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The US government just crossed the Rubicon

OWoN: China, RIGHTLY so, will tell these Assholes to Shove It! Then what?

From the questions that we received today, some of you may not have fully understood the significance of the Chinese announcement about the start-up of their inter-bank settlement system (CIPS) that we sent out earlier today. The attached article is from someone who does understand many of the implications. I added some appropriate comments (in red) to point out some related matters that are not widely recognized.

The primary problem is that the US public has no idea what is really going on. It's one of those mushroom situations - keep them in the dark and feed them manure. Until the day it is too late. Only then will blame be cast and you can be assured the spin masters will deflect the truth of mistakes made. However the international press especially in Britain will be different. It will castigate and rip apart the true guilty parties. When even a British PM is ripped part, the US will be cannibalized in full public view.

Leadership when you need it seems not to be found nowadays as mediocrities rule. Allowing this history to repeat itself and the whole world will pay a price as a consequence not just the US. The price for that may well be the Russian and Chinese parked up off the US coasts with thousands of missiles incoming. What then would come over the Poles would be reciprocity. For a nation who only knows how to give it, as we saw from Vietnam, Mogadishu, 9/11, the psyche just cant take it. None of these morons realise that War is a harsh reality if the Cabal are not stopped. Clueless. 20 years messing around bulldozing the Middle East going nowhere. Putin moves into Syria and 3 weeks later the Fundamentalist are running for their Mammies. Which complete Assholes want to offend Russia and China? They will end up dead. The Evil Empire is ending. The sooner the better. Peacefully or Nuked into atoms?

Push China and Russia and they will respond. Damned right. So come on China, 2 very large fingers and call them out. Time the world sees this end.




The US government just crossed the Rubicon


Sovereign Man
By Simon Black
8 October 2015

Note: Red text added by OWoN

In 49 BC, a defiant Julius Caesar stood in front of his army at the River Rubicon and made the biggest decision of his life.

It was strictly forbidden by Roman law for a general lead his army out of its province and into Rome. And the Rubicon marked the boundary.

“Alea iacta est!” (The die is cast!) he said, and led his army across the river into civil war.

The phrase “crossing the Rubicon” has stuck for more than 2,000 years, signifying a risky and dangerous point of no return.

This week, the United States government crossed the Rubicon.

In a fit of complete arrogance, a federal judge ruled that he has ‘jurisdiction’ over one of the biggest banks in mainland China, Bank of China (BOC), and demands that the bank turn over financial records to his court.

The judge is hearing a case brought by the luxury brand Gucci against an alleged Chinese counterfeiting ring for selling fake handbags in the United States. The claim is that the Chinese defendants are sending their ill-gotten gains back to Bank of China in the mainland. And the judge wants to see their account activity.

Bank of China, as you can probably guess, is predominantly owned by the Chinese government. So it goes without saying that this demand (not a request) is a direct affront at China’s sovereignty.

The only leverage the judge has is that Bank of China has a branch in New York City; it is officially a licensed bank in the US.

So if Bank of China doesn’t comply, the judge could theoretically order that their US license be revoked.

Once again, the United States is using its financial system as a weapon.

Since US dollars are the most widely used reserve currency in the world, every bank on the planet needs some access to the US banking system.

Whether you’re in London, Riyadh, Sydney, or Shanghai, the most widely traded commodities, bonds, and financial contracts in the world are primarily denominated in US dollars.

Plus most global trade takes place in US dollars. (More correctly this should say "has taken place in US dollars". With the advent of oil and gold futures contracts denominated in Yuan starting on 15 Oct., that is about to change abruptly. No doubt futures contracts for other commodities like metals and agricultural products will follow shortly afterward. China is already the world's largest oil importer, and if you throw in iron ore, thermal and metallurgical coal, copper, zinc, aluminum, etc., one quickly sees that things will fall apart in a real hurry.)

So not only are banks forced to hold US dollars, they require access to the US banking system in order to clear and settle US dollar transactions.

Large international banks have what are known as ‘correspondent bank accounts’ or ‘nostro accounts’ with US banks.

So a big bank in Denmark, for example, may have a correspondent account with JP Morgan or Citibank in New York to facilitate its dollar transactions.

And sometimes foreign banks may even apply for their own US banking license, as in the case of Bank of China.

But if a bank were to be kicked out of the US banking system, it would be incredibly detrimental to its ability to hold and transact in US dollars. And hence quite difficult to participate in global trade and finance.

This financial leverage is an unbelievable advantage for the United States, and is a result of the rest of the world placing a great deal of trust in the US government.

But the government has shown time and time again that they are willing to abuse that trust and use their advantage as a weapon– one that is more powerful than the US military.

Just last year, the Treasury Department fined French bank BNP Paribas a whopping $9 billion for doing business with countries that the US doesn’t like, such as Cuba.

Of course, Cuba and the US are BFFs now. But I doubt BNP is getting a refund anytime soon.

And naturally, if BNP didn’t pay up, the US could threaten to evict them from its financial system. (Of course, such behaviour had nothing to do with the US government's fiscal position and need for cash.)

It’s simply amazing that the US did that to its own ally.

Now they’re going after China, its biggest competitor.

The Chinese are already working on a parallel, competitive financial system. They set up the Asian Infrastructure Investment Bank to compete with the vestigial IMF and World Bank.

And they’re nearing completion on an international payment system and clearing network to compete with SWIFT and the US financial system. It’s called CIPS.

And once it’s up and running, there will likely be a rapid increase in the worldwide use of China’s currency for financial transactions– transactions that used to be executed in US dollars.

Sticking it to Bank of China like this only gives the Chinese government even more reason to wage war on the US financial system through CIPS.

The reduced demand for US dollars completely destroys America’s last remaining advantage.

If they can’t force the rest of the world to use the US banking system, then they won’t be able to force the rest of the world to hold US dollars or buy US government debt. It weakens America considerably. (You may think the sales of US government debt instruments, i.e., T-bills, notes and bonds, by foreign governments and central banks has been large so far, but you haven't even seen the numbers for September yet. And it's not just the Chinese that are selling, but also Brazilians, Norwegians, Arabs, Taiwanese, and smart private investors from around the world. The US Fed is already the largest buyer of US debt by far so what happens when no-one else will buy it??? Don't forget that the US government is running a $48 billion/month deficit so far this fiscal year, that's only the official books, and not the off-balance sheet expenditures.)

And when future historians write the history of the decline of the United States, there will no doubt be a chapter on how the US government made it a matter of national policy to consistently abuse the power entrusted to them by the global banking community.

Of course, Julius Caesar didn’t learn that lesson either. After crossing the Rubicon, he won a long civil war, after which the Roman Senate made him dictator for life.

And fearing he would abuse it, he was assassinated just a few weeks later by the very people who entrusted him with that power.

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3 comments :

  1. The sooner these arrogant dogs are brought to earth the better. Its only 60 years since vile Apartheid ended in America, and these same arrogant Gobshites think they have the right to lecture others. China needs to mass sell off all US Treasuries, force all trade in RMB, stop US imports, and see how long DC takes the hits. Stop all Treasury purchasing and force up the price of Gold. Get all BRICs nations to stop dealing in USD. Stop all US warships docking in Chinese ports. Restrict US flights to China and cut back US Embassy numbers in China. Put bases in Iran and face off all US bases in the Middle East. Crank up South American trade. Stop supplying the US with rare metals. Bring the lot to a halt.
    Time these assholes find the game is up. Cease all US Hegemony in all Asian territories. Arm the Middle East and give the Arabs help to face down Israe hell. When the Israeli aggressions starts then in Ghaza send in Chinese warships and Russian troops to help Palestine. Smash the Israeli blockades and remove illegal Israeli settlements. Play the same game. See how the Kazakhs handle a taste of their own.

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  2. That judge has no jurisdiction as all those courts operate under the jurisdiction of the sea. The Chinese should start a countersuit and charge the judge with inland piracy and press-ganging. The punishment for that has been capital punishment for centuries. That would be poetic justice....instead of making an example of others, that bar member would be made an example of. Not that that would quickly happen when protected by other inland pirates....

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  3. Thanks for this explanation, John. I hope when they do write the history of the decline, it is the real truth.

    ReplyDelete

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