Econ on a Monday

Following up on a post from last week regarding the same…

See Zerohedge here.

While the implications for stocks in general are extensive and were previously discussed, it is worth noting that the Israel Monetary Authority now has a big MTM loss on its Apple investment (although as Greece and the ECB have taught us, a central bank can book a “profit” even when a given security is trading at an all time low, and completely irrelevant of what one’s cost basis is). And where Israel is, it is quite certain that other central banks have boldly ventured as well. So how long until the Fed has to open an FX swap line with Tel Aviv to bailout Stanley Fischer in this latest of hare brained schemes to keep the Ponzi system going? And how long until it has to be extended to the nearly 250 hedge funds who are now also long the stock, with the universe of incremental buyers disappearing by the day? What is most stunning is that Apple dipped a modest 3% intraday… Which just happened to be the biggest decline since November 2010.

Uh, oops?

Guys, you do realize that a foreign central bank of a nation who is essentially a global power just took a hit because the new iPad3 announcement (or whatever) didn’t make the street happy, right?

As mentioned before, this is just another bucket in a long line of buckets in which they are trying to dump fiat currency in order to inflate some kind of bubble where there wasn’t one before.

Of course, as with previously disastrous information related to the economy, this will go unnoticed and unreported by any media outlet that is not Zerohedge or a blog. This is akin to the Fed monetizing the debt back in 2008/2009. Only this time, you will see noticeable results in the very short term.

This is some seriously scary excrement.

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Economics: Ponzi Schemes & You

A few things before we get started:

  1. Lack of regular (and good) posting bothers me too. I’ve taken on a second day gig because it’s an opportunity that cannot be ignored. I guess I will sleep when I’m dead.
  2. Regular day gig is still in transition.
  3. Family outranks all of this.

So, I wanted to talk about this Zerohedge post from yesterday afternoon.

Here’s the summary:

Foreign, central banks are directly investing into US stocks with their reserves.

Now, under the Fed’s mandate, this in itself is not only unethical, but illegal based upon the explicit wording in it’s own charter. Not that it matters as the Fed has gone so far past it’s mandate at this point, that actually adhering to the rules set would be laughable. BTW, never throw out a complicated conspiracy when you can just chalk it up to shocking levels of incompetence.

Denninger covers it here as well.

Extend. Pretend.

There is no evidence that this trend will cease. Based on previous history, it is only a matter of time before this comes to an end. I stand behind the statement that at some point they will run out of places to blow these bubbles.

From the Zerohedge piece:

In other words, while the Fed’s charter forbids it from buying US equities outright, it certainly can promise that it will bail out such bosom friends as the Bank of Israel, the Swiss National Bank, and soon everyone else, if and when their investment in Apple should sour.

Luckily, this means that the exponential phase in risk is approaching as everyone will now scramble to frontrun central bank purchases no longer in bonds, but in stocks outright, leading to epic surges in everything risk related, then collapse and force the Fed to print tens of trillions to bail everyone out all over again, rinse repeat, until this chart becomes asymptotic. We say luckily, because it means that the long overdue systemic reset is finally approaching.

Do you see the trend/ What did the Dow close at yesterday? 12,900?

Harkening back to a discussion I had in 2005 with John Dvorak, I believe we have one hell of a ramp up, but when you start to approach 20,000, it’s time to run for the hills.

BTW, on another note, expect a run on ammo and guns sooner rather than later – meaning prior to the election. I’m starting to see incremental price increases based upon demand alone. My favorite vendors are running low on bulk, but doing ok on the premium stuff. If you are inclined to spend some cash on ammo stocks, I would advise that now is a good time.

I still think we have a long way to go. However, the darkness approaches, and at a steady pace. Keep your wits about you. Watch your six & keep your powder dry.

 

Interdasting. May I subscribe to your newsletter sir?

Kerodin makes a very interesting point on the true machinations of the state with regard to the ‘arab spring’.

I contend the Arab Spring was a deliberate policy action undertaken by USG to be rid of established dictators in the region, allowing the Muslim Horde to step into power and control State assets, militaries, natural resources, et cetera.

The opening paragraph demonstrates the type of people that have been allowed power as a result…and Washington’s response to the taking of hostages and demands for more foreign aid reflect the disposition of our Masters.

Enemies of Liberty need Sparklies to keep your attention away from their true mischief.

Watch the Other Hand continues to be the meme for 2012.

Interdasting for sure.

Macro Manuvers

Not willing to put any money on this just yet as it has been the bugaboo theme for years now, but the noise coming out of the part of the world where Iran is are ominous.

Keep an eye on it. Norway pulled out last evening according to Drudge. The Brits are essentially done as well.

Should there be overt action, make no mistake, it will have an impact here at home – especially economically.