Where Will The Economic F5 Tornadicane Touchdown?

It was just released on Friday (5/31/13) that personal income decreased $5.6 billion, and disposable personal income decreased $16.1 billion in April. Now consider that consumer purchasing power has been devalued by around 7% ($1 trillion printed by Fed divided by a $15 trillion economy). Meaning that consumers need their income to rise 7% just to break even in real terms. Despite massive monetary intervention over the last five years, we continue to bleed net jobs and purchasing power. You would think that the economic doctors would have figured out that blood letting does not work.

Of course the talking heads and politicians will never highlight this fact. After all, we can’t have the sacrificial sheeple aware of the consequences of inflation when financial repression is the chosen path to reduce our debt obligations, now can we? Instead, they focus on the much more fickle and easy to manipulate indicators like Consumer Confidence, that hit a 6-year high; and the jump in the Chicago PMI. Are average consumers, which increasingly rely on pundits and a manipulated stock market to tell them how they should think, a reliable indicator, or do they always feel their best right before the collapse?

Consumer Sentiment

As the above chart indicates, prior to the 2000 and 2008 collapses, consumers were feeling pretty good about themselves (bubbling tech stocks and real estate prices can tend to divert people’s attention from the source of the hopium). Today, a manipulated stock market and international money flows from sicker economies are propping up our asset prices (and hopes) once again, instead of encouraging people to ask why and how? When government and their economic mouthpieces lose control of an uncontrollable free market, they try to institutionalize bogus ideas like MOPE (Management Of Perspective Economics) to justify and legitimize concepts that have no place in a free market. Academic and political economists, like all government employees, try to justify their existence by fabricating these theories and policies that could never stand the test of reality. However, they do accomplish their primary objectives, which is buying them more time and grant money to keep them from having to prove their worth in the real world. Government has convinced itself that chasing its tail is real work. Since they are actual snakes, we can only hope they catch themselves.

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Sustained economic growth will NEVER be achieved until the financial system is reformed, which based on the ongoing collusive corruption between CONgress and the bankster banks, it’s not going to happen anytime soon. Breaking the cycle of  control fraud (ratting out your pimp) requires abundant opportunities that the system seeks to control. What these short-sighted, sociopaths cannot get through their thick skulls is that they are not only destroying our economy, but they are accelerating the “big reset” of civilization. What’s most bewildering is they think they can escape the economic tornado that’s as wide as a hurricane. What good is it going to do if they have all the fiat currency, but there’s no where to spend it? Even worse, where are they going to turn for help when they’ve screwed over the 99.9%. I would have to believe that hobnobbing with fellow sociopaths eventually becomes very uninspiring and unnerving. As Robert Johnson states, more and more of the elite know the system is like the Titanic, and as they stand on the deck staring each other in the eyes, the unspoken vibe is that most are going for the jewels and lifeboat instead of helping the navigator.

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The consequences of systemic fraud in our government has spawned tornadoes like the named storms of Madoff, Sanford, and MF Global. If you were not in the direct path of the fraud, it’s understandable that you would only have a passing interest. What government officials do not want you know is that economic tornadoes, just like real tornadoes, do not occur without the right environmental conditions. They also want you to believe these fraudulent episodes where one-off rogue events, like a tornado suddenly popping out of a clear sky. The reality is the incidents are related and grow in intensity when the right environmental elements feed them. The common elements present in all the financial frauds is a complicit, fraudulent, and “aggressively clueless” government. Instead of government acting like a sheering wind that weakens the inevitable storms of fraud, they are more like a giant sweltering swamp that endlessly streams moisture into the economic storm.

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Europe, Great Britain, Japan, and the USA continue to grow the perfect set of conditions to produce a F5-level economic disaster. All have unsustainable debt, caused by bankster banks financing the undeliverable promises of politicians that are papered over by central banks printing that has created a giant death spiral that anyone with eyes can see. The environment has already spawned numerous tornadoes of growing intensity, like the dot.com F3 that hit in 2000 and subprime F4 that touched down in 2008. The same conditions subsequently caused twisters in places like Greece, Cyprus, and Stockton, CA. If the same environment that launched these storms has not dissipated, and if the frontal boundaries of fraud and corruption have only gotten stronger, then is it not safe to say that the number and power of the storms will grow? The sad truth is the winds of fraud and corruption emanating from crony low prssure systems in DC, London, Brussels, and Tokyo have created a super storm that combines the size of a category 5 hurricane with the destructive force of an F5 tornado to produce a Category F5 economic Tornadicane.

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Why don’t people that are directly in the path of a disaster do anything to prepare? One reason is “normalcy bias”, which occurs because specific bad events have not directly impacted a person. Therefore, that person does not believe the bad event will happen to them. Even though the bad event is happening all around him, even in their backyard.

The horrific Moore tornado is a devastating reminder of the consequences of normalcy bias. For homes, schools, and other public buildings not to have protected areas when they are located in the middle of tornado alley is an example of willful ignorance and misplaced priorities. We can all identify with normalcy bias because we’ve all witnessed it at one time or another. Most of us know the story of the three little pigs and the implications of being unprepared. While we mere mortals always suffer the consequences of our stupid decisions, the special people in government rarely suffer a consequence for their selfish, neglectful, and boneheaded actions. For example, why did government officials choose to fund public pensions and other benefits for themselves instead of building shelters in schools?

One could argue that the odds of an F5 are extremely low, but the odds of bankrupting a municipality due to overspending on public employee benefits is extremely high. Public servants are supposed to be looking out for the welfare of their citizens, not themselves. You will never hear a public employee admit they were wrong, which is why our public education system is a world joke, and the post office is a model of inefficiency that always loses money no matter how much money we throw at it.

The only difference between a natural disasters, and the pending financial disaster, is that the latter is man made. The prevailing conditions make it relatively easy to predict where it will hit, and the willful neglect and fraud by public officials is even more pronounced. Unfortunately, even though people could prepare and even prevent the destruction, nothing will be done until the shock of the devastation forces the required changes.

The Fraud Corridor between NYC and DC, and the Tornado Triangle between Brussels, Paris, and Frankfurt have created the perfect storm of forces that will destroy everything in its path. If one is living in the real world, void of normalcy bias and fully aware of the situation, then the only conclusion is to build a financial storm shelter. I suppose it’s human nature to think one can skirt disaster, and I suppose if the damage was limited to the path of a tornado, then the odds might be in your favor. However, when your financial world collapses because the foundation was built with defective materials supplied by corrupt entities, traditional safe houses will be useless.

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As economies continue their depressionary slide and riots break out in GreeceSpainFrance, and even the socialist paradise of Sweden, I hope Americans realize these events are not occurring in some third-world country. They are occurring in very “developed” countries where debt has been the source of their development. It doesn’t matter if the desperation is cultivated in the Middle East, Europe or the U.S., when youth unemployment runs greater than 50%, the natives will get restless. Government’s believing that credit can replace reform only postpone and grow the inevitable collapse. Those naive souls that point to places like Sweden as evidence that Socialism can work will once again be proven wrong, as debt can never replace ingenuity and real capital formation. The folks that hold the Utopian belief that other peoples money can keep flowing like an endless Fountain of Youth have obviously never tried sharing a pizza at a Frat house.

The fraud on EU Taxpayers should be a warning of what’s to come stateside. After all, do their politicians want to maintain their jobs, power, and perks less than ours? Politicians will sacrifice their own citizens to stay in power, and our politicians are no less mad than those in Europe and Japan. That is reflected in the dismissive tone of the U.S. Treasury Secretary in his lack of concern about the inability of the Fed to purchase treasuries with printed money. Federal employees will be glad to donate their pensions to buy them. When public pension money has been exhausted, the government will simply move on to corporate pensions, 401K’s and IRA’s…and when that’s not enough to continue growing their Fascist Utopia, then they’ll simply use the “bail-in” model and confiscate the needed funds directly out of the citizen’s bank accounts. Do you actually think politicians will voluntarily decrease the size of their empire?

When all the environmental conditions indicate that a disaster is imminent, the laws of nature do not care if you live in Europe, Japan, or Moore, Oklahoma. While it matters little in the long run, it would be wise for Europeans to have their safe houses completed before the German elections this fall. Rising interest rates in Japan will attract the Tornadocane from Europe before it ultimately hits our shores.  Since the Fed must control interest rates at all cost, it is highly likely that that the stock market will be sacrificed in the short term to keep a lid on rates. In the next few years it won’t matter. As we will see in Japan, once capital flight begins, central banks will be woefully inept at controlling anything.

If we keep feeding the storm, the consequences will only grow. That is why Step One to take back the country is to impose de facto term limits. You don’t need to camp out in Zuccotti Park or hold a huge Tea Party Rally on the National Mall. The government doesn’t care if you had to skip a shower. They believe they can always wait out an ADD society that will quickly forget why they are mad. Simple actions that hit home are the only things that will get their attention and force change. Do what you can, but do something!


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