We were ring-around-the-rosy children
They were circles around the sun
Never give up, never slow down
Never grow old, never, ever die young
And we who couldn't bear to believe they might make it
We got to close our eyes
Cut up our losses into doable doses
And ration our tears and sighs
Oh, yes, other hearts were broken
Yeah, other dreams ran dry
But our golden ones sail on, sail on
To another land beneath another sky - James Taylor
The Correspondent and the Old Trench Fighter retrace Princip's journey through the back streets of Sarajevo on that fateful June day in 1914 - nineteen-ninety something: Above. Click image to enlarge.
The world is on the precipice of a financial-asset bear market as global bond structures transition from negative real rates to pricing that represents current economic reality. This financial hurricane will sink every asset class as the emerging deflationary tsunami sweeps the globe.
With both Miami and San Diego State dusted by Connecticut in the Final Four, we become quite familiar with sunken asset classes. The March Madness campaign concludes with a small positive yield of around four units thanks to Husky Hedging at the end.
Much like British perpetual Gilts in a hard-money environment, we realise, over time, the value of early high-end futures positions. Similar to deep out of the money option pricing, high-priced (and well-hedged) futures tickets on the Hurricanes and Aztecs proved to be the difference and sufficient to cover a plethora of lower-end misses.
If only the current global financial structure could be as fortunate. Artificial interest rate suppression by government can only result in one outcome: much like a beach ball held underwater in the deep end, when grasp is lost, yield will shoot up high above the perceived surface limit.
That upward interest rate movement will wreck every leveraged asset class. Escalating government interest costs in rolling old paper will tear a hole in western financial structures akin to the iceberg scoop of the Titanic, some hundred eleven years ago next week.
The contraction of bank credit is accelerating as, in reality, there are no good loans to be made out there. When every physical structure in the real economy represents a collateral element far in excess of current market value, there is little sense in further lending.
Reduced lending always drives up the price of borrowing whether in terms of acquiring income-producing assets or rolling government paper upon maturity. Global interest rates will continue to rise during the coming summer of discontent -- corporate bankruptcies will soar during the prevailing winds of Autumn.
Understanding this dynamic may make the Ukraine war more comprehensible to those still not seeing the global looting of America that occurs each day before their very eyes. Russia is winning the war not only in eastern Europe but in the global financial markets.
When the Real IRA launches their attack on London this fall take note where the weaponry originated. Hundreds of billions of American taxpayer dollars in military aid sent to Ukraine the past year and only a fraction of it reached the front lines before being destroyed by Wagner Gruppen elements or Russian missile strikes. Much of it skimmed off by the usual NGO structures and international arms merchants through the Polish corridor -- as both Republican and Democratic politicians get their beaks wet.
Of course those peeps realise interest rates reflect not the cost of money/currency but is instead a time-preference equation. For the West that time is running out as economic restructuring in the harshest of terms approaches.
It won't be pretty, but take heart: College football kicks off in a little more than four months. And, of course, the biggest contest of Labor Day weekend, despite what College GameDay may tell you, will be East Carolina at Michigan in the Big House.
Long-time readers will recall how the fate of all mankind hangs in the balance with that contest of skill and science. If you are any kind of ECU fan you have to make the trip to what would represent the greatest victory in school history, surpassing even the epic Fulton County Stadium Peach Bowl triumph over State College last century.
The Pirates seldom know early season respect from The Man in terms of pricing. With a substantial power rating differential anticipated, this opening number should be hit when it first goes up in mid-August. Anything above plus 16 for ECU should be hammered to the moon.
In the meantime, Summer approaches. Such will see a dollar crash, Ukraine government collapse and -- most importantly, time to go fishing.
Instead of stressing about all of this, find ways to deal with it and appreciate the remarkable times you live in. Such perspective can make all the difference.
See you in August.
