Accurate newsletter's followup.... .....to his AA list readers. I doubt if he will mind I share some of his general information here:
Keynesian Theory: Last Days of a Failed Experiment...
Schiff, Roubini, Faber and I predicted it years ago. The Keynesianism Experiment will “destroy Western civilization,”
Untenable political and financial decisions put US and European economies on the road to fiscal destruction. Bailouts and market manipulation can no longer delay the inevitable.
A tipping point approaches. The timeframe is no longer unknown. It is now.
Sputtering and fading fiat power runs world economies. Wall Street and giant European banks can no longer run Western societies.
Financial mis-regulations converted the financial system into a stacked-house gambling casino. Zero interest rates destroy household savings. Progressive media cheerleaders suppress ugly truths.
Progressive and/or socialist governments allow banking crooks to scam the system for profits, fully aware this will lead to a catastrophic failure.
Bad news keeps getting worse. Public awareness arrives late. Moody’s June 21 downgrade of 15 major banks conceded what’s been known for years. Giant Western banks are zombies. They’re insolvent. Taxpayer funded bailouts alone keep them operating. Moody’s warned last winter than downgrades were coming. So-called stress tests suppress more than they revealed.
The derivatives casino is a desperate sucker's last gasp. A last-ditch attempt to prop up a private pyramid-ponzi scheme. It’s cracks are visible even to the folks on Main Street. The derivatives tower will not crumble under its own weight. It will collapse into rubble and in turn will collapse the entire global economy. JPMorgan Chase is considered America’s most stable bank. Technically it is bankrupt. Evidence: JPMorgan's $2 billion loss will exceed $30 billion.
America’s five largest banks hold $226 trillion in derivative bets. Example: JPMorgan’s total assets approach $2 trillion. Its derivatives holdings exceed $70 trillion. Its risk capital is about $136 billion. Its derivative bets are 516 times *larger* that the capital that covers the bets. They are not too big to fail, they are too big to contain.
Goldman Sachs $44 trillion in derivatives speculation is covered by only $19 billion in risk capital.
In other words, its bets are 2,295 times larger than cash on hand covering them.
Derivatives bets by America’s five largest banks exceed US GDP over 15-fold. Corrupt politicians on both sides of the aisle and reaching right into the uber-corrupt White House allowing this assure me that we are facing total economic collapse. Banking executives are serial liars. After Moody's downgrades, Citigroup and Bank of America officials said its actions failed to reflect "safeguards" that have been in place for years.
Moody’s and other rating agencies long ago lost credibility. They failed to acknowledge the sub prime crisis until headlines revealed it.
They bogusly call toxic assets safe in return for large fees and big profits.
They’re called lagging, not leading indicators. They’re many days and dollars short. They’re part of the dirty game that scams ordinary people.
RBC Capital Markets analyst Gerard Cassidy said Moody’s “action is five years too late.”
Stanford University Professor Anat Admati called its downgrades bad news at a time bank “balance sheets are very fragile.”
Credit Agricole Securities analyst Mike Mayo said America doesn’t have a coherent solution to its banking crisis. Will actions like Moody’s make it safer, he asked?
Saying the jury is still out, he doubts it. He also called Thursday’s downgrades “unfortunate four years after (a) crisis” that’s deepening, not improving.
Evidence shows troubled global banking conditions. Central bank liquidity injections alone cannot prevent collapse. They’re running their course. Each new round helps less than previous ones. Ahead they’ll be ineffective at a price too great to bear. Progressive and socialist based policies are a dismal failure. Fiat currencies will collapse, one on top of the other.
Economic data shows it. The closely watched Markit Eurozone purchasing managers composite index matched May’s 46 read. It showed production contracting at the *steepest level* since June 2009.
Its flash measure dropped from 45.1 in May to 44.8 in June. It reflected a 37-month low. The flash reading rounded off the weakest quarter for three years.
China’s flash PMI fell to 48.1 in June. Manufacturing contracted for the eighth consecutive month. The Fed slashed 2012 and 2013 US growth. Growing numbers of companies are cutting revenue and profit estimates.
Germany’s ZEW confidence index plunged to -16.9 from 10.8 in May. It’s the largest monthly decline since the 1998 LTCM/Russian debt default crisis.
Germany's Ifo business confidence index hit a two-year low, and Italy’s consumer confidence plunged to its lowest level since 1995.
US initial jobless claims are rising. On June 21, they reached a 2012 high. When reviewing initial figures out of Washington, make a note to *always* wait for the revised numbers six weeks later. They are usually revised downward.
Slowdown is gaining speed. Economic underpinnings look wobbly. In June alone, about 70% of economic reports showed weakness.
The Fed’s Operation Twist extension underwhelmed analysts. Officially it’s called the Maturity Extension Program. It exchanges short-term debt for longer term holdings. In theory, it’s to lower interest rates on 10-year Treasuries. In early June 22 trading, they stood at 1.63%, a near record low.
Housing remains in severe depression. In the week ending June 15, mortgage purchase applications plunged 8.5%. Companies keep cutting planned capex expenditures. According to the latest Architectural Billings Index, commercial construction continues to contract.
Down 22% from their highs, commodity prices entered bear market territory. Oil prices hit an 18-month low. It signals weak demand. Brent fell 8% in one week. It’s down 30% from its earlier high. Copper prices are expected to continue to test old lows.
US factory output reached an 11-month low. Eurozone business activity dropped for the fifth straight month. At a 48.5 read in June, Germany’s PMI shows contraction. The Fed’s June Philadelphia manufacturing index contracted sharply to -16.6 after dropping 5.8 points in May.
The Jolts (Job Opening/Labor Turnover) survey showed job openings plunged 325,000 in May. It was the steepest drop since Lehman’s September 2008 collapse. Only twice before in the past decade did it decline that much. All major categories were affected.
New hires decreased for the second straight month. They’re lowest since July 2011.
Layoffs keep increasing. Cuts rose in three of the past four months.
Data revisions are mostly negative. Peak levels were reached months ago. The full impact of how weak things are has yet to hit home. So-called recovery is political formed illusion, not reality.
Europe’s economic condition is worse than grim. Bailing out Spain will be short of impossible. Banks need at least $500 billion, not the publicly announced $78.75 billion.
And that is only the near-term, as hundreds of billions more are needed to rescue Spain’s regional and central governments. At issue is who’ll supply it. Sick socialists economies traditionally cannot solve their own problems.
The Eurozone looks to Germany for help. It will not be able to bear the burden when it’s economy is weakening.
Italy’s collapsing economy combined with its 12-month 29% of GDP sovereign financing burden means it cannot contribute much.
Europe’s PIIGS (Portugal, Ireland, Italy, Greece and Spain) combined with troubled France have a combined public debt of 205% of Germany’s GDP. Its own debt to GDP ratio is 80% and climbing.
Simple math dictates that Germany cannot backstop the Eurozone. Bailouts cannot continue forever. Debt burdened economies head for collapse. Adding more hastens the timeframe.
Troubled Eurozone economies are so weak that cross-border bank-to-bank lending dried up. ECB chairman Mario Draghi calls inter-bank lending “dysfunctional.” It’s “not working,” he said. As it goes, so does business lending altogether.
These developments show deepening crisis conditions. Clearly wrongheaded policy measures as the stubborn Keynesian's have no answers.
Government revenues are down. So is consumption. Business spending keeps falling. Debt keeps rising. The looming train wreck approaches.
Why should households and economies bear the burden of bailing out crooked banks? Why are too big to fail ones allowed to exist? Why do ordinary people put up with progressive politicians scamming them for personal gain? How can any American in his right mind give America's utterly failed president another four years?
A Final Comment
On June 19, the Global Europe Anticipation Bulletin (GEAB) issued a “red alert.” Global conditions are “negative, even catastrophic,” it said.
The second half of 2012 will “mark a major inflection point of the global system crisis….”
Day of reckoning time approaches. Putting off “the inevitable comes at a high price….”
The shock of the autumn 2008 will seen like a small potatoes compared to what is coming. The entire global economy will collapse and this will become evident to all.
There will be a conversion of geopolitical and economic shocks. They include more Middle East wars, Afpak chaos, and America’s already tattered and completely artificial economy will be entering free-fall, major bank insolvencies, and money printing madness that will continue although it no longer works. There will be a desperate stampede to own physical gold...gold that will become increasingly scarce and priced to the moon.
Early summer is the (relative) calm before the storm. We will experience the onset of the fiscal storm within the next 100 days, as the Last Days of Keynesianism are upon us.