Economic pressures

[Danny B]

Sr. Price,,, Butler,,, Hudson

Sr. Price and the Assignat; .:Plata:.

"But as mentioned above, to the extent that this wage convergence process is driven by monetary inflation, rather than natural, non-inflationary economic integration, the Cantillon effects discussed earlier result in wages converging downward rather than upward, implying a global wealth transfer from ‘owners’ of labour—workers—to owners of capital." http://www.24hgold.com/english/news-...hn+Butler&mk=1

EXCELLENT article from Michael Hudson. A great explanation of the multitudes of parasites.
Michael Hudson on Debt Deflation, the Rentier Economy, and the Coming Financial Cold War | naked capitalism

[Danny B]

Too much oil

Energy is the master resource. The banks piled into energy for the huge returns. But, they overdid it on the greed angle. They have more oil than they know what to do with; Why Oil Prices Are About To Plunge Again: 31 Million Barrels In Floating Storage Are Coming On Shore | Zero Hedge

It is obvious that oil will go / stay down for a while. The banks have gotten tired of doing bridge loans to keep the oil sector alive. BUT, when they stop the loans, the SHTF.
A Glimpse Of Things To Come: Canadian Oil Company Liquidates Hours After Bank Demands Repayment | Zero Hedge
The banks can't make you borrow money and the State can't make you have kids. Japan is offering a bandaid to help the problem; 3/24 Japan plans un-depositable, non-cash "gift certificate" money drop to young people – Zero Hedge
After WW II, Japan was garrisoned and controlled. One of the control issues was ; they had to have lots of nuke power and produce lots of fuel for bombs.
Germany is a very poor candidate for wind & solar power. Germany is doing great at getting rid of their reactors. Japan has optimal conditions for wind and solar. But, their overlords demanded nukes. The damage from Fukushima is starting to get the attention of the whole world. Hopefully, the Japanese can switch over soon. Goldman Sachs is demanding that TEPCO restart the reactors because GS has sunk costs in nukes.

[Danny B]

The mega-parasite is trying to revive the host

Michael Hudson has an excellent analysis of how regulatory capture allowed the banks to fleece us. (Repost); Michael Hudson on Debt Deflation, the Rentier Economy, and the Coming Financial Cold War | naked capitalism
Charles Hugh Smith shows the outcome in clear detail; oftwominds-Charles Hugh Smith: What Killed the Middle Class?
They stole everything we had and now, want to give us free money.

The ghettoes, indian reservations and the reserves for the abos all have huge problems with alcohol and drugs. The huff gasoline if they can't get good drugs. Deep, down inside, nobody wants to live the worthless, pointless life. They choose slow suicide. Americans are hooked on anti-depressants. And, what is in anti-depressants? https://www.youtube.com/watch?v=ppAVBtP-l5Y
The parasite is successfully killing the host.

[Danny B]

Fleecing the workers won't save the host

Post-war, the West became a high-wage, high-price economy. The majority of the middle class sunk their savings in their houses. The wages have been falling for years. The banks have been trying to maintain the price and credit structure even though the wage structure has crashed. They extended our credit terms.
• Sweden Cuts Maximum Mortgage Term To 105 Years -The Average Is 140 (Tel.)
Here is a long-winded article from Jim Rickards talking about all the States doing currency devaluations close to simultaneously. The Dollar Has Been Shanghaied - The Daily Reckoning
This is a maxed-out effort to save the financial system. EFFING marvellous. A currency devaluation, seen from the street level, is just a cut in wages.

The bankers are running the show. They are bending over backwards to offer us more loans. We lost our jobs and spent our savings. We don't want any more debt. We don't want longer credit terms. We cut back our consumption, often involuntarily. Consumption has crashed. The corporatocracy is hard at work on various trade agreements that are designed to smash labor rates and bring back their previous big margins. The plan to use these agreements to kill or circumvent GOV regulations that protect the environment and / or workers. They have big plans to cut their overhead costs by driving down wages.
Somehow, it didn't occur to them that low wages will result in low consumption.
"General Electric CEO Jeffrey Immelt was charged by the president with a Herculean task: figuring out how to get big American firms to start hiring again. First, he says, we need "a sense of national urgency around jobs" and a government that's focused 100 percent on the task at hand."
Immelt, himself was responsible for outsourcing LOTS of jobs.

First, it was a short-sighted grab for increased profits using global-wage-arbitrage. We fell further. Lately, it has been a grasp for survival as we, necessarily, cut our consumption.
• Coming to the Oil Patch: Bad Loans to Outnumber the Good (WSJ)
• Junk Territory: US Corporate Debt Ratings Near 15-Year Low (CNN)
• Earnings Growth Based On Debt And Buybacks? Totally Unsustainable (SA)
That's what happens when wages leave,,, profits leave too.
3/25 Bankrupt banks brutally bleeding... worldwide – Gold-Eagle

3/25 Citing pension woes, S&P just cut N.J's credit outlook to negative – NJ.com
3/25 Countdown to insolvency begins for Chicago pensions – Zero Hedge
The record for Dem controlled States and cities is painfully bad.

EDIT;
"Today we have the foundations poured for the next crisis, and that crisis will be emanating from the public sector, as this is where all of the asymmetry has built up." GOV going broke.
"In Europe nationalism is on the rise… and why wouldn’t it be? Europe has ceded sovereignty to Brussels and Brussels has allowed Europe to completely lose control of it’s borders. Security is the first and foremost social contract a nation state has with its citizenry. That social contract lies in tatters and the ramifications will continue to be felt for years to come.

A heartfelt sorry to my European friends, but Europe as we know it today, is toast.
“One of the key problems today is that politics is such a disgrace, good people don’t go into government.” – Donald Trump

This article has a few graphs that show the good economic projections from GOV are always spectacularly wrong. Was This The Worst Economist Forecast Of All Time | Zero Hedge

[Danny B]

Chinese devaluation,,, CB stupidity

Many years ago, it was claimed that the American economy was "de-coupled" from the Chinese economy. NOBODY claims that now. ALL governments are socialist,,, China, more-so. Since socialism is a consumption system, NOT a productive system, socialism requires central planning. In a true free market, planning is done by producers and consumers. China needed to do a very rapid buildup to avoid being over run by the West.
Since the "goals" of GOV are different than the goals of the average person, this central planning is always an aberration. They are always focused on desires rather that actual market demands.
This always results in malinvestment.

China built up far more production capacity that was needed. They buried the rest of the world with their cheap productivity. BUT, all this stuff was financed. Their export business is down 25%. They can't pay the loans.
"According to documents submitted to the Chinese Parliament, four especially moribund sectors (steel, coal, cement, and nonferrous) officially owe $1.56 trillion, which more than likely cannot be repaid."
More Bad China Debt News: SOE Defaults on $2.3B
You can bet that the true amount is much higher.

China desperately needs a devaluation to "adjust" their problems.
3/27 "If China devalues by 20% the world is over, everything hits a wall" – Zero Hedge

Politicians always buy votes by promising riches to their voters. The accepted solution was to have the central bank as a separate entity from the GOV. This, in theory, would allow the monetary authorities to rein in the spending errors of the politicians. The CB takes IOUs from the Treasury and gives it cash. The CB must then sell the IOUs. It must unwind it's treasury bond portfolio.
"6) The Central Banks have no idea how to exit their strategies. Fed minutes released from 2009 show Janet Yellen was worried about how to exit when the Fed’s balance sheet was $1.3 trillion (back in 2009). Today it’s over $4.5 trillion."
"5) The Central Banks are now all leveraged at levels greater than or equal to where Lehman Brothers was when it imploded. The Fed is leveraged at 78 to 1. The ECB is leveraged at over 26 to 1. Lehman Brothers was leveraged at 30 to 1."
The Next Crisis Will Be THE Crisis | Zero Hedge

The banks all tried to survive even though the economy was shrinking badly. It bought them some time but, that time is running out; The Big Unwind Hits Investment Banking | Wolf Street
3/27 I love the smell of napalm in the market – True Sinews

[Danny B]

Minimum wage

Capital has always had more "power" than labor. They buy the politicians and write the laws.
"There was a 1942 study that looked at the cottonseed industry and found that the minimum wage led to greater adoption of labor machinery and reduced employment levels,” Still true.
"The current minimum wage is the highest its ever been, but when adjusted for inflation, it actually hit its peak in 1968 at $1.60 an hour.

“Adjusted for inflation the highest minimum wage we’ve ever had was in 1968,” Saltsman said. “In 1968 it hit the high point at about $10.90 an hour in 2015 dollars."
This is the second of 2 articles on this page.
Read more: This Map Shows If You Live Near An Aging Nuclear Reactor | The Daily Caller
As long as other regions have lower wages, this tends to drive down wages worldwide. This is primarily true in manufacturing but, it also drives down wages in other sectors. The problem comes in that these low-wage competitors have FAR lower costs for housing. Our wages have to come up OR our cost of housing has to come down. The GOV safety net tends to support the price of housing even though we can no longer afford housing with our diminished wages.
Should the safety net fail, many (more) millions will be homeless.
Chinese money is flooding the housing market and driving up house prices in many markets,,, like Vancouver and Orange county. As aggregate Western wages continue to fall, new house construction continues to fall. Zoning laws aren't favorable to tiny houses because taxing authorities want big houses with BIG taxes. Property taxes, in general, are unfavorable to living on the cheap.
As more workers are displaced by cheap labor markets, GOV tries to raise taxes to support them. We will end up with 20 people on the dole living in a single-wide out in the boondocks

[Danny B]

student debt, energy stocks,,, Russian stocks

It's often said; What can't go on forever, WON'T. "Student Debt 2030: 17 Trillion! " Confessions of a College Professor: Student Debt 2030: 17 Trillion!
It's pretty clear that all debt worldwide is inter-connected. China may blow all to hell first,,, who knows?
Then, there is the energy sector. The banks are deeply tied to the energy sector.
"using the S&P Energy Sector Index data, the sector's forward multiple is now an absolutely ridiculous, mindblowing 23x."

This was 14 months ago. Where do we stand now?

The snapshot answer comes courtesy of the latest Factset weekly earnings insight, according to which as of this moment, the forward P/E of the Energy sector is no longer "an absolutely ridiculous and mindblowing 23x".... it is, in fact, more than double that at 58.7x, which also happens to be more than four times higher than the 15 year average.

There is no longer a word to describe the lunacy where the forward P/E multiple was literally "off the chart" until the Y-axis was doubled."
OK, so double the Y axis and everything will be good.
I'm constantly asked when the SHTF. I always reply the same, it depends on who you are. For millions of people, it is already desperation time. Then, the question is clarified some. Then, I answer, "I don't know".
Armstrong; "Once the “confidence” in government cracks for the BULK OF THE SILENT MAJORITY who do not listen to money supply and conspiracy theories, then we move into game over"
"Everything hinges upon the “confidence” of the silent majority. They are starting to rumble. That is the key to the future. We are watching this beginning and that is Trump, precisely in line with out model calling for political chaos to emerge in 2016."
https://www.armstrongeconomics.com/a...icopter-money/
Additionally, Armstrong says; "That is when we will see assets rise as confidence shifts from a corrupt government for the majority will no longer trust then and they will turn to the private sector.”

I have trouble with this scenario. $ 15--20--25 trillion in hot money was pumped into the stock market. The P/E is up in nosebleed territory. Earnings are non-existent. There is no possible way for earnings to rise while wages and consumption are stagnant. Why would anybody be attracted to American stocks?
He did say to buy stocks. He didn't say which stocks.
Opinion: Russian stocks are a best buy amid global turmoil
Opinion: 5 reasons to be a contrarian and buy Russian stocks
Buy This Russian Stock For Double Gains Within Three years
Russia stocks traded on U.S. exchanges - BRICADR.com
Legendary Investor Jim Rogers: Buy Russian Stocks Fast!

[Danny B]

Cannibalism

My great, long post disappeared. Here is the short version. It is VERY important that you understand this article. The Great Ponzi Scheme of the Global Economy - The Unz Review
All the classical economists made a clear distinction between profits that resulted from an increase in productivity and profits that did NOT result from an increase in productivity.
The non-productive sector of the economy now claims that it has twice the value of the productive sector. https://s-media-cache-ak0.pinimg.com...f516ddaedf.jpg
The economy has been hollowed out and trade is collapsing. "Worse Than 2008" World Trade Collapses To 10 Year Lows | Zero Hedge
The financial industry is sitting on enormous piles of debt notes that are claims on future productivity and services. This is "cerebral wealth". They believe that it has value.

[Danny B]

Peak wages, peak consumption and peak debt

Concentration of Wealth Vs Political dysfunction What could be worse than the Great Depression? - Money and Markets - Financial Advice | Financial Investment Newsletter ? Money and Markets - Financial Advice | Financial Investment Newsletter

3/29 Commodities longs will "liquidate in unison," driving bulls off a cliff – Zero Hedge
3/29 It's official: The US oil surge was driven by the biggest short squeeze ever – Zero Hedge
• Barclays Warns Commodities May Slump in ‘Rush for the Exits’ (BBG)
3/28 23% of Americans in their prime working years are unemployed – Economic Collapse

Well, we reached peak-wages around 1969-1970. We reached peak-cheap-oil. We reached peak productivity several years ago. We reached peak employment. We have reached peak consumption and peak debt. We still haven't reached peak corruption but, hildebeest is making a valiant try.
After we reached peak wages, credit terms were extended way out. Debt grows much faster than productivity so the bankers had to continuously find new ways of taking our money.
Aggregate national income from productive enterprise has been falling steadily. Since consumption was falling, the financial sector just kept rolling over their paper,,, getting richer and richer. Wealth production keeps falling Our GDP keeps rising. There is less and less wealth being created but, the financial sector needs to liquidate ever-more of it to keep the credit bubble growing.
50% of the cost of everything is for finance. We have a huge overhead that precludes us ever being competitive in the world market. For every additional dollar of taxes, the economy shrinks by three dollars. Our profit and working-capital is being sucked out. It is used to satisfy interest payment on non-productive debt. When debt is incurred to pay for consumption and / or non-productive enterprise, there is little chance that it will be paid back. The FED is getting VERY nervous about the $ 4.5 trillion that we owe them.
The BRICs crashed down global wages. They wiped out their best customer. Now, they are trying to create a domestic consumer economy. The whole world is stuck with slave wages and the consumer economy is dead. No State can afford to unilaterally raise wages,,,, and lose market share. With the consumer economy gone, all we have left is the "Amish economy". We are stuck in a downward spiral of wages and consumption. We reached into the future to spend tomorrow's wages,,, today. Then, we lost our job and tomorrow's wages never materialized.

[Danny B]

Bogus treasury sales, Europe has no future

"One by one, nearly all Treasury buyers have ceased buying (net) US Treasury's.
As each group of buyers ceases their purchases leaving an ever smaller pool of potential buyers, interest rates have fallen further in contradiction to market fundamentals?!?
Since QE3 was fully "tapered" (no further net new Fed purchases), all foreign buying has simultaneously ceased.
The only remaining buyers are the US intra-governmental purchases but primarily the US public (US banks, US pensions, US insurers, US private citizens).
Since the completion of the Fed's taper in November 2014, the US public has undertaken the greatest Treasury buying spree in history "
Jim Willie made it clear, the FED is buying all Treasury issuance.
Hambone's stuff: Treasury Buying Mystery - Does Treasury Data Imply the Treasury Market is a Fraud!?!

• The US Is in for Much Greater Civil Unrest Ahead (Dent)
• Bonfire of the Commodities Writedowns is Just Starting (BBG)
• Eurozone ‘Flying On One Engine’: S&P (CNBC) "youth unemployment amounts to 23% in the EZ and is far higher in crisis countries, such as Greece (48%), Spain (45%) and Italy (39%). In the future, Europe must cope with a ‘lost generation." "general government gross debt soared from 70% to 93% in 2013. It remains at threat levels in Greece (169%) and Portugal (130%) and excessively high in Italy (135%) and France (135%), even Spain (98%)."
The End Of Europe As We Know It? | Zero Hedge

As if Europe doesn't have enough domestic problems, they are importing problems; https://www.armstrongeconomics.com/i...pe-is-burning/

[Danny B]

Harry Dent sets the date.

" world's super-bagman" UNAOIL: THE COMPANY THAT BRIBED THE WORLD
Never forget, your e-mails are forever. Something the hildebeest has recently learned.
Harry Dent; "I think the worst will be over by 2020, but the worst of that will be by the end of 2017."
Trend Forecaster's Dire Warning: Massive Crash Will Wipe 12,000 Points Off Dow Jones By Late 2017
More layoffs; " As you will see below, corporate defaults are currently at the highest level that we have seen since 2009."
Corporate Debt Defaults Explode To Catastrophic Levels Not Seen Since The Last Financial Crisis

3/31 Simple math shows America is headed for an economic disaster – Daily Reckoning
Our standard of living is the GDP divided by the population. Our actual GDP is probably only 1/3 of what is claimed. When the FIRE economy crashes, our standard of living goes with it. All those people who were living off their portfolio will no longer be spending any money. NOBODY is buying Treasury debt. If / when this precipitates a crash, Both the public and private sector will stop spending.

[Danny B]

Hussman on stocks

"Using basic mathematical relationships which have held for over 100 years of stock market performance, Hussman concludes a run of the mill reversion to the mean will result in a 50% stock market loss. In order to reach a secular low in valuations, we would experience a 73% loss from here. That seems inconceivable to a population of normalcy bias blinded, iGadget distracted, math challenged CNBC believers. Will you let cognitive dissonance rule your decision making or will you use reason to understand the peril directly ahead?"

"Given the current dividend yield on the S&P 500 actually exceeds 2%, the historically run-of-the-mill expectation from current valuations is that the S&P 500 Index itself will be below current levels 12 years from today, in 2028."
WORST CASE SCENARIO = 73% DOWN FROM HERE « The Burning Platform

• China Ends This Quarter With The World’s Worst-Performing Stock Market (BBG)
• Growth Of Fintech Forecast To Spur Almost 2 Million Banking Job Cuts (FT)
• Pathocracy: The Rise Of The Political Psychopath (Whitehead)
• Europe Is Too Important To Be Left To Its Clueless Rulers – Varoufakis (Tel.)
3/30 The inevitable is now imminent
3/30 U.S. private sector adds 200,000 jobs in March: ADP – Yahoo!
3/31 Jobless claims hit 276,000 vs. 265,000 estimate – CNBC

[Danny B]

Paying for previous promises.... Davidson

FED GOV made a LOT of promises when times were better. Times have changed, Our lock on manufacturing has crashed. The demographic crash is getting worse. The core population is falling. All those promises have gotten very expensive.
"Prior to 1950, the amount required to fund federal pensions [P] was relatively small. In fact, it didn’t exist as a budgetary item until 1922. Pensions became a significant expense during the 1960s. In 2015, it consumed over 25% of the federal budget."
"Health Care [HC] was a minor budgetary item until 1966, the year following the enactment of Medicare. It has been rising steadily since then and was the largest budget category in 2015 (27.9%)."
A great graph showing how fast these 2 items are growing; http://blogs-images.forbes.com/mikep...1-1200x502.jpg
Keep in mind that the deficit is growing by about $ 1 trillion a year. The negative net worth of US GOV is growing at about $5 trillion a year. Any fracture in public finance would crash both pensions and medical care.

The Keynesian wet dream is an end to all interest charges,,, "euthanasia of the rentier". It may sound good. It may even work. BUT, getting from here to there involves continued ZIRP to kill off the existing economy. That means wiping out ALL funds including pension funds. Oregon PERS unfunded liability swells to $21 billion | News - Home
Grandpa is going to be very pissed off if he has to give up golf and take up begging.

Imploding Pensions Take The Rest Of US Down With Them
"And this, remember, is at the tail end of an epic bull market in financial assets. If pension plans aren’t fully funded now, they’ll fall into an abyss in the coming correction. "
GOV has to cut pensions OR cut current workers. "The result: everyone gets poorer. Or more accurately, everyone discovers that they were never as rich as they thought they were" This is just another twist on the downward spiral.
Davidson, 20 unquestionable charts; $10 Oil Will Trigger Economic Collapse, Warns Economist - The Sovereign Investor

[Danny B]

Can a cashless society survive hackers?

Western society is so open that it has NO way to deal with domestic terrorists.
What about Western banking? "February 5, the first Friday of the month, saw the Federal Reserve Bank, and more precisely its customer, the central bank of Bangladesh, ripped off to the tune of $81 million. No one knows who took it, or where the money ended up" "Of the $1 billion in requests, only $81 million went through by then, with another $20 or so million stopped by Deutsche Bank, which noticed an obvious spelling error in one of the requests, and halted it. The rest of the money went through, hit casino accounts in the Philippines, and just disappeared." Saved by a spelling error?

"But a cashless society with an insecure digital system is doubly cursed, both obliged to participate in a system which gravely undermines their personal liberty, and to watch with no real recourse as their wealth is siphoned off by thieves."
3/31 Hackers breach law firms, including Cravath and Weil Gotshal – Wall St Journal
3/26 What came first, bitcoin or ransomware? – News BTC
3/25 Hackers robbed the US gov't, are you next? – Casey Research
3/21 Cyber warfare shows scary signs of where malware is headed – Hack Read
3/19 FBI to car owners: Watch out for hackers – CNBC
3/19 Cyber war — bigger than ever — is here to stay – Washington Post
3/18 Unbreakable TeslaCrypt Ransomware forces users to pay Bitcoin fee – Bit Coinist
3/15 Chrome ad blocker found to steal bitcoins – Silicon Angle

[Danny B]

hopefully, market forces will kill fission power

Just for a change, I have a tiny bit of good news. There are about 435 commercial nuclear reactors in the world with about 60 in the planning stage. There are many thousands of fuel rods that need to be reprocessed and are a great danger. GOV is NOT good about telling us about the danger; 10 Devastating Radiation Accidents They Never Tell You About - Listverse
Oil is crashing but, this doesn't seem to stop wind and solar. Wind looks to make good strides in the future. Market forces choose wind power | TheHill
There is an increasing awareness of the contamination of soil and farmland from coal ash. China has it especially bad because they don't use good smokestack scrubbers. China is adding so much wind power that they have had to take a break to build more transmission lines.
Natural gas will remain cheap for a long time. Hopefully, NOBODY will build new fusion of fission plants.
True, the Farnsworth Fusor looks great but, I just don't trust GOV.