We have not seen Wall Street this jumpy since just before the great financial crisis of 2008. As I have explained so many times before, when the waters are calm and there is low volatility, markets tend to go up. And when the waters are choppy and volatility starts to spike, markets tend to go down. That is why the behavior that we have been witnessing from investors during the first two quarters of 2018 is so alarming. A high level of market turnover is often a sign of big trouble ahead, and according to Bloomberg our financial markets “are churning at the fastest rate since 2008″
Read more at:We Are Witnessing Unusual Stock Market Behavior That Is Unlike Anything That We Have Seen Since 2008
Printing / borrowing money to generate the unsustainable illusion of “growth” sets up the collapse of the entire Keynesian edifice.
Of the many delusions of modern economics, perhaps the greatest is that the dominant Keynesian model reflects permanent dynamics of advanced economies. Economics, along with other social sciences, makes an implicit claim that its econometric claims are the equal of the “hard sciences” of physics and chemistry.
In other words, the econometrics of Keynesian economics is presented as possessing the same timeless validity of the natural sciences.
The reality is that Keynesianism arose in an era of abundant cheap energy, and it is an artifact of that brief one-off period in which industrialization, consumption and the human population were able to expand by leaps and bounds due to cheap energy and new technologies that leveraged greater value (“work,” output) from the cheap energy.
Read more at:Keynesian Economics Is an Artifact of Cheap Energy
Members of Antifa clashed with members of the conservative group Patriot Prayer Saturday evening in Portland, Ore., forcing police to declare that a riot was taking place as officers fired paintballs filled with tear gas into the crowd, according to the Oregonian.
Scuffles broke out shortly after 6 pm local time as Antifa protesters pelted marchers from the conservative group with eggs, water bottles and firecrackers as the marchers spilled out into downtown Portland for their legally permitted march in support of a conservative Republican candidate for the U.S. Senate. The march followed an afternoon rally at Terry Schrunk Federal Plaza, Reuters reported.
Read more at:Riot Breaks Out In Portland As Antifa Activists Clash With Conservative Marchers
All sorts of centralized organizations that appear rock-solid may well melt into air as the disintegrative dynamics gather momentum. Rising political and social discord that is generally being attributed to “populism” may actually be the re-emergence of ancient geographic and cultural fault lines. An often-overlooked manifestation of this might be the nation-state of Germany, a possibility fleshed out by longtime correspondent Mark G.
It’s both convenient and expedient for politicos to blame “populism” for the fracturing of the status quo. Given the unsavory undertones of ethnic/religious bias of “populism,” this allows the media-savvy politico (and aren’t they all media-savvy?) to paint his/her opponents as racist via the code-word “populist.”
Labeling dissenters “populists” doesn’t explain or predict anything. In terms of economic classes, it’s more insightful to distinguish between the Protected Class (insiders and favored elites) who benefits enormously from the status quo and the Unprotected Class (outsiders, marginalized workers, those without privilege or access to cheap capital).
Read more at: Could Germany Fracture?
When are America’s global corporations and Wall Street going to sit down with President Trump and explain to him that his trade war is not with China but with them? The biggest chunk of America’s trade deficit with China is the offshored production of America’s global corporations. When the corporations bring the products that they produce in China to the US consumer market, the products are classified as imports from China.
Six years ago when I was writing The Failure of Laissez Faire Capitalism, I concluded on the evidence that half of US imports from China consist of the offshored production of US corporations. Offshoring is a substantial benefit to US corporations because of much lower labor and compliance costs. Profits, executive bonuses, and shareholders’ capital gains receive a large boost from offshoring. The costs of these benefits for a few fall on the many – the former American employees who formerly had a middle class income and expectations for their children.
Read more at:“How Long Can The Federal Reserve Stave Off The Inevitable?”
It is difficult to find the words to describe just how serious America’s trade war with China is becoming. As you will see below, the two largest economies on the entire planet are on a self-destructive course that almost seems irreversible at this point. The only way that this trade war is going to come to a rapid conclusion is if one side is willing to totally submit and accept an extremely bitter and humiliating defeat on the global stage, and that is not likely to happen. So in the short-term, and probably beyond that, we are going to experience a tremendous amount of economic pain. In fact, if one wanted to create a recipe for economic disaster, it would be hard to beat having the Federal Reserve dramatically raise interest rates at the exact same time that the U.S. government is starting trade wars with all of the other major economic powers simultaneously. Unless something drastically changes in the very near future, there is no way that the U.S. is going to be able to get through this without experiencing severe pain. Many had hoped that President Trump would settle down after the initial salvos in this new trade war, but instead on Sunday evening we learned that he has decided to go nuclear.
Read more at:Things Just Went Nuclear In Our Trade War With China, And A Giant Shockwave Is About To Hit The U.S. Economy
Market “fixes” fuel wealth/income inequality which feeds political and social instability.
There are two Grand Narratives about the U.S. economy and asset markets: the mainstream narrative is that nothing is fundamentally wrong with the economy, and so no structural changes (and the sacrifices such changes entail) are needed.
In this narrative, the only problem that needs solving is markets stop bubbling higher. The mainstream always expects markets to keep bubbling higher essentially forever, but reality intrudes and the asset bubbles pop.
The solution in this narrative is to “fix” markets with massive stimulus: fiscal stimulus from the Savior State and monetary stimulus from the central bank — Federal Reserve (reinflating bubbles that enrich the already-wealthy is our primary job).
I’ve marked up a chart of the S&P 500 stock index to reflect this narrative:
Read more at:Are You Prepared to Invest in Troubled Times?