What if the Fed actually were dumb enough to raise rates Wednesday –
amidst the “worst
global economy of our lifetimes”; and crashing worldwide financial
markets – like commodities,
junk
bonds, currencies,
and the majority of equities? In other words, the type of catastrophic
conditions that typically cause it to reducerates?
And this, whilst the “dollar” is surging, putting a dagger in already
crashing corporate earnings, as competing Central banks – particularly, the
ECB and PBOC – are actively taking the “final currency
war” thermonuclear? Not to mention, as the fraudulent – and at this
point, comically transparent, “recovery”
is already one of the weakest in U.S. history?
Well, we’re about to see; as if the PPT, the ESF, the gold Cartel, and the
Federal Reserve’s own “open market operations” desks are unable to reverse
last week’s horrific trading action – and frankly, the world’s most powerful
market-manipulating algorithms have their work cut out for them – we may well
see the “perfect cataclysmic storm” of the Chinese unleashing the “cataclysmic
financial big bang to end all big bangs,” as the Fed engages in the “only
financial event as potentially cataclysmic as a significant Yuan devaluation.”
Amidst the final, thermonuclear phase of history’s largest, broadest fiat
Ponzi scheme, bubbles of epic proportion are serially popping as we speak –
integrally, irreversibly entwined in the common threads of monetary
hyperinflation; parabolic debt growth; unprecedented industrial overcapacity;
and the ensuing political, geopolitical,
and social instability that has destroyed hundreds of fraudulent currencies
throughout history. And this is decidedly NOT just about the “second”
and “third” worlds,” which were hopelessly bubble-ized goners from day
one. No, this time around, the epicenter of what will be the greatest
financial collapse in history will be the so-called “first world.” Which, as
we speak, is being rapidly exposed for the Banana Republic regime it is has
been since the gold standard was abandoned in 1971.
And nowhere more so than the “leader of the free world,” the United
States. Which care of the most virulent, wide-reaching scheme of money
printing, market manipulation, data cooking, and propaganda of all time, has
not only built the largest debt edifice in global history – in the federal,
state,
municipal, corporate,
and individual
sectors – but the most overvalued financial markets ever; including stock
valuations above the 2000 peak, and high yield bonds above those in
early 2008. Yes, thanks to the Fed and PPT, stocks are actually, objectively,
more expensive than at the peaks of the cataclysmic bubbles that defined the
beginning of the fiat Ponzi’s end game.
And this, as historically “cooked” earnings – in many cases, aided by
government-sanctioned accounting changes that encouragesuch
fraud – are already in steep decline, having fallen year-over-year for
the past three quarters; joining the year-over-year declines in everything
from retail sales, to industrial production, durable goods orders, and even “island of lies”
diffusion indices like the Chicago PMI and ISM Manufacturing Indices.
Heck, even the most financially illiterate can understand ominous data such
as the below – of the bubble-bursting implications of an explosion of
money-losing companies; amidst an artificial, ZIRP-created environment in
which default rates have been pushed toward all-time lows.
Of course, not just U.S., but worldwide debt defaults are surging –
cumulatively, to their highest level since
2009, especially in the “emerging
markets” everyone knows will default. Which is probably why
the average global currency is at, or nearly at, its all-time low; in most
cases, dramatically weaker than the spike-bottom lows at the heart of
the 2008 financial crisis. And again, I’m not just speaking of “third
world” currencies, but nearly all currencies – from the Euro; to the
Yen; the vaunted “BRICS”;
and of course, soon-to-be-unpegged currencies like the Yuan.
Of course, it’s here in the U.S. where the sheer volume of
soon-to-be-defaulted debts are the highest; although you’d never know it,
given the unrelenting, comically transparent propaganda of U.S. “relative
strength” from Washington, Wall Street, and the Mainstream
Media. Which, of course, has been temporarily masked by the
dollar’s fading “reserve currency” status – enabling the deleterious economic
market impact of unfettered money printing to be modest relative to the rest
of the world. Where, for example, the vast majority of equities are in
bear markets, as bond yields explode.
That said, U.S. corporate debt defaults are also back at 2009
levels, with a whopping 72% of metals and mining companies in
distress. I mean, we’re talking about hundreds of billions of
defaults-to-be in the commodity sector alone – many of which will likely
occur in the 2016.
Which, of course, starts just two weeks from now.
In fact, major “high yield” bond funds were collapsing
before Friday’s junk bond bloodbath – its worst single-day performance
in four years. And with the CCC-rated bond yield – i.e., the equivalent
of the subprime mortgage market circa 2007 – at its highest level since the
2008 crisis (more specifically, the weekend
of the Lehman Brothers bankruptcy), it doesn’t take much to realize
how close we are to the tipping point. Or, per the title of today’s
article, the “imminence of oblivion.”
And this, with the Fed, amidst worse economic conditions than 2008,
and lower commodity and currency prices – itself, holding a
gargantuan, $4.5 trillion balance sheet – representing the largest,
lowest-quality fixed income “hedge fund” in history – considering raising rates
for the first time in a decade, as part of an inexorably destructive, but
desperately hopeless, and historically perverted, “face saving”
exercise. And by the way, when the Fed did last raise rates in 2006
(only to take them back down a year later), not only was its balance sheet
one-fifth its current size, but the U.S. national debt was more than $10
trillion less. Not including, of course, the $5+ trillion held “off
balance sheet” from nationalizing Fannie Mae and Freddie Mach; and tens, if
not hundreds, of trillions of geometrically rising “unfunded
liabilities.” In other words, to quote Mark St. Cyr from this weekend,
“the world sits atop a tinderbox fueled by the monetary policies that
created them, awaiting a match that could set it off in a blaze of who knows
what. All in short order.” And I assure you, if Whirlybird
Janet and company are insane enough to attempt a rate “lift-off” under such
conditions, it will crash back to the Earth as rapidly, and forcefully, as
the Republic Transport at the end of Attack of the Clones.
But wait, what’s this? It appears the Fed is desperately trying to
“adjust market expectations” – per this,
for all intents and purposes, mea culpa from its mainstream media
“mouthpiece,” Jon Hilsenrath of the Wall Street Journal, this
weekend. Not that they said so directly, but by having
Hilsenrath publish such a dramatically dovish article, mere days from a
so-called rate hike – you can bet they are as terrified by the global
financial market contagion they have created as of “losing face” by not
raising rates. Too bad they don’t realize it was their own
hyper-inflationary policies of the past 15 years that are the true
problem; NOT the prospect of a minuscule, immaterial quarter-point rate
hike. From ZERO, I might add.
“Any number of factors could force the Fed to reverse course and cut
rates all over again: a shock to the U.S. economy from abroad,
persistently low inflation, some new financial bubble bursting and slamming
the economy, or lost momentum in a business cycle which, at 78 months, is
already longer than 29 of the 33 expansions the U.S. economy has experienced
since 1854. In short, the age of unconventional monetary policy begun
by the 2007-09 financial crisis might not be ending.”
Is it too late to renege on the misguided, suicidal “December
rate hike or bust” campaign – with so many lies and market manipulations already
invested in it? Of course not; as per what I have maintained forever,
the only thing the Fed cares about is the financial markets it and its
government and Wall Street partners rig on a 24/7 basis. Thus, if they
cannot reverse the financial market bloodbath by Wednesday afternoon, you can
bet your “bottom dollar” they’ll change their mind – using every imaginable
excuse other than their own abysmal failures. Which, in and of itself,
may well commence the aforementioned “oblivion” event – as it would
permanently destroy whatever remaining “credibility”
they still had, even in the eyes of the Wall Street and MSM lackeys that
depend on their hyperinflationary largesse to maintain the status quo they
alone benefit from.
And this, with physical Precious Metal demand – irrespective of the
historic, merciless paper manipulation occurring as we speak – at all-time
high levels, particularly at the epicenter of global currency
devaluation, China.
Let alone, as the mining industry is operating at steep losses that will
certainly cause unprecedented mine shutdowns in short order – ensuring
collapsing production at a time when above-ground inventories are
unquestionably at all-time lows, and demand all-time highs.
Tonight, I’m looking forward to the one-time, never-again-to-be-broadcast
podcast by the great David Stockman – whose “Great Deformation” thesis is the
basis of my own, historically
bearish economic outlook. He believes the upcoming Fed rate hike –
assuming it actually occurs – will represent the end of three decades of
bubble –financing and market valuations, yielding an historic economic
collapse that, frankly, has already
begun. In other words, the “imminence of oblivion” has arrived;
and for those that haven’t yet taken steps to protect themselves, we can only
warn, as vehemently as possible, that “Precious
Metals won’t be available when the herd wants them.”