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Old 12-11-2018, 04:04 PM
Danny B Danny B is online now
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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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Download SOLAR SECRETS by Peter Lindemann
Free - Get it now: Solar Secrets

Old 12-12-2018, 03:18 PM
Danny B Danny B is online now
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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 online now
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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 online now
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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 online now
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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 12-15-2018, 04:56 AM
Danny B Danny B is online now
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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 12-16-2018, 02:42 AM
Danny B Danny B is online now
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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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Old 12-16-2018, 06:16 PM
Danny B Danny B is online now
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State, AI, finance, wages, non-producers

Man created the State to bring order to society. Out of necessity, the State must gain it's support from coercion and taxing. The State has the lawbooks, the guns and, the prisons. Socialism is the firewall between Darwinian pressures and the non-producers. The main problem comes in because the State is the prime non-producer. Because of it's great power over society, the State attracts and nourishes corruption. All States do redistribution with themselves at the head of the line. Hegel came up with the idea of the Hegelian dialectic where everybody is an employee of the State. This is perfectly in line with the mindset of a non-producer but, it goes completely against the rationale of any person who wants to work hard and get ahead. This is the mantra of socialism.

Another non-producer of equal proportion to the State is the financial sector. At one time, the finance business was responsible for intelligent distribution and allocation of surplus capital. The holder of surplus capital didn't know who was credit worthy and, who was not. The banker filled the niche of discerning who was morally and financially likely to correctly invest the desired sum of the loan.
The banker was entrusted with everyone's surplus capital. All this surplus capital was owned by somebody and, not the property of the banker.
Fractional-reserve banking was created to address this problem.

At the same time, parasite number one (the State) gave it's blessing to this expansion of the purported money supply. The 2 chief parasites were in agreement that they were best served by perpetual monetary inflation. The State definitely had the power and the tools to forestall this monetary inflation but, how else was it to support the always growing bureaucracy ?
The State stole the wealth produced by the working class through taxes. The bankers stole the wealth of the working class by monetary inflation and front-running. The banks produced free money and, added this to the pot of money from your savings. They, then bought up everything in sight and, later resold it to you.

Man dies and has to pay death-duties (inheritance taxes) but, the corporation is eternal. Over the decades, the corporation accumulates more power and money.
These 11 Companies Control Everything You Buy - Activist Post
This concentration of monopoly pricing power has another effect. Each individual person has to sell their labor. Neither capital nor the State wants to see labor rates rise. Wiki has MANY examples of the State taking the side of capital.
"Battle of the Viaduct, part of the Great Railroad Strike of 1877: Violence erupted between a crowd and police, federal troops, and state militia at the Halsted Street Viaduct. When it ended, 30 were dead.[11]"
Collective bargaining is blocked wherever possible.
Capital has monopoly-pricing power but, labor has no collective wage demand power.
Automation promised great reductions in the price of manufactured goods. This was not to be. Since capital had monopoly pricing power, the fruits of automation could be handed out as stock dividends. Wages stagnated for the last 40 years but, stock dividends did very well.
Here is a graph of worker compensation and productivity.
Here is CEO pay, https://proxy.duckduckgo.com/iu/?u=h...FBC752.png&f=1
Not to be left out, the State put the squeeze on the worker also. The State knows what price inflation is. Here is a graph of postage costs.

The worker has no real bargaining power. Prices continue to rise. A corporation is a money making enterprise. A FAMILY IS NOT. Finance depends on ever-growing credit. It barely recognises that it requires an ever-growing demand in consumption and, an ever-growing increase in the consuming population. Wages are stagnant and prices have risen. Lacking the credit demand from the consumer-producer, the State has stepped in with enormous and growing credit demands. FED GOV has hit $22 trillion. Since the State is a non-producer and, the taxpayer is tapped out, State debt won't be repaid.

The worker was deprived of the price-reduction benefits from automation but, he was displaced from his job by computer driven machinery. In the '40s, 44% of Americans worked on the farm. Automation reduced this to a present day number of 1%. People moved to manufacturing. Now, they are being displaced from manufacturing. Where will they go?
At the same time, the Industrial Revolution is working it's way up the "ability ladder". White collar jobs are now disappearing.

"Kai-Fu Lee, now chairman and CEO of Sinovation Ventures, believes that about half of all jobs will disappear over the next decade and be replaced with AI "
"next generation of robots in the fastest period of disruption in history.

"AI, at the same time, will be a replacement for blue collar and white collar jobs," said Lee, a renowned Chinese technologist and investor who held positions at Apple and Microsoft in addition to Alphabet's Google. But white collar jobs will go first, he warned."
""The white collar jobs are easier to take because they're pure a quantitative analytical process. Reporters, traders, telemarketing, telesales, customer service, [and] analysts, there can all be replaced by a software," he explained on "Squawk Box." "To do blue collar, some of work requires hand-eye coordination, things that machines are not yet good enough to do."
"Lee said that while economic growth "will go dramatically up because AI can do so many things so much more faster" than humans"
Do you see the fatal flaw? Economic growth may potentially
go way up but, who is going to consume the results?
Rust Belt Lost More White Collar Jobs than Factory Positions | Money

Currently the military (State) is doing all the consumption because, it never intends to repay what to takes. Just how long can this go on?

Last edited by Danny B; 12-16-2018 at 06:29 PM. Reason: correction
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Old 12-16-2018, 07:13 PM
Danny B Danny B is online now
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Monetary inflation as a cure-all

The preceding post is a description of the background problems caused by punishing the family to enrich the bankers and bureaucrats. This post is an examination of the efforts and results of runaway money-supply inflation.
I need to do a lot of excerpts.

“When the European Central Bank switches off its money-printing press at the turn of this year and stops buying fresh assets, it will mark the end of a decade-long global experiment in how to stave off economic meltdowns. Quantitative easing, the policy that aims to boost spending and inflation by creating electronic money and pumping it into the economy by buying assets such as government bonds"
Definitely not pumped into wages for the producer.
"Arguments over how, or even if, the trillions spent by policymakers helped the global economy recover will rage for years to come. But as central banks step back, the initial view is that the purchases worked "
Poverty, suicide and deaths of despair are WAY up. QE worked for the rich only.

"The great virtue of this policy course, many believe, is that there is essentially no limit to the scope and duration of “QE infinity.”
NO mention of rising debt service costs and falling population. This could possibly work with eternal ZIRP,,, highly doubtful. Did you know that in previous ages, topical beauty products included lead, mercury, arsenic ad radium? ZIRP is much like that.

"But what if faith in QE is woefully misguided? What if markets and policymakers alike come to appreciate that QE only masked underlying fragilities and delayed desperately needed structural reform? Worse yet, what if the reality is that QE exacerbated latent financial fragility – through more leverage, speculation, misperceptions and market distortions. "
Naw, couldn't happen.

" Germany’s ZEW economic sentiment index collapsed 13 points in December to 45.3. This is down from 95 early in the year and the lowest reading since January 2015. "
Obviously, just statistical noise.
" Surely QE proponents would have expected the printing of $2.6 TN of new “money” to have, at least for a period, worked to pacify the masses and temper political instability. Detractors of unsound money and Credit are anything but surprised by heightened instability throughout the eurozone,"
The standard of living is fast falling. THIS is supposed to pacify the masses.
"Proponents of central bank stimulus operations take a sanguine view."
No kidding, They are next to the free money tap.
"Then there was 2011’s “Long-term Refinancing operations (LTRO),” where the ECB lent $640 billion directly to eurozone banks (liquidity in many instances used to buy government bonds)."

"Proponents proclaim a decade of central bank stimulus has proven a tremendous success. They would point first to stock, bond and asset markets more generally. I view the same markets and see acute instability and fragility. I believe a decade of monetary stimulus has exacerbated financial, economic, social, political and geopolitical instabilities. This will surely be debated for decades to come. "
NOPE, I give it about 2 years.

"Credit is a financial claim – an IOU. New Credit creates purchasing power. Credit is self-reinforcing. When Credit is expanding, the creation of this new purchasing power works to validate the value of Credit generally. In general, new Credit promotes economic activity, both spending and investment, in the process promoting higher incomes. Credit expansions fuel higher price levels throughout the economy, including incomes, real estate, stocks and bonds. Higher perceived wealth stimulates self-reinforcing borrowing, spending and investment."
Notice that wages are never mentioned.

"There were various mechanisms that worked to contain Credit expansions, including the gold standard and disciplined monetary regimes. As important, there were traditions against deficit spending, running persistent trade deficits and profligacy more generally. Moreover, there were bank reserve and capital requirements that placed constraints on lending and financial excess. In short, there was a limited supply of “money,” with excessive borrowing demands pressuring interest rates higher."
The State and ZIRP got rid of any kind of discipline.

" As the key source of additional system “money” and Credit, banks and business investment were some time ago supplanted by market-based finance and leveraged securities/asset purchases. Contemporary (“digitalized”) finance expands virtually without constraint. "

"I’ve been chronicling the “global government finance Bubble.” It has not been ten years of systemic smooth sailing. History’s greatest Bubble stumbled in 2011 on fears of the Fed’s “exit strategy.” The Fed quickly backed off – and then proceeded to double its balance sheet again by 2014. Europe tottered badly in 2011 and 2012, inciting “whatever it takes” and a reckless ECB balance sheet gambit. Fed, ECB and global central bank liquidity stoked a historic boom throughout the emerging markets. China’s epic Bubble, pushed into overdrive with aggressive global crisis-period stimulus, inflated uncontrollably. All of it almost came crashing down in late-‘15/early-’16. But the Chinese adopted more stimulus, the ECB and BOJ boosted QE, and the Fed postponed “normalization.”
They can't EVER let off the gas pedal

"Surging asset prices spur rapid increases in speculative Credit, unleashing new self-reinforcing liquidity/purchasing power upon markets, financial systems and economies around the globe. The problem is it doesn’t work in reverse. "

"As inflationism has demonstrated throughout history, QE was always going to be a most slippery slope. The notion of inflating risk asset markets with central bank liquidity has to be the most dangerous policy prescription in the sordid history of central banking. And, importantly, the longer central bankers held to this policy course the deeper were market structural distortions. Rather than attempting to rectify crucial flaws in contemporary finance, central bankers chose inflationism and market backstops as stabilization expedients. This was a monumental mistake. "
The short-term goal of saving the banks has become a full-time obsession is it all slowly erodes away.

" The original Fed QE “money” program basically accommodated speculative deleveraging."
Nope, that was the intention, NOT the result.
"Trillions flowed into risky stocks, bonds, corporate Credit, EM assets and derivative structures believing that these fund shares were a liquid store of (nominal) value. "
The State facilitated the creation of mega tons on new pixelated money in the belief that much of it would flow into GOV bonds.
"global “system” liquidity acutely vulnerable. Faltering global liquidity will now expose the misperception of “moneyness” for ETF and passive index products. As such, global markets are now at high risk to global de-risking/deleveraging "
This "deleveraging" is a process of moving down Exter's pyramid,,,, reducing risk.

"Flawed central bank policies are directly responsible for both a decade-long global Bubble and the more recent speculative blow-off. Markets, meanwhile, cling to the belief that central bankers remain fully committed to doing “whatever it takes” to hold bear markets, recessions and crises at bay. There’s a disconnect. The harsh reality is that “whatever it takes” has failed."
NOT, spectacularly,,, not yet.

"Credit, is now in significant self-reinforcing contraction. This portends liquidity issues for markets, faltering asset values and trouble for economies. In the markets, Fear is supplanting greed. "
"December 14 – Bloomberg (Lisa Lee): “Funds exiting the U.S. leveraged loan market at a record pace are clobbering sentiment as they go. History suggests that the record $2.5 billion yanked from funds in the past week could mean more short-term loan price pain"
Do tell?

"The Bubble has burst – the greater global Bubble, the Bubble in leveraged lending, and Bubbles across asset classes around the globe. In the case of leveraged loans, I don’t expect another bout of QE to resuscitate Bubble Dynamics."
"It was a timely reminder of how deeply Bubble Dynamics have permeated the marketplace. I would argue that some of the greatest excesses have unfolded in perceived low-risk sectors and strategies,"

China, "We’ll continue to closely monitor Chinese Credit data. Total Social Financing (TSF) This was still 15% below growth from November ’17. This puts y-t-d TSF expansion at $2.129 TN, down 20% from comparable 2017."
I doubt that the Chinese system can survive a 20% contraction.
" In numbers that illuminate the scope of China’s mortgage finance Bubble, Consumer Loans increased 44% in two years, 78% in three years and 141% in five years."

John Rubino expects GOV to start massive money printing to save the system
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Old 12-17-2018, 03:51 AM
Danny B Danny B is online now
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The default wolf is growling at the door.

Here is a good article on pensions.
"The median retirement account balance among all working US adults is $0. This is true even for the cohort closest to retirement age, those 55-64 years old.
The average (i.e., mean) near-retirement individual has less than 8% of one year's income saved in a retirement account
77% of all American households aren't on track to have enough net worth to retire"
"The data certainly seems to show that the experiment did not take human nature into account enough – specifically, the fact that just because people have the option to save money for later use doesn't mean that they actually will."
No kidding, they ignored human nature.
Here is the embedded vid, https://www.youtube.com/watch?v=_br3uMudQSM&t=271s
"research conducted by the Pew Charitable Trusts shows a $1.4 trillion shortfall between state pension assets and guarantees to employees."

Jim Willie has lots of news, https://www.silverdoctors.com/tag/jim-willie/
12/16 Will landing be soft or “chaotic” as Fed begins to stop rate hike cycle – Reuters
12/16 Major hedge funds are scrambling to prevent financial wipeout – NY Post
12/16 Investors have nowhere to hide as stocks, bonds and commodities all tumble – NYT

Should have bought gold.
2/16 US banks disclose huge unrealized losses on security investments: FDIC – Wolf Street
12/16 Failed by both its major parties, betrayed Britain lurches towards the abyss – Guardian

"Ultimately, central banks might have to resort to QE variations such as “helicopter money.” Originally a thought experiment of Milton Friedman, the government would print money and distribute it to the public to stimulate the economy."
Nope, they're not desperate.
Comparative bubbles, https://www.zerohedge.com/sites/defa...612_bubble.jpg
The bubbles are needed to stave off default.
"Since 2008, governments and central banks have stabilized the situation without fundamentally addressing high debt levels, weak banking systems and excessive financialization."
Right, they stabilized the situation. What about the crashing standard of living?
"The political economy could then accelerate towards the critical point identified by John Maynard Keynes in 1933, where “we must expect the progressive breakdown of the existing structure of contract and instruments of indebtedness, accompanied by the utter discredit of orthodox leadership in finance and government, with what ultimate outcome we cannot predict.”

This article is speculation that the FED will not rescue the stock market.
"Another brutal week left the stock market with its worst start to a December in 38 years,"
"Over the first nine trading days of the month, the Dow is down 5.6%, the S&P is off 5.8% and the Nasdaq is 5.7% in the red. That’s the worst start to a December for all three benchmarks since 1980,"

Last edited by Danny B; 12-17-2018 at 03:53 AM. Reason: mistock
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Old 12-18-2018, 05:09 AM
Danny B Danny B is online now
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Confidnce is slowly shifting, it will speed up

The markets are going down and, greed is slowly turning to fear. The problems of Italy, France and Britain are dragging down European markets.
Rense, Nation Heads To Shutdown Friday - Schumer, Dems Refuse
To Fund Border Wall - Trump Promises To Shut Government

Remember, both the ECB and FED have meetings in December. Volatility is picking up even more.
"The Bond Market Has Frozen: For The First Month Since 2008, Not A Single Junk Bond Prices"
"dramatic drop in loan prices, a record outflow from loan funds, and a general collapse in investor sentiment that was euphoric as recently as the start of October, the wheels had come off the loan market which was on the verge of freezing after we got the first hung bridge loan in years, after Wells Fargo and Barclays took the rare step of keeping a $415 million leveraged loan on their books after failing to sell it to investors."
Take a look at the graph AND keep in mind that the credit bubble MUST grow. So, $trillions are stuck in bank portfolios. There are trillions that MUST roll over.
"The two banks now "plan" to wait until January - i.e., hope that yield chasing desperation returns - to offload the loan"
The banks are waiting and hoping for a change in sentiment and confidence.

12/17 Stocks on pace for worst December since the Great Depression – CNBC
Yup, sentiment and confidence.
12/17 Ron Paul: A 50% correction will spark a Depression – CNBC

The Gramm-Leach-Bliley Act was what really got the ball rolling as far as the banks really screwing us. Only one democrat voted for it. All the republicans did. Slick Willie signed it.
12/17 Why did all the old people decide to be broke? – Hmm Daily
"In 1913 the top marginal income tax bracket was 7% -- today it is 39.6%.
In 1913 the marginal income tax bracket range was 1% - 7%. Today the range is 10% - 39.6%.
In 1913 there were 400 pages in the tax code. Today there are 74,608 pages in the code.
In 1913 the family standard deduction was $98,425.45 in today’s dollars. The family standard deduction now is just $12,600."
So, don't have a family.

12/17 The ECB’s quantitative easing failure – Daniel Lacalle
When the ECB printed money to bail out Greece, the money bounced back from the border of Greece and, landed in German banks. Austerity has never worked but, that didn't stop Merkel and Schauble.
12/17 Malaysia charges Goldman Sachs, ex-bankers in 1mdb probe – Reuters
What the NYC courts would never do, the Malaysian courts are planning to do.
12/17 China sees bankruptcies surge; bondholders may get less back – Bloomberg
You're going to hear more and more about "haircuts"
12/17 Von Greyerz, at KWN, notes collapse of European bank stocks – GATA
He sells gold.

12/17 Trump again blasts Fed for ‘even considering’ rate hike – Reuters
Is this just Kabuki theatre?
12/17 Ray Dalio’s ‘conflict gauge’ hits highest level since WWII – Zero Hedge
Churchill " If Germany trades in the next 50 years, WW I will have been for nothing."
Pox Americana can't really prevail in a hot war with China and Russia. The new weapons are too devastating and nobody will prevail. Russia & Iran can cut off most of the world's oil, in an instant. Nobody wins. A billion die.
12/17 Recent market ‘jolt’ will be first of many as easy money era ends, says BIS – Reuters

Armstrong, "The Federal Deposit Insurance Corporation (FDIC) lists 30 some business categories that have been linked to “high-risk activity,” including marijuana dealers, gun sellers, home-based charities, payday loans, dating services, escort services, fireworks suppliers, cable box de-scramblers, coin dealers, credit card repair services, gaming and gambling websites, and telemarketing companies."
Armstrong sees all of this as a hunt for taxes. He never mentions criminal profits.
"How Global Organized Crime Makes $870 Billion A Year ...
Page Not Found - Business Insider... "
Crime Does Pay. How? Italian Mafia Earned $167 Billion ...

12/17 Will landing be soft or ‘chaotic’ as Fed begins to stop rate hike cycle – Reuters
Nobody really knows if QE will stop in th near future. The landing will be chaotic no matter what.
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Old 12-18-2018, 04:08 PM
Danny B Danny B is online now
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The role of gold,,, frozen junk

FED GOV had spent so much on the warfare-welfare State that gold was leaving the Treasury at the rate of 100 tons a week in summer of 1971. There had been a lag but, the bills eventually came due. Nixon closed the gold window to avoid paying the bills of his predecessors. It is the STATE that is the profligate spender that is constantly constrained by a gold standard. The banks can survive a gold standard because they use fractional-reserve credit creation. The State is NOT a profitable enterprise unlike the banks. The State consumes and distributes but, it technically isn't profitable. The State is hamstrung by a gold standard, especially in the case of war.


The basis of a sound system is sound money. Throughout history the monetary system has always functioned better when gold has been backing the currency? So why has every currency system in history then failed and why have all currencies always gone to their intrinsic value of zero?

The explanation is simple. Soundly based economies with budget and trade surpluses carry the seeds of their own destruction. Once the economic cycle has peaked, the country continuous to spend money it doesn’t have and deficits are created. This becomes a vicious circle, more deficits lead to more money printing which in its turn increases the deficits. At that point the country abandons the gold backing of the currency in order to print more money and this eventually leads to the collapse of the country’s economy. "

This upcoming FED meeting is crucial. Will the FED detonate the markets or, not? Keep in mind that ZIRP and QE have not fixed anything. Will they be abandoned? The markets are a very short step away from collapse.

The BIS fears that a very large segment of the debt market will just disappear. Keep in mind that an object or asset is only worth what somebody else will pay you for it,,,, be it a tulip bulb or a collateralised debt swap.
The bond market has frozen: Not a single junk bond prices this month – Zero Hedge
A frozen debt market can be considered a "stranded asset"
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Old 12-19-2018, 05:32 AM
Danny B Danny B is online now
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DTCC and the freeze up of the clearing system

I wrote about custodial risk. Stocks and other instruments are cleared at / by DTCC. Most are held in the name of Cede & Company, Armstrong clearly differentiated on risk depending if certificates are held in the street name OR, held by the broker in the name of Cede & co. If they are held by the broker and, are not in the street name, they are sucked up to satisfy the liabilities of the broker. So, when markets go down, individual investors and funds get a margin call to supply new cash to offset the fall in value of the asset. If they can't meet the margin call, the broker liquidates their stocks. BUT, if the market is falling, he may not be able to sell anything.

Whether you hold stocks or not, you should read this wiki page. Remember, your stocks are held in the name of 'Cede & Company. The various subsidiaries of DTCC also hold European and English assets. It is for the most part, just a recording service. They put everything in the name of Cede & co for the ease of transfer.
They hold all government debt also.

More on the DTCC,
About 40 trillion worth of stock and bond certificates held in an underground Manhattan vault owned by the Depository Trust & Clearing Corporation were damaged by flooding in Hurricane Sandy in November 2012
The DTCC processes the underwriting of stock and bond offerings for all transactions on the New York Stock Exchange and electronically registers securities
largest depository of “paper” stocks and bonds in a vault below sea level and then, forget to close the door. That’s right, the vault was waterproof, but someone forgot to close the door on the way out after they heard the largest hurricane to ever hit Manhattan was on the way. But that is only topped by the fact that after the flood drained, a fire somehow burnt the contents of the vault. And then, another flood somehow filled the vault again leaving a mess that DTCC says may never be cleared up.

Then we are told by DTCC that the remains of the $40 trillion paper trail has been moved to a secret location; furthermore, no pictures of the “damp and burnt” records were ever shared with the public. This is made even odder when we read from DTCC own newsletter its intentions concerning “paper” copies of anything traded on the New York Stock exchange. As a matter of fact, just prior to the 2012 flood, DTCC called for a “dematerialization” of paper copies of any transaction on the NY Stock Exchange, or any other exchange.
DTCC’s dematerialization plan focuses on three primary areas in physical processing:
Work with the industry to reduce physical certificates held in the DTC vault, as well as reducing and ultimately eliminating those certificates held in DTC’s street name, Cede and Co."
Remember, when the only records that exist are electronic, you own whatever they say you own.

DTCC does all the clearing.
The BIS warns that the clearing system is going to freeze up.

Armstrong warned that the dollar will rise until it breaks the emerging markets.
The most crowded trade right now is,,,, the U.S. dollar.
Remember, when investors go to cash, this removes liquidity from the credit markets.
When investors ran away from Italian debt, the ECB had to make up the difference.

12/18 Greenspan tells stock investors: ‘Run for cover’ – MarketWatch
12/18 Oil sinks 5% to 15-month low as US and Russian output rises, demand falters – CNBC
What about my derivatives based on a rise in oil?
12/18 Wall Street turns apocalyptic on “biggest ever rotation into bonds” – Zero Hedge
The corporate bond market is exceedingly ugly. The sovereign bond market is a disaster.
12/18 France will tax Google, Apple, Facebook, and Amazon starting Jan. 1 – Quartz
12/18 Single-family home construction tumbles – CNBC
No more families AND, no more free money to speculators.

12/18 ‘No existing countermeasures’ to Russian hypersonic weapons, US govt. admits – RT That's great news.
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Old 12-19-2018, 03:35 PM
Danny B Danny B is online now
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DTCC and the reset,,, custodial risk

The DTCC handles many millions of trades every day. This couldn't be done if every asset was in an individual. name. So, it is all put in the name of Cede & Company. The brokerages and banks keep track of who owns what. The DTCC is just a clearing company. As I just posted, the BIS is predicting a meltdown of clearing.

Before the mortgage meltdown, RE transfers were all recorded in the MERS system. When the meltdown hit, the MERS system completely puked. A friend of mine lived in her house for 7 years without making a house payment. Nobody knew who owned the house or the loan. Loans had been sliced & diced (tranches) so much that it took years to straighten it out.

" four biggest Wall Street Banks holding at 6/30/2018 $ 188.58 TRILLION of nominal derivatives of which $ 142.23 TRILLION are interest rate contracts? FDIC reports two, JPM and Citibank, have $ 36.8 TRILLION of custodial assets. Further, OCC.GOV reports 99.4% of the nominal derivative obligations of these four banks are held for trading"
OK, what happens to all these derivatives in the event of a freeze up of clearing? Even the IMF has come out and said that we are going to have a global reset.

In a hypothetical bail-in of the banks, the investors money is taken to make the bank "whole" again. Remember the depositors are no longer depositors. They are investors. So, if the banks take your money, you won't have any recourse. You also won't have any idea if they really needed it or not.

I already wrote about the flood and fire at the DTCC vault where the paper trail for stocks and other assets was completely destroyed. In the absence of a paper trail, you will own exactly what the bank and brokerage house say you own. This is true for stocks, bonds and government securities. When the market turns and, brokerages want more cash, for margin calls that you can't meet, YOUR stocks (in the name of Cede & co) will be sold.
You will have NO idea of how much they sold for nor, how much more you owe the brokerage.

"In view of the M F Global seizure by JPM-Britain of USA sourced billions under City-of-London laws, is there a concern if the Custodial Companies have unsupervised authority to transfer title to securities to numerous other nations/laws?"

"There is certainly a Custodial Risk going forward and many people are unaware of the broker/clearer risk. This may not cause an overnight collapse but some sort of a work-out deal."
Guess who loses?
"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. "
"As far as an American institution sweeping accounts and sending the money to London pretending that they are the “owner” of the funds to post in the REPO market, that remains an open risk because the SEC and CFTC never prosecuted M.F. Global allowing that scheme to remain in place"

So, derivatives and government securities have no paper trail. These are the 2 big items that will freeze up. You can bet that a lot of people are going to get a big haircut.
Every ounce of physical gold is "held" by <100> people. When paper gold blows up, 99 people will get screwed. The CBs started buying gold a few years ago after having failed to drive gold out of all consideration of being a wealth instrument. This signifies that they see gold to be an excellent asset.
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Old 12-20-2018, 05:49 AM
Danny B Danny B is online now
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Panic out of stocks and, into bonds

Well, Powell did it. He hiked the interest rate. The fallout will be pretty bad.
The article mentions that the GDP is up.....consumption spending plus investment spending plus government spending equal gdp. GOV just hiked military spending to $750 billion. Presto,,, the GDP goes up. It also mentioned that unemployment is at 3.7%. The 92.6 million of working age who are not in the labor force have NO effect on the economy.

12/20 Too late to matter: Fed-sponsored economic bust coming no matter what – TM
12/20 Hedge fund armageddon – Capitalist Exploits
12/20 Why everything that needs to be fixed remains permanently broken – CHS
12/20 Big funds begin liquidating as panic grips the loan market – Zero Hedge
12/19 Fed hikes rate, lowers 2019 projection to 2 increases – CNBC

Yeah right,,, 2 more increases and every lemonade stand in the country will shut down.

12/18 Wall Street turns apocalyptic on “biggest ever rotation into bonds” – Zero Hedge
RIGHT, run to bonds.
"as I’ve been warning for months. CLOs, or collateralized loan obligations, are a Wall Street product stuffed with corporate loans. If that sounds familiar to you, there’s a reason. Wall Street is doing exactly what they did with mortgage loans before the 2008 financial crisis, but with corporate ones."
"Companies are holding $9.1 trillion of debt now in contrast to the $4.9 trillion in 2007 before the last financial crisis. The financial system, and those who take money from banks, are more highly levered than they were prior to the last financial crisis.'

12/19 “Jarring” Fedex outlook cut suggests “severe global recession” – Zero Hedge
Buy more popcorn.
12/19 Senate will introduce a short-term bill to avoid a government shutdown – CNBC
Make it long-term please.
12/19 Belgian government falls over migration pact as Michel resigns – Bloomberg
12/19 U.S. to pull forces from Syria, officials see full withdrawal – Reuters

12/17 Gun deaths in America reach highest level in nearly 40 years, CDC data shows – CNN
Research shows that whites use guns for suicide and blacks use guns for murder.

Putin Gives Trump 160 Terabytes Of Communication Intercepts ...

A Complete Guide to All 17 (Known) Trump and Russia Investigations ...

THAT is why it takes 17 agencies to investigate. They don't need to search for leads. They only need to follow up.

Italy has agreed to lower their target deficit spending.,
" the composition of the spending still raised concerns, particularly the main expansionary measures — the citizens’ income and rollback of pensions reforms (including lowering the retirement age).

“When these measures will fully come into force they will result in higher costs for the years to come. In 2020 and 2021, Italy intends to compensate the costs by … raising value-added tax (VAT). However, we know that in the past Italy has not activated this kind of safeguard"

Automatic Earth has a very good article,
"However, as I wrote in April 2018, if there is no price discovery, and there isn’t, there ARE NO markets, and it would be good and beneficial if many more people absorb that simple reality.
As long as you limit it to stock and bond markets, it may appear fine that people don’t understand. But as soon as you acknowledge there are no housing markets either for the exact same reasons, the story changes considerably. Because then it becomes clear that all -former- markets, bar none, have been eviscerated by central bank policies that sought to prop up banks, often highly successfully so, which they knew could only happen at the expense of communities and societies."
Got that right.
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Old 12-21-2018, 04:40 AM
Danny B Danny B is online now
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Central Bank war

I built a woodgas truck because fracking is such a money loser. I also put together a propane engine for my '65 Chevy. Fracking is going down fast.
12/20 US stocks plunge to 14-month low, Nasdaq enters bear market – CNBC
12/20 Global trade tensions boil over at staid W.T.O. forum – NY Times

Well, gold is up for the year. The Central Banks are at war with each other.
Billionaire 12/20 David Tepper urges move to cash: The Fed put is dead” – Zero Hedge
Remember that the credit bubble MUST grow. If people go to cash, this is liquidity drawn OUT of the credit bubble.

The BIS and IMF have it all worked out to use this crash to force the SDR into use.

"We are witnessing indeed not a Currency War but a Central Bank War. "
"The ECB is trapped and I have warned that it is the ONLY central bank that can actually go bankrupt because all central banks do not have the same structure. I have made it clear that by their very own standards, the ECB itself is insolvent."
"Summers is the man behind the curtain wanting to eliminate cash and making money national cryptocurrencies to ENFORCE negative rates. If you eliminate paper money, you eliminate bank runs. You eliminate hoarding of money (cash) and that would allow Summers to enforce a -5% interest rate stealing your money which would enrich the banks on top of the taxes you pay to the government."

"This is why we are in a Central Bank War. There are a lot of problems taking place and the Fed knows the Pension Crisis is taking down state and municipal governments. True, they raise rates and government debts explode. But the failure to raise rates means pension funds collapse and bailouts become necessary while states raise taxes which lower economic growth as disposable income declines. So if you can move to one of the state that do not have an income tax, do so while you still can."

"In plain speak, Powell bluntly stated that a stock market correction or even a 20% bear market is not enough… it would require a CRISIS for the Fed to stop being hawkish."
"Jerome Powell is worth over $100 million. He is not using his position as Fed Chair to launch a later career giving speeches for $250K or signing advisory deals as former Professors Bernanke and Yellen were.

As a result of this, Powell actually believes in his role as Fed Chair as it was originally intended… namely to focus on the ECONOMY, not the stock markets. He isn’t interested in maintaining the Bernanke/ Yellen created Everything Bubble. He is interested in getting the Fed back on course by normalizing policy."

Just about everybody is predicting that Powell will raise rates now so that he can lower them later. Going by his latest rate rise and the resultant fallout, I think that he is serious about squeezing much of the excess out of the markets.
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Old 12-21-2018, 05:17 AM
Danny B Danny B is online now
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X22, dismantling the FED,,,Syrian and Afghanistan withdrawal

I always notice the X22 reports but, never much follow them. I try to stick with things that have some documentation attached to them. Here are a couple of intriguing vids

The Syrian withdrawal.

Afghanistan is next.
Mattis was against pulling out. Trump has a LOT of practice saying "you're fired" .
Everybody keeps forgetting that Trump isn't some pantywaist politician.

The Bubble in Defense Stocks: Why It May Burst Soon - Investopedia
https://www.investopedia.com › News › Company News

The F-35 was such a piece of garbage that they are dangerous to fly. "They" are proposing a replacement that costs $ 300 million each.
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Old 12-21-2018, 03:35 PM
Danny B Danny B is online now
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Powell cutting off both Viagra and Cocaine in the stock market

Pox Americana invaded Afghanistan just months after the Taliban destroyed the poppy crops. Shortly after the invasion, Poppy and heroin production rose way up. Why do you think that they called him Poppy Bush?
Trump plans to pull have the troops out of Afghanistan. The entrenched powers are doing everything that they can to stop this.
Taliban's Ban On Poppy A Success, U.S. Aides Say - The New York ...
May 20, 2001
During the 2008 crash, drug money was the only thing moving through the banks. They had no other liquidity. I wish Trump luck in prevailing against the dark powers of the swamp.

12/21 Shades of 1987 and 2008 in current level of stocks getting crushed – Bloomberg
12/21 ETFs, major supporter of US stock market, stop buying the dip – Reuters
12/21 U.S. stock funds set for record monthly withdrawals – Reuters

Floggings will continue until morale improves. Powell doesn't care about the stock market.
12/21 NYC subway chief warns of ‘death spiral’ without $40 billion fix – Bloomberg
They want to dump $40 billion into a hole in the ground.
12/21 Japan’s FY2019 budget to top 100 trillion yen for first time – Bloomberg
QE is socialism for the banks. There is no limit.
12/21 Cramer feels ‘powerless’ after Fed hike, tells investors to buy gold – CNBC
Substitute brainless for powerless.

12/18 There is a new “most crowded trade” on Wall Street – Zero Hedge
Everybody is buying the dollar so, gold isn't up much in dollar terms. It is way up in foreign currencies.
The tax protest, https://economyandmarkets.com/econom...vest-movement/

Here is a short read with a great graph showing that confidence levels are WAY up.
And, here is the reality check, https://www.zerohedge.com/news/2018-...ll-assets-down

Last edited by Danny B; 12-21-2018 at 03:44 PM. Reason: Mo info
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Old 12-22-2018, 03:25 AM
Danny B Danny B is online now
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Nothing will save the pensions

My job is getting easier. I don't have to do as many excerpts as we get closer to default.
Saudi Arabia Adopts Biggest Budget in History With Expenditure at Over $294Bln -
"Saudi Arabia Is Going Bankrupt" Taleb Exclaims After Seeing Kingdom's Latest Budget | Zero

The Central Banks had the money hydrants all the way open in 2017,
"The record bearish print is made all the more fascinating, considering that just one year ago, 2017, was the 'best' year ever for markets on this measure, when just 1% of assets finished with a negative total return in dollar terms "
"2018 continues to the be the worst year on record on this measure with 93% of assets currently down -worse than the years of the Great Depression"
Repost, https://www.zerohedge.com/news/2018-...ll-assets-down


Armstrong, " The Fed MUST raise rates to help the crisis in Pension funds. Raising rates is NECESSARY for the Fed also realizes that come the next economic recession, the only tool they have is to lower rates.
This is why we are in a Central Bank War. There are a lot of problems taking place and the Fed knows the Pension Crisis is taking down state and municipal governments. True, they raise rates and government debts explode. But the failure to raise rates means pension funds collapse"

12/21 Brace for “seismic” volatility: pensions to buy $60bn in stocks – Zero Hedge
Raising of interest rates isn't going to help stocks. Stocks go down as rising interest charges make everything more expensive.
12/21 Dow dives 400 points to end its worst week in 10 years – CNBC
Armstrong, "The market has still not breached important support levels."
So, how low does it have to go before it is at an important level?
The smart money at the ETFs,,
12/21 ETFs, major supporter of US stock market, stop buying the dip – Reuters
I think that Armstrong is grasping at straws.
12/21 High-yield credit spread blowout – Macro Tourist
Corporate bonds are blowing to the moon. How can corporate stocks survive that?

12/21 Trump promises a ‘very long’ shutdown if Senate rejects border wall money – CNBC
So, how much money is really needed?
850 miles of US-Mexico 'wall' not needed, ex-border officials sayReveal
Nearly 700 Miles of Fencing at the US-Mexico Border Already Exist ...

$5 billion should cover the major smuggling routes.
12/21 Apple just entered a death cross, and Wall Street should ‘prepare for the worst’ – CNBC
12/21 Corporate bond issuance shrinks to 7-year low as selloff deepens – Reuters
Offers have been pulled because nobody is buying. What about roll-over time?
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Old 12-23-2018, 04:45 AM
Danny B Danny B is online now
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Power and money always attract corruption

As I already mentioned, Central Banks are created by the State to finance wars.
The FED was created in 1913. By strange coincidence,,, "WW I started July 28, 1914" War is big business and big profits. America wanted to get in on it. More correctly, American bankers wanted to get in on it. A Central Bank was necessary to reap the big rewards.
Armstrong, "The original design of the Federal Reserve in 1913 was PERFECT!!!!!! It “stimulated” by purchasing corporate short-term paper which created an elastic money supply. The paper naturally matured and thus the money supply contracted."
The money supply temporarily expended,,, and then, contracted. The FED had the power to create money and, power attracts corruption.
Armstrong, " When Congress usurped the Fed in World War I and ordered it to buy only government bonds to fund the war, they NEVER returned the Fed to its original design."
"Changing the structure of the Federal Reserve has altered everything. Now the Fed “stimulates” buying government debt EXCLUSIVELY!"

This is socialism, nothing more, nothing less. True, it was socialism for the rich. The poor got a burial on the battlefield. The banks got a goldmine. The FED was an association of bankers who put up their own money to have a liquidity backstop in times of panic. The FED was ALSO a great temptation. The State was never good at resisting temptation.
Not just the State. FED head, Benjamin Strong was found to be illegally selling Treasury bonds on the secondary market. They eventually made this retroactively legal.
The FED was hitched up to the cart to make the State grow and grow. The taxpayer was hitched up to repay all this.
Like all redistribution schemes, the parasite just kept growing without limit. State debt is growing faster than exponentially. The FED was unable to resist the mandates of crooked politicians.

After the war, the Bretton Woods agreement was supposed to tie the FED to gold and, all other States to the U.S. dollar. This would prevent CBs from inflating the bond market to ring in a war. Once again, crooked politicians would rule the day and create the welfare-warfare state. Everyone is pointing the finger at the FED for all of out problems.
2015, 21,995,000 to 12,329,000: Government Employees Outnumber Manufacturing Employees 1.8 to 1
This is a ratio of producers to non-producers. This isn't going to end well.
The State borrows money from the future to finance present-day consumption by parasites.

"In business, time is a cost working against profit, because profit is always measured within a time-frame. Time is also the basis of interest rates, which far from being a cost of money, is an expression of time preference. Time preference is the discounted future value of materials, energy and effort not yet in possession, but promised to be so at a given future date."
"Through monetary policy the state commandeers our time preferences, forcing its own omnibus version upon us. It commands the value of our personal futures relative to cash."
"If we understood the state was depriving us of time, we would probably be angry. The embezzlement of its use is behind the growing frustration felt by ordinary people. It is the underlying theme to Hayek’s Road to Serfdom, how the state conspires to steal its people’s freedom for statist priorities."
"First, we produce. Then we are paid. Then we spend and save. Money is the temporary storage of our labour for future use. Time and money are synonymous and common to all these activities.
We think the state is taking only our money, but it is also taking our time"

"we find ourselves working increasingly for the state, spending almost half our working lifetime doing so, our discontent and resentment builds. We are no longer in control of the fruits of our labour, our time. The central bank then springs to our rescue, creating the extra money we have lost in taxes, and encouraging the banks it regulates to extend credit to allow us to make more and spend more. It debases both our time preferences and the true cost of our wages to our employers. For a brief period, it might appear to work, so long as the losers don’t notice and complain. "
"Earnings and savings, the fruits of our time spent, are transferred from ordinary citizens and gifted to others favoured by the state, simply by suppressing interest rates, thereby reducing time preferences. Time-value is taken from consumers and given to producing borrowers. "

Here is a very good article on the end of the European project.
Another article that links the end of cheap oil to our unfolding monetary crisis.

China is looking at ways to keep it's people working.
12/22 Chinese leaders promise tax cuts to boost flagging economic growth – CNBC
12/22 Loan market is freezing: banks fail to sell $1.6 billion in loans – Zero Hedge
12/22 Trump wants to fire the Fed chair, which could wreak financial havoc – CNBC
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Old 12-23-2018, 08:48 PM
Danny B Danny B is online now
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No substitute for work and wages

30---40 % of Athenians were slaves. This was the accepted way of skimming off someone's surplus labor and time. But, you had to care for your slave's welfare from cradle to grave. Wage slavery was more profitable because, you only had to worry about a slave's welfare during it's productive years. Along with this came tax slavery. You paid the king for his protection.
With the advent of the industrial revolution and, the rise of mechanization, there was a dwindling need for human slaves. We continuously invented labor-saving devices. Every technological advance made more workers redundant. The only way that the credit bubble could continue to grow was for consumption to continue to grow. The finance sector extended more and more credit so that we could reach further and further into future wages. The advent of the computer created a huge rise in the destruction of job niches.

The State stepped in to provide support to those who lost their job niche. Here is a graph of government dependence.
The credit bubble & consumption have been maintained with money from the bond market supposedly pulling future consumption to today. There is an admission that this money won't be repaid. Just the debt service on this money is at $ 450 billion.
There is a falling need for slaves but, the financial sector has an always growing need for consumption.

The University of California system reports that they have $90.1 billion in cash and investments. This is reported yearly in their comprehensive annual financial report.
All State entities are required to file an annual report. On the site, CAFR1 Walter Burien shows that 37,000 State agencies report that they are sitting on a cumulative $230 trillion. One could make the argument that the State charges us for everything just to keep us working and productive. There are over 92 million Americans of working age who are not employed. The State takes about 40% in taxes and, burns it up on wars. This keeps us working. The number of employed people is expected to fall dramatically in the future.
The States plan to just raise taxes to keep the State going. The French demonstrations are characterized as being a tax revolt. The State is trying to counter-balance automation with increased taxes. The generally accepted figure is; for every 1$ increase in taxes, the producing economy is reduced by 3$.

Leaving the free $hit army aside, MANY of the people who are redundant do want to work. The State can raise taxes on those who still have gainful employment in the private sector but, that is the worst facet of socialism. Socialism kills motivation. Just the same, it appears that the PTB are heavily promoting socialism. Socialism brings a complete lethargy to the population as amply demonstrated in East Germany.

The Kalergi Chodoroff plan calls for migration replacement of existing populations in Europe with dumb brown people, who would be more controllable. This isn't any kind of solution to the problem of inadequate job niches.
The key problem is; an inadequate and falling number of wage-earners in the productive enterprises.
Japan addressed this by printing more money. Japan has the highest number of robots per capita.
The economy is soon to go into a cascade of default. Japan has tried all the conventional tools. There is very LITTLE talk about what we will do after the inception of the collapse. The conventional tools just won't work with a falling population. If U.S. sovereign debt collapses as predicted by Armstrong, The fallout will go on for a long time.
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Old 12-24-2018, 03:45 AM
Danny B Danny B is online now
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Kicking off the death spiral.

12/23 ‘Stunned’ by recession talk — El-Erian warns of self-fulfilling prophecies – CNBC
Everybody and their dog knows that the stock market has bubbled up to about 2.5 times historical valuation. They have all been edging to the exits just waiting to make a break. If the HUGE ETFs have stopped buying the dips, it is definitely time to get out.

Big Funds Begin Liquidating As Panic Grips The Loan Market
Look at the collateralized loans origination.
The credit market is rapidly deflating.
The banks are forced to keep sketchy loans on their books because nobody will buy them. This cuts back on both their stock price and, their income. Just imagine if they are never able to sell them.

Sovereign debt, "“$20 trillion got to $21 trillion in 186 days" "Global debt rose from 276% of global GDP in 2007, wallowed through the Great Recession, came out the other side topping 327% of global GDP, and continues to expand at >10% per annum.ref 324 Simon Black notes that while the economy grew 36%, the debt grew 123%.ref 325"

Credit "Death Spiral" Accelerates As Loan ETF Sees Record Outflow, Primary Market Freezes
"but over 800 million has been pulled in last current month, the biggest monthly outflow ever as investors are packing it in."
"Incidentally the behavior described by Citi's strategists, in which ETF administrators first sell high quality paper then shift to deep discount holdings, was one of the catalysts that hedge fund manager Adam Schwartz listed three weeks ago as a necessary condition for credit ETFs to enter a "death spiral." And with virtually everyone - including the Fed, BIS and IMF - all warning that the next crisis will begin in the leverage loan sector, the question to ask is "has it begun"?"
"In Europe, the market appears to have already locked up, "
"According to JPM, the percentage of loans trading above face value has dropped to just 3.9%, a 29-month low, down from 65.4% in early October. This suggests that virtually all leverage loan investors are now underwater on a total return basis."
"that are so deep underwriters may have to book a loss, if they can be sold at all. This is precisely what happened in late 2007 and early 2008 when underwriters found themselves with pipelines of debt sales that sudden got blocked, "
Viewing Conspirology feeds ~ World Professional News
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Old 12-25-2018, 04:55 AM
Danny B Danny B is online now
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No safe place for money

The last post showed the hedge funds abandoning the exchange traded funds.

Stock market selloff erases 2018 gains for Dow and S&P 500.
The pension funds have moved into credit funds and private equity.
All 11 sectors of the S&P 500 are now negative for December, the fourth quarter and the full year.

Treasury secretary Mnuchin says that investors will now move from stocks to bonds. He has NO idea of how markets work. He wants to get the Plunge Protection Team to go to work. They would buy up stocks to support markets.

BOJ Is Now A Top-10 Shareholder In 40% Of All Japanese Companies; Owns 42% Of All Government Bonds
"The last time we looked at how much of the stock market the Bank of Japan controls, we found that as of September, Kuroda's central bank owned a stunning 75% of all Japanese ETFs"
So, America is preparing to go down a road previously trodden by the Japanese. It didn't work for them. Look at Italian bonds. When the ECB started buying up Italian bonds, this gave private investors a GREAT opportunity to sell garbage the the Central Bank at a good price. The State wants to do a fresh transfusion into zombie companies to keep them floating,,, like dead fish.
Japan plans to try a plan B ,,, because plan A didn't work.

12/24 Mnuchin bid to calm markets risks making bad situation worse – Bloomberg
What do you expect? he's from the government.
12/24 From Goldilocks to Humpty-Dumpty markets – Zero Hedge That about covers it.
Kunstler is just a ray of sunshine, "And this solemn night a great stillness falls upon the land as the Leviathan of Washington is sent to its room to get its mind straight, and the USA gets on with collapse in earnest. There will be no visions of sugarplums for the Deep Staters as the government enters its induced coma, only premonitions of anarchy and insolvency,"

Jorge G. Castañeda writes about the bankruptcy of socialism.
Parallels with the 1930s;
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Old 12-25-2018, 05:08 PM
Danny B Danny B is online now
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It's officially true when you hear the official denial

Mnuchin really stirred things up by stating that; "Mnuchin bizarre, crisis-era announcement that bank liquidity is fine, "
"Mnuchin’s statement about banks “clearly backfired,” Upadhyaya said. “It smacks of desperation and nervousness."
"I’m not sure what they planned to achieve with this plunge protection team since none of the agencies involved have legal authority to intervene in the equity markets."
A lack of legal authority would never stop them. The FED sends a boatload of pixels to the SNB and, the SNB buys a ton of the FAANGS. Don't forget that the CAFR1 site shows local GOV has bought $trillions of stocks by squeezing us for every dime.
"What’s more troubling is the selloff in bank stocks, which signals distress in the credit market."
Do Not Worry,,, the banks are adequately capitalized. They are required to hold capital of 8% of their loans. It means NOTHING that their stock is down 20%

"what really brings banks down -- is a liquidity shortage. And these banks are incredibly liquid.”
Another denial.
"December has been the worst month for the stock market since the Great Depression - the average one-day drop in the S&P this month has been 1.6% - and was appropriately capped with a Christmas Eve crash which not only saw it plunge almost 3% "

A derivative is a financial contract with a value that is derived from an underlying asset. Derivatives have no direct value in and of themselves, Investopedia.
Just Four Banks Account For 90% of $200 Trillion in Derivatives Says OCC Report
The continuous currency inflation from the central banks created a constantly rising price in the asset market. By using derivatives, banks had their most profitable year in history in 2017. The derivatives themselves are an enormous lever for creating profits.
The derivatives themselves are an enormous lever for creating losses when they go into reverse. The bank may very well have adequate capital reserves for surviving a <10%> loss in the underlying asset but, they have no possibility of surviving this same loss when it is leveraged up by derivatives.

From the IMF, "A number of large bond mutual funds use derivatives—contracts that permit investors to bet on the future direction of interest rates. However, unlike bonds, most derivatives only require a small deposit to make the investment, which amplifies their potential gains through leverage,"
"the amount of leverage that can be achieved through derivatives exposure is potentially large, often multiples of the market value of their portfolios. This may explain why mutual funds accounting for about 2/3 of the assets in our sample disclose derivatives leverage ranging from 100 percent to 1000 percent of net asset value "

The banks are required to hold adequate capital for a loss in their loan book. Since derivatives technically don't have any value, they don't require loan-loss provisions.
There are a few more trading days left in the year. This official denial of problems with bank liquidity may bring a thunderous climax to 2018.
The markets have lost over 20% this year. While the financial sector is the most prominent loser, the corporate sector is in big danger also.
"Where investors share heightened concerns over market illiquidity is in the smaller universe of corporate bonds.
$9 trillion corporate debt bomb is 'bubbling' in the US economy
Will Record Corporate Debt Cause the Next U.S. Recession ... https://www.bloomberg

We've seen this story before, https://www.marketwatch.com/story/co...ndi-2018-08-27
Good graphs, https://www.marketwatch.com/story/th...and-2018-11-29

Because of the outsized leverage of derivatives, the FEDs interest rate rise has an outsized effect on losses in derivatives.
Paul Volker raised rates to about 21% to control price inflation. Powell is hoping just to get to 3%.
Real wages haven't gone up in 40 years. The finance sector is horrendously bloated. The FED has tried to support a finance sector that the consumer just can not support. The finance sector went from 15% of the economy to about 40%. The CBs goosed the economy with $trillions of support. Powell has shoved the transmission into reverse. Trump is trying to wind down military expenses to free up some money for domestic problems.
The deep state would willingly throw us into a SEVERE depression to save their perks and control. Trump and Powell are trying to ease us into a much less depression.

12/25 2 year Treasury yield flash crashes – Zero Hedge
12/25 Japan’s Nikkei drops 5 percent after Wall Street slide deepens – CNBC
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Old 12-26-2018, 04:04 PM
Danny B Danny B is online now
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Oil,,, the dept poison is back and, spreading

In a general sense, the economy goes down when the cost of energy goes up. In a general sense, the financial sector goes down when the cost of oil goes down. Oil is going down.
The Kuwaitis say that they can extend the production cuts until it finally causes a rise in price. The price of oil now is 1$ a gallon,,, $42 a barrel.
The IMF says that Saudi Arabia could be bankrupt by 2020. That would definitely cause financial markets to puke up.

"When asked why stock prices are falling, the talking heads on television and the internet point to the Fed’s continuing interest rate hikes and the ongoing trade war with China. Those factors are important, but there’s another component that gets less attention: soaring levels of debt. Much of that debt is of highly dubious quality. "
"financial wizards on Wall Street turned sub-prime mortgages into mortgaged-back securities called collateralized debt obligations"
"However, with the help of global credit rating agencies, the purveyors of mortgage-backed securities were able to do something roughly akin to converting lead into gold."

Since the banks were rated AAA, the ratings agencies rated the sub-prime loans AAA.
"Millions of borrowers defaulted on their mortgages, and the value of collateralized debt obligations collapsed. Then the banks and insurance companies backing those securities started to collapse, along with stock markets worldwide.

Now it’s happening again. Credit rating agencies are once again using questionable assumptions to give trillions of dollars in dodgy debt much higher ratings than is deserved."
"he volume of debt rated BBB- has ballooned from $700 billion in 2008 to $3 trillion today.

Drilling down into these numbers, there are some alarming statistics. In 2007, companies rated BBB- had an average net debt of 2.1 times earnings. Today, that ratio is 3.2. And more than a third of companies with a BBB- rating have a debt-to-earnings ratio larger than five."
"I won’t be surprised if a large chunk of supposedly investment-grade debt is effectively junk and written off if the correction we’re now experiencing in the stock market turns into a recession. And that could trigger a financial crisis that dwarfs the one that we experienced a decade ago."

"in the early 2000s, the Fed’s easy-money bias spawned a monstrous credit bubble, which subsidized the leveraged monetization of housing-market froth.

And so it went, from bubble to bubble. The more the real economy became dependent on the asset economy, the tougher it became for the Fed to break the daisy chain."
The economy SHOULD have been commensurate with our wages. It took serial bubbles to save the finance sector from a crash with reality. At the same time, the welfare-warfare State had to be constantly financed and the State was not about to reel in the FED.

12/26 House Democrats line up behind huge expansion of gov’t – Daily Caller Just what we need.
12/25 Trump ‘plunging us into chaos’, Democrats say, as markets tank – Guardian
Yep, put the dems in charge and , everything will be great.
California is starting to enter it's own special hell.
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Old 12-27-2018, 03:59 PM
Danny B Danny B is online now
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The piggy banks (bond market) is breaking

1908, the bankers started a panic to justify the creation of a Central Bank.
1913, we got a Central Bank
1914, WW I started
1917 America entered WW I
1917, the FED was coerced to buy war bonds.
Apr 24, 1917 Emergency Loan Act authorizes issue of $1.9 billion in bonds at 3.5 percent.
Oct 1, 1917 Second Liberty Loan offers $3.8 billion in bonds at 4 percent
Apr 5, 1918 Third Liberty Loan offers $4.1 billion in bonds at 4.15 percent.
Sep 28, 1918 Fourth Liberty Loan offers $6.9 billion in bonds at 4.25 percent.

The FED was created as a private liquidity backstop for it's members. It loaned from the overnight window to create emergency liquidity. The short-term loan was repaid and, the liquidity was destroyed. Buying State bonds was never a part of it's original design. The FED was to provide emergency liquidity to private companies for a very short term.
In 2003, the banks were required to create sub-prime housing loans to increase the rate of home ownership. In 2004, both the FBI and SEC warned that a serious bubble in RE was forming. Both units were disbanded.
It all blew up in 2007--2008. The FED was required to buy many $trillions of mortgage backed securities. Their balance sheet eventually reached $ 4.4 trillion. They have been trying to sell all this dodgy paper but, have only sold 10%.

The FED is much maligned but, they never asked to buy and broker GOV bonds.

In 1925, Social Security was created to support widows and orphans. It paid out old age benefits after 65 years of age,,, back when the average life span was 57. It was financed by contributions from workers and their employers. Eventually, ALL the funds in SS were replaced by non-negotiable GOV bonds. If SS had invested in stocks, it would have much more money.

"The roots of IRS go back to the Civil War when President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and enacted an income tax to pay war expenses. The income tax was repealed 10 years later."
"The United States imposed income taxes briefly during the Civil War and the 1890s. In 1913, the 16th Amendment was ratified, permanently legalizing an income tax."
We got an income tax in 1913 and a war in 1917.

America's history is a long litany of war and taxes. Since LBJ instituted the war on poverty America has spent $ 25 trillion.
51% of Americans receive a check from GOV. 44 million receive direct support.
"There were 21,995,000 employed by federal, state and local government in the United States "
GOV debt is growing faster than exponentially. 44% of Americans pay no income taxes.
The bond market is the big piggy bank that was subverted 100 years ago to ensure the continuation of wars and welfare. The FED has been an unwilling enabler.
There is much talk of ending the FED but, the FED buys up all the dodgy assets when the credit markets freeze up. The FED and IRS support the GOV. GOV does redistribution. GOV does much of it's distribution by creating make-work jobs and wars.
The ultimate problem is; GOV tries to create make-work jobs in an amount equal to the jobs lost to automation and outsourcing.

Here is an article about our coming system that will no longer include money. we will just receive everything that we want.

12/27 Mutual fund outflows surge to $56 billion, most since 2008 – Bloomberg
12/27 Mother of all sucker rallies sends Dow 1,000 points higher – Mish
12/27 Richmond Fed mfg index record plunge coupled with twilight zone hiring – Mish
12/27 Bid-to-cover at U.S. 5-year auction weakest since 2009 – Reuters

Avoiding GOV debt.
12/27 Insider stock buying surges to 8-year high – Bloomberg
Insider stock buying used to be illegal.
12/27 China to take over Kenya’s largest port over unpaid Chinese loan – Zero Hedge
What did you think would eventually happen?

"U.S. credit market debt is about $70 trillion. The 10 year rate doubled in the past two years. Suppose that 1.7% increase applied to $70 trillion of debt. The cost to corporations, state and local governments, credit card holders, students etc. would be $1.2 trillion of reduced spending on other necessities."
This is a good article in credit markets.
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Old 12-28-2018, 05:07 AM
Danny B Danny B is online now
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suckers rally,,, Armstrong,,,All-consuming public pensions,,, advanced weapons

Charles Hugh Smith writes about the general rise in taxes.
oftwominds-Charles Hugh Smith
$125,000: The pension debt each Chicago household is really on the hook for

Armstrong, "The total global debt hit a record $184 trillion, which is the equivalent to more than $86,000 per person. That is actually more than double the average per-capita income. People ask me will our solution work? Can we really just end government debt and convert it to cash restricted to investing in domestic companies? I will put it this way. There is absolutely NO OTHER CHOICE!!!!"
Sorry, I'm not yet at a level of understanding to where I could visualize this process.
"We either default, which will result in civil war and revolution, or you inflate your way out like Venezuela so your Social Security check will not even buy a cup of coffee. A default will result in war. People will then be demanding they have been cheated. Inflating the way out is completely different. You paid them what was promised. It’s their fault it buys nothing.

To inflate the way out requires a completely different set of patterns. Right now, the theory is that WE THE PEOPLE are the problem. If we all paid what the government thinks we should then they will be fine. They increase taxes and increase enforcement and believe it is their divine right of kings to act in this manner. What we are witnessing so far is not the inflation path – but the hardline path that leads to only violence as we are witnessing in France."
Armstrong dearly hates the U.S. GOV that threw him in prison to get his program. I think that his hatred is coloring his view.
Armstrong, Illinois House had voted 72-45 to pass a 32% income tax hike as government refuses to address the real issue of a never-ending need for more and more tax revenue to keep state employees rolling in their pensions. The governor vetoed the tax increase and he was overriden.

The problem has been that government pretends that socialism is to take care of the poor when in fact they have their hand in the cookie jar before anyone else. The crisis stems from the fact that they have been giving themselves pensions with outrageous benefits
More-often-Than-Not, the revolutions throughout history come about when the taxes of government simply break the back of the economy. We are reaching one of those moments as we cross the threshold into 2018.
The low-interest rate policy for nearly 10 years has not merely destroyed the bond market in Europe, it has undermined the pension system both privately and publicly. Indeed, adding to this crisis is the mandate that all pension funds hold some or the majority of their investments into government debt"

Mass Exodus from NYC Due to Taxes
Another favorite of Armstrong., https://www.armstrongeconomics.com/w...endless-taxes/
"QUESTION: Mr. Armstrong; I understand at the WEC you told the audience the stock market would correct sharply into January/February. For those of us who could not afford to attend a WEC, are we to expect the slingshot you have been warning should take place?
"ANSWER: Yes. Timing is absolutely everything. DO NOT ANTICIPATE anything. Time is more important than price"
"Yes, when I say we can see a monetary reset as soon as 2021, this is no joke. There are critical points in a number of markets that I will reveal in Singapore. These are the lines in the sand. Once we cross them, there is no going back. This is a global systemic collapse. I cannot emphasize how serious this is going to be."
It appears that we have 13 months or a bit more to go until we are in deep do-do.... shortly after the next election.

"Europe continues to suffer with some key names still under significant declines even raising questions of continuity! Deutsche Bank shares fell to 6.68 today a decline of 58% YTD. Lots of talk of European names liquidating US paper not as trading strategy but for survival. Financials and auto’s have had a combined affect on the DAX this year and have resulted in one of its worst years in history"

"Mr. Armstrong; A spectacular call. You gave the day and the market bottomed within 100 points of your number. You always nail it. "
"The problem is he has the classic TV talking heads view that stocks will crash with higher interest rates. Trump’s frustration with the central bank chief intensified following the interest-rate increase and months of stock-market losses. He is oblivious to the real crisis which is the low-interest rates are destroying the pension funds."
Armstrong is obsessed with the pension funds. I suppose that it is possible to save the pension funds with higher interest rates. Higher interest rates would destroy; corporate debt, emerging market debt service, FED GOV debt service

"For now, the news will bash the stocks when down, and when investors/traders see there can be no flight to bonds as quality, the real panic will begin. I wish I could reverse this mess, but reality states Trump’s handlers are rooting for the Deep State and would never let me near him.

The Democrats want the stocks to crash for they can blame Trump and try to win the losers to vote for their team. The shame here is this is not about running the nation or the economy to benefit all, it is just about winning the 2020 election. Since the ECM turns in January 2020 rather than the elections in November 2020, this is indicating that we may have a psychological shift prior to the elections."

12/27 Trump declares end to US ‘policeman’ role in surprise Iraq visit – Yahoo
Raytheon and General Dynamics are NOT going to like that. The hard truth is, Russia has a mach 27 missile. They have a nuclear powered cruise missile that can stay aloft for days. It can avoid all ABM systems. China has a hypersonic glider that they are willing to sell to anybody who comes along. Russia has a super torpedo that is pretty much undetectable. It can be launched over great distances. So What !
It can cause a giant tsunami on any coastal city. The F-35 is such a P.O.S. that the israelis have to build it over with new wings. It's about time that pox Americana got out of the war business.
The Pentagon admits that it doesn't have anything that could counter the new Russian weapons. Russia says,,, "you haven't seen everything.

12/27 Falling total fertility rate should be welcomed, population expert says – Guardian
12/27 Japan shrinking as birthrate falls to lowest level in history – Guardian
12/27 US population growth hits 80-year low in year of demographic stagnation – Brookings

So, what is the plan to grow the economy?
12/27 US stocks reverse big early decline to end higher – CNBC
China Shows Mnuchin How It's Done As Beijing's Plunge Protection Team Reverses Stock Rout

They pumped zillions into financial markets. There will be no controlled demolition for them.
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Old 12-28-2018, 01:59 PM
wayne.ct wayne.ct is offline
Silver Member
Join Date: Jan 2011
Posts: 552
Converting deflation into inflation

The way the stock market has performed recently is indeed very interesting and it is the cause of much consternation and ink which is interesting of itself. However, the "solution" proposed by Armstrong prompts this comment.

Also, btw, I don't claim to understand or know exactly what his solution is. I just want to throw something out here in black and white regarding inflation and deflation!

It appears that governments and banks (one entity?!) would like to have inflation but at the same time conceal the cost to the economy. I believe that to be true. How to do that when so many are waking up and beginning to act?

Those people who are able to do so and those people who have no choice are able to discontinue going further into debt and even reduce their debt. This causes a major problem for govs and banks. It takes "debt money" out of circulation and to some degree "real money" as well. I would argue that this is the core of deflation, i.e. less "money" in circulation.

What if, by some means legal or deceptive, the accountants obtain the legal option of transferring part of their bad debt to the government in such a way that it "disappears". The bank's balance sheet improves and the government's credibility declines.

If you agree with that premise you probably think that is exactly what they are doing now. Anyway, if the process continues along those lines, is this not what you have?

Those who don't trust the government now will continue to not trust the government.

Likewise, those who do trust the government will continue in the misguided beliefs.

Same for banks.

Same for the legal profession and local governments.

Nothing changes!

Unless people switch sides in this battle, there can be no change in direction. This sea change is more like steering the Titanic than paddling a kayak. The public is being fed the same line they have heard every year, year after year, for a long long time now. We each have to do our part but the prospects are not bright. The public is being conditioned to believe we are just going through a "normal" economic cycle and no fundamental change is required or needed.

Therefore, don't expect a change of course. The world is going to ride this train right over a cliff while thinking "no big deal" everything is fine!
There is a reason why science has been successful and technology is widespread. Don't be afraid to do the math and apply the laws of physics.
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Old 12-28-2018, 04:00 PM
Danny B Danny B is online now
Platinum Member
Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,885
Falling population crashes into rising debt

In the 2008 crash, millions defaulted on RE loans. This locked up the banks and credit markets. The FED, most likely unwillingly, bought up all those impaired assets at 100%. The banks themselves bought out their competitors for pennies on the dollar. The Sec of the Treasury was a Goldman guy and he made sure that GS had plenty of cash and opportunities to buy or destroy rivals. Lehman Bros was executed by withholding monies owed to them.
Congress was told that the FED must buy all these impaired assets so that the banks could start loaning to the public once more. The banks couldn't find very many credit-worthy people who wanted a loan. The banks speculated rather than loaning. The banks held their excess reserves at the FED and received interest payments. The bloated banking sector conjured up derivatives to create new fees. They pushed student loans to conjure up credit growth.
So, yes, The bank's balance sheet improves and the government's credibility declines.
I hear conflicting numbers but, it appears that the State spends 30% of the GDP. I read conflicting numbers but, it appears that; for every one dollar increase in taxes, the productive economy shrinks by three dollars.
As automation bites harder, social spending goes up. If GOV maintains social support with rising taxes, this reduces the economy. If GOV maintains social support with debt money, debt service becomes exorbitant.
When children were a financial asset because they could be put to work, we had big families. Since children are a financial drain, it makes sense to not have children. The State is running out of people to tax. The economy is shrinking but, the pension funds project 7% returns. The State pension funds require enormous new tax "contributions".
Birth control and the demographic crash can NOT be factored in to a system with debt money.

Our current debt money system AND the financial system will continue to flounder faced with population reduction and wage reduction. Our productivity has gone up but, our consumptive power has gone down. The State tries to make up the difference by war spending and social spending. If sovereign debt collapses as predicted by Armstrong, total spending will fall until it reaches a point commensurate with our wages.
The only thing that could offset this to some degree is a big fall in the master resource.
If the FUSOR or the MEG were to bring down the price of energy by 80%, this would go a long way towards allowing general prices to fall so that we could better survive.
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Old 12-29-2018, 04:34 AM
Danny B Danny B is online now
Platinum Member
Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,885
Jim Willie, Kunstler,,,FED as a suicide bomber

Jim Willie; "We have finally arrived at the ten-year anniversary of the Lehman event, a killjob whereby JPMorgan and Goldman Sachs bought a few $billion in mortgage bonds and never paid Lehman Brothers. The firm died, called a financial failure, but was actually a strangulation. Goldman went on to capture AIG, in order to claim 100 cents per dollar on insured mortgage bonds, a second crime. The Wall Street banks, under the leader Henry Paulsen as the managing USTreasury Secretary, completed the third crime, by pitching the $700 billion TARP Fund. They stole it,
, instead of making the funds available for lending purposes. Here ten years later, nothing has been fixed. In fact, all the abuses heaped upon the mortgage finance sector have been repeated in sovereign bonds. The USTreasury Bond has become a subprime bond, financed by pure monetization, almost no actual bonds buyers"

"The outcome of the unfolding crisis will be three to five times more magnificent that what was witnessed in 2008 and 2009.
Then the Deutsche Bank saga, better known as the Bush Narco Bank. Then the entire US big bank takedowns, evident in the BKX bank stock decline. In fact, the Western banks have kept the EM nations afloat by lending them funds in the last two years, just to maintain and to float the loans owed to the same Western banks.
The USGovt tax revenue in total does not cover the USGovt borrowing costs any longer. The entire USGovt function is currently in deficit, the entire shebang.
The lit fuse will be Western bank declines and Emerging Market debt default."

So, while the banks are declining, they are loaning money to emerging markets to keep the from defaulting.
"calls for powerful recession, corporate debt defaults, official debt rating downgrades, rising unemployment, rising price inflation, and growing scattered talk of a USGovt debt restructure (default)."
Armstrong made the somewhat cryptic remark that GOV debt must be converted to cash.

"The Wall Street banks desperately propped up the crude oil price, with the collusion of the USFed itself. Next it all unwinds, and massive losses to Wall Street banks threaten to expose tremendous losses in the $billions for these hollow pillars posing as banks,"
"Consider Deutsche Bank, whose stock was once well over $100 per share. It serves as the Western bank toilet lever. The DB share price is heading to 50 cents in one of the greatest tragedies in the modern financial era. Hundreds of $billions in market capitalization are being vaporized. Little known to the sheeple and even to many financial mavens is that DBank is the Bush Narco Bank, which has moved $billions in narco money for three decades"

" Dozens of big US corporations will suffer additional debt downgrades. Expect at least 1$trillion in bond losses. Expect the Wall Street managers to have very significant option puts in place for the S&P500 and the NASDAQ tech stocks. They will sabotage the main US stock market, in order to drive money into the USTreasury Bonds. But their initiative of sabotage will not succeed this time. The reason why is very solid and very understood. The funds will not find safe haven in the USTBonds since they are the new subprime bond. The tax revenue does not even cover the debt borrowing costs,
Gold and Global Financial Crisis Redux

Well, you didn't expect him to be an optimist..

Kunstler; "You had to love the narrative that the financial media put over about the 1000-plus point zoom in the DJIA on Wednesday: that pension funds were “rebalancing” their portfolios. It dredged up the image of a drowning man at the bottom of the deep blue sea with an anchor in one hand and an anvil in the other, switching hands."
"Thursday’s last minute 900-point turnaround was another marvelous stunt to behold. Somebody gave the drowned man a pair of swim fins to kick himself furiously to the surface for a gulp of air. The truth, of course, is that pension funds are sunk, however you balance their investment loads while they’re underwater. They over-bought stocks out of sheer desperation during ten years of near-ZIRP bond yields, and started rotating back into bonds as they crept above the ZIRP handle, and now with bond yields retreating, they’re loading up again on still-overpriced stocks that pretend to be “bargains.” Everybody knows that this will not end well for pension funds. Glug Glug."

Armstrong says that the FED is raising rates to save the pension funds. Just imagine that you are a deeps sea diver in a dive suit with an air hose to the surface. The air compressor dies and, the crew takes 20 minutes to fix it.
"What The Times and its media compadres fail to notice is that the nation has entered an irreversible transition out of our familiar techno-industrial arrangements into the uncharted territory of deferred fantasies and real hard times. Financialization of the economy was the last ploy to keep this boat floating. It allowed political and business leaders to pretend that asset-stripping the interior of the country — so that coastal moralizers could enjoy micro-green lunches and sex-change surgery — would promote the general welfare. "

"The true rebalancing of pension funds, and everything else in American life, will come with the recognition that we are tapped out and bumping up against actual limits. Alas, economies don’t de-grow, at least not in an orderly way."
Mitigationists versus the Adapters
Which Side Are You On? - Kunstler

Merkel and Macron equate patriotism with treason.
Brandon Smith says that the FED is a suicide bomber trying to destroy the economy to usher in one world GOV. Some of his stuff is hard to believe BUT, he has a very good track record of getting stuff right. Don't forget, The Economist Magazine (mouthpiece of the "elites") predicted20 years ago that the new world currency would come in 2018.
An interesting graph of gasoline prices, https://www.globalpetrolprices.com/V...soline_prices/

12/28 Credit spreads blow out amid accelerating liquidations – Zero Hedge
The 1,000 point rise was manufactured by a $64 billion stock purchase. How long can you expect that to last?
12/28 As credit losses pile up, one bond guru dismisses crisis talk – Bloomberg Just one?
12/28 Nobody has any clue about how to trade this “bewildering” market – Zero Hedge Just wait a couple of months.
12/28 Why stock-market investors fear a ‘wicked bear trap’ – MarketWatch Because they are in one.

12/28 Sears may be down to its last 24 hours – CNBC Eaten alive by corporate vultures
12/28 Apple lost $11 billion buying back its own stock in 2018 – Zero Hedge
12/28 Market gives finger formation to Fed’s dot plot take – Mish

I wonder why?
12/28 Danielle Park – Markets finally head south – Market Sanity
Death toll from the cold doubles, https://www.armstrongeconomics.com/w...-not-over-yet/

12/28 Huge divergence between the Dow Transportation index and Dept of Transportation stats – Mish Somebody lied !
12/28 Gerald Celente: worldwide riots, recessions – 2019 will be nuts – Market Sanity
Move to some place warm and, buy more popcorn. I suggest Darwin N.T.

12/27 Trump is a test of the economy’s breaking point – Bloomberg
I'm beginning to suspect that the shutdown is not about the wall. I think that the shutdown is meant to set off something else but, have no idea what.
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