Up early this morning. We have much to discuss, hence the Epistle-length report.
Data Danger #1: M2 Collapsing
The first is a major story about the future of America’s economy. Buried by the China virus and the ongoing demo-Coup coverage, the Velocity of Money is free-falling again.
What it is: “Velocity” is the Gross Domestic Product divided by the H.6 Money Stock M2 (cash, equivalents, and certain time deposits).
Why it matters: Money, like electrons, don’t do a damn thing unless they are in motion. Another simple way to consider M2 is “It’s the inventory turn-over rate of money.”
Why It’s a Disaster: As you can see, the latest GDP out Thursday along with the 3-month average M2, has begun to decline again and is likely in Q1 to set a new all-time (as in lifespan of Nation) bottom. Worse that 2009. Worse than the Great Depression. Check out the historical view:
To be sure, the number did not – yet- set a new low, but that’s only thanks to averaging. If you look only at the monthly figures, not averaged for the Q4 period, you’ll see the Ve;locity at M2 is down to 1.413. The previous (though quarterly) low was 1.432…so we’re on the verge of breaking lower.
What it Portends: Yeah, this is an ugly. As noted above, money in motion is what makes jobs, returns on investment and even stimulates higher interest rates. Despite the Fed’s crazy ongoing Quantitative Pleasing (or financial types) the money being created is NOT creating additional economic activity. It’s like creating money for the mafia to put in the bank and not loan out, invest in research, build new plants and equipment.
On the other hand, there’s a reason for money cratering. A long time, ongoing concept around here has been the notion of Consumer Super-Saturation. Wal-Mart is sending me (another) 65-inch TV this week. (Best time to load up on TV gear is just before and after Super Bowl, right?). $393.11 which includes free delivery and tax. Not a fancy curve-screen ors a super-looking OLED, but in terms of cost-per-pixel? Gotta be kidding me.
Consumer-Saturation is a real thing. In the USA we have 253-million cars. More than one-per person if we back out children and seniors past driving, right? What is enough? Want to guess at how many excess televisions there are? As I ask in the book “ The 100-Year Toaster” – which has been serialized on the Peoplenomics.com subscriber site – we have built an insane world based on optimizing financ ial instruments, not based on improvintg quality of life – regardless of what the “Free-Trade” tax dodgers want to claim.
Danger #2: A Killer Virus Comes
Despite a few readers who have made questionable (OK, idiotic, too) comments to the effect that NoCoV2019 is a “nothing” we disagree. We see it has having a mortality rate of well over 2-percent. And, since it’s going global, with 7.6 billion people in the world, that’s a potential body count of 152-million, although the December virus “war-game” figured 65-million…and too early to waste time on such nits.
What it is: Mortality rate is the number of people getting a disease divided by the deaths attributed to it.
As of this morning the number of cases in China was reported at 9.809 (al Jazeera) with a death toll of 213. That’s a higher number than The Guardian reports: Over 9,320 cases but again, 213 dead. The Guardian death rate pencils to 2.2 percent while the Al Jazeera pushes out to 2.17 percent.
We told you to order N100 masks last week. Now they’re going out of stock. Well, again, we tried…
Why It Matters: A 2 percent mortality rate this early in a disease is quite remarkable. Simple math here – I promise this won’t hurt. The typical incubation time for the disease while spreading has been 8-14 days according to early reports. Let’s say it’s 10-days on average.
Thus, we can wildly and irresponsibly estimate that the “Dead of today” were infected (half the incubation period?) 5-days ago. All that remains to be done is look up the five-days ago infected number and use today’s death count.
Using this approach, we would take today’s death toll (213) and divide that by 5-day-ago confirmed cases (WHO sit-rep last Sunday here) was 2,014 cases. This kind of approach suggests to us a death toll around 10.57 percent which is up in Spanish Flu death rate levels.
The Sounder Alternate View: There is a much more accurate (and formal) method of estimating death rates. It’s laid out in the SIR Model explained on the Mathematical Association of America website.
Tackling the problem (as the SIR model does) as a differential equation is a more accurate view. But we stick to “simple estimations” because in 50-years of chasing down the news, estimations – the earlier and more accurate the better – are fine for simple personal planning. For more advanced readers, MAPLE, Mathematica, and MatLab models may be found (thanks to the MAA) here.
What It Portends: There may be a reason in our first concern (cratering money supply) for the lac k of money velocity based on Danger #2, the coronavirus outbreak.
Not to be missed: Russia Reports First Coronavirus Infections. And they locked down their border promptly.
As we read headlines like “Supply Chain Disruptions From China’s Coronavirus Outbreak Could Affect US Manufacturing” we come up with an almost woo-woo-like question forming. Did the U.S.-centdric global economic forecast or in some what know this was coming? In other words, is the event about to become so “writ large” in the global mass consciousness that it “back-casts a shadow” that colors behavior prior to an actual global-impacting event?
Last point: Whenever you read the news, look for the dateline and posting time. I am terribly disappointed (as a journo) when people post comments (“just 170 dead compared to the population of China is nothing,,,.) that reflects both old data and a lack of ability to project obvious trends into the future.
Stay current, or stay quiet.
Stories like Goldman Sachs expects coronavirus outbreak to weigh on US economic growth this quarter aren’t particularly useful other than PR points for name familiarity…and to give the Street cover for being WILDLY overpriced. While the big players unwind trades.
As we explained in Peoplenomics, the slow-witted sheep missed Ben Bernanke’s AEA speech and paper this month that QE “makes up” (hiding’s more like ) as much as 3%. So, yes: Real inflation is closer to 4-1/2%, not 1-1/2% and that little ugly makes stocks over-priced by how much???
Danger #3: Coup, Pricks, and Treason
I am so utterly disgusted in the CENSORSHIP by Cheap Just-Us John Roberts – not letting Senator Rand Paul ask a straight-forward question at the Senate kangaroo trial of Donald Trump that I could just spit.
As one of our “smartest guy in the room” contributors, “ warhammer” noted in an early morning post:
“The real issue rests with the silence of the rest of the Senate regarding the censoring Of Sen. Paul’s question by Roberts.
“In the first presidential impeachment trial in 1868, Chief Justice Salmon Chase claimed the authority to decide certain procedural questions on his own, but the Senate challenged several of his rulings and overruled him at least twice.”
Roberts has (thus far) successfully hijacked the Senate Trial and it’s a terrible commentary on republican sell-outs to principles (including and especially RINOs like “Mittens”) that we are nearly at a loss for words.
But wait! There IS a major question no one is asking: It goes like this (and I want you tdo really think about this):
“When an attempt is made to unseat a lawfully elected President, and when a four-year series of lies is obviously orchestrated by persons affiliated with a former administration, at what point does a factually deficient impeachment attempt cross over into attempted coup territory?”
My belief is that when members of the U.S. House employed their staff to coach an implanted whistleblower, it constituted an attempt to “entrap” an elected president. As it did this, the line between dissent and insurrection was passed.
Moreover, this whole shit-show – especially the role of ex Obama implants and all communitations with them in the set-up to the entrapment, illegal surveillance, and sham “impeachment” needs to be investigated by a Grand Jury.
And if treason is found, regardless of past office’s held or public servic e (fattening healthcare), prosecution with proper penalities applied is the only track Justice allows.
Ah…the fairytale for the little peeps: “One Nation, Under God, with Liberty and Justice for All” who can afford it.
Again,. “We the People” have been outbid by swamp-snakes and politcal hacks on all sides. The virus and finance blowing up were going to get us anyway…
While the Senate may dismiss charges on a vote today (even here don’t hold your breath – corruption and evil own D.C.), if they do so without criminal referrals and censure of Roberts overstep, it will just be “business as usual.”
This Will Piss You Off
Labor Department outs the Deep State (again) in figures just released this morning:
State and Local Government Workers
Compensation costs for state and local government workers increased 2.9 percent for the 12-month period ending in December 2019. In December 2018, the increase was 2.6 percent. Wages and salaries increased 2.5 percent for the 12-month period ending in December 2019 and 2.4 percent a year ago. Benefit costs increased 3.3 percent for the 12-month period ending in December 2019. The prior year increase was 3.1 percent.
As compared with:
Compensation costs for civilian workers increased 2.7 percent for the 12-month period ending in December 2019, compared to 2.9 percent in December 2018. Wages and salaries increased 2.9 percent over the year and increased 3.1 percent for the 12-month period ending in December 2018. Benefit costs increased
2.2 percent for the 12-month period ending in December 2019. In December 2018, the increase was 2.8 percent.
Notice how they toss in 2-year old (2018) data to cover-up that they’re getting ahead of regular working people who don’t enjoy government (taxpayer) largess for years? Nothing to see here, move along… BS! Come on…who’s working for who?
Next bad news…anyone? BEA Personal expenditures and Disposable Personal Income (DPI) going the wrong way again:
“Personal income increased $40.7 billion (0.2 percent) in December according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $30.6 billion (0.2 percent) and personal consumption expenditures (PCE) increased $46.6 billion (0.3 percent) (table 5).
Real DPI decreased 0.1 percent in December and Real PCE increased 0.1 percent.
So, it’s true again: The harder we work, the behinder we get! Thanks, FedGov. Astroglide with the next report, maybe?
While we’re waiting to see what the next democrat fake-hysteria crisis will be, take note that in the Impeachment trial: Key Republican says he’ll vote against witnesses. Not all stupid, after all? The House failed to make a case and the Senate is just voting what (mainly wasn’t) presented in the way of “evidence” – even after the Censor in Cheap decision… (I gotta get past this, but I’m seriously pissed at judge-shopping and constitutional-ignoring lawyers screwing up the country…)
Is this another liberal, open-borders whine at CNN? “More Iranian students are being deported at US airports, advocates say.” Carrying the water for Tehran infiltrators, perhaps? You do realize we pay for a lot of education for foreign nationals, right? Whee! Let’s give it ALL AWAY!!!! We don’t need Bernie if the Socialists hold the House, right AOC fans?
Crooked Euro-dope notes: Here we go with another round as EU stupidity: British Steel: France in threat to veto sale. Meanwhile, you may be asking (as CBS does) What actually changes, and when, with Brexit?.
Climate hysteria rebirth as ‘Every Day Matters’: Guardian Stops Accepting Fossil Fuel Ads. Try to remember Earth has been warming since the Ice Age…OMG people are sheep!
Remember the old Usury Rhyme? “Bah-bah dumb sheep have you any fool? Yes sir, yes sir, two houses full!!”
And here, it seems like the NY Times getting business as wrong as they got “impeachment” as Wall St. Shrugs Off Risks Related to Viral Outbreak in China. Can we revisit this in a few weeks? I mean Dopw futures down 130 and only an idiot would hold long going into a Super Bowl and Viral weekend…
OK, chasing chow, massive long list of to-do’s and tomorrow’s Peoplenomics podcast to prep for. May require a nap.
Meantime, here, takes this $45-billion of fresh repo-creepo and go BTFD, would you?
Write when you get rich,