Enter James Grant of the Interest Rate Observer. He has for many years been a voice of critique and reason in the upside down world of central banking. In this short interview on CNBC, Grant describes the Hall of Mirrors distorted pricing using the example of the Italian debt market. Grant points out that the junk rated four-year Telecom Italia bonds are yielding 0.61%. In contrast the 3 month US Treasury bill went for 1.68% at the last auction.
Italy is conducting an election Sunday that promises to be quite disruptive. This includes solid support for so-called “right-wing fringe parties” that want to haircut Italy’s massive unpayable debt.
Italy and its banks have been kept afloat by massive bond purchases via the European Central Bank (ECB). The ECB of course is headed by the Italian bankster Mario Draghi- what a coinkydink. Once this Italian debt bubble/distortion pops, Italy will be gripped with a severe crisis. I predict the parasite guild vultures are in wait. See: Exploring the Dark Lobbies of Vulture Hedge Funds. It really doesn’t take great insight to see how the post-bust economic texts of the future will report on this madness.
Here is more ECB looney tunes.
Two weekends ago I penned an article entitled, US Fiscal Train-Wreck: Accident Waiting to Happen. Since then the trade wars have ramped up further, with Trumpenstein directing it first at China, and now Europe. “We will soon be starting RECIPROCAL TAXES so that we will charge the same thing as they charge us. $800 Billion Trade Deficit-have no choice!” Trump said in a tweet.
Yes, it seems the Red Queen’s plans for reversing the trade deficits have also been an epic fail. In reality that deficit, like the twin fiscal deficit, has gotten quite bigly. Again, the reasons are Hall of Mirrors pricing distortions and the weak US Dollar since the election. A weak Dollar translates into more inflation for imported goods- whodathunk?
Also in my previous article I mentioned the situation in silver. At the time the Comex (aka Crimex) Committment of Traders (CoT) showed managed money (hedge funds) net short 8,290 contracts. A net short position here is quite rare and bullish. This week Crimex CoT checked in at 16,435 net short for the hedge fund boyz. What is especially impressive is that the price of silver (POS) held quite firm against this onslaught. Meanwhile JP Morgan has increased its depository holdings during the same period by 2.6 million oz to 135.6 million.