A couple of months ago one of my closest friends in the business spontaneously described the financial markets as “The Farce.” I took to it immediately and from that day on pretty much every morning our first conversation over Bloomberg begins with “so how’s the farce today?”
Long time readers know that I am under no illusions that the markets were ever “free” in our investment lifetimes. Let’s be real. A small group of 12 Central Planners determine the most important price signal in the economy, ie interest rates. They admittedly use this tool to manipulate behavior and markets. So in some ways the financial markets as long as we have had fiat money and the Federal Reserve has always been a farce in the near-term.
That said, the prior farce is very distinct from the current farce. At least in those days interest rates would manipulate behavior but beyond that basic macro backdrop the Central Planners allowed markets to generally do whatever they wanted until in their infinite wisdom they decided to pull the plug. Ever since the banksters blew up the world in 2008, our Central Planners clearly made a decision that a new playbook was needed. They needed to manage markets much more aggressively in order to “save the system” and restore confidence to the ponzi scheme that is the global financial system. This increased manipulation was obvious to anyone paying attention in the markets, but investment managers were so terrified they justified it and largely continue to do so.
Well we are in a whole other ballgame now. Ever since U.S. debt was downgraded last summer the manipulation has now taken on biblical proportions and markets are now nothing but a total farce. Then when the theft in broad daylight occurred at MF Global in an attempt to steal customers’ precious metals positions as well and instill total fear in the hearts and minds of commodities investors, I knew it was really over. I said so publicly at the time and I continue to this very day. I told anyone that was listening that unless you are a professional investor prepared to withstand heavy losses in a rigged casino you better move out. You should be in physical gold and silver as well as getting hunkered down in general as best you can to brace for the inevitable impact of systemic failure. This continues to be the best advice I can give. For me, part of that meant moving away from NYC and the east coast population center generally. For others, it may mean a host of different things.
I want to conclude this section with a quote that Angel Merkel, the Chancellor of Germany, said back in May 2010. She said: “In some ways it’s a battle of the politicians against the markets. That’s how I do see it. But I’m determined to win this battle.” She said that in May 2010. What do you think they are saying now? They are cornered and desperate as ever at the moment as all of their money printing and propaganda have totally failed. Therefore, they will lie, cheat and steal more than you can ever imagine. It has started already. Let’s not forget what Argentina did this week.
Also never forget what Voiltaire said centuries ago. “It is dangerous to be right in matters where established men are wrong.”
Important reads for the weekend
First is an article from Roger Lowenstein. Just one paragraph here summarizes how insanely corrupt the financial world we live in is.
The CFTC devised a tough, and sensible, proposal. When a pension fund or municipality bought a generic derivative, its dealer wouldn’t be liable. But if the bank tailored a customized product specifically for that customer, then, according to the proposed rule, the bank had a duty to sell a suitable instrument, and to advise the client in its own best interest. This hardly sounds burdensome. But the industry, fearing potential liability, unleashed a torrent of protest. The CFTC caved and revised the rule so that clients will be permitted to waive their right to good advice.
Read more here
Second is an article by Ambrose Evans Pritchard on the debacle that is Europe. Just one line here sums it up to me.
The latest poll shows that 56pc of Germans want a return to the D-Mark.
Read more here
Finally, what I think is the most important thing you can watch today. This short clip from a longer interview in which a whistleblower from the NSA explains to you how they store and track all of your emails. This can serve as a red pill for even the most brainwashed sheeple. Enjoy it here
Have a wonderful weekend everyone and thank you all so much for the support,