Happy New Year?

January 4, 2015 Financial Markets

"One believes things because one has been conditioned to believe them" –

Aldous Huxley, Brave New World

It’s incredible to me that 60% of this country thought extreme torture methodologies were okay if they were used to extract information.  It reminds me of nαzι Germany.  The “war on terror” has got to be the biggest con job in the history of mankind.  The truth is, the U.S. Government is the biggest terrorist in the world.  But hey man, honor the troops and don’t question why they are stationed in countries all over the world killing and maiming entire populations.  If it’s on CNN or Fox News it must be legit.
How about the fact that Obama sanctioned North Korea AFTER it was revealed that Sony was hacked by a former disgruntled employee.  AND NO ONE IN THIS COUNTRY QUESTIONED the sanctions.  In this era, you’re a racist if you disagree with a black man.

I hope everyone had a good time over the holidays because I have a feeling that 2015 is going to be very difficult, especially for the majority of Americans who are either in denial of the truth or in complete ignorance of truth. “Hey man, keep hope alive! And pass that bong while you’re at it.”
The U.S. Government has embarked on a propaganda campaign for the ages.  In fact, I heard Obama is going to call a press conference when he gets back from Hawaii and blame the Washington Redskin’s 4-12 season and last  place division finish on Putin.  Put it on CNN and the masses will nod in agreement and further fear that evil-doer Putin…

Despite the rigged Government economic reports to the contrary, the U.S. economy is collapsing along with the rest of the global economy.  The Government and Fed have been able to mask the ongoing collapse in this country by printing $4 trillion, issuing $7.5 trillion in new Government debt and keeping interest rates close to zero since the beginning of 2009.   This has not only inflated the greatest stock market bubble in the history of this country, it has enabled a debt-fueled new car buying binge and the reflation of the housing bubble.
While the money printing ended in 2014, the Government continued piling new Treasury debt on top of old debt, as Treasury debt outstanding hit $18.1 trillion on 12/31/14.  I would also argue that the massive increase in money-printing by Japan has acted as a de facto QE4, as Japan’s Government has used the new yen printed to buy U.S. Treasuries and swap them into Japan’s massive public pension fund in exchange for Japanese Govt bonds, which are being moved into the Bank of Japan.
Perhaps the biggest sign of global economic collapse has been the stunning drop in the price of oil since mid-June: (see base of post)

Notwithstanding the silly conspiracy theories attributing the collapse in the price of oil to a Saudi plan to wipe out the U.S. oil shale industry or a U.S. Government plan to punish Russia/Putin, the big drop in the price of oil is simply a function of crashing demand in the face of pretty much steady supply. Recall from Econ 101, when demand drops and supply stays constant, price falls. Occam’s Razor (aka the “KISS principle”) applies here, folks.
This graph of the 10yr yield confirms that the economy in this country is extremely weak (see base of post):

Note that the 10yr yield is now as low as it was at the depths of the last “officially declared” recession.  Of course, I’m sure – see the quote at the top – that most people will lap up the 5% GDP growth rate “officially declared” by the Government for Q3.  And, of course, most people are completely unaware that 80% of that “growth” can be attributed to a big upward revision in Obamacare spending (note:  “upward revision” is Orwell-speak for “we just made it up because we know the people will believe it”).  Another big component of the “growth” rate was from inventory building, which is why 70% off Christmas sales began November 1.  Again, lots of supply, little demand, price falls…

Here’s my prediction for 2015:  I think the safety net the Fed has put in place gets shredded to the downside. I think the big story will be the collapse of the U.S. economy and the attempt by the Govt to hide it with absurd reports that anyone with one brain cell will be able to see through. I also think we’re going to see a huge increase in civil unrest.

"Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked, ‘Account overdrawn.’  – Francisco D’Anconia,  Atlas Shrugged