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  • More London Banker / Brad Setser

    London Banker seems to be coming up with some damn fine, pithy posts about the current situation (contrast my long winded, tortured posts here.)


    From comments on today's Follow the Money blog:



    http://tinyurl.com/4ve5q9



    Brad, I was looking back a couple years on your blog at RGE trying to find an exchange we had during the set up to the current crisis. I said I thought then that the Fed was exporting inflation abroad through its massive (hidden) M3 growth, as credit was created and drawn to the States on the back of foreign asset bubbles in dollar pegged economies. I projected that the Fed would also eventually export deflation abroad, making sure that when everything crashed it would crash disproportionately outside US borders leaving the US “flight to safety” status in tact with a survivor bias favoring US markets.
    I can’t find the exchange, but maybe you recall it too.
    Events of this week lead me to think I wasn’t too far off the mark in my conspiracy theorising.
    What has changed is that so many are now alert to the plan, that the outcome is no longer predictable. China, Russia and the Gulf are independently and collectively now pursuing their own strategies to protect investments, gain marketshare and secure survivor bias to their own economies.
    Very interesting time to be a spectator on the sidelines."


    I'm really interested in this idea of whether the Rest of the World can effectively fight back. I'm particularly interested in the notion that the ka phase (have I got that right?) actually represents the zenith of Dollar Hegemony rather than its demise, or in other words, that the crisis actually strengthens dollar hegemony as this seems to run completely counter to the itulip thesis. (Marc Faber's comment that he would be buying the dollar here if he were buying currencies unsettles me a little. Ditto Macro Man's similar take - thinks the secular low is in for the dollar.) This position is being put forward by *$#. We discussed it here: http://tinyurl.com/4lny8x


    I think I need some remedial reading... again.

  • #2
    Re: More London Banker / Brad Setser

    Oddlots your link is not working (at least in my browser). here is the direct link:
    http://www.itulip.com/forums/showthread.php?t=5463



    Originally posted by oddlots View Post
    I'm really interested in this idea of whether the Rest of the World can effectively fight back.
    I believe that is a complicated issue. The Rest Of the World has simple and effective means to fight back.

    With respect to this final stage, my short answer would be that ROW can't and it won't fight back.

    Another possibility is that after the complete takeover and the transformation of the Fed (even if under a different name) in a Global Central Bank, Joe Six Pack will get pissed off and transform himself into a Samuel Adams Six Shooter .. and the Federal Reserve System would be abolished for ever... I'm an eternal optimist but ... well... slim chances for that...

    Therefore, I don't see at this moment that ROW will do anything to fight back... it won't happen.

    Comment


    • #3
      Re: More London Banker / Brad Setser

      Thanks for posting the link (and for the reply to my endless post on that other thread.)

      Comment


      • #4
        Re: More London Banker / Brad Setser

        oddlots,

        I'd look for a wider net of opinions.

        $#* seems to think that all of the other nations will just bow their heads and join the monetary slave coffle.

        Certainly the chorus of calls from abroad has been varied, but there have been several notable exceptions:

        1) Germany
        2) China

        France has said they would "very probably express our support for the American plan", but then again this is hardly glowing unconditional support.

        http://www.forbes.com/afxnewslimited...fx5452367.html

        For all $#*'s America Uber Alles talk, there have been several recent public examples where what America wants is not necessarily what America gets.

        When some type of bailout passes, we will be close to the decision point for the rest of the world.

        Unfortunately, we won't know for several months what this result is.

        Watch the Treasury auctions to see.

        Comment


        • #5
          Re: More London Banker / Brad Setser

          Originally posted by c1ue View Post
          For all $#*'s America Uber Alles talk, there have been several recent public examples where what America wants is not necessarily what America gets.
          c1ue, you have no clue what are you talking about. I'm not America Uber Alles, I'm just one of those Cassandras, which immediately after 9/11 tried to warn everybody, to keep their heads cool, and to see that all the "patriotic" tough/Texas rhetoric was nothing else than a Problem-Reaction-Solution scenario for imposing a completely different and hidden agenda. In December 2001 nobody wanted to believe me when I was saying that AQ doesn't really exists and everything is pumped up for an inevitable invasion of Iraq and possibly an attack on Iran, while Afghanistan is nothing else than a side show for propaganda reasons.

          I don't think that GWB and the current political/financial mafia in Washington are good for America (and the rest of the world, for that matter), by the contrary, ... and the deluded American sheeple filled by fear, refuse to see they are led by the American MSM in a march towards a financial slaughterhouse.

          The same for Russia. I don't think that Putin and the current KGB/financial mafia in Moscow are good for Russia (and the rest of Europe, for that matter), by the contrary... and the deluded Russian sheeple filled by a false nationalism and a misguided mesianic belief in a revitalized Russian Empire, refuse to see they are led by the Kremlin controlled media in a march towards a financial and national disaster.

          I have nothing with you personally, I don't know and I honestly don't care if you have any affiliation with FSB/MVD mafia, or you are just in the game of doing a profitable business at some level with the siloviki-mafia regime by enjoying good money stolen from the Russian taxpayer.

          You maybe just a very poorly informed person. I don't care. But this is not an excuse to accept as KGB Party Directives (10 Commandments equivalent) all the distortions ludicrous claims you present here in your role of RussiaToday's resident anchor on iTulip.

          I dislike self-styled Fox News anchors (the well know O'Really? idiots) as much as I dislike self-styled RussiaToday anchors (such as our dear Kluevina Bulshitova). I see no real difference between them.

          My screwball theory is not an endorsement of American (actually Wall Street) Grab for Global Financial Permanent Total Dominance. If that really happens, in the end (probably after a long period of suffering in America and all over the world) it will lead to a true and real catastrophic disaster for USA.

          I presented my theory here, just as a person shaking his head while seeing a robbery in progress and nobody, but nobody (not even the police or the victims) able to accept the reality that there is a crime in progress happening under our sleepy eyes.

          Comment


          • #6
            Re: More London Banker / Brad Setser

            My cluelessness or clued-in-ness is already well established here on iTulip.

            I feel zero need to pump up my own credentials/downplay my bad rep.

            I leave that to the members of the community to establish for themselves.

            As for your insight, how about putting up some concrete items to look for and/or dates rather than vague talk about this method or that method of stampeding the people into stupid things.

            The game of saying vague and unspecific things which can be pointed to in the future as 'predictions' is just astrology all over again.

            For example with your work on the ETNs/ETFs.

            There was some good work/info in showing that some anecdotal evidence exists for fraud with these and furthermore that the ETNs/ETFs could structurally be used for fraud purposes.

            But you never followed up to position the ETN/ETF situation vs. the general bank deleveraging in the past several months.

            It is now quite clear that the oil price peak at $147 was due in no small part to a sector rotation plus leverage as well as the specific crap MBS for Treasuries (via Fed alphabet soup) in turn used as collateral for leveraged commodities long positions - something Martin Mayer alluded to.

            Yet if there was systemic fraud in the ETNs/ETFs, I would expect massive losses to be forthcoming as commodities have done a significant U turn.

            This hasn't shown up so far.

            Thus the main conclusion from that thread is?

            Comment


            • #7
              Re: More London Banker / Brad Setser

              Originally posted by c1ue View Post
              As for your insight, how about putting up some concrete items to look for and/or dates rather than vague talk about this method or that method of stampeding the people into stupid things.
              Please check this:
              http://www.itulip.com/forums/showpos...0&postcount=15


              Originally posted by c1ue View Post
              But you never followed up to position the ETN/ETF situation vs. the general bank deleveraging in the past several months.
              Of course I didn't , why would I do that?

              Anyway, after finishing my interview with RussiaToday, let's return to the original subject of the thread. Here very interesting blog entry from Naked Capitalism:
              http://www.nakedcapitalism.com/2008/...e-down-eu.html

              We have been asserting for many moons that despite having lower incidence of US style, "another quarter, another writedown" behavior, European banks are actually in weaker condition than their US counterparts. That's based on the view of a buddy who has top level regulatory connections here and in Europe, and it seems plausible given the fact that European regulators let their bank operate with lower equity levels than US banks can.

              Not only have events started confirming this view, but, with a banking crisis starting to take hold in the EU, the stakes are high. The EU lacks a mechanism for rescuing banks; the responsibility falls to national central banks.
              [...]
              It took a weekend to shatter the complacency of German finance minister Peer Steinbrück. Last Thursday he told us that the financial crisis was an "American problem", the fruit of Anglo-Saxon greed and inept regulation that would cost the United States its "superpower status". Pleas from US Treasury Secretary Hank Paulson for a joint US-European rescue plan to halt the downward spiral were rebuffed as unnecessary.

              By Monday, Mr Steinbrück was having to orchestrate Germany's biggest bank bail-out, putting together a €35 billion loan package to save Hypo Real Estate. By then Europe was "staring into the abyss," he admitted. Belgium faced worse. It had to nationalise Fortis (with Dutch help), a 300-year-old bastion of Flemish finance, followed a day later by a bail-out for Dexia (with French help).
              [...]
              The drama has exposed Europe's dark secret for all to see. EU banks took on even more debt leverage than their US counterparts, despite the tirades against ''le capitalisme sauvage'' of the Anglo-Saxons.

              We now know that it was French finance minister Christine Lagarde who begged Mr Paulson to save the US insurer AIG last week. AIG had written $300 billion in credit protection for European banks, admitting that it was for "regulatory capital relief rather than risk mitigation". In other words, it was underpinning a disguised extension of credit leverage. Its collapse would have set off a lending crunch across Europe as banking capital sank below water level.

              It turns out that European regulators have allowed even greater use of "off-books" chicanery than the Americans. Mr Paulson may have saved Europe.
              [...]
              Traders are starting to "price in" an appreciable risk that EMU will break apart.

              The European Commission's top economists warned the politicians in the 1990s that the euro might not survive a crisis, at least in its current form. There is no EU treasury or debt union to back it up. The one-size-fits-all regime of interest rates caters badly to the different needs of Club Med and the German bloc.

              The euro fathers did not dispute this. But they saw EMU as an instrument to force the pace of political union. They welcomed the idea of a "beneficial crisis". As ex-Commission chief Romano Prodi remarked, it would allow Brussels to break taboos and accelerate the move to a full-fledged EU economic government.
              [...]
              This may go down as the greatest monetary error of the post-war era. The ECB responded to the external shock of an oil and food spike with anti-inflation overkill, compounding the onset of an accelerating debt deflation that poses a greater danger. Has it committed the classic mistake of central banks, fighting the last war (1970s) instead of the last war but one (1930s)?
              After years of acquiescence, the markets have started to ask whether the euro zone has the machinery to launch a Paulson-style rescue in a fast-moving crisis. Who has the authority to take charge? The ECB is not allowed to bail out countries under EU treaty law. The Stability Pact bans the sort of fiscal blitz that has kept America afloat. Yes, treaties can be ignored. But as we are learning, a banking system can implode in less time than it would take for EU ministers to congregate from the far corners of euroland.
              No comment!

              Comment


              • #8
                Re: More London Banker / Brad Setser

                Originally posted by $#* View Post
                Please check this:
                http://www.itulip.com/forums/showpos...0&postcount=15



                Of course I didn't , why would I do that?

                Anyway, after finishing my interview with RussiaToday, let's return to the original subject of the thread. Here very interesting blog entry from Naked Capitalism:
                http://www.nakedcapitalism.com/2008/...e-down-eu.html



                No comment!
                German industrialists will hate dissolution of EU... only way to keep their currency down!

                Comment


                • #9
                  Re: More London Banker / Brad Setser

                  Originally posted by phirang View Post
                  German industrialists will hate dissolution of EU... only way to keep their currency down!
                  I don't think it will be a complete and irreversible dissolution. This quote is very interesting:
                  The euro fathers did not dispute this. But they saw EMU as an instrument to force the pace of political union. They welcomed the idea of a "beneficial crisis". As ex-Commission chief Romano Prodi remarked, it would allow Brussels to break taboos and accelerate the move to a full-fledged EU economic government.
                  The financial powerhouses of EU, are not interested to maintain an equality based only on nice principles: they don't want to have PIGS sitting at the EU round table... ;)

                  Comment

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