The “When hope turns to Fear” moment (See 2010 Outlook “When hope turns to Fear” in Tedbits archives) is unfolding as we speak, as the tides of insolvency sweep over the social welfare states and financial systems of the developed world. It is the next leg down in the global financial crisis and what will come to be known as the greatest depression ever is commencing -- we are fascinated and astonished at what the main stream media is reporting and failing to report.
No amount of PONZI finance or money printing will rescue the Western world from its immorality masquerading as morality. SOCIALISM is IMMORAL and that is why it always FALLS into BANKRUPTCY. As Margaret Thatcher once said:
“The problem with socialism is that eventually you run out of OTHER PEOPLE’S MONEY”
- Margaret Thatcher
Of course they now have. The idea that asset values (malinvestments) or economies are going to resume growth or achieve pre-2008 levels is FALSE. Extend and pretend is DEAD, political lies are being exposed for what they are: Deception of the dumbest among us who swallow them hook, line and sinker and who then place their trust in government to solve problems they themselves should be solving. Let’s look back at a chart of the percentage of GDP the West’s social welfare states CONSUME and then MISALLOCATE to the unproductive and crony capitalist elites:
Simple math tells you that if budget deficits approach 10% of GDP these freeloaders, socialist redistributionists and misallocations of capital must cut government spending by 20% to restore ANY CHANCE for a private-sector recovery. FAT chance; but even a reduction of 1/3rd of that will bankrupt many of the crony capitalists and their LENDERS.
Instead they are implementing another power grab in the name of reform and believe that when it comes to spending they only know one word: MORE. The more public serpents and elites try to preserve the absurd in the name of JUSTICE and FAIRNESS, the farther recovery becomes the horizon.
Authors note: The world is AWASH on a sea of FIAT currency and credit creation. The only places where there is no cash are (1) welfare-state government coffers, as economic activity collapses tax receipts, and (2) on the balance sheet of the largest players in the financial system who are choking on the toxic assets they themselves created and borrowed money to buy.
At no time in history have assets -- stocks, bonds, real estate, etc. (malinvestments inflated by cheap credit) been more MISPRICED, and since the value of fiat currency as a unit of exchange is unknowable (not measured in GOLD or silver), prices are set to REPRICE and create VOLATILITY rarely seen in history -- other than previous “CURRENCY EXTINCTION” events such as Argentina, Weimar Germany and unfolding in VENEZUELA right now. Volatility is exploding and set to increase, creating HUGE opportunities as these markets zoom up and down. Learn how to fix your paper currencies and diversify into absolute return alternative investments with the potential to thrive in UP and down markets! This is what I do, contact me!
Keep the corner of your eye on Venezuela; this is where the developed world is headed! It is fascinating see Comrade Hugo torpedo his own economy to implement SOCIALISM, also known as MISERY spread WIDELY.
He is following in the footsteps of Comrade Bob in Zimbabwe. Just look at the BOLIVAR currency, it says it all. You know, many in the BELTWAY are BIG supporters of Comrade Hugo.
Comrades Merkel and Sarkozy are now proposing BANNING short selling on stocks and sovereign debt throughout the Euro zone; obviously they do not like the opinions of the public and institutions that SEE the folly of current policy and who rationally want to vote against it, and so their solution is: OUTLAW anyone with whose opinions they DISAGREE and OUTLAW the mechanisms with which they do so. Not one short selling ban has halted a crash, as holders of the poor assets are just plain old sellers exercising RISK management.
Wealth creation (producing more than you consume and fostering rising incomes) is the only solution to preserving wealth in societies which practice credit-based FIAT currencies. FIAT currency based financial systems ALWAYS fall into insolvency, bond market collapses, serial quantitative easing and then hyperinflation, without exception throughout history. THIS TIME WILL BE NO DIFFERENT. I DEFY any analyst to show me one exception….
The destruction of the productive to feed the unproductive is cannibalism of the worst sort. In the name of social justice, public servants in something-for-nothing societies REFUSE to reform the welfare states of the west and implement polices of growth. Such REFORMS spell DOOM for their futures, economies and their constituents. IMPLEMENTING more wealth redistribution and taxes WILL FAIL to revive anything and sets the next deepening of the unfolding crisis and depression.
Over forty years of borrowing and spending to substitute for the policies of growth are now FAILING and the bills are now coming due. Only there is NO MONEY, and unfortunately, economic growth and wealth creation is something the Western world’s fathers and grandfathers knew about, but for current leaders they are but a footnote in the history books. Let me repeat: The IDIOTS at the wheel of economic and political power are implementing policies which have NO CHANCE of fostering economic and income growth.
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 Ty Andros - TraderView
Managed Futures & Alternative Investment Specialist
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Phone: 312-338-7800
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