Oh the drama of it all. Republican self-immolation thanks to the radical neo-con Tea Party Faction. Democratic self-congratulatory chest-thumping and holier-than-thou posturings. Even a stenographer who flips her lid and shrieks in tongues through the senate microphones in a fit of apparent uncharacteristic madness. If this were a painting, it would be by Salvador Dali.
But its not. This is the demise of a world power in real time and before our very eyes. It’s the outcome of absolutely non-sensical fiscal policy that essenatially decrees self-enrichment through cheque-kiting for the ruling class while the rest of the masses duke it out over tidbits thrown from the overladen tables on high.
Reuters suggests that thanks to the financial moment of weakness caused by the budget battle, the 6.3% of GDP that comes from the Federal Reserve’s own chequebook will continue until at least 2014.
(Reuters) – The Federal Reserve may have to wait until early next year before it sees sufficient strength in the U.S. economy to begin scaling back its bond-buying stimulus, after a destructive Washington budget battle that may take a bite out of growth.
What a spectacle!
One can’t help but wonder if its time to stock up on ammunition and canned goods or perhaps build an arc, the madness of the political class evidently having achieved biblical proportions, and the inevitable flout surely to constitute a deluge of woe.
Precious Metals Threatening to Pop
The more stimulus, the bigger will be the explosion in precious metals prices when the levy finally breaks. The dutiful chorus emanating from Goldman Sachs, Morgan Stanley et al should be considered nothing more but the obedient barking of seals in return for all the free fish.
Rick Rule aptly points out that the big banks will be as wrong about precious metals as they were about CDO’s and sub primes.
Reuters published a piece today that underscores trading irregularities in the gold market, as if they’ve just noticed for the first time. They refer to massive volumes of paper gold in the futures market when they are normally quiet:
“The episode followed five equally dramatic and short spurts of heavy buying or selling that moved prices by over $10 within minutes.
The sheer volume has astonished traders.
On October 1 and October 11, volume in just ten minutes exceeded 20,000 lots, accounting for almost a tenth of the market’s average daily turnover this year, Reuters data showed.”
What is conspicuous by its absence in mainstream coverage of the gold market is any sort of detailed analysis of futures ‘open interest’ versus physical volumes actually traded, nor is there any reporting on what futures contracts are actually settled with a delivery of physical gold.
Those who perceive the signature of a manipulation in progress have no illusions as to why (because it’s true), but it is curious nonetheless that such a deficiency of analysis continues without external comment, except for lunatic fringe conspiracy nuts like me.
Ah well. What can I say. I’m content to mutter away in my remote corner of the world, careless as to whether anyone notices or agrees.
