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ECONOMICS AND FINANCE

THE US RESCUE BOMB HAS EXPLODED. WHAT NEXT?

3/26/2020

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In the following is our translation of an article from RIA Novosti with commentary and notes [in brackets] by Vince Dhimos.
 
The main difference between analyses by the Russian Ivan Danilov and US financial analysts is that Danilov looks at the larger picture including non-aligned countries, whose opinion is invariably ignored by US state-aligned media. Actually, it could have been worse. Trump had wanted to bail out the already perpetually failing oil companies, which, thanks to the refusal of Russia and OPEC to cut production – which had been done heretofore solely to prop up US shale oil drillers – have had their bottoms drop out completely.
 
Danilov’s last paragraph is a warning:
 
“China is seriously considering the scenario where dollars (and US bonds from China's foreign exchange reserves) will need to be dropped immediately, because Washington’s actions will lead to global inflation and a catastrophic devaluation of the American currency itself. We can assume that Beijing was sending a public warning to Washington. But it is unlikely to raise anyone’s awareness.”
 
Remember that the reason for the Fed´s perpetual printing spree (quantitative easing) is that buyers can no longer be found for US Treasury notes and the Fed is obliged to buy its own bonds back. But if China ditches its reserves of Treasuries, this will make it even harder for the Fed to cope. And then, what if the unthinkable happens and Saudi ditches its reserves and buys gold instead? Some analysts have already observed that Saudi’s refusal to continue the oil production cuts signals the end of the petrodollar. But ditching its dollar reserves would be the icing on the cake! The reason I mention this possibility is MBS’s stated suspicion that the US is behind a recently uncovered palace coup plot. Suppose MBS, in a rage at Washington, decides to drop the dollar and then undertake a rapprochement with Iran? Peace might break out in a nation that relies on war for its livelihood!
 
BEGIN TRANSLATION
 
https://ria.ru/20200326/1569143255.html
 
The explosion of the American "rescue bomb": what will happen now?
 
March 25, 2020
 
Ivan Danilov
 
On Monday, the US Federal Reserve System (that is, the US Central Bank) took unprecedented measures to support financial markets: it was announced that now the redemption of the government bond market will occur without any restrictions, in the volumes "that will be required."
 
A delayed, but powerful effect of this announcement was observed on financial markets around the world on Tuesday – indeed prices were rising for everything, including the currencies of developing countries, gold, oil, as well as stocks of companies.
 
The psychological effect that the American authorities have achieved is also hard to overestimate, and it will be much more long-term than any direct impact on the prices of some assets. The term "Fed Reserve" has long been established in the financial markets - and it is used in cases where the US Central Bank applies some urgent, unusual, and possibly extremely dangerous measures of financial impact on the markets and the economy as a whole.
 
As an example of an emotional reaction to what happened on Monday, you can take an assessment from an article in the Australian Financial Review, the leading financial publication in the Southern Hemisphere, which begins with the thesis: "Forget the bazooka. The Federal Reserve has resorted to nuclear weapons." The decision to undertake endless quantitative easing (endless redemption of US government bonds from the market. - author) by the world's largest Central Bank is a decisive moment not only in this crisis, but also in the history of central banks, which indicates the seriousness of the falling (economic) activity affecting the global economy and the financial system that supports it. "
 
Theoretically, after this statement by the Federal Reserve, the rise in prices on trading floors should have started almost immediately, but on the day the decision was made, everything went wrong, because the actions of the regulator were actively (and effectively) prevented by American politicians. The fact is that congressmen and senators decided that now is a very good moment to quarrel among themselves about the details of the legislative package of measures to support the American economy, and failed at its expected adoption. Players in the financial markets of the whole world came to the logical conclusion that no measures of the Federal Reserve will save the American economy if it is governed by such intellectually peculiar policies, and under global conditions, the fall of the US economy means a severe crisis around the world.
 
On Tuesday, markets were growing by and large – due in part to hopes that either Trump or the famous American "deep state" could nevertheless put things in order or at least create some kind of consensus. It is worth noting that the venerable senators and congressmen quarrelled and failed to vote not because they wanted to do better, but because each party tried to sneak subsidies for its corporate sponsors or socially associated groups into the bill on the pretext of fighting the crisis. Matt Stoller, director of research at the American Economic Liberties Project, compiled an incomplete list of such proposals, which were discussed both officially and informally.
 
Speeding up payments and removing budget control over payments to contractors of the Pentagon, five billion dollars grant for space projects of billionaires Elon Musk and Jeff Bezos [Musk’s net worth: 26.9 billion, Bezos’ net worth 113.9 billion], $150 billion for hotels, $145 billion for restaurant owners, one trillion dollars credit guarantees for the International Council of Shopping Centers [a real estate group], a tax deduction for subscriptions to fitness clubs and the purchase of sports equipment, a facilitated process for issuance of visas for migrant workers in meat processing companies, five billion dollars of subsidies to producers of beer, 500 million for confectionery manufacturers, etc.
 
As a Washington lobbyist rightly remarked:
 
“A crisis can be a blessing. Every time a crisis arises and Washington is involved in that crisis, it’s an opportunity for guys like me.” This is important, because discussions of this kind accurately reflect the essence of the situation and where and to whom the bulk of the very money will go that the Federal Reserve prints and throws into the market in its "use of the nuclear option."
 
Sooner or later, lobbyists, senators, financial bosses, shareholders of large companies and congressmen will somehow agree among themselves, adopt the relevant actions, and this will allow us to efficiently inject money into the American (and - indirectly - global) economy, which will have a positive effect on the confidence of global financial markets in a bright future. But those who are used to planning not for months but for years — and in this case we are talking about our Beijing partners — are not delighted with Washington’s monetary initiative and its consequences, which will fully manifest after the shock of the epidemic passes. The official mouthpiece of China, the state-owned Global Times has published an editorial that clearly sets out a vision of what will happen next and what China has to do to deal with the consequences:
 
 
"In fact, the US reaction in the form of printing money has become an inevitable trend and (this printing) comes from the economy. The US dollar is the world's reserve currency and the main currency of world trade. And it is because of the financial hegemony of the dollar that the world will have to take on the consequences of large-scale US quantitative easing (that is, the Fed’s redemption of US bonds for US dollars printed from thin air. - author). As a result, serious global inflation is on the way. Rising commodity prices will soon spread to all products around the world, which will lead to higher asset prices, and the impact of this growth will ultimately be felt in the real economy. As one of the largest lenders of US debt, China must be vigilant about the impact of printing money in the United States with proper precautions regarding the structure of Chinese foreign exchange reserves."
 
It is worth separately translating the final phrase from the diplomatic English in which the Global Times column is written, into plain Russian [or English, in translation]: China is seriously considering the scenario where dollars (and US bonds from China's foreign exchange reserves) will need to be dropped immediately, because Washington’s actions will lead to global inflation and a catastrophic devaluation of the American currency itself. We can assume that Beijing was sending a public warning to Washington. But it is unlikely that it will raise anyone’s awareness.
 
END OF TRANSLATION
 
Syrian war news
 
We absolutely do not encourage anyone to come here first or prefer NSS to read about the conflict. We include this for readers too busy to browse other sites. Go to Al Masdar and Southfront first if possible, which include photos and videos. Support Southfront if possible.  The Western msm is not doing its job. Why? Because news from Syria and Iraq shows that the US is gradually losing its influence there. Thus US media simply ignore this news.
 
https://www.almasdarnews.com/article/syrian-russian-military-reinforcements-head-to-idlib-with-heavy-weapons-video/?utm_medium=ppc&utm_source=push&utm_campaign=push%notificationss&utm_content=varies
 
Syrian, Russian military reinforcements head to Idlib with heavy weapons: video
By News Desk -2020-03-25
 
BEIRUT, LEBANON (5:20 P.M.) – The Syrian Arab Army (SAA) is preparing to launch a large-scale offensive in the Idlib Governorate amid the refusal of the militant groups to withdraw from the designated safe zone that was established by the Moscow Agreement on March 5th.
 
According to a military source in northwestern Syria, the Syrian and Russian military forces have sent more reinforcements to the Idlib Governorate this week, with the latter’s personnel consisting mostly of advisers.
 
The Russian military gave the Turkish forces until the end of March to clear the safe zone along the M-4 Highway (Aleppo-Latakia Highway); however, they have failed to remove these militants from the area.
 
This was one of the stipulations of the Moscow Agreement, which Turkey helped establish in order to implement a ceasefire in the Idlib Governorate.
 
A convoy of Russian military equipment was filmed heading towards the Idlib Governorate this week, as the Syrian Arab Army (SAA) prepares to resume their offensive against the militant forces in the region.
 
https://southfront.org/unfortunate-adventures-of-turkish-army-in-idlib/
 
UNFORTUNATE ADVENTURES OF TURKISH ARMY IN IDLIB
 
 
 
Two Turkish soldiers were injured and two vehicles damaged in Syria’s southern Idlib on March 24. Their military convoy was targeted by a roadside bomb explosion near the village of Sfuhun. Turkish troops based at the al-Barah observation post were conducting a patrol along the contact line between the Syrian Army and Idlib armed groups.
This became the second attack on Turkish forces in Greater Idlib in less than 7 days. On March 19, two Turkish soldiers were killed and several others injured, when an IED exploded near their convoy near the village of Muhamabal.
Pro-militant propaganda claims that the attacks were carried out by the ‘criminal Assad regime’ in an attempt to destabilize the situation. Turkish media outlets pay scant attention to the situation reporting about some unidentified radicals. The open secret is that Turkish forces have become the target of attacks by groups that Ankara has been supporting with its  opposition of the anti-terrorist operations of the Syrian Army. Hayat Tahrir al-Sham, Houras al-Din, the Turkistan Islamic Party and similar organizations see the creation of a buffer zone along the M4 as a grave threat to their interests and survival. Therefore they are sabotaging the deal by blocking the highway and fuelling military tensions in the region. In the near future, they may even stage a large false-flag attack on Turkish forces near the contact line planning to blame the ‘Assad regime’ for it and thus  relaunch military hostilities between the Turkish Army and the Syrian Armed Forces.
Violations of the ceasefire regime by Idlib radicals are also increasing. Recently, ATGM, mortar attacks and artillery shelling were reported near Kafr Nubl, Saraqib, Kansafra and Kabinah. Turkish-backed groups claim that this week they destroyed a Syrian Army battle tank and  bulldozer north of Saraqib.
Members of Turkish-backed Faylaq al-Madj raided the village of Sukariya, near the town of Tell Abyad, in northeastern Syria. They attacked locals wounding dozens of them and looting their property. Earlier in March, members of Turkish-backed militant groups protested in the area of Operation Peace Spring because there had been a significant delay of salaries from Ankara. Turkish sources claim that Turkey is actively working to put an end to looting and attacks on locals. Nonetheless, such incidents continue to erupt on a regular basis.
Several explosions were reported near positions of the Syrian Army and Iranian-backed forces at al-Bukamal. Local sources claim that they were a result of actions by ISIS cells. Over the past months, al-Bukamal became a target of dozens of Israeli and US strikes. ISIS terrorists are likely trying to exploit this.
 
https://www.almasdarnews.com/article/turkish-military-sends-large-convoy-to-southern-idlib-amid-syrian-army-build-up/?utm_medium=ppc&utm_source=push&utm_campaign=push%notificationss&utm_content=varies
 
Turkish military sends large convoy to southern Idlib amid Syrian Army build-up
By News Desk -2020-03-26
 
BEIRUT, LEBANON (3:45 P.M.) – The Turkish military sent a large convoy to the southern countryside of the Idlib Governorate on Thursday amid reports of a Syrian Arab Army (SAA) build-up in the Jabal Al-Zawiya region.
 
According to reports from the Idlib countryside, the Turkish military convoy entered northwestern Syria from the neighboring Hatay Province; they would make their way to one of their observation posts.
 
The Turkish military was said to have reached the town of Al-Mastoumah in the southern countryside of Idlib after entering the country earlier in the day.
 
At the same time, the Syrian Arab Army is still building up its forces in the Jabal Al-Zawiya region, as they continue to send troops and military equipment to the front-lines in southern Idlib.
 
The Syrian Arab Army is awaiting the green light from the Russian Armed Forces to resume this offensive, which could happen during the first week of April.
 
The Russian military has given their Turkish counterparts until the end of March to force their allied militants to withdraw from the designated safe zone along the M-4 Highway (Aleppo-Latakia Highway).
 
https://www.almasdarnews.com/article/rockets-land-near-us-embassy-in-baghdad-video/?utm_medium=ppc&utm_source=push&utm_campaign=push%notificationss&utm_content=varies
 
Rockets land near US embassy in Baghdad: video
 
By News Desk -2020-03-26
 
At least three rockets fell near the US Embassy in Iraq, in the Green Zone of Baghdad, Iraqi media reported on Thursday.
 
According to the Al-Arabiya broadcaster, the rockets fell near the US embassy, and no damage or casualties were reported, a source told Baghdad Today.
 
Aleph 🕯️ א
@no_itsmyturn
 · 12h
Replying to @no_itsmyturn
Update: No casualties.
 
 
Aleph 🕯️ א
@no_itsmyturn
Another video /#Baghdad Green Zone #Iraq 🇮🇶
 
​No official statement on the reports has been made.
 
The Green Zone suffers from regular rocket attacks as it houses government facilities and foreign embassies. On 17 March, three rockets fell in the zone, two in al-Jadriya and a third in the Tigris River, according to Iraqi officials.
 
Col. Myles Caggins, a spokesperson for the Pentagon’s Operation Inherent Resolve, noted at the time that the rockets landed roughly 2 kilometers from the American embassy, according to the Associated Press.
 
https://www.almasdarnews.com/article/us-warship-armed-with-tomahawk-missiles-enters-taiwan-strait-amid-row-with-china/?utm_medium=ppc&utm_source=push&utm_campaign=push%notificationss&utm_content=varies
 
US warship armed with Tomahawk missiles enters Taiwan Strait amid row with China
By
 News Desk
 -
2020-03-26
0
 
China blasted the US over the move to sale a warship through the Taiwan Strait, accusing Washington “dangerous” behaviour.
“US moves have seriously interfered in China’s internal affairs, severely harmed peace and stability in the Taiwan Strait and poisoned Sino-US military ties,” Chinese Defence Ministry spokesman Ren Guoqiang said. Criticizing the US’s “continued negative actions” in Taiwan, Ren warned that US actions were “extremely dangerous.”
Earlier, the US Seventh Fleet reported that the USS McCampbell, an Arleigh Burke-class missile destroyer equipped with Tomahawk cruise missiles, carried out a “routine” freedom of navigation mission through the sensitive 180 km-wide Taiwan Strait.
Anthony Junco, a Navy spokesman, said the ship carried out a “routine Taiwan Strait transit March 25 (local time) in accordance with international law.” The ship’s transit, Junco said, “demonstrates the US commitment to a free and open Indo-Pacific.”
The spokesman added that the Navy would “continue to fly, sail and operate anywhere international law allows.” Taiwan’s military, meanwhile, said it monitored the US destroyer’s movement as it sailed north through the strait.
Second Transit Since January
This was the second time the US has sailed a warship through the Strait since January, when the US Navy demonstratively sent a ship to the area following elections in Taiwan. China said at the time that it ‘closely monitored’ that passage.
Taiwan staged massive naval, air force and army drills this week, a week after the island’s military reported intercepting and driving away multiple People’s Liberation Army Air Force jets after they crossed the median line of the Taiwan Strait. Taipei has called the actions of the Chinese military a “provocation.”
Beijing considers Taiwan a part of its territory, and maintains its right to one day reunite the island with the mainland. Taiwan split from mainland China in during the Chinese Civil War in 1949.
The United States, Taiwan’s biggest protector and ally, has regularly sent vessels through the Strait, and has sold the country advanced weaponry, even while de jure recognizing the People’s Republic as the sole sovereign Chinese state.
Beijing has repeatedly warned Washington against interfering in Taiwan’s internal affairs, and has demanded that the US cancel any official and military contacts with the island, on pain of sanctions against US companies.
 
Source: Sputnik
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