China Buying the World

From South America to the South Pacific, China has spent billion and billions of dollars to exert economic and political control over developing nations across the globe. Saddled with debt and faulty Chinese-built infrastructure, these countries are now dependent upon Beijing and have become de facto "Sino-States."

Last week, Ranil Wickremesinghe, who became president of the island nation of Sri Lanka last summer, was finally able to succeed where his beleaguered predecessor had failed: An agreement with the International Monetary Fund (IMF) to reschedule $3 billion in debt.


The deal will provide Sri Lanka with an additional four years to satisfy its IMF obligations, which are crippling the nation with inflation.

It’s a good start, but the MIF deal does nothing to mitigate the country’s real debt burden, the nearly $7.5 billion it owes to China.

You’ve heard of “failed states” like Somalia, where the central government has basically ceased to exist. And then there are “narco states” where the trafficking of drugs — and often people — is the chief function of the criminal gangs that run the country.

Located from the South Pacific to South America, Sino states are countries whose ports, railroads, resources – and even governments and economies – are deep in China’s pockets.

And as Beijing further extends its military and economic reach, Sino states are multiplying. “China is on the march globally, bending dozens of countries to its will,” observes Australian defense analyst David Archibald, “and this includes here in the South Pacific, where [China] is eyeing the World War II Japanese base on Guadalcanal in the Solomon Islands.” (Spoiler alert: Last year China lent the Solomon Islands $66 million to upgrade their telecommunications infrastructure.)

Sri Lanka is a prime example of a Sino-state, and so is Ecuador – which currently owes China nearly $4.5 billion in unpaid loans.

This sum includes billions to the Chinese construction company Sinohydro, responsible for Ecuador’s dismally faulty – and corruption-laden – Coca Codo Sinclair hydroelectric plant.

The $2.7 billion infrastructure giant – one of four built by China across Ecuador – is not only riddled with thousands of cracks but is at risk of systemwide failure, according to local engineers.  READ MORE...

Pakistan Closes Due To Market Crisis

Pakistan’s government has ordered measures to conserve energy, including closing all malls and markets by 8:30pm (15:30 GMT), as the country grapples with a crippling power and economic crisis.

The cabinet-approved measures are expected to save the country about 62 billion Pakistani rupees ($273m), Defence Minister Khawaja Asif told journalists on Tuesday.

Pakistan finds itself strapped for cash as money expected to come in under an International Monetary Fund (IMF) programme has been delayed. Its foreign exchange reserves now barely cover a month of imports, most of which are for energy purchases.

The defence minister said additional measures that will take immediate effect include shutting restaurants and wedding halls by 10pm (17:00 GMT). He said some market representatives had pushed for longer hours, but the government decided that an earlier closure was needed.

Asif also said Prime Minister Shehbaz Sharif had ordered all government departments to reduce electricity consumption by 30 percent.

The measures are being implemented as Pakistan struggles to quell fears of a default after the $1.1bn in IMF funding was delayed. Islamabad has differences with the IMF over a review the agency is conducting of policy and reforms it is requiring in Pakistan. The review should have been completed in November.  READ MORE...

All About Ireland

The magnificent scenery of Ireland’s Atlantic coastline faces a 2,000-mile- (3,200-km-) wide expanse of ocean, and its geographic isolation has helped it to develop a rich heritage of culture and tradition that was linked initially to the Gaelic language. Washed by abundant rain, the country’s pervasive grasslands create a green-hued landscape that is responsible for the popular sobriquet Emerald Isle. 

Ireland is also renowned for its wealth of folklore, from tales of tiny leprechauns with hidden pots of gold to that of the patron saint, Patrick, with his legendary ridding the island of snakes and his reputed use of the three-leaved shamrock as a symbol for the Christian Trinity. But while many may think of Ireland as an enchanted land, the republic has been beset with perennial concerns—emigration, cultural and political identity, and relations with Northern Ireland (comprising the 6 of Ireland’s 32 counties within the province of Ulster that remain part of the United Kingdom). 

At the beginning of the 21st century, Ireland’s long-standing economic problems were abating, owing to its diverse export-driven economy, but calamity struck again in 2008 when a new financial and economic crisis befell the country, culminating in a very costly bailout of the Irish economy by the European Union (EU) and the International Monetary Fund.

The emergence of Ireland as an independent country is a fairly recent phenomenon. Until the 17th century, political power was widely shared among a rather loosely constructed network of small earldoms in often-shifting alliances. Following the so-called “Flight of the Earls” after an unsuccessful uprising in the early 17th century, Ireland effectively became an English colony. 

It was formally incorporated into the United Kingdom in 1801. A 1914 Home Rule Act was passed but never implemented due to pro-union militancy in the north, the onset of World War I, and the subsequent Irish War of Independence. 

In 1920 the island was effectively partitioned with the creation of Northern Ireland, a six-county area with devolved powers within the United Kingdom, whereas under the Anglo-Irish Treaty of December 6, 1921, the other 26 counties became the Irish Free State, a self-governing dominion within the British Commonwealth and Empire. In 1937 the southern state passed a new constitution that offered a more robust expression of sovereignty, and in 1949 it formally left the Commonwealth as the Republic of Ireland.  SOURCE:  Britannica

The IMF Predicts for 2023

The International Monetary Fund predicts global growth will slow to 2.7% next year, 0.2 percentage point lower than its July forecast, and anticipates 2023 will feel like a recession for millions around the world.

Aside from the global financial crisis and the peak of the Covid-19 pandemic, this is “the weakest growth profile since 2001,” the IMF said in its World Economic Outlook published Tuesday. Its GDP estimate for this year remained steady at 3.2%, which was down from the 6% seen in 2021.

“The worst is yet to come, and for many people 2023 will feel like a recession,” the report said, echoing warnings from the United Nations, the World Bank and many global CEOs.

More than a third of the global economy will see two consecutive quarters of negative growth, while the three largest economies — the United States, the European Union and China — will continue to slow, the report said.

“Next year is going to feel painful,” Pierre-Olivier Gourinchas, the IMF’s chief economist, told CNBC on Tuesday on the back of the report. “There’s going to be a lot of slowdown and economic pain,” he said.  READ MORE...

China Controlling Global Economy

China wants its currency, the yuan, to replace the U.S. dollar as the world's global currency. That would give it more control over its economy.

As China's economic might grows, it's taking steps to make that happen. A slim majority of institutional investors see it as inevitable, but don't say when.1 Could we see a switch from a greenback- to a redback-dominated world? If so, how and when would that happen? What would be the consequences?

Before the yuan can become a global currency, it must first be successful as a reserve currency. That would give China the following five benefits:

1. The yuan would be used to price more international contracts. China exports a lot of commodities that are traditionally priced in U.S. dollars. If they were priced in yuan, China would not have to worry so much about the dollar's value.
2. All central banks would have to hold yuan as part of their foreign exchange reserves. The yuan would be in higher demand. That would lower interest rates for bonds denominated in yuan.
3. Chinese exporters would have lower borrowing costs.
4. China would have more economic clout in relation to the United States.
5. It would support President Jinping's economic reforms.

READ MORE

Persistent Inflation

The International Monetary Fund warned Tuesday that there is a threat inflation will prove to be extra than simply transitory, pushing central banks to take pre-emptive motion.

The subject is presently dividing the funding neighborhood, which has been busy considering whether or not a current surge in shopper costs is right here to keep. 

In the U.S., the patron worth index got here in at 5.4% in June — the quickest tempo in virtually 13 years. In the U.Ok., the inflation rate reached 2.5% in June — the best stage since August 2018 and above the Bank of England’s goal of two%.

For probably the most half, the Washington-based establishment sees these worth pressures as transitory. 

“Inflation is expected to return to its pre-pandemic ranges in most countries in 2022,” the Fund stated in its newest World Economic Outlook replace launched Tuesday.

However, it warned that “uncertainty remains high.”

“There is however a risk that transitory pressures could become more persistent and central banks may need to take preemptive action,” the IMF stated.  READ MORE