Credit gamesmanship is coming to a screeching halt all over the world. Mr. Bernanke testified yesterday and offered nothing to prop the markets. In our view those hearings, that venue, was not the time nor the place to be discussing rate cuts with a passel of political fools with an agenda. Mr. Bernanke is not politically stupid and we can assure you he has a strategic plan to save the immediate world as we know it. His plan will probably work for the shorter view, but his Achilles Heel, and he knows it, is a massive loss of confidence in the world's bond markets. Like a broken record, we have been saying this for years as we watch this pathetic and sad spectacle by central bankers and government planners to promote and keep their doomed old-timey paradigm in play.
Our forecast says they get away with it piecing together this mammoth credit mess with chewing gum and bailing wire one more time. However, by the fall, or sooner if someone out there steps on a trip wire, or is dive bombed by an unrecognized Black Swan, this crazy insane game of credit musical chairs comes to an abrupt halt. One of our top European fund manager friends says it all ends with American consumers when their plastic spending existence is cut-off. Anyone with half a brain who can read history books knows what the ending looks like and it is not a pretty one. We watch daily while shopping as pathetic creatures put tiny purchases of pop, gum and other junk on plastic in stores. Why? Not because it's convenient but because they are broke and their cards are the last way they can buy anything to get through the day. What happens when we have an American bank run and ATMs are shut down? What happens if convenience stores have to operate, at least for a few days, on cash only? Our local gas station had a computer glitch for two days and this happened. It was cash only for fuel and lots of folks were very upset.
Worse yet, what happens when our current unannounced inflation rate of 11% turns into 20%? 30% or hyperinflation at 50%? That is when we'll see martial law and government appropriation (call that theft) of private property to feed the masses and keep a lid on riots. This is not idle speculation. Watch what is happening in the worst, broken nations in Europe like Spain, Greece and other places in southern Europe and those facing similar troubles in South America. It is not the end of the world and these messes will eventually end, but who wants to go through this with your economic hands tied behind your back? Who wants to be at the mercy of bureaucrats who have one goal; and that is take your stuff, your money and hold onto power?
The credit rubber bands were stretched too far and too thin. Now we are near D-Day, also known as Debt Day when this pack of fools must face the supreme religious experience; that of what shall we do when no one can buy our crummy toxic bonds? The debt shuffle in Europe is growing exponentially with Spain pleading on its knees for $40 billion by this weekend. They tried to tell the immediate world they did not need to borrow and they desperately wanted to keep the iron hand of the IMF out of their credit life, but they can no longer hold out. The Big Boy Banks in America, Asia and Europe will not do business with Spain offering any kind of loans, currency exchange, bonds or other marvelous tricky means of inducing a handout for El Toro. The handwriting is on the wall and it says insolvency in foot high letters.
As we reported in Trader Tracks Newsletter today, Spain's leaders and others in the know have told us there is not enough money on the face of this earth nor in the ECB banker's credit paper till to cover the Spanish credit mess. One report said they need $112 Billion to cover and that was their statement; the truth is probably more like $300 billion. This not in the least amusing and these dumbos running this central banker circus had better get busy and very fast, or they will be standing on the corner in tears muttering to themselves wondering what happened.
Bloomberg analysts this morning were speculating that we might see a coordinated global bailout effort hit all the markets at once. We don't think so as this, while seemingly positive in tone, could have other kinds of market-disrupting implications. It's not nice to fool with Mother Nature, or the stability of a global credit and trade system wired together with lightening fast computers and village idiots. Further, how would it be possible to gain approval with so many global players involved? Germany is readying its plans to dump the euro and Euroland with a graceful exit taking as little with them when they go, as far as credit obligations for the broken others. Drudge News said today Obama could not gain any help from Germany's Mrs. Merkel. Do you really think she cares what he wants, or thinks? Not a chance.
Rather, we see these banker-people drib-drabbing on the edges as they have done before offering specious promises and not much real help in the way of extending credit as they don't have any left. Further, they have no enthusiasm for lending more under current conditions. Spain sold a pathetic $2.6 billion in new paper yesterday at some improbable loan shark rates. But it won't matter anyway as the terms were certainly just moving credit from one broke pocket to another broke pocket. Somebody is going to have to step-up RIGHT NOW and help Spain. We say it's the IMF and it will demand Spain's gold for collateral in return so they can steal it when the loans fail, as they surely will. That gambit should put the lid on this conflagration for at least another 90 days, or so as they all chortle in unison that things are fine. Not only are they not fine, but they are indeed dire. We say the central banker plan is doomed and has been for 25–30 years. All that's left is to play out the nasty ending.
It is our contention that the fourth quarter of 2012 and the first quarter of 2013 have the potential to turn into the worst, imaginable nightmare on Elm Street. Fraudsters in all political parties are maneuvering to steal the election by hook, or by crook attempting to scramble and grasp onto global power. Both parties want their hands on the taxpayers punch bowl because they know this could be their last chance for implementation of supreme grand theft for many years, or maybe forever. This is the way psychopaths think and the world's capitals are full of them.
Like the NASDAQ that was sacrificed on the altar of "Save The Big Markets" in the year 2000, the little nations and little people of this world will pay the price first. Ireland, Greece and Iceland were the first in line in Europe to fall. Next the numbers of credit-dead nations will pile-up like a train wreck. We liked Iceland's response when it told its creditor Eurobankers to go to hell. Those scammers made a bad loan, earned some interest and could not be paid back. Too bad for them. They took the risk and they are supposed adults. The rhyme of Too Big To Fail will turn into The Hell With You And We Won't Pay because you stripped us of everything we have left.
Let the central bankers and their scams write it all off and we can collectively start over. Do you really care if those banks fail or not? We say let 'em drop and just follow the rules of law. No more bailouts. Those banksters sure aren't following the rules now as they continually run to Momma in Washington pleading for more taxpayer help and bailouts. Toss 'em overboard and let 'em drown. I say good riddance and we start all over. Problem is the next mess is the obligatory World War III, which is nothing but a plan to steal Middle Eastern Oil and make new war-time jobs. This is not our idea of a jobs program, but that's what we get. Please control risk, use common sense and hunker down for a lengendary storm.
Trader Rog, Roger Wiegand
Editor Trader Tracks Newsletter