The Phaserl


If A Nuclear Bomb Destroyed Europe, Part V-Rigging Versus Reality

by Andy Hoffman, Miles Franklin:

It’s early Monday, and let’s start by clearing our heads of the ramifications of yesterday’s first round of the French Presidential election process – in which, as expected, 39-year Emmanuel Macron, a former Rothschild Bank investment banker whose only political experience was miserably failing as “Economy Minister” under outgoing President Francois Hollande (whose approval rating was so low – principally because the French economy has collapsed – he didn’t run for re-election); running under a new Independent political party, just established in September; came in first place, a mere 2.5 percentage points ahead of Marine Le Pen.

For all the talk of the impending election cataclysm, the relentlessly PPT-supported “Dow Jones Propaganda Average” entered the weekend barely 2% below its all-time high. To that end, its overvaluation is unprecedented, no matter what metrics are utilized to analyze it. I mean, per this must read article, not only are essentially all U.S. equity valuation metrics pegged off the charts; but after having largely ignored the surging stock market since the 2008 crisis, retail investors have finally re-entered the fray. To wit, in 2017’s first quarter; coincident with the PPT-orchestrated bubble catalyzed by the patently fraudulent – and for all intents and purposes, already disproven – “Trump-flation” meme; retail brokerage accounts were opened at the fastest pace since the first quarter of 2000 – i.e., the top of the dotcom bubble.

Of course, now that history’s largest, most destructive fiat Ponzi scheme is global, the bubbles are far larger, broader, and more deleterious. In China alone, there’s no precedent for such unmitigated credit profligacy, which has created the world’s largest debt/GDP ratio. Yes, larger than even Japan when considering that most of China’s debt is held by “corporations” that are in actuality, state-owned. By the way, note that the chart below; created by none other than the Bank of International Settlements and IMF; suggests China entered a “major downturn” in 2015 – after which, said “social financing” has exploded further. This, compared to “official” Chinese GDP growth of roughly 6.5% per annum; which, I might add, is the lowest “growth” the Chinese government has reported since it started publishing such statistics 30 years ago.

Yes, a global phenomenon, as Central banks have “monetized” $1 trillion in the first four months of 2017 alone, nearly quadrupling their cumulative balance sheets via freshly printed “money” since the 2008 financial crisis. And that’s just the “on balance sheet” amount, ignoring “off balance sheet” acquisitions via derivatives, swaps, and offshore slush funds. In fact, as you can see here, global QE has never been higher. China’s “social financing” is running at its highest-ever pace; and just last week, the heads of the ECB and BOJ reiterated, based on their comically ridiculous logic that “inflation” is too low, that the below, historic QE pace won’t end any time soon. Consequently, global debt to cash flow valuations are at an all-time high, at a time when real economic activity is imploding and debt is parabolically exploding. Which, I might add, must continue rising, at an accelerating pace no less, to prevent history’s largest Ponzi scheme from instantaneous collapse. Which, in turn, can only be sustained by record-low interest rates – in Europe and Japan’s case, negative rates – ad infinitum.

Ironically, the delusional liars known as Federal Reserve governors continue to lie about the economic “strength” that their own calculations disprove – such as its own estimate that 1Q GDP “growth,” to be reported on Friday, will be just 0.4%. Not to mention, the experience of 99% of Main Street America – as evidenced by, to name a few examples, the ongoing “Retail Armageddon”; exploding subprime delinquencies; negative commercial lending growth; plunging iron ore and crude oil prices (the latter, despite relentless “oil PPT” support); year-over-declines in government tax revenues; and relentlessly weak economic data – like this morning’s Chicago Fed National Activity Index report, which plunged from 0.34 in February to 0.08 in March.

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