Max Velocity Tactical



Your Ad Here - Email for Info

You Can Shop At Amazon and Help Support Emergency-Preps.com Without It Costing You One Thin Dime - Click Here to Learn How!

Author Topic: Consolidated Financial Doom Thread  (Read 116905 times)

0 Members and 1 Guest are viewing this topic.

Offline oldguy52

  • Hero Member
  • *****
  • Posts: 558
  • Karma: +16/-1
  • Gender: Male
Re: Consolidated Financial Doom Thread
« Reply #1075 on: August 19, 2011, 01:22:58 AM »
Thanks SD for the laugh. I gotta' admit though, it'd be a hell of a lot funnier is I wasn't living it as I read.....
O.G.

"Stupid is supposed to be painful, it's nature's way of learnin' ya" - Me, 1994

When one finds himself living in interesting times, it is prudent to become as uninteresting as possible.... Me, 2011

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1076 on: August 23, 2011, 09:49:07 PM »
8/23/2011 Market Ticker


Are You Ready? The Government Doesn't Give A Damn
By Karl Denninger

http://market-ticker.org/akcs-www?post=192780

I hope you are.

Today proved one thing - oversold doesn't mean jack.  The ~20 handle pop into the open was sold into immediately, despite the market's severely-oversold condition.

A condition that is worse than during the height of the 08/09 crash.

Drill that into your head folks: The government doesn't get it, exactly as they didn't get it in early 2008.  They are, right now, squandering the opportunity to take effective action.  I know this for a fact because the Republican Caucus has refused to address the issue and I know they're aware of it.

This weekend I listened to McCain with his condescending bullcrap on talk TV.  Let me remind you, this is the same Senator McCain who I sent this letter to in 2008 predicting what was going to happen in the election if he did not act.  He did not, and he lost.  In fact, today he still claims that he couldn't see it coming.  Not only did he see it coming, his campaign manager was in receipt of that letter and Governor Ridge personally told me at that campaign event that they knew full well it was all driven from greed and scams.  In short, not only did he lie about what he knew at the time he's still lying.

This is the GOP.  This is what it has done and is doing.  The GOP is proving time and time again that it will not get in front of these issues because doing so means kneecapping the banksters that have trashed our economy and continue to do so today.

Not that Obama, Pelosi and Reid are any better, of course.

The GOP doesn't care, the Democrats don't care, and you're going to get creamed.

There is no way to avoid what's coming.  We have added roughly $4.5 trillion in debt to the Federal balance sheet trying to paper it over and have failed.  Even the "good" banks like JP Morgan and Goldman are failing to make progress.  The poorer ones such as Citibank, Morgan Stanley and Bank of America are seeing their market prices collapse.  The XLF, the composite of the large banks, is back to where it was in the summer of 2009.  Should it break below these levels it is likely going for the spring 2009 lows.

All the fraudulent accounting games, shifting Granny's earnings on her CDs to the banks through zero-interest rates and money printing have been used up as policy tools.  There are few if any weapons left in the arsenal to combat what is coming.

This is where we are, and where we're going.

http://market-ticker.org/akcs-www?get_gallerynr=2153

I'm sure this will be scoffed at.  We'll see.  Go have a look at 2000 if you'd like.  It's pretty similar.  Through the mid-bolinger on the monthly, a bounce back, often off or near the lower bolinger, then a collapse that loses half or more of the market's value.  Twice, and now we're setting up for it again.  It's as clear as day and the reasons for it are just as clear now as they were before.

The time in that chart is probably not quite to scale, but I bet the price move is.

Impossible?  Oh no it's not.  The Nikkei stood at 40,000 before it collapsed.  It now trades under 10,000 - a 75% loss - decades later.  It has not recovered and neither will we because we refuse as a nation and as a government to force recognition of bogus debt that cannot be paid while destroying capital formation and interest margins with zero interest rates.

400 is roughly where the S&P was before the "great bull market of fraud" began in 1995.  To think we can't return there when the fraud collapses is utter folly.  We not only can, we probably will.

But instead of putting a stop to the games we choose to allow crazy derivative schemes, balance sheets that do not reflect reality and the repeated asset-stripping from savers and productive members of society, all to protect the "gilded ones" on Wall Street from the just consequences of their own 30-year old foibles and scams.

Now let me explain what happens "down there", because it is my unbroken opinion, going back to 2007, that's where we're headed irrespective of attempts to stop it (and we've already seen how fast those attempts unwind when they fail, haven't we?)

Quote
    -Every pension fund blows up.  All of them.  Many doubled into the decline and will be utterly destroyed.  Chief among them will be big municipal funds like CALPERs.  If you have a pension of some sort, ask the pension administrator what happens to your pension if the S&P goes to 400 and stays there.  He'll poo-poo your question - but I bet he won't answer it.

-    Annuities and insurance companies blow up.  You don't think they can pay when they're figuring on an 8% annualized return, do you?  Well, no they can't.  Oh yeah, your state insurance on those is $100,000 in most states - the rest of your principal is "at risk."  This, of course, assumes the State has the $100,000 too.  Did you know this in advance or are you learning it now (let's not hope the latter is true!)

-    The FDIC has no prayer of covering it.  The good news is that if they act now they can shut the banks that are exposed and cram down debt to equity.  The bad news is that they have a horrible record in doing that in a timely manner and of late the losses have been anywhere from 20-40% of assets, which is both a violation of the law ("Prompt Corrective Action" is supposed to prevent this from happening) and they have no way to cover it should it become a widespread problem.  It will.  Oh yeah, you can't sue the government either.  Have a nice day.

-    The government Ponzi blows up.  Unemployment will reach 20% or more.  Tax receipts will get cut in half.  Deficit spending will be impossible.  Instead of a 40% "draconian" cut in government spending we will have to cut spending by 60% or more.  Entitlements will be decimated; retirement entitlements will go last, but go they will.  Food stamps, Section 8, Medicaid, all gone.  Bet on it.

-    All the other things that depend on the government Ponzi blow up.  Medical care as we know it, education, state programs, all gone.  We will return to a simpler time whether we like it or not, and we won't like it.  That much I'm sure of.

-    Best guess on whether civil order is lost.  In some places I'm sure things will be fine in that regard, likely in places where self-defense is recognized as the unalienable right that it is.  In others?  Not so much.  If you live in a big city - or an "unfriendly" place in regards to self-defense, you need to be thinking about this quite-seriously.  Yesterday would have been a good time to consider it and figure out what you're going to do about it.

-    Short-term and minor to moderate disruptions in what would be considered "essential" goods and services are likely.  Go down the list and figure out what you must have and what you can do without.  Be realistic.  Most people won't be, which will put you one step in front of them.

-    The world will recognize the Depression we have tried to cover up.  This is not a US-centric story.  The Eurozone will get the unemployment and tax consequences too.  Germany will be forced to choose between propping up the entire rest of the Euro (which it can't) and detonating it and going back to the Deutsche Mark (which it will be forced to.)  There is a very high probability of war that comes out of this, although the exact trigger is not something I can forecast.  War is the classical solution to these problems, and it is unlikely to be different this time.

This is going to be a rough time folks.  Our government has refused to deal with the basic mathematical constructs that underlay all economies and debt.  It's not a matter of competing theoretical ideas - it's a matter of basic mathematical laws.  We are now running into the end game where entire nations are coming unglued along with their various patrons and parasites, as the cold, hard mathematical facts run into the fantasy conjurations of people like Bernanke, Geithner and Obama, along with the chortling harpies on Wall Street.

If they manage to "sticksave" things once again, and you can bet they'll try, you've lost nothing by being prepared.  But even if they do pull another rabbit from the hat, instead of a burning stick of dynamite, there are a limited number of rabbits, there are sticks of dynamite in the hat, one will eventually be inadvertently selected and the games will end.

The only real choice is whether that option will take place voluntarily and now, or involuntarily and later.

Either way it's going to suck, but a voluntary acceptance of reality will both suck less and be over sooner, along with being able to be mitigated.  An uncontrolled event - which is what we're headed for at the present time - will be most unpleasant.

PS: Yes, this is an update to the "What's Broken" ticker....  The last time they reached into the hat they got a rabbit - and made the problem worse.  How many more pulls do you think they'll get before the burning stick of dynamite pops out?
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004


Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1077 on: August 23, 2011, 09:50:51 PM »
8/23/2011 Market Ticker


The Recognition of Reality
By Karl Denninger

http://market-ticker.org/akcs-www?post=192809

It would be a good idea to become grounded in it folks, because it's coming, and it's not going to be fun if you're not well-grounded in the facts.

Let's take a few examples, some of them from the forum and some from my own personal experience, and flesh them out.

Take many if not most allegedly "middle-class" and "upper middle-class" business owners and managers.  They live in a nice 3,500 sq/ft house in the suburbs with a manicured lawn and the service that comes once a week.  Their home is immaculate and full of granite counter tops and Viking appliances.  There are two $50,000 automobiles in the driveway - and perhaps another one, or some sort of recreational vehicle (a boat or RV) in the garage or a nearby storage area.

Now look at how much actual wealth they have, on a balance-sheet basis.  Their home is likely underwater or has limited equity - 10 or 20% of the current market value at most.  Their vehicles are not owned outright, they all have notes on them.  There's $100,000 or less in their retirement accounts, but they're middle-aged - in their 40s.

On the spending side they have a $200/month cellphone bill for themselves and their kids ($2,400 a year), spend $300/month on utilities ($3,600 a year) and pay $5,000 or more in property taxes and hazard insurance.  Between these there's more than $10,000 that goes out the front door, plus their income tax burden.  This family also eats out a couple of times a week ($200/month or $2,400 a year) and in general treats money and credit as though it's something they have access to and thus will use.

This prototypical family manages to make it work predicated on being paid by the government for the use of leverage through the mortgage tax deduction.  This has induced them to (among other things) refinance serially, since as a loan amortizes the interest percentage drops and so does the tax write-off. To keep that "extra" $3,000 a year in deduction the family has buried itself in debt - intentionally - through serial refinances, while stripping every dime of equity they could get their hands on to spend on their lifestyle.  What they don't admit to is that they're simply pyramiding debt upon debt, goaded on by a tax system that has encouraged profligacy, immaturity and a mathematically-inevitable economic collapse.

As they head toward "retirement age" their children have gone off on their own.  They treated their kids as chattel during the time they were kids, smothering them and yet at the same time showering them with "things."  A car at 16.  An extravagant prom experience.  Travel-team soccer at hundreds of dollars a month.  New clothes from the latest trendy place - several times a year.  A college that costs $20,000/year.  None of this was earned by Junior, it was "deserved" because the little darlings "should have the best."

These people will argue, to the last man and woman, that they've done "everything right all their lives."

They're deluded, and if you're reading this you're probably one of them.

The fact is that the bubble that made possible the appearance of rapid accumulation of wealth was just that - a bubble.  It was a fraud.  This prototypical family, and the majority of Americans live like this even today, having learned nothing from the last few years,  is literally one disruption in the ability to put leverage upon leverage from a full-blown economic disaster.

But bubbles always pop.

Always.

It's not a bubble eh?  Care to rethink that in light of this chart?

If you want to know where that came from, look right here:

When did the market start to take off?  Right after 1980, right when the government, industry and you set forth upon the path of borrowing more and more money to spend beyond your means, saving nothing, investing nothing.

This drove asset prices higher.  But this game must eventually end, because every dollar you borrow comes with interest, and eventually you are unable to borrow any more, since your borrowing has outrun your earnings capacity.

That's what happened in 2007.  It is why all the games with QEx have failed - all they did was create more "excess reserves" that could be loaned out, but the economy's ability to absorb more loans and pay more interest has been exceeded.

Pressing that bet further and further will not work.  It cannot work.

Now we're in trouble, and lots of it.  We're faced with the reality of what we've done because when that leverage comes out of the system and it will the market is likely to go right back where it started - or fairly close to it.  Contemplate that, and read the Ticker I posted yesterday, because that's the macro economic impact of that leverage being removed.

But on a personal note the impact is going to suck too. In no particular order you might want to consider all of the following:

-    Americans have levered themselves up to the gills.  Despite claims in the media, that leverage has not been taken down.  Think about yourself, your family, neighbors and friends. Would you be ok if you had no credit cards, in fact no credit of any sort, no government handouts and no job - for six months.  Very few families would be able to survive such a thing without ending up in the street, yet without that ability you have excessive financial leverage in your life.  You have not removed that leverage.  You had better start - now.  If you didn't believe in the risk in 2007 when I started writing about this, the 2008/09 market collapse should have convinced you.  If that wasn't enough this latest swoon should have underlined the point.  If neither of those two events has made clear what you must do - right now - then like it or not you deserve what's going to happen to you, despite the fact that I'm sure I'll get hate mail for saying it.

-    Can you make it in "retirement" - by whatever means, including continuing to work, without government support?  If not, you're not unlevered.  You've simply believed the lies told to you by the political establishment that it could lever itself up on an indefinite forward basis and give the benefits to you despite the fact that the demographics - that the Baby Boomers were going to retire en-masse and overload the Medicare and Social Security systems - has been known for more than 30 years.  The government did nothing about it because fixing this would have meant curtailing forward promises of benefits or massive tax increases thirty years ago.  Today, that problem cannot be solved with tax increases as the money is not there and cannot be extracted from the economy.  As a consequence major benefit cuts are going to happen, irrespective of the political demands placed on the government.  You must be prepared to survive and continue onward without any government support.  Figure it out, right now and alter your lifestyle today, or suffer the consequences.

-    Did you successfully transition your relationship with your children (if any) from one of dependence to one of mutual respect?  This doesn't always work, by the way.  Kids are independent human beings, and no matter how you parent them some percentage will be anti-social jackasses as will some parents.  This is reality.  However, it doesn't help if you treated your kids as chattel or worse, abused them or worse, or showered them with all sorts of "entitlements" as kids, because now they'll expect the same as adults!  Historically the solution to getting older meant living in extended family units.  It will again - if you didn't ruin those connections with your children.  If you did, I hope you're wealthy - truly wealthy - or you're in lots of trouble.  Begging sucks as does apologizing for your previous acts along with repairing broken family relationships but it beats the hell out of starving and/or freezing to death.  Choose wisely and choose today.

-    Got faith?  There may or may not be a God, but it's a fact that there's a congregation in the corner Church on Sunday.  Consider that if the Zombie Apocalypse comes knocking your local faith community may be the best option for mutually-arranged self-defense, the patching of any holes that might get made in places you'd rather not have them, and the provision of basic human needs, including most-particularly something hot to put down the pie hole.  Is faith practical?  You decide, and consider this along with the following indisputable fact: Once you know for sure if there's a God it's too late to change your mind.

-    Resolve self-regulation issues - now.  The majority of Americans are overweight or obese.  A minority exercise three times a week for 20 minutes at a moderate to intense level of activity.  One of the Christian "seven deadly sins" is gluttony, and it's not just found in the bottle or the dope bag - it's also found in the grocery store, at the fast-food joint and on the couch.  America has enjoyed the ability to call "911" any time and have an ambulance magically appear to whisk you to the hospital when you feel that nasty tightness in your chest.  In fact, an amazing number of municipalities have managed to vote into place ridiculous tax increases (including my local area) to pay for exactly that.  Instead, a volunteer fire department would be sufficient without the "ALS" ambulance service at a quarter of the cost - and the average homeowner, who pays $250 a year or more for that "enhanaced" level of service, could buy more than enough running shoes and save five times that much or more on food not consumed - and not need the EMS!  The same thing happens in the doctor's office every day: "Doc, do you have a pill for that?"  Guess what - we can't afford to pay for your pills, the EMS, or the hospital - you can't cover it individually and we can't cover it as a society.  Therefore, either solve your self-regulation issues or suffer the inevitable consequences.  It's time to grow up America.

-    Come to grips with your mortality.  If you prefer to use faith, that's fine.  If you don't believe in God, that's fine too - Darwin will do as well.  Nonetheless we are all mortal and we are going to have to deal with the fact that we cannot have medical services we are unable to personally pay for.  This is a major shift after the idiotic moves of the last 30 years, but it is nonetheless a fact.  Leverage enabled the pulling forward of demand for medical services into today that were promised to be paid for tomorrow, but now tomorrow has come and there's no more ability to pull that demand forward.  See the "Self-Regulation" bullet point above and consider that your success or failure in dealing with that will materially change your interaction with this point, then choose.  If you believe that with the global finance ponzi collapsing you'll be able to demand a pair of $100,000 hips, a $90,000 prostate cancer treatment or $250,000 for bypass surgery from "society", you're wrong.  The money doesn't exist any more, which means you either earn and stash it yourself during your productive years, do what you need to so those things are unnecessary (to the extent you can), or face the fact that we all die and your time might be now.


If you'd like the above in a "religious" format someone on the forum posted a link to the a sermon tracking much of the above.  Yeah, it's 45 minutes.  But it's pretty much spot-on in Christian terms.

Time is short; choose wisely.
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1078 on: August 23, 2011, 09:52:09 PM »
Read the comments here: http://market-ticker.org/akcs-www?post=192809

Real eye-openers abound, and the sheep are starting to wake-up and get scared.
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline Mr. Bingley

  • Sr. Member
  • ****
  • Posts: 446
  • Karma: +4/-0
    • The Coalition of the Swilling
Re: Consolidated Financial Doom Thread
« Reply #1079 on: August 24, 2011, 06:07:50 AM »
Well that was a cheery way to start my day! ;)

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1080 on: April 13, 2012, 03:17:57 PM »
Welcome back to the slow motion train wreck friends.

"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1081 on: April 13, 2012, 03:18:11 PM »
4/13/2012 Zero Hedge


Friday Fun With Financial Fatalism
by Tyler Durden

http://www.zerohedge.com/news/friday-fun-financial-fatalism

It seemed appropriate, given Europe is hitting the wall again in its vicious cycle of self-financed self-hypnotizing recovery-less recovery, to present the 'World Collapse Explained In 3 Minutes' that so mockingly relates the real state of absurdity we face in today's financial markets.

http://youtu.be/NOzR3UAyXao

« Last Edit: April 13, 2012, 03:21:27 PM by SilverDeth »
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1082 on: April 15, 2012, 01:47:11 PM »
4/15/2012 The Market Ticker


CPI: All Gas Prices, All The Time?
By Karl Denninger

http://market-ticker.org/akcs-www?post=204696

No really? I needed a laugh this morning....
Quote
    The indexes for food, energy, and all items less food and energy all increased in March. The gasoline index continued to rise, more than offsetting a decline in the household energy index and leading to a 0.9 percent increase in the energy index. The food index rose 0.2 percent as the index for meats, poultry, fish, and eggs increased notably.

We'll get to that household energy thing in a minute....

But from the standpoint of the leading presentation, all I can say is "duh."

Incidentally, the unadjusted price change in all items last month was 0.8%.  That, my friends, is a shocker.  Leading the charge was meats, poultry, fish and eggs (animal products) which anyone with a brain has seen in the supermarket.

Energy commodities, again unadjusted, were up 7.6% this last month.  Motor fuel was the screaming leader with an 8% increase, while piped gas was down 0.9%.

Other screamers in the number were appliances (up 0.7% last month, 9% annually) with laundry leading with 1.1% and 11.5%, respectively.  Apparel was up big as well, although that move looks to be all "right here and now" rather than trend, so whether it's a one-off remains to be determined.  And for those who claim that health insurance costs are leveling off and won't play hell with the United States, well, the numbers say otherwise -- 1.3% last month and 11.3% annual, which is above the 9.3% that we've historically recorded over the last 30 years.
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1083 on: April 16, 2012, 10:22:50 AM »
4/16/2012 Zero Hedge


When Does This Travesty of a Mockery of a Sham Finally End?
by Charles Hugh Smith

http://www.zerohedge.com/news/guest-post-when-does-travesty-mockery-sham-finally-end

Intersecting global crises cannot be papered over with artifice and propaganda for long.

We all know the Status Quo's response to the global financial meltdown of 2008 has been a travesty of a mockery of a sham--smoke and mirrors, flimsy facades of "recovery," simulacrum "reforms," and serial can-kicking, all based on borrowing and printing trillions of dollars, yen, euros and yuan, quatloos, etc.

So when will the travesty of a mockery of a sham finally come to an end? Probably around 2021-22, with a few global crises and "saves" along the way to break up the monotony of devolution. The foundation of this forecast is this chart I prepared back in 2008:



This is of course only a selection of cycles; many more may be active but these four give us a flavor of the confluence of crises ahead.

Cycles are not laws of Nature, of course; they are only records of previous periods of growth/excess/depletion/collapse, not predictions per se. Nonetheless their repetition reflects the systemic dynamic of growth, crisis and collapse, and so the study of cycles is instructive even though we stipulate they are not predictive.

What is predictable is the way systems tend to follow an S-curve of rapid growth with then tops out in excess, stagnates in depletion and then devolves or implodes. We can see all sorts of things topping out and entering depletion/collapse: debt, financialization, the Savior State, Chinese auto sales, oil production, and so on.



Since each mechanism that burns out or implodes tends to be replaced with some other mechanism, this creates the recurring cycle of growth/excess/depletion/collapse.

I plotted four long-wave cycles in the first chart:

1. The credit expansion/renunciation cycle. a.k.a. the Kondratieff cycle. Credit expands when credit is costly and invested in productive assets. Credit reaches excess when it is cheap and it's dumped into malinvestments, and as collateral vanishes then credit is renunciated/written off.

This is inexact, but obviously the postwar cycle of expansion has ended and is now rolling over into the collapse/renunciation stage.

2. The generational cycle of four generations/80 years described in the seminal book The Fourth Turning. American history uncannily tracks an 80-year cycle of crises and profound transformation: 1860 (Civil War), 1940 (world war and global Empire) and next up to bat, 2020, the implosion of the debt-based Savior State and the financialized economy.

3. The 100-year cycle of inflation-deflation described in the masterful book The Great Wave: Price Revolutions and the Rhythm of History. The price of bread remained almost constant in Britain throughout the 19th century. In contrast, the 20th century has been characterized by inflation--the U.S. dollar has lost approximately 96% of its value since the early 20th century.

Another characteristic of this cycle is wage stagnation: people earn less even as costs of essentials rise, a dynamic that inevitably leads to political crisis and upheaval.

The end-game for inflation is destruction of fiat currencies, i.e. hyper-inflation or complete loss of faith in paper money. This is of course "impossible," just like World War I, the Titanic sinking, the global meltdown of 2008, etc. Impossible things happen with alarming regularity.

4. Peak oil, which does not mean the world runs out of oil, it simply means oil production no longer rises to meet demand and eventually declines even as new fields are brought online.

Many observers are confident that fracking and other technologies will enable current energy proligacy to continue unabated as the U.S. replaces oil and coal with newly abundant natural gas. Not only will this lessen American dependence on non-U.S. oil exporters, but domestic energy will spark a jobs boom as well: Fuel to Burn: Now What? (via Joel M.).

Quote

All this surplus energy in North America sounds wonderful, but that doesn't mean the world as a whole has escaped Peak Oil. Even if these projections turn out to be accurate, that expansion of production will not replace the loss of production as supergiant fields in Mexico, the North Sea and the Mideast enter the depletion phase. Yes, technology can extract more oil, but technology is costly. The days of cheap natural gas may have arrived, but the days of cheap oil are numbered.

How all this plays out is unknown, but even raising U.S. production by 10 million barrels of oil equivalents a day--quite a challenge in the real world despite the easy-to-pen hype-- might not be enough to maintain current production levels. Since several billion more people desire the U.S.-type lifestyle of energy profligacy, then what are the consequences of the mismatch between global demand and supply?

We can also posit that "good-paying jobs" in developed economies are also tracking an S-curve. The post-industrial decline in labor has many causes, but the Internet is a key factor going forward as the Web leverages all sorts of productivity gains without the pesky overhead, costs and trouble of workers.

This reality was masked by the initial boom in Web infrastructure that topped out in 2000, and again by the credit-fueled global malinvestment in real estate that topped out in 2007. Now that those bubbles have popped, the reality of long-term employment stagnation can no longer be masked.

Credit bubbles are not engines of employment, they are only engines of mis-investment and wealth destruction on a grand scale.

A number of other questions arise as we ponder these dynamics. How "cheap" will all that cheap energy be to those without full-time jobs? How will 100 million workers support 100 million retirees, pensioners, welfare recipients and parasitic Elites as costs rise and wages stagnate?

The Status Quo is unsustainable on a number of fundamental fronts. How long it can maintain the facade of stability and sustainability is unknown, but the global willingness to squander four years on artifice and propaganda suggests that another decade will fly by and the end-game will be at hand whether we approve of it or not.
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1084 on: April 16, 2012, 10:32:03 AM »
4/16/2012 The Market Ticker


Euro Area: We're Fooked And We Know It
By Karl Denninger

 http://market-ticker.org/akcs-www?post=204781

Oh this is rich....

Quote

But I thought there was no crisis?  That we all took "decisive" and "effective" actions in 2008 and 2009?

Hmmm... you mean that was a lie?

Spain's 10 year bond is trading near 6%, and Italy is trading near 5.5%.  That's a problem; Spain is feeling desperate, as one of their economic ministers is now calling for the ECB to buy yet more of it's trash, er, "debt."

The real problem that Europe has is the same one we have in the United States -- we, and they, are unwilling to fund our government programs with sufficient money in the present tense.

That is we're all unwilling to come to the public of our respective nations with the open question as to exactly what services we want our governments to provide, and then set tax levels such that they're paid for in full in the present tense.

But this is exactly what we must do -- and what they must do.

This weekend I was at a political event canvassing for Calen Fretts who is running for Congress as a Libertarian.  Our current hurdle is getting on the ballot, which requires petitions.  In the course of gathering them I spoke with a lot of people, and one of them was very focused on foreign policy, hammering on the Iraq war and generally being hostile to Libertarian ideas.

At one point I pointed out that irrespective of what he, or I, might like the fact remained that $750 billion a year (our defense budget) is roughly 1/3rd of all tax revenues that the Federal Government currently receives.  While national defense is certainly one of the Constitutional powers of the Federal Government if you can't write the check without it bouncing it's immaterial.  I recognize, for example, that we cannot simply walk off into the sunset on foreign policy as we've managed to create for ourselves a world where we need foreign resources, particularly oil, but this is something we can correct over time.

What we can't do is continue to believe that we can cut taxes further while increasing spending at the same time.  If we're going to have lower taxes (and everyone likes lower taxes) then we must also have lower spending.  This isn't optional -- it's absolutely necessary.

We simply have to have the conversation with the American public in recognition that we either have to cut federal spending by about 50%, double tax receipts or some combination of the two. Either is going to have a significant and inescapable economic impact.

Spain, Italy and the rest of the Euro Zone are in the same box.  None of these nations have actually addressed the funding and spending mismatch that led them into this box and none of them have shown any indication of correcting that error.  Nor have we.

But if we're going to ever make a serious effort at resolving our debt problem before we play Thelma and Louise, driving straight off the cliff, we must stop with the rhetoric and deal with the mathematics.

Walker was up on CNBS this morning again saying that the problem is not "today" but "tomorrow."  He's wrong.  In fact, he's lying as he knows he's wrong.  The problems we have today are real, they are emergent, and health care is not a Medicare or Medicaid problem, it is a structural issue in our medical system.

We simply cannot continue to run $1 trillion+ annual deficits.  This has to end now.

In Europe they must also end these imbalances now.

If those problems are resolved then while the short-term economic difficulty will be significant the intermediate and longer-run benefits will be stability and economic prosperity.

If not then the outcome will be ruin. 

In that case it is not a matter of if, but when.
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline xtron

  • Sr. Member
  • ****
  • Posts: 360
  • Karma: +12/-0
Re: Consolidated Financial Doom Thread
« Reply #1085 on: April 16, 2012, 04:30:54 PM »
raise taxes and/or cut spending...been there done that..twice....under regan, the democrats promised to cut spending, in return for tax hikes.  regan agreed to the tax hikes, and, suprize suprize, never got the spending cuts......

i would gladly support an across the board 5% tax hike...from TODAYS tax rates(NOT the clinton era pre bush tax reduction rates)......ONE YEAR AFTER an across the board 10% spending reduction

what do you think the chances of that happening are???   

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1086 on: April 16, 2012, 08:28:59 PM »
Zero
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline oldguy52

  • Hero Member
  • *****
  • Posts: 558
  • Karma: +16/-1
  • Gender: Male
Re: Consolidated Financial Doom Thread
« Reply #1087 on: April 16, 2012, 08:33:15 PM »
O.G.

"Stupid is supposed to be painful, it's nature's way of learnin' ya" - Me, 1994

When one finds himself living in interesting times, it is prudent to become as uninteresting as possible.... Me, 2011

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1088 on: April 17, 2012, 01:22:38 PM »
4/17/2012 Zero Hedge


Guest Post: Why the Middle Class Is Doomed
by Charles Hugh Smith

http://www.zerohedge.com/news/guest-post-why-middle-class-doomed
Quote

We can see this steady decline in wages in this chart:

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/04/Labor-share4-12_0.png

The more recent fall-off is depicted in this chart:



Notice that the only age bracket with rising incomes is the 65 and over cohort; everyone younger than 65 has seen their income slashed. And this is assuming "official" inflation is accurate; if it understates real inflation (loss of purchasing power), then the income declines are actually much more severe than charted here.

As I have observed many times before, the middle class filled this gap between rising costs and stagnating wages with debt. This chart reflects this reality:

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/04/household-liabilities-wages.png

Household debt has soared far above wages. (Note that this chart is not adjusted to inflation; in real terms, wages have been flat for decades).

Now that the average household is heavily indebted with student loans, vehicle loans, credit card debt and mortgages, its ability to leverage a declining income into more debt is seriously impaired. So filling the gap between rising costs and declining wages with debt is no longer a possibility.

Living within their means and servicing their mountains of debt removes most families from the middle class. As a rough metric, I define middle class as any household with the following attributes:

1. Meaningful healthcare insurance, either provided by an employer or paid by the household

2. Significant equity in a home or other real estate

3. An income and expense sheet that enables the household to save at least 6% of its income

4. Significant retirement funds, either employer-provided or 401Ks, IRAs, income property, etc.

5. The ability to service all debt and expenses over the medium-term if one of the two primary household wage-earners lose their job, i.e. either the household has significant savings or its debts are modest compared to the household income.

Anything less than this basket of attributes is too precarious to qualify as middle class. These basics of financial security were standard-issue for the middle class in the postwar era.

A household could have all of the above attributes on an annual income of $40,000, or they may not have them with an income of $80,000, as "middle class" means some measure of financial security, i.e. owning assets and carrying a debt load that isn't large enough to crush the household balance sheet if income declines.

We can further understand the precariousness of many American households by examining IRS tax data. The top 25% of taxpayers--34 million workers out of a workforce of 160 million and 140 million wage earners--pay almost 90% of all Federal income taxes. Where Do You Rank as a Taxpayer?

Quote
    An adjusted gross income (AGI) of $66,193 or more puts you in the top 25% of earners. The top-earning 25% of taxpayers reported 65.81% of all AGI and paid 87.30% of total federal income taxes ( $755.9 billion).

    How much do you need to make to be in the top 50% of earners? Just $32,396. Fall below that level and you are in the bottom half, along with nearly 70 million of your fellow taxpayers. All told, that group earned just 13% of the income reported on 2009 tax returns. And they coughed up 2.25% of all the income taxes paid.

All these numbers mask the sobering reality that 38 Million Workers Made Less Than $10,000 in 2010-- Equal to California's Population (The Atlantic magazine)

If we dig into the data, we find that the top 25% (34 million workers) is really the top 33%, as only 104 million tax returns actually pay any Federal tax--and as noted above, the bottom 70 million paid a scant 13% of all Federal taxes while the top 34 million paid 87% of all income taxes.

Many Unhappy Returns? (America's aggregate 1040, from IRS tax data).

Quote

Of course Social Security taxes are paid by low-income workers, but this amounts to 7.6% of income--not zero, but not too punishing compared to Federal tax rates.

What all this reveals is that the middle class has lost its political power. Roughly 40% of all households receive a check or equivalent from the Federal government, while at the top Power Elite crony capitalists skim capital gains and pay an average of 17% of all income.

The 100 million dependents on the Federal government (Central State) vote to support their share of the largesse, regardless of the consequences to future generations, and the Power Elite crony capitalists buy political protection for their cartels and financialization scams. The dwindling middle class ends up paying most of the taxes even as their percentage of the population falls to the point that their political voice is drowned out by more numerous dependents and Elites that both favor the Status Quo.

The Federal government is supporting its dependents and its crony-capitalist Elites with borrowed money: $1.5 trillion every year, fully 40% of the Federal budget. It is in effect filling the gap between exploding costs and declining income, just like the middle class did until they ran out of collateral to leverage.

The dwindling middle class, now at best perhaps 25% of the workforce, has been reduced to tax donkeys supporting those above and below who are dependent on Federal largesse.

Fisher found that this cycle ends in transformational political upheaval. No wonder; even as the class paying most of the taxes shrinks and is pressured by higher costs, the class of dependents expands as the economy deteriorates and the super-wealthy Power Elites continue to control the levers of Central State power.
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline Ken

  • Hero Member
  • *****
  • Posts: 1008
  • Karma: +10/-0
  • Gender: Male
Re: Consolidated Financial Doom Thread
« Reply #1089 on: April 17, 2012, 04:08:03 PM »
While I would normally agree with your longwave forecasts that you are presenting, I think a lot of it is going to be thrown off by some of the newer technologies that are coming out.

Two of the major new developments are the really better energy generation and the shrinking of the infrastructure footprint.  (a lot of the newer tech stuff is leaning towards an almost cottage-industry like structure, rather than what we have, at present.)

Of course, the transition looks to be a real SOB, though.


Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1091 on: April 18, 2012, 09:17:33 AM »
4/18/2012 The Market Ticker


Get Ready (Europe)
Karl Denninger

http://market-ticker.org/akcs-www?post=204874

From the 2012 Predictions Ticker:

Quote
    The fissures -- if not outright failure -- in the Euro Zone become realized.  I fully expect one or more nations to leave the Euro and there is a non-zero chance of an outright collapse.  Timing is the problem -- I'll go ahead and stick this in 2012 but may be early a year.  We'll see.  Incidentally because of how I worded this Greece leaving is a "score" but I'm not thinking Greece here -- try Spain or Italy on for size.

And now we have this:

Quote

This is bad.  Very bad, when one considers that Western Banking Systems all depend on default rates closer to 1%, not 8%.

Why?  Because of leverage.  If you're running 30:1 gearing then a 3.3% loss wipes you out.  A 1% loss is tolerable, but just barely.

And all western "banking systems" have been run between 10:1 and more than 30:1 for the last couple of decades, with Europe consistently at or above the top end of that scale.

It's not just private funding either; worse is the government side:

Quote
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1092 on: April 18, 2012, 10:48:40 PM »
4/18/2012 Zero Hedge


How Far to the Wall?
by Terry Coxon

http://www.zerohedge.com/news/guest-post-how-far-wall
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1093 on: April 19, 2012, 04:08:27 PM »
4/19/2012 The Market Ticker


Jobless Claims 4/19: Oops
By Karl Denninger

http://market-ticker.org/akcs-www?post=204939

There's no love here.
Quote
    In the week ending April 14, the advance figure for  seasonally adjusted initial claims was 386,000, a decrease of 2,000 from the previous week's revised figure of 388,000. The 4-week moving average  was 374,750, an increase of 5,500 from the previous week's revised average of  369,250.

"But it went down!" I hear you say.  Uh, no.  The revisions folks, the revisions.  Again.

There's nothing good here; this looks like yet another train wreck and shows that job "creation" is at best tepid and might be turning negative.

There is however, one interesting thing in the big table -- and note that this is in last month's numbers:

http://market-ticker.org/akcs-www?get_gallery=2981

That regular drop is definitely something to take note of.  We'll see if that's a one-off or an actual meaningful change...... there have been a number of drops in that figure of late, so it cannot be ignored without further evidence that it is an anomaly.
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1094 on: April 19, 2012, 04:10:01 PM »
4/19/2012 The Market Ticker


Philly Fed - Softening
By Karl Denninger

http://market-ticker.org/akcs-www?post=204944

Not good...

Quote

Yeah, ok.  Nice try.

The diffusion index came in at 8.5, down from 12.5 last month.  New orders and shipments were both down, unfilled orders (backlog) was an outlier and showed build, inventories were up (a lot) and prices paid were also up (not so good), far more than prices received (very bad.)

More ominously while hiring took place employee workweek contracted.  That implies overshoot in the activity by employers, which is very bad on a forward basis.
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1095 on: April 19, 2012, 04:11:44 PM »
4/19/2012 Zero Hedge


How States Can Protect Themselves From Financial Collapse
by Brandon Smith

http://www.zerohedge.com/news/guest-post-how-states-can-protect-themselves-financial-collapse
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1096 on: April 23, 2012, 04:09:36 PM »
4/23/2012 Zero Hedge


I Do Not Believe, Any Longer, That The Catastrophe Can Be Avoided
by Mark Grant

http://www.zerohedge.com/news/mark-grant-i-do-not-believe-any-longer-catastrophe-can-be-avoided

State Guarantees
Quote
Quote
Quote
Quote
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1097 on: April 23, 2012, 04:19:29 PM »
04/23/2012 Zero Hedge


Dutch Cabinet Resigns
by Tyler Durden

http://www.zerohedge.com/news/dutch-cabinet-resigns


As reported first thing this morning when we discussed the perfect storm in Europe, the Dutch government was expected to resign en masse in the aftermath of this weekend's auterity fiasco. Sure enough, that resignation is now fact.

From the WSJ:
Quote
    Dutch Prime Minister Mark Rutte and his cabinet have resigned after failing to reach agreement on reducing the country's budget to meet European guidelines, the Dutch government information service said Monday.

    The information service said that Mr. Rutte had met with Queen Beatrix and she had accepted his resignation, asking him to tend to pressing matters of state with a caretaker government for the time being. Mr. Rutte is due to address parliament Tuesday afternoon to discuss interim budget cuts and schedule new elections.

    Talks over measures to slash the government's budget deficit collapsed over the weekend after seven weeks of negotiations, raising questions about the future commitment of one of the euro zone's foremost proponents of fiscal stringency to a German-led austerity agenda.

    The Netherlands has been a key ally of Germany and one of the most vociferous supporters of austerity since Greece's debt problems initiated the euro-zone's debt crisis more than two years ago. But its economy is performing poorly and is expected to shrink this year, widening its budget deficit and making it one of the worst-performing in the euro zone.

    The talks collapsed after the right-wing Freedom Party pulled out of talks with Mr. Rutte's center-right liberal party. The negotiations had been aimed at cutting the budget deficit to 3% of gross domestic product next year, in line with European Union rules, from a forecast 4.6%.

And so the final Catch 22 for Europe unfolds: impair banks and suffer threats of the end of the world, or impair citizens and suffer falling governments. Check to you.
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1098 on: April 23, 2012, 04:23:29 PM »
4/23/2012 Zero Hedge


Russia Will Not Reopen: "The Situation Has Been Recognized As An Emergency"
by Tyler Durden

http://www.zerohedge.com/news/russia-will-not-reopen-situation-has-been-reocginzed-emergency


One temporary halt and three delay attempts later, and we get.... this.



Yes, this is the Russian stock market.
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004

Offline SilverDeth

  • ...a propagandist by inclination...
  • Hero Member
  • *****
  • Posts: 2112
  • Karma: +30/-0
Re: Consolidated Financial Doom Thread
« Reply #1099 on: April 23, 2012, 04:25:33 PM »
4/23/2012 Zero Hedge


US Welfare State To Run Out Of Cash Sooner Than Hoped For
by Tyler Durden

http://www.zerohedge.com/news/us-welfare-state-run-out-cash-sooner-hoped

Medicare trustees just released their annual report on the program's finances and it does not make for healthy reading. In fact the main headline takeaway is that the social security fund itself will now run dry three years sooner than was projected in 2011. While 2035, the new deadline, seems a long way off, the 5% rise in medicare costs in 2011 should be enough to worry most and perhaps more disturbing is the separate disability program is set to run dry in 2016 (two years earlier than expected) and Medicare is to be depleted by 2014. Headlines via Bloomberg:

    *MEDICARE COSTS RISE 5 PERCENT TO $549 BILLION IN 2011   :UNH US
    *LONG-TERM PROJECTIONS FOR MEDICARE WORSEN, TRUSTEES SAY :UNH US
    *HOSPITALS TO FACE MEDICARE PAYMENT CUTS IN 2024, U.S. SAYS
    *TRUSTEES SAY FUND TO RUN OUT THREE YEARS EARLIER THAN PREDICTED

Added Tim Geithner's ever-positive spin-fest...

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/04/20120423_TSY1.png
"There are many things worse than dying, and there are some things far more important than living."
- Me, 2004


 

Related Topics

  Subject / Started by Replies Last post
0 Replies
280 Views
Last post October 12, 2010, 11:44:11 PM
by SilverDeth
18 Replies
4582 Views
Last post August 30, 2011, 09:11:06 PM
by Coleman Junkie
12 Replies
7440 Views
Last post October 13, 2012, 01:46:26 PM
by Langenator
8 Replies
1573 Views
Last post November 07, 2012, 10:04:58 PM
by Bill Quick
12 Replies
1006 Views
Last post August 26, 2014, 09:06:04 AM
by BooMushroom


Your Ad Here - Email for Info
Help Support E-P.com
Even A Buck Makes A Difference!
Or Make Convenient Monthly
Donations By Selecting
A Payment Option
Payment Options