Speechless

This about sums it up today:

My Take:

The world is a scary place right now:

Bernanke is in complete denial as inflation continues to strengthen it's grip on the world.

Tanks are rolling through the streets of Bahrain, Libya, and Egypt as the Middle East remains on the brink of total chaos.

Goldman Sachs takes another hit to it's permanently scarred reputation as one of their board members gets accused of insider trading by the SEC.

Congress prevents the government from shutting down after making a last second deal that lasts for a whopping two weeks.

The US consumer takes another blow to the head as oil rips through $100.

States, the US government, and the banks are all bankrupt!

I could keep going but I will end it there.

The Bottom Line

I don't know what to say folks.  I am speechless at this point.  All I can do at this point is pray that we somehow find a way to keep things together. 

The rising stock market over the past few years has been very effective at hiding the Ponzi scheme that our whole world has morphed into.   It's now all beginning to burst, and I don't see how it can be stopped.

Our 2 year economic recovery was built on a foundation of sand which means it had no hope from the beginning.  

The debts that were created during a 30 year credit bubble have become insurmountable as inflation rears it's ugly head.  Rates will inevitably rise as a result which will then make our debt too costly to service.

All we can do is hope for a miracle because that's the only thing that will save us at this point.

Who's Right? You Decide...

Great exchange here between Schiff and the Fast Money guys. 



Bullard's Tells the Savers to Piss Off

The market partied on today as the Fed rolled out Bullard on CNBC this morning.  The Fed President preached QE, easy money, and low rates for the whole segment.  The market responded with an immediate boner as they become convinced that the "easy money" game will keep rolling on.

Take a look at Bullard's arrogant reaction below when CNBC pressed him on the devestating effect that zero rates on have on the elderly who live off of fixed income.

He basically tells them "tough shit" and blames them for not taking on enough risk.  I am continually amazed at the size of the balls the Fed has. 

The P/E's on stocks are now at 24 which is the highest levels seen since the tech bubble.  Historically stocks P/E's usually remain around 16.  This is hardly sound advice from a Fed President. 

Today was also a POMO day which helped stocks.  For now it's party on.  The Fed shows no signs of taking their foot off the "easy money" gas pedal despite the turmoil in the Middle East.

I fear the day when this all comes back to bite us.   Enjoy Bullard's remarks below:

Oil Futures Surge Higher as Libya Burns

Things are not looking good folks.  It looks like crude is headed back over $100 by the morning:

My Take:

The market looks AWFUL tonight.  Stock futures are diving and gold and silver are surging as Libya sinks into a full blown civil war.

Qaddafi has officially reverted back into his old "lunatic" self as the walls begin to cave in around him.   The situation in the Middle East is bordering on the brink of chaos. 

IMO, There is more uncertainty over there today than ever before which says a lot when you look at the history of this region.

The questions are endless:

Who will rise to power in Egypt and Libya(after the regime falls)?
What happens to the Suez canal?
Which government will fail next?
Does oil go to $200 if Saudi Arabia is next?

I could go on and on.  Wall St will spin all of this change as being one gigantic positive for the markets as the crazy dictators come crashing down like a ton of bricks.  The market rallied on the rumored death of Qaddafi on Friday.

This is retarded thinking in my view.  The reality here is millions of impoverished arabs are becoming desperate as inflation takes the cost to living unaffordable levels.  These worries are now starting to drift over into the Western world:

The EU is getting increasingly concerned about rising prices. there are reports that they might bolt on the Fed and start raising rates in order to quell inflation:

"(Reuters) - The Federal Reserve and European Central Bank may go their separate ways if Middle East unrest provokes a sustained, inflationary oil price spike.


Crude prices creeping back into the triple digits have sparked concern about slower economic growth and will no doubt reignite two long-running monetary policy debates:

Should central banks have a single inflation-fighting mandate, as the ECB does, or dual goals of price stability and full employment, like the Fed?

Should policymakers focus on headline inflation rates or strip out volatile food and energy prices?"

Take Continued:

This is NOT good folks.  If the EU starts taking rates higher then our currency is toast unless the Fed follows.  Gas is closing in on $9 in the UK, and I am sure the prices are similar throughout the whole EU.

The PIIGS simply cannot afford this type of shock as their unemployment rates hover over 20% in some areas. 

The walls are closing in on this whole charade people.    The Fed is slowly getting "boxed in".

What will Ben do next?

Does he risk a huge surge in global inflation as he continues dropping money out of helicopters?

OR

Will he be forced to raise rates which then risks the whole economic recovery?

The Bottom Line

The right answer is to raise rates of course.  There is no economic recovery to save.  Government spending created an artificial one there for a bit, but we all knew all along that this was not sustainable. 

The problem the Fed has if it raises rate then it will likely put this country into an economic depression.  This is why I fully expect Ben to choose option A.

This means you should expect to see prices continuing to rise until the whole thing inevitably collapses.  $140 oil should do it.  

Remember, we are much less prepared for an oil spike this go around.  Unemployment is nearly twice what it was when a similiar "shock" occurred back in 2008.  This means the consumer will roll over much faster this go around as Americans continue to remain jobless.

This is all going bad much sooner than I originally thought.  If oil continues surging like this then the central banks of the world are going to have some tough decisions to make when it comes to interest rates.

Sticking our head in the sand and running up the government credit card with mind numbing amounts of debt is not the answer.  The market will eventually force the Fed to raise rates if Ben continues to deny that we are seeing inflation.

Keep an eye on Bernanke's testimony in front of Congress this week.  What's interesting here is the ECB has their policy meeting regarding interest rates right in the middle of his testimony.  We should learn a lot about what Ben is thinking as he is forced to take some tough questions.  I am sure the phone lines of the central bankers will be lit up in the hours before Bernanke speaks.

That's all I have time for tonight.  I didn't even get a chance to discuss Ireland's dramatic election results..  The ruling party got abused by the voters.  In fact, the ruling party came in 4th place which is mind boggling when you really think about it.

The concern here of course is what will the new regime do in regards to the EU bailout of Ireland?  Does the Irish now tell the ECB to take a hike and refuse to pay the money back?  I would if I were them.  Why would any government sacrifice it's people in order to pay back a bunch of greedy bankers?  Afterall, that's what the bailout is all about.

Keep a close eye on this.  Until next time.....