COLLAPSE UPDATE – 2013 Year End

Reading time: 9,171 words, 37 pages, 23 to 37 minutes

Sometimes I wonder whether the world is being run by smart people who are putting us on, or by imbeciles who really mean it. – Mark Twain

As is often the case with simple ‘either/or’ questions, the correct answer is BOTH. The world is run by psychopaths smart enough to steal their way to wealth without getting caught yet stupid enough to allow their insatiable greed to kill the goose that lays their golden eggs. An alternative perspective: they’re deliberately destroying global economies in order to pick up the pieces dirt cheap. In this case they’ll be the rulers of a smoking ruin and the correct answer is still BOTH. Regardless, the end result is the same: collapse.

These idiot savants are aided and abetted by numerous handmaidens in various guises. Much digital ink has been wasted by financial pundits discussing what the government can do to fix our collapsing economies. Ron Holland talks about “Restoring our American Legacy …” and on his November 10, 2013 “Thoughts from the Front Lines” the Quisling John Mauldin distracts our attention asking what the incoming Fed Chairman Yellen would do?

Such talk is a complete waste of time. Their paradigm is entirely wrong. They, like most people, are indoctrinated to believe that the greatest earthly powers are governments. Some of the more astute pundits realize that evil banksters are pulling the strings behind the scene, but the banksters are simply another layer of the onion.

Certainly, the banksters own and control our governments. Our governments are like the Wizard of Oz; just a deception and a front designed to make us believe they are in charge and we, as good, democratic and voting citizens are in control our governments. If you believe that, then it’s time to burst another bubble. All we do every couple of years is vote for empty suits hand-picked by the Powers-That-Be (PTB). We get to choose between identical puppets.

Many years ago, one of my political science professors was asked how he votes. He replied that he does NOT vote because it only encourages the bastards. Nothing has changed since then.

It makes no difference who you vote for. All the so-called parties are the same; just a different name and color. The conventional wisdom is that conservatives, favouring smaller government spend less and liberals/socialists, favouring big government and more social programs spend more. However, a study earlier this year covering the U.S., Canada and Quebec over the last 40 years showed no discernible difference and often the opposite was the case. So much for conventional wisdom!

Political parties and governments are controlled by the banksters and the banksters in turn are controlled by a handful of ultra-rich families (the PTB) who you NEVER see because they’re smart enough to keep out of the public eye. Only Hollywood stars are stupid enough to sacrifice their private lives for fifteen seconds of fame.

The banksters and their real owners (the ultra-rich) use the governments’ money (your money) to manipulate the markets to their advantage. They create bubbles that burst while you’re left holding the bag because they bought low and sold high and typically, you bought high and lost when the bubbles burst. Not much has changed there, too.

They wait and buy your foreclosed home for pennies on the dollar so they can rent your old home back to you except now you’re a tenant and they’re the new owners. If it hasn’t happened yet; stay tuned, it will. There are reports emerging about mortgage-free homes being foreclosed for failure to pay or even late payment of property taxes or any number of other innocuous municipal transgressions. Remember, there are hundreds of thousands of laws and by-laws. You’ve probably broken several before you woke up this morning.

They created ‘financial instruments’ (fictitious pieces of paper) out of thin air (think derivatives) and then convert them into real stuff like gold and real estate and corporate stocks (for now) and various other ‘hard’ assets. Don’t forget; they own the central banks which, in turn, own the banksters, which in turn own the governments and politicians who you think you vote for.

They, like Warren Buffet, are masters of the ‘indirect exchange’. They exchange their worthless fiat currencies for real income-producing assets while we dummies scramble to make another devalued dollar of depreciating fiat currency which will soon be as useful as toilet paper. The assets of the ultra-rich elites survive re-denomination and official devaluation. They’ll have customers during both economic booms and busts because the indirect exchange protects wealth, creates opportunity and cash flows during both periods.

Meanwhile, they’re loading up on low-interest, off-balance sheet debt, driving up their stock prices, then buying from those who previously took risk thereby exchanging debt (useless paper) for real assets which produce a sustaining free cash flow for real wealth. Rinse and endlessly repeat.

That’s how the rich get richer and the rest of us get poorer because most people don’t understand how the game is played. Most people have been brainwashed by the public indoctrination education system and Hollywood and the entertainment industry and the sports channels, etc. So, are you still watching that moronic boob tube? What excuse are you using this time?

By the way, there’s no Santa Claus either. Or Easter Bunny. Or Tooth Fairy. Or anything you believe in. It’s all lies. By the way, crime DOES pay. Nobody ever got filthy rich by being completely honest. The sooner you stop believing the nonsense you’ve been taught and open your eyes, the sooner you begin to understand what’s happening and make plans to protect yourself and your loved ones from the predations of the ultra-rich psychopaths. They don’t care about us. To them, we’re just cattle to be manipulated, fleeced and led to the slaughterhouse. If you find that hard to believe then examine the Georgia Guidestones.

Does this sound cynical? I hope so. If it’s comforting fairy tales you want then you’re reading the wrong blog. This is a bunk buster blog geared to cutting through the bullshit you’re fed on a daily basis by government, the ass media, the entertainment industry, the public indoctrination education system and probably your mom and dad. However, your mom and dad can be forgiven because they don’t know any better. They’re just cogs in this vast wheel, too busy trying to make ends meet to look too closely under the covers and afraid of what they might see. So, I will keep lifting the covers for you and report the ugly truth.

I know it’s politically incorrect to take pride in one’s cynicism (as if I ever cared about political correctness). To paraphrase George Bernard Shaw; people with astute powers of observation are called cynics by those who cannot see. He also said, “The worst sin towards our fellow creatures is not to hate them, but to be indifferent to them: that’s the essence of inhumanity.”

I will not be indifferent to the unnecessary suffering caused by the insatiable greed of our psychopathic elites and perpetuated by their ass media, the public indoctrination education system and organized religion that teaches us to turn the other cheek (surrender, don’t fight), “render unto Caesar” (obey the authorities & pay your taxes), and to endure suffering with the empty promise of a better afterlife.

I will not be indifferent. I will not stand by. I will not resign. I will not turn the other cheek. That is for Christians and sheep. I am neither. I am a free man.
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CONTINUING U.S. ECONOMIC COLLAPSE

The continuing collapse of the world’s largest economy; the U.S. economy will have dire consequences for the rest of the globe because a large part of international trade is with the U.S., many major financial institutions are Amerikan and the global reserve currency is the U.S. dollar. All are slowly collapsing so the focus of this post will be the continuing deterioration of Amerikan economy. The Canadian economy was covered in the previous post.

Mike Maloney was one of many who foresaw the collapse. He predicted that “a crisis was imminent: First the threat of deflation (1), followed by a helicopter drop (2), followed by big reflation (3), followed by a real deflation (4), and then followed by hyperinflation (5)”

The first of the three have already happened.

1) Deflation in 2008 saw devaluation of many assets from stocks to commodities to U.S. house prices.

2) Big reflation – Ben Bernanke’s helicopter money drop of bailouts and massive money printing.

3) Reflation of stocks hitting all-time highs, real estate prices stabilizing and consumer debt again approaching 2007 levels.

Next we’ll have 4) real deflation as stock markets crash from their present unsustainable levels – likely in the first half of 2014 followed by 5) hyperinflation that will wipe out whatever is still left standing.

The wealthy understand this. They’re desperately transforming their soon-to-be worthless cash into assets. The New York Times reported that a 1969 triptych by Francis Bacon recently sold at Christie’s for $142.4 million, the highest price ever paid for an artwork at auction and it’s not even a hundred years old.

The next “financial crisis” will make the last Great Depression of the 1930’s look like a walk in the park for a variety of reasons:

1) Central banks are out of ammunition and they’re getting less bang for the buck

2) The U.S. government is grid-locked

3) Obama is a lame-duck President

4) In the 1930’s the dollar was based on gold. Today we have fiat currency based on nothing.

5) Consumers’ credit is maxed out again and 100 million Americans barely survive

6) People today aren’t as self-reliant as they were in the 1930’s. 50 million Americans are on food stamps and millions more rely on disability payments

7) America international prestige is waning; Russia and Iran trump the U.S.

8) The U.S. dollar, the world’s reserve currency is declining. See the chart below.

US dollar long term

9) The U.S. is much less civilized than in the past. See this video below and decide for yourself

Maloney says, “the crash of 2008 was just a speed bump on the way to the main event… the consequences are gonna be horrific… the rest of the decade will bring us the greatest financial calamity in history.”

As I’ve said before, the most dangerous animal is a wounded animal (ask any hunter) and Amerika and its failing empire is a very wounded animal.

Doesn’t the following sound like Amerika? “If the history of humanity were the clinical case history of a single human being, the diagnosis would have to be: chronic paranoid delusions, a pathological propensity to commit murder and acts of extreme violence and cruelty against his perceived “enemies” – his own unconsciousness projected outward. Criminally insane, with a few brief lucid intervals.” A New Earth: Awakening to Your Life’s Purpose – By Eckhart Tolle; ISBN 978-0-452-28996-3

If you aren’t preparing for the inevitable collapse with storable food (see here and here and here) or barter items, then you will suffer horribly and you probably will NOT survive.

Are you prepared?
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SHADOWSTATS REPORTS

Numerous times in previous commentary I’ve mentioned that John Williams’ ShadowStats calculates statistics like inflation, unemployment, GDP, etc. the way the government did until 1980 before they embarked on their propaganda campaign of distorting the numbers through creative accounting techniques like hedonics and sunstitution and other forms of accounting fraud.

For a more detailed analysis, see Pulling Back the Curtain on Phony Government Statistics where John Williams is a guest contributor for Casey Research. Below, he presents the “official” headline GDP where we are supposed to believe the government’s cooked statistics that, “a deep recession began in December 2007, hit bottom in June 2009, and that business activity has been in recovery since.”

Headline  Real GDP130710_CDD_chart_2

However, that’s bullshit! Using uncooked ShadowStats numbers the graph below “shows a pattern of economic plunge and stagnation, as opposed to the official pattern of plunge and recovery.”

Corrected Real GDP130710_CDD_chart_3

That is the “slow-motion” train wreck I’ve been warning about since 2007.

On the other hand, if you want brief ShadowStats headlines illustrating the declining U.S. economy, below are several month’s worth courtesy of Jim Sinclair’s Commentary.

Warning: the next eight pages are very grim reading so you might want to selectively scan them or pour yourself a stiff one first.

– Market Instabilities Suggestive of Nearing, Hyperinflation End Game
– Monthly Retail Sales Gain Was Statistically Insignificant; Recession Signal Intact
– Consumer Liquidity Remains Heavily Impaired

“No. 532: Market Instabilities, May Retail Sales, Consumer Liquidity ” June 13, 2013
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– Fed’s Expanded QE3 Has Monetized 78.4% of the Concurrent Increase in Treasury Debt
– Relationship of Post-2008 Monetary Base Activity to Broad Money Supply
– May Year-to-Year Inflation: 1.4% (CPI-U), 1.2% (CPI-W), 9.0% (ShadowStats)
– Real Retail Sales Still Signal Broad Economic Downturn
– Second-Quarter Housing Starts on Track for Quarterly Plunge

“No. 534: May CPI, Housing Starts, Real Retail Sales, Real Earnings, Systemic Solvency ” June 19, 2013
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– May Household Income Remained Stuck Near Cycle Low˜No Recovery
– Unusually Large GDP Revision So Late in Cycle Could Be Suggestive of Pending Benchmark Impact
– Fed Policies Should Intensify Market Reactions to Economic Surprises

“No. 536: Gold, GDP Revision,” June 26, 2013
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– Central Banks Dumping U.S. Treasuries at Fastest Pace Since 2011 Budget Crisis
– Market Turmoil Reflects Shifting Sentiments and Systemic Distortions
– Underlying Fundamentals for Gold and Silver Remain Extremely Strong
– Gold Remains the Most-Solid Hedge Against Looming Dollar and Inflation Crises

“No. 537: Gold Price and Market Instabilities ” July 1, 2013
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– May Trade Deterioration Will Be A Drag on Second-Quarter 2013 GDP Growth
– Construction Benchmark Suggests Downside Revisions to 2012 GDP

“No. 538: May Trade and Construction Spending ” July 3, 2013
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– Full-Time Employment Plunged by 240,000 in June
– Economic Issues Accounted for 75% of Gain in Part-Time Employment
– Number of Short-Term Discouraged Workers Increased by 197,000
– June Unemployment: 7.6% (U.3), 14.3% (U.6), 23.4% (ShadowStats)
– Payroll Gains Were Warped Heavily by Inconsistent Seasonal Factors

“No. 539: June Employment and Unemployment ” July 5, 2013
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– With Fed Monetization of Treasury Debt at 90.5%,
– Money Supply Growth Patterns Suggest Banking-System Stress
– Using Consistent Seasonals, June Payrolls Rose About 160,000
– Full-Time Employment Plunged by 240,000 in June
– Economic Issues Accounted for 75% of Gain in Part-Time Employment
– Number of Short-Term Discouraged Workers Increased by 247,000
– June Unemployment: 7.6% (U.3), 14.3% (U.6), 23.4% (ShadowStats)

“No. 540: Updated June Employment and Unemployment, Money Supply M3” July 10, 2013
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– Annual June PPI Inflation Hit 15-Month High of 2.5%
– 0.8% Monthly PPI Jump Reflected Reversal in Negative Seasonals for Energy
– Consumer Credit Growth Still Limited to Federal Student Loans

“No. 541: June Producer Price Index, Consumer Credit, Seasonal Adjustments” July 12, 2013
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– June Retail Sales Gain Reflected Little More Than Rising Inflation
“No. 542: June Retail Sales ” 7-15-13
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– Second-Quarter Housing Starts Plunged at Annualized Quarterly Rate of 31.2%, Dimming the Outlook for Second-Quarter GDP
– Economic Growth Otherwise Has Slowed in Second-Quarter 2013
– Immigration Legislation Would Exacerbate Serious Economic and Fiscal Issues Facing the United States

“No. 544: June Housing Starts, Economy, Updated Summary Outlook” July 17, 2013
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– New- and Existing-Home Sales Were Exaggerated by Downside Revisions, Changes Otherwise Were Statistically Insignificant
– Irregular Surge in Commercial Aircraft Orders Dominated Monthly Gain in Durable Goods Orders
– GDP Reporting and Revisions Could Offer Some Downside Surprises

No. 545: June Durable Goods Orders, Home Sales, Pending GDP Revisions July 26, 2013
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– July Jobs Gain and Unemployment Decline Were Not Meaningful
– Payroll Boost of 162,000 was 136,000 Net of Revisions
– July Unemployment: 7.4% (U.3), 14.0% (U.6), 23.3% (ShadowStats)
– Construction Spending Remained Stagnant
– Annual M3 Growth Picked Up Slightly

“No. 547: July Employment and Unemployment, M3, June Construction” August 4, 2013
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– Unusually Large Reduction in June Trade Deficit Likely Reflected Port of New York Disruptions
– Headline Trade Deficit Will Add Upside Pressure to First Revision of Second-Quarter GDP Growth

“No. 548: June Trade Balance” August 6, 2013
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– No Economic Recovery Here
– Industrial Production on Brink of Showing Formal New Recession
– For Second Month, Rising Retail Sales Reflected Rising Prices,
Not Rising Consumer Demand
– Real Average Weekly Earnings Fell for Third Month and Year-to-Year
– July Year-to-Year Inflation: 2.0% (CPI-U), 2.0% (CPI-W), 9.6% (ShadowStats)

“No. 549: July CPI, PPI, Nominal and Real Retail Sales, Industrial Production, RealEarnings” August 16, 2013
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-In Ongoing Stagnation, Durable Goods Orders Are Suggestive of Pending Downturn
– New-Home Sales Are in Renewed Contraction
– Existing-Home Sales Jump But Remain of Questionable Quality

“No. 551: July New Orders for Durable Goods, New- and Existing-Home Sales”
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– GDP Revision Reflected Previously Discussed Trade-Flow Distortions
– Well Removed from Real-World Activity, GDP Numbers Remain Nonsensical; There Never Was a Recovery and There Is None Pending
– With Consumer Liquidity Issues Deepening, Broad U.S. Economic Activity Is in Renewed Contraction
-Fed Pullback on QE3 Remains Unlikely, Amidst Suggestions of Intensifying Banking-System Stress

“No. 552: GDP Revision, Systemic- and Consumer-Liquidity Updates” August 29, 2013
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– July Trade Data Remain in State of Flux
– Reported Gain in July Construction Spending Was Not Statistically Significant
– Brief Update on New Liquidity Numbers
– A Spurious Payroll-Data Blip for August?

No. 553 Sept. 5, 2013
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– August Labor Conditions Showed a Deteriorating Economy
– Instead of Being Matched Happily with Rising Employment, Falling Unemployment Reflected a Shrinking Labor Force with Declining Employment
– Payroll Boost of 169,000 was 95,000 Net of Revisions
– August Unemployment: 7.3% (U.3), 13.7% (U.6), 23.3% (ShadowStats)
– Annual M3 Growth Slowed Markedly in August

“No. 554: August Employment and Unemployment, M3” Sept. 6, 2013
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– Production Activity Remained Consistent with Renewed Economic Downturn
– Neither Banking-System nor Economic Developments Suggest Fed “Tapering,”
But Heavily-Managed Market Expectations Indicate Near-Term Action

“No. 556: August Industrial Production, FOMC Meeting” Sept 16, 2013
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– At An 18-Year Low, 2012 Real Median Household Income Was Below Levels Seen in 1968 through 1974
– 2012 Income Variance Hit Record High, Suggestive of Greater Financial and Economic Crises Ahead
– Systemic Instabilities That Led to 2008 Crisis Still Have to Be Worked Through
– Housing Starts Continued in Renewed Downturn or Stagnation

“No. 558: 2012 Household Income, August Housing Starts” Sept 18, 2013
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– Fed Is Trapped In the End Game for the U.S. Dollar
– Panic of 2008 Still Is Playing Out
– Hyperinflation Forecast Remains in Place

“No. 559: Hyperinflation Update, FOMC” Sept. 19, 2013
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– Durable Goods Orders Activity Stagnated in August
– Despite statistically insignificant Upside Blip, New-Home Sales Continued in Renewed Contraction

“No. 560: August Durable Goods Orders, Home Sales” Sept. 25, 2013
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– Bad Numbers? Just Change the Reporting Methodology!
– Economic “Growth” Created by Statistical Redefinitions, Not by Consumer or Business Demand
– 2013 Benchmark Payroll Employment Revision of Minus 124,000 Changed to Plus 345,000 with Redefinitions by BLS
– GDP Revision Was No More Than Statistical Noise
– Annual GDP Growth Has Slowed to Typical Pre-Recession Levels
– Household Income Remained Stagnant, Near Cycle Lows

“No. 561: Payroll Benchmark Revision, August Household Income, Revised Second-Quarter GDP” Sept. 26, 2013
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– Renewed Battle Over U.S. Sovereign Solvency
– President’s Working Group on Financial Markets Likely in Play
– Government Economic-Reporting Shutdown Excludes Data from Privately-Owned Federal Reserve

“No. 562: Shutdown of the Federal Government” Oct. 1, 2013
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-No More Tap Dancing on a Land Mine, The Administration Pulls Out a Couple of Hammers
– Message to the Global Markets: Long-Range Solvency Issues of the United States Will Not Be Addressed
– Stagnant in September, Monthly M3 Suggests Deepening Systemic-Liquidity Distress; Annual Growth in Monetary Base Rising at Fastest Pace Since 2008 Crisis

“No. 563: Fiscal and Systemic-Liquidity Crises Update ” Oct. 7, 2013
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– Estimated Headline U.3 Unemployment Rates: 7.3% in September, 7.6% in October, versus August Actual of 7.3%
– Estimated Headline Payroll Changes, or Jobs Gains/Losses: 181,000 Gain in September, 430,000 Loss in October, versus August Gain of 169,000
– Consumer Credit and Sentiment Show Deteriorating Consumer Liquidity Circumstances

“No. 564: Government Negotiations, Labor Conditions, Consumer Credit and Sentiment” Oct. 14, 2013
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– Debt-Ceiling Concept Was Gutted in “Deal” to Reopen the Government
– Chances Are Nonexistent for Meaningful Government Action to Address Issues of Longer-Range U.S. Sovereign Solvency
– General Economic Outlook Has Deteriorated
– Watch the Dollar!

“No. 565: Fiscal Crisis—Dollar Debasement” Oct. 17, 2013
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– Weakening Trends Seen in Payrolls and Home Sales
– October Payroll Loss of Roughly 400,000 Remains Likely
– September Unemployment: 7.2% (U.3), 13.6% (U.6), 23.3% (ShadowStats)
– Rising Costs Boosted Construction Spending

“No. 566: September Employment/Unemployment, August Construction Spending,” Oct. 23, 2013
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– Hyperinflation in 2014
– Trade Data Should Have Negligible Impact on Initial Third-Quarter GDP Estimate and on Expectations for Same
– Durable Goods Orders Remained Stagnant (Ex-Commercial Aircraft), Consistent with Renewed Economic Downturn
– BLS Will Count Furloughed Government Employees as Unemployed in Household Survey, but as Employed in Payroll Survey

“No. 567: Hyperinflation Update, Durable Goods, Trade Deficit” Oct. 25, 2013
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– Production Jump Was Due to Irregular Surge in Utilities Usage
– Economy Remains in Stagnation/Renewed Downturn

Oct. 28, 2013
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– Retail Sales Contraction Should Deepen After Inflation Adjustment
– PPI Pulled Lower by Plunging Food Prices
– Real Durable Goods Orders Show No Economic Recovery

Oct. 29, 2013
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– Real Retail Sales Fell 0.3% Month-to-Month in September
– Official Data Indicate Slowing/Stagnating Third-Quarter GDP
– CPI-Based Social Security COLA Would Have Been Same With Chained-CPI
– September Annual Inflation: 1.2% (CPI-U), 1.0% (CPI-W), 8.8%

Oct. 30, 2013
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– Error Margin Around GDP Growth of 2.8% Includes Zero
– GDP Gain Dominated by Involuntary Inventory Build-Up
– Third-Quarter M3 Velocity Was Stable; M2 Velocity Declined
– September Household Income Remained Near Cycle Low

“No. 571: Third-Quarter GDP, Money Supply Velocity, September Household Income ” Nov. 7, 2013
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– Large Shift in August-October Period Seasonal Adjustments Bloated Latest Payroll Reporting
– Loss of Long-Term Unemployed from Headline Labor Force Boosted Alternate Unemployment Rate to New High
– Government-Shutdown Impact on October Unemployment Reporting Masked by Misclassification and Seasonal-Adjustment Fiasco
– October Unemployment: 7.3% (U.3), 13.8% (U.6), 23.5% (ShadowStats)

“No. 572: October Employment and Unemployment ” Nov. 9, 2013
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– Production Activity Suggestive of Pending “New” Recession
– Trade Data Should Dampen Growth in Next GDP Revision
– October M3 Annual Growth at 4.4%
– Reflecting Recent Surge in Treasury Borrowings, Fed Has Monetized 75% of Net Issuance of Publicly-Held Federal Debt, Since January 1st

“No. 573: October Industrial Production and Money Supply, September Trade Balance ” Nov. 15, 2013
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– Watch Out for the Dollar
– October Annual Inflation: 1.0% (CPI-U), 0.8% (CPI-W), 8.5% (ShadowStats)
– Retail Sales Gain Was Statistically Insignificant; Recession Signal Remained Intact
– Official Real Earnings Declined in October
– Existing Home Sales Declined for the Month; Annual Growth Slowed Markedly

“No. 574: October CPI, Retail Sales, Real Retail Sales Nov. 22, 2013
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– October PPI Was Hit by Lower Energy Costs
– Imminent Official Recession Signaled by New
Leading Indicator
– Broad Economy Never Recovered from Prior Downturn

“No. 575: Economic Review, October PPI ”
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– Building Permits Showed No Recovery
– Consumer Confidence Declined Again in November

“No. 576: Residential Construction, Consumer Confidence ” Nov. 26, 2013
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– No Signs of a Growing Economy
– Intensifying Weakness in Revised Third-Quarter Trade and Construction Data Should Soften Third-Quarter GDP Growth
– Construction Spending Falters Despite Statistically-Insignificant October Gain
– New Home Sales Monthly Data Are Nonsense, Extreme Volatility and Revisions Leave Monthly Changes Meaningless

“No. 578: Trade Deficit, Construction Spending, New Home Sales ” Dec. 6, 2013
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– “Booming” GDP Growth Not Reflected in Any Other Major Economic Indicator
– Involuntary Inventory Build-Up Spiked GDP Revision; Final Sales (GDP Less Inventory Change) Growth Revised to 1.9% from 2.0%
– Revised Headline Growth in Third-Quarter GDP Was Reported at 3.6%; GNP Was 3.9%; But GDI (the Theoretical GDP Equivalent) Was 1.4%
– Another Set of GDP Revisions in Two Weeks

“No. 579: First Revision to Third-Quarter 2013 GDP ”

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– Real Household Income Falls Slightly in October, Remaining Near Cycle-Low
– Shutdown Effects on October Labor Data, and Misreporting of Same, Are More than Reversed in Headline November Numbers
– Resulting Seasonal-Factor Distortions Weigh Heavily on Data Significance; Current Headline Labor Numbers Have Little Meaning
– November Unemployment: 7.0% (U.3), 13.2% (U.6), 23.2% (ShadowStats)

“No. 580: November Labor Data and M3, October Household Income ” Dec. 8, 2013
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I warned you it was grim.

Let’s take a break from cold headlines and statistics and look at the numbers from a personal perspective. Here’s a comment from T.K. Wallace, one of the ‘regulars’ on MarketWatch that substantiates ShadowStats’s numbers.

“I go shopping every Saturday with my wife and have kept accurate records of our family spends on the computer (Microsoft Money, Excel, etc.) for over 20 years. In the past 5 years – the “Obama Years” my spends in fuel, food and health insurance have ALL gone up over 50%. And we have NOT changed the way we live except in reducing the amount of driving and increasing deductibles on health insurance to try to contain costs. Food has always been make our own at home, even pizza, so the costs are also simply going up. Of course back in 2009 I could get a gallon of milk at Aldi for $1.99 – try $3.55 today.
“Real numbers are well above 50%.

“Went back and got the numbers ACTUAL that I did in August of 2012 – four years into this train wreck we call the Obama Administration – this is the numbers off of the 2009 numbers at THAT point:

“Gasoline – up 179%; Health – up 68%; Food – up 75% – combined all three categories up 85%.”
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INFLATION WATCH

And, it’s not just governments that are playing with the numbers to disguises the real inflation rate. It is also masked by manufacturers and retailers in a variety of ways. To avoid increasing prices they make package sizes smaller. To avoid increasing prices, McDonald’s removes a slice of cheese from their quarter pounder. And so on …
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WELFARE PAYS BETTER THAN WORKING

Fishingbuddy reports,

“These 11 States now have More People on Welfare than they do Employed!”

11 States welfare

“… The Senate Budget Committee reports that in fiscal year 2011, between food stamps, housing support, child care, Medicaid and other benefits, the average U.S. household below the poverty line received $168.00 a day in government support. What’s the problem with that much support? Well, the median household income in America is just over $50,000, which averages out to $137.13 a day.

“To put it another way, being on welfare now pays the equivalent of $30.00 an hour for a 40-hour week, while the average job pays $25.00 an hour.”

This welfare recipient on the YouTube video below says “working is stupid” because she gets subsidized housing, food stamps, a welfare check, and numerous other handouts.

You don’t need to be a math whiz to see this encourages dependence on the government and discourages self-reliance, freedom and independence. For another perspective, read this Martin Armstrong article below.

Socialism Brought Home

“An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.

“The professor then said, ‘OK, we will have an experiment in this class on Obama’s plan’. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A…. (substituting grades for dollars – something closer to home and more readily understood by all).

“After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

“The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F.

“As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

“To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed. Could not be any simpler than that.”

“Here are possibly the 5 key points about such an experiment:

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it!

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.”

By the way – according to the U.S. Census Bureau, an unprecedented 49.2% of Americans are receiving benefits from at least one government program.
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The New Normal America: A Country Where Eating And Drinking Is The New
Manufacturing

The above headline is from Zero Hedge and the chart below graphically captures Amerika’s ‘new normal’.

bar vs GDP

The descending red line is manufacturing jobs, the ascending blue line is ‘Food Services & Dining” jobs.

Well-paying manufacturing jobs are disappearing to be replaced by low-paying ‘hospitality’ service jobs such as bar and restaurant employees.

Zero Hedge says, “in the past year the US has added 366,700 “food service and drinking places” employees and a whopping… 41,000 manufacturing workers.

“And that, in a nutshell is the new America: a nation … in which almost nobody actually produces anything.”

In the following video Dan Alpert, of Westwood Capital, says “What you’re seeing is now the spreading of low wage growth,” noting that those trends continue in subsequent jobs report. “Really we have become a nation of hamburger flippers, Wal-Mart sales associates, barmaids, checkout people and other people working at very low wages.”

http://finance.yahoo.com/blogs/daily-ticker/become-nation-hamburger-flippers-dan-alpert-breaks-down-145831220.html?l=1

The chart below shows that U.S. manufacturing jobs have shrunk to 1941 levels. Furthermore, CNN reports that 60% of the jobs lost during the last recession were middle-wage jobs, but only 22% of them were recovered.

US mfg 1941

And, it’s NOT just manufacturing jobs that are disappearing. All the ass media propaganda about an Amerikan recovery is absolute bullshit because they parrot the government’s phony unemployment numbers arrived at using phony accounting gimmicks mentioned above.

Here’s another eye-opener although I have NOT been able to verify this: the U.S. government counts jobs, not people. Many people “moonlight” i.e. have more than one job in order to make ends meet.

Whenever I travel on business, I like to chat up the cabbies. More than one told me he has two moonlight jobs and his wife also has one, so between two people, they have five jobs. The government counts that as five jobs not two working people. Some recovery!

Although the government fudges the UNemployment numbers, they haven’t gotten around to fudging the EMPLOYment numbers yet. To see the REAL jobs situation, look at the graph below for the employment population ratio – that’s the number of people employed divided by the number of people who are of working age and gives a better evaluation of the jobs picture.

Its chief criticism is it doesn’t account for students not working i.e. voluntarily NOT in the labor force. However, that’s actually a plus because when the economy is ailing, many choose to continue or go back to school which in itself speaks volumes about economic conditions.

In any case, the ratio has barely budged since the so-called recovery began four years ago. In Amerika, the ‘Great Recession’ continues in spite of the propaganda to the contrary.

employ pop ratio

Another look at the real Amerikan jobs situation is the labor force participation rate. Using the Federal Reserve’s own numbers in November 2000, 64.3% of working age Americans had jobs, 60.6% when Barack Obama first entered the White House and today the number is only 58.6%.

partic rate

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SHADOW ECONOMY HURTS TAX REVENUE

On the other hand, unemployment may not be quite as bad as it seems although there are other consequences. The Daily Ticker reports in “$2 Trillion Shadow Economy Not Counted in Jobs Numbers”

“…One persistent and disquieting theme of the so-called recovery is the staggering number of people who have dropped out of the labor force. The labor force participation rate … has been hovering around a 30-year low for more than a year.

“But one $2 trillion part of the equation that’s missing is the growing shadow economy: A grey market made up of people who aren’t on the official payrolls but are finding ways to get by nonetheless.”

This is not an illegal economy. It is people doing legitimate but unreported and un-taxed work; usually for cash. This under-the-table economy is draining tax revenues thereby accelerating government deficits. It partially explains why retail sales are higher than they should be given the official unemployment rate. According to USA Today the IRS loses about $500 billion in tax revenue a year because of unreported income.

Although there may be more jobs than the statistics indicate, they are lower paying than in the past with 40% of workers making less than $20,000 a year. Median household income has fallen for five years in a row.

Here’s another perspective. The DHS and Amerikan police have acquired armored personnel carriers and billions of rounds of ammo to deal with a revolution that may not happen. Instead, a covert and invisible revolution has already begun with the shadow economy.
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AND NOW U.S. GDP STATISTICAL MANIPULATION

Just when you think you’ve heard everything, last July 31, the Amerikan government brought accounting gimmickry to new heights of Kafkaesque absurdity in re-calculating GDP. The U.S. Bureau of Economic Analysis will rewrite history by adding about 3% to the gross domestic product, all the way back to 1929.

Now Research & Development, previously treated as an expense will be added to productivity whether anything is eventually produced or not.

GDP will also be credited with the non-existent interest earned by non-existent (unfunded) pension funds. In other words, the fictitious interest on 100% of Detroit’s bankrupt pensions will be added to GDP although pensioners will be lucky to get 16% of what they were promised.

I wonder how much they credited the latest Hollywood bombs for increasing the GDP based on estimated future TV broadcast income? First they manipulate the Consumer Price Index (inflation), then unemployment numbers and now GDP itself is fudged.

GDP change

It was once said that if you repeat a lie often enough; people will believe it. One of my mantras states, “You cannot pretend your way out of trouble” and it seems more people are beginning to understand that.

Pretending and propaganda might prevent civil unrest for now, but it doesn’t create jobs or fix a broken economy. The U.S. debt to GDP ratio was under 70% when Barack Obama was first elected, but today it’s over 100%. Some recovery!

And, don’t forget that Reinhart and Rogoff demonstrated that no country ever recovered when its debt to GDP ratio exceeded 90%. The U.S. is long past the point-of-no-return.
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THE GREAT UNWIND

It’s time to lighten up a bit. If you haven’t seen it yet, here’s an amusing YouTube video featuring the tongue-in-cheek Merle Hazard; a play on Country singer Merle Haggard and Moral Hazard (loose monetary policy encourages risky behavior). Central banks bloated their balance sheets with Quantitative Easing (QE) but talk about tapering causes panic in the markets, leading Jim Sinclair to declare “QE to infinity”.

Note the back-up singers wearing “Harvard” ties.
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AMERICAN EXCEPTIONALISM

Let’s bust some more bunk. Another great lie that will have unintended consequences is Amerikan ‘exceptionalism’; that Amerika is “the greatest country on earth”; that Amerika is the biblical, shining “City upon a Hill”, and exempt from historical forces that affect other countries.

However, the bigger the lie; the greater the consequences. Someday, Amerikans will wake to the fact that the United States has not broken from European history; it still retains class inequities, fosters imperialism and unleashes unnecessary wars. In fact, most nations adhere to some form of exceptionalism (think “God’s Chosen People”) . The U.S. has become the most war-like nation in history and is rapidly turning into a police state.

You may already have seen the most honest three and a half minutes of television but it’s still worth watching again …

Not to put too fine a point on it, but Amerika’s federal prison population has increased 27% in the last 10 years. That’s just one reason I now spell Amerika with a “k”.

More to the point, the propaganda of Amerikan exceptionalism can produce an unbelievable level of jingoistic patriotism, entitlement and outright stupidity. Here, with all the spelling and grammatical errors is one reader’s comment from another blog:

“Who cares that i’m fat, I can still get famous and have all the hot chicks I want. most other countries is just jelous that americans has superior education and health benefits then themselves. Plus I get a free check from the govenment and dont even have to work if i want to. Thats the kind of thing that makes us the great country that we are”

Ok, son, I believe you, but thousands wouldn’t. But, hey Fatso; whatcha gonna do when the government checks stop?
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AMERIDUMB & DUMBER

It doesn’t help that Amerika has been dumbed-down for decades and it’s not just the kids. According to Washington Post’s headlines, “US adults score below international average on global workplace skills test”.

The study, conducted by the OECD found that, “In math, reading and problem-solving using technology — all skills considered critical for global competitiveness and economic strength — American adults scored below the international average on a global test…”

China and India were not part of the test but, “Japan, Finland, Canada, Netherlands, Australia, Sweden, Norway, Flanders-Belgium, Czech Republic, Slovak Republic, and Korea all scored significantly higher than the United States in all three areas on the test.”

“The United States will have a tough time catching up because money at the state and local level, a major source of education funding, has been slashed in recent years…”

As I said, Amerika is beyond the point-of-no-return.
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IS CHINA SLOW-DOWN A PROBLEM?

Many pundits are alarmed at the slow-down in China’s economy because they say it spells trouble for other economies.

Let’s put this into perspective: if global economies are so screwed that we need a Communist country like China to save us then we are well and truly screwed and it doesn’t matter a bit what China’s economy does. That sums it up for the future of global economies!
Any questions?

Here’s another perspective. In the 1980’s when Japan was a global economic juggernaut, we said that we should learn to speak Japanese so that we’d be able to communicate with our future bosses. In 1990, Japan’s economy flat-lined and they’ve been in a depression ever since.

History may not always repeat, but it does rhyme. The Financial Times recently reported that, “[British] Schools should stop teaching children so much French and German and focus instead on Mandarin, David Cameron said on his return from a three-day trip to China.”

Could this be another Skyscraper Index where the construction of record-breaking skyscrapers was a harbinger of economic downturns?

By the way, China has begun building Sky City, destined to become the world’s largest sky scraper.

Coincidence?
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JIM SINCLAIR’S GOTS LIST

For those of you with considerable assets who missed Jim Sinclair’s GOTS (Get Out of The System) here is his checklist

1. Your equities are held in certificate form.

2. You have no Federal income tax favored retirement funds.

3. You have no CDs and investments in bonds.

4. You have modest money deposited among selected BRICs countries.

5. You store your own precious metals.

6. You have no mortgage obligations.

7. You keep cash on hand for 6 months expenses.

8. You have no consumer debt at all.

9. You have a small hobby farm for protein and veggies outside of where you are living with no mortgage debt, set up green.

10. You have a gas, diesel or electric car with high fuel mileage for the farm.

11. You have a generator with large fuel capacity for the farm.

“Note the reference to all retirement accounts. Those accounts are going to be targeted and your hard earned assets will be replaced with a special issue of sovereign paper that will have no real value whatsoever. Whilst the penalty and taxes may seem onerous they will seem insignificant after the nationalization occurs. Quite simply there is no time left and I advise that you must act now to secure what you have.”
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OBAMACARE FIASCO

Much has already been said and written about the highly-charged Affordable Care Act so I won’t add much more fuel to the fire except to point out its economic ramifications:

1) Employers now have even more incentive to turn full-time jobs into part-time (less than 30 hours a week) to avoid increased payments.

2) The drastic increase in individual premiums removes even more disposable income from an ailing economy that is 70% consumer-based. Ouch!

And, if that’s not insulting enough, consider the winner of the “Healthy Young America video contest” telling us to “Forget about the Price Tag.”


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U.S. CONSUMERS ARE TAPPED OUT

Gordon Long of Market Research and Analytics forecasts a “Looming US Retail Implosion”. He says, “The US Consumer as the engine of global growth has powering global credit creation and expansion as a result of the corresponding growth in US deficits. Now at 70% of the US economy, as compared to 50-55% for other developed economies and less than 35% for emerging economies, the question is no longer a matter of is it sustainable, but rather what will be the fallout now the inevitable has finally arrived?”

The “inevitable” he refers to is seen in the chart below showing Wal-Mart earnings per share and the Global economy, both of which are falling.

WAL-MART VS GLOBAL

The red line is Wal-mart, the blue line is global GDP. Some recovery!

He says, “It is clear the US consumer is tapped out a result of the US middle class being ‘gutted’ with job lose, low salaries, exploding healthcare & educations costs and pensions now an endangered species.”

You’ve no doubt heard “the rich get richer and the poor get poorer.” Below is an interesting graph that amply demonstrates how the U.S. Fed’s QE helps the rich get richer.

QE high end

QE has done very little for middle class consumers who shop at low-end and mid-level retailers like Macy’s, Kohl’s and J.C. Penney (blue line) but obviously benefited the rich who shop at high-end retailers like Tiffany, Coach and LVMH (brown line).
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The Decline And Fall Of The Dollar & The USA


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NO SOLUTION

I get tired of pundits endlessly debating what can be done to solve Amerika’s insolvency and economic problems i.e. either cut spending or raise taxes or some combination of both.
Even if they raised taxes to 100% on everybody rich and poor and everybody and cut spending to zero it would make no difference. As I’ve been saying for years now, most of the globe and particularly the U.S. is beyond the point of no return.
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U.S. CAPITAL CONTROLS

They slipped another one under the ass media’s radar; capital controls i.e. limitation or prohibition of transferring your money in and out of the country. It’s speaks volumes that the “Voice of Russia” reported it in “JP Morgan Chase to limit cash withdrawals, prohibit all outgoing international bank wires, bank officials say”

“In an apparent effort to front-run official government capital controls, JP Morgan Chase has issued letters to all its business account holders notifying them that as of November, 17 the bank will limit all cash transactions (including deposits, withdrawals, and ATM usage) to $50,000 per month, and will prohibit all outgoing international bank wires.

“Chase Bank has moved to limit cash withdrawals while banning business customers from sending international wire transfers causing speculation that the bank is preparing for a looming financial crisis in the United States by imposing capital controls.Bank officials confirmed Wednesday that the new capital limits apply to all business account holders, the bank will stop processing any outgoing international bank wire, and that any monthly cash transactions in excess of the new $50,000 limit will be subject to penalties and fees.”

Here’s an angry and passionate Gerald Celente’s discussing capital controls and other issues.


23:31
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AMERIKAN STUDENT DEBT ALERT

According to Elliott Wave International U.S. student loans, the second largest source of household debt after mortgages, now exceeds $1 trillion and that $8 billion is already in default.

It is almost impossible for bankruptcy to relieve student debt so this albatross will hang around students for the foreseeable future. This reduces their discretionary spending which exacerbates an already ailing economy. It also significantly delays household formation (living in Mom’s basement) and the recovery of the housing market.

household formation

That spike in 2004-07 was caused by the housing bubble but the long-term trend has been downwards for a long time.
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In a move reminiscent of the subprime mortgage crisis JPMorgan Chse notified colleges that they’ll stop making student loans. “’We just don’t see this as a market that we can significantly grow,’ [says a Chase executive].

“The move is eerily reminiscent of the subprime shutdown that happened in 2007. Each time a bank shuttered its subprime unit, the news was presented in much the same way that JPMorgan is spinning the end of its student lending.

“It’s no longer sustainable and not the right place to allocate capital in the future,” HSBC Holdings Group Chief Executive … said in a statement the day HSBC shut down its subprime unit in 2007.”
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NO END OF BULLSHIT

Below is a MarketWatch report parroting the U.S. Fed’s propaganda.

Plenty of positive economic details in Fed’s Beige Book

“WASHINGTON (MarketWatch)– The Federal Reserve on Wednesday said the economy continued to expand at the same “modest to moderate pace” it has seen over most of the past year. But the details of the latest so-called Beige Book report show plenty of positive news with relatively little negative trends mentioned. According to the report, manufacturing continued to expand and plant managers were optimistic about the near term. Retailers gave positive reports on activity and said they were “hopeful, but cautious” about the holiday shopping season. New car sales were reported as moderate to strong and farm conditions were seen as “generally favorable.” Tourism was up and real estate activity also improved. The business service sector was also experiencing stable growth. Several districts reported an easing of lending standards. The latest Beige Book covers information collected by Nov. 22.”

Never mind the fact that this year’s Black Friday sales were lower than last years, take a look at the chart below from Zero Hedge.

“It seems some among the mainstream media believe “the economy is improving.” In the interests of clearing up that little misunderstanding, we hope the following chart will clarify which “economy” is improving…”

SP VS GDP

Chart: Bloomberg

The green line above is the S & P stock market that is artificially pumped up by the Fed’s QE whereas the red line is the U.S. economy. Which of these do you think is the “real” economy? GDP or the stock market?

Below is a long term view that is even more frightening in its implications.

pc change income

As Charles Hugh Smith states, “Income for the bottom 90% has been stagnant for forty years, and has declined 7% in real terms since 2000.
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THE TRUTH ABOUT CENTRAL BANKING AND BUSINESS CYCLES

Here’s an excellent video that explains banks, money and central banks if you have time to watch it. It’s a short 6:04 and well worth watching.

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EDWARD SNOWDEN & SPYGATE

Really, I mean who cares? Of course the U.S. is spying. Everybody’s spying. Always have. Always will. What else is new? Smells like a distraction to me.

Just be careful what you print and say. Big Brother is watching and listening. Enough said.
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TAPER FEARS

The blogosphere is awash in ‘taper talk’. This refers to the reduction – not the elimination, but simply reducing the amount of Quantitative Easing (QE) – the endless printing of money backed by nothing i.e. government counterfeiting. As Jim Sinclair and others have mentioned, there is NO end to QE. It will be QE4ever.

By the way, the general consensus is the U.S. Fed is buying $85 billion a month. Don’t believe it. It’s probably many orders of magnitude beyond that. Remember, there are over one quadrillion dollars of toxic derivatives outstanding of which about half is infecting Amerikan financial institutions. At the rate of only $85 billion a month, it would take over 500 years for the Fed to cover that. Not gonna happen.

Below are several headlines for only one day that demonstrate that the markets have become so addicted to QE that good news is bad news and bad news is good news and stocks will go up as long as we have QE – like a druggie justifying his addiction.

Stock futures in red as strong jobs report sparks early-taper fears

11/08/2013 08:41:58 AM
By Victor Reklaitis

NEW YORK (MarketWatch) — U.S. stock futures turned mostly negative on Friday after a stronger-than-expected jobs report spurred bets the Federal Reserve could begin tapering its bond-buying program sooner than expected.

Stocks fight December taper fears, open higher

11/08/2013 09:37:44 AM
By Victor Reklaitis

NEW YORK (MarketWatch) — U.S. stocks edged up at the open on Friday, as investors digested a stronger-than-expected jobs report that initially hammered stock futures… The jobs report at first spurred bets that the Federal Reserve could begin tapering its bond-buying program sooner than expected, but then investors reconsidered that reaction.

Treasuries slide after strong US jobs data – Financial Times, November 8, 2013.

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PENSION POVERTY

Much has been said and written about disappearing Amerikan public pensions. Detroit government employees are faced with an 84% haircut and left with only 16% of the pension payments they had been promised. Newsweek reports that. “According to Government Accountability Office research, public employees across America may be cheated out of almost a trillion dollars, nearly half the benefits they have already earned, but not yet collected.

“Private-sector workers are at risk of losing almost as much, about $840 billion, although at the moment Congress guarantees a portion of company pensions so actual losses could be much smaller.” Notice the “at the moment” because the Federal government is as dead broke as municipal and state governments.

I’m not going to join Newsweek’s ‘blame game’ when they say “Congress and state legislatures have known about the failure to properly fund pensions since at least the 1964 collapse of Studebaker.” The trouble with pointing your finger is you have three fingers pointing back toward yourself. It’s sad that it’s always everybody else’s fault. The fact is we’re all in this together. Greedy unions demanded more then they deserved, spineless government managers caved in, the rest of us adopted entitlement mentalities and greedy CEO’s gave themselves golden parachutes before trashing their employees. As Pogo said, “We have met the enemy and he is us.”

To see how out of touch Newsweek is, consider this statement: “In New Orleans, bankrupt Stockton, Calif., and 3,000 other local government districts, [pension] shortfalls have been met by taking on more debt. Instead of investing money and earning interest …” Whoa, full stop! Earning interest? What interest? Earning 0.1% interest and losing 7% to 9% of purchasing power to the real inflation rate is NOT earning interest. It’s losing money.

Interest rates are at an unprecedented rate of near zero and have been for an unprecedented length of time and on and on with an unprecedented number of unprecedents … because we are in a DEPRESSION and we will be for an unprecedented length of time while an unprecedented number of people stick their heads in the sand in an unprecedented amount of wilful ignorance desperately believing the unprecedented amount of bullshit spewed by craven politicians pretending the U.S. is in recovery.

But, that’s enough ranting. There is much more to cover but this has already gone on far too long for one article.

But, before we end, let’s tear Paul Krugman a new one. He rhetorically asks,what if the world we’ve been living in for the past five years is the new normal? What if depression-like conditions are on track to persist, not for another year or two, but for decades?” According to the Daily Bell, “Unable to defend the status quo anymore, Krugman defends himself by asserting that the tidal wave of ruin now sweeping down on the West is impossible to halt or even slow down… By characterizing it as a kind of unstoppable natural disaster, Krugman avoids the blame for his part in the making of these massive problems.”

Good-by, Paul, and thanks for all the fish.

More later.

Stay tuned, and remember the mantra.

We cannot borrow our way out of debt.

We cannot spend our way to prosperity.

We cannot pretend our way out of trouble.

Gerold
December 9, 2013

Your comments are WELCOME!
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About gerold

I have a bit of financial experience having invested in stocks in the 1960s & 70s, commodities in the 80s & commercial real estate in the 90s (I sold in 2005.) I am appalled at our rapidly deteriorating global condition so I've written articles for family, friends & colleagues since 2007; warning them and doing my best to explain what's happening, what we can expect in the future and what you can do to prepare and mitigate the worst of the economic, social, political and nuclear fallout. As a public service in 2010 I decided to create a blog accessible to a larger number of people because I believe that knowledge not shared is wasted.
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7 Responses to COLLAPSE UPDATE – 2013 Year End

  1. Steve says:

    Please Gerold, send me all your worthless “toilet paper.” Even if you’ve shit on it. (You won’t.) People worldwide will work, beg, steal, borrow, lie, cheat and even kill for US dollars. I wish my IOU’s were that valuable.

  2. Ken says:

    Hi, Gerold

    I had to send you this article on the front page of msn this morning. I just can’t understand how Canadians can continue to afford these insane costs on top of that increase Hydro in B.C is going up another 10% on April 01 2014.

    This has to be all debt based, even with a good income I cannot afford these housing costs, After last weeks bad news on the Canadian economy and US Jobs Numbers I cannot comprehend how this circus show continues

    The average price of a Canadian home increased 10 per cent to $389,119 in December, compared to the same month in 2012.

    http://money.ca.msn.com/banking/homebuyersguide/average-canadian-house-price-up-10percent-to-dollar389119-2

  3. GBV says:

    Hi Gerold.

    Sorry for my absence in your comment sections as of late – ongoing acquisition of hard goods, homestead hunting (next to impossible to find anything while the Canadian housing bubble persists), protests in Ukraine and Bangkok, Mexican drug cartel brutality & killings, and LDS (Latter Day Saints, i.e. Mormon) food canning sessions (don’t laugh – it was actually a pretty interesting learning experience and got to meet some prepping-minded individuals) have been keeping me preoccupied as of late. That, and chasing some tinfoil hat theories down their rabbit holes (i.e. comet ISON and the Electric Universe theory) as well as a semi-triumphant return to the painful world of physical fitness (dropping 10 lbs for any potential New Year apocalypses – apocalaii? – seemed in order).

    That being said, I have caught most of your recent articles – your last two in particular – and wanted to say I appreciate the depth/breadth of the updates you are providing. I have to chuckle every time you mention an author and their works that I just read in the last few weeks, as it lets me know someone else is slumming in my intellectual ghettos and putting together all the pieces (as impossible a task as that is) 🙂

    I appreciated the Mike Maloney reference as I caught his Secrets of Money episode in which he talks about 5 phases of collapse. I think he’s spot on that we’re right at the precipice of deflation. Hyperinflation is the end game, as you’ve both pointed out, but my only challenge to that view is that his stage four deflation could last a lot longer than you may think (The Automatic Earth likes to point out the fact that most bubbles correct/crash over the same period in which it took for them to inflate before returning to “normal” values; considering we’ve been living in a debt saturated society since the 80’s, the correction of the debt market bubble may take upwards of 20 – 25 years to correct… Quite the deflationary Dark Age, assuming it is not interrupted by war with Russia and/or China… which seems unavoidable in the long run, though to what degree is still too vague to tell).

    If that turns out to be the case, all those elites you mentioned who are stocking up for the collapse and hyperinflationary future might find themselves realizing they were a bit premature in the acquiring of overvalued assets (though unlike we the little people, those elites can afford to be a bit premature/wrong given the amount of wealth they hold in comparison to us)…

    My other other point of contention would be on QE4ever. Jim Sinclair may be right that the Fed will never taper, but whether they do or do not is irrelevant as the system actually requires QE to expand if it is to prevent any sort of economic seizure (like a drug addict who continually requires a bigger and bigger dose to maintain their high). Even with Yellen at the helm, it seems that increased QE and/or stimulus spending is unpalatable at this point, which means the US and Canada might have finally arrived to the doorstep of austerity at which the EU found itself a few short years ago. Or at the very least, that a S&P 500 / DOW and possibly Canadian dollar correction are in order.

    In a way, I feel like we’re at that point at the top of a roller coaster, right before it starts to slowly accelerate downwards. Its an exciting but worrisome moment where you know things are about to pick up speed and there’s nothing you can do to stop it – so best to just kick back and enjoy the ride?

    Something you may wish to look into if you haven’t already – Total Credit Market Debt and the Velocity of Money. Both are painting some very deflationary pictures of our future.

    And if you’re looking for something entertaining to pass the time, I suggest checking out YouTube for Watchmen: The Motion Comics. I don’t usually recommend wasting time on self-indulgent entertainment, but I find the story played out of in Watchmen is even more moving now than when it was written in the 80’s.

    One episode (#2) was particularly interesting for me – the anti-social and uncompromising character Rorschach gives a sort of eulogy for another character who has died – The Comedian.

    The Comedian is an wonderfully conceived character in that he is aware of man’s violent and monstrous nature, yet he has chosen to become a parody of it himself (his only way of dealing with the burden of his insight). But it is Rorschach’s uncompromising views of good vs. evil, right vs. wrong, and truth vs. lies that captured my attention and imagination. Mostly because his cost of living an uncompromising life based on truth was what seemed to be a terrible sense of loneliness and detachment from the rest of society (and eventually even himself).

    I suppose some degree of loneliness and detachment is the price all men pay who refuse to be silent when truth and reality take a backseat to illusion and indulgence.

    Cheers and Happy Holidays,
    GBV

    • gerold says:

      Good to hear from you again, GBV. Sounds like you’ve been busy.

      And good luck with the Electric Universe conjecture. If ever substantiated, we’d need to re-write modern physics which would be interesting indeed. I call it conjecture because a scientific theory is quite strong although conventional wisdom (an oxymoron) conflates hunch with theory.

      Gravity is a theory although many people call it a law. We can calculate and predict gravity’s effects but we do NOT know how it works. Is it a particle, wave, invisible hands, suction, electromagnetic, electric universe? We don’t know and until we can explain how gravity works it remains a theory but one that is powerful enough I wouldn’t suggest walking off the edge of a cliff.

      You’re probably right about deflation taking a long time. We are so burdened by historically unprecedented levels of debt that the painful deleveraging process will drag on and on. One of my fears is a type of ‘stagflation’ that combines deflation of assets and inflation of expenses; a very painful form of austerity where what we own decreases in value and what we owe increases in price.

      You’re also right too about the slowing Velocity of Money indicating trouble ahead. Yes, the Total Credit Market Debt graphs are going exponential. So much money created out of thin air is going nowhere as if sucked into a black hole partly because there are fewer and fewer credit-worthy borrowers to extend loans. This will eventually have unintended consequences and the longer it takes and the more ‘counterfeit’ created, the greater the pain of ‘correction’ will be.

      Yes QE is now structural and to keep some semblance of confidence in the evil central banks s well as financial instruments, markets, etc. now requires a constant stream of ‘mixed signals’ from our monetary overlords. Yes, we’ll taper, no we won’t. We’ll taper shortly; we’ll do it later, etc. How long this charade will continue to work remains to be seen. I think we underestimate the importance of confidence which is ultimately what our financial systems are based on and when confidence erodes, instability ensues.

      I will definitely check out YouTube for Watchmen: The Motion Comics. Your description of the Comedian reminds me of Friedrich Nietzsche who Freud claimed had the greatest understanding of humanity. Nietzsche wrote, “All superior men who were irresistibly drawn to throw off the yoke of any kind of morality and to frame new laws had, if they were not actually mad, no alternative but to make themselves or pretend to be mad.” And, in later life, he descended into insanity.

      Having studied religion and myth most of my life, I’m convinced most of our lives are based on lies and self-deception because the truth is too painful for most people to bear. That’s why I’m fascinated by Julian Jaynes’ “The Origin of Consciousness in the Breakdown of the Bicameral Mind” as it explains so much of modern mankind’s thinking and behaviour.

      You mention the Comedian’s “cost of living an uncompromising life based on truth was what seemed to be a terrible sense of loneliness and detachment from the rest of society (and eventually even himself).” I might substitute “aloneness” for loneliness. Some philosophers call it being a ‘perpetual outsider’ or a ‘wanderer’. Both aptly describes me although I consider it a bearable price to pay for my powers of observation and unusual perspectives. The philosopher Arthur Schopenhauer refused to marry because he was unwilling to inflict his pessimism on someone he loved. I can appreciate that.

      You say, “I suppose some degree of loneliness and detachment is the price all men pay who refuse to be silent when truth and reality take a backseat to illusion and indulgence.” Agreed, although again, I’d substitute aloneness for loneliness. I’ve never been lonely a moment in my life. Wherever I go I’m always with the best company I know: myself.

      Learning Mormon food canning is a great idea and trading ideas with other preppers will be invaluable. Never underestimate the value of teamwork.

      I recently acquired 2 of the last 3 items on my survival gear list; a North Face 65 L backpack as a bug-out bag and a Swiss-made Katadyn ‘Pocket’ water filter both of which I hope I never have to use.

      The last item I’m still researching is a Geiger-Muller radiation detector (“Geiger counter”) because I have no faith in the incomprehensively incompetent TEPCO to deal with the never-ending Fukushima disaster. There are a lot of cheap, unreliable detectors available so I may have to reluctantly part with over $1,000 for a Ludlum unit. That’s a goodly chunk of change for the last item I also hope I never have to use. Investigation continues.

      Take care and Top of the Season to you.

      – Gerold

    • Ken says:

      Hi, Gerold

      I couldn’t believe my eyes when I saw this article tonight, just adds to everything you have been saying.
      This gives a totally new meaning to paying the man.

      http://www.zerohedge.com/news/2013-12-12/imf-wants-you-pay-71-income-tax

      The IMF just dropped another bombshell.

      After it recently suggested a “one-off capital levy” – a one-time tax on private wealth as an exceptional measure to restore debt sustainability across insolvent countries – it has now called for “revenue-maximizing top income tax rates”.

      The IMF’s team of monkeys has been working around the clock on this one, figuring that developed nations can increase their overall tax revenue by increasing tax rates.

      They’ve singled out the US, suggesting that the US government could maximize its tax revenue by increasing tax brackets to as high as 71%.

      Coming from one of the grand wizards of the global financial system, this might be the clearest sign yet that the whole house of cards is dangerously close to being swept away.

      Think about it– solvent governments with healthy economies don’t go looking to steal 71% of people’s wealth. They’re raising this point because these governments are desperate. And flat broke.

      The ratio of public debt to GDP across advanced economies will reach a historic peak of 110% next year, compared to 75% in 2007.

      That’s a staggering increase. Most of the ‘wealithest’ nations in the West now have to borrow money just to pay interest on the money they’ve already borrowed.

      This is why we can only expect more financial repression from desperate governments and established institutions.

      This means more onerous taxation. More regulation. More controls over credit and capital flows.

      And that’s only the financial aspect; the deterioration of our freedom and liberty will continue at an accelerated pace.

      Can a person still be considered “free” when 71% of what s/he earns is taken away at the point of a gun by a bankrupt, bullying government? Or are you merely a serf then, existing only to feed the system?

      This is why we often stress having a global outlook and considering all options that are on the table.

      Because the other side of the coin is that while some countries are tightening the screws and making life more difficult, others are taking a different approach.

      Whether out of necessity or because they recognize the trend, many nations around the world are launching new programs to attract international talent and capital.

      I’ve mentioned a few of these already– economic citizenship programs in places like Cyprus, Malta, and Antigua (I met a lot of these programs’ principals at a recent global citizenship conference that I spoke at in Miami).

      Then there are places like Chile and Colombia which have great programs for entrepreneurs and investors. Other places like Georgia and Panama have opened their doors to nearly all foreigners for residency.

      Bottom line– there are options. Some countries are really great places to hold money. Others are great to do business. Others are great places to reside.

      The era we’re living in– that of global communications and modern transport– means that you can live in one place, your money can live somewhere else, and you can generate your income in a third location.

      Your savings and livelihood need not be enslaved by corrupt politicians bent on stealing your wealth… all to keep their destructive party going just a little bit longer.

      The world can truly be your playground. You just need to know the rules of the game.

      • gerold says:

        Ken, thanks for the heads-up with the Zero Hedge article. Whether it’s real or just a talking point; higher taxes are sure to come.

        Bail-outs, bail-ins, fiat currency, capital controls, crony capitalism, corrupt oligarchs, zero interest savings, declining real incomes and next on the agenda will be exorbitant taxes to feed the insatiable, collectivist bag-men for the ultra-rich.

        They want us to believe it’s a “one-time” tax just like income tax itself was introduced as “temporary” almost a century ago.

        Taxes creep – taxes have a tendency to increase in percentage and coverage. Few taxes are ever reduced. Canada reduced its (Federal) Goods and Service Tax (GST) by 1% but did not eliminate it and the reduction was offset with increases in Provincial tax. Ha, fooled you again!

        Ironically, the IMF is the bastard child of the U.S. coming back to bite its progenitor in the ass. The fact that the IMF is suggesting higher taxes for the U.S. is instructive because the IMF blood-sucking vampires usually drain the life-blood of smaller, dumber countries. The fact they’re going after the U.S. indicates the end is near.

        You can bet those hypocritical swine that are sucking off the IMF’s tit won’t pay this tax.

        Desperation – Tyler Durden said it best, “They’re raising this point because these governments are desperate. And flat broke… solvent governments with healthy economies don’t go looking to steal 71% of people’s wealth. “ So much for the so-called recovery!

        It’s another step to looting us into collapse so we’ll beg for Big Brother’s “One World Government” to save us from starvation. As I said before, we are so indebted that even if the governments cut 100% of spending and increased taxes to 100% it would make NO difference. We are beyond the point-of-no-return but they’ll extract every last drop of blood we have.

        It tightens the screws on the Amerikan Police State with ever-increasing regulation and diminishing freedoms.

        It taxes income, not wealth and certainly not the ultra-rich’s wealth. It makes it more difficult for ordinary people to accumulate wealth while protecting the 0.1%’s loot. In other words, more people will become dependent on Big Brother’s welfare state.

        Hard hit will be small business which are the real provider of jobs, not large corporations. Another nail in the coffin.

        One of the Zero Hedge readers commented, “Love it or hate it a government is necessary and some taxes need to be collected.” That poor brain-washed schmuck never heard of the political system called Anarchy (no, it’s not chaos) https://geroldblog.com/2011/10/10/1601/ and he knows nothing of the history of the Basques who, having had no borders they needed no army to protect themselves for thousands of years, yet survived invasions by Rome, the Moors, Visigoths, Franks, Vikings and the dictatorships of Hitler and the Spanish General Franco’s failed attempts to eliminate their language. The Basques survived by learning to do business with the invaders. Government and taxes are the problem, not the solution.

        The only good thing about all this is it speeds up the final and inevitable collapse. The sooner it happens the sooner those who are left can rebuild. As Gerald Celente says, “When people lose everything, they have nothing left to lose so they lose it.” It will soon be time to dust off Madam Guillotine. Don’t forget to bring popcorn.

        – Gerold

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