The guillotine returns after September 22, 2013

Two Months Until The German Elections And The Return Of Reality

by Mark J. Grant, author of Out of the Box,

“For what we regard as reality is conditioned by the theory to which we subscribe.”

                                      -Stephen Hawking

Europe has denigrated into a strange place where fantasy replaces reality as necessitated by their governments and the Union that governs them. It is a world where anything but direct liabilities are not counted, where securitizations worth 50 cents on the Dollar are held at par and where both data and numbers are manipulated for the preservation of the State.

Dreams are born of imagination, fed upon illusions, and put to death by reality. The guillotine returns after September 22, 2013.

You cannot believe anything that you are told by the Europeans. You cannot accept any of their financials, both sovereigns and banks, at face value. The actuality of the financial condition of the European Central Bank is not only shrouded in secrecy but it is shrouded in make believe. It is a Grimm fairytale.

Familiarity, the first myth of reality: What you know the best, you observe the least.

Devotion, the second myth of reality: The faithful are most hurt by the objects of their faith.

Conviction, the third myth of reality: Only those who seek the truth can be deceived.

Fellowship, the fourth myth of reality: As the tides of war shift, so do loyalties.

Trust, the fifth myth of reality: Every truth holds the seed of betrayal.

             -Magic, The Gathering

You may have noticed the small blurb recently that the ECB had eased the rules for asset backed securitizations. You may have read this snippet and thinking nothing of it you moved on. This would have been a mistake because just here you would have noticed the cracks of a crumbling empire.

The French banks, the Spanish banks, the Portuguese banks are all engaged in an ongoing charade so they do not need to ask the EU for help. They all are taking their Real Estate loans, the properties that they have confiscated, the commercial loans that are no longer paying and they have put them into massive securitizations that are pledged at the ECB as they are given cash for the collateral. The collateral, as you may suppose, has all of the value of cents on the Dollar but they are given money at par while the ECB carries them on their books at par. It is a fraudulent scheme jam packed with money created out of nothing but it is judged to be a better plan that to have to admit to accurate financials and have the banks of Europe default all across the Continent.

Conspiracy of dogmatic, deliberate, and willful ignorance does not either form the “raison d'être” or constitute an excuse for inaction. It is the tolerance of sheer lies, self-deception and malfeasance. It merely locks all your flaws in floors and stored behind concrete doors; a thick veil that obscures clear seeing of reality and it may cause you to stumble, fall and drift into transgression to reach the end point of decadence.

After almost forty years on Wall Street let me assure you that reality always returns. Always and because it must. What is uncounted does not disappear. Losses eventually have to be paid. Deception by governments has a long time frame but it is not eternal. Lies are eventually confronted by truth.

There will be nothing but lying until September 22, 2013 which is the date of the German elections. This is the drop dead date that I have been asked about for so long. Then, as soon as the celebration is over that Ms. Merkel is to remain in power, the world will turn on its axis. The status quo will disappear and there will be a “shock and horror” campaign as the Southern nations of Europe demand more help and Germany squirms and then refuses to provide it because it does not have the assets to do so.

Spain, France, Portugal, Greece, Cyprus, and even Italy are all going to line up at the trough only to discover that the promise of water was just that, a promise, and does not exist. A Biblical drought will be upon the Continent and from the political battles will emerge new alliances and new screams calling the traitors by name. The twin towers upon which the markets rest, money from nothing and fairy tale financials, will decompose in the light of this new sun and our old friend, Fear, will return to haunt us.

First the bough will be exposed. Next it will crack. Let’s all hope that it does not break and toss the baby into the thorns.

“Reason is a choice. Wishes and whims are not facts, nor are they a means to discovering them. Reason is our only way of grasping reality; it is our basic tool of survival. We are free to evade the effort of thinking, to reject reason, but we are not free to avoid the penalty of the abyss we refuse to see.”

        -Terry Goodkind, Faith of the Fallen