ECONOMY UPDATE

FALLACY OF FREE MARKET AND FREE TRADE: A THEORETICAL VIEW.

Already Adam Smith in his work “Wealth of Nations” admitted that free markets and free trade both are nothing but a theoretical concepts never implemented in real economies throughout the history [also not in his contemporary XVIII century England run by Mercantile class] due to its fatal impracticality and mostly due to the fact that theoretical free markets require full transparency and hence they would remove any uncertainty, any insider betting/gambling opportunity which is the core of market operations and profitable speculation as I posited in my post on “Invisible hand and other paranoid delusions” as follows:

In ideal, [theoretical] non-existent free market, price point is stable and unchanged since it always matches precisely market value and consequently no profit or margin is possible since market is purely [completely] transparent. Even changes in fundamentals of the asset market value would not change anything except instantly switching to new price point to match new market value due to 100% transparency. Ideal, free markets, worshiped by disciples of free market capitalism [orthodoxy], are dead and useless. The real market profits are all based on cronyism and insider trading, lying or [timely] withholding [critical] market data [including facts about changing third party considerations such as market regulations and others]. There is no other way to make money in real markets but by illicit activities [, propaganda and faux research, manipulation of others into wrong bets mostly due to lack of market transparency controlled by market makers].

Hence, it is clear that all those advocating “Free Markets” are pure propagandists of the markets they actually have control over and are dominant players in, adamant in actually restraining market’s freedom and freedom of its participants to know, for their own advantage and profit via market data manipulation, spreading false information, or narratives, even rigging totally un-audited bidding process itself [such a front-running], ripping enormous rewards from the scam of “Free Market Capitalism” while lying to steal our money.
Just review any recent free trade or free market or investment treaties or agreements [NAFTA, CAFTA, TPP, TTIP etc.,] to see them full of insiders’ advantages, privileges and subsidies often rules, embedded in national laws or international/global agencies or organizations like WTO, that virtually preclude any meaningful competition while promoting multinational monopoly and interests of dominant powers.


Free Market or whatever it is.
In fact vast majority of “real” markets in a course of their so-called “normal” operation, can be characterized as simply rigged, blatantly manipulated, or at minimum heavily constrained by market makers rules intertwined with trade, securities and other government rules and regulations aimed solely to bring profit to the insiders with most of other considerations, like fairness, honesty, transparency, legal arbitration or even common law legality, rescinded or treated with very low priority.
In fact the so-called markets have been effectively explicitly or implicitly excluded from general as well as criminal rule of law and replaced by supra-legal authoritarian if not despotic rule of market makers and their oligarchic cronies leaving the rest gullible market participants [also pension funds] in a “Land of Lawlessness” where the same de-facto criminal acts such a theft, coercion or misrepresentation of product or service, or bridging fiducial duties, easily prosecutable in the mainstream are considered not a crime but even are hailed as market innovations, advanced financial engineering or just investing/trading prowess.
The TBTF mantra is aligned with such as assertions about “real” ugly lawless markets.
While worshipers of free markets present themselves as against regulations and government intervention, ironically it is this very intervention that makes markets possible and this is the very intervention and regulation that bring market makers enormous profits regardless of overall economic and financial conditions of Wall Street or Main Street, guaranteed loot, guaranteed survival and immunity no matter what cost to be endured by mainstream economy or overall financial system.

The markets, regarded by the rulers’ orthodoxy as omni-panacea for all sociopolitical ills, now infecting almost all aspects of human life and society, themselves ,in any form of shape even symbolic only, must survive regardless of anything because they are personifications of righteousness of radical neoliberal ideology, foundations of global oligarchic regimes and their new market morality and hence cannot fail even if they fail.
Yes, these “free” markets are dependent and need big government to survive and thrive as an extension of political power. They need big and strong state legal framework so market makers or insider’s advantageous rules could be imposed and reinforced upon society they are preying upon as economic parasites, bringing nothing of value to the mainstream.
Their usury and greed, if untamed, always led directly to a collapse of economy and society with tragic consequences of death and mayhem, which was strongly discouraged by rulers themselves in the historical ages by a quite often public beheadings of conniving market manipulators, hated speculators, thieves of other people’s money, a practice urgently needed and sorely missed today.
Now repulsive thieves have become rulers of the realm themselves and hence there is nobody to hang but ordinary people who protest the mass larceny on national scale.
In fact critical and vital role of ruling elites, government and/or power of private tyranny was critical in formation of early markets, [pre-money] commodity exchange market as well a modern capital markets today or hundreds even thousands years ago as I put in my post “Plutus and Myth of Money” as follows:

The first markets developed at least ten to twenty thousand years ago, were run mostly not by producers or consumers but by the market makers, specialized subgroup of the local ruling elites which saw their market function as part of the ruling and security prerogatives and a way to create or nurture the political support for their rule. The dominance of the elite class as market makers and profit takers is true even more today.
Such markets were called the commodity exchange markets, where the process of valuation was not based on a use-value of the goods i.e. their usefulness for the buyer, but instead were based on the exchange value, a value arbitrarily set by the seller/buyer expectation of how profitable the transaction could be or should be.
For the market participants goods were no longer represented as something useful for the consumption or production but as certain items valued by their ability to produce profit or advantage i.e. simple commodities, “stripped” of the use-value of their natural form and character.
What was hidden however, in the exchange market valuation process was a fact that it indirectly involved an external third-party, not formally present at the market.
The third-party concerns that were considered in those simple commodity markets were for example: degree of the commitment and trust of seller/buyer at another outside market who ordered the commodities to resell or the commitment and trust or ability to purchase by the buyer who would invest in the commodities.
Also serious consideration were given in the transactional process of valuation to series of risks involved in the trading investments such as rule of law, [government subsidies, rules, concerns, policies, barriers, tariffs etc.,] stability of the political and economic situation i.e. concern about safety of the commodities in transit, legality of goods at destination location, tolls, religious limitations, ability to procure commodities likely to be resold back on the local market, political implications to the trade in military goods or trading with enemies, commodity storage capacity, buyer limitations, monopolistic positions of buyer/seller, trade/business development strategies, ancient forms of sanctions or embargos, which would prevent otherwise profitable trades for reasons of the state policies or competitiveness, overall economic situation and many other considerations.
It is clear that even these [ancient] primitive commodity exchange markets were not and could not be “free” markets since severe weight was always placed on the valuation process of simplest [moneyless] exchange transaction by the unrelated third-party considerations having nothing to do with the intrinsic value of goods or [supply-demand] fundamentals such as production levels, weather, or ingenuity of the producers, cultural/social/religious/technological demand factors or skills of a trader who brought the goods to the market.
The third-party consideration made any practical market de facto “highly regulated” by the, often obfuscated, third-party conditions imposed on the trade.
But even if they would somehow eliminate most of the third-party consideration, practically “impossible” feat, still market valuation process would not have been free and egalitarian [equal chances to succeed]. Simply because of common and dramatic inequality of the market participants as far as economical/political [financial] as well as physical/mental strength to withstand a highly antagonistic valuation process is concerned, a process involving lies, manipulation, threats and intimidation or violence.
The strong traders always could intimidate weak traders, who significantly depended on an outcome of particular transaction or trade block, and could be extorted to pay much above and sell much below the fair or average market price, common feature of the real life market places even [especially] today.

Another huge reason why practical markets cannot be free is manipulated evaluation and bidding process that is mostly removed from/vaguely related or entirely unrelated to true fundamental values of commodities but are direct result of economic/financial power play.
All that brings what we call inherent enormous instability to real markets since they are detached from fundamentals of the trade and serve immediate interest of market makers and powerful insiders rather than trading public due to mostly, critically rigged valuation process.
But there is an alternative to rigged commodity or capital [also commodity derivatives, futures and options etc.,] markets, they are called old local farmers markers [or similar, equivalent] as I continue in my post:

Let’s examine how a valuation process was conducted using example of a rare [but ancient, even moneyless] type of market developed by some tribal societies that mostly rejected social differentiation and stratification. Let’s look at the so-called markets of interchangeable producers and consumers [resembling farmers’ markets but not exactly].
In such rare markets goods never turned into commodities and always were considered in a form and character intended by producers and desired by consumers.
The valuation process performed at such markets was reduced to a simple determination of relative use-value of two goods exchanged. But how this determination was made?
First, it was based on the fundamentals, meaning amount of effort or labor that was needed to bring the goods to the market, so-called absolute value.
On the top of it there was a value component related to specialty or particular use-value of the goods such as rare or bigger beans or better sharper sickle or warmer cloth than offered by the other market participants.
At such markets the role of third-party was severely diminished or eliminated, allowing for broaden transparency of trade, possible since buyer was sole judge of the goods’ ultimate use-value since he/she would be consuming it.
What’s characteristic of those primitive producer-consumer markets is that they are stable with values having solid support by the local economy and community since no potential resell values to the outside markets entered into the valuation process. And hence there are almost no market instigated bubbles or crashes.
In contrast, all the commodity exchange markets are inherently unstable with no value backstop or practical upper limit since the only value ever considered was a value of potential profit on a commodity trade. If there was no profit potential, commodity value went to zero.

Generally “real” markets are extremely prone to inflation (bubble) or deflation (collapse) since price points are all determined by a bet or guess base on obfuscated or twisted information about profit potentiality of a given trade.
This attitude of disregard to the enormous deviations of the price from fundamental values and focusing solely on immediate profit no matter how low or high price commodity or security will go, is a quintessence of the “real” market operations that nonetheless have devastated impact on commodity producers or consumers or medium to long term investors [pension funds, IRA, 401k etc, schemes] who seek investment into real economic growth thought equity, commodity or debt market while their hard earned money is used mostly for driving rampant greed and gambling for immediate gratification liked to behavior of hard core drug addicts.
Now the problem of commodity exchange markets is even exasperated by including massive trading in commodity derivatives, as a highly leveraged securities, corporate bonds, stocks based on the commodities as a collateral or dependent on commodity fundamentals in relation to projected profits within certain capital structure.
The private markets concocting massively off the balance sheet so-called innovative structured financial products such as MBS, CDS etc., practically devoid of liquidity, fundamental value or price point and underwritten with phony ratings of underlying assets are versions of fraud extreme. The last shred of connection of such a purely abstract financial instruments with reality of hard core assets have been severed for immersion into a mind job of hallucination of wealth and extreme psychopathic competition to win a game no matter what.
All that was made possible by Wall Street banks that enabled this madness by financing all those sick delusional adventures with margin lending and perpetual refinancing for their cronies. It is truly a mad house out there to big and too influential to be fucked with.


Free Trade or whatever it is.
The free trading as I mentioned above already was never about unimpeded free access to trade of a broad market of participants, but the freedom was to be limited to free capital flows and reverse trade flows associated with it which give another huge advantage to global corporations over local players due to local labor law, and environmental compliance costs arbitrage.
This is the main purpose and focus of what Orwellianesque statement of “Free Global Trade” is all about namely unfair special advantage aimed to destroy jobs small business, suppress independent business activities and permanently bond local economy into neo-feudal relationship of total dominance of global supranational emporium which divides local communities into artificially created “winners” and “losers” of so-called “new” economy i.e. dictatorship of global capital.
Many of those from few percent of small/medium biz supposed [temporary] “winners” of economic globalizations become as planned, ardent advocates for global economy until they themselves join the rest in bankruptcy sometime down the road, while refusing to acknowledge that those local “losers” they previously dismissed as unviable businesses are no longer there to support any reminding local demand when Global corporation finds much cheaper supplies somewhere else and pull back their support for “winning” local firms, causing complete economic collapse and leaves carnage of local utterly divided and conflicted community.
The “Free Trade” orthodoxy is a delusion concocted by global free trade propagandists, serving only exploitative needs and profit of ruling elite.
What we need is predominantly local trade, a fair trade which will take into account interests and advantages of local economy, in ways that benefit local economy, and vast majority of population in fair and balance ways, always in the framework of local culture and society as well as setting up rules of trade and markets that serves objectives of self-governance, material and social needs of local population and not far removed owners or customers.
Tariffs, trade barriers, other fair labor regulations and controls of capital flows aimed at protecting integrity of local economy and sustain long term social order is what give people true freedom to live and work and raise family in our towns and cities the way we want it and the way we choose regardless of global winds of political seasons, or some remote environmental/economic crises, trade wars and/or financial speculation or market crashes fueled by greed and opulence.
This is utter fallacy to propagate narratives that we have to compete globally or worry about events on another side of the globe as far as our economic survival is concerned. This is an utter lie perpetuated by global propagandists, also from political left, who want us to submit to their criminal system of massive national theft and war.
“Global Free Trade” is nothing but a moniker of economic collapse of middle class, loss of self-governance and advanced welfare state that turns into a warfare state, exactly what each of us can see if keep our eyes open.

In summary, the truly free market and free trade does not exists nor will it ever exist and all those who proliferate the idea are peddling their own neo-feudal ,autocratic rule under guise of rational socioeconomic policies,rigid pseudo-scientific economic/financial rules and judgments dictated by suppose “wisdom” of mythical market or by imperative of global trade they alone established and rigged behind the scenes for their own benefit and advantage, while preaching capital market orthodoxy of infallibility of market judgment as a combined “holly” expression of supposed people’s will. The will of the people with money i.e. themselves.

Rest of us find no divine market expression but economic rape and pillage.

 

WHAT DOES ADOPTION OF NIRP REALLY SAY ABOUT MAINSTREAM ECONOMY?

Let’s cut out all the shit propaganda and buzzwords.

I will ignore here additional and significant impact of moral hazard driven appalling behavior of gambling banksters that brought the ZIRP and NIRP in and focus on what it means for mainstream economy instead.

In order to answer this, one must first understand the purpose of interest rates in a capitalistic system, although this is not the economic system that we have in the US.

The interest rate, (preferably set by a market operations but in fact is highly manipulated by FED) is a cost of capital for those who want to invest it in mainstream economy in order to tap to pent-up demand supported by income of the population in different time scales. (1 yr, 2yr, 5yr, 10yr, 30yr, etc.) in the future.

Before we go any further let’s define what I mean by income. I mean wage earnings, profit from mainstream economic activity, other remittances (alimony, SS etc.,) and consumer credit used/per unit of time while net income is the income minus periodic amount of obligation to pay debt/per unit of time.

I do not use a total income which would include wage earnings, profit from mainstream economic activity, other remittances, total credit used and incomes from rents, leases, retirement funds, stocks, bonds sale and other financial activity, since they are concentrated at top 5% of the income brackets and they are not immediately realizable as disposable income.

This is because an increase of income of the rich, in a society of Banana republic-like extreme inequality i.e. US society, does not translate into increased aggregated demand for mainstream economy products and services but instead boosts financial investment vehicles and marginally stimulates luxury goods demand mostly foreign.

Hence positive interest rates requires overall growth of the mainstream economy sans financial sector but mostly it requires growth of the net income of majority of people funneled into artificially or naturally instigated demand.

For about forty years now, we have income stagnation. For first 30 years, we had net income positive (people were earning less but over-leveraging with debt, pushing real GDP slightly up) and net-income negative (deleveraging) for about last 10 years pushing real GDP down.

The manipulation of official GDP numbers hides those facts but reasonable assessment of national product adjusted for real inflation indicates that US entered depression about 10 years ago and it continues. Hence desperate, ridiculous, goal seeking  attempts to explain quarterly negative GDP reads by weather, or national events when heavily skewed, heuristic adjustments and changing rules stubbornly refuse to give desired results.

This is a devastating debt effect on the mainstream economy (ignored by business media) due to negative net-income growth i.e. decline of net-income and collapse of total income while financial markets volatility skyrocketed and hence collapse of total demand, although gadgetry (computer appliances) slowed the process a little for a while.

As a response to secular decline with negative outlook of overall growth of economic activity, price of the capital had to be adjusted to the negative growth (decline) of the mainstream economy and hence negative rates for deployment of capital in the future.

The FED’s frantic ZIRP policies were not only concocted to save the banksters  from self-annihilation, but to respond to, now global, secular mainstream economic decline.

The NIRP policy, in addition to bailing out the gambling oligarchs, is just a continuation of ZIRP and admission of the projection of long term economic collapse, and massive shrinking of US economy and associated pauperization of the society and associated dramatic fall down of standard of living of 99% of Americans in next several decades or permanently.

The clueless FED academics, serfs of Wall Street oligarchy pushing propaganda ZIRP/NIRP and monetary easing i.e. shoving money down the throats of their cronies in an absurd and futile attempt of enticing investments into dead and decaying US mainstream economy and recently global economy for that matter, with consumer base income obliterated by programmatic theft of US national treasury, defrauding American people and working people all over the world.

This is exactly this income/demand collapse that destroys global trade and global commodity demand we are experiencing now.

The NIRP means that we are doomed, US economy and global economy is not coming back and perhaps never will. The NIRP means total capitulation regarding future of the mainstream economy, it means giving up on American working people, their families and communities.

The FED erratic, nervous, incoherent, volatility instigating moves are deliberately furthering misery of US and world population as well as Oligarchs plans for human extermination when economy shrinks beyond its ability to sustain current population growth. Longevity among men in the US as well as in many other countries is in collapse for about 20 years now and it is getting worse.

In other words the privately owned FED, as I pointed out of this page few times already, is not setting any policies that are even remotely related to employment or inflation in mainstream economy,  but reactively spewing public with abhorrent propaganda that insinuates millions of people to move their mostly retirement savings assets into loosing bets solely for the purpose of bailing out their shareholders (also via fees on capital flows) i.e. crony banksters and finance their wars for profit, This did not start in 2008 but has always been, one way or another, the mission of the FED.

Unless worldwide revolution against global oligarchy occurs, this process of collapse of mainstream economy will destroy last vestiges of capitalism and as evidences show already , will transform US into a digital age, 21st century, neo-feudal economic system of monopoly run by a class of rent-seeking oligarchs and courtiers of ruling elite extorting last drop of value from sweat, blood and tears of pauperized American serfs. Brace yourselves because this new old system it is already here.

 

BLOOD ON THE STREET: Why is price of crude oil collapsing?

Do you remember that all the miraculous growth of stocks and securities over last 6 years were based on one official lie. Namely, abandoning of mark to market accounting principle for all the securities early in 2009 and replacing them with mark to fantasy NON-GAAP BS. And in the process the FED made accounting racket more lying than before if it was even possible.

Since that time overnight penny stocks of all major Wall Street gambling parlors (banks), instead of being de-listed and bankrupted, were given commercial status, access to FED’s discount window, free ZIRP money in a form of treasuries’ spread and by this magic trick banks’ stocks became suddenly “undervalued” attracting steady stream of bi-curious pension funds and HF to buy them as a part of TBTF bail-out, guarantying enormous profits during first years after 2008 disaster, man-made by the banksters themselves.

It followed, all other forms of bailouts of all the Wall Street industries, Insurance, heath, auto, HF, PE, commercial real estate etc., all worthless debt derivatives bought up by FED via criminal act of enormous expansion of balance sheet as well as theft of 20 trillions in clandestine subsidies and bailouts for all non-US TBTF banks, CBs and private, securing currency swap lines intended to stem enormous dollar rise and sovereign debt defaults, that would have surely follow, etc.

Now it is a time for an Energy sector bailout including bank bailout/bail-in for those gamblers not so anonymous who kept lending money to zombie frackers and other insane maniacs who refused to get to their heads the basic truth that it is a humongous global debt and oligarchic lawlessness that is killing global demand for crude oil, for labor, for commodities and later (meaning now) for other categories of securities or financial assets, stocks, corporate, Hi-yield etc.

FED has no choice but to use even bigger QE bazooka than BOJ, ECB again to make whole its own shareholders, namely TBTF bankster mafia knowing well that it will result in further collapse of the global economy since QE BS is a license to suck blood of population and now even from small millionaires or even small billionaires so FED cronies may keep gorging on dying corpse of global economy.

The FED criminal actions that encourage hiding of losses and falsifying accounting statements and regulatory reports or giving big banks assurance of support as long as they will pretend that most of Energy companies are worth anything and continue to extend their unpayable loans to a dead industry, is just another form of bailout of TBTF banks themselves, not really related to Energy companies that are already effectively owned and securitized into a blood of hungry bankster zombies using Saudi Royal family erratic struggle to survive a calamity of abandonment by collapsing US empire. This political tantrum of a Saudi puppet elite, unable to stop a global demand collapse is threatening Saudi Arabia’s very existence and drives market instabilities aimed to pry the rest of capital out of somewhat independent hands.

What people do not understand is why price of crude oil is falling. It is not because Saudis manipulation against US shale industry of Russia or Iran. It is because of US manipulation of global financial markets over last two years by recalling all the US$ dominated capital assets from EM,including BRICS, just to collapse them as a part of US imperial offensive.

The EM countries and some DM like Brits responded by opening currency swaps lines and devaluating of their currencies vs. dollar to keep competitive in the global trade (ex US). What it actually caused, as I described before on this blog, is a shortage of US$ funding for commodity trades.

In other words dollar rise was primarily due to dollar funding shortage (no need to sell as many dollars to trade globally) and not an increase in demand for dollars since dollars were no longer needed where swaps were available.

And secondly due to repatriation of US$ assets based on propaganda of US robust domestic recovery and consequently, a steady path for FED’s rate increase into the future which never materialized but caused unorganized flight of speculative capital from EM to DM including EU and Japan forcing treasuries in Japan into zero or negative rates in EU.

The burden of US denominated debt and catastrophic US$ credit contraction and securities ratings downgrades, forced collapsing of interest rates of EM CB’s and massive devaluation of currencies in a futile quest to protect exports to China and/or DM which themselves are facing collapse of demand for goods and services.

In fact crude oil price, in non-US$-EURO pegged, Emerging Markets currency basket is not collapsing but holding steady so in majority of DM currencies. The true problem, were are facing, is and always was a collapse of the commodity demand due to collapse of income of 99% but what’s more alarming for Washington/Wall Street oligarchy is dropping demand for dollars, expressed as dropping demand for commodities benchmarked in US$. Yes, it is the falling down of the demand for US$ in global trade and global commodities and coming up collapse of demand for US denominated securities that scares shit out of FED and its cronies.

It could be perceived as counterintuitive for some who was raised on propaganda of the dollar-centric world to accept that the price of crude oil is not only collapsing because of lack of global demand but also because of lack of global demand for dollars (de-dollarization) and in this world of US$ deflationary death spiral, for the same reason, namely because crude oil and the dollar are both too expensive.

Once US securities loose investors confidence, US$ will collapse exponentially and hyperinflation in DM will be unleashed. All those so-called de-dollarization scenarios, discussed for last several years, are coming to fruition one way or another. The last US strong card left to play is a regional or global war and as we see preparations are ongoing.

De-dollarization of petrodollar is coming soon following by de-dollarization of other commodity trades, AIIB is up and running.

In Russia:

https://www.rt.com/business/325577-russia-oil-new-benchmark/

And in China:

http://www.reuters.com/article/china-crude-futures-idUSL5N11F04A20150910

http://asia.nikkei.com/Markets/Commodities/China-aiming-for-new-global-benchmark

 

NEW YEAR’S CONFESSIONS: MONEY MATRIX.

It’s disconcerting to realize that many millions Americans, while worshiping dollar/gold orthodoxy, demonstrate their utter ignorance about reality of money.

All so called fiat money is just a symbol of money that supposed to be in the bank but it isn’t. It has no intrinsic value, short of cost of bringing it to market and store it or in case of metals, use value of it. So gold value is simple current cost of mining it and bringing it to market, and fiat money, has value of piece of fancy paper.

So why price of money is variable and so different then its value? Why “dollar bill” this fancy piece of paper, or entry in your bank statement, buys so much of our hard work ( sweat and tears) while the same dollar buys so little stuff we need? Why our dollar is cheaper than their dollar? Etc.

The answer is: “invisible hand of valuation”, hand of crude power, individual, group, local, global, private, or governmental power, which profoundly influences our lives.

The money imposes on us system of values, that are not ours, but values of those who, in their own interest alone, exercise power over us under mystic concepts of market, law, religion or patriotism spilled through propaganda tubes.

In a very core of money is a threatening force compelling us to submit to some kind of authority called benignly, trusted third party. It is neither trusted but rather forced upon us, nor third, since it is in the middle of every financial transaction imposing its rules. However, it is definitely a party, group of people representing their own interest and not yours, unless you belong to it. Hence, centuries old, and so far unsuccessful, free people’s drive to remove crushing influence of brutal power from economic as well as human relations.

This is reality of Political Economy, Political Finance and Political Monetarism, well known to Adam Smith, and informed by strict policies and moral codes within ruling elites rather then laws of economy and society we suppose to believe in.

Any rational person knows that what’s going on in “global markets”, is utter chaos, where all, carved in stone, market rules and national laws, are being thrashed daily with impunity. Even those versed in economics and speculation, who still hold a shred of intellectual integrity and honesty, are giving up on rationalizing these events since all previous theories completely failed.

All this points to horrifying conclusion which few have guts to utter, desperately trying to bend the spoon (ref. Matrix). What we need is to have courage to bend our mind instead, to see that, there is no market and never was, there is no economical nor fiscal theory and never was, there is no monetary theory and never was, these are just veils spread over our eyes to blind us from realizing that we are just slaves of brutal power, subjects to rulers’ untamed will.

Paraphrasing Neo, recalling his life to Trinity on the way to Oracle. “See this building, on Wall Street, I worked there as a broker, made lots of money …. hm, none of it actually happened”.

More on origins of money can be found at:

https://contrarianopinion.wordpress.com/2015/04/14/plutus-and-the-myth-of-money/

As long as we express our values are in dollars or other currency we will always be poor and our hard work will always be stolen by banksters who tell us what to value and how. Their values are not mine or yours, they are theirs alone, serving their interest not ours, our family or community. When working, think whom your work benefit most because these days it ain’t you. That’s the reason people looking at job ethos differently than before when they believed that most of fruits of their sweat went to them. Rejecting culture of money would be the first step.

 

 

HOLIDAYS: WHAT’S NEXT?

After 6 years of FED pushing all mutual funds, pension funds, 401k into insane gambling parlor of junk bonds or penny stocks for yield mostly to support thieving fund managers, nobody dared to ask: what’s next?

It’s because so much concentrated capital was guarantied to get their principal money back and profit no matter what i.e. by printing profits and principal needs be. And every one outside the FED close crony circle was to be fucked up hard.

And the time has come. High yield bond fiasco is with us killing small to moderate PE and hedge funds left and right to stem HF run.

Oil futures hedges expired, oil, natgas and other commodities that are of fundamental importance for CAPEX investments, continue to collapse due to catastrophic disintegration of the coherent globally controlled demand depressing markets even more due to Middle East wars and cascading collapse of US dollar pegs all over the oil producing countries that are running dangerous budget deficits pushing population into abyss of even more debt by unprecedented propping up their military.

All that in order to be prepared for ultimate confrontation between US global imperial power and emerging eastern contenders, and in the process both sides are destroying their own people’s purchasing power in the world market and hence destroying demand even more.

Global demand and 99% income death spiral will continue unless a political change enables governments to deal with the national debt and a social issues of tragic income slump head-on i.e. rein in the parasitic banking system, reduce debt burden on the people and governments, refute an ideology of globalism and reinstating full national sovereignty by rejecting US imperial protectorate.

But that will not happen soon enough and instead we will see continuation of outrageous bailouts bail-ins, concocted on a whim FED facilities and programs for cronies and utter carnage for the little fishes (up to 1 Billion worth) not to mention another tsunami of foreclosures, jobless indebted students, fired oil workers and all the proud owners of new cars bought with ninja loans being fired from their minimum wage jobs or abandoned by UBER and likes who disrupt our lives and leave us to rot.

With all the analysis of what FED is doing i.e. a command and control over the global capital, it is nothing but blunt instrument of world oligarchs to accumulate as much capital as they possible can, that’s what capitalists do even via destroying competition and denying capitalism to others.

It does not matter what the system is, it is serving the elite to consolidate power and accumulate wealth under whatever explanation or ideology sheeple will swallow just like fake rate raising by FED propagandized as bill of good health of the US economy, an absurd lie so thinly covered that a kindergartener can see through this vile deception. As I posited just few days before December 2015 Fed meeting:

.. plans are set up and process continues, you can feel it and I can feel it in our world of daily financial instability and uncertainty. Now we are waiting for another lame explanation, an excuse for why all bad things are happening to us, an Olympus mountain sort of holy judgment upon weak and stupid sheeple to tell us again why we are, mostly metaphorically, raped and why our feelings, although horribly painful, are only of a perpetual transitory nature.

And in the midst of another oligarch instigated crisis absent from Fed’s dashboard of a Chair’s favorite game of “Grand Theft Repo” that’s exactly what FED’s proclaimed: Economy is great and if you are being financially devastated, lost job, home, retirement savings, got sick and cannot afford skyrocketed prices of medical services, food and rent you are a looser but just wait until your new born child graduate from a college and the transitory shit you found yourself in solely due to you own laziness and stupidity will improve just after fat gluttonous bankers step back from the trough unable to gorge themselves anymore.

I will not be writing here any moral treatises about FOMC despicable cartoonish characters passing for human beings proclaiming from a position of fraudulent authority about something they are completely ignorant about, namely life of ordinary American people and insidiously conspire to destroy all, central to our very humanity, values of family, community, ethos of hard work, human dignity, self-determination, self-effacement, solidarity and self-sacrifice for others while doing whatever it takes to proliferate greed and gluttonous ecstasy of exploitation and death practiced by global oligarchy.

FED’s meticulous programmatic destructors of the very holiday spirit of love and inclusion want us divided, blind to other people suffering, dehumanized, and waiting passively to be devoured one by one by a monster of hatred unleashed against us by the ruling elite  in some silent night.

 

 

FOMC HISTORIC DECISION: SORRY PICTURE OF MEDIA’s DEAD HORSE BEATING.

You can smell the stench of death already.

I keep telling everyone that FED has nothing to do with our real, mainstream economy which is felt by 95% of population but is designed to make sure FED cronies are doing well on paper no matter what disasters they cause.

Of course there is some weak correlation between FED talk and so-called FED moves that are nothing but more talk; forward guidance, backward guidance and contemporary confusion i.e. reading from magic ball of nonsense. One way or another FED bails in, bails out and prints money. That’s all they do except for farting in their chairs.

The correlation is not causation, however. The true causation process between FED utterances and our economic agony is solely in the embedded long, preprogrammed by ruling elite, FED policies that use all the self-instigated self-inflicted financial disasters to pursuit degradation of social organization, law and order and to accelerate process of pauperization of the society as necessary condition for preplanned epochal regression into political social and economic realm of neo-feudalism with some technological twist, mainly related to surveillance and social control.

In other words FED is not policy maker or shaker but it is a somewhat marginal gauge of efficiency of preprogrammed agenda of collapse of modern society and last façades of quasi- democratic institutions standing. At best FED’s role is to provide propaganda cover for whatever real belligerence against society is being planned and executed by the ruling elite.

So plans are set up and process continues, you can feel it and I can feel it in our world of daily financial instability and uncertainty. Now we are waiting for another lame explanation, an excuse for why all bad things are happening to us, an Olympus mountain sort of holy judgment upon weak and stupid sheeple to tell us again why we are, mostly metaphorically, raped and why our feelings, although horribly painful, are only of a perpetual transitory nature.

So since we cleared that up we may ask what this whole FED hoopla, having nothing to do with people’s economy, a creature farcical kabuki theater, is all about.

As I mentioned in my previous posts QE as a propaganda construct is declared dead since FED have nothing more descent to buy at least there were no willing sellers who would load their portfolios with even more insane junk especially in the energy sector. Although, FED’s necrophiliacs did not give up on it as of yet and are likely to devour corporate junk or high yield credit instruments that are collapsing as I write. The FED today is facing the same issues as three months ago when I wrote this:

The FED maneuvering is all about an attempt to conceal complete market failure, bond market, stock market, not to mention naturally illiquid derivative markets, frozen if market intermediaries (HFT, MM) pull out and they do more and more often. But most of all it is all about unqualified failure of those half-baked monetary theories concocted by the army of FED’s PhDs worshiping their spreadsheet produced utter nonsense.

The market failure, FED is concerned and always and only was concerned about, this time is due to enormous concentration of the market capital across different assets classes in only few hands despite the cacophony of differently named investment funds. Such a concentration of capital and by this fact alone, dramatic distortion of all the markets (including Real Estate) through capital consolidation as well as via pseudo-regulations (result of fusion of the capital with regulatory powers) impacting market operations as well introduction of other trading technologies and other prerogatives unrelated to the underlying tradable assets but strongly determining the price discovery mechanism or lack there of. In other words there are few and few suckers that could be conned by a façade of the free market fundamentals’ driven operations and their transparency that never was. Markets have been reduced, in different measure in different markets, to a insider trading among cronies while FED having their backs as TBTBF entities operating virtually outside the law (Be F for “f..k with”).

Also it’s not about “normalizing” anything since there is no natural interest rate as there is no natural rape rate or natural murder rate. Setting interest rate is just a propaganda justifying whatever the hell they want to do in the recalcitrant, capricious credit cycle more and more incessant within crony financial mafia leaving  rest of us exposed to 5000% APR financial apartheid.

In today’s extremely centralized world of capital, an objective of interest rates manipulation is to spew propaganda or instructions that would signal or compel FED cronies and other CBs subsidiaries of the “First Global Bank” to act according to preprogrammed agenda of collapsing the global income and demand stemming from basic economic activities of 95% of the world population while making whole all gambling losses of the world oligarchs.

So far FED and global banking system is very successful in their insidious efforts of socioeconomic destruction for benefit of tiny oligarchy while propagandizing their fake, made up, difficulties and “complexities” of tacking the global economy and credit/economic cycle via monetary means tacitly and impudently demanding patience to overcome “transitory processes” that already last a lifetime of a college student, while millions of ordinary people are suffering or dying under their murderous edicts.

The next official media “crisis” has been engineered and is ready to be unleashed onto the population anytime to cover up reality of secular collapse of the global demand and income of 95% of the world population. Will it be commodity crisis, Chinese stocks again, or western banking repo/reverse repo rate bifurcation, never recorded in the recent history of financial system, flattening of yield curve even more,long overdue  collapse of bonds or US currency instability, collateral reserves shift, CLOs, CDO, private bank derivatives or EFTs gambling blowout of shadow banking system etc., any of these can be used a pretext for confiscation of people’s hard earned savings, pension funds, cutting wages or theft of bank deposits or bail-ins by financial and alternative means of blocking, denomination or freezing the access to peoples money including cash while openly blowing the last remaining bubble, the bubble of global war.

Remember, next week nothing is going to happen, except perhaps unleashing of another stage of global cascading war against ordinary people.

 

 

OWN TO RENT: A DREAM OF AMERICAN DEBT SLAVE.

Have you taken a good look at housing market lately? And what do you see?

Made up sales numbers to prop up utter collapse of US housing demand (ex speculators), manipulated exuberant prices, unaffordable for over 95% of local population, ninja mortgage volumes skimmed of fees and unloaded to GSE letting taxpayers to absorb inevitable losses, FED suppressed interest rates for rich and opulent to subsidize their pathological gambling and aimed to abolish any shred of moral hazard they may be subjected to for their detestable deeds. It is nothing but another manifestation of complete and utter failure of propaganda of free market that never was and never will be. All of that so-called “housing economic activity” including commercial real estate is nothing but a shameful scam, a continuous bailout guaranteeing oligarchs’ profit while covering up the fact that housing industry is an enormous criminal, global money laundering outfit feeding rampant Wall Street speculation and psychotic greed and opulence with no place for ordinary Americans who work for living, to buy or rent a home for their families.

In this context it is very hard no to see that, through a massive population movement back into parents houses or into substandard overcrowded rental housing during last several years due to massive joblessness and gigantic, continuing foreclosure tsunami, the standard of living of Americans is collapsing in accelerated pace as a part of the premeditated process of pauperization of American society and collapse of the US economy via destruction of the US industrial and service base by means of disastrous monetary and fiscal policies, subsidized outsourcing, insidious immigration policies and most of all programmatic economic annihilation as a result deliberate, anti-American treasonous government policies and repugnant, criminal Wall Street speculation and continuing bailouts of US/global oligarchs by US taxpayers and their unborn grandchildren.

The Bush 2.0 slogan about America as an ownership society was a cruel joke, a propaganda feat, another slogan meant to destroy American family for corporate profit while they are “American dreaming” that they own a house. What Americans really own is lifelong enslaving mortgage servitude enforced by horrible threat of homelessness and the hence their very survival, a social engineering method akin to terrorism utilized in order to exert strict social control. Without solid economic policies that would support the standard of living of American people, ownership society was nothing by a sophisticated slave trap.

In reality USA was never a land of individual home owners despite of the whole American dream propaganda spread all over the Europe and which in cooperation of XIX century European autocratic regimes who purposefully, via political and economic means expelled huge part of surplus population under the pretense of political or economic, religious freedoms overseas, have been channeled into what for all intensive purposes was plain and simple slave trade and mass open air incarceration feat. And I am not talking here about slave trade of Africans or color people, which was visible with its grotesque brutality and human degradation. I am talking about so-called white European immigrants who were subjects/objects of the same industrial trade with somewhat more sophisticated mechanisms of indoctrination and control.

In fact almost all workers were living in rental units, built by investors/land real estate speculators, cities following gentrification process, but most of all rental housing was built by industrial moguls who provided dilapidated housing units in the newly established industrial sites controlled by the same moguls allowing for appalling standard of those dwellings since no alternative or no competition was allowed.

The same was with the food and other supplies only available via a “company” store. This isolation of the workers and lack of competition resulted in huge workers’ net worth depreciation or collapse even when they were working daily and received their wages, sometime in an insidious form of scripts not money. Those who were unable to save for their own house got deeper in debt and consequently forfeited a chance to ever be homeowners. All of that was a part of preplanned ploy to steal workers’ labor and exploit them to exhaustion or collapse.

What about farmers or western settlers, were they owners of their land and real estate? No. In general that is not true. Some had a deed assigned to their names but actually most of farmers worked for big land owners first being employed to provide service and expertise and most of them were just (willingly or unwillingly) used by the US army to take over Indian lands and be a effectively representatives and enforcers of the US government sovereignty in the rural areas.

In many cases when natives Indians contacted the migrants from the East before they established their homestead, settlers were willing to compromise and even moved to other areas often indicated by Indians but as soon as they built their homes they mostly stood their ground and instigated simmering genocidal conflict with millions of dead victims mostly on the Indian side. This mistrust and willingness to use deadly violence at a whim of suspicion is characteristic of cowardly western American culture or simple cult of guns, of alienated egoistic desperate people who conscientiously or sub-conscientiously understood that their stance has no moral or religious foundation and hence were scrabbling to cover up this moral deficit or acute cognitive dissonance between their immediate interests or needs and the reality of the situation with blunt violence and atrocity lashing out against everyone perceived as a enemy regardless of reality of situation.

And hence US government established system of subsidies and free land giveaways, the land US did not legally owned, and called for establishing claim, a title for a piece of land that could be marked of fenced recruiting land surveyors like A. Lincoln as a front line soldiers in the operation land grab backed up by the US Calvary in way depicted in the movie “Soldier Blue” starring Candice Bergen.

While settlers were given a inheritable title to the land in order to claim it they had to either use the rest of the savings, if they have any, most were in debt before they started the journey or borrowed using land as collateral from those banks seen in every western movies, put there not to buy gold but to give new settlers US government guaranties (no risk to the bank) mortgage loans in order to establish a homestead as soon as possible before settlers realized what the socio-political situation they are in. Hence, they became unpaid US soldiers defending newly acquired (stolen) land like their own while being trapped in this extortion racket unable to do anything about. And agents of the US ruling elite further propagating a lies about all the phantom economic opportunities in the West, truly land of desolation and war under the control and dictate of the East cost oligarchs who left no room for markets or any kind of fair competition while proliferating stories about bootstrap pulling or rugs to riches as a American pass time.

Majority of farmers were mortgaged to the max trembling every time when heavy clouds came, knowing that there is only single rain of difference between a proud farmer and homeless hobo. And when they somehow paid mortgage off and survived intimidation of gangster landlords, property taxes and county fees took over the role of an ax over the head of household.

Yes. America is and always was run by a rentier class and hence it was always a land of renters, human masses that were pushed around to submit to the American oligarchs’ will or benefit reinforced by the violence of US government of the rich.

Only in such a historic context only may we understand what going on in last forty years as well in last almost ten years since underneath it all it has been the same thing for centuries namely manipulation of peoples’ notion of ownership furling into the interests of oligarchs via variety of direct or obfuscated subsidy government programs.

During and after WWII Americans were enlisted to be used again but this time not against Indians but to fight for interests of US oligarchy and against interests of German, Italian and Japanese oligarchy abroad and hence tens of millions of alienated Americans needed to be enticed, re-enfranchised and take a personal stake in that war.

One of many enticing or coercing propaganda tricks was a use of propaganda of ownership as a piece American dream, an old tired trick for consumption of millions of newly born suckers. And hence after WWII, miraculously, instead of food lines of wandering hobos, shantytowns or stenchy slums, plentiful jobs and sprawling airy suburbs, connected via military grade freeways, mirages. These were government inspired fakeries of reincarnated special uniqueness of a proud home owner living individually in an identical track house, driving identical Chevy truck in the highly collectivist world of industrial command and control where desolated heads of household felt entrapped by the debt, pinned down to the place by a propaganda determined “fashionable social environment”, and forced to built tools of global war and destruction, as a good soldier, a defender of “democracy” or “progress”, exactly like two centuries ago.

What ere are facing right now is a reversal of the process i.e. the ruling elite do not need us to defend them in any capacity since they are untied throughout the world with no other marginal annoyance to them but us, regular people, hence they are unwinding all they did for society at large while they were shitting in their pants from fear and cowardice.

The cascading failure from one concocted crisis to another with no bounce back or economic recovery is a manifestation of the genocidal politics of secular collapse of the US economy in every dimension while building up a totalitarian regime where lawlessness reign supreme in lives of ordinary peoples placing the ruling elite and their courtiers beyond reach of any public scrutiny or criticism. Those processes are in full swing now and will intensify even more, until the so far spared couriers of the system such as imperial administration and the security apparatus will be rendered obsolete and programmatically self-destruct.

The politics of ownership is a prime example of politics permeating and controlling the economic processes which are currently set for destruction of the demand, purchasing power and standard of living of vast majority of the US and western society followed within a decade by newly enriched Eastern societies. There will be no true housing recovery, never, but only more millions of new debt enslaved Americans renting houses they previously owned until all the remaining savings and/or incomes are exhausted or death comes since the era of political contingencies is gone and won’t be back, unless the current US regime and consequently global power elite is overthrown.

 

 

YOU ARE NOT CRAZY: SUPERINFLATION IS HERE;

The term “inflation/deflation” has been prostituted so much that Fed’s pimps made out like thieves, which term correctly describes job they are doing, stealing life savings and otherwise fucking up American people’s lives in more ways than described in Kama Sutra.

That aside let’s bring some sanity and reality into discussion of inflation/deflation and its devastating impact on the peoples economy, in a way devoid of propaganda lies spewed over the MSM solely to obfuscate true objectives of monetary as well as economic policies directed toward collapsing of the society into neo-feudal serfdom.

More details on a scam of defining and evaluating inflation in various forms including CPI and its manipulation and misinterpretation can be found at:

https://contrarianopinion.wordpress.com/2015/01/29/invisible-hand-and-other-paranoid-delusions/

In the “real” peoples’ economy an inflation (“real inflation”) is rampant and warrants double digit “real” interest rates at FED, just look at basic staples eggs, beef, chicken and other foods, rent/housing, education, even transportation and telecommunication cost are “effectively” raising, not to mention medical care/insurance, all those things people need to sustain and regenerate their vital force are raising in costs precipitously.

Even 1%-ters facing massive inflation are forced to buy risky bonds/stocks or derivatives at unbelievable high prices to get any yield at all. The global “real” inflation bubble is here while global demand is dying and commodity nominal prices are collapsing as we speak since with such a high “real” prices everybody expects loss or severe secular decline of income or profit in the future expressed by a dead body of CapEx and consumption and increase of savings, all in the lowest nominal interest rate environment in the history of civilization. These hard facts, which alone destroy all of  Fed’s useless economic models, have dire consequences for billions of peoples all over the globe.

All those devastating and violent socio-economic processes unleashed by the global oligarch class are suppressed in media by central banking morons more interested in nursing their cognitive dissonance and paranoid delusions than any kind of monetary leadership for a benefit of overall economy as their mandate demands as long as their crony banksters are happy.

In order to allow CBs’ ostrich-like stand at least in the MSM, typical inflation hiding maneuvers are being massively implemented by wholesalers and retailers to obfuscate serving size inflation, quality collapse inflation, component substitution inflation, choice narrowing inflation, package cost and quality inflation, shopping experience quality collapse inflation, and other manipulations to keep the so-called nominal “at the store” price marginal increase of few percent only per year, as bosses require but even that is impossible despite near full monopolization of the US sustenance market and complete vertical integration of the US food cartel.

That’s will make true nominal inflation total at least 25% a year on retail side alone, not to mention gigantic health care and insurance inflation, education inflation, rent inflation, etc.

This combined with collapse of wages/benefits/other incomes produces about 50-60% “real” inflation/year. That’s why all retailers cheat about their sales because in response to such big inflation people drastically cut spending as only thing they can do. They go to store 50% less times and buy 50% less in dollars then before per trip, the sign of collapsing standard of living. Service economy, except for packets of cronies of the ruling elites, is collapsing as well, now you can get a haircut for $4.99 or less at home.

All these are signs of hidden “real” super-inflation (not yet hyperinflation) in the collapsing economy seen through almost halting of the transaction volumes and collapse of money circulation in the society of 99%.

But as long as this Washington D.C. Regime persists the nominal hyper-inflation will not be allowed because of the issue of political malleability of Americans but instead the expropriation will continue to be executed in other ways mainly through measured nominal deflationary spiral.

In simple words peoples income and their basic assets will continue to be depreciated so the assets or services they need to survive, food shelter will continue becoming less and less affordable (beyond reach of the nominally little changed price) and hence demand will continue to collapse until acute social decohesion and massive social unrest occurs.

If one wonders about intricacies of natural social processes in play here, all of them are not due to any natural laws of economy but deliberate policies of government to enable oligarchs to accumulate and concentrate the capital, monopolize the markets and transform the economy into rent seeking feudal outfit to be bailed out by the people again and again to cover future gambling debts of greedy and opulent.

 

 

FALLACY OF VIRTUOUS GLOBAL TRADE.

In last five years at least, there was a carnage in the shipping industry due to collapse of global demand for commodities, all papered over with the copper/aluminum collateral speculation and fake export from China disclosed in  last year’s HK invoice scandal.

Similar process of deliberate destruction of shipping capacities in order to hold on to margins, happened within air-shipping/airline industry about 10-15 years ago, causing thousands of perfectly working airliners just 15-25 years old to be scrapped and abandoned somewhere the Western US desert graveyards.

Now the same thing is going on in the marine shipping industry all over the world, run by a cartel of US Chinese and European shippers desperately trying to maintain their shipping margins and losing the battle, incurring massive losses covered up by the ZIRP free money printing, stock sales/buybacks/dividends, junk bond issuance, bailouts/M&A and enormous borrowing.

After over five years now, of frantic scraping of hundreds of sea worthy ships in all sizes in the medieval like, deadly scrap industry in Bangladesh or India that employs children and following massive abandonment of ships even with valuable cargo by the owners in the mid-ocean, ships ran for months by unpaid crews often having to pay for the fuel and their own food from their own pockets to get to a shore while holding cargo at ransom, now thanks to ZIRP and continuous shipyards’ production all over the world but mostly in Asia for the political reasons of maintaining employment, we have newest commercial ocean fleet in the 5000 year history of maritime and smallest by number in at least 100 years. Newest super cargo ship madness only illustrates utter desperation of the shippers to squeeze any last drop of profitability they think may have left in their business but not to avail. The plans for demolition of perfectly OK suspension bridge in Long Beach, CA paid by US taxpayers just to accommodate super-cargo ships during their few port calls a year border on insanity.

Another desperate move of drowning in the ocean tens of thousands of shipping containers seemed finally stem collapse of BDI into unrecorded for this index’s history abyss late last year but not for long since global demand stubbornly keep collapsing, more or less in the stable pace due to crumpling of purchasing power and income of 99% of world population due to continuing economic depression aimed at further pauperization of ordinary people especially in the West.

Against all we know from daily corporate propaganda global trade and especially sea and air shipping has steadily declined over last thirty years if we take into the consideration that more than half of the world shipping today is unnecessary, wasteful or forced by the political and economic interests solely due to the globalization of the common production and luxury consumption and a takeover of sovereign nations by multinational corporations all over the globe, powered by pure greed of the political and economic elites.

The really beneficial, for the majority of people, world trade is at the levels well below that 1960-ties when population of the globe was about 3-4 billions about half of today’s and hence BDI hit bottom at the levels of late 1950 in nominal terms much lower in real terms while global GDP grew 3.5%, an unbelievable fact inexplicable by the official statistics.

If we want to grasp of what’s going on we must realize that global shipping is not treated by the corporate elites just as a business but as a propaganda tool for promoting extremist ideology of globalization through fragmentation of local economies and making them 100% dependent on the global economic outlook, leaving them exposed to the so-called global wind of manipulation and speculation with all devastating consequences.

Hence massive fiscal and monetary subsidies pouring into the shipping industry and in the process destroying any functioning market and replacing it with more or less a command and control system of global directives.

If we allow for any basic economic analysis of our proud global shipping system we would quickly prove a fallacy of the claims of efficiency, innovation or progress as a cause of rock bottom shipping cost, big corporate behemoths enjoy and instead it would raise serious questions about the very efficacy and viability of the global trade itself.

The fact is the shipping industry, a cartel, through methods of strict vertical integration as well as financial engineering i.e. derivative speculation, is never subject to any true market forces whatsoever and in times of crisis or just gluttonous rants protected by the taxpayers and government programs instead, all to maintain an illusion that globalization actually works.

For starters any exposure of global shipping industry to the real market forces would wipe out any labor cost advantage, for all potential investors in China and elsewhere, which now stands for 10-15% only. This alone would have made outsourcing of US or EU jobs loosing and costly proposition, but that was not allowed to happen since shipping is an Achilles heel of the whole insane global project of economic dictatorship.

The fact that every single part of the Aircraft or other more complicated apparatus nowadays travels at least tens of thousands of miles before final assembly is completed and shipping is nowhere truly accounted for in their cost estimations. The same happens with car or appliance parts that are hitting frequent flyer/shipper bonus well before they are finally assembled while local basis for production of whole final product have been destroyed in US, Europe and Japan and elsewhere.

For behemoths of global economy the cost of shipping is artificially set to zero and only appears within the retail shipping, hitting average consumer, in a way resembling a form of private sales tax related more to the price of the shipped item than the real shipping costs which are never evaluated nor reported.

I will not mention hundreds of millions of tons of foods traveling aimlessly around the world and then thrown away to the garbage unconsumed, foods with principally the same nutritional values and general (taste and smell) appeal as locally produced goods and that includes fish and other meats, which are shipped away. All that is forced upon most countries by the western financial system that makes exports or tourism (external economic relations) the only option for any government to support any, even minute social programs and national policies without getting into enormous sovereign debt since globally fragmented fleeting industrial production prevents any kind of leverage against the global capital or development of more closed, more stable, more controlled local economies.

The fact is that, as proven by the case of Roman Empire or Dutch or British Empire, globalization has its enormous economic, political and social costs and shipping costs paid one way or another by all of us is one of them. This huge cost naturally depresses all the local economies under the burden of wasteful behavior, misinvestment, unsound decisions or insane plans aimed solely to supporting the system that serves the rich and opulent alone with no measurable positive effects on population and hence on the real economy.

Any objective analysis would produce one consistent conclusion that secular collapse of the world economy is directly due to the massive globalization processes that are paralyzing local economies, accelerated by global financial fraud.

[UPDATE: Sadly, my “prophecies” of  imminent collapse of hopelessly loosing money global shipping industry, barely floating financially like aquatic zombies, seems to come true in recent bankruptcy of one of top three largest global South Korean shipping company HANJIN that finally faced reality of collapse of global trade and shipping rates exemplified by historically low Baltic Dry Index what is the subject of my post. Now, while global economy continue its secular collapse under burden of astronomical debt,  what’s left is demise of few remaining global container shipping behemoths like MAERSK that just recently cried for protection of EU and ECB, all on a wasteful way to collapsing the fallacy of economically efficient global trade.

http://www.zerohedge.com/news/2016-09-01/supply-chain-contagion-arrives-hanjin-bankruptcy-roils-global-trade-freezes-ships-ra

I say good riddance];

 

INCREDIBLE LYING CHAIR.

The FED spoke and what we heard was a scream of confusion obfuscated with a second grade FED-speak of self-deprecation. Like automaton the FED continues to talk the talk of fantastic recovery just ahead while refused to walk the walk. FED’s concern about World economy (EM) is a lamest excuse their brains could concoct to cover up (unsuccessfully) their utter ignorance about what to do, namely their own impending realization of ongoing global secular collapse. So what was it? Inability to unwind their balance sheet? no. Repo rates? Reserves? Because it could not be economy since outside FED’s dismayland, the world economy is in unprecedented turmoil for almost a decade now.

In fact, instead of the dissolving zombie banks and allowing for quick massive bankruptcies of the financial gamblers anonymous, FED put itself into conundrum. And now, whatever they do, it would severely impact some part of the global, still corrupted, financial system and as a triggered mitigation measure, the real economy somewhere in the world.

The FED exceedingly proves itself useless even for their own cronies, strangling financial system, starving credit markets of quality collateral while not too big  to fail (NTBTF) companies/investors are being pushed into monopolistic, rent seeking M&As or into the barely 5% yielding utter junk hanging on the cliff of ZIRP or even NIRP knowing well that there is no economic recovery in sight and there won’t be one due to global demand collapse instigated and exacerbated from 2008 by world CBs and governments’ policies of economical betrayal of their nations, a sacrifice on the altar of global oligarchy where maintaining illusion of their own wealth is always worth more than people’s suffering or social disintegration.

I love all those FED’s para-psychological economic models but they have one fundamental, always dismissed by delusional FOMC members, problem. They do not exist in the reality. And colossal 90%+ predictive failure of the FED’s economic models concocted by PhD econo-prostitutes, proves it.

It is not about fear, panic, exuberance, ecstasy or etc. All of that nonsense is to explain to the grunt why he was robbed blind at this cesspool of corruption as are the so-called markets run by the plunge protection teams (absent from market models, so is margin debt), protecting cronies against the orchestrated surge and plunge which MSM propaganda calls crashes but what they actually are, manifestations of capricious credit extension/contraction cycles preprogrammed by the world CBs on the orders of Wall Street plutocrats who own them.

The financial markets are absolutely detached, not only from mainstream economy but also detached from any shred of reality or sanity even in financial terms by abandoning even mathematical tautologies i.e. equations or principles of conservation replacing them with an outcrop of fuzzy logic and fuzzy math or just strait lies. The FED magic solution to the crash of the world financial system in 2007/2008 was limited to the famous accounting trick of abandoning mark to market securities’ evaluation principle and allowing for so-called mark to “model” fantasy making overnight broke zombie banksters rich again, making magically dead in the water, worthless financial instruments whole, worth 100% on a dollar or even more than they were ever worth in the “good times”.

The accounting art (not science) used by the markets in the valuation process only loosely resembles arithmetical manipulation but in fact it is a total fabrication, purely goal seeking endeavor, with false ordering, ratings and indexing which are useless as any kind of indicators of the state of a market or economy since they are not invariant between two different states of the market or economy. Such as in monetary terms, the capital inflows and outflows do not match (asymmetry) i.e. financial markets are variant and always involved third party risks or instruments, unknown or undefined at the time of transaction.

This mathematical fact is papered over with a fallacy of wealth creation/destruction from thin air just by a magic of the stock price increase/decrease which in most cases is due to some inside trading lies proliferated by Witches of Boomberg and other factories of pornographic news bringing thousands simultaneous orgasms to sadomasochistic audience seeking relief from their utter confusion and desperation, unable or unwilling to understand that they were being metaphorically (or actually) raped. Those facts while proven and acknowledged widely are being mostly ignored since there can be no rational argument strong enough to overcome the propaganda of greed because it feels good.

Even those imperfect measures of the market fundamentals that supposedly underlie the stock valuations, EPS, top line, bottom line, productivity etc., are hopelessly misinterpreted and became completely useless since they apply only to an economic scenarios of (magically) ever increasing demand supported by the growth of overall economy and continuous increase of the standard of living of population through “unmentioned” mechanisms of redistribution of the profits (understood on the Wall Street as somebody’s else profits), classical Supply Side Economics absurd (SSE) FED worships daily. Is this the real economy we are dealing with now? Of course not, and hence all of the FED incoherent utterances is just useless shit.

 

TO RAISE OR NOT TO RAISE? ONE WAY OR ANOTHER WE ARE SCREWED.

The question of FED’s short-term interest rates has nothing to do with the real economy but rather with a fetish of those accounting ledger addicts in the oligarchic class who forget that it is power that counts not money. However, I will address it since it has devastating impact on you and me.

The FED maneuvering is all about an attempt to conceal complete market failure, bond market, stock market, not to mention naturally illiquid derivative markets, frozen if market intermediaries (HFT, MM) pull out and they do more and more often. But most of all it is all about unqualified failure of those half-baked monetary theories concocted by the army of FED’s PhDs worshiping their spreadsheet produced utter nonsense.

The market failure, FED is concerned and always and only was concerned about, this time is due to enormous concentration of the market capital across different assets classes in only few hands despite the cacophony of differently named investment funds. Such a concentration of  capital and by this fact alone, dramatic distortion of all the markets (including Real Estate) through capital consolidation as well as via pseudo-regulations (result of fusion of the capital with regulatory powers) impacting market operations as well introduction of other trading technologies and other prerogatives unrelated to the underlying tradable assets but strongly determining the price discovery mechanism or lack there of. In other words there are few and few suckers that could be conned by a façade of the free market fundamentals’ driven operations and their transparency that never was. Markets have been reduced, in different measure in different markets, to a insider trading among cronies while FED having their backs as TBTBF entities operating virtually outside the law (Be F for “f..k with”).

The rest of us, small investors as well as retirement funds, educational endowments and environmental funds etc., are there to lose, to pay for shenanigans of opulent few gamblers as it was in 2008 and before.

In such a context, for us, ordinary people all of that FED fuss is irrelevant since they will do what the hell they want and it will be we, who are going to pay for it one way or another. If I was to bet, FED will rise the rates measly .25% to 0-0.50% in September just in an attempt to regain credibility they think they still have on Wall Street, since they are the Wall Street themselves now and openly for over 15 years, but lost long time ago among the population. But most of all to provide some bailout for Germany where exports are collapsing as we speak just after a month of strengthening of euro and continuous collapse of demand in the US, China and elsewhere only to accelerate.

Having said that FED will likely establish a new TBTBF bailout facility not to use it but to calm down their own girlieman cronies’ hysteria that could mess up the stock markets even more so they won’t look good. And that’s a crime in the FED playbook.

But why? Why would they raise the rates this time or even in the near future. For one, because against their own propaganda and crapshoot monetary theories, it has nothing to do with normalization of an abnormality, which is the global financial system of today, they simply need to raise the rates or convince remaining bond holders that they will be raising the rates steadily in the future to be able to coerce the bond holders to sell what they are reluctant to sell since they ironically, for whatever reason, consider those assets as the only stable, virtually risk free investment class, a must in their portfolio, they do not want to load up with more junk than they already did and hence draining (or freezing) the liquidity of those asset classes from the market. They may even use a gun or clobber to get their bonds as in their old loan sharking days they very well remember at the FED.

Yes, the QE causes illiquidity in the low risk bond market.

The ECB/BOJ set up near NegIRP solely to block capital inflows nominated in their respective currencies while collapsing their values and as a results leaving Central bankers as virtually the only buyers of those bonds with no or very few willing sellers since bondholders consider them more valued than the cash which is just the zero coupon FED/ECB/BOJ bond. However, as perverse it may sound but they have more trust and/or are somehow obligated to purchase sovereign bonds issued by the Japanese, German or US government than the ECB/BOJ or the FED cash fearing perhaps dissolution of those useless institutions of credit/debt price propaganda soon.

All this encourages or screams for accelerating deficit spending by the Governments since they are often a sole source of the bond purchase by the QE facility.

In the current condition QE cannot work and will not work that’s why FED stopped it last year but if the interest rate is increased it would force those remaining holdouts to sell to the FED and stay in cash or to buy more junk, not something they want to do due to low yield or high risk. The paranoia reigns supreme and a bill to pay for the real economy, jobs, income, pensions and all of us is skyrocketing.

The FED and global banking system is an economic doomsday machine and must be stopped.

 

IS THE END GAME FOR THE SSE RADICALISM NEAR? MAY BE.

The Supply Side Economics (SSE) did us all. Yes. Under this benign name the SSE represent an extreme radical and dangerous ideology based on the unfounded (or rather borrowed) believe that “If we build, they will come” supply side fantasy that implicitly assumes that the real demand (nominal demand minus weighted debt incurred while producing the demand) does not need not be of any concern to the economic, financial and political decision makers, spelling the decades of doom to the people who work for living and created a paradise for the parasitic rent seekers, financial oligarchs and their government cronies.

The SSE was presented in the early seventies as an alternative to the Keynesian Theory that supposedly was concerned about the Demand Side Economics (DSE) but in fact it was not. It cared mostly about the so-called aggregate demand stimulation initiated generally through the government investment policies leaving the task of “real demand” creation on the shoulders of the working people through the organized labor actions and leftist political movements lobbying the government and imparting on the government fiscal policies in a way beneficial to the labor and restricting the power of economic elites.

For the true demand side economic we would need a set of fiscal and economic and trade policies that would build up the institutional support for completely different, non financial, assets classes such as: the labor asset class (LAC) and the natural environment assets class (NRAC). The economic, fiscal and monetary policies of the government in the DSE are dedicated to maintain the fair value and stable growth of the above asset classes while leaving the other financial assets classes exposed to the global free markets. The true DSE guaranties demand and adjust the supply to fit the real demand hence no deflationary death spiral is ever possible, and if value-based monetary system is imposed, no inflationary pressures may ever develop.

Such a type of economics spurs the stable economic outlook, investment certainty, reduces or eliminates financial risks and seamlessly supports the social programs and policies of the government as well as discourages the excessive capital concentration, malinvestment and assets bubbles and reduces the political influence of the owners of the big capital.

The China economic case is very instructive since they’ve advanced in the process of transformation from an incarnation of DSE to the SSE with all the social, economic and political consequences.

The Chinese SSE extremists in concert with the western Oligarchs were building all their fantastic economy out of the SSE fallacy for decades, supported solely by the well preprogrammed “miracle” of the debt fueled western demand for the useless Chinese widgets while the real demand (except for 100 millions of the gluttonous courtiers to the China’s corporatist regime) stemming from the 1.2 billion of Chinese population remains low due to the historical “long economic outlook and savings culture” and such attitude was actually reinforced by the increased instability after 2008.

Now when the SSE inspired process of the overleveraging and pauperization of the western working and middle classes nears completion, China’s rulers find themselves confused by the past prophets, disciples of the SSE searching for some support for the real demand within the Chinese economy and not surprisingly, not finding it.

Now the Chinese political leadership has to face the same fate for their own population as they observed with satisfaction in the west for decades i.e. permanent collapse of the standard of living of the working people and later the middle class, a (nominal) deflationary economic death spiral driven by the collapse of the people’s income and hence collapse of the demand for commodities, services and basic economic activities.

And the Chinese seem to be going exactly on the same road to hell as the Japanese, Europeans and the US by pondering the destruction of the savings of Chinese population  via a ZIRP like economic holocaust, being unable to invest at home anymore, without blowing another bubble, seeing the way out through the exports of the capital instead, via the AIIB and dedolarization exactly as the US did after WWI and WWII. But as a nationalistic totalitarian regime, Chinese have an ace in their sleeves, namely “9/11” type event that would redirect the attention of the nation from their catastrophic economic plunder toward the outside enemy but this time not al-Qaeda but the Japanese militarism, ironically the US and Japanese plays into their hands.

There is no perfect economic system since no economic system can be perfectly implemented but most of all because it is just an extension of the system of political power itself i.e. the political economy controlled by and for benefit of the Ruling Elite.

 

 

REVERSE CHINA SYNDROME: A VIEW FROM ABOVE.

Forget the SHCOMP. The China is melting down or rather a skewed propaganda image of the Chinese economy and its core; the financial system is melting down in the MSM world of illusion. In the real world it is just steady continuation of the secular process of transformation but not the progress.

Global demand is dramatically collapsing for at least 3-4 years now devastating the Chinese and western producers in China, and now, the East Asia and China herself, the only “beacon” of the consumption growth left in the world fueled by artificial, massive stimulus and global currency war (WW$) is collapsing as we speak.

The ongoing for months now, the Chinese stock market crash is revealing how the seemingly freer market capitalism in China is a complete fake exactly like in the West. However, the collapse of this illusion will not be allowed to continue and is or going to be interrupted via massive monetary/fiscal interventions i.e. manipulation of some spreadsheets on PBOC ledger since in the end, in China, it is all about the real power, not the fake money as well as it was not about money in Japan or in the US.

In the minds of  world ruling elites everywhere, the Brave New World is no longer about making profit from exploitation of the human labor but by the financial accounting gimmicks and setting up, feudal like, private rentier economies based on the monopoly and  extortionist, mafia like, rules enforced by the power of state.

Such a drastic change in the attitudes has only one possible spectacular outcome namely the total collapse of the global demand due to the global income/benefit and available social services collapse for 99% of the world population and this includes China, Asian tigers and Africa over the next decade.

As they say: It is the demand stupid. It is the income stupid. It is the overleveraging stupid. It is the extermination stupid.

For the last, at least two decades China behaves as a corporate fascist state in every meaning of the word, freeing herself from any notions of leading political role of the working people or dreams of the Maoist communist society serving ordinary people’s needs. The political organizations and state institutions that would truly protect the health, wages or any interests of the working people are being continuously corrupted or destroyed. The over thirty thousands strikes and acute workers disputes with management of the Chinese as well as western companies in China every year are all testament of the suppression of the voice of the ordinary people and the utter disregard for their social and economic needs despite of some wage inflation.

The most of the Chinese people, except for the fast growing class of Chinese and multinational courtiers to the fascist/nationalist regime in Beijing , benefit nothing from the whole western instigated and financed economic boom era in China achieved mostly by robbing the western middle class and destroying livelihoods of the ordinary working people in the west.

Before the Chinese worker was making a dollar a month and paid one cent for a loaf of bread. Now, the Chinese worker is making 100 dollars a month and pay one dollar for the bread calling that progress or improvement.

Remaining true communists, who could constitute a political force of equitable wealth distribution among the society and hence preserving adequate demand for the economic output, are killed, imprisoned or gagged. What we have in China is a fascist state of fused the “private profit/public loss” corporations and the government via rampant cronyism with intimate often genetic ties to the western elites, who themselves are cultivating fascism, a global fascism.

China is a distinct part but nevertheless, a part of global political system run by world elites through central banking command and control system, united in the quest for debauchery, gluttony, and power in the psychotic drive to ultimate extermination of the ordinary people.

The multiple decisions of China leadership to follow the western financial and economic prescriptions, such as pumping and damping stocks to rob desperate, indebted people blind, only to maintain the illusion of the functioning world economy with ghost cities, millions un-bought cars hidden from the view, fake exports to HK, collapse of the energy demand and decrease of general consumption, ecological catastrophe and wide-spread poverty in China and elsewhere are clear evidences of the harmony at the top echelons of the global elite, despite often personality conflicts misconstrued as political antagonisms.

Now China’s central bank, PBOC, years after imposing the politically motivated and misguided stimulus spending, to enable 2012 transition of the power between two political mafias, finally embarked on a version of massive QE and lowering the interest rates and capital requirements on the way to ZIRP oblivion, to keep the badly collapsed or deteriorated “good things” going joining the US, Europe and Japan on the road to the collapse of their respective societies.

The frantic and futile efforts of Chinese authorities to decelerate massive collapse of the real estate, shadow banking bubble, corporate bond bubble and stock bubble (purposely blown beyond any proportions) by destroying the stability of the Chinese currency and whole command and control financial system, no mater what economic consequences for ordinary Chinese savers may ensue is in its form identical to brutal destruction of the western markets, pensions, saving and financial system via the historic and illegal FED intervention beyond any prerogatives of the 1913 act, during the 2008 financial crisis in the west that was spurred primarily by a derivative of insanity of the gambling world bankers.

China’s AIIB is a clear example of China’s ruling elite desperation and entering onto a path, following the US imperial path after WWI and WWII, toward the growth of Chinese sagging economy by exploiting the world (global investment strategy and dedollarization) , in the attempt to bring stability to their society that no longer can be or needs to be exploited in order to provide a satisfactory ROI without catastrophic political consequences.

In other words, these are evidences that China began to depart from their Confucian historical perspective toward short-term political game. The greed of the China’s ruling elite is sowing its own demise as much as American ruling elites sowing their own.

 

ARE YOU FED UP WITH THE FED? YOU ARE.

So FED’s puppet figures are nowhere to be found while Rome is burning. Holed up in Jackson Hole?

The FED & the World Gang does not understand that it is not assisting or regulating the world financial system it is THE FINANCIAL SYSTEM since it killed and buried all the markets, incapacitating them before 2008 and killing them afterwords. As it was taught to the PBOC , the FED continues its massive market operations at NYFED,  busy buying hundreds of billions $ of equities so ECB, JCB, SNB, ICB etc., and the others do daily loosing sight of anything but the dead markets.

They are insanely fixed on the so-called liquidity i.e. a green buck blood transfusion into the zombie financial corpse while what they do is destroying the liquidity for those who want to invest in the real economies long-term.

With all the moral hazard and implicit TBTF status provided to the FED shareholders (cronies), who in their right mind would put money anywhere else but into blowing the bubbles as a method of killing the non-TBTF competition and as a result enormously concentrating world capital in few hands of the banking system cronies. It has already happened.

But what now? $’s loosing to € or fluctuating while increasing substantially in the value against most of the other commodity producing currencies engaged in currency war among themselves.

Two choices: unleash more ECB/JCB QE (so far silence; correction Draghi spoke 08/25/2015) like an addict fix or to opt for a small interest rate hike by the FED or both even before the September meeting to preserve the German exports, the only bright spot in the European economy and as a consequence further sink EM economies into turmoil. Will see what Frau Yellen will do, faced with an open and bloody currency war as I coined it WW$. Worry about Jewish lobby??? Look at 800 pounds German financial and economic Gorilla in the room eating your lunch.

For Germans to export is to dominate the world so they would do anything to keep dominating in Europe, US and elsewhere. If this meltdown continues the fake Greek bailout deal would fall apart in no time  as the IMF posited to the deaf eared Eurogroup of soulless technocrats, simply due to the austerity that would be imposed onto Germans and the EU in the maddening  dash of the world’s oligarchs down the deflation death spiral and the economical collapse motivated mainly by the refusal to admit the fact of the collapse of global financial structures they built and the utter failure of their near ZIRP junk monetary theories about how the world economy works and incessantly hold on to the policies that did not work in  Japan for 25 years nor in the US for 15 or in Europe for 8.

May the world’s oligarchs live in the interesting times as all of us are living in for the last several decades.

 

COMMODITIES IN THE DEFLATIONARY COLLAPSE: NOT EXACTLY.

The commodity futures are often interpreted as predictors of the future prices but only in constant currency exchange units and assuming the future spot price at predicted supply demand balance that is routinely incorrectly determined since nobody can predict the future with arbitrary accuracy.

All of those assumptions fail however, in the volatile currency and commodity markets rendering the static backwardation/contango type of price of commodity futures’ interpretation, an absurd. In other words futures are even more useless as the future spot market indicators in the turbulent times. This is an obvious conclusion.

Having said that the future spot market is truly determined by the enormous imbalances that developed especially over last decades which if not suppressed or rather deferred by the massive financial intervention (what is done routinely) will violently cascade down to the supply and demand balance at the point determined not by trading floors or arbitrary production cost but by the real economy and the purchasing power of the ordinary people.

With all the falling prices of commodities they have long way to go down since the ordinary people experience not a real deflation but high real inflation of the prices of commodities and services since their incomes/benefits/services-obtained are collapsing faster than the commodity prices in recent months as well as over last several years trapped in the so-called nominal deflationary (or real inflationary) death spiral.

One must remember that the currency unit of the spot price determines the real rate of the price change (nominal inflation/deflation in local currencies), which is superimposed on the current price and FX turmoil.

And here we have dramatic divergence of the financial policies of the governments and the vital interest of the population leading government technocrats into the conundrum with only single possible monetary escape i.e. sharp FX devaluation (currency war) or dropping volatile FX exchange base commodity cost and replacing it with the fixed currency swap exchange rate i.e. de-dollarization of the trade (currency peace) and associated relative raise of the dollar value due to the shortage of FX dollar funding that we are witnessing now.

Otherwise, it would results in the currency deflationary spiral and further devaluation war negotiated through the FX reserve currency, which leads nowhere, but the total collapse of real economies, which is the primary, and the only real effect of the QE based ZIRP policies.

In summary there are two alternatives here. One, to take a blue pill, and ingesting more illusions that all’s well and keep pumping QE and blowing the bubbles all over the world or the pink pill, allowing for unfortunately unorganized deflationary collapse of the bubbles and settling supply/demand point much lower approximately matching the true purchasing power of the 99% of population of the world which means oil at $1/barrel and other food commodity accordingly, down orders of magnitude lower. For example: Gold at $5 and SAP at 50 401ks 5% to match ½ $ per hour mean wage rate of the population. All this would eventually and shortly lead to total mainstream economic collapse without massive debt relief and hence the collapse of the banks and their recapitalization and ZIRP and new crisis all over again. The only consolation for us would be that we might be dead before the full cycle is completed again and again.

There is the third choice however, if we take a red pill and institute the policies, laws and rules enabling massive redistribution of the centralized capital through aggressive growth of wages and social services including basic income, government funded technology and science and using fiscal/monetary policies to suppress rising prices of non-productive – rent seeking assets much below the wage inflation, financed by the seized assets via sequestration, lowering taxes of “good-long term” capital and let speculative capital to collapse together with its “bad” banking system that enabled it. All that with programmatic long-term de-globalization policy through  introduction of the trade and capital flow barriers and tariffs targeting re-establishment of the basic productive industries via the withdrawal from international trade organizations WTO, NAFTA, CAFTA, TTIP, TTP etc.,. in other words US should take the same medicine it prescribes for China.

This is the globalization that makes impossible true existence any sovereign government in any country in the world and precludes any economical or social policies leaving the citizen defenseless as a prey for aggressive global speculative capital without any social safety net exactly like it already happened during other ancient attempts for globalization over the millennium including British imperial economic commonwealth that at the end inevitably collapsed the British crown economy and as a result shrank it into economic and political dwarf of today.

This is the only way I see that would possibly mitigate, a programmatically, politically and ideologically induced collapse of demand and suppress incomes of working people. The blue pill alternatives lead inevitably one way or another to extermination of about  50% human race through resource wars by the end of this century. It already happened before in the history of human civilization.

Of course the red pill scenario will not likely happen because of one simple reason. All those alternatives blue, pink and red are not really economic, fiscal or monetary or financial. All those alternatives are purely political in the core and would be coming from the center of the political power (power elites) revealing, already existing, single unitary command and control of the world system of power and its financial reincarnation in form of central banking system.

 

US ECONOMY: ABANDON YE HOPE.

It is depressing but the vast majority of US population do not have any idea what they are dealing with. This is not recession, great or not so great; this is not even great depression because of one fundamental fact. All those concepts were defined as elements of economic cycles under assumption of perpetual secular growth of economy within specific legal/political regime at least at the levels adequate to the population growth.

In other words underneath it all, there was tacit assumption that the ruling elites (oligarchs and government) would create policies and conditions, political/legal framework and/or directly support economy enabling necessary level of growth.

This assumption is no longer true. During last few decades policies of ruling class could be characterized as more or less controlled collapse of the US economy by whatever means available; destructive for ordinary people trade agreements, massive, unheard of on the scale of civilization, programmatic divestment and/or speculative suppression of assets held by majority of US households, savings, retirement and productive assets of small to medium business. The  massive outsourcing of good jobs, provided final nail to the coffin.

All these policies; economic, fiscal, tax, financial/monetary, social and military policies were harmonized in order to render horrendous economic and social blow, to every hard-working American, policies reinforced by army of propaganda and security courtiers of plutocratic ruling regime.

The suppression of life, culture as well as social and economic activity of US citizens has become unprecedented and historic low in the labor participation is a small symptom of programmaticaly collapsed society. For decades now, US security forces, formerly known as law enforcement, have been unleashed onto American society and economy, with unprecedented viciousness and vengeance against anyone dare to speak economic or civil rights or the constitution.

The propaganda of forced suppression of everyday reality of social and economic decay of millions of Americans as well as massive surveillance and brutal physical suppression or extermination are tools used now by ruling elites in orderly process of the economic destruction, deconstruction and pauperization of the US population as well as the eradication of any remaining political influence or people’s organizing capabilities.

Yes, It sounds shocking but ruling elite wants most of us dead, the truth that no longer can be denied in the face of overwhelming facts.

The economic crises and wars concocted, propagandized and executed solely to justify political moves and detailed policy implementations against vital interest of American people are milestones of preprogrammed secular collapse. This current plutocrat instigated, economic/financial collapse and the one that will follow soon is just another permanent, deliberate step into social and economic abyss for most working Americans and no hallucinations of the prostituting pseudo economists can change that.

The America economy is not coming back until this over two-century-old Washington D.C. appalling regime falls. The continuous collapse of income, standard of living, net worth and purchasing power of most Americans due to loss of job, depreciation of savings, collapse of the value of long-term investments or debt servitude is here to stay only to be deepened by environmental collapse.

Soon there will be no purchasing of no new cars since we’ll have nowhere to go. There will be no purchasing of no new houses since we won’t sale the one we live in with relatives who have nowhere to go. There will be no purchasing of no new appliances since we won’t afford to use the ones we have. There will be no purchasing of no new hi-tech gadgets since we’ll have nobody to call or share. There will be no purchasing of no new TVs since nobody will want to be fed more illusions or listen to lies anymore. There will be no going to restaurants since we’ll have nothing to celebrate. There will be no going to schools since it will be nothing left to learn. There will be no going to churches since nothing will be left to believe.

That’s the agenda concocted for us and our families by US regime, the only difference among us is when it comes knocking to our doors.

Those left out there who still believe in mighty dollar now should not have any doubt. It is the US ruling elite that fully controls dollar and world elites that fully control other fiat currencies. I mean they fully control currency and ALL financial products that are being propagandized as carriers of wealth or value, which they are not.

Very few realize or are ready to admit that every stock, bond or derivative including gold options priced in any fiat money units is the fiat itself as well. It means it has a value because government-fused banking elites say so. The world monopolistic central banking system which is nothing but a single Unified Global Bank directly controls valuation of EVERYTHING all over the world, from land, commodity and labor to capital and investment instruments.

No one can run or hide, no cash under mattress, no gold, no property let us get away from this totalitarian system of money. The only way to free ourselves from slavery is to flatly reject “their” money. Reject mentally and physically money as something necessary or even useful in our lives.

We need to reject money since it is foundation of propaganda that justifies existence and indispensability of bankers and the ruling elites themselves. The function of complete control of money constitutes core of their power and they will never relinquish it.

We need to truly understand what money really is, how it came about, what purpose it serves and how it came to be “seemingly” indispensable in our lives.

Interesting and unique take on myth of money addressing above questions can be found at:

https://contrarianopinion.wordpress.com/2015/04/14/plutus-and-the-myth-of-money/

Interesting take on true intentions of ruling elites can be found at: https://contrarianopinion.wordpress.com/2015/01/28/slaves-of-wage/

We cannot buy our freedom with “their” money for simple reason. Money is worthless. Only our hard work has any value at all.

 

WORLD WAR DOLLAR (WW$)

So it finally happened. China finally broke the peg to Dollar after Swiss broke the peg to Euro declaring monetary policies dead. Followed by de-peging of the currencies of smaller EMs.They will keep devaluating slowly at least until S. Korea, Australia drop interest rates and Japan increase QE even more. Vietnam already responded by widening trading range and devaluating the Dong. What Chinese want is to export their bubbles to its neighbors. EU thinks it is still safe for Euro but when (not if) Yuan drops 30% vs. dollar they will panic. Already stocks of German manufacturers of cars and industrial equipment shattered. Globalism requires: TO LIVE IS TO EXPORT;

The ECB and Japanese CB are printing like crazy in order to stop inflows of the capital to Europe and Japan forcing dollar trend up vs. EMs since capital has nowhere to go for yield. Look soon, for the FED unleashing trillions of dollars worth of swap lines to its friends to help them pay the dollar liabilities as it was happening in 2008.

The PBOC saw the futility of their attempts of the monetary “deflation” of the real estate bubble by blowing the stock market bubble which they failed to deflate in an organized way even by buying half of the stock market in Shanghai. They are in panic and loss so they resorted to three things they did in 1994; devaluate, devaluate and devaluate silently. But they are already late to the party after a year of massive devaluation of other EM countries’ currencies including BRICS without C.

Hence, we have export craze everywhere and devaluation everywhere or the Greek alternative of slavery, the only thing that allows for governments and economies to fund themselves by printing trash.

Below there is a piece I wrote several months ago warning about massive demand collapse and over-leveraging of the small to moderate businesses and households not to mention big corporations and scarcity of dollars for trade due to opening of the multiple swap lines and repatriation of yield hungry world’s capital to the US and into the dollar after FED noise and utterances about raising rates.

What the so-called economists are trying hard to overlook is severe “real” inflation of the commodities required for the basic human subsistence such as food, transportation, education, healthcare, home rent or lease, etc., not as much due to the nominal prices increase but due to massive aggregated income collapse of the working people all over the world.

The so-called economists also trying hard to overlook severe deflation and depreciation of the assets own by the majority of ordinary people, such as labor power, skills and education, conservative retirement assets, savings, value of  work benefits, value of social programs, consumer services, land lease value, furniture, electronics, used cars mobile, phones and gadgets, computers and software, used clothes, memorabilia, low brow art and antics, etc. not as much due to the loss of the value of these assets but because of massive aggregated “real” income collapse due to “real” inflation and over-leverage affecting  disproportionately people working for living all over the world. In other words money circulation in the second tier economy of 99% almost came to a standstill. Almost all the income was distributed up to 1% or rather 0.1% of the population.

This is double whammy of the “real” income and asset deflation and the subsistence commodities and rents inflation and hence ordinary people “net worth” spiraled down, accelerating toward collapse. The process of pauperization of western societies not only affected the middle class but also the working class people  when it was initiated in the US over three decades ago.

Very few emphasize strongly enough that the core of the issue is utter collapse of the demand (due to collapse of income and value of the assets) for anything throughout the world due to massive overleveraging of the business of all sizes and households often in the US Dollars/Euro/Yen not in the domestic currencies leaving local CBs helpless.

People simply paying off their loans and obligations and have nothing left for the consumption or investment. This catastrophic collapse of the world demand (pointed out by Russia and China) for most goods including food and oil causes,  continuing for almost a decade now, dramatic flight of the capital resulting in recalling of massive amounts of the speculative capital back to the US., Japan and Europe that refused to accept returning yen and euro assets desperately seeking shelter in panic. They are trying to accomplish it via QEs and NegIRP. They are trying to erect a barrier to the capital inflows in order to avoid surging of their currencies and consequently killing their export economies, meaning the reminder of their industries capable of export since the domestic income and demand is dead.

This leaves, the commodity driven emerging markets in conundrum. Their currency is weak vs. dollar but they do not trade that much with the US to take any significant advantage (US is a significant exporter of the commodities itself), but if the currency of a country to which they sell is weaker than their own currency vs. dollar, their sales collapse. And that’s really the case throughout the world. So they fight a proxy currency war indirectly among themselves, through the FX Dollar fix, by collapsing their own CB interest rates while facing the collapse of their own currencies vs. dollar due to the capital flight. All that against common wisdom, which would suggest rate hikes instead.

That’s why while 75% of the world currencies lost to the dollar, 75% of all world CBs lowered the interest rate within  last 12 months and they keep lowering it to “out-export” each other giving up on the domestic demand and growth or even preventing any significant growth in first place to avoid their currency surge. Even China accepts much lower growth, to talk yuan down and recently even aggressively devaluates it, and Russia lowered the interest rates more than twice while she was under FX attack and massive capital outflows, and was happy with the Ruble about half of its value 12 months ago. And with Ruble gains this year so far, there is talk of further easing to keep it correlated with price of oil at 60 Rb level.

More recently Central Bank of Vietnam, India and RBA were other Asian CBs lowered their interest rates effectively devalued their currencies, the only remedy possible for tens of  central banks in the world, which already dropped their interest rates within last 12 months in order to prevent further collapse of their export driven economies. More to follow.

To defend themselves, many countries, also in the west, abandon FX market monopoly and set up huge currency swap lines, or join newly created independent of the Washington and the Dollar, international financial institutions such as AIIB  to limit this spiral of death. Ironically swap lines actually boosts the dollar since in addition to non-US$ denominated capital flight into the US$ assets, there is a shortage of the FX Dollar funding since nobody needs to sell dollars to buy other currencies if they have their swap lines, with the “fixed” exchange rate, open. In strange ways the globalization makes de-dollarization inevitable one way or another. The dollar strength is in part a result of the dollar shortage at the FX but not because everybody wants dollars but because nobody needs them any more as an intermediary in the FX exchange because it is overpriced to its value. It is a classical FX market failure, similar to that of the 2008 when FED opened massive swap lines with the worlds CBs to squash dramatic raise of the dollar.

But why? What’s going on?

The general answer is that national economies and sovereign states (with few exceptions) are illusions. Their domestic markets are illusions, their economic and social policies are illusions maintained for domestic political audience. Global integration has been accomplished. Only global economy exists now. And unified global capital rules the world.

The production is distributed so much all over the world that no country controls production of nothing but some small subsystem, one of thousands of parts from all over the world assembled in the final product with no true ownership and no clearly defined country of production. Just few multinationals are richer than the GDP of at least bottom 120 countries in the world and have no national allegiance of any kind.

This serves the purpose of practically eliminating any political leverage that a country may have over the world production. But now with the ZIRP nobody has any leverage over the global elites who simply print their profits. In other words the countries (with few partial exceptions) cannot reestablish any meaningful control over their economies and social policies by imposing tariffs, trade barriers, capital/labor controls, specific social, economic, military, foreign policies or whatever in any way that would not result in the collapse of their “hollow” economies and painful political turmoil at least during transition.

Even countries at war cannot stop cooperating economically, close borders or limit civilian trade, thing unheard off 50 years ago. The unimpeded and even increasing the cross border trade and people movement between Russia and Ukraine continues while Poroshenko’s candy factories in Russia are making profit at time when the respective countries are on the war footing. The US increased exports to Russia in last 12 months while spewing apocalyptic rhetoric of the WWIII. Germany owned factories in Russia dramatically increased investment and their profits in Russia to avoid losses of the manipulated currency play. And it paid off handsomely so far. These are examples of the global integration paralyzing the social or international policies.

This has most corrupting influence on the national politics. That’s why all politicians that promised economic growth, betrayed the people as soon as they got in power since they knew that the only way to the growth in the global economy is to export if not they have to cut the expenses, collapsing governmental and private social programs and dismantling democratic institutions that still left, just to pretend to pay un-payable debt.

The fallacy of such a debt based global economic system is only too apparent.

There is no way out of the world pauperization and demand death spiral except to break through the globalism in very painful ways. Unfortunately, people rather believe in the illusion than face the pain of reality and turn around to stop this genocidal system of the alien class of global oligarchy directed towards the human extermination, all other priorities rescinded.

For brief discussion of the inflation/deflation as well as the so-called  “free” markets, benchmarks and indices I suggest fresh look at financial propaganda of deceit at:

https://contrarianopinion.wordpress.com/2015/01/29/invisible-hand-and-other-paranoid-delusions/

For those believing that economy is rational science and economic conditions are a result of the laws or rules of economy I suggest interesting read on the wage economy at:

https://contrarianopinion.wordpress.com/2015/01/28/slaves-of-wage/

 

2 thoughts on “ECONOMY UPDATE

  1. Just wanna comment on few general things, The website style and design is perfect, the written content is real good. “By following the concept of ‘one country, two systems,’ you don’t swallow me up nor I you.” by Deng Xiaoping.

    Like

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