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Old 06-17-2018, 06:58 PM
Danny B Danny B is online now
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,494
Trade war, pensions, fertility,,,, wobbly China

The upper loop of the economy is at all time highs. Here is a graph of trade flows in real stuff.
https://www.zerohedge.com/sites/defa...?itok=JRhwydO0
It has turned down quite a bit. This is BEFORE tariffs, sanctions and trade wars have show their effect.
https://www.peakprosperity.com/blog/...ins-gonna-fall

" in just 16 years (1960–1976), fertility in the US dropped from 3.65 births per woman to only 1.76. "
"How can a shrinking group of working-age people support a growing number of retirement-age people? The easy and quick illustration to this question is to talk about the number of workers supporting each Social Security recipient. In 1940, it was 160. By 1950 it was 16.5. By 1960 it was 5.1. I think you can see a trend here. As the chart below shows, it will be 2.3 by 2030."
https://upload.wikimedia.org/wikiped...ency_ratio.png

"How can one worker support two or three retirees while still working and trying to raise a family with mortgage payments, food, healthcare, etc.? Obviously, they can’t, at least not forever. But no one wants to admit that, so we just ignore reality. "

"States' pension funds have nearly $4 trillion of stock investments, but somehow haven't benefited from soaring stock prices.

A new report by the American Legislative Exchange Council (ALEC) shows why this is true. It notes that the unfunded liabilities of state and local pension plans jumped $433 billion in the last year to more than $6 trillion."
"This means in six years, without the $6 trillion being somehow restored (magic beans?), pension underfunding will be at $8.4 trillion or thereabouts, even if nothing else goes wrong."
"I noted last week in Debt Clock Ticking that the total US debt-to-GDP ratio is now well over 300%. That’s government, corporate, financial, and household debt combined."

"you find that the US governments from the top to bottom owe over $30 trillion, which is well over 150% of GDP. Technically, we have blown right past the Italian debt bubble. And that’s not even including unfunded Social Security and healthcare benefits, which some estimates have well over $100 trillion"
The Pension Train Has No Seat Belts | Mauldin Economics

"It is my strong view that nations that aspire to solve their shrinking population problem must first abolish their interest-based monetary and financial system and replace it with systems that are based on risk-sharing principles."
"I hope Europe, the US, Japan, Singapore and others that are faced with shrinking population problem would replace their interest-based monetary system with interest-free systems to ‘save’ their populations and unique cultures. In this regard, Islamic finance comes to mind and indeed is something all nations can consider."
https://www.ahamedkameel.com/interes...ertility-rate/
The Islamic banking system COULD be a positive solution to the current system. It has been forcefully stamped out whenever possible.

"I would argue that China's runaway mortgage finance and apartment Bubbles at this late stage of the cycle significantly increase the risk of systemic crisis."
"China's private-sector companies of all sizes, even large ones, had long faced challenges in obtaining loans. But the credit squeeze on them this spring has been particularly painful. 'It's very bad, and we see not just small and medium-sized enterprises defaulting but even big companies defaulting,"
"With the Trump administration Friday announcing $50 billion of tariffs on Chinese goods - supposedly with a list of an additional $100 billion ready to go - and China retaliating with its own tariffs on $34 billion, there are concerns for an escalating trade war. Returning to the potential for an upside dollar dislocation, China is today unusually financially and economically vulnerable."
https://creditbubblebulletin.blogspo...t-fallacy.html
The trade war is getting off to a running start.

"something remarkable happened last week: the entire global bond curve just inverted for the first time since just before the financial crisis erupted."
"As for the timing, well it's troubling to say the least: it did so just before the last two bubbles burst."
https://www.zerohedge.com/news/2018-...ay-be-imminent

6/17 Trump’s tariffs add $9,000 to the price of a new home – Idaho Statesman
6/17 A 1-bedroom in Oregon is now unaffordable for the average worker – OPB
6/17 Higher home, mortgage prices mean first-time buyers pay 19% more – Dallas

The hot money continues to chip away at affordability.
https://twocents.lifehacker.com/youl...ent-1826831468
"Today, the migration patterns are purely economic, but they are inspired by socialism whereby they need only show up and receive automatic income and benefits."
https://www.armstrongeconomics.com/a...are-migration/

"A national debt is the single greatest way we transfer wealth among citizens as well as nations. I kept yelling on Capitol Hill that Quantitative Easing would fail, it would not “stimulate” the economy for a very simple reason. The assumption that the Fed would buy 30-year bonds and then the banks would lend into real estate with lower interest rates was crazy."
Of course it was crazy. The BRICs put a roof on wages and therefore, a roof on discretionary spending.
https://www.armstrongeconomics.com/a...eans-anything/
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