Tuesday, June 22, 2010

Money Wars & Scottish Independence

The Euro is fast losing prestige.

Only a couple of months ago it was starting to rival the dollar as a reserve currency. However Greece and now Spain have shown how difficult it is to have monetary union without political union. Is the whole experiment falling apart? According to the Telegraph things are getting desperado:

Germany and France examine 'two-tier' euro

You know those rating agencies? Fitch, S&P and Moody´s are the principle ones. These are the institutions which tell investors if investments are of good quality or not. They rate businesses, banks and countries and have recently downgraded Spain and some Spanish banks.

The problem with all this is that they haven't downgraded the US and the UK. The debt situation in both countries is as bad as Spain if not worse. So, why not?

The answer is that they are no longer independent rating agencies. These are the same agencies that put AAA ratings to sub-prime mortgages and other investments which has brought us to the point of drowning under fraud and debt.

Europe has no rating agencies of such callibre. These agencies, just like the president, then take their orders from the big US merchant banks: Goldman Sachs, JP Morgan, Morgan Stanley etc. These guys are desperately trying to hold up the value of the dollar so that they can print more of it. So much so that they need wars to steal resources so that they can pay interest on existing loans from China and the Saudis for example. If the ratings agencies downgraded the US the US would pay higher interest and would be immediately bankrupt causing a global financial meltdown.

So, the ratings agencies have a political master. Another way to encourage people to buy dollars is by attacking the Euro. The drip drip drip of bad news about European banks and nations from ratings agencies has seen investors move their Euros into Dollars.

No-one should be in any doubt that the big powers in the world are conducting currency wars. Indeed, you can now do a course in 'economic warfare' in Paris. The Euro has began to bounce back a little given that investors have taken comfort from the actions taken by the EU a ECB (European Central Bank). I don´t think that confidence will last long.

So, which currencies to hold? Well, the US can bomb and plunder as many countries as it wants but the dollar is a total basket case. Britain will soon find it difficult to stay in the G20. The truth is that in the short term some currencies will perform better than others. If a country has natural resources with which to pay debts then they will be less likely to print more money and devalue. Ultimately though there are no safe paper currencies. Countries are devaluing so they can export and the race is to the bottom. Who loses? The man and woman in the street.

So, when the currencies are going down, bonds are worthless, derivatives imploding like last time and countries going bankrupt and conducting economic (for now) warfare, how do you keep your wealth?

Well, as banks suck money out of the economy to pay themselves bonuses and the govenments take more in taxes to pay for the bail-outs to the banks the ordinary punter will be able to spend a lot less. So, for a while things will be cheaper. So spend it on things you can use over the next few years while things are cheap and before inflation hits.

That aside many are seeking refuge in gold and silver. It´s difficult to know how to buy it but I would recommend www.goldmoney.com

That aside if you want to invest then some commodities do well in times of geo-political tension like oil and sugar.

Most of all though, I would recommend Scottish independence. It´s that or rearranging the deck chairs on the Lusitania. Oil in Scottish water has bankrolled the British state for nearly 40 years. It can´t save Britain now but it can save Scotland.

Without the label of Britain, England would tone down her ambitions and live within her means. Scotland would become relatively rich which would be a nice change. It makes sense all round as Britain can no longer sustain her role of imperial poodle. That´s all the union means and all it ever did mean. It´s over. Britain is a goner. Remember cabinet government? Gone. Remember parliamentary parties and real political conferences? Gone. Britain has the same name but we are no longer citizens, merely bank-slaves and that is going to get a whole lot worse.

Independence or bank-serfdom. That´s the only real electoral choice you have.


voiceofourown said...

Well argued and yes we are reaching a critical point Alex, but Scotland the Feart will do as it has always done.
By the way, how would you communicate the necessity of independence to, say, some of the characters in 'The Scheme'?
That's the challenge we face in Glasgow and west central Scotland in general.

Ross Taylor said...

The average English person over 30 treats Scotland as a laughing stock benefit junkie.

The average English person under 30 doesn't know Scotland exists.

Alex Porter said...

Yes Ross, that´s all the thanks we get and it also shows up the idea of political union to be a fraud.

The problem for the average English person though is that when there´s no oil underwriting all the debt that now subsidises London and the budgets, the average English person on both sides of 30 will be emigrating.

tapestry said...

Fine, Alex, yet US Treasuries are rising, inflation is falling, and interest rates are falling or becalmed.