Posts Tagged ‘economic crisis’

Preserve and Protect: Mapping The Tipping Points

Preserve and Protect: Mapping The Tipping Points

Courtesy of Gordon T Long of Tipping Points

The economic news has turned decidedly negative globally and a sense of ‘quiet before the storm’ permeates the financial headlines. Arcane subjects such as a Hindenburg Omen now make mainline news. The retail investor continues to flee the equity markets and in concert with the institutional players relentlessly pile into the perceived safety of yield instruments, though they are outrageously expensive by any proven measure. Like trying to buy a pump during a storm flood, people are apparently willing to pay any price.  As a sailor, it feels like the ominous period where the crew is fastening down the hatches and preparing for the squall that is clearly on the horizon. Few crew mates are talgking as everyone is checking preparations for any eventuality. Are you prepared?

What if this is not a squall but a tropical storm, or even a hurricane? Unlike sailors, the financial markets do not have the forecasting technology for protection against such a possibility. Good sailors before today’s technology advancements avoided this possibility through the use of almanacs, shrewd observation of the climate and common sense. It appears to this old salt that all three are missing in today’s financial community.

Looking through the misty haze though, I can see the following clearly looming on the horizon.

Since President Nixon took the US off the Gold standard in 1971, the increase in global fiat currency has been nothing short of breath taking. It has grown unchecked and inevitably has become unhinged from world industrial production and the historical creators of real tangible wealth.

Do you believe trees grow to the sky?
Or, is it you believe you are smart enough to get out before this graph crashes?

Apparent synthetic wealth has artificially and temporarily been created through the production of paper. Whether Federal Reserve IOU notes (the dollar) or guaranteed certificates of confiscation (treasury notes & bonds), it needs to never be forgotten that these are paper. It is not wealth. It is someone else’s obligation to deliver that wealth to the holder of the paper based on what that paper is felt to be worth when the obligation is required to be surrendered. It must never be forgotten that fiat paper is only a counter party obligation to deliver. Will they?…
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Naked Capitalism and My Scary Minsky Model

Naked Capitalism and My Scary Minsky Model

Courtesy of Steve Keen at Debtwatch

I met with Yves Smith of Naked Capitalism on the weekend, at a superb Japanese restaurant that only New York locals could find (and I’ll keep its location quiet for their benefit–too much publicity could spoil a spectacular thing). Yves was kind enough to post details of my latest academic paper at her site in a post she entitled “Steve Keen’s scary Minsky model“.

Yves found the model scary, not because it revealed anything about the economy that she didn’t already know, but because it so easily reproduced the Ponzi features of the economy she knows so well.

I have yet to attempt to fit the model to data–and given its nonlinearity, that won’t be easy–but its qualitative behavior is very close to what we’ve experienced. As in the real world, a series of booms and busts give the superficial appearance of an economy entering a “Great Moderation”–just before it collapses.

The motive force driving the crash is the ratio of debt to GDP–a key feature of the real world that the mainstream economists who dominate the world’s academic university departments, Central Banks and Treasuries ignore. In the model, as in the real world, this ratio rises in a boom as businesses take on debt to finance investment and speculation, and then falls in a slump when things don’t work out in line with the euphoric expectations that developed during the boom. Cash flows during the slump don’t allow borrowers to reduce the debt to GDP ratio to the pre-boom level, but the period of relative stability after the crisis leads to expectations–and debt–taking off once more.

Ultimately, such an extreme level of debt is accumulated that debt servicing exceeds available cash flows, and a permanent slump ensues–a Depression.

There are 4 behavioural functions in the model that mimic the behaviour of the major private actors in the economy–workers, capitalists and bankers. Workers wage rises are related to the level of employment and the rate of inflation; capitalists investment and debt repayment plans are related to the rate of profit; and the willingness of banks to lend is also a function of the rate of profit.…
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Will Thousands Of Police Layoffs Unleash Chaos And Anarchy Across America?

Law enforcement is, or at least was, considered one of the (few, for libertarian-types) legitimate functions of government. Just saying. – Ilene

Will Thousands Of Police Layoffs Unleash Chaos And Anarchy Across America?

Courtesy of Michael Synder at The Economic Collapse 

 

Thousands of police officers have been laid off all across America since the current economic crisis began.  Thousands more are getting ready to be laid off.  So could we be on the verge of a new era of chaos and anarchy in America as crime runs wild and there are just far too few police to respond to it all?  That is the message that one blood-smeared billboard in Stockton, California is trying to get across.  Paid for by the Stockton, California police union, the message of the billboard is chillingly clear: "Welcome to the 2nd most dangerous city in California. Stop laying off cops."  As state, city and local governments across the United States continue to be devastated by the ongoing economic crisis, budget cuts are becoming much deeper and police forces have suddenly become a very popular target.

Officer Steve Leonesio, the president of the Stockton Police Officers Association, has announced that the police union plans to spend approximately $20,000 on at least 20 more billboards.

Why is the union putting up all of these billboards?

Well, it turns out that Stockton has been considering a plan to lay off 53 police officers in an effort to eliminate a $23 million budget deficit.

But law enforcement in Stockton has already been cut to the bone.  Recently, the Stockton Police Department dropped this bombshell….

"We absolutely do not have any narcotics officers, narcotics sergeants working any kind of investigative narcotics type cases at this point in time."

Do you think drug dealers will be flocking to Stockton after they hear that?

But the truth is that so many of these local governments around the nation are just flat broke at this point. 

Even major cities are having to admit that they have accumulated such large debts that they cannot even afford to provide the most basic services any longer.

In Oakland, California the battle over police layoffs has made national headlines over the past couple of weeks.  Oakland has laid off 80 police officers, and now the police chief says that there are some crimes that his department simply will not be able to…
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Irony: Our Huge Military Is What Made Us an Empire… But Our Huge Military is What Is Bankrupting Us, Thus DESTROYING Our Status as an Empire

Irony: Our Huge Military Is What Made Us an Empire … But Our Huge Military is What Is Bankrupting Us, Thus DESTROYING Our Status as an Empire

Courtesy of Washington’s Blog

As I’ve previously pointed out, America’s military-industrial complex is ruining our economy.

And U.S. military and intelligence leaders say that the economic crisis is the biggest national security threat to the United States. See this, this and this.

As RT points out, it is ironic that America’s huge military spending is what made us an empire … but our huge military is what is bankrupting us … thus destroying our status as an empire:

No wonder people from opposite ends of the political spectrum like Barney Frank and Ron Paul are calling for a reduction in military spending.


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CONGRESSMAN BRADY ASKS GEITHNER TO STEP DOWN

CONGRESSMAN BRADY ASKS GEITHNER TO STEP DOWN

Courtesy of The Pragmatic Capitalist

This relatively boring hearing suddenly turned exciting when Congressman Kevin Brady asked Tim Geithner to step down.   The economic team that President Obama put in place (primarily Geithner and Summers) has been largely responsible for the current predicament.  This is not to imply that the Republicans and President Bush did not play an equal (or greater) role in the economic crisis, but it’s truly astonishing that the people who helped cause this crisis are the same ones who are attempting to steer us out of it:

 


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SP Futures Hourly Chart

SP Futures Hourly Chart at 2:30 PM EDT

Courtesy of Jesse’s Café Américain

A potential Head and Shoulders top has formed. It will be a valid formation but the objective will not be activated until and unless the neckline is broken.

Volumes remain light, with lots of technical gamesmanship that contributes to quite a bit of volatility in the short term, aka a ‘daytrader’s market.’

There is quite a bit of ‘tension’ in the market ahead of the GDP report tomorrow. The consensus is for growth of 1.5%. We are still a couple of weeks short of the timeframe we have projected for a top and the beginning of a leg down in markets, but some data or exogenous surprise could accelerate this.

There is a de facto partnership between the government and the banks with regard to the financial system and the economy which is spilling over to the equity markets. This is a similar arrangement that brought us the housing bubble and the credit crisis after the tech bubble and crash of 2001, which itself was a reaction to the Asian and Russian currency crisis of the late 1990′s.

The financial engineers will likely not abandon their efforts until they either succeed, or finally shake the real economy apart and destroy the US financial system and currency. How they define ‘success’ is likely to be stability at the price of freedom, a classic oligarchy with ‘enlightened despots.’ Their financial engineering will require ever greater control over policy and priorities to maintain its artificial equilibrium.

The banks must be restrained, the financial system reformed, and the economy brought back into balance before there can be a sustained recovery.


 

 

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Phil's Favorites

Machine learning and big data know it wasn't you who just swiped your credit card

 

Machine learning and big data know it wasn't you who just swiped your credit card

Courtesy of Jungwoo Ryoo, Pennsylvania State University

You’re sitting at home minding your own business when you get a call from your credit card’s fraud detection unit asking if you’ve just made a purchase at a department store in your city. It wasn’t you who bought expensive electronics using your credit card – in fact, it’s been in your pocket all afternoon. So how did the bank know to flag this single purchase as most likely fraudulent?

Credit card companies have a vested interest in identifying financial transactions that are illegitimate and criminal in nature. The stakes are high. According to the ...



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Zero Hedge

Will Bitcoin Mining Consume All The World's Current Electricity Production By Feb 2020?

Courtesy of ZeroHedge. View original post here.

Via PowerCompare.co.uk,

Bitcoin’s ongoing meteoric price rise has received the bulk of recent press attention with a lot of discussion around whether or not it’s a bubble waiting to burst.

However, most the coverage has missed out one of the more interesting and unintended consequences of this price increase. That is the surge in global electricity consumption used to “mine” more Bitcoins.

How ...

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Digital Currencies

Bitcoin & Fiat Paper Dollars

Courtesy of Zero Hedge

By Chris Whalen

This past week on Bloomberg Television, I referred to bitcoin as "a fraud decorated with technology." The fraud comes about because the exchange of a fiat legal dollar for a token, to use the kind description adopted by the Securities and Exchange Commission, seems unfair and frankly incomplete. But since the dollar itself is a product of government fiat, the subject seems open to debate.

The fact that a growing crowd of people have decided to speculate in this modern day version of tulip bulbs does not alter the unfairness of the exchange.  Our friend Jim Rickards recently squared off against four bitcoi...



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Chart School

Happy Thanksgiving :) Friday Should Be A Winner

Courtesy of Declan

Thanksgiving Wednesday was never going to generate an exciting day but it was good to see early week gains retained. Upcoming Thanksgiving Friday is typically a day when Junior traders go wild and decent gains are posted - even if trading volume is light. With last week's lead action I wouldn't be surprised if this pattern was to repeat.

Tech Indices have been leading the charge in recent days and I would look to the Nasdaq and Nasdaq 100 to be the primary chargers on Friday. Technicals are firmly in the green.

The Nasda...



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Insider Scoop

8 Stocks To Watch For November 22, 2017

Courtesy of Benzinga.

Related CRM 9 Stock's Moving In Tuesday's After Hours Session Salesforce Falls Despite Q3 Beat The Vetr co...

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Biotech

The two obstacles that are holding back Alzheimer's research

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

The two obstacles that are holding back Alzheimer's research

Courtesy of Todd GoldeUniversity of Florida

Family members often become primary caregivers for loved ones with Alzheimer’s disease. tonkid/Shutterstock.com

Thirty years ago, scientists began to unlock the mysteries regarding the cause of Alzheimer’...



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ValueWalk

Robert Mugabe Under House Arrest, Military Takes Control Of Zimbabwe

By Andjela Radmilac. Originally published at ValueWalk.

Zimbabwe’s head of state, 93-year-old Robert Mugabe, has been placed under house arrest after what seems to be a military coup took place in the nation’s capital.

By U.S. Navy photo by Mass Communication Specialist 2nd Class Jesse B. Awalt/Released [Public domain], via Wikimedia CommonsRobert Mugabe is safe

Following numerous reports on social media late Thursday night about the increased military presence in Harare, the capital of Zimbabwe, the country’s military took...



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Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



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Mapping The Market

Puts things in perspective

Courtesy of Jean-Luc

Puts things in perspective:

The circles don't look to be to scale much!

...

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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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