by Ramin Mazaheri for the Saker blog
There’s no more obvious failure of Europe’s politicians to protect their own citizens than the drop in the euro and the pound to below parity and near-parity, respectively, with the United States dollar.
However, this article was planned before the brazen sabotage of the Russian-German Nord Stream gas pipelines which – almost impossibly – outranks the currencies’ collapse!
The two seismic events actually dovetail perfectly: both illustrate the absolute failure of Western Liberal Democracy for everyone but the Western 1%.
Why would anyone interested in the theory of governance treat the above as hot news? Western leadership may have infinite personal faults and a bottomless appetite for blood and treasure, but their instability is so endemic so as to be clearly structural.
If we accept the Hobbesian insistence that government is here to prevent disorder, then what can we say about the record of the pan-European project, which we can define as the combined efforts of the European Union, the euro and the Eurogroup, the hidden but legal and accountable banker cabal which rules the euro and thus a score of European nations? Their record is one of shameless pride in unabashed failure for Europe’s working-poor class, which used to be called the “middle class”.
On January 1, 2008,1 euro was worth $1.47 and 1 pound was worth $1.98. How very far the strength of the pan-European project has fallen!
Allowing the drop to parity with the dollar must be combined with the reminder that Europe’s leaders were the only major macroeconomic area which refused to implement a recovery plan after the Great Financial Crisis. They chose, over the will of voters, the Age of Austerity, which can be described as the Americanization of the European social safety net; or the end of the era of European Social Democracy, for which so many millions died on their battlefields of World War I and II; or the creation of the current, incredibly unequal Western Gilded Age II.
There is still no recognition of failure by Europe’s leadership: the UK actually tried to re-embark on economic Thatcherism, while France is about to pass its annual budget via the incredibly anti-democratic 49-3 executive decree. Just as I predicted: Macron’s legislative victory was just enough that he will never lose a no-confidence vote over any issue of right-wing economic importance.
The currency collapses, which are like huge pay cuts for the average European, were enough to make this point: the pan-European project continues to only fail to bring about the promised prosperity and stability. The cause of Europe’s economic collapse isn’t bad luck, or due to foreign aggression or sanctions, or the result of neoliberal “reforms” just not getting enough time to play out – it’s due to the failure of the ideology of Western Liberal Democracy itself.
Nord Stream: Germans can no longer have any illusions
It was hard to imagine a more naked escalation of the 8-year Ukraine conflict than the destruction of the Nord Stream pipelines.
It’s long been said that the only actual winner from the conflict has been the United States. Because the arrival of peace would be a change to the current status quo the US has the most to lose from a victory of diplomacy. The destruction of Nord Stream virtually ended chances of a diplomatic solution to the conflict during the expected lull in fighting over the next 3 or 4 months, and maybe beyond.
There was no Western outrage over Nord Stream, which may be the biggest proof that they were behind the sabotage. The lack of outrage of The New York Times speaks volumes, as does its repeated terming of explosions as mere “breaks” or “leaks”. Bloomberg labeled the sabotage merely “Putin’s Pettiness”, although for Europeans the price of energy is hardly a petty concern.
What happened to Nord Stream seems clear, and that’s going beyond the now-viral clips from this year of both Joe Biden and Victoria “F*** the EU” Nuland promising the end of the Nord Stream project by any means necessary, which are the definitions of rhetorical smoking guns. We can fairly assume that for many years the United States has been colluding with Poland to destroy the Nord Stream project, and they finally succeeded.
Poland’s ex-Foreign Minister from 2007 to 2014 – no short tenure – couldn’t restrain his joy at the culmination of plotting he was probably present at from the very beginning (Nord Stream first broke ground in 2011), tweeting a picture of the gas leak and the words “Thank you USA”.
The problem, at least for those in Europe who believe that Washington is a true ally, is that Poland and the US have likely colluded to hurt Poland’s ostensible partner, Germany, as well as the largest economic force in the pan-European project. Thus, the US is manipulating individual states within the pan-European project to ensure that the pan-European project itself cannot rise above it’s ordered station, which is: policy subservience to Washington’s needs. The US is using the classic imperialist strategy of dividing and conquering peoples and tribes, this time within the EU.
Is Berlin merely a vassal to Washington?
However emotionally satisfying as the nationalist component is for some people, it is not logically satisfying – only the class angle explains it: Liberal Democracies are the product of international collusion among the 1% class, which is a class that puts maintaining their elite status far above concepts of patriotism. Western Liberal Democracy – as Marx proved way back in 1848 (and he was merely reporting what the recently-freed European serfs were all saying) – is the collusion of the 1% against the rest of the country/continent/world/galaxy. Monarchy and aristocrats are not actually dead!
The complete transcription of Nuland’s comments make this clear. She said, “We continue to have very clear and strong conversations with our German allies, and I want to be clear with you today. If Russia invades Ukraine, one way or another, Nord Stream 2, will not move forward.”
The key phrase is not the threat but “clear and strong conversation with our German allies”: the US elite is colluding with the German elite, and the non-elite Germans can only go triple up on sweaters, ration their meat and hope they don’t join the jobless.
What on earth can the Germans be feeling about their own leaders?
It must be total contempt, no? Berlin either helped destroy, or allowed the destruction of, their sovereign energy program, and amid the most economic uncertainty in almost 15 years.
The Western “Great Game” moves to the West itself
The currency collapses are bad, but Nord Stream explodes the Western corona slogan of, “We are all in this together”. Europe’s elites are not in it together with their own voters, and France’s Yellow Vests knew this in 2019. They knew that they were being permanently declassed into the hopeless working-poor, and so they resisted so bravely and intelligently.
Will Germans soon realise that they are on the same road? Will they have the courage to give voice to their contempt for their own government, as the French did? If so, how far the smug, Greece-shaming, falsely-pious Germans have to fall, indeed!
It can now be said that the successful resistance of places like Afghanistan, Iraq and Syria – as well as Iran and Hezbollah – have so bankrupted Western imperialists that America’s detonation of Germany’s prime energy source proves that the 19th century Western and Russian “Great Game” has moved from Persia, Central Asia and India to inside the West in the 21st century.
This is another proof that the pan-European project is “neo-imperialist” – they are colluding in the colonisation of their own people: imperialism is not only for non-Whites anymore.
If the German people rise up as the French did recently then we will likely see a total Balkanisation of the perpetually-failing pan-European project. This is why the Nord Stream sabotage was so shocking – what a risk the West has taken! They are apparently relying on Germans to maintain their smug, complacent illusion of self-supremacy even despite the obvious fact that the pan-European project is against them as much as it is against Greece.
What on earth are Europe’s leaders doing to themselves, or rather, to their own citizens?!
This is the question Iran has been asking for years, with Europe’s failure to implement the JCPOA agreement on Iran’s nuclear energy program. Russia has recently joined this chorus.
The pan-European project wasn’t designed merely to ensure American hegemony over Europe, but to ensure that the international, liberalist 1% has hegemony over the world. My new book, France’s Yellow Vests: Western Repression of the West’s Best Values, gives a daily, hard-news summation of the failure of the pan-European project since 2009. It also shows that the autocratic legacy of monarchism/elitism lives on via the anti-democratic ideology known as Western Liberal Democracy – all of Europe’s noblest values since 1789 continue to be subverted by the Western 1%.
If you can, get paid in dollars.
But perhaps Germans, and other Europhiles, truly are willing to go cold, hungry and jobless – not for Ukraine, but to ensure the wealth of Western elites?
Ramin Mazaheri is the chief correspondent in Paris for PressTV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. His latest book is ‘France’s Yellow Vests: Western Repression of the West’s Best Values’. He is also the author of ‘Socialism’s Ignored Success: Iranian Islamic Socialism’ as well as ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’.
– The currency collapses, which are like huge pay cuts for the average European,
I depends upon how much Europa need of American import. In case of wine the buyers rather switch to Chilean wine
Hi Ramin;; It’s good to see you back here. It would be worth having a dig into how this is all going to impact the major European Financial institutions. For example someone on this site turned me on to an analysis of the big trouble the currency crisis is causing for Credit Swiss (My spelling error?) Apparently they are highly vulnerable to over investment in Credit Default Swaps. I read that experts are predicting that just this one institution’s exposure can cause a repeat of the 2008 financial crisis all by itself.
I find it hard to imagine that the European Financial edifice can stay afloat given the general breakdown there.
There are a lot of links in that chain that can go wrong.
There are people working on those links right now.
I have about 5 they have yet to address.
The exchange rate EUR-CNY is exactly the same today as Feb 25, 2022.
No collapse then.
The fact that the Euro and the Pound are collapsing versus the dollar goes to show that countries – many, many countries – are still very keen on keeping USD and US government bonds. So the theft of Afghanistan’s and Russia’s foreign assets has not scared anyone. Is that a surprise when the overwhelming majority of the World’s central banks are controlled by the Rothschild cartel? The dollar is as strong as ever, and any talk of “de-dollarization” is nonsense; even the Chinese continue to finance the US war machine with their $1.5 trillion in US government bonds. The World is US America’s slave, and the worst of it all is that we *pay* to be it’s slave. And US America is Israel’s slave.
Move along, nothing to see here…
“Saudi Arabia can crash US Dollar the day it wants to”
In the eyes of House of Saud Biden is enemy.
Some years ago they decided to kill US fracking industry.
Americans are also slaves to the America regime.
If so what are the Amercian slaves doing to free themselves – or are they quite happy as slaves?
In public they seem to be happy driving themselves nuts, in private they go home every night and beat up the wife kids and pets.
I’ve read several articles past month about the decreased demand for US and UK treasury bonds causing them to have trouble selling them at the intended price and time frame. It was so bad that the central banks started buying the bonds to stabilize the markets. Foreign investors seem to think the bonds are overvalued.
The market in Treasuries is storing up trouble – Financial Times:
“Although the Treasury is in no jeopardy of suffering a “failed auction,” lower demand means the government is paying more to borrow.”
When it has become obvious that the institutions of the west have been taken over by external forces, the logical step is to identify and expel the infiltrators and to reclaim your institutions.
We are encouraged to rebel against the institution and hate its supporters.
This is how control is exercised. Divide and rule.
And now 60% of US grains for export are being held up by the decline of the mississippi river , the droughts in China,US,EU means food availability is going to become the worlds most pressing concern very quickly! and likely to kick off several wars for survivial
I had heard about the Mississippi River declines but didn’t know, or realize, it was this bad. Too bad they killed trucking.
I just saw a headline on this yesterday.
Too bad sea rise doesn’t seem to be affecting the Mississippi!
Who was it who said “Don’t put all your eggs in one basket”?
Was it the Brothers Grimm? Or perhaps Mother Goose?
Who was it who said put all your eggs in one basket, and watch that basket.
“Imperialism is not only for non-Whites anymore”
LOL! The Irish are shocked by this concept! They thought that eight and a half centuries of direct supervision from London based Anglo-Normans to Tudors to Cromwell down to QEII was about brotherly love from people looking much like themselves.
Joy: Nicely said. It is true is it not that dying empires founded upon exploitative class relations can only turn on their own people in their final stage. It is inevitably structurally built into the class relations from the outset. The Romans being a prime example. From Rome to Venice to the city of London being really one long experiment in Empire. Ramin is doing a good job documenting how Europe’s tradition of Imperialism is finally turning upon itself.
It’s amazing how few people are aware yet of the UK’s and US’s history of white slavery. In school they taught us that the dumb Irish relied on potatoes and thus starved, when what happened was a reduced crop, which all went off to England, a lot like Ukraine’s wheat going to Europe, who have at least some money to pay for it. Australia wound up populated mostly by Irish busted for whatever crime whether petty or imaginary, and in the US they were indentured servants, treated as slaves.
And then there were the land enclosure acts that brought on Dickinsonian lifestyles for the former peasantry, boosting industrialist profits. And then, of course, there are various forms of cannon fodder. The only time a middle class was allowed to form was when the energy bonanza from oil lifted all boats. That’s over.
Nothing personal then Patricia, just lust for personal wealth and everyone’s fair game.
If Russia didn’t enjoy bountiful resources, then TPTB wouldn’t be going after them in such a crazed manner.
Not that this can be viewed as any consolation.
It’s not amazing, it’s MPAI (Most People Are Idiots) in action. Most people really aren’t that interested in learning anything, which is why, for one example, if you say “slave” to almost anyone in the West, they think “black”, even going so far as to insist slavery is a white “invention”.
Because MPAI, and you can’t learn nothin’ to folks how don’t want no learnin’. Even moderately widespread literacy is a historical aberration, and it would be difficult to argue that it’s a net positive.
Sage comments, Patricia.
Here Blackrock is identified with DEM and wokeness
“BlackRock stock downgraded after pushing radical ESG agenda”
So well done Ramin! Many many tangents to choose from. I feel an overarching spirit here that is something else entirely. Something great. Keep on keeping on!
On track to be Detroit.
I can attest to that as my son and I explored the streets of Detroit. What truly amazes me are the number of churches that used to be open. About every two or three blocks there are churches, churches of all denominations, churches off the main street of Woodward Ave. (feeds into downtown Detroit, north to south, 20 miles long), churches tucked within homes. Everywhere. That once meant a very thriving community. Great sadness upon reflection. I see no hope for these urban abandoned industrial cities unless we bring our jobs back home.
5GW my friend, we are on same wavelength. This was my favorite Ramin article ever. Pithy pained perusal of the scene of the crime and its perps, like a heat-seeking M. Poirot. Many sharp minds have left their ivory towers and begun to focus. I will try to find a way to incorporate your astute observation, “Too bad they killed trucking” in a poem.. a perfect storm affecting all aspects and cogs of the food supply arrives, no?
Thanks for this video. I lived in a similar dying part of greater Boston for a while.. rust belts all over.
The barely-contained schadenfreude of the narrator aside (was his family delegated by the bitter Churchill to keep score on those who dismantled their overt Empire?) – he is spot on:
It is a hallmark of End-Stage decline in all imperial “home bases.” San Francisco today is a paradise compared to certain neighborhoods in late Imperial Rome..
I do dispute what befell Detroit was mere incompetence or local naivete.. As the worst and most inadequate are put in leadership positions today in USUK etc, the intent of the puppet-masters becomes clear through their selections. It was a demolition job by those who hated USA and its potential to resist the NWO, foremost certain American families and their retainers.. a trial case too, for Detroit was the most celebrated global industrial city at the end of WW2?? “What’s good for General Motors is good for the country”
as German/EU Industrialists currently betray their people and doom their future, so did American traitors long before them. They worked relentlessly to build a global slave plantation — keeping the oppressed Rest down and levelling the West to equalize all under the globohomo boot.
This video on Detroit also reminds of the words of a loudmouth (ironically on his way back like BoJo?!):
While the demented EU continues its march toward inevitable collapse and breakup, the West’s various Nazi and mercenary proxies continue getting destroyed on the ground in the former Ukraine. Some videos for today.
Russian airborne troops’ drones destroy Kiev regime military vehicles and ammo (very good footage here):
Great footage showing a Russian Lancet drone taking out a Kiev regime radar:
Another Russian drone hits some kind of regime administration building:
Lots of enemy equipment getting destroyed on the Kherson front:
The Kiev regime’s military is stuck in the mud, literally:
Great vids, lots of NATO armour….er, scrap, from stuck in the mud, to struck in the mud. Just watched a vid of a long line of smashed vehicles strung out down a dirt road. Field arty guys getting plenty of OJT……practice makes perfect.
I read the word neo-imperialism in the article. It sounds to nice?
What has become of the west?
I can think of words such as profiteers, extortioners, usurers, warmongers, pirates, slave traders etc.
As the article says, the great game has come to the west itself. We are now cannibalizing on ourselves.
16 tons and what do you get? The lyrics feels very actual…
“What on earth are Europe’s leaders doing to themselves, or rather, to their own citizens?!”
Now alter that a bit.
What on earth are United States leaders doing to themselves, or rather, to their own citizens?!
The leaders are all doing very well. You can do a search of the wealth of the congressmen. Last I checked there were only about three that had less than one million dollars in assets. Most way more.
The leaders know what they are doing to their people. We have heard one lie after another since Biden took over. It doesn’t matter what subject you pick: borders, justice, vaccines, inflation, law and order, the list is long. Every talking point they have done a 180 degrees on since Biden took office. The only truthful thing Biden has said is, “There will be food shortages,” earlier this year. The shelves are bare in my big suburban metropolitan area.
I kept expecting something good to come out of these endless committee hearings, where the party in charge has lied, and lied again. What good does it do to say, we’ll refer this to the DoJ, or I’ve requested they preserve those records, etc, etc, etc. Two years now and I’ve come to accept they represent something other than the people. The ruling party has an agenda because really just how stupid are some of these ideas they just keep promoting?? Like Germany we are declining.
Great article as usual Ramin.
The EU is being run by maniacs who will in the end be dealt with.
There is constant talk the past weeks about currencies declining including US$ but I cannot find out what currencies are rising in value – where is the money going ?
Is it going into secret place or are criminal elites just contracting the whole money supply by cancelling the issued money ?
This is a key issue in all this that is happening.
When some mortgage of $1 mill is deleted Money contracts by $1 mill.
This minus one million will tricle down to economy.
A recession is wealth destruction then. No one is stealing the destructed money.
Zuckerberg and Bezos will be those who lose most, like $1 mill per hour.
The removal of UK PM Liz Truss which I commented on a few days ago on another article here about being subject to an insurrection, was vindicated by her announcing a resignation yesterday.
I believe BoJo’s people forced that after having having figured out a way in the past 40 days on how to rig the Conservative Party internal voting processes so another one of their criminal minons can get installed.
Conservatives should be on alert to what happens with that voting process.
She was probably told ‘you will resign, or you will go another way’, like was attempted on Boloanaro.
Unprecedented that a popular UK PM would last 45 days.
Its a sign of the depths things have sunk to in UK.
It’s was a regime change. Sir Starmer is waiting for the keys to No.10.
This is the contention of more than one observer whom I trust:
That she was forced out; that this was planned in advance (she was never going to be the actual PM).
It would not surprise me at all to learn that BoJo only pretended to resign, in order to reappear a few months later to totally humiliate Truss and regain firmer control of the Party.
Sure, Truss was way above her pay grade. But that doesn’t mean she hasn’t been brutally used, which is how it appears. I wonder whether she might have been keeping a diary: “Forty Days of the Tin Lizzie.” It almost seems like she was stuck in there to preside of the death of Queen Eliz, and now “the boys” are taking over . . .
“Unprecedented that a popular UK PM would last 45 days.” Do you mean the 4% popular? In the UK the 96% don’t count. Frankly, I’m surprised she managed to last that long.
Keir Starmer, the non-Labour, Labour party leader, is a deep state stooge with the personality of dry/drying cement, as someone correctly described him. He is a criminal and helped set-up Julian Assange on bogus sex charges that’s resulted in him being held in Britain’s equivalent of Guantanamo Bay. He should be thrown out of the Labour Party, since he doesn’t represent working class people, and should be disbarred.
There is no electable party in the UK because they’re all a bad as each other.
As for FRANCE, Macron’s record is appalling.
Under Macron, and other similar leaders in past decades, the once wonderful France has descended in to a horrible place.
There is evidence that the April Presidential election saw fraud against LePen (as is currently going on in Brazil) and this and the current situation justifies the French military to move to deal with this and place him and his backers in custody and seize all their assets, in the public interest.
Especially also given the Russia situation happening and French-EU involvement.
The great General de Gaulle, if he were still alive and in retirement, would have had him dealt with long ago.
Unfortunately most Germans are too civilized today to rise up, but there will be tipping point.
This coming winter season is going to be just the prelude to what would be comes next, the ultimate demise of the current western neoliberal world chaos (order). It’ll happen in four parts, three more winter seasons and the entire western evil structure should fall apart. Most likely there going to be huge, even bloody riots/revolutions in London, NY and other western cities. Look forward to seeing a Nuremberg-type trial for neocon criminals and their zionist-neonazi collaborators in the nearest future. The best candidate city for the trial procedure, in my opinion, is the Syrian capital Damascus. The future International Military Tribunal at Damascus must deal with those guys and their accomplices.
I feel naked rage and complete contempt, which I will never, ever forget. Since I cannot stop caring about my country and have actually grown up in the full riches of German high culture, in poetry, philosophy and music, music, music, the degree of plunder, humiliation and defacement we still do not have sufficient forces to kick the f**k out of the country (the protest mass is growing), is excruciating. Just the other day a gay porn was given the German book award. We are, of course talking about complete and utter garbage with gendered language in the cheapest of diary styles (“autoethnography”), not any interesting, tasteful or well written piece of literature with a homosexual protagonist. So there is no reason whatsoever to hand over awards to this crap other than trashing the country’s international reputation and stupidity is no saving grace here.
High time to look at this :
Rage is easy – classical ideas are hard work, and do have real ‘Wirkung’.
Everyone can see the problem and talk about it forever. But what’s the solution? That’s the real question. My take on all this is we’re not going to get out of this without having to shoot our way out. I keep waiting for people to rise up and protest all the crime’s against the people, but I don’t see much. History repeats itself. It always goes kinetic in the end.
Great piece. As many Saker readers are aware, nearly 8 decades post-WWII, Germany is still occupied by circa 35K US troops and thus is little more than a US stooge/vassal state. As Glen Ford pointed out, Empires do not have ‘allies’, rather they have ‘subordinates’- (eg. Germany).
See- Glen Ford’s Ukrainian Crystal Ball Jul 27, 2022; Glen Ford’s Ukrainian Crystal Ball | Black Agenda Report
What an excellent article Ramin… BRAVO!
Ah yes… behold the thieving parasitic money changers and their millennia of antics in various guises, bases, and proxies, as they continue to this day to ply their trade on Mainstreet.
Methinks not for long, and oh my word, such poetic and ironic justice. What if the final killer contagion was to emanate from its old European base, and in particular from the historical lairs of Rome, Venice, City of London and then to domino across the Atlantic and on to all of Natostan and its yapping lapdogs in the South Seas?
And now to attempt to assemble just some of the multitude of bright red warning flags… how long do you/me/we have?
DIRE STRAITS… AN HISTORICAL BACKGROUND
– The fact that fiat currencies by definition have a finite life. They all eventually revert to their inherent value = a big fat ZERO.
– The global rot set in when the key currencies of the world came off their gold backing in 1971. This led to the growing divergence of the globe’s productive economy from that of the FIRE steroid-driven casino obsession that we witness today.
– Deregulation and the abolition of Glass Steagall in the 1990s allowed the casino financial industry to reach a whole new level of chicanery and develop into one huge Ponzi scheme.
– A diet of ZIRP and NIRP cool-aid that distorted every aspect of the financial world along with, eliminating moral hazard, creating malinvestment, rentier obsession and a happy-go-lucky ‘Money is for nothing and the chicks for free’ attitude. Savings in this environment were terminated and this opportunity to provide capital for productive enterprise and long-term wealth creation was cancelled.
– All of our growth figures are also completely fictitious too since there are all manner of tricks to misrepresent GDP numbers… also the growth we brag about is always nominal. The technical expressions recession and depression are farcical too because figures are endlessly juggled and misrepresented so that economies can create the impression of being functional and not going backwards.
– Just since 2008 the US M2 money supply has increased ~300%. The accompanying inflation means that wealth is being transferred from the wider population and the productive sector to the issuer and the institutions closest to it. This transfer of wealth from the engine room of the economy to central Govt, the FED, and the private banking cabal, directly distorts the market and stifles the productive economy and Mainstreet.
– Any country that has sovereign treasuries that cannot find buyers other than their own central bank [via direct monetization] = solvency problems.
– Huge spikes in equity markets were witnessed in crisis years like 1929 and 1987… these spikes are historical precursors to looming meltdowns. The underlying fundamentals in the marketplace today are exponentially worse than those instances.
– Traditionally there were only 3 safe-haven [aka default] currencies… they were the US dollar, the Japanese yen, and the Swiss franc. If you ask me, two of these have already disqualified themselves and the US dollar remains the least dirty shirt in an extremely grubby laundry basket.
– ZIRP/NIRP in Euro countries distorted the repo market because banks could effectively borrow short-term at zero interest costs. This meant that the overnight interbank short-term markets no longer meant banks conducted their overnight book balancing by trusting each other in the marketplace. This is no longer market repo as we knew it and consequently, this is debt that has shot up to a staggering €10 trillion… this is no longer just about overnight finance… this can now hide a mountain of toxic debt. This has grown to more than the capital of the entire Eurozone… what happens when this all begins unravelling?
– What many of us fail to appreciate is the staggering level of potential bad debts.
– Regulators in some Euro countries allow these debts to be classed as performing and permit the holders of that debt to use it as collateral for borrowing from their central banks.
– Interest compensates holders of currency for the loss of possession of an asset for a period of time. But you also should expect to be compensated for the loss of purchasing power of that currency. If that currency is going down the gurgler at the very same time, then you should expect to be compensated for this too.
– The problem is that the loss of purchasing power of fiat currencies is not transitory… it is now baked into the cake.
– In the 1970s in the UK, Gilts were issued at around 15% to fix a problem in a financial system that was far less leveraged. In today’s massively indebted world no Central bank could dream of issuing treasury bonds with coupons anywhere near these levels… it would equal instant financial disaster for that country.
– With inflation now built-in, bond markets can’t operate in this fairy tale land, and yet with a flat yield curve, it appears that bond traders and investors don’t expect high inflation to continue otherwise they would expect higher nominal yields for the long-dated bonds. This makes no sense to me.
– If a 1-year treasury bill is yielding less than 1% how does this figure when CPI inflation is announced at 7%. If Europe was anything like as bad at spinning giant whoppers as the U$, and if the rate was more like the 15% that John Williams at ShadowStats calculates, then this makes the premise of the entire bond market completely farcical.
– This seems to be based on some sort of bizarre situation where the market itself appears to believe that markets don’t actually matter because the Central banks will take care of everything for investors anyway.
– Of course, none of this farce is revealed by the despotic Keynsian MSM ‘reporters’ because they would lose their livelihoods if they dared even mention the blatant nonsense of this entire situation.
– The asset/equity ratios of the Global Systemically Important Banks [G-SIBs] are a nightmare waiting to happen too, with many 20 times and up to more than 30 times assets to equity. They are in terribly precarious positions. What happens to their equity when the European winter kicks in, coupled with massive energy costs, shutdowns of businesses, manufacturing, and most of the tourist industry… and all of that coupled with a plummetting currency to boot?
– The head of the Bundesbank [the central bank of the 4th largest economy of the world], Jens Weidmann resigned in January 2022 wanting early retirement when he was seemingly at the height of a very respected career [if there even is such a thing in the CB industry] and at the age of only 56… another red flag?
– Average Govt debt/GDP ratios in the Eurozone are well over 100%. But if you net out the Govt sector and then compare Govt debt to the tax base, this can climb up into the realms of 3-400% which is completely unsustainable. Add in unfunded liabilities alongside deteriorating demographics and it is painfully obvious that the Eurozone is already a completely insolvent zombie entity before the looming winter chill even begins. Perhaps Jens Weidmann had the presence of mind to crunch these numbers and reflect on what inevitably lies ahead, instead of choosing to remain on board the financial equivalent of the Titanic. Apparently, he was asking some very pointed questions about the Target2 Settlement System and not receiving any satisfactory answers. He could see this was a disaster waiting to happen and that the Eurozone was all set to implode.
TARGET2 EUROZONE BALANCES 2018
Germany +€966 billion
Luxembourg +€213 billion
Netherlands +€92.5 billion
Italy -€480 billion
Spain -€402 billion
Portugal -€83 billion
NB… before the subprime debacle of 2008 the scenario was entirely different…
Italy was at +€27.7 billion and Germany at +€10.6 billion.
– Today we witness massive debt, an everything bubble, a bond debacle, and a sub-prime lurking around every corner. How on earth will the Eurozone have a snowball’s chance in hell of negotiating what is currently unfolding?
USA! USA! USA!
– There appears to be an obsession, not just on Wall Street but indeed globally, regarding if/when Jerome Powell will pivot. Apparently, because the markets are so used to sucking on FED breast milk they can’t really contemplate any financial reality without this continuing. Is this really how the markets of most of the world predicate their investment strategies?
– Also, there is a stickiness problem with addressing inflation using rate hikes. In other words, it is like adjusting an old-fashioned shower. The temp is freezing cold so you dial up the hot water [interest rates]… but there is an annoying lag… in your freezing impatience you dial up more heat… same old lag… then whammo suddenly all the heat arrives at once and scalds you… you try to cool it off by turning the heat down… once again there is this hellish lag… you are now desperately trying to dial down the heat, but there is this lag effect again… it’s the same with tackling problematic inflation. But just to confound the situation even more… this is not garden variety “inflation” as we have come to know it. This is the erosion of the purchasing power of a dying fiat currency… quite apart from the lag effect of hiking interest rates, this is not the strategy to fix the problem anyway.
– Another theory is that there may be all manner of bluff going on and maybe Powell is really only intending on hiking to 5% anyway… with a view, not to pivot back to ZIRP, but to around 2%… who knows? The long and the short… however I slice and dice this one it all equals to one inevitability and that is impending financial meltdown and mayhem for the entire Zone A Natostan club.
– To some commentators, it appears that Jerome Powell [FED Chair] seems set to model himself and policy on Paul Volker. They think it is becoming evident that he won’t pivot on interest rates and that he will let much of the economy bleed out as he continues to hike. Either way, the fact that the true inflation rate is closer to 15% than the announced 7-8% seems to have completely escaped Powell’s attention… and also the fact that in order to put the brakes on inflation by hiking interest rates you have to match or pass the inflation rate to begin to tackle it. This was the horrendous scenario in the 1980s when interest rates went past 20%, but that was when Govt debt and all other debt were exponentially lower than it is today. Raising interest rates incrementally actually feeds inflation rather than tackling it, and this destroys debt-ridden economy miles before you get anywhere near the CPI level [contrived or real] and you destroy your economy before the brakes come on from large rate hikes.
– Rate hikes also destroy the bond markets which make no sense in the beginning anyway because no one ever seems to focus on the real yields which are negative when you factor in persistently high inflation. Now that this so-called inflation is clearly no longer transitory, yields have to be far higher, but who can afford to pay these yields, and if there are no buyers who can buy these bonds anyway? The FED can’t buy them all because this is just more QE and counterproductive to the fight against inflation.
– The other gorilla in the room is that we are not really talking about inflation in the normal sense of the term. This is a loss in the purchasing power of the currency which is not caused by a lively vibrant productive economy but by the exact opposite… this is caused by a FIRE economy experiencing crippling supply chain challenges, opportunistic price gouging, and increases in the cost of raw materials, energy and financial costs. This is an economy in which every man woman and child owes around $500,000 and each taxpayer ~$800,000… these figures don’t even account for unfunded liabilities. This means that the entire US economy is technically insolvent and was in this position well prior to the FED hiking and at the same time hoping to shrink its balance sheet… which is incidentally 900% higher than it stood in 2008.
– One glance at the Bond Volatility [Move Index] graph tells me that the index is now close to its peak back in Feb/March 2020. A 150 level signals that the FED is losing control and this index currently sits at ~160.
– The FED now has a problem with an operating loss and the highlighting of ~$247 billion of distressed debt. For an operating loss, they must remit to congress on a quarterly basis but soon the GOP will be running the house… if they even have an election! Will the Treasury come in and buy up the long-dated bonds just to take them out of the market and retire them? Could they try to pretend that this is not actually QE? Either way, it seems to be kicking the can down the road.
– Meanwhile, it appears as if the market expects Powell to save the day with either another round of QE or an interest rate pivot. But as mentioned above, my info also tells me that he might rather fancy himself as a modern-day Volker and that perhaps he has no intention of doing either and therefore is the market expectation ill-founded. At the same time I hear that there is major division within the Eccles building, so who could possibly call this with any degree of confidence?
– And now … newsflash, the two biggest single budget items on planet earth are…
#1 Interest on US Govt debt
#2 The US “Defense” budget.
Once upon a time it was easy-easy money for nothin’, chicks for free
Damn…that ain’t workin’ now
Thank you Col, for the comprehensive analysis of the money markets.
” Western Liberal Democracy – as Marx proved way back in 1848 (and he was merely reporting what the recently-freed European serfs were all saying) – is the collusion of the 1% against the rest of the country/continent/world/galaxy. ”
Marx proved nothing in 1848 – class analysis was already well developed by his time, amongst others, William Godwin had lived & died by 1848 & written his classic Enquiry Concerning Political Justice which is far superior to anything Marx wrote. Marx’s contemporary, Joseph Pierre Proudhon, who Marx hated & slandered constantly in his typical petty hateful manner, was also a far superior analyst of socio-economic structure & systemic class differentiation. Marx was no innovator, no visionary, but he was a subversive for sure, with clear links to what would now be called the Deep State, via the likes of David Uqart & Lord Palmerston no less. Marx himself acknowledged towards the end of his life that Capital was basically one huge waste of paper & print, because he omitted to analyse the key institution where political/social economy begins: the state. In addition to this omission, I would also add that Marx gave a very limited evaluation of the role of banking & finance, where the so-called capitalist system begins in its relation with the state, which – I repeat – Marx acknowledged totally ignoring. Marx did not make this omissions accidentally, they were by design, to produce a very partial & limited analysis of the system which is of no use at all, & has proven to be of no use whatsoever, hence why Marx is another pseudo intellectual who is gradually being confined to the dustbin of history.
Marx had a classical education in Germany, ended up working for millionaire Engels, and British Library chief Urquhart (known as Ali Bey in Chechnya) .
Marx’s analysis thereby ignores the American system of Carey, Hamilton,, rendering his analysis impotent.
Marx is thus a British Empire operative – witness what this did in Russia.
China fully realizes this – it knows British Marxist Bertrand Russel’s effect on Mao. Xi is perfectly aware of what this means. China actually runs the American System – with China character. This drives London and D.C. neocons, libertarians, Austrian School nutter completely insane.
In other words BRICS+, china’s BRI, New Silk Roads, is taking on Carey’s and Hamilton”s System as a model for win-win development!!
In other words, imagine the Truss Tories, Starmer and BoJo’s utter conniptions – the American System of Carey, an IRISHMAN, is gone global! Everywhere they look are the Irish. Now, if only Dublin realized this!
Popcorn, or Scones and Cream Tea everyone – this is fun!
Oceana has always been at war with Eurasia, alternating with war on Eastasia.
George Orwell 1984
All that Oceania’s citizens know about the world is whatever the Party wants them to know, so how the world evolved into the three states is unknown; and it is also unknown whether they actually exist in reality, or whether they are a storyline invented by the Party to advance social control.
Germany has been beef-in-the-sandwich since Bismarck bucked Britain’s Edward VII, built a Berlin-Baghdad Railroad. The King’s nephew Wilhelm got Germany into WWI, what an aristocratic imbecile!
Imagine that, bringing modern industrial systems to the most backward Ottoman, and raise them out of abject poverty! What Frechheit – brazen disobedience!
What did British operative Lawrence of Arabia target first with his rabble – why, none other than that Railroad.
Today who is playing Kaiser Wilhelm’s pantomime?
Europe has not succeeded in ridding itself of this Oligarchy, with Primes-inter-Pares, London. That is since 1492!
The USA broke off and was, to all superficial appearances, absorbed back by the Slime Mold Oligarchy.
The new King actually does know all this – and His patented Great Reset, de-industrialization of Germany and most emphatically USA is now in full swing.
So, Berlin Bundestagsabgeordneter look up Bismarck, even as Paris looks up DeGaulle.
Thank you for your article.
In the matter of the Pound and the Euro losing “value” all of that has been instigated by the US FED.
The FED has purposely executed the drop in the value of the two currencies, to pave the way for the US/EU/UK Financial Aristocrats to grab cheaper prices in buying up small, medium-sized and large businesses now under duress in the UK/EU due to the purposely inflated prices for energy, and other resources .
The central banks of each separate EU member country have joint ownership of the European Central Bank, are owned by exactly the same banking cabal, who owns the US Federal Reserve. The seesaw game they play with exchange rates is quite deliberate.
The fairy story that George Soros defeated the Bank of England is absurd, since he is the front man for all these banks, to feed us tripe every day.
Soros gutted Sterling to force the Euro, for the Continent of course.
As the Monarch’s Quantum Fund manager, orders from above.
These people respect no nation, not even the UK – look at the shambles!
I have read his book on the Yellow Vests, and indeed it is very good and enlightening. He has enough space in the book to make clear his points, which are difficult in the short columns he posts in the Saker. I think everyone in the saker community should buy his book on the Yellow Vests.