Chasing the Wild Goose

Occurrences of rich irony are to be savored like fine wine.  Each sip makes one feel smarter, younger, and wealthier too.  So, too, they should not be wasted…lest they turn to vinegar.

Today we pause a moment for appreciation.  A bottle of rich irony was served up this week in a giant glass goblet.  We must drink it in before it sours.

Do-gooders galore are gathered in Davos, Switzerland, to partake in the World Economic Forum.  Moreover, they are gathered for grave and weighty reasons.  According to the programme, they are “committed to improving the state of the world.”

This, in itself, warrants a snicker.  For the vanity and conceit of it all if nothing else.  But it gets much, much better…

“Billionaires and world leaders from across the globe are flying en masse to the annual World Economic Forum in Davos, Switzerland – and they insist on traveling in style,” reports CNN Money.  “Roughly 1,700 private flights are expected over the course of the week, which is twice as normal.”  Once there, and after spending $40,000 to get in the door, they will contemplate climate warming and poverty…among other world ails.

Swiss National Bank Surprise

Here at the Economic Prism we make no judgment on how people spend their money.  Good for you if you charter private jets and drop $40,000 to fraternize in an Alpine village.  Pretending to be deeply concerned about global warming and human poverty, after doing so, is our objection.

However, it isn’t really an objection to take too seriously.  We are merely holding it up as ridicule for the whole event…like we did the salvation calls they had a few years back.  We do so to properly render the spectacle for the 100 percent nonsense it is.

Coincidentally, the Swiss National Bank gave the world leaders a surprise late last week.  After repeatedly promising to hold the Swiss franc peg with the euro, they suddenly demurred.  The franc rapidly appreciated 41 percent against the euro.  Obviously, this sent financial markets and brokers into a massive panic.

“London-based IG said it will take a hit of up to £30million due to the ‘unprecedented surge’ in the value of the Swiss franc last week,” reported This is Money.  “But in New York, foreign exchange broker FXCM’s share price fell in early trading as much as 88 per cent to just $1.50 after it disclosed the punitive terms of a bailout by Leucadia National.”

“Currency speculators, particularly large hedge funds with short positions in the Swiss franc, are staring massive losses in the face and Michael Platt’s BlueCrest Capital Management was reported to have closed a trading book after sustaining losses.  Deutsche Bank, Barclays and Citigroup have endured a total of around $400million (£264million) in losses.”

Good thing for the Swiss National Bank…they severed their peg just in time.  For yesterday the European Central Bank announced it would be creating 60 billion euros a month from nothing and spending it on European sovereign debt.  Naturally, financial markets roared to life on the announcement.  The DOW jumped 259 points.  Still, we remain skeptical of these sorts of shenanigans.

Chasing the Wild Goose

Of greater consequence than the investment banking losses is the message the Swiss National Bank sent with its actions.  In effect, they’re telling the world they are no longer on board with the global money charade.  Other central banks may now pause to reconsider if they want to continue their part in keeping the money creation farce alive too.

This scheme, no doubt, is precisely what the world improvers in Davos have a vested interest in continuing.  It allows them to balloon their wealth with inflating asset prices.  It also allows their governments to borrow lots of money and spend it ways their interests dictate.

Ultimately, though, their efforts to control financial markets and the world will be in vain.  What’s more, as the Swiss National Bank clearly knows, it’ll make a great big mess of things.  Improving the world economy via political means – through force – never quite works out how the planners intend.

New complexities arise to make a mockery out of their efforts.  They are chasing the wild goose.  To illustrate our point, what follows is a partial list of the World Economic Forum’s rolling agenda

…Can we really measure the impact of research? …The ECB’s bond-purchase dilemma …Why is trust in NGOs falling? …Obama’s State of the Union, BOJ inflation and quantitative easing …Should cash be abolished? …Why more demand is what the world needs most …Can Davos solve the world’s problems? …QE and central bank solvency …What is the economic cost of climate change? …Is the world zero-sum or win-win? …The right choices for policymakers in 2015 …The evolution of Davos? …What effect will a rise in US rates have? …4 breakthroughs for a world without poverty …How will China’s next steps affect Brazil? …2015: Towards utopia or a nightmare? …And on and on, and so forth and so forth.

Surely the do-gooders would have done more to improve the state of the world if they’d stayed home.  There, at least, they could sweep their porch, plant some flowers, and tip the paper boy.

Sincerely,

MN Gordon
for Economic Prism

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