Here we are six years after the “Great Financial Crisis”. Since then, every acronym in the book has been thrown at the economy and financial markets but to what end? The economy has gone nowhere over these six years, “recovery” has been the meme …but never “expansion”. Hasn’t anyone wondered about this? In the good old days we used to hear the word “expansion” for two or three years before the natural recession would roll through. This time we’ve heard nothing but recovery …year after year. “Hope” (which is the vestige of fools), year after year.
I wrote in 2008, “this is a crisis of ‘solvency’, more liquidity cannot turn bad loans into good ones”. Now, six years later it turns out this thought process was 100% correct. Other than financial assets being “saved”, all of the QE, all of the additional debt taken on by various sovereign treasuries has done nothing to the real economy of Main St.. The plan was to inflate asset values and this would spill onto Main St.. Even mainstream media when interviewing the talking heads of Wall St. and the liars out of Washington are questioning this. Heck, Peter Fisher (past chief of the plunge protection team Martin) this morning brought this up on his own. He said the policy of inflating assets has not worked and cannot work. The five plus year experiment has failed. One does not have to look far or even “into” the bogus reporting of unemployment to see what is happening. All you need to do is look at oil and Dr. copper. They are both crashing and now threating to break trend lines going back to the 1980′s.
In as few words as possible, we are witnessing a credit collapse. These two commodities (along with many others) are crashing NOT because currencies are so well foundationed or strong and “going up”. No, we are watching them crash because of shrinking demand. This is also confirmed by trade numbers (or lack of). We also see freight rates imploding all over the world due to the same lack of demand and trade. This should tell you something in very loud and very clear terms, the “reflation” efforts have failed miserably!
You don’t need to take my word, your own gut feel or even your very own eyes to know this. “They” have admitted it and we now even see stories going mainstream with titles such as “is the Fed out of bullets? and Fed loses its grip on debt” http://www.bloomberg.com/news/articles/2015-08-20/credit-traders-gird-for-the-worst-as-fed-loses-its-grip-on-debt. Just this week we have seen Alan Greenspan warn the “credit markets are in a bubble” http://www.marketwatch.com/story/greenspan-warns-about-bond-market-bubble-2015-08-19 . If that were not enough, the St. Louis Fed http://www.zerohedge.com/news/2015-08-19/after-6-years-qe-and-45-trillion-balance-sheet-st-louis-fed-admits-qe-was-mistake admits QE was a mistake and did nothing to help the economy.
In the case of Mr. Greenspan, he is simply trying to get on the record far enough to hopefully make historians forget he was the one driving the bus on the road to perdition. He is now on the record gold “is money” and a safe haven versus his precious product the dollar. Has he had some sort of come to Jesus moment? I believe no, not even possible as he’s known all along how money works and where he was driving the bus. His days with Ayn Rand were filled with quotes and writings which sounded much like today’s tin foil hat society! He knew then, he knows now and will know until his last breath, the end of the credit road is in sight. His own “legacy” and nothing else is his concern.
The St. Louis Fed is known as the “teaching” district. Their recent admission QE was a mistake is a little different than Alan Greenspan trying to get on the record. I’m not really sure what their motive is for telling the truth? It certainly does not aid their cause because they are admitting failure.
We stand on the cusp of a credit meltdown. Never mind the stock markets or the commodity markets, they are simply “symptoms” of a credit bubble going bust. The talk of “will the Fed tighten” in Sept. (or EVER again) is hilarious! The Fed will be forced to implement another round of QE no matter what the acronym or name. More QE will do what more QE has already done, simply pile more debt on top of already TOO MUCH DEBT! There are no possible fixes left, the CREDIT CRISIS has arrived. No way to reflate and no way to actually “pay” (settle) on the debt. Central banks all over the world are now beginning to act in their own best interests, it’s like the sharks are eating the sharks.
The credit BUST is here! Markets all over the world are crashing and the U.S. is now losing control. After breaking down yesterday, today looks to be another bad day. If the PPT cannot get any traction today, Monday could be a disaster. I even question whether markets remain open at some point because closure will be the ONLY way to stop the selling which will be forced (by margin calls) in nearly all markets. This is not fear mongering, it is now math. We live in a make believe world created by the illusion that “credit” is a strong foundation, it cannot be. Bad credits cannot be made good by those with too much debt. This is exactly what has been attempted by the largest debtor on the planet. The failure will be spectacular. All money today is nothing more than credit … credit IS the problem!
It is imperative you understand how this will go down. You must have exactly what you think you’ll need and what you want to own going into this. You will have no opportunity to change horses when the markets close. Bluntly, it’s not the closure of markets that will kill you …it will be the reopening!
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