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  • Danny B
    Late credit cycle,,, liar loans,,, inflation

    Where to start,,, What to cover?
    For starters, look at this graph,
    Just in case that you believe that we are in some kind of linear zone of stability, rather than in a cycle. We're coming to the end of a credit cycle.
    Everybody is starting to face this fact.
    "warned that the credit cycle is on its last legs, noting that "in our view, a key driver is simply that global liquidity conditions are tightening, and markets are coming to the realisation that the process will be rocky."
    "The bank also made a rare timing forecast of when it expects it to crack:

    "Morgan Stanley concluded that "evidence is mounting that spreads have hit cycle tights – in other words, that bigger fundamental challenges in credit are 6-12 months away, not 2-3 years down the road."
    " Late-cycle returns: asset returns YTD (annualized): commodities 23%, equities 5%, bonds 4%, cash 1%, US dollar -9%...“late-cycle” price action...last time asset performance ranked this way was 2007."

    "lessons of the 2008 financial crisis“:
    “The shareholders got bailed out. The boards of directors got bailed out. Management got bailed out. So from their perspective, there was no crisis.” “No other industry is levered likely the banking industry,” Kashkari said. "
    "While I agree with Kashkari that Wall Street is forgetting the lessons of the 2008 financial crisis (and is participating in the development of another dangerous economic bubble), he seems to be absolving the Federal Reserve of its massive responsibility for inflating the mid-2000s U.S. housing and credit bubble as well as the current “Everything Bubble”
    It wasn't the FED that made $trillions in liar loans. The Graham-Leachy bill allowed the banks to take all your money and loan it out. No qualified borrowers?? No problem, give them the money anyway.

    "This was a reference to a time-honored banker adage, now mostly forgotten after nearly nine years of easy money: Bad deals are made in good times." "Chapter 11 bankruptcies spiked 63% in March from a year ago "

    Armstrong on inflation.
    "The assumption that an increase in the money supply is the root of all inflation is simply a theory that does not stack up to history. "
    "Therefore, all the research that I have conducted demonstrates that inflation is by no means tied to the increase in the money supply, which is the entire reason nations borrow today. They think borrowing rather than printing is less inflationary. That is not true if the debt can be used as money."
    He is on shaky ground here because he compares debt-money to gold -silver money.
    "At times, the national debt of just about every major nation today has reached 70% of which is attributed to accumulative interest expenditures. As interest rates rise, the national debts will explode and because of this bogus theory of inflation tied to an increase in money supply, they will then raise taxes to try to reduce deficits. This will further create a Great Depression as deflation surges."
    "The ECB has engaged in quantitative easing for nearly 10 years without producing corresponding inflation"
    The monetary inflation is stuck in the upper loop. Specifically, in the bond market.

    "Typically, inflation unfolds when there is CONFIDENCE in the future. Hyperinflation takes place when CONFIDENCE in government collapses. We are dead center. There is no real CONFIDENCE in the future so people are spending less and saving more"
    This is sloppy thinking. There are 2 types of (price) inflation.
    There are two main types of inflation: demand pull and cost push. Fueled by income and strong consumer demand, demand-pull inflation occurs when the economy demands more goods and services than are available. Cost-push inflation happens when the demand for goods increases because production costs rise to the point where fewer goods can be produced.
    People are NOT saving more. They have maxed out their credit cards.

    "What government refuses to look at is the bottom line. The more they raise taxes, the less disposable income the individual has in every class. "

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  • Danny B
    Fiscal gap,,, yield curve,,,smoke and BS

    There is definitely a lot going on but, it is difficult to see past the fog of BS. When Trump tries to make America first, he is forcing globalism out of the top spot. The globalists don't like this. They will break and ignore ANY law if it helps to bring down Trump.

    The British House of Lords is making a big move to rescind Brexit. European socialism is crashing so, the answer is to raise taxes.

    The person who produces a good or service wants to protect and store the value of his labor. The person who produces nothing of value must steal from the producer. Paper money is the vehicle for this theft. Socialism is an organizational tool to do this most effectively.
    The socialists in Venezuela put their cronies in charge of the oil industry,,, ejecting the experts. Unfortunately for the Venezuelans, the price of oil fell badly. The socialists failed to pay the oil workers and, they hyper-inflated the money supply. The results were predictable.

    "the IMF again recommended that countries raise taxes and lower public spending to decrease annual borrowing and get the burden of debt on a firmly downward path now that there is no need for fiscal stimulus."
    "In fact, reading the IMF report between the lines, it is nothing more than advance scapegoating for the inevitable global debt crisis that is coming, and which not even the IMF is hiding any more. What is most comical - if completely expected - is that the IMF is now blaming it all on Trump: not on generations of economists who steered the world to the point where there is more than $3 of debt for every $1 of GDP, and not on central bankers who flooded the world with debt so that the richest 0.01% can be richer than their wildest dream. Nope: it's all Trump's fault."
    "The IMF said that the interest burden has doubled in the past ten years to close to 20% of taxes,"

    The IMF makes no mention of the fact that; the giga-tons of liquidity pumped out by the private banks is what got us to this point. The State did it's share of borrowing megatons of debt to buy votes and make wars.
    The private sector was offered credit that it did not merit. They act surprised when the defaults hit.
    The Global Economy Is Slowing, Credit Card Defaults Hit 6 Year High…. Saxo: The Word Economies Are Synchronically… Falling! – Investment Watch Blog

    The worker wants to store the value of his labor. The parasite uses debt-money to steal it. This only works if the producer pays back the loan. The money-renting business got too crowded and, many debt creators loaned to people who could not repay. The mother of all defaults will be when the State can't repay.
    Armstrong, "Trump is misguided on Trade, as every other politician has been since World War II. That has awakened the sleeping giant of China, whose debt to GDP exceeded 250% going into the end of 2017 compared to 103.7% for the USA going into the end of 2017."
    Ben Carson’s claim that the U.S. owes $211 trillion beyond the reported federal debt
    The more complicated figure he cites in his ad is the $213 trillion “fiscal gap” Carson claims is in addition to the $18 trillion debt. This figure comes from a Boston University economics professor, Laurence Kotlikoff, who put the number at $210 trillion, $3 trillion less than Carson’s figure.

    "Take for example the estimate of the fiscal gap, which increased by one-third from 2015 to 2016.

    The fiscal gap is a key snapshot of the government's financial health that estimates the tax increases and spending cuts required to maintain the current ratio of national debt to GDP. That's a more meaningful number than the national debt alone because it also takes into account money coming into the government's coffers, and the implications on future public policy."
    "If entitlement obligations were counted, the true national debt figure would actually be around $100 trillion, as opposed to the government's current $20 trillion figure. The more holistic $100 trillion number breaks down to a $308,000 burden for every American taxpayer. These bills are real, and they'll come due one day."
    So, cut out all entitlements and, we'll be good.

    Here is a graph of the yield curve. Every time that it collapses, we get a recession.
    You can get a feel for where we are now,

    The crash is blamed on the failure of capitalism or the failure of democracy.
    The pundits wouldn't dream of blaming it on low wages and automation.

    4/19 China air force again circles Taiwan in ‘sacred mission’ – Reuters 3 guesses what they have in mind.
    4/19 Apple jitters mount on concerns of waning smartphone demand – Bloomberg
    No kidding. maybe that is because we are getting ripped off.
    4/19 10-year Treasury yield tops 2.9% on better-than-expected economic data – CNBC
    4/19 Store closures set to accelerate this year, warns Bloomberg – Financial Sense

    More on global growth. Use ... control +... to make the tiny text larger.

    "improving confidence has pushed leverage back to record levels, investors carry the highest levels of risk assets since the turn of the century, and yield spreads remain near record lows. It certainly seems as “things are as good as they can get.”
    "The U.S. economy remains in robust shape, with growth in GDP, industrial production, and investment holding up well. In tandem with strong consumer confidence and employment growth"
    "For investors, when things are “as good as they can get,” that is the point where something has historically gone wrong. It is always an unexpected, unanticipated event that causes a revulsion of risk assets across markets."

    "In 1960, Robert Triffin brilliantly argued that ever-accumulating trade deficits, the flaw of hosting the reserve currency and the result of Bretton Woods, may help economic growth in the short run but would kill it in the long run."
    "We believe the financial crisis of 2008 was likely an important warning that years of accumulating deficits and debts associated with maintaining the world’s reserve currency may finally be reaching their tipping point. Despite the last nine years of outsized fiscal spending and unprecedented monetary stimulus, economic growth is well below the pace of recoveries of years past. In fact, as shown below, starting in 2009 the cumulative amount of new federal debt surpassed the cumulative amount of GDP growth going back to 1967. Said differently, if it were not for a significant and consistent federal deficit, GDP would have been negative every year since the 2008 financial crisis. "

    VERY good article explaining the relationship between the reserve currency, Bretton Woods, gold, and the dollar.

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  • Danny B
    Storing labor & “coincidence of wants”

    Here is an article where Lloyd Blankfein (doing gods work) says that the CBs are buying up all the risky assets.

    Here is an interesting comment;
    "The risky assets are the low hanging fruit. If I create a fiat money with no intrinsic value then what do I care if the paper goes bad? All I care about is how much labor-value can be harvested from the faux asset that I paid nothing for in the first place.

    If I had to pay in gold, then and only then will I have a problem with risk. My gold required labor to produce.

    It blows me away that people can't wrap their minds around the lack of authenticity of paper. It's obsolete and was so decades ago. You aren't worth a bag of puss on paper !!! "
    If you read the annual reports from 38,000 State bodies, they already own very large chunks of all the markets.
    CAFR1 Home Page
    The State steals our money AND prints free money to buy up real assets. Just how much of the overall economy is owned by the State?

    "Many consider Gold to be a barbarous relic of the past. Others say gold offers a poor investment return.
    But you know what gold does best? It forces bankers and the government to rob you out in the open where everyone can see.

    The current monetary system was designed specifically to hide the theft of your wealth from you."
    "Much to the surprise of US citizens even the US Constitution declares that only gold and silver can be used as money in the United States:"
    So what makes gold and silver a good store of value?

    The problem that the laborer wants to solve is how does he store the value of his labor?
    The reason the laborer wants to store the value of his labor is because of a problem called the “coincidence of wants”.

    You live in a system where dollars (or other fiat currency) are used as a store of value, but let us imagine a system that does not yet have a store of value, so that we can better understand the problem that dollars are trying to solve.

    A carpenter who makes tables and chairs from wood can save up the tables and chairs he makes, store them in a warehouse, and later trade them for food.
    When the tables and chairs are in the warehouse they represent a store of the value the carpenter’s labor that he put into making them.
    Later he can trade the tables and chairs for other items, such as food.
    But what if the farmer does not need tables or chairs and the carpenter is hungry?
    The problem of having an item to trade but not being able to find someone who “wants” the item is called the “coincidence of wants” problem.

    Since food products tend to spoil relatively quickly the carpenter has to find someone to trade his tables and chairs to when he is hungry.
    To solve the problem of trade and trying to find people who want your items exactly when you need some particular item people choose to use an “intermediary” item as a “store of value.”
    The carpenter can trade his chairs for gold whenever someone wanting chairs shows up at his door, **and** at any later time the carpenter can, when he is hungry, trade his gold to the farmer for food.

    It is the farmer’s willingness to trade food for gold and the carpenter’s willingness to trade tables and chairs for gold, that solves the “coincidence of wants” problem.
    It is hard to believe today, but US dollars were originally receipts for gold that you had on deposit at a bank.
    Until 1914, US dollars were receipts for gold and silver. They were receipts redeemable on-demand in gold or silver.
    Why does that date ring a bell?

    Gold is a store of value for the laborer, especially, the farmer, because his produce deteriorate rapidly. Centuries ago, the banker stored deposits and, matched up people with excess wealth and, people who needed capital for investment.
    When man operated draft animals or machinery, he received the excess labor value that resulted. As more and more of the machines are owned by capital, rather than by labor, the excess value created only benefits capital. This creates an ever-increasing mismatch between the consumptive power of the laborer and, the tangible wealth created by capital.
    Capital attempts to make up for falling business by reducing it's costs,,, like labor. The State tries to step in and fix things by pumping in more debt money. The State is underwriting capital by buying up shares. At the same time, the State is trying to underwrite labor with a safety net. This is a temporary fix to try to save labor.

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  • Danny B
    Banks fading away

    Bankers don't actually produce anything. But, it is a lucrative business and everybody wanted to get into the business of renting money. The banks had their depositors money but, everybody else had to use personal money. When money no longer had any intrinsic value, investors could create it willy-nilly. But, when money had no value, all it became was information. This made it very easy to create far more "information" than there were tangible goods represented by this information. In the information age, there is little need for banks.

    Banking sector will be ground zero for job losses from AI and robotics
    Future of Fintech: Will the Banks Disappear?
    “I Expect That Within the Next 10 Years, Probably Half of the Banks Will be Gone”

    Without the recent tax reduction, bank earnings would have been down.
    Super Mario Draghi is from Goldman Sachs. He was installed to make sure that the ECB rescued all the private banks. Having mush in his head, instead of brains, he never considered that NOBODY could rescue the ECB.
    As a typical banker, he is only concerned with creating money. He has no particular concern about creating wealth.

    4/18 Yield curve continues to collapse – Zero Hedge
    4/18 Morgan Stanley warns investors that best times are over – Bloomberg
    4/18 Fed’s Williams: Inverted yield curve is a powerful recession sign – Bloomberg

    4/18 Retail bankruptcies just hit an all-time high — and these 18 are next – MSN

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  • Danny B
    The BLOB State,,, kingdom divided,,, public retirement funds

    Definition of the deep state, "What is this mysterious “Deep State?” How does it operate? Who is behind it? Well… it depends.

    An instructive article in the “Moyers & Co.,” by pundit Mike Lofgren, addressed the question under the heading: “Anatomy of the Deep State?” He wrote: there is “another government concealed behind the one that is visible…a hybrid of public and private institutions ruling the country according to a consistent pattern…The state within a state is hiding mostly in plain sight…In terms of its scope…the American hybrid state, the Deep State, is in a class by itself and relentlessly well entrenched.”

    I need a new term and, have settled on the BLOB STATE.
    The blob state is not the power-mongers who start wars and ruin economies. The blob state is comprised of the millions of paper shufflers who sit in government offices and make miserable the lives of the average person.
    "School administrators' average salaries in New York over the past three years have increased more than four times those of public school teachers in the Empire State. For this school year, wages for administrators jumped to $146,652"
    The blob state has a lot of administrative control over things like retirement packages.
    "The really scary part is that pension debt keeps increasing despite the fact that taxpayers' contributions to state-level pension plans have doubled as a share of state revenue in the past decade."
    America's Sinking Public Pension Plans Are Now $1.4 Trillion Underwater - Hit & Run :
    The public pensions are $1.4 trillion in the hole. So, how are they going to pay for pensions? Remember that the court system is part of the public administration.
    This is a good article. The courts have insisted that pensions can't be diminished,,, Natch! The courts have now ordered / allowed the State controller to GARNISH the tax revenues of the municipality.
    Only 4 States are adequately funded. Nationwide, we will see public funds raided constantly to fund the retirees of the blob state. I'm not talking about teachers and cops. I'm talking about the huge "overburden" (worthless dirt) of administrators that had to be managers because they had no abilities.
    This is the slowly unfolding war between retirees and workers.

    In Matthew 12:22-28, Jesus tells the Pharisees: Every kingdom divided against itself is brought to desolation, and every city or house divided against itself will not stand.
    "North Korea is watching. And you know what it sees? It sees a house divided. It sees an America that is perhaps as divided against itself as it was prior to the civil war. An America that elects a president and then initiates multiple investigations against him that are kept going seemingly indefinitely. An America where hatred of one’s fellow countrymen and -women has become the norm.

    An America that has adopted a Shakespearian theater as its political system, where all norms of civil conversation have long been thrown out the window, where venomous gossip and backstabbing have become accepted social instruments. "
    "The attack on Syria is seen as a sign of weakness. Because there was no need for it. "
    "What the world sees is bluster emanating from a deeply divided nation (and we haven’t even tackled Britain)"
    That’s how all empires end. Complacency and division. That is what North Korea sees when it watches America, what China, and Russia see. And they may even know how Jesus put it. He didn’t just say a kingdom divided would become less powerful or wealthy, he said:
    Every kingdom divided against itself is brought to desolation."

    It's not just America,

    4/17 Optimism of manufacturers “plunged” the most ever: NY Fed – Wolf Street
    4/17 How Libor’s surge will help pop the global bubble – Real Investment Advice

    The bail-in is like a hyena hiding in the bushes. Nobody knows who it will eat. The banks don't want to lend to each other.
    4/17 Macron warns of European ‘civil war’ over growing east-west divide – Yahoo! He finally noticed.

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  • Danny B
    The collapse of CoCos

    OK gang, It' reading time again. The banks LOVED loaning money to the State back when it had a huge tax base. The tax base has slipped away at the same time that compound interest is really stacking up. Loaning money to the State is now seen as very risky.
    If you pick up a history book and give it a good read, you read about a long chain of events. You RARELY get the idea that all of history is cyclical.
    Strauss & Howe wrote Generational Turnings about these cycles. Burning Platform has 2 recent articles about The fourth Turning. It is worth reading both article to get a feel for where we are in these cycles.
    Part one,
    Part two,

    Current FED head Powell wrote the book on bail-ins where the bondholders and stockholders will be bailed-in to rescue the banks. You can imagine that those 2 groups are nervously eyeing the door.
    "According to one recent Bloomberg article, the next crisis will begin in the private bank debt market.

    The specific culprit is a kind of debt called “contingent convertible” debt, or “CoCos.” These bonds start out like ordinary debt, but a bank in distress could convert them to equity to improve its capital ratios.

    The problem is that bondholders know this and start dumping the bonds before the bank can pull the trigger on the conversion clause. This can cause a run on the bank and trigger cross default clauses in other bonds. Far from adding safety to bank capital structures, CoCos can make banks more unstable by igniting panics."
    "The bottom line is that today, systemic risk is more dangerous than ever. Each crisis is bigger than the one before. Too-big-to-fail banks are bigger than ever, have a larger percentage of the total assets of the banking system and have much larger derivatives books."
    "These kinds of sudden, unexpected crashes that seem to emerge from nowhere are entirely consistent with the predictions of complexity theory.

    In complex dynamic systems such as capital markets, risk is an exponential function of system scale. Increasing market scale correlates with exponentially larger market collapses. "

    Leave a comment:

  • Danny B
    Weak dollar,,, more gold,,, less silver

    Trump is way out of his area of expertise. He is listening to all the wrong people. Trump said that he wants a weak dollar. Well, he has a weak dollar.
    A weak dollar helps exports but, it doesn't attract foreign capital. Trump,put sanctions on Russia that crashed markets. Then, he complained that the Russian Rouble was falling.

    “Closing Panama Tax Haven Will Require Fighting the Most Powerful Lobby In the World,” The Real News Network, April 14, 2016.

    Economist Michael Hudson says oil and mining industries and the State Department created Panama and Liberia for the express purpose of tax evasion."
    Laundering Havens for War Budgets | Michael Hudson

    "According to Forbes, the Federal Reserve in 2008 – under the oh! so responsible watch of the Ashkenazi Jew Ben ‘Helicopter’ Bernanke – single-handedly allocated “over $16 Trillion to corporations and banks internationally, purportedly for ‘financial assistance. ”

    Other sources put it at close to $30 Trillion, twice the size of America’s GDP. And none of that money has been accounted for. These transactions were only discovered after a “quick audit” that then Congressman Ron Paul miraculously managed to squeeze out of the Fed"

    "Now this gets directly to the issue of gold. Watch very carefully when in a week or so the first petro yuan contract comes due on the Shanghai Exchange. You know that countries that sell their oil to China will have to get paid in yuan. If they are a bit shaky on accepting yuan, they can hedge against yuan by taking delivery of gold (not paper delivery but real gold) on the Shanghai Gold Exchange"
    Sloppy reporting. If they want to exchange Yuan for gold, the gold must be sourced on the open market. China isn't going to cough up any domestic gold.

    The price of gold has being driven down constantly for years. The Chinese have been using U.S. treasury bonds to pay for purchase of gold mines and all other natural resources. If gold were to go up, the Chinese wouldn't be able to buy it and the mines so cheaply. It is in China's best interests to hold down the price of paper-gold because paper gold is used for price discovery of physical gold.
    America sends over no-cost dollars to exporters and, gets back lots of good stuff in return. China and Russia print no-cost currency and, get gold in return. They were previously very cautious about not driving up the price. They have bought a LOT more in the last couple of months.

    4/16 Global debt bubble hits new high – quadrillion reasons to buy gold – GoldCore
    4/17 Global silver scrap supply falls to 26-year low – SRSrocco Report
    It's in somebody's pocket
    4/17 The first domino falls in Illinois… 400 more funds to follow – Zero Hedge
    4/17 Extravagant unfunded pensions for state, local bureaucrats – CNS News
    4/17 LA schools facing $15 billion debt for retiree health care – Reason

    That's just the schools.

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  • Danny B
    Notes from Armstrong

    Treasury secretary Connaly said, "the dollar is our currency but, your problem. The dollar is spread all over the world.
    "The Sovereign Debt Crisis is on schedule to be noticed starting here in 2018. We have 13 governments now who are already in default of their debt payments. There are more than 100 nations who are on the verge of a debt crisis. "
    China’s debt to GDP is more than TWICE that of the United States. DEBT is our worst enemy and there are no viable solutions coming forward because anything implied by others is tinkering with the current system. There is no solution is valued circles, other than mine, which calls for the complete revision of the debt system."
    "I fear that all we can do is protect ourselves. Nobody is willing to listen to me. When they will, it will be too late. Hence – the crash & burn becomes unavoidable. "

    This may sound like a lot of hubris on the part of Armstrong but, I believe that he AND his program are the ONLY solution. "Nobody will scrap the system before it crashes. It is against human nature."

    Years ago, new drivers were taught to use the transmission on a downhill,, to preserve the brakes. Gradually, over the years, brakes became better and, transmissions weaker. New drivers are taught to use the brakes and, not strain the transmission.
    Years ago, banks were eager to loan money to the State. The State had endless money because of it's taxing authority. 48% of Americans pay no income tax. 51% of Americans receive a check from GOV. From beggars to defense contractors. <96 million> people of working age are not in the labor force. Corporate taxes have been rolled way back. The FEDs pumped tons of money into the upper loop of the economy.
    Part of this is returned in the form of taxes.

    Just the same, tax collection is way down. The compounding nature of GOV debt is starting to runaway from the shrinking nature of tax collection.
    "I have been warning for years at the World Economic Conferences that interest expenditures will reach the point that they will crowd out everything else. Well at last, as we enter 2019 and the War Cycle heats up, interest expenditures will now EXCEED even military spending. Welcome to the SOVEREIGN DEBT CRISIS. "
    "The risk is beginning to become obvious as interest expenditures will crowd out everything other areas of spending. Governments will try to keep the debt revolving by raising taxes and this will only further reduce both the economy and our living standards. We are being walled-in by our own debt with no place to go except default if we do not act NOW!!!!!!!"
    Armstrong is going off to Europe to try to save the world. I do not say this in jest. The EU project has poisoned Europe and they will NOT work together. He has to try.

    Armstrong claims that this is a worldwide crash of socialism. The French government spends 57% of the gdp into circulation. Can that be called anything BUT socialism? Remember that they spend all this money for CONSUMPTION. Money borrowed for consumption is LOST. Armstrong is going to try to get them to cut WAY back on State expenditures and extend repayment terms. The alternative is sovereign debt collapse. They won't agree to do this. That means national default.

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  • Danny B
    The fall of the rial,,, pension problems,, ZIRP poison

    Everyone knows that the dollar has lost much of it's purchasing power. The Iranian Rail has gone from 70 to a dollar in 1979 to 60,000 now.
    "The rial has lost a third of its value this year alone."
    "Rouhani’s administration declared on April 9 that it had set a single rate for the dollar, at 42,000 rials, and anyone carrying more than 10,000 euros ($12,345) would be arrested.

    Tehran police reported that 12 “currency market schemers” had been arrested. Ayatollah Nasser Makarem Shirazi called for the execution of those “disrupting” Iran’s forex market."

    ZIRP is never done because it is so disruptive. They did it anyway. BUT, it only helps a few sectors for a period of about 2 years. Then the poison spreads through the whole system. By that time; the problem that called for ZIRP has only gotten worse. In the meantime every weak sector has become completely dependent on the drug/poison. State GOV is closing down everything and laying off everybody to meet pension payments.

    "Of the past 3,400 years, humans have been entirely at peace for 268 of them, or just 8 percent of recorded history."
    Russian sanctions will cut off rare earth exports to America. Buy your Neo magnets right away.
    Russia Drafts Tit-for-Tat Sanctions on America - Stephen Lendman
    North Korea has $15 trillion in rare Earths but, I don't think that we are going to see them.
    "Today, 247,977 units — equivalent to more than 11% of all rental apartments in New York City — sit either empty or scarcely occupied, even as many New Yorkers struggle to find an apartment they can afford."

    4/16 CBO budget projections worsen at alarming rate – Mish
    4/16 Oil prices vulnerable to ‘super spikes’ again as geopolitics heats up – CNBC

    Leave a comment:

  • Danny B
    Negative returns of increased debt

    Things are quiet for the moment. Everybody is waiting to see what Russia does after the latest bombing.
    Here is a graph of GOV spending,
    “The government expenditure multiplier is negative. Based on academic research, the best evidence suggests the multiplier is -0.01, which means that an additional dollar of deficit spending will reduce private GDP by $1.01, resulting in a one-cent decline in real GDP. "
    "nearly 75% of every tax dollar goes to non-productive spending. "

    "As I noted previously, it now requires $3.71 of debt to create $1 of economic growth which will only worsen"
    "In a word, what was a $20 trillion national debt when the Donald arrived in the White House is no longer. Now it’s barreling toward $40 trillion within the next decade."
    "The fact that debt and deficits are rising under conditions of full employment suggests a deeper underlying fiscal problem.”
    No, it suggests a head full of do-do.
    CBO – "Making America More Indebted" | RIA

    "While the unemployment rate is close to record lows, the portion of Americans who have a job or want one is also low. "
    "People who say they’re out of the labor force on account of disability aren’t counted in the unemployment statistics, which only measure people who have a job or are looking for a job. The 13.8% of working-age adults in West Virginia who are out of the labor force because of a disability,"
    The IMF seems to have a problem,

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  • Danny B
    Willie and Fulford

    Here are 2 articles from 2 writers who have access to uncommon information. Both article should be read in detail. Not because they are 100% accurate. Because they give you a view that nobody else has the cohones to present.
    Longstanding Chinese War: Intrigue And Betrayal

    Leave a comment:

  • Danny B
    Banks weakening, no customers,,,, 1987 Déjà vu

    Repost, Powell said that no bank is too big to fail.
    "Put simply, according to current proposals the next time a financial firm gets into trouble, the Fed won’t come running with a bail out. Instead, the FDIC will seize the bank and then use the capital from shareholders and bondholders to “prop it up” before breaking it apart into separate entities"

    OK, so, bank investors can look at the roadmap for bank dissolution. They also know that the banks are no longer profitable. When will they start moving to the exits?
    "However, sheer profit numbers alone won't be able to drive stock performance
    J.P. Morgan was off by more than 2 percent in trading Friday. Wells Fargo dropped nearly 3 percent.

    "If you take out the capital markets business and the one-time events, it shows these banks aren't doing any business, and that's the key problem," said Dick Bove, chief strategist at Hilton Capital Management and formerly of the Vertical Group. "If you take a look right across the board, credit cards are down, auto is down, student loans are down, the corporate area is mixed to down.

    Indeed, mortgage banking revenue tumbled for both J.P. Morgan and Wells Fargo. Trading was mediocre at Citigroup, while PNC saw declines in revenue and deposits.
    Bove has long railed against conventional wisdom that rising interest rates automatically would benefit banks, and he said Friday's results validated that view.

    "If you take these things and ask how is the core banking business doing, it isn't doing. It's not producing higher revenues, because it's not producing more loans," he said.
    "It was wrong because interest rates do not drive bank earnings. What does drive bank earnings is what they sell."
    JPM had a credit positive first quarter with all franchises showing healthy customer engagement," Arsov said. "This was also supported with particularly favorable performance in the consumer and retail bank
    Yeah,,, until they default.

    "For the vast majority of banks in the United States, they're not selling anything," Bove said. "If JPM can't sell loans because nobody is interested in buying them, it means people are not buying products"
    No kidding,,, Maybe they are out of money and, have maxed out their credit cards
    If the banks have no earnings, how long before everybody exits to avoid a bail-in?

    FED GOV is borrowing way to much. You can understand that it isn't particularly inclined to pay this back. Armstrong warns everybody to get out of GOV bonds. He warns that the State will just change the maturity dates to suit themselves. Your 90 day paper will magically become 10 year paper. This is where confidence in GOV becomes very important.
    4/14 JPM credit card charge-offs surge to six year high – Zero Hedge
    This has a bunch of graphs comparing today to the '30s.

    "The logic is pretty straightforward from a fundamental point of view, we are at a relationship between the Wilshire GDP ratio which is almost unprecedented historically, where we have a relationship that is historically the Wilshire's 70 to a 100 percent value of GDP,” the investor told The Street."
    The Wilshire 5000 is an index that consists of all the stocks that are actively traded in the United States. Following the dot-com bubble of the late 1990s, Warren Buffett introduced the ratio of the Wilshire 5000 full-cap index to the US GDP as a measure to evaluate the American economy's overall valuation.

    “So if GDP is at $20 billion or at $18 billion, that’s a descent market price. Today we are at 155 percent. The Wilshire is vastly overpriced historically against GDP.
    US stock markets are currently passing through the same peaks they faced 11 years ago, right before the massive sell-off that triggered the 2008 financial crisis, according to Phil Town, who sold his stocks before the crash.
    Town, who moved back into the markets at the March 2009 low, now expresses deep concerns
    You can't argue with his timing.

    Market volatility is reminiscent of the 1987 crash: Art Cashin -
    Apr 5, 2018 - UBS Financial Services Managing Director Art Cashin said this year's market volatility reminds him of the 1987 stock market crash. "It's a good deal more volatile than almost anything else you've seen,"

    Hong Kong Index Looks a Lot Like the Dow Before Black Monday ...
    Mar 25, 2018
    Stock Market Following EXACT Pattern of 1987 and 1929! What Will ...
    Video for stock market looking like 1987▶ 12:46
    6 days ago - Uploaded by The Money GPS
    Stock Market Following EXACT Pattern of 1987 and 1929! .... This looks more like a healthy correction ...

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  • Danny B
    Minsky, subprime is back,,,Deviation amplifying machine

    The British banker's war on Syria is on hold for a few days. We can all make money for a few days more before markets crash.
    Charles Huge Smith has an excellent article. It is about how monetary inflation distorts all markets and, results in trade wars.
    oftwominds-Charles Hugh Smith: Why Trade Wars Ignite and Why They're Spreading

    Excellent article on the Minsky Moment,
    "In particular, over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance." Too many people trying to rent out their money.
    "Specifically, Bianco Research defines these “zombies” as companies whose interest expense is greater than their 3-year average EBIT (earnings before interest and taxes). Currently, we face the greatest percentage of “Ponzi units” in at least 20 years."

    "It can be shown that if hedge financing dominates, then the economy may well be an equilibrium seeking and containing system. In contrast, the greater the weight of speculative and Ponzi finance, the greater the likelihood that the economy is a deviation amplifying system." A crooked casino.
    " if an economy with a sizeable body of speculative financial units is in an inflationary state, and the authorities attempt to exorcise inflation by monetary constraint, then speculative units will become Ponzi units and the net worth of previously Ponzi units will quickly evaporate."
    "there are plenty of reasons to believe the wealth effect may be even more powerful to the downside than it was to the upside. "

    Sub-prime mortgages are back. BUT, this time is different. The won't do any NINJA loans.
    "But it will allow its borrowers to have FICO credit scores as low as 500. The current average for agency-backed mortgages is in the mid-700s. Borrowers can take out loans of up to $1.5 million on single-family homes, townhomes and condominiums. "
    4/13 Wells Fargo just reported worst mortgage number since financial crisis – Zero Hedge

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  • Danny B
    Eurozone meltdown,,, markets are deaf to the drums of war

    Things are quiet at the moment. The Eurozone was a great idea as long as it was an informal economic union. When it became a forced political union, the strain was just too much. Lawyers and politicians believe that; they just decree that something is law and, everyone will comply. Germany has a $1 trillion current account surplus. The rest of Europe has a $1 trillion deficit.
    Killary spoke of Trump's riches and said, just think of what we could do with that money. I'm sure that Germany is getting nervous about what the socialist Eurocrats may decide about all that "excess" money that Germany has.

    Draghi finally came out and said that he was going to print until the cows came home,,,, and then, print while the cows were sleeping.
    "Draghi realizes he is trapped and he is trying to hold it together until he leaves so he will not be blamed for the mess he has created in the world economy after he leaves in 2019. I hate to tell him, but I do not think he will win that race out the door before chaos hits."

    OK, so what to do? What will the Eurocrats do to try to hold the Eurozone together when it will obviously crash?
    " With the Hungary election, Italian election, BREXIT, and Catalonia, the handwriting is on the wall. The EU is crumbling from its undemocratic internal authoritarian power that refuses to yield concerning its European Project to federalize Europe. If the Euro goes, there goes Brussels. They refuse to even concede that they created a nightmare with the Refugee Crisis. Italianer left because he disagreed with the internal policies. Selmayr is known as the “Monster” and this is a desperate turn to force central power upon the whole of Europe."

    Here are the big food producers in Europe,
    35% of the EU budget is for food subsidies. What will happen when the EU collapses?
    4/13 CIO of largest bond fund: “We are not alarmist but it’s time to sell” – Zero Hedge
    Global debt has hit $233 trillion. It isn't the poor people who are going to satisfy this demand.

    It’s Pure Math – We’re Headed for a Train Wreck

    Holter also points out the explosion of global debt. Holter charges, “It’s now $237 trillion. The amount of debt grew by $21 trillion globally over the last 12 months. That’s roughly 10 %. How much did global GDP grow? 2% or 3%, I mean that is totally unsustainable.” The biggest worry for Holter right now is escalating military action in Syria. Holter warns, “This is so, so dangerous. Obviously, you worry about a hot war because with the weapons you have today, you could have WWIII start in a heartbeat. But look at the market today. It’s up 400 or 500 points. You have talk of trade wars. You have talk of hot wars. It’s amazing the markets can hold together and ignore potential annihilation.”

    "It wouldn’t be hard for Xi to pull that carpet out from under Trump’s feet; it would be costly for China too, but if war were the reality, the rules and priorities change. And you can bet Xi and his people have run through the kinds of scenarios many many times. They’re prepared to “withdraw upon themselves”.

    As for the US, the ‘markets are holding on to crazy levels so far despite the threat that hangs in the air, but once the first rockets fly, and gold and bitcoin -oil?- are still available, why hold on to stocks? "
    "And besides, which investors are going to say, hell, I feel so patriotic, I’m going to hold on to stocks that have been onvervalued for years already, just to support Bolton and McCain and Tony Blair and Boris Johnson’s fantasies?"
    Gold, bitcoin, oil.
    1 day ago - The OECD Americas' drop in stocks of crude oil, NGL, and feedstocks was the largest in magnitude at 14.8 Mt. This trend was driven by the start of the United States' multi-year plan in 2017 to reduce crude oil stocks within their Strategic Petroleum Reserve. Buy a horse.
    Paper dollars and diesel fuel will receive the most demand and, be the best stores of wealth. Gold won't shine in most circumstances.

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  • Danny B
    War and markets

    Celente, "Specifically, last December we wrote in the Trends Monthly:

    "As quantitative data proves, the price-earnings ratio to stocks are approaching 1929/dot-com crash territory. Beyond prevailing economic fundamentals, the black swan event we forecast, the outbreak of war in the Middle East and beyond, will melt down markets…"
    That wild card event is upon us. And from a fact-based, trend-tracking perspective, not only is the Middle East on the brink of greater War, trend lines are leading to World War III."
    "Will you have enough cash on hand if your government calls a "Bank Holiday" to prevent a run on the banks as currencies crash and fear spreads.

    What will you do if a cyber attack hits financial systems, wiping out your digital cash and digital savings stored in banks and equities?"
    Ready for War! Are you Prepared?
    So, why the big push for war? The bid-to-cover ratio is breaking down. $360 billion in attempted bond sales will do that Investors are inching closer to the door. A mass default cascade would paralyse everything. Would martial law help to stabilize things? The latest bond sales might have just been too much for the markets to choke down. Obviously, Uncle Sam can't pay off his debt. Maybe the markets are afraid that he can't even service the debt.
    4/12 CBO: Interest payments will outpace military spending by 2023 – Bloomberg
    Rising federal debt: US budget deficit rose 18.4% in March.

    The federal debt is $145,000 per household. At what point will everyone desert Uncle Sam?
    Attached Files

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