Currency Wars – End Game

The story is like this. Source : Wikipedia

There was once an Ant and a Grasshopper.
The Ant worked in Summer while the Grasshopper played. When Winter came, the Grasshopper ran out of food and the Ant makes a lot of money selling his food to the Grasshopper which the Grasshopper bought on credit.

The Grasshopper had helped the Ant in the past, building his home and giving him aid. Now the Ant, who has built a better home for himself, does not want to lose it by helping the Grasshopper who is running low on credit.

Currency Wars

The currency wars have started and the central bankers are just concerned with bailing out themselves.

The BRICs and the G3 are each concerned with saving themselves first, while the IMF and World Bank run around trying to put out fires with little watering cans because the word these days is Trillions and not Billions.

It is difficult to visualise the scale of what is happening globally, I mean it is hard enough to manage our own finances.  Yet the story is falling into place.

Going through the archives, I have written quite a bit on the subject of currency wars and tipping points in the past month.

Me Lemming, You Lemming, We All Lemmings

Liars Poker – Devaluing Our Way To Prosperity, Hosted By Bernanke

Liquidity – The Game Of Money and How To Win Currency Wars

Liquidity and the Game of Money – Uncertainty & Unease ? Understood

Then I come across this excellent presentation by Joseph Stiglitz, Nobel laureate.  I pick the slide below for the Ant & Grasshopper story.

Source http://www.businessinsider.com/joe-stiglitz-on-mercantilism-2012-4

Yes. The system is heading towards collapse in quite a downward spiral, clear enough for an economic ignoramus like myself to see.

Soros probably has his own evil intentions for saying the below too last week in the Financial Times.

Far from abating, the euro crisis has recently taken a turn for the worse. The European Central Bank relieved an incipient credit crunch through its longer-term refinancing operations. The resulting rally in financial markets hid an underlying deterioration; but that is unlikely to last much longer.

The fundamental problems have not been resolved; indeed, the gap between creditor and debtor countries continues to widen. The crisis has entered what may be a less volatile but more lethal phase.

Read more: http://articles.businessinsider.com/2012-04-11/markets/31323906_1_european-central-bank-george-soros-read-soros#ixzz1sGyNmsYu

The Ants React

9-Apr-12 DJFXTrader Bank of Russia Leaves Interest Rates Hold
10-Apr-12 DJFXTrader Brazil Mantega : Will continue exchnage rate policy to boost competitiveness; will take measures so Real doesn’t strengthen
12-Apr-12 DJFXTrader Bank Of Russia: Ctrl Bk Buying $100M-$200M In Daily Interventions
13-Apr-12 TIME Brazil and the US aren’t taking each other too seriously — and that’s a mistake
15-Apr-12 DJFXTrader #Colombia Central Bank Chief: ‘We Want A Weaker Peso’ [Dow Jones]
17-Apr-12 Reuters RBI cuts repo rate by 50 bp to 8%; Keeps banks’ cash reserve ratio unchanged at 4.75%

Grasshopper : Keynesian Economics has run its course.

Never before in history has intervention been so prolonged and protracted, so pronounced and colossal. And it is still on going !

And the truth is that, we all know the Great Depression ended with the advent of World War II.