It's been a wild and wooly week for students of the economy and politics.
A lot of significant developments on a number of subjects took place: ALL OF
THEM NEGATIVE for the private sector and public. I will be covering a number
of subjects in this week's Weekly Wrap:
- Hammering the ECONOMY
- Constitutional crisis Unfolding
- European banks still in DEEP trouble and economies as well.
- Beware Suppressed Volatility
- ECB meeting: NO SURPRISES - A "Let them eat cake" moment for the Eurozone
"Government is not reason, it is not eloquence, it is force, like fire
it is a dangerous servant, and a fearful master." - George Washington
Hammering the economy
The latest ECONOMIC death sentence from the District of Corruption was announced
by the chief executive this week. The EPA has announced new rules and regulations
issued by executive order crippling conventional energy production in the United
States. The president says he is battling CLIMATE CHANGE to save the children.
It will cost all of us dearly, especially our children. Unable to pass anything
through congress due to bipartisan opposition the EPA is taking new authority
based upon reinterpreting the plain language of the Clean Air Act passed
in the early 1970s. Just like those living in the land of George Orwell where
words have no meaning, laws can now be interpreted in any manner they wish.
The US has firmly entered this land and the evil coming from our masters inside
the beltway knows no limits. It's all politics all the time, practical considerations
be damned.
This PROGRESSIVE administration consists of blind ideologues and paid-for
academics who write fairy tale analysis to justify any policy they wish to
impose upon the country. This is a wholesale attack on inexpensive and affordable
energy and MANDATES a 25% reduction in greenhouse gases by 2020 growing to
30% by 2030. They claim it will REDUCE electricity costs by 8% but don't hold
your breath. The problem is that there is no technology currently available
that can achieve this mandate. The Chamber of Commerce is reporting that it
will cost $50 Billion dollars a year and 250,000 jobs lost each and every year.
I believe the job losses will be much greater. 40% of all electricity generated
in America comes from CLEAN COAL. The United States hasn't had any problems
with coal fired plants since the days of acid rain during the Nixon administration.
Projected Job Losses by these regulations:
The job losses are too large a price to pay to prevent something that we have
absolutely no ability to prevent. Climate change is far from settled science
contrary to the government assertions. In my opinion, it is a hoax cooked up
by socialists and academics that have run out of other people's money and need
new sources of money to loot and redistribute to their cronies in crime. Putting
climate change into prospective for people that can't/don't/haven't been taught
to think:
- The earth is about 9 billion years old (9 million million)
- Climate has changed throughout that period - hotter, colder, ice ages,
tropical etc.
- Carbon has fluctuated wildly during this period. Man was not present
for most of this time.
- Humans exhale Carbon Dioxide which is the air that plants breathe. Plants
create oxygen that we breathe. It is a symbiotic part of nature between
man and plants. God's masterful planning.
- Man is a part of nature not a virus to it.
- More carbon dioxide is emitted from a VOLCANIC ERUPTION than man has
ever generated and plants breathe this also.
- Man has been out of the caves maybe 3000 years of the 30 million million
- Man has really burned fossil fuels about 75 years since the auto was
invented
- Climatologists have very little accurate information going back over
30 years
- What percentage of 9 million million is 30 years? .0000000000000000003
- What SCIENTIFIC conclusions can you reach from a sample that small?
NONE
If you can wade through those FACTS and conclude that academics can say anything
is SETTLED SCIENCE then you are a fool, a useful idiot and deserve the FATE
and heartache their guidance will create for you. We all want clean air and
environments, and anyone who knows history knows they have improved steadily
through the decades as the US has matured. Carbon emissions have fallen steadily
since 1992 and will continue to do so without help from the EPA and the District
of Corruption. Man has no ability to affect climate change through carbon reduction.
Man does not know what causes climate change, mother earth is far more complex
than our pea brains can understand. Climate change is nothing but a hoax, a
wealth and freedom confiscation scheme, another nail in the world's greatest
capitalist economy by the CENTRAL government that the constitution was meant
to PREVENT. When I was a child in the late 60s, the government was warning
us school children about an unfolding ICE AGE. The administration cannot get
the legislature where laws must come from to pass a bill, so they are decreeing
it. It is a just another constitutional crisis created by a lawless executive
branch. They like to use FEAR to control the dumbest among us. What's wrong
with this picture?
Constitutional Crisis
Even though we are just barely into the dog days of summer there are lots
of events unfolding which bear careful scrutiny and must be kept in mind as
the greatest manmade crisis in human history continues to unfold. Few issues
are greater than the unfolding CONSTITUTIONAL crisis in the United States,
which is basically unreported by the media. The rule of law is damned and the
rule of man has become the reality. The EPA power crab without legislation
from Congress is the latest LAWLESSNESS out of the Executive branch. The federal
takeover of property through misuse of wetlands legislation is up next. Look
no further than the Affordable Care Act also known as OBAMACARE which has been
modified over 38 times at last count with plainly no legislative basis. The
NSA spying which violates the PLAIN language of the constitutional right to
privacy, the IRS deployment against political rivals (this got NIXON impeached!),
the latest prisoner swap by the president (plainly in violation of the plain
language of the law)... the Justice department is just enforcing laws the administration
agrees with and ignoring those it doesn't. The dream act is another example
of law made by executive order. This list is endless and growing by the day.
If the executive branch was held by republicans, impeachment proceedings would
already be in motion and the main stream media would be shouting it to the
hills. But, since it is being done by their socialist masters, not a word is
said. None of these things are being done with the advice and consent of your
elected representatives.
In our system of government, laws originate in congress, are passed by them,
then signed into law by the executive branch. Once done they can only be amended
by the same process. Now they have become mere SUGGESTIONS to be handled at
the discretion of the executive branch. Congress has abandoned most of its
oversight RESPONSIBILITIES and only performs them when FORCED to do so by HEADLINES.
Then, in most cases, it is all puff and hot air for the masses and a quick
return to unaccountability to the public they claim to serve. "Go along to
get along" from both sides of the aisle. It is SIGNALING a frightening and
rapid descent into totalitarianism. This is happening all around us and I am
dedicated to bringing it to you and outlining it.
European banks still in DEEP trouble.
Author's
Note: In my opinion the greatest manmade disaster and OPPORTUNITY in
history is unfolding in every corner of the world. Are you diversified or
operating with your eyes shut? Are you prepared to turn this into opportunity
by properly diversifying your portfolio? Adding absolute return investments
which have the potential to thrive (up and down markets) regardless of what
unfolds economically? Hedging the printing presses impact on your paper money?
This is what I do for investors; help them diversify into investments which
are created to potentially thrive in the storm. For a personal consultation
with me
CLICK HERE!
The rush for YIELD continues to astound as even the weakest and most insolvent
can raise funds if the rates are right. Piraeus Bank (Greece's biggest bank)
just issued its first bond in 5 years for 1.75 Billion Euro. No roadshow was
necessary as it was oversubscribed by a factor of 2 in less than 48 hours.
Totally unsecured lending from off shore institutions is setting the stage
for the next run on the banks.
"Right now everyone is a yield hog," says a senior London-based debt banker. "Institutions
don't care what they're buying, they need that yield." ...Which could be problematic
for UNSECURED LENDERS as non-performing loans represent 32% of all Greek loans,
27% of all Irish loans, 12.6% in Spain and 16.9 % in Italy. Looking at those
numbers, most banks are operating in BANKRUPTCY since OFFICIAL reserves are
not above 10%. These countries' banking systems range from 250 to 400% bigger
than the size of their domestic economies so those percentages foreshadow future
banking rescues. When the ECB stress tests are conducted, it will be interesting
to see how they SWEEP THIS UNDER THE RUG. One whiff of trouble and we will
see who is swimming naked as foreigners run. They are all swimming naked, the
banks and the investors in the bonds are in a game of Russian roulette. When
you have problem loans of that magnitude, building your loan book is not an
option. Managing the losses becomes all that is important. It is also why lending
to the private sector is contracting as ZOMBIE banks are unable to do so or
take risk. Take a look at the bifurcation from healthier banks lending in the
core of the Eurozone and the ZOMBIES on the periphery.
Mind the GAP! HOW IN THE WORLD CAN THE PRIVATE SECTOR on the PERIPHERY CREATE
THE GROWTH NECESSARY for Eurozone RECOVERY? No recovery can take place when
only government is growing! All wealth creation and growth comes from the PRIVATE
sector. The banks buy local government debt and, BY LAW, call it RISK FREE
so no reserves are required to hold it. The government regulators are happy
as government spending is funded until the charade of insolvency is exposed.
And it will be exposed SOONER or LATER! Regulating lending to the GOVERNMENT.
Beware Suppressed Volatility
There is simply NO FEAR in the markets as many markets are hitting or exceeding
pre-crisis peaks, corporate spread over treasuries, high yield bond issuance,
vix, leveraged loans. This is all happening as tightening is occurring in the
US, Eurozone (as inflation falls real rates are rising by definition) and China.
Everything is priced for perfection in a QE world.
Gordon T. Long has several major turn dates clustered around July 16,17,18
and is looking for markets and the economy to turn decisively at that time.
You are looking at a bull market in complacency. Anyone who knows history is
frightened. Suppressed Volatility is KILLING the banks proprietary and market
making revenues, revenues they cannot afford to lose. It is at pre-crisis levels
of 2007 just as the lending and leverage insanity is:
I would daresay that we are staring the next crisis in the face, with utter
destruction to be fully priced sometime in the next two years. Rarely, if ever
in history, have investors paid more money for less returns. Moral hazard is
an epidemic among investors and Bernanke put is alive and well. The only question
is when does the tide turn? Here is another view of insanity in action courtesy
of Mauldin economics and www.sentimentrader.com:
The last time we saw this must insanity was 2000, which preceded a 50%+ decline.
This decline should be much worse as leverage is much higher. The taper sets
the stage for a big fireworks show and a challenge to Yellen's leadership.
Expect a REVERSAL SOON in the markets and economy. Is this coming collapse
being engineered by the powers that be? Creating a crisis to be exploited?
ECB meeting: NO SURPRISES - A "Let them eat cake!" moment for the Eurozone
Super Mario DID NOT surprise when he brought a squirt gun to a raging fire
as economic activity will continue its collapse with this "too little too late" strategy.
Lowering ECB deposit rates from 0% to -.1% and dropping the refinancing rate
from .25% to .15%. This will have virtually NO effect as the LTRO money has
mostly been repaid and funds on deposit at the ECB are nearing MULTI-YEAR LOWS.
There is no money bank money balance sheets parked at the ECB to FORCE them
to lend. In other words, he DID NOTHING. Take a look at the contraction in
the private sector of the Eurozone over the last 3 years. It is breathtaking
and it says two things:
- zero percent interest rates will do nothing to revive the economies of
the EU
- fiduciary FAILURE of Brussels and the ECB to reform the system is criminality
in action.
"Let me issue and control a nation's money supply, and I care not who
makes its laws."
- Mayer Amschel Rothschild, Founder of Rothschild Banking Dynasty
But the EURO and EUROZONE were never about practical solutions for the public
good. They are political projects gathering unaccountable power over sovereigns
and the private sector to centralized socialist authoritarians.
Look at that! Unbelievable! That is the FACE of an UNFOLDING DEPRESSION with
three years of MOMENTUM! How can any self-respecting government or central
bank not reform themselves and their policies till this is substantially REDUCED?
Socialists would never dream of doing so as in their mind they are doing it
for their OWN GOOD. Here is a look at Eurozone inflation adjusted for higher
taxes and it is uglier than the Government number (as one would expect):
Once again, look at the MOMENTUM. The puny move the ECB has made is criminally
short of what is required. Nothing will stop the freight train of economic
collapse short of GOVERNMENT regulatory and tax reform combined with funding
for the private sector through healthy banks. The zombies have NO LENDING capacity.
The chances of these things happening are close to ZERO. Eurozone SOCIALIST
governments NEVER return freedom or income once confiscated. Their goal is
to seize and confiscate it. It is the source of the UNFOLDING societal unrest
and the PLAN - Inflict pain until the public surrenders everything to their
would-be masters in exchange for change. The public will give it up but the
governments and central banks will not deliver them from their ANGUISH.
In closing
This week was a debacle for the developed world and their citizens. The punishment
being meted out by our public servants and banksters was TORTUROUS to us all,
a complete betrayal by the powers that be. Markets are poised for serious adjustments
as complacency and moral hazard is an epidemic as are record mispricings of
many assets. Historically speaking, malinvestments which produce very little
income RARELY produce returns over the long-term. Be careful out there!
See you next week, Ty
I hope you enjoyed this second weekly wrap. It is a compendium
of my daily exercises on my
blog at www.TedBits.com. It is the second
of MANY. Don't miss the next edition and my bi-weekly commentary, subscriptions
are FREE: CLICK HERE.
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and my bi-weekly commentary at www.TedBits.com. Check
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up today!
In my opinion, the greatest man-made disaster and OPPORTUNITY
in history is unfolding in every corner of the world. Are you diversified or
operating with your eyes shut? Are you prepared to turn this into opportunity
by properly diversifying your portfolio? Adding absolute return investments
which have the potential to thrive (up and down markets) regardless of what
unfolds economically? Hedging the printing presses impact on your paper money?
This is what I do for investors - I help them diversify into investments which
are created to potentially thrive in the storm. For a personal consultation
with me CLICK HERE!