Economic pressures

[Danny B]

avoiding revolution at all costs

The exporters who sold us lots of junk were paid with bonds rather than currency. They have to wait for their money. They essentially did vendor-financing. They want their money, " $11,280,000,000,000 Dollars - $11.28 Trillion Dollars."


"What lies ahead is a situation where each country will attempt desperate measures to ensure a minimum of internal stability. Treaties will be ignored or thrown overboard. Devaluations around the world will proliferate; some countries will declare bankruptcy. The gravity of the crisis will make these events inevitable. We have just seen India refuse to abide by the rules of the World Trade Organization (WTO); the WTO rules say that governments are not to grant subsidies to sectors of their economies. But India is forced to subsidize its agriculture, because it has a population of over 1 billion and 67% of the people depend on cheap food for survival. So the statist international rules - emanating mainly from the US - to regulate the whole world will be trashed, eventually.

When push comes to shove, China, with 1.3 billion or more population, will take unorthodox measures. The pressure of the enormous population of China, made up of quite intelligent men and women, is going to force its government to stop adhering to international covenants. China will take whatever measures can offer hope to the Chinese.
http://www.plata.com.mx/Mplata/artic...idarticulo=278
When push comes to shove, revolution will be the last and biggest pressure.

[Danny B]

China isn't going to escape the collapse

In the above post, Sr. Price argues that China will sit back and watch the West crash and burn. BUT, every excess that occurred in the West also occurred in the East. "So at minimum, China has borrowed $4.50 for every new dollar of reported GDP"
The Lull Before The Storm—–It’s Getting Narrow At The Top, Part 2 | David Stockman's Contra Corner
"At this week’s close, the FANG stocks were valued at just under $1.2 trillion, meaning they have gained $450 billion of market cap or 60% during the last 11 months——even as their combined earnings for the September LTM period were up by only 13%."
The Chinese aren't just going for a walk in the park. If international credit breaks down, there will be big problems with food imports.

[aljhoa]

The government’s control of the virtual currency market
(all others are illegal, including Bitcoin) has its advantages.
Within a few minutes, anyone with a cellphone on any carrier
can open up a mobile account — and money can be added
at any bank or other registered outlet.

Ecuador’s new virtual currency is a source of pride

Al

[wayne.ct]

To whom much is given, much will be required.

I thought the last sentence of the Price/Plata article was interesting. This is tantamount to predicting aggressive, belligerent, war-like posturing. Some arrogant institutions seem to think that they can make and enforce rules on other people that they themselves can ignore. That much is a general truth that can be applied to many situations. Ultimately, a significant minority will stand up and put an end to abuse and oppression. The minority may, in fact, be the majority, but it won't really matter. This seems to be a natural law that will ultimately overcome all human efforts to resist it.

Here is the last sentence to which I refer:

China will break away and state its terms. And the terms will be: GOLD. The rest of the world will follow.

[Danny B]

Downgrading banks

Wayne, have you listened to John Bedini's vid, "Petrovoltaics"? He talks about his contact with a spook named, Sajeka. The spook tells him that both America and Russia are using transmutation to produce artificial gold.

The FED said that it won't rescue a single bank like it did for AIG. There have to be at least 5 banks involved if a rescue is to be considered.
"Standard & Poor's slashed the credit ratings of the holding companies for eight major global banks "
Standard & Poor's lowers ratings on major U.S. banks
"“We now consider the likelihood that the U.S. government would provide extraordinary support to its banking system to be ‘uncertain’ and are removing the uplift based on government support from our ratings,” S&P said in the statement."
JPMorgan, BofA, Citigroup Among Eight Big U.S. Banks Cut by S&P - Yahoo Finance
SO, without GOV support, the banks look a lot weaker.

[wayne.ct]

China going its own way?

Some think China or Russia will "save" the world from economic suicide. Why exactly to they think that? Various reasons are offered as answers to that critical question. After all, if they have no reason to act, they will not act. The reason doesn't need to make sense. But, they surely must have some reason to do something so altruistic. It is certainly not likely, in my opinion. I don't really believe the Chinese want to "save" anybody except they might want to save themselves. So, bottom line, I don't believe they are going to somehow force the world onto the gold standard.

However, that being said, I also believe there are certain natural laws regarding economics. For example, there is the so-called law of supply and demand. There is also a law that involves people thinking and acting individually and in societal groups. Call that the lemming effect. When sentiment shifts from "belief" in the dollar to "belief" in gold or whatever, then it will shift. It could happen in a regional government or culture, say the US or China, but with communication technology being what it is, I think it is more likely that mass psychology will strike worldwide. It will be, perhaps, the first true global economic panic. Think of a 1929 style bank run on a global scale.

I thought the article interesting but not truly definitive.

Unless the transmutation or creation of gold is financially profitable, I don't see how it could be much of a factor. If you bombard the right element with alpha particles, you can create gold in the lab, but it produces very expensive gold. It's not worth it. However, these things can change. Some gold miners are struggling right now because the price of gold is down and the cost of production is up. It's just a thought, but there it is.

[Danny B]

BIG money, no where to put it.

Wayne, you would have to talk to JB as to the exact method he discovered for creating gold. It didn't involve bombardment. There may very well be other methods;
The Platinum Cannon Shipwreck - Index/Home

Headlines;
• US, EU Bond Markets Lose $270 Billion In One Day (BBG)
• US Corporate Debt Downgrades Reach $1 Trillion (FT)
These headlines are critical. Armstrong shows very good info claiming that confidence will flow (jump) out of public debt and into private debt. Private debt is collapsing.
"The Great Bond Bubble Bursting Threat, over $100 Trillion outstanding in (3 times the size of the 2008 Housing Bubble) and, including leveraged Derivatives based on Bond Prices, it is $555 Trillion!!!

-But the Corporate Bond Market is showing increasing Stress and not just in the Energy Sectors."
http://www.24hgold.com/english/news-...eepcaster&mk=1
"-And Worse, Major Central Banks claim to be solving the Debt Crisis by competitively issuing more Debt, not a Sustainable Strategy in the long Run."
OK, so, corporate debt is crashing. Public debt is beyond sustainable.
"Total U.S. Debt SOARS by $674 Billion Just in November Alone"
Total U.S. Debt SOARS by $674 Billion Just in November Alone | The Daily Sheeple
OK, so, just how is the capital going to find a safe refuge if both public and private bond markets are crashing?


• 20 Billionaires Now Have More Wealth Than Half US Population (Collins)
The CBs printed up about ? $100 trillion? extra debt-dollars. They didn't do any good because they were injected into the upper loop of the economy. THAT is where they will die.
• OPEC Fails To Agree Production Ceiling As Iran Pledges Output Boost (Reuters)
It doesn't matter what OPEC pledges. They will pump as fast as they can to save their domestic economy. This will continue to destroy derivatives. Much of the U.S. oil and coal industry is facing bankruptcy. This will take out the banks that hold their paper.
If S&P downgraded the big banks, this tells you that it is a formality for institutions that are walking dead.
There just isn't enough money circulating in the lower loop of the economy. The PTB are trying this and that.
"TOKYO —

The Japanese government may offer 30,000 yen lump sum payments to a total of around 12.5 million low-income pensioners"

[Danny B]

Increasing the money supply OR, decreasing the people supply

The FED is searching for ANY excuse to raise rates. They want to save the investor class that depends on interest income. To be fair, it also includes the pension funds that support a lot of retired people. Pension funds are sinking; 12/06 State pension funding level drops again, to 17 percent – Lexington Herald-Leade
The FED sees BIG job gains; 12/04 211,000 new US jobs all but guarantees Fed rate hike – MarketWatch
BUT, the jobs are not in the prime value-added industry MANUFACTURING.
12/04 Since Jan, US added 294,000 waiters and bartenders and zero mfg workers – Zero Hedge
Then, there is the small detail that really hurts, "according to the BLS' Household Survey, while 375,000 foreign-born workers found jobs in November, a whopping 326,000 native-born Americans lost theirs." 326,000 Native-Born Americans Lost Their Job In November: Why This Remains The Most Important Jobs Chart | Zero Hedge

So, we're pulling in LOTS of foreign-born workers. America has a tech lead on most other countries and it attracts a lot of talent.
https://www.youtube.com/watch?v=NK0Y9j_CGgM
We pull in some talent but, continue to send jobs out. https://www.flatworldsolutions.com/a...utsourcing.php
Then, there is automation.
In general, jobs in the private sector go to the most qualified worker at the lowest wage. This is increasingly likely to be a machine.
The State has always tried to give support to people who just couldn’t find a job niche. They tried to limit support to those who wouldn't look for work.
As outsourcing and automation continue to eliminate domestic job niches, the State finds the rolls of unemployed and unemployable growing. 51% of Americans depend on a check from GOV.
Currently, the State creates debt money to support these people. Since the CFR and others have broached the idea of free helicopter money, it is obvious that the State sees the current situation as increasingly unworkable.
Once the helicopters started their drops, it would be hard to stop them. Once it becomes obvious that currency can be created with no limit, people will catch on that they don't really need to work for it.
One segment of the PTB prefers to reduce the number of people to fit the money supply rather than increasing the money supply to match the number of people.

[Danny B]

Finding a midle ground between socialism and capitalism

Capitalism has been given a bad name because of monopolistic crony capitalism. The Austrian School, et al argue for free-market capitalism. Socialism is the "firewall" between Darwinian pressures and people who aren't productive and don't have a job niche. The planned, ongoing crash of ""capitalism"" is being executed to teach all of us that it is unworkable. The computer and artificial intelligence is working it's way up the "ability ladder". Machine intelligence is especially adept at eliminating supervisory jobs. At some point, it will eliminate the need for most politicians. They ALL see the need for socialism because they have little in the way of job skills that are in demand.

There is much discussion of the post-capitalist economy. It seems to be taking hold mainly in the Nordic States. http://www.wakingtimes.com/2015/11/1...etter-society/
Finland plans to give every citizen a basic income of 800 euros a month - Quartz
Even Uruguay is moving in VERY interesting directions. Where Uruguay leads, the rest struggle to keep up | Emma Graham-Harrison | Comment is free | The Guardian
Our current form of capitalism is NOT compatible with the enormous unfolding of automation. Socialism is NOT compatible with human nature. We only work for free for our close genetic offspring. There are ongoing efforts to change our basic human nature but, I wouldn't hold my breath expecting them to work any time soon. We will never be an ant nest society.
We can learn from the ants but, we can't live like them. Ants and us: can society take a leaf from the leaf-cutter's book?

We have a RAPIDLY growing dependence on GOV; CHARTS: Rise Of Government Dependence - Business Insider
The economic pundits claim that we are selling the future of our children and grandchildren. NOT true. They won't have general employment. They won't pay back anything. GOV prints up $ trillions to support people who would otherwise die and/or revolt. Their numbers grow daily.
The bankers don't want to see free money distributed into society. GOV doesn't want to see widespread death and revolution.
The writing is on the wall. GOV will shaft the bankers. http://www.zerohedge.com/news/2015-0...-paid-them-fed
That still won't stop automation but, it will make revolution less likely.

[wayne.ct]

Who is in charge?

Most people at this time don't really take charge of their personal resources. If a person has a little savings they tend to sleep-walk through their days of existence. People with no savings worry about things, but have no power to do anything substantial beyond some form of activism. That pretty much leaves only the rich and a few top bosses to run the show. I think the question to be asked is what motivates these top decision makers? If you figure that out you might come up with a reasonable prediction as to where things are headed.

I think a big factor is negative. I.e. they are afraid the general public will catch on to the big fraud being perpetrated on them. So, they will find some way to make sure the "little people" are fed and entertained. The welfare state will be funded until it collapses of its own weight. That may take a while, but on the other hand, maybe it won't.

Each person needs to do their best to take charge of their own resources. A person's resources comprise true "capital". Paper is paper and its true value is what people think it is. I.e. confidence, faith in government, banks, or whatever. If that faith or confidence is lost, it won't matter how much "capital" one thinks one has, if that capital is made up of paper. By paper I mean debt, financial instruments of all kinds and corporate stock, etc.

The gig will be up when the top players try to move from paper into real estate and commodities. That is starting to happen. Most noticeably, to me, is the Chinese and other nationalities buying US land and stocks. Things may be picking up pace, but I'm just wondering when it will become obvious to the middle management type persons. I don't get the feeling they realize what is happening.

[Danny B]

Stretching the rubber band even tighter

Armstrong says that ALL states eventually default on their debts. Many States are rolling over old debt with new debt. What happens when they can't roll it over? • Emerging Market Debt Sales Are Down 98% (BBG)
• BIS Warns “Uneasy Calm” In Global Markets May Be Shattered By Fed Hike (ZH) Imagine that you have 1% bonds and the FED offers 2% bonds. Who will buy your bonds? Imagine what will happen to interest rate swaps when interest rates go up.
Zero Hedge lays out some of the particulars on the situation; http://www.zerohedge.com/news/2015-1...et-and-economy
12/07 Oil slumps to near seven-year low on OPEC inaction, dollar – Reuters What about all the derivatives written against the price of oil?
12/07 What happens when the auto-loan boom blows up? – Wolf Street
Do we get 3 guesses?
12/07 BIS points finger at Yellen, Draghi – Mish Which finger did they use?
12/06 Mortgage lenders unveil zero-money-down "friends and family" mortgage – Zero Hedge Why does that NOT sound like a good idea?
Stockman has something to say about housing; Chart Of The Day: Population-Adjusted New Home Sales Lowest In History | David Stockman's Contra Corner
Stockman; " the average wage for the bottom 81 million workers computes to $6.30 per hour on a standard work year!"
Well, that explains why nobody is buying anything. These Ain’t Your Grandfather’s “Jobs”—–Why Friday’s Rip Should Be Sold | David Stockman's Contra Corner
It's no great surprise that we are sliding towards a global-mean-wage but, that doesn't lessen the pain. We lost our lock on manufacturing. Aggregate wages crashed. Prices are going up when we need them to go down to match up with our new-found poverty.

[Danny B]

Avoiding downsizing

Peter Schiff, "Right now interest rates are being kept at zero which makes it possible to service the debt even though it’s impossible to repay it… at least we can service it. But once interest rates go up then we can’t even service it let alone repay it. "
"U.S. national debt will soon surpass $20 Trillion."
Peter Schiff Warns: "The Whole Economy Has Imploded... Collapse Is Coming" | Zero Hedge
Now isn't the best time for a rate increase.
As the CBs printed more and more currency to support a financial sector that was too big to be supported by a shrinking productive sector, they caused price inflation in the upper loop of the economy. Some of the price inflation in the upper loop of the economy bled over into the lower loop of the economy.
Shrinking wages and rising prices meant that we had/have less consumptive power. The lower loop of the economy was shrinking.
The financial sector pumped in more money to keep THEIR sector from shrinking. Every increase in the money supply caused a shrinkage in the lower loop. This feedback loop just gets worse but, the bankers only know how to print, NOT produce.
Money creation does not have a limit. OUR consumption DOES have a limit. As the currency creation causes more and more price inflation, our limited, and shrinking, consumptive power causes us to cut back on big-ticket items.
New house sales per-capita are the lowest on record.
The other BIG-ticket item is children.
"As a direct result of central bank actions, we see self-reinforcing population deflation coupled with asset price inflation. It's especially pronounced in Europe and Japan.

For additional discussion, please see Population Deflation: Spain Joins Germany with Negative Net Birth Rate; Italy on Threshold; Who's to Blame?

Read more at Mish's Global Economic Trend Analysis: Energy Price Deflation: Crude Dips 6% to 7-Year Low; Gasoline Below $1.50; Central Banks to Blame for What's About to Happen
The financial sector is too big. The more currency and debt that is created to save it,,, the lower the birth rate and consumption fall. A Keynesian system demands a growing money and credit bubble. Our money and credit creation system demands non-stop growth.
As we cut back on population growth, the demographic crash grows that much worse. When Social Security was first created, it kicked in at age 65. At THAT time, average life expectancy was 57. Medical care was relatively cheap.
GOV has painted itself into a corner due to changing demographics.
With TARP, the banks were rescued temporarily. Japan has thoroughly proved that a shrinking population can not create any economic growth.
When the Western financial system finally becomes commensurate to the productive loop, it is going to be much smaller. Unfortunately, there is going to be a lot of "overshoot" on the road to this shrinkage.
TARP and QE were a means to temporarily avoid this shrinkage that should have been allowed to happen with a minimum of chaos. The world is in FAR worse shape now than it was in 2008. There will be a maximum of chaos.

[wayne.ct]

Viva la difference

Hey, we don't agree on everything, but that at least keeps things interesting. Here is a posting that seems to mirror some of my thoughts. It doesn't directly reflect my view vis-a-vis the relationship between all this and the ethics involved. The unethical among the rich and powerful will "declare bankruptcy" or simply not pay their debts at some point and paper will be worthless at that point. It could happen practically overnight.

The global economic reset has begun

[Danny B]

Commodity wars

As profit margins go down, producers increase volume to compensate. The lowest cost producer usually wins the battle. In the oil market, that is Saudi Arabia with a production cost of about $ 15 a bbl. Everybody else eventually goes broke.
"The flood is compounding a worldwide surplus of commodities that’s driven returns from raw materials to the lowest since 1999, threatening producers from India to Pennsylvania and aggravating trade disputes. While companies such as India’s JSW Steel Ltd. decry cheap exports as unfair, China says the overcapacity is a global problem"
Saudi Arabia said that they would cut back on pumping if everybody else did the same. No takers
"Net fuel exports surged to an all-time high of 2.22 million metric tons in November, 77 percent above the previous month, customs data showed. Aluminum shipments jumped 37 percent to the second-highest level on record while sales of steel products climbed 6.5 percent, taking annual exports above 100 million tons for the first time."
When It Rains It Pours as China Unleashes Commodity Torrent - Bloomberg Business
The market structure is destroyed in these price wars. This takes down the financial structure. Some producers are selling for less than cost-to-produce. The race to the bottom is a battle to preserve one's home industry AND domestic employment.
Headlines;
12/09 Fed's rocket ship turns hoverboard – Euro Pacific
12/09 Plunging commodities interfere with the new world order – Automatic Earth
12/09 Collapse of US shale oil production has begun – SRSrocco Report
12/09 Chinese yuan drops to 5-year low – David Stockman
12/09 Money is flying out of China – CNN and 12/09 China and Japan continue to liquidate US Treasury holdings – 24/7 Wall St.

China has a fractional reserve system. What happens when somebody removes that fraction? 50% of Chinese companies can't even pay the interest on their debt. My crystal ball says that we may see defaults.
They send us paper and we send them gold. 12/07 Chinese stockpile gold at accelerated pace in November – Schiff Gold
http://2.bp.blogspot.com/-_cbSgg-wfs...rrency+war.jpg

In other news, the IRS could very well seize your life savings; IRS seizes life savings for deposits under $10,000
But not if you work for the government; 9.8 million federal employees delinquent on taxes

[Danny B]

The fallout from the crash of the oil markets

"If oil stays around $50 a barrel, most countries in the region will run out of cash in five years or less, warned a dire report from the International Monetary Fund this week. " How long can the Middle East survive cheap oil? - Oct. 25, 2015
"Saudi Arabia is the world’s largest oil producer but must sell oil at $106 a barrel to balance its books." Here is the fiscal break even price; http://static.independent.co.uk/s3fs.../16/IMFOil.JPG
One chart that shows which Middle Eastern countries could run out of money in less than five years | Business News | News | The Independent
Oil producers prepare for prices to halve to $20 a barrel Oil producers prepare for prices to halve to $20 a barrel | Business | The Guardian
So, how fast do they run out of cash at $ 20 a bbl? NOBODY will stop pumping because they are broke. The more that they pump, the sooner they all crash. There are enormous amounts of hedges and derivatives written against oil contracts. The counter-parties to these hedges and derivatives will go belly-up along with the bankrupt energy producers.
Nigeria has a break-even price of $ 141 a bbl. What will happen to the 21 million people who live in Lagos when oil production shuts down? Cost of Oil Production by Country - knoema.com
Settlement demands will come in to the banks and funds that are counter-parties.
The miracle of globalization made it easy to put your money into any market worldwide. This same miracle allows you to yank your money back out.
"Emerging Markets Warned of Capital Drought as Fed Nears Liftoff" http://www.bloomberg.com/news/articl...-nears-liftoff
SO, the FED raises rates and capital follows return. It is fleeing negative rates in Europe. It is fleeing the shrinking economy in emerging markets AND resource economies. This includes Canada and Australia. What happens to debt-service in States that have lost their working and investment capital? They default. The IMF is panic stricken that the FED wants to raise rates. It's Lagarde against Yellen.
So, how much default? " Emerging Market debt defaults whose range is between $5 and $11 trillion in volume" http://www.goldenjackass.com/main5.html
Mark your calendar for the next FED meeting, December 15-16*