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World News See other World News Articles Title: Time for a mercy killing of NATO The Great Disrupter was in fine fettle Wednesday. First he scolded Germany for investing in a natural gas pipeline from Russia that makes all the sense in the world and then blasted it for not spending money on defense it doesn’t need. Well, I have to say, I think it’s very sad when Germany makes a massive oil and gas deal with Russia, where you’re supposed to be guarding against Russia, and Germany goes out and pays billions and billions of dollars a year to Russia……On top of that, Germany is just paying a little bit over 1 percent, whereas the United States, in actual numbers, is paying 4.2 percent of a much larger GDP. So I think that’s inappropriate also. You know, we’re protecting Germany, we’re protecting France. We’re protecting everybody. And yet we’re paying a lot of money to protect. But not to worry. The talking heads of bubblevision say today’s market dip is the pause which refreshes. It’s still "risk-on" because by their lights when push comes to shove no mere politician – including the Donald – is going to do anything that the boys and girls on Wall Street might find troubling. They apparently don’t dare – as was well and truly proven in late September 2008. When the remnants of principled Republicans voted down the TARP bailout of Wall Street, the Dow instantly plunged by 7% or $1.2 trillion, which would be equivalent to a 1700 point meltdown at today’s index level. Of course, that particular hissy fit brought the GOP pols scampering back to the House floor. Having gotten their heads right in the interim, they marched back up the hill to approve George Bush’s $700 billion package of crony capitalist loot. There hasn’t been even a close call since then. The only thing the gamblers really fear, apparently, is that a central banker might look at them cross-eyed. But as we told CNBC viewers yesterday, no central banker has the backbone to even wrinkle his brow in the direction of Wall Street. We also told them that a bone-crushing trade war is coming. That’s because the Donald has no idea what he’s doing and is triggering an avalanche of bouncing billiard balls on the $17 trillion global trade table that is too complex and too interactive to even fathom and which, therefore, will be nigh impossible to stop. Needless to say, our bubble vision hosts were having none of it. Since the Russell 2000 – the index of America’s home-based small and midsized companies – hit an all-time record yesterday, albeit at 90X its meager earnings, they averred the market is attesting that no serious trouble looms. Really, that’s exactly what they said, as per the attached clip. Likewise, when we mentioned 43-years of continuous and growing US current account deficits, Mike Santoli, a casino croupier if there ever was one, suggested there is nothing to see here, implying that viewers should move along toward the buy key on their trade stations. After all, America’s huge current account deficits – $7 trillion in the last 15 years alone – are allegedly just the accounting record of happy campers all around the world cheerfully sending their savings to America so that we can buy their goods and live high on the hog. Besides, Santoli intoned, what’s the "emergency" if it’s been going on for 43 years? Which, of course, is exactly what the 43-year smoker said right before he was felled by lung cancer. What we are saying is that its dangerous out there because the conventional wisdom has incorporated big memes and postulates that are fundamentally untrue. In this particular case, for crying out loud, the world is not sending the US its "savings". To the contrary, other central banks have spent 3o years pumping-up their own fiat monies in order to scoop-up unwanted US dollars, thereby sequestering America’s prodigious debt emissions in the vaults of foreign central banks. And that was done, of course, to suppress their own exchange rates and boost export industries so that they could sell America even more goods on credit. This is sustainable? You can borrow your way to everlasting prosperity? We will have much more to say on this topic in the future because in his blunderbuss manner, the Donald is finally bringing it all to a head. Not withstanding that a tariff war is exactly the wrong solution, Trump is actually asking the right question: To wit, how in the world can the US still be running an $800 billion trade deficit long after the world economy was allegedly fixed by ZIRP and QE? The fact is, the US’ massively imbalanced trade accounts are the flip-side of the very hollowed out economy in Flyover America that put the Donald in the Oval Office. And yet establishment groupthink doggedly insists that the richest big country in the world can borrow indefinitely from the mostly poorer ranks elsewhere on the planet, and that sooner or later the Donald will flinch from his quest to fix the problem because Wall Street will take him to the woodshed if he doesn’t. We’d call that head-in-the-sand insouciance, and suggest it is exactly reason why the coming correction will be so tumultuous. And the comforting theory that the Donald is all bark and no bite on trade is not the end of the complacency, either. Both ends of the Acela Corridor, in fact, are riven with dangerous groupthink that is utterly detached from reality. Post Comment Private Reply Ignore Thread
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