Category Archives: Business

Europe is so weak it can’t even handle 0% interest rates, by Simon Black

Europe is probably already in a recession. The US won’t be far behind. From Simon Black at sovereignman.com:

Europe’s leading economic policy makers have officially thrown in the towel.

Last week, the European Central Bank admitted economic conditions are so dire that it already has to reverse its monetary policy.

I’ll get back to that in a minute…

Following the Great Financial Crisis in 2008, central banks printed trillions of dollars and pushed interest rates to their lowest levels in human history. Low interest rates (and lots of new money sloshing around the system) mean people should go out and buy things that would otherwise be out of reach… new houses, new cars, businesses, etc.

And, in theory, all of that activity creates jobs and helps the economy grow… in theory.

Ten years into this monetary experiment, central banks did create growth…

US Gross Domestic Product (GDP) was about $15 trillion in 2008. Current GDP is about $22 trillion. That’s $7 trillion of economic growth.

Impressive… until you figure the cost of that growth.

Over the same period, the US national debt increased from $10 trillion to $22 trillion.

So, it took $12 trillion of debt to create $7 trillion of economic growth.

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Facebook Reverses Zero Hedge Ban, Says It Made A “Mistake”, by Tyler Durden

Facebook, probably pushed by a social media eruption, has reinstated Zero Hedge. From Tyler Durden at zerohedge.com:

It has been a strange 24 hours.

On Monday, we first learned that for the previous two days, Facebook had banned all Zero Hedge content across its various mediums, as it went against Facebook’s “Community Standards” (which to the best of our knowledge, neither we not anyone else has any idea what they are), a decision which – as we noted yesterday – surprised us for two reasons: not only do we not have an official Facebook account, but Facebook did not approach us even once with a warning or even notification.

While we were in the dark about what had triggered Facebook, or what was the company’s motive, we were humbled and delighted not only with the media coverage this event received, but far more so with the outpouring of support we received from readers and across social media, where Zero Hedge had not been yet banned, like Twitter, where figures from various industries and across the political spectrum voiced support and came to our defense, with many condemning what we felt was an arbitrary decision.

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Federal Reserve Chairman Appears on 60 Minutes – Why Now? by Michael Krieger

Michael Krieger pierces the veil of Fed Chairman Powell’s PR. From Krieger at libertyblitzkrieg.com:

One of the most famous, and prescient, financial cartoons in American history is the above depiction of the Federal Reserve Bank as a giant octopus that would come to parasitically suck the life out of all U.S. institutions as well as free markets.

The image is taken from Alfred Owen Crozier’s U.S. Money Vs Corporation Currency, “Aldrich Plan,” Wall Street Confessions! Great Bank Combine, published in 1912, just a year before the creation of the Federal Reserve. 

Last night, the current high priest of money printing, asset bubbles and inequality, Jerome Powell, appeared on 60 Minutes. Interviewer Scott Pelley mentioned the fact that such discussions are rare and noted the last time a Fed head appeared for such a chat was Ben Bernanke back in 2010.

As such, what I find most interesting about this event wasn’t Powell’s boilerplate, bureaucratic propaganda about how the economy’s doing fine and how much central bankers love average Americans, but why he and the institution he heads felt a need to do this now.

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The Sharing Economy Was Always a Scam, by Susie Cagle

Sharing may be caring, but it’s not much of a base for economic activity. From Susie Cagle at onezero.medium.com:

‘Sharing’ was supposed to save us. Instead, it became a Trojan horse for a precarious economic future.

Founded in 2014, Omni is a startup that offers users the ability to store and rent their lesser-used stuff in the San Francisco Bay Area and Portland. Backed by roughly $40 million in venture capital, Omni proclaims on its website that they “believe in experiences over things, access over ownership, and living lighter rather than being weighed down by our possessions.”

If you’re in the Bay Area, you can currently rent a copy of The Life-Changing Magic of Tidying Up by Marie Kondo from “Lan” for the low price of $1 per day; “charles” is renting a small framed lithograph for $10 a day; and “Tom” is renting a copy of the film Friends With Benefits (68 percent on Rotten Tomatoes) on Blu-ray for just $2 a day. Those prices don’t include delivery and return fees for the Omni trucks traversing the city, which start at $1.99each way.

In 2016, Omni’s CEO and co-founder Tom McLeod said that “lending enables Omni members to put their ‘dormant’ belongings to good use in their community.” That same year, Fortune said Omni “could create a true ‘sharing economy.’” For a while, the tenets of the sharing economy were front and center in Omni’s model: It promised to activate underutilitized assets in order to sustain a healthier world and build community trust. In 2017, McLeod said, “We want to change behavior around ownership on the planet.”

Just three years later, those promises seem second to the pursuit of profit. In 2019, the Omni pitch can be summed up by the ads emblazoned on its delivery trucks: “Rent things from your neighbors, earn money when they rent from you!”

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Facebook Bans Zero Hedge, by Tyler Durden

There’s no explanation for why Facebook has now banned Zero Hedge stories and links. SLL features ZH stories and ZH has posted many of my articles. It could be ZH’s negative articles about some aspects of Facebook, or maybe Mark Zuckerberg just doesn’t like ZH’s anti-establishment political slant. Either way, it doesn’t matter. ZH will be around long after Facebook has gone the way of MySpace. From Tyler Durden at zerohedge.com:

Over the weekend, we were surprised to learn that some readers were prevented by Facebook when attempting to share Zero Hedge articles. Subsequently it emerged that virtually every attempt to share or merely mention an article, including in private messages, would be actively blocked by the world’s largest social network, with the explanation that “the link you tried to visit goes against our community standards.”

View image on Twitter

Ollie Richardson@O_Rich_

Facebook has blocked all @zerohedge links, throwing up the following message:

258 people are talking about this
We were especially surprised by this action as neither prior to this seemingly arbitrary act of censorship, nor since, were we contacted by Facebook with an explanation of what “community standard” had been violated or what particular filter or article had triggered the blanket rejection of all Zero Hedge content.
To be sure, as a for-profit enterprise with its own unique set of corporate “ethics”, Facebook has every right to impose whatever filters it desires on the media shared on its platform. It is entirely possible that one or more posts was flagged by Facebook’s “triggered” readers who merely alerted a censorship algo which blocked all content.

Alternatively, it is just as possible that Facebook simply decided to no longer allow its users to share our content in retaliation for our extensive coverage of what some have dubbed the platform’s “many problems”, including chronic privacy violations, mass abandonment by younger users, its gross and ongoing misrepresentation of fake users, ironically – in retrospect – its systematic censorship  and back door government cooperation (those are just links from the past few weeks).

Unfortunately, as noted above, we still don’t know what event precipitated this censorship, and any attempts to get feedback from the company with the $500 billion market cap, have so far remained unanswered.

We would welcome this opportunity to engage Facebook in a constructive dialog over the company’s decision to impose a blanket ban on Zero Hedge content. Alternatively, we will probably not lose much sleep if that fails to occur: unlike other websites, we are lucky in that only a tiny fraction of our inbound traffic originates at Facebook, with most of our readers arriving here directly without the aid of search engines (Google banned us from its News platform, for reasons still unknown, shortly after the Trump victory) or referrals.

That said, with Facebook increasingly under political, regulatory and market scrutiny for its arbitrary internal decisions on what content to promote and what to snuff, its ever declining user engagement, and its soaring content surveillance costs, such censorship is hardly evidence of the platform’s “openness” to discourse, its advocacy of free speech, or its willingness to listen to and encourage non-mainstream opinions, even if such “discourse” takes place in some fake user “click farm” somewhere in Calcutta.

 

Time’s Running Out for World’s Most Indebted Oil Company, by Don Quijones

Venezuela is not the only country with “problems” in its oil company. Mexico’s appears to be going down the drain, too. From Don Quijones at wolfstreet.com:

US rating agencies pressure Pemex and the new Mexican government. But Pemex is too big to fail. 

The financial pains and strains continue to grow for the world’s most indebted oil company, Petroleos de Mexico (Pemex). Standard & Poor’s became the latest in a succession of rating agencies to downgrade the company. Pemex is state-owned. So S&P has two credit ratings for the company: One, as if it were a stand-alone company; and one for the company as part of the Mexican state.

S&P slashed its stand-alone rating of Pemex three notches to ‘B-‘ from ‘BB-‘ on growing worries that financial support pledged by the government might not be enough to prop up the company and might not be enough revive declining production. Anything below ‘BBB-‘ is non-investment grade, or “junk.” ‘B-‘ is six notches into junk (see our corporate credit rating scales by Moody’s, S&P, and Fitch).

S&P left unchanged its rating of Pemex-as-part-of-the-Mexican-state, at ‘BBB+’, the same as its rating of Mexican government debt, but lowered its outlook for both to negative from stable, and warned that Mexico faces a one-in-three chance of being downgraded in the coming year. This, in turn, triggered a cascade of outlook downgrades for many of Mexico’s biggest corporations and 72 financial institutions, including the country’s biggest banks and insurance companies.

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9 Charts Showing Huawei’s Global Dominance, by Tyler Durden

US moves against Huawei couldn’t be because the Chinese company is the world leader in 5G technology. From Tyler Durden at zerohedge.com:

Regardless of whether Huawei represents a genuine national security threat to the US and its allies, there is another important reason why Washington might want to persecute Huawei: Namely, because US telecoms companies, fearful of ceding even more ground to global market leader, asked them to, as John Tamney explained in an essay published by the American Institute for Economic Research.

Huawei, a wildly highly successful telecom company can’t place its goods on U.S. shelves because it is viewed as a national security threat. The laughable argument offered up by members of the political class to defend the indefensible is that Huawei’s close ties to the Chinese government mean that American use of its phones and equipment imperil us because we could be spied upon. Oh dear…

The real threat here is U.S. telecoms that are close enough to our federal government such that they can convince federal officials to pursue always damaging protectionism. Luckily for U.S. smartphone makers (Apple sells 20% of its iPhones in China), the rules against our best and brightest in China aren’t so stringent.

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