By Michael Every of Rabobank

With the BoE Governor warning about pre-2008 bubble conditions in private credit; UK public-sector borrowing coming in higher than thought; Canadian CPI hotter; yet gold -6% Tuesday, its biggest sell-off since 2013, with silver -8.7%, and both -2% again this morning; and Bitcoin soaring as gold fell, then dropping in tandem, there is a lot going on. And I don’t mean GOP leaders are eyeing a new stopgap spending measure to end the government shutdown. Rather:

"<a href="https://public-eur.mkt.dynamics.com/api/orgs/285245b1-7c6f-ef11-a66d-000d3a4b6c6a/r/Gt7rGgGWikWPao7l4LoDAAEAAAA?msdynmkt_target=%7B%22TargetUrl%22%3A%22https%253A%252F%252Fwww.reuters.com%252Fbusiness%252Ffinance%252Fecbs-lane-warns-dollar-risk-banks-2025-10-21%252F%22%2C%22RedirectOptions%22%3A%7B%225%22%3Anull%2C%221%22%3Anull%2C%222%22%3A%7B%22utm_medium%22%3A%22email%22%2C%22utm_term%22%3A%22N%2FA%22%2C%22utm_source%22%3A%22dynamics-rr%22%2C%22utm_content%22%3A%22Email%20304%22%2C%22utm_campaign%22%3A%22SN%3A%20Email%20304%20af66ea%22%7D%7D%7D&amp;msdynmkt_digest=PgvPXnIyWoIuglMRPXZCYL%2Fxm2ZDDHf5hqkA%2BzEzFWE%3D&amp;msdynmkt_secretVersion=7bb221762d0c46939816d3a5592b1359">ECB's Lane flags dollar risk for banks amid tariff turmoil</a>’ as “Eurozone banks may come under pressure if dollar funding were to dry up,” as their dollars accounted for 7 - 28% of liabilities and 10% of assets in Q2, all reliant on borrowing from US banks. Reuters notes central banks are toying with the idea of pooling their dollar reserves to backstop banks in case the Fed were to withdraw its emergency swap lines. But any such cooperation would be politically difficult and insufficient given the multi-trillion-dollar size of the international market for dollar loans. This is a point of US economic statecraft strength flagged here repeatedly: more so if the Fed is politicised.

"Bessent’s Plan Runs Short on Time to Line Up Argentina Financing’ (Bloomberg) where the market doubts he can find the second $20bn of his $40bn package from the private sector before Sunday’s key election as ‘The US Is Trying to Drive a Wedge Between Argentina and China’ (WSJ).

"China eyes 3-way currency swap with Japan and South Korea amid Trump’s tariff war’ (SCMP) as “Beijing seeks to strengthen regional financial ties and boost yuan use as US trade pressures weigh on East Asian economies”. This would be the same Japan and China rearming against threats from each other, and the South Korea focused on North Korea that is now friendly with China again? Moreover, Blomberg says Ethiopia is in talks with China to convert its dollar loans to CNY, which follows the lead set by Kenya: lower rates – and different pressure points.

Politico underlines ‘Greenland could become the biggest car crash in Atlantic relations’, as “If the US President presses ahead… others can and will follow elsewhere.” Yet what could Europe do given the situation Lane just underlined and its need for US exports, LNG, tech, and arms? 

Plans for a Trump-Putin summit in Budapest have been shelved, as Trump said it would be a “waste of time’’ given Russia is clinging to territorial ambitions that make a peace deal with Ukraine impossible. So, more war, with more tit-for-tat blows to Russian and Ukrainian energy infrastructure: and elsewhere? <a href="https://public-eur.mkt.dynamics.com/api/orgs/285245b1-7c6f-ef11-a66d-000d3a4b6c6a/r/Gt7rGgGWikWPao7l4LoDAAIAAAA?msdynmkt_target=%7B%22TargetUrl%22%3A%22https%253A%252F%252Fwww.yahoo.com%252Fnews%252Farticles%252Fblasts-hit-romanian-hungarian-oil-162716227.html%253Fguccounter%253D1%2526guce_referrer%253DaHR0cHM6Ly93d3cuYmluZy5jb20v%2526guce_referrer_sig%253DAQAAAADeLDFvNkZyv17ex-WZHrhbyDfjAKMlIxdbxq_OsL4_YtmprHds3GWzbyCAvfIZd_S4GYcgRKSU2WBFGQt0lu3uIaGQNfbRksLEokLgKT2kYHt9dGDWsFLjdrIaAxqdilodoZOLu_WGGqwxhOPWKmoLpdWL3A0Ukn07tTUxr0E1%22%2C%22RedirectOptions%22%3A%7B%225%22%3Anull%2C%221%22%3Anull%2C%222%22%3A%7B%22utm_medium%22%3A%22email%22%2C%22utm_term%22%3A%22N%2FA%22%2C%22utm_source%22%3A%22dynamics-rr%22%2C%22utm_content%22%3A%22Email%20304%22%2C%22utm_campaign%22%3A%22SN%3A%20Email%20304%20af66ea%22%7D%7D%7D&amp;msdynmkt_digest=tcm5cZ7DjD5atH72Us5hTi0iI7tGM0jfOBbXe8G4ago%3D&amp;msdynmkt_secretVersion=7bb221762d0c46939816d3a5592b1359">Blasts just hit both Romanian and Hungarian oil refineries tied to Russia</a>. This time last week I was telling clients to prepare for the fat tail risks of deliberate targeting of upstream commodity supply chains as part of a Grand Macro Strategy to strengthen one bloc over another.

Trump again said Modi agreed to ease Russian energy buys, but scepticism remains there; and that’s as India reestablished relations with the Taliban as Afghanistan fights Pakistan.

As Trump threatened Hamas again, VP Vance is “optimistic” the Gaza peace deal will hold, and said the US won’t force Israel to host foreign troops, while US Special Envoy Kushner stated Israel and Hamas are “transitioning to a peacetime posture.” Perhaps: but note the Saudi Crown Prince is expected to visit Trump at the White House on November 18, which flags something is afoot.

The UK Foreign Office dismissed as “nonsense” claims that Mauritius was in discussions with China over selling it one of the Chagos Islands for $10bn, which the UK is handing over shortly alongside a £30bn bill to retain the century lease on its critical airbases there. The FO stated foreign forces are prohibited from building bases in the archipelago as part of the treaty: and treaties are always fully complied with is obviously the UK view as the global system crumbles.

"Colombia's president embraces war of words with Trump’ (AFP), saying “President Trump doesn't like us being out of his control… they want a coup against me." We still wait to see what the new, “substantial” US tariffs on Colombia will look like.

"Trump Sees Successful Xi Meeting, But Allows It Might Not Happen" (Bloomberg), again underlining 155% tariffs are going live from 1 November if he doesn’t get the deal he wants.

"How US-Australia rare earth deal aims to loosen China’s grip on critical minerals market’ (SCMP), as ‘China fires warning at Australia over ‘bloc confrontation’’ (Australian) for doing so.

The EU is to stockpile critical minerals amid supply chain threats. From whom, when they aren’t easily available right now? That’s as the ‘Dutch seek solution to stand-off with China over chipmaker Nexperia, while carmakers fret’ as ‘VW says production pauses planned, denies chip crunch as reason’ (Reuters). If chips aren’t available soon then that correlation will be obvious.

"South Korea Senior Officials to Visit US Again for Tariff Talks’ (Bloomberg) as Seoul said it wants to produce more of its own weapons – who doesn’t? And with whose rare earths?

Transcending all of the areas above, the FT reports ‘US army taps private equity groups to help fund $150bn revamp.’ On one hand: “This special military operation was brought to you by Snickersnacks.” On the other, as <a href="https://public-eur.mkt.dynamics.com/api/orgs/285245b1-7c6f-ef11-a66d-000d3a4b6c6a/r/Gt7rGgGWikWPao7l4LoDAAMAAAA?msdynmkt_target=%7B%22TargetUrl%22%3A%22https%253A%252F%252Fx.com%252Fmichaeljmcnair%252Fstatus%252F1980638003480432856%253Fs%253D12%2526t%253D4pzSg833QjknZ8FBqh_S4Q%22%2C%22RedirectOptions%22%3A%7B%225%22%3Anull%2C%221%22%3Anull%2C%222%22%3A%7B%22utm_medium%22%3A%22email%22%2C%22utm_term%22%3A%22N%2FA%22%2C%22utm_source%22%3A%22dynamics-rr%22%2C%22utm_content%22%3A%22Email%20304%22%2C%22utm_campaign%22%3A%22SN%3A%20Email%20304%20af66ea%22%7D%7D%7D&amp;msdynmkt_digest=Jg3KXSnHC4VkH0OTpInnO3C7uD8hAiKQFU6iPlO9iT0%3D&amp;msdynmkt_secretVersion=7bb221762d0c46939816d3a5592b1359">@michaeljmcnair</a> notes, the Office of Strategic Capital (OSC) and International Development Finance Corp (DFC) could be mutating into a private equity-style sovereign wealth fund vehicle. Previously, OSC and DFC credit/equity investments were scored at face value, but a new accounting rule means only the net present value of the expected subsidy is charged to the federal budget so a defence deal may run:

<ol><li>DFC/OSC puts in 10% equity or a thin guarantee covered by Treasury debt;</li>
	<li>Crowd in SWFs/PE funds for the 90% - a lot of this has been pledged already via tariff threats;</li>
	<li>The OBBBA lets the DFC retain and redeploy proceeds/dividends, not return them to Treasury.</li>
</ol>In short, this would be what I call financial ‘fartcraft’ to transform the US for warcraft via fiat not gold, even if gold -- and Bitcoin -- may play a role in the process later. That still needs the hard physical supply side, which is where deals with Australia and threats to LatAm come in – and then all the market disruption and inflation (and deflation) that comes with it. 

All that is gold does not glitter; Not all those who wander are lost

Meanwhile, the FT op-ed bewails ‘The hard task of exiting the populist trap’, flagging Argentina as a bad role model, which the US is following: fair comment, perhaps. Yet <a href="https://public-eur.mkt.dynamics.com/api/orgs/285245b1-7c6f-ef11-a66d-000d3a4b6c6a/r/Gt7rGgGWikWPao7l4LoDAAQAAAA?msdynmkt_target=%7B%22TargetUrl%22%3A%22https%253A%252F%252Fwww.lemonde.fr%252Fen%252Fopinion%252Farticle%252F2025%252F10%252F21%252Ffrance-s-democratic-crisis-is-showing-increasingly-alarming-symptons_6746626_23.html%22%2C%22RedirectOptions%22%3A%7B%225%22%3Anull%2C%221%22%3Anull%2C%222%22%3A%7B%22utm_medium%22%3A%22email%22%2C%22utm_term%22%3A%22N%2FA%22%2C%22utm_source%22%3A%22dynamics-rr%22%2C%22utm_content%22%3A%22Email%20304%22%2C%22utm_campaign%22%3A%22SN%3A%20Email%20304%20af66ea%22%7D%7D%7D&amp;msdynmkt_digest=mPw0V614ty0i1p2YDAK4Cp5E6KfxMEz%2BVe2yOw9cW%2FA%3D&amp;msdynmkt_secretVersion=7bb221762d0c46939816d3a5592b1359">a French mega opinion poll in Le Monde</a> notes “France's democratic crisis is showing increasingly alarming symptoms.” Indeed, the numbers are shocking:

Of those surveyed, 96% feel dissatisfied or angry about the state of the country; 90% believe it is in decline; 81% don’t think democracy is working for them; 66% think most politicians are corrupt; 71% think their living standards are getting worse; 57% have trouble making ends meet; 85% think France ‘needs a real leader to restore order’; and 63% say they don’t ‘feel at home any more’. That sounds like FT-friendly technocratic centrism leads to populism, as was flagged way back in 2019’s ‘The Age of Rage’ – and this survey was taken before France’s crown jewels were humiliatingly stolen from the Louvre in minutes, with no official resignations in response yet.

FT chief economics commentator Martin Wolf, we are *still* waiting for your promised blueprint for a global economic system that works sustainably and inclusively for everyone: don’t keep us in suspense any longer!

All That Is Gold Does Not Glitter

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