Things are moving so fast right now that its challenging to stay on top of events. In the last 24 hours the following has happened:
1. US threatens economic sanctions against Russia. (more than 24 hours)
2. Russia threatens to dump US Treasuries
3. Russia threatens to by-pass the dollar as reserve currency.
4. Russia threatens to not make payments to western banks.
5. Ukraine says it cannot pay Russia for natural gas deliveries.
6. Russia says it will stop deliveries of natural gas to Ukraine.
7. US Treasury Secretary Jack Lew states that the IMF 2010 Code of Reforms must be part of any aid package to the Ukraine.
8. Top Republican Bob Corker says the Reforms are on the table for the aid package.
9. White House slips the IMF Reforms into the 2015 budget.
10. Russia threatens to confiscate all US and European assets in Russian territory.
11. Protestors waving the Russian flag storm Treasury building in Donetsk, which is located in eastern Ukraine.
12. Russia continues with pre-scheduled ICBM test launch.
13. European Union offers Ukraine $15 billion dollar aid package.
14. Russia offering Ukraine $15 billion dollar aid package.
15. IMF expecting tough austerity measures on Ukraine as a part of any SDR denominated bail out.
16. Russian tanks are in the eastern Ukrainian town of Enerhodar, the location of a hydro dam and nuclear power plants.
With the US Congress and Republicans all of sudden interested in making the IMF 2010 Reforms a part of any aid package, one can only wonder if they are sending a message to Russia.
Could this message be saying, “give us Ukraine and we will pass the IMF Reforms to equal the playing field for the emerging markets”?
And lets not forget that these reforms will transition the worlds primary reserve currency from the dollar to the SDR.
Based on the level of Russian threats it can be assumed that they are not interested in handing over the Ukraine at all.
Perhaps the country will be split down in the middle, with eastern Ukraine going to Russia and western Ukraine going to Europe. It’s the hinge between economic zones as we have previously stated.
Eastern Ukraine has the majority of the resources and industry. Perhaps the Russians will have to give up the natural defensive wall offered by the Carpathian Mountains for the heavy industry.
Or perhaps Russia will give up nothing in the Ukraine and wait for the western economies to fold or economically fall. This is the least desired outcome as it will affect the whole world.
Survival measures have been taken by the emerging economies by way of currency swap arrangements with China using the renminbi.
Watch the problem/reaction/solution play out on the world scene.
What can’t be denied is that the IMF 2010 Code of Reforms and SDR allocation system is at the middle of it all. The shift from US dollar reserves to SDR reserves is inevitable.