The Nikkei 225 had a several hundred point increase due to “hopes” either the Bank of Japan or the Federal Reserve would keep the lighter fluid squirting. Today, reality set in. The US Markets closed down over 1 percent for the S and P and the NASDAQ. The Dow was down a mere three quarters of one percent. Japan followed up the smoke and mirrors rally yesterday with a sharp decline of nearly 200 points and 1.45 percent.
The key thing Doomer Doug has been keeping his four eyes on is the Yen to dollar rate. You will all recall that less than 2 weeks ago the Yen was at 101. It is now in the 96 range. The speed and amount of the currency swings is truly stunning both in terms or scale and implications. This is a 5 percent swing in currency value in less than two weeks. The global bond markets are clearly seeing the handwriting on the wall related to the collapse of the yen carry trade.
At any rate, the Nikkei will no doubt show its further displeasure in a few hours when it opens. It seems the “hope” from yesterday has now turned into the reality of no further BOJ easing. It isn’t like the BOJ has any options left at this point. If they don’t pour more money in, the Nikkei will continue to go down. If they do, the Yen will continue its wild currency value swings. This will impact on domestic interest rates and we all know where that will lead. The so called “Abegeddon” is now in full swing. It will have profound results on a global basis.
We Americans are very much a sound bite and thirty second result type of people. The idea consequences can continue for days, weeks, months and years into the future is something we tend to overlook. The global economic collapse will not be instant. It will not happen in the next 72 hours. It will be an ongoing process. It will be a process that unrolls itself in a logical progression that is now beyond the control of the central banks. The central banks have squandered TRILLIONS of dollars of taxpayer funds bailing out a degenerate, oligarchy of bankers and financial whores who have taken the money and run.
The money is gone. The debt levels have increased to the point that it is no longer possible for the central banks to flood the markets with more money. Yes, they can create more fiat money. The reality is the bond markets will no longer allow them to do so. The domestic political realities of the USA make it impossible for the federal debt to increase much more. We are now nearly 17 TRILLION in official US government debt. Do people think we will increase it to 20 TRILLION? How about 25 TRILLION? It is over, gang. The bond markets will no longer allow the ongoing increase in national debt in either Japan, Europe or the USA needed to continue the stock market rallies. Braying Bernie has spent his wad. It is over.