look out, here comes tomorrow

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[i know this blog hasn't been much fun lately.  i promise some entertaining shit soon.]

so the market's crashing and everybody's all, like, surprised and shit.  or should i say, everybody but my eleven readers, upon each of whose memory is engraved in letters of fire that immortal post i wrote back in april in which i laid out exactly why what's now happening would happen right about now, right?

no?

(sigh)  i really wonder why i bother sometimes.

well, lemme start this post with why what's now happening is not happening:  it's not happening because, as our "let 'em eat cake" president maintains, the recovery he so splendidly engineered has suddenly hit a patch of bad luck

You had an Arab Spring in the Middle East that promises more democracy and more human rights for people, but it also drove up gas prices -- tough for the economy, a lot of uncertainty.  And then you have the situation in Europe, where they’re dealing with all sorts of debt challenges, and that washes up on our shores.  And you had a tsunami in Japan, and that broke supply chains and created difficulties for the economy all across the globe.

the irony of blaming the "arab spring" uprisings which were caused in no small part by the inflationary policies of his phony recovery aside, what the president failed to mention in that nice little speech was the fact that, despite each of the incidents he cited, the american stock market had, by the end of june, regained the ground it had lost over the spring and was approaching its two-year highs.

in fact, the stock market has continued the climb it started back in march 2009 (i.e., the beginning of the "obama recovery") through all sorts of bad news that in any sane universe shoulda sent it tumbling to 4,000 long ago.

was this because the american "recovery" was sufficiently strong to weather such storms, as the president, his lackeys and so many in the media maintain?  fuck no--it was because, for most of the last two years and four months, at the first sign of faltering,  the plunge protection team (aka the fed) was there to pump whatever liquidity was required into the market to keep it buoyant [seriously, i only wish i had a nickel for every late-session turnaround "rally" the market has staged over the last couple years].

but then the quantitative-easing party ended: as of june 30, there were no more liquidity injections courtesy of helicopter ben.  the market see-sawed around through most of july like one of those staggering cowboys that had taken a bullet in a bad western, and then it was finally time to drop.

and drop it has, just like back on april 8 i told you it would:

if, as promised, [bernanke] ends QE in order to curb the inflation, our vaunted "economic recovery" that's been running on nothing but this fed-provided life support will promptly collapse, taking with it not only precious metals (temporarily, anyway), but the stock market, job creation, what's left of the housing market and whatever shreds of hope barack obama might still have of re-election.

i.e., what's happening now is a long-delayed continuation of what started back in 2007:  the inevitable death spiral of the american economy.

ah, but i was wrong about one thing, wasn't i?  see, usually when the market corrects in any serious way, it takes metals with it, if for no other reason than because investors are often forced to liquidate their winners to cover their losers.  but boy, not this time--people are starting to catch on.

so where do we go from here?  by the time you read this, tomorrow will have come, and i don't expect it to be pretty.

on august 26, ben bernanke will give a speech from the fed's annual economic symposium at jackson hole, wyoming.  why is this important, you ask?  because he used the occasion of last year's speech to announce QE II, which promised infusion of new liquidity gave the market another year of seemingly vibrant life.

if, as is widely anticipated, mr. bernanke uses the occasion of this year's speech to announce another round of, as governor perry of texas recently put it, "money printing" in an attempt to stem the current market bloodbath and thus kick the can down the road one more time, will it work again?  i honestly dunno--the world is waking up awful fast.

here is what i do know:  at the time of mr. bernanke's speech in august of 2010, you coulda bought an ounce of gold for a little over $1,200, and an ounce of silver for a little over $17.

august 2012?  extrapolate for yourselves, bitches.