Presenting The Winners And Losers In The Ongoing Currency Wars

Tyler Durden's picture

Rather than focus simply on the actual adjustments in the real effective exchange rates which shows the UK and US as having used monetary policy to devalue/weaken their currencies since the 2008 crisis really took shape, we look at an intriguing chart from Nomura's EEMEA FX research team. Google Trends shows, that in the year since Brazil's finance minister Mantega warned of a currency war's immediacy, a dramatic pickup in searches for both 'Currency Wars' and 'Recession' and we believe, like them, that 2012 will see further engagement of the vicious circle of antagonism around the world (with the EUR the obvious next chapter). Only EUR, USD, and TRY are actually weaker since the 2009 lows with most of the Emerging Market over 16% higher on average. It would appear that whether Europe escalates or US retaliates, gold will eventually benefit from this fiat fiasco and the search patterns set a rather nasty precedent.


And the winners and losers from the 2009 equity lows, in FX land (in REER terms):

and comparing UK, US, and Europe from the start of the 2008 crisis. US and UK have been using monetary policy effectively to keep their currencies weak? It is almost a given that Europe will want to join in as the valuation gap between periphery and say the UK is now extreme...

Simply put, you can't grow fast enough, you can't cut rates, that leaves only one option (call it what you want), currency devaluation.

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YesWeKahn's picture

The only option left, people will start using Gold as currency.

YesWeKahn's picture

XBOx: 1/4 gold bar.

coffee: 1/2048 oz of gold.


whatsinaname's picture

Indian currency sure getting slapped around - maybe thats what hurting them from getting more Au.

HedgeAccordingly's picture

1.75 in the 10 year? 20 handle melt up and currency didnt move today -

Let them eat iPads's picture

Currency Wars would make a good TV program.

Gene Parmesan's picture

They'd have to figure out a way to create and televise tracer MT300s.

gangland's picture

speaking of wars...

Finland impounds shipment of Patriot missiles, explosives in ship destined for Shanghai



lizzy36's picture

1. devalue

2. export crap to the island of misfit toys

3. export inflation to 2nd&3rd world countries

4. social instability begins

5. revolution and civil war (but as long as it is over there no problem)

6. start to replace democracy with technocracy

7. wait...........

Temporalist's picture

March of the Paper Soldiers

scratch_en_sniff's picture

umm, the thing about the Google search trends is that it depends a lot on the given context. A lot of people looking for the term "currency wars" probably have never heard of it before, hence just want to find out what the talking heads are yapping about. Its a bit like the quantitative easing thing, im sure there was a spike in that as well in Google trends…where the only thing that it indicated was that people didn’t have a clue what was happening. As for the Euro being devalued, I seriously don’t believe that the ECB has to do anything other than let the politicians get on with fucking things up naturally.

greased up deaf guy's picture

that, or most folks were looking up jim rickards' best-selling book of the same name... especially after the free publicity by roubini spouting off like a fool lately.

hyper-critical's picture


This is a good post, and I'm sure both the authors of this study and Tyler are well aware of the dangers of inferring anything from historical time series, but still gave me a chuckle. I'm positive Rickards' book contributed significantly to the recent increase, thus inferring anything about the future from that chart would be making the same high-school level stats mistake that 95% of 'market professionals' make every day...textbook non-stationarity.

Good book, by the way, from a guy who comes at markets with a unique perspective.

s2man's picture

??? USD is down only 6%?  AUS is up 40%? Why isn't AUSUSD @ 1.46?

It must be me...  dazed and confused.  But hey, Peter Tchir has admitted to being confused a couple of times this week.

tooktheredpill's picture

Don't forget the aussie plummeted big time at one stage in 09.

youngandhealthy's picture

Its obviously clear....US banks with huge capital in EU banks and Sovs are looking for the last rescuer. ECB.

QE in UK and US is over, both politicaly and money wise.

Now with huge Gross exposures (e.g. BoA with a gross @ 2700 BN with a pathetich net of 79Bn thru derivatives) is looking for a savior. ECB.


topcallingtroll's picture

Repudiation of certain obligations.

There is an option other than printing.

JustObserving's picture

How did we miss this?  About 40 minutes ago:


Fitch warns it may follow Standard & Poor's lead and downgrade America from its AAA rating, attacking the country's high and rising government debt burden.


z123's picture

gold is loser

after all  the problems in europe and usa gold should be trading now @3000 but it can't because it is a loser, that's my opinion

LeBalance's picture

ah I am able to see that you have truly reached the mountain top of yogic study.  Your asana practice is so advanced that you are supremely flexible in the spine.  It is regretable that you use this capability to eat your own feces as it seems to be affecting your cognitive capabilities.

this is not my opinion. it is a comedic jest.

DosZap's picture


Ask WHY?....................Margin hikes fkd us over,and then Europe.

As far as VALUE (real Value,not manipurtaled paper shit) it's still the ONLY place to put money, and ever hope to regain it.


akak's picture



Winners: Central governments and central banks (and perhaps, those who own PMs)

Losers: Everyone else


It is that simple. It always has been, and always will be during times of exponentially rising governmental debt and currency debasement, and no, we are NOT going to see any putative "deflation", because this time is NOT different!

economics1996's picture

That’s when we peasants reinvent the guillotine.  

Georgesblog's picture

Ah, good. You're keeping score. Does this mean we should be watching IRT: Most Dangerous Roads, more? Could see the next big thing in emerging markets.

Yen Cross's picture

 What about the abstainers?

CreativeDestructor's picture

and US piled into massive government debt while dollar was already week. US is doomed even on that criteria. It'll have to devalue even further to pay back debt or ask a magician to make it all go away...

Alex Kintner's picture

 Q: If you owed $15 Trillion in debt and could force inflation to make that worth 15 cents, what would you do?
 A: QE until there were no electrons left on the planet.

indygo55's picture

What would that do for gold and silver?

Yen Cross's picture

 The trade is upon us.   Spank me %0/%0.

f16hoser's picture

Welcome to the US Ameribanna.

Bill Shockley's picture

I am surprised there aren't more posts on this.

Trench warefare guess.

Gold will rise in price if market demand increases or market supply decreases in physical terms and further rise, if gold commands a higher fiat interest than bonds/fiat denominated in currency vs. spot gold price in fiat given an equal lending period.

No one wants gold/gld, fiat is way easier to use, digital is easier still, but you know that.

If the gold price is falling but the GOFO price is rising continue to buy. I learned that yesterday.


While the world's  reserve currency isn't stable, the EURO is at least  social so in the long run it is a better bet.

The Euro is more democratic and therefore stands a better chance for survival. The Euro public is better educated and the phsical plant is in better shape. There are fewer guns, better transport and a common history. Where hell could break loose is in the USA unless we change our ways.



rosiescenario's picture

....and they were in containers marked "fireworks".....and they were from Germany.

This is one interesting article.....

steveo's picture

I still think this is the best Christmas Gift I have ever received (even if I had to buy it).  

 Celestron C8 SGT XLT

Visitors to my site kliking ads have helped pay for 7% of this fine beast, and I appreciate that, since with accessories I was $1200 over budget, ouch.    Consider stopping by and viewing some scope pics, etc.   I actually do stock charts too!

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Now that is cool!


The Scope is only about 60 lbs wet (lets hope it doesn't get wet), but is a beast at gathering light.   These are actual pictures.   

C'mon how about a little Christmas present for steveo?    Thanks and have a Happy Holiday season.  I will probably be pretty scarce between Christmas and New Years as far as blogging goes.

The Monkey's picture

I woudn't say that it's by any stretch of the imagination, absolute, that endless devaluation into the abyss in the cards. The prolific number of articles such as this, speak for themselves. Watch voter sentiment in this electoral cycle. Bailouts and massive open market purchases are looking increasingly long-in-the-tooth, politically and practically.