Economic pressures

[Danny B]

Oil headlines

The financial industry speculates very heavily in energy. Reportedly, they add $ 27 a Bbl to the price. Oil is sold 48 times before it is consumed. Exxon earns $ 2.31 a bbl and is unhappy with the load of the parasites ( GOV and Banks). Hedges and derivatives are indexed to a specific price. If the price moves too far either way, it causes a big loss for speculators. The oil price is falling because workers / consumers are sliding towards a global-mean wage. China is the go-too producer but, it's go-to consumers have gone broke. China tanked-up on oil when the prices started to fall. Their demand has fallen off a cliff with the pull-back in consumption. We are in a downward spiral as far as consumption and jobs are concerned. Several States are pumping faster to 1. maintain market share 2. maintain employment 3. drive out competitors. Saudi, in particular is trying to wipe out frackers.
Market Volatility and the Twilight of the Dollar

Then, there is the FED, "That is why when it appeared last summer that the Federal Reserve Board was going to raise interest rates the oil price collapsed; why when it put off its decision to raise interest rates in the winter the oil price rallied; and why when talk it might be about to raise rates in September began to spread again during the summer the oil price collapsed again - taking other commodity prices down with it."

The frackers are fighting back even though they are losing money. US Oil Rig Count Increases for Fifth Straight Week
Read more: US Oil Rig Count Increases for Fifth Straight Week / Sputnik International

Bless their hearts,,, they are adding to the glut. China Slowdown, US Overproduction Drive Falling Oil Prices
Read more: China Slowdown, US Overproduction Drive Falling Oil Prices / Sputnik International

Not to be left out, "Norway Starts Development of Largest Offshore Oil Field
Read more: Norway Starts Development of Largest Offshore Oil Field / Sputnik International
Norway says that they can make a profit even if the price stays around $ 40. That would drive out most other producers.
These low prices are crashing the whole parasitic finance structure. Full on Crash Alert for Major World Markets... | Clive Maund | Safehaven.com
The graph shows very fast drops. http://globaleconomicanalysis.blogsp...-40-brent.html

“Financial markets, like religions, are faith-based networks. The complex structures of assets and liabilities that comprise markets are held together by a set of underlying beliefs." "Contemporary global finance is a complex “system” of interwoven (electronic) “faith-based networks.”
"For the most part, global finance is comprised of a labyrinth of IOUs. And IOU value hinges on confidence, faith and trust."
http://creditbubblebulletin.blogspot...orse-than.html
Armstrong stresses that his models are CONFIDENCE models. Confidence and morality go hand-in-hand. Douglas MacArthur plainly stated that when morality was lost, financial ruin inevitably followed.

[Danny B]

More headlines

It is claimed that it took Rome 240 years to collapse. With the speed of modern communication, we have stepped up the pace considerably.
Gulf Markets Melting Down: Saudi Arabia Plunges 7%, Dubai Sold | Zero Hedge
Money is fleeing; Record capital flight from China as industrial slump drags on - Telegraph
Ahhh, but, the door is too small; http://www.nytimes.com/2015/08/23/bu...onds.html?_r=0
The energy currencies are crashing day by day; Kazakh PM Sees Oil-Nation Currency Pegs Axed as Crude Falls - Bloomberg Business

Student loans certainly aren't a bright spot; http://www.zerohedge.com/news/2015-0...ent-least-year
What about Greece? Yanis Varoufakis did his absolute best to save Greece. He said that if he failed, Syriza would be replaced by REALLY hard-line lefties. Schauble played hardball with Greece even though he knew that austerity does not work. NOW, Europe is wishing that they had given Greece a chance. http://www.nytimes.com/2015/08/22/wo...lar-unity.html
Waiting in the wings,,, the hardliners; http://www.ekathimerini.com/200790/a...rite-down-debt

Headlines;
• Dow Plunges 531 Points In Global Selloff, Largest Weekly Drop Since 2008 (WSJ)
• Chanos on China: “Whatever You Might Think, It’s Worse” (CNBC)
• Chinese Market Mirroring 1929 Crash: Analyst (CNBC)

[Ruphus]

Another article on the the very possible EM bond collapse:

http://www.nytimes.com/2015/08/23/bu...onds.html?_r=1






DannyB keep speaking the truth Brother!

[Ruphus]

On a side note

So my wife is letting her grandmother's house go to foreclosure due to her dementia and the cost of a convalescence home. She hasn't paid the mortgage in 8 months. Today she got a letter that citibank has "sold" the mortgage to another lender. The name of the lender was Seterus. Now what company would take this loan on knowing no payments are made for almost a year? My guess is Seterus is a company created in the last crisis that many lenders will use to off load the bad loans. They will not get caught again like before.


Edit:
From their website:
"Transfer of Servicing

When you have a mortgage loan, there is always a possibility that the lender will transfer the servicing of your loan to another institution. Servicing includes the collection of payments and management of operational procedures related to mortgages. When loan servicing is transferred, it means that another company will be taking your payments, handling your escrow accounts, and answering your questions. It has nothing to do with the borrower’s payment history or quality of loan."

Yeah right!

[Danny B]

Mal investment and bad theories

Ruphus, I hope that I am speaking the truth. The VERY fortunate aspect this time around is; there are plenty of informed people who can pass on important info and don't NEED to have lots of money to have public access. I try not to do bland posts but, I also try to put some interpretation with the info. I put up links so you can make your own decision.

Mal-investment;
The Western productive economies had too high labor and finance costs compared to the emerging markets. The lower (productive) loop of the economy crashed. The Central bank threw money at the problem. It only threw money at the upper loop and this didn't work. Throwing tons of money at the NON-productive sector just resulted in mal-investment. The production-consumption cycle had severely diminished. The upper loop found no profits in traditional commerce. They created derivatives to scare up some fees when traditional banking was far too big to generate income for all the bankers. This free money found no place in the productive economy, except for the very-risky junk-bond market. All the big funds were dying from ZIRP. They started throwing money at everything hunting for yield.
This created tons of mal-investment that produced no payback. Y'all remember the mal-investment of the dotcom bust.
Here we are again.
"Mr. Max Ehrendfreund, writing in the Washington Post’s Wonkblog, believes that he has discovered something new: that the world is producing too much and doesn’t know what to do with it. His solution, of course, is to confiscate the overproduced products, such as oil and cotton, from its rightful owners and give it to the people who need it. This phony problem and its statist solution goes back at least as far at the 1930’s socialist calls for “production for use” vs. the hated capitalist concept of “production for profit“.

Mr. Ehrenfreund commiserates that a “surplus…challenges some basic principles of conventional economics…”. Ah, now we see why Mr. Ehrenfreund has a problem; he understands only “conventional economics”. Austrians have no such problem understanding why many commodities are currently in surplus. Our understanding of Austrian business cycle theory tells us that years of interest rate suppression by monetary authorities worldwide has disrupted the time structure of production; i.e., that artificially low interest rates have led entrepreneurs and their business partners to believe that sufficient resources exist for the profitable completion of longer term projects, such as increasing investment in oil and cotton production."
The Problem Isn't Over-Production; It's Mal-Investment! | Zero Hedge

Various PTB promoted / executed long-term investments that were not market efficient. Various people are screaming for America to rebuild it's infrastructure. Japan did this. At one point in time, Japan was pouring more cement that the whole rest of the world combined. Japan has the highest number of robots per capita. Japan has the fastest population shrinkage in the world. In what fantasy world is the Japanese economy going to grow when China is overshadowing everything that they do? Abe is printing ever-more Yen. A 6 year old could tell him that no power on earth will cause Japan to grow. The people know it and have stopped procreating. They see no future for their children. Why have young people in Japan stopped having sex? | World news | The Guardian

The Chinese are gamblers. They took out loans to build business (ostensibly) and invested in the stock market. "The connection is in corporate working capital loans that banks lent out that, she posits, may have been invested in the stock market."

Read more: Charlene Chu doomsday scenario - Business Insider
More mal-investment.
Everybody has a huge debt overhand that MUST be serviced. A Deflationary Gale Is Storming Out Of China—–Can You Say Malinvestment? | David Stockman's Contra Corner It can't be serviced. ALL finance is inter-connected. Imagine a GIANT field of dominoes. The whole field is closely packed in all directions. It doesn't matter where the dominoes start to fall.
Many people, including Stockman,,, if you can believe that, are bad-mouthing capitalism. Socialism is the firewall between Darwinian pressures and people who can't find a niche in the productive economy. Never forget that automation GREATLY increased their numbers. GOV, by it's very nature is a consumer and not a producer. It does it's best to promote collectivism and destroyfree market capitalism.
THE FAILURE OF "CAPITALISM"? - NOT EXACTLY!
Democracy ( socialism-lite) always crashes the bank. No matter their standard of living, the non-producers always want more.

[Ruphus]

A repeat of 2008 is looking trendy

https://www.google.com/trends/explor...mic%20collapse

[Danny B]

1929, all over again

Here is the same search with "1929" added. It spiked WAY up in the 2008 crash because super-imposed graphs looked much between the 2 events. You can bet that it will spike again. https://www.google.com/trends/explor...=Etc%2FGMT%2B7
http://www.glennbeck.com/publish/upl...0132547_MG.jpg

[Danny B]

Financial fallout from the crash of commodities

As everybody knows, somebody bought a bunch of "shorts" on airline stocks just before the holograms hit the twin towers. Everybody already knows about Odingo. Somebody generally knows about certain things that are soon to occur. The VIX index is called the "fear" index. Somebody just made a big bet on the VIX.
http://www.zerohedge.com/news/2015-0...apse-insurance
Bernanke created $ trillions of dollars but, had no control where they went. One effect was to drive interest rates to the basement. While they were in the basement, various groups created derivatives betting that these rates would remain. The fear of these Interest Rate Swaps being crashed is a big part of what has locked in ZIRP.
Much of this wet-ink money went into oil because oil is ALWAYS a sure bet. BUT, the PTB reflated the upper loop of the economy and not the lower loop. Without reflation, the lower loop cut way back on consumption. Like so may other "sure" bets, oil crashed. Before it crashed, oil sucked in $trillions from the high-yield (junk bond) credit market. This influx of money allowed the frackers to produce a LOT of oil.
This new oil destabilized the oil markets and, in turn, the financial markets. Saudi jumped in to crash the frackers but, this only added to the glut. Resource States are trying to produce AND sell more resources to make up for price deflation. Cabbage costs more per ton than iron ore.
The rise of China created a big spike in the production and sale of resources. When China's customers crashed, China stopped buying commodities. The credit and derivative structure in the resource markets makes a downturn a disaster. The petrodollar is now a casualty of the great reflation of the upper loop.
Why It Really All Comes Down To The Death Of The Petrodollar | Zero Hedge

[Danny B]

worthless toolbox

2008 compared to 2015; " 2. Then: China had a relatively modest $7 trillion in total debt, considerably less than 100% of GDP.
Now: China's debt has quadrupled from $7 trillion in 2007 to $28 trillion as of mid-2014, an astonishing 282% of gross domestic product (GDP)
3. Then: Central banks had a full toolbox of unprecedented monetary surprises to unleash on the market: TARP, TARF, BARF (OK, that one is made up) rescue packages and credit guarantees, quantitative easing (QE), zero interest rate policy (ZIRP) and direct purchases of mortgages, to name just the top few.
Now: The central bank toolbox is empty: every tool has already been deployed on an unprecedented scale. Every potential new program is simply a retread of QE, yield curve bending, asset purchases, etc.--the same old bag of tricks."
oftwominds-Charles Hugh Smith: Why the Bear of 2015 Is Different from the Bear of 2008
The current credit-and-interest structure DEMANDS growth. How can they extract interest from a fixed amount of capital? Economists are always trying to guide us forward by looking in the rear-view mirror. The times have changed in so may ways that their views have no hope of being accurate.
Global financial integration has never existed before. A crash of the reserve currency has never happened before. The biggest change of all is birth control.
The system demands growth of production and consumption AND investment. The demographic crash makes this impossible. Hambone's stuff: Depression Does Not Come Close to Describe What the World is About to Experience
Japan is thrashing around and floundering. Other States will follow.

[Danny B]

Destruction of the family, morality, society and the economy

Douglas MacArthur; "History fails to record a single precedent in which nations subject to moral decay have not passed into political and economic decline."

There has been either a spiritual awakening to overcome the moral lapse, or a progressive deterioration leading to ultimate national disaster."
OK, economic decline. Nobody wants to do business with a thief. So, where does moral decline come from?
" Brock Chisholm (1959 Humanist of the Year) was at one time head of the World Health Organization, and in the February 1946 issue of PSYCHIATRY he wrote, "To achieve world government, it is necessary to remove from the minds of men their individualism, loyalty to family tradition national patriotism, and religious dogmas" WINDS - New World Order Sets Course to Destroy Family Unit
Apparently, success is at hand; 27 Facts That Prove That The Family In America Is In The Worst Shape Ever
Marxism needs to destroy the family so that there are no conflicts of interest. "http://www.gillistriplett.com/rel101/articles/destruction.html
"Marxist Communism plot to eradicate the family, noted in the 1926 July issue of the Atlantic Monthly. Please read this document slowly and carefully.
The Russian Effort To Abolish Marriage

When the Bolsheviki came into power in 1917 they regarded the family, like every other "bourgeois" institution," " (There are three hundred thousand… shelterless children in Russia to-day, who are literally turned out on the streets. They are one of the greatest social dangers of the present time, because they are developing into professional criminals.

More than half of them are drug addicts and sex perverts.
It is claimed by many Communists that the break-up of the family is responsible for a large percentage of these children.) "
"[1] Lenin merely repeated what Socrates had said and what Friedrich Engels and Karl Marx put into words. Lenin set out to do just that, hoping that a new society -- with the State as the ultimate father -- could be constructed. With the collapse of the Soviet Union, we have seen the consequences of the experiment."
Ah yes, unavoidable economic decline.
Pope John XXIII had a lot to say about the pill and marriage. Pope Paul VI Was A Prophet For Our Time
Marxist one-world GOV would happily destroy the family not recognizing that it would destroy society and the economy at the same time.

[Danny B]

stocks,,, ho hum

"Davidson has a remarkable track record of calling every major economic shift over the last three decades. For example, Davidson predicted the collapse of 1999 and 2007, along with the fall of the Soviet Union and Japan’s economic downfall, to name just a few." SO, what does that prove? Maybe he's wrong now.
Are Stocks 80% Overvalued? New Evidence Shocks Wall Street - The Sovereign Investor
European stocks lost 12% which amounted to a $ trillion. what happens if they lose 80---90%
Over $1 trillion wiped off top Europe shares in August | Reuters
Some headlines;
The World’s Richest People Lost Another $124 Billion on Monday - Bloomberg Business
Is This Black Monday Crash The BIG ONE? It Doesn't Matter - The Automatic Earth
"Central banks will come up with more, much more, ‘stimulus’, but what China teaches us today is that we’re woefully close to the moment when central banks will lose the faith and trust of everyone."
Armstrong argues that all faith will be lost in public debt and consequently, move into private debt. Private debt is crashing horrendously.
ASX, global share markets in chaos amid China, Greece fears: What does it mean for you?

[Ruphus]

FED Trapped

I think the FED is going to raise rates soon. Big money is either getting out now or making "threats" to the FED to do more QE or else.

The FED can't do much else correct? If they do not raise rates, everyone knows they are full of it. They have said that QE didn't work. They are signalling a rate hike.

A Rate hike could, and most likely will, crash the market.

What if the FED had GOV help to significantly lower taxes for the consumer at the same time?

[Danny B]

QE til hel freezes over

MORE QE !!! you have to be kidding.
Belgium had / has NO dollar reserves. Belgium bought $ 420 billion of treasury bonds. Belgium, Luxembourg, Ireland, Cayman Islands are buying hundreds of $ billions of U.S. Treasury bonds. THEY HAVE NO DOLLARS. The FED stopped openly buying bonds and does QE through other channels. Jim Willie: Exported QE Travesty: Meet the BLICS | SilverDoctors.com
QE IS CONTINUOUS !!!!
"The Fed is prohibited from buying equities by the Federal Reserve Act. But an amendment in 2010 – Section 13(3) – was enacted to permit the Fed to buy AIG’s insolvent Maiden Lane assets. This amendment also created a loophole which enables the Fed to lend money to entities that can use the funds to buy stocks."
"These questions came to mind when we learned that the central bank of Switzerland, the Swiss National Bank, purchased 3,300,000 shares of Apple stock in the first quarter of this year, adding 500,000 shares in the second quarter. Smart money would have been selling, not buying.

It turns out that the Swiss central bank, in addition to its Apple stock, holds very large equity positions, ranging from $250,000,000 to $637,000,000, in numerous US corporations — Exxon Mobil, Microsoft, Google, Johnson & Johnson, General Electric, Procter & Gamble, Verizon, AT&T, Pfizer, Chevron, Merck, Facebook, Pepsico, Coca Cola, Disney, Valeant, IBM, Gilead, Amazon.

Among this list of the Swiss central bank’s holdings are stocks which are responsible for more than 100% of the year-to-date rise in the S&P 500 prior to the latest sell-off. "
Central Banks Have Become A Corrupting Force -- Paul Craig Roberts and Dave Kranzler - PaulCraigRoberts.org
The FED is creating hundreds of $ billions to keep the show going.
"Have no illusions, while most market observers are quick to blame the sell-off on China, this market was given life by the Fed, and the Fed is the only force that will keep it alive."
Quantitative Easing | Zero Hedge
And what happens when QE comes to an end? China stock market panic shows what happens when stimulants wear off | Business | The Guardian
And what happens after the stock market blows? The next shoe to drop in China? The banks - MarketWatch
QE can't stop and interest rates are never going to be raised.

[Danny B]

Dollar replacement and the ongoing crash of solialism

Jim Willie and Adrian Salbuchi have both predicted that America would be forced to create a new dollar. Armstrong said that the dollar would never go away. He gives great arguments showing money that survived for centuries BECAUSE it was the money of the predominant power. All the money that he uses for example is gold. He can't show a non-tangible money that lasted for very long. The dollar lasted for quite a while because it was gold convertible. It no longer is and I don't see it lasting very long in it's current form.
Can the World Really Abandon the Dollar As A Reserve Currency? | Armstrong Economics

The problem is ease of duplication. If I remember correctly, the Ferengi of Star Trek fame used "Latinum" because it couldn't be duplicated in a "replicator".
Keynes wanted the "Bancor". Rickards and many others are pushing for the SDR, Special Drawing Rights. All of these are infinitely expandable.
The basic problem is; When a reserve currency is also a sovereign currency, it gets greatly expanded by demand,,, as wealth grows. (Triffins Dilemma). The SDR wouldn't be a sovereign currency but, it could be expanded at any time. Another problem is ; The reserve currency can NOT be the transactional currency also. It just doesn't work. So, the idea of the SDR is good because it isn't a transactional currency. BUT, it is open to expansion. The collectivists are pushing for a one-world currency with expansion controlled by them and NOT by economic output.

Socialism ALWAYS breaks the bank. Capitalism certainly isn't perfect but, at least it produces motivation. Socialism is strictly a distribution system that assigns no priorities to productivity. Picture GOV as an ever-expanding mob of voracious bureaucrats. Productivity is an alien concept. They mandate,,, they consume. They spend $ 86,000 a year to create a job that pays $ 55,000 a year. ALL GOV is socialist. ALL GOV redistributes until it breaks the bank. This is just the latest instalment. Martin Armstrong Warns "This Time Is Very Different" | Zero Hedge ,,Read it all.
"The global poverty levels are also highly distressing, including an astonishing 22 thousand children dying each day from poverty." THIS IS TODAY. Tomorrow, it will be the elderly. The Next Global Financial Crisis is Here... This is What We Can Do About It : Waking Times
Traders have lost ALL confidence and the big drop is just ahead. Aug 25, 2015 Eurodollar COT Says Ugly Drop Is Still Ahead of Us Tom McClellan 321gold ...inc ...s
Just remember,,, don't shoot the messenger.

[Ruphus]

No I was asking if the FED could raise rates and while GOV also gave a significant tax cut for Joe the consumer.

I see now that CBs of the world have great ties to US companies. What a friggin mess. There is no way of cleaning this up without a match is there? Oh well I'll buy some air rifles and BBs then.