The Phaserl



by Andy Hoffman, Miles Franklin:

Where to start, on this penultimate Tuesday of the year? And by the way, next week I’ll be unveiling my 2015 wrap-up, and 2016 predictions, which should be great fun.

I could easily write a small novella about Sunday’s historic Spanish elections – a mere two weeks after equally historic French elections; in both cases, for the first time in decades, breaking up Europe’s equivalent of America’s dysfunctional “two-party system” – as angry socialists, secessionists, anti-Euro, and anti-austerity factions consume the imploding European continent.

Or how about the Chinese government pulling the double “credibility whammy” of first, “discontinuing” the Minxin PMI manufacturing index because, unlike the official version, it didn’t purport the government’s party line of “recovery?”  And next, overtly promising additional fiscal “stimulus” – as if more debt-financed ghost cities will fix the terminal problem of too many debt-financed ghost cities.

Or how about the “TED Spread” – a widely-watched money market ratio, with eerily accurate predictive ability; reaching its highest level in four years, amidst its largest two-day surge since September 2008, just before Lehman Brothers collapsed?

Or the imminent default of one of Mexico’s oldest, largest industrial companies – ICA – under the weight of the full destructive powers of Federal Reserve exported inflation, and Wall Street financial engineering?  I.e., the artificially low interest rates, and ultra-risky financing schemes, that enabled it to blow up its balance sheet with Peso-denominated debt, amidst a rapidly collapsing bubble economy.  A “model of failure,” I might add, that thousands of companies, in dozens of countries, are experiencing.

Or how about yesterday’s abysmal Chicago Fed National Economic Activity report – including a way below expectations, significantly negative number for November, and a massive downward revision for October?  “Surpassed” only by this morning’s horror of a November existing home sales print – which was “supposed to” have been flat from October, but instead plunged 11%.  For that matter, how about the “strange” fact that, despite the Fed having “raised rates” last week, actual money market rates are still below 0.25%?  In other words, in reality, they haven’t executed what they claimed.

Or Azerbaijan joining an extremely active month of global currency devaluation – following Argentina’s official 29% devaluation;market-based currency crashes in Brazil, South Africa, and Venezuela, among others; and the inexorable “water torture” the PBOC is engaging in, in weakening the Yuan’s dollar peg a tiny bit each day; with an overnight, government-decreed, 50% devaluation?

I won’t even go into the PPT’s desperate effort to reverse the irreversible with petty, comically transparent “resuscitation operations” – as at this point, even the most jaded market apologist realizes the average stock is now in a bear market (down at least 20%); including, say it ain’t so – APPLE.  Or crashing oil prices; Portuguese and Italian bank “bailouts”; aggressive, expanding war rhetoric; or heck, the hopelessly inept “hedge fund” community taking its most bearish Precious Metals stance ever, amidst recordphysical demand, vanishing inventories, and imploding production.

Incredibly, none of these topics were deemed “worthy enough” for headline attention today.  So again, kudos to the great David Stockman for unearthing the data that reached the pinnacle of my daily “top ten” of “horrible headlines.”  Which is, providing proof positive – or should I say, negative – of just how insane it is that government-appointed bureaucrats are considered the “world’s smartest people.”  Let alone, why anyone listens to a word they say, when 1) they are always wrong; and 2) like Wall Street, they are incentivized to lie.  Not that there aren’t brilliant people in non-profit jobs of all sorts, of course.  However, when working within big government, the most valuable “skill” is towing the party line; and the most frowned on, speaking the truth.

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