In my daily absorbtion of a ton of information, I subscribe to a number of financial newsletters. All are free, and all are written to lead the reader further into the company’s products, with the hope of eventually landing the reader as a paid subscriber.
That’d be nice on my part, but it first requires a job with real income. (I applied to three jobs this morning; hopefully one will come through!)
What a clever and intelligent person like myself can do with these free newsletters is through an aggregation of information distill a common message or idea about the current financial situation, and what certain classes of investors should look for in a macroeconomic conclusion about what the future holds for their cash, their stocks, and their bond holdings. Individual investment decisions on partucular stocks or shorts are beyond this look, but that’s not important for an overall economic analysis, or to draw conclusions.
Gains Pains & Capitol wrote this morning about the very dangerous situation emerging in Spain. I completely agree with their assessment, and what it holds for the United States.
How soon all of this unfolds remains to be seen. The Multi-‐Trillion Dollar Question is whether the markets realize that Central Banks are virtually powerless sooner rather than later.
By the look of things, it’s coming relatively soon. Spain, which is now at the forefront of the Great Western Debt Default Collapse, has opted to seek funding from the mega-bailout fund, the European Stability Mechanism (ESM) rather than going directly to the ECB or the IMF.
The reasons for this are clear: the IMF doesn’t have the funds (nor will it as the US won’t fund a European bailout during a Presidential election year). And the ECB is now backed into a political corner with Germany.
The London Daily Telegraph’s amazing Ambrose Evans-Prichard continues to lead the mainstream economic coverage of this disaster, in my opinion. He grasps the obvious conclusions more so than anyone else I have read.
Central banks don’t have very many tools to use to fix a broken economy. Their two main tools are printing money like Weimar Germany or Argentina, or dropping interest rates so low as to be giving money away. Today’s announcement that U.S. housing loan rates are the lowest since the 1950s is an ominous sign that things are still not right, despite billions of dollars and euros dumped into Western economies since 2008.
<irony> Shit, just send me $100M and I can make marvelous investments in the economy. With that infusion of “economic stimulus,” I can personally boost the travel and tourism sectors, the rural Virginia housing market, the construction industry–especially the important subsegment of artisan craftsmen–and the classic car markets. And given enough time, I can also make sure a lot of money goes into independent television production, as well as small business creation. So far, no central bankers have been smart enough to send me that $100M check…so the calamity continues to unfold unchecked. </irony>
Spain is in very serious economic trouble, with high default rates on bad housing loans, an incredible 25% of their workers unemployed and unpaid, and no real avenue of escape. Greece is a small violent side-show, compared to what will happen to Spain when it tips over the edge, especially in the bond markets.
The citizens of France and Greece just showed their elite classes that they don’t give a shit about the banks collapsing, and just voted to make sure their new political classes continue the gravy train. That will work for a few weeks, but the investor classes won’t buy bonds that have the potential to be worthless later this year, and banks won’t lend if there is a heightened sense that they won’t be repaid. Central banks can print money, but they know it becomes increasingly worthless, as history has shown for 200 years what happens to debased fiat currencies.
It is amusing to read week after week about how the Euro crisis is being solved, but personally knowing because of analysis, comparison, and innate knowledge of how human markets work just how false that narrative is. It’s manufactured history, but with the tiny yet nauseating kernel of obvious fear at its heart. The Establishment knows they are fucked, but hope beyone hope that the public relations guys like myself can keep the bullshit flowing long enough so that the bovine voters in their own way can rescue the Establishment and their B.S. fiat money “fortunes.”
How Keynesian economists can continue with a straight face to think debt financing and massive loans to banks can stave off the inevitable reset, I have no idea. Part of me believes that these bedwetting bozos are so white-knuckle afraid of what is coming and now know that their national economic theories turned out to be flawed that they continue on the same incomptent path because they know nothing else. It’s sad really, but they knew deep down this could happen when they started playing God with the natural order of economies. But they thought they were better than the primitives before them. Surprise–you aren’t!
Hubris and disturbed egos know no boundaries, especially with these Establishment elitists. And they aren’t stupid–they’ve seen what happens when governments collapse and those held personally responsible by the masses are held to a rough account, many times at the end of a lightpole.
The end phase should be interesting. I would imagine the preparation of the U.S. Department of Homeland Security to handle the overflow from Europe’s collapse has been going on under the radar. It’s been mildly interesting to read the bits and pieces of obscure public information flowing from the department, especially through government contracts for curious services and goods which seem to be directed towards preparing for “something.” The paranoid Alex Jones Websites are a goldmine for that kind of material. Just don’t bother reading the ignorant comments and interpretations–they don’t know what they are talking about, especially when it comes to reading government contracts. It’s the hidden kernels of tiny, irrefutable facts that are illuminating.
Kinda would like a job with FEMA, actually–to be a part of the response, and perhaps offer something useful to fixing this disaster would be fascinating and rewarding. (Yes, I’ve applied there a few times in the past with no response. Darned veterans keep beating me out for interviews, even though I am better intellectually qualified for the jobs than they are.) But such preparations, and the execution thereof, will be a fascinating chapter in American history. I hope I am around to see the end of it.
To wrap this up, there is a lot of information out there this spring about Europe’s dire situation that if one just reads it, keeps an open mind, identifies the disinformation and ignorance, and once one makes some gut-check conclusions–and isn’t afraid to see what is happening with our currency and the world’s economic situation–one can get a pretty good picture of what lies ahead for all of us.
And it ain’t pretty.