So much to cover this morning, so let’s get started with something positive; i.e., CVS’ decision to stop selling cigarettes at its 7,600 drugstores. Sure, such a trend could prove crippling to the tobacco industry – and its massive Washington lobby. However, it’s nice to see an American business taking steps to improve the quality of life, as opposed to fostering behaviors weakening it. Not to mention, withdrawing one of its most profitable business lines amidst the worst retail recession since the 2008 global financial crisis; which, moreover, is worsening with each passing day. Heck, even the Congressional Budget Office inadvertently admitted Obamacare alone could reduce U.S. employment by 2.5 million over the next decade; i.e., dramatically reducing potential cigarette sales over that period.
Before discussing today’s main topic, we want to follow up on yesterday’s article about the accelerating Japanese collapse. This morning, it was reported that Japanese wages, amidst a suicidal doubling of the money supply, not only fell for the 19th straight month; but on a real basis, plunged to 16-year lows. In other words, the only “positive” effect of monetary inflation is the temporary spiking of stock prices; benefitting “the 1%,” at the expense of the rest. And for those paying attention, the Nikkei has recently been in freefall; as not only is the Japanese economy collapsing amidst surging inflation, but Abenomics’ entire, misguided aim is failing as well – as the Yen has been surging, destroying the cancerous, lethally destructive “carry trade.”
As for Japan’s ultimate economic plight, it will be no different than the rest – although the collapse of the Japanese standard of living will be well above average. The entire world is on the verge of an epic debt collapse – as has resulted from every fiat currency regime throughout history. And if you don’t believe the utter implosion of emerging market currencies – utilized by more than a third of the world’s population – matters, consider that European banks alone have lent these nations more than $3 trillion’; led, of course, by the “usual suspects” in the realm of equity destruction – such as Spain’s Santander, Italy’s Unicredit, and the UK’s HSBC. Only this time around, Central banks won’t have the balance sheets – or public support – to “bail out” these societal blights; which is why your funds will be personally used to bail them in.
And by the way, did anyone notice that Puerto Rico, a U.S. “territory” whose bonds are equivalent investment vehicles to those of the other 50 States, was just downgraded to junk by the three major credit rating agencies? Puerto Rico has an astounding $70 billion of debt – on a debt/GDP basis, nearly four times that of California – and another $30 billion of unfunded liabilities; and yep, you guessed it, its official currency is the U.S. dollar.
Per this terrifying article, don’t be surprised if the soon-to-collapse Puerto Rican economy yields a massive debt default; subsequently, creating the equivalent of a Greece-like bailout event. Perhaps Puerto Rico will be the “black swan” that catalyzes the “Big One” – and perhaps Greece, for that matter. But if not, we assure you that many others are waiting in line behind them. Heck, Fitch stated this morning that it may in fact downgrade the U.S. Government if its “debt ceiling” issue is not resolved constructively; and don’t forget, the current “X-Date” – i.e., when Jack Lew’s “extraordinary measures” can no longer circumvent the current debt ceiling – is roughly three weeks away.
As it stands, the U.S. economy is in shambles; and thus, the global economic “leader” cannot be counted on to save the rest. In fact, it will likely drag the rest down – like the suction that pulled down the Titanic. This morning’s ADP employment report revealed a 29% sequential decline in jobs created; but don’t worry, it was blamed on “the weather” – i.e., the most common MSM excuse as to why the so-called “recovery” continues to be delayed.
FYI, after this morning’s blatant “Cartel Herald” capping at the 8:20 AM COMEX open, and subsequent raid at the 10:00 AM EST “key attack time” – gold and silver are again rising sharply, as the Dow plunges anew; with gold well above $1,260, and silver, yet again, battling to take the Cartel’s eight-month “line in the sand” at the very key round number of $20/oz. My gosh, it’s going to be a doozy of a surge when it finally, inevitably does; and for those ignoring the fact that JP Morgan is MASSIVELY long PHYSICAL silver, all we can say is this. Do so at your own financial risk!
Back to the weather, we’re exhausted from hearing of how it’s the only negative factor in an otherwise rosy economic picture; as portrayed last week by Bank of America, Goldman Sachs, and essentially all entities levered to the status quo of a dollar-dominated, “99%”-repressed world. However, unlike those supposed bastions of research, only the Miles Franklin Blog actually does the work required to make such conclusions. It doesn’t hurt that I was “one of them” for 15 years; and as an Institutional Investor-ranked, CFA-trained analyst at Salomon Smith Barney for seven years, I have just as much ability to do so – without the “rose-colored” bias, of course.
To start with, let’s just recognize that the weather is a very important factor in our lives. And thus, if the economy was in fact slowing as a result, it would be neither unprecedented, unexpected, or “one-off” in nature. Ask the people still suffering from Katrina in New Orleans, Fukishima in Japan, or countless other disaster areas the world round. Or heck, those working in Miles Franklin’s home office in Minneapolis, which has suffered through its coldest-ever winter.
But for the record, below is a chart of the average U.S. temperature for the past 125 years; of which 2013, while “cold,” is just one degree or so below the historic average.
Heck, on a global basis, average temperature not only sits near its 125-year highs, but November 2013 was the warmest month on record. And looking around the world, I don’t see economies booming as a result. Do you?
However, the coup de grace against those propagandizing – and frankly, praying – that the U.S. “recovery” will regain “momentum” once this “one-off” weather passes, take a look at the two damning charts below. The first shows how U.S. flight cancellations and delays were not only immaterial in 2013, but below average. More importantly, the second chart tells the true story of America’s economy; as following the 2008 financial crisis, the number of flights operated plunged by 18%; with nary a blip higher since. And thus, when the MSM continually speaks of “strong holiday travel” and the like, make sure you realized that – per the below charts – they are lying.
Worse yet, the historic, catastrophic California drought may well accelerate America’s economic decline. But don’t worry, according to the MSM, this additional “one-off” event is immaterial; and consequently, should not deter you from buying stocks, and selling those “barbarous relics,” gold and silver.
As they say, “when it rains, it pours.” And regardless of weather’s impact, the fact remains that the global economy is collapsing; and sadly, four decades of unfavorable “economic weather” – in the form of endless money printing – has left it unprepared to deal with even “minor showers” like recessions, rising interest rates, or regionally surging commodity prices. Ultimately, “Mother Nature” will humble the infinitesimal impact of human technology – and prayer; and do so as dispassionately as ever.
Conversely, her sister – “Economic Mother Nature” – has never been angrier, as Wall Street financial engineering attempts to circumvent her immutable laws. And thus, if you think the thunderbolts she sent in 2008 were loud, just wait for her final response to the largest fiat currency experiment in history. Her presence is already being seen – loud and clear; but sadly, most are neither watching nor listening. Hopefully, Miles Franklin Blog readers are; and better yet, that they’ll actually respond by giving us a call, at 800-822-8080.