It’s early Friday morning, preceding what could be a very stressful, turbulent weekend for the powers that be. With stock futures again sharply lower, and the “all-important” NFP jobs report an hour away, their ability to manipulate markets could be significantly compromised if already terrified, mortally fearful market participants “misinterpret” the signals the blatantly rigged report attempts to emit. In recent years, I’d say “it doesn’t matter”; as no matter what the report says – or how it’s spun – said powers that be have had little trouble controlling markets’ “reaction.” You know, pushing stocks and Treasury bonds higher, and gold and silver lower. That said, they clearly lost control of currencies long ago – and commodities in the past 12 months. And now that equities, too, are moving “against their wishes”; whilst exploding physical Precious Metals demand threatens to blow their four decade Ponzi scheme to “kingdom come” – perhaps, imminently – I’m not so sure. Clearly, we are amidst the “manipulators’ last stand” – and today will be a major test of their cumulative abilities.
To wit, we’ll see if they believe a “better than expected” report will give them the best chance to survive the pre-holiday weekend unscathed; or conversely, “worse than expected.” Practically speaking, the carnage from this summer’s commodity and currency crash MUST have had a significant negative impact on August employment trends; whilst economic data of all kinds, both domestic and international, has continued to be exceedingly week. Which is probably why the Fed’s own “GDP Now” forecast for 3Q GDP growth has plunged to just 1.5% – “double seasonally adjusted” and all – compared to the current, as usual lagging Wall Street consensus of 2.7%. And last but not least, we know that Wednesday’s ADP jobs report for August was massively below expectations.
Consequently, if the BLS attempts to claim a “strong” jobs market – notwithstanding the typical lies, deceptions, and misstatements the NFP report is infamous for – it threatens to not only lose credibility entirely, but ignite “rate hike fears” regarding the FOMC’s upcoming September 17th meeting. Which, as I wrote last week, would be the “only financial event as cataclysmic as a significant Yuan devaluation.” Conversely, a very weak number would confirm, once and for all, that the “recovery” propaganda meme is dead and buried; raising the specter of when, not if – the inevitable “Yellen Reversal” arrives, showering the world with hyper-inflationary doses of negative interest rates and “QE to Infinity.” Which, in turn, could for the first time challenge the equally powerful meme that Central banks are in control. Which, as I wrote last month, is more likely than not, a meme on its last, dying legs. Oh, the tangled web the world’s Central banks have woven – in trying to prolong the inevitable end of the historic, unprecedented Ponzi scheme they created.
But enough of that misery for a moment – which I’ll get back to following the NFP report’s publication. For now, let’s go all the way back to 2003 – when the world was reeling from the first of the century’s three historic economic and financial market bubbles; whilst the aftermath of 9/11 was shaping the way Americans would view the world for generations to come.
Amidst the gloom and doom, the “brilliant”, “forward-looking” analysts at Goldman Sachs – yes, the same ones who predicted the internet boom would engulf equity markets indefinitely; came up with a brilliant marketing ploy – playing on investors’ inherent “hope” for recovery, and unwavering search for “the next big one” to bet the house on. And given that America’s internet “big one” had just imploded, it made sense to pick international targets – particularly opaque ones that they could purport to be “experts” about. Hence, they birthed a “long-term investing meme” based on the notion that four nations – Brazil, Russia, India, and China; i.e., the BRICs – would dominate global trade for the next 50 years.
Hey, it sounded good on paper; particularly given China’s burgeoning domination of global manufacturing. Which, by the way, was largely predicated on the PBOC’s own, hideously “deformative” monetary policy – in artificially pegging the Yuan to the dollar. Plus, India’s such a big nation, with all those tech geniuses and doctors, so how could it not become a global leader? As for Brazil and Russia; well, I’m not sure what the big excitement was about, as both are governed in borderline third-world fashion, and both as hopelessly tied to commodity markets as an infant to mother’s milk. Better yet, when mining activity took off in the mid-2000s, Goldman felt bold enough to add the nation whose fortunes were more broadly tied to mining than any other – South Africa – in April 2011. No matter that much of South African mining is equivalent to U.S. shale oil drilling – i.e., extremely high cost. Or that South Africa’s small size; checkered political history; and gaping racial divide made it unlikely to ever be a major global power. And thus, BRIC became BRICS. Perfect timing, I might add, as Goldman nearly “top-ticked” not only global commodity prices, but the Rand’s foreign exchange value.
Fast forward to today, when not only is the global economy at its singularly weakest point of our lifetimes – and “adjusting for debt,” the weakest point in centuries. Getting worse, I might add, as now that we are in the “terminal phase” of history’s largest fiat Ponzi scheme, debt loads are guaranteed to exponentially increase until the acutely diseased monetary system implodes.
And which countries are suffering the most? Yep, you got it, the BRICS! In fact, their average currency is down an astounding 70% in the past four years alone, with only the Rupee’s exchange rate down less than 100% versus the cancerous dollar. All four are either at, or about to slice through their all-time lows. And trust me, particularly as the historic commodity bear worsens, you “ain’t seen nothing yet.” To wit, when I wrote “crashing oil prices portend unspeakable horrors” a year ago – when WTI crude was $81/bbl, compared to $46/bbl today, I could have just as easily have titled it “crashing commodity prices portend unspeakable horrors.”
Regarding Brazil and Russia, said reliance on commodities, in what is shaping up to be the longest, most destructive commodity bear market in history, are likely to pave the way not just for economic Depression, but social and political revolution. Yes, Putin can probably survive by taking Russia back to its brutal totalitarian state. However, if you thought the fall of the USSR was economically devastating for Russia, get ready for the irreversible fall of the Ruble. As for Brazil, the Real is one of the few currencies collapsing as precipitously as the Russian Ruble – amidst not only a devastating economic implosion with nowhere to go but down, but a den of government corruption that could result in President Rousseff’s resignation any day. Heck, state-owned oil company Petrobras – by far, the nation’s largest revenue producing asset – just sold itself to the Chinese at fire sale prices, to avoid full-fledged bankruptcy. Which, by the way, may well occur anyway, no matter how much bad money is thrown at it.
As for South Africa, NO ONE has spent more time discussing how doomed its collapsing mining industry is – going all the way back to my “rise and fall of South African mining” article of February 2013. You know, less than two years after Goldman Sachs declared it one of the likely global economic leaders of the next 50 years. Moreover, I have spent the past year practically screaming that the South African gold miners – ravaged by Cartel price suppression and exploding production costs – were on the verge of full-fledged bankruptcy themselves. And if the Cartel is not decisively overrun by year-end, enabling Anglogold, Goldfields, Harmony, and others to recapitalize (likely, at massively dilutive terms), a big chunk of global gold production will be eliminated, potentially for years to come. Which is why I have NEVER been more confident that “peak gold” has arrived – and right behind it, peak silver. Most likely, followed by dramatic, precipitous declines in the production of both; but particularly silver, as roughly half of all silver production is the byproduct of soon-to-be-closed-en-masse copper, lead, and zinc mines.
And then there’s India – which earlier this year, I proclaimed to have the “world’s worst government.” In fact, I have written countless articles over the past three years on India’s hideous political and economic situation (links embedded within the aforementioned article). Which, I strongly believe, makes India a prime candidate for Greece-like social revolution; particularly when its psychotic, fiat currency loving government is overran by the 99% of Indians that believe gold and silver – not “rupees” – represent true wealth. To wit, since the (since disgracefully swept from power) Congress Party initiated onerous gold and silver import tariffs in 2013 – under the ridiculous guise of reigning in the nation’s “trade deficit” – a massive “black market” has developed, causing gold and silver imports to surge; the Rupee has plunged back to an all-time low; and India’s economic outlook has dramatically worsened. Moreover, Narendra Modi’s BJP Party, which campaigned in 2014 under an implicit promise to repeal the tariffs, has reneged on said “promise.” And worse yet, speculation that the Reserve Bank of India will shortly re-enter the “final currency war” by significantly reducing interest rates is increasing. And if they do, the backlash from a billion-plus citizens desperate for gold and silver will be historic.
And then there’s China – which in many ways, is the poster child of the globally “deformative” impact of an historic, four decade long fiat currency Ponzi scheme. I’m not going to re-hash the countless points I’ve made about the political, economic, and social hell the Chinese are about to go through – and by proxy, the entire world. But suffice to say, my article from just two days ago, “the most dangerous, destabilizing force on the planet” – i.e., China – says it all.
In other words, yet another feather in Goldman Sachs’ cap – as it vies for historians’ infamous branding of the most evil corporation ever. Previously, I had given that title to England’s East India Corporation of the 16-1800s – for raping, pillaging, and enslaving large swaths of the world in the name of (government-supported) “profit.” But now, I’m not so sure – as the raping, pillaging, and enslaving that Goldman Sachs, JP Morgan, and a handful of other “TBTF” banks are causing, with the pen rather than the sword, is as epic as it is destructive.
And now, for the “main event”; i.e, said “all-important” NFP jobs report for August. And WOW, WOW, WOW, was it horrible. Of course, if Wall Street simply paid attention to the aforementioned fundamentals – including the ADP August jobs report from two days ago – their “expectations” might have been a bit more tempered. That said, it’s not the hideous “headline number” that mattered most (+173,000 bogus jobs, versus expectations of +223,000 bogus jobs, including 111,000 bogus “birth/death model” jobs), but the “devil in the details” that, as usual, smashes said economic “recovery” propaganda in the face like a steel two-by-four. You know, like the vast majority of said jobs occurring in non-productive sectors like healthcare and “social assistance.” And get this, finance! Gee, I wonder how long those finance jobs will last, as the world enters an historic financial meltdown.
Yes, the BLS, in all its wisdom, purported that, despite miserable job creation – even with unprecedented data goosing, the second weakest number in the past 19 months; the “unemployment rate” not only declined, but did so from 5.3% to 5.1% – representing the lowest “unemployment rate” since…drum roll please…April 2008, just before the global economy imploded into oblivion. Of course, the reason it fell so much, as always, was yet another decline in the Labor Participation Rate; as whilst the aforementioned 173,000 bogus “jobs” were created, 261,000 Americans left the Labor Force. Consequently, the amount of Americans not in the Labor Force rose to a record 94 million, keeping the Labor Participation at a 38-year low of 62.6% – and an all-time low for males. “Coincidentally,” female labor participation surged in the late 1970s; i.e, just after the gold standard was abandoned, raising the cost of living for millions of American households, and thus forcing many women to work. And by the way, if one chart depicts how dire America’s labor situation has become, it’s this one – depicting how the only segment of the population demonstrating improved employment trends is high school dropouts.
In the hideous report’s aftermath, stocks are plunging, commodities imploding, the dollar exploding higher (i.e., the “liquidity vacuum” I predicted two years ago); and interest rates plummeting. The Cartel is desperately trying to hold PMs down as well, but having a lot of trouble. And methinks today’s news, and market action, will only make the burgeoning physical silver shortage we have been shouting about that much more acute. As for interest rates, they are plunging anew, making it more and more likely that the September 17th meeting will be yet another miserable failure for the Fed – even if Richmond Fed President Jeffrey Lacker was, comically, trotted out to claim “the case for raising rates is still strong,” as “both mandate conditions (improving employment and rising inflation) have been met.”
I mean geez, just how dumb do they think we are? Not dumb enough to avoid PROTECTING our assets while we still can, I hope.