Thursday, October 31, 2013

The Gathering Storm........AN ABSOLUTE MUST READ!

We have never been in a more dysfunctional state at the corporate, political and individual level in history.

The Gathering Storm

Doing more of what failed spectacularly will not save the day a second time, as the scale required to create yet more phantom collateral and more asset bubbles will collapse the system.

The financial storm clouds are gathering, ominously darkening the horizon. Though the financial media and the organs of state propaganda continue forecasting blue skies of recovery and rising corporate profits, the factual evidence belies this rosy forecast: internal measures of financial and economic activity are weakening across the globe as the state-central bank solutions to all ills--massive increases in credit creation, leverage and deficit spending--have failed to address any of the structural causes of the 2008 Global Financial Meltdown.

This failure to address the causes of 2008 Global Financial Meltdown is disastrous in and of itself--but the status quo has magnified the coming disaster by scaling up the very causes of the 2008 Global Financial Meltdown: excessive credit expansion, misallocation of capital on a grand scale, an opaque shadow banking system constructed of excessive leverage and a dependence on phantom collateral, i.e. risks and assets that are systemically mispriced to skim stupendous profits for financiers, bankers and their political enablers.

Extremes inevitably lead to collapse, but even the most distorted system has some feedback mechanisms that attempt to counter the momentum toward disaster. Just as the body will try to mitigate the negative consequences of a diet of greasy fast food, our grossly distorted financial and political systems still retain some modest feedback loops that attempt to mitigate rising risks.

These interactive forces make it impossible to predict the moment of collapse, even as systemic failure remains inevitable. Precisely when the heart of an obese, unfit person who eats nothing but fast food will give out cannot be predicted, but what can be predicted is the odds of systemic failure rise with every passing day.

Doing more of what has failed spectacularly--inflating new asset bubbles in housing, stocks and bonds via quantitative easing, obfuscating financial skimming operations with thousands of pages of new regulations, and so on--is the equivalent of pushing an obese, unfit person to run uphill. Rather than repair the system, doing more of what has failed further stresses the system.

But even if the financial system were cleansed of bad debt and phantom collateral, the status quo would remain only partially repaired. For it's not just the financial system that has reached the point of negative return: the entire economic foundation of the developed world--credit-dependent consumerism--is as bankrupt and broken as the financial system that fuels it.

The state's response to this economic endgame is depersonalized welfare, both corporate and individual. When favored sectors can't succeed in the open market, the state enforces cartel-capitalism that enriches the corporations at the expense of the citizenry. When the cartel-state economy no longer creates paying work for the citizenry, the state issues social welfare benefits, in effect paying people to stay home and amuse themselves.

This destroys both free enterprise on the corporate level and the source of individual and social meaning, i.e. the opportunity to contribute in a meaningful way to one's community, family and trade/skill.

The status quo is thus not just financially bankrupt--it is morally bankrupt as well.

The status quo is as intellectually bankrupt as it is financially bankrupt. Our leadership cannot conceive of any course of action other than central bank credit creation and expanding state control of the economy and social benefits, paid for with money borrowed from future generations.

Let's take a wild guess that the obese, unfit person won't make it up the second hill, never mind the third or fourth one. The status quo responded to the financial heart attack of 2008 by doing more of what had failed spectacularly. That injection of trillions of dollars, euros, yen, renminbi, quatloos, etc. revived the global financial system in the same way a shot of nitroglycerin resolves a life-threatening crisis: it doesn't fix the causes of the crisis, it simply gives the system some additional time.

The next global financial storm is already gathering on the horizon. Doing more of what failed spectacularly will not save the day a second time, as the scale required to create yet more phantom collateral and more asset bubbles will collapse the system.

Intellectual, moral and financial bankruptcy all go hand in hand. There isn't just one storm gathering on the horizon--there are three, each adding force and fury to the other two.


Did The Fed Kill The Long-Term Investor?........A MUST READ!

Did The Fed Kill The Long-Term Investor?

Gone are the days where people looked towards next year when building their portfolios, or five years down the road as they approach retirement. Now from a combination of apprehensiveness and shear paranoia in our unstable markets, investors are looking only as far as they can throw for their personal investment decisions.

In more than 30 years of money management, I've never seen such a rapid change in the way people make financial plans. Instead of saving for the future, many are opting for fast gains — yet at the same time they want low risk. Others are playing it completely safe. In fact, in a quarterly poll my firm took, 83% of respondents said they were holding on to their cash versus investing in the stock market.

Why are investors so hesitant to invest when markets are at record highs?

It should come as no surprise that the 2008 financial crisis is still a major factor. As the banks were crumbling, the housing market caved and unemployment rocketed, investors' confidence sunk.

But in the years that followed, we saw a huge amount of government intervention in the form of various stimulus packages. While some may argue that this stimulus, including the Federal Reserve's quantitative easing, saved our economy, this injection of billions of dollars each month to buy government bonds has created a dangerous facade of market strength.

This is because although we get a visible boost from QE, these upward swings are merely a temporary high. The public has taken note of the Fed's parlor trick. 

An overwhelming 93% of participants in our survey wanted to end QE and let the markets readjust without government support. And we have every reason to worry. By the Fed thinking they can own an entire Treasury market, it is funding a new asset bubble that is at risk of bursting.

What should the Fed be doing to create jobs and economic recovery?

The Fed's recent decision not to slow its bond purchasing surprised everyone. This move, or lack thereof, only underscores the Fed's uncertainty about the U.S. economic recovery, making already uneasy investors think twice about throwing their hat — or their money — into the ring. And the fact that in a post-financial crisis world, investors are viewing the U.S. economic climate with a skeptical eye makes it all the more important for financial advisers to adapt to a different economic environment while also managing client psyche.

The public is tired of not seeing solid movement to help our economy recover in the wake of 2008. In the past five years, all we have been able to sustain is a stagnant unemployment rate and an influx of stimulus packages that are holding our economy together by the bootstraps instead of enabling it to grow on its own.

As long as we try to find a path to recovery among failed policies, investors are going to continue to gauge their risks and develop a new type of strategy to adapt to an extremely unclear future.

Not Falling Off A Cliff Is No Reason For Optimism...........

Not Falling Off A Cliff Is No Reason For Optimism

Although the sigh of relief that the nation wasn't going to default was worth a short bounce, the outlook for additional stock market gains seems bleak. The agreement to open the federal government and raise the debt ceiling temporarily is a Band-Aid rather than a solution, and merely sets up the prospect of another confrontation within a short time.  Meanwhile, an economy that was already sputtering before the negotiations even started has now undergone further significant damage.  

We see the following serious problems with the near-to-intermediate outlook.

1)     The agreement settled nothing, and we will now be doing the same thing over again within a short time.  The settlement called for the formation of yet another congressional committee to either come up with a long-term budget solution or a budget for fiscal 2014. 

The problem is that we've tried this over and over again, and, if anything, positions have hardened. The House budget resolution proposes deep spending cuts and no tax increases, while the Senate resolution includes large tax increases and less spending cuts.  Both sides are adamant in their positions, and are unlikely to work out a compromise by December 13th that they have rejected numerous times in previous negotiations.  Absent an agreement, we will be facing another bitter conflict as we approach January 15th.

2) Part of the reason for the market's optimism is the likelihood that the Fed's tapering will be now put off to at least March as a result of the additional economic uncertainty created by the current deal.   However, quantitative easing (QE) has been priced into the market over and over again, raising the question as to how many times the market can discount the same factor.  In addition there is a serious question on whether the benefits of QE outweigh the possibly serious unwanted side effects.

3) With the economy barely growing, corporate revenue growth has been decelerating while profit margins are 70% higher than their long-term average and likely to come down.  As a result, earnings growth is also slowing, and current forecasts will probably prove to be far too high.

4) Economic growth was only in the 1.5%-to-2% range even before the recent round of negotiations, and is now likely to sink below that.  While lower government spending during the shutdown probably only sliced about 0.2% annualized from 4th quarter GDP, the effect on consumer and corporate spending can lop off anywhere between 0.2% and 0.7% more.  And the uncertainty leading into the January 15th deadline can affect 1st quarter growth as well.

5) Most market strategists seem to assume that other than the turmoil in Washington, the underlying economy is getting stronger. We'd like to see their data. 

Real consumer spending on an annualized basis increased by a tepid 1.5% in the 1st quarter, 1.2% in the 2nd, and 1.3% in July and August.  That's barely above recessionary levels. In addition housing is slowing down, business remains reluctant to hire and spend, and government spending is declining.  Furthermore, if the budget committee comes up with an agreement, it will almost certainly involve additional cuts in spending and, perhaps, higher taxes.  If there's no agreement, the sequester is scheduled to increase automatically in January.

6) A last minute settlement is what the consensus expected, so was not a great positive surprise.  The market's maximum decline was slightly under 5%, meaning there were few outstanding bargains available as result of any jitters during the conflict..  The preponderance of sentiment is dangerously bullish and the S&P 500 is selling at an historically high multiple of 19 times trailing reported earnings.  

In our view, the current condition of the market is eerily similar to the peaks of early 2000 and late 2007, when unfavorable conditions were ignored by the majority of investors.    

This Great Bubble Chart Shows How Europe's Major Cities Have Fared Since The Financial Crisis....GREAT GRAPHIC!

This Great Bubble Chart Shows How Europe's Major Cities Have Fared Since The Financial Crisis

Istanbul has been the most dynamic city since 2007, while cities like Athens and Barcelona haven't performed well.

european cities

Wednesday, October 30, 2013

THIS is where our Monetary System is Headed.........don't be the dupe who ignores the obvious.


THIS is where our Monetary System is Headed

Fire is notorious for doing what it wants and once its out of control even the best firefighters don't stand a chance. THE FED, THE FINANCIAL SERVICES INDUSTRY, AND POLITICIANS ARE NOT ONLY PLAYING WITH FIRE THEY ARE SETTING THEM AND THEN FANNING THE FLAMES!

Each day that passes we come closer to the arrival of a monetary fire that threatens to dwarf anything in our collective living memories. 

Like the business cycle nature too abhors excess and steps in to correct it, clear the dead wood and prepare for rebirth.

What is often forgotten is that nature has evolved to rely on bush-fires as a means of reproduction and new "birth." Fires are an integral part of the ecology of the planet's surface. Humans can try and prevent these inevitable economic 
fires by "controlled burnings", clearing out much of the dead underbrush, but it's not easy or foolproof.

The longer the dry bush remains unburned in nature
, and the more that accumulates the greater the risk of an inevitable fire. The result will be much greater than that which would have preceded it should a fire have taken place sooner. This is a basic, easy to understand law of nature.

Financial markets are NO different. !!!!!!!!!!

The dry brush of excessive credit, monetary stimulus, rampant fraud, and government interference, which has caused the largest sovereign bond bubble the world has ever seen, has not been cleared or burned to allow for regeneration. In contrast we've actually been ADDING to it, doing the exact opposite of the "controlled burn."

The market, like nature, has attempted to correct these excesses many times, only to be met with central bankers fire hoses spraying liquidity at ever increasing volumes and velocity. As the outbreaks of financial fires increase so too do the tools and technologies used by the central bankers. 

This postponement of the inevitable leads to massive mis-allocation of capital.

That's a lot of dead wood built u
p there, great fire starter!

Quite a bonfire awaits our economy.

It is possible that the fires will continue to be contained, central bankers promise that this is indeed the case. THE FED 

We also know that it is not possible to contain all the lies and bullshit forever. This time is not different...

The playbook from throughout history tells us that governments will steal anything and everything from the most productive before they default.

This happens either overtly (taxation, fines, penalties, asset seizure) or covertly via destruction of currencies (quantitative easing). Everything not nailed down is up for grabs. Don't say you weren't warned! If you need an example look at what's happening in France. Hollande is insane, but he's not unique.

It makes no sense to invest intelligently only to have some government 
thug steal the proceeds because you failed to set yourself up to deal with the inevitability of the above.

The bottom line is: don't be the dupe who ignores the obvious.


Bubble-Like Markets Again

BlackRock Inc. (BLK) Chief Executive Officer Laurence D. Fink, whose company is the world's largest money manager with $4.1 trillion in assets, said Federal Reserve policy is contributing to "bubble-like markets."

"It's imperative that the Fed begins to taper," Fink said today at a panel discussion in Chicago, referring to the central bank's $85 billion in monthly bond purchases. "We've seen real bubble-like markets again. We've had a huge increase in the equity market. We've seen corporate-debt spreads narrow dramatically."

The Fed in September decided against reducing the bond purchases as economic growth remained muted. Following a partial U.S. government shutdown this month, policy makers will probably delay slowing the stimulus until March, according to a Bloomberg survey of economists conducted Oct. 17-18.  THE EARLIEST THEY WILL TAPER IS PROBABLY MARCH 2014.

The Standard & Poor's 500 Index has gained 24 percent this year, after advancing 13 percent in 2012. The extra yield investors demand to hold high-risk, high-yield bonds has dropped to 444 basis points from this year's high of 534 in June, according to the Bank of America Merrill Lynch U.S. High Yield Index. That spread reached 440 basis points on Oct. 24, the narrowest since May 28.

"We have issues of an overzealous market again," Fink said...............

UBS Books $41 Million Loss On Puerto Rico............

UBS Books $41 Million Loss On Puerto Rico

UBS took a $20 million trading loss, and $21 million in credit losses, connected to loans related to Puerto Rico's municipal market, reports Trevor Hunnicutt at Investment News. From Hunnicutt:

"The trading loss reflects provisions UBS made to continue providing liquidity to clients in that U.S. territory's bonds as they declined in value, according to UBS spokesman Gregg Rosenberg. Mr. Rosenberg said the company also made lending facilities backed by Puerto Rican debt available to its wealth management clients, and the credit losses reflect the diminished value of that collateral. 

'In our view this is a market issue and not a UBS issue,' Mr. Rosenberg said."

Consumer Confidence Plunges Most In 2 Years.......MORE PESKY FACTS!

Consumer Confidence Plunges Most In 2 Years

Following the lowest UMich confidence print in 2013, Gallup's economic confidence collapse, and Bloomberg's index of consumer comfort signaling major concerns among rich and poor in this country (in spite of record highs in stocks), the recent Conference Board Consumer Confidence data  continues to confirm a problem for all those 'hoping' for moar multiple expansion. 

From 80.2 in September, confidence collapsed to 71.2 (the largest MoM drop in 2 years) to its lowest in six months, and notably below expectations. As we have noted in the past a 10 point drop in confidence has historically led to a 2x multiple compression in stocks (which suggests the Fed will need to un-Taper some more to keep the dream alive). Hope for the future dropped to 7-month lows but what is perhaps most intriguiging, just as with the Bloomberg surveys, we are seeing the wealthiest cohorts confidence plunging (even as stocks soar to new highs). It would appear the Fed has lost its wealth effect inspiration.

Once again we remind that it's all about confidence and hope appears to be fading...

As we have noted previously - this move in confidence is key...

But, it's all about confidence... investors will not be willing to pay increasing multiples unless they are confident that the future streams of earnings are sustainable and forecastable... And simply put,the current levels of Consumer Sentiment need to almost double for the US equity market to approach historical multiple valuation levels...

and the cycle appears to be shifting...

Is consumer confidence set to turn?

Consumer Confidence is once again following a dynamic where we see it move higher for 4 years and 4 months before beginning to collapse

Moves higher from 1996-2000 with a smaller dip halfway through in October 1998
Moves higher from 2003-2007 with a smaller dip hallway through in October 2005
Moves higher and so far tops out in June 2013. Also sees a small dip halfway through in October 2011.

Higher yields do not help confidence...

A sharp rise in mortgage rates has a negative feedback loop to consumer confidence. For those families and individuals that were now looking/able to enter the housing market, the recent spike in rates acts as a headwind.

In addition to the economic backdrop, there is plenty of tail risk as we head into the end of the year. Oil prices have been rising since the summer began (and in reality since the Summer of 2012), partially due to geopolitical risks which are very much "top of mind." A bigger spike due to a supply shock would choke the economic recovery.

In the US, the appointment of a new Fed Chairman and the upcoming budget/debt ceiling debates are likely to bring added volatility. Tapering itself can also induce concern as the "Bernanke put" is being removed from markets.

In Europe, many of the structural problems related to the single currency union have not actually been addressed and the peripheral countries could still create turmoil going forward. There has also been little concern with both the German elections and the German Court decision on the constitutionality of the OMT program. A surprise in either of these could be cause for concern.

Emerging Markets are still not out of the woods yet as growth has been weak relative to expectations and countries with current account deficits are beginning to feel pressure in their FX and Bond markets. This is an issue we believe is only starting to develop which we will continue to expand on at later dates.

Overall, the weak economic backdrop, poor housing recovery and potential for tail risk events over the next few months suggest that we have topped out in Consumer Confidence, a warning sign for equity markets.

The relationship between Consumer Confidence is clear, and IF June did mark the high and Confidence continues to decline, then we would expect to see that translate to weakness in the equity markets. The removal of the "Bernanke put" only adds to this concern.

A major turn has taken place in equity markets on average four months after Consumer Confidence turns, which would point to a decline beginning around September-October. As we have previously expressed, we remain of the bias that a correction in equity markets on the order of 20%+ is likely this year/ into 2014 and the current dynamics support such a move.

Should we see a decline of that magnitude, it is almost certain that yields would move lower in a rush to safe assets.


Home Sales Collapse At Fastest Rate In 40 Months........MORE PESKY FACTS!

Home Sales Collapse At Fastest Rate In 40 Months

Pending home sales data collapsed in September (and remember this is before the shutdown and was heralded at the time as buyers rushing to buy before the risk of the shutdown slowed acceptances). Affordability, argued by some serial extrapolators as still being 'relatively' positive - has drastically weighed on housing at the margin just as we argued previously. 

This is the first annual drop in 29 months, the biggest drop in 40 months, and the biggest miss against expectations in 40 months. Even the typically full of spin, NAR Chief economist had to admit "this tells us to expect lower home sales for the fourth quarter, with a flat trend going into 2014." Apparently, if one is to believe the spin, overheard everywhere in September: "Hmm, government may shut down next month - let's not buy a house."

Of course, NAR Chief Economist seems to have found an excuse by time-shifting his narrative...

NAR chief economist, said concerns over the government shutdown also played a role. "Declining housing affordability conditions are likely responsible for the bulk of reduced contract activity," he said. "In addition, government and contract workers were on the sidelines with growing insecurity over lawmakers' inability to agree on a budget. A broader hit on consumer confidence from general uncertainty also curbs major expenditures such as home purchases."

Umm no Larry... because in our world September is before October and no one was talking about shutdown's impact then OR even pricing it in any way...

None of this should be a surprise given the impact on mortgage activity that higher rates have had...

Despite all the chatter that rates are still 'near' generational lows....

Of course - the market loves this crappy data is rallying handsomely as Taper is pushed off once again. THE MARKET IS A DISTORTED, DELUSIONAL MESS, THAT IS VERY NEAR A CRISIS TOP!  


In a climax run you sell out of your entire don't hold on and hope for more!

Tuesday, October 29, 2013


There's a lady I've known forever. She's very sick. On top of that, she's being abused by those to whom she has given everything..... Lies about her abound, and seem to come from all sides. Just breaks my heart. Seems there's nothing I can do alone but maybe, if we join in and lift her up together, we can heal her. She's well over 230 years old, but way too young to die. 

Her name is ' America '... And I love her and have always been proud of her.

Take time to say a prayer for her - even if it is a short, simple prayer like, Lord, please heal our land.


Alan Greenspan laughs at all of us......UNBELIEVABLE!


As Alan Greenspan described last week, in an interview with John Stewart on "The Daily Show,"

"We really can't forecast all that well. We pretend that we can but we can't. And markets do really weird things sometimes because they react to the way people behave, and sometimes people are a little screwy."

Which means they don't necessarily go along with your central planning, no matter how good you think it is. But still economists insist that, if they are allowed to monkey around with it, they can make an economy better. 

So the Fed is stuck with QE for better or for worse and unfortunately so is our economy. Were it to stop, the stock market would take a massive tumble and the "wealth effect" the PhDs have been aiming for would quickly turn into a poverty effect. OUR ECONOMY AND THE STOCK MARKET ARE HEADED FOR MASSIVE PROBLEMS, IT IS ONLY A MATTER OF TIME.

Janet Yellen believes the Fed should use all its available weapons to force the economy to do what she wants it to do. She won't be able to stand by, dagger in hand, when the market turns its back on her. Instead, she will stab.
And therefore, the Fed, which has lived by the sword of QE, will if history is any guide,die by it as well.


Obama Is Shocked, Shocked To Learn Everyone's Phone Was Bugged..... A VERY SAD STATE OF AFFAIRS!


Obama Is Shocked, Shocked To Learn Everyone's Phone Was Bugged

The Obama administration, which has a spotless track record in taking credit for everything that goes right (all of which is thanks to Bernanke's flooding the world with record liquidity as when the No Free Lunch bill comes due, it will be some other president's clean up), has an even more impeccable history of deflecting responsibility for all that goes wrong.

Most recently, it was the horrific rollout of Obamacare which was all "someone else's fault" but certainly not the government's. Now, as the Snowden whistleblowing scandal has found its third (or fourth) wind courtesy of a furious international response following revelations that Obama was listening in to Merkel and at least 34 other world leaders', it is time for perhaps the most stunning revelation of all: you see, Obama is shocked, shocked to learn that cell phone spying - of virtually everyone on the planet - is going on in here.

It makes perfect sense in Obama's world that supposedly mid-level janitors decide which leaders of the free and not so free world they will decide to eavesdrop on without even informally informing the president.

It makes even greater sense that a government which is desperately strapped for money, can spend billions on wiretaps in Spain, where El Mundo reports, the NSA monitored 60.5 million Spanish phone calls between December 2012 and January 2013.

Because when in doubt, spend taxpayer money when not even the president has any idea why the entire world is suddenly quite angry with him and America. And then panic when the government shutdown results in the furlough of thousands of spies otherwise busy eavesdropping on Frau Merkel.

But going back to the original point: with just under 3 years to go in his term, an economy that is foundering and which not all the money printing in history can offset the inevitable, a budget deficit that depsite recent dips is still the largest until 2008, does Obama actually have any idea what the US Government is spending money on, or is his daily teleprompted address the only thing that Obama actually has a hand in.




"There's only one thing left to do now, gentlemen... Let's find a way to blame Bush."

Monday, October 28, 2013


"Five percent of the people really think;
ten percent of the people think they think;
and the other eighty-five percent would rather die than think."

                 Thomas Edison

"No people will tamely surrender their Liberties, nor can any be easily subdued, when knowledge is diffused and virtue is preserved. On the Contrary, when People are universally ignorant, and debauched in their Manners, they will sink under their own weight without the Aid of foreign Invaders." 

                                               Samuel Adams


"There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: "In the long run we are all dead." And such shallow wisecracks pass as devastating epigrams and the ripest wisdom." 

                                                                                                                                Henry Hazlitt




The Cartoon that is US Fiscal And Monetary Policy............

It's like deja vu all over again...


90,609,000: Americans Not in Labor Force Climbs to Another Record ........MORE PESKY FACTS!

90,609,000: Americans Not in Labor Force Climbs to Another Record

The number of Americans who are 16 years or older and who have decided not to participate in the nation's labor force has climbed to a record 90,609,000  in September, according to data released today by the Bureau of Labor Statistics.

The BLS counts a person as participating in the labor force if they are 16 years or older and either have a job or have actively sought a job in the last four weeks. A person is not participating in the labor force if they are 16 or older and have not sought a job in the last four weeks.

In from July to August, according to BLS, Americans not participating in the labor force climbed from 89,957,000 to 90,473,000, pushing past 90,000,000 for the first time, with a one month increase of 516,000.

In September, it climbed again to 90,609,000, an increase of 136,000 during the month.

In January 2009, when President Barack Obama took office, there were 80,507,000 Americans not in the labor force. Thus, the number of Americans not in the labor force has increased by 10,102,000 during Obama's presidency.  THERE IS NO RECOVERY 

GREAT GRAPHIC..........50 Unbelievable Facts About Earth

50 facts about earth3

Sunday, October 27, 2013

Just Give Me Jesus........

Just Give Me Jesus

"Give unto the LORD the glory due unto His name; worship the LORD in the beauty of holiness." 

                                                                                                                                                Psalm 29:2

There was a man who had lived a long life with Jesus, and now he was dying. His loved ones came to him and asked him to sign his name to a legal document. They said, "Daddy, if you would sign this, it would help us with a lot of legal difficulties. We hate to mention it, but it needs to be done."

With the old man facing eternity, he lifted his quivering hand and signed the paper. Before long, he went to be with the Lord. When the family picked up the document, to their amazement he had signed, "Jesus." More than likely, it was the only name that meant anything to him in those moments.

What name means the most to you right now? 

There will come a time when the only name that will mean anything to you is--Jesus.

Keep Your Eyes on Jesus.............

Keep Your Eyes on Jesus

"And ye now therefore have sorrow: but I will see you again, and your heart shall rejoice, and your joy no man taketh from you."

                                      John 16:22

When I was a boy and living on the Florida coastline, I was always a little disappointed when a hurricane passed us by because of the exhilaration I experienced leaning into the wind and tasting the salty air! I can remember waves sometimes reaching many feet in the air. What a sight! But did you know there has never been a storm to move the ocean floor? I LIVED THROUGH 5 OR 6 HURRICANES AS A YOUNG BOY WHEN WE LIVED IN FLORIDA!

There will be storms that will course across the surface of our lives with raging torment, but the child of God can know a deep-down joy that nothing can take away. If you keep your eyes on Jesus, He will bring a joy that no man can take from you.

Oh, thank God for the steadfastness of His power, love, and mercy. Is your joy full in Christ today despite the winds of adversity?

FEAR NOT..............COURAGE!


"Be of good courage, And He shall strengthen your heart, All you who hope in the LORD." 

                                                                                                                                        Psalm 31:24

"We can walk without fear, full of hope and courage and strength to do His will, waiting for the endless good which He is always giving as fast as He can get us able to take it in." 

What keeps us from attempting—let alone accomplishing—great things? 

None other than fear! 

No wonder the phrase "fear not" is found more than 100 times throughout the Bible. 

The opposite of fear is courage. 

But how do you get courage if you're afraid? 

Unlike the Cowardly Lion, it's not like we can follow the Yellow Brick Road with Dorothy and Toto to see if a wizard will bestow courage on us.

The psalmist tells us that there is something we can do to build our courage: hope in the Lord (Psalm 31:24). There's no other starting point. 

It's the only thing that enabled David to face Goliath (1 Samuel 17:1-51); Gideon to lead a small rag-tag army against the mighty Midianites (Judges 6:1-7:25); Joshua to cross the Jordan River and later conquer Jericho (Joshua 3:1-17); Peter to walk on water (Matthew 14:22-29). 

And it's the only thing that enables you and me to face any giants and challenges that come our way.

Is your hope in God?

Oh Lord, I do put my hope in you this day. Give me the courage and strengthen my heart so I can do something great for You. 

Let Your New Life Push Out the Old!.............

Let Your New Life Push Out the Old!

"Therefore if any man be in Christ, he is a new creature: old things are passed away; behold, all things are become new." 

                               2 Corinthians 5:17
Our eyes delight to see the trees in autumn which turn glorious colors, then they drop their leaves one by one. But there are certain trees that hold their leaves until spring. They wither and turn brown, but they don't drop. Not until spring do these trees lose their leaves--when the new leaves push out the old leaves.

That's exactly what happens to our old habits and our old lives when we find the Lord Jesus. The new life pushes that old life off.

It's not a matter of plucking off this leaf and knocking off that leaf. The Christian life is not forged in that manner. 

Our new life replaces our old life when we are born again.

The Goal of An Unbroken Circle..................

The Goal of An Unbroken Circle

"In the fear of the LORD is strong confidence: and His children shall have a place of refuge." 

                                                                                                                              Proverbs 14:26

The devil hates families who worship together. He will allow parents to be religious, but he does not want them to take their children to heaven with them. As a result, we're losing an entire generation.

Our children are being left behind to die and go to hell because we are compromising with Satan.

Catherine Booth, wife of the founder of the Salvation Army, prayed, "Oh God, I will not stand before Thee without all my children."

There are many fathers and mothers today who need to say that. Stand firm, Mom. Stand firm, Dad. Gather those children close to you and love them to Jesus.

More Than One Reason to Live by God's Principles..............

More Than One Reason to Live by God's Principles

"For God hath not called us unto uncleanness, but unto holiness."

                                                                              1 Thessalonians 4:7

A former president of the American Psychiatric Association said, "Premarital sex relationships resulting from the so-called new morality have greatly increased the number of young people in mental hospitals."

Dr. Billy Graham said he talked to the head psychiatrist at one of our great universities. At that time he said, "Over fifty percent of the students at that university are suffering psychological problems because of immoral relationships."

Why does God tell us to live a pure and holy life? 

It's not only so that we can have fellowship with Him, but also it is for our own mental health! 

He knows holiness brings life to our bones, healing to our hearts, and joy to our steps!

Saturday, October 26, 2013


Nobody can go back and start a new beginning, but anyone can start today and make a new ending.

Thankfully, persistence is a great substitute for talent.

There are no shortcuts to any place worth going.

In Honor Of National Chemistry Week, Here Are 15 Jokes Only Chemists Will Get..........

In Honor Of National Chemistry Week, Here Are 15 Jokes Only Chemists Will Get

National Chemistry Week runs from Oct. 20-26. In honor of our most elemental (heh heh) science, how about some chemistry jokes?

These 15 chemistry jokes and puns are really cheesy and may only have the power to make a chemist laugh, but don't worry: we've included an explanation below each joke so at least you'll understand their cheesiness. And maybe even learn something along the way.

Two chemists go into a bar. The first one says "I think I'll have an H2O." The second one says "I think I'll have an H2O too" — and he died.

Explanation: H20 is the molecular formula for water. But H2O2 is the molecular formula for hydrogen peroxide, which will kill you if you drink it. Find the joke here.

Q: Did you hear oxygen went on a date with potassium? A: It went OK.

Explanation: The atomic symbol for oxygen and potassium are "O" and "K," respectively. They get together they spell OK. Find the joke here.

The optimist sees the glass half full. The pessimist sees the glass half empty. The chemist sees the glass completely full, half with liquid and half with air.

Explanation: The glass is always completely full of something, be it a solid, liquid, or gas — unless the entire thing is in a vacuum and all the atoms are removed. Find the joke here.

If you're not part of the solution, you're part of the precipitate.

Explanation: This is a play on the phrase "If you're not part of the solution, you're part of the problem." But in chemistry a solution is a completely dissolved mixture of two or more compounds, and a precipitate is a a solid that forms from a chemical reaction in a liquid solution. The solid precipitate falls out of solution, and collects in the bottom of the vial. So a precipitate is definitely not part of the solution. Find the joke here.

A photon checks into a hotel and is asked if he needs any help with his luggage. He says, "No, I'm traveling light."

Explanation: OK, this is more of a physics joke. A photon is a packet of light and has zero mass. Not only is it literally traveling light (the illuminating kind), it's also traveling light (as in not heavy). Find the joke here.

Organic chemistry is difficult. Those who study it have alkynes of trouble.

Explanation: An alkyne is a common type of carbon compound with one carbon-to-carbon triple bond. They are frequently used and studied in organic chemistry. It's pronounced like "al kine." So, alkynes of trouble sounds like all kinds of trouble. Find the joke here.

Q: Did you hear about the man who got cooled to absolute zero? A: He's 0K now.

Explanation: "0K" here actually stands for zero Kelvin. Kelvin is a temperature scale in which zero is the coldest possible temperature, referred to as absolute zero, where molecules cease to move. A person wouldn't actually be OK if cooled to absolute zero. Find the joke here.

Q: Why can you never trust atoms? A: They make up everything!

Explanation: Atoms are the smallest pieces of matter, they make up all of the elements and molecules and proteins and everything else on Earth. They literally make up everything we see, but in the joke they are suggesting that the atoms lie so don't trust them. Find the joke here.

9. If the Silver Surfer and Iron Man team up, they'd be alloys.

Explanation: In chemistry, an alloy is a mixture of metals. Silver and Iron are both metals, so if these guys teamed up they wouldn't just be allies, they would be alloys too. Find the joke here.

Q: Anyone know any jokes about sodium? A: Na

Explanation: The symbol for sodium on the periodic table is "Na," which when said as a word is pronounced like nah, another way to say no. Find the joke here.

The name's Bond. Ionic Bond. Taken, not shared.

Explanation: We all know James Bond's famous drink order: Shaken, not stirred. But an ionic bond is formed between two atoms when electrons are taken from one atom by the other, unlike a covalent bond where the atoms share their electrons. And, taken rhymes with shaken. Find the joke here.

I had to make these bad chemistry jokes because all the good ones Argon.

Explanation: Argon is an element on the periodic table. When you say it out loud it sounds like you are saying "are gone." Find the joke here.

Q: What element is a girl's future best friend? A: Carbon.

Explanation: "Diamonds are a girl's best friend" is a well-known saying. Diamonds are created from carbon under extreme pressurize and over time, so carbon will eventually become "a girl's best friend" — hence her "future best friend." Find the joke here.

Q: Why are chemists great for solving problems? A: They have all the solutions.

Explanation: In chemistry a solution is the proper name for a mixture where one substance is completely dissolved in another — like sugar or salt in water. Solutions are also the answers to problems. Find the joke here.

Q: What do chemists call a benzene ring with iron atoms replacing the carbon atoms? A: A ferrous wheel.

Explanation: A benzene ring is a hexagon-shaped ring made out of hydrogen and carbon atoms — so it basically resembles a wheel. "Ferrous" is used an adjective to describe something with iron in it, so a wheel of iron is a Ferrous wheel, which sounds similar to Ferris wheel, the carnival ride.


The Average NBA Player Will Make A Lot More In His Career Than The Other Major Sports

The average NBA player will make $24.7 million in his career. That is based on an average salary of $5.2 million and an average career length of 4.8 years and is $18.6 million more than the career earnings for the average NFL player ($6.1 million).

The NFL average is so much lower than the other leagues because of the large number of players on each team and the high turnover rate, especially among fringe players. As a result, the average NFL player makes just $1.9 million and has a career of just 3.2 years.

Of course, most players will fall below these averages as there will always be elite players that pull the average up, such as Kevin Garnett, who has played 19 seasons and made more than $300 million in his career. However, this does give us a sense of just how much different the earning power is for athletes in different sports...

Friday, October 25, 2013

Fractional Reserve Banking: the Real Story......VERY IMPORTANT STUFF!

Fractional Reserve Banking: the Real Story

There is an erroneous view of fractional reserve banking that claims all fractionally reserved banks are de facto insolvent. A variant asserts that if a bank takes in $100 of deposits then it can make $1000 of loans, creating money out of thin air.

This view is false.

To understand why, let's look at the bank's balance sheet. The following examples are presented as being for one bank, but could as easily represent the consolidated balance sheet of the entire banking sector. Ignoring shareholder equity, and other complicating factors that would make this analysis harder to follow, the bank takes the $100 deposit:


Now assuming they could lend $1000, what would this look like?


This could never work. Assets have to equal liabilities, but if a bank creates loans out of thin air then it would be creating assets.

Fractional reserve lending is not lending more than what the bank takes in via deposits. That would be impossible. The bank lends less than it takes in deposits.

Aggregate deposits in the banking system (and thus bank debt) can (and typically do) exceed the amount of base money in the system. For the remainder of this article, we will look at the gold standard with fractional reserves, to make it simpler and clearer. First, someone deposits some gold coin into a bank.


So far, so good. Next, the bank makes a loan of more than zero but less than the total deposited.


It's still solvent. Now let's say that the borrower pays the 90 oz to a contractor to build a new house and the contractor deposits the money in the same bank.


What just happened here? The size of the balance sheet increased. The balance sheet shows assets to match the liabilities; there is no evidence of insolvency yet. The bank may or may not be insolvent.

To drill down further, we need to introduce the idea of duration. Every deposit has a duration (for a demand deposit, duration is effectively zero), and every loan also has a duration.

So let's go back to the original depositor. He put in 100 oz of gold, asking the bank to keep 10 oz for withdrawal on demand, 15 oz to be withdrawn in one year, and 75 oz to be withdrawn in five years.


Now the bank makes two loans, a one-year loan of 15 oz and a five-year loan of 75 oz.


This is still a solid balance sheet. Now let's say the borrowers of those loans pay people who deposit the 90 oz of gold back into the bank as demand deposits.


There is still no problem. The maturities of the bank's assets match its liabilities. This bank is perfectly solvent. (In the real world, the bank would set aside its own capital as loan loss reserves to cover the credit risk).

Before proceeding to duration mismatch, which is a serious problem, let's address the fact that the balance sheet has expanded. Some would argue that the bank has just expanded the "money supply". This is not true; the same 100 oz of gold is still in the system. What has been expanded is credit.

One side of credit is the asset on the books. To the bank, the loans it extended are assets. These assets have real value based on the expectation to be repaid, and they can be sold to other banks, etc. The other side is the liability. To the bank, the deposits it accepted are liabilities.

The bank has increased both its assets and its liabilities by the same amount.

It cannot be overstated or overemphasized: one cannot simply add up gold + demand deposits + time deposits to obtain the "money" in the banking system. It may be helpful to think of the analogy of trying to add up 1/2 + 3/8 + 5/19 = 9/29.

OK, now, let's look at borrowing short to lend long, otherwise known as duration mismatch. Let's say the depositor specified 10 oz on demand, and 90 oz to be withdrawn in 1 year. This balance sheet is:


Up until this point, the bank is OK. Its assets are of zero duration (i.e. gold in the vault) and it has a portion of its liabilities of zero duration (i.e. demand deposit) and a portion that it must be able to pay in one year. The gold in the vault is obviously good for this (not counting that the gold is earning no interest, and the deposit must be paid back with interest). But let's say the bank lends 90 ounces for 30 years, perhaps for a mortgage.


This bank has, at the very least, a liquidity problem. In one year, the depositor will come back asking for his 100 oz of gold. The bank has only 10. The other 90 oz worth is locked into a long-term mortgage. The bank will have to do something in order to be able to pay the depositor and avoid bankruptcy. I'll discuss that further, below.

As the bank discovers when the depositor wants his money back, a mortgage is not money that can be used to pay expenses. The depositor wants gold, not a paper instrument.

So what does the bank do when presented by the demand from the depositor for his money? They find another depositor. This is one form of "rolling" the deposit from the first depositor to the second. Most of the time it works. In this example, the bank must plan to do this 30 times.

Usually, the banks can borrow fresh money to pay off loans that are due. There are many forms of rolling expiring loans, not necessarily involving depositors, but all have the same problem.

It is a confidence game, and of course it doesn't work when there is stress in the system. Let people start to question the bank's solvency, or solvency in general in the banking system, and depositors on net will withdraw their gold from the system and refuse to re-deposit it until they feel more comfortable.Duration mismatch will necessarily cause depositors to lose confidence sooner or later.

The issue is not merely that the bank is taking a risk. Duration mismatch is much like a check kiting scheme. It is a major factor contributing to the business cycle, which is actually a credit cycle of credit-expansion boom followed by credit-contraction bust.

So what have we concluded? 

First, fractional reserve lending is about lending less than the deposits a bank takes. The only party capable of creating money out of thin air is a central bank.

Second, fractional reserves do not necessarily cause any problems to the bank. If a depositor wants to liquidate a time deposit before maturity, the bank will seek the best bid in the market—and hand the loss off to the depositor.

Third, one cannot simply add up the various kinds and durations of banking deposits to come up with a simple (scalar) total. Gold is money. A demand deposit can be redeemed for money at any time. A time deposit that matures next year or in 2043 is not money; it may be convertible to money at an unknown loss. Thus banks can expand credit in the system but not money.

Finally, borrowing short to lend long, aka duration mismatch, inevitably implodes. This is not a matter of odds or probability. Like a geological fault line, one can try to assess probability of a destructive event in any given year, but sooner or later catastrophe is certain.

Duration mismatch is a very serious problem. Without identifying it separately, many people blame fractional reserve banking. This error would have massive repercussions, as banks play a vital role in a healthy economy.

Duration Mismatch Will Always Fail.......AN ABSOLUTE MUST READ!

Duration Mismatch Will Always Fail

Duration mismatch is when a bank (or anyone else) borrows short to lend long.  Unlike fractional reserve, duration mismatch is bad.  It is fraud, it is unfair to depositors (much less shareholders) and it is certain to collapse sooner or later.  This is not a matter for statistics and probability, i.e. risk.  It is a matter of causality, which is certain as I explain below.

This discussion is of paramount importance if we are to move to a monetary system that actually works.  

Few serious observers believe that the current worldwide regime of irredeemable paper money will endure much longer. 

Now is the time when various schools of thought are competing to define what should come next.

Banks are the market makers in loans, and loans are an exchange of wealth and income (The Loan: An Exchange of Wealth for Income).  Without banks playing this vital role, the economy would collapse back to its level the previous time that the government made it almost impossible to lend (and certainly to make a market in lending).  The medieval village had an economy based on subsistence agriculture, with a few tradesmen such as the blacksmith.

Duration mismatch necessarily must fail, leading to the collapse of the banks that engage in it.  

In our paper monetary system, the dollar is in a "closed loop".  Dollars circulate endlessly.  Ownership of the money can change hands, but the money itself cannot leave the banking system.  Contrast with gold, where money is an "open loop".  Not only can people sell a bond to get gold coins, they can take those gold coins out of the monetary system entirely, and stuff them under the mattress. This is a necessary and critical mechanism—it is how the floor under the rate of interest is set.

This bears directly on banks.  In a paper system, they know that even if some depositors withdraw the money, they do not withdraw it to remove it altogether  They withdraw it to spend it.  When someone withdraws money in order to spend it, the seller of the goods who receives the money will deposit it again.  From the bank's perspective nothing has changed other than the name attached to the deposit.

The assumption that if some depositors withdraw their money, they will be replaced with others who deposit money may seem to make sense.  But this is only in the current context of irredeemable paper money.  It is most emphatically not true under gold!

There are so many ills in our present paper system, that a forensic exploration would require a very long book to dissect it.  It is easier and simpler to look at how things work in a free market under gold and without a central bank.

Let's say that Joe has 17 ounces of gold that he will need in probably around a month.  He deposits the gold on demand at a bank, and the bank promptly buys a 30-year mortgage bond with the money.  They assume that there are other depositors who will come in with new deposits when Joe withdraws his gold, such as Mary.  Mary has 12 ounces of gold that she will need for her daughter's wedding next week, but she deposits the gold today.  And Bill has 5 ounces of gold that he must set aside to pay his doctor for life-saving surgery.  He will need to withdraw it as soon as the doctor can schedule the operation.

In this instance, the bank finds that their scheme seems to have worked.  The wedding hall and the doctor both deposit their new gold into the bank.  "It's not a problem until it's a problem," they tell themselves.  And they pocket the difference between the rate they must pay demand depositors (near zero) and the yield on a 30-year bond (for example, 5%).

So the bank repeats this trick many times over.  They come to think they can get away with it forever.  Until one day, it blows up.  There is a net flow of gold out of the bank; withdrawals exceed deposits.  The bank goes to the market to sell the mortgage bond.  But there is no bid in the mortgage market (recall that if you need to sell, you must take the bid).  This is not because of the borrower's declining credit quality, but because the other banks are in the same position.  Blood is in the water.  The other potential bond buyers smell it, and they see no rush to buy while bond prices are falling.

The banks, desperate to stay liquid (not to mention solvent!) sell bonds to raise cash (gold) to meet the obligations to their depositors.  But the weakest banks fail.  Shareholders are wiped out.  Holders of that bank's bonds are wiped out.  With these cushions that protect depositors gone, depositors now begin to take losses.  A bank run feeds on itself.  Even if other banks have no exposure to the failing bank, there is panic in the markets (impacting the value of the other banks' portfolios) and depositors are withdrawing gold now, and asking questions later.

And why shouldn't they?  The rule with runs on the bank is that there is no penalty for being very early, but one could suffer massive losses if one is a minute late (this is contagion).

What happened to start the process of the bank run?  In reality, the depositors all knew for how long they could do without their money.  But the bank presumed that it could lend it for far longer, and get away with it.  The bank did not know, and did not want to know, how long the depositors were willing to forego the use of their money before demanding it be returned.  Reality (and the depositors) took a while, but they got their revenge.  

Today, it is fashionable to call this a "black swan event."  But if that term is to have any meaning, it can't mean the inevitable effect caused by acting under delusions.

Without addressing the moral and the legal aspects of this, in a monetary system the bank has a job: to be the market maker in lending.  Its job is not to presume to say when the individual depositors would need their money, and lend it out according to the bank's judgment rather than the depositors'.  Presumption of this sort will always result in losses, if not immediately.  The bank is issuing counterfeit credit (Inflation: An Expansion of Counterfeit Credit).  In this case, the saver is not willing (or even knowing) to lend for the long duration that the bank offers to the borrower.

Do depositors need a reason to withdraw at any time gold they deposited "on demand"?  From the bank's perspective, the answer is "no" and the problem is simple.

From the perspective of the economist, what happened is more complex.  People do not withdraw their gold from the banking system for no reason.  The banking system offers compelling reasons to deposit gold, including safety, ease of making payments, and typically, interest.

Perhaps depositors fear that a bank has become dangerously illiquid, or they don't like the low interest rate, or they see opportunities offshore or in the bill market.  For whatever reason, depositors are exercising their right and what they expressly indicated to the bank: "this money is to be withdrawn on demand at any time."

The problem is that the capital structure, once erected, is not flexible.  

The money went into durable consumer goods such as houses, or it went into partially building higher-order factors of production.  Imagine if a company today began to build a giant plant to desalinate the Atlantic Ocean.  It begins borrowing every penny it can get its hands on, and it spends each cash infusion on part of this enormous project.  It would obviously run out of money long before the plant was complete.  Then, when it could no longer continue, the partially-completed plant would either be disassembled and some of the materials liquidated at auction, or it would sit there and begin to rot.  Either way, it would finally be revealed for the malinvestment that it was all along.

By taking demand deposits and buying long bonds, the banks distort the cost of money.  They send a false signal to entrepreneurs that higher-order projects are viable, while in reality they are not.  The capital is not really there to complete the project, though it is temporarily there to begin it.

Capital is not fungible; one cannot repurpose a partially completed desalination plant that isn't needed into a car manufacturing plant that is.  The bond on the plant cannot be repaid.  The plant construction project was aborted prior to the plant producing anything of value.  The bond will be defaulted.  Real wealth was destroyed, and this is experienced by those who malinvested their gold as total losses.

Note that this is not a matter of probability.  Non-viable ventures will default, as unsupported buildings will collapse.

People do not behave as particles of an "ideal" gas, as studied by undergraduate students in physics.  They act with purpose, and they try to protect themselves from losses by selling securities as soon as they understand the truth.  

Men are unlike a container full of N2 molecules, wherein the motion of some to the left forces others to the right.  With men, as some try to sell out of a failing bond, others try to sell out also.  And they are driven by the same essential cause.  The project is non-viable; it is malinvestment.  They want to cut their losses.

Unfortunately, someone must take the losses as real capital is consumed and destroyed.  A bust of credit contraction, business contraction, layoffs, and losses inevitably follows the false boom.  People who are employed in wealth-destroying enterprises must be laid off and the enterprises shut down.

Busts inflict real pain on people, and this is tragic as there is no need for busts.  They are not intrinsic to free markets.  They are caused by government's attempts at central planning, and also by duration mismatch.


Fastest growing jobs in low wage sectors. Of 10 largest occupations in US only one pays more than $35,000 per year.

The end of the Great Recession has done little to protect the middle class. The largest employment growth has come from low wage positions.  According to Social Security data on wages the per capita wage for Americans is $26,000.  Your typical household is pulling in about $50,000 per year. The growth in low wage jobs reinforces a continuing trend that is pulling chunks of the middle class apart. Income inequality in the US is at its highest level since the years prior to the Great Depression.  There was a time when some of the top occupations actually paid good living wages. Those days seem to have disappeared as low wage jobs dominate the top 10 occupation fields.

Top US jobs

Here is a list for 10 of the top occupations in the US with their corresponding wages:

Retail sales, cashier, and food preparation round out the top three occupations in the country.  Unfortunately the Great Recession destroyed many good paying jobs only to replace them with lower paying employment.

58 percent of jobs created since the Great Recession ended have been lower wage jobs.

Only one occupation in the top 10 pays more than $35,000 per year (nursing).  These kinds of wages will make it tough for families to get by especially with the cost of many items rising. 

For better paying jobs a college education or specialized training is becoming more of a necessity.  Yet many are pursuing careers with little marketability and ending up battling it out for some of the "top" occupations.  Is it any surprise why so many young Americans are leaving college with a degree but are unable to repay their college debt?  The value of a college degree is also coming into question.

In spite of this, Americans add fuel to the flame by keeping up the party by spending more than they earn.

Median income and spending

Adjusting for inflation, household incomes are back to what they were in the 1980s:

This is an important metric. Given the wages of these jobs, it is no surprise that many two-income households exist merely out of economic necessity.  What is interesting is that while the median household income is roughly $50,000 annual household spending is higher:

household spending per year

Average household spending is at $51,442.  A large part of consumption is being done on the back of the following:

-Student debt


-Credit cards

-Auto debt

American consumers are merely taking a page out of government spending. As we discussed previously, while the US government avoided a hard default, a soft default is unavoidable. Any items that have readily available access to debt are ballooning in price (i.e., higher education, etc). All because of easy money. The problem is of course that many households with tight budgets are also facing higher rents:

Since housing is the biggest expense, this is going to cut away from other spending sectors.  And look at the top jobs again. These employment sectors rely on consumption and spending. Rising rents come out of stagnant wages so all this means is that more money is going to be allocated to housing versus other discretionary spending.

There doesn't seem to be a unifying fight to preserve the middle class in America.  Little by little the middle is being hollowed out.  So we now have nearly 48 million people on food stamps and the top 1 percent controls the largest share of assets going back to the Gilded Age.  It isn't any surprise then that the top growing employment sectors post-Great Recession are coming in low wage fields that cater to tighter household budgets.