The Outlook, after February 1.2016

Bloomberg headlines as of Monday, Feb. 1, 2016. Not optimistic at all!

Feb 1, 2016
Twitter Shares Jump on Report of Possible Silver Lake Deal
Feb 1, 2016
The Window to Buy Stocks Has Shut for Now: JPMorgan
Feb 1, 2016
Tracing Oil's Hypnosis of Stocks From Wealth Funds to Junk
Jan 31, 2016
Millennials Are Starting to Change the Stock Market

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The articles, with a quick glance or two, do stimulate some serious thought in view of their underlying weaknesses; some that occur to O&G -

First, an observation on the video of “millennials” responding to their needs, though it didn’t seem their concerns centered on stock market activity.

For the millennials – our hope for the future – those represented are unprepared to face issues on anything other than a personal basis. None of their comments shed light on the importance of understanding causes or cures. Their viewpoints are matters of what debt do I need to get into, how do I get out of it, and will I be functional during any of those trials?

An extremely personal pattern of concerns; not of any real value from a macro- or economic mechanics perspective.

As for the other stories on the other headlines which seemed so disheartening, groping in the dark would be the best description of the middle aged responses from the “informed: sources” at this critical stage in the middle of the continuing crisis, with not even a cogent summary of where the entry was – or where the exit will be, or when we’ll stumble across understanding of either, or what needs to be done.

Disappointing!

In all, from O&G’s perspective, Bloomberg assessment appears to be a collection of “informed people”, who show little sign of devoting time to an ongoing analysis of the economic situation, and/or our chances of escape or improvement. Every opinion seems too loose and fluttering in the wind.

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In the meantime, in separate reading, O&G spent time catching up with what the Federal Government by way of Congress, TARP (the Troubled Asset Relief Program), has been doing to straighten out the banking situation recently.

Congress passed the Emergency Economic Stabilization Act of 2008 which provided for SIGTARP (Special Inspector General for the TARP provisions) with powers to “investigate, search, and seize and arrest in criminal investigations related to TARP. And, they have done so., going beyond the arrest stage and prosecuting violators successfully.

The original head of the office was a former assistant US Attorney in the New York office, Neil Barofsky, who considered his contribution completed in 2012 and stepped down.

Five years after its establishment, October of 2013, a quarterly report to Congress was issued under the signature of his replacement (?), Christy L. Romero which detailed the program’s progress. Successful prosecution has sent bank executives who engaged in fraudulent bookkeeping practices, improper disbursement of TARP finds for gains both of their own and those of their families and friends, and enough other charges in a series of litigations that resulted in convictions which included banning one offender from banking, up to jail time from 1.5 to 23 years.

The series of cases and an analysis of banking culture to that point prompted a 500+ paged report that describes a “toxic corporate culture that led up to the financial crisis” which “TARP has not sufficiently changed”. This is aimed at banks up to regional sized with one slightly beyond that class at 8 billion of “kited value” assets attempting to stretching into global activity in China. . . and failing!

It seems patently obvious that those prosecuted do not come from the upper echelons of the megalithic banks, the originators of gambling with the greatest impact on the crisis, but from the smaller fringe banks with executives who believed they could use their firms and the TARP resources for their own and their friends private “piggy banks”, or play pen type of adolescent gaming that taints confidence placed in the smaller local banks and if extended through banking culture shows what kind of attitude could have devastated regional economies.

But, the global situation has suffered as a result of improper banking on a massive scale that has not to date been dealt with successfully. Following the path of SIGTARP, as one commenter mentioned in a news article addressing the prosecutorial success, it’s easier to prosecute infractions in the smaller banks, the bookkeeping is simpler and deviations from standard controls and limitations are easier to spot and isolate. Megaliths are another story entirely. Not only is bookkeeping more complicated but legal staffs of large banks are more aggressive and of an entirely different caliber. Prosecution certainly would not be as simple or predictable as in the more transparent, smaller banks.

The description of the process was set out in the Executive Summary of the Quarterly Report as –

”At SIGTARP, we have arrested and continue to arrest bankers who cultivated a culture of reckless arrogance, believing they were untouchable even as they broke the law. Profit chasing and aggressive expansion led to risky gambles on lower quality loans that violated a bank’s internal policies and industry rules that CEOs were telling employees to follow while also directing actions which violated the policies and rules.”

True, of course, and the investigation and prosecution was warranted;

Looking back to the opening salvo in the Central Bank, Monetary Policy series in the O&G Corner, we relayed the OCC (Office of the Controller of the Currency) 1930 evaluation of banking’s lack of integrity over 60+ years and concluded that bankers’ excesses and abuses were responsible for at least three quarters of all banking crises over the period documented. In summary, we despaired of ever seeing anything similar from 1930 on. This SIGTARP report may be phase two of the same type of discovery and long overdue. Phase three may be another 83 years in the making. A lot of damage can be committed in that 83 year cycle as we’ve witnessed.

However, though something has been done, in the larger aspect of the terrible consequences of the global crisis, when jobs, asset values, displacements from homes and careers, with all the suffering that has been experienced, the cheating and self-serving diversion of funds of 107 individuals in local banks hardly seems an explanation of the crisis which defies recovery efforts. It may indicate the direction of personal goals of a percentage of bankers; but, whether we need the millions of dollars spent on what should have been detected and investigated by regulators or even halted by supervisors may be a more productive direction for inquiry and correction.

Granted the people prosecuted successfully received what they deserved, and granted also, that TARP was not the sweeping program meant to cover the entire banking sphere from local to global venues. Still, though $89,000 or $875,000 of TARP funding diverted to personal use is unconscionable, it hardly bears an impact capable of upsetting international trade. The largest of the losses mentioned, $298 million, as bad as it was, pales when the trillions of dollars of debt generated by the Fed’s support of the megaliths, or quadrillion dollar + value of commitment of currency and other assets as collateral or payment required for the distribution or settlements of the off-balance sheet derivatives which undermined money values and interrupted global currency circulation are considered. At our current level we’re almost prompted to ask, “What on earth is not under lien?”

Nevertheless, the SIGTARP report testifies to the fact that banks still cannot be depended on to follow a code of ethics or morals nor do they observe rules and regulations to a point beyond reproach or in a dependably honest way; and they ought to be subject to continuing regulation and supervision, perhaps more stringent, at that. The limited range of the SIGTARP operation does support the impression that BIG is simply bigger than the US government is willing to tackle. In which case, they truly are too big to continue.

It may be that economic or banking scholars may be more helpful if they’d devote more time to determine the limits within which the human capabilities and talents can operate. A clear-cut answer to that conundrum, widely distributed in plain language may convince the public where the dangers lie and what should be addressed to promote price, wage and employment stability. Integrity and honesty In banking would be a good starting point.

We desperately need something more than the flimsy, ineffective rear view mirror vision that now gives is Monetary Policy founded on unstable results and undependable response times found in interest rates and the quantity theory of Money. It’s proving too weak to control the high powered gambling going on in our new financial world.

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Judging from the interviews of professionals on the Bloomberg site, we have no idea what we’re in to, what affect it will generate or how we can get out of the vicious spiral threatening to lead us on a constant path lower to a level being described by serious economists and historians for more than a quarter of a century past and presaged by more than two centuries of prior scholarly work.

insanity

US futures are up today because Dudley says the world economy is deteriorating and the the Fed may have made a mistake in December by raising the interest rate .25% ?????

Mistake? The Fed?

neoh;

Nothing but one more in the long string of mistakes they've been making since. . . . Well, can't remember when they were on the correct side of the road last.

Bill Gross, now of Janus, had an interesting column after you get past the personals he is want to drift into lately. . . That is an assessment of the conditions of some of the larger - but troubled - nations. Venezuela or Puerto Rico are not neglected in his short list.

The essence is how they intend to deal with debt and is there a safe or clear path to stability in this global struggle which has every nation trapped. Of course, he features the US, China, Eurozone, Japan, and Brazil. And for ammunition he uses no more than what the leaders have expressed.

It seems to be the thing to do. A number of economists see finances and the international activity, ebb and flow, as worth more than a little interest. In particular, some ex-Fed Board members are looking into the Fed toolbag and the dependence on "forward Guidance" - that's the windy approach that costs little in outlay, but then returns precisely what its worth - no more! It's such a positive field that Alan Blinder and some co-authors title their concern, "What We Know and What we'd like to know about Central Bank communication." That from a former Fed Board member. O&G would shift the concern to the fields of finance and monetary policy, they seem too at sea over the entire subject - unable to put two and two together to show half a smidgeon of progress.

Goldman, Sachs is in the news with a Bloomberg headlined article by Joe Weisenthal, Goldman Sachs says it may be Forced to Fundamentally Question How Capitalism is Working. Their analysts are concerned that the high (inordinate would be a fitting qualifier here) profit margins can be maintained. The quick answer would be, not a problem if the prices were established by market activity. But, realistically, the market is not establishing prices these days since market equilibrium established by current conditions is working closer to bare cost. What is prevailing, is an artificial pricing system which says

Here's our production lot, priced as we feel we can impose on the market. Take it or leave it!

From another viewpoint - Bonds and the credit market - an ex-head of Goldman Sachs bond efforts, demonstrates a little dismay in "cookie cutter" evaluations from bond salesmen these days. After two decades of booms/busts, he'd like to see signs of sincere efforts to de-leverage - that nasty trick that contributed to the global crisis that refuses to go away, which is also encouraged to hang on just a little longer mostly by bankers' unwillingness to give up some fsst buck income.

Both articles feature the words "efficient" and "efficacy", qualities "devoutly to be wished for. . ." but nowhere to be found. It's built around the concept of sloppy industrial management, a modus of remodelling and repricing goods designed to fail prematurely supported by aggressive business tactics not tuned to reality - monopolistic in nature and egoistic in ideology, but with built-in imbalance in the main. It has, after all, provided the redeeming virtue of stripping more currency out of circulation concealed partially, but but conceniently by providing faux values. The falsehood is mostly in banking's and the large corporations' refusal to acknowledge that leveraging persists - and in the process committing the willing bank culture into a permanent gambling mode of operation, promising more bumpy economic gyrations over rough terrain in the immediate future when we haven't yet emerged from the biggie of last decade and all of which exhibits no propensity to seek solutions.

This demonstrates just how fractionated and uncooperative our system has become when it pits industry and finance against the interest of society which should be a smooth and affordable function, currently, the process's last concern. Perhaps it always has been moderately so, but due to the fact that it was once composed of a greater number of banks and corporations of smaller size competing for business, when one enterprise suffered, it was a micro- event that could be ignored and the single unit could right itself and re-enter the fray. Now everything is concentrated in BIG and BIG has nowhere to go for help but the over-stressed taxpayer, who is operating on less income under inflationary pressures in an over-priced world.

Meanwhile BIG, helped along by the Fed, is taking on more debt, peddling this as growth. What it does, of course, is shift any and all resource from household use to BIG's unending need for MORE! We'll become a nation of even larger BIGs and not much more than desert elsewhere.

So, this where Bill Gross pops in and asks the central banks "How's it workin' for ya?" He puts it in folksy terms when he shortens the summary to -

"Today's Fed and other model based central banks are, to my way of thinking, the ones that have more and more become "increasingly addled". Their genetic makeup, . . . seems to have been determined at origin and has since been centered on changes in the policy rate and the observation that higher interest rates slow economic growth/temper inflation, and that low (or negative) interest rates do just the opposite. . ."

A man after my own heart, indeed! He then proceeds to dissect the interest rate binge the Fed embarked on - that Fed quarter of a percent rise that saw the USD lose a 1/2% value to a few nations on the forex - in effect acknowledging the fact that if we don't have "nowhere-to-go" we'll provide the circumstances and drive us there under force, if necessary. This was accompanied by Japan's resort to "the black hole of negative interest rates much like the ECB and three other European central banks."

It was at this point that Gross wrote, "Great Recession? How's it workin' for ya?"

We know one thing from the policy moves put to use, discretionary decisions are esaential here to force this mode onto the public. Rules, of course, would make the Fed's machinations clear, but discretion can always confuse issues and provide a screen to shield the Fed's abandoning the public and declaring that money and finance provide our future and to the devil with such unglamorous things as basic needs and comfort for the confused general public.

When common sense and a couple of hundred of years experience say otherwise, there is no other justification for the experimental monetary policy than discretion.

It also tells us, it is a long road leading to the light at the end. . . The sobering question: Do we really want to get there?

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BTW looks like another red letter day in the US stock markets as we head into the second half of the day. - and after they rid themselves of the bouncing ball effect. The rest of the world has contributed their opinions - an unhealthy day. . .

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After Thought:

The moral of this post: During Booms, severe miscalculations and drastic policy errors are tolerated. Nothing goes wrong,because attention is directed elsewhere in a happy, productive, profitable mood no one is anxious to surrender; during Busts, the least little burden or error in calculating the public's tolerance and we're in a deeper hole with no means to get out.

In simpler words: In monetary policy terms, when times are bad, it's easy to get into trouble and near impossible to get out.

This was the basic truth that impelled O&G to object to the interest rate plunge to 0-0.25%, and QE1, 2 and 3, and fiscal debt up to here back in 2008-2009. . . all of them, of course, pushed along into the black hole by derivatives and bankers' games for their owm welfare beyond reason.

We are so mired in quicksand the least attempt to free ourselves will end in disaster. Mood of the public plays a large part in this; anticipating this obstacle may be the prime reason the Fed shifted to the gambit of "forward guidance". However, besides the general public's not paying attention to the Fed, it may be reasonable to believe tha part of the public that is aware of the Fed's efforts, sees too much insincerity in the ploy. In other words, serving the BIG players in the game and ignoring the biggest part of the markets hardly convinces anyone that the doctors have an honest intent to repair the economy. . . And, that neglected group of concumers, friends, is essential if you'd like to keep money flowing and the economy in good shape. Distrust is the deserving word - and, it fits.

And, we know that our economy ain't working as it should right now - eight years into the darkenss! Nothing but more reason for distrust wherever you look.

How deep is this hole, BTW?

nasdaq

Seems to be dropping like a rock. Down 3.25% today. Headline banners generally only show the DOW 30 which didn't have a good day but the damage was light when compared to NASDAQ.
401k, IRA, and other arm chair investors become enamored to the tech/bio heavy NASDAQ. A problem which is common during the past 20yrs. A false sense of security develops in many people thinking that the answers to economic malaise is distracting social media inventions or worse, the false hope that old age will be eliminated at an affordable cost.
I've noticed that some young people have developed a grudge against the "boomer" generation. A generation that prospered while their children aren't. While I feel that the anger is slightly misplaced, has there ever been a generation that has built gated and guarded communities where young tenants are not welcome?
Personally, I would find such a community boring and depressing.

A Bunker Mentality

Depressing. Very depressing.
Dual economy. The rich live in secure, gated communities, private roads, private parks private schools, private, private, private.
The rest live in a world of insecurity. At the bottom are millions of young people deprived of their right to live in dignity, to hope for a better future, to have control over their lives.
I have heard of gated communities where children and vegetarians are not allowed. Residents must vote Republicans and own small dogs with rhinestone collars, stupid eyes and names that end in i, Taffi is good, Cassi is better.
You could surround yourself with all that money can buy and you'd still be as miserable as a human can be.

Sorry, my cold makes me nervous.

False Elitism

Clueless immature kids with techno-access... now THERE is a problem. Hell-bent on destruction just for fun without responsibility. Some of those kids are in their 40's now.

You don't want to be rich right now... you want to be working hard to achieve momentum in your enterprise. It isn't fake if you break a sweat.

Dual economy. One is faked, the alternative (sub-economy) is sustaining billions. Guess which one survives?

At one point very soon it makes no sense at all to keep bailing something that dead.

Fake Sinks Unable To Support It's Own Dead Weight

I have written this so many times... close the banks, end the Federal Reserve and get RID of Wall Street. After a billion denials that this is a commonsense approach to a catastrophic failure scenario, the naysayers are getting it. Like the guy who fell off a cliff and landed alive, but had to cut his arm off with a pocket knife because it got jammed between to boulders in the impact-- sometimes we all have to do what has to be done.

The Federal Reserve is not part of our government. Our government has three terrible branches and an omnipotent and dangerous private bank connected to global interests mired by secular stagnation. They simply are NOT going to help who needs helping, they are going to help themselves and they have. 62 people have the equivalent wealth of half of the rest of the world. You roll up a newspaper and SWAT that cockroach effect. What ends secular stagnation? 62 no longer breathing people and wealth redistribution on top of ordinary consumer debt forgiveness. Free the buyer and he/she buys again. Pump up dead cats and legacies and they look terrific in glass cabinets. STAGNATION is resolved by movement. You can't promote progress pressing buttons or shuffling paper or dropping interest rates on fake fiat money to zero and only letting the wealthiest play with it.

Complacency is falling off the walls and shells are cracking everywhere now.

No Fear. LOL...

Eat Your iPhone!

You say you are struggling to cover your rising expenses while your pay is stagnant? Don't sweat it. You have a phone and that more than makes up for your lack of adequate wages, declining ability to access health care and lack of a pension. Just ask JPMorgan chief executive officer Jamie Dimon. He says you underpaid employees should not complain because you have iPhones!
At least Marie Antoinette's alleged belief in cake allowed France's plebeians to eat, more than can be done with a phone.
" If you go back 20 years ago" he said " cars were worse, health was worse, you did not live as long, the air was worse and you didn't have iPhones." Cutting the pay of chief executive officers would do nothing to solve inequality, Mr. Dimon proclaimed. But as you apply ketchup to your iPhone, you will surely digest smootly with the knoweledge that the chief executive officers of Goldman Sachs and JPMorgan officially became billionaires during 2015.
There is no need for banking to exist as an uncontrollable behemoth extracting wealth from all other human activities.
Why shouldn't it be a utility under public control that exists to serve the productive economy? People can't survive on iPhone alone.

Mario Draghi spoke about the concern on low interest rates and claimed that this benefits the purchase of....cars!
" What low interest rates are doing, however, is stimulating the economy and especially the demand for durable goods, like cars."
With 7 euro per month profit after 15% taxes from interest rates what does the average Greek do? He buys a car or a super huge plasmaTV. According to Draghi, of course.

When no one is borrowing money, monetary policy is largely useless. We know that now. Neither QE nor zero rates promote growth. The "Grand Experiment" has failed.
What is needed is "good old fashion" fiscal stimulus mainlined into the economy through ambitious infrastructure programs that stimulate activity, boost employment and keep the economy moving forward until private sector balance sheets are repaired and personal spending returns to normal.
The Fed has wasted the last seven years trying to reinvent the wheel when the solution was always right under its nose.
Is the Fed really going to waste another seven implementing the same failed strategy?

Piano has 88 keys, but the music you can play is infinite.
Infinite possibility is real. No matter the odds for or against you, opportunities for change, development, movement - however minute or monumental are abundant. The journey from where you are to where you want to be may at times appear to be littered with insurmountable obstacles while obstacles are and always will remain exactly what they are - a tangible, definable entity - possibilities are infinite, limitless. Anything can happen.

The Shape Of Things To Come

403 Forbidden Content again. To the obstructors of the truth... you will go down for your corruption. Freedom WILL ring worldwide.

Economy. You've known me a while now. I was trained early in life to hone and use a certain kind of "intuition". I can sense things whereas few others actually see anything. A giant new Kroger's was built near me- right next to the giant Meijer's, within driving distance to Costco, Sam's Club, Target and Wal-Mart. There are always cars in those parking lots... poverty seems to be a thriving business for them BUT... a simple scan of license plates suggest the bulk of shoppers are coming from Canada. A retired man in a thrift store yesterday, picked up a pair of men's pants he fancied, called the nearest rack stocker to him and demanded to have a discount on it. They were $6.99. He said he would give her $2. She looked horrified at him for a nano-second then told him that she wasn't the one who did the pricing. He demanded to speak with a manager. The employee told him the manager didn't need to speak to him and then walked away. The man stared out into space, then put the pants in his cart and eventually bought them. Out in the parking lot, he got into his super big gas guzzling pick up truck with the NRA sticker on the bumper and left. If it still had the "W 04" sticker on it, that would have made my day.

It is-- impossible-- for someone who has known real poverty, real need, to recover to a condition where they will spend without thinking and buy crap or cheap based solely on the price. The lesson of this era is simply, that it cranked out millions of people who by-condition of suppression, realized commonsense and reality. The odds are completely against the continuance of greed and big. Wal-Mart fired Murphy Oil and will manage it's own gas pumps like CostCo. Every major business platform is welding itself to the oil and gas racket. Consumers cannot afford to drive now. It's a conundrum... what happens when the unstoppable force collides with the immovable object? We are about to find out.

What happens ahead? There will be pieces. Big cannot sell pieces and parts. Every single person who had to know parts and pieces will be by default- experts in them. I hope you are understanding my point... we are shifting. It won't be the boggling misdirected steered train wreck we have endured this century. Big crumbles, in the rubble are opportunities. I see youth foraging in thrift with i-Phone in-hand scanning for gold flips. Nobody picks ripe fruit guided solely by a book with stock photos of fruit. You have to know it.

Emerging From The Fog Of Ignorance

The real world is so complex that for each one of us there is just a tiny slice of reality where we can have sufficient knowledge. The rest is forever shrouded in a fog of ignorance. What is the truth? It is not an intellectual game. We are risking our own survival.
There seems to be nobody left in the world we can trust. Governments? My Gosh...Politicians? Even worse...The scientists? A little better, but...there is something called reality out there. A civilization cannot survive if large portions of that civilization have declared war on facts. We can declare war to reality, but reality will win in the end......and from the ashes a fire shall be woken and a light from the shadows shall spring.

And it's coming fast

A short quote from a recent article:

"Before this year the lowest level The Baltic Dry Index had reached was 556 in August of 1986 and the highest was in June 2008 at a stunning 11,612. Today saw the freight index hit a new milestone however, crashing through the 300 barrier for the first time ever - at 298, this is almost 50% below the previous record low."

edited 2-5 -16. Above numbers do not account for 30 yrs inflation!

us rail down

Down 7.3% for January when compared to 2015. Canadian not doing well either.

Maersk

"To the extent the conglomerate is a bellwether for global growth and trade, things are looking pretty grim. Maersk Line - the company's golden goose and the world's largest container operator - racked up $182 million in red ink last quarter and the outlook for 2016 isn't pretty either. The company now sees demand for seaborne container transportation rising a meager 1-3% for the year.

“The demand for transportation of goods was significantly lower than expected, especially in the emerging markets as well as the Group’s key Europe trades, where the impact was further accelerated by de-stocking of the high inventory levels,” the company said, in its annual report."

An eye on International Trade.

An eye on International Trade.

Submitted by Old and Gray on Wed, 02/10/2016 - 15:19.

Maersk's investment in international trade was understandable as of a few years ago. The World Trade Organization released figures for the comparison of Merchandise export volumes and GDP growth; export averaged greater growth on a percentage basis than did GDP. This is not a dollar for dollar basis, of course, since GDP is on a much higher level than is the transportation of product or its parts. That can amount to only a fraction of the overall.

Nevertheless, more goods were transported over the past few decades at an astonishing rate as the emerging nations found themselves capable of producing parts to the specs required by modern technology and its consumer goods. But, transportation's growth peaked in the decade of the nineties averaging something comfortably over 6% annual growth. The growth of "offshoring" production and decline of domestic US production is chronicled somewhere in those figures, Even as the figures dipped in the next decade about 2%, it was still not alarming.

Entities such as Maersk and its parent and/or related companies could easily conclude that it might be a temporary dip, but the trend will recover and continue once the root of the interrupted growth was identified and dealt with. At the time, the blame centered on glitches in financing - as if, once we have those details straightened out the trade will pick up again and it's better to prepare for the resumption of growth than to lay back and let someone else leap into the void created by any slackened interest. Too much was at stake to chance that.

Alas, the missteps of the next decade, first the dot-com bust, then the 2003-2006 miscalculation of the low interest rate held too low and loo long, plus the inordinate growth of financial commitments to the bonanza of depending on derivatives' insuring against any and all failures - an obvious impossibility we may have discovered in retrospect (only time will tell if that is a lesson learned) - all mounted a charge against common sense in finance and the house of cards collapsed. Financing for international trade became a matter of tertiary interest - if that high.

Meanwhile Maersk may have committed to more equipment, more facilities in more ports globally, and may have negotiated a few contracts for business still in the hopper.

More than Maersk got caught in the anticipatory mode: Germany was reported to have supported 25% of their 2008 jobs through foreign trade - according to OECD. And, the emerging markets made that valiant effort to recover from the 2007 bombshell as was noted here a few years back emerging from the wreckage ahead of schedule and ready and willing to pick up where they'd left off. Initially they moved out at a 6% pace, while the advanced nations (their markets) were floundering in the low fractions of 1% ± recovery which cut off their blood supply and they also stagnated. The global markets were unable and unwilling to partake of the game at that point.

The WTO has some more recent data which shows the trade/GDP ratio less dramatic with the trade growth itself diminishing at an increased pace the first half of the 2010 - 2019 decade to this point. If you recall we presented short summations on occasions where economists were concerned with the effects of protectionism and the inability or unwillingness of banks to provide the financing for international trade. But, the plain fact is, it has not resuscitated and since most domestic markets are still somewhere between stagnation and tight-fisted withdrawal from the lending scene, international trade will have to take a backseat for yet an indeterminate period longer.

Not only Maersk will have to acknowledge that eventually. That over-investment in anticipation of business growth that turned to a falloff, is one of the fundamentals of cyclical business. A lot that has not been addressed or straightened out to this point will need attention.

That retraction by the banking industry is the burden growing heavier by the year as we discover how solutions have been tossed out blithely only to find them falling dead-weighted with a sickening thud as economists postulate and pray there is something worthwhile in those empty postulations supported with "scientific models" that bear no relations to the realities we face. In plain words: they have no idea where we stand, how vulnerable we are, or how to proceed from here.

I Am Proud To Be...

... free from some voodoo stress and frustration. In the time since and directly relative to your post O&G... the grassroots sub-economy and alternative news may have more hand in the game you describe and it isn't a greased palm. Moving massive merchandise had a tremendous gap in plan- no consideration for ramifications. Today, we all see over-supply strangling big and causing outrageous debt. That said, no nation and collectively all nations combined cannot alleviate the debt obligation costs even at 25 bps. It has to make sense that Janet Yellen is in a corner with the room on fire.

Not our problem.

As we lose retailers now, and if malls are telling, the losses are swelling, over-supply grows more toxic. The pain taken to establish alternatives was hard, but may now become the only source for those goods. They tried to stall the losses today, but in the end, another 100 points fell off the Dow. More to come, LOTS more to come.

Can't believe this came up as a comment!

Our 403 ghost is asleep? ? ?

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I'll have to get busy and cleanup the typos. . .

And an uneducated population

I agree entirely with your post V_L.
We have a problem though. The USA is ranked ~25-36 among a group a of 50 nations in education.
It's pretty embarrassing watching TV shows where college undergrads can't identify the three branches of government. Fewer have any idea what the Federal Reserve is. It's a little scary when you see some of the countries that are ranked higher!
I'm pretty sure we rank #1 in Facebook usage though.

A Too-Popular Society

This only partially bothers me... I will be somewhere and the conversation will venture into economics. I will say what's on my mind and see glassy-eyed stares in return. The most common response-- "oh, I don't watch or read the news... it's always negative." Wouldn't that suggest a GOOD reason to stay current?

We crashed once in April, 2001. Remember that? I worked for a major bank and enjoyed a healthy growing retirement plan including a pension, a 401K account and private investments. Overnight I saw a 50% LOSS in my holdings as stocks fell. That was pretty devastating and I went into work the next day feeling fairly bad for myself. A woman I worked with approached me to say that she had lost 50% as well and wondered what my plan was to get it back. By the end of that day, I learned that the better part of bank personnel company-wide had their 401K accounts on auto-pilot and lost nearly ALL of it! Within the week, people were approaching me asking what to do. Most had no idea what to do or how their own 401K account worked. A woman with nearly 40 years in that banking succession had lost 90% of her 401K balance in that crash. Sure... once there is such a loss, everybody suddenly pays attention and follows direction, all-too-often ANY direction because they have no clue what to do.

Publicly-traded technology companies now approach a trillion in losses since New Year and energy exceeds that now. Gold is up just under 5% but all that means is that holders of specie will bulk-sell for cash flow and send price down again. 151,000 created jobs in January fall into the same bucket as all prior "numbers" there is no evidence of them in the economy. How is it that so many jobs are created but every business and community is still falling? The Federal Reserve now asks that same question. The answer foretells the future of stock. You know it for a fact that we do not have a correction ahead... we have a crash.

About this crash. Inflation is already here. Hyper inflation in certain things will kill them. For instance, our most recent billing for cable-internet-phone in my market increased about 25%. The new "faster" service requires an expensive modem-router upgrade. Many fixed-income subscribers will be opting out. Property taxes are rising in markets where values have not. There is a difference between home sales and renovated home sales. Data does not distinguish between them so an improving area gets a tax increase without reciprocal benefit.Collectively, goods are approaching 30% higher in cash-out cost. That means some things are in smaller packaging or the price on the same-size item is higher. Obama's new oil barrel tax will translate to higher gas prices. We have seen the cycles shift before but never without a core income driver-- manufacturing to offset. There is no proof whatsoever that administrative jobs re-invest in economy and stabilize markets.

We are all good with history here. The homework assignment has to be-- find a time in history when inflation had reared up into a society of mainly long term unemployed and struggling under and self employed, with stocks at a nosebleed high price that cannot be sustained. We have seen 1937 and the current wars did not shift our course. This isn't 1933. Some are saying there is a likeness now to the 1840's. I am unfamiliar with that history.

Mis-Education Is The Weapon Of Mass Destruction

There is a You-Tube surfacing now of a college student at Texas A & M who polls other students on the American Civil War. When was it? Who fought it? Who won? What was it about? The answers were amazingly BAD. Today's younger people are so entrenched in social media, social stack-ranking, society without substance... they look an awful lot like a generation of low-hanging fruit for the corrupt to cultivate into indentured slaves.

For all Obama thinks he is... black students polled in that video looked every bit the modern person but had no clue what the Civil War was fought for. It negates the existence of the Civil Rights Act. We don't need to protect the reason why we will have an inevitable train wreck ahead.

As for other nations... education is far less a priority so it has less societal draw to psychopaths and more- like where you go to start making a difference.

History-- know it well or repeat it and know what Hell is.