Again Europe takes center stage, and again we have our markets under severe pressure this morning.
Remember, a few days ago Europe declared that evil short-sellers would not be able to slam stock prices to the floor any more.
How's that working out for you this morning? The DAX is down 4%, the CAC 3%, the FTSE 2.3% and the big banks are all down big numbers, from 3, 4, 5 or more percent each.
Oh, and the DOW is indicated lower by about 200.
Remember that we, the glorious Americans, turned balance sheet fraud into an officially-sanctioned business practice in 2009 with "mark to the booger on your finger that you're about to eat", courtesy of our CONgress, which is quite-appropriately named.
We were told that there were all these institutions that were "too big to fail", but we in fact closed some banks and combined them with the too big to fail, making them even bigger and more too big to fail.
At the same time we refused to force all the bogus paper into the open, including the allegedly-good-but-can't-be-paid Credit Default Swaps, clearing the market and getting the bogus credit and debt (which will not be paid because it cannot be paid) out of the system and freeing the economy and price level to adjust to where it should have been all along.
The problem with fraud as a business model is that it only works under two conditions: Nobody can find out, or if they do, whoever allowed and sanctioned it has to be big enough to eat the losses and backstop those who would otherwise go bankrupt.
ENRON played that game for a while, but in the end their "fortress" crumbled in days when it was discovered that despite being perfectly solvent on paper nothing about their balance sheet, except perhaps the cash in the petty cash drawer at the front desk, was real.
Dodd-Frank refused to address this, because our financial firms are of course great "helpers" to our Congressional office-holders and their staff. We continue to allow the "big lie" that Manhattan is the center of the universe, and should anything happen to it's ability to siphon off the wealth of people all over the world there would be instant calamity and the world would end the next morning.
That of course is a lie, but the liars don't care - their intent is simply to make money, irrespective of how, even if "make" really ought to be better-labeled "steal" or "extort."
Of course for the last two years fraud has felt pretty damn good, if you were a bankster - or someone playing the market. The problem is that other than the "masters of finance" most people aren't either - they're simply people trying to build a retirement nest egg in 401ks and IRAs and they've actually lost 20% of their money before inflation since 2000!
It's much worse than this, of course, since inflation since 2000 has been about 34% (compounded rate from 2000-2010), so in point of fact your "nest egg" has lost approximately half of its value!
More to the point you would have been far better off sitting in CDs for the entire time period from 2000 until now. You'd still have gotten screwed to some degree by inflation, but you'd have a partial offset for that in the form of interest. And you'd not have lost 30% of your principal, soon to be 80% if you don't wise the hell up first.
This is what happens when Ponzi schemes run out of suckers. Bernanke's "Put", which he has not only taken credit for in public but declared a function of policy, utterly depends on someone having the confidence that prices will always go higher.
One quick question: How did that work out for you with your house?
These policies are not born out of ignorance, they're intentional frauds.
We keep hearing that we can't have "deflation" as that's "terrible", but exactly who is it terrible for? It certainly isn't terrible for the prudent saver - the Senior Citizen who has been systemically and serially financially raped by those very same "captains of finance!" Yes, it's terrible if you took on debt you can't afford but exactly why should you be protected from your own stupidity whether you're that borrower or lender - and using debt to pull future earnings capacity from the future or speculate is factually stupid!
Further, is it really "deflation" when you simply reverse the inflation of the last ten years, say much the last 30? Why is it perfectly ok to steal half or more of someone's saved money, but when they might get that stored value back it's suddenly a national calamity to be avoided at all costs?
We're now in the position where the final backstop, sovereign governments, are being questioned as to their ability to underwrite the frauds they have not only permitted but explicitly sanctioned as public policy. As the little guy behind the curtain is exposed to be a 4' man in his boxers playing with himself instead of the Wise and Powerful Oz, we are due to suffer a tremendous blow.
It is still not too late to take our medicine and correct the imbalances in our economy. But it will not be easy, it will not be painless, and it will not be fun. That option expired more than a decade ago and there is nothing we can do about that which is in the past. That we compounded the errors and turned a required 20% contraction in the size of the Federal Government into a 43% one over the last three years is our fault, collectively, as Americans - and it is most-specifically the fault of the singular man who infests the White House along with the 535 frauds who occasionally sit in the Capitol, bounded by (allegedly anyway) both Independence and a thing called the Constitution (the streets, of course.)
Many people say "We're not Japan" and "We won't suffer their fate." I simply observe that irrespective of the deflation/inflation argument when it comes to the markets does it really matter? The Nikkei is trading at less than 25% of its all-time high, despite having had a couple of really huge rallies since it topped - it has failed to recover as ZIRP and associated policies have destroyed capital formation and they ran out of suckers to bid up the price.
Such is what faces us today. ZIRP is a scam and a public fraud, and Rick Perry's observation about "printing money" is spot-on. Let us remind ourselves of The Coinage Act of 1792, which stated:
Section 19. And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of the fine gold or fine silver therein contained, or shall be of less weight or value than the same out to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, and if any of the said officers or persons shall embezzle any of the metals which shall at any time be committed to their charge for the purpose of being coined, or any of the coins which shall be struck or coined at the said mint, every such officer or person who shall commit any or either of the said offenses, shall be deemed guilty of felony, and shall suffer death.
What's wrong with that law and why shouldn't it apply now? More to the point, has this law ever actually been actually and specifically repealed or did "someone" at "some point" simply stop referring to and publishing it in the official US Code, perhaps because it was "inconvenient"?
Why should a person not be able to simply save 20% of their funds in total, from their first day of employment to their retirement, a period of 45 years for the average person, and by doing so not have ten years of savings to expend at their former rate of spending (or twenty if they are more frugal since they no longer need to spend on all the things that go into pursuit of employment)?
And before you say that 20% in savings is beyond the common man may I point out that you are already allegedly "saving" nearly 15% between the Social Security and Medicare taxes you have withheld, allegedly for your benefit - or so the lefties claim, which means you should only need to privately save five percent more!
Well? Who stole your damn money, and why is it that they should not suffer the penalty proscribed in The Coinage Act of 1792?
Why are not you, the common man in America, demanding the return of the Coinage Act and immediate trial of all who violate it, with sentences carried out at high noon upon the Washington Mall at the foot of the Capitol building? Would we wind up vacating half or more of the seats in Congress, the White House, Treasury, and the voting members of the FOMC - and if we did would that really be such a bad thing if it finally secured our monetary and financial system against the serial abuses and destruction done to you, the common man, over the last three decades?
Get ready for the "Big Suck" folks, because like the leading edge of the back eyewall of a hurricane it's coming, and our nation's collective unwillingness to force prosecution and removal from office of the malefactors that have caused this situation over the last thirty years, and most-specifically over the last ten, makes the responsibility for what's now becoming inevitable ours.
