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Old 02-09-2018, 06:05 AM
Danny B Danny B is online now
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Interest rates and the worst-case scenario

Reverse wealth effect, oftwominds-Charles Hugh Smith: Before You "Buy the Dip," Look at This One Chart
2/09 Volatility shock wave has wiped $5.2 trillion from global markets – MarketWatch
2/09 Asian stocks tumble after US markets sharply sell-off – CNBC
2/09 Junk bond ETFs sink to lowest since 2016 – Bloomberg
2/09 Market tumble wipes out almost $100 billion from world’s richest – Bloomberg

The fear of rising interest rates is spreading, PressTV-Dow Jones crashes again, plunges 1,000 points
2/09 Fund crashes after wrong-way volatility trade – CNBC
2/09 “Worst case scenario” emerging: “selling has shifted” – Zero Hedge

2/08 Dow plummets 1032 points, now down 10% from record – CNBC
2/08 FANG’s $90 billion disaster – Daily Reckoning
2/08 A fundamental change is underway in the financial markets – CNBC

2/08 Everything’s a sell in China after $660 billion equity wipeout – Bloomberg
2/08 Tokyo to investors — don’t panic – Nikkei

2/09 White House to federal agencies: prepare for shutdown – MarketWatch
2/08 Government shutdown deadline looms Thursday – NBC News

2/09 China’s HNA reverses buying binge with $4 billion selling spree – Bloomberg Ah yes, the Chinese need to raise cash.
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Old 02-09-2018, 03:59 PM
Danny B Danny B is online now
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Graphs of wages and productivity

Some graphs that tell the story very well.
We're at the bottom, https://www.financialsamurai.com/wp-...by-country.png
We're always working harder, http://s3.amazonaws.com/content.thir...jpg?1458578442
Part of the reason for our loss, http://www.industryweek.com/sites/in...ss-Incomes.jpg
The FED can inflate the money supply far faster than we can make gains in wages. https://lh5.googleusercontent.com/-C...Power+USD2.JPG

We went off the gold standard and this allowed to FED to print up lots of faux money for all the money renters. In 1971, we got a swift kick in the wallet, https://philebersole.files.wordpress...oductivity.png
We "survived" by just borrowing more, https://wolfstreet.com/wp-content/up...al-2017-Q4.png

The more that we were squeezed by monetary inflation, the harder we worked and the more we borrowed. The upper loop is trying to keep the game going. The printing has gone parabolic. It is SUPPOSED to stave off defaults in the lower loop. The real result is; price inflation resulting from the monetary inflation is bringing even more defaults. Diminished consumption caused manufacturing to do even more automation.
The defaults are rising in spite of the efforts at the FED to hold it all together.

2/09 European banks could soon hold bitcoin, admits ECB president – CCN
These feces-for-brains bankers are ALREADY holding SDRs. What happened to the new magic-money, the SDR?
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Old 02-10-2018, 02:36 AM
Danny B Danny B is online now
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The fallout from the rising 10 year note

Mnuchin is at the Treasury. When Powell became head of the FED, the stock market dropped 1175 points. Now, we see more drops. Maybe the FED, PPT and ESF are NOT going to prop things up. There were initial indications that somebody came in and cut the losses in half on the first day. It remains to be seen just how much control Trump, Mnuchin and Powell have over the Exchange Stabilization Fund.
"a background description is given on the USDept Treasury's enormous slush fund in the Exchange Stabilization Fund which has size in the multiple $trillions and which has a function in financial rigging of every major Western market, and whose core might be $3 to $5 trillion worth of Saudi recycled petro surpluses, with primary function being the fabrication of fake USTreasury Bond demand via the Interest Rate Swap derivative machinery during the absent foreign bond demand"
GOLDEN JACKASS.COM - The Golden Jackass Knows Gold, Currencies & Bonds"

Everything is based on the 10 year Treasury note.
” If the 10-year yield gets above the 2013 high of 3.04%, a bullish long-term “double bottom” reversal pattern would be completed, opening the door for an eventual rise toward the 4.75% area."
"When the yield bumped up against the downtrend line before, as happened in 1987, 1990, 1994, 2000 and 2007, bad things happened on Wall Street."

"There's a not-so-quiet rebellion going on in the bond market, and it threatens to take 10-year yields above 3 percent much faster than expected just a few weeks ago."
2/09 Asia’s rich must exit crowded trades, cut leverage – WaPo That might cause a downturn. What if China does not want a downturn?
2/09 China’s central bank releases nearly 2trln yuan in temporary liquidity – CNBC Right,,, temporary. They have never been able to withdraw liquidity.
2/09 Moody’s threatens to downgrade US debt – ETF Daily News That won't make them very popular in the District of corruption.
2/09 Stock and bond investors paying for Fed’s dangerous experiment – Zero Hedge The FED did it ALL for them and now, it has run it's course.

Venezuela has a negative feedback loop in oil production, https://www.zerohedge.com/news/2018-...ial-insolvency
The Venezuelans are all trying to leave, https://sputniknews.com/latam/201802...rol-venezuela/
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Old 02-11-2018, 04:17 AM
Danny B Danny B is online now
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Impossible decision,,, short version

I hurt my eye and can't stand light,,, especially looking at the screen.
Here are a few links.

Fed will have to choose between rates and stocks, Sprott says | Gold Anti-Trust Action Committee


"But that truth means the system as managed by the political elite is dysfunctional. Yet the elite refuse to yield any power."

1517, removing the financial remora, https://www.armstrongeconomics.com/a...ion-v-banking/

Almost every bit of the money supply is electronic debt backed by nothing. Paper money is a rarity. The NSA created the blockchain and bitcoin. They are collapsing because they can be stolen too easily and now, the energy cost is far too high.
The SDR didn't fly because it is a piece of garbage... unlimited creation. Notice that nobody steals SDRs.
BTC was an attempt to acclimate us to non-CB electronic money.. That lump of garbage just won’t fly.

The FED is about to crash and, they are making one last desperate attempt. to get us out of the crashing dollar and, INTO their latest creation.
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Old 02-13-2018, 02:49 PM
Danny B Danny B is online now
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slipping into democracy/insolvency

ALL GOV is socialist because all GOVT. does redistribution. All democracies eventually crash because the people learn that they can vote the whole pie for themselves. All politicians buy votes with promises. They eventually promise more than the taxpayer can afford. We were originally given a republic. The 17th amendment chipped away at that. When women were given the vote, the results became more touchy-feely and less businesslike. Women are a lot more likely to live in a wishful dream world.

We lost the republic and became a democracy. Politicians bought election money with promises to the rich,,, and then bought votes with promises to the poor. Supporting the rich costs 10 times what it costs to support the poor. The State told the people, "don't worry about old age and infirmity, we will take care of you." "Don't worry that you have no skills and are unemployable. we will give you a job."

Because of the great wealth arising from the post WW II economy, America was able to make good on those promises. That has all ended and the printing press is all that is keeping things going. Trump plans to spend $trillions on infrastructure. The FED plans to stop monetizing Treasury paper.
No politician has had the balls to take away all the perks that earlier politicians have passed out.
2/13 Trump wants giant cuts to housing, food stamps and health care – WaPo
I'm guessing that Trump will demand that GOV shut down all the benefits because the FED will no longer monetize Treasury paper. That should light a fire under the FED.
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Old 02-14-2018, 02:12 AM
Danny B Danny B is online now
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Stpckman,,,, the wind & the unwind,,,

My eye is still giving me trouble and the posts will be short. You can skip a lot of reading by just looking at what David Stockman wrote. The FED seems to think that the unwind is controllable.

QT is the "unwind". The Treasury bond market is the "wind".
"Less than two weeks ago, the United States Department of Treasury very quietly released its own internal projections for the federal government’s budget deficits over the next several years.

And the numbers are pretty gruesome.

In order to plug the gaps from its soaring deficits, the Treasury Department expects to borrow nearly $1 trillion this fiscal year.

Then nearly $1.1 trillion next fiscal year.
And up to $1.3 trillion the year after that.

This means that the national debt will exceed $25 trillion by September 30, 2020.

Remember, this isn’t some wild conspiracy theory. These are official government projections published by the United States Department of Treasury.

This story alone is monumental– not only does the US owe, by far, the greatest amount of debt ever accumulated by a single nation in human history, but $25 trillion is larger than the debts of every other nation in the world combined."
2/13 China January new loans surge to record 2.9trln yuan – Reuters Ah yes, it requires huge new loans to roll over the old loans.
2/12 Chinese Central Bank governor warns again of financial crisis risk – Smaulgld Like Sleeping Beauty, he has finally awoken.

2/13 Stock market’s massive moves not seen since Great Recession – SafeHaven
2/13 These bonds should make ECB hawks apoplectic with rage – Bloomberg

Wait til this really gets rolling. "Apoplectic" will be a watchword.

Stockman, "That get's us to the market's misplaced confidence that after a moderate-sized hissy fit on Wall Street, the Fed and other fellow-traveling central banks will back-off from normalization and QT. The fact that the head of the New York Fed and Goldman plenipotentiary at the central bank, Bill Dudley, pointedly referred to last week's two-day $4 trillion stock plunge as "small potatoes" is perhaps a hint of things to come."

Contra Corner » Swan Song Of The Central Bankers, Part 1: Last Week Wasn’t An Error

Armstrong writes about contagion in counter-party risk.
"Chinese Government that focuses on connectivity and cooperation between Eurasian countries, primarily the People’s Republic of China (PRC), the land-based Silk Road Economic Belt (SREB) and the ocean-going Maritime Silk Road (MSR). "
As opposed to the American business plan of blowing up everybody in sight to steal their resources.
The default cascade will freeze up all credit. The Russians don't intend to get caught with their pants down.
https://www.rt.com/business/418665-r...dy-shut-swiftI suppose that this implies a crash of the BIS.. VERY interesting
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Old 02-15-2018, 05:38 AM
Danny B Danny B is online now
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When will the bond market wahe up?

2/14 January retail sales post biggest decline in 11 months – CNBC
2/14 Total US household debt soars to record above $13 trillion – CNBC

Looks like $13 trillion just isn't enough to keep things rolling.
2/15 Dutch plan to build giant solar power farm – SBS News
2/14 First Solar beats gas with solar and batteries – Greentech Media

Wait, what about my oil shares?
2/14 Draghi faces an impossible task to weaken the euro – CNBC The currency war seems to be on the front burner now.
Currency war: Trump’s games pose threat to European economy – Spiegel

2/15 US economy is an ‘accident waiting to happen’ – CNBC There was nothing accidental about the FED inflation.
2/15 The next commodities supercycle is getting started – Casey Research Not on your life.
2/15 Shorts in SPDR junk bond ETF surge to highest level since 2010 – Bloomberg Junk bonds are crashing fast. The shorts smell blood.
2/14 Big reset looms for corporate credit market – Wolf Street Yes, from the fat and into the fire.
2/14 U.S. public debt surges by $175 billion in one day – SRSrocco Report
SO, why didn't I get a check fro $503?

"Deficits will probably reach $1 trillion in the current or next fiscal year, almost double what the Congressional Budget Office had projected less than a year ago for 2018."
“Never in modern times,” says analyst Sven Henrich, “have we seen tax cuts being implemented and spending increased with debt to GDP north of 100%.”

"Global Debt Crisis II Cometh

– Global debt ‘area of weakness’ and could ‘induce financial panic’ – King warns
– Global debt to GDP now 40 per cent higher than it was a decade ago – BIS warn
– Global non-financial corporate debt grew by 15% to 96% of GDP in the past six years
– US mortgage rates hit highest level since May 2014
– US student loans near $1.4 trillion, 40% expected to default in next 5 years
– UK consumer debt hit £200b, highest level in 30 years, 25% of households behind on repayments"
"When you look at the figures you realise there is an air of inevitability of what is around the corner. If the last week has taught us anything, it is that markets are unprepared for the fallout that is destined to come after a decade of easy monetary policies.

Global debt is more than three times the size of the global economy, the highest it has ever been"
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Old 02-16-2018, 02:26 AM
Danny B Danny B is online now
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still smooth sailing

Well, this is all getting repetitious. The debt mountain grows a bit higher.
"2) Unpaid bills will skyrocket. Illinois currently has nearly $12 billion in unpaid bills, which, under the current impasse, are expected to total nearly $25 billion by early 2019."
Illinois' Fiscal Crisis Impacts Business
The default rate grows higher, “Non-housing balances, which have been increasing steadily for nearly six years overall, saw a $58 billion increase in the fourth quarter. Auto loans grew by $8 billion and credit card balances increased by $26 billion, while student loans saw a $21 billion increase”. “As of December 31, 4.7 percent of outstanding debt was in some stage of delinquency. Of the $619 billion of debt that is delinquent, $406 billion is seriously delinquent (at least 90 days late or “severely derogatory”).

"Trump’s plan sees a 2019 deficit of $984 billion, though White House Budget Director Mick Mulvaney admits $1.2 trillion is more plausible "

So, does anybody have a clue,,,, a slight niggling worry?
Edging towards the exits,
2/15 Bond fund hit by biggest outflow in 15-year history – Bloomberg
2/15 Trump supports 25 cent federal gas tax hike – Zero Hedge Just what we need.
2/15 Trump wants to impose a ‘reciprocal tax’ on trade partners – CNBC That was tried with the Smoot-Hawley act and, it crashed international trade.
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Old 02-16-2018, 04:13 PM
Danny B Danny B is online now
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Petro dollar shifts,,, evaporating israel

Saudi Arabia was the backbone of the petro-dollar scheme. Jim Willie claims that the anglo-americans stole both the Saudi gold AND the Saudi treasury bonds. Who knows?
Saudi/Russia-Led Oil Supergroup In The Making
It appears that the Sauds have switched horses.
America is producing LOTS of light crude oil that our refineries can NOT refine. We send it out to other States with different refineries.

Venezuela has the largest reserves in the world but, it is very heavy crude that must be mixed with light crude. Venezuela is too broke to buy light Nigerian crude so, they can't sell their heavy stuff. 2 million people have left Venezuela and the GOV is now refusing to produce passports... to keep more people from leaving.
"PDVSA, Venezuela’s state-oil company, is losing workers by the thousands, with as many as 10,000 leaving the company in just one week of January, media report, citing protests against low wages and the growing risk of accidents due to lack of equipment maintenance. The situation, according to Univision, has escalated to such an extent that PDVSA’s board of directors has stopped accepting letters of resignation."

Israel is trying to steal the oil & gas from both Syria and Lebanon. The Syrians have shifted strategies.
The Chinese will participate in the oil industry in Lebanon.
51 firms win out for oil exploration contracts in Lebanon - Xinhua | English.news.cn
Netanyahooo said that America is an unreliable partner and, israel is going to look for a new match with Russia. Keep in mind that Putin personally threw Netanyahoooo out of the Kremlin a few years ago. Netanyahoooo threatened Puitn and told him that Russia must get out and, stay out of Syria. Putin told him that he could make isreal a sheet of glass in 24 hours.

China and Russia are teaming up with the world's oil producers to control supply. This was previously impossible because the U.S. military would blow up any State or person who tried to break the petro-dollar standard. American defense contractors worked to pad their bills and didn't care about the quality of their products. The F-35 is the perfect example. The Russian jamming systems and latest plane & missile systems are far superior. The petro-dollar has been defeated by shoddy military weapons contractors. Not to mention, dumbing down our schools to where America fell way down in international competition.

Tel Aviv was/is the Eastern garrison for pox Americana. Netanyahoooo has been totally brutal and alienated Europe. He has been totally intransigent and alienated the whole rest of the world. Mainstream israelies will suffer for his brutality.
The Eastern alliances are locking up oil production outside the control of pox Americana. The unfolding financial collapse will be especially hard on our Eastern garrison.

the Republicans were always the deficit hawks who refused to fund pork barrel programs. They have don a complete about-face on the subject.
It makes you wonder just what inspired such total fear in the entire legislature.
2/16 It’s not China that is dumping US Treasurys, it’s Japan – Zero Hedge Japan got reamed badly after the war. They were required to roll over ALL of their profits into U.S. treasuries.
2/16 JP Morgan slashes GDP estimate to 2.5% – CNBC Keep in mind that; when America prints a new dollar, it is added on as part of the GDP. When it spends the same dollar, it is added on again to the gdp.
2/16 Water produced by fuel cell car could be stored and used to drink – Ind HOLD on a minute. That water is the primary greenhouse gas.

"In truth, however, the evil genius behind the catastrophic error of Camp David was Milton Friedman, and his errand boy in Nixon's cabinet, George Schultz. The two were apostles of the free market when it came to commodities, wages, rents, goods, services and most anything else including gambling, prostitution and drugs. But not money.

Friedman had been dead wrong about the Fed's culpability for the Great Depression of 1930-1933, and from that error he erected a theory of state control of money that eventually evolved into today's baleful regime of Keynesian central banking."
"The problem with this Friedmanite monetary postulate was two-fold: It was wrong in theory and impossible in practice!

Thus, there is no possible fixed rule of monetary growth."
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Old 02-17-2018, 01:21 AM
Danny B Danny B is online now
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Forget the promises.

Charles Huge Smith writes about all the promises that won't be kept.
oftwominds-Charles Hugh Smith: Our Approaching Winter of Discontent
"Cut $2 trillion in revenue, add $2 trillion in spending, and you create a $4 trillion dollar gap in the budget. Of course, that is $4 Trillion in addition to the current run rate in spending which continues the current acceleration of the “debt problem.”

" The time to implement austerity measures is when the economy is running a budget surplus and is close to full employment."
2/16 Cracks appear in credit funds as investors head for the exit – Bloomberg
2/16 Central banks will let the next crash happen – Alt Market
2/16 “Financial stress” spikes – Wolf Street
2/16 Last time Americans confident of “retiring comfortably”, stocks crashed – Zero Hedge
2/16 As debt ceiling lifts, flood of T-bills set to jack up rates – Bloomberg

The Post office wants a bailout, https://www.fedsmith.com/2018/02/13/...unded-bailout/
Fannie May wants a bailout, https://sputniknews.com/us/201802151...osses-bailout/

Last edited by Danny B; 02-17-2018 at 01:25 AM. Reason: Premature posting
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Old 02-18-2018, 04:40 AM
Danny B Danny B is online now
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Birth rate = intererst rate

"Economica" has proved pretty well that the interest rates is locked in to the the number of 16---62 year old consumers. The interest rate just can't seem to escape the consumption side of the production-consumption equation. What about the R.O.W. ? Most of the West is declining and,
"China's own family planning commission's survey of existing families, 75% said they were unwilling to have a second child because of "economic reasons". "
The Central planners have LOTS of plans as far as control of interest rates.

"The long-term is set by the market. That is why the central banks tried Quantitative Easing buying in long-term bonds hoping that would lower the long-term rates which are set by the auction process."
There is just no demand from solvent borrowers for more credit. We also see this in the CAPEX numbers. Nobody is expanding their business facing a declining number of consumers.
Interest rates are normally raised when there is an increasing demand for credit. All increasing demand for credit is from the upper loop looking to leverage their speculation even more.

Lots of speculators are moving into real estate. Residential RE depends on the salaries of the renters and buyers.
"ANSWER: The problem with real estate has been that its value depends upon lending. This was what the government did as part of the New Deal by creating 30-year mortgages back during 1930s. This was a scheme to get prices up by extending the period people could pay off the loan. Typically, the duration was 5 years previously. Because of the 30-year mortgage, prices have risen to reflect the accumulative amount of earnings available. If there was no lending, prices would collapse to 10 cents on the dollar until cash buyers become interested."
It does NOT depend on lending. It depends on earnings. A lot of hot-money has flowed into RE and, is driving people out on the streets.

A staggering 2.5 million children are now homeless each year in America. This historic high represents one in every 30 children in the United States.

Birth rates will continue to fall. Consumption will continue to fall. Interest rates my make a temporary lift but, not in the long run.
This graph shows you exactly the effect of mechanization.
This graph shows you how many hours we are working,
The corporatocracy has fought tooth & nail to stop collective bargaining. The Central Bank has fought equally hard at blocking wage inflation. So, we crash and go broke.

"And this is precisely what we see now: household income actually declined 8.5% since 2000 when adjusted for inflation."
The CBs can plan and rage but, they can't bring back consumption in the lower loop. Nothing will bring interest rates back.
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Old 02-19-2018, 01:44 AM
Danny B Danny B is online now
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The economy,,, the short form

Here is a post that I wrote at Drive on Wood. It might be useful for people who want everything condensed.
In the summer of '05, I had finally moved to Bend, Or after leaving the log house vacant since '90. With much time on my hands, I did a lot of reading on the net. That is when I deduced the coming crash. 12 years later and, I’m still reading 40 hrs a week, not just on the economy. It has taken many years to finally figure out the cause of the crash. Everybody talks about cycles and interest rates and other such nonsense.
As all of you know, a bank creates the principle of a loan but, NOT the interest.
The interest is taken from the always growing pile of debt, future loans. Consumption and production MUST grow to provide the increased economic activity, that provides the additional money required to service the debt.
The debt pile MUST grow to be serviced. The main body of consumers in the world is the , 16----62 year olds. Their numbers are shrinking. The debt bubble is growing at an exponential rate.There is no possibility of a growing debt pile at the same time as shrinking consumption. It can grow temporarily if the central bank prints enough. The money must flow from thin air if the debt is to be serviced during a time of shrinking consumption ans shrinking demand for credit.
There is NO possibility of organic growth in the debt pile if the population is shrinking. Japan has proved that for the last 3 decades. As the private sector shrinks it’s demand for credit, the State has jumped in and raised the public debt by $ trillions. This is causing a loss of trust in State debt. S&P is soon to downgrade U.S. GOV credit. Dagong rating agency has already downgraded U.S. debt to one level above junk.
ALL States eventually default. Between defaults, State debt is rated risk-free. Martin Armstrong and his super program, Socrates show FED GOV debt to be crashing in the not-so-distant future.
China has the fastest shrinking work force due to their one-child policy. The States with the fastest shrinking work force are doing the most money printing, to compensate. Several States pay a baby-bonus. Russia pays your rent if you have 3 kids and, gives you a medal if you have 6 kids.
The Central bank of South Korea came out and admitted that “they can’t print babies”.
So, when you hear the politicians and central bankers talk about fixing the problems with various tweaks, ignore them. If you want more information on how population affects the interest rates, go to the site, “Economica”
The Chinese policy makers ended the 1-child policy and figured that the people would respond. NOPE. 75% of respondents said that it was too expensive to have more than one child.
There is a youtube vid where the Polish GOV is telling the people explicitly to “breed like rabbits”. The Danish GOV has a youtube vid about the same. The Japanese GOV has a big huge State run dating site.
So, amazing as it may seem, you must have people to have an economy.
The full impact of birth-control combined with our unfolding poverty has ensured that this crash will not be fixed by simple tweaks. Confidence in the future is lost.
Here are some vids that discuss various problems. Keep in mind that there is no QUICK fix for falling population.
top-ten-videos | https://dollarcollapse.com/videos/top-ten-videos/
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Old 02-19-2018, 02:18 AM
Danny B Danny B is online now
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NOTHING is going into the markets

The longer version.
The CBs jumped in to do market support when the falling population could not keep,the credit bubble inflated. In spite of the graphic example from Japan, the CBs thought? hoped? that market support would be temporary.
"I have serious issues with contemporary finance. Unique in history, the world operates with a financial “system” devoid of limits on either the quantity or quality of “money” and Credit. Unlike a gold standard (or other disciplined monetary regimes), there is no mechanism to contain the creation of new finance. As such, traditional supply/demand dynamics have little relevance in the pricing of finance. Today’s contemporary financial apparatus – where central bankers largely dictate the price of Credit – lacks effective regulation of supply and demand. Importantly, the contemporary system fails to self-correct or adjust. Left unchecked, it feeds serial Bubbles and busts."

Somehow, there’s never been a serious and sustained effort to analyze contemporary finance’s shortcomings. Rather than contemplating evident deficiencies, each burst Bubble led immediately to whatever reflationary measures deemed necessary. Structural issues be damned. All along the way, few have been willing to admit the fundamental flaws inherent in various modern forms of risk intermediation. Rather than mitigate risk, structured finance and derivatives tend to distort, disguise and transfer myriad risks. Various risk intermediation mechanisms work to lower the cost of finance, in the process exacerbating Credit excess, risk-taking, speculation and leveraging.

Perhaps most momentous, the experiment in unconstrained finance spurred an experiment in economic structure. The U.S. economy was free to deindustrialize. With newfound access to unlimited finance and inflating asset prices, Americans were to indefinitely trade financial claims for endless cheap imports. The bane of “twin deficits” had been eradicated. Even more miraculously, the flood of finance the U.S. unleashed upon the world would, largely through foreign central banks, be recycled right back into booming American securities markets.

After the burst of the “tech” Bubble – and, importantly, the 2002 dislocation in the corporate debt market – the Fed panicked. Even more so than 1987, 1990 and 1998, the Fed feared “the scourge of deflation.” Somehow, the Fed, Wall Street and others found solace in Bernanke’s radical monetary ideas of “helicopter money” and the “government printing press.” The Federal Reserve was willing to slash rates to one percent – and leave them pegged there in the face of several years of double-digit annual mortgage Credit growth.

Let’s call it what it was: reckless. The Fed looked the other way from conspicuous financial and housing-related excess (as they have in the securities markets more recently). Why? Because they had specifically targeted mortgage Credit as their inflationary mechanism of choice. The Bubble was Untouchable.

he 2008 crisis marked the failure of a great financial experiment. Fannie, Freddie and GSE risk intermediation failed. Wall Street structured finance failed. Derivatives markets and Wall Street firms failed. Counterparties failed. Across the financial landscape, catastrophic flaws were exposed. In short, contemporary finance failed spectacularly.

The ‘08/’09 crisis should have provided an historic inflection point. The greatest upheaval in decades should have marked the beginning of an era of more stable finance – of sounder money and Credit and firmer economic underpinnings. It would have no doubt been an arduous process. Central bankers had other ideas.
The greatest flaw in central banker doctrine/strategy was to believe that after intervening temporarily with reflationary measures the system would stabilize and gravitate right back to normal operations. Central bankers reflated a deeply unsound financial structure, only exacerbating flaws and compounding contemporary finance’s vulnerabilities.

"Consider that, under the Greenspan/Bernanke/Yellen Federal Reserve, the following has occurred:

Pension plans, both public and private have been ruined. Millions of future retirees and taxpayers will not have trillions of dollars they would and should otherwise have to support them in their later years.
Income inequality is at the highest its been in over 100 years
Wealth inequality is also at historical extremes
Student debt is now nearly $1.5 trillion, up ~ $1 trillion since 2007
More than a trillion dollars of interest payments on savings accounts has been forfeited -- denying funds to the next generation for use in business creation, household formation, and education.
Total debt in the US and globally is up massively since the 2008 Great Recession (itself a central banking accident), and now stands at more than $233 trillion worldwide."

The article goes on to list important headlines in the pension industry.
"There should be serious consequences for destroying the futures of tens of millions of retirees, on purpose --and knowingly -- simply so big banks could not just enjoy fat profits, but record fat profits, for nearly ten years in a row:"
The article goes on to show a long list of how.the banks are HUGELY profitable. But, there is plenty of blame to go around. You can bet that FED GOV had a lot to do with holding interest rates way down. ALL socialist GOV eventually breaks the bank. The FEDs tried to make State debt very easy to carry at ZIRP. They can claim that the banks killed the economy. The FED was very reluctant to do ZIRP. You can bet that the State twisted their arm. The State is always trying to squeeze out money that it never earns or deserves. From each, as to his abilities,,, to each, as to his needs.
Needs always seem to outstrip productivity.

"Put more bluntly: approximately 90% of US citizens have been financially and economically tossed under the bus simply so that the already-rich could get a little richer."
No mention of the immense power of the State that could have limited the depredations of the banks.
"When it comes to repaying the current global debt levels of ~310 % of GDP, we can confidently predict that such a debt load can never be repaid. They can only try to roll it over as long as they can -- which can't go on much longer without real consequence"
"When it comes to underfunded promises and entitlement programs, such as pensions and social security (clocking in at nearly 800% of GDP!), there’s really only one all-important question that matter at this point: Who’s going to eat the losses?"

The 2% inflation target of the FED was meant to keep a constant supply of new money flowing through the system STARTING at the people closest to the spigot.

"The fact that virtually every channel of household credit has already been blocked or become highly congested by Peak Debt is self-evident in the household debt data. According to the flow of funds report, household debt doubled between the 2000 peak and mid-2008, growing at a 9.1% annual rate.

By contrast, the growth rate of total household credit from all sources during the last nine years has been just 0.5% per annum"
"The (unsecured) personal loan rates quoted below are more or less in line with the current average APR on credit cards, which stands at 16.15%."
"This means that upwards of 40% of the gain during the Greenspan mortgage/credit boom was accounted for by borrowing and other unearned sources of spending power."
"In other words, net business investment today is lower than it was 17 years ago, and that's before factoring-in the cumulative 35-40% rise in the price level during the interim.

Accordingly, constant dollar net investment has been sharply declining on a trend basis for the entirety of this century."
"In fact, constant dollar net investment of $379 billion in 2016 was 28% below its 2000 level and only slightly ahead of real net investment two decades ag0 during 1997."
Contra Corner » Swan Song Of The Central Bankers, Part 4: The Folly Of 2.00% Inflation Targeting
Those giant tax cuts that were going to flood the economy with new money,,,, have all gone into share buybacks.
"While there is still some fringe debate what companies will do with the hundreds of billions in offshore funds repatriated to the US as part of the recently passed Trump tax reform, the discussion is largely over, especially after last week's Cisco results. The company, which has $68 billion of overseas cash, third after AAPL and MSFT, announced that it would raise its buyback authorization by $25 billion, and revealed plans to repurchase its entire authorization of $31 billion during the next 6-8 quarters, equal to roughly 15% of its current market cap."
You get a very clear picture. No new money is flowing into the economy.
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Old 02-20-2018, 04:37 AM
Danny B Danny B is online now
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Location: L.A. Ca.
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Japan, the Amish, GS says that US public debt is unsustaiunable

Here is a graph of Japanese public debt.
Here is a graph of population change.
2/19 Japan’s cheap money addiction to deepen under Kuroda – Nikkei
Here is an excellent article with great graphs showing the Amish fertility rate.

"Now, in yet another note meant to prompt selling of Treasurys (and buying of stocks that Goldman's co-head of equities admitted last week he is all too willing to sell),"
"Goldman predicts a surge in the cost of servicing American debt, and goes so far as to warn that the current US fiscal trajectory would lead to catastrophe: "
"The irony, of course, is that while one Goldman employee warns that the US is now on collision course with debt sustainability, it was another former Goldman employee - former COO Gary Cohn - who transformed this blueprint for catastrophe into reality.

Needless to say, the culmination and outcome of these processes is a fiscal - and sovereign debt - crisis... unless the Fed proceeds to monetize the deficit once again as it did in 2009-2015, sending yields plunging as the next and final episode of QE is unveiled. Which, of course, is precisely what will happen, and is also why Goldman is already starting to load up on all Treasuries it can buy."
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Old Yesterday, 04:01 PM
Danny B Danny B is online now
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Location: L.A. Ca.
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The effect of primitive militarism in an advanced society

Here is a must-read article on the military industrial complex and all the destruction and cost it has brought to the world.
Second article;
The whole planet’s become entangled in America’s increasingly corrupt, militaristic and fraudulent imperial financial system. Escape will not be clean or easy for anybody. Nevertheless, the U.S. has the furtherest to fall given it is the world’s dominant power armed with the global reserve currency. An empire with such an overwhelming structural advantage can last a lot longer than it should in the face of monumental incompetence, but the day of reckoning is coming.
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Old Today, 02:34 AM
Danny B Danny B is online now
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You have a LOT of dependents

The University of California system reports in their comprehensive annual financial report that they have over $90 billion stashed away. 37,000 U.S. GOV agencies report that they have ~$150 trillion stashed away.
CAFR1 Home Page
U.C. also has $millions of income from royalties, etc. Why do they need to charge tuition? Germany does not charge tuition for college.

The FED monetary inflation policy is a well engineered system guaranteed to keep the working man poor.
BUT, it is also a system guaranteed to keep him WORKING..

"How will we all keep busy when we only have to work 15 hours a week? That was the question that worried the economist John Maynard Keynes when he wrote his short essay “Economic Possibilities for Our Grandchildren” in 1930. Over the next century, he predicted, the economy would become so productive that people would barely need to work at all.

For a while, it looked like Keynes was right: In 1930 the average workweek was 47 hours. By 1970 it had fallen to slightly less than 39.
But then something changed"
1971, the gold window was closed and the FED was free to do unlimited inflation.
"In a new paper, Friedman tries to figure out why that increased productivity has not translated into increased leisure time"
Refer to the article by Mish (above) as to why we are working ever-harder.

The finance sector doesn't produce anything. The State employees sector doesn't produce anything but red tape. They are GROWING.
51% of Americans receive a check from GOV. The productive worker is squeezed ever-more because he is the only person producing wealth AND, he / she has a LOT of dependants. To make matters worse, robots pay no payroll tax. There is a huge imbalance between productive capacity and consumptive capacity. So, the FED squeezes us to work harder at the same time that the robots are replacing us. The solution from the State is to have as many wars as possible to create artificial demand (consumption). This is all paid for with wet-ink money.
Jobs have been outsourced and automated but, the working man is expected to carry the load.
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Old Today, 03:18 AM
Danny B Danny B is online now
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Location: L.A. Ca.
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GOV debt rising,,, private debt teetering

Excerpts on private debt;
"As the Federal Reserve reported most recently two weeks ago, US consumer non-mortgage debt has never been higher: as of December 31, 2017, US households had a record $1.0 trillion of credit card/revolving loans, a record $1.3 trillion of auto loans, and a record $1.5 trillion of student loans."
"just the recent months a surge in charge off deterioration, which at 7.9% is on par with the last financial crisis! In other words, to find where the next consumer credit crisis hides - and will erupt next - ignore the big banks and focus on the smaller ones."
Good graph, https://www.zerohedge.com/sites/defa...point-03_0.jpg
"the current accumulation of overall leverage in the financial system expressed by Bank Credit/GDP at 63%, levels last seen in 2008""

Personal savings rate, https://www.zerohedge.com/sites/defa...0129_ince1.jpg
"* * *
2. Consumer Credit and its Share of Real Disposable Income are at Record Highs: Consumer credit is running at $3.8 trillion surpassing its 2008 peak by +45%..."
"Meanwhile, as underlying credit trends deteriorate, the Fed is hiking rates, leading to even higher delinquencies and Charge Offs." About those future rate hikes...
"This may be due to the fact that household net worth to disposable income is at an all-time high of 673% or 2.9 standard deviations above its mean since 1951. Worse, as shown in the chart below, the gap between household net worth and the tangible income economy continues to widen to unprecedented levels."
Great graph, https://www.zerohedge.com/sites/defa...ewpoint-19.jpg

" The equity market was acting as savings for the consumer in the Dot.com Bubble, while the Housing Bubble obliged almost a decade later, abrogating the need for thrift. History hasn’t been kind to this kind of bubble logic.
Today, the discrepency within aggregate household wealth has never been more skewed"
"TCW notes that Jobless claims recently printed at a 45-year low of +216K and have been lower than the key level of +300k for the last 43 months. Claims are now 1.6 standard deviations below their historic mean since 1967. This is important as there is a 67% correlation between claims and card NCOs. This means that if claims mean revert at some point" Feces for brains. close to 100 million not in the labor force but, unemployment is modest at 4.1%.

So, wages are flat,,, for those few who still have a job. Housing is beyond reach for many.
NOT to worry, price inflation is not a problem.
"According to these fake news aficionados, the cost of a new car has not gone up by one dime in the last 20 years. It seems there is some non-government data that says otherwise. The average price of a new car in 1997 was $19,214. The average price of a new car in 2017 was $33,560. Does that strike you as a 0% increase? The actual increase for the average schmuck living in the real world has been 75%. But those good old hedonic adjustments get you back to 0%. Those heated seats for your ass and those deluxe cupholders made your drive to work $14,000 cheaper, according to the BLS."

The latest news on pensions, "The California Public Employees’ Retirement System, the largest public pension fund in the U.S., lost $18.5 billion in value over a 10-day trading period ended Feb. 9, according to figures provided by the system."
What about GOV debt? http://thesoundingline.com/wp-conten...e-1024x678.jpg

2/21 Weekly mortgage applications tank even more – CNBC
2/21 Existing home sales tumble at fastest pace in 3 years – MarketWatch

No kidding maybe it had something to do with the rising interest rates.
2/21 Fed minutes: All signs pointing to more rate hikes ahead – CNBC
2/21 Fed president sounds panic over level of US debt – Zero Hedge
2/21 U.S. pays up to auction $179 billion of debt in a span of hours – Bloomberg

Whatsa matter,,, getting cold feet?
2/20 Morgan Stanley says stock slide was appetizer for real deal – Bloomberg

$1 trillion in non-performing loans,,, what could go wrong?
2/21 Bitcoin or British pound ‘pretty much failed’ as currency? – GoldCore You MUST stop Brexit and adopt the Euro to save your country.
2/20 Japanese electric car destroyed Tesla’s 0-60 acceleration record – Yahoo! Must be running drag slicks.
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