Saturday, March 29, 2014

Corporate books are better than Governments

The new normal has finally set in. Government books are in shambles world wide and investors are looking at company's senior notes. Is any one surprised? You shouldn't be. You voted these turkeys in.

If you read Forbes you see PIMCO lagging others because they didn't quite offer the tools for investing in senior bonds of companies. This is the single most telling trend for 2014 and 2015. Watch as financials weaken and more people seek safe haven in companies. This will make companies are new rulers. Corporate Imperialism anyone? It's bad enough that they already own the governments but now the governments face failure en mass.

"I think we are going to see a series of bankruptcies. I think the rise in interest rates is the fatal sign which is going to ignite a derivatives crisis. This is going to bring down the derivatives system (and the financial system).
There are (over) one quadrillion dollars of derivatives and most of them are related to interest rates. The spiking of interest rates in the United States may set that off. What is going to happen in the world is eventually we are going to come to a moment where there is going to be massive bankruptcies around the globe."

Folks just don't realize the staggering size of the derivatives market. All it takes to implode this imaginary "Greater Fools" poker game is for interest rates to climb a bit. It will only take one large fund to start dumping bonds and the jig is up. Interest rates would climb and a chain reaction would be set off.

UK interest rates ‘to rise in 2015′ Bank figure says
UK interest rates are likely to rise for the first time since the financial crisis in the spring of 2015, one Bank of England policy maker has said.
Martin Weale, a member of the Bank’s rate-setting Monetary Policy Committee, said a spring 2015 rise was “the most likely path” in a Sky News interview.
But he said a rates rise could come sooner if wages rise faster than expected.
Interest rates have been held at a record low of 0.5% since 2008.
Mr Weale’s comments follow last week’s Bank of England inflation report, when Bank governor Mark Carney said interest rates were unlikely to rise even if the unemployment rate fell below 7%, as is now expected in the coming months.
Mr Carney had previously suggested the 7% unemployment rate as a threshold for considering an interest rates rise.
“I think it is very helpful that we try and explain the most likely path for interest rates is that the first rise will come perhaps in the spring of next year, and then the path is likely to be relatively gradual,” Mr Weale told Sky News.
But he added that he could “not rule out” an earlier increase, if average earnings increased quicker than expected.
Although unemployment has fallen faster than many analysts expected in recent months, wages have not risen as quickly.
“You don’t get much more specific forward guidance than what Martin Weale said,” said Howard Archer, chief UK economist at IHS Global Insight.
“It really does tie in with what Mark Carney implied when presenting the inflation report and in the inflation forecasts contained in the report.”
And to cap it off for you...

I too expect April 2015 as the date where real trouble begins. Previously I wrote about gold becoming paper. What lunatic Alchemist sought to turn gold into paper? What Antichrist convinced the people to believe the paper was real! Wowzers.

So there you have it—again: a big pool of money chasing market-beating returns and ultimately inflating asset-price bubbles that burst with awful consequences, from bank failures to sovereign-debt crises.

Um, I don't buy the idea of these money horders being so stupid. I'm pretty sure they know what they are doing. The people who don't know what they are doing are called the public. They don't have a website and no real spokespeople. They think they do but the all live in an illusion. They think paper is gold, their public voice has force behind it, there elected leaders represent them, companies are not evil, their banks are honest, there is an invisible hand of the market, fairness is the general rule, they have freedom, they can speak freely in most countries, their elected leaders are not spying on them, their leaders are spying but for their own good... (The actual list for the illusion would fill many pages.)

The bottom line is we are all slaves.
We are under the absolute control of less than 500 people.
We own nothing.
We are powerless to change this.
We do not desire to change it.

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