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End of the Line! China and Germany Look Ready to Pop
End of the Line! China and Germany Look Ready to Pop
The U.S. stock market has finally hit a speed bump after more than six years of a Fed- and QE-driven rally. The S&P 500 is up 232% since March of 2009 despite this unprecedented stimulus in the feeblest economic recovery in history.
But since late December 2014, U.S. stocks have gone nowhere as investors face some growing realities.
GDP, retail sales, production and exports are slowing.
The dollar’s sharp rise in recent years has crushed global exports.
Long term interest rates are rising consistently… what I call the beginning of the end of stimulus policies designed to keep rates low forever.
Meanwhile, in just six months Germany saw its key stock market, the DAX, rise nearly 50% from mid-October into early April.
Germany’s bubble has shot up 245% since March 2009 — greater than the U.S., despite its slower economy.
It won’t last!
As I’ve explained many times, starting last year Germany has the worst demographic trends of any country in the world lasting through 2022. It’s even worse than Japan’s demographic cliff in the 1990s!
There’s one reason Germany has held up as well as it has in the last year: the euro.
When the euro falls, German exports soar. Between April 2014 and March 2015 the euro fell 25%. Its long-term peak was in July 2008 at 1.60 dollars. It hit 1.05 in March — 34.5% lower!
Consider that Germany exports 50% of its GDP. That’s one of the highest ratios in the world.
…click on the above link to read the rest of the article…
“Bernanke & Greenspan Have Destroyed America” Schiff & Maloney Warn “People Don’t Realize What Is Coming”
“Bernanke & Greenspan Have Destroyed America” Schiff & Maloney Warn “People Don’t Realize What Is Coming”
Ali and Frazier, Laurel and Hardy, Mayweather and Pacquiao, Liesman and Santelli, and now Schiff and Maloney. Peter and Mike join clash of the titan-like to discuss their investment strategies and expose the charts the government doesn’t want you to seeas “people like Bernanke are taken seriously still and the people that did predict [the crisis] are dismissed as lunatics half the time.” The wide-reaching conversation covers everything from gold and stocks to The Fed and The Dollar – Bernanke “took the coward’s way out because all he did was exacerbate the problems to postpone the day of reckoning.” The air is coming out of the bubble, they warn, “Bernanke and Greenspan have absolutely destroyed America. People don’t realize what is coming…”
Full transcript below:
Mike: I was in Puerto Rico a little while back and Peter Schiff invited me over to his house and we were just amazed at how we are exactly on the same page when it comes to everything economically. And so he just made a trip out to California near my offices and we decided we’d get together and discuss some of this stuff. So on your travels Peter lately you were just at a show you were speaking. Where were you at?
Peter: I was in Las Vegas. It’s great to see you again Mike. I was speaking to a very main stream audience of hedge fund managers at an annual conference there. And what was very interesting is even though the audience was, as I said, very main stream, and I was on a panel with a lot of very high profile, main stream individuals, the only person that really got applause was me.
…click on the above link to read the rest of the article or view the interview…
The Economic Wall Dead Ahead Is Hidden Behind False Signs Of “Recovery”
The Economic Wall Dead Ahead Is Hidden Behind False Signs Of “Recovery”
This morning I had left the TV mistakenly tuned to CNBC with the sound on—-and unavoidably caught another bullish strategist jawing about the US economy’s awesome strength. This one was peddling as exhibit #1 the recent surge in C&I loans, arguing that it is a sure sign that business is gearing up for a post-winter boom.
It turns out that the $1.8 trillion of C&I loans outstanding at the end of February, in fact, were up by 14% since January 2014. But then again, when are they going to find a guest which wasn’t born yesterday. That is to say, an analyst who is capable of looking at the historic context in which the latest data points are anchored, the quality of the numbers at issue and the deeper implications of the indicators.
In this case, like most of the blizzard of bullish factoids spewed out each day on bubble vision, the purported business lending boom is not all that. The upward blip during the last 13 months was from a level which had first been reached way back in October 2008. In other words, it had taken 63 months to dig out of the deep crater that had resulted from the liquidation of the mountains of bad debt that existed on the eve of the financial crisis.
Next consider the quality and content of the purported “surge” in business lending. The skunk in the woodpile is patently obvious in the graph below.
The “surge” is almost entirely due to financial engineering and LBOs. In fact, virtually all of the growth in business lending during the past two years is due to a dramatic rise in leveraged loans from the deal business. Thus, overall C&I loans are up a modest $220 billion since October 2008, but 100% of that gain is accounted for by the 37% rise in leveraged loans outstanding since 2008.
…click on the above link to read the rest of the article…
Income, Education and Inequality in the “Recovery”: Prepare to be Surprised
Income, Education and Inequality in the “Recovery”: Prepare to be Surprised
Note to the higher education industry: issuing diplomas doesn’t magically create new jobs in the real world.
By virtually any standard, wealth inequality has soared to historic levels in the six years of “recovery” since the Great Recession of 2008-09. Economist Emmanuel Saez, who has long collaborated with Thomas Piketty, described the recent extremes of wealth inequality in a recent paper Striking it Richer: The Evolution of Top Incomes in the United States, which provides an in-depth look at the widening gulf between the top 1% and the bottom 90% from 2009 to 2012.
Here is a chart of the top 10% share of income, based on their research (the note in red marking the beginning of financialization in 1982 is my own):
As author David Cay Johnston noted in an insightful review of Piketty’s book Capital in the Twenty-First Century, Trickle-Up economics: “The top 1 percent of Americans raked in 95 cents out of every dollar of increased income from 2009, when the Great Recession officially ended, through 2012. Almost a third of the entire national increase went to just 16,000 households, the top 1 percent of the top 1 percent, Piketty and Saez’s analysis of IRS data
…click on the above link to read the rest of the article…
The End Of The World Of Finance As We Know It
The End Of The World Of Finance As We Know It
I’ve said before, and quite a while ago too, – more than once-, that the world of investing as we’ve come to know it is over. It’s still as true as it was then, and I can only hope that more people today understand why it is true, and why I said it in the past. The basic underlying argument then and now is that financial markets have been distorted to such an extent by the activities, the interventions, of central banks – and governments -, that they can no longer function, period.
What we’ve seen since 2008 – not that things were fine and rosy before that – is that all ‘private’ losses were taken over by the public sector, just so the private sector didn’t have to fess up to what it lost, and the appearance of a functioning market system could be upheld. And those who organized this charade were dead on in thinking that as long as Dow and S&P numbers would look good, and they said ‘recovery’ in the media often enough, people would believe there still was a functioning financial marketplace. And they did. But those days are over. Or at least, they soon will be.
What I mean by that is that the functioning marketplace is long gone, and only now people’s beliefs, too, about it are changing, being forced to change, and soon quite radically. The entire idea that ruled the world of finance and kept it -seemingly – standing upright is crumbling fast. And we’re going to have to find a way to deal with that. As of today, we have none, we come up zero. The overriding narrative – which overrides every other thought – is that we’re on our way back to recovery. And then we’ll get back to becoming ever richer, live in ever bigger homes and drive ever bigger, smarter and faster cars. Or something in that vein.
…click on the above link to read the rest of the article…
Good Economic News, but Democrats Differ on Whether to Take Credit – NYTimes.com
Good Economic News, but Democrats Differ on Whether to Take Credit – NYTimes.com.
WASHINGTON — Democrats would like some credit for the run of good economic news. Yet the better those reports are, the more divided the party has become over how — even whether — to take any.
In one camp are Democrats who argue that if they do not take some credit, they will continue to receive little. Others counter that boasting would backfire, infuriating millions of Americans who do not see the economy improving for them or their children.
Many, including President Obama, fall in the middle: still seeking to strike some balance, more than five years after the recovery officially began, between extolling progress and recognizing the pain that lingers.
The debate simmered behind the scenes for months leading to the midterm elections. It intensified afterward, as the defeated party scrambled for a new direction, and then again when the report of 321,000 new jobs in November confirmed that after 57 straight months of growth, employment gains were at their highest levels since the 1990s.
…click on the above link to read the rest of the article…
oftwominds-Charles Hugh Smith: Which Cities/States Will Be the First to Default When the Economy Rolls Over?
What happens to local governments when the economy rolls over?
Though we’re constantly reassured the “recovery” that’s stumbled for five years has years of strong growth ahead, history suggests the “recovery” is due to roll over. Few recoveries last longer than 5 or 6 years, and the business cycle is graying fast: subprime auto loans are not exactly the foundation of “strong growth.”
Why Chinese Growth Forecasts Just Crashed To A Paltry 3.9% – And Are Going Even Lower – In One | ZeroHedge
Up until a few years ago, conventional wisdom was that China would grow at nearly double digits as long as the eye could see. Then, however, something happened, and China’s 9% growth became 8%, then 7% and even lower, as suddenly the Politburo made it quite clear China would not chase growth at any cost, especially when the cost is trillions in bad debt and other NPLs, as we have explained time and again. The collapse in Chinese growth expectations is shown best on the following formerly hockeysticking chart of IMF’s revised Chinese growth projections which has completely collapsed in the past few years.
…click on the link above to read the rest of the article…
