Market Crash Watch Party

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Re: Market Crash Watch Party

Postby Harvey » Wed Jul 14, 2021 3:41 pm

In the UK, various friends and contacts have mentioned numerous black box buyers at auctions, buying up every property available on behalf of unknown entities.

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https://twitter.com/APhilosophae/status/1402434266970140676

Blackrock is buying every single family house they can find, paying 20-50% above asking price and outbidding normal home buyers. Why are corporations, pension funds and property investment groups buying...
And while we spoke of many things, fools and kings
This he said to me
"The greatest thing
You'll ever learn
Is just to love
And be loved
In return"


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Re: Market Crash Watch Party

Postby Grizzly » Fri Jul 16, 2021 6:15 pm


Kevin O'Leary says 3.5 billion people living in poverty is 'fantastic news'
“The more we do to you, the less you seem to believe we are doing it.”

― Joseph mengele
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Re: Market Crash Watch Party

Postby drstrangelove » Mon Jul 19, 2021 9:59 am

JP Morgan, State Street, Mellon, Citibank, and Goldman Sachs all -3%. Some approaching -4%

S&P -1.50%, DOW nearing -2%

I still believe July is month it's all down hill from.
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Re: Market Crash Watch Party

Postby Wombaticus Rex » Mon Aug 02, 2021 1:32 pm

drstrangelove » Mon Jul 19, 2021 8:59 am wrote:JP Morgan, State Street, Mellon, Citibank, and Goldman Sachs all -3%. Some approaching -4%

S&P -1.50%, DOW nearing -2%

I still believe July is month it's all down hill from.


The next 90 days will make or break your theory, for sure. WSJ's Andy Kessler wrote a very odd column to kick off what will surely be an odd month, "August Is Full of Surprises," which recaps some momentous historical events that went down during a month where "nothing ever happens." Most notably:

Surprise! On Aug. 15, 1971, President Nixon ended the international gold standard set up at the 1944 Bretton Woods Conference. Most didn’t see that coming. After years of funding Lyndon B. Johnson’s Great Society and the never-ending Vietnam War, the U.S. couldn’t afford both guns and butter as other countries began demanding physical gold instead of printed dollars for trade imbalances. Subsequent inflation was definitely not “transitory.” Oil embargoes and economic “malaise” followed. Real assets soared, stocks flatlined. This was broken only when President Reagan had Federal Reserve Chairman Paul Volcker’s back as he slew inflation with punishing interest-rate hikes.


Most oddly:

In August 2001, not much happened. Bill Clinton sold his memoirs to Knopf for $10 million. Oh, and there was some chatter. The next month changed everything.
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Re: Market Crash Watch Party

Postby drstrangelove » Mon Aug 02, 2021 1:52 pm

Nah I already concede the Kubrick theory. It was meant to crash july inline with an old babylonian festival called the sacaea. It was a pretty batshit theory anyway and had more to do with that exact thing happening in the Weimar Republic exactly 100 years ago. German market crashed July 1921. By 1923 hyperinflation had necessitated a currency reset. It was how Germany avoided paying reparations. Well, the first of many ways.

The synchronicity was too much.

I'd be very wrong if the market doesn't crash this year. And completely wrong if, whenever it eventually crashes, there isn't hyperinflation into a currency reset onto CBDC.
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Re: Market Crash Watch Party

Postby Wombaticus Rex » Mon Aug 02, 2021 2:29 pm

Well, Kubrick aside...

Set against apparently secular / systemic productivity stagnation, over-valuation and over-leveraging, and ongoing crises in logistics and infrastructure, this is looking like a pretty good Fall to be calling for a crash. And CBDC isn't just coming, it's here: that transition is going to happen whether it's necessitated by a "great reset" or not.

The experiment has been inevitable for years now, been accelerated by the rise of crypto assets, and now the pressure has been turned up even further by the newfound need for regular direct deposit stimulus to citizens, many of whom are tragically "unbanked," as the wonks put it.

That said, being able to roll that out for hundreds of millions this year in response to a crisis, shit. A big ask. That'd be exponentially more impressive than anything Operation Warp Speed accomplished. The trials going right now are modest, but their ambitions are sweeping. I'm assuming you've seen that the Atlantic Council has a whole tracker dashboard like what Johns Hopkins helpfully maintained for COVID -- in both cases the simple fact that it exists says more than any of the data itself.
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Re: Market Crash Watch Party

Postby drstrangelove » Mon Aug 02, 2021 10:29 pm

Well the currency reset wouldn't happen abruptly. The market would crash and all that leverage would flow out into commodities, which would be the point at which inflation we are currently seeing becomes hyperinflation. Germany was able to stay afloat from 1921-1923 using the printing press. So the fact central banks don't need to physically print cash, only credit accounts, has an effect. Which is something I haven't given enough thought to.

I would imagine hyperinflation into a currency reset would be a combering situation that unfolds alongside a media narrative to frame it 'appropriately'. Maybe 1-3 years. It can't be too long though, as there eventually comes civil unrest in the lower classes, who aren't actually affected by the currency reset itself since they have no savings, only the high prices of goods which is needed to get there.

A longer form piece which explains my reasoning:

The modern economy is based on debt. The creation of its reserve currency for foreign exchange, the US dollar, is backed by debt through the Federal Reserve’s bond purchasing program with the US Treasury.

The Treasury writes an IOU on a piece of paper and exchanges this with the Federal Reserve for fiat currency. Since the fiat currency is backed by the debt used to create it, if this debt is never repaid then the fiat currency is not actually backed by nothing, but less than nothing.

If this doesn’t make sense, it’s because it doesn’t. US debt is now at $28 trillion and rising, while the discussion over how to service it is no longer entertained.
If the debt doesn’t need to be paid off—ever, then modern monetary theory would be correct and central banks these days no longer use a money printer but a philosopher’s stone. They will have discovered the perfect mix of ingredients to create sound money from nothing at no cost. Which would mean that the debt used to make money is just wastage, a giant rubbish tip of exhausted ingredients which can be left to decompose.

On the other hand, if the debt needs to be dealt with at some point, and using currency already in circulation—not servicing debt with more debt—then there are only three options the US government have:

Taxation
Repudiation
Inflation

Taxation Option

This requires increasing the amount of real wealth so that it can be taxed at a rate which provides the government with a surplus used to pay off the debt. The problem with this is twofold.
Firstly, modern monetary policy produces real wealth through debt, which is what has to be paid off. Thus, the solution to a problem cannot be the problem itself.
Secondly, raising taxes without raising the real wealth of the tax base is unpopular and politicians don’t like making unpopular decisions if they don’t have to.
Repudiation Option

The government simply says it won’t pay the debt. As a result all government bonds become worthless and bondholders take the loss. Trust in the government is lost and the ability to finance future spending through bonds sales is diminished. Which means future spending will have to rely heavily on taxation, making the government even more unpopular.
Inflation Option

Currency the debt is payable in is devalued through inflation of it. The more currency is inflated the more devalued the debts payable in it become. If inflation is left to become hyperinflation, currency will begin to spiral towards worthlessness. As currency approaches the point of worthlessness, the debts payable in that currency approach worthlessness too. This is because at such a point the cost of paper or any other means for billing, begins to cost more than the debt it collects. Thus it becomes no longer profitable to collect debt, even if it technically still exists.

This is similar to Repudiation only all debt is erased, not just the governments. The government also never has to outright refuse to pay its debt, rather, the holders of it are compelled by the economic environment never to collect.

However, a gradual inflation, which has been the doctrine of modern monetary theory—being around 2%, can never solve the debt-crises precisely because the means for devaluing the debt creates more of it. Thus, the increase in debt offsets the devaluation of the currency it’s held in.
This means the only true way to solve a debt-crises through inflation is to ensure that it becomes hyperinflationary to the point money becomes worthless. And this requires a currency reset.
Currency Reset

Once currency becomes worthless it needs to be replaced with a new currency. This is called a currency reset.
The worthless currency is pegged to the new currency at an extraordinary rate of exchange, such as 1:1,000,000,000. Banks then discontinue credit lines in the old currency and issue them elusively in the new one.
Out of economic necessity people quickly adopt the new currency and leave the old one behind. At which point currency has been reset with a new stable one, and all debt left behind in an old worthless one.
In whose best interest would a currency reset be?

Put simply, those in the most amount of debt, but let's explore this.

The two institutions which determine how US debt is managed are the US Government—specifically the Treasury Department, and the Federal Reserve.

Institutions are vested interests, and will always act accordingly.

Of the three aforementioned remedies for the current debt-crises, assuming there is one, it could be speculated by some(me), that the one most likely to be chosen would be that which serves the best interests of both the US Government and Federal Reserve.

The government can’t realistically service the debt through taxation. The amount of tax which would have to be raised to pay off $28 trillion would require major hikes in the highest bracket. The people in this bracket are experts at not paying tax and there’s a global infrastructure of financial secrecy jurisdictions to assist them in this. So just raising taxes wouldn’t be enough, the government would also have to dismantle this tax avoidance network, which spans far beyond its jurisdiction, just to taxes from a group of people that would’ve already exodused the country at such a point. Put simply, this is not an option because austerity measures would have to be placed upon those with the power to reject them.

So taxation seems unlikely.

The government could repudiate the debt. Though this would be against the interests of those who hold government bonds. The biggest buyer of government bonds is the Federal Reserve. If the Federal Reserve refuses to buy government bonds then the Government must fund itself through raising taxes. Since it cannot effectively collect higher taxes in the upper brackets, it must collect them from the lower brackets, which is very unpopular with the majority of voters.

The pensioned middle classes are also major holders of government bonds. By repudiating the debt the government fucks over the middle classes who are never repaid, and then also has to raise taxes on them because neither they nor the central bank will want to buy its bonds anymore.

So while the government rids itself of a debt-crises, it does so at the cost of a funding crises and mass unpopularity. A government which does this is unlikely to survive the next election, which is why it only generally done by governments without such an affliction.

Repudiation in a nation of voters would require a current government placing the blame of past governments squarely on itself, only to help erase the debt of a future government, who are likely to be their replacement.

The transient nature of election cycles means the debt is handed down and added to as no self interested politician in their right mind would want to become the debt martyr. Such a thing is simply beyond the politicians nature.

If the government is incapable of ever dealing with the debt, then the only other option is the Federal Reserve. Which leaves currency reset and seemingly the only option.

When a currency resets, holders of government bonds are fucked over just as they are when a government repudiates that debt. However, in this case the government isn’t at fault as monetary policy is the responsibility of the central bank. As far as the government knows, their debt has been wiped away, the central bank is primarily at fault, and they don’t have to raise taxes. And all they've had to do on their end is pass popular public spending bills.
But it isn’t just government debt wiped away, but all debt in the old currency. Which means currency reset is an economy wide zero-sum game. Debtors win and creditors lose.
Broader economic interests

In early March of 2020 the stock market crashed sharply as it became apparent economies would be going into lockdowns.

On march 15th it began a swift recovery when the Federal Reserve announced(source) interest rates would drop to near zero and that the fractional reserve ratio previously required of retail banks had been abolished. The latter meant retail banks could theoretically loan out infinite amounts of credit at almost no interest.

Since then this cheap credit has poured into the economy in mostly three ways:

Leveraged buyouts
Stock purchases
Property purchases

The lending measures by the Fed instantly initiated a stock market boom. The market has been suckling on this credit ever since, up until the present moment as I’m writing this, where it appears to be teetering out as the first “clear” signs of “unexpected” inflation begin to show. There are fears now that the Fed will stop breast feeding it cheap credit to combat inflation. However, if the Fed is in planning a currency reset, then the market has nothing to fear for now, as it will be needed to further hide the expansion of the money supply.

The stock market is important for the creation of hyperinflation as it prevents cheap credit from spreading out across the economy, where it would hike commodity prices and become noticeable.
Instead the credit blows bubbles in the stock market where it stores, and no one notices this over the frenzy of trying to become rich.

This allows the Fed to keep expanding the supply of money while hiding the inflationary effects of doing so. It’s all about buying time for the seed of hyperinflation to grow. And when the stock market eventually crashes of course, all that stored up cheap credit floods out all at once and into everything else, which becomes the spark sending prices over the edge and into hyperinflation.

For this reason, if the Fed where wanting a currency reset, then the stock market would be their greatest weapon for doing it, and would have to nurture the market on its breast for as long as possible until just the right time.

Retail bank credit has also been blowing bubbles in the property market. If interest rates are held down long enough, and hyperinflation unfolds quick enough into a currency reset, then all that debt used to purchase property could be repaid with the value of a cup of tea before banks can foreclose on it. Thus, those who know what they are doing or have cosy relationships with credit lenders are currently going into to debt to buy up whatever they can get their hands on at whatever price, knowing that the value of their assets will soar and the value of debt used to purchase those assets will plummet.

As the Fed uses retail banks to blow up private sector spending in the corporate, stock, and property markets; it is also buying government bonds to blow up public sector spending. It cannot hide the latter and needn’t do, as government spending and stimulus checks are supported by the majority of people who assume it’s going to them, and is only opposed by the minority of people it mostly goes to.
The central banking interest

The Fed isn’t a self contained interest group, rather it is a node in a globalised central banking network governed by a nexus acting as a central bank for central banks, called the Bank For International Settlements(BIS). The BIS probably has one of the seediest histories of any modern institution, though that’s beyond the scope of the discussion here.

The primary interest of the BIS is to maintain control over global currency markets and foreign exchanges through a top-down governance policy framework. It acts as an information authority to central banks subscribed to its policy frameworks, such as Basel III, through subscription tiers like the G7 and G20 forums.
The Feds interests are internationalist and share the BIS agenda, which is maintaining control over universal exchange currency.

In January 2020 the BIS announced(source) an agenda to develop a Central Banking Digital Currency(CBDC). The CBDC is still quasi speculative at this point so the form it will take is uncertain, but generally speaking it is a centralised digital currency distributed distributed directly to consumers, thus cutting out the middle man position of retail banks possibly.

There are many reasons why the BIS and governments would want to replace the current debt-based currencies with CBDC. Most importantly it secures the position of Central Banks within an emerging economic environment of crypto- currencies utilising anonymous transaction ledgers. The technology driving this is blockchain infrastructure. It is decentralised, anonymous and autonomous, and because of this threatens the BIS, which is a transaction ledger itself.
So in adapting to this modern environment, the BIS is seeking to take blockchain technology and morph it into a fully centralised and monitorable transaction ledger under their control. They will then ensure that their version of blockchain becomes the standard universally adopted.
Them accomplishing this is inevitable, the only thing in question is the timeline and ultimate form it will take. China’s central bank has already rolled out CBDC and is experimenting with the possibilities of the technology through such things as providing economic stimulus payments which have a time expiry, thus ensuring it serves its purpose.

The biggest hurdle for CBDC is the initial introduction of it. If there are alternatives available providing things CBDC cannot adoption will be slow. CBDC cannot provide anonymity. Which means all currencies which do are a threat to it. Some more than others, the main one being cash, which is the only means available to the working classes for tax avoidance. Currencies like bitcoin aren’t really a threat as they can never been scaled to become a universal exchange standard. And if even if they could, the mining infrastructure which facilitates autonomous transactions is easily regulated and abolished by any government on environmental grounds, which is currently in the works. Further more, like anything digital, crypto-currencies and their ledgers are susceptible to cyberattacks in some way or form. Barring all else these currencies rely on the material infrastructure of the internet, which is controlled by interests subservient to the central banks.
Thus, it is not the digital alternatives to CBDC which threaten its adoption, but the analogy properties of cash providing anonymity for day to day transactions. You could call cash completely decentralised grassroots currency as there is no transaction ledger other than the one people may choose to keep.

The only way to get rid of cash would be to outlaw ownership of it. This would be an unpopular decision for a government to have to make, and an unnecessary one too. Because people will throw cash away themselves if it becomes worthless.

The only way to make cash worthless is through hyperinflation, which is the means for gaining the mandate of a currency reset.

The following is what a hyperinflation toward a currency reset onto CBDC would achieve for those with an interest in them:
- Makes anonymous cash worthless
- Makes the introduction of centralised CBDC a necessity
- increases government spending and then erases government debt
- increases corporate growth and then erases corporate debt
- Increases the wealth of the asset rich.

The only people who lose are the middle classes whose savings are used to purchase government bonds. The lower classes without savings have nothing to lose and also gain stimulus checks as part of the process. They will suffer during the actual hyperinflation period itself, but if this period is short and quick, like a band-aid rip, then there shouldn’t be too much damage caused by the resulting civil unrest.

A currency reset is in the best interests of all those who have the power to do it. And the only time they could get away with it is right now, during this pandemic, while the whole world is in a state of confusion.

As I write this inflation has begun to rear it’s head. The stock market is feeling rather uncertain as it assumes the Fed will crunch credit. But a currency reset is on the agenda then it won’t do this. This is because CBDC is still in developmental phase at the BIS and isn’t ready to be rolled out. This means interest rates must stay down so the market bubble holds until the time it needs to be popped to ignite hyperinflation.

The current trend we are on is very similar to Wiemar Germany exactly a century ago.
1919 - Post war money creation begins
1920 (start of)- Stock market boom begins
1921 (end of) - Stock market begins to decline
1922 - Stock Market begins to crash and hyperinflation begins.
1923(November)- The Reichsmark becomes worthless. The Rentenmark is rolled out pegged at 1 trillion Reichsmarks.

If we are to follow the Wiemar trajectory then things will begin to kick off in June/July 2021. So a couple months from now, being May 2021. Events would synchronise perfectly a century apart from some kind of obsession for round numbers.

It’s hard to tell when the BIS would be ready for a CBDC currency reset. The BIS appears to be past the planning stage and well into development one(source). What follows next is rollout.
It would be safe to assume the technology is ready, as China’s Central Bank has already rolled it out domestically, meaning Chinese CBDC is ready to be plugged into the BIS foreign-exchange backbone.
The fallout of currency reset

There can be no consequences for the actions which cause it, as these are explained away as unfortunate and unforeseen externalities in response to an unprecedented global crises. Governments can blame central banks and the pandemic. The private sector can blame government spending. And central banks needn’t explain themselves as they aren’t elected by people or regulated by governments, but will probably elude to the broader economic environment induced by the pandemic.

The public will be bamboozled by a new industry of takes. Sycophants of all kinds will be ready to bend the knee for a chance to sign onto the Bertelsmann-Springer monopoly’s mass publication of carbon copy books loosely entitled “The Crises. What happened.”. Ultimately it will resonate in history as a complicated mixture of various causes explaining away intended effects. Initially, anything which suggests there was intention will be deemed too simple an explanation for too complex an economic landscape. After a universal narrative is set, anything which suggests an alternative of strategic planning will be deemed too complex and outlandish on the principal Occam’s razor. It will simply come down to incompetence in crises.

Anyway, stay the fuck away from government bonds and enjoy the show. They certainly did a century ago.


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Re: Market Crash Watch Party

Postby Wombaticus Rex » Tue Aug 03, 2021 9:40 am

Another velvet monkey wrench: the commodities markets, globally, are denominated in USD.

Fed intervention in interest rates has always had an effect on the decision big commodity powerhouses make but -- prior to the Great Resttery, at least -- the Fed has never directly intervened in the commodity sphere. Not that this is some sacred firewall, mind, it's more that they haven't had to. Thanks to futures contracts getting rendered every day, the delicate dance of backwardation and contango keeps everyone incentivized to produce their goods, give or take three to six months of industry-wide collusion to get spot prices into the sweetest spot possible. Yet it's because price crashes can be severe and durable that these cartels are compelled to keep their spice flowing.

It's worth considering that the last time the commodities had a secular boom or "Supercycle" (everything has a fucking cape on these days) was the peak of China's rise to global power. There are a lot of assumptions built into that sentence, but charging onward, most of the momentum in that boom was driven by oil demand and oil supply uncertainty. Somewhere here on RI we have a "Peak Oil" thread that capped out at about seven billion pages. Once the Arab Spring started conveniently putting oil volatility through the fuckin' roof, the market and the world was basically handed over to men like Ian Taylor or Andy "God" Hall and the US made a suicidal but undeniably technically impressive bid to become a net exporter of petrol.

In support of your theory, though: oil prices recently had an historicalicious paroxysm that, briefly, resulted in negative WTI prices on Hitler's birthday. Given the scale of global demand and the financial pressure on shale operators every month, it is quite safe to assume that prices will continue to climb further. I blame Biden, but ironically.

Further, there is absolutely stupendous pressure on the entire global supply chain thanks to nCoV shocks, infrastructure problems, and a certain island nation engaging in a science fiction sized exodus of all their most sensitive and valuable manufacturing equipment in advance of a Chinese takeover. So regardless of the underlying production cost and market value of any given commodity, their spot prices will continue to increase solely due to shipping problems. This is a rather unprecedented wrinkle.

So upstream on the manufacturing chain, high end and high tech products will be facing shortages they cannot substitute for and this will wreak havoc through 2023.

Despite all that chaos, though, wheat is wheat and soybeans are soybeans. The pressure there is going to come from weather chaos and, again, the logistical challenges of making contractual deliveries. I suspect we'll see a lot of shipping firms get acquired outright by commodity traders -- hardly new but I think the scale and speed of it into this fall will be intense.

I also suspect we'll see some radical changes get made to the delivery pipeline itself. There's been a lot of innovation there already, but much of it was driven by JIT business logic dreamed up by the same assholes in suits who gave us "Software as a Service." The next round of innovation will be in shortening supply chains, something Harald Malmgren has been seeing and discussing for a decade now as part of the "fourth industrial revolution." (Note that there are two of those - the Klaus Schwab version is sci-fi bullshit, the Malmgren version is low-budget, decentralized and driven by advances in materials and small-scale manufacturing, not some 6GW "Internet of Things" panopticon.)

I reckon we'll see full scale CBDC rollouts long before we start to see the effects of a new industrial revolution, though.

Consumers will absolutely be hit by a savage increase in prices, especially for anything more complicated than a boombox. Depending on how the rest of this summer plays out, the pressure on food prices will be somewhere between heavy and severe, too. Although it should be easy for the propaganda machine to spin all this as something that can be cured by a Great Reset, that would of course be a cheap dumb lie. Never stopped them before.

But to come back to where this rant started, I think there is a lot of ceiling for the Federal Reserve and Treasury Dept to assist and intervene in commodities, and more fundamentally / broadly, US consumers will feel less price pressure than anyone else in a globalized economy that runs on debt that is all rendered in USD. And the price crunch, especially in food, will hit China harder than anywhere else outside of Africa.
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Re: Market Crash Watch Party

Postby Wombaticus Rex » Thu Aug 05, 2021 10:19 am

Been hearing & reading a lot of fascinating things about the incoming shipping / logistics crunch. It appears to be more than a transient crisis, too, because the timing overlaps with big shifts in market structure as well as novel technologies becoming more tractable & practical. There will be a lot of rethinking supply chains - yet of course that was going to happen anyway, crisis or not. Any savings you can extract on the raw materials or transport level result in huge increases in profit margins, so that's already incentivized as regular hygiene.

It's also worth remembering that "rethinking" in general results in a lot of ideas on a lot of whiteboards, but not always a lot of actual change. ~40% of the worlds electricity still comes from coal, after all. Classics never die, they just fall out of fashion. There's been a new miracle replacement for concrete waiting in the wings every two years for the past five decades, yet it always seems to fizzle out into mere hype.

For the most part, consumer goods are still going to get manufactured in cheap-ass countries and shipped around the world in big-ass ships. Expect to see the big shifts happen in terms of the locations of both the manufacturing centers, and the locations (and operating rules) of the ports. I'm betting we're going to witness a lot more Free Trade Zones get minted over the next half-decade.

Anyways - some collected excerpts from the trade rags of global capital. First up, John Dizard, who has a good track record for a guy who has done nothing but prognosticate in print for three decades:

The supply chain practitioners I’ve been interviewing figure that the port backups, unavailable trucks, Covid-19 restrictions and unskilled warehouse staff will be more or less ironed out by Chinese new year.

That is on February 1 of next year. So now you have an educated guess about when the North American economy will take a dive.
China seems to have already slowed. The words “Europe” and “boom” have not been connected for a long time.

...

A few on-the-run, contemporary central bank economists have explored the possible role of inventory “adjustments” in recent recessions. But that will not be the headline coming out of the central bankers’ star turn in Jackson Hole, Wyoming, in late August.

An inventory recession on the horizon? No, that would suggest official finance is not “in control” with all the “tools they need”. But what can the US Federal Reserve or the European Central Bank do about double and triple ordering caused by truck drivers’ retirements and bridge shutdowns? Buy two containers of rubber bath ducks when the retail customers only wanted one? That would be a truly unconventional asset purchase programme.

At last, though, container shipowners can enter by the front door without being grabbed by the creditors’ marshals. Every operator in the chain is finally cash rich. As one logistics analyst said: “For me, the more chaos, the better.”

...

Container owners are coining it. As Lars Jensen, of Vespucci Maritime in Copenhagen points out: “Under normal circumstances. a container will go from the factory in Shanghai to Chicago in 35 days. Now it takes up to 73 days, and then the same container has to be returned (usually empty).” Not surprisingly, the spot rental for containers from China to the US west coast has risen from an already high $4,000 or so at the beginning of the year to almost $10,000 in the past couple of weeks.

Of course, most shippers and shipping lines will not want to pay spot rates. Triton International, a US-listed container lessor that has about 40 per cent of the container leasing market, had second-quarter net income of $144.2m, up 148 per cent from the same quarter last year. The company finally snagged an investment grade rating (triple B minus), and did so even while ordering more than 1.1m TEU (twenty foot container equivalent units) of new boxes to add to the 7m they already had on hand.


More on the container aspect from ol' WSJ:

Container factories, concentrated almost solely in China, are expected to produce a record 5.4 million 20-foot-equivalent units, or TEUs, of the steel boxes this year, according to Drewry Shipping Consultants Ltd. The production has grown rapidly since 2.8 million TEUs were produced in 2019, part of a yearslong decline in orders amid economic uncertainty and slowing global trade growth.

John Fossey, head of container equipment and leasing research for London-based Drewry, said that in principle there are more than enough containers to handle global trading volumes. In practice, he said, availability in several parts of the world has become incredibly tight because large volumes of containers are stuck in the wrong place.

Mr. Fossey said the pullback in production in recent years may have contributed to today’s shortages, but the disruption triggered by the pandemic has been the main factor hampering availability.

Lars Jensen of Denmark-based shipping consultants Vespucci Maritime, traces the beginning of the container shortage to the early months of the pandemic, in the spring of 2020, when consumer demand slumped and shipping lines canceled many of their routes between Asia and North America. As consumer demand snapped back during the summer of 2020, thousands of empty containers were stuck in the U.S. and exporters in China faced long waits for boxes to ship their goods.

Now, some U.S. exporters say shipping lines are refusing to send boxes inland to pick up their cargo because they are trying to get empty containers back to factories in Asia as quickly as possible to take advantage of historically high shipping prices for exports from the continent.


Peter Friedmann, executive director of the Agriculture Transportation Coalition, said a survey of members in the fall showed that 22% of sales are lost because they can’t get cargo overseas.


This is going to hit the East Coast hardest of all, because the system was built by organized crime:

Chicago is strained because all seven of the major North American freight railroads converge, creating a complicated web of operations in which inbound and outbound shipments are traded off between trains and trucks. It is also located within a 500-mile truck journey of about one-third of the U.S. population, making it a prime distribution hub, shipping experts say.

“If you’re moving anything via rail from coast to coast, you’re almost guaranteed it’s got to come through Chicago,” said Maciek Nowak, a professor of supply chain management at Loyola University Chicago’s Quinlan School of Business.

Chicago is perpetually a chokepoint, Mr. Nowak noted. Freight trains, which take several days to reach the city from thousands of miles away, can spend another day or two traversing it because they have to cross busy roads, he added.


From the same piece, there's very little room to improvise available -- and all of it is competitive:

Darin Cooprider, senior vice president for supply chain solutions at Ryder System Inc., said the current suspension and metering are the most substantial restrictions on eastbound goods he has seen for some time, and shippers have few alternatives.

Airfreight is prohibitively expensive, he noted, while moving goods by truck from the West Coast is more costly than rail and requires drivers and equipment currently in short supply.

“If you switch everything from rail to truck, it just makes matters worse, not better, and it ties up that truck for multiple days, adding further insult to injury,” he said.

Some third-party logistics firms say customers are diverting rail orders to St. Louis and Kansas City, Mo., or to Memphis, Tenn. Mark Ori, senior vice president of enterprise development for Redwood Multimodal, said demand is pushing up last-minute rates from those cities.


Unprecedented opportunities abound for rent seekers:

Traditionally, landlords have required business tenants to sign leases of between three and five years, according to Mr. DeLuca. Today, landlords in the area are requiring seven- to 10-year leases to lock in space at current rates, he said.

...

Real-estate group CBRE Group Inc. in a recent report said asking rents across the U.S. were up 7.1% year-over-year in the first quarter, but that the rents for industrial space in northern New Jersey and the Inland Empire, the industrial zone east of Los Angeles, were up 33.3% and 24.1%, respectively, from the same period the year before.

Storage rates have in some cases doubled in the last several years, according to Karl Siebrecht, chief executive of Seattle-based Flexe Inc., which connects businesses to warehouses with shared space. “Customers have been normalized to those rate increases,” he said.


From a FT blander overview published on August 1st:

Manufacturers are tacking on surcharges and bemoaning lost business, with industrial conglomerate Honeywell International blaming supply chain difficulties for a revenue hit of up to $200m. Retailers are scrambling to secure enough products to sell for the holiday season, with big chains ordering larger amounts of inventory than normal, hoping at least some of it arrives on time.

“The global supply chain was not built for this,” said Brian Bourke, chief growth officer at Seko Logistics in suburban Chicago. “They were built for seasonal surges of demand annually. When you have 12 peak seasons in every mode, things begin to break down.”

...

Goods coming from China are delayed by 15 to 20 days after their arrival at US ports, and up to a quarter of intermodal shipping containers are unavailable because some are being used as temporary storage, according to the company.

Ports on both US coasts are straining. Long Beach moved more than 907,000 containers in May, the highest number since 1995. Nine out of the port’s 10 busiest months in the past quarter century have all come in the past 12 months. Across the country, the port at Savannah, Georgia moved 5.3m containers for the 12 months ending June 30, a record for the port and 20 per cent more than the previous fiscal year.

“I don’t think there’s a port in the country that hasn’t been touched by congestion,” said Todd Tranausky, a transportation analyst with FTR.

At the railroads, aggressive furloughing has left companies without the necessary staff to handle the surge in demand, Tranausky said. Rates have risen commensurately, with shipping prices up to 15 per cent higher than they were a year ago. Though he forecasted the increase will slow in the second half of the year and in 2022, “it’s not going to be, by any stretch of the imagination, a shipper’s market”.


The piece goes on to detail at quotidian length the increases in cost for various consumer staples. Although Biden's sleepwalking PR administration is at pains to squash the perception -- indeed, even the mention -- of "inflation," these increases are being driven by the supply chain more than a diminishing dollar. Relative to FX baskets, the US dollar is only getting stronger. In practice, as this musical chairs shitshow unwinds over the next 6-8 months, this means that dollar markets will be prioritized for deliveries. (As ever.)

There's another big bottleneck at the other end of this equation, though, and that's household budgets. Consumer spending is already notably down over the past quarter and that will likely continue, even if another round of direct deposit stimulus comes through.

A more interesting aspect I've been hearing about from those in the business but not seeing in the press yet (I work for a 3PL firm although my day job doesn't interface with warehousing or shipping at all) is the problem of maintenance. Halfway through this lurching bullwhip effect roller coaster, the shortage of raw materials and the breakdown of transport is going to mean that transport and manufacturing equipment is going to come up against a shortage in spare parts as their inventories draw down with no replacements.

The ripple effect of this will be ugly and fast, and worse yet, it will come in the middle of the winter when equipment breakdowns are common and constant already. Fun times & memorable headlines ahead.
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Re: Market Crash Watch Party

Postby Grizzly » Thu Aug 05, 2021 11:12 pm

Image
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Re: Market Crash Watch Party

Postby Wombaticus Rex » Fri Aug 06, 2021 9:20 am

That seems more like the market functioning normally, non? Regulatory capture never fully ends.

It also curiously omits Mike Donilon, "Biden's conscience, alter ego and shared brain," brother of Blackrock chairman Thomas, and Thomas's wife Catherine Russell, currently director of personnel after being a longtime assistant to "doctor" and noted educational expert Jill Biden. It's just a Blackrock administration. As we have noted elsewhere, Biden's staff are even more redundant than Trump's were; all the substantive decisions and maneuvers are being made in boardrooms now. The Oval Office is nothing but a TV set now, a fitting end to the American Dream.

Anyways. Natural gas boom points towards the overall commodity supercycle shaping up:

The era of cheap natural gas is over, giving way to an age of far more costly energy that will create ripple effects across the global economy.

Natural gas, used to generate electricity and heat homes, was abundant and cheap during much of the last decade amid a boom in supply from the U.S. to Australia. That came crashing to a halt this year as demand drastically outpaced new supply. European gas rates reached a record this week, while deliveries of the liquefied fuel to Asia are near an all-time high for this time of year.

With few other options, the world is expected to depend more on cleaner-burning gas as a replacement to coal to help achieve near-term green goals. But as producers curb investments into new supply amid calls from climate-conscious investors and governments, it is becoming apparent that expensive energy is here to stay.

“No matter how you look at it, gas will be the transition fuel for decades to come as major economies are committed to reach carbon emission targets,” said Chris Weafer, chief executive officer of Moscow-based Macro-Advisory Ltd. “The price of gas is more likely to stay elevated over the medium-term and to rise over the longer-term.”

...

Surging natural gas prices means it will be costlier to power factories or produce petrochemicals, rattling every corner of the global economy and fueling inflation fears. For consumers, it will bring higher monthly energy and gas utility bills. It will cost more to power a washing machine, take a hot shower and cook dinner.

It’s especially bad news for poorer nations like Pakistan and Bangladesh that reworked entire energy policies on the premise that the fuel’s price would be lower for longer.

European natural gas rates have surged more than 1,000% from a record low in May 2020 due to the pandemic, while Asian LNG rates have jumped about six-fold in the last year. Even prices in the U.S., where the shale revolution has significantly boosted production of the fuel, have rallied to the highest level for this time of year in a decade.
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Re: Market Crash Watch Party

Postby Elvis » Thu Aug 12, 2021 11:53 pm

Eccles Patman 1947 debt.jpg

https://fraser.stlouisfed.org/files/doc ... rchgov.pdf

drstrangelove wrote:The modern economy is based on debt.

So were ancient economies; in fact economies (even pre-money) have always been based on the principle of "I owe you one."

drstrangelove wrote:The Treasury writes an IOU on a piece of paper and exchanges this with the Federal Reserve for fiat currency.

A Treasury bond is fiat money. When the Treasury creates a Treasury bond, it's creating money: a $100K Treasury bond is $100K.

Selling government bonds indirectly to the Fed to add numbers to the Treasury's General Account is a neat charade that barely conceals the fact that the government is financing itself (some other countries have abondoned the charade).

Treasuries are IOU's, just as a dollar bill is an IOU; the two are just designed differently (e.g., one is interest bearing, the other is not, etc).

How are Treasury bonds "repaid"? You can go to treasurydirect.gov and buy a 30-year Treasury bond, and at any time later, if you change your mind and ask for your money back, the Treasury moves the number from your bond account back to your bank account. It's the same if you let the bond mature; in that case the money is automatically moved from one account to the other (like from savings to checking). Hundreds of billions in Treasuries are constantly thus redeemed (most are rolled over rather than "cashed out"); no one, least of all taxpayers, is ever 'stuck with the bill.'

The false assumption that Treasury bonds must be "repaid," as if the government must go "find the money" somewhere to pay bond holders (it doesn't), only leads to grossly mistaken conclusions.

This may help—an explanation by Frank Newman, a former Treasury Dept. deputy with broad experience across both public and private sectors:

FNewman ch3 treasuries 01m.jpg


FNewman ch3 treasuries 02m.jpg


FNewman ch3 treasuries 03m.jpg


FNewman ch3 treasuries 04m.jpg


Frank Newman book007m.jpg


Frank Newman book008m.jpg


Frank Newman book009m.jpg


So much for the "current debt-crises," which exists only in the minds of the misinformed and those who use its spectre as a political cudgel.

It also helps to remember that the dollars used to buy Treasuries comes from dollars previously issued by the government.


drstrangelove wrote:The government can’t realistically service the debt through taxation.

Correct, and nor does it in any way need to, nor should it even try.

Frank Newman:
I even try to avoid using the expression “borrow” when the Treasury issues securities; the Treasury is
providing an opportunity for investors to move funds from risky banks to safe and liquid Treasuries.



drstrangelove wrote: If the Federal Reserve refuses to buy government bonds then the Government must fund itself through raising taxes.

The Fed cannot refuse an order by Congress, and the Fed refusing an order by the Treasury Dept. is legally dubious and highly unlikely, and would trigger some kind of constitutional crisis (which the Fed dissenters would lose). Congress has amended the Fed Act many times, and regularly tells the Fed what to do and not do (e.g. see the recent relief acts). The Fed is granted a measure of independence, but the Fed is not some kind of God that can overrule the US government; it exists as a creature and an agency of the government.


https://www.youtube.com/watch?v=pH2RLObp41o

drstrangelove wrote:if the Fed is in planning a currency reset

Keep in mind that money is a designed thing, and any "currency reset" would require an act of Congress, and any "new currency" would necessarily go through design stages, so no one can say what the final design might be. Design would include the Fed's role in it.


drstrangelove wrote:The CBDC

I'm seeing not one CBDC, but rather individual currency-issuing countries contemplating different designs for national CBDCs. If we're talking about a foreign exchange currency to replace the dollar's world reserve primacy, I think something along Keynes' idea of the bancor as the exchange unit seems good—better than what we got: the IMF and US global monetary primacy.


drstrangelove wrote:The current trend we are on is very similar to Wiemar Germany exactly a century ago

Except the conditions in the US are nothing like they were in Weimar Germany. Omitted from your timeline is Germany's war-torn production capacity and crushing war reparations payable in gold, not to mention private banks demanding repayment—perhaps in other currencies. Germany printed money, oh yeah, but did so in response to a resource crisis—which is the usual cause of inflation. (Zimbabwe and Venezuela can be unpacked another time.)

By 1923 hyperinflation had necessitated a currency reset.

...because immediate postwar resource constraints caused prices to rise.


In any money-based economy, we pretty much have a choice between some inflation or some deflation; changing conditions affect price, i.e. the value of a particular thing. Two percent annually over 30 years seems pretty reasonable, and reflects some degree of good management, even if the managers themselves aren't fully certain about what they did right.


Is some kind of redesign appropriate? How does money's design affect us and the kind of society we have?

Christine Desan:
Mehrsa Baradaran’s book teaches us that money has a color, an arresting proposition to fans and foes of capitalism alike. As she points out, economic orthodoxy posits that the transactional medium is itself a formal instrument: money expresses but does not affect the value of the substances it measures. Critics of that orthodoxy agree even as they bemoan the results: money denies through its very impersonality the social substrate of exchange. Against that commonsense, Baradaran directs us to consider how the institutions of money creation in the United States – commercial banks – have systemically originated money in white hands over decades. That is, considering money as a process – asking how value is packaged into the everyday units we call dollars and injected into circulation – reveals that we have designed a market that is racially discriminatory in its very medium.

Baradaran challenges us to recognize how much determinations about money’s design matter. That proposition is particularly striking because they are also remarkably malleable: altering the institutions that deliver credit in money can change the way people and groups relate to one another. I want to underscore Baradaran’s argument about the practice of black banking by exploring an alternative vision. Only when the monetary project of the agrarian populists failed did Americans settle on the exclusionary system that Baradaran describes. The contrast suggests that designing money is shaping community; it can bring people together or set them at each other’s throats.

...more: https://lpeproject.org/blog/the-impact- ... #more-2165


That reminds me of David Graeber's characterization of money as a social relationship (not merely some fungible "store of value").


None of this is meant to excuse any nefarious schemes of the predatory high-finance community. But starting with bad assumptions leads to iffy conclusions.


(edit: typos)
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Re: Market Crash Watch Party

Postby Grizzly » Fri Aug 13, 2021 1:20 am

Investment advisor and former Assistant Secretary of Housing Catherine Austin Fitts contends CV19 and the vaccines to cure it are more about control than depopulation. Fitts explains, “I think the bankers are trying to chip us. Moderna describes their injection, gene therapy as an ‘operating system.’ I agree with them. I think they are trying to download an operating system into our bodies. I don’t think it was an accident . . . the man President Trump appointed as head of ‘Operation Warp Speed’ was an expert at Brain-Machine interface. . . . Just like Bill Gates downloaded an operating system into your computer and made you update it regularly because of the threat of another virus, I think they are trying to play the same game with human bodies. It’s hard for people to fathom if they have not been following the advancements in biotech and to fathom how much money the bankers can make if they can achieve this. We just saw the Chairman of the Federal Reserve talking about the economy was getting better because the vaccination rate was going up. I think that’s code for the bank stocks are going up because we are downloading operating systems in more and more people, and our stock reflects that. We get a pop on our stock for every person we can remotely control with our operating system. . . . If you look at the deaths and adverse events, and the failure to provide true informed consent, we are talking about the greatest violations of the Nuremberg Code in history—now.”

Fitts says don’t believe the hype on the number of CV19 vaccines being given. Fitts explains, “One of the things I have seen and gotten feedback on is that the resistance is much greater than anything they are indicating in any kind of official statistics. There are also indications that the deaths and adverse events (from the vaccines) are much worse, and that has to be spreading virally. If you look at the people most resistant, including healthcare workers and nursing staff, they are seeing the adverse events, and they are seeing the deaths. So, I don’t trust the statistics. . . . The top doctors I trust essentially say this is an experiment, and it’s true. These vaccines are not approved by the FDA. These are authorized under experimental use. So, this is a trial, a human trial. The doctors I trust say we won’t know for 4, 6, 12 or 18 months what the real impact is. These are not vaccines. It is gene therapy and downloading an operating system. I would argue that they are not vaccinations, but whatever they are, if it follows the history of vaccinations, what you are going to see is a tremendous diminution of people’s immune systems and a whole world of autoimmune diseases that can be explained away by other things. I would guess that the leadership’s goal is not necessarily to depopulate, and I could be wrong, but their goal is to install an operating system. To get that done, they don’t care how many people they kill.”

In closing, Fitts says, “Naomi Wolf was giving an interview about the vaccine passports, and she said this is the end of human liberty in the west, and that’s right. If those things are allowed, along with the operating system, it is the end of liberty. We are talking about a slavery system. . . . The greatest navigation tool ever created is prayer.”
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Re: Market Crash Watch Party

Postby Grizzly » Fri Aug 13, 2021 1:21 am

Greatest Violations of Nuremberg Code in History – Catherine Austin Fitts
https://coronanews123.wordpress.com/2021/08/11/the-resistance-to-the-clot-shots-way-more-than-you-think-catherine-austin-fitts/
Grizzly » Fri Aug 13, 2021 1:20 am wrote:
Investment advisor and former Assistant Secretary of Housing Catherine Austin Fitts contends CV19 and the vaccines to cure it are more about control than depopulation. Fitts explains, “I think the bankers are trying to chip us. Moderna describes their injection, gene therapy as an ‘operating system.’ I agree with them. I think they are trying to download an operating system into our bodies. I don’t think it was an accident . . . the man President Trump appointed as head of ‘Operation Warp Speed’ was an expert at Brain-Machine interface. . . . Just like Bill Gates downloaded an operating system into your computer and made you update it regularly because of the threat of another virus, I think they are trying to play the same game with human bodies. It’s hard for people to fathom if they have not been following the advancements in biotech and to fathom how much money the bankers can make if they can achieve this. We just saw the Chairman of the Federal Reserve talking about the economy was getting better because the vaccination rate was going up. I think that’s code for the bank stocks are going up because we are downloading operating systems in more and more people, and our stock reflects that. We get a pop on our stock for every person we can remotely control with our operating system. . . . If you look at the deaths and adverse events, and the failure to provide true informed consent, we are talking about the greatest violations of the Nuremberg Code in history—now.”

Fitts says don’t believe the hype on the number of CV19 vaccines being given. Fitts explains, “One of the things I have seen and gotten feedback on is that the resistance is much greater than anything they are indicating in any kind of official statistics. There are also indications that the deaths and adverse events (from the vaccines) are much worse, and that has to be spreading virally. If you look at the people most resistant, including healthcare workers and nursing staff, they are seeing the adverse events, and they are seeing the deaths. So, I don’t trust the statistics. . . . The top doctors I trust essentially say this is an experiment, and it’s true. These vaccines are not approved by the FDA. These are authorized under experimental use. So, this is a trial, a human trial. The doctors I trust say we won’t know for 4, 6, 12 or 18 months what the real impact is. These are not vaccines. It is gene therapy and downloading an operating system. I would argue that they are not vaccinations, but whatever they are, if it follows the history of vaccinations, what you are going to see is a tremendous diminution of people’s immune systems and a whole world of autoimmune diseases that can be explained away by other things. I would guess that the leadership’s goal is not necessarily to depopulate, and I could be wrong, but their goal is to install an operating system. To get that done, they don’t care how many people they kill.”

In closing, Fitts says, “Naomi Wolf was giving an interview about the vaccine passports, and she said this is the end of human liberty in the west, and that’s right. If those things are allowed, along with the operating system, it is the end of liberty. We are talking about a slavery system. . . . The greatest navigation tool ever created is prayer.”
“The more we do to you, the less you seem to believe we are doing it.”

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Re: Market Crash Watch Party

Postby drstrangelove » Fri Aug 13, 2021 8:49 am

The costs we have suffered as a society to hide the effects of this inflationary monetary policy, to the extent it has been taken, have been transferred, with more fancy bookkeeping, to the rapid decline in quality of products we purchase and quality of environment we live in.

To keep the cost of living down, which is to say prices down, every single qualitative measure has been stripped away. And even still, we get price inflation beyond real wage growth.

If you want real price inflation, go purchase a proper quality product which is X5 the price of one most people can afford.

The more money created, the more inflation needs to be hidden in the destruction of goods, services, and environment.

They need to reduce the price of food, so create more food using chemical farming. More food of less nutrician at gradually higher prices and gradually declining human health.

Instead of organic materials like metals and woods, we now get plastics.

The list go on. And we have pushed this so far it is becoming untenable. Which means inflation can no longer be hidden, and the debt can no longer be tenable.

So they will end this cycle of quality destruction, and instead destroy the money supply and reset.

The assumption there is no inflation which is unmanageable is untrue. The inflation has been converted into quality destruction to keep prices down, but quality has been reduced about as far as it can go.

They have to keep pumping the food full of sugar because it has so little nutrician these days that it is almost rancid and people need a sweet tooth to taste something.
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