Thursday, January 21, 2016

Today's Links

 1--When Russia's money runs out, the 'real trouble starts', CNBC

Speaking to CNBC in Davos where global business and political leaders are attending the World Economic Forum (WEF), Browder said the central bank of Russia was "running out of money."

"Let's say that they have $200 billion (in reserve) and they're burning through all sorts of money right now because of the oil prices and sanctions. They just don't have the money to support the ruble and so Russians are just suffering," he said, adding.

"Eventually they're going to run out of that money and when they do, that's when the real trouble begins," he added.

His comments come as the ruble continued its slide against the dollar. On Thursday it hit 85 rubles per dollar.

2--Ruble Plunges 26% in 90 days, Hits New Low, Government Says to Heck with it

Where’s the shock and awe?

The ruble plunged 3.8% on Wednesday and another 2.8 on Thursday to a new all-time low of 83.85 to the dollar, at 5:30 PM Moscow time, blowing through the previous catastrophic panic low of December 2014. At the time, the Ministry of Finance and the Central Bank deployed desperate, and ultimately very costly shock-and-awe measures to stop the ruble from spiraling out of control. And it triggered all kinds of drama....


Today, there’s no such drama. The ruble is now lower than it had ever been. It has plunged 26% against the dollar in just three months. It’s also down 25% against the euro, 27% against the yen, and 23% against the yuan. This is an all-out ruble crash, not a “strong dollar” problem.

And it’s down 63% against the dollar since early 2013. Back then, it took 29 rubles to buy a dollar. It took 62 rubles three months ago. It takes nearly 84 rubles now:

But there were no big announcements and no shock-and-awe moments.

3---Looking for signs of stocks' final washout as fear, panic spike

First came the Dow's 565-point whoosh to the downside Wednesday. Then came the rebound rally that trimmed the Dow's losses for the day to 249 points and which Wall Street hopes was the final washout -- or so-called investor "capitulation" -- that often signals the end of stock market pain.

Indeed, the relentless selling on Wall Street early in the new year had panicky investors running Wednesday.

4--Rick Sentelli: "A rolling margin call"

"We basically have a global rolling margin call that's been going on since the 3rd Quarter of last year. It's gotten a bit more intense since the Fed announced it was normalizing" because, in essence, a quarter point (rate hike) doesn't mean anything, but the mentality that we are about to turn the corner on the "Grand Experiment" means a lot, ("especially in a time when" inflation, absent energy, appears to be on the rise) (Closing Bell Exchange, CNBC)

5--New low oil prices and how they're set, focus on fracking

6--Default risk in energy debt seen as higher than Great Recession

Schwab Center for Financial Research

Energy spreads have widened past their Great-Recession peak.


Widening credit spreads imply that “the market is clearly expecting the default rate to pick up, as the balance sheets of some of the riskier energy companies won't be able to sustain this drop in oil prices US:CLG6 ” said Collin Martin, director of fixed-income strategy for the Schwab Center for Financial Research

7--Commodities meltdown triggers capital flight

Global investors and companies pulled $735 billion out of emerging markets in 2015, the worst capital flight in at least 15 years, the Institute of International Finance said.

The amount was almost seven times bigger than what was recorded in 2014, the Washington-based think tank said in a report on Wednesday. China was the biggest loser, with $676 billion leaving its markets. The IIF predicted investors may withdraw $348 billion from developing countries this year.

Emerging-market stocks are trading at the lowest levels since May 2009 and a gauge of 20 currencies has slumped to a record. A meltdown in commodity prices and concern over the slowdown in China’s growth to the weakest since 1990 are spurring investors to dump assets from China to Russia and Brazil. The 31 biggest developing markets have lost a combined $2 trillion in equity values since the start of 2016.

8--Oil Bust Could End Dollar Domination, oil price

 There is an overriding belief that the U.S. dollar can hold onto its status as the world’s king reserve currency simply because of petro dollars. But in recent years, a serious threat to this system has developed—and the risk of the dollar being dethroned is very real. The U.S. dollar has reigned supreme since the end of WWII, when the Bretton Woods system gave it is initial power. With Bretton Woods’collapse in 1971, oil became its new saviour and kingmaker as the U.S. dollar became the prime currency for crude oil transactions. In 1973, the U.S. made a pact with the Saudi King to conduct all crude oil trades in U.S. dollars—in return for U.S. protection of its oil fields. Because of world hunger for crude, the demand for U.S. dollars experienced a similar, sustained hunger.

9--Oil's Sum of All Fears

Be very afraid

10--Michael Klare: Plunging Oil Prices – A Recipe for More War?

11--Russia Breaking Wall St Oil Price Monopoly

Russia has just taken significant steps that will break the present Wall Street oil price monopoly, at least for a huge part of the world oil market. The move is part of a longer-term strategy of decoupling Russia’s economy and especially its very significant export of oil, from the US dollar, today the Achilles Heel of the Russian economy. Later in November the Russian Energy Ministry has announced that it will begin test-trading of a new Russian oil benchmark. While this might sound like small beer to many, it’s huge. If successful, and there is no reason why it won’t be, the Russian crude oil benchmark futures contract traded on Russian exchanges, will price oil in rubles and no longer in US dollars. It is part of a de-dollarization move that Russia, China and a growing number of other countries have quietly begun. The setting of an oil benchmark price is at the heart of the method used by major Wall Street banks to control world oil prices. Oil is the world’s largest commodity in dollar terms. Today, the price of Russian crude oil is referenced to what is called the Brent price. The problem is that the Brent field, along with other major North Sea oil fields is in major decline, meaning that Wall Street can use a vanishing benchmark to leverage control over vastly larger oil volumes. The other problem is that the Brent contract is controlled essentially by Wall Street and the derivatives manipulations of banks like Goldman Sachs, Morgan Stanley, JP MorganChase and Citibank.

12--Weak Demand?  Gasoline Demand Has Plummeted; Signs Of Severe Recession In Store?

13--Stakes are high as US plays the oil card against Iran and Russia, Guardian

John Kerry, the US Secretary of State, allegedly struck a deal with King Abdullah in September under which the Saudis would sell crude at below the prevailing market price. That would help explain why the price has been falling at a time when, given the turmoil in Iraq and Syria caused by Islamic State, it would normally have been rising.”

14--F. William Engdahl titled “The Secret Stupid Saudi-US Deal on Syria”

“The details are emerging of a new secret and quite stupid Saudi-US deal on Syria and the so-called IS. It involves oil and gas control of the entire region and the weakening of Russia and Iran by Saudi Arabian flooding the world market with cheap oil. Details were concluded in the September meeting by US Secretary of State John Kerry and the Saudi King…

..the kingdom of Saudi Arabia, has been flooding the market with deep discounted oil, triggering a price war within OPEC… The Saudis are targeting sales to Asia for the discounts and in particular, its major Asian customer, China where it is reportedly offering its crude for a mere $50 to $60 a barrel rather than the earlier price of around $100. That Saudi financial discounting operation in turn is by all appearance being coordinated with a US Treasury financial warfare operation, via its Office of Terrorism and Financial Intelligence, in cooperation with a handful of inside players on Wall Street who control oil derivatives trading. The result is a market panic that is gaining momentum daily. China is quite happy to buy the cheap oil, but her close allies, Russia and Iran, are being hit severely…

According to Rashid Abanmy, President of the Riyadh-based Saudi Arabia Oil Policies and Strategic Expectations Center, the dramatic price collapse is being deliberately caused by the Saudis, OPEC’s largest producer. The public reason claimed is to gain new markets in a global market of weakening oil demand. The real reason, according to Abanmy, is to put pressure on Iran on her nuclear program, and on Russia to end her support for Bashar al-Assad in Syria….More than 50% of Russian state revenue comes from its export sales of oil and gas. The US-Saudi oil price manipulation is aimed at destabilizing several strong opponents of US globalist policies. Targets include Iran and Syria, both allies of Russia in opposing a US sole Superpower. The principal target, however, is Putin’s Russia, the single greatest threat today to that Superpower hegemony.

15--No Panic as Russians Absorb Ruble Crash 

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