Four Blood Moons Calling? Greek Elections again, S&P Minicrash, Gold bear over?

Well, if the whole blood moons thing is correct, which I still doubt but it is possible, then the picture has to start deteriorating fast. Like now, within the next two months. According to Blood Moon Theory or whatever you want to call it, we have until Hoshanah Rabba 5776 for the world to change somehow.

Today, the S&P broke medium term support at 2040, gold is up again, miners up 20% since bottoming late July, China crashing again, VIX up 25% in one day. I’m long gold and miners (obviously), no longer short China anymore, but long the VIX expiring in November since covering the China short.

Let’s clarify this “China devaluing” mumbo jumbo for a second. China has a “peg” to the dollar. That means the PBOC doesn’t allow the Renminbi, or Yuan or whatever they call it, to trade below a certain exchange rate with the dollar. They control it by buying or selling dollars whenever it gets too close. China is not “devaluing” its currency so much as simply letting it trade below a previous peg without the PBOC selling dollars to strengthen it to within an arbitrary peg. Why are they doing this? They think they need to in order to “stimulate exports” which is a bunch of crap, like saying you need to take hit of your crackpipe to think clearly. Yeah, maybe for 3 seconds, but then you go nuts.

Now Vietnam and Kasakhstan and a whole bunch of other countries few people care about economically are doing the same thing. The peg is manipulation. Releasing that peg is allowing the free market to trade the currency.

I’m in the US now, and this is the first time in years I’ve even put on main stream financial media around market close today just to see what they say. The bullshit is so thick you can’t cut it with a chainsaw. Nobody has any clue what they’re talking about, and they all say that in different words.

Greek elections are happening again. My hope is Yanis Varoufakis will get off his butt and run for Prime Minister in a new party. He’d win hands down, I think, and send the banksters to hell. He’s the only one that would do it. September 20th apparently is the date.

Gold is on its way up past $1,150 after bottoming (hopefully) at $1,072. If this is the bottom, it’s been a long time coming.

When the S&P broke support since February when it steamrolled through 2040, it was in the last 15 minutes of trading today. If stocks don’t bounce back sharply tomorrow morning early, then the next support levels are at 1972. If that gets broken, 1820 is next. Tomorrow is a very important day for stocks. If they don’t bounce early, they probably won’t bounce.

Let’s see what happens.


Varoufakis and Tzipras are on a Collision Course

I love this guy, but I don’t understand him. He’s got some things so right, and others so wrong. Yanis Varoufakis was just interviewed on Bloomberg about what should be done in Greece. He’s a pleasure to listen to because unlike other smug econometrician academic weasels, you can tell Varoufakis is sincere and has some sort of moral drive. The problem is, he’s confused. He understands Greece is bankrupt. He doesn’t seem to understand that the politicians he is joining do not understand that that essentially means they can no longer spend money.

In his latest interview with Bloomberg, Varoufakis made some pretty frank comments. Among the most frank was his answer to the question “Do you know for sure if the bailout will be renegotiated, or if SYRIZA will make a U-turn?” meaning, will SYRIZA cave and just keep going with the bailout in order not to get kicked out of the Eurozone in a so-called Grexit.

His answer reminded me of what Ron Paul said to the question “Will the Federal Government default?”

“The government will default. It’s just a question of how, through outright default or inflation.”

Varoufakis answered this question the same way. The bailout will be renegotiated, simply because the current bailout makes no damn freaking sense. How can a bailout from debt put you more in debt? How is that even a bailout? That’s just doing CPR on a corpse. (My words, not his.)

Dealing with the issue of a Grexit, Varoufakis said that in “brushing off” a Grexit as containable, the sponsoring Eurozone countries were basically making up bullshit. They have no idea what the consequences will be, because nobody knows who holds how many bonds where, and what the systemic effects will be, whether other bond runs will ensue, it’s like trying to predict exact weather patterns 2 years in advance.

In short, there can be no Grexit without severe consequences for everyone, and those brushing it off have no idea what they’re talking about.

So much he gets. What he doesn’t get is that when Greece does default, which will absolutely happen in one form or another, his politician friends, the same nincompoops that have co-opted him as their voice of reason in SYRIZA, will want to ramp up the spending once again, because that’s all they know how to do.

He will be in the extremely uncomfortable position, likely as finance minister, of saying no. There is no money, there is nothing, stop trying to spend what doesn’t exist. If he can maintain his candor, he will end up resigning.

At the end of his interview with Bloomberg, he was asked what must be done. He said something very libertarian. Paraphrasing, entrepreneurs in Greece face one big enemy, and that is the State. The State does not let them put people back to work because it punishes them with taxes that make no sense. The economy is totally paralyzed by the State apparatus, and that is why the State is bankrupt.

In Rothbardian terms, the parasite overwhelmed the host, and now both have died.

Someone who can speak in such clear libertarian terms, I don’t know what he’s doing joining a radical left wing political movement expecting them to just sit back and relax as he recommends they shrink government. There’s going to be a big fight between him and Alexis Tzipras. They are on a collision course.

Once the bailout is renegotiated, Tzipras will want to spend more money on his projects. Varoufakis will tell him there is no money. Tzipras will then want to print Drachmas until they have no value, which will happen very quickly if he tries to print them.

There is nothing SYRIZA or New Democracy, or Pasok can do to get money. There just isn’t any. They will all come flying at a brick wall of bankruptcy, because there is no one left to steal from. It’s all gone. Only Varoufakis understands that. He won’t be able to explain it to the politicos. They don’t get it. They never will.