BRICS are drifting away from US andEuropean monetary structures
The BRICS countries (Brazil (EWZ), Russia,India (EPI), China (FXI), and South Africa) are slowly but surely drifting awayfrom the 20th Century monetary and political structures setup by the U.S. (SPY)and Europe (EZU), as characterized by Russia’s G8 membership beingrevoked in the wake of the events in Crimea. The G7, as it is now known,is at odds with Russia’s Vladimir Putin, but that rift applies to the entireBRICS coalition — a group that seems to be growing stronger and more focused asleader of the Emerging Markets.
There have been a slew of recent moveswithin the BRICS network. Russia and China inked a $400 billion, 30-yearnatural gas partnership, forged a bilateral inter-bank agreement todeal in local currencies, and announced plans to create a new creditrating system to counter the Western agencies. China is diversifyingaway its U.S. dollar exposure, China and Brazil finalized a local currencyswap, and leaders from the group of nations just met for the sixth annual BRICSSummit in Brazil.
Market Realist – The above graph showsChina’s holdings of U.S. Treasuries (IEF), which have been declining consistentlyover the past year. China is steadily diversifying away from the dollar. According to a government report releasedin June, China’s (FXI) holdings of U.S. Treasuries (TLT) declined for the thirdstraight month in June 2014. China held 1.26 trillion in U.S. debt as of April30, 2014, according to the report. This is an $8.9 billion declinefrom March. This fact is particularly significant given that China (FXI) is thelargest foreign holder of U.S. Treasuries (IEF). According to data compiled byBloomberg, analysts have seen this decline in holdings for threeconsecutive months.
China and Russia are also disintegratingfrom the standard credit rating procedures by agreeing to establish a ratingagency on joint projects and international services. The rating agency woulduse similar tools and criteria for assessing creditworthiness as the existingagencies. This move came in response to the countries’ fears that negativefeedback from agencies could prove harmful to their economies.
China and Russia also signed a momentousdeal in May 2014. China agreed to purchase $400 billion of naturalgas from Russia. This strategic deal comes as Russia finds itself isolateddue to tensions with Ukraine. The deal should help China ease its gasshortages and reduce its dependence on coal.
According to a joint statement from Russiaand China on the partnership and strategic cooperation, Russia and China areplanning to bypass the dollar and increase the volume of direct payments intheir national currencies. This would threaten the dominance of the petrodollarand could be a huge blow to the economy if other nations follow suit.
red 1 hour ago 0 24 Make no mistake, this is all the result ofthe 2008 global financial crisis that originated in the US. MBS's were sold asAAA by the rating agencies when in fact they were toxic assets. Banks likeGoldman made out like bandits and BOTH our political parties, despite HUGEobjections from the American people, gave BILLIONS in bailouts. The bankerslater gave themselves massive bonuses to boot. Yeap, I would want to run awayfrom a rigged system like that too!!
Eric 1 hour ago 3 17 Maybe America will downsize government andrely more on the people of America to get us out of debt. Yeah wishful thinkingI know. Government has taken control of America and Government will ruinAmerica that is just how it is. Americans aren't united enough to understandthe urgency we face nor are they willing to put their cherished lives on theline to protect us from disaster. We are Divided States, not United States, Ourstates don't challenge the federal government we all just sit back and takewhat the fed dish out to us.
Assertion 30 minutes ago 4 1 China will sustain substantial andirreversible loses if they cut ties with the west or start to devalue currencyof western nations. China may be considered a super power, but they are still athird world country that relies heavily on manufacturing products for US and EUconsumers to pay their bills. That's not going to change any time soon, andthat is why China will continue to be friends with the US and EU. This articleis simply fear mongering. So long as the West has the most powerful militaryforce and most technologically advanced military, BRICS will be in check. TheUS and EU area decades ahead of Russia and EU in terms of military technologybecause the Cold War never ended - having the largest army or combined armywon't do much with the weapons that we likely don't know about. China needs tosteal military technology because they don't develop it, so the likelihood thatthey're going to catch up is simply wrong.
Myra Piezas 20 minutes ago 0 1 This move by the BRICS will keep the fedhonest. Hope this will happen soon so that the interest rate will go up andmoney printing will stop.
Orlando 24 minutes ago 0 4 The US could stage a comeback within monthsby
1) jailing the criminal banksters;
2) eliminating 75% of the crooked-government itself;
3) returning to a gold & silver standard to crush fiat-currencies;
4) eliminating welfare except for US citizens, including vets & elderly.
However, because of reasons 1 & 2, the US is awash crony capitalism andwill fall soon enough.
umedia 1 hour ago 0 4 It's going to be hard to be the leader ofthe New World Order with 17 Trillion of debt and manufacturing going to RedChina. Someone wake up the Pols.
Newton 18 minutes ago 0 1 If the world switches from USD to anothercurrency this means end of free money printed by the Fed. America will have tolive up to its means. Now when the government needs money no matter for what,just prints USD, other countries can't afford that luxury without consequences.
Pr0n 2 hours ago 10 7 This $400 billion dollar 30 year deal withChina is not as great as Putin is trying to make it sound. If we break it downit comes out to roughly $13 billion per year. Well for comparison a countrylike Poland imports almost $10 billion worth of gas from Russia per year, andfollowing this Ukrainian crisis and Russian threats against them they arelooking for alternatives. So this China "deal" only makes up for theloss of Poland, what about the rest of the EU? If Putin wants to isolatehimself from "the West", then that leaves him with China and India topay his bills? Well I got news for Putin, India isn't exactly rolling in cash,and China isn't buying any more gas than that $13 billion they agreed to. Sothere goes about 90% of Russia's economy. The truth is all of this"success" news being put out by the Kremlin is just propaganda, tomake the brainwashed Russians and anyone else dumb enough to believe it thinkthat Russia can "beat" the West. That's why I'm surprised Yahoo!Finance posted this garbage as "news". Shame on you! Do some research,don't just parrot back Russian PROPAGANDA at us.
Algis 2 hours ago 2 6 They are running away from jewish americanusury as fast as they can and India, SE Asia and Latin America aren't waitingfor an invitation either. They don't want to be in perpetual indebtedness tothe US/UK elite for the next hundred years. No thank you!
Ronald W 49 minutes ago 2 3 In America we build upon bad policy. Ourpoliticians will pass horribly flawed legislation and instead of repealing theykeep attempting to fix the failure. If you can not get it right in the firstplace, what makes you think you can fix it? 2 good examples are The FederalReserve Act and ObamaCare, both fatally flawed.