The global crisis is essentially a dollar crisis, which might have a spill-over effect into the next world war.
In an interview with USA Watchdog, Egon von Greyerz, founder of Matterhorn Asset Management, says another world war seems inevitable. “That’s been the rule whenever an empire is collapsing. The actions they take are they start wars everywhere, because then you can frighten people and you can borrow more money. Of course, to some extent, the United States has done that ...
“There could easily be a war, and just look at Ukraine ... Here we have a situation that just arose in the last six months that nobody talked about last year. That in itself is a very dangerous situation ...
“Ukraine is just one situation. When you take a look at what’s happening with Iraq, Saudi Arabia and the Middle East, it’s a very unstable situation also. War is certainly a major part of the risks we have.”
The dollar’s future looks gloomier following the BRICS summit in Brazil this week to set up financial institutions to rival the International Monetary Fund and World Bank.
The BRICS countries’ move is widely seen as an attempt to break the predominance of the US dollar as the world’s currency reserve of choice. That is why we are seeing an intensifying global crisis.
Under the agreement, a US$100-billion fund, which will pool reserves among the member countries (Brazil, Russia, India, China and South Africa), will provide liquidity support to countries facing currency crisis, similar to what Thailand experienced in the 1997 financial crisis.
At the same time, the bloc’s New Development Bank, with an initial capital of $50 billion, will provide loans to emerging-market countries to support their investment infrastructure projects.
Russia has meanwhile announced measures to sell its fuel in other currencies rather than the US dollar. And China has been signing bilateral currency-swap agreements with its trading partners in preparation for the internationalisation of the renminbi.
The combination of Russia and China’s fresh attacks on the dollar will have a deep impact on the global status of the dollar.
The US and the European Union announced fresh measures to sanction Russia due to the ongoing Ukraine crisis. This was announced in the middle of this week, while the BRICS summit was going on in Brazil. It was not coincidental.
Asked to comment on the sanction, Russian President Vladimir Putin said, “We aren’t the ones introducing sanctions – you should ask them. But, as for sanctions, they usually have a boomerang effect, and without a doubt will force US-Russian relations into a corner.
“This is a serious blow to our relationship,” Putin warned. “And it undermines the long-term security interests of the US State and its people.”
In the Middle East, the situation has worsened on two fronts. First, Israeli forces are preparing for a ground invasion of the Gaza Strip, which is under the autonomous rule of the Palestinians.
The latest war between Israel and the Palestinian Hamas government has been going on for the past 10 days, with the Israelis sending war planes to bomb Gaza and accusing Hamas of firing rockets into Israel.
The death toll has topped 200 and there have been thousands of injuries on the Palestinian side, while Israel has suffered only slight casualties – one person reported killed.
The impending Israeli invasion of Gaza, with implicit support from the US, could spill into a war with Syria and Iran, both of which are aware they could be the next targets.
And finally, the militant group now calling itself the Islamic State has emerged out of the blue to further destabilise the Middle East.
It wants to spur the civil war in Syria, occupy the whole of Iraq and create an Islamic caliphate in the Middle East.
The Middle East is once again being set on fire.
As these incidents develop, we’ll certainly witness more destabilisation in the global affairs, with regional wars threatening to become the next world war.