The Coming Dollar Rally
With the intentional policy to lower the value of the Euro to try to stimulate the European economy, the dollar will rise as we have been warning and we may see this reach all time record highs. This will then turn the US economy down after 2015.75 and you can see, smell, and taste this one coming.
The dollar will be forced higher and higher and this will then hurt the US economy from an export perspective. We still have to worry about the capital flows right now. They will help to provide a floor to US assets.
This is a interesting parallel to the events that set in motion the Great Depression. We could be at the 1927 phase when capital flows shifted into the USA. This may result in the US share market high coming in 2017 and the bond bubble for 2015. Rates will most likely begin to rise after 2015.75 as confidence in government declines.
We can see how the bonds turned down in 1927 and the next two-year phase sent capital pouring into the private sector forming the high in 1929. So anyone touting the TV financial-evangelists who proclaim their gospel stocks down with rising interest rates, will most likely lose their shirt, house, wife, kids, and the dog.
They lowered rates in the USA in 1927 to try to help Europe. Then as the capital flows shifted, the Fed was FORCED to raise rates because they were being blamed for creating a stock bubble. Of course, the rally into 1929 was set in motion by capital inflows, not domestic interest rates. Those in power respond to nonsense and ignore the global trend that is the real mover and shaker – not domestic.
Delusional Demise of the Euro – It’s A Plan Now
The eminent collapse of the Euro was pre-determined by the disastrous design from the outset. Instead of accepting responsibility and altering the mistakes that would require political reform, we are in a position where Europe is simply moving into the realm of beyond all hope.
From the outset, they sent the commission to our World Economic Conference in London back in 1997. They took the entire back row of both aisles. I laid out theproblems and explained that ONE SIZE DOES NOT FIT ALL. I warned that the only way to create a world currency required the consolidation of member states’ national debts into a new European National Debt. I was told they did not think the voters would accept that and they were going to introduce the currency first and then look at that for Phase II. Of course, Phase II never came.
Now European leaders have figure this out that they now want a weaker euro to bailout the economy. This begins the currency wars that will be fostered in the post-2015.75 era. European politicians are also waking up to the fact that they cannot continue to return to the voters time and time again to package another bailout.
The problem faced around the world is the perpetual tendency to borrow year-after-year with ABSOLUTELY no intention of ever paying off any debt. So why the bailouts? The ECB can buy 100 billion euros per month. It does not matter. Each member state still increases their debt year after year. There is no end to this insane system.
Stop the borrowing and stop the federal taxation. Just print the money to service the operation of the government and stop the BS and perpetual bailouts that will never end anyhow. This is the problem when we have lawyers and academics without any common sense from the street level. They do not grasp HOW the economy functions so how in this world are the qualified to run it? The greater mystery of life, is why do these types of people feel they have the right to even run something they will never understand? I suppose just delusional.
ECB Fighting A Losing Battle
The increase in buying by the ECB from 50 to 60 billion is reflecting what we posted earlier. The massive contraction appears to be closer to 6 trillion Euros. The ECB clearly gained more support even from Germany for this is a far easier way to try to bailout members than politicians having to face voters.
Nevertheless, we see the Euro still falling back to par against the dollar. This is why the Swiss broke the peg for they could not continue to buy Euros in a free-fall. The increase in the amount from 50 to 60 will still fail to stimulate the economy and is really just another indirect form of bailing out member states without the political flak.
The ONLY thing that will work at this stage is to give up the idea of the United States of Europe and save the EU trade union before the whole thing melts down. Unfortunately, this is all now about support jobs in Brussels – not about helping Europe.
ECB Agrees to Buy now 60 Billion not 50 Billion
The European Central Bank agreed on Thursday to embark on a quantitative easing (QE) programme that will see it print money to buy up 60 billion euros worth of sovereign bonds from March until the end of September next year. The money will include some from existing programmes. Countries under a bailout programme, such as Greece, will be included but with some additional criteria. This is substantially more than expected up from 50 billion.
The Insanity of the ECB
The European Central Bank (ECB) kept its main interest rate unchanged on Thursday, but markets are still on edge ahead of this afternoon’s press conference, at which central bank President Mario Draghi is expected to announce a “full-blown” quantitative easing (QE). ”Further monetary policy measures will be communicated by the President of the ECB at a press conference starting at 2.30 p.m. CET today,” the ECB said in a statement after announcing the rate decision.
The central bank kept its main refinancing rate at 0.05 percent, with the rate on its marginal lending facility at 0.30 percent. The rate on its deposit facility was held at -0.20 percent. This fight inside Europe is clear. The Germans disagree with creating $1 trillion euros.
It really does not matter for in the end, even $1 trillion euros will not be inflationary for the contraction appears to be massive in the area of at least $6 trillion. All they will do is try to help the banks buying in their bad sovereign debt. That money will not do back into the system to provide lending when demand for loans is still falling inside Europe.
You cannot raise taxes and hunt down money everywhere, and then expect this will not harm the economy. Without public confidence, there can be no recovery. Europe is looking at a massive decline that appears to be headed into 2020.
Beware the Barbarians INSIDE the Gates
BEWARE the Police. The Police today are acting in the very same role as the soldiers that furthered the fall of Rome. They are seizing money with no crime and its all going to pay their pensions. This is getting more and more press as here onCNN. Looks like history repeats. It was the collapse of the Roman pension system that unleashed the army that began sacking Roman towns and cities. The government employees were transformed into the barbarians INSIDE the gate. After they destroyed Rome itself, then the barbarians from OUTSIDE the Empire join in the wholesale robbery. And people think hyperinflation is the danger? It is DEFLATION in the worst possible way.