Economic pressures

[Danny B]

Morality and commerce

It also helps that they are hard working and religious,,, fewer scammers.
"The population of North Dakota identifies as religious at a much higher rate than the national average. About 67% of the state population identifies as religious, compared to the national average of 49%. Out of the 67%, about 30% identify as members of the Lutheran Church, making it the largest denomination in the state of North Dakota. The next largest denomination in the state is Catholic, making up 25% of the population. All the other Christian denominations make up about 11.9% of the population. Those who identify as Jewish or Islamic only make up 0.1% of the population."

[Danny B]

GOFO and running out of spoils to divide

I found an excellent vid on GOFO, contango and backwardation,,,, in the gold market. When Gold and Silver Go Into Hiding - YouTube
This may not sound terribly important but, the author makes a pretty convincing case for; when the gold comes to an end,,, the oil stops.
Money printing has never fixed a broken economy. $ Trillions of printing and no good effect;
http://kingworldnews.com/kingworldne...A28%3A2014.jpg

My Blog

This is an excellent article on the breakdown of the "spoils" system;
charles hugh smith-Why the Periphery Is Crumbling: The Spoils System Is Cracking

[aljhoa]

It also helps that they are hard working and religious,,, fewer scammers.
"The population of North Dakota identifies as religious at a much higher rate than the national average. About 67% of the state population identifies as religious, compared to the national average of 49%. Out of the 67%, about 30% identify as members of the Lutheran Church, making it the largest denomination in the state of North Dakota. The next largest denomination in the state is Catholic, making up 25% of the population. All the other Christian denominations make up about 11.9% of the population. Those who identify as Jewish or Islamic only make up 0.1% of the population."

And not that many snouts in the trough of ND.

Welfare: A Better Deal than Work | Cato Institute

Still, it is undeniable that for many recipients—
especially long-term dependents—
welfare pays more than the type of entrylevel job that a typical welfare recipient can expect to find. As long as this is true, many recipients are likely to choose welfare over work.
the_work_versus_welfare_trade-off_2013_wp

Al

[Danny B]

Problems in China

We all know that the Western banking system is a rip-off for the average person. "The Chinese have essentially “replicated the entire U.S. commercial banking system” in just five years"
The Chinese have a racial gambling streak that is way too optimistic. They have gone way overboard on credit creation.

"Chinese Business Wisdom argues (via China Gaze) that waves of bankruptcies are striking in 10 Chinese industries: (1) shipbuilding; (2) iron and steel: (3) LED lighting; (4) furniture; (5) real estate development; (6) cargo shipping; (7) trust and financial institutions; (8) financial management; (9) private equity; and (10) group buying."
Chinese banks have inflated at 18 times the rate that U.S. banks inflated.
China Is Crashing … As Predicted | Zero Hedge

[Danny B]

The pathology of a bureacracy

Here is a great graph showing the development of a bureaucracy;
http://www.oftwominds.com/photos10/l...ureaucracy.png
oftwominds-Charles Hugh Smith: Why Is Our Government (and Deep State) So Incompetent?
Any bureaucracy with an open-end life will continually attract non-productive parasites. Low level parasites fight for a bigger budget so they can hire more low level parasites. Having underlings justifies the original parasite a rise in pay and status. The bureaucracy is ever-increasing regardless of the efficacy or viability of the original mandate.

As the bureaucrats become ever more numerous, they can vote for ever-more generous (to them) taxes. This provides the non-producers with an ever increasing standard of living. This acts to starve the producing economy of necessary capital. It also burns up resources at a much higher rate.
Energy is the current focal point for resource depletion. The lower 48 states are in a mad rush to fracture out every drop of oil to hold down international prices. The lower 48 states are OUT of cheap oil. Our economy was built on cheap oil.


The cause of the 'great recession', starting in 2007/2008, was the fact that the world hit peak cheap oil on or about 2004. Obviously, oil production, counting all liquids produced, has increased since then, but only because sustained high oil prices have allowed more expensive oil to come to market.

Starting in the 1970's, in the early 80's, in 1991, and again in 2000, each and every time the price of oil exceeded $30/bbl the USA economy dipped into recession. Now it is over $100/bbl. How can the economy be growing? Answer: it isn't. If cpi inflation was measured the same way it was measured prior to 1980, it would show that prices are going up 9%/year. (see shadowstats)

If you plug the 9% inflation number into the GDP calculations, you will see that we never came out of the 'great recession'. It is quite obvious that we haven't come out of the great recession, because the percent of adult Americans with a full time job is at a multi decade low.

There is no amount of economic fine tuning that can maintain our standard of living, since it was based on cheap oil. That no longer exists, so our standard of living must drop. Switching from easy credit to tight credit, or budget deficits to austerity won't alter these facts. We can adopt Austrian Economics until we are blue in the face, (probably should do this anyway) but it won't find or produce a single barrel of cheap oil. The cheap oil has been found, produced, and burned.

Fracking is a "hail Mary" to maintain a high standard of living for multitudes of non-producers. 53% of Americans rely on a check from GOV. In truth, a big percentage of non-producers are in that position because of automation and outsourcing. GOV was previously able to absorb many of these people into it's gargantuan bureaucracy but, times have changed.

Currency printing has caused price inflation. Seen from street level, this is just a cut in wages. GOV bureaucrats don't want to diminish their standard of living and have found it necessary to steal your savings. Various States have started robbing pension funds.
8 Real World Events That Prove Your Money Isn't Safe In Europe (Or Anywhere)
Jeffery Berwick expects pension funds to be gone in about 4 years.

In a rare moment of truth, Bush admitted that the social security fund was empty except for IOUs from Treasury. Forbes shows the same thing;
What Happened to the $2.6 Trillion Social Security Trust Fund? - Forbes
These IOUs are non-negotiable. One could guess that American workers will pay taxes to treasury and treasury will replace the missing funds. We get to pay twice.

There will be no economic recovery while energy prices are rising. The general rule of thumb is that every one-cent increase in gas prices takes $1 billion away from the rest of the economy.
Our resources and our fortunes are ever diminishing. Our burden of non-producers is ever increasing. The parasites steal our savings to keep the standard of living from falling.

[Danny B]

Dr. Copper, The Crash V2.0

Our economy runs on electricity and electricity is distributed through copper wire. A downturn in the economy is presaged by a reduction in the consumption of copper. This has always been a very close correlation and the metal is referred to as "doctor copper" for accurately forecasting the economy. Dr. Copper is not looking good;
Is “Dr. Copper” Foreshadowing A Stock Market Crash Just Like It Did In 2008?

This hardly come as a surprise. The Chinese economy was projected to grow at 7.75%. Instead, it SHRANK at 18.1 %. The shadow banking system in China was generating about $ 160 billion a month. In February, it generated nothing. China now has a trade deficit,,, this from the world's largest exporter. The resource countries like Australia and Brazil are seeing huge reductions of exports in base materials.

The basis for honest wealth creation on planet earth is to take something from nature,,, add labor, and sell it for a profit. Agriculture, mining and manufacturing are the basic value-added industries. We crashed into low-wage competitors and wealth creation took a nosedive. The banks should have taken a huge hit when wealth creation took a big hit. Not wanting to be severely reduced, the banking industry extorted $ 700 billion out of congress. TARP.

The economy has shrunken even more since then and the banks are in an even more precarious situation. Since our economy lacks wealth creation, the banks have forced currency creation as a substitute. This fell far short so, they created huge amounts of synthetic instruments that pass for wealth,,, sort of.

The original problem of falling wealth creation has never been rectified. These synthetic instruments are not wealth and they don't have much stability. "That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 427 times greater than their total assets."
The FED has printed currency to save the banks and the plan is for you and me to repay this debt. Open you checkbook and take care of the problem.

"Back in September 2008, the U.S. national debt was sitting at a total of 10.02 trillion dollars.

As I write this, it is now sitting at a total of 17.49 trillion dollars."
The original problem was that we weren't creating enough wealth to support the banks. We are producing even less wealth and the original problem has gotten even worse. The bankers told congress that we would grow our way out of this and it would be easy to repay the giant debt to the FED. Our economy is shrinking rather than growing. The debt is far worse and we are very close to crashing again.
We Are In FAR Worse Shape Than We Were Just Prior To The Last Great Financial Crisis

Only 4 times in history has margin debt been this high. Every time that it reached our current number, the markets have crashed.
Ignore all this and watch Lorenzo;
Lorenzo The Flying French Man - YouTube

[Danny B]

the crash of the middle class

The Royal Bank of Scotland is the 12th largest bank in the world. They were recently downgraded to junk.
Royal Bank of Scotland nears junk bond status after Moody's downgrade | Business | The Guardian
European banks have over $ 3 trillion in exposure to Chinese bonds. China is crashing ever-faster. European banks are soon to be required to hold even more capital by the Basel accords. RBS will soon be followed by Deutches Bank. King dollar is attacking all competitors.
Libor: FDIC sues Barclays, RBS, HSBC, Lloyds and BBA - Telegraph

The rich have set aside $ 21---23 trillion in tax havens. That's cool. Just don't expect the economy to continue all the same. Their stash is growing at 12%. This $ 23 trillion is in the form of debt instruments. With no middle class, there won't be any payment of these instruments.

The middle class is rapidly becoming the poor class;
#9 Incredibly, 56 percent of all Americans now have “subprime credit” at this point.
#12 Overall, U.S. consumers are $11,360,000,000,000 in debt.
#14 U.S. workers are taking home the smallest share of the income pie that has ever been recorded.
U.S. corporations are sitting on $ 2 trillion in cash. They are very happy about this but, they are starting to get nervous. The consumer has run out of money.
#18 In 2008, 25 percent of all Americans in the 18 to 29-year-old age bracket considered themselves to be “lower class”. In 2014, an astounding 49 percent of them do.
Dow Jones Industrial Average, J.C. Penney Company, Inc.: 19 Signs That The U.S. Consumer Is Tapped Out | ETF DAILY NEWS
We are $ 11 trillion in debt. America is spending what she/he doesn't have;
US budget deficit hits $193.5 billion in February – ABC News

People are pretty bummed out about being poor;
#17 According to a study conducted by the Mayo Clinic, nearly 70 percent of all Americans are on at least one prescription drug. An astounding 20 percent of all Americans are on at least five prescription drugs.

#18 Americans spend more than 280 billion dollars on prescription drugs each year.

#19 According to the Centers for Disease Control and Prevention, doctors in the United States write more than 250 million prescriptions for antidepressants each year.
55 Things About America You May Not Know | Zero Hedge
Something not so depressing;
Whites Only Laundry - YouTube

[Danny B]

Too much currency,, not enough wealth

Central bankers print (currency inflation). Their banker buddies take this free money and push it into anything that promises some kind of return. Since Americans are debt saturated, much of this wet-ink money flows into emerging markets. It eventually causes price inflation. We export price inflation. This shows up in the CPI (consumer price inflation) index.

Here is a graph on CPI based on a population weighted index;
http://blog.milesfranklin.com/wp-con...ries-Chart.png
"On a population-weighted basis, the average currency has declined by 10% versus the dollar over the past six months, and a whopping 20% over the past two years."
http://blog.milesfranklin.com/the-mo...e-ever-written
"Of course, we all know the U.S., too, heavily understates its CPI – and thus, one can simply view the CRB Commodity Index, up 75% since the turn of the century, to see such inflation in action"
You did notice that your dollars don't go as far as they used to

As I’ve posted a couple of times, margin debt has only been this high 3 times previously. It crashed every time. Then, there is the question of inequality;
"As indicated in the graph below from Robert Reich’s documentary,
“Inequality for All,” there are only two years in the history of this
nation that income inequality reached these unprecedented levels: 1928,
the year before the 1929 Wall Street crash and 2007, the year before the
2008 Wall Street crash. Let that thought sink in for a while."
Mr. President, Executive Orders Are No Match for this Economic Slowdown

The world desperately needs a new financial system but king dollar is fighting the rest of the world.
The World Is Screaming For A New Financial System | Zero Hedge
The FED claims that they have a toolbox. Seems that the favorite tool in the toolbox is the printing press;
http://www.gold-eagle.com/sites/defa...on030914-1.jpg
This certainly shows up in the gold-leverage rate;
http://www.gold-eagle.com/sites/defa...on030914-3.jpg

The Death Of Paper Money | Gold Eagle
Every month, our time grows shorter;
The Daily Bell - Andy Hoffman on the Golden Bull, Failing Fiat and the Foundering of the Central Bank Economy

Here are a couple of vids that will make you nervous;
INCHES FROM DEATH: Downhill mountain biker rips cliffs in Utah - YouTube

driving on mountain top ORIGINAL! - YouTube

[Danny B]

Ukraine

Russian GAZPROM wants to sell gas to Europe. the Western oil majors are trying to block this. Russia needs both Syria and Ukraine for it's pipelines. The Oil majors created a civil war in Syria that cut off Russia from It's port in Tartus. The oil majors are trying to create a civil war in Ukraine to cut off the Russians from it's very important warm-water port in Sevastopol.

" Ukrainians said they would not renew the lease when it expired in 2017.
But they buckled under the pressure of a gas-price hike and, in 2010,
extended the Russian navy's lease until 2042."

"The Russian navy was actively engaged with Vietnam, Syria and Venezuela (and up until March 2011, Libya) "for logistics and repair services in their principal ports". It has also been alleged that Sevastopol has served as the main source in supplying the Assad regime during Syria's civil war and proved useful with Russia's role in
dismantling Syria's chemical weapons last year. After Syria's civil war
forced Russia to stop using its naval base in the Syrian port of Tartus
last year, Sevastopol became even more crucial."
Ukraine crisis: why Russia sees Crimea as its naval stronghold | World news | theguardian.com

Ukraine is a rust belt of no particular value except for the port in Sevastopol. If the EU got hold of Ukraine, NATO would soon follow. There would be even more missiles close in to Russia. Ukraine's gold reserves have already been shipped to the New York FED.

[Danny B]

Condi, Chevron, Ukraine and Afghanistan

Actually, Ukraine is of some use.
Condi, "Ukraine "should not be a pawn in a great-power conflict but rather an independent nation" might have something to do with Chevron's 50-year lease to develop Ukraine's shale gas reserves."
Condi, " She sat on Chevron's board of directors for ten years"
" she might prioritize their interests in places like Kazakhstan or the Caspian Sea (where Chevron is heavily invested) or Afghanistan (where they've long sought a pipeline from the Caspian region to the Indian Ocean)."
"She doesn't want to hear "talk of withdrawal from Afghanistan whether the security situation warrants it or not." For her, nothing less than 10,000 troops will do. Otherwise, the US is "not serious about helping to stabilize that country."
"Perhaps the former Secretary of State, former Chevron big-wig is more concerned with the ability of Chevron to realize its Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline dream."
Ukraine, Chevron, Condi Rice and shale gas ... join the dots - Comment - The Ecologist

No amount of American lives and treasure is too high a price to be paid for the security of Pipelines and bankers.

[Danny B]

Oil prices

"Sources of unconventional oil (listed below) such as tight oil (or ‘shale oil’ in popular discourse) are only commercially viable because the need to match the declining rate of conventional oil production has raised oil prices."
"Current data for the decline in oil fields’ production indicates that around 3 million barrels per day of new production must be achieved year on year, simply to sustain supply levels. "
"The price of a barrel of oil has trebled over the past decade, but output has effectively flatlined."
Peak oil is not a myth | Chemistry World
This is pretty clear. Peak cheap oil has passed us by. There is lots of oil, just, not in the lower 48 states. Fracking is a stop-gap measure. Oil was discovered in Titusville, Pa. in 1850. The frackers have just pulled out of Pa. because there isn't anything worth drilling / fracking for.
Sure, we have lots of oil but, the price has trebled. Consumption has fallen as we shift more of our income to energy and less to discretionary spending.
No big surprise...

[Danny B]

The failure of centralization

The world-improvers, both fascist and socialist want complete control and complete centralization. Our corporate overlords and our political overlords see perfect centralization as the road to perfect control. Problem is, it doesn't work that way.
"The structural incompetence of centralized, wrong-unit-size agencies and central banks is global: the
centralized strategies of China, Japan, the European Union and yes,
Russia, too, will all fail for the same reasons: organizations with a
few limited controls are intrinsically incapable of managing complex
systems."
The Incompetence Of The Federal Reserve And Deep State Is Unavoidable | Zero Hedge

This subject is so important that I want to expand on it. A few decades ago, Roberto Vaca, a computer specialist wrote a book, The Coming Dark Age
http://www.printandread.com/download...arkagefree.pdf

Vaca wrote about the breakdown of super-systems.
The PTB seem to want to force centralization. It just doesn't work. There is too much complexity.
"Complexity theorist Eric Beinhocker, author of “The Origin of Wealth,” asks us to run a thought experiment to understand this point. Imagine that the inhabitants of a town have made you their benevolent dictator, but in exchange for your awesome powers, you are responsible for making sure the town is fed, clothed, and sheltered each day. No one will do anything without your say-so, and therefore each morning you have to create a to-do list for organizing all the town’s economic activities. "
http://www.radicalsocialentreps.org/...lexity-theory/

Charles Hugh Smith;

The Master Narrative Nobody Dares Admit: Centralization Has Failed (June 21, 2012)
All centralized systems, open and shadow alike, act as heavy taxes on the society and economy. This is why they cannot compete with the forces of networked decentralization.

The primary "news" narrative may be the failure of the euro, but the master narrative is much, much bigger: centralization has failed. The failure of Europe's "ultimate centralization project" is but a symptom of a global failure of centralization. "
charles hugh smith-The Master Narrative Nobody Dares Admit: Centralization Has Failed

[Danny B]

U.S. GOV default

The FED drove interest rates down to about 1%. The bankers then made bets for about $ 440 trillion that these rates would stay there. The bankers figured that they eventually would get paid off. Wanting to be extra sure, the bankers had new laws written giving THEM senior-seniority in the case of default.
Real estate sales are crashing. The bankers see a new golden opportunity. They already have tons of derivatives in the form of Mortgage backed securities. They cost nothing to write but are potentially quite valuable in the case of a mortgage default. The bankers are pushing a new law. This law would have the U.S. Treasury guarantee MBSs that default. The RE market is crashing and the banks expect a BIG payoff.
The Economic Scam of the Century » CounterPunch: Tells the Facts, Names the Names

Moving right along, you and me, as the guarantor of the U.S. Treasury will have to cough up. $30--40 trillion. Since we don't have this kind of cash, the banks will offer to settle for a bit less. They will take lots of GOV owned assets.
Staircase-Escalante was recently set aside as a national monument,,, no mining. It has enormous mineral deposits;
Energy and Mineral Resources, Grand Staircase - Escalante National Monument - Utah Geological Survey
This would make a very nice Christmas present to the banks in their time of need.

[aljhoa]

"The Word ends not with a bang, but a whimper."

As TS Elliot noted: "Between the idea and the reality, between the motion and the act falls the shadow." Whether or not Elliot was referring to "shadow banking" in 1925, 100 years later his words certainly ring true as "Vampire Internet Funds" like Alibaba's Yu'E Bao are draining liquidity out of China's financial system at an alarming rate.

In less than on year, 81M people have opened Yu'E Bao accounts at an average of $1,000 each, totaling $80Bn of deposits. Compare that with only 67M investors in China's entire stock market – after 23 years of operation! Yu'E Bao gives depositors 6% interest and allows the funds to be used at any time, making payments by smart phone or straight withdrawls anywhere in the World vs 0.35% in a Chinese bank, subject to all sorts of restrictions.

People gather in front of a branch of Jiangsu Sheyang Rural Commercial Bank, in Yancheng, Jiangsu province, March 25, 2014. REUTERS/StringerDeposit money draining away from the banks is freaking China out and it won't be long before it starts spreading (because it makes perfect sense for depositors) and suddenly we will end up with either a global liquidity crunch OR banks will have to begin paying fair market rates for deposits, which would also lead to a major crisis as rates rise sharply.

There's already been a run on the Jiangsu Sheyahg Rural Commercial Bank (picture above, yesterday) and you can ignore it if you want to – the way you ignored Northern Trust in 2007 or the Icelandic Banks that same year – who cares, right? It's too far away to affect you, isn't it? Our bankers are far too smart to get caught up in that kind of mess, aren't they?
http://www.marketoracle.co.uk/Article44969.html


Al

[Danny B]

Efficiency of war

Aljhoa, that is a fascinating article. We are at war with China. Since America is debt saturated, the QE from the FED moved into developing markets that had a higher rate of return. We exported our currency inflation. The Chinese lapped it all up and blew an unbelievable credit bubble.
That was our war effort; trying to destabilize China economically.

China is at war with us.
"“The Three Warfares is a dynamic three dimensional war-fighting process that constitutes war by other means,” said Cambridge University professor Stefan Halper, who directed the study. “It is China’s weapon of choice in the South China Sea.”
"The unclassified 566-page report warns that the US government and the military lack effective tools for countering the non-kinetic warfare methods, and notes that US military academies do not teach future military leaders about the Chinese use of unconventional warfare"

"According to the final Pentagon report, China’s use of Three Warfares is based on the notion that the modern information age has rendered nuclear weapons unusable and conventional conflict too problematic for achieving political goals. China’s goals are to acquire resources, influence, and territory and to project national will."
PressTV - Inside China’s secret three-front war vs. the US

The report suggests that kinetic warfare is a thing of the past. That is fine with me. Economic competition demands efficiency. War has to bring gains of some sort if it is done for economic reasons rather than ideology. Blowing things up doesn't bring gains.
$2 billion long range bombers and $ 35 million fighter jets just don't make economic sense.
We now have 3D printed drones. Another thing that will shape the battlefield will be energy. We can't waste huge amounts of energy fighting wars. Europe is running out fast. Cameron? said that Britain needs to start fracking by the end of the year. They are desperate.
Death Cross For European Energy