Category Archives: Economy

Once “Prosperity” Falters, The Legitimacy Of The Status Quo Evaporates

All we’re doing is waiting for the fake “prosperity” to crumble, and the resulting loss of credibility and legitimacy will follow like night follows day.

The citizenry of corrupt regimes ruled by self-serving elites tolerate this oppressive misrule for one reason and only one reason: increasing prosperity,which we can define as continual improvement in material well-being and financial security.

The legitimacy of every corrupt regime ruled by self-serving elites hangs on this single thread: once prosperity fades, the legitimacy of the regime evaporates, as the citizenry have no reason to tolerate their rapacious, predatory overlords.

A broken, unfair system will be tolerated as long as every participant feels they’re getting a few shreds of improvement. This is why there is such an enormous push of propaganda touting “growth”; if the citizenry can be conned into believing that their deteriorating well-being and security are actually “prosperity,” then they will continue to grant the status quo some measure of credibility and legitimacy.

When the gap between the propaganda and reality widens to the breaking point, the regime loses its credibility and legitimacy. This manifests in a number of ways:

1. Nobody believes anything the state or its agencies reports as “fact”: since it misreported economic well-being and security to benefit the few at the expense of the many, why believe anything official?

2. Increased lawlessness: since the Ruling Elites get away with virtually everything, why we should we obey the laws?

3. Opting out: rather than become a target for the state’s oppressive organs of security, the safer path is to opt out: quit supporting a parasitic and predatory Status Quo of corporations and the state with your labor, slip into the shadows of the economy, avoid debt like the plague, get by on a fraction of your former income.

4. Breakdown of Status Quo political parties: since all parties are bands of self-serving thieves, what’s the point of even nominal membership?

5. Increasing reliance on anti-depression and anti-anxiety medications, more self-medication/drug use, and other manifestations of social stress and breakdown.

6. Those who can move away from crumbling high-tax cities, essentially giving up civic hope for fair, affordable solutions to rising inequality and social disorder.

7. Increasing defaults and bankruptcies as households and enterprises no longer see any other way out.

8. Increasing mockery of financial/corporate media parroting the propaganda that “prosperity” is real and rising– S&P 500 hits 3,000, we’re all getting better in every way, every day, etc.

Truth is the most essential form of capital, and once it has been squandered to serve insiders, vested interests and Ruling Elites, the nation is morally, spiritually, politically and financially bankrupt. All we’re doing is waiting for the fake “prosperity” to crumble, and the resulting loss of credibility and legitimacy will follow like night follows day.

Source: by Charles Hugh Smith | ZeroHedge

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For The First Time In 6 Years, No Central Bank Is Hiking

The global central bank experiment with re-normalization is officially over.

After roughly half the world’s central banks hiked rates at least once in 2018, the major central banks have returned to easing mode, and as the chart below shows, for the first time since 2013, not a single central bank is hiking rates.

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US Manufacturing PMI Slumps To 10-Year Low, Business Outlook Worst On Record

Despite a collapse in European Manufacturing PMIs (led by Germany), and 3rd month of contraction in Japan PMIs; US PMIs were expected to modestly rebound in preliminary July data, but instead the picture was mixed:

  • US Manufacturing PMI missed – printing 50.0 versus 51.0 exp and down from 50.6 in June
  • US Services PMI beat – printing 52.2 versus 51.8 exp and up from 51.5 in June.

This manufacturing print is the lowest in 118 months.

At 51.6 in July, the seasonally adjusted IHS Markit Flash U.S. Composite PMI Output Index edged up from 51.5 in June and remained higher than the three-year low recorded during May.

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

The overall picture of modest growth conceals a two-speed economy, with steady service sector growth masking a deepening downturn in the manufacturing sector. The survey’s gauge of factory production has slumped to its lowest since August 2009, and indicates that manufacturing output is falling at a quarterly rate of over 1%, led by an increasing rate of loss of export sales.

The survey’s employment gauge has meanwhile fallen to a level consistent with 130,000 jobs being added in July, down from an average of 200,000, in the first quarter and 150,000 in the second quarter, as firm became increasingly cautious in relation to hiring. Manufacturers are shedding workers at the fastest rate since 2009 and service sector job creation is now down to its lowest since April 2017.

Future prospects have also darkened to the gloomiest since comparable data were first available in 2012, suggesting that companies may look to tighten their belts further in coming months, dampening spending, investment and jobs growth. Geopolitical worries, trade wars and increasingly widespread expectations of slower economic growth at home and internationally have all pulled business optimism lower.”

Williamson concludes:

“The survey data indicated that the economy started the third quarter on a disappointingly soft footing. The PMIs for manufacturing and services collectively point to annualized GDP growth of just 1.6%, up only very marginally from a lacklustre 1.5% indicated by the survey in the second quarter.”

Finally, we note former fund manager and FX trader Richard Breslow’s comments on the dismal data:

“It doesn’t seem like a tremendous leap of faith to worry that they are proving the point of the declining efficacy of existing policies in order to justify experimenting with some of the more outlandish proposals, like MMT, that are getting way too much airtime.”

Does make on wonder.

Source: ZeroHedge

Chief Investment Officer of Largest US Public Pension Fund Has Deep Ties to Chinese Regime

(Nathan Su) Newly discovered deep ties between the chief investment officer (CIO) of the California Public Employees Retirement System (CalPERS) and the Chinese government, along with CalPERS’s China investment holdings, have provoked controversy about the operations of the largest public retirement fund in the United States.

CalPERS manages more than $350 billion for public employees either retired from or currently working for most of the state and local public agencies in California.

The fund holds tens of millions of shares in equities of Chinese companies. Among other things, these companies develop advanced weapons for China’s People’s Liberation Army (PLA), and, according to one expert, are involved in unethical business practices and human rights abuses, including the concentration camps holding Uyghurs in Xinjiang.

According to a 2017 report by People’s Daily, the official mouthpiece of the Chinese Communist Party (CCP), CalPERS’s current CIO, Yu “Ben” Meng, as of 2015 was a participant in the Chinese government’s prestigious headhunting program called the Thousand Talents Plan (TTP).

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Wall Street Banks Are Starting To Give Up On Lending To Farmers

After years of farm income falling and the U.S./China trade war now taking its toll on the sector, Wall Street banks look as though they are giving up on lending to farmers, according to Reuters

Meanwhile, total U.S. farm debt is slated to rise to $427 billion this year, up from an inflation adjusted $317 billion just 10 years ago. The debt is reaching levels not seen since the 1980’s farm crisis. 

Agricultural loan portfolios of the nation’s top 30 banks was lower by $3.9 billion, to $18.3 billion between their peak in December 2015 and March 2019. This is a 17.5% fall.

An analysis performed by Reuters identified the banks by their quarterly filings of loan performance with the FDIC and grouped banks that were owned by the same holding company.

The slide in farm lending is happening as cash flow worries surface for farmers. We’ve highlighted numerous instances of farmers under pressure due to the U.S./China trade war and poor conditions, like this report from early June and this report on farmer bankruptcies from May.

Sales of products like soybeans have fallen significantly since China and Mexico imposed tariffs in retaliation to U.S. duties on their goods. The trade war losses exacerbated an already strained sector, under pressure from “years over global oversupply and low commodity prices.”

Chapter 12 bankruptcy filings for small farmers were up from 361 filings in 2014 to 498 in 2018. 

Minneapolis-St. Paul area bankruptcy attorney Barbara May said: 

“My phone is ringing constantly. It’s all farmers. Their banks are calling in the loans and cutting them off.”

At the same time, surveys are showing that demand for farm credit is growing. The demand is most pronounced among Midwest grain and soybean producers. Having fewer options to borrow could threaten the survival of many farms, especially when incomes have been cut in half since 2013. 

Gordon Giese, a 66-year-old dairy and corn farmer in Mayville, Wisconsin, was forced to sell most of his cows, his farmhouse and about one-third of his land last year to pay off his debt obligations. 

He said: 

“If you have any signs of trouble, the banks don’t want to work with you. I don’t want to get out of farming, but we might be forced to.”

Michelle Bowman, a governor at the U.S. Federal Reserve called the decline in farm incomes a “troubling echos of the 1980’s farm crisis”. 

Between the end of 2015 and March 31 of this year, JP Morgan pared back its farm loan holdings by 22%, or $245 million. Capital One’s farm-loan holdings at FDIC-insured units fell 33% between the end of 2015 and March 2019. U.S. Bancorp’s fell by 25%. Agricultural loans at BB&T Corp have fallen 29% since summer of 2016. PNC Financial Services Group Inc has cut its farm loans by 12% since 2015.

The four-quarter growth rate for farm loans at all FDIC-insured banks slowed from 6.4% in December 2015 to 3.9% in March 2019. But many smaller, regional banks depend on farms as the main key to their loan books. 

In March, FDIC insured banks reported 1.53% of farm loans were 90 days past due, up from 0.74% at the end of 2015. 

Curt Everson, president of the South Dakota Bankers Association said: “All you have are farmers and companies that work with, sell to or buy from farmers.” 

Source: ZeroHedge

How The Fed Wrecks The Economy Over And Over Again

When people talk about the economy, they generally focus on government policies such as taxation and regulation. For instance, Republicans credit President Trump’s tax cuts for the seemingly booming economy and surging stock markets. Meanwhile, Democrats blame “deregulation” for the 2008 financial crisis. While government policies do have an impact on the direction of the economy, this analysis completely ignores the biggest player on the stage – the Federal Reserve.

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Global Manufacturing PMI Crashes To 7-Year Lows As New Orders Slump

It’s a bloodbath. No matter where you look, global manufacturing surveys are signaling growth is over and in most cases, outright contraction is upon us.

JPMorgan’s Global Manufacturing PMI fell to its lowest level for over six-and-a-half years and posted back-to-back sub-50.0 readings for the first time since the second half of 2012.

https://www.zerohedge.com/s3/files/inline-images/2019-07-01_8-26-34.jpg?itok=fBSDNlpy

June data signalled a mild decrease in global manufacturing employment for the second month running (but every sub-index declined in June).

https://www.zerohedge.com/s3/files/inline-images/2019-07-01_8-26-16.jpg?itok=t_Nwf1FU

Of the 30 nations for which a June PMI reading was available, the majority (18) signalled contraction. China, Japan, Germany, the UK, Taiwan, South Korea, Italy and Russia were among those countries experiencing downturns. The US, India, Brazil and Australia were some of the larger industrial nations to register an expansion.

Commenting on the survey, Olya Borichevska, from Global Economic Research at J.P.Morgan, said:

The global manufacturing sector downshifted again at the end of the second quarter. The PMI surveys signalled that output stopped growing, as inflows of new business shrank at the fastest pace since September 2012. This impacted hiring and business optimism, with the latter at a series-record low. Conditions will need to stage a marked recovery if manufacturing is to revive later in the year.”

https://www.zerohedge.com/s3/files/inline-images/bfmC408.jpg?itok=-cWZwI60

It’s not rocket science!!

Source: ZeroHedge