CURRENCY WARS: Switzerland’s franc fire-sale in favour of the Pound-rush

Only a madman would invent the econo-fiscal system we have. Or a neocon.

‘Any thoughts on how we get out of this mess?’ wrote Ambrose Evans-Pritchard, as he rounded off his piece yesterday about the Swiss buying all the Sterling they could lay hands on in a swapathon for the Swiss franc. It is something of a pointer (towards how dysfunctional the global economic system is) that one of the richest nations in the world is buying the currency of a tiny bankrupt country in order to avoid going bankrupt itself. But I’m sure Milt Friedman would’ve had the answer to that peevish criticism. We just need to wait patiently while Dan Hannan finds the mots justes among his collection.

Currency wars – despite Jim O’Neill’s denialism – have been with us for some time now, and things will get worse as the world lurches from wild Wealth of Nations bollocks to protectionism….hopefully along the road to self-sufficiency. Almost exactly two years ago, I posted a sketch about how Britain could wind up winning the currency wars. Every year, it seems, truth gets odder than satire.

Anyway, AEP asked the question, and so I feel duty-bound to reply. The required action is actually ludicrously easy to define, but impossible to get anyone in the self-appointed élite to act on it. This is because they all have something to lose, and they all want to come out as a winner. That is the rice-paper-made flaw upon which the concrete juggernaut of global mercantilism rests uneasily: it assumes everyone can win all at the same time. Anyway, what we need starting some time before May 2013 is:

1. A global summit to crunch debt forgiveness and sign a deal under which a debt-jubilee is declared.
2. Then we need to dump the globalist mercantile/financial capitalist model in favour of sovereign self-sufficiency and trade in surpluses.
3. Then we need to abandon the Euro, the US Dollar and the Pound in favour of a gold-backed world currency coexisting alongside legal-tender gold currency.

But in the immediate and selfish term, given our UK export performance is risible anyway, we should

4. Let the Swiss buy all the Sterling they want and let it shoot upwards in value. This makes us safer against the coming fiat meltdown – which will occur because nobody wants to organise points 1-3 above.
5. Buy all the gold we can get hold of.
6. Use the profits to offset the trade gap.
7. Compel all UK based banks by law to invest in SME growth.
8. Buy an underground house, or a farm above 1500 feet with its own well, once it becomes clear that nobody wants to organise points 4-7 above.

Nothing from 4-7, by the way, makes any sense at all. Point 8 is the sound thing to do, because right now in France you could buy it for a song: and if by chance we do get out of this mess, it will be worth three times what you paid for it within five years. But we need to do 4-7 because nobody will do 1-3. And we need to do 1-3 because nobody has done anything sensible at all thus far. And as nobody will do 1-3, Point 8 still looks good to me. James Delingpole would disagree – and he is right about everything; so that too is something worth bearing in mind.

And yes AEP, you’re right: it is a mess of near inestimable proportions. It is a profound and multivariate mess. It is a mess which, despite various attempts to disguise the pungency of ageing turds, gives off an odour to make any Undertaker retch. It is a mess in which every major sovereign State on the planet is standing, insouciantly drinking tea, as the sewage-to-sulphur-dioxide tide rises slowly towards their knees. Any minute now, a celestial voice will yell, “Right then everyone….tea-break over, back on yer ‘eads.” What happens after that may separate the weet from the chav….but come what may, afterwards everyone is going to smell like sh*t mixed with vomit for quite some time.

Related: Regarding the Vix Fix….

 

 

57 thoughts on “CURRENCY WARS: Switzerland’s franc fire-sale in favour of the Pound-rush

  1. Pingback: John Ward – Currency Wars : Switzerland’s Franc Fire-Sale In Favour Of The Pound-Rush – 4 January 2013 | Lucas 2012 Infos

  2. From AEP’s article – “Policymakers are doing things that if you had suggested four years ago they would have put you in a straitjacket and thrown you in a cell. I don’t rule out anything any longer in this market. Desperate times lead to desperate acts,” said David Bloom, currency chief at HSBC.

    Ain’t that the truth…

  3. Pingback: John Ward – Currency Wars : Switzerland’s Franc Fire-Sale In Favour Of The Pound-Rush – 4 January 2013 | 2012: What's the 'real' truth?

  4. Salient points 1-8 !

    Like you i’d rather address the first 3. Actually ,scrap 1, and replace it with voluntary bankruptcy and the imprisonment of those responsible for sleight of hand banking and organised theft ( one and the same!).

    I wish i thought it was ineptitude that led us here. But unfortunately i’m of the opinion that amongst the halfwits and crooks who run the status quo are the architects of this debacle. The same bunch who profit from every crash and subsequent power consolidation.

    They attend the Bilderberg meetings ( who miraculously have the foresight to invite yet to be elected powerbrokers to grace their presence) and rub noses with ‘luminaries’ from the banking world and politics and with spooks,aristocrats and the entertainment moguls.

    They have dodgy handshakes, dodgy pasts and dodgy accquaintances. Blair, Kissinger; i could go on, but it’s too bloody depressing.

    • @Bamber (no-coin-soon, surely?)
      Bloody depressing indeed, but hopefully someone has some form of airspray which will mask the reek of “sh€t mixed with vomit” and everything will turn out fine (not)…
      WAD
      PS Is the Utopian farm 1500 feet high or 1500 feet above sea level?

  5. Apparently not…
    ‘Eurozone composite output PMI rose to 47.2 in December from 46.5 in November, with the services index edging up to 47.8 from 46.7. Surveys across the region, such as in Germany, “provide some hope that the eurozone is showing signs of lifting out of its deep double-dip recession,” says Markit, although the December improvements are “unlikely to prevent the eurozone economy from having contracted at a sharper rate” in Q4.’
    More wishful thinking if you ask me….

  6. Point 8. If point 8 turns out to be the only viable option.
    You have then to say to yourself do I want to survive in this post industrial world?
    If you answer yes then there are boolian-like logic gates that you then need to pass through in order to achieve the goal.

    You do in fact need to become one of the much derided ‘survivalists’. Those who think it through and -cookie or not- have made some preparation for the unraveling of what we call society.

    I have been, in essence, the self same since I finished my book on a mutated H5N1 which was easily transmissible [scared the crap out of me], because make no mistake if things do get to the point 8 stage then those who have ‘prepped’ for Armageddon [nuclear], or Armageddon [biological] will be in a much better shape to survive than those who think it an interesting idea but do nothing.

    I didn’t start out a fan of Ray Mears when I started writing my novel it just happened that way after 2 or three years of research including ‘what ifs’ by the bucket load and ‘what thens’ in equal measure.

    Just as a taster -frightener if you will- spend a few moments working out the consequence of not being able to have power, clean water, sewage disposal, supermarket food, doctors on tap etc -for the foreseeable future . These are the threads you need to weave to have an idea of what may be. The first 3 months casualties would be staggering. Particularly the old and the very young, the weak or challenged physically. Cities become death traps with little in the way of sustenance and the casualties from starvation, resulting disease and disease in general, all get the counter going crazy.

    It is very sobering and whilst you don’t have to have a house at 1500 feet or underground, even simple preparation is like going back 400 hundred years -more even due to skills irreplaceably lost…….

    • @ Me again…

      The problem you then have is that then everyone from the urban areas who are interested in surviving will want what you have got.

    • Sounds as though I am going to have to hurry up & watch all the old charity shop DVDs’ & videos I bought at Christmas in double quick time!

    • If I may; some of the answers that you require.

      What difference will ‘prepping’ make?
      You/we have to be crystal clear about exactly what you/we are ‘prepared’ for. Then the cost/benefit becomes clearer. Hint, there most certainly ARE worse things that death. The vast majority will not necessarily fight to live.

      Are ‘preppers’ insane?
      That leads onto…
      Well, who are the ‘preppers’?
      They own the world. They control the earth. Most of what you can see occouring in the world today IS their preparation. Mass immigration/emigration. The vaccine agenda. The financial consolidation/crisis. Attacks designed to destroy Christianity and debase human culture.

      What is their objective?

      They are evil and not entirely in control.

      God Bless.

    • Me Again…….. I’ve got #8 covered however I figure I will lose the farm to the local crazies who will probably finish me off by cooking me on my own out door grill. My faithful dog will be eyeing the spit salivating as I go round and round over the flames.

      • Yes I know I must be a nut job to even think about it, be far more sporting and very British if I arrive at the cliff edge without a rope or foam rubber pants to cushion the blow.

        Chris, spot on. Ask yourself how do you keep what you have sensibly saved? Answer is take the appropriate action or get the emergency bottle of whisky and paracetamol ready -you need a whole bottle and at least 30 tabs to do a good job.
        John R prepping makes the difference if you want to survive. It’s up to you mate. I didn’t understand much else of what you said.
        Bill of course there will be those out there that will covet what you have. Depends how much you want to keep it mate. Besides, your dog will be up there on the spit next to you. Moral dilemma. Do I fight for my family? Do I let some chav have my stash? Easy answer for me I live quite rural and I’ve got plenty of space to bury the new fertilizer as it comes stealing.

        I was trying to come up with a criteria that defined when you are on your own and the law was history too -even if temporary. The only thing I could think of was if you dial 999 and get a ‘no line’ tone or ‘This is the Police. You are 9347th in the Q, waiting time is 44 hours and 23 minutes’. I think you just carry on as normal until it obviously isn’t, then all your quiet preparations come into play and you quietly pull down the shutters and hunker down to wait it out.

        I didn’t and don’t want to go into this deeply on here, it’s all up to you if you think it’s going down the pan what are you going to do? ‘Owt or nowt?’ Simples.

  7. That’s about the measure of it JW. But as ‘common sense’ has been made all but illegal – underlined by the fact that it doesn’t feature in you 1 to 8 – I’m placing my faith in silver (the real stuff, shiny, lumpy and ever so sleep inducing under the mattress.) Oh! and my trusty long barreled colt 45 which as I recall, was the gun that ‘won the west.’

  8. Note the yields on US treasuries and UK gilts have been slowly rising this past couple of weeks. Is this the start of the bond bubble bursting and major sovereign default?

    • No, they are not back from their luxury Christmas vacations yet, that’s all, as soon as the presses are oiled and back running at full tilt, the yields will fall again.

  9. Those who are unable to afford the underground house of step 8, nor even a smattering of gold coins to help cushion the blow of eventual collapse – might like to learn Yoga. Then at least you are able to kiss your A*se goodbye when the wheels come off.

    (Written with difficulty, from what I believe is the cat-stretch position ;-)

  10. “1. A global summit to crunch debt forgiveness and sign a deal under which a debt-jubilee is declared.
    2. Then we need to dump the globalist mercantile/financial capitalist model in favour of sovereign self-sufficiency and trade in surpluses.
    3. Then we need to abandon the Euro, the US Dollar and the Pound in favour of a gold-backed world currency coexisting alongside legal-tender gold currency.”

    1) Slight problem in that under a fiat money system money=debt, so wiping of trillions of debt globally also wipes off trillions of ‘money’. For example if you decided that everyone’s mortgage in the UK was to be wiped off, and the freehold given to the former mortgagors, then bank and building society deposits would be no longer all backed by a corresponding asset, and many if not all financial institutions would be instantly bankrupted. And savers would lose whatever proportion of their cash was no longer backed by loans that had been forgiven.
    2) We can’t all trade in surpluses, by definition.
    3) This would just mean that the world would be locked into a version of the euro, with no escape. If you cannot control your own currency, you are a ship without a rudder, at the mercy of global forces you can do nothing about. Any nation that was uncompetitive internationally would suffer a slow agonising death as the wealth was slowly sucked out of it, rather like the PIGS in the euro now. Only there would be no-one to bail them out, and no way of making yourself more competitive other than grinding austerity, and wage reductions, many times worse than anything we see now. The UK has lived on debt driven fiat money dream for the last 30-40 years. The adjustment to a world where you can only spend what you make as a nation would be a nasty shock.

    • “The adjustment to a world where you can only spend what you make as a nation would be a nasty shock.”

      But isn’t this something that is being forced upon society anyway? If the current fractional reserve system breaks down then we would literally be at the point we were at decades ago – i.e. whatever ‘money’ you made would either be spent on your usual monthly outgoings or saved, without the option of credit.

      • Yes, the fiat money system will eventually break down. And yes it will be nasty. But having a floating currency gives a bit of elasticity in the system. The pain is spread more widely across society via higher import prices, and it makes your exports more competitive, allowing you to earn more of a living as a nation. Without that elasticity the pain is concentrated on those who lose their jobs, either from State budget cuts, or from private sector losses. Its Greece basically, but without the safety net of Germany to bail you out.

  11. As sterling along with $/euro/yen is a ‘basket case’ (stage cough) according to Imbecilic Monetary Franchise accounting protocol, could this move away from cheese and chocolate have anything to do with SDRs?

  12. May I add a point 9..
    Create wealth.
    Either make it in the workplace or harness nature for her abundant energy.

    In Germany they say – unfortunately your British tummies are too full to get off the sofa and away from the television.

      • Sorry gemz but the germans have prospered from a cheap euro, nothing more. Dont over-simplify a hugely complex problem.

        You speak of fat english bellies, but the uk is full of vibrant and creative wealth creators, who are hamstrung by idiot governments and pc bulls**t. It betrays your obvious intelligence that you seem to take your news about england from pictures and not reality.

  13. I agree with a great deal of what you say and enjoy reading your blog. However, it has taken me a long time to realize that like most Brits you haven’t a clue what the term “neocon” means and you simply use it as a synonym for “evil” or “stupid”.

    In fact the term neocon was a slur used by liberals against their own when a group of liberal Americans around Norman Podhoretz and Irving Kristal broke with their friends in supporting the Soviet Union in the 1950s. They were referred to as “neocons”: little better that conservatives. They were all Democrats and continued to be until Reagan brought them into the Republican Party and they started using the term to describe themselves — sort of like Pompey being ridiculed by Sula as “Magnus” and eventually turning it into a veritable title. They are certainly not the source of all evil in the world or even in America or the Republican Party. They are simply people who were once liberal and are now broadly conservative, while retaining some of their former beliefs. For instance, neocons want to free other people from tyranny, while conservatives want to butt out of other peoples problems. They are decidedly not part of the religious right, nor are they part of what is known as the heartland. They are usually big city, over-educated, former liberals who think the government has interfered too much in life. I suppose you can consider that wrong-headed, but I have trouble considering it “evil.

    • Paul in TO,

      i agree, and I hope you will forgive me John, but the term neocon is political with geopolitical aims and neo liberal is the term for the lunatics who have created this economic mayhem.

      Neo liberals follow the Friedmanite nonsense that has got us where we are. A return to anything resembling the the Gold Standard a recipe for further disaster as outined very well by Jim above. +100 btw Jim.

      let those at the top look after themselves, the most important thing we can do is look after the 99% starting with a Job Guarantee for all who want want. The politics of this is irrelevant in my view.

      we need to get the economics right first.

  14. Stop press/OT: More waxing at the House of Bishops; the convoluted word forms of the ‘qualification’ make the Hampton Caught Maze (Freudian slip) look positively Euclidian, in straight-line parlance.

  15. I might be way behind the curve here but does anyone remember Enron?
    I watched a documentary the other day called “Enron: The smartest men in the room.”
    From the “doc” i got the impression all the protagonists are doing or did time for their crimes but the explanation of what they actually did, it seems that the methods have been taken on board and are bieng used to this very day.

    • The best way to beat ‘em, even if you don’t actually want to…fast learners anyway. It doesn’t take much of anything to know which pocket to piss in.

  16. I feel like wandering the streets with a sandwich board saying “the end is nigh”. Lets keep it simple for a bear of incredible little brain like me and say the global economy is screwed. The tough decisions are not going to happen here or in the US of A or in Europe and these sticking plaster measures they have applied are all going to come unstuck sooner or later.

    In a way it does not matter which shoe drops where as these banks and governments are all houses built on sand. Our houses may not be the first to be knocked down by the financial tsunami but they will all be swept away.

    One contingency I have heard is to inject £1tn in QE straight into the economy when it is about to come all tumbling down. This is like the guy who borrows money from the bookie to place his losing bets. Sooner or later a couple of heavies will come around looking to break legs if they cannot get their money back. This situation cannot carry on indefinitely. Absurdly low interest rates will have to rise and at that point we all find out just bad things really are.

    My prediction for 2013 is start stocking up on the can foods. We are in for a grim year.

  17. I loved reading this! I could be reading too much into this but I have noticed that for about the last three years, the Pound and US dollar have hardly deviated at all from the $1.59-$1.62 range, suggesting that the two operate very similarly at the central banking/Fed level and interest rates being in tandem with each other. I wish in late 2008 when I had the instinct to invest in Australian dollars and sock it in the bank there at 7% I had done it, but I did not have the guts. -’tarotworldtour’

  18. Pingback: FORT KNOX GOLD: Fed figures show US debt over 40 times bigger than gold reserves, critics want proper audit. | The Slog. 3-D bollocks deconstruction

  19. The madman was Anselm Rothschild who said “Give me the power to issue a nation’s money; then I do not care who makes the law. ”

    Since then, he and his family empire seem to have ensured that the agenda of the financial elite is NEVER the public interest…

  20. On the face of it Debt Forgiveness seems a neat way of getting around the huge debt problem we have. That is if, as you say John, the political will was there, but you are quite right;nobody wants to come out on the losing side and we all know the bankers have the politicians effectively in their pockets.

    However a more worrying notion is the fact that in reality and even if the political will was there, Debt Forgiveness will only exacerbate the problems for Jo-public.

    If those holding the dogey debt get defaulted on via forgiveness i.e. the banks, then the whole shambolic mess comes down even more speedily around our ears and the ruling class know this. The banks are essentially underwater/bankrupt anyway – as not al the debt can/will be paid back anyway in eventuality. As i said, debt forgiveness willl only hasten the collapse that is already baked into the cake.

    Once the banks go down, corporate funding suffers, theeconomy suffers, jobs get lost, we suffer. Such is the economic reverse of the boom times. For every expansion there is a corresponding contraction. Having held the tide out for so long articificially via market manipulation the central planners will now reap an incoming tsunami. Its been spotted of shore after the big bang of 2008 but no ones really twigged thatit hasnt made landfall yet. It will.

    And additional if when the banks/financial institutions fail, where do you think our pensions will go. They will evaporate like dew on a hot summer morning to be overly prosiac.

    I foresee vast failures and forced nationalisations as the only outcome here created ever-indebted nations and ever-poorer populations. There will be no spring this year. We are firmly heading into the Kondratiev winter

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