"A portfolio built to only withstand stress thanks to central bank intervention is one destined to blow-up spectacularly."
Fraud as a way of life caters an extravagant banquet of consequences. This can't be said politely: the entire status quo in America is a fraud.
It seems for Nassim "Black Swan" Taleb, less is more. After perfectly summarizing the circus that is the American Presidential election camapaign in 17 words last week, he appears to have gone one step further with a two-word summation: "No SHillary."
The system is rigged... and rotten. Elections are exercises in solemn deceit. And the Fed’s management of the economy is a mixture of delusion and self-serving scam. We don’t have much doubt about it. That’s just the way it is. But that honesty is "cynical" and "anti-American," according to some. However, we’re not alone in our skepticism. Apparently, about half the country is “anti-American.”
What made Europe and Japan agree that negative rates - with all their known and unknown consequences - are a solution to our current economic malaise?
Trump’s blunt, angry, provocative, anti-establishment message has struck a chord among millions of disaffected Americans who have been ignored, abused, scorned, and shit on by the elitist establishment, banking cabal, corrupt politicians and government apparatchiks. The Deep State establishment has overstepped their bounds. Their ravenous pillaging of the national wealth through outsourcing millions of American jobs, largest mortgage control fraud in history, and outrageous gall in shifting their losing bets onto the backs of hard working Americans is about to bite them in the ass.
"People are not voting for Trump (or Sanders). People are just voting, finally, to destroy the establishment."
Until recently, the consensus assumed a strengthening of the global economy in 2016. It won’t happen. If the global economic growth manages to reach 3.1% next year, as forecast by the IMF, it will be a miracle. We are close to the end of the current economic cycle. The outbreak of a new global crisis in the coming years is inevitable. The Fed and other central banks are in a dead-end having fallen in the same trap as the Bank of Japan. If they increase rates too much, they will precipitate another financial crisis. It is impossible to stop the accommodative monetary policy.
Almost all serious analysts see a Terminal problem developing - "We will go from deflation to hyperinflation without seeing inflation." But hyperinflation is a political phenomenon. It is caused by those same authorities the masses think they can trust. When they are threatened, they will protect themselves by printing money on a scale we haven’t seen since the War Between the States (consumer prices in Richmond, Virginia, had risen 6,700% by the end of the war).
Seeing the market crash from a few weeks ago, it is clear how quickly the market can ferociously hurdle in front of one's risk models. Risk models that failed to safeguard against risk when it mattered the most. Models that left many large hedge funds hemorrhaging - top funds which by definition were supposed to protect their investors in the August tumult. Instead when markets broke bad, a lot of things "went wrong"; and stayed that way.
When it comes to soliciting opinions, the NY Fed in general, and former Goldmanite Bill Dudley in particular, care about just one group of "advisors" - the Investor Advisory Committee on Financial Markets (a group created in July 2009 after the 2008 market crash) also known as the billionaires who run the country's biggest hedge funds, prop desks and PE firms, including JPM, Credit Suisse, Apollo, Blackrock, Blue Mountain, Brevan Howard, Tudor, Fortress, and lo and behold, David "Balls to the Wall" Tepper.
You can't say Nassim Taleb didn't warn you: the outspoken academic-philosopher, best known for his prediction that six sigma "fat tail", or black swan, events happen much more frequently than they should statistically (perhaps a main reason why there is no longer a market but a centrally-planned cesspool of academic intervention) just had a black swan land smack in the middle of the Universa hedge fund founded by ardent Ron Paul supporter Mark Spitznagel, and affiliated with Nassim Taleb. The result: a $1 billion payday, translating into a 20% YTD return, in a week when the VIX exploded from the teens to over 50, and which most other hedge funds would love to forget.
The US and world economies are frauds that are coming unraveled. The Greek bailout is the most recent example of “kick the can down the road” solutions. The US housing bubble was an attempt to cover up/recover from the dot-com bust. Now the US is in a financial bubble engineered to recover from the housing bubble debacle. Soon this bubble will burst. Only the date is unknown.
The Dow's volatility is dead... long live The Dow's volatility.
Uncertainty should not bother you. We may not be able to forecast when a bridge will break, but we can identify which ones are faulty and poorly built. We can assess vulnerability. And today the financial bridges across the world are very vulnerable. Politicians prescribe ever larger doses of pain killer in the form of financial bailouts, which consists in curing debt with debt, like curing an addiction with an addiction, that is to say it is not a cure. This cycle will end, like it always does, spectacularly.