INEVITABLE, GLOBAL SOVEREIGN DEBT COLLAPSE
by Andy Hoffman, Miles Franklin
It’s Monday evening, following yet another day of across-the-board “horrible headlines”; no matter what nation, continent, or hemisphere one considers. That said, today’s “top story” is that Greece – what a shock – didn’t complete its “reforms list” today as planned; putting it off until tomorrow – and thus, leaving the world a measly four days from “Grexit,” without even a firm proposal on the table. Heck, early this morning, well before this ominous news emerged, the Euro was already tanking – per what I stated in yesterday’s Audioblog; i.e, “even if a ‘deal’ is agreed upon, I’d bet the Euro continues to weaken irrespective; as clearly, the end game is upon Greece – whether PPT-supported markets give it four more months, or otherwise.”
Yes, the end game indeed – for Greece, the other PIIGS, and every fiat cancer ridden, debt-wracked nation on Earth; which is to say – for all intents and purposes – all of them. So is the nature of fiat currency Ponzi schemes; and now that every currency on the planet is engulfed by the current version, they all will eventually be destroyed – be it now, or later on. Many already have, as the average currency is down roughly 40% against the dollar since the Federal Reserve led history’s most destructive inflation exportation scheme in late 2011, as ALL major Central banks commenced QE, ZIRP – and in some cases, NIRP – “to infinity” campaigns. And those that haven’t been knocked into second – and in many cases, third-world hell, they inevitably will; some, in very short order.
To wit, the dollar surged yet again today, against nearly every currency – including commodity currencies that have already been obliterated since oil prices started plunging last Fall; and of course, the Euro itself. To that end, the blatantly obvious algorithms charged with “saving” oil prices are – as I predicted they would – failing; as WTI crude is on the verge of crashing below the newly created “oil PPT‘s” latest “line in the sand,” at $49/bbl. To that end, even a fraudulent “rumor” of an emergency OPEC meeting – which was refuted an hour later – failed to save oil today; and furthermore, today’s ugly economic data won’t make it any easier for said manipulators. To wit, existing home sales were reported to have plunged 5% last month, whilst the Dallas Fed Manufacturing Survey collapsed from -4.4 to -11.2. Subsequently, commodity prices have resumed January’s historic plunge; leaving the Baltic Dry Index at an all-time (30 year) low, and enabling the Israeli Central bank to be the 20th to cut rates since year-end. Recall, I wrote four-and-a-half months ago that “2008 is back“; and that, before said commodity cataclysm. Let alone, the Swiss Franc debacle; ECB QE; the Greek and Ukrainian crises; or the majority of the oil and commodity price plunge. In other words, the global economy is imploding; and likely, will do so at an accelerated pace in the coming months.
Which is why it will be so “entertaining” watching Whirlybird Janet squirm on Capitol Hill tomorrow morning, less than a week after the fraudulent “minutes” of the January 27th FOMC meeting depicted a terrified, clueless Fed – with not a clue what’s going on, or the slightest inclination to enact the mythical “rate hikes” they have intimated of since a “closed door” meeting between Obama and the “TBTF” bank CEOs in April 2013. Subsequently, history’s largest money printing, market manipulation, and propaganda scheme has created the largest-ever gap between asset valuations and economic activity; the largest-ever wealth disparity between the “1%” and the “99%”; and asset bubbles that put 1929, 2000, and 2008 to shame. Meanwhile, the most maniacal price suppression scheme ever continues unabated – as exemplified by today’s prototypical “2:15 AM” and 10:00 AM EST raids; amidst some of the most PM-bullish news imaginable. Which, by the way, included an abysmal production outlook, and huge reserve write-down from the world’s third largest gold miner, Anglogold.
Conversely, equally prototypical “dead ringer” and “hail mary” algorithms enabled the “Dow Jones Propaganda Average” to achieve yet another all-time high; whilst yet again, commodities, currencies, bond yields, and economic data plunged. I mean, Euripides, Sophocles, and Homer combined couldn’t conjure stories of such blatant, suicidal hubris if they tried. That is, unless they were writing of their home-town Greek bonds; which, in what could be the worst “risk/reward” trade of all time, actually rose today!
Nearly across-the-board, across the globe, government-supported financial markets meet that very same description; as care of history’s largest Ponzi scheme, worldwide debt loads are so far past the point of no return, it’s no longer in the rear-view mirror.
To that end, this horrifying chart; depicting how since said Ponzi smashed into the wall of “diminishing returns” at the turn of the century, global debt has increased by an incredible $112 trillion – including $57 trillion since the global monetary system broke in 2008. Consequently, 23 nations – including sovereign, municipal, and corporate obligations – have cumulative debt/GDP ratios above 200%, and nine above 300%. Needless to say, especially amidst the weakest global economy of our lifetimes, nearly all this debt is “unpayable.” Heck, even the top financial propagandists know it – per the below CNBC story, featured as Yahoo! Finance’s “top story this morning.
Clearly, Greece’s case is one of the most extreme; as not only is it hopelessly bankrupt, but insolvent as well – with literally a few days of cash left; and thus, an Earth-shattering debt default dead ahead, for both the national government and dead and buried banks; the latter of which, categorize a whopping one-third of their outstanding loans as non-performing. This is why it’s utterly absurd that Greece and the “Troika” leaders are still pretending there is a “deal” to get done, other than extending the aforementioned hundreds of billions of Euros of “loans” with no strings attached. Doing so, of course, would be a “technical default”; and from a face-saving standpoint, there is essentially no chance the Euro Group would approve such a deal.
Greece, of course, would take such a deal indefinitely; but as it won’t be offered, Alexis Tsipras will be forced to either default – which he was essentially elected to do – or cave in to the same financial repression that destroyed Greece in the first place. Not to mention, against the violent opposition of the majority of Greek citizens. Moreover, not just Tsipras, but the entire Syriza-dominated Greek Parliament must approve of said “deal” before it is ratified; and given comments from senior Syriza leaders this weekend, it’s difficult to believe Greece will allow itself to remain a Euro Group “debt colony” much longer. Furthermore, rumor has it that many of the “reforms” to be proposed tomorrow will be non-starters for the Euro Group; possibly, a calculated strategy to make it appear the Euro Group was at fault for the inevitable “Grexit.”
That said, while Greece is the by far the “weakest link” in the entire, cancerous global monetary system, essentially all other nations face the same dire situation. One by one, they will be “picked off” like Greece, until eventually the reserve currency issuer itself is destroyed; and with it, the entire, global fiat Ponzi scheme. In Europe, said inevitability is far more imminent; as no matter what nation one considers, the same Syriza-like populist forces are gaining strength – for the exact same reasons. And if Greece does in fact Grexit, it is nearly guaranteed that similar movements will explode in Spain, France, Italy, and other hopelessly indebted nations.
And the ugliest part of all is that, like the misleading at best, fraudulent at worst “reserves and resources” held by mining companies, nearly all nations’ “debt to GDP” ratios are grossly understated, care of a plethora of accounting gimmicks designed to overstate GDP and understate debt. No one “does it better” than the U.S.; which not only holds vast amounts of “off balance sheet” debt, but relentlessly “adjusts” GDP upward by including large swaths of “economic activity” that don’t actually produce anything; like, for instance, the “goodwill” overpaid paid for corporate M&A transactions. Let alone, the explicitly illegal activities now included in numerous GDP calculations – particularly in Europe – such as drug dealing and prostitution.
Anyhow, the “moral of the story” is that while Greece will be one of the first so-called “first world” nations to go, everyone is essentially in the same boat; all the way up to the “reserve currency” issuer itself. To that end, it’s quite possible this week’s “Greek Tragedy” ends so badly, it not only triggers the inevitable Greek default, but those of countless other corporations, municipalities, and sovereign nations the world round. And if it doesn’t, and somehow financial markets don’t discount such a “tragedy” just yet, it’s just a matter of time before they do; likely, sooner rather than later.
And when this occurs – be it this week, next month, or a year or two later; if you haven’t already protected your assets with real money, it will already be too late.