Economic pressures

[Danny B]

Myopia in the upper loop

"It was almost like a series of Nigerian princes had descended upon the financial districts of each of the world’s great money centers, promising each and every bank (really “banks”) as much wealth as they could possibly want should they only take a small risk."
"This is post hoc ergo propter hoc fallacy, for regulations never, ever stand in the way of Wall Street (or Lombard Street) on a mission. "
"the big banks also amassed an army of Ivy League lawyers by which to plow through any obstacles to reaching the Holy Grail. Money is no object when the object is “money.”

"The fatal flaw that was considered in 2007 (rather than LTCM 1997) but proven beyond doubt in 2011 was that so long as whatever bank liability any eurodollar bank might create was considered currency, further balance sheet expansion would thus create all the “dollars” necessary to fund it. Thus, that fatal flaw was its circular reasoning, that balance sheet expansion created “dollars” which funded balance sheet expansion, creating more “dollars” and so on. Remove the expansion and the inconsistencies, risk primarily, implode the whole intent. Like a spinning top, it can only ever be stable at high rates of growth, because when it slows everyone starts to question whether that math-as-money is actually real or merely, like alchemy or the Nigerian scam, an impossible dream."

The CBs could pump liquidity into the markets but, they couldn't actually generate earnings. Only a well-off middle class can do that.
"Without recovery, there would be no “dollars”, indeed could be no “dollars.”
http://www.alhambrapartners.com/2017...humpty-dumpty/

Here is a chart of profit margins; https://mishgea.files.wordpress.com/...ng?w=803&h=846
This is the margin ABOVE to 10 year Treasury benchmark. The FED doesn't want all the wet-ink money to flow to GOV bonds. It MUST keep bond yield low so that some money will flow into the private sector. If bond yield goes up, that creates a danger of sucking all the money out of the private sector. Treasury bonds are considered zero risk so, Yellen can suck the liquidity out of the markets at any time.
https://mishtalk.com/2017/02/05/equi...icy-trumpacho/
Investors are seeing falling returns for increasing risk.
TINA to the rescue. The CBs were created solely for the speculator class. All the CBs ,under the discipline of the B.I.S, try to inflate equally,,, or round-robin. This presents the investors with, there is no alternative.
This is the main reason that gold has to be suppressed.
Earnings keep falling but, investors can't leave the casino.

It almost seems like deficits don't matter. Japan is on it's way to find out what the absolute limits are. http://themacrotourist.com/images/20...verFeb0317.jpg
IT'S FINALLY HAPPENING | THE MACROTOURIST

"2008 financial crisis, which cost 8.7 million people their jobs and may have destroyed as much as 45 percent of the world's wealth."
http://www.rollingstone.com/politics...-banks-w464966
That was ephemeral wealth of the speculator class. Just wait for next time.

The PTB would very much like to control the markets. BUT, they have to respond to market actions that are getting ever-faster; http://www.talkmarkets.com/content/u...ry?post=121117

Here is an article where Business Insider lists ALL the things that have recently deflated. They now claim that deflation has ended. They sing the praises of (price) inflation. There is not one effing mention of wage deflation. http://www.businessinsider.com/defla...-the-us-2017-2
When it comes to deflation,,, you ain't seen nothing yet.

2/05 Central banks have failed to generate economic growth – FRA No 8hit Sherlock. They create a mountain of debt notes and wonder why nobody is creating more tangible wealth.
2/05 Central banks tolerate higher inflation to erode debt – FRA
BUT, this isn't working any more.

Britain is still following the Kalergi plan.
"Half of new homes built in Britain the next five years will go to migrants
Britain will need to accommodate 243,000 new households each year
Net *migration accounts for an estimated 45 per cent of this growth
109,000 extra homes will be needed every year by migrants and their families
http://www.dailymail.co.uk/news/arti...-migrants.html
2/06 Theresa May to offer more security for renters – Guardian As long as they are immigrants.

[Danny B]

Charles Hugh Smith and John Hussman

Under the present arrangement, the stock market and the bond market have no purpose other than to support speculators, Marxists and war-mongers. The crashes just get bigger and closer together. These three groups will slide down the cliff screaming, kicking and trying to grab anything within reach to try to stop the slide. They have NOTHING to offer to the productive economy. They are redundant to the capitalist system.

Smith; "If you doubt the inevitability of a system implosion/re-set, please read Is America In A Bubble (And Can It Ever Return To "Normal")? This brief essay presents charts that reveal a sobering economic reality: America is now dependent on multiple asset bubbles never popping--something history suggests is not possible."
"The charts below describe the key dynamics driving a system re-set. Earned income (wages) as a share of GDP has been falling for decades: this means labor is receiving a diminishing share of economic growth. Since costs and debt continue rising while incomes are declining or stagnating, this asymmetry eventually leads to insolvency."

" What happens when the bubbles pop, despite massive central bank/state interventions? The entire socio-political/financial system goes through a "system re-set" in which all the fantasy-based valuations, political denials, false promises and fraudulent claims collapse in a heap.
In a crisis, the privileged Elites will change the rules in a desperate attempt to expropriate the income and wealth of the bottom 99.5% to preserve their own power."
"1. They will expropriate what is easy to expropriate: financial assets in centralized institutions the state controls: banks, brokerage accounts, insurance policies, etc."
" So what's difficult to expropriate? I present some answers in my books An Unconventional Guide to Investing in Troubled Times and Get a Job, Build a Real Career and Defy a Bewildering Economy.
It's impossible to expropriate one's skills, experience and social capital. These are intangible forms of capital and so they cannot be confiscated like gold, currency, land, etc."

"The main takeaway is this: your skills, knowledge and social capital will emerge unscathed on the other side of the re-set wormhole. Land and real property you own free and clear (no debt) is likely to remain in your possession, as long as you can pay soaring taxes/junk fees during the crisis phase. Your financial assets held in centrally controlled institutions will not make it through unscathed; they are simply too easy for central authorities to expropriate."
oftwominds-Charles Hugh Smith: Which Assets Are Most Likely to Survive the Inevitable "System Re-Set"?
So the suddenly unemployed parasites will have to depend on their job skills.

"John Hussman was been warning us for years that QE/etc has pulled all the value of future returns into present asset prices. Today's investor has to make a choice: either buy now and expect no/low returns for the next 10 years; or wait for a price correction in the markets and then buy at low valuations to get appreciation from there."
"Well, not that great. Wolf Richter shows that the total aggregate revenues for the 30 companies that make up this index was actually lower in 2016 than in every year from 2011 onwards:"
"The latest Case-Shiller home price index report shows that US housing prices have, in aggregate, for the first time exceeded their previous peak seen right before the 2007 collapse:"

"dumb money" betting on a continued rally and the "smart money" anticipating a decline: " http://www.zerohedge.com/sites/defau...mb%20money.jpg
https://www.peakprosperity.com/blog/...us-complacency

Bill Gross; Bill Gross: Central bank 'financial methadone' is 'unhealthy'

[Danny B]

Command economies and automation

China is a command economy. Command economies do not have a good history. They mandate this and that with little regard for economic or social reality. North Korea stands out.
China DEMANDED that everyone limit their offspring to just one child.
China now has the fastest shrinking work force in the world.
China demanded that the economy grow at 7% per year. But, they took the income of their best foreign clients. The purchasing power of their clients was falling at the same time that their domestic consumer class was shrinking.
Why does this all seem so predictable?

"Consider the past quarter century: a credit boom in Japan that collapsed after 1990; a credit boom in Asian emerging economies that collapsed in 1997; a credit boom in the north Atlantic economies that collapsed after 2007; and finally in China. Each is greeted as a new era of prosperity, to collapse into crisis and post-crisis malaise."
"China’s debt has quadrupled since 2007. Fueled by real estate and shadow banking, China’s total debt has nearly quadrupled, rising to $28 trillion by mid-2014, from $7 trillion in 2007."

"in spite of the injection of US$21 trillion of debt into the system, there’s a distinct downward trend in GDP growth since 2007." Maybe that has something to do with population and markets.
"China has allowed (and encouraged) its banking system to grow into a gargantuan $34 trillion behemoth (a whopping 340% of Chinese GDP)."
" However, the Shanghai stock exchange is still 40% below its June 2015 high.
The debt is still in the system; it hasn’t gone away."

"China can continue pumping high-octane debt fuel into its economic engine and risk a high impact collision OR it can take its foot off the pedal and accept that it’s going to hit the wall with slightly less force."
NOPE, it can't take it's foot off the pedal. Most of the new money creation is to service previous credit creation.
https://www.dailyreckoning.com.au/ch...ld/2017/02/06/

The economic textbooks were only marginally representative of the actual economy, specifically the lower loop. The textbooks will have to be completely re-written to TRY to account for birth-control, electronic money, ultra-cheap shipping, automation, resource depletion, renewable power, the demographic crash, et cetera.
The textbooks are primarily applicable to the lower loop of the economy. The PTB are striving mightily to preserve the upper loop using the manual for the lower loop. Finance was created to support and facilitate the productive sector.
Once the cart was put before the horse, things no longer worked. The parasitic sectors have no desire to relinquish their stranglehold on the productive sector so, it is going to be a LONG road down.

The parasitic sector being mostly comprised of bureaucrats and bankers are especially susceptible to advances in automation.
Middle class jobs at risk of becoming automated says study | Daily Mail Online
The Eurozone apparatus is like a giant parasitic fungus growing all over Europe. When the sovereign bond markets crash, the bureaucrats will suddenly get a new religion. They will decry automation.

[Danny B]

Spending tomorrow's earnings today,,, until we have no tomorrow

The parasitic class has grown enormously. The producer class just can't support their vast numbers. So, the parasitic class (and quite a few workers) reach into the future to spend future earnings,, today.
"U.S. households are collectively more than 12 trillion dollars in debt."
We/they have reached so far into future earnings, that the cost of debt service is negating any additional draw from the future. Should interest rates rise, the increased debt-service cost would bring quick bankruptcy.

"However, business bankruptcies began to surge in November 2015 and continued surging on a year-over-year basis in 2016, to reach a full-year total of 37,823 filings, up 26% from the prior year"
"US bankruptcy filings by consumers rose 5.4% in January, compared to January last year, to 52,421 according to the American Bankruptcy Institute. In December, they’d already risen 4.5% from a year earlier."
Too many shmucks believed the "recovery" lie.

Labor's share of the economic pie has shrunken drastically. This moves down the line.
"Compared to January last year, car sales collapsed for all three US automakers, and the largest Japanese automakers didn’t do much better:

GM -21.1%
Ford -17.5%
Fiat Chrysler -35.8%
Toyota -19.9%
Honda -10.7%
Nissan -9.0%
We've pretty much reached a limit at reaching into future wages.
Debt-pocalypse Beckons As US Consumer Bankruptcies Do Something They Haven't Done In 7 Years | Zero Hedge
"About two-thirds of the nation is essentially living paycheck to paycheck."
"When debt grows much faster than GDP for an extended period of time, it is inevitable that a good portion of that debt will start to go bad at some point."

"what tends to occur is that enforcement increases serially, right up until the moment when such enforcement can no longer be funded. "
"When even the interest on the debt could not be serviced, the ability to maintain control not only ceased to advance—it went into reverse."
"With the above entities heading south, the Wolfowitz Doctrine, which has since 1992 been the basis of US aggression policy, would become unachievable."
"At present, countless people live in fear of the present empires and their ever-increasing efforts at usurpation. However, as history shows, once debt has reached its nadir and begins its rapid fall, so does the empire’s ability to enforce draconian confiscations."
When the Money Supply Dries Up | International Man

[Danny B]

Social costs

The corporatocracy is consumed with balance sheets, margins and profits. It has no regard for people whatsoever. It may have legal "personhood" but, that is as far as it goes. Socialism is a plan for putting people way ahead of profits. Japan is a case-study of what happens when you put profits way ahead of people. The people die out and the profits leave. Without people, commerce just fades away. The corporatocracy is dancing around with trade agreements that would further impoverish the people. The corporate structure is ignorant of reproduction.
The financial system is about 99% incompatible with a shrinking population BUT, nobody told the corporations this. The bankers and corporations have sucked all the money out of the economy. Did they somehow think that they could crash our wages and still grow their profits? They did indeed grow their profits but, this is analogous to starving the goose that lays the golden eggs.
The middle class spent itself down and then, maxed out their credit.

We are debt-saturated and the bankers are counting on us repaying a few $ trillion of liar-loans. FED GOV holds about $ 1.3 trillion of student debt loans that are defaulting at over 40%. The CBs rescued the bankers with a fresh $ 150 trillion worldwide. Since commerce and confidence had died, most of this money had gone into mal-investemnt. But, mal-investments need constant monetary replenishment. The debt is rising faster than exponentially so, this gives a hint of how fast it will drop on the other side of the mountain.

A normal corporation must be competitive. It sheds non-performing assets. This effect has carried through to the general population. The elderly are considered non-performing assets. There are a lot of social costs to this recession.
"more than a half-million people who are released from U.S. federal and state prison every year"
"Nearly half of U.S. children now have at least one parent with a criminal record."
" Men with criminal records now account for about 34 percent of nonworking men aged from 25 and 54 years old, otherwise known as prime working age."
"Moore is just one of almost 9 million Americans who receive disability insurance"
“Two-thirds of people who came in to interview failed the drug test,” Pfeifer says, "
"A Pennsylvania Manufacturers’ Association study from 2014 found that one in three potential hires either refuses or fails the drug test."
https://www.bloomberg.com/features/2...-unemployment/
You can thank the CIA and the bankers for all the drugs.

"One-third of adults aged 50 or older spend more than 30 percent of their income on housing, "
"In 1990, an estimated 11 percent of the adult homeless population was over the age of 50. By 2003, that number had increased to 32 percent. Today, researchers put the figure closer to 40 percent — and rising."
"Kushel has found that nearly half of her participants worked throughout their adult lives and only became homeless in their later years, usually because of a sudden, unfortunate event such as the loss of a job or the death of a spouse."
" those born between 1955 and 1965 — made up the largest subpopulation of the nation’s chronic homeless population, now comprising an estimated 40 percent."

"Though many have struggled with homelessness since their 20s, a shocking 43 percent of study participants had never been homeless before the age of 50. They are people who have worked their whole lives, have paid their rent or mortgage, and have no significant mental-health or substance-abuse problems. "
"We’re in close touch with several people who have advanced cancer and are living on the street,” Kushel says. “People tell me, ‘I just don’t want to die in my car."
https://psmag.com/radical-efforts-to...7ee#.qotva5yt0

"While the overall murder rate for the nation should end up increasing about 8% year-over-year, the surge within U.S. cities is absolutely staggering. Chicago suffered a 59% increase in homicides during 2016. Murders were up 56% in Memphis, 61% in San Antonio, 44% in Louisville, 36% in Phoenix and 31% in Las Vegas.
There were also 44,193 suicides in the U.S. in 2015"
"with the percent increase in suicides rising the most for females aged 10–14, and for males aged 45–64. The suicide rate has risen 24% over the past 15 years"
"an incredible 52,404 Americans died from drug overdoses in 2015."
Yes but, doctor caused deaths are the third leading cause of death.
"American blue and white collar workers have good reason to fear that globalization will result in the slow extinction of the middle class; setting the United States on a dystopic course where a small group of wealthy elite reign over a large class of workers without benefits, pensions, job security or a living wage."

"And it is the carnage of the middle class that has abetted the dissolution of the American family, which in turn as led to the surge in homicides, suicides and drug overdoses in the United States.

Washington and media elites have failed to listen to the forgotten man for decades. Normalizing interest rates and enforcing fair trade agreements are absolutely mandatory for a middle class renaissance to take place. "
Sadly, it just isn't going to happen. Once confidence is lost, it takes decaeds to re kindle.
http://www.24hgold.com/english/news-...ael+Pento&mk=1

[Danny B]

Everyone is losing money and trying to make up the difference with the printing press

The economy is rushing headlong into automation and artificial intelligence. Society has NO MEANS for coping with this. The corporatocracy continues to double-down on practices that reduce the purchasing power of it's customer base.
"It would be difficult to explain away such a pattern of conduct as merely the side effects of becoming a prevailing behemoth. More to the point, the mentality that allows and encourages such behavior is a fundamental component that invigorates transgressions against ethical business practices. The net effects upon society, encourages the corporatist mindset to consolidate their state sponsor cronyism. "
Destructive Centralization and the GE Corporatist Culture
This cronyism, fascism by any other name, is just an attempt by corporations to recoup / maintain profit margins with a shotgun marriage to the State. Their profits were reduced at the same time that the corporatocracy reduced the wages of their customers.
The linkage is impossible to miss unless you turn a blind eye to the problem. BUT, a corporation has NO eyes, nor brain.

The 8astard offspring of this shotgun marriage is a crashing economy. The ugly duo are trying to rescue everything bad with the printing press. Thanks to the efforts of the duo, the consumer can't consume. The ongoing production / destruction provided by the war industries isn't enough to make a profitable difference.
"COPYRIGHT 2004-2017, RONALD L. ROSEN 2Like it or not, read it and weep, every bear market since the Federal Reserve Bank began in 1913 has collapsed and bottomed beneath the green shaded area on this chart. A repeat performance means that the D. J. I. A. will collapse to below the low of 6,470"
http://www.321gold.com/editorials/rosen/rosen020617.pdf

The FED serially gooses the economy to provide liquidity for war-mongers, Marxists and speculators. This is nothing new. With the onset of a global mean wage, the printing press is enlisted to do what the fruits of the enslavement of the working man are no longer able to afford.

The stock market is going up and up but, this is just a number. It can't possibly represent true wealth if the economy is crashing concurrently.
https://www.goldbroker.com/news/gold...ns-stocks-1082

There is a worldwide push for socialism as a cure for the "evils" of automation. The lefties see diminishing job niches. They are rabidly trying to get on the free-money train. 92% of Berlin left-wing activists live with their parents | Daily Mail Online

Suicide and murder rates are WAY up. The cities are becoming less viable. They seem to breed a dependency class. The police-state is running amuck trying to deal with the crime and a populace that has no stake in society.
https://courthousenews.com/man-says-...fied-shooting/

China is never far from the headlines. Jim Rickards has a new article. He pushes the SDR but, he is still a well-informed and smart guy.
"In addition to our proprietary models and analytic techniques — including complexity theory, causal inference, and behavioral psychology — I have always been of the view that there is no substitute for foreign travel and face-to-face contact with both experts and everyday citizens in the countries we are trying to understand."
"People you meet in the street are often a better source of information than the experts in the hotel conference rooms. I asked one student if people in China were trying to get their money out of the country.
His eyes lit up and he replied, “Yes, everybody I know!”

"President Trump and President Xi are on a collision course involving issues of trade, tariffs, and currency manipulation. Geopolitical issues will make the economic issues even harder to resolve.

The quote also lists the main areas of contention — trade, tariffs, taxation, currency manipulation, North Korea, Taiwan, and the South China Sea. China’s response to these conflicts might take the form of a maxi-devaluation of the yuan, much tighter capital controls, a severe downturn in its economy or all three."
Notice that there is NO mention that the numbers of the China workforce are crashing.
"But none of the extreme outcomes will be contained to China. Any significant departure from China’s current growth trajectory has serious negative implications for investors around the world."
Right, just like Japan, China tries to grow their economy at the same time that it's productive class is shrinking. Ignore the demographic crash and maybe it will go away.

"As Trump settles into office, he’s backing up his words with actions. His team is now packed with seasoned officials and advisors who have been vocal critics of China’s trade policies for decades. The new U.S. Trade Representative, Robert Lighthizer, has a record of imposing tariffs on unfair trading partners going back to the Reagan administration in the 1980s."
Rock the boat and you will see just how fast the water comes in over the sides.
"Another senior Trump advisor, Peter Navarro, is an academic and outspoken critic of China. Navarro wrote the book “Death by China,”

"This does not mean U.S. interest rates will spike, despite recent increases. The U.S. will simply force U.S. banks to buy the Treasury debt that China cannot.???? To the extent that China still runs trade surpluses, it is allocating its reserves into gold, euros, and special drawing rights (SDR or world money) and away from dollars."
Yeah right, China will stop buying U.S. debt notes and switch over to buying IMF/U.S.dollar notes disguised as SDRs. It will diversify by buying Euros when LePen promises to crash the Eurozone. Merkel is soon to be replaced with a centrist. The Italian bond market; Bonnie Tyler, We're living in a powder keg and giving off sparks.
https://dailyreckoning.com/indicators-chinese-collapse/

"The Chinese Communist Party is an illegitimate regime that will remain in power only so long as it provides jobs and a rising living standard for the Chinese people.",,, in the age of rampant automation.
"In effect, Trump is trying to force China to adopt policies on trade and currency that it cannot pursue for political and financial reasons.

And Trump’s leverage (the “art of the deal”) including North Korea, Taiwan, and the South China Sea involves matters of existential importance to the Chinese where there is no room for compromise."
"The greatest danger may be a maxi-devaluation of the Chinese yuan. Once the Chinese realize that they will not be rewarded by the U.S. for trying to prop up their currency, they may just let it crash to reap the benefits of even cheaper export prices to offset the U.S. tariffs."
This appears to be a simplistic analysis here. China subsidises a lot of stuff that is then sold below cost. They can't very well support their entire export market with domestic subsidies. The Yuan will crash and their huge bill for their huge imported raw materials will get even huger.
Manufacturing is very important because it is the prime value-added industry. If everything is sold at a loss, there is no point except a continuation of domestic employment.
China is forked because they tried to leap-frog organic domestic growth. Their export market is crashing and domestic wages can't make up the difference.

[Danny B]

More rocks in the financial road

"every bear market since the Federal Reserve Bank began in 1913 has collapsed"
YES, the FED is batting a perfect score. To go along with their impressive list of crashes, there is another impressive list. Every time that we are about to crash, they stand up with great confidence to tell us that everything is fine.
Alert: The Fed is Now Confident | Zero Hedge
The bankers that control the FED may very well want to yank the rug out from under Trump but, he is a wily one. He could probably pin the blame on them.

Goldman Sachs is stunned by the drop in demand for gasoline. They said that the drop would demand a recession. They seriously adjusted their numbers so that a recession is no longer demanded.
Goldman Stunned By Collapse In Gasoline Demand: "This Would Require A US Recession" | Zero Hedge

Australia depends on sending raw materials to China. China depends on export of finished goods. That has pretty much crashed.
https://mishtalk.com/2017/02/08/time...-in-australia/
China burned through a $1 trillion trying to support the Yuan. They have to find a balance between [I]capital flight[U] and loss of export competitiveness. They are currently losing ground on both counts. https://www.nytimes.com/interactive/...=business&_r=2

"Greece's debts are going to mount unsustainably, the IMF believes, unless the country undertakes serious reforms - and receives more bailouts from its eurozone neighbours"
NO reform will ever allow Greece to survive. The Troika just wants to punish them real good as a lesson. What they WILL accomplish is; the next state to leave will simply default and avoid the long, drawn-out pain.
EU faces crisis as IMF warns Greek debts are on ‘explosive’ path 

2/08 US has only itself to blame for dollar strength, Bundesbank chief says – GATA,,, So he says, while he cranks up the rheostat on the printing press.

2/06 Everyone is suddenly worried about this US mortgage-bond whale – Bloomberg It has a twin In OZ.

Rense, Anti-Trump 'Resistance' Aims To Make US 'Ungovernable'
Soros may get his way in the end, http://www.zerohedge.com/news/2017-0...r-city-turmoil

[Danny B]

automation and capitalism are incompatible

One of the main pillars of capitalism is human capital,, both for production and consumption. What happens to capitalism when the human is still needed for consumption but, he is needed far less for production?
The human was replaced in agriculture. About 1% of Americans work in Ag.
The human has been replaced in manufacturing to a great degree. The human sector of information handling has grown greatly but, is now diminishing. The State tried to absorb as many people as possible but that will be diminishing.

"Robots and computers could replace almost 250,000 public sector workers over the next 15 years, improving efficiency and saving billions of pounds, according to a new report.

The Reform thinktank said use of websites and artificially intelligent “chat bots” would remove the need for 130,000 Whitehall administrators, around 90% of the total, by 2030, saving £2.6 billion a year.

A further 90,000 NHS administrative posts and 24,000 GP receptionists could be subjected to automation in a similar way, with savings of more than £1.7 billion."
UK: Robots Could Replace 250,000 Public Sector Workers | Soren Dreier

It's true that the State could cut way back on it's expenditures. But, the State is the employer of last resort for people who can't find a niche in the private sector.
Our cities are concentrated areas of employment. As employment diminishes, our cities become concentrated areas of crime. Up til now, the State has been able to supply meaningless employment for people who had no niche in the competitive sector. A crash of the sovereign bond market would make this impossible to finance. At the same time, a bankrupt State would no longer be able to pay for our huge public "security" apparatus.

If the State, combined with the private sector can't produce enough employment in our industrial economy, people will have to revert to a subsistence agrarian economy. This really isn't practical for most people.
Armstrong said that California will go into crash mode as we go into 2018. Los Angeles may very well be a test-case of what happens when the safety net snaps.

[Danny B]

Armstrong, talking the dollar down

I often quote Martin Armstrong because of his track record of accuracy. Here is another bit. "Marty; You gave the resistance in the Dow at 20,158 and it stopped at 20,155"
https://www.armstrongeconomics.com/m...w-the-numbers/
There is an ongoing argument of the exact number but, it is generally accepted that every one dollar of additional tax shrinks the productive economy by 3 dollars. Frederick Hegel and his Hegelian dialectic demands that everybody work for GOV. I don't really see that working.
So, GOV taxes the snot out of everybody and the economy shrinks. There have been different tax schemes used with varying rates of success.

" As taxation rose, the Roman Empire declined. The Roman Emperor Hadrian when he took the throne forgave back taxes and created an economic boom."
https://www.armstrongeconomics.com/w...om-in-history/

"The EU leadership is really trying to make Great Britain pay dearly for voting to exit the Community. "
"The EU think that is they can make it so bad for Britain, nobody else will leave."
" So while the EU thinks by punishing Britain they will discourage others from leaving, they are seriously mistaken. The dream of the EU is dead. "
https://www.armstrongeconomics.com/i...egration-mode/

2/09 US stocks jump after Trump tax cut promise – Yahoo!
2/09 Hedge funds sell near-record amount of stock – Zero Hedge
YES, they sold them to the muppets.
Why It Feels Like the Dot-Com Bubble All Over Again | Casey Research
2/09 Worries grow over euro’s fate as debts smoulder in Italy and Greece – NYT Yep, they're "smoldering" at the moment.
2/09 Let ‘artificially’ low British pound, euro and yen recover – Pound Sterling Live Sure, turn off the heart-lung machine and let the patient recover.

"When it comes to international trade, they have NEVER learned their lesson even once.
These people Trump has surrounded him with are absolute idiots if they think they can “talk” the dollar down to help trade. Sorry, that is what Jim Baker did in creating the G5 and urging Europe to create the euro at the Plaza Accord in 1985."
"If they attempt to create the Trump Tower Accord to somehow fix currencies, they are going to find that the world monetary system is on the verge of collapse, "
" I wrote to Robert Rubin who was pulling the very same tactic – complain that the yen should be higher. Rubin, ex-Goldman Sachs, attempted to manipulate the dollar for trade. Instead of the real reform, they ALWAYS look for the easy way – lower the currency to sell more."
"The words coming out of the Trump Administration show that we are going to have to cope with this same nonsense of attempting to talk the currency down all for trade. We do not live in a FIXED exchange rate system. These people think they can talk currency up or down and it will magically stay there. What we see ahead is chaos and volatility – not a more stable economy."

"First and FOREMOST – these people cannot even comprehend how trade works because all they see is dollar flow. Nobody sits at the docks counting the number of goods coming in."
"Talking the currencies up or down WILL NOT alter the course long-term. We are headed into a major currency crisis for as the euro goes off the boards, the dollar will soar and Trump will freak out about trade exactly as we did back in 1931. At that time, Roosevelt’s Brains Trust were all wrong. "
"It was Warren who showed Roosevelt that the devaluation of the dollar was the only way out. Against the advise of the “establishment” bankers, Roosevelt devalued the dollar and that reversed the stock market and the economy, although that lasted only until 1937."

We can probably count on one thing – the people from Goldman Sachs advising Trump will most likely do what they always do – assume the manipulation and “influence” is all that is needed to change the trend in the dollar. Donald Trump’s top trade adviser Peter Navarro has hit out at Germany and accused the country of gaining an unfair trade advantage from the “grossly undervalued” euro. He gave a lift to the euro but has signaled that when it comes to international trade, they have NEVER learned their lesson even once.

Future Secretary of the Treasury responded, Tim Geithner in a matter of days by June 4th. Nothing has ever changed. The words coming out of the Trump Administration show that we are going to have to cope with this same nonsense of attempting to talk the currency down all for trade. We do not live in a FIXED exchange rate system. These people think they can talk currency up or down and it will magically stay there. What we see ahead is chaos and volatility – not a more stable economy.

The core of the first Roosevelt brains trust consisted of a group of Columbia law professors Adolf Berle (1895-1971), Raymond Moley (1886-1975), and Rexford Tugwell (1891-1979). Note that they were lawyers, not market investors, technicians, or economists. They knew how to get around the Constitution, not straighten out the economy. "
"They each were solicited for their LEGAL opinions by Roosevelt Roosevelt"
https://www.armstrongeconomics.com/i...-plaza-accord/

So, the economists all have $hit for brains and the lawyers are far worse. There isn't a one of them that understands global capital flows. They want to "talk" the dollar down to maintain export sector and employment. That has never worked before so, it is the obvious next step.
Capitalism is incompatible with automation and socialism is incompatible with human nature.

[Danny B]

The calm before the whatever,, organized crime = organized destruction

"According to Gallup, U.S. economic confidence has soared to the highest level ever recorded,"

Tax receipts indicate the US is in recession.
Gross private domestic investment indicates were are in a recession.
Retailers are showing that the US consumer is tapped out (see AMZN’s recent miss).
UPS, another economic bellweather, dramatically lowered 2017 forecasts.
And it is interesting to note that job growth at S&P 500 companies has gone negative for the first time since the last recession
"And we have also just learned that real median household income declined in 2016…"
"And if a recession is going to happen anyway, the Trump administration should want it to occur as quickly as possible.

"You see, if a recession starts a year from now, it will be much more difficult for Trump to blame it on Obama. But if a recession starts right now, he will definitely be able to argue that it happened because of the mess that he inherited from the last administration."
Recession 2017? Things Are Happening That Usually Never Happen Unless A New Recession Is Beginning | The Daily Sheeple

"The problem with depending on a central bankers' assisted bubble, is that it defies the laws of science, the history of bubbles, and human behavior. "
The Misleading Comfort of Calm | Doug Wakefield | Safehaven.com

2/10 Brewing banking crisis in Europe could shake up global economy – Risk Hedge That qualifies as a mega-understatement.
2/10 VIX cycles set to explode in March/April 2017 – part 1 – Active Trading Partners After the great calm comes the great fear.
2/10 Commerzbank CFO sees no near-term end to negative rates – Bloomberg Translated; he sees no return of interest-income to all the millions of people who depend on it.
2/10 Junk may slam into $1 trillion wall as maturities hit record – Bloomberg Ah yes,,, payback time.

2/10 Deutsche: Economic boom about to end – Zero Hedge True, next comes the economic BOOM.
2/10 Grant Williams sees oil pricing transitioning to the yuan and gold – GATA Yuan,,, yeah, right. Here is a chart of the price of gold in Yuan. It is screaming up as the Yuan is screaming down. https://www.goldbroker.com/charts/gold-price/cny
The oil-to-gold price has been far more stable than any of the currencies.

2/10 Draghi meets Merkel as populist concerns Trump ECB criticism – Bloomberg
2/10 Le Pen tops ANOTHER poll as support for Fillon plummets after scandal – Express
2/10 Marine Le Pen: Either the EU changes ‘or it will die’ – Politico
This tells you all you need to know about French bonds.
2/10 French election now Le Pen vs collapsing French establishment – Spectator

Decades ago, the world moved from cash to checks,,, then to credit cards.,, then to electronic transactions. This was generally foreseen by organized crime. They had to take over the State to make sure that nothing they did was illegal. Congress passed a law to make it legal for congressmen to do insider trading. This was a more blatant example. Congressman Ron Paul
was always cited for his honesty. Did that indicate that the rest of congress was dishonest?
NATO is the drug-distribution vehicle in Europe. The U.S. military is used to protect drug crops in Afghanistan. If the Columbian growers don't pay up, their crops get sprayed. The Mexican Pres was financed by the cartels. In general, organized crime has a stranglehold on the general population. This permeates to anything that involves a lot of money.
Illegal Drug Trade Essential to Geopolitics, Says Former Diplomat : Waking Times
Destruction of society will continue as long as it is profitable.

[Danny B]

Oil-to-gold,,.Trump borrowing vs the debt ceiling

Britain could do 'Brexit" fairly painlessly because it still has the Pound.
France is another story. Who really knows what a new Franc would be worth?
https://www.bloomberg.com/news/artic...debt-in-francs
France is moderately socialist and the GOV spends about 57% of the GDP. The Franc won't do well in the FX markets BUT, if the Euro is soon to crash, who knows what a Franc would be worth?

"So, the world’s largest exporter of oil is now dealing with the largest importer directly in yuan and it has the ability to convert those yuan proceeds into physical gold through the Shanghai exchange— which the data suggest it is doing as fast as possible."
It's a long article. It shows that much of the oil trade is being settled in gold. Gold is NOT consumed so, in essence, the world is moving away from bonds and, towards barter. But, primarily at the international level. This is the settlement of international debts with gold-trade notes that Jim Willie has been going on about for years. When the paper-gold market crashes, the price of physical gold will go way up. The world will revert to gold as a store of value and get rid of bonds.
Edit, had to break it up.

[Danny B]

second part

Grant Williams: The Death Of The Petrodollar, And What Comes After | Zero Hedge

The animal spirits that have buoyed the markets are fading fast. Consumer Confidence Tumbles As Democrats' "Hope" Plunges Near Record Lows | Zero Hedge

"As Trump hustles to nail down a tax overhaul, he faces the biggest federal debt surge since Truman"
Trump wants to cut way back on taxes and do lots of stimulus.
As Trump hustles to nail down a tax overhaul, he faces the biggest federal debt surge since Truman
This would entail a LOT of borrowing. BUT, the looming debt ceiling won't allow any increases.
http://static3.businessinsider.com/i...hard-place.jpg

PricewaterhouseCoopers suggests that States like Egypt, Pakistan, Mexico, Indonesia will have the largest economies by 2050. The West Will Become The New ?Third World?: PricewaterhouseCoopers | Zero Hedge
Lots of smart people with one-dimensional thinking.

[Danny B]

Third part

"Even the central banks themselves concede interest rates are intended to eventually normalize. Their radical experiment in zero interest rates (ZIRP) and bond yield repression of the last nine years was designed to force interest rates temporarily to unnatural lows in order to jump start the economy."
The boneheads think that they can jump-start the economy while wages and employment are crashing
"What will be coming soon, however, is the mother of all debt ceiling crises — an eruption of beltway dysfunction"
"The debt ceiling holiday ends on March 15, and it appears that the rudderless Treasury Department — Mnuchin has not yet been approved as Treasury Secretary and there are no Trump deputies, either — may be engaging in a bit of sabotage. That is, the cash balance has run down from a peak of about $450 billion to just $304 billion as of last Friday.

Unless reversed soon, this means that the Treasury will run out of cash by perhaps July 4th rather than Labor Day."
The S&P 500 has now reached the highest ratio to worker earnings in recorded history.
https://dailyreckoning.com/crash-will-violent/

[Danny B]

Ignore social trends and fallout at your peril

It has long been a mainstay of economic theory that; infusing money into the upper loop will result in a trickle down to the lower loop. But, this idea remains a theory. Money people have little understanding of social issues.

"Since the financial crisis nearly a decade ago, the Federal Reserve has printed trillions of dollars in an effort to create a “wealth effect” in the economy. Their theory goes that quantitative easing would make for rising prices of financial assets which should, in turn, make the wealthy feel more confident and thus spend more. By this process, a trickle-down effect would boost the economy."

"So the Fed has accomplished its goal of making the wealthy wealthier it just hasn’t trickled down to the rest of the economy as they had hoped. The end result is the Fed has only exacerbated the greatest wealth inequality in this country since the Great Depression."

"The fact is rapidly growing wealth inequality, rather than boosting the confidence of the wealthy, has had the opposite effect, making them increasingly concerned about its societal ramifications."
"'People attuned to societal levers understand that we are skating on really thin cultural ice right now."
"Some of the wealthiest people in America—in Silicon Valley, New York, and beyond—are getting ready for the crackup of civilization."
"This dramatic disparity in economic fortunes between the wealthy and the rest of the country in recent years is surely one of the major drivers behind the rising global trends toward populism and anti-elitism."

"'Brexit was the Bears Stearns moment in the rise of populism. Trump is the Lehman Brothers."
"The BIS says that post-crisis unconventional monetary policy has NO statistical effect"
So, QE was a waste of time that created lots of sovereign debt that can never be paid back. This may be a new realization BUT, it isn't a new effect.
“As I look back, it now seems that, with all the thought and work and good intentions, which we provided, we achieved absolutely nothing… nothing that I did, and very little that old Ben [Strong of the Federal Reserve] did, internationally produced any good effect – or indeed any effect at all except that we collected money from a lot of poor devils and gave it over to the four winds.”
-Montagu Norman, Governor of the Bank of England 1920-1944
The Unintended & Deadly Societal Consequences Of Quantitative Easing | Zero Hedge

So, Norman and Strong, CB heads of America and Britain printed tons of money to save the upper loop when it had outgrown the lower loop. They tried to raise "animal spirits" in the wealthy sector to effect trickle down. The growing inequality and rising resentment caused the wealthy to adopt policies that reduced their spending.
All debts must be paid eventually,, either by the debtor or the creditor. When the debtor from the lower loop can no longer service the sovereign debt that was incurred in his name, the creditor must bear the loss.
The upper loop is adamant that everybody in their boat must be rescued. The FED rescued everybody and bought every dip in the markets. A market without corrections is a casino.
The politicians goosed the markets for every election. The cumulative effect is that the upper loop has accumulated so much "dead wood" that it will eventually have a bonfire. This will take out both the bad and the good.
We hear all the demands to audit the FED. What a load of BS. The FED balance sheet is at $ 4.1 trillion because the U.S. Treasury sent over boatloads of bonds to be monetized. The House originates all spending bills.
Audit the house of Representatives.

The upper loop thought it was great that they could leverage the global mean wage to increase their margins. Did they think it through to the eventual outcome? Impoverish the masses and there is nobody with enough discretionary income to service the debt load. The bond market can never be serviced by a populace earning survival wages. Pakistan is a good example for this.
After the upper loop impoverishes the lower loop, they have to deal with the push-back. Brexit snuck by. The upper loop didn't like it and assumed that the lower loop could be controlled enough to reject it. Killary expected to control the lower loop enough to continue the Clinton-Bush regime of terror.
The PTB are starting to catch on that they are losing control. This has emboldened the French to send a political hand grenade special delivery to Paris.
Economists: Le Pen Victory Would Lead To "Massive Sovereign Default", Global Financial Chaos | Zero Hedge
"National Front's Marine Le Pen will likely win the first round, she is virtually assured a loss in the runoff round against either Fillon, or more recently Macron, having between 20 and 30% of the vote; on the other, all those same analysts and political experts were dead wrong with their forecasts about both Brexit and Trump, and are desperate to avoid a trifecta as being wrong 3 out of 3 just may be result in losing one's job."

The British voters figured that they had nothing to lose by voting to leave. Things were so bad, they took the risk. Trump voters figured that it could only get worse with a continuation of the entrenched powers. Le Pen represents the only hope for a lot of French people who believe in France, NOT in globalism. They are energized by the success of the Anglo -American voters.

The corporatocracy can take our money BUT, they take our compliance and stability with it.

[Danny B]

Different bubbles have different attributes

This article is about the varying "moneyness" of different bubbles.
"Behind every consequential Bubble is an inflation in underlying Credit. My analysis focuses on the nature of the monetary expansion responsible for the asset inflation."
The transformation of risky Credit into perceived safe money-like securities (“Wall Street Alchemy”) was integral to both “tech” and “mortgage finance” Bubble periods.

"I define contemporary “money” as a financial claim perceived as a safe and liquid store of (nominal) value. Money these days is Credit, but a special type of Credit. Unlike junk bonds, “money” enjoys essentially insatiable demand. As such, a boom fueled by “money” is a quite different animal than our above junk bond example. I would posit that a prolonged inflation of perceived safe “money” by its nature ensures far-reaching risk distortions. For one, Bubbles fueled by “money” appear especially sustainable, while a prolonged inflation of “money” virtually ensures a destabilizing crisis of confidence. "

"Rather, it’s the nature of Bubbles that the more conspicuous they appear the less systemic their impact."
"Today’s Bubble is global, and it resides at the very heart of contemporary electronic “money.” This means, as we’ve already witnessed, that it can inflate almost indefinitely, at the discretion of a small group of central bankers and so long as their Credit is readily accepted. It’s unique in financial history, '
"There’s a reason why crises tend to erupt in the money markets. Panic quickly ensues when markets suddenly sense their perceived safe and liquid holdings are at risk"
"Especially after years of inflating asset and securities markets, it will not be possible for global central bankers to walk away from QE without major consequences. The world is currently at peak QE, with major uncertainties surrounding future operations. "
"This week saw European bank stocks sink 2.4%. It’s worth highlighting the performance of the major French banks, with BNP Paribas (down 8.9%), Societe Generale (down 7.6%) and Credit Agricole (down 7.1%) posting notable declines."

This is where the rubber meets the road. As LePen looks better and better, French bank stocks will do worse and worse.
Credit Bubble Bulletin: Weekly Commentary: Bubbles, Money and the VIX
There will be more shocks from Italian elections. The German elections may offer big shocks. The America debt ceiling will offer shocks.
"Panic quickly ensues when markets suddenly sense their perceived safe and liquid holdings are at risk"
""Today’s Bubble is global, and it resides at the very heart of contemporary electronic “money.” This means, as we’ve already witnessed, that it can inflate almost indefinitely
Italy and France will send tremors through the system. The bubble can inflate almost indefinitely. Armstrong puts the crash of the EU at the beginning of 2018.





What Form Will The Great Confiscation Take - And How Can We Prepare? - DollarCollapse.com