Category Archives: Collapse

An “Extreme Warning” From Our Doom Index, by Bill Bonner

Here’s another bearish prognostication, from Bill Bonner at bonnerandpartners.com:

BALTIMORE – When we left you yesterday, we were describing why the situation is getting dangerous for investors, and how the lessons learned over the last 30 years may backfire in the next crisis.

“Dow over 26,000… bitcoin under $10,000,” reports this morning’s news… “but could crypto panic spill over into stocks?”

Investors are accustomed to depending on the Greenspan-Bernanke-Yellen Put… which is to say, they are pretty sure that the feds will come in with more booze when the party starts to flag.

“Buy the dip,” they tell each other, confident that the feds can be counted on in a pinch.

Many think the recently passed tax bill is 80-proof, too – sure to rev things up by putting more money in the hands of shareholders and consumers.

Maybe it will raise stock prices. Or maybe it won’t. What it won’t do is make the next crisis disappear.

Bad Tidings

We hate to be the bearer of bad tidings, but bad tidings are all we have to bear.

Corporate America is already pretty flush. The price-to-earnings (P/E) ratio for the S&P 500 is now 70% above its long-term average.

In fact, the price of stocks relative to earnings has only been near this high three times in the last 118 years… each time caused by the aforementioned Fed party favors.

And if stocks go higher, it merely gives them further to fall.

In order to get back to more traditional levels, notes Martin Feldstein in yesterday’s Wall Street Journal, the next bear market would have to wipe out some $10 trillion of stock market wealth.

This, he says, would take 2% off annual GDP… tipping the country into recession.

Extreme Warning

How close is this crisis?

We turn to our Doom Index, put together by our ace researcher, Joe Withrow:

The Doom Index spiked back up to “7” this month – our extreme warning level.

After a surprisingly expansive third quarter in 2017, credit growth fell back to 1.6% in the fourth quarter. Paraphrasing your friend and economist Richard Duncan, bad things happen when credit growth falls below 2%.

Looking at the credit markets, corporate bond downgrades continued to come in at an elevated level last quarter. And junk bonds are starting to show some cracks, falling more than 1% on the quarter. That said, junk bonds still closed out 2017 in positive territory.

To continue reading: An “Extreme Warning” From Our Doom Index

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The Aristocratic Illusion, by Robert Gore

They’re not as smart as they think they are.

If you draw your sustenance from the government—as an employee, contractor, or beneficiary of redistributed funds—the money you receive comes from someone who had no choice whether or not you got paid. Except for those jobs the government mandates, private sector workers’ compensation comes from employers who have freely chosen to pay it. The jobs they perform are worth more to their employers than what they’re paid, or the jobs wouldn’t exist.

Here’s a new definition of aristocrat: a person legally entitled to take money from other people without their consent. This definition focuses on what aristocrats do and have done throughout the centuries, regardless of their labels.

If you’re an aristocrat, the thought that you’re living on somebody else’s dime may cause psychological stress. All sorts of rationales have been concocted to justify this privileged position. The most straightforward is the protection racket. In exchange for their subjects’ money, aristocrats protect them from external invasion and preserve domestic order. It’s not a voluntary trade—the subjects can’t say no—but at least both sides get something from it.

However, “protection racket” doesn’t have quite the moral gloss aristocrats crave. Deities may not have been an aristocratic invention, but they jumped on the concept of divine favor to justify their position. It makes it harder to oppose the rulers if authority is bestowed by the gods or the government is a theocracy. Ultimately, regardless of rationale, the ideology always come down to: The aristocracy is superior to those they rule. The aristocrats have no trouble believing it; they have to psychologically justify their positions to themselves. The trick is to get the subjects to buy in.

In America, the myth is that the aristocracy is a meritocracy. Merit, in this formulation, means degrees from top academic institutions, and employment with government-aligned private sector firms, nonprofit organizations, and the government itself. Those who emerge from these backgrounds and worm their way to the top are the cream…or so the aristocrats like to believe. It can’t be labelled exclusionary, they claim, because many who make it came from modest beginnings: Truman, Eisenhower, Johnson, Nixon, Ford, Carter, Reagan, Clinton, and Obama.

The best and brightest notion crested with John F. Kennedy’s administration, stacked with Ivy Leaguers and whiz kids. David Halberstam, in his book The Best and the Brightest, asked how all that brain power managed to get us into the Vietnam mess. Hubris was the easy answer: they were smart but too cocky. However, another explanation surfaced, one the aristocracy resisted. In 2016 and 2017 it exploded into the popular consciousness.

These last two years have revealed a simple truth: regardless of résumés, the aristocrats are nowhere near as bright as they think they are. For instance, the identity politics so many have fecklessly pushed completely undermines their own meritocracy myth.

Barack Obama became president because he was black, not because of anything he had done in academia, as a community organizer, or in politics. Hillary Clinton was next in line because she was a woman. Without her husband, the world would have never heard of her. How, as an aristocrat, can you argue for your own special merit when you’ve replaced the idea of merit with race, gender, and ethnicity? An aristocracy that no longer has its mythical basis is left with the blandishments of power and treasure—and the armed might of the state—and is on its way out. The Divine Right of Kings notion died before Europe’s absolute monarchies crumbled.

In their self-congratulatory isolation, enjoying only the support which they had bought and paid for (with other people’s money), America’s aristocrats had no idea that millions of America’s had rejected their pompous posturing. Hillary Clinton couldn’t convincingly answer why she was running for president, yet she was presented as an exemplar of merit and ability. Even many of her own supporters didn’t buy it, but the aristocrats shut their eyes and foisted her on the voters.

Donald Trump’s greatest achievement has been his exposure of the hypocrisy, corruption, and stupidity of America’s aristocrats. Even as he mowed down Republican contenders and it was clear his message was resonating with substantial numbers of voters, they dismissed him. November 8, 2016 shattered for good the myth—in force since Franklin Roosevelt and his New Deal whiz kids—of the exceptional aristocracy.

If the aristocracy is unexceptional, it has no basis for its pretension and condescension. It takes smarts to graduate from Harvard Law School. But it also takes smarts—which the aristocrats either don’t recognize or disparage—to run a business, operate complicated machine tools, fly a jet, harvest crops, design a semiconductor, or build office towers.

The elite don’t even acknowledge that their sustenance comes from the entrepreneurs, builders, and doers they deride. Nothing could have been more symbolically appropriate than the aristocracy’s take down by a businessman who had never held a government job. Most of the aristocracy knows very little about actual business and the world of real work. (Cocktail parties with Silicon Valley CEOs don’t count.) Trump, on the other hand, has had extensive dealings with politicians, bureaucrats, and the government.

Compounding stupidity, the aristocracy bet on Russiagate in a vain attempt to drive out the interloper and preserve its position. The story was so transparently thin that nobody really believed it, but it was all they had and they were desperate. It has boomeranged disastrously, giving Trump ample ammunition for counterattack. It has also destroyed the credibility of the FBI and the Department of Justice.

Even if the aristocracy recovers and drives Trump from office, there’s no going back. The aristocratic illusion has been shattered. Their claims of superiority are nothing more than self-serving screeches of denial. Contempt has replaced whatever respect Americans once had for their rulers. The bought-and-paid-for’s loyalty extends only to the next payday. When the payola ends, chaos begins. Funded as it is by debt and taxes on increasingly restive producers, the payola will end.

A ruling class that has lost its last vestige of legitimacy has nothing but force and fear to perpetuate its rule. The nation will grow more bitterly fractured as the skims and scams fall apart. The American aristocracy had better be sure its surveillance apparatus is in order, that it has the wherewithal to pay the military and police, and that it has infiltrated the populace with trustworthy informants and quislings, if that’s not a contradiction in terms.

Even with all those “assets,” the aristocracy is vastly outnumbered and has no moral force against the disgusted and the enraged, who every year have less to lose. Force and fear are the last refuges of doomed regimes. It all may collapse of its own unsustainable weight or there may be chaos and bloodshed, but regardless of the ultimate outcome, the aristocracy’s days are numbered.

And after the downfall, mercy will be in short supply.

Has It Been Years Since You

Read A Novel You Cherished?

AMAZON

KINDLE

NOOK

Diversity Politics Vs. White People: Who Will Win?, by Paul Craig Roberts

This is a good survey for anyone with the interest (and the stomach) to deep dive into “identity politics.” From Paul Craig Roberts at paulcraigroberts.org:

Identity Politics is the ideology of the liberal/progressive/left and the Democratic Party. Identity Politics teaches hatred of white people, all white people. An article last November in the student newspaper at Texas State University declared that white DNA is an abomination.

Americans, assuming that they are aware of this hostile statement toward white people, dismiss it as student silliness. They do not understand that it is the logical conclusion of the reigning ideology in America today. Naomi Klein, for example, writing in the current issue of Sierra, takes for granted the explanations of Identity Politics when she writes that the stakes in the 2016 election were enormously high for “those targeted by racist attacks as Trump fanned the flames of rising white nationalism . . . to the prospect of women losing the right to decide whether or not to become mothers, to the reality of sexual assault being normalized and trivialized at the highest reaches of power.”

Formerly, the liberal/progressive/left and the Democratic Party stood for the working class. In those days societal conflict was understood in class terms, and the capitalist was seen as the exploiter. Today the conflict is identity driven, with the white heterosexual male placed in the role as the exploiter of blacks, homosexuals and women.

The idea that power resides in the white heterosexual male is obviously erroneous. Imagine if the Texas college student had written that black DNA is an abomination or homosexual DNA is an abomination. The article would not have been published. But it is perfectly OK to denigrate whites. Indeed, white males have no protection against abuse, because they are not protected by quotas, political correctness, and hate speech prohibitions.

Whites are easily discriminated against, as the recent firing of James Damore by Google illustrates. Damore simply stated a scientific fact that males and females have different traits that suit them to different jobs. But this is a fact that is inconsistent with Identity Politics. Just as Trofim Lysenko managed to destroy Soviet genetics by denying facts, Identity Politics is destroying American society by denying facts. http://www.encyclopedia.com/science/encyclopedias-almanacs-transcripts-and-maps/disastrous-effects-lysenkoism-soviet-agriculture Ideologies are only interested in facts that confirm the ideology. When no such facts exist, ideologues make up the facts.

To continue reading: Diversity Politics Vs. White People: Who Will Win?

I Have A Dream! by Karl Denninger

Karl Denninger imagines a better world, at theburningplatform.com:

That we live in a world where every single move you made was tracked by the government and big corporations. 

There are cameras at every street corner, in every building and even in your own home, all connected to a gigantic cloud that was intentionally compromised by the government so it could see everything you did.

I have a dream!

That in exchange for silently cooperating with the government in putting those cameras and microphones everywhere huge corporations worth hundreds of billions of dollars would be given a pass from privacy laws and allowed to tap into that information too, both to sell you things and to screw you out of thousands of dollars every year by perverting the so-called market.

I have a dream!

That “self-driving” cars will soon make their appearance on the roads, but will always be connected to said cloud by law, with disconnection or independent action being an absolute offense and subject to immediate fines and confiscations. These vehicles will communicate exactly who is in them, where they’re going and where they’ve come from, building an impenetrable and permanent dossier on every single movement everyone in the country makes from birth to death that cannot be evaded or avoided.

I have a dream!

That the people of this nation would be so stupid that they’d fail to recognize that spending money you don’t have is a bankrupt premise and can never work, as it robs the very people who you “give” the money to and drives them further into poverty every single time.

I have a dream!

That the people of this nation would be so easily seduced that they would pay money to buy a microphone that was always on and they did not control, willingly putting it in their living room and, for many, another in their bedroom so on command that examination of their lives could be conducted not only when on the public streets but when they were having their most-intimate moments.

To continue reading: I Have A Dream!

Collapse of Construction Giant with 43,000 Employees Globally Sparks Fear and Mayhem, by Don Quijones

If you’ve never heard of UK infrastructure group Carillion, you will. From Don Quijones at wolfstreet.com:

“The company that runs Britain”: profits were privatized, costs will be socialized.

The decline and fall of 200-year old UK infrastructure group Carillion was as spectacular as it will be costly. It was forced into compulsory liquidation this morning, following the breakdown of crisis talks with its banks and the government. The company, with global sales of £5.2 billion in 2016, has 43,000 employees, including 20,000 in Britain and 10,000 in Canada. It’s saddled with debts and an underfunded pension plan.

Its shares had plunged by 95% over the past 12 months, from £2.40 ($3.53) in January 2017 to as low as £0.12 ($0.17).

“We have been unable to secure the funding to support our business plan, and it is therefore with the deepest regret that we have arrived at this decision,” the company said in a statement. And the government is now forced to guarantee public services, ranging from school meals and hospital maintenance to roadwork.

Carillion’s problems began after a spate of contract delays and a decline in new business left it at the mercy of its lenders and battling a burgeoning debt pile. The rot became irreversible once the hedge fund community, scenting fresh blood, began shorting the stock en masse in November 2016.

In July 2017 a partial review by auditors KPMG identified £845 million of contract write-downs, sparking a massive rout in the shares. The finance director who helped unearth those problems, Zafar Khan, was duly fired by management in September, but the damage had already been done: Carillion shares were down 70% and the stock was the most shorted in Europe. As a leading City analyst told City A.M, the extent of the problems was “gobsmacking.”

Last week, senior government ministers held a crisis meeting to discuss further steps. The choice was stark: either bail out the firm or it let it fail, with ugly ramifications for its project partners, employees, creditors, including three lenders, HSBC, RBS and Santander UK, and UK public services as a whole.

The government chose the latter.

To continue reading: Collapse of Construction Giant with 43,000 Employees Globally Sparks Fear and Mayhem

America’s Civil War, by Justin Raimondo

A civil war rages between America’s ruling class and its supporters, and everyone else. From Justin Raimondo at antiwar.com:

It’s here, it’s real, it’s now – and I know what side I’m on

For nearly twenty-five years I have been writing in this space about war: that is, the wars we have waged against other countries. I’ve heard every possible rationalization for these conflicts, from “weapons of mass destruction” to “he’s killing his own people” to babies being bayoneted in their incubators and on down the line.

Now that I’ve reached a milestone in my career as a chronicler of this kind of folly, and thought I’d seen it all, I’ve come upon something entirely new and that totally outdid my experience and expectations: civil war in America.

Oh, and you should hear the rationales! They make George W. Bush, Dick Cheney, and Richard Perle come off like paragons of honesty and rectitude.

According to a coalition of forces including the Democratic party, the FBI, the CIA, and most of the “news” media, the country has been taken over by Vladimir Putin and the Russian State: President Donald J. Trump is an instrument in their hands, and the independence of the United States has been fatally compromised: the President and his top aides are taking their orders from the Kremlin.

This wouldn’t even pass an elementary course in formulaic script-writing, not to mention that gigantic plagiarism problem such a project would pose: it’s been done to death. But a lack of originality isn’t something that would stop our spooks, as dogged as they are.

Our intelligence agencies are at war with the executive branch of government, and they have been ever since Trump triumphed in the Electoral College and decisively defeated Hillary Clinton. The FBI/CIA/Deep State have been trying mightily to reverse the election results since that moment, to no avail.

To continue reading:

Three-Hundred-Million Fell from the Eagle’s Aerie, by Doug “Uncola” Lynn

Who’s crazy? From Doug “Uncola” Lynn at theburningplatform.com:

I had lunch with a friend the other day and he called the mainstream media the “sunshine media” because they are shedding light on all of Trump’s dark deeds with Russia. Not kidding. As I persuasively tried to red-pill him regarding Robert Mueller, Rod Rosenstein, Uranium One, the DNC/Clinton/Fusion GPS fake Russian dossier, Obama’s weaponization of the DoJ and FBI against a presidential candidate, FISA warrants and Susan Rice’s felonious unmasking of American citizens illicitly surveilled – I saw a look of confused pity enter his eyes. He thought I was crazy.

In retrospect, I was acting, perhaps, a little… shall we say… passionate on these topics. I also realize one of the reasons people get upset when discussing politics and the reporting by the mainstream media, is because no one wants their friends to get fooled.  But on the way home I started to wonder:

“How can one convince someone else they are NOT crazy?” 

After lunch, I read a humorous story on a blog with the word “cuckoo’s nest” in the title and it made me think of the 25th Amendment positioning by Trump’s political opponents; both kind of funny and kind of tragic.  Kind of like Ken Kesey’s 1962 novel, “One Flew Over the Cuckoo’s Nest”, which was later made into a 1975 film of the same name. The book remains one of my personal favorites and the Academy Award winning movie is widely considered to be one of the best motion pictures ever made; ranking #33 in the American Film Institute’s top 100 films.

When I read Cuckoo’s Nest in high school I was so impressed that I wanted to learn more about the author. I was fascinated by Kesey, a one-time champion wrestler who later became an icon of the 1960s counterculture. I identified with Kesey as a wrestler although, at the time, I arrogantly considered his home state of Oregon to represent more of a civil war reenactor or national-guard-type level of wrestling; compared to my own Midwestern state, which ranked nothing less than the Green Beret, Navy Seal, or recon-Marine standard of matsmanship.

Then, in college, I also read “The Electric Kool-Aid Acid Test”.

But I digress.

To continue reading: Three-Hundred-Million Fell from the Eagle’s Aerie