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These are the signs of an economic collapse

The next six months will be interesting to say the least.-Lou

These are the signs of an economic collapse

These are the signs of an economic collapse




What does the beginning of an economic collapse look like?

Do you see grocery stores closing? Do you see other retailers, like clothing stores and department stores, going out of business?

Are there shuttered storefronts along your Main Street shopping district, where you bought a tool from the hardware store or dropped off your dry cleaning or bought fruits and vegetables?

Are you making as much money annually as you did 10 years ago?

Do you see homes in neighborhoods becoming run down as the residents either were foreclosed upon, or the owner lost his or her job so he or she can’t afford to cut the grass or paint the house?

Did that same house where the Joneses once lived now become a rental property, where new people come to live every few months?

Do you know one or two people who are looking for work? Maybe professionals, who you thought were safe in their jobs? Friday’s anemic jobs numbers tell that tale.

Did your high school buddy take a job at the local convenience store because he could not find work in sales?

Is the pothole on your street getting larger instead of getting repaired? Is there more than one street light out in your town?

Don’t be fooled into thinking that the stock market is any indication of the health of an economy.

Is the town pool closed this summer much more than usual?

Have you seen a situation — any situation — and said, “Jeez, it wouldn’t take much money to fix that” — but it hasn’t been fixed?

You may have witnessed many of these situations, but you tell yourself it can’t be an economic collapse because the stock market is at an all-time high.

Does that mean all is well? No, this is what a 21st century economic collapse looks like in the beginning.

The divide between the haves and the have-nots is growing exponentially. If the 99 percent can’t contribute to the economy because of the dire financial situations they find themselves in, then you see gross domestic product growth reports of 1 percent, such as we have seen lately.

Don’t be fooled into thinking that the stock market is any indication of the health of an economy.

It’s a rigged market to placate the masses — most of whom do not have much skin in the game — and convince them that all is well, when in fact the opposite is true.


Friday’s Markets After BREXIT



Greenspan: “This Is The Worst Period I Recall; There’s Nothing Like It”

Greenspan has nothing good to say about the economy or markets.-Lou


“This is the worst period, I recall since I’ve been in public service. There’s nothing like it, including the crisis — remember October 19th, 1987, when the Dow went down by a record amount 23 percent? That I thought was the bottom of all potential problems. This has a corrosive effect that will not go away.”-Alan Greenspan, speaking on CNBC about the Brexit vote

The Dreaded Death Cross Formation Just Hit Stocks

The next 6-7 months are going to to wild in so many ways.-Lou

From: ZeroHedge

The Dreaded Death Cross Formation Just Hit Stocks

Smart investors have noted that the S&P 500 just staged a very dangerous looking move.

That move was when S&P 500’s 50-week moving average broke below its 100-week moving average. You can see this in the green circle below.

This move is called a “Death Cross” and for good reason. The last time it happened was in 2008, right before the entire market CRASHED.

The time before that was right before the Tech Bubble burst, crashing stocks.

In short, going back over 16 years, this Death Cross formation has only hit TWICE before. Both times were when major bubbles burst and stocks Crashed.

Gold Plunges After “Someone” Suddenly Decides To Dump Over $2.3 Billion In 10 Minutes

Yea, the gold market is not rigged.-Lou

Gold Plunges After “Someone” Suddenly Decides To Dump Over $2.3 Billion Notional In 10 Minutes

A modest blip higher in the USD…


And commodities suddenly accelerated to the downside, led by precious metals.


While Copper and Crude are giving up gains, gold and silver and being monkey-hammered on heavy volume..


Over 18,000 contracts – or over $2.3 billion notional of gold has been dumped in the last 10 minutes…

Wealth Confiscation for the Digital Age: the New “Cash Tax”

As I have been warning you.-Lou


Wealth Confiscation for the Digital Age: the New “Cash Tax”

Directly from your bank account.

“Negative interest rates” have become a phenomenon with economists and the media. But I’m writing to tell you something about negative interest rates you haven’t heard. You certainly won’t hear about it in the mainstream press.

What’s coming at you is a historic event. It’s something our grandchildren will hear stories about, much like the Great Depression or the Cold War. It could send the price of gold much higher in the coming years.

If you know what’s coming, it could mean the difference between having lots of free cash in retirement and barely getting by. And please remember this warning: Social Security will help even less than you think.

To understand the gravity of this moment, let’s cover one of the most bizarre ideas in the world…

Negative Interest Rates.

In a normal world, your bank pays you interest on your savings. It takes your money, pools it with other people’s money, and loans it out. The bank makes money by paying out less in interest on your deposit than it earns in interest from borrowers. For example, it might pay out 3% to depositors while earning 6% from borrowers. This is how it has worked for decades.

Negative interest rates turn your “normal” bank account upside down. They could only exist in a crazy world where idiot politicians are in control. Unfortunately, that’s just what we’re dealing with right now.

Politicians all over the world are ordering banks to charge depositors (you) a fee for storing cash. It’s a perversion of saving. It’s a perversion of capitalism. It’s a perversion of planning for the future.

And it’s going to result in disaster.

Politicians think that by making it unattractive for you to keep money in the bank, you’ll save less money. Instead, you’ll spend more money on things like smartphones and cars. You’ll invest in things like stocks and real estate. This would “stimulate” the economy.

This thinking is very, very wrong. No matter what the government does, it can’t force you to spend money. It can’t force you to make investments if you don’t see good opportunities. Forcing people to pay banks to hold their money is a tax.

It is wealth confiscation for the digital age.

The government and the mainstream press won’t dare call it a tax. But that’s exactly what it is. A negative interest rate policy is a tax. Any time you hear a politician, central banker, or news anchor say “negative interest rates,” just think “TAX.” Think “TAX ON MY CASH.”

Negative interest rates are going to result in financial disaster that will wipe out many people. But you don’t have to be one of them. I’ll explain how you can sidestep this disaster—and even make a lot of money as a result of it—in a moment.

But let’s quickly cover one more thing about negative interest rates…

If the government makes it unattractive for you to keep cash in the bank, you can pull cash out of the bank. You can simply store it in a safe or under the mattress. Politicians know this. That’s why they’ve created another dangerous policy that works hand-in-glove with negative interest rates.

That policy is banning cash.

You see, if you pull your money out of the banking system and stuff it under the mattress, you aren’t doing what the government wants you to do. You’re not spending money or investing in stocks. This is a major reason why governments are banning large cash transactions and large denomination bills. They are fighting a War on Cash.

In just the past few years…

  • Spain banned cash transactions over 2,500 euros.
  • Italy banned cash transactions over 1,000 euros.
  • France banned cash transactions over 1,000 euros, down from the previous limit of 3,000 euros.

And just a little while ago, former U.S. Treasury Secretary Larry Summers called for a ban on the $100 bill! Historians aren’t surprised by Summers’ idea. Franklin Delano Roosevelt banned $500 and $1,000 bills in the 1930s. You can bet that our politicians will do the same thing in a financial emergency.


The Sub-Zero Club: Getting Used to the Upside-Down World Economy

The financial world has gone mad.-Lou

Interest Rate Crash

The Sub-Zero Club: Getting Used to the Upside-Down World Economy


Japanese families seem to have a sudden affinity for home safes. According to the Tokyo-based manufacturer Eiko, shipments have doubled since last fall. And in Germany, insurer Munich Re has stashed some 10 million euros ($11.4 million) worth of its own cash into vaults.

Why the squirreling? One possible reason is the creeping imposition of negative interest rates across the world, which could make it more rewarding to bypass banks—and a safe or vault is, well, more secure than a mattress.

Welcome to the upside-down world of modern monetary policy. In this new reality, borrowers get paid and savers penalized. Almost 500 million people in a quarter of the global economy now live in countries where interest rates measure less than zero. That would’ve been an almost unthinkable phenomenon before the 2008 financial crisis, and one major economies didn’t seriously consider until two years ago, when the European Central Bank first partook in the experiment. Now the ECB and the Bank of Japan are diving deeper into the sub-zero world as they seek more ways to spark inflation.

ECB President Mario Draghi currently charges 0.4 percent on the euros deposited by banks in his coffers overnight. BOJ Governor Haruhiko Kuroda, whose country knows more than most about the perils of soft inflation, knocked his benchmark down to an unprecedented -0.1 percent in January. Their counterparts in Sweden, Switzerland, and Denmark have already been running negative campaigns for a while now. The U.S. Federal Reserve has, so far, remained on the sidelines.

The overall aim, of course, is to spur banks to look elsewhere when lending their cash, preferably to spenders such as companies and consumers, who should also benefit from low borrowing costs in markets. There’s also the hope—especially in Scandinavia and Switzerland—that currencies will fall as investors seek higher returns elsewhere, lifting exports and import costs.

The policy isn’t without risks. Bank profits could be squeezed, money markets may freeze, and consumers could end up with bulging mattresses to avoid paying to keep money in a bank account. The whole effort could wind up leaving inflation even weaker—hence the tiptoe approach to cutting rates.

“I’m skeptical about the efficacy of negative interest rates,” says Barry Eichengreen, professor of economics at University of California at Berkeley. “They increase the cost of doing business for the banks, which find it hard to pass on those costs to borrowers, given the weakness of the economy and hence of loan demand. Weaker bank balance sheets are not ideal from the standpoint of jump-starting growth, to put an understated gloss on the point.”


The Fed Sends A Frightening Letter To JPMorgan, Corporate Media Yawns

As I have been advising for many months, you should not have your life savings in any National Bank.  When it hits the fan they are all going down. Sorry for lack of posts the last two months, Income Tax Season dominated my time. The blog will be more active going forward.-Lou




The Fed Sends A Frightening Letter To JPMorgan, Corporate Media Yawns

From: ZeroHedge

Yesterday the Federal Reserve released a 19-page letter that it and the FDIC had issued to Jamie Dimon, the Chairman and CEO of JPMorgan Chase, on April 12 as a result of its failure to present a credible plan for winding itself down if the bank failed. The letter carried frightening passages and large blocks of redacted material in critical areas, instilling in any careful reader a sense of panic about the U.S. financial system.

A rational observer of Wall Street’s serial hubris might have expected some key segments of this letter to make it into the business press. A mere eight years ago the United States experienced a complete meltdown of its financial system, leading to the worst economic collapse since the Great Depression. President Obama and regulators have been assuring us over these intervening eight years that things are under control as a result of the Dodd-Frank financial reform legislation. But according to the letter the Fed and FDIC issued on April 12 to JPMorgan Chase, the country’s largest bank with over $2 trillion in assets and $51 trillion in notional amounts of derivatives, things are decidedly not under control.

At the top of page 11, the Federal regulators reveal that they have “identified a deficiency” in JPMorgan’s wind-down plan which if not properly addressed could “pose serious adverse effects to the financial stability of the United States.” Why didn’t JPMorgan’s Board of Directors or its legions of lawyers catch this?

It’s important to parse the phrasing of that sentence. The Federal regulators didn’t say JPMorgan could pose a threat to its shareholders or Wall Street or the markets. It said the potential threat was to “the financial stability of the United States.”

That statement should strike fear into even the likes of presidential candidate Hillary Clinton who has been tilting at the shadows in shadow banks while buying into the Paul Krugman nonsense that “Dodd-Frank Financial Reform Is Working” when it comes to the behemoth banks on Wall Street.

How could one bank, even one as big and global as JPMorgan Chase, bring down the whole financial stability of the United States? Because, as the U.S. Treasury’s Office of Financial Research (OFR) has explained in detail and plotted in pictures (see below), five big banks in the U.S. have high contagion risk to each other. Which bank poses the highest contagion risk? JPMorgan Chase.

The OFR study was authored by Meraj Allahrakha, Paul Glasserman, and H. Peyton Young, who found the following:

“…the default of a bank with a higher connectivity index would have a greater impact on the rest of the banking system because its shortfall would spill over onto other financial institutions, creating a cascade that could lead to further defaults. High leverage, measured as the ratio of total assets to Tier 1 capital, tends to be associated with high financial connectivity and many of the largest institutions are high on both dimensions…The larger the bank, the greater the potential spillover if it defaults; the higher its leverage, the more prone it is to default under stress; and the greater its connectivity index, the greater is the share of the default that cascades onto the banking system. The product of these three factors provides an overall measure of the contagion risk that the bank poses for the financial system.”

The Federal Reserve and FDIC are clearly fingering their worry beads over the issue of “liquidity” in the next Wall Street crisis. That obviously has something to do with the fact that the Fed has received scathing rebuke from the public for secretly funneling over $13 trillion in cumulative, below-market-rate loans, often at one-half percent or less, to the big U.S. and foreign banks during the 2007-2010 crisis. The two regulators released background documents yesterday as part of flunking the wind-down plans (living wills) of five major Wall Street banks. (In addition to JPMorgan Chase, plans were rejected at Wells Fargo, Bank of America, State Street and Bank of New York Mellon.) One paragraph in the Resolution Plan Assessment Framework and Firm Determinations (2016) used the word “liquidity” 11 times:

“Firms must be able to reliably estimate and meet their liquidity needs prior to, and in, resolution. In this regard, firms must be able to track and measure their liquidity sources and uses at all material entities under normal and stressed conditions. They must also conduct liquidity stress tests that appropriately capture the effect of stresses and impediments to the movement of funds. Holding liquidity in a manner that allows the firm to quickly respond to demands from stakeholders and counterparties, including regulatory authorities in other jurisdictions and financial market utilities, is critical to the execution of the plan. Maintaining sufficient and appropriately positioned liquidity also allows the subsidiaries to continue to operate while the firm is being resolved. In assessing the firms’ plans with regard to liquidity, the agencies evaluated whether the companies were able to appropriately forecast the size and location of liquidity needed to execute their resolution plans and whether those forecasts were incorporated into the firms’ day-to-day liquidity decision making processes. The agencies also reviewed the current size and positioning of the firms’ liquidity resources to assess their adequacy relative to the estimated liquidity needed in resolution under the firm’s scenario and strategy. Further, the agencies evaluated whether the firms had linked their process for determining when to file for bankruptcy to the estimate of liquidity needed to execute their preferred resolution strategy.”

Apparently, the Federal regulators believe JPMorgan Chase has a problem with the “location,” “size and positioning” of its liquidity under its current plan. The April 12 letter to JPMorgan Chase addressed that issue as follows:

“JPMC does not have an appropriate model and process for estimating and maintaining sufficient liquidity at, or readily available to, material entities in resolution…JPMC’s liquidity profile is vulnerable to adverse actions by third parties.”

The regulators expressed the further view that JPMorgan was placing too much “reliance on funds in foreign entities that may be subject to defensive ring-fencing during a time of financial stress.” The use of the term “ring-fencing” suggests that the regulators fear that foreign jurisdictions might lay claim to the liquidity to protect their own financial counterparty interests or investors.

JPMorgan’s sprawling derivatives portfolio that encompasses $51 trillion notional amount as of December 31, 2015 is also causing angst at the Fed and FDIC. The regulators wanted more granular detail on what would happen if JPMorgan’s counterparties refused to continue doing business with it if rating agencies cut its credit ratings. The regulators asked for a “narrative describing at least one pathway” for winding down the derivatives portfolio, taking into account a number of factors, including “the costs and challenges of obtaining timely consents from counterparties and potential acquirers (step-in banks).” The regulators wanted to see the “losses and liquidity required to support the active wind-down” of the derivatives portfolio “incorporated into estimates of the firm’s resolution capital and liquidity execution needs.” 

According to the Office of the Comptroller of the Currency’s (OCC) derivatives report as of December 31, 2015, JPMorgan Chase is only centrally clearing 37 percent of its derivatives while a whopping 63 percent of its derivatives remain in over-the-counter contracts between itself and unnamed counterparties. The Dodd-Frank reform legislation had promised the public that derivatives would all become exchange traded or centrally cleared. Indeed, on March 7 President Obama falsely stated at a press conference that when it comes to derivatives “you have clearinghouses that account for the vast majority of trades taking place.”


Goldman Sachs Admits Misleading Investors With Risky Mortgages, Gets Fines $5.1 Billion Dollars

And nobody goes to prison……ever. A fine of $5.1 billion is a lot of money, the crimes must have been so egregious and the shareholders pay for the sins of the executives.-Lou



Goldman Sachs admits misleading investors with risky mortgages

New York Post 

More than 10 years after it spotted cracks in the housing market, Goldman Sachs will pay $5.1 billion for its role in the financial crisis.

The settlement announced Monday with the Justice Department resolves allegations that the bank misled investors about risky mortgage bonds it sold as supposedly safe investments.

In addition to the DOJ, the agreement resolves claims brought by New York Attorney General Eric Schneiderman and other states. New York will get $670 million, with most going to consumer relief such as mortgage assistance and principal forgiveness for underwater loans.

“Today’s settlement is another example of the department’s resolve to hold accountable those whose illegal conduct resulted in the financial crisis of 2008,” Benjamin C. Mizer, head of the Justice Department’s Civil Division, said in a statement.

CEO Lloyd Blankfein’s Goldman is the last of the big US banks to settle with the government over its mortgage misdeeds. Bank of America paid a record $17 billion in 2014, while JPMorgan Chase paid $13 billion the previous year.

Goldman’s settlement comes just days after Wells Fargo paid $1.2 billion to settle mortgage claims, and two months after Morgan Stanley paid $3.2 billion to end a similar probe.

Goldman bought loans from mortgage underwriters such as subprime giant Countrywide Financial and repackaged them as supposedly safe securities — even though it knew many of the underlying loans were lousy, according to a statement of fact released along with the settlement.

“If they only knew,” Goldman’s head of due diligence wrote in a 2006 e-mail.

When the bank’s Mortgage Capital Committee, which is supposed to approve the loans, examined one 2006 package of mortgages, it was taken aback by how defective it was.

“How do we know that we caught everything?” the committee asked, according to the settlement.