They're Changing Guard at Buckingham Palace

I initially wanted to get my message across over Gary Lineker and his crass treatment by the ‘truly independent and impartial British Brain-Washing Corporation. I therefore thought about ‘Step Back’ by the Beatles but I really needed a much broader title to cover a myriad of more global events so I opted for ‘They’re Changing Guard at Buckingham Palace’. I appreciate that this song hardly fulfils my normal preference for Popular Music as it is a less well known number by Max Bygraves who is probably better remembered for old classics like ‘Underneath the Arches’, ‘Wonderful, Wonderful Copenhagen’ and ‘Tulips from Amsterdam’. Anyway, that’s enough for the time being, of my attempt at a mini tour of Euroland.

My regular readers will also be pleased to hear that this article is not about Ginger & Whinger, better known as Harry and Meghan or, as Pears Morgan so eloquently makes reference, ‘That Little Rat-Bag’, who perpetually craves privacy but continues to urinate on his Royal Chips. I have previously registered my comments and opinions about Mr & Mrs Markle/Simpson.  I will therefore leave it to South Park to have the final word as they have warmed to the task of discrediting the ‘House of Montecito’ with a vengeance. I will merely add as a parting shot to both of them; Step Back and Shut Up; and please stay away from the Coronation allowing those who really want to enjoy a spectacle that few will have ever witnessed before.

There is of course a strong positive correlation between Prick Harry and the British Brain-Washing Corporation; that is both seem to be demanding an apology without any foundation for an apology. I would have more concern about the whatsapp leaks from Isabel Oakeshott who was given privileged information when helping the allegedly disgraced Health Secretary to write his memoirs. Gary Lineker, who incidentally happens to be a freelance participator, was merely expressing an opinion on migrants which was perhaps a tad clumsy but you also get the impression that his comments on Twitter for the world to see have been blown out of all proportion and that the tail, aka the Government, is wagging the dog. In my opinion, it’s not GL who needs to issue an apology because previously there are a number of examples where the BBC has not acted on other BBC employee’s opinions. This current intervention is a clear example of damned if they do get involved but let me sight two examples of damned if they don’t get involved; initially the Chair of the BBC where there was a clear breach and, secondly, the Qatari World Cup where the Government remained on the fence even though there was a clear opportunity to highlight the issues of Human Rights in Qatar. However, aside from the BBC eating humble pie, the odds on a peerage for Gazzer will now have lengthened considerably and there are clearly others that are well to the fore in the queue, not that I am suggesting nepotism is at play; and dare I question yet again the extraordinary qualities of Gavin Wiiliamson that justified his elevation to a peerage.

However, a key reason for my reference to ‘Changing the Guard’ is very much directed at the latest news from the US on US Bank Bankruptcies where blame for what I consider could be a potential catalogue of banking failures lays firmly at the feet of Central Bank Monetary Policy, ever since the Financial Crisis of 2008. One has to ask the question have Central Bankers, including the Bank of England and the ECB, ultimately failed in their overall management of Monetary Policy as they were far to slow in recognizing the permanent rather than transient nature of inflationary pressures and it begs the question; are they now any longer fit for purpose? However, ‘Changing the Guard’ also goes deeper than Central Bankers when you examine the recent close alliance of Tehran and Riyadh brokered of course by the Chinese Government. This new friendly alliance must be a wake-up call to the US Administration as it has also been given support from Yemen and is raising political pressures for President Biden, not least from the Israeli Prime Minister, Benjamin Netanyahu, who is clearly neither happy with these latest developments nor, indeed, the US Administration’s lack of a response.

It is of course an open secret that the US economy has for an extended period been driven by a Printing Press mentality with total debt climbing above $30 trillion. In fairness to the Economist Magazine, a lead article around the turn of the millennium made reference to the US Dollar as ‘The American Peso’. Twenty plus years later it does look like the US Banking Sector could indeed be built on quicksand. The men in Grey Suits and Janet Yellen are clearly keen to point out that the demise of Silicon Valley Bank Financial is an exceptional case bearing in mind that  90% of its deposits were uninsured by the FDIC and that the industry average for Bank Deposits insurance is generally around 52%. However, the failure of SVB, the first major bank failure since 2008, has also come at a time when US Banks are sitting on unrealized bond losses of $620billion. Many of these bond losses have of course been driven by tardy US Federal Reserve’s policy, given their initial failure to recognize inflationary pressures as more permanent than transient; and to have 52% of investor deposits guaranteed by FDIC Insurance has to ring alarm bells, being supported by an alleged Printing Press mentality. The problems for the Federal Reserve are of course driven by the need to maintain their foot on the economic growth brake at a time when job creation justifies further monetary tightening. Throw into the pot President Biden’s Inflation Reduction Act (IRA) which is a rather unfortunate acronym. Further increases in short rates will therefore put further downward pressure on bond prices and therefore potentially increase the level of unrealized bond losses which could lead to further Bank Bankruptcies.

It is also fair to say that relations between the US and China are at best frayed and any opportunity to replace the US Dollar as the global reserve currency of choice will therefore be seized on with relish but we must also not lose sight of the fact that the burgeoning US debt issue has been building since the Financial Crisis of 2008 and it would therefore be unfair to load all of this blame onto the current Democratic Administration. However, as we are all aware, life is not fair and when you dance with the devil which is always in the detail, the consequences of your past actions will eventually resurface. Sadly, our Governors in the developed world appear to have turned basic economics on its head, so much so it  now appears very difficult to predict when this contempt for sound economic thinking will surface. However, rest assured that SVB Financial may just be the tip of the iceberg.

This development at SVB is of course diverting attention away from the good work of the UK Government in its determination to sort out the Northern Island situation, the associated love in with the European Commission and the desire with some French assistance to solve the illegal migrant crisis, which brings me back full circle to Mr Lineker and MOTD.

Of course we all need to be careful what we wish for but the debt time bomb has been building in the US over a protracted period and to use a simple analogy bubbles don’t deflate they simply burst. We just still need to be very wary of Bond Finger and look to embracing Gold Finger as I would doubt that if there is any further contagion it will not be confined to the US but will extend to other markets. The US can be very unselfish when it comes down to sharing woes of its own making.