Were My 2016 Economic Predictions of Epocalypse Wrong?
![By Randy Robertson [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons](https://i0.wp.com/thegreatrecession.info/blog/wp-content/uploads/Crows_on_a_Wire.jpg?fit=500%2C189&ssl=1)
It appears one of my most boisterous predictions last year could be about to fail (and right at the point where it looked like a success in every detail). The current stock market rally and rise in oil prices appear to contradict my big prediction of a stock market crash that would start in December. I bet my blog on that prediction. As of Thursday, the stock market has recovered to its highest point of the year, nearly back to the point from which it fell in December. It could reach that point today (Friday). If that happens, the market will erase the damage of its crash.
I’ve made a fair amount of noise and bluster about the precision of my economic predictions with a purpose. I hope to shame the numerous economists who should be able see economic catastrophe coming but who fail miserably anytime it does, even though this is their area of specialized expertise.
Most economists today do worse than fail: they actually create their own failure by engineering economic destruction under the apparent belief that they are engineering economic recovery. Their foolishness will be the entire world’s despair, so their blindness and economic denial deserves contempt and judgment. Would that they could be honest in admitting their failures, that the world might be spared their folly.
Their elitist arrogance guards an entirely upside-down understanding of economics that serves their greedy self-interest. I hope to, at least, awaken some of their followers out of this economic denial by proving that those with less economic training are able to see what is coming and, therefore, must understand economic fundamentals better than the experts who are completely blindsided … every time.
You don’t have to be a fortune teller to see a train that is already off the rails coming in your direction and, thereby, predict a crash is coming. You can even tell about when it’s going to hit you. It is not so remarkable (to me anyway) that one can see it coming but remarkable in the extreme that so many people cannot see it, even when the train is only a few hundred feet away and the rumbling is immense.
My hope is that, if people see economic collapse could be foreseen (because they read someone who foresaw it), they will be far less forgiving this time than they were last time. Too much got swept under the rug with the excuse of, “Oh well, no one can really see something like the Great Recession coming.” I, of course, am not the only one pointing out the impending Epocalypse — an economic collapse that I believe will prove to be the worst in history. So, I’m not claiming this is my loan crusade.
Of course, if I make noise about the accuracy of my own bold predictions, I may only shame myself if I’m wrong in such a public way. (But, hey, somebody has to do this dirty job of cleaning up the greasy economists, and that’s the risk that comes with my approach. Doesn’t do much good, in my opinion, to make a lot of noise after the fact about how foreseeable was the outcome of their financial manipulations.)
As I live by the antiquated concept that one needs to be honest in admitting error (something these economists excuse daily), I think one should be just as brazen in admitting when they were wrong as they were in making their predictions. As we have reached an inflection point in the US oil market, the US stock market and the overall US economy, this should be an interesting moment to test my economic predictions.
I have a few oily looking crows already lined up on the wire, cawing their contempt at me. Fair enough, should they prove right. I certainly have no reservations about doing the same thing when I see false predictions that were boldly proclaimed. I criticize economic prognosticators all the time because I get weary of their establishment nonsense. So, no hard feelings. The world needs fewer false prophets of doom and gloom, and I certainly don’t want to be counted among them. So, I’m not going to cut myself a lot of slack; but I’m going to be fair to myself in how I evaluate the success and failure, too.
Most prophets of doom and gloom soldier on with total indifference to their false predictions. I’m not that kind of person. I may seem brash when I point out where my predictions were right, since they are predictions of massive events; but I think it is fair to point that out if (and only if) I am equally bold and clear in stating when I’m wrong.
In my mind, it’s not proud to point out when your predictions are right if you equally point out when they are wrong. In that case, it is simply a matter of objective tracking and evaluation. The value in doing so is this: If I’m pretty consistently right (no one is perfect), it means you have strong reason to pay attention, but it also establishes that economists can be blamed for being wrong (and should be blamed if they are architects of the failure that everyone else suffers); they cannot cop a plea that such things were not humanly foreseeable. If I’m wrong, it means I have strong reason to shut up and go away, and I should admit it publicly.
With that purpose in mind, allow me to point out where my predictions have recently come true and where they appear to be failing with, I hope, equal objectivity both ways.
The global economic collapse I predicted became a fact for most of the world
Clearly one of my two major economic predictions last year is solidly in the bag and cannot be taken from me. I bet my blog that global economic collapse would become obvious by fall, and it did. We have definitely entered a state of global economic collapse. I made that prediction half a year before when the mainstream economists were all talking about global recovery, as if it were a fact.
People in some countries like the US and parts of Europe may not be feeling the collapse much yet; but many nations that were recently rising stars are now completely fallen stars, such as Brazil, or are having a very tough time of things, such as China and the formerly great Japan. Canada, which thought it had escaped the Great Recession, has entered recession. Other areas that thought they were recovering from the Great recession, such as parts of Europe, are also back in recession. (Immigration problems have also turned out terrible in Europe as I said they would back when mass migration from Syria first began.)
While I (and probably most people) expected the US to hold out the longest and best in any global economic collapse, even the US had a perilous start to the year — one of the worst ever for the New York Stock Exchange. Bad signs for the US continue to abound; but the jury is still out on whether the US fully joins that collapse.
The verdict is in for the world, however, and I stand by my statements that it is going to get so much worse that you may hardly be able to believe what you see happening. So, I’m going to pronounce all of that a perfect full-court shot. If you want to challenge that shot, tell my why you think the world is not in a state of economic collapse. (But you’ll be challenged back.)
Auto loan defaults about to careen over a cliff
It was only a month ago that I last predicted auto loans would become a huge problem this year, just as they became in the Great Crash of 2008. That was a short-range shot, like a slam dunk. Already, news has arrived that auto loan delinquencies have reached a twenty-year high. The number of loans that are more than sixty days late has risen to 5.16% of all auto loans. It only hit 5.04% at its peak during the Great Recession.
Those numbers were not available when I said we were going to wind up in a serious default situation just like last time. My prediction was based on the fact that we learn nothing. Auto manufacturers, dealers and banks went right back to the same practices of allowing zero down payments and zero interest for many months … and those deals are being advertised as available to people with “bad credit.” That, by itself, was enough reason to predict disaster.
As I said ahead of the last crisis and say again now, you have to wonder what the manufacturers’ end games are when they are offering deals that you can walk away from with absolutely no loss after a year of enjoying the car. (Since the deals are being offered to people with poor credit, the automakers’ buyers of last resort don’t even have to worry about damage to their already dismal credit rating. It’s too far gone for them to care.) And that’s why people should be able to see something like this coming: the fundamentals are rotten. They virtually guarantee disruptive events.
How do you go back to normal financing after offering desperate deals like that? You’re either stuck offering equal or better terms again in the next year, or you have to crash your way out. In other words, you’re going to have a starkly bad year when you withdraw those extremely abnormal enticements. It’s similar to the game that was played in housing finance, leading up to the housing-market collapse. Tax payers wound up being put on the hook for the huge losses the automobile industry experienced at the end of their outrageously risky efforts to boost short-term sales.
The current delinquency problem — already as bad as the worst we’ve seen in the past — is likely to get rapidly worse, not better, because a record number of cars from expired auto leases is scheduled to start hitting the streets this month, which means used car values should fall, making it likely that even more people will walk away. It also makes the defaults more expensive for lenders, who lose recovery value in the repossessed automobiles. So, the financial engines of the auto industry are over-revving just as we approach a major curve in the road.
US credit card debt balloon rises to stratosphere
Another trend that looks like those lead-up years to the Great Recession is the rapid increase in US credit card debts. While people did a good job of deleveraging during and immediately after the official recession years — almost making me think the masses actually learned something — they have apparently returned to their bad habits.
Credit card debt rose about $71 billion last year to reach $918 billion this year. At that rate of expansion, it will be a trillion dollars by the end of the year. What’s more troubling, perhaps, is that most of that happened just in the last quarter of the year. That makes last quarter the fastest expansion since the Great Recession. (There we go again.)
It could, of course, just be that people are flush with more jobs and higher wages, so they have increased their credit purchases. That would indicate consumer confidence about the economy’s future is rising. (That is, if any of this expansion of credit-card debt is based on rational thinking, versus just rampant desire for more stuff at any price down the road in Neverland.) However, the company that created this report says otherwise:
“With 7 of the past 10 quarters reflecting year-over-year regression in consumer performance, evidence is mounting to support the notion that credit card users are reverting to pre-downturn bad habits,” CardHub CEO Odysseas Papadimitriou said in a statement. (CNBC)
Alas, we learn nothing … maybe:
Consumer confidence not as exuberant as we were told
If people were buying more things on their credit cards because of greater confidence in their ability to pay for them in the future, that would be reflected by a corresponding growth in sales; but sales were not good in the last quarter of 2015 and are getting worse. That indicates people actually bought fewer things and still needed to use more credit. That’s a bear print in the muddy economy if there ever was one. Expansion of credit use when purchases are declining sounds like people in desperate times, not like people just buying more stuff they cannot afford because they learned nothing the last time around.
While we were told, based on opinion polls, that consumer confidence made a nice rise during the past month, a look at consumer activity tells a much different story. Retail sales in February actually fell by 0.2%. Services held flat. January sales were also revised sharply downward from a 0.2% decline to a 0.4% decline.
Declines were experienced in furniture sales, electronics and appliances. The decline affected department stores and supermarkets … but also online sales. Not surprisingly, the decline even included a drop in automobile sales. (You see, there is no end game to a 2015 filled with ludicrous enticements. You’re just borrowing from future sales with that kind of activity, and that future is now here with fewer sales to show because of it.)
The decline in consumer activity was matched last month by a decline in wages. Imagine that, immediately after we heard wages made their first uptick in years, which we were supposed to be happy about, we hear that wages are going down again, and the uptick was revised down, too:
The drop in February [wages] was pretty sharp…. The wage situation does not get as much attention as the headline number and the unemployment rate, but it’s evidence that the economy is basically flatlining. (CNBC)
Stock market rally has highly questionable underpinnings, but its making me look bad
Some of those declines in the economic environment look good for my predictions, but it is the stock market rally that appears to be killing me. The rally, which I did expect, is going higher than I had expected if it’s just a bear-market rally (meaning just a big bump on the path down). I expected the market would bounce about halfway back up to its starting point after such a huge fall in January. (Nothing is ever a smooth line in the stock market, whether it’s a bull market or a bear market.)
Now that the market is nearing the point at which it began its crash, things are looking good for the crows on the wire who say I didn’t know what I was talking about when I also bet my blog on a stock market crash, which I said would begin in late December, 2015, and grow worse in the new year.
Nevertheless, the market did crash (and right on schedule), and it did start its crash by going up right on the day when I said it would do that before it went over the cliff. So, is this a prediction victory or a failure? I lean towards somewhat of a failure if the market fully recovers and keeps going up because the most important part of my prediction was that this crash would take us into the Epocalypse — the real abyss that results from all the compounding of debt we’ve added to the pit we found ourselves in during 2008 and 2009.
Look beneath the hood of this rally, though, and things don’t look so shiny for the crows. A fair part of rising stock prices is due to companies buying back their own stock (and using credit to do it) in order to pump the price up by creating their own demand. You can keep firing your stock values up with major buybacks for awhile, but that’s a non-sustainable game. It’s a game for board members and CEOs who are looking out for their own short-term best interest and never for the long-term best interest of the companies they manage Maybe it will buy a few month’s reprieve for the market, but I think those shenanigans are nearing exhaustion, too.
This debt-financed, greedy game is not much better than a Ponzi scheme. Borrowing from the future to buy your own stocks back does not, in itself, create value, even if it does drive up your stock price. That’s a quintessential bubble — big and round and shiny, but completely hollow inside. The numerous companies now doing this are just pumping up the price of their stocks by creating their own demand incestuously. This game, employed throughout 2015 is now shifting in a manner that looks more and more like the kind of activity you might expect from self-serving CEOs who think implosion is imminent, so they want to cash out now.
First, consider that executives who are paid in stock options are inflating the value of those options at a time when corporate sales are in significant decline. They have certainly not earned this rise in the value of their options. It’s allowed by board members, who are also major stockholders, who are eager for short-term gain in hope of selling before the manure hits the spreader paddles.
Once again, I note the significance of being able to say (as I have with almost all the bad news that is coming down the pike now) that the last time stock buybacks got this insane was right before the Great Recession. Repurchase authorizations have risen 41% over the same time last year. The $165 billion dollars in repurchase agreements set for S&P 500 companies this quarter now nearly reaches the record set in 2007.
The devil is in the details of these expensive, debt-financed buybacks. Many of the buybacks in the 2016 surge are targeted to help only insider investors. That’s one of the insidious shifts from what was happening in 2015. Instead of buying back shares on the open market, some corporations have repurchased shares almost exclusively from the major owners of the company.
For example, LPL Financial Holdings, a Boston brokerage, decided to substantially increase its own debt to buy back shares from TPG Capital, one of its major stock owners. Out of 5.6 million shares bought back (at a cost of a quarter billion dollars), 4.3 million were owened by TPG. Much of the rest of the buyback was from other major investors in LPL. The remaining smaller stockholders whose shares didn’t get bought back now have a lot more interest in a company that now has a lot more debt.
In other words, it’s conceivable the smaller stockholders could simply be left holding the debt now that the major players cast votes to use company credit to buy themselves out! If that’s what the present rise in the market is about, it could fall very hard and fast when it does fall. The big players will have already saved themselves and then can just let things go.
It certainly looks like the big guys at the top are looking out for each other by using company credit so that they can dump shares quickly without causing any loss to the value of shares. (I don’t know that to be the case, but that’s what it smells like to me. It looks and smells like the kind of greedy rot that abounds before an economy implodes.) It may just be that there are such large fortunes that the major investors are seeking to save by buying themselves out with company funds that its creating an enormous short-term completely debt-financed rally.
So, while the market is looking more and more like a bull market each day, the intolerable rot and the stench underneath make me think most of this rally is due to these kind of buybacks that only help the principal owners jump off the train and land on a cushion just before it launches off the bulkhead of a missing bridge.
Oil teetered toward my predicted plunge then smudged my face
My most recent prediction was that the perfect storm would hit the oil industry in the Ides of March (by which I colorfully mean mid-March, not specifically March 15, the day when Caesar died). Exactly as we hit March 15th, however, oil prices started to fall again, breaking a fairly good rally in the first half of the month. That looked good for my recent prediction for oil. Prices dropped for two days. What looked better for me was that they started dropping due to the exact forces I have been saying would dominate in the pricing of oil and to which I have been saying people should give more heed:
Oil dropped for a second day as Iran bolstered crude exports. Russia signalled the Persian Gulf nation [Iran] won’t join major producers in freezing output to reduce a global glut. (Financial Review)
That exactly matches the way I said things would fall out this month — that Iran would definitely not agree to cap its oil production, but would, instead, ramp up its oil production.
However, that decline in prices was short-lived, as oil prices shot right back up on Thursday, boosting the stock market closer to the point from which it fell. Nevertheless, I think the market’s rotten underpinnings, the sour financial underbelly of recent automobile success headlines, and the great economic malaise that settled over the planet last year, are just a few of many forces that will prevail over the US economy and stock market … but back to oil:
If you’ve been reading this blog for awhile, you were not surprised at all if you read the following on Wednesday, as I did:
“Iranian production climbed last month by the most in almost two decades following the end of sanctions, OPEC said on Monday. US supplies probably rose last week, keeping stockpiles at the highest since 1930…. Iran increased output by 187,800 barrels a day to 3.13 million a day in February, the biggest monthly gain since 1997, OPEC said in its report.”
That’s just Iran’s most recent increase in production. One source said that, over the course of a month, Iran increased production 30% (though I did not find confirmation of that elsewhere). Suffice it to say, Iran has no intention of curbing production. And that is one big reason I have given when countering numerous experts who think the supply problem is ending.
I think you just saw the beginning, and phase two of the oil glut is about to get underway … but will it begin that fall in the middle of March? I’m left hanging for now. (I write this, even as the immediate facts seem to be proving my oil prediction wrong, but I’ve never been one to simply parrot what the majority wants to believe or to say something just to be popular.)
Iran, I said, would be one of the three storms that would converge to form the perfect storm on an ocean of oil. Iran has now made its rejection of the production freeze abundantly clear so that several news sites announced in the middle of this past week,
Iran’s rejection of the freeze deal and the rise in Iranian production have put an end to the rally.
Victory of my prediction declared by others! Oops. They spoke too soon, too. It put an end to the rally for a few days, but the rally returned full force on Thursday.
If you’ve been reading The Great Recession Blog, you have also heard me say that all the excitement over Russia’s agreement to curb its production was nothing but stupid euphoria in the first place. I’ve noted all along that the cap agreed to between Russia and Saudi Arabia was explicitly conditioned on all other major producers agreeing to do the same, which I’ve maintained is not going to happen.
Iran has been one of the biggest producers in the region, so Russia would seem to have been saying that Iran would have to capitulate with the agreement if Russia is to stay in it. The other major producer that would probably have to capitulate would be the US.
Now that Iran and Russia have met to talk about Iran joining the production-freeze agreement, and Iran has stated clearly that it won’t, it is possible that Russia will back out based on the conditions it laid down at the start. The US has only increased production, even as smaller companies have gone out of business; so there is not a lot of reason to believe Russia or Saudi Arabia will hold to their production caps, much less reduce production.
The more important point I’ve been trying to make, however, is that it doesn’t matter even if all nations on earth agree to cap production at current levels. They are still overproducing, so the oversupply gets worse even if everyone agrees to hold rigidly to this agreement. That’s why I’ve said the excitement over the agreement seems particularly dizzy. It’s the kind of blind euphoria that allows for a crash that almost no one sees coming.
Another one of the three storms that I said would start to converge on the price of oil around mid March is a global storage problem. Tank farms would start to reach capacity, and this week’s news told of the following:
At the Cushing, Okla. storage hub, stocks climbed to about 67.5 million barrels, nearing its working capacity of about 73 million. (MarketWatch)
So, we are not quite at this major tipping point, yet, but we are clearly getting close. Cushing is one of the main oil storage hubs that I mentioned when predicting the perfect storm would hit oil prices around mid-March. (In hindsight, I should have said “could hit.”) That means pressure against the oil market is building toward a climax as I said it would, too; but it may take these tank farms another month or two to get to that point where they have no choice but to reject oil for current delivery at any price because they have nowhere to put it. That would leave my timing a little off. Again, we’ll know soon enough.
It is when the major hubs mentioned in my earlier article hit their top working capacity, that oversupply will become a significantly bigger problem. It’s one thing to produce more oil than you need. It’s an exponentially greater problem to have nowhere left to put it all when it is something that can’t just be stockpiled on the ground.
This should become a fascinating scenario. How will producers handle it when there is nowhere left to put their burgeoning supply? They will certainly reduce production at that point because lack of storage will force their hand. It’s all one more reason why talk of production caps is meaningless. We are rapidly coming to a point where production reduction will be absolutely forced. (But will the storm come together with the timing I gave it?)
The interesting thing to watch as we near that time will be to see how the major oil players battle that out — who reduces first or how much they are willing to drop prices individually in order to avoid being the one to make the first major production cuts.
Obviously, my inclination is to believe there will be another round of price wars, rather than just major agreed cuts in production on the Saudi, Russian, and Iranian fronts. So, grab the sissy bar because the ride gets crazier up ahead. If production cuts are forced because there is nowhere left to store the oil, that could hurt oil prices more than increased production would hurt prices. If prices stay the same while production has to be reduced, that still means oil companies lose more money because they are selling less oil at the same low price.
So far, we have witnessed tens of thousands of layoffs in the oil industry, about $100 billion in cancelled investments, several company closures and bankruptcies, and about a dozen companies that have cut or eliminated dividends. And the costs of all that are trickling out into the communities that built up around America’s oil boom, causing problems in other industries, not just in the financial industry or in the stock market.
The dividend slashers include some major companies, such as Conocophillips and Chesapeake Energy Corp. Says Conocophillip’s chief executive, “We believe it’s prudent to plan for lower prices for a longer period.”
Oil companies are not planning as if the oversupply in oil and resulting plunge in prices will end anytime soon, so why should stock investors? The same scenario is playing out in Canada and in Europe, where Spanish and Norwegian oil companies are also slashing development plans and payouts. Chevron is cutting back new-production spending by 26% and is looking at borrowing money to pay its dividends.
And if you think the price of oil is not having a major impact on major banks, read this article from Zero Hedge on additional tricky deals that are happening in stock buybacks that banks are promoting as a way of getting themselves out of this trouble. Things are getting extra slimy behind the scenes just as they did in the pre-Great-Recession days when Goldman Sachs convinced clients to buy stuff Goldman knew was junk.
Finally, there is this news today on the price wars in oil:
Three months since the U.S. lifted a 40-year ban on oil exports, American crude is flowing to virtually every corner of the market and reshaping the world’s energy map. Overseas sales, which started on Dec. 31 with a small cargo aboard the Theo T tanker, have been picking up speed…. The “growing volumes of exports” from the U.S. are now “spooking the markets,” Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd. in London, said in a note…. With American stockpiles at unprecedented levels, oil tankers laden with U.S. crude have docked in, or are heading to, countries including France, Germany, the Netherlands, Israel, China and Panama. Oil traders said other destinations are likely, just as supplies in Europe and the Mediterranean region are also increasing. (NewsMax)
[amazon_link id=”0996489703″ target=”_blank” ]Shale Boom, Shale Bust: The Myth of Saudi America  In 2014, something went terribly wrong with this rosy scenario of “Saudi America.†An unexpected collapse in the price of oil is bankrupting the oil patch, destroying jobs and threatening plans for a renewable energy future.[/amazon_link]
So, the score on my oil predictions for March would be that I was right in predicting Iran would not join the pact and was right in predicting that that tank farms would continue to move toward maximum capacity, even though Russia and OPEC members capped production because the US also would not join such an agreement. Clearly, it has done the opposite. That much is now established fact. However, I am not yet right on the impact on prices, which is the important thing.
I said you would see the perfect storm begin in mid-March, and the storm clouds are shaping up. (I didn’t say that you’d see it climax mid-March, but you’d see forces starting to drive down the price of oil, and those forces would build into the perfect storm.) That means, if the price of oil doesn’t start going back down soon, I’m wrong (at least on the important part).
If those storm clouds are looking worse at the end of March, I’ll have to question if I was just wrong in my timing or if I’m also wrong about another big drop in the price of oil. Being off some in timing would not be much of an error in this case, but being wrong about the direction in the price of oil would make me completely wrong about the oil storm.
(Note, however, that I have not bet my blog on my recent prediction about the price of oil. I think I bet $10, but the crow I made the bet with didn’t go for the shiny lure. Since he didn’t take my bet at the time when it was offered, it won’t be offered again now that things look to be in his favor.)
Is the Epocalypse coming?
That’s the big question. I’m more interested in seeing whether my predicted stock market crash turns into a short event or turns into the longterm Epocalypse that I have envisioned it will become. If the stock market makes a full recovery of all of its losses since its December high point and then keeps moving above that point as a bull market, then, I was partially wrong: it did crash and somewhat spectacularly, having been noted by almost everyone as the worst January since the Great Depression. That’s no small event, and it did so with exactly the right timing, too; so, I don’t think that’s a shabby prediction.
However, record-shattering as January was, a crash that bounces right back up and steams along as if nothing happened, is hardly the Epocalypse that I have said it would become. (When I bet my blog on a stock market crash, however, I did not bet it would reach the level of an economic apocalypse. That is a statement I added later. I simply bet the US market would crash.) Missing on the important stuff while getting the details exactly right, is worse than getting the big picture right and missing on the details.
Keep watching. We’re getting close to a time of revelation as to whether my predictions of an economic apocalypse are right or not. The rises in stocks and oil prices are speaking against me, but the very clouds I pointed to and said would gather are getting closer and darker, and stock market dealings are getting slimier. So many things have played out exactly as I’ve said that I think it all bears a little watching to see if the bigger vision of the Epocalypse starts shaping up, as well as whether the last detail about the price of oil falls into place.
And, while you’re here, invite a few other people to watch my battle with the crows. There is nothing like a good crow fight.
More reading on oil wars and oil price wars:
[amazon_image id=”B00CMDPTA4″ link=”true” target=”_blank” size=”medium” ]The Prize – An Epic Quest for Oil; Money & Power[/amazon_image][amazon_image id=”B004S95I4M” link=”true” target=”_blank” size=”medium” ]Blood and Oil – The Middle East in World War I[/amazon_image][amazon_image id=”B00HKKX2L2″ link=”true” target=”_blank” size=”medium” ]Oil: Black Gold[/amazon_image][amazon_image id=”B01A7OLKHK” link=”true” target=”_blank” size=”medium” ]Frack Us[/amazon_image][amazon_image id=”B0037VY1ZO” link=”true” target=”_blank” size=”medium” ]Crude Independence[/amazon_image][amazon_image id=”B00DY2T6BA” link=”true” target=”_blank” size=”medium” ]Split Estate[/amazon_image]
Monday, March 21st 2016 at 2:04 am |
Without doubt you are the most honest commentator on the whole sorry mess of insolvent countries from West to East, all running exploding debt levels with central banks desperately trying to keep big private banks alive (so they can continue with their fraudulent profit agendas). Few public commentators on all of this ever admit to being wrong about their predictions.
Not getting the timing of your predictions spot on doesn’t at all invalidate them.
I read your Apocalypse articles and I would have been the first to criticise them if I had felt them in way to be exaggerated or un true. If there was no on going global debt and obvious industrial contraction along side it, also now blatantly, ‘managed’ stock markets, then yes, I would not take your predictions seriously. Never mind all the years of my own studies on the politics and finances of our over, ‘managed’ monetary and economic systems, down here at ground level it is becoming more and more obvious that the highly manipulated S&P500 etc bears no relationship to the fundamental living standards of most people. My friends, neighbours and acquaintances have gone from feeling a pinch to feeling a big squeeze when it comes to making ends meet. Only the few very well off people around here are not experiencing that.
I have said a few times on GoldSeek that I can even imagine a scenario where by the S&P500 goes to ever new highs while down here in reality more and more of us are falling into complete poverty. This is actually quite possible if you think about it. As long as there is ZIRP and NIRP in many developed countries (and the Fed never gets beyond its piddling .25 rate hike, which looks likely), then the Extend and Pretend game goes on for Wall St. The City of London etc. It also goes on for their cronies running multinationals (the endless interest free borrowing money spree to shove into buy backs). Then there is the PPT, always there, ever ready to short circuit those red stock market traffic lights and get them back to green again.
The 2008 financial crash so terrified TPTB that they have thrown the kitchen sink at promoting bubble stock markets and keeping big banking alive. These are all people with a vested interest, as in their own power and wealth depends on them putting everything into the interests of the few, at the expense of the many.
A perfect example here in the UK is our government so continually hammering the low paid and poor year after year, that one Cabinet Minister has finally resigned. We just had a budget by our Chancellor that yet again gave tax breaks to the already rich while cutting allowances for the severally disabled. The Brits. don’t like extremes, so there has been a public outcry about this. The problem is that our Prime Minister was born into great wealth and so was the Chancellor. They are great chums because they both went to Eton and Oxford and then straight into politics. Neither of them have ever had a real job in their entire lives (let alone a low paid one).
The huge mistake in the US, UK and Europe is that supposedly democratic countries have allowed a crisis caused by a corrupt banking system to become the sole responsibility and thus burden of the citizens of these countries. If that wasn’t bad enough, the people see the senior management and traders of the largest banks continue to pay themselves lottery sized salaries and bonuses, all gained by very dubious financial practices. This is why the people of America are being drawn to the extremes of Trump and Sanders. When the status quo only results in the rich getting richer and most of a society getting poorer, people start to get angry and look for a more radical style of political leadership.
Add on to this the absolute mess of a financially bankrupt EU, and their complete inability to agree on how to deal with an on going, massive influx of refugees and migrants from not only the Middle East but Asia and Africa, and if that isn’t an Apocalypse waiting to happen then I don’t know what is. Extremes of Right and Left are now popping up all over Europe, with some countries (the poorer ones) demanding the richer ones take all the refugees and immigrants, with the refugees and immigrants also demanding this. Even very liberal countries like Sweden can’t cope with taking more (already their crime rates are rising and there is a lot of social tension since two Swedish women helping in hostels for immigrants were attacked and killed by migrants). There have been increasing sexual assaults and rapes of European women by young Muslim men who see them as whores because in the West women don’t wear the Burka. Meanwhile Angela Merkel’s Open Door policy to immigration has infuriated Austria and Hungry who have their own Balkan Agreement now and have closed their borders (Merkel furious at this when in fact it has stopped more immigrants walking into Germany and thus fanning the flames of extreme Right Wing groups in Germany). To all intents and purposes she has become the unelected leader of a European superstate that vast swathes of Europeans have grave doubts about.
Here in the UK our housing, health care, schooling and welfare infrastructures are now at breaking point because under EU law we cannot determine how many migrants from poor Eastern Europe come to the UK, so we have areas of the UK full of Romanians, Polish citizens etc (all entitled to our welfare system). We have had decades of high immigration and are now projected to be the most populated nation in Europe (per our small landmass) by 2027. Added to all of this, the tin pot dictator in Turkey (Erdogan), has just blackmailed the EU to hand over €6 billion to hold back some of the refugees. He is also demanding Europe wide, visa free travel for his 75 million population which means poor Turkish citizens will begin freely flooding into Northern Europe in search of a better life. Finally he is demanding a speedy entry for Turkey into the Eurozone (thus being able to access huge EU subsidies and bank loans). It is like watching a madness take place. I haven’t even mentioned the Muslim ghettos springing up in all European cities (I lived in one in Glasgow for many years), or the fact that a hard core of young, Western hating Muslim men are in every country of Europe are waiting and planning Paris style attacks. The costs of higher security and policing to deal with this is estimated at billions of Euros and UK £s.
I apologise for banging on about Europe but it is in fact an integral part of your inevitable Apocalypse.
I think because it has turned into another form of monetary fiction, I prefer to look past the S&P500, the next Fed meeting, the oil price going up or down, completely manipulated employment and economic stats. I only need to look at my own financial situation and that of those who live around me, to smell the decay of the West. Even if the endless PPT interventions in the S&P500 since 12 Feb. do keep oil going higher, loads of folk could barely afford it at its much lower prices. So even if oil gets to between $60-$80 a barrel, so what, there will be even more of it sloshing around because there simply isn’t the industrial or private demand there used to be for it. What I am trying to say is, TPTB can intervene all they like, they can make the S&P500 go to a zillion points, but it won’t make our economies grow. It used to be that the health of an economy determined the health of a stock market, thanks to completely turned inside out central bank policies, these idiots think a high stock market makes a healthy economy! It doesn’t, it can’t, it just makes a few very rich folk even richer, along with a few very savvy traders.
The halcyon days pre 2008 are over folks. The US may escape lightly compared to Europe, but maybe it won’t. I don’t see how it can when Europe fails (which it is well into the process of doing). Some on the Internet think this whole mass immigration to Europe is part of the NWO, orchestrated by TPTB but who needs conspiracy theories when reality is bad enough! I simply think a greed fest was let loose the day the world reserve currency was freed from the anchor of gold (1971). The very term, ‘anchor’ explains why gold needed to be a part of the monetary system. With gold out of the window then gradually more and more banking regulations dropped, it meant banks could go crazy and throw debt at all and everyone. Idiot politicians went along with this, with their stupid belief that debt would grow our economies. So everyone was loaded up with debt instruments, from the individual to the corporate level. We didn’t all take part in it and yet even those of us who lived solely by our means are now paying for the out of control debt binges of others. I truly feel for those who worked and saved all their lives, whose savings now earn nothing and are being used up fast as their pensions don’t meet their living expenses.
So yes David, maybe you were too brave to openly give a time for the Apocalypse, but the fact remains it is well underway and God help us all when it completely encompasses us.
PS I apologise for the length of this.
Monday, March 21st 2016 at 1:45 pm |
Thanks, AuldFriend. I appreciate getting the UK perspective, especially from someone far from the London center, where things may look more skewed than in the hinterlands.
My feeling is that, if I’m not honest about my mistakes (should things continue to move in the direction the would make them mistakes), then why should people pay attention to what I’m writing? Besides, I can’t stand people who boast when they’re right (like I’ve been doing from time to time) but then prevaricate when they’re wrong.
Time will soon tell, but today things moved more in the right direction for the crows on the wire.
–David
Monday, March 21st 2016 at 7:17 pm |
Avi Gilburt does nothing but, ‘crow’ on Goldseek. What really annoys me is the way he also derides fellow regular feature writers on there (I have never seen that type of behaviour before). He was damning Chris Powell of GATA not so long ago and has been at it again yesterday, concerning an article by another contributor.
I know I rambled on in my initial reply to your latest article David, but glad you understood why, (as in trying to give a perspective of how this whole screwed up financial mess of the West is playing out for ordinary people like myself in other parts of the Western hemisphere). You are right about London, it is sloshing with wealth at its centre, but like everywhere else, the further you go from the epicentre of all that manufactured out of nothing wealth, the poorer and more obvious it becomes that there is now an ever widening gap between, ‘them’ and ‘us’.
I just read a short but very incisive article on another site, which expresses far more eloquently than I was able to do in my earlier reply to your article, concerning my conviction that the stock market bull, post 2008 is a manufactured fantasy to keep big banks alive and a way for the Fed and government to use as a lie that the US economy is thriving. The author makes a very pertinent observation by pointing out that after the Great Depression, it took 25 years for the US stock market to recover, where as this present bull market started the minute QE was rolled out. I think he nails it with this:
‘Following the 2008 crash, stock markets are now entirely under the control of central banks, and statistics are manufactured by the government to compliment the desired narrative. In fact, a new report out shows that 93%, or nearly all upward movement in equities following the 2009 bottom has been completely due to central bank intervention, and not from some economic recovery.’
Kenneth Shortgen (RogueMoney).
The above reiterates everything I said on here earlier, so if a very ordinary person like myself, with no great intellect or skills to boast about and no background in money markets or economics, can see what’s happening it means so does an ever growing amount of the Western population. Our awareness can’t stop any of this madness but at least when it happens we won’t be in a state of complete shock. We also know that for something better to hopefully come, this terrible corruption can only be destroyed by itself in the end, (something that has been in progress for a long time now). There is, quite literally, no other way it will stop. A Trump or Sanders, or Right or Left wing leaders in Europe aren’t going to ever stop it because however different and radical they sound, they are part of the problem always.
In my mind I see the grim pictures of my childhood; a Europe decimated by death and destruction. I mind the vivid tales of my parents concerning everything from rationing to the bombing raids over London and other big cities and towns in the UK. I don’t think my Dad fought all the way through that war, from the age of 17, his elder brother killed in it like countless others, for a West that would become entrenched in greed, waste, debt and Europe now turning into one great Muslim asylum centre, and with Germany making all the rules. Nor do I think so many Americans, Canadians etc gave their lives in that terrible war to see their own countries being decimated by a banking-political cabal with a fake and soggy veneer of overt Political Correctness.
So it will go one of two ways, the best case scenario after the financial ‘Apocalypse’ is that life gets extremely hard for most Western citizens, but we hold it together and something better comes from it. The worst case is WWIII.
Lacking your kind of in depth knowledge of economics, markets etc I haven’t a clue if it will come suddenly or that we just slide like the Titanic but then suddenly go down.
All best to the US and Canada from Malt whisky land!
Monday, March 21st 2016 at 7:35 pm |
Thanks for the Scotch. I am inclined to agree with you that the only way this kind of evil comes to an end is if it burns itself out. It will need to fail badly before people will realize (if they even do then) that this ain’t no way to build an economy. I’m going to make a few comparisons to the Great Depression, myself, in my next article.
Monday, March 21st 2016 at 1:47 am |
Without doubt you are the most honest commentator on the whole sorry mess of insolvent countries from West to East, all running exploding debt levels with central banks desperately trying to keep big private banks alive (so they can continue with their fraudulent profit agendas). Most other public commentators on all of this ever admit to being wrong about their predictions.
Not getting the timing of your predictions spot on doesn’t at all invalidate them.
I read your Apocalypse articles and I would have been the first to criticise them if I had felt them in any way they were exaggerated or un true. If there was no on going global debt and obvious industrial contraction along side it, also now blatantly, ‘managed’ stock markets, then yes, I would not take your predictions seriously. Never mind all the years of my own studies on the politics and finances of our over, ‘managed’ monetary and economic systems, down here at ground level it is becoming more and more obvious that the highly manipulated S&P500 etc bears no relationship to the fundamental living standards of most people. My friends, neighbours and acquaintances have gone from feeling a pinch to feeling a big squeeze when it comes to making ends meet. Only the few very well off people around here are not experiencing that.Â
I have said a few times on GoldSeek that I can even imagine a scenario where by the S&P500 goes to ever new highs while down here in reality more and more of us are falling into complete poverty. This is actually quite possible if you think about it. As long as there is ZIRP and NIRP in many developed countries (and the Fed never gets beyond its piddling .25 rate hike, which looks likely), then the Extend and Pretend game goes on for Wall St. The City of London etc. It also goes on for their cronies running multinationals (the endless interest free borrowing money spree to shove into buy backs). Then there is the PPT, always there, ever ready to short circuit those red stock market traffic lights and get them back to green again.
The 2008 financial crash so terrified TPTB that they have thrown the kitchen sink at promoting bubble stock markets and keeping big banking alive. These are all people with a vested interest, as in their own power and wealth depends on them putting everything into the interests of the few, at the expense of the many.Â
A perfect example here in the UK is our government so continually hammering the low paid and poor year after year, that one Cabinet Minister has finally resigned. We just had a budget by our Chancellor that yet again gave tax breaks to the already rich while cutting allowances for the severally disabled. The Brits. don’t like extremes, so there has been a public outcry about this. The problem is that our Prime Minister was born into great wealth and so was the Chancellor. They are great chums because they both went to Eton and Oxford and then straight into politics. Neither of them have ever had a real job in their entire lives (let alone a low paid one).
The huge mistake in the US, UK and Europe is that supposedly democratic countries have allowed a crisis caused by a corrupt banking system to become the sole responsibility and thus burden of the citizens of these countries. If that wasn’t bad enough, the people see the senior management and traders of the largest banks continue to pay themselves lottery sized salaries and bonuses, all gained by very dubious financial practices. This is why the people of America are being drawn to the extremes of Trump and Sanders. When the status quo only results in the rich getting richer and most of a society getting poorer, people start to get angry and look for a more radical style of political leadership.
Add on to this the absolute mess of a financially bankrupt EU, and their complete inability to agree on how to deal with an on going, massive influx of refugees and migrants from not only the Middle East but Asia and Africa, and if that isn’t an Apocalypse waiting to happen then I don’t know what is. Extremes of Right and Left are now popping up all over Europe, with some countries (the poorer ones) demanding the richer ones take all the refugees and immigrants, with the refugees and immigrants also demanding this. Even very liberal countries like Sweden can’t cope with taking more (already their crime rates are rising and there is a lot of social tension since two Swedish women helping in hostels for immigrants were attacked and killed by migrants). There have been increasing sexual assaults and rapes of European women by young Muslim men who see them as whores because in the West women don’t wear the Burka. Meanwhile Angela Merkel’s Open Door policy to immigration has infuriated Austria and Hungry who have their own Balkan Agreement now and have closed their borders (Merkel furious at this when in fact it has stopped more immigrants walking into Germany and thus fanning the flames of extreme Right Wing groups in Germany). To all intents and purposes she has become the unelected leader of a European superstate that vast swathes of Europeans have grave doubts about.
Here in the UK our housing, health care, schooling and welfare infrastructures are now at breaking point because under EU law we cannot determine how many migrants from poor Eastern Europe come to the UK, so we have areas of the UK full of Romanians, Polish citizens etc (all entitled to our welfare system). We have had decades of high immigration and are now projected to be the most populated nation in Europe (per our small landmass) by 2027. Added to all of this, the tin pot dictator in Turkey (Erdogan), has just blackmailed the EU to hand over €6 billion to hold back some of the refugees. He is also demanding Europe wide, visa free travel for his 75 million population which means poor Turkish citizens will begin freely flooding into Northern Europe in search of a better life. Finally he is demanding a speedy entry for Turkey into the Eurozone (thus being able to access huge EU subsidies and bank loans). It is like watching a madness take place. I haven’t even mentioned the Muslim ghettos springing up in all European cities (I lived in one in Glasgow for many years), or the fact that a hard core of young, Western hating Muslim men are in every country of Europe are waiting and planning Paris style attacks. The costs of higher security and policing to deal with this is estimated at billions of Euros and UK £s.
I apologise for banging on about Europe but it is in fact an integral part of your inevitable Apocalypse.Â
Folk need to look past the S&P500, the next Fed meeting, the oil price going up or down, completely manipulated employment and economic stats. Just go out on the street and you can smell the decay of the West.Â
The halcyon days pre 2008 are over folks. The US may escape lightly compared to Europe, but maybe it won’t. I don’t see how it can when Europe fails (which it is well into the process of doing). Some on the Internet think this whole mass immigration to Europe is part of the NWO, orchestrated by TPTB but who needs conspiracy theories when reality is bad enough! I simply think a greed fest was let loose the day the world reserve currency was freed from the anchor of gold (1971). The very term, ‘anchor’ explains why gold needed to be a part of the monetary system. With gold out of the window then gradually more and more banking regulations dropped, it meant banks could go crazy and throw debt at all and everyone. Idiot politicians went along with this, with their stupid belief that debt would grow our economies. So everyone was loaded up with debt instruments, from the individual to the corporate level. We didn’t all take part in it and yet even those of us who lived solely by our means are now paying for the out of control debt binges of others. I truly feel for those who worked and saved all their lives, whose savings now earn nothing and are being used up fast as their pensions don’t meet their living expenses.Â
So yes David, maybe you were too brave to openly give a time for the Apocalypse, but the fact remains it is well underway and God help us all when it completely encompasses us.
PS I apologise for the length of this.
Sunday, March 20th 2016 at 10:55 am |
Don’t give up just yet. We filled a big gap on the NYSE chart the day before yesterday. Now things will get interesting.
Sunday, March 20th 2016 at 6:09 pm |
I’m inclined to think this coming week will reveal a lot about whether the rally is going to end or steam ahead into a bull market, too.
Saturday, March 19th 2016 at 5:16 pm |
http://www.zerohedge.com/news/2016-03-19/another-false-oil-price-rally-crossing-boundary
Saturday, March 19th 2016 at 4:37 pm |
Dave,
Watch the last few minutes of Donald Trump’s speech in Utah yesterday (YouTube). He talks about “the bubble, the big dangerous bubble, that’s going to explode.” He says the cause is unsustainable debt. I call it illiquidity, but that’s splitting hairs. Trump worries that the crash will come right after he gets elected and it will be blamed on him. He might be right. I think unseen forces are artificially holding things together until the election, when all hell breaks loose.
Hang in there, Dave. You might prove correct — though for all our sake, I hope not. In which case, I’d still like to read anything you have to say. :^D
Sunday, March 20th 2016 at 8:04 am |
Thanks for hanging in there with me. Whether or not I’m right on the perfect storm for oil, I’ll keep writing my blog, as i did not bet my blog on that particular position, nor did I bet it on the recent stock market crash marking our decent into the “Epocalypse.”
The crash of the stock market happened exactly when and how I said it would — even when some bears said, “You cannot possible KNOW that is going to happen.” The drop over a cliff was significant enough to have everyone talking about what a horrible record January was. In the very least, it was such an abrupt fall and and all-time record drop for January that it scared the entire marketplace. So, it was no small deal.
The fall of the global economy into a massive collapse is also clear enough that I’m not going to give up my blog if the perfect storm in oil doesn’t happen. But I will certainly admit wherever I am wrong, and I think that the time to write my concession speech on that prediction or my victory speech is very near.
While I didn’t bet my blog on our immediate entrance into the Epocalypse, my statements that we are entering it were big statements, so I’ll have a lot to choke down if the market returns to a full-on bull market.
We do know, of course, that the Obama Administration will do everything it can behind the scenes to make certain any crash doesn’t happen on his watch. I believe his only option to retain the kind of power he clearly loves is to become Secretary General of the UN or to try to return to the presidency after dropping off for one term like Putin did (some arguing that holding two terms in office as a max means two consecutive terms, not two terms in a lifetime). I think his UN hopes are more likely, and his Nobel Peace Prize probably stimulates those hopes and gives reason to think it could happen. All of that is jeopardized if the US stock market crashes on his watch.
That said, I have always indicated that I don’t see how they can patch the economy together that long. It’s going to take a Herculean effort to keep the economy alive until January so that the next person can take the blame … or, at least, until November. If Trump gets elected, it will be easy to argue in November that the economy crashed because the entire financial world fears his maverick approach. (They’re already saying it everywhere you look: “Wall Street will fall into ruins if Trump is elected.” Wall Street will fall into ruins whether Trump is elected or not; but if they can keep things together until November, they can blame the fall on fear of Trump.)
–David
Saturday, March 19th 2016 at 11:32 am |
David, don’t lose heart. I think you are correct in that signs of a collapse would become apparent in March. What happened then?….Helicopter money. It probably started after the G-20 finance summit. They just didn’t announce it. Big entities were going to fail. The price of oil needed to rise, hence CB intervention. Yeah, I think oil futures are being levitated.
Sunday, March 20th 2016 at 7:46 am |
Thanks, Muad, and good to see another voice join these comments. You make a good point that one thing that makes it very hard to know how bad things truly are is that the Fed flies beneath the radar. Because they have the right to create infinite amounts of money by their own decree and to direct it wherever they want beneath the radar, it’s hard to know how bad things really are.
What would stop them from doing with oil what they did with the stock market? For YEARS they denied they were manipulating stock prices up. Then, after the December rate increase, two Fed board members stated outright that their main plan was to front-run the US stock market by pumping money into it. It was always clear to me they were doing that. I stated all along they were.
It was clear to a number of other writers as well, but there hand is close enough to invisible that there were numerous other people who believed the Fed was not front-running the stock market and that the market was NOT in a Fed bubble.
So, what is to stop them from creating money in their member bank accounts that they direct toward oil purchases? IF they are doing that, they really are creating a monumental disaster because that kind of manipulation that presses prices back up also presses PRODUCTION back up, as it lures producers to produce more now that the price of oil is rising.
I don’t know how we’d know, though, whether or not that was happening now that the Fed sees its mission as being the market manipulator of last resort.
Keeping my eye just on the KNOWABLE facts, the rise in the price of oil INCREASES oil production. Why would you, as a producer, lower your production if the market has risen to $40 per barrel and appears to have stabilized there or to be rising even higher. The oversupply gets WORSE, not better, with a rise in the price of oil.
That means there is a likelihood of reaching that maximum storage capacity where price of oil falls off a cliff because no one wants oil that they have to start storing in their household Tupperware just to find a place to put it. What happens when all the big tanks are full remains a very interesting question now that oil has soared to $40 a barrel. It’s like hitting the accelerator just before hitting the brick wall!
1) Why would you do that? 2) Ouch! The impact is going to hurt a lot more!
–David
Monday, March 21st 2016 at 9:38 am |
Lets call that “pulling an Aubrey”
Monday, March 21st 2016 at 1:59 pm |
“Pulling an Aubrey.” Isn’t that supposed to be like ditching attention?
If so, which part of all the above are you referring to?
Monday, March 21st 2016 at 5:30 pm |
at the first sign of an indictment you accelerate into the abutment.. Remember the wall street motto:’IBG YBG”
If they can run this rally into a triple top, and oil above 45-50, they’ve got an exit before the investing public will realize they’ve been “Aubreyed”
Monday, March 21st 2016 at 7:23 pm |
Actually, I think that’s what is happening. I think that the major stockholders are using corporate cash and corporate credit to buy out their own stocks before the whole thing goes down. Take out the buybacks, and the market would be dead.
However, I placed a timeframe on when I said things would take their next major downturn, and the risk of putting a timeframe on it is you have to eat crow if you miss it, which I’m willing to do if it turns out that way. We’ll know shortly.
Friday, March 18th 2016 at 11:31 pm |
Two items of note in case you missed them:
1) ZH has an excellent reprint up of Ben Hunt’s last missive. He’s a bright guy and worth your reading. You’ll take solace in finding you are not alone
http://www.zerohedge.com/news/2016-03-18/new-new-deal-markets-are-too-important-be-left-investors
2) Erik Townsend at the podcast Macro Voices is also in your camp. His latest podcast with Axel Merk covers much of your same ground prior to the interview. The Merk interview is good as well.
http://www.macrovoices.com
It’s hard to call what’s happening a true rally yet, as some technical hurdles have yet to be crossed, but they are pretty close in the windshield now.
A few podcasts I like to listen to every day are from Korelin Economics. I suggest you give them a try as well.
Sunday, March 20th 2016 at 7:25 am |
The first part of the podcast where Erick Townsend is giving his opinion is particularly interesting because he exactly matches my own thinking that there are currently two things to keep a close eye on.
One is that the US stock market is in a zone now where, if it goes a little higher, there is a strong likelihood that it really is going to emerge as a new bull market. (Those who call the last two months a “bull market” are dumber than a fence post.)
The market has broken above all points of major resistance, and the question now is whether the break past the final point of major resistance (the 200-day moving average) just a boost given by the Fed’s strongly dovish turn, which will fade quickly, or will it keep rising? I’m not a big charts person, but focused more on economic fundamentals; but I am looking to see if the market fully recovers from its fall that began after the Fed’s decision in December to raise interest rates. It’s very close to moving above that.
It’s also interesting to hear him say that the important factor to determine where the market goes is going to be oil prices and that the real important thing to look at for oil prices is not any upcoming meetings about production freezes, but to look at the impending storage crisis. IF we hit that limit where all storage is in use (the big factor in my “perfect storm”), oil has a lot of pressure to plunge in price again.
He’s willing to concede that his bearish position could be wrong for the immediate future — as I’ve just said I am — IF oil storage capacity is not reached soon and if the market goes up just a little more. It won’t take long to see whether the market breaks past the point where it was when it started to fall in December and whether oil actually hits that full-storage-capacity crisis.
As we move past the middle third of March and into the final third of March, we’ll know whether the perfect storm comes together just as the market hits this real breakout point and plunges the stock market back down or whether we manage to whistle past the graveyard. The closing days of March are, in my view, likely to make it clear whether I was right or wrong in my prediction of the perfect storm and my prediction that the recent stock market crash would be the start of the Epocalypse that I am still am certain of.
The Fed’s recent decision not to raise interest rates and their own forecasts that they will only raise rates this year about half as much as they first telegraphed makes it clear that even the Fed feels the economy is back on shaky ground. They made a clear choice to step back from their rate increases. I’ve believed and indicated all along that the Fed would certainly raise interest rates in December and then would find itself completely stuck. That it will not be able to raise them again because their first raise ended their false recovery.
Facing no sustainable recovery and a world in economic collapse, they are utterly stuck. For the moment that looks like they postponed and interest increase. Meanwhile the pressure to actually lower interest will grow. Next meeting will look like they’ve postponed it again; but what that postponement will mean is that they simply are not able to raise interest at all. They will need to lower interest, but will be extremely reluctant to do so.
Maybe they will find other ways to pump things up so they don’t appear caught in that hard place, such as the helicopter money that Delving Eye speaks of, and it may be very hard to know if that is happening. The Fed is allowed by congress to fly beneath the radar so that most of the time we have no idea what it is doing, as it does not even need to report to congress what it is doing. You have to try to decipher what it is up to via its balance sheet; but there can be a lot of hidden manipulation.
While we cannot know what it is doing beneath the radar, we can know one thing with ABSOLUTE CERTAINTY. The Fed decided it was NOT able to raise interest rates this quarter. When it first raised rates in December, it telegraphed the notion that its next increase would like be at this March meeting. We KNOW that is what they wanted to do, and we KNOW they were not able to do it. And that is exactly where I thought they would be by the time this March meeting came. I think it is highly significant that the Fed, as much as it wanted to, was not able to take the second step toward monetary normalization. Their “recovery” is so weak in their own eyes, that they feel one tiny bump of a quarter of a percent in interest targets (which still remain at a very influential economic stimulus level) could harm their recovery. If they really believed their recovery was stable, they’d soldier onward with their plan. Instead, they are clearly stuck in quagmire.
–David
Sunday, March 20th 2016 at 3:39 pm |
Our past puppet speaks on what they have left:
http://www.brookings.edu/blogs/ben-bernanke/posts/2016/03/18-negative-interest-rates
Sunday, March 20th 2016 at 3:41 pm |
Btw, for what is worth, I believe we are in a big rounding top — no crash.
Monday, March 21st 2016 at 1:10 pm |
After the plunge in the stock market that occurred in Sept-Oct 2014 with its subsequent recovery, I said that what I expected we were seeing start to form was a big rounded top and that I would expect that before a massive crash. If you look at a chart going back that far for any of the main indexes, but especially the Dow, you see that the top of the market does start rounding off at that point by increasing at less and less of rate, then running flat, then slowing decreasing. And that’s what you do see if you look at a chart of any of the major indexes over the past three years.
My prediction was that, once you see that rounded top, which we saw in 2015, it would fall off a cliff, as it did in August of 2015 and in January. Each time it has recovered, however back to that same curve as its high point, which is a position it just slightly edged above today (March 21).
So, the question that remains to be seen, now that it has edged above that curve, is whether it will taper down and then fall off a cliff again or if breaking out of that curve means it is set to steam ahead. I still think it will continue to fall in a series of crashes, as I’ve said earlier, but it remains to be seen. This is, after all, an election year, and the Administration may find hidden ways to keep the train on the track until after November (which doesn’t help my recent predictions any).
One thing I will note is that almost all of the market buoyancy has been due to stock buybacks, many of them funded with debt. Take out the buybacks, and the market would be seriously falling. We are just now entering a buyback blackout period when companies do not buy back their own stocks near the end of a quarter, so this week and next could cause the market to start to drop, as those buybacks diminish.
Monday, March 21st 2016 at 1:23 pm |
The one thing that precludes a “crash” is the revocation of FASB 157. Once that was pulled, and the black hole of bank debt and derivatives could yet again be hidden, the games continued.
Monday, March 21st 2016 at 2:04 pm |
Do you mean such as the Fed did with banks that are deeply into the oil debacle? The Fed appears to have told banks not to devalue the loans/collateral with the debts of oil producers that are sinking in the present low-price market. That keeps the banks looking better. It also appears from what I’ve been able to find about it that it means the banks will sustain those bad debts indefinitely, rather than recall the loans.
If that is what you’re referring to, I wonder how long they can continue with that charade. Seems to me like it would be a short-term game because sooner or later, the reality that they aren’t paying and that more and more are joining their number means bank troubles due to lack of revenue.
It’s a good way, though, to forestall a crash for a while and hope that the market reverses and things improve to where no one sees your slight of hand.
–David
Monday, March 21st 2016 at 6:01 pm |
No one knows what’s on the banks balance sheets. Greenspan set the precedent of turning a blind eye back during the ‘peso crisis’. It’s been operational policy ever since other that that FASB ‘event’.
Friday, March 18th 2016 at 2:50 pm |
http://www.shtfplan.com/headline-news/shock-report-oil-oversupply-exaggerated-millions-of-barrels-go-missing-oil-market-could-tighten-substantially_03182016
Just read this. Not at all sure what to make of it. I tend not to believe it. What then of the falling oil price and all these companies going out of business? Is everything we are seeing now a total fabrication, which is another way of saying ‘a lie’? Thoughts?
Friday, March 18th 2016 at 8:10 pm |
I read that, too, Craig, before I finished writing this article. Like you, I decided it reeks of being a fabrication. One of the baloney conspiracy theories. (Not that I’m concluding all conspiracy theories are baloney, just a great many of them.)
With tank farms it’s all physical oil. So, there is no uncertainty about where the oil is for them. They can look in the tank. If it’s full, it must be actually full. If 67% of their working capacity is full, then that’s what it is. There is no guessing.
So, the conclusions made about the an 800,000 barrel per day accounting mistake explaining the oil glut don’t mesh with reality. To believe this article, you’d have to believe that every tank farm in the world is in collusion on a lie about oil supply — that all of them are falsely reporting that they are nearly full up in order to try to manipulate the price of oil down so that they can lose more money.
I am always leary of conspiracy theories that require vast numbers of liars all over the world to keep the same secret contained.
If the tank farms are full, the tank farms are full, and the glut is real. I got a tiny sense of that flying home from Phoenix the other day. We flew over a refinery that I have flown over a number of times. There were four tankers anchored in an adjacent bay, all down to their waterlines (so full), in addition to any in the docks. That’s the most I’ve seen anchored there at one time.
So, it matches the reports I shared a couple of weeks ago about tankers having to wait much longer to empty their loads because there are more loaded tankers than there is demand. That will only get worse when all those storage tanks are full.
–David
Friday, March 18th 2016 at 2:42 pm |
I wouldn’t be quick to admit error David. To me there is the economy and then there is the financial system it depends on. That is the place the gamblers make big bets with others money. The economy is where we live working a job, paying bills, buying food etc. The economy isn’t doing well. For millions, even in north America the epocalypse has already arrived.
Two things caught my eye this week. The first was the report about personal credit card debt, heading to a trillion dollars. I look at my wife and ask ‘are people really buying stuff or are they using their credit cards for cash advances to pay a bill, trying to stay one step ahead of repo man? I know someone who lived like that for a time. Fortunately he was able to work his way out of that mess because he had some work and he also made moves for advancement. It looks to me there isn’t much of that available to many living in the real economy.
The next thing I noticed was oil prices. Going up over $42 per barrel? How can this be? There is a growing glut and falling demand. Just like gold and silver, someone must be manipulating the price. I’ve heard there is a near secret slush fund, and equalization fund which was created during or soon after the last world war. Is that being used? I don’t know but it doesn’t make much sense in the real world.
I’m sticking to my initial gut sense: we’re screwed. This isn’t going to turn back. There is going to be a lot of suffering and loss and we ought to be making preparations as best and fast as we can. Otherwise, get out and stay out of debt and be happy with less. Having sustenance and covering, be content with these things.
Friday, March 18th 2016 at 8:28 pm |
I will try to be completely fair about it, both to myself and others. I don’t like the myriad of false prophets who move their dates like Harold Camping did overtime the catastrophe they predicted fails to show. So, I won’t go there. However, being fair to myself means that if I see the kinds of events I predicted really are happening but that they are building more slowly than I thought, I’m not going to say my prediction was wrong, but just that I was off a bit on the timing. On the other hand, if the time goes by and I see none of what I predicted happening, then I’ll say I’m wrong.
I’m glad to see you sensed the same thing about this huge pile-on of credit-card debt. When I overlaid that news with the last few months sales statistics, I said, “There is almost no way you can explain this increase in credit-card debt as people greedily buying stuff they cannot afford. Christmas sales at brick-and-mortar stores and online were down quite a bit in December. January looked not much better, and February is now reported as being down.
So, if people aren’t using their cards to by more stuff, they must be using them to buy the things they routinely bought with their paychecks until the paychecks weren’t there. We’ve had tens of thousands of layoffs last year and this year in the Midwest and Texas region over the oil glut. Those layoffs also certainly have to be creating collateral damage to all the service industries that build up around a boom like the one we experienced over the past decade. That many things going bust along the centerline of our country probably explains the ramp-up in credit card debt.
It makes more sense to deduct that people are using the cards to try to float their way across a bad patch of oil than to believe it is flagrant spending at a time when sales are consistently going downhill.
–David