Yoo Hoo..... Who Took A Dump?
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2019-09-18 09:00 by Karl Denninger
in Editorial , 313 references Ignore this thread
Yoo Hoo..... Who Took A Dump?
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Hmmmm....

Yesterday there was a mess in the repo market -- where people go for very short term money.  Repos, for those who don't know, are where you put up securities (typically government debt) and get cash, and then put the cash back and get the securities back -- at some annualized interest rate.

This morning that appears to be back to "ok".  But an overnight funding index also spiked last night.

What nobody has managed to figure out is where that's coming from.  There's plenty of speculation -- and there are plenty of possibilities too.  Tax payments are due on the 15th of September, which might well have been the cause.  Then you have the Saudi situation, which might have played into it as well; flight to dollars has a way of happening when people get scared that there might be a big "boom" coming.

Today we have the Fed Decision, which everyone thinks will be a rate cut.  There quite-clearly should not be.  Even if you believe the government inflation data (which is a flat-out lie) whether you're looking at consumer prices or labor costs, both are out of whack with reality -- and the broader economy.

The base issue is that the entire so-called "economy" is predicated on ever-cheaper money.  We currently have a feral government that is running a 35% fiscal deficit!  That is, through August the government took in just over 3 trillion in taxes and spent over $4.1 trillion.

This insanity is what is causing the market to go up, it is propping up house prices, and it is what is providing our alleged "strong economy." The economy is NOT strong -- any more than if you made $50,000 a year and spent $65,000 by running your credit card up $15,000 a year every single year you'd be doing well.

You would in fact be one stumble away from disaster, unable to make the power bill or your car insurance, setting off a cascade when stopped for speeding that leads you to be arrested, tossed in jail, your license plate revoked and now you lose your job, your house and everything else.

While the CNBC screamers tell us how wonderful everything is in fact there is nothing stable or good about what is going on.  In a time of emergency you can and indeed perhaps should spend more than you make -- after all, if the alternative is that you drown you'll spend anything to keep your head above water.

But ten years after the housing bubble exploded to continue doing so for the explicit purpose of maintaining and expanding both public and private frauds is criminally insane.  Those doing it are risking not just economic depression but the loss of civil order.  They all ought to be in prison and when they die there I want their carcasses hauled out onto the National Mall and hung from a tree for the buzzards to pick clean so nobody contemplates doing it again.

Yes, I just said these people don't even deserve a decent burial, say much less anything more-dignified.

But instead of demanding this crap stop -- and meaning it -- the American people run around with their hair on fire wearing red hats or threatening to start a civil war by confiscating guns.  Oh wait -- they don't run at all; they're all riding in power scooters while injecting insulin in a thunder-thigh with one hand and stuffing their pie hole full of Doritos with the other!

Exactly how long all of this continues before someone calls "bullcrap!" on it and the entire edifice we now call "a great economy" or "a great job market" comes crashing down around our ears is unknown -- but that it will happen is a certainty.  As I write this the UAW is on strike because GM is allegedly making a "lot of money" and they want "their fair share."

The UAW is demanding the spoils of ridiculously overinflated vehicle prices which cannot continue forever and yet the UAW wants a contract that will extend well beyond the point of collapse in ability to pay, and this said "profits", will be made going forward.  This will bankrupt GM if they acquiesce down the road with certainty and yet if they do not capitulate the strike continues and, when they burn through inventory, then it really bites them.

Best bet from my perspective: We're months away, at best, from a train wreck.  Why?  Because there are lots of people who want one before the 2020 elections, and on the other side you have such a mountain of fiscal and economic fraud -- and an entire business and political class that have built their entire lives on same continuing forever into the future.

Here it comes.

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