Category Archives: Financial markets

With Heroes Like This, Who Needs Villains? by Michael Maharrey

Who knew that conjuring fiat debt from thin air was a heroic act? From Michael Maharrey at schiffgold.com:

According to Owen Ullmann in an op-ed published by USA Today, there are some unsung “heroes” in the battle against the coronavirus pandemic – the brave and courageous bankers at the Federal Reserve.

I think Ulmann misspelled “villains.”

Ulmann writes that the Fed “has taken extraordinary steps to prevent the global economy from crashing into irreversible catastrophe as business around the world grinds to a virtual halt.”

This is like praising the arsonist for trying to put out the fire he set by throwing more gasoline on it.

The Fed certainly has taken extraordinary steps. Just a few days ago, it announced QE infinity. It committed to buy an “unlimited” amount of US Treasury bonds and mortgage-backed securities. It also announced a new program to buy corporate bonds for the first time ever.

In Ulmann’s Keynesian wonderland this is fantastic news.

The Fed can create unlimited amounts of dollars — that’s right, trillions, if required — to ensure that banks have enough funds to make emergency loans to businesses large and small.”

Yes indeed. Printing new money out of thin air so companies, governments and individuals already drowning in debt can borrow more money is the prescription for saving the economy! Free money for everybody!

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Helicopter Money for Wall Street, by Wolf Richter

In case you were worried that Wall Street might catch the coronavirus, fear not. An insane amount of central bank balance sheet expansion is meant to keep Wall Street feeling chipper. Time will tell if it does so. From Wolf Richter at wolfstreet.com:

Fed’s assets spike to high heaven to bail out the imploded Everything Bubble it had worked so hard to inflate over the past decade.

Total assets on the Fed’s weekly balance sheet, released this afternoon, spiked by $586 billion in one week, to $5.25 trillion. This doesn’t even include yet the bulk of the mortgage-backed securities (MBS) the Fed bought over the past two weeks because the Fed books them when its trades settle, and MBS trades take a while to settle. So they will show up later.

Over the past two weeks, total assets have ballooned by $942 billion – again not including the bulk of the MBS it bought during that time, which will be booked when they settle. Money creation at its finest:

If the Fed had sent that $942 billion it created over the past two weeks to the 130 million households in the US, each household would have received $7,250. But that didn’t happen. That was helicopter money for Wall Street.

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Leveraged Loans Blow Out. Distressed Corporate Debt Spikes, by Wolf Richter

James Grant once said something to the effect that reaching for yield is more dangerous than reaching for razor blades in the dark. He was right, as the last few weeks have amply demonstrated. From Wolf Richter at wolfstreet.com:

This is the moment when yield-chasing turns into a massacre.

Leveraged loans – they’re issued by junk-rated overleveraged companies with insufficient cash flows – are part of the gigantic pile of risky corporate debt that is now being brutally repriced as concerns over credit risk (the risk of default) are finally bubbling to the surface. Since February 22, the S&P/LSTA US Leveraged Loan 100 Index, which tracks the prices of the largest leveraged loans, has plunged 20%:

The index is another example of how in these crazy times, when the most splendid Everything Bubble collided with the coronavirus, ever more financial metrics are violating the WOLF STREET beer mug dictumthat “Nothing Goes to Heck in a Straight Line.”

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The Crash Of The “Everything Bubble” Is Here – And It’s Not Going Away Anytime Soon, by Brandon Smith

Long after the coronavirus recedes from the public’s attention we’ll be reeling from its damage to the US and global economy. From Brandon Smith at birchgold.com:

economy crash

Photo by Flickr.com | CC BY | Photoshopped

Last November, in an article titled ‘The Economic Crash So Far: A Look At The Real Numbers’, I outlined the reality of statistical fraud by governments and central banks to hide the ongoing economic downturn. The Everything Bubble, perhaps the biggest debt fueled bubble in history, has been propping up the global economy for several years, but began to waver dramatically at the end of 2018, as the Federal Reserve tightened liquidity conditions into economic weakness (just as they did in 1929 and in the early 1930’s as the Great Depression took hold).

In that article, I warned:

“If the global economy is not on the verge of collapse, then why did central banks keep propping it up for the past ten years? And if central banks have been propping up the system, how much longer do you think they can do this? How much longer do you think they want to do it? What if one day they decide to let the entire house of cards tumble? What if such an event actually benefits them?”

An important factor to this discussion is the idea that the central banks are “ignorant” to the damage they do. This claim is everywhere in the alternative media these days, and it is simply wrong. The banking elites are well aware of the damage they do, and often it benefits their bigger agenda of one world centralization. In fact, Jerome Powell openly admitted in the minutes of the October 2012 Fed meeting exactly what would happen if the Fed took actions to tighten cash flows while markets were addicted to stimulus. Then, as soon as he became the head of the central bank, he implemented that exact policy.

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The Cat Leaves The Bag, by Eric Peters

The US numbers, particularly deaths supposedly due to Covid-19, certainly aren’t supporting the hysterical case being made for the draconian evisceration of our remaining liberties and the shutdown of the economy. From Eric Peters at ericpetersautos.com:

Hysterical headlines today – Sunday, March 21 – about the number of Americans supposedly identified as having been infected with Coronavirus. The modifier supposedly used because the tests being used to identify the virus are of dubious reliability. But, regardless – 25,493 as of today. A big number, banner-headlined across the Internet.

But there’s another number you have to look for, which isn’t being banner-headlined around the Internet.

307.

That’s how many Americans have supposedly died from WuFlu so far. The modifier added – and italicized – to emphasize the fact that it is not known whether it was the WuFlu that killed all these people or old age/underlying infirmity pushed over the edge by what would otherwise have just been a nasty cold.

But regardless, 307.

Weeks Where Decades Happen, by Jim Quinn

It shouldn’t be a surprise given the state of our world how quickly things can go to shit, but it always is to most people. From Jim Quinn at theburningplatform.com:

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“There are decades where nothing happens; and there are weeks where decades happen.”Vladimir Ilyich Lenin

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 “A Crisis mood does not guarantee that the new governing policies will be well designed or will work as intended.

To the contrary: Crisis eras are studded with faulty leadership and inept management—from President Lincoln’s poor record of choosing generals to President Roosevelt’s colossal blunders with such alphabet soup agencies as the AAA, NRA, and WPA.

What makes a Crisis special is the public’s willingness to let leaders lead even when they falter and to let authorities be authoritative even when they make mistakes.

Wars become more likely and are fought with efficacy and finality. The risk of revolution is high—as is the risk of civil war, since the community that commands the greatest loyalty does not necessarily coincide with political (or geographic) boundaries. Leaders become more inclined to define enemies in moral terms, to enforce virtue militarily, to refuse all compromise, to commit large forces in that effort, to impose heavy sacrifices on the battlefield and home front, to build the most destructive weapons contemporary minds can imagine, and to deploy those weapons if needed to obtain an enduring victory.” – Strauss & Howe – The Fourth Turning

The quote by Lenin has been reverberating in my conscience for the last few weeks. I believe the quote from Strauss & Howe provides context to what has happened and will happen as this Fourth Turning advances towards its climax. I began a new role in my organization two weeks ago, after only seven months in my previous role. I’ve been in non-stop crisis meetings, as this coronavirus pandemic has flipped everyone’s world upside down. As of Thursday, we were ordered to work from home.

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The Enemy of America, by Brian Cates

If you’re hoping a lot of people die so that markets will crash and a president you don’t like won’t get reelected, what does that make you? From Brian Cates at uncoverdc.com:

If you’d told me just a few weeks ago that Trump Derangement Syndrome had reached the point that prominent American politicians and news media people would be openly rooting for a major pandemic to collapse the financial markets, I would not have believed it. Surely, they would never go THAT far, I would have thought.

And then I watched it happen before my eyes.

I watched ghouls in human form hoping a virus would kill hundreds, if not thousands of their fellow Americans so the Dow Jones and the NASDAQ would plummet, and this could be used to politically damage a President they didn’t like.

Let me tell you something- I don’t like President Obama. I didn’t when he was in office and I still don’t. But even when he was at his worst, my distaste for Obama would never have led me to wish for some disaster that would kill enough Americans so that it could be used to drive him from office.

Even when Obama’s mishandling of the entire Middle East led to bloodbaths in Egypt, Libya, Iraq, Syria, Yemen and elsewhere that killed hundreds of thousands of people, it never even occurred to me to hope for some disaster to strike my own country that was so bad it would hurt his reelection chances.

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