Economic pressures

[Danny B]

The EU said that Britain must pay a huge settlement to leave the union. The house of Lords told them to "shove it"
https://www.theguardian.com/politics...enny-say-lords

" What I’m saying is that the buy-Europe!™ story that has been pitched by the sell-side ad nauseam for the past six months is broken and that these stocks are defenseless against the steady stream of anti-Europe political news "
"Because every sell-side strategist and his cousin has been pounding the table that Europe is recovering and Europe is cheap and why worry about all those elections"
"The European 'Story' Is Broken" | Zero Hedge

FED GOV has been lying about numbers for so long, nobody believes them,,, except the ignorati investors.
" Since 2009, the BLS has added 4.78 million jobs through the so-called birth/death of businesses adjustment, although the numbers of business formations per U.S. Census have actually been declining. "
" Trump may change the way we calculate trade deficits, unemployment, and maybe even GDP."

So politicians in the United States have manipulated figures to present lower unemployment, better trade, and a higher GDP. Trump, as usual, is going against the trend of how economic figures are usually adjusted, by trying to expose the weakness of the U.S. economy, which he says the previous administration left him. "
"In 2014, desperate European nations Italy and Great Britain changed their GDP methodology to include drug dealing and prostitution. For Britain, this resulted in added “production” of 9.7 billion pounds in 2009, equal to 0.7 percent of GDP."
"As for trade, the whole world has a bigger numbers problem than American re-export calculations. According to the International Monetary Fund, the account balance of the whole world was $247.4 billion in 2015. This means the earth exported more goods and services than it imported."
The Economic Numbers Conundrum

"The value of China’s banking system is now more than 310% the size of its GDP, compared to "only" 280% for the eurozone and its banks. "
"China became the world's growth dynamo during and after the financial crisis, spewing out between $3 and $4 trillion in credit creation each year,"
"While in recent weeks, China's top leaders have signalled that they intend to shift policy focus away from stimulus towards risk control, the truth is they have done so on numerous occasions in the past only to fail" MANY times.
"by the end of 2017, China's banking syste, will be roughly $37 trillion and rising precipitously."
China's Banking System Hits $33 Trillion, Overtaking The Eurozone As World's Largest | Zero Hedge

"America’s trade deficit in goods is "large and persistent, about $2 billion every day."
"suggest that as a result of foreign investment in the US to plug the current account shortfall, foreigners may - to cite Warren Buffett - eventually own so much of the U.S. that Americans will wind up working longer hours just to eat and to service the debt."
" The U.S. has begun to lose control of its food-supply chain, and foreign firms are eager to purchase large swaths of Silicon Valley’s treasures.
Much of Wall Street and most economists simply don’t care. But to paraphrase Mike Pence on the 2016 campaign trail, the people of Fort Wayne know better. The analysts at the Pentagon know better, too. That’s why, for both economic and national-security reasons, it is important to bring America’s trade back into balance—through free, fair and reciprocal trade."
In WSJ Op-Ed, Peter Navarro Writes Deficits "Could Put US National Security In Jeopardy" | Zero Hedge

Rhodesia destroyed itself when it killed and persecuted the White Boers. Now, Zuma of South Africa is proposing that they do the same thing, http://www.zerohedge.com/news/2017-0...ion-white-land

[Danny B]

Floating on a sea of red ink,,, until the plug is pulled

The State pumps out lots of sovereign bonds and injects the money into the upper loop of the economy,,,, hoping for a trickle-down effect. BUT, the bonds must be repaid by productive workers. Their future wages are handed out to the rich. It is actually a trickle-up scheme. The rich aren't actually producing anything. As more and more of production is done by machines, there is a lower and lower wage base to repay the sovereign bonds. The State responds by creating ever-more debt.
As the productive sector of the economy tries to cope with the ever-lower wages, it utilises more and more automatic machines.

The price deflation promised by automation was stillborn and never allowed to compensate for the lower wages brought by automation.
The finance sector is growing ever-larger as wealth production and consumption continue to shrink. The sovereign bonds can never be repaid by the productive sector. The stock market no longer serves any useful function and must rely on cash infusions from the State. These infusions aren't adequate to make "normal" dividend payments even though the state has pumped in $trillions.

In 1913, we got the FED and the economy crashed 16 years later. In 1999, we got the repeal of Glass-Stegal and the 2008 crash 9 years later.
There has NEVER been enough money in the system to support the huge overload of bankers.
"when Bill Clinton defends repeal of Glass-Steagall, you get a hindsight rationalization of his action to let the banking street to go wild. Surely he or his Fed toadies would never admit that tearing up Glass-Steagall separation had anything to do with the 2008 crash. "
"Understanding How Glass-Steagall Act Impacts Investment Banking and the Role of Commercial Banks, explains the principle. Goldman Sachs had the crucial need for the infusion of major capital to keep itself afloat. With the conversion from a partnership to a public company Goldman gained access to Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress.

" Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year."
"The ultimate day of reckoning and economic collapse from the next panic cannot be prevented. The scope of a future financial apocalypse will make a $7.77 trillion bail out look like chump change. Wall Street is never held accountable for their uncontrolled greed and criminal practices. Glass-Steagall was one of the few regulatory interventions that served the country well. For that reason alone it was destined for oblivion. The central banksters have proven that they are the definitive parasites in all money matters."
Glass-Steagall Essential Banking Regulation

The middle class has been bled-out.
"What is even more striking is that among Americans who earn more than $75,000 per year - a third more than the typical U.S. household earns - almost half also said they wouldn’t be able to cover a $500 surprise expense. "
"The Bankrate survey findings echoed research published last year by the Federal Reserve, which found that 46% of respondents said they would be challenged to come up with even less, or $400, to cover an emergency expense, and would likely borrow or sell something to afford it. When the Fed asked what types of emergency expenses Americans had actually faced in the last year, more than one out of five cited a major unexpected medical expense. The average expense: $2,782, or almost seven times higher than the Fed’s hypothetical $400 surprise bill. "
"The Reality Is, Half Of Americans Can?t Afford To Write A $500 Check" | Zero Hedge

"This year, we have the [19th National Congress of the Communist Party of China] in the fall, "
" China is creating debt five times faster than incremental GDP. Beijing can grow the economy with ghost cities and high-speed railways to nowhere, but that’s not free, and it’s not sustainable.
Gordon Chang: 'China Is Going to Go Into Free Fall'
After the Party congress, China is going to go into free fall."
"China Accounts For Half Of All Global Debt Created Since 2005." So, what happens to global liquidity when China hits the wall at mach7 ?

[Danny B]

NO zombies to be seen

Kunstler deserves special mention for his writing style,
Great Expectations (Not) - KUNSTLER

[Danny B]

Marching downhill

MOSSAD /CIA created Stuxnet and it got away and created havoc. As most people know, the entire? toolbox of CIA hacks has been released. Vault 7 is the biggest Pandora’s box yet. Hundreds of banks and other corporations were hacked before the release of Vault 7. What will happen when the hackers get the best tools to be had?
https://www.softwar.net/firesale.html

Margin debt is back up to nosebleed territory; https://www.advisorperspectives.com/...277b47d2a6.png
The FED backstopped the investors somehow believing that it would only be a temporary measure. BUT, trickle-up economics can't work when too few people are working.
https://www.advisorperspectives.com/...and-the-market

"Obama and his minions jabber about the tremendous jobs recovery during his reign of error. In 2007 there were 122 million full-time workers among a working age population of 233 million, or 52.3%. After Obama’s eight year economic “recovery”, there are 125 million full-time workers among a working age population of 254 million, or 49.2%.

We’ve added 3 million full-time jobs in the last 9 years, and the captured mainstream media touts this as a success story. The deceitfulness – it burns. When 125 million full-time workers, of which 22 million are non-producing government drones, have to support 102 million non-working Americans, most living on the dole, you have a financially unsustainable paradigm."
Personal spending has gone off a cliff, http://www.zerohedge.com/sites/defau...01_spend_0.jpg
https://www.theburningplatform.com/2...ll-is-going-on

"And if anyone believes that the GOP will patch up its differences and fall into ranks to vote a $24 trillion debt ceiling through in order to accommodate the Trump tax cuts, a huge defense increase, border walls and thousands of more armed guards, they need look no further than the Obamacare “repeal and replace” campaign.
It’s already DOA."
"This prospect means, in turn, that there is no path to a Congressional majority to raise the debt ceiling when it freezes into law at about $20 trillion on March 15."
https://dailyreckoning.com/deep-stat...-donald-trump/

Sooner or later, the fallout from automation will have to be addressed. Until then, we will drag along the bottom with falling spending and falling consumption.
https://medium.com/basic-income/self...961#.xk0b4vpoj
https://hackernoon.com/a-history-and...a71#.uxldxfv5q
http://www.financialsense.com/thecon...9&utm_term=FSO

There is SO LITTLE appreciation for the fact that the working man has been replaced by the machine. We invented machines to take away the physical burden of heavy labor. Now, we have machines to take away most of the burden of mental work. The owners of the machines insist on being paid as if it were a human doing the labor.
Bankruptcies are done by machines now. They still charge ~ $3,000. They should charge 5 bucks plus filing fees. Our economic system just doesn't work when the parasites outgrow the host.

[Danny B]

Coming attractions,,, NY Times

Coming attractions; Are We Witnessing The Weirdest Moment In Economic History? | Zero Hedge
It's 1994 Again: Why Albert Edwards Expects An Imminent "Bond Market Bloodbath" | Zero Hedge
Marine Le Pen is getting a reality check; Marine Le Pen: "I Will Introduce The New Franc At A Rate Of One-To-One To The Euro" | Zero Hedge

More coming attractions; https://dailyreckoning.com/four-economic-triggers-2017/
The New York Times has done some soul-searching;
" When it bursts, there will be no new round of bailouts like the ones the banks got in 2008. Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.

THIS dyspeptic prospect results from the fact that we are now state-wrecked. With only brief interruptions, we’ve had eight decades of increasingly frenetic fiscal and monetary policy activism intended to counter the cyclical bumps and grinds of the free market and its purported tendency to underproduce jobs and economic output."
state-wrecked That would be money printing to support crony capitalism and socialism.
"above all, bailing out Wall Street — they have now succumbed to overload, overreach and outside capture by powerful interests. The modern Keynesian state is broke, paralysed and mired in empty ritual incantations about stimulating “demand,” even as it fosters a mutant crony capitalism that periodically lavishes the top 1 percent with speculative windfalls. "
http://www.nytimes.com/2013/03/31/op...agewanted=all&

[Danny B]

Creeping parasitism,,,, creeping socialism,,,killing the family

When money/capital is invested, it becomes ill-liquid. It goes into tangible things and can't be readily paid back as money. There have always been periodic bank runs for one reason or another. The bank isn't a storehouse of all the depositor's money. In a panic, they simply run out of cash. The original charter of the FED allowed it to make overnight loans from it's discount window for good collateral only. This is a perfectly logical way to deal with human emotions that cause bank runs. The original charter of the FED was a good idea. It brought enough confidence and stability that bank runs became very infrequent. Subsequent changes to the FED charter have made it a completely different beast.

The FED now follows a mantra of constant 2% inflation as being GOOD for the economy. 50% of the cost of everything that you buy is for finance costs. BUT, this isn't so much for actual finance, it is for speculation.
100% markup to keep all the speculators in business. Since the stock market doesn't produce anything tangible, it is simply a parasite. It is a VERY popular parasite because so many people depend on dividends and profits. Those dividends must come from somewhere. The consumer pays them. Those who are invested in the stock market receive dividends to offset the extra cost they pay as a consumer. Those who are not invested in the stock market pay the full burden of the parasitic drain from the stock market.

For decades, the head of the FED has been a jew. For decades, the FED has insisted on expanding the money supply by 2% or more. It wasn't always this way.
"Consider the following. William McChesney Martin fought against a proposed 2% inflation target, stating that “there is no validity whatsoever that any inflation, once accepted, can be confined to moderate proportions.” At a hearing, he summarized his views on how to steer policy in a free society: "We are dealing with waste and extravagance, incompetency and inefficiency, the only way we have in a free society is to take losses from time to time. This is the loss economy as well as the profit economy."
"Now the Fed seems to be diametrically opposed to these views. It is openly pursuing a 2% inflation target; and its actions since the 2008 financial crisis have been specifically designed to prevent losses."
" When William McChesney Martin left the Fed in early 1970, financial industry profits as a percentage of total stood at 15%. Today it is double that amount"
"William McChesney Martin’s tenure, the economy and the stock market clocked some remarkable gains, with very little inflation and moderate credit growth"
William McChesney Martin was not jewish.
"In contrast, his successors particularly since Alan Greenspan all have brilliant academic credentials in economics, but very little hands-on experience in real world affairs"
The Fed Then And Now ? Remembering William McChesney Martin, Jr. | Zero Hedge
These brilliant academic credentials are worthless in the real world of business.

Pox Americana has managed to unite much of the world against it. This will be a big deal going forward.
Washington Makes Biggest Geopolitical Blunder Since 1776
Even, that insane criminal Netanayahooo has figured that the winds of change are blowing against him,,, and the West.
Netanyahu Demands Summit With Putin After Russia and Iran Ruin Israel’s Plan For Syria

"Socialism has necessitated equal rights because politics have also targeted the individual for regulation and taxes. If there was nothing government could do to a woman, then we would return to the ancient days of Athens. Once you imposed income taxes (direct taxation), which the Founding Fathers prohibited, then everything changed. Today, women have lost the right to stay home and raise the children in the average home because it takes two incomes to pay the taxes that in 1950 were paid by just one salary. The issues of equality in the work force have been more important ONLY because of socialism."
https://www.armstrongeconomics.com/i...-to-socialism/
OK, then,, you force the women out of the house so that they can pay taxes. The tax money is used to finance socialism and BIG government. Socialism focuses on consumption only and leaves productivity to blow in the wind. Socialism has always been extremely short-sighted and always crashes.
ALL MANNER of productivity crashes; US Fertility Rate At Lowest Point Since Records Began In 1909 | Zero Hedge

We just aren't going to win on this one; https://www.armstrongeconomics.com/a...ily-structure/
https://mises.org/library/what-has-g...e-our-families

[Danny B]

Reality slowly coming into view

Nothing much new going on. The big boys are pulling OUT of the stock markets because they see that valuations are WAY too high. The private investors just seem to miss ALL the obvious signs.
Investors cash out of U.S.-based junk bond funds | Reuters
The Smartest Money In Finance Isn't Buying This Rally. | Zero Hedge
When California got into a financial tight squeeze, it sold revenue anticipation bonds.
The entire Eurozone is crashing badly and they want to offer floating rate bonds. NOBODY will buy them. The Eurozone is shrinking but, the bonds would be linked to growth.
"Global efforts to create a market for growth-linked bonds that could help avert debt crises have stalled because none of the wealthy economies backing the drive are willing to take the lead and be the first to issue, sources told Reuters."
"They were told that the main obstacles to the project was a lack of investor demand and the stigma attached to such instruments, according to two sources close to the discussions. These kind of bonds have so far only emerged from debt restructurings as a way to coax creditors to accept writedowns. "
They're trying to kick the can just a bit further down the road. G20 plan to stave off debt crises stalls as no country takes lead | Reuters

3/11 Oil’s plunge below $50 sends options trading into a frenzy – Bloomberg Maybe they will all go and run off a cliff.
3/11 US subprime auto loan losses reach highest level since crisis – Bloomberg No kidding,,, maybe it is all those liar-loans. Whuda thunk?
3/11 US stocks rise, dollar falls as data back hike: markets wrap – Bloomberg They pulled that "data" right out of their culo.
3/11 Massive cascade of eurozone defaults coming up – Mish
What a surprise.
3/11 As ECB charts economic course, politics complicate the picture – NY Times
3/11 European Central Bank: Global politics now the bigger risk – Crossroads Daily No kidding,,, you mean that there is a connection between politics and the economy?
3/11 Why do politicians continue to push the zombie creed of austerity? – Guardian That "zombie creed" comes straight from academia.

[Danny B]

Oil and Gull Island

Lindsey Williams is intimately connected to the oil business in Alaska. He wrote a book, "The Energy Non-Crisis".
The Energy Non-Crisis by Lindsey Williams
20+ years ago he wrote about a place called Gull Island. He said that test wells showed that they had found enough oil to last 100 yeas. It was all capped. Move forward 20 years and they are now going to tap Gull Island.
https://www.youtube.com/watch?v=eDioUCukACQ

There is a LOT of oil in Alaska; Repsol Announces Largest U.S. Onshore Conventional Discovery In 30 Years | OilPrice.com
FAR more than is let on to the public. The reserves are generally hidden to preserve price support. While fracking is getting more cost effective, it still doesn't have a long-term future. The Saudi national oil company is up for sale but, it is only believed to be worth 10% of the asking price. One would guess that they are running out of oil.
As the dollar crashes, we won't be able to pay for imports and will have to rely on domestic supplies. The problem comes in that the original ALYESKA pipeline is abrading from the sand in the oil. The diminished flow from the Prudhoe field is causing it's own set of problems.
Alyeska Pipeline - TAPS - Pipeline Operations - Low Flow Impact Study
The Alaska oil may stay in Alaska.

Gasoline consumption is falling and the consumer is broke.

[Danny B]

A cluster bomb in Europe

Well, it looks like the race to crash will be won by the Europeans. The mileposts in the race track are, bad banks that are saved by the State. The G-20 tried to offer bonds that are tied to growth. Nobody would buy.
Jean Claude Junker youtube headlines;
Nigel Farage; Jean Claude Juncker EU President Drunk drinks Cognac for breakfast?
Jean-Claude Juncker : " I have met several leaders of other planets "
Jean-Claude Juncker - Some Alien Species Are Worried About the EU ?!?! [CC
Jean Claude Juncker, President of the European Commission drunk and ***** slaps leaders
A week ago; https://www.youtube.com/watch?v=3MOrGI9jOFE

Evidently, he never got the memo; the Eurozone was designed/destined to crash. After the crash, the corporatocracy will take over everything.
The article 50 process for a Brexit is supposed to commence by next week. The EU says that there has to be a cash settlement BEFORE the divorce. The House of Lords said,,, piss off!
https://mishtalk.com/2017/03/10/uk-l...nter-the-boat/

Draghi must be smoking some BAD weed.
"Weidmann said that he agreed with Mario Draghi that a country that exits should settle its Target2 liabilities in euros. But then he made an important qualification:

“What that looks like in practice, and whether a government was willing or able to meet these claims, is a wholly different issue altogether.”
"We see it exactly the same way. Any exit would cause so much financial stress, and give rise to such political recriminations on both sides, that it is inconceivable that these balances would ever be paid up. This is why a euro exit invariably constitutes a series of massive defaults – without parallel in economic history."
"Some may be wondering what is it that would cause a cascade of defaults. The answer pertains to the Eurozone treaty which designates the ECB itself cannot cover defaults or bail out nations."

"For example, if Italy Italy left the Eurozone and paid back €364 billion of Target2 liabilities in Lira at a 40% discount to the Euro, where does the money come from?

And might not Italy be tempted to just declare the entire amount null and void?"
"They" knew ahead of time that the EU could never work.

No fiscal union: No currency union without a fiscal union has ever survived
Target2
Treaty requires unanimous approval to make anything but a minor change
Single interest rate policy cannot possibly be suitable for countries with varying degrees of productivity

There is no way to fix this mess, and no way to stop the imbalances from growing until it all blows sky high in a massive cascade of defaults"
They created the Euro charter in such a manner that the voters could not escape or materially change things. When it all begins to blow all to hell,,,, they can't materially change things to attempt to save it.
https://mishtalk.com/2017/03/09/mass...lts-coming-up/
The over-riding concern in all of this is the preservation of agriculture
and food distribution. In a default cascade, all trust is gone because you never know who is solvent and who is insolvent. The politicians will be frozen like a deer in the headlights. The politicians are the only ones who can organize a rescue of agriculture and food distribution.

[Danny B]

Robots don't drink Koolaide,,, they're just stupid

Martin Armstrong's program, Socrates runs 21,000 variables and has "all" the financial history of the world for the last 5,000 years. The robo-traders on wall Street have investment algorithms.
"In some ways, Skynet is already here with Alphabet (GOOG) having bought the robot firm Boston Dynamics. Not to mention we have high-frequency trading in which bots account for up to 80% of the daily volume on the stock market and buy and sell stocks in microseconds."
The "algos" look ONLY at numbers.

"The VIX index — Wall Street’s “fear gauge” — nears its lowest point in a decade — 11.6. It peaked at 60 in the teeth of the 2008 crisis. Historically, 20’s about par.
“We haven’t seen levels this low since early 2007,” notes Andy Crowder of Wyatt Investment Research, a slight crack in his voice."
"Volatility’s so low it’s even got the Fed — the Fed! — arching an eyebrow. Per Bloomberg, some in the ranks have “expressed concern that the low level of implied volatility in equity markets appeared inconsistent with the considerable uncertainty attending the outlook.”
Has the market reached “peak complacency”? Peak robo !
"It seems the market’s guzzling orange Kool-Aid. Trump’s opening the purse for infrastructure and defense. He’ll slash taxes… gut regulations… let American business off its leash."

"David’s conclusion: The coming debt crisis will yield a financial crash of “unbelievable proportions.” But the robo-machines are missing it:

“I am seeing reality; the machines [on Wall Street] are simply trading on sound bites, tweets and hourly sentiments. "
“The optimist thinks this is the best of all possible worlds,” waxed satirical fantasy novelist James Branch Cabell. “The pessimist fears it is true.”
https://dailyreckoning.com/markets-s...-warning-sign/

"the Treasury has no idea what is happening within its own joint. In the first 46 days of the Trump Administration they have burned through $294 billion of cash. They started with $382 billion. It is now down to $88 billion and dropping by the day.”
“It will soon become clear that the tax cuts aren’t going to happen, that this debt ceiling crisis is going to take down the whole system. Why did they allow $294 billion of cash to be burned up? Only $237 billion of that was to cover the inherited deficit that you can’t blame Trump for but he used $57 billion in cash to lower the debt ceiling.”
https://dailyreckoning.com/stockman-...ntdown-begins/

Eric Janszen in 1998 called the Ka-POOM theory.
"This theory rests on the belief that the Federal Reserve along with the other world central banks looked at Japan's several decades of economic stagnation and decided that deflationary recessions are to be avoided at all costs -- even if that means blowing asset bubbles and then cleaning up the destruction left behind in their aftermath." How much destruction?
Eric Janszen wrote VERY good stuff. Haven't seen him in years.
"This stark fact makes the Fed's entire money printing misadventure not just pointless, but dangerously destabilizing from a social and political perspective. The world's central banks, especially the Fed, have done an enormous amount of damage. "

"A credit bubble occurs when the issuance of credit grows faster than income supporting it." http://media.peakprosperity.com/imag...-2-17-2017.jpg
"Look, millions -- likely billions -- of people are at risk of getting badly hurt. When this bubble blows, it’s going to be enormously destructive and take out a lot of wealth along the way. Millions of jobs will be destroyed. What people think of as wealth will evaporate as though it never existed in the first place (it didn’t). Political dynasties and major financial institutions will be ruined."
Writers never mention death.
https://www.peakprosperity.com/blog/...when-all-blows

I can't leave out Kunstler.
"Glowering in the spotlight at center stage will be President Donald Trump, designated bag-holder of the Deep State and its myrmidons. And what’s in that bag he’s holding? Just a couple of $hit sandwiches and a hair shirt for his journey down the lonely road to exile. But getting rid of Trump would only leave the Deep State with a bigger problem: itself. That is, an economy and a society that can’t be governed by any means."
"All this hugger-mugger may be further mooted by the financial disorders of Spring 2017. Don’t underestimate the Federal Reserve’s eagerness in sending Trump on the road to political perdition with his $hit sandwiches and hair shirt. The Fed’s board of governors knows full well that their interest rate hike could sink even the carefully fabricated Potemkin appearance of a healthy economy. It would also create more dire debt-servicing problems for the US Treasury when and if the debt ceiling problem ever gets resolved. They’re holding a hand grenade in the old USA bunker and they’re getting ready to pull the pin. Just watch."
The Bag Holder and His Bag - KUNSTLER

If you're still looking for more reading, here is 4 parts of a survival story from Survival Sullivan. He writes about martial law in every burg, no matter how small. It's a bit overblown but, fairly interesting. Part one is at the bottom of the page. http://www.survivalsullivan.com/cate...were-declared/

[Danny B]

Stay in cash, stay out of China

The economic news is all trite or BS or plain false. BUT, I can always fall back on Armstrong. His stuff is always timely.
I previously wrote about Preet Baharara prosecuting LOTS of politicians. Armstrong writes that Preet prosecuted politicians but, let all the bankers off the hook. https://www.armstrongeconomics.com/i...kers-is-fired/

His advice to an old guy with cash, "ANSWER: Right now stay in cash. We will most likely see a change come May."
https://www.armstrongeconomics.com/a...ep-your-money/
NB, Warren Buffet has $ 86 billion in cash on the sidelines.

"While Europe is certainly not turning bullish, what we do see is a bounce due to the fundamental focus of the pending US debt ceiling battle looming on the horizon. Naturally, the press will be blaming Trump so we should be prepared for headlines like US going to default. The press will use this incident created by Obama and Boehner to score as many points against Trump as possible. Facts mean nothing to mainstream press. They have their agenda and that is not going to suddenly change. So we should expect dire headlines about how the USA will default and all this may provide a bounce for the Euro for up to two months until the French elections on May 7th. "
"There is traditionally the false move that get people off-side so we should bounce before we collapse."
https://www.armstrongeconomics.com/m...ending-bounce/

"However, because of the Sovereign Debt Crisis, we will begin to see this surface with the Obama-Boehner Debt Crisis Crisis that pushed off into 2017 when they would not be accountable. As this starts to become more and more aware to the general public, that is when the confidence in currencies begins to drop. That appears to be on schedule for 2018.

All tangible assets will rise in value according to the decline in a currency. This will be “currency inflation”
"When we swap to a new currency, then tangible assets will make that transition in value. It is not that you will make a profit, the name of the game is that you just break-even."
This is the FIRST mention of a new currency from Armstrong. Jim Willie had been talking about the new currency for a couple of years. (Scheiss dollar)

"Democrats talk a good game how they are for the poor, but then sell tax loopholes to special interests in return for financing their campaigns. Why would the bankers and hedge funds back Democrats if they were really against them?"
"Plus we have the debt ceiling about to explode and that will hurt the dollar short-term defeating ultimately Trump for the press will turn this around and blame 50 years of spending on him.

What I do support is the people. They elected Trump because they want a change. This is the anti-establishment movement that is growing globally. This is what will bring the whole system crashing down. This is separate and distinct from Trump. "
https://www.armstrongeconomics.com/i...mp-succeed-no/

Trump talks over and over about China. Everybody is talking about the new Silk Road. IT WON'T WORK. China has tried for years to change over from an export economy to a domestic-consumption economy. THEY CAN'T. China has pumped in trillions and trillions. They are still stuck at a global-mean-wage. With runaway automation, nobody can break free of low wages.

The hard times in China likely will become worse.
China’s economic miracle, like that of Japan before it, is over. Its resurrection simply isn’t working, which shouldn’t surprise anyone. Sustained double-digit economic growth is possible when you begin with a wrecked economy. In Japan’s case, the country was recovering from World War II. China was recovering from Mao Zedong’s policies. Simply by getting back to work an economy will surge. If the damage from which the economy is recovering is great enough, that surge can last a generation."
"The more mature an economy, the more the damage has been repaired and the harder it is to sustain extraordinary growth rates. The idea that China was going to economically dominate the world was as dubious as the idea in the 1980s that Japan would. "

"China’s deepest fear was unemployment, and the country’s interior remained impoverished. If exports plunged and unemployment rose, the Chinese would face both a social and political threat of massive inequality. It would face an army of the unemployed on the coast. This combination is precisely what gave rise to the Communist Party in the 1920s, which the Party today fully understands. So, a solution was proposed that entailed massive lending to keep non-competitive businesses operating and wages paid. That resulted in even greater inefficiency and made Chinese exports even less competitive."
China’s economic miracle is over - MarketWatch
"It now has a political problem: how to manage massive disappointment in an economy that has become simply ordinary. "

[Danny B]

Stagflation,,, Jim Willie

"STAGFLATION: "Is persistent high inflation combined with high unemployment and stagnant demand in a country's economy"
The stock market exists for no other reason than to create price inflation. Prices have increased 40 fold. Wages have increased 17 fold.
"Why Has Labor’s Share of Gross Domestic Product (GDP) been declining for 40 Years? " "But labor’s declining share of GDP hasn’t reversed course as macro conditions change; labor’s share keeps dropping"
"Why does this matter? If wages and salaries–earned income–is a steadily decreasing share of the entire economy, this means household earned income is eroding even when the economy is expanding.

And this is precisely what we see now: household income actually declined 8.5% since 2000 when adjusted for inflation." ah yes, price inflation.

"How can households pay rising taxes, borrow more money and spend more to support a consumer economy on an income that’s shrinking even when the economy is expanding?

Answer: they can’t. “Something’s gotta give”: they can’t pay higher taxes, borrow more money (and incur more monthly payments) and spend more on goods and services when their incomes are stagnating. It simply isn’t possible."
"As every clock-cycle in CPUs (central processing units) and every byte of memory became cheaper, replacing human labor with automation became increasingly affordable.

As the working-age population expanded (for two reasons–the Baby Boom and women entering the workforce en masse)" so they could be taxed.
"If these factors continue to play out–and I see no reason they won’t–we can expect labor’s share of GDP to continue its slide as human labor is automated in a highly globalized economy.

This long-term erosion of earned income and household finances does not enable “growth” that is based on rising spending and borrowing. If these are no longer possible, the status quo has no Plan B."
Is Stagflation Stalking? | Gordon Long | Safehaven.com
Don't forget, Plan A is to keep the moneyed class rich.
It's worldwide; CONVERSABLE ECONOMIST: Labor's Falling Share, Everywhere

The FED bet the farm on trickle-down economics saving the system,,,, no matter how stupid that sounds. Well, it did NOT save the system. The price inflation that resulted from the currency inflation is crushing everybody who isn't connected to the free-money spigot. The natives are getting VERY restless.
https://www.bloomberg.com/news/artic...igh-everywhere

Jim Willie recounts the major threats that we face; Seven Bowls - Current Threat

"the Trump Admin will have tremendous challenges in setting up a solid industrial base to relieve the $550 billion annual trade deficit, which is the major problem for the nation… any new asset backed USDollar would result in the forfeit of 13,000 tons of gold in the first year from the trade deficit… the USEconomy is the fast moving locomotive heading over the cliff with numerous indicators of steep decline… the US leadership has had for years no initiatives, no direction, and no progress toward remedy or reform of any imbalances or any crisis conditions…
... the USGovt is dedicated to fraud, corruption, propaganda, and war… the nation can work toward business creation and job growth if it can get past the political squabbles and sabotage and sedition… many juicy topics are included with the fascist theme permeating the entire nation with politics, industry, banking... the Fascist Business Model has been at work since the Clinton Admin... the US nation cannot be fixed in less than 10 years even if very positive moves are made"
https://youtu.be/edCA9wteFqc

[Danny B]

Equities, Venezuela, Brazil,,, eliminating the debt ceiling

The price/earnings of the stock market is higher now than it was before the '29 crash. "The Wall Street Journal reports that insider buying — company brass buying its own stock — is at its lowest level in 29 years:"
"As the Daily Reckoning’s International Man, Simon Black tells us this morning the government’s cash hoard is down to just $34 billion. "
"But at 26.6, today’s P/E ratio crosses the 26.5 red line — and is bleeding from the nose holes." Robo-trading algorithms don't have nose holes.
https://dailyreckoning.com/the-lull-before-the-storm/
Stock traders vacillate between fear & greed. Algos don't know fear.

The sharks are circling the malls; Wall Street has found its next big short in U.S. credit market | Business | stltoday.com
Venezuela and Brazil once had very strong economies. Both are now spiralling down into chaos. As the U.S. dollar gets stronger, it is ever-more difficult for them to service dollar-denominated debt. The same thing is starting to happen in Mexico.
“I think they are going to hike” on March 15, Sri-Kumar said on “Squawk Box,” echoing a theory shared by many analysts. “But that is going to prompt capital outflows from the euro zone, especially with the political risk. It is going to increase the capital outflow from China, and the U.S. economy will feel the impact.”

This Region Of The World Is Being Hit By The Worst Economic Collapse It Has Ever Experienced

"Despite collecting a record amount in individual income taxes, the Treasury still ran a $348,984,000,000 deficit in the first five months of this fiscal year."
"Trump is inheriting a built-in deficit of $10 trillion over the next decade under current policies that are built in. "
"It doesn’t even begin to add up, and it won’t happen when you are struggling with the $10 trillion of debt that’s coming down the pike and the $20 trillion that’s already on the books.”
“They need a budget resolution for the next fiscal year. They have to have a debt ceiling increase before then. It is a chicken and egg conundrum. "
"The market is totally missing the fact that the tax cut isn’t going to happen. That instead there is going to be this terrible showdown on the debt ceiling. This will create a panic and sell-off like we haven’t seen before." Blame the algos

"The careerist politicians are far less fearful of defaulting on the official debt ceiling, because the off budget and total unfunded obligations is so enormous that the entire international monetary system would have to be re-invented to rescue world commerce."
"If the Treasury was serious about creating financial breathing room to the burden of unsustainable current interest payments, the short term national debt should be substituted for 30 or even 50 year bond obligations while interest rates are so low. However, this strategy was never used, because the moneychangers have no intention of even providing a temporary relief to the taxpayer."
"If this is the fate that befalls us, eliminating the debt limit ceiling becomes immaterial. Trump may well have to resort to directly issuing Treasury bonds and by pass the Federal Reserve note legal tender laws."
The economy can't possibly survive on debt money.
Raising the Ides of March Debt Limit

"#3 California has the highest state income tax rates in the entire nation. For many Americans, the difference between what you would have to pay if you lived in California and what you would have to pay if you lived in Texas could literally buy a car every single year."
16 Reasons Why You Shouldn?t Live In California

[Danny B]

Neoclassical model of banking

Lots of technical stuff on money.
" In reality in the modern economy, commercial banks are the creators of deposit money .... Rather than banks lending out deposits that are placed with them, the act of lending creates deposits — the reverse of the sequence typically described in textbooks."
" The bank does not actually make any money available to the borrower: No transfer of funds from anywhere to the customer or indeed the customer’s account takes place. There is no equal reduction in the balance of another account to defray the borrower. Instead, the bank simply re-classified its liabilities, changing the ‘accounts payable’ obligation arising from the bank loan contract to another liability category called ‘customer deposits’."
" The bank’s liability is simply re-named a ‘bank deposit’."

"How Can Banks DO This?
Professor Werner explains the reason that banks - but no one else - can create money out of thin air is that they are the only institution exempted from normal accounting rules. "
"Specifically, every other company would be busted for fraudulent accounting if they conjured new money out of thin air by reclassifying a liability (i.e. an accounts payable) as an asset (i.e. a deposit). But the banks have pushed through exemptions so that they don't have to follow normal accounting rules:

What enables banks to create credit and hence money is their exemption from the Client Money Rules. Thanks to this exemption they are allowed to keep customer deposits on their own balance sheet. This means that depositors who deposit their money with a bank are no longer the legal owners of this money. Instead, they are just one of the general creditors of the bank whom it owes money to."
"What distinguishes banks from non-banks is their ability to create credit and money through lending, which is accomplished by booking what actually are accounts payable liabilities as imaginary customer deposits,"

"Mainstream economists believe that private debt doesn’t even “exist“ as a force that acts on the economy. For example, Ben Bernanke and Paul Krugman assume that huge levels of household debt don’t hurt the economy because more debt among households just means that savers have loaned them money … i.e. that it is a net wash to the economy. To make this assumption, they rely on the myth debunked above ... that banks can only loan as much money out as they have in deposits. "

"By failing to take into account the fact that banks create money, economists and governments are sowing the seeds for future crashes. But the economics field is very resistant to change ... Economics professor Steve Keen notes in Forbes:

In any genuine science, empirical data like this would have forced the orthodoxy to rethink its position. But in economics, the profession has sailed on, blithely unaware of how their model of “banks as intermediaries between savers and investors” is seriously wrong, and now blinds them to the remedy for the crisis as it previously blinded them to the possibility of a crisis occurring."
The Banking Secret that Neither Economists Nor Laypeople Know ? Which Is Destroying the Real Economy (While Making a Few King) | Zero Hedge

[Danny B]

Part 2 , had to break it up

Wouldn't post in one bite.

From Comments;
"On a systemic basis, once banks start pulling a lot of future money into the present to provide credit for spending that does not maintain or increase economic productivity, the future money they are paying out now does nothing to grow the economy"
"Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, said:

If all the bank loans were paid, no one could have a bank
deposit, and there would not be a dollar of coin or currency in
circulation. This is a staggering thought. We are completely dependent
on the commercial Banks. Someone has to borrow every dollar we have in
circulation, cash or credit. If the Banks create ample synthetic money
we are prosperous; if not, we starve. We are absolutely without a
permanent money system. When one gets a complete grasp of the picture,
the tragic absurdity of our hopeless position is almost incredible, but
there it is. It is the most important subject intelligent persons can
investigate and reflect upon. It is so important that our present
civilization may collapse unless it becomes widely understood and the
defects remedied very soon."