{"id":42217,"date":"2013-09-20T20:05:02","date_gmt":"2013-09-21T00:05:02","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=42217"},"modified":"2013-09-21T09:01:01","modified_gmt":"2013-09-21T13:01:01","slug":"how-long-can-the-government-charade-continue","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/09\/20\/how-long-can-the-government-charade-continue\/","title":{"rendered":"How Long Can the Government Charade Continue?"},"content":{"rendered":"

By MoneyMorning.com.au<\/u><\/a> <\/p>\n

13 is meant to be an unlucky number. However, 2013 has been lucky for share investors, with the Australian market<\/a> up over 10%.<\/p>\n

If we hark back to 2012, that year started with investors feeling far from lucky. The uncertainty facing Europe had markets on a knife-edge. Thanks to the ‘unlimited’ and ‘indefinite’ money-printing rhetoric of US and European central bankers, 2012 ended in a state of near euphoria – as highlighted in this Financial Times<\/em> article:<\/p>\n

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\n click to enlarge<\/em><\/a> <\/p>\n

The bulls have indeed reigned supreme in 2013. <\/p>\n

However the year is not yet over. A little look back at history tells us the number 13 and<\/strong> the last four months of the year have been decidedly unlucky for investors.<\/p>\n

In 1974, the S&P 500 index started the year around 100 points. In September 1974 the market fell 35% to 65 points (hard to believe it was ever that low).<\/p>\n

From its 1974 low the S&P 500 climbed to 335 points – guess when? August 1987 (13 years later). We all know what followed – October 19, 1987. The day they call Black Monday triggered a fall of 33%.<\/p>\n

The share market phoenix again rose from its 87\/88 low of 220 points to reach 1520 points in August 2000 (bingo, 13 years later). The tech wreck started the slide and over a year later the market ground its way 46% lower.<\/p>\n

Here we are today, 13 years later and the S&P 500 has risen from its 2000\/01 low of 800 points to over 1700 points. <\/p>\n

Note to superstitious share investors: perhaps you should consider taking some profits while the S&P is riding high.<\/p>\n

There is still time for 2013 to be the year the market finally meets its long-awaited fate with economic reality. If this does eventuate, be assured central bankers will cease all talk of ‘taper’ and increase the rhetoric to ‘tamper’ further with market mechanisms. <\/p>\n

Besides death and taxes, the only other certainty is that desperate governments<\/strong> and their sycophant bankers will do all they can to maintain the illusion of economic recovery.<\/p>\n

Debt and deception are the fraying ropes holding this whole rotten mess together. Yet, for now, the vast majority is happy for the charade to continue. So 2013 may or may not be the year the ropes break and the extent of the deception is revealed.<\/p>\n

Lance Armstrong’s deceit also happened to last 13 years (1999 to 2012) so Bernanke and Co. could easily mask their use of Economic EPOs for a little while longer.<\/p>\n

Complicit in this deception are various government <\/strong> agencies. Over the past three decades the official reporting mechanisms on unemployment, inflation and other economic indicators have been doctored so much they bear no resemblance to the truth – I refer to them as Michael Jackson statistics.<\/p>\n

ShadowStats.com is a website dedicated to ‘keeping the bastards honest’. John Williams (who publishes ShadowStats) produces data using the pre-tampered methodology. Williams’s data shows the US is in its seventh consecutive year of recession and US unemployment rate as 20%.<\/p>\n

God forbid if the public knew the real state of the economy. More mushroom treatment awaits the uninformed.<\/p>\n

Deficit spending is another part of the deceit. Governments spending money they don’t have creates an illusion of health in an economy. To highlight this fact, look at those European countries that have been forced to adopt austerity measures (live within their means). <\/p>\n

All of them are either in recession or depression. This is the harsh reality of the underlying economic conditions in those countries. Governments’ spending money they don’t have (temporarily) hides this reality. <\/p>\n

This would not be a major problem if the world were not already awash with private and public debt. <\/p>\n

Running annual $1 trillion deficits is why the US continually encounters fiscal cliffs and debt ceilings. The enormity of the debt problem means it just keeps raising its ugly head on a more frequent basis.<\/p>\n

Groundhog Day is here again with the next US debt ceiling due to be hit in mid-October. The political players will all muscle up for a very public show of brinkmanship and at two minutes to midnight guess what – the debt ceiling is raised another few metres. Why bother with the whole charade? <\/p>\n

Given the lack of political will to address this issue it’s going to continue to fester and at some stage no amount of lying, statistical trickery and useless dollars notes will hide this monstrous gaping wound from the public’s view. <\/p>\n

According to Professor Laurence Kotlikoff of Boston University the total US government debt and<\/strong> unfunded pension and healthcare liabilities is approx. $222<\/strong> TRILLION <\/strong>(this is 14 times the official government debt of $16 TRILLION). Baby boomer retirees are only going to further increase this liability. Clearly this situation is untenable. <\/p>\n