SYSTEMATIC FINANCIAL MELTDOWN IS NOW INEVITABLE

Enjoy the stock market rally today, for the end is near. Charles Hugh Smith paints a bleak picture. There is no way to avoid the pain coming our way. The only choice is whether to willingly accept our bitter medicine or wait until the disease kills us. Nice choice. Tough sh!t.

Submitted by Charles Hugh Smith from Of Two Minds

Welcome to the Age of Instability

The phony fixes have failed, and the dam of toxic sludge and debt is leaking; instability will be the New Normal until the dam finally bursts and the financial Status Quo is swept away.

If you liked the past two weeks, you’re going to love the next two years: welcome to the age of instability. As I explained yesterday, the quasi-religious belief in the stock market as a secure store of wealth has faded, and for good reason: The Junkie in the Pool and False Idols: Faith in Wall Street and The Fed Has Has Eroded (August 10, 2011).

In a nutshell, the Federal Reserve and Federal government’s extend-and-pretend, mark-to-fantasy, paper over bad private debt with trillions in public bad debt “fixes” of the broken economy have failed, completely, utterly, miserably. Rather than drain the cesspool of impaired debt, risky bets gone bad and rampant abuse of the rule of law, the Fed and the Central State have poured trillions of dollars more bad debt into the fetid pool of sewage and sludge, which is now full to bursting.

For a deeper explanation of why instability is now the norm, and destabilization is now inevitable, I turn to my new book An Unconventional Guide to Investing in Troubled Times for this excerpt.

More