It’s the penultimate day before the Fed and Bank of Japan destroy what’s left of their “credibility” – and my god, it’s an utter horror show of economic implosion, monetary lunacy, political and corporate corruption, market and data manipulation, and military and diplomatic provocation out there. Typically, I “calm” myself in such situations by realizing it could be worse – by considering “worst-case scenarios,” then appreciating that we’re not there…yet. Unfortunately, what I see – politically, economically, socially, monetarily, and militarily, tells me a whole lot of worst-case scenarios are about to play out in the “first world.” Which sadly, nations like Brazil, Venezuela, Greece, and countless other “second” and “third” world nations are experiencing as we speak.
Before I get to today’s very important topic, I want to point out the across-the-board horrors that cumulatively, threaten the mass breakdown of financial markets, monetary stability, and even political and social order. And not, “in the future,” but NOW. Frankly, it’s difficult to find a starting point, given how many ugly stories are out there; but seeing former Republican President –and CIA Director – George H.W. Bush endorse Hillary Clinton, demonstrates just how lost, and corrupt, America has become. This, on the day it was discovered that Hillary’s Associate Paul Combetta was in fact “bleaching” her illegally stored, confidentially-created emails, from her time as Secretary of State.
[July 24, 2014] Hello all- I may be facing a very interesting situation where I need to strip out a VIP’s (VERY VIP) email address from a bunch of archived email that I have both in a live Exchange mailbox, as well as a PST file. Basically, they don’t want the VIP’s email address exposed to anyone, and want to be able to either strip out or replace the email address in the to/from fields in all of the emails we want to send out.
Read more here
Then we have the U.S. army “accidentally” killing 62 anti-ISIS Syrian soldiers this weekend. Then, having the gall to accuse the Russians of attacking an aid convoy the very next day. And Hillary Clinton, whose Middle East wars have destroyed tens of millions of lives, accusing Donald Trump of fostering terrorism! And my god, supposedly “conservative” Wells Fargo stealing tens of millions from clients – only to have the employee in charge of the crime receive a $125 million “golden parachute”; the CEO say he’s “sorry,” but won’t resign; and NO ONE being arrested! And how about the “coincidental” bomb attacks in New York and New Jersey, in which an Afghani national has been arrested – prompting a new wave of ugly political rhetoric, calls for closed borders, and new “anti-terrorism” measures.
Economically, just how much more obvious can it be that history’s largest financial bubbles are collapsing as we speak – from high-end real estate to “emerging art”; exposing just how insane the deformation created by the hyper-inflating of history’s largest, most destructive fiat Ponzi scheme has become? In China, mortgage loan demand hit an all-time high last month, whilst business loan demand hit an all-time low – the result of a government fostered housing mega-bubble that has created excesses unlike any since the Japanese real estate bubble of the 1980s. To that end, cumulative Chinese debt has essentially doubled since the 2008 crisis, to roughly $30 trillion – a significant portion of which, financed vacant apartments in hyper-bubbly cities like Beijing and Shenzhen, whilst the Chinese economy is experiencing its lowest “growth” since records commenced 30 years ago. Heck, the Bank of International Settlements itself, just this week warned that China faces a full-blown banking crisis!
Here in the United States of Lies and Propaganda, we’re to believe the National Association of Home Builders’ confidence exploded in August – whilst new home starts, reported this morning, plunged. Or that 50% of all new “jobs” since the 2008 crisis were created by the BLS’ birth-death model, despite new business formation free falling. And that the unemployment rate is at a multi-decade low, despite record low labor participation, declining real wages, and countless layoff announcements from major corporations. Port traffic is down 5% year-over-year, Treasury tax revenues are down nearly that amount, essentially all economic data is declining, and corporate earnings have fallen for six straight quarters – but don’t’ worry, all’s well. Meanwhile, oil prices are plunging anew, threatening further, drastic cuts in the sector that not only is responsible for one-third of all U.S. corporate capital spending; but has been the only sector to generate high-paying jobs since the 2008 crisis. And oh yeah, has more soon-to-default junk bonds within it, than all others combined. And yet, we’re told that third quarter GDP will be up 3%, after barely averaging 1% for the prior three!
Heck, even “Fed Whisperer” Jon Hilsenrath said no rate hike “until December” this morning – and yet, the “recovery” propaganda simply won’t go away. In other words, the Washington, Wall Street, and (captive) MSM economic “hockey sticks” – which I experienced first-hand as a Wall Street buy- and sell-side analyst – simply cannot be eradicated, no matter how bad things get. That is, until the “all-important” stock market – which, with each passing day, bears less and less resemblance to economic reality – is finally “lost.” Which I assure you, it will be – via crash or hyperinflation.
In Europe, Deutsche Bank’s stock is freefalling anew – as I write, to within $0.10/share of its all-time low of $12.49/share; as it becomes increasingly obvious it will not survive the “straw that broke the Euro’s back” – which incredibly, was the U.S. government’s demand for $14 billion it doesn’t have. And not just Deutsche Bank, but the entire European banking sector, €80 billion of monthly ECB QE notwithstanding; starting with Italy’s Bank Monte Paschi; which, LOL, needs to sell $10 billion of loans no one wants, and raise $5 billion of equity, by year-end, despite not a shred of interest in the dying company, which has already raised capital twice in the past two years, but has a total enterprise value of just $1 billion to show for it. Better yet, Italy’s soon-to-resign Prime Minister, Matteo Renzi – Italy’s fourth since 2008 – is openly attacking Germany for patronizing Italy regarding the health of its collapsing banking system, by correctly stating that Deutsche Bank’s problems are far greater. Of course, since all such banks are intertwined – plus, the thousands of corporations, dozens of governments, and billions of people with stakes in them – if one goes, they all go. And I assure you, far more than one are about to go.
And then there’s the gold Cartel – which NEVER in my 14½ years in the sector has worked so hard, or blatantly, to suppress the markets they know to be their “Achilles Heels.” I mean, just how obvious can it be that the same algorithms are being used, day in and day out, to suppress paper gold and silver – whilst prices in nearly all other currencies are at, near, or well above previous all-time highs; as physical demand achieves new highs every year? Heck, even the MSM is writing about how Central banks themselves have been buying gold for years…and yet, prices have such “trouble” rising. Just wait until Central banks are forced to admit such buying – whilst increasing it exponentially – to protect their rapidly collapsing currencies…just as today, when they admit buying stocks and bonds.
Last but far from least, today’s incredibly important topic – of what I believe may be a watershed event, upcoming over the next two days. Which is, the Federal Reserve and Bank of Japan’s respective policy statements tomorrow; at least of one of which, and possibly both, may fully destroy what’s left of the “credibility” they still have. Which, I might add, is only due to the blatant support of stock and bond indices they have prevented them from rightfully reflecting an economic, political, and monetary environment worse not only than 2008, but 1929. At least in 1929, the gold-backed dollar was still worth something – whilst debt was nearly non-existent, care of the gold standard that made it so difficult to create.
Many views have been spouted about what will be said tomorrow, starting with when they will actually be stated – as clearly, both banks are scared of “going first.” Heck, the Bank of Japan hasn’t even published the time of their policy statement, as they are so terrified of having their potentially rogue statements “mis-timed.” Are they colluding with the Fed? I have no idea. But frankly, the fact that the timing appears to be as big of an issue as the content, demonstrates just how fearful they are of another “policy error,” from a bank with literally no margin for “error” at all. Honestly, why anyone cares what these people have to say is beyond me – unless, of course, they decide to “go rogue,” by taking hyperinflationary, currency war provoking monetary policy to new, unheard of levels. Frankly, I would be shocked if they don’t announced something out of leftfield, given how desperate Shinzo Abe and Hirohiko Kuroda are to save their jobs, their collapsing legacies, and the “Land of the Setting Sun” itself.
As for the Fed, they will yet again prove me right by not raising rates – making a mockery of their, and Goldman Sachs’, prediction of “four rate hikes in 2016.” I’m sure they would love to simply say nothing else, other than the usual FOMC boilerplate about being “data dependent”; oil price declines being “transitory”; “inflation” likely to rise in the “medium-term”; blah, blah, blah. However, in their ridiculously blatant attempt to suppress Precious Metals over the past month, by relentlessly speaking of imminent rate hikes, they will be forced to address December in more than a cursory manner. Most likely – that is, if Deutsche Bank’s collapsing stock isn’t causing a global panic by tomorrow afternoon – they’ll pretend a December rate hike is a “strong possibility.” However, even that may well catalyze a massive stock decline, given how ZIRP-addicted – and NIRP-craving – markets don’t want to hear anything other than “lower for longer.” Which, shortly, will become an ECB-like call for “QE to Infinity.” And not the covert type they are performing today – in propping up stocks on a daily basis. But an overt QE4, which will make QE’s 1, 2, and 3 pale in comparison.
No matter what these two dying institutions say, I believe that by the time the dust settles on Thursday – ironically, my birthday – both the Fed and Bank of Japan will have dramatically reduced their credibility. And if the “markets” don’t co-operate, manic manipulation notwithstanding, it may well be September 21st, 2016, that goes down in history as the “day the Central banks died.”
Hopefully, you’ll have protected yourself by then, as the ramifications of the serial demise of the “leaders” of monetary destruction are almost to horrifying to consider. Remember, once the ball starts rolling downhill, it will be impossible to reverse; and if you haven’t taken precautions beforehand – like, for instance, purchasing the real money gold and silver always have been, and always will be – you may never again get the chance, certainly not at prices anywhere near today’s historically suppressed prices.