage for US foreign policy. This also suggests a decision to spend years in an effort to deliberately mislead the West’s public, via a compliant media, into believing that Syria’s rebellion was overwhelmingly ‘moderate.’”
Annie Machon, a former MI5 intelligence officer who blew the whistle in the 1990s on MI6 funding of al-Qaeda to assassinate Libya’s former leader Colonel Gaddafi, similarly said of the revelations:
“This is no surprise to me. Within individual countries there are always multiple intelligence agencies with competing agendas.”
She explained that MI6’s Libya operation in 1996, which resulted in the deaths of innocent people, “happened at precisely the time when MI5 was setting up a new section to investigate al-Qaeda.”
This strategy was repeated on a grand scale in the 2011 NATO intervention in Libya, said Machon, where the CIA and MI6 were:
“… supporting the very same Libyan groups, resulting in a failed state, mass murder, displacement and anarchy. So the idea that elements of the American military-security complex have enabled the development of ISIS after their failed attempt to get NATO to once again ‘intervene’ is part of an established pattern. And they remain indifferent to the sheer scale of human suffering that is unleashed as a result of such game-playing.”

Divide and rule

Several US government officials have conceded that their closest allies in the anti-ISIS coalition were funding violent extremist Islamist groups that became integral to ISIS.
US Vice President Joe Biden, for instanceadmitted last year that Saudi Arabia, the UAE, Qatar and Turkey had funneled hundreds of millions of dollars to Islamist rebels in Syria that metamorphosed into ISIS.
But he did not admit what this internal Pentagon document demonstrates?—?that the entire covert strategy was sanctioned and supervisedby the US, Britain, France, Israel and other Western powers.
The strategy appears to fit a policy scenario identified by a recent US Army-commissioned RAND Corp report.
The report, published four years before the DIA document, called for the US “to capitalise on the Shia-Sunni conflict by taking the side of the conservative Sunni regimes in a decisive fashion and working with them against all Shiite empowerment movements in the Muslim world.”
The US would need to contain “Iranian power and influence” in the Gulf by “shoring up the traditional Sunni regimes in Saudi Arabia, Egypt, and Pakistan.” Simultaneously, the US must maintain “a strong strategic relationship with the Iraqi Shiite government” despite its Iran alliance.
The RAND report confirmed that the “divide and rule” strategy was already being deployed “to create divisions in the jihadist camp. Today in Iraq such a strategy is being used at the tactical level.”
The report observed that the US was forming “temporary alliances” with al-Qaeda affiliated “nationalist insurgent groups” that have fought the US for four years in the form of “weapons and cash.” Although these nationalists “have cooperated with al-Qaeda against US forces,” they are now being supported to exploit “the common threat that al-Qaeda now poses to both parties.”
The 2012 DIA document, however, further shows that while sponsoring purportedly former al-Qaeda insurgents in Iraq to counter al-Qaeda,Western governments were simultaneously arming al-Qaeda insurgents in Syria.
The revelation from an internal US intelligence document that the very US-led coalition supposedly fighting ‘Islamic State’ today, knowingly created ISIS in the first place, raises troubling questions about recent government efforts to justify the expansion of state anti-terror powers.
In the wake of the rise of ISIS, intrusive new measures to combat extremism including mass surveillance, the Orwellian ‘prevent duty’ and even plans to enable government censorship of broadcasters, are being pursued on both sides of the Atlantic, much of which disproportionately targets activists, journalists and ethnic minorities, especially Muslims.
Yet the new Pentagon report reveals that, contrary to Western government claimsthe primary cause of the threat comes from their own deeply misguided policies of secretly sponsoring Islamist terrorism for dubious geopolitical purposes.


Dr Nafeez Ahmed is an investigative journalist, bestselling author and international security scholar. A former Guardian writer, he writes the ‘System Shift’ column for VICE’s Motherboard, and is also a columnist for Middle East Eye. He is the winner of a 2015 Project Censored Award, known as the ‘Alternative Pulitzer Prize’, for Outstanding Investigative Journalism for his Guardian work, and was selected in the Evening Standard’s ‘Power 1,000’ most globally influential Londoners.
Nafeez has also written for The Independent, Sydney Morning Herald, The Age, The Scotsman, Foreign Policy, The Atlantic, Quartz, Prospect, New Statesman, Le Monde diplomatique, New Internationalist, Counterpunch, Truthout, among others. He is the author of A User’s Guide to the Crisis of Civilization: And How to Save It (2010), and the scifi thriller novel ZERO POINT, among other books. His work on the root causes and covert operations linked to international terrorism officially contributed to the 9/11 Commission and the 7/7 Coroner’s Inquest.

Friday, May 22, 2015

JPMorgan Officially Apologizes For Being A Criminal Market Manipulator

Presented with little comment, aside to ask - how many 'people' went to jail for this?
MAY 20, 2015 DISCLOSURE NOTICE
The purpose of this notice is to disclose certain practices of JPMorgan Chase & Co. and its affiliates (together, “JPMorgan Chase” or the “Firm”) when it acted as a dealer, on a principal basis, in the spot foreign exchange (“FX”) markets. We want to ensure that there are no ambiguities or misunderstandings regarding those practices.
To begin, conduct by certain individuals has fallen short of the Firm’s expectations. The conduct underlying the criminal antitrust charge by the Department of Justice is unacceptable. Moreover, as described in our November 2014 settlement with the U.K. Financial Conduct Authority relating to our spot FX business, in certain instances during the period 2008 to 2013, certain employees intentionally disclosed information relating to the identity of clients or the nature of clients’ activities to third parties in order to generate revenue for the Firm. This also was contrary to the Firm’s policies, unacceptable, and wrong. The Firm does not tolerate such conduct and already has committed significant resources in strengthening its controls surrounding our FX business.
The Firm has engaged in other practices on occasion, including:
  • We added markup to price quotes using hand signals and/or other internal arrangements or communications. Specifically, when obtaining price quotes for bids or offers from the Firm, certain clients requested to be placed on open telephone lines, meaning the client could hear pricing not only from a salesperson, but also from the trader who would be executing the client’s order. In certain instances, certain of our salespeople used hand signals to indicate to the trader to add markup to the price being quoted to the client on the open telephone line, so as to avoid informing the client listening on the phone of the markup and/or the amount of the markup. For example, prior to agreement between the client and the Firm to transact for the purchase of €100, a salesperson would, in certain instances, indicate with hand signals that the trader should add two pips of markup in providing a specific price to the client (e.g., a EURUSD rate of 1.1202, rather than 1.1200) in order to earn the Firm markup in connection with the prospective transaction.
  • We have, without informing clients, worked limit orders at levels (i.e., prices) better than the limit order price so that we would earn a spread or markup in connection with our execution of such orders. This practice could have impacted clients in the following ways: (1) clients’ limit orders would be filled at a time later than when the Firm could have obtained currency in the market at the limit orders’ prices, and (2) clients’ limit orders would not be filled at all, even though the Firm had or could have obtained currency in the market at the limit orders’ prices. For example, if we accepted an order to purchase €100 at a limit of 1.1200 EURUSD, we might choose to try to purchase the currency at a EURUSD rate of 1.1199 or better so that, when we sought in turn to fill the client’s order at the order price (i.e., 1.1200), we would make a spread or markup of 1 pip or better on the transaction. If the Firm were unable to obtain the currency at the 1.1199 price, the clients’ order may not be filled as a result of our choice to make this spread or markup.
  • We made decisions not to fill clients’ limit orders at all, or to fill them only in part, in order to profit from a spread or markup in connection with our execution of such orders. For example, if we accepted a limit order to purchase €100 at a EURUSD rate of 1.1200, we would in certain instances only partially fill the order (e.g., €70) even when we had obtained (or might have been able to obtain) the full €100 at a EURUSD rate of 1.1200 or better in the marketplace. We did so because of other anticipated client demand, liquidity, a decision by the Firm to keep inventory at a more advantageous price to the Firm, or for other reasons. In doing so, we did not inform our clients as to our reasons for not filling the entirety of their orders.
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Barclays fined $2.4 billion for FX manipulation, to fire 8 staff

Barclays Plc (BARC.L) pleaded guilty to a U.S. criminal charge and was fined $2.4 billion (1.5 billion pounds) by U.S. and British authorities on Wednesday for manipulating foreign exchange rates.
The British bank also agreed to fire eight employees as a result of the settlement, according to the New York Department of Financial Services (NYDFS).
The bank will pay $710 million to the U.S. Department of Justice, $485 million to the NYDFS, $400 million to the Commodities Futures Trading Commission and $342 to the U.S. Federal Reserve. It was also fined a record 284 million pounds, or $441 million, by Britain's Financial Conduct Authority.
Barclays was one of five banks to be fined a total of $5.7 billion by authorities on Wednesday. Its fine was far higher than the other banks, as it did not take part in a group settlement in November, because it wanted to include the powerful NYDFS in its settlement.
Barclays had set aside $3.2 billion for potential fines related to past FX trading. It could face further punishment related to electronic systems used in FX trading, which the NYDFS said it will continue to investigate.
Benjamin Lawsky, New York superintendent of financial services, said a number of Barclays employees involved in the misconduct were no longer employed by the bank and four were fired last month, including its global head of FX spot trading in London and a director on the FX spot trading desk in New York.

Lawsky ordered the bank to fire another four staff who it still employed, including a vice president on the emerging markets trading desk in New York and two directors on the FX spot trading desk in New York.

Barclays Settles ISDAFIX Manipulation Charges for $115M - Analyst Blog

Barclays PLC 
 is set to pay a penalty of £74.2 million ($115 million) to the U.S. Commodity Futures Trading Commission (CFTC) to settle charges of manipulating U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX). Notably, the UK-based bank became the first to be hit with a penalty regarding manipulation of the USD ISDAFIX.



Apart from payment of the penalty, Barclays is also required to cease and desist from further violations as charged, and undertake remedial actions as specified and to improve internal controls. 
USD ISDAFIX is a global benchmark, used for setting values of interest rate swaps, and used as a valuation tool for a number of financial products. CFTC's finding stated that during the aforementioned period Barclays was engaged in executing interest rate swap spread transactions in such a manner so as to influence the published USD ISDAFIX and derive benefits in its derivatives positions. Further, the UK based banking giant tried to manipulate USD ISDAFIX through its employees by providing false and misleading USD ISDAFIX submissions. 

Also, Barclays announced the settlement over the prolonged industry-wide probe into the foreign exchange market manipulation. The regulators involved were CFTC, the New York State Department of Financial Services, the U.S. Department of Justice, the Board of Governors of the Federal Reserve System and the UK Financial Conduct Authority. The company pleaded guilty for violating an US anti-trust law. 

Separately, per a Bloomberg report, Barclays failed in its attempt to dismiss a lawsuit by U.S. regulators for alleged manipulation of trades on electricity contracts. Per the court ruling, "the Federal Energy Regulatory Commission (FERC) has alleged both a sufficient factual and legal basis to support its claim of manipulation." The lawsuit claims $488 million in fines. 

Bottom Line 

We remain encouraged by Barclays' efforts in gradually resolving its legal issues. Also, the recent settlements are not likely to impact its financials in the upcoming quarters as these are covered by the company's existing provisions. 

http://www.nasdaq.com/article/barclays-settles-isdafix-manipulation-charges-for-115m-analyst-blog-cm479435

Sunday, May 17, 2015

Ukraine hikes rate to 30%, to avert hyperinflation and currency plunge

The National Bank of Ukraine is raising its benchmark interest rate to 30 percent from 19.5 percent, the biggest increase in 15 years. It reflects the bank’s attempt to save the collapsing economy from hyperinflation that some estimate at 272 percent.
The new refinancing rate becomes effective from Wednesday, Ukraine’s National Bank said Tuesday.
This is the second rate increase this year, as the bank raised it in February to 19.5 percent from 14 percent.
The decision was taken because the bank saw the "threat of inflation had risen strongly due to negative consequences from currency market panic," the National Bank chief Valeriya Gontareva said in a media briefing.
The bank also kept in place the requirement for companies to sell about 75 percent of their foreign currency earnings, which is also hoped, will stabilize the hryvnia. Gontareva hopes it will return the currency to a level of 20-22 to the US dollar "quickly".

The domestic currency, the hryvnia, has lost about 70 percent since the start of the Maidan unrest a year ago. On Tuesday it was trading at 26 hryvnia to the Dollar, while a year ago a greenback bought 8 hryvnia.
This is pushing up inflation, with official numbers showing prices are rising by 28.5 percent in annual terms. However, separate research by Johns Hopkins professor Steve Hanke suggests the real inflation rate is 272 percent, the world’s highest, and well above Venezuela’s 127 percent rate

Ukraine and China ink $2.4 bn currency swap

Ukraine and China have signed a currency swap agreement worth $2.4 billion, according to the National Bank of Ukraine (NBU). Ukraine expects it will relieve pressure on its currency which has lost above 40 percent against the US dollar in a year.
The three year agreement was signed in Shanghai by the governor of the National Bank of Ukraine(NBU) Valeria Gontareva and the governor of the People's Bank of China Zhou Xiaochuan, according to NBU’s press release published on Friday.
Ukraine will provide some 54 billion hryvnia and China 15 billion yuan within the swap line.
"This agreement is extremely important for our countries, being strategic partners, and will promote the economic development of both countries. The funds received under the agreement may be used to finance commercial operations and direct investments between the two countries,” Gontareva said.
The practical implementation of currency swap arrangements will cut the demand of importers for foreign currency, which will lower the pressure on the hryvnia exchange rate and help stabilize the situation in the domestic money market, she added.
The hryvnia has lost about 44 percent since last May standing at 20.9 against the US dollar on May 15.
The agreement will come into effect in June when the previous agreement, concluded in 2012 expires. It will enable companies from both countries to use national currencies for export-import operations and to conduct settlements in national currencies without involving the currencies of other countries.
Ukraine’s economy is currently facing tough times; the country’s foreign debt totaled $72.9 billion at the beginning of 2015. Ukraine’s National Bank reserves have fallen dangerously below $5.5 billion in March, and the national currency, the hryvnia, has lost more than half its value in 2015.
Ukraine and China agreed on economic and technical cooperation worth $8 million in January. Ukraine’s exports to China reached $2.7 billion last year while import amounted to $5.4 billion.

Sunday, March 22, 2015

The New Order Emerges

China and Russia have taken the lead in establishing the Asian Infrastructure Investment Bank (AIIB), seen as a rival organisation to the World Bank and the Asian Development Bank, which are dominated by the United States with Europe and Japan.
These banks do business at the behest of the old Bretton Woods order. The AIIB will dance to China and Russia's tune instead.
The geopolitical importance was immediately evident from the US's negative reaction to the UK's announcement this week that it would join the AIIB. And very shortly afterwards France, Germany and Italy also defied the US and announced they might join. In the Pacific region, one of America's closest allies, Australia, says she is considering joining too along with New Zealand. The list of US allies seeking to join is growing. From a geopolitical point of view China and Russia have completely outmanoeuvred the US, splitting both NATO and America's Pacific alliances right down the middle.
This is much more important than political commentators generally realise. We must appreciate that anything China does is planned well in advance. Here is the relevant sequence of events:
• In 2002 China and Russia formally adopted the founding charter for the Shanghai Cooperation Organisation, an economic bloc that today contains about 35% of the world's population, which will become more than 50% when India, Pakistan, Iran, Afghanistan and Mongolia join, which is their stated intention. Russia has the resources and China the manufacturing power to develop the largest internal market ever seen.
• In October 2013 George Osborne was effectively summoned to Beijing because China wanted London to be the base to develop renminbi-denominated financial instruments. London has served China well, with the UK Government even issuing the first renminbi-denominated foreign (to China) government bond. The renminbi is now on the way to being a fully-fledged international currency.
• The establishment of an infrastructure bank, the AIIB, will ensure the lead funding is available for the rapid development of road, rail, electric and electronic communications throughout the SCO, ensuring equally rapid economic development of the whole of the Asian continent. It could amount to the equivalent of several trillion dollars over time.
The countries that are applying to join the AIIB realise that they have to be members to access what will eventually become the largest single market in the world. America is being frozen out, the consequence of her belligerence over Ukraine and the exercise of her hegemonic power through the dollar. America's allies in South East Asia are going with or will go with the new AIIB, and in Europe commercial interests are driving America's NATO partners away from her, turning the Ukraine from a common cause into a festering liability.
The more one thinks about it, the creation of the AIIB is a masterstroke of tactical genius. The outstanding issue now is China and Russia will need to come up with a credible plan to make their currencies a slam-dunk replacement for the dollar. We know that gold may be involved because the SCO members have been accumulating bullion; but before we get there China must manage a deliberate deflation of her credit bubble, which will be a delicate and dangerous task.
Unlike the welfare-driven economies in the west, China has sufficient political authority and internal control to survive a rapid deflation of bank credit. When this inevitably happens the economic consequences for the west will be very serious. Japan and the Eurozone are already facing economic dislocation, and despite over-optimistic employment numbers, the US economy is faltering as well. The last thing America and the dollar needs is a deflationary shock from China.
The silver lining for us all is a peace dividend: it is becoming less likely that America will persist with a call to arms, because support from her allies is melting away leaving her on her own.

Thursday, March 19, 2015

De-Dollarization Accelerates As More Of Washington's "Allies" Defect To China-Led Bank

The global de-dollarization trend continues as it appears the UK’s move to join the China-led Asian Infrastructure Development Bank has indeed shown other US “allies” that spurning Washington’s advice is actually acceptable and concerns about the institution’s “standards” may simply be a diversion aimed at undermining China’s attempt to exercise more influence in its own backyard. Here’s more from the NY Times
Ignoring direct pleas from the Obama administration, Europe’s biggest economies have declared their desire to become founding members of a new Chinese-led Asian investment bank that the United States views as a rival to the World Bank and other institutions set up at the height of American power after World War II.

The announcement on Tuesday by Germany, France and Italy that they would follow Britain and join the Chinese-led venture delivered a stinging rebuke to Washington from some of its closest allies. It also called into question whether the World Bank and the International Monetary Fund, which grew out of a multination conference in Bretton Woods, N.H., in 1944 and established an economic pecking order that lasted 70 years, will find their influence diminished.

The announcement by Germany, Europe’s largest economy, came only six days after Secretary of State John Kerry asked his German counterpart, Frank Walter-Steinmeier, to resist the Chinese overtures until the Chinese agreed to a number of conditions about transparency and governing of the new entity. But Germany came to the same conclusion that Britain did: China is such a large export and investment market for it that it cannot afford to stay on the sidelines.
South Korea, another US ally that the Obama administration has not-so-subtly lobbied to stay out of the AIIB for the time being, is reportedly reconsidering a bid to join and although reports that Seoul had already committed to the venture appear to have been a bit premature, the country will make a decision this month and is expected to discuss specifics this weekend at a meeting with Chinese and Japanese officials. Here’s FT
The foreign ministers of China, Japan and South Korea will meet in Seoul this weekend for the first time in three years, in an effort to calm tensions in the region.

The trio have strong economic ties but frosty relations. International angst about this state of affairs among the regional superpowers has been further piqued by the Asian Infrastructure Investment Bank, a Chinese-led initiative sparking alarm in Washington and proving divisive elsewhere.
Meanwhile, even Europe’s own “magical fairyland” is taking the plunge. Via Bloomberg: 
China welcomes Luxembourg’s application to be a founding member of the Asian Infrastructure Investment Bank, China’s finance ministry says in a statement on website.

Thursday, March 12, 2015

Rate Hikes Already Priced into the US Dollar Index

Buy the Rumor, Sell the News

All those bemoaning what rate hikes could potentially portend for the US Dollar need to get a grip, the rate hikes are already priced in.  That`s how markets work, buy the rumor and sell the news or actual event. Moreover, not just one 25 basis point rate hike, taking a look at that chart, several rate hikes have already been priced into the US Dollar Index.  

A Perfect Dollar Storm

It really has been the perfect storm for the US Dollar Index from struggling emerging markets to the oil and commodities meltdown to the strong economic data here in the states and Europe finally initiating a QE Program. But the trade has gotten way ahead of itself, probably the most crowded trade on the street right now, and definitely due for a pullback. The momentum resulting from the start of European QE being the primary catalyst with the Euro cratering far beyond the fundamentals of historical relationships between the two currencies. It too is overdone to the downside and due for a snapback rally either this week or next, and the coiled nature of that trade suggests the snapback will be rather sizable.



One Word Folks: Entitlements

Therefore all those worried about the appreciation of the US Dollar Index being the end of the world can take a deep breath and relax.  The Fed can still raise rates and the US Dollar Index will probably weaken on the news from current levels. There has been a lot of bullish optimism for a country that continues to push out an unbelievably high level of government debt each year to be financed and subsidized outside of its cash inflows. The US Dollar isn`t always going to be this strong versus global currencies, even with much higher short-term interest rates.

Australia Survived a Strong Currency & High Interest Rates

However even if the US Dollar continues to appreciate, big freaking deal, it has happened before in this country and the economy didn`t fall off a cliff. In fact just the opposite occurred, a strong dollar means the US economy is competing on the global stage in a very robust manner. This is a good thing, like cheap energy and a robust job market, nothing too complain about! How did Australia survive all those years when their commodity based economy was performing so well and ahead of its peers? They had a strong currency and much higher interest rates, and their economy didn`t fall off a cliff due to either of those factors in having higher interest rates and a stronger currency than most of their global peers. This is how finance and currency crosses are supposed to work in a market based global economy.


Whiners going to Whine

All this whining about a strong US Dollar Index and Rate Hikes is really about the end of government handouts, corporate welfare programs for the 1%, and just plain weak mindedness in general. Like they cannot possibly succeed on the world stage without the psychological crutch of a weak dollar! The ironic part of this whole consternation over the appreciating dollar is that most of these same people were complaining about the disastrous effects of the weak dollar just a couple of years ago. You know oil is going to 200 dollars a barrel, inflation to 6%, and the purchasing power of the US Consumer being eroded indefinitely, not to mention how expensive it was to travel to other counties for Americans.

Glass Half Full

Quit looking at the world as glass half empty, currency crosses fluctuate with global economics and relationships between countries. There is a constant give and take that goes on based upon the business cycles and development stages of the local economies.  Having weak and strong currencies serves an economic purpose, and function as natural forces on correcting inefficient and uncompetitive country practices. This is how finance and economics work. Thank goodness the US has finally gotten the upper hand the past couple of years after really taking it on the chin from the BRIC`s when they had their robust economic growth cycle.

Always Good to be Strong

In short, a strong dollar is good. In this case it is a sign of strength and confidence in the business prospects of the economy, and a vote for capitalistic principles in a globally competitive marketplace. There are many advantages to having a strong US Dollar.  It helps attract capital, it lowers overall inflation, while providing stronger purchasing power for US Consumers, making travel more affordable.  It is a sign of a robust economy relative to its global peers. I am sure Australia wishes they could time travel back to the glory days of the commodity boom based upon the emerging market parabolic growth phase led by China. They would gladly take a stronger currency, higher rates and all the good benefits that go along with an outperforming economy versus their current state of affairs represented by a much weaker currency, lower interest rates and much weaker business prospects.


Currency Investors Already Front Running the Fed on Interest Rates

The US should thank its lucky stars investors value the US Dollar, and consider it a good place to invest in relative to our global peers because currencies move in cycles, and trust me this will not always be the case. But the appreciating currency is telling investors the inevitable that a strong US Dollar is indicative of a strong economy and rising rates are already being factored into the appreciation. Wall Street and Global investors don`t wait for the Fed to raise rates, they already are voting via the currency markets that rates are going to rise in the US, and much of these rate hikes are already being priced into the currency. Look at it this way, investors in the currency markets are already miles ahead of the fed front-running their rate hikes. Their analysis is that interest rates are going to rise in the US over the next quarter, and this is part of the tremendous run-up in the US Dollar. Subsequently forget about the ramifications of the Fed raising interest rates on the US Dollar Index, it has already been factored into the market by currency investors. The real news would be if for some reason the Fed didn`t raise rates over the next quarter!

http://www.zerohedge.com/news/2015-03-12/rate-hikes-already-priced-us-dollar-index

Wednesday, March 11, 2015

Plunge Protection Exposed: Bank Of Japan Stepped In A Stunning 143 Times To Buy Stocks, Prevent Drop

Since 2010, The Bank of Japan has 'openly' - no conspiracy theory here - been a buyer of Japanese stock ETFs. Their bravado increased as the years passed and Abe pressured them from their independence to 'show' that his policies were working to the point that in September 2014, The BoJ bought a record amount of Japanese stock ETFstaking its holdings to over 1.5% of the entire market cap, surpassing Nippon Life as the largest individual holder of Japanese stocks. However, as WSJ reports, The BoJ has now gone full intervention-tard - buying Japanese stocks on 76% of the days when the market opened lower.
The Bank of Japan’s aggressive purchasing of stock funds has helped Japanese shares climb to multiyear highs in recent months. But some within the central bank are growing uncomfortable about the fast-paced rally and the bank’s own role in fueling it.

Since Gov. Haruhiko Kuroda took office in March 2013 and introduced monetary easing of what he called a “different dimension,” the central bank has sharply increased its buying of baskets of stocks known as exchange-traded funds. By directly underpinning the market, officials have tried to encourage private investors to follow suit and put more money in stocks in the hope of stimulating the economy and increasing inflation.

During the past two years, the central bank entered the stock market roughly once every three days, picking up a total of ¥2.8 trillion ($23 billion) of ETFs that track Japan’s major stock indexes, according to Bank of Japan records. That distinguishes it from the U.S. Federal Reserve and European Central Bank, both of which have bought bonds to pump up the economy but haven’t directly bought stocks.


Analysts say the bank’s action has been a significant driver of Japan’s stock-market rally in recent months, combined with hefty purchases by the $1.1 trillion Government Pension Investment Fund. Their buying has often countered selling pressure from individuals in the market and made up for a weaker appetite among foreign investors.
The central bank has stepped in mostly when market sentiment was weak. Three-quarters of the central bank’s buying occurred on days when the benchmark Topix index opened lower, according to a Wall Street Journal analysis of BOJ data.



So much for independence...
BOJ officials used to be cautious about purchasing ETFs, worried that it could distort market activities and put the central bank’s own financial health at risk. But under pressure from politicians following the global financial crisis, the bank changed its stance in late 2010.

“We led the cows to water, but they didn’t drink it, even though we told them it tasted good,” Miyako Suda, who was a board member then, wrote in a 2014 book discussing monetary easing at that time. “So we thought we should drink it ourselves, showing them it was tasty.”

http://www.zerohedge.com/news/2015-03-11/how-boj-stepped-143-times-send-japanese-stocks-soaring