Economic pressures

[Danny B]

"Although free markets are commonly associated with capitalism" Capitalism is the ONLY production system. All the rest of the "isms" are distribution systems. If I cut down trees and make a log house, that is capitalism in it's most basic form. It is a "mechanical" system. Communism is a social system.

[Danny B]

bonds are dangerous and stocks are ugly

America's post-war lock on manufacturing brought us high wages. As our competitors re-tooled, our wages went down. GOV and the financial system got bigger even though American earning power was diminishing. GOV took more and more for taxes. The financial system blew larger and larger bubbles. Our wages continued to shrink and the necessary bubbles continued to grow.
http://www.zerohedge.com/sites/defau...bowl%202_0.jpg
The current bubble is in GOV bonds. GOV demanded that the banks buy and hold GOV bonds as reserve assets. Should anything bad happen to GOV bonds, that will reflect on the assets of banks.
"What Goes Up Can Also Come Down" | Zero Hedge
"Next, note that over $58 TRILLION is owed by governments, and over $45 TRILLION is owed by banks and insurance companies."
" To summarise, the groups who hold a whole bunch of government bonds include:

- Bank & insurance companies
- Pension funds
- Target Dated Mutual Funds"
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"every historical market crash of note is found within this one set of conditions. Those conditions are: extremely unfavorable valuations and poor trend uniformity. At present, the market is displaying the same set of characteristics as it did just prior to past market crashes. In both 1929 and 1987, the market crash began about 55 trading sessions after the peak. During those sessions, the market traced out a characteristic pattern of declining peaks and troughs, with a one-day rally just after the third trough (roughly 14% down from the peak), and then ‘five days of Armageddon.’ This is exactly the pattern that the S&P has traced since its late-March peak.”
Hussman Funds - Weekly Market Comment: Warning with a Capital "W" - February 15, 2016

[Danny B]

Kunstler

My long, witty, informative post disappeared into the aether. I'll just leave you with Kunstler; Repricing Reality | KUNSTLER

[Danny B]

The best horse in the glue factory

China, " total social financing, or TSF." "TSF in January came in at a whopping $522 billion. That's up from $276 billion in December" 1/2 trillion in a month is some serious money. "outstanding credit accelerated to 15.1%"
China TSF numbers for January - Business Insider

Ron Paul; No Fed Bailout Will Stop Economic Freefall Next Time

"In 1971 the US dollar bought approximately 0.03 ounces of gold. By 2015 the US dollar bought less than 0.001 ounces of gold – a devaluation of over 30 to one. More devaluation is coming."
Argentina, In summary the 1945 peso was devalued by 10 trillion to one between 1945 and 2015 Silver, Gold, the Argentina Peso, and Exponentially Increasing Prices | SilverSeek.com

[Danny B]

The patient is slipping away

"Much has been written about the abysmal track record of expert forecasters, whose performance is hard to distinguish statistically from a “blind” forecaster who simply chooses the historical average growth for each indicator. As the late economist Ezra Solomon once remarked, “The only function of economic forecasting is to make astrology look respectable.”

Stockman warns the next crash will be bigger than any other in history. Stockman, the best-selling author of “The Great Deformation,” says,

“I think we have been building a bubble year by year since the early 1990’s. The earlier crashes that we are so familiar with, Dot Com and the Housing Crash, were only interim corrections that were not allowed to work their way clear.
The rot was not effectively purged from the system because central banks jumped back in within months of the corrections and doubled down in terms of the stimulus and liquidity that they pumped into the market.”
"We're Nearing The End" David Stockman Warns, Retail Investors Are "Heading For The Slaughter"

Tyler Durden, "total increase in aggregate Chinese debt is on pace to surpass CNY6.5 trillion, or $1 trillion in new debt created in 2 months! This is roughly how much outside money the Fed added to the US economy during one full year of QE3. "

"Recently, one hedgie described the charade as follows: ”I like to use the analogy that the economic patient is riddled with cancer — central banks are applying a defibrillator, but there's only so much electricity the patient can take before it becomes a burnt-out corpse.” Pretty apt."
"Central bankers are now fully impotent to drive growth, despite having swallowed all monetary viagra they can handle."
The Four Horsemen Of Economic Apocalypse Are Here | Zero Hedge

[Danny B]

Been there, done that

"We will not have any more crashes in our time."
- John Maynard Keynes in 1927

"There will be no interruption of our permanent prosperity."
- Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928

"There may be a recession in stock prices, but not anything in the nature of a crash."
- Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929
"Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months."
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929

"This crash is not going to have much effect on business."
- Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929

"There will be no repetition of the break of yesterday... I have no fear of another comparable decline."
- Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929

"We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices."
- Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929
"This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan... that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years."
- R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929

"Buying of sound, seasoned issues now will not be regretted"
- E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929

"Some pretty intelligent people are now buying stocks... Unless we are to have a panic -- which no one seriously believes, stocks have hit bottom."
- R. W. McNeal, financial analyst in October 1929
"The decline is in paper values, not in tangible goods and services...America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin."
- Stuart Chase (American economist and author), NY Herald Tribune, November 1, 1929

"Hysteria has now disappeared from Wall Street."
- The Times of London, November 2, 1929

"The Wall Street crash doesn't mean that there will be any general or serious business depression... Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before."
- Business Week, November 2, 1929

"...despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation..."
- Harvard Economic Society (HES), November 2, 1929
"... a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall."
- HES, November 10, 1929

"The end of the decline of the Stock Market will probably not be long, only a few more days at most."
- Irving Fisher, Professor of Economics at Yale University, November 14, 1929
PERMANENTLY HIGH PLATEAU « The Burning Platform

[Danny B]

Cashless quackery

"Number two; if they want to really launch a cashless society, they would have to take your gold away. That, in some countries, will simply not fly. In other countries, a cashless society is simply not practical because 80% of the population doesn’t have a bank account and doesn’t have cash to start with. So in my view, this cashless business is going to fail very badly."
Marc Faber on Cashless Society Insanity and Why Wall Street Hates Gold | Gold Silver Worlds

"In this context "cash is comparable to the service firearm kept by Swiss citizen soldiers," the pair argued in their motion, saying they both “guarantee freedom”. "This is what the Swiss politicians admit too: Brunner and Brandberg maintain that the tendency in the EU and in OECD member countries is to “weaken individual liberties” and to exercise greater control over citizens."
Swiss Politicians Slam Attempts To Eliminate Cash, Compare Paper Money To A Gun Defending Freedom | Zero Hedge
"NIRP is the falling Keynesian system's penultimate hope. When it fails, there is just one last option, the one we have said is coming ever since 2009, the one which even the "smartest money in the world" agreed today is inevitable: helicopter money. "

• Negative Interest Rates Set The Stage For The Next Crisis (Stephen Roach)
• Why Negative Interest Rates Spell Doom For Capitalism (Romano)
• Central Banking Is In Crisis. Can The World Economy Be Far Behind? (Economist) The Economist is the mouthpiece for the PTB. It is strange to see them pessimistic.
2/19 Out of ammo? – Economist
• OECD Calls for Urgent Increase in Government Spending (WSJ) Sure,,, more debt creation is just the answer.
• You Cannot Print Your Way to Prosperity (Ron Paul) What a party pooper.
The sad part getting even sadder, • 400,000 Americans In Jeopardy As Giant Pension Fund Plans 50% Benefit Cuts (ZH) Fallout from ZIRP.
2/19 Boomer's retirement: the third and final blow – Daily Reckoning
2/19 Bottom 40% of US has negative net worth – My Budget 360
2/19 Dr. Marc Faber: "They will bankrupt the world!" – Financial Repression Authority
2/19 The Fed badly needs inflation to happen soon – CNBC Yeah right, we're broke as hell and the FED wants higher prices.
2/19 Core US consumer prices rise by most in more than four years – Bloomberg Marvellous, now, we can't buy anything but food.

[Danny B]

more on pensions,,, Hudson and Roberts

"he companies in the Standard & Poor’s 500 collectively reported that at the end of their most recent fiscal years, their pension plans had obligations of $1.68 trillion and assets of just $1.32 trillion. The difference of $355 billion was the largest ever, S.& P. said in a report."
"Even as stock market rose last year, pension funding levels at America's biggest companies in 2014 fell to levels not seen since just after the financial crisis. "
" General Motors plans to sell 20- and 30-year notes to make a payment on its huge U.S. pension obligation for hourly workers.
The Detroit company filed a prospectus for the offering with the U.S. Securities and Exchange Commission on Thursday that did not specify an amount. But Moody's Investor Services said it would be $2 billion in senior unsecured credit.
At the end of last year GM's U.S. hourly pension plan was underfunded by $10.4 billion."

Michael Hudson has an excellent article on where the money went and, how it got there; The Federal Reserve and the Global Fracture | Global Research - Centre for Research on Globalization
Paul Craig Roberts also has an excellent article; The US Economy Has Not Recovered and Will Not Recover - The Unz Review
People don't have any money and even Wal Mart can't make it; The US Economy Has Not Recovered and Will Not Recover - The Unz Review

Those who have all the money like it that way. They plan to foreclose on everything that the have-nots are holding. BUT, when a people feel that they have no say and no stake in society and the economy, they they tend to turn wicked.

[Danny B]

Refinance cliff for energy and commodities

Re: the war on cash; "“It would be fatal if citizens got the impression that cash is gradually taken away from them”: Bundesbank President Weidman."
As War on Cash Escalates, Cash Lovers Fight Back | Wolf Street
“Capitulation”: Longest Streak Of Equity Outflows Since 2008 – Biggest Gold Inflows Since 2010 "Capitulation": Longest Streak Of Equity Outflows Since 2008; Biggest Gold Inflows Since 2010
• Commodities’ $3.6 Trillion Black Hole (BBG) Gold inflows and commodities outflow. Some fools still call gold a commodity.

Bert Dohmen, founder of Dohmen Capital Research, 'Is it too late to panic?' Because...the advice given by so many analysts is 'Don't panic, don't sell, don't panic.' And I say, 'Yes, panic!' And it's not too late to panic. Panicking at the right time can save you a lot of money...
Bert Dohmen Is Uber-Bearish and Here's Why | FS Staff | FINANCIAL SENSE
• Has The Market Crash Only Just Begun? (ZH) You bet!
• US Shale Faces March Madness With $1.2 Billion in Interest Due (BBG)
2/21 US$21.3bn of energy bonds headed to junk in March: Barclays – Reuters
"That “refinancing cliff” is going to be the biggest, steepest ever, after the greatest credit bubble in US history when companies took on record amounts of debt, and it comes at the worst possible time, warned Moody’s in its annual report." Moodys
• Moody’s Tallies 28 Downgrades In The Energy Sector Since December (MW)

2/21 Jim Rogers: Central banks have no idea what they're doing – Birch Gold
Tyler Durden at Zero Hedge claims that they know exactly what they are doing. They are purposely crashing the system to usher in a one-world currency.

[Danny B]

The Euro

Feb. 16, "The euro continues its fall and the likelihood of reaching 116 is starting to dwindle. Even the British Telegraph has come out and stated that the bail-in plan for government bonds in Europe risks destroying the entire euro system. We have to understand that those in power are clueless. All they do is try to defend their prior decisions by insisting they are correct and the world is wrong. When we look at the volatility and panic cycles starting next week, it appears the crisis may emerge in Europe"
https://www.armstrongeconomics.com/f...near-collapse/
The PTB go to great lengths to keep us from getting bored.

"The euro crisis appears to be unfolding right on target rather amazingly. Our target was published in “The Rise and Fall of the Euro” back in 2011. The target for the collapse in confidence was 2016.202. This comes into play March 13/14, 2016." https://www.armstrongeconomics.com/m...t-of-2016-202/

March is going to be a busy month with the collapse of both the Euro AND the re-fi/rollover collapse in commodities.
I'm not trying to make light of this. A billion people are going to die in the next 10 years. I didn't cause it and I can't stop it. I can only try to give some warning. If people won't pay attention to self-survival, mother nature will have the final say.

[Danny B]

Still sliding down

The labor market crashed. The central banks pumped in hundreds of $ trillions to make up for lost purchasing power. This is failing. The solution; • BofA: ‘Shanghai Accord’, Massive Central Bank Intervention Imminent (ZH)
• China Lenders’ Foreign-Exchange Holdings Omitted From PBOC Data (BBG)
• Sensitive Financial Data ‘Missing’ From PBOC Report On Capital Outflows (SCMP) The data showing gobs of money leaving China is now omitted. This is nothing particularly new. GOV scrubs the bad news. " as of March 23rd 2006 the government will no longer be publishing the M3 money supply data" This is from U.S. GOV trying to hide price inflation.

"3. Stocks are facing an absolutely monumental crash – Corporate debt is back to 2007 PEAK levels. Margin debt which is money borrowed to buy stocks is at 2007 PEAK levels." What could go wrong? 5 Signs That Prove We Are On The Brink Of A Complete Collapse ? Get Prepared For The Coming Food Shortages And The End Of America As We Know IT! « InvestmentWatch

Globalism is the embodiment of economic insanity.
"“It has been reported that international currency gambling speculations vary from $1 trillion to $1.5 trillions per day. Annuallized, this is more than ten times the total production of the planet in real goods and services. As much as $2 billion in corporate stocks change hands daily in U. S. markets alone. These cycles of financial gambling in debt have plagued humanity since well before the Roman follies reported above. Solon, as reported by some historians, confronted the same problem in early 6th Century BC Attica - See more at: Economic Insanity and Political Reality

"No-one acknowledges that falling oil prices are a symptom of the global
metastasising deflationary depression that's occurring right now."

Read more: OPEC Is Out of Business, But Dollar Crash Will Save the Oil Price

2/21 Options market sees 50% chance of massive S&P plunge – CNBC
2/21 "Banks selling energy loans at cents on the dollar to ensure own survival" – Zero Hedge
2/21 Are Asian central bankers even crazier than our own? – Automatic Earth No doubt about it.
My last post had a couple of notes about the Euro breaking down. Now; "Trading On Eurex Suspended "Until Futher Notice" Due To Technical Issues
Tyler Durden's picture
Submitted by Tyler Durden on 02/22/2016 06:15 -0500"
'Technical issues" means that the exit doors are too small for the rush.

[alman]

Thanks for your positng Danny B.

I hope your wrong But I feel your right. Aln

"the Fed has painted itself in a corner: If it raises interest rates, this will cause the stock and bond markets to go down. That would reverse the debt leveraging that has kept these markets up. Higher interest rates also would bankrupt Third World debtors, which will not be able to pay their dollar debts if dollars become more expensive in their currencies.

But if the Fed keeps interest rates low, pension funds and insurance companies will have difficulty making the paper gains that their plans imagined could continue exponentially ad infinitum. So whatever it does, it will destabilize the global economy." from here

[Danny B]

Socialism, GOV debt and inflation

Alman, you are correct. The CBs intervened to save the private banks at the cost of killing the economy first, and then the banks later.

America was founded as a democratic republic. All democracies fail after about 150 years and the founding fathers knew this. With the 17th amendment, we moved closer to being a democracy. We took a big lurch further in that direction when women got the vote. The central focus of a man is providing security for his family. The central focus of a woman's life is her insecurities. This has nothing to do with intelligence. Women are a lot more security minded and more likely to look longingly at the promises of security provided (temporarily) by socialism. Socialism always breaks the bank. Democracy is socialism-lite.

The Grace commission created by Ronald Reagan reported that not one dime of our income taxes goes to GOV.. I'm not positive just which segments of taxing this covers. GOV just prints the money that it needs. The FED claims that we need 2% inflation. This gives them cover for printing bucks for GOV programs. U.S. GOV spends; "by the 2010s federal spending checked in at over 20 percent of GDP, state spending amounted to 8 to 9 percent of GDP and local spending exceeded 10 percent of GDP."
FED GOV spending in France is 48% of GDP. They are far more socialist than America.
51% of Americans receive a check from GOV. FED GOV prints 80 million checks a month. Our debts are unpayable and our bond markets are crashing.

"For several years now the small coterie of Keynesian academics and apparatchiks who have seized nearly absolute financial power through the Fed’s printing presses have justified the lunacy of unending ZIRP and massive QE on the grounds that there is too little inflation. "
"Between 1870 and 1913 in the United States, for example, real national income grew at 3.5% per year——the highest gain for any 43 year period in history. Yet the average inflation rate during that long period of capitalist prosperity was less than 0.0%"
That only benefited the workers and not the parasites.

"The whole 2% inflation mantra is just a smokescreen to justify the massive daily intrusion in financial markets by a power-obsessed claque of monetary central planners. They just made it up and then rode it to ever increasing dominance over the financial system—-even though as recently as 15 years ago the 2% inflation theory was unknown outside a small circle of neo-Keynesian academic scribblers led by Ben Bernanke."
"Once at Peak Debt, the central bank in effect has already printed itself out of a job."
" But as we shall see in the next section, the academics who grabbed the power had no idea what they were doing in the financial markets that they have now saturated with financial time bombs."
Silver Linings: Keynesian Central Banking Is Heading For A Massive Repudiation | David Stockman's Contra Corner

"The U.S. owes nearly one third of total world government debt with $18.91 trillion. That is 105% of its GDP and with a population of 322.8 million, is equal to $58,576 for every American man, woman and child."
Watch all of the government debt in the world grow in real time - MarketWatch

America has become too top-heavy with non-producers,,, beggars, bankers and bureaucrats. We have $ 212 trillion in unfunded liabilities.

• NYSE Short Interest Nears Record – And We Know What Happened Last Time (ZH)
2/22 Wild ride! Treasury Term premia at lowest level since 1990 – Confounded Interest

[Danny B]

Non-stop growth of debt

America the beautiful screwed every country in the world that it possibly could. American bankers used GOV, the World bank, the IMF and the military to rape every country. Any leader that tried to escape the trap was killed. Perkins wrote "Economic Hitman" to expose this. He has recently written 14 new chapters to his book. The whole world has good reason to hate the American financial establishment.
The Evil Empire Has The World In A Death Grip -- Paul Craig Roberts - PaulCraigRoberts.org
Now, that most of the world has been bled white by the mega-parasites, they are looking inward at doing the same thing right here. Financial Time Bombs Hiding In Plain Sight | David Stockman's Contra Corner

"Money no longer represented wealth. It now represented anti-wealth: debt. So, the economy stopped producing real wealth. The Fed could create money that no one ever earned and no one ever saved. It was no longer the real thing, but a counterfeit.

In this way, effort and reward were cut off from one another. The working man still had to labor. But it was the banker, gambler, speculator, lender, financier, investor, politician, or inside operator who made the money. And the nature of the economy changed. Instead of rewarding the productive Main Street economy, it rewarded insiders… and the financial sector."
The Fatal Flaw That Has Doomed Our Economy |

Socialism crashes because it removes motivation. No point in working hard if you won't gain anything. Corporate fascism has the same effect.
" According to think tank Budget Solutions, public pension plans have promised to pay out $4.7 trillion more than they have on hand. Every U.S. citizen would have to pitch in $15,000 to pay everyone’s promised pension.

BlackRock (BLK), the world’s largest money manager, expects 85% of U.S. public pensions to fail over the next three decades."
Relying on a Pension to Retire? Food Stamps Might Be in Your Future | Casey Research

• Barclays Says Sharp Yuan Devaluation Needed (BBG) Marvellous idea. Devalue the Yuan and it will be that much harder to pay $ trillions in dollar-denominated debt,,,, that they already can't pay. • S&P Cuts Rating On BP, Total And Statoil (Reuters) Big oil is dying.
• Canada PM Trudeau Drops Campaign Promises and Goes All In With Deficits (BBG) Promises,,, we don't need no stinkin promises.

[Danny B]

Death by ZIRP for the banks,,,, attraction of gold

Banks live or die on "spread". They need to borrow cheap and lend dear. When the economy contracted, there wasn't enough spread for them to survive. Rather than letting nature take it's course, the got the FED to cause ZIRP, to bring back some spread. That worked for a while but, the fundamentals never went away.
Peter Schiff; "In the past I argued that even a tiny, symbolic, quarter point increase would be sufficient to prick the enormous bubble that eight years of stimulus had inflated. Early results show that I was likely right on that point."
Peter Schiff Warns "The Fed's Nightmare Scenario Is Becoming Reality" | Zero Hedge

ZIRP was instituted to give them some spread even though there were / are just too many banks for the size of the productive economy. To the bankers, it didn't matter at all if ZIRP killed all the pension, insurance and hedge funds that live on interest. It didn't matter of millions of savers and retirees were wiped out. Well, now ZIRP and it's bastard son, NIRP have caught up to the banks.
"U.S. bank stocks are the worst performing sector in the S&P 500 this year. They’ve fallen 11%…more than double the S&P 500’s 5% decline this year."
"As you can see in the chart below, the STOXX Europe 600 Banks Index, which tracks large banks across Europe, is already down 22% this year."
"Mitsubishi UFJ Financial Group (MTU), Japan’s biggest bank, has plunged 32% since the start of the year. Mizuho Financial Group (MFG), Japan’s second-biggest, is down 27%.
Keep in mind, we’re just two months into the year. "
18 Bucks for a Gallon of Milk…This is What a Currency Collapse Looks Like | Casey Research
The bankers were willing to kill everyone who depends on interest income. Now, the ZIRP chickens have come home to roost and it is killing them.

ZIRP was supposed to max out at 6 months. Every time that the FED talked about raising rates, the bankers howled about losing spread. The banks postponed their eventual demise but, they became so dependent on ZIRP, that, over time, it was the only glue holding the system together.
This postponement has run it's course and spread is crashing.

Gold, on the other hand, is a different story. The politicians have been running a balancing act with the price of gold. If it goes too low, everybody buys, it runs out,,, and there is a panic. If it goes too high, too many people buy it. "They" need to inject enough gold into the market to keep the price in a window. "They" print enormous amounts of paper and want us to believe that ALL of it has great value. They can't understand why anyone would buy gold.

"Robert Michele, JP Morgan’s global Chief Investment Officer (NYSE:CIO), showed great emotional frustration. He seemed to throw up his hands, and while doing that, he stated that people “have more confidence in gold than paper money.”

It was a very puzzling statement for someone to make. It was a bizarre emotional reaction on camera, given the fact that gold prices have been plummeting for 4.5 years! I believe that Michele’s comments can only be understood in context. If top people at JPM already know that the deep drop in gold prices was artificially contrived, and that the continuing physical demand is natural and real, his statements and facial expressions make perfect sense.

In short, Mr. Michele is expressing his frustration that JP Morgan Chase was unable to break the back of gold demand, in spite of having been given what I believe was carte blanche to invade the US Gold Reserve by the Obama Administration. Have they thrown away thousands of tons of American-owned gold and accomplished nothing? I believe that they have. That was frustration reflected in what Mr. Michele’s voice, in my view.

Sooner or later, it becomes necessary to slow down the hemorrhage. "
Why is Gold Rising Again | AVERY B. GOODMAN'S BLOG

2/24 It starts: subprime auto loans implode (in your bond fund) – Wolf Street
2/23 Student debt apocalypse – My Budget 360
The banks made tons of liar-loans in RE knowing that regulatory capture would bail them out. They have now made tons of liar-loans in auto and schooling. They expect that we will bail them out. WE don't have the bucks. This puts the U.S. Treasury in danger. It is expected to crash.