Yesterday we looked at the situations in both Ukraine and Greece, and how they are both out of money which makes them potential “flash points” for reality to set in. What I’d like to talk about today are the various “slights of hand” and why a spade can never be called a spade.
Currently in the U.S., some (but certainly not all) of the recent economic numbers are showing an absolutely booming economy. All you need to do is look at Friday’s unemployment numbers, they were clearly bogus. The biggest driver of employment over the last five years has been the boom in the oil patch …which is now busted with 1,000’s of pink slips being handed out. BLS revised the November and December numbers to show the fastest growth of employment for any three month period …so far this century! Really? Do you believe this in any fashion at all?De
The economic and financial lies are getting bigger and bigger while the economy is shrinking and the financial position is more perilous. The gap between the reality and the true conditions have never before in history been this wide. Stocks are not allowed to drop, institutions are not allowed to fail, heck, financial institutions have been “told” not to mark to market as this would expose failures. Inflation is understated, employment is overstated, gold is not allowed to rise and the game continues. Everything you now see and hear has one goal behind it, hide the reality at any and all costs.
The situation with Greece is very sticky for the West for several reasons. Each and every one of them is because a Greek failure will expose the very ugly reality that the West is one big and interconnected series of Ponzi schemes constructed in pyramid fashion. Greece cannot be allowed to fail because of what, how much, and who they owe. In order for the reality to stay hidden, Greece absolutely must be forced to borrow more money so they have the ability to pay past debts. Already this morning, a six month “trial balloon” extension has been floated. If Greece is allowed to fail, other central banks (including and particularly the ECB) and many commercial banks will take some very real losses. This CANNOT be allowed to happen because of the leverage factor and the fact that no more collateral exists within the system that’s not already encumbered.
You see, many assets have been hypothecated (lent/borrowed against) many times over, including Greek debt. In case you don’t see the problem here, I will spell it out. When something is “lent” out or “borrowed” more than one time, it is theft pure and simple. This truth cannot in any fashion come to the surface because it will create a “call”. The original owners will flood in and ask for their security, their asset, (think gold) back. What do you think the world will look like when 100 or so “owners” of the same asset decide they will not be one of the suckers who are left with nothing? This will be a bank run on a system-wide basis and include nearly any asset type you can think of.
The following analogy sums it up pretty well I believe. This game works well …for a “while”. It works “while” everyone is confident and no one asks any questions. It works while no one at the poker table decides to cash in and leave with their chips. It works well for as long as no one believes anyone else is cheating. Actually, it even works when everyone knows that everyone else is cheating …as long as everyone is winning. The problems begin when people start asking questions. Questions begin when people start to lose money. The answers are brutally ugly when discovered so it is imperative that no questions are allowed to be asked… and this is where we are today. This is exactly what “official policy” is today.
The Chinese, the Russians, The BRICS nations and 135 other nations tagging along ALL know what the “answers” are. They fully understand the casino is 100% rigged. They understand that everything of value has already been borrowed against and in many instances, several times over. This is why there have been so many trade and currency deals signed over the last year and a half …without U.S. involvement, approval or even “dollars”.
My personal opinion is this, a spade will very soon be exposed as the spade it is and all the theft, corruption and intentional fraud will be uncovered. The relevant event could be anything. It could be Greece failing to pay, leaving the EU or even being kicked out. It could be a local currency blowing up which bankrupts someone in derivatives. It could be the failure of a debt auction somewhere in the world. It could be something already well known or not. It could be a war. It could come from the West or the East, and it could be an accident or even an intentional event. It doesn’t matter “why”, the event is coming. The event is coming because everyone knows that everyone knows the system is fraudulent.
Please don’t reply to me saying “no, not everyone knows, the sheeple are as asleep as always”. I am talking about “countries”. I am talking about the players that count. The East et al absolutely knows they are dealing and trading in a lopsided and unfair system. They know the West is massively leveraged and has been dealing unfairly for many years. Even Western countries know this to be true, for example, why are countries repatriating their gold? Because they hope there is enough still in the vault to cover what they originally deposited. Like I said, everyone knows that everyone knows.
As mentioned yesterday, it is my opinion the East would prefer to allow the West’s failure to occur “naturally” and not force the issue. Time alone will do this. The U.S. has been pushing for war at every turn. A war will be pointed at as “the reason” everything failed. A war will also be used to cover the tracks of the fraud. This is not new thought and only the way it has always been. Distract, pretend, and extend!
If you believe the meme of “recovery” or “growth”, all you need to do is look at this. The Baltic dry index has just dropped to ALL-TIME lows! This index is very basic and when broken down reflects the state of global trade. Global trade has collapsed since the 2008 crisis began, unlike ever before.
This, after huge global deficit spending and monetization. “Magic Policy” which we were assured would cure all ills has failed miserably and no amount of bogus economic reports can mask this fact.
Expect out of control markets, unimaginable financial failures and ultimately a breakdown of distribution and society itself. The truth is, we have lived in financial fantasy land since 2007. 2008 came along, markets collapsed and the reset which should have occurred was aborted …only to become a much bigger and far more painful “inevitable” event now. More debt, more money supply and of course less gold in Western vaults. We in the West have spent, frittered, and given away 100’s of years worth of labor and savings of our forefathers. This in an effort to resist living within our means and calling a spade a spade. Spades are almost all that is left, all the other suits have been spent, lent and borrowed 100+ times over!
Bill, I completely agree with your article. Just a small clarification to those who don’t realize what the BDI or Baltic Dry Index is.
This index tracks the cost of shipping bulk goods/commodities around the world. It cannot be manipulated by any one government.
The Baltic Dry ships wheat, iron ore, oats, corn, barley, bauxite, rice, sugar, coal, cement, soy bean, etc. etc. etc.
Almost everything that goes into a modern economy. This tracking index is a six month leading indicator and is now at it’s lowest level EVER! Since the beginning of the index. This is an historic low, never seen before. Recovery? NO.
Oh yah, forgot to mention that widespread hunger and starvation, in certain economically deprived areas will result from this lowering of food stuffs being shipped. Unless some countries step up and foot the bill. Which they can’t because they are all broke!
Thanks O. L. I.
OLI, my understanding of the BDI is very limited. However, I am wondering if we were to convert it to apples to apples if it is actually worse than the already bad reading. For example, if it was measured on a per capita basis, or versus currency in circulation, or something like that. I am thinking that over the past 30 years the global economy has grown for sure as has the number of currency units in circulation. Just thinking out loud. Any thoughts would be appreciated.
also must take into account how many tankers are available.
Bill, the global tanker fleet is very busy due to the crash in oil price and the fact that oil traders have taken advantage of this to lease (short term) VLCC’s and UHCC’s (very large & ultra high crude carriers) to be used as floating storage. Hoping to cash in as in the oil price crash of 2009 – 2010 and repeat their gathering of fortunes.
yes, have seen stories on this.
Bob – google;
Baltic Dry Index
Lloyd’s Shipping Register
These sites will provide you with info and links.
Read the Zerohedge comment below. It will provide you a different perspective for assessing the BDI data.
Date: Fri, 01/09/2015 – 03:02 | 5640638 Zidane1998
“I work as a shipping analyst, and I have noticed you are using the BDI as “measure of world trade”. This is completely wrong….its a pure shipping market index, and the reason for its plunge the last few years is due to oversupply of vessels. Shipment of Dry Bulk volumes have increased markedly since 08, but this is nearly SOLELY due to Coal and Iron Ore imports to China. What will happen to these volumes as the credit bubble there implodes is another matter (coal imports have already fallen a great deal the last year).
Of course these vessels are a ridiculous malinvestment stemming from ZIRP. After the financial crisis, 95% of shipowners could not raise capital themselves to buy these vessels. The finance are increasingly provided by “hedge funds” and private equity…Therefore we have seen the massive surge in order placements as well as vessel deliveries the last few years. This does not only include Dry Bulk ships, but also Dirty Tankers, Clean Tankers, Chemical Carriers, LNG and LPG vessels.
All this is a “bubble”, and vessels prices have to collapse (which we are starting to see)… which will have wider repercussions, as several major Banks in Germany, Norway, etc have massive exposure to shipping….”
The zerohedge article that you reprint here is wrong on so many levels. Considering that it comes from a commenting community at ZH that is base, sophomoric, immature, profane and ignorant of facts, its no surprise.
Its really a shame that the commenting community at ZH has fallen to such a low degree of intelligence. It never used to be like this. Most participants of the commenting board worth reading have left off commenting, preferring to just read the articles, which are still top notch.
Thanks for another excellent article.
I’ve never seen so many lies and bull shit from governments in my 60+ years. If the government says it is raining outside you had better step outside and look for yourself.
The lies and bull shit are so fast coming even a pair of fishing waders won’t help.
If you have a “shit meter” like I do, it has been flashing red for years.
Hope you are waking a few more up because time is so very short!
yes, and when they do wake up it will be with a startle.
shit filter here is full, tks
Another great piece Bill.
Well Governments sure know how to use a spade.
They have allowed the banks to dig us a hole so deep that we cannot see the light of day, never mind crawl our way out.
The part that troubles me the most is that they go on and pretend that their is no hole just a small ditch that we must jump over so that our economies can rush back into motion. What a joke.
The USA and Canada appear to be trying to convince us that we must stop PUTIN and we must stop ISIL, and nothing else matters.
Soon the war drums will beat so loud that nothing else will matter….
Seldom are things by chance…Mostly things that come to be do so by design.
Surely we must be where we are because we planned to FAIL.
unfortunately it is all planned.
Bill do you believe in Shemitah? The statistical probabilities are hard to refute.
the conditions are certainly correct.
Why do cattletruck drivers drive at night?
To beat the bk inspector to the next ranch….
I’ve lately been studying a concept new to me called “Social Mood”. It’s how people feel about different things like the economy, politics, their own financial and social status, etc. There are international conferences on Social Mood, determining how people feel and perceive their personal situation. All the propaganda and data these days is aimed at directing and manipulating social mood for the benefit of TPTB. Having said that, I agree with you that the “sheeple” don’t need to come to reality for the Ponzi to fall. To many of the TPTB already know it and will act accordingly (The Swiss Bank).
Super article Bill. You really lay it all out where even a blind American could see – well, maybe a few let’s hope. Al the best Bill.
Bill,What ever happened to the report that Russia shut off Natty to Ukraine and reduced output to six other countries…Tnx Dennis
As far as I know, the gas supply through the Ukraine pipeline has been reduced 40%, the 100% story was backed off of.
Great piece. IMHO it won’t be a financial failure that causes the crash. We’ve learned since 2008 that they have every market hooked up to the printing press, they can buy whatever they want and paint any picture they want. It will probably be a geopolitical event as you say, probably when they see the gold has gone down too far. They’ll start a war or something or do some 9/11 type event. Or maybe the East will lay bare the gold scam, but that would not be in their interest of letting it fall naturally as you say, it could be spun as an attack against the USA.
could come from anywhere.
What amazes me is that because the “majority” of the sheeple believe these positive jobs numbers are accurate, defying what they may be persoanlly seeing on main street, they invest or accumulate debt or some even hire based on what they are told. So the main stream media is doing their job in bestowing these lies or even more so to those who don’t watch ANY news at all unless its about Snookie or Honey Yoo Hoo booboo or whatever she’s called. I think that probably 95% of the population celebrates how cheap gas is right now and cannot see anything beyond that. Of course the MSM milks that for all it is worth as yet another destraction.
They are not true but slightly better than those of the rest of the western world…
I call BS!!! on this statement! One of your very worst and if you believe it, then oh well, have fun in your own mind.
JOLTS numbers are quite real even if there are double counted ones and part time is included so the jobs may be lower quality than they used to be in the nineties (more part time and low income jobs but still better than greece or spain for example).
US/UK have succeed to engineer a Financial bubble in real estate and other assets which have always provided growth even of bad quality (debt volume strong rise).
That is why the anglo world is still leading the western world. BRICS are trying to escape the cliff but they are very very slow to act : since lehman they just have made some currencies swap and took birth only very recently to their own developement bank.
At this pace they should be ready for 2050 !
2050? your crystal ball is broken.
You are right maybe 2070 !
It seems the gold recovery is fading much more faster than US recovery !
2050 or 2070, I don’t think so but I admit, I thought it would have happened in 2011, 2012, 2013, 2014 already…. They kicked the can down the road accumulating unbelieveble debt as the sheeple are surrounded by wolves… these wolves are showing themselves as sheep dogs here to protect them all as they stand their blissfully chewing on grass. A picture of one of “the big bad wolves” Mr. Putin is just one way the sheepdogs tell the sheep not to think, but just to fear and leave it up to them to deal with it.
So the fact that we did not reset in 2008 or 2011-2014 YET, is actually extra bad, as people are less prepared than they were for the 2008 crash and the problem is now so expounded from kicking the can, that rather than a painful reset, we may very well have WWIII, and surely even more of our freedoms taken from those who see this coming, but sadly given away by that 95% majority of cud chewing complacent herd animals. My hope is, when TSHTF, that that 95% majority will decrease to maybe 65% as I believe when the pain starts, there are people who will wake up and become a stronger minority.
and herd animals eventually get herded….to what out-come they have no clue.
they never do.
we can hope.
you remind me of an old friend of mine from Wyoming. Strait and to the point, he also thought as I believe you do that paper pushers and talking bobble heads are way over rated. I know that there is a lot more to be said on this and related subjects. Just wanted to say you and your team, that you all do a great job bringing us folks out here a glimpse of what is really going on behind all the glitter on wall street.
Thanks Again….. A friend
“We in the West have spent, frittered, and given away 100′s of years worth of labor and savings of our forefathers.” This is probably the saddest, gravest, and most stark comment in the piece. There is no getting away from systemic, distributive, and by extension, societal displacements never before seen on this continent. And to top it off, the moral fabric of our society today is a ghostly shadow of what it was during the years of the Great Depression. The hobos will not come to your door with hat in hand and good manners as they generally did back then. Rather, the goings on will be beyond most peoples’ imaginations.
moral fabric is gone.
Of course Mr. Holter has the reality of the unreal well covered in this article. Can the owners of the debt money ponzi scheme unwind the present conditions by allowing debt relief by some fanciful name that hides saying this is a spade? Of course this would mean giving up some of their wealth, a not likely scenario as the wealthy figure they can ride a “rough patch ” out and retain all that they have stolen and then some. Come the collapse the people must rally in support of those who come forward offering a non debt/money system, be it precious metal or some other desirable commodity backing a currency with rigid quantity controls. In the meantime gold and silver are a great insurance policy for this transition period.
one can hope but not likely. The only chance for “asset backed” money in my opinion are the Chinese forcing it on the world.
Excellent article that says it all. Keep stacking the physical y’all. I will continue doing so.
I did need a soundtrack to read by; https://www.youtube.com/watch?v=9F8QM3tjkTE
Thanks I J, enjoyed it!