The Poker Player and the Grand Chess Master

Week ended August 4, 2023, interesting news items to look at this week were:

1. The Poker Player and the Grand Chess Master: At the outset of the US-China Conflict in 2018, then the Angelo American Russian Wart in Ukraine in 2022, I have used two analogies to frame my conclusion on the end game. The first analogy was the Chu-Han Contention (楚漢之爭) in China around BC 206. The King of Chu (Xiang 項羽) was a most fearsome warrior but the King of Han (Liu 劉邦)was skillful in strategies and diplomacy. In a drawn out war of attrition the Liu was under siege by Xiang. By avoiding an initial direct combat and skillful delayed tactit and logistics, Liu eventually prevailed. This was due to exhaustion of supplies Xiang’s army because the attack on Liu was far away from Xiang’s home base. The other analogy I used was the the American Marine’s style of attack against a well fortified defender. Marines by their very nature of combat formation needs to win the short game by bursts of intensive concentrated firepower but will fail in a prolonged drawn out war of attrition. Mark Twain once said that “History never repeats itself, but it does often rhyme.” (Fig. 1).  

In my Judeo-Christian world view, I take it as truth that similar circumstances would draw similar results. (Fig. 2).

This is now very apparent how the East West conflict will end. The Anglo American affront with their self deluded facade of military strength was nothing more than fleshing a hand of 2,3,4,5 of Hearts without knowing the unrevealed 5^th card is but an 8 of Spade. China and Russia on the other hand are Grand Chess Masters and have carefully counted all the cards being played. (Fig. 3)

Even worse is the Anglo American poker player has to borrow chips from friends and neighbours to double up the wager whilst calling for guard rail with the opponent in case the game gets overheated.

Every military analyst worth his salt, including Zelensky, can now see clearly the American’s hesitancy and the continued dwindling in military aide to Ukraine is a telltale sign that the Anglo American Empire is in a waterfall decline. Gordon Duff in an excellent piece commented “The American’s aren’t coming, they won’t be ‘on the ground’ nor in the air nor on the seas. There is no combat environment for the US against a grade one power.” and Gordon gave with very good reasoning. (Fig. 4).

For those readers interested to read his full editorial, here is the link:   https://journal-neo.org/2023/07/20/the-short-but-nasty-truth-about-bidens-bluff-in-ukraine/ .

2. Fitch downgraded USA credit rating:(Fig. 5).

In the context of Fitch having full knowledge of how the Administration retaliated against Standard and Poor in the 2011 credit downgrade, it was courageous for Fitch to raise the alarm. Nothing ground breaking but still I tip my hat to Paul Taylor, CEO of Fitch. Instead of closing one’s eyes, Paul Taylor made the right decision to give the whole Biden’s Team a black eye. My friends, please take heed, we are talking about weeks before an immense implosion.

3. Macron raised France’s electricity tariff by 10% on August 1(Fig. 6):

Once the beast of inflation is let out of the cage, the easy option of currency printing with impunity is gone. It is of paramount importance to see how different Western Government is reacting to the problems they created during the pandemic, withdrawal of subsidies, student loans payment restart, cessation of consumption vouchers. Washington, however, is still spending money like a drunken sailor and borrowing like there is no tomorrow. After SVB, Signature and First Republic failures, two more US banks failed. For a short while, the flight of depositors to the US G-SIB (Globally Systemically Important Banks) helped to boost big Wall Street Bank’s profitability and prop up the stock index. Let’s not forget, these G-SIB are primary dealers in US Treasuries and hence under legal obligations to pick up any slack in Govt bond auctions. The current estimate regarding the health status of the US banking system is approximately half of the US banks are insolvent with combined assets of $11 trillion and a shortfall of assets as compared with liabilities of $2.6 trillion. I say with almost certainty that there will be first be a forced assets liquidation and lower asset prices then comes a bout of panic money printing and hyperinflation to set in.

4. Consequence of India ban of rice exports (Fig. 7):

In reaction to India’s ban on rice exports, Thai and Vietnamese rice merchants adjust prices, Hong Kong rice imports are expected to be 30% more expensive.

This week’s financial markets:

A. Stock Market: (Fig. 8): Dow closed at 35,065 for the week, down 394 points or -1.11%.  

Fitch downgrade US Credit Rating spooked the market and caused a sell down of stocks, bonds and most financial asset class.

B. Debt Market: (Fig. 9): USGG10YR ended the week at 4.042%, a rate increase of 8.5 basis points.

The bond market initially reacted to Fitch August 1 USG credit downgrade with 10Year Bond Prices dropped 1.8%. On Friday, the Govt Plunge Protection Team came out and somewhat stabilized the bond market and revert most of the earlier losses in support of the Administration denials. In terms of yield curve, long duration took the major hit with noticeable decline in YR 10, 20 and 30 with yield increases of between 9 to 18 basis points. The long duration is where the Federal Reserve has the largest holdings precipitating further decline in its insolvent trading status. For the week ended August 2^nd 2023, the Fed reported weekly losses of $85 billion ($79 billion weekly losses reported in my Blog just 2 weeks ago) (Fig. 10).

As mentioned in Paragraph 3 above, the unrelenting borrowing by theUS Govt without a debt ceiling will ultimately drain the G-SIB and all Western and Japanese Banks will go down with the Washington Titanic. The biggest irony of the developed countries’ Central Bank is, unlike the submersible Titan, the Western Central Bankers are all aware of the micro cracks in the system yet they followed like lemmings with Washington to the deep. The rest of the democratic Western voting public are equally drunk to the Kool-Aid of Govt handouts, unwilling to part with the punch bowl. What more can a watchman on the tower do?

C. FX and Commodities and Precious Metals: Trading results for the week (Fig. 11): 

Oil (+3.28%), Euro(-0.28%), Rmb(0.31%), JPY(-0.71%), Gold(-0.99%), GBP(-1.02%), Bitcoin(-1.38%), S&P 500 (-2.31%), NASDAQ (-3.09%), Silver(-3.17%), Rubble(-3.99%).  What is hidden from the paper derivatives contract prices are precious metals depository inventory have been severely drained. Eastern Central Banks and Sovereign Funds together with ultra high net-worth individuals and Family Offices stepped up their purchases to diversify risks away from USD.

^{Luk 12:15}  And He said to them, "Take heed and beware of covetousness, for one's life does not consist in the abundance of the things he possesses."¹⁶  Then He spoke a parable to them, saying: "The ground of a certain rich man yielded plentifully.¹⁷  And he thought within himself, saying, 'What shall I do, since I have no room to store my crops?' ¹⁸  So he said, 'I will do this: I will pull down my barns and build greater, and there I will store all my crops and my goods. ¹⁹  And I will say to my soul, "Soul, you have many goods laid up for many years; take your ease; eat, drink, and be merry." ' ²⁰  But God said to him, 'Fool! This night your soul will be required of you; then whose will those things be which you have provided?'21  "So is he who lays up treasure for himself, and is not rich toward God."