CNBC featured an interesting interview with Goldman Sachs CEO Lloyd Blankfein last week. He was briefing the Australian Institute of Company Directors in Sydney. From the CNBC article:
GOLDMAN SACHS, BUSINESS NEWS
"Most risk management is really just advanced contingency planning and disciplining yourself to realize that, given enough time, very low probability events not only can happen, but they absolutely will happen," said Blankfein.
"Once you think that something is improbable and everybody thinks it, people modify their behavior in a way that makes it more probable," said Blankfein.
This is an extraordinary interview and provides an important lesson for us today. Virtually everyone is dismissing the possibility of future economic warfare or financial terrorism. The vast majority have declared that it is impossible to imagine any risk to the dollar's status as the primary reserve currency in the world for example. The so-called experts are equally dismissive of a serious cyber attack, an EMP explosion wiping out the power grid, a collapse in the global derivatives system, widespread systemic dislocations from commodity manipulations, rogue traders, manmade stock market crashes, or any of the other numerous economic warfare weapons identified by our enemies.
Blankfein's warning was focused on the unanticipated risks in the markets. It applies equally well, however, to the potential for premeditated attacks. And, it explains why arrogance is so dangerous.
Now, couple Blankfein's warning with the reality that there are serious elements in Russia, China, and elsewhere who are planning the demise of the U.S. dollar. This isn't a conspiracy theory. It is being openly discussed by Putin and others around him and is at least entertained for discussion at the highest levels in China. We have covered reports from around the world about this. Here are a few more:
Clearly, China is less than enthusiastic about the dollar's status as the main global reserve currency. The People's Bank of China (the Chinese central bank) said back in 2009 that a global dominance of a single national currency translates into higher risks of contagion.
Russia is not happy about the dollar's ubiquitous role, either. The Russian government wants the world to have more reserve currencies, and believes that the rouble could be among those currencies.
The two emerging economies, Russia and China, have now pooled their efforts in order to make their dreams of a stronger rouble and yuan come true. To CONTINUE READING . . .
Same story, original source:
TRADING AND INVESTMENT IDEAS AHEAD OF THE HERDRUSS WINTER
"All warfare is based on deception." – Sun Tzu, "The Art of War" (500 B.C.)
"The message of this initiative is for China to consider whether or not China would open up its banking system and allow the strongest currency in the world, which is the Chinese yuan, to be the rightful and anointed convertible currency of the world." – Thailand Deputy Prime Minister Olarn Chaipravat in an interview with Bloomberg
"An international monetary system dominated by a single sovereign currency has intensified the concentration of risk and the spread of the crisis." — People's Bank of China (2009)
It should go without saying that China and Russia have designs to end the U.S. Dollar hegemony and debtism free ride. This is fundamental to understand and will be a game changer. The impacts on the standard of living of these players will be profound and especially negative for the U.S. How and in what manner this plays out is the question. I strongly believe that the answer lies in two parts: letting the U.S. put a noose around its own neck and then at the appropriate time, kicking the chair out from under it.
It would be foolish to ignore this risk. The Goldman Sachs CEO tells us why.