Financial Markets Quake Before Anticipated Collapse

Prior to the housing bubble implosion, prescient prognosticators were predicting an economic disaster the world hadn’t seen since the Great Depression.  Pollyannaish investors thought the sky was the limit.  Many thought there was no end to rising property values.  Boy, were they wrong.

We are in the throes of another pending disaster, one that will make 2008 look benign by comparison.  Yesterday, the rumblings of a financial crisis shook the world’s financial markets.  The Economic Collapse blog reported the following:

The first trading day of 2016 was full of chaos and panic.  It started in Asia where the Nikkei was down 582 points, Hong Kong was down 587 points, and Chinese markets experienced an emergency shutdown after the CSI 300 tumbled 7 percent.  When European markets opened, the nightmare continued.  The DAX was down 459 points, and European stocks overall had their worst start to a year ever.  In the U.S., it looked like we were on course for a truly historic day as well.  The Dow Jones Industrial Average was down 467 points at one stage, but some very mysterious late day buying activity helped trim the loss to just 276 points at the close of the market.  The sudden market turmoil caught many by surprise, but it shouldn’t have.  The truth is that a whole host of leading indicators have been telling us that this is exactly what should be happening.  The global financial crisis that began in 2015 is now accelerating, and my regular readers already know precisely what is coming next.

And in case anyone believes this was just a blip, take into consideration what is happening in South Korea. 

 This is yet another sign that tells us that the U.S. economy has already entered the next recession.

And what happens to the markets during a recession?

They go down.

In addition to the bad data that we got from the U.S. and China, there was another number that was also extremely troubling.

South Korean exports have traditionally been considered a key leading indicator for the entire global economy, and on Monday we learned that they were down a whopping 13.8 percent in December from a year earlier…

We can expect volatility in the markets from here on out, until the bottom finally falls out.

Source:

http://theeconomiccollapseblog.com/archives/stock-markets-all-over-the-world-crash-as-we-begin-2016

Will Maxine Waters Tax OneUnited Bank Out of Business?

If Maxine Waters has anything its chutzpah; she went on a rant about how the banks are shafting the “little people”, and if they don’t start shaking the money tree for the black community, than the big bad banks should be taxed until they go out of business.

Maxine Waters helped cause this financial disaster. Maxine Waters is part of the problem. She helped to spearhead the concept of no down payment loans. Countrywide ran with this concept and look at the mess we’re in because of it. She stood beside Fannie Mae and Freddie Mac when they were under fire by critics and regulators for some of the most creative accounting since Enron. Now, the American taxpayers are on the hook for billions, if not trillions of dollars.

And to top it off, Maxine Waters’s husband held stock and served on a board of a bank that got bailed out by a congressional committee that she served on:

WASHINGTON AND LOS ANGELES — Rep. Maxine Waters, one of Los Angeles' most enduring liberal politicians, has come under scrutiny because of bailout funds that went to a bank in which her husband had owned stock and served on the board.

Waters was a senior member of the congressional committee dealing with the financial crisis when OneUnited Bank -- one of the nation's largest minority-owned institutions -- received $12 million in bailout funds.

Her husband, Sidney Williams, served on the bank board until early last year and held at least $500,000 in investments in the bank in 2007, the most recent year for which public financial disclosure statements are available.

A month before Congress enacted the bailout program, Waters helped set up a meeting between the chief executive of the bank, representatives of other financial institutions and Treasury officials.

"When a member of the financial services committee calls, you pay special attention," said Jeb Mason, who was a high-ranking Treasury official last fall.

He said that the September meeting was billed as a broad discussion by minority-owned banks of the problems they faced but that it ended up a discussion of one bank's problems. He said he only recently learned of Waters' husband's ties to OneUnited and would have liked to have known about them. He added, however, that the connection didn't influence the department.

OneUnited did not receive any federal money at that time, but by mid-December, it had received $12 million in bailout funds.

Waters did not respond to requests for comment.

But she sure as hell will comment on the dealings of others.

Source: http://articles.latimes.com/2009/mar/13/nation/na-maxine-waters13

Americans Go Hungry, While Corn Goes to Ethanol Production

The USDA just released a report that projects more corn will go to the production of ethanol, than feed for cattle. That is the first time that has ever happened in this country. At the same time, other crops have experienced loss in yields:

For the first time ever, more of the corn crop may go into gas tanks than into the stomachs of cattle and poultry destined for kitchen tables.

The prediction drew little response last week when it was released by the USDA in its Crop Production and Supply/Demand Report for the 2011 crop season. The USDA kept its prediction for ethanol production demand for corn at 5.05 billion, but lowered demand projections for livestock feed by 100 million bushels to 5 billion bushels.

That fuel now tops livestock as the primary user of corn struck at least one observer as noteworthy.

“That’s a first-time-ever type of change,” University of Missouri Extension economist Ron Plain said in a statement released by the university.

Ethanol is heavily subsidized. When the federal government pushes or favors a particular industry or product that tends to have a ripple effect:

Soybean yields will be 169 million bushels, or 5.24 percent lower than the July estimate of 3.225 billion bushels, the report indicated.

The USDA predicted Iowa’s total corn production will rise from 2.15 billion bushels in 2010 to 2.43 billion bushels in 2011. Iowa’s harvest is predicted to yield 177 bushels per acre. That is higher than last year’s 165 bushels per acre, but shy of the record of 182 bushels.

Anyone who has been in a grocery store can testify to the rising cost of food. Now, we have American families stating that they are going hungry:

The latest report focuses on households with children. It found that 40 of the largest metro areas nationwide had at least 25 percent of households that could not buy enough food for everyone in the home at some point during the past year. Every one of the 100 largest metro areas had 15 percent or more of such households with children.

Food is in high demand, yet short in supply:

In addition, there have been substantial cuts in The Emergency Food Assistance Program, or TEFAP, which represents 38 percent of the food Second Harvest delivers, she said.
Though the local Second Harvest agency continues to get food through the federal TEFAP program, there are empty shelves at the warehouse, said Clyde Fitzgerald, the executive director for Second Harvest Food Bank.

"They've been empty since late last week," he said. "We have had a great daily need for food assistance, and a sharp decrease in supply due to no food-drive donations in several weeks and a marked decline in retail grocery store donations. When your supply goes down sharply and the demand is strong, that depletes supply in a heartbeat."

There are always consequences when the federal government gets involved in the market. It’s quite disturbing when a scientific theory is more important to our elected representatives than its people.

Source: http://thegazette.com/2011/08/15/for-first-time-more-corn-to-be-used-for-ethanol-than-livestock/

http://www2.journalnow.com/news/2011/aug/16/2/hunger-study-says-winston-salem-metro-area-worst-i-ar-1305986/

Food Stamps Stimulate the Economy?

Obama’s Secretary of Agriculture made an asinine comment. According to this fool, every dollar spent in food stamps creates $1.84 in economic activity in direct stimulus. Well, if that’s the case lets all get on welfare. We can all have American Recovery Act placards on our backs.

Newt Gingrich called it. Barack Obama is the Food Stamp President:

CHICAGO (MarketWatch) -- A record number of Americans are now receiving food stamps, according to data released by the U.S. Department of Agriculture. In May, there were 45.75 million recipients of the aid, up 2.5% from the previous month and 12% from May of 2010. The state of Alabama showed the biggest increase, almost 120%, with New Jersey, Nevada and North Carolina all seeing jumps in the 20% range. Every state posted a percentage increase, save North Dakota, which was essentially flat.

Thank God for food stamps. I’d hate to see what our economy would be like without them.

Source: http://www.marketwatch.com/story/record-number-of-americans-on-food-stamps-2011-08-03

Washington D.C.: There's a Recession?

There is one region in the United States where people believe the country is not in a recession and doing well. Where could that possibly be? You guessed it, Washington D.C.

(CNSNews.com) - Only in Washington, D.C.—home of a federal government that has dramatically increased its spending as a share of the U.S. economy over the last three years—did a majority of the people say they believe the economy was getting better not worse in the first half of this year, according to a survey released today by Gallup.

In not one state did more than 41 percent of those surveyed tell Gallup they believed the economy was getting better.

While everyone else watched the value of their homes take a nose dive; the bureaucrats, lobbyist, and all around D.C. critters watched theirs increase:

Seasonally adjusted, the price of homes for sale in Washington, D.C. was up 2.4 percent after values grew 1.5 percent from March to April. Compared to the same time last year, prices in Washington, D.C. were up 1.3 percent.

Is it any wonder that college students aspire to work for the federal government? It’s the only recession proof profession in the country.

Source: http://cnsnews.com/news/article/gallup-only-dc-do-they-think-economy-get

http://www.homefinder.com/news/real-estate/2011/07/27/home-prices-jump-in-washington-d-c-during-may/

http://www.washingtonpost.com/wpdyn/content/article/2009/03/25/AR2009032503068.html

Obama Exhorts Businesses to Boost Economy

Barack Obama’s rhetoric and approach to America’s economy is reminiscent of FDR. The New Deal was a disaster, and prolonged the depression. Here is an excerpt from Jim Powell’s book, “FDR’s Folly”:


Some economists claimed the economy declined because the federal government had cut government spending in 1937, after having splurged the previous year to help assure that FDR would win the election. This line of thinking implicitly suggested that the economy had become dependent on government spending and that FDR hadn’t prepared a transition toward private investment and private employment.


The bottom line was a chronic low level of business investment. The National Industrial Conference Board reported that the amount of investment capital per employee was much lower in the 1930s than it had been during the 1920s. Less capital meant fewer people could be employed. Economist Roose added that low working capital was an issue during the 1937-1938 recession, as evidenced by a dramatic increase in corporate accounts payable (unpaid bills).


A substantial portion of business investment was short term, as had been the case throughout the New Deal period. Economist H. Gregg Lewis observed, “The situation was dominated by the short-run outlook, and was for that reason vulnerable. All the elements of a short run boom were there, but the requirement for a sustained recovery – recovery in outlays made on the basis of a long term outlook – was lacking. Reasonable certainty as to the future was absent.


Employers were wary of long-term risks, one of which was a president and Congress threatening those with “idle”capital to invest. Many economists then and now recognized how bashing employers can destroy jobs. Joseph Schumpeter wrote in his 1939 book Business Cycles that employers felt threatened: “They realize that they are on trial before judges who have the verdict in their pocket beforehand, that an increasing part of public opinion is impervious to their point of view, and that any particular indictment will, if successfully met, at once be replaced by another. Again, we may differ in our estimates of the importance of both of this factor and the functions it tends to paralyze, but it should not be overlooked.



Here we have Obama telling businesses it is their “obligation” to provide jobs.



(Reuters) - President Barack Obama called on U.S. businesses on Saturday to do more to boost the economy by hiring more workers and making investments.


The government has an obligation to make the United States the best place to do business, by providing the best schools, incentives to innovate and the best infrastructure, he said, but added that businesses also have to do their part.


"If we make America the best place to do business, businesses should make their mark in America," Obama said in his weekly radio address. "They should set up shop here, and hire our workers, and pay decent wages and invest in the future of this nation. That's their obligation



Barack Obama is about as clueless as FDR. History can guide us away from the pitfalls of the past. Unfortunately, today’s intellectual elites skipped that class.