The world is headed for big problems - interview with very smart economist

[Jan van Eck + 7,558]

I invite readers to ponder the implications of the words of this esteemed economist, which are sobering:

https://www.spiegel.de/international/business/nouriel-roubini-the-stock-market-is-deluding-itself-a-a9d3ab21-cfea-4220-8727-5b59105d0858?sara_ecid=nl_upd_1jtzCCtmxpVo9GAZr2b4X8GquyeAc9&nlid=bfjpqhxz

While titled the stock market is deluding itself," this interview, printed in Der Spiegel, a German-language political magazine  (here tastefully translated into English) is of a now-American economist in New York City.   I happen to concur with his assessments.   It paints a picture of an ugly future, at least in the next decade.  

[Dan Warnick + 6,100]

46 minutes ago, Jan van Eck said:

I invite readers to ponder the implications of the words of this esteemed economist, which are sobering:

https://www.spiegel.de/international/business/nouriel-roubini-the-stock-market-is-deluding-itself-a-a9d3ab21-cfea-4220-8727-5b59105d0858?sara_ecid=nl_upd_1jtzCCtmxpVo9GAZr2b4X8GquyeAc9&nlid=bfjpqhxz

While titled the stock market is deluding itself," this interview, printed in Der Spiegel, a German-language political magazine  (here tastefully translated into English) is of a now-American economist in New York City.   I happen to concur with his assessments.   It paints a picture of an ugly future, at least in the next decade.  

Interesting, if sparse on details.  But I suppose it would be difficult if not impossible to list all of the ramifications of the past 6 months on the world economy without going into a 3 day session and 100s of pages.  I get it, and I believe it.

It seems that a large portion of people are deluding themselves into believing this will blow over quickly.

One example:  I read a fair amount of financial pages and forums.  Many on the forums, at least, are saying that things might be okay because they are not seeing foreclosures and such.  But 35+ million people DID lose their jobs and have not gone back to work.  Couple that with the fact that employers are taking this very convenient opportunity to right-size their staff, probably meaning that a good 10-15 million people don't return to work, and that there will probably be further reductions once the pandemic shutdown's impact on the business is finally fully felt in the next 2-4 months.  Even well planned families don't have mortgage payment buffers of more than 8-12 months saved up, with most of their liquid capital invested in the markets, either by direct investments or their 401k or similar.  Or, their buffer is much less and they are betting on being able to cash in investments and be able to pay the mortgage for up to a year.  That's it, and then the mass foreclosures hit, and hit far and wide.

Foreclosures will come, IMHO, and I believe they will come at a much higher percentage than 2007-2009.  I think this will also over stress financial companies that are already on weak foundations, so the impact will be felt from the S&P500 to the Russell 1,000 & 2,000.  Credit tightening will be the result of all the above and then the world really grinds to a halt and the Dow and remaining indexes will dive with the big ones.

Prepare yourselves people.

[Jan van Eck + 7,558]

3 minutes ago, Dan Warnick said:

employers are taking this very convenient opportunity to right-size their staff,

But remember that employment levels are a direct function of product demand.  You cannot have employment just for the sake of employment, unless you are the Government.   Governments can (and do) hire people because then the Managers or department Heads have a bigger fiefdom, which eventually relates to more money.  Private enterprises, even the zombie corporations, can over-staff only so far, then it collapses.  I invite you to ponder the situation of Boeing, the corporation that still has an Order Book for certain aircraft lines, but no order book for the 737 Max-10.   What do you do with all those employees that would otherwise build those planes?  Well, they get laid off.  Are they coming back?  Not in my lifetime. 

If you have a situation where product demand has collapsed, and forget the reasons, that is not interesting here, then you cannot maintain your employment levels; they have to shrink to meet whatever demand is out there.  And it makes no difference if you are running a factory or a telephone company; if nobody wants you lousy land-line service, because you run a lousy company (for example, the local AT&T - Bell Telephone entities) becuase you have for decades hired stupid, insolent and lousy people with cruddy attitudes towards the public, then don't be surprised that the public says "enough" and abandons land-lines and goes over to all-wireless.  In Connecticut, the cruddy, insolent land-line monopolist, AT&T, was losing over 50,000 landlines every quarter.  They tried to entice people back to being customers;  it did not work.  That was because there was no internal cultural change.  Result: a chunk of that w3orkforce ends up permanently unemployed.  

If youare in the automobile-building business and your autos are put together with shoddy body-panel fit and you put components in there with poor or no quality-control, then eventually the customers will flee, and go buy Japanese cars - which is exctly what happened to mightly GM some decades back.  At one point the US auto industry comprised some 10% of national GNP.  Today, even Ford is abandoning the entire personal-auto segment.  You want a Ford?  Go buy a truck. You want a sedan?  Go talk to the Koreans.  

What has brought about the collapse of the quality of the Amereican workforce product?  In lage part - management.  If you have cruddy management, then the good staff will get disgusted and give up, and the cruddy employees will continue to sponge and slack off, and guess what, your operation gets into deep trouble.  When Boeing management spends $45 billion on stock buy-backs in order to reise the stock price and allow management to sell out their bonus shares and warrants for personal profit, for millions, and nothing gets invested back into new product, then you end up with farm-outs to India where people who know zero about airplanes are busy writing the software code for flight-surface control, and the ensuing disaster will wipe out the entire company.  Boeing survives today only, I repeat only, because the US govt is putting military contracts into the company.  If left to its own devices, Boeing would be in the bankruptcy courts  (which is where it belongs, incidentally). 

If you take a society that is effectively run by the Jamie Dimon's of the New York finance banks, and you take his arrogance and insolence and extrapolate that out across the landscape, then don't be surprised that managers everywhere take their cue from that jerk and society goes into collapse.  Jamie Dimon is personally responsible for the creation of urban ghettos, millions unemployed, U.S. social decay.  The President does not run America;  the Federal Reserve does not run America; the Congress, forget about it; Jamie Dimon runs America.  Why?  In his own words:  "Because I have more money than you."   Now, let that sink in, people. 

[Jan van Eck + 7,558]

23 hours ago, Dan Warnick said:

Foreclosures will come, IMHO, and I believe they will come at a much higher percentage than 2007-2009. 

They are already here.  And the New Yorkers are already gearing up to make immense profits from them.  For example, Goldman Sachs, the most notorious of the money scavengers on the Street, has set upp some 68 subsidiaries, including the notorious outfit labelled as "MTGLQ Investors Limited Partnership."  Goldman Sachs is the general partner, so they get to scavenge off the bulk of the profits, and the buyers of the limited partner shares, typically hedge funds, get to participate for lesser shares.  But make no mistake, these guys are sharks.  

Their head office is at 28 Liberty Street, down in the NYC financial center, in a 60-story skyscraper built and otherwise largely occupied by Jamie Dimon and has JPMorgan Chase Bank.  Convenient, no?  MTGLQ Investors is the vehicle that buys vast pools of defaulted mortgage loans from FNMA  ["Fannie Mae," the federal house-funding institution run by the govt that went insolvent, effectively bankrupt but not placed into that Court] by the billions of dollars, then attempts to retail out the underlying properties to new buyers under draconian, non-market sale contracts.  In effect, the govt via FNMA socializes the losses, and the sale of the defaulted loans into these baskets of pools at deep-discount allows the Wall Street sharks to go buy them for pennies, then to go re-sell them for a double-your-capital operation.  The profits flow back to the oligarchs at Goldman Sachs, of course. 

The main reason that Goldman does not directly buy these pools in their own name is to create opacity.  Goldman is a Jewish company; for decades, you had to be a Jew in order to get a job there, any job, no matter how menial.  When the nest revolution comes, the wrath of the masses will be directed at Wall Street, but who is "MTGLQ" ?  How can you go lynch an alphabet?  The Goldman guys figure this grants them just enough insulation to keep the masses from murder, at least of them. 

I think it is a failed exercise.  Some of those ANTIFA guys are very computer literate, and the internet today has tons of information.  They will dig and dig like total fanatics, find the names of the Goldman guys, get their guns, and go hunting.  That is my prediction.  Will gated communities and armed guards keep the mob away?  Probably not; sure didn't help the guards of the Bastille, now did it? 

Edited June 14, 2020 by Jan van Eck
typing error

[El Nikko + 2,145]

I can't open the article, would anyone care to copy paste it in to this thread?

[Dan Warnick + 6,100]

Here you go:

Interview with Economist Nouriel Roubini
"The Stock Market Is Deluding Itself"

Prominent American economist Nouriel Roubini does not believe the global economy will recover quickly. He believes that the dire situation will produce a summer of protest in the U.S. and years of difficulties in Europe as well.

Interview Conducted by Tim Bartz
12.06.2020, 18.26 Uhr

DER SPIEGEL: Mr. Roubini, the pandemic has brought the global economy to its knees, and millions of people have lost their jobs. Is the crisis as severe as the Great Depression of the 1930s?

Roubini: The crash is even greater than it was then. It took years from 1929 until the full extent of the crisis became visible. Compared to today, it was like a slow-motion train wreck. Now the world economy has collapsed within weeks, and in the U.S. alone, more than 40 million people are unemployed. Many believe that the economy will pick up again just as quickly, but that is a fallacy.

About Nouriel Roubini

Nouriel Roubini, 62, is one of the best-known economists in the world. A professor at the Stern School of Business in New York, he is one of the few who predicted the bursting of the U.S. real estate bubble and the resulting financial crisis in 2008. He was also among those who warned early on that COVID-19 would cripple the economy.

DER SPIEGEL: You don't believe in a V-shaped recovery despite the huge economic stimulus packages? After all, 2.5 million new jobs were created again in the U.S. in May.

Roubini: Of course, we will see an upswing in the second half of the year. But it will not be a real one, but a delusion. The economy has fallen so steeply that it is practically inevitable that it will pick up again at some point. But that won't compensate for the crash in any way. Even at the end of 2021, the U.S. economy will still be below the level of early 2020; too much has broken down. And the unemployment rate will level off at 16 or 17 percent - during the financial crisis it was only 10 percent. The job creation in May was only 2.4 million after 42 million lost their jobs in the last few months. And the actual unemployment rate is much higher than officially measured.

DER SPIEGEL: The stock market obviously sees things differently, with shares already trading at the same level as at the beginning of the year.

Roubini: The stock market is deluding itself. Investors are betting that there will be further economic stimulus packages and a V-shaped recovery of profits. But for the people here in the U.S., that means nothing.

DER SPIEGEL: Since when have Americans not cared about the stock market?

Roubini: On Wall Street, big corporations set the tone, banks and technology companies in particular. They will survive the crisis because the state will never let them go under. They will kick people out, cut costs and in the end, they will have even more market power than before. But what we here call Main Street, small- and medium-sized companies, can't do that. They just go bankrupt. I estimate that every second restaurant in New York City will have to close, but McDonald's will survive. But that's not all.

DER SPIEGEL: What else?

Roubini: The richest 10 percent of Americans hold 80 percent of stock market wealth, while 75 percent own no shares at all. There is a study by the Federal Reserve, according to which 40 percent of Americans do not have 400 dollars in cash to be prepared for emergencies. We are experiencing this emergency now. The system is sick, and people are taking to the streets because of it.

DER SPIEGEL 25/2020

The article you are reading originally appeared in German in issue 25/2020 (June 13, 2020) of DER SPIEGEL.

FAQ: Everything You Need to Know about DER SPIEGEL

Seven Decades of Quality Journalism: The History of DER SPIEGEL

Reprints: How To License SPIEGEL Articles

DER SPIEGEL: You mean the protests following the police killing of George Floyd also have a social component?

Roubini: Of course! In the area where I live, the Bowery in Lower Manhattan, three quarters of the demonstrators are white. Many of them are young and belong to the urban "Precariat," the new underclass that has replaced the traditional working class, the "Proletariat,” in advanced service economies. The Precariat is made up of temporary workers, freelancers, people who work on an hourly basis, gig workers, contractors - even though they often have university degrees. Those who are not in regular full-time employment no longer receive state transfers after three months. These people can then no longer pay their rent and telephone bills, and electricity and water are cut off. It will be a long, hot summer.

DER SPIEGEL: That will significantly reduce Donald Trump's chances at reelection, won't it?

Roubini: You're right. But Joe Biden will have to win by a very large margin for Donald Trump to leave Washington on his own. But I predict that's not what will happen. Either Trump will barely hold on to office, even though support among the white working class that put him into office is waning. Or he will lose by a narrow margin, but will not accept the results.

DER SPIEGEL: And you seriously believe that he would then barricade himself in the White House?

Roubini: Of course. Trump does not go to the Supreme Court like Al Gore and request a recount of the votes if the election results are close in some districts. He will blame China, Russia, blacks or immigrants and act like the dictator of a banana republic. He will call his followers to arms – there are enough armed white fascists running around out there. He reminds them often enough of the Second Amendment, which allows Americans to own weapons.

DER SPIEGEL: A grim scenario. Trump will also likely blame the Federal Reserve for economic developments. He wants to see the Fed lower interest rates even further.

Roubini: The Fed has already done all sorts of things that it didn't have to do. It has saved banks, financial investors, hedge funds and asset managers by flooding the markets with liquidity. That was the right thing to do in the short term to avoid deflation. But public debt is so high that governments and companies can only refinance themselves if interest rates remain ultra-low. The Fed has to make sure of that by buying bonds and thereby boosting their prices and depressing interest rates. In the long term, it will not get out of the act. The Fed is in the same situation as all major central banks worldwide.

DER SPIEGEL: You mean the central banks have lost their independence?

Roubini: Absolutely. Look: In December 2018, Fed Chairman Jerome Powell announced that he would raise interest rates and cut the central bank balance sheet by stopping bond purchases. As a result, the stock market slumped by 20 percent. Powell quickly backed off, and today the Fed balance sheet is twice as big as it was then. In the long run, this will lead to inflation.

DER SPIEGEL: How can that happen when so many people are unemployed, and the economy is not really getting off the ground?

Roubini: Because we will experience a negative shock on the supply side. It may sound technical, but it's easily explained.

DER SPIEGEL: Go ahead.

Roubini: Globalization has kept labor and production costs low for years, if only because of the 2.5 billion cheap laborers from India and China. But globalization had already passed its peak after the financial crisis, and the pandemic has intensified the trend. We are witnessing renationalization, the disintegration of supply chains, a trade conflict between China and the U.S.

DER SPIEGEL: So you expect prices to increase across the board?

Roubini: Take the example of 5G technology: Nokia and Ericsson are 30 percent more expensive and 20 percent less effective than Huawei. So if a country decides against Huawei for 5G expansion, which there are good security policy reasons for doing, the prices of all kinds of end products, from 5G services to toasters and microwaves with 5G chips, will automatically rise. And that ultimately leads to inflation.

DER SPIEGEL: But then interest rates would have to rise.

Roubini: According to the textbook, yes, but that won't happen. States and companies would otherwise blow their budgets and balance sheets to smithereens.

DER SPIEGEL: Have you been surprised by how much money Europeans are suddenly mobilizing to stabilize their economies?

Roubini: Not really. After all, it's all about keeping the Eurozone together. Without an act of solidarity, Italy in particular, would collapse and leave the common currency zone. Then everything would be over.

DER SPIEGEL: With regard to the 500-billion-euro aid package that Germany and France are hoping to assemble together, German Finance Minister Olaf Scholz spoke of Europe's Hamilton moment, a reference to America's first Secretary of the Treasury Alexander Hamilton, who laid the financial foundation for a U.S. nation. Is Scholz exaggerating?

Roubini: Of course, he is exaggerating. The package is all well and good, but two crucial prerequisites are missing for a European federal state: First, the communitization of liabilities - Italy's debt is still Italy's debt. And secondly, a common budget of a significant size, i.e. of 20 or 30 percent of the gross domestic product and not, as is now the case, of just 2 percent.

DER SPIEGEL: By German standards, the decisions of the German government are revolutionary.

Roubini: You can't always say no to everything! Berlin cannot be against the fact that the EU budget is growing and that the ECB is playing a greater role and at the same time be surprised when everything goes down the drain. Then Europe would be dead! Fortunately, Chancellor Angela Merkel realized in time what was at stake. And she is so popular at the moment that she can push these things through. I doubt that this would still be possible under her successor, no matter who becomes the leader of her party and chancellor.

DER SPIEGEL: But the next crisis is already lurking around the corner: Brexit. Will the British again request an extension of the transition period?

Roubini: I speak regularly with British government representatives and have the impression that they are clearly heading for a hard Brexit. London does not want a free-trade agreement like the one between the EU and Canada, the government really wants a clear cut. That is, of course, crazy. Trucks will pile up at the customs border, Europe's stock markets will fall sharply, the British economy will as well, and the European economy will fall too, albeit not to the same degree.

DER SPIEGEL: Is there anything that gives you hope?

Roubini: Hope? I'd have to think. It was good that the governments reacted so quickly and massively to the pandemic and its consequences. But otherwise? I fear that the 2020s will be marked by doom and disaster. Perhaps the global economy will be more sustainable afterwards. But for now, it will be gloomy.

[BLA + 1,666]

On 6/13/2020 at 8:28 AM, Jan van Eck said:

I invite readers to ponder the implications of the words of this esteemed economist, which are sobering:

While titled the stock market is deluding itself," this interview, printed in Der Spiegel, a German-language political magazine  (here tastefully translated into English) is of a now-American economist in New York City.   I happen to concur with his assessments.   It paints a picture of an ugly future, at least in the next decade.  

I pondered the article and I .   .   .  Disagree.

Roubini was relevant 25 years ago. 

Not today.

Much like the retired generals turning on this administration. They grew up in a different world from  a military security and economy standpoint. They think in a 1980 to 1990 mindset. 

The federal Government programs have pumped $3 trillion into the economy.  Then the Fed Reserve has bought $4 trillion of the stressed and high yield debt.  Total $7 Trillion.

That's more than a kick in the butt.  There will be some dislocation, above avg unemployment and some bankruptcies.  But it is not nearly as dire as Roubini (a lefty Trump hater) makes it out to be. 

Roubini uses the example of that it took 10 years to recover from the 2007 -2008 financial crisis.  Just maybe could taking ten years to come back possibly be the result of Obama administration anemic economic plan ? 

Plus this is an entirely different financial crisis.  

Actually this crisis is very different. Back in 2008 due to asset backed securities , mortgage tranches and no serious oversight 80% OF THE U.S. BANKS WERE INSOLVENT OR BANKRUPT.  The Treasury and Federal Reserve had to recapitalize them.  They even took care of some foreign banks. 

This time around those hurt most are small businesses and hourly workers. It's due to shutting down the economy.  It's a big problem,  but in my opinion can be brought back in a reasonable amount of time. Today's economy has so much more flexibility.

The investment banks and hedgefunds are setting up subs to buy the discounted $4 trillion high yield debt the Federal Reserve has bought. Same as last financial crisis 2008. Same as Long-term Capital LLC crisis,  Same as the Savings and Loan crisis before that.  The difference is last time (2008) it was mortgages and Wallstreet's manufactured derivatives vs this time high yield debt that was exposed as a result of shutting down the economy along with the massive resultant unemployment.  

The last time Federal Reserve bought $50 Billion / month of mortgages for a total of close to $2 trillion.  The Fed packaged the mortgages and sold them at great discount to financial buyers.

Then the Fed recapitalized the banks with the help of the Treasury department to the tune of $ trillions more.   

Fed sold the repacked mortgages to financial buyers like Joe Biden's son Hunter. Remember Joe Biden's son Hunter and Senator Kerry's stepson Chris (both with no Financial background) were given $130 million guaranteed loan to buy Fed Assets by way of the TALF program.  They ran the millions in profits thru an offshore entity in the Cayman islands to avoid scrutiny and taxes. How come nobody in Washington investigates this)

I end my argument that Roubini is no longer relevant at this time by discussing  his statement that Trump, if loses, will not leave the Whitehouse ! What sane person really believes this ? This is proof Roubini has lost it and is the reason he is relegated to be interviewed by a dying German left leaning weekly magazine. 

 

The pandemic solution : protect the elderly and those with compromised immune systems and open up the economy to allow the herd immunity to take place. 

 

Edited June 15, 2020 by BLA

[Eyes Wide Open + 3,554]

That is a interesting read, it is filled with far to many complexity's for the US to get quickly back up on its feet however. Now if Biden is elected it is easy to see the world piece itself back together, Trump being a opportunist will run with nationalization of US industry..its just to simple and the rewards would be enormous..

How this left last dance for revolution plays out will determine quite a bit...It is interesting to trying to proiect just where the customer base will be and even more interesting is who will be allowed to serve or do business with that base..That has never happened prior to this event, In some ways it is almost similar to a corporation being cut up and sold to the highest bidder.

Odd it not, the Saudis have risen there hand already in a sense they are the highest bidder in there market..

[El Nikko + 2,145]

Thanks @Dan Warnick

 

[Eyes Wide Open + 3,554]

4 hours ago, Eyes Wide Open said:

That is a interesting read, it is filled with far to many complexity's for the US to get quickly back up on its feet however. Now if Biden is elected it is easy to see the world piece itself back together, Trump being a opportunist will run with nationalization of US industry..its just to simple and the rewards would be enormous..

How this left last dance for revolution plays out will determine quite a bit...It is interesting to trying to proiect just where the customer base will be and even more interesting is who will be allowed to serve or do business with that base..That has never happened prior to this event, In some ways it is almost similar to a corporation being cut up and sold to the highest bidder.

Odd it not, the Saudis have risen there hand already in a sense they are the highest bidder in there market..

Perhaps better said Biden would attempt to hold that tangled mess together if elected.. actually his support team the man himself could not put any three of those intertwining nightmares together..

What is do not understand why no addresses the contract failures in the US...this shutdown calamity is beyond hope...

Trump once said "What do you have to lose"...pretty much everything.

 

Edited June 14, 2020 by Eyes Wide Open

[frankfurter + 562]

So very typical of xenophobic 'murcans. A US economist, famous in the US, speaking about US-centric issues. Fine. Yet, somehow this economist and the issues are "the world"? 

Today, the US stands before a chasm, of its own making. There is no turning back to safer ground. The hope is the chasm is not too deep, not too wide, and V-shaped, to allow it to be filled with paper money, printed by the government via its agent the Fed, sufficient to roll the 1% across the divide in bubble-wrapped cocoons. If any others can cross the divide, by their independent means, then fine, the strongest survive, while the rest are not worth saving in any case.

But what if the chasm is too extensive to be filled with paper?  aye, there's the rub. Then we must bring as many other countries with their paper along with us to fill the void. Why should we deplete our national treasure to zero and not others? 

But what if other countries wish to take a different path/s to explore the extent of the chasm, and/or wish to take a solution/s different from ours?  Perhaps build a bridge to the land of another country or more?  aye, there's another rub.  We cannot allow that, for if they cross the chasm, they will prosper while we decline. Thus the solution is to destroy those countries, not entirely, but sufficiently to cause those peoples to see thereafter our way is their difference between death and survival, and so steal their resources so we fill the chasm. 

But those countries can team up to destroy us, too. aye, there's the most difficult rub. In that case, we must fight: if we die, they die. To have a chance of success, we must force as many other countries as we can to be our vassals to fight with us. We must fight to risk the destruction of the Earth, and hope the ancient scriptures are correct: that our Creator will send his Chosen One to enrapture his chosen people before we destroy ourselves and all upon the Earth.

We have no other solution, for we cannot retreat from the chasm we face. 

 

[Strangelovesurfing + 737]

12 hours ago, Dan Warnick said:

It seems that a large portion of people are deluding themselves into believing this will blow over quickly.

Every crisis starts this way, look at 2007-2008, they were willfully clueless. You've got the same dummies preaching the same 'no worries' chant on the financial news, Kudlow is idiot preacher #1 once again. How do these guys/gals keep their highly overpaid jobs...?

No really, I want to know so I can get one!

[El Nikko + 2,145]

6 minutes ago, Strangelovesurfing said:

Every crisis starts this way, look at 2007-2008, they were willfully clueless. You've got the same dummies preaching the same 'no worries' chant on the financial news, Kudlow is idiot preacher #1 once again. How do these guys/gals keep their highly overpaid jobs...?

No really, I want to know so I can get one!

Yeh I've seen that as well but they're probably the ones selling while the dummies coming in after the boom are the ones pumping it and also will be the ones who lose everything shortly...sounds a bit familar actually.

[El Nikko + 2,145]

I look at things simply, there are probably somewhere between 20-40 million people out of work in the US and easily 3-4 million in the UK who are being paid by the government but won't have a job to go back to.

Just that alone is enough to make me think we're seeing something we've never seen before and this is going to be a total blood bath or even the slow downfall of the west...I know that sounds far fetched but there was never a guarantee this party would last for ever.

Crazy world

[Strangelovesurfing + 737]

1 minute ago, El Nikko said:

while the dummies coming in after the boom are the ones pumping it and also will be the ones who lose everything shortly...sounds a bit familar actually.

From what I've read a lot of sports betters are scratching that itch in the markets, that ends when sports start. NFL preseason fans/no fans starts in August, might be a good time to short the 500.

[Strangelovesurfing + 737]

1 minute ago, El Nikko said:

I look at things simply, there are probably somewhere between 20-40 million people out of work in the US and easily 3-4 million in the UK who are being paid by the government but won't have a job to go back to.

Just that alone is enough to make me think we're seeing something we've never seen before and this is going to be a total blood bath or even the slow downfall of the west...I know that sounds far fetched but there was never a guarantee this party would last for ever.

Crazy world

Maybe, I cant get a read on this one yet. I'm more of a 'if theres no inflation, shove money into the system' kind of person. If the govt. keeps pushing liquidity into peoples accounts it might not be terrible for an extended period. Usually recessions/depressions are market orientated. This time might not be different, but it is unusual in cause/rapid FED response.

[El Nikko + 2,145]

I think...and I've had a beer or two...because why not?...this is my take on things, summed up in 26 seconds.

 

[Strangelovesurfing + 737]

16 hours ago, Jan van Eck said:

"MTGLQ"

They'll probably think it's supposed to be LGBTQ. 

Edited June 14, 2020 by Strangelovesurfing

[0R0 + 6,251]

5 hours ago, BLA said:

Disagree.

Roubini was relevant 25 years ago. 

Not today.

Much like the retired generals turning on this administration. They grew up in a different world from  a military security and economy standpoint. They think in a 1980 to 1990 mindset. 

The federal Government programs have pumped $3 trillion into the economy.  Then the Fed Reserve has bought $4 trillion of the stressed and high yield debt.  Total $7 Trillion.

That's more than a kick in the butt.  There will be some dislocation, above avg unemployment and some bankruptcies.  But it is not nearly as dire as Roubini (a lefty Trump hater) makes it out to be. 

Roubini uses the example of thst it took 10 years to recover from the 2007 -2008 financial crisis.  Just maybe could taking ten years to come back possibly be the result of Obama administration anemic economic plan ? 

Plus this is an entirely different financial crisis.  

Actually this crisis is very different. Back in 2008 due to asset backed securities , mortgage tranches and no serious oversight 80% OF THE U.S. BANKS WERE BANKRUPT.  The Treasury and Federal Reserve had to recapitalize them.  They even took care of some foreign banks. 

This time around those hurt most are small businesses and hourly workers. It's due to shutting down the economy.  It's a big problem,  but in my opinion can be brought back in a reasonable amount of time. Today's economy has so much more flexibility.

The investment banks and hedgefunds are setting up subs to buy the discounted $4 trillion high yield debt the Federal Reserve has bought. Same as last financial crisis 2008.  Same as the Savings and Loan crisis before that.  The difference is last time (2008) it was mortgages vs this time high yield debt.

The last time Federal Reserve bought $50 Billion / month of mortgages for a total of close to $2 trillion.  The Fed packaged the mortgages and sold them at great discount to financial buyers.

Then the Fed recapitalized the banks with the help of the Treasury department to the tune of $ trillions more.   

Fed sold the repacked mortgages to financial buyers like Joe Biden's son Hunter. Remember Joe Biden's son Hunter and Senator Kerry's stepson Chris (bpth with no Financial background) were given $130 million guaranteed loan to buy Fed Assets by way of the TALF program.  They ran the millions in profits thru an offshore entity in the Cayman islands to avoid scrutiny and taxes. How come nobody in Washington investigates this)

I end my argument that Roubini is no longer relevant at this time by discussing  his statement that Trump, if loses, will not leave the Whitehouse ! What sane person really believes this ? This is proof Roubini has lost it and is the reason he is relegated to be interviewed by a dying German left leaning weekly magazine. 

 

Totally agree with you. Roubini is mixing his politics with the economic analysis.

He is looking from an European perspective where outside of Germany's export sector and aggressive "green" program there has been no growth on the continent for well over a decade, since their inverted demographics crossed the threshold. That is not true in the US, so his analysis is just bonkers. The US has industrialized in the upstream oil and gas supply chain since before 2014, with domestic oil and NG production, plastic resins, plastic parts and additive manufacturing industry. But those are Ohio Valley, Pittsburgh and Texas economies that seems hidden from bicoastal economists and visitors.

Roubini's equation of Trump with fascism is just insane. It is a socialist distortion.

My recent outings show more of the same gushing spending and heavy daytime traffic and high truck density, just with less downtown traffic and some stores missing out, e.g. Best Buy which now seems to be 60% online sales. People don't just come in to browse. Evening traffic is low and restaurants are largely empty for dinner, but carry out is loaded with lines of cars around the fast food restaurants. There is a desperate need to figure out how to remove limits on cinemas concerts etc. people who are willing to take the risk should be allowed to do it with their best efforts at PPE. Not holding my breath on seeing the air travel sector revive any time soon. Vacationers are doing road trips and RVs. Nobody want to do culture tourism in the big cities. The big cities are heading for a total bust.

But the roadside motel business should do well enough and Air BnB will revive, just in more rural areas and the coasts.

[Ward Smith + 6,615]

2 hours ago, frankfurter said:

So very typical of xenophobic 'murcans. A US economist, famous in the US, speaking about US-centric issues. Fine. Yet, somehow this economist and the issues are "the world"? 

Today, the US stands before a chasm, of its own making. There is no turning back to safer ground. The hope is the chasm is not too deep, not too wide, and V-shaped, to allow it to be filled with paper money, printed by the government via its agent the Fed, sufficient to roll the 1% across the divide in bubble-wrapped cocoons. If any others can cross the divide, by their independent means, then fine, the strongest survive, while the rest are not worth saving in any case.

But what if the chasm is too extensive to be filled with paper?  aye, there's the rub. Then we must bring as many other countries with their paper along with us to fill the void. Why should we deplete our national treasure to zero and not others? 

But what if other countries wish to take a different path/s to explore the extent of the chasm, and/or wish to take a solution/s different from ours?  Perhaps build a bridge to the land of another country or more?  aye, there's another rub.  We cannot allow that, for if they cross the chasm, they will prosper while we decline. Thus the solution is to destroy those countries, not entirely, but sufficiently to cause those peoples to see thereafter our way is their difference between death and survival, and so steal their resources so we fill the chasm. 

But those countries can team up to destroy us, too. aye, there's the most difficult rub. In that case, we must fight: if we die, they die. To have a chance of success, we must force as many other countries as we can to be our vassals to fight with us. We must fight to risk the destruction of the Earth, and hope the ancient scriptures are correct: that our Creator will send his Chosen One to enrapture his chosen people before we destroy ourselves and all upon the Earth.

We have no other solution, for we cannot retreat from the chasm we face. 

 

I thought opium was illegal in China? 

[Strangelovesurfing + 737]

2 hours ago, 0R0 said:

Air BnB will revive

Please no

[Strangelovesurfing + 737]

1 hour ago, Ward Smith said:

I thought opium was illegal in China? 

Is there more than one person 'manning the post' under FF's handle? His writing style varies a lot.

[Marcin2 + 725]

An interesting article by Roubini. My prudent and informed comment about this article is:

I do not know.

1. US economy and the large part of global economy is like a COVID-19 patient in ICU.

The patient is alive and seems to be happy but needs oxygen mask and at times mechanical ventilation.

What would be after patient starts to breath normally ?

I think nobody knows because we are in uncharted territory.

 

2. 2007-2008 financial crisis actually never ended: Interest rates in Japan, EU and US were not back to normal, with a brief and unsuccesfull experiment by FED that Roubini mentions. Other countries actually never even tried with normalization of interest rates. These countries are addicted to ZIRP or NIRP.

Since 2007 our patient is addicted to breathing pure oxygen at times and taking medications that keep him alive. But he is not healthy at all.

 

3. There are limits of Keynessian largesse, the limits that are now being  tested in many countries, also in US.

3 trillion dollars US govenment programs plus 4 trillion FED "buy everything" program is in total:

100 billion dollars a day ICU treatment for US economy patient.

How long it can go on ?

I think the magic limit would be around 200% debt+FED to GDP ratio so about 42 trillion dollars in 2020 US GDP.

On 1 June 2020 US debt+FED is 25 trillion + 7 trillion = 32 trillion US dollars.

Still about 10 trillion dollars to borrow / print.

So depending on the timing of the pandemic and future budgets US has about 2-4 years until US dollar is completely debased.

4. The longer the epidemic lasts and the associated painful lockdowns, the larger the cost for the economy.

Epidemic in China lasted for 45 days: from 25 January till 10 March 2020.

In US epidemic lasts already 95 days: from 10 March till 15 June 2020, and on the basis of chaotic state and federal reactions plus recent demonstrations it would last for a very long time.

5. Roubini said a lot of important things about inequalities, and Wall Street+FED+Trump trying to keep NYSE+NASDAQ asset bubble.

I do not know why he thinks it would be different under Biden.

There is bi-partisan support for keeping stock exchange bubble, both rich Democracts and rich Republicans are interested in perpetuating this criminal act towards 90% of poor Ameircans.

 

 

Edited June 14, 2020 by Marcin2
typo

[Ward Smith + 6,615]

3 hours ago, Marcin2 said:

An interesting article by Roubini. My prudent and informed comment about this article is:

I do not know.

1. US economy and the large part of global economy is like a COVID-19 patient in ICU.

The patient is alive and seems to be happy but needs oxygen mask and at times mechanical ventilation.

What would be after patient starts to breath normally ?

I think nobody knows because we are in uncharted territory.

 

2. 2007-2008 financial crisis actually never ended: Interest rates in Japan, EU and US were not back to normal, with a brief and unsuccesfull experiment by FED that Roubini mentions. Other countries actually never even tried with normalization of interest rates. These countries are addicted to ZIRP or NIRP.

Since 2007 our patient is addicted to breathing pure oxygen at times and taking medications that keep him alive. But he is not healthy at all.

 

3. There are limits of Keynessian largesse, the limits that are now being  tested in many countries, also in US.

3 trillion dollars US govenment programs plus 4 trillion FED "buy everything" program is in total:

100 billion dollars a day ICU treatment for US economy patient.

How long it can go on ?

I think the magic limit would be around 200% debt+FED to GDP ratio so about 42 trillion dollars in 2020 US GDP.

On 1 June 2020 US debt+FED is 25 trillion + 7 trillion = 32 trillion US dollars.

Still about 10 trillion dollars to borrow / print.

So depending on the timing of the pandemic and future budgets US has about 2-4 years until US dollar is completely debased.

4. The longer the epidemic lasts and the associated painful lockdowns, the larger the cost for the economy.

Epidemic in China lasted for 45 days: from 25 January till 10 March 2020.

In US epidemic lasts already 95 days: from 10 March till 15 June 2020, and on the basis of chaotic state and federal reactions plus recent demonstrations it would last for a very long time.

5. Roubini said a lot of important things about inequalities, and Wall Street+FED+Trump trying to keep NYSE+NASDAQ asset bubble.

I do not know why he thinks it would be different under Biden.

There is bi-partisan support for keeping stock exchange bubble, both rich Democracts and rich Republicans are interested in perpetuating this criminal act towards 90% of poor Ameircans.

The interesting thing about "currency" is its overarching viability so long as the entity behind it seems viable. The dollar is backed by the full faith of the US government, whatever that means. It used to mean a lot, today? Who knows? We've seen a full on coup attempt by at least two arms of the government just during the 3 years of the Trump administration. We're seeing a new kind of confederacy with states giving the middle finger to the feds about everything from illegal immigration to reopening the economy. Trust me, while Main Street is dying, Wall Street is singing, and no one is singing louder than Jeff Bezos, the richest man in the world and growing. The union is splintering before our eyes. 

Every time California, or as I like to call it, Kalifornistan, makes noises about Independence, I say, goferit.  The thing those granola brains don't realize is, take away the military contracts, the bilateral trade and most importantly, the currency and Kalifornistan ain't that big a deal. Sure, 9th largest economy now but not then. They think afterwards as the coins toss, they'll get all the heads and the US gets all the tails (or, given their predilections, I'm guessing they prefer tails). In reality, as a separate country, they'd be lucky to be treated as well as Canada. Not because we hate them (even when they deserve it), but because that's what countries do. We don't have friends, we have interests. 

Because of the petrodollar, the US is the defacto reserve currency for the world. Poland just "accidentally" invaded their neighbor, does this mean it's a good time to hold Zloty's? Is any time a good time to hold Zloty's? The dollar has Universal appeal, no matter where I've gone in the world, and I've gone a ton of places, the dollars in my wallet were well received. Funny thing, Marcin, you could hand an American a counterfeit zloty and they'd never know. I handed a twenty to a tea vendor in the mountains of Taiwan where I hadn't seen one other round eye for two weeks, but she examined that bill like a trained Treasury agent. 

[BLA + 1,666]

14 hours ago, El Nikko said:

I look at things simply, there are probably somewhere between 20-40 million people out of work in the US and easily 3-4 million in the UK who are being paid by the government but won't have a job to go back to.

Just that alone is enough to make me think we're seeing something we've never seen before and this is going to be a total blood bath or even the slow downfall of the west...I know that sounds far fetched but there was never a guarantee this party would last for ever.

Crazy world

How many of the 20 million unemployed will go back to work when the very generous unemployment payments expire in July ?

Edited June 14, 2020 by BLA