Monday, March 7, 2016

The Decline Of The Male Workforce.......ANOTHER PESKY FACT!


The Decline Of The Male Workforce

Having fallen consistently from almost 90% particpation in the labor force in 1948 to just 68.5% in 2015, it appears that crossing below the 70% participation rate has pushed American men to their limit of faith in career politicians.



Friday, March 4, 2016

THE 2016 ELECTION GETS EVEN MORE INTERESTING............

Judge Warns Hillary "Should Be Terrified" After Justice Grants Email-Staffer Immunity

"She should be terrified of the fact that he's been granted immunity,"adding that "they would not be immunizing him and thereby inducing him to spill his guts unless they wanted to indict someone."

The Justice Department has granted immunity to a former State Department staffer, who worked on Hillary Clinton's private email server, as part of a criminal investigation into the possible mishandling of classified information, according to a senior law enforcement official.

As the FBI looks to wrap up its investigation in the coming months, agents are likely to want to interview Clinton and her senior aides about the decision to use a private server, how it was set up, and whether any of the participants knew they were sending classified information in emails, current and former officials said.

So far, there is no indication that prosecutors have convened a grand jury in the email investigation to subpoena testimony or documents, which would require the participation of a U.S. attorney's office.

Judge Andrew Napolitano warns "She should be terrified of the fact that he's been granted immunity," adding that "they would not be immunizing him and thereby inducing him to spill his guts unless they wanted to indict someone."

Napolitano argued that the revelation that former Clinton aide Bryan Pagliano, who set up Clinton's private email server in 2009, is reportedly being offered immunity means he will 
likely be called to testify against someone much higher on the "totem pole."

Pagliano will likely be asked how he was able to "migrate a State Department secure system onto her private server." He then presented this theoretical question: "Mr. Pagliano, did Mrs. Clinton give you her personal Secretary of State password to enable you to do that?"

"If he answers, 'yes,' we have an indictment for misconduct in office as well as espionage. She should be terrified of the fact that he's been granted immunity," Napolitano added.

The Judge explained that only a federal judge can grant immunity and will only do so if a sitting jury is ready to hear testimony from the "immunized person," suggesting the investigation is well on its way to a possible indictment.

"We also know they are going to seek someone's indictment, because they would not be immunizing him and thereby inducing him to spill his guts unless they wanted to indict someone," he said.

Napolitano noted there are only about five people between Pagliano and Clinton.

It's my strong impression that the Justice Department doesn't go around granting immunity to people unless the person getting the immunity may be able to shed light on an important part of the investigation.

After all, if Pagliano a) knew nothing or b) did nothing wrong, why would he need immunity to talk to the FBI?

ANOTHER INTERESTING ELECTION DEVELOPMENT:

Romney Plots To Block Trump At Republican Convention

Only in America's so-called democracy could a proven "loser" so vehemently and shamelessly condemn a current "winner" with the goal of overturning 'we, the people's' prospective leader in favor of himself. In the latest and most desperate action from the establishment, CNN reports Romney has instructed his closest advisers to explore the possibility of stopping Donald Trump at the Republican National Convention (by revising rules for instance). As The GOP self-immolates, perhaps Romney - as the mouthpiece of the establishment - should pay heed to Florida Governor Risk Scott who explained "I trust the voters, so I will not try to tell the Republican voters in Florida how to vote."



Corporate Default Rate Jumps Past Lehman Moment.....

Corporate Default Rate Jumps Past Lehman Moment

The US corporate default rate, according to Standard & Poor's Global Fixed Income Research, soared from 2.8% in January to 3.3% in February, a big jump for just one month, and the highest rate since December 2010, when it was recovering from the Financial Crisis, with QE and ZIRP running at full bore, and with banks and big corporations getting bailed out by the Fed and the Treasury.

And it's higher than it had been during the early phase of the Financial Crisis in September 2008, when Lehman Brothers filed for bankruptcy, when all heck was breaking lose, when stocks and bonds were plunging, and when the default rate was "only" 2.96%.

But this time it's different, they reassure us. In December 2007, the default rate was 1.02%. At the time, banks were already cracking at the seams. Bear Stearns would soon pop. The Financial Crisis was visible on the horizon. And the economy entered what would later be called the Great Recession. By November 2009, nearly two years later, the default rate peaked at 12%.

These aren't overnight fireworks. Credits take their time to react.

But then newly created money surged through the system. What followed was the greatest credit bubble in US history. By July 2014, the default rate had dropped to 1.4%. That was the peak of the Fed's fanciful handiwork that had "saved" the economy, an era when even the riskiest borrowers could get new money to fill their financial sinkholes, when bankruptcies had become rare, when the business cycle had been abolished, and before the price of oil fell off the cliff.

Then it all came unglued again. And in February, S&P's US trailing-12-month speculative-grade corporate default rate finally accomplished the feat and jumped above the rate of the Lehman-moment.


Rather than letting the enormous and increasingly onerous pile of corporate debt blow up and get restructured, at the expense of bondholders and stockholders, the Fed, in its infinite wisdom, made sure that this debt, plus even more new debt, would get carried forward to burden companies and the economy overall for years to come. Hence the lousy recovery.

And it's going to get worse. 

Standard & Poor's expects the default rate to rise to 3.9% by December 2016, up from 2.8% in December 2015, and 1.6% in December 2014, as it reported in February.

Stressors in the form of persistently low oil prices, the beginning of tighter monetary policy by the Federal Reserve for the first time in nine years, and slowing global growth likely will produce more defaults in the next 12 months.

In its "pessimistic scenario" — "if global economic and financial headwinds continue on their present course" — the default rate could jump to 5.2%. That would match the rate in February 2009 when it was on the way to 12%.

The collapse of lower-rated junk bonds is now having nasty "spillover effects," as S&P called them, on higher-rated junk bonds and even on investment-grade bonds, whose yield spreads widened to 868 and 254 basis points respectively (8.68 and 2.54 percentage points).

As the bond market comes unglued from the bottom up while contagion spreads far and wide, stocks are going to have a rough time, regardless of whatever thrilling rallies appear out of the fog. 

The basic reality is this: When a company gets in credit trouble, stockholders, who are at the bottom of the capital structure, are the first to feel the pain; and when it defaults, stockholders often get completely wiped out.



PROFIT MARGINS.......ANOTHER PESKY FACT!

Profit Margins Are About To Collapse The Most In The 21st Century

While companies continue to feel ever so generous when responding to the NFIB's survey, and increase raise intentions to boost wages with every passing month (just never this month) even they admit that it is impossible to pass through these wage hikes in the form of rising prices. 

As the chart below from JPM shows, the difference between "intentions to raise prices" less "intentions to raise wages" - a proxy for operating margins - has not been this negative in the 21st century.


Thursday, March 3, 2016

There's A Bull Market In Uncertainty..........more uncertain than ever!

HERE IS THE REAL PROBLEM:

TWO VERY INSIGHTFUL COMMENTS FROM REGULAR READERS OF THESE EMAILS.

Self Greed and self gratification are the motivators of most people, meaning their minds are incapable of believing anything that may deprive them of their wants, or what is best for their country.

                                                                                                                                 BO D.

If Trump has an accident or is assassinated, America will go to war against itself - this will not just be the divisiveness driven by Obama. Right now, many people are arming themselves against both known and unknown threats.  It isn't just terrorism or an illegal immigrant invasion across as wide open southern border that has led to this situation.  It is a government and politicians wildly out of touch with the American citizen and utterly unwilling to do anything to upset the very lucrative apple cart.

                                                                                  BOB W.

PEOPLE WANT TO BELIEVE THE LIES, AND THE LIES ARE BEING EXPOSED MAKING IT HARD TO CONTINUE DELUDING ONESELF! UNCERTAINTY IS THE RESULT OF AVOIDING THE TRUTH.

"The American economy is a failed economy,"  

                  Nobel Prize-winning economist Joseph Stiglitz said in London on Wednesday.

There's A Bull Market In Uncertainty

It's been a volatile start to 2016 for the markets and the only thing we seem to know for sure is that no one knows anything.  

In a note to clients, UBS' Julian Emanuel highlighted the following the chart which shows the increase in the number of stories on Bloomberg that contain the word "uncertain."

The future for us all is now more uncertain than ever.


The Two-Party Illusion.........A HUGE SCAM!

The Two-Party Illusion

"There is nothing which I dread so much as a division of the republic into two great parties, each arranged under its leader, and concerting measures in opposition to each other. This, in my humble apprehension, is to be dreaded as the greatest political evil." 

                                         John Adams

The Great Illusion of the two-party system is that it allows the voter a choice – usually between a liberal and a conservative government. The reality is that, whichever party wins the election, the government is, in truth, a totalitarian one. The "choice" is a mere distraction from the true objective.

Recently, an American college student, Justin Snyder, commented on his choice for his country's next president and his reasons for it. Mister Snyder said, in part,

"I support Hillary Clinton for president … When you add up her know 
how, leadership, and experience, it's clear that Hillary Clinton is a perfect fit to be the commander-in-chief of the largest military the world has ever seen … The thing is, we've been trying the free market thing for centuries. All we have to show for it is a super wealthy class of people who run the country. What we need is someone to represent the common man, and that someone is Hillary Rodham Clinton."

Mister Snyder has done quite well in absorbing the modern liberal party line, one that both advances itself on the concept of collectivism, yet reverses itself on its position just two generations ago that war is an evil concept, promoted by conservatives in an effort to control the world.

His comments are not unusual, and that's what makes them significant. He's a modern, educated, effectively indoctrinated liberal. His political counterpart is a modern, educated, effectively indoctrinated conservative. Together, they comprise the backbone of governmental dominance over a people: different party, same blind acceptance of political party dogma.

John Adams had it right in his 1780 letter to Jonathan Jackson, as quoted above. He understood that the old method of thought control – that of kings ordering their vassals what to believe – had had its day. It had never been fully effective, as the vassal was free to decide whether he believed the king. But, as early as 1780, the future would belong to those politicians who were skilled in giving the public "A" and "B" choices.

People need to believe that they have a choice. Interestingly, though, they seem to be content with only two choices. A skilled politician therefore limits the number of choices to two and, today, this is the way it's done in most "advanced" countries. Whether it's Democrat vs. Republican, or Tory vs. Labour, there are two dominant parties. Each is represented by a group of individuals seeking to gain or maintain public office.

Initially, in order to sell the two-party concept to voters, it's important for each party to have a philosophical identity. These two identities would seem to need to be based on opposing primary principles or ideologies, such as a free market system vs. collectivism, or empire-building warfare vs. a commitment to peace.

The US did, indeed, follow this route in developing its own primary sports teams, the Democrats and the Republicans. And, along the way, it learned that the public can be best manipulated if they are blindly devoted to either one team or the other. (Those in the red T-shirts detest those in the blue, and vice versa.)

Once this blind devotion has been achieved, it becomes possible to dispense with the extreme polarity of principles and ideology. As stated above, only two generations ago, there was a "collectivism and peace" party and a "free market and empire" party in the US. What they had in common, however, was that both required an increasingly larger government to support its objectives.

Today, the US political system has evolved to the point that the principles and ideology are disappearing.Today, Democrats fully accept and even encourage overseas aggression. This has been achieved through the illusion of "terrorism." Similarly, the Republicans have watered down their commitment to a free market system through the soma of ever-widening entitlements.

No longer is it necessary that the two dogmas are polar opposites. They can only be five degrees apart from each other, yet each team of supporters fully believes his team is morally right and the other team is morally wrong.

Meanwhile, they're both headed toward the same warfare/welfare end. !!!!

And of course, both teams fully accept the concept that an ever-expanding government role is necessary in achieving these ends.

But how is it possible that the principles and ideologies have been virtually erased? After all, the very idea of principles is that they are not based on popularity, but on inner conviction. Well, truth be told, the great majority of people have no real moral compass at all; no real inner sense of convictions. Their convictions can be manipulated in such a way that the portion of the brain that wishes to deal with convictions can be redirected into areas that are of little consequence. !!!!!!

On the surface of it, this seems like a bold and even radical statement, yet, as we can readily see, as long as never-ending debates are maintained over the less vital issues, such as abortion rights, gay rights, etc., a people can be distracted away from primary principles. Therefore, the government has the ability to create the illusion that a two-party system exists when, in truth, as the caption below states,

"VOTING: It's deciding which criminal gets to steal everything you have."

The concept of a government as a body of individuals that are chosen by election to represent 
the voters is a good one, but it's not a concept that's shared by those who are elected. Those who are elected almost unanimously see the concept as one in which the rulers are determined. They have no illusion about representation, although they do understand that they must give the impression to voters that they see themselves as representatives. Rulers seek to rule. All other concerns are secondary.

Over time, those elected will look for every opportunity to increase their own power (both politically and economically). Consequently, the longer a governmental system exists in a given country, the more it will deteriorate toward tyranny.

At some point, there is, in almost every country, a rebellion of some sort that causes a reset – a return to a more democratic structure where a greater level of representation once again takes place. Then the deterioration, inexorably, begins anew. This is why Thomas Jefferson was so fervent that, every so often,a revolution is essential.

It should be pointed out that the US is not alone in this deterioration. In all fairness, many other countries are in a similar state. Increasingly, people in these countries recognize that conditions are becoming tyrannical. 

Yet, most hold out the hope that the next election will somehow magically result in a return to basic freedoms. This will not be the case. Deterioration is baked in the cake. Regardless of the candidate, regardless of the party, regardless of the country, the outcome will be the same.





Corporate Earnings Fraud...........CORRUPTION, COWARDS AND CRIMINALS!

Corporate Earnings Fraud

Corporate earnings reports for the fourth quarter are pretty much in the books. The deception, falsification, accounting manipulation, and propaganda utilized by mega-corporations and their compliant corporate media mouthpieces has been outrageously blatant. It reeks of desperation as the Wall Street shysters attempt to extract the last dollar from their muppet clients before this house of cards collapses.

The CEOs of these mega-corporations accelerated their debt financed stock buybacks in 2015 as stock prices reached all-time highs and are currently so overvalued, they will deliver 0% returns over the next decade. This disgraceful act of pure greed by the Ivy League educated leaders of corporate America to boost their own stock based compensation is reckless and absurd.

It is proof that 
education at our most prestigious universities has produced avaricious MBAs following financial models and each other like lemmings going over the cliff. These intellectual giants evidently never learned the basic rule of buying low and selling high in order to make a profitable trade.

The previous all-time high in stock buybacks occurred in 2008 at the previous peak. That brilliant strategy led to 50% shareholder losses in a matter of months. No Board of Directors fired any CEO for these disastrous strategic blunders. These cowardly ego maniacs didn't buy back any stock in 2009 and 2010 when they could have made a killing with valuations at decade lows. After the stock market recovered by 100%, these stooges then began borrowing and buying. It has now reached another all-time high crescendo.

Dividends and stock buybacks in 2015 topped $1 trillion for the first. As CEOs have borrowed billions to buyback their inflated overvalued stock, they have put the long-term sustainability of their firms at extreme risk.

When a dead retailer walking like Macy's, which is seeing it's sales fall and profits crater by 30%, announces a $1.5 billion stock buyback when it already is weighed down with $7 billion in debt, you realize the men running these companies have no common sense or concern for the long-term viability of their companies. They'll get a golden parachute no matter how badly they screw the pooch.

The stock buyback scheme by corporate CEOs is just one of the devious methods used to cover-up the dramatic downturn in corporate profits. These titans of industry, and 
their Wall Street heroin dealers, and their corporate propaganda outlets need cover while they abscond with more of the nations wealth, before pulling the rug out from beneath the American people once again.

The 2008 Wall Street created financial crisis will look like a walk in the park compared to what's coming down the pike now. 

We now have a bond bubble, stock bubble, housing bubble, commercial real estate bubble and central banker confidence bubble all poised to pop simultaneously. The negative interest rate and banning of cash schemes will be dead on arrival, driving a stake into the heart of the Fed vampire.

"Oh, what a tangled web we weave…when first we practice to deceive." 

It's become perfectly clear over the last few weeks that 
the deception, misdirection, spin, and outright accounting fraud being used to hide the horrific financial results of S&P 500 companies has been orchestrated by the corporations, Wall Street "analysts" and the likes of cheerleaders like CNBS.

When "dead retailer walking" J.C. Penney reported their fourth quarter results last week the stock immediately soared 15%. The Wall Street propaganda machine was declaring turnaround complete. Modest positive comp store sales after five years of double digit declines were proof J.C. Penney was back. I went to the company press release and no matter how hard I searched, they never mentioned their Net Income. They blathered on about EBITDA and adjusted earnings per share, but not a peep about the actual GAAP Net Income.

Once I was able to access their Income Statement I realized why. Their completed turnaround resulted in a $131 million 4th quarter loss, almost $100 million higher than last year's loss. They finished their turnaround year with a loss of more than a half BILLION dollars. This company will be on the retail scrap heap of history in a couple years, but the Wall Street fleecing machine tells its muppet clients to buy, buy, buy. And the lemmings do as they are told. MBA NOW STANDS FOR MASTER BULLSHIT ARTIST! THE MOTHERS AND 
CHILDREN OF THESE PEOPLE SHOULD BE VERY PROUD! AS LONG AS THEY GET PAID,THEY DON'T AND WON'T ROCK THE BOAT! THEY ARE VERY COWARDLY, THEY WOULD RATHER LIE FOR PERSONAL GAIN, REGARDLESS OF THE CONSEQUENCES, THAN TELL THE HARD TRUTH. MANY HAVE BEEN DOING IT FOR SO LONG THAT THEY DON'T EVEN RECOGNIZE THE TRUTH ANYMORE.

The other blatant manipulation and spin is headline after headline stating one company after another beat expectations. What you are not told is expectations at the beginning of the quarter were 20% higher than they were on the day they reported. The highly paid 30 year old MBA "analyst lemmings" are told by the companies to reduce earnings expectations as the quarter progresses.

Sometimes they pre-announce earnings will fall by 20% to $0.45 per share, then three weeks later announce actual results of $0.46 per share, therefore beating expectations. This game is getting long in the tooth. Corporate revenues have been falling for a number of quarters, and they have run out of accounting reserves to make the numbers. So they move on to plan C.

If you can't make the numbers work, just fake the numbers and call them "adjusted". So when a corporate CEO opens 50 retail stores that turn out to be dogs and is eventually forced to close the stores and fire 10,000 employees, they just call those one time charges and ignore the $50 million loss when reporting the results. Heads the CEO wins, tails the shareholders lose. 

Wall Street reports a beat, and the clueless investors believe the lies. 

It's all fun and games until the next financial crisis hits, recession sweeps across the land, and the fraud, deception, and lies are revealed.

Even the billionaire oligarch crony capitalist Warren Buffett addressed this despicably flagrant flaunting of basic accounting principles to mislead shareholders in his annual letter last week:

It has become common for managers to tell their owners to ignore certain expense items that are all too real. "Stock-based compensation" is the most egregious example. The very name says it all: "compensation." If compensation isn't an expense, what is it? And, if real and recurring expenses don't belong in the calculation of earnings, where in the world do they belong?

Wall Street analysts often play their part in this charade, too, parroting the phony, compensation-ignoring "earnings" figures fed them by managements. Maybe the offending analysts don't know any better. Or maybe they fear losing "access" to management. Or maybe they are cynical, telling themselves that since everyone else is playing the game, why shouldn't they go along with it. THEY ARE ABSOLUTELY AFRAID OF LOSING THEIR JOBS / PAYCHECKS, THEY ARE WALL STREET WHORES!

Whatever their reasoning, these analysts are guilty of propagating misleading numbers that can deceive investors…. WHORES! When CEOs or investment bankers tout pre-depreciation figures such as EBITDA as a valuation guide, watch their noses lengthen while they speak.

Based on fake reported earnings per share, the profits of the S&P 500 mega-corporations were essentially flat between 2014 and 2015. Using real GAAP results, earnings per share plunged by 12.7%, the largest decline since the memorable year of 2008. 
Despite persistent inquiry it is virtually impossible for a Wall Street outsider to gain access to the actual GAAP net income numbers for all S&P 500 companies. With almost $500 billion of shares bought back in 2015, the true decline in earnings is closer to 15%.

The increasing desperation of corporate CEOs is clear, as accounting gimmicks and attempts to manipulate earnings in 2015 has resulted in the 2nd largest discrepancy between reported results and GAAP results in history, only surpassed in 2008. 

The gaping 25% fissure between fantasy and reality means the S&P 500 PE ratio is actually 21.2 and not the falsified 16.5 propagated by Wall Street and their CNBS mouthpieces. True S&P 500 earnings are the lowest since 2010. Corporate profits only decline at this rate in the midst of recessions.

With approximately $270 billion of "one time" add-backs to income used to deceive the public, the true valuation of the median S&P 500 stock is now the highest in history – higher than 1929, 2000, and 2007. Wall Street's latest con game, with the active participation of corporate CEO co-conspirators, is a last ditch effort to fend off the inevitable stock market crash. 

It didn't work in 2008 and it won't work now. All economic indicators are flashing red for recession. Stocks are poised for a 40% decline faster than you can say Wall Street criminal banks.

The most infuriating aspect of this shameless ruse by corporate America and the Wall Street cabal is their complete lack of conscience or acknowledgment of misdeeds that destroyed the financial system in 2008. The American people bailed these sociopaths out, have borne the brunt of the QE and ZIRP save a banker programs, and "we the people" 
are poised to get screwed again when financial collapse part two hits in the near future.

The establishment is aghast that Donald Trump is storming towards the presidency. They are blind to the fact their unconcealed felonious actions rise to the level of treason in the eyes of average hard working Americans. 

The fabric of this country is being torn asunder by a contemptible class of corporate fascists, ego maniacal bankers, shadowy billionaires, and media titans. They have reaped billions of profits since 2009 as the Fed and politicians in D.C. rolled out "solutions" designed to enrich them. They are confident their failures will be shifted to the American people again. The American people may have a different opinion this time. Pitchforks and torches are being readied.

How The Next Financial Crisis Could Spread..........

How The Next Financial Crisis Could Spread

The next global financial crisis could start with U.S. stocks.

The first trigger: The strong U.S. dollar crimps U.S. exports and foreign earnings. Emerging-market weakness affects businesses in the technology, aerospace, automobile, consumer products, and luxury product industries. Currency devaluations combined with excess capacity, driven by debt-fueled over-investment in China, maintain deflationary pressures, which reduces pricing power. Lower oil prices negatively impact earnings, cash flow, and asset values of energy producers.

In turn, earnings and liquidity pressures reduce merger activity and stock buybacks, which have supported equity values. U.S. stocks tumble, and their weakness infects global equity markets.

The second trigger: Debt markets. Heavily indebted energy companies and emerging market borrowers face increased financial risk. Initially, the focus will center on the U.S. shale oil and gas industry, which is highly leveraged with borrowings that are over three-times gross operating profits.

A third trigger: Changes in liquidity conditions as the world enters a period of asynchronous monetary policy.

The Federal Reserve is scaling back, having terminated purchases of government bonds and mortgage backed securities, which at their peak provided more than $1 trillion a year in new funds to markets.

The importance of dollar liquidity is driven by the large amount of foreign currency debt, especially that issued by emerging market borrowers, which is denominated in U.S. dollars. According to the Bank of International Settlements, U.S. dollar credit to non-bank borrowers outside the U.S. totaled over $9 trillion in debt securities and bank loans — more than 50% greater since the end of 2009.

Tightening of available dollar liquidity, coupled with a stronger U.S. dollar, would result in losses on these borrowings. The risk is exacerbated by the economic distress of many emerging markets. Low commodity prices also compound the problems. It reduces the U.S. dollar-denominated revenue available to meet debt obligations of exporters, increasing potential exposures to currency fluctuations.

Global dollar liquidity is also affected by altered capital flows. Since the first oil shock, petrodollar recycling — the surplus revenues from oil exporters — has been an essential component of global capital flows, providing financing, boosting asset prices, and keeping interest rates low. A prolonged period of low oil prices will reduce petrodollar liquidity and may necessitate sales of foreign investments.

Emerging market foreign currency reserves are also falling, led by substantial falls in Chinese reserves due to a combination of weakened trading conditions, capital flight, and the suspected liquidation to release capital to support the domestic economy and equity markets.

A fourth trigger: weakness in global economic activity.

Look no further than the energy sector. The belief that lower oil prices will lead to an increase in growth may be misplaced, with the problems of producers offsetting the benefits for consumers. Around $1 trillion of new investment may not make economic sense at lower oil prices. When combined with the reduction in planned investment in other resource sectors as a result of lower prices, the adverse effect on economies will be significant. Moreover, currency volatility will place pressure on growth.

The increasing problems in emerging markets will also take a toll. Emerging-markets growth is slowing as a result of sluggish demand from developed markets, unsustainable debt, and unaddressed structural weaknesses. For commodity-producing nations in particular, lower revenues will lead to a rerating. The problems will spread across emerging markets.

Fifth, slowing growth, low inflation, and widespread financial problems will refocus attention on the level and sustainability of sovereign debt. The unresolved public debt issues of Japan and the U.S., for example, will attract renewed investor scrutiny. In Europe, the sovereign debt problems will affect core nations such as Italy and France.

A sixth and final trigger: Investors will critically appraise government and central bank policies and find them wanting. The artificial financial stability engineered by low interest-rates and QE is undermined by concern about the long-term effects of the policies and the lack of self-sustaining recovery.

The cascade of financial woes would result rapidly in a worldwide financial crisis. !!!!

The position is eerily similar to 1997-98, when falling commodity prices, especially oil, a stronger U.S. dollar, rising U.S. interest rates, and emerging-market debt weaknesses led to the Asian monetary crisis, the Russian default, and the collapse of hedge fund Long Term Capital Management. This time around the outcomes will be much worse, involving much larger sums and solutions will be very hard or impossible to find.

RETAIL CARNAGE HAS ONLY JUST BEGUN...........

RETAIL CARNAGE HAS ONLY JUST BEGUN

#1 Sears lost 580 million dollars in the fourth quarter of 2015 alone, and they are scheduled to close at least 50 more "unprofitable stores" by the end of this year.

#2 It is being reported that Sports Authority will file for bankruptcy in March.  Some news reports have indicated that around 200 stores may close, but at this point it is not known how many of their 450 stores will be able to stay open.

#3 For decades, Kohl's has been growing aggressively, but now it plans to shutter 
18 stores in 2016.

#4 Target has just finished closing 13 stores in the United States.

#5 Best Buy closed 30 stores last year, and it says that more store closings are likely in the months to come.

#6 Office Depot plans to close a total of 400 stores by the end of 2016.

#7 Wal-Mart is closing 269 stores, including 154 inside the United States.

#8 K-Mart is closing down more than two dozen stores over the next several months.

#9 J.C. Penney will be permanently shutting down 47 more stores after closing a total of 40 stores in 2015.

#10 Macy's has decided that it needs to shutter 36 stores and lay offapproximately 2,500 employees.

#11 The Gap is in the process of closing 175 stores in North America.

#12 Aeropostale is in the process of closing 84 stores all across America.

#13 Finish Line has announced that 150 stores will be shutting down.

I GUARANTEE THESE NUMBERS WILL BE MUCH WORSE AND MANY MORE CHAINS WILL ANNOUNCE BIG CLOSINGS AND EMPLOYEE LAYOFFS BEFORE THE END OF 2016. 


Wednesday, March 2, 2016

Alan Greenspan Delivers Stark Warning: "We're In Trouble"......

Alan Greenspan Delivers Stark Warning: "We're In Trouble"

Were you wondering what Alan Greenspan thinks about the outlook for monetary policy across the globe?

Bloomberg was and Tom Keene and Mike McKee got the "privilege" of sitting down with the "maestro" on Monday afternoon to discuss a variety of topics including NIRP, which Greenspan says "warps investment behavior."

While he isn't willing to go so far as to condemn negative rates as "dangerous," he does say the global race to the proverbial Keynesian bottom is "counterproductive."

As far as the US economy is concerned, Greenspan isn't optimistic. "We're in trouble basically because productivity is dead in the water…Real capital investment is way below average. 

Why? Because business people are very uncertain about the future."

Well yes, they most certainly are. Of course were it not for "the Greenspan put" and decades of policy largesse we might not have ever had a financial crisis in the first place.

As for whether Dodd-Frank has solved anything, Greenspan says no: "The regulations are supposed to be making changes of addressing the problems that existed in 2008 or leading up to 2008. It's not doing that. 'Too Big to Fail' is a critical issue back then, and now. And, there is nothing in Dodd-Frank which actually addresses this issue."

And finally, here's the punchline. Asked whether he's optimistic going forward, Greenspan said this: "No. I haven't been for quite a while. And I won't be until we can resolve the entitlement programs. Nobody wants to touch it. And that is gradually crowding out capital investment, and that's crowding out productivity, and it's crowding out the standards of living where do you want me to go from there."

Now if only he hadn't gotten us into this mess in the first place...


An Interesting take on Trump........AN ABSOLUTE MUST READ!

THE CURRENT ELECTION CYCLE IS LIKELY TO BE ONE OF THE MOST INTERESTING IN AMERICAN HISTORY AND PERHAPS ONE OF THE MOST DISRUPTIVE.

An Interesting take on Trump.

 William J. Bennett, Host of Bill Bennett's Morning in America Show, is one of America's most important, influential, and respected voices on cultural, political, and education issues. He has one of the strongest Christian world views of any writer in modern times.

What I See Happening In a Trump Presidency

By Bill Bennett

"They will kill him before they let him be president."

Don't be surprised if Trump has an accident. Some people are getting very nervous: Barack Obama, Valerie Jarrett, Eric Holder, Hillary Clinton and Jon Corzine, to name just a few.

It's about the unholy dynamics between big government, big business, and big media. They all benefit by the billions of dollars from this partnership, and it's in all of their interests to protect one another. It's one for all and all for one. 

It's a filthy relationship that makes everyone filthy rich, everyone except the American people. We get ripped off. We're the patsies. But for once, the powerful socialist cabal and the corrupt crony capitalists are scared. The over-the-top reaction to Trump by politicians of both parties, the media, and the biggest corporations of America has been so swift and insanely angry that it suggests they are all threatened and frightened.

Donald Trump can self-fund. No matter how much they say to the contrary, the media, business, and political elite understand that Trump is no joke. He could actually win and upset their nice cozy apple cart.

It's no coincidence that everyone has gotten together to destroy The Donald. It's because most of the other politicians are part of the a good old boys club. They talk big, but they won't change a thing. They are all beholden to big-money donors. They are all owned by lobbyists, unions, lawyers, gigantic environmental organizations, and multinational corporations – like Big Pharmacy or Big Oil. Or they are owned lock, stock, and barrel by foreigners like George Soros owns Obama or foreign governments own Hillary and their Clinton Foundation donations.

These run-of-the-mill establishment politicians are all puppets owned by big money. But there's one man who isn't beholden to anyone. There's one man who doesn't need foreigners, or foreign governments, or George Soros, or the United Auto Workers, or the teacher's union, or the Service Employees International Union, or the Bar Association to fund his campaign.

Billionaire tycoon and maverick Donald Trump doesn't need anyone's help. That means he doesn't care what the media says. He doesn't care what the corporate elites think. That makes him very dangerous to the
entrenched interests. That makes Trump a huge threat to those people. Trump can ruin everything for the bribed politicians and their spoiled slave masters.

Don't you ever wonder why the GOP has never tried to impeach Obama? Don't you wonder why John Boehner and Mitch McConnell talk a big game, but never actually try to stop Obama? Don't you wonder why Congress holds the purse strings, yet has never tried to de-fund Obamacare or Obama's clearly illegal executive action on amnesty for illegal aliens? Bizarre, right? It defies logic.

First, I'd guess many key Republicans are being bribed. Secondly, I believe many key Republicans are being blackmailed. Whether they are having affairs, or secretly gay, or stealing taxpayer money, the  National Security Agency knows everything.

Ask former House Speaker Dennis Hastert about that. The government even knew he was withdrawing large sums of his own money from his own bank account. The NSA, the SEC, the IRS, and all the other three-letter government agencies are watching every Republican political leader. They surveil everything. 

Thirdly, many Republicans are petrified of being called racists, so they are scared to ever criticize Obama or call out his crimes, let alone demand his impeachment. 

Fourth ,why rock the boat? After defeat or retirement, if you're a good old boy, you've got a $5 million-per-year lobbying job waiting. The big-money interests have the system gamed. Win or lose, they win.

But Trump doesn't play by any of these rules. Trump breaks up this nice, cozy relationship between big government, big media, and big business. All of these corrupt 
rules are out the window if Trump wins the Presidency. !!!!!

The other politicians will protect Obama and his aides but not Trump. Remember: Trump is the guy who publicly questioned Obama's birth certificate. He questioned Obama's college records and how a mediocre student got into an Ivy League university. Now, he's doing something no Republican has the chutzpah to do. He's questioning our relationship with Mexico; he's questioning why the border is wide open; he's questioning why no wall has been built across the border; he's questioning if allowing millions of illegal aliens into America is in our best interests; he's questioning why so many illegal aliens commit violent crimes, yet are not deported; and he's questioning why our trade deals with Mexico, Russia and China are so bad.

Trump has the audacity to ask out loud why American workers always get the short end of the stick. Good question! 

I'm certain Trump will question what happened to the almost billion dollars given in a rigged no-bid contract to college friends of Michelle Obama at foreign companies to build the defective Obamacare website. By the way, that tab is now up to $5 billion. Trump will ask if Obamacare's architects can be charged with fraud for selling it by lying. Trump will investigate Obama's widespread IRS conspiracy, not to mention Obama's college records. Trump will prosecute Clinton and Obama for fraud committed to cover up Benghazi before the election. How about the fraud committed by employees of the Labor Department when they made up dramatic job numbers in the last jobs report before the 2012 election?

Obama, the multinational corporations and the media need to stop Trump. They recognize this could get out of control. If left unchecked, telling the raw truth and asking questions everyone else is afraid to ask, Trump could wake a sleeping giant. 

Trump's election would be a nightmare for establishment power

Obama has committed many crimes. No one else but Trump would dare to prosecute. He will not hesitate. Once Trump gets in and gets a look at the cooked books and Obama's records, the game is over. The goose is cooked. 

Holder could wind up in prison. Jarrett could wind up in prison. Obama bundler Corzine could wind up in prison for losing $1.5 billion of customer money. Clinton could wind up in jail for deleting 32,000 emails or for accepting bribes from foreign governments while Secretary of State, or for misplacing $6 billion as the head of the State Department, or for lying about Benghazi. The entire upper level management of the IRS could wind up in prison.

Obamacare will be de-funded and dismantled. Obama himself could wind up ruined, his legacy in tatters. Trump will investigate. Trump will prosecute. Trump will go after everyone involved. That's why the dogs of hell have been unleashed on Donald Trump.

Yes, it's become open season on Donald Trump. The left and the right are determined to attack his policies, harm his businesses, and, if possible, even keep him out of the coming debates. But they can't silence him. And they sure can't intimidate him. The more they try, the more the public will realize that he's the one telling the truth.

The GOP Is On The Verge Of A Meltdown,Senior Republicans Threaten To Vote For Hillary.........INTERESTING TIMES!

The GOP Is On The Verge Of A Meltdown, Senior Republicans Threaten To Vote For Hillary

With Donald Trump set for a huge victory in tomorrow's Super Tuesday slugfest - oddsmakers see 80% chance of Trump being the nominee - tensions are mounting dramatically within the Republican establishment. As The FT reports, many mainstream Republicans believe Mr Trump would struggle to beat Hillary Clinton and are urgently rallying around their man Rubio with some senior Republicans saying privately that they might consider voting for Mrs Clinton if Mr Trump were to end up as their party nominee as one conservative commentator exclaimed "we are on the verge of a real meltdown in the Republican party."

While Mr Rubio and Mr Trump ramp up their attacks on each other ahead of the March 1 primaries, Republican grandees and lawmakers are turning to the Florida senator as they become increasingly worried that the property tycoon could lock up the GOP presidential nomination within three weeks.

They fear that a victory for Mr Trump could fatally fracture the party and prevent them from winning the White House in November.

Many mainstream Republicans believe Mr Trump would struggle to beat Hillary Clinton, the clear Democratic frontrunner after her resounding victory over Bernie Sanders in South Carolina on Saturday, given the comments he has made about Hispanics, Muslims, women, disabled people and people who have criticised his campaign.

Mr Trump on Sunday issued a thinly-veiled warning that he would consider running as an independent.

"The Republican Establishment has been pushing for lightweight Senator Marco Rubio to say anything to "hit" Trump. I signed the pledge-careful," he tweeted, a reference to a pledge that all candidates signed to back the party's eventual nominee.

As panic is setting in within The GOP...

"We are on the verge of a real meltdown in the Republican party," Hugh Hewitt, the influential conservative radio talk-show host told ABC television on Sunday.

Some senior Republicans have said privately that they might consider voting for Mrs Clinton if Mr Trump were to end up as their party nominee. "You'll see a lot of Republicans do that," Christine Whitman, the former New Jersey governor who previously compared Mr Trump to Hitler, told the New Jersey Star-Ledger.

"We don't want to. But I know I won't vote for Trump."

Donald Trump's runaway success in the GOP primaries so far is also 
setting off alarm bells among neoconservatives who are worried he will not pursue the same bellicose foreign policy that has dominated Republican thinking for decades.

Neoconservative historian Robert Kagan — one of the prime intellectual backers of the Iraq war and an advocate for Syrian intervention —  announced in the Washington Post last week that if Trump secures the nomination "the only choice will be to vote for Hillary Clinton."

Max Boot, an unrepentant supporter of the Iraq war, wrote in the Weekly Standard that a "Trump presidency would represent the death knell of America as a great power,"citing, among other things, Trump's objection to a large American troop presence in South Korea.

Trump has done much to trigger the scorn of neocon pundits. He denounced the Iraq war as a mistake based on Bush administration lies, just prior to scoring a sizable victory in the South Carolina GOP primary. In last week's contentious GOP presidential debate, he defended the concept of neutrality in the Israeli-Palestinian conflict, which is utterly taboo on the neocon right. "It serves no purpose to say you have a good guy and a bad guy," he said, pledging to take a neutral position in negotiating peace.

With Trump's ascendancy, it's possible that the parties will re-orient their views on war and peace, with Trump moving the GOP to a more dovish direction and Clinton moving the Democrats towards greater support for war.


WHAT THEY ARE REALLY WORRIED ABOUT IS BEING EXPOSED FOR WHAT THEY ARE AND LOSING THEIR POWER TO AN OUTSIDER THEY HAVE LITTLE OR NO CONTROL OVER.

How The Seeds Of Revolution Take Root.........DO NOT MISS THIS!

How The Seeds Of Revolution Take Root

If you cap the volcano, eventually the pressure beneath rises to the point that the cap gets blown off in spectacular fashion.

That the dramatic upheavals of war, pestilence and environmental collapse can trigger social disorder and revolution is well-established.

Indeed, this dynamic can be viewed as the standard model of social disorder/revolution: a large-scale crisis—often a bolt-from-the-blue externality—upends the status quo.

Another model identifies warring elites and imperial meddling as a source of revolution: a new elite forcibly replaces the current elite (known colloquially as meet the new boss, same as the old boss) or a dominant nation-state/empire arranges a political coup to replace the current leadership with a more compliant elite.

A third model was described by David Hackett Fischer in The Great Wave: Price Revolutions and the Rhythm of History. By assembling price and wage data stretching back hundreds of years, Fischer found that cycles of economic growth spawn population growth, resulting in more workers entering the market economy. Their earnings trigger a demand-driven expansion of essential commodities such as grain and energy (wood, coal, oil, etc.).

In the initial phase, wages rise and commodity prices remain stable as supplies of essential goods expand and the demand for labor pushes up wages.

But this virtuous cycle reverses when the supply of essentials no longer keeps pace with rising population and demand: the price of essentials begin an inexorable rise even as an oversupply of labor drives down wages.

Fisher found that this wage/price cycle often ends in transformational social upheaval.


While proponents of these models have a wealth of historical examples to draw upon, these models miss a key factor:  the vulnerability or resilience of the nation-state facing crises.

Some nations survive invasions, environmental catastrophes, epidemics and inflation without disintegrating into disorder. Something about these nation's social/ economic /political order makes them more resilient than other nations.

So rather than accept the proximate causes of disorder as the sole factors, we should look deeper into the social order for the factors behind a nation's relative fragility or resilience.

The Decline Of Shared Purpose

Historian Peter Turchin defined a key factor in the resilience of the social order as "the degree of solidarity felt between the commons and aristocracy," that is, the sense of purpose and identity shared by the aristocracy and commoners alike.

As Turchin explains in War and Peace and War: The Rise and Fall of Empires:

"Unlike the selfish elites of the later periods, the aristocracy of the early Republic did not spare its blood or treasure in the service of the common interest. When 50,000 Romans, a staggering one fifth of Rome's total manpower, perished in the battle of Cannae, the senate lost almost one third of its membership. This suggests that the senatorial aristocracy was more likely to be killed in wars than the average citizen….

The wealthy classes were also the first to volunteer extra taxes when they were needed… A graduated scale was used in which the senators paid the most, followed by the knights, and then other citizens. In addition, officers and centurions (but not common soldiers!) served without pay, saving the state 20 percent of the legion's payroll….

The richest 1 percent of the Romans during the early Republic was only 10 to 20 times as wealthy as an average Roman citizen.

Roman historians of the later age stressed the modest way of life, even poverty of the leading citizens. For example, when Cincinnatus was summoned to be dictator, while working at the plow, he reportedly exclaimed, 'My land will not be sown this year and so we shall run the risk of not having enough to eat!'"

Once the aristocracy's ethic of public unity and service was replaced by personal greed and pursuit of self-interest, the empire lost its social resilience.

Turchin also identified rising wealth inequality as a factor in weakening social solidarity. By the end-days of the Western Roman Empire, elites held not 10 times as much wealth commoners but 10,000 times as much as average citizens.

Wealth inequality is both a cause and a symptom: it is a cause of weakening social resilience, but it also symptomatic of a system that enables the concentration of wealth and power in the hands of the few at the expense of the many.

Diminishing Returns On Complexity & Expansion

Thomas Homer-Dixon's excellent book The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization outlines two systemic sources of increasing fragility: diminishing returns on complexity and the rising costs of continuing strategies that worked well in the past but no longer yield positive results.

Successful economies generate surpluses that are skimmed by various elites to support new layers of complexity: temple priests, state bureaucracies, standing armies, etc.

All this complexity adds cost but beyond the initial positive impact of rationalizing production, it reduces productivity by draining potentially productive investments from the economy.

Building temple complexes and vast palaces for the aristocracy appears affordable in the initial surge of productivity, but as investment in productivity declines and the population of state dependents expands, surpluses shrink while costs rise.

Meanwhile, strategies that boosted yields in the beginning also suffer diminishing returns. Conquering nearby lands and extracting their wealth paid off handsomely at first, but as the distance to newly conquered territories lengthen, the payoff declines: supplying distant armies to maintain control over distant lands costs more, while the yield on marginal new conquests drops.

Expanding land under production was easy in the river valley, but once water has to be carried up hillsides, the net yield plummets.  THINK ABOUT CHEAP,EASY TO FIND AND PRODUCE OIL VERSUS THE MORE EXPENSIVE, HARDER TO FIND AND PRODUCE TYPES.

What worked well at first no longer works well, but those in charge are wedded to the existing system; why change what has worked so brilliantly?

As the costs of complexity and state dependents rise, productive people grow tired of supporting an economy suffering from terminal diminishing returns.

Empires do not just suddenly collapse; they are abandoned by the productive citizenry as the burdens become unbearable. The independent class of tradespeople (a.k.a. the middle class), driven into serfdom by taxes, lose their shared identity with the aristocracy. Beneath the surface, social cohesion frays. Once the benefits of the status quo no longer outweigh its costs, the system is vulnerable to an external disruption that would have been easily handled in previous eras.

The Suppression Of Social Mobility

There is another key factor in the resilience or fragility of social order: the permeability of the barrier between the ruling class and everyone below. We call this permeability social mobility: how easy is it for a working class family to rise up to the middle class, and how easy is it for a middle class family to enter the political and financial aristocracy?

I recently read Venice: A New History, a fascinating account of Venice's rise to regional empire and its decline to tourist destination.

What struck me most powerfully was Venice's long success as a republic: it was the world's only republic for roughly 1,000 years.

How did the Venetians manage this?  Their system of participatory democracy accreted over time, and was by no means perfect; only men of substance had much of a say. But strikingly, key political turning points were often triggered by mass gatherings of craftsmen and laborers.

Most importantly, the system was carefully designed to enable new blood to enter the higher levels of power. Commoners could rise to power (and take their families with them if their wealth outlasted the founding generation) via commercial success or military service.

The Republic also developed a culture that frowned on personal glorification and cults of personality: the nobility and commoners alike deferred to the Republic rather than any one leader.

In Venice, the political leadership (the doge and the Council) were elected via a convoluted series of steps that made it essentially impossible for one clique to control the entire process.

The doge was elected for a term, not for life, and he had to be acceptable not just to the elites but to the much larger class of movers and shakers--roughly 1,000 people in a city of at most 150,000.

Venice's crises emerged when the upwelling of social and financial mobility was capped by elites who were over-zealous in their pursuit of hegemony: all those blocked from rising to power/influence became the source of political revolt.

If you cap the volcano, eventually the pressure beneath rises to the point that the cap gets blown off in spectacular fashion.

The suppression of social mobility and the monopolization of power by the few at the expense of the many are universal dynamics in social orders.

Broadly speaking, Venice's 1,000-year Republican government, with its complex rules to limit concentrations of power and insure the boundaries between elites and commoners were porous enough to diffuse revolution and social disorder, speak to what is once again in play around the world: social unrest due to the concentration of power and the suppression of social mobility.

I don't think it's a stretch to say that the greater the concentration of power, the lower the social mobility, the greater the odds that the system will collapse when faced with crisis.

When the entire economy is expanding faster than population, and this tide is raising all ships, the majority of people feel their chances of getting ahead are positive.

But when the economy is stagnating, and those in power are amassing most of the gains, the majority realizes their chances of securing a better life are declining. This is the pressure that is being capped by the status quo that first and foremost protects the privileged.

How porous are the barriers to social mobility in our society? That a few people become billionaires from technological innovations that scale globally is not a real measure of social mobility for the masses.

Downside Risk Escalates As "New Highs" Falter..........

THIS IS A PICTURE OF A MARKET THAT HAS BEEN MANIPULATED TO DEATH AND IS RUNNING ON FUMES.

Downside Risk Escalates As "New Highs" Falter

One of the more reliable market internal data points is indicating to us that there is probably further downside ahead for investors.

When at least 55% of US stocks are making new 20-day highs, this is a sign that the overall asset class is in demand and that stocks are being widely bought. In other words, this is a sign that equities are in a bull market and investors should be participating. In the chart below, we plot new 20-day highs against the GKCI United States Price Index and we have added a line at 55% to mark when new highs hit this threshold. Granted, this indicator missed the 06-07 rally (perhaps a sign of the narrowness of that bull market), but otherwise it has generally been correct in identifying when stocks are in a bull market.

One of the reasons we are holding back our enthusiasm for this latest rally is the fact that new 20-day highs only reached a peak of 33% last week and have since fallen to just 22%. This is a sign to us that the distribution phase of the correction isn't over yet and the market hasn't moved into a broad accumulation phase.



In addition, not only are we not seeing an expansion in new highs in the US, we aren't seeing it anywhere in the world. New 20-day highs hit just 31% in this latest rally in Japan, 27% in the UK, and just 23% overall for all stocks in the developed market.

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Tuesday, March 1, 2016

Global Anarchy...........OUR WORLD TODAY!

Global Anarchy

Polite society seems to be breaking down all over the world.

In 2015, we got what certainly looks like evidence that anarchy beckons - even in the US, the supposed bastion of modernity and human "advancement".

There were, for instance, the riots that reduced parts of Baltimore to smoldering ash in April.

In August, in rural Virginia
, an apparently disgruntled news anchor murdered his former colleagues on live television.

That came on the heels of a horrific shooting at an African American church in Charleston perpetrated by an angry 17-year-old.

Since then, things have only gotten worse. In fact, the US has seen three mass shootings in the last week alone.

And the trend towards societal disintegration is a global phenomenon. The Paris attacks underscore the extent to which the chaos and outright depravity that characterizes everyday life in the Mid-East, that 
has now spilled over into Western Europe. That spillover has in turn triggered feelings of intense nationalism in Germany, Sweden, Finland, and Norway (among other countries) where far-right political movements look set to invoke Europe's troubled past. 

On Monday, we got what might well be the surest sign yet that society is rapidly descending into a Hobbesian state of nature. In Moscow, a woman dressed in all black was arrested near a metro station screaming "I am a terrorist." She also shouted the following:

"The end of the world is coming in a second…I'm your death. I hate democracy. I'm a terrorist."

"I have been cursed and destroyed so many times."

"I'm your suicide bomber… I'm going to die in a second…The end of the world."

But believe it or not, that's not the most disturbing part of this story. The woman 
was holding the severed head of a child. 

An investigation revelaed the woman was a citizen of a "Central Asian country." She apparently burned down the apartment where she was supposed to be caring for the child who was "three or four." The child's headless body was found in the charred remains of the building. The woman was identified as Gulchekhra Bobokulova from Uzbekistan. She beheaded the child, she said, because of her husband's "betrayal." It wasn't immediately clear what the connection was between the dead toddler and her alleged husband.

Meanwhile, in China, 45-year-old Li Sijun decided to stab 10 schoolchildren this morning for apparently no reason at all. As CNN reports, "the incident took place in Haikou, the capital city of the southern island province of Hainan." Thankfully, all of the children survived. Li didn't. He killed himself.

Finally, rounding out Monday's news from our increasingly anarchic world, a woman strolling through Highbridge Park near 190th Street in New York found a box, with a "cooked horse head in it." "Cops," The New York Post says, "are looking into whether the animal parts are tied to 'voodoo.'"

So, a woman decapitates a toddler and displays the head while shouting about the end of the world, a man stabs ten schoolchildren for no reason, and a woman finds a baked horse's head with possible ties to "voodoo" in Manhattan.

And that's just in the past 24 hours.....

But mark this: There will be terrible times in the last days.  People will be lovers of themselves, lovers of money, boastful, proud, abusivedisobedient to their parents, ungrateful, unholy, without love, unforgiving, slanderous, without self-control, brutal, not lovers of the good, treacherous, rash, conceited, lovers of pleasure rather than lovers of God—  having a form of godliness but denying its power. Have nothing to do with such people.

They are the kind who worm their way into homes and gain control over gullible women, who are loaded down with sins and are swayed by all kinds of evil desires, always learning but never able to come to a knowledge of the truth. 

                                                                                                                                                                  
2 Timothy 3 1-7

Financial Time Bombs Hiding In Plain Sight...........DO NOT MISS THIS!

Financial Time Bombs Hiding In Plain Sight

The bear will soon be arriving in earnest, marauding through the canyons of Wall Street while red in tooth and claw.

Our monetary central planners, of course, will once again - for the third time this century - be utterly shocked and unprepared. That's because they have spent the better part of two decades deforming, distorting, denuding and destroying what were once serviceably free financial markets.Yet they remain as clueless as ever about the financial time bombs this inexorably fosters.

The sum and substance of Keynesian central banking is the falsification of financial prices. 

In essence, this means pegging interest rates below market clearing levels on the theory that more borrowing and spending will thereby ensue. Why? Because if credit / debt stops growing our economy collapses.

To this traditional credit channel of monetary policy transmission has been added in recent years the notion of an FX channel, which works through currency depreciation and export stimulus; and the wealth effects channel, which seeks to levitate the paper wealth of the top 10% of households so that they will feel emboldened to spend more at luxury retail emporiums, BMW showrooms and upscale vacation spots.

Needless to say, currency trashing might work for a tiny export economy like New Zealand. But on a global scale among the big national economies, it's just a recipe for a race to the bottom. Ultimately it leads to nothing more than the inflation of imported commodities and goods and the reallocation of income and wealth from domestic industries and households to exporters and their shareholders. Japan proves that in spades.

It is a measure of the political euthanasia induced into American politics by 20 years of central bank dominance that the so-called wealth effects channel is even taken seriously. It amounts to a massive fiscal transfer and trickle-up to the most affluent 10% of US households who own 85% of financial assets.

Moreover, this odious reverse robin hood feat is effected by 12 unelected apparatchiks who sit on the FOMC. From their august perches, they perform live monetary experiments on the American public with no accountability whatsoever.

Besides the rank injustice, there is also the sheer stupidity of it. Implicit in the whole misbegotten wealth effects doctrine is the spurious presumption that the Wall Street gambling apparatus can be rented for a spell by the central bank. So doing, our monetary central planners believe themselves to be unleashing a virtuous circle of increased spending, income and output, and then more rounds of the same.

At length, according to these pettifoggers, production, income and profits catch-up with the levitated prices of financial assets. Accordingly, there are no bubbles; and, instead, societal wealth continues to rise happily ever after.

Not exactly. Central bank stimulated financial asset bubbles crash. Every time. !!!!

The Fed and other practitioners of wealth effects policy do not rent the gambling apparatus of the financial markets. They become hostage to it, and eventually become loathe to curtail it for fear of an open-ended hissy fit in the casino. Bernanke found that out in the spring of 2013, and Yellen three times now——in October 2014, August 2015 and January-February 2016.

But unlike the last two bubble cycles, where our monetary central planners did manage to ratchet the money market rate back up to the 6% and 5% range, by 2000 and 2007, respectively, this time an even more obtuse posse of Keynesian true believers rode the zero bound right to the end of capitalism's natural recovery cycle.

Accordingly, the casinos are populated with financial time bombs like never before. 

Worse still, the central bankers are now so utterly lost and confused that they are all thronging toward the one thing that will ignite these time bombs in a fiery denouement. That is, negative interest rates. This travesty reflects sheer irrational desperation among central bankers and their fellow travelers, and will soon illicit a fire storm of political revolt, currency hoarding and revulsion among even the gamblers inside the casino.

Besides that, they are crushing bank net interest margins, thereby imperiling the solvency of the very banking system that the central banks claim to have rescued and fixed.

So there will be carnage in the casino when it becomes evident that recession has again visited this fair land, but that the Fed is utterly out of dry powder. There is not a chance in the world that NIRP will work or even be permitted by what will be the suddenly awaked politicians of Washington.

Even Peter Fisher admitted that NIRP signals the end of the road for Keynesian central bankers:

Fisher believes that central bankers' growing penchant for negative policy rates stems from a desire to avoid admitting that they've expended all of their monetary ammunition.

Yet what immense societal damage these fanatics have done charging mindlessly toward this dead end. 

In fact, our monetary central planners have become so self-deluded and drunk with power that they now dispense sheer nonsense with complete alacrity. Thus, the Fed's actual printing press operator, Simon Potter of the New York Fed, relieved himself of the following tommyrot in a speech at Columbia University:

The Fed used to use a scarcity of bank reserves to set monetary policy but has had to adopt 
new tools for raising rates with a balance sheet of $4.5 trillion.

"We have achieved excellent control over the effective federal funds rate, and we have done so while avoiding unintended effects on the financial system or financial stability," Potter said.

Is this guy kidding? 

There is no Federal funds market worthy of the name. The Fed's massive bond purchasing program and the monumental excess reserves it generated obviated and destroyed the fed funds market long ago; and at a miniscule $45 billion, the residue of a market which trades virtually by appointment now amounts to just 0.3% of the footings of the US banking system.

Well, here are the Fed's "new tools". What they achieve is not a financial price or interest rate; what they produce is a purely counterfeit rate issuing from what amounts to a monetary circle jerk.

To wit, the Fed raised the cap on its domestic reverse repo bid from $300 billion to $2 trillion and set the yield at 25 basis points. On top of that, it has raised the foreign bank repo pool to $250 billion, where its now paying approximately 33 basis points. Finally, the interest rate it pays member banks with excess reserves (IOER) of approximately $2.5 trillion has been raised to 50 basis points.

Just call the combination of these three facilities the mother of all Big Fat Bids. And throw in the fact that the US treasury is now also flooding the market with T-bills. Under those conditions, how could it be otherwise than that money market rates, including federal funds, would settle in the FOMC's 25-50 basis point target range?

The Fed is operating a giant monetary sump pump for no rational purpose whatsoever, and it's based on a pure financial fraud to boot.

On the former point, there is not a single rational business in America that would actually wish to fund its working capital or any other assets on an overnight tender. That's why even floating rate revolvers have terms of a year or longer and contractual guarantees of availability if covenants are complied with.

The only beneficiaries of overnight money at 38 bps are Wall Street carry trade gamblers, and they would be just as grateful for an announced peg at 12 bps or 100 bps or even 250 bps. The only thing they really care about is short-run certainty about the cost of carrying their gambling chips—-something the Fed's peg unfailingly provides. From the perspective of the main street economy, however, the whole federal funds targeting gambit is a thoroughly pointless farce.

So, yes, the Keynesian fools in the Eccles Building are mounting what amounts to a $6 trillion bid in order to peg with great precision a money market rate that is of absolutely no moment to the main street economy. That's because the US household and business sectors are already at Peak Debt. Consequently, the old Keynesian credit channel of monetary policy transmission is over and done. The monetary central planners, therefore, are pushing on a credit string to no effect except to further drastically deform and destabilize a financial system that is already on the verge of implosion.

But what makes the world so dangerous is that they are doing it with a fraudulent Rube Goldberg Contraption that establishes beyond a shadow of doubt that the FOMC is lost in a monetary puzzle palace, and is capable of virtually any kind of desperate gambit. After all, just recall where this Big Fat Bid of $6 trillion equivalent comes from.

The $2 trillion overnight reverse repo facility essentially means that the Fed is hocking a part of its massive $4.5 trillion trove of treasury bonds and mortgage-backed securities to borrow cash that it doesn't need. And, yes, this repo collateral was previously purchased with fiat credits that it had conjured from thin air and deposited into the bank accounts of Wall Street dealers who sold these securities to the Fed's Open Markets desk via QE.

Then again, the banking system in aggregate didn't have an immediate need for the new reserves injected via QE so they accumulated at the New York Fed, rising from a level just $40 billion in August 2008 to $2.5 trillion at present. Now, stacked as they are in towering digital piles at 33 Liberty Street, the second component of the Feds "new tools" keeps these previously inconceivable quantities of excess reserves happily sequestered. That is, they are bribed to stay put by 50 bps of IOER payments.

There shouldn't be any confusion here. The Fed is gratuitously subsidizing its member banks to the tune of $13 billion annually for no rational purpose whatsoever except to keep these funds from leaking into the money market and quashing its pointless fed funds target.

And the same goes for the 33 bps being earned by offshore banks which have deposited $250 billion of excess cash in the NY Fed's foreign repo pool. Surely Deutsche Bank, Barclays, BNP Paribas and the assorted other dinosaurs of European socialism are grateful for a better return on their idle cash than the negative yield on offer from their own NIRPing central bank in Frankfurt.

Yet does this goofball Simon Potter really think that this rank outrage is a measure of the Fed's "excellent control" over its money market targets?

And that ain't the half of it. All the bribes being paid through these three different channels in order to peg a completely pointless target for the non-existent fed funds market reduces the Feds annual "profit".  And if the notion of profit, which lies at the very heartbeat of capitalism, ever needed to be qualified in quotation marks, this is the case.

The Fed earns revenue of approximately $120 billion per year from the $4.5 trillion trove of assets that it paid for with fictional credit rather than the proceeds of work, production and real economic value added. From that intake, it consumes $5-6 billion on its 22,000 staffers and army of contractors and consultants, many of whom otherwise pretend to teach "economics" in the nation's colleges and universities. It now also spends upwards of $15 billion or so to pay the IOER and interest on its reverse repo borrowings and foreign bank depositors, resulting in net "profits" of about $100 billion.

This abortion of the very concept of profit is then recycled back to the US treasury as a giant bribe to keep the politicians at both ends of Pennsylvania Avenue pacified and out of its hair. Worse still, the Fed's remanded profits are booked as an offset to the interest cost on the nation's staggering $19 trillion of public debt, thereby enabling the politicians to believe there is a fiscal free lunch after all.

Unfortunately, all of this fraudulent monetary shuffling has a terrible consequence in the financial casinos here and aboard. It drives interest rates to sub-economic levels and triggers a massive hunt for yield among the world's money managers and home gamers alike.

Bloomberg recently 
published a telling study of the baleful consequence this central bank fostered hunt for yield has had on the world's energy and mining industries. To wit, it has enabled companies in what are highly cyclical, risky and volatile commodity industries to borrow heretofore inconceivable amounts of money, and plow it into massive malinvestments and excess capacity. As Bloomberg explained it...

The 5,000 biggest publicly traded companies tracked by Bloomberg in the iron and steel, metals and mining, and energy sectors have a combined $3.6 trillion in debt, according to their most recent financial reports, or double what they had at the end of 2008.

Five years ago, those companies tracked by Bloomberg had more operating income than debt, on average. Now, it would take them more than eight years' worth of current earnings, without provisioning for interest, taxes, depreciation or amortization, to clear their combined net obligations.

The bottom line is simple. The great wave of commodity and industrial deflation now sweeping through the world economy is the bastard offspring of the debt binge that was enabled by the central banks over the last two decades. Yet they now pretend that this massive headwind to growth originated in some exogenous force that must be counted with even more of the same monetary intrusion. !!!!

That's how we get to the crime of NIRP. Keynesian central banks cannot imagine a problem for which more debt is not the solution. But is it not lack of "aggregate demand" which is idling an increasing share of the world's oilfield drilling equipment; nor did it cause Caterpillar's heavy mining machinery sales to plunge or the Baltic Dry index to plummet to 30-year lows.

What is driving output, wages and profits drastically southward throughout the materials and energy complex is drastically sinking profits and a desperate need to conserve cash flow in order to survive. The CapEx budget of global mining giant BHP is a proxy for what is becoming a global CapEx depression in the world's industrial economy.

To wit, at the peak of the global credit boom and China/EM growth frenzy a few years ago, BHP's capital budget was about $23 billion. This year, by contrast, it is expected to come in at just $7 billion and plunge further to only $5 billion in 2017.

Needless to say, it does not take much imagination to envision how a 78% cut in capital spending by a giant user of heavy machinery and engineered infrastructure like rail lines and port facilities will cascade down the supply chain. And since the top executives who ran these operations right over the credit bubble cliff are being fired right and left, another thing is quite certain.

That is, there are no takers for incremental debt at any price, NIRP or otherwise, in the global mining and energy industries. Epic damage has already been done, and the overhang of excess capacity and malinvestment will linger for years to come. Even then, hundreds of billions of the debt which funded this massive and mindless investment spree will be restructured or written off entirely, as is already emerging in the US shale patch.

These kinds of financial time bombs are lurking everywhere in the global economy - even if the central bankers don't see them coming.