Today will be the chapter heading for a future economic history book
Man for all Seasons David Cameron consolidated his lead in the human cliché stakes today be remarking that”we’re all Thatcherites now”. Some of us never were, Mr Cameron – a reality one might have thought obvious by the divisive mud-slinging no-holds-barred battle between the Deists and the Demonisers since her merciful release of last week. The reality of this shallow man’s occupation of Ten Downing Street is something I remain unable to grasp, but then I felt precisely the same way about Tony Blair.
Our Prime Minister’s one attempt at stamping his mark upon the UK over the last three years was The Big Society, a concept so dense whole armies of amateur cod philosophers have been first lost and then asphyxiated in it. The situation has recently been exacerbated by the fact that not only does nobody know what it is, what Britain has become bears no relation even to what they thought it might be. Did anyone nine months ago, for example, think a crooked media mogul, three crooked bank CEOs, and a crooked monopoly supplier to government would be not only outside jail, but also thriving in public life? Well yes, we probably did: but we were sort of hoping it wasn’t what The Big Society is about.
Where I am now is a relatively small society on the verge of not being a society any more. It’s already one where beggars hassle the visitor every hour or so, middle class people can’t pay electricity or phone bills, most car traffic has disappeared, the retail trade is on its arse, and foreign financial despots are demanding more and more firstborn flesh. I was explaining my view about the country’s position in the greater scheme of things to a native yesterday, but for inhabitants here the shock of the burglary is still the overwhelming emotion – that and the absence of any discernible police force to punish the perpetrators.
For those of us observers lucky enough not to be acting out this local tragedy, there seems little doubt that the acceleration period of financial inundation is now well under way…and on the way to being out of control. The Any Old Iron Lady is on her way out just too soon to see the maiden voyage of SS Globecantile hit the iceberg while steaming at 45 knots towards the New Horizon.
On top of her obvious economic and export slowdown, China is slowly beginning to admit that she has a banking bubble big enough to make Lehman seem a silent fart by comparison. A senior Chinese auditor has warned that local government debt is “out of control” and could spark a bigger financial crisis than the US housing market crash. One senior player in the sector Zhang Ke said he would no longer buy local government bonds, these by now having a status rather worse than Cyprus but slightly better than Zimbabwe.
Yesterday, aptly-named Philadelphia Mayor Michael Nutter, whose municipality has the lowest credit rating of the five most-populous U.S. cities, invited bankers and other concerned folks to his office for a private meeting that is a virtual public recognition of the City’s bankruptcy. And in California, those once loopy-spaced but now stick-thin Perrier drinking taxpayers face a 50% hike in the cost of funding that which is not currently funded as such for the California Public Employees’ Retirement System. It’s just a gnats’ short of full by $87 billion in unfunded obligations.
This is where low-tax, high-leverage, financial paper neocon paradigms end up – and as if those fantasies weren’t enough, the globalist mercantile trade joke overlaid upon it by Thoedore F**kwitt forty years ago is about to make currency trench-warfare the new bailout slaughter. Having crashed down to $1340 over the lst four days, the shiny gold-haven is today skiing crazily over a giant mowgli field: down $6, up $13, down $13, up $13 in the last in the last seven hours alone.
It’s highly possible that while at first Beijing has been happy – along with the other central banks – to gobble up the manipulated metal at a knockdown price, there are now fears inside the Big C that this could turn into just another way for the US to block off a genuinely alternative investment route for them. Put another way, “Don’t try and move out of our debt pile slant-eyes, or we’ll render your gold worthless”. Oddly enough, in the last hour I got this from a Slogger along similar lines:
‘An angle not covered in the gold price fall is the possibility of a power play between China and the US. The Chinese were keen to divert out of the manipulated US Treasury market into gold. Now the Fed is showing that they can manipulate gold too! The message the US is presumably trying to send is that the Chinese are cornered when it comes to investing the proceeds of their trade surplus with the US.’
So what we see now is Washington sells some, Beijing buys more….just as with Swiss Francs v Euros six weeks ago, and Yuan v Yen three weeks ago. It’s the World Series, folks: the knockout tournament in which everyone dies.
If you sit in the lunatic fringe making sense for long enough, there’s no need to desert the fringe, because the mainstream will come to you. After the first post about Gold hokum in 2005 by The Slog’s predecessor nby, the ten-day stream of hooting emailed laughter that followed was audible from New York to Sydney. So there you have it: proof positive that time wounds all heels.