For all the talk about QE this, HFT that, crony capitalism, cold war 2.0, hyperinflation, hyperdeflation, social inequality, Keynesian dead end, global financial meltdown, perhaps the one most tangible threat to mankind as a whole (and to the future underfunded healthcare costs) is something fatr simpler: the rise of the fatty.
It almost happened in 2008... but as this excerpt from Casey Research's Meltdown America documentary notes, it appears the US military is preparing for the potential collapse of the US dollar. As Scott Taylor warns, "...if the carrot (of credit worthiness) is fading, and the stick (of military threat) is weak, that empire is going to come down in a hurry..." which leaves a serial economic mis-manager only one option to 'secure' the empire.
Public Service Annoucement: The Most Likely Armageddon Threat … Preventable for a Small Amount of Money
In this day and age, it is imperative that we all learn how to think for ourselves. The foundations of our society are crumbling, our economic system is failing and the blind are leading the blind. If we do not learn to make our own decisions, we are just going to follow the rest of the herd into oblivion. In addition, we all need to start taking a long-term view of things. Just because the economic collapse is not going to happen this month does not mean that it is not going to happen. When you step back and take a broader view of what is happening, it becomes exceedingly clear where we are heading. Sadly, most Americans will never do that.
The mainstream recovery narrative has an astounding “recency bias”. According to all the CNBC talking heads, the 192,000 NFP jobs gain reported on Friday constituted another “strong” report card. Well, let’s see. Approximately 75 months ago (December 2007) at the cyclical peak before the so-called Great Recession, the BLS reported 138.4 million NFP jobs. When the hosanna chorus broke into song last Friday, the reported figure was 137.9 million NFP jobs. By the lights of old-fashioned subtraction, therefore, we are still 500k jobs short—notwithstanding $3.5 trillion of money printing in the interim. The truth is, all the ballyhooed “new jobs” celebrated on bubblevision month-after-month have actually been “born again” jobs. That is, jobs which were created during the Fed’s 2002-2007 bubble inflation; lost in the aftermath of the September 2008 meltdown; and then “recovered” during the renewed bubble inflation now underway.
Most Buy Side managers have no idea about the disparate business models of the four largest US banks by assets.
"The global financial landscape was evolving. Ever since World War II, US bankers hadn’t worried too much about their supremacy being challenged by other international banks, which were still playing catch-up in terms of deposits, loans, and global customers. But by now the international banks had moved beyond postwar reconstructive pain and gained significant ground by trading with Cold War enemies of the United States. They were, in short, cutting into the global market that the US bankers had dominated by extending themselves into areas in which the US bankers were absent for US policy reasons. There was no such thing as “enough” of a market share in this game. As a result, US bankers had to take a longer, harder look at the “shackles” hampering their growth. To remain globally competitive, among other things, bankers sought to shatter post-Depression legislative barriers like Glass-Steagall. They wielded fear coated in shades of nationalism as a weapon: if US bankers became less competitive, then by extension the United States would become less powerful. The competition argument would remain dominant on Wall Street and in Washington for nearly three decades, until the separation of speculative and commercial banking that had been invoked by the Glass-Steagall Act would be no more."
High Frequency Trading (HFT) covers such a broad swathe of 'trading' and financial markets that Mark Cuban (yes, that Mark Cuban), who has been among the leading anti-HFT graft voices in the public realm, decided to put finger-to-keyboard to create an "idiots guide to HFT" as a starting point for broad discussion. With screens full of desperate "stocks aren't rigged" HFT defenders seemingly most confused about what HFT is and does, perhaps instead of 'idiots' a better term would be "practitioners."
One way to understand why the global financial meltdown occurred in 2008 and not in 2012 is all the oxygen in the room had been consumed. In the U.S. housing market, there was nobody left to buy an overpriced house with a no-document liar loan because everyone who was qualified to buy a McMansion in the middle of nowhere had already bought three and everyone who wasn't qualified had purchased a McMansion to flip with a liar loan. Once the pool of credulous buyers evaporated, the dominoes fell, eventually circling the globe. Right now China is at the top of the S-Curve, and the problems of stagnation are still ahead.
As we reported last night, Japan's economy may once again be relapsing into a slowing phase, perversely well in advance of the dreaded sales-tax hike which many expect will catalyze Japan's collapse into another recession as happened the last time Japan had a tax hike, but that doesn't mean its population should be prevented from enjoying the heavily energized local atmosphere buzzing with the hope and promise of imminent paper-based "wealth effects" for those long the daily penNikkeistock rollercoaster.... and just as buzzing with copious gamma rays of course. Which is why for the first time in over three years, since Japan's Fukushima nuclear disaster, residents of a small district 20 km from the wrecked plant are about to be allowed to return home. Because if the honest Japanese government says it is safe, then so it must be.
The Federal Reserve is likely to suffer significant losses on its Treasury holdings once interest rates rise from historic lows. Indeed, the researchers at the San Francisco Fed have recently called for "stress tests" on the Fed itself. Fail to prepare ... prepare to ...
For five long years, we have pursued the fantasy that we could return to "growth" without having to fix or change anything. The core policy of the fantasy is the consensus of "serious economists," i.e. those accepted into the priesthood of PhD economists protected by academic tenure or state positions: what we suffered in 2009 was not the collapse of leveraged crony-state financialization but a temporary decline of "aggregate demand" and productive capacity. The five-year fantasy that free money would fix all the distortions and systemic problems is drawing to a close. Why can't the fantasy run forever? The two-word answer: diminishing returns. Handing out subprime auto loans works at first because it pulls demand forward: anyone who wants or needs a new car buys one now, rather than put the purchase off a year or two. Eventually the marginal buyers default and demand falls off, and the distortions cause an even greater collapse in demand and auto loan quality.
Does anything about 2014 remind you of 2008? The long lists of visible stress in the global financial system and the almost laughably hollow assurances that there are no bubbles, everything is under control, etc. etc. etc. certainly remind me of the late-2007-early 2008 period when the subprime mortgage meltdown was already visible and officialdom from Federal Reserve chairman Alan Greenspan on down were mounting the bully pulpit at every opportunity to declare that there was no bubble in housing and the system was easily able to handle little things like defaulting mortgages. The party, once again, is clearly ending and raises the question: "If asset bubbles no longer boost full-time employment or incomes across the board, what is the broad-based, “social good” justification for inflating them?"