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  • Danny B
    The banks have a plan,,, take your money

    "The major cause of the upcoming financial meltdown, as with the pre-2008 conditions, is globally systemic gambling against national economies; called derivatives. Derivatives are sold as a kind of betting insurance for managing fraudulent banking profits and risk. So, why fix systemic banking fraud when the final result allowed these same banks to make even more money in the aftermath of the national and personal financial destruction they originated in the first recession?"
    "Instead, thanks to Dodd-Frank, derivatives suddenly have “super-priority” status in any bankruptcy. Applied to Dodd-Frank this means that all these bad bank bets on derivatives will be paid off first … before you may have your savings cash."

    "The public, however, has an estimated total US cash deposits of US$7.36 trillion ,,,FDIC is armed with a paltry US$25 billion war chest to pay depositors. "
    When YOUR Bank Fails, Don’t Walk … Run! | The Daily Sheeple
    The banks have already started securitizing everything in preparation for the meltdown. That $ 7.36 trillion is considered (by law) to be a simple investment in the bank.

    "Bitcoin investors may not recognise their motivation as such, but the impulse behind computer-generated currency is revolutionary: to take the production and control of money away from government."
    "There’s too much money in the world right now, sloshing from investment to investment and bloating every bolt hole one can think of to stash with capital (an unholy proportion of which is founded on debt). Because it costs central banks nothing to turn on the pumps."
    The article fails to mention that the State can strangle BTC at any time.

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  • Danny B
    Confidence,,, interest rates,,, sovereign debt service

    What happened to last night's long, comprehensive post?

    Interest rates are at the lowest point for the last 5,000 years. Interest rates generally reflect confidence. Our low-wage competitors took away our employment and high wages. We started serial crashes.
    Stock market crash – 1987
    Junk bond crash – 1989
    Dotcom bubble – 1999 to 2000
    Global financial crisis – 2007 to 2008
    One result of all these crashes was, falling confidence. The welfare-warfare State could NOT service it's growing debt with high interest rates. When confidence could no longer depress interest rates, they were artificially depressed by flooding the markets with "liquidity". The oceans of liquidity forced interest rates down BUT, they also killed interest-income to many millions of banks, funds, retirees and savers. In trying to substitute liquidity for confidence, the State further eroded confidence.
    The confidence is gone because the income is gone. This is true of both interest-income AND wage-income.
    TARP was a case of buying confidence with liquidity. When the CBs propose reducing the creation of new liquidity, they are actually proposing that confidence can now take over the job of maintaining low interest rates.
    We continue to slide down to a global-mean wage. The asset markets maintain their high values only because of liquidity injections. The production-consumption cycle has been short-circuited by automation. The predations of the finance sector has put the wealth in the hands of those who can't spend it.
    The CBs are demanding / dreaming that private investors buy State bonds.
    "Rising interest rates will always at first support a currency as should be expected with the Euro short-term. However, that will be the trend provided the confidence in government remains. If confidence collapses, then suddenly the interest rates will continue to rise exponentially and the currency will collapse along with asset values."
    When confidence declined, this is when we see the highest levels of interest rates.
    This is what will happen in Europe. It is all depending upon the fleeting whims of confidence. Only a complete fool thinks that a trend set for a few days will continue forever."
    "These remain possible and will help to create the impression the euro will rally and the dollar will collapse. That will suck everyone in and then you have the stage set for the slingshot in the opposite direction."
    In order to create the greatest amount of chaos, you always have to swing to extremes. If we are going to really create total havoc that will bring down the monetary system as we head into 2021 and force some sort of a new Bretton Woods, the only way to do that is a dollar rally."

    "ANSWER: Central banks can only control short-term rates for brief periods of time. They cannot control the long-end. The problem the ECB has is by backing off of QE, it will require private buyers to replace them, which will not happen at negative to low rates. The interest rates will be set by the private sector – not the ECB. The QE program has degenerated from an economic stimulus to simply life-support for member states. "
    "Once the government have to turn back to private buyers, that is when you will see rates rise sharply to try to sell new debt."

    So, the cost of sovereign debt service will go way up. Do we shrink GOV by 90% to manage the cost?

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  • Danny B
    Employment,,, headlines

    "Lastly, as total US population growth has slowed nearly 2/3rd's (as a percentage) from peak '50's growth."
    " How GDP can supposedly grow at 4% while the growth of the quantity of those capable of consuming more is growing at less than a third of previous periods and the quality of real wages are stubbornly flat...truly a mystery?"
    Ah yes, the gdp number is a tally of the money in the economy.
    "Despite a new peak in employment and asset prices, the net creation of full time employment over the past decade is less than a third of that seen almost five decades ago."
    Don't complain, it is growing in China. Good graphs.

    1/14 The household debt ticking time bomb – Investment Research Dynamics
    1/13 The move to $80 oil may be quick – Forbes
    The corresponding downward move in the economy will be equally quick.
    1/13 Global economy has China’s back as it confronts debt demons – Bloomberg
    Two drunks holding each other up.
    1/12 Good news just keeps stacking up for Europe assets on a roll – Bloomberg GREAT news,,,, what about the non-performing loans that are stacking up faster?

    1/13 U.S. 2-year yield tops 2% for first time since financial crisis – Bloomberg GREAT news. When it hits <3.5> %, EVERYTHING crashes.
    1/14 The dollar’s declines are just getting started, Peter Schiff warns – The Street Must be all that back-door printing.

    1/14 KFC accepts bitcoin in Canada now – Motherboard BTC + trans-fats.
    1/14 Staggering number of people are buying bitcoin on credit cards – Zero Hedge
    1/13 Big crypto exchange goes dark and users are getting nervous – GATA
    1/13 Cryptocurrency creation is now as easy as breathing – GATA
    That makes them even more valuable.
    1/13 Bitcoin consumes 30 times more electricity than Tesla cars – Fortune
    1/13 Bitcoin miners to use more electricity than all of Argentina – Fortune

    1/14 Electric cars will fail, but we’ll build them anyway – Green Car Reports
    NO, we won't. Short-term thinking at FED GOV has insured that we won't have the necessary rare earths.
    Ahead of The Herd
    When anthropogenic global warming reached a maximum stupidity point, the name was shifted to "climate change". NATURALLY, climate change is caused by man. If man caused it, man should pay up. But, not every man can pay. No problem, make the oil companies pay.
    New York City Sues Major Oil Companies Over Climate Change | Fortune
    Today, there is ample research to debunk anthropogenic climate change. Possibly, BIG OIL will assemble ALL of the proofs that man just doesn't have the power to overcome the power of the sun.

    Leave a comment:

  • Danny B
    Peak debt,,, peak inequality

    It remains to be seen of the FED will actually shrink their balance sheet.
    "Yesterday, The New York Federal Reserve announced that it actually increased their $4.2 trillion balance sheet by $1 million rather than shrinking it."
    This is a good article speculating what might happen to those excess reserves.
    "In FY 2017, Walmart had pre-tax profits of around $20.5 billion. The great GOP tax cut heist will save the company almost $2 billion annually, maybe more - over 10 years likely over $20 billion. "
    More Post-GOP Tax Cut Heist Mass Layoffs

    The finance system is facing huge challenges from the tech industry. Here is a good article exploring the possibilities.

    More melt-up.
    "It’s synchronized global speculation unlike anything I’ve witnessed. It’s evolved into a full-fledged speculative Bubble and intense Mania. This type of euphoria, while fun and captivating, comes with unfortunate consequences. But there will be no worry for now.
    "I recall the speculative market that culminated in manic trading in the summer of 1998 – just weeks before the global system convulsed with the collapses of Russia and Long-Term Capital Management."
    "The backdrop is extraordinarily fascinating because of the intensity of speculative excess in the face of key developments that hold the potential to bring this party to a conclusion. "
    "This puts growth over the most recent three quarters at a staggering $2.124 TN (16% annualized)." What could possibly go wrong? BTY, where is the shrinkage I have been hearing about?
    Credit Bubble Bulletin : Weekly Commentary: Mania

    Look at this graph. Do you see a dip?
    "Real wages are now 7% lower than they were in 1973 --and that's calculated using the official government-reported inflation rate, which we all know vastly undercalculates the actual inflation rate. (Read our report on The Burrito Index to understand why the true price inflation households suffer is more like 5x greater than the official reported rate).

    So the assets held by the rich shoot the moon, and they get access to the 'money river', to boot. While the rest of us see stagnant real wages and a skyrocketing cost of living."
    Good article with a great little GIF.

    "All of the important activities in this land have been converted into odious rackets, by which I mean nakedly dishonest money-grubbing scams, especially the two sectors that used to be characterized by first, doing no harm (medicine), and seeking the truth (education). But everything else we do is infected by engineered falsehood and mendacity, including the news media, the law, banking, government, retail commerce, you name it. We’re living in a culture of pervasive control fraud, in which authorities set up looting and asset-stripping operations without any restraint."****-nati...oved-my-xanax/

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  • Danny B
    FED,,, treasury paper,,, savings

    I leave for ONE day and,,,, I'm a week behind on reading. It takes a lot of reading to make sense of all the moves in finance and economics.
    ALL of the rise in the stock market is a product of wet-ink money from the FED.
    "Normally, Fed tightening policies should cause an ever-increasing boost to the dollar index. Instead, the dollar is facing a swift plunge not seen since 2003."
    Yeah, right. Tightening at the front door,,, while liquidity pours out the back door. The 2 big buyers of Treasury paper have cut back.
    So, the FED does forward liquidity swaps with various States that use the liquidity to buy Treasury paper.
    "The Fed, as well as the mainstream, have also planted the notion that the Fed “will be forced” to raise interest rates faster if the Trump Administration pursues its plans for Hoover-style infrastructure development."
    OK, so, if Trump tries to do infrastructure improvements, the FED will kill everything.
    "The central bankers need a scapegoat for the eventual bursting of the market bubble that they have produced. Why not simply allow that bubble to finally implode in the near term, blaming the Trump administration"
    The chosenites will put a knife in his back, one way or another.

    Ron Paul, "By the time the QE’s ended, the Central banks of the world had increased their balance sheet by $8.3 trillion, with only $2.1 trillion worth of GDP growth to show for it. This left $6.2 trillion of excess liquidity in the banking system that did not go where the economic planners had hoped."
    THAT is because they have feces for brains.
    The article has a vid and transcript. As usual, Ron Paul is painfully clear about our future.
    Historically, finance was about 4--5% of the economy. The money-renters managed to bump that WAY up when released from the chains of gold. Now, they are trying to fight off a reversion to the mean.

    " First, recently enacted tax reform legislation is estimated to raise the deficit by more than $200bn, on average, each of the next four years, and Congress looks likely approve substantial new spending as well.
    Second, Fed portfolio runoff will increase the amount of debt the Treasury must issue to the public.
    Third, the Treasury’s cash balance is likely to rise by around $200bn once a longer-term debt limit suspension is enacted, which will also necessitate additional borrowing."
    "What Goldman has left unsaid is what happens to interest rates at a time when on one hand US debt supply is set to double and on the other the Fed is set to continue shrinking its balance sheets"
    "What is also unsaid is just who will be the marginal buyer of this debt tsunami when central banks increasingly shift away from debt monetization."
    The Treasury plans to pump out bazillions in new debt issuance. The FED plans to end debt purchases.

    "Distilled to its roots, the Fed has been manufacturing “savings” from thin air for the better part of a decade. When the financial crisis hit in 2008, American savings were depleted, so the Fed had to step in to produce savings (to finance huge government deficits). Now the Fed is attempting to remove that “savings”
    "It is the country’s seed corn. If there is no net savings, there can be no net investment."
    It IS different this time, http://blog.knowledgeleaderscapital..../2017/09/2.png
    "Not to state the obvious, but all else equal, if the Fed started shedding assets at $30 billion a month (or $360 billion a year), it would exhaust the entire stock of private savings."
    "Net savings have fallen in the last 2 years from a peak of just over $700 billion to the current $355 billion. Will savings halve again in the next two years? If so, there is no mathematical way in the world the Fed can shed assets at the rate it outlined yesterday.”
    "side effects of the Fed’s QE programs has been unprecedented growth in excess bank reserves parked in cash at the Fed. While these excess reserves are currently at the Fed, under the right conditions, the excess reserves could begin to flow into financial assets, like treasuries and mortgage backed securities."

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  • Danny B
    Setting up the fall-guy for the great unwinding

    "On the plus side for South Korea, reunification with the North could unlock trillions of dollars of energy and mineral resources"
    “From an economic development perspective, North Korea and Japan are a match made in heaven: an ample supply of natural resources and labor meets world-leading technology and capital,” Koll argues.
    “ Engaging North Korea constructively would not just boost Japan’s economic fortunes, but surely create a historic legacy for Abe worthy of the Nobel Peace Prize.”
    WaPost - It’s Time To Accept A Nuclear North Korea
    The fix is in. There is money to be made in in North Korea.

    "students graduating under a $1.3 trillion pile of student loan debt. (Not to worry though: Goldman Sachs is promoting a way to profit from this debt by stuffing it into other assets and selling those off to investors, a la shades of the subprime mortgage crisis.)"
    "The Wall Street and London megabanks are scrambling out of this debt by securitizing it — packaging and selling it on — knowing it is not payable. U.S. banks’ securitization of debt — corporate junk, auto and credit card debt, student debt, etc. — has grown by $1.1 trillion or 25% just during 2017."
    The banks are securitizing everything in preparation for the big unwinding. The default cascade will catch the investors who bought the notes, rather than the banks themselves.
    1/11 China just reminded the United States Beijing is its banker – CNBC
    1/12 Reports China will stop buying US Treasury debt is ‘fake news’ – Business Insider
    TRUE, but, it got the desired results.

    Here is an important article from the CFR.
    "As shown in the left-hand figure above, profits at private-sector enterprises rose 18 percent between 2011 and 2016, while profits at state-owned enterprises (SOEs) plunged by 33 percent. As shown in the right-hand figure, however, the share of corporate liability growth accounted for by SOEs soared from 59 percent in 2010 to 80 percent by 2016. This is the opposite of what one would expect in a market economy."
    Apparently, private industry is to be thrown on the funeral pyre of credit excesses AND, State enterprises will come out OK. China is capitalist when it is convenient AND communist when it is necessary.
    Private industry goes on the chopping block,
    A warning on Japan,,,, I doubt this,

    There is widespread talk about a reversal in the 30 year downtrend of the 10 year bond. Here is a good short article on the subject.

    1/12 Fed’s Bullard says inflation miss has ‘cost’ US lost growth – US News The feces-for-brains claims that; because prices didn't go up, America didn't grow.
    Bullard goes on in depth to advocate for raising the price of everything. The MORON never mentions wages.
    1/11 Will our strong economy spike inflation in 2018? – ValueWalk Will pigs fly?
    "Walmart Abruptly Closing Dozens Of Sam's Club Stores, Firing Thousands On Same Day It Raised Minimum Wages"
    China set the roof on wages. Consumption goes down,,, stores close.

    "The U.S. debt limit was suspended in September until Dec. 8. Mnuchin began using special accounting measures to stay below the ceiling since then and has said that Treasury could comfortably fund the government at least through January."

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  • Danny B
    The B.I.S. throws in the towel

    Creating <$220> trillion of new debt to stimulate the economy was strictly an experiment. There is now a better understanding of the actual economic rules,,, rather that the various delusions that previously dictated economic policy. The various CBs have all stimulated in round-robin fashion.
    Who told them to do that? Who coordinated the process?
    "Policy for most central banks around the world is dictated in Switzerland by the Bank for International Settlements. Fed chairmen like Janet Yellen are mere mascots implementing policy initiatives as ordered. This is why we are now seeing supposedly separate central banking institutions around the world acting in unison, first with stimulus, then with fiscal tightening."

    "Now comes the era of Jerome Powell, who will oversee the last stages of fiscal tightening, the reduction of the Fed balance sheet, faster rate increases and the final implosion of the 'everything' bubble."
    "a Trump presidency would inevitably be followed by economic crisis, and this would be facilitated by the Federal Reserve pulling the plug on fiat life support measures which kept the illusion of recovery going for the past several years. It is important to note that the mainstream media is consistently referring to Jerome Powell as "Trump's candidate" for the Fed, or "Trump's pick"

    "Trump, and by extension all the conservatives that support him, are meant to take the blame when the 'everything' bubble vaporizes our financial structure. "
    Powell, "He even admits the existence of the Fed's "short position on volatility." This explains the strange behavior of the VIX index, which has plunged to record lows as "someone" continually shorts VIX stocks in order to interfere with any decline in markets."
    Party While You Can - Central Bank Ready To Pop The 'Everything' Bubble
    Best read the whole article. You may not be in the markets but, you are directly affected by the broader economy. The slaughter of the money-renters will be only one facet of the credit collapse. The CBs (BIS) tried their doomed credit expansion experiment. They ran that horse until it died in it's tracks.

    The people who are actual producers are not going to have it as hard as the non-producers. The largest non-producer is the State. It has tried every stimulus imaginable to ang on to control.
    "Treasury volatility as measured by realized volatility in the U.S. 10-year Treasury note has fallen to a 52-year low, according to a new report from Bank of America Merrill Lynch."
    "Indeed, we have already seen a stunning flattening in the yield curve as measured by the spread between the 10-year and 2-year Treasury yields. Furthermore, the 10-year yield has failed to take its high from the first quarter of 2017, and the 30-year has remained even more contained in its moves.
    Ultimately, these long periods of muted moves will lead to a mean reversion."

    "The MSCI World Index has gone 19 straight months without a 5 percent pullback, its longest on record."

    I'm sure that the B.I.S. is well aware that monetary inflation of the upper loop is slowly bleeding over into the lower loop. This slow progression of price inflation is forcing people out of housing. It is strangling consumption. A complete crash of the credit bubble is definitely a "bad thing". The B.I.S. is afraid of something even worse. The complete dispossession of the middle class would bring revolution.
    The verdict is in on global cooling. Our weakened magnetosphere is allowing great climate volatility. The crop losses will get much worse.
    The B.I.S. prefers to bring the collapse forward so that we can "reset" the financial system before the worst of the weather disasters throws everything into chaos.

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  • Danny B
    Morality OR, collapse

    Our country is now geared to an arms economy bred in an artificially induced psychosis of war hysteria and an incessant propaganda of fear. Douglas MacArthur
    I am concerned for the security of our great Nation; not so much because of any threat from without, but because of the insidious forces working from within. Douglas MacArthur
    History fails to record a single precedent in which nations subject to moral decay have not passed into political and economic decline. There has been either a spiritual awakening to overcome the moral lapse, or a progressive deterioration leading to ultimate national disaster."
    Douglas MacArthur

    Look around you and ask yourself; who brought us this collapse of morality? Who controls mass media? Who advocates perpetual war for profit? Who dreams of world control?

    Churchill, "WW II could have been avoided but, the bankers wanted it."
    "Germany’s unforgivable crime before WW2 was its attempt to loosen its economy out of the world trade system and to build up an independent exchange system from which the world-finance couldn’t profit anymore. ...We butchered the wrong pig."
    -Winston Churchill (The Second World War - Bern, 1960)

    There's no arguing that many of America's leaders are working hard at a personal moral collapse. The same is true for a large number of corporate leaders who only worship the god of profit.
    What about religious leaders? The Popes have generally been a rotten bunch. The bishops and cardinals run pretty bad. The Priests have their own special problems with pedophilia.

    Keep in mind that Germany was a very strong Christian country when it was attacked. Russia is now having a strong resurgence of the Christian faith. Those who bring us moral collapse have a real hatred of Russia and want to blow the place up. They destroyed it many years ago and, plan to do it again. Christian Europe is headed for a dark age. Christians in the ME, Indonesia and many other places are being killed in large numbers.

    While organized religion has plenty of dark history of persecution, the Christians have been pretty good for the last couple of centuries. What is it about Christianity that so offends those who are working towards our moral collapse?
    Christianity is a moral framework that we can teach our children. We don't have to conjure up a moral framework on our own. The Decalogue is the long, long existent framework that we pass on to each generation. The mass media tells us that morality is just relative,,,, and whatever you feel is correct in any given situation.
    The mumbo-jumbo of the liturgy isn't the important part. The continuity of the norms of morality are what is important.
    "There has been either a spiritual awakening to overcome the moral lapse, or a progressive deterioration leading to ultimate national disaster."
    Apparently, Russia will get the spiritual awakening and, America will continue to collapse.
    We spent our accumulated fortune on wars for the war-profiteers and world-dominators. At the same time that we collapse financially, we are collapsing morally. As the trust-horizon shrinks to just our immediate family, we will exclude all others. The deplorable will somewhat work together. The progressives will slit each other's throat.

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  • Danny B
    Debt as far as the eye can see,,, NAFTA,,,cyclical collapse

    China floats a "trial balloon".
    "Bloomberg News reported Wednesday, citing people familiar with the matter, that officials in Beijing have recommended the Chinese government lower — or even stop — its buying of U.S. sovereign debt.

    The report also notes that Chinese officials think U.S. debt is becoming less attractive compared with other assets, adding that trade tensions between the two countries could provide a reason to slow down or halt the purchases."
    "Treasury prices fell, boosting yields."
    Reportedly, it is game over when Treasury yields hit 3.5%.
    "I think the Chinese will contribute to the removal of liquidity from the U.S. bond market," said Michael Shaoul, chairman and CEO of Marketfield Asset Management. "

    "The kneejerk reaction in fixed income was fast and furious, as over 35,000 10-year futures traded in the one-minute period after the news broke according to Bloomberg, sending 10Y yields as high as 2.59%, the highest since March 2017."
    From comments; "I mean with the Fed having initiated a program that will dump an additional $2,300,000,000,000+ of UST on the "market", above and beyond what will be dumped to finance the ongoing exploding debt load?? China doesn't want to take the other side of that trade?"
    "China doesn't want to fund the USA's military which they see as will eventually be turned on them! Let's pay the country that labeled us an economic aggressor in their NSS to fund the war against us, LOL.

    Strange coincidence that Trump last night announces how the US will revamp and modernize their Nuclear missiles and then China announces this, next day and only a week before they launch the Shanghai Energy Exchange to directly compete with the Petrodollar selling oil future contracts in Yuan!"
    "The US will, you see they will open up private LLC's and such offshore in the islands and other places and use them to buy US treasuries without having to tell who is doing it. Essentially the treasury is buying the US treasuries but using a cutout to hide the fact that they are."

    Trump is talking about killing NAFTA. It remains to be seen what the final effect might be.

    Comments; "Follow the money and the United States huge trade deficit with Mexico becomes even more disturbing as you begin to understand where the money eventually ends up. When you start thinking about all the money and jobs we shift into Mexico each year you would think by now Mexico would be rolling in cash.

    A bit of research quickly confirms that the money Mexico receives by way of trading with America quickly passes through its lands and flows to Asia. It could be argued that when all is said and done we are still transferring our wealth to the far east only by the scenic route. More on the problem with this in the article below.

    http://Follow The Money-The US Trade Deficit With Mexico Benefits China.html

    The World bank gives bogus numbers but, they are still in a funk.

    “The labor force participation rate of men 25 to 54 years old continued its long-term decline,” said one part of that report. Less-educated men are working less than guys with better educations.

    Are less-educated people really working less because they want to work less? Or is this myth of full employment simply bunk?"

    The Atlantic, "The United States is in the midst of one of the longest stretches of job creation in modern history. And most of that economic growth has been presided over by President Obama, and his appointee for Fed chair, Janet Yellen "

    Armstrong, "Unfortunately, humans also possess at that inner level this same survival instinct that is hardwired. This makes it increasingly unlikely that willingness to change gains sufficient strength in time before the abyss is reached. Hence, we must crash and burn.

    Because the government will respond in the same manner as an ameba, there is no hope that they will spontaneously look in the mirror and reach an OMG moment of realizing that they are causing the demise of our society. Consequently, they will consume our liberty until they push it to the point that society will then act only in its self-interest to survive. Historically, all governments collapse once they have consumed rights, liberty, and privileges in their desire to maintain control and in the end, die by their own greed for power. They lack any consciousness of what they are doing precisely as an ameba. There is no reasoning for there is no one single mind to reason with."

    "According to the Institute of International Finance, total liabilities in the third quarter of 2017 surpassed $230 trillion (Public+Private). This is an increase of 16 trillion compared to the end of 2016. As the interest rates continue to rise, the debt servicing costs are simply going to explode. As a whole, Europe is over 100% of debt to GDP with respect to just Public Debt on average compared to the USA at about 73%. Global government public debt has exceeded $60 trillion."

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  • Danny B
    Extreme greed fuels the melt-up

    More melt-up news.
    " With dumb-money running close to the highest levels on record, it has generally led to outcomes that have not been favorable in the short-term."
    "This past weekend, I discussed the surge in market exuberance in terms of both individual and professional investors. Of course, such surges in exuberance are generally indicative of the “capitulation phase” as the last of the “holdouts” finally jump back into a market which “can seemingly never go down.”
    “There are many factors from economic, monetary, geopolitical, and financial which have ignited each bubble, and bust, period throughout history. However, each bubble had in common the same extreme levels of confidence, exuberance, valuation and price extension that we see today. And they all ended the same, as well.”

    "The extreme net-short positioning on the volatility index suggests there will be a rapid unwinding of positions given the right catalyst. "
    There is SO much money "short" in the VIX that any turnaround would involve massive losses.
    A good article on the reversal of volatility,
    "The recent attempt by crude oil to get back to $60/bbl coincided with a “mad rush” by traders to be long the commodity."
    Yes, oil is rising but, somebody must consume that oil for the price to be supported.
    "With crude traders currently extremely “long,” a reversal will likely coincide with both a reversal in the S&P 500 and oil prices being pushed back towards $40/bbl. "
    "Just recently, that net-short positioning has turned positive which suggests a rally in the dollar is likely."
    The dollar goes up,,, exports decline and, EMs can't service their dollar-denominated debt.
    "With the dollar VERY oversold currently, look for a strong-dollar rally this year. "

    “Even our composite fear/greed index which is a combination of AAII, INVI, MarketVane and the VIX is now also registering extreme greed on a rolling 4-week basis.”
    Herd mentality at it's finest.
    "Amazingly, investors seem to be residing in a world without any perceived risks and a strong belief that the financial markets are NOT in a bubble. "
    1/10 Bill Gross calls a bond bear market after Treasury yield surges – Bloomberg
    Grundlatch says that Bill Gross (the bond king) is early.
    "A main catalyst for Gundlach's bearishness - for both bonds and stocks - is that we are now entering an era of quantitative tightening, i.e., accelerating balance sheet unwind from all the major central banks"
    "Additionally, Gundlach is confident that a "more hawkish ECB" is not priced into the market."

    QE hasn't fixed anything. Have the CBs truly cooled off the printing presses,,, or, are they in stealth mode?
    1/10 Japan takes away the last of the world’s ‘punch bowls’ – CNBC
    1/09 Yen’s spike shows taste of what comes when BoJ really does shift – Bloomberg
    The ECB and PBOC have been VERY reluctant to take away the punch bowl. Will the CBs carry through? Is this a game of "chicken"?
    1/10 U.S. crude hits three-year high as prices climb in tight market – Reuters
    America both imports and exports oil. Net imports are 4.1 mbd. Fracking is a losing business. If domestic oil prices go up, you can bet that our oil exports will go down,,, especially with a strong dollar.
    The Asians see the falling dollar as downward pressure on Asian exports. They are working to weaken their currencies in respect to the dollar.
    BUT, as the dollar goes up, they have more trouble servicing dollar-denominated debt.

    12 years ago, Greenspan said that social security was "not working".
    "Greenspan: "There is nothing to prevent the government from creating as much money as it wants."
    "People are living longer than ever before– the average life expectancy in the US is a full EIGHTEEN YEARS longer than it was when Social Security was conceived back in the 1930s."
    "The Social Security star has already exploded. But it will take the light another 15+ years to reach us."

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  • Danny B
    More immorality,,, more meltup,,,at what cost?

    If you are into the markets, here is a technical examination of the divergence between stocks and Treasuries. It has previously been a good indicator.
    "According to the Bank of International Settlements, in 2016, the yuan constituted only 4 percent of the world's currency trades. "
    "just 1.1 percent of the world's forex reserves were held in yuan versus 63 percent in dollars"
    The dollar saturated the markets post WW II because everything else was destroyed. That isn't the case now and China can't expect the Yuan to saturate anything. They probably know this and plan to rely on gold.

    C. H. Smith, "The status quo delights in celebrating gains, but the costs required to generate those gains are ignored for one simple reason: the costs exceed the gains by a wide margin. As long as the costs can be hidden, diluted, minimized and rationalized, then phantom gains can be presented as real."
    "You see the point: the cost are skyrocketing but the gains are diminishing. "
    "The financial media is euphoric over the billions of dollars of profits "
    "This is how our entire status quo maintains the illusion of normalcy: by avoiding a full accounting of the costs of a system set to maximizing profits by any means available, a system of public-private pillage overseen by the protected few at the expense of the vulnerable many."
    oftwominds-Charles Hugh Smith: Yes, But at What Cost?

    OK, how did we get to this point? A corporation is a mindless pile of money that will do anything it can to grow. Since it is "eternal" and has immunity from prosecution, "anything" can, and does include murder, genocide, slavery, addiction and every other evil.
    Baxter Pharmaceutical sent deadly contaminated flu vaccine,,,
    Several European countries have banned a flu vaccine produced by the Swiss pharmaceutical company, Novartis

    The opioid crisis was done specifically to boost profits. As long as the rich can buy the regulators, they can kill-for-profit as many as they want.
    It wasn't always like this. How did we get to the point that profit defined EVERYTHING? A corporation has officers who make the decisions. Lee Iacoca personally made the decision to build the Pinto with it's gas-tank flaw. It was simply cheaper to pay the lawsuits than to fix the car.

    How did corporate America reach the point where every decision of the board was done strictly on profit with NO other consideration?
    Seeds Of America?s Collapse | Real Jew News
    Our cops have killed 1,000 Americans in the last year. When did shoot-first,,, ask questions later become S.O.P. ?

    OK, back to the melt-up.
    Why does money inflate? What a stupid question.
    Power corrupts. These corrupt people get to control the issuance of money.
    Zimbabwe is flat broke. Gideon Gono, the head of the CB lives in an 80 room mansion.

    "Dow Jones Global Index $DJW Weekly RSI at 89.87 There is no historical reference even approaching this:"
    OK, the speed of acceleration is just crazy. If debt is growing faster than exponentially, how long can the CBs keep a lid on things?
    "It is no wonder that we see people such as GMO’s Grantham capitulating and calling for a melt-up in stocks. But excuse me, the $NDX is up 10 years in a row, the $DJIA is up 10 quarters in a row and global stocks are up 14 months in a row with RSI readings never seen before. Does that not qualify as a melt-up already having occurred?"
    "To summarize: From my perch markets are engaged in a historic blow-off move fueled by artificial liquidity & complimented by a temporary earnings boost. The combined resulting excess in conjunction with no visible improvements to structural problems will worsen the impacts of an eventual recession. "

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  • Danny B
    The timing of the meltup

    It was assumed that Killary would win and nobody covered their tracks. "As soon as Hillary lost the election, all the foreign governments, including Saudi Arabia, withdrew their “donation” for a smoke-screen charity."
    It was assumed that Merkel would win so, the pension crisis was held off until after the election. It is not working out that way. Germany, like England is coming apart.

    Grantham wrote about the coming Meltup. His graphs were showing about a 3 1/2 year peak area. John Hussman has good replies showing that 3 1/2 years may be a bit too long.

    What happens is; Everybody is afraid of missing out (FOMO) This keeps reluctant money-renters from leaving the markets. At some point, the rise is just too steep and, fear overcomes greed. The CBs are hard at work trying to inspire greed. IF the CBs have truly dialed back stimulus, one would expect fear to make a pretty fast appearance.

    Don't look now, but Morgan Stanley wealth just took their high yield allocation to zero. They have exited the junk-bond market. How many others will take this as a cue to get out?
    Just how much of the market can the CB buy?

    "The average pension fund assumes it can achieve a 7.6% rate of return on its assets in the future."
    "The trouble is that for stocks to return anywhere near 8% they would need to fall more than 50% first. "
    "Currently, the index trades at roughly 2,690 thus it would take a major stock market crash for investors to have the opportunity to invest at a level that would enable them to achieve anything close to what pensions now require."
    The stupidity here is frightening. If the stock market crashes 50%, consumption will crash with that. These knuckleheads expect dividends to stay static if consumption crashes.

    "Shares are expensive – keep buying them. That appears to be investors’ consensus view. “Looking into 2018, we believe that the concerns about a bubble for US equities are overdone,” he says. “Compared to past crises [2000, 2007], we don’t see excess in terms of flows." Open your effing eyes.
    "Prices have climbed so high that the average yield on stocks in the S&P 500, the broadest US index, has slipped below 2%. "
    "One flashing light was the extreme difference between the performance of US “value” stocks – the type of reliable profit and dividend-earners he tends to prefer – and “growth” companies. The disparity was “greater than at any stage in stock market history”, Woodford said – yes, even including the 1929 Wall Street crash.

    Woodford, who manages £15bn, famously sat out the dotcom bubble of the late 1990s and cleaned up afterwards."
    "Grantham is the British-born veteran fund manager who in 1977 co-founded Boston-based GMO, which today manages $75bn (£55bn) of assets. The firm’s fame partly derives from its skill in having identified, and dodged, the last two big market blow-ups – the dotcom bubble of 1998-2000 and the US housing crisis that preceded the financial crash of 2007-09."
    "He defines a bubble as being “excellent fundamentals euphorically extrapolated”.

    1/08 11 Saudi princes sent to supermaxes for protesting utility bills – Bloomberg MbS wants to show everybody that he is ruthless. Sooner or later, the other royals are all going to chip in a few Rouble and hire a good Russian hitman.
    1/07 China unveils world’s first solar-powered highway – Green Matters
    Thieves shut China's solar highway after just five days | South China ...
    1/08 Ron Paul: Sessions should be fired over marijuana move – CNN A LOT of Americans are going to need to be stoned to cope with the coming collapse.

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  • Danny B
    State debt,,,Breakup of England,,,perpetual regulations

    An article on GOV debt, “Combined, the largest 50 countries in the world owe nearly $65 trillion. That is a staggering 90% of their combined GDPs! "
    Sovereign GOVs have a printing press. U.S. States do not have a printing press. Here are a couple of graphs showing State debt.
    How Indebted is Your State? - The Sounding Line
    There is over a $trillion bubble in auto finance with a fairly high default rate. Just the same, auto sales are falling.

    New Zealand is a very nice place,,, especially if there is a nuclear war. It has attracted a LOT of hot money.
    Armstrong, "Eventually, the United Kingdom will break apart formally, but with the collapse of Brussels and the EU Project, we are also likely to then see AFTER 2032, the general trend toward decentralization of governments as a whole. Hence, we will see England break apart into the old Anglo-Saxon regions as we will see the United States break apart. "

    1/07 2018 will be the year humanity directly ‘sees’ our first black hole – Medium We will "see" it from a satellite view over the financial district of NYC.
    1/07 White House asks for $18 billion to build 700 miles of border wall – Zero Hedge $25.7 million a mile. That must be a pretty impressive wall.
    1/07 QE party over, even by the bank of Japan – Wolf Street There is a general feeling that QE has failed to fix anything. Japan tried for 20 years. They have a crashing population and a falling market share. Creating more debt didn't seem to help.

    "The perpetual accumulation of regulations slowed U.S. economic growth by 0.8 percent per year on average, according to a 2016 paper by the Mercatus Center. The economy in 2012 would have been $4 trillion—or 25 percent—higher, if the amount of regulation had remained at its 1980 level. This equates to a nearly $13,000 loss for every person in the United States."
    This $13,000 loss isn't entirely true.

    > Democratic Senators are considering introducing legislation that will provide new benefits for many more Americans. The Americans With No Abilities Act is being hailed as a major legislative goal by advocates of the millions of Americans who lack any real skills and ambition.
    > “Roughly 50 percent of Americans do not possess the competence and drive necessary to carve out a meaningful role for themselves in society,” said California Sen. Kamala Harris. “We can no longer stand by and allow People of Inability (POI) to be ridiculed and passed over. With this legislation, employers will no longer be able to grant special favors to a small group of workers, simply because they have some idea of what they are doing.”
    > In a Capitol Hill press conference, Nancy Pelosi pointed to the success of the U.S. Postal Service, which has a long-standing policy of providing opportunity without regard to performance. At the state government level, the Department of Motor Vehicles also has an excellent record of hiring Persons with No Ability (63 percent).
    > Under the Americans With No Abilities Act, more than 25 million mid-level positions will be created, with important-sounding titles but little real responsibility, thus providing an illusory sense of purpose and performance.
    > Finally, the Americans With No Abilities Act contains tough new measures to make it more difficult to discriminate against the non-abled, banning, for example, discriminatory interview questions such as, “Do you have any skills or experience that relate to this job?”
    > “As a non-abled person, I can’t be expected to keep up with people who have something going for them,” said Mary Lou Gertz, who lost her position as a lug-nut twister at the GM plant in Flint, Mich., due to her inability to remember “righty tighty, lefty loosey”. “This new law should be real good for people like me. I’ll finally have job security.” With the passage of this bill, Gertz and millions of other untalented citizens will finally see a light at the end of the tunnel."

    > Said Sen. Dick Durbin, II: “As a senator with no abilities, I believe the same privileges that elected officials enjoy ought to be extended to every American with no abilities. It is our duty as lawmakers to provide each and every American citizen, regardless of his or her inadequacy, with some sort of space to take up in this great nation and a good salary for doing so.”
    > This message was approved by Jesse Jackson, Al Sharpton, Diane Feinstein, Barbara Boxer, Maxine Waters, Elizabeth Warren & Nancy Pelosi........all Americans With No Abilities whatsoever!!"

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  • Danny B
    BTC,,, accelerating to the blow-off top

    An interesting article on BTC. "China is a major mining center with huge operations powered by nearby hydroelectric dams to get the best electricity rates. In fact, it’s been calculated that a single bitcoin transaction now uses up as much electricity as a home might use in a month."
    "One estimate calculates that at its current trajectory Bitcoin is on track to consume 100% of the world’s electricity production by 2020."
    "Bitcoin itself does not hold any value. The value in bitcoin is provided by the miners. No miners = no Bitcoin value.

    The army of Bitcoin miners require a huge amount of electricity and computing capital investment to run. As long as the costs of running the Bitcoin miners is lower than the value received, then it should persist. But as soon as the puzzle-solving becomes too hard, meaning too few Bitcoin rewards are granted per solved block (currently at 12.5 Bitcoin per block) to justify the expense, then the miners will start shutting down. It's simple cost/benefit math."

    "Debt is irrelevant and matters not. It’s different this time. That’s the message from politicians, markets and participants. Tax cuts pay for themselves (they do not), leverage doesn’t matter (it does) and the increased costs of servicing the debt as a result of rising rates will be offset by imaginary real wage growth to come (they won’t). But the calmest market waters in history continue to keep these illusions alive as asset prices keep levitating from record to record.

    Debt does matter and it was ironically left to Janet Yellen to voice any remnant concerns about the sustainability of debt to GDP: “It’s the type of thing that should keep people awake at night” she said.

    The red part of this graph shows the negative credit balance of investors.

    "Of course, for someone who is actively and professionally managing money, Grantham - like so many of his peers - had no choice but to admit the gaping cognitive dissonance that results from investing in the current "market", where one can avoid participating and see their AUM withdrawan promptly, or one can, in the immortal words of Chuck Prince, continue dancing as long as the music plays.

    But how to determine if, after nearly nine years of constant market levitation, the music is finally dying down? Conveniently, Grantham also presented his favorite indicator which allows him to determine if "market momentum is increasing to a frenzy" - the acceleration of price, or said otherwise, the non-stop surge that accompanies the final melt-up."
    This is an excellent article about how professional money managers must stay in the markets until the last possible moment. A LOT of hedge funds have closed because that managers were too prudent to continue to gamble.
    "They recognize the importance of a true psychological event of momentum increasing to a frenzy. That is to say, acceleration of price. The average time of the final bubble phase of the great equity bubbles shown in Exhibit 1 is just under 3.5 years, with the average upcycle of real acceleration just 21 months."
    He does a very credible job of showing that the rate of acceleration "defines" when the blow-off top is imminent. The results are pretty consistent.
    "But historically, when dealing with real bubbles, being late has not been materially different in time and pain than being too early, as you can see. "
    Leave too early,,, you get killed. Leave too late,,, you get killed.
    "the US and almost all global markets, "the strongest indicator – stronger than pure pricing or value – was indeed price acceleration."

    But if upward acceleration is indeed the best bubble indicator, then there is a problem, because as we discussed earlier today when we commented on the Dow's move above 25,000 for the first time ever, the broader market is approaching exponential "speed" to the upside."

    "However, no matter if one looks at the move on a relative or absolute basis, a clear sign of just how relentless and rapid the market's recent upward acceleration has been is that the Dow’s latest 5,000-point run - which started roughly around the time 2017 rolled in, shortly after Trump's election - was more than three times quicker than its 844-day rally to 10,000. In fact, it will have taken the equity index only 238 sessions to advance from 20000 in January 2017 to 25000 Thursday."

    When this happens, the money-renters will be broke and, they will stop spending. They won't be able to meet the margin calls and, the brokerages will crash. Since QE has blocked ALL price discovery, NOBODY will get back into the markets. EVERYTHING will be NO-bid.

    So much for stocks,,, what about bonds?
    "Just one of the above charts would be a big wake up call…but taken together, they are SCREAMING “INFLATION!!!!!!” (in commodities)

    As this is a MAJOR problem for the Bond Bubble.

    As I explain in my bestselling book The Everything Bubble: the Endgame For Central Bank Policy, US sovereign bonds (also called Treasuries) trade based on inflation expectations.
    Put simply, when inflation spikes higher, so do Treasury bond yields.
    When bond yields rise, bond prices fall.
    When bond prices fall, the Bond Bubble bursts.
    When the Bond Bubble bursts, the EVERYTHING bubble follows."

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  • Danny B
    The money-renting zombie

    As we get closer to the end of the debt super-cycle, it becomes more difficult to explain the process. It takes a lot more reading also. I keep reading about the "tight labor market" and other BS. I have claimed that we won't see hyperinflation. I have also claimed that we won't see much price inflation. Real income is falling,,, employment is falling and aggregate purchasing power is falling. This tends to limit spending and (somewhat) forestall price increases.
    On the other side of the equation, we see money bleeding out of the hyperinflated upper loop of the economy. It tends to flow into anything that can be considered as a store-of-value. Hot money also tends to flow into sectors that are considered as "necessities". There has been enormous price inflation in anything connected with the medical sector.
    Education is considered essential and the cost of that has been inflated.

    "The average cost of tuition and fees at a private, non-profit, four-year university this school year was $31,231—up sharply from $1,832 in 1971-1972 (in current dollars)."
    "government aid that once came as grants have transitioned to student loans."
    "Germany has abandoned tuition fees altogether for German and international students alike. "
    "Germany encourages the flow of international students with free tuition and 18-month post-study work visas. In 2016, German universities ... “Of course, we invest a certain amount of money [in their education], but what we get back is worth so much more. "
    OK, so, the bankers got their financial claws into everything. Everything is done for short-term gains regardless of the long-term costs. We spend enormous amounts on medical "care" and are sicker than many countries that spend far less.

    The banks survive on "spread". The consumer was broke and the only spread that could be generated was by lowering the prime rate from the banks. That has started to turn upwards and the defaults will climb also.
    The consumer is/was broke. Extending more credit to keep the fees coming into the banks is a fool's game. At the same time that ZIRP created a bit of income for the banks, it destroyed everybody's interest income. The GDP is a measurement of how much money is in the economy. The bankers just create more and more until it flows into every corner.
    ZIRP brought spread to the bankers and kept their system alive for 10 more years. Personal savings are gone and debt service is rising,
    Here is a long term chart of the FED funds rate. LOTS of free money to keep the "money-renters" in business. There are just TOO MANY people trying to rent out their money.

    The bankers try to preserve the value of all capital to keep loans from defaulting. The bankers try to keep ALL speculators from losing money.
    Socialism is the firewall between Darwinian pressures and the non-producers.
    QE is the firewall between money-renting and the reality of an economy that has lost it's manufacturing base.

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