Oct 12 18 SIT EC y POL
ND
denounce Global-neoliberal debacle y propone State-Social + Capit-compet in
Econ
ZERO HEDGE ECONOMICS
Neoliberal globalization is over. Financiers know it, they
documented with graphics
US Economic situation today.. The global recession is on..
neoliberal Econ failed
What's $6 trillion between
friends? "Everybody else was buying so I followed in their tracks..."
Global Capital Markets
aggregate 'wealth' collapsed in the last two weeks...(bonds
first, then stocks)...
See Chart:
79 of 94 global equity indices
ended the week red...
See Graph:
China started badly and ended
worse - biggest weekly loss since Jan 2016...
European stocks were a
bloodbath, closing on their lows this week (second worst week since
Jan 2016) at the lowest since Jan 2017...Italy was worst on the week (and is
now in a bear market)
US equity markets were clubbed like baby
seals...
Catching down to the rest of the world...
See Chart:
But a late Friday afternoon bounce flattered then is the
end (see you Sunday night)...
See Chart:
On the month so far, it's carnage:
- Nasdaq 100 is on course for the worst month since Nov 2008
- Small Caps are on course for the worst month since September 2011
- S&P is on course for the worst month since August 2015 (China Deval)
See Chart:
Interestingly, Value/Growth ended almost unchanged on
the week...
See Chart:
US Equity breadth is a disaster...
See Chart:
Away from the bloodbath in stocks, bonds were notably
bid... (maybe they just needed that day off on Monday?)
See Chart:
With 10Y Yields dropping most in 5 months (after last
week's biggest yield rise since Nov 2016)...
See Chart:
The yield curve UST 2s30s flattened notably on the
week...
See Chart:
The Dollar Index fell on the week (after two straight
weeks higher)
See Chart:
China fixed the yuan lower every day this week, clearly
signaling something to Trump, as yesterday's epic spike in Yuan roundtripped
today..
See Chart:
Black Gold was battered (global growth/demand and
inventories) as Yellow Gold surged...
See Chart:
Oil tracked stocks – simple
See Chart:
Gold in Yuan remains well managed...
See Chart:
What does it mean when the most systemically important
banks in the world are down 26% from their highs and accelerating lower?
See Chart:
Is this it? [[ who is going to buy it? .. Me, if I get big piece of QE.. I don’t care
for FED debt ]]
See Chart:
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Here’s where being “woke” finally starts to
mean something...
READ THIS:
Looks like somebody threw a dead cat onto Wall Street’s
luge run overnight to temporarily halt the rather ugly 2000 point slide in the
Dow Jones Industrial Average - and plenty of freefall in other indices,
including markets in other countries. A Friday
pause in the financial carnage will give the hedge funders a chance to plant “for sale” signs along their Hamptons driveways, but who
might the buyers be? Hedge funders from another planet,
perhaps? You can hope. And while you’re at it, how do you spell liquidity
problem?
If I were President, I’d
declare Oct 12 Greater Fool Day. (Nobody
likes Christopher Columbus anymore, that genocidal monster of dead white male
privilege.) The futures were zooming as I write in the early morning, a last
roundup for suckers at the OD corral, begging the question: who will show up on Monday. Nobody, I
predict. And then what?
The
great false front of the financial markets resumes falling over into the
November election.
Complicating matters this time will be the chaos unleashed in politics and governing when the
long-running “Russia collusion” melodrama boomerangs into a raft of indictments
against the cast of characters in the Intel Community
and Department of Justice AND the Democratic National Committee, and
perhaps even including the Party’s last standard bearer, HRC, for ginning up
the Russia Collusion matter in the first place as an exercise in sedition. The
wheels of the law turn slowly, but they’ll turn even while financial markets
tumble. And the
threat to order might be so great that an unprecedented “emergency” has to be
declared, with soldiers in the streets of Washington, as was sadly the case in
1861, the first time the country turned itself upside down.
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SOURCE: https://www.zerohedge.com/news/2018-10-12/jim-kunstler-exposes-great-false-front-financial-markets
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READ THIS:
Our economy rests upon four crumbling
pillars of debt. If one of these collapses, the entire
superstructure may not be far behind...
Behind closed doors, we’ve been working
on how to shield the economy from Too Big to Fail banks
and how the U.S. can better fund infrastructure projects. These are initiatives
that all politicians should care about.
Underneath the surface of the economy is
a financial system that is heavily influenced by the
Federal Reserve. That’s why political figures and the media alike have
all tried to understand what direction the system is headed.
Savvy investors know that if the U.S. economy falters, because everything is connected,
it could reverberate on the world.
That’s why I could forecast that the Fed
would raise rates by 25 basis points last week ahead of time. And they
did. However,
there’s now even less reason to believe the Fed will raise rates at the next
meeting in December.
Why is that?
First, Powell has made clear
that he doesn’t see inflation heating up as a threat. Second, even though last
quarter’s GDP growth figures were relatively high, the reality is that much of
that growth came from trade war spending and preparation.
According to a recent New York Federal
Reserve Bank report, total consumer debt is at higher
levels now than going into the financial crisis.
By breaking down what that debt is, you
can best understand how to navigate the world of finance, understand your own
portfolio better and make more sound investments.
Here they are:
Overall Household Debt.
The state of household debt, which literally takes
into account the combined debt within a given household, continues to flash red. According to a 2017 household financial
survey by the Fed, “About one-quarter of U.S. adults
have no retirement savings. And 41% say they would not have enough savings to
cover a $400 emergency expense.”
The overall level of consumer debt has hit a new record. It’s now $618
billion higher than it was at its prior peak at $12.68 trillion during the
third quarter of 2008 – right before the onset of the financial crisis.
The total borrowing of Americans hit $13.29 during the second quarter
of this year. That’s up $454 billion from a year earlier. The fact is that
borrowing has risen for 16 consecutive quarters.
Credit Card Debt.
The total of U.S. credit card loans has increased by $45 billion this
year to a massive $829 billion total.
Despite cheap rates for banks, the average credit card interest payment
rate is 15.5%. It was at 12.5% only five years ago. And, yet people keep
borrowing.
The total revolving credit card debt now stands at
a record of $1.04 trillion, higher than its last 2008 peak.
Borrowers have paid a painful $104 billion in credit card interest and
fees in just the last year. That figure is up 11% from the prior year, and up
35% over the past five years.
What you should know if you have a credit card is that if the Fed
continues to raise rates, that any associated debt will become even more
expensive.
Student Loan Debt.
During my meetings in Washington and with even media figures, student debt continues to be a central topic of concern.
The fact is, student loans cannot be given bankruptcy status and therefore are
much more complex when evaluating the U.S. economy.
Currently, the amount of student loans grew to $1.41 trillion in the
second quarter of 2018. That figure has nearly tripled since the beginning of
the financial crisis. Student loan debt is now the second highest consumer debt
held.
That crippling amount of debt makes it harder for graduates to find
jobs that will help them alleviate the costs of their education. It also
means that those with student loans will have less money to deploy into the
economy — which will impact economic growth overall.
Auto Debt.
While the rising cost of manufacturing autos has impacted the
automotive sector, it has not deterred consumers from borrowing money.
Total auto debt in the U.S. has shot up to $1.24 trillion. That figure
is up $48 billion from just a year ago.
The reason this sector is so important now is that a lot of loans being
given are of the subprime variety. Subprime loans were the exact kind of high
rate loans that caused the last financial crisis — only last time they were
given to mortgage borrowers.
Auto loan delinquency rates are already higher now than they were
during the financial crisis. The auto loan sector will continue to be one to
watch for signs of financial faltering.
* * *
As we head into the holiday
season, these four debt triggers matter even more.
Our economy
rests upon four crumbling pillars of debt. If one of these collapses, the
entire superstructure may not be far behind.
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"...you can't get blood from a stone, or make an
insolvent entity solvent with more debt. Losses will have to taken,
and nose-bleed fixed-costs will have to be slashed; reality will eventually have to be dealt
with."
Here's the difference between a
recession and a depression:
1.
Duration: a recession typically lasts between 6
and 18 months, while a depression drags on for years or even decades, often
masked by official propaganda as "slow growth" or
"stagnation."
2.
The basic dynamic: recessions are business / credit
cycle events that wring out the excesses of credit expansion (i.e. lending
to unqualified borrowers who subsequently default) and mal-investment in
low-yield, high-risk speculations and projects that only made financial sense
in the euphoria of bubble psychology (i.e. animal spirits acting as
if bubbles never pop).
Recessions are brief because
the basic dynamic is to write down defaults, tighten up credit and absorb the
losses from failed speculations. As consumers and enterprises cut back
borrowing, they trim spending, leading to lay-offs, reduced tax revenues,
contraction of credit and all the other consequences of wringing excesses out
of the economy.
Depressions, on the other
hand, are generated by self-reinforcing feedback loops: insolvencies
beget more insolvencies, reduced prices for assets beget lower prices for
assets, and so on.
There are two critical
differences between the two dynamics: high fixed costs and dependence on credit
/ asset bubbles for "growth." Recessions
clear excesses in otherwise healthy economies with low fixed costs, rising
productivity, broadly distributed gains in earned income, safe yields on
capital set aside for savings and retirement and high returns on productive
investments. Growth is the result of rising productivity of labor and capital.
Depressions are the result of
the opposite set of dynamics: growth is the result of a vast
expansion of credit that drives mal-investment and risk-laden speculation.
Productivity stagnates as capital flows to speculative gambles ("sure
things" in a bubble euphoria) and expansions of capacity that far outstrip
demand.
Economies prone to depressions
have high debt levels and high fixed costs. Both
generate self-reinforcing feedback loops: as loans issued to uncreditworthy
borrowers default, liquidity dries up and marginal borrowers are pushed into
default. As credit dries up, sales decline, profits drop, employees are laid
off to cut operational costs and previously sound borrowers slide into default.
The key here is to understand
the difference between fixed costs and operational
costs. Fixed costs are, well, fixed:
they don't decline even if income, sales or tax revenues decline. Fixed costs
include: rent, mortgage payments, debt service, mandated healthcare insurance
premiums, etc.
Fixed costs remain the same
even as sales, profits, income and tax revenues plummet. Economies
burdened with high fixed costs have very little wiggle-room (i.e. buffers)
before reductions in sales, profits, income and tax revenues trigger losses,
i.e. expenses are no longer covered by income.
Here are some examples of fixed costs:
For state and local
governments, pensions and benefits due retirees are fixed: they don't go down in recessions. Rather, what drops in recessions
are the tax revenues needed to fund the pensions.
California pension funding:
See Chart:
New York City pension funding:
See Chart:
Notice how all the big-ticket
essentials (i.e. fixed costs) are rising in price: the
only items with declining prices are those that are generally optional-- TVs,
clothing, etc.
See Chart:
Everywhere we look in the U.S.
economy, we see sky-high fixed costs. Investors
who overpaid for commercial real estate will default once their business
tenants close down, homeowners who overpaid will default once one of the
household's primary jobholders loses his/her job, state and local governments
that have feasted on a decade of rising tax revenues will suddenly face
staggering deficits as tax revenues crater--the list of those with high fixed
costs and no wiggle room other than bankruptcy is essentially endless in
America.
Here's the difference between
a recession and a depression: you can't get blood from a stone, or make an
insolvent entity solvent with more debt. Losses
will have to taken, and nose-bleed fixed-costs will have to be slashed; reality
will eventually have to be dealt with.
But everyone will resist this
process because high fixed costs are the gravy train everyone depends on. Slashing
fixed costs destroys the income needed to support asset valuations which are
the collateral for the stupendous mountains of debt
that define the U.S. economy. Once that debt is written down, the entire
financial system collapses.
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“Investors
always decide to do the same
thing, at the same time, and it is usuallythe wrong thing.”
“Individual investors drew down cash balances at brokerage accounts to
record lows as the S&P 500 surged 7.2 percent in the three months ended
Friday.
Cash as a percentage of assets among Charles Schwab
Corp. clients in August fell to 10.4 percent, matching the level in January
that marked the lowest since at least 2004.”
Of course, eight months ago the markets suffered a 10.4% decline
just as investors scrambled to “get in.”
The monthly survey from the American Association of Individual
Investors shows the same. Individuals are carrying some
of the highest levels in history of equities, are reducing their exposure to
bonds, and carrying very low levels of cash.
See Chart:
Of course, this is the sad
history of individual investors in the financial markets as they are
always “told to buy” but
never “when to sell.”
You can do better.
Meanwhile get your weekend reading list.
Economy & Fed
- US Loses Its Entrepreneurial Edge by Caroline Baum via MarketWatch
- Recession Would Slash Wealth By $5 Trillion by Tyler Durden via ZeroHedge
- Will The Fed Only Stop When Something Breaks by Paul Hoffmeister via Camelot Portfolios
- Will The Fed Go To Far? by Kathy Jones via Schwab
- Home Buyers Dilemma: Wages & Price by Mike “Mish” Shedlock via MishTalk.com
- A $1 Trillion Dollar Blunder by Stephen Moore via The Washington Times
- The World Is Quietly Decoupling From The U.S. by Brandon Smith via Alt-Market
- Economy Is On A Sugar High by Danielle DiMartino-Booth via Bloomberg
- September’s Job Report Okay, Not Great by Upfina
- Oil Prices Entering The “Red Zone” by William Watts via MarketWatch
- IMF: Global Economy At Risk by Levi Winchester via Express
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Markets
- Goldman: Markets Repricing US Growth by Tyler Durden via Zerohedge
- Get Ready For An 8-13% Correction by Mark Hulbert via MarketWatch
- Ignore This Indicator Which Has Always Been Right by Shawn Langlois via MarketWatch
- S&P’s Q3 Rally Not All That It Was Cracked Up To Be by Dan Caplinger via Motley Fool
- Fred Hickey: The Crash Is Coming by Christoph Gisiger via Finanz Und Wirtschaft
- Interest Rates Break Out, But Will It Last by Dana Lyons via The Lyons Share
- A Replacement For LIBOR Gains Traction by Simon Constable via Forbes
- Investing Success By Felix Grandluckmeister by Mike Harris via Price Action Lab
- Sell Off Could Be An Opportunity For The Bulls by Ryan Vlastelica via MarketWatch
- Extremes In The Bond Market by Callum Thomas via Topdown Charts
- Edwards: Equity Investors Face The 4-Horseman by Tyler Durden via ZeroHedge
- Reframing Risks & Opportunities In Rates by Seth Levine via Dlacalle.com
- When The Music Stops, Make Sure You Have A Chair by John Hussman via Hussman Funds
- Roadmap For The Upcoming Treasury Bull Market by Eric Hickman via Advisor Perspectives
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Most Read On RIA
- Markets Fail To Hold Support by Lance Roberts
- Why The Fed’s Monetary Policy Is Still Accommodative by Michael Lebowitz
- The Upcoming Bond Bull Market by Lance Roberts
- Analyzing This Years Returns by John Coumarianos
- Bonds Are Dead…Again by Richard Rosso
- All Markets Are Cyclical, When Will This One End by Lance Roberts
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Research /
Interesting Reads
- BIS Issues Urgent “Zombie Alert” by Nomi Prins via The Daily Reckoning
- Dalio: The Risk Of War With China Is Spreading by Ray Dalio
- A Death Knell For TSLA If Tax Break Is Repealed by Jeremy Dillon via Roll Call
- Why Did All The Money Printing Not Trigger Inflation by Wolf Richter via Wolf Street
- Yes, Bond Yields Really Matter For Markets by John Stepek via MoneyWeek
- On Wall Street The Bond Market Sets The Tone by Matt Phillips via NYT
- Is It Time To End Useless Rating Agencies by Stephen Moore via The Washington Times
- Retirees Should Feel Very Worried Right Now by Paul Brandus via MarketWatch
- 5-G Devices Are About To Change Your Life by David Pogue via Scientific American
- Bad Financial Moon Rising by William White via Project Syndicate
….
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US DOMESTIC
POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds &
corruption. Urge cambio
"
The Federal Reserve is an unelected
cabal of central bankers that is running our economy into the ground,
and the only way we are going to fix our long-term economic and financial
problems is if we abolish it...
"
#1 We like to
think that we have a government “of the people, by the people, for the people”,
but the truth is that an unelected, unaccountable group of central planners has
far more power over our economy than anyone else in our society does.
#50 The
Federal Reserve is supposed to look out for the health of all U.S. banks, but
the truth is that they only seem to be concerned about the big ones. In 1985,
there were more
than 18,000 banks in the United States. Today, there are only 6,891
left.
#101 Shutting
down the Federal Reserve would make Donald Trump a national hero, and
potentially one of the greatest presidents in United States history.
….
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SOURCE: https://www.zerohedge.com/news/2018-10-12/trump-right-fed-crazy-and-heres-101-reasons-why-it-should-be-shut-down
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As it turns out, Republicans are doing a better job managing
Obamacare than the Democrats did...
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Shocking,
we know.
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"... read and ponder the fate of the
Republic unless this company is defanged."
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"I
have said it before and I will say it again:in a corporatist system, wherein there is no clear line
between corporate power and government power, corporate censorship is government censorship..."
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US-WW ISSUES (Geo Econ, Geo Pol & global Wars)
Global depression is on…China, RU, Iran search for State socialis+K-,
D rest in limbo
"They
have given the order from the White House that Maduro be killed...they will not touch even a single hair of
mine."
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The
death of famous journalist Saudita Jamal Khashoggi is likely to have importantrepercussions, revealing the hypocrisy of the mainstream
media, tensions inside
the Saudi regime, and the double
standards of Western countries...
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China
has an insatiable appetite for the
raw materials which Russia has in abundance and Beijing has
the financial strength to
protect Moscow against the sanctions related to its annexation of Crimea...
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SPUTNIK and RT SHOWS
GEO-POL n GEO-ECO ..Focus
on neoliberal expansion via wars & danger of WW3
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RT SHOWS
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NOTICIAS IN SPANISH
Lat Am search f alternatives to neo-fascist regimes &
terrorist imperial chaos
REBELION
Españ Cómo blanquear la leyenda
negra? Carlos de Urabá
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ALAI NET
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RT EN ESPAÑOL
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La planta PIRA de Caracas y el centro y oriente venezolano
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El Zoom EE.UU. y el furor del dragón
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COUNTER PUNCH
Analysis on US Politics & Geopolitics
Ralph E. Shaffer Could
Kavanaugh’s Confirmation Hearing Ended Differently?
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Brian Cloughley Trump’s
Threats of Death and Destruction
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Joel A. Harrison The
Case for a Non-Profit Single-Payer Healthcare System
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Adrian Kuzminski
What is
Truth?
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Michael Doliner Were
the Constitution and the Bill of Rights a Mistake?
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James Munson Identity
Politics and the Ruling Class
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to more business-wars
from US-NATO allies
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DEMOCRACY NOW
Focus on Trump policies & the Econ & Pol crisis inside US
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PRESS TV
Resume of Global News described by
Iranian observers..
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