“11/30”: The Ducklings And The Plot Begin To Hatch
“But there are also unknown unknowns- there are things we do not know we don’t know.” (Donald Rumsfeld)
Summary:
· FTX-gate is starting to resemble Watergate.
· The Fed Listens, and responds, to Key Signals in order to Constitutionally Comply with the 13th Amendment.
· Raphael Bostic is Constitutionally Compliant and only 75 to 100-Basis points away from pausing.
· Being Constitutionally Compliant does not mean that the Fed is employment mandate compliant, anymore, as the mass layoffs in the technology sector grow.
· The US “Friend-Shoring” tailwind has encountered a direct global headwind from China.
· China may also be blowing an indirect global economic headwind via alleged US trade partners.
· A trade war between America and Europe is highly likely.
· The UK’s “Cosa Notre” intentions will most likely lead to emerging market price-taker capabilities only.
· The insolvent Bank of England is transferring wealth, to the commercial banks, from the taxpayer, and wider lending margins, to avoid a financial crisis, by creating a recession that will have the same crisis impact.
· The insolvent Bank of England is being blamed, for the widening North-South divide, and is being captured by “Weimar-on-Thames”.
· The Bank of England is being blamed for the fraudulent black hole in the national accounts that the government is responsible for.
· Discovery of the UK’s fraudulent black hole will tip the nation into anarchy.
· If Britain is being “invaded”, Suella is in breach of the Geneva Convention.
· The green shoots of Kubla Khan’s G20 seeds, of destruction, are visible in the Western Alliance.
· Far from avoiding a Eurozone financial crisis, callable/extendable bank debt will trigger one.
FTX-gate is the new Watergate ….
· Beware the ides of 11/30/2022.
(Source: the Author)
Manipulated crises, hiding in plain sight, have become so commonplace, today, that Mr. Market, initially, blows them off, only, then, to overreact somewhat later.
We saw it with COVID.
We saw it with Ukraine.
· The Crypto Crisis is approaching its “Lehman Moment”.
(Source: the Author)
Are we seeing it again in Crypto?
The last report had an intuition about something “damned strange” happening on November 30th, in New York, at a New York Times-sponsored gathering of the famous and infamous.
When the three-letter acronyms start to get thrown around, with gay abandon, in the press, one can expect something nasty masterminded by someone, as nasty, to happen.
Based on the new news that SBF, of FTX, funded a large piece of the Democrats’ successful recent Mid-Term campaigning, the three-letter acronyms, and the plot, are well and truly thickening. The montage of speakers, at the upcoming New York Times event, looks like a media fly-paper to attract a lively debate and potential further revelations.
Oh, not be a fly on that wall.
FTX-gate is beginning to look like Watergate.
This author would not stop, with the comparisons, at Watergate. Some responsible media channels have bought into Larry Summers’ take that has likened the FTX Scandal to Enron. This author notes that the Enron Scandal also involved significant geopolitical events involving Russia, Afghanistan, energy resources, and energy pipelines, in addition to large US financial institutions with access to the White House. Today, all the same boxes can be ticked.
The Bush Dynasty was under intense scrutiny, during the Enron Scandal. Currently, the Biden Dynasty is “enjoying” the same level of scrutiny. Just saying, is all!
This author also notes that Larry Summers, and his love-hate relationship, with the White House, and the Fed, have a habit of cropping up, like a fly on the proverbial, at seminal moments, in the unfolding narrative. Also, just saying!
There is, clearly, a similar modus operandi, currently, at play, causally, or coincidentally, hence, the probability of a similar outcome is elevated. If it walks and quacks, like a duck, it must be a duck.
There will be a brood of ducklings, some ugly, some less so, and a related plot, all hatching on 11/30 in New York. This author strongly advises readers to turn off the World Cup Footie and tune in to the New York Times event.
If nothing else, other than for entertainment, FTX-gate highlights the imperative for the executive, and its Federal agencies, to legally act within the constraints of the Constitution. All hell breaks out when non-compliance occurs, as it may just be about to on November 30th.
All hell breaking loose, oftentimes, leads to political regime change. It also leads to a new global economic stimulus and attendant monetary policy expansion.
As this author’s imagined financial instability moment approaches, he must admit that there is some evidence that the Fed has, recently, responded, with alacrity, to developments. It took the central bank a while to understand, what was happening, but now the FOMC is reacting appropriately.
The Road, from “Free-Loader” to Incremental Constitutional Compliance, is paved with good intentions and Key Signals ….
The minutes of the last FOMC meeting show that whilst being unanimous, about the accompanying 75-basis points interest rate hike, there was a broad discussion consistent with a drift towards smaller incremental policy adjustments going forward.
The tune of Cleveland Fed president Loretta Mester’s guidance demonstrates the accelerated appropriate response of the FOMC. Mester has accelerated, with brio, from dissonant, through “diligent” to a current “cadence” that is smaller in incremental tightening steps.
Similarly, San Francisco Fed president Mary Daly has throttled back on her broomstick. She is, now, mindful of the lagged impact, of previous tightening spells, “resolute and mindful”. Loosely translated, this means that she will tighten incrementally, with smaller increments, potentially, over a longer time horizon.
This author would say, that, had the Fed listened more attentively, to the incremental warning, of Esther George, at Jackson Hole, the FOMC could have finessed its reaction function.
· Susan Collins’s brave attempt to redefine the full employment mandate is Constitutionally Compliant.
(Source: the Author)
The author must also get some more apologies and retractions out of the way. In the last report, retraction and apology were awarded to Boston Fed president Susan Collins for the author’s incorrect assertion that she was not 13th Amendment compliant. This apology was suffixed with praise for her tenacity, and bravery, in trying to gain traction for a real debate about what full employment means in these unprecedented times.
· The Fed Listens initiative does not make the Fed compliant with the 13th Amendment.
(Source: the Author)
It is now time to apologize and retract, to Atlanta Fed president Raphael Bostic. This author had criticized Bostic, like Collins, for non-compliance with the 13th Amendment and for, perceived, ambivalence towards the conditions of the ethnic minority cohort in the American polity. Bostic has redeemed himself.
The author must also extend his thanks to Bostic for his swift response to the author’s assertions.
As an example, of this author’s observation, Bostic classified the comments, of his ethnic minority Fed Listens audience, as their ignorance of what is really important in life. Apparently, they just don’t get it and, therefore, are not worth listening to, let alone, actually, making policy for. Such ambivalence may reduce the number of colored folks who are competing for jobs with Bostic and the other ethnic escapees, from poverty, within the Fed’s ivory tower.
(Source: the Author)
The author was particularly critical of Bostic’s failure to uphold the 13th Amendment, along with some very demeaning behavior towards members of the “Black Belt” at an alleged Fed Listens event.
It would appear that Bostic, and his team, have reflected, on this criticism, and responded with a broadsheet declaration of his intent to listen and Constitutionally comply with the 13th Amendment. The author did try to congratulate Bostic, and his team. on their successful “Constitutional Compliance” but, unfortunately, the congratulation was censored.
· The KCF is Constitutionally Compliant with the tighter partisan US political environment and thereby independent from it.
(Source: the Author)
In reality, Bostic’s latest media stunt may simply be a response to the fact that the political climate has become more partisan since the Mid-Terms. The change, in the political status quo, thereby, makes it even more important to be “Constitutionally Compliant”.
Since none of the media majors has broadcast the significance, of this political imperative, this author is still claiming the kudos, and copyright on the term “Constitutional Compliance”, however.
Bostic, also, recently opened up about his opus dei from humble origins, in academia, to high monetary policymaking office. Along the way, he has, allegedly, not forgotten where he came from or how the decisions, that he makes, as an FOMC member, generally, amplify the economic disparity from which he has escaped. Bostic emphatically states that his policymaking decisions are made with all Americans in mind, despite the fact that those from who he has escaped still fail to benefit on aggregate.
Bostic has now become incremental but does not see the job done yet in terms of fighting inflation. He does, however, believe that he will be done in another 75 to 100-basis points. Presumably, therefore, the continued suffering of ethnic minorities will, also, now be incremental, and, thereby, more tolerable for them and less painful for Bostic to reconcile.
All this 13th Amendment and “Constitutional Compliance” stuff is fine, but largely ignores the fact that the, allegedly, skilled American workers, who are, supposedly, highly sought after, and highly paid, by employers, in the technology sector, are being culled in their thousands. Elon Musk is not the only one doing the culling. The Fed is falling behind on compliance with its dual mandate. Susan Collins’ new full employment debate is suddenly looking like the old full employment debate.
Kansas City Fed president Esther George is as always refreshingly transparent about why the Fed may have to fall behind on its full employment mandate obligation. She notes that the Federal authorities’ combined, massive, fiscal and monetary response, to the pandemic, has left a wall of potentially inflationary savings in the hands of consumers. George wishes to keep those savings pent-up, in fixed-interest instruments, whilst subduing the real economic growth opportunities to unlock them. Hence, she sees interest rates incrementally rising and being incrementally elevated for longer.
Whilst the Fed does its worst, the propensity for America to avoid China doing its worst is marginal.
Divided, pending being conquered ….
· G20 is incrementally calibrating not strategically cooperating.
· China and the USA are pretending to have an armistice.
(Source: the Author)
Since G20, China has adopted the passive-aggressive, regulatory, form of “techno-economic warfare” that is consistent with the current “armistice” environment status quo. Tesla has been forced to recall 80,000 cars and Apple’s biggest Chinese supplier is being shaken down by the application of COVID-Zero policies.
Hence, the US “Friend-Shoring” tailwind has encountered a global economic headwind from China.
China may also be blowing an indirect global economic headwind via alleged US trade partners.
· Kubla Khan wants to divide and conquer the Western Alliance and the EU.
(Source: the Author)
The last report discussed the Western Alliance powers, including Britain, which is no longer a power, falling out, with each other, in relation to the impending Ukraine/Russian endgame.
Evidence of this strategic allied diversion has recently been supported by the EU decision to water down sanctions on Russian energy exports. Further evidence comes from the recent Franco-German pushback over the, allegedly, more protectionist elements within the US Inflation Reduction Act and, related, “Friend-Shoring” legislation.
As will be discussed, later, however, there are also schisms within the superficially unified Franco-German pushback effort.
Within the EU, the Dutch are disinclined to support further American sanctions on Chinese technology companies.
The prospect of significant trade tension between America and Europe is, thus, an elevated probability. It is, in fact, a certainty, in some isolated cases which may, then, blow up into a formalized trade war.
This author has also suggested that Kubla Khan aka Xi Jinping was stirring the pot of allied discord. The Great Khan’s strategy is, apparently, working as it is now widely believed that the EU and America are diverging over China.
This divergence will, however, come as no surprise to President Biden.
Joe n’est pas Le Patsy ….
· The French Maginot Line is extended on three fronts.
(Source: the Author)
The last report discussed the French push, with a little nudge from President Xi Jinping, of an alternative geopolitical future, independent from the constraining influences of Germany and the USA.
Macron’s grand strategy is now in ruins. Furthermore, Macron just abused the President of the United States, for the second time, to try and get himself off the hook. Fool me Joe Biden once, shame on you, fool him twice shame on him. There will be no third time. Politically, and metaphorically speaking, the Island of Elba now awaits Macron.
(Source: the Author)
This French initiative was broadly viewed in the context, of the greater estrangement, between President Macron and President Biden, which began when Macron originally cozied up to President Putin.
Macron now finds himself on the receiving end.
The American justice system has recently widened a tax probe, of McKinsey, to include the alleged, illegal campaign financing of Macron. This author notes with cynical amusement that Biden may soon find himself under the campaign financing microscope as a result of the “11/30” event.
Macron is increasingly isolated. Germany would appear to have bottled it about partnering, with France, to resist the potentially protectionist elements of America’s Inflation Reduction Act and “Friend-Shoring” legislation.
Germany also has an exclusive strategic vision, for its industrial self, that involves cooperation with China. Germany, therefore, by default, has its own specific issues, with America, which are of a higher strategic priority than its relations with France.
Hence, as he stands back, President Xi Jinping must be satisfied with the seeds of global chaos that he has sown, at G20, amongst the Western Allies.
Within the Western Alliance, Britain and France are now directly in verbal conflict about the Ukraine endgame.
· Europe is now the greatest headline inflation, financial instability, and growth threat to the global economy.
(Source: the Author)
As this author noted, in the last report, EU divergence from the US will not go well for those who diverge. This author believes that the Eurozone is the catalyst for a new financial crisis. Through “Friend-Shoring”, America will isolate its own economy, from the Eurozone, and may even tip the Eurozone into a crisis to make it reconsider its divergent view on China.
Evidently, Britain is betting that America saves it as usual. Historically, this has been a good bet since Napoleon lost at Waterloo.
Preparations for the arrival, of the US Cavalry, have begun with HMG removing all Chinese-made surveillance equipment, and technology, from government premises. The HMG move anticipated a similar move from the US, by a few days, thereby, seemingly, demonstrating that Britain is back in the vanguard of the global policymaking elite. China will, thus, not be able to remotely observe what HMG is up to with the Americans anymore.
· “Lizzo” indirectly Brexit U-Turns to join Macron’s Cosa Notre
(Source: the Author)
In practice, the UK PM is only trying to do what his predecessor, unsuccessfully, attempted. “Lizzo” wanted a loose affiliation, with the EU, which obliged the UK to follow EU laws and customs without all the political embarrassment of re-applying to join the union. Hence, the current PM is selling the fiction that, somehow, the UK will retain sovereignty, going forward, as it seeks to negotiate trade deals going forward. This fiction ignores the reality, that America and the EU stand at the front of the line in all developed nation trade deals, thereby, setting the cascading precedents and rules that must be followed by Britain.
The only way for Britain to be independent, from the EU, and the US, is for it to become an emerging market, outside of the US/EU framework. This would exact a heavy price, to be paid, in terms of currency depreciation and interest rate rises. The ultimate economic conditions would then make Britain a price/deal-terms taker in any event. The way that things are going, however, the UK may end up with this same outcome by default of its, lowly, current economic, and political circumstances, in any case.
The assault on central bank independence, which is the hallmark of the decline and fall of a developed nation, is already underway in the UK.
Balkanized Britain: Fiscally Dragging the North-South Divide wider apart ….
· Britain is not the least significant developed nation in the world but it is in the bottom one.
(Source: the Author)
What this author calls Britain’s “Bottom One” global status is now being officially recognized by globally accepted commentators.
The same said renowned global commentators would not dare to throw around such inflammatory terms as “Balkanised”, “Banana Republic” or “Chapati Republic” however apposite they may be. Maybe they’ll stoop to putting a new B in the BRICs, to represent Britain’s global position.
Britain did not get into its lowly global position by accident or simply through COVID. The decline and fall are the consequences of a political and economic process. This author would say that this process is fraudulent, at best, and criminal at worst.
· The Bank of England is the biggest fiscal drag on the UK economy followed by the inept kleptocracy of the Government.
(Source: the Author)
The last report discussed how the insolvent Bank of England was the biggest fiscal drag on the UK economy. In effect, the cost of bailing out the UK central bank is robbing the real economy of desperately needed economic stimulus.
The Bank is doing itself no favors with its handling of the situation. Chief Economist Huw Pill has ruled out cutting the interest on reserves that the Bank pays to commercial banks. His objective may be to avoid triggering a banking sector liquidity and wider economic crisis, but he hasn’t explained his reasoning well. Instead of stating, his reasoning, Pill has encouraged taxpayers to, rightly, conclude that they will be financing a continued subsidy, to the commercial banks, via the Bank of England.
The insult, to the taxpayer, is then compounded, as their borrowing costs are raised, by the Bank of England, as it simultaneously widens bank lending margins with interest rate hikes.
The Bank of England, hence, selects the commercial banks, as winners, and the taxpayers, as losers, at no further costs to itself. The egregious inequity is palpable, especially as the commercial banks are raising mortgage and borrowing costs, in line with the Bank of England’s higher base rates. Thus, commercial banks continue to get subsidized whilst expanding their lending margins.
The sanctimonious Pill, therefore, looks like a hypocrite, at best, and arrogant at worst. Taxpayers, who are borrowers, will become militant. Some may become violent.
A recent headline demonstrates how, intimately, the Bank of England is undermining the UK economy. The government’s election promise, to “Level Up”, has, allegedly, fallen victim to the central bank insolvency credit event. This is nothing other than cynical spin doctoring, however. The Tories were never sincere, about “Levelling Up”, and now that the intended recipients are most likely to vote Labour all bets are off.
· The Bank of England is a cash cow that has gone from being too big to fail to become too juicy not to get slaughtered by the rapacious Conservative Party.
· “Weimar-on-Thames” style with an English accent UK economic policymaking seeks to nationalize the Bank of England “Kremlin-on-Thames” style with the same English accent.
· UK fiscal and monetary policy will remain antipathetic until the war over the Bank of England’s independence is concluded or the recession overwhelms inflation.
(Source: the Author)
Now, the Tories are conflating the Bank of England with their failure to “Level Up”. This author suspects that the strategic objective is to effectively take control of the Bank of England. This shaming and blaming, is the first step.
· UK ex ante Dishevelling Up has been revealed as a deliberate policy U-Turn on Levelling Up immediately ex post facto the Brexit-driven election victory.
· Nationwide Dishevelling Up is driving economic privatization and Bank of England nationalization in the New Jerusalem.
(Source: the Author)
The author has previously discussed how the UK will become Balkanised. The widening of the North-Side Divide, through the U-Turn on “Levelling Up”, should be viewed in this context.
· Keanononimcs, in the form of a Kleptocracy, to build a war chest, for the guerrilla warfare, in opposition, of the Tories in Balkanised Britain will try to use the IMF as a cover.
(Source: the Author)
The government has abandoned its Regional Gauleiters, and retreated, to build a, supposedly, impregnable bunker, in the South, as the nation collapses.
The modus operandi of the “Lizzo Fiscal Interregnum” has already been called fraudulent, by the official investigators. The tactic deployed was to mislabel a fiscal item, so that it would somehow fall outside the government’s need to correctly account for it, in cost and benefit terms, on the national consolidated financial accounts.
This author suspects that there is an even bigger black hole hidden, somewhere, in all the mislabelling. This hole was dug with kleptocracy and nepotism. This black hole has been used to literally steal from the taxpayer, during the COVID crisis, as friends and family lined up, alongside legitimate recipients, of government handouts. Even enemies prospered. No proper records were kept. The government is now trying to subsume, presumably, in order, to gag those parts of the civil service and the Bank of England that can shed light on where the money went.
This black hole was financed by the Bank of England, but it was created by cabinet ministers. During COVID, the national exchequer was raided by friends and family of cabinet ministers. Some of these friends and family were not even British, and none of them paid any taxes in Britain. Now the cover-up is being done in such a way as to identify, and blame, the Bank of England as the source of the black hole.
The truth will out, and when it does the Serious Fraud Office and other criminal agencies should be forced to investigate.
“Should” is the operative word.
But all these public servants and central bankers are paid by the UK Treasury. Why would they bite the hand that feeds them? The chances of any honest whistleblowing are slim, therefore. Snippets of scandal will come out in dribs, and drabs, from disaffected individuals and those with consciences. The whole system of government is ethically and financially bankrupt.
The UK “Butler” has catered to the exclusive political, and financial, needs of a global elite. This report is specifically concerned with the “R”, the “I”, and “C”, in the “BRIC” nomenclature, of the said global elite, that the UK is “Butlering” for.
(Source: the Author)
Political correctness has also made investigators fearful of the various Woke cans of worms erected between them and the truth. Revelations of Banana Republic and/or Chapati Republic status would, hence, invite rebuke rather than investigation.
Those who follow the money will, however, ultimately be vindicated.
The realization that all was not legal about the infamous VIP Lane of grace and favor rewards, of contracts, and fiscal support, during COVID, has started to occur. The tip of a very large iceberg is clearly visible.
There are also some signs of a conscience developing, within the Conservative ranks, at the grassroots MP level. There now is an open revolt, from within, against the government’s domestic legislative agenda. This may reflect concern about the electability of the Conservative party, with its current cabinet, or it may be genuine concern about the way the party has been hijacked by a bunch of kleptocrats and nepotists.
· Behind Rishi’s great fortune lie Suella’s and Priti’s humanitarian crimes.
(Source: the Author)
There is, also, growing disquiet, within the ranks, about the humanitarian crimes that have been perpetrated against asylum seekers. If Britain is ever going to regain its developed nation mantle, it must be seen to be acting, legally, in compliance with global norms on the treatment of the underprivileged.
Questions have been raised about Suella’s depth of involvement in humanitarian crimes. This has revealed that Suella has no idea about how the asylum application process actually works. It is, therefore, unlikely that she understands how the crimes have been perpetrated. What is abundantly clear, however, is that she doesn’t care about how the asylum application process works or how the crimes are perpetrated. She appears to care more about being perceived as tough on asylum seekers than professionally competent or even legally compliant with global conventions on humanitarian behavior.
Suella is, evidently, not the sharpest intellectual knife, in the Conservative armory, but she is certainly the most bloodthirsty. Effectively perjuring herself against, potential, claims of plausible denial, she has claimed that Britain is facing a migrant “invasion”. Apparently, this plays well with voters. Unfortunately, it means that all those soldiers, in the immigration system, currently perpetrating war crimes can say that they were only “following orders” when they are put on the stand. The orders are Suella’s, even though she doesn’t seem to know what they are.
The party reformers must decide if they are looking at a case of professional incompetence or a more worrying case of deliberate misconduct.
As the investigation broadens from humanitarian crime to criminal fraud, the distinction between the two classifications will become an existential threat to the Conservative Party.
The bottom one, that Britain currently occupies may soon become the bottom two. Within the new member, there are numerous individual nations, which will make it a whole new second division in the global order.
Start extending, but stop pretending ….
· Europe is now the greatest headline inflation, financial instability, and growth threat to the global economy.
· Villeroy accepts and apologizes on behalf of the ECB for triggering the next financial crisis and prays that the Fed will be in pivoting mode by then.
· The “Villeroy and the Bosch” model of Eurozone integration is broken, but the process is still on.
· The process of deeper Eurozone integration will be noisy, ugly, and potentially impossible to achieve in practice.
· De Guindos conflates financial instability with his economic performance outlook.
· The ECB’s latest financial stability report is a synopsis of an impending financial crisis.
(Source: the Author)
This author readily admits to, the cognitive bias of, looking for the next financial crisis to occur in the Eurozone.
The author has been encouraged, in large part, by what he sees as the concerted attempt of policymakers, and central bankers, to use a financial crisis to enable the next phase of Eurozone integration.
So far, after recently looking, more evidence for a crisis has been found.
Those Clever Dicks who think that they can dodge the inevitable crisis simply concentrate the author’s focus and attention.
The Clever Dicks think that they have found a clever wrinkle in the verbiage, and nonsense, in bond indentures, that will evade a financial crisis in the Eurozone banking sector. Bank bond covenants have call options attached which allow the banks to extend the maturity, of their liabilities, in the event of specific credit events, including ECB interest rate hikes.
The theory goes that the banks can, thus, evade crisis, and consolidation by calling their bonds and extending, their debt maturities, out to a time when the Eurozone is stable. This author would say that this is a fallacy, because if (ever) the Eurozone is going to be stable, again, long-term interest rates will be as high as, if not higher than, they are, currently, because such an environment will demand a positively sloped yield curve. The banks have, hence, just extended into a future high interest rate environment that is equivalent to the one today. This mistake will get present-valued into the current market price of the debt liabilities that are supposed to evade a crisis. These callable bonds will, thus, have to trade at a deep discount; the price of which will send a very negative signal about the credit of the issuer.
Furthermore, holders of these callable/extendable bank bonds will have to hedge.
The best hedge is a sale, so the holders should sell the said callable/extendable bonds, thereby, pricing in the result of the call/extend option exercise.
Those who do not sell will have to hedge with OTC credit default swaps and, then, hope that their counterparties survive a financial crisis in order to pay out on the swaps. Hence, the credit event will be priced negatively, today, and perceptions of bank credit risk will adjust, lower, to reflect this. Markets are efficient when they see a risk. The banks will have shown them the risk by calling/extending their bond liabilities.
The banks (and the Clever Dicks) have, therefore, just shot themselves in the foot by calling their bonds. Indeed, this author believes that any bank that calls/extends its liabilities will invite insolvency/bankruptcy by appearing to be weak.
Far from evading a financial crisis, the call features of bank bonds will trigger one; as the cognitive blind man said to the Clever Dick.