If you’re eurosphere by perspective – and especially if you’re British – there are three big stories competing for attention at the minute: gold price destruction, the third Greek bailout, and David Cameron’s speech about tackling NVEs yesterday. The three are actually related by far more than contemporaneity.
Allow me to explain why.
The Slog posted last night about the dangerously muddled nature of the British PM’s ‘thinking’ on how to tackle extremism. The speech took place under 24 hours ago, and already the other two pieces of news are making a mockery of the government’s approach.
One of the central themes of Cameron’s address (it’s 10 Downing Street SW1 by the way – if you want to write to him about it) was the use of extremist conspiracy theories to persuade “young minds” that something happened when it didn’t, or vice versa, and/or why and how. The flaw in such an assertion is the implied assumption that all ‘official’ explanations are true and accurate, and only troublemakers lie. I doubt if there’s a single adult in the Western hemisphere who thinks such a thing.
So let’s look first at the drop in the gold price. It’s obvious from reading half a dozen informed accounts thus far that nobody knows for sure why it’s been falling since the 8th July, and has now began an acceleration in its speed of descent. But we do know that two coordinated “dumps” of gold took place in low trading volumes, such that the price was rocked by both those factors. And we do know that either (a) China was lying before about how much gold it had got or (b) China is lying now about how much gold its got. We also know that Beijing is very keen not to have a further stock market selloff, and a gold rally could very easily kick-start that rush out of equities into shiny metal. So it suited China to make it look as if it wasn’t buying gold…to make investors think the government sees a bear market in it coming. Pay attention, please. It’s really quite simple.
However, my own opinion at this juncture is that the two most stated reasons for the fall in gold are complete bollocks. The first – that Yellen will raise rates because the US economy is strengthening and that will make the Dollar a safer haven than gold – is based on the same infantile Cameron suggestion that this official version of the future is truthful and accurate. It is neither. I could certainly see a race out of the stock exchanges into US debt bonds/the Dollar because the Dow et al are ludicrously overpriced, and the tapering of QE continues to make that reality abundantly clear. But that’s not the same thing at all.
The second quoted factor – that the euro crisis is over and Greece is saved – would require you as an investor to have spent the last three months in a sealed zero-stimulus tank. Italy and Spain are in a similar (but much bigger) mess to the one being exacerbated in Greece, and France is inexorably heading in the same direction. Far from Greece being saved, this startling chart confirms for everyone what they already knew – that the Greek situation will get fiscally and economically worse, and may well led to bloody internal conflict:
Extracted from Michael Lebowitz’s excellent blog on the subject, we can see that even under the rosiest of outlooks, the Greek debt/gdp ratio continues to escalate. The Fred’s likely scenario – that it will more than double over the next decade – makes it abundantly clear to even the individual pro-am investor that Greece is being fed poison while slaving away pointlessly in a Death Camp.
So this in turn raises three questions:
1. Why did the EU creditors inflict such a fate on Athens while ignoring the IMFs maths showing that debt relief is the only way to put Greece back on an even keel?
2. Why are two risible gold-fall explanations being foisted on the media?
3. What’s really going on in the latest episode of the adventure serial Gold! ?
Now based on David Cameron’s flimsy logic, if I start to suggest far more likely geopolitical factors, I’m going to be defined as a crafty and wicked NVE operating just inside the law in my avowed radical programme of blogging designed to bring Britain, capitalism and banking to their aggregated knees, knobbly or otherwise.
But as one at least gets three squares a day in the pokey, here goes. The EU inflicted an insane policy on the Greeks because it wished to demonstrate to other EU (especially eurozone) States that it can subjugate national sovereignty to Brussels-am-Berlin’s will. Profoundly daft explanations are being advanced for the drop in the gold price because the world’s key central bankers need to make gold more affordable for them, and thus they need to frighten gold-bugs….but not too obviously. And what we are seeing here is the next stage in a gold-price destruction exercise long predicted by The Slog and thousands of other sites.
I haven’t a clue at the moment if the two ‘dumps’ of gold were merely the Bourse Bastard tendency making some hay while there’s still time. But remembering the now accepted collusion between the Bank of England and private City firms in relation to Libor Rate rigging, I think it at least very possible that the dumpers were acting as a proxy for one or more central bankers using opportunism to exploit low volumes, Japanese holidays and international events in order to further erode confidence in gold.
To repeat the rationale I’ve put forward many times in the past on this subject, without a drastic move to repair the global banking system’s Nottingham lace balance sheets, a meltdown in that system is a matter of when, not if. A swoop to hoover up underpriced gold (and then revalue it upwards as a banking asset) is about the best way to do that. In my opinion.
It is my opinion, and I could very well be wrong. But being wrong doesn’t make me a bonkers NVE fiscal anarchist. It makes me no more than an observer using data and events in order to question the official version of empirical reality.
This is where the Cameron-May rationale of Action on Extremism is going to lead to a suspension of Citizen liberty in Britain unless somebody or something reins in their hubris and calls foul. For me, the result of their intended legislation is going to be a further blurring of the line between those of us who don’t want a corporatocracy, and genuine religiously intolerant nutters who want to remould Britain to fit their sacred belief system.
I think we are being misled by the Conservatives. I think this because:
* I never believed the Cameron/Hunt/Newscorp relationship was innocent
* I was unconvinced by the Rebekah Brooks trial because she was only charged with crimes where the email evidence had been destroyed…by Newscorp.
* There were no grounds at all for the Coulson perjury Judge to dismiss the case without trial by jury
* On the NHS, Jeremy Hunt has consistently – since 2009 – said one thing and done:written another
* I’ve done the maths on Osborne’s austerity policy, and they show that he lies in his Budget speeches and scopes out his fiscal actions for the debt markets, not the good of all Britons
* Several senior Cabinet Ministers work hard to confuse the electorate about the difference between fiscal deficit and National Debt. (John Redwood – an honest Tory – can talk and write for England about this deliberate obfuscation)
Good socio-economic governance in the United Kingdom is coming a poor second to legislation with a very clear political agenda. The Prime Minister’s supposed plan to “tackle extremism” is in reality a Charter via which he and those who follow him can bang someone up for saying to government “I don’t believe you”.
Such would leave every journalist, economist, Judge, policeman and blogger living in fear. It would be a giant step towards a legal system designed to hide the guilty privileged City boys…rather than protecting the vulnerable citizen.