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Showing posts with label economics news today. Show all posts
Showing posts with label economics news today. Show all posts
Can the Global Economic Collapse be Mitigated, or Averted Altogether?
Among the many issues that should be of paramount importance to the American people as a whole, but sadly is not, is the issue of the coming global currency reset. Why is not of importance to many people? Simply put, because most of them have no idea it’s coming! Why don’t people know about it? Because our politicians and their lackey’s in the mainstream media refuse to be honest. Before going any further, consider the following quote from Winston Churchill:
“The farther back you can look, the farther forward you are likely to see.”
The key to what Churchill was saying, is to actually look backwards, something rarely talked about, much less practiced by American politicians; hence why our country rarely seems to learn from the mistakes of the past, whether the mistakes were our own, or others who came before us.
Essentially, the global currency reset is the end of the United States Dollar as the world’s reserve currency, and the beginning of a new monetary system led by a new currency. The United States has enjoyed the privilege of being the world’s reserve currency since 1944, but the United States has also abused the privilege for almost as long as we’ve had it.
As evidence of our abuse, look no further than the last eight years of Obama’s presidency when the U.S. printed over 6 TRILLION dollars out of thin air, largely as a means to make payments on our out of control ballooning national debt. The world has grown tired of being paid back with dollars worth less than the ones they lent to us.
Some have speculated the new reserve will be backed by gold, while others have suggested it could be the International Monetary Fund’s (IMF) Special Drawing Rights (SDR’s), which is essentially a mixed basket of five major currencies including the U.S. dollar, euro, the Chinese renminbi (RMB), the Japanese yen, and pound sterling.
Whether either of those theories turns out to be correct remains to be seen, but one fact that is not up for debate (unless you’re dealing with a politician or the dishonest media), is that the U.S. Dollar’s time as the world’s reserve currency has come to an end, and the Dollar is in the process of being escorted to the exit door at this very moment.
To fully grasp just how much the loss of that status will be felt by ordinary Americans, I suggest either of the following interviews listed below with Bill Holter, one of the world’s leading forensic economists.
For the few people who have been following the topic of the global reset closely, a logical question would be if there is anything that can be done to avoid it. The video below, and article that follows (with many supporting links), shine a light on just how serious this issue is, and why more Americans must demand honesty from Washington and the mainstream media.
A doomsday prepper's guide to surviving 'SHTF'
Preppers - doomsayers gearing up for civilisation’s collapse - used to be seen as paranoid, tinfoil-hatted folk wasting time on a disaster that would never come. Not so much now. Before the presidential election, the Lincoln Leadership initiative polled Americans: Hillary Clinton voters reckoned there was a 63 per cent chance that Donald Trump would start a nuclear war.
Survivalists call it the “SHTF scenario” - when the Shit Hits The Fan. And it might not even be caused by the geriatric man-baby’s tiny fingers on the nuclear button: it could be a financial system failure, a flu pandemic or climate change.
When I interviewed Wahaca co-founder Thomasina Miers recently, she argued soil erosion was the great, unnoted crisis facing humanity. Locally, a London prepper, who’s also a fund manager, says: “People don’t think about flood risk. My guess is that the Thames barrier is going to fail at some point. Battersea and Richmond will be buggered.”
Meanwhile, Lionel Shriver’s latest novel, The Mandibles, is set in a future where the debt burden has left the US bust. “Preppers aren’t crazy - they’re people who are capable of thinking creatively,” she tells me. “I think [economic collapse] is a real possibility. Though I’ve so far found myself incapable of acting on that anxiety. I have savings and shares but I don’t trust anything: the dollar, the pound or the markets.”
Many are acting on these fears, though. In Silicon Valley, survivalism has high-profile followers. Reddit boss Steve Huffman recently told the New Yorker that he’d had laser eye surgery to prep himself for armageddon, while ex-Yahoo exec Marvin Liao has been learning archery. Others have built underground bunkers with air-filtration systems or land in New Zealand.
In Shriver’s novel, she discusses complexity theory - the idea that as the world becomes more complicated, it also gets more fragile: “Complex systems collapse catastrophically. They can go on and on – uncannily – everything seems fine while instabilities build up in the system. It’s a house of cards, the classic example, or a deep piled mountain of gravel, you trip one rock and the whole thing comes tumbling down.” The 2008 economic crisis was an example of this: it showed how interlinked the system is now. “People didn’t have an idea how far the subprime mortgage crisis would proliferate or penetrate,” says the prepper.
In a disaster scenario, the fear is that you will be the person who falls over, shrieking “go on without me!” As Shriver notes, in the UK, we are now a long way from the wilds: “We are very socially dependent and we’re not very competent animals any more. If you put me in the woods, I would starve.”
How best to prepare for the apocalypse, then? “It depends on the type of disaster, but for most types, it’s important to have some form of portable wealth,” says the London prepper. She suggests gold: “It’s elemental, so there’s a finite amount of it in the world. But you need it in small parts like coins, or a bracelet or watch with links - not heavy gold bars. Diamonds probably aren’t useful, because they aren’t divisible - though uncut they’re easy to hide, because they don’t sparkle. You could take silver as well, but the rate of gold to silver in currency value has really varied over the years and you have to carry so much more.” If the collapse is economic, the Government may (as happens in the Mandibles) seize gold - so you need to hide it. She proposes a safe in the floor: “It has to be accessible. With jewellery – you wouldn’t want it showing. Secrete them abut your person.”
$19 Oil Will Trigger Economic Collapse, Warns Economist Channel
Several noted energy experts warn that the price of oil will continue to plummet in 2016.gold buyers,
Goldman Sachs and Morgan Stanley expect oil to plummet to $20 a barrel … and Royal Bank of Scotland says $16 oil is on the horizon.economics news today,
Both British bank Standard Chartered and energy expert Dr. A. Gary Shilling warn that we need to “get ready for $10 oil.”
Why many Americans celebrate cheap prices at the pump, they don’t realize that “cheap oil” spells DOOM for the U.S. economy.economics usa,
How?
It’s a massive ripple effect.penny stocks
Oil service companies Baker Hughes, Halliburton and Schlumberger have already laid off over 50,000 employees. But it’s not just energy company employees who are impacted. The companies that supply fracking equipment, employee housing, restaurants and consumer services all feel the pinch, and will follow suit and layoff tens of thousands more employees, many of these businesses will have to close.buy shares,
Then there’s the banks who loaned billions of dollars to these companies who will see massive losses. Many will go bankrupt. As a results, tens of thousands of more workers will lose jobs … and just like that … cheap oil brings down the entire U.S. economy.
But one economist, James Dale Davidson, believes that cheap oil is the least of our problems.
“It’s not cheap oil that should frighten you,” Davidson warns, “There are three other key economic indicators everyone is ignoring. And they are screaming SELL. They don’t imply that a 50% stock market collapse is looming, it’s already at our doorstep.”
Before you dismiss Davidson’s warning, know that he is the famed economist who correctly predicted the collapse of 1999 and 2007, and even larger events like the fall of the Soviet Union long before it toppled over.
Indeed, his predictions have been so accurate, he’s been invited to shake hands and counsel the likes of former presidents Ronald Reagan and Bill Clinton — and he’s had the good fortune to befriend and convene with George Bush Sr., Steve Forbes, Donald Trump, Margaret Thatcher, Sir Roger Douglas and even Boris Yeltsin.
When Davidson makes a prediction, they listen. And so should you.
In a new controversial video, Davidson uses 20 unquestionable charts to prove his point that a 50% stock market crash is here.
Most alarming of all is what Davidson says will cause the collapse. It has nothing to do with the China meltdown, the price of oil or even the presidential election. Instead, it is linked back to a little-known economic “curse” that our Founding Fathers warned our elected officials about … a curse that was recently triggered.
And although our future may seem bleak, as Davidson says, “There is no need to fall victim to the future. If you are on the right side of what’s ahead, you could seize opportunities that come along once, maybe twice, in a lifetime.”
Perhaps most importantly, in this new video presentation, Davidson reveals what he and his family are doing to prepare right now. (It’s unconventional and even controversial, but proven to work.)
While Davidson intended the video for a private audience only, original viewers leaked it out and now tens of thousands are downloading the video every day.
One anonymous viewer wrote, “Davidson uses clear evidence that spells out the looming collapse, and he does it in a simple language that anyone can understand.” (Indeed, Davidson uses a sandcastle, a $5 bill and straightforward analogies to prove his points.)
Thousands Protest Donald Trump's Travel Ban
Bilal Askaryar was 5 years old when his family fled the war in Afghanistan and sought asylum in the United States. On Sunday he was among thousands protesting outside the White House to denounce President Donald Trump's travel ban for seven Muslim-majority countries.
Trump signed an executive order Friday temporarily banning nationals of Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen from entering the U.S. Officials have said the list may be expanded in 30 days. The executive order also suspends the refugee admissions program for 120 days and indefinitely halts Syrian refugee resettlement.
Askaryar, now 31, took Trump's action personally.
"As a United States citizen, as a human being, I can't stand the fact that we're turning the most vulnerable people away," said Askaryar, wearing a red T-shirt that read "Make America Great Insha'Allah," using an Arabic word that means "God willing."
White House Chief of Staff Rience Priebus said Sunday on NBC's "Meet the Press" that the immigration order does not apply to lawful permanent residents of the United States "going forward," walking back the administration's initial position that nationals of the seven countries would be impacted by the ban even if they are permanent residents of the U.S. However, green card holders may still be subject to "further screening," Priebus said.
A series of rulings by federal judges Saturday blocked parts of the executive order, preventing the government from deporting travelers detained at airports across the country. Early Sunday, the Department of Homeland Security and the White House said the order continues to remain in force.
"President Trump's executive orders remain in place — prohibited travel will remain prohibited, and the U.S. government retains its right to revoke visas at any time if required for national security or public safety," the DHS said in a statement.
"Saturday’s ruling does not undercut the president's executive order. All stopped visas will remain stopped. All halted admissions will remain halted. All restricted travel will remain prohibited," a White House official told Politico. "The order remains in place.”
Women's March Leads the Way
EXPAND GALLERY
The "No Muslim Ban" protest in Washington, organized on Facebook by a group called Peace for Iran, was one of dozens of protests held nationwide this weekend. It began at Lafayette Park, on the north side of the White House, at 1 p.m. and the crowd quickly swelled to thousands of people, who chanted "Hey hey, ho ho, Muslim ban has got to go" and "No hate, no fear, refugees are welcome here."
They carried signs welcoming Muslims and refugees and disparaging the Trump administration. One sign said, "Respect existence or expect resistance." A yellow poster had the message, "Will trade one 'tyrant' president for 50,000 refugees."
Sarah Sadoizai, 23, and Falak Malik, 24, carried a sign that read, "Proud daughters of Muslim immigrants." Sadoizai, whose parents emigrated from Afghanistan and India decades ago, said she came to the protest to "put a face to the people being discriminated against. It could have been me or my parents who weren't allowed into the country."
Protesters stressed the importance of building bridges across faith groups.
"I love that the love for Muslims has increased dramatically in such a short time," said Nancy Illman, 50, a Jew who carried a sign that likened Anne Frank to Syrian refugees. "It can only increase, and it's in response to the racism of the White House."
When Trump signed the executive order Friday he said, "We want to ensure that we are not admitting into our country the very threats our soldiers are fighting overseas." Bloomberg noted at the time that the seven countries listed in the order do not include any Muslim-majority countries were Trump has done business. Protesters pushed back against the concept that the travel ban would make the country safer.
"These policies don't promote national security. They might harm it," said District of Columbia resident Jeremy Farrell, 31. "ISIS is already using this as propaganda, and it doesn't reinforce America's role as a moral leader."
Askaryar, who lives in Washington, agreed, saying that the order continued longstanding anti-Muslim feelings among many in the United States. "We've allowed Islamophobia to go unchecked for decades," he said.
Stocks And Bonds: Don’t Count On The Great Rotation
After many false promises and one false start, it is becoming evident that 2017 will be the year the Federal Reserve finally begins down the road toward interest-rate normalization. Therefore, it is likely that Ms. Yellen will cause bond yields to rise this year on the short-end of the yield curve. In addition, soaring debt and deficits, along with the lack of central-bank bond buying, should send long-term rates much higher as well.
Wall Street soothsayers, who viewed every Fed rate cut as a buying opportunity for stocks, are now busily assuring investors that the potential dramatic and protracted move higher in bond yields will be bullish for stocks as well.
Their theory holds that the price of stocks and bonds are negatively correlated, as one moves up the other moves down. Hence, the nirvana of a safely balanced portfolio is achieved by simply owning a fairly even distribution of both. Therefore, according to Wall Street, the end of the thirty-five-year bull market in bonds will be a welcomed event for equities. This myth has a name, and it’s known as “the great rotation from bonds into stocks.”
The concept suggests that the investible market works like a balanced fund; as money moves out of bonds, it moves into stocks. And of course, you could cherry pick cycles over the past few decades that would provide support for this opinion. For instance, the biggest rise in interest rates (fall in price) was from February 1978 to November 1980. During this time the yield on the Ten-Year Treasury rose from 8.04% to 12.80%, while stock market averages enjoyed a healthy gain.
But when you take a step further back and look at the correlation between stock prices and bond yields since Nixon broke the goldwindow in 1971, you quickly realize that there is no such positive relationship. In fact, most of the time stock prices and bond yields move in the opposite direction. As bond yields increased (prices down) during the stagflation of the 70s, stock prices went lower or simply stagnated. Then, after Fed Chair Paul Volcker vanquished inflation in the early ’80s, bond yields fell (prices increased) and stock prices went along for the ride.
This relationship makes perfect sense. An unstable economic environment of rising inflation and rising borrowing costs causes equities to suffer. Conversely, a healthy economic environment of steady growth and low inflation is beneficial for stocks.
Into Commodities And Cash
Focusing more closely on the period where the U.S. went completely off the gold standard we can easily see the flaw in the “great rotation theory.” Throughout the 1970s, bond prices plummeted as yields soared. But during that same ten-year period, for the most part, stock prices simply stagnated. In March of 1971, the S&P 500 was trading at 100 and the 10-Year yieldwas 5.53%. By the end of the decade, the yield on the benchmark yield had soared to 12.64%, but the S&P 500 was still trading near 100. After losing nearly 40% of its value by 1974, the market managed to climb back to par by March 1980. Where did investors rotate their money during the 1970s? The “great rotation theory” would suggest all that money should have flowed into stocks. But, as money gushed out of bonds it went into commodities and cash
During the high inflation/low growth decade of the 1970s, investors sought protection in gold and oil. Attesting that as money flowed out of bonds, it didn’t compulsively move into stocks.
Therefore, a better way to think about the long-term relationship between stocks and bonds is that the bull market in bond prices helped to foster the bull market in the major stock averages. Or, that on average the stock market does better in a period of falling bond yields. Yet, Wall Street chooses to make the opposite argument to allay investors’ fears as interest rates begin this huge secular move higher.
Ain't Seen Nothing Yet
Escalating bond yields will finally break the 35-year trajectory of falling interest rates that has led to the decades-long bull market in the major stock-market averages. At what yield this line officially breaks is up for debate. Bond King Bill Gross has indicated that 2.6% on the Ten-Year Treasury will end the bull market in bonds. DoubleLine Capital’s Jeff Gundlach argues that 3% is the level to watch. But both believe that 2017 will mark the end of the secular bull market in bonds; with Gundlach going out on a limb assuring it is "almost for sure" that the 10-Year is going to take out 3% this year.
This time around bond yields will initially rise for three reasons: the first because the credit quality of the government has been severely damaged as a result of the unprecedented amount of borrowing undertaken following the Great Recession, the second due to the fiscal profligacy proposed by President Trump and third because our central bank has spring loaded interest rates by artificially holding them at record lows for the past eight years.
And that sets us up for the real surge in bond yields -- yes, we haven’t seen anything yet.
Rising borrowing costs should send our debt-saturated economy into a recession, which by the way is already way overdue. That recession, coupled with the massive fiscal and monetary response to it from President Trump—think massive deficit spending and helicopter money--should engender the second phase of soaring rates that will result from spiking inflation and soaring debt levels. This unprecedented period of turmoil will once again prove that rising bond yields are seldom good for stocks, especially in real terms. And the bursting of this historic bond bubble certainly won’t be the exception.
Michael Pento is the President and Founder of Pento Portfolio Strategies, produces the weekly podcast called, “The Mid-week Reality Check”, is Host of The Pentonomics Program and Author of the book “The Coming Bond Market Collapse.”
Tax-free days ending for Saudis after oil slump
Tax-free living will soon be a thing of the past for Saudis after cabinet on Monday approved an IMF-backed value-added tax to be imposed across the Gulf following an oil slump.
Residents of the energy-rich region had long enjoyed a tax-free and heavily subsidised existence but the collapse in crude prices since 2014 sparked cutbacks and a search for new revenue.
Saudi Arabia is the world’s biggest oil exporter and the largest economy in the Arab region.
It froze major building projects, cut cabinet ministers’ salaries and imposed a wage freeze on civil servants to cope with last year’s record budget deficit of $97 billion.
It also made unprecedented cuts to fuel and utilities subsidies.
The kingdom is broadening its investment base and boosting other non-oil income as part of economic diversification efforts and aims to balance its budget by 2020.
Cabinet “decided to approve the Unified Agreement for Value Added Tax” to be implemented throughout the six-member Gulf Cooperation Council, the official Saudi Press Agency said.
“A Royal Decree has been prepared,” it said.
A five-percent levy will apply to certain goods following a GCC agreement last June.
The move is in line with an International Monetary Fund recommendation for Gulf states to impose revenue-raising measures including excise and value-added taxes to help their adjustment to lower crude prices which have slowed regional growth.
The GCC countries have already agreed to implement selective taxes on tobacco, and soft and energy drinks this year
A key figure in Paul Singer’s epic Argentina trade is stepping down
A key portfolio manager behind Elliott Management's infamous Argentina bet is stepping down.
Jay Newman, a lawyer who joined New York-based Elliott in 1995, is stepping down and will act as a consultant for Paul Singer's $31.6 billion hedge fund firm, according to a January investor letter reviewed by Business Insider.
"Newman has decided to retire from being a Senior Portfolio Manager and being involved in the hedge-fund industry on a full-time basis," the investor letter added.
Newman didn't immediately respond to a request for comment.
Elliott founder Paul Singer. World Economic Forum via Flikr
In the early 2000s, Elliott started buying up Argentinian debt following the country's economic collapse. According to a 2016 Wall Street Journal report, Newman's thinking on the matter went like this: "If Argentina’s economy improved, the bonds would gain in value. If the nation defaulted, Elliott would join a creditor committee, as in any restructuring, and push to profit from a debt restructuring." Newman became a public representative for Elliott over time, speaking to financial news outlets about the matter.
Last year, Argentina agreed to pay $4.65 billion to Elliott and three other hedge funds to settle its debt saga. Elliott's bet yielded $2.4 billion, about 10 to 15 times the money the hedge fund put on the wager 15 years prior, according to the Journal report.
More recently, Elliott's flagship fund returned 4.4% for the fourth quarter of 2016 and 13.1% for last year, according to the investor letter.
Trump Immigration Order Sparks Constitutional Showdown
Confusion, protests and the specter of a constitutional showdown erupted at the nation's international airports this weekend, as federal authorities detained hundreds of people in compliance with President Donald Trump's executive order barring citizens of seven mostly Muslim nations from entering the U.S.
Judges in at least four cities hastily issued rulings blocking parts of the orders in response to emergency challenges filed by the ACLU and other civil rights attorneys, sparking jubilation among thousands of protesters who had flocked to airport terminals around the nation to "welcome" migrants and oppose the immigration ban.
However, it was unclear how many people were still being held in airports as of Monday morning. Although dozens of detainees were reportedly released, lawyers reported Sunday evening that they were being barred by Customs and Border Protection officers from seeing those still held in custody, despite orders by at least two judges that the detainees be allowed access to legal counsel.
Hundreds more immigrants, visitors and refugees scheduled to fly to the U.S. but who had not yet boarded aircraft were stopped at their points of departure, effectively stranding them as a result of the immigration prohibitions.
New York Attorney General Eric Schneiderman, a Democrat, sent a letter Sunday to the Department of Homeland Security seeking more information about anyone still being held at John F. Kennedy International Airport in New York.
More than a dozen other attorneys general also issued a statement decrying Trump's executive order.
The order, signed by Trump in a televised ceremony Friday afternoon, prohibits entry for 120 days by any citizen of Iraq, Iran, Syria, Somalia, Sudan, Libya and Yemen, as well as any refugee awaiting resettlement. The order was initially seen to apply to legal permanent residents – or green-card holders – and dual U.S. citizens who also have citizenship in any of the seven named countries, but officials on Sunday said that any U.S. citizen and most green-card holders would be exempt "going forward."
Federal judges in Boston, Brooklyn, Seattle and Alexandria, Virginia, found in separate but similar rulings that the order went too far too quickly. Judge Ann M. Donnelly, of the U.S. District Court for the Eastern District of New York, issued a nationwide injunction that froze potential deportations of those who had already arrived and were being detained in U.S. airports.
The rulings are effectively provisional, but civil rights groups hailed the outcomes as an important first step.
“Clearly the judge understood the possibility for irreparable harm to hundreds of immigrants and lawful visitors to this country," ACLU executive director Anthony Romero said in a statement Saturday after Donnelly's ruling. "Our courts today worked as they should as bulwarks against government abuse or unconstitutional policies and orders."
The orders, however, also set a potential showdown between the executive and judicial branches of the federal government. After Donnelly's injunction, rumors soon swirled that some immigration authorities – overseen by the Department of Homeland Security – were ignoring the order. Donnelly, meanwhile, had ordered the U.S. Marshals Service, which is part of the Department of Justice, to enforce her injunction.
The New York Times reported that Gen. John Kelly, the secretary of homeland security, learned about the order only as Trump was signing it. The Department of Homeland Security eventually issued a statement affirming it was complying with the order.
"We are and will remain in compliance with judicial orders. We are and will continue to enforce President Trump's executive order humanely and with professionalism," the agency said in the statement.
"We are committed to ensuring that all individuals affected by the executive orders, including those affected by the court orders, are being provided all rights afforded under the law," the statement read. "We are also working closely with airline partners to prevent travelers who would not be granted entry under the executive orders from boarding international flights to the U.S. Therefore, we do not anticipate that further individuals traveling by air to the United States will be affected."
