Economic pressures

[Danny B]

WW III and cyberwar

Just in case you wondered why we can't even talk to each other ,,,,oftwominds-Charles Hugh Smith: How Much of our Discord Is the Result of the "Engagement" Advert Revenue Model of Social Media?

China Leads The Quantum Race While The West Plays Catch Up

https://www.forbes.com/.../china-leads-the-quantum-race-while-the-west-plays-catch-

China's New Supercomputer Puts the US Even Further Behind | WIRED

https://www.wired.com/2016/06/fastest-supercomputer-sunway-taihulight/

Quantum Computing Would Make Today's Encryption Obsolete ...
https://www.bloomberg.com/.../quantu...y-s-encryption...
Moving on;

https://cybersecurityventures.com/hackerpocalypse-original-cybercrime-report-2016/

America desperately needs to develop quantum computing but, what will that do to stop State efforts to intercept all data?

[Danny B]

Education,,, warnings from the PBOC and IMF

America dumbed down the schools to make the electorate more controllable. Europe is bringing in boatloads of trash to comply with the Kalergi Plan and break up all cultural unity. The plan calls for an electorate that is brown and stupid.
BUT, Pox Americana depends on technical advances to stay ahead of it's competitors. American students are falling way behind many other States. China is pressing ahead with education and advancement as fast as it can. America has a huge military budget. What about Japan?

The Orientals put a huge emphasis on education. We will continue to fall behind.

The lower loop meets the upper loop in housing because it is considered such a good store of value.

This is where some of the hot money is flowing. Select cities are priced way out of reach of the working class.
The new twit in New Zealand is going to cut off the hot money there. Wait and see. https://www.armstrongeconomics.com/i...gners-get-out/CBI ex-boss says capitalism not working - BBC News
It's true that crony-capitalism combined with the welfare state doesn't work.

"Hidden almost all the way in the end of the first chapter of the IMF's latest Financial Stability Report, is a surprisingly candid discussion on the topic of whether "Rising Medium-Term Vulnerabilities Could Derail the Global Recovery", which is a politically correct way of saying is the financial system on the verge of crashing."
"ominously admits that "concerns about a continuing buildup in debt loads and overstretched asset valuations could have global economic repercussions" and - in modeling out the next crash, pardon "dislocation" - the IMF conducts a "scenario analysis" to illustrate how a repricing of risks could "lead to a rise in credit spreads and a fall in capital market and housing prices," About that house that you bought with hot money,,,

"A sudden uncoiling of compressed risk premiums, declines in asset prices, and rises in volatility would lead to a global financial downturn." financial FART
"Thus, the second phase begins with a rapid decompression of credit spreads and declines of up to 15 and 9 percent in equity and house price"
Most of the report is watered down BS. Here Is The IMF's Global Financial Crash Scenario | Zero Hedge
The IMF postulates a drop in lending as setting things off.
"As the following chart of year over year lending growth shows, this metric has turned negative during or immediately following every formal recession since 1948. Furthermore, at no point since 1948 has lending slowed to the level that is is at today and not subsequently turned negative amid a recession."
Commercial and Industrial Credit Growth is Still Slowing - The Sounding Line
The oil industry is rapidly going bankrupt. GOV is rushing through some new leases for drilling in Alaska. Keep in mind that oil from the Naval Reserve couldn't arrive here for at least 7 years. The current pipeline is a long ways away from the new leases and the current pipeline is in bad shape from sand in the oil abrading the pipes.

https://www.reuters.com/article/usa-oil-alaska/u-s-offers-record-lease-sale-in-alaska-reserve-to-oil-gas-drillers-idUSL2N1N02OP

So, the PBOC warns of a crash in assets. The IMF warns of a crash in Assets. But, the hot money just keeps flowing in. Armstrong said that a strong dollar will crash the R.O.W.
Evidently, those in the House of Saud got hold of some bad weed, https://finance.yahoo.com/news/saudi...175000431.html

[Danny B]

https://www.yahoo.com/news/european-central-bank-set-announce-073014158.html

"The market cap of equities is 139% of GDP. For comparison, it was 66% of GDP in 1987 before the Dow dropped 23% in just one day."
"But the greatest bubble in the history of bubbles resides in the sovereign bond market. The incredible $8 trillion in negative yielding sovereign debt and the unfathomable $1.6 trillion in corporate debt with a yield less than 0% has pushed stocks and real estate investors into a yield-chasing frenzy."
"For 2017, the Q1 year-over-year earnings was 14.5%, Q2 came in at 11%, but FACT Set is projecting Q3 will come in at a paltry 1.7% yoy earnings growth." It can only go down from here. It seems that you need consumers to actually have earnings.
Lemmings in Full Gallup Towards Cliff | Michael Pento | Safehaven.comS&P: UK consumer debt boom raises 'red flags' as cre - Business Insider PARTY ON.

Chinese president Xi at one time worked on a farm feeding pigs. In his quest for power and wealth, he may have overstepped good sense. He will be forced to devalue the Yuan. It remains to be seen if he can maintain confidence in Chinese debt and markets.

[Danny B]

Saving the banks,,, Reaper,,, QT,, 10 year rising

After Great Depression I, congress passed the Glass-Steagal act separating savings banks from investment banks. Slick Willie came along and pushed the Graham-Leachy bill that allowed the savings banks to reunite with investment banks. Europe has just refused to separate savings banks from investment banks. Banks are just not growing and have reached an apex. They are headed down AND, they are going to take your money as they slip-slide into hell. Your deposit in the bank is considered an investment in that bank. When they go down, you can forget about trying to recoup your money.
Senate Repeals Rule Letting Americans File Class-Action SuitsAgainst Financial FirmsReaper? Will it mine BTC? Will it be used to bring down everything?
The Next Cyber Hurricane Is Coming And It'll Take Down The Internet | Zero Hedge

"Put simply, the above charts are a MAJOR warning that the bond bubble is in serious trouble. Central Banks are now cornered: either they stop printing money and let stocks collapse... or they continue to print money, unleash inflation, and pop the bond bubble."
"The problem with this, is that in order to create this bubble, they had to print trillions of dollars worth of money and use this money to buy bonds. And that money printing (now to the tune of $15 trillion) has unleashed inflation.

Why is this a problem?

Because inflation makes bond prices FALL as bond yields rise to accommodate the higher inflation rate. And when bond prices fall, the bond bubble bursts."
"Worst of all, the 10-Year Treasury has already broken its bull market trendline running back to previous credit cycle peak in 2007."
Central Banks Are Now Cornered | Zero Hedge
The foreign capital inflows have gone into equities, NOT sovereign bonds. The State drove down interest rates to make their debt service easier. At the same time, these low rates precluded them from attracting capital. Both Draghi and Yellen are talking about Quantative Tightening. The 10 year treasury has broken support. QT will only make it worse.

The recovery has definitely helped those closest to the money spigot. Income has crashed and with it, the fertility rate. GREAT graphs.

https://econimica.blogspot.com/2017/10/economic-recovery-but-for-who.html

"Many have a hard time comprehending that if the money supply increases, how can there be deflation? It is always the bottom-line. If you keep raising taxes, you will reduce the standard of living, and that in turn comes back and results in lower economic activity."

https://www.armstrongeconomics.com/history/europes-economic-history/cars-sales-dropping-as-taxes-rise/

The everything card, https://www.armstrongeconomics.com/w...tos-move-over/

[Danny B]

Global pot flows,, ransomware,,hot money

"Allen said there are more than 50,000 pot farms in California, and as many as 15,000 in Sonoma County. "
Dozens of pot farms burn down in California wildfires - Oct. 20, 2017
This big growth in domestic pot production is having quite an effect on foreign competition. The Mexican drug producers are losing market share.
24,000 Homicides: Mexico On Pace For Most Violent Year In History As Drug Wars Spiral Out Of Control | Zero Hedge

Malware is growing faster than anyone could have predicted. States are gradually shifting from kinetic warfare to cyber warfare.
Bad Rabbit Ransomware Spreads: "This Is A Targeted Attack.. On Critical Infrastructure" | Zero Hedge
Round up the usual suspects.

The FED pumped in all that hot money but, ZIRP made it all but impossible to get any returns. As yield disappears, the hot money flows into stocks. Now that stocks have peaked, it is flowing into other asset classes.

Hot money may bump up some areas but, it doesn't do much good for the average person. It gradually bleeds over into prices but, NOT wages.
"The ashes of wealth consumed by the 2008-09 Global Financial Meltdown are still warm, at least to those who never recovered, and so buying assets at nosebleed valuations in the hopes of earning another 5% aren't very compelling to anyone pursuing common-sense risk management."

"2. Value flows to what's scarce. As economist Michael Spence and his colleagues have noted, conventional capital--the kind issued by central banks and private banks--is not scarce and therefore has little value. Ditto for conventional labor. This is why the returns on conventional capital and labor are so low."
"So any investment in health will pay extremely high dividends. It doesn't take a ton of cash to invest in one's health; most of the investment is behavioral."
oftwominds-Charles Hugh Smith: Where To Invest When (Almost) Everything's in a Bubble

[Danny B]

Nervous billionares,,,repeat of 1987,,

The upper loop meets the lower loop in real estate. The hot money has gone into property. This has priced out buyers who aren't in the upper loop. The same things is starting to happen to renters.
Vacant Property Rates Soar In Over Half Of US
1 In 5 American Renters Missed A Pmt In Past 3 Months
A very good article on contagion, "The Nightmare Scenario" Revisited: Albert Edwards Lays Out The Next "Black Monday" | Zero Hedgehttps://www.theguardian.com/business...-swells-to-6tnKeep in mind that in 1948 Costa Rica declared that they didn't intend to have any wars. They disbanded the army. Get rid of the military and there would be lots more for the average person.

https://www.theautomaticearth.com/2017/10/volatility-on-steroids/

[Danny B]

https://www.armstrongeconomics.com/armstrong-economics-upcoming-events/world-economic-conference/phase-transition-v-plateau-move/

https://www.armstrongeconomics.com/markets-by-sector/precious-metals/gold/gold-better-in-euros-than-dollars/

http://www.24hgold.com/english/news-gold-silver-the-informant-cometh.aspx?article=11680372768H11690&redirect=false&contributor=James+Howard+Kunstler

Oregon has some new taxes for people who refuse to adequately support the highway system. The higher mileage your car gets,,,, the more taxes you pay. Electric cars pay a chunk too. They even plan to tax bicycles.

https://kobi5.com/news/63605-63605/

http://www.24hgold.com/english/news-gold-silver-crypto-currency-calm-before-the-storm--governments-are-studying-it-to-find-the-means-to-take-control-of-it-and-you-.aspx?article=11647357844H11690&redirect=false&contributor=Mac+Slavo

[Danny B]

tradable, that is, commoditized goods that can be made anywhere and shipped to markets elsewhere, nontradableWe certainly have plenty of that.
"-- The fragmentation of the two political parties into warring camps that have little common ground in a struggle for control of the rising tide of populism."

https://www.peakprosperity.com/blog/113383/what-could-pop-everything-bubble

"Based on McKinsey scenario modeling, they estimate automation could raise productivity growth globally by 0.8 to 1.4 percent annually."
NO MENTION of wages.

https://www.nextbigfuture.com/2017/10/ai-automation-digital-finance-blockchain-could-boost-global-gdp-growth-by-over-2-per-year.html/

"As we get closer to the end of 2017, it's becoming clear that the solar industry will likely surpass 100 GW of solar installations for the year. For perspective, that's up from about 76 GW a year ago, and exponential growth from the 8.1 GW installed in 2009. "

https://www.fool.com/investing/2017/10/28/solar-news-this-week-100-gw-within-industry-reach.aspx

The U.S. is putting the squeeze on Saudi oil in favor of buying Iraqi oil. https://www.bloomberg.com/gadfly/art...l-trump-wanted
Exponential growth of solar power is definitely going to affect oil prices.
As if solar wasn't bad enough for oil, here is the growth of wind power, https://g.foolcdn.com/editorial/imag...42_1_large.JPG
"From 1998 to 2001, capacity factor was 25.4%, and projects built in 2015 had a capacity factor of 42.6%. Each watt installed generated 67% more electricity. "

https://www.fool.com/investing/2017/10/29/why-wind-energy-is-booming-in-the-us.aspx

https://dailyreckoning.com/revealed-americas-actual-debt/

"-- you can't help but notice that, to date, crypto hype and promises outweigh actual tangible real-world adoption and accomplishments by a very, very large margin. Say what you like about Valley VCs, but you can't argue that they don't have a long, proud history of momentous, world-changing success.

There do seem to be green shoots of future success in the crypto world. I'm on record (see "Blockchains are the new Linux, not the new Internet") as arguing that decentralized consumer apps are unlikely to take off. That said, though, decentralized blockchain apps in many spaces, even non-financial ones, -- such as, say, power grids or reputation economies --"

https://finance.yahoo.com/news/ether-fever-dreams-130042187.html

A rather odd article, "So when the opening shots of the next American civil war are fired, how will I know with which of my neighbors to affiliate? They all seem nice enough. But when the sirens sound and the grocery shelves are empty, who among them will share their basements or emergency rations from Costco?"

http://www.freep.com/story/opinion/columnists/brian-dickerson/2017/10/29/second-civil-war-republicans-democrats/806319001/

[Danny B]

https://www.financialsense.com/mises-institute/crisis-or-stagnation-why-china-cannot-develerage

The article goes on to state that China can never de-leverage. This shows a lack of imagination. China needs a huge influx of wealth to liquefy all of it's debt. A huge repricing of it's gold would (will) do the job nicely

[Danny B]

[Danny B]

https://renegadeinc.com/j-is-for-junk-economics/#comment-11135

[Danny B]

Gold,,, Ca. pensions,,,Taleb, ignore warnings

The East is determined to make gold the ultimate extinguisher of debt.
"Ottawa's gold holdings peaked in the 1960s at more than 1,000 tonnes. But the government has been steadily selling off its gold holdings ever since. By 2003, Ottawa was down to 3.4 tonnes, which it has now almost entirely sold."
Ottawa sells off almost all its gold reserves, leaving just 77 ounces ? or less - Business - CBC News
The State wants you to use only State paper as a store of value. The run down gold any way they can. I suspect that they are selling fake gold to try to drive people away from the market, "This Could Be Huge": Gold Bar Certified By Royal Canadian Mint Exposed As Fake | Zero Hedge

Pox Americana tries to keep investors confident in the markets. The FED announces that it will stop QE. Then the PPT and ESF pump in liquidity. The European Central Bank announced that it would reduce QE by 30 billion Euros. They have already bought 2.55 trillion. BUT, they want another entity to continue to pump in liquidity.

https://www.rt.com/business/408190-europe-wants-replace-imf/

https://www.youtube.com/watch?v=EmC26RuO26g

https://www.libertynation.com/impending-pension-crisis-california-looking-little-less-golden/

Cute infographic, http://www.visualcapitalist.com/63-t...visualization/
European bond yields are crashing so, we can expect more capital flight, http://www.zerohedge.com/news/2017-1...s-are-crashing
Draghi is an imbecile.
The CBs are talking up quantitative tightening but, the markets don't really believe them. I think it is all bluff.

http://www.zerohedge.com/news/2017-10-27/2-trillion-hole-2019-central-bank-liquidity-finally-turns-negative

https://www.theburningplatform.com/2017/10/29/bull-in-a-china-shop-2/

RE is where hot money meets the lower loop. It's hard to imagine the GOV doing something about this.

[Danny B]

Crypto news,,,Armstrong, unglued to bring us socialism

Bitcoin Just Hit New Record High At$6300 - Over 550% YTD
There you have it. Crypto assets are just catching on too fast to ignore.
"Worse Than Tulips..." And Other Enduring Misconceptions About Crypto Assets | Zero HedgeBlockchain-based voting system"
"With the residency program already on blockchain and business records to follow, a blockchain-based currency could be the final piece in the puzzle that provides a frictionless taxation system that largely eliminates tax evasion at a stroke."

"Payspace magazine reckons 41 million people now have a Bitcoin wallet and there are over 80 stock exchanges trading in crypto-assets. "
Making it Easy to Invest in Cryptos - Russian Entrepreneur Unveils 'Tokenbox'
Fascinating stuff.

https://oilprice.com/Energy/Energy-General/The-Petrodollars-Biggest-Challengers.html

Stealth socialism, https://jonrappoport.wordpress.com/2...low-the-money/

https://www.armstrongeconomics.com/armstrongeconomics101/understanding-cycles/idiots-who-try-to-control-the-world-and-blame-everyone-else-for-their-failure/

Armstrong has another interesting article, https://www.armstrongeconomics.com/a...ion-or-cities/
Saudi Arabia agreed (under duress) to sell oil only in dollars. They agreed to recycle their excess profits into Treasury Bonds. Evidently T-bonds didn't earn enough so, they branched out, https://www.youtube.com/watch?v=M1rxFPnNCro&t=164s
There is nothing smooth about the petro markets, https://www.bloomberg.com/news/artic...o-end-in-sight

[Danny B]

Worldwide QE to maintain employment

A short recap. Cheap Containerized shipping allowed low-wage countries in the East to rapidly cause / export massive price deflation in Tradeable goods. Meanwhile, they slowly exported massive wage deflation. The wage deflation kicked off a cascade of defaults mostly in real estate. RE is a very large part of the credit edifice. The financial institutions with the most exposure to RE, were in deep trouble. They couldn't foreclose because nobody would buy houses off of them for any kind of decent price.
The taxpayer was forced to cough up $700 billion because the banks were insolvent AND illiquid. The only cash coming in was from their drug business. They brought it on themselves by originating liar-loans. This was done to keep the credit bubble growing.

Over the years, hot money gradually bought up the RE. The CB tried to stimulate the economy by pumping liquidity into the financial loop. How could it trickle down when wages and employment kept falling? The CB was determined to pump in liquidity until price inflation reached 2%. Keep in mind that their tunnel vision was focused on consumer goods. No matter how high stocks flew, it was not counted as inflation. The CB essentially rescued RE. RE is still rising because it is still attracting hot money.
Reduced consumption and reduced wages cause deflation in State tax collection. They did the obvious thing and raised taxes to compensate. Higher taxes brought lower consumption. As poverty increases, GOV wants more and more tax.

"Economic expansions always breed unproductive investments and the role of the recessions is to release the economy from this burden. The creative destruction is a process of purification that occurs during recessions. That is, a typical business cycle recession promotes a more efficient allocation of capital by driving out bad investments"
"After the crisis, Japan decided to save everyone. Ailing banks and companies were kept in operation with aggressive measures by the government and the Bank of Japan (BoJ). The government gave subsidies to firms so that they could maintain employment and banks were allowed to hold non-performing loans in their balance sheets"

"Zero and below-zero interest rates have created a situation, where easy credit is keeping more and more unprofitably firms alive " Maintaining employment

https://www.huffingtonpost.com/entry/the-coming-zombie-collapse_us_59f6c9fae4b06ae9067ab9f3

"the next violent VIX burst higher without an immediate slam lower, could be the catalyst that blows up not only half the investing worlds, but unleashes the next QE - as central banks won't just sit there as everything crashes - in the process short-circuiting the cycle and restarting from square one (unless of course a reset is impossible, as Kocic discussed on Saturday)."
Minsky Cycle 2017: Where Are We Now | Zero Hedge"What Happens When The Market Can No Longer Pretend": Charting Today's Minsky Moment Dynamics | Zero Hedge

https://www.businesslive.co.za/bd/world/asia/2017-10-30-analysis-chinas-debt-fuelled-boom-is-the-worlds-problem/

Pension reform now,,, pension destruction later.
Contra Corner » A Monstrous Bubble—The Destroyer Called Amazon Bringing price deflation to your doorstep.

[Danny B]

Banks can't skim with BTC

"Centralized banking and all other forms of intermediary rentier skims are presented as solid. If history is any guide, these supposedly solid entities may well melt into air."
" 1. It's a form of private-sector issued money. It is not issued or controlled by any government or central bank.
2. It is structured in a completely different manner than conventional central-bank issued currency: it is a digital form of money that is issued as payment for those who maintain the database (the blockchain) on their privately owned computers. Since the blockchain is distributed over numerous computers, it is decentralized and distributed rather than centralized.
3. It enables trusted transactions between parties without requiring the services of an intermediary, i.e.a bank which acts as a trusted clearing house for transactions."

" Many of the functional pieces of modern capitalism were private-sector innovations, starting with banking and credit (some of which was borrowed from Arab traders). In the good old days of the 1500s, if the King of Spain wanted to finance a costly voyage around the world (Magellan's circumnavigation in 1519-1522), he turned to private-sector lenders.
Insurance, stock markets, futures markets and options were all private-sector innovations designed spread the risk and reward of ventures such as trading voyages to the Spice Islands."
"The rate of expansion of private-sector innovations is much higher than those of centralized authority. "

" The private sector, in contrast, is a free-for-all of a multitude of players with an enormous range of ideas, schemes, scams, risk appetites, insider knowledge (i.e. asymmetric knowledge), capital, expertise and so on, all networked through a fast-expanding spectrum of media and exchanges.
This private-sector ferment is on display in the cryptocurrency space. Scams and brilliant innovations are shoulder to shoulder in a fast-moving mob."
oftwominds-Charles Hugh Smith: Why Is Bitcoin a Big Deal?