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Europe Warns Of An Upcoming “Trade Apocalypse”

As European officials struggle to do everything they can to save the WTO, which appears headed for an all-but-certain demise thanks to President Trump’s aggressive trade policies, EU leaders have apparently circulated an “internal memo” drafted by the European Commission that accuses the US of deliberately instigating the collapse of the global trade order, and warns of an upcoming “trade apocalypse.” In short, if this document is any guide, the trade war is about to get worse – as if Trump’s threat to impose 20% tariffs on all cars coming into the US last week wasn’t bad enough.

EU

According to Bloomberg, the EU warned that the “rules-based system of international commerce” could revert to an trade environment where “the strong impose their will upon the weak,” the memo said.

Our world will go back “to a trading environment where rules are only enforced where convenient and where strength replaces rules as the basis for trade relations,” according to the memo.

The flirtations with a return to an environment of “mercantilist deals” have intensified as President Trump has been determined to narrow the trade deficit at any cost – even if the price is the collapse of the multilateral trade order.

Specifically, the memo, which was obtained by Bloomberg, spells out three complaints raised by the EU:

  • Gaps in the rulebook of global trade “leading to distortions, many of which associated with non-market policies and practices in major trading nations, that the WTO does not seem able to address adequately”
  • Aggressive unilateral actions by the US targeting allies and foes alike with punitive tariffs
  • The US’s decision to block appointments of members to the World Trade Organization’s Appellate Body that serves as the final arbiter in trade disputes.

The EU also complained about the US’s practice of blocking appointments to the appellate body that would help render a judgment in a WTO trade dispute.

…click on the above link to read the rest of the article…

The Biggest Monetary Experiments in History: Part 1

The Biggest Monetary Experiments in History: Part 1

… and all at the same time.

Last week was a humdinger. Three things happened:

One

Firstly, our pasta-eating friends, after having experienced firsthand a blizzard of accelerating violent crime… and watching their previously gentrified neighbourhoods reconfigured into ghettos resembling the Maghreb, decided enough was enough and said “non piu”.


Italy turns away two more boats loaded with ‘human cargo’ https://sc.mp/2lbiUF7  via @SCMP_News

Italy turns away two more boats loaded with ‘human cargo’

Minister says the country no longer wants to be any part of the business of ‘clandestine immigration’.

scmp.com


And who could blame them?

A clash of cultures. One that will one day be studied by scholars sipping their coffee, scratching their heads, frowning and scorning the insanity of it all.

The below video of migrants unhappy with the accommodations provided by the Italian state is nothing unusual. It is rather a daily occurrence, not only in Italy, but across various parts of Europe, Britain, and Scandinavia.

A strange way one would say to show gratitude to the Italians who rescued them from the ocean, fed them, clothed them, and provided them shelter.

That these daily events aren’t publicised by the MSM is a topic for another day, but increasingly it’s hard to hide this sort of thing from your own people. Italy, as we all know, is predominantly Catholic, certainly Christian. And so when Luigi strolls outside for an espresso at his local cafe and finds this in the streets:

… he wonders what the hell the politicians are thinking.

When future generations look back at the reasons why the European Union and one currency system collapsed, there will be many factors to consider.

…click on the above link to read the rest of the article…

Things Just Went Nuclear In Our Trade War With China, And A Giant Shockwave Is About To Hit The U.S. Economy

Things Just Went Nuclear In Our Trade War With China, And A Giant Shockwave Is About To Hit The U.S. Economy

It is difficult to find the words to describe just how serious America’s trade war with China is becoming.  As you will see below, the two largest economies on the entire planet are on a self-destructive course that almost seems irreversible at this point.  The only way that this trade war is going to come to a rapid conclusion is if one side is willing to totally submit and accept an extremely bitter and humiliating defeat on the global stage, and that is not likely to happen.  So in the short-term, and probably beyond that, we are going to experience a tremendous amount of economic pain.  In fact, if one wanted to create a recipe for economic disaster, it would be hard to beat having the Federal Reserve dramatically raise interest ratesat the exact same time that the U.S. government is starting trade wars with all of the other major economic powers simultaneously.  Unless something drastically changes in the very near future, there is no way that the U.S. is going to be able to get through this without experiencing severe pain.

Many had hoped that President Trump would settle down after the initial salvos in this new trade war, but instead on Sunday evening we learned that he has decided to go nuclear.  The following comes from CNBC

President Donald Trump plans to bar many Chinese companies from investing in U.S. tech and to block additional technology exports to China, The Wall Street Journal reported on Sunday evening, citing people familiar with the matter.

The two measures are set to be announced by the end of the week, and are intended to counter Beijing’s Made in China 2025 — a Chinese initiative to be a global leader in technology.

…click on the above link to read the rest of the article…

Global Stocks Dive On Fears Of “Irreversible” Trade War; Italian Bonds, Turkish Lira Tumble

Bulletin Headline Summary from RanSquawk:

  • Trump is said to be planning new restrictions on tech exports to China
  • PBoC says they are to cut the re-lending rate for SME loans by 50bps, following the RRR cut over the weekend
  • Looking ahead, highlights include, US New Home Sales and BoJ’s Sakurai speaking

Global stocks are diving in what has been a generally quiet session, amid renewed trade war fears following reports that the Treasury Department is planning to heighten scrutiny of Chinese investments in sensitive U.S. industries under an emergency law, putting Washington’s trade war with Beijing on what Bloomberg dubbed a “potentially irreversible course”, while at the same time Trump threatened “more than reciprocity” to trade barriers.

According to overnight news reports, the US Treasury is devising rules to block firms with 25% Chinese ownership from acquiring companies involved in industrially significant technologies and that it plans using International Emergency Economic Powers Act 1977 to impose investment restrictions. “This one could well result in an escalating trade war,” Lee Ferridge, a macro strategist at State Street Corp., told Bloomberg TV in Hong Kong. “Volatility is going to continue to rise from here.”

Adding to the trade war jitters, an EU internal memo says trade crisis “set to deepen in coming months” and warns of the breakdown of rules-based trading. The EU Commission has also warned of a direct response to any new taxes on EU cars imported into the US.

The result has been a sea of red with European equities following Asia lower from the open, with the mining and auto sectors underperforming, resulting in a sea of red across global stock markets.

…click on the above link to read the rest of the article…

A world for the many, not the few

A world for the many, not the few

“The very notion of ‘charity’ erases a global history of slavery and oppression”. Asad Rehman applauds Labour’s ambition to overhaul neo-colonial development policy

Illustration by Andrzej Krauze

In 1792, pioneering British feminist and social justice activist Mary Wollstonecroft wrote in her seminal book The Rights of Women, ‘It is justice, not charity, that is wanting in the world.’ Two centuries later, the shadow international development minister, Kate Osamor, a black feminist with a background in social justice activism, has anchored that fundamental truth in Labour’s vision for international development, ‘A World For the Many, Not The Few’. In doing so, she has committed the Labour Party to putting social justice at the heart of its international agenda and listening to the voices of those facing the greatest injustices: women in the global south.

For too long, politicians and, to their shame, many in the development sector have ignored the key driver of global poverty: neoliberal capitalism, a failed economic system whose rules are stacked in favour of corporate elites. They have stayed silent on the culpability of Britain in promoting unfair trade rules, creating new debt burdens, forcing privatisations and entrenching oppressive neo-colonial power dynamics on the international stage.

The new colonialism

The idea of ‘international development’ was constructed in the post-war era to cover up the deliberate ‘underdevelopment’ of the global south. During colonialism, Britain and the other industrial powerhouses had enriched themselves by extracting resources and slave labour from their colonies. They deliberately impoverished the south and, in the process, killed countless millions across Latin America, Africa and Asia. It is estimated that the UK extracted £600 trillion during its colonisation of India alone, reducing India’s pre-colonial share of the global economy from 27 per cent to just 3 per cent by the time the British left.

…click on the above link to read the rest of the article…

Dear High School Graduates: the Status Quo “Solutions” Enrich the Few at Your Expense

Dear High School Graduates: the Status Quo “Solutions” Enrich the Few at Your Expense

You deserve a realistic account of the economy you’re joining.

Dear high school graduates: please glance at these charts before buying into the conventional life-course being promoted by the status quo.

Here’s the summary: the status quo is pressuring you to accept its “solutions”: borrow mega-bucks to attend college, then buy a decaying bungalow or hastily constructed stucco box for $800,000 in a “desirable” city, pay sky-high income and property taxes on your earnings, and when the stress of all these crushing financial burdens ruins your health, well, we’ve got meds to “help” you–lots of meds at insane price points paid for by insurance– if you have “real” insurance without high deductibles, of course.

Here’s the truth the status quo marketers don’t dare acknowledge: every one of these conventional “solutions” only makes the problem worse. Student loan debt only makes your life harder, not easier, as the claimed “value” of a college degree is based on the distant past, not the present. The economy is changing fast and the conventional “solutions” no longer match the new realities. But don’t expect anyone profiting from the predatory profiteering higher-education cartel to admit this.

The high cost of housing isn’t “solved” by buying in at the top of an unprecedented bubble. Buying into bubbles only makes the problem worse, for all bubbles eventually pop.

The “solution” to crushing levels of debt is not to borrow more just to prop up a rotten, corrupt, dysfunctional and self-serving status quo. In effect, the young generations are being groomed to be the hosts for the parasitic classes that feed on young taxpayers, student loan debt-serfs, young buyers of bubble-priced housing, unaffordable sickcare “insurance” and all the rest of the status quo “solutions.”

…click on the above link to read the rest of the article…

Trump’s Doomsday Gamble in China Trade War

Trump’s Doomsday Gamble in China Trade War

Trump’s Doomsday Gamble in China Trade War

President Trump dramatically resumed a trade war footing this week with Beijing, threatening to impose tariffs on virtually all imported Chinese goods to the US.

After earlier negotiations this month appeared to avert a clash, the Trump administration is back to full trade war mode. With fiery language, the US president and his trade advisors said they have run out of patience with what they claim to be “predatory practices” by Beijing.

For its part, China quickly hit back, condemning “unacceptable blackmail” by Washington. Beijing said it will not hesitate to respond in kind with counter-tariffs on American exports.

Markets in Asia, Europe and America tumbled, with companies and investors panicked by the prospect of a full-blown trade war between the world’s two largest economies, and the uncertain repercussions from such a titanic clash.

Trump is gambling big time. He is betting that China will be the “first to blink”, as the New York Times reported. That’s because the Trump administration reckons that with China’s huge trade surplus, Beijing has much more to suffer financially if it goes toe-to-toe with the US in a trade showdown.

“China has a lot more to lose than we do,” said Trump’s trade advisor Peter Navarro, who is a hawk when it comes to dealing with Beijing. Navarro, like Trump, has continually accused China of ripping off the American economy and workers through alleged unfair trade practices and theft of intellectual property from US tech companies.

During his election campaign, Trump fired up voters with tirades slamming China for “raping America”. Recently, the president railed against “China taking $500 billion out of our economy every year”.

But typical of Trump, the emotive charges and figures are not what they appear to be.

…click on the above link to read the rest of the article…

Here’s 21 Trillion Reasons To Question The Role Of Government In America

Here’s 21 Trillion Reasons To Question The Role Of Government In America

The U.S. military budget dwarfs every other country on the planet combined.

Do you know how much the Pentagon spent between 1998 and 2015 that is “unaccounted for”?

TWENTY-ONE TRILLION DOLLARS
$21,000,000,000,000

Where did it go?

No one knows…it’s “unaccounted for”.

The role of government must SERIOUSLY be reconsidered in America.

Without being technically at war with anyone in particular, the U.S. is dropping a bomb somewhere in the world every 12 minutes, around the clock.

The U.S. has 1,000 military bases scattered across the planet.

Congress, not only doesn’t declare war, as they’re required to by the U.S. Constitution, but they’re surprised to find out that American troops are peppered throughout Africa too.

The role of government must SERIOUSLY be reconsidered in America.

Peace … Non-intervention in the affairs of foreign nations … Free Trade … Travel.

These principles have long been gone.

It’s time to revive them.

BIS Confirms Banks Use “Lehman-Style Trick” To Disguise Debt, Engage In “Window Dressing”

Several years ago we showed how the Fed’s then-new Reverse Repo operation had quickly transformed into nothing more than a quarter-end “window dressing” operation for major banks, seeking to make their balance sheets appear healthier and more stable for regulatory purposes.

As we described in article such as “What Just Happened In Today’s “Crazy” And Biggest Ever “Window-Dressing” Reverse Repo?”,Window Dressing On, Window Dressing Off… Amounting To $140 Billion In Two Days”, Month-End Window Dressing Sends Fed Reverse Repo Usage To $208 Billion: Second Highest Ever“, “WTF Chart Of The Day: “Holy $340 Billion In Quarter-End Window Dressing, Batman“, “Record $189 Billion Injected Into Market From “Window Dressing” Reverse Repo Unwind” and so on, we showed how banks were purposefully making their balance sheets appear better than they really with the aid of short-term Fed facilities for quarter-end regulatory purposes, a trick that gained prominence first nearly a decade ago with the infamous Lehman “Repo 105.”

And this is a snapshot of what the reverse-repo usage looked like back in late 2014:

Today, in its latest Annual Economic Report, some 4 years after our original allegations, the Bank for International Settlements has confirmed that banks may indeed be “disguising” their borrowings “in a way similar to that used by Lehman Brothers” as debt ratios fall within limits imposed by regulators just four times a year, thank to the use of repo arrangements.

For those unfamiliar, the BIS explains that window-dressing refers to the practice of adjusting balance sheets around regular reporting dates, such as year- or quarter-ends and notes that “window-dressing can reflect attempts to optimise a firm’s profit and loss for taxation purposes.”

…click on the above link to read the rest of the article…

Booming Stocks, Booming Home Prices, Booming Risk of Collapse

Booming Stocks, Booming Home Prices, Booming Risk of Collapse

The American Dream of home ownership is once again on its death bed.

Home prices have dramatically increased in price, rising from their 2012 lows by a stunning 75%, with the average median home price now resting at $245,000!

This is up 4.5% over the last year alone, which means prices are increasing and increasing fast.

This has made home ownership essentially unaffordable for many millennial’s who are looking to purchase their first home. This is causing more and more to either return home and live with their parents, or asking them for assistance in purchasing their home.

Profits for many businesses are rising and consumer confidence is way up, recently hitting a thirteen year high,but this has not directly translated into an increases in wages, which continues to stagnate .

This truly is the worst of both worlds for many average working citizens, who are just trying to make ends meet and pay the bills. This is what many in the precious metals community have warned about for years, stagflation.

Sadly, many are completely ignorant to what is unfolding in front of their eyes, and they appear incapable of seeing just how similar this current environment is to that which led to one of the greatest meltdowns in modern history, the 2008 crisis.

Stocks have roared higher, causing valuations to become more and more disconnected from reality, home prices are becoming increasing more unaffordable and wages are stagnating in comparison to inflation. This has the hallmarks of a disaster in the making.

These problems on their own should cause one to take notice and pause in reflection, but this is not it, these are not the only problems that need to be taken into consideration.

…click on the above link to read the rest of the article…

China Cuts Reserve Ratio, Unlocks 700BN Yuan Amid Rising Trade War, Mass Defaults And Margin Calls

As widely expected, China’s central bank announced it would cut the Required Reserve Ratio (RRR) for some banks by 0.5% effective July 5, just over two months after the PBOC did a similar cut on April 17, the first such easing since the start of 2016.

The move is expected to unlock 700 billion yuan ($108 billion) in liquidity amid growing trade war tensions, a sharp slowdown in the Chinese economy, a tumbling stock market, rising forced margin call, and a spike in corporate defaults.

According to the central bank, the aim of the cut is” to support small and micro enterprises, and to further promote the debt-to-equity swap program.” The cut will apply to major state-run commercial banks, joint-stock commercial lenders, postal banks, city commercial lenders, rural banks and foreign banks, in other words: virtually everyone.

“The size of the liquidity being unleashed has beat expectations and it’s larger than the previous two cuts this year”, said Citic fixed income research head Ming Ming. “It’s almost a universal cut as it covers almost all lenders.”

The RRR cut was also widely expected following the publication of a central bank working paper on Tuesday calling for such a cut.


A cut in China’s RRR by the PBOC is imminent following central bank’s working paper released Tuesday arguing for such a cut.


According to Bloomberg, the cut is designed to achieve two things:

  • The 500 billion yuan unlocked for the nation’s five biggest state-run banks and 12 joint-stock commercial lenders will be channeled to debt-to-equity swaps, which can reduce companies’ debt burdens and help cleaning up banks’ balance sheets. It comes following no less than 20 corporate bond defaults in 2018, and ahead of a wave of corporate repayments that has prompted analysts to express fears about a default avalanche.

…click on the above link to read the rest of the article…

Manipulation of Gold & Silver by Bullion Banks

Manipulation of Gold & Silver by Bullion Banks

As a former spot currency trader for a major international bank, I have had first-hand experience of central banks directly intervening in currency markets in massive size, repeatedly. You’ll hear a lot of people say market manipulation is a conspiracy theory, despite the fact that it has been proven in court several times in various assets classes and especially in precious metals. Books have been written about Gold and Silver manipulation for decades. Central Bankers have admitted it publicly. Now it has become so obvious that it’s predictable. I know because I made 500% in less than 24 hours on Friday last on a 1-week SLV 15.50 strike put option I bought on Thursday at 2pm. I bought that put expecting the Bullion Banks to come in and hammer the metals, given the typical signals I was seeing ahead of each time they slam Gold and/or Silver lower. Moreover, I began warning people on Twitter a week ahead of time that this could happen (note the dates posted):

I’ll provide those typical signals later, but let’s take a look at what happened to Gold…

Since May 24th, Gold has been capped at its 200 day moving average despite being oversold, extreme overbearish per the DSI and Funds positioning being at levels that has consistently led to strong rallies over the past 3 years. Yet, on this occasion the price went down?

So why did the price go down? Below is the daily changes in Gold open interest (“OI”) on the COMEX up to and including Friday last.

Notice how OI rose significantly around May 10, and the price of Gold fell hard. Then OI fell consistently but the price did not rise, instead it remained capped under its 200-day MA. Then, beginning Tuesday, June 12 and for the next two days, open interest rose a total of 18k contracts.

…click on the above link to read the rest of the article…

Merger Mania and the Kings of Debt

Merger Mania and the Kings of Debt

Another Early Warning Siren Goes Off

Our friend Jonathan Tepper of research house Variant Perception (check out their blog to see some of their excellent work) recently pointed out to us that the volume of mergers and acquisitions has increased rather noticeably lately. Some color on this was provided in an article published by Reuters in late May, “Global M&A hits record $2 trillion in the year to date”, which inter alia contained the following chart illustrating the situation. This snapshot was taken shortly after a particularly busy “Merger Monday” in May, which saw $28 billion in takeover announcements:

Getting frisky: captains of industry and private equity funds evidently feel supremely confident again and have embarked on a major shopping spree. This mainly goes to show that no-one ever learns a thing in financial markets (presumably this goes for “learning from history” generally, but the remarkable thing in this case are the small time intervals between the markets teaching lessons and the subsequent collective forgetting exercise). The people responsible for all this breathless activity get paid more than at any other time in history, both in nominal and real terms – and one of their major characteristics is apparently that they have the attention span of gnats.

Almost needless to say, this is a nigh perfect medium to long term contrary indicator. When stocks are actually cheap, most of our corporate chieftains behave like deer in the headlights, i.e., they basically freeze and do nothing. The backdrop  they prefer to see before they feel compelled to really swing into action full-speed-ahead with maximum recklessness is “one of the most overvalued markets in history”. Only then do they feel truly safe.

…click on the above link to read the rest of the article…

The Final Assault in the War on Cash

Before I show you what I’ve learned about a plan to seize control of America’s money, let me make one point clear…

If you value sound money and political freedom… if you value limited government and taxation with representation… and if you value enterprise and privacy… then you’re going to hate the future I’m about to describe.

There is no philosophical or monetary middle ground on the issue.

You’re either with it or against it.

The Chicago Plan

In March 1933, Henry Morgenthau Jr., chairman of the Federal Farm Board, was sent a short memo titled, “Memorandum on Banking Reform.”

It was signed by Frank Knight (the acknowledged author of the memo), Garfield Cox, Aaron Director, Paul Douglas, Lloyd Mints, Henry Schultz, and Henry Simons. All of them were professors at the University of Chicago.

The memorandum advocated for full-reserve banking (FRB) in the U.S. monetary system. U.S. currency would be backed only by government debt, not bank debt (loans issued by commercial banks to private citizens and companies).

It wouldn’t nationalize the U.S. banking system. But it would nationalize the nation’s money supply.

Under this kind of system, banks could no longer “create” money by lending it into existence. Money creation would be the exclusive territory of the government of the United States.

In this system, the key government agencies could not create money through new lending. They would do so through new spending (on priorities determined by elected politicians).

They called it “The Chicago Plan.”

The most radical elements of the plan – which we’ll discuss shortly – were left on the shelf nearly a century ago.

But I believe it’s about to find a resurgence in modern America…

…click on the above link to read the rest of the article…

The Dollar Dilemma: Where to From Here?

The Dollar Dilemma: Where to From Here?

money 750.jpg

 Introduction: Where We Are 

It’s a fallacy to believe the US has a free market economy. The economy is run by a conglomerate of individuals and special interests, in and out of government, including the Deep State, which controls central economic planning.

Rigging the economy is required to prevent market forces from demanding a halt to the mistakes that planners continuously make. This deceptive policy can last only for a limited time. Ultimately, the market proves more powerful than government manipulation of economic events. The longer the process lasts, the greater the bubble that always bursts. The planners in charge have many tools to perpetuate confidence in an unstable system, but common sense should tell us that grave dangers lie ahead.

Their policies strive to convince the unknowing that the dollar is strong and its status as the world’s reserve currency is secure, no matter how many new dollars they create of out of thin air. It is claimed that our foreign debt is always someone else’s fault and never related to our own monetary and economic mismanagement.

Official government reports inevitably claim inflation is low and we must work harder to increase it, claiming price increases somehow mystically indicate economic growth.

The Consumer Price Index is the statistic manipulated to try to prove this point just as they use misleading GDP numbers to do the same. Many people now recognizing these reports are nothing more than propaganda. Anybody who pays the bills to maintain a household knows the truth about inflation.

Ever since the Great Depression, controlling the dollar price of gold and deciding who gets to hold gold was official policy. This advanced the Federal Reserve’s original goal of demonetizing precious metals, which was fully achieved in August 1971.

…click on the above link to read the rest of the article…

Olduvai II: Exodus
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Olduvai
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Olduvai II: Exodus
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Olduvai III: Cataclysm
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