Dollar hegemony in danger

The history shows that the world’s base currency can lose its position, as happened with Britain’s pound in the 20th century. The US economy is much smaller as a share of world output now than it was after WWII, when its dominance began. And now some investors are flagging concerns about the potential for chaotic images emanating from the US election that could undermine confidence in American rule-of-law and the broader political system.

In 2009, after the meltdown in US mortgage securities triggered the biggest financial crisis since the Great Depression, China’s central bank chief of the time issued a high-profile call to move the global financial system away from the dollar. 

Fifteen years later, it continues to reign supreme — having weathered the launch of trade wars under Donald Trump’s administration and a welter of US sanctions on other countries that showcased the risk, for some nations anyway, of keeping assets in dollars. The greenback remains the main currency of choice in global reserves and massively dominates the foreign-exchange market.

Multiple stewards of US economic policy over decades have highlighted the importance of democratic, transparent governance and respect for the law in underpinning the dollar’s role. A violent attempt to disrupt the transfer of power occurred in the wake of the last election, and had little impact on markets. But further instances could have consequences, some warn.

“You can’t be complacent around any of these things” with regard to the dollar, Robin Vince, CEO of BNY Mellon — one of the world’s largest custodians of financial assets — said in an interview last week. “As is the case with many tipping points, you don’t quite know when you’re approaching it until you go over the other side.”

Thierry Wizman, a three-decade Wall Street veteran, said “the American exceptionalism narrative could end if traders lose faith in US institutions.”

“The way that could happen in the next few weeks is if we have an election without a definitive result for several weeks, and where people can’t trust the institutions to adjudicate any of these disputes,” said Wizman, a global currency and rates strategist at Macquarie.

Courtesy: Bloomberg

 

 

NATO summit under Biden’s uncertain future

When dozens of world leaders convene in Washington, DC, for the NATO 75th anniversary summit next week, they won’t only be looking to underscore the unity of the alliance — they will also be carefully watching US President Joe Biden after his poor debate performance last week.

Biden’s showing at the CNN presidential debate was met with shock and concern by diplomats around the world. Now, the president will be under immense pressure to perform well at the high-stakes gathering and show that he is still a viable competitor to former President Donald Trump, multiple diplomats told CNN.

The concern is compounded because many believe Trump poses a threat to the future of NATO. He publicly railed against the alliance during his first term in office and did so again recently on the campaign trail, even going as far as suggesting Russia “do whatever the hell they want” to members who don’t meet defense spending targets.

Questions about Biden and his political future inject further uncertainty into a summit where key allies are also dealing with major political changes.

The Labour Party took power in the United Kingdom overnight for the first time in more than a decade, putting a new prime minister — Keir Starmer — in place just days before the start of the summit on Tuesday.

On Sunday, the second round of French parliamentary elections is taking place, which could potentially lead to a far-right prime minister taking office in a massive defeat to President Emmanuel Macron’s coalition.

However, as one former senior US diplomat said, there will “certainly be a spotlight” on Biden at the NATO summit.

“How does he look? And how does he sound? And how does he move? Does he look fit? And I suppose he and his team (will) be trying to focus on making him look spry and more with it,” said the former diplomat, who is a veteran of several of NATO summits.

Biden will undoubtedly be feeling the pressure to perform well, the former diplomat said.

The three-day summit is highly choreographed, and typically little is left to chance. It is preceded by months and months of prep work, discussion and negotiations among the 32 member countries.

During the summit, there will be numerous opportunities for counterparts to interact with Biden — the North Atlantic Council meeting, formal bilateral meetings, a leader’s dinner.

The president will be supported and accompanied to key meetings by Blinken, Defense Secretary Lloyd Austin and other key national security officials. Officials such as Blinken and Austin may have one-on-one meetings with their counterparts as well.

Diplomats say the chances of Biden making a major blunder at the NATO summit are limited, but one European diplomat said, that even if Biden does well, “This will still leave doubt,” given how poorly he performed at the debate.

“If there is another clear failure, this will feed into the ‘crisis mood,’” this diplomat said.

The allies are not expected to raise Biden’s debate performance with him directly, but it is expected that they will discuss the debate and their observations next week among themselves.

Another European diplomat said they believe the debate will be used, “even subconsciously, as a benchmark in all kinds of contexts” between now and Election Day.

CNN has reached out to the White House for comment. One US official said they were not aware of concerns that Biden’s debate performance would overshadow the NATO summit, saying that the leaders have spent a good deal of time with the US president, including last month at the G7 summit in Italy.

However, some diplomats were already concerned about Biden’s endurance that summit.

Another source told CNN that British officials who spoke with Biden during the G7 in June assessed he was fine and with it when it came to topics discussed during meetings, but that there was a lot of concern after the debate performance that he did not perform like the same person they interacted with in the meetings.

Adding to the pressure is the increased significance of this year’s NATO summit. The alliance will mark its 75th anniversary and seek to shore up consensus on issues such as support to Ukraine, particularly ahead of a potential change in leadership in the United States.

Trump’s stance on the campaign trail that his adherence to the alliance would be conditional has stirred concerns in the international community. Some question whether Trump will seize the opportunity to again denounce NATO next week. The former US diplomat remarked that “it’s hard to imagine him staying out of it.”

One NATO diplomat told CNN that the attention on Biden next week is a double-edged sword — while they appreciate the immense attention on the summit, there is concern that the actual substance will be lost as all eyes are on the US president.

Meanwhile, the Biden administration has sought to focus attention on the content of the summit and away from Biden’s debate performance.

“Next week, in Washington, DC, as you know, the historic summit is to mark the 75th anniversary of NATO’s founding,” White House press secretary Karine Jean-Pierre said Tuesday.

“For 75 years, NATO has kept us and the world safer. And under the president’s leadership, this president’s leadership, our Alliance is stronger, it’s larger, it’s more united than ever.”

 

Trump not considering Haley running mate

Donald Trump said on Saturday that former Republican presidential candidate Nikki Haley was not being considered to be his running mate in the November 2024 election.

"Nikki Haley is not under consideration for the Vice President slot, but I wish her well!" Trump wrote on his social media platform Truth Social.

It was reported that Trump could pick Haley if he were convinced she could help him win the presidency, avoid a potential prison sentence and cover tens of millions in legal bills if he loses.

Haley, the former South Carolina governor and a former US ambassador to the United Nations, ended her long-shot challenge to Republican presidential frontrunner Trump in March this year.

Comment was not immediately available from Haley. While she has acknowledged that Trump, who repeatedly belittled her candidacy, would be the Republican nominee, Haley has not endorsed him.

There is already a long list of potential candidates for the vice president position that includes North Dakota Governor Doug Burgum, South Dakota Governor Kristi Noem, U.S. Senators Marco Rubio, Tim Scott and J.D. Vance, and US Representative Elise Stefanik.

Burgum and Scott competed against Trump for the 2024 Republican nomination before dropping out.

Noem has been embroiled in controversy after revealing in a memoir that she once shot a 14-month-old dog for being disobedient.

Trump does not seem in hurry to pick a running mate. He will not be formally nominated until the Republican convention in Milwaukee, Wisconsin, in July.

He will face President Joe Biden, a Democrat, in the November 05 general election.

 

 

United States: Two Party System and Militarism

US Presidential Candidate, Jill Stein has condemned Israel for its actions. She placed ultimate responsibility for much of the violence on Washington. While talking to MintCast host Mnar Adley she said, “Gaza is the key issue of our era.” She added “Every international law in the books is being broken.”

She said, “This is not something that began on October 07, 20234. This is the continuation of ethnic cleansing and displacement that began in 1947 and 1948 with the displacement of 750,000 people.”

Jill Stein, a physician by trade, has been involved in the Green movement for decades. She first ran for office in 2002, attempting to become the governor of her native Massachusetts. In 2012 and 2016, she was selected as the Green Party’s presidential candidate. Running against Donald Trump and Hillary Clinton in 2016, she received over 1% of the national vote. She is the overwhelming favorite to represent the Green Party in the 2024 presidential election.

Congress, Stein noted, has just approved US$3.8 billion in aid to Israel, with another US$17 billion pending for not only continuing its genocide but to expand its wars in the Middle East.”

Global public opinion is increasingly turning against the United States, Stein warned, turning both Washington and Israel into pariahs. Even inside the US, recent polling shows that a majority of Democratic voters consider Israeli actions to constitute genocide. And President Biden continues to offer unconditional support.

It seems this is pushing millions of voters to consider the Green Party as an alternative. Stein described the Democratic establishment as in a state of panic over the widespread revolt among its voter base, which could destroy the party’s chances of winning elections.

She said they are fielding an army of corporate lawyers to try to dirty trick us, to find little technicalities to throw us off the ballot.

This is not a new phenomenon, as the Green Party has long dealt with the Democrats’ attempts to suppress them.

However, what has changed, Stein said, is the party’s willingness to announce their intentions to limit democracy openly.

 

US Election: Military-Industrial-Congressional Complex Wins Again

With Veterans Day in mind, if one is asked to comment on the 2022 election outcome, the reply is, the winner in 2022 is the same as has always been, the military-industrial-congressional complex. It is a sad result to contemplate with Veterans Day looming.

In this election cycle, people have heard nothing about peace; have heard nothing about strengthening and preserving democracy by downsizing our military and imperial presence around the globe. Not from Democrats and Republicans.

When both political parties pose as pro-military, when both are pro-war, when both are enablers of record-high Pentagon spending, when both act as if a new cold war with China and Russia is inevitable, do election results even matter? No matter which party claims victory, the true victor remains the military-industrial-Congressional complex.

To paraphrase Joe Biden, nothing fundamentally changed in the 2022 elections when it comes to colossal military spending, incessant wars and preparations for the same and non-stop imperialism around the globe. There is no new vision for lower Pentagon spending, for fewer wars and weapons exports, and for a smaller, less domineering, imperial mission.

As General and President Dwight D. Eisenhower warned in 1961, the military-industrial-Congressional complex represents a disastrous rise of misplaced power that is profoundly anti-democratic. Collectively, we’ve failed to heed Ike’s warning. The result has been one unnecessary and disastrous war after another, even as democracy in America withers.

The Vietnam War—disaster. The Iraq War—disaster. The Afghan War—disaster. The War on Terror—disaster. Even the war US ostensibly won, the Cold War against the USSR, is now apparently about to be refought. May be the US needs to refight the Cold War which it won thirty years ago so that it can lose that one too.

With the Democrats doing somewhat better than expected at the polls, war business should continue to grow in Washington, D.C. Most political commentators seem to think this is a good thing, when they think about it at all. Few seem to recall Ike’s warning that a military establishment of vast proportions is antithetical to democracy.

 

Finally, Israeli Prime Minister Benjamin Netanyahu calls US President-elect Joe Biden

Finally, Israeli President Reuven Rivlin and Prime Minister Benjamin Netanyahu called US President-elect Joe Biden on Tuesday, a week and a half after his victory in the presidential election. Netanyahu and Biden spoke for more than 20 minutes, and the Prime Minister’s Office said the conversation was warm. “The special relationship between the US and Israel is a fundamental part of Israel’s security and policy,” Netanyahu said.

Biden in turn thanked Netanyahu for congratulating him on his election win, according to his office, noting that he expects to work closely with Netanyahu in the future. Biden told Netanyahu he is deeply committed to the State of Israel and its security, according to the Prime Minister’s Office.

The two agreed to meet soon to discuss matters on the agenda and the need to strengthen the alliance between the US and Israel. The Prime Minister’s Office statement called Biden president-elect, which Netanyahu had previously not done.

Rivlin congratulated Biden on his election, saying he has “no doubt that under your leadership, the United States is committed to Israel’s security and success.” US-Israel “friendship is based on values that are beyond partisan politics,” Rivlin said. Biden thanked Rivlin for his congratulations and stated that he looks forward to working with Israel.

Rivlin touted the friendship between the two countries on three levels: First, that the US has no stronger ally than Israel; second, the great friendship between the Israeli and American people; and third, that “the president of the United States of America has no greater friend than the president of the State of Israel, as we have proven over the years.”

Rivlin also said he hoped Biden would work to build on the recently signed Abraham Accords and facilitate ties between Israel and more countries in the region. In addition, Rivlin invited Biden to Jerusalem and sent his regards to Vice President-elect Kamala Harris.

The statement about Netanyahu’s call came out 27 minutes after Rivlin’s office sent its statement. The Prime Minister’s Office said it was scheduled in advance and not in reaction to the president calling. A spokesman for Netanyahu was unaware of the timing and said Biden did not mention speaking to Rivlin first. The President’s Residence did not respond to inquiries about the timing of the call.

The delay of a week and a half in calling Biden, when other world leaders did so much sooner – and the 12-hour delay in Netanyahu releasing a congratulatory message after news outlets called Biden’s victory on November 7 – fueled speculation that the prime minister was trying to avoid angering President Donald Trump.

In his message to the cabinet the morning after, Netanyahu said, “I have a personal, long and warm connection with Joe Biden for nearly 40 years, and I know him to be a great friend of the State of Israel.” But he again stopped short of using the term president-elect.

At a press conference on Monday, Netanyahu would only say that Biden is “supposed to be appointed the next president.” Asked who won the US election by Galei Israel Radio on Tuesday, Netanyahu said: “Why do I have to express an opinion? They have their processes, their Electoral College.” “I will cooperate with the US administration, but stand up for our security,” he later said.

USD witnessing persistent selling

With 13 days until the US Presidential election, it is no surprise to see investors selling greenback. President Trump and Democratic presidential nominee Joe Biden are locked in a tight race. There are growing fears, if Biden wins by a narrow margin, Trump may not leave office willingly. 

Despite a raging second virus wave in many Eurozone nations, the common currency is on a tear. It is almost hard to believe that EUR/USD hit a one month high on Wednesday. Some of the biggest countries in Europe have implemented new restrictions and Europeans are staying at home as much as possible. This behavior will undoubtedly weigh on growth.

There have been some comments suggesting that the European Central Bank (ECB) is not ready to ease policies, but if the economy freezes up from a second wave, it will have no choice. The only reason EUR is strong is because of its attracting demand from investors selling USD. 

GBP also hit a one month high versus the greenback. Brexit deal hopes and mixed inflation data helped to lift the currency. Consumer prices rose in September, which was less than expected but stronger than the previous month. Producer prices beat expectations and rose at a faster pace. The durability of EUR and GBP rally will hinge upon Friday’s PMI reports.

Recently, the New Zealand and Australian currieries saw strong gains today on the back of USD weakness. There’s a very clear trend of improving NZ data and weakening AU data that should continue to drive these currencies lower.