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The Fed's Painted Itself Into The Most Dangerous Corner In History - Why There Will Soon Be A Riot In The Casino
Submitted by David Stockman via Contra Corner blog,
The chart below crystalizes why the Fed is stranded in a monetary no man’s land. By the time of next week’s meeting the federal funds rate will have been pinned at about 10 bps, or effectively zero, for 84 straight months.
Yet during that same period, the consumer price level has risen by 1.75% per year. And that’s if you give credit to all of the BLS gimmicks, such as hedonic adjustments for quality change, homeowners “imputed” rents and product basket substitution, which cause inflation to be systematically understated.
On a basis that is close enough for government work, therefore, the real money market interest rate has been negative 2% for seven years. But that’s so crazy, unjustified, and unprecedented that even the Keynesian money printers who run the Fed have run out of excuses.
Presumably, Yellen and her posse know that we did not have seven years running of negative real money market rates even during the Great Depression of the 1930s.
So after one pretension, delusion, head fake and forecasting error after another, the denizens of the Eccles Building have painted themselves into the most dangerous monetary corner in history. They have left themselves no alternative except to provoke a riot in the casino - the very outcome that has filled them with fear and dread all these years.
Indeed, Yellen and Bernanke before her have made a huge deal out of communications clarity and forward guidance. But how do you explain to even the credulous gamblers and day traders on Wall Street that the business cycle has not been outlawed and that free money can not last forever, world without end?
Likewise, after all these years of saying that the dollar’s exchange rate is the responsibility of the US Treasury— and that the Eccles Building only does domestic monetary policy—– how will the Fed heads explain that they have wrapped themselves around the axle of an unrelentingly strong dollar?
And that they are impotent to stop the gale force of global deflation and recession being imported into the domestic economy by the inexorable unwinding of the massive dollar short that they have spent years fueling?
For years now the dollar has been a “funding” currency in the global casino—-something the gamblers borrowed or effectively sold short in order to pile into higher yielding EM debt, equities and commodities until they peaked awhile back.
But the fantastic global credit bubble summarized below has now reached its apogee. China and the EM economies are rolling over into a debilitating deflation, thereby catalyzing the mother of all margins calls. This time subprime is lettered in Chinese and speaks with a Portuguese accent.
This time the correction will not be in the overbuilt and over-valued domestic (and other DMs like Spain) housing market. Instead, there will be a global CapEx depression and its contractionary cascade will cause the entire global economy to shrink for the first time since the 1930s.
In fact, it is already happening, even by the lights of the IMF. The world’s nominal GDP has dropped 5% in dollar terms during the past year, and that’s what counts because the world’s $225 trillion tower of debt is heavily denominated in dollars, or linked to it through exchange rates, most especially the Chinese RMB.
But unlike the short-lived recessionary dips of the past, the southward turn in the graph below still has a long way to go. Brazil is plunging into its so-called hard-landing and China is not far behind—-along with its supply chain and DM materials exporters like Canada and Australia.
Figure 1. Gross Planet Product at current prices (trillions of dollars, 1980 – 2015)
Source: IMF World Economic Outlook Database, October 2015.
Shrinking GPP (Gross Planet Product) is not even in the Fed’s vocabulary yet, and even when they do latch on to it, they won’t dare explain it honestly and cogently.
That’s because contracting GPP measures the abysmal failure of the two-decade long global experiment in massive central bank money printing, and the unsustainable credit fueled economic boom it enabled. And it is a stark reminder that the world’s effective leverage ratio will be rising—even as income and cash flow sink deeper into deflation.
So the Fed will have some heavy duty “splanin” to do, but it will be hard-pressed to come up with words that comfort the casino, rather than spook it.
After all, for most of this century the Fed’s post meeting statements and minutes have been progressively degenerating into embarrassingly empty pabulum; and its seemingly rock solid voting consensus was an artifact of being on the Easy Button 80% of the time.
In that environment there was little to debate and less to explain. They simply delivered an economic weather report and urged Wall Street to hang on for the ride.
But now the Fed must emerge from the shaded zone shown above for the first time on a sustained basis since the 1980s. Yet as it seeks to explain a macro-economic slump that it absolutely did not see coming, and confesses to its complete lack of policy tools to reverse the worldwide deflationary tide now lapping at these shores, its statements will be reduced to self-evident and self-contradictory gibberish.
Likewise, the 19 members of the Board will take to noisy public quarrelling right in front of the boys and girls on Wall Street for the first time in their lives.
The reason that there will soon be a riot in the casino, therefore, is not owing to the prospect of a 25 bps pinprick after all this time on the zero bound.
The hissy fit will happen because the Fed’s words and actions starting next week will not say “we have your back, keep buying”.
The message will be “we are lost and you are on your own”.
And that’s not “priced in”. Not even close.
Evidence that a completely new monetary policy ball game is commencing comes from JM Keynes’ current vicar on earth himself, Larry Summers. Three days ago he penned a strange op ed in which he apparently reminded himself that the business cycle has not been outlawed——something most non-PhDs presumably already knew:
U.S. and international experience suggests that once a recovery is mature, the odds that it will end within two years are about half and that it will end in less than three years are over two-thirds. Because normal growth is now below 2 percent rather than near 3 percent, as has been the case historically, the risk may even be greater now. While the risk of recession may seem remote given recent growth, it bears emphasizing that since World War II, no postwar recession has been predicted a year in advance by the Fed, the White House or the consensus forecast.
Well now. If you wait until month 78 of a business expansion to end the emergency policy, and then hesitate to venture more than a few basis points off the zero bound, you will indeed use up the remaining runway right quick.
That’s because the average of ten business cycle expansions since 1948 have lasted but 61 months; and the only expansion that was appreciably longer than the present tepid affair was the 119 month stretch of the 1990s.
But let’s see. Back then the Fed’s balance sheet was $300 billion, not $4.5 trillion. The world had less than $40 trillion of debt or about 1.4X GDP, not $225 trillion or nearly 3X global income.
And, most importantly, China was still a quasi-agrarian victim of Mao’s destructrutive experiments in collectivist economics and state generated famine, not today’s towering Red Ponzi.
That is, it was irrelevant then, but is now a bloated economic whale sinking under the weight of $30 trillion of debt and the most reckless spree of over-investment and mindless public and private construction in recorded history.
So as this domestic business expansion cycle get long in the tooth, the US economy is confronted by a veritable engine of global deflation in the form of China and its EM supply chain. After a 20-year credit driven boom, it now payback time. All of these economies find their exports stalled, their exchange rates falling, and their debt service exploding higher.
What this means, of course, is that Wall Street’s “decoupling” myth will soon be on the scrap heap. US exports and imports are now crumbling, and even the standard measures of goods transit are cliff diving.
Likewise, today’s wholesale report for November was a red alert warning that a big recession inducing inventory liquidation is just around the corner. Even if Janet Yellen won’t find this chart on her dash board of 19 lagging labor indicators, the message is unmistakable.
According to Dr. Summers, the thing to do when recession strikes is to cut interest rates by 300 basis points. But even he admits it ain’t going to happen this time.
Even if were technically possible to have a negative 300 bps federal funds rate, what is already a 2016 election year gong show would take on a whole new level of crazy. The brutally trod upon savers and retirees of American would well and truly revolt.
Historical experience suggests that when recession comes it is necessary to cut interest rates by more than 300 basis points. I agree with the market that the Fed likely will not be able to raise rates by 100 basis points a year without threatening to undermine the recovery. But even if this were possible, the chances are very high that recession will come before there is room to cut rates by enough to offset it. The knowledge that this is the case must surely reduce confidence and inhibit demand.
Central bankers bravely assert that they can always use unconventional tools. But there may be less in the cupboard than they suppose. The efficacy of further quantitative easing in an environment of well-functioning markets and already very low medium-term rates is highly questionable. There are severe limits on how negative rates can become. A central bank that is forced back to the zero lower bound is not likely to have great credibility if it engages in forward guidance.
So if the endlessly clever word-splitter who currently heads the church of Keynes on earth can do not better than the above ill-disguised punt, can you imagine what blithering incoherence will be contained in the meeting statements as the recession gathers force next year?
Yes, there will be a riot in the casino.
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Time to party like 1929...where's the nearest 10 story building?
Jump! You fuckers!
For those who haven't heard it yet:
Jump You Fuckers
https://www.youtube.com/watch?v=yge311sFhC8
< Hike
< No hike
Brandon Smith says the December 16th rate hike is (almost certainly) on. Since he's the only financial writer who knows the larger game afoot I am inclined to agree...
http://www.alt-market.com/articles/2758-the-global-economic-reset-has-begun
All this is just the rigging creaking. Steady as she goes. Into the night.
I like that, very well done and smart way to sum it up. "Sir, there's an iceburg ahead." "40 degrees starboard guys, we can avoid it! Fire up the boilers, tell that band to keep on playin'."
http://www.rmstitanicremembered.com/?page_id=283
25 bp hike, then market hissy fit, then QE 4,5,6, etc. Plunge Protection Team to go public (like Japan) and buy everything that's not nailed down. Helicopter money. War on cash. Reset, bail-in, followed by Bretton Woods 3. Creation of the Central Bank of Mars that then becomes the new lender of last resort. Party on! Oh, and then WW III really gets going, Historians will say it started on 9/11/2001.
And it's worth paying attention to Brandon's comments on Russia. They are, along with Putin, part of the financial NWO.
If he is correct and this rate hike is a catalyst for the destruction from which the Phoenix of the NWO catapults we need to treat it like skeet. Anyone say "pull!" If they won't do the honorable thing we should help them
yes! I agree, but do not count on the fed. they keep saying they will raise and they never do.
But the market is intersting here.
spx chart here ==> http://www.bit.ly/1fMcakI WHOA! = ASCENDING TRIANGLE PATTERN!
Probably some big moves on the stock market coming to a town near you! :-)
"The efficacy of further quantitative easing in an environment of well-functioning markets and already very low medium-term rates is highly questionable"
Larry Summers
the stupid is strong with this one.
Is it wrong that I am so excited for December 16th and have been since September. I. LITERALLY. CAN. NOT. WAIT. Looking forward to them being fucked so hard no matter what they do, willing to accept what will happen because of it. Excited.
Give me a fricken' break...it has ALL been according to plan..."we hubris'd some folks"
Good Read
Valid points. NO Mention of devastation over decades that trade deals have caused. TPP. TIPP and NAFTA? All these "trade lies" combined with Central Banking idiots. The 2 go hand in hand Mr. Stockman.
There will never be a rate increase. If they raise even 25bps then they have to sell $500B worth of securities. That would crush the banking sector which is relying on the Fed as the lender of last resport.
There will be no one to soak up the liquidity. Just like when the BoJ decides to sell stocks there will be no one to buy them. All banks have maxed out their credit. WIthout the central bank liquidity there are no buyers.
There will be a rate increase next week. And no, they don't have to sell any securities to make it happen.
Come on back next week and apologize for being so dumb.
Come back when you read the articles -
"But It's Just A 0.25% Rate Hike, What's The Big Deal?" - Here Is The Stunning Answerhttp://www.zerohedge.com/news/2015-12-03/its-just-025-rate-hike-whats-bi...
Belgium is printing up some $1T platinum coins as we speak.
Stockman certainly has a way of explaining the problem eloquently. I applaud his writing style.
But, the REAL issue is, if the Fed raises rates, what is the mechanism they will use to make it happen.
Concensus is that that they don't have a mechanism (repo's, etc.) that won't create havoc in the so-called markets.
What they say is a targeted Fed Funds rate. Get a adverse reaction and the Fed doesn't follow up on making that rate happen.
The Most Dangerous Corner In History - Why There Will Soon Be A Riot In The Casino
Wrong, Mr. Stockman.
Wonder why?
US financial rules the world. And that’s an unreputable fact, you like it or not.
Interest will go up soon. Likely next week. Next year it will go up 4/5 times.
Again, wondering why?
Well, if you don’t know the answer, you should stop writing about financials, Sir.
LOL you must worship satan too I bet. I'll pray for you. You are a lost soul.
Dude, I think you may be more comfortable over at marketwatch, they love that MSM crap,,,
You may be proved right. However.
Well, if you don’t know the answer, you should stop writing about financials, Sir.
Enlighten us all with your wisdom and argument kindly. IF Mr. Stockman is so misguided and you are not then kindly share your argument. Cryptic comments? with nothing to back? Hey kiddo ain't you so smart. I think not.
Jesus guys, US is an open society with a well established track record. Just go back to 1970’s and 1980’s high interested rates and crashing commodities—third world more exactly.
Did they care that it bankrupt the Savings and Loans? The US oil companies?
https://en.wikipedia.org/wiki/Savings_and_loan_crisis
https://www.youtube.com/watch?v=02F-3l1EKsA
Supporting the death spasms of global currency/military domination while impoverishing your citizens? US has already been doing this slowly. So interest goes up? Money flows in. How long do you posit this can last. Please share your analysis of how much debt US can create.
I personally do not care how much juice my druggie thug neighbour promises to me. At some point the game will blow. The promises are fuelled by crime.
You are a real man of genius.
Nope. A commentator willing to drive the majority of society into serfdom. I guess the US landlords (and UK overlords) envied the seemingly limitless slave labour offered in China. So trying to create that globally.
State your argument Escavara???? Otherwise confine yourself to shutting up.
I see you're being heavily downvoted, but I agree with you, Babaloo.
Increasing rates is the dumber of the two choices. If you look back in recent history they're consistently making the worst possible choices, and I have no reason to doubt this will change.
I expect a rate increase, and market freakout with god knows what unintended consequences, and then a rate decrease, followed by wholesale commitment to either NIRP (or possibly QE, but QE looks worse politically. NIRP is arguably more damaging to the little people, so my bets are heavily on the NIRP side, since it hasn't been demonized as sending cash to banks the way QE has, and NIRPs ability to fuck savers hasn't been well publicized.)
We'll see which side is right in a week, but I think we see an increase, and it's a critical milestone on the path to the the main collapse events.
Here's the problem with that scenario: it means the Fed has no idea what they are doing. Sure, we all know they are idiots, but the general public thinks they are the masters of the financial universe.
If they raise rates they can't admit to it being bad policy. They can admit later down the line. Like Greenspan saying he didn't do a great job. But Bernanke never took responsibilty for 2008. Yellen will extend and pretend.
It's the Blame Bush mantra, we just blame the last guy.
Thus why they will continue to bluff the public and extend and pretend for infinity.
Man, you lost me at "we all know they are idiots."
Sorry, but they know exactly what they're doing. Their moves are intentional. Notice how they are not accountable to us. The world is full of banksters doing their masters' errands. We're not in the club so our opinions don't matter.
They could create a scenario where they "can't" raise rates. Like your Dow under 17,000 idea. However, if they want to raise rates, they will.
Grab some popcorn and see what happens.
When I refer to them as idiots I am refering to the fact that at some point in time this system will break and the Fed will look clueless.
Sorry Soul, whenever someone suggest they are "clueless", :misinformed", "idiots" I dv.
They know EXACTLY what they are doing.
Here is what is idiotic - you are someone with power. You make big decisions. Yet you use your power to harm the world.
THAT IS IDIOCY.
Not idiocy... they are called sociopaths... for good reason.... because they are. It all becomes clear when you understand that TPTB are all sociopaths.
No expert here, but why couldn't they raise the rate AND expand its balance sheet. More market manipulation but what the heck. There is a history of that.
Rates are inverse to liquidity. That's why.
Not in this universe, yet. There's the problem.
This game has been played way beyond any point of reasonable solution.
I carry in my wallet a 100,000 ruble note that was issued in '95. At that time is was worth $20. A pensioner in good standing received 100 rubles, many just died.
Just remember: USA # 1
Rates are inverse to liquidity. Rates rise and the price of the security falls, which puts pressure on selling. Banks/creditors will want to unload bonds along with the Fed.
And yes I understand this could end in hyperinflation of the dollar.
Buy silver.
Your last two words are the truest.
Bond prices only fall in the presence of a fully functioning market, and that hasn't existed since at least 2008.... all by design. Your theory works, but only if the Rule of Law is alive... so ask John Corzine how that Rule of Law thingy is working. The bottom line is the Fed, and their proxies essentially control the bond market now and have completely neutralized the bond vigilantes. Without a truly functioning bond market, the Fed and their proxies can essentially do what they want. Who can stop them when they control the money supply, bond market, treasury... and by extension Federal Govt... and by further extension the Security State? This is all by design to insure the Ponzi is perpetual.
>>Who can stop them
There's this pesky little thing call faith or confidence. The Fed is playing a dangerous game and if they rock the apple cart too much things will unwind quicker than you can get to the exit doors. Anyone in the market is playing russian roulette for sure.
You don't seem to have any idea what interest rate the Fed is talking about raising. It's the rate at the discount window and it is set at whatever the Fed says. They don't have to sell or buy anything to change it.
We are discussing the federal funds rate, not the discount window rate.
They don't have to sell or buy anything to change it.
Really?
Just what do you think happens to the liquidity available to borrowers when it costs them more to borrow?
Where does that money to pay the finance charges come from? The borrowers?
Well they will not be borrowing if they were that cash flush. In fact they borrow due to their LACK OF CASH.
How will they finance that borrowing? In these wonderful markets that have no yield?
They will be forced to LIQUIDATE.
Stop being a state apologist. You know that she is between a rock and a hard place. That has already been empirically demonstrated by the fact that she has NOT RAISED RATES EVER. She knows that she is between a rock and a hard place.
She is not that damned stupid...although some people here think that she is.
Stanley Fishcher, from Israel, was imported to run the show. Yellen was apparently too stupid to keep the game going.
No matter, the results will be the same.
China and Russia are quietly leaving the con game. THere was an article here last week about thr Fed's debt being increased by $200 B + ? .
No matter, it's only digits on some folks computers.
We were computered by some folks.
You don't know what you're talking about man. The announcement depends on execution.....some open market operation. If they just "say" or "declare" a rate hike without action, the market responds accordingly. Rates don't rise and you are right back where you started - only with less credibility. And to demonstrate just how far from the adult table you have wandered, the entire discussion(s) on ZH and elsewhere have been, not whether there will be a rate hike, but, rather if the FED declares a rate hike, whether they are actually able to effect one, given the appetite for paper (collateral) in the short run. In other words, the amount of money that they may have to pull from the market to effect a 1/4 point hike may be a lot more than what people think.
Slap em with the truth, Soul Glow!
The FED has lost credibility. They will lose confidence as well if they do not raise rates.
Without confidence the system implodes.
Politically she must raise rates. Without that hike she will lose the confidence of the people that she has any cue about that which she is doing.
A loss of confidence in that the system is salvagable will also cause a sell off...of US Treasuries.
I do not envy her...at all. In fact she is really a tragic figurehead...deservingly so...but still tragic.
Bingo. This is about politics, not finance. It will trigger a negative outcome but that's going to happen anyway, and it happens later, this is all about whack-a-mole, and right now credibility is the biggest mole to whack.
Sorry, she's not tragic - just incompotent.
Stanly Fisher had to be broght in as her script wrtighter.
Incompetence?
I am sorry that I do not buy that.
She was left in an impossible situaton by her predecessors.
As a Mathematician of sorts...egads I do not like claiming that as I more practical and applied***.... I only can tell you that I can solve extremely few problems. The vast majority of problems are without any solution whatsoever.
It is rather humbling but I went to school to find out about what I did not know. By the time that I left I found out that there was much, mich more that I did not know than I believed there to be when I started.
To admit that does not make me incompetent in the least.
No. She was left with an impossibility,that being to solve that which has no solution.
And that, sir, is tragic.
A man has got to know his limitations. ~ Dirty Harry
*** Now that reminds me of El Vaquero's joke on this website about the two Physicists stranded in a balloon. They were floating for quite awhile above the clouds, and were lost. They spotted a break in the clousds and saw a man. One of the physicists asked where they were at. The man responded you are in a ballon floating above. The other physicist said, "Great. We found a Mathematician." The first physicist asked, "How can you discern that" The other physicist replied, "His answer was entirely accurate with absolutely no practical application."
I think there are a crapload of SIFs (systemically important folks) that have lined up their portfolios for a rate rise. If it doesn't happen, a lot of that crap is gonna hit the fan.
Did I not just see a chart that showed $Ts in the bank's deposits at the fed?
Seems like to me there is plenty of liquidity to allow $800B to be removed from those.
And the Fed has those securities, it has been exchanging the TBTF banks' shit for $ for a long time. Now those will be greatly discounted, and the banks will make bonuses on the profits when they pass them along to patsy customers excited by what I am sure will be explained as 'the new economy' for the few week it takes to get all that done.
Then the crash.
Stockman usually knows what he is talking about but he missed the boat on this one. The Fed is not agraid of what will happen next week. They will be taken care of no matter what happens. They will raise interest rates no matter what Stockman says. They have the power and they will do whatever they want.
Unemployement rate is down to a 5% print - time to end the charade of emergency rates & start normalization.
Thank you Steve Liesman. I like your new nome de plume. Very fetching.
If you seriously think unemployment is truly 5%, might I interest you in purchasing the Golden Gate Bridge? I can give you really good terms.
Check out Shadowstats.com for some more reasonable numbers for BLS statistics.
I already sold the Golden Gate Bridge to a Chinese couple.
You some kind of con man ?
The FedRes is hiring.
If the FED raises next week; you'll know they are confident in their 5% unemployement print.
If the FED doesnt raise next week; you'll know they aren't confident in their 5% unemployement print - and that the unemployment rate is cooked.
Time to play "The roof is on fire". The one with the microwave in the video.
Interest rates ran considerably higher than inflation for many, many years. So why shouldn't interest rates run below inflation for many, many years? After all, the long-term return of cash is roughly that of inflation, ie: a zero real return. People who want better than a zero real return are, of course, highly advised to actually invest it in active business or take interest rate risk.
It shouldn't be the central bank's role, nor the government's, to guarantee a return greater than inflation to people who take no risk. So negative rates are just the economy's way of unwinding excesses of interest rate policy of the past where rates were significantly positive.
Or, how about the government and the Federal Reserve no longer get to play god and are completely removed from the business of controlling the economy?
You wrote: "So negative rates are just the economy's way of unwinding excesses of interest rate policy of the past where rates were significantly positive."
Something feels not right about that sentence...just having a hard time expressing what about it bothers me.
"It shouldn't be the central bank's role, nor the government's, to guarantee a return greater than inflation to people who take no risk."
When did the fruit of our labor become a casino chip? I seem to have missed that one.
But Krugman is still busy taking a victory lap and kicking dirt in the eyes of anyone questioning this insanity.
The Keynesians have failed and have carried out an economic holocaust against younger people who don't hold grossly inflated and distorted assets.
Sounds like a Pyramid scam.
Yup, and they'll turn it into a brick. A top and a bottom - no inbetween.
If a lousy 0.25% raise in rates creates this much havoc in the system, then this system isn't worth having.
It's the relative rise that counts to debtors. If you're paying 1% and you have to roll over into 1.25%, your carrying charges have just gone up 25%. Not good, if you're leveraged to the hilt.
I saw these charts yesterday. The original poster somehow thinks the usd/jpy correlation is indicative, of higher rates pushing P/E and SPX ratios higher.
LMFAO! Welcome to " Generation RETARD"...
where there is correlation there must be causation /idiocracy
Merry Christmas buzz. might I add a small factor to the equation?
A< causationctl-p <> B/S+ $4t/idiocracy= A<>$4tctl-p-Merry Christmas.
Bitchez
We've been saying this for a decade now, but every time they find a way, consider the 'competition' is part of the system, as long as the G20 keep covering eachothers asses, nothing will happen.
say what you will about greedscam and the bernank, at least they had the ballz to drain the swamp once apiece in their whole scummy existence. janet ain't got no ballz and she will never tell those maggots they are on their own.
J.P. Morgan analysts wrote that the three best leading indicators for recession have been credit spreads, the shape of the yield curve and profit margins.
Here are some signs of a coming recession.
1. Investors in high-yield bonds are expecting to see their first negative return since the start of the credit crisis in 2008.
http://www.marketwatch.com/story/deteriorating-junk-bonds-flash-warning-signs-for-stocks-2015-12-07?dist=afterbell
2. Factory orders continue to drop
http://www.zerohedge.com/news/2015-10-02/us-factory-orders-flash-recession-warning-drop-yoy-10th-month-row
3. Default risk spikes
http://www.zerohedge.com/news/2015-10-02/us-financials-default-risk-spikes-2-year-high
4. M&A set record
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/
5. Iron ore prices tumble
http://www.marketwatch.com/story/iron-ore-prices-keep-crashing-adding-to-global-growth-fears-2015-11-30
6. Baltic dry shipping index tumbles
http://www.marketwatch.com/story/shipping-index-falls-to-all-time-low-stoking-fears-about-global-growth-2015-11-19
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
http://stockcharts.com/freecharts/yieldcurve.php
YIELD Curve has NOT inverted yet!
As I read all the comments, I think we are all still a bit in denial concerning the real causes and culprits. A large portion of 1% have made huge gains in fiat that they then used to buy real assets. Think about it. Print currency to benefit the tiny minority who then buy up everything. When it all crashes they will be fine while we are exterminated.
But real assets, ex-real estate, are cheap at the moment. There is little evidence to suggest that the 1% have been converting to 'real' assets. Most of the 1% are asleep at the switch thinking the gravy train of their overinflated assets is going to last forever.
Valuations on the mines, gold, etc. railways, manufacturing etc., the quintessential 'real' assets of the economy, aren't particularly high. In some cases, they are at generational lows, as is the case for the mining sector.
When the flush is applied to the bond market, and all of the 'fluff' it supports (ie: US financial sector, tech sector, government), a good chunk of the 1% will go down with the ship. Even Uncle Warren who dogmatically hates many of the real long-term stores of wealth because their short-term quoted ROI isn't great enough for his liking.
"We" Kimosabe?
Can't the shit finally hit the fan?
It's the only way anything is going to really change.
Keep your head down and try to make it a change for the better.
Mr. Stockman, trend is not destiny. "Growth" is down for a good reason; the surplus energy is ebbing away.
What happens when you mess with the casino:
https://www.youtube.com/watch?v=zl9_ylakzcI
The Fed absolutely positively must not do what it absolutely should not and cannot fail not to not do. It's all in the data points, people. Very esoteric stuff. Just trust us, because we most certainly don't not know what we aren't not doing.
Hope that time runs out asap, like before "gun control" gets even more out of hand. If everyone gets fkd, bullets are gona be flying at certain assholes and they fucking know it.
It's a race to the finish. what will happen first? Gun control vs econ collapse? They are ramping things up exactly like you say.
I would expect a generated national emergency about the time Janet picking up the Batshit Crazy phone to Hilsenrath if not before, they ain't going down without a fight (using your kids of course)
Hope and Change = Make America Great Again
Same bullshit
Let the games begin already.
Squid
If they hike, history tells us, the markets will sell off, then sell off heavy, then panic, then the Fed will announce a rescue and stocks stablize before a face ripping rally of a return to negative rates and a new QE program. The 1% settle in for another year of double didget equity gains, while 10 million more Americans drop out of the labor force.
I suspect they will only raise rates because they have no alternative. Like the chinese they are seeing signs of a banking system on crack. They need to pop the bubble in a controlled manner.
Suspect they will fiddle with other knobs. One possibity mentioned is helicopter money and theres elimination of cash and negative rates and taxes, war, cheap oil, obamaacare.
There is the possibility that global warming will have a negative affect on economic projection- finsies.
I suspect they will have to print money to propup the dollar- go ask alice.
Yet again I wish to object in the strongest terms to the destruction of language and meaning by using 'deflation' in the sense of 'down side of the business cycle'.
It has no explanatory power, and should logically be the opposite of 'inflation', but we have both inflation and deflation going on simultaneously, in the discussions of economists.
'deflation' is a Keynesian thought and is used precisely to invoke the Keynsian solutions to the 'problem of business cycles'. They don't know zip about the economy and there is no possible control system, it is hubris to the power of Dunning-Kruger to implement controls on an open, evolving, complex system.
'economist' == witch doctor with a specialty in mathematics.
All the players at the table are in a situation that to call it would put them all in...the casino owners, (Mr imf and bis etc) are standing just off screen watching while their security guards are pointing their weapons.
So biggest stack being player usa but holding a horrible hand...has no choice but to bluff the fuck out of it and hope you can be the last to turn em over as each of the players get shot for folding instead of requesting another marker.
Then the only possible outcome, player usa having busted every other player and watched the guards execute them one by one looks around the table, sees the huge pile of chips and no other players at the table so reaches forward to gather the spoils just to have his arms chopped of...the King's of the world take what was always theirs and USA joins the rest of the players bleeding out on the floor.
The point now is not to will, it's just to survive the longest under the current way of life we enjoy before we all get stoneaged folks.
I still think that the most reckless spree of over-investment and mindless spending of money in recorded history is the U.S. Army. Just a few examples:
The Navy’s $864 Million Underwater Drones Still Don’t Work http://www.bloomberg.com/news/articles/2015-12-08/littoral-combat-ship-c...
Raytheon’s GPS control system is ‘a disaster': U.S. Air Force general http://www.reuters.com/article/us-raytheon-satellites-idUSKBN0TR1QF20151208
The designer of the F-16 explains why the F-35 is such a crappy plane http://forum.prisonplanet.com/index.php?topic=265349.0
Navy’s $4 billion new futuristic destroyer Zumwalt is finally at sea https://www.washingtonpost.com/news/checkpoint/wp/2015/12/08/the-navys-n...
The Fed has a money printing machine and is unaudited. There isn't anything they can't do ! They got this!
Larry Summers uses the word "recovery" several times. Larry is somewhat delusional.
"Recovery" and 5% Unemployment....then why do I see "stamp out hungar" boxes everywhere? At the office, at school, at the supermarket, at church...geez I must be missing something.
Last market all-time high was MAY. Seven months ago. Take a look at a chart and you can see the distribution (i.e., selling) by institutional investors.
Not very orderly, but sevne months between highs is a long time for the greedy fuckers on Wall Street and the bozos on CNBC.
This is it. Less than a week away. won't be the end of the world, but I'm hoping for some of these losers to take heed of the words from Jump You Fuckers:
"You're good at stealin' you're good at lyin', let's see how good you are at flyin'... Jump you fuckers."
http://stockcharts.com/freecharts/gallery.html?$SPX
As long as we are on the topic of global conspiracies...
I postulate the Fed will raise rates and continue to do so in gradual intervals. This is an act of economic warfare. It is an attack on [insert name of currency here] and strengthens the dollar's position as a reserve currency and the underpinning of the petrodollar. There will be pain at home. It will pale in comparison to the pain abroad. Thus will the U.S. government attempt to prevent rebellion. Immigration "reform" in the form of amnesty will bring in the necessary millions of new taxpayers Uncle Sam so desperately needs. And, hey, they are already here so it's not like we have to vet them. Then we plead our case to the world as having absorbed millions of refugees.
I like that much more than the whole IMF thing. There is not enough government power in the world to prevent an uprising of the people, and there won't be until we are all microchipped.
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What fills me with trepidation is the idea from the 90's that we're going to have jobless recovery after this all falls in due to the automation, robotics, driverless vehicles, AI, et cetera.
Except not just in Canada as they yapped about in the early 90's, but all over the world.
How will we get past it?
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V-V
The hissy fit will happen because the Fed’s words and actions starting next week will not say “we have your back, keep buying”.
The message will be “we are lost and you are on your own”.
And that’s not “priced in”. Not even close.
Classic Stockman
I don`t know.....I think you give these socialist college professors at the FED who have never had a real job too much credit......Since when has a liberal ever realized a mistake, let alone correct one?......Curing a debt problem with more debt has been their religion, and they will go down defending it to the bitter end......If history is a lesson......expect helicopter money directly to government entities, and QE infinity to continue......With inner city bailouts, Hillarys election, and Obama`s legacy, at stake, Why would they quit printing Zimbabwe bucks?.....
I'm not sure why, but for the longest time I thought they made ambergris at the Eccles building. My mariner friend has corrected my error: they manufacture hubris there--hubris.
"...private capital is the economic equivalent of our bodily appendix." [Private] CapEx [-induced] depression? We'll see.
http://www.counterpunch.org/2013/05/03/the-economics-of-over-ripe-capita...
There is no "current recovery". There is no "recovery" at all. The predators-that-be totally destroyed the western economies before the start of this century.
The predators-that-be have known that... and wanted that. They've spent the past many 15+ years preparing for "the end of mankind". The top predators-that-be imagine they will survive in the Valhalla Sector under Mount Weather. They've been preparing to move into their luxury underground digs for a long, long time, and they are almost ready.
Get ready for the end... coming to a species near and dear to your heart. The sad fact is, most sheeple asked for it, and will get it in spades. 99.9999% of those who didn't ask for it, unfortunately did not get the hell outta dodge and prepare for what's coming.