Saturday, March 3, 2018

The Supply Side Doctrine Of Shock

The Boomers have jointly agreed that this will only implode on their children, so this can't be ending now...

My mistake throughout the past ten years was continually underestimating how willfully ignorant this society would become over the course of the post-Lehman Shock Doctrine cycle. Mass delusion reigns supreme because the lamestream media must spoon feed the old age home their daily dose of pablum to contradict everything going on in reality. They can't admit that it's over, so they just pretend that it's not. It won't work...

As of this week, all of the bubbles have now burst - including big cap tech - there is no global leadership anymore. Not in the casino. Not in politics. Not in economics. 

Any questions?

We're a society captured by the past. That's what Trumptopia represents - the forcible return to the grandeur of America's past. Except, MAGA is the equivalent of Stephen King's Pet Sematary - you bury your dead dog and it comes back as a rabid Frankenmonster. In other words, we've turned into Japan - an aging Idiocracy caught in a deflationary trap of its own making, recycling the same failed ideas over and over again. Each time expecting a different result. Surplus capital chasing its own tail, inventing fantasy narratives along the way. 

(Un)fortunately, the world as a whole can't be Japan, due to zero sum trade and capital flows. In order for one country to be a net exporter another has to be a net importer. In the case of Globalization, the developed nations generally import goods and capital. While the developing nations export goods and capital. It's the exact opposite of what should have occurred to raise global standards of living - wealthy nations should have been lending to poorer nations, not the other way around. Bernankenstein called this exploitation-based phenomenon "the global savings glut" - wage slaves trying to plink their way up the socioeconomic ladder one delusional rung at a time. Wholly unaware that they are drowning in a vast ocean of ever-expanding poverty-induced deflation. 

Yet, in order to continue in the mercantilist ways of its past, Japan found a way around this "system" by continuously debasing their currency on a scale no other country has ever attempted. The global cycle telegraphs its own end, when the Yen strengthens, indicating there are no more takers for global hot money. It's at that point that ironically the country that has done the most to weaken its currency, then has the strongest currency. 

Because there is nowhere left to hide.

Going into 2018, Wall Street raised their price targets massively. It was all going swimmingly well through January, as global stock markets levitated vertically. Wall Street's narratives for a robust 2018 were fully intact:

January 24th, 2018:

When the correction came, it inconveniently wiped out five months of gains, possibly putting the 2018 narrative into question. But since there was no audience for a changed narrative, there was no call to re-calibrate. Not for the fact that the economy is now weakening. The Fed is becoming more aggressive. ALL global Central banks are now tightening. Bonds are getting monkey hammered. The global carry trade is reversing. Trump is pursuing bilateral and multilateral global trade wars.

In summary, liquidity is the lowest since the 2008 Financial Crisis. 

No need to recalibrate because the stock market is still off to the same start it had 31 years ago, in 1987. Or for that matter the end of 2007...

It's the IQ test for stunned dunces:

How does this end?