2010-06-23

Germany and Russia getting friendly?

Germany and Russia Move Closer
German Foreign Minister Guido Westerwelle will brief French and Polish officials on a joint proposal for Russian-European “cooperation on security,” according to a statement from Westerwelle’s spokesman on Monday. The proposal emerged out of talks between German Chancellor Angela Merkel and Russian President Dmitri Medvedev earlier in June and is based on a draft Russia drew up in 2008. Russian Foreign Minister Sergei Lavrov will be present at the meeting. Andreas Peschke said, “We want to further elaborate and discuss it within the triangle [i.e., France, Germany and Poland] in the presence of the Russian foreign minister.”
Interesting because Jim Rickards recently wrote the following:
What G20 will not discuss this weekend (but probably should)
As the system breaks down anyway (because of private demand for gold due to lack of faith in official solutions) one political response will be protectionism (to appease local populations) and efforts at confiscation (to put the gold genie back in the bottle). At that point, and amid the chaos, one or more countries will "go for gold" on their own to preserve wealth and the purchasing power of export income; the most likely axis here is Germany-Russia with Austria, the Netherlands, France and possibly Italy joining in. The German-Russian axis is the most natural in the world because each has what the other needs; technology and manufacturing in the case of Germany and energy and other natural resources in the case of Russia. At that point, the U.S. may have to give up its alternative paper plans and join the gold rush leaving China heavily exposed to collapse because of its shortage of gold relative to GDP. It seems likely that China sees the same scenario which explains its own rush to gold, albeit mostly from captive domestic production in the short run.

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