Steve Bull's Blog, page 1178
February 27, 2018
Treasury Department reports $1.2 TRILLION loss in 2017
Treasury Department reports $1.2 TRILLION loss in 2017
Earlier this month, the United States government released its annual financial report for the year 2017.
This is something the government does every year, similar to how large companies like Apple, or Warren Buffett’s Berkshire Hathaway, publish their own annual reports.
Unlike Berkshire and Apple, though, whose financial reports typically show strong, positive results, the US government’s financial statements are a complete horror show.
Right at the beginning of the report, the government explains that it’s “net loss” for the year was an unbelievable $1.2 TRILLION.
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Read that number again.
$1.2 trillion. That’s simply staggering.
It’s larger than the size of the entire Australian economy… and constitutes a loss of more than $2.2 million per minute.
This is not a conspiracy theory or irrational fantasy.
This is the Treasury Secretary of the United States of America publicly announcing that the federal government lost $1.2 trillion on page ‘i’ of its annual financial report.
What’s even more alarming is that 2017 was a great year.
There was no war. No recession. No epic financial crisis.
In his introductory letter, in fact, the Treasury Secretary proudly stated that “[t]he country enjoyed a pick-up in [economic] growth in 2017. Unemployment is at its lowest level since February 2001, consumer and business confidence are at two-decade highs, and inflation is low and stable.”
In short, everything was awesome in 2017.
Even the government’s overall revenue was a record high $3.3 trillion for the year.
Yet despite all that good news… despite all those positive developments and record revenue… they STILL managed to lose $1.2 trillion.
…click on the above link to read the rest of the article…
Silicon Valley Joins War On Cash: Tim Cook Seeks “Elimination Of Money”
Apple CEO Tim Cook has one big hope for the future – that he lives to see the end of money.
“…I’m hoping that I’m still going to be alive to see the elimination of money.”
Speaking at a meeting for Apple shareholders in Cupertino, California earlier this month, Cook made it clear that he is firmly on the side of the war-on-cash establishment.
“Because why would you have this stuff! Why go through all the expense of printing this stuff and then some people steal it, and you’ve got to worry about counterfeits and all these things,” he continued.
As Apple’s CEO talked about the downsides of cash, BI reported that he became more animated, revealing his real passion about the topic…
“We can provide a solution for the customer that’s simpler, more convenient, you don’t carry around a wallet with a bunch of cards in it, or a purse with a bunch of cards in it,” Cook said.
“And it’s more secure, if you’ve ever had your credit card ripped off, I’m sure a lot of you have, I have, it’s not a good experience.”
Until now, it has tended to be politicians and central bankers leading the call for a cashless society… for your own good.
The enemies of cash claim that only crooks and cranks need large-denomination bills. They want large transactions to be made electronically so government can follow them. Yet these are some of the same European politicians who blew a gasket when they learned that U.S. counterterrorist officials were monitoring money through the Swift global system. Criminals will find a way, large bills or not.
…click on the above link to read the rest of the article…
Stock Market Leverage Spikes. Sparks Already Flew. Brokerage Regulator “Concerned.” But Hey, Nothing’s Going to Happen.
Resting Happily on Smoldering Powder Keg.
There is nothing like a big shot of leverage to fire up the stock market. And that’s what the market got in 2017, when the S&P 500 surged 26%, and in January 2018, when the index soared another 7.5% through January 26 – until suddenly something happened.
One measure of leverage in the stock market is margin debt – the amount individual and institutional investors borrow from their brokers against their portfolios – which surged $22.9 billion in January to a new record of $665.7 billion, according to FINRA (Financial Industry Regulatory Authority), which regulates member brokerage firms and exchange markets, and which has taken over margin-debt reporting from the NYSE.
For the 12-month period through January, margin debt soared $112.2 billion, among the largest 12-month gains in the history of the data series, behind only the 12-month periods ending in:
December 2013 ($123 billion)
July 2007 ($160 billion)
March 2000 ($133.7 billion)
November 1997 ($132 billion).
But it’s not just the recent surge; it’s the length of the surge. With only a few noticeable down periods, margin debt has soared for nine years in a row and now exceeds the prior peak of July 2007 ($416 billion) by 60%.
By comparison, over the same period, nominal GDP (not adjusted for inflation) has grown 32%, and the Consumer Price Index has grown 20%. In other words, margin debt has ballooned twice as fast from peak to peak as GDP and three times as fast as the Consumer Price Index.
The chart below shows margin debt based on the FINRA data, which includes margin debt from its own member firms and from NYSE Member firms, and is therefore more complete and larger than the NYSE data was. For example, NYSE margin debt in November 2017, the last month available, was $580.9 billion while FINRA’s data for November showed margin debt of $627.4 billion.
…click on the above link to read the rest of the article…
First it was fake farms, now fake bakeries?
First it was fake farms, now fake bakeries?
The practice of creating a brand name to conjure up in shoppers’ minds an idyllic, but entirely fictional, farm is the favoured sleight of hand of many supermarket retailers. It encourages customers to think, for example, of pigs snuffling around leafy fields instead of the far more harrowing steel and concrete reality of a crowded meat factory. While these activities have been roundly condemned and criticised, against one chain, they still persist.
In January this year, a British supermarket withdrew its own-brand, ‘everyday value’, wrapped, sliced loaf. In its place, at a similar price point of around 40p, is a near-identical loaf, marketed under the brand name ‘H W Nevill’. It made me wonder if the supermarket in question is now attempting to use a fake bakery name to convince shoppers to part with their dough? After all, its so-called ‘value’ loaf received no stars in a 2013 Guardian taste test, with the reviewer commenting that “the dough is awful, sour and claggy”, so perhaps it needed an image makeover.
Ex-bakery
On its website, the retailer boasts that, “back in 1872, Henry William Nevill founded his first bakery and started a proud baking tradition. Almost 150 years later, our hero bakers take their craft just as seriously as Henry did. Using only quality ingredients, they work through the night to create delicious bakery favourites for the whole family to enjoy.”
I decided to do a bit of digging around and found that Nevill did indeed begin as an independent company, with bakeries in Herne Hill, Acton and Leytonstone. But that was a long time ago. In the middle of the last century, it was gobbled up by industrial milling and baking giant Allied Bakeries, later to become Associated British Foods (ABF), now an even bigger behemoth that also owns Primark.
…click on the above link to read the rest of the article…
Geopolitical Risk Is On The Rise In Oil Markets
In the long-term, many oil analysts expect the world to become increasingly dependent on oil production from the Middle East, as U.S. shale fades in importance. However, geopolitical turmoil is already causing disruptions in major oil-producing countries in the Middle East, raising questions about the region’s ability to supply the global market in the long run.
The IEA has repeatedly warned that while U.S. shale has led to oversupply in the short run, shale output cannot meet future demand by itself. By the mid-2020s, especially because there are questions about the longevity of U.S. shale, there could be a much greater reliance on the Middle East, just as there was in the past.
However, according to the Oxford Institute for Energy Studies (OIES), the deteriorating geopolitical landscape in the Middle East could leave longstanding scars on the region’s energy sector.
Geopolitical threats are cropping up in various ways in the Middle East and North Africa. Formal institutions have been weakened, and in places like Libya, Yemen and Syria there is an absolute lack of legitimacy in government. Non-state actors have stepped into the void, such as Hezbollah, the Houthis, Libya Dawn, and others, according to OIES. These rivaling power centers make it tricky for oil companies and oilfield services to make investments.
As far as the oil market goes, these geopolitical problems are not obvious just yet. The glut of U.S. shale has inoculated the oil market from instability and unrest for the time being. Also, while there are plenty of sources of conflict and no shortage of potential threats, actual oil production outages have remained minimal. In fact, Iran ramped up production after the removal of international sanctions, while Libya, and Nigeria restored quite a bit of output after serious outages.
…click on the above link to read the rest of the article…
Forget the Yuan: King Dollar is Here to Stay
Many believe deficit spending will kill the US dollar as a reserve currency and the yuan will take over. They are wrong.
Economist Daniel Lacalle asks Can China Really Kill The US Dollar Supremacy?
>Why China Will Fail to Dethrone the US Dollar
First, because it wants the world to widely accept the Yuan while maintaining monetary repression via capital controls. As the British say, they want to “bake the cake and eat it.” What kind of global reserve can be created when capital controls are imposed? None. No economic agent will accept it.
Second, because most economic agents are aware that the huge imbalances of the Chinese economy will likely be disguised with a huge devaluation. The average of estimates assumes between an 18% and a 20% additional devaluation against its main trading currencies in the next five years. The more this inevitable correction is delayed, the less the possibility of reinforcing the credibility of the yuan as a world reserve currency.
Third, the financial balance is against them. The reason why China maintains completely obsolete capital controls is that domestic economic agents, as soon as markets open, do everything possible to get rid of their yuan in the face of the evidence of a huge devaluation. That is why China has lost almost one-third of its reserves in foreign currency in a few years.
The only way in which China and Russia could pose a threat to the US dollar would be to defend sound money and end the disastrous monetary policy that governments are conducting. A commitment to a return to a gold standard and avoid massive money supply increases. However, that does not seem to be the case, rather to spread China’s monetary imbalances to the rest of the world.
…click on the above link to read the rest of the article…
Inflation Coming? How About Deflation?
Economists expect higher inflation based on rising producer prices. But will producer prices feed consumer prices? When?
Do producer prices eventually feed into consumer prices? If so, what’s the lead or lag time?
The Wall Street Journal article Why the Inflation Picture Looks Starkly Different for Businesses and Consumers got me thinking about these questions and I do not believe they came up with the correct answer.
This month consumers said they expected a 2.7% rise in inflation over the next year, a level unchanged since December, according to the University of Michigan’s latest sentiment survey.
Other survey data indicate businesses are feeling inflationary pressures. Take, for instance, the rising percentage of executives in the Institute for Supply Management’s manufacturing survey who say they’re paying higher prices for materials: In January, 46.6% reported higher prices, up from 42% a year earlier.
Households’ inflation expectations tend to lag behind the behavior of inflation itself, which means as consumer prices rise, inflation expectations for this group should rise, too, said Michael Pearce, economist at Capital Economics.
“We’ve seen pickups in producer-price inflation before that haven’t really fed through to higher consumer prices, but there are good reasons to expect that the story this time around could be a bit different,” Mr. Pearce said. This, he said, is because a whole slew of factors are converging to put pressure on business prices and ultimately consumer inflation, a divergence from some past patterns when oil was the main driver.
Lagging the Leader or Noise?
The above chart is easily creatable in Fred. Here is a longer term view.
Cope PPI vs Core CPI
The overall correlation seems easy to spot but it was far stronger prior to 1988. Since then movement seems somewhat random.
I expected the divergences to be oil-related but they do not all seem to be.
…click on the above link to read the rest of the article…
Washington has Engaged in Information Warfare, Including Fake News and Trolling, for Years
The howling in government and the corporate media and among many liberals about an alleged Russian information war, with bots, trolls and fake news being placed in social media to mislead and incite Americans against each other, might lead one think, like Sen John McCain, that we are practically at war with Russia. Yet it’s all actually pretty silly. After all, our own government has been playing this game for decades, both abroad, and also right here inside the “Land of the Free and Home of the Brave” and against us American citizens.
I know. I was a victim of such an attack, though initially, I didn’t realize what was happening.
Back on August 25, 2005, I published a piece in In These Times titled Radioactive Wounds of War about the devastating damage caused by the US military’s use of depleted uranium weapons in its brutal assault leveling Fallujah, the Iraqi city of 300,000 people that was destroyed by US marines in 2004 as retribution for the killing of four US contractors by the Iraqi insurgents who at the time controlled the city, and for their humiliating defeat of a smaller Marine assault on the city earlier in the year.
At the time I was and had been a contributing editor at ITT, a publication for which I had written regularly since it was founded back in 1978, and was listed on its masthead as such.
As I recount in an article published in Counterpunch on November 19, 2005, titled R.I.P In These Times, the left-liberal news magazine had been promptly bombarded with letters criticizing my article after it came out.
…click on the above link to read the rest of the article…
When Empire’s Die
When empires begin to die, their public acts–in sharp contrast to the ponderous, stately sobriety of their behavior while ascendant–tend to be marked by queer and pathetic eruptions of idiocy, bathos, and mania.
Though it can’t be known when our last Imperial Clown will douse the last lights of The Exceptional Empire and drop the keys in the mailbox for the last failed bank–America is showing clear signs of approaching meltdown.
In Rome, one dingy Caesar burlesqued as a gladiator, then went on stage in drag to warble of nymphs and fauns, and made his horse a senator.
At Tsarist Russia’s end, the Imperials ran their bloody circus on the whims of a drunken, deranged sociopath repeatedly arrested for public indecency.
Hitler egomaniacally wasted his mighty wehrmacht against Russian winter, then as his Reich exploded and burnt around him, had his gofer shoot him.
The American Empire, enmeshed and floundering in a smothering net of contradictions, deceptions, and disastrous choices, is now playing out a pathetic absurdist farce before a fascinated and astonished world.
The essence of it is this. Due to prolonged betrayal of working people by the Democratic Party over many decades, the blatantly falsity and obvious deception it peddled so hard and so long to keep them in thrall have at last lost their grip. The result was loss of the Presidential election in 2016.
Stunned and unable to swallow the undeniable reason for it, the desperate party leadership concocted a preposterous, threadbare fantasy narrative to deny responsibility and direct shame, blame and disgrace away from itself.
The obvious best target was Trump, since so many good people detest him for so many good reasons. It would not suffice, though, to attack him as a legitimate opponent because that would mean the electorate, left to itself, had made this awful choice. Unthinkable, even for the half of it Hillary had deplored.
…click on the above link to read the rest of the article…
The Pros And Cons Of Nord Stream 2
There are few issues as divisive in the EU as the planned construction of Nord Stream 2, another direct gas infrastructure connection between Germany and the Russian Federation.
With the climate of relations between Russia and the West just above the point of freezing, the agreement between Gazprom (MCX:GAZP) and its Western counterparts Shell (NYSE:RDS-A), OMV (VIE:OMV), ENGIE (EPA:ENGI), Uniper (ETR:UN01), and Wintershall has caused critics of closer relations with Russia to mobilize.
While supporters of the project insist that it isn’t more than a commercial deal (mostly Western European countries and companies), opponents (Central and Eastern Europe) are convinced that the deal will give Moscow more unwanted influence.
Here, we’ll discuss the arguments of opponents and proponents of the proposed gas infrastructure in order to make a modest recommendation regarding Europe’s common interest.
Currently, over almost 40 percent of the gas consumed in the EU originates from Russia, making Moscow the biggest supplier, followed closely by Norway and Algeria. Even though many policy declarations were made to diversify and several serious crises involved Russia, the export of Siberian gas to Europe increased spectacularly — from 8 percent in 2017 to a record 195 bcm.
The most important reasons behind this growth are the expanding economy of the Eurozone and domestic gas fields that are producing less. Although Europe currently possesses 208 bcm of LNG capacity, of that just 51 bcm was used in 2016. Most of the capacity was idle due to much cheaper pipeline gas, especially from Russia.
Proponents, therefore, argue that Nord Stream 2’s importance will increase over the years as demand for imported gas will do the same. Furthermore, several crises over the years between Russia and Ukraine have severely damaged Europe’s energy security (and Russia’s, opponents argue). According to supporters, Nord Stream 2 will improve Europe’s position, as transit through Ukraine can be avoided and risks decreased.
…click on the above link to read the rest of the article…
