So Mark Carney, the Great White Shark has moved to the Bank of England. Here is what is going to happen next. First he is going to freeze the interest rate at the Bank of England, ostensibly this is to encourage borrowing in general. I point this out because it is not what the last Governor of the Bank of England would have done. Usually in times of economic turmoil the central bank will raise interest rates to secure the necessary capital which falters due to high unemployment and capital flight.
In continental Europe things will seem to rally a little over the summer, economically speaking but the simmering political tensions will continue boil up. In concert with this a strange phenomenon will take place in the UK. Although there will be no real significant changes in the level of overall unemployment, overall borrowing will increase and real estate values will rally. All this will appear to happen under Carney’s loving guidance while Parliament is summering wherever it is British politicians go to polish their evil.
Then the fucking unthinkable, it will turn out the Scots are semi-serious about their whole separatist movement. Over the course of the coming winter this will become a hot debate both in Parliament and within the British media. The rules of a separatist referendum will be itemized and indexed and catalogued and fluffed and spanked and called sexy names all right out in the public eye. Murdoch will use the holiday break of Parliament at the end of December/beginning of January to talk a lot about the economic doom of a fractured UK and the faltering romance of the British aristocracy. By the time 2014 is really up and running the British as a whole will have entirely forgotten about the Canadian running their central bank.
The longer this dialogue takes place the worse it will affect the British Pound as a stable trade currency, causing its value against the Euro and the other Western currencies to fall towards parity. The only event that could bring the Pound to meaningful parity with the Euro would be a referendum on Scottish soviergnty, it is an obscenely valuable currency. Referendum talk and playing fast and loose with interest rates will definitely cause a drop in the trade value of the Pound but it will take some real national instability to move it, even temporarily, towards parity with the other western currencies.
By this time next year I suspect the Scots will have committed themselves to a referendum, most likely before Parliament summers in 2014. They will set the date for the vote sometime in 2015. In the period between British Parliament setting a date for a referendum vote on Scottish separation and the actual vote itself the economic alliance behind the Euro on the Continent will begin to truly fail. Some member state will abandon the Euro.
During this period continental European wealth will flow invisibly into Britain (I say invisibly because Britain has some very opaque and nefarious banking channels, just like Canada), the depressed value of the Pound allowing the transfer to take place painlessly without substantial losses in currency exchange.
Held up against the failed EU the Scottish push for independence will falter, overall political instability throughout the rest of Europe will inspire the UK to ’Keep Calm and Carry On’ as it has before. Once the failed referendum is over the Pound will quickly rally. Possibly less than a year to retake its original trade values if the chaos is bad enough on the Continent, which I think it is safe to assume it will be. I am looking at 2016-2017 for the rally of the British Pound following a failed Scottish referendum.
Parity between the Euro and the Pound is what you want to watch for because that is the most meaningful marker for the collapse of the Union. The referendum will ultimately be a false flag, so if the talk is enough to drive the Pound to parity alone then I doubt the vote itself will ever materialize. The over-arching necessity is the temporary parity between the two currencies.
When the Pound rallies the European elite will turn vast profits off of the collapse of the Euro, 25% gains just off the appreciated value of the trade currency (based on current exchange rates, so in actuality probably much higher than 25%). Conversely, the Euro (anyone still using it at this point anyway) and whatever break away currencies are left in Europe will be massively depreciated by the collapse, allowing those same wealthy elites to buy back European holdings for a fraction of their original value, basically the profit they turned collapsing the European economic structure can then be used to buy back the destroyed industrial and civil infrastructure.
Then Mark Carney will laugh maniacally because ALL UR BASE ARE BELONG TO ME.