T-TIP: Salvation or trash-tip?

President Obama weighed into the Brexit debate on his recent visit to the UK, saying that if Britain left the EU, she would be at the back of the queue when it comes to a free trade agreement.

If this was intended to scare voters into voting Remain, the tactic seems to have failed, with the subsequent swing in the polls favouring Brexit. However, this intervention has drawn widespread attention to the current trade negotiations between the US and the EU, known as T-TIP. Continue reading T-TIP: Salvation or trash-tip?

Taking the petro out of the dollar

Saudi Arabia has been in the news recently for several interconnected reasons. Underlying it all is a spendthrift country that is rapidly becoming insolvent.

While the House of Saud remains strongly resistant to change, a mixture of reality and power-play is likely to dominate domestic politics in the coming years, following the ascendency of King Salman to the Saudi throne. This has important implications for the dollar, given its historic role in the region. Continue reading Taking the petro out of the dollar

The ECB and shadow banking

Markets have fully adjusted to a financial world which reflects the leadership and management of money by central banks, and are increasingly frightened of any prospect of their control failing.

Every time the system stumbles, the response has been for central banks to force greater control and regulation upon the monetary system to the detriment of free markets. It is the financial version of the Road to Serfdom. Central banks have become ill-equipped to allow markets to price risk, and in the case of the ECB, it is downright hostile to market-determined prices. Continue reading The ECB and shadow banking

A tale of two currencies

There is a widespread and growing feeling that financial markets are slipping towards another crisis of some sort.

In this article I argue that we are in the eye of a financial storm, that it will blow again from the direction of the advanced economies, and that this time it will uproot the purchasing power of major currencies.

The problems we face have been created by the major central banks. I shall assume, for the purpose of this article, that a second financial and monetary crisis will not have its origin in the collapse of China’s credit bubble, nor that Japan’s situation destabilises. These are additional risks, the first of which in particular is widely expected, but are subject to the control of a command economy. They obscure problems closer to home. Instead I shall concentrate on two old-school economies, that of the US and the Eurozone, where I believe the real dangers lie. Continue reading A tale of two currencies