Economic pressures

[Danny B]

Cash pulled out,,, debt created to cover the hole

Canada is a resource economy and resources are crashing. Consequently, the money is leaving Canada. Forget China: This Extremely "Developed" Country Just Suffered Its Biggest Money Outflow Ever | Zero Hedge
Stockman says to end the FED's money creation ability. Seems strange because private banks create most of the money. End The Fed’s Money Monopoly–The Only Escape From Monetary Central Planning & The Wall Street Casino | David Stockman's Contra Corner
China seems to be losing control. "Did Something Just Snap In China: Total SOE Debt Rises By $1 Trillion In One Month"
Did Something Just Snap In China: Total SOE Debt Rises By $1 Trillion In One Month | Zero Hedge
"Every year, China is now adding $2.5 trillion of private sector debt to a $9.7 trillion GDP." Why does that sound like a BAD idea? China's "Minsky Moment" Is Here, Morgan Stanley Finds | Zero Hedge
The banking industry just gets more and more concentrated in fewer hands. Considering just how big it has gotten, the meltdown / explosion will probably be heard on Pluto. https://hendersonlefthook.wordpress....en-of-banking/

[wayne.ct]

Centralized Banking, etc.

If you care to examine what is going on along with the hows and whys, perhaps you will see what I see. There seems to be a pendulum or wave phenomenon in which power becomes centralized on the one hand and then swings back toward a decentralized paradigm over time and in various contexts.

In the recent past the US Dollar formed a 'centralized' common reference point in the global economy, not just in the US. Even though individual countries had their "own" currencies and individual banks had their own depositors, creditors and stockholders, etc, there was this "central" factor. This was, of course, the reserve currency, the USD.

The pendulum is swinging the other way. The central planners are resisting this with counter force. I think this is more than a mere change from one reserve currency to another. I think we are headed for economic hard times.

Now, regarding Iceland, the article about Iceland says they are putting the money printing authority in the hands of a central bank. Really? I guess they have not really learned anything. Or, perhaps, the central banker types have been hard at work behind the scenes to get what they really want and have deceived the people of Iceland, again.

There really is, in my view, a psychology to this and until more people understand this stuff, they will continue to get manipulated and controlled by powerful people with their own selfish interests.

[Danny B]

Falling wages,,, falling economy

After WW II, America built a high-wage, high-price economy by having a lock on manufacturing. By about 1970, we lost that lock and it has been a downhill slide ever since then. It stands to reason. We are in a transition period where we still have high prices even though aggregate labor income has crashed through the basement.
#17 There are 7.9 million working age Americans that are “officially unemployed” right now and another 94.7 million working age Americans that are considered to be “not in the labor force”. When you add those two numbers together, you get a grand total of 102.6 million working age Americans that do not have a job right now.
21 Facts About The Explosive Growth Of Poverty In America That Will Blow Your Mind
#16 There are simply not enough good jobs to go around anymore. It may be hard to believe, but 51 percent of all American workers make less than $30,000 a year.
So, 102.6 million not working. 10,000 people sign up for social security every day. So, not working,, not earning.
American industry was thrown into global competition.
Aluminum; When a 127-Year-Old U.S. Industry Collapses Under China's Weight - Bloomberg Business
Steel; https://www.washingtonpost.com/news/...ree-heres-why/
Oil; It's a gusher! Oil industry layoffs hit 6-month high: report - NY Daily News

America has crashed badly with globalism. The financial sector has tried to soldier on by printing lots of money. It would like to remain independent and detached from the pain of the working man. BUT, a 4 decade slide in wages is dragging down Wall St. Globalism chipped away at wages / purchasing power. Manufacturers had to get more efficient to deal with our falling wages. They did more outsourcing to lower the cost of their goods. This, of course, is a downward spiral. They resorted to ever-more mergers and trade agreements for more efficiency to try to meet our shrinking wages.
As industry, especially banking finds it ever-more difficult to make a profit, they exert ever-more control over GOV to get more favorable deals. The latest trade deals would gut all GOV regulation. We're sliding towards a global-mean wage and industry just can't make a profit no matter how many robots they buy. They take ever-more control of GOV as we slide into fascism. Big Pharma, especially, has BIG profits mandated by law. WE can't pay for their high-priced medicines so, GOV mandates that we must join up. We still can't pay so, GOV pays in our names and expects to charge it off to our children. Our children are not working.
Lacking their former levels of profit ( because we are lacking our former wages), industry (especially banking) pushed even harder for more State control of our wallets.
Jim Willie: Fascism & Gold | SilverDoctors.com
51% of Americans receive a check from GOV so, it's going to be difficult for us to Support both GOV and industry with our new-found poverty.
Oil used to be a guaranteed source of money for GOV, but, it has reversed and Big Oil is losing $ billions.
War industries used to be big money-makers but, things haven't gone so well lately. "In May 2003 Congressman Henry Waxman (D-CA) discovered that Halliburton subsidiary KBR had received a $425 million contract to rebuild Iraq in December 2001, a full year and a half before the war had even started. "
"All told Halliburton had received over $7 billion worth of contracts and the job of putting Iraq back together had barely even begun."
https://hendersonlefthook.wordpress....anking-on-war/ Raping a country for it's resources makes good business sense so, we do it a lot. That's over with now.

Russia has been super-effective in Syria. This has re-energised the Syrian army. China wants a piece of the action because they see it as a turkey shoot. They have plans in the MENA. With that much muscle in Syria, Iranian planes are bring in a volunteer battalion from Iraq. Hezbollah is happy to do the ground work and spare Russia the casualties. ISIS is getting their butts kicked so bad, they can't even use the weapons we send; https://www.youtube.com/watch?v=YwCKsPzanbg
Russia is going to blockade the coast, China will help. http://www.veteranstoday.com/2015/10...-syrian-coast/
Russia has brought in lots of missiles for hostile aircraft. There is WAY too much firepower in Syria for the Pentagram to even consider setting foot inside. The war-mongers are rabid. https://www.youtube.com/watch?v=mC7Fz0d9H8M
This decline contributes to a decline in other areas. Lots of States are dumping U.S. bonds. Many are in the process of rejecting the U.S. dollar.
All of this will help to bring back the gold standard. Because of Triffin's dilemma, any State that has the reserve currency will always over-print and crash. There is much talk about the SDR but, I don't think that it will fly.

Manufacturing has left. Steel has left, Aluminum, going. Lead gone. Oil leaving. http://www.reuters.com/article/2015/...Vu739ppkkMs.97
We're all going to have a lot of free time.

[Danny B]

Banking,,, central banking losing credibility

" The share of households in the middle tier of income earners has fallen to 43% from 55% since the 1970s, according to The New York Times.
And those households in the middle tier haven't gotten a raise since 1999. "
As America's middle class collapses, no one is buying stuff anymore / Boing Boing
Earnings are sliding but, the banks don't want to slide with us. Through manipulation of everything under the sun (except wages), they have managed to keep going. The Central Banks are now running out of both "tools" and believers. The banks are slowly being pulled towards the black hole of insolvency. S&P Puts Too-Big-To-Fail US Banks On Ratings Downgrade Watch, Blames Fed | Zero Hedge

"Singer criticized the “obvious failure of monetary extremism” to grow the economy." You only grow the economy with more production AND more consumption. "Singer thinks these problems could reach the U.S. soon. If that happens, he’s worried about the government’s response.

They will not remain passive in the face of a renewed global recession and/or financial crisis... What policymakers will do, in all likelihood, is hope and pray, and when that fails, they will likely double down on monetary extremism."
Extremism seems to equate to money printing. The Council on Foreign Relations has called for sending everybody $ 80,000.
When the Cult of Central Banking Collapses… | Casey Research

The propaganda file;
"Due to the nature of modern money, it would technically be possible to adjust the way the monetary system works such that governments directly print all the money they need. If this change were made then there would be no requirement for the government to ever again borrow money or collect taxes. This would have an obvious benefit, because it would result in the dismantling of the massive government apparatus that has evolved to not only collect taxes but to monitor almost all financial transactions in an effort to ensure that tax collection is maximised. In other words, it would potentially result in greater freedom without the need to cut back on the ‘nanny-state services’ that so many people have come to rely on. So, why isn’t such a change under serious consideration?

The answer is that it would expose the true nature of modern money for all to see, leading to a collapse in demand for the official money."
GOV will never do anything like dismantling itself. The Hegelian dialectic calls for never ending growth of GOV until it controls everything. Communitarianism - Final Synthesis In Hegelian Dialectic
" leading to a collapse in demand for the official money" Blatant lie. The non-producers would demand even more of this free money. the producers would be a different story.
"One of the best historical examples of how taxation creates demand for money is the use of “tally sticks” in England from the 1100s through to the 1600s. In this case, essentially worthless pieces of wood were converted into valuable money by the fact that these pieces of wood could be used to pay taxes. Moreover, once taxation had created demand for the sticks, the government was able to fund itself by issuing additional sticks."
Gee whiz, this system only lasted for 500 years. What a failure. "essentially worthless pieces of wood " The sticks were notched to indicate their value as a receipt. Then the sticks were split in half lengthwise. Each person received his half of a receipt that could not be counterfeited or modified. Steven Saville Blog | Why governments can't just print the money they need | Talkmarkets
The article could have examined the pros and cons of GOV created money but, it is much easier to just spout propaganda.
We slide towards a global mean wage at the same time that we have a demographic crash. The upper loop of the economy where all the free money is circulating is in complete denial.

[Danny B]

Employment way up,,, FED hike needed

In the simplest terms, ZIRP originally helped the banks. Later, it hurt them. ZIRP hurts hedge funds and insurance funds and retirement funds. ZIRP hurts savers and anyone who depends on interest-income. ZIRP helps corporate America to a certain extent. They are taking on a LOT of debt because money is so cheap. ZIRP is now hurting the big banks and they have been down-graded. They must be REALLY bad for S&P to publicly downgrade them. To a great extent, ZIRP is locked into the system because there are hundreds of $ trillions in interest rate swaps. Corporate America is in bad shape and only 3 companies have AAA rated credit. The lack of earnings is hurting corporate America. The crash of interest-earnings-income has driven many consumers to cut way back.

The FED is NOT independent. It has no army and is under the thumb of the district of corruption. Their balance sheet is up above $ 4 trillion. They take all their orders from the kleptocrats. They print to fund runaway socialism in D.C.
Forbes Welcome
Originally, the FED collected interest on the money it created. They now reimburse this money back to Washington.
The FED is printing with a knife at their throat. ZIRP was supposed to last no longer than 6 months. The big banks have been downgraded and the FED is desperate to save them with a rate hike.
Currently, they are talking up a storm about how good employment is and the need for a December rate hike.
Employment; Goldman Sachs, "just yesterday hiked its forecast from 175K to 190K" A LOT of people see that thy are not prepared for retirement and are trying to build up savings,,, or just stay out of the poorhouse "As the chart below shows, in October the age group that accounted for virtually all total job gains was workers aged 55 and over. They added some 378K jobs in the past month, representing virtually the entire increase in payrolls. And more troubling: workers aged 25-54 actually declined by 35,000, with males in this age group tumbling by 119,000!"
" workers aged 55 and older have gained over 7.5 million jobs in the past 8 years, workers aged 55 and under, have lost a cumulative total of 4.6 million jobs."
The Most Surprising Thing About Today's Jobs Report | Zero Hedge
The FED is desperate to "spin" a good jobs report so that they have an excuse to raise rates.
11/06 'Off the charts' jobs report pushes rate hike odds 'way up' – MarketWatch RIGHT, off the charts and out of the truth zone" ADP Report Latest Sign of Cooling Job Market
"The jobs report released Wednesday doesn't bode well for Friday's official government data release." NOT to worry, GOV jimmied the numbers.
"102.6 million working age Americans that do not have a job right now." They jimmy the numbers and fools believe it. ANY excuse for a rate hike to save the banks.
11/06 Stocks and gold turn lower after big jobs beat; dollar flies – Seeking Alpha
Vid, https://www.youtube.com/watch?v=NyxyRK39N4o

[Danny B]

I've written something over 1,000 posts. My profile page; "This page has had 3,030 visits ". How many of you are spooks,, raise your hands.
This post is on the collapse of federal GOV,,, followed by the rest of GOV. I hope that the spooks take due notice that their gravy train is coming to an end.
Martin Armstrong was a professor at Princeton. He and his program, Socrates seem to have all of history at his (their) fingertips. I try to extract a few important points from my source documents and let you do the amount of reading that is necessary for complete understanding. The more that you read, (hopefully), the more corroboration, logic and understanding will come out of the exercise.
Armstrong; "The question how do empires die is absolutely critical to surviving the Sovereign Debt Crisis."
"Empires do not die by HYPERINFLATION – that is reserved for the fringe. When an empire dies, it historically has ALWAYS been by DEFLATION/STAGFLATION. How? Real wealth is driven from the ABOVEGROUND economy into the UNDERGROUND economy where it is hoarded and tucked away. This is why we find hoards of Roman coins. This reduces the VELOCITY of money and commerce collapses. This is ALWAYS AND WITHOUT EXCEPTION how empires die. "
HOW DO Empires Die? | Armstrong Economics
It's a long article but, you can skip much of it. It is worth reading. The important point to take away is that commerce collapses.

Armstrong; "What Destroyed Rome was its Unfunded Government Employee Pensions" http://s3.amazonaws.com/armstrongeco...ons-051811.pdf
The article has EVERY detail that you could ask for.

Kotlikoff; "$205 Trillion in Unfunded Liabilities" $205 Trillion in Unfunded Liabilities - The Daily Reckoning

Grover Cleaveland; “At times like the present, when the evils of unsound finance threaten us, the speculator may anticipate a harvest gathered from the misfortune of others, the capitalist may protect himself by hoarding or may even find profit in the fluctuations of values; but the wage earner – the first to be injured by a depreciated currency – is practically defenseless. He relies for work upon the ventures of confident and contented capital. This failing him, his condition is without alleviation, for he can neither prey on the misfortunes of others nor hoard his labour.”

Armstrong; "the two words POLITICAL ECONOMY should have been divorced the moment they met. Just as we have SEPARATION OF CHURCH AND STATE to ensure freedom of religion, we now need SEPARATION OF ECONOMICS FROM POLITICS just to survive. This is just NOT working!
"This cycle marks the peak in government as an employer and we call them PUBLIC SERVANTS because they produce nothing to expand the wealth of the nation, but live off of those who do produce like a parasite;the larger the government role in employment, the lower the economic growth. That is precisely the problem in Greece"
http://s3.amazonaws.com/armstrongeco...ots-091311.pdf
This is what happens when you put the parasite in charge.

Charles Hugh Smith, " Life Cycle of a Bureaucracy" This is an EXCELLENT read. Of Two Minds - When Collapse Is Cheaper and More Effective Than Reform
Jim Willie, "“I’m concerned about the period of time between the dollar collapse and the new system. I’m told its going to be a 4-10 month period of CHAOS…” http://www.silverdoctors.com/jim-wil...se/#more-58656

This is an excellent article on the balance between capitalism, socialism and free markets; http://economyandmarkets.com/economy...s-of-our-time/

All Governments eventually default. All GOV makes promises for the future to get votes. It always becomes too expensive. 51% of Americans receive a check from GOV. California by it's own CAFR report has extracted an extra $ 8 trillion in taxes. Georg Wilhelm Friedrich Hegel wrote that GOV should collect enough taxes so that it would gradually be able to afford to have everybody working for GOV. That way, nobody would disapprove of the high taxes. GOV would eventually absorb and control everything.
But, GOV is a parasite. The Cold War was just a jobs program. it didn't create any wealth,, just shuffled it around. GOV is just a consumer, NOT a producer.
A viable loan must be to an entity that will produce enough wealth to repay the loan. A loan taken out just for consumption can't be paid back. That is why GOV always defaults.
So, WHO IS HOLDING THE BAG?
"Martin: Absolutely nothing. And if you really look carefully, the issues that created the problem which was the derivative CDSs, they still didn’t regulate. So they regulate everything else around it, but they just don’t do whatever is right at that point in time."
"The only thing we do know is that 40% of the interest that is on our national debt goes out to foreigners. So, the old economic theories where fixed exchange rates system and all these things after World War II, it just does not exist anymore. And we really have to sit down and revise the entire world monetary system because nobody knows what they are doing."
"If you add up the interest expenditure between 1986 and 2006, you’ll see that 80% of the increase in the national debt was all interest. So, we are not getting anything for this. Forty percent of that money is going out of the country. So, it’s just astonishing to me that you can cut every program you want, but the national debt is off the table. You cannot negotiate it. You cannot – I mean, we have to create a new monetary system. We just have to do so. The debt is going to take over absolutely everything "
If you look at the amount of interest that we are paying that is leaving this country, it is far more than what we are losing in trade.

"All of the yelling and screaming that they did over the derivatives but they still did not – they still did not regulate them. They still did not stop the CDSs from being issued. They did nothing. They regulated other things, and added more agencies and more government jobs, but they actually did not do anything to prevent what was happening. And to tell you the truth the reason they will not do so is because the banks that they were looking at are primary dealers. A Primary dealer is the one that settles the government debt for them. So, they are never going to charge criminally any of those banks because they have become kind of like the financial crack dealer. They are not going to give them up."

Ah, but the primary dealers just got downgraded. All Governments eventually default. The FED is holding a HUGE part of GOV debt. The FED gave the banks something like $ 2.7 trillion in excess reserves and pays some interest on them. How bad is the situation if they have been downgraded when GOV is trying to pump up confidence? in addition to the $4 trillion that the FED claims that it is holding, it is printing of tons of pixels to rescue crashing energy hedges and derivatives. The poor get screwed but, it is the rich who are holding the bag.

[Danny B]

Tyler Durden and helicopter money

Tyler Durden at Zero Hedge is always years ahead of whatever is coming along in the financial world.
Back in early 2009, just around the time the Fed announced it would unleash QE1, we warned that any attempt to reflate the debt (a pathway which ultimately leads to hyperinflation as monetary paradrops are the only logical outcome as a result of the deflationary failure of the intermediate steps) would fail, and instead would saddle the world with even more debt, making monetary financing, i.e., paradropping money, the inevitable outcome.

We said that instead, the right move would be to liquidate the excess debt, and start anew - a step which, however, would wipe out trillions in (underwater) equity, something which the status quo would never agree to, as that is where the bulk of its wealth is contained.

7 years later, debt is well over $200 trillion, having risen by more than $60 trillion in the interim, and we are rapidly approaching the peak of the world's debt capacity as we noted a month ago in "The World Hits Its Credit Limit, And The Debt Market Is Starting To Realize That."

Today, we find that none other than Adair Turner, a member of the Bank of England's Financial Policy Committee and a Chairman of the Financial Services Authority, wrote a long essay in Bloomberg which admits everything we have warned about.
Equity value had to be preserved no matter how much employment crashed.
"More important, national incomes and living standards in many countries are 10 percent or more below where they could have been, and are likely to remain there in perpetuity. " Yep, that is what happens when you slide to a global wage at the same time that everything is automated.
"Almost any economics or finance textbook will describe how banks take money from savers and lend it to borrowers" Pure BS but, go on.
"Advanced economies' public debt on average increased by 34 percent of GDP between 2007 and 2014. More important, national incomes and living standards in many countries are 10 percent or more below where they could have been, and are likely to remain there in perpetuity.

The fundamental problem is that modern financial systems inevitably create debt in excessive quantities. The debt they create doesn't finance new capital investment but the purchase of existing assets, It doesn't finance new capital investment because nobody has wages to buy the products of capitalism. The investors know that we are broke.

At the core of financial instability in modern economies lies this interaction between the infinite capacity of banks to create new credit, money and purchasing power, and the scarce supply of urban land. Self-reinforcing cycles of boom and bust are the inevitable result" No mention whatsoever of crashing wages.
"We seem to need credit to grow faster than GDP to keep economies growing at a reasonable rate," So, credit will keep the economy growing even as wages crash,,,, on what planet?
" the deflation risk is fuelling fears the global economy could be fast stuck into a deep low-growth mire." Maybe the crash of the core population has something to do with low growth.
A Stunning Admission From A BOE Central Banker: This Is What The Coming "Helicopter Money" Will Look Like | Zero Hedge
“Consider for example a tax cut for households and businesses that is explicitly coupled with incremental Bank of Japan purchases of government debt – so that the tax cut is in effect financed by money creation”
Bloody marvellous idea. 102 million Americans of working age not in the labor force and you're going to give them a tax cut. What about the 51% of Americans who already receive a check from GOV.

[Danny B]

Borrowing to survive

Wages and earning power are crashing but, "Consumer Borrowing in U.S. Rose at Faster Pace in September" "The $28.9 billion jump in total credit followed a $16 billion gain in the previous month, Federal Reserve figures showed Friday"
"lending for auto purchases and bigger credit-card balances." GREAT, bump up my limit on my card and I will be your friend forever.
Consumer Borrowing in U.S. Rose at Faster Pace in September - Bloomberg Business
Anthony Wile writes about the coming collapse. The Daily Bell - The Inevitable Collapse of the World's Economic System – It's Coming
He makes a common mistake / omission. If you are going to plan for a collapse of credit and GOV, there is one, basic first step. Do a mental exercise. If the banks closed tomorrow, what would you do? THAT is what most people will do. Make your plans accordingly.

[Danny B]

Creeping socialism,,, creeping automation

Socialism requires a command economy but, a command economy has never worked. The more that the PTB push for a centralized economy, the more things go wrong.
Jim Grant;"We are in a regime of price administration. Price control is a policy that has failed for millennia. " " We are under the governance of former tenured economics professors who think they know more than they could possibly know."
"The 2008 Crisis Didn't Come From Nowhere," Jim Grant Slams The Fed's Utopian World Of "Economic Sleepwalking" | Zero Hedge
As if it wasn't bad enough with economics professors running the show, We have idiot lawyers too.
"Then the central banks have the bonds, which they could never sell again, and as debt rises, the central banks go belly up. Honestly, this is what we deserve for electing lawyers who think they can just write a law and make the impossible happen."
Armstrong also has a very good explanation for the 3 types of inflation;
"If we follow the logic here, QE is supposed to “stimulate” the economy by reinventing inflation. But does this only create cost-push inflation or asset/currency-inflation rather than demand-inflation that marks economic growth? The first two forms of inflation reduce the living standard as net disposable income shrinks. Demand inflation requires confidence as people invest expecting to make more in a boom, not punishment. This type of stimulus will widen the gap the socialists talk about between rich and poor for it will only create asset inflation. So it is hard to follow the logic that QE alone, while hunting money for taxation, will have any stimulus impact other than eroding the economic base."
Quantitative Easing & the Illogical Conclusion | Armstrong Economics
OK, so QE erodes the economic base. Ending QE wipes out almost everything. 1/2 the pundits are convinced that the FED will raise rates. 1/2 the pundits are sure that they won't. The economists have been seriously wrong every time for the last 5 years so, it is anybody's guess. Either path is destructive.
The FED is stuck with $ trillions in bonds that it can never sell. I suppose that U.S. GOV will default to the FED when times get tight.
When speaking about price inflation, you must recognize the difference between the 3 types. Demand inflation is when prices go up because the economy is honestly growing. There is no possibility of demand inflation when wages are falling. So, all price inflation that we see is spill-over from money supply inflation.
One write claims that GOV will try very hard to juice the economy for the upcoming election year. They are out of bullets AND juice. «Welcome to the first global recession created by central banks» | International Selection | Finanz und Wirtschaft

OK, that is a summation of the good news. The bad news is; after we crash, we will never escape.
Robots Will Change World Beyond Recognition Says BoA
The Telegraph comments on the viewpoint of Bank of America in Robots May Shatter the Global Economic Order Within a Decade.
"Robots will take over 45pc of all jobs in manufacturing and shave $9 trillion off labour costs within a decade, leaving great swathes of the global society on the historical scrap heap." Shaving $ 9 trillion off labor costs is also shaving $ 9 trillion off of wages.
"In a sweeping 300-page report, Bank of America predicts that robots and other forms of artificial intelligence will transform the world beyond recognition as soon as 2025, shattering old business models in a whirlwind of “creative disruption”, with transformation effects ultimately amounting to $30 trillion or more each year."
"We are coming close to the crucial “inflexion point” when it is 15pc cheaper to use a robot than to employ a human worker."
"The social effect is to squeeze out those at the bottom of the employment ladder, rendering them almost unemployable without re-education. Bank of America describes this as the “displacement of human labour”, estimating that almost half of US jobs could be at risk."
What if they are too stupid to educate? Re-educate for what. We just don't need them in the labor force.
"Productivity will soar but wages will not rise at the same pace, if at all. The owners of capital will take an even bigger slice of global income, pushing inequality to yet greater extremes. Labour’s share of the pie peaked at 65pc in 1975 in the rich countries and has already dropped to 58pc."
Right, capital will take a bigger share. No it won't. Lacking wages, there won't be any buyers.
"not to mention the 800m illiterates in the world. It is easy to imagine the explosive political consequences if governments fail to take action to mitigate the effects," How do you mitigate stupidity?
"We may achieve the dream of prosperity without toil as robots take over, but find ourselves living in a jobless dystopia."
"The higher the wage inflation, the greater the incentive to replace workers with robots."
Read more at Mish's Global Economic Trend Analysis: Robots Will Change World Beyond Recognition Says BoA; Automation Will Change Jobs More Than Kill Them Says McKinsey
MANY politicians see socialism as the only cure for runaway automation. The mass murderer (vaccinator ) Bill Gates says that only socialism can stop global warming. http://i100.independent.co.uk/articl...e--b1xNpbL8O_x

Mother Nature always allows "superior" species to overtake "inferior" species. What if the superior species is a robot?
Labor's share of income continues to drop. if capital owns all the robots, the income from the labor of the robots will accrue to them. Capital just grows and grows. Aggregate human wages just continue to shrink. IT'S ALREADY HAPPENING. Manufacturing and capital are pushing things like the TPP and the TTIP. This would give all control of commerce to supra-national companies and take it away from GOV. They can't make a profit because our wages are shrinking. They count on more control to make up for lost earnings.
Do you think that they will drive UP wages? ALL the Western trade agreements are attempts to lower costs to meet lower consumptive power. Capital is hard at work trying to create price deflation. If they accomplish this by creating wage deflation (aggregate), it will be a zero-sum game.

[Danny B]

Running out of momentum,,, slamming it into reverse

102.6 million of working age not employed. This reduces GDP. Armstrong; "If you look at the amount of interest that we are paying that is leaving this country, it is far more than what we are losing in trade. " " 80% of the increase in the national debt was all interest."
This debt repayment has to be squeezed out of the GDP. Eric Sprott says that there just isn't enough GDP to service the debt; https://www.youtube.com/watch?v=C58jGfVcplg
Then, there is the problem of various States redeeming their U.S. Treasury paper. The FED is fully controlled by the district of corruption. The FED is printing to rescue $ trillions in collapsing derivatives. The FED is as busy as a one-legged man at and A$$-kicking contest.
The primary dealers are the banks that sell and redeem GOV debt. They were recently downgraded AND they are selling off corporate bonds to raise cash. Maybe business isn't so good. Maybe, nobody is buying U.S debt.

The financial system operates at maximum leverage to get maximum return. Everything is fine as long as the shifter doesn't get thrown into reverse while humming down the road. When the private sector crashed into a low-wage competitor, things were crammed into reverse. The upper loop of the economy where the free money lives tried to party on. They grew the money supply for themselves but, NOT for the lower loop. This eventually cut back consumption in the lower loop. Lack of consumption bumped into productivity. This, in turn, bumped into earnings.
This caused the money-magic to go into reverse. Imagine driving your car at 60 MPH in reverse. You are going to bump into a LOT of obstacles.
The tally of damaged obstacles is rising.
18 Numbers That Scream That A Crippling Global Recession Has Arrived
Every contraction is an "opportunity" for a default. Every default is an opportunity of a cascade.

[Danny B]

Defaults, small, large and gargantuan

Well, the important events are just coming faster and faster. China is the nexus at the moment.
The Chinese banks are crashing but, they just got a $ 400 billion margin call.
https://finance.yahoo.com/news/too-b...124857291.html
U.S. banks have loads of exposure to risky trades; U.S. banks said to hold $10 trillion of 'risky' trades | Gold Anti-Trust Action Committee
Corporate debt has gone up quite a bit, "As Net Leverage Soars 15% Above Its 2008 Peak" It's Not The Record High Debt That Is The Biggest Risk, It's This | Zero Hedge
So, global trade has collapsed. This might start a few defaults. We Have Never Seen Global Trade Collapse This Dramatically Outside Of A Major Recession. So Buckle Your Seat Belts Boys And Girls, Because We Are Definitely In For A Bumpy Ride.
Student loan debt is higher that what RE subprime was in the 2008 crash; http://www.gordontlong.com/Articles/...Auto_Abyss.pdf It has a very high default rate. Students even have their very own debt clock, http://schiffgold.com/commentaries/w...ime-bomb-tick/
Car loans and over productivity are on the rise, http://www.gordontlong.com/Articles/...Auto_Abyss.pdf
This is all building up to a default crescendo. http://wolfstreet.com/2015/11/10/wer...in-us-history/

Greece isn’t receiving the funds that it needs. Part of Spain voted to split. Portugal has pissed off the ECB by actually trying to have a democracy. The dictators in Belgium want 100% control. http://www.zerohedge.com/news/2015-1...row-government
It has been long known that the U.S. dollar carry-trade would eventually go into reverse. As the dollar grows stronger, it is ever more difficult to service dollar-debt when your earnings are in your local currency that is getting weaker.
11/10 EM exodus: emerging economies see half trillion in capital flight – Zero Hedge
It has long been planned for a restructuring of emerging market debt when things go bad. The common term is "restructuring".
Greece proved pretty well that restructuring just doesn’t work. DEFAULT will be the operative word. Default will take down all the banks.
https://www.bullionstar.com/blogs/ko...restructuring/
The rating agency S&P took a momentous step when it downgraded the big banks. Now, Moodys rating service has something to say; 11/10 Moody’s warns of global shockwaves – City AM

[Danny B]

The catwalk for detfault.

That 1/2 $ trillion threatens to become $9 trillion. The US Dollar Bull Market Could Trigger a $9 Trillion Debt Implosion | Zero Hedge
Peak oil (demand) 11/12 Stocks hammered again by oil selloff, rate worries – The Street
Peak oil (storage), Something Very Strange Is Taking Place Off The Coast Of Galveston, TX | Zero Hedge

Well, Greece is stuffed; Greece Comes to a Standstill as Unions Turn Against Tsipras - Bloomberg Business
Portugal is going crazy and Spain wants to split BUT, somehow, Finland is the sick man of Europe; 'Sick man of Europe' Finland agonises over austerity | Reuters

Venezuela is currently the sick man of S. America.
Venezuela Default Countdown Begins: After Selling Billions In Gold, Caracas Raids $467 Million In IMF Reserves | Zero Hedge
Puerto Rico is close to the edge; http://www.bloomberg.com/news/articl...out-of-options
So the defaults are on the way. When and who?
Four US Firms With $4.8 Billion In Debt Warned This Week They May Default Any Minute
http://www.zerohedge.com/news/2015-1...w-capital-here
The defaults are starting to pick up in China. http://www.zerohedge.com/news/2015-1...-more-defaults Who knows when the contagion will explode?
The banks are in deep do-do but, the bet is that they are in better shape than GOV; http://www.bloombergview.com/article...vatives-market

[Danny B]

Default and repudiate, the careless lender gets what he deserves

Andy Hoffman has been writing about the unwind for years. " “Economic Mother Nature” is on the verge of taking her revenge on the manipulators that sought to usurp her immutable laws with money printing, market manipulation, and propaganda"
Energy is the largest cash generator and it is crashing worldwide. This, in turn, brings down everything else. "Horrible Headlines" Go Parabolic, "Economic Mother Nature" Nears All-Out Victory | SilverSeek.com

Here is a good article that covers a lot of ground; "The world’s most prestigious financial institution, known as the “Central Banks’ Central Bank” – the Bank for International Settlements – warned in 2008 that bailing out the big banks would create sovereign debt crises, transferring the banks’ problems to their host nations. That’s exactly what’s happened.

Last year, the head of the Bank for International Settlements said that things have gotten worse:

The world economy is just as vulnerable to a financial crisis as it was in 2007, with the added danger that debt ratios are now far higher and emerging markets have been drawn into the fire as well, the Bank for International Settlements has warned.

A study of 124 banking crises by the International Monetary Fund found that propping up banks which are only pretending to be solvent – instead of forcing them to write off their bad debt – typically shreds the nation’s economy:"
"And contrary to another mainstream myth, military spending is HORRIBLE for the economy … especially in the long-term."
"On a global level, growth is being steadily drowned under a rising tide of debt, threatening renewed financial crisis, a continued squeeze to living standards, and eventual mass default."
Yep, mass default is on the way.
"In other words, the bigger the bubble, the bigger the bust. And given that the enormous super-bubble of debt may be about to burst, the world’s skyrocketing might not look very smart in the coming years."
"Indeed, an economics professor who bases his analysis on computer models says we’ll have “a never-ending depression unless we repudiate the debt, which never should have been extended in the first place”."
Yep, call it repudiate or call it default.

"Top economists say that Iceland did it right … and everyone else is doing it wrong. Here’s why:

Arni Pall Arnason, 44, Iceland’s minister of economic affairs, says the decision to make debt holders [i.e. the people to whom the debts are owed … mainly bondholders] share the pain saved the country’s future.

Even the IMF points to Iceland as a model for debt write-offs as a way out of its economic slump.

Postscript: Debt-forgiveness was historically considered the cornerstone of both religion and liberty."
Shocking, Little-Known Facts About Debt. Private Debt Exploding | Global Research - Centre for Research on Globalization
When GOV passed out free money, it was bound to go into bad investments. The natural credit system would have financed good investments. When banks were allowed to sell their loans on the secondary market, they were bound to relax lending standards. The legal system mandates that the borrower must pay for ill-advised borrowing. But, human nature is always present in a transaction. Mother Nature is going to have a say in all of this.
Previously, the irresponsible borrower was flogged and suffered losses. What about irresponsible lenders? The upcoming worldwide crash of defaults is going to be a stern reminder that the lender must be mindful of risk too.

[Danny B]

God is mad at the FED

"in the words of the Old Testament “ the use of false weights and measures is the greatest abomination in the eyes of the Lord ”.(King James Version ,Wycliffe translation,Proverbs,XX10.)
Professor Fekete argues that Real Gold Bills are the only way to rescue / revive international trade. The guy is really smart.
http://www.professorfekete.com/artic...EFOctandor.pdf
Professor Antal E. Fekete - Articles
Honduras is now making the news; Get Ready For Crazy | Zero Hedge
The B.I.S. says that the FED is a bunch of bozos;
Indeed, one the Fed’s core tools – quantitative easing – which is aimed at boosting inflation, may actually CAUSE deflation.

Another core tool – creating a “wealth effect” – actually HARMS the broader economy in the long run.
Federal Reserve Admits It Has NO IDEA What It's Doing Washington's Blog

"Let’s say an individual has saved $100,000 in cash. He keeps the money in the bank, which pays him less than 1% interest. Rather than earn this low rate, he decides to loan the cash to an individual who wants to buy a rental home at 4% interest."
"The bank, on the other hand, can perform magic with the $100,000 they obtain from the central bank. The bank can issue 19 times this amount in new loans—in effect, creating $1,900,000 in new money out of thin air."
"If the reserve requirement is 5%, the bank can issue $1,900,000 in new loans based on the $100,000 in cash"
"Imagine if we each had a relatively modest $1 million line of credit at 0.25% interest from a central bank that we could use to issue loans of $19 million. Let’s say we issued $19 million in home loans at an annual interest rate of 4%. The gross revenue (before expenses) of our leveraged $1 million would be $760,000 annually –let’s assume we net $600,000 per year after annual expenses of $160,000. (Recall that the interest due on the $1 million line of credit is a paltry $2,500 annually).

Median income for workers in the U.S. is around $30,000 annually. Thus a modest $1 million line of credit at 0.25% interest from the central bank would enable us to net 20 years of a typical worker’s earnings every single year."
If We Don't Change the Way Money Is Created and Distributed, Rising Inequality Will Trigger Social Disorder Washington's Blog

[Danny B]

Working harder and earning less

"U.S. -- a vast majority of working Americans -- saw no gains in their wages between 2000 and 2012. At the same time their productivity increased nearly 25 percent."
"While wage stagnation is not new -- a median U.S. wage earner has seen a 5 percent growth in wages between 1979 and 2012 while boosting productivity nearly 75 percent"
America Workers Are More Productive, But Their Wages Are Flat, And In Some Cases, Lower

Increase in real value of the minimum wage since 1990: 21%
Increase in cost of living since 1990: 67%
One year's earnings at the minimum wage: $15,080
Income required for a single worker to have real economic security: $30,000
Productivity has surged, but income and wages have stagnated for most Americans. If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.
Overworked America: 12 Charts That Will Make Your Blood Boil | Mother Jones
"From 1973 to 2014, American worker productivity increased 72.2 percent while median worker compensation rose just 8.7 percent. From 1948 to 1973, by contrast, typical worker compensation and productivity grew at roughly the same rate."
This chart shows a clear divergence right about 1973, just after we went off the gold standard completely. http://www.epi.org/files/91664-figA-body.png
Post WW II, America had a lock on manufacturing. By about 1970, the rest of the world had rebuilt their factories and we had a lot of new competition.
It's true that we are slipping towards a global-mean-wage BUT, 50% of the cost, on average, is for finance.
Socialism for the rich is really grinding us down.