Posted Jun 18, 2014 by Martin Armstrong
The head of the Bank of England, Mark Carney delivered a speech at the “Lord Mayor’s Banquet” in London’s financial district with the surprise announcement of an interest rate reversal. United Kingdom This is a departure from the policy of the ECB. Primarily, the British economy was saved by staying out of the Euro. The significant difference was that the European banks had to use the Euro as reserves. That resulted in the requirement of having to be “politically correct” and spreading their reserves out among the various member states. That would be the same result if the Federal Reserves used the bond issues of all states that vary in quality tremendously. This is why the Euro is such a disaster. There is no underlying foundation to the structure.
Carney has shocked a lot of people for what he said is in direct conflict with Europe. We have been stating since the 1980s, that our computer showed Britain was separating from Europe on our correlation models ever since the North Sea Oil was discovered. It really depends little on Europe and would survive quite well without being linked in. Europe needs Britain more than it needs Europe.
Carney said “It could happen faster than the markets it currently expects.” So far, the Bank of England had gone from an automatic cooling of the economy to the concern of a heating up of the economy. Real estate is booming but much of this is also caused by general capital inflows.
Britain is receiving capital inflows both from Europe and Russia. This is very interesting We can see that the chart patterns are decisively different against the dollar v the euro. Clearly, the euro will decline sharply against the pound.
Even the timing is distinctly different. This is the importance of correlating everything. This then allows you to isolate separate trends that become easier to see when the same instrument is then mapped against everything else. This is why personal opinion is just way too primitive for the global economy today.