When The Economy Collapses The Government Will Implode : ‘The Support Mechanisms On Which We Depend Will Break Down’

For twenty years Micheal Rivero of What Really Happened has been exposing the lies and corruption emanating from the Federal government, Wall street bankers, and big business.
In his latest interview with Crush The Street he sounds one of his most dire warnings yet:
‘When the economy implodes here in the United States it’s probably going to take the Federal government with it.’
The implications, as Rivero notes in the following must-see video, are such that the entire system upon which we depend for essential services will completely fall apart. That means access to food, basic supplies and even your bank account will become next to impossible:

This post was published at shtfplan on January 31st, 2016.

Did A Central Banker Just Margin Call All Other Central Banks’ Credibility?

Authored by Mark St. Cyr,
In a stunning policy move Bank of Japan Governor Haruhiko Kuroda introduced and adopted negative interest rates. The word ‘stunning’ is fitting, for just weeks prior he stated there was no need to adopt such measures. It seems by all accounts his mind changed (or was made right?) after returning from Davos.
Whether or not this is the case one thing is certain: The Bank of Japan (BOJ) has thrown not just a monkey wrench into the financial system. He may have simultaneously made every other central bankers toolbox irrelevant, as well as incapable, to deal with the resulting damage. It’s one thing to have the right tool at the right time to tweak or fix. It’s quite another to lose grip of that tool where it falls into the running gears of the machinery. That’s when far more can (and usually does) go awry than just the original issue. (Think losing the small water pumps that keep water in a nuclear reactor as an analogy.)
No matter what anyone in the ‘smart crowd’ would argue different. Today, both the financial world along with business in general is currently being manipulated made possible via crony capitalism as well as simultaneously being stymied by central bank policies. All occurring through the direct myriad of interventions into the capital markets globally. I believe that in no other time since the days of direct rule of Kings and Queens has such a small cabal of people had so much influence, as well as control, of global finance and business influence. Ever.

This post was published at Zero Hedge on 01/31/2016 –.

“Time To Panic”? Nigeria Begs World Bank For Massive Loan As Dollar Reserves Dry Up

Having urged “don’t panic” just 4 short months ago, it appears Nigeria just did just that as the global dollar short squeeze forces the eight-month-old government of President Muhammadu Buhari to beg The World Bank and African Development Bank for $3.5bn in emergency loans to help fund a $15bn deficit in a budget heavy on public spending amid collapsing oil revenues. Just as we warned in December, the dollar shortage has arrived, perhaps now is time to panic after all.
In September, Nigerian central bank Governor Godwin Emefiele ruled out a naira devaluation on Thursday and told people not to panic about a government order which risks draining billions of dollars from the financial system.
In an interview with Reuters, Emefiele said he was ready to inject liquidity if needed into the interbank market, which dried up this week following the directive to government departments to move their funds from commercial banks into a “Treasury Single Account” (TSA) at the central bank. The policy is part of new President Muhammadu Buhari’s drive to fight corruption, but analysts say it could suck up as much as 10 percent of banking sector deposits in Africa’s biggest economy – playing havoc with banks’ liquidity ratios.

This post was published at Zero Hedge on 01/31/2016 –.

Dear Abby

Dear Abby, My husband hasn’t worked for the last 14 years. All he does is get dressed in the morning and hop in his fancy car to visit his cronies. I know he’s cheated on me many times with young girls who could be his grand-daughters. I know this because he brags about this to me. He smokes fancy cigars and drinks the most expensive Champagne day and night. We sleep in separate beds because he tells me he knows I am a lesbian and my varicose veins and fat behind turns him off. Should I clobber him with a frying pan, or should I just leave him? Your advice would be appreciated. Sincerely, Mad as hell.

This post was published at Armstrong Economics on January 31, 2016.

Washington Jingoism Gone Wild – – The 2 US Navy Boats Were The Provocateur, Not Iran

Summary: Iran’s arrest of US sailors in their waters provides opportunity for our hawks to wave a fake bloody shirt, hoping to make the US public fear and despise Iran. That this daft jingoism is considered acceptable, even routine, fare in our newspapers shows how much we’ve adopted Imperial thinking – and abandoned common sense.
Today’s output from the war-monger industry: ‘At the Pentagon, General Chaos is in Charge’ by Ray Starmann at US Defense Watch (‘News, Opinion and Analysis on US Defense issues and politics with a conservative viewpoint’), 26 January 2016 – Opening…
The surrender of two US Navy vessels of war and their crews to the Iranians without firing so much as a shot and the subsequent and sickening apology by the commanding officer, speaks volumes about the current fighting spirit, training and state of readiness of the US military in 2016.

This post was published at David Stockmans Contra Corner on JANUARY 30, 2016.

The Q4 GDP Report – – Yellen’s Cronkite Moment

Fourth quarter GDP was estimate at just 0.68906% Q/Q in its advance statement. There is no more ‘residual seasonality’ left with which to obfuscate the deficiency in 2015; the year ended as it had begun, under great suspicion. Unlike most economic context given as commentary, that actually makes sense as both markets and other more fruitful economic measures have been suggesting all along. At best, GDP has exhibited great instability which is itself an indication of weakness since GDP was constructed to be the most charitable interpretation of economic growth.
Instead of riding into the sunset of QE-inspired success, the economy last year decelerated and left only questions as to exactly that. The year saw only one quarter that could be in any way characterized as decent, leaving three as undesirable; two unconscionably close to zero.
By the standard of average SAAR’s, GDP in 2015 was 2.38%, slightly less than 2014′s 2.43%. In terms of average Q/Q, 2015 was appreciably worse at just 1.78%; not really meaningfully better than even 2012 and certainly nowhere near projecting ‘overheating.’ In fact, by comparison to the last ‘recovery’ after the dot-com recession, 2015 seriously underperforms 2006 (a year that included half of it on the wrong side of the housing bubble).
That left the FOMC little choice but to make the alteration to its statement language in January, being forced into acknowledgement that GDP was no longer confirming their view. That leaves the FOMC’s recovery as purely the imagination of the BLS and its hopelessly isolated unemployment rate. The GDP report provided only contradiction for the ‘inflation’ reality in 2015, too. If the Fed meant that calculated inflation rates would at least begin to respond to past monetary policy efforts bearing fruit in the actual economy, then the fact that nominal GDP failed to reach the 2% threshold twice in 2015 has to be a fatal blow to any designs about ‘slack’ being sufficiently addressed. Again: Nominal GDP failed to reach 2% half of the year, including the last three months.

This post was published at David Stockmans Contra Corner on January 30, 2016.

Durable Goods Confirm Again – – The Slope Is Down

Durable goods orders and shipments declined much worse in December than November, ending any hope that November’s variation was anything other than simply that. Across-the-board, capital goods as well as durable goods, the numbers year-over-year were nearly flat for November, thus suggesting just how bad 2015 was overall when slightly negative seems like a huge improvement. So where capital goods orders had been -7.15% in September, but -1.8% and then -0.8% in October and November, respectively, December thumped everything back to recessionary reality; -7.69%. In durable goods orders (ex trans), what was -5.42% in September and -4.14% in October briefly turned to -0.91% in November before back down to -3.09% in December.
What is more troubling is that shipments though now persistently contracting, too, are doing so still at a noticeably lesser pace than orders; the 6-month average for capital goods orders is -4.41% vs. -1.75% for shipments. Forward-looking, then, this suggests only more cuts in production and activity to come.
The longer this contraction goes, the more it looks like slow recession even without any widespread or large-scale cutbacks as yet. Even in energy and oil production, the full fury of the oil crash is nowhere to be found; meaning it can only be lurking ahead. If durable goods already suggest recession tendencies without all that, it focuses attention on what the downside might be with all that. In other words, more still the adjustment phase than yet the cutback phase.

This post was published at David Stockmans Contra Corner on January 28, 2016.

The Financial Fractioning of Gold – – A Deep Dive Into What Ails It

The simple fact of the matter is that gold is no longer money and hasn’t been treated that way in decades. It is a frustrating and often woeful outcome, but deference isn’t a reason to color judgement. As an investment, which is more like what gold has become, it isn’t all that straight, either. Gold behaves in many circumstances erratically; often violently so. In 2008, gold crashed three times; but it also came back (and then some) three times. The metal remains stuck in some orthodox limbo of duality, sometimes acting an investment while at others, more rarely, as almost reclaiming its former status.
The junction of that dyad format is wholesale collateral. It is a difficult and dense topic because it plumbs the very depths of the wholesale arrangement – factors like leasing, swaps and collateralized lending through binary bespoke arrangements. It is there that I think it helps to form the narrative, however, starting by reviewing what the BIS was up to in late 2009 and early 2010. I am going to borrow heavily from an article I wrote in April 2013 that describes the events in question but this is one of those times when you should read the whole thing.
Back in July 2010, the Wall Street Journal caused some commotion when it happened to notice in the annual report for the Bank for International Settlements the sudden appearance of gold swap operations to the tune of 346 tons. Subsequent investigation by media outlets, including the Financial Times, reported that the BIS had indeed swapped in 346 tons of gold holdings from ten European commercial banks. That was highly unusual in that gold swaps are typically conducted between and among central banks.
Included in that list of commercial banks were, according to the Financial Times, HSBC, BNP Paribas and Socit Gnrale. The timing of the swaps was pinned down to sometime between December 2009 and January 2010 – just as the world was getting reacquainted with the Greek Republic.

This post was published at David Stockmans Contra Corner on January 28, 2016.

Apple, FANGS And Monetary Fools

This week the great tree of Apple finally stopped growing toward the sky. During its latest quarter, in fact, i-Pad sales were down 25%, Mac volume came in 4% lower and even the i-Phone barely breached the flat line.
In all, Apple’s mighty machine of double digit growth posted a revenue gain of just 1.7% over prior year, while its net income was essentially flat. The real news, however, was that management is now projecting an actual 11% y/y decline in sales during the current quarter.
Don’t get me wrong. Apple has been the most awesome fount of product invention, global production and supply chain proficiency, logistics and marketing innovation and consumer brand value creation in modern history – -perhaps ever.
Its products – especially the smart phone – did fundamentally transform the daily life of the world. Apple’s installed base of one billion devices is a living testimonial to its fanatical focus on bringing to the consumer a truly transformative digital age experience.

This post was published at David Stockmans Contra Corner by David Stockman ‘ January 30, 2016.

Red Ponzi Update – -Greatest Capital Flight In History

For lovers of dramatic numbers, China has long been a gift. The flood of cash leaving the country has produced another impressive statistic: We are witnessing the greatest episode of capital flight in history.
China’s foreign-exchange reserves fell by $700 billion last year. The flood of cash across its borders is complicating the country’s economic transformation and is raising the risks of problems in other emerging markets, where cash already is flowing outward.
‘What happened in 2015 coming out of China was unprecedented in magnitude,’ saidCharles Collyns, chief economist for the Institute of International Finance, a global trade group for the financial industry.
The size of China’s $10 trillion economy and its still-huge foreign reserves means the outflow won’t cause an immediate crisis in the country, though there are risks. According to World Bank data, the $700 billion decline in China’s foreign-currency reserves is bigger than the total foreign-currency reserves of all but three other central banks in the world – Japan, Switzerland and Saudi Arabia. China’s outflows are the biggest in absolute terms, although other countries have had larger outflows relative to the size of their economies.

This post was published at David Stockmans Contra Corner on January 29, 2016.

Meet Former US Ambassador To Syria, Robert Ford – – The Syrian Terrorists Best Friend In Washington

Robert Ford was US Ambassador to Syria when the revolt against Syrian president Assad was launched. He not only was a chief architect of regime change in Syria, but actively worked with rebels to aid their overthrow of the Syrian government.
Ford assured us that those taking up arms to overthrow the Syrian government were simply moderates and democrats seeking to change Syria’s autocratic system. Anyone pointing out the obviously Islamist extremist nature of the rebellion and the foreign funding and backing for the jihadists was written off as an Assad apologist or worse.
Ambassador Ford talked himself blue in the face reassuring us that he was only supporting moderates in Syria. As evidence mounted that the recipients of the largesse doled out by Washington was going to jihadist groups, Ford finally admitted early last year that most of the moderates he backed were fighting alongside ISIS and al-Qaeda. Witness this incredible Twitter exchange with then-ex Ambassador Ford:

This post was published at David Stockmans Contra Corner on January 29, 2016.

That Didn’t Take Long – – Fed Heading For Even Deeper Monetary Depravity

It wasn’t in any way magnanimous for the FOMC to state clearly what everyone already knew without any need for aid of GDP calculations. The policy statement for its January 2016 meeting included language that mitigated, if not fully than significantly, the continued reliance on labor indications alone. The Fed says the labor market continues to point in the right direction, even if the economy in all the wrong places slowed just as it judged recovery conditions met.
Information received since the Federal Open Market Committee met in December suggests that labor market conditions improved further even as economic growth slowed late last year. Household spending and business fixed investment have been increasing at moderate rates in recent months, and the housing sector has improved further; however, net exports have been soft and inventory investment slowed.
As for inflation, the Committee still will not specify ‘partly.’
Inflation has continued to run below the Committee’s 2 percent longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation declined further; survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months. [emphasis added] Yellen’s ‘professional forecasters’ are mostly unwavering, not surprising since they are the same sort of economists that stand upon the BLS’s straight line of a payroll report, but credit market indications of such things are equally if not more so but in the worst way. Inflation forwards and breakevens improved a little since this statement, but remain far too near the worst levels of 2009.
As noted about Japan earlier today, inflation is the whole thing. You don’t have to take my word for it; the FOMC amended its 2012 Statement on Longer-Run Goals and Monetary Policy Strategy in the most curious way.

This post was published at David Stockmans Contra Corner on January 29, 2016.

Painting By The Numbers – -The Farce Of Central Planning In China

Fresh evidence of China moving away from a growth-at-all-costs strategy is emerging in the annual targets of the nation’s regional authorities.
With new metrics like debt sustainability and cleaning up the environment rising in focus, 11 of 31 provinces have lowered their growth goals for 2016. Nine have moved away from a pinpoint figure, and now present a range of growth to shoot for – an approach some economists anticipate the national government will adopt when it unveils its objective in March.
The more modest goals are a departure from the days when provincial governments led stimulus binges, creating a debt pile that hangs over today’s growth prospects. While President Xi Jinping and Premier Li Keqiang have signaled they’ll tolerate a slower expansion, they’ve set a line in the sand at an average of 6.5 percent through to 2020 – the pace needed to achieve long-term goals to double incomes and the economy’s size from 2010 levels.
‘The government seems to be lowering the importance of GDP targets and prioritizing things like cleaning up the environment,’ said Zhu Qibing, a Beijing-based analyst at China Minzu Securities Co. ‘The other reason for targeting a range is the increasing difficulty in reaching targets as the economy slows. It’s embarrassing to set a low target, but a high target is too difficult to meet. So a range provides some flexibility.’

This post was published at David Stockmans Contra Corner by Bloomberg Business ‘ January 29, 2016.

Now Among Largest Firearms Investors, Soros in Gun Control Scheme to Dump Stocks: ‘I’m Very Much Against Guns’

Do you see the puppet strings?
The plot to disarm Americans and suspend the 2nd Amendment is working with furious pace. But it is anything but head on.
The 2nd Amendment makes gun ownership an inalienable right and guarantees armed and formidable populace. The NRA and other lobbies have gun rights firmly entrenched in the Republican party.
So the other side works the back door. Infiltration, sabotage and other dirty tricks.
Is that what is happening?
By all appearances, Soros, the elite wolf in sheep’s clothing has been investing in firearms companies not to profit from them, but to destroy them, and destroy the access of people to guns and ammunition.
Via the International Business Times:

This post was published at shtfplan on January 29th, 2016.

War Party On The Run – – -The Roots Of The Anti-Trump, Anti-Sanders Camps In Both Parties

I haven’t had this much fun in years – of course I’m taking about the US presidential election season, with The Donald taking on all comers, and winning (at least so far), and Berne Sanders burning up the self-satisfied mandarins of the Democratic party Establishment.
What’s great about this spectacle – and one must view it as a spectacle in order to gain maximum enjoyment from it – is that, as none other than Rush Limbaugh points out:
‘Trump is so far outside the formula that has been established for American politics that people who are inside the formula can’t comprehend it. They don’t understand why somebody would want to venture so far outside it, because it is what it is, and there’s a ladder of success that you have to climb. And somebody challenging it like this in more ways than one, as Trump is doing, has just got everybody experiencing every kind of emotion you can: They’re angry, they are flabbergasted, they’re shocked, they’re stunned – and all of it because he’s leading.’
As I explained here, and here, one of the ways Trump is upending the rules is that he’s broken with the GOP mandarins on foreign policy. Yes, yes, Iknow he bloviates about how he’s ‘the most militaristic person’ on God’s green earth, but the fact is there’s plenty of others out there who out-do him in that category. I’ve heard him say he wants to ‘bomb the s**t out of ISIS,’ but aren’t we doing that already – to little effect? When Bill O’Reilly asked him why he didn’t support putting ground troops in Syria, he answered ‘Do you want to run Syria?’ O’Reilly demurred. Trump puffs up his chest and announces he wants us to have ‘the strongest biggest baddest military on earth’ – but you’ll note he invariably adds: ‘So we’ll never have to use it.’

This post was published at David Stockmans Contra Corner by Justin Raimondo ‘ January 29, 2016.

Obamacare’s Fiscal Folly: Cost Per Beneficiary Explodes with Shrinking Enrollment

The Congressional Budget Office’s latest budget estimate shows Obamacare’s costs per beneficiary have exploded, as enrollment in Obamacare’s broken exchanges collapses. January’s update estimates 2016 exchange enrollment at 13 million people (p. 69). Although the Administration had previously downgraded its estimate of Obamacare enrollment, this is the first significant change by the non-partisan CBO.
What is really shocking is the January update still estimates tax credits, which subsidize insurers participating in exchanges, will cost taxpayers $56 billion this year (p. 182). That amounts to about $4,308 per enrollee (although not all are subsidized). Back in March 2010, CBO estimated that 21 million people would be covered in exchanges in 2016, for a total cost of $59 billion in tax credits (pp. 20-23). That would amount to about $2,810 per enrollee.

This post was published at David Stockmans Contra Corner by NCPA ‘ January 29, 2016.

The Shipping News Says the World Economy Is Toast

In October 2008, as the repercussions of the financial crisis were starting to ripple through the global economy, I noticed a press release from Swedish truckmaker Volvo saying that its European order book had fallen by more than 99 percent between the third quarters of 2007 and 2008 – to just 155 from 41,970. That prompted me to study various other real-world activity measures ranging from shipping to air freight, and to conclude that ‘the news is all bad and getting worse, fast.’ The same exercise today, I’m afraid to say, leads me to a similar conclusion about the growth outlook.
Here’s a chart showing what’s happening to the cost of shipping containers from China’s ports, one for the country and one for Shanghai. Both indexes are compiled by the Shanghai Shipping Exchange and cover shipments to the rest of the world including Europe, the U. S. and Africa; the broader China index is down more than 40 percent from its peak in mid-2012:

This post was published at David Stockmans Contra Corner on January 29, 2016.

Watch The Wafers – -The Global Semi-Conductor Demand Has Collapsed

Silicon Wafers and What They Tell Us
Collapsing demand for silicon wafers is signaling further global economic slowdown.
Silicon wafers are the raw material used for semiconductors. It’s the pig iron that gets turned into steel, the concrete that becomes roads. Except that semiconductors have a far broader and deeper reach in the 21st century economy. That is, demand for silicon is a pure reflection of economic demand, but just slightly in the near future since that silicon has to be turned into semiconductors first and then integrated into things to then get sold.
Simply put, in a growing economy where production and durable goods demand is expanding, silicon wafer demand is growing.

This post was published at David Stockmans Contra Corner on January 29, 2016.

The $29 Trillion Corporate Debt Hangover That Could Spark a Global Recession

There’s been endless speculation in recent weeks about whether the U. S., and the whole world for that matter, are about to sink into recession. Underpinning much of the angst is an unprecedented $29 trillion corporate bond binge that has left many companies more indebted than ever.
Whether this debt overhang proves to be a catalyst for recession or not, one thing is clear in talking to credit-market observers: It’s a problem that won’t go away any time soon.
Strains are emerging in just about every corner of the global credit market. Credit-rating downgrades account for the biggest chunk of ratings actions since 2009; corporate leverage is at a 12-year high; and perhaps most worrisome, growing numbers of companies – one third globally – are failing to generate high enough returns on investments to cover their cost of funding. Pooled together into a single snapshot, the data points show how the seven-year-old global growth model based on cheap credit from central banks is running out of steam.
‘We’ve never been in a cycle quite like this,’ said Bonnie Baha, a money manager at DoubleLine Capital in Los Angeles, which oversees more than $80 billion. ‘It’s setting up for an unhappy turn.’

This post was published at David Stockmans Contra Corner on January 29, 2016.