This email is not about football.
It’s about the recent ‘peasant revolt’ – yet another anti-elite uprising that reflects the extremely shaky state of the global currency system.
12 of Europe’s biggest football clubs announced they were launching a breakaway Super League in which they would only play each other to generate vast sums of money.
But the peasants revolted. (And they’re still at it.)
After Occupy Wall St, Brexit, Trump winning in 2016, Antifa, BLM and GameStop, this was one of the most obviously successful popular mutinies.
It only took 72 hours to get climbdowns and apologies from most of the clubs – and the Wall Street bank behind the project.
And the involvement of a Wall Street makes this worth understanding for those interested in the end of the global currency system.
Most people can enjoy seeing billionaires not getting what they want.
Beyond that, the launch and collapse of the Super League reveals a lot about our failing economic model and global currency system.
As usual, the problem is debt.
Some of Europe’s biggest clubs owe billions and face bankruptcy if something doesn’t change. Fast.
They have been locked in an arms race of hyper-inflating players wages and transfer fees that threatens to put them out of business.
But according to sports journalist Kaveh Solhekol the Super League was a very American project:
“The ring leaders, were England’s American owned clubs: Manchester United, Liverpool and Arsenal.”
And driving the deal was JP Morgan, who offered a $5 billion grant to make the project possible.
The Quest for Yield.
JP Morgan and other investment banks face an existential threat that can help explain this attempt to turn European football into an American-style, franchise sport.
In recent decades – while the real economy struggled – Wall Street boomed, reaping increasing amounts wealth from the country’s producers.
But as American industry was downsized and outsourced, there is not much left to loot from America’s real economy.
And financial innovations (like low cost index funds, and the arrival of decentralized finance) are making it much harder to extract out-sized profits from Main Street America.
Wall Street’s Quest for Yield has hit the buffers.
And extreme money printing (to keep the US economy afloat) means more and more cash chases fewer and fewer investments, pushing the prices of financial assets to all time highs.
So Wall Street must look further afield for the giants pots of money required to keep their show on the road.
And European football is one of the biggest pots of money out there.
It has the best players and best teams and best competitions. And that’s what global audiences want to watch – alongside advertisements for razor-blades and sugared water and semi-toxic aftershave.
The Bigger Picture.
While greedy bankers and club-owners get the blame, this story is about something much bigger:
Since 1971, the US financial system has been based on debt creation. That means that if the amount of debt issued does not keep increasing, the entire system collapses.
And, according to anthropologist David Graeber, eras of debt crisis are marked by peasant rebellions – which often escalate to war or revolution as currencies are devalued to pay off debt.
A huge percentage of global debt is created by commercial banks in New York and London, and this has given both nations a standard of living their real economies not provide.
The correction is overdue, and is unlikely to be pretty.
If history is a reliable guide, we can expect to see US and British investment banks make more extreme grabs for other people’s money and that means more extreme peasant revolts in response.
American investor Warren Buffett said it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful.”
Looks like we are still in the “greed phase” of this story – let’s see how long before it tips into outright panic.
This clash of European football culture and Wall Street foreshadows a global geopolitical battle for control of the world’s currency system, and energy markets.
This phase began in the 1970s with the creation of the Petrodollar system – devised by Nixon, Kissinger and Volcker to save the dollar after the link to gold was severed in 1971.
The petrodollar system has two main elements:
a) the ‘petro’ (aka oil)
b) the dollar.
Linking US dollars to Arab oil gave the US control over the biggest producers of the world’s most important commodity.
And that made the dollar more valuable than it would have otherwise been.
But as the value of the dollar erodes, the people with the ‘petro’ are getting restive. Infinitely creatable dollars look a bad trade for their finite oil reserves.
A geopolitical battle is being played out in elite European football where:
the oil/gas rich owners of the ‘petro’ clubs (Paris Saint Germain, Manchester City and Chelsea) can easily outspend the ‘dollar’ clubs (Manchester United, Arsenal and Liverpool) – owned by Americans who are ‘rich’ in dollar debt
Regular readers can guess who I expect to prevail.
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