Apr 2, 2023 06:52 PM
The riots start soon: The collapse has only begun. Hyperinflation & WWIII
https://youtu.be/VXE8mRyyV2I
EXCERPTS: [Looming catastrophic level] inflation is going to wipe out the majority of people. For the average American their standard of living is going to drop precipitously. [...] We've got Peter Schiff himself back in the house, a renowned financial commentator and CEO and chief global strategist of Euro-Pacific Capital...
[...] What caused the 2008 financial crisis and what has caused and is causing the 2023 financial crisis -- it's the same [... similar reasons...] The Fed held interest rates artificially low, they they held rates at a level that the market would never set -- and as a result decisions were made, behavior was altered, and people and companies and banks took on a lot of debt that they shouldn't have taken on [...] Banks loaned a lot of money to mortgage borrowers based on these artificial low rates, without any regard to what would happen to the ability of the borrower to repay the loans...
[...] Banks loaded up on debt, everybody took on a lot of debt. That was the intended goal, the Fed was trying to encourage debt and borrowing. And they did that by holding interest rates artificially low. But all these banks that are now failing, the reason they're failing is because all the bonds that they bought when interest rates are low are now worth a lot less than they paid. Now that interest rates have moved up and some of their depositors want their money back for all sorts of reasons. The banks don't have it... (MORE - details)
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Riots occurring in France are coming to the U.S.
https://www.detroitnews.com/story/opinio...044907007/
EXCERPT: Social Security is hurtling toward disaster even faster than France's system. Current projections are that Social Security reserves will be depleted by 2033, and the Medicare trust fund will go broke in five years.
What are American politicians doing about it? Playing politics. All attempts to get ahead of this fast-approaching disaster are met with accusations that one party or the other wants to kill Social Security and Medicare.
A bipartisan congressional working group formed to figure out how to extend Social Security's solvency had one meeting with the White House, and now says President Joe Biden is "refusing to engage."
It's the sort of cowardice shown by presidents of both parties who prefer to pretend there's no need to worry, and then hand off the headache to their successor, who does the same... (MORE - details)
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Xi Jinping says he is preparing China for war
https://www.foreignaffairs.com/united-st...-china-war
INTRO: Chinese leader Xi Jinping says he is preparing for war. At the annual meeting of China’s parliament and its top political advisory body in March, Xi wove the theme of war readiness through four separate speeches, in one instance telling his generals to “dare to fight.” His government also announced a 7.2 percent increase in China’s defense budget, which has doubled over the last decade, as well as plans to make the country less dependent on foreign grain imports. And in recent months, Beijing has unveiled new military readiness laws, new air-raid shelters in cities across the strait from Taiwan, and new “National Defense Mobilization” offices countrywide.
It is too early to say for certain what these developments mean. Conflict is not certain or imminent. But something has changed in Beijing that policymakers and business leaders worldwide cannot afford to ignore. If Xi says he is readying for war, it would be foolish not to take him at his word...(MORE - details)
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A spate of recent deals raises chatter of a fading petrodollar
https://www.forbes.com/sites/davidblackm...41bd725964
INTRO: Following up on last week’s assessment of the rapidly evolving complexion of the world order in crude oil trading, a spate of recent oil-related international deals raises questions about whether the dominance of the petrodollar is evolving as well. While no one has been surprised by Russia’s responding to western sanctions by pressuring its oil buyers to conduct transactions in roubles, recent deals made among other nations to conduct trades in crude and petroleum products using other currencies have raised more eyebrows.
Examples Of Recent Deals. So, what is all the chatter about? Here are a few examples of recent international deals and new alliances that are raising questions about the future of the petrodollar:
These and other agreements conducted in recent months have led to speculation that, as oil markets continue to evolve, the petrodollar could be losing its influence... (MORE - details)
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Banks managed credit risk, but not interest-rate risk. Now we’re paying the price.
https://www.msn.com/en-us/money/mutualfu...r-AA19gxxe
EXCERPTS: Over the past decade, the U.S. Federal Reserve has manipulated asset prices by interfering with free markets, deciding what both short- and long-term interest rates should be. Price manipulation has increased risk-taking behavior among investors. What many investors feared most was being left out; the more risk you took, the more money you made. But risk didn’t disappear. It just got passed from one party to another, like a game of hot potato.
This “hot potato” behavior is evident in the U.S. economy now. For example, over the past decade, many homeowners refinanced their houses with cheap mortgages. Some of these loans were kept by banks, while others were converted into mortgage-backed securities and sold to insurance companies, pension funds, corporations and consumers. The majority of mortgages are fixed-rate, so consumers’ ability to remain in their homes is not affected by rising interest rates.
However, the risk did not leave the system; it just got transferred from consumers to banks. Long-term mortgages — seemingly low-risk — have declined in value by 20%-30%. Not only mortgages have suffered these declines, trillions in long-term bonds issued by governments and corporations at near-zero interest rates are burning holes in the pockets of those who bought them.
That’s what we thought. But with Uncle Sam dumping $5 trillion into the economy during the pandemic, banks were flooded with consumer deposits that either paid no interest (non-interest-bearing) or almost no interest (interest-bearing).
Banks had a dilemma: All this free money (deposits) did nothing for the bank’s profits if it sat idle. So the money was loaned or invested. Banks had learned their lesson from the GFC and did not take on higher credit risk, but they took a different risk — duration risk. And why not? For the past three decades interest rates had gone only one way – down.
Also, this is what banks do — borrow short-term (deposits) and lend long-term. Yet because rates were so low, many banks had to lend very long-term to capture extra yield. This worked for a long time, and banks were minting money. Then inflation spiked, rates went vertical and losses soared as long-term bonds declined 20%-40% in a matter of months.
Banks suffered on both the asset- and liability side of the balance sheet. If they chose to categorize long-term bonds as available for sale, they had to mark them to market and immediately book losses, reducing their equity, which capped their ability to lend without shrinking their cushion to withstand future losses.
If they categorized long-term bonds in the hold-to-maturity section of the balance sheet, they didn’t have to realize the losses — but the nightmare would reappear for a decade or longer on their income statements.
Silicon Valley Bank (SVB) is a magnified view of what many U.S. banks are facing today. SVB is also a sad demonstration of how volatile deposits are.
[...] the U.S. banking system [...] is drowning in consumer deposits. If interest rates and prices stay at this level or go higher, American consumers will do what they are unmatched at: withdraw and spend the savings that were given to them by kind Uncle Sam. Thus deposits (both interest- and non-interest-bearing), the banks’ cheapest cost of funding, will leave the banks to pay for the cost of consumer goods.
[...] Losses from the decline in long-dated assets will reduce banks’ equity and earnings power. This also reduces banks’ ability to lend, sucking credit out of the economy. The cost of financing of everything from cars to factories will rise, while the decline in banks’ equity weakens the banking system’s ability to handle the higher defaults that will inevitably come in the next recession... (MORE - missing details)
https://youtu.be/VXE8mRyyV2I
EXCERPTS: [Looming catastrophic level] inflation is going to wipe out the majority of people. For the average American their standard of living is going to drop precipitously. [...] We've got Peter Schiff himself back in the house, a renowned financial commentator and CEO and chief global strategist of Euro-Pacific Capital...
[...] What caused the 2008 financial crisis and what has caused and is causing the 2023 financial crisis -- it's the same [... similar reasons...] The Fed held interest rates artificially low, they they held rates at a level that the market would never set -- and as a result decisions were made, behavior was altered, and people and companies and banks took on a lot of debt that they shouldn't have taken on [...] Banks loaned a lot of money to mortgage borrowers based on these artificial low rates, without any regard to what would happen to the ability of the borrower to repay the loans...
[...] Banks loaded up on debt, everybody took on a lot of debt. That was the intended goal, the Fed was trying to encourage debt and borrowing. And they did that by holding interest rates artificially low. But all these banks that are now failing, the reason they're failing is because all the bonds that they bought when interest rates are low are now worth a lot less than they paid. Now that interest rates have moved up and some of their depositors want their money back for all sorts of reasons. The banks don't have it... (MORE - details)
- - - - - - - - - - - -
Riots occurring in France are coming to the U.S.
https://www.detroitnews.com/story/opinio...044907007/
EXCERPT: Social Security is hurtling toward disaster even faster than France's system. Current projections are that Social Security reserves will be depleted by 2033, and the Medicare trust fund will go broke in five years.
What are American politicians doing about it? Playing politics. All attempts to get ahead of this fast-approaching disaster are met with accusations that one party or the other wants to kill Social Security and Medicare.
A bipartisan congressional working group formed to figure out how to extend Social Security's solvency had one meeting with the White House, and now says President Joe Biden is "refusing to engage."
It's the sort of cowardice shown by presidents of both parties who prefer to pretend there's no need to worry, and then hand off the headache to their successor, who does the same... (MORE - details)
- - - - - - - - - - - -
Xi Jinping says he is preparing China for war
https://www.foreignaffairs.com/united-st...-china-war
INTRO: Chinese leader Xi Jinping says he is preparing for war. At the annual meeting of China’s parliament and its top political advisory body in March, Xi wove the theme of war readiness through four separate speeches, in one instance telling his generals to “dare to fight.” His government also announced a 7.2 percent increase in China’s defense budget, which has doubled over the last decade, as well as plans to make the country less dependent on foreign grain imports. And in recent months, Beijing has unveiled new military readiness laws, new air-raid shelters in cities across the strait from Taiwan, and new “National Defense Mobilization” offices countrywide.
It is too early to say for certain what these developments mean. Conflict is not certain or imminent. But something has changed in Beijing that policymakers and business leaders worldwide cannot afford to ignore. If Xi says he is readying for war, it would be foolish not to take him at his word...(MORE - details)
- - - - - - - - - - - - -
A spate of recent deals raises chatter of a fading petrodollar
https://www.forbes.com/sites/davidblackm...41bd725964
INTRO: Following up on last week’s assessment of the rapidly evolving complexion of the world order in crude oil trading, a spate of recent oil-related international deals raises questions about whether the dominance of the petrodollar is evolving as well. While no one has been surprised by Russia’s responding to western sanctions by pressuring its oil buyers to conduct transactions in roubles, recent deals made among other nations to conduct trades in crude and petroleum products using other currencies have raised more eyebrows.
Examples Of Recent Deals. So, what is all the chatter about? Here are a few examples of recent international deals and new alliances that are raising questions about the future of the petrodollar:
- On March 28, Brazil and China, two members in the increasingly influential BRICS Alliance, announced an agreement to conduct all future trade transactions using their own currencies. China ranks as Brazil’s biggest trading partner.
- On March 8, Reuters reported that “Indian customers have paid for most Russian oil in non-dollar currencies, including the United Arab Emirates dirham and more recently the Russian rouble, multiple oil trading and banking sources said.”
- On March 29, Saudi Arabia announced it has agreed to become a “dialogue partner” in the Shanghai Cooperation Organization, a China-led political, economic and security organization designed to compete with similar Western organizations. This latest indication of strengthening ties between Saudi Arabia and China came just just weeks after the Kingdom and Iran announced an agreement to re-establish diplomatic relations that had been brokered by China.
- Also on March 28, French oil giant Total Energies announced it had completed its first purchase of liquefied natural gas (LNG) from Chinese oil company CNOOC using the Chinese Yuan as the currency.
These and other agreements conducted in recent months have led to speculation that, as oil markets continue to evolve, the petrodollar could be losing its influence... (MORE - details)
- - - - - - - - - - - - -
Banks managed credit risk, but not interest-rate risk. Now we’re paying the price.
https://www.msn.com/en-us/money/mutualfu...r-AA19gxxe
EXCERPTS: Over the past decade, the U.S. Federal Reserve has manipulated asset prices by interfering with free markets, deciding what both short- and long-term interest rates should be. Price manipulation has increased risk-taking behavior among investors. What many investors feared most was being left out; the more risk you took, the more money you made. But risk didn’t disappear. It just got passed from one party to another, like a game of hot potato.
This “hot potato” behavior is evident in the U.S. economy now. For example, over the past decade, many homeowners refinanced their houses with cheap mortgages. Some of these loans were kept by banks, while others were converted into mortgage-backed securities and sold to insurance companies, pension funds, corporations and consumers. The majority of mortgages are fixed-rate, so consumers’ ability to remain in their homes is not affected by rising interest rates.
However, the risk did not leave the system; it just got transferred from consumers to banks. Long-term mortgages — seemingly low-risk — have declined in value by 20%-30%. Not only mortgages have suffered these declines, trillions in long-term bonds issued by governments and corporations at near-zero interest rates are burning holes in the pockets of those who bought them.
That’s what we thought. But with Uncle Sam dumping $5 trillion into the economy during the pandemic, banks were flooded with consumer deposits that either paid no interest (non-interest-bearing) or almost no interest (interest-bearing).
Banks had a dilemma: All this free money (deposits) did nothing for the bank’s profits if it sat idle. So the money was loaned or invested. Banks had learned their lesson from the GFC and did not take on higher credit risk, but they took a different risk — duration risk. And why not? For the past three decades interest rates had gone only one way – down.
Also, this is what banks do — borrow short-term (deposits) and lend long-term. Yet because rates were so low, many banks had to lend very long-term to capture extra yield. This worked for a long time, and banks were minting money. Then inflation spiked, rates went vertical and losses soared as long-term bonds declined 20%-40% in a matter of months.
Banks suffered on both the asset- and liability side of the balance sheet. If they chose to categorize long-term bonds as available for sale, they had to mark them to market and immediately book losses, reducing their equity, which capped their ability to lend without shrinking their cushion to withstand future losses.
If they categorized long-term bonds in the hold-to-maturity section of the balance sheet, they didn’t have to realize the losses — but the nightmare would reappear for a decade or longer on their income statements.
Silicon Valley Bank (SVB) is a magnified view of what many U.S. banks are facing today. SVB is also a sad demonstration of how volatile deposits are.
[...] the U.S. banking system [...] is drowning in consumer deposits. If interest rates and prices stay at this level or go higher, American consumers will do what they are unmatched at: withdraw and spend the savings that were given to them by kind Uncle Sam. Thus deposits (both interest- and non-interest-bearing), the banks’ cheapest cost of funding, will leave the banks to pay for the cost of consumer goods.
[...] Losses from the decline in long-dated assets will reduce banks’ equity and earnings power. This also reduces banks’ ability to lend, sucking credit out of the economy. The cost of financing of everything from cars to factories will rise, while the decline in banks’ equity weakens the banking system’s ability to handle the higher defaults that will inevitably come in the next recession... (MORE - missing details)