While Miliband kitchens grasp the UK headlines, rather more important moves are being made both there and elsewhere.
British Chancellor George Osborne has announced plans to become the first major Western country to join a Chinese-led development bank – the self-styled Asian Infrastructure Investment Bank (AIIB).
It’s being pushed by Beijing as a way of financing regional development, and as a potential rival to US-based institutions such as the World Bank.
The US logged the fact that it didn’t like this. I’m sure it didn’t, because what this move represents is the Special Ally deciding to hedge its bets on currency hegemony.
The infinitely more important insight here, I would contend, is that Camerlot knows exactly what’s coming down the road. But at the same time, it’s a smart tactical move by the Draper, in that it suggests a large degree of euroscepticism…and a determination to reduce its dependance on trade with the flatlining EU. It thus seems highly likely to shut Nigel Farrago up for a day or two.
The bottom line really, of course, is that this is the quid pro quo for getting China to underwrite our ill-advised nuclear power renewal programme. (Lest we forget, this is the same Son of Little Osborne who was rabid in his criticism of the PRC’s human rights record prior to the last Election).
Veteran Sloggers will be aware of my long-held view that Deutsche Bank and Santander Bank are prime examples of gung-ho flying machines that somehow got off the ground….only to discover at 25,000 ft that there were no engines on board. They might also recall that I fingered Bank of America way back in 2010 as the most likely first US casualty of Crash2. So it is both gratifying and terrifying that the latest US Fed Stress test just singled out three banks about whom they had some concerns: Deutsche, Santander and BoA.
Seven years on from Crash1, these (and myriad other diversified banking institutions) have resisted every legislative attempt to make their business less risky…all of them continuing to believe that the TBTF convention will always apply.
Meanwhile, the falling euro/rising $US gap continues to widen: never in the time since the launch of the Common Currency has there been such a rapid creation of a Grand Canyon between the two currencies.
Not only is this going to make exporting from the US to the EU well-nigh pointless, the eye-rolling amount of capital flight from the EU is going to be horrific: several European investment analysts over the last two days have suggested a ballpark exit of monies from the eurozone of at least 4 trillion euros over the next year….previously thought of as the amount that might escape over eight years.
Another way of looking at this, however, is to think of the eurozone as Greece, and the US as Mario Draghi. As I’ve suggested before, tiny fleas have little fleas on their backs….and little fleas have bigger flies biting voraciously at their backs.
Perhaps the eurodollar cometh….and with Britain signing a banking deal with China, who know what players the two sides – Dollar and Rublenimbi – might have pulling for them?