American QE and European debt fantasy are on the way out.
Although the eventual (and richly deserved) crucifixion of Monetarist Friedmanism is still some time away, I remain – based on the datastreams coming in – more certain than ever that the pace of nailing hands to wood is accelerating. And as there’s been a glut of such evidence in the last few days, I thought I’d comment on it.
For the past two years now, The Slog has been saying we’re are at the edge of disaster, and been wrong. Hohoho, oh how we laughed. Except that my answer from day one of this farrago of lies from the authorities has remained exactly the same. The only thing I got wrong was one assumption: that the sheer weight of lies, obfuscation, illegal subordination, money-printing, ‘market stimulation’ and then stealing could ever wind up being at the level it was. Still, if it’s any consolation to washed-up old hack trolls formerly employed by Muppet Rudeshock, having put my money where my mouth was, the Slog pension fund is now one third of what it was in 2010. Indeed, without gold having doubled before the swine started effing with that sector, I would now be bordering on skint.
Forgetting childish mud-slinging for a minute or two, this is a very important point that everyone should retain in their frontal lobes when the time comes to deal with these ersatz humans. Times can be good and times can be bad: cyclical, proper capitalism is like that, and always will be. But if you were paying attention or merely awake, being a shrewd investor wasn’t that hard overall when the system was functioning. If there was a recession during which commodities and shares fell in value, you could run to gold, wait until the Dow bottomed, and then buy shares again in anticipation of the recovery. What you can’t do today is buy either gold or shares at the right time, because everyone from Bernanke to Draghi is dealing off the bottom.
We’ve been cheated for four years; now we’re being robbed. This isn’t conspiracy theory: ask any trader or market opinion leader – it’s incontrovertible fact.
However, why the latest incoming information particularly interests me is that there are – at last – signs of two related trends: Sovereign money and will running out….and citizen pacifist patience doing precisely the same.
Over at Zero Hedge, Tyler Durden No 7 notes that John Hilsenrath of the Wall Street Journal has written a seminal piece talking about the US Federal Reserve ‘mapping out’ its exit from QE. Just so we’re clear on the pointless and unimaginatively insane nature of QE, Japan has tried it nine times (depending on who you believe) in a decade, America five times (same health warning) since 2009. It didn’t work then – and it isn’t going to work in the future until some of the confidence fundamentals and employment structures change. What’s fascinating about the Hilsenrath piece is that it looks like even Ben the Banker now realises he has to exit before too long. The Fed is, of course, very careful not to quantify the long and short of it. Says Hilsenrath:
‘Officials say they plan to reduce the amount of bonds they buy in careful and potentially halting steps, varying their purchases as their confidence about the job market and inflation evolves. The timing on when to start is still being debated.’
But at least it’s on the agenda. And in an absolutely classic piece of delusional Control Fantasy, the Fed leakers tell Hilsy that ‘Officials are focusing on clarifying the strategy so markets don’t overreact about their next moves. For example, officials want to avoid creating expectations that their retreat will be a steady, uniform process like their approach from 2003 to 2006, when they raised short-term interest rates in a series of quarter-percentage-point increments over 17 straight policy meetings.’
Don’t you want to just laugh out loud? ‘So markets don’t overreact’ to a policy that won’t be ‘a steady, uniform process like their approach from 2003 to 2006′….oh mah Loword, are you serious? Overreacting is what bourses do in a globalist world: that’s why our reliance on them is so idiotic. But anyway, the point is this: an exit is being signalled. The games up or over, or something: cut down the QE and control the cocaine supply from down South – the time has come for cool heads. Sorry, I need to evacuate my bladder.
Onto the second sign. In the mainstream media, although gloves are not as yet being thrown down as gauntlets, they are nevertheless off. Even the eternally short-trousered Jeremy Warner at The Telegraph has spotted that Spain too is a basket case. His subtle headline to yesterday’s piece – ‘Spain is officially insolvent: get your money out while you still can’ – was splattered in the body copy with a loss of something beyond confidence:
‘What’s projected to occur is essentially what happens in all bankruptcies. Eventually you have to borrow more just to pay the interest on your existing debt. The fiscal compact requires eurozone countries to reduce their deficits to 3% by the end of this year, though Spain among others was recently granted an extension. But on these [latest] numbers, there is no chance ever of achieving this target without further austerity measures, which even if they were attempted would very likely be self defeating. In any case, it seems doubtful an economy where unemployment is already above 25% could take any more….a big Spanish debt restructuring is inevitable. Spanish sovereign bond yields have fallen sharply since the announcement of the European Central Bank’s “outright monetary transactions” programme. The ECB has promised to print money without limit to counter the speculators. But in the end, no amount of liquidity can cover up for an underlying problem with solvency.’
Now here we have what I’d call a Normalist economics writer saying the same thing – in a European context – as John Hilsenrath is saying at the Journal about the United States of America: forget it guys, the game’s over/up etc: fat ladies are singing arias all over Spain. This admission by an old-school Telegraph steady-as-she-goes fan of economic modernism is (just this once) far more significant than anything Ambrose Evans-Pritchard might write. The formerly constipated conformist Warner is morphing into a brick-sh*tting doomsayer. It is a sign.
Equally, although the Troika ‘strategy’ in Greece continues to be 100% dysfunctional comes as no surprise, it adds weight to the argument which suggests their trident is looking a tad bent. As one regular Sloggerspondent writes, ‘Expenses are down but so are revenues. Bottom line: the Papademos first 4 months of 2012 was much better than the Stournaras (obedient Berlin employee) first four months of 2013.’ So then: the medicine is being more accurately administered, but is still not efficacious. What on Earth can this mean?
While we’re waiting for this reality to be absorbed from the soil by the Brussels sprouts, the populace – they being on the receiving end of it – are way ahead when it comes to conclusive analysis: the Italians have clearly decided that enough is enough. Regardless of what one thinks of the latest ruse to foil democracy in the land of Machiavelli, the message has gone out to their friends in the North: dump austerity. As French finance minister Moscovici triumphantly declared last week, “Austerity is dead”. Bond market investors should beware.
Now we must add to this open rebellion against Berlin-am-Brussels a quite extraordinary sign of citizen preparation for resistance. An already infamous internet operation is marketing self-assembly guns to get round new Sovereign rules about owning weapons. This isn’t that significant on its own: what is important is the level at which these guns are flying off the shelves…..and who’s buying them. According to what the firm said two days ago, Spain is the country where the most download requests were received for the “Liberator” pistol during the first two days its blueprints were available online. Between Monday and Wednesday, 100,000 download requests were received worldwide via the company’s web site and Mega.co.nz, operated by the controversial German-Finnish Internet entrepreneur Kim Dotcom, known for his ability to prevent the authorities from tracing the activities of Internet users.
But this snippet is especially fascinating: by Thursday, the US surpassed Spain as the country from which the most pistol download requests had been received…and those two leader nations were closely followed by Brazil, Germany and Britain. Britain? Blimey. Germany? Gott im Himmel.
Are there any signs in the miscellany section? Unfortunately, yes – there are.
Yesterday, the International Monetary Fund said unprecedented monetary easing could lead to a “serious boom and bust”. On the same day, the Co-op bank’s debt rating was downgraded to ‘junk’ status by rating agency Moody’s….that’s a cautious, left-wing mutual bank in trouble: and afterwards, the CEO resigned. On that very same day, Ben Bernanke warned against excessive risk-taking in financial markets as the dollar was driven up in the latest manifestation of a desperate global hunt for yield. Benny said he was watching for signs of reckless speculation caused by low interest rates, highlighting the danger that easy monetary policy could inflate new bubbles in asset prices.
So as doubts grow about whether China can pass the US to become the world’s biggest economy even this century – given that the country’s 30-year miracle seems to be nearing exhaustion – yes, I think you can say with some certainty that even the most raging bulls are beginning to hunt for honey and swipe at salmon.
Try to remember that when it starts, the acceleration rate increase will be exponential. That’s going to make the pace of the last two days’ events look like a UK Parliamentary enquiry.
Good luck. We are all going to need it.
www.hat4uk.wordpress.com / link to original article
Lucas 2012 Infos 