The Foul Stench Of Desperation

Something is really wrong behind the scenes.  The insiders are exhibiting an extreme degree of desperation to keep the price of gold and silver from trading freely and to keep the stock market from plunging.   Every time the S&P 500/Dow are in a free-fall, one of the big HFT electronic commications networks (ECNs) mysteriously “breaks” (source: zerohedge):  click to enlarge

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Today the S&P 500 was down 16 points and falling quickly. Then the BATS ECN announced that it had to suspend trading in all of its trade routing systems to the NYSE. It just so happens that BATS is one of the largest, if not the largest, electronic communication networks in the world. This happens every time the stock market goes into cliff-dive mode. How come it NEVER happens when the S&P 500 is going parabolic to the upside?

The economy is starting to fall apart.  The plunging price of oil is just one indicator.  Retail sales down nearly 1% two months in a row with one of the months being December, which is historically the best month of the year for retail sales.  DOWN 1%.   Declines in retail sales are not very common – especially back-to-back monthly declines just under 1%.  It means that consumers are not buying.  They are not buying because they have run out of money.

Revolving credit balances have been rising steadily now since 2011.  The rise has begun to accelerate (source:  St Louis Fed, click to enlarge):

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Contrary to popular Wall Street myth, consumers don’t take out an increasing amount of high-cost credit card debt when they feel “good” about the economy. Since the mid-2000’s people have been using credit card debt increasingly to pay for necessities:  food, gasoline, etc. Many will even put their monthly mortgage payment on their credit card. This is part of the dynamic that led to the credit market collapse in 2008.  Banks are all too willing to issue them to everyone with less than stellar credit ratings because they can charge 15% (current average APR) on money for which they are borrowing from depositors for almost 0%.

How do we know that consumers don’t “feel good” about the economy?  Because if you review all of recent macro economic surveys, you’ll find that they all have sub-indices which measure “sentiment” or “expectations.”  Those sub-indices in particular are plunging.

I don’t know how much longer “they” can keep up this absurd charade, but I know when that when they lose control the collapse will be spectacular.

16 thoughts on “The Foul Stench Of Desperation

  1. The situation must be quite bad since they dont´even seems to succede pumping Nasdaq up in the green.
    But the day hasn´t ended yet!

  2. Like the man said “Everybody gotta die sometime”. The economy looks awful bloated
    and sickly. Appears it maybe on it’s death bed.

  3. Locking gold to 1200, the yen to 120 and oil to 50, its obvious its all manipulated. No price discovery translates to a BS market.

  4. It is both sad and ridiculous. They don’t hide it anymore because they can’t – everyone knows what’s coming but nobody wants to be the one that starts the stampede for the exit by stating the blindingly obvious. Instead, everyone’s tiptoeing discreetly away in the hope that no one else will notice and cause a panic.

    I fear the end is near and we’ve just about reached the terminus. The greatest Great Depression yet awaits.

  5. Desperation is the only word that can explain our foreign policy, too. That or utter stupidity. Do they think that war is the only option given the mess we’re in?

    1. Just as generals historically prepare for the previous war in the face of the next one, economists tend to use the previous recovery as the strategy for the next decline.

      A case can be made that the US didn’t recover from the Great Depression until Roosevelt unleashed the MIC in 1940. The means by which he did so ensured that his Republican opposition didn’t stand in the way, as they always like to use war as a solution.

      It is thus now. Obama shot his wad while basking in the glory of being President only to see the GOP take it away. He’s been playing catch-up ever since. After running out of his other possible courses of action, the neocons infesting his Administration now have the only game left to play, one that they know the Republicans will get behind.

      The only remaining question is who to wage war upon. It has to be someone who can’t fight back, else the Ukraine would now look much like it did in 1941-43. This is the main reason why Teheran hasn’t yet experienced Shock and Awe. As they just demonstrated, they can block the Straits of Hormuz rather easily, and the rocketing oil prices would immediately cause global economic collapse.

      That wouldn’t be a fitting coda for the guy who saved the global banking system, would it?

  6. Americans have been ill for quite awhile, morally ill. Etiology: apathy. America has gone from intensive care, to palliative care and now on the deathbed of hospice care, gasping our last few breaths.
    Sure the Vampire bankers are sucking our blood to the last drop but I say we are to blame. We’ve kicked God to the curb, lusted for entertainment and our own personal peace and prosperity, ignoring the theft of our freedoms, ignoring our neighbors, whether they are across the street or across the world, as long as the remote is nearby and a bag of chips, all is well with our world.
    We have ignored the signs of fascism, burying our heads in the sands of apathy. We are the Pathetic Apathetics. We deserve everything that is coming to us.

  7. Well the money masters have had a good run of it, 3 1/2 centuries or so of ripping the world off under their debt money ponzi scam. Now the world is full up, with very little room for growth, expansion of debt, and their debt scheme has saturated the world’s economy and the jigs up. What to do? If the system looks like it will fail in the short expect these money lenders to take the west into an awfully big war with their economic rivals all the while demonizing them, in the past present and future. It’s so bad that most of what western populations believe is false. The word for it is FUBAR.

  8. There is serious pressure building up in the markets. King $ will go higher, E will go down, PE will go up and make this market even more Frankensteinish. They can’t even allow two little down days without getting scared shitless. FED had to hike rates to deflate the bubble. But do they have the courage to do it? And if they do it only by the most minimal percentage point the US stock markets will be shocked and go into freefall.

    Oil production going up, inventory going up because there’s not enough demand. When the second crude oil wave hits the shore this Frankenstein market won’t be able to take it. The drop in oil prices is the black swan. It’s like an earthquake in the ocean and now we wait for the tsunami to hit the shores.

    For years we have heard the FED painted itself into a corner. Actually they did and 2015 is the year of unraveling!

  9. Just goes to prove we are in a new era .High speed computers can control all markets and old fundamentals mean nothing . That is something everyone should have learnt over the last 5 years. The stockmarket may never collapse, gold may never go up , only if the powers that be wish it so .

  10. Malcolm,

    It appears that way for sure…” stock market may never collapse, gold may never go up… ” Until it doesn’t. I know it’s painful to watch but around the World Country after Country is suffering Economically. Some worse than others. If the USD was not the World’s Reserve Currency, America would have woken up by now ( maybe ). We all know the markets are manipulated. TPTB are hanging on by their finger tips. But any thought of an orderly transition is long gone. The World is trapped and there is no escape route. The Eleech know this, or many of them do, so the option is WAR. I can see all those NATO commanders getting there Bankster marching orders. ” Okay boyzzzz…. your pensions are over there ( Russia, China, ME )… go get ’em “.

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