Friday, August 12, 2011

A Few Timely Remarks About Some Of Our Long-Time Macro Calls On The Global Economy

Going into the weekend, I just want to highlight a few remarks around a handful of our anticipated outcomes to the global economy.  All of our anticipated macro outcomes were made months to years in advance of the 2008 collapse.  Many have already come to pass.  Many are in play as I type this and many more will.  We have spent the last two years discussing and reinforcing these themes while waiting for the  coming storm.  Unless someone in the status quo has some transformational ideas, this could very well be the beginning of that storm.   

Even though I might not share endless charts and graphs, (mostly because I blog for enjoyment and I enjoy writing not to fidgeting with graphs) all of my analysis is based on reason and qualitative & quantitative analysis of data.  Ain’t no useless opinions in our macro economic calls.  I just saw one of those on Yahoo’s home page the other day where a consistently incompetent Wall Streeter compared this environment to 1987.  Talk about useless opinions.  1987?  WTF?   How about Orwell’s dystopian  1984? 

If I am wrong in any of my macro calls, it is because my interpretation of the data is wrong.  Contrarily, most everything in the Orwellian world in which we live that is put out for public consumption is based on ideology, beliefs, speculation, self-serving manipulation, half-truths or hearsay.   Reason and factual analysis never serve the goal of any dynamic where money or control are the motivating factors.  And, because we are in the biggest financial bubble the world has ever seen, it’s all about money and control.  There is no other primary motivating factor.   In today’s world, even if facts are presented, they are presented under the duress of money or control.  That means they are used for one purpose – to twist reality into some manipulation serving some money-driven goal.  Or as Mark Twain famously wrote, “Lies, damn lies and statistics.”.   I think we’ve all had enough of the endless supply of useless, uninformed opinions and political commentary of 24 hour news and the supposed Weekend at Bernie’s propaganda experts propped up for public consumption.

The reality?  No one is listening to anything out of Wall Street or Washington anymore except politicians and Wall Street.  Who actually remains invested in this economic or political environment?  As we have remarked, fewer and fewer people remain invested and that means we are nearing the end.  Months?  Years?  Some of the status quo will fail in months.  Some may take a few more years.  But it is game over.  As we have remarked time and again, that world you knew just a few years ago is gone forever.  It is never coming back.  And never is a long, long time.    

On to a review of a few timely long-time macro outcomes we have been waiting for.  By the way, most of which would have been laughed at by Wall Street and politicians when we first wrote of them.  Ain’t nothing to laugh at now: 

  • --We are in the biggest financial bubble the world has ever seen. E-V-E-R. 
  • -This could very well be the beginning of the end of Wall Street as we know it.  Wall Street could actually cease to exist as new and better solutions become apparent to democracy’s financial and developmental needs.
  • -Hedge funds go bye bye.
  • -Investment banking goes bye bye
  • -Private equity goes bye bye (Essentially all of the  financial masters of the universe we were told to worship were in fact fucking idiots,  criminals or anti-christs who simply controlled the microphone because society entrusted them with control of our savings and our capital to keep safe.  Instead they ultimately destroyed our society, our savings and our capital stock through their systemic and endless incompetence and corruption aided and abetted by Ivy League universities and the political class.)
  • -Ivy League finance MBAs are going to be working at McDonald’s serving up Quarter Pounders with cheese.
  • -A financial crisis will then lead to economic crisis.  One reason why economists never see these events coming is that we don’t have recessions anymore.  We have financial crises that lead to economic crises.  That is because the system as constructed is inherently unstable.  That anticipated outcome came true in 2008 and it will be true again.
  • -The Euro zone is headed for a major restructuring or the entire euro financial system could collapse.  We said this while even people like Marc Faber were remarking that the euro was a sound currency and  the dollar was illegitimate. (Yeah right.  Most opinions are based on biased and unsubstantiated beliefs rather than qualitative and quantitative analysis of the facts.)
  • -Germany would ultimately be damaged the most in the coming euro zone chaos. (Just as China will be damaged the most in coming global chaos.)
  • -Global finance is dead.  Need I say more?  The world’s financial institutions are on fire as the completely unstable global financial network eventually shatters. 
  • -Globalization is dead.  It will be replaced by localization and by local finance initiatives. 
  • -State’s Rights, an important check in our governance system against a distant national government (the colonies didn’t want a repeat of the English throne in Washington) will (already are) going to rise against Washington hegemony and corruption and more importantly their inability to impact local economies through Soviet-style or king of England-style central planning. 
  • -Supply chain shocks would develop in the global economy and because of the bullwhip effect countries/companies that are substantially reliant on globalization would suffer disproportionately.
  • -Even though this crisis was kicked off in the U.S. in 2008’s collapse, the vast amount of future economic crises will happen outside of the U.S.  We are starting to see this come to pass. 
  • -Emerging markets are going to experience substantial and disproportionate economic distress or even busts
  • -The back end of this crisis will be much worse than the first shock in 2008 and it will polish off the status quo.
  • -All wealth created since 2000 in the global economy could very well disappear.
  • -Today’s equity market valuations are many times higher than 1929 before the market lost almost all of its value.  Equity market valuations have no foundation in any type of reality.  Those who see value in this market are simply seeing their own self-delusions.  The myth of large sums of corporate cash is met with the reality of the highest corporate debt levels in history and the lowest capital spending in recorded history.
  • -Finally, one more outcome that we have beaten the drum on incessantly is that our downside target for the S&P remains 200-450 before this crisis is over.
    I’d say most of those calls are starting to look pretty good right about now.  And they were made years ago.  By a hick.  A hick with no formal education in economics or finance.  Not by Wall Street masters, Ivy League economics professors or Washington royalty. 
    I think maybe our president and his neoliberal beliefs (The way out of this environment is that we graduate everyone from college.  You know, like those brilliant economics and finance professors, Wall Street masters and Washington royalty. ) needs a little adjustment.  (By the way, the baseless position that we need to have more people graduate from college for our economy to recover may be born out of a narcissistic belief that more people need to be like the ego espousing that belief.) We already graduate more per capita from college than many other more productive nations.   What we need is everyone to have economic opportunity.  And in a democratic economy, that should not be predicated on pissing away a few hundred grand on a college degree that is often unnecessary.  But, then college degrees are often just tools of the corporate state – economics, MBAs, finance, business, etc.   As the corporate state implodes so do their demands for these college degrees. 
    A merit and market-based democratic economy would determine the educational needs of society.  Not a bunch of bureaucrats sitting in Washington trying to centrally-plan a topic they know little or nothing about.

posted by TimingLogic at 9:27 AM