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Dedollarising is removing the debt foundation.
An Apex is a peak created by upside, its energy diminishes and downside is created.
The short EU and long US is well underway, the players involved are many and more than anyone could have expected. The playbook is printing as previous told. Great Britain are buying UST’s replacing the continuing selldown by the makers, the makers are reliquifying there own economies and are moving forward into a multi lateral debt market that has been ignored by the EU.
The Euro exists to service global debt and run the USD secondary market.The archaic hegemoic system perpetuated by European banks and institutions is being crushed. The ramifications will be global, while stats state Euro banks are 17-19% exposed to this market, this is an average, large banks are probably 30-35%, at least one third of the business they do which is being removed by the makers.
The EU got to big and started wielding power it didn’t have the backing for, 2011 was a time when the first cracks in its existence became apparent. The subsequent controls implemented by the US where to reign in the expansion that could affect the stability especially to the US.
Geopolitically the EU simply lied with agreements they where never to honour even with the US as well. Another factor in the lack of trust, we have also seen the latest seizures of sovereign wealth of peoples and assets because of where you where born. The disparity of reality is told by the facts, gone are the days narratives.
The makers have created a new system, are implementing the new system and moving out of the way, capital,debt and construction are being furnished by the makers into Emerging Markets and removing the need for EU institutions.Lending money now doesnt cut it,they cant compete with the total packages on offer with less strings attached. The payment of loans by EM’s need no longer the USD only, in fact it can be commodity or another currency.
Every project in EM markets in the billions is billions lost in the EU markets, the BRI was looked at as a joke but has emerged as a chokepoint on the European markets. There is nothing stopping the payout of current loans by EM’s in USD supplied by the makers who have excess supply, then reborrow through the BRI. This is liquidating the euro markets, its industrialists are moving offshore they are the backup engine for expansion.
Its delusional to listen to narratives from contracting economies, and even more delusional to think takers have power over makers, the debt based system requires the makers to fund the takers debt to balance the scales. The makers arent playing now, they dont have too. For those who have followed its been a fast few years that now brings the separate players all working on different fronts to now come together.
New alliances will form when it comes to trade, and some will be left shocked as to who is who moving forward. The rhetoric will begin from the US as it aligns its future. Liquidity is the key of the economy, an ally can become a foe when required and will at the flick of a sanction/tariff whatever the term.The USD is positioned to vacuum up liquidity, its the system and it will be last one left, the recessionary consequence will be born offshore, but its allies will be the feeder, others are well hedged and far removed.
Capital will continue to roll into makers and EM’s. The US will reposition globally. The insulation is in place for some countries, the problem in the EU is how its formed, only countries can insulate its economy , a union of nations has no protections, a single debt currency is futile, countries will want to become countries again. Holding Euro isnt always in the interest of nations in the EU,the idea that its devaluation can be washed across its union will be interesting. Larger countries entering contraction at a faster pace than others cannot be levelled out across smaller ones. A currency buying power is a mark of its economy. One currency being shared with different economies/ over governance/ diferential tax standards is the recipe baking now.
As we roll off the Apex the US has been on bid and many await the fiscal outcomes to see if the show goes on, the EU have it all in front of them and more over the horizon. Investment capital is moving to safer markets, both Asia and the US are the recipients, the debt markets controlled by the EU are under attack, a crucial next step may be energy from the maker nations especially LNG.