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Barreling Toward Epocalypse: Grading My 2020 Predictions

After each year closes, I typically grade myself on the predictions I made for that year. My last set of predictions were written near the end of June, during our reopening from the COVID lockdowns, for the second half: “2020 Economic Predictions: This Series of Unfortunate Events Guarantees the Epocalypse.”

I led off with this economic overview of what was still to come:

Many people are living right now in the delusional hope of a V-shaped recovery from the recent Coronacrisis lockdown…. That is the most unlikely possibility imaginable.

Half a year later, that overarching theme has been realized. Even though the economy reopened, we still have millions and millions of unemployed people who are surviving off of various stimulus programs. Without those programs millions would be bankrupt. We even had to renew forbearance programs for mortgages and rent that were set to expire at the end of the year even though that termination date was originally set because congress hoped we might be past the worst of this by then. Clearly we are not.

I believed it was absurd to think the disease would be settled by the end of 2020. As it has turned out, we are going down economically again due to viral resurgence and more economic lockdowns in various parts of the country, making unemployment worse again even as much of the damage from the first lockdown has become permanent or remains unresolved. So, we are building lockdown damage upon lockdown damage.

From there, I went on to say the following:

During this time of economic crisis, most of the predictions listed below are current events that are almost certain to continue as the major trends of 2020 and are likely to even worsen, plunging us into the chaos of a deep economic collapse, worse than 2008:

  • The social unrest of BLM will become even more widespread and intense. [That prediction was easily right for the summer, but toward the end of the year BLM actually fell off the radar screen as Trump “Stop the Steal” protests took center stage.]
  • Additional social unrest over forced social distancing will reappear around the nation as distancing measures return. [We did go back to extreme social-distancing measures in numerous parts of the nation in the fall, and many of the “Stop the Steal” rebellions have expressed a buildup of fiery rage fueled by those dictates. Again an easy prediction.]
  • Social unrest over corporate bailouts is likely to begin as the Federal Reserve and government stack up mega bailouts for the rich. [The corporate bailouts were mostly accomplished by July, and there was almost no social unrest over them during the remainder of the year. So, didn’t happen.]
  • Tearing down of monuments and other acts of violence will certainly create backlash against BLM. [I think a lot of the rage in the “Stop the Steal” rebellions is a backlash by people who feel their culture is being taken away from them. Thus, you hear a lot of “take our country back” statements by those who are rebelling and those inciting rebellion.]
  • So, social unrest will beget more social unrest. [My statement here meant that rage will just snowball, becoming worse and worse as people counteract the cultural dismantling from BLM and as protests become increasingly angrier. Things cooled down a little in the early fall, but rage exploded after the election. The “Stop the Steal” rebellion became more and more intense with every protest until it finally became an insurrection at the start of 2021.]
  • All the turmoil of a likely-to-be contested election with all the accusations of Russian tampering and other hacking … will cause even more social unrest. [Some of the rage when Trump bas based on claims that voting machines were hacked. The hacking claim, however, was not the main concern of the voting-machine allegations. The legal claims focused more on allegations that the machines were rigged by their operators. Yet concerns were expressed that the machines were hacked by the CIA’s operations out of Germany, and an office in Germany was even raided to try to prove that. So, this prediction was right on in it’s main statement of a contested election, which was easy to predict, but may have overemphasized “hacking” as part of the concerns.]
  • All those social conflicts will negatively impact some local businesses already hurting badly from the COVID-19 lockdown because they will be unable to reopen due to the protests at a time when we cannot afford anything that causes further damage to business. [I don’t think we’ve seen that. While the resurgence of lockdown has hurt businesses, protests in the latter part of the year had less and less harm on businesses than they had earlier.]
  • Social distancing being ignored entirely by BLM protestors, will increase the spread of COVID-19 as will reopening, ending the stock market’s fantasy of a V-shaped recovery. [Here I meant economic recovery. BLM protests died down a lot after I wrote this, so whatever spread happened through them was already happening at the time I wrote this. As the year moved on, few BLM protests diminished, and the rallies held by Republicans who refused to wear masks became the suspected super-spreader events instead. This one was half-right, though, because reopening definitely resulted in the disease starting to rise again in the second half of summer, and it exploded when people started getting together more in the fall, especially the holidays.]
  • Travel and hospitality will certainly remain in deep depression as COVID-19 stages resurgences. [An easy prediction, but certainly dead on.]
  • Lack of travel assures a continued rise in bankruptcies in the oil and gas industry. [Dead on! Eleven refineries are scheduled to close, including the nation’s largest refinery, Royal Dutch Shell in Louisiana. The nation’s largest U.S. refining company, Marathon Petroleum, is closing several refineries. In terms of actual bankruptcies from all businesses in the oil industry, the industry passed a milestone in October of over 500 bankruptcies, making 2020 its worst year ever.]
  • Shutdowns of major summer events will depress local business and government revenue as will shutdowns of sports events and concerts. [True. Almost all summer events were cancelled.]
  • Local governments will be forced to downsize staffing quickly and cut back projects of all kinds due to hugely diminished tax revenue caused by all the troubles listed here, causing a new wave of job losses…. [Didn’t happen to the large degree I expected. I believe it will still happen, but so far most local and state governments appear to have found ways to make it through with only minor adjustments, and government downsizing has been fairly quiet in the news or in job statistics so far.]
  • Diminished policing will result in a huge crime wave across America … because police officers resign and no new people want to become police in the present atmosphere. [Did happen. A number of cities have struggled to find sufficient numbers of police officers because of public rage against police in some cities and defunding, and their crime rates have soared.]
  • Business uncertainty due to the continuing trade wars and to additional COVID-19 border lockdowns, as well as inability of businesses to get parts across borders even for products produced and sold within the nation, will act like gravity on the hope of economic lift. [This has happened in the background of our economic troubles that have come from COVID shutdowns, BUT these aspects have not developed into a significant part of the economic news. The main problems have been from businesses locked down that never reopened and the resulting unemployment.]
  • We all know the federal debt will keep growing at an exponential rate because of reduced taxes that were supposed to be paid for by a rise to 4% or better GDP growth. That’s now a distant dream… The Federal Reserve [will] monetize the debt to the moon and back. At some point that will call into question the current US credit rating. [Fitch downgraded the US credit rating outlook to “negative” a month after I wrote this due to the exploding debt, but the government’s credit rating retained its overall AAA status. So, it got a nick.]
  • So many bonds sliding toward junk because the weak business economy will force all kinds of already risky credit to become riskier and become downgraded. [As it turned out, most of this was already in when I wrote this. Some city’s and states like New York were downgraded late in the year, but there was not not as much worsening of the situation, as I was actually anticipating with this statement.]
  • Forced offloading of that debt by institutions that are not allowed to carry junk bonds, will cause huge bond market problems and defaults by those who can no longer refinance by issuing new bonds. That will force the Fed to continue to soak up ever larger amounts of junkier debt, moving further down the junk spectrum, even as it also has to fund the federal government’s exploding debt plus the new exploding debts of local governments via new “special vehicles.” [The Fed has silently soaked all of it up, and the news has been silent about it, making it hard to ascertain how bad this problem really has been.]
  • The stock market, being utterly dependent on the Fed continuing to print money while also utterly dependent on COVID-19 keeping its head down, will go down hard again, likely this summer and probably again in the fourth quarter. I predict it will ultimately fall lower than its nadir in March. [MASSIVE fail. It did go down at the end of Summer and again in October by about 10% each time, but nothing like it went down in the spring, and it more than fully recovered since.]
  • That will cause more wealth evaporation, leading to more natural economic tightening across the financial and business spectrum. [Nope.]
  • The second wave of COVID-19 will be worse than the first when the fall flu season hits or maybe even this summer. [Definitely. The second wave from the fall is still rising and went well above the first wave.]
  • Some major banks and other financial institutions in Europe, such as Deutsche Bank, and in other nations will crash. US institutions will get pulled down by their associations…. [Fail.]
  • Many businesses will never reopen even though the economy has been reopened legally. Many others that do re-open will close for good before long because partial reopening is not enough to sustain them. [Extremely accurate. Numerous business remained shut after the reopening that had begun when I wrote this. Many of those that struggled through the reopening, shut for good during fall’s return in some areas to lockdowns.]
  • More shopping malls that were already marginal will close forever after reopening because of the number of businesses that do not return or that fail during the partial reopening…. [Numerous malls shut forever, and the buildings are being repurposed for all kinds of other uses or have just been left vacant.]
  • That, in turn, will have a knock-on effect for other surrounding businesses that now experience less traffic…. [Hard to say so far.]
  • Due to the continuing sweep of all the problems listed above, we are in for a deep, longterm jobs depression…. [Definitely. Unemployment remains horrendous, and is now getting worse again.]
  • That means housing and commercial real-estate will crash again as longterm unemployment and business losses result in mortgage defaults…. [Massive miss! Housing prices have soared. I TOTALLY did not see the COVID migration coming that resulted in a huge housing surge. My only comfort is that I don’t think anyone else back in June saw it coming either.]
  • The resulting deep slowdown in construction will mean even more job losses…. [For the reasons just given, way off!]
  • That means some US banks will crash…. [It didn’t happen at all. We may get there, but it did not happen in 2020.]
  • Add to all of these near certainties, the growing possibilities of more international wars that we already see rising in risk…. [Didn’t happen. Maybe some skirmishes, but no big new wars of the kind I talked about.]
  • Civil wars within various nations are more likely because of the rising economic troubles and social strife listed here as well as continued growing strife due to immigration pressures that developed under globalization. [Well, it looks like the US may be plunging into one — the tensions of which began to seriously build in the last two months of 2020, which exploded into insurrection in the first week of 2021 in an event that is the worst of its kind since the US Civil War.]
  • I won’t predict the US dollar will collapse, BUT … this is the FIRST year in which I’ve ever said that is a reasonable possibility.I am certain the indomitable dollar will finally start to experience struggles of its own…. [That has been the news of the past few months. How far it goes, nobody knows.]
  • Add to all of that the normal economic crises from major exogenous events, such as earthquakes, volcanism, hurricanes, tornadoes, floods, droughts, pestilence, wildfires, and, oh, an asteroid or two. The difference this year is that those big catastrophes will be hitting badly crippled economies and stressed societies wherever they hit in this world. (We cannot know what will hit or whether the number of such events will be lighter or heavier than other years because these are black-swan events — things we know CAN happen but have no knowledge of the specific likelihood of any particular event in a particular area in any given year. What we do know is that nations struggling under an economic crisis and an emergency health crisis will be less able to manage those events when they hit. Organizations like FEMA will be stretched way beyond their capacities.) [We dodged a bullet in the US. We had some bad catastrophes, such as wild fires that turned out after I wrote these predictions to be our worst season ever, but overall the natural disasters proved manageable and did not seriously strain our economy, except, of course, the local economies of those areas hit by the massive wildfires; but nationally it did not strain the system.]

From there, I concluded:

That’s a long list of finger-in-the-wind economic predictions. I’m not saying all of them will be dominant trends this year, and I can’t say when or in what order each one will happen; but I am certain 80% or more of my 2020 economic predictions will play out as stated above, and that is more than enough to assure the deep economic depression I’ve named “The Epocalyse.”

Counting only those items above that were largely or entirely correct and not those that were minimally correct, I come up with 16 solid positive scores out of 32 items. That’s my worst ever. So, I gotta give myself a “C” for getting only half right. However, I think 2021 will still bring around many of the things that didn’t happen this year. So, for some those that I didn’t score on, it’s really a matter of slower timing, not that they won’t happen. I’ve usually scored myself with a “B,” sometimes even an “A-.” Not this past year. I’ll blame it on COVID. Why not? Weirdest year in my lifetime.

I may have overstated the economic bad news for 2020 because we’ve weathered through economically better than I expected so far; but the social train wreck piled into the station only a minute late, blowing up in the first week of 2021. The economic strains listed above that didn’t happen or barely happened probably will not turn out to be a miss because the end of this train is still piling into the station on top of the cars that have already crashed. With lots more economic strain piling on and social strains that look like they could become worse than 2020, we are still barreling toward Epocalypse.

The Great Reset: Leaning into 2021 Money Storm

The big talk among economists and central banksters and some politicians in 2020 has shifted toward how the Coronacrisis will (or “must”) result in a global financial/social reset. I’ve said for years we can anticipate central bank digital currencies (even before that term existed) to happen in conjunction with a global financial reset. Now we are in that era, and I’ve been writing about it this year in my Patron Posts.

In short, I framed that argument as, “The world is set universally on a course of creating an everything bubble. When that explodes or implodes, it will be a global problem worse than the Great Recession, which will beg for a global answer.” With the global pandemic expanding some bubbles (like stocks) and, oddly, housing, and imploding other parts of the economy that were not bubbles (Main Street, such as restaurants, already endangered malls, etc.), one cannot help but think that time is here.

So, it’s not hard to understand why economists, politicians and bankers are all talking about a global reset now.

Talk of the town

Here are some quotes from the economists and other business leaders:

Mike Corbat: Chief executive officer of Citigroup Inc.

From putting letters of credit on blockchains, digitally onboarding clients, and conducting virtual roadshows for IPOs, bankers are ripping up some of the last paper trails we have left. Consumers who might have not done a lot digitally until now are engaging remotely. Many of those core activities will never go analog again. All that puts even more responsibility on financial institutions to help close the digital divide.

Zero Hedge

That cuts straight to the chase on the issues talked in my Patron Posts earlier today and throughout the year. There you have the CEO of a major bank that ordinary people work with on a day-to-day basis, saying banking will never be the same again. All banking will go more digital quickly just as people’s work spaces are going virtual.

[Money managers] should also stop hoping for a V-shaped recovery, argues real estate billionaire Sam Zell. Banking titans James Gorman and Mike Corbat see more and more of the financial industry going digital. One upshot: Firms like Morgan Stanley and Citigroup may not need all that office space.

I think that is a given. Wall Street is one of the easiest arenas to shift toward virtual offices since almost everything they do in their offices is digital anyway. This will expedite NYC’s uptown collapse. NYC is in for a world of continuing hurt as the collapse of commercial real-estate hits hardest in Manhattan, the loss of uptown workers results in closure of Manhattan stores, the rise in violence already seen by Antifa and BLM protests that went wild makes the area less desirable for people to live in, and being the hotspot of repeated COVID breakouts drives people away in fear.

The changes in the workplace are also going to have a longterm impact against the travel industry.

Susan Lyne: Managing partner at BBG Ventures

I can’t imagine companies are going to go back to spending as much on business travel. Everyone has been forced to figure out how to do business across country using Zoom or whatever video products.

Expect other changes in travel that may become permanent:

Glenn Fogel: President and CEO of Booking Holdings Inc. and Coronavirus survivor

You’re going to see fever checks in all airports. They’re going to try to catch anyone who’s coming through who may be infected. Certain jurisdictions are going to ask you to download an app to track where you are.

Proof that you don’t have COVID via a COVID test is already required on some airlines. Due to the latest upsurge in COVID, expect to see proof of vaccination in the coming year as a condition for flying on some airlines. Air Canada has already announced such plans. Some work places may start to require such proof by the end of 2021, depending on how far the vaccine roll-out has gotten. In the immediate future, however, such measures would shut out to many workers or too many travelers to be feasible.

James Gorman: CEO of Morgan Stanley

Clearly we’ve figured out how to operate with much less real estate. Do I think everyone is going to be working from home? No. The mentoring, the connection, the team bonding, the brainstorming, the creativity that comes from being in groups of individuals, like-minded and not like-minded, that’s how great organizations thrive. But can I see a future where part of every week, certainly part of every month, a lot of our employees will be at home? Absolutely. People have been functioning extremely well. We will have less footprint.

That takes us back to the global impact on US jobs that Trump sought to overcome with his revised trade policies, but this transformation will strengthen the move of higher-end jobs to places like China and India:

Joe Lonsdale: Partner at 8VC and co-founder of Palantir

Does this change how we hire around the world? Unfortunately it probably pushes outsourcing a lot more for certain types of jobs in the U.S., because you can hire someone just as well who doesn’t have to necessarily live in your town…. It could be another pressure on the middle class….

I think Biden will capitalize on the trade war Trump began but also seek to bring it to a close. (He has ties with China, remember?)

Chen Zhiwu: Director of the Asia Global Institute, economics professor at the University of Hong Kong, and a former adviser to China’s cabinet.

After the pandemic stabilizes, the New Cold War will be more visible between China and the U.S.-led West. The blame game has already started. But it will get worse once the economic hardship from the pandemic materializes in the coming months or years, to decouple China further from the developed West. As a result of the crisis, China will shift further back to its Communist roots and the Maoist era in terms of worldview and policy mindset.

I’m not completely convinced of that one. I think the world is starting to coalesce against Chinese expansion, which is something Trump should have done from the start in his trade war, drawing Europe into the fight on our side, instead of launching a warn in all theaters at once.

Biden has much better relationships with Europe, and will seek to unify the US and Europe in pressuring China. I’m not so sure China will respond by moving away from the West and going full-on military as it knows it thrives by trade with the rest of world. Only time will tell if Dr. Zhiwu will do better in his prediction about China than I. He certainly has the better credentials, so I won’t stake anything on my prediction.

James Galbraith: Professor of government at the University of Texas

There will be a vast tangle of unpaid debts that cannot be cleared, and—what is different from 2008 and 2009—the model of foreclosures, evictions, and repossessions to deal with them is going to be absolutely unacceptable. People sheltering at home without income are in no way responsible for their circumstances and will refuse to accept the terms of those contracts. So the contracts will have to be suspended, and the debts cleared away, or there will be a confrontation on a vast scale….

The right model is that of the treatment of inter-allied war debts after World War II: They were canceled, because dealing with the common enemy was a common effort. So the whole financial system will have to be reset. This is not an ideological point but a practical necessity for reestablishing a functioning economic system.

I think some form of a partial debt jubilee on mortgages could happen later in 2021. The pandemic was not the quick three-month thing the government was hoping for when it set up forbearance. There was no V-shaped recovery, except in stocks. It is becoming impossible for landlords to ever recover in making up mortgage payment that were inevitably stopped by rent forbearance.

Other homeowners are facing a mountain of deferred payments they will find hard to manage because the forbearance thing could easily go on another six months before it starts to break all apart everywhere. Maybe banks will be able to roll those up into refinanced loans.

If not, that will force some kind of debt reset, especially in rental houses, because renters are never going to come current with landlords. They didn’t create the problem, so as Galbraith says, they will demand government support for a situation the government (state directly and federal by guidance/policy) forced upon them.

It’s POSSIBLE, you could come out better being underwater on your mortgage than if you chose to slog your way through and maintain payments. Possible. Depends on how the government responds to the crisis it helped create.

Ray Dalio: Founder and co-chief investment officer of Bridgewater Associates

The second-order consequences of the coronavirus will be big. The large monetizations of debt and the pushing of bond yields to around 0% (while necessary) will reduce the appeal of holding dollar- and other reserve-currency-denominated debt. The wealth and political gaps and the conflicts from them will influence the distribution of wealth and power.

Dalio has been way off in many of his predictions, but I think that one is almost a no-brainer. The wealth gap, already terrible from decades of expansion, spread exponentially under Trump. So, we are getting to a breaking point where one cause of violence is that people feel the injustice of disparity as they see banksters have, again, grown much richer under the existing government’s bailout programs.

Without a doubt, we’ll see increasing cracks in society and a strengthening of efforts to claw back money from the wealthy, which to a large extent is deserved because much of the disparity was created by tax structures that resulted frequently in the wealthy paying a much smaller percentage of their total income in taxes (especially for Social Security and Medicare) than the middle class.

The forms that takes, however, may be economically bad ideas. Removing the cap on taxable Social Security income would only affect wealthier individuals who have had a free benefit there for decades because most people pay those taxes on 100% of their income. Placing that same tax on capital gains could be justified as easily as placing it on wages.

Social Security’s problems would be ended even without taxing capital gains just by removing the income cap; so, the latter may not be necessary. Republicans, however, are constantly pushing for the interests of big money and trying to demand SS be saved on the backs of recipients by making them feel guilty for feeling “entitled.” As I’ve said many times, of course they are entitled. It was their money in the first place, held in trust. You’re always entitled to your own money if it is held in trust.

Other responses could have all kinds of damaging consequences, such as a move to Universal Basic Income now that we have helicopter money already falling out of the sky. To a lesser degree, a direct wealth tax. These are two ideas that will gain currency under Biden, whether he embraces them or not, especially if Dem’s gain control of the senate.

One way or the other, the new reset will include clawbacks from the wealthy, or it will end in torches and pitchforks. Under a Biden administration and with a strong mandate from the Democratic part of the public, the following path is likely to gain traction, whether one likes bigger government or not:

Robert Reich: Secretary of labor for President Bill Clinton and now studies public policy at the University of California at Berkeley

I hope I’m not looking at it through rose-colored glasses, but it’s possible we may understand that at least with regard to minimum safety nets, and minimum health care, we need to do much more for our country and each other than we are doing now. We can’t ever afford to find ourselves so unprepared and lacking in the basics. The richest country in the world can’t even make sure all its people are safe. That makes no sense. Americans as a whole are gaining a deeper appreciation of how important government is…. Americans emerging from this may say to themselves: We really do have to have a government that works well. And we’ve got to have a public-health system that is the best in the world. Why not?

I’m not saying things should go that way, but I think they will, especially if Dem’s seize the senate. There will, of course, be a lot of push back from the new “not my president” crowd that is replacing the Democrats on that particular watch — a movement that has suddenly been fully embraced by Republicans against Biden.

With the Democrats in the ascendancy, you can be sure of more of the following:

Former Secretary of State John Kerry attended a panel discussion at the World Economic Forum during which he asserted that a great reset was urgently needed to stop the rise of populism. Kerry vowed that under a Biden administration, America would rejoin the job-killing Paris Climate Agreement but that this was “not enough….”

Speaking about how Trump increased his vote in 2020, Kerry noted, “What astounds me is that as many people still voted for the level of chaos and breach of law and order and breaking the standards and … I think that, the underlying reason for that is something that everybody has to examine.”

European Commission President Ursula von der Leyen … said the two entities [the EU and the US] would work on “a new rulebook for the digital economy and the digital society…. I see this as an unprecedented opportunity.”

Summit News

The globalists are back in charge.

Market AGAIN More Precariously Euphoric Than Any Time in History

We are now seeing the most euphoric stock stock market in history — a market as precariously perched as the one I laid out last January. “Market Euphoria Surpasses Dot Com Levels” says one headline.

There is another way of putting it: extreme euphoria.

Zero Hedge
Read the remainder of this entry »

Knock-on Effects Knock out Economy Like Dominoes

The major knock-on effects of the COVID shutdown are now starting to stack against each other, pushing city centers into the dust. Here are some of the big moves that are as characteristic of the US as they are of the world overall.

Read the remainder of this entry »

The Upbeat Downbeat on Housing and Commercial Real Estate

I mentioned in a recent article that the weird thing about this recession is that it is the only one in which personal income has gone up during a recession. That, of course, is because of government assistance, which is making it so we don’t have to feel the pain of a recession that the government, itself, caused — through its massive debt, tax breaks for the 1%, reliance on the Fed to solve government’s problems, and most currently through its forced economic shutdown as a response to COVID-19 — something that even the WHO now says was failed policy that should never have happened — even though they helped make sure it did happen!

All of that is weird stuff, but another really weird thing about this recession is that the housing market took off as though we had just entered the best of times this summer. Who would have guessed: 32-million people out of work, and we have a housing market melt-up? Of all the unlikely times for a new bubble to form! I didn’t read anyone who saw that coming. Neither did I see it coming, but it added brilliance to the summer that has continued burning all the way into October.

If you are looking to buy a house, as many are, that silver ray has a dark lining because it is driving up your cost, making it harder for you to enter the market. We are seeing rampant inflation in housing prices outside of major cities. The housing market is exploding into a new balloon (far too big to call a bubble) because there is severe shortage in available housing right as demand soared and interest hit an all-time low.

The mass-migration problem

Oh, there is plenty of housing supply opening up in the major cities because no one wants to live there anymore. Urbanites now want to migrate to the country or to smaller towns to escape riots and COVID concentration camps. COVID created a sudden reversal (perhaps just temporarILy) of a migration pattern from country to city that had endured for decades.

Of course, what makes “the country” the country is the lack of housing. Likewise with what makes small towns small. That means the desired new homes have to be built from scratch. So, we’re in a rush to fill in those beautiful fields and forests with new housing developments, turning them into rapidly expanding suburbs under that bizarrely outmoded idea that you can actually move swarms of people into the country and still have it be country.

Californians in particular are doing what they always do in times like this — rushing to transform small towns outside of California into expensive larger towns that run like Californians know towns ought to run (so they can do it all again fifty years from now when they, again, flee what they recreated). Once there, they will establish the same liberal polices of teaching racial hatred and police hatred by endlessly reminding everyone of why they should hate each other along with encouragement of riots as a form of free speech that have turned their cities into war zones, forever oblivious to the fact that hatred is what it is partly because they do all they can to enable riots while throwing fuel on smoldering animosities.

This huge migration shift has driven prices up as much as 5% per month and the cost of building materials in some areas up as much as 300% over the course of just a couple of months, particularly lumber, now that California is burning down all of its forests (due to years in which environmentalists saw to it that open slash burns were no longer allowed in national forests — or any kind of forest — so we left lots of debris on the floor to become tinder because burning slash in piles does not accomplish the same cleansing and due to reducing logging).

In some places builders and/or construction workers are in short supply. All of that is good for the economy as housing has more power to drive an economy and create new jobs than just about anything.

With too few houses in the country (because it is country), we are even back to bidding wars over existing homes in some rural areas and smaller towns, all enabled by record low mortgage interest that the Fed has established.

However …

A housing collapse within the building spree

Oddly, while June and July saw a record rebound in new housing starts, August saw somewhat of a collapse:

While that seems weird on the face of things, given how enthusiastic builders are feeling right now and how prices are soaring, the explanation for it is fairly straightforward:

Despite Record Builder Sentiment, Housing Starts Collapse Led By Rental Unit Crash

While single-family home starts rose, the rental units crashed in August…

4.1% jump in single family units from 981K to 1021M.

25.4% drop in multi-family units from 503K to 375K.

Zero Hedge

Who wants to live in multi-family housing when they are trying to escape cities and COVID? So the increase in the construction of new single-family homes in the country was more than offset by the decrease in multi-family housing units in the cities. The same transition could be seen in permits issued.

Another oddity is that, in spite of the barrage of news about rabid demand and bidding wars starting back up in housing, it would appear from September sentiment gauges that maybe builders (and realtors) were more excited about it than actual buyers:

Buyer sentiment may be falling because prices are rising so fast, and inventory is so low, putting the desired homes out of reach for many. (That is a guess. I don’t really know quite how to square that circle because falling sentiment would not seem to drive rising sales and rising prices.) Both the drop in sentiment and the drop in multi-family housing could also be indicative that the market is already starting to turn and will turn when I first said it would.

I have maintained since the start fo the Coronacrisis that we will not see a decline in housing prices until November. Before all the government intervention, I did expect a decline to start around November. However, with the forbearance laws that went in place and all the government rescue packages that are increasing most unemployed people’s income during this recession, it’s possible a drop in prices will not come at all. That depends on whether stimulus fails to get approval and whether forbearance laws are renewed.

If the government support subsides, everything, including the housing market, will collapse rapidly over the late fall and winter. If the economy degenerates as quickly as I believe it will during the fall and winter, even additional stimulus still may not be enough to keep the housing balloon floating.

I found it easy to predict a housing bubble collapse in 2007 for 2008. Whether the market will collapse soon this time around is really hard to predict because of the scale of competing forces and efforts to prevent such a thing already I play — job losses v. greater income for the unemployed, housing prices rising v. interest falling, rising numbers of homes technically in default v. forbearance preventing legal default, stimulus likely to increase after the election v. the likely civil wars that will break out after the election if the results are close enough to be contestable, fueling even greater desire to get out of the urban battlegrounds.

Commercial real estate is another matter entirely and is easily predictable

There is no question where the commercial monster is headed for the next few years. In war-torn NYC, commercial real-estate sales plummeted 54% citywide to the lowest since 2015 when records began. Not surprisingly,

Apartment buildings suffered the biggest drops in prices, at 50% on average. Offices and hotels saw decreases of 28% and 37%, respectively, while prices for retail properties were flat.

Zero Hedge

And why wouldn’t hotels crash like an elevator? Even the famous Hilton of Times Square announced in September it will close its doors on a “permanent” basis. “Two-Thirds Of US Hotels Say They Won’t Last Six More Month At Current Occupancy Levels.”

Malls were struggling all over the nation for a couple of years under the Retail Apocalypse I’ve been covering, and COVID has kicked mall owners in the groin; so, mall closures are speeding up everywhere. Offices are not needed as much due to people working remotely. Forbearance was making things worse for mall and office high-rise owners by making it impossible for landlords to evict commercial tenants, though the tenants certainly needed that grace. At some point all of this collapses into a heap of rubble.

As Zero Hedge just noted, malls die slowly until they die quickly. The same can be said of shopping centers and probably of office buildings that have fallen out of demand. They close store by store or office by office until they get below a certain critical mass, where they are no longer feasible with no hope in site because their problems are mostly not of their own creating right now, so then they just close entirely.

When will the house of cards fall?

There is plenty that can bring this whole real-estate structure down in a hurry, especially now that we are in a housing market melt-up that can only find comparison in the year 2007, BUT it all depends on how long it takes before the government can’t find the political will for continued stimulus or can’t take on additional debt at the speed of light without damaging its credit rating or ends forbearance measures because they are killing landlords or killing banks.

Commercial real estate is already falling and is in such a world of hurt that it has zero chance of getting better anytime soon. The same thing is happening in nations all over the world of course because many nations already had badly flawed economies before the Covidcrisis hit and had banks that were already seeing lower results for higher stimulus efforts.

The foundation for the housing market structure in the US is precarious with plenty of explosives already attached to the support columns, but something is going to have to detonate it to cause it to collapse into its own basement. Until then, housing prices may keep on soaring right into the recession … but probably not out the other side.

A September to Remember

Try to remember the kind of September,

When life was slow and oh so mellow.

Try to remember the kind of September

When grass was green and grain was yellow.

Try to remember the kind of September

When you were a tender and callow fellow….

–Tom Jones
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Denial Dominates the Dummies

One of my reasons I started this website years ago was to counter all the denial that I saw in the mainstream media about how long and deep the problems from the Great Financial Crisis would be and about how we were failing in every way to resolve the greed, decay and especially faulty thinking that would assure our next collapse would be even greater than the Great Recession.

Today, the same lame thinking still dominates, but not just in the media. It’s pervasive in the general public, too. Of course, it is particularly prevalent among high-flying stock investors, who actually think because stocks can float above it all, the world must be doing fine.

I found myself observing a … shall we call it … a balloon ride crowded with lightheaded investors floating over my little mountain this week? (I live in the mountains, you know?) Even as I tried to shout out a warning that their overcrowded gondola was starting to tear at the bottom and that the top of their balloon was on fire, they scoffed and sailed on past me on the trade winds out toward a vast and stormy looking reach of rocky peaks and deep canyons. They could have landed on the grassy uphill slope just before my little mountaintop and got off, but all they could seem to see was blue sky. It beckoned them.

I am still dismayed at how light heads can be at their level of floatiness. The thin air is obviously not conducive to clear thinking. While I believe it is vital to keep yelling warnings to those whose heads are in the clouds to try to wake the world out of its lunacy, sometimes breaking dreams that float on nothing but hope feels … hopeless.

Years of irrational thought about the economy and markets have kept us from making the many fundamental changes we need in order to get back to the solid ground of an actual capitalist economy. We cannot build structures that reach into the sky without respect to the laws of economics as well as a set of man-made rules that prevent behavior that is well known to be reckless and, so, destructive to others. I’m talking about behaviors that serve only a greedy few. We want, instead, to keep feeding dreams of clear and unrestrained flights of fancy to easy riches.

In economics, that means we’ve burned up regulations like Glass-Steagall and cast off such ballast as the illegality of stock buybacks in favor of sailing higher and faster with no restraints. We’ve untethered the high-flying market from solid economic ground. Worst of all, we’ve become so lightheaded about how economies and markets function, that we cannot see or understand the storm we are sailing into or heed warnings that might bring us safely down.

What follows is an example from my experience this week in the airy writings and oxygen-deprived comments of a small clutch of light-headed investors.

Inverted thinking about inverted yield curves

While I continue to come across many articles that exude lame thinking, I’m going to focus here on just one. I won’t name the person who wrote it or provide a reference to it because he’s small potatoes. If he were a big public media name like Krackpot Kudlow, I’d reference his article directly; but my point is not to lampoon the person but to show just how poor the prevalent arguments from stock investors and advisors continue to be.

The article I’m referring to asked whether a recession was coming based on recession indicators we talked about last year here on The Great Recession Blog. Only we talked about those indicators a year or more ago when they could actually indicate something. The author thought it good to say these economic wind socks, now relaxed, indicate we will not fly into a recession, promising calm, blue skies for market balloonists in the days ahead.

I had to wonder if the writer lived on mars and hadn’t noticed that a recession was already declared to have begun in the first quarter of 2020. I even had to look at the date of the article to see if I was reading a rerun of an old article. Nope. Current. Wow, I thought, as I looked at the tornado howling through the canyon they were about to fly over. Not a good time for balloon rides.

The windsock he pointed his passengers to was the yield-curve indicator to see if it is showing a recession to be likely. He noted that it was not yet inverted. He must have been asleep at the start of the storm I guess. Inversion already happened last year — twice.

I thought everyone who talks about this recession indicator knew the yield curve inversion is forward looking. This author even said it is forward looking, but apparently, he didn’t know it looks forward by more than six months and that it never keeps indicating recession once one has already started.

The indicator I’m writing about (and that he was writing about) is this one:

As you can see, each time the indicator dipped into inversion (a reading below zero) a recession ensued months after it dipped. In fact, as I often noted here last year, recessions do not start until after the yield curve reverts from its state of inversion back to normal — usually about three months after it reverts to normal. You can see that in the graph, too. (See: “BOND PRIMER: What is an inverted yield curve and what does it mean?” and “BOND PRIMER: Does Inverted Yield Curve Indicate Recession?“)

The yield curve inverted over a year ago, and it reverted many months ago, so it already predicted this recession more than a year ago. It’s not surprising, then, that the train arrived at the station right on time six months ago! Yet, this writer I was reading saw no recession currently marked on the graph (the gray zones) and sees the yield curve has reverted, so all must be fine ahead now that the indicator has stabilized. We must have already cleared out of the recession zone!

Really, the start of a recession just means this gauge’s messaging utility is long past. The yield curve was already 100% correct in having predicted a recession. It’s done its job! That train not only already arrived at the station, it’s now long on its way down the recessionary railroad. The yield-curve indicator has never been able to tell us anything about how long a recession would last or how deep it would go. As you can see, one of the slightest dips into inversion was followed by the largest, deepest recession on the graph.

The author even provided this chart from the Fed where you can plainly see the yield curve always inverts ahead of the recession by six months or more and, in most cases, returned to normal before the recession began. You’d think he could, at least, read the charts he presents; but that doesn’t happen when people are struggling to avoid seeing reality.

Let’s get our heads out of the clouds and look at bedrock reality!

This guy is nuts. We’ve already been declared in a recession, and he’s looking skyward at forward indicators to say they don’t show we are about to fly into one. On that basis, he argued the stock market might actually be right in indicating belief that the economy is going to get better and pricing accordingly because, “Look, the indicators shows there may be no recession ahead!” (As if the stock market knows anything!)

He also quoted the always lame Nobel economist Paul Krugman as backup to show hope waits ahead. Who on earth cares what economists are forecasting as a recession probability? No professional group has ever been worse at its own game.

Open your own eyes and think for yourself, Man! Economists didn’t see the recession of the dot-com bust coming and certainly didn’t see the Great Recession coming. So, who cares where they think we’ll be in six months? Look at the mud hole we’re already in. Wake up and smell the rotting cabbage!

The improvement in the unemployment rate that came with reopening the economy after the viral shutdown flattened much more than the viral infection rate or death rate over a month ago. It has only changed incrementally since then.

In fact, if you include all unemployed “gig” workers in the mix, who are now received special forms of unemployment benefits made just for this event, the unemployment rate has actually increased every week for more than a month and is over 32-million people. That’s 32-million and NOW RISING!

Here’s a reminder of the graph I published a couple of weeks ago in an article titled “Labor Dept. Trumps Its Own Numbers“:

This peaked and flatlining unemployment means there is no question the second half of this year gets worse because it’s already doing so, and a vaccine — if a vaccine even happens (given that scientists have never yet made a successful vaccine for a coronavirus) — isn’t going to repair the economic damage already accomplished and firmly holding.

A vaccine won’t restore businesses that already crashed and died. It may keep more businesses from going out, but there is a lot of loss that is already permanent, and the only reason we are not feeling the depth of pain is that we are receiving massive repeat doses of government anesthesia. That is what is allowing the market to float in delirium above it all.

The only things preventing the greatest storm of mortgage defaults and bankruptcies ever witnessed in US history right now — and this is straight fact, not opinion — are the equally massive government intervention programs that congress can no longer agree on — the $1,200 stimulus checks, the extended and enhanced unemployment benefits, the expanded unemployment benefits for gig workers, the payroll protection program, and the mortgage and rent forbearance act.

Why is that statement fact, not opinion? PRIOR TO the Coronacrisis, over 70% of Americans did not have enough money in savings to cover more than one month of living expenses. Fact. So, it is a certainty that, without those government emergency programs in place, 70% of the 32-million unemployed would have already defaulted on their loans and rents long enough to be in foreclosure or eviction! That’s 22 million people who would be in foreclosure or evicted from their rental homes!

And that was just the first wave! Even if we assume there will be no second wave of coronavirus infections (in spite of the fact that we are already seeing one), what would be the knock-on effects to other businesses from so many people driven out of their homes into destitution with no income and no savings???

All of this means there is absolutely zero chance that the second half of 2020 gets better just because unemployment has flatlined. The economy has already reopened for more than two months and has experienced as much benefit as it is going to from reopening. The benefits saving us from total despair are increasingly being battled in congress, and more than 50% of businesses on Yelp already reported they have closed “PERMANENTLY.” There is no reason to think the businesses that are not on yelp are somehow experiencing a different reality.

That is not going to change even with a vaccine. It has already happened, and vaccines are not retroactive! Yet, this high-flying balloonist of an author contended the stock market in its great wisdom may just be seeing the hope that lies ahead! I’d say the operative word there is “lies.”

On top of all these dead businesses with unemployment stalled at levels that may even exceed the Great Depression (except that clear statistics are not available from back then), we have the worst social unrest across the nation since the 60’s. That is clearly only going to get worse just before and especially after the election, which is less than three months away.

If Trump wins, the radicals will go insane! (They already are insane, but the arteries in their heads will burst from enflamed madness.) If Trump loses, Trump and his supporters will become enraged, claiming the election was totally rigged. Trump is already laying the ground for that claim with his constant complaints that mail-in-votes are ripe for fraud. (Maybe they are, in which case Trump voters will be right to be enraged; but, whether they are right or not, you know Trump is already laying the groundwork to make such a claim.) Democrats are laying the groundwork, too, by saying Trump is denying the post office essential funding so that it cannot deliver all ballots on time. So, no matter the outcome, this election bursts the nation into greater flames.

Congress is stymied over renewing the current efforts to renew all the emergency programs that are keeping the economy minimally alive on government life support. Trump saved only part of them by intervening via executive decree. The chances of yet a third round being approved in the final quarter go down drastically as Trump probably did this by decree to assure his re-election. After the election, he’s not as likely to fight his own party on this, and they will be even less likely to go for a third round. So, your experience of the situation is not going to get better anytime soon.

If these safety nets fail, then the bottom really falls out since unemployment is no longer improving.

And all of that is IF the virus doesn’t get worse! But, hey, maybe the market in its wisdom is flying toward real future earnings! After all, the big recession gauges don’t show any recession coming!

Who drives their car off the cliff then worries about the fuel gauge?

Afterward, a puzzled reader asks this writer who was floating on hopium, “Hasn’t a recession already started?”

You would think, “Duh!” (But apparently the question needed to be asked, given the dumb article.)

The author’s only lame answer is, “Yes … while, of course, the U.S. is in a recession, two of the three indicators mentioned in the article are forward-looking in nature.”

Oh, my gosh! He even sees it and still doesn’t see it!

Of course the gauges he uses are forward looking, but he raised the question of whether we are even now in a recession by talking about the probability of going into a recession. That is like asking what the probability is of your car going off a cliff when you have already gone over the cliff and your wheels are dangling in the air. It’s a dumb question to raise because it is already 100% fact! (And cars with dangly wheels don’t make good hot-air balloons.)

Moreover, the fact that the author actually responded that the indicators are forward looking in nature shows he should have known his article was dumb. They are likely to be looking BETTER after you’ve already entered the recession than they did before because you are now trying to work your way OUT of the recession you are already in; but they have never been known to indicate when that end will come.

That’s like staring at your gas gauge after you ran out of gas to see if it is indicating how long it will before your tank refills. It can tell you the probability of running out of gas. It has no predictive power for telling you when the tank will refill.

You have to figure the latter out by looking around at where you car sits. Is it resting beside a gas pump while your hand is running your credit card through the pump. Then it’s pretty likely the tank will be full soon. Or is it sitting at the bottom of a cliff in a pile of exploded rubble?

As another example, talking about the “probability” of my stepping on a tack in my bare feet is uh, err, pointless when I’m already standing on one while running the probabilities that the event could really be happening. It is an exercise in clownishness. I don’t need to waste time running my probability calculations to know what my shrieking foot is already telling me!

It’s unbelievable that you have to explain this stuff!

Another person even responded with glee, “It’s over already. I’d say 9M jobs recovered in 3 months shows that clearly.”

Seriously? What a fool’s pipe dream! 9-million jobs recovered out of 32-million lost! Yeah, it’s over already! We’ve recovered! Glory hallelujah!

That is how thick the clouds of denial are. It’s disgusting that one even has to write to correct such vain thinking. I’m explaining to those lost in the new politically correct math that five minus two doesn’t equal a million, no matter how much you want it to!

First, the meager 9-million jobs we got back compared to the 32-million lost were the low-hanging fruit. They are the jobs that could and did come back when the edicts that shut down the economy were removed. They were the jobs I said back in march would pop back immediately when the economy was reopened for business. Can’t these people figure out what the remaining 23M jobs mean? They are the ones that did not come back when the edicts were removed!

That means they are not going to come back for a long time because the edicts that shut them down were removed two months ago. IF THEY COULD COME BACK, they would have. If they remain lost because some places went back into shutdown, what does going back into shutdown so quickly tell you about the months ahead?

For the most part, these jobs can’t ever come back because the businesses that provided them we’re destroyed. They represent the actual economic wreckage that the permanent closure of restaurants and retail outlets already caused because the coronavirus hit an economy that was already faulty and feeble. The economy simply blew apart when it got this corona kick in the chops.

As I wrote just a few days ago,

I went to our local mall yesterday for the first time since the economy was shut down. Now two full months after reopening, more than 50% of the shops remained closed. Of those, 80% were stripped bare. That calculates out to no hope that, at least, 40% of all the businesses in the mall are EVER coming back….

The huge rebound quit as soon as it began, and the numbers of new hires are now just matching with the numbers of new layoffs. That’s if you look at real numbers and not just the BLS hype about its numbers. (As I wrote about in the article just referenced.)

More than half of the restaurants that have closed have not reopened. Most report on Yelp they are closed permanently. Those are services businesses that will never be rehiring their laid-off employees. So, real statistics add up with what my eyes tell me from a walkaround at the mall and what service businesses on Yelp are reporting.

Wake up!

The jobs are not coming back.

US in Longterm Economic Decline

The proof of that is that overall unemployment is already rising again. You hear in the parrot press’s headlines about unemployment dropping because the mainstream media just regurgitates what the government feeds it, and the government is conveniently not talking about the larger number that includes all of those on unconventional unemployment benefits (the very ones congress is now arguing about).

Total unemployment is rising because the damage of closing is still playing through. Can you even imagine how much worse that damage will be if congress does not renew those novel unemployment programs that are keeping people from defaulting on their mortgages and rent and that are protecting those who are defaulting?

Thank goodness for the readers who do still see straight

A wiser person commenting on the lame article put these unemployment numbers in perspective:

The unemployment rate fell to 10.2% in Friday’s report, but let’s put that in perspective. This rate is still higher than the peak of 10% that we hit in October 2009 during the Great Financial Crisis. We lost 22.2 million jobs from February to April, and now we have recovered 9.3 million, which leaves 12.9 million unemployed. There are millions more that are gig workers or self-employed, who are also out of work and not counted on payrolls, which is why we had more than 31 million on government benefits before the stimulus ended.

Additionally, the labor participation rate has fallen to 61.4%, which is the lowest level since 1976. This is because 5.8 million Americans who lost their jobs during the pandemic have presumably left the workforce. They are no longer looking for employment, which is not good news….

The lack of concern about our labor market crisis is unbelievable. The economy went over an income cliff two weeks ago, and Congress has its head in the sand. Perhaps that is because the stock market indicates that things are not that bad at all, unless you’re unemployed.

Indeed. Who cares about the rest?

So long as stocks are up, everything must be fine because the great wisdom of the market, according the writer I’m criticizing, knows there is hope in the near future. The Great Oz has spoken!

We’ve already fallen so the falling must be over. Right?

We’ve fallen through the bottom of the balloon’s gondola, but, hey, at least, we’re still in the air! That ground appears to be approaching quickly, but what does that matter, the balloon is now rising faster without our dead weight!

How could we possibly still have recession ahead when we’re only a mere 32-million jobs short of what we had the start of the year???

Whatever kind of crack they’re putting in their pipes where the writer of the article is from must be some pretty delusional stuff. People fall for it because we are all doped on government anesthesia with all those programs congress failed to re-approve, but which Trump partially reinstated.

People don’t feel the pain of hitting the ground yet, so they ignore the fact that they’re falling quickly. You cannot even imagine the economic catastrophe everyone would already be feeling without all that temporary shoring. 

Hand me another pipe of whatever crack it is you have going over there, Man. I’m going to need a lot bigger hit to believe in your delusions.

If you want to talk probabilities, the unemployment level we are now experiencing and the knock-on effects without government support for those who were forced to stop working would likely be beyond anything the US has experienced in its history.

Millions more jobs would rapidly evaporate because the 32-million lost the ability to buy things. As millions of mortgages went into default, housing values would plummet from all the homes on the market. Rent values would fall through the floor because millions of evictions put millions of rental homes on the market at the same time. Those houses then have to try to rent out to people who cannot afford rent anyway. Thus, banks would go under. Landlords would be sunk. Construction would collapse.

Trump was smarter than his party and just ran out ahead of the party and quickly kicked some of the shoring back in place to avert immediate disaster. (But, hey, there is no recession anywhere in sight because the yield curve doesn’t say one is coming!)

Trump knew that, if people started actually feeling the pain of our self-inflicted catastrophe (not happening on this scale in Sweden, which didn’t shut down its economy and has far better viral recovery), he’d have no chance of getting re-elected, particularly if voters see their pain as resulting due to Republicans not realizing how bad the economic damage would be without this support.

In conclusion

When I wrote parts of the critique above in my own comments on the article’s page, another person replied with …

Equities have had a V recovery right? Are you saying today’s market levels don’t reflect a positive outlook for the economy to recover?

Wow! You can’t even beat the denial down with a stick! So, I replied as follows because years of market manipulation by Fed and government have turned the world into a rabbit hole where people no longer have a clue of how an economy and real markets actually work and where people are no longer even capable of grasping reality:

Equities are completely meaningless. I am definitely saying today’s market levels have nothing to do with a true outlook for the economy. The market has been delusional economically for a long time. It has totally disconnected from economic reality and is predictive of nothing but its own continuing delusions.

The market used to care about the economy, but stock markets like 2000 and housing markets like 2006 become completely irrational. On top of that, this market was built from the ground up for the past decade on nothing but corporate debt, financed by the Fed buying massive government debt that resulted from huge corporate tax cuts that were already breaking the nation because they were accompanied with huge spending increases before COVID-19 hit.

The market has from the commencement of the bull rally cared nothing about true business profits. Earnings were a complete joke the entire time! What are earnings? By that term, the market means “earnings per share.” And the “per share” part is the reason earnings have been going up for most companies for years. They were buying back their own shares at a rate never seen in history and broadly across almost the entire market. So, of course, earnings per share looked like they were improving because the denominator was constantly shrinking.

That’s as good as a baked number. At the same time, of course, it drives up stock prices because companies are using all of their own cash in many cases and all of the corporate credit in other cases to CREATE THEIR OWN MARKET FOR THEIR OWN SHARES! They drive up the price because they vote to buy the shares in sufficient enough numbers to force the price higher by creating their own demand!

Another term for this is “milking the company for all it’s worth” because you are not investing back in CAPEX (well established fact) but are burning cash and credit to make money off your stocks, not off your profits and are leaving the companies as empty shells because you don’t put enough back into them.

This market has been devoid of all business sense and all economic foresight for years!

That doesn’t mean it doesn’t make the owners rich. Of course it does! They buy into a company, profit themselves immensely by gutting it of every dime it makes and then use all of its available credit to line their pockets more, and then they sell to the dummies in the retail crowd who buy the momentum without a thought to the true value of a profitless, hopelessly indebted company during a time of global economic collapse!

So equity valuations are all hype, adrenaline and testosterone. Their rise has nothing to do with the economy now or its future; but one thing is certain (at least historically) all markets do catch back down to economic reality when the economy crashes for long enough, and this economy, which is now holding at 32-million lost jobs, clearly has a lot of crashing left in it. 

Even the Fed, which tries to be as optimistic in every statement it makes as it can be, says it will take years to recover the lost jobs, even IF a vaccine is approved by January. The damage is in; and, if you cannot see that, you are intentionally blind to the obvious.

So, what kind of crack are you smokin’?

US in Longterm Economic Decline

Measured by the common man (or common girl), we’re on the road to ruin. The US has been in decline for decades, but you can’t see that by looking at stocks. You can’t tell it from those who lie about the economy to make their living, but look at longterm real numbers, and you see an empire in decline that just got its wobbly legs kicked out by COVID-19.

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No “V” in Reco_ery

These pictures are worth thousands of words:

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Drumbeats of the Epocalypse: The Economic Death March Has Come to Town!

The coronavirus pandemic inflicted a “swift and massive shock” that has caused the broadest collapse of the global economy since 1870 despite unprecedented government support, the World Bank said.

“This is a deeply sobering outlook, with the crisis likely to leave long-lasting scars and pose major global challenges,” said World Bank Group Vice President for Equitable Growth, Finance and Institutions Ceyla Pazarbasioglu….

The depth of the crisis will drive 70 to 100 million people into extreme poverty.

Yahoo! News

The Depression is deep, and the pain is wide.

Yet, the NADAQ is a rocket, attempting to break out of earth’s atmosphere. As I wrote several days ago and reiterated yesterday, saying I’d follow up with greater detail today, this bubble in stocks is the most extreme euphoria ever seen. It will, however, blow when the initial burst of good news from reopening gives way to the reality of all that did not recover after reopening.

That endless lineup of headlines is arriving now.

Since COVID-19 has been rebuilding its claimed outbreaks around the nation in the news, the market has become troubled, knocking the S&P 500 and the Dow back down to that seemingly magical 61% retracement fibonacci line on the charts that really big rallies after really big crashes like to top out at.

As I mentioned yesterday, the Nasdaq has pressed on ahead in a tear. Here is how it looks relative to the rest of the economy (GDP). See if this picture looks stable to you:

And how well did that work out last time?

“Ahh,” you may say, “but this time it is only because then denominator (GDP) has crashed so hard.”

“Nay,” I say.

It is also because, in six days, the five top stocks in the NASDAQ have added half a trillion dollars to the market’s value; and, since the start of this wondrously promising year, they have added 1.6 trillion! All but one of these companies have claimed a heady position in the trillion-dollar-company club.

I’m sure that is not because their businesses have become so much more promising during 2020, earning this appreciation.

As Sven Henrich notes,

That would be a feat during any bull market during times of great growth, but in a historical recession?

Northman Trader

So, while the Dow and the S&P got decapitated the second a new COVID-19 surge took the headlines back, the NASDAQ has continued to be a riot of irrational enthusiasm.

A growing drone of doomsayers

In June, one of the great bubble-blowing predictors of market madness joined with me (unbeknownst to him and for his own reasons of course) in calling out this madness:

Stock-market legend who called 3 financial bubbles says this one is the ‘Real McCoy,’ this is ‘crazy stuff

Jeremy Grantham, co-founder and chief investment strategist at Boston-based money manager Grantham, Mayo, Van Otterloo & Co., [offered] up a stark warning to speculators driving the stock market to new heights amid the greatest pandemic of the past century….

“My confidence is rising quite rapidly that this is, in fact, becoming the fourth, real McCoy, bubble of my investment career. The great bubbles can go on a long time and inflict a lot of pain but at least I think we know now that we’re in one. And the chutzpah involved in having a bubble at a time of massive economic and financial uncertainty is substantial.

Gratham painted a very dire picture of the investment landscape in the U.S., suggesting that rampant trading by out-of-work investors and speculative fervor around bankrupt companies, including car-rental company Hertz Global Holdings Inc. … reflects a market that may be the most bubblicious he’s seen in his storied career.

It is a rally without precedence,” he told CNBC, noting that the run-up comes amid a period in which U.S. economic health is at a low point, with millions of people out of work and bankruptcies likely to continue to rise due to a slowdown in business activity and closures that have come in the aftermath of lockdowns implemented to curb the spread of the deadly COVID-19 pathogen….

Grantham is worth paying attention to due to his prescient calls over the years. He said that stocks were overvalued in 2000 and again in 2007, anticipating those market downturns.


Grantham was one of the clear-eyed people in 2000 who could look at the graph above and say it was a picture of fabulous nonsense. And this time, the graph says it is worse, and Grantham says it is worse. This time, he’s saying this stock bubble is the greatest and craziest of them all.

Grantham indicated his firm has moved to zero exposure in stocks, and he recommends others make that shift, too. And he said that nearly a month ago! Imagine what he thinks of the nonsense now.

In my last article I described three main aspects of the economy that show massive permanent business closures as a result of the first shutdown. Imagine how much worse it becomes as the knock-on effects that are continue to develop. Then imagine how much worse it becomes if any states that go back into a shutdown.

BUT THE NASDAQ KEEPS CLIMBING thanks to the fabulous five!

Second quarter 2020 came and went like a California wildfire. The economic devastation caused by the government lockdowns was swift, the destruction immense, and the damage lasting. But, nonetheless, in Q2, the major U.S. stock market indices rallied at a record pace.

The Dow booked its best quarter in 33 years. The S&P 500 posted its best performance since 1998. And the NASDAQ had its biggest increase since 1999…jumping 38.85 percent in just three months.

The economy, on the other hand, was severely scorched. Decades of debt had built up like dead wood amongst a forest understory. Then, at the worst possible time, government lockdown orders sparked a match and set it ablaze.

Economic Prism

News of plague turns for the worse

We are now entering the phase I talked about for July where the good news from reopening starts to fade, and we get to see how much didn’t recover. Now we start to find out how much is permanently lost and, by the end of the month, we start to see the bankruptcies and foreclosures lining up like a soup line in front of the courts. Then, in August, the business dominoes start to topple because of the businesses that have already collapsed that other businesses depend on.

In this article, I’m going to start laying out the parade of facts that reveal how much did not recover during reopening. First, here was the news three weeks ago that clipped the heads off the Dow and S&P:

Coronvirus cases rise in at least 9 U.S. states, while Fed’s Powell tells Congress unemployment benefits should be extended. U.S. stocks slumped in the final hour of trade Wednesday to end three days of gains, as investors monitored signs of a revival of the coronavirus pandemic in some U.S. states and China, while still hoping for a quick economic recovery as business activity resumes….

Investors monitored the trajectory of new coronavirus cases, as business activity resumes after lockdowns, along with a fresh outbreak in China, but the focus remains on the path to economic recovery, amid some progress in developing therapeutic drugs and vaccines against COVID-19….

Meanwhile, Arizona, Florida, Oklahoma, Oregon and Texas all saw record increases in new cases on Tuesday, while hospitalizations in Texas, Nevada and Florida hit recordsaccording to Reuters….

China canceled flights to and from Beijing, restricted movement of people, and closed schools in the capital city, after 137 new cases were reported in recent days….

“If COVID-19 were to get so bad this fall that the economy had to totally shut down, stocks would fall and fall hard. But right now, even with a surge, the general consensus is that the economy won’t completely shut down again,” said James Meyer, chief investment officer at Tower Bridge Advisors….


We all know now how that return of the COVID story went. The news just continued to grow worse. Whether the cases of disease are rightly reported or not, this is the news that has dominated, and it is the news governors will certainly be responding to as they consider whether or not to remain open for business. Some of them have already begun winding back toward closure.

So, good luck with the idea that the economy will not shut down again! It’s already doing it in statewide moves. Trump may rail against it at a national level, but his own health advisors have been saying we need to move back in the direction of closure, and numerous states have shown they are free to ignore Trump on this issue, which they did when they chose the last lockdown against his express will.

So, that’s a heck of a thing to be banking on!

Atlanta Mayor Set To Reimpose Lockdown As Cases Surge, Defying Gov Kemp, Trump

And good luck with the economy not remaining well below where it was in January of this year (already not a good place) for a minimum of two years to come (probably more). Good luck with the arrival of end of the reopening bump in good-news statistics not taking out the stock market’s drug-addled euphoria later this summer if COVID-19’s rising case claims don’t do the job first.

(Note I say claims because a few people in the medical profession have contacted me to tell me they are instructed by the CDC to report all respiratory deaths as COVID-19 unless they are known with certainty to be something else. Yesterday, a reader here told me he heard Ron Paul claim that Texas is now reporting people who merely come into contact with COVID-19 as actual COVID-19 cases. See: “Ron Paul: Is the Texas COVID ‘Spike’ Fake News?” I keep hearing various reasons to question the numbers that are coming through. Still, as I said before, perception is reality in terms of how this story hurts the economy because politicians are acting on it and so are hundreds of millions of customers.)

Failure of the Fed is already being sensed

The stock bubble is already looking ready to burst. The Robinhood crowd, where the reigning self-proclaimed champion Dave Portnoy has proclaimed “stocks rise forever,” may be in for some sticker a shock when prices crash:

The first crack appears in bulls’ thesis that the stock market will rise no matter what.

Money printing by the Federal Reserve has propelled stocks for more than a decade. But that effect may soon wear off….

Until recently, the Fed has been unreasonably intransigent in that it will continue money printing even if the economy became strong and there was no need for it…. When the Fed announced it will buy individual bonds, the stock market loved it….

Fed Chairman Jerome Powell is a smart man. The way he came across in his press conference after the FOMC policy decision last week was troubling in that he was going to do whatever it took without regard to consequences and limits. Why would a smart man like Powell show such intransigence?…

Powell is being clever in exhibiting intransigence because he wants everybody to believe that the Fed is all in and there are no limits to what the Fed can do….

[However, looking deeper into Powell’s words:]

“We’re not actually increasing the dollar volume of things we’re buying. We’re just shifting away from ETFs toward this other form of index….”

The crack in the bulls’ thesis is that contrary to their belief, the Fed is becoming measured and may have difficulty expanding its balance sheet beyond $10 trillion. In plain English, unlimited money printing is highly unlikely…..


Why is Powell talking big but then showing some signs of not going there? Maybe he’s offering empty reassurance as the Fed actually backs off on its monetary support of the market’s rise. He might talk big and back away if he knows the Fed is at the point where the distortions it blows into being are worse than what it seeks to cure.

Right now, the Fed’s financial money-printing in support of the market looks like the red line below:

Zero Hedge

The Fed knows it has pumped the stock market into the highest bubble in history, and it is trying to taper that because the risk gets worse the bigger the bubble gets. However, economic damage that is still building will likely press it back to more money creation. In the meantime, we know now from past experience, not just from my saying it would prove to be so, that the Fed cannot taper its balance sheet without crashing the market it has rigged up. We see in the graph the S&P has already responded by settling back down (same for the Dow as shown yesterday), and so the market is tipping.

With no further adieu, here is the rapidly approaching lineup of bad news the market is ignoring. Here is the bad news that is now relentlessly drumming louder and louder until it will become a deafening roar the market cannot ignore. (And the Fed is backing down right as the news arrives, though its arrival will push the Fed back to running the money pumps, which may, if that happens, buy the market a little more time … like until September; but right now, I’d say August is looking good for the start of a crash.)

The drumbeats of the Epocalypse

A parade of headlines has been marching into town during the past couple of weeks, telling a story of death and destruction due to a plague hitting a world burdened under a crushing load of debt, papered over with optimistic accounting gimmicks that emit a sweet stink something like rose water poured over decaying meat.

How can anyone not hear the following noisy parade coming?

The results were predictable to everyone but the experts. Supply chain disruptions followed by retail disruptions, followed by declining sales, followed by disappearing cash flow, followed by layoffs, followed by business closures, followed by shrinking tax receipts, followed by unserviceable public and private debt, followed by mass bankruptcies, followed by riots, followed by full societal breakdown.

Economic Prism

Now, the parade of facts has arrived.

Consumer spending fails to recover:

We can see from Chase that consumer spending via credit card improved during reopening, but now appears to have flatlined about 10% lower than it was last year:

Airline recovery take-off sputtered back toward ground:

Top line is number of passengers. Bottom line is revenue.
Wolf Street

Flights are still down about 70% and that is at reduced ticket prices (as evidenced by revenue falling more percentage-wise than than number of passengers booked). International flights are, of course, even more pathetic:

That’s as far off the ground as they got. Looks like a plane wreck off the end of the runway to me.

United Airlines announced that 36,000 employees in the US, or 45% of its US workforce, could face “involuntary furloughs” on or after October 1. That’s the day after the restrictions attached to the $25 billion in payroll aid under the CARES act expire….

The “involuntary furloughs” would include up to 15,000 flight attendants, 11,000 customer service and gate agents, 5,500 maintenance workers, and 2,250 pilots. Another 1,300 management and support staff will be laid off on October 1

Wolf Street

Airbus To Cut 15,000 Jobs As No Recovery Expected Until 2023

Zero Hedge

Airbnb CEO and co-founder Brian Chesky said the global travel and tourism industry might never fully recover from the coronavirus pandemic.

The Hill

As the great urban evacuation begins in America, rent in Manhattan has already fallen 6.6% (during reopening):

That’s the first decline in eighteen months and the largest drop since 2011. No one wants to live in virus central. Or it’s just a case of “So, who has money to pay rent?”

US home prices now at risk just like Manhattan rent:

Despite relatively steady home price appreciation in May, the U.S. housing market is on the precipice of an extended price slump, according to a CoreLogic report released Tuesday. The housing data provider’s May Home Price Index and HPI Forecast report predicts a year-over-year home price decrease of 6.6% by May 2021.


How serious is the housing peril?

Nearly Half Of Americans Consider Selling Home As COVID Crushes Finances

As the virus pandemic has metastasized into an economic downturn … new research offers a glimpse into struggling households…. Out of the 2,000 American homeowners polled, over half (52%) of respondents say they’re routinely worried about making future mortgage payments and nearly half (47%) considered selling their home because of the inability to service mortgage payments.

Zero Hedge

Oldest retailer in US files Chapter 11 bankruptcy:

People who work from home don’t need to dress up for work.

This new COVID normal of (in)formal meetings seems to have been the last nail in the coffin of America’s most iconic menswear retailers as Brooks Brothers has just filed for bankruptcy (just weeks after Men’s Wearhouse owner Tailored Brands considered the same).

Zero Hedge

A tidal wave of bankruptcies is coming:

Experts foresee so many filings in the coming months that the courts could struggle to salvage the businesses that are worth saving.

Edward I. Altman, the creator of the Z score, a widely used method of predicting business failures, estimated that this year will easily set a record for so-called mega bankruptcies — filings by companies with $1 billion or more in debt. And he expects the number of merely large bankruptcies — at least $100 million — to challenge the record set the year after the 2008 economic crisis.

Even a meaningful rebound in economic activity over the coming months won’t stop it, said Mr. Altman, the Max L. Heine professor of finance, emeritus, at New York University’s Stern School of Business. “The really hurting companies are too far gone to be saved,” he said.

The New York Times

It’s damage already done.

Businesses that had been reopening are slowing back down:

Hours worked at more than 44,000 small businesses, whose employee hours are managed by Homebase, fell in 25 states in the week ending June 28. That included a more than 7% decline in Arizona and a more than 5% drop in Texas, where new outbreaks forced governors to renege on aggressive efforts to reopen the economy….

Goldman Sachs analysts estimated that states accounting for over half the U.S. population had now paused or partially reversed their reopening plans, with limits reimposed most often on bars, restaurants and the size of gatherings.


Big Apple may deliver less byte for the buck:

Sources familiar with Apple’s supply chain partners said suppliers ‘are less optimistic about shipments’ for the new 5G iPhone…. sources said 2020 5G iPhone 12 shipments could be halved, from 30-40 million to just 15-20 million.

Zero Hedge

That’s OK. Sales of primary products are not necessary in order to justify skyrocketing stock prices as we soar mindlessly toward the realm where shell corporations eventually trade at a trillion dollars in market cap. Life’s good.

Chicago Purchase Manager’s Index fails to rise as much as expected:

In conclusion

I’m going to sum it up by letting a rather big authority confirm all I’ve been saying about this recession being a great depression before it even began: (Though they completely failed — again — to see economic collapse coming, the experts eventually caught up with me.)

UCLA Anderson Forecast senior economist David the UCLA Anderson Forecast revised its outlook for the U.S. economy downward because of the expected impact of COVID-19, which was then still being referred to as an epidemic. Two weeks later, as the economy began shutting down because of the pandemic, the Forecast released the first revision in its 68-year history to assert that the U.S. economy was already in recession.

Now, in its second quarterly forecast of 2020, the Forecast team states that the global health crisis has “morphed into a Depression-like crisis” and that it does not expect the national economy to return to its 2019 fourth-quarter peak until 2023.U.S. employment will not recover until “well past 2022…. “Simply put, despite the Paycheck Protection Program, too many small businesses will fail and millions of jobs in restaurants and personal service firms will disappear in the short run. We believe that even with the availability of a vaccine, it will take time for consumers to return to normal.…”

The forecast notes that while the economy seems to have hit bottom, it will be a while before GDP and employment levels reach fourth-quarter 2019 levels, as the huge debt buildup in both the public and private sectors dampen output….

For too many workers, the recession will linger on well past the official end date of the depression.

The Hill

Thank you.

Epochalypse Now: How Deep is Your Depression?

We are nearing that mid-point in July when I said we would start to see the news turn from euphoria-inducing reopening positives to depression-developing realism.

Speaking of stock-market bulls who are stampeding uphill on the euphoria side, I wrote,

Right now the farce is with them — reopening has arrived! And these stupid people will believe that means they were right about the “V,” virtually assuring they continue to bet the market up for a little while…. The reopening means economic statistics will improve rapidly. That will give a lot of stupid people many reasons to believe they were right to think the obliterated economy would experience a V-shaped recovery.

What they won’t see because they don’t want to see it is that the steep recovery is not going to take the economy back to where it was…. It may take stocks back to their last highs (and beyond!) but not the economy.

And, so it has tuned out. The Dow and S&P have stalled at about a 60% retracement of their earlier crash, which is right where I said I thought they would. They stopped rising well below their all-time peaks because the COVIDcrisis raised its ugly head (the one caveat I gave for stocks continuing rise to the moon) very quickly after our nationwide economic reopening …

… but massive bets have poured into tech stocks — long seen as the surest bet in a risky marketplace — and have pushed the tech-heavy Nasdaq on a reach well beyond its former peak:

So, we see the stock market proving both claims true — that a rise of COVID-19 would knock the wind out of the euphoric bulls but that, absent a host of new COVID-19 headlines, the bulls would continue to focus on the great reopening news because the worst news would come later.

That is how I read what is happening in this split: money effectively shifted from the more value-driven Dow and S&P where the rise had been going strong into the high-velocity, high-tech NASDAQ to complete the charge up past former highs as I said the bulls would try to do.

The path became narrower; but the tech charge, where most of the testosterone is, continued to drive up the center, pumped by the V-shaped fantasy — pumped so hard that those remaining bulls are paying no attention to the new COVID headlines, while others have fallen to the sides.

“Here’s the full truth,” I said in early June about the euphoria-inducing reopening:

Reopening means, OF COURSE, businesses will start to show rapid improvement, and millions of jobs will certainly come back almost overnight. That’s half the truth. The other half, which investors … won’t see because they don’t want to, is that many businesses will not reopen, and many jobs will not come back…. But guess which half of the truth you get to see first? We’ll be deep into July before we start to see where the rapid recovery stalls out, and then it may take a little longer before investors start to see it because they don’t want to.

Yet, that truth is already flooding in for those who are willing to see it, and I’m going to lay out the broad overview of it here and then give a whole deluge of short facts tomorrow:

Now it really is a retail and restaurant apocalypse

While I said retail — because it was already dying — would show the worst damage, I also noted in other articles that restaurants would suffer similarly broad and quick deaths because they are typically run on thin margins.

So, here is where we are on reopening for those segments of the economy that I said would become the first devastating news to materialize, particularly restaurants, retail and unemployment. The latter I said would hold at deep recession levels. Now that reopening appears to have gone about as far as it is going to go because some states have reversed it, while others are going no further on an indefinite basis, we are already at the point where reopening is climaxing.

First, here’s a real ground-level (Main Street) view of how jaw-dropping the destruction to restaurants turned out to be (worse at this early date than even I thought it would be):

53% of restaurants closed amid coronavirus have shuttered permanently, Yelp data shows.

In March, restaurants had the highest numbers of business closures listed on the app compared to other industries, and the rate of closure has remained high. Of the businesses that closed, 17% are restaurants, and 53% of those restaurant closures are indicated as permanent on Yelp….

During the peak of the pandemic, the number of diners seated across Yelp Reservations and Waitlist dropped essentially to zero. In early June, numbers of diners seated are down 57% of pre-pandemic levels.

Restaurant Dive

The National Association of Restaurants had estimated 15% of restaurants would close for good. I had noted another publication, Open Table, that estimated 25% would never reopen. I ventured 20% would not reopen but then many others that did reopen would close under the partial-opening restrictions in most states, so that we’d eventually be down about 40%.

It looks like many of the latter kind (the ones that would reopen and then give up) were smart enough no to even give partial-reopening a try because, as I said, most restaurants will run at a loss throughout the period of partial reopening. They cannot make it with their customer base cut in half … or worse.

53% of those listed on Yelp (which is most) that closed are gone for good. That is absolutely catastrophic. That’s the number on Yelp that have so fully given up that they have already reported to their customers they will never reopen!

If you’ve been thinking I have been too bearish about. all of this, wait until you see how bad it may become once many of those that have reopened give up the ghost in exhaustion:

85% of independent restaurants may go out of business by the end of 2020, according to the Independent Restaurant Coalition…. Independent restaurants, which comprise 70% of all restaurants, rely more heavily on dine-in revenue than chains and don’t have a corporate safety net or support system to fall back on.

Business Insider

As for the retail apocalypse that I’ve been describing for, at least, three years,

41% of businesses closed on Yelp have shut down for good during the coronavirus pandemic. Retail was hit the worst…. Los Angeles recorded the largest total number of closures with 11,774 business establishments shuttering, but Las Vegas has had the highest number of closures relative to the number of businesses in the city at 1,921…. Shopping and retail stores have suffered 27,663 closures.


We are not even to the middle of July, and already the first wave of permanent damage to wash over us is massive. Almost beyond belief! It’s a total tsunami of “permanent” business destruction, and a lot more waves are coming from all the businesses that are impacted by the businesses that have just shut down for good!

Yet, do you think I could convince bullish investors on other sites that we are going beyond a recession and into a second Great Depression and that the stock market is raving mad? Not even with my best arguments.

However that, too, fits exactly what I predicted, which was that bull-headed stock traders would certainly be the last to figure this out. I was so certain the lunacy and complete denial would keep charging ahead that I said I was going to bet my own retirement money on it in stocks for a short ride up, unless and until the COVIDcrisis came crashing back into the party with new headlines of rising cases and deaths. It almost immediately did, making the ride shorter than I anticipated because that was my self-imposed stop for getting out of the risk.

I wanted to put my money where my mouth is to prove how much I believed what I was saying, and I would have made money had I stayed in because most of the stock funds I invested our three small 401Ks in were heavy in tech. However, I adhered to my stop when COVID crashed the party with rapidly rising cases.

So, it was a dumb bet in terms of hoping the health crisis would stay down for the first couple weeks of reopening; but it was not at all wrong about how far the market euphoria would keep pushing even past the start of truly depressing news that is now coming in before the mid-July date I gave for the reversal in the economic news flow. Today’s rise in the Nasdaq in the face of today’s terrible economic news, shown below, affirms that.

Epic Great-Depression-level unemployment begins new epoch in US history

I noted in my article referenced above that the biggest upward driver for the stock market’s irrational exuberance would be the certain-to-be-seen rapid turnaround in job losses from the worst losses in history to the best gains in history. That certainly has turned out to be the centerpiece of the narrative the market is riding on; but the deeper truth, I said, would be…

Unemployment will remain high enough to still be considered typical of a recession because marginal businesses did not reopen (including particularly retail stores that were barely holding on)….

And, so, here is how all of that is coming together in this morning’s hot news:

As the number of new coronavirus cases in the United States rose to a single-day record [Wednesday], fresh government data on Thursday showed another 1.3 million Americans filed for jobless benefits, highlighting the pandemic’s devastating impact on the economy. More than 60,000 new COVID-19 infections were reported on Wednesday and U.S. deaths rose by more than 900 for the second straight day, the highest since early June…. The grim U.S. numbers come on top of extraordinarily high jobless figures, although they came in lower than economists had forecast…. Initial unemployment claims hit a historic peak of nearly 6.9 million in late March. Although they have gradually fallen, claims remain roughly double their highest point during the 2007-09 Great Recession. With coronavirus cases rising in 41 of the 50 U.S. states over the past two weeks, according to a Reuters analysis, many states have had to halt and roll back plans to reopen businesses and lift restrictions.


Reuters lead competitor carried a similar kind of report a few days ago:

US unemployment falls to 11%, but new shutdowns are underway.

U.S. unemployment fell to 11.1% in June as the economy added a solid 4.8 million jobs, the government reported Thursday. But the job-market recovery may already be faltering because of a new round of closings and layoffs triggered by a resurgence of the coronavirus…. While the jobless rate was down from 13.3% in May, it is still at a Depression-era level. And the data was gathered during the second week of June, just before a number of states began to reverse or suspend the reopenings.


That’s how bad it it … just in the broad sweep! And that was measured before states started to reverse their reopening plans. That unemployment was, in other words, solely due to the effects of the initial shutdown continuing to play through.

An epic conclusion

These numbers are truly as grand on a historic scale as I said the next recession would be when I named what was coming “The Epocalypse” a few years ago. In fact, the data are worse by far than what I thought the starting data for permanent destruction would be back when I started (a couple of months ago) to lay out the timeline for how all of this would go down.

While the pandemic response is clearly a huge factor in the present crisis, the economy is collapsing much harder than it would have with deeper, more permanent destruction than our politicians ever thought their closures could cause because the economy was a house of cards ready to collapse in the first place.

They didn’t see what destruction their actions would wreck upon the economy because they were blind to how fractured our economy was by the deep flaws I’ve been pointing out for years. Our social structures are caving in at the same time, as I also said would be part of The Epocalypse.

Shortly after the COVID-crisis had taken down the stock market in a Great-Depression-era sized crash, I started making it clear that the worst numbers — the permanent damage — wouldn’t even start to become known until mid-July. Now I can say that train of facts has started pulling into the station a week early.

This article presents the broad picture of just how much this recession is following the exact fast track I said it would … including the stupid stock market. Tomorrow, I’m going to lay out a finer-grained picture by presenting numerous headlines as thumbnail prints of the economic collapse that is gaping now open beneath us.

This is not just a recession. It may even become worse than the Great Depression. If these numbers hold for permanent business closures (and there is no reason to think they won’t) and new unemployment claims continue as they are now starting to crystalize even before the middle of July, this will certainly develop into the complete economic and social collapse I call “The Epocalypse.”

Death of the dollar, death of money as we know it.

As I wrote in my latest Patron Post, this collapse may also now include a global dollar collapse, which will change the world and the United States’ relationship to it. In addition to all I wrote in that article on the possibility of a dollar collapse and its effects, which was quite extensive, I am now including here in this article an interview with Shadowstats’ John Williams on that same subject.

Williams has been an economist since the Nixon administration more than forty years ago. He is the one I sometimes go to for quotes on real economic data without all corrupt revisions the government has worked into its formulae since the dollar lost its last hold on gold in the Nixon era and the government had to start compensating for the truth.

Williams validates everything I wrote this week about a possible dollar collapse (and that means the Fed’s destruction along with it), saying the dollar is looking seriously imperiled this year.

As I stated at the start of my Patron Post, I’ve never written about the collapse of the dollar as a possibility in any year until now. I’m not predicting it will collapse this year because I point out in my own article that there are also strong disinflationary forces at work; but this is the first year in which I think it actually could. It is time to be vigilant about it, watching what is happening in foreign currency exchanges and keeping a close eye on what is happening with US inflation (not as falsely reported by the government, but as such stats used to be calculated in the 1970s and still are by John Williams on Shadowstats.com.

I’m putting Williams’ interview in this article, rather than my Patron Post on the subject, because he also spells out why this current economic crisis is going to turn into something even worse than the Great Depression — an all-out “economic collapse.” Like me, he says the roots for all of this were laid in before COVID-19 came along.

Williams also says the recession started last year … when I said it would, though I also said it wouldn’t be recognized until this year:

If you want more on the possible dollar collapse that may become part of this global catastrophe, it’s in my last Patron Post. But I wanted everyone to have, at least, the gist of what is coming to the world free here on this site through articles like this one that are available to all because of those patrons who generously try to make all of this worth my time. (It remains mostly a labor of love and earnest concern.)

You can see that post and everything I’ve written over the past year about the move to central bank digital currencies, the death of cash, and the Fed’s final solutions to its failing recovery as my thank-you to those who go the extra mile and become patrons at the $5 level or above via the link below:

Protected: Death of the Dollar: Economic Collapse Certain

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