We do not have sudden energy price inflation alongside banking illiquidity and stock market nerves: none of that came out of left-field. There will be rallies and false hopes, but as of now, the holidays are over and the cold light of New Normal has dawned. Russia looks to advantage, China leads a bailin charge, and the Unelected Spook-Banker State is priming the Great Reset.
Most people among the 1 in 8 grasped a long time ago that – under the New Normal being cooked up for us by the Grand Gargoyle Alliance – the information is distinctly one-way: They must know everything about Us, but We mustn’t know anything about Them. The same rule applies to quality as well as quantity: They lie to us with impunity, but if We tell porkies to them, we get banged up faster than you can say “safe vaccine”.
We are about to see this fools’ golden rule applied to the next stage of Reset preparation: global econo-fiscal meltdown. It became brutally obvious during the last few months that intrabank liquidity in New York and raw material inflation around the world were soon to become colliding super-novas. Jerome Powell (and several otherwise sane commentators) kept calling the inflation “transitory”, but four months on it is still accelerating – and (in my beady eye) hugely underestimated.
The difficulties at Chinese mega-bank Evergrande were bubbling nicely under a rattling lid in the latter part of last week; I couldn’t help thinking at the time how the brand name is something of a hostage to fortune, in the sense that (for example) you wouldn’t want to call a major stock index The Everhigh, but whatever – Evergrande is in serious trouble, in that it has a third of a trillion dollars worth of bills to pay, and the safe has been empty for some time.
What makes this particular failure a concern, however – and yesterday caught markets unaware – was that the Politburo Boys from Beijing kind of said, “No bank is too big to fail”. This being the People’s Republic of China, that means, “Tough luck ordinary creditors – you’re on your own”: the person of no fixed abode Also Known As “bailin” applies.
The knock-on effect of that on world markets hasn’t been slight. Although strictly speaking Evergrande is a property developer rather than a “proper” hoho bank, the Chinese market is so skewed towards property now, the terminology isn’t really relevant: $300 billion dollars is very serious money.
We briefly pause here while a reasonably intelligent private investor not depicted or indeed known as an “expert” (me) injects some much needed commonsense reality into the equation:
If existential inflation is rising (see Britain’s “energy crunch”) the paper in your pocket’s promise to deliver reliable purchasing power will fall until, as it were, it’s not worth the paper it’s printed on.
If a quasi building society giant fails, the bondholders, depositors and stockholders see their money disappear. (Hold that prestidigitation thought)
If liquidity dries up still more because lack of trust becomes widespread, more banks fail, and as State bailouts are – officially – off the agenda ‘these days’, the same conjuring trick applies.
A combination of rising unemployment and mass reductions in spending power will deal yet more unwanted fiscal and economic cards to national States….immediately after the World’s Most Hyped Health Threat has already sent sovereign borrowing through the stratosphere.
The world now waits until this coming Thursday (when Evergrande will for sure default in the face of unpayable settlements) to see if the PRC politburo holds its nerve or does a U-turn.
Further comment is pointless until that time which – given time differences – is now only fifteen hours away.
Yesterday, the Dow ended Monday’s trading session down more than 600 points following steep stock market declines in Europe and Hong Kong and other parts of Asia. As you’d expect, the 10 year US treasury yield’s inverse correlation price slid to 1.297%. The FTSE fell 1% – probably saved by the bell. The Hang Seng staged a recovery, suggesting that Beijing has chosen to pump the market rather than the developer. That alone supported the FTSE in early trading today: we shall see how things develop.
There are two broader issues to grasp in all this – the devaluation/loss of consumer cash money; and the geopolitical ramifications that are already apparent.
It was during 2012 that fiscal idiot and Davos devotee George Osborne, the UK Chancellor, rose in the House of Commons to make a speech of such astonishing doubletalk, even an old cynic like me had his breath taken away. Osborne declared – in a tone suggesting he was leading a sans culottes storming of the Bastille – that the taxpayer would no longer be asked to bail out banking institutions: instead, banks would be allowed to fail via a ‘bailin’.
Little Georgie Sniffing and High thus convinced much of the electorate there was a difference between the two options that might favour them in some way. This was of course high-octane drivel: in a bailout, the voters pay indirectly because the currency valuation is being diluted by the State and there will be some loss of services alongside stealth taxes; in a bailin, they lose all their current and deposited funds – with no comeback. As ‘creditors’, they’re at the back of the queue.
This lack of State help to citizens is now being more overtly floated by Beijing. I do not doubt that – as illiquidity based on fear and suspicion grows as a problem – Biden, Johnson et al will follow suit, but disguise the fact that the errors of around 40,000 psychos will be paid for by the remaining 7.7999 billion innocents.
All of this aggregates to lower purchasing power and increased nation State costs. In other words, stagflation – but this time around with a dual purpose: to bury the contradictory BS and criminality of the Covid19/Vaxx scam forever…and to give an impression that Reset is simply a way of saving “everyone in the same boat” from pauperisation.
The geopolitical “plan” is, by definition, more multivariate than one-dimensional. Out of the blue on Monday morning, the UK somehow walked into a hard wall called The Energy Crunch.
The predictable attempts by some MSM bottom-feeders to serve this up as yet more CO2-driven climate issues based on fossil fuel is beyond risible. What we’re seeing is the effect of Covid economic Lockdown yet again: as Sovereign mugs reopen their economies, the demand for global gas has risen. A cold winter didn’t help. Demand has dried up much of the energy supply….ergo, prices for wholesale gas are up 250% since January.
In turn, Russia – having been hammered by a variety of every-which-way Washington/NATO attempts at encirclement – has unsurprisingly decided to get its own back by quietly restricting Western access to its vast supplies of natural gas.
Finally – going back full circle – if Beijing does decide to let Evergrande fail, that would suggest the PRC is inside the NWO tent. (Very notable here is that both the Clintons and Bidens are giving advice to the Chinese government about how to proceed)
Lost savings and collapsing cash-currency values will cause shock, awe and not a little anger. But it will make the Reset more acceptable to the drongoes. At least, that’s the theory. For myself, I’m less than convinced.
One final point to underline this post: the developing crisis here is based on energy and finance. Put more simply, oyull and munnneeeee.
Stay tuned.
The Slog 