The Dow lost something far more valuable than a few thousand points last week. It lost the mutual trust upon which bourses are based.
What will happen this time when the citizenry is once more asked to pick up the tab for the depravity, criminality, anti-social greed and sociopathy of the bourse/central bank racketeers? The Slog spells out the history, and offers an immediate outlook.
The trail of citizen rape that slithering financialised bourse neoliberalism has left behind it goes back quite some way:
- Ignored overheating in 2003
- Doubled UK national debt in 2009
- Cost £790 billion to bail out British banks, 2010
- Cheated everyone with SIPP Bear Notes via QE, 2011-ongoing
- Removed all income on capital for the retired with Zirp, 2012-ongoing
- Rigged the Libor rate to cheat retail customers
- Pushed share valuations up by 300% in nine years based on cheap credit
- Within a year of Crash1, started paying megabonuses to people saved by taxpayers
- Lobbied furiously to get all reforms diluted or reversed
- Watched as real US and EU middle range wages fell by 38% from 1995-2018
- Contributed nothing to small entrepreneurs who represent 55% of UK gdp
- Snatched the assets of such small businesses fraudulently and got away with it.
During this period of lascivious greed and malfeasance, the politicians in Washington, Westminster and Brussels did nothing to restore the balance between labour and capital, Equality before the Law and the overall Rule of Law. Black Democrat President Obama stood meekly by, Boris Johnson told us we must learn to love bankers, and Emmanuel Macron got elected by promising to convert France to the very same economic and fiscal ideology killing communities across the West. George Osborne’s contribution was to embezzle the State pension monies owed to 3.65 million British women after 2010. Elected at last in 1997, Blairite New Labour collaborated in la grande bouffe. Interested only in their own backsides, Whitehall after 2004 quietly used obscure legal instruments to award itself even more morbidly obese (but unfunded) pensions than those already in place.
As for the media, once the internet had destroyed their cosy Sugar-Daddy business model, the first thing to go was investigative journalism as they clambered over the wreckage in a bid to survive. It was, they felt, “far too expensive”. These days, the MSM sees its job as rationalising the lunacy of globalist, pc and divisive ID politics. (The police take a very similar view).
Today, however, I want to focus mainly, not on the toothless, spineless, careless and altogether pointless élites whom we pay to protect us, but on the bankers and bourse financiers who have somehow managed to use capital raising, credit provision and fiat currencies to starve creative social capitalism, replacing it with anti-social financialisation.
The Hard Leftlib ideologues and their cleverly rebranded fellow-travellers would have you believe that capitalism is the enemy, because beneath a layer of diaphanous “equality” or “green” packaging, they are unreconstructed Big State collectivists. Their very ignorance on the subject of bourses (ask them what an algorithm is, and they will likely suggest it might be a form of birth control) disobeys the first rule of radical reform: know thine enemy.
The enemy is not capitalism: the enemy is self-interested ideology
Ideology is the cuckoo in the nest of open-minded free-speech philosophy. Every practical philosopher searches for Truth and Improvement. Every ideologue seeks power at any price.
Last Friday, we watched as financialised globalist bourse banking openly displayed its naked power to protect a tiny minority at the expense of the honest wellbeing of the 97%.
If this reads like hectoring rhetoric, don’t stop reading now: I am about to prove every foregoing assertion.
You can read the full sorry tale here at yesterday’s Slogpost. But in the light of this year’s double-whammy, here’s the tabloid summary:
On Friday 13th March 2020, the New York Reserve Bank (an NGO) doubled the taxpayer risks of the United States citizen by promising to devote $24 trillion (over time, not cumulatively) to the continued mega-wealth of a financial community probably totalling no more than 450,000 people. There was zero requirement for accountability re their action to a Congress elected by The People.
In the very early hours of today – after a long period of Congressional haggling – US politicians agreed to a package of aid designed to mitigate the effects of Covid19, a virus which, if unchecked, will kill 5.67 million Americans. The package is in theory open-ended, but the starter sum is likely to be around $15 billion.
So in a nutshell, trillions for 450,000 gated community Zil laners who can self-isolate with little or no fear plays 15 billion bucks for maybe six million older traditional loyal taxpaying Americans especially vulnerable to a virus which they will find hard to avoid.
It is beyond obscene.
‘Friday the 13th closes out a week unlike any we’ve seen before, and it’s all driven by one thing: coronavirus’ wrote Zero Hedge yesterday. Regular readers here will already know my view on ZH: it’s batting for the other side. “It’s all driven by Coronavirus” is exactly what we’re supposed to think; but as I posted four days ago here, IABATO* is in full flow: the facts and the dates simply don’t fit.
There is so much rigging out there on myriad levels, you could refit HMS Victory with it from crows’ nest to keel. Over Thursday and Friday last week, $150 was shaved off the price of the world’s first resort safe haven during the pandemonium of a bear market approaching at a record rate. On Friday afternoon, I rang two UK and one US gold dealer. They were sold out of bullion. “We could sell every ounce we get immediately,” said one, adding, “There’s a waiting list for physical gold”.
The Fed knows where the real guilt lies: its Board of Governors told Wall Street On Parade last week that it has 233 documents shedding light on why JPMorgan Chase was allowed by the Fed to draw down $158 billion of the reserves it held at the Fed last year, creating a liquidity crisis in the Repo market. The obvious hint in all this is that JPMC deliberately drained liquidity. Given that its gold trading desk is already undergoing a massive criminal investigation based on ancient racketeering laws, nobody is terribly surprised. Goldman Sachs is under a criminal probe by both the U.S. Department of Justice and Malaysian authorities for its role in a pay-to-play and embezzlement scheme known as 1MDB; and Deutsche Bank – facing endless charges of illegal behaviour – plays a dangerous anti-matter role on Wall Street, given it is a derivatives counterparty to all the largest Wall Street banks. Its recent losses of more and more equity capital have caused its shares to become virtual junk….and last week, the collapse accelerated.
None of this has so much as a billionth of an iota to do with COVID19; the question I posed back in February still applies: why has the virus been given plague status from Day 1 by the media, and where does the trail of terror-mongering lead back to?
It’s still too early to answer that, not least because none of the media moguls want to. But the time has come to map out what happens at the next stage of Crash2.
David Cumming, chief investment officer for equities at Aviva Investors, said yesterday, “The market is gripped by fear. It’s already pricing in a recession. I think that’s overdone, because as soon as you can see a pathway out, the market will look forward beyond that.”
I could try and put into words what Cumming said, but I’d fail. It is hogwash of the first order: where and what is this pathway out beyond chucking more credit at a global debt problem? The model, the theory, the entire ideology and the dishonesty of globalist neoliberal financing is The Problem here.
It’s fine to observe that last Friday displayed a solid rally, but we shouldn’t forget that it took a phased promise of humungous noughts-money just to get that….and the buying trailed away towards the day end. People I spoke to Friday and yesterday admitted they’d spent the later hours taking short positions. One US market-watcher I’ve learned to respect told me, “I’m still a seller of this market unless something changes drastically.” Like what, I asked; Good question, he replied.
Indeed, the generalised expectation that the US Fed and other central banks will pile in with big ideas I find profoundly disturbing: the ECB certainly isn’t going to do that, and the Bank of England is armed with a range of little more than peashooters. It’s already Sunday lunchtime CET and there is no sign of further action from anyone in authority.
Although we may well see a steady Monday, what the Fed’s nuclear bazooka hides is what always turns overblown markets into dustbowls: loss of trust. The bourse system is based on herding illusions, and resort to algorithms isn’t going to change that. Herds are fine until somebody ironically observes, “Sure – eat s**t, 200 zillion flies can’t be wrong”. What started in Repo is spreading. A lot of travel sectors from hotels to airlines will go under, those with big bets in commodities will be in trouble, and trading desks over-reliant on credit (as most are) will create distrust.
As happened with Lehman, that will quickly morph into assumed leprosy. There will be bank failures, there will be catastrophic gdp data. The euro will be in crisis within a few weeks, because Italy is on the verge of collapse.
What we saw last week was the end of the beginning. There’s a long way to go yet.