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A CNBC anchor after trying to explain hedging against the volatility of stocks indexed to the Volatility Index. The end is near now.
Screw it, I’m calling it. I’ve been watching the so-called “markets” of China, the United States and a couple dozen other countries fall off a cliff, get up, stagger upward, fall off another cliff, and repeat. I’ve been listening to the chattering class say over and over again, this is normal, seen this before, everybody buy the dip. I’ve been watching the zombie oil-fracking revolution in this country go into spasms, jerking a few feet forward, a few feet back, gasping for breath, while the cheerleaders agree: perfectly normal, blood pressure okay, reflexes good, lend them more money. This is not normal, it is not okay, it is the Crash of 2015.
We will not likely agree on this until we stop using wildly different languages with which to discuss it. First of all, to refer to these things as “stock markets,” as if they were places where equities were bought and sold based on the soundness and prospects of the companies listed, is akin to putting your faith in the tooth fairy and Santa Claus.
These places are casinos filled with gambling addicts using other people’s money to bet, not on the future of a stock but on the popularity of a stock among the greater fools on whom the gambler must unload the shares of Consolidated Aggregators he just bought on the dip. In this casino, trading in shares themselves is like playing the slot machines, there in the lobby of the casino for the amusement of the little people risking their quarters. The real games are played in private rooms with derivatives, futures, hedges, credit default swaps, junk bonds. The master of the universe are even gambling on the outcomes of corporate lawsuits (and for what reason, do we suppose, has that practice alone drawn the disapproving attention of the drones of Washington?). They are buying hedges against the volatility of securities indexed to the volatility of the market. If you can think about that one for more than 30 seconds without your head exploding, your mellowness index is in the stratosphere. Increasingly the gambling is being done by machines, programmed by the Masters to detect the circumstances under which they are to blow up the world.
The commerce of the world, like the Gulf Stream in the Atlantic Ocean, is slowing down, bestowing unimaginable collateral damage as its does so. The prices of all industrial commodities (not just oil) have tanked, taking down the economies and currencies of the countries who depend for their existence on the exploitation of their natural resources. The volume of stuff being shipped from pace to place has withered. Both commerce and the Gulf Stream are losing the sources of their energy: in the case of the Gulf Stream, it’s temperature differential; in the case of trade, it’s money in the hands of the middle class, being spent on consumer goods.
Money, not credit. The Masters like to pretend they are the same thing but they are not. To issue consumers more credit cards, or more mortgage refi’s, is not the same thing as providing them with a living wage. To inject more money into the equity of banks and corporations, as the central banks have been doing for decades, does not, it turns out, create a tide of well being that lifts all boats. It’s like feeding the cow at the wrong end. No matter how much nutritious food you ram in, it’s just not going to help.
They have got away with this madness — the Masters, the Pundits, the Shills and the Gamblers — largely because decent people cannot believe anyone could possibly be crazy enough to do what they seem to be doing. Decent people tend not to remember the Housing Bubble Crash, the Dot-Com Crash, the Savings and Loan Crash, the Enron Crash, etc. etc.
Even if they’re gambling, surely it’s still true that the house never loses? Yes, that’s still true. As long as there are customers in the house. Look around. The customers are cashing in their chips and leaving China, the emerging markets, the junk-bond markets and the US markets as fast as they can without actually yelling “fire” and trampling each other.
Believe it. They are crazy, and this is the Crash of 2015.
It is not the Crash of the Industrial Age, not yet, although that, too, is ongoing. We will probably emerge from the Crash of 2015 onto the littered, downward slope of depression toward the ultimate collapse, still it seems several uncomfortable years in the future. But we will have cause to remember the Crash of 2015.
Excellent Mr. Lewis! i agree with your assessment.
The whole house of cards is falling under its own weight and complexity. The “economists” (a group of people that believe in a fantasy theory of their own making – which decidedly does NOT model reality) forgot to include pollution and the environmental destruction of the very planet that sustains them in their models, so here we are with life in the Pacific Ocean dying before our eyes (and beginning to show signs of a Canfield Ocean which is characterized by hydrogen sulfide and dead zones) from Fukushima radiation (that hasn’t stopped and will not stop for the foreseeable future), plastic pollution, warming, acidification and disease that is encouraged by these factors.
Similarly, the worlds trees (and other vegetation) are dying from ozone (the result of all the CO2 we’ve dumped into the atmosphere, after reacting with sunlight) – leaving the human race with little to look forward to beyond collapse, decline and extinction.
Taking these to their logical conclusion, we’re losing our habitat.
This is all being mirrored in the affairs of said “masters of the universe” who are psychopathic and daft beyond any reasonable degree. Thinking they are “separate” from everyone else and nature too, they only consider their own individual situation when making decisions that effect global economies, labor pools and government policies (which they buy and sell like everything else they “own”), and their decisions are made by largely by weighing “wealth” and “money” considerations – both of which are complete fantasies that have been invented by the above economists. [Before anyone begins to argue with this statement, consider how much money or wealth you can eat or drink when it has no value in exchange (the resources of food and water having been removed by reactive Nature to our pollution of the entire biosphere).
Extend and pretend only lasts so long, then it’s good bye and good night!
The fundamental problem with economists is that they don’t understand the “physics” of economic growth. Growth requires surplus energy. Energy is the capacity to do work. Work is force times distance. For economic activity of any sort to occur, a force must transport something a distance via an expenditure of energy. Duh! Now that the era of cheap, abundant, and concentrated energy is in the rear-view mirror, growth is finished…….forever.
That is a sound comment on the unwise, anthropocentric decisions being made by people. They believe that industrial civilization could freely use up natural resources without taking into account the tangible consequences. So now they will have to cope with climate disruption, ocean warming,acidification and pollution from sewerage, loss of aquifer water, fertile soil and beneficial species. They will have to cope while losing the services provided by the immutable aging of the infrastructure they have become so dependent on.
No , it’s okay, the market’s gonna be fine. Turns out it was all caused by Wang Xiaolu, a financial journalist and he’s confessed on TV and everything so it must be true. So quit worrying, put all your money back in the market, borrow more and put that in too and we will all get something for nothing in an ever growing economy.
Investors are trying to get the Fed to renege on its commitment to raise rates, and to issue QE4 instead. The real question is when it becomes obvious to everyone that they’re just scamming the system — this is what will make the crash big and permanent. I sincerely hope that the demands for QE4 spark that realization, because if QE4 is issued it will make everything worse in the long term.
I just read that a certain Damian McBride, former head of communications at the British Treasury and former special adviser to Gordon Brown, erstwhile Prime Minister of the U.K., tweeted some special advice a couple days back in response to the plunge in global equities markets:
1. Get hard cash in a safe place now; don’t assume banks & cashpoints will be open, or bank cards will work.
2. Stock up enough bottled water, canned food & other essentials at home to last a month indoors.
3. Agree on a meeting place with your loved ones, somewhere you can all head to, in case transport and communication systems break down.
http://www.zerohedge.com/news/2015-08-28/we-are-all-preppers-now
It’s normally easy to be dismissive of preppers as so many Chicken Littles. But when someone like this gentleman asks us to start prepping, I think it will be the most monumental level of idiocy possible to continue being dismissive.
I read “The Crash of 2016” by Thom Hartman. It was very enlightening regarding the events unfolding. Perhaps he was too optimistic to think the crash could hold off another year.
There’s so much economic news to back this up, Mr. Lewis, that it’s hard to pick just one to highlight the trends. So i’ll just post to Rice Farmer, from yesterday (or the past week if you want even more):
http://www.ricefarmer.blogspot.com/
Parallel to these economic trends the environment is rapidly becoming unable to support ANY life (especially in the oceans, but on land also) through crop loses from extreme/erratic weather, heat, drought, flooding, hail, and storms.
More corroboration, Mr. Lewis:
Stock Market Crash 2015: The Dow Has Already Plummeted 2200 Points From The Peak
http://theeconomiccollapseblog.com/archives/stock-market-crash-2015-the-dow-has-already-plummeted-2200-points-from-the-peak
[quote]
On Friday, the Dow was down another 272 points, and it is now down more than 2200 points from the peak of the market back in May. [much more]