Source: Miles Franklin, by Andy Hoffman
In Wednesday’s “historic market manipulation setting the stage for catastrophe,” my principal inference was that, per the time old adage, crime never pays. Perhaps in the short-term; but the longer a scam is perpetrated, the more vulnerable it becomes to its inevitable demise. Kind of like Fargo, when the initial plan to ransom Jerry’s wife morphed into a heinous killing spree, resulting in essentially all participating parties dying; as crime, like market manipulation, has significant unintended consequences, which must inevitably be addressed.
Such as, the fact that the historic money printing perpetrated on the world’s 99% by the “1%” bankers has resulted in an unprecedented debt edifice that, to paraphrase JP Morgan yesterday, can NEVER be repaid. Not to mention, the equally unprecedented oversupply, of everything from commodities, to factories, to government itself – which can only be “repaid” by vast retrenchment, via the historic Depression that shortly, will envelop the entire world. And oh yeah, the “dotcom valuations in a Great Depression Era” said “historic market manipulations” have created – which must eventually reverse; likely, violently so. Perhaps one of the increasingly likely “black swan” events will be, as Jim Rickards puts it, the “snowflake that starts the avalanche.” Or perhaps, history’s largest asset bubbles – and conversely, Precious Metals “anti-bubbles” – will simply collapse under their own sheer weight.
Everywhere one looks, attempts to “fool” people into believing “this time is different” are failing – from Brazil’s disastrous “Olympic investment”; to housing bubbles in the U.S., Canada, Australia, China, and Europe. Meanwhile, the Trump Administration – like the Clinton, Bush, and Obama Administrations before it – thinks it can “balance the budget” ten years from now, based on comically unrealistic assumptions and a “budget” with not a chance in hell of passing; in an increasingly socialized nation, where the need for handouts is growing as rapidly as the national debt itself. Government lie about economic output; trade groups lie about “growth”; and corporations about everything from their earnings to – say it ain’t so – the legality of their operations. To wit, yesterday’s bombshell news that GM, like Volkswagen and several other major auto producers, has been rigging its emission tests with “defeat devices.”
Then there’s the “Central bankers”; who continue to pretend they’re “in control,” despite the fact that the fiat toilet papers they “manage” are serially imploding – yielding collapsing purchasing power and global trade; historic asset bubbles; unprecedented wealth disparity; and burgeoning social unrest and geopolitical tensions. To wit, Helicopter Ben was again spouting off about his new favorite Ponzi scheme, the Japanese economy – in espousing that the Bank of Japan “may need to coordinate a new fiscal spending plan with the government, allowing for inflation to accelerate above its 2% target without worsening the debt burden.” This, as the Fed continues to pretend – if only in extremely vague terms – that it intends to unwind its $4.5 trillion balance sheet, if the economy, which just posted its weakest GDP growth in three years, “continues” to improve “as expected.” And don’t worry about the fact that the three miniscule rate hikes enacted in the past 18 months have directly caused such economic weakness; or that the tax cuts and fiscal spending growth that will supposedly reinvigorate it must be financed; or that the “debt ceiling” must be dramatically increased this summer to make this possible. I mean seriously, you simply can’t make this stuff up!
That said, today’s principal topic is the “lie of all lies” that is the ongoing saga of the OPEC “production cut” that, per yesterday’s horrific crude oil plunge – which is accelerating this morning – is proving, once and for all, to be the historic, potentially Cartel-destroying failure I predicted it would be, from the second it was fabricated last Fall.
Again, consider the fact that, from 1995-2005, I was a Wall Street analyst covering both Exploration & Production – i.e, “E&P” – and oilfield equipment, services, and drilling from the buy- and sell-side, the last six years, as an Institutional Investor ranked “oil service” analyst at Salomon Smith Barney. Where, I might add, I sat next to the number one ranked “Major” oil analyst, enabling me to learn a lot about the fundamentals of crude oil supply and demand. During that decade, OPEC meetings had as much impact on my business – and life – as Fed meetings do today; so trust me, I know as much about OPEC’s machinations – and vulnerabilities – as anyone.