Sunday, September 13, 2009

Financial Blowback & "W"-Shaped Recession

When President Obama announced economic recovery is here, it was time to call bullshit. It'd be great if B.O.'s right, of course, but fundamentals have actually deteriorated, with hot money pumped direct from the state running even faster through the veins, chasing higher yields and P/E ratios. Insider stock sales, a classic buy-sell benchmark, are currently running at a rate of 31 to 1, sell-heavy. In the still very much deregulated financial industry, the side bets which caused banks to fail have not been taken off. Every month another bank or two goes down because the cancerous transactions were not un-wound, and in return for a bail-out or heist of approximately one year's worth of total US gross domestic product, no meaningful change was forced in regulation or culture.

But it's ok. Right now Wall Street is collectively thinking, "Let the good times roll, baby. We can get away with absolutely anything." While all known historical data say that's a good time to duck, what do I know? What's to duck from, exactly?
To me, the US-led global financial system looks like an enormous black pulsating blob. It makes groans, whoops, satisfied sounds. It emits an alarming howl every now and again over the gurglings and gushings which accompany its usual to and fro. Periodically a maw creaks open from a manifold cleft and some be-tentacled larval outgrowth emerges and it thrives while words like "collateralized debt obligations" ring dutifully out.

I certainly don't know what the Blob's going to do next, or when, and it seems to be demonstrably unknowable in the aggregate by any personage or group, inside or out. This is, in fact, its very problem, because financial systems ultimately operate on faith. This Thing inspires the opposite. Its complexity, vastness, and opacity warrant looking for the quiet exit, but that usually involves building your own exit door with spare lumber and cable because that's just how big the Blob has gotten. The other exit doors have drawn their own crowds already, with their own problems.

As if that were not enough, a well-placed few blob-masters were recently given the chance to legally award kingly amounts of blob-extract to themselves and apportion more to their vassals in the name of saving us from a Second Great Depression. They're currently basking with amazing modesty in accolades since it has been announced that Recovery is At Hand. The Blob is smiling; all will be well. There was no need to alter our former beliefs, we just needed some "stimulus," and a bold will to fast action.

People like Joe Stiglitz and the blog Seeking Alpha say, "Not so fast. What you call stimulus, I call sleight of hand. All those fork lifts that loaded containers onto the trucks, where did they go? Where are the containers now?" A rigged system so sly and newly faithful of itself will simply pull its hidden levers yet lower and harder, so maybe there are worse things than double-dip recessions:
The Double Dip Recession, or the “W” shaped recovery that a minority of economists, such as Joseph Stiglitz, is now stating as a strong possible outcome of this current rally, should not be discussed in the realm of economics but rather in the more apropos realm of financial fraud. The fact that the upleg of the “W” shaped recovery that is occurring now will inevitably crumble in spectacular fashion will not be a result of any free market principle, but rather the direct consequence of a fraudulent scheme executed by an elite global financial oligarchy, otherwise known as Central Banks.

If the mission of this current manufactured leg-up in Western stock markets was to fool the world into believing that global economies are recovering, then clearly, up until this point, the mission has been a resounding success. For those unfamiliar with the term “blowback”, it’s a CIA term that was first used in March 1954 to describe the unintended consequences of US government international activities kept secret from the American people.

Though this term has primarily been used to describe the consequences of covert military operations, “blowback” is an appropriate term to use to describe the coming consequences of banking fraud because the US government, US Federal Reserve, Wall Street, the US Treasury, and the Exchange Stabilization Fund have all engaged in domestic and international financial and monetary transactions that have been kept secret from the world, and that will have severe and negative consequences in the not so distant future.

In fact, I predict that the blowback of these activities will not only exceed, but far exceed, the fallout the world experienced in 2008 at the prior apex of this current crisis. Most people today can not even fathom how bad the situation will become primarily because of all the secrecy that the banksters have engaged in – in US Treasury markets, the gold markets, the US dollar markets, agriculture commodities, stock markets, and financial markets – in hiding reality from the people.


Unknown said...

It may be worse than you think.

Unknown said...

Bro Tim,

Woke up yesterday to see the hubbub had returned its attention to this subject. A printable version of what I think is this:

Government has been taken over by finance; finance will try to use legislation to suppress competitive solutions and turn us into indebted slave-consumers of shitty products. Public services will continue to be impoverished, forcing local solutions, markets, supply chains, and sophisticated exchange mechanisms to emerge and succeed despite government attempts to thwart them. Finance will not settle for anything less than having its cake and eating it, too, and that can't be done for long.