Wednesday, May 2, 2012
Those of us who have been descrying the actions of central authority and the central banks, appear to have some egg on our faces at this point. The mainstream media and the Keynesian doublethink anal-ists are gloating over strong and wide evidence that the U.S. economy may, indeed be recovering from the financial crisis of 2008 and it may, indeed, be decoupled from the collapsing European community and the crashing far East. Not only have our repeated calls for disasters been made into a mockery but our own pockets and investments have suffered as we certainly did put our wealth where our writings were. So what happened? Were we so wrong? I don't think so. The evidence strongly suggests that Europe is sinking, that their union cannot be saved, that each nations' separate economies are heading into the tank and dissolution is inevitable. Once their central currency is abandoned, all sorts of derivatives and synthetic financial instruments and the like will suddenly be meaningless and on account of all the interdependence, all of the major banks all over the world will be wiped out (although I certainly don't put it past them to maintain a veneer of solvency for at least a little while longer. Recent events have shown the vested parties to have developed the sine qua non of mendacity and disingenuousness in the whole history of mankind.) What has happened is that the upper middle classes of all the European nations, reading very well the handwriting on the wall (after all, they have seen this show before, within the last century), have been pulling their money out of their banks. And what to do with it? While some have invested in gold, silver, lead, and other precious metals, many have looked around and seen the U.S., with its incredibly obese military machine, to be the least, or at least the last, threatened, and hence the safest place for their wealth to be stored. Estimates of the total amount moved across the pond in the last two years hover around 2 Trillion ($2,000,000,000,000.00), eclipsing TARP, ZIRP, and even QE2. A great deal of it has gone into U.S. Treasury notes, notwithstanding the horrible credit rating of the U.S. taxpayers, because its still better than most alternatives. Another great deal of it has gone into U.S. equities, which are still offering decent yields in these days and times. What next? The inevitable has been postponed. The proverbial can is way, way down the proverbial road. That much is pretty clear. How much longer can this go on? I have no idea. Mankind's ability to fool himself has to be his crowning achievement on this planet. One remembers, again, that in the year 1802 their existed a country on the mainland in Europe which called itself "The Holy Roman Empire." though its true nature was more akin to "The parochial pigsty" and there hadn't been anything remotely resembling ancient Rome for over a millennium. Interesting times, what?