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  #3031  
Old 11-22-2018, 05:28 PM
Danny B Danny B is online now
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Hussman, fundamentals of market deterioration

The people who do NOT understand the economy work in academia or television. The people who do understand the economy guide investment firms and write private investment letters. BUT, there are some people who understand the economy AND write for the public.
John Hussman phd is one of the very best technical writers who writes for the public. Some years ago, he saw that the stock market was highly over-valued. He guided his clients to take bearish actions. He and his clients lost a LOT of money because the markets continued to go higher and higher. He has now figured out where he went wrong. The markets went higher because of foreign capital inflows. Something that Armstrong had stressed but, most people had ignored. Here is an excellent article from Hussman.

"In the recent advancing half-cycle, the speculation intentionally provoked by zero-interest rate policy forced us to elevate the priority of market internals to a far greater degree than was required during the tech and mortgage bubbles. It was necessary to prioritize the behavior of market internals even over extreme “overvalued, overbought, overbullish” features of market action. Those syndromes were effective in other cycles across history, but in the advancing half-cycle since 2009, our bearish response to those syndromes proved to be our Achilles Heel."
He has since learned that an overbought market is NOT enough to precipitate a crash. In the 2 previous crashes, it WAS an adequate predictor.

His track record.

By March 2000, on the basis of historically reliable valuation measures, I projected that a retreat to normal valuations would require an -83% plunge in tech stocks. In the 19 months that followed, that estimate turned out to be precise for the tech-heavy Nasdaq 100 Index.
So, he was correct in 2000 based just on valuations.

"Delusions are best understood not as deficiencies in logic, but rather as explanations that have been logically reached on the basis of distorted inputs. Similarly, Garety & Freeman found that delusions appear to reflect not a defect in reasoning itself, but a defect “which is best described as a data-gathering bias, The reason that delusions are so hard to fight with logic is that delusions themselves are established through the exercise of logic. Responsibility for delusions is more likely to be found in distorted perception or inadequate information. The problem isn’t disturbed reasoning, but distorted or inadequate inputs.

" where speculative behavior increasingly produces self-reinforcing feedback. Specifically, the speculative behavior of the crowd results in rising prices that both impress and reward speculators, and in turn encourage even greater speculation. The more impressed the crowd becomes with the result of its own behavior, the more that behavior persists, and the more unstable the system becomes,
The problem was that investors stopped thinking about stocks as a claim on a very, very long-term stream of discounted cash flows. Valuations didn’t matter. It was enough that the economy was expanding. It was enough that earnings were rising. Put simply, the trend of earnings and the economy, not the actual level of valuation, became the justification for buying stocks. Graham & Dodd described this process:

"The notion that the desirability of a common stock was entirely independent of its price seems incredibly absurd.
Missing from Yellen’s benign assessment was the fact that the speculative distortion and debt buildup enabled by the bubble itself would be the primary driver of the worst economic collapse since the Great Depression. The Fed appears to exclude such risks from its thinking,
Despite risks that I fully expect to devolve into a roughly -65% loss in the S&P 500 over the completion of the current market cycle

"it’s absolutely critical to distinguish the long-term effects of valuation from the shorter-term effects speculative pressure. Historically-reliable valuation measures are remarkably useful in projecting long-term and full-cycle market outcomes, but the behavior of the market over shorter segments of the market cycle is driven by the psychological inclination of investors toward speculation or risk-aversion. "
There you have it. He previously looked at valuation in the long run with taking into account market sentiment.
"zero-interest rate policy forced us to elevate the priority of market internals to a far greater degree than was required during the tech and mortgage bubbles."

" The process of adaptation was very incremental, and therefore painful in the face of persistent speculation. We’ve adapted our investment discipline so that without exception, a negative market outlook can be established only in periods when our measures of market internals have also deteriorated. A neutral outlook is fine when conditions are sufficiently unfavorable, but establishing a negative outlook requires deterioration and dispersion in market internals."
A crash must be preceded by a fall in confidence, NOT just over-valuation.

"Faced with extreme valuations, the first impulse of investors should not be to try to justify those valuation extremes, but to recognize the impact of their own speculative behavior in producing and sustaining those extremes. It then becomes essential to monitor market conditions for the hostile combination of extreme valuations and deteriorating market internals. At present, we observe that combination, but would still characterize the deterioration in market internals as “early,” in the sense that it’s permissive of abrupt market losses, but not severe enough to infer a clear shift from speculation to risk-aversion among investors."
OK, so we are still "early" in the credit half cycle. BUT, the speed of deterioration is likely to rapidly pick up.

"Speculation is dangerous because it encourages the belief that just because prices are elevated, they must somehow actually belong there. It encourages the belief that the paper itself is wealth, rather than the stream of future cash flows that investors can expect their securities to deliver over time. "
A big part of the over-valuation is that investors are looking for protection, NOT necessarily future cash flow.

I previously wrote about the near unlimited issuance of things that investors call "assets"
"It takes only a bit more thought to recognize that securities, in themselves, are not net wealth. Rather, every security is an asset to the holder, and an equivalent liability to the issuer."

"The IOU is a new security, but it doesn’t represent new economic wealth."
"Neither the creation of securities, nor changes in their price, create net wealth or purchasing power for the economy. Yes, an individual holder of a security can obtain a transfer of wealth from someone else in the economy, provided that the holder actually sells the security to some new buyer while the price remains elevated. But in aggregate, the economy cannot consume off of its paper “wealth,” because in aggregate, those paper securities cannot be sold without someone else to buy them, and those paper securities must be held by someone until they are retired. "

"What actually matters, in aggregate, is the stream of cash flows. Specifically, the activity that produces actual economic wealth is value-added production, which results in goods and services that did not exist previously with the same value. Value-added production is what actually “injects” purchasing power into the economy, as well as the objects available to be purchased."

"If one carefully accounts for what is spent, what is saved, and what form those savings take (securities that transfer the savings to others, or tangible real investment of output that is not consumed), one obtains a set of “stock-flow consistent” accounting identities that must be true at each point in time:

1) Total real saving in the economy must equal total real investment in the economy;

2) For every investor who calls some security an “asset” there’s an issuer that calls that same security a “liability”;

3) The net acquisition of all securities in the economy is always precisely zero, even though the gross issuance of securities can be many times the amount of underlying saving; "
"4) When one nets out all the assets and liabilities in the economy, the only thing that is left – the true basis of a society’s net worth – is the stock of real investment that it has accumulated as a result of prior saving, and its unused endowment of resources. Everything else cancels out because every security represents an asset of the holder and a liability of the issuer. Securities are not net wealth."
This isn't 100% true because the Central Bank can pass out free money that is not a liability. Much of the TARP money was not repaid.

"the wealth of a nation consists of its stock of real private investment (e.g. housing, capital goods, factories), real public investment (e.g. infrastructure), intangible intellectual capital (e.g. education, knowledge, inventions, organizations, and systems), and its endowment of basic resources such as land, energy, and water. In an open economy, one would include the net claims on foreigners (negative, in the U.S. case). A nation that expands and defends its stock of real, productive investment is a nation that has the capacity to generate a higher long-term stream of value-added production, and to sustain a higher long-term standard of living."
Funny, he doesn't mention banks.

"Understand that securities are not net economic wealth. They are a claim of one party in the economy – by virtue of past saving – on the future output produced by others. When paper “wealth” becomes extremely elevated or depressed relative to the value-added produced by an economy, it’s the paper “wealth” that adjusts to eliminate the gap."
Currently, there is VERY little wealth from past savings. With free money from the CB, the speculators didn't have to trouble themselves with paying decent interest on savings so that they could attract saved capital.

"Several years ago, I introduced what remains the single most reliable measure of valuation we’ve ever developed or tested,"
"Among the valuation measures we find best correlated with actual S&P 500 total returns in market cycles across history, the S&P 500 is currently more than 2.8 times its historical norms. "
"So even given the level of interest rates, we expect a market loss of about -65% to complete the current speculative market cycle."
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  #3032  
Old 11-22-2018, 05:28 PM
Danny B Danny B is online now
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Hussman, second part

"The best place to watch for cracks in this narrative is not valuations; they are already extreme, and are uninformative about near-term outcomes. Rather, it’s essential to monitor the uniformity of market internals across a wide range of individual securities "
"We’ve already observed deterioration in our key measures of market internals, but I would still characterize that deterioration as “early.”
"The upshot is this. At present, U.S. investors are under the delusion that the $37.3 trillion of paper wealth in their equity portfolios represents durable purchasing power. Unfortunately, as in 2000 and 2007, they are likely to observe an evaporation of this paper wealth. Nobody will “get” that wealth. It will simply vanish."
"That’s how market capitalization works. Over the completion of this market cycle, we estimate that between $19.8 and $24.2 trillion in paper “wealth” will evaporate into thin air."
Deflation with a capital D

"While our immediate market outlook remains only moderately negative, based on the still-early deterioration we observe in market internals, recognize that from a valuation perspective, we are now witnessing the single most offensive speculative extreme in history."
"the correlation with subsequent market returns by accounting for variation in the embedded profit margin. The current extreme exceeds both the 1929 and 2000 highs."

"Already, the available corporate surplus is being primarily driven into dividend payouts, share buybacks, and mergers and acquisitions, rather than real investment."
The money will never flow into wages while China , et al enforce a global wage ceiling.
"Real economic growth is the sum of two components: employment growth plus productivity growth. That means growth in the number of employed workers, plus growth in the level of output per-worker."
NO NO NO. It is the growth of assets that matter.
"The labor force component of structural growth is largely baked in the cake due to demographics, which in the absence of a substantial increase in the rate of immigration, leaves productivity growth as the main factor that could raise structural U.S. growth."
Bring in unskilled immigrants does nothing for increasing growth.

"It’s worth noting that U.S. economic growth has expanded at a rate of 2.1% annually in the 7-year period since 2010 (I’ve chosen a 7-year period to confine growth to the recent expansion, without including data from the global financial crisis). What’s remarkable about this is that nearly half of this growth is attributable to a decline in the U.S. unemployment rate"
Yeah, so, what happens to your projections when you cut out the BS and look at the true unemployment rate?

"If our policy makers are interested in boosting long-term structural U.S. GDP growth, they should be providing direct and targeted tax incentives for real investment, education, research & development, and other factors that could, over time, increase our nation’s productive capacity."
NO MENTION of the crashing birth rate. Maybe we can increase our productive capacity but, NOT our consumptive capacity.
Side note, 11/22 Why are young people having so little sex? – Atlantic


[B]The article goes on to talk about Bitcoin.
https://www.hussmanfunds.com/comment/mmc171218/
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  #3033  
Old 11-22-2018, 05:48 PM
Danny B Danny B is online now
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Just how fast will hope turn to fear?

Hussman writes that we are "early" in the deterioration of market fundamentals. Here is an article on the breakdown of credit markets. It remains to be seen just what the speed of deterioration will be. BUT, everything is speeding up.
https://www.bloomberg.com/news/artic...rnd=markets-vp

The markets are starting to look more at fundamentals of risk.
https://www.nytimes.com/2018/11/21/u...ing-hints.html

11/22 Hedge funds suffer worst month in three years; now down for the year – CNBC
11/22 Multiple risks are converging on markets – Jim Rickards
11/22 Get out now: SocGen releases the most bearish 2019 forecast yet – Zero Hedge

Société Générale has been very accurate and very watched. It won't take much to reverse / deflate the delusions of investors.
11/22 Owner of blown-up hedge fund left clients owing more money – Zero Hedge
NOBODY wants to be left holding the bag. This will prompt more flight to cash.
11/21 Mortgage refinance applications hit 18-year low – CNBC
So, how is the credit bubble supposed to grow without new laons and new fees?
11/21 Blain: “Who will purchase the €275 billion of debt Italy expects to issue in 2019?” – ZH
11/21 EU calls for sanctions against Italy over budget – US News
It will NEVER pass a vote of the general assembly.
"So here we have the Pi Target and to the day Brussels has officially rejected Italy’s spending budget on Wednesday, November 21st"
Armstrong's program is right on target.

"The real curious thing is that the Abu Dhabi sovereign wealth fund filed a lawsuit against Goldman Sachs precisely on the Pi Target Wednesday (Nov 21) for allegedly conspiring against the Middle Eastern fund to further a criminal scheme by Malaysia’s scandal-plagued 1MDB. So here we have the suit filed precisely on the Pi Target and precisely at the top of the ECM back in 2007, that is when Goldman Sachs sold ABACUS2007-ACI which was a $2 Billion Synthetic CDO."
"Them, on the Pi Target from the previous 8.6-year wave, April 16th, 2010, that is when the SEC charged Goldman Sachs with fraud with regard to the ABACUS2007 product. Here we now have Abu Dhabi filing suit for criminal fraud against Goldman Sachs precisely on the Pi Target of November 21, 2018."
https://www.armstrongeconomics.com/w...riminal-fraud/
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  #3034  
Old 11-23-2018, 04:00 PM
Danny B Danny B is online now
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oil notes,,,Powell & chicken,,, social credit in China

Oil is so important to finance that every little move in the price of oil has major repercussions in finance. Here are a few notes.
"Oil and gas companies lost $1 trillion in oil price slide. The global oil and gas sector has lost $1 trillion in value over a 40-day period since October after crude prices fell by about $20 per barrel. U.S.-listed companies in the S&P 500 shed $240 billion."
"Saudi petrochemical firm. Previously, Aramco had considered a $40 billion bond sale for the acquisition, but has rejected the idea because of the financial disclosures that would be required for the sale"

"Producing shale gas in the UK may not ever be economic because of ample supplies on the continent and a growing source of supply in the form of LNG from Qatar, Norway and the UK. Beyond that, renewables are steadily falling in cost, down 50 percent since 2013."
Damn free energy.

"The firm apparently suffered a “catastrophic loss” by wrong-way bets on prices. Oil fell by 7 percent on November 13 and natural gas spiked by 18 percent on November 14. Individual investors, which apparently had to have made a minimum investment of $250,000, are set to lose their money."
Damn free energy
"Prices for Western Canada Select have dropped as low as $14 per barrel, as pipelines carrying oil from Alberta are full. "
https://oilprice.com/Energy/Energy-G...ces-Crash.html

"According to the report, top oil and gas companies jointly spent around 1 percent of their 2018 budgets on clean energy. The study comes as European oil and gas heavy weights such as Royal Dutch Shell, Total, BP and others have in recent years accelerated spending on wind and solar power as well as battery technologies. The companies’ increased green investment shows that they are seeking a larger role in global efforts to slash carbon emissions to battle global warming, the report added. "

Side note;
Earth is Cooling…No it's Warming - NASA Earth Observatory
https://earthobservatory.nasa.gov/Fe...mperature2.php

"ExxonMobil, the world’s largest traded publicly owned oil company, for its part, was heavily criticized over its slower move to embrace the concerns of climate change. "
"Also, earlier this year ExxonMobil announced a $500 million joint venture (JV) with Synthetic Genomics to genetically engineer photosynthetic algae to produce renewable crude from sunlight and carbon dioxide"
https://oilprice.com/Energy/Energy-G...ergy-Race.html

"U.S. shale is not new to pipeline bottlenecks. The Permian basin has suffered from steep discounts this year, with WTI in Midland trading as much as $20 per barrel below WTI in Houston at times. Meanwhile, the midstream bottleneck is especially acute in Canada, where the inability to build a major pipeline out of Alberta has led to price discounts that have reached as high as $50 per barrel. Western Canada Select fell as low as $15 per barrel in recent days after a U.S. federal judge blocked construction on the Keystone XL pipeline, dealing yet another blow to Canada’s oil industry."
https://oilprice.com/Energy/Energy-G...line-Woes.html

"Crude oil stockpiles in China rose by 29.09 million barrels last month from a month before and are likely to continue up, S&P Global Platts calculations have suggested. The inventory build was a result of rising imports combined with lower refinery activity,"
Yep, China is slowing down.
https://oilprice.com/Energy/Energy-G...One-Month.html

Everybody in the world is wondering when Powell is going to fire up the printing presses and save the financial world.
11/23 The Fed finally blinks – Macro Tourist
"It is clear to me the Federal Reserve was intent on raising rates until something broke, and that last week enough things “broke” that they finally blinked."
"I know it seems like a subtle distinction, but the market has interpreted this as the Fed blinking."
So, he interprets some comment as "the FED will start printing". A lot of his wishful thinking is based on the extreme volatility in the oil markets. The next FOMC meeting will tell us if the FED is blinking or not. Powell is on a mission to do a slow crash of markets so that they will not suffer a fast crash. Trump is on a mission to destroy China. Since capital can instantly flee and flow to any place in the world, ALL CBs provide liquidity to all markets.
When the FED withdraws liquidity, this subtracts liquidity from most markets. Powell is playing a game of "chicken" with Chinese markets hoping to suffer far less damage than China.
https://www.themacrotourist.com/post.../21/fedblinks/

Absent the enormous stimulus and liquidity from the FED,,, and to a certain extent the BOJ and ECB, China has had to go back to serious printing.
https://www.bloombergquint.com/opini...dus#gs.wsUNzx4
Keep in mind that the ECB claims that it is still on track to terminate bond purchases at the end of the year. Willingly or not, the BOJ, ECB, and BOE are joining with the FED to gang up on China. China does not have a developed safety net as opposed to the West and Japan.

How China Stays Stable Despite 500 Protests Every Day - The Atlantic

https://www.theatlantic.com/internat...sts.../250940/
Jan 5, 2012 - China saw 180,000 protests, riots, and mass demonstrations in 2010 alone
China: Strikes and protest numbers jump 20% | Financial Times
https://www.ft.com/content/56afb47c-...f-bddab6a27883
Jul 14, 2016 -
Social unrest in China: A threat to regime legitimacy and the economy ...
https://globalriskinsights.com/2017/...-legitimacy-ec...

The West is hoping to get a big revolution going in China. Their business model of growth, not profit is far more vulnerable than the Western model of profit before people.
Starting with TARP, the banks transferred their risk and bad paper to the State. The State is soon to collapse (Armstrong). When the default cascade hits, China will be in a very poor position to hold on to control. They have instituted a draconian / Orwellian system called social credit

The odd reality of life under China's all-seeing credit score system ...
https://www.wired.co.uk/article/china-social-credit
China's social credit score system is doomed to fail | Financial Times
https://www.ft.com/content/6ba36896-...8-47c53c652916
Pushing The Ethical Boundaries Of Big Data: A Look At China's Social ...
https://www.forbes.com/.../pushing-t...-look-at-china...
China Turns Big Data into Big Brother - MIT Technology Review
https://www.technologyreview.com/s/6...o-big-brother/

They know that the crash is coming. They are betting on a lockdown of every individual.
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  #3035  
Old 11-24-2018, 05:06 AM
Danny B Danny B is online now
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Italy is PAST the point of no return,,, margin debt,,, fallen angles

China is going for all "stick" and, NO carrot.
11/23 China ‘social credit’ system blacklists millions from flights – Independent

"European banks have accumulated about $1.2 trillion in bad and non-performing loans (NPLs) that have continued weighing down heavily on their balance sheets. Italian banks are sitting on the biggest pile of bad debt: €224.2B ($255.9B), with NPLs and advances making up nearly a quarter of all loans."
"The sharks can already smell the blood in the water, and investors have been shorting Italian banking stocks to death. Italian banks hold nearly a fifth of the country’s government bonds."
Every time that the Italians harden their stance, more people will short Italian debt and banks. Salvini HAD to have known about the shorting sharks. He invited them to the table. I suspect that he wanted to bring Italy to the point of no return without being too overt about it. If 1/4 of all loans are technically non-performing, I believe that momentum will carry Italy off the cliff regardless of what the ECB does.

"Meanwhile, total debt sits at a staggering 130 percent of GDP, the fourth highest in the world. The EC rules are clear: national debt should be maintained below 60 percent of GDP "
The Italians see that they are WAY too far in debt to get out by legitimate means. As shorting and interest rates rise, it will become painfully obvious that nothing will save Italy.
https://safehaven.com/news/Breaking-...ian-Banks.html

"The Italian coalition partners still command nearly 60% of all Italians’ support"
" And roughly that same number now see the EU as mistreating Italy. These numbers will only get worse if the EU goes through with levying fines against Italy for submitting a budget Brussels doesn’t like.

Moreover, now we’re seeing support for Italeave rise as well. A recent poll by Politico Magazine posted over at Zerohedge shows a slight majority of Italians under age 45 are ready to do just that, leave the European Union."
"how Deputy Prime Minister Matteo Salvini is attacking Brussels’ hypocrisy over fiscal restraints.

Salvini is doing exactly what he needs to do to shore up support and push the Italian electorate away from Brussels. It was a stroke of political genius to submit a budget which placated both halves of the coalition – tax and regulation cuts along with universal basic income – while ever so gently flaunting EU budget rules.

Salvini and his partner in insurrection Luigi Di Maio crafted a perfect piece of political poison for the EU to swallow. There’s nothing really objectionable in the budget proposal. It won’t solve any of Italy’s problems nor make them materially worse.

It was put forth to rankle EU leadership that has grown fat and lazy on having everything rigged in their favor. And they have over-reacted in the most predictable manner."
"Think about what the EU is doing over this budget. They are threatening billions in fines to an Italian government that is in debt up to its eyeballs."
" And don’t forget folks that the only reason the Italian sovereign debt issue isn’t front page news is because the European Central Bank is the only marginal buyer of Italian debt. And ECB President Mario Draghi isn’t doing this out of the goodness of his Goldman-Sachs-trained heart.

He’s doing it because if he doesn’t then the entire European banking system collapses.
So this whole thing is nothing more than Kabuki theatre. And Salvini knows it.
He understands that the euro is a death trap for Italy. He also knows he has all the leverage because of the size of the debt pile."
" It should, then, come as no shock to anyone that the EU is handling Salvini and his government with the same disdain and derision. And that’s exactly what Salvini wants. He has to maneuver Brussels into making them be the bad guys.
Because if he’s going to get Italy free from Brussels it can’t be his idea. It has to be a popular groundswell.
Thankfully for him and Italians in general, the dopes in high places in Brussels are only too happy to oblige. I think they like being odious jerks, frankly."

" Why do you think French President Emmanuel Macron and Lame Duck German Chancellor Angela Merkel want a Grand Army of the EU so badly? It’s to invade and occupy wayward member states not protect themselves from Russia.
The more the EU tries to bully and force Italy to do what it wants the more Italians, even older ones, will support Salvini’s crusade against them."
https://www.strategic-culture.org/ne...about-you.html
The investors know ALL of this. They can short Italian debt with almost NO risk. If the ECB starts OMT, that will kill the bond market. If they don't start OMT, Italian debt will blow up like Vesuvius. Since Salvini has reached the point of no return, there is only one possible outcome. The article has quite a bit about getting screwed by May on Brexit. The British will remember who screwed them. When Italian debt blows up the entire EU, Brexit will happen anyway. Hopefully, there is still someone in Britain who remembers who to draw & quarter traitors.

"during the stock market boom since the Financial Crisis, this measure of margin debt has surged from high to high, reaching a peak in May 2018 of $669 billion, up 60% from the pre-Financial Crisis peak in July 2007, and up 117% since January 2012. Since the peak in May, margin debt has dropped by $62 billion (-9.2%). Note the $40.5-billion plunge in October:"
Great graph, https://wolfstreet.com/wp-content/up...97_2018-10.png

"Surging margin debt creates stock-market liquidity out of nothing, and this new liquidity is used to buy more stocks. In this manner, rising margin debt is the great accelerator on the way up."
"even as the S&P 500 index might decline at a moderate pace – investors, including hedge funds, with margin debt and concentrated holdings in these stocks may find that their portfolio has taken enough of a hit to where they get margin calls.

Now they have to dump stocks to pay down margin debt. This begets further selling pressure, which begets more margin calls, which begets more forced selling…. In this manner, a high level of margin debt turns into the great accelerator on the way down."
"But this money from those stock sales doesn’t go into other stocks or another asset class, and it doesn’t sit at the “sidelines” waiting to jump in again at the next dip. Nope, it is used to pay down margin debt. And thus, this liquidity just evaporates without a trace.
October’s plunge in margin debt was just the beginning"
Count this as deflation.
https://wolfstreet.com/2018/11/21/st...lehman-moment/

Shorting the fallen angels.
"the Next Bond Crisis will be the result of "Over $1 Trillion In Bonds Risk Cut To Junk Once Cycle Turns."

with low-IG rated companies generously issuing debt to fund trillions in stock buybacks, or to acquire other companies, and now BBB debt accounts for nearly 60% of the entire $6.4 trillion US investment grade space, "
""expects to see a flood of troubled credits topping $1 trillion as rising interest rates overwhelm low-quality loans and bonds", the one question left is how much of this BBB paper is likely to be downgraded?

Or, as one might say, that is the 6.4 trillion dollar question (the size of the US investment grade corporate bond sector)."
"So around 10% of EUR BBB- bonds are already reasonably strong fallen angel candidates."
"Judging by the recent blow out in IG spreads, the market has a far shorter, and less optimistic, timeframe.":
"The biggest of the BBB issuers happened to be the large telecommunication companies. The sector has over USD300bn of BBB rated debt compared to a high-yield market of USD 1tn."
https://www.zerohedge.com/news/2018-...-be-downgraded

11/23 History says FANG feast is finished – Dana Lyons
11/23 Yet another plunge in crude: down 7 straight weeks and negative from year ago – Mish
11/23 US stocks fall again as tech shares resume slide – CNBC

The exit door is soon to narrow.

Pensions in Los Angeles are starting to eat up the budget.
"This would require an additional contribution of at least $500 million, if not more, chewing up close to 30% of General Fund revenues. "
So, they will squeeze the taxpayer for $1/2 billion more.
https://www.citywatchla.com/index.ph...-pension-plans
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  #3036  
Old 11-25-2018, 04:49 AM
Danny B Danny B is online now
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Capital abandoning fracking

"expects to see a flood of troubled credits topping $1 trillion as rising interest rates overwhelm low-quality loans and bonds", the one question left is how much of this BBB paper is likely to be downgraded?"
The asset most at risk right now is the oil industry. This shouldn't come as a surprise.
This Federal Policy Enabled the Fracking Industry's $280 Billion Loss ...
https://www.resilience.org/.../this-...ndustrys-280-b...

Oil Is Above $70, but Frackers Still Struggle to Make Money - WSJ
https://www.wsj.com/.../oils-at-70-b...-money-1526549...
May 17, 2018

"Crude is breaking down after the double top, which suggests in time it could test rising channel support at the $39 level at (3)."
https://www.zerohedge.com/news/2018-...ays-joe-friday

New Energy Institute Report Finds that U.S. Could Lose Nearly 15 ...
https://www.globalenergyinstitute.or...-press-release
... that U.S. Could Lose Nearly 15 Million Jobs If Hydraulic Fracturing is Banned
Just like China, we run expensive jobs programs to keep people working.
The problem is that investors are starting to run away. Nov 23
"Despite this being a low-volume holiday week, crude oil continues to plunge. West Texas Intermediate (WTI) crude oil is down $3.69 or 6.75% and Brent crude oil is down $3.60 or 5.75% today alone, which further confirms the concerns I had when when I wrote the article “Is A Crude Oil Liquidation Event Ahead?” on November 6th. In that piece, I warned that WTI crude oil’s technical breakdown below its key $65 level would likely lead to even more bearish action, which could then cause speculators or the “dumb money” to violently liquidate their large bullish position of nearly 500,000 net futures contracts. "

Chart, https://realinvestmentadvice.com/wp-...CrudeDaily.png
"WTI crude oil keeps slicing below important technical levels: $60, $55, and the uptrend line that began in early-2016, which represents a very important and concerning technical breakdown. The next major support level to watch is $50; if WTI crude oil breaks below $50 in a convincing manner, it will likely try to gun for $40, then $30, and so on."

"As I’ve been pointing out since the start of this year, crude oil futures speculators or the “dumb money” (the red line under the chart) have built a massive long position in WTI crude oil of just under 500,000 net futures contracts. There is a very real risk that these speculators will be forced to liquidate if the sell-off continues, which would greatly exacerbate the sell-off."
Global recession risk;
“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. Expect a global recession. It either has begun or will begin shortly. "
"U.S. shale energy boom/energy junk bonds: This boom/bubble is closely related to the corporate debt bubble discussed above. Extracting oil and gas from shale via fracking is extremely capital-intensive and would not be feasible in a normal interest rate environment. Thanks to the artificially low interest rate environment since the Great Recession, the shale energy industry’s net debt surged to $200 billion in 2015 – a 300% increase from 2005. Rising interest rates and the bursting of the corporate debt/junk bond bubble will cause a major bust in the shale energy industry."

"the Fed would raise rates “until something breaks.” There is a good chance that one of the first things that broke and continues to break is crude oil prices and the shale energy bubble. This has very serious implications because it is one of the most important drivers of economic activity and job creation in the U.S. since the Great Recession. "
https://realinvestmentadvice.com/why...e-energy-bust/

Goldman Sachs may be going down in flames.
https://www.armstrongeconomics.com/w...s-v-jp-morgan/

11/24 This sell-off is just one step in a methodical unwind of stock prices – Wolf Street
11/24 Yet another plunge in crude: down 7 straight weeks and negative from year ago – Mish

1/2 million contracts that investors will try to dump.
So, as oil slips, the exodus grows. As the exodus grows, the bbb bonds financing fracking are reclassified to junk. Institutional investors are forced by their charter to unload the junk. That depresses the price and, the frackers have no capital. Along the way, there will be huge margin calls.
When you get a margin call in a falling market, you sell what you can, NOT what you want. Good assets and gold sell first. Judging by the severity of the fall so far, I suspect that it has quite a ways to go.

Ford sales in China dropped 43 percent in September - CNBC.com
Ford Motor's Credit Rating Was Cut to One Notch Above Junk ...
https://www.bloomberg.com/.../2018.....ody-s-warns-of...
There is speculation of a collapse of Ford setting off a huge fall in markets.
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Old 11-26-2018, 04:27 AM
Danny B Danny B is online now
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Abundance without purchasing power,,,, no confidence = no kids

So, when will the crash go mainstream? How bad will it get? How long will it last? How many of the old folks will be cast out? How many millennials will opt for the slow suicide of drugs? How long will it last? WHAT could possibly bring us out of the crash?
Sorry but, I haven't got any good news for the short term. The entire system is based on physical growth and credit growth. The State is nothing but a corrupt tax farmer. The finance system is nothing but, thinly veiled robbery,,, through inflation. Our current system is going down in flames. There is nothing to replace it because we have never had this problem before in history. The world has always had larceny and corruption. It has never had industrialization and automation anywhere near this level.
Keep in mind that efficiency is the main focus of capitalism.

" In the 21st century, we are more quickly approaching capitalism’s paradox than expected.
Capitalism is working as intended. A constant exercise of finding the most efficient way to use scarce resources.
It is providing miracle abundance through increasingly efficient processes that raise the public standard of life for everyone. Yet this progress comes at the cost of replacing labor with automation (or globalization providing cheap labor) and in recent trends has been distributing this new found wealth unequally. If you fire all your workers so you can automate/relocate to a country with cheap labor, then no one will be able to buy what you produce. "

"This creates a paradox of abundance being created without anyone who can pay for it. This is dangerous because this begins to rip apart the mutually beneficial relationship between producer/consumer that holds our economy together."
"In terms of food, production and supply chain institutions have become so efficient that half of the food that America produces is thrown directly into the trash without ever reaching a mouth. This food abundance problem occurs simultaneously as 43+ million Americans every year live in hunger."
"The automation of moving humans, goods, and deliveries dramatically brings down the costs of travel and commerce, even advancing the possibility of a more sustainable access-economy. Yet simultaneously threatens to replace the jobs of over 5 million blue-collar Americans."
This brings down the cost of goods you buy while replacing the bi-weekly paycheck received by 6% of working Americans (8 Million people)

"Blockchain and smart contracts aim to remove intermediaries between individuals. But this also means a dip in many high-salaried jobs."
"Populism. A response to inequality.

This is already creating political polarization seen in the American Rust-Belt where this loss of production work (employment dropping from 18.9 million jobs to 12.2 million) has devastated towns and left millions in poverty and without a future they can believe in.
Capitalism is working as intended."
"Thus, to look at this paradox more objectively, it helps to look at how we got here. How did we go from our earliest tribal hunter/gather societies, where everyone is working together to fight for survival, to the modern economies of today, where decreasingly small percentage of the population focuses on these basic necessities for everyone. My favorite analysis of these transitions come from Marx’s Stages of Economic Development. Yet instead of ending with “communism”, my belief is that the incredible abundance created through capitalism creates the conditions for post-scarcity lifestyles and economies."

" “Slaves acquired by conquest built most of its bridges, roads and aqueducts and took jobs in farming, mining and construction. As this cheaper labor replaced Roman citizens, idle, unemployed, hungry people filled the capital.”
— Alice Schroder, Bloomberg"
"Private property is no longer a reserved right of the aristocracy, but rather a reward to those who are mindful towards market forces (efficiency). Price signals allow complex social interactions that allow anyone to specialize and become an expert in their domain, providing a wealth of services that would be impossible to organize by a centralized planner. Capitalism is by far the most superior global incentive to efficiently exploit scarce resources and services into abundance. "

" And just like previous socio-economic systems before us, our system has inner-contradictions which create unsustainable tensions. As business owners replace laborers with technology, wealth is concentrated amongst those who already have it. And if the laborers employed by these business owners are getting paid less (or fired), who’ll buy the products produced by these business owners? The paradox is these efficiencies make products and services more abundant than ever before, but decrease the ability to distribute this abundance and thus creates unsustainable wealth inequality."

"Every socio-economic transition is born with the infrastructure and knowledge of the system before it. A post-scarcity economy is no different. The internet, AI, and automation are shaped in the free market as much as these technologies disrupt the market."
https://medium.com/nestegg/running-t...y-3d03aa27682f

In a true post-scarcity economy, everything would be free. The only thing to buy would be SEX & attention.
Captain Capitalism: Why Post-Scarcity Economics is Scary
The powers that be will definitely try to hang on to their advantages. Money, interest, finance, control, etc. BUT, the worker has been replaced by CHEAP labor in the form of a "robot". There is no going back on that one. Automation is not going to diminish without some kind of cataclysm that knocks us back 150 years.

All this robbery by the State and banks to keep us working is losing effectiveness as more and more automation is introduced. As we get poorer and poorer, we must reduce expenses. We stop having children. As we cut down reproduction, economic activity falls further. As it falls further, we get squeezed harder and, reduce the birth rate even more..

The current system is all based on collecting interest on money loaned. What if that can no longer be done?
https://www.ahamedkameel.com/interes...ertility-rate/

As we get more squeezed, we further cut the birth rate.
https://money.cnn.com/2018/06/27/new...omy/index.html
Yes, this has a feedback loop.
https://money.cnn.com/2018/06/27/new...omy/index.html

https://www.google.com/url?sa=t&rct=...bYi1BNCySBxBVT
So, we can't possibly grow the economy with a falling population. The interest rate is tied to the fertility rate.
What happens to an economy that is stuck at 0% interest? This also involves a feedback loop. As the economy shrinks, the fertility rate shrinks. China is at 1.6 and nothing will convince them to have more kids.
Japan shows that there is no escape when confidence is lost and nobody believes in having children.
The finance system can never recover in it's present configuration. There will be years of resistance to unfolding any new configuration
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Old 11-26-2018, 04:10 PM
Danny B Danny B is online now
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C. H. Smith, optimization and adaptibility

I wrote about post-scarcity economics. It is the darling child of people who sit behind desks and plan out how to save the world. The deplorables would see things differently. Along with resource depletion, we have falling solar energy output and falling population. Add in failing ocean populations and soil depletion. Automated labor may be post-scarcity but, many other things are definitely scarce.
John Tainter writes in The Collapse of Complex Societies that energy and resource over-shoot are usually the root cause.

Charles Hugh Smith writes an interesting article about optimization and adaptability.
"There are two basic drivers of systemic erosion, drivers that have little to do with leadership or policy. Our current delusion is that changing leaders and tweaking policies are enough to stave off systemic erosion, decline and collapse.
The first is the gradual decline in the system's ability to adapt to changing circumstances. Life's core asset is the ability to evolve and adapt, and organisms, species and systems which fail to adapt fast enough and effectively enough to rapid change disappear.
Today's modern complex systems are typically optimized to specific conditions, meaning that they've evolved (or been designed) to maximize production and output given a certain set of inputs and processes.
If those conditions shift outside the expected parameters, the system's efficiency and output are heavily eroded.
The vast majority of modern systems are heavily optimized in ways outsiders typically can't appreciate.

"The path to sudden collapse is paved by increasingly narrow optimization. Adaptability and optimization are on a see-saw: as a general rule, adaptability requires flexibility, buffers and redundancies that are costly to maintain. So in a world driven by efficiencies in service of maximizing profits, these costs have been ruthlessly eliminated from complex systems. The adaptability of optimized systems is very low
The second dynamic is the gradual rigging of the system to reward insiders, at the expense of its purported purpose and output.

"Centralized hierarchies concentrate power and wealth in the hands of the few.Self-interest being what it is, these insiders naturally rig the system to protect insiders from criticism, reductions in budgets, etc.
In other words, the very structure of our systems guarantees their failure once conditions change beyond their limited ability to adjust.
To avoid decline and collapse, we need to develop new localized structures optimized for resilience and adaptability--a flexible, decentralized, sustainable, democratic, opportunity-for-all nation."
oftwominds-Charles Hugh Smith: The Two Paths to Collapse

Climate change driven by our failing magnetosphere will push a lot of things out side the current optimized path. The low birth-rate and demographic crash can NO way be reconciled with the expectations of pension programs. Climate change has brought floods to the desert and, drought to fertile areas. ALL of this supplies the backdrop to a finance system that had taken advantage of the working man just because it could. The finance world has drifted (was pushed) out of it's optimised path. The physical world has entered an extremely weak solar cycle at the same time that the pole shift is accelerating. I suspect that all of this is far too much change for us to adapt to when the power brokers are trying to maintain the status quo and their power & control.
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Old 11-27-2018, 04:53 AM
Danny B Danny B is online now
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Armstrong, Salvini, Goldman Sucks,oil glut, GM and Ford,

Well, there is plenty going on.
"Oct 31, 2018 - The stock market lost nearly $2 trillion in October. Here's what happened. U.S. markets lost nearly $2 trillion in October. The biggest technology stocks — most well-known as FANG — were among the hardest hit this month."
Armstrong, Nov 25 "The FAANGS’s all performed well"
He couldn't leave well enough alone.
"European markets opened on a very positive note following the EU acceptance of the BREXIT deal and also news that the Italian coalition would reconsider their 2019 budget proposal. "
UN-NAMED sources said that Salvini would reconsider. The truth;
https://www.zerohedge.com/news/2018-...-goldman-angle

This article also mentions that Goldman Sachs (the vampire squid) is in serious trouble. I hope that they all DIE.
(Salvini) "And in doing this he not only speaks for Italians, he is now speaking for that growing part of the European population who sees what the EU is morphing into and recoiling in horror."
"Angela Merkel and Macron are ratcheting up the rhetoric against the rising nationalism Salvini represents and are now pushing hard for their Federation of Europe before both of them leave the scene in the next few years, at best.

If they lose their battles with Salvini and Hungary’s Viktor Orban they may be run out of office with pitchforks and firebrands."
"Salvini declared with Orban to develop a “League of Leagues” to storm the Bastille of the European Parliament in May’s elections."
Ah yes,,, those pesky elections. Maybe Macron shouldn't have pushed so hard for a EU army. People tend to figure those things out.
"This is a major gambit by Salvini, and if he is successful he will become a lightning rod for Euroskeptics across Europe to break with Merkelism and the consolidation of power around Germany within the EU.

Italy’s debt problems are not solvable within the euro. Salvini understands this. "
"There’s something serious brewing within Goldman-Sachs. Martin Armstrong has been all over the potential wipeout of Goldman as part of the European sovereign debt crisis.

Because we have 3 countries now bringing charges and/or suits against Goldman Sachs, it appears that this will mark the beginning of the end for the firm. When the Euro cracks, they will also be blamed for their role in Greece and the rest of Europe. Don’t forget that Mario Draghi is also ex-Goldman Sachs. When the Euro cracks, there will be a microscope applied to every communication that was ever carried out between Draghi and Goldman Sachs."
"The rot within Goverment Goldman Sachs runs deep. The destruction of Greec was all about protecting Goldman.

And even if there is no Goldman angle directly related to Italy’s debt and banking situation, which I very much doubt, remember formerPrime Minister Mario Monte, who was installed to stop Silvio Berlusconi from taking Italy out of the euro back in 2011."
"Because don’t think for one second that Salvini doesn’t know what the real story behind Italy’s debt is and who is hurt worst by exposing it to the vicissitudes of the market. At this point he’s daring Draghi to stop supporting Italian bond yields.

Let yields rise. Let’s find out who is behind the insolvent Italian banks swimming naked as the tide rolls out, liquidity dries up and the whole European debt market seizes up.

And if it’s Goldman again then then expect the biggest fight yet for the future of the EU. If Salvini plays it right, Italeave not Brexit becomes the clarion call for ending the Davos Crowd’s push for global control."
https://www.zerohedge.com/news/2018-...-goldman-angle
I just hope that Salvini doesn't get on any airplanes.

Notes on BTC;
https://www.armstrongeconomics.com/w...ptocurrencies/
https://www.armstrongeconomics.com/w...ptocurrencies/

"Energy prices have declined 30% over the past two months is being talked as another example of the slowing global economy."
Wait a minute ! What about all that money invested in oil??
"Saudi crude oil production hit 11.1-11.3 million barrels per day (bpd) in November, an all-time high, an industry source said. "
Oil Giants Saudi Arabia, Russia Ramp-Up Production - Bloomberg

https://www.bloomberg.com/graphics/o...ction-targets/
Nov 19, 2018

So, what happens to the banks if oil stays low?
Jim Willie, "the global USTreasury dumping initiative motivated by massive USGovt debts & deficits coupled with lower oil price from energy wars "
"the high risk to Wall Street banks from the declining crude oil price whereby the big banks have credit exposure to the suicidal shale sector, the theft of $3 trillion in USTreasury Bonds owned by the Saudis "
"Prices on Friday hit their lowest since October 2017 amid intensifying fears of a supply glut. Brent sank to $58.41 a barrel, while WTI fell to $50.15 a barrel. "
"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. "
"Herein we have Trump Putin and Xi to assure that the Gold Standard is installed without global war. The Gold Standard will be rolled out in a long organized tactical efficient schedule. The process has begun, and is not stoppable."
"the USGovt deficit enormous problem characterized by current borrowing costs exceeding all tax revenue income that indicates Third World status,"
http://www.goldenjackass.com/main5.html

11/26 Asia’s liquidity squeeze is the worst since 2008 – Bloomberg
Making America great again.
11/26 GM to slash 14,700 jobs in North America; 5 plants could close – CT
https://www.cnn.com/2018/11/26/busin...ant/index.html

Ford will probably be downgraded to junk. GM is trying to jump in and avoid that. Both are hurting because of a fall in sales to China.
11/26 Climate change will wreck economic growth, major government report says – MW
So, just don't read the report and,,,, DON'T worry.
11/26 Cash outperforms stocks & bonds first time since 1992 – Upfina
NO, NO, NO,,, you must stay in stocks.
11/26 Lawmakers leak plan for $3 billion pension-fund bailout – Zero Hedge
Marvellous,,, the pension funds are about $50 trillion short in aggregate.

Amazon is breaking new ground in the stupidity contest.
https://www.zerohedge.com/news/2018-...riking-workers
"police in Madrid were "dumbfounded" when Amazon asked them to intervene during a strike at one of the company's warehouses on the outskirts of the city. The company wanted the police presence to keep productivity high, or at least comparable to that of a normal working day.
A spokesman for one of the labor unions that helped coordinate the strike told Business Insider that Amazon "wanted to send the police inside the warehouse to push people to work."
I lived in Madrid for a while. The madrileños are very sensible.
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Old 11-27-2018, 04:06 PM
Danny B Danny B is online now
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State dominance vs Mother nature & human nature

C. H. Smith, " In the present era of corporate dominance, where can serfs go to demand redress and financial freedom from the neofeudal system? Nowhere. The global corporations that own the land and the productive assets have no castle that can be stormed; they exist in an abstract financial world of stock shares, buybacks, bonds, lobbyists and political influence.
The reality is there is no avenue left for advocacy, grievances or redress in a system dominated by global corporations and self-serving political insiders."
"The problem for well-meaning politicos is the system cannot be reformed or repaired: the cartel-state socio-economic system is now the wrong unit size and the wrong structure."
"Mere debt-serfs and tax donkeys cannot compete with campaign contributions and influence purchased with tens of millions of dollars in cartel profits."
"Corporate power and self-serving insiders destroy democracy. That is the heart of neofeudalism, which is the only possible output of the status quo."
oftwominds-Charles Hugh Smith: The Politics of Debt-Serfs and Tax Donkeys: Our Only Choice Is the Least Bad Option
The tax donkeys have gone on strike and, are not producing new children to be tax farmed.

"Today, the value of the dollar has been eroded by over 97% of its 1913 purchasing power and is due for replacement. If the owners of the Federal Reserve are to continue to regularly scalp the hoi polloi, the best approach would be to engineer a second major buildup of debt, trigger a crash, then introduce a new currency to “save the economy.”

This, they will most assuredly do. The debt has already been created. A crash can be triggered in many ways, including the tried-and-true method of raising interest rates.

And, after the predictable crash, the public will most assuredly cry out for those in power to “do something.” The warning signs have been in view for some time that that “something” will be digital currency – a currency that will make it necessary for virtually all economic transactions to pass through the hands of banks. "
https://internationalman.com/article...ls-are-coming/

"The IMF has recommended that all Central banks should issue their own cryptocurrencies. Indeed, they are looking at using Block Chain to keep track of taxes and to enforce negative interest rates with cryptocurrencies which would allow them to impose negative interest rates whenever necessary. With adopting cryptocurrencies that governments would control, we will come one step closer to losing all our freedom. Central banks could enforce negative interest rates with cryptocurrencies and thus people would find their accounts just garnished. You could not hoard cash and withdraw it from banks."
https://www.armstrongeconomics.com/w...ptocurrencies/

" Because interest rates have been negative in Europe, the capital has been fleeing around the world."
"Lowering interest rates to negative by the ECB has created one huge mess in international capital flows. The capital went everywhere BUT Europe and the ECB ended up buying the bulk of government debt because they singlehandedly destroyed the European bond market. "
https://www.armstrongeconomics.com/w...capital-flows/
Several years ago, the cover of The Economist magazine predicted a complete crash with the phoenix of the SDR rising up out of the ashes. It is easy to claim that the crash has been engineered by the Central Banks. It is logical to believe that the State would like to have total control of the financial system.
China shows us the social credit system where it monitors and controls every facet of Chinese lives. BUT, Japan shows us that people refuse to have children if they have no confidence in the future.
The demographic crash will only get worse because of this. So, while the State would like to lock down control of every person, it must support / contend with millions of retirees who have no support.
All this at the same time that global cooling and violent weather will take a huge toll on the economy.
https://www.armstrongeconomics.com/w...ture-low-2046/
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Old 11-28-2018, 04:14 AM
Danny B Danny B is online now
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Creating $trillions to keep employment going

"There’s $3 trillion in outstanding dollar-denominated debt issued by Chinese companies" "Defaults on dollar-denominated Chinese bonds stood at $3.4 billion in the first 10 months of this year,"
"This is because more bonds are coming due. About $33.3 billion in dollar-denominated Chinese bonds are expected to mature each quarter through the end of 2020,"
"Data from Dealogic shows that 385 billion yuan ($55 billion) of local-currency debt and $15 billion of dollar debt will come due next year for Chinese property developers, "
https://www.theepochtimes.com/chines...t_2723023.html
China is in bad need of dollars and, Powell is cutting the supply.

"Earlier this year, I wrote a series of articles (synopsis and links here) predicting a debt “train wreck” and eventual liquidation. I dubbed it “The Great Reset.” I estimated we have another year or two before the crisis becomes evident.
Now I’m having second thoughts. Recent events tell me the reckoning could be closer than I thought just a few months ago."
"Central banks enable debt because they think it will generate economic growth. Sometimes it does. The problem is they create debt with little regard for how it will be used."
A common misconception. They are trying to preserve employment.
"China’s debt productivity dropped 42.9% between 2007 and 2017. That was the worst among major economies, "
Underwriting zombi companies to build 50 million extra housing units to keep people working
https://www.theepochtimes.com/chines...t_2723023.html

" Notably, the combined debt of the US, Eurozone, Japan, and China has increased more than ten times as much as their combined GDP [growth] over the past year.
Yes, you read that right. In the last year, the world’s largest economies are generating debt 10X faster than economic growth. "
With 96 million Americans of working age NOT in the labor force, what do you expect. The debt is being created to finance consumption, NOT investment.
"I am trying to imagine a scenario where this ends in something less than chaos and crisis. The best I can conceive is a decade-long (and possibly more) stagnation while the debt gets liquidated.

But realistically, that won’t happen because debtors won’t let it. And they outnumber lenders. For this reason, something like “the Great Reset” will happen first."
https://www.zerohedge.com/news/2018-...al-possibility

"After both investment grade and high yield bonds got crushed in the past month with spreads blowing out to multi-year wides and generated negative YTD returns as Morgan Stanley now sees the bear market gripping credit accelerating into 2019, many traders were wondering how long before the final bastion of the credit bubble - leveraged loans - would also pop.

It appears the answer may be "now" because as Bloomberg reports,"
Check out the graph, https://www.zerohedge.com/sites/defa...6P%20loans.jpg
"As for the leveraged loans underlying these CLOs, Morgan Stanley has been warning that covenant quality is weaker than 2007"
Covenants are protection clauses in financial instruments. They cost money and, are slowly being weakened. (covenant lite)
"Morgan Stanley also expects new issue supply to fall to $90 billion for 2019 from $126 billion this year"
To the asset markets, this is a serious deflation of liquidity.
"As a result, the bank recommends defensive positioning "in AAAs instead of junior AAAs or AAs because of the better liquidity and lower spread duration"
This pulls liquidity OUT of junk bonds that so many companies depend on. That is the reason that Ford is expected to crash.
https://www.zerohedge.com/news/2018-...als-get-pulled

"
Exclusive: The Pentagon’s Massive Accounting Fraud Exposed
Posted on November 27, 2018 by Dave LIndorff
How US military spending keeps rising even as the Pentagon flunks its audits.

By Dave Lindorff

On November 15, Ernst & Young and other private firms that were hired to audit the Pentagon announced that they could not complete the job. Congress had ordered an independent audit of the Department of Defense, the government’s largest single cost center—the Pentagon receives two out of every three federal tax dollars collected—after the Pentagon failed for decades to audit itself. The firms concluded, however, that the DoD’s financial records were riddled with so many bookkeeping deficiencies, irregularities, and errors that a reliable audit was simply impossible.

Deputy secretary of Defense Patrick Shanahan tried to put the best face on things, telling reporters, “We failed the audit, but we never expected to pass it.” Shanahan suggested that the DoD should get credit for attempting an audit, saying, “It was an audit on a $2.7 trillion dollar organization, so the fact that we did the audit is substantial.” The truth, though, is that the DoD was dragged kicking and screaming to this audit by bipartisan frustration in Congress, and the result, had this been a major corporation, likely would have been a crashed stock.

As Republican Senator Charles Grassley of Iowa, a frequent critic of DoD’s financial practices, said on the Senate floor in September 2017, the Pentagon’s long-standing failure to conduct a proper audit reflects “twenty-six years of hard-core foot-dragging” on the part of the DoD, where “internal resistance to auditing the books runs deep.” In 1990, Congress passed the Chief Financial Officers Act, which required all departments and agencies of the federal government to develop auditable accounting systems and submit to annual audits. Since then, every department and agency has come into compliance—except the Pentagon."
https://thiscantbehappening.net/excl...fraud-exposed/
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Old 11-28-2018, 05:08 AM
Danny B Danny B is online now
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Michael Hudson and the jubilee

I need a separate post to address an article posted by Gambeir.
Traditionally, a State just defaults when it can't afford it's debt load. Greece has spent 50% of it's modern history in default. Italy is soon to join the list. They are going to push the EU and ECB into a corner that they can't get out of. Nature will take it's course and, the banks will collapse. This will be a completely uncontrolled demolition with very little structure.

Michael Hudson has written very well about an alternative. I have to do a lot of excerpts to do comment.

"To say that Michael Hudson’s new book And Forgive Them Their Debts: Lending, Foreclosure, and Redemption from Bronze Age Finance to the Jubilee Year (ISLET 2018)"
"Over the past three decades, gleaned (under the auspices of Harvard’s Peabody Museum) and then synthesized the scholarship of American and British and French and German and Soviet assyriologists"
"Hudson demonstrates that we, twenty-first century globalists, have been morally blinded by a dark legacy of some twenty-eight centuries of decontextualized history. This has left us, for all practical purposes, utterly ignorant of the corrective civilizational model that is needed to save ourselves from tottering into bleak neo-feudal barbarism."

While reading anything that I write, keep in mind that; if you search on "Global Population Reduction" it returns 261 million pages. So, while there may be plenty of people trying to make the economy "work", there are a LOT of people trying to cause death, famine and disease.

"This corrective model actually existed and flourished in the economic functioning of Mesopotamian societies during the third and second millennia B.C. It can be termed Clean Slate amnesty"
"It is the necessary and periodic erasure of the debts of small farmers — necessary because such farmers are, in any society in which interest on loans is calculated, inevitably subject to being impoverished, then stripped of their property, and finally reduced to servitude (including the sexual servitude of daughters and wives) by their creditors, creditors. The latter inevitably seek to effect the terminal polarization of society into an oligarchy of predatory creditors cannibalizing a sinking underclass mired in irreversible debt peonage. Hudson writes: “That is what creditors really wanted: Not merely the interest as such, but the collateral — whatever economic assets debtors possessed, from their labor to their property, ending up with their lives”

“Mesopotamian societies were not interested in equality,” he told me, “but they were civilized. And they possessed the financial sophistication to understand that, since interest on loans increases exponentially, while economic growth at best follows an S-curve. This means that debtors will, if not protected by a central authority, end up becoming permanent bondservants to their creditors. So Mesopotamian kings regularly rescued debtors who were getting crushed by their debts. They knew that they needed to do this. Again and again, century after century, they proclaimed Clean Slate Amnesties.”

Something that is left out of this article. There were very often scheduled debt jubilees. This allowed creditors to taper down their loans as the date approached.

"Hudson also writes: “By liberating distressed individuals who had fallen into debt bondage, and returning to cultivators the lands they had forfeited for debt or sold under economic duress, these royal acts maintained a free peasantry willing to fight for its land and work on public building projects and canals…. By clearing away the buildup of personal debts, rulers saved society from the social chaos that would have resulted from personal insolvency, debt bondage, and military defection”

During the '30s in America, congress acted strongly to keep farmers from being tossed off their land. It was realized that dispossessing farmers would be disastrous. Times have changed and only 1% of Amricans work on the farm.

" In ancient Mesopotamian societies it was understood that freedom was preserved by protecting debtors. "
"In what we call Western Civilization, that is, in the plethora of societies that have followed the flowering of the Greek poleis beginning in the eighth century B.C., just the opposite"
"For us freedom has been understood to sanction the ability of creditors to demand payment from debtors without restraint or oversight. This is the freedom to cannibalize society. This is the freedom to enslave. "

“A constant dynamic of history has been the drive by financial elites to centralize control in their own hands and manage the economy in predatory, extractive ways. Their ostensible freedom is at the expense of the governing authority and the economy at large. As such, it is the opposite of liberty as conceived in Sumerian times”
"And our Orwellian, our neoliberal notion of unrestricted freedom for the creditor dooms us at the very outset of any quest we undertake for a just economic order."
"in the Bronze Age Mesopotamian societies that understood how life, liberty and land would be cyclically restored to debtors again and again. But, in the eighth century B.C., along with the alphabet coming from the Near East to the Greeks, so came the concept of calculating interest on loans. This concept of exponentially-increasing interest was adopted by the Greeks — and subsequently by the Romans — without the balancing concept of Clean Slate amnesty."

"So it was inevitable that, over the centuries of Greek and Roman history, increasing numbers of small farmers became irredeemably indebted and lost their land. It likewise was inevitable that their creditors amassed huge land holdings and established themselves in parasitic oligarchies. This innate tendency to social polarization arising from debt unforgiveness is the original and incurable curse on our post-eighth-century-B.C. Western Civilization,"

It is the corporation that controls so much of the land. They need very few workers to keep the farm going.

"debt was a deliberate device on the part of the creditor to obtain more dependent labor rather than a device for enrichment through interest.” Likewise he quotes Tim Cornell: “The purpose of the ‘loan,’ which was secured on the person of the debtor, was precisely to create a state of bondage”

You can see where this is going when you relate this to rising automation.

"Second Punic War (218-201 B.C.). After that war the small farmers of Italy never recovered their land, which was systematically swallowed up by the prædia (note the etymological connection with predatory), the latifundia, the great oligarchic estates: latifundiaperdidere Italiam (“the great estates destroyed Italy”), as Pliny the Elder observed."

A valid point but, still mostly negated by automation.

"means to securing more equitable distribution of property and a restraint on the oppression of debtors by creditors.’ The latter attempt failed,” Hudson observes, “and European and Western civilization is still living with the aftermath"
"The rules of the game had not been changed, but everyone had been dealt a new hand of cards’” (p. 133). Contrast the Greeks and Romans: “Classical Antiquity,” Hudson writes, “replaced the cyclical idea of time and social renewal with that of linear time. Economic polarization became irreversible, not merely temporary” (p. xxv). In other words: “The idea of linear progress, in the form of irreversible debt and property transfers, has replaced the Bronze Age tradition of cyclical renewal” (p. 7)."

"I often availed myself of David Graeber’s book Debt: The First 5,000 Years when I struggled to follow some of Hudson’s arguments."
"The basic moral financial principal should be that creditors should bear the hazard for making bad loans that the debtor couldn’t pay "
Everything You Thought You Knew About Western Civilization Is Wrong, by John Siman - The Unz Review

The article is good and, I'm sure that the book is great. but, times on the farm have changed.
Six companies are about to merge into the biggest farm-business ...
https://www.fooddemocracynow.org/blog/2016/sep/27
Sep 27, 2016 - Big farms are about to get a lot bigger. With six agricultural giants on the verge of merging into three separate companies,

Previously, a debt jubilee was created to ensure agricultural production and free debt-bondage slaves. With the advent of the Industrial Revolution, most of the world is limited by consumptive ability, not by productive ability. A possible debt jubilee would not rescue the Ag industry. Though it does get a LOT of subsidies. Who knows where the future of that will go?
Our system is too complex and integrated to survive a debt jubilee. That is why "they" are taking about universal basic income.
Hudson draws on lessons learned when we had a survival economy.
One area where he is completely correct; the very wealthy organize the system strongly to their advantage. They don't need to create wealth. They just control the transaction media. To a great degree, the wealthy have always kept us poor so that we would keep working. They can't own everything if we don't first produce it.
Confidence, consumption and the birth rate continue to fall. Productivity rises. The credit system can't possibly survive all of this.
Everything You Thought You Knew About Western Civilization Is Wrong, by John Siman - The Unz Review
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Old 11-28-2018, 03:47 PM
Danny B Danny B is online now
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Military, energy, FUSOR, warming, cooling and carbon taxes

This thread is running about 6--1 of visitors to members. Some things that members might know, I explain anyway to give a more complete picture to visitors.
Pox Americana has spent many $ billions on weapons research and, craftily called it hot fusion research. Other countries are actually trying to create hot fusion.
ITER - the way to new energy
https://www.iter.org/
ITER is the world's largest fusion experiment. Thirty-five nations are collaborating to build and operate the ITER Tokamak, the most complex machine ever ...

America reached peak cheap oil in the lower 48 many years ago. One of the projections of the upcoming default cascade is; we will no longer be able to run a trade deficit. We import about 19.1 mbd of oil. If we could no longer run a trade deficit, our price of oil would go way up. Because of the size of the U.S. this would severely reduce the economy.

U.S. Military Is the World's Number One Consumer of Fuel :: QS ...
https://www.qsenergy.com/.../u-s-mil...onsumer-of-fue...

"The Nimitz has eight steam turbine generators each of which can produce 8,000 kilowatts (8 MW) of electrical power for a total 64 MW. So I calculate that the Ford can generate 250% of this or 160 MW."
"To support this the Zumwalt has the capacity to generate 78 megawatts (MW) of power."

OK, so the military uses a LOT of energy. Moving on.
The Farnsworth FUSOR is old technology that nobody has scaled up. We all know that it works.
"Lockheed Martin has quietly obtained a patent associated with its design for a potentially revolutionary compact fusion reactor, or CFR. If this project has been progressing on schedule, the company could debut a prototype system that size of shipping container, but capable of powering a Nimitz-class aircraft carrier or 80,000 homes, sometime in the next year or so."
Lockheed Martin Now Has a Patent For Its Potentially World Changing Fusion Reactor - The Drive
Yep, first things first. We need to power our aircraft carriers. They are all sitting ducks for hypersonic missiles but, no cost is too great when it comes to the military.
Repost, https://thiscantbehappening.net/excl...fraud-exposed/

I keep mentioning that Mother Nature bats last. This climate change is really starting to be noticed.
11/28 Climate desperation reaches new heights as sea turtles freeze to death – CCC
I thought that they were going to boil.
Seriously, climate change is starting to cost a LOT.
https://www.dollarcollapse.com/cost-insurance-jump/
The feces-for-brains at Yale and Harvard want to escalate the fight against global warming by,,, cooling the earth.
https://www.armstrongeconomics.com/w...hey-just-nuts/
Since chemtrailing has been going on for years ,,, and the upper atmosphere IS cooling, they can claim success in fighting global warming.

Mike King, "Unknown to 30-something Generation X-ers and late teen / 20-something millennials, forty long years have passed since the thankfully-deceased Stanford University Professor and international Global Warming ™ guru, Stephen Schneider, (cough cough) converted (in an instant!) from the ice-age-ism which was the "scientific consensus" ™ of its day, to "Greenhouse Effect" alarmism -- which soon became the new "scientific consensus" ™ of the day.

An understanding of the sudden switch, along with the historical scope of the hoax, would cause the house of marked cards to collapse in an instant --- which is why Sulzberger's Slimes and the rest of the Piranha Press / Fake News have erased both the memory of the 1970's ice-age scare, and the 40-year record of failed doom and gloom "warming" predictions."

"The Trump White House, which has defined itself by a willingness to dismiss scientific findings (fake science) ... on Friday issued a scientific report that directly contradicts its own climate-change policies."
"The 1,656-page (fallacy of verbosity & complexity) National Climate Assessment, which is required by Congress, is the most comprehensive scientific study to date detailing the effects of global warming on the United States economy, public health, coastlines and infrastructure. It describes in precise detail (the "precise" predictions have been wrong for 40 years!) how the warming planet (existential fallacy -- the planet isn't even warming at this time) will wreak hundreds of billions of dollars of damage in coming decades." (for four decades now, doomsday has always been projected for "the coming decades")

"President Trump has often questioned or mocked the basic science of human-caused climate change, and is now working aggressively to encourage the burning of coal and the increase of greenhouse gas pollution." (plant food is not "pollution")
"Under a 1990 law, the federal government is required to issue the climate assessment every four years." (so of course, the kept "scientists" are going to publish what they were hired to publish!)

“I’m watching these arguments between politicians and scientists, but I’m on the ground with public works officials who say that argument’s irrelevant,” Mr. Chinowsky said. “People are going to get hurt and die if we don’t change the policy.” (Oh the bloody drama!)"
"Say what you will about Donald Trump -- but right now, he and his generals are the only thing standing between us and world government through carbon taxes based on a HOAX."
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Old 11-29-2018, 03:56 PM
Danny B Danny B is online now
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military spending vs people, LEI

Just in case that you have forgotten, global warming is going to kill all of us,,,, SOON
It's getting hot in here: Three reports show we are heading towards the end of the world - Strange Sounds

China has figured out that domestic revolution is a very real possibility. They have finally figured out that revolution is what Trump is aiming for.
https://www.rt.com/business/445028-t...at-depression/
They thought that it was a good idea to take 300 million+ self-sufficient peasants off the farm and, give them jobs. These peasants have now run out of things to do.

The budget battle pits the military-industrial complex against the average American. ALL social programs MUST be cut to keep the military going.
" Without a U.S. presence, the logic goes, more sinister forces will take over. What happens when American troops must be evacuated from all over the world because we can’t afford to keep them there anymore? "
"Just like its warfare state, the government’s welfare state has plenty of internal calamities. But while it might be the preference of some megalomaniacal globalists to let the proles starve while preserving overseas holdings, it’s not going to happen. What would transpire if Social Security checks stopped showing up in mailboxes and Medicare benefits got cut off? When presented with that choice, will the average American choose his social safety net or continued funding for far-flung bases in Stuttgart, Okinawa, and Djibouti? Even the most militaristic congressperson will know which way to vote, lest they find a mob waiting outside their D.C. castles"
https://www.zerohedge.com/news/2018-...merican-empire

The rest of the world is definitely getting tired of control by the FED. They brought it on themselves by originating many trillions of loans denominated in U.S. dollars. They don't plan to make that mistake again.
https://sputniknews.com/russia/20181...t-forum-putin/
The State wants it's taxes and, they have new laws to keep you from hiding money. I hope that they use them against drug dealers and crooked bankers.
https://www.armstrongeconomics.com/w...obal-taxation/

The number of owner-occupied homes hasn't gone up in years. The hot money buys up all the houses. Powell cut back on the hot money and,,,
https://www.dollarcollapse.com/home-...ge-fed-blinks/
BTW, the FED did NOT blink. They said that they would maybe blink in the future.
The hot money and speculators screw up everything.
https://www.armstrongeconomics.com/m...d-correlation/
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Old 11-30-2018, 04:25 AM
Danny B Danny B is online now
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U.S. cash flow,,,exponential growth,,,Corporate debt

Where the money comes from and, where it goes.
"11/29 The US is spending $1.5 billion on debt interest every day – Zero Hedge"
"US military spending is $892 billion once you add components hidden in other budgets. "
"in 2018, about 63 million Americans will receive approximately one trillion dollars in Social Security benefits."
national health expenditure
https://www.cms.gov › ... › National Health Expenditure Data
Apr 17, 2018 - Historical NHE, 2016: NHE grew 4.3% to $3.3 trillion in 2016, or $10,348 per person, and accounted for 17.9% of Gross Domestic Product (GDP). Medicare spending grew 3.6% to $672.1 billion in 2016, or 20 percent of total NHE. Medicaid spending grew 3.9% to $565.5 billion in 2016, or 17 percent of total NHE.

Forget Debt As A Percent Of GDP, It's Really Much Worse - Forbes
https://www.forbes.com/sites/.../for...lly-much-worse... Jul 12, 2014
"A country with high taxes can afford more debt than a low tax country. Debt to GDP ignores this difference. Comparing debt to tax revenue reveals a much truer picture of the burden of each country’s debt on its government’s finances.

When I compute those figures, Japan is still #1, with a debt as a percentage of tax revenue of about 900 percent and Greece is still in second place at about 475 percent. The big change is the U.S. jumps up to third place, with a debt to income measure of 408 percent. "
"This does not factor the several trillion dollars owed to Social Security, yet it includes the Social Security taxes collected. If Social Security taxes are not counted, the U.S.’s debt to income ratio rises to 688 percent (still in third place). "

At $21 Trillion, The National Debt Is Growing 36% Faster Than The US economy.
https://www.zerohedge.com/.../21-tri...ster-us-econom...
Mar 19, 2018
Armstrong has predicted a collapse of U.S. sovereign debt going in to 2020.
The US debt-to-GDP ratio has been growing exponentially. What will ...
https://www.quora.com/The-US-debt-to...exponentially-...
Jul 21, 2016
Assuming that there is a collapse of the credit system , there will be a lot of people fighting over the table scraps. Try to be off to the side in all of this.

So, the banks passed as much bad debt as possible onto the State. BUT, there is plenty of bad debt to go around for everybody.
"NEW YORK (Reuters) - Debt among non-financial corporations across the globe rose to a record high of $75 trillion in the second quarter, driven mostly by China and the United States,"
"Canada, India and Mexico rank first in nonfinancial corporate debt relative to cash holdings, the report said, while a “significant proportion” of Brazilian, Canadian, American and Chinese corporations still struggle to pay interests on their debt. "
Brazil, India and China BRICs minus Russia.

"IIF wrote in the report that one-third of small firms in France, the United States and China have an interest coverage ratio under levels generally accepted as optimal, meaning a sharp hike in interest rates could hurt their ability to stay current in their debt payments. "
So, when Trump takes down China, France is collateral damage.
"The total liabilities of nonfinancial corporations across the globe amount to about 92 percent of the world’s gross domestic product"
https://www.reuters.com/article/us-g...-idUSKCN1NX2WH

Even the FED is getting worried.
https://sputniknews.com/business/201...rabilities-us/
So, Brazil, India and China are in deep trouble. Russia is doing very well in both stocks and public debt. Money is moving there.
https://www.rt.com/business/445119-u...-russia-bonds/
11/29 Bloomberg industrial metals gauge falls to lowest in 17 months – Bloomberg
Making America great by strangling China.
11/29 Stock market’s selloff is only half-done, and final leg will come in 2019 – MW

New Research Shows the Fed Accounts for 93% of Market Moves ...
Federal Reserve Money Printing Is The Real Reason Why The Stock market rises

And the,we have Armstrong, "All core indices are between 1.5% and 2% firmer today, but as we have witnessed recently – this could change in a heartbeat. Powell’s speech Wednesday should be closely watched as many still believe it's the FED that is undermining the stock market."
Armstrong seems to believe that foreign capital flows have inflated the stock markets and, NOT FED printing.
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Last edited by Danny B; 11-30-2018 at 04:26 AM. Reason: spelleng
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  #3046  
Old 11-30-2018, 04:09 PM
Danny B Danny B is online now
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The State goes broke as we go broke

After the Latin American debt crisis, several big banks were insolvent. The FED told them to just pretend that everything was OK and, they could grow their way back to solvency.

"QUESTION: What mechanism prevents banks from creating fraudulent electronic deposits of currency?
As an IT systems admin, I have the ability to add / subtract / adjust ERP systems inventory / costing outside the normal users ability. I could add widgets to the system at will, but fraud can’t be sustained very long, as the physical widgets can’t be sold, they only exist in the system. Electronic currency, however, is only a ledger entry, and since new currency units are created as loans – What prevents any bank from just changing the numbers in their systems to create more currency units at will?"

"ANSWER: The creation of money electronically in the banking system is the degree of leverage. Reserve Requirement Ratio at the Federal Reserve was increased on January 18th, 2018. It required that all banks with more than $122.3 million on deposit maintain a reserve of 10% of deposits. Banks with $16 million to $122.3 million must reserve 3% of all deposits. They create money that is purely electronic and we do not see it. "
"They cannot create entries out of thin air. They are audited and the reserve ratio is strictly enforced in the USA."
https://www.armstrongeconomics.com/i...nk-reserves-1/
This is an excellent article that goes into great detail at explaining reserve requirements. But the fact still remains; banks can fudge ALL the numbers when they are audited. They routinely borrow from the overnight window at the FED. Bribing an auditor is an old tradition.

Here is a long, detailed article on how the government causes inflation. Left out is the explanation of WHY the government causes inflation. The State is a non-producer that has the guns, printing press, lawbooks and, taxing authority. A concentration of power attracts a concentration of corruption. What else do you expect?
https://www.kelseywilliamsgold.com/h...ion/#more-2868

"Yesterday, Fed Chair Jerome Powell did a complete 180 on the Fed’s hawkishness."
Nope, he said that we were NEAR the neutral rate.
"Which is why his sudden decision to change course is not a good thing… in fact it’s very VERY bad.
Why?
Because this signals that something truly horrific is brewing in the financial system. "
https://gainspainscapital.com/2018/11/29/10386/
The truly horrific thing that is brewing is; sovereign debt,,, nothing new.

"Pump too much credit into the economy (created by central banking and fractional reserve banking) and mal-investments expand. A recession cleanses the excess. But in 2008 the Fed “papered over” the problems and didn’t allow liquidation of bad debts, insolvent big banks and weak businesses. Instead the Fed created dollars from nothing and gave loans to big banks, insiders and the politically connected. Loan examples:

Citigroup $2.513 trillion (Yes, $Trillions!)
Bank of America $1.344 trillion
Goldman Sachs $814 billion
"RETURN OF ZIRP AND QE: The central bank could allow banks to fail, tighten credit, increase interest rates and nurse the economy back to health over years, maybe decades. Will this happen? OF COURSE NOT! The Fed protects the big banks and treats the middle class as “milk cows” who feed banks and the political and financial elite. ZIRP and QE direct dollars to the big banks and create higher prices for everyone."

So, the economy is going to return to health. The birth rate is falling and automation is taking all the jobs.
https://deviantinvestor.com/10474/th...oaching-storm/

Armstrong, "They never seem to simply correlate this with economics. Now we have more than 47,000 Americans committed suicide in 2017, according to the Centers for Disease Control and Prevention."
This is only the number of people who commit fast suicide. Millions more take drugs that they know will eventually kill them.
Do an image search for crocodile + drug.

11/30 ECB’s Draghi: QE will end in Dec. despite data –MarketWatch
Draghi and Salvini. Imagine to locomotives on the same track at high speed. This will blow out Italian debt and crash their bond market.

11/30 Norridge hikes property taxes by more than 35% to pay for pensions – IL Policy
AND
Progressives Zero In On Exit Tax On Illinois Wealth | Wirepoints
https://www.wirepoints.com/progressi...linois-wealth/
Nov 9, 2018 - They've figured out a way to tax wealthy folks trying to flee Illinois

11/30 Global economic perceptions are shifting, part 1 – Technical Traders
No kidding. $15 trillion lost in October alone.
11/30 Rising rates are killing the housing market – Real Investment Advice
11/30 30,000 empty homes and nowhere to live: inside Dublin’s housing crisis – Guardian

The CBs pumped hot money into the banks. They converted this hot money into houses. Now, the working class can't compete with the speculative class.
11/30 Senators seeking to shoot down Yemen bill were paid by Saudi lobbyists – Zero Hedge
A ***** can't be particular. Moral collapse brings total collapse.

11/30 The insect apocalypse is here – New York Times
"Walmart has filed a patent for autonomous robotic bees, technically called pollination drones, that could potentially pollinate crops just like real bees. The drones would carry pollen from one plant to another, using sensors and cameras to detect the locations of the crops.Mar 14, 2018"

"As we reported last week, some 90% of all assets Deutsche Bank tracks are negative on the year.

In reminder, that is the highest percentage since 1901 — if you can believe it."
"Their calculations reveal that QT to date has lifted 10-year Treasury yields by some 17 basis points (a typical fed funds rate hike is 25 basis points).

Historically, they say, a 17-basis-point increase to the 10-year equals a 68-basis-point hike to the fed funds rate.
A 17-basis-point increase to the 10-year Treasury yield, in other words, equals nearly three Fed rate hikes.
In other words still:
The Fed has effectively worked (nearly) three additional rate hikes than officially listed."
https://dailyreckoning.com/we-are-li...m-uncertainty/
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Old 12-01-2018, 04:57 AM
Danny B Danny B is online now
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Italy, Hopium & LIBOR

The next meeting of the FED is December 18-19.
The next meeting of the ECB is;
Governing Council of the ECB: monetary policy meeting in Frankfurt
13/12/2018
Press conference following the Governing Council meeting of the ECB in Frankfurt
Draghi, "The central bank has been treading a cautious path in recent months, seeking to start winding down its EUR2.6 trillion bond-buying program, known as quantitative easing or QE, without spooking international investors. "
"Speaking at the European Parliament in Brussels, Mr. Draghi confirmed that the ECB would likely phase out QE after next month. The decision is likely to be formalized at the ECB's next policy meeting on Dec. 13."
"Our policy had disastrous consequences? Yes, it created 9.5 million jobs in a few years," Mr. Draghi said."

Armstrong 2016 "Our models have been targeting 2018 for the last 30 years as the first potential year for a monetary crisis and reform."
"The most likely course of action has not changed. When confidence in government collapses among the GENERAL MASS PUBLIC, everything will breakout."
"The days of searching for some guru who is never wrong from an opinion perspective are gone and only fools seek such ideals. We are heading into the eye of a financial storm that will topple governments. The future is being constructed before our eyes if we wake up and just look. "
https://www.armstrongeconomics.com/a...ting-a-future/

Italy wants to take the tried-and-true course of defaulting. Since they don't print their own currency, they have to default by way of the bond market. Investors will be reading the tea leaves leading up to the December meeting of the ECB. They are already starting to dump Italian debt.
AT THE SAME TIME, they must try to guess what the FED open market committee will do about U.S. interest rates. Powell said that we are close to the neutral rate, NOT, at the neutral rate. This is all hogwash anyway. A so-called neutral interest rate depends on dozens of outside factors.
I've already posted links showing that the interest rate is greatly affected by the birth rate. Armstrong already mentioned that December might bring some kind of big reversal.
So, how are the markets reacting to all this news?

London Inter Bank Overnight lending Rate. LIBOR
"While stocks, and with a notable delay bonds, were happy to run with Powell's dovish reversal on Wednesday, one key market - arguably the most important one for financial conditions when it comes to the broader economy - has refused to respond.

Earlier today, instead of reacting to what has been interpreted as the Fed Chair's "dovish repricing" of future rate hike expectations, 3 month USD Libor jumped over 3 basis points to 2.73813%, the highest level in more than ten years."
The banks have a good idea of what is going on with their competitors.
"The reason why rising Libor remains a major risk to financial conditions, is because as the table below shows, its footprint can be found everywhere, from OTC interest rate swaps, to leveraged loans - considered by many as the locus of the next credit crisis - to retail mortgages, to complex securitizations. According to the TBAC, just about $200 trillion in instruments are exposed to Libor's interest rate footprint."

"Most affected by this ongoing rise may be the bond market, which has also been hit with the double whammy of tumbling oil, which earlier today dipped below $50/barrel, a price widely seen as a "red-line" for junk bond investors, below which some may sell their exposure indiscriminately. And since energy is one of the largest components of the junk bond index, it is only a matter of time before contagion spread from oil, through highly leveraged energy producers to the rest of the market."

Putin calls for $60 oil. This pretty much puts a ceiling on price. Remember that oil hit $147 in 2008. That certainly put a whammy on the economy.

"In any case, the ongoing rise in Libor which absent a reversal soon will result in even tighter financial conditions and higher interest expense on trillions in floating rate debt, Bloomberg's Alex Harris notes that those traders who took the "dovish" Powell at his word, "
Powell said MAYBE.
https://www.zerohedge.com/news/2018-...rillion-credit

So, the bankers refused to rev up the money machines. They aren't buying "hopium". Italian debt is 130% of GDP. The meeting is next month.

Central bank owns 18% of Italian government debt - Geotrendlines

https://geotrendlines.com/central-ba...vernment-debt/
Mar 11, 2018 - Back in 1990, about 70% of the Italian government debt was financed by private investors, today it is less than 10%.
France holds a LOT of Italian debt.
https://www.ft.com/__origami/service...rce=Alphaville
The planned collapse of Italian debt is going to take out quite a few banks around Europe.
Armstrong strongly recommended that Europeans get an American bank account.
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Old 12-02-2018, 06:19 PM
Danny B Danny B is online now
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No money = no kids

Finance and the State are non-producers. They both must squeeze the producers to survive. The State does some redistribution so, it isn't quite as much of a direct drain as the bankers. The bankers do this just to raise their standard of living.
"The present global monetary regime is a collusive arrangement between politics and high finance. By monetizing their budget deficits, this system enables national governments to spend far more than their income from taxes and other sources, while granting banks the privilege of creating money in the form of debt, and then charging interest for its use. "

The federal government, (not the constitution) gave the Federal Reserve the right to create the U.S. money supply. The FED creates money out of thin air and uses this to buy treasury bonds. The FED is owned by private banks and, it pumps money into private banks. The private banks also buy Treasury debt. The U.S. FED GOV spends;
"Viewed from a GDP perspective, total government spending was steady at about 33 percent GDP in the mid 2000s and then jumped, in the Great Recession, to 41 percent GDP."
The State is the biggest borrower of all and, really needs those low interest rates, Interest rates are going up and, the State is paying $1.5 billion a day. Federal debt is rising exponentially.
The State sucks the money out of the working economy in the form of taxes. The bankers suck the money away from the working man in the form of the inflation tax. Effective wages haven't gone up in 40 years for the working man,,,, unless he works for the State. With 96 million Americans of working age NOT in the labor force, the State is running out of tax-donkeys. It has resorted to printing and borrowing the difference.

Quora, "
AT LEAST 22 million are reported to work for all the various U.S., state and local governments,"
51% of Americans receive a check from GOV. 96 million of working age are not in the labor force. In short, the "earning power" of the State is diminishing at the same time that it's payouts are rapidly rising.

"It’s a simple but often unrecognized fact that money is created by banks when they make loans, including loans to governments when banks purchase their bonds. "
"The current global monetary regime is ‘political’ in this sense. Based as it is on interest-bearing debt, the imperative for debt to grow continuously is inherent in the system. Since interest on bank loans accrues with the passage of time, total debt must be continually expanded in order to keep the system from collapsing. "
"This debt imperative leads to a growth imperative as individuals and corporations vie with each other in the market to acquire enough money to avoid defaulting on their debts. :"
https://www.opendemocracy.net/transf...wth-imperative

"THE FISCAL CONSEQUENCES OF SHRINKING POPULATIONS
INTERNATIONAL MONETARY FUND
23
Appendix 1. The Impact of Population on Economic Growth The size of the labor force is one of the main determinants of economic output. For example, in the basic Solow Growth Model, output depends on the evolution of the capital stock (K), labor (L), and technological progress (E). The steady-state, long-run growth rate of output is directly proportional to the growth rate of the labor force (Box). "
https://www.imf.org/external/pubs/ft...15/sdn1521.pdf

"But there’s another, simpler explanation for the country’s low birth rate, one that has implications for the U.S.: Japan’s birth rate may be falling because there are fewer good opportunities for young people, and especially men, in the country’s economy. In a country where men are still widely expected to be breadwinners and support families, a lack of good jobs may be creating a class of men who don’t marry and have children because they—and their potential partners—know they can’t afford to."
https://www.theatlantic.com/business...h-rate/534291/

"There is no question but that the populations of most European countries will decline in the next generation, and in the cases of Germany and Russia, the decline will be dramatic. In fact, the entire global population explosion is ending. In virtually all societies, from the poorest to the wealthiest, the birthrate among women has been declining. In order to maintain population stability, the birthrate must remain at 2.1 births per woman. "
"The process is essentially irreversible. It is primarily a matter of urbanization. In agricultural and low-level industrial societies, children are a productive asset. Children can be put to work at the age of 6 doing agricultural work or simple workshop labor. Children become a source of income, and the more you have the better."
"In a mature urban society, the economic value of children declines. In fact, children turn from instruments of production into objects of massive consumption."
"Children cost a tremendous amount of money with limited return, if any, for parents. Thus, people have fewer children. Birth control merely provided the means for what was an economic necessity. "

"hat means that throughout the history of modern industrialism and capitalism, there has always been a surplus of labor. There has also been a shortage of capital in the sense that capital was more expensive than labor by equivalent quanta, and given the constant production of more humans, supply tended to depress the price of labor."
For the first time in 500 years, this situation is reversing itself.
"The argument I am making here is that population decline will significantly transform the functioning of economies"

"Perhaps the most important change will be that where for the past 500 years bankers and financiers have held the upper hand, in a labor-scarce society having pools of labor to broker will be the key. "
https://www.forbes.com/sites/stratfo.../#31af6490698e

https://qz.com/1187819/country-ranki...astern-europe/
"In 1995 only one country, Italy, had more people over 65 than under 15; today there are 30 and by 2020 that number will hit 35. "
Italy had / has the highest debt in Western Europe.
Bulgaria is the fastest shrinking population in Eastern Europe. In 1990, 56% of Bulgaria’s GDP went to debt service.

"Most world leaders are fixated on the unpredictable new administration in Washington in the short term, but they might do better to look at the more certain long-term impacts of diminishing populations on the world’s most important economies. Economists, including John Maynard Keynes, have connected low birth rates to economic declines. On the “devil” of overpopulation, Keynes wrote, “I only wish to warn you that the chaining up of the one devil may, if we are careless, only serve to loose another still fiercer and more intractable.”

"Japan’s long economic slowdown reflects, in part, the fact that its labor force has been declining since the 1990s and will be fully a third smaller by 2035."
Their lost decade commenced in 1992.
"At the same time the fertility rates of some immigrant groups, notably Latinos, have been dropping rapidly and approaching those of other Americans. This is despite the fact that as many as 40% of women would like to have more children; they simply lack the adequate housing, economic wherewithal and spousal support to make it happen."
https://www.forbes.com/sites/joelkot.../#76fb39d5b83c

There really is no solution to the falling birth rate.
At the same time, there is no financial remedy to the falling birth rate that could possibly rescue the debt-money system.
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Old 12-02-2018, 06:47 PM
Danny B Danny B is online now
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Parasites create money because they can't create wealth

I had to break it up.
"As we understand it, when a depositor makes a deposit he is, in essence, lending money to the bank. But what does the money represent? If the deposit is earned money, it represents something of equal value produced by the depositor’s labors. "
"For example, the deposit could represent a coffee table. In this regard, there are only a few things to do with a surplus coffee table. You could store it for your own future use. You could trade it with a neighbor for something of equal value.

In each of these instances, there is no increase in capital. The coffee table remains a coffee table. Nothing more. Nothing less. Alternatively, you could sell the coffee table for money. If you then stuff the money in your mattress, you have the equivalent of one coffee table. Again, there’s been no increase in capital.

But suppose you deposit the money at your bank and leave it there at interest. You would’ve loaned the bank your surplus labor in the value of a coffee table. And the interest paid represents the beginning of an increase in capital.

Now consider that after your deposit, an enterprising carpenter, who is without tools and materials, borrows your deposits from the bank to buy a table saw, doweling jigs, and red oak lumber. These tools and materials represent your coffee table.

But with these tools and materials, the carpenter gets to work and makes three coffee tables. One he keeps for himself. The other two he sells. With the earnings of one of the coffee tables he repays the bank the money he borrowed to buy the tools and materials. After that, he still has the proceeds of the third coffee table, which is profit."
"Then, instead of spending this profit, he saves it. He deposits it in the bank at interest. Now the bank has the capital of two coffee tables. "
"Through this process wealth has been produced and accumulated. And more wealth can be produced and accumulated in this manner, provided the labor is not lost."

"remember, the value in money is in what it represents. Every dollar of actual money should be derived from a dollar’s worth of wealth that has been produced. "
"Through policies of state sponsored wealth destruction, wealth is extracted from those who created it and then set on fire with systematic efficiency.

This is accomplished through fake money, deficit spending, and central bank manipulation of credit markets. The results are an unending assortment of gross distortions, misallocation, debt pileups and losses. Moreover, the average wage earner – those who work hard, save money, and pay their way in life – don’t stand an honest man’s chance."
"You see, within the system of fake money, big deficits, and central bank intervention, money is continually debased, That is, the relationship to the wealth that money represents is degraded. The money’s buying power is impaired. The labor that earned the money is diminished. The time it took to accumulate it is stolen."
Well, what else do you expect a parasite to do?
https://acting-man.com/?p=53838

Bill Gross Says Bond Bear Market Has Arrived After a 35-Year Run
U.S. Births Dip To 30-Year Low; Fertility Rate Sinks Further Below Replacement Level

15 drastic effects.
https://guff.com/15-drastic-effects-...lation-decline
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Old 12-04-2018, 04:55 AM
Danny B Danny B is online now
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No blinking in the FED and Italy,,,French taxes,,,Corporate debt smoking

The cheerleaders are desperately trying to keep the party going.
They said that the FED "blinked". No such thing. He said "we'll see."
This isn't the first time for this kind of thing.
Paul Volcker fought 10 percent annual inflation rates with contractionary monetary policy. He courageously doubled the fed funds rate from 10.25 percent to 20 percent in March 1980. June 1983: Inflation falls to 2.5 percent, after peaking at 14.6 percent just three years earlier.

Italy, 12/03 Italy caves to EU demands on deficit – Bloomberg When you read the article, it is a different story.
"ready to back down on their hard-line deficit target demands, newspaper Il Messaggero reported"
So, some newspaper said that maybe they would back down.
https://www.bloomberg.com/amp/news/a...egotiator-role
"Messaggero reported, without saying where it obtained the information"
They are trying to buy time for the hedge funds to dump Italian debt without starting a panic.
12/03 Mnuchin says China agrees to lower auto tariffs; Beijing silent – Bloomberg
Bloomberg again

Look at this graph. Enormous quantities mature in the next 2 years.
https://twitter.com/Schuldensuehner/...491137/photo/1
Yep, corporate debt is soon to start smoldering,,,,, soon to burst into flames.
https://www.zerohedge.com/news/2018-...gile-narrative

Mises "It must come to an end sooner or later. For paper money and bank deposits are not a proper substitute for non-existing capital goods. Economic theory has demonstrated in an irrefutable way that a prosperity created by an expansionist monetary and credit policy is illusory and must end in a slump, an economic crisis. It has happened again and again in the past, and it will happen in the future, too.”
"created by a feckless Fed captured by Wall Street banks and corrupt Washington politicians who took Dick Cheney’s “deficits don’t matter” mantra to obscene levels, will end in another financial crisis. Our Deep State controllers have “solved” a financial crisis caused by too much debt by tripling down on more debt."

"The current artificial boom would have ended in 2018, but Trump’s massive tax cut for corporations, who used their windfall to buy back their stock at all-time highs, and reckless government spending increases directly into the pockets of the military industrial complex, gave the GDP one final burst."
https://www.theburningplatform.com/2...2/tick-tock-4/

"It will take a fall in America’s economic power, specifically the loss of the dollar as the world’s reserve currency, which will ultimately bring down the empire. That is what has neocons like John Bolton concerned.
Day of Reckoning

Unfortunately, until that time, the US will continue its rampaging ways. The day of reckoning, however, appears to be fast approaching and instead of a defeat on the field of battle, the US Empire will collapse under a mountain of debt."
"The treaty, signed in 1987, was a landmark achievement of the Reagan Administration which deescalated tensions between the two super powers and kept a lid on a costly arms buildup that neither can afford."
YES, but the MIC doesn't want a lid on arms spending.

That caravan of illegals is on the road for a very good reason.
https://www.washingtonexaminer.com/w...ion-households

" technology is now destroying jobs faster than it’s creating them? What if America has hit peak jobs?"
"Well, the notion that ‘jobs are how the rewards of our society are distributed, and every decent human being should have a job’ is becoming cultural technical debt.

If it’s not solved, then in the coming decades you can expect a self-perpetuating privileged elite to accrue more and more of the wealth generated by software and robots, telling themselves that they’re carrying the entire world on their backs,"
https://techcrunch.com/2013/01/26/am...hit-peak-jobs/

Paris protests: Emmanuel Macron orders PM to hold talks with 'yellow ...
https://www.independent.co.uk › News › World › Europe
2 days ago
AND
"It’s also proving to be extremely tricky to defuse, as there’s no single protest leader to negotiate with.
. Demonstrators marched on Paris’s Avenue des Champs-Elysees two weeks later, triggering social unrest. Surprisingly, the protest is benefiting from a significant backing, with 84 percent of the French public calling it “justified,” according to Odoxa-Dentsu poll for Le Figaro."
https://www.zerohedge.com/news/2018-...rexit-or-italy
https://www.armstrongeconomics.com/w...-it-beginning/

Parallels to 2008, http://www.shtfplan.com/headline-new...t-now_11302018

"The REAL problem, the one that is going to crash the markets, is occurring in the BOND/ debt space, NOT stocks.

The US Corporate bond market is larger, more leveraged, and lower quality than it has EVER been in history.

Today, over 34% of ALL corporate debt is high risk.. as in JUNK… as in there is a HIGH probability the corporation will default on it.

Put another way, over $1 out of every $3 in the corporate debt market is going to be defaulted/restructured during the next downturn.

By the way, that downturn is already here. The Junk Bond markets has taken out its bull market trendline AS WELL as support."
"Consider that 50% of the Investment Grade (IG) bond market is rated BBB, the lowest possible credit rating within the IG space. And there is considerable evidence that much of this stuff is actually JUNK."
"even the IMF expects 20% of corporates to default in the coming months, you’ve got the makings of another 2008… only this time in corporate debt, not mortgages."
https://gainspainscapital.com/2018/1...-its-bursting/

The ECB spent EUR 2.6 trillion and created 9.6 million jobs.
The FED created about 4.1 trillion for the State and, created several million jobs. $280 billion was lost to
"This Fed Policy Enabled the Fracking Industry's $280 Billion Loss"
China has been exporting unemployment but, this won't go on much longer.
Walmart will soon deploy hundreds of robot janitors to clean stores, the retailer announced on Monday.
Any questions?
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Old 12-05-2018, 03:24 AM
Danny B Danny B is online now
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Financials slipping,,,Timing prognosis

Reportedly, bank stocks are going down hard.
"All 67 stocks in the S&P Financials Index declined on Tuesday,"
https://finance.yahoo.com/news/chart...ail&soc_trk=ma
So, will the banks run out of money?
12/04 JPMorgan says cash better than stocks for first time in decade – Bloomberg
Bring your money here. We will take good care of it.
Macron the weenie is trying to prove how stupid he is.
Jean Claude Junker is trying to outdo him, https://capitalistexploits.at/2018/12/juncker-speaks/

"Long Pig" is back on the menu, https://rense.com/general96/evidence...annibalism.php
12/04 “Our clients are shifting from “end-of-cycle” to outright “recession” trades” – ZH
12/04 “Collapse of civilisation on the horizon,” Attenborough warns world leaders – Goldcore
So, pass lots of new laws and fix it.
12/04 Ford’s restructuring could slash more jobs than GM’s, Morgan Stanley says – MW
Ford is trying to avoid a downgrade that would push investors OUT of Ford paper.

"The economic implications of a contracting population, in particular a working-age population, is what interests me because it will be the fate of much of the core of our industrial civilisation within a decade."
"For those who have read their Greer books, they should not be surprised. In Greer’s book The Ecotechnic Future, he writes that the most isolated areas will be cut-off first from the benefits of industrial civilisation as rising costs lead to the gradual phasing out of services, goods and electric power to the most remote areas."
"In the longer term, the capitalist system as we know it will end given the “limits to growth” megatrends, something that the German military predicted in their peak oil report which I covered here. "
"So, to conclude, the coming end of economic growth, in part triggered by the demographic shifts going in in the cores of our industrial civilisation, will lead to a fundamental reset of economic relations within a generation. This is the biggest story going on and it is barely registered by our media, political and economic elites."
https://forecastingintelligence.org/...globalisation/
True, nobody is paying much attention to the contraction of both workers and population.

"What happens next?
Think of the past few months as the first act in a play that is performed in virtually every business cycle, with later acts following a predictable script. Here’s how it’s likely to go this time:"
"Words give way to modest action (early 2019). When the markets figure out that empty promises don’t change the underlying reality of slowing growth, falling corporate profits and rising loan defaults, they return to panic mode. Governments are then forced to actually do things to try to stop the bleeding. In the current US case, that means the Fed will announce that it’s done raising rates and will soon start cutting."
"This will be greeted with another few days of market euphoria, followed by the realization that, again, nothing substantive has changed. Stocks will resume their decline. Let’s call this “2008 revisited.”

"The action turns serious (mid-2019). Now Wall Street, Silicon Valley and Washington (i.e., the 1%) are in full-on panic mode, and ready to take radical steps to save themselves. "
"the government starts forgiving student loans and possibly auto mortgages. Tax cuts move through Congress, along with infrastructure spending that dwarfs any previous roads/bridges program.

Federal deficits exceed $2 trillion and will – Washington assures its citizens – stay that high for as long as it takes to restore “normal markets.”
https://www.dollarcollapse.com/empty...fail-timeline/

When China sneezes, Australia catches a cold, https://sorendreier.com/one-million-...heir-own-home/

France is the highest on public social spending.
https://3lrofj3556kl9zu0p27yma51-wpe...cd-longrun.png
France is the next-to-highest on taxes. The working class is fed up with this.
https://capitalistexploits.at/2018/1...astern-europe/

PRIVATE BLOG – The Fate of the US Share Market is Tied to Europe
Posted Dec 3, 2018 by Martin Armstrong

PRIVATE BLOG – The Fate of the US Share Market is Tied to Europe
Italy is getting ready to blow up European banks.
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Old 12-05-2018, 04:12 PM
Danny B Danny B is online now
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Epigenetics, confidence,,,birth and death rates

In the very crowded populations, 20% of seagulls are lesbian.
If a girl lives in a home with poor economic conditions, she will start menstruation early.
If you cut way back on food intake, it can extend life span as much as 40%.
Wiki, "The life extension varies for each species, but on average there was a 30–40% increase in life span in both mice and rats. In late adulthood, acute caloric restriction partially or completely reverses age-related alterations of liver, brain and heart proteins"
These are all examples from research about epigenetics.

"For nearly a century after the term “epigenetics” first surfaced on the printed page, researchers, physicians, and others poked around in the dark crevices of the gene, trying to untangle the clues that suggested gene function could be altered by more than just changes in sequence. Today, a wide variety of illnesses, behaviors, and other health indicators already have some level of evidence linking them with epigenetic mechanisms, including cancers of almost all types, cognitive dysfunction, and respiratory, cardiovascular, reproductive, autoimmune, and neurobehavioral illnesses. Known or suspected drivers behind epigenetic processes include many agents, including heavy metals, pesticides, diesel exhaust, tobacco smoke, polycyclic aromatic hydrocarbons, hormones, radioactivity, viruses, bacteria, and basic nutrients."

What does this have to do with the economy?
The Central Banks along with the private banks have impoverished a great mass of the people. Since we respond "genetically" to exterior stimulus, we have collectively reduced our birth rate.
Tokyo has an area population of 13.8 million. The Japanese government has started a dating service to get people to hook up and procreate. The girls are all looking for a "farm boy".
BBC Two - This World, No Sex Please, We're Japanese
https://www.bbc.co.uk/programmes/b03fh0bg
As Japan faces a future which could see its population shrink by a third in just 40 years


Growing consumption and a growing population are a central necessity to our debt-money and credit system. As Japan clearly shows, there is no escaping from demographics.
mi·as·ma
/mīˈazmə,mēˈazmə/
an oppressive or unpleasant atmosphere that surrounds or emanates from something.
"a miasma of despair"

The Wall Street Journal on Twitter: "'Deaths of despair' are on the rise ...
https://twitter.com/wsj/status/984030863640932352
substance abuse, suicides and diabetes drove a rise in premature deaths in nearly half the country,

There is lots of speculation about the next recession on the net. There are lots of people talking about "post-scarcity" economics where everything will be free. The PTB don't have a chance of continuing the current system of looting the working class. Negative Epigenetic pressures will guarantee that the birth rate will fall and, the death rate will rise.
China is locking down the entire country under AI surveillance. Their fertility rate is only 1.5 People just don't want to bring children into a messed-up world.
Japanese sovereign debt is 260% of gdp. 80% is the death cross. As long as the Japanese GOV pumps in boatloads of money, things keep going,,, after a fashion. Almost all State are going to find themselves in a similar position. In December, we will find out of the ECB is going to shut off the printing press.
The FED has plans to do this too. Capital flight is temporarily holding up U.S. markets. This won't go on forever. As the demographic crash gets worse, the Central Banks will be under constant pressure to print and subsidise retirees. As we see in Japan, and now, Europe, this can only be done with freshly printed money. It becomes impossible to attract private bond buyers when the State has a runaway printing press.

A bid part of epigenetic pressure is related to confidence. Confidence is rapidly being lost.
"In late 2018, an increasing number of Americans believe that an economic downturn is coming, and they are taking actions consistent with that belief. As a result, they are actually helping to produce the result that they fear. "
The Psychological Bubble That Has Been Propping Up The U.S. Economy Is Starting To Implode
So, what will be the low point of this feedback loop?
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Old 12-06-2018, 05:08 AM
Danny B Danny B is online now
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The speed-bumps are getting taller

2 articles, one from a wanker, one from a genius.
"Long-term readers of the Absolute Return Letter will know that I always distinguish between short-term debt cycles and debt super-cycles. Short-term debt cycles move more or less in parallel with the underlying economic cycles and last on average 7-8 years – in line with the average length of economic cycles.
Debt super-cycles are a different kettle of fish. They typically last 50-75 years"
"The growth in debt-to-GDP implies that little of the fancy stuff that have enriched our livelihoods in the last 30-40 years has actually paid for itself. Instead, it has been financed by under-investing, driving productivity growth lower and debt-to-GDP higher. Global under-investments in the past half century amount to no less than $400 trillion "
Maybe we should stop spending on wars.

"Here in the UK, an obvious way to default would be for the government to renege on its pension obligations. Total unfunded UK pension liabilities are about £11 trillion with the majority being the government’s. £11 trillion is more than 5 times UK GDP. Does that money exist? No, and the UK pension model will definitely have to be revamped at some point."
We can't reduce war spending

"Wealth-to-GDP is long-term stable and, as you can see in Exhibit 4 below, the US long-term mean value is around 380%; i.e. total US household wealth is on average about 3.8 times US GDP. The mean value varies somewhat from country to country, but it is long-term stable everywhere. Think of the ratio as a measure of capital efficiency"
"Wealth simply cannot outgrow GDP (or vice versa) in the long run. The two must grow hand-in-hand longer term. I have seen US data going back about 150 years, and every time wealth-to-GDP has deviated meaningfully from 380%, it has mean-reverted. Every single time!"

"As you can see from Exhibit 4, US wealth-to-GDP now exceeds 500%; i.e. it must drop 25-30% to re-establish the long-term mean value. That can happen in two ways. Either GDP grows faster than wealth for an extended period of time, or 25-30% of all US household wealth is destroyed."
"The three most important contributors to wealth in society are property, bonds and equities (in that order)."
Feces-for-brains doesn't list a single thing that produces tangible wealth
"but the fact that populism is on the rise worldwide does worry me. What is that going to lead to?"
We can't possibly have the creators of tangible wealth actually receiving the benefits.
"For now, my favourite to mark the end of this debt super-cycle is a complete meltdown - and subsequent revamp - of the defined benefit (“DB”) pension system,"
"The problem is quite simple. In many countries around the world, large amounts of pension savings are still managed per the DB model; i.e. the risk is still overwhelmingly the employers’ (including the government). With falling interest rates and risk assets only delivering modestly positive returns, particularly outside the US, liabilities have grown much faster than assets in many pension funds in recent years."
The rescue of the banks is what killed the pension plans.

“Either we all take a haircut and convert to defined contribution plans [aka DC plans where the risk is transferred to plan members], or our country will go bankrupt, and you will get nothing at all. Which of the two outcomes would you prefer?”
https://www.arpinvestments.com/arl/t...-of-defaulting

Now for the genius;
"Of all the delusions that have infected the minds of economists, central bankers, and the investing public in recent years, perhaps none is as short-sighted and pernicious as the idea that aggressively low interest rates are “good” for the economy and the financial markets.

There is, of course, a certain truth to that idea, roughly equivalent to proposing that snorting amphetamine-laced cocaine is “good” for one’s energy"
"Back in 2003, Alan Greenspan mixed the soap of what would become the housing bubble by holding interest rates to just 1%. Investors responded to the uncomfortably low yields on Treasury bills by looking for alternatives that offered a seemingly safe “pickup” in yield. They found that alternative in mortgage securities. Wall Street was more than happy to satisfy the demand for more “product,” as they called it, by creating more mortgage bonds. But see, creating a mortgage bond requires you to actually make a mortgage loan to someone, which is how we got zero-down, no-doc, interest-only loans. "

"In my 2003 piece outlining that developing bubble, I began, “T.S. Eliot once wrote ‘Only those who risk going too far can possibly find out how far one can go.’ It seems that the U.S. financial system is bound and determined to find out… the real question is this: why is anybody willing to hold this low interest rate paper if the borrowers issuing it are so vulnerable to default risk? That’s the secret. The borrowers don’t actually issue it directly. Instead, much of the worst credit risk in the U.S. financial system is actually swapped into instruments that end up being partially backed by the U.S. government. These are held by investors precisely because they piggyback on the good faith and credit of Uncle Sam.”"
About that upcoming sovereign bond default,,,

"In the Federal Reserve’s attempt to bring the U.S. out of the crisis of its own making, the Fed has produced conditions that make another collapse inevitable. Unfortunately, the scale of the present bubble is far grander, and the consequences are likely to be more severe. By the completion of this cycle, I continue to expect the S&P 500 to lose roughly two-thirds of the market capitalization it reached at its September 20 peak. Mountains of covenant-lite debt and leveraged loans, this cycle’s version of “sub-prime” mortgages, will go into default."

"so my sense is that a major price collapse like 2000-2002 and 2007-2009 is the most likely way this bubble will be resolved. Meanwhile, it’s worth noting that it would not even take a decline to historically run-of-the-mill valuations to wipe out every bit of S&P 500 total return that the index has enjoyed since 2000."
"quantitative easing and zero interest rates have not been “good” except in the myopic sense of encouraging a short-term burst of very bad choices and misallocations of capital."
"With the total capitalization of U.S. corporate equities recently pushing $40 trillion, I continue to expect that $20 trillion or more of what investors count as “wealth” will vanish over the completion of this cycle."

FRED, 96 million Americans are not in the labor force.
"That leaves cyclical growth as the only remaining component. Yet with the U.S. unemployment rate already down to 3.7%, the likelihood of substantial further declines is limited. Even pushing the unemployment rate down to 1% over the coming 4 year period would add just 0.7% annually to economic growth."
Everybody keeps harping on the unemployment rate as if it were a gold-plated enumeration of all the people not being productive.,

The Phillips curve is an economic concept developed by A. W. Phillips stating that inflation and unemployment have a stable and inverse relationship. The theory claims that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment.

"I’ve regularly argued elsewhere that the “Phillips Curve” is actually properly viewed as a relationship between unemployment and real wage inflation, but it bears repeating that there is no meaningful relationship between general price inflation and unemployment, nor will you find a strong, reliable relationship between inflation and government debt, the outstanding quantity of base money, the output gap, or virtually anything else."
How can he be smart and stupid at the same time?
https://www.hussmanfunds.com/comment/mc181128/
Both these articles have some good information,,, and some ripe BS also.

Armstrong, "Today, governments wage war more often for the private benefit of select groups rather than the state. The invasion of Iraq made billionaires out of Cheney’s friends and left the American people with endless trillions in debt that will last collecting interest to constantly roll indefinitely until the crash and burn."
https://www.armstrongeconomics.com/a...-of-our-times/
Everybody in the financial community has worked hard to transfer all risk to the state.

Armstrong, "f we throw in all the economic problems we see coming with pensions and a monetary crisis on top of all of that, I would not count on 2020 being a normal presidential election. It may be the most violent event in American political history. The last major riots during a presidential election were August 1968 at the Democratic National Convention – 1968.652. If we add 51.6 years we arrive right on schedule – 2020.252. So get ready. 2020 is not going to be very civilized"
https://www.armstrongeconomics.com/i...rican-history/

More bumps in the road.
12/06 Market sell-off set to continue as Dow futures get hit – CNBC
12/06 Global sell-off hits Asia as Hong Kong stocks drop 2% – CNBC
12/06 The market doesn’t care how “fantastic” your stocks are – Real Investment Advice
12/06 Illinois’ other debt disaster: $73 billion unfunded retiree health benefits – Wirepoints
12/06 A flattening yield curve has investors spooked – what happens next – CNBC
12/06 Competition Is dying as the biggest corporations gobble up everything – EOTAD
12/06 Multi-strategy hedge funds suffer “one of worst months ever” – ZH
12/06 Citi warns Q4 market revenue will unexpectedly shrink from last year – ZH


12/05 An eye-scanning lie dectector is forging a dystopian future – Wired
Use it on the politicians.

Stock Market Crash: The Dow Has Fallen Nearly 2,500 Points And FAANG Stocks Have Lost A TRILLION Dollars In Value
Predictions from Saxo Bank.
https://www.zerohedge.com/news/2018-...edictions-2019
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Old 12-06-2018, 08:36 PM
Danny B Danny B is online now
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Market crash,,, climate crash

Since everything is connected, I have to veer off to the climate.
Armstrong, "Furthermore, couldn't it be that the promoters of global warming (IPCC et al) actually know that CO2 is NOT the problem but by feeding us the propaganda, they actually catch two flies in one blow: increased taxes and reduction of the population because the majority will not be prepared for the upcoming cold/famine."
"I was at the White House dinner and was seated at a table of ten with the heads of environmental groups. I cannot get my head around how these people think. They openly admitted that this was all about reducing population growth and how to frustrate it with wetlands to Global Warming these days. They DO NOT believe in Global Warming or CO2. They are using this to reduce the population. "
https://www.armstrongeconomics.com/w...ctor-analysis/

More from Armstrong, https://www.armstrongeconomics.com/c...-news/climate/

OK, the warmers actually want to drastically reduce population AND make a buck while doing so.
Climate change: $4 trillion carbon tax is needed to save humanity from ...
https://www.independent.co.uk/.../cl...-save-humanity...
We fork over $4 trillion and,,,,,, the windbag politicians suck up all the CO2. I would pay that if the politicians promised to hold their breath until they died.
Armstrong believes that the PTB are working on a big depopulation program.
"In Greer’s book The Ecotechnic Future, he writes that the most isolated areas will be cut-off first from the benefits of industrial civilisation as rising costs lead to the gradual phasing out of services, goods and electric power to the most remote areas."
That's nice but, when the sovereign bond market crashes, the cities will be most affected. The free $hit army will run wild. I'll cast my lot with the rural people who are used to dealing with weather problems. Look what happened in a 1977 storm.
https://www.youtube.com/watch?v=Cm9wxpLnd30&t=56s

What happens in the cities when the food supply shrinks? In South Africa, hail destroyed a forest and killed livestock.
https://www.youtube.com/watch?v=SLAdgO4obSE
Here is an incomplete map of crop losses.
http://iceagefarmer.com/map/
About 10 years ago, True News warned that we would see the first signs of an Ice Age in the winter of 2018--2019.
https://www.youtube.com/watch?v=PbVtDa3DqRQ&t=116s
The old weather patterns have changed so much that it is hard to quantify global warming / cooling.

Crippled Atlantic currents triggered ice age climate change | Science ...
http://www.sciencemag.org/.../crippl...climate-change
Jun 30, 2016 - Now, scientists have implicated the culprit behind those seesaws—changes to a conveyor belt of ocean currents known as the Atlantic ...

Earth has lost a third of arable land in past 40 years, scientists say ...
https://www.theguardian.com/environm...urity-shortage
Dec 2, 2015
Climate change is going to radically shift weather patterns. Anthropogenic global warming is just a scam.
https://www.youtube.com/watch?v=oYhCQv5tNsQ&t=49s

So, what happens when the sovereign bond markets crashes,,, fracking blows up,,,crop losses get worse? How bad will the depression be?
https://www.youtube.com/watch?v=tNSXWkApxU8&t=100s
Remember, we blew up the Manmade River Project that was going to irrigate huge areas of north Africa. Slick Willie is responsible for the destruction of the huge food producing capacity of Rhodesia. Looks like Africa gets the axe. This isn't surprising considering that they are the only area that has a rising population.

Meanwhile, the Central banks are setting us up for a total financial crash.
Well, millions of economists have been trained in theories that don't actually work. According to the FED, "The Federal Reserve Board employs over 300 Ph.D. economists,"
Sprott, "In a recent survey not a single major central bank could provide an example of an accurate “a priori” recession forecast."

So, read the information and, make your own conclusions.
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Old 12-07-2018, 03:49 AM
Danny B Danny B is online now
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Ice age,, solar flares,,oil vs banks

Fossil fuel burning 'postponing next ice age' | Environment | The ...
https://www.theguardian.com/.../2016...g-next-ice-age
Ice age delayed by humans... by 100,000 years - CNN - CNN.com
https://www.cnn.com/2016/01/14/world...ned/index.html
The average length of a inter-glacial period is about 11,000 years. We are in the Holocene and, it has been warm for about 13,000 years.
Volcanic event caused ice age during Jurassic Period -- ScienceDaily
https://www.sciencedaily.com/release...1211124428.htm

Well, volcanism is definitely on the rise. Suspicious Observers say that we are statistically due for a very large eruption. Dunno.
In addition to that, Earth is due for a X-45 flare (Carrington) We are close to due for a X-60 flare also.
Then, there are super-flares X-100,000.
"Surprisingly, we (they) found 365 superflares on 148 solar type stars (G-type main sequence stars)"
https://www.swpc.noaa.gov/sites/defa...a_SWW_2015.pdf
Buy more popcorn, the sun will cook it for you.

Jim Willie, "the high risk to Wall Street banks from the declining crude oil price whereby the big banks have credit exposure to the suicidal shale sector,"
12/06 Oil dives 4% as OPEC meeting ends with no details on production cuts – CNBC
The deep state had made enemies of Iran and Russia. Saudi is pumping out record amounts. They can keep pumping until the banks choke. THAT is why Pox Americana keeps talking about cutting Irani oil exports to zero. Iran said that; if they can't export oil, nobody in the area will export oil. Demonizing Russia to get them to cut oil exports.
The banks would like to drive the price of oil way up. That doesn't work out very well.
"Throughout the first half of 2008, oil regularly reached record high prices" $146
"The stock market crash of 2008 occurred on September 29, 2008"

"The Prognostications of Ben Bernanke

We now have the diametrical opposite of the famous "Peter Schiff Was Right" video (a compilation of 2006 and 2007 clips in which Schiff, a financial expert who subscribes to Austrian economics, predicted the deep recession that would follow the bursting of the housing bubble).

The new, opposite video is a compilation of the 2005–2007 prognostications of Federal Reserve Chairman Ben Bernanke. In it, Bernanke is shown to have been just as embarrassingly wrong as Schiff was uncannily right."
"Bernanke said that the housing boom was fine because it was supported by, among other things, growth in jobs, incomes, and in the economy in general. But that very growth itself was supported by the housing boom! For example, most of the job growth was in the housing sector. Witness Bernanke's amazing levitating economy: its housing sector is held up by economic growth, which is held up by its housing sector. And it's just as ridiculous that he denied the existence of a housing bubble by pointing to low mortgage rates. The low rates were a chief cause of the housing bubble, and were a direct result of his actions as Federal Reserve chairman."
https://mises.org/library/ben-bernan...ncannily-wrong
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Old 12-07-2018, 04:04 PM
Danny B Danny B is online now
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Taxes and corruption

12/07 France overtakes Denmark for top spot in most taxes as percent of GDP – Talk Markets
12/07 France fears more riots; museums, Eiffel Tower to close – Philly Tribune

"The French rebellion over taxes on fuel is a Global Warming Tax. So Macron backed off of the fuel tax. To show this is just an excuse for Global Warming and the real objective is to grab more money, "
"There is something seriously wrong with these people. They claim that not even having a car contributes to only 2.4% reduction in CO2. The biggest decrease in CO2 is to stop having children which would reduce it by 58.6%."
https://www.armstrongeconomics.com/w...cause-of-58-6/

California has the highest personal tax rate in the country. Now, they want to tax space travel by the mile AND texting.
https://www.armstrongeconomics.com/w...om-your-phone/
12/06 Stocks rebound on word that Fed may pause rate hikes – CNBC
That's called , "grasping at straws".

2 kinds of debt;
"The poster child for all this lately is GE, who spent $40 billion on stock buybacks between 2015 through 2017 on shares that have declined in value 75% since. The company is now has a tangible net worth at negative $48 Billion."
https://medium.com/@markjeftovic/the...t-85c4fbf3f2bb

China lockdown, "The Chinese government appears to be stepping up its efforts to fully control all Chinese companies through either arrest or restriction of movement for their leaders."
https://www.zerohedge.com/news/2018-...rested-one-one

May seems to think that she is a reincarnation of Thatcher, "May is reportedly still insisting that the only options on the table are "no deal", "her deal" or "no Brexit".
https://www.zerohedge.com/news/2018-...certain-defeat

Netanyahooo is under investigation for corruption and, there have been calls for his resignation. NO problem,,, he'll just start a war with Lebanon to distract people.
https://sputniknews.com/middleeast/2...non-territory/

"In France we’ve been seeing uncontrollable protesters from across the political spectrum writing “We’ve chopped off heads for less than this” in graffiti on the Arc de Triomphe, which you may be certain has widened plutocratic eyes all around the world.

And that, I believe, is why the mass media have been behaving so strangely. For two years they have been reaching and leaning all over the place trying to regain control of the narrative like a novice ice skater trying to regain balance, and they are only getting closer to falling. Which probably makes the present moment the perfect time to give them a good shove."
https://medium.com/@caityjohnstone/m...y-3b220ea0bb97
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Old 12-08-2018, 05:23 AM
Danny B Danny B is online now
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Armstrong and Malthus

Merkel is out but, her ideological (and ugly) doppelgänger is in.
https://www.armstrongeconomics.com/i...places-merkel/
Keep in mind that Germany has a $1 trillion account surplus. The rest of the EU group has a $1 trillion account deficit. Call me suspicious but, when the crash & burn comes, I suspect that Germany will get the shaft. Versailles Deux

Armstrong pooh-poohs the idea of a Malthusian future. There is no need to reduce population.
I have never seen him mention; resource depletion, forced extinction of animals, pollution (China spends 15% of their GDP to counter pollution), stagnant wages for 40 years, habitat loss for everything except humans. "31 million acres for farmland has been developed since 1982."
"Earth has lost a third of arable land in past 40 years, scientists say "

Ocean Fish Stocks on “Verge of Collapse,” Says IRIN Report
Ocean Fish Numbers Cut in Half Since 1970 - Scientific American
All seafood will run out in 2050, say scientists
Nearly half marine population lost in last 40 years


Stocks and bonds are not wealth. They are calls on wealth. Tangible wealth comes out of the air, water and ground. The sun gives us usable energy.
List of 17 Scarce Resources the World Is Running Out of - Ranker
None of this matter to Armstrong. He looks at history and sees,, cycles and markets. How could he possibly have a baseline for a society that has widely available birth control? Same for digital currency. Same for runaway automation. He has no baseline for an economy that has instant transfer of capital but, very little mobility of labor. He has no baseline for a world that can bring total destruction on itself.
He has no baseline for an economy that depends on oil. He has no baseline for an economy that depends HEAVILY on electricity for everything but, is headed into a time of violent solar flux with a weakening and flipping magnetosphere.
https://www.youtube.com/watch?v=YTaNoiC-buI
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Old 12-09-2018, 04:46 AM
Danny B Danny B is online now
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European austerity,,,Why Civilizations Fail

Well, Macron is really a master of bad timing. Public strikes are a national past time in France but, this one is growing and spreading.
12/08 EU support for austerity opens door to far right, Corbyn says – Guardian
With austerity, ALL bets are off.
German Police Shut Down Concert Due to Mass Nazi Salute - Sputnik
The protests are spreading to other countries. Austerity will definitely make it worse.
"The 80 million or so people of Germany de facto rule the 500 million of the Union, or you know, the three handfuls that rule Germany. No important decision can or will ever be taken that Berlin does not agree with. Angela Merkel has been the CEO of Europe Inc. since November 22 2005,"
"The Union appears fatally wounded, and that’s even before the next financial crisis has materialized. Speaking of which, the Fed has been hiking rates and can lower them again a little if it wants, but much of Europe ‘works’ on negative rates already."
"Can Macron allow for French people to be killed in the streets? Almost certainly not. There’ll be pitchforks and guillotines. The only way out for him, the only way to calm things down, may be to announce his resignation. "
https://www.theautomaticearth.com/20...-of-the-union/

Here is a chart of the 30 year treasury bond. It has definitely broken out.
https://3lrofj3556kl9zu0p27yma51-wpe...ut_chart-2.png
ALL markets have rolled over.
"Returning to our truism “it’s never different this time”. Something else that’s equally “never different this time” is that governments never pay off unsustainable debt. Nevaaahhh!
Which brings up a question:
How much more debt can the world’s sovereigns add to their balance sheets before something falls over?"
"Much like Brexit, the French peasants are saying “non, Monsieur” to the globalists.
They’re saying non to the destruction of their culture. They’re saying non to the eye watering taxes. They’re saying non to what has by stealth been imposed on them. A political union run by a bunch of unelected foie-gras eating pointy shoes in Brussels."
https://capitalistexploits.at/2018/1...-is-happening/
The article talks a lot about what is happening in Europe. It’s other focus is; while everyone is watching the stock market, the far more important bond market is headed down fast.

"The cartel (especially the ECB and the Fed) is hoping it can gently deflate these bubbles it created, but that's a fantasy. Bubbles always burst badly; it's their nature to do so. Economic suffering and misery always accompany their termination."
"Attempting To Replace The Business Cycle With A Credit Cycle

In their quest for power and glory (and accompanied by a dead-flat learning curve), the world’s central banks are now pursuing their third, largest, and most ill-considered attempt to defeat the business cycle by replacing it with a credit cycle. The fact that the prior two credit cycles blew up spectacularly doesn't seem to be deterring them in the slightest."
"So Greenspan and Bernanke created the Housing Bubble 1.0 by offering the world’s credit markets a price of money so low it couldn't be refused. Housing was the story, and the Fed supplied the credit. As predicted by a scant few of us, that all blew up spectacularly in 2008. And no constructive lessons were drawn from that experience, either."
"Paying attention or not, here we all are; stuck together in a world awash with credit. $250 trillion in debt. 4 times that amount in unfunded liabilities. And a mind-bogglingly massive amount of tangled financial derivatives roughly the same size as both those debts and liabilities put together."

"And to add insult to injury, recession indicators are piling up faster and faster now. 2019 is looking primed to be The Year That Mass Layoffs Returned"
https://www.peakprosperity.com/blog/...ble-search-pin

"In 2014, a study partly funded by NASA warned that global industrial civilization could implode in the near future."
"Excess resource extraction and unequal wealth distribution were crucial to every civilizational collapse of the past 5,000 years."
"Morris Berman’s trilogy on the American Empire and William Ophuls’ Immoderate Greatness: Why Civilizations Fail offer astute analyses on why America’s problems are irreparable and reminiscent of past empires."
"Simply put, the current monetary system allows America to pay for goods and services with printed dollars."
"All of the “Made in _______” goods being sold at American retailers, as well as American made products using imported materials, should be 2–5x more expensive than they are now. "
"The federal government will downsize drastically. "
"When we can no longer pay our deficits with printed dollars, the 1 in 5 Americans who receive federal aid will see giant reductions in their benefits.
Government employees will be fired en masse."
"Since 2008, they have printed over 12 trillion dollars to prop up the financial system."
https://medium.com/vandal-press/3-re...d-138b1e18bcf4

12/08 A death cross for the S&P 500 highlights a stock market in tatters – MarketWatch
12/08 This is the end of trump’s economic sugar high – Forbes Maybe
12/08 Russia ready to switch off Visa & Mastercard ahead of tougher US sanctions – RT Putin can't get Russians to make a clean break with the dollar. Trump is helping out.
12/08 Central banks fear they might not rule the world forever – GATA We can always hope.
12/08 Italy adopts hardline immigration law – Gatestone
RIGHT, but they're going to back down on the budget.

Compensation of employees as a percentage of the GDP.
https://www.oftwominds.com/photos201...oyees12-18.jpg
So, we had wage deflation at the same time that we had price inflation. We just couldn't afford to keep the economy going. The State stepped in to buy up enough stuff to make up the difference. The State has too much debt and bond buyers are backing off. Wages had their steepest decline after the dotcom crash when the FED inflated everything out of reach. As purchasing power diminished, the CB had to pump in ever-increasing amounts of liquidity to hold back the defaults. Powell has turned that spigot down or off. He wants to wring some of the excesses out of the system. He also wants to raise rates so that he can lower them in the next crisis. He wants ammunition to fight the recession that he will eventually cause.
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Old 12-10-2018, 04:58 AM
Danny B Danny B is online now
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People = the economy,,,, bubble inflating

"High income nations saw peak total energy consumption in 2007 and are still below that peak almost decade later."
"Annual 0 to 64yr/old population growth among the consumer nations double peaked at +38 million. That was annually 38 million more potential employees, homebuyers, consumers, tax payers, etc. By 2008, annual growth was down to 20 million, and as of 2018 annual population growth of those aged 0 to 64 is just 5 million."
The banks (effectively) cut back our earnings by front-running everything we buy,,,,using our savings OR, wet-ink money. There is no possibility of growing the economy while the population is shrinking. Maybe the Greens want population reduction but, the finance system can't survive it.

"Note the potential workforce is growing at just one quarter the peak. But worse still, the pace is now less than half that of 2008...and by mid 2020's, the potential workforce will begin outright shrinking (and yes, the UN data includes and relies upon ongoing immigration just to maintain the below curves...absent that, the falloff is much sooner and steeper)."
The mantra is that; we need immigration. Bringing in 3rd world garbage with no skills means that they won't be productive and must be supported by the State for their whole lives. This implies a belief that the sovereign bond market will grow forever. It is already growing faster than exponentially. So, the State will have to support them cradle-to-grave.

But, the way that automation is growing, there will be many more millions of native born who will join them. Finance is focused on; a continuing supply of warm bodies to grow consumption.
Side note, https://www.breitbart.com/politics/2...-visa-workers/
"the childbearing population peaked about 2010 and is now falling. "
"Again, despite all the debt, central bank "support", and interest rate cuts...energy consumption (and more broadly consumption, period) is tracking the changing population...down."
The CBs are "pushing on a string"
https://econimica.blogspot.com/2018/...nergy-and.html

"2011 to present is the period with the greatest wealth creation growth in the nations history, yet during this period of economic strength, growth in federal tax receipts has been consistently decelerating...and even prior to the Trump tax cuts had already turned negative. Since the tax cuts, tax receipts are collapsing while federal spending is surging...hallmarks of what typically takes place during a recession, not the greatest wealth creation in this nations history. "
That was debt creation, NOT wealth creation.
"The already swollen issuance of public (marketable) debt since 2007 is about to move from a steep angle to an exploding vertical upward trajectory"
https://econimica.blogspot.com/2018/...ollapsing.html

"Yet percentage growth rates don’t do justice late in a Credit Cycle. Outstanding Treasuries expanded $1.187 TN over the past four quarters (7.3%) "
"It’s also worth noting that Federal borrowings this year have accounted for in excess of half of Total Non-Financial Debt growth (Q3 SAAR $1.180 TN of SAAR $2.228 TN)."
The bubble has a lot of leaks and, needs constant pumping. Trump and Powell are trying to make a soft landing. It's never been done before.
" Total Treasuries and Agency Securities ended the quarter at a record $26.439 TN (up $1.450TN y-o-y), or 128% of GDP."
80% is the death cross.
"Debt Securities ended Q3 at 215% of GDP, up from 200% and 157% to end 2007 and 1999. Equities Securities increased nominal $2.269 TN during Q3 to a record $50.602 TN (one-year growth $5.493TN). Equities Securities ended the quarter at a record 245% of GDP versus 172% at the end of 2007"
None dare call it a bubble.
" Total Securities ended the quarter at a record 460% of GDP. This compares to previous cycle peaks 379% (Q3 ’07) and 359% (Q1 ’00)."
"Household Liabilities gained $167 billion during the quarter ($539bn y-o-y) to a record $15.895 TN. "
"Household Net Worth ended the quarter at a record 528% of GDP, up from the year ago 514% and Q3 2016’s 498%. Household Net Worth to GDP set previous cycle peaks at 484% (Q1 ‘07) and 435% (Q4 ‘99)."
https://creditbubblebulletin.blogspo...and-cycle.html

11 companies that control everything that you buy, https://wikibuy.com/blog/11-companie...g-904b28425120
The British are out to prove that American politicians don't have a lock on stupidity.
https://sputniknews.com/europe/20181...n-fein-famine/
Business Insider Magazine, Future of Fintech: How Fintech Is Taking Over The World and What Comes Next.
Finance produces not a single tangible thing out side of paper bills. In their hermetically sealed little minds, tangible objects don't matter.
Japan is shrinking and has a head start on America.
https://www.sciencealert.com/million...-away-for-free

Congress is a big part of the deep state. Evidently, there is a problem with that arrangement.
https://theantimedia.com/rand-paul-d...g-run-congress
Then, we get word from Berzezinski on how things are supposed to be.
https://www.realclearpolitics.com/vi...lclearpolitics
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Old 12-10-2018, 03:48 PM
Danny B Danny B is online now
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Political wars bringing down the economy

Trump has a long way to go. Know they enemy.
https://www.rt.com/usa/445807-us-sta...hanistan-9-11/
https://www.globalresearch.ca/heroin...heroin/5502813
https://www.theguardian.com/global/2...n-cfief-claims

China's economic model ignores profit in the quest for market share and growth. This makes them particularly vulnerable to upsets and declines. Trump got a tax reduction here to buy some time for his attack on China. Capital outflows from the R.O.W. are inflows to America. Everyone knows that the effects of the tax decline will wear off going into 2019. As long as America looks more stable than other markets, that will buy some time. These inflows are raising all boats.

The Chinese boat is sinking.
"With that in mind, take a look at the chart for China’s banking sector. Not only is the bull market trendline broken, (blue line) but the chart has crashed an incredible 33%."
https://gainspainscapital.com/wp-con...GPC1023181.png

Europe is doing equally bad.
https://gainspainscapital.com/wp-con...GPC1023182.png
"The US bond market is over $20 trillion in size. And if you include junior debt instruments, it’s over $60 TRILLION in size.

And this whole mess is beginning to blow up as the yield on the 10-Year US Treasury, the single most important bond in the world, has broken out above its multi-decade trendline."
That is this graph, https://gainspainscapital.com/wp-con...GPC1023183.png
If you compare the breakouts and reversals, the U.S. is doing much better. That is all it takes to attract capital.
Europe is too socialist and China is too exuberant (gambling). China knew that their export economy model would come to an end. They wanted to change to a domestic consumption model. China's EXCESS steel production capacity is equal to the total capacity of Europe and America combined. How are they ever going to absorb all their productivity into domestic consumption when their workforce shrinks by 1 million a year?
https://gainspainscapital.com/2018/1...ble-has-burst/

Teresa May figured that she would just shove a bad Brexit down the throats of Parliament and the people. Armstrong's model did NOT show any changes for Dec. 11. Sure enough, the votes is postponed. Here is a great Pic of May with a "Brexit" gun in her mouth.
https://www.armstrongeconomics.com/i...ote-postponed/
So, while Britain doesn't share the Euro currency, the Pound is going down also, due to the Brexit turmoil. The British banks want unfettered access to European capital markets and May is too stupid to avoid painting herself into a corner.

As China goes down, OZ falls apart.
"Growth had been looking good recently. Economists were optimistic. But when the ABS put out the official figures they were shocked. This matters to all of us. It puts Australia deeper and deeper into our emergency footing.
https://www.news.com.au/finance/econ...662cec0a24711d
The article reflects an exercise in hopium.
Armstrong, "As I have warned, the next two years are going to be an outright political siege warfare. Far more damage will be done to the United States and the world economy in this desperate attempt for the Democrats to retake the White House in 2020."
This is a good article on a possible impeachment.
https://www.armstrongeconomics.com/i...rfare-of-2019/

Here is a good article on the Clinton Foundation by Armstrong. Keep in mind that a full-on war between the House and Senate will be very bad for the economy.
"The Clinton Foundation is the poster-child for political corruption and tax fraud. What we are about to witness is the start of a political war in the House before the handover to the Democrats in January.
If we look back on April 23, 2015, just two weeks after Hillary Clinton officially declared her presidential campaign, her staff sent out a message on the strategy to manipulate the Republicans into selecting the worse candidate.
Trump was absolutely certain to lose.
“Our hope is that the goal of a potential HRC campaign and the DNC would be one-in-the-same: to make whomever the Republicans nominate unpalatable to a majority of the electorate.”
She ignore the deplorables.

"Jennifer Palmieri, in the hacked emails revealed that Palmieri and other Clinton allies’ hold very low opinions of Catholics. Hillary’s staff said Catholics are “severely backwards”
Jerry Oppenheimer reported in his book State of the Union: Inside the Complex Marriage of Bill and Hillary Clinton (2000), that the night Bill unexpectedly lost his 1974 Arkansas congressional seat bid, Hillary shrieked at his campaign manager, “you ****ing Jew bastard.”
"Hillary was so shattered by the loss of her life’s dream to be the first woman president rather than what she could actually do for the country. Hillary refused to appear before her supporters. That was the most devastating thing any candidate had ever done in history."
https://www.armstrongeconomics.com/i...gated-at-last/
Armstrong did 7+ years of hard time in prison. You can't scare him or shut him up. He knows that everybody important in finance reads him.

The dirt that comes out of the Clinton investigation will essentially will essentially make the Dems pathologically toxic. The Dems will control the House of Representatives. The HOUSE is responsible for originating all spending bills. So, while America presently attracts a lot of capital inflows, will this continue during the siege of Washington D.C ?
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