Get set for The Greatest Global Public Scalping of a Lifetime, because most Western Central Banks are going to go down in a big way! Some of the most important investment voices in the world are now more than a little scared about the ravenous appetite for risk playing that is occurring out there in this marketplace, and the fact that these important analysts have been totally ignored should be very unnerving for a blind-sighted U.S and World Public.
Central Banks are the driving force of all investment decisions at present, and what this implies is that they are in this trade so deeply, that there is no obvious or practical exit for them to take. Western Central Banks have been buying nearly ALL new Government bond issuance for the last 5 years. We know that Japan’s Central Bank has admitted to buying equities.
We also know that the Fed sticks huge bids into the marketplace for the S&P 500 eminis, in order to trigger massive hedge fund HFT algo buy programs of the big S&P 500 contract. I suspect that the Federal Reserve is also buying stocks on a massive scale, which is one of the reasons it is spending million of U.S Dollars on lobbying to prevent Congress from passing a law forcing the Fed to a very public financial audit.
So it is no secret that the Fed is thus pushing up the S&P 500 to all new record highs almost on a weekly basis, and it has prevented the stock market from undergoing a meaningful price correction now for nearly 4 years. Concomitantly, the U.S Federal Government is now continuously preventing the price of Gold from moving any higher than $1220oz, although it seems to have lost its ability to push Gold’s price much lower than $1150oz.
Meanwhile, the underlying fundamentals of the U.S Economy are deteriorating at rate that now rivals the rate at which it was deteriorating back in 2008. Financial analyst Dave Skarica has stated that all Midwestern Regional Banks who gave out loans to U.S shale producers do not have any loan loss reserves for when these loans inevitably go bad. He also said that NONE of these Banks have taken write downs yet on the loans that are now trading between 50 and 70 cents on the Dollar in the public market.
This means that $100 million loan on a Bank balance sheet is worth only $50-70 million based on real market data, yet the Bank is carrying this loan at $100 million on its books. This situation is magnified at the Too Big To Fail Bank level. Every single TBTF Bank has released most of its loan loss reserves back into its income statement over the last 4 years, in order to generate GAAP accounting “net income” beats of estimates.
But this is a Non-cash Phony Money scenario the public are seeing now, and how about if we get to see JP Morgan’s inside books and see where it has marked unsold, unsyndicated Bank loan paper to Near-Insolvent Shale Oil Producers. I’d bet on my dog’s life that they have that debt marked at 100 cents on the Dollar, even though it’s likely only worth at best 50 cents of that same Dollar.
The Fed has no choice but to force the stock market ever higher, and keep interest rates around zero. Hell, if the Fed were to let rates normalize, it would suffer huge losses on all the Treasury and Mortgage Debt it purchased over the last 5 years – $3.6 trillion of Debt that would lose at least 5-10% of its value. The Fed would be technically insolvent.
Central Banks and their Sovereign Wealth funds have become the major players dominating market activity. One Central Banker after another has admitted they are fixated on market and public reaction to their comments and actions… A wise Central Banker told me I should learn to live with Central Banks being the dominant force in the market, whether I like it or not.
Note: I disagree with Breslow’s description of the referenced Central Banker as being “Wise.” Ruthlessly Unethical and Insidiously Corrupt, YES. but “Wise?” No way!. Furthermore, the only dynamic keeping most pension funds from imploding is an overexposure to the stock market that keeps going higher on manufactured monetary helium.
If the Fed were to let the stock market find it’s natural trading level, it would lose at least 50% of its value – very quickly, and it would blow up countless public pension funds. The problem would be magnified by a factor 2-3x if the Fed were to let interest rates embark on true price discovery. Pension fund fixed income holdings would plunge in value, and the Pension fund would become hopelessly underfunded from their current status, of being just significantly underfunded.
In other words, if the Fed were to step away from its non-stop Market Intervention and Manipulation, the entire financial system would collapse. At some point this entire Ponzi Scheme is going to implode, despite the increasingly blatant and obvious attempts by the Central Banks to keep it the Steroid-addled gerbil on the wheel. Remember Enron? It was one big fraud, for the most part. Almost no one saw the speed and force with which Enron was incinerated.
I personally was short Enron stock in the $40’s. It dropped to the teens and I covered, thinking the worst was over. Not too long after that Enron filed Bankruptcy and was revealed to be largely an empty shell. It had erected entire floors of energy trading desks that were only used when the Company was trying to sell stock or bonds to investors doing due diligence, yet it was complete lie.
Enron is a microcosmic metaphor for the entire U.S Financial and Economic System. A system which has little substance and an unimaginable amount of Fraudulence masquerading in the form of an Economy. If you were to subtract all of the Fraudulent Accounting, the Fraudulently compiled Government Economic Data, all of the Debt and all of the derivatives on a true mark to market basis, the United States would be nothing more than one giant version of Enron.
Most people have no clue whatsoever of the Economic Devastation that is coming down the system pipeline for not only the U.S, but the entire financial world. Central Banks will eventually lose control of this insanity they have created – history has already spoken repetitively on that matter before. And certainly no one can predict the timing of when Central Bank control will be lost. But when this does occur, the entire U.S and worldwide Financial system will be incinerated like Enron, and scalp the Global public in the process!
Author: Unknown, Post found on Investment Research Dynamics