Marginalized BRICS to Sustain Core Hyperinflation ~ The Risk Averse Alert

Tuesday, January 08, 2013

Marginalized BRICS to Sustain Core Hyperinflation

Back on the theme of controlling disintegration of a wildly mis-priced mountain of risk, this venturing an orderly, further consolidation of physical and financial assets necessary to keep a lid on hyperinflationary pressures provoked by overwhelmed (and insolvent) global central banks, apparently emerging markets are becoming a prime target of the effort bidding to shed [ever-expanding] "excess capacity" presently existing as a function of imbalance-driven marginalization already significantly besetting the global economy. Just as occurred in the 1931-1932 period, currency concerns evidently are being made the object of obfuscation venturing to mask debt burdens that simply cannot be sustained.

So, the wonder is how might an emerging economy like Brazil be forced into a situation where its currency, the real, is strengthened, as is being demanded? More aptly, how can Brazil be made to stop buying into Capo Confetti's expansion of funny money in its bid to slow hyperinflationary hot money flows into Brazil? The effect of this is preventing the desired devaluation of the dollar...

Food and energy being big Brazilian exports—a source of foreign exchange revenue used to buy up dollar-denominated confetti—a move to collapse prices these exports command would serve to squeeze the Brazilian economy as is being demanded, crush foreign exchange revenues available to buy up dollar-denominated securities (probably largely U.S. Treasury securities and agency debt), as well as stimulate the framework for conducting asset grabs serving to further consolidate marginalized global production. The only other alternative is pray for drought and bring in BP to manage energy production.

So, what will it take to collapse commodities prices? Didn't we already see the playbook in '08? Some substantial player(s) in the financial space need be wiped out. But who? And how? Odds are likely, it seems, the victim(s) will be domiciled in the euro-tomb.

No doubt the driver of marginalized global capacity resides in the financial realm. Here is where the impetus toward consolidation of assets both physical and financial originates. Here are the beneficiaries of marginalization born of historic imbalances induced by reckless credit policies. Neither currency exchange rates, nor commodities prices, nor the cost of capital at the core of the globalized casino can afford to be set upon a path where valuations are spiraling out of control. Accomplishing this objective requires victims be sacrificed by any means possible. Up to now this largely has been achieved using financial means. Yet a war machine probably ought be seen quite capable of likewise securing the same objective wherein so-called "excess capacity" is reduced to a bargain to be had for pennies on the dollar. As they say, there are many ways to skin a cat. Fascist geniuses averse to reducing a massive mountain of illegitimate debt have made it more than plain the chosen path forward is marginalizing supply and consolidating assets (including those human) as cheaply as possible. Those in the periphery of the euro-tomb know this all too well. Soon, we will, too.

Word on the Street
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