Bullish on MOPE

I really wish I could claim the invention of the term MOPE, but alas I have to credit Jim Sinclair for giving me the best framework right now for analysing current global economic policy.  MOPE is Management Of Perspectives Economics, and its hot.  In fact, at Human Action, if we’re sure of one bet amid a clearly chaotic world right now, it’s go long MOPE. 

MOPE is everywhere.  Wall St banks with the help of Hank P were big MOPEsters during the credit crunch, lying blatantly about solvency and asset impairments.  Then, when the banking boys had to start reporting gob-smacking losses, MOPE was rampant as CEO’s had to talk down expectations. 

But for all the MOPEyness the banksters perpetrate, nothing comes close to what governments are doing.  MOPE is government economic propaganda.  MOPE is lowering the non-farm payrolls data expectations by blaming a poor number on an abnormally cold winter.  MOPE is re-weighting the CPI basket to understate price inflation.  MOPE is central bank talk talk talk. 

Economic fraud gives birth to MOPE, government pushes out MOPE, the press blindly conveys MOPE, and finally Larry Investor and Joe Sixpack read MOPE and sleep easy at night. 

In short, MOPE is the governments’ economic policy tool of choice to keep up the gargantuan ponzy fraud. 

MOPE kicked up gear this week as government officials and their economist minions started to blame the cold weather in Feb for why we might see a pretty bad US Feb jobs number.  It’s the perfect ploy.  Let’s follow the MOPE trail… 

Right now investors need, more than anything, confidence in government solvency.  The actual government debt metrics would make a Martian investor wince.  Greece is basically bankrupt so it announced ‘austerity measures’ to reduce its 2010 deficit from 12.7% of GDP to 8.7%.  Now, it must be understood that in Greece’s position, even 8.7% is unsustainable.  It’s going to be a long haul.  So Europe’s MOPE right now is that an 8.7% Greek budget deficit is ‘austere’.  That helps the other PIGS (Portugal, Italy, Spain) fly under the radar which lets them get away with ugly debt metrics.  The MOPE then shifts to the European Central Bank and the Bank of England who will not commit either way to more quantitative easing.  The possibility of more monetary stimulus keeps the bond markets calm, but the soft hints that perhaps maybe possibly more stimulus won’t be needed, says that policy makers are more upbeat about growth, which means better tax revenues and lower deficits.  Central banks have to adopt this angle to keep bond yields from spiking and throwing Treasury Ministers from Greece to the US into a tailspin. 

And so finally the trail leads back to the US.  Weak jobs data means prolonged US economic slump which means Obama’s daft revenue projections for 2011/12 look even dafter.  So officials have to talk down expectations so that bad numbers look better and benign numbers look great.  It’s all part of the ruse folks.

Behind the MOPE lies the reality.  Western Europe and America are steaming toward full scale bankruptcy.  The only hope for bond markets is more debt monetisation by central banks.  Better oil up those printing presses good and proper.  US Federal debt is soaring.  Unfunded liabilities are many multiples of the annual US GDP.  Global defaults of a scale never before seen are looming. 

That means more money printing, more currency debasement and more chance of the biggest inflationary boom-bust cycle in history.  That’s the real story folks, and because the real story is getting worse and Western economic fundamentals are falling apart by the day, there’s only one route our progressive liberal social Western democracies will take: more fraud, more money, more debt, more MOPE. 

In an ever crazier world of infinite uncertainties you can be sure of one thing: more, more and even more MOPE. 

Don’t be fooled.