Since I last wrote, it has been a time for thought, contemplation and discussion. This week I recorded an FRA podcast with Richard Bonugli and Larry McDonald. It was the equivalent of the “Wide World of Sports” as we traveled around the world looking at profitable investment ideas. Enjoy the best 60 minutes in financial global macro analysis.
But the world does not stop and there are some issues we must address.
1: U.S. Treasury Secretary Janet Yellen has been center stage at the IMF/G-20 meetings as the U.S. is pushing for a minimal corporate tax in an effort to raise revenue for the massive stimulus programs without hemorrhaging jobs and investment from the U.S. in an effort for multinational corporations to reduce tax liabilities. Why does the U.S. government believe it can exert ITS WILL on the world when everyone else seems to be at odds with continued efforts by BIDEN ADMINISTRATION to use the tools of neo-imperialism through the exorbitant privilege of reserve currency status to punish those nations it deems to be in non-compliance of U.S. objectives.
The world has bent to U.S. demands since the Koren War as the military-industrial complex has expended blood and treasure while the world was forced to quietly acquiesce for protection under the U.S. economic and defense umbrella.
Dear Janet, the world you have inherited is far different then the one that had free reign after the fall of the Soviet Empire. TAX HARMONIZATION has been a DIFFICULT TASK for the European UNION, which shares a common charter. So why would the G-20 bow to your needs as the world’s nations seek to gain every advantage they desire? It seems that China and Russia would be very adverse at this juncture. My question stands: Why pose this issue through the G-20? Also, if the minimal tax was to be accepted wouldn’t the Swiss franc and the Swiss economy suffer as the bastion of the world’s kinky money would be under the greatest threat? As the discussion heated up this week the SWISSIE has rallied more than 2%.
In a recent Financial Times article titled, “Yellen Calls For Global Minimum Corporate Tax,” the Treasury Secretary said, “The United States needs to have a strong presence in global markets on a level playing field. We will to co-operate with willing partners to protect and enforce a rules-based order.”
But this may pose some difficulties for those seeking other alternatives in an effort to thwart U.S. desires. Yellen added, “Our economic relationship with China, like our broader relationship with China, will be competitive where it should be, collaborative where it can be, and adversarial where it must be.” Call it what you will but it is either HUBRIS, hegemonic NOBLESSE OBLIGE or just plain old neo-imperialism.
2: In a real-time effort to thwart American desires, China and Iran signed a 25-year agreement on March 27 to increase trade to $600 billion over the next decade. The Asian Times story written by MK BHADRAKUMAR said “wide ranging economic cooperation is envisaged covering investment investment and trade exchanges, banking, financing, mining, transportation, communications, space manufacturing industries, development of ports, upgrade and expansion of Iran’s railway networks, the introduction of express railway systems in Iran, agriculture, water resources, protection of the environment, food security, fighting desertification, water desalination, use of nuclear energy, etc.”
While the U.S. attempts to SANCTION over the UIGHURS — and possibly BOYCOTT THE CHINA-HOSTED OLYMPICS — the Middle East, a bastion of Islamic wealth and holy sites is engaging in economic intercourse with Beijing. SeveralArab nations use the Chinese rationale in discussing the “GENOCIDE” in Xinjiang Province. Saudi Prince MBS refers to the UIGHURS as an issue of internal affairs just as is Hong Kong and Taiwan.
Yellen’s designs are not going to be welcomed by all G-20 nations. It is a changing order. Now, what about Goldman’s call on the DOLLAR this week? If U.S. influence is on the wane can its currency still be supported by mere nominal yield differentials? Much more to follow.