PARADIGM SHIFT: Precursors To The End Of The Petrodollar, The United States Corporation And The White Supremacy Paradigm - Iran Abandons The U.S. Dollar, Wants Euro Payment For New And Outstanding Oil Sales!

A general view shows a unit of South Pars Gas field in Asalouyeh Seaport, north of Persian Gulf, Iran November 19, 2015.

Reuters/Raheb Homavandi/TIMA

February 7, 2016 - IRAN - Iran wants to recover tens of billions of dollars it is owed by India and other buyers of its oil in euros and is billing new crude sales in euros, too, looking to reduce its dependence on the U.S. dollar following last month's sanctions relief.

A source at state-owned National Iranian Oil Co (NIOC) told Reuters that Iran will charge in euros for its recently signed oil contracts with firms including French oil and gas major Total, Spanish refiner Cepsa and Litasco, the trading arm of Russia's Lukoil.

"In our invoices we mention a clause that buyers of our oil will have to pay in euros, considering the exchange rate versus the dollar around the time of delivery," the NIOC source said.

Lukoil and Total declined to comment, while Cepsa did not respond to a request for comment.

Iran has also told its trading partners who owe it billions of dollars that it wants to be paid in euros rather than U.S. dollars, said the person, who has direct knowledge of the matter.

Iran was allowed to recover some of the funds frozen under U.S.-led sanctions in currencies other than dollars, such as the Omani rial and UAE dhiram.

Switching oil sales to euros makes sense as Europe is now one of Iran's biggest trading partners.

"Many European companies are rushing to Iran for business opportunities, so it makes sense to have revenue in euros," said Robin Mills, chief executive of Dubai-based Qamar Energy.

Iran has pushed for years to have the euro replace the dollar as the currency for international oil trade. In 2007, Tehran failed to persuade OPEC members to switch away from the dollar, which its then President Mahmoud Ahmadinejad called a "worthless piece of paper".

The NIOC source said Iran's central bank instituted a policy while the country was under sanctions over its disputed nuclear program to carry out foreign trade in euros.

"Iran shifted to the euro and canceled trade in dollars because of political reasons," the source said.

BOOST FOR EURO TRADE

Iran has the world's fourth-largest proved reserves of crude oil, and expects to quickly increase production, which could lead to tens of billions of euros worth of new oil trade.

Iran's insistence on being paid in euros rather than dollars is also a sign of an uneasy truce between Tehran and Washington even after last month's lifting of most sanctions.

U.S. officials estimate about $100 billion (69 billion pound) of Iranian assets were frozen abroad, around half of which Tehran could access as a result of sanctions relief.

It is not clear how much of those funds are oil dues that Iran would want back in euros.

India owes Tehran about $6 billion for oil delivered during the sanctions years.

Last month, NIOC's director general for international affairs told Reuters that Iran "would prefer to receive (oil money owed) in some foreign currency, which for the time being is going to be euro."

Indian government sources confirmed Iran is looking to be paid in euros.

Tehran has asked to be paid using the exchange rates at the time the oil was delivered, along with interest for those payment delays, Indian and Iranian sources said.

Indian officials are working on a mechanism that could involve local banks United Commercial Bank (UCO) and IDBI Bank for handling payments to Iran, one Indian government source said.

UCO CEO R.K. Takkar said the bank is involved in payments to Iran, but did not say if there were any plans to change the payment mechanism. IDBI CEO Kishor Kharat could not be reached for comment.

India could also try to resume payments through Turkey's Halkbank, a channel it stopped using in 2012, or by direct transfer to Iranian banks through the global SWIFT transaction network.

With Iran now again linking to international lenders through SWIFT, the NIOC source said it was easy for Tehran to be paid in any currency it wants, adding: "And we want euros." - Reuters.

PARADIGM SHIFT & THE AGE OF OBAMA: The Precursors To The End Of The United States Corporation And The White Supremacy Paradigm - A RECORD NUMBER Of U.S. Citizens And Green-Card Holders Cut Ties And Renounce Citizenship In 2015; 560 PERCENTAGE Increase From The Bush Administration; President Obama Launches New Effort To Help More Immigrants Become U.S. Citizens!

(Photo credit: Victor J. Blue/Bloomberg)

February 7, 2016 - UNITED STATES - Once again, the number of Americans renouncing U.S. citizenship has gone up, up 560% from its Bush administration high. In 2015, there were approximately 4,300 expatriations according to the published names of individuals who renounced. The name and shame list is published quarterly, with the most recent three-month total being 1,058. That brings the total to 4,279 for 2015.

These numbers seem tiny compared to the influx of immigrants. Yet expatriations have historically been much lower. Moreover, the published list is also incomplete, with many not counted. Surprisingly, no one seems to know exactly how big the real number is, even though the IRS and FBI both track Americans who renounce citizenship. There is no single explanation, though with global tax reporting and FATCA, the list of the individuals who renounce keeps increasing,

2014 was also a record year with 3,415 published expatriates. The reasons that Americans renouncing citizenship is at an all-time high can be over family, tax and legal complications. Dual citizenship isn’t always possible, as this infographic from MoveHub shows. Some countries make citizens pay a fee to hand in their passport. Some countries have no fee, but America’s $2,350 fee is more than twenty times the average level in other high-income countries.

Many now find America’s global income tax compliance and disclosure laws to be a burden, some say downright oppressive. No group is more severely impacted than U.S. persons living abroad, who can be pariahs shunned by banks for daily banking activities. For those living and working in foreign countries, it is almost a given that they must report and pay tax where they live. But they must also continue to file taxes in the U.S.

What’s more, U.S. reporting is based on their worldwide income, even though they are paying taxes in the country where they live. Many can claim a foreign tax credit on their U.S. returns, but it generally does not eliminate all double taxes. These rules have long been in effect, but enforcement was historically less of a concern with expats. Today, enforcement fears are palpable. Moreover, the annual foreign bank account reports known as FBARs carry civil and criminal penalties all out of proportion to tax violations. Even civil penalties can quickly consume the balance of an account.

FATCA has ramped up worldwide and requires an annual Form 8938 filing if foreign assets meet a threshold. Foreign banks are sufficiently worried about keeping the IRS happy that many simply do not want American account holders. Still, leaving America can be costly. To exit, you generally must prove 5 years of IRS tax compliance. Plus, if you have a net worth greater than $2 million or have average annual net income tax for the 5 previous years of $160,000 or more, you can pay an exit tax.

It is a capital gain tax as if you sold your property when you left. Long-term residents giving up a Green Card can be required to pay the exit tax too. No one wants to pay an exit tax if they can avoid it. Sometimes planning and valuations can reduce or even eliminate the tax. But taxed or not, many still seem to be headed for the exits. Last year, dual citizens in Canada trying to shed their U.S. citizenship created a backlog at the U.S. consulate in Toronto. President Obama has joked about his birth certificate, but accidental American status is no joke. Many end up in untenable financial situations.

The U.S. has been criticized for hiking its fee to renounce by 422% to $2,350. Previously, there was a $450 fee to renounce, and no fee to relinquish. But the precise difference between the two procedures was often confused. Presently, the $2,350 fee is supposed to apply either way. That was a hike from $450 to $2,350 for renouncing, and an even steeper hike–from zero to $2,350–for relinquishment. The U.S. State Department said raising the fee was about demand and paperwork, but American expatriations still grew even after the increase. - Forbes.

Obama Has Launched a New Effort to Help More Immigrants Become US Citizens

Immigrants take the Oath of Allegiance during a naturalization ceremony in Washington DC on August 28, 2015. (Photo by Michael Reynolds/EPA)

A federal task force created by President Barack Obama to increase the number of immigrants that become naturalized US citizens just kicked off a national tour in Los Angeles, launching a politically controversial effort seen by some conservatives as a way to enroll more Democratic-leaning Hispanic voters for upcoming elections.

Senior White House advisors and members of the Task Force on New Americans met on Friday with LA Mayor Eric Garcetti and local leaders who have been trying to help 750,000 eligible immigrants across the greater LA area gain citizenship.

The task force was created in November, 2014, as part of the president's executive actions on immigration, with the stated goals of increasing funding for programs that help naturalize immigrants, working with city and state governments to increase their ability to help with the process, and to "celebrate 'New Americans,'" according to a 2015 White House report.

The visit to LA comes amid a push by the task force to highlight how some cities and states across the country have opened government offices specifically to help "integrate" immigrants. New York, Illinois, Massachusetts, and Michigan have all opened Offices for New Americans, while Chicago, LA, New York, and Boston are among the cities that have local offices devoted to the cause, according to the report.

Jared Sanchez of the University of Southern California's Center for the Study of Immigrant Integration said the task force is, in some ways, looking to follow the lead of the cities who have already started this work. The meeting Friday in California will highlight efforts to expand access to healthcare, driver's licenses, and college for immigrants, as well as non-profit programs in LA that help individuals apply for citizenship and study for the test, the mayor's office told the Los Angeles Times. The office did not respond to VICE News' request for comment.

"The groundswell is really coming from city level," Sanchez said. "For the federal government, the most important thing to notice is these city offices and groups on the ground already doing the work."

City workers and non-profit groups have stepped up their efforts to reach out to immigrants to explain the benefits of naturalizing: earnings increase 8 to 11 percent after the first three years of citizenship, and individuals can find a more stable sense of place, as well as earning the right to vote in their community, Sanchez said.

"Of course there are the civic benefits: increasing voting, increasing the electorate, especially around upcoming elections, which explains why there's such a focus on naturalizing immigrants now," he added.

Immigrants with lawful permanent resident status — meaning they hold a green card — are eligible to become citizens after five years, or three years if they are married to a US citizen. The programs do not apply to the more than 11 million undocumented immigrants estimated to be living in the United States illegally. Obama has taken executive actions to shield as many as 5 million undocumented individuals from deportation, but the move has been challenged by 26 states in a lawsuit that will be heard by the Supreme Court later this year.

Total deportations in the US have dropped 42 percent since 2012 under the Obama administration, a reversal from Obama's first two years in office, when more immigrants were deported than in any year under George W. Bush. Recently, however, US immigration authorities began rounding up dozens of Central American families who had arrived since May 2014 and who were denied asylum after claiming to have fled violence in their homeland.

Activists suggested that the raids — which were highly publicized and widely criticized by many on the left — were intended to show that the Obama administration is not soft on immigration ahead of the 2016 presidential election, in which Republican candidates have lambasted their Democratic counterparts for their stances on immigration. In particular, GOP candidates and other party leaders have slammed Obama's executive actions.

Texas Senator Ted Cruz called Obama's program to shield young immigrants from deportation "lawless" and "wrong," and claimed that the president has "no legal authority to do what he's doing." Florida Senator Marco Rubio said he "would love to defund the immigration order," while frontrunner Donald Trump has vowed to deport all of the undocumented people in the US and build a giant wall along the US-Mexico border, a project he claims would be paid for by Mexico.

The GOP's bluster has largely ignored the fact that there are millions of legal immigrants in the US, including many that will gain citizenship and become voters in the coming years. The US issues about 1.1 million green cards each year, and the Census Bureau found that by the year 2023, there will be 51 million immigrants in the US, accounting for one in seven US residents.

In LA, task force officials and the mayor met with immigration experts from USC to learn how to effectively reach out to immigrants and help them begin the citizenship process. Sanchez and other researchers at USC have found that a lack of clear information, language barriers, and an ambivalence about putting down roots in the US can often prevent immigrants from initiating the naturalization process, as well as the $685 naturalization fee.

The federal government's infusion of cash into local and state programs could help them waive the fee as well as increase awareness and accessible information, Sanchez said. The task force will meet with other cities around the country to discuss funding and support in during the spring of 2016, according to its 2015 report. - Vice.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - China Shares Tumble In Late Trade As Asia Markets Sell Off; Shanghai Shares Off More Than 5%!

January 11, 2016 - CHINA - Chinese markets extended an already rough start to the year Monday, losing further ground after another sell-off in late afternoon trade that sent mainland indexes down more than 5 percent.

The Shanghai composite tumbled 168 points, or 5.29 percent, to 3,017.99, while the Shenzhen composite plunged 130.61 points, or 6.6 percent, to close at 1,848. In afternoon trade, Hong Kong's Hang Seng index closed down 2.7 percent, slipping below the 20,000 threshold for the first time since June 2013.

The rest of Asia also closed down, with Australia's main ASX 200 index continued its downward slide, ending 58.63 points, or 1.17 percent, lower at 4,932.20. The energy, materials and financials sectors weighed, with those indexes down 1.8, 2.95, and 1.27 percent respectively.

In South Korea, the Kospi shed 22.78 points, 1.19 percent, to close at 1,894.84 on Monday's session, with commodities sectors seeing early losses.

Mainland brokerages suffered steep losses, with shares down as much as 9 percent at market close. Citic Securities' mainland-listed shares were off 7.01 percent, while its Hong Kong-listed ones fell 3 percent. Airlines stocks on the mainland traded mixed, between up 3.72 and down 1.54 percent. Airlines tend to see an earnings boost when oil prices fall.

Beijing guides the yuan higher

On Monday the People's Bank of China (PBOC) guided the yuan higher by setting the mid-point fix at 6.5626 against the dollar. On Friday, the midpoint was fixed at 6.5636. The yuan traded at 6.5818 against the dollar.

The yuan-based Hong Kong Interbank Offered Rates (Hibor) spiked to over 13 percent from 4 percent Friday as offshore yuan volume declined.

Last week, the Shanghai Composite lost all of its 2015 gains, falling by 9.97 percent in just five days. Trading in Chinese markets was halted twice last week by circuit breakers - a market-calming regulatory tool - that were only implemented in the country at the start of the week.


The circuit breakers were designed to trigger a 15-minute trading halt if the CSI 300 index fell 5 percent. If that index moved by 7 percent, trade was halted for the rest of the session. By the end of the week, China suspended its circuit breakers, but investors remained wary over the country's ability to handle financial turmoil.

Experts said the ongoing crisis in Asia's largest economy would have bigger, broader implications about the region's economic prospects.


Taimur Baig, chief economist for Asia at Deutsche Bank Research, said in a note on Friday, "The key risk is China, where fears of continued economic slide are causing capital outflows, exchange rate depreciation, asset market selloff, and policy dilemmas."


Baig noted that while this might not halt economic growth in the mainland, with large parts of the economy operating independently of the country's stock markets, it would hurt sentiment -- not just in China, but also in rest of Asia, causing possible deflation, credit crunches and policy challenges.

Aussie drop a double-edged sword

The Australian dollar fell below 70 U.S. cents again, trading at $0.6969.

Paul Bloxham, chief economist for Australia and New Zealand at HSBC, said in a note that this was the third time since the global financial crisis that the Aussie had fallen below 70 U.S. cents.


But a weaker Aussie was not necessarily negative for Australia's economy, Bloxham said, because it could help to offset the lower commodity prices that were hitting local income growth and speed up the economy's rebalancing toward non-mining sectors.

Commodities remain a concern

Energy plays in Asia traded in the red, weighed by further declines in oil prices. U.S. crude futures were down 2.02 percent at $32.49 a barrel, after falling 10.47 percent in the previous week. Globally traded Brent futures were down 2.18 percent at $32.80 a barrel; last week, Brent futures shed 10 percent.

Australian oil stocks Santos, Oil Search and Woodside Petroleum closed down between 0.76 and 5.03 percent.

In China, mainland oil stocks were down between 2.31 and 3.63 percent, while Hong Kong-traded CNOOC, Petrochina, and Sinopec shares had losses of between 2.97 and 4.91 percent.


Resource stocks were also down, pressured by lower commodity prices.


Rio Tinto and BHP Billiton, Australia's two biggest miners, shed 3.34 and 4.89 percent respectively, while iron ore producer Fortescue saw losses of 4.93 percent. Iron ore prices were down at $41.50 a tonne a tonne Friday, for a total 3 percent decline for the week after rallying for three weeks.

Samsung drops on missed targets

Elsewhere, in South Korea, shares of heavyweight Samsung Electronics were down 1.62 percent after the company missed its profit targets for the fourth quarter of 2015 last week. Other blue chip stocks such as SK Hynix also traded lower.

Shares of Doosan were down 0.49 percent after the company said its subsidiary sold 305 billion won ($252.71 million) worth of shares in fighter jet manufacturer Korean Aerospace Industries, according to reports.

Shares of Korean Aerospace Industries closed down 4.42 percent.

On Wall Street last week

In the U.S., major indexes closed the first trading week of the year in the red as global economic concerns outweighed an above-expectation jobs number for December.

The Dow Jones Industrial Average lost 6.1 percent for the week, closing at 16,346.45. The S&P 500 shed 5.96 percent for the week, down at 1,922.03 while the Nasdaq Composite was down 7 percent at 4,270.78.

In Japan, the market will be closed for a public holiday. - CNBC.

GLOBAL ECONOMIC MELTDOWN: Historic Week - Dow Plunges 1,079 Points; The Worst Five-Day Start To A Year On Record!

January 8, 2016 - WALL STREET, UNITED STATES - The Dow lost 1,079 points this week, or over 6%, as fears about China and crashing oil prices dealt Wall Street a painful one-two blow. It was the Dow's worst five-day start to a year on record, according to Dow Jones.

Despite the relative calm in China and a strong U.S. jobs report, the Dow fell 168 points on Friday, while the S&P 500 and Nasdaq lost about 1% apiece. It capped off the Dow's biggest weekly percentage loss since 2011.

"People are very nervous. We have a lot of fear about what is going on in China," said Joe Saluzzi, co-head of trading at Themis Trading.

Investors were once again spooked by crude oil prices, which plunged to the lowest level since late 2003 on Thursday. Oil initially calmed down on Friday before retreating again. Crude finished the day at $33.16 a barrel, its weakest settle since February 2004.

When oil drops, so do energy stocks. They retreated again on Friday, with names like Valero (VLO) and Marathon Petroleum (MPC) falling more than 3% apiece.

The oil plunge was one of the main drivers behind this week's market selloff, which erased nearly $1.1 trillion from the S&P 500, according to S&P Dow Jones Indices.

Chinese stocks started the year with an epic 12% nosedive. The selling earlier in the week triggered "circuit breakers" that are designed to smooth volatility in the markets. Trading in China was halted twice this week -- on Thursday, the stock markets shut down after just a half hour of trading.

Sentiment was boosted after regulators scrapped the circuit breakers because many believe they were fueling sharp trading losses -- rather than taming them.

Investors cheered as China stopped allowing its currency to lose value. In fact, China's central bank raised its target rate for the yuan for the first time in over a week. The surprise decline in the yuan has raised fears of a currency war of competitive devaluations.

On Friday, China managed to pull back from the brink and the benchmark Shanghai Composite closed 2%.

On Wall Street, investors initially responded favorably to the latest evidence that the U.S. economy continues to chug along despite the global turmoil.

The government said the U.S. added 292,000 jobs in December, easily beating expectations. It capped off the second-strongest year of employment gains since 1999. Importantly, wages went up 2.5% last month, matching the best gain in six years.

But there are lots of signs of the rising fear on Wall Street. CNNMoney's Fear & Greed Index is now flashing "extreme fear," a dramatic reversal from "neutral" just a week ago.

Gold, which tends to rise during times of financial stress, was one of the only things that had a good week. The precious metal soared 4% to $1,103 an ounce. Billionaire George Soros was among the most prominent investors to say the current situation reminds them of the 2008 financial crisis.

Others think it's much more like last summer, when turmoil in China prompted a scare in U.S. stocks that proved fleeting.

"We don't have investment banks failing or a credit crisis going on. This will settle. It reminds me a lot of August right now," said Saluzzi. - CNN Money.

GLOBAL ECONOMIC MELTDOWN: It Has Begun - George Soros Says "IT'S 2008 ALL OVER AGAIN,... Markets At The BEGINNING OF CRISIS"; China's 29 MINUTES OF CHAOS, Stunned Brokers And A Race To Sell; TRILLIONS VANISH!

January 7, 2016 - GLOBAL ECONOMY - Billionaire financier George Soros is warning of an impending financial markets crisis as investors around the world were roiled by turmoil in China trade for the second time this week.

Speaking at an economic forum in Sri Lanka's capital Colombo, he told an audience that China is struggling to find a new growth model and its currency devaluation is transferring problems to the rest of the world, according to media. He added that a return to rising interest rates was proving difficult for the developing world.

The current environment reminded him of the "crisis we had in 2008," The Sunday Times in Sri Lanka reported on Thursday morning. "China has a major adjustment problem," he added, according to Bloomberg. "I would say it amounts to a crisis."

China's CSI 300 tumbled more than 7 percent in early trade Thursday, again triggering the market's circuit breaker. As well as roiling sentiment across Asia, it also battered European risk assets with the German DAX down 3.5 percent at 11 a.m. London time.

U.S. stock index futures also indicated a sharply lower open as investors focused on China's swooning currency and economic slowdown.

China, the biggest economic story of the last 30 years, has soured in the eyes of many analysts. A stock market crash that began in the country last summer has thrown the vast difficulties officials are now facing into sharp relief. A raft of data has disappointed in recent months as the country's leaders refocus the economy on consumption from manufacturing.

Analysts also point to concerns over Chinese market regulators, who they believe do not appear to have a good grasp of the market, even with the introduction of the circuit breakers. In an attempt to stabilize markets, China's securities regulator has issued new rules to restrict the number of shares major shareholders in listed companies can sell every three months to 1 percent.

Marc Ostwald, a strategist at ADM Investor Services, believes that Soros' comments — alongside a gloomy report Wednesday from the World Bank — only serve to cast a "long shadow" over global markets.

"It should be noted that the current turmoil distinguishes itself from 2008, when reckless lending, willful blindness to a mountain of credit sector risks and feckless and irresponsible regulation and supervision of markets were the causes of the crash, given that central bank policies have been encouraged and been wholly responsible for the current protracted bout of gross capital misallocation," he said in a morning note. - CNBC.

U.S. Stocks Pare Losses, Bonds Fall as Crude Rallies Above $34

The selloff in global shares that started after China cut the yuan’s reference rate by the most since August showed signs of easing as crude erased losses and China’s securities regulator suspended a rule that’s exacerbated financial-market turmoil.

The Dow Jones Industrial Average recouped 200 points of a rout that neared 2 percent as crude oil almost erased a loss of as much as 5.5 percent. China’s weakening currency and tumultuous financial markets had fueled a flight from risky assets after shares there plunged 7 percent for a second time this week. Treasuries erased gains, while the yen reached a four-month high and gold surged on haven demand.

“Markets in China historically have had no correlation to their economy or our economy. This is a very emotional reaction and it’s becoming a somewhat absurd reaction,” said Howard Ward, who oversees $42.7 billion as the chief investment officer of growth equities at Mario Gabelli’s Gamco Investors Inc. “We’re going to err on the side of not being too concerned and not getting caught up in the mini-panic.”

Fresh concern that China’s slowdown will hamper global growth has wiped $2.5 trillion off the value of global equities this year, as the nation’s tolerance for a weaker currency is viewed as evidence policy makers are struggling to revive an economy that’s the world’s biggest user of resources. U.S. crude’s tumble toward $30 a barrel heightened fears of disinflation and fueled concern that junk-rated energy producers won’t be able to stay solvent.

Fears eased in U.S. morning trading as China’s leadership signaled it may reconsider or change the system for managing equity selloffs at the same time that crude in New York climbed back above $34 a barrel.

“Chinese equity markets are highly volatile right now and anything they do to potentially stabilize that market improves the outlook for U.S. equities,” Krishna Memani, chief investment officer at Oppenheimer Funds Inc. in New York, said by phone. “They don’t have a whole lot of experience controlling and monitoring markets and they’ve been going about it ham-handedly making the situation far worse than it needs to be.”

Stocks

The Standard & Poor’s 500 Index slid 0.8 percent at 11:04 a.m in New York, trimming a drop of 1.8 percent. The Dow fell 0.7 percent, clawing back from a 317-point slide to start the day.

China’s devaluation revived the angst that sent financial markets into turmoil last summer, driving U.S. stocks to three-month lows Wednesday in a selloff led by commodity producers. Comments by billionaire George Soros exacerbated market jitters after he told an economic forum in Sri Lanka today that global markets are facing a crisis and investors need to be very cautious.

The Stoxx Europe 600 Index slid 2 percent. The rout this year in Europe surpassed 5 percent, as Germany’s DAX fell below 10,000 for the first time since October. Companies with the most sales in China bore the brunt of the decline. Anglo American Plc tumbled and ArcelorMittal sank, dragging a gauge of miners to its lowest level since 2009. A measure of energy producers also fell to a near six-year low.

The MSCI Asia Pacific Index retreated 2.1 percent. Benchmark stock indexes in Australia, Japan, Singapore and Thailand all lost more than 2 percent.

China

The Hang Seng China Enterprises gauge of mainland shares listed in Hong Kong tumbled 4.2 percent, its lowest close since October 2011. The Shanghai Composite Index tumbled 7.3 percent before trading was suspended. New circuit breakers, which kicked in on Monday, have been criticized by analysts for exacerbating declines as investors scramble to exit positions before getting locked in by the halts.

After the halt, the securities regulator announced rules to limit selling by major shareholders when a ban expires this week. Later, the regulator suspended a new stock circuit-breaker, signaling that the country’s leadership may reconsider or change the system.

Currencies

The yen, which has been the best-performing major currency so far this year amid the demand for safe-haven assets, rose as much as 1 percent to its strongest level since August versus the dollar.

The pound fell to the weakest level since June 2010, touching $1.4555. The U.K. currency slid 1 percent to 74.46 pence per euro. It has fallen every day this week against the dollar. Disappointing manufacturing and services data added to the view that the Bank of England will have to keep its benchmark interest rate lower for longer.

Commodities

The Bloomberg Commodity Index rose 0.6 percent, rebounding from what would have been the lowest close since 1999 as crude erased losses.

West Texas Intermediate crude rose 0.1 percent to $34 a barrel. Crude supplies at Cushing, Oklahoma, the delivery point for U.S. crude, climbed to an all-time high, government data showed Wednesday.

Copper retreated 2.7 percent in London to the lowest since Nov. 24 and zinc slumped 4.1 percent. Cocoa for March delivery fell for a fifth day to an eight-month low on ICE Futures U.S. in New York. Gold rose as much as 0.8 percent to a two-month high of $1,102.85 an ounce.

Bonds

Yields on 10-year Treasury notes rose two basis points to 2.19 percent after touching the lowest since October. Japanese government bond futures advanced to a record high after 30-year notes were auctioned at a higher price than dealers forecast.

Germany’s 10-year break-even rate, a gauge of the market’s outlook for inflation, tumbled to the lowest level since February amid concerns that the rout in commodity markets would subdue price-growth.

Emerging Markets

Energy producers led losses in developing-nation stocks, driving the MSCI Emerging Markets Index down 2.7 percent. Benchmark gauges in South Africa, Thailand, the Philippines and Abu Dhabi slid more than 2.5 percent and those for Saudi Arabia, Dubai and Qatar tumbled at least 3 percent. Russian markets were closed for a holiday.

A gauge tracking 20 emerging-market currencies dropped for a fifth day, headed for its longest losing streak since October. The currency in South Africa, which counts China as its biggest trading partner, tumbled 1.2 percent. Russia’s ruble slid 1.1 percent in offshore trading while Mexico’s and Brazil’s real slid at least 0.6 percent. - Bloomberg.

China's 29 Minutes of Chaos: Stunned Brokers and a Race to Sell

Even by the rough-and-tumble standards of China’s stock market, it was a chaotic 29 minutes.

With share prices going into free fall almost as soon as local exchanges opened, market gurus at Huaxi Securities Co. were at a loss to explain why. One manager of $46 million in Shanghai liquidated all his holdings. Other investors, including a top-performing hedge fund, tried in vain to cash out as circuit breakers brought trading to an abrupt halt.

By 9:59 a.m. local time it was all over -- except that it wasn’t. Next came a torrent of calls from angry clients upset by the carnage in a week that’s seen two abbreviated trading sessions and a 12 percent tumble in the benchmark CSI 300 Index. And it’s only January 7th.

"We are dealing with a flood of angry phone calls from clients complaining about the market plunge and the circuit breaker," said Wei Wei, an analyst at Huaxi Securities in Shanghai. "We are also feeling at a loss and confused today as we didn’t quite figure out what was going on in the market."

There’s certainly an Alice-in-Wonderland quality to this week’s selloff, which has radiated across global equity markets and rattled investor confidence in the world’s second-largest economy. It’s not as if China’s growth story is over. True, the yuan is weakening and the economy is decelerating to its slowest annual pace since 1990, but that’s been known for some time. The currency is actually holding up well versus just about everything but the dollar, and analysts are predicting a 6.5 percent economic expansion this year.

Market Intervention

What does seem to worry investors is how deftly, or ineptly, Chinese authorities will manage a stock market that’s gone from boom to bust and back again more times in the past 12 months than most major peers do over the course of a decade. After policy makers took extreme steps to prop up shares last summer, analysts are struggling to gauge how Beijing will react to a renewed bout of volatility that threatens to weigh on business and consumer confidence.

Officials moved to act on Thursday by suspending the new circuit-breaker system, bowing to intense criticism. The rules, launched at the start of this year, were designed to kick in when there’s a 5 percent swing in the CSI 300. That halts trading for 15 minutes, with exchanges shutting for the rest of the day if the index moves by 7 percent, as it did on Monday and Thursday.

In a market with some of the world’s highest volatility, circuit breakers throw up a new wild card that the nation’s 99 million individual investors are still getting used to.

"It is clearly adding some unintended consequences, such as people trying to sell before the break, which is actually accelerating the decline," said Gerry Alfonso, a trader at Shenwan Hongyuan Group Co. in Shanghai. "Investors need time to adapt to the new rules. This type of development in a retail-driven market is bound to be challenging."

The decision to suspend the circuit breaker came hours after CSRC officials held an emergency meeting to discuss conditions on the nation’s tumbling stock market, according to a person familiar with the discussions who asked not to be named because he wasn’t authorized to speak publicly. Officials unveiled plans to curb share sales by major stockholders just a day before an existing ban was due to expire.

Abrupt Halt

Some investors had no choice but to sell on Thursday. Take Chen Gang, who helps oversee the equivalent of $46 million as the chief investment officer at Shanghai Heqi Tongyi Asset Management Co. Chen dumped his firm’s equity holdings and said he won’t get back into the market until regulators improve the circuit breaker system. Many private funds and hedge funds in China have agreements with investors spelling out mandatory liquidation levels if their holdings drop below a certain value.

“This is insane,” Chen said in an interview on Thursday. “We were forced to liquidate all our holdings this morning.”

Then again, Kelvin Tay, the regional chief investment officer at UBS Group AG’s wealth management business in Singapore, sees a buying opportunity. "This week has been a disaster" but "it’s fun in a perverse way," he said. "Investors need to separate the sound from the noise. This is an opportunity to pick up stocks that are undervalued."

Some other managers couldn’t sell fast enough. Jiao Ji, whose hedge funds averaged a 61 percent return during the $5 trillion summer rout after he sold out before the crash, said the trading halts came so quickly that he didn’t have time to unload his holdings this time.

“It was quite abrupt on Monday, and it’s even more abrupt today,” said Jiao, the chairman of Sunrise Investment, based in northeastern China’s Jilin province. “There’s not even a chance for a rebound.” - Bloomberg.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - Dow Jones Sinks 250 Points, Worst Start To A Trading Year Since 2008; Oil Dives To 7-Year-Low; And China Stocks Halted Again!

January 6, 2016 - GLOBAL ECONOMY - Wall Street experienced another mini panic attack on Wednesday after North Korea claimed to successfully test a hydrogen bomb. The markets were already being spooked by the financial and economic turbulence out of China and the latest plunge in oil prices below $34 a barrel.

The Dow dropped 252 points, closing below 17,000 for the first time since mid-October. The S&P 500 fell 1.3% and the Nasdaq lost 1.1%.

It marks the Dow's worst start to a trading year through three days since 2008. The index also fell 276 points on Monday due to worries about China.

"Quite suddenly there seems to be a very long list of topics that represent game-changing risks to the market. North Korea is just one more factor," said Peter Kenny, an independent market strategist and founder of Kenny's Commentary.

The latest selloff began overnight after North Korea claimed it carried out its first hydrogen bomb test. U.S. officials told CNN it could take days to determine if North Korea's claims are legitimate. If true, the test would represent a major advancement by the North Korean regime and the latest geopolitical threat on top of the tensions between Saudi Arabia and Iran.

Stocks in Asia retreated and the South Korean won slumped over 1% against the U.S. dollar. Gold, which tends to rise during times of fear, jumped 1.4% to $1,093 an ounce.

"While the long-term investment implications are likely to be limited (as Pyongyang's previous nuclear tests have proven), the short-term impact will likely keep markets extra jittery," Win Thin, global head of emerging market currency strategy at Brown Brothers Harriman, wrote in a client note.

Oil prices also took another hit on Wednesday. Crude plunged nearly 6% to $33.97 a barrel -- the lowest settle since 2008. The latest losses were triggered by concerns about demand from China, the strong U.S. dollar and the diminishing chances OPEC cuts production.

Worries about China also continue to ripple through the U.S. stock market. A new report released on Wednesday that showed the country's services sector grew at the weakest pace in 17 months in December.

China also continues to experience financial turbulence. Its stock market jumped 2% on Wednesday, rebounding from Monday's crash thanks to more efforts by the government to stabilize markets.

However, China's currency lost more ground and is now down about 1% against the U.S. dollar this year. The yuan's fall will likely cause more money to leave China and "creates havoc" for other manufacturing countries in the region, said Peter Boockvar, chief market analyst at The Lindsey Group. - CNN Money.

China Halts Stock Trading After 7% Rout Triggers Circuit Breaker

Chinese stocks in Hong Kong fell to the lowest level in four years as mainland shares plunged, forcing an early halt to trading for the second day this week after the central bank cut its yuan reference rate by the most since August.

Hong Kong’s Hang Seng China Enterprises Index tumbled 4.2 percent to the lowest level since Oct. 6, 2011. Trading of shares and index futures in the mainland was halted by automatic circuit breakers from about 9:59 a.m. after the CSI 300 Index slid more than 7 percent. The People’s Bank of China cut its reference rate on Thursday for an eighth straight day, fueling concern that tepid economic growth is prompting authorities to guide the currency lower.

“The yuan’s depreciation has exceeded investors’ expectations,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co. “Investors are getting spooked by the declines, which will spur capital outflows.”

The yuan weakened 0.6 percent to 6.5938 per dollar at 4:20 p.m. in Shanghai. The currency rallied from early declines in offshore trading, strengthening 0.4 percent in Hong Kong amid speculation the central bank propped up the exchange rate after setting a weaker fixing that sent the currency tumbling.

Huatai Securities Co. tumbled 10 percent and Citic Securities Co. declined 7.1 percent as financial stocks slumped. China Petroleum & Chemical Co. led losses in energy companies as oil futures slid to the lowest level in 12 years.

Widening Discount

Mainland-listed companies are now 39 percent more expensive than their Hong Kong-traded peers.

“The gap will probably widen, with a higher discount for H shares, because you have to take into account the currency depreciation," said Paul Chan, Hong Kong-based chief investment officer for Asia excluding Japan at Invesco Ltd., which oversees $791 billion globally. “Earnings-per-share in Hong Kong dollar terms are lower, and I pay Hong Kong dollars for those shares.”

Analysts forecast earnings of companies in the H-share index, dominated by the nation’s biggest finance and energy companies, will fall 0.8 percent in the next 12 months.

The China Securities Regulatory Commission issued a rule during Thursday’s market halt, capping the size of stakes that major investors are allowed to sell at 1 percent of a company’s shares. The restriction, which will stay in place for three months, replaces an existing six-month ban on any secondary-market stock sales that’s due to expire Friday, the regulator said in a statement.

The CSRC also called an unscheduled meeting to assess circuit breakers and market conditions without coming to a decision on policy action, according to a person with direct knowledge of the matter. The regulator didn’t immediately respond to requests for comment. - Bloomberg.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - Dow Jones Loses Nearly 300 POINTS On China Fears; S&P 500, Nasdaq Mark Worst Start To A Year Since 2001; China Halts Trading For The FIRST TIME EVER!

Courtesy Everett Collection

January 4, 2016 - GLOBAL ECONOMY - Talk about a scary start to 2016.

Fears of a crash landing in China's economy sent stocks diving around the world on Monday, the first trading day of the year. The global selloff was caused by a new report that showed China's manufacturing sector contracted at the end of 2015. Stocks in China fell so dramatically that trading was halted for the first time ever.

The Dow declined as many as 467 points and briefly fell below the 17,000 level for the first time since October. However, it bounced off the lows and ended the day down 276 points. It was still the Dow's worst opening day of the year since 2008.

The S&P 500 lost 1.5% and the Nasdaq dropped 2.1%.

"It seems like fear woke up early in 2016 and hope is basically sleeping in," said David Kelly, chief global strategist at JPMorgan Funds.

The retreat comes after the index fell 2% in 2014, its worst year since the 2008 financial crisis.

Monday's wave of selling began in Asia. Trading in China was stopped prematurely after circuit breakers were triggered during their first day they were implemented. Circuit breakers act as a kind of emergency brake to halt trading during times of extreme volatility.

The benchmark Shanghai Composite plummeted nearly 7%. The Shenzhen Composite, often compared to America's Nasdaq index because it's home to many tech companies, nosedived more than 8%.

The selloff was fueled by a new manufacturing survey by Caixin that fell to 48.2 in December following two months of stabilization. It marks the 10th month in a row of sub-50 readings, which indicate deceleration.

Even though the manufacturing report was disappointing, it's just the latest sign of a slowdown in China. Analysts said selling in Chinese markets was also driven by other factors, including the scheduled lifting of bans on IPOs and sales by larger investors.

"With headwinds both domestic and external, investors feared a hard landing may be inevitable and rushed to the exits," Emma Dinsmore, CEO of R-Squared Macro Management, wrote in a client note.

JPMorgan's Kelly thinks Monday's crash in China was caused by fears about the introduction of the circuit breakers. He compared the trading halts to a bank saying only the first 10,000 customers will be served.

"Everybody wants their money before it shuts," Kelly said.

The latest evidence of trouble in the American manufacturing sector didn't help Wall Street either. The ISM manufacturing index fell to 48.2 in December, the lowest reading since June 2009 when the Great Recession ended. Manufacturing continues to be hurt by the strong U.S. dollar, which makes American goods more expensive for overseas buyers. 

Global markets are also growing nervous over the dramatic increase in tensions between Saudi Arabia and Iran, the big oil-producing power players in the Middle East.

Saudi Arabia cut diplomatic ties with Iran after its embassy in Tehran was attacked. The violence follows Saudi Arabia's execution of a prominent Shiite cleric.

The Middle East tensions are already causing turbulence in the oil markets. Crude oil prices initially spiked more than 3% and returned above $38 a barrel but then retreated. Oil closed down almost 1% to $36.76 a barrel.

CNNMoney's Fear & Greed Index, which looks at seven measures of investor sentiment, dipped into "fear" territory on Monday.

Even Netflix (NFLX, Tech30), the star performer of 2015, took a tumble on Monday. Shares of Netflix plunged as much as 8% after the streaming site was downgraded by analysts at Robert W. Baird due to concerns about U.S. subscriber growth. Netflix closed down nearly 4%. Similarly, Amazon (AMZN, Tech30), another big winner last year, fell sharply on a separate analyst downgrade.

Not everything fell on Monday though. Gold jumped 1.4% to $1,075 an ounce thanks to the market scare and geopolitical concerns.

The rough start to 2016 could be a bad omen for Wall Street, which has an old saying: "As January goes, so goes the year."

U.S. stocks have finished the year in the same direction as January 72% of the time, according to Howard Silverblatt of S&P Dow Jones Indexes. - CNN Money.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - The Global Financial Order Could UTTERLY COLLAPSE On December 21!

December 19, 2015 - GLOBAL ECONOMY - The world is entering a chaotic phase. There have been recent claims that the US has begun to create «manageable chaos» globally. But events in the Middle East have dispelled the illusion that the instigator of this chaos is capable of managing it. And that unmanageable chaos may very soon overtake the world of international finance. The US is once again guilty of having ushered in unmanageable financial chaos, and Ukraine’s $3 billion debt to Russia will serve to detonate the process.

It is no coincidence that problems are mounting around that debt. Washington is deliberately exploiting the debt to try to inflict damage on Russia. The final destruction of the global financial order that was established during the international conference at Bretton Woods in 1944 could end up as collateral damage of the anti-Russian policy.

The US devised the Bretton Woods monetary system, then inflicted the initial damage on it during the 1970s when Washington stopped exchanging dollars for gold. Gold was demonetized, the world transitioned to paper money, and fixed exchange rates were eliminated. The financial markets, as well as financial speculation, began to expand at a frantic pace, which significantly reduced the stability of the global economy and international finance. Financial chaos was already at hand, but at the time it was still at a manageable level. The International Monetary Fund, which was created in December 1945, remained the tool for managing international finance.

Yet today we are eyewitnesses to the IMF’s destruction, which threatens to magnify the instability of global finance in the midst of global financial chaos. The IMF’s role in maintaining relative financial order in the world not only consisted of issuing loans and credits to specific countries, but also in the fact that it acted as the final authority, writing the rules of the game for global financial markets. After the United States – the IMF’s main shareholder (controlling approximately 17% of the voting power within the fund) – dragged the IMF into the games it was playing with Ukraine, that international financial institution was forced to break its own rules that it had developed and honed over the course of decades. The fund’s recent decisions have created a precedent for a game played without rules, and it is almost impossible to calculate the consequences for international finance.

The most recent ruling of this type was issued on Dec. 8. It was timed to correspond with the final maturity date for Ukraine’s $3 billion debt to Russia – Dec. 20. Washington continues to urge the Ukrainian government not to repay its Russian debt. But if Kiev fails to pay back what it owes, this will almost automatically lead to a full-scale sovereign default, and thus the IMF, in accordance with the rules that have been in place almost since the fund’s birth, will no longer have the right to make loans to Ukraine. In order to continue transferring funds from the IMF’s loan to Ukraine (a loan agreement for $17.5 billion was signed in April 2015), Washington ordered the fund to rewrite the rules so that even if Kiev defaults on what it owes Moscow, the IMF could still lend Ukraine money. The fund – ever submissive – fulfilled this seemingly unfulfillable command.

Aleksei Mozhin, the IMF director for the Russian Federation, reported that on Dec. 8 the fund’s Executive Board approved reforms that would allow lending to debtors even in the event of a default on sovereign debt. Everyone knows perfectly well that the fund made such a revolutionary decision specifically in order to prop up the moribund regime in Kiev and to needle Russia. Speaking to reporters, Russian Finance Minister Anton Siluanov stated, «The decision to change the rules appears hasty and biased. This was done solely to harm Russia and to legitimize the possibility of Kiev not paying its debts».

There have been few decisions of such a radical nature in the IMF’s history. For example, in 1989 the fund won the right to make loans to countries even if the recipients of those funds still had unpaid debts to foreign commercial banks. And in 1998 the fund was permitted to lend to countries with outstanding liabilities on sovereign bonds held by private investors. However, the repayment of debts to sovereign creditors has always been a sacred duty for the IMF’s clients. Sovereign creditors are the saviors of last resort, who come to the aid of states that are being turned away by private lenders and investors.

Under the IMF’s rules, a state’s liabilities to a sovereign creditor (i.e., another state) are just as «sacred» as liabilities to the fund itself. This is, in a manner of speaking, a cornerstone of international finance. And here we see how, at an ordinary meeting of the IMF’s Executive Board, this cornerstone has been hastily pulled out from under the edifice of international finance. Russian Finance Minister Anton Siluanov drew particular attention to this aspect of the Executive Board’s ruling: «The rules for financing the fund’s programs have existed for decades and have not changed. Sovereign creditors have always had priority over commercial ones. The rules have emphasized the special role of official creditors, which is especially important in times of crisis, when commercial lenders are turning countries away, depriving them of access to resources».

The submissive posture of the fund and the audacity of its main shareholder (the US) can be seen in the way the Dec. 8 decision was quickly rubber-stamped, while for five years Washington has blocked efforts to reform the fund (to review the quotas of the member states and to double the fund’s capital). According to Siluanov, given the IMF Executive Board’s Dec. 8 decision, «America’s unwillingness to address the issue of the ratification of the agreement to replenish the IMF’s capital appears particularly egregious, especially when that capital would be very useful in solving Ukraine’s debt problems».

On Dec. 10, a 34-page report was published containing details of the reform that had been approved by the IMF’s Executive Board on Dec. 8. According to that document, some of those changes apply to debt to sovereign creditors that is not covered by the Paris Club agreements. However, a debtor country must meet a number of conditions in order to maintain its access to IMF funds, including «making good faith efforts» to restructure its debt.

The reference to «good faith efforts» raises a very interesting point. So far Kiev has made no efforts at all in its capacity as a debtor state. The statements by Ukrainian Prime Minister Arseniy Yatsenyuk do not count. Those were not attempts at «good faith efforts,» but rather ultimatums made to Russia, a sovereign creditor: in other words, you will either join the restructuring talks we are holding with our private creditors or else we will not pay you anything at all. It’s also typical that these statements were not even made through the official channels of correspondence but were issued verbally on television. I found one statement by Yatsenyuk particularly moving, when he claimed that he had not received any formal proposals from Moscow regarding Ukraine’s debt.

This is something new, in intergovernmental relations in general and in international monetary and credit relations in particular. Almost since the birth of the IMF, a rule has existed (and still does), according to which: a) any initiative to alter the original terms of a loan must come from the debtor, not the creditor; and b) that initiative (request) must be issued in writing and sent to the creditor via official channels.

If Mr Yatsenyuk is unaware of these rules, perhaps the officials of the IMF could explain them to him. However, nothing like this has been done.

Let’s return to the Dec. 8 decision. Whether Kiev wants to or not, if it is to continue obtaining credit through the fund, Ukraine must at least show evidence of an attempt to negotiate with its creditor, i.e., with Moscow. It must provide evidence of «a good faith effort,» so to speak. And of what should that evidence consist? There must be at least three steps: a) a formal request to begin talks to review the terms of the loan must be drafted and sent to the creditor; b) the debtor must receive an official response from the lender; and c) if the creditor agrees – negotiations must be held to revise the terms.

Of course Kiev’s negotiations with its private creditors regarding the restructuring of its debt began almost immediately after the latest IMF loan agreement was signed, i.e., they lasted from March 2015 until late August 2015. The negotiation process lasted until October, which means that the debt restructuring dragged on for six months.

Don’t forget that the deadline to repay the debt to Russia (Dec. 20) falls on a Sunday. Kiev has very little time left to demonstrate «a good faith effort» and even in a best-case scenario could not possibly manage more than the first two of the three steps I have listed. There is no time for the third and most important step.

It will be very interesting to hear what the IMF has to say on Monday, Dec. 21. Where will it be able to find evidence of Kiev’s «good faith efforts»? Or will it wait for its cue from the main shareholder? Although that main shareholder is not renowned for its mental finesse, it makes up for its doltishness with sheer nerve.

Dec. 21 promises to be the most shameful day in the history of the IMF, which could be followed by the death of this international financial institution. Unfortunately, the IMF would still be capable of blowing up the global financial system before its own demise, using Ukraine’s debt to Russia as the detonator. Of course, Washington is the one really playing the game – the fund is merely a toy in its hands. But why would Washington want this to happen? Strictly speaking, it is not even official Washington that wants this, but the «money masters» (the Federal Reserve’s main shareholders), and every official connected with the White House, US Treasury, and other US government agencies is on their payroll. The money masters have been forced to defend the weakening dollar using proven tools – the creation of chaos outside America’s borders. Any kind of chaos will work – political, military, economic, or financial.

After the ruling by the IMF’s Executive Board on Dec. 8, 2015, which was made in order to prop up the bankrupt regime in Kiev and solely for the purpose of harming Russia, some financial experts have cautiously expressed their opinion that there will soon be little reason for Russia to remain in the IMF. I can only endorse their position, although Russia’s withdrawal from the IMF would be a necessary but insufficient prerequisite for bolstering Russian statehood. Russia must still create a reliable defense against global financial chaos, which, after Dec. 21, will quickly grow unmanageable. - SCF.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - Crude Falls Below $35 A Barrel For The First Time Since 2009!

© Nick Oxford / Reuters

December 14, 2015 - GLOBAL ECONOMY - Oil prices on Monday plunged to their lowest level since 2009 as OPEC continues high volume production and Iran plans to boost exports. Brent crude was down below $37 a barrel while the US benchmark WTI fell below $35 per barrel.

There’s “absolutely no chance” Iran will delay its plan to increase shipments even as prices decline, Bloomberg cited Amir Hossein Zamaninia, Iran’s deputy oil minister as saying.

Tehran which expects international sanctions over its nuclear program to be lifted early in January, aims to double crude exports. The country currently exports 1.1 million barrels per day.

Oil prices could slump to $30 per barrel in 2016 and could stay low throughout the year, said Russian Finance Minister Anton Siluanov, warning of tough times ahead.

Deputy Finance Minister Maxim Oreshkin said the country is drawing up plans based on the price fluctuating between $40 and $60 until at least 2022.

That scenario would have devastating implications for OPEC, according to Oreshkin. It would also spell disaster for North Sea producers, Brazil’s off-shore projects, and heavily indebted Western producers. “We will live in a different reality,” he added.

According to the head of Russia's Central Bank the average crude price for next year would be $35 per barrel. Elvira Nabiullina said that at that price Russian GDP would fall by two to three percent along with investment and real wages.

The International Energy Agency’s report last week added to the concerns as it warned the global oil glut would persist at least until late 2016 with oversupply and slowing demand.

According to the Telegraph's Liam Halligan, the slump in oil prices reflects supply patterns driven almost entirely by geopolitics that could quickly shift.

Just as fast as crude prices have fallen over the past year or so, they “could easily spring back again,” Halligan writes.

"Then there’s Russia, outside OPEC and constantly vying with the desert kingdom to be the world’s biggest oil producer.

An OPEC production cut, the increasingly paranoid Saudis’ fear, would make yet more room for Russian crude,” Halligan added.

Moscow is “less bothered about cheap oil than Riyadh – given that, in ruble terms, prices have not fallen so far," he said.

Halligan’s analysis echoes experts who say the low oil price may have had no impact on Russian output, which is currently hovering at post-Soviet record levels. Russian crude production reached 10.77 million barrels per day (bpd) in October with 5.32 million bpd destined for export. - RT.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - Is This What Happens On Monday?

December 13, 2015 - GLOBAL ECONOMY - Four months ago, China decided to devalue the Yuan sending a shudder up and down collateral chains globally and forcing carry trade unwinds and derisking everywhere. Friday August 21st saw notable weakness as that weakness washed ashore in US equities... and then Black Monday struck. The ensuing debacle stalled The Fed and shocked markets.

The last week, we have seen China devalue the Yuan very significantly, EM capital markets turmoiling, and today, that was ashore in US equities... what happens next?

Deja vu?

As a reminder, JPMorgan's "seer" Marko Kolanovic warned this week that...

"As for near-term risks—we believe the most imminent market catalyst will be the December Fed meeting in which we are likely to see the first rate hike of the cycle."

But to a market which has traded mostly on technicals and program buying (and selling) in recent months, there is something far more troubling than just what the Fed will announce:

This important event falls at a peculiar time—less than 48 hours before the largest option expiry in many years. There are $1.1 trillion of S&P 500 options expiring on Friday morning. $670Bn of these are puts, of which $215Bn are struck relatively close below the market level, between 1900 and 2050. Clients are net long these puts and will likely hold onto them through the event and until expiry. At the time of the Fed announcement, these put options will essentially look like a massive stop loss order under the market.

What does this mean? Considering that the bulk of the puts have been layered by the program traders themselves, including CTA trend-followers, and since the vol surface of the market will be well-known to everyone in advance, there is a very high probability the implied "stop loss" level will be triggered, and the market could trade to a level equivalent to the strike price, somewhere in the 1,800 area, or nearly 200 points below current levels.

Which would be a tragedy for the Fed: after all, nothing is more important to Yellen, Draghi et al, than affirmative market signaling - pointing to the (surging) market's reaction and saying "look, we did the right thing", just as Draghi did on Friday when he explicitly talked the market higher in the aftermath of the ECB's disastrous announcement. The irony will be if, regardless of what the Fed does, the subsequent move is driven not by the market's read through of monetary policy but by the "pin" in this massive $1.1 trillion option expiry, the biggest in many years, one which if recent market action is an indicator, suggests the stop loss strike level will be taken out in the process setting the "psychological" stage for market participants who will look at the drop in the market, and equate it with a vote of no confidence in what the Fed is doing, potentially forcing the Fed to backtrack in less than 2 days!

Whether this happens remains to be seen, and we are confident the Fed's "arm's length" market-moving JV partner, Citadel, is currently scrambling to prevent any imminent selloff. However, considering Kolanovic' track record of hinting at key risk inflection risk, it is quite likely that whatever the ultimate closing price on December 16 and, more importantly, December 18, volatility may very soon have an "August 24" type event.

Charts: Bloomberg

- Zero Hedge.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - Jitters Send Financial Markets Plummeting Across The Globe!

Spencer Platt | Getty Images

December 12, 2015 - GLOBAL ECONOMY -  Freefalling oil prices have created an environment of uncertainty across financial markets but turbulence should not impede the Fed from hiking interest rates Wednesday for the first time in nine years.

The Fed is expected to lift its target fed funds rate off of zero, ending a seven-year era of historic, crisis-level rate policy. The central bank Wednesday will also provide economic and interest rate forecasts that could help shape the view of interest rates in 2016.

Both the pending Fed action and the plunge in oil, down 18 percent since Dec. 4, have come together as markets are increasingly worried that widening spreads in the junk bond market could be signaling a weakening economy and a rougher time for stocks. Credit markets became even more nervous Thursday over the liquidation of distressed debt fund — Third Avenue Focused Credit Fund, which halted redemptions.

"Escaping zero — it's a big deal. Even up to the last minute, people have doubts because things are happening, markets are moving. The odds went down," said Tony Crescenzi, portfolio strategist and senior vice president at Pimco. "The period of stress and turbulence would happen whenever the first rate hike occurs." Crescenzi said the market is still pricing in odds of a rate hike of more than 70 percent, but he said there is little doubt the Fed will move to hike rates.

"Whatever comes out Wednesday, even if it seems not as dovish as some hope, the harm that could come from it could seem minimal," said Crescenzi, noting the markets do not expect rapid rate hikes and slowish global growth does not justify very high yields.

"A 25 basis point policy rate should not change any valuation model," he said. Crescenzi said that should not be enough to sway investors from risk assets, as long as they continue to expect growth. Crescenzi said some retail investors could get anxious by the Fed move, and that could trigger some initial selling of bonds.

But some credit strategist say they do not know what to expect next week when the Fed moves to hike rates. One reason is the markets are less liquid at this time of year and the credit markets get very quiet ahead of year end.

"You don't have a lot of trading days left in the year. We were concerned about December anyway. The Fed goes on Wednesday. You have Thursday, Friday and then maybe Monday and Tuesday. Not a lot happens around Christmas," said Gregory Peters, Prudential Fixed Income senior portfolio manager.

The S&P 500 lost 3.8 percent to 2012 in the past week, while the Dow fell 2.5 percent to 17,265. Stocks were tethered to the volatile moves in oil, which fell to 2008 and 2009 lows. West Texas Intermediate crude futures fell through the key $40 per barrel level, and closed at $35.62 per barrel, a 10 percent decline and its worst weekly performance in a year. From a technical perspective, energy traders are watching a level for WTI of around $32.50, the low reached during the financial crisis.

Nuveen Asset Management's Bob Doll said the oil shock is making it difficult to make a call on the stock market for next year. Doll, Nuveen chief equity strategist, expects oil to settle down in the next couple of weeks, but for now it's a problem though the market volatility it's causing should not stop the Fed from raising rates.

Oil has been plunging since midday Dec. 4, when OPEC announced it would not cut production and would instead leave in place its hands-off policy of allowing the heavily oversupplied oil market to find its own price.

"In my view, we've got to stabilize the commodities market. If it keeps going down, stocks will keep going down," said Doll. "Credit widening will stop stocks from going up, but I do not think it will cause them to go down, as oil does. It's a yellow light, not the red light oil is." Doll said that if credit spreads continue to widen, the Fed will be very slow to raise rates a second time.

Treasury yields in the past week edged lower as stocks sold off. The policy sensitive two-year was at 0.88 percent Friday, and the five-year yield fell Friday by 12 basis points to about 1.55 percent. The fall out from energy was apparent in the stock market with the S&P 500 energy sector down 6.5 percent for the week, and energy high yield debt saw spreads widen sharply.

"I think most people thought it would not break that barrier. When it was north of $40, there was an expectation or a belief that by the end of next year, we could crawl back up to $50 again. There are a number of oil companies that would survive at $50," that would have problems with $40 crude, said Amundi Smith Breeden's head of global high yield, Ken Monaghan.

The selling in junk bonds is expected to continue, and while energy and commodities are at the heart of the selling, other sectors are also an issue.

"In the last week, we've seen over $3 billion in retail outflows (from high yield). It think it's very concerning, and you've had one fund in particular that had a hard time returning money to investors," said Michael Contopoulos, head of high yield strategy at Bank of America Merrill Lynch. He said the Third Avenue fund specialized only in distressed debt, unlike most funds.

"But the fear is investors see poor liquidity and start to withdraw their funds on the back of poor performance. That's going to affect the market pretty dramatically." So far, high yield has a negative return this year of 3.6 percent. Contopoulos expects a negative return of 2 to 3 percent in 2016 though BoA expects positive returns of 3 to 4 percent in investment grade bonds and a higher stock market next year.

More energy bankruptcies are expected next year. Contopoulos said he expects 33 percent of the market value of the commodities, CCC-rated debt to default, and 16.5 percent of the higher rated B-rated commodities companies.

Doll said the markets are particularly troubled by oil's decline because of what it may be saying about the economy. "It's because oil is connected to the broader deflation story. Markets, risk assets in particular have to be convinced that we've conquered the deflation risk that's been with us since 2008. When you get oil selling off double digits in a few days, it raises those fears again, and it's not good for risk assets. My guess is … in two weeks, oil will be up a few bucks and it'll feel OK."

Because inflation is one of the mandates of the Fed, the worry about deflation is even greater as the Fed looks set to move on interest rates.

"Without a lot of confidence, my main line scenario is stocks are doing OK, the job market is OK, consumers have much improved balance sheets. They're going to spend some money. The corporate sector is in good shape, excluding the resources. Government spending is going to be up, and that's going to contribute to the economy. China's slowing down, I think it's going to be OK. It's not going to be ripping to the upside. I think stocks will beat bonds in this environment," he said. Doll said as long as the economy is growing, stocks should be able to move higher.

China could also be a big story for markets in the week ahead. Besides retail sales and industrial production data on the weekend, traders will be focused on an announcement from the People's Bank of China on its currency.

Crescenzi said it will also be important to see how the news is received that China's central bank would like the yuan's exchange rate to be measured against a group of currencies, rather than just the dollar. The announcement did not include any firm plans or timing for such a move.

"That will be an important part of the news of the week – how markets react to the news from China about that basket rather than a dollar peg," he said. "The super secular notion is that it would reduce the dollar's status as a reserve currency. The dollar is dominant followed by the euro. The Chinese currency, depending on how it stands economically, politically...it will be an increasing part of currency baskets that institutions own, but it won't be immediate. It doesn't have a vast bond market to store those reserves like the U.S. does." - CNBC.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - World Finance Leaders See Threats Ahead For Global Economy; Finland Could Tear Apart The Euro-Zone Project!

April 19, 2015 - GLOBAL ECONOMY - The world's financial leaders see a number of threats facing a global economy still on an uneven road to recovery with U.S. and European officials worrying that Greece will default on its debt.

The finance ministers and central bank governors ended three days of meetings in Washington determined to work toward "a more robust, balanced and job-rich economy" while admitting there are risks in reaching that objective, the steering committee of the International Monetary Fund said in its communique Saturday.

Seeking to resolve Athens' debt crisis, Greek Finance Minister Yanis Varoufakis held a series of talks with other finance officials on the sidelines of the meetings. The focus now shifts to Riga, Latvia, where European Union finance ministers meet next week.

The head of the European Central Bank, Mario Draghi, said it was "urgent" to resolve the current dispute between Greece and its creditors. He said that while the international finance system had been strengthened since the 2008 crisis, a Greek default would still put the global economy into "unchartered waters" with its effect hard to estimate.

Draghi told reporters he did not want to even contemplate the chance of a Greek default on its debt. But French Finance Minister Michel Sapin said he thought any damage would be confined to Greece because euro zone countries had established measures to protect themselves from any spillover effects.

Seeking to assure financial markets, which fluctuated considerably on Friday over the possibility of a Greek default, Sapin said nothing had changed on the issue as a result of the weekend meetings. He said it was up to the Greek government to present credible, assessable solutions to its economic problems.

"The solution to the Greek debt crisis is in Greece," he said.

The head of the IMF, Christine Lagarde, who had rejected suggestions that the IMF might delay Greek debt repayments, said she had constructive talks with Varoufakis and that the objective remained the same: to restore stability for Greek finances and assure an economic recovery.

International Monetary and Financial Committee (IMFC) Chair Governor of the Bank of Mexico Agust{ed}n Carstens, accompanied by International Monetary
Fund (IMF) Managing Director Christine Lagarde, speaks during a news conference after the IMFC meeting at the World Bank-International Monetary Fund
annual meetings in Washington, Saturday, April 18, 2015. ( AP Photo/Jose Luis Magana)

Greece is negotiating with the IMF and European authorities to receive the final 7.2 billion euro ($7.8 billion) installment of its financial bailout. Creditors are demanding that Greece produce a credible overhaul before releasing the money.

The country has relied on international loans since 2010. Without more bailout money Greece could miss payments due to the IMF in May and run out of cash to pay salaries and pensions.

The negotiations over Greece's debt have proved contentious, but all sides have expressed optimism that the differences can be resolved.

A number of countries directed criticism toward the U.S. for the failure of Congress to pass legislation needed to put into effect reforms that would boost the agency's capacity to make loans and increase the voting power of such emerging economic powers as China, Brazil and India.

Agustin Carstens, the head of Mexico's central bank and chair of the IMF policy panel, said "pretty much all of the members expressed deep disappointment" that a failure of Congress to act is blocking implementation of the reforms. The IMF panel directed IMF officials to explore whether interim solutions could be put in place until Congress acts.

The finance ministers urged central banks including the U.S. Federal Reserve to clearly communicate future policy changes to avoid triggering unwanted turbulence in financial markets.

The annual meetings of the IMF and its sister organization, the World Bank, take place Oct. 9-10 in Lima, Peru. - AP News.

How sleepy Finland could tear apart the euro project

Finland's stricken economy has been strangled by the euro just as much as Greece.

Finland is the unlikely stage for the latest turn in Greece’s interminable eurozone drama this weekend.

With events having decamped temporarily to Washington DC, Athens will be keeping half an eye on developments in Helsinki, where the Nordic state of just 5.4m people heads for the polls on Sunday.

In the five years since Greece’s financial woes were revealed to the world, it has been sleepy Finland which has emerged as the most trenchant critic of EU largesse to the indebted Mediterranean.

The outcome of the country’s general election could now determine Greece’s future in the monetary union

Getting tough on the Greeks

In a leaked memo seen last month, it was revealed that the Finns had already drawn up contingency plans for a Greek exit from the euro.

Although ostensibly a sensible measure for any finance ministry to contemplate, the document confirmed the Finns' position as the most uncompromising of the EU’s creditor nations.

The reputation is well-deserved.

At the height of Greece’s bail-out drama in 2011, Helsinki negotiated an unprecedented bilateral agreement with Athens, receiving €1bn in collateral in return for supporting a rescue deal.

A year later, the Finns were prime candidates to become the first dissenters to voluntarily break the sanctity of the monetary union. “We have to be prepared,” the country’s then foreign minister told the Telegraph three years ago.

Finnish PM Alexander Stubb meeting Germany's Angela Merkel last month.

Greece's current impasse is also partly a result of Finnish obstinacy.

Helsinki was one of the main obstacles to securing a long-term extension to Greece's bail-out programme under the previous Athens government late last year. The eventual compromise of a three-month, rather than six-month reprieve, has seen the new Leftist regime scramble desperately for cash since February.

With the situation in Athens deteriorating by the day, both Finland's prime minister and central bank governor have eschewed high-minded rhetoric about European unity, to insist creditors should be ready to pull the plug on Greece.

Strangled by the euro

But unlike its fellow creditor giant Germany, Finland is more economic laggard than European powerhouse.

Having been mired in a three-year recession, the country heads to the polls with economic output still 5pc below its pre-crisis levels.

Finland has suffered an economic downturn of almost Greek proportions.

The boon from falling oil prices and launch of eurozone QE will still only see the economy expand at a paltry 0.8pc this year, worse only to Italy and Cyprus.

Stagnating growth saw Finland stripped of its much coveted Triple-A sovereign debt rating last year. The International Monetary Fund now recommends a cocktail of structural reforms and fiscal consolidation that would make officials in Athens bristle.

"There is no sympathy for Greece any more, especially because our own economy is struggling," says Jan von Gerich, strategist at Nordea bank in Helsinki.

"If there was a refrerendum on a bail-out deal tomorrow, it would fail."

The tale of the Finnish economy proves competitiveness is not merely the plague of the southern Europe.

At the heart of the country's woes are stifling wages, which have risen by 20pc, while those in the crisis-hit countries of the south have slashed their labour costs.

Unemployment has shot up to nearly 9pc, while the country’s debt and deficit levels will both fall foul of euro-area limits this year.

Much like its fellow northern counterparts, Finland has also fallen into a demographic trap. It is now the fastest ageing country in the world, topping Japan in the race to get old.

Weak productivity and an ageing population, all trapped in the strictures of a monetary union, make Finland a microcosm for much of Europe' future economic woes, says Karl Whelan, a professor of Economics at University College Dublin.

“The future for growth in Europe appears to be Finnish” says Mr Whelan.

The euro has also robbed the economy of the freedom to devalue its currency - the tried and tested instrument the Finns have used to extricate themselves from the midsts of their deepest depressions.

The Finns were one of the first economies to follow Britain’s lead and abandon the inter-war Gold Standard in 1931. They also moved to a free floating exchange rate at the height of a banking crisis and deep recession following the collapse of the Soviet Union in the early 90s. In the aftermath of both episodes, the country was able to get back on its feet through reflationary export-led booms.

Faced with political and economic crisis in neighbouring giant Russia, the country’s current and likely outgoing premier Alexander Stubb, has bemoaned a “lost decade” under the monetary union.

Blocking another bail-out

The run-up to its last elections saw the unprecedented rise of the eurosceptic True Finns, who were ostracised from the coalition-making process for their fierce resistance to Greek aid.

This time round, the party - which has been re-branded as just The Finns - has taken a more subdued approach. The party's charismatic leader has refused to categorically state whether or not he would block a new debt deal in a bid to make the Finns more palatable to any future coalition partner.

Unprecedented among left-leaning parties in Europe however, Finland's Social Democrats now lead the charge against a third Greek bail-out.

But it is The Centre Party who are on course to become the largest in the parliament. The race for second place will be fought over by the Social Democrats and The Finns. Whatever the outcome, the position of finance minister will be occupied by the head of the junior coalition party.

The Centre Party's Juha Sipila is on course to become Finland's new Prime Minister

And should Greece need a third bail-out this summer, as the parlous state of its coffers suggests, then the Finns stand ready to throw sand in the wheels of a fresh agreement, says Moritz Kraemer, chief rating’s officer at Standard & Poor's.

“The Finns will have a very conservative line as before,” says Mr Kraemer.

“They want stringent conditions attached to any bail-out deal and could be put the test very quickly when the new parliament gathers at the end of the month. They might have something to vote on very soon.”

Any insistence on another preferential 2011-style deal from the Finns could cause another major political schism in Europe.

Unlike the first ad hoc rescue deals secured at the height of the crisis, the eurozone now as a bail-out mechanism in place through its European Stability Fund. Brussels will now be loathe to give the Finns any kind preferential creditor status over the rest of the eurozone, adds Mr Kraemer.

“It will be communicated to the Finns that they have to play by the rules,” says Mr Kraemer.

But the nature of the rescue mechanisms still gives disproportionate veto power to individual member states, says Mr von Gerich.

"Even the European Stability Mechanism needs unanimity among all member states unless there are really exceptional circumstances," he says.

The only saving grace for the prospect of another political crisis in the eurozone, is that Athens shows no signs of completing its existing bail-out, let alone agreeing a new deal.

"This is all for the day after tomorrow" says Mr Kraemer. "The task at hand is still to get Greece through to June, before anything new can be negotiated." - Telegraph.