Big Depression Marker! Free Money!

Yeah, I’ve been writing about the Second Depression since 1997 here, and one of the hardest parts of economics is figuring out just how this time’s rhyme will play.

As you remember, from my rambling discourses, what happens in a global depression is that you have consumers begin to tighten up all at once.  They stop spending money on the frivolous and useless, right? 

And so, in one of the worst economic timing debacles of all time, still unfolding on us, America has gone from one of the looser tax deals to something much, much tighter.  Not only have we bumped up rates (the Senate is democrats and so’s Obama as least on paper) so you’re not only going to pay a LOT more income tax this year, but on top of it, you’ll also being paying more for healthcare.

Economic reality check”:  You don’t add healthcare coverage for 30-million people and do it free.  So the middle class gets the bill.  The rich will buy or deduct out of it.

Now – without getting bitter about this stuff – it is what it is. 

But this leaves policyfakers (sic) with a lot of problems:  When an economy is trying to collapse, about the only hiring that can be done is governmental.  We have 21-million people working in government for round numbers.

Now we need to hire more – Ebola and such.

So the higher tax part makes sense.

As a CONSEQUENCE though, between O-care and higher withholding, guess what happens to real disposable income?  Toilet.

People stop discretionary spending.  Look at the restaurant stocks.  A lot of them are reporting fewer people going out to eat.  People are trying to save money – and with little success.

What then happens is the money the one percenters have tied up in banks doesn’t have anything to do because people are not borrowing money and because of that, we are about to begin the second leg down which should test the lows of 2009 and if we hold there, we’ll be lucky.  Bank rates continue to collapse.

Watch the 10-year Treasury futures  Horrible.

Now let’s turn back to the policyfakers:  How do they respond? 

Simple!  They try to push money out into the economy but it will be too little, too late because as we’ve been screaming all along, if the Velocity of Money is imploding, the effort to push money out is like pushing on a wet noodle.

How wet?

In Sweden this morning, Reuters and Bloomberg report the rates just went to zero.  Not for us little guys, but for the big guys.  The thinking is that if money gets cheap enough, someone is going to borrow and that will create jobs.

Dream on.,

The fairytale world is about to come crashing down because reality operate differently than economics. 

To my point about Elon Musk being one of the most honest business leaders out there when it comes to thinking about the dangers of artificial intelligence.  Well, guess what?  Robots and AI ABSOLUTELY ENSURE A 30% unemployment rate in the next 10-years.

There simply are not going to be enough jobs to keep 7-billion people working and fed because machines will take the jobs, there will be no job income to tax, or if there is, government will claim a right to all of it, and that’s what leads downstream to a global revolution.

And I’m sure the jihadists are planning to fan the fires and play the old game of divide and conquer, and for details reread the Moorish Conquests.

The Collapse Won’t Start for a Day or Three

This despite the Durable Goods disaster this morning:

New Orders
New orders for manufactured durable goods in
September decreased $3.2 billion or 1.3 percent to
$241.6 billion, the U.S. Census Bureau announced
today. This decrease, down two consecutive months,
followed an 18.3 percent August decrease
. Excluding
transportation, new orders decreased 0.2 percent.
Excluding defense, new orders decreased 1.5 percent.
Transportation equipment, also down two consecutive
months, led the decrease, $2.8 billion or 3.7 percent to
$73.4 billion.
Shipments of manufactured durable goods in
September, up three of the last four months, increased
$0.1 billion or 0.1 percent to $245.6 billion. This
followed a 1.8 percent August decrease.
Fabricated metal products, up eight of the last nine
months, drove the increase, $0.2 billion or 0.6 percent to
$30.5 billion.
Unfilled Orders
Unfilled orders for manufactured durable goods in
September, up seventeen of the last eighteen months,
increased $3.8 billion or 0.3 percent to $1,168.7 billion.

The Dow is presently looking to open up 50, but that’s because the dollar is weaker (so it takes more of them to buy the Dow) and then as a consequence of THAT we see gold climbing back…

Now About the Housing Picture

Once upon a time, owning a home was the smartest thing you could do. Since 2009?  Let’s roll with this morning’s Case Shiller/S&P/Dow Jones (and whoever) as they lay out housing reality:

New York, October 28, 2014 – Data through August 2014, released today by S&P Dow Jones Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, continue to show a deceleration in home price gains.

The 10-City Composite gained 5.5% year-over-year and the 20-City 5.6%, both down from the 6.7% reported for July. The National Index gained 5.1% annually in August compared to 5.6% in July.
On a monthly basis, the National Index and Composite Indices showed a slight increase of 0.2% for the month of August. Detroit led the cities with the gain of 0.8%, followed by Dallas, Denver and Las Vegas at 0.5%. Gains in those cities were offset by a decline of 0.4% in San Francisco followed by declines of 0.1% in Charlotte and San Diego.


The chart above depicts the annual returns of the U.S. National, the 10-City Composite and the 20-City Composite Home Price Indices. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 5.1% annual gain in August 2014. The 10- and 20-City Composites posted year-over-year increases of 5.5% and 5.6%.

“The deceleration in home prices continues,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “The Sun Belt region reported its worst annual returns since 2012, led by weakness in all three California cities — Los Angeles, San Francisco and San Diego. Despite the weaker year-over-year numbers, home prices are still showing an overall increase, as the National Index increased for its eighth consecutive month.

“The large extent of slower increases is seen in the annual figures with all 20 cities; the two composites and the national index all revealing lower numbers than last month. The 10- and 20-City Composites gained 5.5% and 5.6% annually with prices nationally rising at a slower pace of 5.1%. Las Vegas continues to see a sharp deceleration in their annual home prices with a 10.1% annual return, down just below three percent from last month. Miami is now leading the cities with a 10.5% year-over-year return. San Francisco, which has shown double-digit annual gains since November 2012, posted an annual return of 9.0% in August.

“Despite softer price data, other housing data perked up. September figures for housing starts, permits and sales of existing homes were all up. New home sales and builders’ confidence were weaker. Continued labor market gains, low interest rates and slower increases in home prices should support further improvements in housing.


The bottom line is that we’re back to 2006 levels in terms of real estate prices, but remember in your thinking about this that we can drop what – 10% is easy in the head – from sales commissions, fix-up, inspections and whatever.  Eyeballing it, looks like early 2004.

So the comparison is not exactly applies to apples from the home investor standpoint, due to flipping costs but the stats are rock solid and a damn fine public service by Case, Shiller, S&P, Dow Jones, Core Logic and let me see, did I miss anyone else?

More after this…

Ebola Watch

Amber Vinson is scheduled to be released from hospital today.  She’s the second of the two nurses who were exposed up in the Dallas case a month ago.  Doing fine and a press conference is expected about 1 PM.

This whole Ebola thing has caused a lot of concern in the prepping circles, and Gaye over at has a good piece on what’s beyond Ebola – the risk of more, larger bio threats and the growing chance of bioterrorism.  It’s really a  good article and well worth the time to read.

What’s the old saying?

If you’re not worried, you don’t understand the scale of the problem.

Just overnight, Australia has banned travel to West Africa…so that part of the world is closing in and no telling how many will die, but I’m betting millions.

Scratch Mexico Tourism?

I really like Mexico…so much so that I’ve been penciling out a trip down to the Mexican Riviera for my birthday next year.

But as reports come out this morning of another 43 bodies being uncovered in the southern part of the country, I’m starting to feel queasy about the the idea.  Maybe a margarita as home will work as a substitute…and some chips….

This might be the new government (2012) really digging in, but just doesn’t feel “with flow” YET.

This Morning’s Nostracodeus Report

The Internet Is Out to Get Me.

Either that or Mercury must be in retrograde.  My buddy Gaye at had a bunch of computer troubles last week (failed hard drive, problems recovering).,

Then last night my satellite dish started dropping internet connections.  And then one of our (multiple) DSL routers crapped out.

And the topper?  Our site was having issues.  It’s back up now, but just so you get a taste of what goes on in the morning scans over there, here’s the scoop from Grady:

The Date Restricted News Scan

There must be quite a bit of chatter about prophecy on the Internet and in the news as the word scores high in the results.  

imageAn American President will be linked to Prophecy. Industry will receive an Order to send People to the Moon. An Attack will cause a Change. Leaders will become Central. Ukraine’s main Industry could become War over People and Energy.  A Change that will be labeled as Strict is coming. A Leader’s Attacks on Oil will Forecast. Obama and Industry might be found in Prophecy. Obama’s People could Order a Change that will have something to do with the Moon. Leaders will Attack making Oil Central.  In Russia People will be concerned about (or will be fighting) a War. There will be a Change Order and again we see Leaders and the Moon.  Putin will associated with an Oil Attack and the Future will become Central.  Asia could Change to War as Leaders begin to worry about Energy. Control of Oil may become Strict. A Future Attack by Air will be Forecast.  Europe may Change Prophecy with a Leaders Order.  Oil and the Moon will be linked to a Future Attack and Air will be Central.  Africa Leaders will be at War over Oil Energy. Africa’s Future will be Strict. (‘Strict’ has been showing up a lot in the scans) There will be Air Attacks in Africa. A Bank will make a Forecast. European Leaders are linked to Prophecy. Again we see Oil, an Order and Moon. in the Future, a European Air Attack will have something to do with a Central Bank.

Indicator words with higher hit values: War, Attack.

And as long as we’re on futuring, we have seen an expected rise begin with Earthquakes with a 6.1 in the vicinity of Tonga this morning.

We expect this will continue with quakes rising over a couple of weeks and due, perhaps in part, to the solar flare activity.