Economic pressures

[Danny B]

Saudi following Venezuela

https://www.rt.com/news/363566-saudi-civil-servants-reform/

A $500 Billion "Hitch" Emerges In The Saudi Aramco IPO | Zero Hedge
The Saudi GOV is reducing taxes to make a buyout of ARAMCO look more attractive. Oil sales are down,,, taxes will go down. Benefits are STICKY, PressTV-Saudi Arabia restores perks amid fears of unrest
At some point, they are going to follow Venezuela when they can no longer afford freebies for everyone.

I wrote about Humpty Dumpty climbing on an even higher wall but, I forgot the link, Of Two Minds - Housing's Echo Bubble Now Exceeds the 2006-07 Bubble Peak
We get 3.3 million barrels of oil per day from Canada. Trump is starting to take protectionist measures that are getting them riled up. Alberta Warns Trump Of Retaliation If Energy Sanctions Begin | Zero Hedge

[Danny B]

https://www.newscientist.com/article...uns-the-world/[B]

The printing from the CBs constantly inflated the wealth of the upper loop,, primarily, the banks,. With this amount of wealth, regulatory capture is an obvious strategy. Crony-capitalism became the perfect business model. BUT, crony capitalism gave free-market capitalism a bad name. Now, capitalism is under fire for the sins of State operated capitalism.
The Looting Machine Called Capitalism - PaulCraigRoberts.org
There is speculation that capitalism is to be demonized to allow socialism to flourish.
This is causing great divisions everywhere, https://www.theautomaticearth.com/20...great-divides/
Reportedly, America is the last bastion of capitalism and the Marxists need to destroy it.

[Danny B]

The State prints the difference to stave off deflation

The runaway corporatocracy impoverished Americans to the point that the State had to take over supporting them. 51% of Americans receive a check from GOV. 45 million are on food stamps. Close to 100 million are unemployed. Many millions work for GOV in make-work jobs. The 100 million missing from employment rolls are also missing from wages and money circulation. This is a huge deflationary pressure. U.S. GOV is printing more every day to hold this deflation at bay. The asset values of the upper loop are at risk if the lower loop has no money.

ZIRP is hugely deflationary because it wipes out interest earnings to all the savers and funds. It allows the banks to continue to earn spread but this concentrates the last bit of earning power right at the top. As the banks squeeze out the last drops of profitability, the State must make up the difference. As aggregate national earnings go down, the debt ceiling must be raised. Congress must raise the debt ceiling to protect the value of the assets of the upper loop.

The gold bugs have their own focus BUT, they also are good at pointing out flaws in the system. Here is Miles Franklin with tons of good info.

https://www.milesfranklin.com/the-future-of-money-and-wealth-storage/

Sticking to the Basics - Investing Video & Audio Jay Taylor Media

Here are a few good, short articles including #2 on risk parity funds. They don't look good.

https://capitalistexploits.at/2017/04/world-whack-5-head-scratchers/

[Danny B]

Venezuela, gold and unworkable plans

Remember, rock, paper, scissors? Cheap oil crushes the banking system.
The "resistance" is simply people who have nothing to eat. GOV let oil push out agriculture and now, they are screwed, https://www.marketplace.org/2016/04/...zuela-ranchers
Sadly, the lefties always seem to screw the pooch; https://www.marketplace.org/2016/04/...zuela-ranchers

https://www.milesfranklin.com/the-future-of-money-and-wealth-storage/

45 percent of Americans pay no federal income tax | New York Post

Credit card debt climbed way over a $trillion even though wages were falling,

The middle class is M.I.A when it comes to sending savings up to the upper loop to be leveraged, invested and massaged. Same for the oil industry. The FED has stepped in and pumped up assets of every type. They can raise asset prices but, they can't do much for earnings.

The FED is trying to make up for all the earnings that Americans are not producing. They are going to be quite busy trying to maintain the value of all the markets AND, trying to maintain the standard of living for many millions of Americans.

[Danny B]

https://www.armstrongeconomics.com/armstrongeconomics101/economics/the-confidence-game-the-next-crisis/

The FED lied about the BLICs and "others" buying Treasury debt. They are playing the confidence game.
Here is a chart of debt to GDP. Keep in mind that the debt is counted as a positive segment of the GDP.

https://www.aier.org/sites/default/files/Files/Documents/Standard/articles/images/chart1a.jpg

Here is debt to revenue, https://redhawk500.files.wordpress.c...pg?w=758&h=519
FED GOV must work overtime to maintain confidence. The continuous and upcoming budget battles won't help at all.

[Danny B]

tax growth,,,, ecological overshoot

Some of the facets of the DotCom crash are starting to reappear, "As If Millions Of Unicorns Suddenly Cried Out In Terror": Cloudera IPOes At Less Than Half Its Last Private Valuation Round | Zero Hedge
The Chinese plan to make a big entrance to the world stage. If confidence in the dollar is lost, the Chinese will be free to make their big move.

https://wealth.goldmoney.com/research/goldmoney-insights/end-of-empire?gmrefcode=dollarc

https://www.armstrongeconomics.com/world-news/taxes/italy-to-raise-taxes-to-satisfy-brussels-why-the-euro-will-fail/

A few billion people in the third world want to raise their standard of living. There are some serious obstacles,
Ahead of The Herd - Earth Overshoot Day

[Danny B]

Stronger dollar,,,Unstable credit

As already reported, the VIX is considered the "fear gauge"

"In a paper for the Bank for International Settlements released last month, researchers led by Stefan Avdjiev highlighted how the dollar is a key driver of bank balance sheets, effectively dethroning the CBOE Volatility Index (VIX) as a benchmark for market fears. The stronger the dollar, the wider the deviations from covered interest parity (CIP), slowing down cross-border bank capital flows in dollars, the analysts noted."
The problem comes in that capital flight makes the dollar stronger. In 3 years, Chinese debt-to-GDP is expected to reach 520%. The ECB is a dead man walking. This causes more capital flight.Ah, but the major component of the "money supply" is debt.

"While discerned by few, Credit turns progressively less stable over the course of an economic upcycle. Especially during the late-cycle boom phase, there would be a huge divergence between general confidence and the underlying deterioration in the quality of rapidly expanding Credit. "
Ah yes, confidenceNot perfectly accurate. The politicians that control the central banks are the problem.At the other end of the tug-of-war are the elites that want to drastically reduce the population. Figure on less than a week.politicians believing they enjoy a similar luxury. "
Credit Bubble Bulletin : Weekly Commentary: Unsound Finance

Without the "flywheel" of gold, the credit creation machine runs faster and faster. Little bits and pieces start to fly off. It's still a big machine. It's still spitting out "money". It appears OK. It is fatally unstable.
The politicians create ever-more debt money to raise the standard of living. When debt creation gets too far ahead of wealth creation, the whole system becomes too unstable.

[Danny B]

Tax flow down,,, borrowing up

The ability of a debtor to pay back a loan is related to how much free cash flow he has. Since "other" and the BLICs are not buying sovereign debt, the FED has to buy it all. The U.S. Treasury sends Treasury bonds to the FED to be monetized. The FED re-sells these securities on the open market. But, if nobody is buying sovereign debt from the Treasury, nobody is going to buy it when the FED tries to sell it on the open market.
The deficit for March was $186 billion. Where is the Treasury going to get cash flow to keep the party going if the FED stops buying?

Tax Flow;

https://www.armstrongeconomics.com/world-news/taxes/trumps-tax-survey-already-predetermined/

At what point will the bankers notice that U.S. GOV has a shrinking tax flow?
FED GOV will be running on fumes by about August. The FED reports that it is holding about $ 4.6 trillion of GOV debt. It is expected to take 15--20 years to unwind all this.
Fed 'balance sheet': What happens, why it matters, what could go wrong
GOV wants to increase the snot out of debt at the same time that the FED wants to reduce it's balance sheet.
The FED has probably pumped in an additional $20---30 trillion but, nobody is talking about that.
If sovereign debt is going to crash as predicted by Armstrong, something drastic is going to have to happen to destroy confidence. Maybe somebody plans to pull the plug.

[Danny B]

Emerging cracks in the system

The FED initiated a credit bubble to save the banks. There was never any recovery in the lower loop so, there was never a recovery in the upper loop. The FED, PPT and ESF had to pump nonstop. They claim otherwise but, the debt-clock and deficit make them liars. As employment, savings and wages continue to fall, the FED must fight all this potential deflation with a commensurate credit inflation. Falling employment, falling retail and falling consumption require even more offsetting actions from the FED. In an effort to stimulate the most watched measure of wealth, the alphabet agencies juice the stock market.

The index crossed 6,000 and everybody is jubilant. BUT, the FED is doing targeted juicing.

Personal debt is at a new record high and the millennials are really cranking it up. They spend more than other age cohorts on frivolous stuff.

https://medium.com/@Jay52/americans-are-in-more-massive-debt-than-ever-f289e72c354d

The private and public credit generators pump out debt/liquidity. When it grows too far and too fast, they get nervous about defaults. They try to cut back on their exposure. (Unless they're Chinese). But, the system really can't tolerate a reduction of credit creation. Like this;

https://s3.amazonaws.com/bap-assets/editorial/dre/20170405/20170405-dre-01.png

https://agoraeconomics.com/2017/04/05/the-looming-credit-bust-hinges-on-margin-debt/

excluded governmental debt out of that,"

https://agoraeconomics.com/2017/04/05/the-looming-credit-bust-hinges-on-margin-debt/

A margin call causes forced sales of assets. A BIG margin call can freeze up the markets from too many attempted sales.

Regional banks are shrinking the credit bubble, https://mishtalk.com/2017/04/29/regi...ding-estimate/


The CBs created credit inflation to goose the economy. They ignored wage inflation because they had no power over it.

The CBs mistakenly believed that credit inflation would goose the economy. All this added commerce and productivity would more than compensate for the resulting price inflation.
The goose has a case of the squirts and price inflation is oozing out everywhere.

As the defaults rise, credit disappears, http://www.zerohedge.com/news/2017-0...s-abs-issuance Notice that JPM has flogged off dodgey loans to brain-dead investors.
https://www.washingtonpost.com/world...=.1684bc80db7d

[Danny B]

Labor market in socialism...death by leisure

Here is a long, detailed article about the history of trying to substitute a planned economy for a market economy. Keep in mind that socialism kills incentive. It removes "reward" for the vast majority of people.
Simply compare the economies of N.Korea to S.Korea... East Germany to West Germany.
The Marxist planners try to negate market forces by centrally planning EVERYTHING. They have a new trick up their collective sleeves.
"We know Lange had still not conceded a basic error in his in old age, as he made a gleeful remark in 1967 about computers soon being able to calculate all those equilibrium equations proposed by Barone rapidly enough that a perfect 5 year plan could finally be produced for the comrades. Good grief! [PT]"
It is a good article that goes into a lot of detail and explains a lot.
Ludwig von Mises? Century of Validation |

Somehow, the article evades a very important point. Marxism desires to create uniform, low prices. It must kill the profit motive. Incentive, the twin brother of profit dies at the same time. The great fatality of the system is; socialism demands a uniform low price for both goods AND labor. Socialism pulls down the talented people to support those people with no particular talent. The talented people see no particular reason to exert themselves. There is no reward.
The un-talented people see no particular reason to exert themselves because, there is no penalty. Socialism is incompatible with human nature.

Kunstler has some observations on human nature. The National Blues - KUNSTLER
As man makes more technical advances, the whole fabric of society further disintegrates.

[Danny B]

The ongoing crashes of collectivism

We probably have a one week funding extension. Congressional leaders reach deal to fund government through fall, senior aide tells NBC
The grand fallacy of the eurozone, "German output is exceeding even pre-crisis peaks"
" Italy has not grown for almost two decades now. "
Italy situation is bigger elephant in room than French and German elections: UBS chairman
The obvious solution to no growth,,,, raise taxes. https://www.armstrongeconomics.com/w...uro-will-fail/
The State sees just one solution to it's problems; steal more money.

The United Nations ranks Rhodesia 1st worldwide in food produce. 1975

https://www.zimeye.net/united-nations-ranks-rhodesia-1st-worldwide-in-food-produce/

That was then. This is now, Zimbabwe pleads for $1.5bn in food aid to prevent mass starvation
Zim imports 80% of their food. The Marxists seem to be the absolute worst at running an economy.

[Danny B]

Society,,, losing the narrative

The boneheads in GOV seem to think that a cashless society couldn't execute a bank run.
"According to HCG's latest press release this morning, the "less than prime" Canadian mortgage lender held HISA deposits of only $391 million as of Monday, May 1; this is down C$130 million from Friday, or a reduction in the total amount by 25%. It is also down 72% from the C$1.4 billion reported one week ago."
The Ontario Pension Plan is going to cough up a couple of $billion to save them.
"the company has another C$12.8 billion in Guaranteed Investment Certificate deposits, or GICS. As these 30- and 60-day deposits come due in the coming weeks, depleting HCG's already tapped out liquidity, and forcing even more emergency loans. "
"Jim Hall, the CIO of Mawer Investment Management, formerly one of the biggest investors at HCG, said he is "recalculating the odds of a contagion widening across the Canadian financial system."
Ah yes, the confidence factor.
This Is What A Bank Run Looks Like: Home Capital Loses 70% Of Deposits In One Week | Zero Hedge

It is said that "idle hands are the devil's tools." Some States in Europe have a 50% unemployment rate. They can't live on their own and they can't start a family. They are definitely pissed off about this.

https://qz.com/971374/europes-youth-dont-care-to-vote-but-theyre-ready-to-join-a-mass-revolt/

"And as for "low delinquencies", I remind you of my April 26 article Subprime Credit Card Losses Bite Capital One: Income Down 20%, Charge-Offs Up 30%."
"Previously, the bottom third did not matter. Then the bottom 40% did not matter. Now the bottom 50% do not matter."
Economic Reality: Bottom 50% of Americans No Longer Matter | Mike Shedlock | Safehaven.com
They don't matter until they pick up a Molotov cocktail.
The lefties in academia see that they have no prospects in the labor market. Their solution is to spread violence.
The muslim immigrants are unruly and violent because they have no stake in society. What happens when the native born feel that they have no stake in society?

[Danny B]

Collapse + war.... collapse and no war


OK, so the consumer is tapped out in spite of maxing out her credit cards. The debt bubble has to grow but, the consumer can't do it. Banks have cut back on credit and the unwinding has begun. The speed of unwinding and default is picking up. How much time do we have before the banks fail / close?

The Wolfowitz doctrine never went away. World domination is still the objective.

https://www.rt.com/news/386276-us-missile-shield-russia-strike/

US forces preparing sudden nuclear strike on Russia - Moscow Security Conference - Fort Russ
NO, these aren't attack pages. They are inconvenient truths.

Post WW II, Pax Americana morphed into Pox Americana. We used the credit card of the reserve currency to build 850? bases around the world. The U.S.S.R. didn't have a credit card so, it went broke. We promised to NOT expand NATO Eastward. We lied.
Russia has NO sovereign debt. Their stock market is one of the best in the world. They have 11 time zones of natural resources and this makes them a target.
Post WW II, America got a new master, https://www.youtube.com/watch?v=wLTNBlt6Ubg&t=184s

They are trying to bring us socialism just like they brought to Russia so many years ago. They have a strong hold on Europe.

They have brought a long, slow degradation to America. Our upcoming collapse will bring a paralysis. The CIA director has just rushed off to South Korea. Will the war agenda be sped up to kick off before the looming economic collapse? Will the R.O.W. speed up our collapse to abort WW III?
These aren't just academic questions. If the R.O.W. sees nuclear winter and radiation poisoning in the near future, they will forget their differences and band together for survival.

Will the collapse prevent a later war? How much of the domestic economy will the neocons be willing to sacrifice?
Putin once told netanyahooo that he could make israel a sheet of glass in 24 hours. Are the neocons stupid enough?
Is the military running the show. A few years ago, the U.S. military tried to assassinate the Chinese premier with the "Rods of GOD. I doubt that obummer would have approved such an action.
BOMBSHELL: China and America already at war: Tianjin explosion carried out by Pentagon space weapon in retaliation for Yuan currency devaluation... Military helicopters now patrolling Beijing - NaturalNews.com

The Chinese are in a suicidal credit binge. Is that accidental?
Armstrong, https://www.armstrongeconomics.com/i...et-sad-to-say/
Is the economic collapse being held off by bankers who feel that war is more important? if the economy collapses, will war still be initiated?

[Danny B]

https://www.armstrongeconomics.com/armstrongeconomics101/basic-concepts/can-anyone-really-save-the-economy-in-a-crash/

Side note, Trump - US 'Needs A Good Shutdown In September To Fix This Mess' Is it just me or, does this sound risky?
Soros plans to destroy the Polish government by 2020.

https://www.armstrongeconomics.com/world-news/corruption/soros-at-it-again-trying-to-overthrown-polish-government/

https://www.armstrongeconomics.com/world-news/banking-crisis/federal-reserve-elastic-money-ny-clearing-house-certificates/

While Armstrong makes several good arguments for a central bank, he ignores the many failings due to human nature. He throws ALL the blame on the legislature for expanding the money supply. In the late '30s there was NO credit to be found. As soon as we declared war, there was credit flowing everywhere.


276,000 aircraft manufactured in the US .
43,000 planes lost overseas, including 23,000 in combat.
14,000 lost in the continental U.S.
From Germany 's invasion of Poland Sept. 1, 1939 until Japan 's surrender on Sept. 2, 1945 = 2,433 days.
America lost an average of 170 planes a day.

A B-17 carried 2,500 gallons of high octane fuel and carried a crew of 10 airmen.

9.7 billion gallons of gasoline consumed.
108 million hours flown.
460 thousand million rounds of aircraft ammo fired overseas.
7.9 million bombs dropped overseas.
2.3 million combat flights.
299,230 aircraft used.
808,471 aircraft engines used.
799,972 propellers."

The original charter of the FED allowed overnight lending for good collateral ONLY. A good idea. Elastic moneyHedge Fund CIO: What Central Banks Have Done Is "Stunning, Unprecedented" | Zero Hedge
Everybody jumped on the good-times bus because, even though it faltered, it kept on chugging. Nobody wanted to miss out on all that free money. But, as assets start to roll over, in spite of all the pumping, fear is starting to enter the market.

https://www.hussmanfunds.com/wmc/wmc170501.htm

They've only gotten more numerous and risky.

http://kunstler.com/cluster****-nation/sound-one-wing-flapping/

No kidding. Who would have thought that?
Desperate time call for stupid measures. Maduro controlled the price of bread AND, the bakers went out of business.
Will the big banks do a number on Trump?

"Ron Paul: Fed actions will soon cause a long-overdue correction" NO MENTION of the funding bills from the House.

http://www.cnbc.com/2017/04/29/ron-paul-fed-actions-will-soon-cause-a-long-overdue-correction.html

[Danny B]

The Dems need a LOT of money

FED GOV is paralysed, for the most part. They have voted for a continuing resolution to keep GOV temporarily financed. In a general sense, the DEMs have the most to lose in a budget shutdown. Chicago needs about $ 100 million in FED GOV money every week to keep rolling along. So, who would be most affected by a shutdown?
Baltimore is in crisis because of the murder rate. They pleaded to the FBI for help because they can't afford to pay overtime to their police. The FBI said that they would send a forensic van to more quickly identify firearms used in crimes.
Feds Send In Reinforcements After Baltimore Mayor Pleads For Help: "Murder Is Out Of Control" | Zero Hedge
There is a looming threat that Baltimore could take the record for murders away from Chicago,,,, another democrat run town.
America is quite bummed out and 9.5% of the people need a shrink.
The United States Of Distressed America - Vocativ

GOV debt is rising and fingers are pointing at various groups who use GOV services.

https://dailyreckoning.com/death-by-euphoria/