APR 4
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
...how far are they willing to
go to keep the
bubble economy going?
The Fed
came out with a series
of unprecedented measures on March 22,
2020. They announced the Fed will buy an unlimited amount of
Treasurys and mortgage-backed securities (MBS), or as Peter Schiff refers to
it, “QE infinity.” This has been very positively
welcomed by businessmen . Yet, what many are ignoring is what the Fed has to do to keep the bubbles created
going.
Recently, I
wrote that the Fed has created many structural problems in the mortgage market, corporate bond
market, and the car loan market.
Reinflating the
Mortgage Bubble
After the recession
of 2001 the Fed decreased interest rates substantially, and this along with
other government policy led to the housing bubble that burst in 2007. As can be seen from the graph below, house prices have
increased by about 50 percent since then and are now at an all-time high.
See Chart
The graph above may show that the Fed was successful in
inflating another housing bubble, yet prices alone do not reveal the whole
picture. In the graph below, I show debt-to-GDP ratios
for a variety of debts. The red line represents mortgage debt as a percent of
GDP, and as it is clear from the graph as a percent of GDP, mortgage
debt is decreasing. In fact, it has already decreased by about 20 percent since
its all-time high. This shows the Fed was less successful in recreating the
housing bubble of the early 2000s.
This is
not to say that the housing market is not in a bubble, but the bubble is not in
the levels it was last time
See Chart:
Debt to
GDP
A New Bubble
Post–Great Recession
As the
graph above shows the only private sector debt that the Fed
was able to substantially increase, as a percentage of GDP, was the corporate
debt. Corporate debt has increased by about 67 percent since the
end of the Great Recession, from about $6 trillion to $10 trillion in just ten
years.
Corporations
are not alone in this. All
other businesses have now accumulated about $5.5 trillion in debt too,
bringing the total debt of all businesses (nonfinancial debt only) to about
$15.5 trillion. This makes percentage of total debt to
GDP about 74 percent, which is higher than the mortgage debt-to-GDP ratio at
its highest point in 2009, when it was about 73 percent.
Hence, this time
around the Fed has been more successful in fueling a
business debt bubble.
Will the Fed Be
Able to Fuel Another Bubble?
As discussed
above, the Fed replaced to a large degree the
mortgage bubble with the corporate bubble. But this happened because
corporate debt and collateralized debt obligations (CDOs) did relatively well
during the last recession. This may not be the case in the recession to
come aggravated by COVIT-19 epidemic.
Before the Great
Recession, we had the housing bubble fueled by the Fed. Then, the Fed replaced
the housing bubble with the business debt bubble. The
question that arises is: what
will be the next bubble if the business debt bubble bursts?
It seems the Fed’s
last hope in fueling the next recovery will be government debt. In fact, the
Fed has played a major role in the government debt increase, but now they are
doing this at another level. Jim
Bianco in an article at Bloomberg recently wrote that the Fed’s plan
“includes a hard-to-understand $625 billion of bond-buying a week going
forward. At this rate, the Fed will own two-thirds of the Treasury market in a
year.” Hence, it is clear the Fed, intentionally
or not, is going to make the government debt bubble worse than it is.
Conclusion
The
Fed-fueled economy is unstable, and as the Austrian theory of the business
cycle teaches us, sooner or later is bound to suffer from huge recessions. With each passing recession, the Fed
finds it harder to refuel the last bubble, but the market moves on to the new
bubble, as the Fed keeps interest rates artificially low.
The problem the Fed is facing now is that since the last
recession they have been unable to fuel good economic growth with artificially
low interest rates, since GDP increased at about 1 percent below the post-World
War II average of 3.2 percent. This
may be because even with artificially low interest rates total debt has increased [ vs decreased] as a percentage of GDP, as the graph below shows.
See Chart:
All Debt
to GDP Ratio
If this trend
continues, the Fed will find it even harder to
fuel economic growth by lowering interest rates. The problem here is: how far are they willing to go to keep the bubble economy going?
Jim Bianco said: “Fed Chair Jerome Powell needs to
tread carefully indeed to ensure his cure isn’t worse than the disease.” Only time will tell what the results of the
Fed’s actions will be, but it sure seems like they will
not find it easy to fuel another private debt bubble.
IN SHORT: With only government debt left to increase, the Fed may
have reached its limits in affecting the economy via interest rate manipulation.
….
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SHORT NEWS ON ECONOMICS
A PRIMER FOR GOLD
NEWBIES
Changing fiat money by GOLD
...the wider public is turning to gold in a spontaneous reaction to financial
and economic problems that have become suddenly apparent, hastened
by the spread of COVID-19...
====
"The
short base collapsed in spectacular fashion from LQD, the biggest HG ETF
after the Fed’s credit backstop programs."
This - as shown in the chart below - was
"trouble": between its all time high on March 6,
and the ten year low hit just two weeks later on March 19, the LQD went bid less as the corporate bond bubble burst, and
both investment grade and high yield debt ETFs and single names cratered.
LQD : Corp Bond bubble burst, LQD goes bid-less See Chart:
====
Bear markets have a way
of “suckering” investors back into the market to inflict the most pain
possible... This is why “bear markets” never end with optimism,
but in despair.
....
Problems that “bear markets” won’t
resolved in a single month…. “bear markets” do not end with “CONSUMER
CONFIDENCE” still very elevated.
See Chart:
No Light At The End Of The Tunnel – Yet.
“Most importantly, as shown
below, the majority of businesses will run out of money long before SBA loans,
or financial assistance can be provided. This will lead to higher,
and a longer-duration of unemployment.” See Chart:
Comparatively we are worse that West Europe See Chart
As job losses mount, a virtual spiral in the econ begins as reductio in
spending put further pressures on corporate profitability. Lower profits lead to higher unemployment and lower asset
prices until the cycle is complete. See Chart
The Bear Still Rules: See
S&P500 Long term See Chart updated to Friday:
Major Technical Failures
Let’s clarify.
- A bull market is when the price of the market is trending higher over a long-term period.
- A bear market is when the long-term upward trending advance is broken and prices begin to trend lower.
The chart below provides a visual of the distinction. When you look at price “trends,” the difference becomes
both apparent and more useful. See Chart:
Using the definition of “bull and bear” markets above,
the market has also violated the long-term “bull trend” on
a “confirmed” basis. See Chart:
A confirmed basis is when the market violates a long-term trend, rallies,
and then fails. As Jeffery Marcus, noted above, that market is now establishing
a confirmed downtrend with the recent rally failing at downtrend
resistance. (Also, the
50-200 dma negative cross will apply more downward pressure on any forthcoming
rally.) See Chart:
The feedback loop from that data into corporate profits, and earnings, is going to make valuations more problematic even with low
interest rates currently.
This is NOT the time to try and “speculate” on a bottom
of the market.
For long-term investors, remain patient and let the market dictate when
the bottom has been formed.
This was a point we discussed in “Rothschild’s
80/20 Rule:”
You can have the top 20% and the bottom 20%, I will
take the 80% in the middle.” – Rothschild
This is the basis of the 80/20 investment philosophy, and the driver behind our risk management process at RIA. See Chart:
Continue reading at:
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
The COVID-19 pandemic has spread
to all corners of the globe and the following infographic shows
the last places on Earth remaining
unaffected...
====
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
In oil production we don’t have the % that Saudis & RU
have, but US
trade Saudi-oil
"We
always remained skeptical about this wider deal as U.S. producers cannot
be mandated to cut?" [ US has not
power to ‘mandate’ , as OPEC has it ]
….
US-Saudi
business (is 1 single actor) in oil
trade-business .Of course this trade is in USD But IF new currency is agreed Saudis win, US lose. RU may
look to break such alliance by trading oil no in USD but with a single regional
currency based on oil-gold base. US
don’t have power in gold nor oil, much less power in Global trade. That is the
Econ situation right now & that is why US favor WW3
====
US manipulation of Xenophobia worldwide: India fell in the
trap
In addition to the Indian complaint, a $20 trillion lawsuit has also been filed against China for
waging a Biological war in Texas Federal Court, alleging that it unleashed the coronavirus as a bioweapon upon the world.
….
The hidden intention is to Start WW3 with
China & Iran.. WW3 will be the worse disaster in human history. Nuke
radiation will create many pandemics worse than corona virus. Indian Nation should move for Political Referendum to depose
their puppet Gvt: use radio & internet to foster Reb Agst their Gvt.
RU-China must be in guard to stop US intention to start WW3. We will demand in
our NATION to stop xenophobia & evil
intention of WW3. The Supreme Court must remove Trump from power if continue inciting WW3 by using local
authorities in TX. There is NO scientific
evidence on China as manufacturer of
COVIT-19. What we’ve in TX is just evil & nasty press+local autorit-manipulatat
….
RELATED 1: More xenophobia here:
"...if you're applauding or
admiring the political leadership of China, you're all deluded beyond
belief."
….
EVIDENCE:
NONE.. just a puppet paid & manipulated to say stupidities
…
RELATED 2:. More xenophobia here
"...The brutal truth is that China
seems to flout the normal rules of behavior in every area of life..."
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====
We already got the peak. At the end of April we will have
more vaccines to stop: 1 is OK
Just two
more months until we hit the peak. SEE
CHART
There is one pill, it comes from RU,
it cost $10 to 15 USD, price depends on
…
====
...the “battle” to cope
with the COVID-19 allowed what was already emerging as a fundamental move toward a new, bipolar
global competition to come out into the open.
====
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
====
RT
EN ESPAÑOL
Trump: "Va a haber mucha muerte", estas
dos semanas serán las más duras https://actualidad.rt.com/actualidad/348865-eeuu-trump-mucha-muerte-CV
US supera las 8.000 muertes y los 300.000 infectados
por el coronavirus https://actualidad.rt.com/actualidad/348862-eeuu-supera-8000-muertes-infect-CV
CV podría provocar mayor emisiones de carbono desde
la 2da Guerra Mundial https://actualidad.rt.com/actualidad/348869-pandemia-mayor-caida-emisiones-carbono-guerra-mundial
cifra de muertes por CV en Perú asciende a 73 y el
país ya suma 1.746 infectados https://actualidad.rt.com/actualidad/348863-cifra-muertes-coronavirus-peru-73
Europa se esfuerzan por aplanar la curva de
contagios del covid-19 https://actualidad.rt.com/video/348873-paises-europa-esfuerzan-aplanar-curva-CV
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INFORMATION CLEARING HOUSE
Deep on the US political crisis: neofascism & internal
conflicts that favor WW3
10 Signs the U.S. Is Heading for a Depression By Mike Whitney
Ground Control to Planet Lockdown: This Is
Only a Test By Pepe Escobar
Bigger Picture is Hiding Behind a Virus By Jonathan Cook
Origin of CV: Ecological, Historical and Geopolit
Persp By Romeo Quijano
Why The U.S. Will Drown In CV Cases By Moon Of Alabama
Defence of President Maduro: From the Heart By Arnold August
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