Economic pressures

[Danny B]

big banks and even bigger debts.

I honestly feel very bad for the people who suffer from the global collapse. I bought 10 acres of farmland in Western Oregon hoping to help out as many good people as possible. That said, this is getting very entertaining. New headlines.
"SAYONARA GLOBAL ECONOMY" SAYONARA GLOBAL ECONOMY « The Burning Platform
" Runaway dollar could make deflation unstoppable"
Runaway Dollar Could Make Deflation Unstoppable
" $6 trillion of EM dollar bonds pummeled by rising $" I thought it was only $ 3 trillion
$6 Trillion Of EM Dollar Bonds Pummeled By Rising $, Falling Commodities | David Stockman's Contra Corner
" China's cities face judgement day on debts as costs soar " This is part of that $ 6 trillion that is very difficult to service.
China’s Cities Face Judgment Day on Debts as Costs Soar - Bloomberg
" Greece and Spain on verge of revolt" That's what happens with 50% unemployment.
Squeezed By Austerity Imposed By Germany, Greece and Spain on Verge of Revolt

"How J P Morgan Chase helped wreck the economy " Followed by, Goldman Sachs says that JPM should break itself up.
" Knowing it will end badly and turning a blank eye "
Knowing It Will End Badly And Turning A Blind Eye | Zero Hedge
What do you mean,, blind eye? I'm all packed up waiting to go to camp FEMA.
Not to be left out, it seems that Citi is getting close to blowing all to kingdom-come. They have recently been on a buying frenzy for derivatives. With the bill they just got through congress, they have about $ 70 trillion "supposedly" covered by the FDIC.
http://www.zerohedge.com/news/2015-0...-pass-swaps-pu

"To big to fail" has another name. "Alan Greenspan talked about this when I worked in the government. He basically said, ‘Everybody focuses on the too big too fail, but the real question is: What happens when you are too big too save?’ "
Former White House Official Warns Of Terrifying Cyprus-Style Global Endgame | King World News
The pension funds will be fleeced. "

The world is currently in deflation because of all the credit drying up. The CBs are printing like crazy but, the currency isn't moving from the upper loop into the general economy. There are a few plans floating around to send everybody several thousand dollars to get things moving again.
There is one very good analyst, FOFOA who has insisted that the CBs will eventually be able to create inflation. FOFOA

I'm not so sure. Deflation is a shrinkage in the supply of currency and credit. Currency; "There was approximately $1.29 trillion in circulation as of October 1, 2014, of which $1.25 trillion was in Federal Reserve notes. "
There are supposed to be one quadrillion in contracts denominated in U.S. dollars. There are about $ 1 quadrillion in Derivatives. There are about $ 15 trillion in Treasury bonds. We have a fractional reserve banking system. There isn't very much actual paper currency compared to the notional value of all those instruments and pixels.
I'm suspicious that much of the coming deflation will be in the notional value of all those instruments. The BOJ is buying everything that isn't nailed down just to support the notional value of stocks, bonds and whatever. They still have deflation. Can the FED buy everything in sight and still avoid deflation?

The FED bought up all those mortgage backed securities to keep the price of residential RE up high. They are buying every stock in sight to hold up the perceived value of stocks. They buy at least 80% of U.S. treasury bonds. They buy corporate bonds. Can the markets still crash if the CB has bought everything in sight? We may get to find out.

[Danny B]

Kunstler 2015 projections

James Howard Kunstler has long been a gloom-and-doomer. He sells lots of books. His central point is peak-oil. He says that we will never run out of oil, we just won't be able to afford it. Energy is the master resource. When the price of energy goes up, there is less money to buy other things. The shale boom was financed by junk bonds and the industry lost a lot of money. Financing has collapsed and the oil majors aren't willing to throw their own money after the lost money of investors. They are shutting down.
Kunstler said years ago, that passing peak-cheap-oil would bring great volatility. I suspect that the unwinding of U.S. shale production will indeed bring volatility.
Kunstler has a long list of predictions for 2015.
Forecast 2015 — Life in the Breakdown Lane | KUNSTLER

[Danny B]

Price of oil

"Oil dips below $49 as sector faces 'Hunger Games'
http://www.cnbc.com/id/102312537
OPEC says that THEY are not going to cut. WE have to cut.
"OPEC is not going to come to the rescue. It is up to American producers to cut oil supplies."
Investors Freak As Saudi Inaction Could Sink Oil To $20 A Barrel. Time To Buy? - Forbes
Expect $40 oil, U.S. to shut 200 rigs, pro says
http://finance.yahoo.com/news/expect...214145489.html
Oil is already at $ 30 in North Dakota because of high transportation costs; North Dakota Producers Looking at Crude Falling to $30 - Whiting Petroleum Corp (NYSE:WLL) - 24/7 Wall St.
While I like the price at the pump, whole nations and economies are going bankrupt. Canada is the #1 oil supplier to America. They have a housing bubble bigger than America had. Venezuela is beyond help and is crying to China for MORE money. Sad times.

[Ruphus]

I've always thought that the price of gasoline has been used to control inflation. It will be interesting to see if the OPEC countries hold out to $10-15 barrel prices. I appreciate your time and work into this thread. Very interesting links you have posted. The Forbes link gives a glimmer of hope that all is not lost and that oil will snap back to +$80 per barrel oil before major economic collapse.

I like the idea of getting out from under OPEC's thumb, but we will have to settle for those highly inflated oil prices in order for fracking to be a viable option for domestic oil companies. We are screwed both ways of course.

Thanks again I enjoy reading your posts.

[Danny B]

The politics of oil

The oil majors are losing a LOT of money. The price is too high. Much of the price of energy is profit for banks and taxes for GOV. The oil majors have had enough of this BS of losing money.
Excess capacity for oil production has been with us for decades, despite propaganda to the contrary. OPEC came into existence in the 1970s to check the over supply of crude in world markets.

With the Jamaica Accords in 1979, the U.S. got the Saudis to quote crude in USD only. This turned the USD into the world's reserve currency, the value of which is managed on one hand by the Saudis along with the American oil majors, and on the other hand by the U.S. Treasury and the FED.

What you see going on in the oil market is a fight between the American oil majors and the FED controlled by the big banks. The Keystone Oil pipeline has nothing to do with the environment. It has everything to do with the value of the USD. President Obama chills for the big banks which got him elected twice. The big banks also own Boehner and Mitchell.

The banks want to keep the price of world crude high (check Schumer's recent statement on Canadian oil going through the Keystone Pipeline). The Saudis and the American oil majors want to sell oil into an economically depressed world market. Now that power has shifted in the Congress, the American oil majors and the Saudis are letting Obama and the big banks know that things will be different.......

Then, there is Putin and ISIL or whatever their current name is.
"A major sustained drop in World oil Prices could easily collapse the Western banks since it is estimated by experts that at least 40% of their Worldwide Derivate holdings are dependent on high World Oil prices.

Apparently the goal of this manipulated drop in World oil prices by the agents of the OCC was to create serious financial stress for the Russian Federation and President Putin, to bring them to their knees.

As a true Ju-jitsu move, what if Putin now dropped the price of oil even further to maybe $15/barrel and increased production to flood the global market with legal oil, not stolen oil??

How long before the criminal western banks collapse under the stress of the derivatives contracts they currently hold??"
Putin’s Opportunity to Bust the US Petro Dollar | Veterans Today

[Danny B]

Confidence in financial markets

Energy-and-bonds... bonds-and-energy.
Bischoff;
"The FED keeps lowering the interest rates in order to keep the banks solvent. The easiest way I can explain this statement is to say that the loans on the books of the banks are an asset to the banks, while these bank loans are a debt obligation to the borrower. By lowering the interest rate, the FED increases the value of the assets (loans) on the books of the banks, while at the same time it increases the liquidation value of the debt obligation incurred with the bank loans taken out by the borrower. Quite clearly, the lowering of interest rates amounts to destruction of capital, i.e. airlines, car companies, rail road companies, and all capital heavy industry.

The FED is run by bankers appointed by the U.S. President and confirmed by the U.S. Senate. Their mandate is to keep banks alive and to provide for stable prices in the economy. That means in this environment, the FED must constantly be lowering interest rates. It has no choice, despite any propaganda emanating from the FOMC or the FED Chairwoman, that a rise of interest rates is on the horizon. Don't believe it....

Bond speculators are clued into all this. They have figured out a way to "front run" the FED. They take all this "printed money" put into circulation by the FED to purchase bonds ahead of lower interest rates. Then, the minute the FED has lowered the interest rate, the bond speculators sell the bonds back to the FED, thereby earning a hefty gain from the increase in the capital value of the bonds. The beautiful part is that this works for the bond speculators without having to take any risk at all.

Despite the fact that the FED wants all the "printed money" to flow to the commodity markets to keep up prices, once that "printed money" is in circulation, it flows where the fun is. As I explained, the fun is in the bond market. Speculating in the bond market, given the current FED interest rate policy, carries no risks for the speculators. Compare that to the risk speculators incur in the commodities markets.

The reader should see by now that the FED's policy causes prices in the commodity markets to fall, while it increases the capital value of bonds. The more prices fall in the commodity markets, the more "printed money" seeks gains in the riskless bond market. There is your explanation for increasing deflation despite a lot of "money printing". Compare this to the opinion the DB holds that "printing money" must necessarily cause inflation.

The readers get a much more detailed explanation by reading the interview Dr. Fekete gave to the DB in November of 2013."

SO, everybody is running to bonds,
"It is the sector flows that we see as bubbles. To create a bubble in anything, we need capital CONCENTRATION. This is where confidence comes into play. People display their herd-instinct by running into a sector because that is what everyone else is doing. People are convinced by price movement.
The Bond Bubble – Confirmed | Armstrong Economics

China seems to have a bubble in stocks rather than in bonds; The Last Bubble | Zero Hedge

FED GOV seems to have some problems with out of work people;
#16 69 percent of the federal budget is spent either on entitlements or on welfare programs.

#17 The number of Americans receiving benefits from the federal government each month exceeds the number of full-time workers in the private sector by more than 60 million. 17 Facts To Show To Anyone That Believes That The U.S. Economy Is Just Fine

Armstrong claims that it will all change to do-do when confidence is lost. It has happened before.
"The meltdown in Rome took place when? Not until 260AD. Why? Because for the FIRST time a Roman Emperor Valerian I was captured by the Persians and turned into a public slave. The CONFIDENCE in the government collapsed from that point on. Can you imagine what if Russia invaded Europe and captured Merkel and Obama and turned them into public slaves and the West suddenly discovered it was powerless to invade Russia. Confidence would collapse in Western currencies overnight."
Treading Water | Armstrong Economics

[Danny B]

More debt,,, less oil

I've always thought that the price of gasoline has been used to control inflation. It will be interesting to see if the OPEC countries hold out to $10-15 barrel prices. I appreciate your time and work into this thread. Very interesting links you have posted. The Forbes link gives a glimmer of hope that all is not lost and that oil will snap back to +$80 per barrel oil before major economic collapse.

I like the idea of getting out from under OPEC's thumb, but we will have to settle for those highly inflated oil prices in order for fracking to be a viable option for domestic oil companies. We are screwed both ways of course.

Thanks again I enjoy reading your posts.

Ruphus, thanks for the kudos.
I suspect that there won't be any snap back.
"Ironically, it may well end up as a showdown between the Fed and Saudi Arabia, the former doing everything in its power to keep otherwise insolvent companies well-capitalized, and on the other Saudi Arabia doing everything in its power to keep the cash flow drain as high as possible for High Yield debt-funded shale companies, and daring either the Fed, or rather junk bond investors who are scrambling for any source of yield, to back out. "

The oil rig count is falling fast and the bankruptcies are coming fast. There is fallout from all of this. It's mostly a case of collapse of derivatives.
http://www.zerohedge.com/news/2015-0...appening-again
This is an excellent article on the state of society;
http://www.zerohedge.com/news/2015-0...ered-illusions
Facing illusions; https://www.youtube.com/watch?v=NbxQpCq21l0
The dollar is not actually strong. It is rising but, only against the Yen and Euro. They are both falling. You Are Being Lied To – The West Is In Bad Shape, Particularly The United States | King World News
Much of this is tied to the demographic crash;
http://www.nytimes.com/2015/01/07/op...ine.html?&_r=0
The Euro is in free fall and can't realistically be saved; The Euro In Free-Fall | Armstrong Economics
The FED says that they have no fear of deflation;
"For many months, the Fed had openly ignored what the market was signaling about future inflation expectations, either through 5Y,5Y forwards or breakevens, instead opting to rely on such trivial and unreliable indicators as inflation surveys and beige book narratives. "
The Chart That Terrifies The Fed | Zero Hedge
They NEVER did have a clue.

The rigs are shutting down fast at the 2 main fracking states. That will show up very soon in supplies because the well depletion rate is so high.
Bakken, Let's Do The Math - Peak Oil BarrelPeak Oil Barrel

[Danny B]

Bankism and money printing

Several writers have observed that we no longer have capitalism. It has been replaced with "bankism".
Charles Hugh Smith wrote an excellent article about another "system" that has been replaced.
Keep in mind that the Post-war Bretton Woods agreement made the dollar the reserve currency but, insisted that it be backed by gold. Since the dollar was good as gold for so may years, it flowed into every country. When the gold backing was removed, the dollars were still there. People continued to hold dollars as a rainy-day fund mostly out of momentum.
This worldwide saturation of dollars means that the FED can print a lot of dollars without causing the expected inflation. Also, foreign States created a lot of dollar loans that demand a lot of dollars to fund them. There is a big demand for dollars even though the petro-dollar is not as much in demand as previously.

In a general sense, a State funds itself by taxation. America has reached a point where it no longer depends on taxation. The Grace Commission created by Ronald Reagan reported that not one dime of federal tax revenues goes to support GOV. American GOV is supported just by printing. Smith claims that this can not be stopped internally. It must be stopped by external parties.
The banks took our money and bought the lawmakers and the courts so, I suppose that he is correct.
oftwominds-Charles Hugh Smith: 2015: Everything Can Be Fixed by Printing More Money
"But what if you live under a regime of people who obtain their wealth not through taxation but through money printing?"

[Danny B]

GAAP and voodoo

The stock market just goes up and up. How can that be when the economy is dying? Several $ trillion were pumped into the stock market by the FED, PPT and ESF. About $1 trillion went into stock buybacks.
As companies buy back their own stocks those shares become what are called "Treasury stock" and they subtract from the amount of "outstanding shares", which is what are used for various financial ratios like EPS (Earnings Per (outstanding) Shares.) Therefore, the total number of outstanding shares is constantly shrinking as corporate buy-backs take place, which is one reason corporate profits seem to be rising (i.e., the same earnings are divided by a constantly shrinking number of outstanding shares.)
OK, the fewer outstanding shares, the higher the returns appear.

Sounds real good. It's just that it isn't true.
Generally accepted accounting practices GAAP seems to have gone the way of the Dodo bird. When you do Voodoo accounting, the stock market made money. Not with GAAP http://www.zerohedge.com/sites/defau...non-GAAP_0.jpg
Subtract the voodoo and the stock market made no money.
http://www.zerohedge.com/news/2015-0...-what-it-finds
Jefferson, "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered."
OK, we can see the obvious inflation. Do you think that we have deflation on the horizon?

Here is a graph of GDP adjusted for debt; http://www.firstrebuttal.com/wp-cont...3.11.59-PM.png
The angle looks like a ski slope,,, double black diamond.

You have to look at the delta of the debt and GDP to get an accurate idea of what the economy is really doing.
Empirical Proof of the Giant Con | First Rebuttal
The oil majors are at war with the banks and it is getting really ugly. There is an Indian saying, "when the elephants fight, it is the grass that suffers".

[Ruphus]

Forgive my ignorance...

Thank you again for taking time to write this tread.

I am reading it from the beginning trying to catch up to now. But I have most likely a naive question. Some of the posts (not just yours but some links too) reference the fact that the USD is just paper with no real worth connected to it. But in other posts remarks are made that the bankers are after sidelined trillions? Why are the bankers after the worthless paper? I don't what to get to far into the thread without that understanding and if you could take the time to explain it I would appreciate it.

[Danny B]

Avoiding monetary inflation to preserve the value of existing loans

Ruphus, the U.S. dollar IS just paper BUT, it is accepted many places for tangible stuff. The dollar was fixed at $20 per ounce of gold. After enough time, people got accustomed to just using paper. Gold places chains of control on GOV and banking. Even after GOV threw off those chains, people accepted paper just as before. Historically, this scheme goes on until GOV over-issues the paper. The average life of a fiat currency is 30-40 years.
Because the U.S. dollar is the reserve currency and the petro currency, this has given it an extended life.

The FED could just print $ trillions but, this would dilute the value of the existing currency. By stealing already existing currency, they avoid this dilution. U.S. GOV needs to avoid over-printing because exporters would demand something else besides U.S. dollars for the goods that they send us.
The U.S. dollar is not backed by anything BUT, it is redeemable for all sorts of things. Actually, U.S. GOV claims that the dollar is backed by the Full faith and credit of the U.S. GOV.

Keep in mind that the FED can create new currency but, the private banks can not. The private banks need to steal what is already in circulation. The only money that private banks can create is loan money. If there is no demand for credit, private banks can't create any new money. New money from private banks is deflationary because it carries an interest burden.
As long as the economy is growing, the "new" money moving into circulation pays for the principle and interest of the old loans.
When the economy collapses, everything moves towards default and the central bank has to ride to the rescue with debt-free money too offset the lack of debt money. The original loans were inflationary on inception and deflationary on repayment (because of the interest burden). The FED creates free money to ensure that there is always enough money in the system to repay the debt money.
The mega printing by the FED (TARP) was not very inflationary because it only rescued previously inflationary actions. The FED is careful not to inject too much money because your repayment to the bank will not have much "value" in hyper-inflated currency.
The banks have to steal existing money to avoid inflating away the value of the repayment you send them.

[Danny B]

Church of Perpetual Growth

Keynesian economics demands perpetual growth in credit and presumably, population. We live in a finite world and growth will eventually have limitations. Herman Daly wrote about avoiding these limitations before we did severe damage to our "pale blue dot".
The economic heresy of Herman Daly | Grist

"14) Mainstream Keynesian Economists and those governments who follow their line, typically aim for the Wrong Target — increased aggregate GDP Growth, when they should be aiming for greater GDP per capita
in a “Steady State” Economy (see the Work of Economist Herman Daly).
This Keynesian view leads to a variety of flawed policies including the
one that assumes that population growth is Good-in-itself. In the U.S.
and Eurozone, for example, this has led to the Counterproductive Policy
which encourages Mass Immigration. In fact this Policy results in larger
and larger social-welfare-Dependent Populations, and the Diversity it
brings generates loss of Social Cohesion. And this Mass Immigration
Decreases Job Opportunities and Wages for the Native-born ("Foreign-born
employment has increased by 1,028,000, while the number of native-born
Americans working has decreased by 780,000" (Rubenstein, vDare.com,
11/8/14) in the receiving Societies. Highly selective and extremely
limited immigration creates better results Economically and Socially. "

[Danny B]

Selgin and Fekete

George Selgin writes about "free banking"
The Daily Bell - George Selgin on Austrian Finance, Central Banks and the Virtues of Free Banking
Antal Fekete writes about why the actions of the FED will never work as planned.
The Daily Bell - Dr. Antal Fekete: Blowing Up Modern Austrian Economics ... in a Good Way

[Danny B]

GEAB No 90 and Jim Willie

We're getting closer and closer to dangerous times. I'm not pushing an agenda. I'm just trying to clarify where we are. LEAP 2020 is a group that has been doing a lot of projection. Their latest report is NOT reassuring.
GEAB N°90 is available ! Global systemic crisis 2015 – Oil, currencies, finance, societies, the Middle East : Massive storm in the Western port!
They have a good track record. They tend to be a bit socialist but, with the advance of automation, AI and robots, we are going to need some kind of solution that isn't limited to cut throat capitalism.

Another writer who has a good track record is Jim Willie. Here is his latest text;
Widespread Deceptions & Hall of Mirrors
Here is his latest vid; https://www.youtube.com/watch?v=ynAAXzs3PUY

If anybody wants ANY kind of explanation or clarification, just let me know. I'll give it a try. I understand that it is hard to wade through 18 pages of posts. Fortunately, I’m not an economist. I don't have to block out years of bad programing.
If any readers have any doubt about the seriousness of our situation, I will remind you that Rothschilds are big proponents of population reduction.

[Ruphus]

Yes thank you kindly for the response. I believe I am catching on to the way its played. I appreciate your easy reading style and the links to similar writings from FOFOA and Weis and a few others. I suppose now that I have read more that the bankers want all money in action preferably buying things with the help of credit. It is getting much easier to follow once you understand the rules to the game. Continue on kind sir.