Home » Posts tagged 'great recession blog'
Tag Archives: great recession blog
Why M1 Money Supply (Cash) is Skyrocketing Like No Time in History
Why M1 Money Supply (Cash) is Skyrocketing Like No Time in History
In my last Patron Post, which I eventually made available to everyone, I revealed a little-known (at the time) fact that M1 money supply (the most liquid forms of cash — bills, checks and basic savings accounts) had grown faster than any time in history. I showed that using a graph like the following, which is now brought up to the most current data:
With part of December now in the picture, you can see the faintest hint at the top of the steep late-November climb that shows the climb may be rounding off.
I noted,
That is a massive amount of new cash money — historically massive — done almost covertly in the quickest burst ever — and yet it did not even cause the stock market to blink!… The graphs … make it clear why inflation under the new regime could become a much more serious problem than the limp moves seen over all the years of the Great Recovery, the difference being how fast the Fed’s QE is now converting into cash
… and I asked,
Why did such an enormous surge in money supply happen in the last two weeks of November with no financial articles being written about it and no statements from the Fed about it? What is going on behind the scenes at the Fed and/or US treasury right now?
…and I promised I would look into and get back to you on it.
I think that I may have found a couple of answers, so I am getting back to you on that as promised.
This could be due to Biden’s promised termination of tax welfare to the rich
…click on the above link to read the rest of the article…
A Week in the Life of a Topsy-Turvy Wildly Whirling World
A Week in the Life of a Topsy-Turvy Wildly Whirling World
![By Germán Torreblanca (Own work) [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons](http://thegreatrecession.info/blog/wp-content/uploads/FatWomanSculpture1.jpg)
Let’s review this past devilishly whacky week to see if we can divine the way the world is turning and why the markets are churning. It was 2019’s worst week in stocks and, well, just about everything economic all across this crazily spinning planet. Volatility lifted its head back out of the water like Loch Ness’s monster while the citizenry took flight to treasury safe havens, bringing treasury yields down again to the five-year’s lowest point of the year. North Korea’s Rocketman returned to his rocketry, and the Chinese threw up their hands and ran as far from Mar-a-Lago as they could … or maybe they just threw up from too much chocolate cake.
The China syndrome is back
Most notably all over the world, bad news finally moved back to just being bad news, even as it arrived in cloudburst after cloudburst. Gold popped as money dropped and China flopped. Chinese exports fell 20%, outstripping the worst prediction four fold. The central bank of the billions of people of China mainlined major yuan jolts into the Xi dynasty’s tiring economy, and yet the Sino stock market fell off the mountain, taking a full panda bear plunge in one week. Apparently the nouveau riche Chinese ghost-city dwellers are wising up to all this easing and just realized talk of more of the same as far as the eye can see simply means the economy is finished more than it means refreshed hope waits on some distant horizon.
Trump talked and China walked. The best boast Trump could biggly bluster from his tweet blaster was that the stock market would rise again ifChina would only deal; China chose, instead, to cancel Chairman Xi’s second coming at Mar-a-Lago.
…click on the above link to read the rest of the article…
The Economy is Cracking Up. Are You?
The Economy is Cracking Up. Are You?
Economic cracks big enough to drive a car industry into are opening up all over the globe. Trade gaps are opening up between major allies. Widening spreads between the dollar and other currencies are shredding emerging markets. As we start into summer, these cracks and several others described below have become big enough to get everyone’s attention, just as I said last year would become the situation.
I had, as readers here know, predicted the same for last summer but revised my timing to this summer after Trump was elected and the hope for tax cuts lit on fire one of the world’s greatest stock rallies. Those tax cuts are also creating another rapidly rising gap between government revenue and government spending.
That rally died, pretty much as I said it would, almost as soon as those tax cuts became law. In fact, it died sooner than I said it would because I thought the tax cuts would provide more economic levity than they have. The Dow and S&P 500, as of last Monday’s close, hit their longest correction period since 1984! That’s more than half of my lifetime since we saw a correction period last this long.
However, now that the trade war is officially engaged, FANGMAN stocks (Facebook, Apple, Netflix, Google, Microsoft, Amazon and NVIDIA) are taking the market up again. Whether they will undo my prediction that the second leg down in the stock market will occur in early summer … remains to be seen.
Even so, this past Monday, when nearly every expert fully expected Netflix would blaze the trail upward as markets refocused on “earnings”, Netflix shares got slammed (down 13% in one mammoth stomp) because it had almost 20% fewer new subscribers than it had projected in April.
…click on the above link to read the rest of the article…
Return of the Euro Crisis: Italy Quakes, Rest of the World Shakes and Merkel’s Empire Breaks
Return of the Euro Crisis: Italy Quakes, Rest of the World Shakes and Merkel’s Empire Breaks
Europe’s many fault lines are spreading once again, bringing the endless euro crisis saga back in 3-D realism. Italy gained a new anti-establishment government last week, even as Spain elected a new Socialista government that could crack Catalonia off from the rest of Spain. All of Europe fell under Trumpian trade-war sanctions and threatened their own retaliation. And Germany’s most titanic bank got downgraded to the bottom of the junk-bond B-bin.
The Italian shakeup caused US bond prices to soar (yields to drop) in a flight of capital from European bonds, yet US stock investors took this invasion of troubles from foreign shores as good enough news to end the week on a positive note. The NASDAQ especially never looked happier, though financials feared contagion. As a result, the contrast between tech stocks and financials burst upward to its highest peak since the top of the dot-com frenzy:
While Europe’s troubles apparently sounded like great news to US stock investors, the Italian crisis caused EU bank stocks in aggregate to take one of their largest avalanches in history, ending in a one-week cliffhanger at their lowest level in two-and-a-half years. Deutsche Bank, Germany’s titan of global finance, ended looking like the spawn twin of the Lehman Brothers:
Deutsche Bank appears to be leading the way into a full blown euro crisis like Lehman Bros did in the US financial crisis.
In one week, Europe with its impossible euromess moved back into position of being the world’s chief menace. The Eurozone is a house of cards with many exits, each with their own name, as I’ve written about frequently in the past, and it’s time to pay the never-ending euro crisis some attention once again.
Quitaly looks like next Brexit in everlasting euro crisis
…click on the above link to read the rest of the article…
Stock Market’s Massive Moves Not Seen Since Great Recession: Many who didn’t see the bubble bursting have fallen
Stock Market’s Massive Moves Not Seen Since Great Recession: Many who didn’t see the bubble bursting have fallen
A break through the 200-day moving average would likely trigger an even larger sell-off as the last major technical support gives way. To give some perspective on the cliff we just leaped off of, look at every move from the cliff-dive into the Great Recession to the present:
Ah, a picture’s worth a thousand words. That’s the plunge so far, but one of the things I said would make the difference between a normal correction of top-heavy prices and an all-out crash would be how much momentum the downdraft developed — enough momentum and the dive will be hard to stop. Well, this just in:
That’s “ever!” Not just worst since we crashed into the Great Recession (which we are still in, as far as I’m concerned, as we have merely existed propped up on life support while all flaws of the Great Recession remained). Clearly, this fall is already equal in steepness and depth to the worst the Great Recession had to offer and greater than any drop since.
…click on the above link to read the rest of the article…
Federal Reserve Hesitates on QE Unwind / Balance Sheet Reduction
Federal Reserve Hesitates on QE Unwind / Balance Sheet Reduction
Is the Federal Reserve’s Great Unwind already coming unwound? I thought it would be good to check up on Federal Reserve balance sheet reduction since the Fed is supposed to be up and running on the move out of quantitative easing this month. It should be fascinating to see what progress the Fed is making as it happily applauds its own successful recovery.
The Federal Reserve balance sheet reduction that didn’t happen
![By Kikuyu3 (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons](http://thegreatrecession.info/blog/wp-content/uploads/Hommage_to_the_Gordian_knot-300x225.jpg)
Is balance sheet reduction the Fed’s Gordian knot?
After all, the Federal Reserve’s End of Quantitative Easing Didn’t Happen last time they said it would. It turned out the Fed actually planned to continue QE at a gradual level by reinvesting matured assets. Nevertheless, the mere announcement in 2013 that it would terminate QE in 2014 created the infamous “Taper Tantrum.” The Fed hadn’t said anything back then that I was able to find about reinvesting the funds in its balance sheet until after they supposedly stopped QE in the fall of 2014. It turned out the stop was not a quite a full stop.Unwinding its balance sheet is likely to prove to be the Fed’s Gordian knot.
Federal Reserve balance sheet reduction that didn’t happen … again … so far
So, here we are, and so far there is no reduction. It is now three years since the Fed “ended quantitative easing,” and its balance sheet is still holding around the $4.5 trillion mark where QE was supposed to end. Now that’s gradual! It’s taken three years just for the Fed to say it is going to start reducing the balance; so, let’s see how that balance sheet reduction is going for them now that it has supposedly started:
…click on the above link to read the rest of the article…
Here’s You and Here’s the Top Ten Percent
Here’s You and Here’s the Top Ten Percent
In a nutshell, here is a graph that summarizes everything you need to know about the unsustainable US economy. Unless you’re in the top ten percent of income producers in the nation — or, at least, living in their neighborhood — you are living in a dingy bedroom economy that has only seen its net worth decline since the Great Recession began. Those who are in the top ten percent, on the other hand, profited astronomically from the Great Recession. It’s the best thing that ever happened to them, and you helped them do it with tax-backed or even tax-funded bailouts and by allowing them a perpetual cycle of savings on their capital gains.
Clearly the only ones who “recovered” are at the top
Insanity is repeating the same thing over and over and expecting different results
Now you can see how those bailouts have trickled down to you as well as how capital-gains tax breaks have trickled down. Are you now going to go for Trump’s third-and-greatest-ever round of trickle-down economics?
Lower taxes for corporations may be a good idea (why tax the economic engines and rob them of fuel) if they also come with the end of loopholes (corporate welfare) and with a provision that the corporation cannot be engaged in any corporate buybacks during that tax year or the following. (Without that provision, lower corporate taxes will just fuel useless stock buybacks, making the rich richer, but doing nothing to grow the corporation and grow jobs).
Capital-gains tax breaks, on the other hand, have always been a terrible idea. The notion that such breaks cause people to reinvest their tax savings into creating new factories and jobs is not only proven wrong by thirty-plus years of history (see chart above for just the last decade of decline), but it is ludicrous in concept (even without historic proof):
…click on the above link to read the rest of the article…
Yawning Debt Trap Proves the Great Recession is Still On
Yawning Debt Trap Proves the Great Recession is Still On
While David Stockman stated early this year with resolute certainty that the debt ceiling debate would blow congress up and send the nation reeling over the financial precipice, I avoided jumping on the debt-ceiling bandwagon. While I was convinced major rifts in the economy would start to show up in the summer, I was not convinced they would have anything to do with the debt ceiling debate. If there is anything you can be certain of this in endless recovery-mode economy, it is that the US will just keep pushing its bags of bonds up a hill until it can finally push no more. So, I figured another punt down the road was more likely.
The Debt Ceiling Debate that Didn’t Happen
The reason I didn’t think that debate would blow apart is that Republicans have more than once experienced the political reality that comes from taking the nation to the brink of default or of shutting down government. Each time that kind of thing has happened, it has hurt Republicans far more than it has hurt Democrats. I doubted establishment Repubs (the majority) had the stomach to take us through another credit downgrade, though I’ve noted such an event was possible.
Unsurprisingly to me, then, Congress did the only thing it seems to be capable of any more and just kicked that can a little further down the road with hardly a kerfuffle about it. Hurricane Harvey made things a lot easier for congress to kick the can again by providing a good excuse to dodge that unwanted debate on the basis of massive human suffering that truly did need tending to. Much-talked-about government shutdown put off for a better time
…click on the above link to read the rest of the article…
2016 Economic Predictions: Year of the Epocalypse
2016 Economic Predictions: Year of the Epocalypse
An economic apocalypse upon us. My 2016 economic predictions provide the full explanation as to why 2016 will be the year of the Epocalypse — a word that encompasses the roots “economic, epoch, collapse” and “apocalypse.” I needed a word big enough to describe all that is about to befall the world in 2016. When you see the towering forces that are prevailing against failing global economic architecture and the pit of debt beneath that structure, as laid out here, I think you’ll recognize that the Epocalypse is here, and it is everywhere. The Great Collapse has already begun.
What follows are the megatrends that will increasingly gang up in the first part of 2016 to stomp the deeply flawed global economy down into its own hole of debt. The economic collapse that is already developing includes the US economy and the US stock market that is now collapsing from the external forces and internal vacuum that I’ve been writing about for a few years here.
Nations deep in the hole
Fire in the hole. Brazil is already burning and has been declared by Bank of America and others to be in a recession deeper than the Great Depression — its worst since 1901. Brazil is struggling to combat runaway inflation at the same time. That’s is an impossible combination to battle.
It ain’t Zimbabwe yet, but it’s looking like a place where Mugabe might want to run for president. Only a couple of years ago, Brazil was a nation of rising glory — the shining light of South America, one of the brightest of emerging markets. Now, as the US starts raising interest, its problems will grow worse as its debt, in a time of deep national crisis, is made impossible to manage.
…click on the above link to read the rest of the article…
