Category Archives: Banking

Watch as a Great Empire Stumbles and Falls, by Bill Bonner

You can stop worrying. The Biden administration is on the supply chain case, and our problems will soon be solved. From Bill Bonner at rogueeconomics.com:

BALTIMORE, MARYLAND – What a marvelous time to be alive… with a front-row seat to watch a great empire stumble and fall!

It only happens once every hundred years or so… So pull up a chair and enjoy the show.

Here’s the big news, from Bloomberg:

U.S. Factory Output Falls in Fresh Supply-Chain Warning

Production at U.S. factories fell by the most in seven months in September, in part reflecting a sharp pullback in the manufacturing of motor vehicles as well as broader backlogged supply chains and materials shortages.

Supply chain? What’s happening is much more than just a weak link. Adjusted for inflation, real industrial production has been going down for half a century and now is only a third of its 1968 level.

Falling Apart

The U.S. enjoyed a fake prosperity for the last 30 years – but only because China picked up the burden of manufacturing and sold goods to Americans at discount prices, keeping inflation in check.

And now, the U.S. no longer has the good jobs, the infrastructure, or the know-how to make things Americans want.

Instead, appliances and geegaws are shipped across the Pacific Ocean – at enormous cost – while the discounts disappear.

China’s raw materials costs – metals, fuel, etc. – are going up. So are its wages. It can no longer offset America’s money-printing with cheap products.

Yes, here in the U.S., “inflation” is now out in the open… and the whole scam is coming apart. CBS News reports:

A perfect storm of high demand and low supply is sending fuel prices through the roof. Driving your car is costing a lot more – and heating your home this winter could, too.

[…]

The national average for a gallon of regular unleaded gas this week is $3.27 – a seven-year high. According to GasBuddy, a price tracking service, the price of a gallon nationwide has gone up more than five cents in a week.

Meanwhile, benchmark crude oil prices have risen above $80 a barrel for the first time since 2014. As a result, Chicago-area utilities are projecting that heating bills will be up to 50% higher this winter. The New York Department of Public Service warned residents last week that their home heating bills could jump 21% compared to last winter.

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“The Bidens”: Is the First Family Corrupt, or Merely Crazy? By Matt Taibbi

All of the above. From Matt Taibbi at taibbi.substack.com:

Politico reporter Ben Schreckinger’s new book is an equal opportunity offender that may push a reluctant national media to re-examine ugly questions about President Joe Biden

If you want insight into how challenging life has become for reporters in the Trump era, take a glance at the author’s note for The Bidens, the controversial new book about the president and his family by Politico reporter Ben Schreckinger.

No journalism is apolitical, but Schreckinger’s approach to investigating the first family is as close as you’ll find in the “moral clarity” era to old-school aspirations to objectivity. This book initially won love from the conservative press because Schreckinger brought the mainstream imprimatur of Politico to confirmation of some of the key emails in the infamous Hunter Biden laptop story. But that enthusiasm may have tailed off when reporters for those outlets read the book, which is also brutal in its treatment of figures like Rudy Giuliani, Lev Parnas, and Donald Trump; Schreckinger is an equal-opportunity offender.

In the author’s note, however, it’s clear Schreckinger is concerned about how the mere act of publishing damaging information about Joe Biden and his family members will be received. “We live in an age of distrust and of coordinated campaigns to manipulate public opinion,” he writes, adding: “Readers have every right to wonder whether an extended inquiry into the Biden family, emphasizing its finances, is just some instrument of a broader effort to create a political narrative.”

He goes on to reassure readers that that’s not what he’s up to, that he just believes “the best way to understand people in power, and subjects of international controversy, is to attempt a thorough, timely examination.” He then adds, in a note that reads like he’s saying, “You may be more receptive to these disquieting facts in a few years”:

Too often people interpret the news of the day through the lens of their own political sympathies, and a more nuanced understanding of our leaders emerges only much later, when political pressures have eased.

For these reasons, he has hope the reader can accept his “holistic” telling of the Bidens’ story, which turns out to be a far darker and freakier tale than conventional wisdom has yet conceded.

Schreckinger is young, and The Bidens was clearly written in a bit of a hurry, but he’s a skilled storyteller. The initial framing is clever, with a first first chapter titled, “Chekhov’s Laptop,” a reference to Russian playwright’s famous dictum that “if in the first act you have hung a pistol on the wall, then in the following one it should be fired.”

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Jim Chanos: China’s “Leveraged Prosperity” Model is Doomed. And That’s Not the Worst. By Lynn Parramore

Like virtually the entire global economy, China’s economy rests on a rock-solid foundation of debt. From Lynn Parramore at ineteconomics.org:


Famed short-seller is even more concerned with political fallout from Evergrande than economic/financial woes.

Renowned short-seller Jim Chanos, founder of Kynikos Associates, is what you might call the “ever-bear” of China. For more than a decade, he has warned that the country was building a real estate-driven economy on a feeble house of cards. He spoke to the Institute for New Economic Thinking’s Lynn Parramore about how he views the chickens coming home to roost as the property giant Evergrande – now the world’s most indebted property developer — teeters on the verge of collapse.

Lynn Parramore: Back in ’09, when you started looking at China, your real estate analysts alerted you to the mind-boggling amount of real estate overdevelopment there. You warned that this overdevelopment would end badly. After Xi Jinping became president in 2013, you expressed the then-minority view that a different kind of leader had arrived on the scene. What’s your take on what has happened since then?

Jim Chanos: In 2013, we put a slide in our presentation for investors and talks that was very controversial – especially for Chinese nationals. It showed President Xi Jinping in emperor’s garb. People thought we should take it out, that it was offensive. At the time, Xi was widely seen as just the latest in a series of technocrats who had risen through the ranks — one who would follow along with Deng Xiaoping’s reforms. It’s “capitalism with Chinese characteristics.” It’s okay to get rich as long as the country prospers.

But a few things made us think, no, this guy is different. His first speech in China after becoming president was critical of the Soviet Union for being soft on perestroika. They should have crushed it when they had the chance, he said. Xi then set up an institute to study the Soviet Union’s collapse. That was a red flag to us that he was going to be more hardline than people thought. He went on to do an anti-corruption drive, which people dismissed as a typical settling of scores that Chinese leaders do. But it actually extended beyond that. A couple of years later, he began talking in Puritanical terms about social issues. Again, that was different. Nobody had cared about that stuff for 20 years. Do what you want as long as you don’t question the party. Next, we had the book collecting his speeches and writings, which people could be seen carrying around. He started showing up in military events dressed in Mao jackets. This symbolism isn’t lost in China.

We noticed all this, but the real switch occurred in 2019 when he started going after celebrities like Jack Ma [co-founder of Alibaba]. At that point, it was clear that this president was not stepping down at the end of 10 years. He was taking a much harder line on the “flowers of capitalism,” if you will, than past presidents. In 2021, all of this exploded into the open. There’s been initiative after initiative. Redistributing wealth to the masses. Going after other leaders. Overlaid on top of this is the Evergrande saga.

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Why Interventionist Governments Love Inflation, by Daniel Lacalle

If inflation is a tax, who collects it? Bingo, the government! From Daniel Lacalle at dlacalle.com:

No government looking to massively expand its size in the economy and monetize a soaring deficit is going to act against rising prices, despite claiming the opposite.

One of the things that surprises citizens in Argentina or Turkey is that their populist governments always talk about the middle classes and helping the poor, yet inflation still soars, making everyone poorer.

Inflation is the gradual erosion of the purchasing power of the currency. Governments will always use different excuses to justify inflation: Soaring demand, “supply chain disruptions” or evil corporations’ greed. However, most of the times these are excuses. Inflation is always a monetary phenomenon. Prices soar because money supply rises massively above real output and real money demand.

How can there be “shipping bottlenecks” driving a 100% rise in freights when the shipping industry was burdened by massive overcapacity in 2019? How can anyone say that natural gas and oil have soared due to supply chain disruptions when supply has perfectly followed demand? The reality is that some of those factors may explain a small proportion of the price rise, but the Global Food Index and Bloomberg Commodity Index are not at multi-year highs due to these problems.

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When a Train Wreck Is No Accident, by Jeff Thomas

What if the impending financial collapse is all part of some master plan? From Jeff Thomas at internationalman.com:

trainwreck

“In spite of all the rhetoric, we will go deeper in debt, the Fed will print more money, and the value of the dollar will continue to plummet.” – Ron Paul

Never in history have the economic and political structures been so manipulated by those who are responsible for their safekeeping; never has so much been at stake, in so many countries, and facing collapse, all at the same time.

The great majority of people in the First World recognise that the world is passing through an economic crisis. However, most are under the impression that there are some pretty smart fellows running the show and all they need to do is tweak the system a bit more and we’ll return to happy days.

Not so. The “smart fellows” who are in charge of fixing the problem are in fact the very same people who created it.

Understandably, this a hard concept for most people to even consider, let alone accept, as the very idea that those in charge of the system might consciously collapse it seems preposterous. So, we might wish to back up a bit here and present a very brief history of the system itself, in order to understand that the eventual collapse of the economic system was baked in the cake from the very beginning.

Creating a Central Bank

From the very earliest days of the formation of the American republic, bankers (along with inside help from George Washington’s secretary of the Treasury, Alexander Hamilton) sought to create a banking monopoly that would create the country’s currency and become the central banking system.

The first attempt at a central bank was a failure, and strong opponents, including Thomas Jefferson, prevented a second central bank for a time. Later, further attempts were made by bankers and their political cronies, and each central bank was either short-lived or defeated in its planning stages.

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Living In A Pandemic World, by Jim Quinn

It can’t be said often enough. Covid-19 is a medical fraud and a vehicle for a global, totalitarian government. From Jim Quinn at theburningplatform.com:

“Every record has been destroyed or falsified, every book rewritten, every picture has been repainted, every statue and street building has been renamed, every date has been altered. And the process is continuing day by day and minute by minute. History has stopped. Nothing exists except an endless present in which the Party is always right.”George Orwell, 1984

“Don’t you see that the whole aim of Newspeak is to narrow the range of thought? In the end we shall make thoughtcrime literally impossible, because there will be no words in which to express it.”George Orwell, 1984

I never thought I would experience the dystopian “fictional” nightmare Orwell laid out in his 1949 novel. Seventy-two years later and his warning about a totalitarian society, where mass surveillance, repressive measures against dissenters, mind control through government indoctrination and propaganda designed to convince the masses lies are truth, fake is real and the narrative can be manipulated to achieve the desired outcome of those in power, have come to fruition.

Everything is fake. I don’t believe anything I’m told by the government, the media, medical “experts”, politicians, military leadership, bankers, corporate executives, religious leaders, financial professionals, and anyone selling themselves as an authority on any subject matter. We are truly living in times of mass deception, mass delusion, and mass willful ignorance.

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Distraction As Policy While Our Economic Rome Burns, by Matthew Piepenberg

The global economy is going down the tubes, but nobody is supposed to notice. From Matthew Piepenberg at goldswitzerland.com:

Desperation and distraction are masquerading as economic policy. Below we see how and why—and at what cost.

COVID: The Great Economic and Political Hall-Pass

If every time I stole a cookie from the jar in front of my mom (age 8), or drove dad’s car (sometimes into a tree) without permission (age 16), failed a dorm-room inspection (age 17), broke a lawnmower for driving over a fence post (each year) or forgot a key anniversary (eh-hmm), it would have been so convenient to have a universal “hall pass” to excuse what is/was otherwise just plain stupid behavior.

Luckily for the grown children running our global financial system into the ground, the COVID pandemic is becoming precisely that: “A global hall pass for excusing decades of stupid.”

As we’ve written many times, inexcusably high debt levels, tanking growth data, struggling work force figures, embarrassing wealth disparity and insider market rigging between Wall Street and DC was well in play long before COVID made the headlines.

But now, the architects of such “pre-COVID stupid” have the current COVID narrative to justify and excuse even, well… more stupid.

The Latest Jobs Report “Explained” …

Take, for example, the latest job reports data from those DC-based creative writers at that comic-book publication otherwise known as the Bureau of Labor Statistics (BLS).

Known for years on Wall Street as mathematical magicians capable of turning 12% inflation into a 2% CPI lie, that same BLS is operating yet again to fib away the latest (and otherwise telling) jobs data.

The September jobs report was the second consecutive and disappointing report from the BLS, which they were quick to blame on “pandemic-related staffing fluctuations.”

Hmmm. That’s a nice phrase, no? “Pandemic-related staffing fluctuations.”

But the real description boils down to something more PRAVDA-like under the new Biden Vaccine Mandate, namely: “Obey or we take your job away.”

Needless to say, not everyone is obeying.

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We’re Living in a Chaos Economy. Here’s How to End It. By Mark Thornton

The solution is simple—get the government and its central bank out of the economy—but alas, given present day politics implementation will be impossible. From Mark Thornton at mises.org:

The Federal Reserve has been increasing the money supply at an explosive rate. The federal budget, deficits, and the trade deficit are record levels. Governments, both foreign and domestic, have locked down people, restricting production and consumption. How should this be viewed by an economist?

There is clearly chaos in the economy, and hardly a day goes by when I don’t find unusual if not unprecedented situations in day-to-day economic life. However, many people and economists are either oblivious to the problems or in denial. Things are normal for them. Politicians are mostly in this camp. For economists and investment promotors, inflation is “transitory.” They don’t know how the economy works and they expect near perfection from the economy and entrepreneurs. This view is wrong.

The chaos is all too real for most others. Homemakers who spend household income are seeing their purchasing power shrink, their choices disappearing, and more of their time consumed stretching the family budgets. Christmas shopping will be worse than normal.

Chaos deniers are further entrenched in their experience by the mainstream media (MSM). The problems are either not reported by the MSM or are masked by aggregate statistics like price inflation, i.e., the Consumer Price Index, low unemployment, wage increases, and extremely high stock markets and real estate, especially housing prices. These stats make people feel good, or at least less nervous.

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Are We Really Crazy Enough to Believe This Is Going to Work? By Charles Hugh Smith

Crazy is believing a house of cards built on a foundation of sand will stand. From Charles Hugh Smith at oftwominds.com:

Unbeknownst to the giddy participants, they’re not just betting on the omnipotence of the Fed Politburo, they’re also making a max-leverage bet that “the madness of crowds” will never end.

Imagine an economy so dominated by its central bank that all markets hang on every word of its priesthood as life or death. You know, like the Federal Reserve and the American economy.

Now imagine this central bank issues enormous sums of new money which supercharges speculative activity such as hundreds of billions of dollars in stock buybacks, special purpose acquisition casinos, oops, I mean companies, and so on. You know, like the Federal Reserve’s trillions in nearly free money for financiers.

Next, imagine that the central bank makes barely concealed promises that should any big gambler lose money in the casino, the bank will flood the financial system with even more nearly free money for financiers and bail out the loser.

Since flooding the system with nearly free money for financiers keeps the speculative frenzy going, the bank has implicitly promised that assets driven higher by speculative frenzy will never be allowed to drop. This promise naturally incentivizes even more speculative borrowing, leverage and risk, generating a titanic Everything Bubble in which risky assets skyrocket from pennies into dollars and dollars into fortunes.

Now imagine that this speculative frenzy spreads into every nook and cranny of the economy such that everyone is drawn into one casino or another, and previously sober, cautious people are seized by a quasi-religious fervor in which they become convinced that their gambling chips on NFTs, SPACs, meme-stocks, obscure alt-coins, homes, collectables and pretty much anything within the manic swirl of speculative frenzy is now a can’t lose path to carefree permanent wealth because the central bank guarantees it and anyone who questions this is in league with the Devil (or worse).

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Are You Prepared for the Mass Repricing of Goods and Services? By MN Gordon

You turn up the monetary heat and prices go full boil. From MN Gordon at economicprism.com:

Rising consumer price inflation is not going away.  This, of course, is counter to the “transitory” argument made by Federal Reserve Chairman Jerome Powell earlier this year.

Powell’s cohort, Atlanta Fed President Raphael Bostic, recently admitted inflation is not transitory.  This admission comes with assurances the Fed will properly manage it.  We have some reservations.

The effects of rising consumer prices range far and wide.  For one, the pinch rising prices put on consumers is extraordinarily disruptive.  It acts like a hefty tax…eroding family budgets that are already stretched.  In this ongoing staglation, personal income gains lag far behind rising consumer prices.

Industrial materials and consumer goods companies also feel the pinch.  They can pass on some rising prices to consumers.  They can also absorb through lower profit margins some short term price increases.  But there are natural limits to what price increases can be absorbed and passed along.

When input costs, including raw material and labor, push the costs of the final manufactured goods above what they can readily be sold for the business motive breaks down.  Halting operations makes the most business sense.

One industry feeling the pinch of rising natural gas prices is the fertilizer business.  As we noted several weeks ago, several fertilizer plants in the UK have had to suspend operations because of soaring natural gas prices.  Here in the US we’re not aware of any fertilizer producers suspending operations.  But fertilizer prices are up, nonetheless.

In fact, the Green Markets North American Fertilizer Price Index recently soared to a record high, thus eclipsing the prior record set in 2008.  Sky high fertilizer prices will further raise the cost of food production for farmers.

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