The Gilty Game of Chicken | QPOL Issue #11
Breaking down the Pension Crisis in the UK and the stand-off between global powers.
Special thanks to @theemikehobart and @JediScale for the info and inspiration for some of the ideas that made this issue possible. Onward…
English Pension funds hit an “oh snap” moment when yields crossed 4%. One major reason this occurred was because the BoE was the only one buying the Pension Funds’ gilts (UK bonds). This clip from Forward Guidance sums it up beautifully.
Gilt (UK bonds) yields went from 3.9% - 5.1% in a day. Two things happened here.
1)
UK had lots of pension funds with longer dated liabilities: somebody retires and they receive their benefits payout (that’s a liability)
to match that liability, pension funds would buy longer dated gilts and
get more interest rate exposure through derivatives (leverage) = received fixed income to pay floating income
THE MAIN DERIVATIVE VEHICLE USED WAS BLACKROCK’s LDI PRODUCT
Pensions thought it was sound management because they were matching assets and matching liabilities
2)
BUT! Because interest rates went up so quickly, they were margin called on their derivatives position which made them need cash so they liquidated their gilts
When you sell gilts, interest rates go higher and people had to put up even more cash as they were getting margin called
This forced the BoE to step in and “stabilize” the gilt markets, effectively doing QE when they wanted to do QT. Remember, the BoE was the first to raise rates, even before the Fed
Many people hold these bonds as “safe assets”, but they’re not safe. It’s debt. They can have just as much price volatility as equities when rates increase
If your “safe assets” aren’t actually “safe”, you’re losing money. If you’re a pension fund or government losing money, then you might have some solvency issues…
The BoE was on the path to tightening like the Fed, but they had to reverse course because the market reacted to their QT decision similar to how US markets acted during Powell’s tightening attempts in 2018.
Now, the Bank of England is trying to show they run the show and prove austerity by basically threatening that they won’t buy gilts anymore. This leaves pension funds with 3 options:
1. Sell off all their bonds and wreck the UK economy
2. Hold Gilts and get wrecked since no one (BoE) is buying
3. Hold gilts and bully the Bank of England like they have done for 40 years to keep buying their bonds
In other words, the Bank of England is basically threatening that their bull market is over. The pensions have historically had more power. We’ll see who wins the “chicken” fight.
With their influence in financial markets, BlackRock had the cash to bail out the BoE by buying the gilts. However, they refused to do so in hopes of making England deficit-spend itself into oblivion and force it to lose all credibility. Once this happens to completion, BlackRock will pull a George Soros and buy all of England for crumbs on the pound. BR tried doing the same thing to Credit Suisse in Switzerland as well.
It’s important to remember that Davos’s plans of a WEF Great Reset run through BlackRock. Ergo, BlackRock is a front for Davosian money laundering, and are trying to blackmail the two countries that are NOT members of the EU: The United Kingdom and Switzerland. They seem to be the only nations in Europe not on board with the Great Reset, especially if the Fed bailed out the Swiss with a $3 Billion. The Fed supporting these non-EU financial institutions that were working towards financial correction and austerity further validates the theory of Team Fed fighting against Davos.
The Fed has also sent a A Record $6.3 Billion To Switzerland Via Swap Line. We are at financial war between Team Fed vs Team Davos, and there are two different outcomes depending on who wins it.
Davos Victory: Davos wins by forcing the Fed to capitulate and “print” more money, ruining it’s credibility and causing capital flight to leave the US and back into Europe, only after Europe passes policies that fully send it’s society into poverty causing the population to bend the knee and accept their fate of a digital panopticon with a CBDC issued from the IMF and into their pockets.
Helping the EU commit suicide with this type of digital Euro would be a win for the US. It would imply Europe did everything imaginable to make itself un-investible for generations. This would mean as mentioned above, including:
Modern Monetary Theory (MMT)
Universal Basic Income (UBI)
The extinction of commercial banking and free markets
Fed Victory: Although it doesn’t look like a rosy future in the UK and Europe, I don’t think that is necessarily true and depends on a few things. It all depends on how much weight and control the Fed has over its ally banks/countries on a monetary basis (UK and Switzerland, since they’re not in the EU). That’s what I think is happening with the swap lines.
A Fed win means they have complete monetary independence and destroyed the ODM (offshore dollar market). That’s happening as LIBOR quickly loses liquidity as the Fed raises rates. That is the fastest way EU goes bankrupt and is forced to go full totalitarian.Meanwhile in the background, Raising rates and rebuilding the monetary and financial plumbing/policy that is US-centric is what further gives the Fed monetary independence and the room it needs to raise rates. Fed freedom via its tools and Capital flight to America from its actions is how America and team Fed (and greater society) wins.
It is in the interest of Americans for the ECB to go bankrupt and institute a CBDC in Europe as quickly as possible. For the Fed, it’s in its own best interest to not institute a CBDC in order to maintain its credibility and to help America remain an investable country. This path is so crucial to American soverigntists to the point that they may do the same as Russia and China By tying the dollar to gold or a basket of other commodities. Therefore, it’s imperative that the “EUSSR” as Luongo likes to call it, dies quickly.
As of this writing, we have reached BoE governor Andrew Bailey’s deadline for UK pensions. As a reminder, Bailey basically gave the pension funds 3 days to find a buyer of gilts. In addition, it seems Davos basically made Prime Minister Liz Truss fire minister of finance Kwarteng before the BoE could do their austerity plan before the deadline. This is clearly evident of a globalist/commie hit-job on Truss and US financial allies (all on team Fed) trying to pass sound monetary and economic policy. Instead of making her resign resign, Truss let go her finance expert. Time only tells if or when she will be next.
This video from the Duran goes into detail of how this whole gutting of the conservative parliament and how it very well will be a hatchet job by the globalists which further verifies the goal to further the demise of the UK and Europe.
Many questions remain:
Will Liz Truss get sacked by Damvos come next week?
Is the BoE on team Powell though if they raised rates before the Fed and wanted to do austerity?
Was it not implied that team Fed got Liz truss into office with whatever influence they had?
BoE governor Andrew Bailey probably met with Powell in Washington. The idea of Bailey telling the Pension plans they’re on their own is radically hawkish, is it not?
Will the Fed would continue backing the non-EU countries (UK/Swiss). Is Davos influence too big in UK for that now?
Again. Only time will tell when this macro/geopolitical game of chicken will come to an end. One thing is for sure though.
We are at war.