Now China and the IMF are in talks to include the Chinese Yuan as the Next RESERVE CURRENCY.

Are you familiar with the SDR’s (Special Drawing Rights) !?
The International Currency issued by the IMF held as reserves in central banks globally.

SDRs are international foreign exchange reserve assets. Allocated to nations by the IMF, an SDR represents a claim to foreign currencies for which it may be exchanged in times of need. Originally created by the IMF in 1969 for m
embers and prescribed holders to use their SDR holdings to conduct transactions with the IMF.

The nominal value of an SDR is derived from a basket of currencies, with, specifically, a fixed amount of Japanese Yen, US Dollars, British Pounds and Euro’s, without RMB.

A senior Chinese central bank official said Thursday that the country is “actively communicating” with the IMF on the possibility of including the yuan, or RMB, in the basket of the Special Drawing Rights (SDRs).

From Wikipedia: Special drawing rights (XDR aka SDR) are supplementary foreign exchange reserve assets

From the IMF: SDR Allocations and Holdings for all members as of February 28, 2015

How will CHINA’s move one step closer to becoming an OFFICIAL RESERVE CURRENCY effect your portfolio !?

Yuan

China is pushing for the International Monetary Fund to endorse the Chinese Yuan as a global reserve currency alongside the dollar and Euro.

A senior Chinese central bank official said Thursday that the country is “actively communicating” with the IMF on the possibility of including the Yuan, or RMB, in the basket of the Special Drawing Rights (SDRs).

Including the Yuan in the SDR system would allow the IMF to recognize the ascent of the world’s second-biggest economy while aiding China’s attempts to diminish the dollar’s dominance in global trade and finance.

“We hope the IMF can fully take into account the progress of RMB internationalization, to include RMB into the basket underlining the SDR in foreseeable, near future,” said Yi Gang, vice governor of the People’s Bank of China.

The Yuan became the world’s No. 2 currency for trade finance globally in 2013, and overtook the Canadian and Australian dollars to enter the top five world payment currencies in 2014, according to global transaction services organization SWIFT.

China said the Yuan has also been used as a reserve currency in some countries and regions.

LINK TO STORY: China-IMF talks under way to endorse Yuan as global reserve currency

European Banks At Risk Of Bail-Ins In 2015 – Moody’s and S&P Warn

Credit ratings agencies’ frequent warnings regarding bail-ins in recent months have largely been ignored.

“Europe’s banks are vulnerable in 2015 due to weak macroeconomic conditions, unfinished regulatory hurdles and the risk of bail-ins” according to credit rating agencies.

Bank Bail-ins

In March of this year, credit rating agency Standard and Poor’s (S&P) warned that the move towards “bail-ins” and away from “bailouts” continues to evolve and pose risks to European banks and their credit ratings.

Bank of England plans to make bondholders and depositors bear the cost of bailing out failing banks, led Moody’s to downgrade its outlook on the UK banking sector this August. The rating agency said that it had changed its outlook for the UK financial system from “stable” to “negative”, citing the developing global “bail in regime” of creditor and depositor bail-in.

Moody’s have warned of bail-ins numerous times in recent months. In June of this year, Moody’s cut the outlook for Canadian bank debt to negative over the new ‘bail-in’ regime.

Depositors in some Cyprus banks saw 50% or more of their life savings confiscated overnight.

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The truth is that banks in most western nations are vulnerable to bail-ins in 2015 and the recent G20 meeting in Brisbane was a further move towards the stealth bail-in regimes.

Continue reading here: European Banks At Risk Of Bail-Ins In 2015 – Moody’s and S&P Warn.

Investing Abroad: What US Investors Need to Know

At a time when overindebted governments are making increasingly desperate grabs for their citizens’ money, keeping all your assets invested in one country—and denominated in one currency—is a very bad idea.

Image courtesy of Gordon T Long

Image courtesy of Gordon T Long

A vitally important question for you

 Do you have a bank account in another country? If not, you should hurry up & get one.

Holding foreign currencies in an account outside of the United States is the way to go if you REALLY want to diversify your assets internationally—but in the last few years the US government has left no stone unturned to make it harder for investors to get a foreign bank account. It’s not too late, though—there are still feasible ways to open one. But you have to act quickly, before Washington enacts even stricter controls in a desperate grab for your money.

Most people know of the general investment benefits of not having all your asset eggs in one basket. This portfolio-diversification concept—investing in multiple asset classes—also applies to the political risk associated with your home country. It is a risk few people think about diversifying.

In short, internationalization is prudent because it frees you from absolute dependence on any one country. Achieve that freedom, and it becomes very difficult for any country to control you.

While diversifying political risk is something that everyone in the world should strive to achieve, it goes double for those who live under a government that is sinking deeper into fiscal trouble (e.g., most Western governments).

Here are a few compelling arguments on why you should diversify, diversify, diversify—across different countries, exchanges, currencies, banks, and asset classes.

1: IMF Endorses Capital Controls

Bloomberg reported that the “IMF has endorsed the use of capital controls in certain circumstances.“

“In a reversal of its historic support for unrestricted flows of money across borders, the IMF said controls can be useful…”

2: There Is Academic Support for Capital Controls

Harvard Economists Carmen Reinhart and Ken Rogoff suggest debt write-downs and ‘financial repression’, meaning the use of a combination of moderate inflation and constraints on the flow of capital to reduce debt burdens.

3: Confiscation of Savings on the Rise

The IMF, in a report entitled “Taxing Times,” published in October of 2013, on page 49, states:

“The sharp deterioration of the public finances in many countries has revived interest in a capital levy—a one-off tax on private wealth—as an exceptional measure to restore debt sustainability.”

A study from the IMF: The tax rates needed to for a sample of 15 euro area countries is 10% on households with a positive net worth.

Note: The tax would apply to anyone with a positive net worth. And the 10% wealth-grab would, of course, be on top of regular income taxes, sales taxes, property taxes, etc.

4: We Like Pension Funds

Unfortunately, it’s not just savings. From a paper by Carmen Reinhart & M. Belén Sbrancia:

A subtle type of debt restructuring takes the form of ‘financial repression.’ Financial repression includes directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, regulation of cross-border capital movements, and (generally) a tighter connection between government and banks.

Yes, your retirement account is now a “captive domestic audience.”
“Directed” means “compulsory” in the above statement, and you may not have a choice if “regulation of cross-border capital movements”—capital controls—are instituted.

5: The Eurozone Sanctions Money-Grabs

Germany’s Bundesbank weighed in on this subject last January:

“Countries about to go bankrupt should draw on the private wealth of their citizens through a one-off capital levy before asking other states for help.”

And it’s not just in Germany. On February 12, 2014, Reuters reported on an EU commission document that states:

The savings of the European Union’s 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis.

Reuters reported that the Commission plans to request a draft law, “to mobilize more personal pension savings for long-term financing.”

EU officials are explicitly telling us that the pensions and savings of its citizens are fair game to meet the union’s financial needs. If you live in Europe, the writing is on the wall.

Actually, it’s already under way… Reuters recently reported that Spain has introduced a blanket taxation rate of .03% on all bank account deposits, in a move aimed at… generating revenues for the country’s cash-strapped autonomous communities.

6: Canada Jumps on the Confiscation Bandwagon

You may recall this text from last year’s budget in Canada:

“The Government proposes to implement a bail-in regime for systemically important banks.”

A bail-in is what they call it when a government takes depositors’ money to plug a bank’s financial holes—just as was done in Cyprus last year.

The bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital.

What’s a “bank liability”? Your deposits.

7: FATCA

Have you considered why the Foreign Account Tax Compliance Act was passed into law? It was supposed to crack down on tax evaders and collect unpaid tax revenue.
However, the result of FATCA keeps US savers trapped in US banks and in the US dollar, where the US could implement a Cyprus-like bail-in. Given the debt load in the US and given statements made by government officials, this seems like a reasonable conclusion to draw.

Source>http://www.caseyresearch.com/articles/the-single-most-important-strategy-most-investors-ignore-1

Government of Ukraine Collapses

imageThe Ukrainian government has resigned.
The prime minister Yatsenyuk, or “Yat” as affectionately called by Victoria Nuland who put Yat into office, resigned along with the entire Cabinet.

The parliament refused to vote the harsh conditions demanded by the IMF. I am not sure what this means. Perhaps it is just a tactic to force the parliament to do as the IMF says. Or perhaps Yat, Washington’s stooge, has realized that IMF or no IMF, Ukraine’s economy is imploding and wants to get out of the blame.

The point for now is that I checked the BBC, the New York Times, and CNN and there is not one word about the collapse of the government of Ukraine.

I did notice that the BBC, now a reliable element of Washington’s Ministry of Propaganda, reported, as if it were true, State Department spokeswoman Marie Harf’s claim that the Russian military is shelling Ukrainian forces. When Harf tried this out today on a roomful of journalists, they laughed her out of the room. Evidence, evidence! they demanded. Why, Harf was asked, do you think something is made true by you saying it!?

So, as usual, real news is missing from the Western press, but fake news is reported.

Professor Michael Chossudovsky has provided an account of the collapse of the Ukrainian government on Global Research. http://www.globalresearch.ca/collapse-of-ukraine-government-prime-minister-yatsenyuk-resigns-amidst-pressures-exerted-by-the-imf/5393168

Paul Craig Roberts Institute for Political Economy

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Christine Lagarde – The Most Dangerous Woman in the World – IMF Advocates Taking Pensions & Extending Maturities of Gov’t Debt to Prevent Redemption

image The new IMF proposal led with Christine Lagarde: Debt cuts for over-indebted states are to be performed more effectively in future by defaulting on retirement accounts held in life insurance, mutual funds and other types of pension schemes, or arbitrarily extending debt perpetually so you cannot redeem.

The new IMF paper describes in great detail exactly how to now allow the private sector, which has invested in government bonds, to be expropriated to pay for the national debts of the socialist governments.

The IMF working paper from December 2013 states boldly:

“The distinction between external debt and domestic debt can be quite important. Domestic debt issued in domestic currency typically offers a far wider range of partial default options than does foreign currency–denominated external debt. Financial repression has already been mentioned; governments can stuff debt into local pension funds and insurance companies, forcing them through regulation to accept far lower rates of return than they might otherwise demand.”

Already in October 2013, the International Monetary Fund (IMF), suggested the Euro Crisis should be handled by raising taxes.

The IMF lobbied for a property tax in Europe that should be imposed where there are no such taxes.

The IMF has advocated for a general “debt tax” in the amount of 10 percent for each household in the Eurozone, which also has only modest savings.

The money people have saved, the IMF maintains should be used for debt service by sheer force.

To reduce the enormous national debt, they maintain that government has the right to directly usurp the savings of citizens. Whether saving money, securities or real estate, about ten percent could be expropriated. This is the IMF view.

Because the government debt of the euro countries has increased a total of well over 90 percent of gross domestic product, they suggest that the people should sacrifice their savings for the benefit of the state.

Socialism is no longer to help the poor against the rich, but to help the government against the people. The definition has changed.

In January 2014, the Bundesbank joined the IMF project focusing on a “wealth tax”. In its monthly report they had announced:

“In the exceptional situation of an imminent state bankruptcy a one-time capital levy could but cheaper cut than the then still relevant options”

if higher taxes or drastic limitations of government spending did not meet, or could not be implemented.

In the latest June 2014 working paper of the IMF, they have set forth yet another scheme – extending maturity;

So you bought a 2 year note?
Well, the IMF possible solution would be to simply extend the maturity.
Your 2 year note now become 20 year bond.
They do not default, you just can never redeem.

Possible remedy. The preliminary ideas in this paper would introduce greater flexibility into the 2002 framework by providing the Fund with a broader range of potential policy responses in the context of sovereign debt distress, while addressing the concerns that motivated the 2002 framework.

Specifically, in circumstances where a member has lost market access and debt is considered sustainable, but not with high probability, the Fund would be able to provide exceptional access on the basis of a debt operation that involves an extension of maturities (normally without any reduction of principal or interest).

Such a “reprofiling” operation, coupled with the implementation of a credible adjustment program, would be designed to improve the prospect of securing sustainability and regaining market access, without having to meet the criterion of restoring debt sustainability with high probability.

Now the June 2014 report has a new, far-reaching proposal.
This shows how lawyers think in technical definitions of words. There is no actual default if they extend the maturity.

You could buy 30-day paper in the middle of a crisis and suddenly find under the IMF that 30 day note is converted to 30 year bond at the same rate!?

More from Martin Armstrong post here

Banking Union Time Bomb: Eurocrats Authorize Bailouts AND Bail-Ins

The confiscation of depositor funds
The real story for taxpayers and depositors is the heightened threat to their pocketbooks of a deal that now authorizes both bailouts and “bail-ins”

The Unsettled Question of Deposit Insurance;
But at least, you may say, it’s only the uninsured deposits that are at risk (those over €100,000—about $137,000). Right?

Not necessarily.
According to ABC News, “Thursday’s result is a compromise that differs from the original banking union idea put forward in 2012. The original proposals had a third pillar, Europe-wide deposit insurance. But that idea has stalled.”

Two pillars are now in place” – two but not the third.
And two are not enough to protect the public.

As observed in The Economist in June 2013, without Europe-wide deposit insurance, the banking union is a failure…

WEB OF DEBT BLOG

As things stand, the banks are the permanent government of the country, whichever party is in power.

 – Lord Skidelsky, House of Lords, UK Parliament, 31 March 2011)

On March 20, 2014, European Union officials reached an historic agreement to create a single agency to handle failing banks. Media attention has focused on the agreement involving the single resolution mechanism (SRM), a uniform system for closing failed banks. But the real story for taxpayers and depositors is the heightened threat to their pocketbooks of a deal that now authorizes both bailouts and “bail-ins” – the confiscation of depositor funds. The deal involves multiple concessions to different countries and may be illegal under the rules of the EU Parliament; but it is being rushed through to lock taxpayer and depositor liability into place before the dire state of Eurozone banks is exposed.

View original post 1,601 more words

The Looting Of Ukraine Has Begun! Starting with a 50% Reduction on Pensions

The Looting Of Ukraine Has Begun – Paul Craig Roberts
Naive protesters who believed that EU membership offered a better life are due to lose half of their pension by April.

But this is only the beginning…

The recently installed Kiev government has prepared an economic austerity plan that will cut Ukrainian pensions from $160 to $80 so that Western bankers who lent money to Ukraine can be repaid at the expense of Ukraine’s poor.
According to a report in Kommersant-Ukraine, the finance ministry of Kiev

It is Greece all over again.

This supporter of the Ukraine joining the EU has received her reward: a 50% cut in her pension

This supporter of the Ukraine joining the EU has received her reward: a 50% cut in her pension

11 billion euros is being offered by the EU as aid, this is not aid. It is a loan. Moreover, it comes with many strings, including Kiev’s acceptance of an IMF austerity plan.

Ukrainians participated in the protests that were used to overthrow their elected government, because they believed the lies told to them by Washington-financed NGOs that once they joined the EU they would have streets paved with gold. Instead they are getting cuts in their pensions and an IMF austerity plan.

The austerity plan will cut social services, funds for education, layoff government workers, devalue the currency, thus raising the prices of imports which include Russian gas, thus electricity, and open Ukrainian assets to takeover by Western corporations.

Ukraine’s agriculture lands will pass into the hands of American agribusiness.

Europe Considers Wholesale Savings Confiscation

From Reuters’, “the savings of the European Union’s 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis, an EU document says.” What is left unsaid is that the “usage” will be on a purely involuntary basis, at the discretion of the “union”, and can thus best be described as confiscation.

These actions would directly impact pension funds & bank accounts!
Bail-In – Research & be informed.

This has been approved & signed into law by global governments, the new resolution tool that empowers the confiscation of savings when a financial institution is considered to be significantly important to the banking system, becomes too stressed.

Is your wealth diversified strategically ?
Are your pensions & savings exposed to confiscation ?

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Reuters article link: Exclusive: EU executive sees personal savings used to plug long-term financing gap

Further research reading from Zerohedge

IMF: Lowering sovereign debt levels through a one-off tax on private wealth

The Coming Global Wealth Tax !?
Indebted governments may soon consider a big one-time levy on capital assets!
Q: How much capital do you keep in private & business bank accounts for a possible 10% confiscation, & what defensive actions are being taken ?

imageAs applied to the euro zone, the IMF claims that a 10% levy on households’ positive net worth would bring public debt levels back to pre-financial crisis levels. Such a tax sounds crazy, but recall what happened in euro-zone country Cyprus this year (2013): Holders of bank accounts larger than 100,000 euros had to incur losses of up to 100% on their savings above that threshold, in order to “bail-in” the bankrupt Mediterranean state. Japanese households, sitting on one of the world’s largest pools of savings, have particular reason to worry about their assets: At 240% of GDP, their country’s public debt ratio is more than twice that of Cyprus when it defaulted.

From New York to London, Paris and beyond, powerful economic players are deciding that with an ever-deteriorating global fiscal outlook, conventional levels and methods of taxation will no longer suffice. That makes weapons of mass wealth destruction—such as the IMF’s one-off capital levy, Cyprus’s bank deposit confiscation, or outright sovereign defaults—likelier by the day.

Link to full WSJ Opinion, The Wall Street Journal by Romain Hatchuel; managing partner of Square Advisors, LLC, a New York-based asset management firm.

IMF Proposing a NEW 10% SUPER-TAX BAIL-IN taken from ALL Accounts!

The Independent – The economic nightmare may not be over for Europe

35-Mario-Draghi-EPA

The October 2013 IMF report: Fiscal Monitor : Taxing Times,
Further details on the topic from page 23, in the chapter called:

Taxing Our Way Out Of – Or Into? – Trouble

The sharp deterioration of the public finances in many countries has   revived interest in a capital levy, a one-off tax on private wealth, as   an exceptional measure to restore debt sustainability. (1) The appeal   is that such a tax, if it is implemented before avoidance is possible,   and there is a belief that it will never be repeated, does not distort   behavior (and may be seen by some as fair).

There have been illustrious supporters, including Pigou, Ricardo,   Schumpeter, and, until he changed his mind, Keynes. The conditions for   success are strong, but also need to be weighed against the risks of the   alternatives, which include repudiating public debt or inflating it   away (these, in turn, are a particular form of wealth tax on bondholders   that also falls on non-residents).

There is a surprisingly large amount of experience to draw on, as   such levies were widely adopted in Europe after World War I and in   Germany and Japan after World War II. Reviewed in Eichengreen (1990),   this experience suggests that more notable than any loss of credibility   was a simple failure to achieve debt reduction, largely because the   delay in introduction gave space for extensive avoidance and capital   flight, in turn spurring inflation.

The tax rates needed to bring down public debt to pre-crisis levels,   moreover, are sizable: reducing debt ratios to end-2007 levels would   require (for a sample of 15 euro area countries) a tax rate of about 10 percent on households with positive net wealth . (2)

(1) As for instance in Bach (2012).   (2) IMF staff calculation using the Eurosystems Household Finance and   Consumption Survey (Household Finance and Consumption Network, 2013);   unweighted average.

It should probably be obvious that there is one key sentence here, one   which explains why the IMF is seriously considering the capital levy   (supertax) option, even if it’s presented as hypothetical:

The appeal is that such a tax, if it is implemented before avoidance is possible, and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair). !?