Economic pressures

[Danny B]

Storing gasoline next to the furnace

Making waves in the swamp, 10/10 A ‘pressure cooker’: Trump’s frustration ruptures alliances, threatens agenda – WaPo
“By 2018, we just may see a completely different party forged out of the collapse of both the Democrats and Republicans we have come to know.” Trump has recast the Republican Party even though the elites are still in denial and fighting back. "
"The people now handling Trump, are doing their best to steer him clear of the Deep State to protect the inner-workings. Trump is finding it very difficult to Drain the Swamp because the Press is defending the Swamp to their last gasp of air like CNN, New York Times, and the Washington Post."
"Socialism is dying and taking the Democratic Party with it."
https://www.armstrongeconomics.com/i...ith-socialism/

"Of course the majority of the people who voted Democrat fall into three main categories: (1) the people who live on government programs, (2) students who have not gotten a job for a living who think money falls from above, and (3) those who live in the past because their parents were Democrats so they just vote the party line even against their own self-interest as long as it hurts someone else as well."
"All Democrats leaders are polling below Trump. They just live in a state of denial. Obamacare is a disaster, yet they block any reform simply to protect their legacy "
https://www.armstrongeconomics.com/i...ate-of-denial/

So, both parties are blowing up,,, GOV borrowed $1/2 trillion in 2 weeks,,, the stock market is going to blow to the moon.,,,,GOV will need to act fast AND intelligently when the crisis unfolds.

"A root cause for Congressional ineffectiveness will be found in the simple fact that the exercise of good governmental judgment cannot possibly compete with re-election pressures. "
"Congress has merely been transformed into a school how to be corrupt and get away with it.

Congress has only at best a 31% approval rating against Trump at 41%. Democrats in Congress are at 29%"
https://www.armstrongeconomics.com/i...-in-the-polls/
When the crash hits, THIS is who will be in the driver's seat.

European banks will go up in flames before American banks.
"The biggest problem rises from the rules that if a bank is in trouble, they just seize the bank and sell it for €1 and all the shareholders lose everything. This is having serious impact upon the European Banking System as a whole as I previously warned. "
Strange, the EU banks just can't seem to attract investors.
"Once again, the government solution is to make up rules that totally disregard the private reality. Why would anyone buy bank stocks in Europe today if the government can seize everything and shareholders get zero? Spain’s Banco Santander bought rival Banco Popular for €1. This is Brussels’s new system to rescue failing banks without burdening taxpayers or stressing markets. This was cheered around the world because the shareholders lost absolutely everything. The bank which was valued in the collapse at €1.6 billion was bought for €1. "
https://www.armstrongeconomics.com/w...n-bank-stocks/
Draghi wants to stop printing but, at the same time, he drives out capital.

[Danny B]

Not much more room to kick the can

Funny vid on Millennials, Home Depot Panics Over Millennials; Forced To Host Tutorials On Using Tape Measures, Hammering Nails | Zero Hedge
Jim Willie lists 58 recent global shifts. Pretty good article.
https://www.silverdoctors.com/headli...f-king-dollar/

10/11 Stock record ride ‘has reached epic proportions,’ Morgan Stanley says – MarketWatch And, how will this epic tale come to an end?
10/11 This is how the Fed will reduce its balance sheet – NY Times
10/11 What happens when the Fed finally reduces its $4.5trln balance sheet? – Elliott Wave
The PPT and the ESF are pumping money like crazy into equities and bonds. They either get it from the FED OR, they just conjure it up on their own.
New debt for old debt;
10/11 China debt-for-equity swaps turn out more like debt-for-debt – Bloomberg
10/11 S&P grades Illinois’ debt-reduction bonds a grade above junk – IL News
Crypto;
10/11 Russia turns cold on crypto-currencies – Reuters
10/11 China: the war against bitcoin – Asia Media
10/10 Bitcoin’s price bubble will burst under government pressure – Guardian
Slip-sliding away;
10/11 10% of New York City public school students were homeless last year – NY Times
10/11 Richard Thaler: this could be ‘the riskiest moment of our lives’ – MarketWatch He's just being dramatic. Things will get a LOT worse.
News on the millennials, 5 charts highlighting the epic housing crisis for Millennials ? one third of young adults living at home with parents.
Macron wants to cut back on the public sector in France. He has really stirred things up,
https://www.rt.com/news/406318-tear-gas-paris-strike/

[Danny B]

Argentine model,,, pension debt,,,BTC finding a niche

Apparently, the various patriot groups are preparing for the State to mount an assault against them. That isn't a realistic scene. Using Argentina as a model, this is what we can expect. The State can be expected to revalue the currency. The norm is to, cut off 3 zeros and print a new currency. It will also convert the 401ks and other retirement plans to treasury debt. Gov doesn't need to go around robbing people at gun point. It can just steal their accounts. The State needs lots of money to pay State employees (itself).

Look at Illinois.
New Report: Illinois Pension Unfunded Liabilities Worsened By $17 Billion In A Year
"Financial economists say real numbers are 2X or 3X worse. Also, the numbers are mostly over a year old, at least, as explained below."
Things have gotten much worse since then. The shrinkage in the pension fund is $46,575,342 every day. If it is actually 3X worse, that is almost $150 million every day.
New Report: Illinois Pension Unfunded Liabilities Worsened By $17 Billion In A Year – Wirepoints Original | WirePoints Illinois Financial News

"State and local governments are contributing around $100 billion a year to their pension systems. They need to be contributing around three times that amount to keep the liabilities from rising"
https://seekingalpha.com/article/411...eat-depression
The battles will be fought behind the closed doors of the banks.

10/12 US jobless claims fall to more than one-month low – CNBC
"Second, the September employment report came out the Friday before last. A Reuters survey of economists had expected the economy to add 90,000 jobs in September.

How many did it really add?

Not zero, but less than zero. The economy shed 33,000 jobs last month. This was the first time in seven years that the U.S. economy lost jobs."
https://dailyreckoning.com/four-major-catalysts-gold/
AMAZING that they can all ignore the brontosaurus in the room,,,, the 95 million who are not in the labor force.

[Danny B]

had to break it up

Bitcoin has everybody flummoxed.
10/12 Bitcoin price soars above $5,000 to record high – Guardian
10/12 Trace Mayer: bitcoin price will reach $27,395 in just four months – Coin Telegraph
10/12 Bitcoin isn’t money — it’s a ‘censorship-resistant asset class’ – Business Insider
10/12 Bitcoin is retaking its place as king of the cryptocurrencies – Bloomberg
10/12 Cryptocurrency is more than Bitcoin – MSN
10/12 Be patient, the Fed will screw you eventually – Maven
10/12 Bitcoin is a speculative bubble that will eventually explode – The Street
Bitcoin and a few other crypto currencies will eventually settle in to a small niche. The State will NOT allow very much wealth to flow into a store-of-value that they don't have some control over. The future of the blockchain will be for trading and contracts, not store of value.
10/12 Blockchain tech fuels peer-to-peer solar energy trading in Perth start-up – ABC.net

Manufacturing is the premier value-added industry. The low-wage producers have put a ceiling on worldwide wages. The newly created liquidity continues to flow into the upper loop where it is just hypothecated into new "wealth" OR, it is pushed OUT of circulation.
Everybody (hopefully) sees the problem but, nobody can raise wages with the downward pressure from automation.
The zillionares have read history books and, they know where this leads.
The Pitchforks Are Coming… For Us Plutocrats - POLITICO Magazine

EVERY State wants / needs to keep it's people employed. The number of jobs/workers necessary just keeps falling. No State can afford to raise wages and risk losing market share. Universal Basic Income is proposed as a means to keep consumption from falling more and more. This just can't be done with borrowed money but, the bankers have always resisted debt-free money.

[Danny B]

Setting up the muppets once again,,, Blockchain news

"Nominal global debt is reckoned at between $225 and $250 trillion, or about three times global GDP. Financial, debt-supported derivatives (financial instruments whose prices are derived from the prices of other financial instruments) are estimated at anywhere from $500 trillion to $1 quadrillion notational,"
"Globally, unfunded old age pension and medical liabilities, not counted as debt but still promises made that often have the force of law, sum to another $400 trillion."
"SLL maintains financial markets are exercises in crowd psychology, impervious to government and central bank efforts to control them, designed to separate the maximum number of speculators from a maximum amount of their money."
Side note, "and sell them to gullible, yield-chasing idiots (collecting a transaction fee) while taking the other side of the trade (collecting a huge profit once everything crashes). The instruments, of course, were CDOs, and not long after Goldman sold a whole of them, the financial system crashed and needed a multi-trillion bailout from which the world has not recovered since. "
"Ten years later, Goldman is doing it again, only instead of targeting subprime mortgages, this time the bank has focused on quasi-insolvent European banks.

And just like right before the last financial crash, Goldman is once again allowing its clients to profit from the upcoming collapse, or as Bloomberg puts it, "less than a decade after the last major banking crisis, Goldman Sachs and JPMorgan are offering investors a new way to bet on the next one." Goldman Is Allowing Its Clients To Bet On The Next Financial Crisis | Zero Hedge

"Using conventional valuation measures, the only time stocks have been more highly valued is just before the tech wreck in 2000."
"Every financial asset in the world is either a debt claim or an even less secure equity claim—a claim on what’s left after debt is paid. Much of the world’s real, tangible assets are mortgaged.

When the debt bubble implodes, a global margin call will prompt forced selling, driving down all asset prices precipitously. Most of what is currently regarded as wealth will vanish."
Robert Gore's "Hard Core Doom Porn" | Zero Hedge

Here is a MUST READ article on the blockchain. I suspect that it will make corruption MUCH less prevalent.
https://medium.com/future-crunch/blo...e-8671ee6dd252
Since EVERYTHING has been hacked, the world can't move forward with the present family of computers. The Quantum computer promises to make the blockchain and many other things much safer.
The Crunch # 37 - quantum computing for the mildly curious

[Danny B]

Trump has met with Henry Kissinger three times this year. Kissinger was responsible for presenting the House of Saud with the ultimatum that created the petro-dollar. Things are coming apart rapidly and the petro-dollar is dying.
"The Petro-Dollar is seeing its last months after a 43-year reign as defacto standard. Its retirement will begin in the East, then spread to the decaying loyal Western nations. The entire geopolitical chessboard is becoming more aligned with the Eurasian Trade Zone, one nation after another. Its cornerstones are Russia, China, and increasingly Iran. It has gathered some Eastern European countries like Turkey, and will gather more. It has pursued the Middle East oil monarchies, and will succeed in lassoing them into the zone corral. Whether they deploy financial connections, or trade ties, or security links, these nations no longer see the United States and British (who walk the American dog with a monetary leash) as the leading global players any longer. The leaders are China with its financial and industrial might and Russia with its energy and commodity strength."

"AUSTRALIA CONTENDS WITH FINANCIAL COLONIZATION
Fifteen years of heavy Chinese investment peaked in mining and port facilities
Australian Govt at edge of financial bankruptcy as result of US-led arms purchases"
"MEXICO FIGHTS BANKRUPTCY
Mexican Govt in talks with Russian Rosneft for a large scale oil deal
Mexico urgently needs funds for managing budget deficits"
Turning Point Nations On The Stage

"This fulfils the prophecy of the founder of geopolitics, Sir Halford Mackinder, made over a century ago. He described the conjoined continents of Eurasia and Africa as the World Island, and that he who controls the Heartland, which lies between the Volga and the Yangtze, and the Himalayas and the Artic, controls the World Island.ii The Chinese-Russian partnership is well on its way to controlling the World Island"

" The AIIB, which was set up by China and headquartered in Beijing, is the first supra-national organisation independent of the Bretton Woods institutions, which are all controlled by the US. These institutions, led by the World Bank and the IMF"

"She identified that Britain’s interests were aligned with her own, enabling her to cut out America from future developments. She has obtained arms-length control over London’s physical metal exchange. She had set up a non-dollar rival to the World Bank and IMF, ensuring future Asian development financing is under her control. And, with more than 80 member countries eventually joining the AIIB, she has successfully picked off America’s allies. The inclusion of the yuan in the SDR basket can be taken as an acknowledgement of China’s importance on the world stage."

"By having control of the physical market for gold, China can threaten to use it to destabilise the dollar, without destabilising the yuan. As such, it is potentially devastating, and used carelessly could trigger an economic collapse in Western capital markets, wreaking financial and economic havoc in America and other advanced nations."

"even Mr Netanyahu, the Prime Minister of Israel, has beaten a path to Mr Putin’s door several times. When Turkey, still a NATO member, decided to side with Russia along with Iran, Israel recognised that US protection was no longer good enough to secure her future. When Saudi Arabia was under American influence, Israel had felt as safe as she could be in that turbulent region. But a combination of a Hezbollah/Syrian/Turkish/Iranian axis to Israel’s north, and Prince Mohammed bin Salman’s silent coup in Saudi Arabia has fundamentally altered the balance of power."

"Saudi Arabia went along with Kissinger’s plan in 1973 to use the dollar for oil payments, and to buy US Treasuries and to deposit surplus dollars in American banks. In return, America guaranteed it would protect Saudi Arabia from outside influences. Also, part of the deal was Saudi Arabia would not support Israel’s enemies.

Now that the Kissinger deal is unravelling, it is reasonable to assume the financial deal, the Middle East’s support of the petrodollar to the exclusion of all rival currencies, will also come to an end, more rapidly than thought possible only four months ago."

"The ideal way for China to replace the dollar as the dominant currency for her cross-border trade is to encourage her oil suppliers to accept payment in her own currency, the yuan. It is clear from statements made in 2014 by Guo Jianwei, a PBOC monetary policy official, that China had already planned to wean her oil suppliers off the dollar by introducing both oil and gold futures denominated in yuan, allowing them to take at least part-payment in gold.
Persuading them to do so without unduly disrupting global capital markets should have been a gradual process, perhaps spread out over the best part of another decade. Instead, geopolitical developments have accelerated the time-table following the election of President Trump, who is noticeably lacking in diplomatic patience. His latest renegation of the Iran nuclear deal is for Asian observers classic US perfidy."

The world was willing to dump their dollars over a period of time to avoid upheaval in the capital markets. They would lose also. The plan was to; only buy from America what could be paid in dollars,,, slowly running down their dollar supply. They no longer need their accumulated dollars if the East will take other currencies for oil. America started beating the war drums and persecuting Iran, Russia, Venezuela, and other States that tried to escape the dollar corral. WE have pushed forward the timeline for dumping dollars. Tel Aviv on the Potomac stupidly tried to threaten all these States. This is a blatantly stupid move but, Netanyahoooo is desperate. He regularly goes to Moscow to suck up to Putin,,,, at the SAME time that his ISIS mercenaries are fighting Russians in Syria.

https://www.goldmoney.com/research/g...efcode=dollarc

Pox Americana and NATO surrounded Russia with Missile bases to threaten them into inaction and strangle them economically. They also tried to cut off Russia from the main port in Sevastopol and their port of Tartus in Syria. The Ukrainians paid a very heavy price for the attempt to keep Russia from Sevastopol.
The strangulation attempt in Syria is not working out. The Syrians know very well that they are fighting for survival. The U.S. is winding down in Syria. The oil in the Golan Heights will eventually be the center of a big fight.

The East is going to focus, to a great degree, on gold. The Germans are buying gold.
Germans Have Quietly Become the World’s Biggest Buyers of Gold
There is a possibility that pox Americana could flood the world markets with artificial gold made by transmutation. John Bedini talked about transmutation of gold in the video, "Petrovoltaics".
If that does not happen, we can expect a world gold standard for NETTING OUT trade. The blockchain is just too good,,, too useful, TOO HONEST to ignore. Pox Americana will have to either; pay with gold OR export everything that is not nailed down.
It's going to be very interesting

[Danny B]

Maxi-devaluation,,, Oct 18 congress

Bloomberg; "the Communist Party’s twice-a-decade congress is an event so massive nothing escapes its pull. The gathering -- slated to start on Oct. 18 in Beijing -- approaches cloaked in darkness, discernible mostly from the influence it exerts on other affairs. The meeting is expected to replace about half of China’s top leadership and shape President Xi Jinping’s influence into the next decade."

OK, so what does that mean for you?
"In contrast to the 2008 – 2010 peg, China avoided the impossible trinity this time by partially closing the capital account and by raising rates alongside the Fed, thereby abandoning its independent monetary policy.

This was also in contrast to China’s behavior when it first faced the failure of its efforts to beat impossible trinity. In 2015, China dodged the impossible trinity not by closing the capital account, but by breaking the currency peg.

In August 2015, China engineered a sudden shock devaluation of the yuan. The dollar gained 3% against the yuan in two days as China devalued.

The results were disastrous.

U.S. stocks fell 11% in a few weeks. There was a real threat of global financial contagion and a full-blown liquidity crisis. "
"China conducted another devaluation from November to December 2015.
The results were just as disastrous as the prior August. U.S. stocks fell 11% from January 1, 2016 to February 10. 2016.
"For its part, China did not want a trade or currency war with the U.S. in advance of the National Congress of the Communist Party of China, which begins on October 18. President Xi Jinping was playing a delicate internal political game and did not want to rock the boat in international relations. China appeased the U.S. again by allowing the exchange rate to climb from 6.90 to 6.45 in the summer of 2017."

"China escaped the impossible trinity in 2015 by devaluing their currency. China escaped the impossible trinity again in 2017 using a hat trick of partially closing the capital account, raising interest rates, and allowing the yuan to appreciate against the dollar thereby breaking the exchange rate peg."
"China cannot maintain a strong yuan because that damages exports, hurts export-related jobs, and causes deflation to be imported through lower import prices. An artificially inflated currency also drains the foreign exchange reserves needed to maintain the peg.

Since the impossible trinity really is impossible in the long-run"
"The most obvious course, and the one likely to be implemented, is a maxi-devaluation of the yuan to around the 7.95 level or lower."
"he geopolitical situation is also ripe for a Chinese devaluation policy. Once the National Party Congress is over in late October, President Xi will have secured his political ambitions and will no longer find it necessary to avoid rocking the boat."
"A maxi-devaluation of the yuan is Xi’s most potent weapon."
"Less dramatic devaluations of the yuan led to U.S. stock market crashes. What does a new maxi-devaluation portend for U.S. stocks?

We might have an answer soon enough."
https://dailyreckoning.com/prepare-c...i-devaluation/

"Macro Digest: The 19th Party Conference - The biggest Paradigm shift in 100 years?

I think next week’s 19th China Communist Party’s Conference is the single biggest event this year – a confirmation a true paradigm shift"
We tend to think as China being a recent flash-in-the-pan. Not true, https://s3-us-west-2.amazonaws.com/m...XEO3gfDjX8DRAg
https://www.themaven.net/mishtalk/ec...skSvJMLl7rpJzQ

maxi-devaluation of the yuan to around the 7.95 level or lower.

This would stop capital outflows because those outflows are driven by devaluation fears. Once the devaluation happens, there is no longer any urgency about getting money out of China.
The markets in the West and Australia are surviving on capital outflows from China. Take that away and see what happens.

[Danny B]

One more thing that will eventually unwind

Kass Warns: "The Probability Of A Flash Crash Grows Exponentially"
"investors understand that there is nothing normal in the current environment of unprecedented financialization and economic disruption. The deadweight of US$400 trillion 'cloud' of financial instruments (backing into assets that are either worthless or are declining in value) must be supported by ongoing financialization."
"Thus, risks facing investors are that either CBs and/or China misjudge extent to which reflation is dependent on inflating asset values and China's fixed investment.
If the market is underpricing the uncertainty with respect to the outlook of US monetary policy, we are even more concerned that it seems totally impervious to the risk of two potentially disruptive, if not dangerous, Games of Chicken likely to unfold in the summer and the beginning of the fall...." Imagine Trump and Xi playing a game of chicken.
Kass Warns: "The Probability Of A Flash Crash Grows Exponentially" | Zero Hedge

" As shown below, through the second quarter of this year, reported EPS, which includes “all the bad stuff,” actually declined in the latest quarter and has remained virtually unchanged since 2014. (But, even that is an illusion as shares have been aggressively bought back in order to sustain that same level of EPS.)"
http://realinvestmentadvice.com/wp-c...EPS-101217.png

"The difference between reported earnings with and without the benefit of share repurchases is substantial. The chart below shows the net difference" http://realinvestmentadvice.com/wp-c...cks-101217.png

" “The monster of economic waste—over $7 trillion of dictated stock buybacks since 2003 by the self-enriching CEOs of large corporations—started with a little-noticed change in 1982 by the Securities and Exchange Commission (SEC) under President Ronald Reagan. That was when SEC Chairman John Shad, a former Wall Street CEO, redefined unlawful ‘stock manipulation’ to exclude stock buybacks.”

Yep, stock buybacks used to be considered stock manipulation, yet today, it is widely accepted by investors as “just the right measure to boost earnings in the ongoing “beat the estimate” game."
“The stock buyback mania was unleashed. Its core was not to benefit shareholders (other than perhaps hedge fund speculators) by improving the earnings per share ratio. Its real motivation was to increase CEO pay no matter how badly such burning out of shareholder dollars hurt the company, its workers and the overall pace of economic growth.“

"The bottom line is that while companies take trillions of dollars and buyback shares, it only benefits the executives of the company at the expense of both workers and, ultimately, shareholders "
https://realinvestmentadvice.com/wee...pulate-prices/

[Danny B]

Blockchain and barter

Because computers can find and tally the smallest unit, it is tempting to use computers for a barter system. Here are some comments on the idea.

"The difficult part in answering this question is that people are not always able to differentiate between bilateral barter, which does not require a unit-of-account, and modern multilateral "barter" networks that do. "
"Multilateral barter networks are not hindered by the double coincidence of wants that define bilateral barter. Polydirectional trade, sans legal tender, is thriving globally. It is a recession-positive industry that accounts for 1/3 of global commerce according to the U.S. Department of Commerce."

"Our trade credits are face money. No one but the account holder can spend them. They can't be stolen as they don't exist outside the platform. The platform simply functions as 3rd party record keeper utilizing basic double-entry bookkeeping"
"The "barter" business is booming right now and many people are surviving now because of it. From localized Time Banks, to Bartercard, to Active International, individuals, SMBs, and multinational corporations are relying on commerce sin cash to find real profits."
"Bartsome solves most of the other issues of barter probably as much as it will ever be solved without resorting to “barter bux” and other internal currency-like schemes that are arguably just another currency"

"Cryptocurrency is like currency. A medium of exchange. Bartering is exchanging goods or services, without any currency used. Barter economy is difficult, because you must find a corresponding need to make a transaction, That’s why money was invented."
"Currency and barter are conflicting concepts. This is true regardless of the nature of the currency."

BATA, undercutting the banks, https://bata.io/

"Because we don’t trust each other, we would need the help of a mutually trusted third party person or organisation (for example, a bookmaker or legal firm). This is how society has worked for centuries. We now find ourselves in a world where some of these intermediaries (for example, banks, insurance companies,"
"Do we trust the intermediary's IT systems to be secure from external hackers so that our money isn’t stolen or our personal details aren’t leaked (somewhat of a topic given the recent Panama Papers Mossack Fonseca scandal)? Are we confident that at some time in the future the intermediary won't become corrupt and sell our financial or personal information?

So, let’s imagine there was a way for me to have that $100,000 bet with a complete stranger on the other side of the world, without the need for any form of trusted middleman or legal system. In January this year this system was created."
"heart of his idea was a peer-to-peer decentralised ledger or database, which he called the Blockchain. Probably the closest thing the world had seen before this was the peer-to-peer file transfer system BitTorrent."
"Early on in the Bitcoin journey people began to realise something else. What would happen if, in addition to storing the transaction (for example, a record that I gave you a Bitcoin) on the Blockchain, you could also store a set of rules on the Blockchain. For example a multi-signature transaction that need three “signatures” for the transaction to go through and/or can only go through between 8.30 and 9pm. If we can put these rules also on the Blockchain, then we have what is known as a Smart Contract. "

"So the next chapter in the story starts with a 19-year-old Russian/Canadian who three years ago decided it would be far better to take the Bitcoin experiment and start again. Except that his vision was not to create another cryptocurrency but something much bigger: to create an open source smart contract development platform that included a Turing complete programming language. He got a group of people together who were equally passionate about his vision, crowd funded $19 million and went live with the beta (Frontier Release) toward the end of last year. "

"a distributed autonomous organisation or DAO. This is a self-governing organisation under the control of an incorruptible set of business rules (that is, they are on the Blockchain). Full transparency, no hidden deals. This is happening already. A number of companies are now planning this, Slock.it being one of the first. "
The Blockchain and how it will change your life - Barter and Trade Blog Article By Troc Zen

[Danny B]

Draghi bailouts, oil profitability crash

China is the largest oil importer and Russia is the largest oil exporter. The Chinese central bank has opened an office in Moscow AND the Russian central bank has opened an office in Beijing. It's a safe assumption that they will NOT be pricing oil in U.S. dollars.
China Launches Yuan-Ruble Payment System | Zero Hedge

There was a huge amount of hype in the blogosphere about the gold-oil linked contracts created by China. Only problem is; they don't exist.
https://www.bullionstar.com/blogs/ko...contract-myth/

EVERYBODY is intently following the stock markets,,,by design.
"The global bond markets are teetering on the brink of collapse … threatening a worldwide financial meltdown."

Remember that the "bail ins" were supposed to shift the risk from the taxpayer to the bank investors. This would take the risk off the taxpayer.
"While no one has been watching, the European Central Bank (ECB) – led by “Super” Mario Draghi — has been quietly switching vast liabilities from European private banks and investment funds onto the shoulders of unsuspecting citizens across northern Europe."
"Worse yet, there has been no democratic decision by any European citizen to take on these uncollectible debts that currently total more than 1 trillion euros … and grow every day.

This transfer is the unintended side effect of Europe’s own quantitative easing policies (QE) implemented by Draghi and his merry men at the ECB."
"Eurozone banks are crumbling under approximately 1.06 trillion GBP ($1.3 trillion) of bad loans. "
"This means that 1-in-20 loans across Europe are in trouble. But when you dig deeper, it gets even worse. That’s because there are 10 EU countries that have an average bad-loan rate of 1-out-of-10, which means 10% of their loans are underwater."
https://etfdailynews.com/2017/10/14/...nd-crisis-vgk/

The FED printed mega tons of money pixels. These flowed everywhere (except wages) and financed lots of worthless projects,,, like fracking for oil. BIG oil is constantly losing money,,, something like $ 20 billion last year.
"All that remains now is a mere shadow of the once mighty oil industry that will be forced to continue cannibalizing itself to produce the last bit of valuable oil."
"For example, Chevron was able to make considerable profits in 1997 when the oil price was $19 a barrel. However, the company suffered a loss in 2016 when the price was more than double at $44 last year. And, it’s even worse than that if we compare the company’s profit to total revenues. Chevron enjoyed a $3.2 billion net income profit on revenues of $42 billion in 1997 versus a $497 million loss on total sales of $114 billion in 2016. Even though Chevron’s revenues nearly tripled in twenty years, its profit was decimated by the falling EROI."
"Decimate", a Roman strategy of killing one out of every ten persons. Very often used when the proper word for the situation is "annihilate"

"For instance, the seven top global oil companies that I focused on made a combined $213 billion in cash from operations in 2013. However, they also forked out $230 billion in capital expenditures. Thus, the net free cash flow from these major oil companies was a negative $17 billion"
"that doesn’t include the $44 billion they paid in dividends to their shareholders in 2013. Even though the price of oil was $109 in 2013; these seven oil companies added $45 billion to their long-term debt:"
"As we can see, the total amount of long-term debt in the group (Petrobras, Shell, BP, Total, Chevron, Exxon & Statoil) increased from $227 billion in 2012 to $272 billion in 2013. Isn’t that ironic that the debt ($45 billion) rose nearly the same amount as the group’s dividend payouts ($44 billion)? Of course, we can’t forget about the negative $17 billion in free cash flow in 2013, but here we see evidence that the top seven global oil companies were borrowing money even in 2013, at $109 a barrel oil, to pay their dividends."
Imagine what the markets would do if the oil majors cancelled their dividends.

"Since the 2008 global economic and financial crisis, the top seven oil companies have seen their total combined debt explode four times, from $96 billion to $379 billion currently. You would think with these energy companies enjoying a $100+ oil price for more than three years; they would be lowering their debt, not increasing it. Regrettably, the cost for companies to replace reserves, produce oil and share profits with shareholders was more than the $110 oil price."

"Petrobras’s debt surged from $21 billion in 2008 to $109 billion last year. As Petrobras added debt, it also had to pay out more to service that debt. In just eight years, the annual interest amount Petrobras paid to service its debt increased from $793 million in 2008 to $6 billion last year"
Petrobras is owned by Brazil,,, a chief member of the BRICs
It is a State-owned company so, it is mismanaged to the MAX
Petrobras Annual Dividend Payments:

2008 = $4.7 billion
2009 = $7.7 billion
2010 = $5.4 billion
2011 = $6.4 billion
2012 = $3.3 billion
2013 = $2.6 billion
2014 = $3.9 billion
2015 = ZERO
2016 = ZERO

"Even with a $5 increase in the price of oil last year compared to 2004, these oil companies combined net income profit fell nearly 90%."
"In 2004, these seven oil companies enjoyed a net Free Cash Flow minus dividends of a positive $34 billion versus a negative $39.1 billion in 2016:"
https://www.silverdoctors.com/headli...world-economy/

[Danny B]

Thoughts from Armstrong

Recap; capital can move instantly around the world. Labor can not. This allows capital to move to the lowest-overhead producer of goods. After manufacturing has been gutted, only the service economy is left. The CBs tried to create a trickle-down effect in the lower loop of the economy by pushing "money" into the upper loop. It was destined to fail.
The State is essentially a part of the service economy. But, it is also a huge parasite because it produces nothing."

QUESTION: Mr. Armstrong: I find it disheartening the more I try to advance my family to build a better future for them, the more I realize that the harder I work we do not really get ahead. I agree that taxes just keep moving higher and I am now looking for a job in my field to leave California. A friend of mine from school left Illinois and moved to Texas. He said he feels much better and is gaining ground instead of losing it. Has taxes been the driving force to create migration in advanced civilization?

ANSWER: Absolutely. I have written how Rome fell and just mapping the population of Rome you can see the fate of Illinois – people sell and just leave.
Government creates nothing to advance society or to increase GDP in any positive manner. It is a natural human response not to pay taxes and this is why taxes have been the number one reason for civil war and revolution. Taxes tend to support politicians and their pensions which they exempt themselves from everything from Inside Trading to Obamacare."
https://www.armstrongeconomics.com/a...-civilization/

"The EU is in a death spiral. Every law they pass is to preserve their own power – not for the good of the people or Europe. Once again, the government solution always runs counter-trend to the Free Markets setting the stage for the next crisis. "
"Britain should run away from the EU and slam the door shut and then nailed it to be sure. The British should abandon the EU altogether and undeniably join the NAFTA trade agreement. If they do not, Britain will find itself being dragged down with the sinking ship."
"The Association of German Machinery and Plant Engineering (VDMA) said: “A tough Brexit is a conceivable but not acceptable scenario for the economy.”
https://www.armstrongeconomics.com/i...joining-nafta/

"Criticism of the reform comes from trade unions and left parties who cannot see the opposite side of the table. They say Macron has taken an entrepreneur-friendly policy and is dismantling the welfare state. This is what the strikes are all about. Once again, we are looking at the demise of socialism. Do not forget, Communism began in France and it was sold to Marx as a great idea. "
Armstrong is also guilty of "not seeing the other side of the table". Automation and low-wage competition has made it impossible to earn a living wage for MANY people. This isn't so much a crash of socialism as it is a widespread crash in employment. That equates to a crash in SURVIVAL.
https://www.armstrongeconomics.com/i...-of-socialism/

[Danny B]

Tectonic drift in the world stage

The West has gone broke trying to maintain it's high standard of living even after it lost it’s "job". The State and bankers tried to paper-over the problem by producing LOTS of debt to keep finance going. The jobs just keep disappearing and everybody knows it.
Daily Job Cuts - Layoff News , Job Layoffs 2017 / 2016 , Bankruptcy, Store closings, Business Economy News

The bankers continue to create bogus transaction to produce fee money. World stock markets are about $70 trillion above norms. BUT, Yellen is AMAZED that she doesn't see any price inflation. The upper and lower loops meet in anything that is a store of value. (except gold). RE has gone up and it takes 3 times as much of your income as it did for your grandfather to buy a house.
"living standards for many millions of people in the west have come down and/or are laden with uncertainty, while millions of Chinese now have higher living standards. "
"Economic models are more important in central banking than common sense. The Fed has some 1000 PhDs under contract. But Yellen, their boss, still claims that ‘perhaps’ the models are wrong, with it comes to inflation, and to wage growth. They have no idea why wages don’t grow. Because the models say they should. "

"And then globalization itself is in trouble. The very beneficiaries, the owners of globalization will be. Though not before they have taken away most of the fruits of our labor. What are you going to do with your billions when the societies you knew when you grew up are eradicated by the very process that allowed you to make those billions? "
"The endgame of that process is painfully obvious way in advance. Centralization feeds central forces, be they governmental, military or commercial, with the fruits of labor of local populations. That is a process that will always, inevitably, run into a wall, because too much of those fruits are taken out. Too much of it will flow to the center"
https://www.theautomaticearth.com/20...on-is-poverty/

"Money is a form of social control, and by getting the rest of us into as much debt as possible they are able to get all of us to work for their economic benefit."
"By the way, do you know where the term “mortgage” originally comes from?
If you go all the way back to the Latin, it actually means “death pledge”.
"All over the planet, national governments are drowning in debt, and this didn’t happen by accident. The elite love to get governments into debt because it is a way to systematically transfer tremendous amounts of wealth from our pockets to their pockets. "
Side note, Poland Says No Thanks To $9.2bn Credit Line From IMF
How The Elite Dominate The World ? Part 1: Debt As A Tool Of Enslavement | Zero Hedge

The world really has no way to compensate for the loss of employment. Italy has come up with the idea of raising youth employment by creating a pension crisis, https://www.armstrongeconomics.com/i...ension-crisis/

Armstrong, "ANSWER: This is a battle to the death. A cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. However, this idea has also falsely embraced the notion that a cryptocurrency will be a store of value "
"The rise of cryptocurrency is a reflection that people do not trust the government. Those in power know that and see this as unacceptable. "
"They have unlinked shielded coins from their history on the blockchain. This means they can be used for tax avoidance and the government can use its Terrorist Card. They will not allow cryptocurrency to defeat taxes and BitCoin is not secure enough in that manner."

"There is absolutely no question that we are heading into a new Monetary System. The Monetary Crisis Cycle turns up next year. We saw what happened as soon as the ECM peaked in 2007 and we forecast new highs in the Dow back in 2010 (See Barrons), the War Cycle turned up in 2014 and our Political Cycle that pinpointed the political change in 2016 produced Trump, the ECM peak in 2015.75 "
"We will issue a special report on the coming One World Currency. There is just too much to address in a blog post"
https://www.armstrongeconomics.com/p...ld-currency-2/

The East wants to do LOTS of trade but, few people have enough income to support any kind of luxury system. They want to grow trade enormously and net out the difference in gold. The West wants to use the SDR or some kind of State cryptocurrency. The East has had quite enough of our wars and our DU everywhere.

The Bank for International Settlements transacts ONLY in gold bullion between sovereigns. This will probably be the new model for the East. Only, the B.I.S. won't get a piece of the action. The Eastern alternatives to the IMF and BIS will do the debt reconciliation. Armstrong talks about a new monetary system but, won't mention gold. Traders hate gold because it leaves them out,,, for the most part.
China knows that they will crash. They have the fastest growing debt and the fastest shrinking labor force. Their foreign markets are drying up as they have gone broke from Chinese competition. Try as they might, they can't spur domestic consumption when wages average $ 30 a month.

Pox Americana (NEOCONS) have given the world cause to unite against us and join up with China. Even Germany is pushing hard to join up with Russia.

[Danny B]

Take your choice; money or people

One of the centerpieces of globalization is cross border capital flows. The idea sounded good in theory. BUT, only to short-sighted people in the upper loop. Great Depression I was blamed, in part, on the pools of "dark liquidity" that flowed into and out of different asset classes. We now have much larger pools that can move much farther and faster. Globalization depends on unhindered flows. Since banks no longer have to depend on the money in savings accounts to fund loans, they have even less connection to the lower loop. As we get more broke, they just extend our credit terms. The debt-service cost eventually reaches a point of diminishing returns and borrowing stops. ZIRP doesn't trickle down all that much.

The pools of capital naturally flow to where they get the best return (in the short term).
"Europe suffers from extremely high taxes, taxes and social security contributions combined, which account for around 50% of the business cost which has produced nothing but higher levels of unemployment. In the US and Asia, the comparative rates are between 30% and 40%. Europe just cannot compete in the world economy and is slowly dying."

"Macron still fails to see that higher taxes produce lower economic growth. Until politicians wake up and see themselves are the source of the problem, there is little hope in producing meaningful economic reform anywhere in the world.After all EU countries suffer from financial distress, the plan can only lead to even more taxes being collected and not less."
https://www.armstrongeconomics.com/i...-death-spiral/
"The core problem is never addressed. All of these proposals on how to end the European economic paralysis simply never consider the role of government and its leftist Marxism that failed in China and Russia."
"The high tax burden prevents a dynamic renewal of the economy reducing the standard of living for everyone and perpetuating high unemployment as twice that of the rest of the industrialized world."

Armstrong fails to mention that capital will never flow back to a high-wage economy. Even if the tax burden were lessened, the cost of business would be much higher than the East. The CBs are trying to hold back deflation when the youth unemployment runs as high as 60%. The ECB tries to make up for everybody's lost wages / earning power.
An economy needs people. The bankers are focused on capital, margin and interest. They have no interest in helping people. They abhor debt-free money and lament the lack of children. 20% Of Americans are immigrants. We poach warm bodies from wherever we can just to keep the population from shrinking.
As wages slip away, the money powers will have to eventually make a decision between debt-free money and people.
Kuroda of Japan is leading the way at creating debt-free money.
51% of Americans receive a check from GOV. Armstrong predicts that GOV finances will fail. Which road will it take?
https://www.armstrongeconomics.com/a...-post-2015-75/

[Danny B]

Japanese plan,,, debt and death

"The Bank of Japan’s current path provides an ominous reminder of a similar era 80 years ago. These policies, which are also being followed by the other world central banks, will lead to disaster.

“One man - one kill” railed inoue Nissho, leader of the Ketsumeidan (the Blood Pledge Corps), a Japanese ultranationalist group of the 1930s committed to cleansing the country of ‘traitors’ - the leaders of business and government. "
"Korekiyo’s plan was to fund government spending by having the BOJ directly purchase all the government-issued bonds. The hope was that, when conditions and inflation improved, the bonds would be sold back into the market. Four years later, the BOJ’s balance sheet was 90% of GDP, and the economy (and for “economy” read military) was totally dependent on government spending financed by the BOJ.

As the first modest hint of inflation arrived Korekiyo attempted to sell government bonds publicly, but the auction failed. With this failure it became clear that the bonds which had been stuffed onto the BOJ’s balance sheet could never be sold."

The FED is currently talking about selling the GOV bonds that it holds. Stand back for a moment and think about it.
If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good also. Thomas Edison. Both Ben Franklin and Adolph Hitler issued money to the producing sector of the economy. Both got a war for their presumptuousness.
"There is no end in sight with the BOJ buying $60 billion a month of government debt. At this current pace the modern BOJ will by 2019 be the proud owner of 60% of the local bond market. There is no longer a market price for a Japanese Government Bond, it is an asset whose price is set by the BOJ."
Just print the money and screw the bonds and the banks.
"Central banks continue to act as the enablers to their respective governments." Governments YES,,, productive sector, NO.
"Central banks are currently furnishing the excess credit that, in the past, has been followed by an orgy of blood."
The Treasury can NOT emit currency,,, no way, Jose.
One Bank's Shocking Warning: Central Banks Will Lead To "An Orgy Of Blood" | Zero Hedge

The ECB is printing $trillions in bonds. They wouldn't dream of printing Euros. The ECB Has Bought ?1.9 Trillion In Bonds: Here Is Who Sold And What They Did With The Money | Zero Hedge

The CBs print up free money and use it to buy stocks, Advancing Time: Central Banks Massive Incursion Into Buying Stocks
C.H. Smith believes that they are trying to nationalize the stock markets, oftwominds-Charles Hugh Smith: The Endgame of Financialization: Stealth Nationalization
I don't think that things are going to work out the way that they plan.
There is just no getting around the lack of employment.

1. price rigging of interest rates by the ECB to conceal the importance of the difference between general budget deficit and structural deficit - that is, the existing debt burden that is subject to the mathematics of compound interest",,,,,,,,,
"2. European governments do not provide estimates of unfunded liabilities, so government debt excludes future liabilities for pensions",,,,,,,
"3. there is no accounting for the cost of immigration. government budgets exclude immigrations costs from fiscal calculations",,,,,,,,


Unless they reform their health and social welfare programs, they will have to
meet these unfunded obligations by increasing tax burdens as the larger
Measuring the Unfunded Obligations of European Countries
2
benefit obligations come due. Although spending averages 40 percent of GDP today:
By 2020, the average EU country will need to raise
■the tax rate to 55 percent of national income to pay promised benefits.
In comparison, the United States’ shortfall for Social Security and Medicare alone has been somewhat smaller than the EU average, at 6.5 percent of future GDP. But as a result of the expansion of the Medicare
program to cover prescription drugs, the U.S. fiscal imbalance is now 8.2 percent of future GDP. Putting this in perspective, to close its fiscal imbalance:
The United States would need to save and invest an amount equal to 8.2 percent of its GDP beginning now and continuing every year forever to pay expected future benefits without future tax increases"

The short observation is; when the default cascade hits, no State will be able to get back up off the floor without creating debt-free money OR killing off the old people.
http://www.ncpa.org/pdfs/st319.pdf

[Danny B]

Non-linear complexity-- too much for most people to comprehend

As computers take on more and more tasks, they solve problems that man could never understand. It isn't that these problems are so difficult. Things like the economy are evolving every second. You can't understand a problem that never "sits still".
Armstrong, " My math teacher said that most teachers do not use this method other than using special case formulas because its non-linear solution and that messes up people’s brain.
In physics, the professor said that nothing is random and then I went to economics class and they said everything is random so don’t waste your time trying to forecast it.
In mathematics and physical sciences, a nonlinear system is a system in which the change of the output is not proportional to the change of the input. Therefore, nonlinear problems are of great interest to engineers, physicists, and mathematicians because most systems are inherently nonlinear in nature such as weather, climate, disease, and life itself. Nonlinear systems often appear to be chaotic, unpredictable or counterintuitive. This is beyond the imagination or understanding of the average individual.
Fundamental analysis is therefore worthless because what moves a market is “belief” not logic.
https://www.armstrongeconomics.com/a...to-comprehend/
Armstrong's model is a confidence model. His program, Socrates, removes much of the randomness of markets. Eventually, AI, will delineate smaller and smaller moves in markets. It will eventually reach a point to where it will "red flag" inflationary movements by the State.