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Old 02-09-2018, 06:05 AM
Danny B Danny B is offline
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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 offline
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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 offline
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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 offline
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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 offline
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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 offline
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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 offline
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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 offline
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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 offline
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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 offline
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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 offline
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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 offline
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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 offline
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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 offline
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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 02-21-2018, 04:01 PM
Danny B Danny B is offline
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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 02-22-2018, 02:34 AM
Danny B Danny B is offline
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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 02-22-2018, 03:18 AM
Danny B Danny B is offline
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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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Old 02-22-2018, 04:08 PM
Danny B Danny B is offline
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Blossoming socialism,,, AI tax collector

Damn, my post just got bleeped. I hate that craap.
Chavez and Maduro brought a surge of socialism to Venezuela. Socialists claim that all people are equal. They put their socialist buddies in charge of the State-run oil company. Oil production dropped by 2/3. Now, the country is completely broke.

"Make no mistake; there will be a visceral political reaction to the coming acceleration of labor disrupting technology. We got a little taste of it in the 2016 election.

Just wait until it hits the doctoring, lawyering, and accounting class.

To take an example, COIN (contract intelligence) interprets commercial loan agreements that previously consumed 360,000 hours of lawyers’ time per year. ROSS intelligence is another example, combining a simple, Google-like search system to find up-to-date cases, law and extensive advice in seconds, by quickly sifting through databases of legal history. — marketMogul
Karl and Friedrich wrote about it over 150 years ago:
On disruptive labor destroying technology (AI and the robots are coming):

Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. – Marx and Engels"

"The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere. – Marx and Engels
Then there are the political leanings of the millennials:
Millennials opt for socialism over capitalism"
"Absolutely stunning. More than 50 percent of American millennials prefer to live in a socialist or communist country. Can you blame them?

Debt is a happiness killer. None of us can be truly happy if we’re saddled with debt."

The Key to Bernie Sanders's Appeal Isn't Socialism. It's Yiddish socialism
Why Soviet Refugees Aren't Buying Sanders's Socialism - The Atlantic

The very rich push socialism because it is a control system for them and NOT a panacea for the common man.

Socialism always ends up ih the same place, https://www.armstrongeconomics.com/a...es-to-tyranny/

The early '60s and the inception of the welfare-warfare State bankrupted the country and Nixon was forced to go off the gold standard. With that action, the FED started runaway monetary inflation. The debt serfs got so broke that socialism looked attractive. This may have seemed like an attractive plan to the power brokers and money masters but, they did not take birth control into consideration. They did not fully take automation into their calculations.

Socialism is a system of spending other people's money. It also kills motivation. East Germany was the perfect example. 2 million people have left Venezuela. No matter what the PTB do, they can't change human nature. People can't just sit there idle while AI does everything. The human condition is such that we want as much reward as possible for as little effort as possible. BUT, we don't want to sit around all day doing nothing..

Powell talks about the previous sins of the FED and how they front-loaded the economy. He previously said that the $4 trillion loss in the markets was small potatoes. He has more to say.
Since Bill and Killary have such a reputation for murder, I imagine that the FED heads were under death threat to keep the money rolling until the Hildebeest got elected.

EXCELLENT article on tax collection in Italy.
"Earlier this month, however, the Italian tax authorities rolled out a brand new tool called risparmiometro. And this one is really insidious.

Risparmiometro goes through ALL financial records - credit card transactions, bank accounts, investment accounts, etc. to determine whether or not someone has too much savings relative to his/her occupation.
Think of the implication.
Under the redditometro system, if you spend too much money, they think you’re evading taxes.
But under the risparmiometro system, if you save too much money, they think you’re evading taxes.

But it gets better.
Risparmiometro (the new tool) also looks at bank activity to see how frequently you’re using the account.
And if you’re not using the account frequently enough, the government assumes that it’s because you’re dealing in cash… and evading taxes."

2/22 4% 10-yr note yield will be a floor not a ceiling – SafeHaven Maybe so but, corporate debt collapses at 3.5%
2/22 HSBC’s $881 million money-laundering scandal – MarketWatch They're Chinese. What did you expect?

The end of entitlements for bankers and investors, http://charleshughsmith.blogspot.com...stability.html
2/22 U.S.-trained police hunting, arresting protesters in Honduras – Intercept Arrested, yes. Imprisoned, NO! This is Honduras and they will all be executed.
2/22 Brazil’s military takeover of security in Rio de Janeiro – Huffington Post There is no security in Rio.
2/21 America’s toxic cult of violence turns deadly – Rutherord We inculcated the youth with violence 24/7 so that they would make remorseless soldiers and now, they act out on violent impulses.
2/22 Does your vote for president really count? – YouTube Ask Kilklary

2/21 Is bitcoin more trustworthy than sovereign currency? – Macro Business
Bitcoin fraud triples as criminals target cryptocurrency boom
www.telegraph.co.uk › Technology
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Old 02-23-2018, 05:13 AM
Danny B Danny B is offline
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No buyers for U.S. debt,,, rising interest rates,,, stock are a joke

The CBs pumped out about an extra $200 trillion. The theory was; it would lift all boats. And, it would flow into EVERY asset class. Never mind that it never flowed into wages. Never mind that it inflated RE, medical care and education to where they are unaffordable.
The hoped-for result is TINA. There is no alternative. So, no matter how unattractive a sector may be, money would flow in. High-risk debt was only paying less than 2%. Investors parked their money here and there to get some kind of return. BUT, FED GOV forced ZIRP so that public debt would be "painless" to service.
The fallout from impoverishing the main body of consumers meant that anything that relied on consumption would do very poorly.
John Hussman has clearly shown that stocks would have no return for the next ~ 10 years.

Here is another writer who spells it out clearly. Keep in mind that ALL gains in the stock market are a result of money printing.
Stocks, "It took nearly 14-years just to break even and 18-years to generate just a 2.93% compounded annual rate of return since 2000. (If you back out dividends, it was virtually zero.) This is a far cry from the 6-8% annualized return assumptions promised to “buy and hold” investors."
"This brings me to one of the biggest myths perpetrated by Wall Street on investors. Individuals are often shown some variation of the following chart to support the claim that over the “long-term” the stock market has generated a 10% annualized total return."

"Okay, for a moment let’s just assume the Wall Street “world of fantasy” actually does exist and you can somehow achieve a stagnant rate of return over the next 10-years.

As discussed above, the “other” problem with the analysis is that it excludes the effects of fees, taxes, and inflation. Here is another way to look at it. Let’s start with the fantastical idea of 8% annualized rates of return.
8% – Inflation (historically 3%) – Taxes (roughly 1.5%) – Fees (avg. 1%) = 2.5%
Wait? What?
Hold on…it gets worse. Let’s look forward rather than backward.
Let’s assume that you started planning your retirement at the turn of the century (this gives us 15 years plus 15 years forward for a total of 30 years)
Based on current valuation levels future expected returns from stocks will be roughly 2% (which is what it has been for the last 17 years as well – which means the math works.)"
Curb Your Expectations | RIA

Stocks are starting to fall and many are headed to the exits. ZIRP was intended to keep investors OUT of bank accounts. If there is no return for the risk, there is no point in buying assets.

Only 2 companies in America still have AAA rated credit. Most corporate bonds start to blow at ~ 3--3.5%.
"Federal debt as of Wednesday, February 15...federal debt (red line below) jumped by an additional $50 billion from the previous day to $20.76 trillion. This is an increase of $266 billion essentially since the most recent debt ceiling passage."
"But here's the problem. In order for the American economy to register growth, as measured by GDP (the annual change in total value of all goods produced and services provided in the US), that growth is now based solely upon the growth in federal debt. Without the federal deficit spending, the economy would be shrinking.

The chart below shows the annual change in GDP minus the annual federal deficit incurred. Since 2008, the annual deficit spending has been far greater than the economic activity that deficit spending has produced. "
Yes, the diminishing productivity of new debt.

"Even if we assume an average of 3.5% GDP growth (that the US will not have a recession(s) over a 15 year period) and "only" $1 trillion annual deficits from 2018 through 2025, the US still continues to move backward indefinitely."

"With the change to the Unified budget, effective as of 1969, the Social Security surplus was "unified" into the federal budget. The government gave themselves a ready buyer for US debt while simultaneously allowing the SS surplus to be spent in "the present". Congressionally mandated to buy US debt, from 1970 to 2008, the Intra-Governmental Holdings (over half from the Social Security surplus) purchased over 45% of all federal debt issued. This meant "only" 55% of US debt was auctioned into the market, or "marketable debt"."
"But the annual SS surplus has declined by 90% (from over $200 billion a year at the peak in 2007 to perhaps $20 billion this year) and, according to the SS trust fund, the last surplus will be recorded in 2020 or 2021. After that (or essentially now), the Congressionally mandated buyer (which consumed almost half of all US federal debt for 4 decades) will cease. "

"So who is a buyer of US Treasury debt?

Only three possible groups remaining; "foreigners", the Federal Reserve, and private domestic sources (pensions, banks, mutual funds, individuals).

I will show that foreigners have essentially ceased buying, that the Federal Reserve isn't a buyer and in fact is reducing it's balance sheet...and this means there is only one buyer remaining to soak up the surging marketable debt."
"Federal Reserve...presently allowing Treasury bonds and MBS (mortgage backed securities) to mature, reducing it's balance sheet on a monthly basis. The Fed plans to roughly halve its balance sheet from $4.5 to $2.2 trillion between now and 2022 (a $250 billion annual reduction in Treasury holdings). That is a net increase of available Treasury debt of $250 billion annually above and beyond the trillion plus in new issuance and trillions being rolled over every year."

"Foreigners...foreigners presently hold $6.3 trillion in US Treasury debt but since QE ended in late 2014, foreigners have essentially gone on strike, adding just $150 billion in a little over three years (chart below)."
"Just three buyers hold over half (55%) of all debt held by foreigners; China, Japan, and what I call the BLICS (Belgium, Luxembourg, Ireland, Cayman Island, Switzerland). The chart below shows each nations/groups US Treasury holdings from '00 through December of '17. Entirely noteworthy:

China '00-->'11 +$1.2 trillion...but China has been a net seller of Treasury's since the July of 2011 debt ceiling debate
Japan '00-->'11 +$600 billion...Japan's holdings did rise after the July 2011 debate but are fast declining now toward the same quantity it held in July of 2011
BLICS '00-->'11 +$300 billion...It has been the $800 billion surge in BLICS buying since July 2011 that has kept foreign demand alive."
YES, but the BLICS buyers are all BS. Luxembourg didn't even have any dollar reserves yet, they bought $439 billion in Treasury paper.

"This leaves the domestic public to purchase all the surging new issuance, plus the portion the Fed (and soon enough, the IG) is rolling off, and with little to no assistance from foreigners (even the possibility the strike turns into an outright selloff!?!). The domestic public currently holds about $6 trillion in Treasury debt and will need to buy in excess of $1.5 trillion annually (indefinitely) between picking up the roll off and the new issuance. If the public "willingly" do this at low interest rates, it will represent 7.5% of GDP going toward Treasury purchases that yield well below needed returns. If the Public don't do this "willingly", interest rates will soar far more than shown above and the US will be overwhelmed by debt service. The only other option is that the Federal Reserve makes a U-turn to re-start QE and openly engage in endless monetization."
Once again, we see that FED GOV is on a collision course with the FED.

U.S. GOV can't actually print money. They have to ask the FED to do it. But, even then, they can't actually get the money into the economy to keep everybody from defaulting. FED GOV wants a $ trillion for infrastructure,,, the total military budget is $1.5 trillion. The State has no mechanism for rescuing the lower loop from default. Like the $1 trillion in NPLs in Europe, they aren't going to go away nor, be paid off. Just how much default can the system take? At what point do rising interest rates "flash" through the system?

Next, we learn that Turkey is going to blow, https://dailyreckoning.com/turkey-wi...l-debt-crisis/

2/22 Once 10-year yield hits 3% ‘all hell’ could break loose – CNBC Buy more popcorn.
2/22 China’s VIX goes dark as government clamps down on options – Bloomberg That will cause more capital flight.
Man has been down this road before, Advancing Time: How Great Empires Collapse
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Old 02-23-2018, 04:52 PM
Danny B Danny B is offline
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Feeding the bureaucratic squirrels,,, demoicracy-socialism-tyranny

It is arguable that there is little difference between socialism and fascism. SOME of the people in power get recycled out but, MANY of them remain. The stolen revolution of 1989 in Romania is a good example. The little club often manages to keep control, no matter what the system is called. The "larger club" is the mass of bureaucrats that invariably suck up to the public food trough. This "larger club" is what provides the momentum to try to maintain the status quo. Millions of bureaucrats shuffling papers, punching keyboards and, dreaming up new laws for you to break and, new fines.
No matter the system, there is always an army of bureaucrats. MANY States forced their CB to institute zero interest to make sovereign debt service painless. The State just borrows with no intention of repaying. This provides the salaries for the armies of bureaucrats. This bureaucratic mob has found a new ally,,, the computer. The computer is a double-edged sword in that it could eliminate most of the make-work jobs of the bureaucrats. So far, this hasn't happened. The Hegelian dialectic calls for the State to employ everybody so that they all vote for more taxes,,, to keep their salaries going.

Thie bureaucrats have caught on to the fact that computers can be used to keep track of every penny that the productive class earns,,,, or steals. This is a repost of a previous link showing that the Italian GOV is going to go after every bit if wealth that they (their computers) can find.

Keep in mind that fascism is a marriage between BIG GOV and big business,,, especially banking. In not-so-Great Britain, the bankers have enormous power. They have tried to block Brexit because, they could lose access to European financial systems. The GOV of Great Britain has come up with an idea similar to the Italian plan. With this new plan, they have dismantled legal protections that go all the way back to the Magna Carta. You should read the whole article.

The State makes the rules and, they have ruled that you must buy their bonds. After all, you wouldn't want the huge mob of bureaucrats to go hungry,,,, would you?
"Investing in bonds has created a major crisis in pensions worldwide bringing down the entire socialist agenda. Many governments have even ordered that pension funds must be invested in government bonds varying between 70% and 100% thereby ensuring we have a Pension Crisis to face."
So, GOV instituted ZIRP to keep State payrolls funded. Then, they greatly increased State payrolls until 51% of Americans rely on a check from the State. The Hegelian dialectic in action. Hegel figured that everyone would vote for more State control. That is NOT the same as creating more productivity. At one time, 57% of Greeks worked for the State. This is like feeding the squirrels. The Greek GOV ran out of squirrel food.
Socialism is the firewall between Darwinian pressures and the non-producers. What happens when it is too expensive to pay for the firewall?

Armstrong, "Yes – Canada has also adopted the BAIL-IN abandoning the socialist BAILOUT so banks can take depositors money legally. This is how we move from Capitalism to Socialism to Tyranny,"
Maintaining this firewall has been a scheme of borrowing money for consumption. Naturally, it can't be paid back. Every solution to the problem creates a new problem because the solution adds to the debt.

The FED claims that it is cutting back on printing and monetizing debt. Who knows what the PPT and ESF are doing?
"Actually, they are, and here is the simplest reason why in just 9 words: "Every market crash has been preceded by Fed tightening."
Powell doe stalk like he is going to take away the punch bowl.
2/23 Muni bonds face ‘steep decline’ ahead – CNBC Investors have noticed that most State entities are flat broke. If they stay true-to-form, they will cut back on street maintenance and , keep welfare going.

2/23 China’s shadow banking problem is getting much worse – Forbes A few years ago, pox americana attacked China with our "rods of god" weapon. It left a smoking crater in Tianjin. The Chinese shadow banking system is going to become and ENORMOUS smoking crater.
2/23 Inflation is a bigger danger to stocks than rising rates – Bloomberg With actual price inflation running close to 10%, stocks don't really return anything.
2/23 US may open path for Saudi Arabian nuclear weapons – Middle East Monitor These are the same nutcases that shot up las Vegas in a power struggle. The Saudis spend 10% of their budget on weapon systems. They recently "turned" to Russia and are buying Russian weapon systems. So, we lure them back to American systems by offering them nukes.
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Old 02-24-2018, 05:23 AM
Danny B Danny B is offline
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Combating the coming 3.5% pyroclastic flow

"Every market crash has been preceded by Fed tightening."
It sure didn't take very long, https://www.zerohedge.com/news/2018-...e-flashing-red
"What that point is, is of course the $64 trillion question: while some have suggested 2.75%, some 3.0% the latest and greatest estimation of this inflection point came from Credit Suisse this week, which calculated that the day of reckoning for stocks will take place just as the 10Y yield hits 3.50%."

It's like being in a rocket ship headed straight for the sun. The closer you get (to 3.5 yield), the hotter it gets and the rats start jumping ship. You fry before you get anywhere close.

Now, for the complete bull$hit department.
"Although there is no way to know with precision, the labor market appears to be near or a little beyond full employment at present," the report said."
100 million not in the labor force and 5 million on unemployment. Next comes an extra helping of BS with BS sauce on it.
"Those conditions remain appropriate for further interest rate increases, though inflation pressures remain fairly muted for now, according to a key report to Congress the central bank released Friday."
"Although there is no way to know with precision, the labor market appears to be near or a little beyond full employment at present,"

"Markets worried that the combination of a 2.9 percent annualized wage increase for January "
Side note. The wages of high earners have gone up quite a bit. For middle class, not at all. Down for the lower class. They just average them together and 2.9%

Wage Stagnation in Nine Charts | Economic Policy Institute

Back to the original BS.
"On a separate policy issue, the report said the Fed's efforts begun in the fourth quarter to reduce its balance sheet have gone smoothly. The Fed is allowing a set level of proceeds from its $4.2 trillion portfolio of Treasurys and mortgage-backed securities to roll off each month, creating more supply in markets."
The mortgage market just seized up.

Back to non-existent wage gains.
The upper loop of the economy has enjoyed ENORMOUS monetary inflation. They defecate a brick if there is the slightest hint of wage inflation.
"Already, both energy and higher wages are having a discernible impact on prices: Consumer prices in January were 2.1% higher than a year earlier, up from 1.6% in June. With unemployment at an all-time low, tightness in the labor market "
"Why? Because in Mnuchin's mind, wage inflation and rising consumer prices have only a tenuous link - if that.

"There are a lot of ways to have the economy grow," Mnuchin said in an interview aboard a train to Philadelphia on Thursday, where he toured the U.S. Mint. "You can have wage inflation and not necessarily have inflation concerns in general."
There you have it. The slightest hint of wage gains will crash the markets. NOT one farthing of record profits should be shared with he actual producer of that new wealth. REMEMBER , there people are driving that the bus that we are travelling on.
$200 trillion was pumped into the upper loop in the attempt to reach the magic 2% inflation number. Stagflation is GOOD.
Per-worker productivity has gone up in an uninterrupted line at the same time that wages went stagnant 40 years ago.Lots more money for the non-producers.

2/24 Debt on track to destroy the american middle class – gold telegraph – Gold Telegraph No kidding
2/24 World economic news – economy at risk of government debt over rising interest rates, oecd | World | news | express.co.uk – Express Give it time.
2/23 Retail sales flop in US, UK, Canada, Germany, Australia – Mish No money, honey.
2/24 Japan’s stagnant inflation distances BOJ exit from stimulus – Reuters NO mention of a stagnant birth rate.
2/24 The Fed should aim higher than 2% inflation – Bloomberg The FED says that they are out of the inflation business.

3.5% is supposed to be the breaking point. BUT;
"Note how a rising Fed Funds ratehttps://i0.wp.com/dollarcollapse.com/wp-content/uploads/2018/02/Fed-funds-Feb-18.jpg?resize=600%2C243&ssl=1 preceded every recession in living memory. AND that the point at which higher short-term rates kicked the economy into reverse has been lower in each post-1980 cycle. So it’s reasonable to assume that in the current hyper-leveraged system it won’t take much higher rates to produce instability. "
Here is the graph, https://i0.wp.com/dollarcollapse.com...00%2C243&ssl=1
You can see why the FED is screaming to raise interest rates so that,,, it can lower them to fight the next battle. You can see by the progressively lower lows that the FED will be helpless in the next crash. Poetic justice shows that raising the rates as currently planed will SET OFF the next crash. This is a long-term trend of cyclical crashes from trying to rescue the earnings of the investor class.
The FED completely ignores the statistics from the BLS showing the labor participation rate. They repeat the full employment lie often enough that most investors believe it. The lies are slowly leaking out. Stocks will have no return going forward because the FED front loaded all of their actions.
Corporate bonds will blow near the 3.5% level. New GOV debt is being vomited out of the District of Corruption at a torrid pace. Many buyers are going to hold out for higher rates. ALL the lies are excreted to keep money in failing markets. Sovereign debt service will go to $1 trillion+ It is a very open question just who will buy it.
The credit markets are starting to blow. It remains to be seen just how far the contagion will spread.
Plant a garden.
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Old 02-25-2018, 06:39 PM
Danny B Danny B is offline
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Cyber war heating up

Here is an account of a possible HUGE cyber attack hitting a network. If you're into this kind of stuff, it is very interesting.
A Tale to Make Your Blood Run Cold – EEJournal

2/25 Frank Gaffney: China’s ‘unrestricted’ financial, cyber war on US – Breitbart
2/24 Cybersecurity professionals foresee ‘catastrophic’ cyberattacks – Homeland Prep
2/24 Cyber-war clouds gather as unprecedented threat looms – SC Magazine UK
2/24 The global cyberwar is heating up – TechCentral.ie
2/23 Cybercrime ‘pandemic’ may have cost the world $600 billion last year – CNBC

And lastly, 2/25 The world badly needs a cyber-warfare truce – Diginomica

It isn't going to happen. The economic competition is too fierce. We have too many enemies. Cyber warfare can be done on the cheap. Cyber warfare is open to a lot of deny-ability. The NSA stable of horrors got out into the wild and will never be corralled again.
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Old 02-25-2018, 07:06 PM
Danny B Danny B is offline
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American sovereign default vs Russian growth

S&P downgrades U.S. credit rating for first time - The Washington Post
Aug 6, 2011

Chinese credit rating agency downgrades US rating over political ...
Jan 16, 2018
Moody's will downgrade US credit rating if Treasury misses interest ...
Sep 5, 2017
Fitch reiterates U.S. downgrade warning - Reuters
Jan 10, 2018

John Hussman, et al have clearly show that U.S. stock markets won't have any returns for the next 10 years. What about Russia?
Emerging Market:
Russia 28.5% 28.5%
China 28.4% 28.4%
The Western CBs pumped in hundreds of $trillions to save the bankers and, to save sovereign debt. The mentality is/was,,, TINA. There is no alternative. No matter how bad a sector looked, money would flow in because there was so much hot money floating around.
The bankers wanted un-hindered capital flows so that they could move where they want. Russia already went through their crash and, is on the upswing.

Pox Americana created FACTA to keep American money out of foreign banks. Pox Americana is using the SWIFT system to bludgeon States who do not comply with American wishes. The East has created an alternate system. Russia now has MIR and NSPK up and running as internal payment systems. The alternative to SWIFT is up and running.

If the American stock market is dead in the water AND the Russian system has great returns, I suspect that big capital will find a way around FACTA and, flow in to Russian markets.
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Old 02-25-2018, 08:56 PM
Danny B Danny B is offline
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Increasing State debt to keep Marxism alive

Both Armstrong, and history have made it clear that an economic collapse starts in the periphery and, moves to the core.
"I have warned continually that the Sovereign Debt Crisis will unfold not so much by people selling government debt, but by the lack of people buying new debt. The greatest peril is when there is NO BID for the new issues because all governments are operating a PONZI scheme. They sell new debt to pay off maturing debt. Currently, holders of Indian government debt have been dumping 4.7 billion rupees ($73 million) of government bonds on average every day this year,"

"The Sovereign Debt Crisis emerges when the government is unable to raise enough cash to pay off the maturing debt. India has crossed that threshold so as we have warned, the Sovereign Debt Crisis will begin from outside the USA and spread to the core. This is how all Empires, nations, and city-states collapse."

YOUR signature at the bank creates new debt money. This is where most new money comes from. The FED tops off the system with debt-free money when there isn't enough new debt money being created to service existing debt. Since about 1980 the FED has had to do an ever-larger topping off. The debt bubble grew but, wages did not. The FED is now determined to raise interest rates so that it can lower them for the next crisis. But, after each new crisis, the peak achieved by the FED is a bit lower. The ammunition clip in the monetary bazooka gets shorter and shorter.
2/25 With rates low, Fed officials fret over next U.S. recession – Reuters

I suspect that obummer was the one most responsible for all those years of ZIRP. He isn't simple-minded but, he isn't intelligent either. Not even close. His first economic advisor, Goolsby was a total idiot and ran away in Aug of 2011. Summers left in 2010.
" The departure of Summers, 55, will complete the turnover of three of Obama's four top economic advisers" . I can't leave out the other economic idiot, Bernanke.
So, Trump inherited a total disaster created by a bunch of idiots from academia.

ZIRP enabled State to run bigger and bigger deficits. The feces-for-brains from academia are so simple-minded that they gave no consideration to the fallout. A perfect example of Marxists who live in their own narrow world of wishful thinking.
Economic activity turned down in the 80s. The FED goosed the markets with money that it did not need. That brought the dot-com crash. The FED re-goosed the markets and brought the RE crash. The Marxists have re-re-goosed the markets to save sovereign debt. They evidently never considered the fallout. They have wiped out the pension funds.

Multiemployer pensions insolvent by 2025, agency says
Cheiron finds 114 multiemployer plans heading to insolvency ...
PBGC girds for pending union plan catastrophe - Pensions ...
1 Million American Pension Plans Could Be Insolvent In 10 Years : NPR

The FED only tops off the money supply. It can't support everything. The bond crisis will move from the periphery to,,,, the rest of the world.
Sovereign Debt Crisis Is Now Global | HuffPost
Any doubt that the Eurozone debt crisis is no longer contained but has metastasized into a full-blown global calamity is rapidly being erased by fast-moving events.

So, America is raising interest rates to attract foreign capital. The higher interest rates will crash all the markets. Where will we be when the dust settles? U.S. GOV will be without a credit rating. The normal reaction to this is to force all the various funds to buy GOV bonds,,, whether they like it or not.
"the Economy Ministry had pressed some of the nation's biggest banks into buying about $3 billion in government bonds, at yields far below market rates."
2/24 Government debt levels to hit new global high this year – Asahi
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Old 02-26-2018, 04:26 PM
Danny B Danny B is offline
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Too much debt that is leveraged too much

FED GOV was desperate to keep the markets growing even if the underlying economy was shrinking. That meant that the CB had everybody's back so that they could leverage-up,,, to the moon. They ignored the fact that eventually, leverage would go into reverse. Here is a good explanation of a "margin call"

Stockman writes about public debt.
"To be clear, we are not talking about just the $21 trillion of public debt that will be on the books after this week's borrowing binge, but the entire $67 trillion albatross of public and private debt that now strangles the US economy.
By contrast, at $67 trillion of total debt today, the US leverage ratio stands at nearly 3.5X, and therein lies the giant financial skunk in the woodpile. Had the historically proven leverage ratio of 1.5X national income not been upended by Tricky Dick's perfidy, there would be $30 trillion of total debt on the US economy today, not $67 trillion.
So those two-extra turns of leverage amount to $37 trillion-
To wit, the Fed's balance sheet exploded by 82X or by nearly 10% per annum over the course of a half century.

That is what it took to get 2% inflation of the money supply and keep all the bankers happy.
"To wit, in June 1970 the GDP was $1.1 trillion and it has since expanded by 18X to $19.6 trillion. By contrast, total public and private debt outstanding was $1.58 trillion and has since expanded by 42X to $67 trillion.
"Take the matter of the Fed's balance sheet. Even had the US followed Milton Friedman's fixed money growth rule at approximately 3% per annum, the Fed's $55 billion balance sheet of June 1970 would stand at just $230 billion today."
Hmmm, looks like the original 2% just wasn't enough.
2/26 Powell may accept inflation overshoot to extend expansion – Investing.com Yeah, I bet he would.
"Up to $2 trillion of central bank balance sheet shrinkage has never happened before. Nor has the impact been any more imagined at present than had been the 82X explosion of the Fed's balance sheet back in June 1970."
Contra Corner » The Albatross Of Debt: The Stock Market’s $67 Trillion Nightmare, Part 1

So, the FED has been carrying EVERYTHING. Actually, it wasn't the FED. The currency dilution screwed EVERYBODY who was not connected to the free-money spigot,,, most prominently, the man who sold his labor.

Latvia is fighting with the EU because they don't want to take in a bunch of trashy immigrants. SO, the ECB has pulled the plug on Latvia's biggest private bank. They will never attack the public banks.
The golden Parachute, Explaining Snapchat CEO Evan Spiegel'''s $638 Million Payday | Fortune

2/26 Millions of working-age men will never return to labor market – Zero Hedge No kidding, what an original idea.
2/26 ‘Terrible mistake’ for long-term investors to be in bonds – Reuters
2/26 Buffett warns investors that safe-looking bonds can be risky – Bloomberg

I'm sure that the don't intend to start a panic.
2/26 Regulators inadvertently laying groundwork for next housing crisis – Zero Hedge I'm sure that it wasn't intentional.
As people lose faith in their domestic currency, exchange rates rise and debt service becomes very expensive.
"As interest rates rise, Turkey will certainly find itself in trouble. However, to say that Turkey will just default is one thing. The real risk is that Turkey will start a war to maintain its dignity and suspend all debt payments overseas both public and private."

2/25 Cryptocurrency exchange Coinbase to give IRS data on 13,000 users – NewsMax Count on it!
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Old 02-27-2018, 03:46 AM
Danny B Danny B is offline
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Buying the worst politicians to get the worst banking system

Just imagine that you had a good business selling widgets. BUT, you had competitors so, you had to keep prices reasonable. Your profits were constrained by supply & demand and, competition. Then, just imagine that a pack of criminals came around regularly and demanded a portion of your money. Now, imagine that these criminals had badges and lawbooks that said that it was all perfectly legal.
Canada, like many other States had a thriving economy. Then, they had a Central bank forced on them to bring "stability". Since that time, they had constant monetary inflation and a struggling economy.

So, now you are trying to operate a business with a shortage of capital. The parasitic sector always seems to have plenty of money. How would your business do if you had all the capital that you had earned / gained?

Ben Franklin, "we print whatever money is needed for productivity"
Adolph Hitler did the same thing,,, created money directly for the producing sector. .

Ellen Brown, "Chinese state-owned banks are not going to need a Wall Street-style bailout from the government. They are the government, and the Chinese government has a massive global account surplus. It is not going bankrupt any time soon.
What about the risk of inflation? As noted by the Citigroup economists, Chinese-style qualitative easing is actually less inflationary than the bank-focused quantitative easing engaged in by Western central banks.
The U.S. government could set up a national infrastructure bank that lends just as China’s big public banks do, or the Federal Reserve could do qualitative easing for infrastructure as the People’s Bank of China does. The main roadblock to those solutions seems to be political. They would kill the privatization cash cow of the vested interests calling the shots behind the scenes.

For a model, they can look to the century-old Bank of North Dakota (BND), currently the nation’s only publicly owned depository bank. The BND makes 2 percent loans to local communities for infrastructure, far below the 12 percent average sought by private equity firms. Yet, as noted in a 2014 Wall Street Journal article, the BND is more profitable than Goldman Sachs and JPMorgan Chase.
Fifty percent of the cost of infrastructure is financing
China’s sovereign risk is extremely low. Importantly, the balance sheets of the Chinese state-owned banks, the government and the People’s Bank of China are all interconnected. Under these circumstances, a debt crisis in China is almost impossible.

All of our money is routed through the banks first to add on a huge interest burden.
"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." - Henry Ford
America became quite rich after WW II. We had a lock on manufacturing AND, the "exorbitant privilege" of having the reserve currency. We could just print money to pay our bills. So, while much of international business is conducted using the dollar, foreigners are pulling away from buying government bonds.
Various writers have warned against buoying bonds. At the same time, a few writers have pointed out that everybody else has left that market AND, it is up to the private sector to buy them.

FED head, Powell said that the $4 trillion loss (so far) is small potatoes. Does that sound like he is going to monetize everything that the Treasury sends over? wait and see.

Douglas MacArthur pointed out that ALL societies have a complete collapse if they have a moral collapse.
Everyone knows that slick Willy pushed through the Graham- Leachy bill to bring an end to the Glass-Steagal act. This allowed the banks to gamble with your money instead of / in addition to gambling with their money. When the banks won, they kept the profit that YOU had financed. When they lost, they just passed on the loses to YOU, the taxpayer. Privatise the gains and socialize the losses.

The middle class was getting poorer by the day and, the banks had to come up with a new scam. They skim everybody's account every night. They get excess reserves fro the FED. They get bailed out. etc. The finance sector just got too big and demanded too much money to keep it going. 50% of the cost of everything that you buy is for upstream finance. The demands of the bureaucrats and bankers is still too high for the declining wage and tax base.
Oil that is sold in other-than-dollars AND the drop in treasury bond sales is a de-facto abandonment of the reserve currency. We (and the British) killed <50 million> to keep this from happening.
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Old 02-27-2018, 04:21 AM
Danny B Danny B is offline
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Stock buybacks,, a big helping of poison

Had to break it up. There is just too much criminality for just one post.
"As economic power has shifted from workers to owners over the past 40 years, corporate profit’s take of the U.S. economy has doubled—from an average of 6 percent of GDP during America’s post-war economic heyday to more than 12 percent today. Yet despite this extra $1 trillion a year in corporate profits, job growth remains anemic,"
You can thank the legislature for this.
"Adjusted for inflation, public university tuition—once mostly covered by the states—has more than doubled over the past 30 years, burying recent graduates under $1.2 trillion in student debt. Many public schools and our police and fire departments are dangerously underfunded."
Where did all the money go?

"The answer is as simple as it is surprising: Much of it went to stock buybacks—more than $6.9 trillion of them since 2004, according to data compiled by Mustafa Erdem Sakinç of The Academic-Industry Research Network."
"In the past, this money flowed through the broader economy in the form of higher wages or increased investments in plants and equipment. But today, these buybacks drain trillions of dollars of windfall profits out of the real economy and into a paper-asset bubble, inflating share prices while producing nothing of tangible value."

The Ugly Truth Behind Stock Buybacks - Forbes
Share buybacks: What they are and why they may not work - Business ...
Stock Buybacks Are Killing the American Economy - The Atlantic
Stock Buybacks Destroy Corporations - Banyan Hill Publishing
Why buybacks should be banned - Reuters Blogs

"So what’s changed? Before 1982, when John Shad, a former Wall Street CEO in charge of the Securities and Exchange Commission loosened regulations that define stock manipulation, corporate managers avoided stock buybacks out of fear of prosecution. That rule change, combined with a shift toward stock-based compensation for top executives, has essentially created a gigantic game of financial “keep away,” with CEOs and shareholders tossing a $700-billion ball back and forth over the heads of American workers, whose wages as a share of GDP have fallen in almost exact proportion to profit’s rise."

Stock buybacks were previously considered insider trading and, were illegal. With one stroke of the pen, Shad of the SEC facilitated the drainage of $trillions from circulating in the productive economy.

"In a recent white paper titled “The World’s Dumbest Idea,” GMO asset allocation manager James Montier strongly challenges the 40-year obsession with “shareholder value maximization,” or SVM, documenting the many ways that stock buybacks and excessive dividends have reduced business investment and boosted inequality."
All these regulatory changes pull money from the lower loop to the upper loop.
Just in case you are wondering where congress was during all of this screw-job, don't wonder.
Insider Trading Rules That Don't Apply To Congress - Forbes
Congress Cashes in on Insider Trading | Represent.Us

Greenspan said that banks should NOT be regulated because they would regulate themselves perfectly. He was absolutely amazed when several traders crashed their own banks. Barings was crashed by one trader after it had been in business for 219 years. What he totally forgot to take into account was; INDIVIDUAL traders would act in their best interests, rather than the best interests of the bank.

Company officials are acting in THEIR own best interests, rather than the interests of the company. The runaway greed of individuals was never predicted.
US companies have spent $2 trillion doing something that has absolutely no impact on their business Business Insider

Comments from Zero Hedge
"Stock buybacks funded with debt equate to the total financialization of the equities market. Equities today are a derivative of equities of the past. Such is the fate of a system where debt is the wealth reserve asset."

The cost of debt servicing will eventually siphon off all corporate profits, making ownership of the corporations a liability instead of an asset. Who would want to own stock in a corporation that's insolvent due to massive debt obligations?

Personal debt, corporate debt, municipal debt, State debt, and Federal debt will eventually be beyond servicing; the entities will go tits up, and a lot of people are not going to get paid what they think they're going to get paid. The problem is global.
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Old 02-27-2018, 04:52 AM
Danny B Danny B is offline
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Poping the debt bubble and the resulting yield shock

all net debt issuance in the 21st century has been used to pay for stock buybacks..
Non-financial corporates have repurchased a net US$3.3 trillion worth of US equities since 2009,
Some have called the market self-cannibalizing.

So, they have been borrowing money to do buybacks. BUT, that debt isn't near so cheap to service now. That $3.3 trillion was bowwowed at ZIRP
or close to it. As interest rates rise, service becomes more expensive.

"What drove the US economy for the past three decades was debt expansion----private and public--- at rates far faster than GDP growth. But that entailed a steady ratcheting up of the national leverage ratio until we hit what amounts to the top of the tiger's back---that is, Peak Debt at 3.5X national income."
That unleashed the Fed to expand it balance sheet at will, thereby injecting fiat credit into the financial system at relentlessly accelerating rates; and it also paved the way for takeover of the FOMC by Keynesian academics and apparatchiks in lieu of the conservative bankers and money men who had run the Fed prior to 1970.

"tated differently, as the so-called "reserve currency issuer" the Fed's massive balance sheet eruption forced money-printing reciprocity among all the central banks of the world owing to the fear of rising exchange rates-"
So the convoy of modest central bank balance sheets that collectively stood at perhaps $80 billion in June 1970 totals more than $22 trillion today.
Thus, global GDP has expanded from about $3 trillion to $80 trillion since 1970 or by 26X. By contrast, the balance sheets of central banks has exploded by around 275X.
In a word, the long-running illicit regime of Keynesian central banking is now "priced-in" to the entire warp and woof of the world's $300 trillion market for debt ($220 trillion) and equity securities ($80 trillion).

"Therefore, as the Fed moves forward into the terra incognito of QT and the massive draining of cash from the canyons of Wall Street, thereby eventually triggering reciprocal QT up and down the rest of the global central bank convoy, its essential impact will be to "un-price" the falsifications, distortions, deformations and malinvestments accumulated over decades.
In combination, the carry cost of what is now $67 trillion of public and private debt and the acceleration of C-suite strip-mining of corporate cash flows and balance sheets into order to fund financial engineering, have caused the trend rate of real GDP growth to fall to just 1.2%.

In fact, however, the 1.2% real GDP growth rate in the final panel represents the permanent condition of the main street economy and exposes the real truth about the 40-year debt bubble. To wit, the US economy has reverted to payback time.
We got no more money to make widgets.

More importantly, the chain reaction triggered by slumping stock buybacks will be virtually uncontrollable. The great wall of passive investment vehicles-----ETF and indexed funds----will automatically dump stocks when the smart money realizes that the jig is up and that the carry costs and risks of speculation have suddenly shot dramatically higher.
Contra Corner » The Albatross Of Debt: The Stock Market’s $67 Trillion Nightmare, Part 2
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Old 02-27-2018, 03:32 PM
Danny B Danny B is offline
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Impossible to get off the tiger

No State can afford to have it's currency rise when compared to others. When the FED started printing, everybody else had to do the same. When the Swiss got a little behind on the printing, everybody jumped out of the Euro and, into the Swiss Franc. This caused all kinds of problems. Minus a gold standard, competitive devaluations rule the day. This often brings war. That is why the Bretton Woods agreement was created.

The FED is on a collision course because, previous FED actions set the stage for collapse.
"The Fed announced the unwinding of their $4.4 trillion balance sheet of dodgy mortgages, treasuries, and other Wall Street created dreck, many months ago. They had been all talk until the last week of January when they reduced their balance sheet by a measly .5%. Do you think it was just a coincidence the stock market imploded by 10% in an instant? Shockingly, the Fed increased their balance sheet by $15 billion over the next two weeks and the stock market rebounded dramatically."

"Proof the fake employment numbers are nothing but a propaganda ruse can be seen in the real average hourly earnings chart. Real earnings have not budged in over two years when the economy was supposedly adding 200,000 jobs per month."
"This is exactly what the Deep State controllers want. They don’t want real wages for real people in the real world to go up. The true purpose of the actions taken since 2008 has been to enrich Wall Street while impoverishing Main Street. Mission accomplished."

The financial system of the West is constructed so that every dollar is run through the banking system for them to take the first bite. Both Franklin and Hitler tried to escape from the system and both, got a war. The Chinese system is organized so that the money creation is directed at the actual productive sector. The result; China's middle class is very broad.
Global wealth inequality
In the 2008 crash, the Chinese system worked very well. If there is a repeat of that in the coming collapse, the West will have to institute public banking just to compete.

So, the FED very much wants to cut off the money but, they increased their balance sheet when the market tanked. This happened before in 2013.
David Stockman compared this to "riding a tiger". The longer it goes on, the closer you get to the head and, the harder it is to get off without being eaten. Obummer kept the money pumps going. Will Trump do the same?
"The solution to this debt problem has been to add tens of trillions in debt while artificially suppressing interest rates by rigging markets. The U.S. alone has added $13 trillion of debt since 2009 – a 25% increase in eight years. "
"A lousy 37 basis point increase in mortgage rates resulted in mortgage applications plunging. Existing and new home sales both collapsed in a heap."

World's largest asset manager says get ready to 'stomach complete losses' in cryptocurrencies
Steve Wozniak says someone stole seven bitcoins from him
2/27 NY: toughest cybersecurity in US — and still not enough – Business Insider

2/27 Time to admit the Afghan war is ‘nonsense’ – Consortium News
Afghan Opium Production Reaches Record High - VOA News
Oct 24, 2017 - Afghanistan, the world's largest producer of opium, has harvested a record crop this year that more than doubled last year's production,

Last edited by Danny B; 03-01-2018 at 03:17 AM. Reason: speleling
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Old 03-01-2018, 04:04 AM
Danny B Danny B is offline
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Europe blows before America

"A lousy 37 basis point increase in mortgage rates resulted in mortgage applications plunging. Existing and new home sales both collapsed in a heap."
"reduced their balance sheet by a measly .5%. Do you think it was just a coincidence the stock market imploded by 10% in an instant? "
OK, there is NO question what will happen when interest rates go up. Super Mario Draghi, knows EXACTLY what will happen.
"Draghi has realized that he has singlehandedly destroyed the European bond market. Besides the fact that it is illegal to short government bonds, he has come face to face with the stark reality that IF the ECB stops buying government bonds, there will be NO BID"
"Draghi said Monday that he will continue to include the billion-dollar bond purchase program and he will reinvest expiring bonds exactly OPPOSITE of the policy at the Federal Reserve"
Assuming the FED is honest.

"Draghi realizes that he is subsidizing the European governments. He is not stimulating the economy, he simply has them on life-support. Stopping the bond program will lead to a major crisis "

SO, will the FED raise rates AND do more QE? Hard to say at this point.
"Just today, the new Fed head, Jerome Powell, said policy makers may have to raise US rates during 2018 more than the three times that were previously expected."
In the letter, Buffett reminds us that investors should never borrow money to buy stocks.

According to FINRA, US margin debt reached a record $666 billion at the end of January. Somebody wasn't listening.

You're here for in formation,,, right? Here is your main reading. I won't excerpt it. There is very little in the article that isn't critically important.
Contra Corner » The Albatross Of Debt: The Stock Market’s $67 Trillion Nightmare, Part 4
"BofA's Michael Hartnett is - as of this moment - a force to be reckoned with. Exactly one month ago, the bank's Chief Investment Strategist warned clients that the bank's "Biggest sell signal in 5 years was just triggered" and warned of a correction as much as 12% in the coming 3 months. Just a few days later, he was proven right as the S&P tumbled 10% the very next week."
"In the absence of a stock market bubble (which remains a big risk given a dormant $10tn of negatively-yielding debt that can be reallocated to equities), muted and more volatile returns seem likely this year."
These morons have doctorate degrees. They don't see any bubble in the stock market. Next, the boneheads talk about $10 trillion fleeing bonds and going into equities. RIGHT, a $10 trillion flight from the bond market would still leave the stock market unaffected.

"“Don't Fear the Fed” has been central to the BTD (Buy-The-Dip), FOMO (Fear-Of-Missing-Out) & TINA (There Is No Alternative to stocks) trades of recent years; yet Powell signaled in his Humphrey-Hawkins testimony that US “headwinds” have turned into “tailwinds”. The Fed is signaling the “Powell put” has a much lower strike price and as the Fed accelerates and leads the end of the global QE era," They still might fake it. Then, there is the capital flight out of the EU.
"And note the central bank establishment (see Borio’s recent Bank for International Settlements link) has started to make the case that low policy rates have created “zombie companies” (estimated to now represent more than 10% of all OECD nonfinancial firms)" THAT is a lot of zombies. What about corporate debt of these numerous zombies?

Part of the deep State is a horrendous mass of GOV employees who will fight tooth and nail to get every penny they voted for. No squeeze is too great. No burden is too high,,,, as long as the taxpayer pays it.

Armstrong did many years in prison because of crooked judges. He really hates crooked GOV, https://www.armstrongeconomics.com/i...ing-a-suspect/
"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
~Lord Acton

“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”
~Napoleon Bonaparte

"Let the American people go into their debt-funding schemes and banking systems, and from that hour their boasted independence will be a mere phantom."
- High Consumer Debt Levels (Now $2.5 Trillion in Tuition & Autos)
- $3.8 Trillion Total Consumer Debt
- $9 Trillion in Housing/Mortgage Debt
- $32 Trillion in Foreign Ownership/Investment in Property in USA
- $20 Trillion in Federal Debt
- $65 Trillion in Total US Debt of all kinds

$42 Trillion in Equities
$80 Trillion in Bonds
$700 Trillion Systemically important Derivatives
$4 Quadrillion Total USD Derivatives
$4 Trillion Adjusted Monetary Base
$3.5 Trillion M1 Money Supply

Another number, https://www.sovereignman.com/trends/...in-2017-23026/
China and Japan are going down hard but, most of their debt is owed to their central bank.
Armstrong has some good DOOM going, https://www.silverdoctors.com/headli...-or-in-france/

Will Powell carry through on all the planned rate hikes? Will the FED do QE at the same time. Will Draghi and / or Kuroda cut back on bond & stock purchases? Will the PBOC cut back?
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