Last week the U.S. fined BNP Paribas for dealing through their U.S. entities with the sanctioned countries of Iran and Sudan. As you know, the timing was suspect and even led Vladimir Putin to make the comment that the U.S. was blackmailing “France” to discontinue the naval arms deal with Russia. Fast forward one week and we now find out that Commerzbank and Deutsche Bank are next in line for Uncle Sam’s financial slap. http://dealbook.nytimes.com/2014/07/07/u-s-scrutiny-for-banks-shifts-to-commerzbank-and-germany/?_php=true&_type=blogs&_php=true&_type=blogs&_php=true&_type=blogs&partner=bloomberg&_r=2
Why exactly are we doing this? Is it for “the money”? Did we really hold the fine over BNP’s head as blackmail or coercion? What is the upside to fining the German banks? Did we forget that Commerzbank is partially owned by the German government? Is this how we treat “depositors” who have asked for their gold back? Wasn’t telling them no …enough of a “slap in the face”?
I have a few other pretty obvious observations and/or answers to the above questions. First off, it can’t be “for the money” because the Fed prints billions of dollars per month. What would be the purpose of taking $1 billion from these German banks if the Fed could (and does) create multiples of this in nanoseconds? The Germans already have a few bones to pick with us. They might be a little upset over the NSA spying (they have also arrested two spies within the last week) directly on their president, Angela Merkel. They might also be a little “irritated” that they cannot retrieve their gold that they deposited with us over 50 years ago. Adding the paltry $1 billion or so fine is what exactly? Salt in the wound? Is it us spitting on them and telling them “and don’t get back up either if you know what’s good for you”?
As I see this, there is no upside to it. The German banks will simply re route around using dollars between clients and Iranian or Sudanese businesses. This is the “paper” side to it, what about the “other side”? The gold side. By pushing them harder, maybe they really did want their gold back? Maybe they will say something about it publicly? Can you imagine if they did? What would gold’s price do if Germany made a public statement that they want their gold back and they want it ALL (not just 20% of it) within 30 days? $2,000 overnight? $3,000? Higher? Wouldn’t this be the equivalent of a no confidence vote for the dollar? Isn’t this a “bigger caliber” gun than anything that the U.S. can aim at them?
No matter how you look at this, we are pushing Germany directly into Mr. Putin’s open arms and into the SinoRussian family. We are so dumb that we in essence are telling them to abandon the dollar. We are telling them that the rest of the world is absolutely 100% correct, we are jerks, we can’t be trusted and shouldn’t be done business with. This is really simple stuff that apparently no one in Washington has even thought about …unless they did? Maybe this is the plan? Maybe Washington isn’t filled with a bunch of idiots, maybe it is filled with treasonous bastards intent on putting our great country in an isolated box in the corner of bankruptcy? Could anyone with even half a brain do the things we are doing? On a daily basis it now seems? In my opinion, counting your net worth in dollars is really short term thinking since the dollar is now a “short timer” currency. What else could anyone think after seeing this latest display of rocket science? Regards, Bill Holter