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Governments Have Crippled the World’s Economies. Revolution May Soon Follow.
GOVERNMENTS HAVE CRIPPLED THE WORLD’S ECONOMIES. REVOLUTION MAY SOON FOLLOW.
The world seems to be on fire. A couple of months ago, the economic upswing was still firmly established, production expanded, and unemployment was declining. It all changed with the advent of the coronavirus or, to be precise: things turned really sour with the politically dictated lockdowns. As a reaction to the spread of the virus, governments in many countries ordered shops and firms to shut down and people to stay home. The inevitable result was a close to complete breakdown of the economic system. Hundreds of millions of people were thrown into outright despair; in India alone 120 million workers lost their jobs in April 2020.
The economic collapse sent the unbacked paper money system into a tailspin. Borrowers were unable to service their debt, and banks unwilling to roll over maturing loans, let alone extend new funds to struggling debtors. The entire credit pyramid was about to come crashing down. To prevent this from happening, governments and their central banks went “all in,” providing huge amounts of money to pay for people’s lost incomes and firms’ evaporating profits. Of course, governments do not have the money that they have promised to spend.
Central banks have started running the electronic printing presses, issuing great amounts of newly created money into the banking and financial sector and also injecting new balances into people’s accounts held with banks. In other words: as production contracts heavily, the quantity of money is rising strongly. This is, no doubt, an inflationary policy, for, if anything, inflation must be understood as an increase in the quantity of money. One possible outcome of a policy of increasing the quantity of money is price inflation: the increase in the money prices of goods and services.
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Most U.S. States Have ‘Reopened’ Their Economies, So Why Does Unemployment Continue To Spiral Out Of Control?
Most U.S. States Have ‘Reopened’ Their Economies, So Why Does Unemployment Continue To Spiral Out Of Control?
This wasn’t supposed to happen. Once states started to “reopen” their economies, the tsunami of unemployment was supposed to end. But instead, we continue to see Americans lose jobs at a pace that is far beyond anything we have ever seen before in all of U.S. history. All the way back in 1982, there was a week when 695,000 Americans filed initial claims for unemployment benefits, and that all-time record was never broken until this year. Of course we have seen monster number after monster number here in 2020, and we just learned that last week another 1.877 million Americans filed new claims for unemployment benefits…
Filings for unemployment insurance claims totaled 1.877 million last week in a sign that the worst is over for the coronavirus-related jobs crisis but that the level of unemployment remains stubbornly high.
Economists surveyed by Dow Jones had been looking for 1.775 million new claims. The Labor Department’s total nevertheless represented a decline from the previous week’s upwardly revised total of 2.126 million.
So even though more than 40 million Americans had already lost their jobs in 2020, there were still enough people losing their jobs last week to surpass the old record from 1982 by more than a million.
Just think about that.
Overall, a grand total of 42.6 million Americans have now lost their jobs since the pandemic began, and that makes this the largest spike in unemployment in all of U.S. history by a very wide margin.
And when the monthly employment report comes out on Friday, the official U.S. unemployment rate is expected to surpass 20 percent…
…click on the above link to read the rest of the article…
Coronavirus Bankruptcy Pandemic Continues
Coronavirus Bankruptcy Pandemic Continues
Hertz has now joined the ranks of filing for bankruptcy as this lockdown has caused car rentals to crash to virtually zero. Of course, Climate Change activists led by Bill Gates are celebrating. They cheer every bankruptcy they have managed to create with the absurd lockdowns were the first time in history you quarantine the entire population rather than just those who are sick.
The total economic destruction we have said is about $30 trillion in businesses. If we add real estate which cannot be sold, that is most likely $35-$45 trillion. Then add on top of that the coming wave of sovereign bond defaults which will include emerging markets that have witnessed their exports collapse. Global GDP is about $90 trillion. The global bond market is about $100 trillion.
Commercial Real Estate is worth about $32 trillion and Agricultural Real Estate about $27 trillion. Total residential Real Estate is about $170 trillion at the end of 2019. If we have to put a number of that we reach about $230 trillion.
The total world equity market at the end of 2019 was nearly $90 trillion.
Therefore, if we add up what I call Capital Formation, this is the combination of real estate, equities, and bonds. This number works out to be about $420 trillion.
Consequently, the economic contraction in just the current GDP of $90 trillion is about $30 trillion, and Capital Formation is probably about $120 trillion illiquid out of $420 trillion if they even tried to sell. Anyone who thinks that governments can possibly stimulate their way out of this or create hyperinflation by spending even $10 trillion are not taking into consideration the full scope of this economic collapse.
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COVID-19 Has Replaced Osama bin Laden as the Fall Guy for Lost Liberties
COVID-19 Has Replaced Osama bin Laden as the Fall Guy for Lost Liberties
The government and media have dumped at the doorstep of the coronavirus many of the political, economic and social afflictions that are now ravaging much of the global population. In reality, they need to point the finger at themselves.
As the mainstream media saturates the airwaves with a daily overdose of coronavirus fear porn, the majority of journalists have given their governments a free pass to enact any draconian measure they see fit. From the closure of public beaches to forbidding power boats on waterways, the insanity seems to have no limits or logic. And as the media would have us believe, it was the coronavirus that enacted these measures, as opposed to living, breathing, unthinking humans.
Anti lockdown Protest went well. #Antilockdown #COVID19
What dirty deeds does the new and improved villain of our times stand accused of? First and foremost, the coronavirus singlehandedly destroyed the global economy as only ‘essential’ businesses may continue to operate. Thus, thousands of small businesses have been ordered shuttered, de facto destroyed, while countless numbers of people around the world have been ordered to ‘shelter-in-place’ with dwindling financial reserves.
Again, this wanton destruction of a large swath of the economy is not due to bad government decision-making, at least according to the media, but Covid-19.
‘Jobless claims jump another 4.4 million — 26 million Americans have lost their jobs to the coronavirus,’ reported MarketWatch. ‘It could take two years for the economy to recover from the coronavirus pandemic,’ screamed another headline.
Perhaps it was also the coronavirus that decided that it would make perfect sense to keep abortion clinics and state-owned liquor stores open during the pandemic, while shutting down houses of worship and gun shops. Clearly, the coronavirus is an equitable and non-partisan distributor of pain and suffering!
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WTF: What The Fed?!? (Round 2)
WTF: What The Fed?!? (Round 2)
Williams, Maloney, Martenson, Smith: “Trillions more reasons to be concerned”
Back in mid-January, Grant Williams, Mike Maloney, Charles Hugh Smith, Chris Martenson and I sat down for an in-depth discussion on the dangerous distortions to financial markets and the global economy that central bank intervention is causing.
That video, titled WTF: What The Fed?!? was released soon after the US Federal Reserve had added $200 billion dollars to its balance sheet in Q4 2019. At the time, we worried so much liquidity being added to the system so quickly could recklessly exacerbate the extreme overvaluations in the markets, and further increase the instability of our over-indebted economy.
Little could we have guessed that a global pandemic would soon ensue, one that has seen the central banks collectively flood the world with an additional $4 trillion so far, with (much) more anticipated to come. Sure makes that $200 billion look pretty tiny now…
So, if this group of experts was highly concerned about systemic risk pre-coronavirus, what are they thinking now?
$Trillions in new fiat currency printed in less than 2 months. Over 36 million jobs lost. A Q1 GDP drop of -5% and a predicted Q2 drop of -42.8%. And that’s just in the US alone.
These are historically unprecedented developments on a Great Depression-level scale.
The impact of the economic production loss triggered by covid-19 will be painful and with us for years. How bad will it get? What should we expect next? And why are the current prices of financial assets so divorced from the reality of the destruction to the economy?
For these answers and more, watch this 2-minute trailer for WTF: What The Fed?!? Round 2:
…click on the above link to read the rest of the article…
10 Numbers That Show The U.S. Has Fallen Into A Horrifying Economic Depression
10 Numbers That Show The U.S. Has Fallen Into A Horrifying Economic Depression
The last recession was really, really bad, but it was never like this. It is time for us to face reality, and that means admitting that the U.S. economy has plunged into a depression. This is already the worst economic downturn that America has experienced since the Great Depression of the 1930s, and we are right in the middle of the largest spike in unemployment in all of U.S. history by a very wide margin. Of course it was fear of COVID-19 that burst our economic bubble, and fear of this virus is going to be with us for a very long time to come. So we need to brace ourselves for an extended economic crisis, and at this point even Time Magazine is openly referring to this new downturn as an “economic depression”. Needless to say, there will be a tremendous amount of debate about how deep it will eventually become, but everyone should be able to agree that our nation hasn’t seen anything like this since before World War II.
In order to prove my point, let me share the following 10 numbers with you…
#1 According to a study that was just released by the National Bureau of Economic Research, more than 100,000 U.S. businesses have already permanently shut down during this pandemic, and that represents millions of jobs that are never coming back.
#2 The Federal Reserve Bank of Atlanta is now projecting that U.S. GDP will shrink by 42.8 percent during the second quarter…
A new GDP forecast from the Federal Reserve Bank of Atlanta for the three months through June estimates an unprecedented drop of 42.8 percent. The bank describes the data as a “nowcast” or real-time, compared with the official government report of GDP, which is dated. The first-quarter preliminary data, which showed a 4.8 percent dip, included a limited period of impact from COVID-19.
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The Unspoken Reason for Lockdowns
The Unspoken Reason for Lockdowns
Governments cannot openly admit that the “controlled easing” of COVID-19 lockdowns in fact means controlled progress toward so-called herd immunity to the virus. Much better, then, to pursue this objective silently, under a cloud of obfuscation, and hope that a vaccine will arrive before most of the population gets infected.
LONDON – The COVID-19 pandemic is the first major global crisis in human history to be treated as a mathematical problem, with governments regarding policy as the solution to a set of differential equations. Excluding a few outliers – including, of course, US President Donald Trump – most political leaders have slavishly deferred to “the science” in tackling the virus. The clearest example of this was the UK government’s sudden shift on March 23 to an aggressive lockdown policy, following a nightmarish forecast by Imperial College London researchers of up to 550,000 deaths if nothing was done to combat the pandemic.
Such modeling is the correct scientific approach when the question debars experiment. You can test a new drug by subjecting two groups of lab rats to identical conditions, except for the drug they are given, or by administering it to randomly selected humans in clinical trials.
But you can’t deliberately insert a virus into a human population to test its effects, although some Nazi concentration-camp doctors did just that. Instead, scientists use their knowledge of the infectious pathogen to model a disease’s pattern of contagion, and then work out which policy interventions will modify it.
Predictive modeling was first developed for malaria over a century ago by an almost-forgotten English doctor, Ronald Ross. In a fascinating 2020 book, the mathematician and epidemiologist Adam Kucharski showed how Ross first identified the mosquito as the infectious agent through experiments on birds. From this fact, he developed a predictive model of malaria transmission, which was later generalized as the SIR (Susceptible, Infected, and Recovered) model of contagious-disease epidemics.
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Blain’s Morning Porridge – May 19 2020 – Yoorp Kicks The Can
Blain’s Morning Porridge – May 19 2020 – Yoorp Kicks The Can
“I don’t think I could stand another ten years of this fighting…”
Yesterday afternoon I set out to cure Coronavirus. I set up a new company, Splurgeldrug.Com, issuing our first press release about promising new drug trials, followed by another reporting how lab rats responded favourably to the first press release, and how confident of a vaccine in the near future we are. Splugeldrug.com stock went to $600 by teatime, and I currently negotiating the leveraged acquisition of a drug major…
It’s that kind of market. Rumour and sigh abounds..
As a wiser heads than I have noted… most drugs take years to get to market, and less than 1% are ever approved. We still don’t have an effective vaccine for the constantly evolving and mutating annual flu. To bet the farm on a successful vaccine would seem reckless…
Let’s be honest.. if we get a successful vaccine it will help speed global recovery, but it won’t undo the brutal economic damage that’s already been done. A vaccine will simply flatten the depth of the recession – not reverse it, and certainly not magically convert Q2 Earnings into positive numbers…
Markets are not thriving because they expect a vaccine miracle. They are simply arbing governments and central banks. When Powell says he’s “not out of ammunition by a long-shot”, that’s a massive buy signal. Any positive news helps.. and as the central banks have got out backs, just ignore the bad stuff…
(Oh dear… I suspect this will end badly…)
Yoorp – The Decline of the West, part 5826
Thankfully, I have something more significant and real(ish) to write about this morning… Yet again, for all the wrong reasons, it’s time to buy European distressed European Sovereign bonds. Wait for the them to tighten. Sell, then wait for the next crisis.
…click on the above link to read the rest of the article…
Lethal or Contagious
Lethal or Contagious
There was this comment at the Automatic Earth yesterday that got me thinking. It was sort of wrapped in a bit of -more- innuendo about health officials not getting the results they were looking for in COVID19 numbers, as if the whole virus event is some goal-seeked conspiracy. You’ll be familiar with it by now.
I said back in the day that measures like lockdowns can’t last long, because people are social animals. You would just have hoped that when they were finally, far too late, decided upon, that countries, states, communities, would have made the best of them. But it’s been, and more importantly will be, an awful mess, other than in a few places.
And I did say that too, that the so-called leadership in the world today is good at declaring a lockdown, albeit too late, but not at anything else, not at timing it, not at executing it, let alone at managing the way out of it in reopening societies. It is all so predictable.
But people have been solidly dug into their trenches now, after 2 months, and they’ve done so much reading, and watching pundits, that they’re no longer looking for news, they’re looking for opinions, ones that match their own darkest notions. We’ve come to the point that if there’s nothing suspicious going on, then that’s mighty suspicious.
And there’s plenty of such opinions, and plenty among them that lay the blame for freedoms and livelihoods lost somewhere, anywhere. So yeah, in that sense it’s time to reopen, the mental health sense. But not, unfortunately, in the physical health sense. The virus is still prevalent in most communities and many a community will pay a steep price.
…click on the above link to read the rest of the article…
Globalization and Financialization Are Dead, and so Is Everything That Depended on Them
Globalization and Financialization Are Dead, and so Is Everything That Depended on Them
Financialization was never sustainable, and neither was the destructive globalization it enabled.
All the happy-story analogies to past pandemics being mere bumps in the road miss the mark. A popular claim is that the 1918-1919 flu pandemic killed millions but no biggie, the Roaring 20s started the following year. It’s onward and upward, baby, once we toss the masks.
Wrong. Completely, totally, dead wrong. The drivers of the past 75 years of growth– globalization and financialization–are dead, and so is everything that depended on them for “growth”. (Growth is in quotes because once external costs and currency arbitrage are factored in, most of what’s been glorified as “growth” is nothing but losses covered by accounting trickery.)
Here’s what’s poorly understood: globalization and financialization die when they stop expanding. Just as a shark dies if it stops swimming forward, globalization and financialization die once they stop expanding, because their viability depends on expansion.
Globalization and financialization have been losing momentum for years. Under the guise of “opening markets,” globalization has stripmined every economy that can’t print a reserve currency and hollowed out economies globally as only globally competitive sectors survive globalization. The net result is that once vibrant, diversified economies have been reduced to fragile monocultures completely dependent on global flows of capital and spending for their survival.
Tourism is a prime example: every region that has seen its local economy crushed by global arbitrage and corporate hegemonies, leaving global tourism as its sole surviving sector, has been devastated by the drop in tourism, which was always contingent on disposable income and credit expanding forever.
…click on the above link to read the rest of the article…
How to Maintain a Bull Market After Coronavirus
HOW TO MAINTAIN A BULL MARKET AFTER CORONAVIRUS
Everyone thinks they know the cause and effect of the Federal Reserve’s response to crises such as 2008 and 2020. The Fed prints money to buy assets. This increases the quantity of money. And this causes prices to rise. The Fed wants this, because it thinks that inflation eases the burden on debtors. The mainstream wants this, because they have been brainwashed into thinking that inflation causes good effects such as employment. The critics decry this, because they see inflation as a tax.
This view is not even wrong.
The dollar is not money. It is just credit. And it’s not printed. It’s borrowed. An increase in the quantity of it does not necessarily cause commodity and consumer prices to rise. Just look at not one, but two drops in the price of oil. And not small drops, but epic collapses. Starting in June 2014, the price began to fall from $108. By January 2016, it had dropped to $26, a crash of 76%. Then it rose for a whole, hitting $77 by October 2018. It has been downward since then, to $66 this January, or -14%. It’s now $25, which is a further loss of 62%. This is not counting the brief plunge to -$38 on April 20—yes, those who had oil were obliged to pay someone to take it off their hands (thus debunking the notion that oil is like gold).
In other words, this not-even-wrong theory predicts a didn’t-even-happen price hike.
When a bank, pension fund, or investor sells a bond to the Fed, they do not go out and buy consumer goods. They buy another asset. This is why the result is not rising consumer prices, but rising asset prices.
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The Collapse of Main Street and Local Tax Revenues Cannot Be Reversed
The Collapse of Main Street and Local Tax Revenues Cannot Be Reversed
The core problem is the U.S. economy has been fully financialized, and so costs are unaffordable.
To understand the long-term consequences of the pandemic on Main Street and local tax revenues, we need to consider first and second order effects. The immediate consequences of lockdowns and changes in consumer behavior are first-order effects: closures of Main Street, job losses, massive Federal Reserve bailouts of the top 0.1%, loan programs for small businesses, stimulus checks to households that earned less than $200,000 last year, and so on.
The second-order effects cannot be bailed out or controlled by central authorities. Second-order effects are the result of consequences have their own consequences.
Gordon Long and I look at two highly correlated second-order effects: the collapse of Main Street and local tax revenues.
The first-order effects of the pandemic on Main Street are painfully obvious: small businesses that have barely kept their heads above water as costs have soared have laid off employees as they’ve closed their doors.
The second-order effects are still spooling out: how many businesses will close for good because the owners don’t want to risk losing everything by chancing re-opening? How many will give it the old college try and close a few weeks later as they conclude they can’t survive on 60% of their previous revenues? How many enjoy a brief spurt of business as everyone rushes back, but then reality kicks in and business starts sliding after the initial burst wears off?
How many will be unable to hire back everyone who was laid off?
…click on the above link to read the rest of the article…
Chinese Debt Could Cause Emerging Markets to Implode
CHINESE DEBT COULD CAUSE EMERGING MARKETS TO IMPLODE
The novel coronavirus has brought the world economy to a grinding halt. Global growth is set to fall from 2.9 percent last year into deep negative territory in 2020—the only year besides 2009 that this has happened since World War II. Recovery will likely be slow and painful. Government restrictions to prevent the virus from resurging will inhibit production and consumption, as will defaults, bankruptcies, and staffing cuts that have already produced record jobless claims in the United States.
But not all countries will bear the pain of the global recession equally. Low-income countries suffer from poor health infrastructure, which inhibits their ability to fight off the coronavirus, and many of them had dangerously high debt levels even before the pandemic necessitated massive emergency spending. Foreign investors are now withdrawing capital from emerging markets and returning it to the rich world in search of a safe haven. As a result, countries such as South Africa, Kenya, and Nigeria are seeing their currencies plummet in value—making it difficult, if not impossible, for them to service foreign loans.
Faced with the threat of financial ruin, poor countries have turned to multilateral financial institutions such as the International Monetary Fund and World Bank. The IMF has already released emergency funds to at least 39 countries, and by the end of March more than 40 more had approached it for help. The World Bank has fast-tracked $14 billion for crisis relief efforts. Yet even as they offer extraordinary amounts of aid, the IMF and World Bank know that these sums won’t be nearly enough. For that reason, they called on Group of 20 creditor nations to suspend collecting interest payments on loans they have made to low-income countries. On April 15, the G-20 obliged: all of its members agreed to suspend these repayment obligations through the end of the year—all members except one, that is.
…click on the above link to read the rest of the article…
Second Wave? China Orders ‘Partial Lockdown’ Of Border City; Seoul’s Newest Cluster Explodes To 120 Cases: Live Updates
Second Wave? China Orders ‘Partial Lockdown’ Of Border City; Seoul’s Newest Cluster Explodes To 120 Cases: Live Updates
Summary:
- VW ‘pauses’ manufacturing of VW Golf, SUVs
- China imposes ‘partial lockdown’ on northeastern border city
- SK’s ‘Itaewon’ cluster climbs to 120
- Germany, Austria agree to reopen mutual border
- Global cases: 4.22 million
- Global deaths: 291,519
- Poland reports record jump in new cases
- Russia sees numbers start to slow after shocking record run of confirmations
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Update (0745ET): After reopening the largest auto factory in the world, Volkswagen is reportedly ‘pausing’ production of the Volkswagen Golf (a compact model more popular in Europe), as well as its SUVs, due to ‘poor sales’.
What, exactly, was the point of reopening factories and potentially exposing workers to SARS-CoV-2, just to shut down operations again? Also, given that VW is the world’s largest carmaker, this is just the latest headline to undermine the “V-shaped” thesis/“fantasy”.
* * *
As we reported last night, news that LA County suspects its reopening will take up to 3 months – a month longer than previously expected – sent markets lower into the close. That news, combined with Dr. Fauci’s warning about states rushing to reopen, cemented the impression that the reopening of the American economy would probably be much more fraught with delays. And for a brief moment, it seemed like fun-durr-mentals almost mattered again…
Anyway, European markets wobbled Wednesday following reports that the latest cluster of cases in Seoul had climbed to 119, the latest increase of dozens of cases as contact-tracers scramble to test as many people as possible. More than 14k people have been tested so far. To be sure, investigators have made some discoveries that undermined the theory that all of these cases are connected to one “super-spreader”. Rather, it’s believed that most of these cases were likely individuals who were asymptomatically infected elsewhere. The cases have been linked to multiple cases.
Fourth Turning Accelerating Towards Climax
FOURTH TURNING ACCELERATING TOWARDS CLIMAX
“At some point, America’s short-term Crisis psychology will catch up to the long-term post-Unraveling fundamentals. This might result in a Great Devaluation, a severe drop in the market price of most financial and real assets. This devaluation could be a short but horrific panic, a free-falling price in a market with no buyers. Or it could be a series of downward ratchets linked to political events that sequentially knock the supports out from under the residual popular trust in the system. As assets devalue, trust will further disintegrate, which will cause assets to devalue further, and so on. Every slide in asset prices, employment, and production will give every generation cause to grow more alarmed.” – Strauss & Howe – The Fourth Turning
I’ve been writing articles about the Fourth Turning for over a decade and nothing has happened since its tumultuous onset in 2008, with the global financial collapse, created by the Federal Reserve and their Wall Street co-conspirator owners, that has not followed along the path described by Strauss and Howe in their 1997 book – The Fourth Turning.
Like molten lava bursting forth from a long dormant (80 years) volcano, the core elements of this Fourth Turning continue to flow along channels of distress, long ago built by bad decisions, corrupt politicians and the greed of bankers. The molten ingredients of this Crisis have been the central drivers since 2008 and this second major eruption is flowing along the same route. The core elements are debt, civic decay, and global disorder, just as Strauss & Howe anticipated over two decades ago.
…click on the above link to read the rest of the article…
