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Toggle? Interesting, do you speak Japanese? Nice videos of the silk road, Thanks.
Toggle? Interesting, do you speak Japanese? Nice videos of the silk road, Thanks.
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Earnings, international trade, FED confidence
Nope, don't speak Japanese. Toggle???
The crash of Main Street has moved up the ladder. The big corporations just don't have earnings. The age of the torporation | The Economist
Discretionary spending is crashing and bring down international business and shipping. ",,,freight rates to levels that barely cover fuel costs. They are hovering around $300 a container on the main Asia-to-Europe trade loop, well below the $1,300-a-container average that ship operators say they need to break even in the long term."
Canary On The Containership—Maersk Profit Warning Bodes Ill For World Trade | David Stockman's Contra Corner
"Maersk Chief Executive Nils Andersen said the average rate per 40-foot container across all ocean routes in the third quarter had fallen by more than $500 compared with the year-earlier period."
Don't worry, the green shoots are soon to sprout up.
She'll be right very soon, mate. ",,central bankers persist in expressing their own confidence and, if you read or listen closely enough, great disdain for free markets they deem unworthy as if nothing more than unchained emotion. In the context of 2008, as the current FOMC tells it, the markets got all worked up over nothing much and should have instead simply enjoyed the blind faith in the Fed to have fixed it all without the fuss and bother."
"There is a fatal fallacy at the heart of this philosophy, one in which has blinded these economists as they marvel at their own assumed powers."
http://www.alhambrapartners.com/2015...ina-as-brazil/
DON'T WORRY !! The FED has it all under control; "Bernanke and Obama Ended The Rule of Law and Made Fraud The Centerpiece of US Finance "
Bernanke and Obama Ended The Rule of Law and Made Fraud The Centerpiece of US Finance - The Wall Street Examiner
Re: gold. "I'm not predicting a new world war. But I note that the global debt market now has about $225 trillion outstanding while equities total about $75 trillion. So, we have about $300 trillion in financial claims against a global GDP of about $75 trillion. How is that going to work out? Lots of people are going to lose value. Meanwhile, there is about $7 trillion in above-ground gold to back these claims, which are really liabilities, not assets. - See more at: The Daily Bell - Rudi Fronk: All That Glitters With Seabridge Is Gold
International trade is not going to revive if there is no discretionary spending. Trade groups have already observed that expected holiday spending is not happening. The shipping industry is spending tons of money on new ships. How can they rationally expect commerce to revive? How can so many millions of people participate in global commerce and not foresee the global mean wage? All the global trade agreements kill protectionism and ensure cross-border equality of LOW wages. Was this not obvious from the beginning?
As corporations lose profitability, they try to cut overhead. They bring in more automation. They merge and cut back. 1/3 of the containers that leave the port of Los Angeles are empty. Can they not see the fundamental reason?
Mergers and trade agreements are strategies for efficiencies that are demanded by falling profits. These efficiencies result in less demand for labor. Aggregate wages keep falling. There is no cure for efficiency.Comment
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Drop in living standards,,,, Russian leverage
About 150,000 Americans wish to join the labor force for the first time every month. Half of millennials are living in their parent's basement. Wages just aren't there.
"Total US housing starts peaked in 1972." Just after we went off the gold standard and money printing really took off.
"The recovery in total starts since 2010 has regained less than the post 1972 average." "There is no single family housing market. It has recovered only to 1982 recession levels."
Here Are Three Observations on Housing That Show There’s No Way Out | David Stockman's Contra Corner
Here is a graph of U.S. economic growth expectations. Each fall is graphed and each fall is closer to vertical than the previous. http://www.zerohedge.com/sites/defau...1024_GDP_0.jpg
"To make it a little clearer, this period of economic weakness and disappointment is not just the longest on record, but it is entirely unprecedented..." The streak of money printing is the greatest on record also. US Economic Data Has Never Been This Weak For This Long | Zero Hedge
"Here’s one of the things I learned: Russia is completely unafraid of a default on its debt." " you just have to ask one question: Who holds the majority of the debt that would be at risk in a Russian default? Not China. Not Iran. Not Syria. No, it’s the exact same nations, and banks and funds within those nations, that are applying the sanctions against Russia." "The market is assuming that Putin will play by the western bankers’ rules; therefore there is no fear that the Russians might default on their debt."
"in a few words, if Putin believes that the benefits of a default outweigh the consequences to his country, he won’t hesitate to do it, no matter the international ruckus it might raise."
Why A Russian Default is a Very Real Scenario in 2016 | David Stockman's Contra Corner
GOV has been propping up stocks BUT, it can't really prop up consumption and earnings. The short sellers are starting to smell blood in the water and they are looking for bloated carcasses. Short Sellers Lower Boom on Wall-Street Hype, Big Pharma | Wolf Street
Kyle Bass is searching for any pharma company that might have *****s in it's armor.
The price of a house must be relative to the wages in the same area. As wages slide, the price of a house must also slide. House size doubled since WW II. It will revert to a size commensurate with our new-found wage structure. Housing starts won't recover until zoning is changed to allow "tiny" houses.
We are essentially at wart with china and Russia. NOBODY wants to see it morph into a kinetic war. It would quickly end all life on earth. Cyber and economic war will grow and escalate. Either Russia or China could pull the plug if they felt it necessary. At the moment, china appears very vulnerable and weak. You know what Sun Tsu said about appearing weak.
It remains to be seen who Putin will listen to.
https://www.youtube.com/watch?v=4W85OnL4xtYComment
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Wages falling but, deflation is mysterious
Wiki; Wage ranking;
4 United States $3,263
57 China $656
58 Mexico $609
Instant capital transfer and super-cheap transportation have greatly facilitated globalization. Most commodities are close to the same price worldwide. Why should wages be resistant to these same forces?
Gallup; "WASHINGTON, D.C. -- The median annual household income worldwide is $9,733, and the median per-capita household income is $2,920, according to new Gallup metrics. Vast differences between more economically developed countries and those with developing or transitional economies illustrate how dramatically spending power varies worldwide. Median per-capita incomes in the top 10 wealthiest populations are more than 50 times those in the 10 poorest populations, all of which are in sub-Saharan Africa."
ILO News
"Global wage growth stagnates, lags behind pre-crisis rates"
Chart&video
"ILO expert shows how productivity growth outstrips wage growth "
Global Wage Report 2014/15
There is NOTHING mysterious about falling wages in the high-wage states.
Deflation;
"However, not many have given much consideration to one economic factor that has the potential to disrupt global economies, shut down economic activities, and become a catalyst for a worldwide depression. We are talking about 'deflation' that if not tamed, could bring global economies to their knees creating a worldwide chaos never seen before in scale or length. "
The Global Depression and Deflation Is Currently Underway! | CNA Finance
" The proper lesson is that monetary easing is only reliably beneficial for the market when investors are risk-seeking, but may provide no support at all for the market when investors are risk-averse" This is why Armstrong's "confidence" model is so very important. Hussman Funds — Weekly Market Comment: How Market Cycles Are Completed — October 26, 2015
"This table shows that the federal debt has remained unchanged since February, when the $18.15 trillion debt limit was first hit. Yet, since then the federal government has incurred a cumulative deficit of $215 billion. This means that the government has spent all its available cash balances as well as the cash in pension funds that it has raided, which illustrates how broke the U.S. government really is. The U.S. government will run out of money in a few days if the debt limit is not increased, allowing it to borrow more money." We’re Witnessing Unprecedented Madness As Central Banks Frantic & U.S. On The Edge Of A Precipice | King World News
FED GOV froze the numbers back in February. They didn't stop spending. They just froze the cash register tape.
"On top of that, the world economy is turning down in every region of the world" By strange coincidence,,, so are wages. Global Economy On The Verge Of Collapse As It Turns Down In An Already Bankrupt World | King World News
ALL GOV is socialist because all GOV does redistribution.
"Centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly." -- Fifth plank of the Communist Manifesto, 1848 - See more at: http://batr.org/forbidden/102715.htm....itjmKQID.dpuf
Overstock.com; "This Major Internet Company Has Stockpiled Three Months of Food and $10 Million In Gold For Their Employees: “We Don’t Trust Wall Street” http://www.activistpost.com/2015/10/...ll-street.html
They have the right idea BUT, they won't need to deploy these reserves unless things get REALLY bad. If they get that bad, the supply chains will have broken down. The universal need is food and the universal "coin" is diesel fuel. Try giving gold to a farmer when his tractor is out of diesel.
Last up, Veterans Today; http://www.veteranstoday.com/2015/10...against-assad/Comment
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Keynesian tue believers
Goldman Sachs seem to have taken on quite a bit of risk; ", Goldman Sachs Bank USA had $78 billion in deposits, and – wait for it – $45.7 trillion in notional amount of derivatives. (Notional means face amount of derivatives.) According to the OCC report, Goldman Sachs Bank USA’s notional derivatives are an eye-popping 563 percent of its risk-based capital. "
http://www.zerohedge.com/news/2015-1...et-any-crazier
International trade is crashing so,,, international lending is crashing,,, no surprise. https://agenda.weforum.org/2015/10/w...-bank-lending/
Keynesian BS never seems to die out or get trashed.
"Paul Krugman's suggestions for Japan to escape its third recession since 2012. He recently avowed that Japan needs much more aggressive fiscal and monetary stimulus to escape its "liquidity trap" and "too-low" rate of inflation."
"However, his spurious argument overlooks that the Bank of Japan is already printing 80 trillion yen each year, its Federal Debt is spiraling north of 250% of GDP, and the annual deficits are currently 8% of GDP."
"Here it is in his own words: "What Japan needs (and the rest of us may well be following the same path) is really aggressive policy, using fiscal and monetary policy to boost inflation, and setting the target high enough that it's sustainable."
Fed Headed into Inflation Overdrive | Michael Pento | Safehaven.com
The morons seem to think that; if you print enough money, jobs will come back. Outsourcing doesn't matter. The demographic crash doesn't matter. Automation doesn't matter. Japan has the highest number of robots per capita. Print more debt notes and everything will be fine.
WTF does he mean by "sustainable"? NO economic system is sustainable if wages have crashed.
10/27 Bank of Japan stepping up bond buying pace – Bloomberg It has never worked in the long run so,,, keep doing it.
10/27 Euro zone inflation could stay low for months: Bank of Italy official – NewsAsia It could stay low for years.
10/27 Weak U.S. business spending plans point to slower economic growth – Yahoo! AND, a companion headline. How Can Yahoo Be Worth Less Than Zero? - Bloomberg View
10/27 Explosion of China shopping centers for a declining shopping population – Economica This might have something to do with the "one child" policy.
10/27 Baby Boomers hugely underestimate what they need for retirement – Wall St. Journal Maybe that is because GOV told them that it would take care of everything,,, SPEND everything you have.
This doesn't help; 10/26 Someone is spending your pension money – Mauldin Economics
10/27 Britain's economic recovery loses steam – Reuters It NEVER had any steam, ONLY hot air.Comment
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Credit growth stifles the productive economy
"Those who predicted inflation and those who predicted deflation will both get to be right. This will be an “equal-opportunity disaster.”
https://www.sprottmoney.com/blog/def...ff-thomas.html
"They are united in a state of indebtedness to the tune of $11.86 trillion worth of mortgages, credit card bills, consumer debt and student loans." (Americans).
Our United States of Indebtedness |
"The OECD tracked the 50-year spike in financialization and found that credit floated “by banks and other intermediaries to households and businesses has grown three times as fast as economic activity.”
Yes, three times.
Not coincidentally, that’s the ratio of all the debt in the world relative to the world’s total GDP. The McKinsey Global Institute found that total global debt hit a mindboggling $199 trillion in 2014. That’s up $57 trillion since the crash."
"The report’s authors warn that further expansion of credit “is likely to slow rather than boost growth.”
According to the OECD, more credit equals less growth. It’s worth repeating because lackluster growth has bedeviled central bankers since the crash of 2008, even as the rising stock market has exceeded Wall Street’s loftiest dreams of avarice."
The FED thinks that they know what is going on. oftwominds-Charles Hugh Smith: The Federal Reserve: Illusion of Understanding, Illusion of Control
Ellen brown says, Stiff the FED. ?Running Out of Money?. The US Government On the Brink of Default. How Obama Could Beat the Debt Ceiling | Global Research - Centre for Research on Globalization
We have passed peak credit and we're sinking fast. Everything's Deflating And Nobody Seems To Notice - The Automatic Earth
So nothing new today.Comment
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Falling population = failing economy
Keynesian economics is the preferred system by GOV. It directs the most power to GOV. They like that.
BUT, Keynesian economics demands sequential expansion of everything.
Many of the young in Japan live in tiny rooms at the internet cafe's. The young in Japan have given up on sex and partners and family. The population is crashing. The leaders can't seem to figure out why Japan is in the doldrums economically. The numbers show that; if you have a falling core population, there is no chance of prosperity. Hambone's stuff: Economics=Art Of Deception Vs. Demographics=Simple (Yet Ugly) Reality
Repost; Forget Peak Oil - It's All About Peak Population Growth | Seeking Alpha
China has rescinded the one-child rule because they face a demographic crash.
Europe has a falling population. They won't save themselves by bringing in the shiftless ignorati. 50% of the non-European immigrants in Sweden are on the dole. How is that supposed to help?
Russia gives you a medal if you have 6 kids.Comment
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Steal from the working man to keep him working
Once again, I'm trying to pull together ideas and info to form a "construct". A particular view / interpretation of the world.
Keynes was a very smart guy. In the peace conference at Versailles after WW I, he told them that they were setting up for the next war by making the settlement so punitive.
Keynes also said that; after about 9 or 10 decades, the world would have so much accumulated wealth, that we could stop working. Churchill said, " WW II could have been avoided but, the bankers wanted it". After the war, many currencies went to zero. There are many claims that all wars are banker wars. WHY?
Reportedly, WW I started over the killing of an archduke. Who cares about one archduke? We have seen an endless chain of false-flag attacks to start wars. From the sinking of the Maine in Havana harbor to claimed poison gas attacks in the middle-East. Fortunately, not all attempts to start a war are successful.
This Heroic Captain Defied His Orders and Stopped America From Starting World War III
With every war comes enormous destruction of wealth. Keynes' 8 or 9 decades is upon us. There is enormous wealth worldwide. True, it is concentrated in a small number of people. Since we have little tangible wealth, we have to be satisfied with paper and electronic "proof" of our wealth.
Californians have been over-taxed by something close to $7 trillion and Cal GOV accounts hold about $ 8 trillion. Californians’ $8 trillion in tax surpluses: What to ask your state, local representatives Washington's Blog
The financial reports from GOV show a total of about $ 60 trillion. CAFR1 Home Page
The major income for GOV is for earnings, NOT from taxes. The Grace Report under Reagan reported that GOV doesn't receive one dime of taxes. The FED takes it all in. Walter Burien at Cafr 1 clearly shows that GOV only shows it's liabilities, not it's assets. WHY?
The wealth accumulation that Keynes foretold is around us. It gets smashed back by regularly planned wars. So, we have to keep working to replace destroyed wealth. The G-20 represents the 20 wealthiest developed countries. the G-20 just adopted bail-in laws where banks would be made whole in the event of a crash. The money would be taken from bondholders, stockholders and depositors.
The banks have created a pile of obligations / derivatives with a notional vale of $ 1---1.5 quadrillion. Should they fail, the amount is adequate to suck in all wealth from investors and depositors. Should this happen, we will all have to work much harder to replace the lost wealth.
This is all electronic wealth and will be gone when THE BANKERS SAY THAT IT IS GONE.
Economic warfare and cyber warfare have replaced kinetic warfare. They aren't near as destructive as the good old days of dropping millions of tons of bombs. Wealth destruction is much more difficult than it was in the good old days.
The Central banks have blown an ENORMOUS bubble. It will make an enormous mess when it collapses. There will be a huge amount of wealth destruction / loss. You will lose just as much as the banks say you lost.
Keynes said that there will be so much wealth accumulated that we could stop WORKING. The bankers repeatedly vaporize wealth and we have to keep WORKING. The pile of wealth has grown so huge that it is ever more difficult to vaporize it. The synthetic pile of derivatives had to be grown so monstrous that it could devour the entire pile of wealth.
"All wars are banker wars" should be changed to Bankers regularly and sequentially destroy wealth to keep us working. When money was paper, the bankers had to destroy currencies to make the paper money worthless. Now that it is digital, they just have to tell you that all your money is gone. There is no possible way for you to argue.
This confiscation is not so much to take your wealth. It is more focused on forcing everybody to keep working. The Rothchilds may have a net worth of a gazillion dollars. That isn't the point. The point is that you are poor and have to keep working.
You had to do REAL work to produce real earnings to give to GOV. From that point on, the money becomes more and more of a phantom. The same is true at the bank. Your deposit becomes an unsecured loan to the bank and part of their operating capital. It is just a ghost blowing in the financial winds.
GOV/Banks constantly steal the fruits of your labor so that you keep working. As automation takes over more and more of productivity, there are fewer and fewer people who are actually working. GOV/bankers induce poverty to keep us working. The poverty is still here but, the employment is not. At one time GOV could create enough make-work jobs and wars to keep people productive but this paradigm is falling apart.Comment
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Another serving of HOPE all around the world
There are a few interesting headlines.
• It Is Already Too Late To Scrap China’s One-Child Policy (AEP)
10/29 Short of workers and consumers, China abandons one-child policy – Bloomberg
• China Steel Industry Outlook ‘Worst Ever Amid Unprecedented Losses’ (Zero Hedge)
BUT, don't worry.
• Li Floats New China Five-Year Growth Minimum of Around 6.5% (Bloomberg)
Like Japan, they expect to have a growing economy with falling consumption.
• Bank of Japan Keeps QE On Hold As It Hopes For Recovery (Reuters) HOPE, that is a good strategy when nothing else works.
Here is a good article talking about price inflation & price deflation AND money supply inflation & money supply deflation. Funny, they never mention wages. http://www.zerohedge.com/news/2015-1...-us-all-poorer
The monetary world is so caught up in all the zeros flying around like a swarm of flies. They don't seem to see a connection between wages and wealth. They are starting to sniff a bit of truth.
10/29 Deutsche Bank to shrink workforce by 35,000 in broad revamp – Wall Street JournalComment
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Institutional blindness and the approaching third world status
Craziness all around.
"But here’s the thing – while the Republican candidates were warning about the nation-ending threat posed by the allegedly out-of-control debt, they were also pushing tax proposals that would (pause for effect) dramatically increase the debt."
"This is a common feature of most of the 2016 GOP candidates’ tax plans – they call for massive tax cuts on top earners, and they would (according to conservative estimates) cost more than $1 trillion dollars over the next decade, with some soaring as high as $10 trillion. And that’s just the cost of the tax cuts. Most of the candidates also want to dramatically increase defense spending from its current levels while also pursuing a balanced budget amendment to the Constitution. That means they want to decrease the debt while cutting taxes for the wealthy and increasing military spending while balancing the budget. The only way this math could conceivably work is if you put in place deep, ruinous cuts to entitlement programs and the social safety net – something no one endorsed on stage last night because it would be political suicide. None of this works, none of it makes sense, and yet it’s the position of pretty much every candidate for the Republican nomination.
There is an irreconcilable tension between the apocalyptic warning about the national debt and the candidates’ debt-exacerbating policies. By their own logic, the Republican candidates for president are hastening the demise of the United States of America."
Inviting the debt apocalypse: GOP candidates freak out about the debt, and plan to make it worse - Salon.com
Tax cuts for corporations and the wealthy do NOT translate into more jobs. The freed-up capital is invested into enterprise in low-wage States.
Paul Craig Roberts
On January 6, 2004, Senator Charles Schumer and I challenged the erroneous idea that jobs offshoring was free trade in a New York Times op-ed. Our article so astounded economists that within a few days Schumer and I were summoned to a Brookings Institution conference in Washington, DC, to explain our heresy. In the nationally televised conference, I declared that the consequence of jobs offshoring would be that the US would be a Third World country in 20 years.
That was 11 years ago, and the US is on course to descend to Third World status before the remaining nine years of my prediction have expired.
US On Road To Third World -- Paul Craig Roberts - PaulCraigRoberts.org
Why should all those economists be astounded? The low bidder gets the job/contract. Unlimited capital flows will follow the best return. Ultra-cheap shipping ensures that distance from markets is not a big problem. I'm sure that this is part of "Economics 101". Why isn't it translated into a modus operandi for all levels of the economy?
It's obvious that we are in contraction from market forces. Regulatory changes have sped things up but, the changes would have happened eventually.Comment
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Clinging to Lord Keynes as the ship goes down
Armstrong said that confidence in GOV would go away. Greenspan said that the FED is NOT independent. The FED has always pretended that it is part of GOV. The FED has been loaded up with quite a bit of debt.
"Running a zero-interest-rate policy is an extreme measure that central banks rarely use. It is reserved for dire economic emergencies, and then promptly reversed soon after. Indeed upon panicking into ZIRP, Fed officials promised that highly-distorting condition would be temporary. Yet here we are, 6.9 years later, and ZIRP is still in place! The Fed has lacked the courage to normalize its extreme stock-panic policies."
It's not a question of courage. The economy WILL collapse with normal (5%) rates.
2008's critical presidential elections were held in early November just a week after the US stock markets had lost nearly a third of their value in a single month. Scared Americans desperately wanted something to change.
Yep, we got hope and change. NOBODY wanted to be told that their standard of living was going down.
Since 1900, the fate of the US stock markets in the Septembers and Octobers before early-November elections has predicted the winner 26 out of 29 times. This is a 90% success rate! In 10 of the 12 times the stock markets fell in those final 2 months, the incumbent party lost.
For 50 years prior to that once-in-a-century stock panic, federal deficits averaged 2.0% of GDP.
Deficits under Obama skyrocketed to a crazy record 9.8% of GDP in 2009 per the latest data from the US Treasury and Federal Reserve! Their average level during the Obama years was 6.1% of GDP, which is more than triple the half-century precedent!
Party on !
Fed's US Debt Bomb | Adam Hamilton | Safehaven.com
The FED did just what the GOV wanted it to do. Maybe somebody held a gun to their heads.
This Democratic-led Fed isn't going to embark on a meaningful rate-hike cycle if it forces its government master into serious jeopardy. The dire realty of this situation likely means lower rates for longer.
ZIRP destroys capital. Evidently, were going to have ZIRP until after the election.
The 1973-75 recession was itself severe and protracted, but what followed was such a malignancy of financial conditions that it, by only 1980, had convinced a bipartisan Washington establishment to completely abandon Keynesianism and its New Age versions of soft central planning.
Bernanke’s Fed has done far worse, though the restored Keynesianism combined with monetarism (as if they were ever all that different) remains not just dominant but without any consideration whatsoever toward reform.
GDP Report Is Now Only About Tallying The Ongoing Cost | David Stockman's Contra CornerComment
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Revolution,,, the deflator
The ultimate "wipeout" for a State is revolution. Portugal is close to that. Portugal risks becoming 'ungovernable' as conservative government set to collapse after just 11 days - Telegraph
In Spain, most of the money is in Catalonia. They want to secede and Madrid says that that action would be "illegal". If this action was arrived at by a democratic vote, how can it be illegal?
Every time that U.S. treasuries get dumped, gold rises; Video: The Great U.S. Treasury Dump of 2015: "This decline is the most on record since the data started" | The Daily Sheeple
In the mid-80s, gold shot way up. Volker raised interest rates to about 23% to take the shine out of gold. Could you imagine Yellen raising interest rates now?
Socialism always breaks the bank by legislating against profit. Nobody will build or invest.
" Boston, San Francisco, New York, and Detroit are consistently ranked among the top 10 most liberal cities in America, and they are also ranked in the top 10 cities with the worst wealth inequality.
So why is this? It’s probably because of all the regulations that leftists impose on the housing market. Zoning laws, height limits, historical preservation efforts, environmental laws, and even rent control, all work to limit the construction of new homes, as well as the availability of existing homes."
"Ultimately, this situation serves as a perfect example of what happens when a community only acts with the best intentions, and doesn’t think about the possible consequences. Every time you try to place an arbitrary restriction on the free market, it has the potential to hurt everyone."
Why the Most Liberal Cities Have the Worst Wealth Inequality | The Daily Sheeple
Government action without thinking of the consequences,,, NO, couldn't happen.
GOV is trying to maintain confidence because it is so very important. This graph shows employment crashing, http://www.acting-man.com/blog/media...wmc151026a.png
FOMC: One Month in a Submarine with a Defect Radio |
GOV says other wise, "Economists currently expect next Friday's nonfarm payrolls report to show a gain of 180,000 for October, which despite being below trend would indicate an improvement from September's 142,000 gain. "
"average earnings data, which last month actually edged lower " So, employment is up and earnings are down. http://www.cnbc.com/2015/10/30/janet...-bad-news.html
Using the "deflator" to make GDP look good; Reported “real” GDP was greatly helped by the GDP deflator once again declining sharply, coming in a full percentage point lower than in the second quarter (1.2% instead of 2.2%). Perceptive readers have probably noticed this pattern already: weak GDP numbers always tend to coincide with outsized declines in the deflator.
http://davidstockmanscontracorner.com/the-gdp-illusion/Comment
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Falling population..... falling economy
There is a (slightly) growing appreciation that some unknown factor is affecting the economy in a negative manner.
"I see this as more of a warning, a red flag that there's something going on here that isn't in the models, that we maybe don't understand as well as we think, and we should dig down deep deeper and try to figure this out better," said San Francisco Federal Reserve President John Williams on Friday pointing out that low neutral interest rates are a warning sign of possible changes in the U.S. economy that the central bank does not fully understand."
http://www.zerohedge.com/news/2015-1...ont-understand
Wiki: "The total fertility rate in the United States estimated for 2014 is 1.86 children per woman,[6][7] which is below the replacement fertility rate of approximately 2.1. "
Leaving the southern border wide open has raised the population quite a bit. Wiki: "Hispanic and Latino Americans accounted for 48% of the national population growth of 2.9 million between July 1, 2005, and July 1, 2006.[18] Immigrants and their U.S.-born descendants are expected to provide most of the U.S. population gains in the decades ahead.[19]"
The core population,,, 15---64 year old do most of the consumption and production. That population is falling in America and many other countries. Population ages 15-64 (% of total) | Data | Table
"Moreover, the poor, highly fertile countries that once churned out immigrants by the boatload are now experiencing birthrate declines of their own. From 1960 to 2009, Mexico’s fertility rate tumbled from 7.3 live births per woman to 2.4, India’s dropped from six to 2.5, and Brazil’s fell from 6.15 to 1.9"
World population may actually start declining, not exploding.
STRANGE coincidence; Greece and Brazil are falling and,,,, their economies are crashing. Japan is the poster child for falling birth rate and an economy that can't reach escape velocity no matter how money they print.
http://www.zerohedge.com/news/2015-1...ime-ecb-admits
62% in America are in the core population group. That means that the remaining are doing much less producing than consuming. Somebody has to pay for supporting them. The burden is growing.
"There are more than 430,000 elderly people living in care homes in the UK, and the sector employs 1.4 million people."
"Chai Patel, chairman of HC-One, which rescued almost 250 care homes from Southern Cross, warned that the industry faces a “perfect storm” and needs “significant help”. The healthcare tycoon said that industry research, which has been handed to the government, shows that half of the country’s care homes are facing collapse."
“We reckon that 50% of homes are non-viable if you allow for capital expenditure and the rent on property,” he said. “Once the living wage comes in, 50% of beds will go bust.”"
Crisis in UK care homes set to ‘dwarf the steel industry’s problems’ | Business | The GuardianComment
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Too much money printing = mal-investment
With globalism, commodities move towards the same price worldwide. The cheaper the transportation, the more equal the prices. Globalism also pushes wages towards a global mean. Same with immigration. People try to move to the higher wage areas. Now, bonds are reflecting the same pressures.
"In the past week alone, yields on about $500 billion of the bonds fell below zero," "Appetite for safe assets is so strong in Europe that about 30 percent of the $6.3 trillion of sovereign bonds in the euro area have negative yields,"
Bonds Send Same Ominous Signs No Matter Where in World You Look - Bloomberg Business
Wages in developed States are contracting. Purchasing power is contracting. The price of money is contracting. (interest).
The CBs printed up tons of pixels and pushed them into the financial sector. This happened at the same time that consumption was falling because people were debt saturated. Lacking any viable investments, the money flowed into mal-investment.
The surplus steel capacity in China is equal to the total steel capacity of Europe and America. Mal-investment as far as the eye can see. Not surprisingly, these loans are failing. The rate of non-performing loans is rising dramatically around the world. The CBs can create new money but, They can't control where it goes. The NPLs are wiping out the banks.
People fly to GOV debt because it is safe. GOV has eventually defaulted on it's debt 100% of the time. Given enough time and a crappy education system, people seem to forget this fact. Money Is Also Perishable – Debasement & Devaluation Easier Than Taxing or Defaulting | Armstrong EconomicsComment
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Iceland, money creation and Ellen brown
It has been forever argued that the Central Bank that is empowered to create money must be independent from the Government. ALL democracies eventually crash when the people figure out that they can just print up all the money they want. The CB must be independent. That sounds real good on paper but, the CB does NOT create most of the money. If the [people] can't be trusted to use good judgement when given the power to create new money, how can anybody expect the bankers to use good judgement when creating new money?
In recent years, money creation has grown at 3 times the rate that the GDP has grown. The bankers live and breathe money every day. How can they be expected to exercise self-control? Previously, gold was the monetary governor that limited rampant money creation. Power invariably corrupts so, you can expect the corrupt leaders to shuffle off any limiting factor,,, until it all blows up.
The U.S. constitution limited money creation strictly to GOV. This worked for quite a while. Even when the FED was first created, it's charter was VERY good. It was to be the lender of last resort only in emergencies and only for good collateral. By 1920, Benjamin Strong had starting chipping away at the restrictions. 9 years later, it all blew up. Various banking acts over the years allowed unlimited expansion.
There is nothing wrong with fiat money as long as it isn't over-issued. This calls for very good supervision and transparency. The FED is anything but transparent.
The Bank of North Dakota is a GOV run bank that is VERY well supervised. The CAFR reports for California show assets of $ 8 trillion. This is deposited in private banks. In ND, all GOV money is deposited in the State bank. The ND bank is more profitable than the big Wall Street banks. They don't make foolish loans and they didn't suffer in the '08 crash. They actually loan deposits rather than creating new money.
The earning power of Americans has crashed but, the current banking system is unable to shrink. They just grow the money supply regardless of whether or not new loans are created..
"The banks deemed too big are more than 30% bigger than before the Act was passed in 2010, and 80% bigger than before the banking crisis of 2008. The six largest US financial institutions now have assets of some $10 trillion, amounting to almost 60% of GDP; and they control nearly 50% of all bank deposits."
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Enter Iceland;
"Iceland's government is considering a revolutionary monetary proposal - removing the power of commercial banks to create money and handing it to the central bank. "
" According to a study by four central bankers, the country has had "over 20 instances of financial crises of different types" since 1875, with "six serious multiple financial crisis episodes occurring every 15 years on average".
Mr Sigurjonsson said the problem each time arose from ballooning credit during a strong economic cycle. "
Yep, when the economy looks good, the bankers run with the bit in their teeth.
" Under the so-called Sovereign Money proposal, the country's central bank would become the only creator of money.
"Crucially, the power to create money is kept separate from the power to decide how that new money is used," Mr Sigurjonsson wrote in the proposal. "
Iceland looks at ending boom and bust with radical money plan - Telegraph
Ellen Brown has written tirelessly about this same subject. If Iceland can make this work, it will be a great example for the world.
Why do We Allow Private Banks & Families to Control the World?s Money? : Waking TimesComment
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