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Today’s Negative Rates Are the Path to Poverty

December 25, 2020

Today’s Negative Rates Are the Path to Poverty

risky road

Almost Daily Grant’s (ADG) made the pronouncement on December 14th that a “new benchmark in financial repression” had been set: ”a record $18.4 trillion in global debt is priced to yield less than zero, up from less than $8 trillion in March and a five-year average of $10.3 trillion.”

ADG consulted interest rate historians Sidney Homer and Richard Sylla, who opined, “nominal negative yielding debt had never been seen in material size in the 4,000 years of interest rate history prior to the current cycle.”

Economist Ludwig von Mises never imagined such a thing, writing in Human Action,

There cannot be any question of abolishing interest by any institutions, laws, or devices of bank manipulation. He who wants to “abolish” interest will have to induce people to value an apple available in a hundred years no less than a present apple. What can be abolished by laws and decrees is merely the right of the capitalist to receive interest. But such decrees would bring about capital consumption and would very soon throw mankind back into the original state of natural poverty.

We can’t be sure what Mises meant by “very soon.” But, to read ADG, the march toward “the original state of poverty” will continue. ADG cites Financial Times’s John Dizard, who believes (paraphrased by Grant’s) that ”The potential catalyst [is]: A swath of T-bills [that] is set to mature in the first half of next year without fresh corresponding issuance on account of the Treasury Department’s ‘historically high’ $1.5 trillion cash cache at the Fed, potentially exacerbating a supply vs. demand imbalance.”

Dizard is not alone. Bank of America’s Mark Cabana says, “there is going to be a train wreck at the front of the [Treasury] curve next year. There is way too much cash chasing too little paper.”

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

Did Baby Boomers Ruin America?

December 13, 2018

Did Baby Boomers Ruin America?

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Referring to someone as a sociopath is strong language. After all, just between 3 and 5 percent of Americans are really sociopaths , people who initially seem charming, but, due to bad neurological wiring, lack a conscience and are unable to feel remorse. They are exceptional liars and cheats, and have no capacity to feel guilt.

But according to author and multi-millionaire tech hedge fund manager, Bruce Cannon Gibney, anyone born between 1946 and 1964 (baby boomers) that are still living are sociopaths.

“There is something wrong with the Boomers and there has been for a long time,” writes Gibney in the forward to A Generation of Sociopaths: How the Baby Boomers Betrayed America and the author’s beatings continue for 400-plus pages.

He doesn’t let any of us Boomers off the hook, but really focuses on “generational representatives like Bill Clinton, Newt Gingrich, George W. Bush, Donald Trump, and Dennis Hastert–a stew of philanderers, draft dodgers, tax avoiders, incompetents, hypocrites, holders of high office censured for ethics violations, a sociopathic sundae whose squalid cherry was provided in 2016 by Hastert’s admission of child molestation, itself a grotesque metaphor for Boomer policies.”

Gibney’s point being us Boomers are molesting younger generations because Social Security and Medicare might remain solvent just long enough for Boomers, but no one else, to collect. And, the author preaches from the environmentalist good book every chance he gets. Any skepticism about climate change is viewed as having “negative feelings about reality and science” because, for Boomers, sacrifices for the environment are, “incompatible with sociopathic desires.”

Boomers didn’t have a chance because their moms read Dr. Spock, were too easy on their kids, and parked us in front of the television. “TV’s essential characteristics make it the perfect education for sociopaths, facilitating deceit, acquisitiveness, intransigence, and validating a worldview only loosely tethered to reality,” the author opines.

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

The Looming Mortgage Liquidity Crisis

March 30, 2018

THE LOOMING MORTGAGE LIQUIDITY CRISIS

Every 10 years or so there is a banking crisis. We are due. However, the furthest thing from most people’s minds with the Trump boom is a banking/financial crisis, except for a few folks at the Brookings Institution, who just released a paper entitled “Liquidity Crisis in the Mortgage Market.”

You Suk Kim, of the Federal Reserve Board; Steven M. Laufer, who also labors on the Federal Reserve Board along with Karen Pence, plus, Richard Stanton of the University of California, Berkeley, and Nancy Wallace, also of University of California, Berkeley, to give away the punchline from their paper’s abstract, write, “We describe in this paper how nonbank mortgage companies are vulnerable to liquidity pressures in both their loan origination and servicing activities, and we document that this sector in aggregate appears to have minimal resources to bring to bear in a stress scenario.”

John and Joan Q. Public believe the 2018 mortgage business is like George Bailey’s Building & Loan in “It’s a Wonderful Life.” People deposit money, bankers lend it out, keeping the mortgage on their books. Easy Peasy.

As the folks from Brookings point out, it’s not that easy in these dark days of financial engineering. George Bailey’s handshake, promise and maybe a few words on a document to be signed by the borrower which meant simply, “I’ll pay you back,” has become a financial instrument, to be traded and hypothecated by faceless financial bureaucrats, each one taking a sliver of profit off the top.

Everyone remembers the crash of 2008 and plenty explanations have been posited. What the writers for Brookings explain is,

The literature has been largely silent on the liquidity vulnerabilities of the short-term loans that funded nonbank mortgage origination in the pre-crisis period, as well as the liquidity pressures that are typical in mortgage servicing when defaults are high. These vulnerabilities in the mortgage market were also not the focus of regulatory attention in the aftermath of the crisis.

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

 

Shooting War in North Korea? History says Yes.

October 11, 2017

Shooting War in North Korea? History says Yes.

Washington insider Jim Rickards says a shooting war with North Korea is inevitable within the next six months. “Nobody wants the war. Nobody is rooting for the war, but it’s coming.”

Rickards believes Kim Jong Un will launch another missile any day.  The following explains why.

“In the case of the bombing of North Korea,” Blaine Harden wrote in 2015, “[the American] people never really became conscious of a major war crime committed in their name.”

To most Americans, the North Korean leader is some nutty kid who will only speak to one American, Dennis Rodman, and can’t seem to find a decent barber. To threaten the U.S. of A for no good reason proves he’s a psychopath. North Korea must be a nut-case state.

Donald Trump channeling the American Zeitgeist, calls Un “Little Rocket Man” and threatens to unleash fire and fury on the North Koreans. Trump supporters wonder why Tennessee Senator Bob Corker, chairman of the Senate Foreign Relations Committee, is in the President’s face about all of this. He must just be disloyal. Right?

“I think when you’re in a situation that is as real as this one is and as sensitive as this one is, the lesser public comments you can make, the better,” Corker said. Secretary of State Rex Tillerson, who reportedly called the President a F*****g Moron, was trying to do what business people do and attempt negotiating with Un. Trump tweeted that Tillerson was  “wasting his time trying to negotiate with Little Rocket Man.”

A little history provides a clue as to why Un and the North Koreans are steadfast in their wariness of Uncle Sam.  Blaine Harden wrote in 2015 for The Washington Post,

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

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