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  • Danny B
    Doubtful DOW,,, fading empire

    ALL economic models are simplistic in that, they try to be steady state and ignore time.
    "Virtually every model created tends to be predominately flat with a minimum of dynamic variables lacking understanding of TIME."
    "The Value at risk (VaR) model is a measure of the risk of investments. It estimates how much a set of investments might lose, given normal market conditions, in a set time period such as a day."
    "So you can see, such models are incapable of determining TIME and as a result, they will always fail during a CONTAGION that they cannot see coming."
    "only TIME determines the success of any model and making broad assumptions of probability have ALWAYS failed. If you cannot model TIME and CONTAGION, you will be wiped out during a crisis and VaR will fail just as Black-Sholes."
    Armstrong is calling for an eventual rise of the DOW to 39,000. Americans are fully invested in the stock market. Foreign CBs are heavily invested. Foreign funds are invested. Apparently, he expects a lot of money to come from somewhere.

    It's true that it wouldn't take a huge amount of money to bring the DOW to 39,000. Maybe a few $trillion.
    "What would charts like these look like without $20 trillion in central bank intervention, negative/low rates and a global debt construct that has expanded beyond $217 trillion? "
    How much of the $217 trillion would it take to reach 39,000? Here are a bunch more charts.
    "Ultimately this will cause massive pain as the underlying economy is not keeping pace with the multiple expansion. After all 2017 represented a continued expansion in wealth inequality, debt, leverage, government spending and further allocation of capital to the few. Nothing, and I mean nothing, has been done to address structural challenges facing the global economy."
    "We see hedge funds closing left and right as anyone trying to use active judgement in these markets gets ground up as passive participation has completely taken over:"
    This is a good article. One has to wonder if it is possible for massive capital flight to pump up the DOW to 39,000 while everything else is laid to waste. Armstrong predicts a flight from public debt to private debt. Suppose that everyone dumps Treasury bonds and flees to stocks and corporate bonds. GOV goes bankrupt and tries to print it's way out or, something else equally desperate. Remember that GOV spends 24% of the GDP. How could the stock market keep rising with a bankrupt State?

    " Warfare is often the death knell of a declining empire—both in its extreme financial cost and in its ability to alienate the peoples of other countries. In the new millennium, the US has invaded more countries than at any other time in its history and appears now to be in a state of perpetual warfare. This is being carried out both militarily and economically, as the US imposes economic sanctions on those it seeks to conquer.

    This effort has become so threatening to the world that other major powers, even if they do not have a history of being allies, are now coming together to counter the US."
    "But this does suggest that those who live within the present empire—the US—will be the last to truly understand that the game is all but over. Americans seem to be hopeful that the dramatic decline is a temporary setback from which they will rebound."
    "Yet the US is hanging on tenaciously, and like any dying empire, its leaders are becoming increasingly ruthless, both at home and abroad, hoping to keep up appearances."

    " In the latter days of the British Empire, we Brits seemed to be under the illusion that, even as our power base crumbled, we might somehow retain control by threats and bluster. The UK was utterly wrong in this and only succeeded in alienating trading partners, colonies, and allies by doing so.

    The same is happening again today. China, Russia, and the rest of the world, when faced with American threats and bluster, will not simply fold their tents and accept that the US must be obeyed. They will, instead, create alternatives. And they are doing so exceedingly well and quickly."
    The Next Empire | International Man

    Historically, the reserve currency was always the currency of the strongest military power. Historically, the strongest currency was backed by gold. Because of tech changes, this is no longer possible. BUT, it is possible to back sovereign bonds with gold. China doesn't need to have a strong currency if it has strong sovereign bonds. Armstrong is predicting a long rise in the stock market. What if we go into hyperinflation and the 39,000 level as actually a drop in perceived wealth? The stock market hasn't had ANY gains for the last several years when measured against inflation (Stockman)
    Armstrong claims that hyperinflation only occurs in peripheral economies. We already have hyperinflation in the upper loop. It is slowly creeping into the lower loop. RE, medical care and education.

    China figures that pollution costs them 15% of gdp from losses tied to health issues. They're trying to fight pollution without slowing growth. They are trying to balance; pollution + health + credit growth.
    2 graphs on financial stress,

    David Einhorn speculates that markets are permanently broken.
    1/02 Major platform liquidated its customers’ bitcoin cash for bitcoin – Fortune Reportedly, BTC cash is superior to BTC because BTC fees are FAR too high. Somebody is trying to suck up more fees.
    1/01 Bitcoin tensions rise; investors claim banks freezing their accounts – SMH

    1/02 Maturing bonds about to drain billions of dollars from Tesla? – Seeking Alpha Tesla was bought / supported by rich tech giants trying to help get electric cars off the ground. BIG competitors have entered the markets and it is doubtful that investors will roll over their investments.

    12/30 The dark side of the internet of things – Toronto Star
    12/30 ‘Whoever controls cyberspace will control the world’ – Telegraph
    12/29 Information warfare: the year ahead – Security Boulevard
    12/26 2018 will be the year of cyberwar – Macleans

    There is a slowly dawning perception that malware and attacks can make big changes in the world.

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  • Danny B
    Solar minimum and crop loss

    Russia is limiting carbon transport in the Northern Sea Route. TASS: Business & Economy - Putin introduces exclusive right for Russian vessels to carry oil and gas over NSR
    Russia wants to switch over from Petrol to gas,
    That makes more sense than electric cars.

    "And based on these calculations, the stock market enjoyed less adversity in 2017 than any other year in history going back over 100 years"
    “‘I would expect 2018 to be an almost repeat of 2017,’ said Saut, chief investment strategist at Raymond James. ‘People are still way underinvested."

    There is no doubt that the financial system is headed for collapse. At the same time, there is no doubt that we are moving into a solar minima.
    Our magnetosphere is getting weaker and failing.
    Crop losses are growing worldwide,
    The minima will affect all regions but, especially the northern hemisphere. Mt. Washington had a wind-chill index of minus 89f. How will these changes affect agriculture?
    China has long been getting ready,
    Eventually, there will be a mad scramble for farmland that has an Adequate growing season.
    Crops fall victim to Winter 2017's drastic temperature swings - CBS News
    Brutal Drought in the West Is Decimating This Year's Wheat Crop ...
    What if several of the world's biggest food crops failed at the same time? › Earth › Environment
    We face an economic collapse at the same time as we face a major disruption of the growing season.
    Plant a garden,,,, in a greenhouse.

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  • Danny B
    The fallout from de-dollarization

    There is a lot to read. Post WW II, everyone demanded dollars to hold as reserves. This allowed America to saturate all markets with dollars. This huge saturation contributed to stability of the dollar. No small force could cause much of a change. America printed bazillions of dollars that were spread around the world. China has printed bazillions of Yuan but, they are all in China. They have done a bunch of currency swaps but, that isn't the same thing. The Yuan can never be a reserve currency because, there just aren't enough of them in circulation. China has printed with wild abandon but, nobody is going out of their way to accumulate Yuan. AND, there is a $trillion in capital flight out of China.

    China needs to absorb and stabilize the flow of hot money. Once that confidence is lost in Western bond markets (apparently, in Europe first), hot money will be scrambling to find a safe haven. ALL CBs have grossly inflated. Commodities depend on consumption from a shrinking work force.
    Corporate bonds depend on earnings. Gold doesn't depend on consumption. It is likely to attract a lot of hot money. Same is true for silver because so many nations have used monetary silver in their history.
    Here is a good vid on de-dolarization. Keep in mind that; as the dollar is killed, it takes down the rest.
    This article isn't particularly good but, the comments are very interesting.

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  • Danny B
    January 1, part one

    Most of the economic news is just noise, BS and pabulum. I'm trying to wade through and post as little as possible. The average person does not want to wade through mountains of data that can either be ignored OR reduced to one sentence. I still have to get a coherent message across though.
    My posts have tracked the ever-growing bubble and, all the naysayers who say that it can't grow indefinitely. The wage crash has caused CBs to try to compensate by loading up on debt. Debt is; pulling future consumption to, today. The missing consumption of today is pulled from the future.
    As we move into that future, we don't have the earnings to continue to consume. Those earnings are already spent. This sets us up for defaults. The CBs are trying to protect the assumed value of all the physical collateral so that all the loans don't appear to be "underwater".
    In the housing crash, people who owned a home that was worth less than the outstanding balance of the loan just, walked away. The price of a home MUST be relative to the wages in the same area. The wages are gone. The hot money flows in and maintains the prices even though local wages can not do this.
    The hot money maintains / supports collateral (assets, RE, etc) when the wages in the lower loop can no longer suffice.
    GDP is a measure of the money in all the assets and markets. Productive gdp has been falling for years. The GDP number has been slowly elevated by adding more debt to the overall numbers.
    EVERYBODY in the financial sector is trying to maintain the value of the collateral.

    America was previously a high-wage & high-price economy. As the wages fall, we must revert to a low-wage & low-price economy. The low-wages are here. Maintaining the value of the collateral is an attempt to preserve / maintain the high prices. The FED, in all their brilliance, expected that monetary stimulation would be temporary and close-ended.
    Did they really believe that high wages would return?
    The various CBs have pumped in an estimated $200 trillion. They are aghast that hyperinflation hasn't arrived.

    They create hyper-inflation of the money supply. But, the money is all debt that can only be vitiated by the lower loop. As we cut back on consumption, they are forced to compound the debt pile to keep it alive.
    Kinda like building a snowman in August (northern hemisphere).
    Stockman insists that the debt can't grow forever. Japan is trying to make a liar out of him.
    The nominal paper debt can theoretically grow without limit if it just sits there without an interest burden. The State printed so much money that there is no place for it to flow. The State figured that investors would just park money in GOV bonds.
    Just the same, interest rates are starting to rise in the 10 year market that is the benchmark for most loans. U.S. FED GOV must lie about how much new debt it is creating. The new debt dilutes the value of the old debt. BUT, new debt must be created to meet the demands of growing debt service.
    The FED ends QE but, the PPT and ESF have a printing press in the back shed.
    The EURO was supposed to be a huge competitor to the dollar. BUT, Mario Draghi is a GS man. He visibly fired up the presses to service the EU bond market. Is it any accident that the FED does stealth QE while GS Draghi does OPEN QE?
    U.S. debt hopes to be the least ugliest house on the block and, attract all the capital outflows from the more ugly houses. The Chinese need to have gold-backed Yuan bonds to keep capital from flowing out. It is in their best interests to eventually, crash the physical gold market. The new, higher price will allow gold-backed Yuan bonds to absorb all that excess capital that is floating around the world. The CBs created an extra $ 200 trillion. Various States are trying to suck that capital into their bond markets. Globalism mandates unlimited hot-money flows, Be careful what you wish for.
    As confidence shifts, capital shifts.
    Last edited by Danny B; 01-02-2018, 02:14 AM.

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  • Danny B
    Trying to preserve the value of the collateral

    The robots walked in the front door AND, the humans got tossed out the back door.
    As the wage base crashed, the CBs unleashed their magic pixel machines.
    "In the U.S., Total Securities (Debt and Equities) are approaching $90 TN, or about 450% of GDP. This compares to cycle peaks 379% in 2007 and 359% in early-2000. It was as if 2017 was the year that central banks convinced the markets the party doesn’t have to end. Let the good times roll."
    "I never bought into the comparisons of 2008 to 1929 - nor the “great recession” to the Great Depression. 2008 was for the most part a crisis in private Credit, with government debt and central bank Credit (fatefully) unscathed. In contrast, the bursting of the super-Bubble in 1929 unleashed a global systemic crisis of confidence in finance and policymaking more generally. In important respects, 2017 reminds me of reckless “caution to the wind” late-twenties excess in the face of darkening storm clouds "

    " Importantly, another year passed with Beijing unwilling to forcefully rein in rampant excess. The situation becomes only more perilous, with global markets increasingly confident that Chinese officials dare not risk bursting the Bubble."
    China can't bring down the Western hegemon with just a small "pop"
    "’The debt issuance is pretty much off the charts everywhere"
    Credit Bubble Bulletin : Weekly Commentary: A Phenomenal Year

    " Active stock managers average 109% exposure to the asset class. That is not a misprint. The average exposure is greater than 100% such that active stock managers are "leveraged long."
    The CBs try to keep the party growing even after the wage-base collapsed. They figured that; if they pumped liquidity into every nook and cranny, the middle class would feel rich and start spending again. With ~ 100 million not in the labor force, that wasn't a very good plan.

    "Credit is the foundation of the current financial system, for credit enables consumers to bring consumption forward, that is, buy more stuff today than they could buy with the cash they have on hand, in exchange for promising to pay principal and interest with their future income."
    "If a lender loans me $500 to buy a new table saw, and I default on the loan, the table saw is the collateral. Unfortunately for the lender, the market value of the used tool is perhaps $250 at best. So the lender loses $250 even after repossessing and selling the collateral.

    If the lender loaned me $500 to buy champagne and I default, there is no collateral at all; the loan was based solely on my ability and willingness to pay principal and interest into the future.
    When I say that all credit is not equal, I’m referring to the creditworthiness of the borrower. "

    "Central banks are now trapped. If they raise rates to provide low-risk, high-yield returns to institutional owners, they will stifle the “recovery” and the asset bubbles that are dependent on unlimited liquidity and super-low interest rates.

    But if they keep yields low, the only way institutional investors can earn the gains they need to survive is to pile into risk assets and hope the current bubbles will loft higher.

    This traps the central banks in a strategy of pushing risk assets—already at nose-bleed valuations—ever higher, as any decline would crush the value of the collateral underpinning the titanic mountain of debt "
    12/31 Value of US housing market climbs to record $31.8 trillion – HousingWire
    In the U.S., Total Securities (Debt and Equities) are approaching $90 TN
    All homes in the country are now worth a cumulative $31.8 trillion.

    Stockman, " Yet what is coming down the pike is nothing less than a drastic, permanent downward reset of financial asset prices that will rattle the rafters in the casino."
    "Accordingly, the GOP assumes $30 trillion of extra GDP over the coming decade or nearly 23% more than would be generated by the actual growth rate (blue line) of the last decade; and consequently, $6 trillion of extra revenue."
    "Schwab's retail clients have never, ever had lower cash allocations than at the present time---not even during the run-up to the dotcom bust or the great financial crisis." BAaaaa
    12/31 These 11 of 19 bear market warnings have been signalled already – MunKnee We don't need no stinkin warnings.
    "That is, what is fundamentally different about the greatest financial bubble yet is that there is no possibility of a quick policy-induced reflation after the coming crash. This time the cycle will be L-shaped----- with financial asset prices languishing on the post-crash bottom for years to come. Hussman has shown this very clearly.

    And that is a truly combustible condition. That is, 65% of the retirement population already lives essentially hand-to-month on social security, Medicare and other government welfare benefits (food stamps and SSI, principally). But after the third financial bubble of this century crashes, tens of millions more will be driven close to that condition as their 401Ks again evaporate. MORE VACCINATION !
    Blazing on down,
    Side note;
    Over 100 Seniors Die After Receiving Flu Shot During Study

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  • Danny B
    Doug Casey

    Doug Casey is a perma-bear, preaching doom & gloom for many years. He has an article on Zero Hedge that very clearly explains the essence of an honest banking system vs our current system. It is worth a read. The comment section is a fascinating examination of the various power-plays between the controllers.
    Cryptocurrency expert kidnapped for $1 million bitcoin ransom
    Happy new year to all

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  • Danny B
    Pension meltdown,,,Chinese sepuku

    12/30 Commodities end 2017 with a bang in longest rally on record – Bloomberg
    "Aluminum, the poster-child for hopes of a Beijing-led supply shutdown, has been piling up in Shanghai at a worrying pace. The stockpile of metal available for order has hit a record 634,000 metric tons,"
    China's Commodity Beast Enters Hibernation - Bloomberg Gadfly
    Nov 15, 2017

    12/30 Only one US state pension has funded level above 50% – AI-CIO No problem. Vaccinate away the problem.

    "While a public employee does have a 'vested right' to a pension, that right is only to a 'reasonable' pension — not an immutable entitlement to the most optimal formula of calculating the pension," Judge James A. Richman wrote. "
    Lawsuits threaten pension cuts for California state workers
    So, the State will decide if your pension is reasonable or not.

    12/30 Chinese ’shadow debt’ an $18.5trln market set to collapse –
    "Since then, Chinese authorities have proven they are still able to control their economy. But stability has come at the cost of ever-increasing debt levels. The International Monetary Fund warned in October that China's banking sector assets have risen steadily to 310 percent of GDP from 240 percent of GDP at the end of 2012. "

    Kunstler, "You may detect that I’m not exactly a fan of the president, but I rather admire his standing up to the permanent bureaucracy that we call the Deep State, and especially its elite poobahs, who have driven this polity into a deeper ditch than the voters realize. "
    "After more than a year, the RussiaGate narrative is looking like something fished out of the Goodwill Industries dumpster,"
    "The Tax Plan? Real tax relief just doesn’t mean a whole lot without a reduction in the size and scale of government. Its unstated purpose is a temporary stimulant replacement for Federal Reserve money-printing."
    The Year in Trump - Kunstler

    Russia responds to Trump's tax plan,
    China responds to Trump's tax plan,
    So, America, Russia and China are reducing their tax receipts. The corporatocracy is foundering because consumption is crashing. The State squeezes out one more stimulus to try to save a system in terminal decline. Everything done to save the financial system is killing consumption. Giving more money to corporations is just one more negative in the negative feedback loop. NONE of the money will go into wages.

    We are now starting the 2018 Outlook Report and this is going to be a shocker. We are looking at the start of a Panic Cycle Year in many markets. This warns we can see dramatic volatility that will make your nose bleed."

    BECAUSE America had the reserve currency, it could print with wild abandon. BECAUSE the America dollar was the store-of-value for States, they demanded that we print with wild abandon. This gave LBJ, et al the opportunity to splurge on stupid projects like the welfare-warfare State. If foreign States wanted to have a domestic store-of-value, they had to sell us stuff for a lower price than we sold for. This demand for dollars, coupled with the requisite lower prices for stuff resulted in America running a permanent trade deficit.

    In a certain sense, America was forced to go off the gold standard by the ever-increasing demand for dollars. In the mid-60s, we upshifted the printing presses. We diluted the value of the dollar because everybody was demanding them. Because of this dilution, gold was leaving the U.S. treasury at the rate of 100 tons a week in summer of '71. Nixon was forced to close the gold window. This allowed America to REALLY get the presses going.
    The Bretton Woods agreement used the U.S. dollar as a proxy for gold. The main weakness of this arrangement was; foreign States demanded a fast rising pile of dollars when the gold supply only grew at 2%. Nixon didn't really understand what the consequences would be. China has come out and said that; his actions were more momentous to the world than even the world wars.
    No gold peg has EVER survived. If Nixon had a good sense of history, he would have devalued the dollar vs gold.
    "Roosevelt took much greater action to end the gold standard than did Nixon when Roosevelt let the dollar "float" in 1933 to combat the shrunken monetary supply during the depression. ..."
    “Most economists now agree 90 percent of the reason why the U.S. got out of the Great Depression was the break with gold,”

    This ALL gets back to an immutable law. Your currency and your store-of-value can NOT be one and the same. Gresham's Law states that the strongest currency will go into hiding to serve as a store of value. Because millions of people and dozens of States HID their dollars, America was able to PRINT without a risk of hyperinflation.

    The West severely manipulates the price of gold downwards so that; the dollars will continue to be hidden away as a store of value. Therefore, the East can patiently wait for the inevitable crash that will exorcise the dollar from it's status as the store-of-value. China is NOT trying to avoid a crash. China recognises both Triffin's Dilemma and Gresham's law. They would like the Yuan to be a "good" currency with wide acceptance. They know that the Yuan can never serve as a store-of-value.
    Their shadow banking system is ready to blow. They propose removing all State control from the system so that it can regulate itself.
    They have prepared by accumulating the long-accepted store of value,,, gold. By removing State control, they have indicated that they are ready to pull the pin on the debt hand grenade.
    Last edited by Danny B; 12-31-2017, 09:53 PM. Reason: mistreaks

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  • Danny B
    QE in stealth mode

    The headline numbers on unemployment are at about 4%. With just a little digging, the BLS admits that the true numbers are much higher. Investors don't want t do a little digging. The true number is about 23%.... Shadowstats.
    John Hussman shows the stock market to be wildly over valued from it's historical norm. Investors have some kind of group mania that urges them to ignore the bad news and just, pile in.
    Stockman, "December 1996, the NASDAQ 100 index rose from 830 to 4585 or by 450%. But the perma-bulls said not to worry"
    "During those heart-stopping 30 months of free-fall, all the gains of the tech boom were wiped out in an 84% collapse of the index. Overall, the market value of household equities sank from $10.0 trillion to $4.8 trillion----a wipeout"

    "During the 20 months from the July 2007 peak to the March 2009 bottom, the RUT gave it all back. And we mean every bit of it----as the index bottomed 60% lower at 340. This time the value of household equities plunged by $6 trillion, and still millions more baby-boomers were carried out of the casino on their shields never to return."
    "the value of equities owned by US households exploded still higher----this time by $12.5 trillion."
    "So an epochal pivot has begun----led by the Fed's committement to shrink its balance sheet at a $600 billion annual rate beginning next October. This pivot to QT (quantitative tightening) is something new under the sun and was necessitated by the radical money printing spree of the past three decades."
    So, they claim.
    "In the first instance, the market is not merely complacent; it is insouciant-----indulging in an eye-wide-shut orgy of recklessness that truly has no parallel, not even the mania of 1927-1929."

    "ground zero of the impending bond market conflagration is FY 2019, which incepts exactly 276 days from now during the same window of time (Q4) as the Fed hits full stride on its bond dump-a-thon. Yet on top of CBO's most recent but now obsolete FY 2019 deficit deficit projection of $700 billion, the Trumpian GOP is adding $200 billion for defense, disasters, border control, ObamaCare insurance bailouts and other domestic boodle; and on top of that, now comes its vaunted front-loaded tax cut, which will rip $280 billion out of Uncle Sam's revenue collections in the same year."
    "What you get is Uncle Sam fixing to sell $1.28 trillion of debt---equal to 6.2% of projected GDP---at the same time the Fed is dumping another $600 billion of existing treasury and GSE paper."
    "The only other category left is foreign buyers---private investors and central banks alike---but that source of "demand" for Uncle Sam's emissions is fixing to dry-up, as well. "

    "In all, what was a $1.3 trillion central bank bond purchase rate earlier this year will fade to nearly zero in 2019" So, they claim.
    "Stated differently, what is "priced-in" to the world's risk asset markets is central bank footings of $22 trillion-----not the $6 trillion level prior to the financial crisis or the $17-18 trillion level now being targeted for the end of the QT/normalization campaign."
    "In all, we'd say Wall Street is calling the sheep to the final slaughter. At the moment, in fact, the bleating is so loud that the gamblers are seriously debating whether the 50X gain in bitcoin in just 22 months is sustainable. "
    Contra Corner » The Greatest Bubble Ever: Why You Better Believe It, Part 1

    OK, so, the FED is going to stop printing. Foreign buyers are not going to buy treasuries. In 2015, there was a great drop in the purchase of U.S. treasury paper. Suddenly, the BLICS showed up to buy everything. Belgium, Luxembourg, Iceland, Cayman Islands, Switzerland.
    "The US Federal Reserve is using 17 central banks working in concert through currency swaps to maintain the fraudulent monetary system, which are probably tied into Forward Rate Agreements (FRA) and Interest Rate Swap derivatives between central banks."
    Belgium bought $ 420 billion even though, they didn't have ANY dollar reserves.
    Exported QE Travesty: Meet the BLICS

    So, while Stockman has logic on his side, the FED has corruption and a desire to survive on it's side.

    12/28 Stock optimism swells as S&P 500 most overbought in 22 years – MarketWatch
    12/29 US homeowners made $2 trillion on their houses in 2017 – Zero Hedge
    12/28 U.S. renters paid a record high $485.6 billion in 2017 – Bloomberg
    Property unaffordable for 100,000 households a year in England ..
    Housing Market: Why Millennials Are Getting Priced Out - WSJ

    Since the FED has purportedly stopped QE a few years ago, foreign investors are attracted to American markets. The EU banks are probably much worse than American banks so, we will see capital flight to America. As the foreign capital flows in, the banks will INDEED be stronger.

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  • Danny B
    Lefties = incompetence,,,bankers = corruption

    Obummer clearly proved that lefties prefer to be surrounded by other lefties who agree with them. If you are looking for fellow lefties, start looking for brain-dead people.
    Armstrong on Venezuela, "A general with no energy experience was put now in charge of the state oil company. The problem has been political arrests. (this) has witnessed a mass migration of those with talent leaving the country with incompetent management. This has resulted in the oil industry simply collapsing as production is plummeting."
    Their economy has shrunk by 32%,

    "The bad loan (“non-performing loan” (NPL)) crisis in Europe is well known and many have been calling for this issue to be addressed. In Italy, the bad loan crisis has reached 21% of GDP. While NPLs dropped to 4.8% of all loans in the EU as a whole during the first quarter of 2017, they remained well above 40% in Greece and Cyprus, at 18.5% in Portugal, and 14.8% in Italy according to the European Banking Authority.

    Now comes the bureaucrats with zero experience to save the day – or is that to create a financial pandemic in the EU? " SNAFU
    "Once again, all we have is the ECU and ECB desperately trying to prevent a banking crisis as loans in default rise. However, this project is totally incomprehensible for now a well-secured loan which does not pose any particular credit risk in traditional banking can find its collateral sold."
    "This regulatory logic is just totally insane" "There is no distinguishment between fully-collateralized and non-collectible loans. Nor do bureaucrats comprehend the true meaning of a “non-performing loan” that is temporary and one that could never be repaid. Bureaucrats are not capable of understanding the economy "
    So, given the chance, the lefties hire idiots to run the economy. Given the chance, the bankers loan money to deadbeats,,,, usually to their friends. The S&L crash was a huge case of liar-loans to friends of bank execs. 1,000 of them went to jail.

    With this as background, it is a good idea to take another look at Armstrong's prediction of DOW 39,000. He is essentially predicting MASSIVE capital flight from the R.O.W. to America. We have seen that investors are willing to accept ZIRP or even NIRP to park capital in something that they believe is a safe haven. Returns on the broader stock market are slightly negative when accounting for true price inflation. Earnings are non-existent.
    The CBs have force-fed liquidity into the investment market in the hopes that it will flow into every nook and cranny. Each investor will look for return to protect his investment. Since most investments yield zero, the investor must move into riskier asset classes. By this manuver, the CBs give financial support to numerous zombies that could ordinarily never attract capital.
    Since the Russell and the Wilshire indexes are sinking, it is doubtful that the DOW and S&P can rise in accordance with Armstrong's predictions.

    Here are a couple of articles concerning how the New tax laws will affect capital flow from Europe. Pretty dense.
    The new law will trend to drain capital from Europe.
    "And when Apple’s Tim Cook is talking about bringing back $282 billion in capital in 2018 alone, the banks that are holding those deposits and investments as reserves are going to have to scramble to find the dollars to redeem those investments.

    Does anyone think Apple draining even just $5 billion a month from the European banking system won’t have a huge effect on the health of those banks?" "They began buying after Trump was elected because, rightly, they expected a strong U.S. dollar from the policies he was promoting.

    For most of 2017, up through September, the dollar was weak with the USDX dropping from above 104 to below 91, a huge decrease."
    So, the bankers have burned the European very badly. The lefties intend to extract revenge from the bankers.
    " €800 billion to €1 trillion euro in NPLs exist among the European banks"
    "In Italy, the bad loan crisis has reached 21% of GDP. While NPLs dropped to 4.8% of all loans in the EU as a whole during the first quarter of 2017, they remained well above 40% in Greece and Cyprus, at 18.5% in Portugal, and 14.8% in Italy"
    With this many NPLs, an attack on the banking system will be FATAL.

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  • Danny B
    50 ways to default and leave your banker

    2) For every investor who calls some security an “asset” there’s an issuer that calls that same security a “liability”
    Lenders are so desperate to find yield in a ZIRP world that they are lending with less and less protection. The borrowers will be the ones that "walk" in the event of a problem.

    Ron Paul, “We’re on the verge of something like what happened in ‘89 when the Soviet system just collapsed,” he said. “I’m just hoping our system comes apart as gracefully as the Soviet system."
    The Soviet system had the State owning all the housing,,,more or less. People didn't get thrown out on the street for not paying the rent. If the State bond market collapses as Armstrong predicts, it will be difficult for the State to stop mass eviction.
    PressTV-US on verge of Soviet-style collapse: Ron Paul

    The FED printed to save the banks. The money creeped over into housing. The State knows that it is very dangerous to reach a position where the common man can't afford housing. The State must NEVER let matters get to the point where it's people have nothing left to lose. NO law can ever be enforced in that scenario.

    The U.S. is sanctioning Russia and,,, Russia is fighting back.
    Pox Americana is persecuting 3 of the most prolific oil exporters, Iran, Venezuela and Russia. This, because they are trying to extricate themselves from the dollar system. As they are successful, more will join them. Eventually, America will find it hard to buy oil.

    The PBOC prints money to backstop local GOV banks who have gotten in too deep. The new plan, "Central government control of the scale of local government bonds should be eliminated,"
    “Eliminate central government control on the scale of local government bond issues, expand the scale of local government debt issues,” Xu wrote."
    The West has private banks creating unlimited "money".
    China has public State and local banks creating unlimited "money".
    It appears that the public banks can better tolerate the coming default cascade.

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  • Danny B
    Gann,,yield curve,,CALPERS follies,,Hussman, market psychology

    The Russian Kondratief was the first person of note to talk about economic cycles.
    W.D. Gann figured out the cycles many years ago and made good predictions. He doesn't have the enormous baseline that Armstrong has but, he has been pretty accurate. One little graph shows the yield curve to be trending down but, not very steeply.
    Pretty good read,
    The yield curve is very important,

    CALPERS is $ 138 billion short. They claim that it really isn't a problem. They STILL expect to get 7% returns. They were urged to reduce that to 4%. Their reply, "CalPERS claimed that such an action “would do serious damage to many California cities, counties, other public agencies, and schools. If implemented, they would forever jeopardize the retirement security of millions of current and retired California public employees and their beneficiaries.”
    The NIRP world hasn't been kind to them.
    "The study cited poor fund performance, poor financial, managerial competence, politically motivated decisions, and an artificially inflated discount rate"
    They are a bunch of California socialists who insisted in investing in projects that were very socially correct.
    "For the 12 months ended on June 30, 2016, CalPERS investments lost 2.7 percent, or $8.2 billion. Combining the cash loss with the pension plan's failure to earn any of the 7.5 percent “assumed” investment return of $22.6 billion, the CalPERS total “actuarial investment loss” was a stunning $30.8 billion."
    "an institution that lost $70 billion in the credit wipeout of 2008 and 2009"
    "It’s no secret that hedge funds rank among the most expensive investment vehicles. They typically collect a performance fee, frequently 20 percent, and also take a percentage of assets under management, often 2 percent but sometimes more, even if their investments lose money. Calpers said it spent $135 million in hedge fund fees in its last fiscal year"
    CalPERS Past The Point Of No Return? - ValueWalk

    "Luxury spending rose 5% globally in 2017, the management consulting firm Bain & Company found. But that is a fraction of the 40% rise in net worth that people in America's top-tenth of income earners saw between 2013 and 2016, according to the Federal Reserve."
    2017 was a great year to be rich - Dec. 26, 2017
    You can see the problem here. The money shifts to the upper loop and, just sits there rolled over into more paper schemes. The upper loop gets more bloated. The FED must feed the credit monster because commerce is absent.
    Japan urges it's companies to raise wages. Everybody is afraid to raise wages and lose market share.

    Hussman, "Specifically, faced with unusual or extraordinary price advances, there is a natural tendency (particularly in the presence of crowds, feedback loops, and potential rewards) to look for explanations. The problem isn’t that logic or reason has failed, but that the inputs have been distorted, and in the attempt to justify the advance amid the speculative excitement, careful data-gathering is replaced by a tendency to confuse temporary factors for fundamental underpinnings."
    Too many people pay attention to charts and not enough attention to rationale.
    " The problem was that investors stopped thinking about stocks as a claim on a very, very long-term stream of discounted cash flows."
    Don't forget our falling wages and falling consumptive power.
    "But again, as the advance became more speculative, investors largely ignored the impact of their own speculation in producing that advance. Instead, their first impulse was again to try to justify the elevated valuations in novel ways (recall “price-to-eyeballs”). By March 2000, on the basis of historically reliable valuation measures, I projected that a retreat to normal valuations would require an -83% plunge in tech stocks. In the 19 months that followed"
    Yep, hot money is driving things up. As things keep going up, more hot money flows in so that investors don't miss out.

    1) Total real saving in the economy must equal total real investment in the economy;

    2) For every investor who calls some security an “asset” there’s an issuer that calls that same security a “liability”;

    3) The net acquisition of all securities in the economy is always precisely zero, even though the gross issuance of securities can be many times the amount of underlying saving;

    4) When one nets out all the assets and liabilities in the economy, the only thing that is left – the true basis of a society’s net worth – is the stock of real investment that it has accumulated as a result of prior saving, and its unused endowment of resources. Everything else cancels out because every security represents an asset of the holder and a liability of the issuer. Securities are not net wealth.

    GREAT graphs,

    12/27 Record high 30% of U.S. adults now live with a roommate – Zero Hedge
    12/27 Case-Shiller 20-home price index just shy of 2006 bubble peak – Mish

    The investor has 2 houses,,, the worker has none.
    Armstrong says that the Chinese use the housing market as a bank account. There are 64 million empty buildings in China when you include commercial property. China has the fastest shrinking labor force in the world. Who is going to buy all these houses?
    The BRICKS were supposed to displace the G7 as the world's leading economies. They just don't have enough internal consumption to generate the economic activity necessary.

    12/28 5 reasons the Fed needs a bitcoin-style currency – Fortune
    12/28 How the blockchain is redefining trust – Wired
    blockchain, YES. Bitcoin,, not really.
    BTC note,
    Last edited by Danny B; 12-28-2017, 05:07 AM. Reason: pselling

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  • Danny B
    Euthanasia,,, the China cure for debt hangover,,,BTC news

    A couple of days ago, the rich were ecstatic about the tax cuts. Today is a different story.
    China has a runaway credit system. They plan to cure the problem by allowing local GOV to greatly expand borrowing and, at the same time, remove State control.

    Good graphs but, somebody has poured molasses in my computer and I'm not going to excerpt.
    12/26 The bitcoin hoax – Huffington Post
    12/26 Five bitcoin must reads of 2017 – Futurism
    12/26 The Winklevoss twins talk bitcoin futures and fears – Fox
    12/26 Bitcoin’s mysterious creator appears to be sitting on a $5.8b fortune – Yahoo!

    12/26 Israeli regulator seeks to ban cryptocurrency firms from stock exchange – GATA Evidently, jewesh bankers don't like BTC.,,,, along with American and Chinese bankers.

    12/26 Home prices in 80% of US cities grow twice as fast as wages – Zero Hedge That is where the hot money from the upper loop flows into the lower loop.

    Leave a comment:

  • Danny B
    Possibilities with AI,,Blockchain

    A lot of mankind's problems are related to human nature. It is possible that AI will come up with some solutions to our problems.
    Robot taught itself never seen before chess moves in hours | Daily Mail Online
    "In those 240 minutes of practice, the program not only taught itself how to play but developed tactics that are unbeatably innovative — and revealed its startling ability to trounce human intelligence. Some of its winning moves had never been recorded in the 1,500 years that human brains have pitted wits across the chequered board."
    "On December 6, 2017, AlphaZero took over the chess world . . . eventually solving the game and finally enslaving the human race as pets."

    "Already top IT experts warn that deep-learning algorithms can run riotously out of control because we don’t know what they’re teaching themselves.
    And the programs can develop distinctly worrying ideas. A system developed in America for probation services to predict the risk of parole-seekers reoffending was recently discovered to have quickly become unfairly racially biased."

    Political assassination,
    Socrates and BTC,

    A very good article on integrating blockchain contracts into the existing legal system.
    Who knows what the limits / frontiers of AI are going to be?
    AI detects expressions to tell if people lie in court | Daily Mail Online
    Apparently, you Aussies have developed a taste for Mexican food.
    12/25 Homelessness in England rises by 75% among vulnerable groups – Guardian So, bring in more Pakis and Poles and Arabs.
    12/25 There’s one ledger – it’s called blockchain – GoldSeek
    12/25 Ten years in, nobody has come up with a use for blockchain – Hacker Noon

    12/25 ‘Bitcoin the perfect bubble, but blockchain a remarkable solution’ – Wired
    12/24 Technology behind bitcoin could transform the world – Guardian

    12/25 Trump is obliterating ISIS off the face of the earth – Town Hall
    12/25 Japan births plunge to lowest level ever recorded – Zero Hedge Surely, there is no connection to economic factors.

    Part 2 of the year in review at peak Prosperity,
    Last edited by Danny B; 12-25-2017, 06:43 PM. Reason: Duh

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  • Danny B
    No jobs means no kids = no economy

    Armstrong says that everything runs in cycles. Not true.
    Interest rates are the lowest in 5,000 years.
    The birth rate is the lowest in history.
    The Amish have large families because they need the "free" labor of their children for their non-mechanized farms. In the rest of America, only 1% of the population works in agriculture. They have help.
    22 Billion Energy Slaves. "Today's energy supplies provide the equivalent of the work of 22 billion slaves." So says Colin Campbell, petroleum geologist and Peak Oil commentator. Actually the true figure may be closer to 122 Billion Energy Slaves.

    Agrarian societies had large families out of necessity. That necessity is no longer there. Women were pulled into the labor force by the demands of taxes, wars and parasites. This lowered the birth rate. The predations have become so great that wages are no longer adequate to support a family for many couples.
    The bankers are at the head of the line for the food trough. The boomers are next in line because they were promised support til death. Those boomers who can't get support must work til they drop. This leaves fewer job niches for millennials. The millennials are living in their parent's basement. Seeing no future, they opt out of society and lose themselves in "Second Life" and VR. In Second Life, they can escape and soar with the eagles. If Second life, VR and Youtube aren't enough, they might escape to drugs. This is slow suicide,,,,, as opposed to fast suicide by one of the many popular methods.

    The Polish government encourages the Poles to breed like rabbits (vid). BUT, there are 300,000 Poles in Britain attracted by employment possibilities. There is something seriously wrong with the Polish GOV if they promote reproduction in people who have no employment prospects. This is duplicated in most other developed States. They promote fecundity in jobless populations. To further prove their stupidity, several States are flooding their nations with with non-productive immigrants ,,,, to keep the productive economy going.

    Creating large families out of necessity is a thing of the past. Worldwide population growth is a thing of the past. Full employment is a thing of the past. To preserve the debt bubble, the printing presses are running in hyperdrive.
    Large families made sense before mechanization of production. Most of the people who do decide to have children now limit the number to two. Greece is a good example of what happens when the bankers get their way with a country.
    Shock birth rates shows Greeks may be dying out over IMPOSED ... › News › World
    Apr 29, 2017 - Greece population birth rate crisis GETTY. Roughly a fifth of women born in the 1970s will remain childless.

    This is very much in line with the desires of VHEMT but, it is very bad for the bankers.
    There is a dawning perception that you must have people to have an economy. "They" could cover the land with robots and produce great abundance but, for what? Stocks and bonds are claims on future productivity. What happens if there is no future consumption?

    Many decades ago, the English did not allow a couple to get married until, they had a place to live. This was done to cut down on procreation of people who had inadequate support. We are in a new era where reproduction is an expensive headache and many avoid it. This is not some cyclical thing.

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  • Danny B
    Raging against the long, long night

    China is hard at work to build their new prosperity. Otherwise known as the new Silk Road. They want to get lots of new people working and earning AND consuming. They have the right idea; get lots of people out of the fields,,, into the cities and, consuming like crazy. As nutrition gets better,,, as child care gets better, people become more intelligent.
    Intelligent people have fewer children, preferring to attain quality over quantity.
    Here are 3 articles that you can skim to get a good picture.

    Population (ex S. Africa) is falling everywhere. Our debt-money system is fracturing from the CBs trying to compensate for falling consumption with rising money printing. China has the fastest falling labor force. China has the fastest printing presses.
    The demographic crash will wipe out budgets everywhere. Japan has given up on pretence and is printing with wild abandon. The FED claims to have shut down the QE machine but, we don't hear a word from the PPT and ESF. China has recently created more debt that the EU, FED and BOJ put together.

    Here is a page with American debt year by year.
    Here is a page with births, year by year.
    SOMETHING always precipitates a crash. Recent history clearly shows that our approaching date with poverty will bring a big shrinkage in the birth rate. The unfolding police State and control systems won't inspire people to bring children into an Orwellian world. Our fast approaching poverty won't either. Ditto for the approaching race wars.
    Our current system that demands eternal growth will crash into the reality of a shrinking population and crashing consumption. In the face of runaway automation, there isn't anything "good" that the State can do.
    The unfolding police State is hardly likely to inspire confidence in couples.

    Kunstler writes about, "The Long Emergency". By it's very (current) nature, the State can't possibly inspire confidence.
    The corporatocracy brings us rising fascism. The State brings us a socialist control system. Socialism is anti-family. The results are unfolding. When the markets crash, the demographic crash will eclipse everything else.
    "He said that budget will “be a doozy” because of a projected $1 billion hole created by need to appropriate close to $1 billion to the pension funds on top of the $1.2 billion appropriated in the current budget."
    We will see lots more of this.

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