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CBs buy sovereign debt with free money
Here is a good, easy article about the debt that Uncle Sam is carrying, as compared to his income.
Running On Empty | RIA
It has great graphs that show the enormous debt that the country is carrying. Since Uncle Sam has no intention of repaying that debt, it is only the carrying costs that matter. Sam only has to make interest payments. BUT, as the debt matures, somebody has to buy new debt to roll over the maturing debt. You would think that ALL investors would stay away. MOST investors balance risk with reward. There is one class of investors that don't care about risk.
"Why are CBs buying so many Treasury bonds with year-over-year inflation at 2.8 percent, the highest since January 2012, and with the current Federal Reserve dot plot predicting the Fed Funds rate going to 3.25 percent by the end of 2019? All those factors point to losses on Treasury bonds"
What are the reserve requirements for U.S. government debt owned by a CB?
What are the mark-to-market rules for government debt owned by a CB?
Where does a CB get the funds to buy government debt?
What are the Basel III capital requirements for government debt owned by a CB?
Believe it or not, the answers to these questions are
They are not marked to market.
It creates the money out of thin air.
"Since there are no reserve requirements for the government bonds or the matching Treasury deposits at the CBs, the rising Federal funds rate doesnt affect them. The same goes for the risk-weighted assets for the Basel III capital ratio calculation. The risk weighting is zero, so in theory, banks could expand their balance sheet by infinitely buying government bonds and still not have to put up additional capital."
Marketable securities representing claims on (or guaranteed by) sovereigns, central banks, PSEs, the Bank for International Settlements, the International Monetary Fund, the European Central Bank and European Community, or multilateral development banks, and satisfying all of the following conditions:
Assigned a zero percent risk"
Armstrong said that public debt would collapse. You can see the problems in States like Italy and Turkey. If ALL sovereign debt is considered risk-free, I suspect that ALL of it would collapse at the same time. There is no stopping global contagion.
"The Congressional Budget Office (CBO) expects government debt outstanding to rise by over $1 trillion per year for each of the next four years. At the same time, neither we nor the CBO expect to see interest rates decline meaningfully. However, and of grave concern, the possibility of higher rates is real."
Armstrong has predicted would rise suddenly. That would cause a huge jump in debt service cost for Uncle Sam. Will that rise in interest cost be offset by the CBs buying U.S. sovereign debt with free money?
Blob State blockage,,Brexit,,,,Chinese employment reality
"China has a voracious appetite for energy but has little oil of its own. Iran is a major oil producer, and China is Irans biggest customer.
But oil is priced in dollars and dollars flow through the U.S. banking system."
Not much longer.
"The federal government spends more than $20 billion a year on subsidies for farm businesses. About 39 percent of the nations 2.1 million farms receive direct subsidies"
That's why Mexico can never win in NAFTA.
"The system of government therefore can thwart even the most enthusiastic of ministers. Politicians remain in office for relatively short periods of time. The bureaucrat can play the long game: stall, bluster, misinform. The wonderful British satire Yes Minister of the 1980s showed the game at its best; hilarious but frighteningly true.
The EU federal dream is shared by the civil servant. It is utopia for the bureaucrat. He becomes seriously important, far more so than his political master who is here today and gone tomorrow. For the last forty years, it has been impossible to climb the promotional ladder without a deep and sincere commitment to the European project"
The blob State.
"There are no civil servants who voted Leave. All were horrified at the result and have schemed for two years to thwart the electorate."
"true nature of the project, a Federal Europe. Powell forecast that when the British became aware of that we would vote to come out. We did. Still there was no honesty about the nature of the EU. Still the debate is all about trade, which is of course irrelevant"
There will be a fake Brexit, dressed up to look like Brexit but will fool nobody! | Claudio Grass
"Up to half of Chinas investment is a complete waste. It does produce jobs and utilize inputs like cement, steel, copper and glass. But the finished product, whether a city, train station or sports arena, is often a white elephant that will remain unused."
"Whats worse is that these white elephants are being financed with debt that can never be repaid. And no allowance has been made for the maintenance"
" China has driven growth for the past eight years with excessive credit, wasted infrastructure investment and Ponzi schemes.
The Chinese leadership knows this, but they had to keep the growth machine in high gear to create jobs for millions of migrants coming from the countryside to the city and to maintain jobs for the millions more already in the cities."
"A maxi-devaluation of their currency is probably the best way to avoid the social unrest that terrifies China."
8/29 Melt-up on the mind as US stock gains approach euphoric levels Bloomberg
8/29 Stockman slams greatest fake bull ever Zero Hedge
8/29 Almost half of Americans cant pay for their basic needs CBS
8/29 Boom! US economy logs best performance in nearly 4 years CNBC
8/29 Turkish bank bonds fall after Moodys warning, FinMin comments Reuters
8/29 Argentina burns reserves, asks for early IMF help as peso crashes Reuters
Reportedly, world trade is collapsing.
bank reserves
A chart was in this story to which you shared a link. (Share of allocated foreign exchange reserves)
It looks like data from all the central banks was aggregated to produce this chart. But is it only European central banks? What would this have looked like ten years ago? I could not find such a time series. Perhaps someone with Bloomberg access and knowing how to generate such a chart could come up with one.
Let's conjecture that ten years ago the 63 percent was 100 and that 50 percent was some sort of critical turning point, then ...
37 percent change in ten years equals 3.7 percent per year on average.
Straight line ... we have 13 percent to go from 63 to 50.
That would be about four years to get from 63 to 50.
It would be nice to see a chart....
OK, what about all central banks or all commercial banks worldwide?
If US banks amount to 90 percent of xxx then what significance is there really to this chart that only considers EU banks? Does it not seem extremely complex to ferret out the situation?
Ok, let's look at the other side of the case. Any of the relevant players could upset the apple cart and it would only take a matter of weeks to destroy the world economy or balance of power.
There is a reason why science has been successful and technology is widespread. Don't be afraid to do the math and apply the laws of physics.
Global wages fall = global trade falls
Money in circulation has far outrun actual tangible wealth. This would normally cause hyperinflation of prices. This monetary inflation has been mostly corralled in the upper loop which has seen the stock market go up by huge multiples. We do have hyper-inflation but, it is mostly dangerous for the speculators. The speculators don't see any danger.
Eventually, this euphoric bubble finds a pin. The prime candidate at the moment seems to be Turkey. We should find out fairly soon.
For the time being, the various banks are allowed to create money out of thin air and, but GOV bonds. This all works fine until the West hits a bump in the road that is just too big for credit markets to ignore.
Russia has dumped all of it's U.S. sovereign debt so, it can't be easily punished if it allows Turkey to join up after dumping Western debt.
World trade has fallen badly and, the credit markets are going to take a huge hit. The East can default whenever it decides that default is advantages.
8/30 More fraud exposed in Chinese official econ data Zero Hedge
The Chinese never projected that their economic miracle would run out of steam. They were going to connect the whole East to the West by road, rail and marine. They are making great advances. What they can not do is; raise global wages to allow a consumer economy. Everybody is stuck in a survival economy. Global trade is falling in response to the falling global wages.
"But you have to understand WHY are we even turning to robots. The answer to that question is TAXES & SOCIALISM!"
How can he be so WRONG and blind?
Man is competitive and; his quest for efficiency is hard-wired in.
Computer driven surgery is superior.
Computer driven medical diagnosis is superior.
Everywhere you look, computers are superior for managing industry.
Armstrong sees it differently.
"Lets eliminate the income tax and adopt a new system which will not make labor outrageously expensive."
Wages have not gone up in 40 years.
The speculators would happily suck the life-blood out of the working class to increase their wealth. They are too short-sighted to see that they are NOT independent of the welfare of the working man.
The end of the Central Bank?
The G-30 published an important paper on the creation and role of the Central Bank. After the forward, on page one,,, at the bottom, the G-30 have this to say, "Central banks were first established in the 17th
century, with the primary purpose of providing war finance to governments and managing their debts. "
It was never about doing something beneficial for the people. The controllers of the printing press were / are only concerned about war and State debt. There has been FAR too much of both of these abominations.
In the Report From Iron Mountain, It is stated, "concludes that a lasting peace would not be in society's best interest because warfare is the main organizing principle of government, as well as the primary driver of both cultural values and scientific progress. It states that warfare's main purposes, far from being to settle disputes between nation-states, are to control unemployment, reduce the population, drive scientific and artistic development, provide legitimacy and growth to the government, "
"cultural values" Here is a vid of a Viet nam vet executing a cop in cold blood. So much for the values learned in war.
Pox Americana teaches and demands that it's soldiers learn to kill with no remorse. Cultural values learned from the State are abominable.
"scientific progress" Mankind has reached the pinnacle of success where he can kill every living thing on the planet.
"artistic development" You are out of your BLOODY mind.
The advent of the Central Bank has coincided with the worst and bloodiest episodes in the history of mankind. Will this era come to an end,,, dunno.
The monetary inflation created by the Central Bank to save the private banks has destroyed all markets. There is no such thing as honest price discovery. As honest price discovery disappears, so does confidence. This is playing out in the States with a weaker currency. Argentina has to pay 60% interest to try to attract investment. Italy has elected a populist government and, investors are getting nervous and, leaving.
The ECB has been printing steadily for almost 10 years. They now claim that they are going to stop. That should destroy just about everything.
Taps Coogan: ECB's Balance Sheet Has Outgrown the Eurozone Three Years Running - The Sounding Line
South Africa plans to steal all the white-owned land. So, investors are running away from S.A. also.
So, various emerging markets are crashing. The ECB plans to cut out money printing. Evidently, the situation looks SO BAD that the Germans want to send money to Turkey to hold back contagion. The ECB might end up like the BOJ and, never be able to shut off the printing presses..
It is often speculated that the CBs will eventually be forced to relent and, fire up the presses once again.
"But, decades of declining births, a falling childbearing population, and failed attempts to turn this around (detailed HERE and HERE) mean a secular downturn in demand is underway in China but more broadly across East Asia. Couple this with a falling base of importer nations, and domestic plus international demand will fall indefinitely from here. Falling core populations, decelerating and declining energy consumption, and falling economic activity all go hand in hand (detailed HERE and HERE). "
"A fast falling childbearing population (yellow columns below) with continued deeply negative fertility rates equals a continued collapse in births."
"Rising wages in the face of declining demand and consumption seems unlikely. Growth has ended and decline will be the central feature for decades, if not centuries. How we decide to handle this new reality will determine the financial and economic systems. "
"the world is faced with how to deal with the growing inequality among (and within) nations, resultant overcapacity, ongoing urbanization versus large scale rural depopulation, and a general bankruptcy / reorganization of all the promises made that required perpetual growth to make them come true."
They took our wages. They took our confidence. We refuse to procreate.
So, emerging markets are looking like a default. Student debt is defaulting more than claimed.
8/30 Pre-tax corporate profits rise 0.2%, after-tax corporate profits rise 6.7% Mish
The tax reduction was a shot of adrenaline. Bernanke, Armstrong and Schiff all claim that this shot will wear off going in to 2020.
We've had a serious deflation in purchasing power. A fall in the birth rate. A rise in the price of energy. A fall in employment.
NOT TO worry,, the credit bubble is still growing.
Armstrong,,EMs running out of cash,,,The public food trough
Armstrong in his echo chamber.
"The economic growth has been declining for decades as has the velocity of money, As the velocity declines, it shows that people are either saving more or they do not have disposable income after taxes to spend"
"the velocity declines because people really do not have the money after taxes to spend. This is one reason I keep harping on its the taxes stupid!"
95,745,000: Record Number Not in Labor Force
BUT, it is the taxes that are curtailing spending.
"We see this with central banks setting targets for 3% inflation and they cannot reach that level."
Look at the stock market and tell me that they can't get 3% inflation.
Armstrong, "They point out that corporate-buy-backs will also reach an all-time high in 2018. They present this as evidence that somehow these purchases are not legitimate. In truth, the excess cash has led companies to buy back shares "
Buybacks were illegal manipulation until recent legal changes.
"Excess cash"
Debt for US corporations tops $6 trillion S&P Global
Corporate debt is equal to nearly half of U.S. GDP
Armstrong has his own agenda. He says that public debt will CRASH but, that the private debt / sector will do OK. FED GOV spends about 30% of the GDP. There is no possibility of the private sector coasting through this mess.
8/31 Emerging market sell-off looks contagious Bloomberg
8/31 Economic doom returns as EM currencies crash to record lows Economic Collapse
This "turnaround" in exchange rates can result in an increase in debt repayment costs reaching an effective interest cost of 60% or higher.
8/31 Italian bond market on edge ahead of ratings verdict Reuters
There will be some arm-twisting but, Italy can't survive without the ECB printing press.
The weak currency States have to use their hard currency reserves to try to uphold the value of their home currencies. They pump dollars into the FX markets buying their own currency. How long can that go on?
Here is a graph.
"More importantly, what this ratio shows is how long a given emerging market has before it runs out of cash. And, as the chart below shows, if we were investors in Turkey, Ukraine, Argentina, or any of the other nations on the left side of the chart - and certainly those with less than a year of reserves to fund its external funding needs - we would be worried."
You can bet that these weak States will stiff foreign debt holders to preserve capital for domestic use. Panic now and, avoid the rush.
8/31 Indias rupee falls to an all-time low CNBC
Prime Minister Narendra Modi's Rise From Tea Seller to Prime Minister
Slowly evolving;
8/31 In a posh Bangkok neighborhood, residents trade energy with blockchain Solarplaza
8/31 Russian lawmaker suggests gold-linked cryptocurrency for weapons exports GATA
Eventually, the blockchain will bring some honesty to markets.
German construction workers seal inflation-busting wage deal
12/5/2018, "German unions and employers on Saturday agreed on an inflation-busting pay hike of roughly 6 percent"
8/31 2018 Inflation nearly wipes out wage increase in Germany Xinhuanet
So, a 6% wage hike is inflationary but, constant price inflation is good for us.
"unfunded liabilities of state-administered pensions now exceed $6 trillion. The number increased by $433 billion in the last twelve months"
"The retired head of the Oregon Health & Science University takes home a pension of $76,111 each month! Fifty-eight percent of police and firefighters in Scranton, Pa., are on disability pensions; the average retirement age of a Scranton police officer is just under 45 years old. "
"note the strong correlation between states that have managed their pension programs responsibly and states with pro-growth economic policies that favor free-market solutions over government ones. Note that each of the five states with the highest funding levels are also states that rely less on the government to sustain their economies. In none of these states does government control more than 45 percent of the economy,"
"On the other end of the spectrum, 57 percent of Kentuckys economy is controlled by government, while the public sector controls 55 percent of Mississippis economy. "
Looming deflation,,,dis-solution of empire.
Government around the country is spending $ billions to (allegedly) help the homeless. Apparently, it is a big scam in most cases.
Charles Huge Smith makes a back of the envelope calculation of the nominal wealth that will be lost when the bubble pops.
"That's $30 trillion up in smoke, and we haven't even gotten to pensions and $15 trillion in "other financial assets." Whatever they are, we can bet that $10 trillion in pension entitlements and "other financial assets" disappear, too."
"So a reasonable estimate is post-bubble, household net worth drops by 40%, or $40 trillion. "
oftwominds-Charles Hugh Smith: Once the Bubbles Pop, We're Broke
John Hussman shows a much larger deflation with his calculations.
Chris Hedges has a lot of experience from his many years of work around the world. Here is his report.
The emergence of the Eurasian land powers
(Crosspost) https://consortiumnews.com/2018/08/2...n-land-powers/
Once again, Armstrong claims that it is impossible to manipulate markets. Once again, he is leaving out a historical perspective. The price of tulip bulbs was completely manipulated in the short run,,, just like gold. The long run is a different story.
"Our Democracy is based on Untenable Myths of Privilege"
Once again, the ills of crony-capitalism and corporatism are blamed on democracy and capitalism.
The loss of morality in the legislature allowed in regulatory capture.
Regulatory capture allowed in high inflation in prices with almost no inflation in wages. Blame it all on corruption.
Fallout from the rise of the 10 year,,, Venezuela
As I already posted, the Central Banks can buy U.S. public debt at no cost. The CBs are all just financing each other. Actually, they are just financing the FED. BUT, "US Fed lent $3.3tn to multinationals, billionaires and foreign banks"
The bankers look out for each other. Private investors are a different story,
Bond prices fall when yields rise and being short the 10-year Treasury, and thus betting on a rising yield, has become a very crowded and profitable trade for hedge funds and other speculators.
OK, so, a "short" bet is a bet that interest rates will go up.
Alarm! 10Y Treasury Shorts Reach All-time High, Net Shorts For VIX, Gold and 10Y Treasuries Near Record
Corporate America has debt equal to 50% of the GDP ($6 trillion) Raising interest rates will make it much harder for them to service their debt. Powell is determined to raise interest rates. The market is betting that this will happen.
Raising rates is a full-on attack on both Europe and the East. China, in particular is sliding down.
9/01 Less than 20% of Chinese bond defaults have been paid back Bloomberg
So, everybody is betting that the 10 year note will go up. What about the fallout? I already mentioned corporate debt. What else?
As interest rates go up, everything else goes down. RE will fall.
Here is a long, detailed article from 8 years ago, proving that interest rates on Treasury notes will eventually go to zero.
Why US Treasury Notes Will Eventually Yield Nothing :: The Market Oracle ::
Keep in mind that you must subtract the price inflation rate from the paid out interest rate on a bond. Price inflation is running just over 10%.
Alternate Inflation Charts
"Zimbabwe wrote the book on trying to print their way out of economic dysfunction and eventually stopped printing with a z$100 trillion bill. As we all know, a printing press that never stops promotes inflation that eventually makes the printing press irrelevant. Not long after the introduction of the z$100 trillion, Zimbabwe thought about introducing the z$1 quadrillion bill. "
Venezuela, "In 2010 VEF-USD traded just above 8 bolivares per dollar in the black market. As of today it stands at more than 8.7 million bolivares per dollar" Here is the graph. The date of 11/17 marks the start of the rise. that is when Venezuela first defaulted.
"The next chart shows Venezuelas narrow money supply M1 since 2008 "
"We calculated that Venezuelas money supply growth amounts to 46.68 billion percent since the early 1960s."
Venezuela ? An Economic Catastrophe in Charts |
Socialism kills motivation at all levels. Price controls are especially corrosive. State-caused monetary inflation means that far more money is chasing the same amount of goods. This causes price inflation. If the State institutes price controls, the producer has no motivation to produce. He just closes up shop.
Chavez / Maduro inflated the lower loop. Greenspan / Bernanke inflated the upper loop. Armstrong said the hyperinflation is reserved for peripheral economies. Central economies don't suffer it. BUT, Germany was a central economy when the Weimar hyperinflation hit.
Powell seems to be betting that his attack on the rest of the world will not set off a debt crash in America. Long before we had instant worldwide capital transfer (1930), the crash of Credit Anstalt in Austria brought worldwide contagion to the banking system. Deutsche Bank is soon to have a shotgun wedding with Commerz Bank. The Italians are on track to bring down the ECB. Turkey is on track to bring down the Spanish banks.
There will be plenty of default contagion to bring down American banks.
Then, there is the looming Bexit that will / would be a disaster for British banks.
A hard Brexit is looking increasingly likely ... - The Independent
Powell is going to light something, somewhere.
China fighting market forces
DEFINITION of 'Plaza Accord' A 1985 agreement among the G-5 nations (France, Germany, the United States, the United Kingdom and Japan) to manipulate exchange rates by depreciating the U.S. dollar relative to the Japanese yen and the German Deutsche mark.
The dollar had gotten too strong and, it was messing up international trade.
"Plaza Accord" refers to an agreement made at the Plaza Hotel in 1985, between the United States and its primary economic allies, to engage in massive selling of the dollar in the foreign exchange market at a time when the dollar had skyrocketed in value against other currencies."
Once again, the U.S. dollar has gotten too strong,,, mostly because of the actions of the FED. It is fast wiping out weaker currencies. They will soon run out of dollars to support their home currency. Both the FED and the private banks are deflating the currency supply just when the R.O.W. needs lots of dollars.
So, what does China have to say about this?
Dollar Poised To Soar As China Refuses New Plaza Accord
"The Federal Reserve monetized debt. It took existing debt and swapped it for Federal Reserve notes. The effect was not a resumption of credit growth to pre-crisis levels because banks create new money when they create new credit. Even with massive federal deficits in the wake of the 2008 crisis, deflation in the financial and household sector overwhelmed credit growth. "
"The Federal Reserve did achieve a transformation of debt into equity. Instead of making new loans, money flowed into stocks. The wealth effect caused by rising stock prices is a fraction of the wealth generated by productive credit creation. "
The boneheads could NOT make new loans because there was no demand.
"Until the 2016 presidential election, the U.S. stock market moved in lock-step with the Federal Reserve's balance sheet, so much so that the chart below only has one axis. The percentage changes in the Fed balance sheet and S&P 500 Index are too close to be a coincidence."
"Most importantly, emerging markets inflated like crazy and in countries such as China, if the private economy wasn't willing to lend and borrow, the government forced state-owned banks and companies to do it."
"The solution everywhere is trying to add more debt to overly indebted nations, economies, corporations and consumers. For various reasons including demographics and absolute debt levels, the U.S. (in aggregate) refused. American banks retreated from eurodollar funding after 2008 and the Europe after 2011."
"The financial system is moving in a deflationary direction, but "everyone" believes inflation is right around the corner because central bank policies are laying the groundwork for higher inflation. The flaw is there's no catalyst. Base money isn't multiplying into new credit. Each round of QE (and the Chinese stimulus burst in 2016) is better understood as preventing a deflationary collapse."
"For today, however, it still looks like emerging markets have made the larger error in the short-term. They are heavily "short" dollars and the Federal Reserve isn't interested in helping. Moreover, neither are the emerging markets. "
"Chinese Ambassador to the United States Cui Tiankai said here on Thursday that China would not accept a Plaza Accord imposed on it.
"On what to do next, for China it is very clear," Cui said. "I wish to advise people to give up the illusion that another Plaza Accord could be imposed on China. They should give up the illusion that China will ever give in to intimidation, coercion "
China is fighting the impossible trinity, huge capital outflow, shrinking workforce, crashing overseas markets AND,
2016 - The Asian colossus is losing 6.5 percent of GDP to pollution-rated costs.
11 1 2018
"Over two million Chinese workers have been laid off in recent months due to over capacity. Companies have been shut down as employers either sold their businesses or simply disappeared. These layoffs have increased the numbers of unemployed youth in urban areas, increasing the risk of social unrest.Chinese President Xi Jinping has suggested sending Chinas increasingly debt-prone youth to work in the country, in a Second Cultural Revolution. Few have taken the offer despite employment opportunities in farming, food processing, and rural tourism.Industrial manufacturingcomprising approximately 45 percent of Chinas GDPis suffering from debt-laden overproduction. Chinese corporations owe an aggregate amount equivalent to 170% of Chinas GDP."
"His data showed the leading edge of a force long thought to doom Chinas system. Known as modernization theory, it says that once citizens reach a certain level of wealth, they will demand things like public accountability, free expression and a role in government. Authoritarian states, unable to meet these demands, either transition to democracy or collapse amid unrest"
Powell has pulled the plug on dollar creation just when many States need them most. The implosion should be spectacular.
Xi-Powell game of chicken,,,Fracking bust,,,Kunstler,,class warfare
China is refusing to accept and implement an agreement that would weaken the dollar. Does Xi think that the crash will be worse in America than in China? Powell refuses to print to weaken the dollar. Does Powell think that the crash will be worse in China than in America?
I'm betting that Premier Xi of China is right. The CIA and Pentagon have made it a practise of thrashing countries all over the world. This has made us a LOT of enemies. The list of enemies includes MOST of the oil producers. What does this matter? We have lots of oil from fracking.
"The 60 biggest exploration and production firms are not generating enough cash from their operations to cover their operating and capital expenses. In aggregate, from mid-2012 to mid-2017, they had negative free cash flow of $9 billion per quarter. "
"He had looked at the financial statements of 16 publicly traded exploration and production companies and found that from 2006 to 2014, they had spent $80 billion more than they received from selling oil. "
"average well in the Bakken a key area for fracking shale in North Dakota declines 69 percent in its first year and more than 85 percent in its first three years."
"Amir Azar, a fellow at the Columbia University Center on Global Energy Policy, calculated that the industrys net debt in 2015 was $200 billion, a 300 percent increase from 2005. But interest expense increased at half the rate debt did because interest rates kept falling. Dr. Azar recently called the post-2008 era of super-low interest rates the real catalyst of the shale revolution.
Ah, Mr. Powell,,,, about those interest rates that you want.
"By mid-2016, American oil production had declined by nearly a million barrels a day and some 150 oil and gas companies filed for bankruptcy."
"And yet only five of the top 20 fracking companies managed to generate more cash than they spent in the first quarter of 2018. "
Best read the whole article.
Kunstler has weighed in on this subject.
"Energy: The shale oil miracle was a stunt enabled by supernaturally low interest rates, i.e. Federal Reserve policy. "
"For all that, the shale oil producers still couldnt make money at it. If interest rates go up, the industry will choke on the debt it has already accumulated and lose access to new loans. If the Fed reverses its current course say, to rescue the stock and bond markets then the shale oil industry has perhaps three more years before it collapses on a geological basis, maybe less. "
The Uncomfortable Hiatus - Kunstler
"as with everything else on the table for debate, the reach and scope of US imperial arrangements has to be reduced. Its happening already, whether we like it or not, as geopolitical relations shift drastically and the other nations on the planet scramble for survival in a post-industrial world that will be a good deal harsher than the robotic paradise of digitally creative economies that the credulous expect. This country has enough to do within its own boundaries to prepare for survival without making extra trouble for itself and other people around the world."
"Today, being part of the middle class is like playing a really bizarre game of musical chairs. Each month when the music stops playing, those of us still in the middle class desperately hope that we are not among the ones that slip out of the middle class and into poverty. Well over 100 million Americans receive money or benefits from the federal government each month, and that includes approximately 40 percent of all families with children. We are losing our ability to take care of ourselves, and that has frightening implications for the future of our society."
"Collectively, Americans have more than $1 trillion in credit-card debt, according to the Federal Reserve. They have another $1.5 trillion in student loans, up from $1.1 trillion in 2013. Motor vehicle loans are now topping $1.1 trillion, up from $878.5 billion in 2013. And they have another nearly $15 trillion in mortgage debt outstanding."
#2 In 2011, the average home price was 3.56 times the average yearly salary in the United States. But by the time 2017 was finished, the average home price was 4.73 times the average yearly salary in the United States.
#3 In 1980, the average American workers debt was 1.96 times larger than his or her monthly salary. Today, that number has ballooned to 5.00.
#5 102 million working age Americans do not have a job right now. That number is higher than it was at any point during the last recession.
#10 Poverty rates in U.S. suburbs have increased by 50 percent since 1990.
#11 Almost 51 million U.S. households cant afford basics like rent and food.
The American Dream Is Getting Smaller, And The Reason Why Is Painfully Obvious⦠– Investment Watch Blog
All that hot money has priced the average family out of the consumer economy.
" Armstrongs war cycle models are converging, suggesting that not only will we see an expansion of international conflicts, but civil unrest will begin to spread precipitously."
Soros is ON the job with this. He and the tribe are hard at work to sow the seeds of domestic violence.
"Ocasio-Cortez is a member of Democratic Socialists of America which is cheering the return of Marxism. No matter what you show that Marxism has resulted in more people dying in class warfare and the failure of Russia, Eastern Europe, Venezuela, and China among many South American socialist agendas, the Democrats refuse to look at the evidence of such failure."
"They are advocating all-out economic class warfare that anyone sho donates to Republicans should be boycotted. They do not believe in free speech and the left has historically started more wars to force their opinions upon everyone else."
"We are rapidly approaching the moment when the USA will collapse into political hatred and it will be the end of the United states."
"We are indeed rapidly approaching the time when we will need to just turn out the lights on the United States. This internal battle between socialists who will NEVER accept the position of others to live and let live will build and it will tear the country apart"
A nation is held together by shared values. This is becoming increasingly rare in What used to be America.
Currencies crashing,,Mega contagion
The lower loop of the economy has lost ground for decades. The upper loop just extends our repayment schedule further and further out. At some point, the interest costs outweigh the the rationale of using credit.
In 1998, long term capital management collapsed and came very close to bringing down the global credit system. One wonders how a single institution could have so much negative fallout.
"The global financial system suffered a seizure in 2008-09, a non-linear manifestation of a system completely out of whack: the $500 billion subprime mortgage market almost took down the entire $200 trillion global financial system."
Ah yes,,, non-linear.
The cure for our default was to print up $250 trillion of new debt. This was passed out to the bankers and, was intended to be laid on the backs of our children to pay off. The lower loop cut way back on both credit demand AND consumption. The State stepped in to boost both of them. This worked after a fashion inside America. This prompted enormous capital flight. In times of trouble, capital flees to the jurisdiction that 1. appears the most stable,,, 2. has the most respect for the rights of private property holders.
The Eurozone is a poisoned well. Draghi has destroyed the façade of an honest bond market. Socialism is more advanced in Europe than it is in America so, our bond market hasn't been strained as much as has been strained in States like France.
"The Eurodollar market, which was established in the City of London in the 1950s"
It is unregulated. The Europeans went all out in creating European loans denominated in U.S. dollars. Now, they can't get dollars to service their loans. Italy is the 10th largest economy but, the third largest bond market. They had no business gorging like that. Deutsche bank created derivatives equal to 80% of Germany's GDP. Once again, they had no business going that far.
Greed has turned to fear and, investors are fleeing weaker currencies. Their flight makes the abandoned currency that much weaker. This causes more fear in markets. This turnaround in confidence is playing out all over the world.
" There's a rule of thumb that's also worth pondering. While the stock market attracts all the media attention--every news cast reports the daily closing the the Dow Jones Industrial Average, the SPX and the Nasdaq stock index--the bond market is larger and more consequential. And larger still is the currency market--foreign exchange (FX).
As the chart below illustrates, a great many currencies around the world are in complete meltdown. This is not normal. Nations that over-borrow, over-spend and print too much of their currency to generate an illusion of solvency eventually experience a currency crisis"
"Here's the key takeaway: a currency crisis is a symptom of a deeper disease--it is not the illness."
"The fact that so many currencies are melting down at the same time is telling us the global financial system is unraveling, and unraveling fast. This is a symptom of a fatal disease."
" The global financial system is inter-connected, but this is not a viable excuse for the meltdown. The general explanation floating around is that currency weakness is like the flu: one currency gets it, and then it spreads to other weak currencies.
This diagnosis is misleading. What's actually happening is the unprecedented global bubble of debt and assets of the past decade is popping, and it's laying waste to the most indebted, over-leveraged and mismanaged nations first,"
"These are symptoms. The disease is the "fixes" of the past decade--extreme expansions of debt and asset valuations--are unraveling. The global financial system suffered a seizure in 2008-09"
" That's the acme of a brittle, fragile system: a small input (subprime mortgage defaults) yields an enormous output (global financial meltdown).
What nobody dares talk about is the "fixes" have made the global financial system even more vulnerable than it was in 2008. The global meltdown of currencies is evidence that the symptomatic "solutions" to the brush with collapse in 2008-09--skyrocketing debt and asset bubbles-- fixed nothing. All they did was inflate an even larger, more vulnerable bubble.
Currencies don't melt down randomly. This is only the first stage of a complete re-ordering of the global financial system,"
Here is the current list of causalities;
"The illusion that the U.S. is immune to the unravelling of debt and asset valuations won't last. When the defaults start piling up, so will the losses, and when asset bubbles pop, incomes and spending decline. Although few seem to notice, almost half the profits of the S&P 500 corporations are earned overseas."
Yep, we're last.
oftwominds-Charles Hugh Smith: The Global Financial System Is Unraveling, And No, the U.S. Is Not immune
9/04 Emerging assets roiled by one risk after another as dollar rises Bloomberg
9/04 Chinas share of global debt tripled since 2009: Standard Chartered Bloomberg
9/04 Judgment Day awaits for plan to avert Argentinas economic crisis Bloomberg
"This month marks the 10th anniversary of the Wall Street/Fed/Treasury created financial disaster of 2008/2009. What should have happened was an orderly liquidation of the criminal Wall Street banks who committed the greatest control fraud in world history and the disposition of their good assets to non-criminal banks who did not recklessly leverage their assets by 30 to 1, while fraudulently issuing worthless loans to deadbeats and criminals. But we know that did not happen."
"Total household debt topped out at $14.5 trillion in 2008 and proceeded to fall by almost $1 trillion as a tsunami of foreclosures swept across the land."
"Wall Street banks doling out loans to anyone capable of fogging a mirror and scratching an X on a loan document. The Deep State oligarchs realized the only way to keep their ponzi scheme economy afloat was to lure in more suckers with debt that could be re-circulated to make the economy appear solvent.
College students, after over a decade of government school indoctrination, were the perfect dupes. From 2009 until today the government has doubled student loan debt from $750 billion to over $1.5 trillion. Everyone likes a shiny new car, so the financial industry took auto lending from $700 billion to over $1.1 trillion over the same time frame. "
"If corporations were swimming in profits, why have they added $2.5 trillion of debt above the pre-collapse high in 2008?"
"biggest corporations in the world took the free money created by the Federal Reserve and proceeded to invest it in their own stock rather than investing it in their operations and workers. Borrowing at near zero rates and using the proceeds to buy back hundreds of billions of your own stock had multiple benefits for greedy feckless Harvard MBA CEOs. Reducing shares outstanding juiced their earnings per share, resulting in a false profit picture to investors, who bid their stock prices higher."
"using Big Lie propaganda and central bank printing presses across the globe, they have managed to add $71 trillion of global debt in the last ten years, up 43% from pre-crisis levels. And the most mind-boggling aspect of this growth is that $42 trillion of the new debt was in emerging markets"
"The massive debt creation has been nothing more than a last-ditch effort to prop up the crumbling financial/political paradigm. The current state of affairs is unsustainable. It is failing. And it will fail. This turkey will ultimately hit the ground like a wet sack of cement."
Bond markets circling a black hole
The orbit of a rock circling a black hole gets more defined as it gets closer. The same is true for our economic malaise as we circle ever-closer to worldwide default. Here is the list (reposted) of failing currencies.
By my rough reckoning, the population of the affected States is about 2.5 billion people. That is WITHOUT China. The Emerging Markets and many other States borrowed in dollar-denominated loans. Then, they used these cheap dollar loans to invest in higher-yielding securities and higher yielding markets. This is called a carry-trade.
Investors assumed that the FED would continue to print forever. Keep in mind that all that QE has destroyed the pension funds. The stock markets went up EXACTLY parallel to the FED printing. Estimates for the "retrenchment" call for losses in equities of 50---90%. So, the pension funds might get higher interest rates on their investments but, at the same time,. the value of their portfolios will be cut by 50---90%
The bankers were all rescued at the cost of destroying everything else.
The carry trade has resulted in everybody being carried out on their shields.
The feces-for-brains at the Central Banks assumed that they could always rescue the system by pumping in more liquidity. Bernanke was the standard bearer. Kuroda was his lieutenant. (BOJ).
The CBs more-or-less follow the BS from Keynes. They also embrace the quantity of money theory The mined gold supply increases by about 2% per year. The economy normally grows about 2% per year. The years under a gold standard show little to no price inflation. The PTB weren't happy with this limitation. The quantity of money must be commensurate with the quantity of goods.
The upper loop ramped up the money supply,,, all debt. But, wages, productivity and population were / are falling. The upper loop discovered that ONLY the upper loop had the "ability" to service all this new debt. They are printing madly but, to no avail.
Powell has apparently decided that enough is enough. Time to pull the plug on Bernanke's grand experiment.
Trump tries to talk down the dollar to reduce our trade deficit. BUT, our stuff is now too expensive to attract foreign buyers / importers.
9/05 U.S. trade deficit soars nearly 10% on record imports MarketWatch
The hot money is fleeing jurisdictions like Italy and India and Turkey, et al. Italy wants $250 billion of debt forgiveness and, is going head-to-head with the ECB. Investors don't like the sound of that. The wind is whispering that Turkey is going to default. They want to stiff the West and align with Russia. They control the Bosporus so, Russia must be very careful.
Here is Italy, https://capitalistexploits.at/2018/0...dog-wont-hunt/
Apparently, the gold and silver markets see the writing on the wall.
Jim Willie; Good rundown here.
GOLDEN JACKASS.COM - The Golden Jackass Knows Gold, Currencies & Bonds"
Fulford always has at least some truth to his articles.
Armstrong is interesting, as usual.
" There are enough of us down here who would sincerely ask would you consider advising Argentina to straighten out our economy and nation? You have forecast this emerging market crisis long before anyone else and your solution video on YouTube is very thought-provoking. If we can demand the government meets with you, would you do it?"
"I would be glad to fly to Argentina to help if the pain reaches their eyeballs so they will do as directed to save the country. Half-ass maybes are a waste of time. It is only worth it when they realize they have no choice. The choice is plain the people v bondholders! We are at the end of a period of public confidence in government borrowing that never ends."
You saw in Greece that they punished the entire country to save the bond holders. Will that happen worldwide?
More from Argentina.
"Argentina, but it applies to the entire world for what happens in Argentina is merely the beginning of the global debt crisis. We can see from the chart that the dollar has been soaring. However, the Array picked August as the Panic Cycle and that has been spot on. "
"Unfortunately, it does not look like this is going to calm down. We may be headed into a real Emerging Market crisis by October."
"Now we have Portuguese and Spanish banks who would not lend to their domestic economies for there were way too many nonperforming loans so they ran and bought Turkish debt."
"Rates will soar in Europe if Draghi actually stopped buying and then we will see a global debt crisis you cannot imagine."
He retires in a few months.
"Left unchecked, more nations are going to be swept up in this debt crisis as their bond values collapse. This is threatening the entire worlds economic growth and confidence. As institutions begin to wise up for once, we will see the confidence in public debt collapse. This will become a game of musical chairs and the one left standing with government debt will lose everything!"
Wait they need those bond markets to support all the muzzies and bureaucrats.
Napoleon seems to have had bad luck with the weather caused by volcanoes.
He also made a stupendously bad decision by refusing to let James Watt build him a steam-powered warship.
9/05 Justin Trudeau indicates he will not bend on key NAFTA demands at talks CNBC
Well, he may not bend but, he will certainly break.
9/05 Emerging markets and equities reel as dollar flexes muscles Reuters
9/05 No relief in sight for emerging markets as rand leads sell-off Bloomberg
Yeah, well, they didn't inspire any confidence by expropriating private farms.
Gold and silver are indicators, https://www.dollarcollapse.com/gold-silver-2008/
9/05 St. Louis Fed: 60% of Jobs Automated in Next 20 Years Mish
If the industrial economy does not have a job niche for you, you have to turn to the agrarian economy. I don't see anyone even presenting some kind of a solution.
Unfolding bond wars
Here is a graph of credit growth for the G4 + Swiss.
"while US$ liquidity is turning deeply negative, thus supporting US$. "
Powell seems determined to continue with shrinkage at the FED.
"But on the other hand, China is moving towards more stimulative position. How do we balance these factors? Unless there is a stronger private sector recovery or China becomes more aggressive, CBs must change their narrative. "
Powell is forcing the Chinese to increase liquidity in the system to make up for a Western curtailment of credit creation. The more that China prints, the more that they suffer capital flight. This is an attack on bond markets. Here is a page with a graph of the current sell-off. You can see that foreign currency bonds Have an unprecedented sell off.
Tyler Durden Blog | "The Very Definition Of Contagion": Catching Falling Knives In Emerging Markets | Talkmarkets
"The slump and the duration, calculation in the number of days from peak to trough, has pushed some strategists to say the EM crisis is more than just a knee-jerk reaction to higher U.S. interest rates or the unfolding trade war: "Its become a full-fledged crisis of confidence for investors in developing nations."
A war by any other name is still a war.
Catching Falling Knives In Emerging Markets Catching a falling knife refers to the action of buying an asset right at the bottom of valuation just before it rises. This trick is closely related to judging market confidence. Not an easy thing to do.
Kolanovic, a 43-year-old analyst with a Ph.D. in theoretical physics has written a very interesting report.
"Central banks will be forced to make unprecedented moves, including direct purchases of equities, or there could even be negative income taxes.
Timing of when this next crisis will occur is uncertain but markets appear to be safe through the first half of 2019, he said."
BOJ and ECB are already doing that. It hasn't fixed anything. Will Powell refuse to do this?
"The forces that have transformed markets in the last decade, namely the rise of computerized trading and passive investing, are setting up conditions for potentially violent moves once the current bull market ends"
If markets fall by 40 percent or more, the Federal Reserve would need to leap into action to prevent a spiral that led into depression"
"Suddenly, every pension fund in the U.S. is severely underfunded, retail investors panic and sell, while individuals stop spending," Kolanovic said. "If you have this type of severe crisis, how do you break the vicious cycle, the negative feedback loop? Maybe you stimulate the economy by cutting taxes further, perhaps even into negative territory. I think most likely is direct central bank intervention in asset prices, maybe bonds, maybe credit, and perhaps equities if that's the eye of the storm."
This hasn't worked yet.
"The exact timing of this crisis is uncertain but will be determined by the speed in which the Fed hikes interest rates and reverses bond purchases "
Powell is pushing hard on the brake pedal.
"If central banks can head off the worst of a crisis by providing a floor for asset prices, then the status quo will probably be maintained, he said. "
What if we don't want the status quo?
Armstrong explains what happens to dollar-denominated debt in foreign markets.
"The dollar debt rises exponentially in the cost to service that debt as the currency declines." "Turkeys external debt has grown 10% just in the past year alone as its currency has declined and interest rates have risen."
"Additionally, you must take into account the CONTAGION FACTOR that will erupt on trading desks. Once a crisis begins in Emerging Market debt, they will not look at the number on any individual country they will just sell the entire category at the market. "
"ANSWER: The French President Emmanuel Macron has urged European states to work with Russia and construct new security architecture, in a bid to strengthen defense capabilities within the European Union and thus rely less on America."
"Trumps demand that they pay their fair share of NATO"
Trump obliquely pointed out that Europe does not need to defend itself.
"NATO exists because of a view that Russia would invade Europe to end capitalism. Those days are gone. Nonetheless, the idea of empire still haunts us to this day."
"It may take another 50 to 100 years before we end this idea of empire. Macron is still displaying the view that Europe should stand together against America. It has been the Frech who have blocked free trade and trade negotiations because they are the origin of communism where the idea was born and this is reflected in the poor economic performance of France as a whole."
Trump, Putin and Xi have it in mind to stop all the wasteful spending on the military. The crash is unavoidable. The resurrection must minimise any expenditures for the military. The Pentagram doesn't like this idea.
The nations that first entered the industrial revolution were most adept at colonizing nations that were not industrialized. Now, that most States are industrialized enough to conduct mechanized warfare, colonies and empire are a thing of the past. Russia is demonized as an aggressor to try to keep this mentality (and spending) in force.
9/06 Japan govt seeks record 2019 budget to boost welfare, defence spending DT
Old people in Japan are committing crimes so that they can get a comfy jail cell. Who would possibly invade Japan?
9/06 Naples mayor plans to launch autonomous crypto for greater southern autonomy CT
The Camorra (Italian: [kaˈmɔrra]; Neapolitan: [kaˈmorrə]) is an Italian Mafia-type crime syndicate, or secret society, which arose in the region of Campania and its capital Naples. It is one of the oldest and largest criminal organizations in Italy, dating back to the 17th century.
Contagion,,,attacking Trump because he won't save israel,,
The world watches as the contagion spreads.
9/06 Micron leads chip stock slaughter after warnings on demand CNBC
9/07 Tech stock sell-off could be just beginning if trade war with China worsens CNBC
9/07 Asia markets mixed in the morning as US-China trade war takes center stage CNBC
9/07 Contagion risk is now spreading, and the US is not immune Graham Summers
9/07 Foreign market contagion is about to go viral Talk Markets
9/07 Look out for emerging-market contagion effects Nomi Prins
9/07 U.S. stock market crash long overdue, but people are oblivious Peter Schiff
9/06 World stocks fall for fifth straight day on trade fears Reuters
9/06 Will Trumps trade war spur the dollars decline? World Bulletin
Nope, it will do just the opposite.
Yes, using voodoo.
9/06 Get ready for the strongest commodities bull market of all time Casey Research
The manufacturing index worldwide is crashing but, commodities are going to sell GREAT.
9/07 U.S. stock market crash long overdue, but people are oblivious Peter Schiff
They are NOT oblivious,,, they are avoiding the bond market.
"The "recovery"/Bull Market is in its 10th year, and yet central banks are still tiptoeing around as if the tiniest misstep will cause the whole shebang to shatter: what are they so afraid of?"
"Wait a minute: so the patient has been on life-support for 10 years and authorities are telling us the patient is now super-healthy? If the patient is so healthy, then why is he still on life support after 10 years of "recovery"?"
It was the best that they could come up with to try to save unsavable banks. Here is the graph of Chinese credit creation. It has recently dropped just a bit.
oftwominds-Charles Hugh Smith: After 10 Years of "Recovery," What Are Central Banks So Afraid Of?
Unemployment rate matches lowest point in half a century - CNN
Ignore the 95 million not in the labor force.
The unemployment rate is historically low, and meaningless.
Full employment but, with fewer people.
"Covert Coup" From Inside Trump White House Sparks Constitutional Crisis
Ex Rep - 'The Deep State Is Real...And They Don't Like Donald Trump's Disruption'
Trump Looking For Replacement For SecDef Mattis - Report
Trump has fallen out with his military chiefs
Add up all of that, and then, add it to this.
Syrian Army Ready To Liberate Idlib Syrian MP
US envoy - Syria's Golan may remain under Israeli occupation 'forever'
9/06 Assad readies last major showdown of Syria war Bloomberg
Israeli army gives ammunition, money to terrorists in Golan Heights
There are only weeks? left before Syria kills off the mercenaries in Idlib. The tribe is gnashing their teeth and rending their garments because Trump won't attack. They are pulling out all the stops attacking him. Not only that, the military-industrial complex are in open rebellion / attack.
This is, of course, a perfect setup for a false-flag attack. That little Rothschild $hite in Paris is all ready to go.
"Macron Needs to Attack Syria With or without the United States."
Syria needed to cleanse Idlib before it could take on the Golan,,, where all the oil is.
Partition of Syria: US and Israel eye Golan Heights oil | Asia Times
" Genie Energy's Strategic advisory board is composed of: Dick Cheney (former vice president of the United States), Rupert Murdoch (media mogul and chairman of News Corp), James Woolsey (former CIA director), Larry Summers (former head of the US Treasury), Bill Richardson, former Governor of New Mexico, an ex-ambassador to the United Nations and United States Energy Secretary[2], Michael Steinhardt, Jacob Rothschild"
Jacob Rothschild + the military-industrial complex + Netanayahoo + most of congress + millions more of the tribe are all stomping their feet to boot out Trump because he won't attack. Reportedly, the Russian dossier was a fabrication of Homeland Security. So, add HS to the list of enemies.
This is mostly an extension of the pipeline wars for israel to get control of large amounts of gas and oil that belong to Palestine, Lebanon and Syria. Meanwhile, Russia is maxxing out their gas distribution.
After the credit collapse, America will not be able to run a trade deficit. We are out of cheap oil and, we will have to pay as we go. Wall Street and the junk-bond market are abandoning fracking. Peak-cheap-oil was held off for several years but, it will appear.
The idea of taking over Eurasian oil was just a bridge too far. Curiously, American sanctions helped to destroy Venezuelan oil production at a critical time when it would have been in our best interests to support them.
Last edited by Danny B; 09-07-2018 at 02:25 PM. Reason: swelling
The Left wants civil war,, will they get it?
Socialism is the firewall between Darwinian pressures and Mother Natures second class children. They demand trophies for participation. They demand classrooms without grades. They demand that the over-achievers be brought down, to level the playing field.
"Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery." - Winston Churchill quotes ...
The left is betting all their cards on Socialism. Trump represents the hard workers and the overachievers. The blob State of bureaucrats are well aware that they contribute nothing to the producing side of the economy. Realizing this, they grow ever-more shrill and demanding. They are fanatically obsessed because they see the approaching credit collapse. They know that their particular niche is ONLY supported by the public debt / sovereign bond market.
Here are a bunch of quotes from Armstrong about what the world can expect from the left as the economy contracts.
"The left not merely staged a revolution seizing all the property of anyone who had it, but they then killed the Emperor and his entire family. The hatred is a pattern that will always manifest on the left. They are really blaming everyone else for their failures in life.
I did not like Obama for the fact that he supported the NSA, installed Obamacare which failed to work but supported the insurance companies, and raised taxes. Nobody I ever heard called him vicious names. It was a disagreement with politics. The left is incapable of drawing such a line and their hatred is always personal.
"the lack of intelligence and the high probability that is some person who will eventually take out their hatred and support the civil war against anyone who disagrees with them. That is why all revolutions begin from the left. These are people who cannot sleep at night hating others who typically have more." ENVY
"These people who want to see Trump gone have no clue what may result in the aftermath. My concern is global. This is far beyond Trump. "
We have private debt concerns in China. We have South Africa following the mistakes of Zimbabwe and we have major change sweeping the Middle East. The discontent in Iran is building toward yet another revolution and in Japan, Abe Economics is failing. South America is in turmoil which has spread even to Mexico."
"In all honesty, throughout my career, there have been places that are in turmoil and it was crystal clear where capital would move. I honestly have to say I have NEVER witnessed a period quite like this. There is no place that is a safe haven at this point. The entire world is just coming unglued.
All we can do is now rely on the computer for personal opinions will be probably the most dangerous things upon which to base forecasts.
"The people who hate Trump so much may be crying later if he is forced out for they will find their lives completely destroyed economically if confidence in government collapses as they try to put in one of their own career politicians. We have a Panic Cycle arriving in Politics in 2021 and again in 2024. The presidential elections will be 2020 and 2024. Note that both Panic Cycles are aligned with these events. I am NOT joking about blood in the streets. Those who hate Trump so much right now will be the very people hunting others who disagree with them."
"When a currency collapses, the value of tangible assets rise. In the case of Venezuela, you have a socialist government that refuses to relinquish power in fact of a complete economic disaster with millions of people fleeing the country. Here we have a double hit. The currency normally is sufficient to bring about regime change. In this case, the army is still willing to kill its own people to support a leftist regime."
"This is the profound difference that concerns me about leftist governments. They are filled with such hatred and propaganda that killing anyone who disagrees is seen as justified because THEY are the people who have ruined the state never the leftists who seek to vindicate their victimization."
"In the case of Venezuela, the last check against the leftist government will be capital. They will be unable to borrow ANY money" "By no means invest in ANY fund that invests in Venezuela. Get out before you lose 100%."
I have stated numerous times, my deep concern is what comes AFTER Trump? There is no question they will seek to stuff a career politician into office be it Democrat or Republican. As the debt crisis expands, they will turn to raise taxes. They will in the process destroy the very democratic process and we will witness rising taxes quite dramatically until the entire political system breaks apart."
"Any career politician will defend their own self-interest and raise taxes trying to hold on to power regardless if they are Democrat or Republican. This is simply how the West enters its Decline and Fall "
"You can see the policy already in Europe. Brussels will defend the Euro at all costs even if it suppresses the people because now it is just about their pensions and jobs.
The Euro fails and there goes Brussels and its bureaucracy off the edge. There is no hope on the horizon of a knight in shining armor to come to save the day."
Rowe: Why we never see protests at trade schools [Video] - Yahoo
The deplorables are more likely to be doing productive work. The lefties majored in subjects that led to jobs that didnt demand any particular skills beyond shuffling papers and E-mails to other lefties. They passed judgement and handed down their decisions to the lower classes.
Armstrong's projections, " We have a Panic Cycle arriving in Politics in 2021 and again in 2024. The presidential elections will be 2020 and 2024"
So, one year after the next election, we go into a panic. Will the deep State finally get to Trump? Will he die from aspartame and KFC?
Keep in mind that Agenda 21 calls for everybody to leave rural areas and, move to the cities. If the lefties are willing to burn it all down, the cities are the last place to be. Will this pit homeland security against deplorables?
Last edited by Danny B; 09-08-2018 at 02:56 AM. Reason: moar info
Wild capital flows
I'll start with Kunstler. He rightly points out that; if Trump is going to lay claim to an economic resurgence, he will also have to shoulder the blame for an economic collapse.
"Perhaps he has not noticed that the money system is crumbling all around the world at the margins. If he does not understand that this rot eventually must reach the center, then he has washed down too many cheeseburgers with his own Kool Aid. Having taken ownership of all this lock, stock, and barrel, then he is perfectly situated to be blamed when the honey-wagon of algo trading robots turns south and whatever remains of the worlds hot money, including the US dollar, goes up in smoke. If it coincides even bluntly with the mid-term election, then we will find ourselves living through Civil War Two."
Slouching Toward Okeefenoke - Kunstler
There won't be a civil war. There is no place to draw the battle lines. It will be constant civil insurrection.
9/08 COMEX silver to test 2015 lows-Craig Hemke Sprott Money
9/08 Surge in silver demand leaves U.S. Mint with no Eagle Silver bullion coins Kitco
Yep, record low prices at the same time as record low supply.
9/09 Turkey ripples hit Korea as record money-market funds pulled Bloomberg
Yep, you're going to be reading a lot about money-market funds running hither and yon.
9/08 The pension crisis is bigger than the worlds 20 largest economies Sovereign Man
Close your eyes and, click your heels three times.
9/08 Chinas record trade surplus with U.S. adds fuel to trade war fire Reuters
The only way that they can get more dollars to do loan service is to sell us more stuff.
9/09 Japan eyes extra budget, challenging efforts to rein in debt Money Control
There are NO reins on that horse.
9/09 The new fear for stock investors is an emerging-market meltdown Yahoo
It is a little bit late to start worrying about that. The exit will be closed pretty soon.
"That companies would be scrambling to repurchase their stock last month was not lost on one particular group of investors: the corporate insiders of the companies buying back their own stocks.
According to data compiled by TrimTabs, insider selling reached $450 million daily in August, the highest level this year; on a monthly basis, insiders sold more than $10 billion of their stock, the most of any month this year and near the most on record.
corporate insiders are ramping up share selling as the major U.S. stock market averages are at or near record highs," TrimTabs wrote in a note.
In other words, as insiders and management teams authorized record buybacks, the same insiders and management teams were some of the biggest sellers into this very bid, which one would say is a rather risk-free way of dumping their stock"
John Hussman once again shows excellent data to predict a 50-60-70% decline in the stock market. The data is great. I can't take issue with it. Armstrong shows sovereign debt completely collapsing. So, a 50% collapse of equities is a better deal than a 100% collapse of sovereign debt. Not only that, corporate bonds are looking TERRIBLE. There is a shift out of emerging markets. The money has to go somewhere.
The banks made a killing before and after the 2008 collapse. They were in NO way motivated to reform. There was even more regulatory capture. Not surprisingly, this has set the system for an even bigger collapse.
"Securities ended Q3 2008 at $8.070 TN, having about doubled from year 2000. The government agencies were integral to the mortgage finance Bubble - fundamental to liquidity excess,"
"$7.544 TN during Q1 2012. Since then, with crisis memories fading and new priorities appearing, GSE Securities expanded $1.341 TN to a record $8.874 TN. Of that growth, $970 billion has come during the past three years, as financial markets boomed and the economy gathered momentum. A lesson not learned."
"But overall global debt has surged: last year it was 217% of gross domestic product, nearly 40 percentage points higher - not lower - than 2007."
"The big beasts are even bigger: at the last count America's top five banks controlled 47% of banking assets, compared with 44% in 2007, and the top 1% of mutual funds have 45% of assets."
"Regulators pledged to clamp down. So did the shadow banks shrink? Not quite: a conservative definition of the shadow bank sector suggests that it is now $45tn in size, controlling 13% of the world's financial assets, up from $28tn in 2010"
"I've never viewed the 2008 fiasco as a "failure of the free markets." It was instead an abject failure of policymaking - of government policy and central bank doctrine and methods."
What do you expect when the parasites run the show?
"The allies wanted to prevent this ever happening again. So, at a meeting at the Bretton Woods resort in New Hampshire in 1944, they negotiated the details of an economic architecture that would in perpetuity stop uncontrolled money flows."
Feces-for-brains ignore the real problem. It is NOT uncontrolled money flows. It is uncontrolled money creation. THAT was the whole idea behind Bretton Woods.
9/09 Trump administration discussed coup plans with rebel Venezuelan officers NYT
America will be in there sooner or later.
Obama's Friday Attacks on Trump Were Purposeful He Knows He Will Soon Be Exposed in Spygate
9/08 Obama breaks his long silence and finally condemns Trumpism Rolling Stones
Secret Grand Jury Proceedings Underway Against Andrew McCabe; Witnesses Summoned
The entertainment looks to be improving.
U.S. GOV has cut way back on tax collection to give the economy a temporary boost. This has cut way back on FED GOV income.
"The U.S. Government paid $40.5 billion in interest expense this July versus $28.7 billion for the same month last year. "
"Total U.S. interest expense in 2017 was $458 billion while the amount paid this year is $455 billion and we still have two months remaining."
Wait til Powell really gets the bit in his teeth.
The spread of monetary sepsis
The Central banks printed up an extra $250 trillion to temporarily rescue their member banks AND, all the various things that were considered to be stores of value (except gold). The problem came up that; how could all this wet-ink money be invested at a profitable rate of interest?
ZIRP had been instituted so that the State could carry the public debt burden more easily. The extra $250 T created extra price inflation that wore down the returned interest on all investments. You had to get a few % interest just to preserve the value of your principle.
This pushed a lot of liquidity into risky asset classes like junk bonds and emerging markets. Pension funds were especially fried because they had bought safe U. S. government debt. Some pension funds bought riskier public debt in EMs. The currency crash in places like Turkey has come back here to haunt / wreck domestic pension funds.
#1 Forbes: Disaster Is Inevitable When Americas Stock Market Bubble Bursts...
This is a long article of doom-porn from many well known writers. BUT, the crash of the stock market has been imminent for years.
EVERYBODY who is anybody reads Martin Armstrong. Uncle Sam is cutting his income and increasing his debt. Armstrong predicts that it will all crash down (public debt). No matter how high the stock market goes, it's crash will be less than the bond market. Making crash predictions based on valuation is risky when there are $trillions of capital flight.
The Chinese mistrust "flying money" (paper). They much prefer tangible things like property. The good thing about gold is; it just sits there for eternity. Houses do not do that.
China is building 20 million apartment flats a year. It needs about 6 to 8 to cover both urban migration and depreciation of existing stock. So 60% of that 25% is simply being built for speculative purposes, for investment purposes. And thats 15% of Chinas GDP of $12 trillion. Put another way, its about $2 trillion. That $2 trillion is 3% of global GDP.
It [Chinese residential real estate] is the single most important asset class in the world.
" The heart of the Chinese model is malinvestment. Its about building up non-performing loans and figuring out what to do with them.
Chinese leaders know that their country suffers from massive over-investment in construction and manufacturing, [and] that its real-estate market is a bubble that makes the Dutch tulip frenzy look restrained. Chinese debt is the foundation of the system.
Remember that, at one time, China was printing more that the FED, ECB and BOJ combined. The Western CBs are slowing down, forcing China (PBOC) to speed up. There is huge capital flight from China and, Uncle Sam is attracting a lot of capital to these shores.
"Corporate and consumer debt, which has accumulated over the last decade far beyond its capacity to be repaid, will go bad all at once. Then, as layoffs rise, consumer confidence the last fortification against a recession will roll over in short order."
The Chinese have abandoned thriftiness, "grew nearly 40 per cent last year to Rmb6.8tn, according to the Chinese investment bank CICC. Consumer loans pushed household borrowing to Rmb33tn by the end of 2017, equivalent of 40 per cent of gross domestic product."
As much as the macro stuff has intrigued me whats so interesting about China is the lower down you get, the more micro you get, the worse it looks, in that the companies dont seem to be profitable, the accounting is a joke.
"When the debt spigot turns off, it means the only safe assets are cash and precious metals. When the sparks fly, its hard to tell where they might land. And it means that whichever market has the highest debt and the fastest credit growth will be the most important asset class in the world.
Employment from the BS,,, Collapse of socialism
Notes on employment. Here is an article with tons of graphs.
"It currently takes 31 days to fill a vacant job, up from 23 days in 2006
Businesses are very worried about tight labor market
Almost 7mn job openings at the moment; was 2mn in 2009
In 2010 there were 7 unemployed workers per job opening. Now its at 1
Labor market slack declining across different measures
Unemployment duration still trending lower, we have reached full employment"
"Labor force participation rate marginally down to 62.7% in August
Fall in people not in the labor force who want a job"
Aug 2018
Total not in the labor force (in thousands) 94,494 96,157
Do not want a job now(1) 88,641 90,622
So, it is very difficult to find workers and, there are 90 million who do not want a job.
Just imagine what would happen if we had universal basic income.
9/10 40% of Americans struggle to pay for at least one basic need like food or rent MW
The graphs point out lots of wage increases. I call BS.
You have to get 1/2 way through this article before it makes relevant sense.
"Central banks dont care about Value. Central banks dont care about Trend or Quality or anything else that rewards good investments and punishes bad investments. No, all they care about is lifting the price of ALL financial assets, which means lets be real here if central banks have a bias on Quality, their bias is to protect low quality companies. Particularly European low quality banks."
"Every policy decision made by China and Europe and Japan and the US in the wake of the Great Financial Crisis was made with a singular goal in mind to prop up and inflate financial asset prices. Originally, it was to keep the status quo financial system from imploding. But soon after and still now it was to keep the status quo political system from imploding."
"For 46 years, from 1951 to 1997, we were no more and no less rich than our economy grew. "
"For the past 20 years, however, we have had a series of wealth bubbles first the Dot-Com bubble, then the Housing Bubble, and today the Financial Asset Bubble that have made us (temporarily) richer than our economy grows.
And yes, thats what a bubble IS its when youre richer than your economy grows."
"Rock-bottom wealth ownership by the very rich coincided roughly with the Jimmy Carter administration, and its been a nice ride for the 1/10th of 1% ever since Ronald Reagan came to the White House."
"What Im saying is that wealth inequality in 2018 is greater than it has been in 3+ generations. Im saying this is a fact. Im saying that wealth inequality has been exacerbated by the inflation of financial asset prices. Im saying that if you dont think this is a problem for political fragmentation "
"This brief article will explain why the worlds banking system is unsound, and what differentiates a sound from an unsound bank. I suspect not one person in 1,000 actually understands the difference. As a result, the worlds economy is now based upon unsound banks dealing in unsound currencies. "
World trade is starting to seize up. That weakens both currencies and bonds.
"Goldman estimates that the fading credit impulse and associated debt service costs will shave goods consumption growth by a whopping 3% in 2H 2018, resulting some time in late 2018 and early 2019 in the most negative print since the financial crisis. This, as shown in the chart below, would lead to the fastest slowdown in Chinese consumption this decade."
Yep, just one more facet of the credit collapse.
"tariffs could trigger a domestic slowdown in shipping that would ripple through the transportation industry."
Just part of the slowdown.
"Contrary to those continually predicting a stock market bubble and crash over the past 8-9 years, well-known market forecaster Martin Armstrong has been telling listeners that systemic problems overseas would continue to drive capital into the US, ultimately pushing the Dow and the S&P 500 to much higher levels.
Famous for his long track record of accurate calls, Armstrong predicted on our show in years past that Trump would likely win against Hillary Clinton, that the US dollar would strengthen, and that the Dow could possibly swell to 40,000 before hitting a final peak."
"We caught up with Martin again to get an update on his outlook, including his belief that we are witnessing the global collapse of socialism,"
"For example, constant predictions of a collapse in US stock market, US economy, and US dollar fail to understand that conditions in other countries are actually much worse, Armstrong explained.
Because of this very fact, capital continues to concentrate intoand not awayfrom the US in times of crisis."
"biggest predictions Armstrong has been making for years is that we are witnessing the collapse of socialism on a global scale, particularly in Europe, "
"Ultimately, entitlements and pension promises are falling apart, Armstrong, an avid historian, stated (see Pension Crisis on the Horizon for more info on this"
"Right now, the amount of money in government bonds and debt is distributed at a ten-to-one ratio against equities,"
"The United States is the only game in town, said Armstrong. There is ultimately no safe place for large investors to park money to ensure a return of principle, Armstrong stated, other than the dollar and US-related assets. As a result, a massive amount of capital is flowing into the US right now."
Originally, social security was created to support widows and orphans. It supported people over 65 y.o. back when average life expectancy was 58.
What started out as a good idea was a misunderstanding of human nature.
Capitalism Encourages More Personal Responsibility - WSJ
Socialism discourages personal responsibility.
History shows that socialism brings misery to nations that adopt it ...
You really can't argue with this conclusion. All government is socialist because the State is a non-producer. If we take Armstrong's claim at face value, what happens to the people who currently depend on the state. How many people were born just because their parent(s) knew that the State would support them?
How Socialism Destroyed the Family Structure | Armstrong Economics
5 Ways Socialism Destroys Societies - Townhall
Black Jobs Matter: How Socialism Has Destroyed Black Communities
Why socialism always fails - AEI - American Enterprise Institute
Socialism at war with marriage, family - Washington Times
What Has Government Done to Our Families? | Mises Institute
Socialism and the State have destroyed the family structure for a great number of people. A large part of our population is so insecure that they blindly follow anything or anybody. Witness the recent resurgence of the flat earth "phenomenon." Don't forget Niburu.
The State promised to be our benefactor and our "security blanket" That job has gotten far too expensive. The collapse of socialism will leave many millions of people cast adrift. Moral relativism will give millions of lefties the justification to grab anything that you have.
'Morality test' on topics like incest and puppy-killing judged 'not OK' by students' parents
The pension crisis is bigger than the world's 20 largest economies
This will be the biggest facet of the collapse of socialism.
Plant a garden for your granny. BlS
BS from the BLS,,, technostructure,,,
This is a repost of 40 charts showing that employment in America is doing great.
Paul Craig Roberts throws a barrel of cold water on the BS reports.
"The great mystery is how these jobs can possibly have been created when the Bureau of Labor Statistics Household Data (Table A) https://www.bls.gov/news.release/empsit.a.htm reports that the civilian labor force declined by 469,000 in August from the level in the previous month (July); that employment declined by 423,000 in August from the previous month; and that 692,000 Americans dropped out of the labor force in August. Year over year (August 2017-August 2018) 1,531,000 Americans have left the labor force. This is inconsistent with a booming economy at full employment."
Did GOV LIE ?
The economy is SO strong that the FED needs to raise rates to cool it off.
9/10 Stronger U.S. economy may warrant restrictive rates, says Feds Rosengren Reuters
Raising rates wipes out U.S. corporate debt,,,, wipes out RE sales,,, increases the debt-service cost to FED GOV,,,, it can also massacre interest rate swaps in the derivatives market. So FED GOV blatantly lies about employment to raise rates and attract foreign capital inflows. This crashes down Europe, China, et al. It's called beggar thy neighbor.
Yanis Varoufakis has an excellent article that is pretty hard to understand in it's entirety..
"In summary, what had happened, globally, was that imbalanced dollar-denominated financial flows, which had initially grown on the back of the US trade deficit, succeeded in de-coupling themselves from the underlying economic values and trade volumes. "
They only succeeded in decoupling because of regulatory capture.
"From that moment onwards, politicians went into overdrive to shift the losses from those who created them (the bankers) onto the shoulders of the innocent (middle class debtors, waged labourers, the unemployed, those on disability payments and the taxpayers who could not afford to set up off-shore accounting units). In Europe, in particular, one proud nation was turned against another by political elites determined to disguise: (A) a crisis caused by an alliance of Northern and Southern bankers and other rent-seeking oligarchs, into (B) a clash caused by the profligate Southerners and ant-like Northerners or as as crisis of over-generous German, Greek, Italian etc. social welfare systems."
"Back in 1967, John Kenneth Galbraith described how capitalism had shifted from a market society to a hierarchical system owned by a cartel of corporations: the Technostructure, as he called it. Run by a global elite that usurped markets, fixed prices and controlled demand, the Technostructure replaced the New Deals full employment objective with that of GDP growth."
Ah, without full employment, you can't control demand in the long run.
"In the end, this financialised Technostucture was brought to its knees by the weight of its hubris. Thats what the Crash of 2008 was all about. Two powers proceeded to save the financialised Technostructure from itself: The US government, and in particular the trillions of dollars that the Federal Reserve pumped into European private and central banks (through what is known in the trade as swap lines)."
"Based on the toxic fantasy of apolitical macroeconomic management, the Technostructure is, to this day, shrouding in techno-bubble the undeclared class war with which the establishment has been shifting all the risks and all the losses onto the weak, instructing them to suffer what they must,"
"And so, here we are: At our generations 1930 moment. Soon after the Crash and with a fascist moment upon us. The pressing question facing this generation is a harsh one that, while no young person deserves to face, none of us have the right to evade: When and how will we rise up against the Nationalist International bred across the West by the Technostructures inane handling of its inevitable crisis?"
Varoufakis leans towards socialism in his writings. For all his brilliance, he is blind to the corrosive effects of socialism on the body politic.
9/10 Emerging markets increasingly locked out from access to capital ZH You can thank Powell for that. China in particular has a desperate need for capital to service it's enormous bubble. This will bring about bubble deflation.
Blockchain, YES... Crypto, NO!
9/10 Crypto-mania collapse update: $638 billion gone WolfStreet
Former Chief Economist of IMF Wants the Fed to Buy Stocks
If you read the CAFR 1 website, the GOV informs you that they own $trillions in stocks. CAFR1 Home Page
The bankers set up investment vehicles and draw in investors with money.
The bankers use regulatory capture to get changes to the law.
The bankers spring the trap on the investors and clean them out.
The investors get cleaned out by a market crash that nobody could have predicted.
The laws protect the bankers.
Taxes and inflation to keep it ALL going
I'm trying to find my way across untrodden ground,,, untrodden, at least for me.
I must start with some notes from J.M. Keynes.
In 1930, economist John Keynes predicted we'd only work 15 hours a week
On a recent episode of Planet Money, hosts Robert Smith and David Kestenbaum discussed why Keynes was so far off-base and what really motivates us to work so much.
"thank heavens Keynes was wrong about the strength of human devotion to work. There is so much to learn and produce and improve that we should not spend more than a dribble of time living as if we were in Eden."
How Keynes vision of the future could soon be forced upon us, but probably wont be we just love work too much.
He thought that by 2030 wed have 8 times the standard of living as in the 1930s, and wed be able to fulfil our wants and needs with a mere 15 hours of work per week
There is no"devotion to work". About 75% hate their job. We work to survive.
Walter Burien uses mandated financial reports from every government agency to show that they cumulatively hold a couple hundred $ trillion that they have squeezed out of us in the way of taxes, fines and fees.
CAFR1 Home Page
Jack Ma made the claim that U.S. GOV debt is about equal to what we spent on wars.
Paul Craig Roberts, "I have explained that the leftwing lost its bearings when the Soviet Union collapsed and socialism gave way to neoliberal privatizations. The moral fury of the leftwing movement had to go somewhere, "
"The purpose of Russiagate is to prevent President Trump from normalizing relations with Russia. In these times when so many Americans are hard pressed, normal relations could adversely impact the budget and power of the military/security complex by reducing the Russian threat. If there is no real Russian threat, only an orchestrated perceived one, the question arises: why does the military/security complex have a taxpayer-supported annual budget of $1,000 billion dollars? "
Why indeed?
Roughly, 37,000 public agencies have roughly $233 trillion stashed away. For example the University of California system reports that it holds $90.1 billion in investments AND has many millions in income from various licenses and patents. BUT, free education is a radically expensive pipe dream.
Burien also claims that GOV has no need to tax. So, GOV squeezes out taxes. GOV spends $trillions on wars. Part of the $trillions circulates in the economy. Much of the wealth created is dedicated to warfare where it will be destroyed.
Shumpeter wrote about the "broken window" theory. If we go around breaking windows, this will stimulate the economy by necessitating repairs. This is also covered in the idea of "creative destruction'. We build things to keep people employed and then, we destroy these things to employ the people once again.
As war gets FAR more dangerous, it isn't safe to have hot wars. We have cold wars where we do the SAME military buildup but, the hardware is abandoned, rather than blow up.
What Paul Craig Roberts is missing is this; a cessation of warfare would change the entire economic picture. The fruits of industrial production would accumulate in the general economy, NOT be blown up. We would get closer to Keynes' nirvana where we didn't need to work more than 15 hours a week.
Remember that the lower loop of the economy is where all the productivity happens. IF we could meet our needs with just 15 hrs. of labor, where would the upper loop of the economy get it's wealth?
A cessation of creative destruction would result in FAR less production to be taxed and stolen by monetary inflation.
If Trump, Xi and Putin should show that there was no particular need to have a perpetual arms race, this would greatly reduce overall economic activity.
Moving on. Historically, it was absolutely anathema to tax a man on his labor. Not today. The working man is squeezed from every side to keep him working. The FED GOV doesn't need the tax money. The State can NOT afford to let the tax donkey take an extended rest.
This whole paradigm is changing. 96.2 million Americans of working age are NOT in the labor force. Productivity has not suffered.
"There is so much to learn and produce and improve that voluntarily we just wont ever give up working."
"But what if we have to?
As automation takes hold, were on the cusp of a revolution in how we work and specifically, how much work there is to go around.
As a January 2016 Oxford University study boldly states, 47% of US jobs could be lost to automation, along with 69% of jobs in India, and 77% in China, with similarly devastating job loses occurring in most countries (an average of 57% worldwide)."
"Soon, without the creation of new, uniquely human forms of work, there simply wont be enough jobs to go around.
So what happens when what we currently think of as work disappears, given that we love work too much to give it up?"
"If automation presents the challenge of our time, then the solution is simple: we have to radically re-think what work is in order to survive."
There is (and will continue to be) a huge disparity between the jobs that emerge, and the skills of existing job-seekers. Across Europe and America were seeing that trend emerge."
There are now more job openings than workers to fill them - CNN Money https://money.cnn
The article is upbeat about us figuring a way out of this problem. Previously. machines had replaced man's arms. Now, machine are replacing his brain. I do not see any answer that is compatible with human nature.
As far as support for all these displaced workers, there are only a couple of possibilities. Universal basic income or a Tobin tax. Both of these are heavily resisted by the corporatocracy. sadly, both of these are incompatible with human nature.
A great number of the PTB have seen this coming for a long time. THAT is why we see such a widespread push towards socialism.
Socialism too is incompatible with human nature as far as maintaining a viable economy.
The State has maintained productivity in the working class by constantly reducing our effective wages with taxes and currency / price inflation. The end effect was; the corporatocracy increased automation and, we reduced our reproduction rate. The looming default cascade will not settle the problem of the falling birth rate and increasing automation. It will not change human nature to be more robot like and, work without motivation.
Even a robot tax will not solve the problem.
Last edited by Danny B; 09-12-2018 at 10:59 PM. Reason: mistook
Rolling out the blockchain to enforce morality
Probably the biggest problem today is that far too much of the economy is run by organized crime. The swamp is a loosely organised group of people, both elected and appointed and self-promoted. Morality is an easily ignored stumbling block. Douglas MacArthur said that without morality, it all comes tumbling down.
Since so much of the world is controlled by the corporate mentality, there is no chance of morality making a reappearance.
We're slowly moving into a post-colonial world. The war-mongers don't want to let go of control.
How can the world institute accountability as an acceptable substitute for morality?
The Bretton Woods agreement was a wonderful arrangement to prevent a State from hyper-inflating their bond market to finance a war. It failed because it depended on the honesty and morality of politicians.
Gold previously served the role of limiting expansion of the bond market as a prelude to starting a war. The war-mongers will never willingly let gold make a reappearance. The East has it in mind to do exactly this. They must tame the bond-inflators.
Various States regularly cheated on bonds and went off the gold standard when they were in the runup to war. The only way to prevent this is to institute instant accountability. This is where the blockchain comes in. I believe that the blockchain can bring accountability to all finance. That is what the East is concentrating on.
How Beijing is building a blockchain empire | Asia Times
Future-facing South Korea moves to full blockchain adoption | Asia Times
Reading everybody including Jim Willie and FOFOA, et al, et al, one gets the idea that gold is an un-stoppable idea.
OBVIOUSLY, there will be no gold-backed currencies. Gold can no longer serve that purpose. The gold needs to quietly come to rest in the bond market.
The blockchain is like "double entry book keeping" It is just too useful to ignore. It ferrets out corruption. I'm sure that the Italians will be the last to adopt.
The private markets are STRICT about efficiency. Eventually, the accountability demanded by private entities will be demanded in public entities.
The more corrupt the institution, the more that they will resist the transparency of the blockchain.
This is where the collapse of fracking comes in. We managed to fake it when we hit peak-cheap-oil. No longer. The R.O.W. wants to end our military adventurism. If we want oil, we will have to have accountability. The Pacific Northwest already depends on Russian oil. I believe that Trump is trying to lay the groundwork so that we don't have a huge interruption is petroleum deliveries.
LOVE those tax cuts;
"The federal deficit hit $895 billion in the first 11 months of fiscal 2018, an increase of $222 billion, or 32 percent, over the same period the previous year,"
"revenue only rose 1 percent, failing to keep up with a 7 percent surge in spending" "Revenue from individual and payroll taxes was up some $105 billion, or 4 percent, while corporate taxes fell $71 billion, or 30 percent."
"The finance industry runs almost entirely on Other Peoples Money (OPM). That creates an immediate problem. The finance industry likes to present itself as a steward of OPM, from institutional investors to individuals. Instead, it more often cares about getting as big a chunk of that OPM as it can"
"That incentivises the creation of complicated, fee-heavy products. It incentivises the expansion of balance sheets. It incentivises short-term behaviour."
Rahm Emanuel is getting out of Chicago as fast as he can,,, before it blows up.
The Fed has burst the everything bubble Gains Pains
The FED is desperate to raise interest rates that it can lower them later.
9/12 Cryptos 80% crash is now worse than dot-com bust Bloomberg
9/12 How bitcoin will make you big money again Technal Traders
GDP,, France,,, Italy,,sucking in the dollars
GDP is a measurement that was "invented" in the '30s. It is now used as a measurement of all economic activity. The guy who invented GDP claimed that advertising and finance should NOT be included because they produced nothing. When US GOV prints money, that is included in gdp. When it spends this money, it is counted a second time. The French government spends about 57% of the gdp. How is that possible?
Many European States were serial defaulters because they over-printed their currency. Along came the boneheads with the idea of a common currency for all European States. The feces-for-brains world improvers blocked European States from printing currencies. They did NOT block them from selling unlimited bonds.
"EU rules says that member states' debt should not exceed 60 percent of gdp"
"France is also the only country in the eurozone whose debt to GDP ratio will rise over the next two years to 96.9 per cent"
Now you know where France got the money to give a free ride to all those "migrants'
"France recorded a government debt equivalent to 97 percent of the country's Gross Domestic Product in 2017. Government Debt to GDP in France averaged 57.16 percent from 1980 until 2017, reaching an all time high of 97 percent in 2017"
Socialism is EXPENSIVE.
That brings us to Italy.
"Nick Giambruno: We had a European sovereign debt crisis, focused on Greece, a couple of years back. That sent shockwaves through global financial markets.
But Italy is not Greece. Greece is a marginal economy. Its annual GDP is $200 billion. Italy has the ninth-largest economy in the world, with an annual GDP of about $2 trillion.
Even more important, the value of Italian debt dwarfs Greeces debt pile. Italian governments have run up the equivalent of about $2.6 trillion in debtor about 130% of Italian GDP."
"Nick Giambruno: Thats the point. Italys new government wants to leave the euro so it can finance its budget by going back to the old Italian currency, the lira, and printing money.
Thats how its going to pay for its universal basic income and its extravagant pensions. "
"Nick Giambruno: Italys new government is on a collision course with the powers that be in the EU. Its spending plans are completely at odds with the EUs rules on deficits. And its already called on the European Central Bank [ECB] to forgive 250 billion in Italian debt. The ECB owns 341 billion worth of Italian bonds,"
"It knows a blowup of Italys $2.6 trillion debt pile would make the fallout from the Lehman Brothers collapse look like a picnic. And folks in Brussels understand all too well that this would be a mortal blow to the EU.
The EU has a choice to make. It can accept Italys demands and create a moral hazard that will eventually unravel the euro and the EU or it can reject them, at which point Italys government will have no choice but to leave the euro. "
"Nick Giambruno: Italys debt-to-GDP ratio stands at over 130%. But GDP isnt a worthwhile measureespecially in Italys case.
Government spendingno matter how wasteful or counterproductiveis counted as a positive in the calculation of GDP. And trust me, Italian government spending is not having a positive impact on the productive part of its economy."
"If you want a more honest reflection of the indebtedness of the Italian economy, strip out government spending. It accounts for about half of Italys GDP. Do that, and Italys debt-to-GDP ratio doubles. Its really 260%, not 130%."
" The next big crunch will be when the Italian government unveils its new budget. And its almost certainly going to be at odds with EU spending rules.
So were talking about a crisisthat would dwarf the 2008 global financial crisishappening as soon as later this year. The EU is in an impossible situation. No matter which way it goes, its in trouble. "
So, what is the French debt to GDP if you take out government spending?
"Due to the high dependence of many economies around the globe on the US dollar, the Fed can no longer gear its monetary policy to the needs of the US economy alone. It can no longer ignore the consequences its monetary policy is most likely to have on other economies around the world. While the US economy may well need higher interest rates, many countries will have significant problems coping with US borrowing costs going up."
USAGOLD's NEWS & VIEWS newsletter
THAT is the whole idea and, it isn't an accident.
The U.S. is doing a tax holiday to repatriate overseas funds. Keep in mind that the whole world needs dollars to service dollar-denominated debt.
Some US$2.6 trillion of offshore funds are in the process of taking advantage of a one-off 14% tax holiday.
Repatriation or, sucking the dollars out of the R.O.W.
"The Feds monetary policy would become, more than ever, a bail-out policy for the rest of the world, that is coming to the rescue of foreign borrowers who have overstretched themselves by taking on US dollar debt. Printing great amounts of money and providing it at artificially low interest rates would become the hallmark of the new Fed policy."
USAGOLD's NEWS & VIEWS newsletter
Where do these idiots get the idea that America is going to save the financial world?
"The Bank for International Settlements (BIS) says offshore dollar funding has risen to US$10.7 trillion since the early 2000s, with a further US$14 trillion of global dollar debt hidden in derivatives."
Powell is going to put them up against the wall.
The strong dollar is crashing CBs and economies around the world. China said that they would refuse to take part in a new "Plaza Accord" where the CBs would sell dollars and buy weaker currencies. There is speculation that Trump could declare a national emergency and cheapen the dollar unilaterally. I really don't think that would be successful.
While Italy and France will blow up in 12--18 months, it looks like Turkey will beat them. Erodgan has gone totally nuts. Maybe, he plans to just default anyway.
This will make all the Turkish bonds held by Spanish and Portuguese banks
Edgy investors are retreating from risky economies New York Times
America is the best looking horse in the glue factory.
"In 2018, total high and upper middle income population growth will be +22 million persons or just half of that of the 1988 peak"
"'88 when over 85% of the growth was among the under 65 year old population...in 2018, just 21% of the consumer nations population growth will be among the under 65 year olds,"
So, the potential workforce is crashing. This, at the same time that pensions are shooting up. This is where the rubber meets the road as far as socialism is concerned. Socialism is financed through the bond markets. Social Security is holding non-negotiable U.S. Treasury bonds.
U.S. public debt is slated to crash going in to 2020.
Needless to say, the European States will be crashing first.
9/14 Australias banks may be the big butterfly which triggers next financial storm GC
I'm betting on Italian banks.
9/14 Albert Edwards: Why we are destined to repeat the mistakes of the past ZH
This can be expected every time that the parasites get control of the printing press.
9/14 World is sleepwalking towards another financial crisis, warns Gordon Brown Reuters
9/13 This will be the mother of all Minsky moments John Mauldin
9/13 New trade war shockwave has FAANG companies bracing for impact Birch Gold
9/13 Interactive Brokers defects from Nasdaq to IEX as dominoes start to fall ZH
Forget the dominoes. I want to see heads roll. Starting with politicians.
9/13 Fed fears it may have been too successful at whipping US unemployment CNBC
So, raise the rates even faster.
I'm glad to see Frau Merkel get kicked in the teeth.
9/14 Germany ready to sign migrant return deal with Italy DW
Merkel walks out of parliament as AfD leader slams her migration policies
9/12 In fiery speech, Hungary PM slams EU immigration policy Zero Hedge
Brussels thinks that they are going to fine Hungary. The MEPs are cheering Hungary on.
9/14 Tesla just lost its head of global finance Tech Crunch
He came on board just 3 weeks ago. He took a look at the books and, ran away as fast as possible.
Breaking windows around the world
J. M. Keynes advocated perpetual war as the best means to keep the economy stimulated. Keynes became a celebrity before becoming one of the most respected economists of the century when his eloquent book The Economic Consequences of the Peace
"Keynes wrote it to object to the punitive reparations payments imposed on Germany by the Allied countries after World War I. The amounts demanded by the Allies were so large, he wrote, that a Germany that tried to pay them would stay perpetually poor and, therefore, politically unstable."
Keynes claimed that the Treaty of Versailles sowed the seeds for the next war.
Every country England has invaded
Among this select group of nations are far-off destinations such as Guatemala, Tajikistan and the Marshall Islands, as well some slightly closer to home, such as Luxembourg. The analysis of the histories of the almost 200 countries in the world found only 22 which have never experienced an invasion by the British.
Churchill, World War could have been avoided but, the bankers wanted it.
Winston Churchill: "We will force this war upon Hitler, if he wants it or not." - Winston Churchill (1936 broadcast)
"Germany becomes to powerful. We have to crush it." - Winston Churchill (November 1936 to US-General Robert E. Wood)
"Germany's unforgivable crime before WW2 was its attempt to loosen its economy out of the world trade system and to build up an own exchange system from which the world-finance couldnt profit anymore. ...We butchered the wrong pig." - Winston Churchill, The Second World War
"Hitler and the German people didn't want this war. We didn't answer Hitler's various petitions for peace"
"Neither the French nor the English would have made Poland a motive for war if they hadnt been continuously spurred on by Washington..." US defence minister J. Forrestal 27.12.1945 in his diary
Bankers Extended WWI By Three Years - henrymakow.com
"Keynes' most successful policy initiative, the proposal that Britain and the U.S. finance World War II by taxes rather than by borrowing, came directly out of Schumpeter's 1918 warning of the disastrous consequences of the debt financing of World War I."
Schumpeter advocated the "broken window" policy of stimulating the economy by destroying existing infrastructure.
General Wesley Clark: Wars Were Planned - Seven Countries In Five ...
You see where this is all going. ISIS has gone around wantonly destroying every bit of infrastructure in the Middle East that it comes in contact with. The "secret" is to destroy other people's infrastructure,,, not your own. Washington pushed England and France to attack Germany. The end result was that America got the job of rebuilding Europe with the Marshall plan. General Clark said that we were going to attack seven countries. It is simple. They ALL have oil and, can pay for rebuilding.
This is Shumpeter's creative destruction carried out on an international scale.
This isn't anything new. We let Iraq know that we would turn a blind eye if they attacked Kuwait.
Superpowers unite over Iraqi invasion of Kuwait- archive, 3 August ...
Aug 3, 2018 - Superpowers unite over Iraqi invasion of Kuwait
Feb 22, 1991 - It is a job that eventually could cost as much as $100 billion, and Kuwait has promised the contracts to countries that are supporting the war ...
We got a Central bank in 1913, and, shortly thereafter, we got a world war. This is a very convenient way to enslave the State to the bankers. This eventually brought regulatory capture where the State had to do the bidding of the bankers if it wanted to avoid bankruptcy. The tables have turned somewhat. In the runup to WW II, FED GOV demanded that the FED buy GOV bonds to support the war. This hasn't stopped. The FED is now locked in to buying government debt. The wars are a waste of money but, they keep the bankers happy AND, people working.
China wanted to get all it's people working too so, they industrialized. The end result was that China exported unemployment.
The massive currency inflation brought on by the inception of the FED in 1913 had crashed the economy by the 20s.
Roosevelt felt that a war would drag America up out of the Great Depression One. Keep in mind that the '29 crash was not all that bad. When the Rothschild bank, Credit Anstalt crashed in 1931, that is when the banking crash really got going.
Roosevelt blockaded Japan (and act of war) and then, acted surprised when they attacked Pearl harbor. Admiral Kimmel of Pearl Harbor testified to congress that military intelligence knew 2 weeks ahead of time when / where the attack would come. Roosevelt was more concerned about getting the economy going than he was about many millions of dead Americans. The New York bankers pushed Roosevelt into war. Just as the London bankers pushed England into war.
When presidents lie to make a war | DD Guttenplan | Opinion | The ...
Aug 2, 2014 - Fifty years on we know the trigger for war with Vietnam was a fiction. ... secrets, is that the attack on 4 August may never actually have happened.
The Gulf of Tonkin incident never happened but, it was a good excuse to get the war industries running at full capacity.
This kind of provocation now happens on a regular basis with things like weapons of mass destruction.
The current "La Guerre du jour" is an attempt to destroy Syria. They have LOTS of money for rebuilding. Will Trump resist the temptation to go to war to stimulate the economy?
Trump's Choice - WW3 Or Saving Face In Syria
Ex-US Intel Officers Warn Trump Over Syria Attack 'Don't Be Surprised Russians Fire Their Missiles'
The bankers are doing their best to hold Trump's feet to the fire to get a war going. The swamp is gearing up for war.
"As a reminder, just yesterday we reported that the US fiscal deficit has resumed its surge, rising 40% Y/Y to $898BN for the first 11 months of the year, following the biggest monthly outlay by the US government in history."
" with a recession in 2020 (or sooner) now inevitable, the question then being just how and where will the US government find the room to add on the trillions in extra debt needed to bootstrap the economy out of what is likely to be the most severe contraction in decades,"
GREAT graph, https://www.zerohedge.com/sites/defa...forecast_2.jpg
"if the current or future administration will eventually "grow into" the contextual situation that Goldman laid out as justifying the current fiscal outlier state of the US economy, namely entry into war."
The chosenites, neocons and Sauds are all frothing at the mouth because Trump only threatens to attack Syria. He is trying to break the cycle of war. War is justified as an economic stimulus. Is there an alternative?
Japan tried to stimulate it's home economy with infrastructure spending. At one point, Japan was pouring more cement than all the rest of the world combined. It didn't seem to help.
What must the world do differently to avoid using warfare as the only stimulus? China used massive infrastructure spending to get their economy going. That is now crashing because of huge debt loads combined with a falling population.
The stimulus is used for the most part to cure unemployment. U.S. GOV now spends about 32% of the GDP. (Armstrong). What happens to employment when the federal bond market collapses? 51% receive a check from GOV. 44 million receive direct assistance. In it's attempt to fight unemployment, the State may very well have met its match,,, the silicon chip.
America was a high-wage... high-cost State. As aggregate wages sank down, Americans could no longer support the things that were considered as a store-of-value by the middle class. Greenspan jumped in with price support for real estate. Bernanke and Yellen jumped in with price support for all asset classes. Keep in mind that money-printing hasn't fixed anything. It artificially supports prices. Just the same, this is the only plan that the CBs know.
FED GOV is spending money like crazy. https://theantimedia.com/government-...llion-deficit/
America is considered the least-worse place as a destination for fleeing capital. How much longer will this be true?
Starting next year, debt service to the bankers will surpass the cost of the defense department. The cure for the expense of debt service has long been known.
The bankers claim that the State can't possibly create the money supply because they will print so much that terrible inflation will result. Just another fairy tale.
10 years after the inception of the crash
10 years on from the 2008 crash, everybody is looking back to examine what happened.
In 1908, the bankers precipitated a panic that was later used as a justification for creating the Central bank in 1913. Since then, we have had a succession of crashes. The history of modern crashes should begin with the dotcom crash. Great gobs of money were thrown at anything that had to do with computers. The 2001 crash resulted. This sowed the seeds for following crashes.
In 2004, units from both the SEC and FBI warned of a RE bubble. Both units were disbanded. The sheep had to be shorn and, the show had to go on. The shearer was to be the banks. Banks take a financial risk when they loan money. This brings financial prudence to the loan originators. With securitization, the loan is immediately resold to an investor. All financial prudence went out the window. The loans were rated AAA and, the investor was sucked in. The banks generated fees whether the loan was good or bad. The banks were actually motivated to make loans to the more numerous deadbeats.
"Oct 20, 2009 - As head of the Commodity Futures Trading Commission [CFTC], Brooksley Born became alarmed by the lack of oversight of the secretive, multitrillion-dollar over-the-counter derivatives market."
Everyone from Born to Buffet warned about derivatives but, few people listened. It was just a matter of time.
Here is an article about 4 prominent people who tried very hard to sound the alarm to the financial world. It is well worth the time to read the whole article.
The bankers had a great degree of control over the various regulatory bodies like the FED, SEC and CFTC. Here is a list of the lessons to be learned.
The State needed to inflate the money supply to make up for the liquidity that had vanished in the crashes. How could they do that when all money was debt? Simple, they created more debt to re-inflate the economy. All this debt carried an interest cost. The interest cost is eating into everything. It takes a LOT of productivity to service a debt of $250 trillion. BUT, productivity is falling. More printing is the only thing available to do debt service.
The State forced ZIRP as a means to lift the load of debt service on State debt. ZIRP severely distorted everything else. It was particularly bad for pensions. The State reduced it's carry costs for sovereign debt but increased it's effective costs for pensions. Powell has reversed this. He has made the carry costs for sovereign debt go up. He is attracting fleeing capital but, he is only buying a bit more time.
FED GOV debt is increasing massively. How long before investors get scared away? How long before they flee to gold?
"Capitalism as we know it is over. So suggests a new report commissioned by a group of scientists appointed by the UN secretary general. Conventional capitalist economic thinking can no longer explain, predict or solve the workings of the global economy in this new age.
Conventional economic models, the Finnish scientists note, almost completely disregard the energetic and material dimensions of the economy.
Tug-o-war between bankers and producers
Here is a longish article recounting the travails pictured in Steinbeck's book," The Grapes of Wrath". The author compares that period of time with what we have today.
"As long as you can have endless growth, the system of money we have in place today is perfectly fine. But if you can't, then once growth peters out, the entire system crashes into nothingness. Theres no in-between territory.
We could choose to have a different monetary system. We could embrace a 'sound money' system, where money can't be conjured out of thin air, at no cost, the way it is today"
Repost, https://www.peakprosperity.com/blog/114369/bad-money
Armstrong says that we see today is a collapse of socialism. The thin-air money has kept legions of non-producers from starving. It has nurtured millions of babies that have no future job niche. It supports many millions of retired people who are unable to work.
Socialism is a system that distributes the fruits of labor to everyone, including the poor non-producers.
Capitalism purportedly distributes the fruits of labor to the people who produced the wealth. Using the intermediary of un-sound money, this wealth is handed over to the non-producers who are rich enough to buy favorable legislation.
The poor vote to try to get enough of the wealth that they have produced. The rich take a shortcut and just buy politicians.
The well-off rent out their excess wealth that they have earned, to gain profit. The rich rent out their money that they got for free to gain profit.
The Central Bank is the enabler of this arrangement. Wealth and capital is something that you earn or create.
The sins of crony capitalism are laid at the feet of honest capitalism.
The banking fraternity may claim that they are staunch capitalists but, they actually produce nothing.
Ten years after the crash, weve learned nothing Matt Taibbi, Rolling Stone
The bankers only have one game. They don't plan on doing anything that is actually productive.
9/16 Next financial crash imminent; Chinas resource crisis could be the trigger Medium
9/16 A boom commodities boom for the ages starts now Casey
Doug Casey is the master of bad timing.
Here is a claim that $30 trillion in notional value will just evaporate. I expect that to be a very low number.
"Geithner found mechanisms, all of them very technicaland well-reported in Adam Toozes new book Crashedto throw unlimited amounts of credit at institutions controlled by financial executives in the United States and Europe. (Eric Holder, meanwhile, also de facto granted legal amnesty to executives for possible securities fraud associated with the crisis.)
Second, Geithner chose to deny money and credit to the middle class in the midst of a foreclosure crisis. The Obama administration supported this by neutering laws against illegal foreclosures."
Economic weak points at risk
The Central Banks tried to rescue with the printing press that which could no longer be supported with productivity and consumption. They were doomed to failure but, they managed to extend and pretend for an extra 10 years. I already posted writings from 4 people who clearly saw the crash coming. Something that Central Bankers claim is impossible. Even the big brains at the Harvard endowment fund got taken to the cleaners. That is what happens when everybody embraces the wrong economic theory.
Just as those 4 made accurate predictions, here are a couple more. Keep in mind that most investment bankers are using other people's money. They are a lot more likely to be reckless.
"The worry that got my attention was echoed by the second billionaire. When two billionaires with their own money invested in their own funds have the same major concern, it is time to take note. These guys are active investors. "
"Their biggest worry is the epic shift of investment flows from active management to passive management.
Having over 40% of all the money in the market being managed by computers gives a huge boost to returns during a bull market. But when the selling starts, computers dont think. Their algorithms will automatically sell and flash crashes will abound. Once fear replaces greed, the wave of computer selling will overwhelm those trying to actively manage their portfolios. Then the record level of margin debt will result in margin calls and a further wave of selling. "
"Its not a matter of if, but when the tsunami of selling will make the 2008 crisis look like a walk in the park. There are numerous other potential triggers which could cause or exacerbate the next financial crisis. Excess leverage always creates catastrophe. When you have $8 trillion of emerging market debt, a rising dollar, rising interest rates, and record low risk premiums, the fuse on the fireworks has already been lit."
"We know the 2008 crisis was primarily driven by the implosion of subprime mortgage debt and derivatives of mass destruction tied to those mortgages"
"What they fail to acknowledge is the immense issuance of subprime auto, credit card, corporate, and student loan debt to borrowers incapable of repaying that debt.
High yield corporate debt has grown from $781 billion in 2010 to $1.3 trillion today. Subprime auto debt has grown from $18 billion in 2010 to $50 billion today. Student loan debt has grown from $800 billion in 2010 to $1.53 trillion "
The CB tries to maintain the value of all debt. When enough people default, it can't be maintained. The banks are made whole again by printing.
"These investing titans were clearly scared at the time, but they chose not to pontificate about how Paulson and Bernanke saved their Wall Street asses while throwing Main Street under the bus. Nine million foreclosures later, with virtually no real wage gains in nine years, money market funds paying .15%, a national debt 122% higher (versus 38% increase in GDP), and global government debt $63 trillion higher (triple 2008 levels), we again stand on the precipice of another crisis created by the Fed, Wall Street, and your benevolent government."
"Near the end of the discussion they were asked what keeps them up at night."
"According to one of the billionaires (he was looking at bug-out real estate in Queensland in 2009), the first potential trigger is Italy. They are the 3rd largest economy in the EU. The debt market has issued a warning, with yields blowing out. Political chaos, massive debt, weakening economy, and animosity towards Brussels over migrants has created a perfect storm. An Italian debt default would trigger a global contagion."
Back in the '90s, Armstrong told the Eurocrats that the EU would blow up because it didn't have a common debt market. They went ahead anyway. It is now a race to the finish line. Who will blow first. Will it be Deutsche bank..... Italian bond markets.... Turkish debt?
just two more rate hikes would put the central bank above the neutral rate - the interest rate that neither stimulates nor holds back the economy
These boneheads seem to believe that there is a perfect / neutral interest rate. They ignore falling population. All that old debt was rescued by creating $247 trillion of new debt. They ignore the fact that the debt bubble has grown enormously.
"This broader overvaluation makes things "considerably more dangerous" for investors, as BCA estimates that the total value of global risk-assets is $400 trillion"
"The takeaway is that any inflationary impulse would - through higher bond yields - undermine the valuation support of global risk-assets that are worth several times the size of the global economy. Thereby, it could unleash a potentially much larger disinflationary impulse. Or stated simply, the higher yields go, the lower they will eventually drop during what Albert Edwards has dubbed the next deflationary "ice age."
"The fake money system a system centered on debt based legal tender and centrally fabricated interest rates produces booms and busts of greater extremes with each progression of the business cycle. This century alone weve experienced two iterations of these boom and bust scenarios. First the dotcom bubble and bust. Then the housing boom and crash."
"On a glorious day, much like today, when everything appears to be unfolding according to plan, all of the suddenly, out on the margins, an emerging market economy will be stricken by a debt crisis and go kaput. Moments later, during much confusion and panic, another two or three more emerging markets will also croak."
" Any and all ideas, ranging from the absurd to the ludicrous, will be put to the acid test so long as they meet two very critical criteria. They must preserve the status quo and further concentrate wealth into the hands of the few."
Honest Work for Dishonest Pay |
"It now appears that Chinas escalation will be even more targeted, and that some Chinese officials involved in advising the leadership are proposing to step up the trade fight a notch by restricting Chinas sales of materials, equipment and other parts key to U.S. manufacturers supply chain."
Here is a graph of world stock markets compared to U.S. stock markets.
This shows the effects of capital flight.
There are always side issues. North Korea is looking at drought and famine.
China has some serious issues also.
Chinas industrialization has also resulted in significant environmental damage, which greatly limits domestic production capacity. Industrial pollution has tainted as many as 13 million tons of crops with heavy metals. It is estimated that almost one-sixth of Chinas land has been affected by soil contamination due to toxic runoff. Water scarcity is also a concern, as the government reported in 2014 that nearly 60 percent of Chinas underground water is polluted and unfit for drinking without treatment. In 2013, widespread contamination of soil, especially in southern areas like Henan province, prompted the government to prohibit the farming of 8 million acres of contaminated agricultural land until it can be rehabilitated. . . . .
"Over the past ten years, Chinas food imports have increased from approximately $6 million in 2005 to $300 million in 2015. Chinas food imports make up 6.7 percent of its total merchandise imports, placing it ahead of the United States (5.7 percent), India (5.6 percent), and Brazil (5.1 percent).
The Noosphere,,, gold & peace
Since it has no value, debt money is easy to create. Commodity money has to actually have a commodity linked to it. At one time, FED GOV required gold reserves to be 40% of the value of paper money. This proved to be very inconvenient to speculators and other non-producers. When paper money was gold convertible, there was really no question of confidence. Un-backed money lives & dies on confidence. A few years ago, the FED quit reporting the most important aspect of the money supply. They said that it was too expensive and, too troublesome. You see BS statistics everywhere. All done in the name of preserving confidence.
Most of you have heard of The Hundredth Monkey.
Some of you may have heard of the Princeton Egg.
The Global Consciousness Project
"When human consciousness becomes coherent, the behavior of random systems may change. Random number generators (RNGs) based on quantum tunneling produce completely unpredictable sequences of zeroes and ones. But when a great event synchronizes the feelings of millions of people, our network of RNGs becomes subtly structured. "
Professor Jamieson got a Nobel prize for proving quantum tunnelling.
In short, we are all connected to a certain degree at the quantum level.
Also, https://blog.nationalgeographic.org/...consciousness/
There are a lot of people who know that the economy is going to crack up. Maintaining confidence is much more difficult. Quantum tunnelling is what allows the whole flock of birds to wheel and turn at once. What has our impending credit collapse done to our national psyche?
Besides this, the constant hate programming from MSM is driving a lot of lefties flat-out crazy. Like most people that I know, I did NOT like obummer. That didn't mean that I was going to go out and physically attack obummer supporters. The lefties are talking revolution and mayhem.
"The left has always been the most violent in politics mainly because they blame others for their own failure. Already we are starting to see a trend where threats are being made against political rallies for the Republicans. Police have had to respond to threats of violence against Republicans but perhaps the most serious threat was targeting the Trump International Hotel in Washington DC. An anonymous threat to pull off a mass shooting there was made on Twitter account that supports the Democratic Socialists and the far-left political group. The Twitter read: I am coming with a gun and I expect to get numerous bloodstained MAGA hats as trophies, Of course, that is the Make America Great Hats."
"I have just never seen such outright hatred for a president of any party as we are witnessing against Trump. I fear the computer is forecasting something important with an unbiased and objective analysis that is unsettling. Trump is the false move or counter-trend against the swamp (corruption) but the trend in motion will revert back and conclude with the destruction of the West as we have known it. It will certainly not be politics, as usual, anymore."
We just can't have a civil war. Where would you draw the battle lines? In India, they demonetized the largest denomination note. It completely paralysed the economy. We can't have widespread martial law. That would paralyse supplies to the cities. The State is trying to maintain confidence while the contagion is spreading at the quantum level.
"Repo 105 was a multiyear scheme by Lehman to defraud the government and its own investors by falsifying the actual amount of loans it had on the books, making Lehman look safer than it actually was.
It worked like this. A few days before the end of the calendar quarter, Lehman would sell billions of dollars worth of loans to another bank. I put sell in quotation marks, because Lehman ALSO had an agreement with these other banks to buy the loans back a few days after the quarter ended for the same price as they were sold, plus enough money to cover whatever the going interest rate was on that cash for the few days it was in Lehmans hands. This is whats called a repurchase agreement, or repo, hence the name Repo 105 (the 105 refers to the 5% over-collateralization that counterparty banks required to lend the cash to Lehman even for a few days they knew Lehman was in trouble)."
"Surely, you say, no law firm would bless this blatant attempt to cook the books? I say, well no US law firm would bless this, so naturally Lehman found a UK firm, Linklaters, to say that this was, in fact, technically a true sale. Even then, to pull this off Lehman had to run Repo 105 through their offshore subsidiaries, not through their US-chartered entities. "
"What about Lehmans auditors, you ask, surely no auditor would go along with this scheme? Again , Lehman found that Ernst & Young would indeed sign off on the program, in exchange, of course, for a sharp increase in fees. "
9/17 Chinas stocks drop to lowest level in nearly four years Bloomberg
Powell is fighting the confidence battle.
Here are some vids from the doomers.
This article starts off with a long rant against Trump. Later on in the article, they have some worthwhile observations on gold. This is from a PDF that is very tedious to copy. You should read it starting at page 4.
With the Gulf of Tonkin incident in late 1964 and the acceleration of the Vietnam war in 1965, US Military spending exploded. This was compounded by President Lyndon B. Johnson's Great Society project spending and not raising taxes.
The ramping up, in early 1968, of the Vietnam War-because of the Tet offensive and President Johnsons agreeing to General Westmorelands proposed troop surge-brought renewed pressure on the dollar.
Since Johnson refused to raise taxes to pay for the social welfare reforms
undertaken earlier and the war in Vietnam, the US was now running massive balance of payment deficits with the world.
Fed chairman William McChesney-Martin said the US would defend the US$35 per oz gold price down to the last ingot.Several planeloads of gold were emergency airlifted from the US to London. Gold demand continued to escalate with the London Gold Pool selling 175 tons one day and the very next day selling an additional 225 tons
"This broke the back of the London Gold Pool. Members were tired of draining their countries gold reserves to pay for the USs Vietnam War and social reform policies."
That was our Bretton Woods credit card.
"Johnson was forced to reverse his decision to send hundreds of thousands more US troops to crush the Vietnamese resistance-instead he opened up peace talks"
There is no clearer link between gold and peace.
More China,,, non-linear unwinding,,, macron=merde
Trump and Powell are attacking most of the world. China in particular is the main target. The collapse is coming and, America intends to be last in line. China loses 15% of it's GDP to pollution.
They have a real debt problem.
"To doomsayers, China's $34 trillion pile of public and private debt is an explosive threat to the global economy. Either way, the buildup has been breathtaking, with borrowing quadrupling in seven years"
"Chinese borrowing rose 14 percent in 2017, ballooning to 266 percent of gross domestic product, from 162 percent in 2008. "
"More than half of Chinas debt is held by state and private corporations.) , former central bank governor Zhou Xiaochuan warned in late 2017 of a buildup of financial risks that are hidden, complex, sudden, contagious and hazardous.
9/17 Chinas stocks drop to lowest level in nearly four years Bloomberg
9/17 China wont just play defense in a trade war with the US CNBC
9/18 Trump unwisely escalates trade war: expect a rare earth response from China Mish
Buy your Neo magnets now before the price increase.
Here is a good article comparing linear and non-linear dynamics.
"The linear stage of maturity is followed by a decline phase thats non-linear.Linear means one unit of input yields one unit of output. Non-linear means one unit of input yields 100 unit of output."
"The previous two bubbles that topped/popped in 2000-01 and 2008-09 both exhibited non-linear dynamics that scared the bejabbers out of the central bank/state authorities accustomed to linear systems."
"Adam Tooze is an attempt to autopsy the meltdown and investigate the mindset and assumptions that led to the panicky bailouts and frantic goosing of a third credit/asset bubble the bubble which is about to pop with even greater non-linear effects.
This is the nature of non-linear dynamics: everything is tightly tied to everything else. Tightly bound/connected systems are hyper-coherent, i.e. every component is tightly bound/correlated to other components."
"The vast imbalances created by 10 years of unceasing goosing will unleash a non-linear avalanche of reversions to the mean and rapid unwinding of extremes."
Who knows what will set it off? You can be assured that the contagion will travel around the globe in less than a day. In the original bailout, the U.S. Treasury mandated that all the banks take the money. Nobody knew if a bank was solvent or not,,, lying or not. All trust between banks was gone. By pumping up all of them, Treasury brought back trust. The CBs have pumped in something like $237 trillion and, things haven't improved. The next unwind will involve the loss of trust once again. The banks will close this time.
Turkey shot down a Russian plane and created quite a problem for themselves. Trump refuses to attack Idlib. The British are pushing very heavily for an attack. Syria has intercepted most missiles from israel, so, a plane might not be a good idea.
Macron is a globalist Rothschild. He has gone way out on a limb by directly attacking Russia and shooting down an unarmed plane.
"Air traffic controllers at Khmeimim Airbase lost contact with the aircraft on Monday evening, during an attack by Israeli F-16 fighters on Latakia, said the MoD. The plane was 35km off the coast of Syria when it vanished.
Russian radars also registered the launch of missiles from a French frigate in the Mediterranean on the evening of September 17."
I expect Putin will make them pay very dearly.
France is going down fast. The State spends 57% of the GDP and their debt is FAR above what is allowed by the EU. I don't wish this on the French people BUT, they did NOT vote for Le Pen. This is what they get.
It's not just America that has an epidemic of despair. Notice that these deaths are very high among First nation people. Canada has the same problem.
All the $trillions that flowed into passive investment is at high risk of berserk algos all trying to sell at the same time. Junk bonds will evaporate in a microsecond. Now, Michael Milken says that investment grade paper is at high risk.
Don't forget that U.S. government debt was downgraded 2 notches a few years ago. It almost makes you want to buy gold.
" Bolton made it very clear that the United States would NEVER cooperate with the Hague Tribunal and it regards the international court as an illegitimate court for the ICC is only good when it prosecutes non-Americans for war crimes.
Indeed, Bolton virtually declared war on the Hague and said that the United States and Israel, with other allied states, would put immigration bans on judges and prosecutors of the ICC, and it would also freeze any potential assets of Hague lawyers in the United States."
The Court at the Hague would have to move to MUCH larger quarters if they were to prosecutes all the war criminals in just the American lagoon of the swamp.
A crash here, a crash there. Pretty soon, you have a real problem
Most of the news is too lacking in veracity to post here. Most of the rest is pretty technical. It is centered on China and, their big, big bubble. The Chinese bet almost everything on continued consumption from the West. Did they not consider that we would become poor when we lost our jobs to them?
Zhou Xiaochuan was the head of the PBOC. They brought in a new wonder boy, Yi Gang. He has a PHD in economics from the university of Illinois. So, Yi is a product of Western economics.
"This is a hard conclusion for many in the West (and in China, I suppose) to reach. Theyve been taught the technocracy from the very beginning. Give technocrats full autonomy, as they have in China, and watch all the good things they will accomplish."
"The powerful central bank doesnt appear all that powerful, rather judging by whats really going on in all facets of China money central bankers in 2018 once again appear to be desperate. Like 2015 desperate. Because of their models"
"Per Crescats model, the neutral Fed funds rate that would be necessary to control rising inflationary pressures today is 5.5%. The current Fed funds rate, however, is only 2%. Our research is based on the history of a breadth of inflation and labor market indicators and the Fed Funds rate going back to 1971."
"If the Fed were to raise interest rates by 3.5% to get to the neutral rate to prevent rising inflation, it would be catastrophic for todays financial asset bubbles. Doing so would massively invert the yield curve, crash the stock and credit markets, and create a recession. Such is the tradeoff between inflation and financial asset bubble deflation that we face today."
1971 was when we parted final company with the gold standard. These feces-for-brains are trying to calculate inflation and deflation when the money supply has been growing 6-8% a year. They ignore the cumulative effects of debasing the dollar.
"China has been the fastest growing major GDP economy in the world, contributing over 50% of global GDP growth since the Global Financial Crisis. But the China miracle has all been accomplished by unsustainable debt growth, non-productive capital investment, and a massive hidden non-performing loan problem. Chinas NPLs are estimated at close to USD 10 trillion" $ 10 trillion in non performing loans,,, what could go wrong?
Great chart, https://www.zerohedge.com/sites/defa...18_6-11-58.jpg
Here is a chart of CB gold reserves. If it is good enough for them, it is good enough for me.
It doesn't matter so much if the West does or doesn't believe in gold. What matters is; what do the energy exporters want.
Here is a long, technical examination of the effects of automation by Authored by Per Bylund via The Mises Institute,
It is 100% garbage. I can't believe that these people consider themselves academicians.
"Similarly, the markets production process with decentralized decision-making can be improved through the adoption of rational central planning where all available information is used properly. The task is thus to get the right people into power, and then have them calculate the best possible outcome given the means and ends already known.
In other words, we need not know anything about economy per se, but the task is one of engineering: to reduce waste and improve the existing processes."
While you're professing ignorance about the economy, you should also profess ignorance of human nature, natural resources, energy consumption and extraction. Throw in geo-politics and climate change.
"But the threat is not real for the simple reason that the efficiency of production is not the problem that economy tries to solve. The actual problem is the use of scarce means to produce want satisfaction." Yeah, I want a meaningful career to provide a center for my life.
"The economy is about economizing, and economizing is not about physical resources or means of production." Oh, do tell?
"So far the debate on automation has completely skipped the value dimension. While this makes the problem much easier to solve, whether through the creation of machines or algorithms to solve calculations, it provides a solution that misses the core of the question."
He missed the bus when they were handing out intelligence and rationality.
"If robots save us from the toil and trouble of working, thats one thing. It means replacing leisure for labor, which cannot be a bad thing."
"Peak annual potential labor force growth took place in 1998, adding 1.9 million persons...almost entirely among the prime working age population. By 2008, total potential labor force growth was down about 15% (from peak) but the shift was well underway with the prime working age population growth down 25% to 1.4 million annually. By 2018, the potential labor force growth is just 35% of peak. By 2028, annual labor force growth will be just 15% of that seen at peak growth."
In the last 10 years, wages have doubled in China. Demand for robots increased 400% last year. Their labor force shrinks by 1 million a year. Will the fall in the human labor force be an even match with the rise in robots?
Everybody concentrates on productivity and ignores consumptive ability.
"Wages on Wall Street are now the highest theyve been since 2008, with the average salary in the financial industry clocking in at $422,500. "
"Last year, a study found that 553,742 Americans were living on the streets on one given night. The biggest cause is a lack of affordable housing, something thats exacerbated by flat wages"
Not one word of mention that inflation from the FED has priced millions out of the housing market. No wonder the suicide rate is so high.
As productivity and GDP dropped, the FED ramped up printing. Here is a chart of GDP minus FED printing.
"And when the music finally stops - as they say - it will be the central banks that bear the brunt of the blame.
"And it's that $20 trillion, built up over the last two decades, that has basically distorted everything - falsified prices, repressed interest rates, caused an explosion of debt. Twenty years ago there was $40 trillion of debt in the world today there is $250 trillion worth of debt in the world. The leverage of the world has gone from 1.3 times which is stable...to 3.3 times,"
Hmmm, Armstrong did mention something about Sovereign debt having some future problem.
Tesla, "The market cap is $60 billion going to zero - you can feel that happening. Pets.com was only a couple hundred million."
"Amazon is one example, Stockman said, claiming that its current valuation, at 160x free cash flow, is simply impossible to justify.
"The crash of Amazon it will thunder across the planet," Stockman said."
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