Economic pressures

[Danny B]

CBs buy equities to hedge against the collapse of sovereign debt

Well Macaroon got elected. He is the choice of the bankers and billionaires. He was even endorsed by obummer.
Emmanuel Macron Topless on LGBT Magazine Garcon | Mediaite
Emmanuel Macron is a 'gay psychopath,' claims best-selling Russian ...
Armstrong, "But the election of Macron was the worst possible outcome as it should have been for it now seals the fate of Europe. The Euro that will crumble as Brussels now tries to federalize everything to secure its own survival against the people of Europe to defeat this populist movement by political decree."

https://www.armstrongeconomics.com/markets-by-sector/foreign-exchange/usd/the-dollar-is-king/

"Merkel has already made it clear that she will not relax Eurozone spending rules to help Macron. The defeat of Le Pen has sealed the fate of Europe because there will be no reflection upon how to reform the EU to save Europe."
"Only a sublime idiot would now think everything in Europe will be just great. We are looking at a major hard landing for Europe"

https://www.armstrongeconomics.com/international-news/politics/macrons-victory-may-be-disaster-for-merkel/

Worldwide, the Central Banks are buying equities. This appears to be an effort to support stock markets and keep confidence running high. There is a secondary reason. The Central Banks are diversifying OUT of GOV debt.
"The central banks are trapped. Lowering interest rates to virtually zero reduced their yield on reserves and they cannot sell off government securities. The only viable hedge is US treasuries in the bond world against the chaos of the Eurozone. That offers no diversification, just more government debt. "
"The ECB owns 40% of European government debt. The Swiss are buying US equities as a hedge against the Euro and political unrest. This is not manipulation. They lost a fortune trying to maintain the peg and franc with the Euro. They cannot use pegs, so the only alternative to just buying US Treasuries is private equities."
Equities still depend on consumers being able to spend money. The CBs are pumping in $250 billion every quarter. GOV spends 24% of the GDP. With a crash in sovereign debt, GOV WON'T be spending all these billions. Equities will not survive.

https://www.armstrongeconomics.com/world-news/central-banks/why-central-banks-buying-equities/

The Canadians easily survived the '08 crash. They have had a change of heart and, are now embracing the American attitude of spending far more than they earn.

https://dollarcollapse.com/money-bubble/canada-next-hot-money-vicitim/

[Danny B]

Oil-PM link... death of big oil

Energy is the master resource. Here is a chart of the price of silver compared to the price of oil.

https://dj0s31cxqi9ot.cloudfront.net/wp-content/uploads/2016/10/Annual-Silver-Price-vs-Oil-Price-1900-2016.png?x65756

Even copper seems to be connected to the price of oil.

https://dj0s31cxqi9ot.cloudfront.net/wp-content/uploads/2017/05/Copper-Price-vs-Oil-1900-2016.png?x65756

https://dj0s31cxqi9ot.cloudfront.net/wp-content/uploads/2017/05/Blood-Bath-In-Oil-Industry-FIMAGE.png?x65756

"David Stockman discussed this in his recent interview, Fiscal Bloodbath Coming This Fall

https://srsroccoreport.com/central-bank-market-rigging-horrified-about-the-biggest-global-bank-run-in-history/

[Danny B]

Oil companies rapidly dying

You can well imagine that I find it difficult to separate the BS from the truth. I also find it difficult to pull together ideas from many different sources. You have to sort out all this stuff in your own mind.
America had a boom post WW II. Things started to go down when the R.O.W. rebuilt their manufacturing capacity. In the mid-60s, the politicians inflated the system to create the welfare-warfare State. By 1971, gold was leaving the treasury at the rate of 100 tons a week. Not knowing any better, Nixon broke the gold standard rather than revaluing the gold/dollar. This incident prompted Ron Paul to go into politics. The chief strategist in China said that this was the single most important action taken by America, NOT the world wars.

Wages in America have been going down for decades.
Purchasing power has been going down for decades.
Oil supplies in the lower 48 have been going down for decades.
Fracking brought expensive oil online.
Our wages go down, the price of oil goes up.
Up until a few years ago, the oil majors sent about $1/2 trillion to the banking industry for investment. This has rolled over and the number is NEGATIVE. The oil majors are spending huge amounts of money for debt service. This high price for gasoline and diesel is made worse by GOV taxes. GOV adds about 70 cents per gallon. The oil companies profit about 5 cents per gallon.
California just added $ 50 billion in taxes to fuels.

Our wages are going down. The price of oil is going up. Profits are going down. Demand is going down. Oil companies have stopped paying for exploration and are cutting back on maintenance. They have cut back their stock dividends. The oil companies are sinking beneath the waves.
We can't afford their oil any more. The taxes just make it worse.
Our wages go down and the net change in money pushed into the system from the oil majors has been about a negative $750 billion. The credit bubble MUST grow but, input from the oil industry is crashing.

"This next chart says it all. The top three U.S. oil companies, ExxonMobil, Chevron and ConocoPhillips cleared a hefty $16.3 billion after CAPEX and dividends were paid during the first half of 2011:"
I arrived at that figure by taking these three companies Cash from Operations and then deducted Capital Expenditures (CAPEX) and Dividends. Now, if we look at the same figure five years later, these three U.S. oil companies are in the HOLE for $18.1 billion. "
Their interest payment on debt is 86% of profit, https://i1.wp.com/srsroccoreport.com...00%2C358&ssl=1
It is a good idea to read the whole article, THE COMING BREAKDOWN OF U.S. & GLOBAL MARKETS EXPLAINED… What Most Analysts Miss – Truth is Justice

Infrastructure maintenance is also killing the oil majors, A Sobering Look At The Future Of Oil | Zero Hedge

[Danny B]

Setting up for the bloodbath

Much of American wealth was tied up in real estate. When RE crashed in 2008, that brought down most of the rest of the system.
Much of Chinese wealth is invested in commodities. Commodities are headed down, https://www.bloomberg.com/view/artic...-taken-lightly
Investors believe that stocks are going to go screaming up. Stocks are going up because CBs are buying them. P/E is close to 30--1. The CBs see stocks with no earnings as being superior to bonds that are expected to blow all to hades. Investors also see emerging market debt to be a good investment. IF the EMs are sucking up every dollar they can get PRIOR to blowing up and defaulting, those investors will get hosed very well.

https://www.armstrongeconomics.com/international-news/emerging-markets/emerging-market-debt-expanding-twice-the-rate-of-2016/

"The bond debt from developing countries is growing exponentially with total commitments reaching around $425 billion+. This crop of bonds have an average maturity of 6.3 years as compared to 10 year maturities for investment grade rated as risk-free.

This is adding to the crisis we see on the horizon and a dollar rally will set off a debt crisis like nobody has ever seen in more than 100 years. Private debt among emerging markets is almost about $1.6 trillion with maturity due to foreign creditors over the next five years. It looks like about 90% of this debt is in US dollars."

Yep, they are setting up the West for a BIG blowup, https://www.armstrongeconomics.com/i...-rate-of-2016/
Armstrong, "Additionally, we have produced a very important report on the Fate of the Euro & the ECB. This report dives into the crisis faced by central banks and illustrates how it is now possible for central banks to actually fail."
Armstrong stated VERY clearly that the State is NEVER proactive.
"More importantly, we have offered a SOLUTION on how to save the ECB.

https://www.armstrongeconomics.com/armstrong-economics-upcoming-events/world-economic-conference/materials-for-hong-kong-wec-2017/

Stockman, " I would target sometime between August and NovemberFiscal Bloodbath Coming this Fall-David Stockman | Greg Hunter’s USAWatchdog

Keep in mind that Trump must increase the debt to $40 trillion over a period of a few years.

[Danny B]

China right on track for default...Systemic meltdown in Europe

The wealth in China is underpinned by commodities.
So, what to do when commodities crash?
Simple !!! Borrow more money, https://capitalistexploits.at/2017/0...d-bull-market/
If you are looking for some humor, GOV is ready to provide it. Keep in mind that the day before 9/11, GOV reported that $ 2.7 trillion was missing. Since then, several more $ trillions have simply gone missing. GOV has now created a website so that Joe average can track every dollar of GOV spending.
For The First Time, You Can Track Every Dollar The Government Spends | Zero Hedge

In France, the newly elected Macaroon is the anointed darling of the Rothschilds. Emmanuel Clinton and the revolt of the elites | Asia TimesParis Afterparty - KUNSTLER

[Danny B]

Money, wealth and gold, FOFOA

This post not only calls for quite a bit of reading, it calls for quite a bit of thought and understanding. There were 3 writers over a period of a few decades who had an inside window to gold AND a serious understanding of economics.
Another, Friend of another and Friend of friend of another. The following article if from FOFOA. He continues a tradition of fantastic insights into economics. You should read the whole article. It's long. The only thing better than a good book is a long, good book. The article centers on Money, gold and wealth. You have to read it slowly to let some of the foreign concepts sink in.

"The debt built up from all of the past, unfree, protectionist old world trade is killing the transition. (to digital currency)
The policy is to sell free trade and the narrow margins it produces as they shut down entire economies because the low profits cannot service the old debt.
This brilliant, modern free trade system and all of its benefits cannot be implemented using the US dollar as a reserve currency.
Government guarantees would require the treasury (and Fed) to print unbelievable amounts of new currency to cover the unserviceable debt that Free Trade would create!
Back in 2014, I wrote a series of three very long posts, Fiat 33, Dirty Float and Global Stagnation, which explained, at length, my view of the future monetary system I call Freegold, which, ironically I think, has almost nothing to do with gold. Excellent articles to read.

Please see Moneyness and Moneyness 2: Money is Credit for more on this subject More EXCELLENT information.FOFOA: Money or Wealth?

[Danny B]

Puputovs, MMT,, poor Italy

Well, the proverbial $hit is flying in Venezuela, Venezuelan Protesters Unleash 'Poop Bombs' As Currency Collapses 99.5% | Zero Hedge I feel real bad for the Venezuelans. Many of them are going to die. If they took all the effort they spend protesting and used it to do gardening, they would be much better off.

Italy is following Greece because the eurocrats refuse to deal with reality. A lot of Italians are going to die. In Bleak Prognosis, Italy’s Financial Regulator Threatens EU with Return to a “National Currency” | Wolf Street
An article on modern monetary theory https://dollarcollapse.com/monetary-...netary-theory/

[Danny B]

What happens to the debt load?

America has public debt overhang of $20 trillion. With $212 trillion of unfunded liabilities, we can expect the debt overhang to grow. Our trade deficit is about $45 billion a month. Globalization has brought VERY low profit margins and very low wages. The old debt that we have been carrying and rolling over for decades can no longer be serviced by our new, low earnings. We just roll it up higher and higher by printing new debt to service the old. Nobody wants to be paid with U.S. Treasury notes so, nobody buys them.
I do not understand how we are paying for our imports if nobody will take treasury notes. I don't believe that we have enough gold left to settle trade imbalances UNLESS somebody is manufacturing elemental gold.

Our debt must necessarily grow but,,, how... and to who will we owe it? The EMs have borrowed tons of money,,, maybe they figure on not paying it back.

[Danny B]

The Marxist road

Europe is headed for BIG trouble and the election of the Macaroon in France highlights the problems. The European Monetary Union was formed knowing ahead of time that it would crash without a debt union. Now that it is at the edge of the abyss, the Marxists roll out the plans for Eurobonds.
Because of favorable trade laws, Germany has a current account surplus of about 900 billion Euros. The EU has a great plan to load up Germany with the debt of the failing economies.
The old economies of Europe were like a big barge floating down the Rhine. Globalism and digital capital have facilitated instant transfer of capital. NOTHING is stable. The new economies are like a kayak rather than a barge. any little thing causes an upset. Consider Germany; it has an enormous surplus, actually ILLEGAL under EU rules BUT,

"I have warned that about 50% of the German municipalities are on the verge of bankruptcy. The pensions have been unfunded and are absorbing everything."
"German municipalities face rising debt levels that mimic Greece. They cannot afford the investment to even maintain schools and roads any more. We are headed into an economic abyss beyond contemplation. And people worry about hyperinflation?" https://www.armstrongeconomics.com/u...ies-in-crisis/
2014 It's only gotten worse.
The economic system is like a kayak. Nobody can stand up.

Back to the Macaroon.
The Marxists are celebrating his election but, they expect him to roll over and hand ALL control of France to Brussels.

https://www.armstrongeconomics.com/international-news/politics/macron-to-hand-all-sovereignty-to-brussels/

The Marxists and the bankers are in agreement; RAISE THE SNOT OUT OF TAXES. They say that they need 10% of your money to improve things, https://www.armstrongeconomics.com/w...roperty-taxes/
Consider GOV to be an enormous mass of bureaucrats. Their full-time job is to squeeze out funding for their salaries. Everything else if secondary.

Macaroon is the darling of the Marxists and was quickly groomed when it appeared that Hollande was going down.

https://www.armstrongeconomics.com/international-news/europes-current-economy/brussels-berlin-reject-the-core-of-macrons-political-campaign/

Merkel is a communist, of course BUT she isn't in any hurry to fork over Germany's wealth to the macaroon.

https://mishtalk.com/2017/05/09/zumutungen-buyers-remorse-in-france-impossible-situation-for-germany/

SO, China is flying under the radar at the moment. Give it a few days.

Another way to look at this; the U.S. is importing more and more dollars from India and China.

[Danny B]

The rising cost of ransomware

Very quiet at the moment. There are still a couple of things to write about.
Man proposes,,, god disposes. Competing States keep raising their capabilities for war-making and competition. MUCH of the competition between States is for economic reasons. Many States AND independent actors are turning to cyber warfare instead of kinetic warfare. Their actions are often untraceable. Who are you going to retaliate against?

The latest release of hacking tools from "vault 7" has spread around the world.
"One reason WannaCry has proven so vicious? It seems to leverage a Windows vulnerability known as EternalBlue that allegedly originated with the NSA. The exploit was dumped into the wild last month in a trove of alleged NSA tools by the Shadow Brokers hacking group."

https://www.wired.com/2017/05/ransomware-meltdown-experts-warned/?mbid=nl_51217_p6&CNDID=38901740

Reportedly, the latest attack hit 74 States, Cyber attack spreads across 74 countries; some UK hospitals crippled | Fox News

https://dailyreckoning.com/first-must-protect-computer/

[Danny B]

Update on the ransomware

"spread quickly across the globe, raising fears that people would not be able to meet ransom demands before their data are destroyed."
"The animated map below shows the speed and scale of the global infestation which took just a few hours to cover the globe:"
Yes, and how fast will the cascade of default circle the globe?
24 Hours Later: "Unprecedented" Fallout From "Biggest Ransomware Attack In History" | Zero Hedge
So, the NSA lost control of an "cyber atomic bomb" and everybody has it. "They" were oh-so-worried about 3-D printed AR-15s. Now, they REALLY have something to worry about.

"They" have fingered an interesting culprit, Top NSA Whistleblower: Ransomware Hack Caused by ?Swindle of the Taxpayers? by Intelligence Agencies | Zero Hedge


GREAT business model.
A while back, I was surfing and got a ransomware window. I immediately pushed the power button and shut down. I'm running Linux Mint. When I restarted, everything was OK.

[Danny B]

https://dailyreckoning.com/new-financial-weapons-mass-destruction/

3 Signs U.S. Economy Is Near Tipping Point

The wage earner has to meet his immediate survival needs and is in no position to stop working and demand more money. The rentier class can always squeeze him for more productivity and/or lower wages. The wealth transfer from the wage earner who is actually productive to the person who just rents his money has made the latter even more rich. The money flows up to the top where it is NOT circulated. The super-rich can't actually spend their fortunes. They can only re-invest the money. At the end of the day, the money can't truly be put to work unless there is consumption.

How much is APPL worth if they don't sell any phones? How much is Google advertising worth if nobody can buy the advertised products?
Warren Buffet never picked cotton or fixed a car. The debt is compounding faster and faster because consumption is getting slower and slower.
Typically, when the consumer fails to take on more debt, the interest rates are lowered to prod her to buy more. When she still isn't able or willing to take on more debt, the State steps in and creates debt in her name. (bonds) The more that she falters, the more that the State makes up for the difference.

The State runs out of things to spend money on. Wars are nice and expensive and fulfil the Shumpeterian demand for creative destruction. BUT, all of this debt is eventually laid on the back of those pay taxes. Sovereign bonds spend tomorrow's taxes,,, today. This demands a lot of confidence in GOV. This confidence has been lost and nobody wants to buy U.S. promissory notes.

FOFOA reports the the giants (super rich) have bought up 50,000 tons of gold that is missing from the traditional accounts but, very much in existence.
The U.S. dollar was formerly backed up by gold. Then later, it was backed up by our taxing ability. Then, it was backed up by our industrial capacity. It is also backed up by the full faith and credit of the U.S. GOV
49% of Americans pay no taxes. Uncle Sam is in hock for $ 20 trillion. His unfunded liabilities amount to $ 213 trillion.
If nobody is buying Treasury notes, how are we paying for imports? Will the coming debt-ceiling and budget battle unmask the whole situation?

Then, there is the question of war, Are You Ready to Die? - PaulCraigRoberts.org

[Danny B]

I'm taking my BOB and going up to my BOL so, I'll be AFK for a few days.

[Danny B]

Globalization and the destruction of most economic niches

A major tenent of economic theory was that; for every producer, there was a consumer. Everything was produced by a laborer or an artisan. Mankind had to be ever-more productive in agriculture so that his surpluses could feed people who did not work just to grow food. Over time, his increased productivity drastically lowered the number of people needed in agriculture. With the industrial revolution, this increased efficiency moved into most other sectors.
Man came up with new economic theories to adjust labor, prices and credit.

Labor had no real bargaining power because man had to eat every day. Big business regularly busted up unions to keep profit margins up. With slave wages, consumption was very limited and money didn't circulate very much. The mega-rich just didn't understand that paying a living wage greatly increases economic activity and makes them richer also. Well, times have changed and the democratization of wealth no longer works. As each new sector gets automated, consumptive power goes further down.

Charles Hugh Smith;
"The Status Quo narrative is: the policies that worked for the past 70 years are still working today.
There's no Plan B for a state-corporate form of central-planning capitalism that is no longer functioning.
If there is one reality that is denied or obscured by the Status Quo, it is that the economy no longer works as it did in the past. This is the fundamental economic context of our current slide into political-social disintegration.
So "emergency" temporary measures are now permanent life-support, lest the comatose patient expire once life support is removed.

As Gail Tverberg has explained, there is a collar on oil prices: if they're too low, producers lose money and shut down higher-cost wells, crimping supply; if they're too high, low and moderate-income households can no longer support the consumption the economy needs to keep expanding:
This is the current state of the oil industry in the lower 48. Falling effective purchasing power can not keep the physical economy rolling along. It was temporarily papered-over with ever-longer credit terms. Now, longer credit terms are just not enough to keep consumption going.
oftwominds-Charles Hugh Smith: State of Denial: The Economy No Longer Works As It Did in the Past

Globalization tends to concentrate all activity in just one area. Everybody else goes poor. The instant transfer of capital sequentially inflates and deflates one area after another. People just can't move around like capital does. Capital doesn't worry about this because capital is blind and dumb. When it all of a sudden pulls out of an area and leaves a wasteland, it takes no notice.
It cares not the slightest that consumption in that area has crashed.

Commodities are traded on the global market. More and more, labor is subject to global labor rates. Globalism has most affected areas of commerce that are concerned with tradable goods.
From comments;
"Manufacturing, agriculture, and mining are untradeable in any society that wants to live for the long term. These are the sources of all new wealth."
Note to Venezuela, you let agriculture slip away from you.

"Service sector employment is largely untradable, as getting a haircut (for example) isn't something you can have done overseas for less money. Healthcare, education, legal services, restaurants, government--all these job-rich sectors are untradable.

The net result is globalization has an outsized impact on rural production employment and very little impact on urban untradable employment."
It's a two-pronged attack on employment in Western countries. GlobalTARDS import crimigants to take alot of those "untradable" urban service sector jobs. So those a$$wipes found a way to wreck those jobs too. On a scale similar to the jobs sent overseas. Chuck should mention that too."

"Rural economies have been largely destroyed by two things: Agricultural policies (regulations and subsidies) have destroyed the small farmer. The small farmer can't sell meat or dairy products without jumping through hoops or conforming to regulations that make profitability impossible. Plus Big Ag enjoys subsidies that allow it to out-compete the small farmer on price--even if the small farmer is next door to you, while Big Ag's products may have to travel a thousand miles (or from China). Small farmers in my area can sell high-quality meat, dairy, and produce at prices that are competitive with Big Ag's prices for ****ty products; they just aren't allowed to.

The second factor is the destruction of small businesses by over-regulation, taxation, artificially high rents, and subsidies to their larger competitors."
Globalization & The Rural-Urban Divide | Zero Hedge

OK, so Agenda 21 has quite a few facets. BUT, all of this depends on American dominance of the R.O.W. Without global dominance, we can NOT pay for imports. There is a new world financial system coming and it isn't going to allow Pox Americana to receive $ 45 billion a month of "free stuff"
New Global Financial System Is Inevitable – Dr. Ron Paul |

Tom Waits;
Who are the ones that we kept in charge
Killers, thieves, and lawyers
Tom Waits
There is always a wild-card in the deck,

[Danny B]

Another and Friend of Another.Kill the Euro and there wouldn't be an alternative to the dollar.Our legacy debt was no longer serviceable with our run-down economy.FOFOA convincingly reports that 50,000 tons have been taken by the "giants".So, kill the Euro.Jim Sinclair Reveals How the Gold Reset Will Occur | Silver Doctors