G20 Party In London

Posted 01 Apr 2009

Keeping yourself, your family and your assets safe during a credit contraction can be a particularly daunting task but I am sure you are up for it.  

Gold is the currency.  Irredeemable tickets, like the FRN$, Euro, Pound and Yen merely function like the common stock of nations.  Like a falling share price of a corporation; when those irredeemable tickets, either digital or paper, lose purchasing power it does not bode well for the nation.


Charles I in 1649 seemed to lose his head when the English partied in their revolution.

 Then the scoundrel sociopath John Law was instrumental in starting a massive inflationary credit expansion that was followed predictably by a deflationary credit contraction that decimated the French economy.

The working class decided to protect themselves by using gold and silver in their ordinary daily transactions.  John Law got the insane idea to institute the death penalty for those using the precious metals.  The People responded by rounding up the criminal gangs costumed in government regalia, like King Louis XIV, in the public squares and giving them a free ride on the guillotine.

This is an effective way of dealing with dangerous rabid animals which cannot be rehabilitated.  But I prefer the American method which involves the due process of law and not the blind rage of a mob.  Under Section 19 of the Coinage Act of 1792 when costumed governmental officials engage in counterfeiting they 'shall suffer death'.


The G-20 will be holding a party in London on 2 April 2009 at the Bank of England.  Flash mobs are extremely popular in England and it appears everyone has been invited to the G-20 party.

Well, everyone except the red-headed step child Ireland.  Perhaps it is because Ireland's credit rating was cut from AAA to AA+ by the S&P and they can no longer keep up.  The G20 countries attending are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the United States.

Because of the dire straits England is in and with the Bank of England engaging in quantitative easing the British Pound has lost over 30% of its value in the last year.

 Perhaps that is why, as the BBC reports, "six police forces are part of the £7.5m security plan' and some 84,000 police man-hours have been expended.  "All police leave has been cancelled in London for Wednesday and Thursday."

Some police will probably be in uniform while others will be like the undercover agent provocateurs at one of Canada's parties.  But what happens when the brutalizing class no longer accepts the irredeemable tickets for payment?  Then even the police get to party.


The Argentinian Peso has been declining, like usual, so the Argentineans have been partying, like usual.  Last week I decided to talk a short walk around Buenos Aires.  Nothing gets the blood of a journalist flowing like wandering unexpectedly into a giant protest of about 10,000.

That picture was taken with my iPhone on Nuevo de Julio which is the largest avenue in the world.  While the full street is not shown it is extremely wide with many lanes of traffic.  

It seems everyone is partying these days; Greece, China, Iceland, and even the United States is having tea parties.  

After all, in the United States partying is protected under the First Amendment of the Constitution.  ”Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof, or abridging the freedom of speech, or of the press; or of the right of people peaceably to assemble, and to petition the Government for the redress of grievances.”

How fun!


There is suitable dress for bankers when attending the party.  For those who are in London please encourage all your banker associates to be extremely helpful and bring their own tie.

Bloomberg reported on the many websites that purport to provide advice for party etiquette while in London.  One website gave this advice:  "How to keep warm during the credit crunch .... BURN A BANKER!"

If only Wall Street and Washington were viewed as sociopaths infected with the financial insanity virus who are intentionally exacerbating the greater depression then there would be a lot of rounding up to do.


Investors are usually worried when there are parties like these.  Their property, plant and equipment may get damaged.  As a result, they seek to allocate capital to safer and more liquid assets.

To date capital has been moving into the FRN$ resulting in Treasury yields being pushed near 0%.  Despite the 'safety' of government paper; auctions are failing in Britain and Germany.  China and Russia are getting increasingly anxious about the FRN$ and its role as the world's reserve currency will surely be a hot topic at the party in London.

 Eventually the Treasury bubble will burst as capital continues moving into physical gold and silver; not paper apparitions like the problematic ETFs GLD and SLV.


The system, financial, economic, political and social does no collapse but evaporate.  The costumed criminal gangs are being increasingly viewed with less moral authority.  The derivative illusion is rapidly dissipating.  

Capital is fleeing into safer more liquid assets and global trade is collapsing.  Political risk is increasing and parties break out everywhere.  But do not worry the G-20 has everything under control and everything will be fine.  April fools!

All the G-20 can do is attempt to pontificate a unified statement they will all give lip service to but in action be completely fractionated.  The scope of The Great Credit Contraction is simply too massive.

 As Jim Sinclair said, "A very good, simple and clear representation of the problem lacking a practical solution."

Disclosures:  Long real gold and silver with no position in Treasury bills, GLD, SLV, Irish debt and no party invitations.