The Phaserl


Out With The Fake, In With The Real!

by Andy Hoffman, Miles Franklin:

All weekend, I’ve been debating what to focus on this morning, given all that is “competing” for my attention. After all, it’s difficult to ignore what I view as the “peak fake” environment of financial market history – as evidenced by the VIX volatility index; itself, a major PPT manipulation target; trading below 11 for a record 15 straight days. FYI, the previous record was just 10, way back in 2006.

This, amidst arguably the worst global political and economic environment of our lifetimes. Which, even according to Wall Street’s rose-colored commentary, is rapidly approaching crisis levels. Here in the United States of Fake Everything, barely positive first quarter GDP “growth” is in danger of imminently turning negative – whilst everything from retail sales, to industrial production and auto/student/credit card defaults are screaming recession; whilst overseas, the story is no different, as evidenced by last night’s across-the-board Chinese economic data “misses,” despite being issued by data cookers that make the U.S. Bureau of Labor Statistics appear honest.

You know, the people who claimed 211,000 U.S. “jobs” were created in April by adding 255,000 phantom “birth/death” model jobs; and instead of using the last two years’ “seasonal adjustment factors” – both of which, would have produced a negative April jobs number; simply fabricated a new one, to produce 211,000. Most of which, were part-time, minimum wage paying jobs in sectors like, say, restaurants. This, despite the weakest restaurant performance since…wait for it…2009!

Meanwhile, equity valuation metrics have unquestionably reached “dotcom valuations in a Great Depression Era” – as evidenced by the S&P 500’s price/sales ratio on the verge of taking out the late 1999 peak, whilst macroeconomic indicators in the real economic world are crashing (like the Empire State Manufacturing Index, which just “unexpectedly” plunged from +5.2 to -1.0). For that matter, does anyone even remember the (fraudulent from Day One) “Trump-flation” meme that was supposed to explain why stocks surged after the Election? Heck, at this point, it’s more likely Trump doesn’t make it through four years in office; let alone, to “make America great again” any time soon. And no, that’s not a criticism of Trump, but of the Dysfunctional States of American in general.

Of course, even today’s fake valuations; of a fake economy; in which the fraud, and resulting speculative excess, can be seen everywhere – from Virginia, to California, Florida, and Canada (seriously, click on these links); are, plain and simple, Houses of Cards sitting atop foundations of Quicksand. I mean, since the dotcom bubble – at-the-time, the biggest financial bubble in history – Central banks have fabricated tens of trillions of “currency units” out of thin air; to the point that, the three largest Central banks alone have cumulatively added $13 trillion to their balance sheet. Meanwhile, global debt has essentially doubled – much of it, by sub-prime issuers with not a chance of paying it back. Let alone, if the U.S. dollar much of it is denominated in continues to rise, as it always does during financial crises.

Meanwhile, the gargantuan industrial oversupply caused by decades of money printing, financial engineering, and predatory lending will be with us for years to come; which is why this weekend’s “agreement” between Saudi Arabia and Russia to extend oil production cuts another nine months is so laughable. I mean, not only did the first five months fail to even modestly alleviate the historic, worldwide glut – in large part, because demand continues to fall – but half of the participating nations (which all must agree to the latest Saudi/Russian “deal”) were cheating, with many outwardly trumpeting their plans to expand production in the immediate future.

As for demand, do yourself a favor and read this fantastic article from one of the brightest new minds in the alternative blogosphere, Chris Hamilton; in which, per below, you’ll realize exactly what I’ve long warned of regarding the world’s historically ugly demographic trends. In a nutshell, ZERO population growth, plus EXPONENTIAL debt growth, plus HISTORIC industrial overcapacity, plus DRAMATIC technology changes. equals MASSIVE debt defaults and employment; and oh yeah, UNPRECEDENTED money printing and currency destruction.

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