My thoughts on Russia are probably way off the beam, but since they invaded Georgia there has been a massive outflow of money from Russia back to the West. Last night on the radio here a Russian embassy official and an analyst were quoted as confirming that the Russians were worried by this and that their stock market was down about 45% in 4 months. See this link for more on the background:-
Hence my thinking is simple. Did the US administration tell the Georgians to attack South Ossetia knowing that the Russians would invade and that the real reason for doing this was to help with their planning to get the dollar up as they announced the nationalisation of the GSE's? The dollar nearly always does well when political tensions rise. I think it is a fair bet that somebody in the US government could guess that the Russians would react as they did and that it would likely cause a lot of western money to exit Russia. When money is moved quickly it is nearly always converted into dollars.
Maybe I am mad to think this possible and since I have been out of touch I may have missed something which makes this look even more stupid. But as I reflect on the extent of the dollar's climb and the efforts needed to move it up, I think that there has been a massive co-ordinated set of steps taken by the PPT and a number of governments to help the dollar go up.
Let's imagine the following sequence starting back 3 or 4 months:
1. Paulson to Bush - We need to save the financial system and it is in very bad shape. It could fail unless we act. We need to rescue the GSE's or we will never get any more loans from our friends in China, Japan, Middle East and Europe. When we do this rescue we must keep the dollar strong to keep markets calm. We know many other of our major banks are bust, our deficits are out of control and we have a number of industrial companies in trouble too. If the dollar climbs then investors and friendly governments will remain calmer about these other problems and retain their investments. Then we live to fight another day. Hence, we must keep oil down and pretend inflation is under control. We need help from the Saudis on oil and a co-ordinated effort to get the dollar up, including plenty of gold to hit the market and keep the inflation canary quiet.
2. Bush - Ok get on with it and see everybody you need to get help from. I will make them toe the line and the whole administration is behind you. (Paulson to Bush - Let's call the it Project "Phoenix". Bush to Paulson - "Why not call it Tucson? They are both in Arizona")
3. Paulson and his PPT get to work and get promises of help from outside governments such as Japan, France, UK, Germany and Saudi Arabia. After all none of them want to see losses on any of their loans to the USA, including massive loans to the GSE's. Hence in due course the dollar will be bought, oil sold cheaply and gold leased to the PPT and then sold into the markets to avoid disclosure. They also decide to allow oil to get too high to help emphasise the decline.
4. Paulson and the PPT say to themselves - this is not enough. We need to use every trick in the book and try to close down as many speculators and hedge funds as we can. Our friends at the big international banks can help as they know their positions well and how far we need to go to get an impact.
5. The PPT then say - the trouble is this is as big a mess as we have ever had to handle and we cannot afford to fail. Can we get some more help?
6. A bright spark says let's start a geo-political crisis - they are nearly always good for the dollar. We could bomb Iran, but that will upset the Saudis and the Iranians are crazy so we do not know what they will do. What about North Korea? He is utterly bonkers and we will possibly upset the Chinese and the Russians too. I know let's get the Russians to shoot themselves in the foot - old Putin is so predictable and he will not be able to resist showing off to the world that Russia is back. Also, he will not go too far when he reacts - just enough to show us he is a tough guy. The problems in Georgia look to be one area we can try to use.
7. The Team concludes that for this to work the administration has to pretend that it made a mistake and allowed President Saakashvili to be hot headed. The more that they study it the more that they like it as not only the Europeans, but also the Japanese and the Chinese are still deeply suspicious of the Russians and with a bit of helpful advice from the big international investment banks it will be easy to get a lot of cash to flee Russia and keep the dollar climbing. Investment money will probably not return to Russia for a long time so it has even more benefits.
8. Paulson to Bush - The plan is in place and let's get started over the summer when it is quiet and things will be exceptionally placid whilst the Olympics are on.
Perhaps I have read too many John Le Carre novels, but I think it is a very helpful coincidence to see international investment cash leaving Russia at this rate just as the USA is trying to save the international financial system. Even if I am totally wrong about Russia something like the above has happened. As we both know none of this rubbish is a real fix, but probably gets Bush home and dry and gives McCain or Obama the dubious honour of having to sort out the problem. It gives a great opportunity to buy gold and silver, as you keep on saying.
samedi 13 septembre 2008
Guerre en Géorgie: une simple mesure de sauvetage?
Pas le temps de tout traduire (voir texte suivant, source: Midas 12.9.08), mais c'est une explication très plausible: Le conflit en Géorgie aurait été provoqué par les USA pour contribuer au sauvetage de l'économie US. Les effets: La bourse russe a perdu 45% en 4 mois, les treasury US ont retrouvé un peu de souffle.