If you're smart, and if you're into military matters then you need to broaden your horizon and start watching the economy of both friends, enemies and frenemies.
Exhibit Number One. via Yahoo.com
In a series of TV interviews from party headquarters, Abe said his top priority was the economy. "Economy first," he told national broadcaster NHK, adding that he would also tackle other major issues, including national security.My read on this? The economy is a worry for the Japanese people. Its a worry for Americans and Europeans. The Chinese are concerned and so are the Russians. With oil hitting new lows on an almost daily basis for the past month, economic factors are not intertwining with economic conditions in ways that we haven't seen since before the 2nd World War. Keep an eye on the Middle East, Africa, Brazil, Venezuela, Argentina etc...
The U.S. government hopes Abe will be able to win passage of a series of bills needed to expand Japan's military role, so that it can play a bigger part in their alliance. A heated debate is expected when parliament takes up the legislation, likely after local elections in April.
But wait you're thinking. I've been predicting that globalization would collapse so I should be happy! Wrong. The best case scenario would have been a planned unwinding of that bastardized economic house of cards. Plunging oil prices points to future chaos. Which leads me to this...
Exhibit Number Two.
.png) |
| The white bars track the us treasury 10 year yield. Notice how we are heading back to the lows of the move from 2012 when the Fed launched QE3 to try to get more inflation in the system. Basically the slowdown in China plus recessions in Japan and Europe are driving the world towards deflation. Scary scenario. |
I've been chatting with my financial guy.
At first he called me crazy for prepping and thought that I was missing out on a tremendous opportunity by not being in the market now.
Over the course of the year it was a furious debate. Last week he hit me that we were in the 5th or 6th inning of a bull market. Toward the end of the week he hit me with the above chart, told me that if my house still had a mortgage that I should ask the broker at what level it makes sense to refinance. These are the exact words that he left me with....
I've been bullish for a while as you know and am now getting pretty beared up. The fulldeflation scenario is playing out, as shown by the collapsing yield on the 10 year treasury.What does this have to do with a defense blog?
First its a warning to my readers. When financial analyst are privately telling relatives and friends that things are about to get shaky then you should pay attention.
But on to the military thing. I've stated that the F-35 is in a death spiral. I've predicted that the Marine Corps isn't being honest about the production of the ACV 1.1.
I believe more than ever I'm right. Additionally I think we're headed toward that nightmare scenario of the US Army going down to 420,000 Soldiers and the USMC hitting 150,000.
Long story short? We're probably looking at the Great Recession part 2 in March or April....just enough time for all the fat cats to get their money into safety, out of the market and to sell real estate to the pigeons at an inflated price....while getting set up to buy it all back at greatly depressed prices. You heard it here first.
On the bright side, the economy still has not recovered much from 2008, so there isn't much to "crash".
ReplyDeleteThe US isn't exactly the best place to view the global economy, frankly, it's a mess. India is doing ok, so are the South American countries and ironically the old Warsaw Pact countries. Europe is also chugging along, small increases. The biggest problem areas are as you mentioned, the US, China (with ripple into Australia) and Japan.
And not all fields "crash" equally. Many predict it is going to be a boom year for Biotech in the UK and Australia.
you are so biased you can't see straight. the US is perfectly fine to view things is you're willing to take off the blinders. first the US is outperforming the EU. second its the EU that's a huge fucking mess. Germany is in recession and its floating the entire union. second, italy, greece and spain are basket cases. france is teetering and the uk is just chugging along. want to know how bad things are? british citizens are flocking to the US in droves! additionally russia is in a hurt locker because of the tumble in oil prices and middle eastern countries are hurting because of it. same applies to s. american oil exporters...as well as those in africa. brazil is hurting because along with oil taking a tumble so has natural gas.
Deleteseriously dude. wake up, read up and stop talking out of your behind. happy talk is not allowed when warning signs are flashing.
this was too harsh a response. i stand by my statement that happy talk and not facing facts will see many people ruined in the near future.
DeleteSouth America is not OK at all. Actually it is a disaster. Venezuela is in full implosion and is about to default. Brazil has had two negative GDP quarters in a row (compared to the US clocking in at a very nice 3.5 percent). Argentina has 40 percent inflation and defaulted, and it is going to contract more than 2 percent next year compared to up 2.5-3 percent for the US. Chile and Colombia are slowing down fast as well. Remember, all these economies are driven by commodity exports to China. As China slows down the commodity market is in meltdown. Oil, copper, iron ore, cotton, soybeans, corn, gold, and coal have all taken it on the chin with no rebound in sight. I would bet big money the US will outperform all South American countries over the next 2 years for GDP growth. Europe is not chugging along. It is in a Depression of epic size and length. Europe and China are what's driving these global deflationary forces.
DeleteI've been getting good ROIs from them. Guess maybe I just know how to pick them.
DeleteBTW, Sol, low interest on Treasury bonds is a GOOD thing. It shows that people believe them to be stable, so they buy them even when the interest is low. If people don't want to buy them, the government has to raise interest until someone bites, so a low interest rate indicates confidence in stability, not a lack thereof. Counterintuitive but true.
There is also a common error in seeing a government default as an economic crash, it is not, both can be, and sometimes are 2 separate issues. A government can shut down, but the economy can still be chugging along nicely, private enterprise does not need government to function, the US government shutdowns are an example of this. Inversely, a country can be mired in poverty but El Supremo can still be living the high life.
You may have your opinion and I have mine. Difference is that I actually have money on the outcome.
low interest on treasury bonds means that they're in such demand that people are buying them despite an extremely low return on investment.
Deletethat means that money is fleeing to safe waters.
that's why this is startling. money is leaving the stock market. money is leaving real estate. money is leaving corporations and is settling in bonds...that will further erode growth as all of the above starts to tighten up to maintain earnings.
Paying off the debt almost mathematically impossible?
ReplyDeletehttp://www.zerohedge.com/news/2014-12-12/paying-down-debt-now-almost-mathematically-impossible
The default scenarios don't look pretty.
Bro don't read zerohedge. It will only cost you money. The US does not have a debt problem. Look at the chart above. Yields are going down not up, and our deficit as a percentage of GDP is gonna be well under 3 percent this year. This is good news that is not being heard. It's the other parts of the world that are imploding.
DeleteI don't read zerohedge for financial advice. I read it because they print news that mainstream media does not.
DeleteI don't agree that the debt is not a problem. Debt is debt. We pay hundreds of billions in interest each year on the debt. Cut the debt and billions go back into the treasury. There is the money for the MPC.
Interest paid on the debt: http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm
Our debt relative to the other major economies of the world is manageable, and our cost to pay for it is decreasing due to decreasing rates. Yes it would be better if it was lower, and as a percent of GDP it is starting to head lower.
DeleteRepeating mistakes from 2008?
ReplyDeletehttp://www.cnbc.com/id/102264391?trknav=homestack:topnews:5
I don't like this 3% down plan. If a person pays 4% in closing costs with a 3% down payment they are in negative equity even before they move in.
yeah i saw that and came to only one conclusion. they're trying to get people spending money. additionally i think that is what the immigration order is all about. they need to jump start the economy with consumer spending so what better way to do it other than to get illegals out of the underground economy, identified and tax the hell out of them.
Deletehouse of cards is falling. an organized and orderly destruction? nope, just pure chaos waiting in the wings.
http://m.ft.com/cms/s/0/3f4dc794-8141-11e4-b956-00144feabdc0.html
ReplyDeleteDid you see this? China joining the fray!
I live in Phoenix and know quite a lot of real estate guys here. They are all telling me to sell in 2015, the market is getting close to some of the highs of 2008, in certain neighborhoods, not all of them. We are going to sell a property in early 2015, need to get out when it's high and get back in later when it comes back down.....
ReplyDeleteThe USD underwrites all oil sales. Oil is the P3 (Power, Propulsion, Plastics) basis of everything else. If falling oil prices induce other natons to start trading in their own 'private currencies' (likely a commercial only variant of their domestic currencies to control for further price fluxuation), all sales will be based strictly on their own exchange rates which they can set as they like
ReplyDeleteThe whole purpose of this is to destroy the USD which is at a debt ratio of something like 77:1. Countries which have a 'Special Relationsship' with the U.S. are also being hurt by this so that their ability to prime a dry pump with masses of cheap consumer goods is destroyed.
Then a 'neutral power', likely the IMF, with a debt monetization ratio of 3 will offer, humbly, to step in and solve to problems of the world, which it caused. And all they will ask for in return is OWG. Emphasis on the Vaseline.
It was always going to come to this. In 1975, the U.S. was the world's largest lending nation with a planet full of constant debt failed states as a neverending risk for continued bailout and further loans. So some bright boy at Greenspan or higher came up with the 'Roman Idea of sending high end industrial manufacturing to the boondocks while teaching Americans how to spend on credit rather than save, that The Spice Must Flow, outwards.
And that is what has happened.
Except. Money is virtual. It's value is what you say it is, both with regards to the goods purchased and the -scales of exchange- by which those goods have to be bought using centrally controlled money rather than barter. People are real and see what this false trade in money as setting the value of goods does to isolate wealth as process ownership from labor as the effectors of society.
If, for whatever class or genetics (1 and Same) reason the MATERIAL value of economic exchange doesn't continue to extend downwards rather than become locked in the wealth classes at the highest level; they will not pay into the system with goods or services. Especially if they are poor and dumb and easily able to fall back to entropic levels of primitivism that they can comfortably live with.
Speaking of entropy. Economies obey thermodynamic laws, just like every other system at the macro level. Namely the three laws: You can never get more Work out of a system than the Energy you put into it. You can never have more E-> WP than you have process steps as inefficiency inbetween. And all systems become entropic as the amount of resources expended exceeds the innate efficiencies of the system, they work less and less well until they don't work at all.
Since 'wealth building' as capitalization is about using a false symbol (virtual, remember?) to get people to do things for which you supply the initial outlay for startup and they agree to pay you a penny per pack, per process step, which THEY DO FOR THEMSELVES (paying you for the privilege of goods they get to buy back while you do nothing), the reality becomes that wealth building equates to inserting more companies, longer distances and and greater /complexities/ into the system. By which wealth can be made by 'employing people!'. As if that was ever a good idea.
DeleteThere are 7 billion people on this planet right now. Without any really effective population control, there will be 14-17 billion by 2100. Mass media as television and internet have given the world's desperate the idea that it is a 'human right' to live the western lifestyle, even though 90%+, living in the hotbands either side of the equator, have IQs in the 70s and 80s which makes it all but impossible for them to sustain a modern society. All of the Middle East being amongst these.
Americans are reproducing at 1.83 TFR, subsustainment, levels. Other groups are at anywhere from 2.8 (American Hispanics) to 6 (MENA and Subsaharan Africa). Which means you are creating a market source which does not conform to social norms necessary to sustain it.
When Rome failed, overrun by Barbarians allowed to cross the Danube by Valens, the result was that the outlier provinces thrived for a bit, trading amongst themselves and the Byzantines. But the overall /volume/ of trading went down as the costs rose. And then came ol Mohammed with his ravening horde of displaced/poor people (using the cascade system of getting yesterday's victims to reinforce your armies for tomorrow's conquest) and the rather than demand that the goods be given to them where they sat, they came to the source. And took everything.
Of course, with modern weapons, that is not an option in the modern world which is why, IMO, 'the joke's on us' when it comes to 'allow your displacers in or you're a racist!' because we are pulling a Valens and setting ourselves up for our own Adrianople.
And because modern society is ultimately so weak and so hard to reconstruct in a meaningful way, the pursuit of universalist egalitarianism as an occulted control psychology, threatening the West with ruination from within if they don't accept NWO/OWG. Think about it: no one takes our check = no oil = no electricity for food storage nor gasoline to deliver food to market. If there are between 35 and 45 illegals and 39-41 million blacks who _will not_ sit still as they begin to starve, the resultant civil war will be fought with WWII levels of forces in play. Threatening to send the U.S. back to the stone age if food riots are not hard checked by the military. 'Liberals' will foment AI challenges to the legitimacy of that and the resulting bitter self hatred between groups and between civilians and military will lead to total collapse. At which point the BRIC and EU states will move in for their chunks of the quivering corpse.
If the UN/IMF/OWG doesn't get their way they will play Modern Mohammed on our behinds.
Sound Fun?
We are so stupid. The precedent as the alternative is right there, staring us in the face. And we ignore it.
i didn't understand most of that. can you try again...this time speaking plainly and without the acronyms...i get UN/IMF but what is OWG?
DeleteOWG - One World Government.
ReplyDelete1. Investing--One doesn't invest in "the economy" but in certain sectors, and that should be in growth sectors like healthcare, a purely domestic, growing enterprise. We all know that the gov't has been exporting the good mfg jobs so as to increase corporate profits, so some sectors are still good investments. Not all.
ReplyDelete2. Real estate--Why take a chance? I have a friend who just lost $150K, it was easy. Just buy high and sell low. Single occupancy RE is all inflated. Young people can't afford it, so they double up in apartments. Why gamble on RE? Don't do it.
3. Be an optimist. The economy in gross terms may decrease, but it will still be huge with plenty of opportunities in the growth sectors. No time to look at individual stocks & bonds? Go with a reliable sector-based mutual fund. choose the sectors, then choose the investing medium, lessen risk as much as possible, and then devote productive time to provide goods or services that people need, and profit from that.
I agree with most of the "Economics" posts that Solomon posts here except those built on the foundation of cheaper (Not cheap in every sence of that word....just cheaper) oil and bringing in deflation.
ReplyDeleteI am of the firm belief that if everything that revolves around us requires energy then cheaper energy iis the way to go. But I am from an economy that usually thrives on cheap or should i say more economically priced energy.
And another observation which i would like to get informed inputs from the people here-
ReplyDeleteEver noticed how most if not all the worlds leading and biggest IPO (Initial public offerings) of shares and other capital raising activitiy always happens in the US capital markets. Yet when it comes to actually building factories and manufacturing facilities from all that American saved/invested money all that money is taken outside the US again and again and again.
Its not only US companies that indulge in raise money here.....build over there but also Foreign Firms.....who also continue with the practice of Borrow here.....build there. Alibaba, Infosys, Euro-Pharma companies, Manchester United etc.
I know that Americans love funding entrepreneurship and business and have a proven track record of that but..... what gives with this system of lending your own money to businesses that are just not interested in providing you the same massive job opportunities? In effect...every day of the year companies are depleting you of your savings and investments. Its not that Americans dont save money. Its just that even when they do save and invest properly....that money never comes back to them in the form of a 350,000 cars per annum factory or a 10million tons/year steel mill. Sure, US investments do give good returns to investors over the long term but they also result in long term industrial and even more importantly "entrepreneurship" haemmorage.
The biggest capital lendings/raisings in the world do not correlate to the biggest asset building at that particular place.
They export it because it spreads them all over the globe, and while goods don't flow into the country, money does. It's something similar to the old Indian method of remittance from their expats.
DeleteUS built factory, US company, US's profits. It all goes round and round.
Other advantages is that
1) you spread the risk around. One part of the planet may experience a sector crash but another might have a boom or at least prop the other part up temporarily.
2) Taxes are less confiscatory outside of the US, so if funds are kept there, you got more to play with.
Today's election clarifies who Japan's enemies are, from both Abe himself and his supporters.
ReplyDeletehttp://www.cnbc.com/id/102265970#.
"We can't go back to a strong yen," Abe said earlier in his speech. "Do you all remember when Japan's excellent products were being outsold by China and Korean made products all over the world?"
This is exactly what some supporters wanted to hear.
"I didn't come here to support the LDP's ideology. I wanted Abe to confirm the government will take a firm stand against China and South Korea," said a 53 year-old man and who declined to give his name.
"Abe is the only one that will stand up to China and Korea – and the media won't report on it," a 67-year old woman who also declined to give her name told CNBC.
The only thing wrong with this picture is the inclusion of South Korea with China. Korea doesnt need to get stood up against....it needs to get partnered with. Some US influence to bring these 2 together would be good.
DeleteOther than that...the ages of 53 and 67 seem to confirm the worst fear we have regarding Japan.
DeleteSarabvir Singh
Delete> The only thing wrong with this picture is the inclusion of South Korea with China.
There is nothing wrong with that.
The no. 1 external threat perceived in Japan is Korea. China is no. 2.
Why? Because Japanese rightwingers blame Korean mega corporations for the downfall of Japan's industrial champions, ie Japan is in a perpetual depression because Korean companies are stilling market shares from Japanese companies, which in turn forces Japanese companies to lay off and cut wages of Japanese workers. Look at Japan's electronics, cosmetics, and entertainment industry, as they are basically industrial wastelands like Detroit circa 2009. Chinese are not blamed for Japan's economic woos because few Chinese companies compete with Japanese companies directly.
In addition, Japan and Korea are potential combatants over territorial disputes, so it is not possible to form a trilateral military alliance that the US AirSea battle planners are dreaming of.
http://www.upi.com/Business_News/Security-Industry/2014/12/15/Japan-asks-US-for-AMRAAM-sales-deal/2941418663964/
DeleteJapan is buying 17 AMRAAM C7s for $25 million. Japan is buying them not for use in combat, but for aiding the development of EW protection against AMRAAM C7s which is the primary weapon of one of Japan's primary opponents, the ROKAF.
"In addition, Japan and Korea are potential combatants over territorial disputes, so it is not possible to form a trilateral military alliance that the US AirSea battle planners are dreaming of."
DeleteYeah, there is to much hate and distrust between Korea and Japan to achieve a functional alliance, WWII memories seem to be still fresh and to be honest I wasnt aware of the hate of korean companies and culture in Japan ( I suppose this hate of culture and companies is also brooding in the Koreans ).
@ Basically the slowdown in China plus recessions in Japan and Europe are driving the world towards deflation.@
ReplyDeleteHa! Deflation…There is a very-well spread theory in Ru-internet about this. The short of long story is: USA organizes manipulated disorders around all the world (specially in key points of energy carriers rout-lines, like Ukraine or the Strait of Malacca) and start deflation of Dollar- the world is unstable and only one thing is “smooth water” Dollar-the Master and American security-papers, collateral to dollar. Debts in dollars rises, and quantity of real material objects, bought for dollars rises too. Then, a little later, the completely the opposite process will be started – hyper-inflation. And USA paid their debts in totally cheap dollars. And everyone who dares to disagree will be named a “dictator-who-eats-babies-and downs-airplanes-like-Putin” with all the ensuing consequences. Bingo!!!
If they do that I'll laugh my way to the bank! I get my pay in a currency that is constantly gaining value to the USD whenever there is a crisis! It's not a money maker by any means, but it's solid relative to the other currencies. It's something like the tortise and the hare with the hare getting punched back every few meters.
DeleteIrony of it is that I work in a US multinational. Just glad I decided to take the pay in SGD instead.
http://www.tradingeconomics.com/singapore/currency
Go to the historical forecast from 1981 and see the decline. This is one of the reasons why I can't buy US bonds, the currency depreciation will kill whatever meager profit I can get especially with the low interest.
@Just glad I decided to take the pay in SGD instead@
DeleteInteresting!
@This is one of the reasons why I can't buy US bonds@
In this crisis time only material objects have value. According to our experience – Vodka is one of the best currency ever. It looks like on the routine life level we will come back to the vodka-currency.
Just don't buy into gold. Gold funds are on a downhill trend these days.
DeleteActually, material funds do make a lot of sense in a time of currency turmoil, you just have to pick the right one.
Yup but the Indian Marraige season is about to go into full swing so dont expect the gold to flat out.
Delete@Just don't buy into gold. Gold funds are on a downhill trend these days.@
DeleteThe gold is going down? Viva the Silver!
But I guess gold has chances to rise – I’ve read and heard that some countries (including Russia) actively buy gold fore their reserves.
Generally speaking, I guess that everyone should invests only in assets, the real value the one can estimate and predict the possible value’s change. If you day-to-day deal with real estate – invest in the real estate market. If you day-to-day deal with currency trends – play in the relevant currency sell-buy games. If you are versed in questions of precious metals – do money in the matter.
If you have no glue in everything above – buy materials (I’ve bought two note-books yesterday myself) and invest in your health.
@the Indian Marraige season is about to go into full swing@
DeleteO! May fault – I didn’t estimate this global factor! Bggggg
Anyone that buys paper gold is a moron. If you're going to buy metals, take physical delivery or don't bother playing the banksters' rigged games.
Delete