Money is on the move. Like an angry Mongol horde it has saddled up and is looking for someone to have a word with.
You see, WE think of Mongol hordes as the archetypal mob of marauding thugs whose main hobbies were raping and pillaging. But did they see themselves that way? I think they probably thought of themselves as a rather nice bunch of highly skilled horsemen who were visiting on business.
And so it is with our modern Mongol horde, the Financial class.
Yesterday they felt stung by German actions on Naked shorting. Today where they are headed and with what intent is getting clearer.
According to the IMF very large amounts of cash – around €56 Billion – have, for the last week, been flowing OUT of Greece and the other ‘periphery’ countries – Spain and Portugal, into the self described ‘core’ of Europe, Germany and France. Then later, it was reported at Zerohedge and other places that the flow had not stopped there. It was and still is, this morning flowing OUT from German and French banks into Swiss ones. €9.8 Billion out of German banks into Swiss ones just Yesterday morning.
Now the reasons for fleeing Greece are clear. The reason for money to get out of Spain and Portugal is that the clearer it gets that there are problems anywhere in Europe, the more obvious it is that European wide growth will be lower than the fatuous estimates. Which, in turn, means neither Spain nor Portugal will grow their way out of debt.
And this situation is far more dangerous than the words convey. Paying off debts requires cuts to spending and growth together, to bring in net revenues/profits. But the balance between these two things is delicate and if it goes wrong it will kill not cure. And that is the worry this morning and why the cash is flowing away from the debtor nations. As growth slows Europe-wide, neither Spain nor Portugal will grow anywhere near fast enough. They will have to cut more and that will decrease their growth further. They will be sucked into a downward debt spiral at the bottom of which is either a deep and long depression or social upheaval.
So there is no real mystery there. But why is the money now flowing out of Germany and France? A report that went viral in the City by RBC Capital Markets yesterday, claimed that German Banks ‘had failed to come clean’ about their real exposure to Greek Debt. This may be particularly true of the Landesbanks. It is almost certainly true of Commerzbank who are, I suspect, toast. The French banks don’t need to come clean, the look on Sarkozy’s face does it for them.
All this is fine and dandy. What I want to say brings me back to the Mongol Horde – you knew I’d get there in the end.
All this financial talk about cash flowing here and there is all so bloodless. It is precisely the bloodless, faceless way the Financial class and their reporters think. I don’t like it. It distorts the world. But it does tell us about the Financial class.
I want to ask any Greek readers and German and French readers and there are a bunch who come to this blog regularly – hello- did YOU move YOUR money from your Greek or German or French Bank? No? I didn’t think so. You see my point is that these flows, which cripple nations and blackmail them into taking one course of action rather than another, are not our doing. Not an expression of the people’s interests – AT ALL. They are the doing of a hoard who are camped on our land, but who care nothing for us and our well being.
Germany took a course of action and money flowed out. But it wasn’t ordinary Germans voting with their wallets. It wasn’t even German Pension funds trying to protect German people’s pensions.
The money pouring away from Greece and Greek banks is not Greek postmen or farmers. This is wealthy Greeks gutting Greece’s chances of helping itself and looking to screw whatever they can from whoever they can before they leave. It is rape and pillage financial style. Less blood. more suits, better hair cuts – same effect. In Germany it’s not hordes of German citizens trying to tell their government something. This is the very rich and their business interests riding round and round the city walls.
Like the Mongol horde they are here among us ‘on business’. They see themselves as misunderstood and unfairly disliked. They have needs too, you know! But what the massive movement of funds from bank to bank, country to country is doing is raping and pillaging. Every country is in fear of their attentions.
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