Baltic Dry Index 639 +11 Brent
Crude 66.25
Trump 25 percent
tariffs 12 days away. Brexit 42 days
away.
We do not err because truth is difficult to see. It is visible
at a glance. We err because this is more comfortable.
Alexander Solzhenitsyn
The world’s biggest debtor by far,
Uncle Scam, has been freeloading off the rest of the world for decades. Since
the Great Nixonian Error of fiat money, communist money, August 15, 1971 to be
precise. But US freeloading, consuming planet earth resources in exchange for
mountains of pictures of dead white USA presidents, or today its modern
electronic equivalent, has never been more blatant or dangerous.
Under Trump, and the two previous
presidents, US debt has exploded to 22 trillion dollars and rising. Out of a global population of 7.5 billion the
USA has only a population approaching 350 million, so a major readjustment lies
ahead one way or another, by reform or by catastrophe, or something in between.
Up until now, the world has gone along with
American freeloading. The rising tide largely lifted all boats. There was a
common enemy in the communist USSR and Mao’s murderous communist China. But
something has gone badly wrong since the mid 90s. Communism imploded and two billion
people rejoined some form of capitalism.
In the west fiat money has generated income inequality last seen in the roaring 20s. As a result, the
western democracies are splitting hard left and hard right. The coming European
elections are widely expected to generate the most extreme outcome yet.
The rest of the world is increasingly
reluctant to follow America’s lead. After abrogating treaties at will, America
increasingly has to resort to outright bullying and intervention to get its
way. While no one much cared when it was the banana republics of Latin America,
Afghanistan, Iraq, Libya or Syria, under President Trump that bullying and
intervention has extended to friend and foe alike. Canada or China, and
everything in between, it’s all much the same.
But now America itself is about to undergo
a congressional civil war. The Democrats have never accepted President Trump’s
legitimacy. What was a simmering civil war is about to go on the boil. A two year fight for the next Presidency of
the USA is just getting underway. With little sign anywhere of any willingness
for currency reform on planet earth, the
likelihood is that we are headed to a dollar catastrophe, probably as the next global
recession arrives.
Without a meaningful US trade deal with
China and the EU, punitive tariffs will make that recession arrive in 2019 or
2020 at the latest. In the first 6 months of 1914, no one saw catastrophe and tragedy
coming. While not expecting war, though
the USA yesterday just gave India a blank cheque, (the price of oil and gold
surged,) no one yet sees the coming catastrophe of dollar debt.
The utterly unbelievable scale of U.S. debt right now
The debt accumulated under Donald Trump would be enough to cover the inflation-adjusted cost of U.S. involvement in the Second World War
February 15, 2019 1:31 PM EST
This week,
the United States national debt ticked above US$22 trillion for the first time,
an amount equivalent to $67,000 per U.S. citizen.
The U.S.
federal government owes more money than any other institution in the history of
human civilization. And it’s just getting worse. According to the Congressional
Budget Office, in only 10 years the U.S. debt-to-GDP ratio will be higher than
any point since the Second World War.
Below, a few
factoids about just how eye-wateringly, bone-chillingly large the U.S. debt has
become.
U.S. debt is
now higher than the combined market value of the Fortune 500
The
Fortune 500 list includes all the recognizable titans of American business from
Apple to Amazon to Exxon-Mobil to the list’s ranking 500th spot, the uniform
and laundry company Cintas. Taken together, they basically constitute every
major consumer, media, industrial and entertainment product in the United
States. If you are the average westerner, the Fortune 500 is responsible for
most of your wardrobe, your diet, your home and your leisure pursuits.
The
sheer size of Amazon alone is difficult to picture: Millions of products,
thousands of employees, hundreds of buildings. And yet, add up the market
values of all 500 companies and it’s equivalent to just $21.7 trillion.
Thus, even if the United States nationalized the most profitable segment of its
private sector and immediately auctioned them off for cash, it would still have
$300 billion owing on its debt. (This would also destroy the world economy.
Don’t nationalize things to pay off debts, everybody).
----Holding a $22 trillion pile of
debt is not cheap. Although the United States benefits from ludicrously cheap
interest rates on its treasury bills, in 2019 it will spend $383 billion just
to service its debt. By 2023, interest payments are expected to be larger even than the U.S. defence budget.
Even now, $383
billion dwarfs the entire federal budget of Canada. Even at a time of its own unprecedented government spending, Ottawa will burn
through the equivalent of only US$254.35 billion in 2019. This means that,
merely with the money it uses to service the debt, the United States could run
the entire Canadian government and still have enough left over to run most
provinces. And if the Americans don’t feel like running Canada with their debt
servicing money, they could also run Mexico.
----U.S. debt has been steadily
climbing ever since the Sept. 11 attacks, but under Obama it was sent into overdrive.
Not all of this was Obama’s fault; the Great Recession,
ongoing Asian wars and a boom in entitlement spending on retiring Baby Boomers
all helped swell the tab. But still, in eight years of the Obama presidency,
the U.S. national debt jumped from $11.1 trillion to $19.85 trillion.
Coincidentally, this $8.75 trillion debt surge is the same as the combined
value of all the gold ever mined. Every nugget pulled out of the Klondike,
every ounce plundered from the Aztecs, every gold bar leach-mined out of
Australia: It all adds to about 190,040 tonnes or 6.7 billion
ounces. At the current per-ounce price of about $1,300, the world’s goal hoard
would be just enough to pay off the U.S. debt accumulated between 2009 and
2016.
President Donald Trump, meanwhile,
has only accelerated the Obama-era debt accumulation. In the 25 months since
Trump was inaugurated, his administration has overseen a $2 trillion increase
to the debt. Given current conditions, that figure is likely to surpass $4
trillion by the end of Trump’s first term.
----Jeff
Bezos’ fortune would cover only 34 days of debt accumulation
More
U.S. backs India's right to self-defence over Kashmir attack - Indian government
February
16, 2019 / 5:45 AM
NEW
DELHI (Reuters) - The United States supports India’s right to self-defence
against cross-border attacks, India’s foreign ministry said on Saturday after a
deadly car bombing in disputed Kashmir raised tensions with rival neighbour
Pakistan.
Prime
Minister Narendra Modi has promised a strong response after a Pakistan-based
militant group claimed responsibility for the suicide attack on a military
convoy on Thursday that killed 44 paramilitary policemen.
India’s
government said it had evidence the group, Jaish-e-Mohammad (JeM), had the
backing of Pakistan and demanded Islamabad take action. Pakistan has condemned
the attack and rejected India’s allegations.
U.S.
National Security Adviser John Bolton spoke to his Indian counterpart Ajit
Doval on Friday night, promising to help bring those behind the attack to
justice, the foreign ministry said in a readout of the phone call.
“The two
NSAs vowed to work together to ensure that Pakistan cease to be a safe haven
for JeM and terrorist groups that target India, the U.S. and others in the
region,” the foreign ministry said.
“They
resolved to hold Pakistan to account for its obligations under U.N.
resolutions,” it added.
More
The 'Blank Check'
Pence Arrives at Munich Conference With Allies Questioning U.S. Leadership
By Marc Champion and Glen Carey
Munich
Security Conference signals concerns about Trump
Stage set
for appearance with Chinese, Russian officials
Vice
President Mike Pence arrived at Europe’s big annual security conference on
Friday, determined to push back against a common perception that the U.S. has
vacated its role as leader of the free world.
Pence joined
a large bipartisan U.S. delegation at the Munich Security Conference where he
will face an unusually high-level Chinese contingent as well as Russian push
back over the U.S. decision to suspend involvement in the 1987
Intermediate-Range Nuclear Forces treaty.
U.S. allies
who see the Trump administration itself as a problem to manage will be as big a
challenge as the Russian and Chinese delegations.
Vice
President Mike Pence arrived at Europe’s big annual security conference on
Friday, determined to push back against a common perception that the U.S. has
vacated its role as leader of the free world.
Pence joined
a large bipartisan U.S. delegation at the Munich Security Conference where he
will face an unusually high-level Chinese contingent as well as Russian push
back over the U.S. decision to suspend involvement in the 1987
Intermediate-Range Nuclear Forces treaty.
U.S. allies
who see the Trump administration itself as a problem to manage will be as big a
challenge as the Russian and Chinese delegations.
---- This weekend’s
conference is the first, however, at which administration figures trusted in
Europe, such as former National Security Adviser H.R. McMaster, who spoke last
year, and former Secretary of Defense James Mattis, who spoke in 2017, will be
absent. A pre-conference report set the tone, worrying that the U.S. approach
to allies risked “squandering its competitive advantages’’ as
U.S. policies
come to match the president’s tweets.
In a sign of the
mood, Pence was met with a lengthy silence rather than applause when he said he
brought “greetings from 45th President of the United States, Donald Trump,’’ in
remarks to participants on Friday evening.
More
Risk of U.S. corporate recession rises as earnings outlook dims
February
15, 2019 / 12:06 PM
LONDON
(Reuters) - The outlook for Wall Street earnings has deteriorated significantly
in recent months, data shows, raising the risk that companies in the United
States may slip into recession before its economy does - with Europe close
behind.
Analysts
on average expect the S&P 500’s first-quarter earnings per share to drop
0.3 percent year-on-year, according to I/B/E/S Refinitiv data.
That’s a big
drop from the 8.2 percent rise expected as recently as October and would mark
the first contraction in U.S. company earnings in three years.
Analysts
have also made deep cuts to forecasts for the rest of the year.
They still expect growth in the remaining three quarters, meaning Wall Street would avoid a technical recession typically defined as a fall in two consecutive quarters. But only just, as the lowered growth forecasts are meager.
The swift pace and size of the cuts have kindled concerns that the downward trend will continue, particularly as companies struggle with squeezed margins and large amounts of debt.
More
Finally,
Unicorn ranching in Canada. The
cryptocurrency scam of the year? But how will all those poor lawyers get paid?
'Mind-blowing' gaffes at QuadrigaCX leave cryptocurrency watchers 'gobsmacked'
Exchange that has lost $260M accidentally misplaced another $468,675 last week
The Canadian Press · Posted: Feb
14, 2019 10:22 AM ET | Last Updated: February 14
Industry observers are in
disbelief over the revelation the embattled QuadrigaCX cryptocurrency exchange
recently lost track of more than $460,000 in crypto coins.
"I'm totally gobsmacked
... that such a thing could happen," says Manie Eagar, CEO of
Vancouver-based DigitalFutures, a business development consultancy that focuses
on digital currency and blockchain technologies.
"Whoever took over the
reins and is acting as the custodian of these funds should have at least done
due diligence to avoid whatever happened."
The court-appointed monitor
overseeing the search for $260 million in cash and cryptocurrency owed to
QuadrigaCX users revealed on Tuesday that the exchange had access to $902,743
in online digital assets, stored in so-called hot wallets as of Feb. 5.
Basically, hot wallets are
storage accounts that are easy to get in and out of because they are on the
internet.
However, Ernst and Young said
that on Feb. 6, someone working for QuadrigaCX "inadvertently"
transferred 103 Bitcoins valued at $468,675 into a so-called cold wallet that
remains beyond the reach of the company. Cold wallets are not fully connected
to the internet, which makes them more secure but also next to impossible to
access using failsafe plans.
Meanwhile, lawyers were expected
to gather Thursday in a Halifax courtroom, where a judge will decide who will
represent QuadrigaCX's creditors.
Insolvency expert Tim Hill
said the case is highly unusual, given QuadrigaCX has no offices,
employees or bank accounts.
"We certainly haven't
seen anything like this in Nova Scotia — and nothing in Canada that I'm aware
of," he said in an interview.
The Vancouver-based exchange
was shut down Jan 28 amid a flurry of speculation about the sudden death of its
CEO and lone director, 30-year-old Gerald Cotten, who led his five-year-old
virtual business from a home north of Halifax.
Court records say Cotten, who
died suddenly on Dec. 9 while travelling in India, was the only person with
access to the digital keys needed to access $190 million worth of Bitcoin and
other cryptocurrencies.
As well, the insolvent company
owes about 115,000 affected users another $70 million in cash.
"Transferring funds to
wallets they can't retrieve money from is really mind-blowing," said Samir
Saadi, professor of finance at the University of Ottawa's Telfer School of
Management.
"They know they don't
have access to those cold wallets and they still managed to make that terrible
mistake ... It tells us a lot about the company's practices. There's no backup
plans — nothing."
The selection Thursday of
representative counsel, which will be overseen by Nova Scotia Supreme Court
Justice Michael Wood, is part of a court-ordered insolvency process that was
set in motion when the virtual company was granted protection from its
creditors on Feb. 5.
The purpose of the federal law
is to allow insolvent companies owing more than $5 million to continue to
operate while drafting a plan to pay off creditors, thereby avoiding
bankruptcy.
The court order includes a
standard 30-day stay of proceedings, which means creditors are prohibited from
filing lawsuits against QuadrigaCX until the order expires. An extension is
widely expected to be granted by the court on March 5.
Hill, a Halifax lawyer who
specializes in insolvency and debt restructuring, said the law firms that will
be selected as representative counsel will be paid by QuadrigaCX's parent
company, Quadriga Fintech Solutions.
"There's a real danger
here that there's going to be no money to pay these guys," said Hill, a
member of BoyneClarke's business litigation team and a former registrar in
bankruptcy.
"Unless they can move
quickly to identify some assets, some money, this may not go on too long.
People need to be paid."
The representative counsel
will speak for the creditors in court, but there's nothing stopping creditors
from hiring their own lawyers.
More
"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."
Henry Hazlitt
The monthly Coppock Indicators finished January.
DJIA: 24,999 +76 Down. NASDAQ:
7,282 +124 Down. SP500: 2,704 +71 Down.
Normally this would suggest more
correction still to come, but with President Trump wanting to be judged by the
performance of the stock market and the Fed’s Plunge Protection Team now
officially part of President Trump’s re-election team, probably the safest
action here is fully paid up synthetic double options on most of the major
indexes.
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