Monetary and Fiscal Policies in Times of Large Debt:

[ronwagn + 6,290]

I would be very happy Dan. I have one vacant house I would love to sell or rent to a good tenant. It is nice and I paid $25,000 for it. My daughter got lonely and moved back home. She is only 20. Adopted grandaughter actually. Decatur to Springfield has a lot to offer if you want low priced housing. Good hospitals, and old houses. My house is only 13 years old and there are old dumpy neighborhoods around or really nice ones. High end homes here are only about $250,000 plus. Many with small acreage. We love our acre. We have lakes around and colleges. I have lived the last thirty four years here after moving from California. I have never regretted it, but still love visiting there and have been to all fifty states. 

[El Nikko + 2,145]

Would anyone care to listen to this guy and let us know if you agree or disagree with him?

Yes I know a pro gold/silver 'youtuber' but I will listen to pretty much anyone to get different perspectives as long as they're not tin foil hat wearers.

 

[Jan van Eck + 7,558]

20 hours ago, Dan Warnick said:

Well, @ronwagn, if half of what @0R0 predicts comes true it will be great for Decatur/Springfield/Taylorville, Mt. Auburn, Illiopolis, Niantic, Rochester, Mechanicsburg, Buffalo, Riverton, hell even Lanesville, and all the rest.  Wouldn't it be sweet to see the area reinvigorated in our lifetimes? 

Unfortunately, that is not going to happen.  The more probable way it all  unfolds can be seen in this YouTube offering:

https://www.youtube.com/watch?v=Z79QGaEqsDM

The future is not going to be pleasant at all.  Hard times are coming. 

[Richard Snyder + 70]

On 5/24/2020 at 4:05 PM, Jan van Eck said:

In the very short term, there is not much that anyone can do differently, because the country is largely locked down by the various State Governors (over whom the Federal executive branch has no control).  In the somewhat longer term, the Executive, led by the President, can enact policies specifically designed to put people back to work and thus accelerate "money velocity" inside the USA.  And that is what Trump is doing, albeit that he grasps that intuitively, and not by academic research, knowledge or insight.  Does not matter; all that counts is the result.

trump's advisors are venal men, they are there to enrich themselves, so the real question is: do the advisor actions have the external effect of inujecting earnings into the internal economy?  They might, but not to the extent that a focused program such ast he FDR "New Deal" wouild have. 

I would have started off on a two-prong program.  Prong One would be to levy a 50% or greater tariff on goods from China, right across the board.  Domestic importers would be on notice that moving to yet another offshore location would not resolve their duty problems, those duties would get extended to other locations soon enough.  As you will recall, Ford once announced moving their sedan auto production to Mexico; that was met by a declaration by Trump that he would impose a 35% tariff on those (Mexican built) autos.   Was that a good idea?  Answer: probably. You could argue that it artificially enhances US auto worker's hand in union negotiations, but there has been so much ground lost that you might as well go all-out at this point to keep production (specifically, large component manufacturing such as metal stamping, and assembly) inside the USA.    It is time to move China production back to the USA, and forget about thsoe people.

The second prong is Federal infrastructure programs, designed to vastly improve life and earnings inside the USA.  One such program is water.  a hefty chunk of the USA is semi-arid, basically close to being desert.  A large part of the Southern USA central plains is prone to drought, yet there is a surplus of water in the Northern Plains that washes down the Missouri and red Rivers and causes extensive flooding every year. Now that water can be moved to the arid Southwest by a canal system running down from Devil's Lake, North Dakota  (currently some 27 feet over flood stage, and has flooded tens of thousands of acres of farmland permanently) down to North Texas, with recharge of the ground aquifers along the way.  

The North Dakota Dept of Transportation has been dumping vast amounts of gravel on their roads in order to raise the elevation, as you can see here.  You can also see the faint remnants of the mainline railroad, now submerged and useless, in the photo above. 

Letting all this water go to waste, and allowing it to do billions in damage, is foolish:

You can build a surface canal cheaply enough, with the added benefit of recreation, including ice skating in the winter assuming it freezes over  (which is likely).  All that water will need tobe "lifted" several hundred feet to get to an elevation South of the Missouri River when it can flow naturally into the Southern central plains.  But the USA has the technology to do that: currently there are these 100 MW packaged nuclear reactors installed on aircraft carriers that would work perfectly to drive a bank of large pumps to lift and move the water.  Those are now "off the shelf" technology and can be easily installed at a pump station at the source point or points. 

Moving the water, and re-charging the depleted ground aquifers, probably will do more good to the central plains than anything else the federal government could deream up.  What would it cost?  50 billion?  Who cares? Do the project and put men back to work, with huge downstream benefits. A lot cheaper than paying people to sit around at home, in my view. 

The Red River of the North flows north into Canada.  You are not going to re-route the water flow.  

The Devil's Lake Basin naturally flows South via the Sheyenne River, which dumps into the Red River and then flows north.  This River has been earmarked as a "feeder" system to supply water for the higher populated eastern area of North Dakota.  The problem had been the higher salinity of the water from the Devil's Lake Basin and the effects of this water passing into Canada.  Good luck attempting to re-route this River into the Missouri River watershed.  Many hydrologists have dreamed of a re-route, with many a doctoral dissertation done.  If you are bored, go back and study the McCluskey Canal.  

[Dan Warnick + 6,100]

9 hours ago, Jan van Eck said:

Unfortunately, that is not going to happen.  The more probable way it all  unfolds can be seen in this YouTube offering:

https://www.youtube.com/watch?v=Z79QGaEqsDM

The future is not going to be pleasant at all.  Hard times are coming. 

Nope.  As you yourself say, again and again, Americans will rise to a challenge.  We are not Russians and we do not think like Russians.  So, in this case my friend, I'm going to stick with 0R0's version and Ron and I can hope, if only for a while.  Heh-heh.

[canadas canadas + 136]

Instead of the FED bailing out Wall Street and its investors with trillions of dollars again by buying up their debts, it should be doing the same with regards to eliminating government debt first and foremost.  It looks like it may be run by big business interests first.

[El Nikko + 2,145]

Zero Hedge which does tend on the negative but...

-------

Goldman: The Default Cycle Has Started

by Tyler Durden

Mon, 05/25/2020 - 17:26

 

Perhaps inspired by our recent articles showing that "Loan Defaults Hit 6 Years High" and "Bankruptcy Tsunami Begins: Thousands Of Default Notices Are "Flying Out The Door", Goldman writes this morning that with businesses shuttered and job losses mounting rapidly, "there is growing concern over the ability of borrowers to service their debt obligations and the resulting risks to financial stability."

In response, Goldman "assesses the likely scale of economy-wide credit losses, the exposure of creditors to those losses, and the potential risks to financial stability and the banking sector" to conclude that "rising bankruptcies and delinquencies suggest the default cycle has started."

How did Goldman get to that assessment?

Looking at corporate credit, the bank first looked at corporate debt, noting that nonfinancial corporate debt grew by over 60% since 2011 and recently rose to an all-time high as a share of GDP (Exhibit 1, left), leading to growing concern even prior to the virus that corporate defaults could rise dramatically in the next downturn. Meanwhile, the sharp decline in revenues across many industries has left a large share of companies with negative cash flow, and rising bankruptcy filings and cases suggest the corporate default cycle has started.

 

Unlike the financial crisis, the bank finds that a unique feature of this downturn "is the wide variation in industry exposure to the virus, with physical constraints on spending, occupational health risks, and geographical variation in the virus  outbreak affecting industries differently."

Goldman then performs an analysis of which industries are most impacted by credit losses due to the coronacrisis, and summarizes the findings in the next chart, which shows a coarser breakdown of virus-impacted industries, as well as their market share in the high-yield corporate bond space.

The energy sector stands out both in terms of its size and default risks, given the collapse in oil demand, its disproportionately large footprint in the corporate bond market relative to its GDP share, and the heavy amounts of leverage in the sector. Roughly half of high-yield corporate bonds are in the energy or virus-impacted industries, according to Goldman which adds that its credit strategists "estimate that the 12-month trailing high-yield default rate will increase to 13% by the end of 2020, similar to the peak rate reached during the Global Financial Crisis (Exhibit 3, bottom)."

 

In addition to energy debt, another key area of concern - as we have repeatedly pounded the table in recent weeks - is commercial real estate (CRE), given signs of overheating and overstretched valuations prior to the virus, as well as the unprecedented declines in demand in industries such as lodging, healthcare, and retail.

Commercial real estate prices have outpaced single family house prices since the prior downturn (chart below, left), with CRE capitalization rates falling to historically low levels. Late payments on commercial mortgages have picked up sharply in recent months, suggesting mounting pressures (chart below, right).

Tangentially, and as also discussed here extensively before, the unique nature of this downturn suggests that "variation in virus exposure will play a large role in determining the breadth and depth of credit losses in commercial real estate." Delinquencies by property type already show wide dispersion, with virus-exposed property types such as lodging and retail showing much higher delinquency rates than less exposed property types such as self-storage. This contrasts with the prior real estate bust, when delinquencies were roughly evenly distributed across property types. 

Overall, Goldman expects a deeper contraction of property incomes than during the financial crisis period, given the heavy stresses to rents and occupancy rates facing many properties, and overall losses on commercial mortgages similar to those observed during the financial crisis.

Meanwhile, even as consumers have been slow to telegraph stress, kept afloat thanks to hundreds of billions in transfer payments, significant downside risks to household debt also remain, particularly if unemployment insurance benefits are not extended, and if higher out-of-pocket medical expenses due to loss of employer-based health insurance push more households to default.

Who Will Bear The Losses

We next look to see where credit losses are most likely to be felt. The Fed’s Financial Accounts suggests that the banking system plays a large role in providing credit for commercial real estate and overall corporate borrowing, two areas of greater concern. Household debt is also largely held by banks, particularly residential mortgages, credit card loans, and auto loans, while student debt is largely held by the federal government.

Municipal debt, another area of concern, is largely held by households, mutual funds and pensions funds, and insurance companies, and thus likely poses a smaller threat to financial stability. Lastly, a growing share of corporate lending—especially in riskier categories, such as leveraged loans—is now done by nonbank financial institutions, including collateralized loan obligations (CLOs), asset managers, hedge funds, and private equity companies, and such lending is not well captured in the Fed’s Financial Accounts. TIC data provides some evidence that non-bank financial institutions and insurance companies own much of US CLO securities, a growing area of concern. Crucially, CLOs do not generally permit early redemptions and are thus less susceptible to runs, which is why Goldman strategists do not see CLOs posing a major risk to financial stability, "despite the likely significant pickup in defaults on leveraged loans."

The next chart shows a breakdown of financial asset holdings by creditor, excluding financial institutions such as hedge funds and private equity companies where data is less readily available. Banks are highly exposed to many areas of credit, while households, mutual funds, and pensions are largely more exposed to equities. Insurance companies are somewhere in between, and hold a significant amount of exposure to corporate debt, including CLOs.

The bottom line is simple: contrary to conventional wisdom that banks are now far, far safer than they were during the financial crisis, they bear the broadest exposure to the coming default wave which will soon test just how safe they are.

Risks to the Banking System

As Goldman reminds us, the Fed’s Financial Stability Report warned that financial sector vulnerabilities including for the banking sector, are likely to be significant in the near term, while the April FOMC minutes indicated concern that banks could come under greater stress, particularly if more adverse economic scenarios were realized. The Fed’s Senior Loan Officer Opinion Survey (SLOOS) indicated that lending standards tightened significantly, particularly for commercial and industrial (C&I) and CRE loans, with most banks citing a less favorable or more uncertain economic outlook, as well as a reduced tolerance for risk, as reasons for tightening lending standards. Loan loss provisions across banks have increased significantly in preparation for the rise in defaults and delinquencies. 

Curiously, only a modest percentage of banks cited a deterioration in their capital position as playing a role in tightening lending standards in the first quarter. In addition, residential real estate remains the largest category of lending in the banking system by a significant margin. And while Goldman believes that given that this downturn was not precipitated by a housing crisis, losses on this particularly large category will likely be smaller than during the GFC, the question of how quickly consumer cash flows return to normal will be critical in answering just how significant residential losses will be in a few months time.

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That said, one clear worry is that certain industries are heavily exposed to the virus, which may lead to larger risks to the banking system if the lending of particular banks, or the banking system as a whole, is highly concentrated in these industries.

Next, Goldman assesses the vulnerability of bank balance sheets as of 2019 Q4, and estimates the losses on total bank equity from losses across asset categories. The bank assumes similar losses on C&I and CRE lending as in the 2008 crisis, but a smaller hit on residential mortgages and consumer loans (this may be a costly mistake). The bank then calculates the estimated losses as a percent of total bank equity capital, estimating that losses on C&I, CRE, consumer, and residential real estate loans would amount to roughly 15% of total bank equity, compared to around 30% of total bank equity at risk heading into the Global Financial Crisis, using ex-post realized losses across the same categories. Two main reasons account for this difference: first, losses on the large residential real estate category are likely to be smaller, and second, bank equity levels are higher today than before the crisis. Once again, these optimistic assumptions may end up having to be substantially revised higher.

Finally, the bank looks at lending exposure of the largest banks individually: bank-level data can reveal differences across banks and highlight whether there are a significant number of banks with large exposures to at-risk categories. Naturally, using the optimistic assumptions profiled above, Goldman finds that while there is dispersion among the largest banks in their exposure to losses, almost all of the largest banks today are less vulnerable than the median large bank was prior to the financial crisis, thus invalidating the entire analysis for the simple reason that the current crisis may end up being far more dire to bank loans than 2008/2009 if an economic recovery isnt forthcoming in short notice.

In summary, Goldman finds that while financial stability concerns appear manageable, significant downside risks remain. A slower than expected recovery and a prolonged downturn would likely stress the banking system further, and a growing share of riskier lending is now done by less regulated nonbank financial institutions, where risks are harder to assess. Its conclusion: "Should a more adverse scenario arise, Fed officials have indicated the willingness to further help facilitate the provision of credit by the financial system."

In other words, if the coming default crisis ends up being as bad as the GFC, the Fed will end up owning a whole lot more bankrupt bonds and loans than just Hertz.

[SUZNV + 1,197]

3 hours ago, canadas canadas said:

Instead of the FED bailing out Wall Street and its investors with trillions of dollars again by buying up their debts, it should be doing the same with regards to eliminating government debt first and foremost.  It looks like it may be run by big business interests first.

I see no reason to pay all of the government debt in a crisis time, it should be use as a pressure on government diet. They will think more than just raiding the government fund for elections.

--------------------

I guess after this election settle down, should be a sharp US recession, the balloon blows, which is devastating and painful, which will lower the cost and lots of unemployment in short term. Then corporations will move back to US for cheap labors and people are eager to work after all of their saving spent. There will be a competition of corporations between states for labor and jobs, so where the land are cheap and in the central like Midwest will have advantage.

How big is the blow and the magnitude of the recovery depends on Trump or Biden (or any Dem) will win the election. Democrats was not for economy but globalization and centralize Fed Gov power so if they perform the economy recover too well, they lose their advantages in many next elections and they have corporation advantages on their side, so they will keep the minimum long recovery to brag about only. Corporations will leave China for sure, at least half the investments and manufacturing, as it is becoming too risky for them and the market shrink but I think China should be holding some Dem corruption tie to stop Dem to do any real damage confrontation (look at how EU treated China after covid and expect something similar). How many percentages of  manufacture and  funds will go to the US instead of else where, which is the sharp of GDP growth depend on the election.

[ronwagn + 6,290]

On 5/23/2020 at 3:11 PM, SUZNV said:

CCP told them that US and Western people are all in big trouble, backed by negative news about their government and praise for China economics from Western media (I think CCP is a big donor) and are afraid of China power rising and CCP is fighting for them and should have their supports. 

Many of them in big cities sit and see the real estate prices keep increasing and listening how their mum and dad got better life started from 0 or negative. They refused to change out of fear of losing everything they got. Anything they possessed are politically and legally hold as hostages so they mind only how to make as much money as they can by any meaning everyone  else around them do even by bribing, not in political system. So it is purely greed. With the poor people or in or from the countryside, they even don't care more. Money is above everything else but they don't mind working with cheap salary if the real estate are high because their parents encourage them to live with them or live a lots of people in small space for immigrants from countryside. 

That's why CCP can keep in power in a long time. Most Chinese are under oppression but not desperate, they don't really trust CCP but choose to keep what they can have and certainly don't trust the Western as well (and governments encourage them to not to trust the opponents). Without jobs and real estate bubble and international trade, China is not much different from North Korean. Because confident in justice is what glue people together in a society and people don't really trust CCP justice, people tend to be selfish and doubt to any stranger and insensitive to social injustice (not my problem). So driven by fear and greed rather than right and wrong or help to build a good society around.

It is hard to live if you have a very black and white mindset, you will try to get out of China by any mean.  You either risk to lose everything you have and being isolated with your family members or choose to believe in the only choice CCP provided and hope for more money. Jobs & Money & Nationalism and someday will lead the world is the morphine for normal Chinese to find meaning of life.

Anyone else in the world who understand CCP and still love or admire them are either bought by CCP or have their businesses or investments interests hold as hostages, CCP understands human psychology, public relations  for centuries and it  was built in Chinese cultures for a long long time  time as they never truly have any kind of democracy (something like ancient Greek or Rome Republic), except maybe HongKong, Taiwanese or Macau.

Communism destroy many aspects of positive human values for generations: hard working, believe in justice, believe the goodness in people which strengthen the society bond and help each other but always have the "the greater good" or "Equality"  or "Stability" as excuses. 

 

I do not know a lot about Confucianism, but it seems that its respect for authority is very solidly built into the DNA of the Chinese people. Mao and his atrocities have only reinforced it. With Mao and communism it is atheism though. In the Islamic nations it is their religion that is used as a unifying force backed by Islamic extremists. The globalist and green/climate change technocratic philosophies all emphasize socialist authority. Do you agree? 

[ronwagn + 6,290]

On 5/22/2020 at 10:51 AM, Marcin2 said:

I would also put stimulus but more targeted and would open economy with tight distancing/masks measures at the same time.

 said frankfurrter is anti American but he has a lot of good thoughts, like this one , behind his attitude.

And he is totally justified, if I would be Chinese I would be anti-American it is obvious.

I was calculating what is the relative cost of the lockdown, closing the economy and the result was for every 1 year of saved life of old person there is about 20-40 years of Lost quality of life in society.

0.1% of old and ill persons die. They could live about 10 more years. So it is 10 times 0.001 equals 0.01 societal years, new  intermediary measure.

Lockdown causes high Increase in unemployment by about 15-20%.

Part of it would be No matter if the  imposed lockdown is done or not cause people change part of their habits.

So I take only 12% of workforce, plus need to add persons that are dependent on this workforce times % of workforce in general population.

Lets say this gives 8%.

Decreased level of life for the unemployed would be prolonged for at least 2-3 years. Often years After they get the job again cause they would be indebted, lose their houses, lise Health etc.

Again I simplify it to 2.5 years times 8% of society.

0.08 times 2.5 years equals to 0.2 societal years.

So 0.01 societal years In longer life are gained but 0.2 societal years are Lost in subsistant life of unemployed people.

So 1 year for 20 years.

This is probably not fair ?

Old persons that would otherwise die had the chance to live on average 70 good years.

Why they should prevent decent life for much younger people ?

We are humans so life has theoretically No price but here it is life against life.

Fortunately for us oldsters, we hold most of the power around the world and most of the money. We will have to make sure to defend ourselves against evil doers however. 

[ronwagn + 6,290]

On 5/24/2020 at 2:17 PM, SUZNV said:

I couldn't agree more. In Western Countries, the less people can afford houses, either because of urbanization or regulations or globalization, the more "liberal" and the whole Western political systems keep shifting left.  In developing or poor countries where majority of people still can have their own houses, natural they will be more "conservatives" and they may risk their lives for whoever want to take their land away from them, even in countries that following communism where people don't trust their government for their retirement.

--------------------

After moving from Communism to Progressive to Conservative countries, 17 years, 15 years and 4 years, I found out that you either vote for learn more, work harder to prove your value with corporations so you can have some controls of your life with your own retirement cave or vote for having a liberal lifestyle, work hard play hard yet no saving on house and depend on government will feed you in your cage in your retirement and vote for left government out of your fear when you are most vulnerable and view people who vote Right as their enemy.

If the governments are evil enough, they can give you something like Covid19 to balance out their spending.

Middle class can never have both (your own house and live on public service for free) unless you are key  person of corporations or politicians.  For retirement I rather choose evil US, where an old person in the nursing home billed state government or your retirement fund at least 400 usd a day or even more (some 800 to 1200), if you still can go to toilet, would be more if you can't, depends on your condition. Because that means I am the important customer and they lose a big customer like me when I die. If the healthcare are under  government regulations and not for profits and health pay cheaply, they wouldn't care I live or die, their earning from government budget would be the same under government controls.  My healthcare in the old age will depend on the people working pay a lots for healthcare now so I happy to pay my share while I can work. You choose your own destiny with your vote and it will affect someone else destiny either they choose the same values with you or different.

It is always  about living in the jungle or in the zoo.

My wife and I are both RN's and she is a Nurse Practitioner. I worked with the elderly including alzheimers patients and other age groups with psychiatric issues. It is prohibitively expensive to give them great care in a hospital or nursing home. It is much more affordable to handle them in a traditional home with guidance from RNs and proper medications. Our society should emphasize training people for home care. Often the patient owns a home and the caretaker could have free lodging as part of the deal. Not all caretakers are equal, just as in any other field, so it is important to keep a close eye on the quality of care. 

[ronwagn + 6,290]

On 5/24/2020 at 4:25 PM, Jan van Eck said:

But you really don't want to be around when it goes down.  There are at least 87 million Americans with private arsenals, and the ammo to match.  When they set loose upon the land, and I predict they will, the results are uncontained.  Nobody knows where it goes and how it ends up.  Will Wall Street be wiped out?  Probably.  How about the surveillance capitalists, the Googles and Facebooks?  Probably.  Agri-business corporation executives?  Probably.  One thing for sure: lots and lots of blood in the streets.  Revolutions are inherently violent and messy. 

Jan, I don't think Americans would go that far, overall. There would be plenty of eruptions of violence but they would be seen as warnings to return to normalcy. We know that we must all remain productive and that requires a degree of harmony and lots of cooperation. Shooting each other only pays off for bandits who can get away with it. That requires docile people who cannot defend themselves. We would quickly form defensive teams in our neighborhoods and work with local authorities. Chaos would be unacceptable to American values. Inflation in the eighties was dealt with, the great depression was dealt with. World War is out of the question due to nuclear weapons plus chemical, and biological weapons. 

[Marcin2 + 724]

1 hour ago, ronwagn said:

Fortunately for us oldsters, we hold most of the power around the world and most of the money. We will have to make sure to defend ourselves against evil doers however. 

But in this case, in democratic societies, you cannot effectively prevent people misbehaviour or gradual weakening of rules of social distancing by authorities due to literal social unrest of isolated people. Social distancing is ensured by resposibility of whole society. In my country at the beginning police was randomly giving heavy fines up to equivalent of 5 grand in US dollars, which is a lot for walking without masks or larger gatherings.

In Poland there is an experiment of return to schools&kindergartens of younger children. Parents just have difficulty of working from home and at the same time taking care of children. It only started this Monday but I can tell you it is bold, maybe even reckless. Social distancing is only pro-forma, only in classrooms, when children play together it is like before COVID.

I am afraid there could be second wave in 2 weeks.

[0R0 + 6,251]

3 hours ago, SUZNV said:

I see no reason to pay all of the government debt in a crisis time, it should be use as a pressure on government diet. They will think more than just raiding the government fund for elections.

--------------------

I guess after this election settle down, should be a sharp US recession, the balloon blows, which is devastating and painful, which will lower the cost and lots of unemployment in short term. Then corporations will move back to US for cheap labors and people are eager to work after all of their saving spent. There will be a competition of corporations between states for labor and jobs, so where the land are cheap and in the central like Midwest will have advantage.

How big is the blow and the magnitude of the recovery depends on Trump or Biden (or any Dem) will win the election. Democrats was not for economy but globalization and centralize Fed Gov power so if they perform the economy recover too well, they lose their advantages in many next elections and they have corporation advantages on their side, so they will keep the minimum long recovery to brag about only. Corporations will leave China for sure, at least half the investments and manufacturing, as it is becoming too risky for them and the market shrink but I think China should be holding some Dem corruption tie to stop Dem to do any real damage confrontation (look at how EU treated China after covid and expect something similar). How many percentages of  manufacture and  funds will go to the US instead of else where, which is the sharp of GDP growth depend on the election.

A couple of points, data on personal savings have shown a near tripling of savings rates (<5% to >13%).

unemployment incomes due to the weekly $600 bonus are higher for 40% of the unemployed than when they were working. The mom's basement dwelling young millennial (40%) are among those people and they are loading the funds into their Robin Hood and TD Ameritrade and Schwab accounts. They were among the big losers in the USO bust during the negative oil price fiasco. For these people, their spending is way down, their incomes a little less so.

What this means is that the bulk of people have the same or more money at hand. On the credit side, you can look at the Goldman Sachs report in reverse. As many (not energy and commercial real estate) debtors, including Boeing some airlines and cruise lines have refinanced their debt already and don't need any revenue for nearly 2 years in the tidal wave of Fed liquidity. The money supply in the US is up 25% and still running. The total Fed and fiscal intervention announced comes to 46% of the US economy pre CV19, and it is weighed against a 40% shutdown for 3 months. Or a 35% excess to the damage done to date. That is plenty to drive recovery in the  aftermath in those areas that can recover.

The Oilprice article about the China war is on point in that the Chinese have a great record of failing to read the winds in Democratic countries and focused their coercion on institutional behaviors, which they are expert at manipulating. The genera response, globally to the discovery of how China dependent supply chains are on China did not gain it much leverage, but it did urge popular opinion away from buying anything related to China, and pushing their politicos into an explicit decoupling action from China immediately. They don't want to export to China even if it hurts them, they don't want to buy from China even if it costs them more at the store. To the people of the globe at large, China is a radioactive black hole. More so in the US. Unlike the Dem leadership that has been bought off by China for decades, the grass roots organization of the party has turned against China in the biggest whiplash kind of political swing observed since Pearl Harbor. The political push to reshoring is coupled with a corporate need to reinforce supply chains with local production. It will be major.

Export orders from China are down from last month. As is employment. They are reversing recovery from March. It is unclear if they get new expert orders to recover once EU and US are fully open for business. https://www.markiteconomics.com/Public/Home/PressRelease/62c70775a2b74fce87c79598d4907fd9

Though traffic in my little "open" corner of the world is not up at rush hour to anything like its normal levels, the shopping traffic is fully back to normal. The evening entertainment traffic (restaurants cinema etc.) is still quite dead. So that is showing 20% of the activity is still missing, though food deliveries are picking up for restaurants.

 

The Dem governor's economic sabotage is not going to continue. They will be held hostage by Trump for the State and Local bailout bill now slowly chewed up in the Senate.  The DOJ is collecting cases to bring against the governors and their bureaucracies for constitutional violations. They will fold. When there is another wave of infections, they will have no support for shutdowns from the Federal government. Trump has explicitly said that regardless of the outcomes, there will be no further shutdowns.

[0R0 + 6,251]

1 hour ago, Marcin2 said:

But in this case, in democratic societies, you cannot effectively prevent people misbehaviour or gradual weakening of rules of social distancing by authorities due to literal social unrest of isolated people. Social distancing is ensured by resposibility of whole society. In my country at the beginning police was randomly giving heavy fines up to equivalent of 5 grand in US dollars, which is a lot for walking without masks or larger gatherings.

In Poland there is an experiment of return to schools&kindergartens of younger children. Parents just have difficulty of working from home and at the same time taking care of children. It only started this Monday but I can tell you it is bold, maybe even reckless. Social distancing is only pro-forma, only in classrooms, when children play together it is like before COVID.

I am afraid there could be second wave in 2 weeks.

The German and Swiss studies show that the kids are neither infected nor do they transmit They just are not vectors. High school and up can get extremely mild infections but are possible vectors

[Marcin2 + 724]

19 minutes ago, 0R0 said:

The German and Swiss studies show that the kids are neither infected nor do they transmit They just are not vectors. High school and up can get extremely mild infections but are possible vectors

Maybe it is true. Recently there was extensive coronavirus antibodies testing in Sweden. Kids normally go to school, there is only ban on parents entry to the premises. The study shown that statistically only 7% of Swedes have anti-bodies.

[ronwagn + 6,290]

22 hours ago, Jan van Eck said:

Unfortunately, that is not going to happen.  The more probable way it all  unfolds can be seen in this YouTube offering:

https://www.youtube.com/watch?v=Z79QGaEqsDM

The future is not going to be pleasant at all.  Hard times are coming. 

Very sad. I think there is a better future though. 

[SUZNV + 1,197]

23 hours ago, ronwagn said:

I do not know a lot about Confucianism, but it seems that its respect for authority is very solidly built into the DNA of the Chinese people. Mao and his atrocities have only reinforced it. With Mao and communism it is atheism though. In the Islamic nations it is their religion that is used as a unifying force backed by Islamic extremists. The globalist and green/climate change technocratic philosophies all emphasize socialist authority. Do you agree? 

I agree that the globalist and green/climate  change are for the purpose of a kind of "left" parties alliance across countries toward local authority and global authority expanding governments bigger and keep people in check, so they will have to balance the world living standard out for their power and corruption while the "right" parties are on less regulation and stay competitive to foreign nations economically, so less chance for corruption (which prevent competition within countries). Any "anti globalism" or "nationalism" government will face major resistance from them, even the US government.  Outside of the US, Obama and Clinton images were must favorable on newspaper than Trump or 2 Bush.

Confucianism history will keep people be loyal to authority. But in the civil war within China after world war 2 and the great leap forward, Mao used "democracy" mob rules style by youngster to win the war with Kuomintang and later  eliminate Mao's comrades who opposed his politics to consolidate power and then drop the "democracy" in Tienanmen Square event where young students were overly affected by Western democracy standard and shaken their power.

Because CCP stir up democracy in people for political purpose before Tianman square, they have to use economy to replace the emptiness when democracy hope was taken away and friendliness  toward Western idea will become dangerous to CCP power.Theoretically people cannot gathering more than 100 people without local authority permission, so normal people turn away politics again.

It make Mainland Chinese neither here nor there in cultural philosophy,  traditions, religions with the the social glue strangers treat each other, besides law, with is the foundation of honesty, working ethics,  team work, cooperation and leadership, taking responsibility, mental resilience, which is much needed in high level integrated tech where multiple industries cooperate together. Money alone is not a factor for developing in very complicated problems which include many industries. It cannot go far if they afraid of taking responsibility or taking risk, fear that the higher will replace them or blame them for their failures. 

Historically only Germany ever succeed in state control economy after world war 1 but they started the war before the balloon would collapse. Both Germany and Soviet Union depended on national pride to sacrifice consumption goods for capital goods to become world class industry-military nation in very short period. Soviet Union had a state control economy, lots of natural resources but still could not catch up with the balloon and collapsed. China natural resources were mostly out of their countries and they depend on trading (which Soviet was missing), so they have many weakness and huge risks if the western's attitudes change.

China failed one with the Great Leap forward and they depend on keeping people consumption to be in power and for consolidate their power, therefor their potentials are inflated. US has never sacrificed  their consumption since world war II so their potentials is under valuated.  A bit diet on consumption and return to traditional values will release it tremendous potentials. US GDP (1st) =  Chinese GDP(2nd)+ Japanese GDP (3rd)+ Germany GDP (4th). 

Many countries concentrated in the US failures, the same way students in class concentrate on top student failed the test while China failed many tests but was ignored.  The greatest threat to the US is the imported half liberal-half socialism values that is undermining many US traditional values which brought US to be independent and became the strongest nation in the first place. Even if it goes the wrong direction, it will took many years to collapse from within, under the circumstance that  other countries didn't collapse first.

When a nations came to power, besides luck in resources,geopolitical and population advantages, its people's values, their believes, that help them endure through tough time: Rome, Ancient China, Mongol  but all corrupted  and collapse from within when their values corrupted. I cannot see what people values made Mainland China to keep up (unlike Hongkong or Taiwan). Japan doesn't have resources and carry historical weight, but it is doing a good job with its people values, Germany people values are great but they have many EU countries pulling their legs.

[SUZNV + 1,197]

On 5/26/2020 at 4:55 PM, 0R0 said:

The Dem governor's economic sabotage is not going to continue. They will be held hostage by Trump for the State and Local bailout bill now slowly chewed up in the Senate.  The DOJ is collecting cases to bring against the governors and their bureaucracies for constitutional violations. They will fold. When there is another wave of infections, they will have no support for shutdowns from the Federal government. Trump has explicitly said that regardless of the outcomes, there will be no further shutdowns.

I didn't mean in Covid19 time but  from next year onward. This US election will be the test on what values US people want the most and none can guarantee the outcome so everything is in theory only.

Edited May 27, 2020 by SUZNV

[0R0 + 6,251]

7 hours ago, Marcin2 said:

I am afraid there could be second wave in 2 weeks.

Georgia has been open for a few weeks.

This is from the Atlanta region no sign of anything yet.

Florida has been open for several weeks as well.

So far nothing to indicate a second wave.

Travis County (Austin Texas) has been open for a month

They are on a second blip of fevers since they were opened,

Ohio is in its third week of opening up. This is for Franklin Co. City of Columbus in central Ohio. Has a little blip too, we shall see if anything develops out of it.

No clear evidence of a second wave starting, not to speak of ongoing.

 

[Ward Smith + 6,615]

On 5/24/2020 at 2:22 AM, Jan van Eck said:

The Buyers will be the sharks from Wall Street,all Jews of course,

I can't give you upvotes when you talk like this. Yes, there might be some Jews on Wall Street, but certainly not all. There's sharks of all stripes out there. Personally I'm vastly more fearful of Mormons than those of the Hebrew persuasion  

[Jan van Eck + 7,558]

1 hour ago, Ward Smith said:

I can't give you upvotes when you talk like this. Yes, there might be some Jews on Wall Street, but certainly not all. There's sharks of all stripes out there. Personally I'm vastly more fearful of Mormons than those of the Hebrew persuasion  

You misunderstand how the Street is structured.  And also how New York City is structured.  To this date it remains a rigid stratified society, and the 3,000 jews on the Street are the fellows that are involved in securitized debentures manufacturing.  They are ostracised by the rest of the Street, where the doors are closed  and they are not hired.  This all stems from decisions made at certain Ivy League Schools roughly about starting 1972, when the Jewish Quotas on students were largely lifted.  The sons of the previously discrimintaed against, who grew up going to the Catskills tobe confronted by signs in small print saying "Hotel - restricted," vowed that they would henceforth never be poor, proceeded to the Street, got jobs at Goldman Sachs, and set about crafting complex financial derivatives.  In New York, you have two classes of co-op apartment buildings: those that accept jews, and those that do not.  If you are jewish you do not get in, nothing else matters.  Same with country clubs, especially in the suburbs such as Greenwixh, COnnecticut.   Look, I did not make the world, I  merely describe it as it is, if you are offended by that reality, or refuse to believe it exists, I cordially invite you to live in Manhattan, go see for yourself.  I could describe it for you at greater detail just how this evolved, but in all candor I am not motivated to do so, assuredly not on this forum.  Actually, on no forum.  See if I care.  I don't live there any more anyway, not my problem.  Cheers. 

[canadas canadas + 136]

Since many businesses and people are facing bankruptcy, one has to ask who and what is the FED saving and making whole by buying up trillions of dollars worth of debt and debt instruments?  

[Jan van Eck + 7,558]

On 5/26/2020 at 6:43 PM, ronwagn said:

Very sad. I think there is a better future though. 

You might want to sit back and take a sobering look at how things are unraveling in Minneapolis:

https://twitter.com/PaulBlume_FOX9/status/1266244250045313024?ref_src=twsrc^google|twcamp^serp|twgr^tweet