The US Mega-Banks and SWIFT money transfer system for the world's reserve currency are Financial Dreadnoughts in time of currency war.
Le privilège stratégique
“Thus, it should be understood that when pro-US figures use the term, 'rules-based international order,' they are not referring to anything analogous to the rule of law. Quite the opposite, they are using Orwellian language to describe a system in which essentially no rules can be established and/or observed, given that the dominant state has the prerogative to violate and/or rewrite “rules” at its whim.” Aaron Good, American Exception
The US Mega-Banks and SWIFT money transfer system for the world's reserve currency are Financial Dreadnoughts in time of currency war.
Le privilège stratégique
"I postulated some years ago (2002) that, when push came to shove, the Fed would gather around itself a few 'friendly banks' which would act on its behalf in private to enforce certain policy decisions in markets in which the Fed and Treasury do not wish to openly operate. It is hard to think of any other somewhat moral reason for the government to babysit and subsidize these very expensive and dangerous TBTF monstrosities, except as instruments of policy to provide some degree of freedom to shape events and responses.
If you want to wage a currency war, you need to have some dreadnoughts packing serious financial throw-weight, and economic muscle. It may be Machiavellian, counter-democratic, and expensive, but that is the diktat of strategy if you want to control things and wield power to do what you will, both at home and abroad."
Jesse, Financial Dreadnoughts in Times of Currency War, 22 February 2013
"God beholds you. He calls you by your name. He sees you and understands you as He made you. He knows what is in you, all your peculiar feelings and thoughts, your dispositions and likings, your strengths and your weaknesses. He views you in your day of rejoicing and in your day of sorrow.
He encompasses you round and bears you in His arms. He notes your very countenance, whether smiling or in tears. He looks tenderly upon you. He hears your voice, the beating of your heart, and your very breathing.
You do not love yourself better than He loves you. You cannot shrink from pain more than He dislikes your bearing it; and if He puts it on you, it is as you would put it on yourself, if you would be wise, for a greater good afterwards.
Therefore I will trust Him. Whatever I am, I can never be thrown away. If I am in sickness, my sickness may serve Him; in perplexity, my perplexity may serve Him. If I am in sorrow, my sorrow may serve Him.
He does nothing in vain. He knows what He is about.
Let us feel what we really are— sinners attempting great things. Let us simply obey God's will, whatever may come. He can turn all things to our eternal good.
The more we do, the more shall we trust in Christ; and that surely is no morose doctrine, that leads us to soothe our selfish restlessness, and forget our fears, in the vision of the Incarnate Son of God."
John Henry Newman
"In the Incarnation the whole human race recovers the dignity of the image of God. Thereafter, any attack, even on the least of men, is an attack on Christ, who took on the form of man, and in his own Person restored the image of God in all. Through our relationship with the Incarnation, we recover our true humanity, and at the same time are delivered from that perverse individualism which is the consequence of sin, and recover our solidarity with all mankind."
Dietrich Bonhoeffer
“Come to me, all you who labor and are burdened, and I will give you rest. Take my yoke upon you and learn from me, for I am meek and humble of heart; and you will find rest for yourselves. For my yoke is easy, and my burden light.”
Matthew 11:30
The hawkish Fed, economic troubles in Europe and the UK, and a fresh appreciation of risk, triggered heavy selling in the equity and commodity markets.
The VIX rose sharply as one might expect on a 'risk off' day.
A look at the stock index charts, especially the SP 500 futures, shows that we retested the prior second low intraday.
If we break further past that low and stick a close or two down that way, things could get interesting, quickly.
Gold and silver were hammered by a much stronger dollar, which shot to just shy of the 113 handle.
This is the highest that the DX index has been since the dot com bubble bust.
There will be a lot of Fed speakers gadding about next week, apparently things to say.
Let's see if they say anything that soothes the nerves of investors, especially in light of the mess in the UK and the potential contagion effects.
Or not.
It might matter which way the winds of insider trading are blowing, especially out of Washington and NY.
Lord, pierce our hardened hearts, enlighten our minds, heal our blindness, and break the self-imposed chains of pride and self-deception, so that we may choose life through repentance, forgiveness, and life.
Have a pleasant weekend.
“If those in charge of our society - politicians, corporate executives, and owners of press and television - can dominate our ideas, they will be secure in their power. They will not need soldiers patrolling the streets. We will control ourselves.”
Howard Zinn
"A sentiment of trust in the legal money of the State is so deeply implanted in the citizens of all countries that they cannot but believe that some day this money must recover a part at least of its former value. To their minds it appears that value is inherent in money as such, and they do not apprehend that the real wealth, which this money might have stood for, has been dissipated once and for all.
This sentiment is supported by the various legal regulations with which the Governments endeavor to control internal prices, and so to preserve some purchasing power for their legal tender. Thus the force of law preserves a measure of immediate purchasing power over some commodities and the force of sentiment and custom maintains, especially amongst peasants, a willingness to hoard paper which is really worthless...
If, however, a government refrains from regulations and allows matters to take their course, essential commodities soon attain a level of price out of the reach of all but the rich, the worthlessness of the money becomes apparent, and the fraud upon the public can be concealed no longer."
John Maynard Keynes, Economic Consequences of the Peace, NY, 1920, p. 239-40
Here is the longer term view of the US Dollar as measured by a basket of currencies.
Can it 'break out' here? Yes, certainly. Europe and Japan have their problems, and in the world of fiat, the grading of the paper is done 'on a curve.' The central banks and their mavens, who intervene at least indirectly in the currency markets with a certain obsessiveness these days of non-stop financial engineering, like to shove their manipulation around the plate as well. They don't 'tweak' the economy; they are the economy, at least at the margins.
Can it also fail and break down here? Yes, certainly. A stronger dollar will step hard on the weak US economic recovery. It will serve to lower import prices, but dampen exports, which is what they call 'bad news' when your domestic demand is slack.
There is the fundamental detail an enormous amount of dollars being held overseas that are not in circulation so to speak. At some point they, like the swallows of Capistrano, will return, and have trouble finding a place to comfortably roost.
But the market does not care about our theories, or even the charts. They are just rough estimates of a very complex reality. This is a disclosure that all pundits should place on their prognostications.
And in these days of thin markets and bank prop desks as a major source the income, the fundamentals are less relevant than the short term reality of the squid's need to feed.
Let's see what happens. Then we will know something actionable.