Well, “September cometh,” and with a BANG! Yet another 3% decline for the “Dow Jones Propaganda Average” – actually 2.84%, following a last minute, PPT-inspired “Hail Mary” rally – but let’s just “round up,” shall we? In other words, its third such decline in the past ten days – following an astonishing, equally PPT-inspired string of four years without a single 3% decline. I mean, just think of all the astoundingly horrible economic, financial, and geopolitical news since the U.S. lost its (comically undeserved) triple-A credit rating in August 2011 – whilst I was attending GATA’s London anti-Cartel conference, I might add; including the addition of roughly $4.5 trillion of national debt, and countless tens of trillions “off-balance sheet.” And yet, not a single 3% decline – which is probably why I long ago declared 2% to be the PPT’s “daily limit down” level.
Conversely, gold and silver – who’s “daily limit up” is typically 1% – have experienced more 3%+ down days than I can count – amidst record demand, vanishing supply, collapsing economies and currencies, and unprecedented money printing. Heck, “paper silver” has at least one 2%+ intraday decline on roughly half of all trading days; which is probably why physical silver is rapidly selling out. I mean, geez – talk about a “sixth sigma” event!
Worse yet, the comical, “oil PPT” enhanced dead count bounce in crude oil (but strangely, few other commodities) decidedly failed – despite the mobilization of everything from fraudulent headlines (Saudi Arabia invading Yemen, OPEC considering production cuts); to economic “recovery” propaganda (despite relentlessly weak data); and most importantly, algorithms gone wild. Earlier this year, the newly-formed oil PPT engineered a nonsensical WTI crude surge from the mid-March low of $42/bbl to nearly $63/bbl six weeks later. However, the current leg down took WTI crude below $38/bbl last week, before the aforementioned, equally nonsensical surge coinciding with the PPT temporarily “saving” the stock market last Wednesday. That said, said “surge” topped out Monday at less than $49/bbl – and as I write Wednesday morning, is back to $44.50/bbl, following not only oil’s biggest down day since 2009, but a shockingly huge API inventory build after the close.
In other words, another miserable day for “the powers that be” – replete with blaring red alarm signals, like collapsing high yield bonds, rising credit default swap premiums, and surging “fear indices.” Not to mention, dozens of currencies plunging to record lows – yielding dramatically reduced purchasing power for the majority of global denizens. And, adding “insult to injury,” the new market “paradigm” – at least since this month’s market crisis commenced – of the dollar surging against most currencies, but plunging against the Yen and Euro. Which, when you’re amidst the nuclear phase of the “final currency war,” pushes the owners of the world’s other mega-printing presses to “turn up the volume.” Which is probably why speculation is rampant of an additional expansion of Abenomics – record low Shinzo Abe approval ratings notwithstanding; and, my god, surging expectations that the ECB will, for the second time since initiating it in March, expand the size of its historic QE program at tomorrow’s meeting! Throw in the fact that the supposed third Greek bailout may collapse following September 20th’s “snap elections” (likely, why National Bank of Greece stock closed at an all-time low), and you can see why TPTB’s most recent “Hail Mary” efforts – including the introduction of that very algorithm to the Shanghai Exchange – are falling flat on their face.
That said, hope springs eternal – particularly when armed with “weapons of mass financial destruction” like monetary printing presses; advanced high frequency trading algorithms; and unregulated, over-the-counter derivatives. Hence, when the Chinese stock market failed to plunge last night – and European and U.S. bourses, to follow up yesterday’s bloodbath with additional losses (like normal, freely-traded markets would have done), the media unabashedly admitted as much. To wit, this morning’s “top story” on Yahoo! Finance – culled from fellow MSM lackey Reuters – titled “markets on edge, as policymakers flex muscles,” claiming “fresh government intervention to support China’s jittery markets and bets on a more dovish stance from Central bankers provided limited respite from Wednesday’s stock market sell-off, as oil resumed its fall.” Ah, of only these dimwits understood we are nearing the “end of belief that Central banks can save us.”
Yes, “fresh government intervention” – like the capping of yesterday’s PM rally (yet again, violating “Cartel Rule #1; i.e., “thou shalt not allow PMs to surge whilst the Dow plunges”); the 502nd “2:15 AM” EST paper raid in the past 574 trading days; and another raid following this morning’s miserable miss of the August ADP jobs report. In fact, not only was the ADP report terrible – declining year-over-year for the seventh straight month; but the simultaneously published labor cost index purported plunging average wages. In other words, extraordinarily weak “jobs” and “inflation” numbers; you know, the two factors the Fed nearly exclusively focuses on when debating (if you can call it that) monetary policy.
Of course, the concept of relying on past economic data is pure idiocy – particularly when analyzing the stock market; which last I looked, was supposed to discount future expectations. As, in the case of employment, the upcoming carnage in the commodities sector alone will be a sight to behold. Like, for instance, Anglo American, one of the world’s largest miners, last month announcing its intention to fire 53,000 workers; or, just yesterday, Conoco Phillips, one of the world’s largest energy companies, plans to lay off 10% of its entire global workforce.
Heck, look at the Precious Metal mining sector alone (sorry, I had to get in another dig); which, yesterday, experienced another horrific, market-leading plunge despite gold prices rising, and silver barely falling. For the millionth time, I cannot overstate my belief that the entire South African mining sector (South Africa is the fifth largest global producer of gold) is on the verge of collapse– which is probably why South African mining stocks are screaming NEAR-TERM BANKRUPTCY, and why the South African Rand plunged to a new all-time low yesterday. But don’t worry, those tens of thousands of engineers, geologists, and mining and oil rig workers should have no problem getting five hours of work per week at Walmart. Oh wait, Walmart just announced it is cutting back employee hours, due to – get this – the detrimental earnings impact of recently mandated minimum wage increases!
OK, that’s enough of today’s mundane, depressing “news”; as it’s time to discuss bigger picture, far more depressing topics. Like surging currency wars, hyperinflation, and geopolitical instability.
To wit, yesterday’s article, “the most dangerous, destabilizing force on Earth”; describing how decades of destructive Chinese economic policies – to both itself, and the world at large – will weigh heavily on global political, economic, and financial stability for years, if not decades, to come. Particularly following last month’s historic Yuan devaluation; the first step toward what I deem the “upcoming, cataclysmic financial big bang to end all big bangs” – i.e., complete de-pegging from the dollar – which, both politically and mathematically, must inevitably occur.
That said, in the former article, I qualified China’s potential to be the world’s “most dangerous, destabilizing force” in stating the following.
“Simply due to the massive size of its population; manufacturing market share; financial resources (and far larger debts); and likely, military capabilities, has a global political and economic impact far larger than any other entity. Frankly, more powerful and destructive than the entire Western World combined; with one notable exception – i.e., the printer of the current “world’s reserve currency,” the U.S. Federal Reserve.”
Indeed, equally destructive economic power resides in Washington’s Eccles building (the Federal Reserve’s headquarters) as in all of China; albeit, of a slightly different ilk. Kind of like a nuclear fusion bomb being 1,000x more powerful than a fission bomb, despite the fact both bombs are capable of leveling entire cities in seconds. Which is all the time financial markets needed to react to China’s (tiny 6%) Yuan devaluation last month – per the subsequent carnage, despite historic PPT efforts. Not to mention, all the time they’ll need to react to a Fed “rate hike” – which I put in quotes, as even if the FOMC were to commit the unthinkable, it would only be by a few meaningless basis points.
Which brings me to the “only financial event that could be as cataclysmic as a significant Yuan devaluation”; i.e., a Fed so enmeshed in its seemingly limitless hubris, it would actually raise interest rates amidst the ugliest economic, financial market, and geopolitical environment in generations. Not to mention, whilst personally holding a $4.5+ trillion portfolio of heavily leveraged, historically overvalued Treasury and mortgage-backed bonds; whilst its “masters” in Washington are not only saddled in an equally historic debt trap, but screaming of the detrimental economic impact of the surging dollar. Which, contrary to what nearly everyone else was predicting, I forecast nearly two years ago; not due to U.S. economic strength (ROFLMAO), but the “liquidity vacuum, a la 2008, that would occur when the global economy inevitably collapses. Which it most certainly has!
Frankly, I could write a small book describing the myriad ways how even a minuscule rate hike would destroy not only U.S. economic activity and financial markets, but those of the entire world. As if the Fed hasn’t done enough damage already – like exporting so much inflation in just the four years since commencing first “Operation Twist” and its European “swap agreements,” and then QE3, the average global currency has lost more than half of its purchasing power. Between the aforementioned factors – and oh yeah, the direct inverse correlation between interest rates and economic activity that even the Fed’s Ivory Tower apparatchiks learned in Economics 101 – even the tiniest of rate hikes would swamp the historically vulnerable global economy and financial markets like a tsunami.
Throw in the fact that – again, oh yeah – the world’s second largest Treasury holder, China, is actively selling Treasury bonds (in effect, a “reverse QE” situation); whilst the world’s largest holder, Japan, is hopelessly bankrupt, and in desperate need of new financing – and the concept of raising rates (again, by even a tiny amount) will have the same impact as a fireman replacing water in his hose with kerosene. Not to mention, what if said “new market paradigm” of the dollar falling against the Euro and Yen amidst market crises causes the ECB and/or Bank of Japan to step up the “final currency war” further – yielding a further surge of the dollar? Which, from the standpoint of the multi-national companies that comprise the vast majority of U.S. corporate earnings, tax receipts, and lobbying dollars, would have the economic impact of dropping an economic “fusion bomb” on their business.
In other words, there are dozens of reasons why the FOMC would be wise to shut its trap and leave rates alone at its September 17th meeting. Not to mention, that as a rule, the fiat currency Ponzi scheme it presides over requires limitless ZIRP and QE to simply survive; let alone, in times of severe systemic crisis, as we are witnessing today. And conversely, not a single reason to raise them, other than the minor “moral victory” it would achieve if it could (it can’t) possibly do it without causing the aforementioned domino-toppling effects.
As for Precious Metals, demand will surge, and supply plunge, no matter what they do – as their “upside fate” has long since been long cast in stone – just as the economy’s equally inevitable “downside fate.” So, to Whirlybird Janet and her band of morons, who are destined to see the despicable fiat Ponzi scheme they created collapse on “their watch,” all I can say is thus…MAKE MY DAY.