Sunday, June 25, 2017

The Long and Short of the Approaching Recession (Depression)

For those out there reading this short missive, a warning that time and space are constraints upon the lives we live, the bread we bake, the food we eat, the products we produce, the jobs that sustain us and the government that pretends to cater to us.

Time and space - according to most adherents of pure physics - are not constraints upon thinking, thought, creativity and imagination.

Indulgence should be given more, in these days of financial peril and social inequality, to solutions derived in the mind, translated to the body by practicality and functionality.

In both the long and short discussions of current finance, there can be little doubt that the system of capitalism by which the developed world has grown and prospered is under severe strain and the solutions offered by the central bankers and government entities who pretend to know how it all works are nothing more than stop-gap measures intended solely to prevent, or at least, delay, a complete collapse of a fragile, human-made system.

Economics, being mostly theoretical, and therefore, unbound, unfortunately needs to operate in a closed, bound, system, restrained by those old devils of time and space. As has been frequently mentioned in higher-level economic discussions, "infinite growth is unsustainable in a finite world."

With that in mind, this weekend edition of Money Daily offers but a brief insight into the unraveling of the world order of finance already well underway.

On the whole, Friday was a washout to a week in which the major indices - with the notable exception of the NASDAQ - vacillated around the unchanged line. In the current nomenclature, stock indices - wherein the vast bulk of trading is performed by computer algorithms and central banks - are a control mechanism. So long as they are stable or going higher, the general population feels comforted and won't look around for cracks in the not-so-golden facade of global finance. As such, this week was very much like the previous six, or eight, or eighty. It was, in general terms, a big nothing-burger.

But, what does the outsize gain on the NASDAQ tell us, when the other indices were going exactly nowhere fast?

It says that the NASDAQ is where the speculation exists, where all the funny money or phony money is going to seek yield, mostly in tech-land, but also in energy stocks and in short-squeezes on the most-shorted list. It's how the game is being played at the top. If shorts are numerous on a particular equity, that where the money flow will be most pronounced, on the long side. Boom! Instant profits and a great weekend in the Hamptons awaits.

For the rest of us, we are placated with the rest of the market going sideways. At least - we comfort ourselves in saying - it didn't go down, much.

An expanded view looks at a couple of issues. Oil took another beating this week as the glut continues, though this fact is not to be promulgated to the general population. We are led to believe that oil is scarce and the price of gas with which to fill our cars should remain at elevated levels.

Nothing could be further from the truth. A variety of factors, including, but not limited to, better fuel consumption, an aging population, alternative energy sources, stagnant or slowing employment, and a more stay-at-home, economically-depressed middle America, is leading to the reality of oversupply meeting slack or declining demand. Oil will continue to fall until it becomes apparent that the big energy companies are squeezing every last nickel and dime out of consumers in the form of stubbornly high gas prices. At some point, the price of gasoline will merit a meeting with reality and then, gas will average, nationally, under $2.00 a gallon, notwithstanding the absurdly-high state and federal taxes on each and every gallon pumped. It's coming. It cannot be denied.

Overseas, the demise of two Italian banks on Friday was, typically, underreported. Banca Popolare di Vicenza and Veneto Banca, with combined assets of roughly 60 billion euros, were green-lighted by the ECB on Friday for liquidation. In other words, these banks are belly-up, bankrupt, kaput!

The Wall Street Journal, Reuters, Bloomberg, the AP, all reported the story. The mainstream media, such as ABC, NBC, CBS, CNN, et. al., i.e, the fake news propagandists, did not.

There you have it. The general public will not be told the truth about the fraility of the banking system for fears people would recall the horrors of the GFC of 2008-09.

Two Italian banks failing may not make the radar of disinterest parties such as the 98% of Americans who don't pay attention to nor understand economics or finance. Neither did the closure of two Bear Stearns funds back in the Spring of 2008. You are now forewarned and forearmed, with knowledge.

The world'd financial system is unwinding and the pace is quickening. Disruptions are already apparent in the forms of capital controls - mostly overseas, but heading to US shores soon - supply chain disorder, falling tax receipts, social unrest, and, most importantly and glaringly obvious, income disparity.

Stay informed, not from the mainstream sources, but from outside. The internet is s treasure trove of information that you're not supposed to know about. It will help you form opinions and strategies by which you can deal with the coming hard times.

Your thoughts and ideas have no limits. Time and space cannot prevent you from thinking, strategizing and planning for your won welfare.

At the Close, 6/23/17:
Dow: 21,394.76, -2.53 (-0.01%)
NASDAQ: 6,265.25, +28.56 (0.46%)
S&P 500: 2,438.30, +3.80 (0.16%)
NYSE Composite: 11,733.20, +20.68 (0.18%)

For the Week:
Dow: +10.48 (0.05%)
NASDAQ: +113.49 (1.84%)
S&P 500: +5.15 (0.21%)
NYSE Composite: -38.83 (-0.33%)

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