Earthquake Economics - Waiting For The Inevitable "Big One"
Submitted by MN Gordon (via Prism Economics), annotated by Acting-Man.com's Pater Tenebrarum,
Beyond Human Capacity
“The United States of America, right now, has the strongest, most durable economy in the world,” said President Obama, in his State of the Union address, on Tuesday night. What performance metrics he based his assertion on is unclear. But we’ll give him the benefit of the doubt.
Maybe this is so…right now. But it isn’t eternal. For at grade, hidden in plain sight, a braid of positive and negative surface flowers indicate an economic strike-slip fault extends below. What’s more, the economy’s foundation dangerously straddles across it.
Actually, it probably isn’t so – the Atlanta Fed’s GDP Now measure, which has proven surprisingly accurate thus far, indicates that the US economy is hanging by a thread – and the above chart does now yet include the string of horrendous economic data released since January 8.
Something must slip. A massive vertical rupture is coming that will collapse everything within a wide-ranging proximity. It is not a matter of if it will come. But, rather, of when…regardless of what the President says.
Here at the Economic Prism we have no reservations about the U.S. – or world – economy. We see absurdities and inconsistencies. We see instabilities perilously pyramided up, which could rapidly cascade down. We just don’t know when.
Comprehending and connecting the infinite nodes and relationships within an economy are beyond even the most intelligent human’s capacity. Cause and effect chains are not always immediately observable. Feedback loops are often circuitous and unpredictable. What is at any given moment may not be what it appears.
Not Without Consequences
For instance, the Federal Reserve quadrupled its balance sheet following the 2008 financial crisis, yet consumer prices hardly budged. Undeniably, the Bureau of Labor Statistics’ consumer price index is subject to gross manipulation. We’re not endorsing the veracity of the CPI.
We’re merely pointing out policies have been implemented that have massively increased the quantity of money, yet we can still get a hot cup of donut shop coffee for less than a buck. Obviously, the effects of these policies have shown up in certain assets…like U.S. stocks. That’s not to say they won’t still show up in consumer prices. They most definitely will.
One should perhaps not be too surprised that most prices are far from declining – even when measured by government methods that are specifically designed to play price increases down in order to lower the growth rates of so-called COLA expenses (and leaving aside the fact that the so-called “general level of prices” is a myth anyway and actually cannot be measured) – click to enlarge.
The point is no one really knows when consumer prices will rapidly rise. The potential is very real. Like desert scrub tumbling along a highway edge, one little spark could send prices up in a bush fire. Moreover, the longer the Fed can seemingly get away with their efforts to inflate in perpetuity, the greater the disaster that awaits us.
In the meantime, their policies are not without consequences. Price distortions flourish to the extent they appear normal. Nevertheless, upon second glance, apparent incongruities greet us everywhere we look.
The sad fact is an honest day’s work has been debased to where it’s no longer rewarded with an honest day’s pay. At the same time the positive effects of productive labor, diligent savings, and prudent spending now take a lifetime – or more – to fully manifest.
Conversely, the negative effects of borrowing gobs of money and taking abundant risks can masquerade as shrewd business acumen for extended bubble periods.
Even when deflated by the government’s own flawed “inflation” measurements, real median household income is back to where it was 20 years ago already. This is definitely not a sign of economic progress. In fact, this datum is testament to how much capital has been malinvested and hence wasted due to Fed policy-inspired serial credit and asset bubbles – click to enlarge.
Earthquake Economics
During an economic boom, particularly a boom puffed up with the Fed’s cheap credit, madmen get rich. They borrow money at an artificial discount and place big bets on rising asset prices.
They don’t care they are placing those bets within a dangerous seismic zone. The rewards are too great. Eventually asset bubbles always exhaust themselves. Price movements reverse. They stop inflating. They start deflating.
Subsequently, as the bubble exhales, the risk taking beneficiaries of the expansion are exposed. The downside, no doubt, is less pleasant than the upside. Ask U.S. oil shale producers. Just 18 months ago they were raking in cash hand over fist. Lenders were tripping over themselves to extend credit for fracked wells.
But how quickly things change. Oil prices fell below $30 per barrel on Tuesday. Break-even costs for many producers are double that – or more. In other words, lenders and borrowers alike are staring the downside into the face now.
Sitting on a powder keg: oil-related debt has experienced staggering growth – reaching a new peak at what appears to be an exceptionally inopportune juncture, to put it mildly.
In fact, according to a report from AlixPartners, North American oil-and-gas producers are losing nearly $2 billion every week at current prices. Naturally, capital could only be misdirected to this extent under errant central bank policies of mass credit creation.
Several more slips like this one and the President’s strongest, most durable economy in the world could backslide into recession. On top of that, ‘the big one’ could rupture at any moment.
(8 votes)
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The "BIG ONE" is the soon to come Financial CATACLYSM which will not be just financially Ugly, but Bloody and Messy as well. Some (the usual suspects) will make a boatload of money while killing millions>> http://bit.ly/1KogtGi
It's the 'Sanford and Son' syndrome.
Fred G. Sanford: [shouting to Eve, who is walking out the door, leaving Fred standing by Esther] Look here, look here! Can't you take Esther with you? Put her in the trunk, use her for a spare!
[Turning to Esther]
Fred G. Sanford: Well, Esther, how ya doin', how ya feelin' and when you leavin'?
Aunt Esther Anderson: I just got here.
Fred G. Sanford: That's a good time to start leavin'.
What ever happened to Grady? That guy was awesome!
The banks should be fine though since the Fed will leak to them weeks before.
http://www.reuters.com/article/us-usa-fed-leaks-idUSKCN0UT2FD
Surprised no one talked about this yesterday.
The only disaster this country has to endure is just one more year
Just build more jet aircraft so we can all go to China for holiday trip.
To be on the safe side I prepared a few more buckets of potatoes and checked the zero on my rifles.
To be on the safe side I prepared a few more buckets of potatoes and checked the zero on my rifles.
To be on the safe side I prepared a few more buckets of potatoes and checked the zero on my rifles.
ease up a tad on the ole trigger finger
He didn't forget to stock up on caffeine as well I see.
lol! Triple tap.
Why predict. It is honestly a no brainer... NY manafacturing index -19%. Chicago PMI 42.9. Global imprt/export is in some case down double digits. I am not much familiar with an instution as Atlanta FED. I have a akward tendency to no listen to such institutions, because institutions in general either understate or overstate things.
Just wait paitently and those who bet against this bubble will be rewarded royally for it.
Lets not forget BDI 390 U6 10 PERCENT participation rate 62 percent we are in a shit load od fantastic
I keep asking God to protect, the " little man " in this coming Crisis, I hope is listening.
I don't see any firewalls that can stop this crash from gaining momentum until it hits ground zero. Sure, there will be pauses and short reversals. But the momentum is clearly down for this year and next year at least. I can't begin to imagine the violence and suffering to follow.
DOOM AND GLOOM ARTICLES ALWAYS APPEAR WHEN THERE IS A SHAKY MARKET WEEK
I GOTTA SEE MORE PROOF...BEEN DOWN THIS TEASING ROAD TOO MUCH,AND TOO LONG
A DISCLAIMER...WITH MY KIND OF LUCK,SHTF WILL HIT ME 2 MINUTES AFTER IT HAPPENS(JUST BEING HONEST)
>“The United States of America, right now, has the
>strongest, most durable economy in the world,”
>said President Obama, Nobel Prize Winner, Scratch Golfer, Emperor of Tomorrow
Well maybe it's true, but a guy on Charlie Rose last night said it better, "We're the cleanest dirty shirt in the hamper."
sanitized cesspool
Wyle E Coyote: Hunting the 1%
Like everything else in the empire, the 99% argument is a bait and swap. The mob of hysterical monkeys turns on the ape, and shoots you, conveniently brought in for the purpose, the sh-show. If you know the monkeys are going to take your children, tax you at 100% and confiscate all your assets for non-compliance, do you comply, react in shock or prepare?
If you reduce the resistance in parallel, the positive feedback frequency blows up the load in the short, creating an open. You don’t need a resistor and it doesn’t take much, with all that excess wiring lying around. If the market goes up by 2% and falls, you don’t want to be the buyer; if the market goes down 2% and rises, you don’t want to be the seller; and the increasing frequency locks the system into a black hole.
There’s a reason why that trophy buck appears right before you, just when you don’t have a gun. It’s not about the money; it’s about destroying the money. That’s History, for the 99%, grown to collect natural resources in one generation, process them efficiently in another, and then watch it all collapse as nature refills the battery, in rotating overlays, swapping the polarity of Family Law for misdirection, a 7 generation cycle.
When I took the test to get into the elevator union, I correctly answered every question, which had never been done before, and the first thing the ape did was show the monkeys our test scores, like I’ve never seen that one before. I could have easily chosen to error on any subset of questions to fit into any number of groups. The first step to solving any problem is to understand that all problems are a variation of the same problem, not to be efficient.
It’s not about the elevator; it’s about the people you meet along the way, which is why the arbitrary algorithm hidden in all that wire never works, especially for the kids who see right through it. Having spent decades on university campuses, I can tell you that it is always the kid on a bike that shows up at the machine room, seldom a university student, and never the professor leading the students up stairs. Of course they are going to eliminate please and thank you, common decency, from public education.
As a young person, you will travel many phases, but when you retire and your children are gone, you don’t need a big house with ten layers of backup, to counter thieves with ten layers of backup, to bring the economy to a dead halt. Take what you need and leave the rest for others, learn the difference between what you really need and surplus, and keep your distance from those who can’t. Turn around and you will find what you are looking for, which never left.
Most people just want an elevator to go where they were told to go. Some want an elevator programmed to take others to them. And some couldn’t care less where the elevator goes, so long as it is somewhere new.
Funny, how you can immediately tell which is which, while others are summing you up, to fit into their box, telling you that you are stupid until you join the group, at the back of the line. Stupid isn’t something you are. Stupid is something people do because they don’t know what else to do, but say one thing and do another like everyone else they see.
I do stupid all the time, and I’m supposed to be smart. The trick is not accepting false assumptions to prove other people’s theories so they can sit in judgment of you, rather than learning for yourself. A community cannot raise a child because the community itself is a convenient myth, built for the purpose of replacing parents.
Empires are in the business of building prisons to ensure war among the inmates. The empire has no way of measuring productivity so it measures consumption, in the past, a narrative it can control. Welcome to California, being replicated wherever you are; you don’t have to teach your children about stupid because stupid will surround them wherever they go.
“Fifty years ago the emphasis was on labor as a cost; today it is increasingly on human beings as a resource – and the scarcest, most important and most productive resource, at that.” Debt was designed for investment, not consumption.” Public healthcare and public education is an investment in consumption, what government does best, act as a counterweight.
Under the US Constitution, yet another dress over Family Law, global feudalism, the real estate industry builds social prisons with artificial scarcity, public health breeds economic slaves and public education programs them, and Family Law orders sterilization for non-compliance, with no due process of law. Why would you accept that contract by voting for the operators from among your own, which the majority does, unless you were chosen and programmed to do so?
The Law is not applied to capital, and cannot be legally applied to labor, no matter how many morons are manufactured by capital to vote for equal rights under the law, and robots aren’t the answer, except as a means for the middle class to replace itself. A closed system is a virus, not an economy, and the ivory tower economists, physicists, and technologists from Harvard, MIT and Stanford are participating morons, surprise. Voting is stupid, willful ignorance, enforced right out of the birth canal by parents who place their trust in Government.
California bonds can only implode, and no matter how fast the HFTs get at rolling them over, they can only increase the damage. “If your friends jump off a bridge….” An effective repairman is not so well paid and hard to find by accident, this country needs a lot of them as quickly as possible, and I am probably wasting my time, no more than 10%, telling you so.
They cannot maintain their infrastructure and they cannot finance new. Men cannot have babies and women cannot replace men, but keep trying with equal pay for make-work in a race to the bottom. Welcome to best business methods practiced by government, best as the enemy of better.
Marriage for the purpose of raising independent children is the shunt capacitor, which you wouldn’t expect unless you were looking, for a needle in a haystack. A meter, built for the purpose, is your best friend. Choose life, instead of knowledge, at every intersection created by empire.
If you haven’t noticed, the polarity of Family Law is being switched, but remains irrelevant to labor. Procrastination is power, for single people pretending to be married, chauvinists and feminists privileged by feudal birth, paying themselves in the debt of others to talk about the symptoms, but not for you as a follower, unless you want to live in a gold-plated ghetto. “I’ll gladly trade my good money for your bad money, which was my good money” has been around since George Washington, and thousands of years before that.
The only remaining question is whether the critters burn down RE and are the first to rebuild, or start WWIII, burn down RE, and get in back of the line. Gee Whiz; they keep making the lottery harder to win, sucking in more regressive taxes. History is something you leave behind, not something you apply to its present symptoms, unless you are a politician, paid to waste other people’s time with make-work.
The cocksucking United States of America colluded with allied countries during, and after, the Second World War so they could control the World's Reserve Currency. President cocksucking Richard Nixon turned the bait & switch Reserve Currency into an oil backed currency when Fort Knox was found to be devoid of gold bullion, and the World knew the Americans were enabling the worst fraud in the history of finance. Ergo, the strong American dollar is indicative of Reserve Currency status, and institutional fraud on a scale unimagined in the historiography of fraud that the World has ever known.
Up yours, America.
You forgot to mention that the British Empire did it first...in July of 1914.
And again in 1924.
And again during WW2.
You forgot to mention the Dutch, who did it before the Brits, and the Spanish before the Dutch.
You forgot to mention that the Chinese did it before the Spanish, with their invention of paper currency.
You forgot to mention the Ottomans, who did it contemporary with the Spanish.
You forgot to mention the Byzantines who did it before the Ottomans, resulting in their downfall to the Ottomans.
You forgot to mention the Romans did it to everyone.
And I am certain there are Sumerian clay tablets waiting to be found proclaiming the bearer to be entitled to shekels...which did not and could not exist.
This is the nature of trust in government currencies.
It is so because where men can steal at low risk they will steal rather than work. And they will invent a political ideology that permits and glorifies their theft.
And that is built in to the species.
Keep that in mind whenever any one in authority speaks about anything at all.
Keep it in mind, in fact, whenever you buy toothpaste or potatos.
The American economy since coming off gold has as zhedger know been very largely about the petrodollar, interbanking systems, etc - or more simply being the Reserve Fiat.
And I loathe the fed and our batshit currency system as much as anyone but weve benefitted, all of us, from a deal where we export ink and paper and inflation and state terror and get back oil and electronics and Cheap labor latins.
This is all rehashing. Mathematically no fiat can last forever and I would argue that in terms of debt repayment we are past feasibility and merely chuting to ground hoping not to break anything or get twisted up by crosswinds.
But the real concern isnt the vanishing if fake wealth premised on fake debt but on the strong possibility that the bankers and usual suspects simply figure a world war will be the best reset, again, for their power and control.
White christian europeans slaughtering each other, or moooslims, in vast numbers, for a 3rd time in 100 years (one could argue the us has already declared war on Muslim states, and despite the Fox Breitbart types here, the body counts surely point to muslims being far, far more on the receiving end of state and nonstate terror than anyone. Ruined states, well over 1 million dead - and for what?
For theft of oil and gas, for the private transnational banking system, and for Greater Israel/Transnational Zionism.
http://leaksource.info/2015/01/17/the-yinon-plan-greater-israel-syria-ir...
The race here is the frn needs to last long enough to support the anglozionist war machine.
A clever state or nonstate actor might find a way to really hurt the us economy and strength of the dollar to prevent or delay decades more wars engineered by bankers, zionists, and assorted mic war profiteers.
A delay would allow for the arrest and trial of the Cheneys and Kagans and Wurmsers and Perles and Feiths and Libbys and Nulands and on and on, while we also end the fed and frn and resume issuing a us government, debt free currency... And we also need to deport all the h1bs and stop the flow of illegal unskilled workers.
Revolt, Repudiate, Rebuild.
peace, limited government, free markets.
No gold backing unless and until private banks and banking dynasties are disgorged of their gold.
To include Germany's, Libya's - and *ours*
"Conversely, the negative effects of borrowing gobs of money and taking abundant risks can masquerade as shrewd business acumen for extended bubble periods."
What a great line...
The big one could indeed rupture at any moment.
But do we really have to discuss Hillary's ass? That'll be Huma's problem.
doop
Yes, and it will bad in the small cell they share when Hitlery farts on that cold steel shitter with no seat.
The day the US citizens were sold, and accepted the concept of 'manifest destiny' was the day they lost their way. Getting people to believe that they have been 'chosen by God' to be the supreme beings on the earth has always been the preferred way of mobilizing them to an orgy of murder, mayhem, robbery, invasion and violence, all in the 'good name' of the church, or the state of course. If today, after all that has happened, 40% of the US population is still willing to elect and follow a man like Trump, who is promising nothing more except more of the same, then I submit that they are fundamentally incapable of seeing reality and that there is nothing to save.
40% of the US population is not the same as 40% of the voting population. An American does not look for a leader. He looks to be left alone to find his own way. Most of us despise the despots who seek to rule us. Too many of us have accepted someone who will give us free shit to let us keep taking whatever we can get.
Am I supposed to crawl under a desk, get in a door jamb or run outside, when the banks collapse?
Steal one of those banker survival backpacks they passed out to the Fed bank examiners.
Naturally, capital could only be misdirected to this extent under errant central bank policies of mass credit creation.
Or it could be misdirected by people who think this curent energy boom will continue (until it doesn't).
Boom and bust has been a well known cycle for energy producers since a use for hydrocarbons (grass, buffalo chips, wood, coal, petroleum, and natural gas) was invented. The North American "Shale Miracle", Rocky Mountain shale oil, or Canadian tar sands are the latest, and may be the last petroleum booms in North America. However, the last boom on the planet may well be in the Middle East. When we win that last war for MidEast oil (if we energy users have to kill everyone who stands in the way) we will have abundant energy, until that too is gone.
In case one of the preceding is the last boom we should all be prepared to gather our energy from whence it came, the sun. When the planet runs out of economical petrofuel, other, higher cost fuels will necessarily come into use. Coal, the most damned of all hydrocarbons, will become the cheapest and most polluting, and most used of all fuels. Whatever the source, thermodynamic theory guarentees the next, most efficient and predominant energy souce will cost more than the previous one. Some day whale oil may once again become a precious commodity.
Sorry, the whales will soon be gone due to Fukishima.
However, if you can get enough radioactive seawater, you can heat your hoe, err, home.
The world markets are now 1 giant tulip bulb!