Tag Archives: Economic Collapse

“Unprecedented” – Companies Slashed Over 20 Million Jobs In April, ADP

Given the fact that over 30 million Americans have filed for initial jobless claims in the last six weeks, it is perhaps no surprise that economists expected a 20.5 million ADP job loss in April. In fact, silver lining, the number ‘beat’ with 20.236 million.

For context, the largest monthly job loss during the great financial crisis was just 834,700!

Large- and mid-sized companies saw the biggest job-losses…

And the service sector saw the biggest job losses…

If you’re an educator or in “management”, it would appear times remain good…

“Job losses of this scale are unprecedented. The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession,” said Ahu Yildirmaz, co-head of the ADP Research Institute.

“Additionally, it is important to note that the report is based on the total number of payroll records for employees who were active on a company’s payroll through the 12th of the month. This is the same time period the Bureau of Labor and Statistics uses for their survey.”  

And as we noted previously, far more Americans have lost their jobs in the last month than jobs gained during the last decade since the end of the Great Recession… (22.13 million gained in a decade, 30.3 million lost in 6 weeks)

Worse still, the final numbers will likely be worsened due to the bailout itself: as a reminder, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed on March 27, could contribute to new records being reached in coming weeks as it increases eligibility for jobless claims to self-employed and gig workers, extends the maximum number of weeks that one can receive benefits, and provides an additional $600 per week until July 31. A recent WSJ article noted that this has created incentives for some businesses to temporarily furlough their employees, knowing that they will be covered financially as the economy is shutdown. Meanwhile, those making below $50k will generally be made whole and possibly be better off on unemployment benefits.

As Mises’ Robert Aro noted earlier in the week, the stimulus packages being handed out across this world provide us with an opportunity to document the anti-capitalist process as it unfolds in real time, keeping in mind that when these inflation schemes fail, it will likely be blamed on capitalism.

The combination of increasing the money supply in order to pay people not to produce goods or services has consequences that not a lot of people are talking about.

It flies in the face of the free market and is as nonsensical as a negative interest rate. A loan that is forgivable is unconventional to say the least, because a loan is normally defined as an amount borrowed that is expected to be paid back with interest. When a loan is given on a first-come-first-served basis for the purpose of paying people not to work and is forgivable because it’s guaranteed by the United States government, we shouldn’t call it a loan.

It may be called socialism, maybe interventionism, and some may still prefer the term statism; but one thing is certain when it comes to the Paycheck Protection Program: it’s not capitalism!

Welfare cliffs are of course not the only reason so many capable Americans languish in partial dependency on government assistance. Dreadful government schools in poor areas and systematic obstacles to getting a job, such as minimum wage laws and occupational licensing laws, are also to blame. But the perverse incentives of America’s welfare system really hurt, and the CARES Act may have been a serious tipping point.

But, hey, there’s good news… well optimistic headlines as Treasury Secretary Steven Mnuchin said he anticipates most of the economy will restart by the end of August.

Finally, it is notable, we have lost 434 jobs for every confirmed US death from COVID-19 (60,999).

Was it worth it?

You will have only two choices now: do hard things, or submit to Globohomo. What are you doing today to prepare yourself and your people for Hard Tasks?

Source: ZeroHedge

For Those of You Waiting on Financial Collapse…

The economy will never collapse.

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Ladies and gentlemen, I am a banker. That’s right, that evil, fat cat, wall street banker that became such a popular moniker during our last administration and I’m also a prepper. Rather than debate the topic of bugging in/out of an incredibly densely populated area which I contend with all the time, I wanted to write about a topic that I see a lot of op-eds about and that is the impending doom of economic collapse and it being the pretense for TEOTWAWKI.

As anyone who is skilled in their field of practice is, I have the ability (mostly because I’m intricately connected to it every day) to decipher the ongoing fear that we as a nation are teetering on the brink of economic collapse and that you must immediately liquidate all holdings and bank accounts and mattress those funds. I will try to impress upon you below how unlikely and improbable this really is.

As a student of Finance you’re taught words like inflation, bubbles and leverage. You pause and look at “The Market” throughout the day and wonder why Apple is up or why oil is down but you really don’t understand how tightly things are tied together and quite frankly how much reliance on everything a simple stock or sector has on everything else in the global economy. Now don’t get me wrong, any company can have a bad day, or week or year. I’s talked about all the time. But the system crashing down as a result of just the system and not some other calamity like plague or an EMP for that matter is just not going to happen.

Checks and Balances

For an economy like the U.S. to go belly up, that would essentially mean that every other country in the world just doesn’t care about receiving payments on their debt. When I spoke above about things being so tied together, did you know that practically every country in the world owns the United States? That’s right, the Chinese own the statue of liberty, the French own the grand canyon and our friends in the Congo own Mt Rushmore. It’s true, well maybe not exactly but that deficit everyone hears about is nothing more than conceptual money that we owe ourselves not to mention every other country out there. No one is coming to collect.

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Every once in a while, corrections are needed.

Do you think there’s a vault out there with trillions of dollars in it? I promise you there’s not. Corporations, foreign governments and independent debt owners care about one thing and one thing only, the interest payment. The interest on the debt they have in the investment they make. That monthly stipend of interest is what’s real and more importantly how people balance the check book. No one ever assumes they’ll get their money back, in fact if they did, we’d be in a far better position. All we’d have to do is print the money but guess what, it wouldn’t be worth very much if there was an excess of it would it? Nobody wants to be paid back these ridiculous sums of money for one simple reason, their value will go down. 1 trillion dollars in owed money is worth 100 times what 1 trillion dollars in cash is. Checks and Balances is just that, what makes the world go round is certainty that you can collect on your debt, not by collecting on what’s owed. The country’s of the world can’t function with trillions of dollars sitting in a vault, they’d essentially be broke.

Value is just perception

If you have a house, and you want to sell it, what’s it worth? Whatever you think your house is worth based on improvements you might have made or what your county is assessing a tax figure on and holding you accountable to pay is really not the answer. Your home and anything for that matter is worth what we call fair market value. Fair market value is the price that some else (the market) is willing to pay (fair value). I bring this up because such is the case with everything when it comes to what things are worth. Now a house is much different from an investment vehicle like a bond for example. You live in your house, it provides you safety, security, memories all of which are equitable things. You might even be willing to put a price tag on that in your mind. A bond or a stock or balance sheet doesn’t really stack up to that house of yours does it? Yet this is what the world economy is made up of, fictional pieces of perceived value. They don’t even print shares of stock or bond anymore so you couldn’t burn it to keep you warm at night. That’s not me being a cynic it’s just the truth. Everything we have with regard to wealth is just in the perception of faith and tied to nothing really tangible. Take a minute to think about that.

Every once in a while, corrections are needed

But banker you ask, what about the next recession, my portfolio might evaporate if it’s not allocated appropriately. Well folks, I’m here to tell you, you losing money is all part of the master plan. Making money is too however. There’s an old adage, maybe you’ve heard it. “Markets can digest good news and bad news but they hate uncertainty”. Isn’t that true of mostly everything come to think of it? Fact is our entire system was built on bull runs (times in which there’s a surge in value) and bear runs (times in which there’s a decline in value). If no one ever lost money the system wouldn’t work. Value wouldn’t change because risk would be taken out of the equation. Everyone would be richer but no one would be richer. What makes the world economy function is that there’s no guarantee that stipend I mentioned that all governments are tied to will be insured and reliable. This is where jockeying comes in and the gambling mentality takes over. Since the dawn of modern finance prospectors and prognosticators have set the benchmark to try to out-earn (even by just the tiniest of margins) their competitors. People wager on perceived value and that’s the x-factor (greed that is) that sets the bulls or bears running and ushers in peaks and valleys. Corrections are there by design and you’ll have to stomach it unless you plan to completely go off grid. That’s not really prepping though, that’s fully prepared. For the rest of us that aspire to “get there”, you have to be prepared to get bounced around with the financial tide.

Conclusion

OK oh ye faithful that have stuck around and for those of you that did, thank you, here’s the synopsis. Unless greed is wiped from the earth OR unless the debt holders want to stop making money, the system will not collapse. Even in the greatest of calamity’s like The Great Depression and or The Great Recession people made money. They just chose the right time to bet against common thought. Point is the system always recovers. We as preppers, for lack of a better way to say it are prepared. We’re prepared beyond what’s in our refrigerator or a minor terrorist crisis in our general vicinity or at least we’re trying to get there. Know this, peaks and valleys within our financial system will always continue but with 100% certainty, the system is rigged.

If things ever got bad enough for the U.S. to the point of bread lines and soup kitchens, we’d just print the money we needed as a government to make our debt payment. If another country couldn’t make their payment, we’d just chisel away at their principal and then auction it off again to the highest bidder for, that’s right you guessed it, another payment plan. Take solace in the fact that there are 100 others ways all of them far more likely to disrupt the balance and cause us to make tough decisions for our family’s. For the ones convinced that the economic system will fail them, you might be caught short-handed in your preps. Invest instead in gas masks or wind turbines or lamp oil, hey, you might just make someone rich.

Source: The Prepper Journal