I am writing this on Tuesday afternoon and am watching the US stock markets fall for a second day. What most people are likely unaware of is that even though the Fed pumped $40 billion into the “markets” on Monday the Dow fell over 1000 points and the major averages all lost 3% +. Everyone knows about the market drop but most are still unaware of the Fed’s interventions. This is in ADDITION to the $60 billion per month in Treasury buying.
Today, Tuesday, the Fed pumped $74 billion into the “markets” and it appears that number gave us a little breathing room at the market open but the Dow is a full 500 points lower than the day’s high at 1:15. Don’t get me wrong- a few more tens of billions and the “market” could wind up higher by 4PM. I am not expecting that but when every asset is being manipulated one way or another there is nothing that seems impossible.
After watching this coronavirus and studying it for the last few weeks- listening to trained professionals- I am convinced that the economic damage is continuing to be done and that it could continue for months. A story today on Zerohedge mentioned a company- FoxConn that offered employees 7000 Yuan to come back to work. More than half declined. The point of the article was the old story of carrot and stick. Right now those in charge are offering a bribe (carrot). If the situation persists then force may be used (stick) to force people back to work. Their economy is in a shambles but returning too soon could just lead to more infections and more down time.
This has also led to a dilemma for many. Do I work to pay my bills and risk getting a deadly disease or try to stay healthy and live to work another day?
“Print” up all the money you want and it will NOT produce a single thing that humanity needs to survive. This is one lesson that will likely come through loud and clear shortly as supplies from food to medicine to energy run short. If goods are not produced all that happens is prices rise and those at the bottom of the food chain are first to suffer. This is already happening in China.
As the disease spreads how many other countries will have factories shut down because of that and a lack of supplies needed to produce their product. Already there are plants closed in Serbia, South Korea and of course, China.
I have already stated that I believe this virus may be the excuse the elites will ultimately use to reset the financial system. Remember, there ALWAYS has to be an excuse to calm the masses when a crisis strikes to deflect the blame from the real culprits- the central banks and the governments that allow them to get away with their “printing” schemes that have been going on now for centuries. They have all ended with the same result- the impoverishment of the many to benefit the few. This is NO accident!
My guess is that there will be enough pain administered to have the regular folks begging for the central planners to “fix it”. My guess is that they already have those plans ready to go.
In looking at the global economic outlook all the numbers are crashing. This leads me to believe that the central banks will now be going all-in again to try and keep this zombie economy appearing alive for a while longer. By doing this I believe that in a short period of time many will get the picture that these fiat currencies have no real value. Anything that can be conjured up out of nowhere in any amount with virtually no cost really has to be considered worthless in my opinion. I have said many times that this faux cash actually has no value until it is used (by those “printing” it up or their close associates to buy something of value)- of course raising the price of what they bought for everyone else in the process. This is the real reason that the economy is sluggish (long before the outbreak) and “markets” kept hitting all-time highs for the last 12 months or so.
I have opined that since this REPO operation was likely to cover losses in major banks to stop the implosion of derivatives. More information was put out today by Wall Street on Parade which makes me think that I may be right. During yesterday’s selloff the biggest losers were the major banks (the biggest holders of derivatives. The losses in their stock values were double what happened in the overall indexes. The article by Pam and Russ Martens laid out the major losses and the amount of derivatives at the major banks. According to the Office of the Comptroller of the Currency derivative exposure (Face amount) is:
JP Morgan Chase $54,900,000,000,000.00 54.9 TRILLION
Goldman Sachs $50,000,000,000,000.00 50 TRILLION
Citigroup $49,400,000,000,000.00 49.4 TRILLION
Bank of America $39,300,000,000,000.00 39.3 TRILLION
Morgan Stanley $36,200,000,000,000.00 36.2 TRILLION
Just these 5 banks have over $229 TRIILLION in derivative bets. This is likely why such drastic measures are being taken to keep stocks and bonds propped up. If any major global bank goes- they could all go.
Back in 2013 it was reported that the major banks had bets of $574 trillion JUST ON INTEREST RATES at that time.
Remember, in a default you may have the call right and be expecting to make a fortune but if your counterparty can’t pay- you still may lose anyway. This is another reason why gold and silver are so important in a situation such as this. There is NO counterparty risk.
It appears that an awful lot of conjured up from nowhere cash would be needed to stem this tide and it appears we may just have a front row seat right now as at least 6.6 trillion as of a couple of weeks ago has been fed to the banks and hedge funds. (Wall Street On Parade)
I believe that gold, silver and the companies that mine them will be the biggest beneficiaries of this paradigm. Of course, the games are still being played to suppress the price- just yesterday a mystery seller came along at 2:30 PM (King World News- suspect BIS) and dumped $2 billion of paper gold onto the market to stop a runaway rally. These games are really ridiculous since they don’t even hide the fact they are doing it anymore. When the unwind comes it will be just that much more spectacular. Another round of selling took place overnight- more than likely an attempt to get to Friday’s option expiry without “da boys” (the banks keeping the price suppressed) getting wiped out on their short positions.
I believe the one day in the not too distant future the many will be looking to do what the banks, central banks and billionaires have been doing quietly for the past few years. They have been buying gold in record amounts. They have been buying hard assets and real stuff. Too bad that by the time most wake up it will be too late and the prices will likely be prohibitive. Your time may be short.
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