Tag Archives: BRICS

China, Russia and South Korea Make Moves Away from Dollar

weak-dollarBRICS (Brazil, Russia, India, China, S. Africa) is the acronym signifying the next generation of economic power houses. Increasingly, these, and nations like them are working to diminish the U.S. Dollar as the World’s reserve currency. This week, China and Russia took more steps towards that goal.

China’s central bank has authorised the Bank of Communications, the country’s fifth largest lender, to undertake yuan clearing business in the South Korean capital, the People’s Bank of China (PBoC) said in a statement.

That action clears the way for China and South Korea to trade in Yuan (Remnibi) for transactions between their two countries thereby releasing them from use of the U.S. Dollar for international trade.

Russia has been working tirelessly with China and other BRIC nations towards the same goal – freedom from the Dollar and the IMF. As more nations set up clearing houses for other than dollar transactions, the Dollar will become less important in international trade.

China, Japan and Russia have already agreed to similar currency use between them. Chinese currency use for trade in Africa is also rapidly increasing.

Next week, Russian President Vladimir Putin will begin a tour of several Latin American countries, including Brazil.  No doubt, decreasing dollar dependence will be on the agenda.

With more than 60% of the World’s currency reserves being held in U.S. Dollars, this increasing trend will have impacts.

The first, and most obvious impact will be massive inflation – in both the cost of goods and the cost of money. The dollar’s value will decline and make food, clothing, gasoline and just about everything else cost much, much more. Interest rates will skyrocket and make borrowing money just about unaffordable.

A portion of the rest of the world envisions a world without America. Some are making sure it happens.

 

South African Guard Tries to Lay Hands On Putin’s ‘Nuclear Suitcase’, Russian Spokesman Throws South African Gov Under the Bus

At this year’s BRICS summit, Russian President, Vladimir Putin’s security detail was challenged while trying to enter a building.

via the Daily Mail-

Armed guards from Vladimir Putin’s entourage were involved in an ugly fight in South Africa after they were ordered to put top secret suitcases – believed to contain the codes for Russia’s nuclear arsenal – through a security scanner.

Angry ‘pushing and shoving’ broke out after some members of Putin’s security detail were prevented from following the Russian president into the conference hall staging the summit, which was hosted by South Africa’s president Jacob Zuma and also involved Brazil, Russia, India and China.

What’s interesting is the apparent lack of diplomacy that happened next, when a Russian spokesman threw the host of the summit (South Africa) under the bus.

Kremlin officials blamed the embarrassing bust-up on the South Africans, with Putin’s spokesman Dmitry Peskov saying: ‘They manage football better. A lot of confusion.’

He added: ‘The incident happened because of the fault of the inviting side.’

Also interesting?  The spokesman said South Africans “manage football  better” in response to the incident over the suitcase presumed to have nuclear codes.  This is interesting, because the American counterpart to that suitcase just so happens to be referred to as a “football” by members of our President’s security.  (of course, in this case, “football” refers to “soccer”, but an interesting tidbit, still)

SO WHAT IS THIS BRICS SUMMIT ABOUT, ANYWAY?

Simply put, it’s a group of five (it used to be four) nations that happen to have large populations and a lot of economic potential, but they lack the same kind of pull that the United States and Europe have enjoyed over the years.  It has been their hope that maybe they can band together and use their synergies to help achieve prominence and leverage on the world stage that they haven’t been able to obtain individually.  As this piece on Bloomberg details, their results, so far have been mixed at best.

WHO ARE THESE BRICS NATIONS?

An investment analyst at Goldman Sachs Group Inc. famously came up with the BRIC designation (South Africa was an afterthought) in 2001

Brazil, Russia, India, China, South Africa.

While the Bloomberg piece suggests that the BRICS summit can sometimes (or often) come across as a fruitless endeavor, it should be noted that these countries are becoming more and more coveted by various corporations around the world due to their large populations and practically untapped markets.

India, for example, has been seen by many as the next place for a great smartphone boom, as more of it’s 1.2 billion citizens become upwardly mobile.

New world order emerging from BRICS summit

Leaders from Brazil, Russia, India, China and South Africa (the BRICS) met in Durham, South Africa this week to discuss a new world bank which will allow them to trade and fund their projects independent of the World Bank and the U.S. Dollar.

South African President Jacob Zuma saud that the group has “decided to enter formal negotiations to establish a BRICS-led new development Bank based on our own considerable infrastructure needs, which amount to around $4.5 trillion over the next five years.”

Today Brazil and China announced that they will do business using each other’s currencies instead of using the U.S. Dollar – the world’s predominate reserve currency.

As the BRICS development bank matures, the members hope it will allow some of the world’s largest emerging economies to ignore and later supplant the World Bank and IMF.

Others are skeptical. .

Chief executive of the Johannesburg-based Frontier Advisory Martyn Davies said “I think there was too much hype around it”. Davies continued saying that the BRICS”are still battling to create the economic institutions to back their geopolitical rhetoric … the rhetoric is not supported by the substance.”

Where the World Bank has been largely the puppet of the U.S. and the IMF under the hand of Europe, the BRICS development bank effort is being largely pushed by China.

Many of the nations involved are economic powerhouses in their own regions, but the group is not yet a functional alliance. Many experts believe that for the bank to emerge as a global economic power, it will need to pull in new members from other emerging nations.