It’s 7 AM MST Tuesday morning, and hard to believe that when I awoke three
hours ago, I hadn’t a clue what I’d write about. “Fortunately,” the
grotesquely deformed, Central bank poisoned, rapidly imploding global economy
provides an endless supply of “horrible headlines” to discuss, enabling the Miles
Franklin Blog to do what it does best; and for me personally, to enjoy
the “sleep of the just” – knowing I have prepared for a dangerous
future with the only assets guaranteed to protect from what’s coming. In
today’s case, a combination of horrific economic data, increasingly unstable
financial markets, and unadulterated Central bank lunacy provided enough
platform to write a mini-book; which fortunately for all of us, my three-page
daily minimum prevents.
OK, where to start? Generally speaking, today’s theme is yet another
installation in the “deformation” series I commenced January 2nd‘s
must read article, “the direst prediction of all.” In it, I
highlighted the great work of David Stockman, who’s “Great Deformation” book
discusses how 15 years of maniacal rate repression and market manipulation
have caused massive industrial, commodity, and infrastructure oversupply;
which will take years – if not decades – to be worked through. And given the
world was pushed past “peak debt” to enable it – via desperate, hopelessly
futile Keynesian methods – the path to massive debt default, either directly
or via inflation – has been set in stone.
It’s been barely three weeks since my last article on this topic was published; but since then, so
many scary things have occurred, it was worth revisiting today. As was the
case then, I have many such “deformations” to list. However, this time
around, the situation feels far direr – like the “end game” is staring us in
the face. Remember, the only “tool” TPTB still have is market
manipulation – most of it covert; and when it no longer produces the desired
effect (i.e., rising asset prices and confidence in the “recovery” we
have long been propagandized promised), the inevitable, global fiat currency
collapse will hit us like a Category F5 tornado.
What first got my juices flowing was the incredible spate of brazen lies
proffered by those most incentivized to fleece the “99%”; which care of the
lapdog financial media, are spread the world round on a daily basis. Heck,
even the CFA Institute itself, a so-called “paragon of conservatism,” just
emailed an article titled “riding out Eurozone uncertainty”; as opposed to
what it should be writing, if it were indeed conservative – i.e, “run,
while you still can!”
To wit, the horrific, world-destroying forces of “financial activists”
which, to quote David Stockman, are the “mutant progeny of Central bank
financial repression.” These sociopathic vultures are amongst the “1%” that
have directly benefited from QE, ZIRP, and other hyperinflationary monetary
and fiscal policies. And despite the obvious, horrific damage these policies
have caused, they continue to be touted as “experts,” because the
aforementioned market manipulations, for the most part, have yet to fail.
Warren Buffet, for example, who I have long
noted as one of the great financial traitors of history – especially as
his father was a Ron Paul-like real money advocate – was on CNBC this morning
claiming how great the record level of capital distributions (share
buybacks plus dividends) is for shareholders; without, of course, noting how
corporate debt has literally exploded to pay for such largesse, whilst
capital spending and employment have plummeted. Which, of course, benefits
company management more than anyone, given how corporate boards’ principle
focus has rapidly shifted from building long-term corporate value to
maximizing short-term share appreciation – which “conveniently,” their
compensation is increasingly tied to.
Meanwhile, as astutely highlighted by Peter Schiff this week, Goldman
Sachs is all but shouting at the ECB to increase the level of its
already insane, hyperinflationary monetary policies – such as the €1.2
trillion QE program it just initiated, and the negative interest rate policy that threatens
to catalyze an all-out run on already insolvent European banks. Inflation only
benefits the 1% that receive such inflationary largesse; but care of said
deformations – not just in the financial and industrial world, but the
economic data used to describe it – the myth of “deflation” is held out as “proof” that more
money printing is needed, despite centuries of evidence claiming
otherwise. Moreover, the fact that “deflation boogeymen” exist not just in the evil world of
Warren Buffet and Goldman Sachs, but the so-called “goldbug” community itself
simply make it that much more treacherous a minefield to navigate.
As for the ECB, don’t forget for a second that Mario Draghi himself is an
ex-Goldman Sachs employee; as is the head of the Bank of England, Mark
Carney; and the head of the New York Federal Reserve, Bill Dudley. Of course, here in the States, we
don’t even need Goldman Sachs’ influence to maintain America’s inevitable
course towards hyperinflationary collapse. What, with FOMC members like
Chicago Fed President Charles Evans making comments (yesterday) like “one
could argue the Fed is not accommodative enough,” and there are “no serious
costs of modestly overshooting inflation targets.”
Last but not least, the insane MSM “hero worship” of the handful of hedge
fund managers blessed to sit in the “sweet spot” of market manipulation; such
as the aforementioned Warren Buffett – who, few remember, would have been
destroyed in 2008 if not for Federal bailouts. Let alone, said “mutant”
activists like Bill Ackman and Carl Icahn; and so-called “gurus” like Jeff
Gundlach. In the latter’s case, he claimed this morning that interest rates
have bottomed. Yet, despite the fact that, in his own words, “high yield
bonds under-perform Treasuries in a rising rate environment,” one should
purchase collapsing Puerto Rican municipal bonds due to
their high yields! And such “advice” – likely, supporting his personal
book of toxic Puerto Rican bonds – is actually circulated like that of a
prophet; only in this case, said “prophet’s” advice is the equivalent of “the
house is burning, so run inside!”
Regarding rates, I have for the past year claimed investors would “front-run” QE to Infinity as the global economy collapsed –
taking sovereign yields in “leading” Western economies to all-time lows. That
is, until hyper-inflation inevitably “comes to town” – at which point,
all bets are off. Well, box number one can certainly be checked – as
cumulatively, global rates hit a 5,000 year low this Spring; led, as you can
imagine, by the bonds of nations most actively engaged in overt QE,
like the Eurozone and Japan. However, a “funny thing happened on the way to
maximum financial repression”; which is, that in the past two weeks, rates
have surged despite unrelenting, horrific global economic data. This morning,
for instance, the 10-year Treasury yield has surged to 2.18% from a low of
1.68% three months ago, despite a weak PMI service reading and horrific
Gallup Economic Confidence reading. Not to mention, last week’s worst GDP
report in years; relentless evidence of expanding economic weakness; and oh
yeah, the most unequivocally dovish stance the Fed has taken
in years.
Perhaps this morning’s catastrophic trade deficit number has
something to do with it – exploding from $35 billion in February to $51
billion in March, representing its worst print since – drum roll please –
October 2008, and the biggest “miss” versus expectations ever. In other
words, signaling the modest increase in oil prices has utterly annihilated an
already dying U.S. economy. Not to mention, said 1Q GDP “growth”
– which will clearly be revised to negative territory as a result. To
which I can only say, nice job, “oil PPT!” – which, despite history’s largest
glut, have managed to push WTI crude back above $60/bbl. LOL, it’s hard not
to laugh at Janet Yellen first calling low oil prices a “net positive for the
economy” six months ago. Now that the economy is sitting at its lows, and oil
prices rising, I wonder what words of wisdom she’ll have for us now.
Back to the trade deficit, the bad news is far worse when you look into
the details; as excluding energy, it was the worst deficit in
the 23 years the data has been compiled. In other words, a collapsing
U.S. export sector is running headlong into the higher prices the so-called
“deflation” the Fed harangues about is actually creating.
As for the 10-year Treasury yield – not to mention, the 10-year German
Bund yield, which has doubled in the past week (albeit, to just 0.46%)
– I last week surmised that the increased Chinese selling indicated by recent
TIC, or Treasury International Capital reports, was likely a major factor;
assuming of course, that the Chinese aren’t lying. That said, said
hyperinflation has to arrive sometime; as the deformation of historically low
rates, amidst record money printing and a soaring cost of living, has to
eventually cause something to “give.” Which is why I am watching the recent,
relentless rises of bellwether commodities like the 10-year Treasury yield,
crude oil, and copper with a very close eye. Oh, those pesky “ramifications” of deforming the economy – and financial
markets – with limitless money printing, market manipulation, and propaganda.
Before I conclude, I have a few more ugly “deformations” to discuss – such
as Wall Street’s “latest craze”; i.e, the unfathomable securitization of
“peer to peer” loans, conducted by “shadow banking” entities over the
internet. Or how about the Bank of Australia cutting interest rates to a
record low 2.0% this morning; citing – aside from collapsing iron ore prices,
which dramatically impacts Australia’s mining export dependent economy;
rising property prices in Sydney; and a “strong currency.” To which, I can
only say HUH? Under what Bizarro World premise are rates reduced due to
rising property prices – let alone, in one specific part of a country? And
better yet, what part of the Australian Dollar’s six-year low is
considered “strong?”
I won’t even get into this morning’s Chinese margin increase, yielding a
4% plunge in the Shanghai stock exchange. Which if not for the insane,
bubble-like valuation of U.S. energy, biotech, social media, and restaurant
stocks, would be considered the world’s largest equity bubble.
Or an article this morning pointing out how global home sales in the $100+
million range are soaring off the charts, with one particularly arrogant
billionaire claiming “they’re better than gold, because you can boast about
them.” Conversely, home prices in the “99%” of the market where most of the
world lives have barely budged amidst the Central bank catalyzed, high-end
housing echo bubble – to the point that even CNBC questioned how unlikely
this “divide” can continue. Let alone, with collapsing lumber prices
screaming of the end of whatever upside momentum housing still remains.
Last but not least, the insane French government has announced its latest,
terrifying salvo in the worldwide “war against money, that cannot be won.” Yes,
lucky Parisians, your collapsing economy will now be compounded by excessive
capital controls, cash usage limits, and even gold transfer monitoring. Which
is why the Miles Franklin Blog is reiterating the “urgent cry to Europeans” we first issued in
January – to “GOTS,” or get out of the system as soon as possible;
particularly with the very real possibility of a catastrophic “Grexit” event within months, if not weeks.
To conclude, I see this morning that yet again, the Cartel is
capping with all its might at gold’s two year “line in the sand” at
$1,200/oz; which, per the fabulous work of Steve St. Angelo, is simply
catalyzing unrelenting, record gold exports to China, India, and the
rest of emerging Eastern world. As noted yesterday, it’s only a matter of
time before the world realizes just how much of the West’s gold is gone, and
how much of it sits in Eastern vaults – as well as on Eastern wrists, necks, ankles,
and fingers. The “fraying barrier between deformation and collapse” is
getting thinner with each passing day; and when it finally rends, if you
haven’t already protected yourself with real money, it will already
be too late.
