PIGS to meet in London

Thursday should be exciting. That's the day of the G-20 economic summit in London. But I think they should have picked a different locale for it. Some place no one had ever heard of, or could find on a map. Sort of like when Dick Cheney would be spirited away to an "undisclosed location" even though we knew they had issued a TFR in Wyoming for him. The problem with this G-20 meeting is that it isn't a good time for bankers to be getting together, much less the heads of state to discuss the economic mess.

I'm sure security will be tight, and most likely there will only be the usual low-grade violence that you normally see in third-world countries, which England is well on its way to becoming. So with any luck there will only be a few arrests, and no one gets killed. The meeting itself could be even more contentious than the protests going on outside. Already most of the major economies, i.e. the US, UK, Japan and Switzerland have gone down the path of quantitative easing (in plain English, money printing.)

Conspicuous by its absence from that list is the European Union. If it were up to the Mediterrean countries, the aptly named PIGS (Portugal, Italy, Greece, and Spain) the ECB would already by happily inflating along with the rest of the world. But the Germans have long memories of the Weimar Republic, and so Europe will be the last to inflate. But mark my words, they WILL inflate, because everyone else will. As everyone else cuts rates to zero, the ECB had to follow, and so they will have to continue in each round of competitive devaluations. Thus, gold and silver will appreciate against all currencies.

French president Sarkozy has already threatened to walk out of the summit meeting, and the Germans have apparently leaked a copy of the report to be issued on the final day. It's nice to know the results of the meeting have already been planned in advance. Sort of like the old Soviet political apparatus announcing the final vote tally the day before the election. So now UK Prime Minister Gordon Brown looks like a complete idiot (not hard for him - remember, he was the guy who sold half of the Bank of England's gold reserve at $252/oz) and the French are blaming the Anglo-Saxons, or in other words the US and UK, for the world's financial problems.

Play nice, children.