Topics I Want To Write More About

I have safely arrived in Moscow. Weather is nice.

Since my sister works during the week, I will have plenty of time to update MarketSkeptics.com. Below are a couple of the topics I want to write more about:

London's role in the financial crisis
I have come to view London as the center of the financial underworld and the root of all financial evil.

  • The off-balance-sheet SIVs of US banks were set up in London
  • Credit Derivative Product Companies (ie: "most idiotic financial instrument ever created") are all located in London
  • Mayfair's hedge-fund industry (80% of all European funds) is located in London.
  • London is by far the largest global centre for over-the-counter (OTC) transactions.
  • The majority of the world's gold trading/ leasing takes place through the London Bullion
  • Marketing Association
  • GLD's gold "supposedly" is stored in HSBC's London vaults
  • AIG's financial division is based in London
  • Etc...

British meltdown as a possible trigger for a dollar collapse

While I am certain the dollar will collapse in 2009, it is an open question what will be the event which triggers the chain reaction leading to this collapse. Here are a few of the events I am watching for evidence that the dollar's end is beginning:

  • Default on COMEX gold contracts
  • Soaring world food prices (which would lead China breaking dollar peg)
  • Failed auctions for long dated US treasuries
  • Collapse of the British pound
  • Etc...

The fate of Britain and the US are tied together. Both are deeply involved in the suppression of gold for example, which means both countries are heavily short gold. The collapse of the pound would create severe doubts about the dollar and lead to an exit from the currency.

Foreign currency checking accounts

Just like banks offer unallocated gold accounts, they also offer foreign currency checking accounts. Problem is that, just like for unallocated gold accounts, banks use derivatives (futures contracts) to hedge these foreign currency checking accounts, which means there is severe counter party risks to these accounts.

I want to write an entry exploring these foreign currency checking accounts, how they work, and what are the risks. (preview: stay away from them)

Other topics

Counter-party risks on futures contracts
The evils of guarantees
Government bailout efforts to date
Etc...


Finally I am behind on answering comments and emails. I will hopefully be able to catch up on both those accounts next week.

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7 Responses to Topics I Want To Write More About

  1. Anonymous says:

    Are you going to meet Eric Kraus from http://nikitskyfund.com/ in Moscow?
    Reading his postings at
    http://nikitskyfund.com/content/blogsection/4/37/
    I think you might have a lot in common or at least interesting discussions. I gather he has French nationality and cosmopolitan tastes.

  2. Mujahid says:

    Eric,
    You are the best trends analyzer around. I love your comments and "conclusions" to news. Big fan mate, pls keep up the gr8 work.

    Mujahid.

  3. EPC says:

    You write, "I have come to view London as the center of the financial underworld and the root of all financial evil."

    Interesting. Henry Makow, Ph.D., and Lyndon Larouche (along with his follower Webster G. Tarpley) reached that same conclusion. But their interest is more in society (Makow) or politics (Larouche), less in economics. By the way, along those same lines, the British documentary film "The Great Global Warming Swindle" (viewable online) traces "global warming" back to an effort by Margaret Thatcher to help Britain's nuclear industry.

    Keep up the good work!

  4. Anonymous says:

    Hello Eric,
    today was a bloomberg report about North American Farmers cutting the use of potash fertilizer. The story fits in the food-shortage or higher food prices theme.
    Have a good time in Moscow.
    Gunther

    Excerpt from Bloomberg, URL at the end:

    Potash Cuts Forecast After Sales Reach ‘Virtual Halt’
    [...]
    North American farmers are on pace to reduce fertilizer use to levels from the 1982-1983 growing season despite planting 37 million more acres of corn and soybeans, the company said.

    “This scenario is unprecedented in magnitude and unpredictable in consequences,” the company said. [...]
    Doyle said reduced fertilizer use is contributing to lower crop yields in Brazil and Argentina and may lead to a “grain crisis” as the world emerges from recession.

    “You could see dramatically higher grain prices going into this fall,” he said on a call with investors and analysts. [...]
    Total potash shipments this year will be about 6 million tons, or about 30 percent less than last year. [...]
    http://www.bloomberg.com/apps/news?pid=20602013&sid;=a4xi0VV2imqc&refer;=commodity_futures

  5. Anonymous says:

    Welcome to Russia, Eric!
    Hope you'll enjoy our capital :-)
    Moscow is a best place on Earth to deny global deflation idea, proposed by Mish - our businessmen en masse responded to demand collapse by simply increasing their prices! :-)
    Nobody wants to trash their dreams about getting a fortune, billion-size :-)

  6. Anonymous says:

    Eric,
    anything about the fact that London
    is a most important center for the
    freemasonry?

    RTridens

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