APR 18 20
ND SIT EC y POL
ND denounce Global-neoliberal debacle y propone State-Social
+ Capit-compet in Eco
ZERO HEDGE ECONOMICS
Neoliberal globalization is over. Financiers know it, they
documented with graphics
"We're
back to elevated multiples on most of the 20 metrics we track."
As Credit Suisse, JPMorgan and
Goldman all point out the schizophrenia in being bullish in a time when
corporate profits are set for the biggest - and longest - drop since the Great
Depression, late last week two more banks joined the bandwagon with Citi
warning that "equities fall the same as EPS in a recession... and reflect that
equity markets are currently not reflecting the expected decline of 50% in
global EPS in 2020." Make that 70% according to JPMorgan.
See Chart:
See more charts at:
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Why will anyone want to work, especially
government workers when they can get paid to stay home? This is not about wanting more
money for small business, it is about the reality that the firings are just beginning.
The government has failed to keep its promise so now we should expect
unemployment to soar as reality sets in. One of the largest
problems facing small companies is they are often underfunded and have
difficulty getting financing at reasonable rates. Banks find larger companies
much more profitable. The sector of the economy most damaged by the covid-19
shutdown is small business. When this is over America will find many small
businesses have been decimated and are not able to reopen. Others will never
recover and be forced to close within months. Since
small businesses employ over 54 million people in America and
their importance in the economy should not be underestimated.
- Small businesses contribute 44 percent of all sales in the country.
- Small businesses employ 54.4 million people, about 57.3percent of the private workforce.
Rest
assured government employees and bureaucrats will still continue to get paid
but small business, the most productive part of the economy has a knife to its
throat.
Washington
has become so attuned to dealing with lobbyist from mega-companies it has lost
sight of the fact small is small, and when this comes to business, this means
usually under twenty employees, not hundreds.
See Chart:
As expected, this measure,
named "Families First Coronavirus Response Act." resulted in millions
of workers to suddenly lose their jobs. Ironically, it was held before the
voters as proof lawmakers could work together during a crisis.
By framing the
poorly crafted pork-packed bill this way promoters positioned themselves to
demonize those unwilling to support it. Remember, this bill is was in addition to the $8.3 billion
emergency spending bill first approved to curb the spread of covid-19.
See Charts
To make matters worse, people
going on unemployment look to get almost as much as those that do work. Why will anyone want to work,
especially government workers when they can get paid to stay home? This is not
about wanting more money for small business, it is about the reality that the
firings are just beginning.
….
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The largest
US bank is quietly shutting down ahead of a historic defaul shitstorm that is
about to hit the US.
Earlier this week, JPMorgan
reported that its loan loss provision surged five fold to over $8.2 billion for
the first quarter, the biggest quarterly increase since the financial crisis (even if its total reserve for losses is still a fraction of
what it was during the 2008-2009 crash).
As we said "the only reason why JPMorgan would "temporarily suspend" all non-government backstopped
loans such as PPP, is if the bank expects a default tsunami to hit coupled with
a full-blown depression that wipes out the value of any and all assets pledged
to collateralize the loans."
Reuters echoed our gloomy take,
stating that "the change
highlights how banks are quickly shifting gears to respond to the darkening
U.S. economic outlook and stress in the housing market, after measures to
contain the virus put 16 million people out of work and plunged the country
into recession."
To be sure, as
we reported last week the residential mortgage
market is already freefalling after borrower requests to delay mortgage
payments exploded by 1,896% in the second half of March. And
unfortunately, this is just the beginning: last
week, Moody’s Analytics predicted that as much as 30% of homeowners - about
15 million households - could stop paying their
mortgages if the U.S. economy remains closed through the summer or beyond. Bloomberg
called this the "biggest wave of
delinquencies in history."
SEE CHART:
Delinquencies
as a % of al Morgages
This would
result in a housing market depression and would lead to tens of billions in
losses for mortgage servicers and originators such as JPMorgan.
….
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A Hyperinflationary Depression has
always been the inevitable end to the biggest financial bubble in history. And
this time it will be global. Hyperinflation
will spread from country to country like Coronavirus. It could start anywhere
but the most likely first countries are the US and the EU or ED (European
Disunion).
...you are not holding gold to measure the gains in debased paper
money. Instead you are holding physical gold as insurance against a broken financial system that is unlikely to be
repaired for a very long time...
CURRENT INTEREST RATES ARE A FALSE INDICATOR
Since in a free market interest
rates are a function of the demand for credit, this long downtrend points to a
severe recession in the US and the rest of the world. The
simple rules of supply and demand tell us that when the price of money is zero,
nobody wants it. But instead debt has grown exponentially without
putting any upside pressure on rates. The reason is simple. Central and
commercial banks have created limitless amounts of credit out of thin air. In a fractional banking system banks can lend the same
money 10 to 50 times. And central banks can just print infinite amounts.
See Chart:
FED Funds 1955-2020: I DOESN’T AD UP! Since
1981: Rates have gone from 20% to
0% & Global debt from $11T to $265T
CORONAVIRUS IS THE CATALYST BUT NOT THE CAUSE
The crisis that the world is now
encountering has not been caused by the Coronavirus. As I have stressed in many
articles recently, CV is just the catalyst, albeit the most vicious one which
could have hit the world. The real cause of the
Greatest Financial Crisis in history is the Central Banks.
They have
been pouring fuel on the fire for 50 years by
continuously reducing the cost of money until it became free in 2008 when rates
were reduced to ZERO. Since then we have also seen negative rates around the
world.
Negative rates are not just a total
paradox but also absolute lunacy. Bankrupt sovereign nations around the world
have been issuing debt at no cost or have even been paid for it. The whole
purpose of interest is to be paid for the risk of lending money. As governments
around the world have issued virtually unlimited debt which will never be
repaid, the risk of lending to them has increased exponentially. But instead of much higher rates, to reflect the massive increase
in debt plus severely elevated risk, central banks have got away with defying
the laws of nature buy falsely manipulating rates..
FALSE MARKETS WITH NO REAL PRICES
Money is a commodity and the price
should be a direct function of risk plus supply and demand. But since we currently have a false financial system with
fake money and false markets, there are no real prices. So through
constant manipulation and intervention central banks together with a few
accomplices can totally rig most markets and prices.
Therefore, the cost of money today neither
reflects the risk nor the demand. All it represents is malicious manipulation
to serve governments and their masters the central bankers. But like all fake
markets, also this one will end, not just badly but catastrophically.
THE SITUATION IS DESPERATE FOR BUSINESSES AND INDIVIDUALS
As I discussed in last week’s
article, we now have the perfect storm. Virtually every
government in the world is now committing billions and trillions of dollars,
euros etc in fruitless attempts to save a collapsing world economy. In many
countries, 50% or more of industry is shut. Most service industries are
in a total lockdown and so is aviation, transport and most small businesses.
Unemployment is approaching rates not seen since the 1930s depression. All
businesses need assistance, from major corporations to small firms. The majority of individuals haven’t got savings for more than
a couple of weeks living and for the ones who are now becoming unemployed, the
situation is desperate.
Many major US corporations need
assistance from the government. Very few of these have put aside profits to
reserves for a rainy day. Instead management has been too generously rewarded
as well as the shareholders. Since 2009, S&P 500
companies have spent $5.4 trillion in share buybacks. Instead of asking
government for assistance, management should pay back their bonuses and
shareholders who have received major payouts should recapitalise the companies.
But this will obviously not happen.
Just like in 2006-9, profits are privatised and losses are socialised.
See Chart:
Businesses are haemorrhaging cash and so are individuals. All that becomes a vicious
circle with bills not being paid including rents, mortgages and taxes.
Estimates predict a 40-50% fall in Q2 2020 GDP in the US. The problem is that this is not a temporary crisis. This
means that GDP will see permanent erosion of a major magnitude in most
countries.
SECULAR DOWNTURN LEADING TO HYPERINFLATIONARY DEPRESSION
So what we are experiencing is the
start of a secular downturn which soon will become a hyperinflationary depression.
This was always the inevitable end to this cycle as I have discussed in many
articles for over 20 years.
A crisis of this magnitude is always a debt crisis. Very soon we will see debt
around the world come under enormous pressure as borrowers start defaulting.
This will lead to bonds crashing and rates surging. Central banks will then
lose control of interest rates as long rates first go up and soon also pulling
the shorter rates up. Rates
can easily go to 15-20%. Many bonds will go to zero and rates to infinity. I have previously talked about paying 21% on my
first mortgage in the UK in 1974. So I have personal experience of high
inflation but never hyperinflation.
Since the majority of the $1.5 quadrillion derivatives market is interest
related, this market will also blow up. All
this will lead to unlimited money printing and currencies crashing fast to
their intrinsic value of ZERO. At that point the entire financial system will
be unrecognisable and parts of it nonexistent. All of this could happen very
quickly, possibly within the next 6 -18 months.
2006-9 WAS A REHEARSAL
Could my Cassandra forecast be
wrong. Yes, of course it could. But let’s be clear that the rehearsal of what I am predicting took place in 2006-9. Nothing
was resolved at that point, just temporarily deferred.
This is now the real thing and whatever money central
banks print this time will have no effect. So I doubt very much that our
banker “friends” can pull another trick out of the hat again. Because the only trick they know, to print more money, can never
solve a debt problem.
MARKETS
Stock markets, in their first leg
down of the new secular bear market, reached a 40% loss in most countries and
that in less than 4 weeks.
Bond markets might hold up for a bit
longer with massive central bank manipulation and money printing. Junk
bonds will first start crashing and constant downgrades will turn a lot of debt
to junk. Much of corporate debt will go the same way and within 6-12 months
also sovereign debt will come under attack.
Property markets are a major bubble
and are already starting to disintegrate. Industrial, commercial, retail
and residential, no sector will be spared. There will be no buyers, no
financing and many forced sellers. A perfect recipe for a collapse.
Before the secular bear market has bottomed in these three markets,
prices will be down 90-100% in real terms. And real terms means in constant
purchasing power like gold.
We must remember that markets will bottom long before the economy. The
likely development is first a hyperinflationary depression that could come and
go very quickly within the next couple of years. Thereafter we will most
probably see a deflationary implosion of all assets and a collapse of most of
the financial system.
But we mustn’t believe that this is the end. It is just another phase in the world economy to correct
excesses of the 100 or 300 years or even 2000 years. Once debt has imploded and
all asset prices have come down from current fantasy valuations, a new system
will emerge built on sound values and principles. And
then the cycle starts all over again.
GOLD
There are
currently severe pressures in both the paper gold market and the physical
market. The Comex and LBMA are making noises that everything is under
control. LBMA is giving the illusion that they have plenty of gold in their
vaults. But virtually all of that gold is already committed. Comex, the gold
futures exchange is under tremendous pressure since they can’t deliver more
than a small fraction in physical when paper holders of gold demand delivery.
And that day is not far away.
If we just take the Gold ETFs as an
example, they increased their holdings by 93 tonnes in the last 4 weeks.
That represents a total value of $5 billion
It is today virtually impossible to
get hold of physical gold so you wonder where the ETFs have bought their gold.
The answer
is of course simple. It was lent to them by LBMA banks which are custodians for
the biggest gold ETF GOLD. These banks also hold central bank gold and
all they need to do is to lend the same gold yet one more time to the ETFs. So
if you hold a gold ETF, which you
mustn’t, you know that it is unlikely to be backed by gold for more than
a small portion of the fund total.
In a world
where prices of most assets are about to implode, gold is life insurance and virtually the only asset that will maintain
its value in real terms. Silver is also likely to do very
well and will most probably outperform gold. But gold
is safer and much less volatile.
See Chart:
As the 20
year gold chart shows above, gold is in an extremely strong uptrend. In
all currencies but US dollars, gold has surpassed the 2011 highs. The gold
price in dollars has just broken out and is now likely to go to $1,700 on its
way to the old high of $1,920 and thereafter much, much higher.
As I have expressed before, I have
been standing on a soap box for 20 years in my attempt to inform investors of
the critical importance of gold for wealth preservation purposes. Fortunately
many investors have listened but they still represent less than 0.5% of world
financial assets. Since
we started 18 years ago, gold is up 6-7X depending on the currency. That rise
is insignificant compared to what is coming next.
But remember you are not holding gold to measure the gains in debased
paper money. Instead you are holding physical gold as insurance against a
broken financial system that is unlikely to be repaired for a very long time
….
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
Not next month, not next week, not tomorrow. Today is the day for the government-imposed
lockdowns to stop...
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Make America Open Again
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"...relaxing or reversing
quarantine measures right now will lead to an exponential explosion in the
infected case count, thus nullifying the role played by all
measures implemented in the US since mid March 2020..."
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People are
getting angry...
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"It's
a separate immune system,
if you like, which isn't easily accessible by vaccine technology..."
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Illinois pension plans are in
serious trouble. So serious, the states seeks a federal
bailout. Cities are in trouble
too!
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US-WORLD ISSUES (Geo Econ, Geo Pol & global Wars)
Global depression is on…China, RU, Iran search for State socialis+K-,
D rest in limbo
"...we need to
demilitarize world affairs, international politics and political
thinking... Specifically, I call
upon them to cut military spending by 10% to 15%. This is the least they
should do now..."
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RELATED:
"My
goal would be to bring on at least a squadron's worth of airplanes modified
with external pylons on the B-1, to carry the ARRW hypersonic cruise
missiles."
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"The deployment announced this month is one of the largest U.S. military operations
in the region since the 1989 invasion of Panama."
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SPUTNIK and RT SHOWS
GEO-POL n GEO-ECO
..Focus on neoliberal expansion via wars & danger of WW3
- Trump Says Certain States Will Be Easing
COVID-19 Restrictions, Vows to Help Mexico With Ventilators
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NOTICIAS IN SPANISH
Lat Am search f alternatives to neo-fascist regimes &
terrorist imperial chaos
REBELION
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ALAI ORG
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RT EN
ESPAÑOL
Trump amenaza a China :su objetivo atizar el WW3 con
cualquier falsedad https://actualidad.rt.com/actualidad/350430-trump-china-consecuencias-responsable-coronavirus China hace tiempo le perdió miedo y va a responder si el US ataca
"El concepto de la equidad no forma parte del
sistema estadounidense" https://actualidad.rt.com/programas/keiser_report/350393-jubileo-deuda-banqueros-e1529
Se multiplican por cinco los entierros en fosas
comunes en la isla de Hart de N Y https://actualidad.rt.com/actualidad/350387-entierros-fosas-nueva-york-multiplican-coronavirus Que los entierren bien basta.. no rezos, misa
ni bendicion del pope
Abogados del US buscan guerra con China y saqueo de billones de dólares https://actualidad.rt.com/actualidad/350436-abogados-eeuu-demandar-china-coronavirus Que China invento el CV es cuento para
idiotas. US si uso guerra-bio-quim
WhatsApp permitirá hacer videollamadas grupales de
más de cuatro personas https://actualidad.rt.com/actualidad/350409-whatsapp-mas-cuatro-personas-videollamadas-grupales
Estudio de Cambridge dice : el CV no comenzó en
Wuhan, surgió antes de lo que se estima https://actualidad.rt.com/actualidad/350273-cientificos-sugieren-brote-coronavirus-comenzado-septiembre
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