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Old 10-09-2018, 04:00 AM
Danny B Danny B is online now
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Interest rates, fear,,, the Rubicon

Interest rates are the talk of the town.
10/08 US stocks down again on rising interest rates – CNBC
Armstrong, "What the IMF is warning about is the risk of interest rates rising and countries who have borrowed in dollars are presenting a major Emerging Market Debt Crisis. Then we have the two-fold risk is the currency and the interest rates. Many others have borrowed but with floating rates. Our model is warning that rates are going to more than DOUBLE. In the face of that probability, we are looking at a very distinct and unique type of debt crisis."

"it seems like short treasuries is the current consensus (I believe they are currently at the biggest net short position in recent history). Since most people need to be wrong, does this suggest that as global debt unwinds that perhaps US Treasuries may still have another rally in them before the final crash?"
"In the case of interest rates, the long-term is clearly staring at higher rates square in the eyes."
"We have NOT yet crossed the Rubicon in interest rates. We still have not yet elected the 4th Monthly Bearish Reversal. When we do, the 30-year will signal the debt crisis is in full gear."
"Hence, the euro looks like death warmed over, political chaos is brewing, so you have to push money out the door to other currencies. Hence, the dollar keeps rising and the political rhetoric against Trump is desperate to hide the trend that his strategies have been working on bringing capital home and renegotiating NAFTA. So with the dollar strong, euro in crisis, you have no choice but to buy Treasuries even if for short-term plays."

"Consequently, you can be correct that the long-term trend is UP UP AND AWAY for interest rates. However, the devil is lurking behind every rock along the path."
"Hence, we have not yet crossed the Rubicon. When we do, it will be time to shout very loud so our readers will hear. We can see that the chart patterns between dollars and euro in the 30-year Treasuries is as different as night and day."
EVERYBODY sees the writing on the wall as far as the Euro is concerned. As capital flees there, it leaves behind DEFLATION. The ECB prints and,,, the new money flees.
As capital flees weak economies in favor of the dollar, the dollar price of gold does not rise,,, of course not. It will be later in the future when the dollar blows and gold is in demand. Still at least a couple of years.

10/08 Italy’s budget crisis flares, sending yields soaring, amid comments on euro exit – Street
Remember that Greek-bond holders took quite a haircut. Italian-bond holders will try to avoid this.
"Let’s be clear: no country in history that doesn’t control its own currency has ever had such a large debt pile. This situation is unprecedented."
" Italy is over 130%.
"European Commission President Jean-Claude Juncker called on Italy to redouble its fiscal efforts; Di Maio responded by saying the country won’t retreat on its fiscal plans.

Unless the relevant officials start communicating in a more positive and coordinated fashion, then Italian yields will continue to spiral and contagion will spread."
This is BS. The EU wants BLOOD, not communication.
"Five days ago, I wrote that the Italian debt crisis had crossed the Rubicon. It was exactly five days after Caesar’s crossing in 49 BC that the leaders of the Roman Republic fled the capital rather than making any attempt to compromise with Caesar. For the sake of more than just the Italian bond market, let’s hope we see a much more constructive reaction from today’s Italian government."
Italian debt is 130% of gdp. They will NEVER escape,,, without default. 70% is considered the safe limit.
'We'll close our airports!' Salvini resists Germany's plans to send migrants back to Italy
Does that sound like a government that is going to back down? We shall see.

"A poll last November by J. Wallin Opinion Research showed over 86% of respondents against foreign military interventions – 57% calling military aid abroad counterproductive.
Over 70% oppose the executive taking the nation to war, urging legislation to prevent it, wanting greater congressional control over this vital issue."
AND, what do we get?
Chinese ‘aggressive industry’ threatens US military complex, ‘stable budget’ needed – Pentagon

Reportedly, the military has misplaced $23 trillion over the years. The Jewish Rabbi who was comptroller of the pentagon many years ago disappeared a $trillion or so. It has been downhill ever since.
Some years ago, the U.S. had some budget cutbacks. Congress tripped all over itself in it's rush to assure israel that THEY wouldn't fall victim to any cutbacks. The MICC and the war industries reign supreme regardless of how impoverished the average American might be.
We MUST have a stable budget for the military.

"Today's extreme polarization could be part of the Strauss–Howe generational theory, also known as the Fourth Turning theory, which could give way to a new era of politics once the political deadlock is over. Perhaps, maybe, that is a key indication the swamp draining is on the horizon. Turmoil is coming. Strap in."
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Old 10-09-2018, 03:03 PM
Danny B Danny B is online now
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Treasury market BS vs population

The price of money (credit) is a big controlling factor for the economy. That is mostly related to the U.S. treasury market. I'm reading articles about the Treasury market that will make your head spin. The major factors affecting decisions at the FED are; we are at a 48 year low in unemployment.
Also, consumer sentiment is VERY high. That may be true in the beltway but, not in mainstreet.
“higher Treasury yields are reflecting a ‘remarkably positive’ economy, as Jay Powell put it"

This article is loaded with LOTS of charts and technical BS.
It's enough to give you a headache. The one takeaway is just one chart of interest rates.
It shows a slow march down that the CB can't escape from.
"The next recession will be a cousin of the 1937/38 recession, the first recession following the Great Depression that shocked everyone with its ferocity."
Reportedly, 5.1 million starved to death in Great Depression I
Japan clearly shows that you can not escape the economic doldrums if you have a falling population.
All the BS articles on interest rates IGNORE falling population.

Armstrong, "Currency is the pressure value for an economy, but with Europe this is forced into the debt markets. The trend and capital flow continues in favour of the US Dollar. "
The dollar is the common currency for the 50 states. The 50 States have a common debt market. The Euro is the common currency for the 28 members of the eurozone,,, minus the UK. The Eurozone does NOT have a common debt market. The European debt markets will blow to smithereens because the individual States can not devalue their currency. Not sure about the British Pound.
The death march of the euro is part of what holds up U.S. stocks.
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Old 10-10-2018, 04:22 AM
Danny B Danny B is online now
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More speedbumps

Global debt just rose to over 247 trillion USD (318% of GDP).This is 96 trillion higher than a decade ago.
•Debt levels in EM’s grew from 17 trillion in 2007 to 54 trillion in 2017.
•Dollar-denominated debt issued by non-US countries rose from 10
trillion USD to 34 trillion since the GFC
Great chart, https://proxy.duckduckgo.com/iu/?u=h...5%2529.png&f=1

"Central bank policies completely distorted production capacity and global supply chains, crippling corporations with staggering debt loads and zero pricing power. Once global demand declines-- which is the inevitable result of bringing demand forward for a decade-- hyper-indebted corporations won't be able to service their debt. "
" Zombie corporations in emerging markets using currencies that are in free-fall to service USD-denominated debt are doomed.
But many of the USD-denominated loans were issued by European banks, which means they will suffer catastrophic losses as the emerging-market zombies default on their USD-denominated loans.
The defaults and currency crises in the periphery will then move into the core."
oftwominds-Charles Hugh Smith: The Global Distortions of Doom Part 1: Hyper-Indebted Zombie Corporations

Good article on corruption.
"Overall, public pension funds in the US are short $7 TRILLION on what they have promised to pay out to retirees.

If you include Social Security that amount balloons beyond $50 trillion.

And that’s just the US.

The World Economic Forum said the total global pension shortfall was $70 TRILLION in 2015. They expect it to reach $400 trillion by 2050."

10/09 China dumps its distressed debt on foreign investors and pensioners – Epoc
10/09 Fifth bond sale pulled as Europe’s junk bond market cracks – Zero Hedge
10/09 China must take strong stimulus measures to support growth: state media – Reuters

Sure, economic growth while the population is falling.
10/09 Beijing eases policy, yuan slides towards 10-year low – Talk Markets
10/09 China’s yuan sinks past key support level as trade war heats up – Bloomberg

China is in a debt trap that will blow up eventually.

Whenever it is quiet, I can always look for Jim Willie.
"game on for President Trump in the clean-up process of the Deep State players after over 30 years of narco-fascist administrations,
the prospects of reconstruction for the USEconomy over the next several years, the requirement to avoid a vaporization of the financial system during the transition which constitutes the Global Financial RESET "
Do you think that this reset can be brought about peacefully when the legislature is locked into a partisan battle to the death?

"The USFed has caused every financial crisis since the 1980s. Both outsourcing of US industry and QE monetary policy assure more crises. The actual price inflation is over 8%, thus the lie on GDP is over 5%, and therefore the USEconomy is stuck in a 12-year recession. The debt engine is broken, since it takes $5 in new debt to create $1 in economic activity."
"This time around the entire globe is participating with national breakdowns in the crisis. Call it the Everything Bond Bubble or the Systemic Lehman Event. The Chinese are using very clever financial tactics which include a Debt-Trap Diplomacy game, using USTBonds for extended credit."
GOLDEN JACKASS.COM - The Golden Jackass Knows Gold, Currencies & Bonds"
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Old 10-11-2018, 03:02 AM
Danny B Danny B is online now
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Stocks and bonds never crash together

Corporate America borrowed about $5 trillion to do stock buybacks. This greatly raised earnings and bonuses for corporate cronies. The insiders have recently started dumping their shares. Bonds have broken out of a 30 years downtrend. Junk bonds are starting to crash.
10/10 Investors yank record cash out of stock, real estate, and muni ETFs – Bloomberg
This can be seen as deflation of the circulating money supply.
10/11 Asian stocks follow US markets down; Nikkei off 700 points – CNBC
10/10 Trump says the Fed has ‘gone crazy’ after the Dow tumbles 830 points – MW
10/10 Carnage continues after-hours – Dow down 1000 Pts – Zero Hedge

Will Powell step in?
10/10 A rare and worrisome thing: Bonds fall along with stocks – CNBC
This doesn't happen.

10/10 Has the derivatives volcano already begun to erupt? – Asia Times
10/10 Fed credit and the US money supply – the liquidity drain accelerates – Acting Man

More deflation.
10/10 From Ferrari to Ford – global auto stocks are crashing – Zero Hedge
Yep, all tied to interest rates.

10/10 Italy’s Lega popularity rises with each EU confrontation: major event coming – Mish
Lega Nord is on a roll. Evidently, they have borrowed a few hand grenades from Trump, AND, they intend to use them.
10/10 UK public finances are among weakest in the world, IMF says – Guardian
Did I mention that the UK is a pressure cooker with no pressure release?

OK, everybody is saying that stocks are going to blow. Themarkets have slipped quite a bit. Armstrong says that global capital flight will uphold American equities markets. This is going to be very interesting.

Armstrong, "the market peak on the target week in the Array of 10/01 so it is simply all about the market getting tired. The vast majority are bearish and the most fascinating thing is what happened to the Flight to Quality? Normally, the stock market crashes and you run to bonds. But if the stock market is crashing and bonds are crashing, is this a completely new type of flight?"
Stocks and bonds don't crash together. BUT, corporate America is indebted up to it's eyeballs. Public debt is indebted up to our eyeballs. Nobody wants to risk the bond market.

"Emerging-market stocks have tumbled 4.5% in the five days last week"
"The dollar has rallied despite everyone saying it was crash. Let me make this perfectly clear: The dollar’s rally will continue overall. The Fed will continue its policy of gradual interest-rate increases at least through the end of 2019 and probably into 2020. Meanwhile, the rise in US rates will FIRST cause tremendous problems in Emerging Markets and then in Europe, followed by Japan. There is no getting away from this trend.
If everybody believes Armstrong, nobody will touch bonds. So while there is a demand for dollars to service dollar-denominated debt, there is no demand for dollar bonds.

Now, the NASTY part.
"There is absolutely no resolution to the great divide that has unfolded politically. The Democrats advocate violence as Hillary clearly states. She says that civility can ONLY return when the Democrats take back the government. Clearly, this is throwing down the gauntlet that it shall be their way or no way. This is the end of Democracy"
"1985, I warned that we would face a Crisis in Democracy. It would begin as the government loses power over the economy and the people, "
"The next stage is the violence"
"Hillary is effectively advocating the destruction of the United States. She has simply stated bluntly that democracy will no longer be tolerated unless the Democrats win and then subjugate the opposition. "

"We have crossed the line. There is no going back. We will now face the Decline & Fall of the United States "
10/10 Americans more radicalized than ever as the country spirals toward civil war – EOTAD
Here is a must read article. Trump has gone from hand grenades to heavy artillery. The CFR is calling for the whole world to get together and block him.
“Committee to Save the World Order,” the dynamic globalist duo argued in CFR mouthpiece Foreign Affairs that Trump was working to “upend” their precious “world order.”
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Old 10-12-2018, 03:08 PM
Danny B Danny B is online now
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Sentiment and crashes

Short version today.
The FED pumped in tons of new liquidity to save banks and, to save valuations of everything under the sun. There is evidence that none of this can be saved on a long-term basis if population is falling. There is evidence that none of this can be saved while wages and purchasing power are falling. The FED has been carnying everything for years. Powell appears to be ending ALL of this. While it will definitely crash America, we may accrue some positive effects.

"Surely they must all have known that this wouldn’t continue?! That it’s just a matter of timing, of knowing when it would end? Oh, but that’s not really possible, is it, without the very price discovery process the Fed successfully strangulated?

Still, there must also be tons of people left thinking the Fed can kick that can six times to the moon and back, or sixty. If only because they’ve never bothered to think about price discovery, and what role it plays in the very ‘markets’ they volunteer to spend their money in."

John Hussman, "Be careful to distinguish the level of valuations, which have been extreme for quite some time, from the consequences of overvaluation, which depend on surrounding market conditions. While valuations provide an enormous amount of information about long-term investment prospects, and likely downside risk over the completion of any cycle, the information from valuations is often entirely useless and even detrimental over shorter segments of the market cycle. The question isn’t whether valuations are useful, but when. "

We can clearly see the economic indicators winding down. It is unknown just how this will affect investment sentiment.

Nomi Prins has more to say on this.

The "establishment" is trying to uphold investor confidence. Apparently, Zero Hedge is going the opposite direction.
10/12 “This is becoming dangerous” Morgan Stanley warns, as forced liquidations loom – ZH
10/12 Albert Edwards: “Equity investors face the Four Horsemen Of The Apocalypse” – ZH

10/12 Media suddenly starts expecting a brutal recession in 2020 – Economic Collapse

"A barrage of selling slammed stocks Wednesday on the heels of several failed bounce attempts earlier this week. As the dust finally cleared, we were left with the worst drop since the February correction.

The Dow Jones Industrial Average tumbled more than 800 points on the day to close down 3%. But once again, tech and momentum stocks absorbed some of the worst damage. The Nasdaq Composite finished the day lower by more than 4%. Many individual names fared much worse."
"As if this market meltdown wasn’t stressful enough, the president is already launching a war of words against his own Fed chair, saying the Fed has “gone crazy” by moving forward with its plan to raise rates."
EVERYBODY is a critic of the FED until they get elected to office,,,, and want to keep the party going during THEIR term.

10/12 Signs suggest China may tolerate yuan weakening past 7 per dollar – Bloomberg
There really isn't much that China can do. Their corporate sector is rapidly melting down, and everybody knows it. If they sell dollars to buy Yuan, EVERYBODY will dump their Yuan at that artificial valuation.
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Old 10-13-2018, 02:56 AM
Danny B Danny B is online now
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Plodding by the milestones

Armstrong, "All the yelling and claims for gold have never changed since the 1970s. They always claim the same scenarios. Meanwhile, gold rallies and then declines. It is a commodity like every other market. It cannot absorb all the cash in the world. The bond market is 10 times that of equities and equities are several hundred times bigger than gold. "
VERY disingenuous of him.
The stock-to-flow of gold clearly shows that gold is NOT a commodity.

Here is a graph of the 10 year nots, https://www.zerohedge.com/sites/defa...GPC1011183.png
"This signals a tectonic shift. Throughout the post-2008 era, anytime stocks collapsed, money rushed into bonds.

Not anymore. Indeed, the bond market is now collapsing ALONG with stocks. The yield on the most important bond in the world, the 10-Year US Treasury, has broken its multi-decade trendline."
One more milestone.

The United Nations is hard at work to clearly show that they have feces-for-brains.
The media is getting a jump on blaming Trump for an economic crash just in time for the 2020 elections.

10/12 Stocks could fall 40% to 50% to reach fair value: Morgan Street Capital – CNBC Ho Hum
10/12 China’s September trade surplus with U.S. widens to record $34.13 billion – Reuters
You can thank Powell for making Chinese goods more affordable.
10/12 Wells just reported the worst mortgage number since the financial crisis – ZH
Don't worry, as interest rates continue rising, mortgage will continue to crash.
10/12 Jamie Dimon warns about ‘geopolitical issues bursting all over the place’ – CNBC
He certainly did his share to bring on the crash.
10/12 Facebook hacked for millions of phone numbers and email addresses – CNBC
Even the NSA was hacked. Cyber security is a fleeting chimera.

10/12 Retirement target-date funds stung by emerging markets, U.S. bonds – Reuters
As Karen Carpenter once sung, we've only just begun.
10/12 Italian parliament approves controversial spending targets despite EU pressure – GM
OK, so, the bond market will respond. What will Italy do then?

Strange news from Greece.
"A Greece politician has demanded his country pay Greece billions in reparations for ‘loans’ extorted by the Nazis during World War 2.

Left-wing lawmaker Gregor Gysi said Berlin should take full responsibility for the actions of Hitler’s fascist regime and pay back at least £8.7billion (€10bn) to settle the outstanding debt."
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Old 10-14-2018, 04:11 AM
Danny B Danny B is online now
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How much pain will Powell allow?

You can bet that Armstrong considers the recent drop to be just a minor correction. Chris Martenson has another view.
"The central banks have distorted the processes of price discovery and market structure for so many years now, that it’s difficult to know yet whether their grip on the markets has indeed failed.
But what we know for certain is that bubbles always burst. Inevitably."
"And with that, our award for “Finally closing the barn door after the horse left 8 years ago,” goes to John Williams of the US Federal Reserve.

In my assessment, the biggest crime of the Fed was the decision under Greenspan to try to eliminate the business cycle by replacing it with a credit cycle. Here’s what that looks like in chart form:"
EXCELLENT chart, http://media.peakprosperity.com/images/Hussman-

But what we know for certain is that bubbles always burst. Inevitably. Each is built upon a fallacy; and when that finally becomes apparent to enough people, the mania ends.

And with that, our award for “Finally closing the barn door after the horse left 8 years ago,” goes to John Williams of the US Federal Reserve.
Heck, Trump was already gunning for Powell on Wednesday after just the first -3% decline:"
But if Trump was concerned on Wednesday, he must have been spitting nails on Thursday as the market carnage continued:"
Another amazing chart, http://media.peakprosperity.com/imag...2018-10-12.jpg

"It’s not a perfect detection mechanism certainly (Germany is down 4x more than Portugal?) but the pattern is more than directionally adequate. The money flood has reversed"
Stop and give this some thought. Germany is down 4X the drop of Portugal. Germany was WAY up. Portugal was not.
Now, think about gold. It hasn't gone way up because the CBs blocked it from every approach. The dollar will continue to rise (Armstrong) until it crashes in 2020? He also said that gold would see a catapult move. Don't throw your gold away.

"Whether the central banks blink here and ride to the rescue is the big question."
"the consensus is that Powell is a different animal from his predecessors. He'll tolerate quite a lot of stock weakness before he's moved to act. Is his line in the sand -20%? -30%? "
So, just how much will Trump be screaming at Powell?

"October 12 - Bloomberg (Cecile Gutscher): "Nervous money managers fled from corporate bonds like never before in an exodus that outpaced stocks. Record outflows hit funds that buy investment-grade debt…, according to Bank of America Corp. strategists citing EPFR Global data. The redemptions totaled $7.5 billion in the week through Oct. 10. By comparison, investors pulled $1.4 billion from equity portfolios during the period,"

"A recent report showed that investors have the LEAST amount of cash in their investment accounts…EVER."
WAIT, what about possible margin calls?
” From the Federal Reserve’s Z.1 release, we find that U.S. Households had a reported 34.3% of their financial assets invested in the equity market as of the 2nd quarter. Outside of a slightly higher reading in the 4th quarter of 2017, that is the highest level of stock investment in the 70-plus year history of the series, other than the 1999-2000 bubble top.”
YES and when the bubble pops, they won't have a red cent to meet margin calls or even,,,, pay their bills.

10/13 40% of the American middle class face poverty in retirement, study concludes – CNBC What will it be after the markets and pension funds crash?
10/13 Chinese car sales suffer record drop, set for historic collapse – ZH
Blame it on their ADD
10/13 Cryptocurrencies continue plunge with another $6 billion wiped out in a day – CNBC
10/13 Bitcoin is the ‘mother of all scams’, Roubini tells Congress – CNBC
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Old 10-15-2018, 03:15 AM
Danny B Danny B is online now
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Credit / interest yo-yo,,,Italian bomb,,,Breakup-nation-state

Lots of notes today.
"If we look at the 180 most important economies in the world, only six have in their estimates of 2018, 2019 and 2020 an evident improvement of their fiscal and commercial imbalances. In other words, almost no government in the world plans to reduce the rate of debt increases."
NOBODY wants to let off the gas pedal.

"Losses will have to taken, and nose-bleed fixed-costs will have to be slashed; reality will eventually have to be dealt with."
"But everyone will resist this process because high fixed costs are the gravy train everyone depends on. Slashing fixed costs destroys the income needed to support asset valuations which are the collateral for the stupendous mountains of debt that define the U.S. economy. Once that debt is written down, the entire financial system collapses."
"If you add up all forms of debt in the United States (government, business, consumer, etc.), it comes to a grand total of more than 68 trillion dollars. Other than hyper-inflating our currency into oblivion, there is no possible way that all of that debt will ever be repaid."
You Can Kick The Can Down The Road, But Reality Will Catch Up With You Eventually

There was never enough money in the system to make all the investors and bankers happy. So, we went off the gold standard so that liquidity could grow into a giant fountain. Still, that wasn't enough for all the millions of speculators worldwide. Greenspan came up with the idea of superseding the business cycle by replacing it with the credit cycle. The markets would all be perfect and there would be no more recessions. The excesses of speculation that drove the business cycle into "small" ups and downs were replaced by enormous excesses of speculation in the credit markets. Greenspan and Bernanke thought that they could play the interest-rate yo-yo so that the economy would never stumble. Here is a graph showing just how violent this yo-yo became.

Manipulation markets so that nobody ever suffers a loss may seem like a good idea on paper. The reality is; investors became ridiculously reckless when they threw other-people's-money around. Just like the dot-com bust, the money was just wasted. There was far more liquidity than there was viable investments.

"China has sold $3 billion of sovereign dollar bonds. This is only the third such move by Beijing in the last 14 years, and the first involving bonds with a 30-year maturity. "
"In the recent tat-for-tat trade punches, China stopped buying oil from the US. China’s crude oil imports from America reached an average of 334,880 barrels per day through August, making Beijing the second-largest buyer of US oil after Canada."
China desperately needs dollar to service dollar-denominated debt.

The dollar has been rallying against the yuan since the March low here in 2018. Clearly, the dollar is going to rise further for a trade war will hurt China more so than the USA. While we see critical turning points in January and March in 2019 followed by May, we must keep in mind that this pattern of a dollar rally is impacting the entire world. Trump FAILS to understand Capital Flows and his accusations against China is manipulating its currency to beat the USA in trade is NOT justified."
"We have tremendous Panic Cycles throughout 2019 and we see even the yuan is lining up with the targets concerning BREXIT. This is by no means a Chinese manipulation. "
They have lost control.

Here is Kunstler with some gallows humor.
"Welcome to the convergence zone of the long emergency, where Murphy’s law meets the law of unintended consequences and the law of diminishing returns, the Three Amigos of collapse. "

10/14 Trump says Saudi Arabia faces ‘severe punishment’ if Khashoggi was killed – CNBC
10/14 UK drawing up list of potential Saudi sanctions targets after Khashoggi murder – Ind

This is revenge for the Las Vegas shooting.

10/14 Draghi to Rome: Don’t expect an ECB rescue if budget talks fail – CNBC
And the reality, "This is the ECB’s biggest weapon. It will try to scare everyone by allowing Italy’s fiscal position to erode quickly making it impossible for them to issue debt at sustainable yields. "
"If the Italian leadership holds the line and refuse to back down, then they call the ECB’s bluff on allowing rates to rise. The ECB has to come back in, begin buying to support the price, and the regroup for the next battle."
"That’s where this war is being waged as well as the headlines. And Salvini and Di Maio understand it. Because if they didn’t they would have already folded.

Instead they have doubled down on their opposition to Brussels and Berlin and added new vectors to their attacks."

"He said it is fair to say that the world is moving away from a centralized system.
“If we follow this trend, it should be obvious that the next step should be an even bigger break up into smaller units than the nation states. With such geopolitical fragmentation comes also the decentralization of power.”
“Our system is based on 7 percent paper notes and 93 percent digital units backed up by nothing other than central bank promises to pay back the debt in the future through inflation and taxation.”

He explained that in the Western world, the government is forcing people to give up between 35 and 65 percent of their income and to put it into mandatory vehicles such as pension funds, retirement insurance, taxes, and so on."
ANYTHING so that the blob State can continue to live the good life.

Doug Casey also writes on the end of the Nation-State.
Keep in mind that the nation-State is an artificial creation. Our number one motivation is self-survival and genetic survival. The family and clan represent the basic social-genetic unit. They are basically socialist where the producers willingly support the non-producers.
The Statists try to stretch the umbrella of socialist-genetic unselfish support over a group that is just too big and, too disparate. This is especially true if members of the group are of a different race that we consider "others".
We are BORN with this racial preference. It is part of our genetic makeup to protect and promote our genetic lineage.
Science Says Everyone's a Little Bit Racist—Even Babies | Parents
Infants show racial bias toward members of own race ... - Media Room
Obama's viral tweet is wrong: Research shows babies are totally racist

It is part of who we are.

I'm perfectly fine with the breakup of the nation-State. Decentralization of wealth, power and control would be great.
10/14 Cryptocurrencies suffer $18 billion drop in value over three days – CNBC
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Old 10-15-2018, 03:05 PM
Danny B Danny B is online now
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Germany, Italy, OZ and NZ,,, criminals in your wallet

Merkel is doing her best to destroy Germany with immigration.
Armstrong, " From the outset, I warned that in an economic decline, the last thing you do is accept immigrants. This is not my opinion – it is just patterns from the past. " "Merkel has set the stage for violence in Europe and political discontent that threatens to undermine the entire EU projected." "European officials are back in the spotlight recently as the debt crisis in Italy has cast Europe directly in the eye of the storm. "
Merkel recently won the Kalergi prize for inundating Germany with stupid brown people.

The Stupid German high command DEMANDS austerity to cure the profligate ways of the rest of Europe. Never mind that austerity NEVER works.
"The European Central Bank (ECB) will NOT aid Italy with an EU rescue program if the country or its banks are in financial turmoil. The Italian government is taking the view that Italy has become an “occupied” country and that Germany has conquered Europe imposing austerity and its view of inflation upon the whole of Europe without firing a shot. "
"The EU Commission, on the other hand, is calling for less spending and the implementation of austerity as demanded by Germany. Italy is already sitting on a debt of around 131% of GDP."
Austerity never works. The horse has already left the barn. The gold standard does NOT allow the state to expand the money / bond supply without practical limit. ONLY a gold standard can prevent the problems that they are now trying futilely to address with austerity.

"But in reality, stopping the ECB’s Quantitative Easing will result in interest rates rising by at least 300% very rapidly. Italy is getting ahead of the curve BEFORE everything comes crashing down."
"This provides for a monetary policy emergency tool adopted in 2012 – called “OMT”. However, this has never been used before. The ECB, behind the curtain, fears that if they try to use this mechanism and it fails, as our model warns, then the CONFIDENCE in the entire EU system will collapse."

The blob State in OZ and NZ seems to have gone completely bonkers. If you have money in the bank, you are OBVIOUSLY tax cheat.
"Governments are in serious trouble and they will be raising taxes dramatically before they ever dare try to reform."
"The greed of governments in their pursuit of money is the single greatest threat to creating a Dark Age. With New Zealand imposing a $5,000 fine for just landing there and you refuse to hand over your pen and passwords to your phone for them to search"
"The Assistance and Access Bill 2018 in Australia will force Google, Apple, Facebook, and other technology groups to help Australian authorities decode certain forms of encrypted communications on their systems, or face fines of up to AU$10 million. The government says the legislation will help protect against terrorism, fraud and child abuse crimes, claiming it aims to ensure criminals “have no place to hide.”

An ABSOLUTE lie. MANY criminals hide out in official government offices.
"The problem that arises that failure to pay taxes they also call criminal. "
"Apple, FOR INSTANCE, would not be made to create a backdoor for their iMessage where every user’s encryption key is different. But the government could request access to the single encryption key for its iCloud services."

10/15 Disappearance of Saudi journalist could rock oil markets – Oil Price
Nobody cares about one journalist. I suspect that the incident is being leveraged to attack Mohammed bin Salman. maybe for ISIS,,, maybe for Las Vegas,,, maybe for Yemen. Dunno.
There have always been a lot of disappearances. https://www.project-syndicate.org/co...hcheva-2018-10

10/14 Violence, public anger erupts in China as home prices slide – Zero Hedge
Housing in China is a hot-button issue like guns are in America. Housing is the main store-of-value for the Chinese. If Powell doesn't print, the perceived value of stocks & bonds falls. If XI doesn't print, the perceived value of housing falls. China is trying to slow the printing.

10/14 Brexit: David Davis calls for cabinet rebellion over PM’s plan – BBC
10/14 Theresa May faces her party as a desperate gambler in hope of a break – Guardian

As Italy sets the stage for collapse of the EU, more and more Brits are thinking that an exit is a good idea.
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Old 10-16-2018, 02:30 PM
Danny B Danny B is online now
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Where will you work tomorrow?

Here is an article that explains that; in the future, everything will be a service. You won't own anything.
"In The Future, You Won’t Own Anything, No Car, No Home"
Here is a vid that explains the The Collision of Demographics, Automation and Inequality

The old cartoon series, The Jetsons.
"George Jetson's work week consist of an hour a day, two days a week. His boss is Cosmo Spacely, the bombastic owner of Spacely Space Sprockets. "
He occasionally pushes a button.

"Quis custodiet ipsos custodes? is a Latin phrase found in the work of the Roman poet Juvenal from his Satires (Satire VI, lines 347–348). It is literally translated as "Who will guard the guards themselves?",
Who will watch the watchers?
The answer is in. China uses AI to watch every movement of every person. It hasn't saturated the whole country yet but, give it time. In all the developed countries, the surveillance state is rapidly unfolding and, engulfing everything.
Once the taser was introduced, the state started using them on everybody.
The State now has much more powerful weapons.

Everything is monitored. Everything is recorded.
We face a new world where there is almost no employment. We face a world of absolute surveillance. We face a future devoid of jobs that have any meaning.
The sovereign bond market is supposed to crash going in to 2020. (Armstrong)
FED GOV will no longer be able to provide make-work jobs to the legions of people who have no job niche in the private sector. At the same time, pensions will crash.
I suspect that very few people will want to bring children into such a brutal and controlled world.
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Old 10-17-2018, 04:07 AM
Danny B Danny B is online now
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Stocks, take your choice,,, China needs an extra $6 trillion

Here is the good news on stocks.
Dow jumps more than 500 points, posts best day since March as earnings fuel rally
The article tells you how great everything is.
10/17 IBM tumbles after revenue resumes slide, EPS “beats” on ridiculous tax rate – ZH

Here is the bad news on stocks.
"We’re not particularly happy,” was the understated comment from BlackRock's Larry Fink as he reflected on the mass exodus of institutional assets under management from the world's largest asset manager."
"But the biggest drop was a $30.8 billion outflow from non-ETF equity index products..."
"As Retail was piling in (Retail and ETFs), according to Bloomberg data, Q3 marks the largest quarterly institutional index net flow change since the bad old days of 2Q 2015."
Great chart, https://www.zerohedge.com/sites/defa...16_7-07-14.jpg

Here is another article of the type that I dismiss.
A full employment economy? What could possibly go wrong?
"The Bureau of Labor’s September numbers showed measured unemployment hitting a multi-decade low of 3.7%."
"It seems like the US is experiencing the proverbial “Goldilocks” economy. What could possibly go wrong?"
" the stimulus as a percentage of GDP is still relatively high, when one considers that the official unemployment rate, at 3.7%, is the lowest recorded level since 1969.

Even allowing for lower labor participation rates (which suggest that there might still be some surplus labor capacity in the US economy)"
96.2 million Americans of working age who are not in the labor force is dismissed as a bit of surplus labor capacity.

SS China resembles the Titanic steaming into a debt iceberg
"S&P Global Ratings warns that ‘off-balance-sheet borrowing’ by local governments in the country could be as high as US$5.78 trillion "
SS China resembles the Titanic steaming into a debt iceberg | Asia Times
They let State-owned companies create unlimited credit instruments. What could possibly go wrong?
10/16 China’s stock rout puts $613 billion of share pledges at risk – Bloomberg

10/17 Netflix soars after crushing subscriber estimates as it burns $10 million per day – ZH
10/17 New Hampshire’s Pension liability equals its annual government budget – Union Leader

They aren't alone.
10/16 The EU wants fiscal austerity in a sinking economy – CNBC
10/16 Bloomberg: The next financial crisis is staring us in the face – ECB
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Old 10-17-2018, 02:53 PM
Danny B Danny B is online now
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What to do when there isn't enough circulating money

I'm trying to get my head wrapped around a new paradigm. Before the industrial revolution, the economy was constrained by limits to productivity. Since then, increasing automation has greatly increased productivity. We have reached a point where the production-consumption cycle is limited by consumption. To a great degree, consumption is limited by the circulating money supply.

Benjamin Franklin is referred to as, the father of paper money. We have to go back to his writings to understand the possible implementation of a paper-money system. Keep in mind that England demanded gold and silver payment for any exports to the colonies. This resulted in a widespread LACK of circulating money in the colonies.

" Franklin observes in 1729 that “we [Pennsylvanians] have already parted with our silver and gold” in trade with England, and the difference between the value of paper money and that of silver is due to “the scarcity of the latter.”
Finally, Franklin argues that “coined land” or a properly run land bank will automatically stabilize the quantity of paper money issued — never too much and never too little to carry on the province’s internal trade.
A properly run land bank will never loan more paper money than the landed security available to back it, and so the value of paper money, through this limit on its quantity, will never fall below that of land.
Before the war, the colonies sent Benjamin Franklin to England to represent their interests. Franklin was greatly surprised by the amount of poverty and high unemployment. It just didn't make sense, England was the richest country in the world but the working class was impoverished, he wrote “The streets are covered with beggars and tramps.”

He was asked why the working class in the colonies were so prosperous.

“That is simple. In the Colonies, we issue our own paper money. It is called ‘Colonial Scrip.’ We issue it in proper proportion to make the goods and pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control its purchasing power and we have no interest to pay to no one.” - Benjamin Franklin
Soon afterward, the English bankers demanded that the King and Parliament pass a law that prohibited the colonies from using their scrip money. Only gold and silver could be used which would be provided by the English bankers. This began the plague of debt based money in the colonies that had cursed the English working class.

The first law was passed in 1751, and then a harsher law was passed in 1763. Franklin claimed that within one year, the colonies were filled with unemployment and beggars, just like in England, because there was not enough money to pay for the goods and work. The money supply had been cut in half.
“It was the monetary system under which America’s Colonies flourished to such an extent that Edmund Burke was able to write about them: ‘Nothing in the history of the world resembles their progress. It was a sound and beneficial system, and its effects led to the happiness of the people."

We issue it in proper proportion to make the goods and pass easily from the producers to the consumers.
I see no mention of bankers. The State issued paper money in proper proportion to the goods produced. Simply put, the money was infused into the lower (productive) loop of the economy.
The 1907 Panic was created to justify the need for a Central Bank in America. We got the CB in 1913 and, a complete crash in 1929.

Federal Reserve - The Enemy of America

The Federal Reserve is NOT Your Enemy - Wealth Daily

America's Number One Enemy: The Federal Reserve - Prepare For ...

Our Enemy The Fed | Mises Institute

Central banks are the real enemy of Americans - Winona Post > Article

Federal Reserve's Role During WWII | Federal Reserve History
The Federal Reserve supported the war effort in several ways – it helped finance wartime spending,

It's pretty obvious. The Federal Reserve is the friend of the very wealthy AND, the war mongers. Currently, most of the money supply is in the hands of the very rich. They can't actually do anything with all this money. They just engage in endless speculation trying to make their money pile grow. Consumption is fast falling. THAT is why the dramatic fall in the "not in the labor force" statistic is so important.
This drop in personal consumption has historically been offset by an increase in consumption from the Federal Government. The drop in consumption has become so extreme that the State can only make up the difference by running the printing presses in hyperdrive.
The MICC is running at warp 7 financed by the sovereign bond market. Armstrong said that the U.S. sovereign bond market will collapse going in to 2020.

The universal basic income plan is an attempt to infuse money into the lower loop to increase consumption. It will NOT work if it is borrowed debt money. FED money has created 95% of the upper loop living on wet-ink money. You can imagine that the people and corporations who receive this money will fight tooth & nail to keep the system going.

Robots don't pay taxes or buy consumer goods. They have no use for money. Consumption will continue to fall. More automation will be brought online to compensate for falling profit margins. People will cut back even more on childbearing. This may be a good stratagem for reducing world population but, it spells destruction for government and banking.

This brings us to the final question. What can be done about the federal reserve and the current system?
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Old 10-18-2018, 01:48 PM
wayne.ct wayne.ct is offline
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Truth, ethics and justice

These players are dolts. They each think they are doing the right thing and they will defend their assumptions with everything at their disposal no matter whether it is in fact right or wrong. They even have the temerity to assert that their view is best for everybody when it is self serving and has a host of negative consequences. I admit I suffer from many of the same deficiencies but a big difference remains. Namely, in aggregate they have more resources than I. A huge reservoir of resources.
There is a reason why science has been successful and technology is widespread. Don't be afraid to do the math and apply the laws of physics.
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Old 10-18-2018, 02:47 PM
Danny B Danny B is online now
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The new masters & slaves

The good thing about slavery is; you can take all of somebody's production and, only allow them a tiny part to survive. What happens if this idea / plan is taken to extremes? What if the slave is far more qualified than the owner?
Here is the new class of slaves.
Workforce Cut from 650 to 60, Productivity Triples at Unmanned Factory
Viscon Hydroponics - Fully Automated Hydroponic System - Gipmans

Here is the new master.
Artificial Intelligence: Mankind's Last Invention Aperture
Artificial intelligence may replace 40% of all jobs: Bridgewater founder Ray Dalio

Energy Slaves: every American has somewhere between 200 and 8,000 energy slaves
Energy Slaves: every American has somewhere between 200 and 8,000 energy slaves | Peak Energy & Resources, Climate Change, and the Preservation of Knowledge
22 Billion Energy Slaves
Thisness of a that: Energy Slaves

Jun 11, 2012 - For example, it would take 11 energy slaves peddling madly simply to ... In the absence of fossil fuels, the global economy in its entirety would need approximately 66 billion 'energy slaves' to sustain itself
Garden Earth - Beyond sustainability: 250 billion energy slaves
Losing our Energy Slaves

The coming financial collapse is unavoidable. It is caused, in great part, by a lack of jobs and wages. FED GOV spends ~34% of the GDP (Armstrong)
If / when the sovereign bond market collapses, there will be a complete reset of public spending. The productive capacity is there. The energy supply is there. The potential wages and profits are NOT there. The tax base is NOT there. Will man be forced to continue to compete with his slaves to survive? That won't work. He can't compete with AI either.

What about the birth rate? Japan hasn't yet found a solution to the problem. Will contraception be outlawed? These are not future problems. They are here now and, getting worse.
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Old 10-19-2018, 02:24 AM
wayne.ct wayne.ct is offline
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When the rulers rule rightly the overall economy is healthy

But when they do as they are doing recently things will go downhill. Some people will follow blindly and even put up with a lot of grief in the process but this is mental abuse and insanity. We seem to be reaching the point where people are ready to rebel against the current abusive regime. Every recession seems to accompany excess industrial capacity. But, which comes first and which is the consequence? In my view, falling demand will cause product to stockpile which will cause layoffs which will cause hardship, unemployment and reduced production. That will reduce demand causing a downward spiral. What will break the cycle? My answer? Reduce the confiscatory taxes and regulations. How can that happen? Only when the corruption at the top is remedied. That could happen at any time. It only takes someone with police authority to arrest the criminal element in the structure. Do they have the spine or are they all weak, compromised and/or corrupt? How does AI fit into this picture? AI is a tool to increase productivity. It is not an independent "solution" or a means that really solves anything important. Maybe some people think we will become the slaves of the machine, but this is science fiction, in my view. Movies have scared people into believing the singularity is just around the corner and have become deluded regarding what machines can do. Machines and robots can grow lettuce but if there were no market for the produce and no way to deliver it, the machines are irrelevant or misdirected capital expense. The "central planners" can be right or wrong and if they are wrong then the economy is put at risk. Do we know where the significant imbalances are? One would be the bubble in the capital markets, stocks and bonds. I am not too worried about robots as such. I am more concerned about the mountains of money being invested in robots where the money invested will never be repaid with interest. The promise of riches coming from that industry is suspicious, in my view, because 99 percent of the investors in that industry don't really understand the risks.

Just to be clear, I consider so called big government and deficit spending to be a sub category of corruption in general. Perhaps that goes without saying. Do you honestly think that AI and automation will be the trigger that blows the economy?
There is a reason why science has been successful and technology is widespread. Don't be afraid to do the math and apply the laws of physics.
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Old 10-19-2018, 03:00 PM
Danny B Danny B is online now
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Sliding downhill to a smaller world

Automation won't be so much of a trigger as it will be a constant pressure.
Bangladesh needs 2 million new jobs every year but, automation is cutting into all employment.
The Industrial Revolution has been chipping away at job niches for more than a century.

Robots will steal your white collar office job, too: 3 case studies ...
Robots do destroy jobs and lower wages, says new study - The Verge

The trigger is most likely to be State spending to support people who have lost all or part of their income to automation. Italy is blowing out their budget to try to give some support to the poor. They will most likely blow the EU apart.
44 million Americans receive direct government support. 51% of Americans receive a check from the State. When the sovereign bond market blows, most of this support will come to an end. This public support is compensation to offset the loss of income. It won't be automation directly that blows up the sovereign bond markets. It will be the remedy for automation that blows the system.

Post WW II, America had 3% of the population and, 50% of the manufacturing capacity (ex iron curtain States) We lost that lock on manufacturing and aggregate income has fallen proportionately.
The computer has accelerated a process that began decades ago.

In the very crowded populations, 20% of seagulls are lesbian. Mother Nature has mechanisms for reducing population. Japan is the perfect example where they have even lost the desire for sex. The fertility rate in China is only 1.6 Most people realize that price inflation and resource depletion will bring us a lower standard of living. The whole world (ex sub-sahara Africa) is reducing their birth rate. This is completely incompatible with the demands of a debt-money system AND, the credit bubble.
The major CBs printed mega-pixels of new debt-money to try to compensate for the huge drop-off in consumption.
10/18 America’s $1.5 trillion student-loan industry is a ‘failed social experiment’ – MW
The debt bubble will blow when it is generally recognised that only debt-free money can keep it inflated. The FED prints debt-money but, the GOV has no ability or intention of paying it back. Last year, we paid $1/2 trillion in interest on public debt. It remains to be seen just how long the debt markets will allows the payment of interest-only with no hope of a return of principle. As interest rates climb, that $1/2 trillion will grow considerably.

No money,,,,, NO kids
10/19 Nearly half the world lives on less than $5.50 a day: World Bank – PhysOrg
EVERYONE assumes that; when things crash, the CB printing press will come to the rescue. I'm somewhat doubtful.
10/18 Saxo Bank outlook: A new easing cycle based on ugly realities – Mondo
10/18 Guggenheim: “By Q2 2019, expect risk-off everywhere with a 40% crash” – ZH
Buy more popcorn.
10/18 US stocks resume their decline – CNBC
Stocks had a short-lived dead-cat bounce but, they haven't stopped falling.

10/18 China’s stock market getting pummeled; that’s bad news for US markets – CNBC
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Posted Oct 19, 2018 by Martin Armstrong

The Sovereign Debt Crisis in China among the provisional governments is alive and well. The off-balance sheet government liabilities in the regions amounted to an estimated 40 trillion yuan which is almost $6 trillion. Some are calling this a “gigantic credit risk” which is a hidden liability. This represents 60% of GDP which bypasses the debt-to-GDP ratio set by the central government on the provinces. "
So, what happens to unemployment when this all blows?

The banks were first in line for free money. 0% money from GOV. This is in addition to all of YOUR savings that they speculated with. They bought up everything with that money and,,,, jacked up the price before they resold it to the end consumer.
This price inflation purely from speculation is what drove down the purchasing power of your wages. It is also the basis for the income inequality.
Here is the graph, https://tcf.org/assets/images/blog_i...mic-growth.png
"Modern economies depend on a thriving financial sector, and the U.S. finance, insurance and real estate (FIRE) sector now accounts for 20 percent of GDP — compared with only 10 percent in 1947. But many observers believe that this expansion of the financial sector comes at a high cost"

OK, but, how do you do a financial evaluation of a parasite that produces nothing?
"They" make up a fictional value of what all this speculation is worth and, ADD it to the GDP.

Last edited by Danny B; 10-19-2018 at 03:52 PM.
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Old 10-19-2018, 03:58 PM
bistander bistander is offline
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My solution

Originally Posted by wayne.ct View Post
... What will break the cycle? My answer? Reduce the confiscatory taxes and regulations. How can that happen? Only when the corruption at the top is remedied. That could happen at any time. It only takes someone with police authority to arrest the criminal element in the structure. Do they have the spine or are they all weak, compromised and/or corrupt? How does AI fit into this picture? AI is a tool to increase productivity. It is not an independent "solution" or a means that really solves anything important. ...
How does AI fit into this picture?
Obviously have AI do this.

... arrest the criminal element in the structure.
Yeah, I know. Sounds easy. Gotta watch for unintended consequences.

Know a cure for greed?


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Old 10-21-2018, 02:50 AM
Danny B Danny B is online now
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Watch Powell, The dragon is eating itself

Trump means what he says when he states that he is going to make America great. He is fully prepared to walk over the bodies of our competitors.
Next, we have Powell. HE is the person to watch. There is universal agreement that Powell will reverse course when the bubbles start to melt down. Trump argues against him but, is that all for show? Armstrong said that America would be the last to go down. Trump and Powell seem to be prepared to carry this out. The R.O.W. had in excess of $13 trillion in dollar-denominated debt.
"just look at what’s happened with Emerging Markets because of a tightening Federal Reserve, a stronger dollar, and drying liquidity.
Don’t forget – a dollar shortage is synonymous with disappearing liquidity. Which means we can expect more violent and sudden market crashes to occur – just like we saw over the last two weeks.
Stock markets (and bond markets) around the world took big losses."

"Not to mention the cost of borrowing short-term dollars via LIBOR (aka London Interbank Offered Rate) is indicating aggressive financial tightening.
Take a look at the 3-month U.S. dollar LIBOR rate – it just had its biggest one day jump since late May.
And even more startling – it’s now at its highest level since 2008."
Why is everybody so fascinated with the 2008 date?
"with current tightening policies in place, the cost for borrowing dollars short-term will continue much higher."
"there was a ticking time-bomb of over $7.5 trillion in debt that’s “highly vulnerable to rising LIBOR rates” (read here). . .

For instance – I said, “Both corporate and non-corporate business loans and commercial mortgages are about half tied to LIBOR. . . To put this in perspective, a 35-basis point increase could raise business loan interest costs by $21 billion. "
"But the problem is – the world created much more debt than the Fed’s created dollars.
Putting this into perspective – for every dollar that’s been printed – there’s roughly 20 times the amount of debt outstanding.
And most of that debt ended up abroad. Like in the Emerging Markets.
And everything was fine – as long as the Fed was easing and inflation was low. . ."
"The Treasury needs more dollars than ever as deficits continue soaring to levels not seen since 2008… The Fed’s ramping up their Quantitative Tightening (sucking dollars out of the banking system). This is pulling out as much as $50 billion dollars a month (or $600 billion a year) … Also – because of the Trump Tax Cuts – we’ve seen corporations take their cash piles back home. This suddenly yanked dollars out of foreign banks"
"Hence – the dollar shortage problem i.e. there are just simply not enough dollars to go around.

That is – under the current monetary policy of tightening. . .
This is why I’m insistent that the Fed will reverse into easing – like pushing rates negative and heavy money printing – much sooner than many think."
He is claiming that the FED will relent, and, rescue our economic competitors.
"For example – we’ve already seen in China this year – they’ve had record onshore bond defaults as liquidity dries up."
The Chinese may think that this is bad but, I doubt that Trump does.

China is on a roller coaster to financial hell. They claim that they have 6.5% growth. BUT, they count money growth as part of the GDP. The end result.
Borrowing from Wolf Richter, here are some stats on the stock market and a graph::
• Lowest since November 27, 2014, nearly four years ago
• Down 30% from its recent peak on January 24, 2018, (3,559.47)
• Down 52% from its last bubble peak on June 12, 2015 (5,166)
• Down 59% from its all-time bubble peak on October 16, 2007 (6,092)
• And back where it had first been on December 27, 2006, nearly 12 years ago.

As they fool fewer and fewer people, there is more and more capital flight.
"how on earth is it possible that in an economy that’s supposedly been growing 6%+ for a decade, stocks have gone nowhere at all? "
"“There’s a liquidity crisis in the stock market, and pledged shares are again starting to sound the alarm,” said Yang Hai, analyst at Kaiyuan Securities. [..] The fear is that if Beijing does nothing, the self-reinforcing liquidation is only set to get worse: with $603 billion of shares pledged as collateral for loans – or 11% of China’s market capitalization,"
They desperately need dollars. But, Powell's phone is off the hook.

"Yes, much of the western wealth has turned into a mirage, but in that respect, too, China has done what we did in a fraction of the time. "

China was a huge gold buyer. They did everything that they could to depress the price,,, naturally. This may be coming to and end.

"If global capital was buying empty flats in China, etc., and selling US-based assets, these numbers would be reversed. This suggests mobile capital is leaving China and other nations and moving into US-denominated assets."
"In summary: follow the money. Smart money is mobile, opaque and constantly on the move seeking safety, tax shelters, yield and capital gains. If mobile capital continues flowing into US assets such that demand exceeds supply, the Bull Market will continue sloshing higher. "
oftwominds-Charles Hugh Smith: Is the Greatest Bull Market Ever Finally Ending? (Hint: Follow the Money)
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Old 10-21-2018, 03:51 AM
Danny B Danny B is online now
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Italy and China

Here is a graph showing the cost of capital, https://pbs.twimg.com/media/DplhWfsWkAAT7n0.jpg:large
This is a good article on discounting capital flows.

"October 19 - Reuters (Massimiliano Di Giorgio): "European Economics Commissioner Pierre Moscovici said on Friday he wanted to reduce tensions with Italy over its 2019 budget,"
"At least for a few hours, Commissioner Moscovici's comments quelled tensions in the Italian (and European) bond market. "
That won't last long.
10/19 Italy’s credit rating cut to one notch above junk – Bloomberg
10/19 Italy’s budget crisis threatens the entire EU project, strategist says – CNBC

10/19 “One size fits Germany” math impossibility, get your money out of Italy now! – Mish
Italy and the EU / ECB are playing a game of "chicken" . There is no possible way for the ECB to win.
10/19 Italy’s budget crisis threatens the entire EU project, strategist says – CNBC

A bit more on China. China wanted to slow down the printing presses. Trump put a real crimp in their plans.
"China's broadest measure of new credit jumped in September, exceeding all estimates, as officials changed the dataset to reflect surging bond issuance amid steps to encourage investment in infrastructure. Aggregate financing stood at 2.21 trillion yuan ($319bn) in September… That compares with an estimated 1.55 trillion yuan"
" China's September Credit data was an eye-opener. "Aggregate financing" jumped to 2.210 TN RMB, or $319 billion, with system Credit continuing its ongoing double-digit annual expansion (10.6%). September growth was about 40% above estimates and a 45% jump from August "
Chinese shadow banking is failing and, the Chinese can't let up on the gas pedal. The more that they weaken the Yuan, the more capital flight they will get.
"This suggests mobile capital is leaving China and other nations and moving into US-denominated assets."
10/20 Trump’s trade war is forcing Beijing to retreat from its own anti-debt battle – CNBC
10/20 There has been a ‘debt explosion’ in China for a decade, expert says – CNBC
10/19 Implosion of stock market double-bubble as China hits new lows – Wolf Street

It won't be just China. Corporate America is going off a cliff also.
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Old 10-21-2018, 02:44 PM
Danny B Danny B is online now
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The pervasive corruption created by the Central bank

The river of lies runs VERY deep as the bankers try to maintain their privilege at raping the producer. The most important tool for doing this is the Central Bank. Central Banks were originally created to supply war finance for the sovereign. The gold standard drastically limits the creation of sovereign bonds and, severely curtails war.
"Until the 1970s, all recorded history showed that bond yields were tied to the general price level, not the rate of price inflation as commonly believed. However, since then, the statistics say this is no longer the case, and bond yields are increasingly influenced by the rate of price inflation. This article explains why this has happened, and why it is important today."

No mention of the abandonment of the gold standard in 1971.
"This paper is a follow-up on my white paper of October 2015.[i] In that paper I explained why, based on over two-hundred years of statistics, long-term interest rates correlated with the general price level, and not with the rate of inflation. I now take the analysis further, explaining why the paradox appears to no longer apply."

200 years,,, about the same amount of time that we have carried the heavy yoke of the CB.
The article goes into great detail showing why Gibson's Paradox is no longer applicable. The article continually focuses on the role of savers / savings in the finance of productivity. NOT ONE MENTION of the fact that production is financed by the CB and, NOT by savings.
There is quite a bit to be learned from the article. It essentially proves (without trying) that monetary inflation from the CB has warped every aspect of finance.

The reason that I bring this up is; the CB was created to finance all the whims of the State,,,, be it war or, socialism. All of this money is channelled through the bond market. After all, when the CB buys sovereign bonds, the State can spend it as it wishes. The author of the preceding article claims that there is a new situation that is different "from all recorded history". The CBs have hyperinflated the bond markets. Armstrong claims that sovereign debt is soon to collapse. "Recorded history" may soon make comeback.

"The mechanics of the Greenspan put are extraordinarily simple. When the stock market drops by about 20 percent, the Fed intervenes by lowering the federal funds rate. This typically results in a real negative yield, and an abundance of cheap credit.

This gimmick has a twofold effect of seen and observable market distortions. First, the burst of liquidity puts an elevated floor under how far the stock market falls. Hence, the put option effect. Second, the interest rate cuts inflate bond prices, as bond prices move inverse to interest rates."
"A portfolio manager could smile in the face of the occasional and inevitable stock market crash because it meant their bond holdings were rising. Then, after a pleasant dip buying opportunity, their stocks would be running back up to new highs. This was the story of U.S. financial markets and money management from 1987 to 2016."
"But each time, the Fed came to the rescue by cutting interest rates, bumping up bond values, and engineering an extended stock market rally."
"When stocks go down, bonds go up.
Somewhere along the lines the flow of funds from stocks to bonds during a market panic became regarded as a flight to safety. But what if, in the year 2018, this flight is no longer to safety; but, to danger?"

"What may come as a great big surprise in the next market downturn is that this relationship between stocks and bonds is not set in stone. In fact, over the next decade we suspect this relationship will be revealed to have been an aberration."
Thank the FED
"You see, the conditions that made the Greenspan put possible are the opposite of the conditions that exist today. Rates are low and are moving higher. The world’s oversaturated with debt. Policies of mass money debasement have bubbled stocks and treasuries out to extremes well beyond what’s honestly fathomable."
"At the moment, Fed Chair Powell’s even determined to bring it on. We applaud his efforts.

Yet when push comes to shove, and the Fed lowers the federal funds rate, expect the unexpected to happen. The Greenspan put – the market savior – will be mowed over like a ground squirrel beneath a tractor rotary tiller. The market carnage left in its wake will be grotesque and unrecognisable."
Don't hold your breath waiting for Powell to lower rates. He means to kill China. U.S. corporate bonds will be collateral damage. BUT, what plan does Powell have for U.S. sovereign debt?

Here is a short history of the sainted Central banks.

"TWENTY years ago next month, the British government gave the Bank of England the freedom to set interest rates. That decision was part of a trend that made central bankers the most powerful financial actors on the planet, not only setting rates but also buying trillions of dollars’ worth of assets, targeting exchange rates and managing the economic cycle."
"central banks have been widely slated for propping up the financial sector, and denting savers’ incomes, in the wake of the financial crisis of 2007-08."

The State has sanctified the Central Bank because the CB finances the State. Sovereign debt is projected to blow up worldwide. Maybe it wasn't such a good idea to give the CB so much control. The academics claimed that they could smooth out the business cycle if a CB were given complete control over interest rates and the quantity of money. They have failed spectacularly. Anything that negates the business cycle is artificial and temporary.
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Old 10-22-2018, 02:47 PM
Danny B Danny B is online now
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Italy, China, Scientific American & Kunstler

The bond market is a very well-known animal,,, very predictable. Salvini knows all this. By going head-to-head with the ECB and EU, he knows that investors will shun Italian debt. What is unknown is; how far will he take this?
10/22 Italy’s banks at risk from widening spread, league official says – Bloomberg
10/22 The European financial establishment has just declared war on Italy – Genfira

Italy's Debt Rating Is Cut to One Level Above Junk - The New York Times
Investors bet against Italian debt as budget fears intensify | Financial ...

"Italy's bond yields rocketed above 7%. That's a crucial threshold--the bright red line Ireland and Portugal passed before their borrowing became so expensive that the European Union had to bail them out. This time, though, the stakes are higher and the options are more limited. Italy's debt is larger than the whole economies of Ireland, Portugal, and Greece combined. The euro zone simply might not have the political will or financial resources necessary to backstop those enormous obligations. As one analyst pointedly told CNBC, the country is "too big to fail, too big to save."

"Then, like Venice in the lagoon, it slowly began to sink. Starting in 2001, Italy's GDP growth turned absolutely paltry. It finally plunged below zero during the global recession "
Italy joined the EU in 1999 and, has been screwed ever since.

Italy's debt per person, 40,392€
Debt clock, https://www.nationaldebtclocks.org/debtclock/italy

"Ned Davis research writes ….note the red arrow at the top right. Readings above 70 have found us in recession 92.11% of the time (1970 to present). Several months ago, the model score stood at 61.3. It has just moved to 80.04."
High Probability of Global recession – WorldoutofWhack

The FED meeting.
"A Number of Officials Saw Need to Hike Above Long-Run Level

“A few participants expected that policy would need to become modestly restrictive for a time and a number judged that it would be necessary to temporarily raise the federal funds rate above their assessments of its longer-run level.”
The long run level is considered to be 5%. Raising above 5% would be high-order demolition. Everybody expects Powell to relent. Your guess is as good as mine.
"In other words, the Fed is “gonna hike until something breaks” and it will likely break in a credit related area like junk bonds, covenant-light, and leveraged loans.

Important note: It won’t be one, or another, but all of them at once when “something breaks.”
Here is a great chart but, you must remember that claimed GDP is just a measure of how much money is in the economy. The financial sector produces nothing but, claims to be 20% of the GDP.
"Of course, with the Fed hiking interest rates, which is pushing debt servicing costs higher, it is only a function of time until the rate of change in interest rates causes a financial decoupling in heavily levered companies with marginal balance sheets and debt servicing capacity."
YEP, we can't crash China without a lot of crashing here too.

"When Alan Greenspan first executed the “Greenspan put” following the 1987 Black Monday crash, markets were well positioned for this centrally coordinated intervention. Interest rates, after peaking out in 1981, were still high. The yield on the 10-Year Treasury note was about 9 percent."
Imagine what 9% would do today.

Scientific American weighs in on the fading American dream.
Imagine the world as a sinking lifeboat. The more States that get pushed overboard, the longer the time before the lifeboat eventually sinks.
Trump / Powell are pushing heavily.

Which brings us to Kunstler and, his gallows humor.
"Thus, the US has decided to get through the approaching winter by setting its house on fire. The two political parties alternately in charge of things are driving around the burning house, stopping at intervals to run Chinese Fire Drills. We call these “elections.” Both parties pretend that the burning house is not a problem.
He and his party have been piling all the furniture inside the house on the fire, to keep the heat up, rather heedless that flames are starting to shoot out of the attic.
The other party has no quibble with burning down the house. In fact, this has been the Democratic Party’s sovereign remedy for problems since the War in Vietnam, when it was explicit policy to burn down villages in order to save them.

So these days they’ve decided to destroy the culture that abided inside the burning house. They’re taking down the draperies and collecting all the clothing and tchotchkes and framed photographs of loved ones, and piling them on top of the burning furniture, doing their bit to keep the heat up.
You might infer from all this that no matter whatever else the Republican and Democratic parties might do now is not going to prevent the house from burning down. In a month, or six months, or eighteen months, they will be left standing stunned in the ashes. How’d this happen!?! Even the clown cars they were riding around in will be smoldering wrecks. And then the rest of the people of this land can sift through ruins, seeking a few trinkets or useful tools with some remaining value. These people will be entitled to call themselves “survivors.” And they will act like survivors should
If it happens that the Democrats lose the midterm elections a few weeks ahead, they will jump up and down and holler that the elections were stolen from them, that somebody meddled and colluded to deprive them of victory, and that will amount to throwing just enough gasoline on the still-burning house for one final glorious burst of heat and flame before the rafters crash through the floor. Welcome to the Long Emergency."
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Old 10-23-2018, 02:31 PM
Danny B Danny B is online now
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Slow unwind in China,,, Armstrong

The unwinding of artificial markets, CHINA.
" the summer of 2015, when worries about Chinese growth and extreme corporate opacity had shares in virtual free-fall. In just over three weeks, Shanghai stocks lost 30%,
The exodus of liquidity had Beijing taking a “kitchen sink” approach – literally tossing everything it could think of at short-sellers. Officials slashed interest rates, loosened leverage requirements, bought shares, imposed capital controls, tweaked margin-trading regulations, suspended initial public offerings, allowed punters to put up homes as collateral.
Despite those Herculean efforts, Shanghai shares are now below 2015 levels. The ongoing $3 trillion rout has the Shanghai Composite Index at the lowest since November 2014.

"China might make this year’s 6.5% growth target, but at what cost in the long run?
The yuan’s drop by that same amount – 6.4% –
Xi is investing trillions of dollars in a “Made in China 2025” scheme to dominate software, artificial intelligence, renewable energies, robotics, self-driving vehicles, high-speed rail, pharmaceuticals, you name it.
"due for a reckoning."
Yes, China is a unique development specimen. That will happen when the most populous nation becomes the No. 2 economy well before per-capital income decisively tops $10,000 in nominal terms. "
There you have it. Wages are just too low for it to escape it's position as an export economy. Wages are too low everywhere. The current minimum Chinese salary is U.S. $ 270 per month.
Why China Inc is still stuck in 2015 | Asia Times

Armstrong, "Yes. In all honesty, it was the Debt Crisis that ended the Roman Republic. There was a Sovereign Debt Crisis during the Roman Republic period resulted in a dictatorship and a debt default."
"A period of excessive concentration of money and large profits came to an end with the rise of the Social War of 91-88BC"
"Therefore, we find that the debt crisis was correlated with a separatist movement – which we are beginning to see worldwide starting in Europe, but will eventually become a contagion in the United States as the conflict between left and right erupts after the November elections."
How bad will this conflict get?

"The debt crisis continued and then in 86BC, the government was compelled into default. This is when the Valerian Law came into play and this remitted 75% of all debts. The State debts were deflated on and reduced to 25%."
Déjà vu all over again?
"So we must understand that there was a brewing debt crisis in Rome and the oligarchy was determined to keep power at any cost."

10/22 Netflix to sell $2 billion of junk bonds to fund content – MarketWatch
Netflix is burning through billions in cash - Yahoo Finance

Interesting article from Armstrong on pole shift.

Reportedly, the current mini-boom should be attributed to obummer

Just in case that you need a reminder, most politicians are too incompetent to survive in the private sector. Once they get in and collect a salary, the next most important thing is to lock in a good pension.

So, we have generally incompetent people running the legal framework of the country. What could go wrong?

"In April 2008, a longtime investment adviser named Chris Tobe was appointed to the board of trustees that oversees the Kentucky Retirement Systems, the pension fund that provides for the state’s firefighters, police, and other government employees. Within a year, his fellow trustees named Tobe to the six-person committee that oversees its investments, becoming the only member of the committee with any actual investment experience. It was an experiment in fiduciary responsibility that ended badly. “I started asking questions when things weren’t sounding right,” Tobe said. “And a secret session was held where they voted to kick me off.”
"Several weeks after he was removed, the remaining members of the committee approved a $200 million investment in a hedge fund called Arrowhawk Capital Partners. "

"In the years since that big Arrowhawk play, Kentucky’s public pensions have descended into financial crisis, "
Tobe had never heard of Arrowhawk, and he quickly figured out why: Arrowhawk was a new fund whose first investor was the Kentucky Retirement Systems,
"the staff had steered the investment committee in 2009 to a startup fund with no track record."
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Old 10-24-2018, 03:08 PM
Danny B Danny B is online now
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2008 Déjà vu,,, Italian cavalry charge

I read everything that doesn't look stupid from the headline. There are so many things that you can learn just from the headline. Here is a perfect example.
10/24 Italy openly defiant of Eurozone stability pact, deliberately and knowingly – Mish
10/24 By going nuclear the EU has already lost its battle with Italy – Tom Luongo
10/24 The EU has rejected Italy’s budget. That’s just what Rome wanted – Atlantic

Italy is the third largest bond market in the world,,, behind America and Japan. It is the tenth largest economy and, the bond load is outsized to the economy. There was a proposal of OMT.
Outright Monetary Transactions ("OMT") is a program of the European Central Bank under which the bank makes purchases ("outright transactions") in secondary, sovereign bond markets, under certain conditions, of bonds issued by Eurozone member-states.
Outright Monetary Transactions - Wikipedia

The Italian economy has not grown ever since it was saddled with the EU. The debt load is growing horrendously. The ECB could execute OMT but, it would only delay the final execution. Evidently, Salvini, et al are going to ride this pony right off the cliff.

10/24 Global banking stocks are crashing hard – just like they did in 2008 – Talk Markets
The Central Bankers inject free / fresh money into the upper loop as a support mechanism for the already-rich. The FED claims that we need 2% inflation per year. That is done to subsidise the rich bankers. Wages never keep up with price inflation. Since China, et al put a ceiling on wages, this has gotten even worse. The bankers want a continuous injection of free money. BUT, this money is debt-money and is deflationary. GOV takes about 50% of your income. As public debt service grows, there is less circulating money for the consumer.
The same is true for private debt-service. The bankers are holding $ bazillions of notes, loans and bonds. Not to mention several $trillion of margin debt from the stock market. Since most of this is debt-money saddled by an interest load, it actually has a negative worth.

Residential RE crashed in 2008. The price of a house has to be commensurate with the prevailing wages in the same area. If it isn't, there will eventually be a lot of defaults. The defaults hit and, the banks were rescued. Prevailing wages were never rescued. The 2008 bailout was just a bandage. The CBs pumped in even more debt money. This did nothing for wages. The 2008 crash continues to this day. But, not for much longer.
Good article.

10/24 50 percent of all American workers make less than $30,533 a year – ECB
We respond
US Birth Rate Hits All-time Low: What's Behind the Decline?
https://www.livescience.com › Health
The US fertility rate just hit a historic low - Vox

Just like Japan; the birth rate falls at the same time the debt load MUST grow.
10/24 A big secret in Japan debt market is getting harder to keep – Bloomberg
The Average Stock Is Overvalued Somewhere Between Tremendously And Enormously
10/24 Corporate earnings reports have been “horrible” so far – CNBC

A bubble in search of a pin.
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Old 10-25-2018, 03:33 AM
Danny B Danny B is online now
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We don't need no stinkin 2% inflation. RE, Armstrong

One of the main responsibilities of the Federal Reserve is to maintain price stability. BUT, all the recent FED-heads have claimed that we MUST have 2% inflation to maintain stability.
Paul Volker was FED-head for several years. Here is what he has to say; “A 2 percent target, or limit, was not in my textbook years ago. I know of no theoretical justification.”
Paul Volker is a Lutheran. ALL the jewish fed-heads demanded 2% inflation.

An infusion of X dollars every year results in the hoped-for 2% inflation. This "money" is injected into the bankers loop so, no matter how much price inflation we get from the monetary inflation, the bankers are always ahead.
This constant monetary and price inflation resulted in minimal wage inflation. The time / terms of our credit purchases were extended way out to compensate for our lost ground on wages. The situation finally reached a point where we defaulted on our houses.
There is horrendous price inflation in the upper loop. It is slowly seeping in to the lower loop,,, especially for things that can be considered as a store of value.

Is it a coincidence that since 1913, leadership positions in the Federal Reserve have been held primarily by Jews?
"In "Jews and Money" Abraham Foxman of the Anti-Defamation League writes:
Of course, the theory is as fallacious as it is commonplace. The Federal Reserve is a U.S. government institution and is not “owned” by any private entities. The Rothschilds have nothing to do with it!"

10/24 Bricks and slaughter: part one – Exposing Australia’s housing crisis – 60 Minutes
10/24 Here comes the housing bust “reverse wealth effect,” Australia edition – DC
10/24 House prices ‘falling by over $1,000 a week’ in Sydney and Melbourne – ABC

10/24 EUR/USD, GBP/USD fall to fresh lows as USD breaks out to key level – MW
Armstrong warned that the rising dollar would destroy everything.

10/24 The financial system has just hit the perfect storm – Graham Summers
10/24 The stock market faces ‘unlimited downside risk,’ warns veteran trader – MW

Fear vs collateral,,,, lotsa graphs.
Here is a note from Armstrong. Look at the title of the picture. This sums up the biggest part of the crash.
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Old 10-25-2018, 03:02 PM
Danny B Danny B is online now
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Chris Hedges

Chris Hedges is a long-time reporter from distressed areas of the world. He has seen MANY wars. He has a good interview here. For some reason, he believes in global warming,,, Kavanaugh is a sexual predator,,, Trump is a nincompoop, Christian fascists,,, a few oddball beliefs like that. Don't let that distract you from his projections.

Couple of quotes, "Wages have been kept far below what they should be, based on productivity which has increased by 77 per cent since 1973. If wages had kept pace with productivity, the minimum wage in the United States would be well over $20 per hour. "
He is talking JUST about our increased productivity. If wages had kept even with price inflation, the number would be much higher.
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Old 10-26-2018, 03:58 AM
Danny B Danny B is online now
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Fallout from currency inflation

The politicians created the post-war welfare-warfare State. This was initially financed by our Bretton-Woods credit card. We maxed out the card (good name of the U.S. dollar) and had to go off the gold standard. Both the gold standard and, Bretton Woods were mechanisms to keep any State from juicing up the sovereign bond market to finance a war. Free of the gold standard, the Treasury debt could be run up much higher. In June of 1971, the debt was 398,129,744,455.54
Currently it is 21,671,062,290,012.80
Population, 207.7 million (1971)
Population, 327,482,993 (2018)

We hyper-inflated the bond market and, had wars aplenty. Out of historic momentum, many people still used the dollar as the reserve currency. We no longer had the Bretton-Woods agreement helping us but, the dollar was still considered the best reserve. Add to this, the Saudi agreement to price all oil in U.S. dollars. We had a very high demand for dollars. We needed all that dollar flow to keep the wars going.
Population went from 207M to 327M
Debt went from $398B to $21,671B

The inflationist army saddled up their beast-of-burden (the productive worker). They put on blinders and cracked the whip.
Money supply, 1971-01-01 632.9 B
Money supply, 2018-09-01 14241.5 B
The FED looks for 2% price inflation. Hard to say just how much monetary inflation it takes to get 2% price inflation.
Never the less, the FED channelled fresh liquidity into the historic banking class. You can see that a 2% increase applied to 14241.5 B is quite a bit of money.
During the '60s, wages went up pretty well because America still had a lock on manufacturing due to the destruction in Europe. By the middle '70s, Europe had rebuilt much of their manufacturing base. Wages went stagnant from the competition. The monetary inflation continued apace.
The R.O.W. Had to undercut our prices to accumulate the reserve currency. With our diminishing income, we had to extend credit terms farther and farther out into the future. We had recurring crashes because our income couldn't support the predations of the upper loop.

Enter China and India. They drove wages down even more. We still had a high cost of living thanks to FED pumping. Our economic competitors didn't have this burden and could survive on very low wages. Wages have been essentially flat for at least 40 years,,, maybe 60. We have a growing money supply and, a growing public debt. We also have 96.2 million of working age who are not in the labor force. Consumption, confidence and, the birth rate are falling.

The money supply must be grossly inflated to support the finance class. The productive class is withering away. Note that derivatives are reckoned to be somewhere in the neighborhood of one quadrillion dollars. The financial class is doing each other's laundry. They sell bogus instruments to each other to "earn" fees.
The money is channelled into the banking class. It is pretty much useless unless some producer takes out a loan. With low wages and mass unemployment, there is little demand for credit from actual producers. To keep the party going a bit longer, FED GOV is borrowing $trillions. But, the tax rolls are diminishing and, eventually people will avoid public debt.

The perennial inflation to support the banking class, has priced Americans out of a job. The resulting defaults will eventually work their way up to the bankers.
10/25 Value of Euro Zone banks drops by a third from 2018 peak – US News
We're still in 2018 and, there is a long way down in the future.
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Old 10-26-2018, 04:24 AM
Danny B Danny B is online now
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Stocks are crashing and, Powell is on the sidelines

Armstrong, "We do not necessarily have to run and hide in a cave. I will let you know if it really is that bad. What we are looking at is the collapse of governmental systems. That does mean you have to run and hide someplace. Yes, that is possible in certain areas. "
Keep in mind that 51% of Americans receive a check from GOV
"So, no need to run and hide. We are looking at an economic implosion. Yes, that will result in civil unrest and that will most likely be focused in the big cities. So the risk would be greater for someone living in LA or NYC rather than in the suburbs. "

Notes on the bear market;
"uncertain how much lower the drop can take the market, which is only where it is thanks to trillions of liquidity created out of thin air by central banks - liquidity which is now being drained at an accelerating pace."
1. It’s (almost) officially a global equity bear market…MSCI equal-weighted global index down 19.6% from intraday high Jan 29th.

2. Asset carnage cross-market & has infected US tech leadership; since the January "big top"…

Annualized loss in US Treasuries (-9.7%) & IG bonds (-4.0%) 3rd largest since 1970
18 out of 21 commodities in corrections of >10% (lumber -53%, copper -23%)
FAANG stocks -21% from highs, semiconductors -22% from high
1742 of 2767 global stocks, 919 of 1150 EM stocks, 1164 of 1899 NYSE stocks in bear markets.
On profits: global EPS growth peaked March @ 23% YoY, it’s now 16% (ex. US it’s dropped to 10%)
63% of global stocks in bear market (80% in EM, 61% in US – Table 2)
Crash watch: $45tn of systemically risky shadow banking assets (source BIS), of which 72% (in bond ETFs, mutual funds, credit HFs, bank loan funds) are vulnerable to forced selling

You get the idea. Stocks are crashing. Previously, the FED always had your back. You could ALWAYS buy the dips. If Powell refuses to carry on what Greenspan started, there just won't be any rallies. Trump appears quite upset about this. One could assume that he doesn't want markets to blow before the election.

10/25 Google parent Alphabet’s shares plunge after missing revenues – Zero Hedge
No earnings and, NO Greenspan "put" means that it is time to pull out.
10/25 Will Fed capitulation forestall stock market crash? – Peter Schiff
THAT is a hypothetical question in all senses.
10/25 Spain’s mortgage market seizes up, bank stocks sink, legal uncertainty reigns – WS
This is just the beginning of market seize-ups.
10/25 ECB sticks to stimulus exit despite “bunch of uncertainties” – Reuters
Bond buyers deserted European markets a long time ago. If the ECB stops buying, there will be NO BID.
10/25 It’s too late to prepare UK borders for no-deal Brexit – Independent
Stock up on popcorn before the big event.

"These tremors are warnings that the “dollar” system’s decay is reaching critical points. The mainstream will tender that this is really no big deal, just a tantrum of spoiled markets unwilling to easily treat the coming end of ZIRP and accommodation; that is simply and flat out false. There is a systemic liquidity problem that is and has been fatal, exposed to a greater degree by the continued withdrawal of eurodollar bank participation"

A rising gold price is often considered an inflationary, or reflationary, sign. In this case, however, the jump especially during that particular two-week period was hardly of the same variety. It was raw, unadulterated fear permeating the entire global system. Something snapped and though it was never written into the conventional record it still happened all the same.

It was in this window that America finally noticed “overseas turmoil” in their 401k’s."
Then, as if to prove these points, the process was repeated in almost exactly the same fashion a second time in a matter of mere months. And to further demonstrate how clueless and useless central bankers are and can be, the Federal Reserve actually kicked off its “rate hike” program in the middle of all this still at that late date believing in that earlier “strong” economy fairy tale."
"This second deflationary wave ultimately proved more devastating than the first, even if Wall Street never fully accounted for it. In Asia as in other far-flung economies, the eurodollar damage was so severe that they still haven’t recovered from it even after suffering 2008-levels of contraction and shrinking. "
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Old 10-26-2018, 03:09 PM
Danny B Danny B is online now
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What magic number brings the Powell put?

The more that China prints, the more that the Yuan devalues.
The ECB is definitely on a death march.
Leaving these 2 things aside, ALL the speculation is now centered on Powell. It is impossible to overstate the importance.

"In a time of rising concern about stock markets, as one of its questions in the latest Fund Managers Survey released last week, Bank of America asked "what level on the S&P 500 do you think would cause the Fed to stop hiking rates?" What it found is that according to the respondents, the Fed would stop hiking if the S&P 500 fell to 2390, suggesting the "Powell put" strike price is about -12% below current levels.
"On Thursday morning, with stocks having wiped out their 2018 gains and with increasing worries about a market that is seemingly no longer backstopped by a central bank, Bloomberg picks up on this theme and notes that with "global investors swimming in a sea of red", they have become consumed with one magic number: the strike price of the so-called Powell Put."

"It found that to the chagrin of those used to central bank intervention, for now at least Wall Street says that the $2 trillion drop in U.S. equities this month has yet to tighten financial conditions enough to levels that would spark a dovish monetary offset. "
"what are the specific price levels that could trigger the Fed to engage in a wholesale market recovery.

According to BNP Paribas, a 6% drop in the S&P 500 Index to 2,500 would be the resistance level that would prompt a response from Powell. "A 10 percent to 15 percent drop in equities is usually the difference between noise and signal," BNP Paribas analysts said in a note."
"Meanwhile, Evercore ISI has put the "Fed Put" below the 2,650 mark, compared with the S&P 500 Index’s closing level at 2,656 on Wednesday. Two weeks ago, after the latest two-day rout, Krishna Guha, the head of central bank strategy at Evercore ISI, warns that it will take a correction of at least 10 percent to get the Fed’s attention"

"A10% drop from the S&P’s record close of 2,930 would put the "Put" at around 2,638, just over 70 points below the current level in the S&P. A 20% plunge would take it all the way down to 2,345, a level not seen since the middle of 2017.

Other are more skeptical: BlackRock and River Valley Asset Management say the real economy remains relatively insulated from the stock meltdown."
These boneheads wouldn't know what the "real economy" is if they found it dead in the road.
"Andre de Silva, global head of emerging-markets rates research at HSBC, was even more blunt, telling Bloomberg TV on Thursday that the Fed needs something “more dramatic” than a stock rout to convince them to stray off course. "
"Meanwhile, the Fed itself has been cryptic with its "market rescuing" intentions, with officials downplaying bouts of market volatility in 2018, citing the health of the U.S. economic trajectory and the tight labor market."
Yeah, right.
"Deutsche Bank calculated the level of the new "Powell Put," noting that one can estimate the strike of that 'put' in two different ways.

First, delta neutral, in which a rise in vol is compensated with lowering of the strike in such a way that the underlying is unchanged. Using this approach we find that the S&P drop started at the point when S&P was at 2800 which places the new strike of the Fed put somewhere in the 2300 — 2400 range."
"it is very unlikely that the market will sell off in a calm, cool and collected manner from its current level to 2,300; in fact, the drop would likely be far more stormy as a result of unwinding convexity flows, which push investors out of equities and into bonds. "
NOBODY wants to be in bonds. They all read Armstrong. They will go to gold and cash.
"For now, bonds have been relatively immune from a "great rotation" out of equities - the 10Y is trading around 3.13% without any buying panic observed"
What about selling panic?
"For now, there are no signals that Powell is planning on intervening any time soon."
Add to this;
"10/26 Fed’s new Vice Chair backs more rate hikes in first major policy speech – CNBC"
So, the chair and vice-chair have a HUGE fan set up. It is switched to SUCK. Stocks and bonds are moving closer to the fan blades. Corporate America is going to crash no matter what. IF the FED can manage some kind of controlled demolition, it will probably avoid UN-controlled demolition.
Remember that when all this notional value of assets is falling, this is deflationary. People stop spending.
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Old 10-27-2018, 03:32 AM
Danny B Danny B is online now
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,902
Armstrong,,, insane algos

If those of you who live in Europe don't know already what is coming at you, you've had your head stuck in the sand. The Eurozone project was doomed from the beginning. Armstrong, once again makes this perfectly clear.
The derivative book at Deutsche Bank was at one time larger than the entire GDP of Germany. Now,

FED GOV squeezed out money from our paycheck and then, promised us a pension from the proceeds. The money was spent on wars. There is no money in most pension funds.

Vladimir Putin tried to reform Russia’s pensions system which is crumbling as is the case in the West. This giant Ponzi Scheme is collapsing and it has been the heart of Socialism. "
"tens of thousands of Russians taking to the streets to protest. This is what we are to expect over the course of the next two years. It is also why the Federal Reserve is desperately trying to gradually raise interest rates in hopes of stabilizing the Pension Crisis."
"There is simply NO system that will survive this Pension Crisis because the design was faulty from the outset."
Social Security was forced to buy U.S. GOV bonds. GOV needed the cash to fight wars. If the money had been invested in stocks, the fund would have grown ENORMOUSLY. The wars came first.

"The traditional way people took care of their future was to build a family structure. The children took care of the parents. The promises of socialism have relieved the children of such obligations for the government was there. As we begin to witness this crisis unfold, the world financial system will be turned on its head."
Invest in your family.

"While on paper, CTAs use computer-driven models to navigate markets and trade everything from equities to bonds to currencies to commodity futures, in reality they simply chase momentum and try to isolate an upward (and occasionally) downward pattern which to piggyback on. Unfortunately for their programmers, with volatility surging, the market's traditional patterns have all been shattered."
The algos don't know what to do.
"Computer-driven hedge funds were already headed for their worst year ever before this month’s volatility, "amid slowing corporate earnings, political turmoil in Italy and uncertainty over Brexit." During the February correction, they tumbled more than 4% for their worst month since 2001,"
Wait, what about 2008?

"It’s a bloodbath out there across almost every strategy with very few exceptions," V "CTAs have been caught by a double-whammy with rising rates and equities plummeting. There’s only one exit and everyone is trying to exit now because the models are telling them to do so."
Traffic jam at the rabbit hole.
"In fact, according to Goldman, equity long-short hedge funds suffered one of their worst ever losses on Wednesday, pushing declines this month to 8.7%."
Damn gravity!

"2631 in the S&P is the next "sell level", at which point CTAs will go down to just "14% Long." We're almost there. Meanwhile, should the selloff extend even further, a move below 2577 would see the CTA Trend position flip to outright "-100% Max Short",
YEP, everybody on one side of the boat.
"Only then- with all the algos short - will it be time to finally buy the dip, ahead of verbal central bank intervention and rise the next furious CTA short squeeze to new all time highs."
SO, what if verbal intervention does not appear?

Here is some heresy from RT, https://www.rt.com/op-ed/442319-thre...order-nuclear/
10/26 The global selloff has erased $5 trillion from stock and bond markets – MarketWatch
The default cascade hasn't even started.
10/26 Rising dollar is major reason for stock sell-off, and it’s only getting worse – CNBC
As the dollar goes up, foreign divisions of domestic companies lose money on currency arbitrage.
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Old 10-28-2018, 03:39 AM
Danny B Danny B is online now
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Location: L.A. Ca.
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Alternative economists,,,kill stocks to save GOV bonds,,, dying shale

Here is all you need to know about the U.S. dollar. The rise of the dollar is destroying everything in it's path.
"the Fed is committing its habitual policy mistake by overtightening"
Yep, if they are cutting off the free money, they are definitely WRONG.
"JPMorgan's quant Marko Kolanovic had repeatedly pushed, advising clients - so far erroneously - on at least two occasions to buy the dip "
They got hammered. Everybody needs dollars and, they are driving them up.

"Federal Reserve officials have tried this week to ease concerns on Wall Street that bank reserves are growing scarce "
Just words, no action.

Armstrong tells us that bonds will crash but, stocks will do well. That is NOT possible.
"But on the other hand, they now find that U.S. trade deficit reaching its largest level on record - the precise deficit tariffs purported to narrow - is very worrying."
Like almost everything else, the theory did NOT work out in practice.
"The problem lies with government spending and monetary inflation, precisely those activities that global businesses have been taught either to ignore or, worse, to embrace and lobby for. "
The chickens are coming home to roost.
"In asking taxes for such payments the government makes the citizens answerable for money squandered in the past. The taxes paid are not compensated by any present service rendered by the government's apparatus. The government pays interest on capital which has been consumed and no longer exists."
YES, but, we got a lot of nice war stories to tell our kids.

"For my part, I outlined in 2015 that the Federal Reserve would undertake a policy of interest rates hikes and fiscal tightening, and that they would pursue this action until markets, long supported by cheap debt, finally broke under the pressure. Months before Trump's election I stated that Donald Trump would in fact be president and that the Fed would accelerate tightening during his administration. At the beginning of this year I predicted that Fed tightening would result in massive stock market reversal (worse than the 2008 crash) in 2018. In September I refined the timing of this crash to begin in the final quarter of 2018."

"The fact is, alternative economists have been RIGHT for the past 10 years and have been far ahead of the mainstream in terms of predicting fiscal trends based on real data. As I have always said, economic collapse is a process, not an event. It’s something that happens in stages or phases over time, not something that occurs overnight or in the span of a few days."
"The establishment banks and the economists that pander to them have burned up all their goodwill and social capital. They have been wrong so much and so often that the public is looking elsewhere for their information. This has led to the explosion of interest in alternative economic analysis that is occurring today."

The broken trend,
OF NOTE, "When bonds collapse, entire countries go broke.
With that in mind, once the US bond market began to collapse, pushing yields above their long-term trendline, it became apparent that the Fed would “sacrifice stocks to save bonds.”
"The reason? Letting stocks collapse will force capital into bonds, thereby forcing yields lower.

That process is now officially underway. And if you think the Fed is close to “stepping in” you’re mistaken. Cleveland Fed President Helen Mester just told CNBC this morning that “the stock market drop is FAR from hurting the US economy.”

This ties in with Fed Chair Jerome Powell’s assertion during a recent Q&A session that the Fed would not step in to prop up the stock market unless it was a sustained collapse that was bad enough to impact the REAL economy, specifically consumer spending.
In simple terms... the Fed's not coming to the rescue this time."
OK, the FED crashes the stock market to drive money into bonds. Keep in mind that most economic theory seems to be major BS. Stocks and bonds are now 100% correlated. They go up and down together.
"So whom has the bonds and will take the loss? Guess who? The central banks. They are loaded to the gills and cannot sell the long-bonds they bought. There is no bid. In this debt crisis, there is no bid for debt, which is typically how empires, nations, & city-states collapse."

2 links, https://www.armstrongeconomics.com/t...ernment-bonds/

OK, enough of the good news. Here comes the bad news.
"So, it doesn’t seem to matter if the oil price is over $100 (2013-2014) or less than $70 (2017-2018), the shale oil industry continues to spend more money than it’s making. The shale energy companies have resorted to selling assets, issuing stock and increasing debt to supplement their inadequate cash flow to fund operations."
"For the U.S. Shale Oil Industry just to pay back its debt, it must produce 9 billion barrels of oil. That is one heck of a lot of oil as the industry has produced about 10 billion barrels to date. Again, as Mike states, it would take 9 billion barrels of shale oil to pay back its $285-300 billion of debt (based on the shale industry’s very own breakeven prices).

Furthermore, the shale industry may have to sell a quarter of its oil production (1.5 million barrels per day) just to service its debt by the end of 2019. "
"total upstream shale oil debt actually is. We found it to be between $285-$300B (billion), both public and private. Kallanish Energy Consultants recently wrote that there is $240B of long term E&P debt in the US maturing by 2023"
"So, as Pioneer issued over $5 billion in stock to produce unprofitable shale oil and gas, Continental Resources racked up more than $5 billion in debt during the same period. These are both examples of “Ponzi Finance.” Thus, the shale energy industry has been quite creative in hoodwinking both the shareholder and capital investor."
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