Because nothing says "recovery" like the record-breaking surges in sales of Rolls-Royce luxury vehicles juxtaposed by the highest level of auto loan delinquency since the 2008 crisis peak...
A month ago we discussed the influx of 'foreigners' to help the Ukraine government 'manage' the country. As UA Today reports, foreign appointments have become a key part of Ukraine's mission to reform its economy and crack down on corruption (and ensure American interests are taken care of?) and now boats 3 non-Ukrainian cabinet members. And now a 4th non-Ukrainian - Estonian Jaanika Merilo - will step up to the plate 'tasked with bringing more foreign investment into Ukraine and improving the country's business climate'. We suspect she will have some success...
- Global Debt Crisis II – Total Global Debt to GDP Ratio Over 300% - Risk of Bail-Ins in 2015 and Beyond - Currency and Gold Wars - $1 Quadrillion “Weapons of Mass Destruction” Derivatives - Cold War II and New World Order as China and Russia Flex Geopolitical Muscles - Enter The Dragon – Paradigm Shift of China Gold Demand - Forecast 2015: None. Forecast 2020: Gold $2,500/oz and Silver $150/oz
Just 2 days after President Obama reflected on his glorious 'save' of the US auto industry - forgetting to explain how so much of this 'buying frenzy' has been predicated on massive low-quality-borrower-based credit extensions - The Wall Street Journal bursts the bubble of 'contained-ness'. Auto loan delinquency rates are surging to levels not seen since 2008 and stunningly, more than 8.4% of borrowers with weak credit scores who took out loans in the first quarter of 2014 had missed payments by November. As even glass-half-full-status-quo-hugger Mark Zandi is forced to admit, "It’s clear that credit quality is eroding now, and pretty quickly."
If we review the events of 2014, it seems the situation has intensified: governments are still overwhelmed with debt, our fiat money system is unsupported, our central banks insist on accumulating debt and making money valueless. Will someone realize we have to pull the plug? And when we do, because it will happen whether we want it or not, how can we hedge against the damage that we will all be exposed to? Owning physical precious metals stored outside the banking system is a proven and essential form of monetary insurance against the uncertainties and negative surprises we see in our world today.
Nearly two-thirds of all Americans are completely and totally unprepared for the next economic crisis.
It is important to remember that the supportive underpinnings are deteriorating. Valuations are elevated, bullishness and complacency are high, and deviations are at extremes. The combination of these ingredients has never led to a profitable conclusion and expecting a different outcome this time will likely lead to excessive disappointment.
Welcome to the new old normal 'Murica... buy those homes... lever up... spend the HELOC... die a debt serf...
Mainstream Media in the US seem to emphasize the positive aspects of the drop in prices. If our only problem were high oil prices, then low oil prices would seem to be a solution. Unfortunately, the problem we are encountering now is extremely low prices. If prices continue at this low level, or go even lower, we are in deep trouble with respect to future oil extraction. The situation is much more worrisome than most people would expect. Even if there are some temporary good effects, they will be more than offset by bad effects, some of which could be very bad indeed. We may be reaching limits of a finite world.
Just 2 short months ago we warned of the rising voice among the cognoscenti tilting their windmills towards the concept of "helicopter money," as Deutsche bank noted, "perhaps there's an increasing weariness that more QE globally whilst inevitable, is a blunt growth tool and that stopping it will be extremely difficult (let alone reversing it) without a positive growth shock." Committing what Commerzbank calls "the ultimate sin" is now reaching the mainstream as Germany's Der Spiegel notes it is becoming increasingly clear that Draghi and his fellow central bank leaders have exhausted all traditional means for combatting deflation; and many economists are demanding that the European Central Bank hand out money to consumers to stimulate the economy.
The December FOMC statement revealed a lack of agreement among Fed officials over communication, BofAML explains, as evidenced by the complicated extension of the forward guidance language and the dissents from both sides of the hawk-dove spectrum. While Standard Chartered expects the Minutes to show The Fed in no rush to raise rates, UBS warns the Minutes “could upset market perceptions of what is important to the Fed’s decision-making process."
Globally, there are over $22 TRILLION worth of derivatives trades involving commodities. ALL of these were at risk of blowing up if the US Dollar rallied. And the Dollar is rallying HARD.
- Twelve shot dead in Paris (Reuters)
- Eurozone Consumer Prices Fall for First Time Since 2009 (NYT)
- Euro's Drop is a Turning Point for Central Banks Reserves (BBG)
- How $50 Oil Changes Almost Everything (BBG)
- Mercedes-Benz Moving U.S. Headquarters to Atlanta (WSJ)
- Greek 10-Year Bond Yields Exceed 10% for First Time Since 2013 (BBG)
- How Even Dairy Farmers Get Squeezed by Rigging in the $5.3 Trillion Currency Market (BBG)
- AirAsia jet tail found underwater, black box may be close (Reuters)
- Italy Unemployment Rises to New High (Bloomberg)
"...we believe the current low crude oil price could be overkill and result in the next “Energy Crisis” by early 2016. Enjoy these low gasoline prices while they last."
Hope springs eternal that 2015 is the year that the US economy stretches its escape velocity growth as consensus growth expectations at 2.9% are still at their highest since 2005 (although world GDP expectations are falling rapidly). However, as Bloomberg's Rich Yamarone explains, with 5 of the Top 10 economies in the world in or near recession, the wall of worry can be constructed as follows...