I wanted to leave for some time away with
my family and not watch or observe the market or the ticker for a while. As a
result. I made it a point to stay away from screens, tickers, news outlets
and concentrate on just strengthening the family bond. Good luck with that!!!
I returned only to see that the entire
financial system is in the toilet and that everything that I had been warning
about is finally coming to light (I’m not happy about it). It looks
like Europe is indeed imploding as the Italian stock market and Italy’s
banks are being clobbered. The Dow Jones Industrial Average started to slide
when I left and it looks like it can’t seem to find the brakes. The
U.S. dollar is starting to rally after the debt deal announcement (As I also
had suggested it would) and it looks like the European Central Bank is now
borrowing a page out of Ben Bernanke’s book as it starts to buy bonds
and maintains a dovish tone towards interest rates.
As I write this, almost all major
currencies are down vs. the U.S. dollar and the U.S. stock markets are taking
a bath, taking the baton from the European session.
Did we really not see this coming
though? Let’s be real. The headlines and warning signs were there for
everyone to see so long as you bothered to look for them. Notwithstanding the
large sums of money being thrown at Europe’s troubled economies,
investors still cannot shake the fact that it won’t be enough. Greece
was saved by a whisker but it is now grasping at thread to try to keep from
falling off a cliff. Despite Italy claiming it has enough cash to meet its
obligations, the market isn’t buying it and is routing the nation as we
speak. Remember it wouldn’t be the first time that a European nation
has flat out lied about the state of its financial affairs. Remember too when
dealing with Italy we are dealing with a very crooked and corrupt government.
Who knows what to really believe. Let the tape be
your guide when observing Italy.
As for the United States, forget the
“soft patch” bullshit that you hear and read about. The U.S.
never got out out of the financial calamity that
gripped it in 2008. The numbers that you’ve seen signalling
growth since then were all manipulated to ease fear. The reality is that the
nation continued to bleed jobs and the number of people going underwater on
their mortgages increased. Home values showed a small bounce after the big
drop but the downtrend quickly resumed and shows no signs of letting up.
Let’s be real. Did anyone think
for a moment that the greatest recession since the great depression was going
to end as quickly as it snuck up on us? Be real for a moment. You don’t
fix decades of fiscal irresponsibility with a few short fixes and think that years worth of garbage collection would be resoled in less than a third of the time it took to reach
the breaking point.
I don’t want to be the bearer of
bad news but I am after all a realist and the reality is that no matter where
you look today you will see economic warning signs. Europe is on the verge of
break up and the single currency is closer to being labelled
a failed experiment. The United States has kicked the can further down the
road and has shown the world how politics and the lust for power always get
in the way of doing the right thing.
Gold tells the real story. The one true
currency in a basket of worthless junk paper is showing everyone who cares to
observe that all is not well in the world. Gold is telling those that bother
to look that there is a lack of faith in currently FIAT currency schemes and
that the house of cards upon which all paper money systems are based on is
starting to topple in the breeze.
So much happened during my time off that
it would take pages and pages of writing to try to make sense of it all. The
easier way to analyze it though is to simply skim the headlines, watch the
financial markets and conclude that despite all the
‘mumbo-jumbo’, nothing has changed.
Central banks are out of bullets, having
used them all up in the aftermath of the 2008 collapse. They have now turned
to making their moves in the currency markets as seen in Switzerland the
other day with their surprise intervention decision and as we are witnessing
now with Japan. Word is also starting to trickle down via the rumour mill that Bernanke might be considering another
round of easing because the first two had such a great impact on the U.S.
economy! This drop in equities and the slashing of wealth might just be the
triggering event that he needed to justify his widely anticipated move.
At the end of the day there is no
normalcy left in the financial sphere. When normalcy leaves, you get a market
running around like a chicken with its head cut off.