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Old 12-11-2018, 04:04 PM
Danny B Danny B is offline
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The current downturn and, losing confidence

Since everybody buys on margin or credit, confidence in the future is all important. A small dip in the price of stocks is called an opportunity to "buy the dip". As the dips get larger, confidence weakens. At some point, everybody wants to "short" the market.
CNN, Here's how much money you could be losing by avoiding the stock market
NBC, The stock market lost more than $2 trillion in October - CNBC
The truth is, the net makes it impossible to hide financial fundamentals. Computers make almost instantaneous analysis.
Here is a short article with a few graphs that puts everything in perspective.
Just one excerpt,
"So what is the crisis this time?
In the ’90s it was the bubble in Tech Stocks.
In the early ’00s it was the bubble in housing.
Today it’s the bubble in DEBT… specifically, sovereign bonds."
The banks blew bubbles to increase fees and interest charges. Every time that this blew up, they simply shifted the losses to the taxpayer. The State is the biggest borrower and, has to figure a way to inject money into the economy to keep it from collapsing.
Trump Reverses Yet Again - OKs $750 Billion Military Budget,
Days After Saying $716 Billion Was 'CRAZY' & Too Much! It's
Biggest Military Budget In History & We're $22 Trillion In Debt

Somebody pulled him aside and told him that the printing presses had to run in hyperdrive if he hoped to maintain some stability while Japan, Europe and China were collapsing.
Powell is hiking to attract foreign capital. BUT, he can't hike so high that debt service on sovereign bonds becomes too costly. He must find a balance point that drains capital from our competitors but, doesn't crash the sovereign debt market,,,, not yet, at least.

One of the eternal debates is; will this cause inflation or deflation. Due to woolly thinking, people group together price levels with money supply. Inflation is defined as an increase in the supply of money. This may or, may not cause price inflation. All of this debate is complicated because an increase in the money supply is an increase in debt.
In ancient times when gold and silver were the primary money, the circulating money supply was dependent on CONFIDENCE, not on supply. In times of low confidence, gold and silver went into hiding, NOT investment.

In the '70s, the State allowed / promoted the paper gold market..
Paper Gold Trading Market Continues To Depress Price
Paper Gold Market 91% of Global GDP - Crush The Street

The paper gold market was created so that the State could thwart any attempt to flee into gold when interest rates fell. The banks and the State want to keep all wealth circulating.
The End Of TINA -- Or 'There Is No Alternative' To Equity Buying - Forbes
Nov 27, 2018 - Investors have complained for years about “TINA” – or “There Is No Alternative” other than to buy more equities.

12/11 The next worry for US stocks: shrinking profit forecasts – Reuters
As profits shrink and political instability gets worse;
America's wealthy are moving to cash as market enthusiasm hits a wall
Here is the article from Armstrong
"Therefore, despite the increase in coinage output, there was DEFLATION as we have witnessed in Europe under the Quantitative Easing of the European Central Bank (ECB). The increase in money supply resulted only in hoarding rather than inflation. They still had faith in the purchasing power of money."

You can see from all this that hoarding reduces the circulating money supply. The obvious answer is to go to 100% digital currency and the blockchain. The State can impose negative interest rates on everybody.

"his seems to imply that the economy was contracting significantly thanks to the reign of Maximinus I (235-238AD) who simply declared all private wealth belonged to the state (him)"
"the reasons I sought to reconstruct the monetary system was to gain a look at what was really taking place within the Roman Empire because the common denominator is how people respond to events regardless of the century."

Last edited by Danny B; 12-12-2018 at 02:57 PM. Reason: punktuation
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Old 12-12-2018, 03:18 PM
Danny B Danny B is offline
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Deficits and solar storms

The ECB is screaming at Italy because they are only allowed to run a 2% deficit. France, on the other hand, is allowed to run a 3% deficit,,,, because it's France. The Yellow Vest demonstrations moved out to other countries and threatened the establishment. Macron came up with some concessions that will now push the French deficit to 3.6% The banks weren't much impressed.
12/12 French borrowing costs jump on Macron wage rises, tax cuts – Reuters
Teresa May has left Britain to beg EU leaders to renegotiate.
12/12 On whirlwind EU tour, Theresa May rebuffed by Merkel, Juncker, Rutte, Tusk – Mish
Automatic Earth has a good article on this.

As the Chinese financial system swirls down the drain, Australia is expected to melt down. If your Aussie, you should read this.

"US forces must remain in the bogged-down Afghanistan campaign, or terrorists might get back on their feet and launch another 9/11-scale attack on American people, General Dunford, Chairman of the Joint Chiefs of Staff said. "
The threat of TERRORISTS is winding down a bit so, the DHS is pumping it up again.

"In a new report from the President’s National Infrastructure Advisory Council and published by the Department of Homeland Security, the government is urging the public to prepare for the up to six months without electricity, transportation, fuel, money, and healthcare."
"The report, titled Surviving a Catastrophic Power Outage”, warns that an attack would likely come with little to no notice and could cause complete chaos for at least a half a year, “Long-duration, lasting several weeks to months (at least 2 months, but more likely 6 months or more"
"The report recommends Americans have enough supplies on hand for a minimum 14 days"
"The report is the second in the last month to warn of a “profound threat” to the U.S. electric grid from terrorism and events like a solar storm or solar flare. A prior government report also recommended presidential action to protect the grid from attacks. "

At least, they mention solar storms.
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Old 12-13-2018, 05:36 AM
Danny B Danny B is offline
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Location: L.A. Ca.
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Custodial risk,,,, a crisis here,,, a crisis there

Armstrong has a good article on custodial risk. It's a bit complex but, worth reading if you are in the markets.
"If you are holding shares and you do leave them in the custody of a broker, they will keep them in “street name” so yes they can be taken as an asset of the firm as they did in M.F. Global. If the shares are to be held and you are not using them for collateral at a broker, it is best to take possession."
"The creation of the Federal Reserve was with the power to create money in times of crisis to meet the demand for withdrawals without having to dump assets in a panic. Then World War I came and instead of the Fed stimulating the economy by buying the corporate paper to directly create jobs, politicians instructed the Fed to buy ONLY government bonds. "
"Then Robert Rubin of Goldman Sachs/US Treasury Secretary pushed to overrule Glass–Steagall. That opened the door for these banks to then be officially trading with other people’s money. The end is now in sight."
"It was Martin Glenn who was the judge in New York on M.F. Global bankruptcy. He was the first one to engage in FORCED LOANS by abandoning the rule of law to help the bankers by protecting them from losses taking client accounts to cover M.F. Global’s losses. "

" The latest trend among European countries of bringing home their gold reserves has been raising concerns in Brussels.
According to Grass, the process means disintegration"
"According to Grass, only a fool believes you can create wealth out of nothing, and use that as a basis for a sustainable system."
"He explained that in the Western world, the government is forcing people to give up between 35 and 65 percent of their income and to put it into mandatory vehicles such as pension funds, retirement insurance, taxes, and so on."

"The storm clouds of the next global financial crisis are gathering despite the world financial system being unprepared for another downturn, the deputy head of the International Monetary Fund has warned."
"U.S. consumers are more than 13 trillion dollars in debt."

"Moreover, Christine Lagarde’s deputy called on nations to work together to tackle financial instability, warning they simply cannot avert a meltdown without coordinating with each other. "
"Specifically, Mr. Lipton said they should work towards ensuring the IMF is not under-resourced, as it was in the run-up to 2007 crash and subsequent credit crunch" SEND MONEY !
"One lesson from that crisis was that the IMF went into it under-resourced; we should try to avoid that next time,” he concluded"
Bring on the SDR

Trump can't do much about intellectual property theft but, he can put the squeeze on Chinese chip makers, https://www.zerohedge.com/news/2018-...a-really-about

12/12 Greece scraps pension cuts – Ekathimerini Very Italian of them.
12/12 Venezuela annual inflation tops 1 million pct in November: – Reuters
12/11 Why bitcoin crashed and why it will crash again – Forbes
12/10 Antonopoulos: why bitcoin is not in a death spiral, refuting reports – CCN
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Old 12-13-2018, 03:58 PM
Danny B Danny B is offline
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Blame it all on the FED

Any economy is subject to occasional panics. When banks do fractional reserve lending, they are subject to collapse from blanket withdrawals. The finance community created the panic of 1907.
Investopedia, "The Bank Panic of 1907 was a set of bank runs and bankruptcies that led industry leaders to draft the first version of the Federal Reserve"
So, a panic in 1907 and, the creation of the FED in 1913. No single private bank could withstand a run on the bank. The FED was created and owned by private banks as a sort of mutual insurance system.
Armstrong, "The creation of the Federal Reserve was with the power to create money in times of crisis to meet the demand for withdrawals without having to dump assets in a panic. Then World War I came and instead of the Fed stimulating the economy by buying the corporate paper to directly create jobs, politicians instructed the Fed to buy ONLY government bonds. "

Private banks have a mismatch of maturities. They borrow short (deposits) and, loan long. The idea of a backstop is logical.
"The Fed operates as a central bank, controlling fiscal and monetary policy. Its three goals are to promote maximum employment, keep prices stable (ie. control inflation) and to moderate long-term interest rates."
So, the bankers created an agency to serve the bankers interests.
"The Fed began with approximately 300 people, representatives of banks who became owners (stockholders purchased stock at $100 per share) of the Federal Reserve Banking System. 100% of its shareholders are private banks; the stock is not publicly traded and none of its stock is owned by the US government."

"Commercial banks borrow from the Fed to meet reserve requirements established in law (set up after the 1929 stock market crash to avoid another run on the banks which caused many to become insolvent). This is known as the discount window. Borrowing from the Fed is quicker and easier than borrowing from another bank, but it is more expensive"

Central Banks were originally created to supply war finance.

It is suspicious that the U.S. congress approved the central bank in 1913 AND the U.S. entered WW I in 1917. The FED was tasked with buying war bonds. After WW I, the mandate was never changed. An agency that was created for the logical purpose of backstopping private banks (remember the maturity mismatch) was commandeered to finance wars. The FED has bought State debt ever since. Where does the money come from?
The FED is mandated with maintaining price stability. The FED has taken it upon itself to maintain 2% inflation. This is, of course, a contradiction.
The FED buys State debt and, re-sells it on the open market. The State pays interest on this money.

"In 2017 the Fed reported $115 billion in income, including $113 billion in interest received from $4.2 trillion in Treasuries and mortgage-backed securities it accumulated during its quantitative easing programs. It also paid out $784 million in dividends to shareholders - the financial institutions that own the 12 Federal Reserve Banks."

Typically, the Central Bank makes money from the State. The State raises taxes. A small, private mutual insurance agency was hitched up to the State to supply funding for perpetual war. Not just warfare.

"In 1966, Congress gave the Federal Reserve authority to purchase the debt of agencies guaranteed or owned by the federal government. This same authority has enabled the Fed’s purchases of mortgage-backed securities (MBS) and debt of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac since 2008 in support of the housing market. In a little-known episode, the Fed shied away from exercising this authority in the 1960s but eventually conceded under political pressure and perceived threats to its independence"

The FED was also hitched up to finance the welfare state.
"Between 2008 and 2015 the Fed bought trillions of dollars worth of T-bills and mortgage-backed securities, keeping interest rates near zero percent, but making the US debt balloon from $900 billion to $4.5 trillion."
Wages haven't risen in 40 years as America has steadily lost manufacturing. The State doesn't want a shrinkage in it's income. The wars must go on. Just how high can the public debt go?
" USA Today notes that as of Sept. 30, the US deficit was $779 billion - 17% higher than last year."
" $1,110 billion for the Department of Health, $576 billion for Defense, and $540 billion for the Treasury. "
Ahead of The Herd

Everybody throws rocks at the FED but, it wasn't the FED that created the welfare-warfare state.
It wasn't the FED that promised unsustainable pensions.
Merkel promised that there would be NO State bailouts for banks. Deutsche bank promised to leave a crater half the size of Germany. She relented.
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Old 12-14-2018, 04:08 AM
Danny B Danny B is offline
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Location: L.A. Ca.
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Attacking China,,, ECB and stimulus,,,Macron blows it

A short article on stocks with good graphs.

"America’s trade war against China appears to be less about unfair trade practices and more about stopping China from evolving into a serious technological competitor against the US. In 2019, there is a strong possibility the tariff war will escalate into a wider conflict, with China selling down its exposure to the dollar and US Treasury debt. That would create significant difficulties for the US Government and the dollar itself.
With the credit cycle turning and the addition of American tariffs, markets are at a growing risk of replicating the 1929-32 crash and the economic depression that followed. "
"tariffs have evolved from a policy to make America great again to bankrupting China. China is seen as the greatest economic threat to America, and in this duel, tariffs are Trump’s weapon of choice.

The objective is to impede China’s technological development. "

" The European Central Bank formally ended its 2.6 trillion euro crisis-fighting bond purchase scheme on Thursday but promised to keep feeding stimulus for years into an economy struggling"
I'd like to know just what form this stimulus is going to take.

"A return of national sovereignty across Europe is no longer coming. I think it’s here. This can no longer be stage-managed as a relief valve of the massive discontent at neoliberal policies rammed down Europeans’ throats as it has in the past."
"Macron was sold as the outsider, the reformer, who wasn’t in office a week before he began betraying the people who voted for him. And now he’s stuck.
The media turned against him quickly because they know he is done. "
"Now the question is, what comes next? Because political unrest leads to financial unrest really quickly and the market hasn’t even begun pricing France into Europe’s evolving troubles."

"Macron’s handling of these protests have been nothing short of abysmal. He began November the darling of the globalist set I like to call The Davos Crowd, excoriating any sense of national pride, likening it to terrorism."
France is NOT the place to do this. https://www.youtube.com/watch?v=zFV6R_ZuAc8
"He also called for the creation of a Grand Army of the EU and pushed hard for banking federalization to consolidate power under Brussels over the currency,"
"With his approval rating dropping faster than Deutsche Bank’s stock price, Macron had to do something to stem the tide against him. It’s so bad even the rest of the French political establishment are sharpening their knives looking for a no-confidence vote and his resignation."
"Salvini is looking at this proposal of Macron’s like it truly is manna from heaven. But for the EU, does it really have any other choice? When you’ve stepped off the cliff and are falling, anything you can do to keep from hitting the ground is what you do regardless of the long-term damage. "

"According to data from the Office of the Superintendent of Bankruptcy Canada, insolvencies climbed to 11,641 in October, a 9.2% rise compared to the year prior. Even more alarming, month over month this rise was up a staggering and somewhat inexplicable 16%, as if something "broke", pardon the pun, in October."

12/13 Yellen and the Fed fear corporate debt bubble, but investors still don’t – CNBC
That is because they put their money into passive investment funds and, went to the beach.
12/13 US budget deficit jumps to $205 billion in November – MarketWatch
So, when does this all default?
12/13 US bank stocks spiral down – Wolf Street
Nobody is listening.
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Old Yesterday, 04:56 AM
Danny B Danny B is offline
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Debt is eating up the world

"Macron is pushing for the European Finance Minister to raise money by selling EU bonds and then distribute the money to the 19-member Eurozone. France is very heavily indebted and here once again we have simply the goal to raise more money rather than reform. Because of the riots in France, Macron is trying to get the EU to fund France. They want to call this the European Monetary Fund"
NOBODY would buy these bonds. He's hoping to buy some time but, the revolts are quickly spreading.

The Venezuelan government has their own plan on how to fund government.
They also created a crypto coin backed by their oil. BUT, the oil seems to be stuck underground.
Hillary is working hard to see Trump get re-elected.

The stock markets have lost $trillions. The Shanghai index is down about 20%. While this causes capital flight to safer jurisdictions, it also promises a LOT of contagion. Here is a graph of the leveraged loan index.
"And then, loan pricing nose-dived along with prices on most other credit products starting around the first week of October, right after Powell's "neutral rate" speech,,,, ... and suddenly complacency turned to sheer panic without passing go. But the catalyst for this wholesale dread was not so much the slump in prices as much as fund flows - i.e., observing in real time what one's peers are doing - and as we showed yesterday, they are selling, with Lipper reporting that loan funds saw a record outflow of $2.53 billion in the week ended December 12, a fitting culmination to the fourth consecutive week of selling."

If you look at this graph, you will see that institutional investors make up the bulk of the buyers.
Everybody else has pulled out. Should the markets crash, as delineated by John Hussman, the big funds will all be insolvent.

Here is a graph of hedge funds index.
"And yet, paradoxically, despite a truly abysmal track record, where the average hedge fund is not only down for the year but badly underperforming its benchmark for the 8th year in a row, hedge fund employees of all stripes, from junior analysts to portfolio managers, have something in common this year: unmitigated optimism in the form, or as Bloomberg puts it, "they’re all expecting fatter paychecks."

Despite an industry beset with lagging performance, an investor exodus and closures, hedge fund professionals expect a median compensation of $520,000 in 2018, a 16% increase from last year's $450,000"
$10,000 a week seems fair.

Zero Hedge, "" Even the sainted Holy Mother of Wokesterism, the Archangel Hillary, may find herself wingless in a witness chair, answering how all that schwag from Russian banksters happened to end up in her foundation’s cookie jar."
There are people who STILL believe that Mueller is investigating Trump.

There is a new year coming and, a few things will get shifted around.
"Credit On Verge Of Crisis: $176 Billion A-Rated Bonds Downgraded To BBB In Q4"
The stock markets have recently lost about $15 trillion. This counts as perceived deflation. Many investors are going to cash. This counts as deflation in the circulating money supply.
"Fast forward to today when Goldman reports that just two weeks after our original report, the number of A to BBB downgrades has doubled to a whopping $176 billion in the fourth quarter,"

12/14 Bank bulls battered as financials enter bear market – Zero Hedge
12/14 Wheels come off the leveraged loan market: banks unable to offload loans – ZH

You Aussies are no slackers.
“The ‘Australian Dream’ was financed through an epic accumulation of debt as interest rates collapsed, with household debt standing at 189 per cent of disposable income,” Ms Creagh writes in the report."

Greenspan argued for deregulation of banks because they could regulate themselves to make the most profit. Forget about malfeasance to make this profit. There is another problem. The individual traders will act to make the most profit for themselves,,, not necessarily for the bank.
When interest rates to ZIRP, lots of companies gorged on free money to do buybacks. This reduced the number of outstanding shares and, bumped up the dividend per share. It also bumped up compensation and bonuses for traders and partners. Once the ZIRP ended, the debt service on the free money started to strangle corporate profits.
As profits fell, investors pulled out their money.

$9 trillion corporate debt bomb is 'bubbling' in the US economy
How The Corporate Debt Bubble Will Destroy The Economy - ValueWalk

Here is the graph, https://static.seekingalpha.com/uplo...8796505134.png
"U.S. corporate debt has risen from $40 trillion to $70 trillion since the top of the last bubble in 2007. That’s 63% in 10 years. It’s risen 135% since 2000!
Only government debt has risen faster, from $35 to $64 trillion, or 83%.
China is the worst by far, going from $6 to $36 trillion or a 500% increase!"
The corporate debt bomb can't destroy the economy. I was told that sovereign debt would do that.

"A government spokesman said: “The UK’s jobs market has never been stronger, employment is at a record high with more people in work in every region of the UK since 2010"
"Average UK workers earning a third less than in 2008 – report "
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Old Today, 02:42 AM
Danny B Danny B is offline
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Location: L.A. Ca.
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The protests

The overlay of the EU bureaucracy on top of existing bureaucracy has reduced the wealth of European countries by 20%. The outsourcing of jobs has further reduced national wealth. There just isn't any money to go around.
UK faces longest fall in living standards since records began, says ...
UK has 'worst quality of life in Europe' | Money |
No Babies? - Declining Population in Europe - The New York Times

Here is a good article on the yellow vest protests.The Indiscreet Charm of the <i>Gilets Jaunes</i>, by C.J. Hopkins - The Unz Review

"And, see, this is the problem the corporate media (and other staunch defenders of global neoliberalism) are facing with these gilets jaunes protests. They can’t get away with simply claiming that what is happening is not a working class uprising,"
"We can expect to hear this line of reasoning, not just from establishment intellectuals like Lévy, but also from members of the Identity Politics Left, who are determined to prevent the working classes from rising up against global neoliberalism"
Nothing scares the Identity Politics Left quite like an actual working class uprising. Witnessing the furious unwashed masses operating out there on their own,"
"but even if it does, and the gilets jaunes uprising ends, this messy, Western “populist” insurgency against global neoliberalism has clearly entered a new phase. Count on the global capitalist ruling classes to intensify their ongoing War on Dissent and their demonization of anyone opposing them"

Doug Casey, "I gave a speech about this at Jayant Bhandari’s Capitalism & Morality 2018 Conference in Vancouver last summer. People can listen to the whole speech here if they’d like the whole story. It’s entitled “How Political Correctness Is Destroying Western Civilization.” I’ll also point out that all the speeches at that day-long conference were superb.

And, interestingly, almost all the speeches at that conference centered around the possibility that a revolution is coming to the United States."
"And with welfare benefits as ridiculously high as they are, middle-class Europeans resent paying half of their income in taxes, only to see freeloading migrants live off their produce.
There’s an excellent chance this will spread throughout Western Europe. "
"In France, the state takes about 45% of all revenue in taxes. It’s got about the highest taxes in the world. The average Frenchman’s tax load is twice as high as the average American’s. Worse, the taxes are used to support massive and onerous bureaucracies in both Paris and Brussels."

Because Teresa May is screwing the Brits so well, there is a very good chance of these protests spreading to Great Britain. Their standard of living is certainly falling.

Notes in israel;
Time to learn from the French!’ Yellow Vest protests spread to Israel, 10 arrested
Israeli Police recommend bribery charges against Netanyahu & wife

He is so corrupt, that there have been weekly protests about him.
A few years back, the protesters brought along a beautiful GUILLOTINE;
Israeli protests: 430,000 take to streets to demand social justice ...

Israel is afflicted with zionism and, the don't like it.
American taxpayers give Israel over $10.5 million per day.
You would think that $10.5 million a day would pay for bread for the people.

France's protests are hurting the economy at a crucial time - Quartz
I guess that we just have to wait and see how much.
12/15 Global debt hits record $184 trillion, or $86,000 per person – Bloomberg
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