Poor Man Survival
Self Reliance tools for
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ISSN
2161-5543
A Digest of Urban
Survival Resources
Attempting To Replace The Business
Cycle With A Credit Cycle
Time to put your crash plans into action.
Now that the world’s central banking
cartel is taking a long-overdue pause from printing money and handing it to the
wealthy elite…
There's mounting evidence that the Age of American
Exceptionalism is grinding to a halt.
Demographically, in the U.S. (as well as many other
developed nations), the prospects of the younger generations are substantially
less than those of the Baby Boomers. The same is true socioeconomically as
well; the wealth gap between the 1% and everyone else continues to accelerate.
In their quest for power and glory (and accompanied by a
dead-flat learning curve), the world’s central banks are now pursuing their
third, largest, and most ill-considered attempt to defeat the business cycle by
replacing it with a credit cycle. The fact that the prior two credit
cycles blew up spectacularly doesn't seem to be deterring them in the
slightest.
A rather minor business cycle slowdown in 1994 was
fought with a tidal wave of new credit under Greenspan. That ultimately resulted
in the Dot Com Bubble crash of 2000, but the lesson went unlearned.
Instead the Fed concluded that the idea was sound, but
was simply not taken far enough. The elite cheerleading squad, captained by
Paul Krugman, fully supported a doubling down, and the media unquestioningly
went along with the program.
So Greenspan and Bernanke created the Housing Bubble 1.0
by offering the world’s credit markets a price of money so low it couldn't be
refused. Housing was the story, and the Fed supplied the credit. As
predicted by a scant few of us, that all blew up spectacularly in
2008. And no constructive lessons were drawn from that experience, either.
With the political aircover to "save the
system" (from the problems that it created!), Bernanke, Yellen, Kuroda and
Draghi then led the most aggressive, coordinated central bank bender in all of
human history.
$Trillions and $trillions were printed up, and many
times that amount were leveraged and loaned throughout the banking and
speculative finance universes:
On the household level, the current recovery is also
the weakest of the post-World War II era. It’s about to get worse.
Many have predicted a downturn since the beginning of
last year.
Any rational person should be able to see that signs that the
U.S. economy is slowing down are all around us.
The
way that things wrapped up for the markets on Friday has many wondering what
Monday will bring. According to one key index, investors were dumping
stocks so rapidly on the Nasdaq on Friday afternoon that it was officially
considered to be “panic-like
activity”…
Selling
on the Nasdaq reached
panic-like proportions Friday afternoon with less than an
hour left in regular trade, as the exchange’s Arms index rose. The Arms is a
volume weighted breadth measure, that tends to rise when the broader market
falls, as the intensity of the selling in declining stocks is usually greater
than the intensity of buying in rising stocks. Levels above 2.000 are considered panic-like activity.
The Nasdaq Composite Index COMP, -3.05% was off 3% at 6,969. The
number of advancing stocks compared against decliners was at 2,108 to 787,
pushing the Arms index on the exchange to 2.068.
Stores are being closed at a
record pace …
Mall
and shopping center owners across the U.S. are preparing to be hit by more
store closures, following a brutal
year that included department store chains like Bon-Ton
and Sears going bankrupt, Toys R Us liquidating and even Walmart shutting
dozens of its club stores.
Now,
a slew of specialty retailers like Gap and L Brands are getting serious about downsizing,
which will leave more vacant storefronts within malls until landlords are able
to replace tenants.
As
a result of these store closings, large numbers of workers will be without
jobs, vendors will not be receiving orders and mall owners will be without
tenants.
General
Motors just shut a bunch of factories and
laid off 14,000 workers,
and Morgan Stanley analyst Adam Jonas is projecting that Ford will
soon be laying off large numbers of employees…
“We
estimate a large portion of Ford’s restructuring actions will be focused on
Ford Europe, a business we currently value at negative $7 billion,” Jonas wrote. “But we also
expect a significant restructuring effort in North America, involving
significant numbers of both salaried and hourly UAW and CAW workers.”
Ford’s
70,000 salaried employees have been told they face unspecified job losses by
the middle of next year as the
automaker works through an “organizational redesign” aimed at creating a
white-collar workforce “designed for speed,” according to
Karen Hampton, a spokeswoman.
“These
actions will come largely outside of North America,” Hampton said of Ford’s
restructuring. “All of this
work is ongoing and publishing a job-reduction figure at this point would be
pure speculation.”
Shifting gears, let’s talk about
agriculture.
If
farmers believed that the trade war was just temporary and that things would
soon swing back in their favor, many of them would keep trying to hold on for
as long as they possibly could.
But
instead, farm bankruptcies are surging …
A
total of 84 farms in the upper Midwest filed for bankruptcy between July 2017 and June
2018, according to
the Minneapolis
Star Tribune. That’s more than double the number of Chapter 12
filings during the same period in 2013 and 2014 in
Wisconsin, Minnesota, North Dakota, South Dakota, and Montana.
Farms
that produce corn, soybeans, milk, and beef were all suffering due to low
global demand and low prices before the trade war, and some economists, some
say our trade war is exacerbating the
weaknesses in the American
economy…while others indicate Trump’s policy is long overdue as China has been
screwing America for decades & it appears China may finally be
capitulating. China
has retaliated against the tariffs by slapping billions of dollars worth of
tariffs on
United States agriculture exports in response to Trump’s tariffs on Chinese
products. Other countries, including
Canada,
have also added duties to US agriculture products in response to Trump’s
tariffs on all imported steel and aluminum. The new NAFTA agreement may soon
balance things out and smooth imbalances.
Disposable income after inflation is up 23% since
December 2007. In the expansion of the 1990s, it grew over 40%.
And so it goes with many other economic measures.
Homeowner equity… corporate profits… even the S&P 500 adjusted for
inflation is weaker than it was during the booms of the 1980s and ’90s.
§ Global Systemically Important Banks
are down 30% from 52-week highs.
§ US Financials down 14.5% from 52-week highs.
§ Goldman Sachs is down 33% from
52-week highs.
We
haven’t seen anything like this since 2008, and we will want to watch the “too
big to fail” banks very carefully during the weeks ahead.
Every single asset class is doing poorly right now, and
as Zero Hedge has noted,
that means that “there’s nowhere to run”…
The
inability of any single asset class to escape the dismal black hole
supergravity of devastating losses in a brutal post-BTFD catharsis that has
mutated into an equal-opportunity rout, crushing returns across all assets, has
left investors reeling, shellshocked and paralyzed, and dreading what may come
tomorrow let alone next year when both the US economy and corporate earnings
are expected to see their supercharged recent growth rates come crashing back
down to earth.
Such
a uniform underperformance by all assets is unique in history, because when
“something falls, something else gains. Amid the financial catastrophe of 2008,
Treasuries rallied. In 1974, commodities were a bright spot. In 2002, it was
REITs.” Yet, in 2018, there’s
nowhere to run.
Meanwhile,
the FAANG stocks have been getting monkey-hammered as well.
By
the end of the day on Tuesday, those stocks had combined to lose more than 140 billion dollars
in market value…
§ Facebook fell 2.2 percent, losing $7.6 billion in implied
market value
§ Amazon fell 5.9 percent, losing $50.8 billion in implied
market value
§ Apple fell 4.4 percent, losing $38.5 billion in implied
market value
§ Netflix fell 5.2 percent, losing $6.5 billion in implied
market value
§ Alphabet fell 4.8 percent, losing $37.5 billion in implied
market value
That
would be enough money to buy
McDonald’s.
Stocks
closed well off their session lows last Thursday after news broke that the
Federal Reserve could tighten monetary policy at a slower pace than previously
expected-The Wall Street Journal Reported that the central bank is considering
whether to signal a wait-and-see approach to rate hikes at its upcoming meeting
this month. The report said Fed officials do not know what their next move on
rates will be after December.
This
just shows the immense power that the Federal Reserve possesses.
[Like
Ron Paul, I believe in free markets, and it annoys me that we have an
unelected, unaccountable panel of central bankers setting our interest rates
for us. As I have said in the past we need to shut down the Federal
Reserve and return to a system where interest rates are determined by the
marketplace.]
Rejection
rates for credit-card applicants came in at 20.8% in the October survey, up
from 14.4% a year ago, while the rejection rate for credit-limit increases
ticked up to 31.7%, compared with 24.9% a year ago.
Meanwhile,
the proportion of respondents who had an account shut down by a lender reached
its highest level since the Fed launched the “Credit Access Survey” in 2013. In
October, 7.2% of surveyed consumers reported having an account involuntarily
shut down in the previous 12 months, up from 5.7% last year and 4.2% in 2016.
The
reason why rejection rates and account shutdowns are soaring is because credit
card debt delinquency rates have been rising.
More
Americans are getting behind on their credit card payments, and this is
spooking a lot of financial institutions. But if consumer credit really
tightens up, that is going to cause economic activity to slow even further.
We
have been waiting for a long time for the largest financial bubble in American
history to burst, and now it is starting to happen. It is being called
“the Everything Bubble”, and as it implodes we are going to see things happen
that we have never seen before.
When
historians look back on this time of history someday, the crisis of 2008 will
be just a footnote compared to what is coming.
Despite
deregulation many are nervous that Democrats will screw things up when they
return to power in January and international markets are already experiencing
problems and challenges as I wrote about two issues ago which make investors
nervous…no doubt our FED will give the markets even more jitters by increasing
rates even more which the markets do not want [President Trump has blasted as
bad news for the economy]. Of course,
this seems to be what the international cartels desire.
And
now economic conditions are deteriorating once again nationally, and things are
about to get a much tougher for everyone.
Yours
for a brighter season,
Bruce
‘the Poor Man!’
Final Notes…
Parting thought…the government/banker system is wide open
devaluing the dollar with the unlimited printing of money. This is economic
war, pure and simple and Americans don't seem to care one way or the
other.
When the money printers print bales of paper money, the dollars already in circulation become worthless. Anybody should understand this debauching of the currency translates to widespread impoverishment. Those who have now will soon be have nots. No politician or government bureaucrat will reveal this to the American people.
The only possible reason for public ignorance is the government juggling the cost of the living index… and massive dumbing down by the public indoctrination system also known as government schools.
When the money printers print bales of paper money, the dollars already in circulation become worthless. Anybody should understand this debauching of the currency translates to widespread impoverishment. Those who have now will soon be have nots. No politician or government bureaucrat will reveal this to the American people.
The only possible reason for public ignorance is the government juggling the cost of the living index… and massive dumbing down by the public indoctrination system also known as government schools.
Contributors and subscribers enable the Poor Man Survivor to post 150+ free essays annually. It is for this reason they are Heroes and Heroines of New Media. Without your financial support, the free content would disappear for the simple reason that I cannot keep body and soul together on my meager book sales & ecommerce alone.
While it is focused on the devastating impact an EMP hit would
have on the military, it appears to support a congressional warning that up to
90 percent of the population on the East Coast would die in a year of an attack
that would dismantle or interfere with electricity, transportation, food
processing, and healthcare.
Another Day Older and Deeper In Debt (GE
Christenson)
The Treasury Department issues bonds and sells them to the Fed.
The Fed creates the dollars and buys the bonds. Insiders collect their swag,
the government pays off corporations and voters, and those new dollars devalue
existing dollars. Prices rise and the circus rolls down the road toward
debt-ruin.
The game works until confidence in the currency and/or the Fed
breaks. That confidence has not broken yet, but it will.
Canada outlaws the mailing of Precious Metals (Thomas
R.)
What's mind-boggling about this is that Canada Post is a Crown
Corporation owned by the government. Yet ANOTHER crown corporation, the Canada
Mint, SELLS Silver, Gold, Platinum, Palladium Bullion (i.e. non-manufactured
precious metals) and quite often Canadians can actually BUY that bullion... at
Canada Post Offices!
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3 comments:
I don't have the same grasp of economics as you do but it seems to boil down to what we've all known for years-the government and the FED [the source of our money problems] spend more than they take in via their international follies and we get stuck with the bill so they continually dilute the value of the dollar and we have less purchasing power - inflation which is why a fricking new truck cost $50K & we can only afford to lease them vs. own them now and why more Americans can't really afford a home nowadays. Do I have that right?
As always you manage to assemble a host of useful content!
All of this along with your previous post about the shrinking number of firms which own everything food related [I still like your description: the Washington-Wall Street Cartel] and how it affects consumers has been long doing the same to banking, and media [seems Att&T along with the Disney cartel own everything] drugs, etc. which ultimately mean less choice and options for everyone - AKA: means cartels are pulling the purse strings for everything and that means consumers are squeezed at both ends...Fewer jobs and fewer spending choices. In the end, we have zero control over local, national or international finances especially with any kind of say-so over government oversight on spending as they [government] ignores its electorate on most everything and only give credence to their corporate handlers.
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