Part 2 - Mr. Big's Plan and The Bond Junkies
Continuing from Part 1...
The dollar and bond junkies are dammed if they do and dammed if they don't. A slow withdrawal for the junkies who cannot go cold turkey, but never a full one. Methadone in the form of partial exposure to other currencies in the basket is offered. The problem is that horse is cut and there is no other true alternative currency if you want to mainline. So maybe they decide to detox slowly and wean their habit to 20-25% dollar FX reserves, but what is the alternative? The RMB, Yen, Franc or Euro? Since the ECB started QE the Euro dropped from 25 to 20% FX reserve share with the Dollar picking up the 5% balance. A worthy alternative currency does not exist.
Euro, Yen, Pound, RMB, Franc? Franc has nothing but a large defacto money laundering operation behind it. RMB a puffed up (through fake numbers) parasite of ours which much like a worm, we starve, they die. The other three have been economically dead in the water for quite a while, and cannot survive without us either.
Why is it that when the shit hits the fan, they ALL come running in a flight to safety in our number one export since 1985, our debt, bonds and currency? Want proof? Aside from the obvious, when we dug up Saddam's scraggly ass, he wasn't hoarding Gold, Euros, Yen or Francs, just 7500 crisp pictures of Ben Franklin. And those exact sentiments are echoed every day in a flight to safety in our currency, debt and markets.
The remnants or foundation of our "recovered" economy (outsourced and emasculated) may not be very healthy. But the ROW economies are in a shambles, making ours the least dirty shirt in the hamper. And guess who holds the purse strings controlling everyone's economic fate? Mr. Big does.
Our trade in the form of currency (dollars) and debt (bonds) IS OUR economy and primary export. How do you think the budget and trade imbalances get financed? The largess of others? Nobody makes more money out of thin air than we do with financialism. We are the masters of smoke and mirrors; M and A, leveraged buyouts, junk bonds, arbitrage; all with no tangible process or end product needed.
For lack of providing a traditional "retain and reinvest" strategy, which would be "value creation", our corporate (outsourcing to labor at the margin, eco and tax law avoidance), government (special interest controlled gridlock by design and kick the can deficit budgets) and monetary (serial asset bubbles, benefiting financialism) policies seem to provide for a "value extraction" strategy. Gecko's mantra "greed is good" permeates this strategy, based upon the worship of promised (P/E), unrealized (EPS) or false profits. And the pun is well intended, remember? Debt pulls future profits forward into current cash flows, mortgaging the future.
Mr. Big is the 800 pound gorilla on the block and pimp daddy does not let his dollar ho's ever forget it. Those dollar junkies gotta keep payin Mr. Big respect until somebody figures out how to implement a global currency and not get overrun by Big's enforcers. Challenge our dollar hegemony? Best case you get what Putin and China are getting, squeezed till you yell Uncle. Worst case, speak to our enforcers. Still not a proselyte? A short list of those who have challenged dollar hegemony and suffered:
Manuel Noriega (Panama); Moammar Kadafi (Libya); Saddam Hussein (Iraq); Osama Bin Laden (Al-Qaeda); Iran; Ukraine; Russia; Belarus; China; Venezuela; Syria; Sudan; Somalia; Congo; North Korea; North Vietnam; Lebanon; Cuba; Burma.
Then there is the case for mass repudiation, which would be the equivalent of flipping the monopoly board because the bank ran out of money, like a game reset or IPL. Then the dollar and bond junkies could get off the hook, but that would mean forgiving Mr. Big for the three giant elephants that have been sitting in his front room all these years (budget deficit, trade deficit, $18T national debt).
On that note, don't forget, We ARE the Arabs and the elevator version: The money talks, the bullshit walks. Happy Holidays to all.
The dollar and bond junkies are dammed if they do and dammed if they don't. A slow withdrawal for the junkies who cannot go cold turkey, but never a full one. Methadone in the form of partial exposure to other currencies in the basket is offered. The problem is that horse is cut and there is no other true alternative currency if you want to mainline. So maybe they decide to detox slowly and wean their habit to 20-25% dollar FX reserves, but what is the alternative? The RMB, Yen, Franc or Euro? Since the ECB started QE the Euro dropped from 25 to 20% FX reserve share with the Dollar picking up the 5% balance. A worthy alternative currency does not exist.
Euro, Yen, Pound, RMB, Franc? Franc has nothing but a large defacto money laundering operation behind it. RMB a puffed up (through fake numbers) parasite of ours which much like a worm, we starve, they die. The other three have been economically dead in the water for quite a while, and cannot survive without us either.
Why is it that when the shit hits the fan, they ALL come running in a flight to safety in our number one export since 1985, our debt, bonds and currency? Want proof? Aside from the obvious, when we dug up Saddam's scraggly ass, he wasn't hoarding Gold, Euros, Yen or Francs, just 7500 crisp pictures of Ben Franklin. And those exact sentiments are echoed every day in a flight to safety in our currency, debt and markets.
The remnants or foundation of our "recovered" economy (outsourced and emasculated) may not be very healthy. But the ROW economies are in a shambles, making ours the least dirty shirt in the hamper. And guess who holds the purse strings controlling everyone's economic fate? Mr. Big does.
Our trade in the form of currency (dollars) and debt (bonds) IS OUR economy and primary export. How do you think the budget and trade imbalances get financed? The largess of others? Nobody makes more money out of thin air than we do with financialism. We are the masters of smoke and mirrors; M and A, leveraged buyouts, junk bonds, arbitrage; all with no tangible process or end product needed.
For lack of providing a traditional "retain and reinvest" strategy, which would be "value creation", our corporate (outsourcing to labor at the margin, eco and tax law avoidance), government (special interest controlled gridlock by design and kick the can deficit budgets) and monetary (serial asset bubbles, benefiting financialism) policies seem to provide for a "value extraction" strategy. Gecko's mantra "greed is good" permeates this strategy, based upon the worship of promised (P/E), unrealized (EPS) or false profits. And the pun is well intended, remember? Debt pulls future profits forward into current cash flows, mortgaging the future.
Mr. Big is the 800 pound gorilla on the block and pimp daddy does not let his dollar ho's ever forget it. Those dollar junkies gotta keep payin Mr. Big respect until somebody figures out how to implement a global currency and not get overrun by Big's enforcers. Challenge our dollar hegemony? Best case you get what Putin and China are getting, squeezed till you yell Uncle. Worst case, speak to our enforcers. Still not a proselyte? A short list of those who have challenged dollar hegemony and suffered:
Manuel Noriega (Panama); Moammar Kadafi (Libya); Saddam Hussein (Iraq); Osama Bin Laden (Al-Qaeda); Iran; Ukraine; Russia; Belarus; China; Venezuela; Syria; Sudan; Somalia; Congo; North Korea; North Vietnam; Lebanon; Cuba; Burma.
Then there is the case for mass repudiation, which would be the equivalent of flipping the monopoly board because the bank ran out of money, like a game reset or IPL. Then the dollar and bond junkies could get off the hook, but that would mean forgiving Mr. Big for the three giant elephants that have been sitting in his front room all these years (budget deficit, trade deficit, $18T national debt).
On that note, don't forget, We ARE the Arabs and the elevator version: The money talks, the bullshit walks. Happy Holidays to all.
Comments