Forget the details and the specifics... here's the latest news you need to know about.
Europe is bankrupt and the EU will not exist in its current form within 12 months. The ECB tried to "bailout our way to success" strategy on some of the more minor players (Greece), but is now finding that there isn't actually enough money to bail out the larger players (Spain and Italy).
So, barring a leveraged buyout of Italy by Germany and China, the EU will be breaking up and the Euro collapsing within the next 12 months. How this will happen remains to be seen (the EU splits into two sections? Is done away with altogether? Etc). But the facts remain that the EU has reached the end game for bailouts (you cannot bail out entire countries).
The last straw of hope that the bulls are clinging is China's recent decision to actively buy EU member states' sovereign debt. Those of us who recall China's decision to buy Morgan Stanley in 2008 can't help but wonder if the country has never heard of "due diligence" or if it simply doesn't care about losing money.
Speaking of China, the People's Republic is finding out that the Republic made $540 billion worth of loans to the people that:
1) Have not been accounted for
2) Are properly garbage and won't be paid back
We all know how this scheme ends (see subprime collapse in US). However, given that China pretty much makes up its economic data, it's pretty safe to assume that the bad loan situation there is even worse than Moody's believes. So look for a "2008 type" bust in China in the coming months.
And then of course there's the US: the current least horrendous disaster winner by default (literally in Europe's case and metaphorically in China's case). Congress continues to play "debt talk" phone tag with President Obama.
The Fed must literally be about to pee itself.
The $600 billion in QE 2 bought at best roughly three months' worth of improved economic data. Granted, it was heavily massaged economic data (US economic data is now largely a work of fiction), but for simplicity's sake, we'll say that the Fed got roughly one month's worth of improved economic data for every $200 billion it spent.
However, QE 2 ALSO blew up food and energy prices up: between 2010 and 2011 gas rose 33% while ground beef, cheese, and vegetables were all up in the double digits as well.
So the Fed needed things to cool down a bit. So they allowed QE 2 to end. Of course, Bernanke juiced the market one final time to the tune of $76 billion, probably hoping that the market would buy his bluff and believe that things might hold up without Fed juice.
But the market didn't. Instead, the markets have begun to implode proving beyond any doubt that the Fed was the primary support behind the stock market rally.
So here we are today. The US economy has very clearly fallen off a cliff. The Fed already has a $2.8 trillion balance sheet (larger than the GDP of France, the UK or Brazil). Announcing QE 3 would mean creating an inflationary disaster. And NOT announcing QE 3 means a market collapse and very likely another 2008 scenario.
So it's literally "pick your monetary poison."
However, in the end, regardless of how we get there, QE 3 will come. The reason for this is that EVERY Fed move since the Financial Crisis began has been aimed at propping up the large Wall Street banks who continue to remain insolvent due to their TRILLIONS in derivative exposure.
When it comes between screwing the taxpayer vs. triggering a systemic implosion that will destroy the banking oligarchs, the Fed has taken option #1 EVERY TIME. They've already done it to the tune of $4 trillion (at the bare minimum). They'll do it again.
Why?
Because letting the banks collapse means hitting "reset" on the entire financial system (at least temporarily). Wall Street as at minimum over $200 TRILLION in derivatives sitting on its balance sheets. And the Fed will do anything it can to try and contain this disaster. That includes kicking the US Dollar off a cliff and screwing US consumers.
Comment:
As predicted, things just keep getting worse. Based what Mr. Graham writes in his articles, and the way he says it, maybe I should give him a call about becoming an Official Supporter?LOL
I assume most of you have noticed that gas prices are creeping up a bit again. Is this due to inflation? Market prices? Short supply? Not this time. The oil companies can't deny it this time. It's greed. No other reason is possible. Why? What month is this? Why July, of course.
July is America's most popular month for vacations. People tend to travel more in July than any other month, except November at Thanksgiving, and the prices creep up a bit then as well.
With all the traveling going on, whether it's by car, train, or plane, the oil companies always cash in. It's what Judeo-Capitalists do best. To them, profit is always the bottom line. Even so-called public transportation is becoming very expensive.
Comrades, a total collapse is inevitable. The only thing we can do at the moment is be as ready as possible. A good disaster preparedness kit isn't just for hurricanes and earthquakes. I have mine. You should have yours as well.
Dan 88!
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