Luongo Placing Niger In Big Picture Context

For “Big Picture” I think we can substitute “Theory of Everything”. We’ve been discussing the Niger coup for the past few days, and especially the attempts of the Neocolonial West to force Niger back into line. As we pointed out this morning, that attempt appears to be failing. France seems to have realized that it isn’t a position to accomplish that on its own. The US attempted to dragoon the ECOWAS countries—led by the US proxy president of Nigeria—into invading Niger. That move failed when the Nigerian senate refused to go along, and most countries north of ECOWAS basically presented a solid front against such moves. The opposition of Algeria was probably the nail in the coffin.

In his latest article, Tom Luongo tries to place events in West Africa within the greater context of his Theory of Everything, in its present development. That means that, among other things, Luongo argues that the Niger situation needs to be understood the context not only of the war on Russia by the collective West but also of the downgrading by Fitch of the US credit rating.

I’ll freely admit that the financial stuff is over my head. However, it’s worth a stab because, as discussed the this morning, the apparent success of Niger—so far—in facing down the collective West is a major blow to the Globalist and Neocolonialist West. And therefore also to the Neocons. I’ll start by going to the end of Luongo’s article, because it’s there that he links to a seminal article (dated in August, 2021) that describes the program that Jay Powell at the Fed put into effect and has been following to this day:

The Fed Says, “Let Me Squeeze Your Dollars…5 Basis Points at a Time”

I’ll throw together some excerpts, slightly out of context, to give what I believe is the general idea and that will provide a link to current developments. It all goes back to Powell raising the rates on Reverse Repos—a move designed to break Davos’ grip on US monetary policy:

The Fed’s decision to pay 5 basis point on Reverse Repos was the subtlest but most effective way to taper without tapering, tighten without tightening and undermine the WEF’s Great Reset while seemingly still supporting it.

What I see, for the first time since Nixon closed the gold window fifty years ago, the Fed was getting hemmed in by outside forces looking to throw its favored sons, Wall St., to the wolves.

And that will not stand.

The result of this has been the predictable explosion of the use of Reverse Repos by domestic counterparties. It jumped a few hundred billion in the aftermath of June 16th’s announcement. The RRP facility is there to push U.S. Treasuries, of which there is a shortage for use as bank collateral, back into the domestic banks.

Nothing the Fed has said since then has materially changed this position. In fact, the Foreign Repo Facility is just another tool to repatriate U.S. Treasuries to insulate U.S. banks and corporates from the very financial storm the Fed is actively fighting not just to save itself but to bankrupt Europe in the process.

These are all technical moves which signal the Fed is preparing for another RRP rate rise. They are actively defending Wall St. and leaving the Biden Administration out to hang, not helping it achieve its goals, destroy the United States.

Because Biden et.al. all work for foreign powers, be they China, Davos or both.

Davos is trying to destroy confidence in the U.S. at every level, especially the dollar, to make Europe the destination for capital fleeing U.S. insanity.

The Fed is inviting a crash. It’s inviting a revolt against the insane commies and traitors currently running the U.S. government.

And why would the Fed do this when it stands to gain a tremendous amount of power? Well, to protect itself from inbred and feckless Eurotrash and be the one institution left standing after the dust settles.

So there’s the big picture, the Theory of Everything that lies behind events of the day.

Next we turn to the new article. Notice the explicit link to the earlier article:

France, Niger and Why Five Basis Points Continue to Change the World

First we use excerpts to update from 2021, when Powell raised the Reverse Repo rate:

… in 2021 … Jerome Powell went off the reservation and began what I called ‘stealth tightening’ by raising the Reverse Repo Rate 5 basis points above the Fed Funds Rate.

… this was the one lever he could pull to begin draining the world of Yellen’s horror show and the ravages of the COVID monster.

The result was a massive inflow into RRP, draining the world of more than $1 trillion in base money net of treasury spending. This was a global event.

Inflation was coming. Everyone knew it. But the Democrats were desperately trying to push through their Davos-demanded “Build Back Better” spending bill, to “help us overcome COVID-19,” …

Powell had to weather a political storm that no Fed Chair, even Paul Volcker, ever had to face. Because this was for all the future marbles. …

The result we see today?

As expected, the money is flowing out of the RRP facility and bank deposits into higher-yielding money market funds thanks to the Fed’s historical tightening.

There’s no denying that we are headed for an ugly credit crunch here in the US. We are.

The fact that the BTFP balance is still rising is saying that banks can’t raise deposit rates for savers yet. That is itself something very worrying. But they are offering better terms on CDs to keep the money from flowing out fast.

The bigger question isn’t whether or even when a credit crunch will hit for real, but whether we have the balance sheet capacity within the banking system to weather it when it does hit. No one really knows but Powell still has plenty of liquidity on both sides of the balance sheet — USTs and RRP savings — to provide the market whatever it needs.

Now, overseas? Well, that’s something else entirely, which has been my point for over two years now.

So, the bottom line here is that domestically I don’t see any panic in the banking system or a dangerous drop in liquidity. Long-term rates are going to rise here. The yield curve is normalizing rapidly.

So, now that we’ve set the background in the US, bad but not terminal. In short, the real problems lie elsewhere.

At this point Luongo looks to link the Fitch downgrade to the Niger coup. The part about what the downgrade means, well, frankly I couldn’t grok it. Luongo’s argument is that the credit rating agencies are actually acting complicitly with Yellen to do away with the debt ceiling and force the US into a CBDC system. But … I’ll try to walk through the rest of the article for what I can understand.

Luongo points out that the implication of the coup in Niger is that France might soon have to pay market prices for uranium, but this could directly impact the Euro itself for technical reasons that boil down to this: If France is forced to pay market prices for uranium, its credit rating could drop.

The coup in Niger occurred just a week after the big Russo - African summit in St. Petersburg, where Putin openly encouraged the African countries to, in effect, declare their independence of Western Neocolonialism. In that regard, France is almost certainly the biggest offender. I’ve been saying for a long time that this war beween Russia and the collective West has multiple fronts, and the economic/financial front just might be the most important one in the long run. The Neocons—using French supplied versions of the Storm Shadow missile—think they’re being clever with their pinprick strikes at Crimean bridges. In response, Putin the geopolitical chess player doesn’t allow himself to be forced into a direct military counter strike. Instead, he takes aim at … the French credit rating:

So, help back a coup in Niger, long overdue, and force France to deal with its insanely profitable colonial extraction system there.  The CFA Franc ensures the profit all goes to France, while the people of Niger starve.  It’s brutal and it’s exactly what I expect from the progeny of Europe’s exploitative ruling classes.  I’m not singling out the French here.  The US is just as guilty of this today in other places, if not providing the real military might for these situations.

It’s almost as if Putin is toying with the midgets of the collective West.

France gets yellowcake at pennies on the dollar. They produce a surplus of electricity. They export it, especially during times of duress in Europe, making their forex reserves and trade balances look far better than they should be if they were paying anything close to market price for Uranium ore and other commodities from the 14 CFA Franc nations.

Putin is hitting France where it really hurts—the pocketbook. And that will impact the rest of Europe, especially this coming winter, at a time when European economies are sliding into recession.

The French have no real idea that they’re way of life and their AAA credit rating is based on rank neocolonial exploitation of dirt poor African countries. It looks like they’re about to get a lesson in economics. They may also have to face some hard questions about the future their ruling elites have mapped out for the subject population. Not Putin’s problem. Looks like he’s getting the last laugh here, and I’ll bet he’s enjoying it:

Ultimately, Europe chose to cut itself off from Russian energy. It gambled on a high-risk strategy to destroy Russia through economic isolation and military aggression, by partnering with US and UK neocons who will use anyone to get what they want.

Now it is staring into the abyss as rates rise, budgets collapse, and the people revolt. These are all self-inflicted wounds here. There is no way to tame both bond yields and inflation without the Fed willing to go back to the zero-bound.

Instead, Powell is talking more rate increases.

There is no way to default on the whole of the euro-zone’s debt and issue perpetual bonds like Soros argues for if there is no long-term collateral backing the bonds.

France now has zero collateral without North Africa. …

If France’s energy cost structure changes drastically, its bond rating should as well.

And so Luongo concludes:

The vast negotiations over what the next monetary system will look like took a right turn last week. Years happened in a couple of days. Premises have to be checked. Incentives reassessed.

So, it’s now go-time.  If Niger’s coup holds and rest of the CFA Franc zone revolts over the next year while the US kinda stands by and picks its nose militarily, then we have our catalyst along with Japan ‘tweaking Yield Curve Control’ two weeks ago for the beginning of the end of the European Union.

Hungary just told NATO no on Finland and Sweden.  The US State dept. retaliated immediately.  But the EU didn’t.  The Neocons are big mad because they still want war in Ukraine but Europe can’t afford it. 

The splits in the oligarchy are now being laid bare.  The collateral is returning to the control of those that produce it rather than those that finance it.

And it was all started by five little basis points in June 2021, five basis points that changed the world.

This is why events in Niger are a really big deal.

Now, to close this out we’ll shift to the US scene and how some of this could play into US politics. For that I’ve prepared a semi-transcript of The Duran guys - Bidenomics downgrade, from AAA to AA+

[The] credit rating agencies are all based in the US and what many people don't know is that they actually a role which is set out in federal law. I found that amazing when I discovered it during the 2008 financial crisis. The credit rating agencies actually have certain legal rights which are enshrined in U.S law as to what kind of credit valuations people can make. Those vauluations have to take their cue from the credit rating agencies. That has been a very powerful weapon that the United States has been able to use because, when these agencies downgrade the credit ratings of other foreign countries--like, for example, in the past Russia--that downgrade deterred U.S investors from investing in those countries.

This time the downgrade has been quietly accepted because the facts make it irrefutable. The other thing that's happened is that the US Treasury has announced that it's going to increase borrowing to a huge level. It was expected that quarter quarterly borrowing would reach 250 billion dollars or something on that scale. We're actually looking at around a trillion dollars.

That also tells us something else, which is that going into the election year the administration's overriding priority now is to avoid a recession. So how do you avoid a recession in the United States? You go on a massive spending spree and you try to keep the economy afloat that way. And that's why the treasury is stepping up it's borrowing. We see the extent to which everything is now being decided in the U.S around the election. Something by the way you know which Donald Trump would not have been able to do. He would never have been allowed to get away with something like this and of course he never even considered doing this.

The effect of all this additional spending is inevitably going to be more pressure on inflation. The Federal Reserve board has been raising interest rates and so it's likely that inflation will fall for a few months but once all the spending really gets underway sometime over the course of next year, probably towards the second half of next year, we'll start to see the inflation numbers ticking up again.

Tom Luongo has had a lot to say about that. One of the things he said to me a couple of weeks ago--which I hadn't really understood--was that there's been an awful lot of price suppression over the last few months, especially in the commodities markets. He said that he expected that oil prices--and Tom is, of course, an expert; his background is in oil--he said oil prices would probably start to creep up and that he sensed that other prices would also start rising.

I suspect that this is again connected in some way with a general perception in the markets that the Biden Administration is preparing a second big spending splurge. Obviously all of this is election related.

The immediate priority is to avoid a recession and I should say that all the indicators in Europe at least are pointing now to a very severe recession. We've seen PMI numbers in Switzerland collapse. Manufacturing PMI in Switzerland is now 38. Anything below 50 is contraction, so 38 is well into deep contraction territory. In Germany it's around 40. These are extremely bad numbers. The US has avoided that because the Administration has used the Inflation Reduction Act that was supposed to be all about reducing inflation. Actually, it was all about providing subsidies supposedly for green technologies--no real evidence of any of that happening, by the way. What it really was was another spending program and that's kept the U.S out of recession.

So the priority still is to avoid being dragged down into recession following Europe. They absolutely do not want people unemployed, they don't want all the difficulties and pressures that happen in an economy when it is in recession, and they certainly don't want people angry over the fact that the economy is in a recession and voting for the Republican nominee--who is most likely going to be Donald Trump despite all the legal challenges that they're bringing.

If they lose the election, then they can dump all of this on Trump. That's absolutely the calculation. They can then see off Trump once and for all, see off the real challenge that he represents arrange with their friends in the Republican party, for the RINOs to consolidate control of the Republican Party, stabilize the political situation.

We'll see if they can pull it off. They have the media on their side so that's a good start. That's their big advantage. It's their only real advantage in an election.