Making short-term economic “predictions” is nearly impossible in the least volatile of times; as simply put, there are too many variables – known and unknown alike – to guess what will occur in a world of seven-plus billion people. Let alone, when the so-called “markets” that theoretically “discount” such factors is manipulated beyond recognition – causing not only dramatic mispricing of entire asset classes, but economic “deformations” with far-reaching, historically destructive ramifications. And heaven knows, the role of the Miles Franklin Blog is not to “advise” you regarding short-term “trading” ideas; but to the contrary, to educate of the immutable, irreversible issues facing the financial world in the coming years. The most important of which, is the inevitable – and in my view, imminent – collapse of history’s largest, most destructive fiat currency Ponzi scheme.
In that context, today’s unique “perfect storm” of factors made it nearly impossible for alternative realities to the forecast made in my MUST HEAR Audioblog from December 30th, 2014 – “2014 review, and 2015 predictions.” This morning, I looked up its text in reference to this weekend’s historic Catalonian “secession referendum” – which frankly, could not have more loudly echoed my December 2014 prediction titled “revenge of the people,” following the initial, “non-binding” Catalonian referendum…
“Even I was taken aback by the rapid fire series of anti-government referendums in the year’s final four months, from Scotland to Catalonia, to Switzerland, Japan, and Greece. However, given the expanding pace of global economic contraction, I expect revolutionary movements – in most cases peaceful – to explode upon the scene in 2015; even in places as “civilized” as France and Italy. At some point, one or more of these referendums will have cataclysmic global ramifications – be they in Greece or elsewhere.”
Well, yesterday’s Catalonian Parliamentary election – which I’ll get to in a moment – certainly fit the bill of a referendum with potentially “cataclysmic global ramifications”; and it remains to be seen if it will indeed be “peaceful.” But before I get to it, here are the other predictions I made at year end, along with comment of how they have fared.
1. Retail (spending) Armageddon – U.S. retail spending down nearly every month this year, with the potential for the worst holiday season since 2008.
2. Return of the PIIGS – Greece on the verge of collapse; Portugal right on its heels; and Catalonian uncertainty setting the stage for a Spanish economic implosion.
3. First signs of Yen hyperinflation – the only prediction not yet correct, as the Yen is essentially unchanged (at multi-year lows) this year. That said, I certainly get points for “Abenomics” being indefinitely extended; as Japan moves into yet another recession; with its largest ever trade deficit; and parabolically growing debt
4. Oil collapse contagion – You ain’t seen nothing yet!
5. Mining industry paralysis – You really ain’t seen nothing yet! Just wait for the year-end – and in some cases, third quarter-end – asset write-downs and associated financial distress.
6. Falling commodity prices – You really, really ain’t seen nothing yet.
7. Collapsing currencies – Global trade weighted currency index at an all-time low, with the real pain to commence once Central banks/governments lose control of stock markets entirely, causing worldwide panic conditions.
8. Revenge of the people – The Greeks voted to end austerity, and the Catalonians to secede. And just wait for Spain’s December Prime Ministerial election.
9. The Re-emergence of real money – You wouldn’t know it based on dollar-priced paper markets. That said, global physical demand is at an all-time high, inventories at an all-time low, and paper prices in the vast majority of currencies in raging bull markets.
In other words, whilst said manipulators take their Alamo-like “last stand” – in both the West and East – “Economic Mother Nature” and her “unstoppable tsunami of reality” are swamping their best efforts. And I do mean best efforts – as at this point, the kitchen sink itself has been thrown into the manipulative support of “favored” assets like stocks, bonds, and commodities; and conversely, suppression of financial “enemies of the state” like gold and silver. As a result, seven billion global denizens are suffering greatly – with far greater “pain” to come, for both them and future generations. And looking at stocks, commodities, and currencies in freefall mode again this morning – notwithstanding the PPT’s desperate, relentless attempt to limit U.S. weakness; and the Cartel’s to prevent paper gold and silver to replicate the experience of the physical markets; and it becomes quite clear the “end game” is at hand.
To that end, I cannot emphasize enough what I wrote of in this weekend’s Audioblog, “seminal events in a collapsing global economy.” In it, I cited several specific “mega-horrible” headlines with the potential to go “parabolically bad” in the near-term. And by this morning’s news and market action, it appears the “near-term” is NOW. Regarding the potential bankruptcy of Brazilian state-owned oil company Petrobras, plunging oil prices and a collapsing CRB index make it less and less likely it will be able to service its mammoth $134 billion debt load much longer. To that end, the world’s largest commodity trader, Glencore, whose desperation to service its $93 billion of debt (and who knows how much “off-balance sheet”) could cause it to sell perhaps billions worth of futures contracts, is watching its stock implode 25% this morning alone; as commodity prices – from copper, to zinc, aluminum, lead, steel, iron ore, coal, and even agriculturals are vanishing in 2008-like fashion, enroute to their 2008 lows and beyond. And oh yeah, half of all the world’s silver production is byproduct from copper, lead, and zinc mines. Gee, I wonder what impact that might have on a market already in dire shortage condition.
As for Greece, this morning’s additional 6% plunge in the National Bank of Greece’s stock, to a new all-time low, portends a relatively near-term “rekindling” of the simmering financial crisis that will inevitably – and in my view, imminently – yield its “guaranteed Grexit” from the Euro; repudiation of a real debt load of $600+ billion; and subsequently, a PIIGS contagion that takes down the entire European Union. Regarding Volkswagen’s “Diesel-gate,” a further plunge in German stocks – the DAX Index is down 23% in the past four months alone – illustrates exactly where Europe’s “strongest” economy is going – and exactly why it will be forced to “give up” trying to support “weaker links” like the PIIGS, in short order.
Regarding Catalonia, don’t for a second believe yesterday’s decided vote for secession was expected – in the mainstream, that is. As recently as Saturday – i.e., 24 hours before the vote – mainstream European media didn’t think the Catalonians had the cajones to do it; just as they didn’t think the Greek’s would vote “OXY” back in July. But lo and behold, with a stunning 78% of the Catalonia electorate turning out to vote – to the point that they ran out of ballots – the two secessionist parties, Junts Per Si (“Together for Yes”) and CUP – won a combined 72 seats of the 135 seat Catalonian Parliament, or 53%, along with 50% of the popular vote – whilst Spanish President Mariano Rajoy’s “People’s Party” (LOL) won just nine. In the historic vote’s aftermath, it is widely expected the Junts Per Si and CUP parties will work together to get Catalonia independent “within 18 months,” according to Catalonian Parliamentary President Artur Mas. And ominously, the Spanish government has vowed to fight the secession movement to its bitter end. Which is why it remains to be seen how “peaceful” this movement turns out to be. Let alone, similar movements in volatile, economic wastelands like Greece – you know, where the “Golden Dawn” neo-Nazi party showed extremely strongly in last week’s “snap elections.”
Ten months ago, when the initial Catalan secession referendum was voted upon, the Spanish government marched in at the last second to declare it “non-binding.” After an 81%-4% victory for the secessionists – again, amidst mainstream calls for the measure to be unsuccessful – I wrote “Catalon-astrophe” to describe the potentially horrific political, economic, and social ramifications when said “unbinding” vote eventually morphed to “binding” – and eventually, a done deal. In it, I espoused…
“Don’t for a second ignore the potentially catastrophic ramifications if the Catalonian secession movement gains momentum – which surely it will, following yesterday’s exclamation point of a vote. As the fiat Ponzi scheme moves through its terminal stage, the House of Cards is starting to splinter. And eventually – perhaps in dramatic fashion – it will come crashing down.”
Well, per the dramatically pace my “2015 predictions” have been realized, it couldn’t be more obvious said House of Cards is splintering NOW, for the entire trembling world to see. And with Spain itself headed for a potentially equally cataclysmic Prime Ministerial election in just three months – with the “anti-austerity”, “anti-Euro” Podemos Party strongly challenging Rajoy’s Brussels lackeys – don’t be surprised if Spain itself becomes a Greek-like political and economic wasteland. Not to mention, as its propagandized economic “recovery” has been among the world’s weakest.
And remember, Catalonia – whose capital is Barcelona – is the wealthiest province in Spain, accounting for roughly 19% of total Spanish GDP, and a whopping 25% of tax revenues. Putting its impact on Spain in perspective, the three States contributing the largest percentages of U.S. GDP are California, Texas, and New York – at 13%, 9%, and 8%, respectively. In other words, it would be unequivocally catastrophic for Spain – in losing not only Catalonia’s massive GDP contribution, but the nation’s wealthiest, highest tax-paying citizens. And remember, there’s a reason why Spain is included in the same “PIIGS” category as Greece – as its economic and financial situation is as ugly as any in Europe; and far worse than when said designation was created.
Let alone, as we are heading into the worst economic environment of our lifetimes; with the European Union itself under attack – from “horrific” issues as diverse as Catalonia; Greece; “Diesel-gate”; a burgeoning immigration crisis; potential military conflict in the Middle East; and of course, the massively failing “NIRP” and “QE” programs that must grow exponentially larger to avert instantaneous financial collapse. In other words, the question you should be asking yourself is not if Catalonia will secede from Spain, but who’s next?
Meanwhile, following the 116th “Sunday Night Sentiment” paper raid of the past 119 weekends; and 518th “2:15 AM” EST attack of the past 592 trading days; the aforementioned, soon-to-be-historic physical metals shortage – particularly in silver – will likely become that much more acute, to the point that eventually, “there will be no silver and gold left, and it will be too late” to PROTECT YOURSELF.
