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Someone should tell the European ruling elites to take a long jump off a short pier. Their endless whining about the Ruuskies and Putin is just plain pathetic because—

It’s not justified—Russia bears no hallmarks of an expansionist imperial power.
The Russia-Ukraine conflict is none of western Europe’s business—since its essentially a territorial and civil war within the borders of historic Russia.
If EU officialdom is really concerned about the purported Russian threat why do they spend just a pittance of their GDP on defense?

Yet, here we have Ursula von der Leyen, president of the European Commission, former German defense minister and full-throated war-hawk, talking absolute nonsense:

“Russian President Vladimir Putin wants to see empires and autocracies back in Europe, European Commission President Ursula von der Leyen told the European Economic Congress in Katowice.

Speaking alongside Polish Prime Minister Donald Tusk, von der Leyen insisted that she stands for a European Union that is ready to do whatever it takes to protect Europe, and especially Ukraine.

“Putin’s war is about redrawing the map of Europe, but it is also a war on our Union and on the entire global rules-based system,” she said.”

Well, that’s rubbish if there ever was such. The only time the borders of Ukraine have been redrawn at the barrel of a gun is when Lenin, Stalin and Khrushchev did it between 1922 and 1954. That’s right, this bureaucratic half-wit wants to embroil the world in WWIII in order to enforce borders drawn by a trio if history’s most blood-thirsty tyrants.

As explained below, there never was a country even remotely resembling modern Ukraine until the Soviet communists decreed its existence…

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

David Stockman on the Continual Rise in the Cost of Living… And Why the Fed has No Shame

May 24, 2024

David Stockman on the Continual Rise in the Cost of Living… And Why the Fed has No Shame

Jay Powell did it again assuring the 1% that he has their back.

Markets recovered their poise over the last 24 hours, as investors were relieved after Fed Chair Powell stuck to his recent views on the economic outlook. In his remarks yesterday, he said that recent data didn’t “materially change the overall picture” and that on inflation “it is too soon to say whether the recent readings represent more than just a bump.” In addition, he reiterated that if “the economy evolves broadly as we expect, most FOMC participants see it as likely to be appropriate to begin lowering the policy rate at some point this year.” So that all helped to validate market pricing, which still expects 71 bps of rate cuts from the Fed by the December meeting.

Needless to say, the man has no shame. And that’s to say nothing of intellectual firepower. There is not even a smidgen of a case that rate cuts in the present context will help main street, and the Fed heads and their Wall Street megaphones don’t actually even try to make that argument.

Instead, they argue for rates cuts by default. If by some tortured version of the CPI (i.e. the “supercore” index, which eliminates 61% of the CPI items by weight) they can espy the in-coming inflation trend settling into a liberally defined vicinity of 2.00%, that’s purportedly good enough to end the money-printing pause that has been in place since March 2022. Thereafter, it’s back to business as usual, flooding the canyons of Wall Street with cheap credit and a new burst of financial asset inflation.

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

David Stockman on Why Washington DC is the War Capital Of The World

May 22, 2024

David Stockman on Why Washington DC is the War Capital Of The World

Ultimately, there is no mystery as to why the Forever Wars go on endlessly. Or why at a time when Uncle Sam is hemorrhaging red ink a large bipartisan majority saw fit to authorize $95 billion of foreign aid boondoggles that do absolutely nothing for America’s homeland security.

To wit, Washington has morphed into a freak of world history—a planetary War Capital dominated by a panoptic complex of arms merchants, paladins of foreign intervention and adventure and Warfare State nomenklatura. Never before has there been assembled and concentrated under a single state authority a hegemonic force possessing such unprecedented levels of economic resources, advanced technology and military wherewithal.

Not surprisingly, the world’s War Capital is Orwellian to the core. Its endless pursuit of war is always and everywhere described as the promotion of peace. Its jackboot of global hegemony is gussied-up in the form of alliances and treaties ostensibly designed to promote a “rules-based order” and collective security for the benefit of mankind, not simply the proper goals of peace, liberty, safety and prosperity within America’s homeland.

Unfortunately, the whole intellectual foundation of the enterprise is false. The planet is not crawling with all-powerful would-be aggressors and empire-builders who must be stopped cold at their own borders, lest they devour the freedom of all their neighbors near and far.

Nor is the DNA of nations infected with incipient butchers and tyrants like Hitler and Stalin. They were one-time accidents of history and fully distinguishable from the standard run of everyday tinpots which actually do arise periodically. But the latter mainly disturb the equipoise of their immediate neighborhoods, not the peace of the planet.

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

David Stockman on Why There is No Noticeable Benefit from the Fed’s Policies

May 14, 2024

David Stockman on Why There is No Noticeable Benefit from the Fed’s Policies

Here is the only noticeable “benefit” from the Fed’s pro-inflation policies since Greenspan’s arrival at the Eccles Building. To wit, these policies have pleasured the tippy top of the economic ladder with massive wealth gains owing to the relentless inflation of financial assets. During the 34 years since 1989, therefore, net worth has increased as follows:

Aggregate Net Worth Gain, Q4 1989 to Q3 2023

Top 0.1% or 131,000 households (purple area): +$18.2 trillion or 11.4X.
Top 1.0% or 1.34 million households (black area): +$40.0 trillion or 9.5X.
Bottom 50% or 65.7 million households (blue area): +$3.7 trillion or 5.1X.

For want of doubt, the corresponding net worth gains on a per household basis are as follows:

Net Worth Gain Per Household, Q4 1989 to Q3 2023

Top 0.1%: +$139 million each.
Top 1.0%: + $30 million each.
Bottom 50%: +$55,000 each.
Ratio of Top 0.1% Versus Bottom 50%: 2,500X

Aggregate Net Worth By Economic Class, 1989 Q4 to 2023 Q3

Needless to say, the only cohort to experience net wealth gains roughly in line with nominal GDP growth during this 34-year period was the bottom 65.7 million households. Their 5.1X gain was only a tad larger than the 4.9X gain in nominal GDP during the period, which rose from $5.7 trillion to $27.6 trillion.

The veritable eruption of net worth at the tippy-top of the economic ladder at more than double the gain in GDP, therefore, should not be confused with superior virtue, greater investment prowess or any other meritorious factor.

To the contrary, it was an unearned windfall owing to massive, artificial asset price inflation. In rough terms, those Fed-fostered windfalls amount to about half the gain reported above or about $20 trillion for the top 1% and $9 trillion, or about $70 million per household, for the top 0.1%.

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

David Stockman on the $1.3 Trillion Elephant In The Room

May 3, 2024

David Stockman on the $1.3 Trillion Elephant In The Room

These people have to be stopped!

We are talking about the nation’s unhinged monetary politburo domiciled in the Eccles Building, of course. It is bad enough that their relentless inflation of financial assets has showered the 1% with untold trillions of windfall gains, but their ultimate crime is that they lured the nation’s elected politician into a veritable fiscal trance. Consequently, future generations will be lugging the service costs on insuperable public debts for years to come.

For more than two decades these foolish PhDs and monetary apparatchiks drove the entire Treasury yield curve to rock bottom, even as public debt erupted skyward. In this context, the single biggest chunk of the Treasury debt lies in the 90-day T-bill sector, but between December 2007 and June 2023 the inflation-adjusted yield on this workhorse debt security was negative 95% of the time.

That’s right. During that 187-month span, the interest rate exceeded the running (LTM) inflation rate during only nine months, as depicted by the purple area picking above the zero bound in the chart, and even then by just a tad. All the rest of the time, Uncle Sam was happily taxing the inflationary rise in nominal incomes, even as his debt service payments were dramatically lagging the 78% rise of CPI during that period.

Inflation-Adjusted Yield On 90-Day T-bills, 2007 to 2022

The above was the fiscal equivalent of Novocain. It enabled the elected politicians to merrily jig up and down Pennsylvania Avenue and stroll the K-Street corridors dispensing bountiful goodies left and right, while experiencing nary a moment of pain from the massive debt burden they were piling on the main street economy..

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

David Stockman on How the US Federal Debt Has Gone Parabolic…

April 16, 2024

David Stockman on How the US Federal Debt Has Gone Parabolic…

The federal debt has been recently increasing by $1 trillion every 100 days. That’s $10 billion per day, $416 million per hour.

In fact, Uncle Sam’s debt has risen by $470 billion in the first two months of this year to $34.5 trillion and is on pace to surpass $35 trillion in a little over a month, $37 trillion well before year’s end, and $40 trillion some time in 2025. That’s about two years ahead of the current CBO (Congressional Budget Office) forecast.

On the current path, moreover, the public debt will reach $60 trillion by the end of the 10-year budget window. But even that depends upon the CBO’s latest iteration of Rosy Scenario, which envisions no recession ever again, just 2% inflation as far as the eye can see and real interest rates of barely 1%. And that’s to say nothing of the trillions in phony spending cuts and out-year tax increases that are built into the CBO baseline but which Congress will never actually allow to materialize.

So when it comes to the projection that the 2034 debt will come in at just $60 trillion, we’ll take the wonders any day of the week. The fact that it will likely be much higher also means that the Washington UniParty’s prevailing fiscal policy path will lead to $100 trillion of public debt sometime in the early 2040s. And that means, in turn, that annual interest expense will then be greater than the entire federal budget during 2019.

Needless to say, neither Trump nor Biden has said, “Boo,” about this looming calamity. Sleepy Joe has even had the audacity to brag that he has reduced the federal deficit by more than half.

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

David Stockman on How the US Federal Debt Has Gone Parabolic…

March 29, 2024

David Stockman on How the US Federal Debt Has Gone Parabolic…

The federal debt has been recently increasing by $1 trillion every 100 days. That’s $10 billion per day, $416 million per hour.

Needless to say, neither Trump nor Biden has said, “Boo,” about this looming calamity. Sleepy Joe has even had the audacity to brag that he has reduced the federal deficit by more than half.

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

David Stockman on Washington’s Fiscal Doomsday Machine

November 22, 2023

David Stockman on Washington’s Fiscal Doomsday Machine

Here’s one that will make your hair stand on end: The US Treasury closed the books on FY 2023, bringing the four-year cumulative deficit to $9.0 trillion!

That’s right. During the last 1,461 days (FY 2020 thru FY 2023), Uncle Sam has generated $6.2 billion of red ink each and every day including weekends, holidays and snow-days. For anyone keeping score at home, that’s $4.2 million of red ink per minute.

For the purpose of perspective, here’s how long it took to generate the first $9 trillion of US government debt: It took all of 43 presidents and 219 years to reach $9 trillion of public debt in July 2007. So the national debt clock has now accelerated to hyper-drive.

Market Value of Public Debt Outstanding, 1940 to July 2007

And, yes, we do mean accelerate. It turns out that when you remove the budgetary Mickey Mouse from the numbers, the federal deficit for FY 2023 clocked in at over $2.0 trillion, or double the comparable level in FY 2022. The reported numbers, of course, do not look quite as alarming, posting at $1.4 trillion last year and $1.7 trillion this year.

But as The Wall Street Journal cogently explained recently, that comparison is very misleading because it includes a $380 billion budgetary shuffle between the two years. It seems that Sleepy Joe’s student debt cancellation got recorded as a cost in September 2022, but then got canceled by the courts in FY 2023, turning it into a giant “savings”!

When the Biden administration announced its plan to forgive federal student debt held by 40 million Americans in September 2022, it logged the long-term cost of the program, $379 billion, on the budget all at once, even though effectively no money was spent on it that year… But in June 2023, the Supreme Court tossed the debt-cancellation program, meaning most of that money wouldn’t actually be spent. Rather than update last year’s deficit numbers, though, the Treasury recorded the changes as a $333 billion spending cut in August 2023.

…click on the above link to read the rest…

Perpetual Debt, Perpetual War

May 30, 2022

Perpetual Debt, Perpetual War

It’s always useful to visit the museum in order to offset the recency bias that distorts perceptions of current realities.

In the great scheme of things, the picture below is admittedly not that ancient – from just 42 years ago. But it is nevertheless a museum piece because it pertains to a matter that has long since faded from the scene. Namely, the public debt and in this instance the day when your editor was compelled to warn the Gipper that the Federal debt was about to cross the dreaded one trillion dollar mark.

Back then, that prospect gave one and all the fiscal heebie-jeebies. Massive public debt was viewed as an immoral imposition on future generations and an economic scourge on the present. That’s because when properly financed in the bond pits it drove up interest rates, thereby crowding-out household and business borrowers and economic growth and rising prosperity on main street.

1/28/1981: President Meeting with David Stockman, Don Regan, Murray Weidenbaum, and Martin Anderson to discuss the economy in oval office

No more. Massive fiscal deficits year-after-year have become a way of life in the Imperial City, but even then CBO’s latest 10-year forecast is a shocker. It shows that even if there is no recession for the next ten years (fat chance!) and existing tax and spending policies (dashed red line) remain in place without enactment of a single new spending program or tax cut (even fatter chance!), the deficit will exceed $3 trillion per year by the end of the decade.

That would amount to a structural deficit equal to 8.4% of GDP and a ticket to fiscal perdition. In dollar terms, it would add $20.3 trillion to the public debt over the next decade, taking the total debt to $50 trillion by 2032.

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

David Stockman on Inflationary Hell That’s About to Break Loose

April 21, 2022

David Stockman on Inflationary Hell That’s About to Break Loose

It is only a matter of time before Kiev surrenders to the Russians, with or without their clown-car president signing the armistice. But that deal will be so onerous from Washington’s perspective that it will not mark the end of the sanctions war, but will be an excuse for its actual intensification and indefinite prolongation.

When that becomes the reality, however, inflationary hell will break out all over the place. And the Fed’s decades-long experiment in egregious, inflationary money-pumping will splatter ignominiously all over the Eccles Building (Fed headquarters).

It now appears that commodities markets have been so drastically roiled by the action to date that Washington’s war on the global trading and payments system is now open-ended and can theoretically go on for years.

That’s because the Russian-loathing, Putin-demonizing Dems now in charge of policy in Washington cannot even see straight when it comes to the real issues of the conflict.

There is absolutely nothing wrong with partitioning Ukraine and Crimea, nor with Putin’s proposed new security arrangement that would have NATO move its missile bases to the pre-1999 status quo and the re-garrisoning of US and Western military forces to the old NATO territories.

But these plausible solutions are so far removed from the war fevers now raging on the Potomac that there is no chance of Washington embracing a negotiated solution to the Ukrainian war. It will actually take a historic GOP sweep in the 2024 elections to clear the decks of Putin/Russian demonization, and even that would not make a difference if the blood-thirsty neocons and military hawks retained control of the GOP.

Meanwhile, just like that, the price of oil recently hit $130 per barrel.

Here’s the thing.

Double-digit inflation is now guaranteed and it will be long-lasting.

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

David Stockman on the Coming Stock Market Crash of Biblical Proportions

April 8, 2022

David Stockman on the Coming Stock Market Crash of Biblical Proportions

International Man: Whether we like it or not, the reality is, the Federal Reserve has an enormous influence over the dollar and the stock market.

And right now, the Fed has an urgent and fateful decision to make.

It can keep printing trillions of dollars, let inflation skyrocket or tighten monetary policy, and watch the stock market crash.

In other words, it can sacrifice the stock market or the dollar.

David, what do you think the Fed will do, and what are the implications?

David Stockman: Well, I think whether it wants to or not, the Fed will crash the stock market. The Fed has painted itself into a hellacious corner because it’s made such a fetish out of its 2% inflation target, especially since January 2012, when it officially adopted this quantitative target.

In fact, most of the massive money printing, which has occurred since 2012, when the economy was pretty much recovered from the Great Recession anyway, has been justified by an inflation shortfall, which wasn’t true, but that was the justification.

They were trying to raise inflation and therefore felt that they could keep quantitative easing at these huge rates, including $120 billion per month, until recently. And as a result, we’re now in a world in which inflation is heading towards double digits.

I think they’re going to have no choice but to throw on the brakes much harder than the market is expecting, much harder than they would like to do, or maybe even intend at the moment, but there’s no choice.

Now, when you have double-digit inflation, number one and second, you’re going into what’s going to be a nasty election season in which the Republicans will finally see hope for their salvation in a horrendous battle on the inflation front blaming the Democrats and Biden.

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

Stockman: “We’re Not Useful Idiots!”

February 17, 2022

Stockman: “We’re Not Useful Idiots!”

Honest injun. We’re not useful idiots here at Contra Corner!

Actually, we thought it up all by our lonesome! Well, we’ll grant we did have a fair amount of help from Google, which insofar as we know works for the CIA, not the Russian SVR (foreign intelligence service).

In any event, at the very center of the crisis is the Washington claim that the rule of law and the sanctity of sovereign borders are on the line in Ukraine and that, therefore, Russia must not be allowed to encroach a single inch into sacrosanct Ukrainian territory.

That is to say, it is not a matter of America’s national security interest in the precise Ukrainian geography, which happens to lie cheek-by-jowl on Russia’s border, but the very governance of the entire planet: Conform to the “rule of law” as articulated by Washington or get sanctioned, outlawed, pariah-ed, and even invaded, if worst comes to worst.

We hear this refrain repeatedly from Secy Blinkey and national security advisor Snake Sullivan. But we find ourselves doubled over with laughter each time, knowing practically by heart the list of coups, regime change plots, invasions and occupations Washington has foisted upon other sovereign nations over the last 70 years.

For want of doubt, however, we recently Googled in pursuit of the exact list and came up with a systematic study by a young scholar named Lindsey A. O’Rourke. Here’s her summary conclusion:

Between 1947 and 1989, the United States tried to change other nations’ governments 72 times; That’s a remarkable number. It includes 66 covert operations and six overt ones.

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

Reset Means Crash of Epic Proportions – David Stockman (Revised)

July 23, 2021

Reset Means Crash of Epic Proportions – David Stockman (Revised)

Reagan White House Budget Director and best-selling author David Stockman says, “This is not the time to be invested in the markets . . . . A reset is just a pleasant name or a clinical name for a crash of epic proportions, which we will have because the markets are so inflated. There are trillions of dollars that are at risk. To put a dimension on this thing or a way of sizing this, is we have a $60 trillion bubble on the balance sheets of 130 million people in American society, but especially in the top 5% to 10% that own a huge share of the assets. . . . I have no thought about how big the correction will be, but if it were just back to the norm . . . it would be a $60 trillion correction, and that is a pretty big hole in the bucket. If $60 trillion disappears (out of the U.S. economy), it changes everything. It turns the financial system and economic reality upside down.”

How did things get so perilous in the economy? Stockman says look no further than Washington D.C. and the Fed. Stockman explains, “When central banks start to inflate like crazy, you first inflate financial assets. It eventually works its way into goods and services, and that’s where we are now. You get the second stage of inflation as well. There has never been a small group of government officials, unelected at that, who have done more damage, more wanton harm to the economy and to the lives of ordinary people than (Fed Head) Powell and his merry band of mad money printers. This is really an outrage. I say these people are damn near criminally incompetent given what they say about the world, which is totally wrong, given what they’re doing, this massive money printing, which is totally unjustified. . .”

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

Stop the Real Steal!

January 9, 2021

Stop the Real Steal!

It’s axiomatic that when you suddenly change the election rules and modus operandi, causing 65 million mail-in ballots (out of 159 million total) to flood unprepared local elections systems, you will get beaucoup irregularities, mistakes and fraud. To that extent, the impending Trumpite challenge when the Congress meets on Wednesday to certify the 2020 election results is spot on.

But at the end of the day, the challenge being mounted by Senator Hawley (R-Missouri) and the Cruz Eleven is both futile and mischievous. That’s because, thank heavens, American government is not organized into an all-powerful, centralized, unitary state like France, Red China or countless other authoritarian regimes in-between.

To the contrary, government in America remains decentralized and federalist, even if the founders’ design, culminating in the 10th Amendment’s reservation of unexpressed powers to the states, has been relentlessly chipped away since the New Deal. Indeed, when it comes to many aspects of day-to-day governance, such as on matters of public welfare or commerce, federalism has been drained of substance and the sovereign states have, regrettably, morphed into administrative appendages and fiscal supplicants of Washington.

Yet notwithstanding that erosion, one originalist feature from the 1787 convention remains largely in tact: Namely, that the election of Federal officials – congressman, senators and presidents – is to be conducted by the states as seen fit by their sovereign legislatures.

And that’s where the Trumpite challenge comes a cropper: No state has sent dueling slates of electors to the Congress, and no state legislature has petitioned the Congress asserting that its now certified tally of the presidential votes was the product of fraudulent or nefarious maneuvers.

Q.E.D. There is nothing to contest rooted in electoral Federalism because there are no state-based disputes pending before the new Congress. That’s essentially the position of solid libertarians like Congressman Thomas Massie. He’s dead-on correct and not just owing to Scaliaian regards for the Constitution’s language and intent on the matter of Federal elections.

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

David Stockman on Fiscal Disaster, Social Unrest, and the Presidential Election

June 21, 2020

David Stockman on Fiscal Disaster, Social Unrest, and the Presidential Election

International Man: Recently, massive riots have broken out in many cities across the US.

Despite the unrest—and the economic damage from the shutdowns—the stock market continues to rally.

It seems that markets don’t reflect earnings, economic prosperity, or growth. What is going on here?

David Stockman: It’s quite simple. The Fed has unleashed the greatest torrent of liquidity ever, and it’s finding its way into a relentless, massive bid for risk assets.

Since the eve of the Lockdown Nation disaster on March 11, the Fed’s balance sheet has erupted from $4.3 trillion to nearly $7.2 trillion. That’s $32 billion per day—including weekends, Easter, and nationwide riot days.

Worse still, at their June meeting, the mad money printers domiciled in the Eccles Building promised to keep printing $120 billion per month to buy US Treasuries and other assets for an indefinite period. That should get us to a $10 trillion balance in less than two years’ time.

What this means, of course, is that honest price discovery in the canyons of Wall Street is deader than a doornail. We now have a putative capitalist economy in which the most important prices in all of capitalism—the prices of financial assets—are pegged, rigged, and manipulated by the central banking agents of the state.

The result, of course, is speculation and malinvestment on a biblical scale.

As to the former, we are now being treated to the preposterous spectacle of an IBO—or Initial Bankruptcy Offer—of the stock of bankrupt Hertz.

Hertz’s stock is worthless. It’s pinned under a pile of $20 billion of debt—senior debt securities, which are trading at 40 cents on the dollar—and a vastly overvalued fleet of vehicles.

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

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