A Peg for a Peg: That’s the West’s Offer for China

While President Trump keeps trying to support a stock market via noises about negotiations with China progressing well, things are spiraling out of control in Hong Kong.

The protests continue to escalate and show no signs of slowing down. The goal has explicitly become attacking the legitimacy of the Hong Kong government and bringing down an economy vulnerable to a falling property market.

The attack vector here is not directly political, Hong Kong is being attacked by the West via student proxies through its currency peg.

The Hong Kong dollar is tightly pegged to the US dollar and defending that peg by the Hong Kong Monetary Authority has left the city-state vulnerable to a massive property collapse if commerce continues to plummet as protestors keep targeting vital centers like the airport and hotel districts.

A collapse of the Hong Kong dollar peg, like all price floors/ceilings, is inevitable. Pegging one currency to another will always create an unsustainable imbalance of payments that the central bank can only cover for so long.

In Hong Kong’s case the peg has fueled, alongside China’s spectacular growth, a property market that is insanely over-valued. So, attacking the value of said property is how you attack the peg. The longer these protests go on, fueled and organized by outside elements (read US and British intelligence actors), the higher the probability that capital will flee Hong Kong and undermine the peg, creating a massive market dislocation overnight.

Think back to 2015 when the Swiss National Bank finally broke its peg to the euro after having turned itself into a hedge fund trying to stop the appreciation of the franc versus the euro. The bottom fell out of the euro/franc pair overnight, adjusting 30% in a matter of minutes.

When a major peg like that breaks, systems break. Societies break as well. Part of the pressure the West is applying to China is for open its capital account and submit to western control via hot money inflows. The Hong Kong dollar peg is the key weakness to the current arrangement.

It goes hand in hand with Trump’s moronic tariffs and the Treasury Department’s sanctions on Chinese firms doing business with Iran. It’s a multi-layered strategy.

Speaking of Iran…

Now that you have some idea of the stakes in Hong Kong, let’s talk about what’s happening in Saudi Arabia.

While Trump tries to pull his Middle East policy decisions from the brink of war, making deals with Turkey’s Erdogan and Russia’s Putin (through Erdogan) to unlock the stalemate in Syria, his allies in Riyadh and Tel Aviv are fuming and finally rightfully scared for their futures.

Iran and its proxies have gained the upper hand not only in Syria but in Yemen and the Persian Gulf. China is no longer playing games with Trump over buying Iranian oil, announcing that they are ready to invest up to $280 billion in Iran’s oil and gas industry.

The attacks on Saudi Armaco assets by the Houthis in Yemen have put Crown Prince Mohammed bin Salman behind the eight ball and his only options are to sue for peace. The same can be said for Trump now that he’s been revealed for having half a brain and not willing to risk World War III over a drone and some oil tankers.

Speaking of oil tankers, the Saudis and/or the Israelis, who have the most to lose by Trump paying peacenik, are likely the ones responsible for the attack on the Iranian oil tanker in the Red Sea. If they can’t get the US to start the war, maybe they can goad the Iranians.

Not likely.

Trump and the embattled and likely out-of-power Benjamin Netanyahu tried vainly to frame the conflict with Iran solely about nuclear weapons. But it’s never been about that. It’s been about continuing the policy of chaos to blunt the rise of China and Russia as the new lords of Eurasia.

Nothing more, nothing less.

And destabilizing the region to split off Iran from Russia and China has failed completely. Iran was never going to back down. Putin told the world that North Korea would rather eat dirt than give up its nuclear weapons. Iran is in the same frame of mind. They would rather be annihilated than give the US an inch after seventy years of egregious intervention and starvation.

So, here we are. The Saudis are the weak link in the US’s Mideast Alliance. Hong Kong is China’s soft financial underbelly. It comes as no surprise to me to see classic color revolution behavior in Hong Kong spring up within weeks of a failed attempt to get Trump to start a war with Iran – when they shot down the US drone over its airspace.

Because once Trump refused to jump off the edge of the Abyss, everything that has happened since then has been predictable. Increased threats to Saudi assets, further instability of the world’s oil infrastructure against the backdrop of political paralysis in Israel.

Netanyahu went off the reservation making attacks on Iraqi Shi’ite militias and likely ginning up protests against an Iraqi government no longer a satrap of D.C. and Tel Aviv.

The end result is now the Saudi government is in very serious trouble. Oil prices cannot rally and will likely crash in the coming weeks as the global slowdown grips traders by the hind brain. At that point I will be shocked if the Houthis do not attack the Saudis again, this time more boldly.

What’s at stake in that attack is no different than that in Hong Kong, the peg of the Saudi Riyal to the US dollar. MbS cannot finance his country’s future without the Aramco IPO, which is now off the table until 2020 at the earliest. And he can’t fund his current spending at $55 oil.

Something has to give.

And that’s why the reporting on the Hong Kong protests have focused on the economic damage the city is experiencing.

It’s a simple bit of blackmail. A peg for a peg.

The Hong Kong dollar for the Saudi Riyal. China needs Hong Kong to return to normalcy. British banks do not want Hong Kong under Chinese control. So many of their traders are targets for extradition for questioning.

This was never about twenty-somethings twerking in a public park. This was about wresting control of the offshore yuan market from the British banks laundering money through Hong Kong to fund intelligence and military operations across Asia.

Saudi Arabia needs to survive to keep the petrodollar somewhat intact and the outflow of dollars continuing while Trump runs the biggest deficits the world has ever seen.

If the Saudis give up the peg, the dollar transmission system begins to collapse. Global trade is the base money of global economy. It is the source of the direction of the flow of capital, from there it is levered up in the shadow banking markets.

Did you ever wonder why the Fed had to switch on the lights at its overnight Repo window? Now it’s open permanently. And that’s most likely about troubles coming from Europe. Add Hong Kong and Saudi Arabia into that mix and we have a hot time in the old house.

Trump is okay with ending some parts of the US empire while maintaining other parts of it. But he’s been fighting for it to happen on his schedule, not Iran’s, not Russia’s and not China’s.

Time’s run out. And now the world is beginning to burn.

Strategic Culture

Dear friends of this aggregator

  • Yes, I intentionally removed Newsbud from the aggregator on Mar 22.
  • Newsbud did not block the aggregator, although their editor blocked me on twitter after a comment I made to her
  • As far as I know, the only site that blocks this aggregator is Global Research. I have no idea why!!
  • Please stop recommending Newsbud and Global Research to be added to the aggregator.

Support this site

News Sources

Source Items
WWI Hidden History 51
Grayzone Project 246
Pass Blue 257
Dilyana Gaytandzhieva 16
John Pilger 418
The Real News 367
Scrutinised Minds 29
Need To Know News 2813
FEE 4923
Marine Le Pen 391
Francois Asselineau 25
Opassande 53
HAX on 5July 220
Henrik Alexandersson 1021
Mohamed Omar 392
Professors Blog 10
Arg Blatte Talar 40
Angry Foreigner 18
Fritte Fritzson 12
Teologiska rummet 32
Filosofiska rummet 119
Vetenskapsradion Historia 166
Snedtänkt (Kalle Lind) 231
Les Crises 3054
Richard Falk 181
Ian Sinclair 115
SpinWatch 61
Counter Currents 10332
Kafila 511
Gail Malone 42
Transnational Foundation 221
Rick Falkvinge 95
The Duran 10135
Vanessa Beeley 152
Nina Kouprianova 9
MintPress 5707
Paul Craig Roberts 2040
News Junkie Post 58
Nomi Prins 27
Kurt Nimmo 191
Strategic Culture 5215
Sir Ken Robinson 25
Stephan Kinsella 103
Liberty Blitzkrieg 863
Sami Bedouin 65
Consortium News 2685
21 Century Wire 3726
Burning Blogger 324
Stephen Gowans 94
David D. Friedman 154
Anarchist Standard 16
The BRICS Post 1523
Tom Dispatch 556
Levant Report 18
The Saker 4544
The Barnes Review 541
John Friend 500
Psyche Truth 160
Jonathan Cook 162
New Eastern Outlook 4316
School Sucks Project 1784
Giza Death Star 2002
Andrew Gavin Marshall 15
Red Ice Radio 628
GMWatch 2412
Robert Faurisson 150
Espionage History Archive 34
Jay's Analysis 1039
Le 4ème singe 90
Jacob Cohen 213
Agora Vox 16740
Cercle Des Volontaires 440
Panamza 2295
Fairewinds 117
Project Censored 1010
Spy Culture 567
Conspiracy Archive 78
Crystal Clark 11
Timothy Kelly 590
PINAC 1482
The Conscious Resistance 879
Independent Science News 83
The Anti Media 6768
Positive News 820
Brandon Martinez 30
Steven Chovanec 61
Lionel 300
The Mind renewed 447
Natural Society 2621
Yanis Varoufakis 1039
Tragedy & Hope 122
Dr. Tim Ball 114
Web of Debt 150
Porkins Policy Review 439
Conspiracy Watch 174
Eva Bartlett 621
Libyan War Truth 341
DeadLine Live 1914
Kevin Ryan 64
Aaron Franz 247
Traces of Reality 166
Revelations Radio News 121
Dr. Bruce Levine 151
Peter B Collins 1645
Faux Capitalism 205
Dissident Voice 11147
Climate Audit 226
Donna Laframboise 462
Judith Curry 1146
Geneva Business Insider 40
Media Monarchy 2490
Syria Report 78
Human Rights Investigation 93
Intifada (Voice of Palestine) 1685
Down With Tyranny 12449
Laura Wells Solutions 45
Video Rebel's Blog 444
Revisionist Review 485
Aletho News 21275
ضد العولمة 27
Penny for your thoughts 3120
Northerntruthseeker 2497
كساريات 37
Color Revolutions and Geopolitics 27
Stop Nato 4744 Blog 3190 Original Content 7189
Corbett Report 2449
Stop Imperialism 491
Land Destroyer 1238
Webster Tarpley Website 1119

Compiled Feeds

Public Lists

Title Visibility
Funny Public