This page has been archived and commenting is disabled.
Unlike Ebola Patients, The Markets After QE Can't Be Quarantined
Submitted by James H Kunstler via Kunstler.com,
Oh, that sound you hear this morning is the distant roar of European equity markets puking after the latest round of phony bank “stress tests” — another exercise in pretend by financial authorities who understand, at least, the bottomless credulity of the news media and the complete mystification of the general public in monetary matters. I rather expect that roar to grow Niagara-like as US markets catch the urge to upchuck violently. Problem is, unlike Ebola victims, they can’t be quarantined.
The end of the “taper” is upon us like the night of the hunter, conveniently just a week before the US election. If the Federal Reserve is politicized, the indoctrination must have been conducted by the Three Stooges. America’s central bank never did explain the difference between tapering and exiting their purchases of US treasury paper. I guess that’s because it has other interventionary tricks up its sleeves. Three-card Monte with reverse repos... ventures into direct stock purchases... the setting up of new Maiden Lane type companies for scarfing up securities with that piquant dead carp aroma. Who knows what’s next? It’s amazing what you can do with money in a desperate polity with a few dozen lawyers.
Of course, there is the solemn matter as to what happens now to the regularly issued treasury bonds and bills. Do they just sit in an accordian file on Jack Lew’s desk next to his Barack Obama bobblehead. The Russians don’t want them. The Chinese are already stuck with trillions they would like to unload for more gold. Frightened European one-percenters may want to park some cash in American paper to avoid bail-ins and other confiscations already rehearsed over there — but could that amount to more than a paltry few billion a month at the most?
What do the stock markets do without up to $85 billion a month (peak QE) sloshing around looking for dark pools to settle in? Can US companies keep the markets levitated by buying back their own shares like snakes eating their tails? Isn’t that basically over and done? And exactly how do interest rates stay suppressed when only a few French tax refugees want to buy American debt? I don’t think anybody knows the answer to these questions and the scenarios are too abstruse for the people who get paid for supposedly writing learned commentary in the sclerotic remnants of the press.
A few things are for sure, though they are sedulously kept out of the public discussion by interested gate-keepers. One is that the western economies have lost the ability to generate real new wealth of the type that their debt-based monetary systems require for ongoing operations (such as paying interest on old debt). Instead, we’ve entered a liminal era when fake wealth passes for wealth. Jive capital poses as capital. The main reason for this, of course, is the inability of world energy producers to meaningfully increase energy production in a way that does not suck more capital out of the system than the system can regenerate. But that conversation also has been outlawed from the public arena in “Saudi America.”
I suspect the subject will force itself on the national consciousness in the year ahead as one company after another in the shale oil regions craps out on a shortage of available investment capital. That’s the inflection point where fake wealth is unmasked for what it really is: crippled capital formation. The disappointment from that looming event will thunder through our society.
In the meantime, the distractions are many and powerful. Ebola may appear controlled for the moment in the USA, but the host countries in West Africa are virtually falling apart and the demographic movement out of failed economies like Liberia’s would suggest an awful dynamic for the spread of that disease into new regions. ISIS (or whatever we call them) is putting on a diversionary show on the Turkish border, but the real action awaits in Baghdad, perhaps poignantly at Christmas time, when mortar rounds start falling on the US embassy in the Green Zone and the evacuations commence.
»
- 8231 reads
- Printer-friendly version
- Send to friend
- advertisements -
ZH has been saying the same things for the last 5 years. Where have all these geniuses been?
Everyone, including Kunstler, and the many other bloggers that ZH posts, has been saying this for 5+ years.....what is a surprise, is that the powers that be have been able to hold up the illusion/brainwash the public that everything is still ok for this long, through accounting fraud, FED antics, misreporting of CPI, and just straight out lying.
No one, including, Tyler thought the illusion could last into 2015...no one outside of the FED knows when the game will be called.
Somebody knows "that" phrase :)
Keep on trudgin'
qe wont end till it breaks, it cant.
To be fair, ZH has been saying this since 2007/2008 when they were on blogger. And they were dead on correct as subprime and finally equities collapsed in a heap in Fall 2008. We have just seen an intermediate reprieve the past 5 years where nothing has been solved, and in fact things are much worse. People have very short memories.
So don't think that PTB can hold this illusion indefinitely , for all of the " "Cassandra's " will be proven right again. And Not because a broken clock is right twice a day , but rather because they can do simple arithmetic. Math fail, and you can't borrow your way to prosperity. Some things never change.
Fuckin hilarious being alive to watch the Second Roman Empire implode isn't it?
And I can't wait for Hitlery to declare herself Empress of Amerika!
I think they plan on skipping the elections and moving Hil right into the desk. We'll be told that it will all be explained to us later. Like three terms later.
The 'fat lady' sings mid March 2015 by my calculations and I'm outside the FED. If the fat lady does not sing by April 2015 my calculations were wrong
and my ability to predict the future is questionable at best.
Meh...ZH has been correct. The average wage earner continues into recession. http://www.zerohedge.com/news/2014-10-24/50-american-workers-make-less-2...
What has happened is GDP was redefined ( added $500B in value), HFTs continue to fake run makets up with no action from SEC. Central banks world wide continue to pump, debts continue to rise. Frankly if real economic principles were applied, we would be in a depression. But we are where we have never been before. When something breaks its going to be epic.
Before the "Bernanke has all the answers" era, many of us criticized Japan for failing to own its problems. Many people thought Japan should face up to the mess it had created and do the right thing. Broadly accepted was the concept that only by letting its zombie banks and industries fail could Japan clean out the system and move forward.
While they claim otherwise, in many ways Bernanke and the Fed have put America on a path that mirrors the same unsuccessful path taken by Japan. A path that avoids real reform and bails out the very people that caused many of our problems. As we measure the results of the Bernanke policy it seems they may not be much different than those achieved by Japan over the last few decades.
Bernanke endorsed and encouraged Japan to step on the gas and print more money until they lower the value of the yen and force inflation to set them on a path forward. More on the path we are going down in the article below.
http://brucewilds.blogspot.com/2013/11/we-are-on-path-to-lost-decades.ht...
he really abused his dictionary of obscure words on that one
In my dream world QE4 would be made up of Ebola drinks sent to every member of Wall Street.
Wow...the Government can't keep printing debt forever without interest penalty?
My money is on Ebola not being contained while the money does just fine...
Gravity always wins.......the reason for the delays is the geniuses can't figure out how to let it collapse AND be able to keep their ill gotten gains AND to be able to walk away with their necks intact....
The IMF is much nastier than ebola.
Well after the 2008 crash not only did the FED start QE they also bought all the toxic assets. This recovery isn't making the risky bullshit loans we came to expect in the era of mortgage backed securities so the answer is obvious....banks need to start lending lending lending, packaging packaging packeging, and then bad debt offloading to the FED's unlimited spreadsheet.
The FED buying government debt isn't enough to get us back into normalcy, they need to start buying shit securities from the private sector too.
It's the only way to get this economy back into high gear so we can get the "growth" we came to expect and think was normal during the boom. The only way.
Denial is a river that runs from Washington D.C. to New York.
Has tributaries in Kenya Indonesia and Hawaii, let alone Columbia and U of Chicago.
"Can US companies keep the markets levitated by buying back their own shares like snakes eating their tails?" With $2 trillion in cash? What do you think, James?
You left out the $5 trillion of corporate debt on the books.
http://research.stlouisfed.org/fred2/series/NCBDBIQ027S
Saw this posted in the Fox comments & thought it was worth copying it here:
Editor, Lewiston Morning Tribune: If I wish to import a horse into the United States from Liberia or any African country other than Morocco, the horse needs to undergo a 60 day quarantine period at a USDA approved quarantine facility prior to mingling with the general population of horses in this country. Africa has a disease called African Horse Sickness that does not exist in the US; this is the way we have kept it out of this country. African Horse Sickness does not cause disease in people, only horses; our government has determined that it would be devastating to the US horse industry if it were to come here.The United States (and virtually all other countries) require a myriad of tests and often quarantine prior to bringing in a foreign animal.I can't legally cross state lines in the United States with a horse or cow without a health certificate signed by a USDA accredited veterinarian stating that the animal has been inspected and found free of infectious disease. In most cases blood tests are also required. In fact I can't legally cross the Snake River and ride my horse in Washington without a health certificate and a negative blood test for Equine Infectious Anemia.I'm not complaining; the United States of America, the States of Idaho and Washington as well as the other 48 states take the health of our livestock very seriously, and we have a very good record at keeping foreign animal diseases out of our country. I am happy to do my part to maintain bio-security in our animal population.If I am a resident of Liberia incubating Ebola, to enter the United States all I need to do is present a valid visa, and lie when asked if I have been exposed to Ebola. Within hours (no quarantine required) I can be walking the streets of any city in the United States. I feel very fortunate to live in a country that values our animals so highly.David A. Rustebakke, DVM
That is because most horses outside of Chicago don't vote.
Horses are worth more than serfs
MARYLAND: Possible Ebola Patient in Isolation - http://bit.ly/1DUjAkb
They are using PARCEL TAPE???????????????????????????????????
FFS
Hey its as water proof as duct tape. Tyvek tape would be better,
In 1948, Henry Kissinger, a 23-year-old American intelligence officer, recruited Nazi expatriates to serve in top positions in American military, aerospace, and biological science and medicine. Twenty years later, he left Harvard’s esteemed faculty and resigned a lucrative position as Nelson Rockefeller’s foreign policy attache’ to become President Nixon’s closest advisor and director of the National Security Council. Seeking alternatives to tactical nuclear weapons to bolster America’s “diplomacy” abroad, the paranoid and egomaniacal Kissinger quickly ordered the Army’s Chief of Staff to requisition $10 million from Congress for the development and testing of EBOLA & AIDS-like viruses. Within ten years, the AIDS and Ebola epidemics erupted coincidentally in the regions of Africa ravaged by CIA military covert operations also ordered by Kissinger.
In 1984, Dr. Robert Gallo, of the National Cancer Institute, claimed credit for discovering the AIDS virus. He announced it most likely originated from a monkey virus which spontaneously mutated and naturally jumped species. Dr. Gallo was a biological weapons contractor for the CIA’s top secret “Project: MKNAOMI,” and was paid to produce and test EBOLA, AIDS-like viruses as early as 1970.
EBOLA – CIA Project Codename MKNAOMI & Hi-Tech Assassinationswhat about the trading kill switch? they tested it a few times (recently)
QE will not be stopped nor will it slow down, it will exponentially increase until... well, you already know what's next
hyperinflation cannot be stopped
If it can be seen coming, it has been factored in and discounted by the markets. What will cause the crash is what cannot be seen coming. Even if the collapse is engineered, the exact event acting as the trigger for the collapse cannot be anticipated by those engineering the collapse. They need to keep rolling several snowballs and wait for the one turning into an avalanche. Unlike the previous crashes, there are many who know there is one coming and stand to lose heavily when it does. They will fight tooth and nail to prevent one from happening, making the trigger event itself quite unmanageable.
Or maybe they'll say Ebola caused the collapse, sound plausible.