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“Plain as the nose on your face,” this was a quote sent in by a reader.  Well yes, everything today is that obvious.  Maybe it’s because everything has become so obvious the masses just cannot see “it” or anything for what it really is…or just maybe the alternative is too awful to even contemplate?  Doesn’t this always happen?  Isn’t this how past manias are all described?  We read history books about stories like the tulip mania or Weimar’s hyperinflation and we wonder “how could people have been so foolish?”  However, there is a difference from past “foolishness” and today’s situation.  Almost all (except the 1930’s) crack ups in the past were regional or only affected one country or a small group of countries, this is not so today.

Today we have the entire world all living in the same boat.  Nearly all countries have borrowed more than they can ever pay back.  The entire world “works” and gets paid with pieces of paper that on their own have absolutely no value or real worth whatsoever.  Stock markets all over the world are “going up” because as the saying goes “there is no other place to put your money.”  Stocks it is said are going up because free money continues to enter the system and must go somewhere, they are going up because that’s what they do as a way to get money out of a failing currency.  Just look at the Caracas exchange as an example.  Look at the global bond markets, interest rates are low everywhere yet many sovereign issuers couldn’t get a subprime car loan if they walked in off the street and applied as John Doe.

Some will say something like “but with new technologies all of this makes sense and “old” measurements and values no longer apply.”  Really?  Does new technology make it “smart” to lend worthless pieces of paper to a bankrupt issuer who promises to pay your invested pieces of paper back with under 3% more (interest) pieces of worthless paper over 10 years?  Has anyone even thought about what their “investment” will purchase 10 years from now?  Does it make sense (here in the U.S.) that less than half of the population works to support the other half?  What about pensions and social security?  Does it make sense that people pay into a system that is known mathematically to be (un) underfunded and will not be able to pay enough worthless pieces of paper at a later date for support in retirement?  Does it make sense for a society to rely on younger, less educated workers whose work ethic has been hollowed out…to provide for retirement?  All you need to do is look at Japan where the birth rate has crashed and the average age is north of 50 years old, how does it mathematically work where 1 worker will be asked to support 3, 4, 5 or even more retirees?

“But the Fed will not let anything bad happen” it is said.  Really?  This is an entity that is leveraged over 70 to 1, Bear Stearns and Lehman were only levered about 30 to 1 when they failed so what makes the Fed so special?  Yes of course, they cannot go bankrupt because they have the ability to create more money to “pay their bills.”  Has anyone really thought this through?  The derivatives market has grown to well over $1 quadrillion (with a capital Q!), how does the Fed with a whopping $65 billion (with a miniscule b) of actual equity save this when it goes off sides?  Yes I know no one ever has to report losses so it can never go “off sides.”  Think about this, all derivatives players know that all other derivatives players are overleveraged, they all know that no one ever has to report a loss and that each player only shows gains…what is the logic to this thought process?

Meanwhile on Main Street the average person is getting squeezed unlike ever before.  The “game” has gotten so big and so “esoteric” that the average person has no way to comprehend what is happening on a micro level.  The average person just goes to work and struggles through everyday life waiting for the next paycheck so he can do it all over again and hope to make it again to the next paycheck.  The little guy may know that something is wrong but is powerless to do much of anything about it.

Strangely I think that a vast majority “know” that something is very very wrong.  Few have the ability to do anything about it and even fewer want it to “end.”  The top .1% surely doesn’t want it to end.  The top 5 or 10% don’t want it to end.  The middle class and even lower 50% don’t want it to end…because the “change” will be worse than the “current.”  This only makes sense because anything is worse than “something for nothing.”  So we go on where the vast majority knows that something (MANY things) is/are “not right” and in fact dead wrong but the alternative would be a bigger disaster.  The “thing(s)” that is as plain as the nose on your face just keeps getting bigger, more blatant and obvious but…facing reality would surely be worse for nearly all involved.  As foolish as this sounds I think it describes where we are now, “everyone knows we are set up for disaster.  Everyone knows that everyone knows…even those who know will shut down those (of us) who talk about it because the alternative is just too awful to even contemplate”…even though it’s as plain as the nose on your face!