Everyone loves a good conspiracy theory debate. Regardless of whether you argue for it, or against, there are times when suddenly the ramifications for plausible truth are realized that overshadow the conspiracy. This is where the plot of truth can get far more sinister than the imagined conspiracy ever could.
Since we’re going into a long holiday weekend here in the U.S. I figured it would be instructive to indulge in a few hypothetical arguments while throwing in a little conspiracy theory to make one think about what just might seem at first blush as unthinkable, might actually be more in line with undeniably plausible as time plays out.
For it will only be “in time” that we’ll know more about what prompted certain actions going forward. And what they may mean to all of us down the road if played out in ways most others would never contemplate.
I make that point because when I first thought about the Swiss National Bank’s (SNB) declaration to rescind its commitment to the Euro peg, I wondered why when just mere days before they assured their commitment to it.
A decision of this scale and magnitude with all its disruption directly thrust upon its own business infrastructure (i.e. The immediate throwing of profits into the waste-heap via a new exchange rate.) there had to be a reason far more onerous to the SNB than previously imagined. And that’s when my first thoughts went to thinking that maybe the SNB – was set up.
I use the words “set up” intentionally and deliberately. Why? Let’s just say today’s Central Bank cartel seems to have more in common with characters and scenarios in an episode of the Sopranos™ than anything else. Too harsh? Fair point. So let’s remember another indecent not all that long ago for some perspective.
Back in early 2011 then head of the International Monetary Fund (IMF) Dominique Strauss-Kahn (DSK) suddenly was charged with rape, sexual abuse, and unlawful imprisonment. DSK at the time was considered the rising star in the world of European monetary policy and politics. So much so that he was also considered a credible challenge to Nicolas Sarkozy for the French presidency. In a blink of an eye all that was wiped from the ledgers. And none seemed more surprised than DSK himself. In retrospect – all with good reason.
With little fanfare (for it doesn’t make as delectable a story for the main stream media as the original accusation) DSK was cleared. The case against him? Dropped. His name, career, political aspirations? Gone. As we now know he was replaced with a far more “banker” friendly head Christine Lagarde. Conspiracy? Who knows. However let me put two illustrations of statements for context. One is from 2010 when DSK was in a position of banking power when crisis and words from a “banker” meant far more than just words.
From an article by Buffin Partners Inc. April 2010
“On the topic of improving the IMF’s role in crisis prevention, he proposed a new multilateral surveillance procedure to assess the systemic effects of a country’s policies so as to complement the fund’s country-level surveillance and the efforts of the G-20, with its mutual assessment Process. There is a widely-held view that the IMF needs to improve its understanding and oversight of how risk spreads through the global financial system, and in particular, to monitor the largest complex financial institutions engaged in international finance. Mr. Strauss-Kahn has identified a number of measures to improve the role of the IMF in any future system-wide financial crisis, including substantial increases in the speed, coverage and size of IMF lending, and the provision of short-term multi-country credit lines. The IMF is also engaged in research studies on how to make its flexible credit line more effective and how to collaborate with regional reserve pools such as the European Union.”
Here’s something to contrast it with in regards to today’s Lagarde in December of 2014:
“International Monetary Fund (IMF) Managing Director Christine Lagarde praised the measures that the European Central Bank (ECB) has taken to combat the crisis and urged governments of the need to implement fiscal policies in order to support growth. In a speech given on Tuesday at the Bocconi University in Italy, Lagarde defined the ECB’s steps in recent months as “bold” and insisted that the Eurozone central bank needed to “continue to play a crucial role in supporting demand”.
It would seem at first glance one wants to have their hand in both the baking as well as within the cookie jar, while the other will use their hands to praise the baker for the cookies contained within. Regardless of what they taste like.
Distinction without a difference? Sure. But the real distinction is the one who wanted to help control the “baking” process in less than 12 months after that statement was both politically, as well as publicly, wiped from the face of the Earth in disgrace. The other would go on to replace him in both areas of importance seemingly right at the “best of times.” Like I said “who knows.” But it makes for great conversation no?
So let’s move back into today with the SNB decision and the “set up” hypothesis. What would this move do that would reward the party responsible for the “set up”?
It may very well solve an issue that scared the implementer far more than the SNB. And that issue just might be where the “Full Monty” monetary bazooka that was about to be revealed, was in fact, going to be witnessed for all to see – a pee-shooter. In other words, possibly far more restrained in nature by what the German (imposed) side of the argument would allow. And nothing brings the fear of losing one’s “omnipotence” more than needing to actually show it and there’s no there – there. Again.
Maybe the monetary threat of words this time were directed at the only place where words still might matter (for that’s all he has left) i.e., Directly at the Swiss as to make them cower into monetary panic.
The ECB would clearly know what would happen to the SNB if it were to release monetary mayhem with a its own version of QE with the Swiss Franc peg. Yet, how could one resolve the dilemma of efficacy if that so-called bazooka wasn’t as grand as its been suggested?
What if you could convince another monetary body (the SNB) into an outright panic; relieving your own condition? Regardless if the assistance it allows one (the ECB) for more time is temporary or not. For the key is – additional time. Any amount of time is better than none. For the implications of “no more time” are far too consequential for the ECB as a whole.
So now you get the benefit of a falling Euro that makes your exports more competitive. You also add into the collective narrative or thought process that if the Swiss could “leave” the Euro behind, maybe it indeed wouldn’t be so bad for the Euro Zone if Greece leaves. All at the same time slaying that one adversary loathed by politicians and “bankers” alike: Shorts. As in those “evil currency speculators” as deemed by the body politic.
A great many Shorts in one fell swoop have been annihilated. The body count of just how many along with how wide-spread is still an ongoing process and might be not known for months.
Add onto all of this it allows the ECB to now mince or parse its words in a fashion unimaginable just a mere week ago. Now it allows the “storytelling” to begin once again in earnest. Themes like: “Well we were ready to unleash a QE program of significant magnitude. However, with the recent events such as those displayed by the SNB we’ve now sided on the side of a more “cautious” stance. And in that theme, we are announcing a modified significantly downsized version of QE and will keep our “powder dry” and ready to deploy if and when we see the circumstances arise. For after all…what is one to do in such a circumstance? Blah, blah, blah…” Get the picture?
All conjecture, innuendo, skullduggery, conspiracy laden and more I’ll admit. However, it’s thought experiments like this that helps one garner or fortify their ability to “see around corners” for possible warnings when everyone is driving along with blinders paying no attention.
As plausible or not as the above may appear. What all this monetary malfeasance has wrought in one form or another is the fact (not conjecture et al) outside forces and power players looking to enhance their own positions in the monetary world are going to strike. And strike at the most inopportune times for those that believe “they” are in control. i.e. A real New World Order evolving and circumventing the current. e.g., The BRICS and PIIGS led by China and Russia.
Currently Russia and China have been a little more than “friendly” to each other. They have opened up trade along with establishing non-dollar backed agreements. What Russia has also done in the process of the current oil collapse is demonstrated it will (not just words but with action) allow Europe to freeze.
What does that demonstrate? Well it shows unequivocally Russia is willing to do things that might hurt its bottom line in ways the West would have a heart attack just contemplating. Never mind acting out.
Do you think Russia did that during a 50% drop in oil revenue because it was a smart “business” decision? Or, was it to show in great detail to anyone that its willing to demonstrate for all to observe what a true Machiavelli inspired move looks like?
If you’ve ever been in a real stakes game of power that move was not lost upon you. And, for any sane thinking person – it should scare the crap out of you. That move was a deliberate “show of force” in more ways than one. Yet, from what I’ve read in our own press, the very people who should know the intent of it – seemed oblivious too it.
You now have Russia signalling to Greece if were to leave the Euro Zone it would in-turn lift agricultural importing restrictions. And what exchange of currency you think will resolve itself to play out there? Drachma vs Dollars? Euros? Of course not, Obviously Rubles but how about the Chinese Yuan also? Why not? Euro Zone one down – 18 more to go.
If you do have Greece exit the Euro Zone how soon before Spain, Italy, Portugal, or who knows who else will be first to the line. Once one makes the move – the next comes sooner and faster. Just look to the recent comments from the Bank of Japan only days later after the SNB for a hint.
Dominoes in these types of circumstances fall quick; especially if they are fueled by people in desperate circumstances (such as countries in fiscal ruin). And we forget all too fast how one triggering event changes everything in a nano second.
Take the once previous unthinkable reality such as when Roger Bannister broke the 4 minute mile barrier. Before he did it, it was believed physically impossible. After? Within a year you needed to keep a list. That’s how fast the “unthinkable” can turn into the probable – forget possible.
Add too this the great rhetorical speeches that will befall on any country in need from escaping the U.S. Federal Reserve’s influence (or heavy hand) of monetary policy. e.g., “Why should your economies falter and your people suffer so that the U.S. can supply its population with free goods, free money, free healthcare while your economies suffer at the hand of their Dollar policy. Join us and forget the U.S. what has NATO done for you lately? Poland, I ask you…still feel the U.S. has your back? How about you others? How much more pain will your economies suffer at the cost to save the Euro/American empire? We left and things are getting better by the day with others like yourself joining we become even more self determinant. Is China, or Russia, or India, or ____________(fill in the blank) not a real economy? What say you?”
As fanciful or improbable as that may sound how about the other quite real possibility where China states something along the lines of: And we’ll buy all your debt. All you have to do is set up trade using our currency rather than theirs.
In that moment everything changes, and that moment is far closer to reality than the Federal reserve making the case that it can unwind its balance sheet without difficulties. Think about it.
Many will scoff and say, “Sure, but the U.S. has the military might which also helps protect that dollar status in the world. And currently there is no other military capable of dethroning the U.S. as a superpower.
Yes. that’s true. However, China is an economic superpower without a superpower military. Russia has a superpower equivalent force with rich natural resources. And they basically just aligned themselves at the hip with recent trade deals and more as to exclude the dollar. Do you think this was all just for a better pricing on an import or export?
As I said earlier nothing sets a discussion on fire than waving the conspiracy banner. Although I’m not what one would call a “conspiracy theorist” what I am quite fond of that’s helped me throughout my career is looking at situations where everyone else has deemed them as “can only mean this” and ponder why can’t it mean this? Or that?
For as many times as I’ve been told “this is the only way” more often than not: what was never considered as plausible turned out to be exactly what took place.
Some call it being a contrarian, some the Devil’s advocate. Either way you slice it can help open up some unforeseen possibilities that others either miss outright or worse – turn a blind eye in their surety that “It just couldn’t happen.”
As I stated it’s an invaluable way to look at issues where even if all they are, are just implausible or improbable realities, at the very least; one has had the mental exercise to help bolster those reasons of why or why not. Rather than blindly race off nonchalant only to find potholes, construction barriers, or worse – a bridge out sign with no road left for stopping.
© 2015 Mark St.Cyr