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Stockman: We’re Borrowing Our Way to Economic Disaster

Stockman: We’re Borrowing Our Way to Economic Disaster

David Stockman joined the Fox Business and the show Mornings with Maria to discuss the tax reform highlights for the current White House and GOP platform and what he views as a real threat of economic disaster in the U.S. During the discussion Stockman highlights what to expect from a border adjustment tax possibility, the creation of jobs and the impact on Wall Street in the age of Donald Trump.

Stockman takes to point the cause of tax reform in the current White House. He begins the segment noting, “I think the border adjustment tax will come out of the retailers margin – and it should. We do need revenue. We need to have a consumption tax, or a value added tax or a border adjustment tax – so that we may reduce taxation on wages and income. We desperately need more jobs in this country. If you keep taxing the payroll at 15.5%, which we’re doing today, you’re not going to encourage the creation of jobs. You’re going to take what jobs there are and impact the take-home pay of those jobs.”

David Stockman was then asked about his read on Donald Trump’s border tax proposals and the possibility of what the President described as a ‘reciprocal tax.’  “He has no idea what he’s talking about. He’s making it up as he goes along. Donald Trump is a tourist in the Imperial City of Washington D.C. He’s flipping, flopping and making it up as he goes.”

“The border adjustment tax, or a value added tax is the way to get at the problem he’s talking about. Every other country in the world has a value added tax. You take it off the exports and put it on the imports.

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

Wall Street Is Pouring Money Back Into Shale

Wall Street Is Pouring Money Back Into Shale

Wall Street

With oil prices seemingly on firm footing, Wall Street is pouring money back into the shale sector, expecting profits even at $50 per barrel.

The private equity industry raised an estimated $19.8 billion in funds for energy investment in the first quarter of this year, or about three times as much as the same period in 2016. The figures indicate a more aggressive approach from private equity in shale drilling, and rising expectations that the oil market is set to rebound. The data comes from Preqin, and was reported on by Reuters.

The optimism comes even as oil prices have languished in the $50 per barrel range since November, after briefly dipping into the $40s last month. The hopes of a stronger rebound by now have been dashed, and oil analysts have steadily revised their expectations, pushing out their projections for stronger price gains. The extraordinary gains in U.S. crude oil inventories in the first quarter caught the market – and OPEC – by surprise, killing off hopes of oil heading north of $60 per barrel.

But the new money from Wall Street need not depend on $60+ oil. Lenders are confident that their investments will turn out to be profitable even at the prevailing market price today. That is because shale drillers have dramatically cut their costs, pushing breakeven prices down. “Shale funders look at the economics today and see a lot of projects that work in the $40 to $55 range,” Howard Newman, head of private equity fund Pine Brook Road Partners, told Reuters. His firm dumped $300 million in Permian driller Admiral Permian Resources LLC in March.

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

Stupid is as Stupid Does

STUPID IS AS STUPID DOES

If you prefer fake news, fake data, and a fake narrative about an improving economy and stock market headed to 30,000, don’t read this fact based, reality check article. The level of stupidity engulfing the country has reached epic proportions, as the mainstream fake news networks flog bullshit Russian conspiracy stories, knowing at least 50% of the non-thinking iGadget distracted public believes anything they hear on the boob tube.

This stupendous degree of utter stupidity goes to a new level of idiocy when it comes to the stock market. The rigged fleecing machine known as Wall Street has gone into hyper-drive since futures dropped by 700 points on the night of Trump’s election. An already extremely overvalued market, as measured by every historically accurate valuation metric, soared by 4,000 points from that futures low – over 20% – to an all-time high. Despite dozens of warning signs and the experience of two 40% to 50% crashes in the last fifteen years, lemming like investors are confident the future is so bright they gotta wear shades.

The current bull market is the 2nd longest in history at 8 years. In March of 2009, the S&P 500 bottomed at a fitting level for Wall Street of 666. In a shocking coincidence, it bottomed on the same day Bernanke & Geithner forced the FASB to rollover like mangy dogs and stop enforcing mark to market accounting. Amazingly, when Wall Street banks, along with Fannie and Freddie, could value their toxic assets at whatever they chose, profits surged. The market is now 240% higher.

You have the second longest bull market in history, while stock market valuations, as measured by the Shiller PE ratio and every other historically accurate valuation method, are higher than 1929 and 2007, but the Wall Street hype machine and the business network shills adamantly declare this bull has years to go and thousands of points of upside.

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

Reagan Adviser: Why Trump Won’t Cut Taxes

The mules of Wall Street were back at it again, buying the dips after the overnight whoosh downward in the futures market. Apparently, it will take an actual two-by-four between the eyes to break a habit that has been working for 96 months now since the March 2009 post-crisis bottom.

We think it is plain as day, however, that we are in a new ball game that the “stimulus-blinded” mules don’t see coming at all. To wit, they have been juiced for eight years running by the Keynesian apparatchiks at the Fed who needed permission from exactly no one to run the printing presses full tilt or to rescue the market with a new round of QE or an extension of ZIRP whenever the indices began to wobble.

But now, even the money printers have made it clear in no uncertain terms that they are done for this cycle, anyway, and that they will be belatedly but consistently raising interest rates for what ought to be a truly scary reason.

That is, the denizens of the Eccles Building have finally realized that they have not outlawed the business cycle after all and need to raise rates toward 2-3% so that they have headroom to “cut” the next time the economy slides into the ditch.

In effect, the Fed is saying to Wall Street: “Price in” a recession because we are!

After all, our monetary central planners are not reluctantly allowing interest rates to lift off the zero bound because they have become converts to the cause of honest price discovery—-nor are they fixing to liberate money rates, debt yields, and the prices of stocks and other financial assets to clear on the free market.

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

Your pension could be at the center of America’s next financial crisis

Your pension could be at the center of America’s next financial crisis

Your pension could be at the center of America's next financial crisis

I’m not a fan of the “greed is good” mentality of Wall Street investment firms. But the next financial crisis that rocks America won’t be driven by bankers behaving badly. It will in fact be driven by pension funds that cannot pay out what they promised to retirees. According to one pension advocacy organization, nearly 1 million working and retired Americans are covered by pension plans at the risk of collapse.

The looming pension crisis is not limited by geography or economic focus. These including former public employees, such as members of South Carolina’s government pension plan, which covers roughly 550,000 people — one out of nine state residents — and is a staggering $24.1 billion in the red. These include former blue collar workers such as roughly 100,000 coal miners who face serious cuts in pension payments and health coverage thanks to a nearly $6 billion shortfall in the plan for the United Mine Workers of America. And when the bill comes due, we will all be in very big trouble.

It’s bad enough to consider the philosophical fallout here, with reneging on the promise of a pension and thus causing even more distrust of bankers and retirement planners. But I’m speaking about a cold, numbers-based perspective that causes a drag on many parts of the American economy. Consider the following.

Pensioners have no flexibility

According to a Bureau of Labor Statistics report from 2015, the average household income of someone older than age 75 is $34,097 and their average expenses exceed that slightly, at $34,382. It is not an exaggeration, then, to say that even a modest reduction in retirement income makes the typical budget of a 75-year-old unsustainable — even when the average budget is far from luxurious at current levels. This inflexibility is a hard financial reality of someone who is no longer able to work and is reliant on means other than labor to make ends meet.

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

Stocks and Precious Metals Charts – Three Day Weekend – Times of General Corruption

Stocks and Precious Metals Charts – Three Day Weekend – Times of General Corruption

 “And I’ll leave you with one set of numbers that I found today, which is just an absolute for this whole thing. In 2015, Wall Street Bonuses, not regular compensation, bonuses, seven years after they were bailed out with the public purse, totaled $29.4 billion dollars. Total compensation paid to every single person in this country who makes minimum wage totaled $14 billion…

The era of neo-liberalism is over. The era of neo-nationalism has just begun.”
Mark Blyth

“Caesar was swimming in blood, Rome and the whole pagan world was mad.  But those who had had enough of transgression and madness, those who were trampled upon, those whose lives were misery and oppression, all the weighed down, all the sad, all the unfortunate, came to hear the wonderful tidings of God, who out of love for men had given Himself to be crucified and redeem their sins.

When they found a God whom they could love, they had found that which the society of the time could not give any one— happiness and love.”
Henryk Sienkiewicz, Quo Vadis: The Time of Nero

When historians look back on this period of the last forty years and diagnose what went wrong, they might do worse than to conclude that at the root of it was a general failure of character, from the top down.

The replacing of honor and duty with egoism and greed as the most honored of civic virtues was a long and slow process.  It took root and was nurtured in a portion of the population that was served by it during the Reaganomics revolution, but eventually spread to those institutions and groups that had generally provided a bulwark for freedom and justice against the perennial amorality of the greedy.

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

“Is Trump About to Cause Another Crisis?”: 2008 Could Be Eclipsed As Bank Restrictions Eliminated

“Is Trump About to Cause Another Crisis?”: 2008 Could Be Eclipsed As Bank Restrictions Eliminated

wall-st-flames

Beware of what may be coming next. We already know the establishment has a plan to blame President Trump for the next financial crisis, and now there are moves being made that will support that narrative.

After the 2008 fiasco, a spotlight on Wall Street misbehavior and some weak, but better-than-nothing regulations were put on the industry in the hopes of preventing another string of bank failures and crippling economic disasters.

But as the system teeters on edge and prepares to endure the backlash of increased rates at the Fed, Trump is also taking off the shackles that have been put in place by the Dodd-Frank Act which instituted certain protections for consumers, including a requirement that pensioners don’t have their nest egg devoured, etc.

For the tens of millions of baby boomer retirees and aging pensioners, the social security net is all they’ve got to count on, apart from a few debt-saddled kids who have hardly been able to save a dime under eight years of Obama.

The 2008 economic crisis penalized everyone with an entire cycle of wage freezes, job starvation and crushing dependence upon government programs for assistance. Wall Street, and the banker class at large were spared from blame or reparations to a society that was robbed blind. Instead, eight years of quantitative easing sent a tidal wave of easy money to the financial sector that created a gorge of asset buy-up from the top – especially in housing, where soaring rates are forcing single households to become renters instead of mortgage debt-slave owners once again.

The election of President Trump created optimism about our collective financial prospects – with seemingly tangible promises of bringing home jobs and returning to American Greatness™.

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

Nomi Prins: Financial Crash From Epic Debt, Asset Bubbles “Possible In Last Quarter 2017”

Nomi Prins: Financial Crash From Epic Debt, Asset Bubbles “Possible In Last Quarter 2017”

societal-collapse

Could there be a crash coming in 2017? Will increasing interest rates at the Federal Reserve trigger the beginning of the end?

It is possible, but not certain.

It will fall, perhaps, after a new sense of normal sets in, and some become comfortable with the change in leadership, and accustomed to drowning out the opposition yelling noisily from the other side. Expectations have been set for a growing economy, fresh infrastructure and new hopes for the average worker.

But getting too comfortable would be a huge mistake. All that could prove to be a mirage. And things could come crashing down.

On Friday, Donald Trump will be inaugurated as the 45th President, and all eyes will be on his first 100 days as he demonstrates what kind of president he will be, and his cabinet takes action. But even with the best intentions and carefully laid plans, there is no telling at this point how firmly he will be tested, and what kind of crisis America will have to endure during his first term. Wars, terror attacks, civil unrest, debt crisis and financial collapse all loom overhead.

Many have seen dark signals about the immediate future, but no one can claim to know the timing.

However, former Wall Street banker and now best selling critic of the predatory financial system Nomi Prins sees the pattern unfolding, and fears that the end of 2017 may be the time that everyone has been watching for. At the center of it is the whiplash effect of Federal Reserve stimulus-withdrawal (i.e. rate hikes and the contraction of easy money).

Greg Hunter of USAWatchdog interviewed Nomi Prins:

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

Is Trump Draining the Swamp or Filling It?

trump-cohen

Trump has broken his word and is by no means draining the swamp — he is filling it. He has really betrayed a lot of people by his nomination of Gary D. Cohn as Director of the National Economic Council, which is a policy-making position for domestic and international economic issues.

The one legal firm in New York that defends the bankers is Sullivan & Cromwell. Trump has named a lawyer from that firm, Jay Clayton, to serve as Wall Street’s top cop as Chairman of the Securities and Exchange Commission. There is absolutely no possible way Clayton will call the bankers to account for anything. In fact, it would probably be a huge conflict of interest to bring charges against any bankers in New York when Sullivan & Cromwell will most likely represent them (including Goldman Sachs).

I am much less concerned about Steven Mnuchin, who left Goldman long ago, than I am with Cohn and the appointment of Clayton. Jared Kushner, Trump’s son-in-law, is a close friend of Cohn, and he set up the first meeting with Trump. I do not see how he will “drain the swamp” with ties to Goldman Sachs. These appointments are no different from Bush, Bill Clinton, or Hillary Clinton. I remain skeptical at this point of any real reform in the swamp.

So for all those who have sent emails betting on me advising Trump behind the scenes simply because I was seen walking into Trump Tower a few weeks ago: 1) I was not there to meet with Trump, and 2) I would be outnumbered by his Goldman advisers, so why bother? Sorry — I have no interest in getting involved with this crew. I do not want to have to count my fingers, assuming I even would shake hands.

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

Forecast 2017: The Wheels Finally Come Off

“There is no other endeavor in which men and women of enormous intellectual power have shown total disregard for higher-order reasoning than monetary policy.
                                                                                                      — David Collum

American Notes

Apart from all the ill-feeling about the election, one constant ‘out there’ since November 8 is the Ayn Randian rapture that infects the money scene. Wall Street and big business believe that the country has passed through a magic portal into a new age of heroic businessmen-warriors (Trump, Rex T, Mnuchin, Wilbur Ross, et. al.) who will go forth creating untold wealth from super-savvy deal-making that un-does all the self-defeating malarkey of the detested Deep State technocratic regulation regime of recent years. The main signs in the sky, they say, are the virile near-penetration of the Dow Jones 20,000-point maidenhead and the rocket ride of Ole King Dollar to supremacy of the global currency-space.

I hate to pound sleet on this manic parade, but, to put it gently, mob psychology is outrunning both experience and reality. Let’s offer a few hypotheses regarding this supposed coming Trumptopian nirvana.

The current narrative weaves an expectation that manufacturing industry will return to the USA complete with all the 1962-vintage societal benefits of great-paying blue collar jobs, plus an orgy of infrastructure-building. I think both ideas are flawed, even allowing for good intentions. For one thing, most of the factories are either standing in ruin or scraped off the landscape. So, it’s not like we’re going to reactivate some mothballed sleeping giant of productive capacity. New state-of-the-art factories would require an Everest of private capital investment that is simply impossible to manifest in a system that is already leveraged up to its eyeballs.

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

Did the Fed Really Say they Could Buy Stocks?

yellen Janet

The Fed told Congress it would buy stocks if Congress allowed it. This statement has caused a lot of people to scratch their heads. Will this cause all the stock bears to rethink their prognostications of a major stock market crash? This was not even on the radar of most people.

Some have reported this story as “the first time in U.S. history” that the Federal Reserve has openly spoken about purchasing of stocks rather than bonds and mortgage-backed securities. While this news may have been shocking to most, South Carolina Republican Mick Mulvaney asked Janet Yellen before the House Financial Services Committee about the Fed’s authority to buy stocks to stimulate the economy. Mulvaney asked:

“There’s been some attention in the last few months about the recent decision by the Bank of Japan to start purchasing equities and my question to you is fairly simple. Is the United States Federal Reserve looking at the possibility of adding the purchase of equities to its tool box as it looks at monetary policy?”

Yellen answered:

“Well, the Federal Reserve is not permitted to purchase equities. We can only purchase U.S. treasuries and agency securities. I did mention in a speech in Jackson Hole, though, where I discussed longer term issues and difficulties we could have in providing adequate monetary policy. Accommodation may be somewhere in the future, down the line that this is the kind of thing that Congress might consider, but if you were to do so, it’s not something that the Federal Reserve is asking for.”

UB1798-Y-MA

This response shook many on Wall Street. It is true that buying equities has been a part of Japan’s effort to stimulate its economy. We will most likely see this tool attempted by Draghi on Europe since he has run out of things to do.

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

 

Stanley Fischer’s Novel Idea: “We’d Be Better Off With A Price For Using Money”

Stanley Fischer’s Novel Idea: “We’d Be Better Off With A Price For Using Money”

The end game of central bank lunacy is surely near. Even the Fed heads appear to be mumbling bits and pieces of truth in public.

Former Philly Fed President Charles Plosser, for example, told Bloomberg TV this morning that central bankers “wring their hands all the time,” are very “concerned about credibility,” and are “pretty good at conjuring up reasons not to act.”

Having screwed up his mutinous courage, he then let loose with words that haven’t been heard from a central banker in decades, if ever:

The Fed “shouldn’t be afraid a recession might come,” he exclaimed, “there’s a real problem here”. 

Then again, Plosser recently retired and perhaps it wasn’t all that voluntary. By contrast, Stanley Fischer is in line to takeover the joint, and perhaps soon.

That’s because Janet Yellen is surely finished whether the Donald wins or loses. Her dithering and double-talk have become a laughingstock even in the Wall Street casino.

So you might have thought the good professor from MIT—-by way of the IMF and Bank Of Israel—– would be carefully parsing his words. Instead, he was apparently moved during a speech to economics students to confess that he is more or less flummoxed by his own policies:

WASHINGTON—Federal Reserve Vice Chairman Stanley Fischer on Tuesday expressed frustration with ultralow interest rates, saying they should rise over time.

“It bothers me, it really bothers me,” he said when asked about low rates at an event for economics students at Howard University in Washington…….I don’t like it, but I don’t want to raise the interest rate too much. I think we should at some point. I don’t know when,” he said. “The interest rate I believe is not at zero at a normal level and it should be [normal] at some point, not immediately.”

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

It Won’t Be Long Now—-The End Game Of Central Banking Is Nigh

It Won’t Be Long Now—-The End Game Of Central Banking Is Nigh

My new book will be published next Tuesday. Preorders for the e-Book version will be available in this space beginning later this week.

As I previously indicated, the book is an exploration of how 30 years of Bubble Finance policies at the Fed, feckless interventions abroad and mushrooming Big government and debt at home have brought America to its current ruinous condition.

In this context, it delves into the good and bad of the Trump campaign and platform, while, to use a spoiler alert, praising it with faint damn!

As Contra Corner readers recognize the only consistent way forward for America at this late stage of the game is a return to free markets, fiscal rectitude, sound money, constitutional liberty, non-intervention abroad, minimalist government at home and decentralized political rule.

Unfortunately, that is not about to happen any time soon—–even if by some miracle Donald Trump is elected President.

But what the book does claim is that the tide is turning against the failed Wall Street/Washington bipartisan consensus. I call this insurrection the “revolt of the rubes” in Flyover America.

This uprising against the rule of the financial and political elites has counterparts abroad among those who voted for Brexit in the UK, against Merkel in the recent German elections in her home state, and among the growing tide of anti-Brussels sentiment reflected in polls throughout the EC.

Needless to say, the political upheaval now underway is largely an inchoate reaction to the policy failures and arrogant pretensions of the establishment rulers. Like Donald Trump himself, it does not reflect a coherent programmatic alternative.

But my contention is that liberation from our current ruinous policy regime has to start somewhere—and that’s why the Trump candidacy is so important. He represents a raw insurgency of attack, derision, impertinence and repudiation.

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

The Great Debt Unwind Beneath the Surface: US Commercial Bankruptcies Soar

The Great Debt Unwind Beneath the Surface: US Commercial Bankruptcies Soar

They’d believed in six years of Wall Street hogwash.

Not that you would have guessed from the stock market, hovering at all-time highs, or from soaring junk bonds, even the riskiest paper: CCC-and-below rated junk bonds skyrocketed since their February 12 low as their average yield plunged from 21.6% to 13.5%. Even the S&P US Distressed High Yield Corporate Bond index has soared 57% since February 12.

Those are miracles to behold.

At the slightest squiggles of the market, the Fed goes into bouts of by now embarrassing flip-flopping on rate increases that demonstrate to the world that they have absolutely nothing else in mind than keeping the stock market inflated and keeping the biggest credit bubble in US history from unceremoniously imploding.

And the ECB is out there with its scorched-earth monetary policies, with negative interest rates and bond purchases, including asset backed securities and corporate bonds, that it has been caught buying directly from issuers. It’s driving even corporate bond yields into the negative. Just now, French drugmaker Sanofi and German household products maker Henkel issued bonds with negative yields, thus getting paid by these hapless investors to borrow.

The idea for bondholders being that you have practically no income throughout and get “most” of your money back at maturity. An idea that is sending NIRP refugees into US assets, driving up their values and pushing down their yields. It all works wonderfully.

But beneath this magic is the real US economy, and there, despite this flood of money and the low interest rates and the soaring stocks, and all the shenanigans to keep the credit bubble from imploding, business bankruptcies are soaring.

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

2008 All Over Again

2008 All Over Again 

   Financial markets in the United States and worldwide face uncertainty and potential crisis after Britain voted to leave the European Union. (Sparkx 11)

Great Britain’s decision to leave the European Union has wiped out many bankers and global speculators. They will turn, as they did in 2008, to governments to rescue them from default. Most governments, including ours, will probably comply.

Will the American public passively permit another massive bailout of the banks? Will it accept more punishing programs of austerity to pay for this bailout? Will a viable socialism rise out of the economic chaos to halt further looting of the U.S. Treasury and the continued reconfiguration of the economy into neofeudalism? Or will a right-wing populism, with heavy undertones of fascism, ascend to power because of a failure on the part of the left to defend a population once again betrayed?

Whatever happens next will be chaotic. Global financial markets, which lost heavily on derivatives, are already in free fall. The value of the British pound has dropped by over 9 percent and British bank stock prices by over 25 percent. This decline has wiped out the net worth of many Wall Street brokerage houses and banks, leaving them with negative equity. The Brexit vote severely cripples and perhaps kills the eurozone and, happily, stymies trade agreements such as the Trans-Pacific Partnership. It throws the viability of NATO and American imperial designs in Eastern Europe and the Middle East into question. The British public’s repudiation of neoliberal economics also has the potential to upend the presidential elections. The Democratic Party will orchestrate a rescue of Wall Street if there is a call for a bailout. Donald Trump and the Republicans, by opposing a bailout, can ride popular revulsion to power.

…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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