One of the reasons we write is rooted in our deep fear of what might emerge after the current paradigm collapses. We have no doubt something very different is coming, we just desperately want that thing to be freedom, free markets and prosperity as opposed to the disaster that a $2 despot like Trump would bring. His ascension in the polls is very troubling, and makes us wonder whether the public will ultimately choose to rally behind some statist-demagogue wrapped in an American flag when things get bad enough, as opposed to something far more difficult: Liberty. We fear they may eventually choose someone like Donald Trump.
While the markets have improved since the "resolution" of the Greek crisis, in my opinion we would have expected substantially more given the overall "angst" that the situation was generating. Yet, the market remains in a bearish consolidation pattern. Furthermore, relative strength, momentum and volume remain a detraction from the "bullishness" of this week's "crisis resolution rally."
Our boots-on-the-ground coverage from the Greek 'frontline': what do normal Greek citizens think of all this mess?
The preposterous Gong Show in Brussels over the weekend was the financial “Ben Tre” moment for the Euro and ECB. That is, it was the moment when the Germans - imitating the American military on that ghastly morning in February 1968 - set fire to the Eurozone in order to save it. In short, Greece will become an outright debtors’ colony and its government will function as page-boy legislators for the Troika occupiers. Needless to say, political and social upheaval will erupt when the full extent of the Tsipras surrender becomes evident, and the resulting political contagion will spread throughout the length and breadth of Europe as Greece implodes. In due course, the euro will collapse and the baleful Keynesian money printers’ regime in Frankfurt will be repudiated and dismantled. But not before European democracy has a brush with death, and European prosperity is extinguished for a generation.
With Puerto Rico missing a payment on a bond overnight "due to non-appropriation of funds" but denying that this constitutes anything close to a default, the territory may be about to retake the limelight as Greece is now "fixed." As Peter Schiff explains, this is far from over... As in Greece, the Puerto Rican economy has been destroyed by its participation in an unrealistic monetary system that it does not control and the failure of domestic politicians to confront their own insolvency. But the damage done to the Puerto Rican economy by the United States has been far more debilitating than whatever damage the European Union has inflicted on Greece. In fact, the lessons we should be learning in Puerto Rico, most notably how socialistic labor and tax policies can devastate an economy, should serve as a wake up call to those advocating prescribing the same for the mainland.
On Wednesday, Carl Icahn and Larry Fink engaged in an epic debate about the role ETFs play in perpetuating systemic risk. Icahn, taking a page from the Tyler Durden playbook, talks phantom liquidity before calling BlackRock "a dangerous company", and opining that Fink and Janet Yellen are "pushing the damn thing off a cliff."
Remember, at the end of the day, it’s all about the big banks’ derivative exposure, NOTHING else. This is what has driven every Central Bank action since 2008. And it’s what will drive Europe’s future negotiations for a 3rd Greek Bailout.
Even as Greek banks, severely depleted of cash and eligible collateral they can post with the ECB, stand to fight another day (and potentially face more withdrawals as soon as the Greek banks reopen supposedly on Monday) thanks to another €900 million liquidity infusion, investors in Greek bank shares will be less lucky: "to ensure a new bailout, investors in the country’s banks faced the prospect of their holdings being "wiped out" under the terms of a €25 billion recapitalization plan."
As with all data, none of these data points suggests that the economy, or the markets, will immediately plunge into a recessionary contraction. However, what is important to consider is that many of these data points are now converging and suggesting that risk is more elevated now than at any point since the financial crisis. It is at least worth thinking about.
For the FOMC to reach its mandate of full employment they boost stock prices which then creates employment in bubble jobs. When people feel rich, they spend more money on the low quality bubble jobs, and hence employment reacts accordingly. This is obviously entirely unsustainable as spending paid for by feelings manipulated by the FOMC accounts to nothing more than pure capital consumption, and the money flow will disappear as soon as the FOMC tighten the screw and the good feeling disappears along with the stock market gains.
This must be one of THE most brainless and pernicious perpetrations against humanity!
The Euro Summit statement (or Terms of Greece’s Surrender – as it will go down in history) was just annotated by Yanis Varoufakis as it pertains to ordinary Greek citizens. As the former finance minister writes "The original text is untouched with my notes confined to square brackets (and in red). Read and weep…"
"The AIIB may come to play an important role in keeping America honest. It is difficult to say at this point whether the AIIB will have a negative or a positive impact on the global economy. At the very least, however, the emergence of an international institution with a viewpoint different from that of western creditors will help enhance the quality of debate over emerging economies’ debt problems."
The stock market is just too important to leave to the vagaries of an actual market now. Too much depends on good-looking numbers now. It must be guided and controlled, or else the stilts on which our global financial system balances become shakier and more visible. The market must be rendered increasingly meaningless simply because it's too meaningful to our current economic system.
"What Europe Wants" - to use global issues as excuses to extend its power:
- environmental issues: increase control over member countries; advance idea of global governance
- terrorism: use excuse for greater control over police and judicial issues; increase extent of surveillance
- global financial crisis: kill two birds (free market; Anglo-Saxon economies) with one stone (Europe-wide regulator; attempts at global financial governance)
- EMU: create a crisis to force introduction of “European economic government”