DEC 28
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
THE
NYSE TICK
See Chart:
This was good enough to fool
the algos and mom and pop investors who were
trading along, and successfully pushed the Dow Jones more than 200 points higher
around 3pm but... there was just one problem because whoever was desperate to
pretend they were a pension fund forgot to sell bonds and with the S&P trading at session highs,
treasurys remained unchanged...
See Chart:
S&P Futs vs 10Y Yield
..in stark contrast with
yesterday's true pension reallocation, which saw TSY yields spike as stocks
jumped.
And once traders realized that
this was just one giant fake out meant to force stops and squeeze shorts, they
started buying... BONDS, with the 10Y yield sliding
as low as 2.7146%, the lowest since February 2018. And as the bond were bid,
stocks tumbled losing all intraday gains, and turning negative.
See Chart:
S&P
Emini vs. 10Y TSY Yield (both down)
Dow
Jones Ind average : As it became clear that no real pension bid was
coming, the selling returned, and stocks closed near session lows, with the Dow losing almost 400 points of gains and briefly dropping
below 23,000 although the selloff was far more
controlled than the liquidation puke observed on Monday.
See Chart:
Dow Jones Industrial
Average (23,000
berlow)
Back to Treasurys Yields, where
buying across the curve was not uniform, and while 30Y
yields were almost unchanged, the short end crumbled, resulting in a sharp
curve steepening.
See Chart:
B-Dollar Index: Another confirmation that there was no real pension bid
today, the dollar not only did not slide as it did yesterday, but was mostly
unchanged if slightly higher on the day.
See Chart:
WTI CRUDE.. oil rose modestly cementing December's 11% plunge for the commodity, and the
worst quarterly drop since 2014.
See Chart:
The
average junk bond yield now above 8% for the first time since April 2016.
See Chart:
Finally, in what may be the
biggest unspoken story of the day, the LSTA leveraged loan index tumbled to new multi-year lows: as shown below, the price of leveraged loans has been
a one way train down, which together with another week of record outflows from
the loan market, is the most ominous signal because
should the loan market freeze up, 2019 will be nothing short of a credit
disaster as billions of M&A and LBO deals lock up.
See Chart:
S&P Leverage Loan Index
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Those of us who closely follow the credit cycle
should not be surprised by the current slide in equity markets. It was
going to happen anyway.
"The crisis is arriving on cue and can be
expected to evolve into something far
nastier in the coming months. Corporate bond markets have seized up, giving us a signal it has
indeed arrived..."
Equity prices continue to fall, as liquidity is
drained from financial markets by worried investors, but price inflation
remains stubbornly high. Consequently, bond prices continue to weaken
under a lethal combination of foreign-owned dollars being sold, increasing
budget deficits, and falling investor confidence in the future purchasing power
of the dollar.
The US enters a severe recession, which is similar
in character to the 1930-33 period. The notable difference is in an unbacked pure fiat dollar, which
being comprised of swollen deposits (currently 67% of GDP versus 36% in 2007),
triggers an attempted reversal of deposit accumulation. The purchasing power of
the dollar declines, not least because over $4 trillion of these deposits are
owned by foreigners through correspondent banks.
The Fed’s room for manoeuvre will be severely
restricted by rising price inflation, which it can only combat with higher
interest rates. Higher interest rates will become a debt trap springing
tightly shut on government finances, forcing the Fed to buy US Treasuries under
cover of monetary stimulation. The true reason for QE will be that with a
rapidly escalating budget deficit exceeding $1.5 trillion and more, the Fed
will want to suppress borrowing costs compared with what the market will
demand. Economic conditions will be diagnosed as a severe case of stagflation.
In reality, the US will be ensnared in a debt trap from which the line of least
resistance will be accelerating monetary inflation.
It will prove difficult for neo-Keynesian central
bankers to understand the seeming contradiction that an economy can suffer a
slump and escalating price inflation at the same time. It is, however, the
condition of all monetary inflations and hyperinflations suffered by economies
with unbacked fiat currencies.
The Eurozone is irretrievably bust
It is easy to conclude the EU, and the Eurozone in particular, is a
financial and systemic time-bomb waiting to happen.
Most of the ECB’s money has been spent on government
bonds for a secondary reason, and that is to ensure Eurozone governments remain
in the euro-system. Profligate politicians in the Mediterranean nations
are soon disabused of their desires to return to their old currencies. Just
imagine the interest rates the Italians would have to pay in lira on their
€2.85 trillion of government debt, given a private sector GDP tax base of only
€840bn, just one third of that government debt.
A side effect of the ECB’s asset purchase programme
has been the reduction of Eurozone bank lending to the private sector, which has been crowded out by the focus on government debt.
This is illustrated in the following chart.
See Chart:
EUROSONE Banks Non Financial
Asset EU Mill
The ECB’s monetary policy has been to ignore this
interest rate arbitrage in order to support an extreme overvaluation in the
whole gamut of euro-denominated bonds. It cannot go on for ever. Fortunately
for Mario Draghi, the pressure to change tack has lessened slightly as signs of
a US economic slowdown appear to be increasing, and with it, further dollar
interest rate rises deferred.
TARGET2
Our second danger sign is the massive TARGET2
interbank imbalances, which have not mattered so long as everyone has faith
that it does not matter. This faith is the glue that holds a disparate
group of national central banks together. Again, it comes down to the
maintenance of asset values, because even though assets are not formally
designated as collateral, their values underwrite confidence in the TARGET2
system.
Massive imbalances have accumulated between the intra-regional central
banks, as shown in our next chart, starting from the time of the Lehman crisis.
See
Chart:
Target
2: Balances (Bill of Euros)
Germany’s Bundesbank, at just
under €900bn is due the most, and Italy, at just under €490bn owes the most.
These imbalances reflect accumulating trade imbalances between member states
and non-trade movements of capital, reflecting capital flight. Additionally,
imbalances arise when the ECB instructs a regional central bank to purchase
bonds issued by its government and local corporate entities.
Trust in the system is crucial for the regional
central banks owed money, principally Germany, Luxembourg, Netherlands and
Finland. If there is a general deterioration in Eurozone collateral values,
then TARGET2 imbalances will begin to matter to these creditors.
[[ BUT,
there a number of problems to be solved
Read the list below in the SOURCE at the end & pay attention to the
last one
Es interesante ver
como se desmorona el sistema neoliberal mundial
]]
Here
the list that is not exhaustive:
Eurozone banks
Commercial banks in the Eurozone
face a number of problems. The best way of illustrating them is by way of a
brief list:
…
…
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A 'GOODWILL GESTURE': CHINA LIFTS BAN ON US
RICE IMPORTS AHEAD OF TRADE TALKS [[ Para que
tanto brinco si el suelo esta parejo! Trump: mete tu twit en el tacho de basura y la próxima vez se mas
responsable con lo que dices ]]
"The permission for U.S. rice
suggests an improving U.S. and China relationship,"
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US DOMESTIC POLITICS
Seudo democ duopolico in US is
obsolete; it’s full of frauds & corruption. Urge cambio
[[ Dificil.. muy dificil: dice la canción
pop. Y yo veo que E Warren crece aún mas
con su silencio calculado… La política es un ajedrez donde vence quien piensa y
calcula ]]
The biggest online betting site has 2:1 odds that Trump prevails over Biden
in 2020. [[ Puro CIRCO:
A Trump le inventaron un payaso con
quien conversar]]
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[[ Sin querer queriendo: TRUMP
deviene lider Rev de los centro-americanos que vienen masivamente a la frontera con
Mexico.. Trump DIJO: Si
no me dan los billones para el cerco, pues abro la frontera.. no borders at all
(y me traigo las ensambladoras de carros al norte...ADEMAS, EL TRADE CON mex
NOS ROBA $75 Bill al año).. Es contradictorio
lo dicho al final, pero prueba de que de su lengua puede salir todo. Creo
que SI DICE que va a borrar los dos partidos monopólicos del circo electoral (DEMs & REPs) se
gana al electorado americano y hasta podría ganar las elecciones si Lidera el FRENTE
Patria Grande. Podra hacerlo?
Tendria que de verdad quererlo. Por lo pronto se sabe
que muchos DEMs & REPs estan abandonado esos Pdos y firmando por EW. Solo entonces T podría ganar al FRENTE de
Elizabeth Warren: Patria Nueva ]]
Leamos sobre el efecto de lo que dijo:
"They say they are even bigger and stronger than the last caravan"
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Senators Elizabeth Warren, Kamala
Harris and Corey Booker are all planning to announce their campaigns next
month, while a handful of other contenders are also gearing up for campaign
launches of their own...
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US-W
ISSUES (Geo Econ, Geo Pol & global Wars)
Global depression is on…China, RU, Iran
search for State socialis+K-, D rest in limbo
"There were [politicians] who believed that they could decide when these
agreements are no longer valid because they are representing The People But the people ... are not a group who
define themselves as the [German] people." - Angela Merkel
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"This
factor [Fed rate hike] is the main one,
which has an impact on the price (of oil)..."
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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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NOTICIAS
IN SPANISH
Lat Am search f alternatives to
neo-fascist regimes & terrorist imperial chaos
REBELION
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Polit Qué hay detrás de la
ultraderecha? Cristina Mas
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Peru Michael
Löwy: El socialismo heroico de Mariátegui
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RT EN ESPAÑOL
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INFORMATION
CLEARING HOUSE
Deep on the US political
crisis: neofascism & internal conflicts that favor WW3
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Dying American Empire: Reflections of an
Aging Anti-Imperialist By
Jonah Raskin
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The Plight of Children in a Neoliberal World By Peter Koenig
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Richard Wolff: We Need a More Humane Economic
System—Not One That Only Benefits the Rich Video and Transcript
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COUNTER
PUNCH
Analysis on US Politics &
Geopolitics
Ariel
Gold Elections
Don’t Make Israel a Democracy
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Louis
Proyect Putin
and Russia’s Turn to Capitalism
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Sameer
Dossani What
Ireland’s Pro-Choice Referendum Teaches Us on Dem
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Leslie
Watson Malachi We’re
Learning the Truth About Voter Fraud
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GLOBAL
RESEARCH
Geopolitics & Econ-Pol
crisis that leads to more business-wars from US-NATO allies
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Peace
and Reconstruction in Syria: Kurdish People’s Protection Units (YPG) Invites
Syrian Army to Manbij By South Front,
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DEMOCRACY
NOW
ND denounce Global-neoliberal debacle y propone State-Social
+ Capit-compet in Econ
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PRESS
TV
Resume of Global News described
by Iranian observers..
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