Be Prepared....
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2015-05-20 07:00 by Karl Denninger
in Editorial , 334 references Ignore this thread
Be Prepared....

Be prepared, because ISIS has allegedly said they've got upwards of half-a-hundred nuts prepared to "strike" against the "infidels" (that's you, by the way.)  Government and law enforcement are powerless to stop it, not because they don't want to but simply because it's impossible; you will be the first responder whether you like it or not if this madness visits your area.  The military is taking it seriously enough to adopt a force protection posture that by their own admission impacts their operational capability.  You ought to take the threat at least that seriously.

Be prepared, because while stock prices have been euphoric sales have not.  Further, beware those calling this a "diversion" of CapEx to share price growth: Capital expenditures have run between 10-13% of GDP, ex-residential investment, through both good markets and bad, growth and recession including the 08-09 "Great Recession."  The data is available to anyone who cares to look so why lie?  The answer is simple: There's an agenda at play and you're not being told what it is.

Be prepared, because ex financial product shenanigans there has been no positive economic output growth ex-debt since 1968.  While there were periods in the 1990s where the GDP deficit was around 2% annually the fact remains that for the last three years it has been running around 7% and at no time during the alleged "recovery" has it gone positive on an annualized basis -- not even for one three month period.


Be prepared, because 2011 was the last time net personal income outpaced this borrowing binge (again, ex financial shenanigans) and then for only four quarters (all of 2011, with the last quarter being a paltry 0.21%.)  For the last year your purchasing power has run at about a -2.5% annual rate which is only "better" compared against 2013 when it was roughly double that.  Roughly 9% of your purchasing power has been lost since the end of 2012 in real terms due to these monetary shenanigans and this is why sales have not gone to record highs even though the stock market has; someone has to buy all that "stuff" (good or services) that is produced!


Be prepared, because neither the Democrat or Republican parties will or have taken on one scintilla of the scam found in our medical "industry", all of which in virtually any other "industry" would lead to racketeering and monopoly-related (E.g. Sherman, Clayton and Robinson-Patman) charges, not to mention consumer fraud charges, being laid against everyone involved.  Despite multiple public documentary trails being laid of not only this behavior but outright fraud such as charging for services not actually performed there have been zero indictments issued against any of the people responsible.

Be prepared, because there is utterly no way that these imbalances, which Congress and Law Enforcement explicitly permit on a daily and continuing basis, in fact they actually enable them via acts such as Obamacare, can continue indefinitely.  The "slow squeeze" placed upon people in the lower and middle classes via trade "deals" that offshore the jobs that those on the lower half of the bell curve depend, along with the destruction of purchasing power that hits everyone but which those on the lower end of the income strata have no margin to absorb, along with unlawful brutality and repression against people primarily in this group by armed men and women in blue costumes, is an explosive situation waiting for nothing more than the one little spark at the wrong time and place that need not exist and wouldn't but for the above.

And finally, be prepared because all of the "relative calm", whether it be in markets or generally, depends on a government and Federal Reserve that together have acted for the last seven years to maintain a zero interest rate policy on the promise that said policy would lift the economy generally for all -- a claim that has now, seven years in, been falsified.  Unfortunately that time at zero and the uneconomic acts taken as a result have now backed both The Fed and Federal Government into a corner; the exact threat that I warned McMorris-Rodgers and others of in 2011 and counseled that Congress must halt deficit spending immediately because to not do so would be to pin both Congress and The Fed to the mat while the alleged "benefits" of that policy would fade to zero over the coming years and in fact were mathematically guaranteed to go negative.  She, and the rest of Congress, blew me (and others who warned similarly) off with the wave of a hand that it was "politically impossible" to do so -- and by doing so guaranteed a massive destructive snapback of which we have only encountered a tiny leading edge of thus far.

Today that leading edge is here, and the question now becomes simply how long before the markets figure it out?

I don't have that answer, but as in 2000 and 2008 such cycles never run to their mathematical endpoints because before that occurs a critical mass of people figure out that the outcome is inevitable, and when they do the time of that endpoint immediately moves forward to "now."