Economic pressures

[Danny B]

Interest rates and the worst-case scenario

Reverse wealth effect, oftwominds-Charles Hugh Smith: Before You "Buy the Dip," Look at This One Chart

The fear of rising interest rates is spreading, PressTV-Dow Jones crashes again, plunges 1,000 points




Ah yes, the Chinese need to raise cash.

[Danny B]

Graphs of wages and productivity

Some graphs that tell the story very well.
We're at the bottom, https://www.financialsamurai.com/wp-...by-country.png
We're always working harder, http://s3.amazonaws.com/content.thir...jpg?1458578442
Part of the reason for our loss, http://www.industryweek.com/sites/in...ss-Incomes.jpg
The FED can inflate the money supply far faster than we can make gains in wages. https://lh5.googleusercontent.com/-C...Power+USD2.JPG

We went off the gold standard and this allowed to FED to print up lots of faux money for all the money renters. In 1971, we got a swift kick in the wallet, https://philebersole.files.wordpress...oductivity.png
We "survived" by just borrowing more, https://wolfstreet.com/wp-content/up...al-2017-Q4.png

https://wolfstreet.com/2018/02/08/the-state-of-the-american-debt-slaves/

The more that we were squeezed by monetary inflation, the harder we worked and the more we borrowed. The upper loop is trying to keep the game going. The printing has gone parabolic. It is SUPPOSED to stave off defaults in the lower loop. The real result is; price inflation resulting from the monetary inflation is bringing even more defaults. Diminished consumption caused manufacturing to do even more automation.
The defaults are rising in spite of the efforts at the FED to hold it all together.


These feces-for-brains bankers are ALREADY holding SDRs. What happened to the new magic-money, the SDR?

[Danny B]

The fallout from the rising 10 year note

Mnuchin is at the Treasury. When Powell became head of the FED, the stock market dropped 1175 points. Now, we see more drops. Maybe the FED, PPT and ESF are NOT going to prop things up. There were initial indications that somebody came in and cut the losses in half on the first day. It remains to be seen just how much control Trump, Mnuchin and Powell have over the Exchange Stabilization Fund.
"a background description is given on the USDept Treasury's enormous slush fund in the Exchange Stabilization Fund which has size in the multiple $trillions and which has a function in financial rigging of every major Western market, and whose core might be $3 to $5 trillion worth of Saudi recycled petro surpluses, with primary function being the fabrication of fake USTreasury Bond demand via the Interest Rate Swap derivative machinery during the absent foreign bond demand"
GOLDEN JACKASS.COM - The Golden Jackass Knows Gold, Currencies & Bonds"

https://www.marketwatch.com/story/is-the-decades-long-downtrend-in-interest-rates-finally-over-2018-02-08

"There's a not-so-quiet rebellion going on in the bond market, and it threatens to take 10-year yields above 3 percent much faster than expected just a few weeks ago."

https://www.cnbc.com/2018/02/08/heres-why-the-stock-market-is-in-turmoil.html

That might cause a downturn. What if China does not want a downturn?
Right,,, temporary. They have never been able to withdraw liquidity.
That won't make them very popular in the District of corruption.
The FED did it ALL for them and now, it has run it's course.

Venezuela has a negative feedback loop in oil production, https://www.zerohedge.com/news/2018-...ial-insolvency
The Venezuelans are all trying to leave, https://sputniknews.com/latam/201802...rol-venezuela/

[Danny B]

Impossible decision,,, short version

I hurt my eye and can't stand light,,, especially looking at the screen.
Here are a few links.

https://dollarcollapse.com/monetary-policy-2/why-fed-will-fail-three-charts/

Fed will have to choose between rates and stocks, Sprott says | Gold Anti-Trust Action Committee

https://www.rt.com/business/418306-next-bear-market-doozy/

https://www.zerohedge.com/news/2018-02-09/gartman-full-fledged-bear-market-upon-us-we-added-our-short

"But that truth means the system as managed by the political elite is dysfunctional. Yet the elite refuse to yield any power."

https://www.armstrongeconomics.com/future-forecasts/why-people-hate-is-it-for-only-three-reasons/

1517, removing the financial remora, https://www.armstrongeconomics.com/a...ion-v-banking/

https://www.reuters.com/article/us-eurozone-ecb-rates-mersch/central-banks-must-meet-public-demand-for-virtual-currencies-ecbs-mersch-idUSKBN1FS21W?il=0

[Danny B]

slipping into democracy/insolvency

ALL GOV is socialist because all GOVT. does redistribution. All democracies eventually crash because the people learn that they can vote the whole pie for themselves. All politicians buy votes with promises. They eventually promise more than the taxpayer can afford. We were originally given a republic. The 17th amendment chipped away at that. When women were given the vote, the results became more touchy-feely and less businesslike. Women are a lot more likely to live in a wishful dream world.

We lost the republic and became a democracy. Politicians bought election money with promises to the rich,,, and then bought votes with promises to the poor. Supporting the rich costs 10 times what it costs to support the poor. The State told the people, "don't worry about old age and infirmity, we will take care of you." "Don't worry that you have no skills and are unemployable. we will give you a job."

Because of the great wealth arising from the post WW II economy, America was able to make good on those promises. That has all ended and the printing press is all that is keeping things going. Trump plans to spend $trillions on infrastructure. The FED plans to stop monetizing Treasury paper.
No politician has had the balls to take away all the perks that earlier politicians have passed out.

I'm guessing that Trump will demand that GOV shut down all the benefits because the FED will no longer monetize Treasury paper. That should light a fire under the FED.

[Danny B]

Stpckman,,,, the wind & the unwind,,,

My eye is still giving me trouble and the posts will be short. You can skip a lot of reading by just looking at what David Stockman wrote. The FED seems to think that the unwind is controllable.

https://www.zerohedge.com/news/2018-02-13/swan-song-central-bankers-part-1-last-week-wasnt-mistake

https://www.sovereignman.com/trends/this-may-be-the-beginning-of-the-great-financial-reckoning-22930/

https://www.sovereignman.com/trends/...ckoning-22930/
Ah yes, it requires huge new loans to roll over the old loans.
Like Sleeping Beauty, he has finally awoken.


Wait til this really gets rolling. "Apoplectic" will be a watchword.

Stockman, "That get's us to the market's misplaced confidence that after a moderate-sized hissy fit on Wall Street, the Fed and other fellow-traveling central banks will back-off from normalization and QT. The fact that the head of the New York Fed and Goldman plenipotentiary at the central bank, Bill Dudley, pointedly referred to last week's two-day $4 trillion stock plunge as "small potatoes" is perhaps a hint of things to come."

Contra Corner » Swan Song Of The Central Bankers, Part 1: Last Week Wasn’t An Error

Armstrong writes about contagion in counter-party risk.

https://www.armstrongeconomics.com/world-news/interest-rates-world-news/counter-party-risk-the-truth/

https://www.armstrongeconomics.com/international-news/china/chinas-one-belt-and-one-road/

The default cascade will freeze up all credit. The Russians don't intend to get caught with their pants down.
https://www.rt.com/business/418665-r...dy-shut-swiftI suppose that this implies a crash of the BIS.. VERY interesting

[Danny B]

When will the bond market wahe up?


Looks like $13 trillion just isn't enough to keep things rolling.

Wait, what about my oil shares?
The currency war seems to be on the front burner now.


There was nothing accidental about the FED inflation.
Not on your life.
Junk bonds are crashing fast. The shorts smell blood.
Yes, from the fat and into the fire.

https://dailyreckoning.com/last-dying-breath-sound-finance/

https://news.goldcore.com/ie/gold-blog/global-debt-crisis-ii-cometh/

[Danny B]

still smooth sailing

Well, this is all getting repetitious. The debt mountain grows a bit higher.
"2) Unpaid bills will skyrocket. Illinois currently has nearly $12 billion in unpaid bills, which, under the current impasse, are expected to total nearly $25 billion by early 2019."
Illinois' Fiscal Crisis Impacts Business

https://northmantrader.com/2018/02/14/the-puzzle-coming-together/

https://dollarcollapse.com/debt/the-world-embraces-debt-at-exactly-the-wrong-time/

Edging towards the exits,

Just what we need.
That was tried with the Smoot-Hawley act and, it crashed international trade.

[Danny B]

Petro dollar shifts,,, evaporating israel

Saudi Arabia was the backbone of the petro-dollar scheme. Jim Willie claims that the anglo-americans stole both the Saudi gold AND the Saudi treasury bonds. Who knows?
Saudi/Russia-Led Oil Supergroup In The Making

https://oilprice.com/Energy/Energy-General/SaudiRussia-Led-Oil-Supergroup-In-The-Making.html

It appears that the Sauds have switched horses.
America is producing LOTS of light crude oil that our refineries can NOT refine. We send it out to other States with different refineries.

https://stateimpact.npr.org/texas/2014/10/28/why-is-the-u-s-still-importing-so-much-oil/

https://oilprice.com/Energy/Energy-General/Venezuelas-PDVSA-Faces-Mass-Exodus-Of-Workforce.html

Israel is trying to steal the oil & gas from both Syria and Lebanon. The Syrians have shifted strategies.

https://oilprice.com/Energy/Energy-General/Russia-Is-Taking-Over-Syrias-Oil-And-Gas.html

The Chinese will participate in the oil industry in Lebanon.
51 firms win out for oil exploration contracts in Lebanon - Xinhua | English.news.cn
Netanyahooo said that America is an unreliable partner and, israel is going to look for a new match with Russia. Keep in mind that Putin personally threw Netanyahoooo out of the Kremlin a few years ago. Netanyahoooo threatened Puitn and told him that Russia must get out and, stay out of Syria. Putin told him that he could make isreal a sheet of glass in 24 hours.

China and Russia are teaming up with the world's oil producers to control supply. This was previously impossible because the U.S. military would blow up any State or person who tried to break the petro-dollar standard. American defense contractors worked to pad their bills and didn't care about the quality of their products. The F-35 is the perfect example. The Russian jamming systems and latest plane & missile systems are far superior. The petro-dollar has been defeated by shoddy military weapons contractors. Not to mention, dumbing down our schools to where America fell way down in international competition.

Tel Aviv was/is the Eastern garrison for pox Americana. Netanyahoooo has been totally brutal and alienated Europe. He has been totally intransigent and alienated the whole rest of the world. Mainstream israelies will suffer for his brutality.

http://www.realjewnews.com/?p=1270

The Eastern alliances are locking up oil production outside the control of pox Americana. The unfolding financial collapse will be especially hard on our Eastern garrison.

the Republicans were always the deficit hawks who refused to fund pork barrel programs. They have don a complete about-face on the subject.

https://patriotpost.us/articles/54145-budget-betrayal

It makes you wonder just what inspired such total fear in the entire legislature.
Japan got reamed badly after the war. They were required to roll over ALL of their profits into U.S. treasuries.
Keep in mind that; when America prints a new dollar, it is added on as part of the GDP. When it spends the same dollar, it is added on again to the gdp.
HOLD on a minute. That water is the primary greenhouse gas.

"In truth, however, the evil genius behind the catastrophic error of Camp David was Milton Friedman, and his errand boy in Nixon's cabinet, George Schultz. The two were apostles of the free market when it came to commodities, wages, rents, goods, services and most anything else including gambling, prostitution and drugs. But not money.

Friedman had been dead wrong about the Fed's culpability for the Great Depression of 1930-1933, and from that error he erected a theory of state control of money that eventually evolved into today's baleful regime of Keynesian central banking."
"The problem with this Friedmanite monetary postulate was two-fold: It was wrong in theory and impossible in practice!

Thus, there is no possible fixed rule of monetary growth."

http://davidstockmanscontracorner.com/swan-song-of-the-central-bankers-part-2-yellens-my-girl/

[Danny B]

Forget the promises.

Charles Huge Smith writes about all the promises that won't be kept.
oftwominds-Charles Hugh Smith: Our Approaching Winter of Discontent

https://realinvestmentadvice.com/there-will-be-no-economic-boom/

The Post office wants a bailout, https://www.fedsmith.com/2018/02/13/...unded-bailout/
Fannie May wants a bailout, https://sputniknews.com/us/201802151...osses-bailout/

[Danny B]

Birth rate = intererst rate

"Economica" has proved pretty well that the interest rates is locked in to the the number of 16---62 year old consumers. The interest rate just can't seem to escape the consumption side of the production-consumption equation. What about the R.O.W. ? Most of the West is declining and,
"China's own family planning commission's survey of existing families, 75% said they were unwilling to have a second child because of "economic reasons". "

https://econimica.blogspot.com/

The Central planners have LOTS of plans as far as control of interest rates.

"The long-term is set by the market. That is why the central banks tried Quantitative Easing buying in long-term bonds hoping that would lower the long-term rates which are set by the auction process."
There is just no demand from solvent borrowers for more credit. We also see this in the CAPEX numbers. Nobody is expanding their business facing a declining number of consumers.

https://www.armstrongeconomics.com/markets-by-sector/interest-rates/short-v-long-term-rates/

Interest rates are normally raised when there is an increasing demand for credit. All increasing demand for credit is from the upper loop looking to leverage their speculation even more.

Lots of speculators are moving into real estate. Residential RE depends on the salaries of the renters and buyers.
"ANSWER: The problem with real estate has been that its value depends upon lending. This was what the government did as part of the New Deal by creating 30-year mortgages back during 1930s. This was a scheme to get prices up by extending the period people could pay off the loan. Typically, the duration was 5 years previously. Because of the 30-year mortgage, prices have risen to reflect the accumulative amount of earnings available. If there was no lending, prices would collapse to 10 cents on the dollar until cash buyers become interested."
It does NOT depend on lending. It depends on earnings. A lot of hot-money has flowed into RE and, is driving people out on the streets.

https://www.armstrongeconomics.com/markets-by-sector/interest-rates/short-v-long-term-rates/

https://www.air.org/center/national-center-family-homelessness

A staggering 2.5 million children are now homeless each year in America. This historic high represents one in every 30 children in the United States.

Birth rates will continue to fall. Consumption will continue to fall. Interest rates my make a temporary lift but, not in the long run.
This graph shows you exactly the effect of mechanization.

https://www.nationalaffairs.com/storage/app/media/imglib/20091216_Manzi33.jpg

This graph shows you how many hours we are working,

http://3.bp.blogspot.com/-pK1zkhfYvxk/VGDQL9F1faI/AAAAAAAAOTA/GOEmPHNN9_E/s1600/hours%2Bworked.PNG

The corporatocracy has fought tooth & nail to stop collective bargaining. The Central Bank has fought equally hard at blocking wage inflation. So, we crash and go broke.

https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iqBxU8GU0mJ4/v1/-1x-1.png

"And this is precisely what we see now: household income actually declined 8.5% since 2000 when adjusted for inflation."

https://seekingalpha.com/article/3522916-labors-share-gdp-declined-40-years

The CBs can plan and rage but, they can't bring back consumption in the lower loop. Nothing will bring interest rates back.

[Danny B]

The economy,,, the short form

Here is a post that I wrote at Drive on Wood.

https://econimica.blogspot.com/

https://dollarcollapse.com/videos/top-ten-videos/

[Danny B]

https://creditbubblebulletin.blogspot.com/2018/02/weekly-commentary-permanent-market.html

"Consider that, under the Greenspan/Bernanke/Yellen Federal Reserve, the following has occurred:

Pension plans, both public and private have been ruined. Millions of future retirees and taxpayers will not have trillions of dollars they would and should otherwise have to support them in their later years.
Income inequality is at the highest its been in over 100 years
Wealth inequality is also at historical extremes
Student debt is now nearly $1.5 trillion, up ~ $1 trillion since 2007
More than a trillion dollars of interest payments on savings accounts has been forfeited -- denying funds to the next generation for use in business creation, household formation, and education.
Total debt in the US and globally is up massively since the 2008 Great Recession (itself a central banking accident), and now stands at more than $233 trillion worldwide."

The article goes on to list important headlines in the pension industry.
"There should be serious consequences for destroying the futures of tens of millions of retirees, on purpose --and knowingly -- simply so big banks could not just enjoy fat profits, but record fat profits, for nearly ten years in a row:"
The article goes on to show a long list of how.the banks are HUGELY profitable. But, there is plenty of blame to go around. You can bet that FED GOV had a lot to do with holding interest rates way down. ALL socialist GOV eventually breaks the bank. The FEDs tried to make State debt very easy to carry at ZIRP. They can claim that the banks killed the economy. The FED was very reluctant to do ZIRP. You can bet that the State twisted their arm. The State is always trying to squeeze out money that it never earns or deserves. From each, as to his abilities,,, to each, as to his needs.
Needs always seem to outstrip productivity.

https://jonrappoport.wordpress.com/2018/02/15/globalism-socialism-technocracy-three-names-for-the-same-thing/

https://www.peakprosperity.com/blog/113760/worst-threat-we-face-right-here-home

The 2% inflation target of the FED was meant to keep a constant supply of new money flowing through the system STARTING at the people closest to the spigot.

"The fact that virtually every channel of household credit has already been blocked or become highly congested by Peak Debt is self-evident in the household debt data. According to the flow of funds report, household debt doubled between the 2000 peak and mid-2008, growing at a 9.1% annual rate.

By contrast, the growth rate of total household credit from all sources during the last nine years has been just 0.5% per annum"
"The (unsecured) personal loan rates quoted below are more or less in line with the current average APR on credit cards, which stands at 16.15%."
"This means that upwards of 40% of the gain during the Greenspan mortgage/credit boom was accounted for by borrowing and other unearned sources of spending power."
"In other words, net business investment today is lower than it was 17 years ago, and that's before factoring-in the cumulative 35-40% rise in the price level during the interim.

Accordingly, constant dollar net investment has been sharply declining on a trend basis for the entirety of this century."
"In fact, constant dollar net investment of $379 billion in 2016 was 28% below its 2000 level and only slightly ahead of real net investment two decades ag0 during 1997."
Contra Corner » Swan Song Of The Central Bankers, Part 4: The Folly Of 2.00% Inflation Targeting
Those giant tax cuts that were going to flood the economy with new money,,,, have all gone into share buybacks.
"While there is still some fringe debate what companies will do with the hundreds of billions in offshore funds repatriated to the US as part of the recently passed Trump tax reform, the discussion is largely over, especially after last week's Cisco results. The company, which has $68 billion of overseas cash, third after AAPL and MSFT, announced that it would raise its buyback authorization by $25 billion, and revealed plans to repurchase its entire authorization of $31 billion during the next 6-8 quarters, equal to roughly 15% of its current market cap."

https://www.zerohedge.com/news/2018-02-17/years-stock-buybacks-are-already-bigger-all-2009s

You get a very clear picture. No new money is flowing into the economy.

[Danny B]

Japan, the Amish, GS says that US public debt is unsustaiunable

Here is a graph of Japanese public debt.

https://adrianrowles.files.wordpress.com/2014/12/japan-public-debt-png.jpg

Here is a graph of population change.

https://www.nippon.com/en/files/h00160en_fig021.png

Here is an excellent article with great graphs showing the Amish fertility rate.

https://medium.com/migration-issues/how-long-until-were-all-amish-268e3d0de87

"Now, in yet another note meant to prompt selling of Treasurys (and buying of stocks that Goldman's co-head of equities admitted last week he is all too willing to sell),"
"Goldman predicts a surge in the cost of servicing American debt, and goes so far as to warn that the current US fiscal trajectory would lead to catastrophe: "
"The irony, of course, is that while one Goldman employee warns that the US is now on collision course with debt sustainability, it was another former Goldman employee - former COO Gary Cohn - who transformed this blueprint for catastrophe into reality.

Needless to say, the culmination and outcome of these processes is a fiscal - and sovereign debt - crisis... unless the Fed proceeds to monetize the deficit once again as it did in 2009-2015, sending yields plunging as the next and final episode of QE is unveiled. Which, of course, is precisely what will happen, and is also why Goldman is already starting to load up on all Treasuries it can buy."

https://www.zerohedge.com/news/2018-02-19/us-fiscal-policy-set-blow-us-economy-goldman

[Danny B]

The effect of primitive militarism in an advanced society

Here is a must-read article on the military industrial complex and all the destruction and cost it has brought to the world.

https://www.zerohedge.com/news/2018-02-19/three-global-super-powers-end-mad

https://www.silverdoctors.com/headlines/world-news/the-system-is-breaking-down-collapse-is-all-but-guaranteed/