Money Flow Trading Method along with Risk Management

https://www.zerohedge.com/news/2019-...ops+to+zero%29

Authored by Mac Slavo via SHTFplan.com,


The debt crisis in the United States of America has reached apocalyptic proportions. A new and horrifying report out details the reason why 63 of America’s largest cities are completely broke: debt and overspending.
https://zh-prod-1cc738ca-7d3b-4a72-b...jor-city-2.jpg


According to a recent analysis of the 75 most populous cities in the United States, 63 of them can’t pay their bills and the total amount of unfunded debt among them is nearly $330 billion. Most of the debt is due to unfunded retiree benefits such as pension and health care costs. That means those depending on that money, likely won’t see a dime of it.

“This year, pension debt accounts for $189.1 billion, and other post-employment benefits (OPEB) – mainly retiree health care liabilities – totaled $139.2 billion,” the third annual “Financial State of the Cities” report produced by the Chicago-based research organization, Truth in Accounting (TIA), states. TIA is a nonprofit, politically unaffiliated organization composed of business, community, and academic leaders interested in improving government financial reporting.

“Many state and local governments are not in good shape, despite the economic and financial market recovery since 2009,” Bill Bergman, director of research at TIA, told Watchdog.org.

The top five cities in the worst financial shape are New York City, Chicago, Philadelphia, Honolulu, and San Francisco. These cities, in addition to Dallas, Oakland, and Portland, all received “F” grades. In New York City, for example, only $4.7 billion has been set aside to fund $100.6 billion of promised retiree health care benefits. In Philadelphia, every taxpayer would have to pay $27,900 to cover the city’s debt. In San Francisco, it would cost $22,600 per taxpayer.

By the end of Fiscal Year 2017, 63 cities did not have enough money to pay all of their bills, the report states, meaning debts outweigh revenue. In order to appear to balance budgets, TIA notes, elected officials “have not included the true costs of the government in their budget calculations and have pushed costs onto future taxpayers.”
–Hartford City News Times

To say that more simply: your children have been sold into debt slavery and owned by the governments; both local and federal. The government is officially punishing the unborn for their inability to handle money.


What a time to be alive…
One major problem area TIA identifies is that city leaders are lying. (What a shock! A lying politician…) These political masters have acquired massive debts despite the balanced budget requirements imposed on them by scamming the public and enslaving them.


“Unfortunately, some elected officials have used portions of the money that is owed to pension funds to keep taxes low and pay for politically popular programs,” TIA states.


“This is like charging earned benefits to a credit card without having the money to pay off the debt. Instead of funding promised benefits now, they have been charged to future taxpayers. Shifting the payment of employee benefits to future taxpayers allows the budget to appear balanced, while municipal debt is increasing.”

It’s only a matter of time until this system built on debt and theft comes crashing to the ground.
https://zh-prod-1cc738ca-7d3b-4a72-b...in-the-USA.png

How prepared are you?

https://www.zerohedge.com/news/2019-...aint-buying-it

More FREE market intel at Askbrokers.com
The recent euphoria was never acknowledged by the JPY. Why do we watch the JPY?
When the JPY weakens, the stock market (mainly the US) tends to rise, and when the JPY strengthens, equity markets tend to fall. Why this relationship?
The JPY is a great “mood” risk indicator due to the carry trade, investors use the JPY to fund cheaply due to low rates in Japan, sell it and buy the USD, all in order to buy riskier assets such as US stocks.
Depending on global correlations, the JPY tends to move in tandem with other equity markets at times as well.
The initial bullish continuation from the Fed was to be faded. We outlined our argumentshere this morning.
Note that the JPY has been diverging rather big over past days. SPX (orange) traded some 3% lower when the JPY traded at these levels around mid-January.



The same divergence has been unfolding between the Eurostoxx 50 (orange) and the JPY (white).
Do you get carried away by Powell’s talk or do you “trust and follow” the big capital flowing in the mighty Yen?

Source: charts by Bloomberg

could you plz throw some light, what is RISK ON or RISK OFF??

RISK ON is when the Equity Markets are going up.

RISK OFF is when the Equity Markets are going down and money flows into Bonds and safe haven currencies such as USD/JPY

https://www.investopedia.com/terms/r...n-risk-off.asp

BREAKING DOWN Risk-On Risk-Off
Investors' appetites for risk rise and fall over time. At times, investors are more likely to invest in higher-risk instruments than during other periods, such as during the 2009 economic recovery period. The 2008 financial crisis was considered a risk-off year, when investors attempted to reduce risk by selling existing risky positions and moving money to either cash positions or low/no-risk positions, such as U.S. Treasury bonds.


Not all asset classes carry the same risk. Investors tend to change asset classes depending on the perceived risk in the markets. For instance, stocks are generally seen as riskier assets than bonds. Therefore, a market where stocks are outperforming bonds is said to be a risk-on environment. When stocks are selling off and investors run for shelter to bonds or gold, the environment is said to be risk-off.


Earnings, Economic Reports and Central Bank Statements Can Influence Risk Sentiment
While asset prices ultimately detail the risk sentiment of the market, investors can often find signs of changing sentiment through corporate earnings, macroeconomic data, global central bank action and statements, and other factors.

Risk-on environments are often carried by a combination of expanding corporate earnings, optimistic economic outlook, accommodative central bank policies and speculation. As investors feel the market is being supported by strong influential fundamentals, they perceive less risk about the market and its outlook.
Conversely, risk-off environments can be caused by widespread corporate earnings downgrades, contracting or slowing economic data, uncertain central bank policy, a rush to safe investments, and other factors.

Investors Give Up Returns For Safety During Risk-Off and Give Up Safety For Returns During Risk-On
As the perceived risk rises in the markets, investors jump risk assets and pile into high-grade bonds, U.S. Treasury bonds, gold, cash and other safe havens. While returns on these assets are not expected to be excessive, they provide downside protection to portfolios during times of distress.
When risks subside in the market, low-return assets and safe havens are dumped for high-yielding bonds, stocks, commodities and other assets that carry elevated risk. As overall market risks stay low, investors are more willing to take on portfolio risk for the chance of higher returns.


Benjaminis

http://straightmoneyanalysis.com/

Upcoming Media Appearances

Joe Meyer will be appearing on Coast to Coast AM on January 17, 2019 with host George Noory.


Joe's interview on Trad Cat Radio show. Listen again on Youtube >>

Joe made an appearance on All The Economic Data Points To An Economic Collapse - Youtube. Listen it here again >>

Joe is now appearing on a regular basis with two new radio stations
AM 1450 WOL in Washington , DC and with WCHD 1200 AM in Detroit, Michigan . He appears with these stations on the first of every month to give a update on all of the Markets and to discuss the Economy.

He also will be appearing on Television in New York and New Jersey on the following stations: Time Warner NY 1, TV Asia, WPIX Channel 11 News and News 12 New Jersey. Details to follow soon...

Click Here for Complete Media Appearances»

When is my 1st class for 1 hr?

did you get any chance to see all open positions in my demo account??

Monday !!!

Yes watching them !!!

https://ecp.yusercontent.com/mail?ur...pNvpPkrtnw--~C
Cognitive Dissonance posted
Perhaps It’s Time to Believe the Impossible
https://ecp.yusercontent.com/mail?ur...P27Zvi3Xdg--~C

"Alice laughed: "There's no use trying," she said; "one can't believe impossible things." "I daresay you haven't had much practice," said the Queen. "When I was younger, I always did it for half an hour a day. Why, sometimes I've believed as many as six impossible things before breakfast." - Alice in Wonderland.

It is often said, usually by those who wish to “educate”, control and manipulate us, that we are defined by what we believe. I submit it’s the other way around. We are defined, or more accurately confined, by what we disbelieve and think impossible, or at a minimum, improbable.

Once we consign something to the impossible, unbelievable, farfetched, unlikely, preposterous and unreal cognitive file, rarely, if ever, do we fish it back out of the garbage bin for reassessment and reconsideration. And why would we do so since it clearly belonged there to begin with, otherwise we never would have discarded it in the first place.

That right there is a perfect example of circular logic and emotionally comforting thinking.

From the point in time when non-religious standardized thinking was institutionalized, more commonly known as the scientific revolution of the 16th and 17th centuries, we have been conditioned to believe everything and anything can (eventually) be cataloged, quantified, qualified and confirmed…or denied. More importantly, the scientific method insists “real” truth can only be verified by way of uniform methods that produce repeatable results.

When dancing on the fringe, this mindset requires the use of measuring instruments not yet invented or even conceived of when pushing the boundaries of accepted thought and “reality”. If one disbelieves something, or at best thinks it highly improbable, what real incentive does that person, entity or institution have to pursue that line of thought. The answer, of course, is little to none. This leaves cutting edge explorations to those who are both brave enough to swim against the consensus belief system while also somehow funding those explorations.

This hardening of the cognitive arteries extends far beyond scientific principals and findings. And from my own personal point of view, it’s just another form of collective cultural corruption designed to maintain the status quo for all involved, including every single person alive today. If we are conditioned to believe, we are conditioned to disbelieve as well. And eventually we will fight to remain safely within the cerebral confines of our sheltered minds.

For example, everyone in their right mind knows 2 + 2 = 4. This is a self-evident fact that can easily be proven. Just count the fingers on your hands if you wish to be affirmed in your thinking. But the mathematical tool we use to “count” those fingers is Base 10, which makes perfect sense because we all have ten fingers and ten toes, therefore counting via Base 10 is perfectly normal and natural.

Though I might argue Base 5 would also make sense.

But believing 2 + 2 = 4 to be an irrefutable fact completely closes the intellectual door to using any other tool with which to count. For example, if we were to count using Base 3, then 2 + 2 would equal 11, only in this case “11” in Base 3 converts to “4” in Base 10. So, in a sense, 11 = 4 when the proper parameters and perspective are understood.

Of course, in the interest of clear and concise communication, it makes perfect sense for everyone to employ the same “language” (in this case Base 10) when “speaking” in mathematical terms. But 2 + 2 = 4 only applies when counting in Base 10 and is not “truth” in all senses of the word. Because we are trained to think in binary absolutes, of either right or wrong, because we are told 2 + 2 = 4 is empirical truth, the whole truth and nothing but the truth, our minds of shuttered of any and all other perspectives and realities.

Very little, if anything, of what we purport to “know” is learned firsthand through direct experience or inquiry. Nearly all we believe we know is taught to us by those who were also first taught what they believe they “know”. Meaning the present-day consensus reality is a shared “illusion” of unknown validity and is mostly based upon self-interested circular logic and self-reinforcing confirmation.
I think; therefore, I am…I think. Besides, my fellow insane asylum inmate tells me I am, therefore I must be real because I can clearly see she is real; therefore, she is thee and I am me.

When we are told (by experts and authorities who obviously “know” more than we do) that one person, place or thing is true and correct, all other explanations, versions, concepts and alternative realities become essentially immaterial, moot and thereby inherently and irrefutably wrong. While we are assured there are a billion paths to nirvana, like a rigged casino game, all outcomes are preordained to end within the cognitive corral of consensus reality.

To think, let alone act, outside the norm is heresy at best and social/career suicide at worst. While we will all excuse an occasional dalliance with perceived nonsensical thinking if properly buttressed with laughter and “just joking” disclaimers, those who dare dance with the dark sided of unchaperoned thought and action are scorned, shunned and isolated.

Such is the way of the hive mind.

Born into the hive mind, raised inside a self-reinforcing and self-affirming insanity, “educated” by those similarly afflicted and then mixed into the general population safely ensconced within the insane asylum, are we really surprised the consensus reality dominants our thoughts, speech, thinking and actions? So complete is the illusion, so confining the cognitive box, it becomes nearly impossible to escape the chains that bind. And why would we even try?

For thousands of years the prevailing belief was/is that humans are doomed to be nothing more than…well, human. That we are slaves to the human “condition”, with no hope of escape unless we subject ourselves to the will of others, be it God, Emperor, King or President. How convenient, at least for those who benefit from the controlling belief system by setting the narrative memes, that we are told the only way out is to dig deeper in. Are we really so brainwashed that we truly believe more conformity, compliance, cooperation and concession is the path to personal happiness, awareness and enlightenment?

For those who drink deeply of the hypnotic and narcissistic elixir so readily available as the price of admission, the answer is unequivocally yes. But others, in ever increasing numbers, are beginning to question reality as presented in ways large and small. Some are chipping away at political and religious dogmas and ideologies, asking basic questions of heretofore previously unchallenged fundamental “truths”. Others are traveling deeper down the rabbit hole and discovering there are more than just one or two layers to the deception.

https://ecp.yusercontent.com/mail?ur...W_u3s_hutQ--~C

But for those who wish to begin, a basic question presents. How does one break from the consensus reality when the only tools available are designed to circle us back into its domain? Or as I like to say, how does one gain sanity when the only perspective we have is insane?

The fundamental premise one must begin with is simple; humans are not naturally insane and the present-day consensus reality is not the only reality, just the oppressively dominant one. Therefore, our so-called human condition is artificially induced via conditioning, repetition and affirmation. This means the present consensus reality can be changed, if for now only on a personal level. In fact, our “own” reality is the only reality we can possibly change in our severely degraded cognitive state.

The key is to view the problem as one would/should view recovery from an addiction. For that is what we are, horribly addicted to a reality that is poisonous at best and terminal at worst. The first step in any recovery is acknowledging our condition, taking personal responsibility for our situation and recognizing we (alone if necessary) must push against the tide and enact fundamental changes in everything we do, think and say.

No big deal…right?

Instead of perceiving the task as impossible, meaning not believable, it helps to embody a few concepts. Breaking from the consensus reality is a long process, not a onetime event. Reversing a lifetime of rote conditioning and addictive behavior is difficult work that will consume the rest of our lives. There is no finish line to cross, if for no other reason than short of becoming a Buddhist monk and withdrawing to an isolated mountain top monastery, we are constantly assaulted by the consensus reality even as we attempt to understand it, then create and enter an alternative one.

But this doesn’t mean things will not get better. Far from it in fact. As with any new learning, experience builds as the basics are mastered and repeatedly practiced. How does one eat the proverbial elephant? One bite at a time is the only answer to this seemingly impossible elephantine task.

How does one think outside the box when the parameters of the box are the only way we know how to think? To start, question everything, especially our own personal belief system. This doesn’t mean all beliefs must be jettisoned simply because there are flaws embedded within. Our belief system acts as a stabilizer in an increasingly insane world. To merely cut loose is the cognitive equivalent of cutting our engines and letting the hurricane smash our boat upon the rocky shore just because we no longer trust the engine.

Strategic reassessment is necessary in order to avoid an existential crisis of epic proportions. Cognitive confusion and emotional breakdowns are not pretty. The object is to get better without getting significantly worse during our awakening, so baby steps are in order throughout the process. Progress, not perfection, is the standing order at all times.

I try to employ several techniques in order to become familiar and practiced with thinking and living outside the consensus. Or more accurately, exploring the frayed edges where the controlling memes lose their effectiveness. I started relatively late in life, a substantial impediment for much unlearning must take place to make room for alternative concepts and considerations. On the other hand, with age comes wisdom and a clearer understanding of the various tricks and cons used over and over again to keep the herd corralled.

One method is to create an alter ego with which I practice becoming someone I wish to be, but presently am not. Many people today have already created alter egos on various social media platforms, either in their own name or concealed behind a fictitious character or alternative name. The problem is they often use the alter ego to say (and sometimes do) things they wouldn’t ordinarily say or do if directly exposed to others. Since this behavior is encouraged within the insane asylum of modern-day consensus reality because it is unhealthy and destructive, those who do so are headed deeper into the insanity.

https://ecp.yusercontent.com/mail?ur...H0pqBtW13g--~C

My Cognitive Dissonance alter ego is a perfect example of my desire to practice that which I am not, but wish to be. And after a decade of practicing, I am closer than I was last week, month or year. The goal is not to become “Cognitive Dissonance”, for “he” is not me and I am not “him”, but to emulate those qualities I continuously imbue within the Cognitive Dissonance alter ego. Forward progress, not perfection, are my own personal marching orders.

The odd thing is this. By practicing the now possible as demonstrated by my alter ego, by devouring that elephant one bite at a time, the seemingly impossible soon becomes merely improbable, then impracticable, then very difficult, then problematic and soon enough actually possible. Managing personal expectations in order to gain perspective, rather than to self-deceive so we may apply temporarily soothing emotional and intellectual balms, is critical to forward progress.

This requires absolute personal accountability (I am solely responsible for all that I am and no one makes me do anything I don’t wish to do) self-honesty (all lies, at their root, begin with self-deception) and constant self (re)evaluation (the first signpost encountered is never the last).

But we need to do more if we are to begin to break consensus reality spell. And make no mistake about it, the hold it has upon us has all the characteristics of a spell cast upon us by powerful witches, overlords and demons. It is so commanding, in fact, that we know of no other way to live, work, speak and think. It is “reality” after all.

Michael Corleone said in ‘The Godfather Part 3’, “Just when I thought I was out, they pull me back in.” While we would all like to believe it is “they” who pull us back into the consensus reality, often it is the other way around. While the overall beat of the narrative drum is set by powerful political, financial, military, corporate, religious and now social media entities, at least for now our cushy cages aren’t locked from the outside.

Endlessly conditioned via the carrot and the stick, nearly all of us tend to pull our cage doors shut and padlock them from inside. The tendency for the frightened or inflexible mind to seek closed cages and equally closed minds is well known and thoroughly documented. One of the ways we do this is to seek out and “consume” only information (notice I did not say “truth” or “facts”) which confirm our beliefs and cognitive bias.

To help combat my deeply ingrained bias I force myself to read (consume) things that are contrary to my perspective and point of view. This doesn’t necessarily mean just politics, though that is presently the favored method the meme makers use to divide and control, but also science, education, religion and so on. The primary purpose is not to change my mind, though that is sometimes the outcome, but simply to exercise my perceptive filters and expose them to the knowledge there is more than one perspective with which to view the insanity.

Essentially, I am attempting to pull myself out of a rut even if the result is simply to get stuck in the one next to it. I am exercising my imagination and creativity, my tolerance to disbelieve things I want to believe and to believe things I wish to disbelieve and don’t wish to challenge. I am exploring possibilities, not fact, truth or settled opinion. The value derived is in the process, not the immediate result.

But that still leaves the problem of speaking, and thereby thinking, in consensus reality words, concepts and beliefs. It is extremely difficult to think outside the box when the terms and concepts used to (critically) think require remaining safely within the box. In many respects we don’t know what we don’t know mostly because the unknown has not been described using new terms which introduce new imagined concepts. It’s sort of a chicken and egg thing. Which came first?

Regardless of what we do, think or say, we must first visualize or imagine “it” before the “reality” of what we are now doing, thinking or saying can be created. In practice, nearly all of the basic building blocks of the consensus reality are pre-formed and rapidly accessed by our minds, then combined to create a reality that closely conforms to the consensus. While we may believe we are being creative, the vast majority of imagination is “pre-imagined”. That, essentially, is what I mean when I speak of the consensus reality.

For example, we don’t actually “imagine” a chair, despite the fact there are millions of different designs and our “thought” or “idea” might incorporate slightly different elements. The word “chair” is already established in the consensus lexicon. And the word, when summoned from memory, recalls already imagined design elements, aka already experienced pre-imagined reality. While the element style may vary from region to region, basically it is a device made of sturdy material with four supports and a seat, often a back and sometimes arm rests.

There is little to no substantial creative thought required to conjure up the consensus reality, precisely the reason we are firmly cemented within this reality.

I often say I have no original thought, just original composition and arrangement of old concepts and ideas. I simply lack the capacity to plow new ground in my present state of conditioned cognitive paralysis. But there are people out there who do possess the imaginative capacity to venture off the beaten path to some degree or another. In a broad category sense, they are the artists of the world. More narrowly they are authors, in particular those who write fiction and specifically those who write science fiction.

While general fiction writers are most definitely creative, for the most part they are simply more fully utilizing consensus reality concepts and beliefs in more creative ways. But by no means am I denigrating fiction authors, just as I do not denigrate myself for saying I have no original ideas, only original composition. And there are certainly fiction genres, such as horror (Steven King et al.) or fantasy (Alice in Wonderland, Harry Potter etc.) which compel the reader to push the boundaries of consensus reality.

https://ecp.yusercontent.com/mail?ur...T8E3Zhl7zA--~C

For me though, I find science fiction (and to a much lesser extent science fantasy) forces the mind to not only think, but imagine, outside the box. Even thought the science fiction author has already created the concepts while writing the story, because many of the concepts fall outside our consensus reality, we are forced to go beyond our known reality and visualize what we are reading as new or altered reality. Often, we must go where we have never gone before.

While the list of excellent science fiction, both old and new, is long and varied, I tend to seek out authors who force me out of my comfort zone by focusing on not just futuristic machines, by thought, concepts, language and thinking. While I prefer audio books, which allow me to listen while doing mundane chores, physical books work just fine.

For example,
The Three-Body Problem Trilogy by Cixin Liu and translated from Chinese. An excellent study in how alien memes and narratives are created, propagated and assimilated while set in China’s Cultural Revolution perspective.

Rosewater by new author Tade Thompson, who explores how the integration of an alien entity changes everything. Set in Nigeria, this alone brings a fresh perspective to western cultural points of view.

The Dispatcher by John Scalzi, a delightfully interesting story about how life works when death doesn’t.

Stranger in a Strange Land by Robert A Heinlein, a classic that still resonates today for its eye opening perspective on engrained cultural beliefs when “groked” from an alien point of view.

Again, the purpose of this activity is to exercise our mind and imagination, to push beyond our conditioned comfort zone, to teach our mind, body and soul the invisible fence line is just an illusion we are conditioned to believe is real. It’s sort of a “fake it until you make it” exercise, adding unfamiliar experiences to the mix that help create memories, which in turn begins to supplant conditioned cognitive reflex. Do it often enough and it enters long term memory from which the consensus reality is retrieved and realized.

The above are just a few suggestions on ways we can begin to pull out the deep roots of consensus reality perception and commence to create our own alternative reality. The key is to understand one simple idea. We are deeply immersed inside an all consuming and very convincing consensus reality. As Albert Einstein once said, “Reality is merely an illusion, albeit a very persistent one”. To expect we can escape after performing a few Jedi mind tricks is naïve and self-delusional.

The one item not outlined above is probably the most important facet of this practice. If we remain as deeply immersed in the consensus reality as we presently are, no amount of expended effort in the opposite direction is going to move us very far off the starting line. When standing under a waterfall, a garden hose isn’t going to make much of a difference. We must begin to withdraw physically, mentally and emotionally from the hustle and bustle of everyday life inside the matrix of insanity.

For most this is the most difficult part of the journey. Many won’t even try, preferring the insanity they know to the unfamiliar and frightening reality of personal responsibility and sacrifice that can lead to greater self-understanding and enlightenment. To walk away, or even just distance ourselves, from the hive mind is to experience self-imposed isolation and a rejection of much of the external affirmation we have been conditioned to believe we need. It takes courage and perseverance to be contrary to the herd for any substantial period of time.

This is why I said earlier we cannot discard all our anchors at once, regardless of their flaws and entanglements. For to do so mostly assuredly will destabilize us to the point where we are falling back faster than we are moving forward. Two steps back with each step forward is not the way out, but deeper in. Whatever we do to begin the withdrawal process, the most critical aspect is to move toward a goal with purpose and intelligence rather than run from ourselves in fear and haste.

Perhaps it’s time to begin to believe the impossible.


01-31-2019

Cognitive Dissonance
https://ecp.yusercontent.com/mail?ur...18yzVa.hWw--~C

CHECK IT OUT

https://www.patreon.com/posts/perhap...B8ncqA7INVnoaI

https://www.zerohedge.com/news/2019-...ops+to+zero%29

Alarm bells are ringing in China as Beijing continues its relentless crackdown on shadow banking.


Hundreds of Chinese companies issued profit warnings, telling their investors that earnings for the full year were going to be below expectations, according to Bloomberg. No less than 440 zombie companies disclosed the bad news on Wednesday, still one day before the deadline for such disclosures. The companies cited the country's economic slowdown (which is also catalyzing sales of Chinese-held U.S. real estate), as well as recent accounting changes that followed a $2.3 trillion equity market selloff last year.

The change is stunning: out of more than 2400 mainland listed companies, 373 have said they're going to post a loss - and what's more concerning, 86% of those companies were profitable in 2017.

There may be more bad news on the way: Thursday is the official deadline for companies to disclose whether or not they expect "substantial changes" in their financial results, so expect even more guidance cuts.
https://zh-prod-1cc738ca-7d3b-4a72-b...HI%20CHI_0.png

Meanwhile, fears about China's economy, and corporate profitability in a time of record bankruptcies now that the government is no longer backstopping every corporation, has become a collective concern among market participants.

https://zh-prod-1cc738ca-7d3b-4a72-b...ults%20bbg.jpg

Lv Changshun, a money manager at Beijing Dajun Zhimeng Investment Management Co., told Bloomberg: "Private companies are particularly vulnerable to the economic downturn. The deleveraging campaign and the deterioration of their corporate health is normal for any economy that is shifting gears and slowing down."

Among those issuing the concerning guidance are companies like Ford's biggest partner in China, Changan which warned that 2018 profit was likely going to tumble 93%. China Life, a massive insurer by market share in China, said its net income could be lower by 70%.

Beijing HualuBaina Film & TV Co., cloud-storage operator Gosun Holding Co. and First Tractor Co. also all said they'd post billions of yuan in losses for the year after having profitable 2017s. Anhui Shengyun Environment Protection Group Co. and Anhui Ankai Automobile Co. disclosed that their net losses would be twice as big as they were in 2017. Guangdong Homa Appliances Co. was halted limit down during Wednesday trading after guiding for a loss in 2018 after stating just months ago that they'd be profitable.

And since profit warnings in China - where companies notoriously misrepresent the rosy state of their finances (recall that one week ago, a Chinese company which filed for bankruptcy, reported that it "had" 15 times more cash than due debt yet it couldn't meet its debt obligations) tend to be an early warning for liquidity problems, or worse, insolvency, the bond market has also felt aftershocks. The bonds of Chinese furniture maker Yihua Lifestyle Technology Co.’s fell to less than half of par. Air conditioning producer Zhejiang Dun’an Artificial Environment Co. has been put on a negative watch Chinese credit agency China Lianhe Credit Rating Co.
https://zh-prod-1cc738ca-7d3b-4a72-b.../chi%202_0.png

One reason why China's companies are suddenly "coming clean" was suggested by Qi He, a fund manager at Huatai Pinebridge Fund Management, who said that "companies whose shares are already quite battered have nothing to lose by lowering earnings forecasts or taking large impairments for 2018. Many of these companies are actually ‘taking a bath’ to begin anew in 2019."

Meanwhile, others are understandably worried that it's only going to get worse: Yu Dingheng, a fund manager at Shenzhen Flying Tiger Investment & Management Ltd. said: "we’re only just seeing the beginning of deterioration in corporate earnings as the economy slows further. Things will continue to go downhill for firms seeing business slowing and even as the macro-economy recovers, these individual firms will never be what they were."

As for China's economy recovering, that still remains wishful thinking for now: after China's greatest liquidity injection ever (over 1.1 trillion yuan two weeks ago) and after weak Chinese macro data in the last few months, which saw a plunge in China's trade data...
https://zh-prod-1cc738ca-7d3b-4a72-b...n%202019_0.jpg


... all eyes were on last week's avalanche of Chinese economic data. The Q3 bounce in macro data was extremely weak. We reported just last week that China's 2018 GDP growth had slowed significantly. China's annual GDP growth in 2018 was +6.6% - the weakest annual GDP growth since 1990.
https://zh-prod-1cc738ca-7d3b-4a72-b...18-12-58_0.jpg

Which is why as Rabobank's Michael Every said earlier today "That Chinese stimulus had better arrive soon..."

Bruce, what time on Monday?

https://economicprism.com/the-catego...hYSCAdIpV3L2FM

← An Honest and Easy Solution to Wealth Inequality

The Categorical Insanity of Central Banking

Posted on February 1, 2019 by MN Gordon
https://economicprism.com/wp-content...xicoCityDF.jpg

Currency debasement. Asset price inflation. Booms, bubbles, and busts. Yes, folks, central bankers have succeeded at making full hash of the world at large. This goes for the Federal Reserve too.

Tracing back recent financial disasters we find the mortgage meltdown coincided with the Fed’s interest rate raising cycle. The Fed had dropped rates following the dot com bust and, in return, puffed up a massive housing bubble. So they raised rates to let some air out and – pop! – the bubble exploded.

The dot com bust also coincided with Fed rate hikes. Rates had been dropped to bailout financial markets from the Long Term Capital Management fiasco and to stem contagion from the 1997 Asian financial crisis. The cheap credit was then channeled into the delusion that the internet would make everyone rich. So the Fed raised rates to impart some reality back to the stock market and – kaboom! – the Pets.com sock puppet was blown to bits.

And on and on these Fed exacerbated bubble and bust cycles go back through the decades. And maybe these failures are all in the past. And maybe they are of little significance to our present complications. And maybe the Fed will, this time, get it right. And maybe pigs will fly.

The hopeless truth is, central bankers always botch it. For example, this week, following the Federal Open Market Committee’s (FOMC) January meeting, the FOMC announced it would continue to price fix the federal funds rate at 2.25 to 2.5 percent.

Is this the correct rate? Is this the incorrect rate? Given that it was decreed by a focus group of central planners – as opposed to a real open market – we can assure you that it’s completely and utterly incorrect.

If you don’t already get this, you probably never will. So here’s what you need to know: The Fed always explodes financial markets and central bankers always botch it.


A Downright Disgrace
This premise, no doubt, is obvious and indisputable. Still, like witnessing a slow motion train wreck, we can’t look away. The ongoing disfigurement is transfixing…and has extended to every corner of the globe.


You see, several years ago, while visiting in-laws – and outlaws – in Mexico City, the true insanity of central banking was revealed to us in the most unlikely of places. We recount this brief tale today as a salutary reminder of the quackery explicit to the central banking profession. However, before we get to it, some context is in order…

To begin, currencies, both north and south of the Rio Grande, ain’t what they use to be. Several generations ago they were as reliable as a rooster’s call at dawn. Now they’re as crooked as a politician’s spine. We know this not by reading the history books, nor by hearsay, but by the honest, verifiable, silver dollar and silver peso we’re holding in our hands.

One coin, the Peace Dollar, is a United States silver dollar minted in the 1920s. At the time of its mint, one coin equaled one dollar and each dollar contained 0.77344 troy ounces of silver. The other coin, the 1922 Un Peso, is a Mexican silver peso. At the time of its mint, one coin equaled one peso, and each peso contained 0.3856 troy ounces of silver.

The exchange rate was real simple. Based on their silver content, two pesos equaled one dollar. Nowadays, both pesos and dollars are merely paper promissory notes issued by their country’s central banks. Their value is derived by their track record of stewardship, the size of their country’s military, and the international currency market’s acceptance of their government’s ability to make payments on their debt.

Today it takes about 19.14 pesos to buy one dollar. As you can see, the Mexican government has been less upright in managing its currency than the U.S. government has over the last 100 years. But when you use silver as the measuring stick, the picture changes…

In the 1920s it took about $1.29 to buy an ounce of silver. Today it takes $15.94 to buy an ounce of silver. This means silver presently costs 1,136 percent more in dollar terms than it did in the 1920s. This also means the U.S. Treasury, with aid from the Federal Reserve, has done an abysmal job managing the dollar.

In pesos, however, it’s a downright disgrace. In 1922, it took 2.58 pesos to buy an ounce of silver. Today an ounce of silver costs 305.09 pesos. Astonishingly, in peso terms, silver now costs 11,725 percent more than it did in the 1920s.


The Categorical Insanity of Central Planning
It doesn’t take much time in Mexico City to observe that behind the hustle and bustle, not only has the government successfully vaporized their currency, they have successfully vaporized their middle class. You can actually see its nonexistence everywhere you look. Yet, at the same time, you can see the ashes of a middle classes prior existence within the cracks of decay.


As an aside, the appearance of a shrinking middle class is now highly visible when traversing through nearly all major U.S. cities today. This is one of the tradeoffs of deficit spending based government stimulus that politicians fail to mention when promising free school, free drugs, free food, and a free retirement. Yet this is a discussion for another day.

The current task at hand is to properly characterize the true insanity of central banking, as it was revealed to us from the small pueblo of Tepoztlán – roughly 80 kilometers south of Mexico City. We’d made the trek out to the countryside to visit Tío Carlos (our mother-in-law’s brother); a man with unique capabilities.
Tío Carlos has never taken a medical course or formally studied medicine. Certainly, he can’t perform open heart surgery. We don’t know if he can even use popsicle sticks to set a broken finger. But to the entire pueblo he’s El Doctor.

When someone fears their body has been overtaken by evil spirits they visit El Doctor for “Limpia” – spiritual cleansing. With no more than a raw egg he’s able to transfer negative energy from a person’s body to the egg. We were told the egg acts as a sponge in this process.

This all sounds a little crazy, we know. But, apparently, these healings have been taking place in Mesoamerica since pre-Columbian times; much longer than central banking’s been around.

We doubt Tío Carlos knows much, if anything, about central banking. Though we’re certain he fully appreciates that, within his lifetime, his country’s bank notes have been transmuted to toilet paper.

As far as we can tell, while a bit crazy sounding, Limpias are generally harmless. Central banking, on the other hand, is categorically insane.
Sincerely,
MN Gordon

for Economic Prism
Return from The Categorical Insanity of Central Banking to Economic Prism
https://economicprism.com/wp-content...ragebanner.jpg
This entry was posted in Inflation, MN Gordon and tagged central banking, central planning, federal reserve, fomc, limpia. Bookmark the permalink.

1. Post 5,499
2. Cleanup
3. Quote
4. Merge
5. Edit
6. Jan 31, 6:26pm (12 hr ago)

1. https://cdn-assets.faireconomy.media...ar392875_1.gif BenjaminIs
2. | Commercial Member | Joined Dec 2014 | 4,607 Posts | Online Now

http://globalintelhub.com/main-page/

http://globalintelhub.com/economic-r...e-accordingly/

http://www.marketoracle.co.uk/Article64078.html

Will 35th Recession Bring A Swift Return To Zero Percent Interest Rates?


Interest-Rates / US Interest Rates

Jan 28, 2019 - 04:08 PM GMT
By: Dan_Amerman
http://www.marketoracle.co.uk/images...s/interest.gif


http://www.marketoracle.co.uk/images/diamond.gif

Many people view the seven years of zero percent interest rates experienced in the United States between 2008 and 2015 as being safely in the past, with normal times having returned.


As explored in this analysis, so long as the business cycle of expansions and recessions has not been repealed - then we are highly likely to see a swift return to a potentially protracted bout of zero percent interest rates with the next major downturn in the economy.


Indeed, even the staff of the Federal Reserve itself expects more frequent episodes of zero percent interest rates in the future, and for those episodes to be on a more protracted basis.

This just may change everything when it comes to the financial plans of retirement and other long term investors. Zero percent interest rates don't just eviscerate the ability of retirees to earn interest income, but they also fundamentally change stock, bond, housing and precious metals prices, moving them to places that are outside of the historical averages.

This analysis is part of a series of related analyses, an overview of the rest of the series is linked here.


A Change In The Cycles
As reviewed in the previous analysis in this series, which is linked here, the United States has experienced 34 cycles of expansion and recession since 1854. As explored in that analysis, the business cycle is an extremely reliable night and day cycle.

The sun has gone down 34 times, with those sunsets being the onsets of recessions. The sun has come up 34 times, with those sunrises being the beginnings of the expansions.
http://www.marketoracle.co.uk/images...ionCyclesA.jpg


However, as can easily be seen - the left side of the graph is very different from the right side. There was a major change after the Great Depression and the end of World War Two: the recessions grew less frequent and less severe, and the expansions became longer.


What happened was not random, but has been the result of an ongoing series of Federal Reserve interventions, which have transformed the business cycle relative to what it was before the Great Depression and World War II.


The 100% Reliable Way In Which The Fed Responds To Recession

The business cycle has changed because the Fed uses modern monetary policy to actively intervene in the business cycle, with the attempt to shorten recessions and to extend the economic expansions. There's some different aspects to it but the core for how the Federal Reserve has been containing recessions in the modern era and how they change the cycle can be seen in the graph below.
http://www.marketoracle.co.uk/images...onCyclesA4.jpg


The graph shows Fed Funds rates and recessions from 1977 to 2018, a period of a little over 40 years. There's a pattern that can be very easily seen: every single time that there is a recession, the Federal Reserve slashes interest rates.


The core of the policy is for the Federal Reserve to very rapidly force short term interest rates downwards in the attempt to jolt the economy out of recession. Now, the timing can be a little bit different because sometimes the Federal Reserve acts preemptively when they think a recession coming, but they turn out to be unable to prevent it. Sometimes they are a little bit late in the recognition that a recession has occurred - the starting dates of recessions are not known in real time, but are assigned afterwards when all the data is available for study.


The Federal Reserve often continues the cycle of reducing interest rates well after the official end of the recession, first because they are not sure the recession has ended yet, and then more importantly, because they are trying to make sure the economy has reliably and robustly moved into the next expansion, so that there is no backsliding into recession.


When we review each one of these cycles of recession and the modern monetary response of Federal Reserve - which is to slash interest rates - then we can see how this has worked in process over the last four or so decades.


For the recession of 1980, the decline started a little bit late as the Fed tried to overcome the persistent stagflation of the late 1970s, but Fed Funds rates were eventually forced down from a peak of about 17.5% (rounded monthly averages) to about 9%, which was a decline of about 8.5% in three months. Now that's a major reduction in interest rates!


When we look at the 1981 recession, there was an even bigger reduction, as the Fed dropped rates from the approximately 19% level - which they had raised them to in the attempt to break the back of inflation - down to about 8.5%, which was a decline of about 10.5%.

For the 1990 recession, the peak had reached about 9.8% before the Fed paused the increasing interest rate cycle then in process, because it appeared that the economy was in trouble. The trough after the end of the official recession was about 2.9%, so the total reduction in interest rates was just a little less than 7%.


When we look at the 2001 recession, rates had reached about 6.5% before the Fed paused. The Fed then forced rates down to just below 1% by the end of the cycle in the attempt to jolt the economy out of recession, so that was a reduction in interest rates of about 5.5%.


The Great Recession began at the end of 2007. Rates had reached about 5.25% the last time that the Fed had to pause a cycle of increasing interest rates.

Because rates started so low, not yet having recovered from the reduction needed to overcome the 2001 recession, the Fed had to slam interest rates down to about zero percent, so the reduction was about 5.25% (and that was not nearly enough by itself, as we will be covering in the next analysis in this series).



Over the last forty years and five recessions, the Federal Reserve has forced short-term interest rates down by an average of about 7.25% per recession.

This response to recession of rapidly decreasing interest rates has been 100% reliable in the modern era for a simple reason - that this is the policy. Slamming interest rates downwards is the very heart of what the Federal Reserve does when it recognizes a recession or the imminent danger of a recession. It does it every time, without exception.



The Coming Return To Zero Percent Interest Rates

In the last approximately 20 years the Fed has moved to a very different place than where they were for most of the post-World War II era. The last two recessions have been different, they have been worse than most, and they were each at least partially precipitated by asset bubble collapses. Having an asset bubble collapse which leads to major investment losses and reductions in household net worth that create persistent spending issues is not a normal feature of the typical business cycle recessions seen between the 1940s and the 1990s.


The tech stock asset bubble collapse precipitated the 2001 recession and because interest rates started from such a low point, the Fed had to knock rates all the way down to a 50 year low, as can be seen below.
http://www.marketoracle.co.uk/images...RErbA8L123.jpg


The graph above shows Fed Funds rates that fall in the range experienced between 1975 and 2000 in green and blue, and interest rate outliers - Fed Funds rates that are entirely outside of that range - in gold. As can be seen by the red numeral 1, in response to the 2001 recession the Federal Reserve knocked interest rates far down into the outlier range.
http://www.marketoracle.co.uk/images...RErbA4L123.jpg


When the Fed slammed Fed Funds rates down to a 50 year low, it also brought mortgage rates down into an outlier range, as can be seen by the red numeral 1 in the graph of 30 year mortgage rates above. Indeed, as explored in the analysis linked here, one of the primary reasons that the real estate bubble formed was the extraordinary low interest rates created by the Fed's response to the 2001 recession.


When that real estate bubble collapsed, it helped to precipitate the Great Recession. Unfortunately, Federal Funds rates started at an even lower level than they had been before 2001, and the Fed knocked interest rates down to zero percent in order to exit that recession, as can be seen below.
http://www.marketoracle.co.uk/images...RErbA4L123.jpg


Now, let's take another look at our graph of recessions and Fed Funds rates, and compare the right side graph - which is where we are right now - to the rest of the graph. Look at how low interest rates are right now, before a potential recession hits, and how different this is from where rates were before any prior recession.


We're starting at a less than a 2.5% Fed Funds rate, and it's a little uncertain what the Fed will do between now and a possible recession in the next 1-2 years. There is now quite a bit of discussion that the Fed will indeed "pause" in 2019, with no further rate increases. If rates do go up - the chances currently look very high that they will not go up by more than 0.5% or so, perhaps 1% at the maximum. Anywhere within that range, from no increase up to a 1% increase, would mean going into the next recession with much lower starting interest rates than with any prior recession in the last four decades.


It is very difficult to make definitive statements with regard to the economic future, but if there is one statement that can be made with close to 100% confidence, it is that if there is another recession, then the Fed will quickly slam interest rates right back down to zero percent (or less).


Many investors view zero percent interest rates as a bizarre anomaly which never should have happened, but are now safely in the past. However, if we look at history, and we then look not just history but we look at the source of that history which is what Federal Reserve policy is, then given that the average reduction in interest rates over the previous 5 recessions is about 7.25%, with a minimum of about 5.25%, and given that we are likely to start with a Fed Funds rate in the 2.25% to 3% range, perhaps 3.5% at the outside - those Fed Funds rates are almost certainly going straight back to zero percent.


What Federal Reserve history and policy shows us is that so long as the cycle is not broken, so long as there is a 35th iteration of recession, so long as we have night following day yet again, then interest rates will immediately move right back to zero percent (if not lower).



This cycle has radical consequences for investment prices, as well as profits and losses. Indeed there's extraordinary information value there because if there is a 35th iteration of recession followed by 35th iteration of expansion, then we're going to see a series of some of the biggest investment price changes that we have seen since 2006, and these changes are likely to impact every investment category.
http://www.marketoracle.co.uk/images...RErbA2L123.jpg


One example is housing prices as explored in the analysis linked here. When we had the golden outliers in terms of Fed Funds rate changes and mortgage rate changes, those in turn created the gold outliers above for housing price ranges - including those seen today, in the second "golden spike".

The real world investment side effects of the Fed's monetary policies has been to create an entirely different price range for housing, where almost every price has been a historical outlier, relative to the markets before the Fed's heavy-handed interventions. Rephrased, while "monetary policy" might sound hopelessly abstract, every house on every street in every neighborhood might have a value that is 20% to 40% different today than it would have been in the past (in inflation-adjusted terms), specifically because of extraordinary monetary policy interventions.


This then means that home prices are far more subject to rapid change with recessions and changes in monetary policy than they used to be. Volatility is up sharply: housing prices used to fluctuate in a band of about +10%/-10% relative to the inflation-adjusted mean, but now the volatility in housing prices is 4X to 5X as great.


So, just using the example of housing, if there is a 35th recession, and the Fed continues with the policies it has used every time since World War II, and Fed Funds rates do go right back down to zero percent - that is likely to again translate to outsized housing losses - and housing gains - in a way that can't be seen by studying the long term historical averages.


These same principles also hold true - with widely varying specifics - for bond prices, stock prices and precious metals prices. When the recession hits, all prices move, and when the Fed slams rates back down to zero percent in response - all prices move, and in a manner that is different than what we have seen in the past. This means that the common practice of expecting the investment statistics of the 20th century to endlessly repeat themselves could potentially lead to some dangerous mistakes.


The graphic below is something that I've been using in my analyses to help communicate the framework for what can happen to prices and returns in all categories, with each turn in the long established night and day historical cycles of recession and expansion, that are now being amplified by our modern heavy-handed Federal Reserve interventions.


The essence is that every time we have a change in the economic cycles (the columns), we also have potentially radical changes in each of the investment categories (the rows). Using a logical framework and an understanding of how the Fed's interventions have changed the markets, we can better identify where the risks are in each investment category, and where unusual opportunities may be available on a cyclical basis as well.
http://www.marketoracle.co.uk/images...dBlackCweb.jpg


An explanatory analysis for the matrix is linked here.

While parts of this analysis may sound negative - and there are indeed some major issues to be concerned about - there will also be many opportunities in these exaggerated cycles. As covered in the previous analysis, over the last 164 years we have seen 34 iterations of the sun going down and nighttime, and 34 iterations of sunrises and the day times that have followed. In both cases there can be extraordinary opportunities from an investment perspective for people who are aware of what is happening.



There is another source when it comes to the likelihood of future rounds of zero percent interest rates. Consider this excerpt from the August 2018 minutes for the Federal Open Market Committee (there is a much more in-depth discussion in my 2019 Cycles Overview):
"...spells at the ELB could become more frequent and protracted than in the past, consistent with the staff’s analysis."


The ELB in this case is Fed-speak for the Effective Lower Boundary for interest rates, which is zero percent. When the Fed staff looks at the future, the current low levels of interest rates, and the ongoing iterations of the business cycle - it doesn't only see zero percent rates in the past. It also sees them in the future, on a more frequent basis than in the past, and possibly on a more protracted basis with each iteration as well.


This may sound radical - but it is the opposite. This is very center of the current conventional wisdom when it comes to monetary policy. If anyone understands the dilemma posed by the business cycle and the current very low level of interest rates, it is the Fed themselves, and they know exactly what is likely to happen when it comes to running up against the boundary in the event of recessions, over and over again.


When we carry through to the investment implications - the cycles will still be with us, but many of the other aspects of investment performance are likely to be transformed. The key is to understand what is coming right now - rather than waiting to be blindsided by it - and hopefully this analysis has been helpful for you in that regard.


*******************************


Read the 2019 Cycles Overview brochure.
Read the investment strategies for crisis and the containment of crisis DVD course brochure.
Read the Spring 2019 workshop brochure.
Daniel R. Amerman, CFA


Website: http://danielamerman.com/


COMMENTS FROM BENJAMIN: WE ARE ALL PUPPETS ON THE WORLD STAGE. THOSE THAT NO LONGER WANT TO BE CONTROLLED FROM BIRTH TO DEATH CAN ACTUALLY DO SOMETHING TO CHANGE THEIR LIVES AND THEIR FUTURES.

HOWEVER MOST OF YOU READING THIS POST AND MY WORDS WILL DO NOTHING.

So a little test today. As I posted this I saw that there was 8 people reading the posts. None were registered to post. Those that will read this post over the next 7 days or so will also most likely not be registered to post here. THINK ABOUT IT LADIES AND GENTLEMAN... Please register so that you can post so that we can have intelligent discussions on how to make a difference and change things. I do not expect even three people to register because that is the way that it is. Have a great Weekend.


Benjamin

https://www.globalresearch.ca/financ...-knew-it/10392

The US Congress’ passage of a slightly modified form of the Bush Administration’s financial bailout plan on the week of October 3 has opened up the specter for the first time of a 1931-style domino wave of worldwide bank failures. That process is already underway across the US banking sector with the failure, nationalization or forced liquidation in the past weeks of Fannie Mae and Freddie Mac, of the giant Washington Mutual mortgage lender, and the rapid collapse of the nation’s fourth largest deposit bank, Wachovia. That was on top of a wave of smaller bank failures that began with IndyMac in the spring.
The new act has been described as the financial equivalent of the US Patriot Act, the law that gave the Bush Administration powers in violation of Constitutional safeguards under the climate of the September 11, 2001 attacks.


The treasury will have almost unlimited discretionary powers to price and buy distressed mortgage securities, or any other type of securities – including even car loans and student loans – which it considers important. Treasury can buy from any institution of its choice, through a process of its own design, which is as yet unknown and at a pace which the treasury deems appropriate. Moreover, the Paulson Treasury will ‘outsource’ most of the management of the $700 billion purchases to the very financial institutions responsible for creating the crisis.


The treasury is reportedly planning to use up to 10 private asset managers to manage the assets purchased under the plan. Big players like PIMCO, Black Rock and Legg Mason are reported likely to be chosen for what will be some of the world’s biggest asset management accounts. Heavy private sector involvement from the same community of investment bankers who are perceived to be the villains in this crisis, will make political management of the plan all the more difficult.

Former US Treasury Secretary Paul O’Neill in an interview has called the Paulson plan ‘crazy.’ O’Neill points out as this author and many other economists have, that the new plan does nothing to assure an end to the banking crisis. It merely rewards many of Paulson’s friends on Wall Street at US taxpayer expense. Were the moral backbone of the Democratic Congress at all strong, there would be calls for indictment of Paulson and others in the Bush Administration for criminal misconduct in the most brazen financial swindle in the scandal-ridden American finance history.


As the details of the present crisis reveal, there are huge ideological fault lines making for chaos and a potential meltdown of the Laissez Faire financial system. That present system, which was built on the back of Wall Street financial and banking deregulation since 1987 when Alan Greenspan, a devout follower and close friend of radical individualist Ayn Rand, became Wall Street’s man at the Federal Reserve for almost 19 years, is over now with the failure of the Henry Paulson $700 billion bailout scheme. Governments worldwide now face no alternative but to begin the painful process of putting the financial genie back in the bottle and re-regulating an out-of-control financial system. The failure of the UK Government and the US Government to address that fundamental issue is behind the present crisis of confidence.

A brief look at history

The Great Depression in Germany in 1931 began with a seemingly minor event—the collapse of a bank in Vienna, Creditanstalt, that May. For readers interested in more on the remarkable parallels between that crisis and that of today, I recommend the treatment in my earlier volume, Stoljece Rata.

That Vienna bank collapse in turn was triggered by a political decision in Paris to sabotage an emerging German-Austrian economic cooperation agreement by pulling down the weakest link of the post-Versailles system, the Vienna Creditanstalt. In the process, Paris triggered a series of tragic events that led to the failure of the German banking system over a period of several weeks. The post-1919 Versailles System, much like the post-1999 US Securitization System, was built on a house of cards with no foundation. When one card was removed, the entire international financial edifice crumbled.

Then, in 1931, there was an inept Brüning government in Germany, which believed severe austerity was the only solution, merely feeding unemployment lines to pay the Young Plan German reparations to the new Bank for International Settlements in Basle.

Then, in 1931 George Harrison, a Germano-phobe, was the inexperienced Governor of the powerful New York Federal Reserve. Harrison was a member of the anglophile Skull & Bones, the elite Yale University secret society which also included George H.W. Bush and George W. Bush as initiates. Harrison, who went on to coordinate the secret Manhattan Project on the development of the Atomic bomb under fellow Skull & Bones member, War Secretary Henry Stimson, believed the crisis had started not from abroad but with German bankers trying to make a profit at the expense of others.

Within weeks of rumor and jitters, the New York Bankers Trust, ironically today a part of Deutsche Bank, announced it would be forced to cut the credit line to Deutsche Bank and by July 1931 began to pull its deposits from all big Berlin banks. Harrison insisted the Reichsbank dramatically raise interest rates to stabilize things, only turning bad into worse as a credit crisis across the German economy ensued.

The Bank of England Governor, Montagu Norman, while somewhat more supportive of Luther argued that his friend Hjalmar Schacht was better suited to manage the crisis. On July 13, 1931, a major German bank, Darmstädter-und Nationalbank (Danat) failed. That triggered a general a depositors’ run on all German banks. The Brüning government merged the Danat with a weakly capitalized Dresdner Bank, and made large state guarantees in an effort to calm matters. It didn’t.

New York Fed governor, Harrison, who was personally convinced it was a ‘German’ problem, barked orders to Reichsbank chief Hans Luther on how to manage the crisis according to archival accounts. A foreign drain on Reichsbank gold reserves ensued.

The rest is history, the tragic history of the greatest most destructive war of the 20th Century, with all the suffering that ensued. At that time in history, the American banking elite saw itself, despite a stock market crash and Great Depression in America, as standing at the dawn of a new American Century.

The decline of the American Century

Today, in 2008, some 77 years later, a German Finance Minister stands before the Bundestag announcing the end of that American Century. Today the German government encourages a fusion of Dresdner with Commerzbank. Today Deutsche Bank, which some years ago acquired Bankers Trust in New York in a merger wave, appears to be in a stronger position than its American counterparts as Wall Street investment banks, some more than 150 years old as the venerable Lehman Bros., simply vanish in a matter of days. The American financial Superpower crumbles before our eyes.

In March 2008 there were five giant Wall Street investment banks, banks which underwrote Mortgage-Backed Securities (MBS), corporate bonds, corporate stock issues. They were not deposit banks like Citibank or Bank of America; they were known as investment banks—Morgan Stanley, Merrill Lynch, Goldman Sachs, Lehman Brothers, Bear Stearns.

The business of taking deposits and lending by banks had been split during the Great Depression from the business of underwriting and selling stocks and bonds—investment banking—by an act of Congress, the Glass-Steagall Act of 1933. The law was passed amid the collapse of the banking system in the United States following the bursting of the Wall Street stock market bubble in October 1929.

That Glass-Steagall act was a prudent attempt by Congress to end the uncontrolled speculative excesses of the Roaring Twenties by New York finance. It established the Federal Deposit Insurance Corporation to guarantee personal bank deposits to a fixed sum that restored consumer confidence and ended the panic runs on bank deposits.

In November 1999, after millions spent lobbying Congress, the New York banks and Wall Street investment banks and insurance companies won a staggering victory. The US Congress voted to repeal that 1933 Glass-Steagall Act. President Bill Clinton proudly signed the repeal act with Sandford Weill, the chairman of Citigroup.

The man whose name is on that repeal bill was Texas Senator Phil Gramm, a devout advocate of ideological free market finance, finance free from any Government fetters. The major US banks had been seeking the repeal of Glass-Steagall since the 1980s. In 1987 the Congressional Research Service prepared a report which argued the case for preserving Glass-Steagall. The new Federal Reserve chairman, Alan Greenspan, just fresh from J.P. Morgan bank on Wall Street, in one of his first speeches to Congress in 1987 argued for repeal of Glass-Steagall.

The repeal allowed commercial banks such as Citigroup, then the largest US bank, to underwrite and trade new financial instruments such as Mortgage-Backed Securities (MBS) and Collateralized Debt Obligations (CDOs) and establish so-called structured investment vehicles, or SIVs, that bought those securities. Repeal of Glass-Steagall after 1999, in short, enabled the Securitization revolution so openly praised by Greenspan as the “revolution in finance.” That revolution is today devouring its young.

That securitization process is at the heart of the present Financial Tsunami that is destroying the American credit structure. Citigroup played a major part in the repeal of Glass–Steagall in 1999. Citicorp had merged with Travelers Insurance company the year before, using a loophole in Glass-Steagall that allowed for temporary exemption. Alan Greenspan gave his personal blessing to the Citibank merger.

Phil Gramm, the original sponsor of the Glass-Steagall repeal bill that bears his name, went on to become the chief economic adviser to John McCain. Gramm also went on to become Vice Chairman of a sizeable Swiss bank, UBS Investment Bank, in the USA, a bank which has had no small share of troubles in the current Tsunami crisis.

Gramm as Senator in 2000 was one of five co-sponsors of the Commodity Futures Modernization Act of 2000. A provision of the bill was referred to as the ‘Enron loophole’ because the it was later applied to Enron to allow them unregulated speculation in energy futures, a key factor in the Enron scandal and collapse. The Commodity Futures Modernization Act, as I described in my earlier piece in May, Perhaps 60% of Today’s Oil Price is Pure Speculation, allowed investment bank Goldman Sachs (coincidentally the former bank of Treasury Secretary Paulson), to make a literal killing in manipulating oil futures prices up to $147 a barrel this summer.

Paulson’s impressive interest conflicts

The actions of Treasury Secretary Paulson since the first outbreak of the Financial Tsunami in August of 2007 have been directed with one apparent guiding aim—to save the obscene gains of his Wall Street and banking cronies. In the process he has taken steps which suggest more than a mild possible conflict of interest. Paulson, who had been chairman of Goldman Sachs from the time of the 1999 Glass-Steagall repeal to his appointment in 2006 as Treasury head, had been one of the most involved Wall Street players in the new securitization revolution of Greenspan.


Under Paulson, according to City of London financial sources familiar with it, Goldman Sachs drove the securitization revolution with an endless rollout of new products. As one London banker put it in an off-record remark to this author, “Paulson’s really the guilty one in this securitization mess but no one brings it up because of the extraordinary influence Goldmans seems to have, a bit like the Knights Templar order of old.’ Naming Goldman chairman Henry Paulson to head the Government agency now responsible for cleaning up the mess left by Wall Street greed and stupidity was tantamount to putting the wolf in charge of guarding the hen house as some see it.


Paulson showed where his interests lay. He is by law is the chairman of something called the President’s Working Group on Financial Markets, the Government’s financial crisis management group that also includes Fed Chairman Bernanke, the Securities & Exchange Commission head, and the head of the Commodity Futures Exchange Commission (CFTC). That is the reason Paulson, the ex-Wall Street Goldman Sachs banker, is always the person announcing new emergency decisions since last August.

Two weeks ago, for example, Paulson announced the Government would make an unprecedented $85 billion nationalization rescue of an insurance group, AIG. True AIG is the world’s largest insurer and has a huge global involvement in financial markets.

AIG’s former Chairman, Hank Greenberg—a close friend of Henry Kissinger, a former Director of the New York Fed, former Vice Chairman of the elite New York Council on Foreign Relations and of David Rockefeller’s select Trilateral Commission, Trustee Emeritus of Rockefeller University—was for more than forty years Chairman of AIG. His AIG career ended in March 2005 when AIG’s board forced Greenberg to resign from his post as Chairman and CEO under the shadow of criticism and legal action for cooking the books, in a prosecution brought by Eliot Spitzer, then Attorney General of New York State.

In mid September, in between other dramatic failures including Lehman Bros., and the bailout of Fannie Mae and Freddie Mac, Paulson announced that the US Treasury, as agent for the United States Government, was to bailout the troubled AIG with a staggering $85 billion. The announcement came a day after Paulson announced the Government would let the 150-year old investment bank, Lehman Brothers, fail without Government aid. Why AIG and not Lehman?
What has since emerged are details of a meeting at the New York Federal Reserve bank chaired by Paulson, to discuss the risk of letting AIG fail. There was only one active Wall Street banker present at the meeting—Lloyd Blankfein, chairman of Paulson’s old firm, Goldman Sachs.


Blankfein later claimed he was present at the fateful meeting not to protect his firm’s interests but to ‘safeguard the entire financial system.’ His claim was put in doubt when it later emerged that Blankfein’s Goldman Sachs was AIG’s largest trading partner and stood to lose $20 billion in a bankruptcy of AIG.
That is a tiny glimpse into the man who crafted the largest bailout in US or world financial history some days ago.


As respected economist, Nouriel Roubini pointed out, in almost every case of recent banking crises in which emergency action was needed to save the financial system, the most economical (to taxpayers) method was to have the Government, as in Sweden or Finland in the early 1990’s, nationalize the troubled banks, take over their management and assets, and inject public capital to recapitalize the banks to allow them to continue doing business, lending to normal clients. In the Swedish case, the Government held the assets, mostly real estate, for several years until the economy again improved at which point they could sell them onto the market and the banks could gradually buy the state ownership shares back into private hands. In the Swedish case the end cost to taxpayers was estimated to have been almost nil. The state never did as Paulson proposed, to buy the toxic waste of the banks, leaving them to get off free from their follies of securitization and speculation abuses.


Paulson’s plan, the one essentially rejected on September 29 by the House of Representatives, would have done nothing to recapitalize the troubled banks. That recapitalization could cost an added hundreds of billions on top of the $700 billion toxic waste disposal.

Serious bankers I know who went through the Scandinavian crisis of the 1990’s are scratching their head trying to imagine how crass the Paulson TARP scheme is. That politically obvious bailout of Wall Street by the taxpayers, what some refer to as ‘Bankers’ Socialism—socialize the costs of failure onto the public, and privatize the profits to the bankers—is a major factor behind the defeat of the TARP compromise version. Under Paulson’s scheme, which seems likely to get very little alteration by Congress in coming days, the Treasury Secretary, initially Paulson, would have sole discretion, with minimal oversight, to use a $700 billion check book, courtesy of taxpayer generosity, to buy various Asset Backed Securities held not only by Federal Reserve regulated banks like JP Morgan Chase or Citicorp, or Goldman Sachs, but also by hedge funds, by insurance companies and whomever he decides needs a boost.


‘The Paulson plan is unworkable,’ noted Stephen Lewis, chief economist with the London-based Monument Securities. ‘No one has an idea how to set a price on these toxic securities held by the banks, and in the present market a lot of them likely would be marked to zero.’ Lewis like many others who have examined the example of the temporary Swedish bank nationalization, called Securum, during their real estate collapse in the early 1990’s, stresses that ultimately only a similar solution would be able to resolve the crisis with a minimum of taxpayer cost. ‘The US authorities know very well the Swedish model, but it seems in the US nationalization is a dirty word.’


But there is an added element. John McCain decided to boost his flagging Presidential campaign by trying to profile himself as a ‘political Maverick’ one who opposes the powerful Washington vested interests. He flew into Washington days before the Paulson Plan was to be approved by a panicked Congress and conspired with a handful of influential Republican Senate friends, including Banking Committee ranking member, Senator Shelby, to oppose the Paulson plan. What emerged, with McCain’s backing, was a political power play that may well have brought the United States financial system to its knees, and McCain’s Presidential hopes with it.


Power and greed are the only visible juice driving the decision-makers in Washington today. Acting in the long-range US national interest seems to have gotten lost in the scramble. As I wrote last November in my Financial Tsunami five part series on the background to today’s crisis, all this could be foreseen. It is what happens when elected Governments abandon their public trust or responsibility to a cabal of private financial interests. It will be interesting to see if anyone in Washington realizes that lesson.


Whatever next comes out of Washington, however, one thing is clear, as reflected in what German Finance Minister Peer Steinbrück told the Bundestag. This is the end of the world as we knew it. The American financial Superpower is gone. The only important question will be what and how will the alternative be.
F. William Engdahl is author of A Century of War: Anglo-American Oil Politics and the New World Order (Pluto Press) and Seeds of Destruction: The Hidden Agenda of Genetic Manipulation (www.globalresearch.ca). He may be contacted through his website, www.engdahl.oilgeopolitics.net.

The original source of this article is Global Research

Copyright F. William Engdahl, Global Research, 2008

COMMENTS FROM BENJAMIN: I had the article that I just posted here in my files. I read it and posted it here as we can all see. It is sad and a disgrace that all of us or most of us are IGNORANT as to what they do to us. So live the rest of your lives having no real control on your future or get involved and do something legal to change things for the better. Put on your Yellow Jackets as that will CHANGE nothing. The solution is to speak out and question your politicians. However like always most people are too busy going in circles having accepted their place in life and the world and that is why those evil people can continue to destroy the world and lives. Trust me when I tell you that this will all end with a World Depression that none of us living has ever seen. Take care and be well !!!

https://seekingalpha.com/article/423...re-price-soars

Good Morning Benjaminis, on your post# 5515, you asked people to have intelligent discussions.

You are authority/command over financial, world politics., how can a person like I have a discussion

With you. To read your articles is not easy, but to understand?? My head spins so many times,lol.



Is your articles only for experts? Experienced? Or for those already have grey hair & thick eye glass for

Distance & far both?? just kidding, nothing personal.



The person like me, need to know that in forex/commodities, how to make money everyday so I could

Make both ends meet.



Is this the right time to BUY, Gold/Silver physically? And above all, how to LEARN your Money Flow Strategy.



Take care.

https://www.zerohedge.com/news/2019-...ops+to+zero%29

Records provided to the Senate Intelligence Committee show the calls were between Trump Jr. and two of his business associates, the sources said, and appear to contradict Democrats' long-held suspicions that the blocked number was from then-candidate Donald Trump. -CNN
Democrats led by Rep. Adam Schiff (D-CA) have pointed to the blocked-number calls as evidence that President Trump himself had knowledge that his son, son-in-law Jared Kushner and Paul Manafort met with a Russian attorney who said she had dirt on Hillary Clinton.
According to Schiff, "We wanted to get the phone records to determine, was Donald Trump talking to his son about this meeting," he told CNN last November. "It's an obvious investigative step, but one the Republicans were unwilling to take because they were afraid of where the evidence might lead."
https://zh-prod-1cc738ca-7d3b-4a72-b...s/schiff_1.jpg
California Senator Dianne Feinstein (D) also pointed to the blocked calls in a Democratic report last year detailing the Senate Judiciary Committee's investigation of the Trump Tower meeting. "We also do not know who they told about this meeting, including whether they ever discussed it with Mr. Trump," wrote Feinstein - who noted that Trump Jr. placed three calls to the blocked numbers.
Schiff's report, however, states that the first call on June 6 was incoming, while CNN reports that the records provided to Congress do not indicate whether the blocked calls were incoming or outgoing.
Democrats have long suggested that Trump Jr. lied to Congress and that President Trump has lied about whether he knew about the Trump Tower meeting before it happened. Trump claims he learned about it when the press began covering it in 2017, over a year after it took place.

Dear Loveandpeace

When we think that we know it all then we know nothing. One of your questions or another person's questions can only help all of us. If I do not know the answer then I will find it and share it thus learning more myself. There is no stupid questions, just sometimes stupid answers.

My article or actually articles by experts that know help to educate us. One of my skills is to know which articles are accurate and help us learn the truth of what really is happening to our world.

You can have insurance by purchasing with some of your money Silver in 100 ounce bars minted by the Royal Canadian Mint. You can also make money by placing money in your TFSA with your discount broker. I can assist you there by sharing my knowledge however you will need to do your own due dillegence. I am a private investor so cannot give investment information to the public. However I can share my knowledge with my company shareholders and share information with family and friends.