Foreign powers are also battening the hatches

Jesse passes on a report from China Daily about China's decision to diversify out of dollar-denominated assets, and he notes that Japan and India are doing the same.

Prepare for a storm; they are.

‘Late late yestreen I saw the new moone,
Wi the auld moone in hir arme,
And I feir, I feir, my deir master,
That we will cum to harme.’

O our Scots nables wer richt laith
To weet their cork-heild schoone;
Bot lang owre a’ the play wer playd,
Their hats they swam aboone.

("Sir Patrick Spens")

US banks preparing for the moonlight flit?

This is a post you will wish to read if Lehman and/or other US Banks go down.

"London Banker" notes that US creditors get first pick of US assets in the event of insolvency, and speculates that Lehman may recently have pursued a strategy of selling foreign assets to increase their US-based holdings. In the event of the bank's failure, this would minimise the loss to American creditors, stiffing their foreign counterparts. Such a pre-crash preparatory repatriation of wealth, he says, might account for some of the recent turnaround in the dollar and US stocks.

He even hints at the temptation for banks to misappropriate assets in nominee accounts for which they are technically only the custodians. Kind of like the old "Muddling up the firm's money with my own," or Father Ted's "It was only resting in my account."

There is a sick plausibility to these speculations.

UPDATE: ... and Sitemeter tells me we are attracting the attention of Beijing (IP: 61.48.41.# (CNCGROUP Beijing Province Network)). A little paranoid frisson to enliven my Friday evening.

Mugabe and Tsvangirai

Has the spider made a deal with the fly?

Gold: window of opportunity?

Gold per ounce is now $752 in US Dollars. I've been trying to track down an article I read in the past couple of days, that said Investec expected gold to veer between $750 - $1,000 (similar article here). Is this the time to get back in? An increase of 33% within months is nothing to sniff at - unless you're one of those greedy City boys.

Large Hadron Collusion

It came to me in a flash. How would you or I know the difference between decay products in a particle accelerator, and a sparkler in a steam bath? We've been had, Ron.

17 miles of construction deep below ground... It's a bunker! When the EU project finally and inevitably collapses, taking the economy of Western Europe with it, the corrupt, incompetent and eye-poppingly expensive politicians and bureaucrats are going to need a hidey-hole.

But what about the pipes and cables?

We saw them as Professor Brian Cox tootled along through the circular cavern, didn't we? D:Ream on. What we saw was a CGI loop, entirely familiar to computer games players. Beneath this illusory overlay is footage of working, sleeping and recreational facilities, water filters, air recycling machinery, food stores and all the rest. Like Slartibartfast on his planet-constructing world of Magarathea, the Euro elite will be able to sleep through the coming recession and return in time to impose fresh taxes and regulations.

Meanwhile, the border-straddling tunnel is a convenient way for them to pop across to Switzerland and check their bank accounts.

Judge Mental rules on religion

Yet another group of young men has been found guilty of conspiring to commit mass murder for political-religious reasons.

Britain has extended tolerance to religious dissenters for over three centuries - e.g. the Toleration Act of 1689 - but always on terms designed to maintain peace and national sovereignty.

Perhaps the regulation of religion needs to be brought up-to-date, and maybe the model should be changed. Everything is commoditised these days, so why not treat emotional investments in chosen philosophies like financial ones?

For example, after a rant against the infidel and a call to slaughter him, for which the promised return is an eternity of brilliant food and sex in Heaven, firebrand preachers should add, "Regulatory warning: souls can go down as well as up."

Foreign powers calling the tune on the US economy

... foreign central banks now are in a position where they can influence, through their asset allocation, the allocation of credit inside the US economy.

... says Brad Setser.