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Guest Post: 2012: Calm Before The Storm

Tyler Durden's picture


Submitted by Gordon T. Long of,

We have a new era dawning in Global Monetary policy. It is a new day with the monetary skies already red. Within 90 days the captains of monetary policy have steered the world into uncharted waters and on a course that history warns us against. Federal Reserve: QE3 "Unlimited" and QE4 within 90 days, ECB: OMT "Uncapped", BoJ: QE 10 and the newly elected Prime Minister Abe's mandate for "Inflation at any cost" BoE: UK's newly appointed BoE Governor, Mark Carney's Monetary Evan Rule targeting. These untested and newly commissioned captains all have PhD's from the finest Economic schools in the world, but they clearly have not studied nor grasped the key lessons of history. To any sane person, who has a grasp of what is presently occurring, it is obvious that the current state of affairs is unsustainable. The question is how long can the Monetary Captains' misguided policies keep us off the shoals of our economic destruction. How long can policies of "Extend and Pretend", Kick the Can Down the Road" or "Fake it Until You Make It" continue? The answer is likely unknowable, the certainty of it ending badly is not.



Article - 2012 - Calm Before the Storm


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Sun, 12/23/2012 - 21:49 | 3092084 knukles
knukles's picture

These people be fuckin' with the null set.

Sun, 12/23/2012 - 22:14 | 3092131 DoChenRollingBearing
DoChenRollingBearing's picture

+ a BIG ONE!

They are not the only ones...

Barron's Cover Story is "Europe: Time to Buy", author Jonathan Buck says: "You bet."  My take is a little different.

Review of Barron's -- Dated 24 December 2012:

Sun, 12/23/2012 - 22:53 | 3092206 mick68
mick68's picture

It has pleased God to make foolish the wise things of the world.


"You have eyes but cannot see, ears but cannot hear, and hearts but do not understand."



Sun, 12/23/2012 - 23:06 | 3092213 Spirit Of Truth
Spirit Of Truth's picture

Appropriate comment.

Anyone read that Assad's forces carried out gas attacks today against rebel forces in Homs?

That's what to pay attention to IMHO:

There's some things Bumbling Ben can't control.  All he's done is given a Prozac high to a suicidal manic-depressive species:

Sun, 12/23/2012 - 23:20 | 3092234 brockhardman
brockhardman's picture

It's simply a currency race to the bottom.  The last one across wins.  Helicopter Benny thinks that printing over a trillion a year will help the US outlast the other currencies.  Someone needs to tell him that the guy in 1st place is the biggest loser.

Sun, 12/23/2012 - 23:30 | 3092243 akak
akak's picture

When your only tool is a printer, every problem looks like printer feedstock.

Tue, 12/25/2012 - 06:57 | 3094376 TwoShortPlanks
TwoShortPlanks's picture

I don't think that a race to the bottom is an accurate enough description. If your plane is going to crash no matter what you do, just keep the wings level and wash off airspeed. Everything they're doing is financial/economic triage and buying time to get things in place.

Tue, 12/25/2012 - 07:37 | 3094385 bunnyswanson
bunnyswanson's picture

The Fight Club:


Tyler Durden:  You know why they put oxygen masks on planes?

Oxygen gets you high. In a catastrophic emergency, you're taking giant panicked breaths. Suddenly you become euphoric, docile. You accept your fate. It's all right here. Emergency water landing - 600 miles an hour. Blank faces, calm as Hindu cows.

Read more <a href="">movie news</a> at:

Mon, 12/24/2012 - 04:52 | 3092439 From Germany Wi...
From Germany With Love's picture

How is that any better -or even different- from raising tariffs on imports? It's protectionism all the way. Politicians these days just try more to disguise what is going on that politicians in the old days. Hide it from the general public which is happy consuming stuff.


In other news, the head of the influential German business association BDI has called for Greece to accept European oversight over its tax collection (in German):

Souvereignty or democracy don't mean anything to these people. It all gets subordinated to business needs.

Mon, 12/24/2012 - 05:15 | 3092443 TPTB_r_TBTF
TPTB_r_TBTF's picture



in order to gain world-wide control, it would be necessary for its aristocratic members to "go into business" with the non-aristocratic but extremely powerful leaders of corporate business on a global scale, and so the doors to ultimate power were opened


Mon, 12/24/2012 - 08:49 | 3092526 AgAu_man
AgAu_man's picture

Contrary to Jim Rickard's "Currency Wars", there is no "war" between the central bank (NWO) currencies. Like you suggest, it is a race to the bottom.

And I suggest that this is deliberate, lest the first CB domino to fall, cause a chain reaction. This way, they all get to hit the big Reset button at the same time, and 'bless/save' the markets with a new currency. Probably some SDR abomination.

Anything to keep the statists going, while they money-print their globalist geo-political agenda. For which any sideshow, distraction & action false flag will do.

And even if all the ZH readers are wise to this, it won't matter if "getting wise" does not reach critical mass with the overall populace.

Tue, 12/25/2012 - 07:11 | 3094382 TwoShortPlanks
TwoShortPlanks's picture

Public awareness that something is afoot is growing at an exponential rate due to the internet etc (whether the masses believe it or not), and the elite know this. I suspect that they will either pull back for a while (if it's even possible now given the economic woes), allowing the system time to die by itself, or they may pull the plug before that awreness gets out of control.

Mon, 12/24/2012 - 00:40 | 3092322 ball-and-chain
ball-and-chain's picture

We've been listening to this same crap since 2008.

There is no collapse.

Just a slow bleed till the boomers die off.

It's nuclear winter.

The bomb has already gone off.

Mon, 12/24/2012 - 01:20 | 3092357 JeffB
JeffB's picture

I think the worst is yet to come.

Although we're feeling the absurd excesses of decades gone by, we're still in the kicking the can down the road phase.

A little, or a lot, like the junkie who's suffering but hasn't hit rock bottom yet. Still getting fixes, but the habit is getting more and more expensive and debilitating and can see that the money's running out and that the day of reckoning is coming.

Mon, 12/24/2012 - 01:51 | 3092376 Errol
Errol's picture

ball-and-chain, of course there was a collapse - the Fed didn't triple its balance sheet for no reason at all.  It is taking "unconventional measures" worldwide just to keep the contraction from becoming runaway.

BTW, by the time the last of the boomers die off, there will be NO free-flowing oil production left anywhere in the world.  With agriculture and the military getting what oil will remain, just how well will our industrial economy function then?

Mon, 12/24/2012 - 05:25 | 3092447 TPTB_r_TBTF
TPTB_r_TBTF's picture

more old boomers need to retire and get sick before we hit the slippery slope.  Decline is apparent, collapse is ahead.

Mon, 12/24/2012 - 08:57 | 3092535 AgAu_man
AgAu_man's picture

Collapse, or another controlled demolition? ;-)

Mon, 12/24/2012 - 09:47 | 3092588 Go Tribe
Go Tribe's picture

Good post. Another 30 years and the problem is resolved. Many cheap assets for the next generation to scoop up.

Mon, 12/24/2012 - 00:25 | 3092302 old naughty
old naughty's picture

If you don't mind me say, hearts DO understand, it's the mind that don't.

Unfortunately, hearts have been covered up these days.

Mon, 12/24/2012 - 06:33 | 3092459 ThirdWorldDude
ThirdWorldDude's picture

"If I speak in the languages of men or of angels, but do not have love, I am only a resounding gong or a clanging cymbal. 

If I have the gift of prophecy and can fathom all mysteries and all knowledge, and if I have a faith that can move mountains, but do not have love, I am nothing. 

If I give all I possess to the poor and give over my body to the flames, but do not have love, I gain nothing."

Mon, 12/24/2012 - 20:45 | 3093985 ricks cabaret
ricks cabaret's picture

The quote is not from Cicero.... I found it in chapter 15 of Caldwell’s book, but it’s indirect speech. Rough translation: “[Gaius] Antonius [Hybrida] was in complete agreement with Cicero that the budget had to be balanced, public debt reduced, aid to foreign lands curtailed, and that the people should not depend on government for subsistence.”

It was turned into direct speech by a politician in the US House of Representatives in 1968. See here (right page, lower right hand side):

So Congressman Passman added a thing or two himself and must be regarded as the co-creator of the fake Cicero quote.

Reagan also seems to have liked it. See the discussion at Roger Pearse’s blog here:

Sun, 12/23/2012 - 21:56 | 3092094 Texas Ginslinger
Texas Ginslinger's picture

What calm..??

Didn't I see 12 charts from hell earlier today, here..??

Sun, 12/23/2012 - 21:55 | 3092096 A Lunatic
A Lunatic's picture

Man the lifeboats, bitchez..............

Sun, 12/23/2012 - 21:59 | 3092109 Alcoholic Nativ...
Alcoholic Native American's picture

Better yet, buy them up, charge a premium...

Sun, 12/23/2012 - 22:33 | 3092170 THX 1178
THX 1178's picture

Yup. There's always money to be made in a crisis. In fact, that when the REAL wealth is made.

Sun, 12/23/2012 - 22:53 | 3092203 scatterbrains
scatterbrains's picture

Indeed.. how will we know that the banks coffers have been filled enough for them to proceed with the next phase.. taking the markets down hard and deep (below 666?)  enough to convince the sheeples to forfeit their 401/IRA's to Goldman's stewardship.. while providing the .01% the opportunity to refill their baskets with more assets at pennies on the dollar.



Sun, 12/23/2012 - 21:56 | 3092098 Alcoholic Nativ...
Alcoholic Native American's picture

Its been unsustainable for a while now, what exactly has changed? Concluding that that there will be only one winner in a game of monopoly isn't exactly groundbreaking journalism.

Sun, 12/23/2012 - 22:34 | 3092172 Cabreado
Cabreado's picture

I'm sure that the odds are:  Mr. Long is a good and decent man.

I also suspect he doesn't pretend to be a journalist.

What you will find, as we unwind, is an ever-increasing glut and eventual coagulation of those who have made their living on a false economy, et al, doing redundant things, in desperation.



Sun, 12/23/2012 - 21:59 | 3092105 Element
Element's picture

They're going to increase the ceiling Gordon. 

This is a murder-suicide, try and enjoy it, the end is not yet.

Sun, 12/23/2012 - 22:03 | 3092111 Demonoid
Demonoid's picture

Sold, glitchez!!!

Glitchez in the Matrix, that is. Soon to be giant gaping holes.

The idea about having a "choice" to take the red pill is about to become obsolete.

You think Neo hated it when they ripped that connector outta the back of his neck? Just wait til you see what they rip outta you.

Sun, 12/23/2012 - 22:34 | 3092171 OneEyedJack
OneEyedJack's picture


  I regret taking the red one

Mon, 12/24/2012 - 00:26 | 3092306 knukles
knukles's picture

Perceptions forever altered, once awake never to sleep again. But for moments of imaginary respite.

God, grant me the serenity to accept the things I cannot change,
The courage to change he things I can,
And wisdom to know the difference

Mon, 12/24/2012 - 00:52 | 3092335 DoChenRollingBearing
DoChenRollingBearing's picture

In line behind you, brother.

Mon, 12/24/2012 - 02:35 | 3092390 fourchan
fourchan's picture

im rejecting the prayer and embracing the drink.

Mon, 12/24/2012 - 11:06 | 3092763 lakecity55
lakecity55's picture

If you can handle that, hat's off, bro.

As a "Dr. B. " once said, "nobody's here to take away your rights."

Mon, 12/24/2012 - 11:05 | 3092760 lakecity55
lakecity55's picture


I say that first thing every morning.

I still want O-Phone's USG Visa.

Gotta work on that resentment thingy.

Sun, 12/23/2012 - 22:09 | 3092125 eddiebe
eddiebe's picture

Obviously the people making the rules dont give a flying fuck about people like us. They will have their stash. All the crying foul about it wont change a thing.

Sun, 12/23/2012 - 22:21 | 3092143 itstippy
itstippy's picture

The Central Banks tell us that they've reduced or eliminated the systemic risks in the global financial system caused by behemoth "Too Big To Fail" financial institutions.

They accomplished this by bailing out or nationalizing the TBTF behemoths,  dropping their interest rates to zero, relaxing their accounting rules so they can make their balance sheets say whatever suits them, and force-feeding trillions of electronic dollars/euros/yen etc. into them.

The TBTF institutions are now much larger and more pervasive than they were before the crash.  They've been "recapitalized".  All is well again.

Is it possible that Draghi, Bernanke, et al, are being less than genuine, and that systemic risk persists to this day?

Sun, 12/23/2012 - 22:23 | 3092147 yogibear
yogibear's picture

An unlimited charge card with low rates on balances. Another 8 trillion added to the deficit and another trillion added to the fed's balance sheet/year.

Sun, 12/23/2012 - 22:23 | 3092148 max2205
Sun, 12/23/2012 - 22:33 | 3092167 Element
Element's picture

Pure class

Mon, 12/24/2012 - 00:27 | 3092308 DoChenRollingBearing
DoChenRollingBearing's picture

Great comment!

Mon, 12/24/2012 - 00:30 | 3092309 knukles
knukles's picture


Mon, 12/24/2012 - 08:28 | 3092514 quadcap
quadcap's picture

I love the way the doll's nipples are taped over.  Wouldn't want to offend anybody, now, would we?

Sun, 12/23/2012 - 22:31 | 3092164 spinone
spinone's picture

The Fed is trying Alchemy, turning garbage securities into gold.  We all know that this was a huge swindle in the 1500's and it is now.  Once people realize they have been tricked and lose confidence, this jig is up.

Mon, 12/24/2012 - 01:43 | 3092370 AUD
AUD's picture


Without doubt, but as Alexander Pope declared:

How goes the Stock, becomes the gen'ral Cry.
Rather than fail we'll at Nine Hundred Buy.
Instead of Scandal, how goes Stock's the Tone,
Ev'n Wit and Beauty are quite useless grown:
No Ships unload, no Looms at Work we see,
But all are swallow'd by the damn'd South Sea.


Sun, 12/23/2012 - 22:40 | 3092190 VATICANT
VATICANT's picture


Mon, 12/24/2012 - 09:27 | 3092566 AgAu_man
AgAu_man's picture

Ah yes, the original Church that is based on the Roman Shepherd tending the 'sheep'. Except that we know the life cycle of both, don't we? Been protecting them, or having your way with them -- and milking, shearing and fleecing them... for your benefit, and that of your secular and unholy counterparts: the Aristocracy and their/your money changers?

Sun, 12/23/2012 - 23:05 | 3092221 dunce
dunce's picture

Has there been a study of who still had real assets after one of these historical implosions? 80% of the people lose everything, some even their lives. i would guess that 10% retain some wealth and position, but a very few escape the worst with most of their wealth intact. Where do do the finance ministers wind up? Maybe that is why they do not miss a step on the road to economic hell.

Mon, 12/24/2012 - 17:27 | 3093702 RockyRacoon
RockyRacoon's picture

I recall someone else pointing out that the janitors were not the ones jumping from the windows.

Mon, 12/24/2012 - 01:43 | 3092372 q99x2
q99x2's picture

The PhDs know the lessons of history and what is taking place. They are not steering the system without knowing where they are taking us. They cannot say that they did not see this coming. They believe they will get away with it without being stopped. They are willing to take that chance. They are wrong.

Mon, 12/24/2012 - 01:49 | 3092375 alfbell
alfbell's picture

If money loses its purchasing powers and becomes worthless, no one is spared. Same as drilling a hole in the hull of a boat that you are also standing in. Who gets the assets is what matters. And only certain assets will matter and act as a store of wealth from the previous paradigm. Got assets?

Mon, 12/24/2012 - 05:29 | 3092448 Disenchanted
Disenchanted's picture




Cicero was an "isolationist!" Who knew... /s

Mon, 12/24/2012 - 06:44 | 3092465 Troncom
Troncom's picture

Red sky at night - Shepherds delight

Red sky in the morning - Shepherds house on fire

Mon, 12/24/2012 - 07:44 | 3092492 negative rates
negative rates's picture

Red skys at night, sailors delight

Red eyes in the morning, sailor take warning!

Mon, 12/24/2012 - 12:24 | 3092996 LFMayor
LFMayor's picture

 I was taught that as "red door lights at night, sailor's delight, red piss-hole in the morning, sailor take warning!".

Mon, 12/24/2012 - 06:45 | 3092467 Pascal1967
Pascal1967's picture

spellcheck? if you want me to take you seriously, Gordon, can you please at least bother to spell-check your work?

Mon, 12/24/2012 - 17:30 | 3093706 RockyRacoon
RockyRacoon's picture

Is your shift key not working?  Capital letters are the usual convention when beginning a sentence.  Oh, I get it, grammar for some, but not all.

Mon, 12/24/2012 - 08:07 | 3092500 smacker
smacker's picture

The GordonTLong PDF download is excellent. It neatly shows the parallel progression between what's happening economically/monetarily and political developments. I agree that the destruction of fiat currencies and free markets that's taking place will certainly lead to expanding the embryonic fascist governments we already have.

A cynic may think that once the political elites saw the damage they'd done to the nations' economies, they then saw an opportunity to seize ever more political power across their societies. This implies that the former may have been intended, so as to justify the latter.

Mon, 12/24/2012 - 08:43 | 3092525 hedgehog9999
hedgehog9999's picture

Stock up on the B's of life:

Bullion,Bullets,Bucks,Bitchez,Band-Aids and Booze or Beer

and some food of course:

Bread,Butter,Beef,Bananas,Berries and Beans.

Mon, 12/24/2012 - 09:38 | 3092577 rbg81
rbg81's picture

The Plan is to confiscate the wealth (or whatever wealth remains) of Boomers when they die.  It ain't going to their kids.

Mon, 12/24/2012 - 09:48 | 3092592 Winston Churchill
Winston Churchill's picture

It always was.

Hence the very old saying;

"clogs to clogs in three generations".

Mon, 12/24/2012 - 10:02 | 3092617 medium giraffe
medium giraffe's picture

In order for our model to grow, a constant stream of new products and services need to be consumed. The consumer hasn't seen a real-term wage rise in two decades. Cheap credit has plugged the gap, but is no longer working. Now governments have to keep the system on life support, and this is only possible through imaginary (and often quite bizarre)  means if there is no growth. Either the system was going to fail, or we were going to run out of resources. Doesn't take a PhD to see it. I'm glad to see the system failing first, but worryingly it seems the IEA have changed their minds about peak oil and now suggest that Commercial oil peaked in '05, so lets not get naked just yet....

We don't actually need money, there are plenty of models to suggest this, but once you start discussing the stupidity of ownership (and therefore resource hoarding), folk feel that you are encroaching on their freedom and start labelling you a Commie, and you don't get very far. Don't blame them though, it a conditioned response resulting from the social pressure exerted to keep the machine in motion. Just another tragic victim of Adam Smith's nightmare. But it does mean we're fucked. 

Well, Merry Hijacked-by-religion-pagan-winter-festival all, I hope Santa brings you a good haul of consumerist shite that will keep you entertained for the next week or so at hige expense to global ecology.

Mon, 12/24/2012 - 17:32 | 3093707 RockyRacoon
RockyRacoon's picture

"Growth" is not necessary if one does not have a ton of debt to service.  Deflation is the destroyer only in a debt-laden society.

Mon, 12/24/2012 - 15:18 | 3093498 steve from virginia
steve from virginia's picture




Long should substitute the term 'energy waste' for 'fiat money' and his article would make more sense. More money is easily had, it results in energy waste which has its own set of consequences ... which the world is experiencing right now.


The putative 'solution'? Have central bankers make all the world's loans so nobody else has to ...




What could possibly be wrong with that? The Fed can be the sole US lender for the next 1000 years, right?

Mon, 12/24/2012 - 15:18 | 3093500 steve from virginia
steve from virginia's picture




Long should substitute the term 'energy waste' for 'fiat money' and his article would make more sense. More money is easily had, it results in energy waste which has its own set of consequences ... which the world is experiencing right now.


The putative 'solution'? Have central bankers make all the world's loans so nobody else has to ...




What could possibly be wrong with that? The Fed can be the sole US lender for the next 1000 years, right?

Mon, 12/24/2012 - 23:22 | 3094136 daveeemc2
daveeemc2's picture

agree with most, but you lost me right here: "

As the Fiscal Cliff crisis is highlighting, for those who can read between the carefully crafted lines, funding for Social Security, Medicare/Medicaid, National Security and Interest on the debt is consuming more than can be realistically raised through taxation"

?This is the great lie - SSI was raided to pay for past pet projects.  It now part of national debt in form of IOU. 

?SSI is not an entitlement - we paid for this in the form of payroll taxes; government "leaders" couldnt keep their paws off our retirement money.

?The rainyday fund was burned in times of prosperity.

?Its amazing cause I worked on 401k recordkeeping software and learned a lot about ERISA laws.  ERISA makes it illegal to take employee pensions and retirment money to redirect to anything BUT their retirement.

?Uncle Sam?  "Do as I say, not as I do..."

?This country better wake up soon; the treason has taken place while we slept by the very "leaders" who were constitutionally bound to protect us.


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