BRIC-A-BRAC

Sometimes it's tough to take the media filter glasses off. We live in a world where all the important information is brought to us thanks to these internets, pity the fools that have to rely on the idiot box. So how is it that the most obvious of patterns are impossible to discern? The collage painted by the press should allow us to see the world how it really is, yet we miss the most obvious. Self-fulfilling prophecies such as last week's BRIC meeting spring to mind as the media simply brushed over the fact that the 4 nations that make up 43% of the world's population met last week to try to chart a mutually beneficial path through the future. The G8 will meet next month and there will be wall to wall reporting yet a group formed by the prediction of a Wall Street analyst gets swept under the carpet.

Reuters declares: Much-Trumpeted BRIC Summit Ends Quietly. "BRIC" is an acronym for Brazil, Russia, India and China, the world's four major developing countries. Jim O'Neill, global head of economic research at Goldman Sachs, first started the idea of BRIC in 2001. While it's obvious today thanks to the economic growth of these countries, which averaged 10.7% from 2006-8, it was only the idle talk of an analyst predicting the economic world of 2050, when the four countries would together pass the G7 in size. Since then we've watched the US economy lead an implosion of western economic power as these four nations have made strategic manoeuvers to position themselves to be exactly what we knew they'd be, the masters of our world. With Brazil and Russia pumping out the raw resources, China and India will consume the world.

The June 16 summit in the Russian Urals city of Yekaterinburg marked a huge step toward BRIC cooperation as a group. The fact that they have now met formally is story enough, but at the same time, the Russian city hosted another meeting, this a more formal grouping, the SCO, Shanghai Cooperation Organization (China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, with Iran, India, Mongolia and Pakistan as observer states). Even more interestingly, both India and Iran took part at the most senior level as the Indian Prime Minister Manmohan Singh and Iranian president Mahmoud Ahmadinejad attended. Yes, just days after the election in Iran, Mahmoud was there, yet we barely heard a whisper of the meetings as his nation's spiral towards revolution captured our attention along with David Letterman's 14-year old rape inciting. Background buzz as we stumble towards a real new world order.

While BRIC countries account for 15 percent of the $60.7 trillion global economy, China is the world's largest holder of U.S. Treasuries with $767.9 billion while Russia holds around $400 billion in their foreign reserves. More importantly, Russian President Dmitry Medvedev has made proposals on giving a greater role to the International Monetary Fund's Special Drawing Rights that echo ideas from Chinese central bank chief Zhou Xiaochuan. China, Russia and Brazil have pledged to help capitalize the IMF as they seek more influence at the fund. Together, the BRIC have a 15-percent share of the world economy and a 42-percent share of global currency reserves. Last week Brazil and Russia joined China in announcing they would shift some $70 billion (50 billion euros) of reserves into multicurrency bonds issued by the International Monetary Fund. Tiring of the inequity of the system, Brazil, for example is the world's 10th largest economy, but has just 1.38 percent of the IMF board's votes, compared to 2.09 percent for Belgium, an economy one-third the size, they are starting to make noise about changing it.

Navel gazing is far more interesting as it seems more important whether or not Obama, and America, are doing enough, or meddling too much in the Iran election quagmire. The future is just the Heisenberg uncertainty principle at work, que sera, sera, plus there's the Jon and some chick thing to worry about, or Letterman. America has put the BRIC on the path to controlling the world, why would they need to worry about where the road goes? Of course looking forward to the year 2050 involves a myriad of uncertainties, it seems forecasts for when the combined BRIC GDP will pass the G7's are being revised with every new report, from 2050 to 2045 to 2032, sure to change again due to the current financial crisis. Of course they'll be potholes on the road to cooperation, not the least of which will be inter-BRIC conflict, particularly between China and Russia as they vie for dominance in Asia. China announced plans at the SCO summit to give $10 billion of loans to Central Asia, upstaging traditional power Russia whose promises of aid have not been fully delivered amid the financial crisis. But India's economy is projected to be 90% of the US while China will have grown to 130% by the year 2050. Not only will the BRIC dwarf the G7 in global importance, but the N11 (harder to make an acronym for an 11 nation group: Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam. Maybe BEIIKMNPPTV) will rival the economic size of the present elite 7 nations.

Notice how all these numbers assume unlimited resources to achieve growth. There will be a far more interesting chess game played with a more level economic table. China locks up resources in African nations without any of those human rights strings attached. Russia is circling the arctic, winning the new polar race. Markets are necessary too, and the US is sure to remain an important one, making killing the greenback a double edged sword, especially for China. Comments by Russian President Dmitry Medvedev questioning the dollar's role pushed down the U.S. currency by 0.9 percent against other key units, thereby hurting the value of China's investments. Baby steps towards independence from the west and the dollar will be the key word, but they'll add up quicker than you think.

You Say You Want a Revolution?

My new favourite member of the US Congress is Michele Bachmann. This chick is actually insane, no wait, she's batshit crazy (don't look in her eyes, three classic examples of the way her mind works). As my blog approaches it's first birthday, I have to admit that I'm experiencing the worst writer's block that I've ever experienced due to this whole financial crisis. There's just so much to say, so many things happening, so many conspiracies that I just can't decide what to focus on. I've started more posts in the past week than in the past couple of months; not one of them finished. Finally, something simple to write about, a crazy Republican Congresswoman! Maybe I'll also talk about Glenn Beck too. He's just as nuts. First, why the block?

Yes, the US Federal Reserve system was created by the richest men in the world to control the money supply. Too much to say. Sure, the three main causes of the current mess, lightweight regulation, cheap money and the promotion of home ownership all benefited the financial sector of the economy. So, read about it here. Yes, those folks in charge of cleaning up the mess are the same ones who created it and have profited from it. Don't believe me? Here, read. Maybe it's easy to disregard the rantings of Hugo Chavez about a oil-backed currency, but there's something important to read here. Perhaps quantitative easing isn't really just printing money. You can read about that here. Is hyperinflation next, like here? Should we all buy gold? Here. Or will the government outlaw it's ownership? Could be here. The Khaleeji might wind up being a dud. Again, here. Putin could be bluffing. Here anyone? However, by the time the Chinese dragon began blowing smoke, questioning the US dollar as the international reserve currency I was convinced that everyone holding US dollars should start running for cover, fast. Read here. Then came the G20 meeting which taught me there is something better better than paper dollars - paper gold, or Special Drawing Rights (SDRs).

Now, what is an SDR? As described on the IMF site, it is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries. SDRs are allocated to member countries in proportion to their IMF quotas. The SDR also serves as the unit of account of the IMF and some other international organizations. Its value is based on a basket of key international currencies. Essentially they are a substitution account at the International Monetary Fund through which unwanted dollars can be converted; a synthetic currency whose value is determined as a weighted average of the dollar, euro, yen and pound. The SDR was created in 1969, during the Bretton Woods fixed exchange-rate system, because of concerns that there was insufficient liquidity to support global economic activity. It was originally intended as a reserve currency, but is now mainly used in the accounts for the IMF’s transactions with member countries. SDRs are allocated to IMF members on the basis of their contribution to the fund. Sounds like a reasonable way to allow for a soft landing instead of a stampede as countries drop their dollar reserves. Ask where their value comes from and you get the same answer as the US buck - nowhere but faith.

The hope is that member nation's will take this credit and use it as needed. Another hope is that with fewer strings attached, the stigma of going hat in hand to the IMF will be reduced; seems to be working, Mexico already signed up. Here's where Bachmann finally comes in. Along with folks like Glenn Beck, the right wing loons are trying to stir the pot to the point of fermenting a revolution. Don't believe me? Just look at the spike in FBI background checks for gun registration in the past few months. Take a listen here (Just try to bear with her propagandist rhetoric, constitution, ceding sovereignty... at least to the point where she says "Kazakastan" a country presumably somewhere over there next to Whatsitcalledastan). Her belief seems to rest on the fact that other nations shouldn't have the choice as to what reserve currency to hold. And of course, by creating any kind of supranational reserve currency, the US buck will be sullied by the likes of Zimbabwe. Maybe this would explain why the US would then have to stop using the dollar. Or listen to her with another "great American" Sean Hannity calling for revolution. This follows her call for Americans to be "armed and dangerous" over Obama's plan to fight climate change.

And Glen Beck. This guy makes me want to use words worse than batshit. What do I expect, he's on "Faux" News, but really, I have to ask once again if people like this deserve freedom of speech. He stated as many times as possible that he wanted to debunk a made up story of FEMA concentration camps that Obama is trying to set up before talking about them. Of course the camps will be used soon for mass imprisonment of American citizens with right-leaning political views. Because he can't disprove they exist, that means they do, sounds familiar. Even profiling modern militias is a bad thing as right wing nut cases would never want to harm Americans. Never mind about those three police officers gunned down in Pittsburgh this weekend, fear mongering is a good thing.

Ok, ok, I know, Bachman and Beck aren't so bad, especially when people like Sean Hannity exist. I won't even get into the Cheney gong show. Fact is however, Beck et al can maybe be excused a bit by the fact they are just looking for ratings, but Bachmann, she was actually elected by the voters of Minnesota to represent them. Somehow, if you don't support everything that represents only America, you are labelled bad (socialist, terrorist sympathizer, etc...) by these right wing nutters. I've pointed out before that there's nothing more dangerous than a wounded animal in reference to the Republican party, but what happens when that half of the country are convinced that everything they believe in is about to be taken away by the red menace? The past week has been a particularly violent one in American, seems to be a new shooting everyday - I'm almost afraid to think that the Oklahoma City bombing and Waco anniversaries are coming up April 19th. According to the F.B.I., there have been 1.2 million more requests for background checks of potential gun buyers from November to February than there were in the same four months last year. That’s 5.5 million requests altogether over that period; more than the number of people living in Bachmann’s Minnesota. Annie, get your gun.