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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 *$#. We discussed it here: http://tinyurl.com/4lny8x
I think I need some remedial reading... again.
From comments on today's Follow the Money blog:
http://tinyurl.com/4ve5q9
Brad, I was looking back a couple years on your blog at RGE trying to find an exchange we had during the set up to the current crisis. I said I thought then that the Fed was exporting inflation abroad through its massive (hidden) M3 growth, as credit was created and drawn to the States on the back of foreign asset bubbles in dollar pegged economies. I projected that the Fed would also eventually export deflation abroad, making sure that when everything crashed it would crash disproportionately outside US borders leaving the US “flight to safety” status in tact with a survivor bias favoring US markets.
I can’t find the exchange, but maybe you recall it too.
Events of this week lead me to think I wasn’t too far off the mark in my conspiracy theorising.
What has changed is that so many are now alert to the plan, that the outcome is no longer predictable. China, Russia and the Gulf are independently and collectively now pursuing their own strategies to protect investments, gain marketshare and secure survivor bias to their own economies.
Very interesting time to be a spectator on the sidelines."
I'm really interested in this idea of whether the Rest of the World can effectively fight back. I'm particularly interested in the notion that the ka phase (have I got that right?) actually represents the zenith of Dollar Hegemony rather than its demise, or in other words, that the crisis actually strengthens dollar hegemony as this seems to run completely counter to the itulip thesis. (Marc Faber's comment that he would be buying the dollar here if he were buying currencies unsettles me a little. Ditto Macro Man's similar take - thinks the secular low is in for the dollar.) This position is being put forward by *$#. We discussed it here: http://tinyurl.com/4lny8x
I think I need some remedial reading... again.
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.
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