Over the last fortnight, The Slog has been starting more of an urgent countdown to Crash 2. I’ve begun the process because the statements, attitudes, preparatory behaviour, central bank policies, and market dynamics being displayed are becoming so blindingly obvious now, their existence can only mean one thing: pretend time is over, and from here on nobody in the élites (beyond the political dumbos) will give a monkeys whether Dean and Becky in Essex or Nantes or Ohio work it out. The Slog offers some thoughts on why the MoU’s have failed as usual to read Page One.
Zero Hedge is an excellent site, but at times the obsession with technical jargon displayed by Tyler Durden in his many existences can get trying. I offer this extract from yesterday’s piece about the VIX as an example:
‘….the Fed and BoJ’s work to open-endedly compress realized volatility is to blame – but the current VIX levels would imply a notably lower (than 2012) realized volatility on average throughout 2013. However, the back-end of the curve remains steep (and unyieldingly less ebullient), the skew is extremely complacent, and as every premium-selling call-writing ‘this-is-easy’ trader knows, picking up nickels in front of the steam roller works well – until it doesn’t….’
Well for God’s sake Tyle, as everye foole doth know, skew something complacently up your back end, and before you know it every call you write realises enough ebullient volatility to create cold fusion at the very least. But if I can put into words what Mr Durden is saying here, lots of nasty folks all over the world are deliberately and artificially depressing the reality of the fundamentals. This means that the VIX volatility index is far lower (ie calmer) than it should be. Even more interesting (as shown here yesterday) quite a lot of sociopaths at the level below the Beelzebubs somehow seem to know that the key ‘VIX suppressant’ timezone is likely to be February-June this year. Not only are they betting on a calm VIX (via the VXX betting pit) they’re also making precious-metal puts of a bullish nature – especially in silver.
What the central bankers and other Bilderberging, thieving members of the politico-media crew have spent the last two years working out is exactly how to boil we the frogs…..without us noticing before unconsciousness renders us supine. Lest this sound a tad Marxyntaxical, let me set out below by numbers what the key facets of this policy have been in the First World. I call them my Top Ten Takeaways.
1. Zirp. The money we used to earn from giving our money to banks has been taken away.
2. Tax. Every type of tax we pay (using everything from personal allowance caps to upped speeding fines) has been increased.
3. Welfare. The credits, services, and subsidies that save most of us money have been reduced, and in some cases removed.
4. Quantitative Easing. The currencies we use to buy goods and services are having their value eroded by sovereign debt, QE, and in some cases direct money printing.
5. Energy. The forms we use to cook, heat, drive and light up the darkness are increasing in price at a rate far beyond anything justified by either demand or conservation.
6. Credit. Aside from the odd piddling and wastefully managed government scheme here and there, credit to purchase durables and property has largely dried up. By definition, this reduces one’s current and future standard of living.
7. Food. Media owners and distributive opinion leaders are giving us clear warnings about the price of food being hiked substantially in the near future. They just haven’t explained why yet.
8. Wages and salaries. Aside from the top 3-5%, the great majority (over 80%) of ‘middle class’ consumers have seen their real salaries eroded since around 2003. That fact applies whether we’re talking the US, the UK, or Greece.
9. Market fraud & manipulation. QE has indirectly caused those with a bearish view about stocks in 2010 to have been proved expensively wrong. The Libor rate was manipulated after 2007 globally to save the banks and cheat the investor. The price of gold has been capped, and that process is now becoming all-encompassing in the light of central banker plans for the metal. Because of smoke, mirrors and bollocks on the subject of sovereign debt, the bond market yields are artificially low, further reducing a fund’s ability to create decent returns for the retired….already hit by Zirp, QE and capped gold.
10. Both upstream and downriver, governments are reducing the individual’s ability to save for later life, and/or live off what they have saved. The UK has once again removed some tax advantages from pension savers. The US has effectively embezzled at least half of its public sector pension funds. Free healthcare is being phased out for the elderly. The Greek and Spanish national pension reserves have ceased to exist. Every French bank is guaranteed by the taxpayer: when they start falling over, French citizens will be powerless to stop their State pensions dwindling back to nothing. UK pensioners have been told they will lose inflation indexing, and probably winter fuel allowances/free prescriptions.
Listen to the vast majority of mainstream Western politicians, and you will find very few who would even admit that this process is taking place, let alone speculate about what its ramifications will be. Bromides like ‘We’re all in this together’, ‘Yes we Can’, ‘Your friend in hard times’ and so forth offer nothing beyond onanist drivel spurting across the airwaves to placate the proles. Honourable and honest exceptions like Austin Mitchell, Ron Paul, and Alexis Tsipras are straight with those who bother to listen. But as the American Spectator wrote this week, ‘Obama’s empty inaugural address offers nothing but more blind leadership’. It’d be a nice turn of phrase – if he really was a leader.
Now the ‘Spartist’ hard-Left view of all this is, of course, that the citizens of the West are to be made increasingly dependent on States that have been confiscated by neocon business and global banking. A new World Elite will emerge and the rest of us will be slave labour until we die and/or get liquidated by the Forces of Darkness. And to be frank, I do not doubt that some of the neocon headcases one occasionally stumbles across have precisely this result in mind. But the rest of the privileged few don’t.
What they calculate is this: to compete with Asia and South America, we need to cut wage costs; to pay off debt we need to inflate currencies; to take on credible new debt, relaunch currenci(es), and repair the banks’ balance sheets, we need gold to be almost completely appropriated by the sovereign banking system; to reduce political incompetence we need to have more technocrats and fewer elections; and to ensure no opposition to any of this gets off the ground, we need a two-speed, heavily regulated internet via which ISPs and the security services can monitor what everyone’s up to 24/7.
Then, they figure, we can get some serious growth under way, keep the East in check, reduce taxes caused by debt, write off the banking sytem’s debts, and return to Business as Usual….provided our view holds sway in 90% of all public media.
I’m not for a second suggesting it’s a fully written up plot hatched by the Elders of Davos, because the world doesn’t work like that…and the egos involved here are so Viagrad out of shape and proportion, there’s no way you could get even a fraction of these truly disturbed materialists to sign up to such a plan, even if it existed. But a general direction is there for all to see, and there is a growing Right Commentariat which thinks it just dandy as a potential road to salvation.
That is to say, there is a sort of expressed faith that goes like this:
“Right, now clearly the system has got a little out of kilter and the banking chaps have pushed their instincts just a bit too hard for the thickies to catch up. Equally, the senior executives of globalist business have filled pockets rather than fulfilling investment promises made to the shareholders, and so we’ve had to get the sovereign money captains to cough up. Thus we have had bailouts for the banks, and QE to keep up confidence in the stock markets, but we still have quite a few derivatives, bad bets and sovereign budget overspends getting in the way of further economic growth.
“This presents us with a problem or, to be more specific, a bill. And as clearly we at the top can’t be expected to pay it, those who in the long-term stand to benefit most materially from what we make and provide will have to do so. The best bet is therefore to make it impossible for them to get anything out of us on any level, to reduce the quite colossal amounts we spend keeping them in trainers, and charge them considerably more for rather less on everything else beyond the State’s remit.
“This will have two effects: sovereign and banking solvency will be restored, our Western products will be more competitive, and – most important of all – the People will grow a new hunger to consume like frenzied sharks. It’s all quite simple really: everything’s under control, and there’ll be nothing to worry about so long as we can shut up the naysayers”.
Put like that, I could almost convince myself that we’re on the right track. Except, of course, for Page One. Page One is the bit very clever people always skip, because they are far to clever to have to bother with it. But whether they like it or not, Page One says the following:
* Shagging the currency raises the cost of borrowing to a point where insolvency must result
* Reducing the spending power and upping the costs of consumer living make it impossible for them to kick-start a recovery
* Inflating away the debt annoys the creditors, some of whom have nuclear weapons and hot-headed military officers
* Creating a new false level of energy costs (without investing bigtime in revolutionary new forms of it) must produce a spiral of higher prices, lower consumption, and thus lack of funds to dig up or tap into those fossil forms that remain. That is also going to cause any recovery to stutter to a halt quite quickly, as a result of spiralling costs.
* Last but not least, no State (privatised, omni-surveillant or otherwise) will survive if it loses feedback from the populace. In the end, all affection for and loyalty to the State disappears, new ideas are stifled, risk is avoided, and the very bases of healthy capitalist creativity are pulled away. Those who were standing on them simply hang to death.
It would be easier to doubt these outcomes if all five of them weren’t already apparent to a worrying degree. Both the US and UK sovereign debts would rapidly become unrepayable with even a fractional increase in borrowing rates. Squeezed middlers in the UK and US have proved unable to stimulate the economies there. The Chinese are already looking at gold as a way of dumping US debt in retaliation, be that a double-edged sword for them or not. Shareholder and boardroom greed have derailed new fossil energy exploitation over the last fifteen years. And the European Union is heading down towards the same high, firing-squad dead-end wall as did the USSR before it.
So that, friends, is why both we and they really are in very big trouble. That is why the Dark Legions are jockeying for position with increasingly brazen moves prior to Crash 2. That is why they think they can handle it. That is why they can’t really. And all of it is why right here, right now, everyone needs a plan to escape the blood-sucking realities of my Top Ten Trickster Takeaways to make the masses pay.
Cue 3000 comment threads asking “How?” But if I knew that, dear reader…..