Mike Krieger Topples The Last Domino

Tyler Durden's picture

Via Mike Krieger of Liberty Blitzkrieg blog,

Whenever you find yourself on the side of the majority, it is time to pause and reflect.
- Mark Twain

I think we’re being run by maniacs for maniacal ends and I think I’m liable to be put away as insane for expressing that. 
- John Lennon (watch the video of Lennon actually saying it here)

We the people are the rightful masters of both Congress and the courts, not to overthrow the Constitution but to overthrow the men who pervert the Constitution.
- Abraham Lincoln

The Last Domino
With the U.S. Presidential election less than one month away, I think it’s a good time to take stock on what has occurred in 2012 so far and look forward to the period ahead, which I think will be one of increasing social and economic chaos in the United States.

Earlier this year I wrote a piece titled Six Months Left…Can They Do It? in which I questioned whether the Administration and its cronies at the Federal Reserve and elsewhere would be able to hold  things together in a relative calm until November 6th. I wasn’t sure of their ability to do so, but I understood that everything would be thrown toward this objective, legal and illegal, to make it happen.  Well here we are, and to some degree they have held the undeniable disaster that is very apparent underneath the superficial surface of American society from exploding upwards.  Back in May I wrote:

Well the past is the past and the future lies right ahead, so how should we be thinking about things?  The assumption that is being made, and to some extent has to be made, is that if they have been able to pull off this total coup of the financial markets for the past seven months why can’t they keep it going until the election.  Well if we are to assume this, it means we must assume they can pull it off for six more months, which would bring the total to thirteen months.  This would be quite a feat.  They know how difficult it will be to keep things “together” in the markets amid a real world that is falling apart.  This is why the Fed is pretending there will be no more liquidity added to the system.  In their minds, the best strategy is to talk down QE while at the same time attacking commodity markets behind the scenes.  In their mind, this will give them the cover to create trillions more for their banker shareholders.  I have stated that this would be the plan and as we can see in the markets lately, it has been executed to precision.

It was always my contention (and still is) that if they successfully kicked the can until the election then there would be absolute hell to pay afterward.  That payment is now due.  The best way I can describe what I think the next six months will look like is: Europe.  Think the periphery countries.  Everything that we have seen in Greece, Spain and the other “PIGS” will be coming to America.  Investors have become completely lulled to sleep by recent benign trends in U.S. markets.  There is this almost religious belief that treasury yields will move sharply lower in an economic downturn or stock market plunge.  I am not saying this won’t be the case, but it is certainly not set in stone.  In the PIGS nations, we saw both collapsing economies and stock markets as well as soaring sovereign yields.  Can’t happen here?  Never say never.

That said, my assumption is that in the initial stages of the forthcoming move we could see treasury yields move lower as stocks head down to reflect the reality of the the much deteriorated earnings and economic environment as well as the realization that no real stimulus is coming other than continued money printing (which will not help the economy one bit).  However, the one assumption that I think will be proven incorrect almost immediately is the notion that precious metals must get sold off hard in an equity market drop.  The metals have been officially capped by Central Planners in biblical fashion over the past 12-18 months, and a lot of physical has simply been taken off the market that will not be coming back.  We have also seen the Italian and Portuguese populations fleeced of their metal in this year long correction, as well as lower income folks in the United States, when we saw earlier this year when EZCORP Inc. told us that pawn shops were running out of gold.  Physical metal will not be available at these prices when people realize how much they need them and any manufactured paper dips will be bought aggressively.

Dow/Gold Ratio is the Tell
I know I sound like a broken record on this one, but I am completely convinced that this ratio tells you everything you need to know from a macro standpoint.  I’m not just talking economics either, I mean from a societal perspective as well.  Yesterday, this ratio started to breakdown and I think this marks the beginning of a major move lower toward my six month target of 5.5x-6.0x.  This would represent a roughly 25% move from here to the lowest level since the secular bear market in stocks began in 2000/01.

The biggest mistake I made in the past year or so was a failure to realize the step by step fashion in which the global monetary and financial system would fall apart.  It is certainly happening in a slower manner than I had anticipated, but make no mistake about it; it is happening.  Like everything else, in retrospect, it becomes much more obvious.  Since the entire world is linked into the fiat petro-dollar monetary standard, the entire world suffers as the system breaks down.  While it was tempting to assume the U.S. would get nailed the hardest, what many people missed, including myself, was that the U.S. would be the last domino to fall.  Whether people want to accept this or not, the U.S. has unfortunately morphed into a global empire.

So as the empire crumbles, it is actually the regions of the empire that collapse first, one after the other.  The first evidence of collapse occurred in North Africa with the “Arab Spring.”  This makes sense as this part of the world is most vulnerable to the pressures evidenced by global systemic failure.  They were in essence the “weakest link” in the chain.  Shortly afterwards, the PIGS experienced similar economic collapse and social unrest.  Unrest that continues to this day.  Most recently, we have witnessed the collapse of China’s “economic miracle.”  What people fail to comprehend is that China’s recent decline is completely linked to the decline of the monetary system itself as well. Let me explain.  China is attached to the hip of the U.S. empire as a result of its foolish decision to put trillions of its fiat U.S. dollars into what are even more worthless treasuries (more worthless because you have to sell them before you can spend them and they can’t do that too easily).  As such, they were unable to make rational economic decisions in the aftermath of 2008.  Instead, they doubled down on a ponzi growth strategy.  It was their trapped position in U.S. treasuries which gave them little room to detach from the petro-dollar empire, and as a result they tried to boost growth by “playing ball” and supporting an unsustainable system and they got what was coming.  Collapse.  Thanks for playing boys.

It is at this point that I want to compare two charts.  The first is familiar to my readers.  The second is not.

Dow/Gold Three Year Chart

 

Shanghai Composite/Gold Three Year Chart

 

So the first chart is one all of you know very well.  It charts the Dow Jones Industrial Average in real terms, and this thing has been in a bear market since 2000.  Even over the past three years of  “recovery,” you can see stocks in terms of gold are down over 20%.  The more interesting thing is the chart of Chinese stocks in terms of gold over the same period.  They have gotten absolutely shellacked.  Down more than 60%, or three times as bad as U.S. stocks.  The same would be seen if you priced let’s say Spain’s market in gold.  In fact, it is even worse than China!  The point is, this is what happens in today’s world when you are faced with a downturn.  This is what is coming to U.S. markets next.

 

The Streets of Europe:  Coming to America
So my message is clear.  I think now with the election right around the corner, the chickens are going to come home to roost.  Our ability to print our own currency and buy all the commodities we want with it is the exorbitant privilege that allowed us to export most of the problems within the monetary system elsewhere first.  As Nixon’s Treasury Secretary John Connelly said when confronted by a group of European Finance Ministers: “it’s our currency, but your problem.”  At the time he was correct, as we were at the very beginning of the fiat dollar standard.  41 years later the system is in its final days and our currency is about to become our problem as well.

There were always going to be massive consequences to keeping this ponzi alive.  What is extremely unfortunate is the small number of U.S. citizens that actually understand specifically that the root of every problem we face right now is the fiat dollar monetary system, because it gives all the power in the country to the Federal Reserve and the TBTF banks that tell Banana Ben Bernanke what to do.  Since 2008, many of the consequences of the fraud called American Crony Capitalism Inc. have been clear, but it has yet to hit the boiling point.  I believe that the boiling point will be hit sometime within the next six months, and 2013 will see the streets of America  beginning to look a lot like the streets of Spain and Greece.

Interestingly enough, one of the key signposts for the next wave of civil unrest and activism is coming from the employees of Wal-Mart.  This is quite fitting considering the company is the largest private employer in the United States with approximately 1.5 million workers.  Moreover, the fact it is happening at a company so anti-union makes it sure to have a sizable impact on the American psyche should it continue to grow.  The strikes began in 12 states about a week ago, and although it is estimated that only 0.01% of Wal-Mart employees are involved, it is still the first multi-store strike in the company’s history (for a good summary of what is happening, read this Salon article).  More significantly, strikers are now threatening stepped up action during Black Friday.  Think it is a coincidence that right now in late 2012 is when Wal-Mart workers are pulling off the first such action in 50 years?  Think that this is just a one-off situation?  Not a chance. 

The main point here is one I was hammering on in my last piece The Global Spring.  You can only push people so far into hardship before things snap.  They snapped in North Africa.  They snapped in Southern Europe.  They snapped in China.  They are about to snap here.  Oh, and one last thing.  What do you think all of this signals for corporate margins?

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economics9698's picture

As long as the Federal Reserve exsist we the people will never be in control.

The Alarmist's picture

Serfdom is the longer-term natural state of the majority of mankind ... the people never really were in control, and what you are now experiencing can best be described as a reversion to the mean (pun intended).

Surly Bear's picture

 

Yea, self-determination is the illusion of control, and this is a very, very old argument.

 

economics9698's picture

Serfdom is mans natural state but that does not mean Spartacus will be denied his day in the sun.  Kill the bankers.

jeff montanye's picture

that day is coming and christine lagarde may get some blood on her beautiful leather jacket as she was unaware and is still blase about the recent horrific admission by the imf that austerity is actually likely to grind the poor further into poverty in current circumstances (most non econ phd's would go duh):

http://globaleconomicanalysis.blogspot.com/

zh had the tape of ann cahill's incisive questioning of lagarde but, as mish notes above, this is bigger news and deserves a more complete durden exegesis. 

Fukushima Sam's picture

Come on Mike, a quote from Lincoln?  Did he say that before or after he forced a bunch of "the people" to stay in the Federal system they wanted out of?

Lost Wages's picture

No, Surfdom is man's natural state. We must all move to Venice Beach and Hawaii before the economic cockpockalypse.

northerngirl's picture

Kill the bankers, always makes me laugh because for me that means the likes of Jamie Diamon, and Big Fed Ben on the streets as a penniless beggars fighting each other for hand-outs of passer buyers.

kliguy38's picture

Does anyone know what time Jersey Shore starts tonite?

Middle_Finger_Market's picture

I be fucking dem hoes ye yup yup here we go here we go ya'll getting fucked with a big benranke dick boom boom. Am a party and party and p and p and party...90% of the world is ignornant and unaware of what is about to take place on a global scale...now that is scary, get out of the cities! 

Eireann go Brach's picture

We have a ways to go yet Krieger, consumer confidence was the highest in 5 years yesterday (whether fudged or not), so the majority of the sheep will chow at the trough for a few more years yet, before they get off their fat asses and hit the streets!

DoChenRollingBearing's picture

Yes, while they are still easy to get.  Besides, the looks you get are priceless from bank tellers when you ask them for $100 of nickels, from every bank in town.

patience...'s picture

Yea good luck with that, I have trouble getting 100's at the local usbank. They say

they don't have many. Go figure

Encroaching Darkness's picture

Good ideas, but consider: unemployment is running 20%+, per Shadowstats.

How long would it take WalMart to replace every striking worker if it fired them all?

There would be lines down the block and past the corner of those who would trade unemployment (if it hasn't run out already) for a chance at a real job, with real money (even if minimum wage, I suspect).

Would we have newly-unemployed ex-WalMarters battling newly-hired WalMarters in the streets? Who would the cops arrest?

it's going to get a lot worse than this before it gets better.

Mark123's picture

Under the current nanny-fascist state, it is more lucrative to stay at home and milk the system.  I cannot understand why anyone works at Walmart.

 

On the other hand, Walmartians don't look like the sharpest tool in the shed.

OpenThePodBayDoorHAL's picture

Interesting to note that the five owners of WalMart have a higher net worth than all of their 1.4 million US workers combined.

Madame Defarge would have said : "aux barricades!"

Instead we get....(crickets chirping...)

Did you read what Snooki said to Guido yesterday? OMG!

Slewburger's picture

Its sad to read the Salon article and see how low people have sunk. Both people in the comments and in the article itself. Those workers have little or no barganing power even on black friday. The high cost of low prices is becoming more and more evident. I already support WM workers with my taxes/Medicare payments. I don't shop there and don't care if their prices go through the roof.

An individual with options, skills, or other opportunities; just leaves. These people have nowhere to go.

I hope they unionize and the whole fucker crumbles under its own weight.

Solarman's picture

I have a friend who is a department manager at Walmart.  He and the other two department managers for that department have no employees. 80% of the employees are cashiers.  I point you to JCPenney and their decision to go to RFID chips, and reassigned all of their cashiers.  

 

In five years Walmart will not be the biggest private employer in the U.S., but they will be doing just fine.  I'll let you figure out why.

franzpick's picture

I point my friends to the possibility that 1) our empty Sam's Club, closed in 2010 lasting only 3 years, 2) the adjacent Walmart, mostly empty except at midnight bank-deposit and paycheck times, 3) our Best Buy vacating it's anchor position in our biggest mall to downsize into Circuit City's smaller previous location, 4) WMT's plan to open 1/10th size Express stores and 1/5th size Neighborhood stores, and 5) BBY's similiar plans to close 50 big stores and open smaller, smart-phone-tablet-Apple-type "Connected" stores, may indicate that both owners and employees of big stores may soon be blindsided by the recognition that the big-box store business model is dead.

 http://www.forbes.com/sites/abrambrown/2012/03/29/death-of-best-buys-big-box-store-company-will-shift-to-new-model-close-50-existing-stores/

 

CrockettAlmanac.com's picture

 

 

These people have nowhere to go.

 

And therefore Walmart is evil to employ them and pay them at a rate which their skills justify. Those who have nowhere to work but Walmart would be better off if they had nowhere to work at all. That'd fix things.

Slewburger's picture

Crockett,

Nice straw man, the big tell was.... And therefore Walmart is evil. WM was a good thing back in Sam Walton's made in America days.

I'm still trying to figure out which ism I want to reply with:

1)As a loving liberal who want to build more planned parenthoods in low income areas so we don't have so many eaters competing for these valuable jobs... I mean reduce health care costs for the tax payers. (Obama speak)

2)As a free market capitalist who thinks the new growth paradigm in this country has been brought to us via  wondrous machinations of free and open markets. (Romney speak)

My real reply is a thick gray line. All WM has done in the last few decades is take advantage of global arbitrage via low wages. Like every other corporation that isn't clever enough to create real profits via efficiencies. The window of opportunity in N. America is closing and as our living standards drop, WM will not be immune to this shift. With the extension of consumer credit via corporate financing maybe WM employees become indebted to the company store just to survive. How about Apple or Best Buy... think it can happen? As a society we are going backwards, this is history repeating. Owing money to the company store.... debt serfdom.

http://forums.bestbuy.com/t5/Points-Policies-Certificates/Employee-Rewar...

I want things to get better for these people, I sincerely do, but likely they will have to get worse first.

If there are no opportunities for them, eventually there are none for me or my children. You mistake me cheering for collapse, when I'm waiting for the rise of a phoenix.

SafelyGraze's picture

"Would we have newly-unemployed ex-WalMarters battling newly-hired WalMarters in the streets?"

that part-time (20 hr/week) minimum wage (7.25 per hour less 7.65 percent ss+medicare) job provides an incentive of $134/week or $7k/year.

not sure that's enough for taking-it-to-the-streets (or parking lots) over

Lore's picture

Exactly. Free citizens are citizens of means.  When you mortgage your future, save nothing, stand back and watch as your real economy goes offshore, you are in no position to whine about "entitlements." You take minimum wage scutwork and avoid getting fired. This is the great equalization hailed by the UN.

oldman's picture

@Encroaching Darkeness

Do-ing not-a-thing on the biggest sales day of the year, especially if it is an un-announced call in about how 'sick I am after eating all of that turkey and dressing, is pretty difficult to defend against under state labor laws. Sick is sick!

 I think that no matter how angry it is, even Walmart might be well advised, legally, to give firing those sick do-nothings a free pass.

And, if the WM employees/serfs fail to rally---what have they really gained? A great career with a golden parachute?

If they don't strike or call in sick, at least, then they truly are sick     om

Encroaching Darkness's picture

Have you ever been fired?

The reason for most HR personnel is to "build a file" on you - doesn't matter if you show up and work every day, for years, without problems. They build their file on you with every time you were late (due to traffic, child sickness, whatever), every time you were sick, every time you infringed on some picky or tiny rule, you name it. Then, when it serves their purposes (or just their timeframe; maybe you were about to vest in a pension, become covered under some statute, earn some higher rate) you will be discharged - not because you were lazy, thieving or slow, but because it saves them money. Or suits their superiors, or their agendas. And to keep the company clear from legal recourse.

I really detest most HR people - I have known a (very) few good ones, and lots of evil, conniving and abusive people. One tried to get me to enforce "discipline" against an employee in my group - her crime was that she (white) had a black husband. Of course, this is illegal, discriminatory and just plain evil - I refused, and left the company shortly after.

If a company is big enough to have an HR department, you really might want to think twice about working there - or at least, have more than one source of income.

WM may or may not do this, I've never worked for them - but I have had enough experience with HR departments to detest nearly everyone who works in one.

WM employees may have the best jobs or the worst ones - if they can create a better workplace, more luck to them. Globalization will make it tough to effect great changes, though - and the unemployment rate surely doesn't help. If they "fail to rally" - it may be because they recognize that a poor job is better than no job, especially when you have spouses and children to feed. I do not judge them, either way - strike or not, it's their choice, and I'm just pointing out the complications involved.

cooterman's picture

agree mk  but give us  something actionable

 

walküre's picture

Image a nationwide strike at all Walmart stores! Maybe that will get people excited and ask questions.

Would a majority of Americans really finally "get it" or would they just be pissed that they're potentially missing a sale of HoHos and Doritos?

The Alarmist's picture

Heartless bastard ... do you actually give a shit for the working poor who make their living slaving away at WalMart, much less the working and non-working poor who stretch their meager means by shopping there?

walküre's picture

Nobody should either be shopping or working at a Walmart.

Walmarts are an abomination. A part of all that is wrong with our society and culture today.

Imagine a Walmart in the Thirties with rows and rows of cheap mostly foreign made snacks or trinkets. We are so far from reality, it's not even funny anymore. We are grotesque and clearly in the last phase of our pitiful existence we dare call "civilisation".

There is nothing civilized about Americans and Walmart. Nothing worth preserving or recording. It is all for the here and now and as cheap as possible including the "labor" effort to stocking shelves or sliding barcoded items over a scanner. Forget it.

Walmart workers are on strike. I hope the shoppers will follow. Let's be the generation that puts the Walmarts into the dustbin of history.

The Alarmist's picture

Yet I bet the Waltons would shop there ... Goodnight, John Boy.

northerngirl's picture

If Walmart is such a bad company to work for then don't work there.  I have yet met a person that has been forced to work at any company.  People do not like their employers for whatever reason and wrongfully set out to make the employer change?  No, the employee has to change-Find a new job with a like minded employer.  As to the shopping at Walmart, if you don't like the company don't shop there.  Why do people insist on making this any more difficult than it has to be?

 

bunnyswanson's picture

Well, you are a fountain of bad advice tonight.  If you live in North America, you'd known Wal-Mart is underbidding the competition and wiping them out.

When Wal-Mart is the only store left standing, even if Target manages to be allowed to participate, the selection on the shelf and the price will be set without regard to attracting smart shoppers. 

 

Three Wal-Marts within 10 miles of one another in a town of 190,000 is called the death of Main Street.  We all know this.  The Chamber of Commerce in each city knows this.  The money being exchanged to keep agenda in motion is far grander than we can imagine is my only conclusion.  The cost of lost local tax revenue is gutting city, county and state budgets. 

 

http://www.hg.org/unfair-competition.html

 

 

  • Unfair Competition - Definition

    Unfair competition in a general sense means that the competitors compete on unequal terms, because favourable or disadvantageous conditions are applied to some competitors but not to others; or that the actions of some competitors actively harm the position of others with respect to their ability to compete on equal and fair terms. It contrasts with fair competition, in which the same rules and conditions are applied to all participants, and the competitive action of some does not harm the ability of others to compete. Often, unfair competition means that the gains of some participants are conditional on the losses of others, where the gains are made in ways which are illegitimate or unjust.

  • Unfair Methods of Competition

    Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.

  • USDOJ - Unfair Competition - FTC Act - Sherman Act - Clayton Act

    Federal antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade, such as price-fixing conspiracies, corporate mergers likely to reduce the competitive vigor of particular markets, and predatory acts designed to achieve or maintain monopoly power.

  • Zadok's picture

    Nah, they will just blame the poor while those at the center of this fraud rob them blind! /Sarc on Simply brilliant they are! /Sarc off.

    Isaiah 10:13. Consider who is talking and how it resembles this day.

    Mark123's picture

    If I wanted to take over the USA and rob it of all of its riches, I would populate it with subservient 3rd world people (promising them unlimited riches) and then divide and conquer.

     

    Oh wait...that already happened.

    mick68's picture

    One day we'll find out just how many dead bodies had to be swept under the rug for the Obama admin to keep it together until November 2012.

    honestann's picture

    If you count bodies all over the world, then the answer will be many millions.

    Uncle Remus's picture

    As long as he doesn't go Carl Sagan on us...

    MiltonFriedmansNightmare's picture

    Ah yes, is this the culling of which you speak?

    Vooter's picture

    How retarded do you have to be to think that one presidential administration or another has ANYTHING to do with the situation that the United States finds itself in today? LOL...I sincerely hope the Romney clown defeats the Obama clown in November, so I can laugh when the death spiral continues and people like you are left scratching their heads in complete confusion...

    Being Free's picture

    Your reading comprehension seems to be deficient, though honerable mention on imagination.

    kito's picture

    everything is fine...........move along....................

    The Alarmist's picture

    In the classic "All I have to do is outrun the bear ...," all they have to do is get past the next election. Then people will be looking forward to Turkey day and their favorite games, followed by a round of midnight shopping.  Then everyone will be caught up in Christmans and New Years.  Then the leadership will be sworn in to do some more serious governing, like a new & improved NDAA, SOPA, PIPA, MOUSE.  Yeah, 13 months sounds about right.

    Freegolder's picture

    'It was their trapped position in U.S. treasuries which gave them little room to detach from the petro-dollar empire, and as a result they tried to boost growth by “playing ball” and supporting an unsustainable system and they got what was coming.  Collapse.  Thanks for playing boys.'

     

    Mike, what do you  think China has been doing all of these past 12 or so years?

    Two things: giving the Euro a chance to get established (job done, it is now ready to take over from the dollar).

    And China has been hoovering up tonnes of physical gold, via Hong Kong and other sources. It will lose all of its so-called value in USTs, but that will be more than compensated for by the much much higher physical-only values attached to gold.

    China will be ok, it is ready for hard times.

    Go Tribe's picture

    The ponzi will crash only when every ZH reader is bullish.

    Conman's picture

    I would love to be bullish, but when everything is telling you markets are artifically inflated and that growth is over how can we be. Until then play the game, btfd's and hedge yourself.

    honestann's picture

    Bullish on what?

    If you say "bullish on gold" then perhaps so.

    geno-econ's picture

    Objective of Democracy is  equal rights for everyone

    Objective of Capitalism is seeking individual wealth

    Objective of Socialism is to share the benefits of a society

    Ojective of Polititans is to balance these objectives to achieve justice, civil order and economic growth

    Polititians are failing us.  Why? Because Big Biz has stole the election process

    Alone, Free People , Capitalists, Socialists and Polititians can not survive nor can a nation

    Financial/Economic manipulation is merely an effort to postpone the eventual disintegration