Fed, Europe Are Kicking Can Down The Road

by JASmius



Just as they've been doing for years, and as though there's much road left down which to kick it:

Last week served as an important reminder that the more things seem to change, the more they stay the same.

The first reminder came from the U.S. Federal Reserve when it removed the word “patient” from its forward guidance and opened the door for an interest-rate hike this summer. But it also accompanied this significant change with further "linguistic gymnastics" to counter any negative market reaction.

As if.

Chair Janet Yellen, for example, was quick to clarify that removing “patient” doesn't mean that the Fed would become “impatient.” With that, markets were reassured that the Fed remains their best friend, resulting in impressive gains in equities and bonds.

The "markets" (which are kind of a real-life economic version of The Truman Show) cannot not be unassured.  Which really renders "Old Yellen's" double-talk unnecessary.  Wall Street has been so conditioned by over six years of "easy money" that they cannot be convinced that the Fed isn't their "friend" or that it will ever rescind their monetary Nirvana.  Because don't all empty bubbles last forever?

And that lucid ignorance will and is priming them for when Barack Obama pulls the plug (via the Fed jacking up rates) and triggers the Final Collapse sometime over the next year that will keep him in power forever.  "The Street," in short, will never see it coming, even though they will have less of an excuse than anybody else not to have seen it coming from parsecs away.

As for "Old Yellen's" European counterparts, they're as hopelessly clueless as our Gordon Gekkos:

Across the Atlantic, Greece and its European partners engaged in another round of a familiar dance: The country and its creditors agree to economic reforms that would unlock the billions of euros Greece needs to pay its bills and stop capital flight; the two sides then bicker over what was agreed to; and after trading old and new accusations, reconciliation talks resume.

Because they both need each other, because both are in on the same scam.

European officials are also keen to keep markets calm while they negotiate with Greece over the terms of another bailout. In the process, finance ministers and the European Central Bank hope to minimize policy mistakes and market accidents that could risk Greece exiting the euro club.

Europe doesn't have "markets"; they have public cartels.  THOSE are the "policy mistakes" that led to the "market accidents" that have the Continent in its most perilous position since the end of World War II.  But they're incapable of recognizing them as such, and so persist in repeating and doubling down on them.  And, consequently, they'll never see the Final Collapse coming, either.

Thus leading to this adorably naive quote from Mr. El-Erian:

The problem for both the Fed and Europe is that it's becoming trickier than ever to buy time, rather than decisively solve problems.

Mohamed, Mohamed, Mohamed; you still do not understand.  The Fed and Europe think they already solved the problems with their orgy of currency debasement.  They're not trying to buy time, but acting out Albert Einstein's definition of insanity, stubbornly shoving the same square peg in the same round hole until it magically slides in like Bill Clinton at a Harlem brothel.  They just refuse to see that they've already contracted the monetary clap, and that they're going to end up the economic equivalent of a syphilitic Al Capone - which is to say, the Final Collapse.

But one man knows....



....he knows all too well.