Archive for the Recession Category

The Great Checkmate And The Great Seesaw: Interesting Rates (April 11, 2022)

Posted in Federal Reserve, Great Checkmate, Inflation, Interest Rates, Recession, Stagflation on April 11, 2022 by e-commentary.org

. . .

K          “I doubt the Fed will be able to increase 150 basis points [1.5%] this year before the economic pain is so great that they will be forced to flood the market with free money for the wealthy and exacerbate the obscene wealth divide.”

J          “200 total basis points [2%].  I’ll go big.  I cannot see them raising rates to a total of 250 or even 225 basis points.  If they also start the ‘quantitative tightening’ at the same time, they will suffocate the markets.”

. . .

J          “Some say we will get ‘deflation’ and others say we will get ‘inflation’ without being specific.  We talked years ago about the deflation of bubble assets and the inflation of necessities that continues to get more distended and pronounced every day.”

K          “As I recall, last April we recognized that inflation was permanent and was not transitory.  The Fed did not shed the word ‘transitory’ until December.”

. . .

K          “The self-inflicted Great Checkmate is inescapable.  They say the bond market is about twice the value of the stock market.  They say the equity market is about fifty trillion dollars.  They say the gross domestic product of the United States is about twenty trillion dollars.  If the Fed raises the Federal Funds Rate to provide a reasonable return to bond holders and to attempt to throttle inflation, then the stock market will fall, the housing market will fold its tent, and the federal government will strain to pay the interest on the national debt.”

J          “The Great Checkmate is the Great Seesaw.  The economy is allowed to teeter and then the economy is allowed to totter.  The next year will be quite a roller coaster ride.  Let’s compare notes at the end of the year.”

. . .

[See the “The Coming Global Financial Revolution: Russia Is Following the American Playbook” in “The Web of Debt” dated April 5, 2022 by Ellen Brown, the recipient of the Third Annual Noble Prize In Eco-nomics (October 8, 2018); consider the discussion of some of the possible changes and consequences of World War E in “The commodity currency revolution” in “Goldmoney” dated April 7, 2022 by Alasdair Macleod.]

[See the e-commentary at Careening Toward A Global Totalitarian Authoritarian Behemoth?  And Then There Is The Fed’s Self-Inflicted Great Checkmate. (January 3, 2022), Third Annual Noble Prize In Eco-nomics (October 8, 2018), Economics And Finance:  Girls v. Boys (June 4, 2018) and Gas / Au / Ag / Cu: The Great Commodity / Currency Wars: What’s Up? What’s Down? What’s Really Up? What’s Going Down? (November 17, 2014).]

Bumper stickers of the week:

Dragon < Eagle > Bruin; Dragon + Bruin > Eagle; Eagle + Bruin > Dragon

Free Assange Journalism is not a crime

“The geopolitical war also distracts attention from the urgent agenda of climate change, especially in light of recent indicators of global warming causing climate experts to be further alarmed.  Other matter of global concern including migration, biodiversity, poverty and apartheid are being again relegated to the back burners of global policy challenge, while the sociopathic game of Armageddon Roulette is being played without taking species wellbeing and survival into account, continuing the lethal recklessness that began the day the bomb was dropped on Hiroshima more than 75 years ago.

In concluding, the question ‘why Ukraine?’ calls for answers.  The standard answer of reverse racism, moral hypocrisy, and Western narrative control is not wrong but significantly incomplete if it does not include the geopolitical war that, while not now directly responsible for Ukrainian suffering, is from other perspectives more dangerous and destructive than that awful traditional war.  This geopolitical war of ‘poor’ choice is now being waged mainly by means of hostile propaganda, but also weapons and supplies while not killing directly outside of Ukraine.

This second war, so rarely identified much less assessed, is irresponsibly menacing the wellbeing of tens of millions of civilians around the world while arms dealers, post-conflict construction companies, and civilian and uniformed militarists exult.  To be provocative, I would say that it is time for the peace movement to make sure that the US loses this geopolitical war!  To win it, even persisting with it, would constitute a grave ‘geopolitical crime.’”  Richard Falk

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Venturing A Few Unfounded And Unwarranted Predictions (July 13, 2015)

Posted in "L" Shaped Economy, Bankruptcy, Banks and Banking System, Collapse, Depression, Elections, Foreign Policy, Gold, Gold Standard, Kleptocracy, Money, Pensions, Quantitative Easing, Recession, SDR - Special Drawing Rights, Security State, Silver, Silver Standard, Supernova Dollar, Zero Interest Rate Policy on July 13, 2015 by e-commentary.org

. . .

3          “Pensions will be even more problematic.”

4          “When the stock markets reset catastrophically, pensions will need to be reset correspondingly.”

3          “We will need to muster the collective intellect and imagination to craft a provision allowing states to file bankruptcy.”

. . .

3          “Interest rates cannot be allowed to rise and will not be allowed to rise beyond a nominal .25 percent.  Any greater rise would result in devastating financial and economic consequences.  Some nominal rise will be imposed to proclaim that interest rates can indeed rise above zero without negative consequence.  Those citizens who planned to fund a retirement with interest-bearing instruments have been sacrificed and will continue to be sacrificed without even a vote or even a debate on the policy.”

4          “Sacrifices have to be made.  Few folks are concerned or even aware that the Federal Reserve rather than the market sets interest rates.  The way I see it the Petrodollar will continue to rise as other currencies decline and those with the wherewithal seek the safety of the Petrodollar.  At this time.  The Petrodollar’s status as the world’s reserve currency and fundamentally weak foreign economies are a double magnet for money.  When the world establishes its own world currency such as a system of Special Drawing Rights (SDR) and circumvents the Petrodollar, the Petrodollar will explode and decline precipitously in value.  As I describe it, the ‘Supernova Dollar.’  The last American export – the Petrodollar and resulting inflation – will not be imported by the world.”

3          “Along those lines, the physical dollar will disappear from circulation in the United States before it disappears from the world stage.  The U.S. government and large corporations are slowly discouraging and will ultimately outlaw the use of dollars as ‘legal tender’ and as a medium of exchange.  Possession of gold and silver bullion by private citizens also will be outlawed.  The government will outsource to large corporations the issuance and control of the Universal Electronic Benefit Transfer (UEBT) cards to its subjects.  Current credit and debit cards will be re-purposed seamlessly.  The IRS will send a statement each year or even each month dictating one’s tax obligation and deducting the amount owed directly from one’s government controlled account.  As a consequence, everyone’s inclinations, transactions, and movements will be monitored and manipulated as necessary.”

4          “On the other hand, possession of gold and silver in any form by foreign citizens and governments will be the law and settled practice.  The West has readily abandoned gold and silver to an East that has eagerly absorbed the precious metals at rates that have been manipulated down by the West.  And gold and silver will be a component of the Special Drawing Rights.”

3          “The West will no longer be able to use paper and electronic transactions to manipulate the prices of physical gold and silver.”

4          “If the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system and the Petrodollar are circumvented, the West will be less able to use paper and electronic transactions to manipulate prices.”

. . .

3          “The nations in the oil-producing regions will not fight over the oil they have but over the water they do not have with far less involvement of and intervention by the United States.”

4          “Nation-States will also disappear as thriving and functioning communities and be replaced by Corporation-States that dictate policy.  The United States Congress took the lead and sold out to become the ‘Citigroup-Congress’ recently.  More than just naming rights are involved.  Current nations are just entities that can be manipulated and maneuvered to go to war with each other when necessary.”

3          “Along those lines, shares in United States Senators will be sold more openly akin to shares in corporations.  The news will announce that shares in ‘Senator Larry Jenkins, Inc.’ are up 3.1 percent today on news that he will sell his vote for the Big Project.  The John Roberts Supreme Court has endorsed the two-step business plan.  If you pay a politician directly for a vote, you are in trouble; if you pay an intermediary that pays a politician for a vote, you are blessed.”

4          “Notions of freely-established supply and demand for goods, services and commodities will yield to quotas per subject each month.  Without functioning markets and with regular and systematic market manipulation and intervention, notions of inflation and deflation will be antiquated.  World population will continue to grow and resources will continue to be more precious which under the old paradigm would fuel inflation.  However, people will simply do without.”

3          “Along those lines, capitalism is a system that socializes the costs of activities and privatizes the profits.  The end stage is the emergence of a very small cabal who control all resources and allow the subjects access to just enough resources to subsist in a police state that throttles any debate or dissent.”

4           “The treatment of Cyprus and Greece are intermediate stages in the process.”

3          “The future is not unpredictable.”

. . .

[See the efforts to eliminate cash at http://betterthancash.org/.%5D

[See the e-commentary at Monitoring The Masses: The Card And The Chip (January 12, 2015).]

Bumper stickers of the week:

If you do predict a definite event, do not pick a definite date.  If you do pick a definite date, do not predict a definite event.  Unless you want to.

In the past, if you could predict the future accurately, you could make a fortune.  In the present, you can predict the future astutely, but you cannot do much to protect your fortune or your future.  Even if you want to.

“The best way to predict your future is to help create it.”  Attributed to Abraham Lincoln

There are few warning signs on the off ramp down the road to serfdom.

What about global climate change?

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Prepping: Public And Private Perspectives (April 27, 2015)

Posted in Bail In, Bailout/Bribe, Bankruptcy, Banks and Banking System, Collapse, Debt/Deficits, Depression, Economics, Global Climate Change, Guns, Population, Recession on April 27, 2015 by e-commentary.org

. . .

C          “A system that cannot go on forever will not go on forever.  The System in its current incarnation cannot go on forever.  Thus, the debate shifts fundamentally from ‘if’ to ‘when.’  The syllogism suggests that fundamental change is in store.  Do we have the stores?”

D          “‘When’ not ‘if’ and also ‘what.’  Plan B is by definition less desirable than Plan A or presumably it would be Plan A.  The most desirable plan is failing.  What is Plan B?”

C          “The other systemic challenge is weather.  That problem like the financial machinations is also substantially man-made and man-modified.  Mother Nature allocates every region a specially-tailored natural catastrophe.  Florida and the Southeast get hurricanes, the Midwest gets tornadoes, the West Coast gets earthquakes, other regions get typhoons and cyclones.  And Mother Nature is shifting the script so that some areas get floods and some get drought.  The jet streams and the gulf streams are working in tandem to change things on the ground.”

D          “Leaves you wondering what is Plan B?”

. . .

C          “The script never varies.  The public Emergency Preparedness offices provide detailed lists of necessary supplies and valuable advice yet always unfailingly avoid even hinting that a gun, even one for hunting squirrels or pigeons, is a wise and prudent investment.  Some of them are reluctant even to mention acquiring a knife other than a pocket knife or perhaps a scalpel.”

D          “And the private sector prepper sites go to the other extreme and focus the entire discussion around guns and ammo and ammo and guns and guns and ammo.  The alpha, the bravo, the charlie and the delta of preparation for the Great Omega.”

C          “Get a gun.  We have a moral duty to protect our family and friends.  And get an LED flashlight.  And extra batteries.”

D          “And beans and bullets.  My personal Plan B combines public and private sector suggestions.”

. . .

C          “Going it alone is a failure from the start, yet desperately few humans have the intellectual and emotional software to engage others cooperatively.  Finding others who have resources, skills and tools is not promising.”

D          “At heart, the most prudent preparation is to restrain the dragons in our soul to free our mind.”

. . .

[And this past weekend, earthquakes in Nepal.]

[National PrepareAthon! Day on April 30 is a grassroots campaign for action to increase community preparedness and resilience.]

[See the e-commentary at Beans and Bullets (April 6, 2009), We Ain’t Ants; We Are Grasshoppers (April 9, 2012), On Community (June 3, 2013) and On Roiling And Rolling Collapse (March 9, 2015).]

Bumper stickers of the week:

Get a garden rake, get a gun, get a grip

“If you want to awaken all of humanity, then awaken all of yourself; if you want to eliminate the suffering in the world, then eliminate all that is dark and negative in yourself. Truly, the greatest gift you have to give is that of your own self-transformation.” Attributed by some to Lao Tzu, but who knows.

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“Fiat Gold” / Fool’s Gold (May 2, 2011)

Posted in "Fiat ______", Depression, Dollar - World's Reserve Currency, Economics, Gold Standard, Recession on May 2, 2011 by e-commentary.org

. . .

F          “Remember that back in 1933, President Franklin Roosevelt confiscated all gold, devalued the dollar and decreed that the United States no longer allowed U.S. citizens to convert dollars into gold.  On August 15, 1971, President Richard Nixon decreed that the United States no longer allowed for the convertibility of the dollar into gold.  At the same time, federal spending and dollar creation grew and continues to grow exponentially.  Gold is an unworkable and irrational benchmark and restraint, yet it was a brake.”

G          “You still believe that the rest of the world will decree that the dollar is no longer the world’s reserve currency.”

F          “Don’t lose faith.  In time, it is only a matter of time.  Even with careful explanations, the public will not understand the consequences.  If there is a ‘slinky slide’ rather than a sudden drop, ‘fiat dollars’ may be accepted for a few months or perhaps longer if there is still some residual faith in the greenback.  The buck is familiar and will be readily available, but it may stop here.  Some members of the public will shed their habit and shift their faith from ‘fiat dollars’ to gold and silver.”

G          “Moving from money to Morgans.”

F          “Then the Great Revelation will be revealed when they discover that they are now holding ‘fiat gold’ and ‘fiat silver.’  The half life of the fascination with the shiny stuff may be two or three months.  Then everyone will discover that the stuff is generally useless, although gold may be useful for some electrical connections and silver for our electrical devices.”

G          “And maybe the stuff is not really as necessary if there is limited delivery of electricity.”

F          “A garden shovel will be much more valuable than a golden bar.”

G          “And knowing how to use a garden shovel.”

F          “And being physically able to use a garden shovel.”

. . .

[See the “e-ssay” titled “Is The Gold Standard Really The Gold Standard? (January 18, 2010)”]   

Bumper stickers of the week:

Why is gold always priced in . . . dollars?

Fiat = Fiat = ?

All that glitters is not a medium of exchange, a store of value, and a unit of account. 

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“Peak Land”: The Exodus Toward The Equator . . . or the North Pole? (April 4, 2011)

Posted in Consumerism, Depression, Economics, Global Climate Change, Global Warming, Housing, Peak Land, Population, Recession on April 4, 2011 by e-commentary.org

. . .

7          “Look at the movement of the ‘center of population’ or the ‘median point’ of the population in America over the decades.  Opportunity, open space, sun shine, clean air, air conditioning, ‘right to work laws’ and lax state environmental and occupational regulations attracted individuals and businesses to the western longitudes and the southern latitudes of America.  The center has moved from Maryland to Missouri.  In the coming decades, the population will need to migrate closer to the sun which on this planet means closer to the equator.”

13        “Not enough dead dinosaurs.  The decline in fossil fuels will drive everyone crazy and may drive them to drive south.  About ninety percent of the Canadian population lives within one hundred miles of the United States border.  They can’t move far and remain Canadians.  We will need to move south.  However, people will not have the electricity to condition the air.”

7          “Americans are drifting toward the southwest, yet they cannot live and work there because of the limited water supply even if photovoltaic cells are welcome and promising.  The populace may end up moving to enclaves in Oregon.”

13        “Then we bump into another limit.  We as a people have always lived at ‘peak land’ because the total number of hectares is finite and known.”

7          “With the rising seas reducing the land mass.”

13        “Exactly.  I look at the globe and a map differently.  I see a narrow undulating band of livable land that does not demand the consumption of substantial deceased dinosaurs to stay warm, offers adequate water supplies and provides locally grown food.  The sustainable plat on the planet is contracting.  Even rising temperatures will not be enough to offset the prohibitive costs of heating cold regions and handling short growing seasons.”

7          “Yet as the perverse insulation envelops the Earth, northern climes may become temperate climates.  Canadians may be well positioned.”

13        “All the rates of change are in flux and uncertain.  We are now moving from ‘peak land’ to scarcer land.”

7          “We are on the wrong side of too many tipping points.  Usable land is contracting while the population is expanding.”

13        “While the population is exploding.  A friend estimated that the city will reach five hundred thousand residents by 2030.  I observed that the city would need to contract to fifty thousand residents at most.  He was nonplussed and added an aside about the birth rate.  I agreed that we are over gross and getting grosser.  Nonetheless, our numbers must shrink and migrate.  He remained nonplussed.”

7          “For most people, it does not add up.  They aren’t even doing the math.”

. . .

[April – National Poetry Month]

Bumper stickers of the week:

A half dozen six-word memoirs in an “e-poem” titled “Take only pictures; Leave only footprints.”

Many live humans; Few dead dinosaurs.

Disregard the e-con-omists; Regard the physicists.

Change your attitude; Range the latitudes.

Pay old bills*; Develop new skills.

Consume less junk; Savor more beauty.

So many challenges; So little time.

*          Craft your own financial game plan.  With hyperinflation on the way, purposefully delaying the payment of bills allows one to pay obligations with significantly devalued dollars.  That is the strategy being pursued by the governments. 

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The Depression is Over!? (September 20, 2010)

Posted in "L" Shaped Economy, Depression, Economics, Recession on September 20, 2010 by e-commentary.org

. . .

E     “The Depression is over.  So they say.  In fact, it was only a recession and has been over since June 2009.  So says the National Bureau of Economic Research, the NBER.”

U     “How does that work?  Can I get a job, go back to work and collect a paycheck retroactive to June, 2009?  That is my benchmark.”

E     “Call them.  The NBER is generally respected as institutions go.  They pegged it as just a recession that was over in June 2009.”

U     “Praise the Lord and pass the paycheck.”

E     “A well-informed citizen should understand the NBER economic model; I don’t.  There may not be enough time even late on Saturday night to analyze the economic model.  However, I follow every fundamental economic factor.  The economic fundamentals are worse than they were two years ago.  The NBER conclusion seems wrong.”

U     “I don’t understand the economic model, but I know the conclusion is wrong.”

. . .

Bumper stickers of the week:

Recessions are so overrated.

2 + 2 = 5

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So Many Words, So Few Ideas (Sept. 21, 2009)

Posted in Bernanke, English Language, Journalism, Recession, Society on September 21, 2009 by e-commentary.org

Too many books published today are distended essays on steroids.  Too many essays are too wordy and not too woody.  Writers are not paid by the word, yet they write as if they were.  Writers should write less; editors should edit more.

Nonetheless, there are far more well-written pieces than one can savor before the candle goes out.

(“The recession is very likely over at this point.”  Ben Bernanke, September 15, 2009 in a speech at the Brookings Institution, one year to the date after Senator McCain proclaimed on September 15, 2008:  “The fundamentals of our economy are sound.”)

Bumper sticker of the week:

The Six-Word Memoir is America’s Haiku

Obituary:

“During his lifetime, he penned over 418 books, 1279 essays, 3065 monographs, . . . received seven Pulitzer Prizes and three Nobel Prizes . . . and is known for one cleverly crafted original phrase propounded in 1985.”

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Housing Revisited (June 22, 2009)

Posted in Case-Shiller/S&P Index, Depression, Economics, Greenspan, Housing, Recession on June 22, 2009 by e-commentary.org

Four years have past, four summers, with . . . the housing market continuing to deteriorate.  The cover of the June 18 – 24, 2005 edition of “The Economist” depicts a falling brick with the words “House Prices” on it and leads with an article entitled “After the fall.”  The article and earlier articles in the magazine were prescient in warning about the explosive rise and pending collapse of house prices.  In conclusion, the article notes:

“Of course, by the time American prices begin to fall, probably sometime next year [2006], they will not be Mr. Greenspan’s headache.  He will have retired and someone else will be in his job.  If weaker house prices push the economy towards recession, the awkward truth is that America’s policymakers will have much less room to manoeuvre than they did after the stock market bubble burst.  Short-term interest rates of only 3% leave less scope for cuts.  In 2000, America had a budget surplus.  Today, it has a large deficit, ruling out big tax cuts.

The whole world economy is at risk.  The IMF has warned that, just as the upswing in house prices has been a global phenomenon, so any downturn is likely to be synchronized, and thus the effects of it will be shared widely.  The housing boom was fun while it lasted, but the biggest increase in wealth in history was largely an illusion.”

In the last few weeks, when someone applied for a building permit to construct a 12 by 16 foot shed, too many commentators were ready to proclaim the housing crash ended.  Few seem to realize that the housing market is just starting to crash.  The infection is now impacting families with reasonable fixed-rate 30-year mortgages and long-term ties to their communities who are losing their jobs and will soon lose their homes.

Until housing prices drop to at least the extrapolated historical levels of a bench mark such as the S&P/Case-Shiller Home Price Indices, the decline in prices will continue.  The Federal Funds Rate is zero which eliminates the primary tool to shape economic events.  The Fed is creating other gimmicks to stimulate the economy that are unwise, unwarranted and unfounded in law.  More later.

Bumper stickers of the week:

Still pushing hard on a string

Everything that goes down does not necessarily go up

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The “R” Word; The “D” Word or The “S” Word? (January 14, 2008)

Posted in Conflicts of Interest, Depression, Economics, Perjury, Rating Agencies, Recession on January 14, 2008 by e-commentary.org

“A recession occurs when your neighbor loses his job; a depression occurs when you lose your job.“  A recession is technically defined as two successive quarters of a downturn in the economy.  The traditional definition of a recession is backward looking.  Would you value being told that you were pregnant fifteen months ago?  Policy planning requires a more forward-looking perspective.  If you lose your job, is it a depression?  If you have less earning capacity despite working overtime and pay more for goods and services, is it stagflation?  (See the e-ssay dated August 7, 2006 entitled “The Fed: Deal With ‘Stag’; Deal With ‘Flation’?”).

The credit rating agencies such as Standard & Poor’s, Moody’s and Fitch suffered from the same grade inflation their employees suffered from in college.  Everyone in college gets As; their parents are spending too much to bestow anything less.  In the real world, the grade inflation is trebled.  The credit rating agencies gave the insurers of bonds the “AAA” ratings.  The insurers of bonds such as Ambac Financial Group and MBIA also suffered from grade inflation.  The insurers of bonds then gave everyone the “AAA” ratings.

The downturns in foreign markets today are a more accurate verdict on the state of and prospects for the American Economy.  In America, risk is not tied to reward whereas foreign investment professionals are more accountable for their performance.  And while the foreign kids were in college, they did not get As just for showing up.

[The recent incident in the Strait of Hormuz:  Gulf of Tonkin II or the USS Cole II?  The statements in English (not translated from a foreign language) from someone expressed a clear present intent to do harm.  The Navy responded in a professional and disciplined way and maintained their course and speed.  Someone can be provocative without provoking a response that is not in the nation’s interest.]

Bumper sticker of the week:

The Mortgage Meltdown continues.

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