Boggart Abroad: 12/23/14

Tuesday, December 23, 2014

China Stumps Up To Help Beleagured Russian Economy

As predicted in The Daily Stirrer Currency Wars page, China was never going to stand aside and let the American and Arabs governments trash the economy of its ally Russia. We knew this because several of our writers, chiefly economics expert Phil T Looker (yes that name is a pun, Ken does not wish to publish his real name on the web for professional reasons) has contributed on the orchestrated attempt by Russia, China and Iran to see the US dollar replaced as the global reserve currency (the petrodollar).
In fact Phil. predicted last week that what we were seeing is a currency war because all parties know a shooting war between the major military powers would be far too destructive. now, as usual, Phil is proved correct as we learn that China is preparing to bail out Russia, after its oil - reliant economy was hit last week by the collapsing price of crude.
Russia is not only an of China but a major trading partner and the other major force behind the BRICS economic bloc (Brazil, Russia, India, China, South Africa) and a strategic partner in the political chess game aimed at achieving geo-political dominance. The USA has long fancied being the global hegemon, as economically dominant on a world scale as The Roman Empire was around the Mediterranean region two thousand years ago.
The Americans looked to be in the stronger position but as usual overplayed their hand. It should have been obvious to Washington strategists that China would support the Russians as the USA tried to inflict economic damage in retaliation for Moscow's support of Assad in Syria and Putin's obduracy in refusing to yield Ukraine to NATO and the EU after Washington had engineered the coup that overthrew the elected government.
Bloomberg reported that during Vladimir Putin's recent visit to the far east, two senior Chinese government officials offered support for Russia in its efforts to defend the the rouble without depleting foreign-exchange reserves. China pledged to provide help if needed and remains confident Russia will overcome its economic problems, Foreign Minister Wang Yi was quoted as saying in a Dec. 20 report by Hong Kong-based Phoenix TV.
“Many Chinese people still view Russia as the big brother, and the two countries are strategically important to each other,” said Jin Canrong, Associate Dean of the School of International Studies at Renmin University in Beijing, referring to the Soviet Union’s backing of Communist China in its first years. “For the sake of national interests, China should deepen cooperation with Russia when such cooperation is in need.”
In fact as was reported in another part of our internet cloud, the Russian economy is in far better shape than the USA which has only staved off economic collapse over the last few years by massive borrowing which now gives it an almost unsupportable debt burden. It is only the fact that the USA holds the global reserve currency that now keeps its economy afloat. Russia on the other hand has very little sovereign debt (see link above "China would support the Russians) and holds substantial gold and dollar reserves which could prop up its currency in the short term. With China offering support in terms of trade (that excludes using the dollar) it appears that the mainstream media's crowing about the demise of Russia has deafened us to the 31% surge in the value of the Ruble in the last few days.

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