Category Archives: Collapse

America is in Terminal Decline, by Raúl Ilargi Meijer

Here’s some more hard core doom porn. From Raúl Ilargi Meijer at theautomaticearth.com:

John Rubino recently posted a graph from Bob Prechter’s Elliot Wave that points to some ominous signs. It depicts the S&P 500, combined with consumer confidence and savings rate. As the accompanying video at Elliott Wave, What “Too Confident to Save” Means for Stocks, shows, when the gap between high confidence and low savings is at its widest, a market crash -often- follows.

In 2000, the subsequent crash was 39%, in 2007 it was 54%. We are now again witnessing just such a gap, with the S&P 500 at record levels. Here’s the graph, with John’s comments:

Consumers Are Both Confident And Broke

Elliott Wave International recently put together a chart that illustrates a recurring theme of financial bubbles: When good times have gone on for a sufficiently long time, people forget that it can be any other way and start behaving as if they’re bulletproof. They stop saving, for instance, because they’ll always have their job and their stocks will always go up. Then comes the inevitable bust. On the following chart, this delusion and its aftermath are represented by the gap between consumer confidence (our sense of how good the next year is likely to be) and the saving rate (the portion of each paycheck we keep for a rainy day). The bigger the gap the less realistic we are and the more likely to pay dearly for our hubris.

 

 

John is mostly right. But not entirely. Not that I don’t think he knows, he simply forgets to mention it. What I mean is his suggestion that people stop saving because they’re confident, bullish. To understand where and why he slightly misses, let’s turn to Lance Roberts. Before we get to the savings, Lance explains why the difference between the Producer Price Index (PPI) and Consumer Price Index (CPI) is important to note.

Summarized, producer prices are rising, but consumer prices are not.

To continue reading: America is in Terminal Decline

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Spain’s Pension System Hits Crisis Point (and Everyone Ignores it), by Don Quijones

The global pension pile-up continues. From Don Quijones at wolfstreet.com:

But how did things get this bad?

By most measures, sun-blessed Spain is an idyllic place to grow old in. Life expectancy is among the highest in the world, and the national pension fund’s payout ratio (pension as percent of final salary) is the second highest in Europe after Greece. But if current trends are any indication, that may soon be about to change.

The country’s Social Security Reserve Fund, which was meant to serve as a nationwide nest egg to guarantee future pension payouts — given Spain’s burgeoning ranks of pensioners — has been bled virtually dry by the government. This started ever so quietly in 2012 when the government began withdrawing cash from the fund. Some of it was used to fill part of the government’s own fiscal gaps while billions more were tapped to cover the Social Security system’s growing deficits. As a result the pension pot has shrunk from over €66 billion in 2011 to just €15 billion in 2016.

To avoid wiping out the fund altogether this year, the Spanish government extended a €10.1 billion interest-free loan to Spain’s social security system, which enabled it to pay out the two extra pension payments due in June and December. That way, only €7-7.5 billion will be tapped from Spain’s public pension nest egg. Emptying the pot altogether this year would have been politically unpalatable, says El País. Instead, it will be emptied next year as the social security system racks up yet another massive annual shortfall.

Last year it registered its biggest deficit in its history (€18.1 billion), which was covered by the pension pot. In 2017, the deficit is forecast to be €16.6 billion, according to the government’s own projections. That’s roughly 1.5% of Spanish GDP. Another €18-20 billion will be needed next year. Successive deficits are expected until at least 2020, when there will still be an annual deficit of around 0.5% of GDP — and that’s according to the government’s own rosy figures!

To continue reading: Spain’s Pension System Hits Crisis Point (and Everyone Ignores it)

The Biggest Wealth Transfer In History, by Egon von Greyerz

If you’re into hard core doom porn, this is the article for you. From Egon von Greyerz at goldswitzerland.com:

What will happen between now and 2025? Nobody knows of course but I will later in this article have a little peek into the next 4-8 years.

The concentration of wealth in the world has now reached dangerous proportions. The three richest people in the world have a greater wealth than the bottom 50%. The top 1% have a wealth of $33 trillion whilst the bottom 1% have a debt $196 billion.

The interesting point is not just that the rich are getting richer and the poor poorer. More interesting is to understand: How did we get there? and what will be the consequences?

PANAMA & PARADISE PAPERS – SENSATIONALISM

As the socialist dominated media dig into the Panama Papers and now recently the Paradise Papers to attack the rich and tell governments to tackle the unacceptable face of capitalism, nobody understands the real reasons for this enormous concentration of wealth. Sadly no journalist does any serious analysis of any issue, whether it is fake economic figures or the state of the world economy.

Instead, all news is accepted as the truth while in fact a lot of news is fake or propaganda. The media is revelling in all the disclosures of offshore trusts and companies. The British Queen is being accused of having “hidden” funds. The fact that offshore entities have been used legally for centuries for privacy, wealth preservation and creditor protection purposes is never mentioned. The media sell more much news by being sensational rather than factual.

INEQUALITY IS DUE TO IRRESPONSIBLE MONETARY POLICY

Let me first put the facts right. It is not capitalism in its traditional sense which has created this enormous concentration. One definition of capitalism is:

“An economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state”

The “controlled by private owners” part of the definition fits our current Western system. But what is missing is that the current economic system could not function without complete state sponsorship and interference. This is the clever construction that a group of top bankers devised on Jekyll Island in the US, in November 1910. This was the meeting that led to the creation of the Fed in 1913. The Central Bank of the US was set up as a private bank, and thus controlled by private bankers for their own benefit.

To continue reading: The Biggest Wealth Transfer In History

The Superhero Complex: Are We Incapable of Saving Ourselves? by Charles Hugh Smith

Here is a deep dive into the psychology behind our attraction to superheroes. From Charles Hugh Smith at oftwominds.com:

If we felt empowered in daily life, would we be so enamored of superheroes constantly saving our world from destruction?

It’s been widely noted that the U.S. film industry ably functions as a pro-global hegemony propaganda machine: even when the plot features evil rogue elements at work in a global-hegemony agency (Pentagon, CIA, NSA, etc.), the competence of the agency is never in doubt, nor is the agency’s ability to rid itself of the evil rogue element.
Evil conspiracies are revealed and the Good Guys/Gals win.
This depiction of official competence and the moral righteousness of patriotic employees is not surprising; these agencies have long “cooperated” with Hollywood on many levels.
More troubling is the recent film-industry depiction of our dependence on superheroes and their superpowers to set things right. The benign view is that Hollywood is always seeking new billion-dollar source materials for multi-film franchises, and comic book heroes are tailor-made for franchises: not only can multiple films be made about individual superheroes, but the potential for mix-and-match combinations of superheroes is practically endless.
The less benign view is that the popularity of superhero movies reflects a deep insecurity and worrisome desire for fantasy saviors, as if mere mortals can no longer save themselves with their pitiful real-world powers.
Psychoanalyzing the zeitgeist of films has long been a popular parlor game: much has been written about the popularity of monster films (often featuring nuclear radiation as the trigger of the mayhem) in 1950s Japan, and the meaning of the American Noir films in the 1950s.

Doug Casey on Why Race Will Break the U.S. Apart, Part II

The second part of Doug Casey’s commentary on race and the impending division of the US. From Casey at caseyresearch.com:

Justin’s note: Today, Doug and I continue our conversation on why the U.S. could dissolve over time. Doug says the problems are all bubbling to the surface…and when the U.S. eventually breaks apart “it will not be peaceful.” (If you missed Part I, you can catch up right here.)


Justin: What about political tensions? Because, as I’m sure you’ve seen, the far-left and far-right are becoming more and more antagonistic. In some cases, they’ve even become violent towards each other.

Could radical political ideologies cause the country to break apart?

Doug: Yes, I think so.

In the late ‘60s and the early ‘70s, hundreds of bombings took place at universities, banks, and all kinds of places. The National Guard was in cities like Detroit during the riots, and they were raking buildings with .50 caliber machine guns. It was wild.

I don’t think most remember this. At least, I don’t see it being brought up anywhere.

I lived in Washington DC then. It seemed like there was tear gas in the air half the time I went out on a date on a Friday or Saturday night.

But as wild and wooly as things were back then, what we have now is much more serious.

The racial element is still there, but the ideological element is even more pronounced.

In those days, people at least talked to each other. You could have a disagreement, and it was a simple difference of opinion.

It’s much worse now. Today, there’s a visceral hatred between the left and the right, between the people that live in the so-called red counties and blue counties.

You add that to the racial situation. Then throw in the fact that the rich are getting richer at an exponential rate while the middle class is disappearing.

 

To continue reading: Doug Casey on Why Race Will Break the U.S. Apart, Part II

Bank Deposits No Longer Off Limits as ECB Seeks Power to Freeze, by John Glover and Alexander Weber

Here’s the camel’s nose under the tent. In the next financial crisis you can be sure that bank’s will be unable to pay all of their liabilities. Customer deposits are liabilities, and bank runs start when people get nervous about their bank. Here’s the Catch-22, governments would be given the authority to freeze deposit withdrawals, but only at banks that are failing or likely to fail. In other words, as soon as the government freezes deposits, depositors will know the bank has one foot in the grave. That should calm them down. From John Glover and Alexander Weber at bloomberg.com:

  • Working paper retains power to stop payments of failing firms
  • Payments stay to affect derivative payments for up to 5 days
An illuminated euro currency symbol is projected on to the European Central Bank (ECB) headquarters in Frankfurt.Photographer: Martin Leissl/Bloomberg

The European Central Bank intensified its push for a tool that would hand authorities the power to stop deposit withdrawals when a bank is on the verge of failing.

ECB executive board member Sabine Lautenschlaeger said that bank resolution cases this year showed that a so-called moratorium tool, which would temporarily freeze a bank’s liabilities to buy time for crucial decisions, is needed. Her comment comes as policy makers in Brussels debate how such measures should be designed, and just days after the ECB officially called for the moratorium to extend to deposits as well.

Sabine Lautenschlaeger

Photographer: Krisztian Bocsi/Bloomberg

“If we have a long list of exemptions and we have a moratorium that doesn’t work, I do not want to have a moratorium tool,” Lautenschlaeger told a conference in Frankfurt on Tuesday. “Then you will never use it.”

EU member states appear ready to heed the request, according to a Nov. 6 paper that develops their stance on a bank-failure bill proposed by the European Commission. They suggest giving authorities the power to cap deposit withdrawals as part of a stay on payments only after an institution has been declared “failing or likely to fail.”
The power to install a moratorium “can in principle apply to eligible deposits,” the paper reads. “However, resolution authority should carefully assess the opportunity to extend the suspension also to covered deposits, especially covered deposits held by natural persons and micro, small and medium sized enterprises, in case application of suspension on such deposits would severely disrupt the functioning of financial markets.”

The Unbearable Slowness of Fourth Turnings, Part Two, by Jim Quinn

The second of Jim Quinn’s two-part article on waiting for the Fourth Turning. From Quinn at theburningplatform.com:

In Part 1 of this article I provided the background regarding the phases of Fourth Turnings and where we stand nine years into this period of crisis. I will now ponder what could happen during the remainder of this Fourth Turning.

“History offers no guarantees. Obviously, things could go horribly wrong – the possibilities ranging from a nuclear exchange to incurable plagues, from terrorist anarchy to high-tech dictatorship. We should not assume that Providence will always exempt our nation from the irreversible tragedies that have overtaken so many others: not just temporary hardship, but debasement and total ruin. Losing in the next Fourth Turning could mean something incomparably worse. It could mean a lasting defeat from which our national innocence – perhaps even our nation – might never recover.” – Strauss & Howe – The Fourth Turning

The most important point to comprehend is the death of the existing social order always occurs during the course of a Fourth Turning. Thus far, those constituting the Deep State hierarchy have fended off their demise. They are utilizing every tool at their disposal to retain their wealth, power and control. As their mass media propaganda machine falters, they have redoubled their rigging of financial markets to promote a narrative of economic recovery, while further enriching themselves and their cronies.

It is clear they have reached the peak of financial manipulation, money printing, and artificial interest rate suppression. The narrative is faltering. Their last and final option to retain power is war. As their “everything bubble” (stocks, bonds, real estate) inevitably implodes, civil and/or global military conflict will be utilized to distract the populace from their Deep State domestic disasters.

The time for compromise is long past. There are no moderates left in the political spectrum. The mood of the country is clearly trending towards conflict. Trump, as the grey champion of this Fourth Turning, has proven to be a lightning rod of hate. He infuriates his political opponents, the left wing media, many in his own party, foreign leaders, billionaires and most worrisome to his well-being – the shadowy surveillance state intel operatives.

To continue reading: The Unbearable Slowness of Fourth Turnings, Part Two