FEB 17 18 SIT EC y POL
ND denounce Global-neoliberal debacle y propone State-Social
+ Capit-compet in Econ
Today Must Read:
1- Painful explanation of neoliberal collapse world-wide:
Read key extracts in WORLD ISSUES below
2-
3- Press the blue
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ZERO HEDGE ECONOMICS
Neoliberal globalization is over. Financiers know it, they
documented with graphics
"The dirty secret of
Keynesian central banking is that under current
circumstances its interventions have almost no impact on
its famous dual mandate - stable prices and full employment on main
street."
The dirty secret of Keynesian central banking is that under current circumstances its
interventions have almost no impact on its famous dual mandate - stable prices and full
employment on main street.
That's
because goods and services inflation is a melded consequence of global
central banking. The capital,
trade, financial and exchange rate movements which result from the
tug-and-haul of worldwide central banking policies generate incessant
shape-shifting impacts on the CPI; and the ebb and flow of these
forces completely dwarfs FOMC actions in the New York money and bond
markets.
In today's world, there is no such thing as inflation in one country. In that regard, the
traditional Fed tool of pegging the funds rate is especially obsolete,
impotent and ritualistically mindless. After all, if the 2.00% inflation target is meant as a long haul
objective, it was achieved long ago. The CPI index for January
2018 at 249.2compared
to a level of 169.3 back in
January 2000, thereby representing exactly a 2.17% compound annual gain
over the 18 year period.
On the other hand, if 2.00% is meant as a short-run target, how much more
evidence do we need? Since the Fed shifted to deep pegging at or near the zero
bound in December 2008, there has been no inflation
rate correlation with the funds rate whatsoever.
See Chart Effective Federal Funds Rate at the source of this Art
In the sections below we will resolve the
inflation matter once and for all by demonstrating that the very idea of 2.00% inflation targeting (or
any other target) is singularly stupid and destructive.
What the free market actually calls for is just the
opposite: That is, consistent, secular DEFLATION so that domestic prices, wages and costs---which are
perched near the top of global cost curves----can be
brought into better competitive alignment.
By the same
token, the full employment objective is equally
vestigial. That's because the channels
of monetary policy transmission to the real main street economy are broken and
done.
With households at Peak Debt, cheap interest rates do not stimulate incremental borrowing
and consumption spending: Households have been left with only their
paychecks to spend, and what remaining raining day funds
(savings) they have not already tapped.
The current levels and risk
spreads on unsecured personal loans, in fact, show
exactly why the credit channel to households is frozen solid.
With more than $15 trillion of total
household debt and other liabilities, it
is now all about credit risk. Even in the
case of the very highest credit scores, unsecured personal loan interest
rates are essentially prohibitive and are designed to recover huge, predictable
losses for dodgy credits, not stimulate a tsunami of
new consumer borrowing and spending.
At length, of course, the
car loan boom will crumble as used car prices plunge on a cyclical basis.
So auto debt will soon join the no growth mortgage market. At
that point, the entirety of household collateral will soon
be tapped-out, thereby insuring the complete shutdown of the household
credit channel of monetary policy transmission.
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
See Chart: Household and non-profit Organizations at the bottom
Art’ source
Needless to say, 0.5% per annum does not a
consumption spending boom make. Our monetary politburo can declaim until
the cows come home about how it "stimulated" the US economy back to
full-employment health. But consumption spending growth has been tepid since
the pre-crisis peak, and what did occur originated mainly in Say's Law, not the Eccles Building.
To wit, real consumption spending
(PCE) grew at a 1.7% rate
between Q4 2007 and Q4 2017, while real wages gained about 1.4% per annum over the
period. Clearly production and income came first and was the source of
most of the spending gain (as it should in a healthy sustainable economy).
By contrast, real PCE grew at a
considerably more robust 2.8% annual
rate during the 2000-2007 peak-to-peak cycle compared to just 1.7% for real wages and
salaries. 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.
Continue reading at this source
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"The problem is when equity
valuations become very high and interest rates get very low it’s difficult for
that strategy to continue to perform very well. All else being equal. Now, however, if
you add modest inflation into the formula, that portfolio actually becomes pretty toxic..."
This growth-constrained scenario that Peters envisions, will
create major problems for risk parity funds as the new economic environment
causes stocks and bonds to
plunge, creating a scenario
for risk parity funds where deleveraging leads to a vicious feedback loop.
See Chart:
In summary, while Peters doesn’t envision a return to 1970s-style inflation,
given the structural shifts in the US economy, combined with anti-globalist
policies instituted by politicians across the West, markets are looking
extremely precarious, and investors who are optimistic about the growth
prospects of the Trump administration’s fiscal policies should keep this in
mind.
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... 10y UST yields at 4.5%+, EUR at 1.40, JPY at
95, oil at $95-100 and US HY credit 650-700bp over USTs as tail risks.
Assuming yields break 3% decisively
this year, the base in yields will have taken seven years to complete so
the target needs only be hit by say mid-2025. And the same economists who will
now say it’s impossible to go above 4% were also saying in 2007 that a move from 5% to 2% was impossible when technicians made
that call from the top of the channel.
See Chart:
…
See more charts at
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After shutting
down more than 5,000 stores in 2017, store-closings are accelerating in
2018 with news
of the potential bankruptcy
of Winn-Dixie chain parent, and plans to shut almost 200 stores as
part of the move - either before or after the
filing.
Another big one:
Bi-Lo
is laboring under more than $1 billion in debt following its 2005
buyout by Lone Star Funds.
See chart:
Lone Star piped in
$150 million when the grocer exited Chapter 11 the first time, and invested
$275 million to help fund the purchase of Winn-Dixie in 2012. But it
probably will still come out ahead, having
paid itself at least $800 million since 2012, along with management fees it’s
collected, according to regulatory filings.
Southeastern Grocers, based in
Jacksonville, Florida, says it’s the fifth-largest supermarket chain, with more
than 700 stores and 50,000 employees. It also operates the Harveys and Fresco y
Mas chains.
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"The Federal
Reserve is ruining us...As
bad as the damage done so far has been, the real pain has not yet begun..."
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POLITICS
Seudo democ y sist
duopolico in US is obsolete; it’s
full of frauds & corruption. Urge cambiarlo
"Is it worth one more
American life to try to build a nation for people unwilling to fight for their own country?"
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The
torrent of reckless false accusations
against Russia made by the US and its NATO allies is hitting warp
speed...
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WORLD ISSUES and M-East
Global depression is on…China, RU, Iran search for State
socialis+K- compet. D rest in limbo
Painful explanation of neoliberal collapse world-wide:
After years
of forced hibernation, brought about by suspension of traditional trading rules
by the central banks, the markets are facing a painful process of
re-emancipation.
See Chart:
As a reminder, the Fed's "negative convexity"
inflation problem was highlighted recently
by none other than Ray Dalio, who pointed out that "it would only
take a 100 basis point rise in Treasury bond yields to trigger the worst price
decline in bonds since the 1981 bond market crash. And since
those interest rates are embedded in the pricing of all investment assets, that
would send them all much lower." Goldman showed this latent risk exposure
last week in the following chart:
See Chart:
Predictably, it was the
spike in wage inflation - and the resulting shift in market sentiment - on Feb
2. that culminated in a 666 points drop in the Dow and the VIX shock just one
trading day later. It is also inflation that
remains the "weakest link" in the Fed's strategy to perpetuate the "state of exception" indefinitely.
It is what Kocic calls the "Icarus effect."
Inflation is producing an Icarus effect: Although
negative convexity of inflation is a far OTM risk, it is significant even at
remote distances from the strike, due to its enormous size. The accumulation of relatively
illiquid long-dated bonds on retail balance sheets is at toxic levels and a
substantial rise in inflation, to which there is no adequate policy response,
could threaten to trigger a bond unwind that the market would be unable to
absorb.
Rising inflation ultimately
acts via two distinct pathway with unique consequences on risk assets: real rates and breakevens. The
main problem for risk assets, would be rising real rates:
"Having
UST bonds with strong dollar or high real yields will be more attractive than
holding US stocks, which means accelerated de-risking and higher volatility in the stock
market. Higher inflation, on the other hand, would be supportive for equities and could cause another leg
of selloff in bonds."
However even here, a self-defeating feedback loop from the
more benign increase in breakevens emerges:
What
complicates things is that the behavior of real rates at this point is also a
function of expected inflation: Higher inflation warrants a more hawkish Fed and therefore pricing in
higher real rates. The reaction of stocks is a non-linear function of inflation
– although risk assets might “like” higher inflation, this would remain true
only up to a certain point.
It is this rising inflation
- whether through breakevens or real rates - that takes
us back full circle to the paradoxical moves observed last week in the three
key risk assets categories whose convergent started in 2011 and ended
with a bang last week, prompting more than one trading desk to explode at the
associated complications of trading this market: complications resulting form the ongoing unwind of
central bank policy.
Putting it together, Kocic notes "the following three observations
which summarize the ongoing complications associated with stimulus unwind and
the conflicts they create in the context of economic recovery."
- Unwind of stimulus is a mirror image of the QE trade
2. Risk is asymmetrically distributed between
rates and risk assets.
3. Volatility plays an essential role in the
policy unwind. .. volatility-reducing
– the unwind of financial repression
is withdrawal of convexity supply and a vol-enhancing mode.
... which takes us to his prediction
of what comes next. The simple answer: "PAIN."
After years of forced hibernation, brought about by
suspension of traditional trading rules by the central banks, the markets are
facing a painful process of re-emancipation.
Finally, for those "confused
and anxious" about the catalyst for the next cycle of pain, look no
further than volatility, and specifically where it goes from here - its
trajectory will determine the fate of not only the market but also the economy,
to wit: "In the subsequent months, a particular pattern of volatility, in
terms of its breakdown across different assets, will determine the mode of risk
rebalancing. In
that context, volatility will play a decisive role in determining the success
and timing of the recovery and a particular economic trajectory."
…
Source: https://www.zerohedge.com/news/2018-02-17/deutsche-everything-changed-2011-what-comes-next-painful
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"All
of them suffer the same symptoms of suffocation, malaise, itching skin and
burning in the eyes."
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to more
business-wars: its profiteers US-NATO
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COUNTER PUNCH
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John W. Whitehead War
Spending Will Bankrupt America
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Robert Koehler War
and Poverty: A Compromise with Hell
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Kenneth Culton No
Time for Olympic Inspired Nationalism
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SPUTNIK and RT SHOWS
Geopolitics & the nasty business of US-NATO-Global-wars
uncovered ..
RELATED:
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RT SHOWS
Keiser
Report Episode
1190. Max and Stacy discuss JP Morgan’s ‘bitcoin bible’ as a plea for help
from central banks to protect their fractional reserve banking monopoly model.
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NOTICIAS IN SPANISH
Latino America looking for alternatives to neoliberalism to
break with Empire:
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USA - despiadada crueldad del presupuesto
de Trump AG y DM Ado Polit no obliga al Gob a gastar fondos
según lo acordado. El diablo se esconde en los detalles: WW3?
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FEM “El feminismo es el sujeto político más
potente" Sara Montero. Cierto .. y más cierto aún que desperdiciar esa fuerza en lucha
anti-machista es dogma medieval. Sistema y guerra son hoy el tema.
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…
Más libre que mi cimarrona
no hay: me dio una hijita negra y un hijito gringo. Muy lindos los dos, pero
nosotros somos latinos y del mero sur. Cuando le dije: como explicamos esto?. LOS GENES NO TIENEN CÁMARA, me dijo. Tu no eres médico
y yo tampoco, y nuestros hijos si lo son. Aún si decimos ‘los adoptamos’, nosotros los criamos,
los amamos y son nuestros hijos. Me re-convenció.
Cierto: los genes no tienen cámara.. pero tienen cama. Ojalá esas camas no
tengan cámara.. me auto-respondí. Los mire a mis
hijos y me dije a mi mismo.. SI, SI y Si..son muy
parecidos a mí. Total, cuando nos quedamos solos luego que nuestros
hijos se fueron a dif Univ , me visito una maestra de Cuba y mi cimarrona dijo:
que linda esta negrita.. por que no tienes un hijo con ella y lo adoptamos como
“foster-parents”, ella se queda con nosotros y le daría de mamar y si quiere regresar a Cuba
le pagamos los pasajes cada mes para que lo visite al niño. Él tendría dos
mamas y dos nacionalidades porque también seria bautizado allí y nosotros también podríamos viajar a Cuba. Ella acepto,
hice el intento, pero no la cogí en su ovulación. Ella tenía que regresar a la
escuela y por el bloqueo que se agravó, jamás pudo volver al US ni Nos visitar la Isla. Yo si tengo un hijito
en una morena de aquí y una hijita en una gringa, que SI
son latinos, pero las dos son casadas con americano. Por todo esto llegué a la
conclusión de que por algo nos dicen LATINOS: no
nos parecemos a nadie en este mundo. Somos un
tipo especial de cimarrones: Amamos la vida y la gozamos como viene.
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Mund Foro Social Mundial 2018:"Siempre afirman otro mundo es posible"
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Keiser Report La Biblia del bitcóin de JP Morgan
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PRESS TV
Global situation described by Iranian observers..
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Trump
blasted for receiving NRA funds National Rifle Association
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