Thursday, September 3, 2009

The Treasury Secretary in London

The plotting continues.

On Friday, Secretary Geithner will arrive in London for the G-20 Finance Ministers and Central Bank Governors Meeting.

In the afternoon, the Secretary will participate in bilateral meetings with:

Chancellor of the Exchequer Alistair Darling

Mario Draghi, Chairman of the Financial Stability Board and Governor of the Bank of Italy

Russian Finance Minister Alexei Kudrin

Zhou Xiaochuan, Governor of the People's Bank of China.

Geithner will also attend a meeting of the BRIC Finance Ministers.

Of these meetings, Russia, China and the BRIC nations have called for a move away from the dollar as the international reserve currency. The UK is, of course, a U.S, lap dog, And Mario Daghi is head of the powerful Financial Stability Board. He was Managing Director of Goldman Sachs and Vice Chairman of Goldman Sachs International, and a member of the Goldman's "Commitments Committee." He is also a trustee of the Brookings Institute where former Treasury Secretary and former Goldman CEO Henry Paulson uses office space while he writes his memoirs. Nuff said.

On the Chinese front, do you think it was just coincidence that China announced plans to buy $50 billion in IMF SDR denominated notes, and that China also just announced that it will allow derivative defaults by state owned enterprises, the same week as the G-20 meeting?

This is high stakes poker. I can't believe Geithner is playing this hand alone against the Chinese. Who's running Geithner? Larry Summers, Rahm Emnauel or Goldman Sachs?

Geithner has no good cards to play in this game. The dollar is history as a reserve currency. The only question remains is whether it can be removed smoothly, or is a collapse in the cards.

In the evening, Geithner will attend the G-20 working dinner at Guildhall.

The cover story coming out of this meeting will be about future global standardized financial regulation. Emphasis on future. The real story is the future of the dollar.


  1. Dumb question: Can you elaborate a little on the derivatives announcement? I'm having trouble connecting it with the other things going on.

    I mean, my friend is having trouble seeing the big picture, and he wanted me to ask you about it.

  2. The derivatives announcement is the announcement that the gvt of China is ging to allow its state owned operations to default on derivative trades that went against them. This could mean billion upon billions in losses for counterparties like Goldman and JPMorgan.

    Bottom line the Chinese made a market bet, lost and now are not going to ay up.

  3. We saw how well Geithner and the G's responded to early signs of the financial meltdown:

    I expect them to sit on their hands for the Chinese intransigence. But Goldman? They'll make the Chinamen pay.

  4. Everybody's rewriting the rules. It looks like fraud, i.e. not delivering what was sold:

  5. "The UK is, of course, a U.S, lap dog"

    Thanks for that. Very nice.

  6. Wenzel,

    The Brookings Institution was until recently always described as a "non-partisan" think tank, though it is now sometimes credited as "liberal." I have yet to read something from one of its scholars, in the 6 or 7 years I've been aware of it, that did not have an either explicit or implicit socialist bias to it (I'm talking 'extreme liberalism' here, not 'moderate liberalism'). Reading Rothbard's AGD only confirmed my suspicions further when he quoted the founder of the institution on his political and economic beliefs during the Great Depression and the government's response to it. Wow.

    As for China's defaulting, they are saying they'll allow, but that doesn't make it a fait accompli that they necessarily will.

    Either way, I suppose they learned this trick from the American banks themselves? Weren't they the ones making bad bets and then forcing other people to pay for them?

    Ohhhhh, gotcha JP Morgan and Goldman, Sachs!