Tuesday, January 26, 2016

Money and Economics Links

Is the world of money coming to an end? Sure feels like it. Last year, high yield tanked, and this year, the equity markets are tanking.

Let's talk about fake fixes and fines that never seem to change anything. Anyone know where the billions and billions (supposedly $144 billion) in fines the big banks and lenders have paid have gone? Is it all a charade? As the author notes, even just splitting $50 billion between the 10 million home owners would be $5K, so why has there not been a single article in any news outlet about relief for homeowners hurt by the financial crisis? We all know if there had been any good story the media would have trumpeted it to boost Obama.

Confirming suspicions, all tuition increases since 1987 can trace back to government lending. As a part of the increases, I still stand by my alternative theory that the elite schools foreign students getting a discount due to the drop in the dollar around 2000 caused elite schools to jack up costs since in foreign currency terms, the tuition stayed the same. This created a herd like move.

What's declined? I was asked that at work recently. I usually like to use the "where can you walk today vs 1955 in safety", but I point to the late '90s as an obvious peak in economic power. More proof rolls in as the US is no longer in the top 10 for most prosperous nations. The elite and the Left want to keep stuffing semi-literate 3rd worlders into this declining nation, which makes absolutely no sense.

Is a break up of TBTF banks possible without an explicit break up? Tom Michaud believes so. It is an interesting argument but it is that regulators and the Dodd-Frank rules will force the TBTF banks to break up on their own. This seems hard to believe in our era of regulatory capture. How are regulators going to enforce the laws? As noted above, are the settlements and fines all phony? Where does the money go? They can't even show us that, and that should be a slam dunk PR move.  For all his talk, the TBTF banks still own a 60% share of total banking assets in America. As Michaud states, JPMorganChase is a trillion dollars bigger. Without a cleaning out of derivatives, the TBTF will remain as they are.

I could link to a myriad of "WHAT THE HELL IS UP WITH CHINA" essays and articles. China has gone after 1500 corrupt cronies, changed their one child policy, seen the yuan added to the SDR basket and is experiencing massive outflows of money. The hard landing is coming as many experts say. Truth is, no one dealt with the mess from the American financial crisis of 2008. We can only kick the can so far down the road.


Alexandros HoMegas said...

2016 is gonna be the year of the collapse.

Son of Brock Landers said...

A lot of us have been saying that for years. I'm inclined to believe that this thing holds on for a short while longer, but it's a miracle if it makes it to 2026.

grey enlightenment said...

Is the world of money coming to an end? Sure feels like it. Last year, high yield tanked, and this year, the equity markets are tanking.

Too soon to know if it's just a correction of the start of something much worse. My money is on the former.

Portlander said...

I always ask people what fundamental policy changes have been made since 2008?

Invade, invite, in-hoc still going strong.
Banks still TBTF.
Obamacare? Dont' make me laugh, healthcare is still egregiously expensive compared to anywhere else in the world. That thing was like the ethanol subsidy to farmers, except it was for health insurance co's -- no economic sense, just a hand-out from all citizens to a connected lobby.

Nope, about the only thing that's changed is the juice to keep the bread and circuses going has dropped from 4-5%/yr to 0-1%/yr.

I think the only way to bring it down is a buyer's strike among what's left of the middle-class. All those head-of-households (ie. men) in the 60-90% percentile for income must go on a cash-only, buyer's strike. Liqudate financial assets, pay down debt, and buy only what you need using cash. After seeing what happened to Macy's, it could totally be done, but we need a charismatic champion for the cause. It would work because banks rely on debt for the multiplier effect. Pay down debt and withdrawal cash the multiplier becomes a harsh divider.

Laguna Beach Fogey said...

It's going to last a lot longer than any of us want, or expect.

Anonymous said...


Will China kill Soros?

Glengarry said...

My feels is we've been running on fumes since 2007, maybe even 2001 judging from the interest rates. And, as mentioned above, nothing has really changed. Just burn money waiting for things to revive by themselves, which so far they don't. Zap the corpse again, doc.

By now we're due for another big dip: 1987, 1993(?), 2001, 2008.