Wednesday, June 8, 2016

Japan Machinery Orders and China Imports from Hong Kong; Soros shorts Financial Markets and comment

We were taught in Economics 101
that countries could not for long sustain large ever-growing trade deficits

…our country has been behaving like an extraordinarily rich family
that possesses an immense farm

In order to consume 4% more than they produce,
that's the trade deficit,
we have, day by day been both selling pieces of the farm
and increasing the mortgage on what we still own

Warren Buffett

Unbelievable, no?;

"...George Soros has returned to trading, lured by opportunities to profit from what he sees as coming economic troubles.

If life is a room of open doors leading to other open doors,
do what you and/or others do or don’t determine what doors stay open,
or lock you in or out?

Worried about the outlook for the global economy and concerned that large market shifts may be at hand, the billionaire hedge-fund founder and philanthropist recently directed a series of big, bearish investments...

Are chances better
for players who more accurately calculate probabilities the farthest into the future?

...Soros and his family, sold stocks and bought gold and shares of gold miners, anticipating weakness in various markets. Investors often view gold as a haven during times of turmoil.

The moves are a significant shift for Soros, who earned fame with a bet against the British pound in 1992, a trade that led to $1 billon of profits..."

Since the 2008/9 financial crisis, the world's central banks, largest financial institutions, wealthy investors, advertising dependent media, paid for economists and entrenched politicians dependent on campaign cash/ bribes etc..., have been kicking the economic reckoning can.

Quantitative Easing caused low interest rates to prop up real estate, financial markets and social spending by financing public deficits with money created out of thin air.

Artificially imposed stability creates ever larger levels of real instability, no different than those with addictions to harmful substances.

Monetary heroin.

Most global central bank balance sheets have at least doubled

Like Greece did after entering the Euro, many smaller European countries enjoyed the benefits of borrowing far more than could be repaid.

Other countries who could, took advantage of low interest rates while printing money to keep their respective currencies low relative to the US dollar.

When the Federal Reserve announced it would stop printing, US long term interest rates rose, affecting rates across the globe.

Then corporations stepped in with share buybacks.

Then England Japan, Switzerland and then Europe among others stepped into the printing breach.

If values fall, investors should likely increase the extrication of monies from what appear to be more risky ventures, allocating heavily to perceived safe havens, compounding affects and triggering bank runs.

The more investors begin to realize Quantitative Easing (printing money) didn't work, the sooner Emperors will appear to be holding up a financial house of cards, forcing the house to collapse with greater speed.

As the global economy is clearly slowing, many who didn't understand yesterday are suddenly awake, looking at naked Empires, now that the veil of QE can be seen for what it is.

A Minsky moment

The world faces a massive debt restructuring, where investors and financial institutions take the hit instead of government bailouts like last time.

It's just a question of how and when a very pushed on string snaps back in the 1%'s faces.

This has taken far too long, which means the consequences are likely greater.