The Phaserl


Hapless Hatzius, The Poor Man’s Stanley Fischer

by Andy Hoffman, Miles Franklin:

Have mercy! I’m starting this article late Friday afternoon, to be finished tomorrow morning (I’m leaving shortly, to take Sylvie to a special outdoor showing of The Force Awakens). And I kid you not, since my must listen Audioblog from yesterday morning, “Brexit II – Coming November,” I have gathered a mind-numbing eight pages of “PM-bullish, everything else bearish” headlines – ranging from the political, to the economic, to the monetary. Each, in and of itself, is “article-worthy”; and the scariest part is, eight-page “horrible headline” logs will shortly become commonplace – as the collapse of history’s largest, most destructive fiat Ponzi scheme unfolds. Frankly, I don’t know where to start – although trust me, today’s “end game” couldn’t be more obvious, as it’s not often I get to eviscerate one of the history’s most evil corporations. Which, I might add, I’m proud to say I was offered a job at during my Wall Street heyday in 1999… and refused.

Politically speaking, it couldn’t be more obvious that the walls are rapidly closing in on Hillary Clinton – which is exactly why I taped yesterday’s unplanned Audioblog. My sense is that now that the election “homestretch” is starting, everything from her scruples, to her scandals, to her health will be under siege. And trust me, it will NOT be good for financial markets – which is probably why David Stockman ranks the realization that she, and the status quo, will likely lose November’s election, as his most likely catalyst of an historic market crash, in September or October.

And it’s not just here where political turmoil is exploding; as the Italian constitutional reform referendum, which I will shortly be devoting a separate article to, is rapidly approaching, in either October or November. I strongly believe, like Brexit, that the Italian people will use it as a “vote of no confidence” in Matteo Renzi’s leadership – throwing the Italian political scene, too, into chaos, when he resigns as promised. Let alone, what will happen in Spain when Catalonia moves forward with seceding – as its Parliament officially voted to do last month; or as the world looks ahead to 2017, when both Angela Merkel in Germany, and Francois Hollande in France, will likely be resoundingly defeated by anti-EU, and anti-Euro, leadership.

Meanwhile, in Brazil, where the Olympics were only pulled off because the Olympic village was guarded by tens of thousands of soldiers, Dilma Rousseff was officially impeached yesterday. In Turkey, Erdogan’s post-coup – or fake coup – power grab will unquestionably be a major source of geopolitical instability; while in Venezuela and Nigeria, bloody revolutions are all but certain. Not to mention Greece, which per this horrifying article, is on the brink of collapse – with close to $700 billion of debt, half of it “off balance sheet,” waiting to imminently default. Heck, there may not even be a “Troika” to administer a third – or is it fourth – “bail out” next year!

In the “Land of the Setting Sun,” word has it that Haruhiko Kuroda, Chairman of the imploding Bank of Japan, is himself is on the block (although personally, I’d prefer Hara-Kari); which is probably why he’ll likely “go for broke” with unlimited helicopter money and deeply negative interest rates by year-end. After which, both he and the “patron saint” of Abenomics will likely be unceremoniously kicked out of office – in Shinzo Abe’s case, for the second time. As for China, this weekend’s G-20 meeting, which Jim Rickards deems the beginning of the end of dollar hegemony, given that it directly proceeds Yuan inclusion in the IMF’s strategic currency baskey, there’s no telling what the future economic leadership of the world will do. At some point, China will surely announce its true gold reserves, but this weekend is probably a long shot.

Economically, things literally couldn’t be worse. I’ll get to today’s disaster of an NFP jobs report momentarily – which, as usual, was much worse than even the superficially weak headlines numbers. In my view, the +151,000 jobs reported was strategically selected by the BLS/Fed/Obama Administration to be just weak enough to prevent the Fed from carrying through its LIE about potentially raising rates, but just strong enough for them to “save face.” At least, that’s what they think will be the perception – as opposed to the reality of people realizing the BLS/Fed/Obama Administration were in fact lying about the “recovering” economy – and “imminent rate hikes”; and that in fact, the data was horrifyingly weak.

But before I go there, I must re-emphasize just how bad the “other” U.S. economic data was this week, such as collapsing August auto sales; an imploding, sub-50 ISM Manufacturing Index; much weaker than expected construction spending; factory orders down 10% year-over-year, excluding U.S. government “defense” orders; plummeting productivity; surging bond defaults; massive tax increase announcements; the EU’s €13 billion tax grab against Apple, which will undoubtedly reduce already plunging corporate earnings; and across-the-board weak – in most cases, recessionary – regional activity indices. To that end, just how many more charts demonstrating how economic activity has “never been this week outside of a recession” – like this one – before the “investment community” gets it?

Throw in Thursday’s bankruptcy of the world’s eighth largest shipping company – which already, is reaking havoc on global logistics. Plus, relentless data depicting exploding healthcare costs (no Hillary, pharmaceutical price controls will NOT make things better), and soon-to-fail insurance companies and pension funds (thanks, NIRP!); as well as collapsing real estate bubbles from the four corners of the planet, and you can see just how bad things are getting – particularly now that commodities, by far the most important global business, are plunging anew. To that end, how hilarious were today’s latest “oil PPT” generated, nonsensical headlines of how Putin now favors the “production freeze” that will NEVER happen, simply to “stabilize” – even if for a few days – oil’s relentless plunge toward its equilibrium value, well below $35/bbl?

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