{"id":29981,"date":"2013-03-11T19:20:18","date_gmt":"2013-03-11T18:20:18","guid":{"rendered":"http:\/\/feedproxy.google.com\/~r\/SHTFplan\/~3\/WVLFlFw7-Io\/like-all-sleight-of-hand-games-it-cannot-continue-forever_03112013"},"modified":"2013-03-11T19:20:18","modified_gmt":"2013-03-11T18:20:18","slug":"like-all-sleight-of-hand-games-it-cannot-continue-forever","status":"publish","type":"post","link":"http:\/\/rinf.com\/alt-news\/breaking-news\/like-all-sleight-of-hand-games-it-cannot-continue-forever\/","title":{"rendered":"\u201cLike All Sleight-of-Hand Games It Cannot Continue Forever\u201d"},"content":{"rendered":"
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Spring is in the air, stock markets are driving higher than ever before, and happy days are here again.<\/p>\n

Or are they?<\/p>\n

\n

The\u00a0facts<\/strong>\u00a0are that last night Japanese machinery orders\u00a0fell<\/strong>\u00a013% in January, despite the Japanese government pledging to \u201cbeat deflation\u201d with new monetary operations (read: printing money) that has driven the Yen weaker by some 20% in the last couple of months. \u00a0That move started in December<\/em><\/strong>\u00a0and as such should have been reflected in January\u2019s order figures \u2014\u00a0if anyone believed it in Japanese business<\/strong>.<\/p>\n

They clearly don\u2019t.<\/p>\n

Then there\u2019s China. \u00a0They have a major property bubble problem, which is what always comes when you start printing cheap \u201cmoney\u201d (really credit) and allowing it to go into the real estate market. \u00a0In China\u2019s case it\u2019s built to the point of literal cities with nobody living in them. \u00a0That\u00a0will<\/em><\/strong>\u00a0eventually burst, and when it does you\u2019ve got trouble. \u00a0China has the \u201cluxury\u201d of having an effective command economy since they\u2019re a communist nation, but even that won\u2019t change the laws of mathematics.<\/p>\n

Finally we have Europe. \u00a0It\u2019s a basket case. \u00a0Europe has failed to deal with its banks, it has failed to deal with its budget deficits and it is still trying to find a way to \u201cpull forward demand\u201d to fill fiscal holes. \u00a0It\u2019s not working because it can\u2019t \u2013 the leverage was never taken out. \u00a0Not there and not here.<\/em><\/strong><\/p>\n

We\u2019re \u201cprinting\u201d $85 billion a month and yet can only muster a 0.1% GDP print? \u00a0Let\u2019s assume we manage to \u201crebound\u201d and get a 2% GDP number. \u00a0We\u2019re diluting purchasing power by ~8% annually!<\/em><\/strong> Where is that going? \u00a0Right into the middle class and below\u2019s pocketbook; like a thief in the night it comes and steals their buying power and that\u00a0ultimately<\/em><\/strong>\u00a0has to reflect in what they purchase \u2013 and thus what people sell.<\/p>\n

There are those who argue that the housing market has \u201cturned.\u201d \u00a0Really? \u00a0Look at Las Vegas<\/em><\/strong>, where there are tens of thousands of homes sitting with people in them\u00a0who haven\u2019t made a mortgage payment in three years!<\/em><\/strong><\/p>\n

\u2026\u00a0The key question:\u00a0Is this a stable environment or is it another bubble that will bust when cap rates fall? \u00a0And if the latter, and you erroneously bet on a \u201chousing recovery\u201d, are you going to get reamed\u00a0twice\u00a0in a decade?<\/strong><\/p>\n

\u2026<\/p>\n

In short what we have here is a market that is levitating upward not due to an improving macro environment but rather due to Fed monetary games. \u00a0This can and has worked for a while, but like all sleight-of-hand games it cannot continue forever, and won\u2019t.<\/span> \u00a0The structural imbalances that have been built over the last four years set the table for a snapback move\u00a0worse than\u00a0<\/em><\/strong>2008.<\/p>\n

This morning CNBS is playing a card that we \u201cshould\u201d put forward fiscal policy mirroring The Fed\u2019s views.\u00a0\u00a0These clowns actually believe that the laws of mathematics have been repealed?<\/em><\/strong><\/p>\n

Give me a break. \u00a0The guy who decides he doesn\u2019t need more than 2 hours of sleep a night and starts shoving coke up his nose to achieve that outcome may indeed produce more work with less sleep and\u00a0appear<\/em><\/strong>\u00a0to be more productive.<\/p>\n

For a while.<\/p>\n

But eventually he has a heart attack, and the question becomes this:\u00a0What are you going to do when you collapse due to the abuse you have heaped on your body and now are able to produce nothing?<\/strong><\/p>\n

Our economy is experiencing chest pains and rapidly-escalating amounts of coke are going up the nose on a daily basis.<\/strong><\/em><\/p>\n

Source: Karl Denninger\u2019s Market Ticker<\/a><\/em><\/p>\n<\/blockquote>\n

Fundamentally, nothing has changed since 2007. The only thing keeping the stock market rising and the economy seemingly stable is the literal Trillions of dollars of funny-money being slammed into the system on a regular basis. They did it in the U.S., in Europe and in China.<\/p>\n

As Karl Denninger points out, this is akin to a cocaine addict continuously snorting to maintain their high. It always ends badly for the addict, as it will for us.<\/p>\n

There is a strong chance that we see a stock market crash, or at the very least a massive correction, in coming weeks or months.<\/p>\n

But, there is also the possibility that it keeps going higher, an effect of the Fed\u2019s monetary easing and cheap money being given to banks who then leverage that money in stocks and other financial instruments. In this scenario, as we\u2019ve seen since 2008, prices for essential goods continue to rise. What won\u2019t rise is wages commensurate with the price inflation, which means that things like food, gas, and electricity become so expensive that disposable income shrinks to near zero (or goes negative) for the majority of Americans.<\/p>\n

There is no way out.<\/p>\n

All roads lead to a detonation of the financial, monetary and economic systems as we have come to know them.<\/p>\n

<\/object>
(Watch at Youtube<\/a>)<\/small><\/em><\/p>\n

When the economies of the world\u2019s \u2018super regions\u2019 finally collapse, and hundreds of millions of people are left destitute and with no hope of recovery, the end result may very well be nuclear engagements<\/a>\u00a0across the globe.<\/p>\n<\/div>\n

Subscribe to our newsletter<\/a><\/div>\n
\n

Author:<\/strong> Mac Slavo
Views:<\/strong> Read by 1,388 people
Date:<\/strong> March 11th, 2013
Website:<\/strong> www.SHTFplan.com<\/a><\/p>\n

Copyright Information:<\/strong> Copyright SHTFplan and Mac Slavo. This content may be freely reproduced in full or in part in digital form with full attribution to the author and a link to www.shtfplan.com. Please contact us for permission to reproduce this content in other media formats.<\/p>\n<\/div>\n

Comments (21) – Join the Discussion<\/a><\/strong><\/div>\n
\n
The Ultimate Preparedness Library (Ad)<\/a><\/div>\n
Will The Government Seize Your Food? (Ad)<\/a><\/div>\n<\/div>\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

\n
\n\n\n
\n\n<\/td>\n<\/tr>\n<\/table>\n<\/div>\n
\n

Spring is in the air, stock markets are driving higher than ever before, and happy days are here again.<\/p>\n

Or are they?<\/p>\n

\n

The facts<\/strong> are that last night Japanese machinery orders fell<\/strong> 13% in January, despite the Japanese government pledging to “beat deflation” with new monetary operations (read: printing money) that has driven the Yen weaker by some 20% in the last couple of months.  That move started in December<\/em><\/strong> and as such should have been reflected in January’s order figures – if anyone believed it in Japanese business<\/strong>.<\/p>\n

They clearly don’t.<\/p>\n

Then there’s China.  They have a major property bubble problem, which is what always comes when you start printing cheap “money” (really credit) and allowing it to go into the real estate market.  In China’s case it’s built to the point of literal cities with nobody living in them.  That will<\/em><\/strong> eventually burst, and when it does you’ve got trouble.  China has the “luxury” of having an effective command economy since they’re a communist nation, but even that won’t change the laws of mathematics.<\/p>\n

Finally we have Europe.  It’s a basket case.  Europe has failed to deal with its banks, it has failed to deal with its budget deficits and it is still trying to find a way to “pull forward demand” to fill fiscal holes.  It’s not working because it can’t — the leverage was never taken out.  Not there and not here.<\/em><\/strong><\/p>\n

We’re “printing” $85 billion a month and yet can only muster a 0.1% GDP print?  Let’s assume we manage to “rebound” and get a 2% GDP number.  We’re diluting purchasing power by ~8% annually!<\/em><\/strong>  Where is that going?  Right into the middle class and below’s pocketbook; like a thief in the night it comes and steals their buying power and that ultimately<\/em><\/strong> has to reflect in what they purchase — and thus what people sell.<\/p>\n

There are those who argue that the housing market has “turned.”  Really?  Look at Las Vegas<\/em><\/strong>, where there are tens of thousands of homes sitting with people in them who haven’t made a mortgage payment in three years!<\/em><\/strong><\/p>\n

… The key question: Is this a stable environment or is it another bubble that will bust when cap rates fall?  And if the latter, and you erroneously bet on a “housing recovery”, are you going to get reamed twice in a decade?<\/strong><\/p>\n

…<\/p>\n

In short what we have here is a market that is levitating upward not due to an improving macro environment but rather due to Fed monetary games.  This can and has worked for a while, but like all sleight-of-hand games it cannot continue forever, and won’t.<\/span>  The structural imbalances that have been built over the last four years set the table for a snapback move worse than <\/em><\/strong>2008.<\/p>\n

This morning CNBS is playing a card that we “should” put forward fiscal policy mirroring The Fed’s views.  These clowns actually believe that the laws of mathematics have been repealed?<\/em><\/strong><\/p>\n

Give me a break.  The guy who decides he doesn’t need more than 2 hours of sleep a night and starts shoving coke up his nose to achieve that outcome may indeed produce more work with less sleep and appear<\/em><\/strong> to be more productive.<\/p>\n

For a while.<\/p>\n

But eventually he has a heart attack, and the question becomes this: What are you going to do when you collapse due to the abuse you have heaped on your body and now are able to produce nothing?<\/strong><\/p>\n

Our economy is experiencing chest pains and rapidly-escalating amounts of coke are going up the nose on a daily basis.<\/strong><\/em><\/p>\n

Source: Karl Denninger’s Market Ticker<\/a><\/em><\/p>\n<\/blockquote>\n

Fundamentally, nothing has changed since 2007. The only thing keeping the stock market rising and the economy seemingly stable is the literal Trillions of dollars of funny-money being slammed into the system on a regular basis. They did it in the U.S., in Europe and in China.<\/p>\n

As Karl Denninger points out, this is akin to a cocaine addict continuously snorting to maintain their high. It always ends badly for the addict, as it will for us.<\/p>\n

There is a strong chance that we see a stock market crash, or at the very least a massive correction, in coming weeks or months.<\/p>\n

But, there is also the possibility that it keeps going higher, an effect of the Fed’s monetary easing and cheap money being given to banks who then leverage that money in stocks and other financial instruments. In this scenario, as we’ve seen since 2008, prices for essential goods continue to rise. What won’t rise is wages commensurate with the price inflation, which means that things like food, gas, and electricity become so expensive that disposable income shrinks to near zero (or goes negative) for the majority of Americans.<\/p>\n

There is no way out.<\/p>\n

All roads lead to a detonation of the financial, monetary and economic systems as we have come to know them.<\/p>\n

(Watch at Youtube<\/a>)<\/small><\/em><\/p>\n

When the economies of the world’s ‘super regions’ finally collapse, and hundreds of millions of people are left destitute and with no hope of recovery, the end result may very well be nuclear engagements<\/a> across the globe.<\/p>\n<\/div>\n

Subscribe to our newsletter<\/a><\/div>\n
\n

Author:<\/strong> Mac Slavo
Views:<\/strong> Read by 1,388 people
Date:<\/strong> March 11th, 2013
Website:<\/strong> www.SHTFplan.com<\/a><\/p>\n

Copyright Information:<\/strong> Copyright SHTFplan and Mac Slavo. This content may be freely reproduced in full or in part in digital form with full attribution to the author and a link to www.shtfplan.com. Please contact us for permission to reproduce this content in other media formats.<\/p>\n<\/div>\n

Comments (21) – Join the Discussion<\/a><\/strong><\/div>\n
\n
The Ultimate Preparedness Library (Ad)<\/a><\/div>\n
Will The Government Seize Your Food? (Ad)<\/a><\/div>\n<\/div>\n<\/div>\n

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