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The new era of adjustment has only just begun

A big, gigantic, heart-felt Thank You! to everyone who supported this website and our activities in 2016!

Really. Thank you.

We did a lot of great things in 2016 in terms of reaching new audiences and extending our message into new places.

While I am constantly driven to do more, and achieve more, this is a great time of the year to look back and ask how we did. It bears repeating that Adam and I are a two man shop, with awesome direct support from Jeanine Dargis and Les Pierce (Saxplayer00o1) with the Daily Digest, Jason Wiskerchen on content loading, and a different Jason as moderator. All in all a very small team given what we accomplish, our global reach, and the sheer variety of things that we also accomplish that are largely out-of-sight (and out-of-mind) for most people.

On that last point, Adam recently brought some of those behind-the-scenes efforts to light in the post title Shifting Into Higher Gear. Thank you to everyone that took the time to appreciate our efforts to make the site run faster, better, smoother. We do it all in the interest of serving you better and reaching more people.

Our mission is to create a world worth inheriting, and we do that by educating, informing and activating people to first understand the world’s various problems and predicaments, and then doing something about them.

In 2016, we were very busy spreading the messages of the Three E’s (economy, energy & environment) and being emissaries for the twin ideas that big changes are coming and that we can do something to prepare for them.

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

2016 A Year in Review

December 24, 2016

2016 A Year in Review

“The easiest thing to do on earth is not write.”

~William Goldman, novelist

I never would have believed it—not in a million years—but it happened: the Cubs won the World Series, and The Donald is our new president. Every December, I write a Year in Review¹ that’s first posted on Chris Martenson’s & Adam Taggart’s website Peak Prosperity² and later at Zero Hedge.³ What started as a few thoughts posted to a handful of wingnuts on Doug Noland’s Prudent Bear message board has mutated into a detailed account of the year’s events. Why write this beast? For me, it puts the seemingly disconnected events that pass through my consciousness, soon to be lost forever, into a more organized and durable form. Somebody said I should write a book. I just did. In a nutshell, this is a story of human follies and bizarre events. There are always plenty of those. Let others tell the feel-good stories.

Figure 1. Malcolm McDowell as Alex in A Clockwork Orange.

I try to identify themes that evolve. This year’s theme was obviously defined by the election, which posed a real problem. I struggled to detect the signals through the noise. Many of my favorite analysts from whom I extract wisdom and pinch cool ideas spent the year trying to convince the world that one or more of the presidential candidates was an unspeakable wretch. I was groping for a metaphor to capture our shared experiences, rummaging through Quentin Tarantino scripts and Hieronymus Bosch landscapes for inspiration. “Rise of the Deplorables” was tempting. Then it clicked. The term “clockwork orange” is a Cockney phrase indicating a bizarre incident that appears normal on the surface. The phrase was commandeered as the title of a 1971 dystopian film in which Malcolm McDowell’s character Alex is brainwashed by being forced to watch the most grisly and horrifying of spectacles (Figure 1).

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

The World Is Turning Ugly As 2016 Winds Down

September 17, 2016

The World Is Turning Ugly As 2016 Winds Down

I have to say that the negative reverberations in our current economic and political environment are becoming so strong that it is impossible for people to not feel at least some uneasiness in their gut. I imagine this is the same kind of sensation many felt from 1914 to 1918 during World War I and the terrible birth of communism, or perhaps in the early 1930s at the onset of the Great Depression and the rise of fascism. Some global changes are so disturbing that they send shockwaves through the collective unconscious before they ever hit the mainstream. People know that something is about to happen, even if they cannot yet clearly define it.

At the beginning of August in my article “2016 Will End With Economic Instability And A Trump Presidency” I stated that:

“I believe a softer downturn will begin before the election (the U.S. presidential election) takes place, most likely starting in September. This will give a boost to the Trump campaign, or at least, that is what the polls will likely say. I would also watch for some banking officials and media pundits to blame this downturn on Trump’s rise in the polling data. The narrative will be that just the threat of a Trump presidency is “putting the markets on edge.”

Unfortunately, it would seem so far that this prediction was correct. Currently global markets have crossed into severe volatility with a vengeance after around three months of eerie calm. Why? Well, as I warned in the same article linked above as well as numerous others since the beginning of this year, the Federal Reserve is determined to continue raising interest rates into a recessionary environment as they almost always do, and equities markets addicted to cheap debt cannot tolerate even one additional rate hike from the central bank.

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

War Is Coming And The Global Financial Situation Is A Lot Worse Than You May Think

July 17, 2016

War Is Coming And The Global Financial Situation Is A Lot Worse Than You May Think

On the surface, things seem pretty quiet in mid-July 2016. The biggest news stories are about the speculation surrounding Donald Trump’s choice of running mate, the stock market in the U.S. keeps setting new all-time record highs, and the media seems completely obsessed with Taylor Swift’s love life. But underneath the surface, it is a very different story. As you will see below, the conditions for a “perfect storm” are coming together very rapidly, and the rest of 2016 promises to be much more chaotic than what we have seen so far.

Let’s start with China. On Tuesday, an international tribunal in the Hague ruled against China’s territorial claims in the South China Sea. The Chinese government announced ahead of time that they do not recognize the jurisdiction of the tribunal, and they have absolutely no intention of abiding by the ruling. In fact, China is becoming even more defiant in the aftermath of this ruling. We aren’t hearing much about it in the U.S. media, but according to international news reports Chinese president Xi Jinping has ordered the People’s Liberation Army “to prepare for combat” with the United States if the Obama administration presses China to abandon the islands that they are currently occupying in the South China Sea…

“Chinese president Xi Jinping has reportedly ordered the People’s Liberation Army to prepare for combat,” reports Arirang.com. “U.S.-based Boxun News said Tuesday that the instruction was given in case the United States takes provocative action in the waters once the ruling is made.”

A U.S. aircraft carrier and fighter jets were already sent to the region in anticipation of the ruling, with the Chinese Navy also carrying out exercises near the disputed Paracel islands.

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

Rio Declares State Of “Public Calamity”, Warns Of Total Collapse In Security, Health And Transport

June 18, 2016

Rio Declares State Of “Public Calamity”, Warns Of Total Collapse In Security, Health And Transport

Earlier today, the IAAF announced that Russian track and field athletes would be banned from the Rio Oympics due to allegations of systematic doping. Rune Andersen, who heads the IAAF task force overseeing Russia’s attempts to reform, said that a “deep-seated culture of tolerance, or worse, appears not to be materially changed”. “No athlete will compete in Rio under a Russian flag,” he said.

Perhaps instead of fighting this decision, Putin’s response should be a simple “thanks” because just hours later, and just 49 days before the start of the Olympics, the Rio state government declared a state of “public calamity” (yes, that’s the technical term) warning of a risk of total collapse in public security, health, transport and virtually everything else, because as the local government explained, the financial crisis is preventing it from fulfilling its requirements for the Games.

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juliana barbassa @jbarbassa

‘State of calamity’ decreeded in Rio; the state is broke. #Rio2016 #Brazil

4:56 PM – 17 Jun 2016

In other words, the money is gone… all gone, and as we jokingly predicted some time ago, as a result of the ongoing economic and now political catastrophe in the country, the 2016 Oympics may never even happen in the country gripped by what may be the worst depression in its history. Oh, and then the whole Zika thing.

As Bruce Douglas adds, the Rio state government fears “total collapse in public security, health, education, mobility, education, environment” due to financial crisis, and that Rio de Janeiro “will adopt exceptional necessary measures to rationalize all public services, with the aim of realizing the [Olympic] Games.”

It was not clear what would happen if the rationalization fails. Finally, by declaring a state of public calamity, the state government of Rio de Janeiro aims to get access to federal cash.

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

‘Central banks can do nothing’: Jakobsen

May 19, 2016

‘Central banks can do nothing’: Jakobsen

2016 has seen a popular reaction against zero-bound policies
Political elites are struggling to preserve an unfruitful status quo
‘The world has become elitist in every way’: Jakobsen
Political middle has become crowded, stagnant; new spectrum of ideas needed
Investment in education and research needed; zero rates are a dead end
Saxo chief economist remains ‘very positive’ overall

In April 2015, Saxo Bank chief economist Steen Jakobsen said that zero rates, zero growth, zero productivity, and zero reforms have left a great many countries adrift in a “new nothingness”.

The products of this nothingness, said Jakobsen, include apathy, stagnation and “an economic outlook based more in peoples’ heads than in reality”. On the cultural level, he continued, the widespread lack of dynamism and new ideas has empowered a political class that is “mainly interested in maintaining the status quo”, even as that status quo provides sharply diminishing returns.

US GDP growth, for instance, is hugging the zero line:

Create your own charts with SaxoTraderGO click here to learn more

Source: Federal Reserve Economic Data

A little more than one year on and we remain, in terms of economics and monetary policy at least, profoundly entranced by this combination of zero-bound policies and continual “emergency measures”.

Culturally and politically, however, the past 12 months have demonstrated time and time again that nature abhors a vacuum.

In Europe, for instance, we have the spectacle of the European Union’s second-largest economy voting on whether it wants to leave the union next month. In the United States, the candidacies of Democratic senator Bernie Sanders and Republican front-runner Donald Trump have benefitted enormously from widespread frustration with the current consensus, particularly in the realm of trade where both candidates – one hard left, one populist right – point to a declining US manufacturing sector and a recovery bereft of “breadwinner” jobs as signs that the country has been led astray.

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

Political Change in 2020 or 2016

April 3, 2016

Political Change in 2020 or 2016

QUESTION:

Dear Marty,

We are heading straight into the hurricane, and as you correctly say, there is no way of reversing the trend.

At this point, should Hillary (or Cruz for that matter) win the elections, she would have to face and preside over the coming inevitable crash and burn. This would be the only way for the silent majority to ultimately put a de facto blame on the establishment. The house of cards comes down all at once.

Wouldn’t at this point, from a timing perspective, be more logical that the 2020 elections (also ECM turning point) will be the right time and place for a third party candidate to emerge as we raise up from the ashes? Of course, since the Great Depression produced FDR, there is clearly a risk of a total opposite outcome: more establishment.

—
SB

ANSWER: I think the 2020 target is too late. Keep in mind this was NOT me making a forecast. The computer projected a huge third party (anti-establishment) vote beginning in 2016. By the time we get to 2020, we may be looking at a complete revamp of the monetary system. On January 1, 2017, G20 begins sharing all info on everyone. They are collapsing the world economy and it really looks like things will go nuts in 2018.

Keep in mind that if the Republicans nominate anyone BUT Trump, it will prove that there is no right to vote. We may see a backlash begin and a sharp rise in third party candidates in Congress. By 2018, that looks revolutionary at the Congressional level. So it appears that Trump has the majority of delegates, but if they give it to Cruz or Romney holy hell will be unleashed for it will prove the system is corrupt.

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

2016, The Year Of The Red Monkey: Expect Wild, Unending Volatility

March 14, 2016

2016, The Year Of The Red Monkey: Expect Wild, Unending Volatility

The past 25 years of “growth” and brief recessions may not be a good guide to the next few years.

In the lunar calendar that started February 8, this is the Year of the Red Monkey.

I found this description of the Red Monkey quite apt:

“According to Chinese Five Elements Horoscopes, Monkey contains Metal and Water. Metal is connected to gold. Water is connected to wisdom and danger. Therefore, we will deal with more financial events in the year of the Monkey. Monkey is a smart, naughty, wily and vigilant animal. If you want to have good return for your money investment, then you need to outsmart the Monkey. Metal is also connected to the Wind. That implies the status of events will be changing very quickly. Think twice before you leap when making changes for your finance, career, business relationship and people relationship.”

(Source)

In other words, the financial world will be volatile. And few will have the agility and wile to outsmart the market-monkey.

For those who don’t believe in astrological forecasts, there are plenty of other reasons to anticipate sustained volatility in 2016 that strips certainty and cash from bulls and bear alike.

What’s the Source of Volatility?

Why are global markets now so volatile? The basic answer is as obvious as it is officially verboten: the global growth story is unraveling, and central banks and governments are increasingly desperate to re-ignite stagnating growth.

When solid evidence of flagging trade, sales and profits surfaces, markets drop. When central banks and states talk up monetary and fiscal stimulus, markets leap higher, as seven years of stimulus programs have rewarded those who “buy the dips.”

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

Trump Rallies Reveal Increased Tensions Among Americans As This Nation Plunges Toward Civil Unrest

March 14, 2016

Trump Rallies Reveal Increased Tensions Among Americans As This Nation Plunges Toward Civil Unrest

America is coming apart at the seams, and Trump rallies have become the latest flashpoint for the rising tide of civil unrest that is sweeping the nation. For years, I have been writing about the increasing levels of anger and frustration in this country, but now they are reaching a fever pitch. And rather than channeling all of our anger and frustration into solving our problems, we have allowed ourselves to become deeply divided and many Americans seem to be taking glee in fighting with one another. Instead of learning to hate one another, we should be learning how to love one another. Unfortunately, America has chosen another path, and 2016 is very rapidly starting to look very much like the chaotic political year of 1968. No matter how the rest of this election season plays out, it appears that we have entered a time of violence, chaos, civil unrest and greatly increased tension among Americans.

On Friday, thousands of radical leftists showed up at a planned Trump rally at the University of Illinois at Chicago with the express purpose of disrupting it. Fortunately Donald Trump cancelled the rally, because there was a very real possibility that mass violence could have erupted. The following description of what happened comes from Wikipedia…

On March 11, 2016, the Donald Trump presidential campaign canceled a planned rally at the University of Illinois at Chicago (UIC), in Chicago, Illinois, citing “growing safety concerns” due to the presence of thousands of protesters in and outside of his rally^[3]. Thousands of anti-Trump demonstrators responding to civic leaders’ and social media calls to shut the rally down had gathered outside the arena, and several hundred more filled seating areas within the UIC Pavilion, where the rally was to take place.

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

This Time Is Different!

February 14, 2016

This Time Is Different!

Experts Agree: It Is Not 2008

If someone were to ask us what year it was, we would probably politely answer that it was 2016, curious to find out whether the inquirer was a) very confused, b) had only recently awoken from a coma and was still unsure of his when-abouts, or c) was a time traveler who got temporarily lost.

In the unlikely case that we should find ourselves unable to remember the year with sufficient precision to ensure a reliable answer, we’d probably consult a calendar. We recently found out that a great many people actually seem to be uncertain about what year it is. Or at least many mainstream media appear to think so, as they have launched an intense awareness campaign.

Specifically, numerous people seem to think it is still 2008. Wish that it were so – we’d be eight years younger. It all started on 24 August 2015, when two publications apparently discovered independently of each other that is was no longer 2008 and decided that this information should be urgently imparted to the rest of humanity. It all started with marketplace.org admonishing its readers to engage in mnemonic exercises so as not to forget:

1-Marketplace-dot-org-Aug-24-2015 If you repeat it often enough, remembering it will eventually become second nature… Photo via marketplace.org

On the very same day, NPR noted that a number of economists agreed: it was indeed no longer 2008. Incidentally, this was actually a correct estimate, as it was clearly 2015 at the time. It was presumably good though that some reassurance on the point was provided by experts – that is apparently helpful with averting panic attacks:

2-NPR Aug 24 2015 Lay your calendar-related phobias to rest pilgrims!

However, these efforts were evidently insufficient: general confusion about the precise year we are in must have promptly resurfaced in early 2016. In the interest of keeping the general population in the date-loop, USA Todayhad the following information on its January 8 front page:

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

The IEA’s Oil Production Predictions for 2016

February 4, 2016

The IEA’s Oil Production Predictions for 2016

The IEA Oil Market Report, full issue, is now available to the public. Some interesting observations:

Non-OPEC oil supplies are nevertheless seen sharply lower in December. Overall supplies are estimated to have slipped by more than 0.6 mb/d from the month prior, to 57.4 mb/d. A seasonal decline in biofuel production, largely due to the Brazilian sugar cane harvest, of nearly 0.4 mb/d was the largest contributor to December’s drop. Production in Vietnam, Kazakhstan, Azerbaijan and the US was also seen easing from both November’s level and compared with a year earlier. Persistently low production in Mexico and Yemen were other contributors to the year-on-year decline.

As such, total non-OPEC liquids output slipped below the year earlier level for the first time since September 2012. A production surge in December 2014 inflates the annual decline rate, but the drop is nevertheless significant should these estimates be confirmed by firm data. Already in November, growth in non-OPEC supply had slipped to 640 kb/d, from as much as 2.9 mb/d at the end of 2014, and 2.4 mb/d for 2014 as a whole. For 2015, supplies look likely to post an increase of 1.4 mb/d for the year, before contracting by nearly 0.6 mb/d in 2016. A prolonged period of oil at sub-$30/bbl puts additional volumes at risk of shut in as realised prices fall close to operating costs for some producers.

IEA Forecast 2

The IEA has every month of 2016 Non-OPEC production below the year over year 2015 production.

IEA Non-OPEC YoY

For the past four years, North America has carried the load as far as the increase in Non-OPEC production is concerned. Now the IEA believes North America will suffer the lions share of the decline in 2016.

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

Why We Won’t Have a “Lehman Moment” in the 2016 Crash

February 3, 2016

Why We Won’t Have a “Lehman Moment” in the 2016 Crash

What the central banks cannot do is create productive places to invest the credit they’ve generated in such excess, or force qualified borrowers to swallow more unproductive debt.

One way to lose a war is to focus on preparing to fight the last war. Preparing to fight the last war is a characteristic of losing generals, militaries and nations. The same is true of finance and economies.

General Grant’s difficulties in breaking the trench warfare around Petersburg, VA in the last year of the American Civil War (1864 to early 1865) telegraphed the future of trench warfare to astute observers. Few took heed of the lessons of the “first modern war,” and many of the same strategies of 1864 (digging a tunnel under enemy lines and filling the tunnel with explosives to blow a hole through their defenses, for example) were repeated in the Great War of 1914-1918 fifty years later.

When a weapon system capable of breaking the stalemate emerged–the tank–its potential for massed attack escaped planners on both sides, and the new weapon was squandered in piecemeal assaults.

“The last war” in 2008-09 was a battle to save heavily leveraged centralized financial institutions from default and liquidation–commercial and investment banks, insurance companies, etc. The concentration of capital, leverage and risk in these behemoths rendered the entire system vulnerable to their collapse (or so we were told).

Saving imploding private-sector banks was no problem for central banks that could create $1 trillion in new money with the push of a button and offer essentially unlimited lines of credit to banks facing a liquidity crunch.

But the current financial meltdown is not like the last war. Central banks are ready to extend unlimited credit again to private-sector financial institutions, but this time around, the problem won’t be a lack of liquidity.

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

Retail Apocalypse: 2016 Brings Empty Shelves And Store Closings All Across America

February 2, 2016

Retail Apocalypse: 2016 Brings Empty Shelves And Store Closings All Across America

Major retailers in the United States are shutting down hundreds of stores, and shoppers are reporting alarmingly bare shelves in many retail locations that are still open all over the country. It appears that the retail apocalypse that made so many headlines in 2015 has gone to an entirely new level as we enter 2016. As economic activity slows down and Internet retailers capture more of the market, brick and mortar retailers are cutting their losses. This is especially true in areas that are on the lower portion of the income scale. In impoverished urban centers all over the nation, it is not uncommon to find entire malls that have now been completely abandoned. It has been estimated that there is about a billion square feet of retail space sitting empty in this country, and this crisis is only going to get worse as the retail apocalypse accelerates.

We always get a wave of store closings after the holiday shopping season, but this year has been particularly active. The following are just a few of the big retailers that have already made major announcements…

-Wal-Mart is closing 269 stores, including 154 inside the United States.

-K-Mart is closing down more than two dozen stores over the next several months.

-J.C. Penney will be permanently shutting down 47 more stores after closing a total of 40 stores in 2015.

-Macy’s has decided that it needs to shutter 36 stores and lay off approximately 2,500 employees.

-The Gap is in the process of closing 175 stores in North America.

-Aeropostale is in the process of closing 84 stores all across America.

-Finish Line has announced that 150 stores will be shutting down over the next few years.

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

2016 Market Meltdown: We Have Never Seen A Year Start Quite Like This…

January 22, 2016

2016 Market Meltdown: We Have Never Seen A Year Start Quite Like This…

We are about three weeks into 2016, and we are witnessing things that we have never seen before. There were two emergency market shutdowns in China within the first four trading days of this year, the Dow Jones Industrial Average has never lost this many points within the first three weeks, and just yesterday we learned that global stocks had officially entered bear market territory. Overall, more than 15 trillion dollars of global stock market wealth has been wiped out since last June. And of course the markets are simply playing catch up with global economic reality. The Baltic Dry Index just hit another new all-time record low today, Wal-Mart has announced that they are shutting down 269 stores, and initial jobless claims in the U.S. just surged to their highest level in six months. So if things are this bad already, what will the rest of 2016 bring?

The Dow was up just a little bit on Thursday thankfully, but even with that gain we are still in unprecedented territory. According to CNBC, we have never seen a tougher start to the year for the Dow than we have in 2016…

The Dow Jones industrial average, which was created in 1896, has never begun a year with 12 worse trading days. Through Wednesday’s close, the Dow has fallen 9.5 percent. Even including the 1.3 percent gains as of noon Thursday, the Dow is still down nearly 8 percent in 2016.

But even with the carnage that we have seen so far, stocks are still wildly overpriced compared to historical averages. In order for stocks to no longer be in a “bubble”, they will still need to decline by about another one-third. The following comes from MarketWatch…

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

Energy round-up: six predictions for 2016

January 14, 2016

Energy round-up: six predictions for 2016

Photo credit: James Russell

2015 proved to be an interesting year for energy and climate issues both globally and in the UK. Will 2016 hold more of the same?

Forecasting is a dangerous business, but here are six predictions you should keep an eye on.

1) The showdown on oil prices between Saudi Arabia and the US will intensify, and the Saudis will eventually break.

It looks like oil and gas prices are going to remain low for the foreseeable future, panicking both the oil industry in Saudi Arabia and the shale gas industry in the US.

The big question is whether Saudi Arabia can keep production high and prices low long enough to bankrupt enough of the American shale industry. The answer may come by the end of 2016 and several factors point to the Saudis breaking first.

For one, despite losses for the oil industry, low oil prices benefit many sectors in the US, especially as consumers now have more spending money in their pockets. However for Saudi Arabia, an oil-dependent economy, low prices are a clear loser.

There’s also the geopolitical dimension that will make worse Saudi Arabia’s financial problems. Saudi Arabia spends more on military spending as a percentage of GDP (11%) than any other country, is currently increasing this spending at a faster rate (21%) than any other country, and has a showdown with Iran on the horizon. To most observers, the public finances in Saudi Arabia are headed for disaster if nothing changes.

2) Renewables will set new records.

Despite low fossil fuel prices (including coal), wind and solar will set new records in 2016 for installations and generation on every continent. This is a pretty safe bet. For many markets, including the important US market, the year-to-year change in 2016 may set records too.

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

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