Monday, May 10, 2010

Is It All That Bad? Really?

No BSing around. It is all that bad. Financial contagion brought on thru excessive debt loads caught up with the EU finally. Did they know it was this bad? Apparently Germany is the only group over there with any sense left not willing to throw more good money after bad. Bottom line is that if you owe $150 billion and can't pay that back, what good id it gonna do to loan them another $150 billion? Makes sense to me, but not to the global monetarist fascists that rule the world and have not completed their conquest of owning every asset on the planet good or bad. How do you solve what Greenspan called: "Most Virulent Global Financial Crisis Ever"?

Not one thing about this "rescue" package makes sense to me. Yeah, I get it. If they had not acted in this unprecedented manner then the global financial dominoes would have begun to tumble, and we would have had financial failure on such a scale that everything would have been lost. Well guess friggin what? Its gonna happen eventually. No amount of financial chicanery will stop this impending disaster from occurring. The days of entitlement are over. The days of structured debt to fund growth are gone. The days of the great consumer are behind us and will not return for many years.

So going into the weekend we all knew was Greece is in deep and the remaining PIIS were also in deep trouble including France and Japan (not mentioning various other nations). Zero Hedge provided (at they usually provide the most concise and comprehensive info found on the net) The European Crisis In Eight Simple Charts  that showed the extent of the problems with the PIIGS and from there you can do the math to get to the near $1 trillion bailout. They knew the others were coming, so they decided to all pony up and solve this in one gargantuan move. So the question I have begun asking, if the problems were so bad then why were we not notified of the severity prior to this? What brand of wool had they been pulling over our eyes for the past 6 months of this Greek drama? Something tells me this Shakespearean tragedy will play out just the way he would have written it.

We started at what, $10 billion for Greece, and we end up with nearly a trillion to bail out the whole neighborhood? Someone has not been telling the truth. Mish has a nice post in which we find Voices of Reason in Sea of Insanity where Hussman, Whitney and others offer their not so glorious views of the bailout and what's coming down the road both here and abroad. It would be nice if we could trust the ratings agencies, but since at least one was apparently in on the scam (Moody’s Falls to Seven-Month Low After ‘Wells’ Notice) where can we turn for the truth? Ron Paul is apparently one of the few still pushing the Audit the Fed bill with any vigor. We absolutely must have at least transparency of what's happening within the Fed.

Problems here on the home front continue to mount as The Bankrupt Gets More Bankrupt (Fannie). The way Denninger translates part of the statement, ""We are entirely dependent on sucking off the public teat for our survival.  Should that end for any reason we will be instantly bust, as we do not earn enough money to pay the dividends and thus would be immediately in default."" Then you get into such issues as Will Silver (And Gold) Prices Rise Now that the Feds Are Launching Criminal and Civil Investigations Into Manipulation of the Silver Market? Add to that the issues of Social Security and Medicare funding, a basically bankrupt FDIC, insolvent (in reality if not marked to myth) banks, GSE's everywhere, states near bankruptcy, blah, blah, blah and we have the chutzpa to assist with (basically fully fund via opening the swaps window) this EU bailout? You gotta be kidding me? 

Maybe we're at a point it is all only window dressing now. Maybe my assumptions that I have had since the beginning of the blog are correct and one massive coordinated global default is the only way out. Kicking the can or extend and pretend might be just their way of buying more time while they plan for the inevitable. Do the math dear reader. However you stack the numbers paying the interest on all this debt is staggering enough. Making the principal payments will be near impossible, thus extending this disaster for decades is possibly the best case scenario. Bottom line is we need to start looking at our problems at home and stop being the global backstop or we'll be the next country on the global default chopping block and there ain't no one that can rescue the USA. 

UPDATE - Have to throw this one in from Jesse's Cafe American Trading in Hubris: Pride, Overreach, and the Inevitable Blowback and Consequences for this alone (not to mention the rest of the fine post), "I had a conversation this morning with a trader that I have known from the 1990's, which is a lifetime in this business. I have to admit that he is successful, more so than any of the popular retail advisory services you might follow such as Elliott Wave, for example, which he views with contempt, a useful distraction for the little guy, the same way that casino operators view most gambling systems except counting cards. He is a bit of an insider, and knows the markets internals and what makes them tick. I remember a time when some of the more obvious market shenanigans used to bother his conscience a little. But he is well beyond that point now." ROFLMAO. "Useful distraction for the little guy". Now that's funny!