Sad, but true
Whenever an economic crisis appears, governments are quick to respond. They will grandstand to make the most of the situation. It does not matter how the crisis began like in this case as a health issue. It will eventually effect the economy which is a politician's cue. There are economic packages all over the world.
Germany already had the playbook written. This virus just opened the pages. The UK along with Europe will shrug off criticism by throwing blame. The first deflection was on the US for stopping airline travel to and from Europe. In the US we will get the same old same old. The democrats blame the republicans and visa versa. The Chinese saved their economy by telling banks and other receivables that no bills will have to be paid for six months. You can do this with a state sponsored economy. The EU, UK, China, Australia and the US central banks all cut their interest rates. They are saying, "You need money. Here it is."
This is all they know and their actions never address real problems. Their actions will explode government debt and corporate debt. There will be other consequences like another serious crisis to our oil and gas industry. In 2019, according to Haynes and Boone, there were 208 oil and gas producers who accumulated over $122 billion in debt. Oil service firms racked up another $66 billion in debt. With falling prices the charts say that oil could touch $26 a barrel again. No one makes any money with that price. Layoffs and cut budgets are coming in a big way along with dividend cuts. President Trump announced that the government will buy oil to restock the national reserve. This won't be enough. The year ahead looks worse.
In addition, there was 42 energy bankruptcies in 2019 as well as 21 oil service bankruptcies. More are coming!
Specious ideas
I think the US leads in this category, although every nation uses a crisis to enrich the rich. What their governments announce is the spin. They seek to trick you like a magician with misdirection. Their solutions is really "corporate welfare."
The US is legislating a package of stimulus to counter the coronavirus. President Trump will preach that he is helping citizens with the payroll tax holiday. This will put more money into workers pockets. This is misleading and lying. Dear Reader, the payroll tax is social security. The employer must match the workers contribution. This action saves the company money. Yes, the worker will take home a bigger check, however that same worker will lose long-term. The worker has already adjusted his living to his income. Yeah, the next few weeks will give that person some relief, but the same worker will lose his earned income for the year under social security. When that worker retires, he will receive less in all the years of retirement due to calculations. Workers will lose the year 2020. The company gets a windfall that accountants will find a way for that money to be tax free. The wealthy get more. The payroll holiday is skewed to the employer not the employee.
The other big idea is to give direct cash, possibly $1,000 to every household. This is from the old playbook and it is used as an election bribe to win the populous over. President Trump is behind this 100%. Why not? The economic ramifications of the virus could cause him the election.
People will suffer, but they will manage. This policy will explode the national deficit. Politicians will always remind citizens that everyone is guilty over the debt. It gives them a good escape clause, as everybody is equally guilty. Well, here at Evolution, we know the real guilty party is the military under the Pentagon.
Anyway, who gets most, if not all that check money? The banks. Here is an idea that I like: A rent/mortgage free month. The government tells banks who always gets government help, to allow everyone a holiday for 30 days. This way there is no explosion of debt. Everyone gets a free pass which is truly charitable. Can I get an amen, brother?
In China the no bill paying will help all, but the help is skewed to the big exporters rather than small stores doing business in market places. How can you compare the saving of a few thousands of dollars to millions and possibly billions in large exporters?
In the US the democrats will cite the paid leave. They will seek to buy votes in November. The republicans will counter with the payroll tax holiday for the same reason, and another bonus. They promise to return to a strong economy when the virus passes with warm weather. They both lie!
There will be hidden bonuses for employers for paid leave. The economy as shown in my weekly articles is a pick and choose winners with more losers than winners. Our homelessness indicates the failure of our economy for all Americans.
Back to the blame game
In the worse example, this is making waves in social media in China. Speaking from his foreign ministry post, Zhao Lijian says the US Army started the coronavirus. It appears that 300 US military athletes were in Wuhan at the same time the virus started. I guess you can get away with this horrific lie when the first warning of the virus was by a local Wuhan doctor who was not only suppressed by the state communists, but died healing the sick due to the COVID-19 disease.
Year of the Rat...
Since we do most of our trading with China and for China doing business with the US has had the most positive effect on China, I feel that some cultural exchange is in the mix. Under the Chinese zodiac, this is the year of the rat. In America, a rat is associated with the worst in human actions, an animal that transmits disease and it is associated with poverty. Under the Chinese signs, it is considered prosperous. If we are to develop our relationship to the positive, then our cultural mixes are needed. So, under American thinking of what a rat resembles, Mr. Zhao Lijian is the leading contender for Rat of the Year!
Another Zhao in Fed's Clothing
In a flagrant bid to expand power during this crisis came from the Boston Governor and a voting member of the Federal Reserve. Eric Rosengren said, "We should allow the central bank to purchase a wider range of securities or assets." This is still another example why I say, "End the Fed!"
Another contender...
goes to the Norwegian Cruise Line who had their sales-people tell potential customers that there was no fear in cruising because the "warm climate:" kills the CORID-19 flu. The cruise line sails in the tropics. Funny, Singapore is a warm climate city and the virus hit the city-state extremely hard. Can't wait for the first lawsuit against the cruise line by a passenger getting sick on their ship.
Wednesday, March 18, 2020
Wednesday, March 11, 2020
Industry's Crashing
- "Beware the Ides of March!"
- W. Shakespeare
The effects of the coronavirus into the US stock market has begun to become a disaster. I will not mention certain industries like the aircraft builder, Boeing. They have there own unique problem. I won't include steel producers for the same reason. Both of these producers had problems long before the virus. Steel has the tariff issue. I will select two that effects many others. As I state in my unpublished work, "All things are connected."
OIL
This is the most important commodity. It is in a bear market. More on that projection in a moment. OPEC failed with its meeting with top producer, Russia to cut production. Russia is basically saying, "I need to worry about surviving. We need to get whatever revenues we can get."
Russia gets 37% of its revenue from oil.
Saudi Arabia gets 65% of its revenue from oil.
"Whenever oil spikes too high or falls too low, we will have a recession," is words that Sebastian lives by. As my readers know, I believe in charting with the input of fundamentals along with the volume of shares traded to get a clearer picture. At the moment the charts are all scary to the negative in the oil industry. If you look at the XLE, energy sector fund, it was $61 in January 2020. It is now $42.50. It fell on high volume of over 61 million shares. Not good. It got slaughtered on "Bloody Monday" of this week.
If you look at the two top US oil firms, the picture is the same. The fundamentals say that we produced too much oil prior to the virus worries. The virus is adding to the shrinking in demand. No one wants to risk being in a controlled environment that is crowded like planes, trains and buses. Cruise ships are breeding grounds for a flu and they had other problems like food being tainted. Firms are cancelling sailing trips. These and many other reasons like school closings, factory work being suspended have all taken a bite out of the demand for oil. A closer look...
XOM was $83. in April 2019. Today, it is $47.69. Bear territory. It trades where it was in 2000.
CVX was $127. in July 2019. Today, it is $95. Both pay a good dividend, but still in bear mode.
By the way as mention in previous articles, dividends will be cut like Occidental Petroleum did on Tuesday. Its dividend went from .79-cents down to .11-cents.
How about a global giant?
BP was $45. in April 2019. Today, it is $31. It fell on high volume.
All of the above will continue to feel pressure as the commodity price of oil falls even further from $41. Oil blasted through its test of the low at $44. Now, the next level is $36 with the all-time low of $26 on the horizon. Not good. On Monday oil busted through the $36 barrier to touch $32. Terrible!
Airlines
I have already mentioned the virus fears have hurt the travel industry. It is not necessary to mention all the various firms. Keep in mind that travel agencies will also feel the pain like Expedia and Priceline. With that said, I will concentrate on the most important and most used-airlines.
Planes are flying with many vacant seats and even though fuel prices have declined, the other fixed costs along with debt weigh heavily to their bottom line. A closer look...
AAL was $35. in July 2019. Today, it is $15.
DAL was $63. in July. Today, it is $45.
JBLU was $21. in February 2020. Today, it is $13.
HA was $31 in February 2020. Today, it is $17.
All these airlines are in bear territory. Both of these industries are tied to banking. Sometimes, conditions of loans are related to a firms stock price. This adds more fear to the market as new worries begin to surface. This is why the Federal Reserve tried to calm the market with a big surprise rate cut. If you go back to their playbook, Alan Greenspan did the same technique. Problem: central banks throughout the world have fired all their ammunition. Negative rates are growing again. Banks will seek other capital controls. Stock brokers will increase margins. This action could cause more selling. Always notice the volume in down or up bounces. It indicates strength of conviction in a worried market. The next quarterly earnings will be another disaster, but the shills will say, "Buy the dip!" Other shills will stress central bank stimulus like is happening in China like is pending in UK. On Tuesday Boston Fed member, Eric Rosengren made the first pitch even before the baseball season. He said, "We should allow the central bank to purchase a broader range of securities or assets." This is also looking to expand a corrupt bureaucratic agency. Still another reason to End the Fed!
In past articles I have informed my readers of the peril in the US retail market. This has been going on since the advent of the internet. In addition, the restaurant industry has suffered for many reasons. One of the most central is also the most important aspect in real estate-location. The retail problems centered around malls and their collapse effects other stores in malls and within the immediate area. This is your restaurant playing field. They have build the stores, but no one comes. Keep in mind the industry has a 37% failure rate. I have assembled a list that was on the brink of joining the Dodo bird long before the virus. This flu is the nail in the coffin. This aspect won't help the stock market.
Fuddruckers: owner is selling.
Joe's Crab Shack: location, virus.
Papa Murphy's: competition. Who wants to make it, after going out to get it?
Checker's: food code problems.
Ruby Tuesday: weather and virus along with mall locations.
Home Town Buffet: already entered in bankruptcy for the third time.
Red Robbin: competition and location along with menu pricing.
Steak 'n Shake: time has passed.
Friendly's: see above.
Howard Johnson's: hard to believe this firm had over 2,000 stores and now, one.
Marie Callenders: under funded, virus, menu.
Golden Corral: I like this place, but not enough other people.
Perkins: menu, competition.
Baja Fresh: management.
Quiznos: already entered into bankruptcy.
O'Charley's: mall locations.
Bar Louie: entered into Chapter 2.
Applebee's: over expansion, menu changes and location.
Hooter's: sadly, time has passed.
Sbarro: mall locations.
Boston Market: competition and menu choice.
Carrabba's Italian Grill: parent cutting funding-money going its other restaurants.
Krystal's: moving into bankruptcy.
Chipotle: consolidating after back streak of problems. Fifty-fifty chance.
Jack in the Box: competition, pricing.
All these chains could fold. This could send unemployment higher to which could start another contagion to the economy that would be even more deadlier than the virus. Next earning season will be a disaster. Not good.
- W. Shakespeare
The effects of the coronavirus into the US stock market has begun to become a disaster. I will not mention certain industries like the aircraft builder, Boeing. They have there own unique problem. I won't include steel producers for the same reason. Both of these producers had problems long before the virus. Steel has the tariff issue. I will select two that effects many others. As I state in my unpublished work, "All things are connected."
OIL
This is the most important commodity. It is in a bear market. More on that projection in a moment. OPEC failed with its meeting with top producer, Russia to cut production. Russia is basically saying, "I need to worry about surviving. We need to get whatever revenues we can get."
Russia gets 37% of its revenue from oil.
Saudi Arabia gets 65% of its revenue from oil.
"Whenever oil spikes too high or falls too low, we will have a recession," is words that Sebastian lives by. As my readers know, I believe in charting with the input of fundamentals along with the volume of shares traded to get a clearer picture. At the moment the charts are all scary to the negative in the oil industry. If you look at the XLE, energy sector fund, it was $61 in January 2020. It is now $42.50. It fell on high volume of over 61 million shares. Not good. It got slaughtered on "Bloody Monday" of this week.
If you look at the two top US oil firms, the picture is the same. The fundamentals say that we produced too much oil prior to the virus worries. The virus is adding to the shrinking in demand. No one wants to risk being in a controlled environment that is crowded like planes, trains and buses. Cruise ships are breeding grounds for a flu and they had other problems like food being tainted. Firms are cancelling sailing trips. These and many other reasons like school closings, factory work being suspended have all taken a bite out of the demand for oil. A closer look...
XOM was $83. in April 2019. Today, it is $47.69. Bear territory. It trades where it was in 2000.
CVX was $127. in July 2019. Today, it is $95. Both pay a good dividend, but still in bear mode.
By the way as mention in previous articles, dividends will be cut like Occidental Petroleum did on Tuesday. Its dividend went from .79-cents down to .11-cents.
How about a global giant?
BP was $45. in April 2019. Today, it is $31. It fell on high volume.
All of the above will continue to feel pressure as the commodity price of oil falls even further from $41. Oil blasted through its test of the low at $44. Now, the next level is $36 with the all-time low of $26 on the horizon. Not good. On Monday oil busted through the $36 barrier to touch $32. Terrible!
Airlines
I have already mentioned the virus fears have hurt the travel industry. It is not necessary to mention all the various firms. Keep in mind that travel agencies will also feel the pain like Expedia and Priceline. With that said, I will concentrate on the most important and most used-airlines.
Planes are flying with many vacant seats and even though fuel prices have declined, the other fixed costs along with debt weigh heavily to their bottom line. A closer look...
AAL was $35. in July 2019. Today, it is $15.
DAL was $63. in July. Today, it is $45.
JBLU was $21. in February 2020. Today, it is $13.
HA was $31 in February 2020. Today, it is $17.
All these airlines are in bear territory. Both of these industries are tied to banking. Sometimes, conditions of loans are related to a firms stock price. This adds more fear to the market as new worries begin to surface. This is why the Federal Reserve tried to calm the market with a big surprise rate cut. If you go back to their playbook, Alan Greenspan did the same technique. Problem: central banks throughout the world have fired all their ammunition. Negative rates are growing again. Banks will seek other capital controls. Stock brokers will increase margins. This action could cause more selling. Always notice the volume in down or up bounces. It indicates strength of conviction in a worried market. The next quarterly earnings will be another disaster, but the shills will say, "Buy the dip!" Other shills will stress central bank stimulus like is happening in China like is pending in UK. On Tuesday Boston Fed member, Eric Rosengren made the first pitch even before the baseball season. He said, "We should allow the central bank to purchase a broader range of securities or assets." This is also looking to expand a corrupt bureaucratic agency. Still another reason to End the Fed!
In past articles I have informed my readers of the peril in the US retail market. This has been going on since the advent of the internet. In addition, the restaurant industry has suffered for many reasons. One of the most central is also the most important aspect in real estate-location. The retail problems centered around malls and their collapse effects other stores in malls and within the immediate area. This is your restaurant playing field. They have build the stores, but no one comes. Keep in mind the industry has a 37% failure rate. I have assembled a list that was on the brink of joining the Dodo bird long before the virus. This flu is the nail in the coffin. This aspect won't help the stock market.
Fuddruckers: owner is selling.
Joe's Crab Shack: location, virus.
Papa Murphy's: competition. Who wants to make it, after going out to get it?
Checker's: food code problems.
Ruby Tuesday: weather and virus along with mall locations.
Home Town Buffet: already entered in bankruptcy for the third time.
Red Robbin: competition and location along with menu pricing.
Steak 'n Shake: time has passed.
Friendly's: see above.
Howard Johnson's: hard to believe this firm had over 2,000 stores and now, one.
Marie Callenders: under funded, virus, menu.
Golden Corral: I like this place, but not enough other people.
Perkins: menu, competition.
Baja Fresh: management.
Quiznos: already entered into bankruptcy.
O'Charley's: mall locations.
Bar Louie: entered into Chapter 2.
Applebee's: over expansion, menu changes and location.
Hooter's: sadly, time has passed.
Sbarro: mall locations.
Boston Market: competition and menu choice.
Carrabba's Italian Grill: parent cutting funding-money going its other restaurants.
Krystal's: moving into bankruptcy.
Chipotle: consolidating after back streak of problems. Fifty-fifty chance.
Jack in the Box: competition, pricing.
All these chains could fold. This could send unemployment higher to which could start another contagion to the economy that would be even more deadlier than the virus. Next earning season will be a disaster. Not good.
Wednesday, March 4, 2020
Symptoms Worse Than Virus
Everyone is talking about the virus. I understand that no one wants to risk sickness with a chance at death. However, this is just a version of a flu in flu season. Dear Reader, we have a flu season every year. People catch it. Some will die. This is a part of living. In China there is presently 90,000 cases, but less than 3,000 have passed. The global communities ratio is similar. It is good to be aware of dangers, but we have more serious threats in our present economy and environment.
Malaria
Now, that is a dangerous bug. It kills over 40,000 people each and every year. Be thankful that this sickness does not mutate into a more global danger. With that said, the present fears caused by the corona bug will cause supply chains to suffer. There are many small companies in China that could collapse. This could have a chain reaction more dangerous than the virus. Even if the Chinese government intervenes and they will, it will take time to ramp up production. Many items are seasonal. Those orders will not be needed, however the repercussions of lost product will hit bottom lines in all corporations throughout the world. The next earning season will be a disaster. It will create new fears. These worries will show up in the stock exchanges.
Vaccines
President Trump's reply to this virus crisis shows the weakness in him and the GOP. When it comes to doing something for American citizens, the republicans fall on their face. Our nation is blessed to have some outstanding talent like doctor Anthony Fauci. He was willing to help, but conflict with the government policies makes him a no show. Instead we get the vice-president. Why, you ask? Because republicans cut health care. We don't even have a group of doctors at the CDC to answer any alarms like this virus. We put all our money into the wasteful hands of the military. If anything, this point should remain in the media. It should be a central issue in this election year. Then, there is also no money for our environment or pollution. This is where the money and government should be.
Symptoms
Because of the apparent ramifications of the virus to supply chains and production, other related needs like oil and equipment will not be needed or go into delay. This will show up in bottom lines. This is why stock exchanges throughout the world are declining. Pressure will be put on central banks to address the needs of firms to which many will not be able to comply with their debt, payroll, etc.
But...
this is a big butt, central banks have already provided cheap money. They have set their interest rates at historical lows. Negative rates are already present in many nations. What to do?
Capital controls...
will be coming along with a host of other regulations. Governments and central banks are hoping that the flu will pass. They will preach a V-shape recovery. They will say, "When the warm weather comes, the economy will roll again."
Meanwhile, regulations against cash will come into play.
Believe it or not: Australia has proposed a law that gives a $25,000 dollar fine and two years in jail for anyone who makes cash transactions of $10,000 or more. This is stealing your economic independence. The law will be sold to prevent money laundering, tax evasion and terrorist. What they are doing is limiting your financial options while the same government is deep in debt. This type of contagion is spreading to all debt laden fiat governments. By the way the US 10-year note broke its record low at 1.31% to form a new record low of 1.00%. Negative rates are on the horizon. The next low should test .23%. This is fatal to everyone's economic freedom. It tells you that the Federal Reserve is a failure like we maintain at Evolution. We expect the Fed to make an announcement about cutting rates again in the very near future. It came sooner than we even realized on Tuesday. They cut a half point. Debt is there only remedy. It is all they know. The debt to GDP ratio will climb.
This has been expressed before by Evolution, but it is more clearer to you, End the Fed!
Other signs...
Even if the economy does do a V-shape correction, the damage has been done. The writing on the subways walls are being fulfilled just as JFL said that the interest rate lows will be tested. He now says that the recent lows in the market will also be tested. As for the prophecies on the walls, they may be hard to see. Why, you ask? Because there will be homeless sleeping against them.
This is another example of GOP cuts that effect US citizens. The Dept. of Urban Housing claims that there are only 500,000 homeless in the US. People, California alone has 250,000. The Department of Education tallies show that they have 1.3 million students who are homeless within our school system. Stats are misleading and wrong, especially if a republican is head of the department. Not that the democrats are any better. When President Obama was signing the stimulus package, he basically gave away taxpayer's money to the rich. He offered troubled banks to investors with government protection. This makes the investment risk free. These banks were bought by greedy people like Wilbur Ross and Steven Mnuchin to which both work for President Trump. These two were the leaders in foreclosing on homes. They both became billionaires by taking citizens homes. They have no conscience.
The stats on homelessness keeps growing with public awareness. The city of Dallas has had back-to-back 9% growth in homelessness. San Francisco's homelessness grew by 30% in 2019.
All of the above and many more are the reasons why America needs a new third political party. The cornerstone purpose should be a US that has less military and no foreign entanglements. The other main aspect should be to protect US workers. If a firm outsources production, then put tariffs on that product. It is no longer American. In a related aspect immigration should be limited until our economy works for all Americans. When we can read the writing of new prophets on the subway walls, then we can allow immigration. As it stands now, immigrants are competing for low wage jobs to which does not provide enough income to be able to exist in our culture. Homelessness reflects this contagion.
Malaria
Now, that is a dangerous bug. It kills over 40,000 people each and every year. Be thankful that this sickness does not mutate into a more global danger. With that said, the present fears caused by the corona bug will cause supply chains to suffer. There are many small companies in China that could collapse. This could have a chain reaction more dangerous than the virus. Even if the Chinese government intervenes and they will, it will take time to ramp up production. Many items are seasonal. Those orders will not be needed, however the repercussions of lost product will hit bottom lines in all corporations throughout the world. The next earning season will be a disaster. It will create new fears. These worries will show up in the stock exchanges.
Vaccines
President Trump's reply to this virus crisis shows the weakness in him and the GOP. When it comes to doing something for American citizens, the republicans fall on their face. Our nation is blessed to have some outstanding talent like doctor Anthony Fauci. He was willing to help, but conflict with the government policies makes him a no show. Instead we get the vice-president. Why, you ask? Because republicans cut health care. We don't even have a group of doctors at the CDC to answer any alarms like this virus. We put all our money into the wasteful hands of the military. If anything, this point should remain in the media. It should be a central issue in this election year. Then, there is also no money for our environment or pollution. This is where the money and government should be.
Symptoms
Because of the apparent ramifications of the virus to supply chains and production, other related needs like oil and equipment will not be needed or go into delay. This will show up in bottom lines. This is why stock exchanges throughout the world are declining. Pressure will be put on central banks to address the needs of firms to which many will not be able to comply with their debt, payroll, etc.
But...
this is a big butt, central banks have already provided cheap money. They have set their interest rates at historical lows. Negative rates are already present in many nations. What to do?
Capital controls...
will be coming along with a host of other regulations. Governments and central banks are hoping that the flu will pass. They will preach a V-shape recovery. They will say, "When the warm weather comes, the economy will roll again."
Meanwhile, regulations against cash will come into play.
Believe it or not: Australia has proposed a law that gives a $25,000 dollar fine and two years in jail for anyone who makes cash transactions of $10,000 or more. This is stealing your economic independence. The law will be sold to prevent money laundering, tax evasion and terrorist. What they are doing is limiting your financial options while the same government is deep in debt. This type of contagion is spreading to all debt laden fiat governments. By the way the US 10-year note broke its record low at 1.31% to form a new record low of 1.00%. Negative rates are on the horizon. The next low should test .23%. This is fatal to everyone's economic freedom. It tells you that the Federal Reserve is a failure like we maintain at Evolution. We expect the Fed to make an announcement about cutting rates again in the very near future. It came sooner than we even realized on Tuesday. They cut a half point. Debt is there only remedy. It is all they know. The debt to GDP ratio will climb.
This has been expressed before by Evolution, but it is more clearer to you, End the Fed!
Other signs...
Even if the economy does do a V-shape correction, the damage has been done. The writing on the subways walls are being fulfilled just as JFL said that the interest rate lows will be tested. He now says that the recent lows in the market will also be tested. As for the prophecies on the walls, they may be hard to see. Why, you ask? Because there will be homeless sleeping against them.
This is another example of GOP cuts that effect US citizens. The Dept. of Urban Housing claims that there are only 500,000 homeless in the US. People, California alone has 250,000. The Department of Education tallies show that they have 1.3 million students who are homeless within our school system. Stats are misleading and wrong, especially if a republican is head of the department. Not that the democrats are any better. When President Obama was signing the stimulus package, he basically gave away taxpayer's money to the rich. He offered troubled banks to investors with government protection. This makes the investment risk free. These banks were bought by greedy people like Wilbur Ross and Steven Mnuchin to which both work for President Trump. These two were the leaders in foreclosing on homes. They both became billionaires by taking citizens homes. They have no conscience.
The stats on homelessness keeps growing with public awareness. The city of Dallas has had back-to-back 9% growth in homelessness. San Francisco's homelessness grew by 30% in 2019.
All of the above and many more are the reasons why America needs a new third political party. The cornerstone purpose should be a US that has less military and no foreign entanglements. The other main aspect should be to protect US workers. If a firm outsources production, then put tariffs on that product. It is no longer American. In a related aspect immigration should be limited until our economy works for all Americans. When we can read the writing of new prophets on the subway walls, then we can allow immigration. As it stands now, immigrants are competing for low wage jobs to which does not provide enough income to be able to exist in our culture. Homelessness reflects this contagion.
Wednesday, February 26, 2020
Odds and Ends: February 2020
Virus and the Economy
Apple became the first company to mention supply concerns due to the virus from China. They expect this to hurt their bottom line in this quarter. Apple was soon followed by many other firms. There are too many to list, however a case in point will give you a better understanding of the situation.
Home Depot: The home project store announced that the virus is having a big impact on this quarter's earnings and future outlook. Home Depot lists 114 Chinese firms that supply items the store needs for their shelves.
Two ways to view...
The list of suppliers to produce a product is fascinating, however it tells me the extent of lost jobs to just China due to outsourcing. This is why there is a shrinking middle-class and a overall lowering living standard in the US. It makes easy to understand the growing, large financial deficits to China and elsewhere. It tells me that our strong commercial firms provide little to our standard of living. It explains why California which could be considered the eight largest nation by terms of GDP and although the richest state in our so-called richest nation, saw homelessness grow by 30% in 2019 in their world tech leading bay area of San Francisco. California also leads the nation with one-forth of
all homelessness in America. They are the canary in the cage. This is the direction the US is headed. Renting eats up one-half of income and homes are unaffordable. We live paycheck to paycheck with one stumble and homelessness is on the horizon.
I stated a lot of points in the above sentences. Let me digress.
Under GDP, the US is the richest nation in the world. However, if one used another standard for evaluating like standard of living, the US falls to number 22 on the scale. This is the scale that counts. The two political parties in America are at fault. Outsourcing is allowable in a free enterprise. My point is that once you export and seek to re-import under your brand name, that is a no-no. You should be taxed with tariffs to protect American workers and standard of living. This is how I view the foreign supply chain.
Speaking of the supply chain. In China the absentees of workers is hurting these firms. Apparently, they are living from order to order. With no orders being filled and no money coming into the coffers, many are on the brink of collapse. Who knew?
Then, there is the other side. Shareholders would disagree with me. Of course, their self-interest for greed forgets the effects to the nation. If they protested outsourcing, well, that is one thing, but they didn't. You reap what you sow.
By the way just 10% of the nation own 84% of all stocks. A rising stock market does not help the 90% of us. The Federal Reserve in providing cheap money only helps the status quo. This is not economic prosperity, it is economic distortion!
10-Year Note
Just broke the all-time low of 1.31%. Sebastian called it. Heading towards negative rates. The Fed and fiat is a failure! End the Fed!
Another virus
Anytime that you speak of the Fed and central banks, you could get ill due to their financial virus. However, here I am referring to another kind of virus which is happening in India. This is a religious virus. Last week Muslims and Hindus' tolerated reach other. Now, they throw stones at each other. They fight, burn, and kill each other. The Indian government will shut down the internet in hopes that this procedure will kill the virus. They say this is to stop incendiary talk and pictures. This is true. It is also true that it is a way to stop democracy when governments are tyrannous.
Space X
is back in the news. They say that they may begin space travel by 2021. Their latest rocket into orbit will help to form a new wi-fi internet address. The point is to lower internet fees and make it available to everyone in the world. Sounds nice. We'll see says the blind man.
Gold tidbit
In the last quarter of 2018 central banks purchased more gold than ever-a record. In 2019 gold purchases by central banks came in second to 2018. One note: Canada, a commodity nation and gold producer, has a central bank that owns no gold. How about that!
By the way, everyone knows that China tries to keep their gold purchases a secret, but even with all the accumulations, they will have to continue buying for another decade to have the foundation to supplant the US dollar as the world's reserve currency. Of course, there are other ways this could happen among them is the IMF. That would be a sad day for the US, its citizens, including me.
Getting back to what is considered a good economy and one that is not. Jeffrey Winters wrote a book, "Oligarchy." He offers this question in it: what happens to a majority when feel that they never will rise out of their lower standings unless they win with a lottery ticket?
He found throughout history when the economy only works for a few and money is concentrated that society begins to despair and eventually collapses. It could be due to war to which they lose or a revolution commences. Not good, especially because it sounds like the present US.
Who's next?
Amazon just cut 1300 small delivery firms. This is the way Amazon grew in the first place. They have already dropped Fed Ex and UPS because those two could not live up to Amazon's standards. The problem with Amazon is the standards keep evolving higher and higher. If the same officers in the company were doing the work that they demand, nothing would be delivered. When the small firms matched the standards that Amazon wanted, Amazon created a new level like one day delivery. This will end badly for Amazon. They will seek to form their own delivery service, but their leadership will kill employee incentive. Hopefully, a union emerges and they put the kibosh to unrealistic standards. Even robots breakdown for repair!
On the positive side, this is a leap year, Try to use the extra time for something good for yourself and others. Let's make our little world a nice place to live like in Carolina the other day. With their professional goalies both hurt in a game against Toronto, the only one capable of the position was the 42 year old Zamboni driver, Ayres. He offered to play. He suited up. The refs allowed him. Who says the refs suck? These refs are great! He gave up two goals, but blocked Toronto's last eight shots to secure the victory. This was not the Stanley Cup, but a beautiful moment in life. Well done! Go Canes! Never thought that I would say that being a Notre Dame fan.
Apple became the first company to mention supply concerns due to the virus from China. They expect this to hurt their bottom line in this quarter. Apple was soon followed by many other firms. There are too many to list, however a case in point will give you a better understanding of the situation.
Home Depot: The home project store announced that the virus is having a big impact on this quarter's earnings and future outlook. Home Depot lists 114 Chinese firms that supply items the store needs for their shelves.
Two ways to view...
The list of suppliers to produce a product is fascinating, however it tells me the extent of lost jobs to just China due to outsourcing. This is why there is a shrinking middle-class and a overall lowering living standard in the US. It makes easy to understand the growing, large financial deficits to China and elsewhere. It tells me that our strong commercial firms provide little to our standard of living. It explains why California which could be considered the eight largest nation by terms of GDP and although the richest state in our so-called richest nation, saw homelessness grow by 30% in 2019 in their world tech leading bay area of San Francisco. California also leads the nation with one-forth of
all homelessness in America. They are the canary in the cage. This is the direction the US is headed. Renting eats up one-half of income and homes are unaffordable. We live paycheck to paycheck with one stumble and homelessness is on the horizon.
I stated a lot of points in the above sentences. Let me digress.
Under GDP, the US is the richest nation in the world. However, if one used another standard for evaluating like standard of living, the US falls to number 22 on the scale. This is the scale that counts. The two political parties in America are at fault. Outsourcing is allowable in a free enterprise. My point is that once you export and seek to re-import under your brand name, that is a no-no. You should be taxed with tariffs to protect American workers and standard of living. This is how I view the foreign supply chain.
Speaking of the supply chain. In China the absentees of workers is hurting these firms. Apparently, they are living from order to order. With no orders being filled and no money coming into the coffers, many are on the brink of collapse. Who knew?
Then, there is the other side. Shareholders would disagree with me. Of course, their self-interest for greed forgets the effects to the nation. If they protested outsourcing, well, that is one thing, but they didn't. You reap what you sow.
By the way just 10% of the nation own 84% of all stocks. A rising stock market does not help the 90% of us. The Federal Reserve in providing cheap money only helps the status quo. This is not economic prosperity, it is economic distortion!
10-Year Note
Just broke the all-time low of 1.31%. Sebastian called it. Heading towards negative rates. The Fed and fiat is a failure! End the Fed!
Another virus
Anytime that you speak of the Fed and central banks, you could get ill due to their financial virus. However, here I am referring to another kind of virus which is happening in India. This is a religious virus. Last week Muslims and Hindus' tolerated reach other. Now, they throw stones at each other. They fight, burn, and kill each other. The Indian government will shut down the internet in hopes that this procedure will kill the virus. They say this is to stop incendiary talk and pictures. This is true. It is also true that it is a way to stop democracy when governments are tyrannous.
Space X
is back in the news. They say that they may begin space travel by 2021. Their latest rocket into orbit will help to form a new wi-fi internet address. The point is to lower internet fees and make it available to everyone in the world. Sounds nice. We'll see says the blind man.
Gold tidbit
In the last quarter of 2018 central banks purchased more gold than ever-a record. In 2019 gold purchases by central banks came in second to 2018. One note: Canada, a commodity nation and gold producer, has a central bank that owns no gold. How about that!
By the way, everyone knows that China tries to keep their gold purchases a secret, but even with all the accumulations, they will have to continue buying for another decade to have the foundation to supplant the US dollar as the world's reserve currency. Of course, there are other ways this could happen among them is the IMF. That would be a sad day for the US, its citizens, including me.
Getting back to what is considered a good economy and one that is not. Jeffrey Winters wrote a book, "Oligarchy." He offers this question in it: what happens to a majority when feel that they never will rise out of their lower standings unless they win with a lottery ticket?
He found throughout history when the economy only works for a few and money is concentrated that society begins to despair and eventually collapses. It could be due to war to which they lose or a revolution commences. Not good, especially because it sounds like the present US.
Who's next?
Amazon just cut 1300 small delivery firms. This is the way Amazon grew in the first place. They have already dropped Fed Ex and UPS because those two could not live up to Amazon's standards. The problem with Amazon is the standards keep evolving higher and higher. If the same officers in the company were doing the work that they demand, nothing would be delivered. When the small firms matched the standards that Amazon wanted, Amazon created a new level like one day delivery. This will end badly for Amazon. They will seek to form their own delivery service, but their leadership will kill employee incentive. Hopefully, a union emerges and they put the kibosh to unrealistic standards. Even robots breakdown for repair!
On the positive side, this is a leap year, Try to use the extra time for something good for yourself and others. Let's make our little world a nice place to live like in Carolina the other day. With their professional goalies both hurt in a game against Toronto, the only one capable of the position was the 42 year old Zamboni driver, Ayres. He offered to play. He suited up. The refs allowed him. Who says the refs suck? These refs are great! He gave up two goals, but blocked Toronto's last eight shots to secure the victory. This was not the Stanley Cup, but a beautiful moment in life. Well done! Go Canes! Never thought that I would say that being a Notre Dame fan.
Wednesday, February 19, 2020
Debt: It leads to Death for Fiat and Oil
In a recent report on global debt by the IMF in 2018 the world is drowning in debt. Their finding totals $188 Trillion. I used a capital "T" to focus your eyes. They went on to breakdown each industrialized share of this poisonous pie.
The US debt to GDP was over 100% at 108%.
France was at 97% debt to GDP.
Italy is scary at 131% debt to GDP.
The average for almost all the economies was 267% debt to GDP.
The report signaled out Germany for its low debt ratio to GDP at 60%. This does not embolden the fiat outlook as all nations are spending more than they take in.
By the way Germany just reported that its manufacturing segment of its economy is in retraction at 43 with 50 being breakeven. The government says that it is ready to help with a $55 billion stimulus package. The debt ratio will keep rising which is why the outlook for interest rates is still negative.
10-Year US Note
It had a huge move in January. It went from 1.91 to 1.51 in just one month. We, at Evolution predicted that the 10-year would test its all-time low of 1.31 and the trend is indicating it is on the horizon. We also said that negative rates are a siren call to us all that central banks and fiat money should be retired. They are failures! These idiots keep devaluing the purchasing power of our dollars. I remind you of a report in 2014 by USA Today where it concluded to be middle-class in America the benchmark income needed to be $130,000 and the medium income for that year was $65,000. This is another snapshot of the wealth gap and how inflation helps to kill the living standard of the poor and middle-class.
Oil Industry
This cheap money by the Federal Reserve is also killing one of our most important industries: Oil.
When oil spiked in 2007, oil firms rushed to borrow cheap money for exploration and dig for oil. The shale industry was the worse as they piled on debt to find natural gas. They envision LNG would grow exponentially. It did, but too much gas was discovered. The laws of economics took effect. Too much supply and prices decrease. This is the present situation.
Now, these low prices with low revenues are effecting the outlook for the industry. Companies are cutting back on exploration. They are ending their buybacks of their stock. By the way, this will effect the stock market as buybacks account for 25% of trading. Some firms are cutting their dividend or ending it. This is a slow process. It takes time to have an effect. Anyway, this change in outlook for the industry will lower future oil production. The IEA says we will get 900,000 barrels per day from shale. However, the cutbacks by the fracking industry will decrease some 200,000 barrels of oil from the IEA estimate. This will eventually get the attention of Wall Street.
It has already got the attention of bankers. In many situations, bankers force their shale clients to continue to sell into the market even with prices so low that they are losing money. The banks won't offer more money until they see a stabilization of prices. Dear Reader, it takes six months in steady prices for the banks to feel confident about lending more money. This means the oil firms must suffer another half year to begin a new strategy. Then, it will take another 9-months to put new money into production. Keep in mind that experts and bankers are usually wrong. Back in 2013 the experts said $100 dollar oil. They were wrong. Goldman Sacks said $90 dollar oil in 2015. Oil went to $54. Then, no one saw oil hit $27 per barrel.
Bottom line: higher prices will come in 2021. This could help some down-and-out firms like RIG. Of course, they have to survive this year first.
The US debt to GDP was over 100% at 108%.
France was at 97% debt to GDP.
Italy is scary at 131% debt to GDP.
The average for almost all the economies was 267% debt to GDP.
The report signaled out Germany for its low debt ratio to GDP at 60%. This does not embolden the fiat outlook as all nations are spending more than they take in.
By the way Germany just reported that its manufacturing segment of its economy is in retraction at 43 with 50 being breakeven. The government says that it is ready to help with a $55 billion stimulus package. The debt ratio will keep rising which is why the outlook for interest rates is still negative.
10-Year US Note
It had a huge move in January. It went from 1.91 to 1.51 in just one month. We, at Evolution predicted that the 10-year would test its all-time low of 1.31 and the trend is indicating it is on the horizon. We also said that negative rates are a siren call to us all that central banks and fiat money should be retired. They are failures! These idiots keep devaluing the purchasing power of our dollars. I remind you of a report in 2014 by USA Today where it concluded to be middle-class in America the benchmark income needed to be $130,000 and the medium income for that year was $65,000. This is another snapshot of the wealth gap and how inflation helps to kill the living standard of the poor and middle-class.
Oil Industry
This cheap money by the Federal Reserve is also killing one of our most important industries: Oil.
When oil spiked in 2007, oil firms rushed to borrow cheap money for exploration and dig for oil. The shale industry was the worse as they piled on debt to find natural gas. They envision LNG would grow exponentially. It did, but too much gas was discovered. The laws of economics took effect. Too much supply and prices decrease. This is the present situation.
Now, these low prices with low revenues are effecting the outlook for the industry. Companies are cutting back on exploration. They are ending their buybacks of their stock. By the way, this will effect the stock market as buybacks account for 25% of trading. Some firms are cutting their dividend or ending it. This is a slow process. It takes time to have an effect. Anyway, this change in outlook for the industry will lower future oil production. The IEA says we will get 900,000 barrels per day from shale. However, the cutbacks by the fracking industry will decrease some 200,000 barrels of oil from the IEA estimate. This will eventually get the attention of Wall Street.
It has already got the attention of bankers. In many situations, bankers force their shale clients to continue to sell into the market even with prices so low that they are losing money. The banks won't offer more money until they see a stabilization of prices. Dear Reader, it takes six months in steady prices for the banks to feel confident about lending more money. This means the oil firms must suffer another half year to begin a new strategy. Then, it will take another 9-months to put new money into production. Keep in mind that experts and bankers are usually wrong. Back in 2013 the experts said $100 dollar oil. They were wrong. Goldman Sacks said $90 dollar oil in 2015. Oil went to $54. Then, no one saw oil hit $27 per barrel.
Bottom line: higher prices will come in 2021. This could help some down-and-out firms like RIG. Of course, they have to survive this year first.
Wednesday, February 12, 2020
Leadership Blues
Now, that the continuing circus on Capitol Hill is over, the two political parties should get back to work on the affairs of the nation. Don't hold your breath waiting. The only lesson that the public can learn from the theatrics is that both parties hate each other so badly that they won't be able to address any problems. This sad outlook will spill over to the national issues which will not be addressed. We already know that the media pays little attention to our national retail crisis. None of the Democratic candidates for the presidency has even given some lip service or any ideas concerning the fate of the retail industry in its historical format. Trump avoids the issue by circumventing it. He keeps the issue out of the news. He stays with what works-higher stock market and full employment. By doing this he also shows that he does not have any ideas on how to fix the problem. Is this the last days of the Thanksgiving Day parade?
Even the simple remedy to even the playing field by adding a sales tax on internet purchases is not on the table? This is the heart of the problem. Consumers know that by buying online that they are immediately ahead by six to nine percent through the sales tax. Many states have enacted a sales tax on internet purchases, but executing the policy has not been fruitful. The fairest idea would be for a national tax that allows each state to receive their respective tax amount. Our nation rarely chooses the fairest policy. If something is not done and soon, brick and mortar stores will be cut in half. Unemployment will rise. In the last five years retail has lost 241,000 jobs. A report by McKinsey estimates that by 2030 due to automation the global community will lose 375 million jobs. This disruptive aspect of capitalism will send our economy, and possibly the global community into a deep recession, if not a depression. Macy's not only will end its glorious parade, but the firm may collapse and disappear?
This is the recent trend...
In 2017 the number of retail stores that closed exploded. The stimulus from 2008 only delayed the trend that started at the millennial. E-commerce in the year 2000 began to peel away into the dominance of brick and mortar stores. It has steadily gained. At present it is 10% of the market. One may think, what is the danger when 90% of consumers still shop actively in a store?
Dear Reader, you must keep in mind that the retail stats are very misleading. They include your quick store stop for gasoline and then, maybe you purchase a snack or something else? They include your grocery shopping to which is also coming under duress. More and more firms are getting into home delivery like Walmart and Amazon. This is killing the standard supermarkets like Safeway. In addition, you have your large discount stores like Costco. You have your national drug firms like CVS and Walgreens that sell many consumer staples. Little by little the revenue of your standard brick and mortar stores is eroded. Did I mention malls? Your anchors like Sears, J. C. Penny and Macy's are closing stores as soon as their lease is expired. This kills the foot traffic in malls which are standing empty throughout the nation. I still cannot get my head around the unemployment reporting because when a store closes the number of lost jobs is a multiplication number. It is not one facility. It is many members making up the total number of lost jobs and wages. For example, Shopko employed 14,000 workers. They closed all their stores. Payless has cut 16,000 jobs.
This is another advantage of online firms. They have one central location. Because they entered the competition recently, they have utilized modern technology like robotics. They have consistently used less and less manpower and more machine service. This point is unquantifiable at present. Together, all these points is sending traditional retail to the big office in the sky.
Core-sight reports that 8,139 stores closed in 2017.
In 2018 the number declined due to Trump's tax cuts to 5,864.
The number for 2019 has already surpassed 12,000. People, that is 12,000 stores multiplied by the number of workers in each store. This is why I cannot believe the unemployment stats the bureau is releasing. Oh, by the way, Macy's started the new year by announcing that it will close another 125 stores and many are located in malls which adds to the contagion. Macy's says that it earned 78% of its sales from just 250 stores. This means the firm will probably close another 250 stores.
It gets worse...
Another report by a UBS analyst says, "If e-commerce total percentage of sales were to rise to 25% (and the trend points this way) by 2025, another 75,000 stores will close their doors.
Meanwhile, the next show in the circus in Washington continues, the beat goes on...
Even the simple remedy to even the playing field by adding a sales tax on internet purchases is not on the table? This is the heart of the problem. Consumers know that by buying online that they are immediately ahead by six to nine percent through the sales tax. Many states have enacted a sales tax on internet purchases, but executing the policy has not been fruitful. The fairest idea would be for a national tax that allows each state to receive their respective tax amount. Our nation rarely chooses the fairest policy. If something is not done and soon, brick and mortar stores will be cut in half. Unemployment will rise. In the last five years retail has lost 241,000 jobs. A report by McKinsey estimates that by 2030 due to automation the global community will lose 375 million jobs. This disruptive aspect of capitalism will send our economy, and possibly the global community into a deep recession, if not a depression. Macy's not only will end its glorious parade, but the firm may collapse and disappear?
This is the recent trend...
In 2017 the number of retail stores that closed exploded. The stimulus from 2008 only delayed the trend that started at the millennial. E-commerce in the year 2000 began to peel away into the dominance of brick and mortar stores. It has steadily gained. At present it is 10% of the market. One may think, what is the danger when 90% of consumers still shop actively in a store?
Dear Reader, you must keep in mind that the retail stats are very misleading. They include your quick store stop for gasoline and then, maybe you purchase a snack or something else? They include your grocery shopping to which is also coming under duress. More and more firms are getting into home delivery like Walmart and Amazon. This is killing the standard supermarkets like Safeway. In addition, you have your large discount stores like Costco. You have your national drug firms like CVS and Walgreens that sell many consumer staples. Little by little the revenue of your standard brick and mortar stores is eroded. Did I mention malls? Your anchors like Sears, J. C. Penny and Macy's are closing stores as soon as their lease is expired. This kills the foot traffic in malls which are standing empty throughout the nation. I still cannot get my head around the unemployment reporting because when a store closes the number of lost jobs is a multiplication number. It is not one facility. It is many members making up the total number of lost jobs and wages. For example, Shopko employed 14,000 workers. They closed all their stores. Payless has cut 16,000 jobs.
This is another advantage of online firms. They have one central location. Because they entered the competition recently, they have utilized modern technology like robotics. They have consistently used less and less manpower and more machine service. This point is unquantifiable at present. Together, all these points is sending traditional retail to the big office in the sky.
Core-sight reports that 8,139 stores closed in 2017.
In 2018 the number declined due to Trump's tax cuts to 5,864.
The number for 2019 has already surpassed 12,000. People, that is 12,000 stores multiplied by the number of workers in each store. This is why I cannot believe the unemployment stats the bureau is releasing. Oh, by the way, Macy's started the new year by announcing that it will close another 125 stores and many are located in malls which adds to the contagion. Macy's says that it earned 78% of its sales from just 250 stores. This means the firm will probably close another 250 stores.
It gets worse...
Another report by a UBS analyst says, "If e-commerce total percentage of sales were to rise to 25% (and the trend points this way) by 2025, another 75,000 stores will close their doors.
Meanwhile, the next show in the circus in Washington continues, the beat goes on...
Wednesday, February 5, 2020
ECB: The Other Central Bank
Christine Lagarde has taken over the reins of power at the European Central Bank (ECB). Her first comments were, "The bank will be highly accommodative." She probably had a strong sense of conditions within the EU and elsewhere since her last post was running the IMF. However, sometimes being a Monday morning quarterback and actually being the quarterback are two different things. This leads me and us to this:
Scariest Omen...
Lagarde has been behind the desk now for a month. She has had time to catch-up on the real conditions of the European economy as well as how it pertains to the global community. She has probably touched base with Powell of the US Federal Reserve. Then, she made this statement, "We should be happier to have a job than to have our savings protected."
Do you understand what this means? It means that your money in the bank is not yours anymore!
She has thrown the first rock at traditional banking. She has germinated the seed that occurred at Cypress when the bank took ownership of citizens deposits. There are many educated people out there who besides the writers of this blog, have pointed out the dangers of fiat money. This danger was reached when bonds that were issued with negative interest hit the market. The numbers exploded to $18 trillion and rising as writer's like myself screamed that this is the proof that fiat is a failure! The banks got worried that maybe the masses would wake up to their financial crimes. Since then, the value of negative bonds has been reduced to $13 trillion. We did not win anything. Lagarde's salvo says that negative interest rates will be the norm in the future. She, along with central banks will come up with a plan. It will probably be related to capital controls. Banks will limit your withdrawals. They already have features that report sums of $5,000 and 10,000. They cite the usual suspects which in some instances is true: terrorism, money laundering and drug traffic. This is really against you the citizen. They are taking away the tried and true aspect of life: save for a rainy day. In their world whatever you put into a savings account, it is their money. To prove it, they will give you back less than you put into the account with negative interest. I predict the return of putting your money under a mattress as the safest place in town.
Prediction coming true...
and ahead of schedule. The two largest Swizz banks have seen many of their largest depositors taking out their money in masse. We all should know that Swizz citizens are smart with money and finances. They still are! They are first in line to realize that they do not want any part of negative interest rates.
2cd Scariest Omen...
was issued by the new head of the IMF. Kristalena Georgieva took over for Lagarde. She too has had time to digest the current economic situation. This is her first stated comment, "We are in danger of another Great Depression." She cited the usual suspects, but her last reason could be the one that could cause the most trouble. By that I mean it could be the catalyst that begins the negative contagion. Here are her thoughts: too much debt, oversized evaluations in stock markets, excessively high real estate in many countries while at the same time those same nations have an aging society along with wage stagnation and finally, disruption of industries with new IT innovations.
Dear Reader, e-commerce is disrupting retail. Robotic systems cause fewer workers, electric autos need less workers. Keep in mind that every store that closes, one needs to multiply the workers involved. There were over 10,000 stores that closed in 2019. Together, the numbers will effect the economy. These changes to an economy are slow and they are not realized until boom. Her last point is very valid which makes her comments very scary.
Scariest Omen...
Lagarde has been behind the desk now for a month. She has had time to catch-up on the real conditions of the European economy as well as how it pertains to the global community. She has probably touched base with Powell of the US Federal Reserve. Then, she made this statement, "We should be happier to have a job than to have our savings protected."
Do you understand what this means? It means that your money in the bank is not yours anymore!
She has thrown the first rock at traditional banking. She has germinated the seed that occurred at Cypress when the bank took ownership of citizens deposits. There are many educated people out there who besides the writers of this blog, have pointed out the dangers of fiat money. This danger was reached when bonds that were issued with negative interest hit the market. The numbers exploded to $18 trillion and rising as writer's like myself screamed that this is the proof that fiat is a failure! The banks got worried that maybe the masses would wake up to their financial crimes. Since then, the value of negative bonds has been reduced to $13 trillion. We did not win anything. Lagarde's salvo says that negative interest rates will be the norm in the future. She, along with central banks will come up with a plan. It will probably be related to capital controls. Banks will limit your withdrawals. They already have features that report sums of $5,000 and 10,000. They cite the usual suspects which in some instances is true: terrorism, money laundering and drug traffic. This is really against you the citizen. They are taking away the tried and true aspect of life: save for a rainy day. In their world whatever you put into a savings account, it is their money. To prove it, they will give you back less than you put into the account with negative interest. I predict the return of putting your money under a mattress as the safest place in town.
Prediction coming true...
and ahead of schedule. The two largest Swizz banks have seen many of their largest depositors taking out their money in masse. We all should know that Swizz citizens are smart with money and finances. They still are! They are first in line to realize that they do not want any part of negative interest rates.
2cd Scariest Omen...
was issued by the new head of the IMF. Kristalena Georgieva took over for Lagarde. She too has had time to digest the current economic situation. This is her first stated comment, "We are in danger of another Great Depression." She cited the usual suspects, but her last reason could be the one that could cause the most trouble. By that I mean it could be the catalyst that begins the negative contagion. Here are her thoughts: too much debt, oversized evaluations in stock markets, excessively high real estate in many countries while at the same time those same nations have an aging society along with wage stagnation and finally, disruption of industries with new IT innovations.
Dear Reader, e-commerce is disrupting retail. Robotic systems cause fewer workers, electric autos need less workers. Keep in mind that every store that closes, one needs to multiply the workers involved. There were over 10,000 stores that closed in 2019. Together, the numbers will effect the economy. These changes to an economy are slow and they are not realized until boom. Her last point is very valid which makes her comments very scary.
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