U.S. Navy Faces off with Chinese & Russian Warships Near Alaska, Russia's Wagner Group Involved in Kidnapping Niger's President? 90-Year-Old Mass Murderer Goes Free (The Five for 08/06/23)
Plus, the alarming 401K early withdrawal rate signals the true state of the economy, and five nations attempt to destroy the dollar (like we didn't do that to ourselves already).`
Hey, welcome to The Five.
Let’s dive into the news!
[one]
Well, this isn’t great.
Eleven military vessels from China and Russia found operating near the Aleutian Islands last week were met by four U.S. Navy destroyers, Alaska’s two U.S. senators said.
The two Republican senators, Dan Sullivan and Lisa Murkowski, issued a joint news release Saturday night saying they had been briefed about the operation.
"We have been in close contact with leadership from Alaska Command for several days now and received detailed classified briefings about the foreign vessels," Murkowski said.
"The incursion by 11 Chinese and Russian warships operating together – off the coast of Alaska – is yet another reminder that we have entered a new era of authoritarian aggression led by the dictators in Beijing and Moscow," Sullivan said.
Although the senators' statement suggested the vessels were passing through U.S. waters, the Northern Command told the Journal the combined force did not appear to enter U.S. territory. “Air and maritime assets under our commands conducted operations to assure the defense of the United States and Canada. The patrol remained in international waters and was not considered a threat,” it told the Journal in a statement.
The command did not immediately respond to USA TODAY's request for comment, nor did the State Department. The Chinese and Russian embassies could not be reached either.
I don’t want to fall into the-sky-is-falling-WWIII-alarmism…
…but on the other hand, we just had a naval showdown with two rival superpowers.
That’s not nothing.
[two]
We’re fast approaching a conference where the BRICS Nations (Brazil, Russia, India, China, South Africa) will convene to challenge the dollar as the international currency.
From Watcher Guru, a finance blog:
With 88% of international transactions conducted in U.S. dollars, and the dollar accounting for 58% of global foreign exchange reserves, the dollar’s global dominance is indisputable. Yet de-dollarization – or reducing an economy’s reliance on the U.S. dollar for international trade and finance – has been accelerating following the Russian invasion of Ukraine.
The BRICS countries have been pursuing a wide range of initiatives to decrease their dependence on the dollar. Over the past year, Russia, China and Brazil have turned to greater use of non-dollar currencies in their cross-border transactions. Iraq, Saudi Arabia and the United Arab Emirates are actively exploring dollar alternatives. And central banks have sought to shift more of their currency reserves away from the dollar and into gold.
All the BRICS nations have been critical of the dollar’s dominance for different reasons. Russian officials have been championing de-dollarization to ease the pain from sanctions. Because of sanctions, Russian banks have been unable to use SWIFT, the global messaging system that enables bank transactions. And the West froze Russia’s US$330 billion in reserves last year.
Meanwhile, the 2022 election in Brazil reinstated Luiz Inácio Lula da Silva as president. Lula is a longtime proponent of BRICS who previously sought to reduce Brazil’s dependence on and vulnerability to the dollar. He has reenergized the group’s commitment to de-dollarization and spoken about creating a new Euro-like currency.
The Chinese government has also clearly laid out its concerns with the dollar’s dominance, labeling it “the main source of instability and uncertainty in the world economy.” Beijing directly blamed the Fed’s interest rate hike for causing turmoil in the international financial market and substantial depreciation of other currencies. Together with other BRICS countries, China has also criticized the use of sanctions as a geopolitical weapon.
The appeal of de-dollarization and a possible BRICS currency would be to mitigate such problems. Experts in the U.S. are deeply divided on its prospects. U.S. Treasury Secretary Janet Yellen believes the dollar will remain dominant as most countries have no alternative. Yet a former White House economist sees a way that a BRICS currency could end dollar dominance.
We’ll find out sometime around August 27th just how much damage has been done to the dollar through hyperinflation, which likely opened the door for other nations to challenge the U.S. currency.
[three]
It’s still unclear as to whether Russia’s Wagner group (which attempted to stage a coup against Vladimir Putin this summer) is involved in a coup in Niger. Mohamed Bazoum, the nation’s President, is currently being held by a military faction.
Hundreds of contractors from Russia’s Wagner mercenary group are stationed in Mali at the invitation of its military junta, which – along with Burkina Faso’s military backed government – has backed the coup in Niger.
“Rather than addressing security concerns by strengthening their own capacity, they employ criminal Russian mercenaries such as the Wagner Group at the expense of their people’s rights and dignity,” Bazoum wrote, referring to Mali’s junta.
Last month Wagner’s boss, Yevgeny Prigozhin said the situation in Niger was down to Western sponsorship of terrorist groups – and his fighters were well capable of dealing with such situations.
“What happened in Niger has been brewing for years,” Prigozhin said. “The former colonizers are trying to keep the people of African countries in check. In order to keep them in check, the former colonizers are filling these countries with terrorists and various bandit formations. Thus creating a colossal security crisis.”
Prigozhin’s message was at odds with the view of the Russian Foreign Ministry,which called for the “prompt release” of President Bazoum by the military.
One of the Nigerien coup leaders, Gen. Salifou Mody, visited Mali on Wednesday, according to the Mali presidency, raising fears of a potential alliance with Wagner.
“With an open invitation from the coup plotters and their regional allies, the entire central Sahel region could fall to Russian influence via the Wagner Group,” Bazoum wrote.
The ousted president called on the US and the international community to “help us restore our constitutional order,” adding: “Nigerien people will never forget your support at this pivotal moment in our history.”
Unfortunately, the majority of Americans don’t pay much attention to international events unless celebrities are telling them to:
Meanwhile, Russia, China, France and other nations are seeking more influence in African nations, no doubt as an indirect bid to control more of the continent’s valuable resources…and nobody much cares.
If there’s a global conflict, led by China against America (see uncoupling from the dollar), we’ll find out quickly just how dependent we are on raw materials from resource rich African nations.
[four]
Meanwhile in Rwanda…
Survivors of Rwanda’s 1994 genocide criticized Tuesday a call by appeals judges at a United Nations court to indefinitely halt the trial of an alleged financer and supporter of the massacre due to the suspect’s ill health.
The ruling Monday sends the matter back to the court’s trial chamber with instructions to impose a stay on proceedings. That likely means that Félicien Kabuga, who is nearly 90, will never be prosecuted. His trial, which started last year at the International Residual Mechanism for Criminal Tribunals in The Hague, was halted in June because his dementia left him unable to participate in proceedings.
Appeals judges at the court also rejected a proposal to set up an alternative procedure that would have allowed evidence to be heard but without the possibility of a verdict.
The U.N. court’s chief prosecutor, Serge Brammertz, said the ruling “must be respected, even if the outcome is dissatisfying.”
Kabuga, who was arrested in France in 2020 after years as a fugitive from justice, is accused of encouraging and bankrolling the mass killing of Rwanda’s Tutsi minority. His trial came nearly three decades after the 100-day massacre left 800,000 dead.
Let’s just run that back.
A guy who helped kill EIGHT HUNDRED THOUSAND people, is just gonna walk, because, he old bro.
Given France’s 120+ year streak of cowardice, I guess I’m not surprised, but there is a practical solution here if they just reach back a bit further into the nation’s collective memory.
[five]
Finally, the current non-recession in the U.S. looks pretty recession-y.
More Americans are tapping their 401(k) accounts because of financial distress, according to Bank of America data released Tuesday.
The number of people who made a hardship withdrawal during the second quarter surged from the first three months of the year to 15,950, an increase of 36% from the second quarter of 2022, according to Bank of America’s analysis of clients’ employee benefits programs, which are comprised of more than 4 million plan participants.
It’s a “pretty troubling” development if more people are resorting to making hardship withdrawals, Matt Schulz, chief credit analyst at LendingTree, told CNN.
“You understand why people do that in the heat of the moment, but the opportunity costs on that are really, really high over time,” he said.
Bank of America’s latest Participant Pulse report also found that a greater percentage of participants borrowed from their workplace plans from the first quarter, and average contributions trailed off as well.
However, overall employee contributions continued to hold steady for the first half of the year, and a greater share of participants upped their contribution rate than decreased it.
“The data from our report tells two stories — one of balance growth, optimism from younger employees and maintaining contributions, contrasted with a trend of increased plan withdrawals,” Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America, said in a statement. “This year, more employees are understandably prioritizing short-term expenses over long-term saving.”
Until the next one,
-sth