Wednesday, July 6, 2011

What-a-World Wednesday- First Hand Experience From Greece Details Chaos, Scandals, Corruption; The Global Economy is in Death Spiral, No Way Out; Challenger Job Report Shows Unemployment Will Get Worse; Ten Percent of China's GDP is Bad Debt Says Moody's; Unprecedented Global Weather Ruins Crops, More Inflation of Food Prices Expected; The "Big One" in Iceland Ready to Erupt; Dust Storm in AZ Blankets Whole Cities; Portugal Puts "P" in PIIGS; Moody's Downgrades "P", Fails; Gold Strong As Ever; Federal Retirement Funds Plundered By $120 Billion; Fukushima: Reactor 1 Radiation Skyrockets To Record, Cover Up of Fukushima Unraveling Fast, Children Clean Out Radioactive Dirt, Japan Plans to Reduce Size of Evacuation Zone While British Columbia Canada Sees 38% Spike in Infant Mortality; Much More

Update 1: Silver/gold shorts days are numbered. Got physical?

Main Article
After reading an excellent first hand experience about the chaos that has erupted across Greece, one cannot help but draw numerous and alarming similarities between Greece and the U.S., especially given that both have very similar - shall we say - "debt problems."

Take for example this excerpt and see if it sounds anything like what America, most European nations and other developed nations are experiencing on an unprecedented level:

"And all Greeks can attest to this; everyone I talked to seemed to have either a personal story or of people they knew that lost their jobs, whose wages were cut in one way or the other, PhD’s who had to take up jobs in supermarkets to survive, or people who were just jobless for endless amounts of time, depending on family and friends for survival."

In late 2008, it was already evident that the economy had descended into a downward death spiral - one that it would never recover from. A widely circulated newspaper in Ohio reported that a single job opening for a janitorial position at a high school in rural Ohio received over 700 (seven hundred) job applications - for one job opening paying $15/hr. The superintendent of the high school was quoted as saying that under normal circumstances, this job opening would receive a dozen or so applications but they had received over 700 applications, from people with everything from two year college Associate Degrees to those with advanced college degrees and/or who had formerly worked in well paying "white collar" positions. Does this sound very similar to what the witness in Greece was saying? If we had written this blog back then, we would have concluded that the worst was yet to come.

As we have highlighted numerous times, the "stock market" indices are not an indicator of economic health, especially now that $2 Trillion in "stimuli" have been pumped into these "markets." There's nothing "market" about these "markets." Thus, the fundamental metrics that once mattered such as employment rates, food stamp participation rates, inflation rates etc, no longer have any impact on these markets - that's not to say that they no longer matter at all. On the contrary in fact, these are the very basis for taking a true reading of the economy - and all of them are indicating this patient is on life support in the ICU, in a coma with no chance of recovery as gangrene and other infections have now spread throughout the body. If the "economy" was a real patient, the doctors would be preparing to inform the family that funeral arrangements should be made. 

From the Challenger Job report, we see that the number of planned job cuts announced by employers increased by 4,297 or 11.6% to 41,432 in June. That is the only line in the report that matters. Did we mention the Too Big To Fail, Too Corrupt To Save banks are prepping for big layoffs? No wonder why there is no talk of a "double dip recession" - the global economy now faces a triple dipper depression.

As every talking head on CNBS since 2009 was claiming China would be the White Knight in shinning under armor and save the global economy, why then is the Princess still locked up in the dungeon? Could it be that China's "growth" was nothing more than smoke and mirrors? Could it be that the real estate boom in China was artificially induced and now they have years worth of depreciating inventory to work through? While everyone was looking up at the fireworks on July 4th, Moody's drops a NATO bomb on China as they find 10% of China's GDP is bad debt and that "China's debt problem is worse than stated." Act surprised. Judging by the images of China's ghost cities, we think 25% of their GDP is plastic rice. We're certain a 25-30 basis point rate increase will also help with their GDP "growth." Or not.

Speaking of plastic rice, the unprecedented weather around the world is going to put a hamper on any "economic growth" for the next, well - indefinite fiscal quarters. In other words, don't expect food prices to deflate any time soon. The production of most food staples has reached a critical point as weather from Australia to Russia to Canada has disrupted the planting and harvesting process - everything from oats to corn to rice to wheat are going to get a lot more expensive. In turn, animal protein will also increase in price exponentially. Maybe plastic rice is not that bad?

Could it get worse? It will if the "gates of hell" open up and spew more ash around the world. Last year, the Eyjafjoell volcano in Iceland erupted, causing the largest shutdown of air traffic since WWII, grounding more than 100,000 flights and the economies of Europe. Now, "the big one" is getting ready to blow. The most feared of all, Hekla (aka the Gates of Hell) is heating up. Once she blows, air traffic will shut down for weeks, possibly months. We predict, immediately following the eruption (if the MSM gives it coverage) the talking bimbos on CNBS will get on the horn and hype that latest catastrophic event as bullish for the global economy and say investing in worthless trash stocks is the best move you can make. Just like Fukushima.

Why wait? The current economic storm that is fast approaching is very similar in appearance to this freak 50 mile wide dust storm in Arizona, only worse and covers a distance of 24,900 miles. Ask any realtor, stock broker pimp, used car salesman - the answer always is "there is no better time to buy [insert whatever they are selling] than right now." Just ignore those storm clouds. 

As we reiterated just yesterday, the PIIGS are lining up to be slaughtered, for bacon - namely, for bacon strips and bacon strips and bacon strips. Greece, the fattiest of them all has already sold their citizens down the river by attempting to sell off public assets and the citizens have fought back with strikes and riots, which will get more and more violent as austerity is implemented fully in the coming months. Greek bonds have not budged on the sell out, and remain in the junk bin as investors know the inevitable outcome is still default. Yesterday, Moody's cut the P in PIIGS to junk. How's that 12.7% yield on the 10yr working for the European (Dis)Union? Not too well. Ireland is next in line in 3... 2... 1...

As always, these ratings agencies come late and swing soft - we downgraded all of the PIIGS in March to junk although we don't get the same recognition as the official ratings agencies so it means nothing. Except to us. Contagion is a five letter acronym that begins with the letter P, but safety is a four letter word that begins with the letter G. We also like the S word which has six letters, not four. (Don't tell anyone but the paper price means nothing. It's all about the physical.)

There's nothing more bullish for the economy than a gov't on the brink of defaulting - and we're not talking about the PIIGS. Here in the U.S. where the "debt ceiling" has been breached, the last resort to keep the lights on is raping and pillaging to "tap" the pension funds - which now have been "tapped" by a total of $120 Billion. Therefore, if the debt ceiling is raised (to Pluto), the total debt on the books will be instantly increased by $120 Billion before a single light bulb is turned on. If the debt ceiling is not raised, the Treasury will continue to plunder the retirement fund until there is not a red cent left for the retirees. Of course, in the meantime, the Too Big To Fail & Too Corrupt To Save tax payer bailed out banks will issue their executives another round of record bonuses. We're 100% Bernanke certain that in 15 minutes this won't end well. 

Speaking of not ending well, Fukushima truly is what many people around the world are calling an ELE or "extinction level event." It is sad to read the news still pouring out of Japan (like the radioactive particles encircling the earth) and our hearts go out to the good people who trusted their leaders but will pay with their lives. We present to you today's 5 top news events related to Fukushima. 

1- Reactor 1 dry well radiation measurement hits a new high of 266 Sv/hour. Of course, now that this reading is worse than ever indicating ongoing fission and leakage, the gov't denies the credibility of the meter and says the meter is defective. Deny, deny, deny. Extend and pretend. Extend and pretend. Sound familiar to how the global economy is being handled?

2- The Fukushima cover up is unraveling fast. "George Washington" does an excellent job at summarizing the gigantic cover up of Fukushima and the coming consequences. As one recently "resigned for personal reasons" former Japanese gov't official just stated, "there will be chaos [once the truth comes to light]." Get ready for some real shockers. 

4- The Japanese gov't plans to reduce the evacuation zone on the 17th of July. Unethical. Immoral. Disgusting. Filthy. We're at a loss for words. With the radiation levels 20-40 miles outside of this evacuation zone increasing daily, we really have no words to describe this news. 

5- British Columbia, Canada sees spike in the number of sudden infant deaths. Not two weeks ago, it was reported that sudden infant deaths in the the Northwest United States increased by 35% in the weeks immediately following the global catastrophe of Fukushima. Now in B.C. Canada, sudden infant deaths have increased 38%. The coroner has the audacity to say, “why so many of those have come up this year, we don’t know.” We do. Connect the dots.


  1. Hallo again my friend. This is very scary news about infant deaths. We see this in USA on westcoast now we see it in Canada. I am very worried about what will happen next. Also I think we are so very so close to economic doom. Here in Sweden it is not so hard to find jobs but we see prices going up on everything. Less tourists from France and Spain. More Muslims from everythwere. Thanks!! From MPP5 Sweden

  2. It's amazing how the complexities in a society allow it the flexibility to overcome so many outside and internal forces that would destroy it. What very few societies seem to survive is the conflagration of several difficulties converging at once. Debt needs ever more debt. The requirement for limitless oil, gas, and coal. The control of E=MC^2 (nuclear) on a minimalist budget. Food and water supply tightness. Any one of these could be attacked and conquered with a Apollo style moon effort. But if you are in debt and you lack energy and your tech backfires and food supplies are tight, what do you do? The reason the problems are so big is that the societies are so big. After all, small villages don't have our problems.

  3. @MPP5- Yes, as I posted last week, if the majority of people knew what was really occurring they'd skip American Idol and hold protests instead.

    @Anon- Excellent summary of the problems the world now faces. These are unprecedented times in which we live and as you aptly point out, our societies are so big and so interdependent that it's now our own demise. History has a funny way of sneaking up quickly and rhyming. Too often, past mistakes are repeated in plain sight. Time to return to living off the land maybe?

  4. @ Fiat Fire - The precipice is fast approaching. What is done now will determine how steep the transition from horizontal to vertical is. That the gulf between the rich and poor has increased so much in the last few years alluded to the planned mitigation strategy: walk across the gap bouyed by a bridge of fiat. Don't have enough fiat? Well then, shame about that gravity thing. A sharp collapse definitely favors those who have, as more people fall off the rolls, there is more for everyone else, especially those who can afford it. Of course, on the other side of the gap, there are no rich people, just survivors. Sort of self defeating. Anyway, thanks for the work you do on the blog, always insightful and informative.

  5. @Anon & Fiat - I would have to disagree on the size being the problem. If we had a society that raised certain ideals above others: size would never be a problem. How did the Inca's in Latin America take over and become a super power? Especially when they where banished to unfruitful swamp lands??? They "invented" or used aqua-ponics to grow food and became more productive then the surrounding tribes by tremendous magnitudes. (look it up, its actually really cool...)

    Throwing our hands up and saying, "Well that is it!" is just out of the question when we are dealing with such corruption at the highest levels. We will need everyone in order to make it through this and shape the world as it should be.

  6. This is a Killer blog -- love the intelligent, insightful, and witty narrative format. Way up there with ZH. Keep it up.

  7. @ [e] - I agree that size is not necessarily the core cause of the issues facing a society. Size has bred complexity, and that complexity has bred immobility. The Inca, I am sure, made a good decision based on all available choices that maximized good for the Inca. In our modern world, in Greece for example, anyone with a 4th grade math education and a chart of their outstanding debt would say that default would be in their best option. But because of outside vested interests, interconnectivity and complexity, this hasn't been allowed to happen. Instead they will sell the Parthenon to the highest bidder? A one-time sale will solve a compounding ever increasing debt problem?

    The other thing that we must realize is that size is not the only issue, it is the rate of growth and rate of consumption that is needed to feed that growth. One would like to think that a decision (whether natural or by will) to increase in size would somehow only be made because there is a natural increase in efficiency due to the increase, an economy of scale. And we've succeeded in making goods ever cheaper using growing amounts of energy. If the energy is no longer there due to scarcity/high costs, how does one justify the current size? Carried to the extreme I suppose we could cover every piece of non-arable and uninhabited land with a nuclear reactor (provided we had enough uranium) to keep the machine going, but I'm not sure I'd want to live with the consequences of that scenario either.

  8. @Anon- Excellent summary and I concur 100%. See my most recent venture with the GEES. We are seeing the makings of a war between the haves and the have nots. This social wars never end well. Size is not the root problem but just another cause. Interdependence is a major problem.

    As with Greece, the problems have not been addressed but again only temporarily fixed with bandaid solutions which as I am trying to make clear on my blog will only make things worse. There is nothing after this for Greece.

    So many problems and they are all compounded and in most cases founded because of Greed. Again, thank you for your input.

    @[e]- You're right. But no one here is throwing their 'hands up.' ;)

    @Nightblogger- Thank you. I appreciate the comments and hope to see you here more often. That is a great compliment! ;)