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Survey: Fate of Countries in Collapse – Results: Currency Collapse

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Published on the Doomstead Diner on September 22, 2015

toast2

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TAKE THE FATE OF COUNTRIES SURVEY HERE

One of the longest running arguments on the Diner is how various different countries will fare as collapse progresses forward.

http://www.philipcaruso-story.com/wp-content/uploads/2015/02/Where-To-Live.jpgMost often, this pits the FSoA against China, and the Diner has some China Bulls and some China Bears.  I am a notorious China Bear gong back to my days on the Peak Oil Forum, where at the time because China was such a hot investment opportunity with double-digit growth rates it was common wisdom the Chinese would out-compete the FSoA Empire to lead the world in the second half of the 21st Century.  It was there I first added my Tag Line to analysis posts on China, "The Chinese are TOAST". 😀

Now in reality here, as time goes by EVERY industrialized nation is toast, in the sense every one is dependent on the systems that are driven by copious quantities of fossil fuel energy.  Once that energy can no longer be accessed or afforded, life as we know it now wll come to a halt.

However, this is unlikely to happen all at once, and it is unlikely to play itself out exactly the same way in different countries, different regions and even from town to town.

In this survey we look at the large nation states individually and regionally for the smaller ones, to find out the opinions of the Kollapsniks TM on which ones are the best positioned as collapse gathers speed, and which ones will fare the worst.

Besides China and the FSoA, the other one of the "Big Three" countries often discussed in comparing on this topic is Russia.  Russia is often cited as more resilient by virtue of the fact they already went through one collapse when the USSR collapsed, plus the fact they have a decent amount of fossil fuel energy still left in the ground.  However, they have numerous problems as well, wars ongoing to their south, the Ukrainian situation and enormous financial and currency turbulence.

Take the survey, and let us know who you think will do best and which ones worst as collapse gets fully underway.

TAKE THE FATE OF COUNTRIES SURVEY HERE

Results: Currency Collapse & Debt Implosion Survey

http://joeforamerica.wpengine.netdna-cdn.com/wp-content/uploads/2013/04/survey-says.jpgOK, now onto the results from last week's Collapse Survey TM, Currency Collapse & Debt Implosion.

First question to look at is which of the current major currencies is likely to collapse first, and which has the potential to hold up the longest.

This is obviously important if you want to try to "preserve wealth", you certainly don't want to be holding the currency that collapses first! Duh. Roll Eyes

On the other hand, you have the problem of the utility of a currency in your neighborhood.

For instance, say the Norwegian Krone holds its value while the FSoA Dollar crashes.  Even if you have some Krone stashed in a Norwegian or Swiss Bank account, or even actually have some of their Notes in your basement safe along with your stash of Gold Coins, is Walmart going to take your Krone for a purchase of a bag of rice in Peoria, IL?  Not very likely.  You might stand a better chance in Europe, particularly Scandinavian countries if you have Krone, but here in the FSoA they are unlikely to do you a whole lot of good.  Only if you want to do currency trading during the spin down is this worthwhile to consider, and first off you need to be pretty flush to do that kind of trading, and second it's a fool's game these days with manipulated markets.  Even back in the day when I messed with currency trading it was nuts.  You have to leverage to beat the band to make any money this way.  You can get SWAMPED in a big move overnight.  Then the margin calls hit, and your next trip is out the window of the 49th floor.

Leaving aside the question of whether holding foreign currencies might benefit you personally, on the nation state level it's important to consider because he whose Currency crashes first, Collapses first.  So who is it gonna be?

I found the results of this particular question to be absolutely astounding.  Here's the results:

  1 2 3 4 5 6 7 8 Standard Deviation Responses Weighted Average
Chinese Renminby/Yuan 10
(9.8%)
23
(22.55%)
8
(7.84%)
17
(16.67%)
10
(9.8%)
8
(7.84%)
8
(7.84%)
1
(0.98%)
5.92 102 4.81 / 12
European Euro 9
(8.82%)
13
(12.75%)
15
(14.71%)
19
(18.63%)
10
(9.8%)
11
(10.78%)
5
(4.9%)
5
(4.9%)
5.24 102 4.88 / 12
Japanese Yen 15
(14.71%)
8
(7.84%)
13
(12.75%)
12
(11.76%)
11
(10.78%)
10
(9.8%)
8
(7.84%)
15
(14.71%)
4.92 102 4.98 / 12
Russian Ruble 7
(6.86%)
16
(15.69%)
21
(20.59%)
13
(12.75%)
8
(7.84%)
13
(12.75%)
2
(1.96%)
2
(1.96%)
5.91 102 4.99 / 12
Brasil Real 29
(28.43%)
14
(13.73%)
6
(5.88%)
3
(2.94%)
7
(6.86%)
5
(4.9%)
3
(2.94%)
4
(3.92%)
7.53 102 5.29 / 12
British Sterling/Pound 0
(0%)
3
(2.94%)
7
(6.86%)
10
(9.8%)
21
(20.59%)
6
(5.88%)
11
(10.78%)
16
(15.69%)
5.74 102 6.78 / 12
US Dollar 27
(26.47%)
7
(6.86%)
5
(4.9%)
1
(0.98%)
1
(0.98%)
3
(2.94%)
1
(0.98%)
2
(1.96%)
10.02 102 7.1 / 12
India Rupee 3
(2.94%)
13
(12.75%)
10
(9.8%)
4
(3.92%)
6
(5.88%)
8
(7.84%)
7
(6.86%)
6
(5.88%)
4.59 102 7.29 / 12
Canadian Loonie 0
(0%)
3
(2.94%)
4
(3.92%)
9
(8.82%)
2
(1.96%)
9
(8.82%)
16
(15.69%)
14
(13.73%)
6.69 102 7.66 / 12
Australian Dollar 1
(0.98%)
0
(0%)
5
(4.9%)
7
(6.86%)
8
(7.84%)
7
(6.86%)
11
(10.78%)
11
(10.78%)
7.49 102 7.84 / 12
Norwegian Krone 0
(0%)
2
(1.96%)
6
(5.88%)
2
(1.96%)
8
(7.84%)
5
(4.9%)
22
(21.57%)
17
(16.67%)
6.17 102 7.93 / 12
Swiss Franc 1
(0.98%)
0
(0%)
2
(1.96%)
5
(4.9%)
10
(9.8%)
17
(16.67%)
8
(7.84%)
9
(8.82%)
6.63 102 8.43 / 12

IMHO, this ordering is INSANE.  Apparently Kollapsniks TM think that the Chinese Renminby will collapse BEFORE the Euro and Yen!  WTF?  Not only that, the Indian Rupee will outlast the FSoA Dollar! hahahahahahahaha.

Which currency outlasts them ALL (according to Kollapsniks)?  The Swissie!  A currency issued by a tiny nation of 8M people with a GDP of $685B (2013 data) is going to outlast the Dollar and Renminby?  WTF?  There are more people living in NY Shity than all of Switzerland!

When the Euro goes down, the Swissie goes with it.  The SNB has HUGE exposure to Euro denominated debt, they have been buying it up to keep the exchange rate from going through the roof.  It's simply nuts to think this currency can outlast those of the Big 3.

My order for currency collapse?

Brasil Real
India Rupee
Russian Ruble
Japanese Yen
European Euro
British Sterling/Pound
Norwegian Krone
Swiss Franc
Australian Dollar
Canadian Loonie
Chinese Renminby/Yuan
US Dollar

Brasil is already on the serious ropes, and so is India.  Weak economies and too much poverty.  Russia should be strong, but they are a target for the Western Illuminati Banksters, so they will be under constant currency attack.  Yen & Euro go next, and then subsidiary currencies like Sterling, the Swissie and Krone go after them.  The Oz Dollar and Hoser Loonie keep value because of how closely they are connected to the FSoA Dollar.

One caveat to this is that once the cascade begins, it may be impossible to tell which one collapsed first.  Once a major like say the Japanese Yen collapses, this will cause so much havoc in the Interbank lending market that everything else will lock up in pico-seconds.

IMHO, the Final Battle for All the Currency Marbles is between the Chinese Renminby and the FSoA Dollar.  I think the Dollar wins this battle, because so much debt is denominated in dollars. Too many .01%ers have their wealth wrapped up in Dollars or Dollar denominated assets to let that one collapse.  We'll see on that one.

OK, now onto Q2, which is whether Gold & Silver will replace Fiat Currencies once they collapse?

Survey-Gold

  Yes No Standard Deviation Responses
All Data 34
(33.01%)
69
(66.99%)
17.5 103

Overwhelmingly by a 2/3rds majority, most Kollapsniks TM do not think Gold and Silver will replace Fiat once it crashes.

I tend to agree with that one, the PMs are too centralized and too few people have access to them for them to be workable as a currency medium.  There also is no clear idea on how these could be distributed out, or how letters of credit would be issued or anything else.  They might function as a Barter item, but as a currency that many use, it seems unlikely.

If Gold & Silver are NOT likely, what is likely once this Currency Regime fails? icon_scratch That was the subject for Q3.  Here's the results for that one:

  1 2 3 4 5 Standard Deviation Responses Weighted Average
TPTB will institute a New World Currency, the SDR or something similar 37
(39.36%)
11
(11.7%)
19
(20.21%)
13
(13.83%)
14
(14.89%)
9.47 94 2.53 / 5
LETS (Local Exchange Trading System) Money will be issued in many locales 23
(24.47%)
21
(22.34%)
19
(20.21%)
26
(27.66%)
5
(5.32%)
7.28 94 2.67 / 5
Paper Money will be issued based on Gold and Silver held in a Central Bank 11
(11.7%)
19
(20.21%)
29
(30.85%)
22
(23.4%)
13
(13.83%)
6.46 94 3.07 / 5
Gold & Silver Coins will be used as Currency 7
(7.45%)
32
(34.04%)
18
(19.15%)
20
(21.28%)
17
(18.09%)
7.98 94 3.09 / 5
No money will work and Trade will be all Barter 16
(17.02%)
11
(11.7%)
9
(9.57%)
13
(13.83%)
45
(47.87%)
13.3 94 3.64 / 5

A large plurality (almost 40%) of Kollapsniks TM think that TPTB will be able to institute a new centralized currency regime from the BIS (Bank for International Settlements, Basel, Switzerland, Central Bank of Central Banks, Home Base for the Illuminati). This is a particularly favored idea by Conspiracy Theorists, but it is not one I hold as most likely.  The likely candidate are SDRs, aka Special Drawing Rights, a concoction the BIS already has in place for internal use based on some potpourri of currencies and commodities and who knows what else they threw in that basket..

I am not in that camp.  Perhaps they will try this, but to get every country in the world to cede their monetary sovereignty over to the BIS would be near impossible IMHO.  It's like the Euro on Steroids.  It really does nothing other than re-denominate debt, and it sure doesn't put any new resource back in the ground.   To me, this is a non-starter.  Not to say it won't be attempted though.  It's a last gasp effort for the Illuminati to maintain hegemony over the economic system.

LETS systems of Local Currencies come in at #2, and this I feel is most likely to occur.  Regional breakup of the One to the Many TM will at least at the beginning require each region to develop their own local currency.  Potlatch at this stage of the spin down seems unlikely.

Far as Centrally held Gold being a basis for a currency, to me this is also a non-starter.  If you have a Central Bank holding gold in the Basement Safe, after a crisis of banking confidence like this, who would not go to the bank and DEMAND their "Gold Backed Note" to actually be redeemable in said Gold?  Once the gold is redeemed, what does the Bank have as an Asset?  At this point, the Gold you redeem for the note the Bank printed on it is just a barter item.

Will all trade eventually go all Barter?  It's already on its way there in some places, but that will take some time in the core countries I imagine.   Cannot be sure on this though, a rapid collapse could make barter the only functioning economic system in your neighborhood for a while.  Good idea to have barterable goods in your preps. Alcohol and Cigarettes are traditional barter items, I suggest also Tampons, Pampers, Condoms, Ammo, & Shoes as good choices of barter goods that last a long time.  Shoes in particular, have you noticed how many of the pictures of refugees show them to be barefoot?  Once trade with China halts, shoes are going to be hard to come by.  Right now though, you can buy a nice pair of sneakers at Wally World for $15 on sale.

Finally in this survey, how long before the Dollar finally dies completely and you can't use it to buy food at the major food retailers?  This could be either because the Dollar has hyperinflated to worthlessness or the shelves are empty.  Here's the results for this one:

  2016 2018 2020 2025 2030 The Dollar will keep working for the forseeable future Standard Deviation Responses
All Data 10
(9.71%)
16
(15.53%)
16
(15.53%)
22
(21.36%)
14
(13.59%)
25
(24.27%)
4.98 103

You have a pretty nice Bell Curve here, except for the 25% or so of people who thnk the Dollar will keep working past 2030.  The 2025 date seems about right to me, although again a major banking crisis and lockup could change that in an instant.

All in all, this was one of our most interesting surveys to date.

 

Kurrency Kollapse: To Print or Not To Print?

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Aired on the Doomstead Diner on March 14, 2015

MoneyHole

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“THE GREATEST BONFIRE OF PAPER WEALTH IN ALL OF RECORDED HISTORY TM

money-burning

Snippet:

http://www.angelfire.com/art/masks/images/mask01.jpg…So to try to resolve this mess, one choice for Da Federal Reserve would be to issue out multiples of the $Trillions$ it has already issued out and take every last indebted country onto its own balance sheet as the collateral, effectively essentially putting say France under the Ownership of the Federal Reserve! Then the Frogs get the same treatment that Greece gets now taking it up the ass from the Troika. The population gets squeezed dried, but this STILL does not stop the implosion from progressing onward.

The other choice, which in the words of Ambrose Evans-Pritchard is to “take their medicine” is that Da Federal Reserve STOPS pitching Worthless Money after more Worthless Money out, and TBTF Banks and entire nation States go Bankrupt in a huge Daisy Chain, or as I once wrote on the Peak Oil Forum, “The Greatest Bonfire of Paper Wealth in All of Recorded History”.

There is no Third Option as yet identified here, it’s a Shakespearian Comedy/Tragedy, “To Print or not to Print, that is the question? Whether ’tis nobler to die by the slings and arrows of Hyperinflationary misfortune,, or to dry up liquidity and die slowly in a Deflationary Spiral, and by collapsing this stupid shit end this utter nonsense? To sleep, perchance to die…”

For the rest, LISTEN TO THE RANT!!!

Merry Doomy Christmas

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Published on the Doomstead Diner on December 25, 2014

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http://wearethepractitioners.com/images/david%27s-collection/lump-of-coal.jpgDoom may not seem very Christmas-y as a concept, but in the spirit of Gifting, as I often like to say, Doom is the Gift that Keeps on Giving.

The old saw has it that if you were Naughty, Santa would leave you a lump of coal in your stocking instead of an Iphone.  As we move along the Collapse Highway though, we turn more of the coal into Iphones, leaving fewer lumps of coal for stockings, and more Iphones.  At a certain point, only the Nice children will see a lump of coal in their stocking at Christmas.  At least you can use a lump of Coal to burn in the fireplace and stay warm on a chilly winter night, the Iphone will not do you much good when the electrical grid goes down.

Most people don’t ever think that will come to pass, and most of the small minority of people who think it might come to pass think this outcome is still far into the future.  How far away is it, how much time do we have here left to live in the comfort of brightly lit McMansions, driving the Cars to Walmart and stopping at Starbucks for a cup of overpriced Coffee?

For the most part, this all remains dependent on the continuing functionality of the Global Monetary System, which as we close out 2014 and move into 2015 shows ever increasing signs of extreme distress.  The most clear signs are in the FOREX, or foreign exchange trading markets, where numerous countries have seen the value of the money they use in their location drop by anywhere from 20-50% in the last few months.

Most prevalent in the newz on this subject of late has been the Russian Ruble, which has collapsed in value along with the price of Oil.  However the Japanese Yen has also been collapsing in value,  same with the Brazilian Real, the Indian Rupee, and even to a lesser extent the multi-national Euro, and the Chinese Yuan also.  What are all these currencies losing value in relation to on the FOREX market?  The Dollar of course, still the World Reserve Toilet Paper and the currency in which the vast preponderance of international loans and interbank finance is denominated.

Damaged 100 yuan banknotes are seen on a table at a branch of China Bank in Foshan

As should be obvious, in any currency pair trading, if one currency is Inflating, the other is Deflating.  The people holding the currency that is inflating, say the Ruble, want to trade it as fast as they can for the deflating currency, in this case the Dollar.  This leads to a shortage of Dollars in the local market that can be purchased with Rubles, which exacerbates the problem and makes the street value for the Ruble even less than the official exchange rate, which is the panic stage and is what drives an inflationary event into a Hyperinflationary one.  So far that does not appear to have occurred in Russia itself, but does already appear to be occuring in one of the satellite countries of the former Soviet Union, Belarus.

To try to put a lid on a problem like this, the local Goobermints try all sorts of things, Capital Controls, large penalties for currency exchanges and so forth, but once the confidence has been lost in the local currency, there is very little that can be done to fix the problem, until and unless you get some folks from the Western Banking Cartel who step in to take control of the local money and start issuing out some new money with some arbitrary peg against the dollar.  This has occurred repeatedly over the years in Brasil, which used Cruzeiros when I lived there in the 60s, switched to Cruzados by lopping off some zeros from Hyperinflating Cruzeiros, and today uses Reals, which are no more REAL than Cruzeiros or Cruzados, but did manage to last a bit longer as a viable currency there.

http://i.cbc.ca/1.2831230.1415722704!/fileImage/httpImage/image.jpg_gen/derivatives/16x9_620/russian-ruble.jpg

To the resident of the FSoA watching as the Federal Deficit skyrockets now to $18T, it’s kind of hard to imagine why Dollars hold more value than Rubles, but there are many reasons for this in play, some psychological, some financial and some physical.

The psychological one begins with the fact that coming out of WWII, the FSoA was the last country standing in a world of ruin, both in Asia and Europe.  The Dollar became World Reserve Currency, and the entire rebuild done in the aftermath of that was done with Dollars loaned out by the FSoA, through the Marshall Plan.  While Deutchmarks bought just about nothing in Germany directly after WWII, if you had a few Dollars, you could buy ANYTHING, and cheap too.  Who had access to borrow said Dollars?  The same people who had access to credit before, the Rothschilds, the Warburgs, the Kuhns, et al.  They build a new and bigger edifice based on debt once again here, and now they have the all the Oil under the ground in MENA to issue that debt on.  So since then, not one but really several generations have all grown up with the BELIEF in the Dollar as a valid currency, and since it has generally worked to buy the stuff you need to live with only a few periods of relatively minor disruption, the belief is quite powerful that it will last in perpetuity.  The strong belief in the Dollar is the reason it is always the preferred currency that other smaller nations and their populations run to when they have a local currency crisis.  In Argentina during the currency crisis in 2001-2, as Ferfal chronicled, if you had Dollars in an overseas account you could access, you could do OK, although it was still a wicked dangerous place even if you did have some.

The Financial reasons become ever more obvious when you watch the manipulation and how easy it is for the Westerm Banksters to put the Thumbscrews down on a country even as large and well gifted with resources as Mother Russia is.  Since Oil is priced in Dollars, most International trade is done in Dollars and the Western Banking Cartel has control over all the computer systems which handle global trade, anytime they wanna cut you off from access to international credit they can, no matter how big you are or how much Oil you have left in the ground.

The physical reason should be obvious, the Dollar maintains some value because ineffectual as it is, the Big Ass Military still holds the threat of bombing your country back to the Stone Age if you don’t buy in Dollars.

Taken altogether, this makes the Dollar look like the best Dogshit in the Pound out there, it still buys stuff at the supermarket and so when your local currency gets hit, this is the preferred “safe haven” to run to. Despite all the jawboning about bilateral tade agreements, currency swaps and a Sino-Russian Yuan-Ruble currency regime taking over from the collapsing Dollar, at least so far the opposite appears true, which is that the Dollar appears to be collapsing Yuan and Ruble.  Not so fast with the Yuan, but the signs in China aren’t too good these days for the big Growth numbers they need and the exploding internal demand from middle class Chinese

In any event, either way whether the Dollar or or Yuable ends up as the last one standing, everybody has run to the winner, THEN WHAT?  It’s really only at this point you get to see what paper claims denominated in the Winning currency actually represent any real value and which do not.  Mostly, they are quite worthless.

http://siliconangle.com/files/2012/12/jolly_santa_saying_ho_ho_ho_0521-1012-0313-4538_SMU-300x264.jpgThe other possibility here is that as soon as one of the 1st Tier currencies like Sterling, Yen or the Euro starts Hyperinflating, there will be a terminal liquidity lockup and then everyone goes down together simultaneously, rather than a cascade of weaker currencies over time.  If that occurs, things will spin out of control REALLY fast.

Either way, 2015 looks to be a Watershed year for us Kollapsniks, as many of the issues we have discussed finally become obvious to all as the Tide Runs Out here.  I can only hope the Internet is still up next Christmas so we can look at all the Doom Gifts in Santa’s Bag for 2015.

HO, HO, HO.

Santa RE

Competitive Currency Devaluation & Deflation

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Aired on the Doomstead Diner on November 18, 2014

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http://www.cartoonspot.net/looney-tunes/images-looney-tunes/speedy-gonzales-A.gif

Speedy Gonzalo Lira sez, “OOPS! I guess I made a MEEESTAKE!”

Snippet:

…Remember back to 2008-2009 when Hank Paulson pulled out the Bazooka to bail out the TBTF Banks, and then Helicopter Ben Bernake launched the first of his QE ships? Pundits in the Econ Blogosphere went berserk, predicting imminent Hyperinflation of the Dollar. John Williams, Speedy Gonzalo Lira, Mish, you name it they all predicted rampant HI which somehow never arrived here.

Meanwhile in the dark secluded corners of the internet, a few people like Nicole Foss of The Automatic Earth, Steve Ludlum from Economic Undertow and myself all predicted a deflationary event coming down the pipe, at least for the Dollar.

What is the situation today? Deflation is now the word of the day spoken fearfully by Central Bank chieftains, and even notorious Hyperinflation predicting sites like Zero Hedge are on the Deflation Bandwagon…

For the rest, LISTEN TO THE RANT!!!

Euro, Yen & Oil Collapse Doom Double Feature

logopodcastOff the microphones, cameras and keyboards of Gail Tverberg, Ugo Bardi, Steve Ludlum, RE & Monsta

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Aired on the Doomstead Diner on November 11, 2014

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Yen, Euro & Oil Frostbite Falls Daily Rant

Yen, Euro and Oil Collapse Cafe Chat with Guests Gail Tverberg, Ugo Bardi and Steve Ludlum

Read more from Gail, Ugo & Steve on their Blogs

Gail Tverberg: Our Finite World

Ugo Bardi: Resource Crisis

Steve Ludlum: Economic Undertow

 

Snippets from the Analysts: (follow the Links to read full versions)

The collapse of oil prices and energy security in Europe

This is a written version of the brief talk I gave at the hearing of the EU parliament on energy security in Brussels on Nov 5, 2014. It is not a transcription, but a shortened version that tries to maintain the substance of what I said. In the picture, you can see the audience and, on the TV screen, yours truly taking the picture.

Ladies and gentlemen, first of all, let me say that it is a pleasure and an honor to be addressing this distinguished audience today. I am here as a faculty member of the University of Florence and as a member of the Club of Rome, but let me state right away that what I will tell you are my own opinions, not necessarily those of the Club of Rome or of my university.

This said, let me note that we have been discussing so far with the gas crisis and the Ukrainian situation, but I have to alert you that there is another ongoing crisis – perhaps much more worrisome – that has to do with crude oil. This crisis is being generated by the rapid fall in oil prices during the past few weeks. I have to tell you that low oil prices are NOT a good thing for the reasons that I will try to explain. In particular, low oil prices make it impossible for many oil producers to produce at a profit and that could generate big problems for the world’s economy, just as it already happened in 2008.

Oil Price Slide – No Good Way Out

The world is in a dangerous place now. A large share of oil sellers need the revenue from oil sales. They have to continue producing, regardless of how low oil prices go unless they are stopped by bankruptcy, revolution, or something else that gives them a very clear signal to stop. Producers of oil from US shale are in this category, as are most oil exporters, including many of the OPEC countries and Russia.

Some large oil companies, such as Shell and ExxonMobil, decided even before the recent drop in prices that they couldn’t make money by developing available producible resources at then-available prices, likely around $100 barrel. See my post, Beginning of the End? Oil Companies Cut Back on Spending. These large companies are in the process of trying to sell off acreage, if they can find someone to buy it. Their actions will eventually lead to a drop in oil production, but not very quickly–maybe in a couple of years.

So there is a definite time lag in slowing production–even with very low prices. In fact, if US shale production keeps rising, and Libya and Iraq keep work at getting oil production on line, we may even see an increase in world oil production, at a time when world oil production needs to decline.

Last Line of Defense …

Triangle of Doom 110114

Figure 1: Continuous WTI futures (TFC Charts, click on for big). Price convergence results in a breakdown as customers are unwilling- or unable to bid prices higher. Absent the high prices there is insufficient cash flow to enable drillers to continue operations. Today’s marginal barrels are extracted from high cost deepwater offshore plays, from tight-oil shale formations and from ‘tar’ sands: without customer credit, drillers are more dependent upon junk bond leverage than ever.

Of course, once on the borrowing treadmill, it is impossible to step off. Borrowers must run faster to stay in place, ever-increasing amounts are needed to keep pace with operating- and service costs as well as to rollover maturing legacy debt. Consumer access to credit must be considered a ‘hard limit’ to petroleum extraction along with geology. Even as drillers are able to borrow they find there are fewer ‘end users’ with available credit … onto whom the drillers can lay off their ballooning exposure.

Conventional analysis insists that fuel constraints result in higher prices due to simply supply and demand. The assumption is that consumers will always find more funds. Instead, fuel constraints reduce customer purchasing power: customers stumble first, the drillers fail afterwards. As customers’ borrowing capacity shrinks the petroleum industry has little choice but to adjust prices to meet the market which forces drillers to reduce output. At some point they fail outright. Fuel supply cuts => diminished consumer borrowing capacity => more fuel supply cuts in a vicious, self-reinforcing cycle.

 

The Double Whammy

Reverse Engineer

Over the course of the last week, we have had two MAJOR Black Swans come in for a landing.

The first one actually has been ongoing for a couple of weeks now, the collapsing price in the Oil Market, plunging from its recent “set point’ at around $90/barrel to $77 for WTI as I write this article:

The second Swan came in the form of an announcement by BoJ Chief Psycho Kuroda that the BoJ would ENGAGE Warp Drive on the Printing Press and buy up every last JGB the Nip Goobermint sells in order to meet their ever increasing need for cash.  The Yen was already sliding, this announcement however sent it on a Downhill Run worthy of an Olympic ski course.

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/11/20141103_NKY.jpg

Flip this upside down to get JPYUSD.  Nobody publishes it that way, I wonder why?

Are these two events unrelated coincidence?  Of course not.

Demand Destruction has taken hold all across the globe now, and Oil consumption is dropping everywhere.  Here in the FSoA, we’ve seen a 10% drop in gasoline consumption since 2008, and the end to this is nowhere in sight either.

Screen Shot 2014-10-27 at 11.57.00 AM

For the rest, listen to the Rant while you tend your Garden, watch the Video while you Cook Dinner, or if you don’t like Media, just read the damn articles!

 

Don’t miss our Upcoming Podcast with David Hughes, Author of the recent Drilling Deeper Report, analyzing the Fracking and Tight Oil plays in the Oil Patch.

…and that’s All the Doom, This Time until Next Time, here on the Doomstead Diner 😀

RE

Musical Dollars

Off the keyboard of RE

Published on the Doomstead Diner on June 22, 2013

http://parathiro.net/wp-content/uploads/2013/05/13-mousikes-karekles.jpg

Discuss this article at the Economics Table inside the Diner

In the last couple of weeks we have begun to see a rapid unwind across all asset classes, from Stocks & Bonds to Commodities like Oil and Precious Metals.  For many people this seems confusing, since usually when one Asset Class goes DOWN, another one goes UP.

Also confusing to the Gold Bug crowd is why PMs are getting SLAMMED, when quite clearly all the Fiat Paper out there is completely WORTHLESS TOILET PAPER!  Why isn’t EVERYBODY dumping their Rolls of Charmin and snapping up PMs here?

The reasons are many, and they have been evident since the first major phase of the collapse began back in 2008 with the failure of Bear Stearns and Lehman Brothers, yet along the way many predictions have come across the net that the Dollar was going to Hyperinflate in the Near Term, Gold would Skyrocket to $5000/oz and the Dow would hit $30,000.  Rather what we have seen is even though massive “Quantitative Easing” has been undertaken by world Central Banks, they are barely able to keep the whole Titanic from Sinking.

Anyhow, Golden Oxen our Resident Gold Bug on the Diner thinks of me as a Tool of Central Bankers because I don’t see PMs as a real good alternative to Fiat Currency, even though I despise Central Banking and in fact all Money.  So I once again tried to explain to him why it was always quite likely that Gold would suffer an Asset Collapse here along the way, and this explanation follows below as a part of this article.

Saying What?

Saying basically that across the board Asset Price Collapse was predictable given the extreme amount of leverage in the system.

Whether you like it or not, the financial system is organized around the Reserve Currency of the Dollar, and Dollar Liquidity and Availability to the people who push around Big Money determines the prices of EVERYTHING.  If there is a shortage of Dollars moving around the system, it’s like a Shortage of Chairs in Musical Chairs.  When the Music Stops, everybody runs for a Chair, but somebody HAS to be left Chairless.

There is CLEARLY a shortage of Dollars now moving around the Asian Markets, that is why the SHIBOR is skyrocketing.  Similarly, “Investors” aka the TBTF Banks are trying to Liquidate Investments in Developing Markets like Brasil for example, which further drains liquidity from the system.

http://qzprod.files.wordpress.com/2013/06/overnight-shanghai-interbank-offered-rate-shibor-_chart-2.png?w=1024&h=576

Helicopter Ben’s announcement the “Tapering” would begin was the equivalent of Stopping the Music in the game.  Some Players are getting left Hung Out to Dry without Chairs, and some of them hold very large positions they are then forced to liquidate into a falling market.  There are thus Sellers, but no Buyers.  If you are a Trader, you are not even going to Buy Gold into a falling market, it is better in this case to hold onto your Dollars and in fact go ahead and Short Gold, further driving down the price.  This is a Game of Chicken, to see just how far you can go at driving the price down before finally jumping back in and buying when the assets finally bottom out.

Relatively speaking, compared to the Sovereign Bond Market and the Derivatives Market, the Gold Market is pretty small.  So when Bond Prices start falling, many Players with Large Positions in Bonds get some BIG ASS Margin Calls there, and to cover they then have to start liquidating smaller positions in Gold.  The smaller Gold Market thus gets overwhelmed by the larger Bond Market this way.  The counterparty risk in the Derivatives Market also forces liquidations, the FEAR is that the counterparties cannot pay off on these instruments.  It all feeds on itself once it gets going in earnest.

At this point it is going to be a very hard thing to stop, because the problems are distributed so widely across so many economies now, it is a much worse situation than it was in 2008.  The Central Banks basically shot their wad in stopping that Cascade, they don’t have tools now to stop it again.  Credibility is completely shot here, and EVERYBODY KNOWS the CBs themselves are Insolvent, holding at Par Value TRILLIONS in Bonds that will never Pay Off.

So there will be a Washout Phase here, as Andrew Mellon said:

Quote from:  Andrew Mellon

Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.

In this case it is more like:

Quote from: RE

Liquidate Bonds, Liquidate Derivatives, Liquidate CDOs, Liquidate Stocks, Liquidate Real Estate, Liquidate Student Debtors, Liquidate Commodities, Liquidate Precious Metals, Liquidate the ENTIRE FUCKING INDUSTRIAL ECONOMY!

Now, down the line a ways it is marginally possible PMs will make a Comeback as a Currency, though the Coinage and Distribution problems remain a very large obstacle to this.  However, the nearer term Washout & Liquidation phase has been predictable as an outcome for quite some time, at least since 2008 when I first picked up on the phenomenon.  Stoneleigh of The Automatic Earth also picked up on this around the same time, I don’t know anybody else who did though.  Steve from Virginia of Economic Undertow maybe, but I don’t think he started publishing until 2009.

Recently jumping on this Bandwagon is Chris Martenson of Peak Prosperity.  He notes with some concern the Mad Dash For Cash going on in Asset Classes across the board:

The Dash for Cash

The early stage of any liquidity crisis is a mad dash for cash, especially by all of the leveraged speculators. Anything that can be sold is sold. As I scan the various markets, all I can find is selling. Stocks, commodities, and equities are all being shed at a rapid pace, and that’s the first clue that we are not experiencing sector rotation or other artful portfolio-dodging designed to move out of one asset class into another (say, from equities into bonds).

Here’s the data. Let’s begin with the place that the most trouble potentially lurks  bonds and here we have to start with the U.S. Treasury 10-year note, as that is the benchmark for so many other interest-rate-sensitive items, such as mortgage bonds.

Here there’s been a very interesting story that predates the recent Fed announcement by nearly two months. This chart of the price of 10-year Treasurys tells us much (remember, price and yield are exact opposites for bonds; as one moves up, the other moves down):

The first take-away is that the current price of 10-year Treasurys is now lower that at any time since late 2011. The second take-away is that this has happened despite both Operation Twist and QE3.

That is, after all the hundreds and hundreds of billions of dollars of thin-air money-printing and bond-buying, Treasurys are now lower in price than when the Fed initiated Operation Twist and QE3.

In the meantime, until this washout is completed, you have some very WEAK currencies that gotta get slammed here, notably the Yen and Euro.  People holding large positions in those currencies are going to look to trade them for increasingly scarce Dollars.  This drives up the value of the Dollar relative to everything else including Gold until the Conduits begin to fail in earnest, at which point perhaps people try to unload Dollars for what Gold they can get their hands on, except it is in Permanent Backwardation.  You likely won’t find much to buy at any price in this situation.

Next week will be a good indicator whether the CBs still have enough Firepower to put the brakes on it again.  Even if they do temporarily though, it can’t last long.  Too many weak links now.

You have to remember always that all Money is an Abstraction which represents a perceived value of other things, mainly the Resources of the Earth and the Value of Work done, which can come in the form of Human or Animal Labor, or in the days since the Industrial Revolution began from the Thermodynamic Energy contained in fossil fuels, themselves a Resource of the Earth available only in a Finite Quantity.  When the money stops representing what is truly available and truly has value, the monetary system starts to deteriorate, and it really doesn’t matter WHAT is being used for money.  Precious Metals are no more “Sound Money” than anything else chosen to represent the real value of other things which at some point are either no longer available or lose their utility value.

There is a persistent Myth that before we got stuck with Da Fed and Central Banking, PMs provided a stable Monetary system for the world, but they in fact never did that at all.  During the Free Banking era of the 1800s when Gold & Silver both were in some circulation as Currency in the FSoA, there were very regular Depressions and Crashes of the economic system.  Going back to the Colonial era over in Europe, Gold & Silver would appear and disappear from circulation in various economies as the trade, production and THEFT of these metals sometimes put more in circulation, other times pulled them out of circulation.  Wars were a constant state of life in those times.  War does not indicate stability of any sort. The Hundred Years War, the Napoleonic Wars, quite endless there really.  Certainly utilizing PMs for Currency did not make the economy of the Roman Empire stable once it reached its Limits to Growth.  So there is no real good reason to suspect that returning to PMs would make for any more stable an economic system now than it did back then.

From Wiki, here is the list of Recessions/Depressions/Banking Crises JUST during the Free Banking Era up to the Great Depression:

US recessions, Free Banking Era to the Great Depression
Name Dates[nb 2] Duration Time since previous recession Business activity [nb 3] Trade & industrial activity[nb 3] Characteristics
1836–1838 recession ~2 years ~2 years —32.8% A sharp downturn in the American economy was caused by bank failures and lack of confidence in the paper currency. Speculation markets were greatly affected when American banks stopped payment in specie (gold and silver coinage).[3][14] Over 600 banks failed in this period. In the South, the cotton market completely collapsed.[9]
late 1839–late 1843 recession ~4 years ~1 year -34.3% This was one of the longest and deepest depressions. It was a period of pronounced deflation and massive default on debt. The Cleveland Trust Company Index showed the economy spent 68 months below its trend and only 9 months above it. The Index declined 34.3% during this depression.[15]
1845–late 1846 recession ~1 year ~2 years −5.9% This recession was mild enough that it may have only been a slowdown in the growth cycle. One theory holds that this would have been a recession, except the United States began to gear up for the Mexican–American War, which began April 25, 1846.[13]
1847–48 recession late 1847–late 1848 ~1 year ~1 year −19.7% The Cleveland Trust Company Index declined 19.7% during 1847 and 1848. It is associated with a financial crisis in Great Britain.[15][16]
1853–54 recession 1853 –Dec 1854 ~1 year ~5 years −18.4% Interest rates rose in this period, contributing to a decrease in railroad investment. Security prices fell during this period. With the exception of falling business investment there is little evidence of contraction in this period.[3]
Panic of 1857 June 1857–Dec 1858 1 year
6 months
2 years
6 months
−23.1% Failure of the Ohio Life Insurance and Trust Company burst a European speculative bubble in United States’ railroads and caused a loss of confidence in American banks. Over 5,000 businesses failed within the first year of the Panic, and unemployment was accompanied by protest meetings in urban areas. This is the earliest recession to which the NBER assigns specific months (rather than years) for the peak and trough.[5][8][17]
1860–61 recession Oct 1860–June 1861 8 months 1 year
10 months
−14.5% There was a recession before the American Civil War, which began April 12, 1861. Zarnowitz says the data generally show a contraction occurred in this period, but it was quite mild.[15] A financial panic was narrowly averted in 1860 by the first use of clearing house certificates between banks.[9]
1865–67 recession April 1865–Dec 1867 2 years
8 months
3 years
10 months
−23.8% The American Civil War ended in April 1865, and the country entered a lengthy period of general deflation that lasted until 1896. The United States occasionally experienced periods of recession during the Reconstruction era. Production increased in the years following the Civil War, but the country still had financial difficulties.[15] The post-war period coincided with a period of some international financial instability.
1869–70 recession June 1869–Dec 1870 1 year
6 months
1 year
6 months
−9.7% A few years after the Civil War, a short recession occurred. It was unusual since it came amid a period when railroad investment was greatly accelerating, even producing the First Transcontinental Railroad. The railroads built in this period opened up the interior of the country, giving birth to the Farmers’ movement. The recession may be explained partly by ongoing financial difficulties following the war, which discouraged businesses from building up inventories.[15] Several months into the recession, there was a major financial panic.
Panic of 1873 and the Long Depression Oct 1873 –
Mar 1879
5 years
5 months
2 years
10 months
−33.6% (−27.3%) [nb 3] Economic problems in Europe prompted the failure of Jay Cooke & Company, the largest bank in the United States, which burst the post-Civil War speculative bubble. The Coinage Act of 1873 also contributed by immediately depressing the price of silver, which hurt North American mining interests.[18] The deflation and wage cuts of the era led to labor turmoil, such as the Great Railroad Strike of 1877. In 1879, the United States returned to the gold standard with the Specie Payment Resumption Act. This is the longest period of economic contraction recognized by the NBER. The Long Depression is sometimes held to be the entire period from 1873–96.[19][20]
1882–85 recession Mar 1882 –
May 1885
3 years
2 months
3 years −32.8% −24.6% Like the Long Depression that preceded it, the recession of 1882–85 was more of a price depression than a production depression. From 1879 to 1882, there had been a boom in railroad construction which came to an end, resulting in a decline in both railroad construction and in related industries, particularly iron and steel.[21] A major economic event during the recession was the Panic of 1884.
1887–88 recession Mar 1887 –
April 1888
1 year
1 month
1 year
10 months
−14.6% −8.2% Investments in railroads and buildings weakened during this period. This slowdown was so mild that it is not always considered a recession. Contemporary accounts apparently indicate it was considered a slight recession.[22]
1890–91 recession July 1890 –
May 1891
10 months 1 year
5 months
−22.1% −11.7% Although shorter than the recession in 1887–88 and still modest, a slowdown in 1890–91 was somewhat more pronounced than the preceding recession. International monetary disturbances are blamed for this recession, such as the Panic of 1890 in the United Kingdom.[22]
Panic of 1893 Jan 1893 –
June 1894
1 year
5 months
1 year
8 months
−37.3% −29.7% Failure of the United States Reading Railroad and withdrawal of European investment led to a stock market and banking collapse. This Panic was also precipitated in part by a run on the gold supply. The Treasury had to issue bonds to purchase enough gold. Profits, investment and income all fell, leading to political instability, the height of the U.S. populist movement and the Free Silver movement.[23]
Panic of 1896 Dec 1895 –
June 1897
1 year
6 months
1 year
6 months
−25.2% −20.8% The period of 1893–97 is seen as a generally depressed cycle that had a short spurt of growth in the middle, following the Panic of 1893. Production shrank and deflation reigned.[22]
1899–1900 recession June 1899 –
Dec 1900
1 year
6 months
2 years −15.5% −8.8% This was a mild recession in the period of general growth beginning after 1897. Evidence for a recession in this period does not show up in some annual data series.[22]
1902–04 recession Sep 1902 –Aug 1904 1 year
11 months
1 year
9 months
−16.2% −17.1% Though not severe, this downturn lasted for nearly two years and saw a distinct decline in the national product. Industrial and commercial production both declined, albeit fairly modestly.[22] The recession came about a year after a 1901 stock crash.
Panic of 1907 May 1907 –
June 1908
1 year
1 month
2 years
9 months
−29.2% −31.0% A run on Knickerbocker Trust Company deposits on October 22, 1907, set events in motion that would lead to a severe monetary contraction. The fallout from the panic led to Congress creating the Federal Reserve System.[24]
Panic of 1910–1911 Jan 1910 –
Jan 1912
2 years 1 year
7 months
−14.7% −10.6% This was a mild but lengthy recession. The national product grew by less than 1%, and commercial activity and industrial activity declined. The period was also marked by deflation.[22]
Recession of 1913–1914 Jan 1913–Dec 1914 1 year
11 months
1 year −25.9% −19.8% Productions and real income declined during this period and were not offset until the start of World War I increased demand.[22] Incidentally, the Federal Reserve Act was signed during this recession, creating the Federal Reserve System, the culmination of a sequence of events following the Panic of 1907.[24]
Post-World War I recession Aug 1918 –
March 1919
7 months 3 years
8 months
−24.5% −14.1% Severe hyperinflation in Europe took place over production in North America. This was a brief but very sharp recession and was caused by the end of wartime production, along with an influx of labor from returning troops. This, in turn, caused high unemployment.[25]
Depression of 1920–21 Jan 1920 –
July 1921
1 year
6 months
10 months −38.1% −32.7% The 1921 recession began a mere 10 months after the post-World War I recession, as the economy continued working through the shift to a peacetime economy. The recession was short, but extremely painful. The year 1920 was the single most deflationary year in American history; production, however, did not fall as much as might be expected from the deflation. GNP may have declined between 2.5 and 7 percent, even as wholesale prices declined by 36.8%.[26] The economy had a strong recovery following the recession.[27]
1923–24 recession May 1923 –
June 1924
1 year
2 months
2 years −25.4% −22.7% From the depression of 1920–21 until the Great Depression, an era dubbed the Roaring Twenties, the economy was generally expanding. Industrial production declined in 1923–24, but on the whole this was a mild recession.[22]
1926–27 recession Oct 1926 –
Nov 1927
1 year
1 month
2 years
3 months
−12.2% −10.0% This was an unusual and mild recession, thought to be caused largely because Henry Ford closed production in his factories for six months to switch from production of the Model T to the Model A. Charles P. Kindleberger says the period from 1925 to the start of the Great Depression is best thought of as a boom, and this minor recession just proof that the boom “was not general, uninterrupted or extensive”.[28]

In all cases through the Growth Period of a Civilization, Debt & Credit have been used as a means to facilitate Commerce and accelerate the Growth of a Civilization to the Limits of its Resource Base.  When those Limits are reached, the Monetary system begins its collapse phase, because the associated Debt & Credit systems are all predicated on persistent Growth of the Economy.  The Interest being paid on any money can only be paid if the economy grows.  If the money is Gold or Silver, said interest can only be paid for so long as more Gold and Silver are mined or Stolen from others.  If the money is Fiat, the interest can only be paid as long as the containing economies produce more and more stuff from the resources of the earth.  When the expansionary period is finished, you can’t return on investment, you can’t pay interest.  Thus now in our case, you have the ZIRP policy, but unfortunately said policy has the Blowback that nobody’s Pension Plan will pay off anymore and there is about no Asset Class you can buy into where there will be an organic return on the investment.

To conclude here today in this episode of the Financial Collapse Phase of Industrial Civilization, we still have a bunch of Workouts and Unwinds that have to occur here before the Dollar is abandoned as the Numerical Arbiter of Value in the Global Financial System.  A couple of Smaller but nevertheless still pretty BIG currencies have to be unwound, namely the Euro and the Yen.  Investors trying to unload these currencies are most likely to head for the Dollar, backed as it is by the Big Ass Military.  Hedge Funds looking to Unload securities they hold large positions in in Developing Nations will also be looking to unload them for Dollars.  TBTF Banks concerned about counterparty risk in Derivatives they hold written by other TBTF banks seek to unload those for Dollars.  As many Dollars as Helicopter Ben has Printed here over the last 5 years, there just are not enough to go around in a Shadow Banking Economy that very likely is measured in Quadrillions.  There are not enough Chairs here to go round.  When the Key Men in the game begin to fall, it all begins to accelerate.  It appears now this Game is Afoot at last.

holmeswatson2

RE

Ostriches on the Blind Side

Off the keyboard of RE

Published on the Doomstead Diner on June 1, 2013

Discuss this article at the Economics Table inside the Diner

ostrich-head-in-sandAnyone watching the Financial Newz over the last couple of weeks has been treated to a marvelous show, watching the 3rd largest Industrial Economy in the world implode on the financial level.  The economy is of course that of Japan, and said Implosion is long overdue, it really should have gone into Overdrive right after Fuk-U-shima.   Keeping it Propped Up has been a Priority, since a Cog this big in the Industrial Machine going down has so many bad financial consequences that essentially the Disaster of the Physical Sense was Ignored by the Financial Markets, except for a couple of weeks in the direct aftermath of the Tsunami.  After that, it was assumed those Plucky Nips would get it all back together and go on with Biz as Usual, Pumping out the Nissans, Nikons and Hitachi Front End Loaders and Backhoes from the Factories surrounding Tokyo.  If they could not draw power from the Nuke Plants to power said Factories, they would replace it by importing more Coal & Oil, keep the JUICE Flowing, and keep exporting the toys to a Positive Trade Balance.

Sadly for the Salarymen and Mrs. Watanabe, this idea did not work out so good over the last couple of years.  Japan’s Trade Surplus evaporated, and it’s already OUTRAGEOUS Public Debt which was somewhere in the Stratosphere over 200% of GDP ballooned even more, with no end in sight at this time, that is for sure.

In the intervening Time Period since Fuk-U-shima, all Eyes have been focused on Eurotrashland.  Greece on the Greasy Skids, Cyprus puking Ruskie Gangsta Money, Spain and Portugal sucking up to the IMF…you know the story by now.  Somehow though, despite the fact absolutely ZERO has been resolved in any of these Eurotrash Nations, over the last two weeks any problems they have simply VANISHED into the Ostrich Head Sand of of the MSM.  Nobody in the MSM is talking about the Eurotrash now in the MSM, because you see, the Eurotrash are on the BLIND SIDE of this week’s Collapse Story.  We are focused here now on the Nips and THEIR collapse problem, which so surprisingly (sic) has emerged once again here.

http://www.kids.esdb.bg/images/ev2.jpgWhy has this story re-emerged here now?  Essentially because after a couple of YEARS of complete FAILURE getting their Mercantilist economy running at a PROFIT again, Da BoJ has gone on a Printing Spree that makes Helicopter Ben look like a PIKER.  Abenomics is giving a BLOW JOB to Paul Krugman, with the supposition that by simply SHOVELLING Credit at the Nip Banks, they can get the Toyotas moving out of the Factories again and heading for the Open Road of the Eisenhower Interstate.  Small problem here, the Happy Motorists who drove those miles are fresh OUT of Gas they can afford to buy, and there are PLENTY of decent Used Carz on the market which do quite the same job of getting you here to there as a new Nissan EV does. Most of said Happy Motoristas are in CC debt up to their EYEBALLS already, and can only even buy a Used Car on a “No Credit Check, No Money Down” deal from the local Used Car Salesman.  After buying said car to get to work at Mickey Ds for $7.25/hr, the only way they can afford Gas for it is to stop paying on the Mortgage.  Sense a PROBLEM here with this methodology?  LOL.

How many years/miles would you have to drive an EV priced at say $40K to match up to a Used Car you pick up for say $3000?Ballparking it here, this leaves you $37K to spend on Gas.  Say your workplace is 20 miles away, and your Used Car gets 20MPG.  So each week you drive 200 R/T miles to make it to the Workplace and Back to your McMansion, stopping at Safeway on the way home to pick up the Groceries.  You put approximately 10K miles/year on the Used Car this way, which takes about 500 Gallons-o-Gas to cover.  Price the Gas at $10/Gallon.  So it costs $5000/year in fuel to run the car to get you to work.  Even at $10/Gallon, it takes more than 7 YEARS for you to make up the price differential between the ICE Used Car and the New Prius utilizing Electric Power, and that is assuming the Electricity comes completely FREE!  Which it does not of course, even if you have enough Solar PV cells on your McMansion Rooftop to charge up your Prius every night, those suckers cost you a decent piece of change ALSO.  Absolutely BEST CASE scenario here, it would take a Decade at least to make up the cost differential between a Prius and a Used Car with Gas priced at the currently in the FSoA OUTRAGEOUS price of $10/Gallon!  How long do you think the Lithium-Ion Battery Pack in said Prius lasts?  If any of you have experience with Li-I rechargeables in your Laptop, you know these suckers generally give up the ghost after 2-3 years if you regularly charge and discharge them.  So at the very LEAST over this 10 year lifespan of the Prius, you will need to replace said Battery Pack 3 times, at a CURRENT price in the $15K range!  Not accounting for how much MORE it will cost to replace said Battery Pack 3 years from now, if you can even GET one shipped over from China.  On no level whatsoever is this the least bit economic or sustainable, and only if you are absolutely ROLLING in DOUGH can you afford such a vehicle as Insurance against a disappearing liquid fuel supply.

So overall, between Decreasing Demand for their Automotive product of ANY type, ICE or EV, and Increasing Energy costs due to the need to import still more Fossil Fuels to make up for lost Electric Production from their Nukes, the Nips have gone from Trade Surplus to Trade Deficit now, and they still got that ever ballooning 240% Debt to GDP ratio to deal with.  WTF is going to buy JGBs here to finance the massive QE Abenomics is trying? Only the BoJ, and maybe Da Fed to keep the Yen from completely collapsing.  The Ostriches here all have their heads in the sand, you obviously cannot solve a systemic problem like this just by shovelling Funny Money at it.

While Japan represents the Disaster of the Day in MSM Economic Newz and even on the pages of Zero Hedge, the very SAME Ostrich problem is going on in Eurotrashland, and here in the FSoA as well.  Eurocrat Clowns run around in a Kabuki Theatre presentation of a Keystone Kops movie as though they can really “solve” the problems every last nation in the Eurozone has (INCLUDING the Krauts!) by dropping Austerity down on everyone, slashing Goobermint Jobs and Pensions, doing “internal Devaluations” cutting salaries in the Private Sector also, all of which is supposed to lead to a “Recovery”.  How?  Cut everyone’s salary, tax receipts fall, they have less income to spend to buy Kraut Kars or Vacation Condos on the Costa del Sol and the Velocity of Money drops to near ZERO!  Super Mario Dragon can print money to his hearts content but it goes NOWHERE but into Ballooning Bubbles and never hits the street economy at all.http://doctorbulldog.files.wordpress.com/2010/03/keystonecops.jpg

Same deal goes on here in the FSoA, still masked a bit better in most places, though not in places like Detroit, Stockton and Harrisburg, already BK and far down the Toilet of FAST COLLAPSE.  I would challenge John Michael Greer to walk the Streets of Detroit and call that one “Slow Catabolic Collapse”.  LOL.

With the Ostrich Movement so prevalent at the very Top End of our society and its control structure, is it any wonder really that on the Personal, Local and Individual level you find Ostriches all around you, amongst your Family Members and Friends?  The “Big Boys” aren’t admitting the TRUTH here, they are busy spinning BULLSHIT on the pages of the Wall Street Journal and the UK Telegraph, courtesy of Shills like John Hilsenrath for the WSJ and Ambrose Evans-Pritchard of the UKT.  OK, granted most dimwit J6Ps don’t read either Hilsenrath if they live in the FSoA OR Ambrose if they live in Jolly Old England, but they do still absorb the next few levels down coming off Faux Newz and MSNBC.  When they can tear themselves away from Lindsay Lohan’s latest Rehab adventure or Kim Kardashian’s marital break up.

These folks are Ostriches of Ignorance, a sad evolutionary consequence of our “Culture”, but they are not RESPONSIBLE for what has gone down here, they are victims of it with about ZERO power to make any difference at all no matter WHAT they do.   Even if they do manage to wake up soon enough to possibly enhance their own survival chances, they sure can’t make a difference on how the Military-Industrial Complex will try to enhance its survival chances.  At least not until such time as the playing field is Level Enough that such a fight could be undertaken and actually WON, which still is a bit down the line here.  It will take a good bit of time for the Industrial Military to collapse on itself, it is likely going to be the very LAST of the Conduits to succumb to decreasing Resource availability to run the War Machine.

To Undercut this, to take DOWN the apparatus before it succumbs to Entropy as it must, at some point a fundamental Weakness has to be exploited, and that is the only real HOPIUM that exists for cutting short an unacceptable spin down of population reduction run by and for TPTB aka Illuminati.  The weaknesses are there all over the place to be so exploited, but dumb ass OSTRICHES on the BLIND SIDE do not see them.  YET.

http://2.bp.blogspot.com/-pHneOZTuq9Y/Ti9ySgiKtBI/AAAAAAAAI8o/LgNkY7ZD6dE/s400/StampedeMentality.jpgFor those of us who DO see the weaknesses, we sit and WAIT, and to the best of our ability try to wake people UP to what is coming down the pipe here.  Bringing round Loved Ones who do not see these things, do not WANT to see them is very tough.  Frustrating to be sure for many Doomers.  Trust me though, if you Stay the Course, keep hammerring down on what is EVIDENT here in the progress of Collapse, eventually you will break through the sand to reach the Head of even the most deeply buried Ostrich.  When that time comes, when FINALLY you can bring the Ostrich Heads from the Sand, when finally the Playing Field is sufficiently Level to make a real FIGHT of it you can WIN, THEN comes the time you make the Final Battle for All the Marbles.  Then you TAKE NO PRISONERS.  Then you TERMINATE WITH EXTREME PREJUDICE.  Then you make the Pigmen REGRET THE DAY THEY WERE EVER BORN!!!  Then you do not just GET MAD, YOU GET EVEN!  You ROLL over them with the POWER OF NUMBERS!  You STAMPEDE THE MOTHERFUCKERS.

This is NATURAL LAW. Backfire.  Fight Fire with Fire. You want some Darwinism here Mother Fucker?  I’ll give you some FIRST CLASS Darwinism.  Where’s my GUILLOTINE?  LOL.

RE

Debt Monetization Economics

Off the keyboard of RE

Published originally on the Doomstead Diner on January 12, 2013

Discuss this article at the Economics Table inside the Diner

If you are the kind of person who worries about Inflation and read the pages of Zero Hedge, there’s a good chance a few days ago reading through the article summaries on the Home Page you had to take a trip to the Throne Room and kneel down and Pray to the Porcelain God while Heaving the Technicolor Yawn.

Let me begin this article by pasting in a few of the synopses from Jan 7th, which came nearly one right after another describing the various and sundry Monetary “experiments” being undertaken by the Bank of Japan (BoJ), the People’s Bank of China (PBoC), the Swiss National Bank(SNB) the European Central Bank (ECB), and of course that Central Bank we all Love to Hate here in the FSofA, Da Fed(FRB).  Not all these main CBs are covered in these articles, but they are sufficient to detect a pattern forming up.

 

Tyler Durden's picture

Japan May Or May Not Mint Quadrillion Yen Coins, But It Will Monetize European Debt

Submitted by Tyler Durdenon 01/07/2013 – 22:03

Just when we thought America would be alone in crossing into the montary twilight zone where so many Keynesian lunatics have gone before, and where trillion dollar platinum coins fall from the sky right onto the heads of all those who have not even the faintest understanding of money creation, here comes Japan:

ASO: JAPAN TO BUY ESM BONDS
ASO SAYS JAPAN TO BUY ESM BONDS USING FOREIGN EXCHANGE RESERVES
ASO: ESM PURCHASES WILL HELP TO STABILIZE YEN

For those who have forgotten, the E in ESM stands for European (the S for Stability), not Japanese (Stability). Otherwise it would be, er… well, JSM. Keynesian at that. But yes – Japan will now proceed to “stabilize” itself by monetizing European debt. Because its own JPY 1 quadrillion in debt was not enough.

Tyler Durden's picture

Meet Jack Lew: Tim Geithner’s Replacement

Submitted by Tyler Durdenon 01/07/2013 – 19:58

Bloomberg is out after hours with news that was expected by many, but which was yet to be formalized, until now: namely that following today’s flurry of contntious nomination by Obama, the latest and greatest is about to be unveiled – Jack Lew, Obama’s current chief of staff, is likely days away from being announced as Tim Geithner’s replacement as the new Treasury Secretary of the United States. In other words, Jack will be the point person whom the people who truly run the Treasury, the Treasury Borrowing Advisory Committee, chaired by JPM’s Matt Zames (who just happens to also now run the notorious JPM Chief Investment Office which uses excess deposits to gamble – yes, you really can’t make this up) and Goldman’s Ashok Varadhan, global head of dollar-rate products and FX trading for North America (recently buying a $16 million pad at 15 CPW) will demand action from.

 

Tyler Durden's picture

Greek Banks To Merkel: “Please Ma’am, Can We Have Some Moar”, Or Here Comes Bailout #4

Submitted by Tyler Durdenon 01/07/2013 – 19:19

As loathed as we are to say “we told you so,” but we did and sure enough eKathimerini is reporting this evening that: thanks to the ‘voluntary’ haircuts the Greek banks were force-fed via the latest buyback scheme and the political uncertainty causing non-performing loans (NPLs) to rise (in a magically unknowable way), they will need significantly more ‘capital’ to plug their increasingly leaky boats. The original Blackrock report from a year did not foresee a rise in NPLs (which Ernst & Young now estimates stands at 24% of all loans) and the buyback dramatically reduces the expected profitability of the banks as it removes critical interest payments that would have been due. Whocouldanode? Well, plenty of people who did not just buy-in blindly to the promise of future hockey-stick returns to growth. Expectations are now for the Greek bank recap to be over EUR30bn.

 

Eooowwwchhh!   Reading this stuff, you get the sinking feeling that Monopoly Money is pouring off the Printing Press at Warp Drive Speeds, and in a fashion you would be correct in believing that.  The Nipponese are clearly in the Deep Doo Doo, their Export Market is collapsing,  the “Off” switch on “cheap” Nuke Power currently remains off (though the new Goobermint intends of firing them up again); the Greeks are a Black Hole of Debt the ECB and various and sundry Financial Special Purpose Vehicles (SPVs) like the ESM keep funding with more fictitious money, and of course Da Fed remains busy in Financing the FSofA War Machine through an exponentially growing Federal Deficit, while at the same time expanding it’s “Balance Sheet” in order to buy absolutely WORTHLESS collateral from the TBTF Banks to keep them from going under this week.

Trying to look at what EVERY CB is doing here to Monetize Debt is an exercise in futility, the rest of the post would be filled with Graphs up the Wazoo here.  As it is, just looking at FSofA Debt Monetization and Population Issues has more graphs than I like to jack into one article.  I’m a Big Picture Pontificator, not an Actuary or CPA, so inundating the reader with endless Graphology of the Exponential Function in action is not my Stock in Trade.  I’m a decent enough mathematician, but I am also perfectly aware that throwing out endless numbers for most people makes their eyes Glaze Over, so I try not to do that.

However, it is necessary in going forward with this post to look at what actually is occurring on the Monetary level, at least here in the FSofA utilizing Da Fed as the Example.  It’s no different for the BoJ,the ECB, the SNB or the PBoC, and in fact since Da Fed produces the WORLD RE$ERVE CURRENCY of the DOLLAR, this best represents what is occurring on a global scale with the monetary system.

Let’s begin with the expansion of the Balance Sheet of Da Fed.  This BS expands as Da Fed purchases Trash for Cash.  TBTF Banks unload worthless MBS, CDOs, Soveriegn Bonds, Securitized Student Loans and Baseball Cards (the ONLY thing in this list of real value)

 

As you can see, the FRB Balance sheet shot to the Moon in 2008, when in order to keep the Financial System from Imploding, Da Fed when on a Buying Spree of Junk Assets on the books of these banks they could not unload to anybody else for Cash, which everybody was short of at the time.  Does this really mean Da Fed “printed money” here for this stuff that wasn’t already in existence?  Not really, becuase these ‘assets” represented money that was already trading around in the system anyhow, Da Fed just traded FRNs for the collateral, providing more liquidity in the system.  Actual Dollars in Circulation, the M1 Money Supply didn’t change all THAT much, certainly not as much as what the above fairly TERRIFYING Graph would indicate.

Not that it still isn’t terrifying to see this vast expansion of Da Fed BS, it still is because it is indicative of the fact the regular Credit Market was in catastrophic failure mode so the assets were transferred off of Private Balance sheets onto Da Fed Public one, even though all this accomplishes is moving insolvency from one place to another.  In the end when the system does implode (it will), it really doesn’t matter who goes broke FIRST here because everybody will go broke.  The Banksters weren’t ever going to be able to pay off their Bad Bets, nor will the Taxpayer be able to do it.  Broke is Broke when distributed over an entire system like this.

The next graph shows the ALSO TERRIFYING expansion of the Federal Deficit, not coincidentally occurring at precisely the same point in time, 2008-9, when Da Fed Balance sheet went Ballistic.

Why is the Federal Deficit ballooning here at the same time?  Because with Private Credit drying up for lack of Creditworthy Borrowers in the Private Sector, in order to keep the system from imploding on this level, Da Goobermint steps in as the Borrower here, basically borrowing money on its own account to do the numerous Bailouts of failing institutional lenders.  This again serves the purpose of providing liquidity and keeping Zombie Banks as the Walking Dead a while longer, but it is still not really putting money into a system that wasn’t already there, just in other forms in the “Shadow Banking” system.  This is unaccounted for money, and nobody really knows how much of it is out there even now, estimates run as high as Quadrillions.  All that is happenning in this case is that some of that sloshing pool of fictitious money is being moved to the Public balance sheet, in dribs and drabs as parts of the system continue to fail.

So now what we have to do is to drop back from the gross debt being pitched around here and look at the components of the Money Supply to see how they are doing.  Below is the graph of the FSofA Monetary Aggregates, divied up into M1, M2 and M3 forms of “Money” that circulate and/or get parked as Savings or Investment in something.

The part of this graph that concerns the Main Street Economy and J6P is mainly down in Blue at the Bottom of the graph.  That’s the actual Cash FRNs floating around out there and digibits in your Checking Account.  As you can see, it has increased substantially since around 1980, but nowhere near the vast increase through the other components of the Money Supply, half of which were such a small component of the total supply in 1970 they don’t even show up on the graph.  This is where most of the “Money” is floating around, and it is mainly held in large Corporate Accounts, Pension Funds etc, in theory there as a balance sheet number, but in realty not there at all.  This is the most fictitious of the fictitious money.  “Other Checkable Deposits” I believe represents Reserves the TBTF Banks have on deposit at Da Fed, my good friend and fellow Macro Economist Steve from Virginia from Economic Undertow will correct me if I am wrong on this.

Although the increasing muber of FRNs and digibits is causing some inflation, particularly in Food prices now which are also being pressed on the Supply End due to drought,  overall cost per capita doesn’t expand that rapidly (at least not at an HI pace until there is a currency collapse of the Dollar), because this Main Street Economy money is distributed out over many more people than it was in 1970.  First the graph of US Population expansion over the time period in question.

As you can see, since 1970 the FSofA has seen a roughly 50% increase in population size from the 200M neighborhood to the 300M neighborhood, so what FRNs there are out there for J6P to earn are spread over more people.  All else being equal, if the number of FRNs don’t increase at the same rate the population size does, each person will have fewer of them, which would be of course highly deflationary for Prices.  Fewer people would have say $5 for a 1 lb Ribeye Steak at Safeway, so to sell the same number of ribeyes, Safeway would have to lower the price to what the new normal was, in this case a 50% decrease in available cash per capita of consumers of Ribeyes, so the price would have to drop to  probably around $3/lb to keep selling the Ribeyes.

Obviously no such thing has happenned, the price keeps going up, but not as fast as you might think it would if you look at the top graphs in the Fed balance Sheet and Federal Deficit graphs.  More money is out there, but sprinkled out over many more people than it was in 1970, and not just here in the FSofA either.  The vast increase in total money supply mostly is NOT distributed out either, it remains “in reserve” at Da Fed on accounts of the TBTF Banks.

This because with increasing Globalization of trade along with the fact the Dollar has served as World Reserve currency through the time period has meant many of these Dollars are now sprinkled across the WHOLE WORLD, often used as black market currency in many highly populous nations that are unable for one reason or another to run a viable currency system of their own.  So Dollars now aren’t spread through just the FSofA population, but across the whole WORLD population in one form or another.

So this leads us to look at the Global Population Graph for the time period, yet another TERRIFYING graph.

 Here you can see especially if you look at Asia since around 1950, the Global Population has more than Doubled, and where have many Dollars been spent to buy stuff?  From Asia of course, Japanese Carz and Electronics, Chinese Plastic Toys etc.  Since the FSofA has had a Trade Deficit since at least the 1970s, a constant outflow of Dollars produced has made it into the hands and savings accounts of literally Billions of Asians, when looked at across the aggregate scale anyhow.  In reality, most of said dollars are just in a few hands, not ALL Asians have gobs of FRNs stuffed in the Bank of Sealy.

Any given INDIVIDUAL in China doesn’t have gobs of FRNs to spend to buy a Ribeye steak, in fact most have far fewer than even the most imoverished Amerikans living on Food Stamps.  The result is that instead of getting an HI in the price of Ribeyes, what yoou mostly get is Demand Destruction as margins are compressed and the actual price a Cattle wholesaler can get is pressed down by the inability of most people to afford to buy the Ribeyes.

The same Bizness of course is occurring with Gasoline (Petrol for the Eurotrash), so instead of HI in Gas, actually prices have now once again DECLINED here in Alaska to BELOW what I paid for it when I first got up here 7 years ago.  It has been above that price for most of those years, but across the board the Demand Destruction is taking hold on this, and despite no increase in total production of Liquid Fuels (see Monsta666 Energy I&II articles), the prices are getting pushed back down again.  Mainly probably attributable to cratering demand for Gasoline in Eurotrashland, now Double digit Unemployment throughout the PIIGS countries and working its way into France also.

To conclude here in this portion of the running Kick the Can Game in Debt Monetization Economics,  despite some outrageously BIG numbers and some really TERRIFYING graphs is really just spreding its way across the entire global monetary system, but because all the CBs are currently engaged in the same process of trying to provide liquidity to an illiquid market, the RELATIVE VALUATIONS between the currencies are not yet changing that much.  Euro’s will spike up or down on a given day dependent on the Newz, same with Yen, same with the Dollar itself of course.  Everytime they do spike though, the OTHER CBs in the system react to it, genrally themselves ALSO adding more liquidity.  Absolute Numbers go up, Relative Values don’t change all that much, at least they have not YET.

Eventually, somebody’s currency will crack here in a Crisis of Confidence, forcing a run out of that currency.  Remains to be seen who is the FIRST to go down the Toilet, but it most CERTAINLY will not be the Dollar.  It is too big and too much of the current system is dependent on valuations made in Dollars.  the much more likely candidates are the Euro or the Yen.  These are the currencies most at risk right now for an HI event, not the Dollar.

In terms of actual Purchasing Power for all these currencies with respect to Oil & Food (closely related clearly), all are destined for terminal decline as the resource base declines and the Cheap Oil dwindles in availability.  What counteracts that on the gross scale is Demand Destruction, and that can occur a lot faster than actual resource depletion does.  It is moving at an INCREDIBLY rapid pace in Eurotrashland right now.

I had Chartist Friend From Pittsburgh do a curvilinear wave analysis of this graph, and as I suspected,  the resistance line is well broken and demand for Oil Products in Europe is likely to hit new lows as we move into 2014. How LOW will it GO by 2014?  13K BPD seems like a very good bet to me.  This represents around a 20% decline off Peak Demand in Europe for Oil, while at the SAME time the population there has increased substantially.  Obviously, per capita consumption of Oil is on a steady downward slope there already,  and this is nothing if not highly deflationary all around.  Thus of course the massive Unemployment problems the Eurotrash are immerssed in already.

Where will the Demand Slack be taken up?  Will it be in China or South America or Africa, in the “growing” economies of the developing world, or will it be in the last place to lose Credi to buy the Oil, likely the FSofA, home of the Printing Press of the Dollar and Home Base for the Big Ass Military?  One thing is for certain, TPTB cannot allow the Demand to Crater entirely, because when it does (it will eventually of course), the entire monetary system they depend on to maintain power goes with it.  The ULTIMATE demand side solution for this is full on WAR, and that of course is liekly to come down the pipe in the bye and bye.

Time will tell, but until the whole Geopolitical equation plays itself out, my bet is that no debt monetization undertaken by Da Fed will spark an HI in the Dollar during this period.  There are too many other weaker players in the same game.  The “Game” still has a few rounds to go in terms of competitive devaluations of the Major Currencies by each of the respective Central Banks, along with still more rounds of Austerity and Demand Destruction being embarked on by more Central Players, including France, Germany, and of course the FSofA.

RE

The Banksters go ALL IN

Discuss this article at the Economics Table in the Diner

What follows this introduction is one of the many articles I wrote on TBP in the aftermath of the Fuk-U-Shima Quake and Tsunami.  Some of them are too dated to repost, but this one has particular significance because of a similar Quake and Tsunami building now in Eurotrashland, just on more of a financial level than a geological one.  The Euro markets are crashing now in much the same way the Nikkei did after Fuk-U-Shima.  The CB interventions already look similar to what occurred then.

The important aspect insofar as recent discussions going on inside the Diner are concerned relate to how Hyperinflationary events might transpire in the aftermath of such Quakes. In the first paragraph, just substitute “Euro” for Yen and “ECB” for BoJ and you should see the whole game is pretty interchangeable here as far as how the CBs are handling it.  Will this lead to Hyperinflation, and in which currencies and when?  Read on for some more thoughts on these subjects.

RE

After a couple of days watching the Nikkei sink like a stone and the Yen rapidly appreciate in value against the Dollar, the Central Banksters of the world Pulled together here, and now have gone ALL IN. The Geeks from MIT, Harvard, Princeton, Columbia and Trinity College of Cambridge University have loaded up on Jolt Cola and they are working in overdrive now pulling All Nighters every night. The BoJ will print as much Yen as necessary to keep the Nikkei floating and the other CBs will print in tandem to swap out as much currency as necessary to keep the relative exchange values even. This should keep the Supercomputers doing Teraflops here until the circuits burn out.

What are the Intangibles, what is going on BEHIND the curtain here? Its not all that different than what has been going on with the NYSE, which is that although the nominal value of the stocks are being kept relatively even, the OWNERSHIP of those stocks has been steadily changing hands. The Insiders are selling out their shares, the CBs are buying them up through their Proxies of the trading desks of the TBTF Banks.

All this really worthless paper is going onto the Books of Banks which ALL will eventually go BK, the liabilities then transferred to the Nation States they are chartered under. Insiders are currently exchanging the stocks for currency they can still use to buy hard goods and secure themselves. They need the currency to remain working as long as possible to be as complete as possible buying up what remains of wealth in the world. Every means possible to forestall currency collapse is being taken here, because once it does occur, all bets are off and it becomes a Power Game which all the Big Players are positioning themselves to play here, but which none of them know the outcome of.

By maintaining the relative value BETWEEN international currencies, none of them will Hyperinflate until there is a local collapse of confidence in one of the currencies, most likely to be the Yen first now. Local Japanese are going to start spending what Yen they have as fast as possible as soon as there are any hard goods to buy with that Yen. Internal commerce in Japan is so slow now (for all intents and purposes it is at a complete halt) that this Hyperinflation will take a while to develop. Might not be for a few weeks or even monthswhen they get some control over the ongoing Nuke disaster and Humanitarian crisis of around half a million people displaced from their homes and in emergency shelters, and try to begin “rebuilding”. Could begin sooner though once the currency traders wake up and smell the coffee.  (Note: over a year now still no HI of the Yen. It clearly takes a lot longer for such a loss of confidence and complete evacuation of a currency such as the Yen to occur.  So for the Euro, same probably is true, and it probably will take longer than seems logical right now for a complete Euro Collapse to play itself out)

Right NOW, the Yen has appreciated in value because it is NEEDED in Japan, but once it becomes evident that it is hyperinflating, everybody will try to get rid of what Yen they hold outside of Japan. The currency is fundamentally worthless now, the industrial infrastructure on which its value was based is pretty much in ruins. Short term though, it is highly VALUABLE, because everybody in Japan needs Yen right now, it’s the currency THEY use to buy stuff.

Anyhow, if the BoJ continues printing at this rate, currency traders who hold Yen should see the Writing on the Wall unless they are stupefyingly dense. The Unknown Variable here is just how fast this will Dawn on the currency traders, and how fast they react by trying to dump their holdings of Yen. If they start dumping, the BoJ has to stop printing, elsewise you get a synergistic effect and the currency completely blows up. (So WHY don;t they dump the Yen as  I wrote here?  My current take on this is that Da Fed and BoJ prevent this from occuring through Swaps and currency manipulation.  the Carry Trade here is enormous, and these folks cannot unwind these trades without gettinng HAMMERRED, so the CBs prevent runs on the currency juicing the market either way if it looks like a run is underway.  I suspect the same will be true if a major run begins on the Euro.  Not so sure Da Fed can move enough CASH through the Back Door in the even of a run on Spanish Banks though.)

If you think about it, this explains why the Dollar, despite constant printing by Helicopter Ben over the last few years has not Hyperinflated. Yes, there IS price increase in commodities and some services resulting from Hot Money flow into speculation in the commodities market and indexes which track that are perceived by many as “inflation”. However, for the most part the money printed here by HB is being HOARDED, not spent rapidly out into the market by end consumers. End consumers for the most part have no access to this money. Smart folks who are still in Surplus aren’t spending their dollars, they are paying down debt and some are Speculating with them buying PMs and driving the price of them up. Relatively small segment of the population in the category of current surplus to be doing either of these two things though. However, there is not YET a crisis in confidence over the Dollar which would lead to across the board Dollar Dumping by people who still have a large surplus of dollars. To achieve Hyperinflation, there must be a crisis in confidence in the currency, which has not happened yet with the Dollar. It will happen eventually as long as the current path is pursued, but the crisis of confidence will come in smaller currencies FIRST, the Yen being the most likely right now.

As it becomes ever more clear just how dire the situation is in Japan, there will be a crisis in confidence over the value of the Yen. Belief is a very strong thing, so is Denial. The belief still exists in many that Japan will shrug this off, rebuild and continue to produce Toyotas and Sony Plasma TVs to sell to worldwide Consumers. Reality will eventually undermine this belief, denial will become impossible as long as things there continue to be out of control, this will happen sooner rather than later.

Of course, the ongoing Nipponese Armageddon is only a part of the total Collapse Picture. Just about as big as this is what is happening over in the M.E., and with the sheer MAGNITUDE of the problems in Japan I haven’t spent much time in the last few Daily Rants keeping tabs on that Shitstorm. Fast as I can keyboard, its just not possible to keep up with all this shit. Besides, I have to keep the OP under 5000 words each day anyhow. LOL. Partially because I promised I would do this, but more for personal reasons which is that if I let myself go longer, it would take more time than the hour or so I will devote each night to writing while I make dinner before I hit the sack. I spend a LOT more time than this composing, but I do it during the day while I am at work in my head. It’s multitasking. So at night, all I have to do is keyboard it out which does not take that much time, not actually compose it which is more time consuming. That is how I write so much every day, in case you were interested, which you probably are not. LOL. The Quality varies from day to day obviously. A few Gems, plenty of Rocks. If you are Panning for Gold here in what I write, you have to sift through a lot of dirt to find some grains of Gold. I’m just ranting on what I think about with respect to the ongoing Collapse, that is all.

Since I last updated on the M.E., there has been quite a bit of action in Bahrain and Saudi Arabia, but the big Newz of the day is the UN resolution to implement a No-Fly Zone over Libya, AKA a License to NATO to Bomb el-Kabong back to the Stone Age. The “Arab League” quickly capitulated on the idea that Arabs could solve Arab problems here. The “Arab League” is of course not representative of the Arab PEOPLE, it’s the Stooges the Illuminati prop up as Goobermints in these countries, all part of the Oil Conduit.

Why are they doing this? It is NOT to bring Democracy to Libya obviously, its because there is so much fucking CHAOS there right now that probably ZERO Oil is floating on tankers out of Libya, even though the MSM claims that production is only down by 2/3rds or so. Italian Auto plants are dependent on Libyan Oil, and if they don’t keep producing Fiat Cars, Silvio Berlusconi will not have any Fiat Money to buy Underage Hookers with.

So the ANSWER they have come up with here is to as quickly as possible bomb the living shit out of all the military hardware THEY sold to el-Kabong, so that then HOPIUMFULLY they can send in a small force of Boots on the Ground to ally with Rebels and get those damn Oil Fields BACK online ASAP! They are likely to be as successful with this concept as they were with Bombing Baghdad back to the Stone Age to take control of Iraqui Oil Fields after Saddam got outta control.

This is of course a UN operation of “Peacekeeping”, not an FSofA Imperialist War, and dutifully all the NATO countries are contributing here, even the Hosers in the Great White North are sending over some Jets piloted by Bob & Doug Mackenzie to bomb the Living Shit out of the Libyans. What about the freaking ITALIANS? They get most of the Libyan Oil, who are THEY sending over there? OK, they are probably providing Airbases in Sicily to fly out of.

El-Kabong has been singularly uncooperative here, unlike the Hoser Mubarak in Egypt he did not dutifully Exit Stage Left with a few Billion in Gold Bars. No, El-Kabong is going to fight to the DEATH to keep control over his patch of depleted land. If he wasn’t such a complete SCUMBAG with bad taste in his wardrobe, his refusal to capitulate to the Illuminati could almost be viewed as heroic. LOL. However, like all the rest of the propped up Dictators, he IS a scumbag, and in the process of trying to hold onto “his” property, a whole heck of a lot of disenfranchised Libyans are going to get a near term ticket to the Great Beyond.

The Intangible Question in the case of El-Kabong is just exactly what Options he has here once NATO brings to bear their Air and Naval assets on that patch of land? How Well Prepped IS he? Does he have enough Anti-Aircraft weaponry to fill the skies full of Lead and shoot down some NATO hardware? Can he send Missiles aimed at Italy from Libyan shores? Can he send out teams of Special Ops forces to do some Assassinations? How LONG can he hold out under Carpet Bombing?  (Question has been answered. Not too long.  El-Kabong clearly did not Bunker himself up well enough here.)

El-Kabong is isolated and his days are numbered here, but he has made it VERY clear he is not going down without a fight. Also clear is he is not going to make a distinction between Civilians and Military, either among his own people or anybody else. ALSO clear is that he is not going to hand over the Oil Fields intact no matter what. His personal Pretorian Guard knows they are all Dead Men once his regime is overrun, so they are likely to be just as INSANE as he is. Even if its ONLY 10,000 troops he has as part of this force, if they have access to good military hardware and enough MREs to keep going for a few months, this will be a rough bunch to take out. They are ALL suicidal now, they all know they are dead men walking, so they have NOTHING LEFT TO LOSE. That makes them dangerous indeed.

I did have the intention tonight of addressing the question Flash asked, which is once all this SHTF stuff coalesces, where does that put us a year or so down the line after an across the board monetary system collapse? That is a very good question to ponder on, but too much to drop in this rant unfortunately even though on a word level this one is short at around 2000 words. I am about out of time here regardless, and I have a Salmon Fillet simmering in Garlic, Lemon Rinds, Dill, Cayenne Pepper and Kerri-Gold Irish Butter just about ready for consumption. I’m a little slow on the keyboard tonight because I have to keep a close watch on the fillet, overcooked it falls apart and doesn’t have the right texture, undercooked the flavors don’t blend properly. So that question will have to wait for tomorrow’s Daily Rant, unless of course I wake up tomorrow and still MORE SHTF I have to address. No shortage these days of Doomer Topics to write on. We have not reached Peak Doom here by any measure, it is the Gift that keeps on Giving to the Doomer. I am of course a major Doomer. (A year later now, we are still mired in what appears to be a “Long Emergency” of the Kuntsler variety rather than a Fast Crash.  Indidcations are that the “Long Emergency” will remain the dominant paradigm for a while longer.  However, the system remains so unstable that it could FLIP at any time.  You have to pay attention to it all the time to not get caught with your pants down.  If /when it flips to aFast Crash, you will not have much time to make the Last Bugout.)

Long Emergency or Fast Crash in terms of the Human Lifespan is concerned notwithstanding, either way I STILL See Dead People.

RE

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