The Beginning of the End of Dominance for the U.S. Dollar

By Andrew Topf

Recent trade deals and high-level cooperation between Russia and China have set off alarm bells in the West as policymakers and oil and gas executives watch the balance of power in global energy markets shift to the East.

The reasons for the cozier relationship between the two giant powers are, of course, rooted in the Ukraine crisis and subsequent Western sanctions against Russia, combined with China's need to secure long-term energy supplies. However, a consequence of closer economic ties between Russia and China could also mean the beginning of the end of dominance for the U.S. dollar, and that could

Russia Calls Europe's Bluff on Ukraine Gas Deal

Geoffrey Smith reports at Fortune:

Russia, Ukraine and the European Union failed late Tuesday to strike a deal that would guarantee Russian gas supplies through the coming winter, after the E.U. refused a request by the Russian side to guarantee full and proper payment by Ukraine.

The deadlock revives the risk that Russia may cut off gas deliveries to parts of Europe this winter, as part of a wider strategy to assert its influence in Ukraine. That would further aggravate the economic slowdown that has hit both countries since the Ukrainian crisis erupted.

It also exposes the reluctance of Europe to back up its political support for the Kyiv government with hard cash.

Ukraine has a record of siphoning Russian gas destined for Europe, and its own finances are in a disastrous state after years of mismanagement by President Viktor Yankovych and the economic collapse in the turmoil that followed his ouster in February. The economy is projected to shrink by some 7% this year...

Russia supplies over a quarter of the E.U.’s gas, and most of those supplies have traditionally gone through Ukraine. Countries such as Bulgaria and Slovakia are completely dependent on Russian gas shipped through the Ukrainian pipeline system, and would face drastic energy shortages this winter if no agreement is struck.

Russia stopped shipping through Ukraine in May, claiming Ukraine owed it over $5 billion for past supplies. Ukraine’s national gas company Naftogaz says it only owes $3.1 billion. The sides are arguing over the difference in a Stockholm arbitration tribunal.

Total's CEO Christophe de Margerie Dies in Moscow Plane Crash

Dmitry Medvedenko, from the Voice of Russia radio station, reports Christophe de Margerie, the chief executive of French oil company Total, has died in an air crash in Moscow.

Total is one of the world's leading oil and gas company, operating in more than 50 countries.

Airport spokeswoman Elena Krylova said: "Tonight, a plane crashed when it collided with a snow-clearing machine. Three crew members and a passenger died."

"I can confirm that the passenger was Total's head de Margerie," she said.

Mr de Margerie, 63, had been chief executive of Europe's third largest oil company since 2007.

maintained the company's investments in Burma and Iran despite US sanctions against those countries. This year he argued Europe should maintain its energy relationship with Russia amid the conflict in Ukraine.

(via the BBC)

Russia Now, Most Likely, Has More Gold Reserves Than Switzerland.

In September, Russia continued its voracious gold buying, reports Smaulgld.

Russia, added 1.2 million ounces of gold to its reserves in September, bringing its reserves to 37 million ounces, or approximately 1.156,00 tons, placing them, most likely, ahead of Switzerland who sold 60% of its gold reserves in the mid 2000’s.

At the average September gold price of $1238 per ounce, Russia’s September gold purchase is worth approximately $1.5 Billion.

Does Russian Billionaire Mikhail Prokhorov Have Any Idea What Is Going on in the Eurozone?

Russian billionaire Mikhail Prokhorov, who is challenging Russia’s Prime Minister Vladimir Putin in March’s presidential election, says he will push for a common currency with the European Union if elected, reports AP.

Hey Vladi, I think you can win this straight. Just explain to the Russian people how insane it would be to hook up with the eurozone, that it would mean higher taxes for Russians so the party can continue in Greece, Spain and Italy.

Putin Disses Protesters; Says They are Seeking 'Brownian Motion'

Vladimir Putin has turned to deep physics to diss Russian protesters. The Christian Science Monitor explains:

Russian Prime Minister Vladimir Putin, during comments before his supporters on Tuesday, said protesters against his 12-year reign were seeking "Brownian motion." What was he talking about?

Mr. Putin was referring to a physics phenomenon first described by Scottish scientist Robert Brown in his 1827 paper "A brief account of microscopical observations made on the particles contained in the pollen of plants."

While observing pollen grains suspended in water, Mr. Brown found that the grains jiggled and bounced within the fluid in what he called "rapid oscillatory motion." He could not see any cause of their motion – they didn't appear to impact any other particles, and he ruled out currents within the water – but he was able [sic] use other substances to consistently replicate the phenomenon, which he dubbed "Brownian motion."

It wasn't until 1905 that the phenomenon was explained, by none other than Albert Einstein. The grains weren't jerking randomly in the water, he wrote, but rather were colliding with much smaller water molecules. As the molecules hit the grains, the grains would change direction, but since the water molecules were invisible, it would appear that the grains were jittering without cause. Einstein's discovery was seen as proof of the atomic theory of matter: that all matter is made of tiny particles, or atoms.

Gorbachev Calls on Putin to Resign

Not a Merry Christmas for Vladimir.

Tens of thousands of Russians took part in demonstrations Saturday to protest against suspected fraud in the Dec. 4 legislative polls. reports AFP. Now word is that Mikhail Gorbachev has called on Putin to resign. And most important, according to professional protest organizers, the protest has a color.

According to AFP, the protesters clutched white balloons and carried banners calling for free elections.

AFP has a video report on the protests here.

Long-time EPJ readers will note that the white balloons suggest a very professional in the background manager of the protests.

Could the CIA be in the background?

Don't forget to read about the man behind the protests.

Here's more.

And don't forget this video about professional protest organizers that are likely employed by the CIA.

Richard Ebeling: On Mises, Central Planning and Facing Down Russian Tanks

Don't miss this week's Robert Wenzel Show. I spoke with economics Professor Richard Ebeling. 

We discussed why Ludwig von Mises was a great economist, central planning, what's going on in Russia right now and about Richard in Moscow facing down Russian tanks.




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More Indications of the Depth of U.S. Involvement in the Russian Unrest

Earlier this week, I reported on Aleksei Navalny, and an NYT profile that dubbed him "The Man Behind the Russian Protests."

Given certain facts in the profile, I speculated Navalny might have CIA connections. Now comes further information that shows that Navalny is a recipient of US government funding. At LRC, Daniel McAdams reports:

Thanks to the intrepid and indefatigable Tony Cartalucci for digging deeper (as true journalists once did) into the bogus "Russia Blogger is Putin's worst nightmare" press orgy to discover that this brave Russian do-gooder coining the memorable "party of crooks and thieves" slogan to describe Prime Minister Putin's United Russia party is a long-time recipient of US government semi-covert largesse via its corrupt color revolution machine the National Endowment for Democracy (sic). "Democracy activist" Alexey Navalny, according to his "Yale World Fellow" profile, "is also co-founder of the Democratic Alternative movement and was vice-chairman of the Moscow branch of the political party YABLOKO," which received funding from the National Endowment for Democracy according to cables made public via the whistleblower website, Wikileaks. 

Navalny's main collaborator, Ilya Yashin, is also a recipient of NED's Russia regime change funding as head of the Moscow branch of the People's Freedom Party and leading member of the "Strategy 31" campaign. Cartalucci points out that NED's own webpage advertises "Strategy 31" as a major recipient of US government funding.

Bottom line, the many legged Empire is operating everywhere, except for possibly, central L.A. and certain parts of Auburn, Alabama.

New Jersey Nets Owner to Run Against Putin

Russian billionaire Mikhail Prokhorov -- the owner of the New Jersey Nets basketball team and one of the world's richest men -- said Monday that he will run for president of Russia next year, reports CNN.

Calling his decision to run for president "probably the most important decision of my life," he acknowledged the risks of challenging Russia's rulers.

"There is saying in Russia: Never say never, anyone can end up behind bars. But I am not afraid," he said in a press conference in Moscow.

Prokhorov, 45, is worth $18 billion, Forbes estimated in March, making him Russia's third richest man.

Says CNN:

His announcement set off a frenzy of speculation about whether he was running with the Kremlin's tacit backing, to give the impression there was a genuine contest for president, or whether he really seeks to defeat Prime Minister Vladimir Putin, who also says he will run.

In October, Prokhorov told NYT that nobody was interested in him until he bought the New Jersey Nets. He underwent media training to make him a more palatable owner to American basketball fans - reportedly watching Katie Couric's interview with Sarah Palin for tips on what not to do on camera.

In Profile: The Man Behind the Russian Protests

It is Aleksei Navalny.

NYT's Ellen Barry writes:

The man most responsible for the extraordinary burst of antigovernment activism here over the past week will not speak at a rally planned for Saturday, or even attend it, because he is in prison...

A week ago, Mr. Navalny, 35, was famous mainly within the narrow context of Russia’s blogosphere. But after last Sunday’s parliamentary elections, he channeled accumulated anger over reported violations into street politics, calling out to “nationalists, liberals, leftists, greens, vegetarians, Martians” via his Twitter feed (135,750 followers) and his blog (61,184) to protest.

If Saturday’s protest is as large as its organizers expect — the city has granted a permit for 30,000 — Mr. Navalny will be credited for mobilizing a generation of young Russians through social media, a leap much like the one that spawned Occupy Wall Street and youth uprisings across Europe this year.

The full measure of Mr. Navalny’s charisma became clear after protests on Monday night; an estimated 5,000 people materialized, making it the largest anti-Kremlin demonstration in recent memory, and Mr. Navalny was arrested on charges of resisting the police and sentenced to 15 days in prison...

MR. NAVALNY has Nordic good looks, a caustic sense of humor and no political organization.

Five years ago, he quit the liberal party Yabloko, frustrated with the liberals’ infighting and isolation from mainstream Russian opinion. Liberals, meanwhile, have deep reservations about him, because he espouses Russian nationalist views. He has appeared as a speaker alongside neo-Nazis and skinheads, and once starred in a video that compares dark-skinned Caucasus militants to cockroaches. While cockroaches can be killed with a slipper, he says that in the case of humans, “I recommend a pistol.”

What attracts people to Mr. Navalny is not ideology, but the confident challenge he mounts to the system.. A real estate lawyer by training, he employs data — on his Web sites he documents theft at state-run companies — and relentless, paint-stripping contempt. “Party of Swindlers and Thieves” has made its way into the vernacular with breathtaking speed and severely damaged United Russia’s political brand.

He projects a serene confidence that events are converging, slowly but surely, against the Kremlin.
.
“Revolution is unavoidable,” he told the Russian edition of Esquire, in an interview published this month. “Simply because the majority of people understand that the system is wrong. When you are in the company of bureaucrats you hear them talking about who has stolen everything, why nothing works and how horrible everything is.”

He was less definitive about the future he envisioned for the country, saying only that he hoped it would “resemble a huge, irrational, metaphysical Canada.”

Of note, the NYT profile is titled, "Rousing Russia With a Phrase". I'm sure using colors and phrases, to incite trouble is part of "Inciting Revolution 101" at the CIA. (See: From Dictatorship to Democracy by Gene Sharp)

Here is WSJ's Phillip Shiskin on Sharp:

In his writings, Mr. Sharp teased out common principles that make nonviolent resistance successful, creating a broad road map for activists looking to destabilize authoritarian regimes. Mr. Sharp's magnum opus, the 902-page "Politics of Nonviolent Action," was published in 1973. But the main source of his success is his 90-page "From Dictatorship to Democracy."

This slim volume offers concise advice on how to plan a successful opposition campaign, along with a list of historically tested tactics for rattling a dictatorial regime. Aimed at no particular country, and easily downloadable from the Internet, the booklet has found universal appeal among opposition activists around the globe.

Though he warns readers that resistance may provoke violent crackdowns and will take careful planning to succeed, Mr. Sharp writes that any dictatorship will eventually collapse if its subjects refuse to obey.

He offers a list of 198 methods of nonviolent action, like the staging of mock elections to poke fun at problems like vote-rigging, using funerals to make political statements and adopting symbolic colors, a la Orange Revolution in the Ukraine. Less conventional tactics include skywriting political messages and "protest disrobings."

Go that? And where did we just see naked protests just appear? In Russia. Was that spontaneous in cold Russia, especially when the girls were imported from the Ukraine?

Curious stuff.

Here's the video where Navalny explains how to kill militants from Caucasus. (Hell of a guy. Is the CIA getting in bed with this character?)

"Putin Out," Thousands of Russian Protesters Chant

Tens of thousands of Russians turned out in central Moscow and across the country Saturday to protest what they believe were rigged parliamentary elections, reports CNN.

Vladimir Ryzhkov, co-chairman of the Party of People's Freedom, said 40,000 people had massed and some 10,000 were headed to the main protest venue,according to a correspondent from the state-run news agency, RIA Novosti.

There have even been nude protests in cold Russia. Although the nude protesters are actually professional Ukrainian protesters. I'm sure the CIA operative who brought them to the mix will probably be promoted:

Rand Paul Single-Handedly Halts a Potential Future Military Confrontation with Russia

Last week, Senator Rand Paul single-handedly prevented the passage of an amendment that would have further eroded Americans’ constitutional rights, the National Defense Authorization Act for Fiscal 2012 (S.1867), amendment No. 1274.

This week he has stopped another  amendment. This one would have significantly increased tensions with Russia and committed the United States to fight a war in Russia's backyard, if Russia attacked Georgia.

Senator Rand, as Brian Koening at The New American put it, "single-handedly thwarted an amendment proposed by Sen. Marco Rubio (R-Fla.) drafted to advance Georgia’s application for NATO membership...Paul firmly opposed Rubio’s amendment, suggesting that expanding NATO in this sensitive region could entangle the United States in Georgia’s affairs with a nuclear-armed Russia, potentially risking a U.S.-Russian war."

Here's Pat Buchanan on what Rand did:

Last week, Sen. Marco Rubio, rising star of the Republican right, on everyone's short list for VP, called for a unanimous vote, without debate, on a resolution directing President Obama to accept Georgia's plan for membership in NATO at the upcoming NATO summit in Chicago.

Rubio was pushing to have the U.S. Senate pressure Obama into fast-tracking Georgia into NATO, making Tbilisi an ally the United States would be obligated by treaty to go to war to defend...

And for whose benefit is Rubio pushing to have his own countrymen committed to fight for a Georgia that, three years ago, started an unprovoked war with Russia? Who cooked up this scheme to involve Americans in future wars in the Caucasus that are none of our business?

The answer is unknown. What is known is the name of the senator who blocked it – Rand Paul, son of Ron Paul, who alone stepped in and objected, defeating Rubio's effort to get a unanimous vote.

The resolution was pulled.

Here's Buchanan on the backstory:

In August 2008, as the world's leaders gathered in Beijing for the Olympic games, Georgian President Mikheil Saakashvili, hot-headed and erratic, made his gamble for greatness.

It began with a stunning artillery barrage on Tskhinvali, capital of tiny South Ossetia, a province that had broken free of Tbilisi when Tbilisi broke free of Russia. As Ossetians and Russian peacekeepers fell under the Georgian guns, terrified Ossetians fled into Russia.

Saakashvili's blitzkrieg appeared to have triumphed.

Until, that is, Russian armor, on Vladimir Putin's orders, came thundering down the Roki Tunnel into Ossetia, sending Saakashvili's army reeling. The Georgians were driven out of Ossetia and expelled from a second province that had broken free of Tbilisi: Abkhazia.

The Russians then proceeded to bomb Tbilisi, capture Gori, birthplace of Josef Stalin, and bomb Georgian airfields rumored to be the forward bases for the Israelis in any pre-emptive strike on Iran.

The humiliation of Saakashvili was total and brought an enraged and frustrated John McCain running to the microphones.

"Today, we're all Georgians," bawled McCain.

Well, not exactly.

President Bush called Putin's response "disproportionate" and "brutal," but did nothing. Small nations that sucker-punch big powers do not get to dictate when the fisticuffs stop.

What made this war of interest to Americans, however, was that Bush had long sought to bring Georgia into NATO. Only the resistance of Old Europe had prevented it.

And had Georgia been a member of NATO when Saakashvili began his war, U.S. Marines and Special Forces might have been on the way to the Caucasus to confront Russian troops in a part of the world where there is no vital U.S. interest and never has been any U.S. strategic interest whatsoever.

A U.S war with Russia – over Georgia, Abkhazia and South Ossetia – would have been an act of national criminal insanity.

Days later, there came another startling discovery.

McCain foreign-policy adviser Randy Scheunemann had been paid $290,000 by the Saakashvili regime, from January 2007 to March 2008, to get Georgia into NATO, and thus acquire a priceless U.S. war guarantee to fight on Georgia's side in any clash with Russia....

Now it is impossible to believe a senator [Rubio], not a year in office, dreamed this [amendment] up himself. Some foreign agent of Scheunemann's ilk had to have had a role in drafting it.

Bottom line: If it wasn't for Rand Paul to step forward and block the amendment, the United States, at the urging of likely dark forces, would have been obligated to fight Russia in its backyard.

Thank you, Rand Paul.

Putin says U.S. Stoked Russian Protests

Is the US an evil empire, fermenting trouble wherever it can? Vladi thinks so.

Prime Minister Vladimir Putin accused the United States on Thursday of stirring up protests against his 12-year rule and said foreign countries were spending hundreds of millions of dollars to influence Russian elections, reports Reuters.

Putin said U.S. Secretary of State Hillary Clinton had encouraged Kremlin opponents by criticizing the vote.

"She set the tone for some opposition activists, gave them a signal, they heard this signal and started active work," Putin told supporters as he laid out plans for his campaign to return to the presidency in a March election.

Citing the examples of Ukraine's 2004 Orange Revolution and the removal of governments in Kyrgyzstan -- also a fellow former Soviet republic -- that were accompanied by bloodshed, he said Western nations were spending heavily to foment political change in Russia.

"Pouring foreign money into electoral processes is particularly unacceptable," said Putin. "Hundreds of millions are being invested in this work. We need to work out forms of protection of our sovereignty, defense against interference from outside."

"What is there to say? We are a big nuclear power and remain so. This raises certain concerns with our partners. They try t o shake us up so that we don't forget who is boss on our planet," Putin said.

Nouriel Roubini Tells a Russian Joke

Robini writes:

A UK PM asked Gorbachev to rate its economy in 1 word. The answer was: Good. Then he asked to describe it in 2 words. The answer: Not Good

Russian President Headed to Visit Silicon Valley Seeking Secret Sauce

As part of his visit to the United States, Russian President Dmitry Medvedev will make a stop in the Silicon Valley this week, reports KCBS TV in San Francisco.

” We’re talking about a country that just a few years ago, the only media they had was socialist media, that was very guarded by the state” said President and CEO of the Silicon Valley Leadership Group Carl Guardino. “And now we have a president of Russia who is very interested in social media, which, by its very nature is very open and transparent.”

People come here looking for the secret sauce, but that’s a hard thing to do,” said Guardino. “But we always encourage foreign leaders to look to establish an innovation economy in your country. Learn from Silicon Valley but don’t think it can be emulated.”


During his visit, Medvedev is also slated to give a speech at Stanford University sometime Wednesday afternoon.

From Stanford, he will fly to Washington D.C. for a meeting with President Obama on Thursday. Then he’s off to Canada for the G8 and G20 meetings.


Dmitry here's the secret sauce that can launch all of Russia into super growth:
 
1. Total respect for property rights.
 
2. Very, very low taxes.
 
3. A stable currency where the central bank is not allowed to increase the supply of money.
 
4. Rule of law--that is limited to protecting property rights.
 
5. Freedom for individuals to do whatever they choose as individuals or as parts of groups, as long as they do not harm others or the property of others.

Russia, Greece and Israel on the Treasury Secretary's Saturday Schedule

On Saturday, Treasury Secretary Geithner will attend the International Monetary Fund’s  International Monetary and Financial Committee  meeting at the IMF in Washington.

 

In the morning, he will hold bilateral meetings with Greek Finance Minister George Papaconstantinou and Russian Finance Minister Alexei Kudrin at the IMF. 

 

Later, Secretary Geithner will meet with Israeli Central Bank Governor Stanley Fischer at the IMF.

Russia Closing All Casinos, 400,000 To Be Laid Off

No wonder Jim Rogers says Russia is too unpredictable to invest in.

The government is shutting down every last legal casino and slot-machine parlor across the land, under an antivice plan promoted by Vladimir Putin, reports NYT.

Putin's plan, writes NYT, was announced during a spy scandal between Russia and its neighbor Georgia, and the timing suggested that Putin was in part seeking to wound the Georgian diaspora, which is said to have an influential role in the industry in Russia.

Dissing the Dollar in Davos, Russian Style

The Russian's want to ditch the dollar as the world's reserve. On Wednesday in Davos, Prime Minister Vladimir Putin, during a speech, called for efforts to "facilitate the emergence of several reserve currencies."

Given current Fed money printing and the likely collapse of the dollar as a result, Putin's proposal may eventually gain traction internationally. There's already a good bit of de facto movement away from the dollar already.

And, note, while this is all brewing, Obama/Geithner seem to want to hasten the collapse of the dollar by calling on China to stop supporting the dollar! Madness. .

Putin wasn't the only Russian dissing the dollar in Davos. On Thursday German Gref, a former Russian Economics Minister, who is now CEO of Russia's largest bank--state-owned-- Sberbank, proposed during a panel discussion, something of a thigh slapper. In the absence of any serious competitors to the dollar, he advocated international control of U.S. monetary policy.

Since the U.S. seems to want to bring democracy to the world, why shouldn't the international community attempt to bring responsible money management to the Federal Reserve? There's kind of an international poetic justice to this Gref proposal, however, I am not planning on staying up late at night waiting for this to happen.

Russian Trading Halted After 12% Drop

The Russian economy, heavily dependent on a world economy absorbing huge quantities of raw commodities used in capital goods production, is getting smacked around pretty good.

Russian shares sank sharply on Wednesday before trading was halted.

Russia’s RTS stock exchange index fell 12.5 per cent in the first three hours of the session before trading was suspended for the rest of the day. Trading was halted on the more liquid Micex stock exchange on Tuesday following a steep slide and it remained closed on Wednesday.

The price of insuring Russian debt soared as credit market sentiment turned dramatically against Russia and some of its leading companies. The cost of protecting Russia’s debt against default leapt by 172 bp to 786.2bp on Wednesday, meaning it now costs $172,000 annually to insure $10 million of the country’s bonds over five years.