David Stockman on the Debt Crisis

This is an old video from September but still relevant.

Eight year cycle

Could there be an 8-year stock market cycle?  Look at the following graph I pasted together.

This is of the S&P 500 from Yahoo.  The lower line starts on Feb 1, 2006, and the two peaks are Apr 30, 2007 and Sept 30 2007, and the lower black dot is Jan 1 2008.

The upper line starts about Apr 30 2014, and the last peak before the dip was June 30 2015, with the dip on Aug 31 2015, and the peak after the dip on Sep 30 2015.  The upper black dot is Jan 1 2016.

I would say, visually, that the two periods appear to roughly coordinate since Sept 30 2007 and Sept 20 2015.

Another link seeing an 8 year cycle.  It might be interesting to post news from 8 years ago.

Will 2016 be the first year the federal government spends $4 trillion dollars?

The official estimate for FY 2016 is 3,999,467.  

In October 2015, they spent $347.6 billion, and in November 2015, they spent $269.5 billion, so they are running short.

Crazy Intersection

A Second Look at the Federal Reserve

The decrepit FBI headquarters

The Hoover Building, the headquarters for the FBI, is falling apart.  Only 53% of the space is usable, and so much concrete was tumbling down on pedestrians below that netting had to be installed.  To repair it to make is usable would cost $1.7 billion.

The best option is to build a new headquarters at a cost of up to $2 billion while selling the existing site to developers for $500 million to fund it.  But they don't have funding for the difference.  So the formerly elite FBI is stuck in this rundown building for the indefinite future.

See: https://www.washingtonpost.com/news/digger/wp/2015/10/16/the-fbis-headquarters-is-falling-apart-why-is-it-so-hard-for-america-to-build-a-new-one/

PI Theory

Martin Armstrong has a theory (the Economic Confidence Model) that there are economic cycles that last 8.6 years or 3141 days.  Before, I have speculated that there are 7 year cycles.  The cycle this time seems to be a little longer, so maybe the longer cycle fits better

The stock market reached an all time-high on either Jan 14, 2000 (DJIA) or Mar 10, 2000 (Nasdaq).  On Sep 29, 2008, the stock market crashed. This was 3182 days after the Dow high and 3126 days after the Nasdaq high.

The early 1990s recession ended in March 1991 (call it Mar 31, 1991).  Between Mar 31, 1991 and Jan 14, 2000 is 3211 days, or about 2.5 months longer than the 8.6 year cycle.

The early 1980s recession ended in November 1982.  Between Nov 30, 1982 and Mar 31, 1991 is 3043 days, about 3 months shorter than the 8.6 year cycle.

Before that, there was a recession that ended in March 1975. Between Mar 31, 1975 and Nov 30, 1982 is 2801 days, about 11 months short.

Anyways, projecting forward, 3141 days from Sept 29, 2008 is May 5, 2017.  According to this model, expect something to happen on that date, plus or minus a couple of months.

Why does it matter?  When the next great recession hits, expect government spending to soar again and the annual deficit to return to the trilllion dollar range.

New Orleans Charity Hospital

Read: http://www.thenation.com/article/why-was-new-orleanss-charity-hospital-allowed-die/

It could have been repaired for $23 million after Hurricane Katrina in 2005.  Instead, it sits abandoned, decaying, maybe haunted, for the day it will either be refurbished or demolished.

Doom and Gloom

See https://larouchepac.com/20151223/emergency-christmas-eve-message-january-1st-doomsday-only-fdr-action-can-save-you

A financial crash will occur on January 1 unless Obama resigns and Lyndon Larouche takes over!!!

I'm calling B.S.  Merry Christmas!

Beautiful font

--http://kunstler.com/clusterfuck-nation/fedpocalypse-now/

Wow, I think this is really attractive.  The font is "OFL Sorts Mill Goudy TT".  Available from: https://www.google.com/fonts/specimen/Sorts+Mill+Goudy

Here is another link - https://www.theleagueofmoveabletype.com/sorts-mill-goudy

The debt keeps rising

So I expressed my frustration with the Treasury for blowing up the national credit card, and guess what? They did it twice more.  So let's keep track, updated daily, starting with Nov. 11 (which was a holiday, so it probably really means the previous day).

11/11/2015 $18,649 bn
11/12/2015 $18,654 bn
11/15/2015 $18,660 bn
11/16/2015 $18,670 bn

I'm going to keep reporting on it until it stops rising for 2 days in a row.  That shouldn't take very long, you would think.  This is ridiculous.

The Debt is back

Ok, we understand that the debt had been frozen for about 9 months and Jack Lew was playing games with trust funds and flush funds to keep it under the limit.  But still, a $500 billion increase in less than two weeks?  Supposedly, the deficit is "only" about $450 billion per year.  So just stop it with the national credit card for a while, ok?  Since October 27, the debt has gone up every single day except for one.  Give us a break for a couple of months please.

Shadow Rate

I have never heard of the shadow rate before today.  Thank you Peter Schiff for introducing it to me.  See here.  The shadow rate can be negative, unlike the official rate. How is it calculated?

See the working paper, very interesting. I think once this goes above zero that the actual rate should follow.

Panic over possible debt ceiling accident

http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

At least some people think there is a small chance that they won't get paid right away for their expiring T-bills and are selling them at a discount.

When was the last time the 1-month notes were that high?  February 7, 2014. What happened then? A similar debate over raising the national debt limit.  Note that the debt limit was $17,226 billion then, and it is $18,152 billion now.  And soon it will jump a few hundred billion more as soon as Congress caves and approves a new ceiling.

See also: http://www.cnbc.com/2015/10/19/lew-i-worry-there-could-be-a-debt-limit-accident-that-could-be-terrible.html

Treasury Secretary Jack Lew said Monday he worries that waiting until the last minute to raise the nation's borrowing authority could result in an accident "that would be terrible."

Last week, Lew said the U.S. debt ceiling will be exhausted Nov. 3, two days before previously estimated. In a letter to congressional leaders, he added that a remaining cash balance of less than $30 billion would swiftly deplete.

"Our best estimate is November 3rd is when we'll exhaust what we call extraordinary measures; those are things we can do to manage things. I will run out of things that I can manage on November 3rd," Lew told CNBC's "Squawk Box."

==================================
 Only 2 weeks until the system collapses! Unless the evil Republicans can be convinced to raise the debt ceiling. Are there negotiations going on? Nope, the president won't negotiate.

August 9, 2007 - the day the system broke

I started this blog in June 2010 because of a feeling that there was something very wrong in the financial world.  Most of my fears then seem to have been overblown, and I don't post very much anymore.  I would like to say definitely that everything is ok.  But they aren't, which is evidenced by the fact that the Fed has kept its rate at 0% for almost 7 years (it was lowered on Dec. 16, 2008).

It is interesting to note that August 9, 2007 was the day that things started to go wrong.

See http://www.theguardian.com/business/2011/dec/01/credit-crunch-pinpointed-august-2007

The former boss of Northern Rock, Adam Applegarth, pinpointed the start of the first credit crunch as 9 August 2007. It was the "day the world changed," he said. The European Central Bank and the US Federal Reserve injected $90bn (£45bn) into jittery financial markets that day, but it was still not enough to stop banks being frozen out of the markets they relied on for funding.

http://www.alhambrapartners.com/2014/08/11/the-anniversary-no-going-back/
Everything that has occurred in the years since can be traced to those days in August 2007 when money markets broke down for the first time. Even the current, though measured, move away from the US dollar in global trade is as much a downstream event of then as anything else. Careful examination reveals that it was the eurodollar system, linked to trade and financialism, that has wrought such persisting havoc and malaise.

http://www.alhambrapartners.com/2015/08/10/still-no-going-back-eighth-anniversary/ In very general terms, central banks could do no wrong prior, and then “suddenly” have been able to do nothing right since. The titanic shift in August 2007 cannot be overstated. The Fed (and all its central bank network) continued to do as it had done before, starting in September 2007 with its first very orthodox, quite textbook 50 bps cut in the federal funds rate. From then on, no matter what it did, the financial system remained unaffected and so with it the economy.

http://www.theguardian.com/business/2012/aug/07/credit-crunch-boom-bust-timeline
Larry Elliott, economics editor, said: "As far as the financial markets are concerned, August 9 2007 has all the resonance of August 4 1914. It marks the cut-off point between 'an Edwardian summer' of prosperity and tranquillity and the trench warfare of the credit crunch – the failed banks, the petrified markets, the property markets blown to pieces by a shortage of credit"

http://davidstockmanscontracorner.com/mind-the-eurodollar-markets-thats-where-the-exit-ramps-are-closing/
The rift in the global eurodollar exchange system that opened in 2007 is not closing, rather it remains in a state of paradigm shift that can only strain further a liquidity system that has actually lost robustness from even its weakened state just prior to near-collapse.

The weaponization of the Eurodollar

I'm in way over my head on this, but lower oil prices and the collapsing world economy are causing a Eurodollar liquidity crisis.

"Investors may have underestimated the degree to which a rising dollar transmits tighter monetary policy across an already misfiring global economy, especially when it is carrying US$10 trillion (+70% since 2008) in offshore Eurodollar debt. From a Chinese (especially) and EM standpoint in particular, it is becoming increasingly clear that the dollar has been “weaponised.” http://ftalphaville.ft.com/2015/09/24/2140580/all-about-the-eurodollars-redux/

A eurodollar can be defined simply as a dollar that is outside the borders of the United States.  However, I don't think it is that simple.  Obviously, physical cash can circulate outside the borders.  But for electronic dollars, I think there has to be some sort of connection to the US, like an account at a big bank, e.g. JP Morgan, or a correspondent relationship with one of the big banks.

However, even without the connection, two parties could agree on a transaction denominated in dollars, and then settle it based on the prevailing exchange rates.  This is no problem if it settles quickly.  However, if there is a long-term loan or time deposit, the problem arises.

If the dollar strengthens in value (which happens because for some reason everyone trusts it), then paying back the loan or deposit becomes much more costly.  This causes spiraling deflation, which is why oil prices and gold prices keep going down.  Of course the countries would prefer to sell oil and gold at higher prices, but they have loan payments due and have to liquidate assets in order to meet their obligation.

This isn't a problem in the US so we don't see the effects, but there is a $10 trillion elephant sitting on the world economy.  These are dollars not created by the Fed, but they still exist.  (Other entities besides the Fed can create money, I have written previously about that, but I haven't considered international banks creating dollars).  This could cause a global economic collapse.  And maybe the Fed would step in as a lender of last resort, and in exchange for its help, effectively demand oversight over banks that it is lending to.

The Fed does provide "swap lines" to other central banks like the ECB and BOJ, but it doesn't to China.  So this could be considered economic warfare against China, which must liquidate its (mostly treasury bond) assets.  This is a topic to research more.

Don't mess with Hungary

Shemitah Fail

Today is the 14th anniversary of the 9/11 attacks on the World Trade Center twin towers.  And it is also the last business day of the Jewish year.  Technically, Sunday is Elul 29 and today is Elul 27, but this is the last business day before that.  Monday, Sept. 14 is Tishri 1, the Jewish New Year (Rosh Hashana).

Every seven years on Elul 29, the stock market crashes.  So says Messianic Jewish Rabbi Johnathan Cahn.  But not this year, thank God.

So the disaster that was supposed to happen today, didn't.  This is another failed prediction, like 12/21/12, which was a dud.  Johnathan Cahn is a fraud.

Quote:
"On the stock market, Cahn goes on to explain, “I want people to be aware and be warned . . . . In the last 40 years . . . you have these collapses in the markets, long term collapses.  The dates are 1973, 1980, 1987, 2000 and 2007.  Every single one of them is on the seven year cycle.  Not only that, every single one of them happens at the time of the Shemitah.  It’s not just a 7 year cycle, but on the exact appointed time.  This has happened every single time, and the last two have been so exact . . . what you have is the greatest stock market point crash, September 17, caused by 9/11.  That day that it crashed is “Elul 29,” the day that is appointed in the Bible of an exact date you have to wipe out financial accounts and becomes a sign of warning of a nation under judgment.  On the exact day, September 17, 2001, you have “Elul 29” that happens not just once a year, Elul 29 happens every 7 years.  Then, that record stays for the next 7  years until you get to the great crash of the great recession.  The greatest crash in history, September 29, 2008, they ring the bell, and the bell refuses to ring.  They take that as a sign, and on that day comes the greatest crash in American history.  Not only on that day, but it was the wipe-out day of the Shemitah that happens only once every 7 years.  So, the two greatest crashes happened exactly 7 Biblical years apart  down to the day, down to the hour, and down to the minute."
http://usawatchdog.com/great-shaking-and-collapse-is-coming-jonathan-cahn/

He was predicting that a massive stock market crash would occur TODAY.  And it didn't. I'm not rooting for it, but I like to see patterns if they exist.  I know some people were saying that Shemitah came early this year, on August 25.  But he is talking about "the exact appointed time", "an exact date", "down to the day".

Epic Fail!

Goldin 117 Tower tops out

Goldin Finance 117 Tower, in Tianjin, China, tops out at 1,957 feet (596 m).  The article says that it is the 2nd tallest structure in the world, but that isn't correct - I think it is the 5th.

They should have made it just a little taller and it would be over 600m and taller than the Mecca Clock Tower.

The list of the tallest buildings in the world is now:

1. Burj Khalifa, Dubai, 828m (2010) 
2. Shanghai Tower, 632m (2014).
3. Abraj Al Bait, Mekka (Mecca Royal Hotel Clock Tower), 601m (2011) 
4. Ping An Finance Center, Shenzhen, 599m (2016)
5. Goldin Finance 117 Tower, Tianjin, 596m (2015)
6. One World Trade Center, New York, 541m (2013) 
7. CTF Finance Center, Guangzhou, 530m (2016)
8. Taipei 101, Taipei, 509m (2004) 
9. Shanghai World Financial Center, 492m (2008) 
10. International Commerce Center, Hongkong, 484m (2010) 
11. Petronas Towers, Kuala Lumpur, 452m (1998) 
12. Greenland Financial Center (aka Zifeng Tower), Nanjing, 450m (2010) 

See also: Shanghai Tower tops out

Ungrateful migrants

How dare you give us water.