This morning’s cheery thought (and discussion of the Blame Game) from your favorite East Texas nutter out in the boonies centers on the idea that as the approaching breakdown of economic order sneaks up on the Cyprus-like public, the more desperate officialdom will become for something, hell anything, to take the blame for economic collapse. And pull off a massive bail-in.
So I thought it would be instructive this morning to look at some of the data which suggest Syria and Iran warfare could shortly be blamed for such outcomes, even though they really have nothing to do with it.
The first is the turnaround in interest rates. As you can see in the long-term view of the US bond yields here, the Bond yields have been coming down since 1981. When they bottom out (between now and 2018) there will likely be a financial panic as markets figure out that the lousy earnings and yields of today (and ghost of Christmas’ past) are gone. But since the consumer class has been beggared, no one will have pricing power, and so stocks will crater along with bonds.
Then there’s the little matter of how long can the Fed keep buying up its own paper? Surely, at some point, that little shenanigan will blow up. When it does, the US dollar would naturally collapse in a heap. By collapse what we mean is the dollar would drop precipitously in value which would cause bond yields to reverse course and head moonward, at just the worst possible moment.
What to do, oh what to do?
Bring on war! Any war! Big war! Scary, frightening BIG war and toss in plenty of threats against the Homeland, too, since that would give us a reason to have martial law to keep a lid on things here at home. Stifle dissent, ban gatherings…
Just to keep things in perspective, the US has always had a double-standard when it comes to nerve agents. As the Monday issue of Foreign Policy reported, “CIA files prove American helped Saddam as he Gassed Iran.” Yes, but he was working for US then….
But, now that the “foe is on the other shoot” we are acting all self-righteous and indignant about nerve gas. Let’s kill some people and show them bastards. Expediency is, deep down, what makes the geopolitical world go around. Say, have you seen our moral high ground around anywhere? We seem to have lost it…
In yesterday’s column, I explained to you how the identity of the sniper fire at the UN inspectors would be a key mediawar prelim round. So far, because so many people are onto the game, the two sides of the conflict are simply charging one another as being the perps.
Over here, in this Boston Globe story, we find “The rebel coalition said the sniper shots occurred near the final checkpoint between rebel and regime-controlled areas, calling it an attempt by the [Assad] regime ‘‘to intimidate the UN team and prevent it from discovering the truth about Assad’s chemical weapons attack against civilians.’’”
On the other side, in this UPI dispatch, we read that “Friday the Syrian government accused the United States of manufacturing stories about chemical weapons use to justify support for the rebels. The Russian government made similar charges, CNN reported.”
The global financial mess is quickly picking up speed, meanwhile, so look for the war moves to come largely and quickly as we settle down toward S&P 1,540. Dow futures are down a hundred and something. Subject to revision as the Housing data comes in.
In overnight trading, Japan and China were both down half a percent and more, while in the early going in Europe France was down almost 1 1/2%, German down more than that and the British market was down 2/3rd’s of a percent, but it ain’t over yet.
The most important thing to know, I think, is that the S&P 500 peaked on August 2. Since crashes (or panic declines) happen around 55-calendar days out from a high, I’ve got September 26th circled, which would really be ideal because it will be the week after September options come off. Of course, I imagine you have 9/11 circled, too?
No point letting a perfectly good war panic and/or market melt go to waste. I figure the odds are at least as good as the PowerBall and secretly, I plan to make more money on this decline that I did in 1987’s.
As always, none of this is to be considered financial advice.
Make War, Not Crash
While any damn fool (or me) can see this whole Syria thing as a market distraction, we have to notice that both Russia and China have stepped up their warnings about any pending attack.
And in terms of telegraphing plans to the Syrians, they don’t really need to do much more than pick up this morning’s Washington Post to learn that a two-day “limited” military strike is planned.
I hate to be a Constitutionalist prick here (OK, not really…), but isn’t Congress supposed to be the ones to declare wars? At what point that blasting the shit out of a country cross that threshold?
Not that anyone in Congress (fools on the hill) can be considered awake enough to care, after all, this is the same gang that can’t even pass a Constitutionally required federal budget. Still, it would help shore up the failing charade to have them tell the president what to do instead of the other way around. Otherwise, the Wag the Dog which has been going on since Johnson will continue….
I’ll leave it to you whether this is because congress is collectively spineless or witless…admittedly it’s a tough call.
Related? China Internet Hack
And related to all this intrigue over markets and wars, our resident war gamer tosses in this:
George,
For some reason, this has not yet made prime time network news:
“Who Hacked China’s Internet Yesterday?” (Sunday)
Interesting the linked article notes that despite its cyber sophistication, China could not defend itself from a distributed denial of service attack. Truth is, due to the nature and the timing of a distributed denial of service attack, where millions of Trojan infected bot computers simultaneously attack and overwhelm a target network, no nation on Earth can adequately defend against such an attack unless it somehow first gets ahold of the attack packet coding and builds filters to screen them out before they affect the targeted network.
DDoS attacks happen at the speed of light, the Internet transmission speed, arriving in concert in such a massive quantity that they overwhelm and shut down the target network. Even prepared networks are surprised and ultimately swamped by the speed and traffic volume of such attacks. Only when the network providers can accurately ID attack packets as they flood in can they program the attacked network servers to filter out those DDoS packets. Over time, traffic returns to normal.
Someone sent the Chinese a large and calculated message on Sunday. Question is, will the Red Cyber Army and the Chinese leadership pay attention and heed the message.
Cheers,
Or, will they respond in kind during a critical trading day, which the 3D chess player in me would suspect? But this gets back to our overarching deep ponder du jour: Is war to cover economic collapse arriving shortly? Our War Gamer’s pet quote on point:
“I can picture in my mind a world without war, a world without hate. And I can picture us attacking that world, because they’d never expect it.”
~ Jack Handy, Deep Thoughts
More after this…
When in Doubt, Lie?
Sheep, peep, and heap time: Let me ask you straight up here: Is there really any way in hell that a 16-trillion dollar debt can REALLY remain unchanged for 100 days?
Of course not! (Only a crank head accounting dropout would believe that). So here’s a fine question: Why is the Treasury Dept. website lying?
Whoops! Did I just accuse our great ‘Merican government of lying? I take that back. Apparently in all my years of managing P&L’s and cash flows and having the requisite MBA, I missed the class where it was explained how a federal deficit could remain fixed all solid Gibraltar-like for 100+ days without lying. I’d love to hear the answer…but I’m not holding my breath because I already know:
What you do is publish the exact high (like the last 100-days) and shove anything else over into “off books accounting.” Of course, that’s not honest, and if you or I tried to do “off books accounting:” on that scale when it comes to income tax, or example, we’d be racked and flailed if not jailed.
More proof of what? There are two sets of laws in ‘Merica. One set for the peeps and sheeps and one for creeps at the top of the heap.
Whoops…there I go again. Just move along…move along…nothing to see here. We’ll try to get Ure’s truly off the books, too….It’s all for our own good, after all….kiss your nanny state and run along now.
Politically Correct Debtor Prisons
Here comes more of that “George talking radical” shit: I don’t have a problem with a parent having to pay child support, but I’ve always looked at alimony as a kind of reincarnation of slavery. So it’s with some interest that you’ll want to read this story about a fellow who’s caught in that deadbeat dads really can go to the modern Debtor Prisons that we supposedly don’t have.
Who says we don’t have debtor prisons?
Selling Iran Yellowcake?
You might want to click over to the NY Times which has a copy of a federal court filing out of Florida which charges a man with “Brokering the supply of goods which the defendant knew were destined and intended for supply to Iran in violation of the International Emergency Economics Powers Act” and other regulations.
Now, I’ve seen dumb, but seriously: If you were looking for a high “risk of being caught crime” I don’t think you could do better than this one. OMG you’ve got Israel, the US, NATO and the EU all stacking up on the Iranians and to try something like this? There must not be IQ tests for criminals. But remember, these are charges only, so insert the word “alleged” every other word.
Still pay close attention here: Read the details about how a lot of this case was overheard in SKYPE conversations….
So how did they get access to SKYPE call content? The answer is ugly, ain’t it?
The Summer Bummer
We walk into the economic restaurant and sit down to look over the menu. We have two choices, it seems: Beef, which would be Janet Yellen as Fed chair, or we have Larry Summers. Let’s call him pork.
Now, click over the Business Insider here and see which one is likely to be ordered.
My candidate for Fed Chair? Ron Paul.
Protecting Us from….Tennis?
Well, if you were among the people who went off to (bad pun alert!) Tennis see at the US Open, and you had to wait up to two hours in a security checkpoint line. Sounds a bit much, but so did the security around the Marathon…
I’ll stick with TV, thanks. Come to think of it, the Security State may just dial back ‘Merca’s fascination with pro sports and would that be such a bad thing?
City of Sisterly Love
Three black teen girls face charges including “ethnic intimidation” for what local media calls a brutal beating of a white woman in Pittsburgh. First time I’ve heard of that charge. Especially in the city of what?