We are witnessing local bulletins but ignoring the Big News

Ben Bernanke has once again said “No QE for now, but we are not out of the woods”. Observers need to wise up to the fact that this is a man who knows he must hold his fire, for far worse is coming.

Despite this, JP Morgan and Bank of America seem to have passed the Federal Reserve’s stress tests. JPM I can get behind, but BoA? Stress tests, I increasingly believe, are so-called because they are primarily designed to reduce global investor stress.

It would be good to feel that the European Troika knows what is down the road. I’m sure Lagarde does, but the rest leave me more convinced than ever that rising to top positions has very little to do with creative talent. There was much talk today in Brussels of slapping Spain’s Rajoy down, with the IMF declaring that Portugal is ‘on track’. There was in turn further gobblegaggle on the subject of Greece now undershooting its 2020 deficit target. Mind you, it was Wolfie Strangelove who said this, so we must judge the observation for what it is: unmitigated bollocks.

Jens Weidmann of the German Bundesbank continues to be a thorn in Mario Draghi’s side. Just when the Italian Stallion thinks he’s got away with another scam, Herr Weidmann bashes him with more statistics to demonstrate what a dangerous game the ECB is playing. Today – in a bid to ram home the message as loudly as possible – Jens reported that Bundesbank profits had fallen from €2.2bn in 2010 to just €643m in 2011 “after substantially increasing reserves set aside to cover risks associated with the ECB’s crisis-fighting measures”. Take that, you Dummkopf Schweinhund.

Meanwhile, the EU’s FinMin agreed to suspend transfers to Hungary of its share of funds for poorer countries on the grounds that it had dared to contradict a Sprout edict. The UK, Austria and Poland thought this was a bit heavy, so the compromise is that the funds could be reinstated in June if FinMin ‘determines that the government is working to bring its budget policies in line with EU rules’. Orders vill be obeyed at all timess.

Still no news on the hard-to-explain-away 107 bn euro pot of further Greek liabilities. Or indeed on the fact that the EU is sticking very strictly indeed to a policy of bailing Athens out with worthless paper. Or indeed on the subject of all those deal-dependent things that the Athens government hasn’t done as yet. As long as the ‘bailout’ is being funded with toilet-tissue, I’m sure the Eurocrats will be happy to go along with it. But my water tells me Venizelos is in for an imminent kidney-punch.

China is slowing down while trying to grapple with the wriggling dragon formerly known as the property market. It’s also dumping Dollar debt as fast as it can, as the Currency Wars that Jim O’Neill says don’t exist continue to escalate. Nobody seems to have given a lot of MSM thought to how the US will borrow if that policy continues. Beijing must not, of course, sew up the mouth that devours its output. But I continue to wonder what America will do when China achieves a degree of self-sufficiency, and then decides to focus 100% on supplying its own population with what it needs to become eternally placid.

The West in general – and former Goldman Sachs employees in particular – continue to pin their hopes on inflationary subterfuge that will eventually dilute the obscene debt. The chances of them doing this without Chinese retaliation are zero. But rather more to the point, if (in the act of trying to dilute debt) you let loose funny money to the value of ten times global GDP, who will benefit?

The short answer is ‘Nobody’. But we are dealing with Masters of the Universe here: we must not intervene, for they know what they are at, whereas we are mere mortals unable to understand their mysterious ways.

Perhaps a bit heavy on the irony pedal there. However, the reality is that contagion will escape, banks will not be prepared for a wall of monetising requirements, and by the end of 2013 at the very latest the entire Hollywood-set facade-folly will have crashed to the ground. For all I know, it may do so the week after next. Nobody knows. Let’s face it: if anyone did, they wouldn’t be arsing about writing blogs like this one.