Tag Archives: economics

Enter the Sag: “This cycle is fading”

18 Friday Oct 2019

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The sorcery has its limits. Ray Dalio says we’ve found them.

Hedge fund owner Ray Dalio said the global business cycle is in a “great sag” and the world’s economy holds at least two parallels to the 1930s.

Speaking a CNBC-moderated panel at the IMF and World Bank annual meetings in Washington, D.C. on Thursday, Dalio said it was now too late for central banks to make much difference as economies enter a natural downturn.

“This cycle is fading, we are now in the world in what I would call a ‘great sag’,” said Dalio, adding that monetary policy, and especially interest rate reductions, were unlikely to offer much stimulus.

“Europe is at the limitation of that, Japan is (too) and the U.S. doesn’t have much to go on for that,” he told CNBC’s Geoff Cutmore.

Dalio said the world was also experiencing the biggest wealth gap since the 1930s and that was creating political stress.

He goes on to mention geopolitical war. One or more of those may strike a little closer to home than most would think possible. It’s not going to be pretty, but it is survivable. Now, what was the ancient punishment for sorcery? As the cycle fades, may the fires rise.

The Check’s in the Mail

17 Thursday Oct 2019

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Great news, Amerika! You’re each and all $9,432 richer this year! Thanks, Sorcerers!

The federal debt increased by $1,203,343,570,253.55 in fiscal 2019, according to data released by the U.S. Treasury Department.

That equaled approximately $9,432 for each of the 127,586,000 households the Census Bureau estimated were in the United States in 2018.

In the decade that began on the first day of fiscal 2010 and ended on the last day of fiscal 2019, the federal debt increased by $10,809,572,749,922—for an average of $1,080,957,274,992.20 per year.

Remember, we owe this to ourselves. So, think of what you can buy when your cash comes in. Uh, but please don’t think about how this owing it to us stuff works. Some thoughts are not meant to be.

Another College Post

13 Sunday Oct 2019

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Bill Sardi comments on the continuing and worsening scam of college education. He particularly concentrates on economics.

Free college education is now being handed out to high school graduates and will lead to the ruination of many unwary young Americans.

Here is what happens when higher education becomes commoditized:

Having redefined my definition of “Americans” to only include Americans, I’m tempted to say they’re already ruined, young or old. He goes with twelve very good reasons why what passes for the college experience is generally a waste for most people, again centering on the moneyed aspects. He’s 99.999% right.

As for the debts that will never be repaid, just remember that the Fed, in the past two weeks, has created more than enough fiat to get rid of all student loans. Or, do we owe those to ourselves too?

More on the Financial Sorcery Madness – from TPC

10 Thursday Oct 2019

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REPO-ing the Economy

 

The economy is roaring along. Record low unemployment. Banks have never been stronger. DOW is way up there somewhere. Everything is fine. Go back to sleep. Kindly ignore the constant hum from the printing presses down in the Financial District. 

Consider this a sequel to my September 24th column on the same subject. That was like a long time ago. You’ve probably forgotten. Waaay back then, starting on September 16th, the New York Fed announced they were injecting just a tiny bit of extra cash into the [VERY HEALTHY AND IN NO WAY ABOUT TO COLLAPSE] commercial banks. “Tiny bit” could have been estimated at around $2 Trillion. Could have. Who, honestly, knows? The program was supposed to last until October Tenth. But why cut short such a good thing?

Now, it’s going to run through and until November Fourth. Fifty days of free fiat funny money. Fifty days. At one-hundred and five billion dollars per day. That’s … let’s see, Gawd… Okay, 105 x 50 = … Hang on… I get … gonna run this straight out, numerically: $5,250,000,000,000. That’s just a shit ton of… Oh! Hang on, again. They’ve attempted to obfuscate with the REPO BUCKS!!! (like a lottery game, but where the ticket is forced upon you and you have to pay out the jackpot…). Something about, in addition to a flat daily grafting of $75 Bn, another $35 Bn, but only twice a week, unless the moon is full. Originally, it was $30 Bn… It’s still… 

Well, hell! The “zero” button on my calculator broke. 

How on Earth do we explain this??? I thought a little ditty appropriate:

…

Complete coverage at TPC!

Even Hellywood Notices the Sorcery

09 Wednesday Oct 2019

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Odd, I know. One class of wizards observes another. “Out of control.”

A ripple of anxiety ran through Wall Street on Sept. 9 when Jay Clayton, chairman of the SEC, warned that corporate debt now stands at $11 trillion, half the annual gross domestic product of the United States. “Should we be cognizant of the growth in corporate debt, who holds that debt and the potential ramifications for our markets and our economy?” Clayton asked. “Of course we should.”

His warning was timely for Hollywood, coming just a couple of weeks before Endeavor Group Holdings CEO Ari Emanuel pulled the plug Sept. 26 on an initial public offering that investors had regarded warily because of his company’s staggering debt of $4.6 billion.

Yeah, poor, satanic Hellywood… Maybe the one faction should have consulted with the other? Just as the government debt dooms the state, the corporate debt dooms those artificial government-created entities. When they all fall, not much will be left standing. It’s like when Apprentice Mickey unleashed heck, but with no “good” wizard standing by to fix things – and real, not a cartoon. Speaking of, hopefully, this will bring the end of  Devil Mouse, Inc.

Repo the Domino

08 Tuesday Oct 2019

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These things are coming almost too fast to keep up with. My TPC column, which will be published after I schedule this post, though not necessarily before the post hits, is called “Repo-ing the Economy.” It’s more about the fun and games of the Fed’s dark sorcery. Now, this.

Some investors are concerned that recent turmoil in a key short-term cash market where banks borrow to fund operations could exacerbate difficulties trading bonds.

Spikes in the cost of overnight loans using repurchase agreements, or repos, could hit bond trading in two ways, investors and analysts said. Rising repo rates make it more expensive for securities dealers to borrow money and to hold government bonds—actions they take frequently to facilitate client trades and manage their risks.

In the repo market, where banks and money-market mutual funds typically lend cash for periods as short as one night in exchange for safe collateral such as Treasurys, rates surged as high as 10% last month from about 2.25% amid an unexpected shortage of available cash in the financial system.

Couple this with what’s going on with China’s cash crash and you get the feeling that a global financial meltdown is upon us – now, not in the future. Bank run, anyone?

The Vanishing Independent Grocery Store

06 Sunday Oct 2019

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This PEW article made me remember that I always love finding a small, local market. Finding them is getting harder.

“There are six towns east of here — they just lost the grocery store, then they lost the gas station, and then they lost the bank and now they’re nothing.”

Some states are trying to tackle their rural grocery gaps. Supporters of such efforts point to tax incentives and subsidies at various levels of government that have enabled superstores to service larger areas and squeeze out local independent grocers. Now, dollar stores are opening in rural regions and offering items at lower prices, posing direct competition to local groceries.

Critics see that development as a threat to public health, since dollar stores typically lack quality meat and fresh produce.

But every town and every store is different, making statewide solutions elusive. Some legislators say they are reluctant to intervene too heavily because the market should close the gaps.

The market will close the gaps (or force people out of them). But, there’s the nostalgia issue. Can’t really recall the last little independent that I ventured into. I can easily think of a bunch that no longer exist.

The article rambles on into ag and tax policy, etc. In some areas I imagine not much will work at all. Way out in the country, it’s a mixed bag. Few people, few stores. Then again, out in the country is where the food grows. Garden? Chickens?

And the “Money” Just Flows…

05 Saturday Oct 2019

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From the sorcery. More and more and more Fed funny money! For the banks, not you.

The New York Federal Reserve Bank said Friday it will continue to inject billions into the US financial plumbing on a daily basis through November 4, extending the operations by three weeks.

The effort, begun in mid-September, is aimed at preventing a spike in short-term interest rates, the New York Fed said in a statement.

Rates spiked last month as banks struggled to find the cash needed to meet reserve requirements, prompting the Fed to pump billions into US money markets.

It announced daily operations which were due to end October 10, but even then demand exceeded supply on some days.

In Friday’s announcement, the New York Fed said it will continue to offer up to $75 billion a day in repurchase agreements — exchanging secure assets for cash for very short periods — as well as 14-day “repo” operations twice a week of at least $35 billion each.

Economists say an array of conditions converged to dry up liquidity in the banking system — including quarterly corporate tax payments and a surge in government debt sold to investors, which drained cash out of banks.

Like I said the other week: The dog ate my liquidity, Mrs. Wall Street!

Seriously, this is serious. My calculator’s “zero” button broke. What are they shooting for? $3 Trillion? $4 Tr? 5??? The Moon? And, does this possibly have an end? Other than the inevitable, I mean.

Might have a TPC column lining up here.

The Bright Shiny Service Economy

01 Tuesday Oct 2019

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The recession is becoming palpable, moving out of bond curve graphs and into the factories.

A gauge of U.S. manufacturing showed the lowest reading in more than 10 years in September as exports dived amid the escalated trade war.

The U.S. manufacturing Purchasing Managers’ Index from the Institute for Supply Management came in at 47.8% in September, the lowest since June 2009, marking the second consecutive month of contraction. Any figure below 50% signals a contraction.

The new export orders index was only 41%, the lowest level since March 2009, down from the August reading of 43.3%, ISM data showed.

“We have now tariffed our way into a manufacturing recession in the U.S. and globally,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

The Bleak Advisor is likely a liar or an idiot. Other lies are told. Amazingly, about the only authority figure hitting on a little truth is the Trump. Thank God for the impeachment hoax! Otherwise, with a severe downturn coming, he might not be re-electable. And anyway, why does this matter??? I recall, some 30 years ago during my third-rate government high school “education,” someone telling us that in the happy future of tomorrow all employment would be in the easy, computerized service sector. Nothing produced, a shame since everyone would have tons of spending money from their high-tech fantasy jobs.

If we had an Index of Official Lies, the baseline would be a hockey stick curve in perpetuity.

The Shirt Index

29 Sunday Sep 2019

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The WSJ has a story about what would have been, in any other age, the epitamy of economic insanity – financing sneakers and sweaters. Read that, it’s … great.

I looked for a sweater comparison, over time. The best I could (easily) come up with were men’s shirts at JCPenney.

2019:

Screenshot 2019-09-29 at 12.02.44 PM

1980:

Screenshot 2019-09-29 at 12.00.57 PM

(Regular price is still less expensive than the 2019 sale and less than 60% off the non-sale 2019 model – plus one got the disco-safari theme…)

1958:

Screenshot 2019-09-29 at 12.09.05 PM

(See where this is going?)

1928:

Screenshot 2019-09-29 at 12.10.15 PM

(That’s in cents, not dollars…)

Today, one can finance a new, regular-priced shirt for several payments, each equal to about the total cost of a 1980 shirt, which was still 15 times more expensive than the same thing fifty years earlier. “Inflation” ain’t the word anymore.

These are cheaply manufactured goods whose nominal production costs have fallen (in and of themselves) due to technology and offshoring, etc. Still, regular price to regular price, the modern equivalent is fifty times more expensive than the same thing 90 years before. Averaging the (easily) available IRS data on average incomes from 1920 and 1929, the 1928 American annual wage was about $2,200. Apples to sweaters, the average American, now, should be earning $110,000 per year. Yet, somehow the BLS reports that the true 2019 pay is only $47K, which itself seems a tad high. You’re 57% behind the price of shirts at JCP. Thank God there’s the Goodwill Store, right?

Sorcery is the gift that keeps on taking.