Living In A Land Beyond Belief

Tyler Durden's picture

From Mark Grant, author of Out of the Box

Living In A Land Beyond Belief

Europe has taken to making comments and engaging in either great promises of future events or the denials of any epitaphs on any gravestones in the days that separate Friday from Monday. The markets are closed these days and it has become an obvious strategy to swing the various banners of national interests or to offer such schemes and plans as would suit the people who live and die based upon bold faced headlines and who give no thought as to their meaning. The propaganda machines spew sweet cakes and sweet meats and hope that no one recognizes that someone must clean up after the retching that will invariably take place. I suggest to each of you that your concentration should not be placed upon offers of Nirvana but squarely and solidly upon what is actually implemented for it is there that the truth is found and it is from there that future events may be predicted.

The Spanish Finance Minister calls for unlimited bond buying by the ECB and schemes are floated of tying the yields of all of the periphery debt to that of Germany and each is heralded as brilliant in its conception and without consequence in the real world as if the blue fairies in some Elfin Kingdom are going to pick up the tab. Please notify me, contact me immediately day or night, when this Kingdom is discovered because it will be at that precise moment when I change my view on Europe and come to the conclusion that all can be righted without consequence and that the ECB is an institution outside of the boundaries of this universe as many people seem to think these days. When this Magical Land is found I will also believe, along with so many others, that the capital of Europe is unlimited, that Germany receives money from the mines of the Dwarves beneath Stuttgart and that the proprietors of all of the restaurants in Europe always pick up the bill and free lunches have been brought back to our world in a flurry of pixie dust and wizard’s incantations.   I am in France now; send me the Hobbits, Peter Pan is invited to any meal, I will go to any body of water and converse with Merlin and the Lady of the Lake, I will meet with anyone from Harry Potter’s Ministry of Magic upon a moment’s notice and having seen the proof of “Money for Nothing and Chicks for Free” I will recant at any Inquisition, Spanish or otherwise, and confess the errors of my ways.

Some who wander about in the lands of fantasy and make-believe point to the lack of Inflation and proclaim this the Rosetta stone of all of the grand designs for Union. Inflation is but one indicator, one consequence of many that are to be found under the heading of VALUATION which is the correct barometer for the success or failure of the plans in the offing. Here it is not just a discussion of Inflation or Deflation but valuation and its implications and consequences where the costs of goods and services vies with the capital to afford them at any price and where just who has what in their purse, past a promise of the coins that are in the purse, meets the reality of actually opening it and pouring out the contents on the round table of Camelot in front of the perhaps not so Joyous Garde.

For a thousand years and longer the Alchemists have promised that lead could be turned into gold and I have yet to see the proof of this oft promised accomplishment. Germany is responsible for 27% of the European Union and 22% of the European Central Bank and how Germany would not be affected by an unlimited balance sheet at the ECB or the cost of some Firewall of all Firewalls is an economic equation that eludes me. I suppose that when Keynes, or Galbraith or Friedman won’t suffice that one must return to Gandalf and the Lord of the Rings for economic wizardry and the magic of creating money from thin air. It is generally recognized that Quantitative Easing has consequences but here we have a new type of magic, we are told again and again, where capital can be freely distributed and no one is responsible or accountable for the disbursement.

Perhaps we have entered a new land where balance sheets only contain assets and where liabilities do not exist nor are they counted. In this Never-Never Land contingent liabilities will not be allowed to occur and bonds are always paid in full and on time and the markets’ rally and rally some more in recognition of our having enter into this new universe of fantasy and make believe. It is no longer a question of risk on or risk off because there is no risk at all and money is waved into existence by some new spell concocted at the end of Frau Merkel’s magic wand. Spain is not being bailed out it is only the banks and not all of the banks but just certain banks that are no longer important as they are guaranteed by the government who is in great financial shape and is not in recession and who has no unemployment as that is an old paradigm from some other universe that no longer exists.

I have been credited with some foresight from time to time and I now can see where all of this is going in our new universe where economic laws and fiscal policy have entered some black hole of a new kind of fiscal warp. The ECB will pay off all of the debt of Spain and Madrid will be free of all obligations. All Italian debt will also be paid off by the ECB and two of the core countries in Europe will require no firewalls at all or fiscal restraint or any measures of austerity since debt no longer exists for these nations. Germany, in a grand gesture, will forgive all of the debts of Greece and each electric utility in the world now can use olive oil in a new process invented by Apple and Athens replaces London as the monetary capital of Europe. This new plan will not only be promised but implemented for all of the nations of Europe and the ECB, whose liabilities would normally be in excess of seventy-five trillion dollars will have none either because the printing presses are rolling and money is arriving from the new, new universe that will replace the new, new normal in everyone’s thinking. Magic will have returned to the Continent and diamonds are glittering upon the streets of St. Tropez and the Champagne flows, without cost of course, at each and every restaurant in the town square. I admit, I was there the other evening and did not see it but then I am an American and inhibited in my abilities to see such things. The Euro will be worth fifty times the value of any other currency when the debts of the Continent are erased and the banks will all be re-capitalized with the diamonds shipped in from St. Tropez. The products of Germany will have buyers without end and the new market for German goods, recently discovered on a small planet slightly to the left of Alpha Centauri, miraculously also has Euros to pay for them.

Buy everything I say without limit. Leverage each purchase to the maximum allowed under the law. The markets will only go up and not down and 100,000 is the next stop for the S&P. It is to be Dow without Jones, assets without liabilities and wealth without poverty. The Middle Class has been evacuated and everyone is wealthy beyond belief. It is just there, of course, that the truth lies in this merry old land, “beyond belief.”

“I like fantasy---it wakes up the brain cells.”

 

Dr. Seuss