Andy Hoffman ~
At the gym this morning, I was reading Dan Brown's new novel, Inferno. Awesome book, which I've read through half of in less than a week. Much like the Miles Franklin Newsletter, it focuses on a catastrophic global event; and no, it's not the collapse of the world's reserve currency. When the main characters finally realize what may occur, they are incredulous; leading one of them, a brilliant scientist, to say the following, "The human mind has a primitive ego defense mechanism that negates all realities producing too much stress for the brain to handle. It's called denial."
Denial explains what I wrote yesterday; of how the MSM struggles to garner "ratings" in a mirage of an economic world, in which manipulated markets and massaged data are utilized to mask the reality of deteriorating global business activity - from Japan toIndia to Europe. The more powerful the manipulation, the wider the cognitive dissonance; and thus, it's no surprise that Europe and the U.S. are the most detached from reality; not to mention, the fundamental factors that have valued markets forcenturies.
In Europe, the PIIGS economies are in FREEFALL; or as I deem them, the PIFIGS, asFrance is doing as poorly as the PIIGS "basket cases." In Greece, which continues to waffle between #1 and #2 - with India - on my "most likely to catalyze the next global crisis list," the number of companies in arrears on income taxes jumped from 182,000 to 526,000 in September alone; and thus, it's a fait accompli that the ECB's "QE to Infinity" will continue with yet another Greek bailout this Fall; followed by other PIIGS bailouts, such as Spain, in the not-so-distant future.
Heck, the European Commission this morning reduced its continental GDP forecast due to morbid end demand; and worse yet, predicted this month's RECORD LOW European unemployment of 12.2% will persist throughout all of 2014, barely declining to 11.8% in 2015. What a coincidence, as the next ECB is meeting Thursday; with a growing majority predicting its measly 0.5% base rate will be reduced further - if noton Thursday, next month. But hey, buy the Greek stock market, because Draghi said he will do "whatever it takes" to save the Euro.
In the United States of Economic Misery, a financial community refuses to grasp the REALITY that the Fed's QE cancer can never end; and in fact, MUST expand exponentially. Jim Rickards gets it, and even chief Cartel apologist Goldman Sachs has been recently blaring it; and yet, the MSM and "average Joe" look about with glazed eyes - per the "denial quote" commencing today's commentary. The FACT remains that unfettered MONEY PRINTING has addicted the ENTIRE WORLD to debt - at historically low interest rates, no less. And thus, REAL demand for sovereign bonds has plummeted, requiring Central banks to monetize at exponentially greater rates. Such "financial repression" has enriched "the 1%" at the expense of the rest; a chasm that will widen dramatically via new, draconian, government wealth-killing mandates like Obamacare.
TPTB will continue to obfuscate with fraudulent data like the ISM Non-Manufacturing "diffusion index," which this morning "beat expectations." However, ultimately the REALITY of an economy in rapid decline will gain widespread acceptance; as depicted by this morning's Gallup Economic Confidence Index - which posted its largest monthly decline since the poll's inception in 2008.
Worse yet, the FOMC's "no taper" guidance is again backfiring; as quietly, interest rates are gaining considerable upside momentum. When the benchmark 10-year Treasury yield reached the VERY KEY ROUND NUMBER of 3.0% two months ago, essentially ALL economic activity dramatically declined. And lo and behold, after a Fed-aided "dead-cat bounce" last month, the Treasury market is again in sharp decline.
In my view, it won't be long before the ENTIRE WORLD realizes QE must be expanded, ad infinitum; and not just in America, but EVERYWHERE. At that point, denial of the most deeply ingrained economic truth will start to wane; i.e., not only are gold and silver the only forms of real money, but there is VERY little left, with the great majority having left permanently for "points east."
By the way, readers of the Miles Franklin Newsletter have a LOT in common with the main character in Inferno (Sienna Brooks), per her follow up to the aforementioned "denial" comment, "I'm a fan of the truth, even if it's painfully hard to accept." This is why we PROTECT ourselves with assets outside of the mainstream dogma; as fortunately, we know they will continue to maintain their purchasing power forgenerations to come.