What wound up being almost completely missed in yesterday’s Second Coming of the Mark story was actually one of the more interesting clues as to the State of the Union: the fact that, in Tokyo, France’s top central banker Christian Noyer dismissed the EFSF leveraging idea, but gave his support to leveraging via some other means. Unser Maulwurf in Bankfurt saw the significance immediately, but most people ignored it as 8,000 hits came in from various German sites: namely, that the French are now desperate for any idea – however mad – that might get them out of the mire. The developing Dexia disaster is clearly only the start.
Sometimes, the urgent news obscures the important chess-moves taking place. Geopolitics is a big subject open to a thousand interpretations, but it’s a comfort zone for me, having been part of my University discipline. Of course, several coincidences can look like a trend (this is how most conspiracy theories start) but of late there have been some consistencies that suggest what may be happening a a level higher than the detail. Very little in real life diplomacy is planned, because events keep emerging to screw up anything that’s too detailed. But goals remain remarkably consistent over time. The EU meltdown, however, is in danger of changing all that.
Going on the basis of recent media/Slog stories, perhaps the clearest thing coming through is that the Americans now have all their money on Germany. You may have read my post of last weekend about stock exchange mergers, and if you did it’s pretty clear from that just how much merger preparation for reporting (or control) of stock prices involves Americo-German deals. Equally interesting is that, in almost all cases, the Germans are the dominant force.
Until recently, the US was backing an EU led by Germany and France. The withdrawal of tens of billions in US dollars the week before last clearly shows that the Americans had underestimated the dire state of the French finances in general and banking in particular. This has dropped ‘their gal’ Christine Lagarde down a snake, because she was not only in charge of those finances – she helped cover up the banking weaknesses by fiddling the 2010 stress tests. In the end, we usually reap what we sow, and it couldn’t happen to a nicer lady.
But several parts of US foreign policy towards Europe are beginning to unravel. The central idea was to keep the Left out of power in the dominant countries. I would say that on a scale of 1 to 10, Sarkozy’s chance of being returned in 2012 are minus 67. And only a mighty leap to freedom and popularity can now save Merkel….although she may already be on that road.
America still regards any form of socialist intent as thinly disguised communism, so the thought that the Left will now come back in France is something of a nightmare for them. But above even this, their chief goal is a stable EU consuming US products efficiently from a limited number of purchase points. This is, after all, how multinationals and globalists think. This is part of the reason why Tim Geithner caught the first available flight to Wroclaw ten days ago; but like I say, urgent events sometimes obscure long-term goals.
The pressing reason for the Fed Treasury secretary to jet in and use his legendary charm and tact on the EU bigwigs is because the US administration, Wall St, and every last bit of the Fed know that an enormous backwash from Europe is heading their way – and no way are they in a position to start being the guarantor of last resort. Ergo sum, the only way to solve this dilemma is to limit the damage to places not called Germany….this last being by far the most American-invested region. After Wroclaw, the Slog’s Washington source confirms, Geithner seems to have brought back the news we’ve known over here for some time: that Brussels is a surreal childrens’ tale of imaginary outcomes and low-flying miracle bailouts.
So the Obama administration’s money is now on Germany as the eventual leader of a north-European trading bloc. Indeed, in Holland and Germany the word ‘Nord’ for the hypothetical new currency is in wide circulation already. But in the short term, the world needs to be prepared for the resurrection of the Mark.
Well connected Washington intimate and boss of Principalis Investments Pippa Malmgren set the ball rolling with her probably well-planned reference to Berlin printing machines last Friday. The only question remaining is, was this one last-ditch attempt by the American Establishment to use scare tactics, and knock some sense into the EU Finance Ministers meeting in Brussels? Or was it a starter for ten on Mark II? Ms Malmgren didn’t return my call yesterday (She’s busy, and anyway, why should she?) so I can’t yet judge. But if it was to shout ‘Ambulance needed!’ to the EU woodentops, it didn’t work: the Greek bailout decision was fudged yesterday. The finance men and women can’t agree about it. Imagine that.
There is of course one big flaw in the US approach: the Americans won’t be able to get every Dollar out of the way once the dominoes start tumbling in Paris. So whatever happens, it is still going to be awful….especially for Britain – with or without Mr Osborne’s odd little bond-issuance plan for SMEs. (If banks won’t cooperate, go round banks. Really? The WTF are banks for?)
Talking of Blighty, let me flag one final thing up: the Camerlots can now, I would suggest, no longer simply keep referring to the EU mess as ‘an imponderable’. For 60 years now, British foreign policy has involved trying to get into bed with some form of EU, and then being unsure about whether the marriage was a good idea in the first place. The total divergence of French and German interests guarantees that period is now over. William Hague needs, once and for all, to start earning his vast salary….rather than just having the foreign office repainted, and its main hallway restored. Britain needs to choose – du nord ou du sud. And as I’ve posted endlessly, it needs to rethink its export trade policy globally.
Related: Gurus line up to warn of disaster
or see the whole ghastly train-wreck at our dedicated page, Crash 2.