The Spins Of The Fathers

Tyler Durden's picture

Submitted by Mark Grant, author of Out of the Box,

A Dali Landscape
Imagine that you are walking through a Salvador Dali painting. Everything is disjointed, tilted and mangled. The clocks are dripping, the colors are ravishing and the trek is difficult as disorientation precedes each step.
In the financial world at present the markets are fueled by the liquidity of the central banks. Not only is nothing else of importance but good news becomes the joyful noise of some divinity, bad news is elevated to good news and horrible news brings ecstasy as it will enlarge the contributions of Mr. Bernanke and Mr. Draghi. 
The various economies are irrelevant. Growth is insignificant. Debt levels are made up and then ignored. The growing stockpile of small bits of pulp mixed with water is all that matters as we stumble along in our Paper Mache world.
Now I do not argue with reality. Equities up, bond compression unrelenting, yields down and we play the Great Game to win and not to be right. Yet I am aware, I am always aware, that reality is lurking in the swirling mists. There is nothing that separates us from chaos except the unrelenting supply of money because the underlying economies in America and especially in Europe cannot support these kinds of markets. Even in Germany, who reports a debt to GDP ratio of 81% while the real number exceeds 200%; the storm clouds are gathering.
The next barrage will be fired soon by Mr. Draghi. It will be a cut in interest rates that will cause the next heretical dance but it will be short lived I fear. Markets up, the Euro down and right at Kelvin’s Absolute Zero will be the temperature reading. There is not a normal in sight. Not the old normal or the new normal or any sort of normal; just the Fed and the ECB with their fingers in the dike.
It is the land of easy money. Heaps of it more than just before the 2008/2009 debacle! That last go round was money provided by the private banks. This go round is provided by the central banks. The last time leverage was in play. This time the capital is minted by creation. Easy money though, always leads to serious mistakes as it gets shoved into inappropriate places.
Yields may be down for sovereign debt in Europe but debt levels are up as every country on the Continent has entered the sinkhole. Mandated debt levels are now being ignored as exemplified by Spain with a 10.6% ratio as ever more debt is added which must be serviced as the total amount of debt cannot be paid regardless of the interest rate.
We live in a world where everything is ignored but the time will come when this ignorance will be shattered. We will pay the price for our stupidity because there is always a price to be paid. Mr. Bernanke and Mr. Draghi have been the Saviors but the church has been built on thin air and the weight of the building is increasing and increasing at an alarming rate. This kind of normal is unsustainable.
The lessons of the past are being ignored once again but I caution you to not forget what you have learned.

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Rubicon's picture

Same shit, different day

Divided States of America's picture

Yes, i learnt that there is such a thing as Groundhog Day.

GetZeeGold's picture



Who could have seen it coming really?

vmromk's picture

Analysis seems spot-on.

But.......what does the COCKSUCKER Bernanke have to say about this ?

i-dog's picture

Whatever he has been told to say.

Doubleguns's picture

But.......what does the COCKSUCKER Bernanke have to say about this ?


Stay in that position....while I remove your pants. 

Pladizow's picture

"You can ignore reality, but you cant ignore the consequences of ignoring reality." - Ayn Rand

Spastica Rex's picture

"You don't get rich writing science fiction. If you want to get rich, you start a religion." - L. Ron Hubbard

Bearwagon's picture

That's much better advice, indeed.

madcows's picture

What's reality?

BLOTTO's picture

Reality is their illusion.


Their fiction IS the reality.

Pladizow's picture

Reality is perception!

TeamDepends's picture

Yep, the guy behind the curtain is kind of scrawny, truth be told.

BLOTTO's picture

Ive learned this:


M2 + more M2 = higher and more valuable Au/Ag is and will be

Aside from all the other fundamentals of Gold (and Silver)

LawsofPhysics's picture

Barring a hard default, debt restructuring/forgiveness or world war, yes.  It's guess the timeline that becomes a problem.

Bearwagon's picture

No longer if the time has come ...

centerline's picture

We will probably get a little of everything.  lol.

Winston Churchill's picture

Long term Blotto,long term.

There are a  lot of wild swings left in the PM price to come.

At the moment the endemic  instability of the whole system is going to show up there.

Keep some dry powder,TPTB are nowhere near giving up yet.

Mototard at Large's picture

Old saviour:  Thy name is Peter, and upon this rock I will build my church.

New saviour:  Thy name is Ben, and upon this liquidity filled sand castle I will spin out a new economic narrative.


IridiumRebel's picture

Bloomberg emails are hilarious. You get the one negative(today Spanish unemployment up to 27%) surrounded by the positivities....jobless fell by 16k(revision anyone?) and the like as they try so hard to polish this turd. At least I have ZH for the truthiness.

earleflorida's picture

excellent read, mr. grant

Bravo for your subtle, yet... exquisite ebbing tenor   :-))

1100-TACTICAL-12's picture

Long turnip seeds ....

Debeachesand Jerseyshores's picture

Please this "New Normal" is the New Disneyland.


Just buy Gold and Silver at these bargain prices.

newworldorder's picture

There was a time when honest capital was earned and spent in the real economy by the swet and toil of human beings. Today its manufactured by the key stroke. We are told that is is the same or just as good as the one earned by toil. That may be so, as millions  are given their key stroked dollars with monthly SNAP cards. We are slowly being conditioned to pray at the feet of the great and mighty central banks. Let's see where this new religion takes us.

glenlloyd's picture

It will take us exactly where it's taken others who've prayed at that altar....a very bad place.

As Kyle Bass said, the extent of financial memory right now is two years....tops.

NoWayJose's picture

And when the rubble clears, it will be Iceland that will emerge as the new world power...

polo007's picture

According to Credit Suisse:

Money Matters: FOMC Preview - Tapering versus Tightening

- The FOMC next meets on April 30-May 1, and we expect no significant policy changes to be announced at that time. Even if the Committee had been entertaining notions at its March 19-20 meeting of slowing its asset purchases anytime soon, the disappointing economic data released since then probably have shelved such plans for several months.

- In our view, an opportunity to scale back the asset buying may not come until later this year perhaps in September. For now, we expect the size of the Fed's monthly purchases to remain at $85bn ($40bn MBS, $45bn Treasuries).

- Looking forward, we maintain that any future decrease in the size of QE3 purchases would not be a monetary policy tightening, although the markets may initially react as though it were.

- Moreover, even if the Fed were to eventually end QE3 sometime in 2014 and start hiking interest rates in 2015 (or later), we believe monetary policy still will remain very accommodative for many years.

- The risk is that even if business cycle conditions were to allow the Fed eventually to firm up its policy stance, subsequent economic performance (or budgetary strains or financial fragilities) would force renewed easing long before the Fed reached an elusive "longer run" neutral funds rate target.

- Monetary Policy Review/Preview

- Beige Book (released on April 17).

- Fed Balance Sheet Update

- The Fed's MBS portfolio surged $55bn to $1.1tr in the week ended April 17.

- Excess reserves total $1.8tr, $159bn above their previous peak in July 2011.

- Money Supply Update

- M1 posted its largest weekly decline since just after the 2001 terrorist attacks.

- A $63bn pop in savings accounts at commercial banks limited M2's decline.

- Bank Balance Sheet Update

- Adjusted for a 2010 accounting change, commercial bank loans outstanding yesterday (April 23) are still some 5% below the Q4 2008 average.

- Cash assets held by domestically chartered banks have jumped by more so far this year than have cash assets at branches of foreign banks in the US.

adr's picture

Retail sales have imploded, yet all these public corporations keep posting increased quarterly sales, some up 28% or more.

Cabelas I can believe, since sales of guns and ammo have probably doubled, if not tripled.

Crocs sales up? Bullshit.

I think the real problem is that Enron accounting is not only legal now, but encouraged.

If you see a retailer posting double digit Q1 gains, it is nothing but forward booking profits off channel stuffed inventory. The profit and revenue will never actually be there, but that is what accounting revisions at the end of the year are for. That is when you get to book all the inventory you never sold for a loss, reducing your tax burden.

Fucking bullshit, all of it.

Shevva's picture

Yes but, but, but the experts on TV today where saying that borrowing at such low interest rates is not a problem, Borrow as much as you want.

Hohum's picture

It took a while for me, but QE and a lack of CPI inflation now makes perfect sense.  QE is merely a great redistribution of income and wealth to the elite.  With that premise, this shit can continue until the people rise up or some necessity becomes unaffordable (yes, oil).

Of course, most ZHers don't look at it like this because class warfare only goes up, not down.

GCT's picture

The only time people will wake up is when social programs take a hit.  Otherwise reality TV and handouts will keep them happy.

Jekyll_n_Hyde_Island's picture

Not the best written contribution.  I grade this one just a step above DisabledVet's inane babble.

Schmuck Raker's picture

What is the "10.6% ratio"? Their budget deficit?

Bit of incomplete informa

Diesel Seven's picture

Balanced budget economies = depression. The negative multiplier effects would last for years. . . there would be civil unrest, chaoas, dogs & cats living together . . . untter chaos; need low rates to sustain the deficit growth; thank <insert your deity here> that we have central banks that can buy ALL of the debt if they so choose. Not enough attention is paid to the big economies that don't play the US/EU game. China, Russia, Brazil and many other emerging market are silently holding the US, EU & Japn in contempt for our leveraging of  fiat currencies. It's going to be like a zombie apocalypse without the zombies.

Ben Bermonkey's picture

come on, zeroehedge gets cramered down one day. no stocks, no fun

luckylongshot's picture

It all makes sense when you realise we are in a debt fuelled death spiral. Central banks are now doing the spending the public can no longer afford to do and the next stage is collapse. The big issue now is what we replace the current system with. The banksters are pushing for a one world government that they control and as this will mean effective slavery for the 99% we should be doing everything we can to stop them.

Relentless's picture

Easy money though, always leads to serious mistakes as it gets shoved into inappropriate places.


Am I the only one who thought "Strippers!" at this point?

Notarocketscientist's picture

Oh come on - everything will be fine - this is just a bit of a bad patch - the business cycle will recover as it always does - you can't eat gold - Bernanke knows what he is doing - we'll inflate our way out of this like we always have - there is plenty of oil left in the ground don't worry - you are too negative etc etc

Sound familiar to anyone?