With each passing day, a greater share of the world’s 7.3 billion denizens are succumbing to the political, economic, financial, monetary, and social horrors of history’s largest fiat Ponzi scheme. After 44 years, it has enveloped all aspects of our existence, leaving a handful of sociopaths controlling our collective fate – and making it significantly worse with each disastrous decision. Everywhere one looks – from Asia, to Europe, Africa, Australia, and the Americas – living standards are weakening for all but the “1%” benefiting from said disastrous decisions. In this weekend’s “Death of the BRICS” Audioblog, we discussed how the five countries supposedly “leading” the global economy are collectively imploding; and as for the rest, the situation is far worse.
Currencies, commodities, and economic activity are plunging at “falling knife” speed; and yet the “evil Troika” of Washington, Wall Street, and the MSM continues to pretend otherwise. Not that anyone’s listening – as signified by CNBC’s ratings plunging to 1992 levels (i.e, when the station went on air); and this, amidst “record stock prices.” However, seeing Yahoo! Finance’s “top story” this morning espousing “Obama claims the upper hand in budget fight with Congress” – with a tagline starting with “bolstered by a spate of upbeat economic news…,” it’s hard for me to maintain my breath, let alone my sanity. A “spate of upbeat economic news?” I mean, what part of the U.S. economy having its worst start to a year in the 15 years the Bloomberg Marco Surprise Index has been calculated rings of “upbeat?” And this, following the worst holiday shopping season since 2009? Or the Fed’s own tracking model assuming roughly ZERO 1Q GDP growth? Or leading propagandist Goldman Sachs’ global tracking model reading recession? Or the CRB commodity index plunging to within 2% of its 2008 lows? Or this (Tuesday) morning’s oil plunge to $42.60/bbl – per the massive “supply response” I discussed last month; with the hideous “Frack-Log,” discussed yesterday, overhanging it – as well as, potentially, a removal of Iranian oil export sanctions? Or heck, the horrifying housing starts number that just printed as I’m writing, plummeting from 1,065,000 in January to 897,000 in February (i.e, the biggest monthly plunge in four years), versus “expectations” of barely budging? Perhaps the analysts creating such “expectations” should consult free falling lumber prices for a better indication how the so-called “housing recovery” is doing.
Yes, the world over, global economic activity is not just grinding to a halt, but moving in reverse. And care of the massive industrial overcapacity created by four decades of unabashed money printing and market manipulation – aided by hideous, predatory financial engineering – there’s not a chance of the current, horrifying trends reversing; likely, for years to come. Which is probably why political tensions have reached a post-World War II high – as in the Ukraine, where with each passing day, the outlook for massive military confrontation dramatically increases. And why governments from the world’s four corners are becoming more draconian – and dangerous – on a daily basis. Heck, we just learned yesterday that the White House, by “Executive Order,” is exempting itself from the Freedom of Information Act, making an Administration that took office on a “transparency” platform the least “transparent” in the nation’s 238-year history. Not that they ever disseminated any material information in the first place. However, the fact that they’re making a point to overtly exempt themselves should tell you just how dangerous the direction America is taking has become.
However, what scares me most is the “deformation” – as David Stockman deems it – that years of hideous market manipulations have caused, of both financial valuations and the global economy at large. Yes, indefinite overproduction of everything from oil to steel to iron ore appears “set in stone” for years to come; and care of the vagaries of Mother Nature, said oversupply will be mingled with its equally evil “twin sister” – shortage; as demonstrated by the dramatically worsening droughts in California – which we first discussed last year – and Brazil, where Sao Paolo, a city of 20 million, is literally running out of water. However, my biggest fears relate to the damage misguided Central banks’ market manipulations will cause – as if the current, historic currency and commodity crashes aren’t bad enough. I mean, there is not a doubt in my mind that starting from the “point of no return” period of late 2011, when stock and sovereign bonds were plunging whilst “dollar-priced gold” achieved an all-time high, the world’s Central banks determined the only way to avoid instantaneous implosion of the global monetary system was to go “all-in” supporting stocks, sovereign bonds, and any and all “favorable” assets – whilst attacking paper gold and silver prices with a vengeance even Satan himself would shy away from. Since then, stocks have gone straight up, as global PPTs literally will not let stocks fall – whilst the Cartel temporarily turned off the global “barometers of bad tidings,” gold and silver. And as for sovereign bonds, how much more deformed can you get than 20% of European yields trading with negative yields, with Japanese bonds nearly there?
And thus, with the global economy – objectively – in free fall, we’re left with a hideously unstable situation in which equities the world round trade at record valuations; sovereign bond yields at record lows; and gold and silver prices as low relatively to the cost of production as at any time in generations, if not centuries – and this, with global inventories of available-for-sale metal, particularly in silver, as low as they have ever been. I mean, think about it. Japanese and Chinese equities now rise every day as their respective economies implode – in the former case, due to overt Central bank actions, and the latter, implicit government policy. In Europe, the Euro is on the verge of collapse; and yet the German stock market is surging in dotcom fashion – just like we’re seeing in, for instance, Venezuela; a nation literally amidst hyperinflation.
And sorry to “harp” on Greece so much, but the only reason the world is not in the same level of all-out panic the Euro’s collapse is signifying – or, for that matter, the 33rd straight month of rising Italian bad loans – is said goosing of European stocks and bonds, and suppression of Precious Metals. To wit, at this moment in time, I have NEVER been more certain a “Grexit” is guaranteed – likely, by year-end. I mean, here are some quotes from yesterday alone…
“We don’t know what to do with Greece, as the new Greek government has destroyed all the trust that had been rebuilt.”
– Wolfgang Schäuble, German Finance Minister
“None of my colleagues, or anyone in the international institutions, can tell me how this (Greek bailout deal) is supposed to work.”
– Wolfgang Schäuble, German Finance Minister
“Whatever obstacles we may encounter in our negotiating effort, we will not return to the policies of austerity.”
-Alexis Tsipras, Greek Prime Minister
“Debt has to be repaid, that’s clear. Debt cannot be wiped out. There will be no haircut, no debt relief.”
-EU Financial Affairs Chief Pierre Moscovici
“Athens will have to pony up more than €2 billion in debt payments this Friday to the ECB, the IMF, and (get this) Goldman Sachs, and it’s not entirely clear where the money will come from.”
Meanwhile, the United States of Corruption hit peak hubris yesterday, with Goldman Sachs upgrading a stock (Mobileye) on Friday; and after watching it surge 10%, announced it was leading a massive secondary stock offering Monday afternoon – in which Goldman, the company’s largest shareholder, was selling shares! I mean, I worked in Salomon Smith Barney’s research department for six years – and even the thought of such a blatantly illegal act would have gotten me fired. However, it’s become par for the course in this unique snapshot in time; where for a brief few years, Wall Street has been able to usurp “Economic Mother Nature.” But have no fear, as “she” always wins – and this time around, her victory will be historic.
In fact, no place is her guaranteed victory more likely to manifest itself – outside physical gold and silver, of course – than the sovereign debt markets, where said deformations are so gargantuan, it’s hard to believe they were even conceived in the first place – let alone, put into motion. To wit, we learned yesterday that in fact, it is China that has been pressuring U.S. Treasury bond prices – and decidedly NOT U.S. “economic recovery”; as last month, China reduced its U.S. Treasury holdings to their lowest level in two years. And it wasn’t just China, as on balance, foreign governments sold more Treasuries in January than in any month – EVER. Unquestionably, the Chinese selling was part of the aforementioned government plan to “backdoor PPT” the Chinese equity market; and as for the rest of the world, it is equally likely the majority of proceeds were plowed into the most guaranteed trade in history – i.e, European sovereign bonds with the ECB buying €60 billion per month; which of course, will only lead to larger deformations – and collapses – in the coming months and years.
However, what shocked me most in its blatancy was the fact that Japanese buying of U.S. Treasuries surged so sharply, they actually overtook China as America’s largest creditor. Yes, Japan, the world’s most bankrupt nation – literally, monetizing every financial asset in sight with printed money, is purported to have had “cash to spare” to buy U.S. Treasuries in immense amounts. Frankly, the situation rings eerily similar to last year’s “magical” Belgian buying, just as the Chinese Treasury selling took off in earnest. And thus, I’d bet “dollars to doughnuts” that in fact, the Fed is not only NOT considering raising rates, but doing the polar opposite of “tapering”; which, by the way, I proved 15 months ago.
Which brings me to tomorrow’s “all-important” FOMC meeting, which idiot propagandists like CNBC still discuss as if the Fed is still considering rate hikes – or at the least, taking the word “patient” out of its statement, irrespective of the global economic implosion; interest rates within spitting distance of record lows; the exploding dollar causing massive economic damage – to the point that the White House issued a dire “warning” last week; and oh yeah, Whirlybird Janet having delivered the “most unequivocally dovish FOMC statement in memory” just two weeks ago.
No, if anything the Fed will de-emphasize its fraudulent NFP employment reports further, in light of the “deflation boogeyman” that will give them the excuse to not only maintain ZIRP indefinitely – and possibly, embrace NIRP; but eventually announce the biggest QE program in global history. Frankly, the only real question is whether the inevitable “Yellen Reversal” is “unexpectedly” sprung tomorrow; or, more likely, a “Yellen Reversal Lite” – in which JY admits the U.S. economy is in fact weakening, prompting the Fed to consider additional policy easing measures; “data dependent,” of course. Yes, “deflation,” as my home-owners insurance policy was just renewed at 12% above last year’s level, and 130% above the premium I paid when I bought my house – which has had zero claims since – seven years ago.
Hopefully, today’s “mysterious” gold spike presages someone “knowing something” about tomorrow’s FOMC statement; as in today’s “final phase of manipulation, corruption, and idiocy,” “rules” have been all but abolished by the halls of power. However, the key word is final; as inevitably – and perhaps, imminently – history’s largest house of cards will spectacularly crumble; leaving, in its wake, only the time-honored purchasing power of real money – i.e, physical gold and silver – intact.