….the Establishments start looking for someone to pin it on. The ECB got its first shots in yesterday: tomorrow is closer than you think
There are few partnerships worse than the European Central Bank and the BBC. The former will blame bad numbers on penguins if necessary, while the Beeb runs so scared these days, it will do the bidding of every bank and Sovereign on the planet. You can see this in Auntie’s coverage of the ECB’s cautious first step in confirming four cloaked men on horses, while blaming everyone in public life who is off-message on the euro. The BBC regurgitates reports as follows:
‘Political uncertainty is putting the eurozone’s financial stability at risk, according to the European Central Bank.
The Brexit referendum and the US election both ratcheted up what it calls its “composite indicator of systemic stress”.
It says the 19 countries that use the euro could be hit by trade wars, higher inflation and rising US interest rates.
In a worst-case scenario, the ECB says, this could reignite the 2009 eurozone debt crisis.’
The day after the UK referendum I said this would happen, and here it is on time. Very unusual for an Italian train that, but then Signor Draghi does have a lot of the Ducé about him. In smaller and less bold print, however, the ECB goes on to warn that some stock markets could be heading for sharp falls. “Valuation measures… are in some regions hovering at levels which, in the past, have been harbingers of impending large corrections.” No shit, Sherlock. Couldn’t be anything to do with you and Janet the Fed chucking free QE money at the markets for six years, could it?
The Financial Times – which is even more fanatically pro-EU than the BBC – obliges the ECB by naming names:
The hair-trigger gun about to set off a surge in borrowing costs can be laid squarely at the door of the Fed’s rate-rise lunacy, the euro, American banking’s withdrawal of Dollars from offshore borrowers, Abenomics, the imploding eurozone banking system, and the EC Troika’s infantile fiscal policy. The sincere hope of all of us in possession of our faculties is that the people behind that door should take the gun and shoot themselves with it. But none of us are holding our breath.
Two things are going on here:
- The neocon failures are getting their scapegoats in a row in readiness for the collapse they know perfectly well is coming; and
- We are now moving into Stage 3 of The Slog’s long-predicted Crash2. This is the leftover unfinished business of Crash1 in 2008 that should’ve been tackled by Greenspan in 2003.
And the learning to take away is even simpler:
When Central Banks start getting real, it’s time to head for the bunker
Given the history of the last decade, only an especially masochistic glutton for punishment would put a timing on this. But it’s now safe to observe, I think, that we are talking months not years.
The countdown could look something like this:
Black Friday disappoints >> Renzi referendum defeat >> Del Paschi rescue found wanting >> Yellen raises rates >> $ denominated debt + $ dry up for lenders >> eurozone bond spikes >> Indian notes scam collapses growth >> gold breaks free >> investors desert equities and bonds for gold >> major bourses go into correction mode >> asset bubble bursts >> non-performing bank loans go stratospheric >> housing market corrections >> consumer confidence mortally wounded >> distribution bankruptcies
The ethereal villain Don Brexit will of course kop for most of it. But as I hope to post in the next 24 hours, Trump may just turn out to be the oddball in the right place at the right time
The Slog 