Friday, November 18, 2016

The Second American Revolution Pt 2: The Massive Reset That We Need

In my blog post "Time For a New American Revolution: Burn Down Our Bloated, Failing Central Planning Bureaucracy," I ranted about the massive failure and waste that aptly describes the federal bureaucracy that has become a huge waste of our nation's resources. The completely incompetent, bloated Fed Govt is a huge $4 Trillion per year leech sucking all of the blood from the US economy. I suggested that much of it needs to be "burned down."

Such a drastic outcome would never come from any elected politician. Even Donald Trump is not considering a radical downsizing of any part of the government. If I were in Trump's shoes, I'd be hiring the heads of major departments with the sole goal of dismantling, privatizing or seriously downsizing them, including Education, HUD, Commerce, Energy, Homeland Security and TSA, Fannie Mae, Freddie Mac, Sallie Mae, Defense, and the Federal Reserve as a start. Many other agencies need a complete house-cleaning including the SEC, EPA, IRS, NLRB, for example. Oh, and the Federal Reserve, which has become the root of all evil, has to go!

Why do this?  Because the US government is ruining our economy and our society!

Stagnating incomes coupled with inflation of health care, rent, college tuition, even defense procurement costs are all the result of government spending or policy. Rising rents are caused by zero interest rates engineered by the Federal Reserve, who have created a new housing bubble that is pricing out a new generation of buyers and hurting the economy. If you can't buy, you must rent. But even the price of renting is a severe hardship to many, many people. It's really a catastrophe as record high house prices aren't sustainable at "normal" interest rates. The geniuses, the educated idiots like Bernanke and Yellen, haven't thought about what happens when rates and mortgage rates rise again with record high house prices?  No one can afford anything! "Government" is CAUSING THIS!

Meanwhile debt at all levels, and across the world continue to pile-up with no end in sight. Perhaps, like Japan, the US will be able to skate by and double our national debt (once again) in the coming decade or so.  It's possible. But peripheral countries like Nigeria, Venezuela, Italy, Portugal, Russia and many, many other countries can not sustain stagnated economies coupled with higher debts. Something will break. Sovereign debt defaults will bring down the banking system in Europe and start the end-game crisis.

Declining and zero interest rates have prolonged the debt game for 30 years, but that too is becoming exhausted. Now interest rates are rising. And it's entirely possible now that more debt hurts rather than help going forward a consequence of "debt saturation." The spike in interest rates after Trump's election has come with an expectation of much higher debt levels to be funded. Rising rates in anticipation of higher debt levels may be the mechanism where more debt hurts the economy.

The massive amount of debt written in recent decades, now totally unsustainable in a slow-growth environment, has to default to a more sustainable level. This will blow-up the entire world economy in a massive financial, economic and humanitarian crisis. In fact, analysts at Deutsche Bank said the following:
..the global financial system remains broken and extremely fragile. Secular stagnation trends are everywhere. The world has too big a debt burden for the current growth environment. We would feel far more comfortable if the world went through a huge creative destruction period where zombie, inefficient debt was allowed to default - thus 'right-sizing' the ratio between debt and GDP. However we've long accepted that this is highly unlikely to happen outside of perhaps a future break-up of the Euro.
Bottom line:  I’m afraid only financial catastrophe will force the kind of reset that is needed. With that, we need the Federal Government itself to go broke in the next financial crisis (for which, the Government will be rightly blamed). But, with the money printers still in business at the Federal Reserve, there is NO WAY the government can go broke. So, the Federal Reserve has to go. The "bureaucracy" can't be permitted to save itself at everyone else's expense.

The US government going broke is EXACTLY what is required to reset the welfare rot, toughen our ignorant, lazy, entitled population, end the money center ‘hedge fund’ banking cartels, cut down the drastically bloated government bureaucracy, and to create a massive deflation in medical, tuition, defense procurement, housing, rents and all other costs to levels that the people and the nation can afford. This becomes more clearly true when you realize that average incomes are never going to catch up with all the inflated prices if we continue our current path. Our delusional Federal Reserve head, Janet Yellen, has demanded even MORE inflation! But the reality is: Inflated prices need a drastic depression-like reduction. A government bankruptcy would pressure personal incomes too for a few years, but I think prices would drop a lot faster.

A repeal of the Revenue Act of 1913 (income tax law), passage of a balanced budget law and repeal of the Federal Reserve Act would force the radical overhaul of the Federal Bureaucracy as well. Note, in this scenario, payroll tax deductions could continue to fund Medicare and Social Security, but these taxes are only covering ~60% of actual spending in these categories, so even there cuts are required. Reduced government spending will drop all prices. A national sales tax could replace income tax for only the strictly Constitutional functions of the government.

My feeling is that only crisis will change the trend to ever bigger government. Let it burn!

Sunday, November 13, 2016

Democrats Headed to Political Wilderness, Not GOP

The result of the election not only went to Trump, but GOP governors also gained ground (+3), where Republican governors now hold 33 out of 50 statehouses (66%) and hold a similar number of state legislatures. This is the most since 1920.

It's Democrats that are headed to the political wilderness, not Republicans. It's entirely fitting as the Democratic Party has become the epicenter of failure, corruption, delusion, false narratives and deception. Check out this map of Congressional Districts that are held by Republicans.

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Friday, November 11, 2016

Uh Oh, Higher Rates Herald Downward Economic Spiral

From Brexit panic lows, interest rates on the 10 year US Treasury bond have gone from 1.35% to 2.1%. And rates are still rising. World rates are rising too.

Some of that rise is due to a violent reversal of a bubble mania flight to bonds worldwide immediately after Brexit. Some of it is that Trump has spoken the most obvious truth in the world: that interest rates have to rise from zero and negative levels. Since Trump's election, interest rates have risen significantly.

Central banks around the world have also begun to hint that QE will end in the future. The US Federal Reserve has vowed to raise Fed Funds rate to 0.75% in December.

All of these extremely low "emergency" rates had to end at some point since NIRP and especially ZIRP is killing banks, retirees, pension funds, insurance companies and capitalism itself. Even the educated-idiots, who occupy our institutions and central banks, could see this (finally). It's insane and never been seen in 5000 years of history!  Now the same investor front-running that drove $11 Trillion in debt to negative interest rates has now begun to reverse. The front-running was investors "getting ahead" of the Central Bank buying of bonds during QE. That's likely reversing now.

Rates may also be rising because Trump has signaled significantly more debt spending. I think we're seeing the dynamic that higher debt equates to rising rates. If so, rising rates will slow an already slowing world economy.  We're seeing the end of debt's utility to create growth as shown in the following graph:

Debt Saturation Means Debt Begins to Hurt The Economy. China is now in a similar position

The End of China's Debt Bubble Is Near

To build on my blog post "We're Reaching the End of Road," here's the dynamics that could lead to a significant downward financial and economic spiral:

  1. Slowing economy causes rising government debt (has been true for decades due, in part, to persistent trade deficits)
  2. Suddenly the prospect of rising debt is, in part, causing rates to rise in US
  3. Rising rates cause US dollar strength which hurts the emerging market/commodity producing countries
  4. Rising rates also hurt business, mortgage and consumer loans, Economy slows further into contraction
  5. Slow growth causes debt distress in corporate world and corporate rates rise further. Debt distress in sovereign debt of commodity-producing countries causes their rates rise further
  6. Debt distress turns into debt defaults
  7. Defaults hurt the banking sector that is already teetering on the edge of default, especially in the EU. 
  8. Financial crises risk a repeat of 2008 financial crisis; or even worse
  9. Debt defaults and banking crises lead to recession, then Depression 

As I've said, we're reaching the end of the road of debt and prosperity. I believe that we are on the precipice of a financial maelstrom that could change history and endanger millions of lives around the world.

Thursday, November 10, 2016

Expect Negative Returns On Stocks And Bonds Going Forward

The Trump rally probably has legs here that will take indices to even higher highs. But prices matter. Historically, if you buy at these market levels, your expected returns are going to be very low, ie., negative for the next 7 years..

According to respected GMO, your expected returns for the next 7 years is now negative 3% for stocks and negative 2% for bonds.  So, if you buy US bonds for 2% yield, you can expect no return at all as prices will likely fall.  Worse, you can expect negative price returns for equities AND the prospect of stomach churning declines of 30 to 50% along the way!  It won't be a pleasant ride. At equity prices today, you're not being compensated sufficiently to endure such risk!

GMO: Expected Asset Returns for Next 7 Years
We're enjoying the 3rd large peak in equity prices in the past 15 years. But two times already, equities plunged 50%  after those peaks.  We've going to have a down cycle in prices going forward! 


Wednesday, November 2, 2016

Hillary's Horrible and Sordid Legacy

Here's the real and sad story of Hillary's legacy for your consideration (quite a few points taken from Wikileaks 100 Most Damaging Leaks): 
  1. Bill and Hillary both profited enormously from Hillary's role at the State Department, to the tune of $100 million and more. She had ZERO accomplishments as Sec of State except enriching herself and the Clinton slush fund otherwise known as the Clinton Foundation. She was all about "pay for play" peddling influence for money. Shameful! There is not one successful US policy during her entire "reign" as Sec of State -- only a 100% record of failures.
  2. Clinton foundation is mostly a fraudulent charity. It's virtually all about business and influence peddling.
  3. Hillary/Obama's pivot to Asia is nearly a complete joke. All talk and no action. Many Asian countries are aligning with China due to the US vacuum.
  4. Hillary/Obama's "Russia reset" is a complete joke. Now we're nearly at war with Russia in Syria 
  5. Hillary's Iran deal is a farce. Secret deals with the Iranians negated much of the deal's significance. Iran is more in control of the Middle East now than ever thanks to Hillary and Obama.  Iran and Russia are the dominant players in the Mideast. US influence is finished.
  6. Hillary and Obama completely botched US Syria policy, virtually handing Syria to Russia. Now our "sour grapes" administration is trying to pick a fight with Russia in Syria risking world war.
  7. Hillary/Obama's ISIS "strategy" has really been no strategy at all except stonewall and wait until their administration is over, They want to lie and delay and leave the mess for the next administration.  Fine upstanding people, huh?
  8. The US's hasty departure from Iraq and the result has been the rise of ISIS, thanks to Hillary, is a massive immigration crisis into Europe, which is destabilizing Europe. 
  9. ISIS is speading out of the Middle East into Europe and elsewhere, while the US southern border remains even more porous thanks to Obama. Maybe someone from ISIS will kill Obama? That would be entirely fitting.
  10. Hillary and Obama both explicitly depend on an ignorant public to impose their agenda. Jonathan Gruber, one of the paid consultants for Obamacare, admitted on video that the administration's strategy for imposint Obamacare depended on "dumb" Americans that are uninformed. Sad. Oh, and the administration denied that Gruber was a consultant at all. LIARS!!  
  11. Hillary wants a 100% government-run healthcare system at a time when the US government can't do ANYTHING well. Obamacare worsened costs and quality of US healthcare. A complete US takeover of the healthcare industry will be disastrous. Remember Obamacare is just a rehashed Hillary-care.
  12. Hillary Clinton denied Libyan Ambassador Stevens request for security....then he was murdered. Then the entire Obama administration lied about the real cause for weeks. Nothing was done to help even though the attack in Benghazi lasted 13 hours. Even in the following days, the facilities in Benghazi were ransacked by militants and ordinary Libyans. The truth is that Obama and Hillary didn't give a shit. These people don't care about anyone whether it's US interests or Americans!! 
  13. Hillary Clinton used her power as Sec. State, to facilitate a Uranium mine deal in Kazakhstan, which netted her Clinton Crime Foundation over $30 million dollars...The Russian government owns the mine and is using the ore to replenish their nukes, which are aimed at you.
  14. Hillary and Obama botched US policy in Libya, quickly backing the ouster of Gaddafi. The result is total chaos. Now ISIS has infiltrated Libya.
  15. Hillary/Obama quickly got behind the ouster of Mubarak in Egypt and installed the horrible Muslim Brotherhood (Obama's pals). A year later, Egypt had a 2nd revolution to get rid of those Islamist Fascists.
  16. Hillary Clinton is the darling of Wall Street donations.
  17. Hillary Clinton voted for all of the Bush's wars.
  18. Bill Clinton managed to divert 93% of $13 Billion of aid money intended for Haitians to party's outside of Haiti. Haiti organizations got only 7%
  19. Hillary Clinton voted for all of the Wall Street bailouts.
  20. Hillary Clinton dreams of completely "open borders”
  21. Hillary Clinton supports and protects a serial woman abuser (Bill Clinton) who has raped and abused and used women like a disposable diaper.
  22. Hillary Clinton received money from and supported nations that she KNEW funded ISIS and terrorists
  23. Hillary was hateful, neglectful, above the law, “contemptuous” to her security detail, and “blatantly disregarded” security, (FBI docs)
  24. Hillary has public positions on policy and her private ones
  25. Hillary and Democrat supporters like Soros have been paying people to incite violence and unrest at Trump rallies, then they try to demonize Trump as hateful and "creating a culture of hate and violence" Who are the real haters?
  26. Hillary's campaign wants "unaware" and "compliant" citizens
  27. Top Hillary aides mock Catholics for their faith
  28. Hillary deleted her incriminating emails. State covered it up. Asked about using White House executive privilege to hide from Congress
  29. Bribery: King of Morocco gave Clinton Foundation $12 million for a meeting with Hillary, 6 months later Morocco gets weapons
  30. State Department tried to bribe FBI to un-classify Clinton emails (FBI docs)
  31. Hillary caught on tape about rigging the Palestine election 
  32. Latinos are "needy". Latino outreach is "taco bowl engagement"
  33. Clinton campaign was in direct communication with DOJ regarding Hillary's investigation
  34. Bill Clinton receives $1 million "birthday gift" from ISIS-funding Qatar while Hillary was SoS, Qatar receives arms flow increases of 1,482%
  35. Hillary cheated in debates: DNC head Donna Brazile caught giving MULTIPLE debate questions to Hillary
  36. Hillary campaign prays for shooters in news stories to be white
  37. Rigging the primaries against Bernie Sanders (DNC favored Hillary)
  38. Rigging the primaries against Bernie Sanders (Hillary’s team)
  39. Clinton Foundation schemed with Big Pharma: keep the price of AIDS drugs high in America and NO to cheaper generic versions
  40. Hillary Clinton supports and protects a serial woman abuser (Bill Clinton) who has raped and abused and used women like a disposable diaper.
This is a record of someone as President of a corrupt 3rd World country, not President of the United States.  If she becomes President, then the US will truly become a 3rd world country.

Tuesday, November 1, 2016

A Civilian Coup D'Etat Underway In US; Now Countered By Events and Comey

The vast conspiracy between Hillary Clinton, the Obama Administration, the corrupted DOJ, the Left Wing media enterprises (96% of Media are "in the tank" for Hillary), activities by various operatives paid by Soros or the Clinton Foundation are actually engaged in a Coup D'Etat to take over this country. The breadth and scope of their "operations" are amazing as is the passivity of the Republican "establishment." It's almost Trump against the world!

The video below is from Dr. Steve Pieczenik, who was Deputy Assistant Secretary of State under Henry Kissinger, Cyrus Vance and James Baker and holds a Harvard Ph.D.



The Left had almost succeeded in their Coup and they had planned Hillary's coronation. But a few kinks in their plans have emerged.

Although Obama tried to suppress Health Insurance premium announcements until after the election, that wasn't possible and the news is terrible. The ACA is a disaster for the country of Category 5 intensity. The Healthcare/Medical/Pharma bubble is inflating and threatens to bankrupt this country. It's obviously unsustainable! It's killing families and businesses all over this country! (The medical/pharma bubble must pop --it HAS to).

Julian Assange is one true hero to the counter-coup forces. His Wikileaks have been crucial in exposing the widespread corruption and manipulation. Most of what we know about the DNC, Hillary, the Clinton Foundations and the deep roots throughout the Democratic Party have been exposed by Assange.  See the Top 100 Most Damaging Wikileaks list here.  But the mainstreet media has failed (again) to report most of this information. Only alternative media like Zero Hedge, Breitbart and Townhall are providing adequate coverage of the stupefying subterfuge underway by the Clinton cartel and all their tentacles that extend to every level of government.  Drain the swamp indeed!

Also, James Comey has decided to "call an audible" and throw a kink in Hillary's takeover plans by announcing that the criminal investigations of her handling of classified information and the fraud associated with the Clinton's slush fund: the Clinton Foundation. Comey has single-handedly helped the counter-coup to help Trump. Comey is a Patriot. Even a few days later, polls have shifted dramatically toward Trump and Hillary has gone into hiding. Warrants have been issued for Huma Abedin's laptop and some 650,000 emails to/from Hillary are there (if not deleted).

Information continues to come out to the extent of corruption of the Clinton "machine" and it extends into every level of the Democratic Party including the President and Loretta Lynch.  It's a vast conspiracy. We hear that new DNC chair Donna Brazile was feeding questions to Hillary prior to a debate through Wikileaks I believe. CNN fired her. She should be fired as DNC chair but that would be entirely too ugly after Debbie Wasserman Schultz was forced-out when it came out through Wikileaks that Schultz  DNC had rigged the primaries against Bernie Sanders. These people are scumbags!  Democrats really suck!

And don't forget Project Veritas James O'Keefe who have exposed more Democratic voter fraud and voter manipulation. Remember, the Democrats need an ignorant population to impose their agenda. That's why they are facilitating mass un-selective immigration from Central America who are among the lowest of the low in terms of intelligence!  They are desperate for ignorant voters!

They must be stopped. Forward this blog post to your friends.

Michael Moore: Trump's Election to be Biggest FUCK YOU in History

Check out an amazing video from Michael Moore below (link here in case it doesn't appear).  He says "career politicians hate Trump, corporate America hates Trump, Wall Street hates Trump, and the media hates Trump. Trump's election  will be the biggest FUCK YOU vote in history."

I have to agree: