Via Mark J. Grant, author of Out of the Box,

“When half the things you are told are a lie; nothing will surprise you more than the truth.”

                         -The Wizard

The financial world, at the moment, is a scary place. The signs of this are all about us and yet the consensus view is to worry about nothing. This has been caused by one singular action which is the orchestrated input of cash into the financial system by every major central bank on Earth. Money will go somewhere as it is created and so it has which is exactly why the markets are at or close to all-time highs while economic conditions have crumbled precipitously. It is not this market or that market which is in a bubble but all of them and it is systemic by its very creation.

There is also an ancillary cause of much of this which is the constant use of lies and made-up numbers to cover up and denigrate the truth. This happens to some extent in the United States but is rampant and prevalent in Europe and also a daily occurrence in Asia. The Europeans do not count liabilities as part of the balance sheets for either the sovereigns or their banks but, as I have pointed out so many times before, the not counting of them does not erase their actuality or their consequences. Liabilities are not counted, debt to GDP ratios for the sovereigns which are based upon the fictitious numbers are then not accurate, economic assumptions become a fairy tale and it all plays along for a time until, and the “until” always arrives, that the liabilities must be paid and accounted for because the money is just not there. It has been four years, four years of paper creation, four years of larger and larger lies, four years of fantasy balance sheets and today I call the ball; it is all about to end.

Look around you; there are signs all around. Spain, if you believe their numbers, with an official 15.5% in bad loans, Italy at 10.2% and Italian elections looming whose results will surely not please those in Brussels and Berlin. Banking crises in both of these countries which are shaking the foundations of their credibility. A Mario Draghi who’s turned up decibels in his call for a European wide bank guarantee is rebuffed and denied by Germany who will not subject their citizens to the liabilities that could and will ensue. The majority of the market participants have not figured it out yet but Mr. Draghi’s promise, which was conditional on the support of the European Union, has been denied. Verboten! The Germans will not allow Mr. Draghi to “Save the World” and so the underpinning of the European sovereign debt market has become a farce whether it is recognized quite yet or not. Recognition will come; reality eventually surfaces.

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