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My year in review — looking back, looking ahead

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Over the last few years, the sense that world events are accelerating in a way that is increasingly difficult to keep up with has become tangible.

At talks I often ask my audiences the same question. ‘Have you experienced a sense of acceleration in world events in recent years? That things are speeding up, become more unpredictable?’

Overwhelmingly the answer is yes.

The sense of acceleration is not an illusion. On the one hand, it’s an artifact of the transformation of the global information architecture, where information on world events is now transmitted instantaneously around the world.

On the other, it’s a direct consequence of the fact that world events are increasingly interconnected in complex ways that we are not used to grappling with. But like it or not, understand it or not, that complexity isn’t going away.

The underlying driver of the sense of acceleration is that we stand at the beginning of the end. The world as we know it has started to come to an end, and with it a new world is being born. Exactly what that world will look like is unclear.

What we know is that the old world, and all its old, outmoded paradigms, are gradually grinding to a halt.

Neoliberal finance capitalism as we know it faces the resurgence of crisis, the inevitability of slow growth, declining productivity, and the probability of another global collapse even worse than that which occurred ten year ago.

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

Forecast 2019: Ding Ding ! Margin Call USA

January 1, 2019

Forecast 2019: Ding Ding ! Margin Call USA

Welcome to the American hall of mirrors… and mind the broken glass all over the floor. That’s Nature’s way of saying the country has run out room to punk itself. 2018 was the consolidation of bad faith in everything we do: politics, the news media, economics & finance, show biz, regular biz, jurisprudence, medicine, education, and relations between men and women — the year of peak dishonesty and self-deception. Of course, the trouble with dishonesty is that it doesn’t comport with Reality, and Reality being Mother Nature’s husband, bats in the cleanup position. Entering 2019, the bases are loaded with delusions, misdirections, and turpitudes. I shall get right to it without further throat-clearing.

Trumpology

The nation’s focus remains clamped to the mercurial character in the White House. If you subscribe to Strauss and Howe’s theories about The Fourth Turning, then you might see president Donald J. Trump playing the archetypal role they call “The Gray Champion,” an elder figure of the “transcendental” Boomer generation sent by fate to rescue a floundering society at a grave moment in the seasons of history. Yes, I know: we might have been better off calling Ghostbusters. A cardinal precept at this blog is that fate is a trickster. You order a Gray Champion and room service sends up a Golden Golem of Greatness.

To put it mildly, Mr. Trump has failed to charm at least half the country. They are embarrassed at his physical presence: his lumbering gait, like unto a behemoth land mammal of the Oligocene; that swaying bay window stomach half-concealed by the flaps of his suit-jacket and bisected by the oddly elongated necktie; the pained smile he puts on for the photo-ops; his man-spreading when seated with the world’s poohbahs, and that strange confection of sculpted hair, like the spun sugar on a Croquembouche, or the pouf on some horrifying plastic dashboard figurine.

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

Why Oil Prices Rose And Crashed In 2018

December 31, 2018

Why Oil Prices Rose And Crashed In 2018

Last week the price of West Texas Intermediate (WTI) crude oil, the primary U.S. benchmark, fell to a 17-month low. The price, $45.88/bbl, marks a stunning fall from a price that closed at $76.40/bbl on October 3rd.

So, what has caused this roller coaster ride, and where are prices headed as we head into 2019?

Let’s first review how to we got to sub-$50 oil as we near the end of 2018. That’s important, because I think it strongly influences what is likely to happen in 2019.

Why Oil Prices Rose in 2018

In my 2018 predictions, which I will grade in a couple of weeks, I projected that oil prices would reach $70/bbl in 2018. The price of WTI, the U.S. benchmark, rose to that level in May and remained there for most of the summer.

There were several reasons I expected oil prices to rise. The threat of sanctions on Iran, global demand that continues to rise (despite increasing predictions of the demise of demand growth), and the deteriorating situation in Venezuela were just three of the reasons I predicted higher oil prices.

But if you had asked me in mid-summer what I expected for the rest of 2018, I would not have anticipated an oil price collapse. I largely attribute this decline to an unexpected variable in the oil markets that I call “The Trump Effect”.

The Trump Effect

President Trump has done some good things for the oil industry, but he has a blind spot when it comes to oil prices. He has been vocal about the need to keep oil prices low, even as the U.S. becomes an increasingly important global oil producer.

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

2018 in Review: Pension Problems, Hawkish Rate Hikes, and Piles of Debt

December 31, 2018

2018 review

2018 in Review: Pension Problems, Hawkish Rate Hikes, and Piles of Debt

A lot happened in 2018, and while it would be a challenge to cover them all, there are three big trends that appear to have defined this year economically. And, each of them had an impact on retirees, investors, and the overall U.S. economic picture.

Here’s a review of 2018 in light of each of these three, impactful trends…

Corporate and Public Pensions Are Sinking Fast

On a local level, a public pension “Hurricane Harvey” hit a small town in Illinois. The city that once had over 20% unemployment, and property tax rates over 5%, had a major pension shortfall. Ultimately, this small town didn’t know how to make ends meet.

But the pension problem isn’t limited to this one small corner in the U.S.

New Jersey has its own pension conundrum too. Their plan back in April was to tax everything and raise enough revenue to cover their shortfall. This month, it appears they aren’t doing too well, according to a Volcker Alliance study:

It’s a math test that New Jersey, Illinois, and even Texas are nearly failing: How to pay for billions of dollars in unfunded liabilities for public-employee pensions and retiree health care.

All in all, states topped $1.4 trillion in underfunded pensions, according to the most recent data available. The story got even more dire worldwide when Sovereign Man reported a pension savings gap approaching $400 trillion. This amount is more than 20 of the world’s largest economies.

This is indeed a crisis. And it could become a crisis for everyone else, whether you have a public pension or not. Especially, if services get cut or tax dollars for a federal bailout are needed. Plus, if tax dollars are needed to rescue failing pensions, there are a whole host of other consequences for lawmakers following that bailout “script.”

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

2018 Was a Year of Deadly Climate Disasters and an ‘Ear Splitting Wake-Up Call’

December 28, 2018

2018 Was a Year of Deadly Climate Disasters and an ‘Ear Splitting Wake-Up Call’

2018 is set to rank as the fourth warmest year on record — and the fourth year in a row reflecting a full degree Celsius (1.8° Fahrenheit) temperature rise from the late 1800s, climate scientists say.

This was the year that introduced us to fire tornadoes, bomb cyclones, and, in Death Valley, a five day streak of 125°F temperatures, part of the hottest month ever documented at a U.S. weather station.

2018 also brought the world’s highest-ever low temperature, as nighttime temperatures fell to a sizzling 109°F in Quiryat, Oman, on June 28, smashing a 2011 record-high low.

A startling 95 percent of the oldest and thickest Arctic sea ice is now gone — and we’re losing Arctic ice at a rate of 14,000 tons per second, according to recent research, three times as fast as roughly three decades ago.

It was a year notable both for its overwhelming, climate-fueled impacts as well as its gut-wrenching predictions for what climate change still has in store for us if we fail to act. So much happened, frankly, that it’s been hard to keep it all straight.

Stark Warnings

Actively eroding coastal permafrost bluff on Barter Island, located on the northern coast of Alaska, July 3, 2018. Credit: Shawn Harrison, U.S. Geological Survey, public domain

The year delivered increasingly powerful warnings from scientists and international agencies about the need to shift away from fossil fuels and slash greenhouse gas emissions. In the U.S., 2018 saw a presidential administration and Republican-controlled Congress packed with politicians and administrators who refuse to recognize the scientific consensus that the climate is changing because of fossil fuel pollution and other human activities.

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

David Collum: Everything That Mattered In 2018

December 27, 2018

David Collum: Everything That Mattered In 2018

And what lies ahead for 2019

The only thing nearly as enlightening as reading David Collum’s epic Year In Review is listening to him and Chris Martenson riff about its highlights.

Strap in, grab some eggnog, and listen to this year’s recap:

Everyone thinks the markets are now correcting. But compared to the size of the correction I think both you and I expect, this is just a drop in the bucket. This is merely the vibrating puddle in Jurassic Park. This is not the big one.

What’s amazing is this recent romp, which has lasted now almost 10 years, is the only gigantic bubble that I’m aware of in which the storyline behind it is just complete garbage.

Every other bubble, like the Tech bubble — well, tech is amazing. The 1920’s bubble — wow, we just invented electric power and cars and planes. There’s always a great, great story.

This particular bubble in which we have had for 10 years is central banks are going to print money to cover our backs.

That’s the stupidest Goddam plotline I can ever imagine.

Click the play button below to listen to Chris’ interview with David Collum (87m:25s).

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TRANSCRIPT

Chris Martenson: Welcome, ,everyone to this Peak Prosperity podcast. I am your host, Chris Martenson. It is December 19th, 2018. Hey, listen, we are here today talking with Dave Collum about his year in review and is continuing our annual tradition. Listen, it’s the best year in review in the business. And it’s, listen, in order to know where we’re going, we’ve got to figure out what just happened. What better than a gigantic romp through where we have just been?

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

2018 Year in Review: Part 2

December 25, 2018

2018 Year in Review: Part 2

And then things got even weirder…

If you’ve not yet read Part 1, click here to do so. The whole enchilada can be downloaded as a single PDF hereor viewed in parts via the hot-linked contents as follows:

Contents

Part 2

Human Achievement

“Opportunities don’t happen; you create them.”

~Chris Grosser

We are now transitioning from economics and markets to the political and social events of 2018. As noted at the outset, I have over a hundred pages of quotes, notes, and anecdotes about Trump, Russian collusion, and the nefarious activities going on in the Deep State. It has grown progressively harder to wrap my brain around what I am actually witnessing. I can no longer write a chapter or two. I may be able to write a book, but certainly not in the months of November or December. It is what it is. I have focused on what catches my eye and what is achievable.

Random topics that come across my field of view that I capture are loosely defined as “Human Achievement”. Who could forget the heroics in Thailand as cave divers saved the Thai soccer team?^{ref 394} Buddhist teachings by their coach helped them cope with stress and lower their oxygen intake for two weeks. Two heroic cave divers found them.^{ref 395} Divers from around the world suffering from toxic masculinity—no pussy hats or man buns on those guys—pulled them out. Meanwhile, Elon Musk was show boating with a useless submarine and calling one of the heroes a pedophile^{ref 396} and then gets sued.^{ref 397}

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

2018 Year in Review

December 22, 2018

2018 Year in Review

The year everything changed

Every year, friend-of-the-site David Collum writes a detailed “Year in Review” synopsis full of keen perspective and plenty of wit. This year’s is no exception. As with past years, he has graciously selected PeakProsperity.com as the site where it will be published in full. It’s quite longer than our usual posts, but worth the time to read in full. A downloadable pdf of the full article is available here, for those who prefer to do their power-reading offline. — cheers, Adam

David B. Collum
Betty R. Miller Professor of Chemistry and Chemical Biology – Cornell University
Email: dbc6@cornell.edu
Twitter: @DavidBCollum

“Dave: You are roundly tolerated.”

~Danielle Dimartino Booth, former Fed advisor and founder of Quill Intelligence

Introduction

Every December, I write a Year in Review^{ref 1} that’s first posted on Chris Martenson & Adam Taggart’s website Peak Prosperity^{ref 2} and later at ZeroHedge.^{ref 3} This is my tenth, although informal versions go back further. It always presents a host of challenging questions like, “Why the hell do I do this?” Is it because I am deeply conflicted for being a misogynist with sexual contempt—both products of the systemic normalization of toxic masculinity perpetuated by an oppressively patriarchal societal structure? No. That’s just crazy talk. More likely, narcissism and need for e-permanence deeply buried in my lizard brain demands surges of dopamine, the neurotransmitter that drives kings to conquer new lands, Jeff Bezos to make even more money, and Harvey Weinstein to do whatever that perv does. The readership has held up so far. Larry Summers said he “finished the first half.” Even as a fib that’s a dopamine cha-ching.

“If you think you are too small to make an impact, try spending the night in a room with a mosquito.”

~African proverb

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

11 Signs That The U.S. Economy Is Starting To Slow Down Dramatically

November 14, 2018

11 Signs That The U.S. Economy Is Starting To Slow Down Dramatically

The pace at which things are changing is shocking the experts. Just a few months ago, many of the experts were still talking about how the U.S. economy was “booming”, but since then a major shift has taken place. Most of the headlines have been about the huge stock market declines that we have been witnessing, but things have not been going well for the real economy either. Home sales are way down, auto sales are plummeting, the retail apocalypse is escalating, the middle class continues to shrink and economic optimism is rapidly evaporating. We haven’t seen anything like this since 2008, and many believe that the economic downturn that is now upon us will ultimately be even worse than what we experienced a decade ago. The following are 11 signs that the U.S. economy is starting to slow down dramatically…

#1 When economic activity is rising, demand for oil increases, and oil prices tend to go up. But when economic activity is slowing down, demand for oil diminishes, and oil prices tend to go down. That is why what is happening to the price of oil right now is so alarming…

US oil prices plummeted 7% to a one-year low of $55.69 a barrel on Tuesday. It was crude’s worst day since September 2015.

The losses in the oil world have been staggering as worries deepen about excess supply. Crude is down 12 straight days, the longest losing streak since futures trading began in March 1983.

#2 One new poll has found that only 13 percent of Americans plan to buy a home in the next year. That number has fallen for three quarters in a row, and it is now down by almost half over the last twelve months.

#3 As the market dries up, the inventory of unsold homes is absolutely soaringnationwide…

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

Stock Market Crash! The Dow Has Now Plunged 2,368 Points From The Peak Of The Market

October 25, 2018

Stock Market Crash! The Dow Has Now Plunged 2,368 Points From The Peak Of The Market

The level of panic that we witnessed on Wall Street on Wednesday was breathtaking. After a promising start to the day, the Dow Jones Industrial Average started plunging, and at the close it was down another 608 points. Since peaking at 26,951.81 on October 3rd, the Dow has now fallen 2,368 points, and all of the gains for 2018 have been completely wiped out. But things are even worse when we look at the Nasdaq. The percentage decline for the Nasdaq almost doubled the Dow’s stunning plunge on Wednesday, and it has now officially entered correction territory. To say that it was a “bloodbath” for tech stocks on Wednesday would be a major understatement. Several big name tech stocks were in free fall mode as panic swept through the marketplace like wildfire. As I noted the other day, October 2018 looks a whole lot like October 2008, and many believe that the worst is yet to come.

But in the short-term we should see some sort of bounce once the current wave of panic selling is exhausted. During every major stock market crash in our history there have been days when the stock market has absolutely soared, and this crash will not be any exception.

If we do see a bounce on either Thursday or Friday, please don’t assume that the crash is over. Most key technical levels have already been breached, and even a small piece of bad news can send stocks plunging once again.

On Wednesday there really wasn’t anything too unusual that happened, but stocks cratered anyway. Here is a summary of the carnage…

-The Dow Jones Industrial Average plummeted 608 points on Wednesday.

-The Dow is now down 7.1 percent for the month of October.

-The S&P 500 has now fallen for 13 of the last 15 trading days.

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

The world in 2018 – Part Four

March 28, 2018

The world in 2018 – Part Four

In the modern world, our perceptions of reality are largely shaped by economic and financial considerations, and our policy conversations are largely built around intellectual categories and evaluative criteria that pertain to the economics discipline. Yet a long-term view shows that ‘The world in 2018’ is in a significantly different place than what economists typically claim, and than what many of us want to believe.

We human beings build our perception of our personal and collective reality on a number of objective and subjective factors, which vary significantly between individuals and societies, as well as across time and space. However, for a majority of people in the modern world this perception tends to be mostly based on economic and financial considerations: the way we, individually and collectively, at any given moment in time, perceive our material and financial situation and prospects, and our material and financial well-being (absolute and relative), typically dominates our overall perception of our personal and collective trajectory and situation. It also influences the way we think about the other elements that contribute to shaping our worldview: when our perception of our material and financial conditions and perspectives is positive, it tends to foster our individual and collective confidence and security, which influences our views on other aspects of our lives and on our ability to address the challenges we face; when this perception gets more negative, on the other hand, it tends to make us insecure about our ability to deal with issues in other aspects of our individual and collective lives, and can in some cases hamper our ability to address them successfully.

The central role of economic and financial conditions in shaping our perception of reality has long been understood by policy makers the world over, who constantly try to influence the way these conditions are viewed and represented in society. It has also, of course, led them to seek advice from economists to find ways of improving material and financial well-being in their jurisdictions. With the development of economic science over the last century, economists have gained increasing sway over policy-making in industrialised as well as industrialising nations, and economics has become – by far – the most politically influential social science. This influence has only grown in recent decades as the modern economic system was becoming more complex and economic growth was becoming more difficult to achieve. Since the 1980s, economists have largely influenced the design of public policies in many Western countries, pushing in particular ‘neoliberal’ reforms that have increased reliance on market mechanisms and fostered the deregulation of financial markets, the privatisation of parts of the public sector, the liberalisation of trade and the quest for ever-growing economic ‘efficiency’ through faster and faster ways of producing and consuming more and more goods and services.

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

The Stock Market Falls Another 724 Points! What In The World Is Happening On Wall Street?

March 23, 2018

The Stock Market Falls Another 724 Points! What In The World Is Happening On Wall Street?

We just witnessed the 5th largest single day stock market crash in U.S. history. On Thursday the Dow Jones Industrial Average plunged 724 points, and many believe that this is just the beginning of another huge wave down for stock prices. After this latest dramatic decline, the Dow is now down 3.1 percent so far in 2018, and overall it is down 9.99 percent from the all-time high in January. A 10 percent decline is officially considered to be “correction” territory, and that means that we are just about there.

So why are stock prices falling so much? Well, USA Today is blaming the potential for a trade war with China, the latest Facebook scandal and “the impact of rising interest rates on the economy”…

U.S. stocks sold off sharply Thursday, with the Dow tumbling more than 700 points amid growing fears of a trade fight between the U.S. and its trading partners after President Trump said he will impose billions of dollars in tariffs on Chinese imports.

The heavy selling on Wall Street was exacerbated by continued weakness in shares of Facebook as well as concerns about the impact of rising interest rates on the economy.

Of course the possibility of a trade war between the two largest economies on the planet is certainly the greatest concern that the markets are grappling with at the moment. According to Ian Winer, any sign of retaliation by China “will really spook people”…

“A global trade war, whether it’s real or perceived, is what’s weighing on the market,” said Ian Winer, head of equities at Wedbush Securities. “There’s this huge uncertainty now. If China decides to get tough on agriculture or anything else, that will really spook people.”

Trump announced tariffs on about $50 billion worth of Chinese imports on Thursday afternoon. It’s not clear which products will be hit, but the action is aimed at curbing China’s troubling theft of US intellectual property.

And we can be quite sure that China will retaliate.

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

The Dow Jones Industrial Average Falls Another 420 Points As Investors Panic About A Potential Trade War

March 2, 2018

The Dow Jones Industrial Average Falls Another 420 Points As Investors Panic About A Potential Trade War

Many had been hoping that the financial shaking on Wall Street that we witnessed in February would subside in March, but so far that is definitely not the case. On Thursday, the Dow fell another 420 points as investors fretted about the potential for a trade war. Over the past month, we have seen many days when stock prices have been way down and other days when stock prices have been way up. This is precisely the sort of wild volatility that we would expect to see if a major financial crisis was brewing, and the truth is that our financial system is far more vulnerable today than it was back in 2008.

Many Americans have assumed that the U.S. economy must be in great shape since the stock market has just kept going up for the past several years. But the reality of the matter is that stock prices are no longer connected to economic reality whatsoever. The U.S. economy has not grown by 3 percent or more in 12 years, but stock prices have been shooting into the stratosphere thanks to relentless central bank intervention.

But what goes up must eventually come down, and on Thursday we witnessed another stunning decline…

The Dow Jones industrial average closed 420.22 points lower at 24,608.98 after rising more than 150 points earlier in the day. The 30-stock index fell as much as 586 points.

The S&P 500 declined 1.4 percent to end at 2,677.67 — erasing its year-to-date gains — with industrials as the worst-performing sector. It also briefly broke below its 100-day moving average, a key technical level. The Nasdaq composite fell 1.3 percent to 7,180.56 and dipped below its 50-day moving average.

So why did this happen?

Well, the mainstream media is placing the blame for Thursday’s decline on Trump’s new tariffs…

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

The world in 2018 – Part Three

February 20, 2018

The world in 2018 – Part Three

Mainstream economics seems to have learned little and changed nothing in the last decade, despite the fact that the financial crisis and its aftermath laid bare a number of important issues with its theories and models. Failure to address these issues is making the economics discipline increasingly incapable of informing us about the trajectory and situation of our world.

After a long period of relentless rise, global financial markets seem to have suddenly entered volatile territory. A brutal selloff in global stocks started in early February, which erased all of the prior gains of 2018 and wiped out trillions of dollars of ‘value’ in a matter of days. The selloff was most spectacular in the U.S., with Wall Street experiencing one of its worst weekly tumbles since the 2008 financial crisis – quickly followed, however, by a sharp rebound. Financial pundits the world over are now busy discussing whether this new episode of market volatility is already over or is likely to last, and if it might be announcing a ‘correction’ (a drop of 10% or more from a peak in market indexes), a ‘bear market’ (a drop of 20% or more), or even a full-blown crash. The truth is that no one knows for sure at this stage, and any prediction of how the next few weeks and months are going to play out in global financial markets can only be guesswork at best.

What is more interesting is to observe how quick economists and policy makers around the world have been to serve yet another round of what has become their standard discourse whenever financial markets get suddenly restless: no worries, folks, ‘the fundamentals of the economy are strong’…

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

The World Embraces Debt At Exactly The Wrong Time

February 16, 2018

The World Embraces Debt At Exactly The Wrong Time

Self-destruction usually happens in stages. At first there’s a binge in which the thrill outweighs the sense of transgression. This is usually followed by remorse, acknowledgement of risks, and an attempt to reform.

But straight-and-narrow is exhausting, and because of this is frequently just temporary, eventually giving way to a kind of capitulation in which the addict drops even the pretense of self-control.

2018 is apparently the year in which the world enters this final stage of its addiction to debt. Wherever you look, leverage is soaring as governments, corporations and individuals just give up and embrace the idea that borrowing is no longer a necessary evil, but simply necessary. Some recent examples:

China January new loans surge to record 2.9 trillion yuan, blow past forecasts

(Reuters) – China’s banks extended a record 2.9 trillion yuan ($458.3 billion) in new yuan loans in January, blowing past expectations and nearly five times the previous month as policymakers aim to sustain solid economic growth while reining in debt risks.

Net new loans surpassed the previous record of 2.51 trillion yuan in January 2016, which is likely to support growth not only in China but may underpin liquidity globally as major Western central banks begin to withdraw stimulus.

Corporate loans surged to 1.78 trillion yuan from 243.2 billion yuan in December, while household loans rose to 901.6 billion yuan in January from 329.4 billion yuan in December, according to Reuters calculations based on the central bank data.

Outstanding yuan loans grew 13.2 percent in January from a year earlier, also faster than an expected 12.5 percent rise and compared with an increase of 12.7 percent in December.

———————–

Total US household debt soars to record above $13 trillion

(CNBC) – Total household debt rose by $193 billion to an all-time high of $13.15 trillion at year-end 2017 from the previous quarter, according to the Federal Reserve Bank of New York’s Center for Microeconomic Data report released Tuesday.

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

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