RI... Moscow. Slightly overcast, the last day of February and the temperature was holding just above the plus numbers. Passing by the Russian Orthodox church of St. Spyridon I spotted the neighborhood “znakhar”, which in English would be a mélange of seeress + witch + healer.
I have seen this elderly woman around the neighborhood from time to time and we limit our exchange to polite hellos, as metaphysics is not something I hold in high regard. This time however, she motioned me to come over.
“You are that foreigner, no?”
I nodded smilingly.
“Be ready for very big changes to begin as we approach the middle of this coming March. It is just as well you now live here with us in Russia, you would not want to live elsewhere for a long time to come”.
Curious, I asked what makes her believe that the world outside of Russia will stress out, and why tell me.
Not answering directly, she went on to say, “Better you get rid of your ‘valyuta’ (hard currencies) and turn them into rubles or better, gold St. George’s. Very big changes are now destined to happen and much will turn upside down, so be ready”.
I thanked her for her global commentary and bid her a good day as she shuffled off into the church.
This incident got me thinking, first why she chose today to speak with me and not simply nodded a hello as usual. Secondly, why she chose to deliver her somewhat disturbing opinion to me, “that foreigner”?
Since markets are something I observe and from time to time engage, the first thing that came to mind was market bubbles.
Could this uneducated old lady now be analyzing the economic rhythms of the western world, and making her prognosis to me? Furthermore, what might happen in mid-March that might be so calamitous? Then thinking… I must be nuts to even dwell on her ramblings.
To be sure, we live today at a time when a number of factors that have been unquestioned for decades are under re-evaluation; the dollar, Euro, central banks, Federal Reserve, QE, ZIRP’s, NIRP’s, and historically unprecedented debts.
Unquestionably a dangerous time, and in many ways engendering a Stockholm-like syndrome of denial…. we shall go on as before, in spite of ourselves.
Central bank balance sheets are up globally from $6 trillion in 2007 to $21 trillion today and are growing as we read this at a rate of $200 billion every month. For example, the ECB is buying corporate bonds, which in itself should make anyone shudder as today 30% of investment-grade debt in Europe is trading with a negative yield. The BOJ now owns 50% of all Japanese government bonds. It has been calculated that about 25% of global sovereign debt now trades with a negative yield.
The perception for decades was that bonds were the sacrosanct vehicle for “risk free” rate of returns. This has changed, and it is key. If such risk free rate of return has devolved to 0% over the past 96 months, then everything is at risk of collapse should a bond bubble burst.
What the Old Russian lady may have “seen” in her predictive vision is that on March 15, 2017 the United States faces its debt ceiling deadline. That is the day the debt ceiling holiday the previous US Administration cobbled together just before October 2015 election expires.
According to the law, the debt ceiling will freeze in at $20 trillion. The Treasury may have roughly $200 billion in cash on hand at that time while spending remains today at a rate of $75 billion a month.
It seems that by June 2017 the Americans will be out of cash. This will come clear to the markets on or just after March 15 when speculation will add fuel to the volatility which this massive debt-ceiling crisis will usher in.
Some may say, “so what”? We will just print more dollars (QE) and kick the can further down the road.
Not so simple anymore, we have used up a lot of mojo — and credibility.
America alone (let’s not even consider the EU or Japan) is indebted at 106% of GDP. The new administration also wants to institute a number of programs such as increased defense spending, broad tax cuts for corporations and individuals, more money for border security enforcement, more for veterans and a long overdue trillion-dollar infrastructure program.
All this may indeed cause several bubbles to burst, even all at once. Therefore, we wait until mid-March and see whether the wrinkled Russian seeress was on the ball, and listen to what President Trump tells Congress on this last day of February.
Meanwhile, I just may go out and see where I can find a few of those 10 gram gold St. George coins to hoard away just in case the “znakhar” knows more than the markets.
Paul Goncharoff is Chairman, Disciplinary Committee, National Association of Corporate Directors, Russia
Poster Comment:
Tatarewicz • Trump can impose Marshall Law. mail a food and other needs-access card to every taxpayer telling them to keep doing what they're doing, inviting others to apply for theirs. Id/access cards keep track of "purchases" to make sure everyone uses them responsibly.
Geeks mobilized to create inventory of manpower, listing who's capable of doing what, present job, or available to do whatever.
Folks input their needs to Geek Central from where resources, machinery, manpower, etc., are allocated. Now, the 95-million unemployed begin meeting their needs and those of others.
Forget about money domestically; take in foreign cash for exports to countries from which we need imports.
Much safer without cash which someone can steal, kill you in the process.Freeloaders who have been manipulating currencies now do something useful.
Carl Osgood • "Beware the Ides of March," Yes. I don't know about the timing, but I do know that the speculative excesses that caused the crash of 2008 were never addressed by Dodd-Frank. That was a load of bullshit, especially since, unlike in the 1930's, no bankers went to jail for causing the crash. And, it was designed to block the return of Glass-Steagall, which Trump said, in a campaign rally last October, would support bringing back. The trans-Atlantic system is dead and remains only to be buried, while the new Eurasian-Silk Road, and its credit mechanism, is already up and running to replace the dead trans-Atlantic system and create a future for all mankind. Since Russia is part of the new system, not the dead old one, you should be happy you have a front row seat for the birth of a new future. +8
Psymon Fallowfield-Cooper • It's all just one big old con trick after another... money isn't real, any more than gold is... because you cannot EAT IT! So, in reality, it's worthless illusion, and we all play along with it...