Signs Of The Times

Tyler Durden's picture

Via Mark J. Grant, author of Out of the Box,

“When half the things you are told are a lie; nothing will surprise you more than the truth.”
                         -The Wizard
The financial world, at the moment, is a scary place. The signs of this are all about us and yet the consensus view is to worry about nothing. This has been caused by one singular action which is the orchestrated input of cash into the financial system by every major central bank on Earth. Money will go somewhere as it is created and so it has which is exactly why the markets are at or close to all-time highs while economic conditions have crumbled precipitously. It is not this market or that market which is in a bubble but all of them and it is systemic by its very creation.
There is also an ancillary cause of much of this which is the constant use of lies and made-up numbers to cover up and denigrate the truth. This happens to some extent in the United States but is rampant and prevalent in Europe and also a daily occurrence in Asia. The Europeans do not count liabilities as part of the balance sheets for either the sovereigns or their banks but, as I have pointed out so many times before, the not counting of them does not erase their actuality or their consequences. Liabilities are not counted, debt to GDP ratios for the sovereigns which are based upon the fictitious numbers are then not accurate, economic assumptions become a fairy tale and it all plays along for a time until, and the “until” always arrives, that the liabilities must be paid and accounted for because the money is just not there. It has been four years, four years of paper creation, four years of larger and larger lies, four years of fantasy balance sheets and today I call the ball; it is all about to end.
Look around you; there are signs all around. Spain, if you believe their numbers, with an official 15.5% in bad loans, Italy at 10.2% and Italian elections looming whose results will surely not please those in Brussels and Berlin. Banking crises in both of these countries which are shaking the foundations of their credibility. A Mario Draghi who’s turned up decibels in his call for a European wide bank guarantee is rebuffed and denied by Germany who will not subject their citizens to the liabilities that could and will ensue. The majority of the market participants have not figured it out yet but Mr. Draghi’s promise, which was conditional on the support of the European Union, has been denied. Verboten! The Germans will not allow Mr. Draghi to “Save the World” and so the underpinning of the European sovereign debt market has become a farce whether it is recognized quite yet or not. Recognition will come; reality eventually surfaces. 
Let me share with you an experience I had recently. Please bear in mind that it is only one car dealer in one city in the United States. This particular car dealer carries Rolls Royce, Bentley and Aston Martin. I stopped by the dealer and was told about what was going on - it is called “tagging.” According to this gentleman both BMW who owns Rolls Royce and Volkswagen who own Bentley are engaged in this process. There are several different tactics apparently. In one the car maker pays the dealer to take the car on as a “demonstrator” and then the car is marked on their books as a sale. In another, money is paid by the car maker to the dealer who uses the money to buy the car but there is a second agreement penned, a repo if you will, that if the car is not sold in X amount of time that the car maker will take it back. In the meantime it is marked as a sale on the car maker’s books. There are apparently many variations to this scheme but the end result is cars that have not been actually sold are entered on the car maker’s ledger as sold and so the cars are “tagged” and the books are falsified.

There is no inflation anywhere in any country we are told past some minor amount and yet, in the United States, gasoline prices surged to their highest level ever in the last few days. Year to date prices are up 12% and rising quickly. Here is another example of counting numbers as you like but eventually confronting reality. Here is the corollary to the famous remark by Stalin that, “It's Not the People Who Vote that Count; It's the People Who Count the Votes.” So what we find are number counters in America and Europe that purposefully distort the data, the passage of time, and then reality tearing at your juggler.
Today there is a hue and cry that the debt to GDP ratio in Spain is 84% and the highest that it has been in one hundred years. It is laughable. The debt to GDP ratio is far past 160% if you count correctly. There are those that say both methodologies are acceptable and they are wrong; dead wrong. The liabilities, the contingent liabilities, the sovereign guaranteed bank debt of Bankia and others is there and must be paid back to the ECB. Securitizations posted at the ECB including Real Estate loans, construction loans and general business loans are now worth pennies on the Dollar and someone will be forced to pay. Those that count may well change the course of an election but those that count cannot do much about an empty bank vault when all of the cash is gone.
We live in dangerous times. Money created out of nothing and in such quantities that Valuation is called into question. Statistics made up and manipulated as a matter of due course and defended as Preservation of the State. Lies told with such straight faces and almost religious fervor designed to subdue the masses and place investors in a sterile coma where “fine” is the watchword of the marketplace. It is all controlled, it is all manipulated but as the bills become due, as there is not enough cash in the drawers; events will happen, yields will rise, equity markets will fall and then a new and quite unpleasant set of circumstances and consequences will arrive.
Politics, economics and the debauchery of the truth. There are consequences; there are always consequences. The world has subsisted on fantasies for four years but I think this spring will bring on the vengeance of the Fates for the demagoguery that has transpired.

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Hulk's picture

End of the road Bitchez! 

GetZeeGold's picture



This calls for a toga party.....a really big one.

Rubicon's picture

Id hate to live with this bloke.

Landotfree's picture

Inflation is dead and has been for about 5 years now.   The system is unable to generate the needed exponential growth needed to sustain itself.  The game is not over but the fat lady started warming up in late 2007, when the system was generating new credit at a $4.7T annualized rate.

The rest of all this is just noise.

The system is simple, inflation must be greater than the prior.  Unfortunately or fortunately, humans have no ability to do this as it would require unlimited power.   60-80 years is the norm.

BLOTTO's picture

Every (work) morning when i wake up and 1st open my eyes...I think about how fucked this shit show really is.

EnslavethechildrenforBen's picture

They're cutting down forest's to make more paper to counterfeit on.

They're exchanging that worthless paper for our land, resources and labor, leaving us desolate and impoverished.

Oquities's picture

millions of trees are saved by the pushing of a few buttons for money creation, which then causes billions in eventual losses.

EnslavethechildrenforBen's picture

Welcome to the Jewnited States of America.

then scroll down, follow some of the links on the right side.

MSimon's picture

Another mind colonized. Can the ovens be far off?

kridkrid's picture

I assume the person who voted you down doesn't like the observation that inflation is dead. People get hung up on this point and it creates confusion. What is certainly dead is our ability to naturally live on the exponential curve you linked. To live on that curve would require an infinite number of participants in the system each doing their part to expand credit/debt. Of course, the infinite number of participants would also need infinite resources to match the infinite growth in credit/debt. None of this is the case. So this system will die. If we experience hyperinflation before it dies, it will only be a symptom of the system trying to survive a moment longer. Inflation vs. deflation is a meaningless debate, really. They are two sides of the same coin.

kridkrid's picture

Cool. I've never been called a troll here. What's your angle? Spend some time understanding how credit money works. You'll be better for it. Without understanding how the system works, you become nothing more than a pawn who can be pushed around through mythology and emotion. Or don't... continue to be a pawn... it won't change things either way.

Swarmee's picture

Deflation in what though? I haven't felt the need to transact a billion dollar LBO any time recently, but I'll be damned if nominal prices of things I buy every day to survive - you know, food, heating fuel, gasoline, health insurance, quality clothing, home repair goods - have gone up every single year since at least 2002. And due to [published, officially acknowledged] inflation the real value of my marginal dollar keeps going down. So real purchasing power down while nominal price numbers up. But no inflation here!

Seems to me the only people experiencing deflation are those gambling with OPM in ludicrously complicated BETS in an international casino. Stuff that is not taxed at the same rate as my labor and so does not even pay back into the system at the same rate as those of us who work for a living and are seeing those living costs rise.

But please, do explain why gas is going back to $1/gallon in the US just like it was in 2000. The same gas that is used to produce and transport every single consumer good in our just-in-time inventory system, therefore affecting the price of every single item.

More_sellers_than_buyers's picture

STOP trying to rationalize anything.  The fed controls the world.  Inflation is dead until it isn't.  It is very simple.  Rules do not apply anymore.  All the smartest guys in the room are broke now.  

TruthInSunshine's picture

"...the Fed" is but one spoke in the wheel.


Did you ever notice how gamblers at casinos are far more likely to become much larger "bettors" than they otherwise would be once they exchange their perceived more valuable colored fiat paper for differently colored plastic casino chips?

Or, stated alternatively, most gamblers at casinos would probably be less statistically likely to place as much on their bets if they were playing with the fiat paper they brought to the casino, rather than some plastic chip that only has any value within the walls of that casino.


Think about it...

MachoMan's picture

Is inflation dead or is growth dead?  Because I see you making a point for the latter, but not so much the former (induction is...  dart throwing)... 

Further, if growth is dead, does that necessarily lead to deflation or inflation?  Can we tell?  Could it even be both over the medium term?  Multiple times?

kridkrid's picture

I think inflation vs. deflation is primariy a policy choice. The ultimate distruction of the currency is the known. The path we take for the remaining few ________ (months or years) is the unknown. Kyle Bass said something to the effect of "timing the end of the debt super-cycle is a bit tricky". People who do not understand the system view this as a cop out. Oh well.

Variance Doc's picture

You did not answer MM's question.

It would help it you define inflation.  Most around here (the thinking ones at least) would define inflation as a result of more money (the stock and flow; huge stock and increasing, leaking flow and increasing) chasing fewer real goods.  The production of real goods cannot keep pace with the “production” of credit+coupon, hence the need for baffle ‘em with bullshit notions like rehypothecation, CDOs, etc.

Thus, you are seeing the severe curtailing of real growth relative to markers such as GDP, but inflation (stealth or otherwise - horse meat, 11” footlongs anyone?) is alive and growing.  The 1+ trillion in US government spending over revenues (plus some of the bank reserves) *is* leaking into the eCONonmy.

Like a frog in boiling water, Joe Sixpack and Sally Housecoat are slowly realizing the gravity of the situation. Not fully aware yet, but it will hit them like a hammer soon.  Gas prices, I think, will the be the first flashing light for 'em.

kridkrid's picture

The issuance of credit creates "money"... the destruction of credit destroys it. Cascading defaults, if they are allowed to happen, or when they can be stopped no longer, will be (or would be) deflationary. This is what central banks are trying to prevent. Not because they care about us, but because banks can't exist in a no growth or declining environment. Leverage requires growth. Sooooooo.... where are we today? Mostly treading water... with bi-flation (inflation in the things we need, deflation in the things we own)... and we are sitting on a time-bomb. Things will not improve.

Variance Doc's picture

Ahh, the credit=money BS.  A fool's errand...

kridkrid's picture

So what is money? In our system... What is money. How does it come to be? Calling something what it is... A fools errand? Ok.

dtwn's picture

Apparently you missed the memo that hyperinflations are par for the course: Via ZH

JR's picture

The fat lady's already sung and she’s out of a job; her career couldn't sustain the inflated price of her food intake and she's now the down and out thin lady.  Only bankers push your line. Ask the public if the price of anything is the same as last year. The public may not be getting the money Bernanke’s printing, we know where that’s going, but they’re sure getting the price increases. The only deflation they’ve seen is in their wallet, their purchasing power.

Lost My Shorts's picture

Ya, ya, "The world has subsisted on fantasies for four years but I think this spring will bring on the vengeance of the Fates for the demagoguery that has transpired."  But someone or other has been saying that for years.  The end of the party is almost here, within three months, within six months, by the end of the year, etc.  Eventually they will be right, just like a stopped clock will be right eventually.

But I am tired of waiting.  I think I will go balls to the wall long, today.

Just Ice's picture

Would indeed be nice to know when reality gets tired of toying with the juggler and goes for tearing into the jugular.  Don't get too tired of waiting tho'...things can be stalled out in corrective sideways fashion, imo, to about the meantime I would suspect market ranges coincident with such malaise to provide ample movement, (e.g. a dow range from 8000 +/-  to 14000 +/-).

CH1's picture

The world has subsisted on fantasies for four years but I think this spring will bring on the vengeance of the Fates for the demagoguery that has transpired.

Reality will rise again? That would be nice.

kridkrid's picture

People who believe that the world has subsisted on fantasies for only four years are part of the problem.

DeadFred's picture

Futures are up this AM but Dr. Copper dropped below support yesterday and hasn't recovered. The Dr. knows.

Notarocketscientist's picture

Fucking with the Jesus would be........ a big mistake

Lost Wages's picture

Yay, vengeance! The longer the wait, the sweeter it is.

cossack55's picture

"One can avoid reality, however, one cannot avoid the consequences of avoiding reality"


Always loved that quote

Notarocketscientist's picture

Ayn Rand was a crazy old bitch but she did get that and a few others things right including


"A genius is a genius, regardless of the number of morons who belong to the same race -- and a moron is a moron, regardless of the number of geniuses who share his racial origin."

A Lunatic's picture

Reality is for the little people.

Apostate2's picture

This is where the sidewalk ends. A new road will come. Maybe no halting places but that is the nature of path finding. Find your own. Then be a guidon.

kridkrid's picture

You'll come to a place where the roads are not marked,
Some windows are lighted, but mostly they're dark

francis_sawyer's picture

The last 3 road endings were <solved> by:


- Al Gore 'inventing' the internet

- evil masterminds in caves masterminding 'Pussy Galores Flying Circus'

- 'Tanks in the Streets' & printing presses


I think we're finally about due for the alien arrival...

Notarocketscientist's picture

The Russia meteor was a UFO landing...

francis_sawyer's picture

I'm supposed to believe a guy named 'Notarocketscientist' on the subject of meteors & UFO's? 


Oh well ~ I suppose it's no worse than Krugman, Bernanke, or Greenspan talking about the economy...

Notarocketscientist's picture

Check CNN - the aliens are crawling out of the hole in the ice as I type!!!!  :)

francis_sawyer's picture

Let me guess... They have 'brown' skin color & swastika tattoos...

flapdoodle's picture

More likely it was the opening volley by the Arachnids against the Federation - watch out Buenos Aires!

Karl Napp's picture

One of the largest Spanish real estate developers Reyal Urbis today filed for bankruptcy.

the not so mighty maximiza's picture

Thats a sign of a roaring economy now.

news printer's picture

110 year old Livermore bulb = no need for replacement

Pyramids of Waste (2010), AKA The Lightbulb Conspiracy - Planned obsolescence documentary

"The lightbulb conspiracy" is a documentary about how our economic system based on consumerism and planned obsolescence is breaking our planet down.


Jason T's picture

that light bulb has never been turned off.  It's the on and off the burns out bulbs.  It lights up too fast and turns off too fast.. if there was some kind of component that allows the light to turn on and off slowely, bulbs would last a whole lot longer.


I notice my LED bulbs do just that.. they take a few seconds to go dim when I turn off.  23 year life supposedly.  

planned obsolesense is evil otherwise.