Friday, September 9, 2011

Morning Update/ Market Thread 9/9 - “Other Events” Will Produce Change Edition…

Good Morning,

Markets are tumbling once again today, the dollar is rising strongly, the euro is falling, bonds are rising, oil is down, Gold & Silver are down, and food commodities are holding their elevated position a little too stubbornly.

The big plan out of the President was rumored to be $300 billion, then it became $400 billion, then $447 billion… Whatever, it’s simply more of the same with no real way to pay for any of it. The pace of number expansion, while huge, is meeting stiff political resistance making the odds of actually seeing this pass much lower than the $700 billion TARP. Note that the emergency atmosphere isn’t anywhere near the point of TARP passing with threats of end of the world and Paulson water boarding politicians Dick Cheney style. No, it’s going to take a much greater emergency to get this passed, and the truth is there are actually parts of it that would be much more effective than just giving taxpayer money to the banks – not that I’m saying it would be effective, but at least you might get a school renovation or two out of it before the empire collapses.

And collapse it will – all exponential things collapse, and we are defined by our money.

Speaking of money, yesterday the update to M2 was released showing that it had grown by another $30.4 billion in just the past week. Note that since 1980, only 30 years, that M2 has expanded 6.3 times what it was. That amounts to a non-compounded annual rate over 31 years of “growth” (inflation) of 20.4%:



Just look at the effect on the Money Multiplier – all by itself this chart is telling you that debt saturation has occurred. The Multiplier and Velocity diminish because new money must be used to service the debt and therefore does not circulate, it simply returns back to the bank to service prior loans:



And when you look at the Monetary Base, it has risen about 13.5 times since 1980, equaling a non-compounded 43.5% rate per year over the past 31 years. Oh yeah, the “Fed” is all over that stability mandate:



But the Debt Saturation becomes very clear when you look at the base money and overlay the Mean Duration of Unemployment over top. The correlation cannot be denied, and I’m sure that if the basic unemployment statistics weren’t so skewed that they, too, would match these charts:



As I’ve been saying for years now, the math is impossible, it is growing exponentially, and all exponential systems collapse. This one will be no different, the physical world demands that it happens, you cannot fool math nor Mother Nature with financial engineering and accounting fraud – at least not forever.

And thus it’s safe to say that “other events” are coming. Are you scared? The boogyman ghost of 9/11 is threatening you know! Better spend a few hundred billion more that you don’t have. Maybe a few more false pretense wars for good measure, yeah, that’ll save us all.

Those who know what’s real and what’s not are not scared. They do not participate in the criminal’s “markets.” They don’t hang out on Wall Street. But those nasty “other events” can and will affect us all, that’s why in the end it will pay for those who got real.

Those “other events” are well in motion if you are paying attention. Of course Europe is crumbling with “other events” spinning out of their impossible math tornado, and as I look at my local county newspaper this morning, it is running a headline that reads “Officials chase unconfirmed al-Qaida bomb plot.” Not only that, but there’s another article discussing how 500 Longshoremen in Longview, Washington are resorting to their own "other events:"
Early this morning in Longview, hundreds of Longshore workers stormed the port, overpowered security guards, damaged rail cars and dumped grain at the center of a labor dispute that has spread to other ports in the state, officials said.

Six guards were detained for a couple of hours after 500 or more Longshoremen broke down gates about 4:30 a.m. and smashed windows in the guard shack, said Longview Police Chief Jim Duscha.

No one was hurt, and nobody has been arrested. Most of the protesters returned to their union hall after cutting brake lines and spilling grain from a car at the EGT terminal, he said.

When was the last time you heard of wildcat strikes that included kidnapping guards? Evidently this storming of the facility was in response to seeing their labor union leader being hauled off by police who are doing the dirty work of management – and don’t even realize how they are being used. Sounds kind of like the 1930s, doesn’t it? There are a lot of parallels, only this time it’s far worse – the math was fixable then, it is no longer, at least not within the central banker box that we’ve all lived our lives in. A new box is coming.