Reality returns

Some hideous consumer confidence numbers came out today. For one of the confidence measures, economists had predicted a slight fall from 56.5 55.9 (in January) to 55.0. Instead it fell drastically to 46, and one of its components -- how respondents feel about their present situation -- is at a low point not seen since February 1983. The other measure of confidence also fell, to just a hair above its all-time low, set 24 years ago.

A very famous trader and an expert in gold, Jim Sinclair, sums up the world's economic situation this way:

The media can play all the games they wish. Just keep firmly in mind that:

1. Towns are broke.
2. Cities are broke.
3. States are broke.
4. Main Street is in dire pain.
5. The apparent improvement in the financial industry is accounting smoke and mirrors.
6. Most corporate improvements are not sales driven but cost cutting based. You can also call that "firing the help."

Greece or any state of the United States that goes under must be supported by QE to infinity as a country bankruptcy of the Iceland type will sweep across the Western World faster than Lehman Brothers locked up the credit markets.

QE to infinity means money printing to infinity. Bankers like to call it "Quantitative Easing" so that it's harder for the public to understand what's going on. Destroying the currency also means destroying the debts that are denominated in that currency, so it's like a jubilee, which will wind up being a good thing for some people. On the other hand, it also destroys savings, and much worse than that, the lack of a stable currency means economic activity grinds to a stop. The people who get through it best will be those who "get it" that tangible assets are now far more desirable than paper assets. You don't want more stocks and bonds in your 401k, you want land and non-perishable food and bits of silver.

While all this destruction of currencies is going on, we've still got a decline in economic activity. On the jobs front, this animation about unemployment says it best. Darker colors mean worse unemployment. See the contagion spread over the land....