The really annoying thing about banking insolvency these days is the alphabet soup of bailout agencies that keep shifting around and restructuring the debt to stave off bankruptcies.  The debt is still there, the bank gets more and more insolvent because the new money comes very expensive, but it delays the inevitable collapse.  So even though the piss poor condition of the banking system has been obvious for months going back to even before the collapse of SVB and Republic and every financial guru from Dr. Doom to Jeremy Grantham and Jim Cramer keeps hooting about an oncoming train wreck, it takes so fucking long to play out it makes you want to tear your hair out by the roots if you are a follower of this kind of nonsense.  Just get it over with already! 

https://www.benzinga.com/news/23/07/33155886/second-wave-of-banking-crisis-incoming-crash-could-be-worse-than-2008-global-financial-crisis-says-e

Second Wave Of Banking Crisis Incoming, Crash Could Be Worse Than 2008 Global Financial Crisis, Says Expert

RE

There's certainly plenty of talk going round about the oncoming train wreck of the banking system, commercial RE is just one more piece of the puzzle.  Also not sure how much "work from home" is to blame, the big tech companies don't like it.  So called productivity increases aren't there and managerial level folks have a harder time cracking the whip as "boss".l  Mostly I think it's just plain old downsizing as these companies shrink or go outta biz.  Whatever thee cause, it's bound to deflate the market, not good news for the banks.  Takes a long time to play out though, so I'm sure they have a magic act to fix it.

https://www.inc.com/jennifer-conrad/why-siete-family-foods-is-giving-2-million-to-latino-businesses.html

The Coming Bank Crisis No One Is Talking About

RE

A nice concise explanation of the ongoing banking crisis and the reason for the downward spiral that becomes self reinforcing and about impossible to stop.  The key is in this one sentence...

The economy operates on credit expansion which is why it's very rare to see bank credit contract.

Another way of saying the same thing is just substitute the word "Debt" for "Credit", because for every credit extended, somebody else has a debit on their balance sheet.  The economy, all the money we use is DEBT.  Somebody somewhere has to extend credit and somebody else somewhere has to take on debt in order to have any money at all flowing around in the economy. Once the banks stop handing out the loans, the economy grinds to a halt.  Down goes the Titanic.

https://seekingalpha.com/article/4617317-an-update-on-the-banking-crisis

An Update On The Banking Crisis

RE

When banks create money they do not create energy.  They do not create copper or trees.  The money is leant out and must be paid back.  Interest compounds.  New debt must be issued to pay for old debt, and the money supply always increases.

Printing brings money into existence as does numbers transferred to a bank account balance.  Once created, money is loaned out to be spent on real things, to service debt the social super organism  grows.  Real things must be built and so they are.   The debt demands it and ever more energy and materials must be used.

Energy and materials.  Stuff that in a world of 8,000,000,000 becomes hard to get. 

Too hard to get.  The social super organism can't eat.  Economic failures, defaults and unemployment result.  Supply chain failures.  Out of business signs and empty office buildings.  There is no profit to feed old debt.

Across the globe debt is now 350 to 400 percent GDP.

What would this be like on an individual level?

You earn 100k a year and you owe the bank 350K.  At the end of the year your credit card balance is bigger than it was last year.  This is a pattern for you.

You are in danger of being laid off, and that raise you got does not cover the increased cost of everything.

Your life is about to change.

Like it or not?



You won't.

The economic divide widens.

• The number of Americans making hardship withdrawals from their 401(k) accounts increased by 36% in the second quarter of 2023 compared to the previous year, according to Bank of America data.
• This increase in hardship withdrawals reflects growing financial distress among Americans due to factors such as high inflation and rising household debt.
• Despite the rise in withdrawals, the average 401(k) balance in the U.S. increased by 9.6% since the end of 2022, indicating some positive growth in retirement savings.

Since 2019, household debt balances have increased by nearly $3 trillion, according to New York Federal Reserve data through the first quarter of 2023.

On Tuesday, the New York Fed reported that US households' credit card debt surpassed the $1 trillion mark for the first time ever. The $45 billion increase in credit card debt helped to drive overall household debt levels to $17.06 trillion at the end of the second quarter.

How much is this.  Waldo is in the lower left.

17 of these: .

Those are $100 bills



But enough mind boggling.  More people are drawing down what they have but deposits increase.

This means rich people have more money.  Again.

It appears as though the financial house of cards is entering an accelerating phase of collapse, as the core Bond market product of US Treasury bills yield moves over the 5% mark for the 1st time in decades.  As you should know, this means the price of these bills is falling, because the yield curve moves inversely to the price curve.  It's getting more expensive to print new money and for Da Goobermint to borrow from the real source of power, the international banking cartel composed of banks like JP Morgan Chase, Citibank< Lloyds of London, the Bank of Rothschild, etc.  All this against the backdrop of soaring inflation and a zombie real estate market.  Is this finally the Big One, a 30 meter high Tsunami beginning to roll in from an earthquake centered under Davos in Switzerland?  Time will tell.

https://markets.businessinsider.com/news/bonds/treasury-bond-yields-market-selloff-market-crashes-dot-com-bubble-2023-10

The collapse in Treasury bonds now ranks among the worst market crashes in history

RE

If you follow the econ doom newa, you know that US Goobermint borrowing has gone Hockey stick, with something like $10T added in the last year essentially doubling the total debt.  This has resulted in the big banks which serve as dealers having to buy the debt themselves when they can't sell it to some other sucker.  This in turn has caused the UST yields to rise, now past 5%.  If it costs Da Goobermint 5% to borrow money, how much does it cost J6P to borrow money for his car?  A lot more, of course.  Banks make their money on the spread between those borrowing costs.

Interest rates for used cars are 13.5% on average for those with fair credit but can rocket up to around 21% for those with the worst credit, according to Bankrate.

15-20% is what you get with unsecured loans like Credit Cards. A car loan or home mortgage is securitized so should come cheaper since the bank can repo the car or foreclose on the mortgage if you miss a payment.

Not surprisingly, as the rates go up, more people go delinquent on the loan because they are usually adjustable rate and your payment, once $200/mo goes to $250 or $300.  Does this stop dumbass J6P from buying carz?  No, they keep buying at higher rates, leading to more delinquencies.  Eventually your subprime loans pop and it's time to bailout the banks.  Where does that money come from?  MOAR Goobermint borrowing.  So now, at long last Fitch, Moodies et al no longer give USTs AAA rating, its downgraded to AAA-.  It should be rated as Junk Bonds, except Da Fed can keep printing as long as they keep printing more USTs also and shoveling wheelbarrows of them at the Dealers to sell.  Round and round she goes, where she stops NOBODY seems to know.  Should have stopped in 2008 of course, but the Smartest Guys in the Room pulled a rabbit out of their Jockstraps and 15 years later it's still going round.  Can the Magicians of Money keep it going again this time?  We'll know soon methinks.

https://www.forbes.com/sites/antoniopequenoiv/2023/10/21/americans-are-overdue-with-their-car-payments-at-highest-rate-in-nearly-30-years/?sh=38b68e9133d0

Americans Are Overdue With Their Car Payments At Highest Rate In Nearly 30 Years

RE

QuoteRising car prices have in part been caused by a pandemic-induced computer chip shortage, and some chip shortages could continue into 2024

So what are the other parts of the rise?

Proletarian undercover work as revealed that the average person only earns about $25 an hour.  The average price for a new car is over $47,000.

I'm not going to bother with saying how things were in the past or pull out the flat income graph shown against rising productivity that spans decades of recent American history.

Suffice it to say reality is catching up with math.

Here there and everywhere.

Looks like the Chinese learned the lesson of how to turn small countries in its sphere of influence into perpetual debt slaves just like the IMF has done for the last century in South America, Africa and the Middle East. Somewhere along the way here the CCP changed from Chinese Communist Party" to Chinese Capitalist Party" 

https://www.cnbc.com/2023/11/09/laos-is-spiraling-toward-a-debt-crisis-as-china-looms-large.html

Laos is spiraling toward a debt crisis as China looms large

RE

This article is just chock full of unfathomable economics.

First off, I can't figure out how they can get ANYBODY to start as an EMT in NYC driving in from NJ at $40K/yr.  That's $20/hr.  Even before a $15 Congestion Fee, how do they afford to drive into Manhattan from NJ?  Minimum round trip mileage is about 50/day, maybe you could squeak by on $5 gas.  However, the article talks about some of the union members living 100 miles away!  That's 200 miles R/T commute! The Toll on the tunnel is $12-15 going in, nothing leaving.  There is no free parking in midtown or on Wall Street.  In the prime neighborhoods, the average fee for daily parking in a garage is $50.  You're talking 3-4 hours of working just to pay for this, and you haven't even factored in the cost of the car, insurance or routine maintenance.

Obviously also, you can't live in Manhattan and work at this salary level.  Average rent is $3600 for a 1 bedroom.  Even out in Brooklyn and Queens it would be hard to find an apt below $2000/mo. Subway fare is $3 each way.  So WTF do any of these workers live without more than half of their already low wages going to housing and commutation?

According to Google, you need an income of $75-100K to live in NY.  Even that I think would be hard to pull off, once you figure in taxes, utilities, communications, insurance etc.

Now on the other end, the $15 Congestion Fee is supposed to raise $1B out of about $15B to finance MTA projects.  This is a drop in that bucket.  The money could easily be raised with a tiny tax on Wall Street banks that have their offices in these neighborhoods.  The real reason isn't to raise money, it's to further discourage driving into the city.  Not a  bad goal, but making it still more unaffordable without another way to get the workers to the jobs just means people will quit.  You'll do better taking a job at min wage near where you live.

Obviously, these workers should be paid more, but for some reason EMTs have never been considered worth as much as Garbagemen, who get paid on a par with Cops and Firemen in NYC.

I can't figure out how NYC keeps running at all.  The economics there are insane.

https://nypost.com/2023/12/24/metro/nyc-ambulance-workers-in-panic-attack-over-15-congestion-toll/

NYC ambulance workers sound sirens over $15 congestion toll: 'It's a slap in the face'

RE

The movers & shakers from Davos have seen the light.

Conversation over canapes at the after session cocktail parties will be comparing bunker amenities and self defense weapons.  Freeze dried Truffles available in the food vendor booths.



https://www.cnn.com/2024/01/10/business/wef-global-risks-report/index.html

The people paid to spot risks see high chance of 'global catastrophe' within 10 years

RE

Quote from: RE on Jan 15, 2024, 01:52 AMThe movers & shakers from Davos have seen the light.

Conversation over canapes at the after session cocktail parties will be comparing bunker amenities and self defense weapons.  Freeze dried Truffles available in the food vendor booths.



https://www.cnn.com/2024/01/10/business/wef-global-risks-report/index.html

The people paid to spot risks see high chance of 'global catastrophe' within 10 years

RE

Full doomer, but from their own point of view.  In reality the folks at Davos are not even close to being 'doomer'.  As a Marxist I have to give this report a thumbs down.  The author, Hanna Ziady writes from an capitalist point of view and generates her own MIS-INFORMATION.

Doom is coming, but genuine bad information, like a green new deal.  Not faux mis-information will be the cause of doom.  Mis-information can only start a fire.  By itself it can't do much.  AI mis-information may be tinder for a fire, but to burn a fire needs fuel.  The existence of Davos itself provides sufficient fuel.

People at Davos need continual economic growth so their money piles get higher at twice the rate of actual growth.  So Davos as usual, with crocodile tears will define doom in terms of their portfolio bottom line.  Doom for Davos will not be 5.6 million Americans starving to death in 2053.  Doom for Davos will mean difficulty finding energy supplies to fuel their rape of the planet and maintain their useless eater status.  This is the writing on the wall Davos sees.

The problem with Hanna is she imagines the information we already have is true and correct.  Fear of 'dis-information' is a natural result of a threat to her frozen in stone 'truth'.  A Marxist point of view considers the world to be in flux, constant motion, everything changing and the economic system we have must reflect current conditions. Reactionaries * to the contrary, imagine the system we have is the best possible.  It is, only outright slavery is more exploitive.  Oligarchies rule by bank account.  The money trick puts a layer of abstraction on slavery and gives it more power.

Years ago, (actually most of my life) I decided to imagine a times that all the 21st century ideas modernity is so proud of, actually were as ignorant of reality as we know an average European peasant from the 1500s was.  I did this from a personal point of view, to test the validity of my own DOGma.  I am only now sour enough to apply the comparison to everyone else.  I am aware this little trick of mine, through the years has made my DOGma far superior to the average.  This gives me the confidence and self-esteem to put the filter on other people.

Let's be real.  Hanna Ziady posits that disinformation will become a threat.  All people who want censorship agree with her.  Mis-information must be fought, and all wanna-be censors are standing in line ready to do it.  Then any information that threatens the supremacy and cultural hegemony of the Davos status-quo will be quashed.  Davos will paint shit white.

My 15th century trick turned me into a Marxist, and I did not even know what one really was at the time.  Likely the gentile reader does not know what one really is.  It is not your fault.  You live in America.

* reactionaries fight system change.  They react against it.

Of course, to paraphrase F. Scott Fitzgerald, Doom is different for the rich, because they have more money.    But  even though it's different, they still see Global Catastrophe in the next 10 years.  That's a Full Doomer type prediction.

RE

Consistent with the ongoing crash in the Commercial Real Estate market, the truth about the over valuation in the stock market is also getting talked about in the MSM, as opposed to the bullshit that has been promulgated that the FSoA economy is healthy and we would avoid a recession due to the higher interest rates needed to stem inflation.   Pretty much every warning light for a crash is flashing RED, from the yield curve inversion in bonds to the PMI, skyrocketing debt on the Federal level and consumer credit card debt now topping $1T and of course the unaffordable housing situation all just SCREAMS crash ahead!

Also pretty silly IMHO is the notion that a recession will be short lived, and we will hop back to growth in a year or even less.  The debt problem is systemic and very deep, and there is nothing you can point to that might provide an engine for growth.

Internationally, the Chinese economy is in a deep hole with their own RE disaster unfolding and youth unemployment above 20%.  Shipping and trade continues to be threatened by the war in the Middle East and the Indian rice export ban is going to wreak havoc with food prices in many countries where it's a main staple.  This means increasing political instability throughout Asia.

So overall we are likely to see a major economic slowdown which will reduce demand for oil, and unless the wars escalate further to increase military demand for oil, consumer prices for fuell here in the FSoA probably won't change too much, at least to begin with.  However, if demand drops enough and they are forced to drop oil prices, that will mean the more expensive oil plays will be shut in.

It looks like the next couple of years will be a critical turning point in the whole energy-economy ball game.  Get ready for a real roller coaster ride, cuz it appears that TSHTF day is approaching.

https://markets.businessinsider.com/news/stocks/stock-market-outlook-economy-recession-bear-market-earnings-tech-bubble-2024-1

Stocks look 'highly vulnerable' and the economy is likely to enter a yearlong recession, a 30-year market veteran says

RE

40% decline is optimistic.

https://seekingalpha.com/article/4671474-is-it-1929-deja-vu-all-over-again

Is It 1929 Deja Vu All Over Again?

RE