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  • Danny B
    Interest load and tax load crushing everybody

    I doubt that most people on this forum are invested in stocks. At the same time, any crash of the market will affect everybody.
    Robert L. Rodriguez was an investment manager for 33 years and won a bunch of awards. He recently retired and had this to say;
    "The closest policy period to what we have now would have been between 1942 and 1951, when the Fed and Treasury had an accord to keep interest rates low. Interest rates were artificially held lower to help finance the World War II effort. "
    The Central banks were created specifically to finance Government wars.
    "We witnessed this in the last cycle. There was an article in the WSJ quoting a quant manager who said on a Wednesday, we had experienced a 1-in-10,000 year event. On Thursday, we had a 1-in-10,000 year event. On Friday we had a 1-in-10,000 year event. A former colleague wrote an email that weekend that said, “I have a quick question to ask. On Monday, are we safe for the next 30,000 years?”
    "After 45 years of watching the Fed, the only Fed chairman that was worth spit was Paul Volcker. The last great central banker that we had in the last 110 years other than Volcker was J.P. Morgan. The difference is, when Morgan tried to contain the 1907 crisis, he wasn’t using zeros and ones of imaginary computer money; he was using his own capital. As long as you have anointed centralized bureaucratic decision makers like the Federal Reserve, that in many ways is similar to the concentrated decision making structure of the former Soviet Union, decisions will be late and generally wrong."

    "We had the greatest, the highest level of computerization in the history of man, the most timely acquisition to information, the highest percentage of advanced degreed professionals and college graduates in the field, and we got an outcome no different than 1974, 1929, 1907. There is something more here going on.”
    "Why on Earth should I allocate capital into a system where the scales are completely manipulated, price discovery is distorted, and the Fed doesn’t have a clue what’s going on? They’ve missed every economic forecast for the last nine years straight. Why would anybody pay any attention to what those people are doing?

    I have confidence in one thing. The Fed will blow it."
    "I am managing my estate in a hedged fashion because what we are going through is without any precedent in human history. How can anybody have confidence that their particular view is the right view?"
    Bob Rodriguez: "We Are Witnessing The Development Of A Perfect Storm" | Zero Hedge

    "They" can't find anybody responsible to borrow money so, They are looking for irresponsible people.
    Signs Of An Auto Bubble: Dealer Literally Offers "Low Credit Score Discount" | Zero Hedge

    On average, every additional dollar of additional taxes reduces the economy by $3. Since the public pension funds are crashing badly, it is expected for GOV to raise the snot out of taxes. We'll see how that works out.
    The bankers want everybody loaded down with debt. When the debt blows, the bankers will just get bailed out by the taxpayer. BUT, 48% of Americans pay no federal income tax. As we see in Illinois, the people with money just leave. The tax base shrinks and the State finances just slide down into a hole.
    The poor debtor just gets poorer and poorer.

    "The survey found that nearly half of Americans are carrying at least $25,000 in debt, with an average debt of $37,000, excluding mortgage payments"
    "But many consumers in the survey also said they’re spending up to 40% of their income on discretionary purchases such as entertainment, leisure, hobbies and travel. "
    "since its 2008 peak, but auto loan balances are $367 billion higher since then and student loans are $671 billion higher,"
    40% of Americans spend up to half of their income servicing debt - MarketWatch

    "Even the lowest income families (the bottom fifth of earners) spend 40% on luxuries and 60% on necessities, according to the study’s author, Torsten Slok, chief international economist for Deutsche Bank Securities."
    "Nearly half of Americans (49%) say their emotions have caused them to spend more than they can afford, it concluded."
    Did they break that down by gender?
    "Women are more likely than men to overspend because of stress (35% vs. 24%)"
    Low-income families spend 40% of their money on luxuries - MarketWatch

    You would think that all those stressed-out women would keep the stores busy.
    "we are on pace to break the all-time record for most store closings in a single year in the United States by more than 20 percent. "

    "#4 Financial stocks have lost all of their gains for the year, and some analysts are saying that this is “a terrible sign”.
    Maybe, investors should just get OUT of financial stocks.
    " which 20% of US corporations were at risk of default should rates rise. "
    Note to Yellen
    "Lapthorne calculates that S&P1500 ex financial net debt has risen by almost $2 trillion in five years, a 150% increase, but this mild in comparison to the tripling of the debt pile in the Russell 2000 in six years. He also notes, as shown he previously, that as a result of this debt surge, interest payments cost the smallest 50% of stocks in the US fully 30% of their EBIT " Earnings Before Interest and Taxes.
    40% of Americans spend 1/2 their income on servicing debt..
    50% of companies pay 30% of their pre-tax earnings on debt service.
    12 Signs The Economic Slowdown The Experts Have Been Warning About Is Now Here

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  • Danny B
    French debt,, stampede of the algos...margin calls

    The French GOV spends about 57% of the GDP.
    "he Maastricht debt criterion governing a country’s eligibility for joining the single currency was that the gross debt to GDP ratio was to be no higher than 60pc"
    "This year it looks as though, in gross terms, the French debt to GDP ratio will be just above 98pc. "
    France?s staggering debt levels are far more worrying than ours - Telegraph
    Sub-prime auto loans are crashing badly. Your car is underwater when you drive it away from the dealer. Even if you give it back to him, the loan never goes away.
    Good Luck Getting Out Of That Subprime Auto Loan When Used Car Prices Crash | Zero Hedge

    "Computer programs designed by quants are telling quants to be fully invested"

    "The key technical requirement is to have the “Hindenburg” signal of June 6th confirmed by another such signal within 36 days. This registered yesterday.
    The rule on this one, is that each such signal is not necessarily followed by a collapse of speculation, but there has been no such collapse without a confirmed Hindenburg"

    ” but rather the systemic shock caused by a “freeze” in the credit markets when Lehman Brothers filed for bankruptcy. Counterparties evaporated, banks froze lending and the credit market ceased to function.
    Credit, not the stock market, is the “lifeblood” of the economy."
    Defaults are rising as fast as they did on the runup to the 2007 crash.
    ” but rather the systemic shock caused by a “freeze” in the credit markets when Lehman Brothers filed for bankruptcy. Counterparties evaporated, banks froze lending and the credit market ceased to function.

    Bank credit is crashing,
    Total system leverage is screaming up,
    "When the “robot trading algorithms” begin to reverse, it will NOT BE a slow and methodical process but rather a stampede with little regard to price, valuation or fundamental measures as the exit will become very narrow.

    Importantly, as prices decline it will trigger margin calls which will induce more indiscriminate selling. The forced redemption cycle will cause catastrophic spreads between the current bid and ask pricing for ETF’s. As investors are forced to dump positions to meet margin calls, the lack of buyers will form a vacuum causing rapid price declines "

    All the world's currencies exist in their own little bubble,

    Leave a comment:

  • Danny B
    Broke states....too many banks..

    Sometimes, all you need from an article is the headline.
    Illinois State Workers, Highest Paid in Nation, Demand 11.5 to 29% Hikes
    Illinois pays its state workers more than $59,000 a year
    April 13, 2011: 35% of Illinois State Employees are on Workers’ Comp

    Illinois has been unable to pass a budget for 2 years. Illinois DID vote unanimously "My sources tell me that by an 84-0 vote, part of I-55 will be renamed the Obama Expressway."
    Illinois gets all the publicity but, Connecticut has an equal problem.
    It's Not Just Illinois: Connecticut Faces Friday Day Of Reckoning | Zero Hedge

    Armstrong is a "money" guy so, he thinks that the "bail-ins" were a necessity.
    The problem is; the financial sector is way too crowded.

    "(2) On top of the 25 000 full banking licenses there are an other cca 60 000 (!) quasi-banks globally. Credit Unions, Savings Cooperatives, Savings Associations, Building Societies and other forms that are almost as rigorously regulated as banks.
    (3) On top of the cca 25 000 full license banks and the cca 60 000 quasi-banks, there are shadow-banks and shadow banking activities. This is a very hard area to calculate estimates on, but the number of unregulated "banks" and "quasi-banks" is somewhere between 20 000 and 30 000 worldwide "
    "(4) Total assets of the 25 000 full license banks constitute to cca USD 150 trillion. report that shadow banking assets amount to USD 75 trillion globally."

    Draghi has flapped his jaws about higher interest rates, "This has all sent the dollar down as the fools rush in where no wise-man would dare go."
    "Now higher interest rates have miraculously flipped into bullish news. The problem is, the economy has not changed. Higher rates will not reverse the deflation in Europe. The idea is that higher rates will bring capital back to Europe. Nobody is addressing what comes next."
    So, Armstrong said to get out of ALL bank shares. No sane person would buy Euro debt either.

    South Australia has the highest unemployment rate in the country so, they levied a "surprise tax" on the big banks.
    Unemployment is just a way of life for our future.

    6/30 Global debt hits a new record high of $217 trillion; 327% of GDP – Zero Hedge
    6/29 Venezuela may be sliding into a civil war – WaPo
    Just imagine that you lost your job. So, you go home and beat up the wife. That won't fix anything.

    Leave a comment:

  • Danny B
    Sliding into hell with the corporatocracy... debt-free China

    The corporatocracy gained control through regulatory capture. We put our money in the bank and the bankers used our money to buy all the politicians within reach. A corporation is a mindless pile of money trying to grow larger. When the consumer got poorer and poorer, populism started to raise it's ugly head. The mealy-mouth politicians assured us that we had a democracy and that, populism was dangerous. The corporatocracy was losing ground and had to gain more control. They were somewhat restricted on how much money they could openly pass to a politician.

    Voilà, the corporation was made a person. That person could could send all the bribes that it could afford. All that free-money to the politicians ensured that they would approve anything that the corporatocracy wanted. All those pork-barrel contracts ensured that the corporatocracy could afford to buy any politician. The money moved in a circular flow from politicians to corporations.
    The money actually originated from the producing taxpayer.
    The corporation dutifully promised to create lots of jobs.
    General Electric CEO Jeffrey Immelt was designated the jobs czar by obummer. He promptly off-shored jobs at GE.

    The corporatocracy was / is loathe to pay any funds to support social benefits. They sucked up the social-security funds to pay for LOTS of contracts for LOTS of wars. Jack Ma of Alibaba tells it like it is.
    Alibaba'a Jack Ma Drops a Redpill in Davos: The U.S. Wasted $14 Trillion on Wars Over the Past 30 Years | Zero Hedge
    We are locked in to spending about a $trillion a year for war contracts.

    The cost of social support / programs for the lower loop is roughly $ 1.5 trillion a year.
    The cost of support to the corporatocracy is roughly $15 trillion a year. The corporatocracy has robbed the people,,, because it can. It has no heart, soul or brain. It can't envision a total collapse because commerce has come to a standstill. It will ride this horse right off the cliff thinking that it can make money after the impact. It will fight tooth & nail to hold on to it's advantage. It will attach itself to the money spigot to survive.

    The slow unravelling,
    Draghi said that he would do whatever it takes to save the Euro. He printed up mega-tons of debt money.
    China said that they will do whatever it takes to save the Chinese economy.
    "There are indeed some risks in the financial sector, but we are able to uphold the bottom line of no systemic risks," he said. "We are fully capable of preventing various risks and making sure economic operations will be within a reasonable range."
    Does that mean debt-free money?
    "It might not blow up; China might be able to prevent that kind of event, and it is less likely that China will melt down financially despite its terrific credit expansion, and there are no signs of an immediate crisis. But China, like Japan in the 1980s, is suffering from a "delusion" about how to fix its economic problems."
    "Japan has found a way to write off nearly half its national debt without creating inflation. We could do that too."
    "Japan seems to have found one. While the US government is busy driving up its "sovereign" debt and the interest owed on it, Japan has been canceling its debt at the rate of $720 billion (¥80 trillion) per year. How? By selling the debt to its own central bank, which returns the interest to the government."
    if China follows the lead of Japan, it's lights-out for Western debt.

    "Federal Reserve has announced that it will soon begin withdrawing liquidity from the system. "
    "Over the past 12 months, the Liquidity Composite has risen by 3.1%. Stock prices have inflated by nearly 15% over that time. Since July of last year, liquidity has grown by just 2.4%. Stock prices have risen 14.1% over the same period."
    "The Fed took its foot off the accelerator at the end of 2014. Soon it will begin to actually siphon gas from the tank."
    "Fed begins the process of withdrawing cash from the system within the next few months. "
    "With the debt ceiling yet to be raised, the Treasury is likely to be forced to stop issuing new debt by September, if not before. That borrowing pause will continue until a deal is done to raise the debt ceiling. With all new Treasury supply held off the market, this will create a temporary shortage of Treasury debt in the market. "
    "Under QT, the Fed will stop rolling over its Treasury holdings. That means that it will call in the money which it had lent the Treasury when it originally bought these bills, notes, and bonds. The Treasury will need to sell new debt to raise the cash it will need to pay off the Fed. "
    "History teaches us that these declines usually become self reinforcing, and they usually devolve into forced selling. That often turns into a crash. "
    Armstrong did mention a crash of Treasury debt.

    We got mammoth inflation in the upper loop from FED printing. It stands to reason that we will see mammoth deflation in the upper loop when the FED cuts back.
    We have had 8 years of a huge bull market for stocks but bonds are dead. The pension funds invested in GOV bonds on and on. They missed out on the huge rise of stocks. Even after a few years of a rising market, they STILL didn't get onboard.
    So, who's idea was it for them to buy Treasury debt when stocks were doing so well?

    We still have the biggest parasite of all locked in to the financial jugular vein of America.

    Leave a comment:

  • Danny B
    Universal basic Income OR mass death

    There are reportedly 102 million Americans of working age who are not employed. This is AT THE SAME TIME that the FED & Treasury have pumped in many $ trillions into the upper loop of the economy. The more money they print, the lower the velocity of money. It is slowly becoming apparent that all the efforts of the PTB are stupid and wasted. They have managed to lock many millions of people out of home ownership and even the POSSIBILITY of having a family.
    OK, so what happens to employment AFTER the FED can no longer pump in money to support the 51% of the people who rely on a check from GOV?

    It is becoming painfully obvious that the PTB have completely failed. There are increasing calls to pump debt-free money directly into the lower loop. It may have some bad effects but, having the majority of the population without support of any kind would bring a quick end to America. The idea du jour is universal basic income.
    I posted the arguments in favor from C.H.Smith Of Two Minds - If We Don't Change the Way Money Is Created, Rising Inequality and Social Disorder Are Inevitable
    Zukerberg, Musk and Modi, et al, have all called for UBI.

    Here is an excellent vid from Yanis Varoufakis addressing details that I never even dreamed about. The guy is SMART and ARTICULATE.

    The West is going to crash very badly. If the East uses debt-free money, The West will not be able to export much of anything. Financialization gives us a 100% markup on everything (on Average). Without the money pump into the upper loop, upper loop jobs will disappear RAPIDLY. At least the lower loop produces something. That is more than you can say for all the bureaucrats, beggars and bankers.
    Currently, corporate welfare costs 10 TIMES what the welfare for the lower loop. Presumably, the upper loop will scream the loudest for free money when all their jobs disappear.

    Here is an article about a couple of State Reps that are prepping.
    In Anticipation Of The Coming American Apocalypse, 2 Lawmakers Plan To Create ‘Christian Survivalist Centers’ In Rural Areas – The American Dream
    Not one mention of farming.... tractors... diesel fuel.

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  • Danny B
    The one party...European pension funds...Money creation

    Ralph Nader writes about the exact moment that the Dems sold their (populist) soul. "The first big one was in 1979. Tony Coelho, who was a congressman from California, and who ran the House Democratic Campaign treasure chest, convinced the Democrats that they should bid for corporate money, corporate PACs, that they could raise a lot of money. "
    "So they knocked out foreign and military policy, because they were getting money from Lockheed and Boeing and General Dynamics and Raytheon and so on. Even Elizabeth Warren when she had a chance started talking about maintaining those contracts with Raytheon. Here’s the left wing of the party talking about Raytheon, which is the biggest corporate welfare boondoggle east of the Pecos."
    OK, so that is how we got our ONE party,, the War party.

    Kunstler writes about the current state of the democratic party. You will shudder.
    The Technicolor Swan - Kunstler
    Regulatory capture is the ooze in the swamp that guarantees everybody will be sucked in. Only the eminently corruptible need apply. These are the people that we must depend on when the markets crash. They are eminently qualified to participate in the swamp but, have no qualifications beyond that.

    “Yellen is expressing confidence that banking is stronger, economic growth is relatively firm and there’s not going to be a crisis in our lifetime,” said Dennis Debusschere,"

    The European pension funds are BROKE. Naturally, Merkel doesn't want this known until after she is re-elected. BUT, with the net, news gets around.
    "The total value of unfunded or underfunded government pension liabilities for 20 countries belonging to the Organisation for Economic Co-operation and Development (OECD) — a group of largely wealthy countries — is $78 trillion"
    Good thing that they are wealthy.
    "Citi noted that Germany, France, Italy, the U.K., Portugal and Spain had estimated public sector pension liabilities that topped 300 percent of gross domestic product. "
    Rich countries have a $78 trillion pension problem

    Globalization tries it's best to get rid of all import tariffs. That means that only the lowest-cost producer will get any business. BUT, there is another factor. The lowest-cost financing will also bring great reduction to the final cost of manufactured goods. As long as the central bank never tries to liquidate it's portfolio, it has issued debt-free money. Japan keeps on printing and has never blow up. China has that option also. If money is created to keep the productive economy moving, it never outruns wealth creation by very much. If money is created to keep the speculators going, credit will always outrun actual wealth creation.

    Charles Hugh Smith writes about an alternative.
    " Let’s say an individual has saved $100,000 in cash. He keeps the money in the bank, which pays him less than 1% interest. Rather than earn this low rate, he decides to loan the cash to an individual who wants to buy a rental home at 4% interest.

    There’s a tradeoff to earn this higher rate of interest: the saver has to accept the risk that the borrower might default on the loan, and that the home will not be worth the $100,000 the borrower owes.

    The bank, on the other hand, can perform magic with the $100,000 they obtain from the central bank. The bank can issue 19 times this amount in new loans—in effect, creating $1,900,000 in new money out of thin air. "

    " This is a simplified version of how money is created and issued, but it helps us understand why centrally issued and distributed money concentrates wealth in the hands of those with access to the centrally issued credit and those who have the privilege of leveraging every $1 of cash into $19 newly created dollars that earn interest.

    Imagine if we each had a relatively modest $1 million line of credit at 0.25% interest from a central bank that we could use to issue loans of $19 million. Let’s say we issued $19 million in home loans at an annual interest rate of 4%. The gross revenue (before expenses) of our leveraged $1 million would be $760,000 annually --let’s assume we net $600,000 per year after annual expenses of $160,000. (Recall that the interest due on the $1 million line of credit is a paltry $2,500 annually).

    Median income for workers in the U.S. is around $30,000 annually. Thus a modest $1 million line of credit at 0.25% interest from the central bank would enable us to net 20 years of a typical worker’s earnings every single year. This is just a modest example of pyramiding wealth. "
    " I hope you understand by now that the current system of issuing money and credit benefits the few at the expense of the many. The vast privilege and the equally vast inequality it generates is the only possible output of the system.

    This inequality cannot be reformed away; it is intrinsic to centrally issued money and private banking with access to central bank credit.

    The problem isn’t fiat money; it’s centrally issued money/credit that is distributed to the few at the expense of the many."
    Of Two Minds - If We Don't Change the Way Money Is Created, Rising Inequality and Social Disorder Are Inevitable
    Smith goes on to endorse universal basic income. I just don't see it working. The vast majority of people would just skip work.

    6/27 Italy’s newest bank bailout cost as much as its annual defense budget – Zero Hedge That was only 2 banks.
    6/27 Senators considering breaking Fannie-Freddie into pieces – Bloomberg It's going to go up in smoke before long, anyway.

    Leave a comment:

  • Danny B
    Another brave soul is predicting the date of the financial apocalypse.
    "But we suspect the end must be near when the likes of Goldman Sachs, JPMorgan, Citi and Bank of America all implore their clients to “go to cash.”
    "Deutsche Bank economist Michael Biggs, who coined the term, says the credit impulse gives a highly accurate EKG of the beating economic heart.
    And it’s currently flashing cardiac arrest."
    Ah, but the date.

    We’ve held you in suspense long enough, dear reader…
    The date of apocalypse:
    Feb. 14, 2018 — Valentine’s Day.
    The claim is made that the "tightening" from the FED wills set things off. The FED was REAL generous when obummer was in office. Can Trump stop the tightening? Would it make a difference? Would this just postpone an even bigger crash?

    "In its simplest form, the Phillips curve is a single-equation model that describes an inverse relationship between inflation and unemployment. As unemployment declines, inflation goes up, and vice versa. The equation was put forward in an academic paper in 1958 and was considered a useful guide to policy in the 1960s and early 1970s." Before computers and CNC machines.
    "Economists began to tweak the original equation to add factors — some of which were not empirical at all but model-based. It became a mess of models based on models, none of which bore any particular relationship to reality. By the early 1980s, the Phillips curve was no longer taken seriously even by academics and seemed buried once and for all. RIP.

    But like a zombie from The Walking Dead, the Phillips curve is baaaack!

    And the person who has done the most to revive it is none other than Janet Yellen, the 70-year-old liberal labor economist who also happens to be chair of the Federal Reserve."
    "Unemployment in the U.S. today is 4.3%, the lowest rate since the early 2000s. Yellen assumes this must result in inflation as scarce labor demands a pay raise and the economy pushes up against the limits of real growth."
    "The Fed’s bungling should come as no surprise.
    The Federal Reserve has done almost nothing right for at least the past twenty years, if not longer.
    "It’s time to load up on Treasury notes, gold and cash and lighten up on stocks. The Fed may be the last to learn about deflation,"
    Armstrong said that sovereign bonds would collapse. I'll pass on the Treasury Notes.

    This next site takes a lot of reading. It is worthwhile because it conveys a LOT of information. one of the big "traps" for investment managers is; we have global capital flows but, they only look locally. It is either laziness or inability to comprehend the markets.
    New York
    – Head of a Derivatives Trade Desk had no idea that interest rates in Germany were negative – “truthfully, we only monitor the US market.”
    – Senior Bond Manager – “we only watch the FED, really, everyone else doesn’t matter.”
    – Bank Economist – “housing is the only thing anyone is talking about and asking about these days.

    For a number of reasons, the vast majority of investors around the world solely look at the stock market. Everything good and everything bad always comes from and away from the stock market. In truth – the grease that keeps the world’s mighty economy and debt eating machine chomping through the night is ladened with interest rates. Yet, few are able to see, speak or even dream about interest rates. The big banks are especially unable to articulate their importance"

    " Unfortunately, perspective is formed on the basis of subjectivity. And to demonstrate just how poor perception can alter reality, consider recent conversations we had with other managers around the world:
    New York
    – Head of a Derivatives Trade Desk had no idea that interest rates in Germany were negative – “truthfully, we only monitor the US market.”
    – Senior Bond Manager – “we only watch the FED, really, everyone else doesn’t matter.”
    – Bank Economist – “housing is the only thing anyone is talking about and asking about these days.” To put this another way, and once you grasp this all-important piece of knowledge, you’ll better appreciate all the gibberish spouting from the big-bank-lead talking heads – there are very few, true global investment managers in the world. "

    Money printing,
    Velocity of money,
    THAT definitely wasn't in the models.

    Mario Draghi has put a LOT of lipstick on the Italian pig,

    Why has Mario Draghi worked so hard applying lipstick to an obvious financial pig, when it should simply let nature take its course? The answer – removing the make-up, will spell the end of the Eurozone. And, there are Trillions of dollars at stake and thousands of government jobs at stake, and a tonne of pride at stake"
    So, what happens to the jobs and $trillions when it finally blows?

    "To put it mildly, stakes in the Italian crisis were astronomically high. If a solution wasn’t found, Italy would plunge into financial chaos by the time the first espressos were being served the next morning. And, if Italy plunged into chaos, so too would the rest of Europe, North America, Asia and anyone else who used money"
    So, postponement will just fix everything.

    " This is for 2 reasons: 1)With the Euro intact, Germany will continue to make money hand over fist until the end of time. 2)Should the Euro break – Germany becomes a DOUBLE loser with its economy tumbling AND it losing BILLIONS owed to it by Italy et al"
    The article is great for a worldview. It is focused in part on Toronto real estate. You really should take the time to read the whole thing.

    Leave a comment:

  • Danny B
    News on timing the market crash

    I'll start with Armstrong because he has the best record for accuracy.
    "As we head into 2018, this may actually present not the trade of a lifetime, but the trade of several lifetimes."
    If somebody wins, somebody else has to lose.
    "At this year’s 2017 World Economic Conference in Orlando, Florida, we will be beyond the election in Germany. Merkel is deliberately refusing to talk about the pension crisis that is brewing in Germany until after the election of course, since there is no solution."
    EVERYBODY knew that Brexit would fail and Trump would not get elected. Maybe Merkel will get the boot.
    "This event is timed so once the German elections are concluded, then the real truth about the financial crisis coming in 2018 will start to make its appearance off center stage.

    We will be looking at the fate of the currencies, the coming slingshot and Phase Transition, and the consequences of what is really happening outside the USA that will drive the markets absolutely nuts come 2018."

    Here is an article that demands a lot of thought.
    " The one thing we can know with certainty is it won't be easy to profit from the crash.
    After 8+ years of phenomenal gains, it's pretty obvious the global stock market rally is overdue for a credit-cycle downturn"
    " Hedge Fund CIO Sets The Day When The Next Crash Begins.
    Next February is a good guess, as recessions and market downturns tend to lag the credit market by about 9 months.
    My own scenario is based not on cycles or technicals or fundamentals, but on the psychology of the topping process"
    Charles Huge Smith goes through EVERY detail of the psychology of the markets as they are correcting. The trading bots may or may not go along with the program. John Hussman thinks that the algos will try to make money on the downward slide. Will the algos be the only ones buying? Are they programmed for crash mode?
    Of Two Minds - A Stock Market Crash Scenario

    OK, so Armstrong will have everyone rushing to one side of the boat. People reading Smith will be trying to time the TOP. BUT, Armstrong is calling for a collapse of State finances. I'm glad that I don't have to figure out how to sail through a maelstrom spiked with Greek Fire.

    China is going to have to do some adjusting, "Moody's estimated that while the government budget deficit in 2016 was "moderate" at around 3 percent of gross domestic product (GDP), it expected the government's debt burden would rise toward 40 percent of GDP by 2018"
    Singapore fund Temasek: How a financial crisis in China might play out

    The B.I.S. says that the economy is in such good shape that the various CBs can slam on the brakes when it comes to credit creation.
    Push on with the 'great unwinding', BIS tells central banks | Reuters
    "the BIS said policymakers should take advantage of the improving economic outlook "
    "Inflation is certainly not the only variable that matters ... and we should keep one eye at least on financial developments," Shin said."
    RIGHT, ignore employment
    "The policy challenge is to take advantage of the current tailwinds to put the expansion on a sounder footing," said Claudio Borio, head of the BIS monetary and economic department."
    Those "tailwinds" are howling through the corpse of the hollowed out economy.
    "The BIS’s financial results, which were also published on Sunday, showed the Swiss-based bank had made a net profit $1.124 billion over the year to March 31 and had a balance sheet worth $329 billion."
    OK, so the B.I.S. "earned over a $1.124 billion. Just what did they do for that?

    6/26 Even the Fed’s own national economy activity index collapsed – Zero Hedge NO problem, things are fine in Switzerland.
    6/25 It’s a gold-rush mentality in bitcoins; many are at risk of losing big – Economic Times One day later;
    6/26 Crypto-correction: Bitcoin, Ethereum dive as market sheds $13 billion – Coindesk
    6/26 Bitcoin is tumbling – Business Insider

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  • Danny B
    Plant a garden instead of pounding your head on a wall

    The B.I.S. has a warning, ho hum. Next global financial crisis to hit with a 'vengeance', warns BIS

    "The following are the brutal truths that the modern generation will have to face as the U.S. and the rest of the world deals with the ongoing global financial crisis:

    1. The slate needs to be wiped clean and a new sound monetary system introduced.

    2. That will require the elimination of all debt, deficits, unfunded social entitlements, the US Dollar as Reserve currency, and the big one, the $600 trillion of derivatives.

    3. To eliminate these problems by default and deflation will cause a banking collapse and untold economic pain, leading to riots and political change.

    4. Politicians are appointed for relatively short terms and opt for the easy solutions. While politicians continue to have the ability to create new money at will, they will do so in order to prevent a melt down on their watch. Consequently the odds point to governments wiping the slate clean by generating enough new money to eventually destroy their currencies."

    SO MANY people making this claim. The quantity of money theory is NOT working as planned. When they pile up debt and call it money, they INCREASE the drain of interest,,,debt service. Effective deflation of the circulating money supply. When they drive down wages,,, effective deflation of the circulating money supply.
    The Moses Generation & the Future of Gold - munKNEE

    WAGES are the link between money and the economy. As the rich extract more and more, they just roll it into investments. It does NOT circulate. The more that is invested, the less circulates. The lower the wages,,, the less circulates in the consuming economy. The less employment, the less circulates BY THE CONSUMER. The money goes round and round in the upper loop. It does NOT flow into consumption. Assets are traded by the $ trillions every day but, the VELOCITY OF MONEY IS FALLING.
    Is this linkage so hard to understand?

    Illinois is ahead of the curve. Just look at the graph on this page.
    Illinois debt is about to be rated 'junk.' What that means
    Keep in mind that Illinois is in legislative deadlock. Will this happen in D.C when the debt-ceiling and budget battle wars are started?

    "Psychology Today asks Will Humans Be Necessary?

    Will automation kill as many jobs as is feared? A widely cited Oxford University study predicts that 47% of jobs could be automated in the next decade of two. Price Waterhouse pegs the U.S. risk at 38%. McKinsey estimates that 45% of what people are paid for could be automated using existing technology!

    No less than Tesla’s Elon Musk, Bill Gates, and Stephen Hawking fear the loss of jobs will cause world cataclysm."
    From India;
    2012, "Govt sets target to skill 500 million people by 2022"
    2017 "Govt abandons goal of training 500 mn people by 2022"

    Government mumbles about creating jobs. One out of eleven in the beltway is a lawyer. That's all we need,,, more parasites. Even GOV can't keep up with the flow of parasites coming from the schools.
    The national unemployment rate for law graduates has grown for the sixth year in a row to a whopping 15.5 percent, according to a report by the National Association for Law Placement.Jan 13, 2015
    Mamas, Don't Let Your Babies Grow Up to Be Lawyers | HuffPost

    Wages are crashing. Consumption is crashing. Oil is crashing. Velocity of money is crashing. Banking is crashing. The CBs attempt to fix the problem by pumping more debt into the upper loop.
    The wrong theories,,, the wrong remedies. Maybe it is all part of a general de-population plan. The remedies are not working. You have to be prepared to get out of the way of the crashing train.
    Last edited by Danny B; 06-27-2017, 12:11 AM. Reason: spelling

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  • Danny B
    Squeeze Europe,, banks & drugs... The Crumble... living on the street

    I found a few interesting articles. The first concerns the fate of Teresa May.
    "The UK government is now paralyzed by electoral politics just when the BREXIT negotiations are just getting underway.

    Make no mistake about it, if May is defeated in the coming vote, we will see a major shock wave around the globe ramifications for the security of Europe as a whole."
    This side of the pond is pretty well paralysed also.
    Here is the very interesting part, VERY telling.
    "If the Labour Party wins a new general election thanks to the students, they are clueless as to what his far-left brand of Marxism will do. Corbyn has, among other things, suggested the UK should get rid of its nuclear weapons and withdraw from NATO. It is Britain who supplies the backbone to NATO in Europe. Should Corbyn actually act on these radical ideas, he will certainly destabilize Europe as a whole. However, the mere expectation and/or uncertainty of a Corbyn-led UK would further unsettle every aspect of Britain from the political to the economic future of the nation. Corbyn is proudly a Marxist and he will take Britain back to the Dark Ages."

    Think about it. Who would Britain ever use their nukes against? Ireland, perhaps? NATO was used to completely trash Yugoslavia. That was their crowning achievement recently. NATO is now in the process of trying to force Russia into a war. NATO is doing it's best to screw up MENA as much as possible.
    "take Britain back to the Dark Ages."
    Britain is being completely over run by invaders who rape and pillage. They have NOTHING to lose by running away from foreign entanglements.
    "security of Europe as a whole." The security of Europe is being purposely destroyed by a handful of politicians who are hard at work to accomplish population replacement.

    Everybody knows that the banks run the drug business. HOW MANY banks are involved?
    " Sindona teamed up with IOR and the Vatican’s chief US banker Continental Illinois to buy Milan-based Banca Privata Finanziara (BPF) and Geneva-based Banque de Financement. The consortium launched Moneyrex in Rome, which over 850 international banks used to move Italian mafia and P-2 heroin proceeds out of Italy. Much of this was laundered through the Vatican to Switzerland. "
    The article goes into a lot of detail about the murder of the Pope and MANY others.

    Not surprisingly, The FED answers to no one in government. Exposing Our Lawless Central Bank | Zero Hedge

    "What we are witnessing is better described as a crumble than a collapse."
    "Whatever our globally heralded ‘constitutional’ political system might once have been, it clearly no longer is. It’s regressed to the point where it’s every man, woman and child for themselves. Confirmation of our decline springs from study after global study showing America’s solid hold on the lower middle of world rankings…and sinking fast."
    "nce we crest the peak and start our descent, we cannot hold on tight enough nor do we have the courage to let go and change course. Therefore we drive our own ship of state directly onto the rocky shoals. The nation simply follows the individual in the same manner the body follows the direction of the head."

    "Neither you nor I can personally save those people begging on the side of the road. The socioeconomic system is failing because we are failing morally, physically, mentally, emotionally, spiritually, as individuals, as a community and as a nation."
    The Greater Depression | Zero Hedge
    You should read the whole article. It's about all the street people who have really hit bottom. Part of this is because of the breakdown of the family.
    If the bond market does indeed collapse, there will be many millions more people who fall through the cracks and die.

    Crumble rather than collapse,
    The EU is fast going broke. Their solution, drag in more States and tax the snot out of them,

    "The gold standard was a hard task master, all right. You couldn’t devalue your way out of trouble. You couldn’t run up a big domestic budget deficit. The central bank of a gold-standard country (if there was a central bank) was charged with preserving the convertibility of the currency and, in a pinch, serving as lender of last resort to needy commercial banks. Growth, employment and price stability took their own course. And if, in a financial panic or a business-cycle downturn, gold fled the country, it was the duty of the central bank to establish a rate of interest that called the metal home. In the throes of a crisis, interest rates would likely go up, not down."
    You also could not have long wars.

    "The modern sensibility quakes at the rigor of such a system. Our forebears embraced it. Countries observed the gold standard because it was progressive, effective, civilized. It anchored prices over the long term (with many a bump in the short term). It promoted balance in international accounts and discipline in domestic ones. Great thinkers -- Adam Smith, David Ricardo and, yes, John Maynard Keynes himself in the wake of World War I -- extolled it.

    The chronic problem in gold-standard days was the one that continues to bedevil us moderns: how to maintain a stable currency when lenders and borrowers run amok."
    "The story of American finance, he contended, was the story of paper credit subverting sound money:" "It’s the cause of panics under monetary systems both metallic and paper. Which is to say that we earthlings will never achieve financial perfection. It seems that the trouble (or, at least, one trouble) with money is credit and that the trouble with credit is people."

    BAD news for the bankers,

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  • Danny B
    Capital surplus

    Every time that a Bank failed, the taxpayer was screwed for the funds to bail them out. Heaven forbid that the investors should have to pay. This got the taxpayers quite riled up and the law was changed. There would be a "bail in" rather than a bail out.
    2 Italian banks recently failed and the bail-in mechanism was enlisted to wind down the failed banks. The purported bail-in took everything from the holders of common stocks and bonds. BUT, the senior bondholders came out OK. $11.1 billion was laid on the backs of the taxpayers instead.
    "The government wants to avoid a political backlash and the risk of contagion spreading across the system."

    Trump, "he doesn’t understand the complexities involved in the balance of payments theory, which has long been discredited as an old mercantilist doctrine. He uses it to attempt to define who the winners and losers are in trade. But, Ed points out, the accounts are always in balance; the other side of a “trade deficit” is a “capital surplus.”

    When enough money is put into American goods and services - and when people who trade with Americans also store their money in the US - the US can develop a “capital surplus.” As Ed explains, a country can have a trade deficit because its capital markets are attractive. It is after all trading financial claims for goods and services."
    if all the capital surplus flows into gold and crypto-currencies, there is far less for the bankers to steal.

    "And you just know people like the Chinese and Russians would love nothing more than to see the Petro-dollar taken out and replaced. Is our US dollar going to retain its Petro-dollar status over time here, Jim?

    Jim Rickards: I don't think so.
    Number one, the Chinese and the Russians are really dumb. Or, they see something that you don't. They see something that most people don't see coming. I've spent time in Russia and China, they're not dumb, meaning they see something that most people don't see. And they're preparing for a post dollar world or a world in which the confidence in the dollar is greatly eroded.

    How is that actually done? Is it through these MT forms on Swift MT stands for message traffic?

    That's how we make irrevocable transfers. Well the United States has a choke hold on all that. We definitely have a choke hold on Fed-wire, which is the dollar payment system. And through our allies and out intelligence services, we have a choke hold on Swift, which is the international payment system.

    The last time it was the central banks bailing out Wall Street and really bailing out the world,
    Why is the Fed reducing their balance sheet? Why do they care? Why not just keep the 4.5 trillion? What's the big deal? Well the answer is they're at the outer limit of a confidence boundary."
    Jim Rickards Exclusive: Dollar May Become "Local Currency Of The U.S." Only | Markets | Minyanville's Wall Street

    " After disregarding repeated market warnings, the fragility of such a financial regime became obvious in 2008. Rather than using the crisis and its lessons to reposition to a more well-grounded monetary regime, the Fed and other central banks doubled down. Reflating securities markets became priority one, and central banks went so far as to be willing to inject newly created “money” directly into the markets to achieve their objective.
    What objective?

    The FED needs to support all the bankers, beggars and bureaucrats.

    Leave a comment:

  • Danny B
    reducing the money supply,,, Financialized medical industry

    Everybody is hemming and hawing about the FED and the interest rate. While they are all focused on the interest rate, the FED is planning to bring a crashing reduction in the money supply.
    This longish article from Jim Rickards explains about bond buying from the FED. It is well worth reading to see the mechanics of how the FED creates money from thin air. The focal point of the article is; the FED isn't going to buy new bonds. They will let existing bonds run to maturity and they will simply throw them into the pixelated trash can. The FED created the bonds to stimulate the economy. They claim that vaporizing these bonds will not de-stimulate the economy.
    The economy needs ever-increasing amounts of money to service the ever-increasing debt bubble. ALL the Central Banks have turned down the money spigot. As Armstrong pointed out, the quantity of money theory is just bogus, junk science.

    The U.S. Treasury sends over treasury bonds to be monetized by the FED. The FED is not buying. What happens when the debt ceiling fight requires much more debt?

    "Global markets have now moved into (what I believe is) the final, parabolic, public-entrapping vertical ascent that typically punctuate established trends with cataclysmic reversals. The problem I have with making such a bold statement is that the body bags are lined up at the side of the road with those that have fought this move firstly since the 2008 Meltdown and then after the 2016 U.S. elections."
    One Massive, Global, Serial Bubble | Silver Doctors
    Economica goes into greater detail to show that the economy can never grow while it has a falling population.

    Financialization is the process where big-money insinuates itself between the producer / service provider AND the final consumer.
    "At the beginning of the 20th century health care was one-quarter of one percent (.25 percent) of the economy.
    "They’re pretending to attempt to fix a racket that comprises eight percent of the American economy"
    Rain Dance - Kunstler

    The new rage on the net is; predicting how the current Rage & Hate will morph into the next civil war.
    Articles: Bleeding America?
    The War of Northern Aggression (U.S. Civil war), was precipitated by the bankers who wanted control of the natural resources of the South. This was complicated by the demands of the Federal government over States rights. South Carolina seceded and demanded that the FEDs abandon Ft. Sumter. Lincoln refused and the war started in North Carolina.
    Lincoln Provoked the War
    Federal government desperately needed the income from tariffs on Southern goods. South Carolina was well within their States rights.

    The division today is between urban centers and the rest of the country. There could be no such thing as a war between urban centers and the agricultural hinterland. Any drastic action taken by the urban centers would immediately cut off their supply lines. We will definitely have civil insurrection but, not a civil war.

    Edit As I said, civil war is a hot topic now. Some propaganda.
    Last edited by Danny B; 06-24-2017, 08:08 PM. Reason: adding propaganda

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  • Danny B
    Fracking and the supply-demand balance..

    6/18 Fear of contagion feeds the Italian banking crisis – Wolf Street
    6/23 Two Italian Zombie Banks Toppled Friday Night | Wolf Street
    Every bank that closes scares off investors and depositors.

    Fracking now fuels half of U.S. oil output - Mar. 24, 2016 - CNN Money
    "Fracking "has allowed the United States to increase its oil production faster than at any time in its history,"
    "But OPEC members may relax their cuts in the second half, for fear of losing market share to U.S. shale oil producers "
    "Saudi Arabia, the most influential of OPEC's 12 member countries, needs oil at $106 a barrel in order to break even after the costs of its generous welfare programs and energy subsidies. Oil has been around $45 a barrel, and futures contracts don't put it much higher over the next few years. "
    This site shows the break-even price for the top 14 producers, starting with Lybia at $144.

    "Hundreds of banks were forced to shut down in Texas when the state fell into a recession in 1986 during a steep decline in oil prices. That 1980s meltdown mirrors the current drop in prices that carried oil below $45 a barrel this week. "
    Falling oil's next victim: banks - Jan. 16, 2015

    Automation is still making steep cuts in employment,

    "Italy, the eurozone’s third-largest economy, has a sovereign debt-to-GDP ratio in excess of 130 percent and a banking system with a non-performing loan ratio of 18 percent. "

    Liu claims that China will have to sell off a few $trillion in State-owned assets to raise cash.
    "assuming state ownership were to be sold down to between 40% and 50% in exchange for fresh funds needed for debt repayment.
    "More than half of the funds could be supplied by China's own savings. The remaining [funding] probably will have to rely on foreign investors," said Liu,
    ALL these analysts and writers make the explicit assumption that China will NOT just print the money to keep things going. They HAVE to borrow it, preferably from foreign bankers. With the new platforms like the SCO and AIIB, China can tell the West to get stuffed. The East will close ranks behind China and the western bankers can't do anything about it. China can get all the fresh funds that it wants.

    Japan shows the way. The CB there is holding paper equal to 93% of the GDP. They can just ignore the numbers because the debt isn't held by outside bankers.

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  • Danny B
    Crypto-currencies examined

    There is a lot of "wildcat" action in the crypto-currencies. I found a good article but, the comments are even better.
    "Digitalization has the potential to provide financial benefits to the economy, with the risk, however, of disintermediating central banks."
    "Dr. Weidman dismisses the notion that privately issued digital currencies may eliminate central bank currencies, reasoning that “central banks are better able to deliver price stability than a rigid monetary rule or an algorithm.”
    Price stability, my culo!
    "Dr. Weidman notes that in times of crisis, money holders would withdraw their bank deposits and transfer them into the official digital currency, thereby rapidly withdrawing liquidity from the private banking sector in a digital bank run."

    I dunno, i think most countries would love to go cashless for ultimate control and Cryptos get them there. They may well co-opt the industry.
    As far as I'm concerned, the whole argument regarding CB's creating crypto's to regain control is a non starter. They'll be priced in USDS, GBP, JPY & EUR and the ability to expand the base will always be there. So nothing will be solved compared to the limits in place for the capacity to generate more BTC, ETH, etc. So non CB crypto's will always hold their value complared to the CB's.

    Of course, additional non CB crypto's can be created (ie.Litecoin and more) so that is an expansion of the non CB crypto base which may eventually dampen the price of these crypto's overall.

    The actual plan may be that CB's unofficially create new crypto's masquerading as uncontrolled, thus fooling the public into thinking that they are just like all the others. Then they can expand the base at will without public awareness. They may already have done so but we'll be the last to know.

    They require deposits, they 'want' deposits... otherwise they have no control. Cryptocurrency is ending their control, and it will work, because their foundation is made of sand. The sand storm is coming!

    This new decentralized blockchain internet is amazing...innovation is changing the game!
    Blockstack: A New Decentralized Blockchain Internet That Brings Privacy & Property Rights to Cyberspace
    Various western central banks have desired a digital crypto currency for a while now. I would not be surprised if "Bit-coin" is actually a test pilot program sponsored by the Federal Reserve.
    How Central Banks Intend To Fight CryptoCurrencies | Zero Hedge

    6/23 Coming soon: the great bitcoin crash? – Daily Reckoning
    6/23 Legal implications surrounding bitcoin – Legal Solutions
    6/23 The bitcoin bubble will turn into mania before it bursts – Forbes
    6/23 Cryptocurrency bubble will burst even if coins change finance – Bloomberg
    6/23 The curious case of the missing Mt. Gox bitcoin fortune – Cyber Scoop

    I believe that the bankers will kill anything that offers competition.

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  • Danny B
    Bogus pension plans,,, Stockman and the worthless stock market

    The pension funds continually depend on returns as high as 25% for their payment tables to work correctly.
    "Moreover, given that total unfunded public pension liabilities are roughly $5 trillion in aggregate, this implies that a simple 5% drop in assets in 2018 could trigger a devastating ~$3 trillion increase in net liabilities.

    Meanwhile, Moody's found that even if the funds return 19% over the next three years then net liabilities would still increase by 15%. "

    In its report, Moody's ran a sample of 56 plans with $778 billion in aggregate reported net pension liabilities through three different investment return scenarios. Due to reporting lags, most 2019 pension results appear in governments' 2020 financial reporting, Moody's noted. The plans had $1.977 trillion in assets.
    Under the first scenario with a cumulative investment return of 25% for 2017-'19, aggregate net pension liabilities for the 56 plans fell by just 1%. Under the second scenario with a cumulative investment return of 19% for 2017-2019, net pension liabilities rose by 15%. Under the third scenario with a 7.2% return in 2017, -5% return in 2018 and zero return in 2019, net pension liabilities rose by 59%.
    In 2016, the 56 plans returned roughly 1% on average "

    ",,,and we have another big correction in 2018. Such a correction would force the fund to liquidate over $1.5 billion in assets in 2018 alone...."
    "....and the system would run out of cash completely within 4 years."
    Moody's: Modest Downside Could Spark $3 Trillion Surge In Pension Liabilities | Zero Hedge

    Oil is looking worse every day, Gartman: 'Oil Heading Egregiously Lower'; Saudi Oil Reserves Will Be 'Worthless' | Zero Hedge

    “The change of change is now negative,” said the CIO.
    “The last time we had a major shift in the change of change was a year ago.” In Jan/Feb 2016, China was imploding. Commodity prices were tanking with equity markets, the dollar soared alongside volatility. Then China unleashed explosive credit stimulus, while the Fed blinked, guiding forward interest rates dramatically lower.
    Within a short time, the change of change turned positive. "
    "China and oil prices,” he said. “Literally, that’s it.”
    China’s stimulus-induced rebound and the oil price recovery is all that mattered. " About those oil prices???
    Apparently, we've reached the peak of the economic roller-coaster.
    Eric Peters Calls it: "The Change Of Change Is Now Negative" | Zero Hedge

    Armstrong, "They did that with interest rates. Higher rates means the stock market will decline. Oops. The Fed just raised rates and the Dow made a new high. Interesting! See it is the carrot paradox. Focusing on just one relationship blinds you to the complexity of the whole. Global Warming is the same as the carrot paradox."
    "In economics, we had the Quantity of Money Theory that has driven central banks into Quantitative Easing expecting inflation and after 10 years of desperately trying to stimulate inflation, they have been beaten to a pulp by deflation. As always, they make a false simple assumption at the outset which then leads to the false result."

    Ho Hum, manufacturing is collapsing. It must have something to do with our lack of income.

    "David Stockman began “we’re in the midst of the biggest political train wreck in modern history… There will be no governance in Washington. There will be no tax bill, stimulus or infrastructure.”

    “We’re heading for an expiration of the debt ceiling and running out of cash that will create an enormous crisis by August or September. They’re not going to be able to cope with it.”
    Armstrong, "will lead to the greatest trading trap of all time."
    Stockman “The market today is trading at 25 times S&P 500 earnings which were $100 a share in the period ending in March. That represents a tiny growth from $85 a share back in June 2007 – ten years ago. We’re about 1.2% over the last decade.”

    “Why would you pay 25 times earnings for one percent growth after a tepid expansion of 100 months that’s near the end of its “sell by date?”
    Let's hope that the muppets don't read Stockman and or MANY others.

    6/23 America divided: ‘Summer of Rage’ accelerates – Stockboard Asset Stay tuned for the big half-time show.
    6/23 Credit-card debt slaves move to top of Fed’s bank worries – Wolf Street
    6/23 Americans are dying with an average of $61,500 in debt – Zero Hedge
    If everybody died, that would screw the banks real good.

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