Category Archives: Economics

It’s Time For All Good Men to Stop Fearing John Galt, by Tom Luongo

It’s time to stand up and be counted on vaccinations. From Tom Luongo at tomluongo.me:

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Is America Becoming Rome Versus Byzantium? By Victor Davis Hanson

If America splits up, it won’t be the first empire to do so. From Victor Davis Hanson at The Epoch Times via zerohedge.com:

In A.D. 286 the Roman emperor Diocletian split in half the huge Roman Empire administratively—and peacefully—under the control of two emperors.

A Western empire included much of modern-day Western Europe and northwest Africa. The Eastern half controlled Eastern Europe and parts of Asia and northeastern Africa.

By 330 the Emperor Constantine institutionalized that split by moving the empire’s capital from Rome to his new imperial city of Constantinople, founded on the site of the old Greek polis of Byzantium.

The two administrative halves of the once huge empire continued to drift apart.

Soon there arose two increasingly different, though still kindred versions, of a once unified Romanity.

The Western empire eventually collapsed into chaos by the latter fifth century A.D.

Yet the Roman eastern half survived for nearly 1,000 years. It was soon known as the Byzantine Empire, until overwhelmed by the Ottoman Turks in 1453 A.D.

Historians still disagree over why the East endured while the West crumbled. And they cite the various roles of differing geography, border challenges, tribal enemies, and internal challenges.

We moderns certainly have developed unfair stereotypes of a supposedly decadent late imperial Rome of Hollywood sensationalism that deserved its end. And we likewise mistakenly typecast a rigid, ultra-orthodox bureaucratic “Byzantine” alternative that supposedly grew more reactionary to survive in a rough neighborhood.

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Empty Christmas stockings? Don’t blame COVID; blame California, by Andrea Widburg

Behind every shortage worthy of the name lurks government. From Andrea Widburg at americanthinker.com:

The conventional wisdom from the left is that COVID is the reason that shipping containers are in the waters off California with no stevedores or truckers available to take care of them.  The implication is that if people would stop being selfish and take the vaccines, the whole problem would magically vanish.  That’s nonsense.  As a couple of astute articles explain, the problem is that California has passed two laws — one for “climate change” and the other as a sop to the unions — that destroyed much of California’s trucking industry.  Add in woes unique to the industry and COVID payments that discourage people from working and…voilà!…empty Christmas stockings.

Stephen Green, at PJ Media, explains some of what’s going on.  As a preliminary matter, truckers are aging out of the job, and new ones aren’t coming along.  Because federal law requires that truckers be at least 21, kids who leave school at 17 or 18 get involved in other careers, leaving trucker shortfalls.  Women don’t offset this problem because, as is typical for most physically difficult jobs, it’s not their thing.  Those are long-term problems.

The short-term problem, though, is that California has passed laws taking trucks off the road:

Twitter user Jerry Oakley reminds us that “Carriers domiciled in California with trucks older than 2011 model, or using engines manufactured before 2010, will need to meet the Board’s new Truck and Bus Regulation beginning in 2020.” Otherwise, “Their vehicles will be blocked from registration with the state’s DMV,” according to California law.

“The requirement is to purchase electric trucks which do not exist.”

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Dollar’s Purchasing Power Plunges Further, as Housing CPI Begins to Climb, Food & Energy Soar, New Vehicle Prices Spike, by Wolf Richter

Just remember that there’s one root cause for both the supply chain issues and rising prices: fiat debt creation and monetization by central banks. From Wolf Richter at wolfstreet.com:

CPI inflation highest since 2008 and 1991.

The Consumer Price Index (CPI) jumped 0.4% in September from August. The relentless series of jumps started in January when this “transitory” inflation took off. But now, “transitory is a dirty word,” as Atlanta Fed President Raphael Bostic phrased it so elegantly, because the underlying dynamics have made it persistent: as some prices back off, others are surging.

On an annual basis, CPI jumped by 5.4%, matching the June high this year, and both are the highest since July and August 2008 (5.6% and 5.4%), and all four are the highest since early 1991, according to data released by the Bureau of Labor Statistics today.

The increase was driven by numerous factors including food and rents and gasoline and utilities and new vehicles.

Food and energy can move sharply and erratically, often following prices of commodities. With food and energy removed, the “core CPI” rose by 0.2% for the month and by 4.0% year-over-year.

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Contagion! By James Rickards

In a massively over-indebted and interconnected world, financial collapse can spread like wildfire. The Chinese property sector may be the beginning of the conflagration. From James Rickard at dailyreckoning.com:

There has been a litany of bad news recently, including the U.S. August humiliation in Afghanistan, China’s aggressive actions against Taiwan and increased tensions with Iran, North Korea and Russia.

It will take the U.S. years, possibly decades, to recover from the debacle of August 2021 and the collapse of American prestige. All of these geopolitical events combine to undermine confidence in U.S. power.

When that happens, a loss of confidence in the U.S. dollar is not far behind.

And, perhaps most importantly of all recent bad news, is a market meltdown and slowing growth in China.

Greatest Ponzi Ever

I’ve long advised my readers that the Chinese wealth management product (WMP) system is the greatest Ponzi in the history of the world. Retail investors are led to believe that WMPs are like bank deposits and are backed by the bank that sells them. They’re not.

They’re actually unsecured units in blind pools that can be invested in anything the pool manager wants.

Most WMP funds have been invested in the real estate sector. This has led to asset bubbles in real estate (at best) and wasted developments that cannot cover their costs (at worst). When investors wanted their money back, the sponsor would simply sell more WMPs and use the money to pay back the redeeming investors.

That’s what gave the product its Ponzi characteristic.

The total amount invested in WMPs is now in the trillions of dollars used to finance thousands of projects sponsored by hundreds of major developers. Chinese investors are all-in with WMPs.

Now the entire edifice is collapsing as I predicted it would.

The largest property developer in China, Evergrande, is quickly headed for bankruptcy. That’s a multibillion-dollar fiasco on its own. Evergrande losses will arise in WMPs, corporate debt, unpaid contractor bills, equity markets and unfinished housing projects.

China’s entire property and financial system is on the verge of a world-historic crack-up. And it won’t remain limited to China.

It comes back to contagion.

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What the Record Spike in “Quits” Says about the Job Market, Inflation, and How Labor Gained Pricing Power, by Wolf Richter

The non-transitory inflation is feeding into wage rates. From Wolf Richter at wolfstreet.com:

One more reason “transitory” and “temporary” have become a silly joke. Even the Fed is backing off promoting it.

By Wolf Richter for WOLF STREET.

The number of people who quit jobs voluntarily – to work for another company that offered higher wages and benefits and a signing bonus; to change careers entirely; to stay home and take care of the kids; to spend  more time with their money; or whatever – spiked by another 242,000 people to a record of 4.27 million in August, up 19% from August 2019.

This is what the Bureau of Labor Statistics reported today in its JOLTS report, based on a survey of 21,000 nonfarm business establishments and government entities.

The spike comes amid a very tight job market, with labor shortages cutting into sales and production, and contributing to transportation bottlenecks, amid record job openings that have been spiking for months, and amid aggressive efforts by companies to hire people away from other companies, which creates this spike of quits.

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Our Economy Is Starting To Break Down On A Very Basic Level, by Michael Snyder

Once you get past the title (Starting to break down? The economy’s been a debt-supported wreck since at least the turn of the century.) and the first sentence (I know many people, including me, who weren’t optimistic at all back in January, especially after January 6), this isn’t a bad article. Michael Snyder’s never at a loss for reasons to be pessimistic, but he supports his case well. From Snyder at themostimportantnews.com:

Do you remember how much optimism there was last January?  Many Americans were entirely convinced that really bright days were just around the corner, but instead things have taken a dramatic turn into the dumpster over the last 9 months.  The Afghanistan debacle was the worst foreign policy embarrassment in modern American history, the Biden administration is trying to deal with an unprecedented crisis on our southern border, and the way that our politicians are handling the pandemic is causing extremely deep divisions throughout our society.  In addition, our economy is starting to break down on a very basic level.  On a widespread basis, goods are not getting to the places they need to be when they need to be there, and services are often not available when people need them.  As time has passed, the “malfunctioning” of our economy has spread, and now the coming mandates threaten to make things a whole lot worse.

Just look at the chaos that was caused in Florida on Sunday

Southwest has canceled 1,018 Sunday flights as of 2 p.m. ET, according to flight tracker FlightAware. That’s 28% of the the airline’s scheduled flights and the highest of any U.S. airline by a wide margin.

American Airlines has canceled 63 flights, or 2% of its operation, while Spirit Airlines canceled 32 flights, or 4% of its flights, according to FlightAware.

Overall, more than 1,800 flights were canceled during the weekend, and Southwest is publicly blaming the problems on “weather challenges”

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Your Money AND Your Life, by Edward Snowden

If they can track every cent you receive or spend, how much freedom, if any, do you have left? From Edward Snowden at edwardsnowden.substack.com:

Central Banks Digital Currencies will ransom our future

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Will Gold Reach Unthinkable Heights? by Egon Von Greyerz

If the world’s governments and central banks continue to create unthinkable amounts of fiat debt instruments, gold’s price as measured against those instruments could well reach unthinkable heights. From Egon Von Greyerz at goldswitzerland.com:

It serves no purpose to hold gold.

Why should anyone hold gold when it has lost value against most other assets since 2009. At the end of this article, I will tell you when you must not hold gold and why I think gold will reach new highs shortly.

Making money is a cinch in today’s stock markets so why do I need gold?

For the investors who have managed to combine a good portion of luck with modest investment skills, they could have made 2,000X their money since 1997 on Apple or 2,170X on Amazon, also since 1997.

So $10,000 invested in both Apple and Amazon in 1997 would today be worth a neat $40 million.

BITCOIN IS UP 470,000X

And what about Bitcoin? If you spent $10,000 on Bitcoin in 2010 at 10 cents, you would today have 100,000 BTCs worth $4.7 billion. If you did, you hopefully haven’t lost your key.

But to rely solely on electronic entries on a computer or memory stick is clearly a very inferior form of wealth preservation.

Also, hindsight is a wonderful investment method and the most exact of all sciences.

Yet, you didn’t need to be an expert stock picker to make money in recent decades.

If you for example spent $10,000 on the Nasdaq in 2009, you would today have over $140,000 and that without selecting one single stock.

But by using 2009 as starting point, you will have conveniently forgotten that you had before that lost 80% on the Nasdaq since 2000.

So we can always prove the ultimate performance by choosing the right starting point.

GOLD – WORST ASSET CLASS SINCE 2011 AND BEST SINCE 1999

When gold antagonists want to disprove gold’s virtues, they choose the 1980 top as $850 as starting point. They then deride gold investors that it took 28 years before that level was reached again. They conveniently forgot to mention that gold reached new highs between1971 and 1980, going up 24X.

Stock investors could also point out that they have outperformed gold by 200% since 2011. But they forget to mention that since 1999 the Dow has lost 60% against gold (excluding dividends).

Again, this shows is that you can always prove the investment performance by picking a suitable starting point.

Still, it is an undeniable fact that gold has been the best asset class in this century.

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Featured Story Biden’s Illegal Migrants Should ‘Pay Their Way’ Into America, Unloading Cargo Ships Stuck Off California Coast, by Robert Bridges

Here’s a novel solution to two crises in one. From Robert Bridges at strategic-culture.com:

The travesty of justice must end if the United States has any hope of remaining a free and democratic sovereign state, Robert Bridge writes.

In September, the full madness of Joe Biden’s open border season became painfully visible as some 12,000 illegal Haitians were filmed huddled under the Del Rio International Bridge seeking shelter. So shocking were the images, which could have passed for one of Dante’s nine circles of hell, that the FAA banned news media from flying drones over the humanitarian wasteland.

Ironically, at the very same time these illegal migrants were getting ushered into the U.S. mainland with nowhere to go, international cargo ships were being restricted from delivering their shipments at U.S. harbors. Many of the vessels are still adrift at sea today, idling off the coast of California and beyond. So bad is the backlog, in fact, that Vice President Kamala Harris broke the news to Christians that Santa would have some trouble fulfilling orders on time this Christmas.

“The stories that we are now hearing about the caution that if you want to have Christmas toys for your children, it might now be might be the time to start buying them, because the delay may be many, many months,” she said at a conference in predominantly Buddhist Singapore, of all places.

In any case, instead of calling out the real Grinch behind the global gridlock, which was the Democrat’s draconian kill-switch response to the Covid pandemic, Harris blamed climate change for spawning “stronger typhoons” and a “sea level rise” that has purportedly wreaked havoc on “port infrastructure.” Does anyone recall the Weather Channel reporting on cargo ships going missing at sea lately, or was Harris just offering a tantalizing hint that climate change lockdowns are the next big event on the horizon?

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