Tuesday, February 23, 2010

Shit + Fan = Huge Mess

It is always nice to be able to see the train coming and not have to suffer a blind side crash. In this case that light at the end of the tunnel (no, don't go towards it) is the global financial default coming on the express route to a country near you.

I suggest you watch Mob Madness - Greece on YouTube to get a glimpse of one reporter's views and opinions of the troubles they face and the building anarchy on the streets there. This country is being ripped apart from core. They are so far in debt that even if bailed out they could not pay that off. This is what the EU knows. This is why they have not spent a penny on solving the problem. Finally, the situation may be clear to the lords of finance. The monster of debt created by the beast of cheap credit, corruption and extremely loose global liquidity can not be fed anymore. We are out of food and have one hungry monster (the banks) that want to be fed.

Here is a glimpse of why our nation is enacting the unthinkable limits on demand deposits (see Citigroup can limit demand deposit withdrawals and money funds can too). You see. it is not such A Wonderful Life. We have taken the red pill and are stuck on a bad trip to Pottersville. The big bad bankers have looted all your money and now the sumbitches don't want to give it back in the form of credit or in the form of cash. In a rare glimpse of what will (not may) be coming our way in the near future is Greeks Scramble To Pull Out €8 Billion From Local Banks As Greece Responds With Money Control Measures. "This represents over a quarter of the money held by private banks in the country. This also represents about €400 billion in total money leaving the system courtesy of fractional reserve banking and the money multiplier. Yet the worst news for Greeks: money controls are coming".  If you need to read that two or three times to get it to sink in go ahead.

How can I so boldly say this is coming our way? Cause we are now in full debt monetization mode. In ZH's Charting The Indrect Bidder Hit Ratio After Today's 100% Result, And Anticipating A Surge In Brand New SFP Issuance you get, "This SFP news is relevant because today's Indirect Hit Ratio demonstrates that the "sales" of $195 billion in new SFP bills will merely go to Primary Dealers and whoever the increasingly less mysterious Direct Bidder is, as Indirects phase out all Bill interest altogether." Monetization of debt. We are printing money to support out debt payments. Whooo Whooo - hear that train whistle. It is calling. It is empty now. All the passengers got off. We are the only ones buying our debt now. How long till the big money grab starts and countries (well, China already is) start cashing out? Uh, folks, the system was not designed nor ever intended to experience a cashing out. That is where global default comes into play. Anyone care to take a peek at the National Debt Clock?

It wont be long till the PIIGS all start falling apart (really every debtor nation globally). They will all topple one by one from the overload of debt created by zero regulation and a corrupt and greedy banking system. It is surreal cause you are able to see it all happening in slow motion in real time. Denial is not a river in Egypt. Denial is the state that most of us are living in. This can't be happening. This is not real. It can not happen here. Sorry folks, it is real and that train is coming. It is big, heavy and at this point futile to try and stop. It will rip its way across the globe causing all sorts of devastation and destruction. Not until that train is derailed will we have any sort of recovery.

Maybe we are not in denial. If the Consumer Confidence Survey is accurate at all maybe we are waking up. Mish does a nice job with Consumer Confidence Plunges To 46, Lowest Since April; Current Conditions Lowest Since 1983 "Housing has stalled with another leg down coming, jobs are pathetic, taxes are headed higher, and debt levels are unsustainably high. Pray tell what is there for consumers to be optimistic about?" (What is really funny is at the beginning of all this mess in 2007 I used to read Mish and get depressed. Glad I don't have to read my own stuff LOL.) And from Rasmussen Reports 73% Agree That Washington Is “Broken” and Obama's approval rating is .... -19. That is really, really bad for the man from HOPE and CHANGE.

Wake up people. Get involved. Force the issues. We need massive amounts of regulation first and foremost. Then all you will be able to do is hang on till that train has done all the damage. We'll come out of the rubble and rebuild. What America will look like will be anyone's guess? We'll be OK in the long run as we always are, but some really tough times are ahead. Whooo Whooo. 

Take care.