Uncharted Territory Cannot Go On Forever

Tyler Durden's picture




 

Via Mark Grant, author of Out of the Box,

The greatest disconnect in the world today is the underlying economies of the world and the markets; all of the markets. This river is wide and getting wider given the money that the central banks are pushing downstream. The flood has reached all of the markets, Real Estate, the banks, many corporations, any and all borrowers with our incredibly low interest rates, but it has had little impact on the Main Streets of the planet. There is, in fact, a bubble of epic proportion.
 
It is not “irrational exuberance” but a quite rational placement of money that must go somewhere because it is not left in the sock drawer. The creation of money by the Fed, the ECB and Japan’s central bank keeps raising the tide but like all tides when it reverses course if will flow back out from the high water mark which has been created and with an equal force.
 
The reversal will come from an event or from the moment that the central banks reverse position or from the fall in the demand for goods and services as consumers/investors have less money to buy things. The one truism that can be counted on is that our current situation will not go on forever as many on Wall Street would have you believe. The one other long established truth that you can count on is that when this reversal comes that the “whoosh” of people trying to rush through the exit doors will be pronounced and startling.
 
Europe has been setting off the warning lights. Their economies are in trouble, real trouble. Total GDP for the EU-17 is -0.2% while Italy and Spain reported out matching drops of -0.5%. The entire Continent, with the barely escaping exception of Germany, is in recession. Europe, in fact, is now in its sixth straight quarter of recession and it is deepening and not lessening with each passing quarter. Japan teeters on deflation and has also charged into the money creation game and buoyed its equity market but I expect a result no different from Europe. Currency wars are now in play with the Euro and the Yen in a continuing drop against the Dollar.
 
America reports out a drop in our deficit and parades around the field in triumph but it is nothing more than our recent increase in taxes. Raise taxes; more Federal income and what did you think would happen in the short term? Hardly a surprise!
 
The world, in the eighteenth century, may have been a stand-alone place but it is not now. The only reason that all of this central bank money printing has been working is because there is no way to invest off-world. We are stuck with the options that we have and that is it. Conversely to the coordinated efforts of the central banks though is the moment in time when a reversal begins because it will affect everyone in the same manner. Even gold can no longer be counted on as an indicator because the physical demand for gold has prompted a mass sell off by Comex, JP Morgan and several central banks as physical gold must be delivered under contract and more cash is raised. We are living in an uncharted territory.

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Wed, 05/15/2013 - 09:49 | 3564409 semperfi
semperfi's picture

Not forever, but maybe for 100 more years?  At which point it won't matter to any of us. 

Wed, 05/15/2013 - 09:54 | 3564427 Clint Liquor
Clint Liquor's picture

That is certainly the hope of those involved; The collapse comes after they are dead. Unfortunately, their hope will be unfulfilled as the collapse is eminent.

Wed, 05/15/2013 - 09:59 | 3564452 nope-1004
nope-1004's picture

Aren't markets forward looking?  I've always been told by brokers that the market knows something before we all do.  Therefore, isn't this the begining of hyperinflation?  Seems it is to me.

 

Wed, 05/15/2013 - 10:08 | 3564492 semperfi
semperfi's picture

And that hyperinflation is most prominent in Japan.  There is no turning back for them now.  If the bond-buying slows down they are screwed.  If it doesn't slow down they are screwed.  So they are screwed.  Soon.

Wed, 05/15/2013 - 10:14 | 3564513 francis_sawyer
francis_sawyer's picture

Print MOAR money... "Do it FOR THE CHILDREN"!

Wed, 05/15/2013 - 10:32 | 3564592 Sudden Debt
Sudden Debt's picture

damn... if they print more fiat again... gold and silver will drop in price yet again....

 

Wed, 05/15/2013 - 10:39 | 3564628 Badabing
Badabing's picture

“The only reason that all of this central bank money printing has been working is because there is no way to invest off-world.”

Invest in gold it comes from exploding stars.

Wed, 05/15/2013 - 19:06 | 3566991 UnpatrioticHoarder
UnpatrioticHoarder's picture

It's uncharted territory, not unchartered territory.

Looks like it's been fixed since the tweet

Wed, 05/15/2013 - 12:23 | 3565192 Professorlocknload
Professorlocknload's picture

Well now, SD, that would be just like Christmas, wouldn't it? Discount metals. I like it.

Wed, 05/15/2013 - 10:20 | 3564537 azzhatter
azzhatter's picture

Define "soon"

Wed, 05/15/2013 - 10:24 | 3564556 semperfi
semperfi's picture

before May 15, 2015  (within 2 years)

Wed, 05/15/2013 - 10:32 | 3564596 Sudden Debt
Sudden Debt's picture

It's good to be... SCREWED!!

Wed, 05/15/2013 - 10:10 | 3564497 LawsofPhysics
LawsofPhysics's picture

Yes, you are correct.  The printing has only accelerated, not slowed.

Wed, 05/15/2013 - 13:32 | 3565464 Professorlocknload
Professorlocknload's picture

Most likely, enough new money has been created to launch this thing to the moon. This time around, it has gone first to Government Unions and Finance. It just hasn't permeated the rest of system yet in the form of velocity.

It will!

 

Wed, 05/15/2013 - 10:06 | 3564481 Gadocat99
Gadocat99's picture

The educational system shrugs.

Wed, 05/15/2013 - 10:07 | 3564483 astoriajoe
astoriajoe's picture

...and soon too

Wed, 05/15/2013 - 10:35 | 3564608 Lets Buy The Dip
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I had to +1 you on that. 

We are living in a world where people are waking up, maybe like 1% of the population, but by the time things collapse, it will be too late to be one of these "wakers" (someone who is awake to what the elites are doing)

All the while they are buying up houses out in the forest, they know what is coming, and want to live far away, so they will not have to endure all the ramifications of this money printing. 

Talking of money printing the market keeps hitting new highs. Look now, the market has not had a correction for 177 days. => CLICK HERE TO FIND OUT STATS

Its crazy you know, and I feel sorry for peole who think they can just short the market and make crap loads. Do not fight the fed, and do not fight the rumors of them stopping QE when we all know they wont. Its simple math. 

Wed, 05/15/2013 - 09:54 | 3564430 What is The Hedge
What is The Hedge's picture

For the record, and for what it's worth, the expression is uncharted not unchartered. Carry on.............

Wed, 05/15/2013 - 09:59 | 3564450 falak pema
falak pema's picture

uncharted : not on chart

unchartered : not on charter, (unauthorized).

Bozs are ze english mais, in zis frase it is bust to uze "uncharted", comme you say eet! 

Wed, 05/15/2013 - 11:57 | 3565081 Spastica Rex
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Brea, bûter en griene tsiis is goed Ingelsk en goed Frysk.

I bet that's the first time anything has been posted in Frisian on ZH.

Wed, 05/15/2013 - 13:20 | 3565411 dontgoforit
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Well motherfucker.

Wed, 05/15/2013 - 10:01 | 3564457 PiltdownMan
PiltdownMan's picture

Europe sucks, US is fragile, China tanking. Central Banks are the only game in town. I saw this guy's comments this morning with the Prince song "Let's Go Crazy!" Good one.

http://confoundedinterest.wordpress.com/2013/05/15/lets-go-crazy-france-...

Wed, 05/15/2013 - 10:11 | 3564501 gjp
gjp's picture

Another day, another punch in the face for the bears.

US dollar up, bonds up, stocks now up, and commodities, you guessed it, down again.

Even the central bankers could hardly have imagined it would go this well.  In fact, it is going so well it must be scaring them just a little.

Wed, 05/15/2013 - 10:25 | 3564558 Dr. Richard Head
Dr. Richard Head's picture

Good news to me.  Quarterly profit share for board members of our company is coming up soon, so I will back the fucking truck up like a Teen Mom doing a porn for vivid......bitchez!

Wed, 05/15/2013 - 10:18 | 3564530 edifice
edifice's picture

Exactly.  If Japan can print for 25 years, we can print indefinitely.  It's already been 40+.

Wed, 05/15/2013 - 09:49 | 3564410 IridiumRebel
IridiumRebel's picture

Ben calls bullshit. He can print until the cash filled wheelbarrows buy bread.

Wed, 05/15/2013 - 09:56 | 3564437 yogibear
yogibear's picture

"He can print until the cash filled wheelbarrows buy bread."

That's the point Bubble Bernanke, Evans, Dudley and Yellen stop.

It's the only point at which they stop.

Otherwise it's a never ending QE drug party.Coke and drinking until the heart attack occurs.

Wed, 05/15/2013 - 10:24 | 3564555 mayhem_korner
mayhem_korner's picture

 

 

The point at which they stop will be far too late.  We know this because it is already well past the point of reconciliation.  Time is the only variable left in the equation.

Wed, 05/15/2013 - 12:50 | 3565285 Liquid Courage
Liquid Courage's picture

Oh ye of little faith. Ben can stop inflation dead in its tracks in 15 minutes while standing on his head pissing in a teacup ... he said so ... or words to that effect.

 

Oh yeah ... just in case ... <end sarc/>

Wed, 05/15/2013 - 10:31 | 3564587 SunRise
SunRise's picture

"He can print until the cash filled wheelbarrows buy bread."

so,  when the Fed hands you dollars, Demand that they make them out of wheat!

Wed, 05/15/2013 - 10:29 | 3564575 Sudden Debt
Sudden Debt's picture

the wheelbarrows will always have value!

Wed, 05/15/2013 - 11:31 | 3564930 Uchtdorf
Uchtdorf's picture

Yeah, but can you eat a wheelbarrow?

(For those of you educated in public schools: sarc off!)

Wed, 05/15/2013 - 13:38 | 3565499 Professorlocknload
Professorlocknload's picture

No, can't eat one. But I can sure put a lot of 'taters in one, down at the communal garden around midnight :)  

Thu, 05/16/2013 - 10:20 | 3568873 MeelionDollerBogus
MeelionDollerBogus's picture

I'm sure it must be true since I read it on the interwebz...

oh, wait a tick... what's this?

Wed, 05/15/2013 - 09:50 | 3564411 freewolf7
freewolf7's picture

This will be a great opportunity for learning.

Wed, 05/15/2013 - 10:06 | 3564482 PhilB
PhilB's picture

Im sure you will be saying the same thing on your death bed...

Wed, 05/15/2013 - 10:10 | 3564495 freewolf7
freewolf7's picture

The closer people get to death,

the more peaceful they become.

It's the resistance of what is

that causes the distress.

 

Wed, 05/15/2013 - 10:18 | 3564519 PhilB
PhilB's picture

Life is the resistance against death...it is inheriently stressful. Of course some prefer to be sheep being lead off the cliff...to each his own.

Wed, 05/15/2013 - 10:26 | 3564540 freewolf7
freewolf7's picture

Perception is everything.

What we focus on.

How we interpret it.

How we respond.

Men are, for whatever reason,

particularly resistant to death.

Peace. I'm on your side.

Wed, 05/15/2013 - 10:36 | 3564614 SunRise
SunRise's picture

Reality + Perception is everything and Perception must never forget it.

Wed, 05/15/2013 - 13:23 | 3565427 dontgoforit
dontgoforit's picture

Denial of Death - Becker '70's.

Wed, 05/15/2013 - 10:22 | 3564541 Bastiat
Bastiat's picture

I think this is not true for mass murdering sociopaths,

Wed, 05/15/2013 - 13:41 | 3565513 Professorlocknload
Professorlocknload's picture

Stress doesn't originate in the "what is." It's roots are to to be found in the "What if."

 

Wed, 05/15/2013 - 09:50 | 3564413 agent default
agent default's picture

It's uncharted because nobody who ventured there came back to tell about it.  This will end in total disaster.

Wed, 05/15/2013 - 10:34 | 3564602 Sudden Debt
Sudden Debt's picture

that's what Columbus's crew said....

Wed, 05/15/2013 - 12:09 | 3565134 GeezerGeek
GeezerGeek's picture

For the native populations, it did end in disaster. I guess it depends on which side writes the history.

Wed, 05/15/2013 - 09:51 | 3564414 Burt Gummer
Burt Gummer's picture

This is going to be the most epic financial bubble of doom the history of the world has or ever will know.

 

http://www.youtube.com/watch?v=deuC8GPr31A

Wed, 05/15/2013 - 13:24 | 3565431 dontgoforit
dontgoforit's picture

Nah - they'll do it even BIGGER and BETTER the next time - whoever's left, 100 yrs from now.  Last one out, turn off the light.

Wed, 05/15/2013 - 10:04 | 3564424 LawsofPhysics
LawsofPhysics's picture

More useless dribble on ZH. No shit sherlock.  Everything in life is a question of timing.  Chance always favors the prepared.  Get your tribe in order and know exactly what your counterparty risk is.  The world will re-learn the true meaning of value when the supply lines break in earnest and the EBT cards stop working.

Wed, 05/15/2013 - 10:07 | 3564485 SMG
SMG's picture

So you have any guesses on the timing?

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