THE BIGGER PICTURE: Why the inane media-invented UK election “issues” are beneath contempt in the context of deadly currency wars

milikitchen13315While 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).

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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.

They’re wrong.

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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?

18 thoughts on “THE BIGGER PICTURE: Why the inane media-invented UK election “issues” are beneath contempt in the context of deadly currency wars

  1. May 8. Queen summons Dave, Militwat and Agreeable Nic and tells them to sort it out,pronto. May 9. £ reaches $1.40. May 10, $1.35. May11.the Canadian raises base by 1 percent, ‘to calm markets.’May 12, FTSE drops 12 percent in an hour,trading suspended ‘in the interests of an orderly market’……

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  2. resisted every legislative attempt to make their business less risky…

    I see it slightly differently, you leverage to the eyeballs (that’s the risk) and we did and in 2008 when the wheels came off they came off with all this massive leverage (money printing really) happening. Since 2008 any attempt to reduce risk fails because that would create the depression / contraction so it is carry on as before.

    If anything the rate of exapansion of fraudulent money creation is not enough so I expect Carney to use QE in the end to create this liquidity. It does makes a mockery of saving for that item if it is just out of reach when a bank can just create the fiat. It is also discriminatory if a bank can create money out of thin air but the ordinary person cannot.

    SO I PROPOSE THIS

    If you have a £1 then you can lend somebody £20 and the BOE credits you with the £19 to make up the difference. NOW YOU WATCH THE ECONOMY EXPAND … hyperinflation as everybody is allowed to do it.

    It does seem fair unlike the current exclusive position and counterfeiting by criminal gangs (not the banksters) does seem rather trivial. Or try a loan spiral A lends B £20 from the £1 but B now lends A £400 froim the £19 freshly created FIAT

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  3. The United States is not officially opposed to the AIIB, but worries that China could have undue influence over its agenda by retaining veto power over its decisions.
    Can’t have anybody else having ‘undue’ influence can we? That accolade belongs solely to the US.

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  4. Here is one for you JW. till Ukraine or Syria kicks off again.

    Today 13 march we celebrate the fact, for the UK, the Afghanistan fiasco is over. Achieving ?

    The sacrifices of Britain’s armed forces who fought and died during the campaign to oust the Taliban from Afghanistan have been honoured by the nation. The heads of all major religions were invited to the service, but no Muslim Clerics came?
    The South Yorkshire Police state “we knew of the grooming of children by certain sections of the community, 15 years ago, but felt the need to persecute motorists for speeding was a more pressing priority?

    For once we have NO TROOPS IN MUSLIM COUNTRIES. So will the Muslims please leave our country.

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  5. Pingback: John Ward – The Bigger Picture : Why The Inane Media-Invented UK Election “Issues” Are Beneath Contempt In The Context Of Deadly Currency Wars – 13 March 2015 | Lucas 2012 Infos

  6. Look,I truly get fed up with the irrelevance of SOME posters on here,thinking that they’re dealing in RELEVANCE.Did none of you watch East-Enders – Britain’s got talent – T.O.W.I.E..etc.?.No?..All you can bang on about is finance,markets,reserve currencies ,wars,& other utterly unimportant stuff.Thank God for the Daily Mail & it’s vitally important 25 daily updates on the Karshittian family.At least SOMEONE has their eye on the all-important ball.

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  7. The issue of Cameron seeking funding from China is, in the estimation of a Forbes writer, a little more serious than Britain’s need for investment in their nuclear power stations. I quote from the article (link below; it’s a quick read).

    It is a fair bet that without constant infusions of Chinese cash, the British pound would be toast – certainly British finances are in far worse shape than they were even in the mid-1970s when, in an immensely humiliating development for the British establishment, the International Monetary Fund was sent in to London to sort things out. Meanwhile, unlike the United States, the United Kingdom lacks the fallback position that it can borrow abroad in its own currency.

    http://www.forbes.com/sites/eamonnfingleton/2015/03/13/chinese-money-drives-wedge-between-obama-white-house-and-a-bankrupt-u-k

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  8. “May11.the Canadian raises base by 1 percent” – that could be VERY nasty. The banks would be smarting from a kick to some very tender places too.

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  9. Miliband’s ‘two kitchens’ ARE important. The leader of what is nominally the party representing working-class people lives in a house worth a couple of million, in part financed by changing his dead father’s will so that less inheritance tax was paid. There is a message there. Milliband isn’t going to do anything serious about the use of tax havens to avoid paying tax. He isn’t going to do anything serious about reducing house prices to levels that people can afford. All he is going to do on the issue of tax avoidance is position himself minutely to the left of Cameron, the financing of whose education was helped by tax evasion.

    Milliband hasn’t a clue about the demands of running a successful business. He hasn’t a clue how great a struggle it is for working or even middle class people to live in the UK. All he knows is the world where Daddy gets a leftie don to give you a place at Oxbridge, where your first job is tell the Chancellor he’s always right and where there is always a quango sinecure for his sort of people.

    The most striking feature of the election campaign so far is the distortion of UKIP’s message by the media. It is remarkable that the other parties should combine to launch a concerted attack on a party with currently only 2 MPs.

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  10. The decision by HMG to have the cojones to tell the US to shove it on the AIIB is only surprising because nobody thought they would dare break ranks with our mad uncle. The funds to join will of course come from our bloated aid budget and represent better value than most alternative uses. The AIIB and the Brics Bank are important policy arms of China’s external economic relations. I am presently in Manila and the Philippines, despite often fraught relations with China, has deemed it in its interests to join, seeing it as source of funding for its deficient infrastructure.

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  11. China seems to be in a bit of a soup and Mr Xi seems to be the noodles and we are cosying up just at the wrong moment.

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  12. If you have a £1 then you can lend somebody £20 and the BOE…..

    This is already possible, there is nothing preventing this. It’s called an IOU or promissory note, regardless of who issues it. The only difference is, as people in the Bank of England have actually said, is that you will have problems getting shops to accept IOU’s written by the local plumber.

    It works the same as the pound in your pocket, it’s based on trust, I myself have created my own credit from thin air by giving an IOU to shop, they trusted me so they accepted it, voila, the money supply has just increased via my IOU.

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  13. It certainly does seem that more people are starting to see the car-crash up the road in the fog.
    The great American bully is getting laughed at, big change.

    Except our excellent media of course.

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