Economic pressures

[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.
https://www.zerohedge.com/news/2017-...-happen?page=1
Cryptocurrency expert kidnapped for $1 million bitcoin ransom
Happy new year to all

[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. https://www.wired.com/story/2017-was...daily_list1_p1
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."
https://seekingalpha.com/article/413...e-depreciation
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 "
https://www.peakprosperity.com/blog/...stem-will-fail
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, https://pbs.twimg.com/media/C8bEwCVWsAE36Pz.png
http://davidstockmanscontracorner.co...eve-it-part-2/
Side note;
Over 100 Seniors Die After Receiving Flu Shot During Study
https://healthfreedomidaho.org/over-...t-during-study

[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.

[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.
https://www.youtube.com/watch?v=LWVc...ature=youtu.be
This article isn't particularly good but, the comments are very interesting.
https://www.zerohedge.com/news/2017-...all-eurodollar

[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, https://www.rt.com/business/414447-r...as-fuel-putin/
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."
https://realinvestmentadvice.com/201...cord-12-29-17/

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.
https://www.youtube.com/watch?v=1x8tyDotgAg
Crop losses are growing worldwide, https://www.youtube.com/watch?v=olxCOGPg9LE&t=88s
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?
https://www.youtube.com/watch?v=sn0gnrTm2pM&t=171s
China has long been getting ready, https://www.youtube.com/watch?v=acoExDbRlrE
Eventually, there will be a mad scramble for farmland that has an Adequate growing season.

http://agfax.com/2017/03/30/usda-ag-...ps-commentary/
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?
https://phys.org › Earth › Environment
https://www.youtube.com/watch?v=rtYWTzTLLjQ
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.

[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."
https://www.armstrongeconomics.com/a...y-models-fail/
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."
https://northmantrader.com/2018/01/0...arket-lessons/
"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.
https://www.theguardian.com/business...ories-slowdown They are trying to balance; pollution + health + credit growth.
2 graphs on financial stress, https://www.themaven.net/mishtalk/ec...ckuSzrv-sn98Hw

David Einhorn speculates that markets are permanently broken. https://www.zerohedge.com/news/2018-...solved-full-qa
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.

[Danny B]

Breaking pegs,,, 44 problems

"The Impossible Trinity theory was advanced in the early 1960s by Nobel Prize-winning economist Robert Mundell. It says that no country can have an open capital account, a fixed exchange rate and an independent monetary policy at the same time."
https://dailyreckoning.com/china-bat...sible-trinity/
Keep in mind that changes are coming VERY fast. China is trying to maintain the impossible trinity. China is printing boatloads oh Yuan AND trying to maintain the value of the Yuan. It isn't working.
https://asia.nikkei.com/Politics-Eco...n_cid=NARAN012

They have broadened the "range" of their dollar peg. Pegs never work and capital is fleeing. Pox Americana used a slightly different scheme to prevent capital flight. FACTA has made it impossible for Americans to have accounts in foreign banks.
1/02 Oil trades near strongest levels since mid-2015 on Iranian unrest – Reuters Oil goes up,,, the rest of the economy goes down.
1/02 Bitcoin soars above $15,000 after report of “monster bet” by Peter Thiel – ZH
1/02 Bitcoin fever to burn out in ‘spectacular crash’ – CNBC
1/02 Bitcoin starts new year by declining, first time since 2015 – Bloomberg

If you are one of the unfortunate people, you really don't care what the stock market does. You WILL care in the future. For now, you just want a warm meal and a warm bed.
"#3 According to the Washington Post, one out of every ten young adults in the United States has been homeless at some point over the past year.

#4 The United States has lost more than 70,000 manufacturing facilities since China joined the WTO in 2001.

#7 Incredibly, the number of retail store closings in 2017 was up 229 percent compared with 2016.

#10 According to the most recent numbers that we have, 41 million Americans are currently living in poverty.

#12 Ever since the beginning of April, Congress has had an average approval rating of less than 20 percent.

#18 Back in 1960, an average of $146 was spent on healthcare per person for the entire year, but today that number has skyrocketed to $9,990.

#19 Thanks to Obamacare, an appendectomy is ten times more expensive in the United States than it is in Mexico.

#20 Thanks to Obamacare, a family of four in Virginia is now facing the prospect of paying $3,000 a month for health insurance.

#21 It is being projected that the average rate increase for Obamacare plans will be 37 percent in 2018.

#25 One survey that was conducted in 2017 discovered that 78 percent of all full-time workers in the United States live paycheck to paycheck at least part of the time.

#26 According to the Federal Reserve, the average U.S. household is now $137,063 in debt, and that figure is more than double the median household income.

#32 At this point, 20 percent of all U.S. households have “either zero or negative wealth”.
44 Numbers From 2017 That Are Almost Too Crazy To Believe

Lastly, 1/01 Canadian zoo moves penguins indoors because of cold temperatures – Independent

[Danny B]

Stealth UBI,,,solar downturn

Even Martin Armstrong has his blind points. I need to give him a good schoolin.
Armstrong is COMPLETELY down on universal basic income. On the SAME page he shows the percentage of people working for the State.
https://d33wjekvz3zs1a.cloudfront.ne...Work-Force.jpg
It has increased enormously. US GOV spends 24% of the GDP. This means that a lot of jobs in the service sector also depend on GOV money.
https://www.armstrongeconomics.com/a...y-or-rational/
He doesn't want UBI, but, sees no problem with bloated GOV jobs programs.

Don't think that those jobs come cheap.
"According to the report, the number of federal employees making $200,000 or more increased by 165 percent between fiscal 2010 and 2016. Federal employees making $150,000 or more grew by 60 percent, with the number making more than $100,000 increasing by 37 percent in the same time period. "
"“There is a new ‘minimum wage’ for federal bureaucrats – at 78 departments and independent agencies, the average employee made $100,000 or more,” OpenTheBooks said in a statement.

In fiscal 2016, the United States Postal Service and the Department of Veterans Affairs employed more than half of federal employees. USPS employed 32 percent of all disclosed federal employees, totaling 621,523 people on the payroll; and the VA employed the second-most employees with 372,614."
'Mapping the Swamp' report finds 30,000 feds earn more than any governor | Fox News

Armstrong adequately covers the historical aspect of global cooling. He shows all the plagues, etc. He says that this time will be BAD and last for many years.
"So keep an extra supply of canned goods."
https://www.armstrongeconomics.com/h...t-10000-years/

[Danny B]

creating new debt to save jobs

#4 The United States has lost more than 70,000 manufacturing facilities since China joined the WTO in 2001."
OK, so the wage base collapsed. The bankers didn't want to see the value of their collateral collapse. Greenspan initiated the "Greenspan put" where the FED would underwrite the price of all the asset classes. Like a broken record, I continue to report the unsustainable rise in the price of assets. The crash of the wage base has forced the CB to create mountains of new debt to support the price base. ZIRP was supposed to keep the cost of debt service manageable.
This might be fine for stocks but, it did nothing for bonds. The FED had to buy most of the bonds. The FED was increasingly tasked to buy the stocks too.
The FED has stepped onto a moving sidewalk that just goes faster and faster. The FED must block any crash in asset prices. The level of State debt is an indication of the speed of the sidewalk. All State power comes from the barrel of a gun, and, the FED has no guns.
"The problem with that is the central banks didn't create "money" out of thin air; they created an unprecedented quantity of debt "
"Vast pools of liquidity sloshing around the trading floors and in the derivatives pits derived from a palpable desperation that was incubated by the unbridled greed of bankers. Under the guise of "saving the system," the global moneychangers saved only their cumulative net worth and retirement funds residing in their precious bank stocks. "

"when the plug is pulled from this bathtub full of rampant speculation and wild-eyed greed, none of those fancy catchphrases will save their clients from cataclysmic losses and the kinds of drawdowns in personal wealth from which there is no return, save a lottery win or messianic intervention."
"bankers will have their gated communities and private island sanctuaries within which to ride out the storm while the public is left cold and naked on the bathroom floor."
http://www.24hgold.com/english/news-...Ballanger&mk=1

"And although the unemployment rate fell to a 17-year low of 4.1 percent, the labor force participation rate dropped to 62.7 percent, "
How can people sign their name to BS like this?
"As history has shown us, all bubbles pop. Until then, certain companies are the equivalent of the living dead. The Bank of International Settlements (BIS), or central bank of global central banks, defines zombie firms as “firms that could not survive without a flow of cheap financing.” The latest BIS Quarterly Report labelled one of every 10 corporations in emerging (EME) and advanced countries as a “zombie.”
So, 70,000 manufacturing facilities have closed. What would happen if 10% of ALL corporations folded?

"Even Jamie Dimon, chairman and CEO of JPMorgan Chase, concurred. He called the tax cut a “QE4” (another round of quantitative easing, added to the three rounds the Fed executed over the past decade to reach $4.41 trillion in credit)." These lying 8astards should stick to lying. Truth is more dangerous.
https://www.truthdig.com/articles/ne...orse-last-one/

GOV debt is extremely high. GOV would very much like to inflate away the pain of repaying this debt. They figured that hyperinflating the upper loop would hyperinflate the lower loop. The Feces-for-brains never considered that the lower loop has to actually work for their money. The inflation of the upper loop was suppose to trickle down as wage gains. They had some idea of the downward pressure on wages from low-wage States. Apparently, they completely ignored the pressure on employment from automation.
"A 9% reduction in hours worked at wages below $19/hour.
A reduction of over $100 million per year in total payroll for low-wage jobs, measured as total sum of increased wages received less wages lost due to employment reductions. Total payroll losses average about $125 per job per month.
The findings that total payroll for low-wage jobs declined rather than rose as a consequence of the 2016 minimum wage increase "
"Bank of Canada estimates Minimum Wage Hikes Could Cost Canada's Economy 60,000 jobs by 2019.

By the way, and as discussed in Staggering Rent Increases in 2017, the median U.S. rental now requires 29% of median monthly income, "
Inflation bleeds over from the upper loop but, wages do NOT.
https://www.themaven.net/mishtalk/ec...OUmBFEb3BvhOag

[Danny B]

Squeezing the producers to maintain the financial parasites

A good article on control fraud and money laundering, oftwominds-Charles Hugh Smith: It's Not About Democracy: Control Fraud Is the Core of our Political System
Ron Paul, “We’re gonna have a sudden, cataclysmic end which is sort of what happened to the Soviet system. "
https://www.rt.com/usa/414931-ron-pa...rica-meltdown/
Here is an excellent article on reversion to the mean.
https://northmantrader.com/2018/01/03/yearly-charts/
We're working harder and getting less pay, https://cdn.americanprogress.org/wp-...eeze-fig11.png
The unions are no longer able to help us, http://www.industryweek.com/sites/in...ss-Incomes.jpg
The money is just not there, https://www.google.com/imgres?imgurl...act=mrc&uact=8

The crash of wages translated to a crash in consumption, AND a crash in banking. This was temporarily papered-over with new debt creation. BUT, unfolding automation is still chipping away at worker compensation.

1/04 Stock markets hyper-risky 2 – SafeHaven
1/04 Stock-market investors should ‘brace for a possible near-term melt-up’ – MarketWatch IGNORE THIS
1/04 ‘Fat cat Thursday’: top bosses earn workers’ annual salary by lunchtime – Guardian
1/04 US auto sales fall for 2nd year at top auto companies – Wolf Street
I wonder if they are related?
1/04 Dow breaks above 25,000 for the first time ever after strong jobs data – CNBC LOVE those strong jobs !

1/04 Pakistan ditches dollar for trade with China after Trump’s denunciation – GATA
1/04 New pipeline doubles Russian crude oil supply to China – Zero Hedge
They may quote price in $$ but, you can bet that they settle in Yuan or Rouble.
1/04 Security flaws put virtually all phones, computers at risk – Yahoo! NOT my flip phone.

[Danny B]

Armstrong,, Japanese woes,,, Kunstler

Armstrong has an interesting paper on the correlation between global cooling and plague. He also speculates that; "The Global Warming crowd may be setting society up for mass famine and death because they are deliberately pointing everyone in the opposite direction"
https://www.armstrongeconomics.com/w...-an-omg-event/
The 2007-2009 Crash was caused by a credit bubble offered to insolvent home buyers. Armstrong claims that the 2007-2009 Crash was not a bubble in asset prices. So, a housing crash that wiped out the banks does not qualify as a bubble because it did not hit the stock market.
"How the market responds to our Energy Models is critical for long-term forecasting. Look at the chart for 1929. Here you see that there is a huge spike in energy which peaked in February 1929."
He doesn't qualify what his energy models are based on. He put an arbitrary line on the graph to show positioning.
"Now compare this to the Energy Models for the 2007 high. We do not have a BUBBLE formation at all and the high came on the reaction high following the major high for the move. This confirmed this was by no means a BUBBLE "
https://www.armstrongeconomics.com/f...quity-markets/

He sounds like Greenspan claiming that nobody can ever see or predict a bubble. The 2008 crash wiped out the banks. It took an immediate $700 billion (TARP) and a follow-up $5 trillion? to save the banks,,, that haven't been saved anyway. He is a fool to look at just one market like the DOW and ignore RE, bonds, commodities, corporate debt, etc.


Armstrong, "Private Blog – Gold & the $1,000 Level" He's talking $hit here. The only possible way for this would be if Bedini's process got out in the wild.
Business insider writes about debt levels, Global debt his a record $233 trillion, but debt-to-GDP falling - Business Insider

Japan, "When government officials conducted a tally of total births last year, they counted roughly 941,000."
"One of the main traits of the demographic time bomb is that young people focus a lot of their time on work instead of socializing, largely to keep up economically."
"Long work hours are leading to a rise in cases of karoshi, or "death from overwork."

A October 2016 report that examined karoshi and its cause of death found more than 20% of people in a survey of 10,000 said they worked at least 80 hours of overtime a month — a signal of just how desperate young people are for extra income."
Terrifying signs Japan has become a 'demographic time bomb' - Business Insider
So, they work the Japanese to death and nobody has time or money for kids.
Japan ranks 184th out of 200 countries in its birth rate. The country has lost 1 million people out of its population of 128 million in just the last seven years"
"Each year, the nation is shuttering 500 schools."
"Obviously, the experience of Japan is not wholly transferable to the U.S. But the transformation of Japan’s low-tax, low-regulation model into nearly its opposite is a cautionary tale."

Read more at: Japan Economy: Its Woes Are Cautionary Tale -- U.S. Needs Tax Reform | National Review
So ream them to death with taxes to keep all the zombies going AND
They have no time , money or energy for a family.

Kunstler has gone out on a limb and made a LOT of predcitions.
"Call NASDAQ to land at 2,700. Calling for a US dollar index (DXY) of 79 by December. Calling for gold $2,500 and silver $60 twelve months from now. There it is, like so much meat on the table."
http://kunstler.com/cluster****-nati...rong/#more-%27

[Danny B]

There is generally a "melt-up" before the "blowoff top"

"On a price to sales basis, the S&P 500 is nearing peaks reached back in the dotcom bubble, while the cyclically adjusted price-to-earnings ratio kept by Yale economics professor Robert Shiller is at levels topped only by the heights hit before the dotcom bubble burst in 2000 and the Great Crash of 1929."
https://www.ft.com/content/4f59ea46-...0-857e26d1aca4
1/06 S&P 500, Nasdaq post best week in more than a year – Reuters
1/06 Price to sales ratio for S&P 500 surpasses 2000 tech bubble peak – Financial Sense
1/06 Global shares smash through records – Independent
1/05 Bullish fund assets jump off the chart – Dana Lyons

The rising cost of the militarization of the world, Tomgram: Engelhardt, Seeing Our Wars for the First Time | TomDispatch

1/06 Millennial deaths surge as opioid crisis deepens – Zero Hedge
1/06 Popular new Amazon service just comes to your house and kills you – Onion
The relationship between the stock market and the oil price.
https://www.zerohedge.com/news/2018-...omy-blows-2018

In 2003--2004, two depts of big federal agencies reported that a RE bubble was forming. BOTH departments were disbanded. In the same general time period, numerous banks were penalized and fined for not making liar loans. The fix was in. The banks would pump money into the housing market. When the eventual defaults materialized, FED GOV would just make the banks whole again.
This pumped up the economy. It also killed off LOTS of small banks. The big banks got bigger.

Buffet, “Between the first computation in 1982 and today, the wealth of the 400 increased 29-fold–from $93 billion to $2.7 trillion–while many millions of hardworking citizens remained stuck on an economic treadmill,” he wrote. “During this period, the tsunami of wealth didn’t trickle down. It surged upward.”
“In 25 years–a single generation–1.2 percent annual growth boosts our current $59,000 of GDP per capita to $79,000. This $20,000 increase guarantees a far better life for our children,”
Somehow, this feces-for-brains moron thinks that 1.2% annual GDP growth automatically translates to 1.2% wage growth. Wages have been flat for 40 years.
Warren Buffett Destroys Trump's Economic Policy Without Mentioning Him Once

[Danny B]

The money-renting zombie

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

"The average cost of tuition and fees at a private, non-profit, four-year university this school year was $31,231—up sharply from $1,832 in 1971-1972 (in current dollars)."
"government aid that once came as grants have transitioned to student loans."
http://i2.cdn.turner.com/money/2011/...ition3.top.jpg
"Germany has abandoned tuition fees altogether for German and international students alike. "
"Germany encourages the flow of international students with free tuition and 18-month post-study work visas. In 2016, German universities ... “Of course, we invest a certain amount of money [in their education], but what we get back is worth so much more. "
OK, so, the bankers got their financial claws into everything. Everything is done for short-term gains regardless of the long-term costs. We spend enormous amounts on medical "care" and are sicker than many countries that spend far less.

The banks survive on "spread". The consumer was broke and the only spread that could be generated was by lowering the prime rate from the banks. That has started to turn upwards and the defaults will climb also.
https://i2.wp.com/northmantrader.com...76%2C300&ssl=1
The consumer is/was broke. Extending more credit to keep the fees coming into the banks is a fool's game. At the same time that ZIRP created a bit of income for the banks, it destroyed everybody's interest income. The GDP is a measurement of how much money is in the economy. The bankers just create more and more until it flows into every corner.
http://www.yesmagazine.org/blogs/dav.../image_preview
ZIRP brought spread to the bankers and kept their system alive for 10 more years. Personal savings are gone and debt service is rising, https://i0.wp.com/northmantrader.com...76%2C328&ssl=1
Here is a long term chart of the FED funds rate. LOTS of free money to keep the "money-renters" in business. There are just TOO MANY people trying to rent out their money.
https://i1.wp.com/northmantrader.com...76%2C396&ssl=1

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

[Danny B]

BTC,,, accelerating to the blow-off top

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

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

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

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

The red part of this graph shows the negative credit balance of investors.
https://i2.wp.com/northmantrader.com...49%2C399&ssl=1
https://northmantrader.com/2018/01/04/the-debt-beneath/

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

But how to determine if, after nearly nine years of constant market levitation, the music is finally dying down? Conveniently, Grantham also presented his favorite indicator which allows him to determine if "market momentum is increasing to a frenzy" - the acceleration of price, or said otherwise, the non-stop surge that accompanies the final melt-up."
This is an excellent article about how professional money managers must stay in the markets until the last possible moment. A LOT of hedge funds have closed because that managers were too prudent to continue to gamble.
"They recognize the importance of a true psychological event of momentum increasing to a frenzy. That is to say, acceleration of price. The average time of the final bubble phase of the great equity bubbles shown in Exhibit 1 is just under 3.5 years, with the average upcycle of real acceleration just 21 months."
He does a very credible job of showing that the rate of acceleration "defines" when the blow-off top is imminent. The results are pretty consistent.
https://www.zerohedge.com/sites/defa...80103_GMO1.png
"But historically, when dealing with real bubbles, being late has not been materially different in time and pain than being too early, as you can see. "
Leave too early,,, you get killed. Leave too late,,, you get killed.
"the US and almost all global markets, "the strongest indicator – stronger than pure pricing or value – was indeed price acceleration."

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

"However, no matter if one looks at the move on a relative or absolute basis, a clear sign of just how relentless and rapid the market's recent upward acceleration has been is that the Dow’s latest 5,000-point run - which started roughly around the time 2017 rolled in, shortly after Trump's election - was more than three times quicker than its 844-day rally to 10,000. In fact, it will have taken the equity index only 238 sessions to advance from 20000 in January 2017 to 25000 Thursday."
https://www.zerohedge.com/news/2018-...m-has-just-one

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

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

As this is a MAJOR problem for the Bond Bubble.

As I explain in my bestselling book The Everything Bubble: the Endgame For Central Bank Policy, US sovereign bonds (also called Treasuries) trade based on inflation expectations.
Put simply, when inflation spikes higher, so do Treasury bond yields.
When bond yields rise, bond prices fall.
When bond prices fall, the Bond Bubble bursts.
When the Bond Bubble bursts, the EVERYTHING bubble follows."
https://www.zerohedge.com/news/2018-...nflation-crowd

[Danny B]

State debt,,,Breakup of England,,,perpetual regulations

An article on GOV debt, “Combined, the largest 50 countries in the world owe nearly $65 trillion. That is a staggering 90% of their combined GDPs! "
Sovereign GOVs have a printing press. U.S. States do not have a printing press. Here are a couple of graphs showing State debt.
How Indebted is Your State? - The Sounding Line
There is over a $trillion bubble in auto finance with a fairly high default rate. Just the same, auto sales are falling.
https://wolfstreet.com/2018/01/03/us...mw-and-others/

New Zealand is a very nice place,,, especially if there is a nuclear war. It has attracted a LOT of hot money.
https://www.stuff.co.nz/business/mon...ut-one-country
Armstrong, "Eventually, the United Kingdom will break apart formally, but with the collapse of Brussels and the EU Project, we are also likely to then see AFTER 2032, the general trend toward decentralization of governments as a whole. Hence, we will see England break apart into the old Anglo-Saxon regions as we will see the United States break apart. "
https://www.armstrongeconomics.com/i...nited-kingdom/

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

"The perpetual accumulation of regulations slowed U.S. economic growth by 0.8 percent per year on average, according to a 2016 paper by the Mercatus Center. The economy in 2012 would have been $4 trillion—or 25 percent—higher, if the amount of regulation had remained at its 1980 level. This equates to a nearly $13,000 loss for every person in the United States."
https://www.theepochtimes.com/govern...h_2403287.html
This $13,000 loss isn't entirely true.


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

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