Some time ago we reported about how the lunatics have put themselves in charge of the asylum by declaring widespread currency war on…well… about everybody but themselves (their salaries are inflation-adjusted, of course). The info can be found in the article Operation Scorched Earth - The New Economic Policy. Of course and right on cue nobody believed us and nobody continues to believe us. Debacle? Debacle? What Debacle?
Well… today we are here to proudly declare that Operation Scorched Earth is right on track. These are some of its milestones:
Japan's debt is about 240% of its' GDP (that's right 240% - this is not a typo).
Just to give you an idea of how bad this is, Argentina collapsed at about 120%.
Japan's interest payments on its debt consume roughly 40% of all real tax revenues.
Only Lebanon's is higher.
Japan keeps borrowing at an astonishing rate and labeling this borrowing as "income" (no, we are not high).
Since when can borrowed money be considered "income"? Not even tax codes are so quixotic!
Mexico successfully sold a pile of bonds with an expiration date of 2115 (again, not a typo)
100 years into the future. A country that is a basket case because despite being one of the richest in terms of oil, its government managed to bollox it up. Big time. A country that we don't even know if 5 years from now will still exist!
Mexico's 100 year bonds are denominated in EUR (again, not a typo)
And to top it all up, Mexico will pay in Euros! We don't know what will happen first, if the Peso will be driven into the ground and won't be worth even as toilet paper or the Euro will disappear. The suspense is killing us.
Switzerland is the first country in the world who sold 10 year bonds at a negative interest rate.
Yes, people are paying money to the Swiss government to lend them money (no, not a typo either). And this after a 40% devaluation of the Swiss Frank (CHF)
Switzerland's interest rate is now negative.
We guess to match the negative interest rate on its bonds. Who says that Switzerland can't interest-rate coordinate?
The ECB (European Central Bank) is charging commercial banks for keeping bank money deposited in the ECB (no, we have not taken LSD).
That's correct. And you thought that your savings were worth something. Silly you. Banks will soon show you that they are doing you a favour by accepting your money!
Denmark's Central Bank is printing Kroners (NOK) in an attempt to prevent capitals from entering Denmark (and no those were regular mushrooms).
Yes, obviously investing money in any country is bad, particularly if that country is Denmark.
According to Standard & Poor (the bond rating agency) the following 10 countries are prime candidates for default: Ecuador, Egypt, Pakistan, Venezuela, Argentina, Belize, Cuba, Cyprus, Greece, Jamaica, Ukraine.
Sure, why not. Because the USA is doing soo well and let's not forget the EU, Japan, Canada, Brazil, and a pile of other countries sitting on…well… piles of debt!
US, EU, UK, Japan, Scandinavia, and several other countries are now fully invested in Quantitative Easing.
That's right! The time for mumbo-jumbo, magic economic solutions has arrived! Who cares if there is no tomorrow! We can always pay the debt with more debt…or print our own money! Yeah… that's the idea…
Germany has a huge trade surplus and this is worrying.
Right! Darn Germans! How dare they having a booming economy and producing better products than everybody else. They are most certainly a de-stabilizing force in Europe!
EU, US, Switzerland, UK, Germany, Denmark and many other countries now have negative interest rates.
ZIRP (Zero Interest-Rate Policy) is passé. Now to be in the club of developed countries you must have negative interest rates!
THIS CAN'T CONTINUE
And you are absolutely right. This is total, complete and utter madness and will not continue…eventually. Governments and politicians will do whatever it takes to keep this scam going. That's OK. There is only your life at stake, not theirs. We can't wait to see what other ridiculous concoction will they come up as soon as this lunacy fails. Perhaps they will incorporate movie heroes on bills in order to make them collectibles. Yeah…that's an idea! Say, how many Spiderman Dollars for that Ironman Euro?
But then again, if a few countries go under who cares, right? We have international luminaries such as the Russian Federation with its mighty industrial power and fearless all-knowing leader who will lead us towards the worker's paradise… err… towards a new era of peace and freedom…yeah…that sounds better. Oh, btw, we have brand new Kalashnikovs for sale, not the cheap Vietnamese replicas of Chinese copies.
But if the Russian Federation fails, we give you China! With its rich democratic history steeped in tolerance and respect for all views and human rights. And to make sure China prevails, it developed a mighty GDP where it's most important component (about 40%) is a real estate bubble!
Of course! Silly us.
WHAT IS THE SOLUTION?
Simple. Look at Argentina. What do Argentine people do every time they approach a debacle? They buy stuff. Stuff that post-debacle will retain its value. Houses, apartments, land, cars, boats, collectibles, business. Whatever it takes so as not to have anything in Argentine currency. Central Banks cannot print stuff… although the government will try to tax you into oblivion. Taxes are so high in the CABA (Ciudad Autonoma de Buenos Aires - or Autonomous City of Buenos Aires) that it is cheaper not to rent and just pay property taxes. You lose less money. Things are so bad that over 200.000 apartments are vacant. But nobody cares! As soon as the debacle implodes, all apartments will soar in value. This is the new reality. Get used to it.
We are indeed on schedule towards global debacle. The good news is that after the debacle will come an era of prosperity. The bad news is that as soon as this era arrives, politicians will push us back where it all started. Yes, it's the Argentine model. The cycle of hell is now inevitable and permanent. This is the "new normal". Get used to it.
Or, you may get off the boat and refuse being commanded by politicians. Stop. Just stop. This is your only chance. Your chance, your choice.
Note: please see the Glossary if you are unfamiliar with certain words.