Irrational Exuberance

Greetings good citizen,

Once I frequently ran articles that showcased the stock markets performance…then it became obvious that there was no underlying ‘economic reality’ to the market’s performance.

Take today for example, the markets are up almost 200 points while gold fell $50 an ounce and oil rose to almost $90 a barrel. Yesterday the whole tableau was reversed, stocks dropped, oil fell while gold climbed.

What is today’s inexplicable rise in equity prices based on? Read and learn:

HSBC hammered home the point on Wednesday that global economic fundamentals were significantly weaker now than before.

The bank’s team of economists lowered their growth forecasts for this year and next, with particularly marked revisions for the developed world. They forecast that developed economies would expand just 1.3 percent this year, down from a previous projection of 1.8 percent. Growth in emerging economies is likely to hit 6.2 percent, rather than 6.3 percent, they said.

“The developed world has succumbed to economic permafrost,” the team, headed by the global economist Stephen King, wrote in its report. “The message is simple: despite massive policy stimulus, healthy economic recovery is now but a distant dream.”

But the German court ruling was bringing momentary relief to financial markets, said Carsten Brzeski, an analyst at ING in Brussels, “as a total chaos scenario has been avoided.”

But he warned against “euphoria” at the development. “A bigger say for the German Parliament in future bailouts could easily find copycats in other euro-zone countries, undermining the clout of the beefed-up” European bailout fund, he said.

“I wouldn’t overplay the German decision,” said Andrew Milligan, head of global strategy at Standard Life Investments in Edinburgh.

There was some relief in the markets because the announcement “removed one hurdle to an overhaul of the European problem,” he said, “but it is still extremely uncertain how the overall situation will play out.”

He added that it was unlikely that bonds of the noncore euro-zone members would pick up much momentum from the court decision.

“You might still want to hold German bonds,” he said, “but do you really want to hold other European bonds?”

Um, if you ask me the ‘investor crowd’ has always been a little mushy around the edges and wrapped none too tight. These people do shit for the weirdest reasons like diving in after the market ‘sells off’ snapping up so called ‘bargains’.

I seriously wonder if these same 'head cases' will go on a buying spree when they learn the markets are being closed (permanently?)

Actually, I suspect they will…one last ‘rush’ because money will ‘disappear’ along with stocks…and that isn’t confined to A Simple Plan, ‘money’ as we have come to know it is ‘toast’ and will be ‘obliterated’ in all its forms save one, the exceptionally rare metallic form.

The seeds for the return of a ‘gold standard’ are already germinating, too bad the fools behind it are TOO STUPID to understand that THEY WON’T control the price regardless of how much they think they own!

Once again good citizen I must re-direct your attention to the only ‘logical’ goal of this exercise and that is to ‘kill off’ as much of the ‘surplus population’ as possible, with money determining who is and isn’t ‘surplus’.

Now hold that up against the fact that ALL MONEY is ‘funny’…

Without an effective government, all money is worthless!

Put that in your Tea Party/Libertarian/Free Trade tri-corner hat and chew on it!

Which brings us full circle to something I have repeatedly stated since the beginning, NONE OF THIS IS NECESSARY! We could make it all STOP tomorrow!

But those who would name themselves as Kings won’t have it.

Which is to state if anyone thinks there will be a ‘void’ left when our current government collapses, think again!

At the end of the day good citizen it is a small circle of selfish jerks behind this with a larger group of ‘go along to get along’ morons backing them up.

History will reveal this to be one of the greatest blunders ever committed/perpetrated upon humanity.

IF we find our backbone in time…

But ‘reckoning’ will come regardless, eventually.

It took 5,000 years to extract religion from government, I suspect these fools will not take nearly as long to expose and bring to justice.

In fact, I predict the (social) backlash will give them whiplash!

Yes, I put a lot of faith in my fellow man…because that’s where it all starts, having faith in one another to do the right thing!

What most of us recognize as ‘evil’ has a firm grip on the reins of power right now, it won’t be until people we can trust seize those reins and place them beyond the reach of any individual that we can begin to restore civilization on a sustainable path into the future.

A path that belongs not to the self-interested but to all of us!

Thanks for letting me inside your head,

Gegner

Hurricane Irene

Greetings good citizen,

Today’s top headline is Mr. Jobs is stepping down from the helm of Apple…and it appears the stock market is, er, ‘tanking’ in his honor.

Like all things stock market related, the gesture is purely symbolic.

Listening to the broadcast news, it seem the progress of hurricane Irene is dominating center stage and we can only wonder why?

Could it be because the vast majority of you are ‘ignorant’ regarding what money is and how it works? (Although those who get to say what money is at any given moment have fucked it up hopelessly, so now there’s nothing anyone can do!)

Which is a truly sorry state of affairs considering money is a ‘simple’ legal construct that has morphed into an incredibly ‘elastic’ substance that defies both logic and reason.

What am I getting at?

The headlines SHOULD read (in any rational civilization) that the ‘faith based’ medium of exchange that we ‘used to use’ has lost all public support so we will be reverting to the back-up system of ‘barter’ for tangibles.

Of course, that would go over like the proverbial ‘lead balloon’.

So we arrive at yet another ‘conundrum’ for those who profess to ‘hate’ government. If you don’t have a government to issue/back your currency, what do you use?

But Rope-a-dope is ready for us, they’ll reply (without thinking) gold!

Why is it every yahoo that desires to rid us of government thinks gold is worth ANYTHING?

It really is a ‘useless’ metal. The only thing it has going for is it’s fairly rare, which with 7 BILLION people to divvy it up between, is sort of a net negative.

Gold stopped working as money once the population got too large.

Funny how the ’Goldbugs’ are all excited about $5,000 an ounce gold but it will really need to hit a half MILLION dollars an ounce to cover the hundred trillion dollar ’global economy’. (Understand this figure does NOT include the Quadrillion dollar ‘derivatives’ market.)

And for those of you who are ‘uncertain’ a quadrillion = one thousand trillion.

Oh wait, we can ‘revalue’….oh no we can’t, not without returning to where we are right now.

A Simple Plan works because many things are ‘devalued’ and money itself is totally ‘reformed’ in both substance and function.

Accumulating ‘tons’ of money will not reap you an advantage as most of what you need to function as a member of society is yours by right.

Starving yourself to accumulate a pile of cash will be an exercise in futility because you can’t ‘trade’ cash between individuals. Lose a bet you had better of bet something other than money because your counter-party has no way to make good, there is no cash! (and no way to transfer funds between individuals.)

I really shouldn’t get too carried away with the ‘your money is for you’ concept as most of you have enough on your hands pretending the scrip we use now is worth something!

Most of you reject ‘cashless’ society out of hand. The idea is too foreign to you. Like Plato trying to wrap his head around a society without slaves…

Weirder still is how most of you don’t have a problem with slavery as long as it ain’t YOU in shackles!

Right now most of you would, er, ‘rebel’ if they tried to put shackles on anybody…and the slavers among us know that…so they’d make their victims ‘criminals’ first.

What ‘crime’ do you suppose would earn you a set of shackles? Chances are the crime of being ‘poor’ will be enough to deprive you of your freedom.

But they’ll start with murderers (not a particularly ‘safe’ choice but you need to get the ball rolling somehow.) We aren’t talking serial killers or other class ‘A’ psychos, we’re talking the bulk of murderers, the ones who commit ‘crimes of passion’.

Then it will be thieves…from there it is only a short hop to ’debtors’ and our brave new third world hell hole will be complete!

So, as you see, there is another ‘up’ side to altering the form/functionality of money, under A Simple Plan the poor/debtor class vanishes!

Unemployment becomes a relic of the past, thrown on the scrap heap of history.

In fact it behooves us to observe that unemployment was CREATED BY capitalism!

Before capitalism, unemployment didn’t exist!

I’m quietly chuckling to myself as this particular post has taken some mighty bizarre turns over a few scant pages!

I’ve ’hopped’ from global bankruptcy to the ‘impossibility’ of returning to the gold standard (which by no means is to say that they won’t TRY it, I’m just pointing out it is doomed to fail because getting THAT many people to AGREE on anything is highly improbable.)

Conversely, I anticipate universal adoption of A Simple Plan partly because of its leveling effect on society and mostly due to the ‘embargo’ feature built into it.

(If you want to trade with Division Society you have to adopt A Simple Plan!)

Returning to my ‘summary’, from the gold standard we jumped to ‘cashless society’ which lead us to slavery and how the infamous ‘they’ would go about re-instituting it.

So I’d be remiss if I didn’t point out that the destruction of our current civilization is proceeding apace.

I’m just trying to avoid mentioning it in EVERY post.

Maybe I’ll title today’s piece as Hurricane Irene! (that should generate some traffic!)

Thanks for letting me inside your head,

Gegner

The Rage Won't End...

Greetings good citizen,

I find it interesting to observe an unintentional ‘echo chamber’ forming on the, er, ‘non-conservative’ side of the fence.

Unsurprisingly, the consensus in the ‘Doom-o-sphere’ is “Put a fork in it, it’s done!” yet, it certainly isn’t ‘over’.

As the astute Mr. Rich so succinctly points out The Rage Won’t End on Election Day [because handing over your right to decide solves nothing!]

Unlike (fabricated) Republican ‘Talking Points’, the similarities coming out of the, er, ‘non-conservative’ media have their basis in ‘observable truth’.

Are people pissed? (A resounding YES!) Do the largely duped ‘Tea Partiers’ have anything to do with it? (No, although the RWNM says otherwise. The Tea Partiers are too addled to know just what they’re supposedly ‘protesting’! This is linked with the discovery that conservatism is a mental disorder!)

Understand good citizen that the ‘Tea Partiers’ are a splinter of the 20% of the overall population that self-identify as ‘conservatives’.

Mathematically, 20% isn’t enough to win an election…but they do, and we can only wonder ‘why’?

Most conservatives are ‘wealthy’, but that is only one percent of the population, so the other 19% are merely ‘wannabes’. (Or worse, they simply ‘think’ they’re rich.)

Unfortunately, this problem is larger than one would think.

Too many people (thanks to conservative brainwashing) think they are on their way success and coincidentally, fame.

Hell, they dutifully do all of the things they were taught lead to success, they can’t fail, right?

If it were as simple as ‘doing the right thing’ we’d all be ‘rich and powerful’.

Sadly, if you want to, er, ‘succeed’ you must be totally self-absorbed, relentless in the pursuit of greed and absolutely without so much as a speck of remorse. You must absolutely loathe every human who crosses your path, even the 'useful' ones, because ‘utility’ is only a temporary condition.

You realize the more useful someone is, the more danger they represent.

This is why conservative ideology is the most direct route to becoming a full-blown socio-path.

Your willingness to dispose of anyone and everyone that stands between you and your, er, ‘destiny’ causes you to believe everyone wants you dead. While this is not an unreasonable assumption (people want you dead for very good reasons!) it is your own ‘self-absorption’ (feeling of self-importance) that fuels this aspect of your mania.

‘Birds of a Feather’ flock together and I see far too many campaign posters for conservative candidates here in my own back yard but that merely proves my point.

Real Estate in this neck of the woods (still) ranges between the upper six figures and lower seven figures…SO, conservative candidates enjoy strong support from the crowd more interested in their own net worth than the quality of life of the area’s public servants.

A conservative will howl like hell when they are assessed to pay more taxes yet the same conservative is the first one to sue the town when his property is damaged because there are no funds to keep the roads in good repair…

Which brings us full circle to the recent ‘non-conservative’ consensus, an almost universal agreement that what passes for our government will inevitably grind to a halt once the conservatives regain control.

Naturally, this begs the other, er, ‘conundrum’ that I raised earlier. How can conservatives win if only one in five of us are conservatives?

Mathematically this don’t work, yet it happens.

Which brings us back to the ‘reliability’ of the ballot box/MSM.

Since the MSM ‘announces’ the results of an election (yes, the same MSM that lies to us on a regular basis at the behest of their corporate/conservative owners.) how much faith can we have in the accuracy of that announcement?

I’d say next to none…but I’m a hard marker.

Maybe you’ve never been in a position where you’ve had to lie to keep your job, but most of us have.

If you don’t think promotions are handed out on the basis of nepotism rather than merit you’re walking through life blindfolded!

That one percent of the population that claims fifty percent of the nation’s income for themselves are, er, ‘over-represented’ in our ‘one dollar = one vote’ government.

This brings us to our last sorry subject

The much abused invention that is at the root of our impending collapse…money.

Now, the linked article is focused on a specific kind of, er, currency and I strongly agree with Jesse, if you think gold is at a ‘top’, think again!

This DOES NOT alter my opinion that gold is no better than ‘paper money’, it is even more frightening to see them ‘linked’ so that one is equated with so many/much of the other when nothing is further from the truth/reality!

Yet my opinion will not stop the mentally challenged from bidding gold to the moon. Nor will it stop millions of suckers from being ‘fleeced’ by the market makers in this commodity.

I’m inclined to say those of us who don’t own gold will be ‘unaffected’ by the coming ‘bull market’ in gold but that would be wrong.

Since gold is still tightly linked to paper currency, as gold rises, so will the price of all commodities.

It will be this, er, ‘illusion’ that will be pointed to when the price of oil shoots over two and then three hundred dollars a barrel!

As I’ve said right along good citizen, the money is all ‘funny’ and none of this should be happening.

What we’re really seeing is the biggest ‘heist’ of the world’s riches ever committed

Left to our imagination is whether or not they’ll get away with it?

Thanks for letting me inside your head,

Gegner

No longer a 'viable entity'

Greetings good citizen!

I have many times pointed to 'currency manipulation' as the principal cause of the destruction of our economy.

Do you know why I make such an outrageous claim? I make it partially because the people living in the 'cheaper there' should be dead, but that's only the half of it.

Letting the bankers play both ends against the middle is how the economy crashed and burned...note I use the present tense...the economy IS gone, it's 'cooked' and there is no 'bringing it back (although that's not what dopey thinks. Who is 'dopey'...you'll see.)

On the other hand, I learned something from this piece. I learned the importance of the gold standard and why the global economy 'turned to shit' once the 'gold standard' was, er, 'abandoned'.

Without the gold standard (everybody's money tied to an 'agreed upon' standard) Bankers were free to 'assign' different values to different nation's currency, where they proceeded to use those 'non-existent' differences to make themselves a ton of money!

The 'screw-job' here is a pig is a pig and a duck is a duck and a buck is a buck no matter where you find it, and they're all priced by the pound for the consumer's convenience. A pound of chicken in Beijing is identical to a pound of chicken in Berlin, which is a carbon copy of a pound of chicken in Bayonne (N.J.,USA)

To an extent, food is better than a 'gold standard' because we all need to eat but we don't all need gold. In fact, nobody would die if they never in their entire life so much as laid eyes on gold...that's how 'unnecessary' gold is. You can't say the same thing for food, and the fucktard bankers know this.

YET, I spend on food each week what the average Chinese worker earns in a month! How do you suppose THAT works? One of us is getting 'ripped off' and guess who it is?

Do the math, it's me! (and by extension, you!) Not only are we paying many times what the Chinese worker pays for food but we are losing our jobs to them in the bargain.

How do you like your 'Wall Street Banker' now?

Anyway, onward with tonight's offering

“The US is not a viable concern anymore” – Duncan
Posted by Izabella Kaminska on Feb 17 13:45.


FT Alphaville spoke with Richard Duncan, partner at Blackhorse Asset Management and author of The Dollar Crisis on Tuesday, regarding his new book The Corruption of Capitalism. And while he is pretty pessimistic on the US, Duncan says there is a way out if policymakers make bold decisions. [I completely agree, however, you’d be hard pressed to call what comes out on the other end ‘capitalism’.]

But first some background. In the Dollar Crisis, published in 2003, Duncan explained how the collapse of the Bretton Woods system in 1973 was always going to lead to a global financial crisis due to the trade imbalances it encouraged and created. Based on the premise, Duncan successfully predicted the subprime problem, the downfall of government sponsored agencies as well as the banking crisis (and related bailouts) we’ve all — seven years on — come to know and love. [Most of us who have been predicting crisis are being ‘exonerated’ although most of us had the timing way off.]

Simply put, according to Duncan, the breakdown of the gold standard allowed too much paper-money to be created in the US. This de facto funded the US deficit, which respectively fuelled a savings glut in Asia. That inevitably drove dollar inflows back into the US — which themselves, over the course of a four-decade period, fueled a global credit bubble of simply gargantuan proportion.

In Duncan’s words, the collapse of Bretton Woods represented the moment “capitalism became corrupted by government debt”. From that point on “US policymakers abandoned the core principles of economic orthodoxy: balanced government budgets and sound money”. [Open for debate here is who the government acted on the behalf of, it sure as hell wasn’t in the best interests of the ‘non-investor, working class!’]

One chart reflecting the situation well according to the author is this one: [click link to view chart.]

In Duncan’s eyes it clearly shows the breaking of the global financial system’s imbalanced back.

To his frustration, though, it’s not a point that’s been grasped by policymakers yet. Policy response if anything has been ill-fitting, meaning the world’s economy is on life support — at best. As he explained to FT Alphaville:

Last year the US economy shrank by 2.4 per cent. But the budget deficit was 10 per cent of GDP. Without that deficit spending, the economy would have shrunk by at least 12 per cent, i.e. -2 per cent plus -10 per cent. Even after that deficit spending, the unemployment rate is 10 per cent, interest rates are zero, and central banks around the world are printing enormous amounts of paper money to prevent economic collapse. This policy response is supporting the global economy but it has not even targeted the structural flaws responsible for the crisis.

The point being: the world’s largest economy and engine of global economic growth — the United States — is simply not a viable concern any more. As Duncan explained it:

The country is de-industrializing because wages in the US are up to 40 times higher than those in developing countries like China. [This is due to currency manipulation, which starts where? With BANKS of course!] Therefore, the United States makes very little that the rest of the world cannot buy somewhere else much more cheaply. [Understand, we didn’t price ourselves out of the market, the sleaze-ball bankers did it for us! How, by abandoning the ‘universal standard’ that gold provided.]

And so, like any troubled company, the US too must restructure itself if it is to remain operational, says Duncan. How it goes about it, though, will be crucial to its success. The best policy according to the author would be heavy government investment in so-called ‘future’ industries — everything from solar, biotech, nano-technology and so on. Trouble is, a move like that would take more government spending not less. [It would also be extremely ‘moronic’ if we fail to ‘re-anchor’ our/the world’s currency to a universal standard. This has become an exercise where the lesson is ‘not everyone who agrees with you has a fucking clue!’]

Duncan estimates some $3,000bn or so on top of the $10,000bn already estimated in deficit spending over the next 10 years would be needed to put the US back on top of the global industrial game in this way.

Full stop! I have mentioned before that I usually select the day’s offering by the ‘headline’ more so than the content, which I read in detail as I ‘highlight’ the writer’s main points.

Sometimes, and this happens to be one of them, you agree with the headline but hardly any of the rest of what THE CLUELESS BASTARD has to say!

What do you suppose adding three trillion to an already ‘towering inferno’ is going to accomplish? Perhaps more amazing is how these clueless bastards ignore the present crisis in Zimbabwe!

Ilargi enlightens us to this ‘more better’ syndrome (albeit not very clearly.) So I’ll ‘recap’ here in a nutshell, when you’re drowning, more water doesn’t help anything!

That sailed right over roughly 50% of your heads, let’s try again.

A quarter buys you a chocolate bar…so two quarters would buy you two chocolate bars…except when there aren’t two chocolate bars to be had, there is still only the one.

This is the heart of the crisis, adding money doesn’t increase the amount of available resources, no matter how much money you add! (Governments around the world have been pumping trillions of ‘dollars’ into their economies without adding any corresponding ‘real wealth’, which merely ‘dilutes’ the value of ‘existing money’ and makes us all ‘net’ poorer.)

Are you working for nothing yet? Pretty much.

Back to the article…

The worst-case scenario, meanwhile, would be America turning into Japan while it attempted to do just that. On the flip side, it’s from Japan’s experience that valuable lessons could also be drawn. As Duncan explained (our emphasis):

When Japan’s bubble popped in 1990, the Japanese government’s debt to GDP was 60 per cent. The Japanese economy has been on government life support since then and government debt to GDP is now more than 200 per cent.

During the bubble years of the 1980s, a great deal of profit was made in Japan. That money was available to finance the expansion of government debt after the bubble popped. If it had not invested in government bonds it would have been destroyed, because there are no viable investment opportunities in a post-bubble economy. So the private sector has financed the expansion of government debt in Japan, and it has done so on concessionary terms.

The 10-year Japanese government bond yield is only 1.3 per cent. Now that the US bubble has popped, the US government will also be able to greatly expand its debt. But the lesson the US must learn from Japan is not to waste that money building bridges to nowhere, but instead to use the money wisely to restructure the economy to restore its viability. This global crisis will not end until the United States restructures its economy and restores its long-term viability. [What do you suppose the odds are of that happening quickly enough to save the doomed Boomers? What do you suppose the odds are that the Boomers will burn this clam shack to the ground?]

The consequences of a scenario where the US failed to respond effectively, meanwhile, would be grave indeed. Not only would the US slip into irreparable decline, according to the author, globalization would break down and export-oriented Asian economies could collapse. [Change ‘could’ to ‘would’, albeit the commies have a better chance of surviving a collapse than the predatory capitalists do...]

—

End of an era for Asia?

But if Duncan’s view here is bleak, it’s even bleaker on the China situation. As he stated:

…regardless of what happens in the US, China is facing a much more difficult future than is generally believed. Every boom busts. Every bubble pops. China will be no exception.

It is a serious mistake to believe China’s economy will continue to grow at 8 per cent or more for the next decade. That’s what people believed about Japan in 1989. Today, Japan’s economy is no larger than it was in 1993, if you don’t adjust for deflation. 2 per cent to 4 per cent annual GDP growth would be an excellent outcome for China over the decade, in light of the enormous capital misallocation that has occurred there over the past 10 years.

The economic crisis in the United States means Asia’s era of export-led growth is over. A protectionist backlash in the West will force China to substantially revalue the Yuan to avoid trade tariffs in the United States and Europe. Other Asian currencies will follow the Yuan higher. Finally, the direction of asset prices in Asia, and around the world, will be determined by the size and timing of successive rounds of government stimulus packages in the United States and within Asia. The global economy will remain on government life support for years to come. [When energy becomes scarce the ‘global economy’ (as it currently exists) will collapse, this is not a question of ‘if’ but ‘when’. (We will, as we have for centuries, trade worldwide. Most commodities will be sourced ‘locally’ as the return of wind driven ocean travel makes cargo hold space ‘pricey’ once more.)]

So that’s pretty much bad news for Asia under every conceivable scenario.

And if gold bugs were hoping for a call back to the gold standard, we would have to disappoint.

Duncan’s view is that we’re now beyond a return to a gold-pegged system. The best we can hope for in terms of restricting future imbalances is regulatory reform focused on keeping credit creation at banks in check. As he summed up:

…we’re simply not in the garden of Eden scenario anymore.

While I might be inclined to agree that we won’t see the ‘gold standard’ re-instated, there is no ‘cure’ for the badly unbalanced global economy if the currency situation remains…’open to banker’s interpretation’.

If they keep on ‘fudging’ the value of the dollar the way they have been, we will all walk off the job in disgust. There won’t be any point in ‘working for the man’.

It’s difficult to image something more terrifying than finding out your money is no good. If you don’t have something to trade, you are well and truly.

Thanks for letting me inside your head,

Gegner

In case you’re interested, here’s the official version of today’s market ‘bellyflop’.