Lyth0s' Economic Troubles Thread

[OROBTC]

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Lyth0s

I join the parade in cheering you on: posting economic stories.  I have no quibble with the ones you have chosen.

Our country's financial problems are epic.  How it will all turn I have no idea.  But I doubt that it will be pretty, I suspect the opposite.

After one is convinced that we really DO have severe problems, the next item on the menu is what do each of us (as individuals) do to protect our savings and our families?

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Here are two well-known websites that provide "News of the Day":

-- zerohedge.com, very bearish and contrarian, fair number of trolls

-- marketwatch.com, very conventional, but provides a wide range of stories

There are a wide range of financial websites covering almost every subject.  Perhaps the main problem is finding one or more that have sufficient information and that you can trust.

[lyth0s]

I don't think I agree with this. If the $100 is printed and we now owe $102 to the fed, then we have even more money printed to pay our debts back and this cycle repeats. Yes debt forever increases (and at a faster rate than the money supply), but all of this printing leads to inflation (dollar becomes cheaper and it takes more of them to buy the same good)...It's only if we stop printing that we would start to have deflation and economic collapse.

Please tell me if I'm wrong or missing something.

Printing does not necessary leads to inflation, since the inflation indicator does not include capital goods, more money will just raise the asset price and bond price. And now more money means more debt, means more of the income will be used to pay the debt, and less money will be used to pay the daily consumption, so there will be deflation even the money printing is accelerating

Of course when banks receive the interest, they will spend, which put those interest money back into circulation, but their spending is very limited and could not create much jobb

I'm starting to see your point. But if asset prices rise, is that not inflation as seen by the consumer? Is it possible for the government to be undergoing deflation in paying the interest while at the same time the rest of the consumer market sees inflation of prices?

[lyth0s]

News 2/27/15


There is really only two things I want to post today.

Greece runs out of funding options despite euro zone reprieve

Shut out of debt markets and faced with a steep fall in tax revenues, Athens is expected to run out of cash by the middle or end of March. Its finance minister has warned that Greece will struggle to repay creditors starting with a 1.5 billion euro IMF loan repayment due in March.

--Greece's emergency funds are only 1 billion in total, not even enough to pay the IMF back. Remember, Remember....The month of March? --Maybe.


The Euro is is getting closer to parity with the USD. Take a look at that nose dive on the 26th.

https://www.google.com/finance?q=EURUSD&ei=OX_xVJChD6ahigK55oGgCQ

If you live in Greece, any country that uses the Euro or have some family out there, tell them to get some bitcoins

[Realpra]

Don't believe any news about Greece. That theater could continue forever - until the EU bankrupts itself constantly bailing out a corrupt and inefficient government/banking system.

When money can be printed how do you run out? You DON'T you make headlines and politics, but at the end of the day you - the elite - get your house and your dinner for free.

It doesn't end until people say stop and choose a medium that cannot be faked - like Bitcoin.

(Gold also cannot be faked, but using it is just as cumbersome and expensive as our current structure of propping up the elites - at least the elite get something out of fiat)


In the near future Bitcoin will start to swallow up all this fiat, the more the fiat price lowers the faster it will go. Bitcoin is like a financial black hole, it is yet small - but just wait.
At first people will go to Bitcoin because of the price increases, later they will come because it is stable and fiat is collapsing.

[lyth0s]

Don't believe any news about Greece. That theater could continue forever - until the EU bankrupts itself constantly bailing out a corrupt and inefficient government/banking system.

When money can be printed how do you run out? You DON'T you make headlines and politics, but at the end of the day you - the elite - get your house and your dinner for free.

It doesn't end until people say stop and choose a medium that cannot be faked - like Bitcoin.

(Gold also cannot be faked, but using it is just as cumbersome and expensive as our current structure of propping up the elites - at least the elite get something out of fiat)


In the near future Bitcoin will start to swallow up all this fiat, the more the fiat price lowers the faster it will go. Bitcoin is like a financial black hole, it is yet small - but just wait.
At first people will go to Bitcoin because of the price increases, later they will come because it is stable and fiat is collapsing.

If Greece were able to print their own Euro I would agree with you that they would never run out of fiat. But since they are reliant on the ECB, if the ECB were to cut them off then Greece would have to go back to printing its own money, which would then in turn make people lose a lot of confidence in the Euro (since any bankrupt country could then follow suit and leave the Euro).

As far as the ECB or its supported countries go your 100% correct that they will never run out of Euro.

In the near future Bitcoin will start to swallow up all this fiat, the more the fiat price lowers the faster it will go. Bitcoin is like a financial black hole, it is yet small - but just wait.
At first people will go to Bitcoin because of the price increases, later they will come because it is stable and fiat is collapsing.

--I couldn't have said it better myself.

[lyth0s]

News 3/3/15

Fraud Comes to Apple Pay

Abraham said it’s not “an anomaly” to see fraud accounting for about 6% of Apple Pay transactions, compared to about 0.1% of transactions using a plastic card to swipe

--6% fraud rate is pretty high for something that is supposed to decrease fraud. Another area where bitcoin shines.

India Central Bank Cuts Interest Rate "Pre-Emptively" For Second Time In 2 Months

In a surprise move, the RBI just cut its main interest rates for the second time in two months, taking it from 6.75% to 6.50%, in what the central bank calls a “pre-emptive” policy move, but what is in reality merely a confirmation that so far in 2015 at least 20 central banks have lowered their interest rate.

--6.5% is still high (at least by USA standards), but still shows the continued downtrend of interest rates in the world economy



Buffett On Europe: Germany Must Stop Greek Dog Peeing On Its Carpet

Buffett compares Greece to a "dog peeing on the carpet" of Europe, suggesting Germany stop "rewarding behavior you want to get rid of."

--Buffet saying that Greece is like a dog peeing on Germany's carpet? The hell? He states he is in favor of Greece leaving the Euro.
--Also sounds like Buffet is in favor of the ECB breaking up due to different fiscial policies.


The deflation bogeyman

None of this might matter were it not for the fact that extremely low interest rates have fueled increased risk-taking by borrowers and yield-hungry lenders. The result has been a massive mispricing of financial assets. And that has created a growing risk of serious adverse effects on the real economy when monetary policy normalizes and asset prices correct.

--Massive mispricing of financial assets, enough said.

[tabnloz]

Posted this on another Spec thread but it is more fitting here.

Many messy implications.

http://foreignpolicy.com/2015/03/03/the-u-s-government-should-pay-anonymous-in-bitcoin-to-fight-isis/

[lyth0s]

Posted this on another Spec thread but it is more fitting here.

Many messy implications.

http://foreignpolicy.com/2015/03/03/the-u-s-government-should-pay-anonymous-in-bitcoin-to-fight-isis/

The government wouldn't out source their hacking to make rich groups of people that could easily turn against the US in the near future. It is an interesting idea but most likely they would just hire from the inside so no need for internal privacy of the agent with government since they would be acting as an employee

[lyth0s]

News 3/9/15


S&P 500 can’t fight the market’s selloff forever

More and more stocks no longer are in uptrends, even as the S&P 500 manages to maintain its uptrend,” said Carter Braxton Worth, chief market technician at Sterne Agee. “Unsustainable divergence, we’d say.”

--Although there are plenty of other stocks within the S&P500 and oil hasn't done that well this quarter the fact that the NYSE composite is also following the general downtrend while the SP500 is diverging should mean something...

China inflation rises, but deflation fears remain

China's economy grew 7.4% last year, its worst showing in 24 years. The government has set an even lower target for this year of about 7% growth.

The central bank took advantage of mild inflation and cut benchmark interest rates, effective March 1, to help bolster economic growth. It was the second rate cut in a little over three months.

--More interest rates cuts. Declining growth in china.




Home-price expectations are cooling, survey finds

Home-price growth has slowed, according to recent data. The year-over-year growth rate for the S&P/Case-Shiller 20-city composite slowed to 4.5% in the final month of last year, compared with 13.4% growth in December 2013.

--I would actually be in favor of housing prices to come down due to a higher interest rate (if that will ever happen) and a correction in housing prices. It's about time for me to buy some new property

[lyth0s]

News 3/10/15



S&P 500 posts worst day in two months on rate worries

(Reuters) - U.S. stocks dropped on Tuesday, giving the S&P 500 its biggest decline in two months, on increasing views the Federal Reserve may raise rates as soon as June.

The Dow and S&P 500 ended in negative territory for the year, with the S&P 500 off 3.5 percent from its March 2 record closing high.

Dow suffers biggest point drop in 5 months

The Dow Jones Industrial Average suffered its worst one-day point drop in five months as investors began pricing in a rate hike by the Federal Reserve by the middle of the year, while other central banks are embarking on a quantitative easing path.

[lyth0s]

News 3/18/15


Fed takes step to rate hike but scales back intended pace

n a unanimous vote, the Fed as expected dropped its pledge to remain “patient” about raising rates in a statement released after a two-day meeting. And 15 of the bank’s top 17 officials think the Fed will raise rates sometime this year. See text of statement.

Still, the Fed cautioned that it will wait to raise rates until it has “seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term.”

--It's getting to the point where the supposed debate about raising the rates is just as silly as discussing whether or not we should increase our debt ceiling. It will never happen and if it does we will have a major economic correction across almost all asset classes.



Yellen Admits "Market Valuations Are On The High Side", Adds "No Comment" On Biotech, Social Media Stocks

With a firm "no comment" Janet Yellen shied away from burstng the bubble in "extremely stretched" Biotech and Social Media stocks, but was forced to admit that "overall measures of equity valluations are on the high side." Then, rather oddly, she notes that The Fed sees unusually low spreads in corporate bond markets... which is odd since they have actually widened dramatically in the last year or so, perhaps signalling just how "high" valuations are in stocks...

Yellen "no comment" on Biotechs... but "market valuations on the high side."

--Yellen says that the bubble "threats are moderate", which really means that they are huge and she is going to downplay the threats in order to not cause a financial panic.


Greek Bank Deposit Outflows Spike As Capital Controls Concern Spreads

With Greek bank bonds collapsing, stocks near record lows, Greek default risk at post-crisis record highs, and Greek government bond yields spiking, it has been surprisng that we have not seen the ATM lines and generalized 'panic' of a population in fear of being "Cyprus'd." Well, now as ekathimerini reports, that appears to escalating and rapidly as credit sector officials estimated that the flight of deposits yesterday alone amounted to 350-400 million euros, which was some five times higher than the daily average in previous days.

As ekathimerini reports, Greek banks are suffering from fresh turbulence due to the tension and the apparent collision course between Athens and its creditors. Bank stocks gave up more than 8 percent of their value on Wednesday, while the outflow of deposits was far greater than on previous days.

[lyth0s]

News 3/23/15

Fighting the "War on Terror " by Banning Cash [In France]

... France has taken the first step.  It seems the terrorists involved partially financed these attacks by cash, as well as by consumer loans and the sale of counterfeit goods.
French Finance Minister Michel Sapin brazenly stated  that it was necessary to "fight against the use of cash and anonymity in the French economy."  He then announced extreme and despotic measures to further restrict the use of cash by French residents and to spy on and pry into their financial affairs.

These measures, which  will be implemented in September 2015, include prohibiting  French residents from making cash payments of more than 1,000 euros, down from the current limit of  3,000 euros.

--Further fiat restrictions and they will only help hinder the unbanked even more. Hopefully the working poor in France aren't as reliant on check cashing services to convert their paychecks into cash to then pay their bills as much as it occurs in the US.

Goldman Sachs says we aren't in a bubble... yet

NEW YORK (MarketWatch) — Don’t fret. Stocks aren’t overheating. That is the message Goldman Sachs chief global strategist Peter Oppenheimer, offered up on CNBC on Monday.

The Goldman strategist included the key term “yet” in his comments about the growing fear in the market that stock’s are getting too rich.

--They are definitely in the money making business, but also they are not the best people to be trusting when it comes to bubbles and crashes.

[OROBTC]

...

France banning cash in large transactions...  If you are French, you have a low limit (1000 euros), but if you are a visitor from Pakistan, Yemen or Algeria (or any other tourist) the limit is 10,000 euros. 

Which of course makes zero sense.  Unless you need to make it easy for Islamic Extremist Terrorists to wreak havoc there...

Lyth0s, my guess is indeed it will be the poor and unbanked who will be hurt the most.  

But, such restrictions on cash might be very good for Bitcoin.  And gold.  As confidence evaporates (which I imagine it will happen in due course), BTC and Au are two of the best assets to own.

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As the ZeroHedgers say, it is probably best to "take the other side" of any speculation that Goldman Sachs 666 advises to its muppets...

[lyth0s]

News 3/24/15


Feds Urge Banks to Call Cops on Customers Who Withdraw $5,000 or More

But as investor and financial blogger Simon Black points out, last week, “A senior official from the Justice Department spoke to a group of bankers about the need for them to rat out their customers to the police.”

Assistant attorney general Leslie Caldwell gave a speech in which he urged banks to “alert law enforcement authorities about the problem” so that police can “seize the funds” or at least “initiate an investigation”.

As Black highlights, according to the handbook for the Federal Financial Institution Examination Council, such suspicious activity includes, “Transactions conducted or attempted by, at, or through the bank (or an affiliate) and aggregating $5,000 or more…”

--"War on cash intensifies"

[johnyj]

News 3/24/15


Feds Urge Banks to Call Cops on Customers Who Withdraw $5,000 or More

But as investor and financial blogger Simon Black points out, last week, “A senior official from the Justice Department spoke to a group of bankers about the need for them to rat out their customers to the police.”

Assistant attorney general Leslie Caldwell gave a speech in which he urged banks to “alert law enforcement authorities about the problem” so that police can “seize the funds” or at least “initiate an investigation”.

As Black highlights, according to the handbook for the Federal Financial Institution Examination Council, such suspicious activity includes, “Transactions conducted or attempted by, at, or through the bank (or an affiliate) and aggregating $5,000 or more…”

--"War on cash intensifies"

The reality is that banks are closing the loop of their whole FRB system, so that everyone is only playing game on that giant exchange (banking networks), if no withdraw will happen then no bank run is possible

[lyth0s]

The reality is that banks are closing the loop of their whole FRB system, so that everyone is only playing game on that giant exchange (banking networks), if no withdraw will happen then no bank run is possible

Yep. This could also be the setup to limit the impending bank run before a financial collapse even occurs.

[lyth0s]

News 3/25/15


Stocks are overpriced, overleveraged, headed for trouble

Just to provide a little context for the less technically minded market watchers, the CAPE ratio is the ratio of the S&P 500 index to trailing 10-year average earnings. Q-ratio is the market value of nonfinancial corporate equities outstanding divided by net worth, while the Buffett Indicator describes the ratio of corporate-market value to gross national product. All three of those metrics are approaching two standard deviations above historical means, while forward P/E ratios are within historical norms.

--Of course it takes a 1.5-2% drop in the stock market in a single day for people to slightly wake up.

U.S. stocks hammered as fears about quarterly results intensify

The carnage on the Street marks the third consecutive losing session, with the S&P 500 and Dow industrials recording the sharpest losses in two weeks and occurred as one of the year’s biggest mergers, a deal between Kraft Foods Group Inc. and H.J. Heinz Co., was announced in the morning.

Analysts attributed the selloff to pre-earnings season jitters and investors cashing out of stocks in companies that have seen big run-ups.

The Nasdaq Composite COMP, -2.37%  ended the day down 118.21 points, or 2.4%, at 4,876.52.ost 19.06 points, or 0.9%, to 2,072.44. Biotechnology stocks were hit the hardest, with the iShares Nasdaq Biotechnology ETF IBB, -0.06%  dropping 4.1%.

The S&P 500 SPX, -1.46%  fell 30.45 points, or 1.5% to 2,061.05, with nine of its 10 main sectors finishing sharply lower. Energy sectors stocks defied the trend and followed a rally in oil prices higher sparked by an intensifying conflict in Yemen.

The Dow Jones Industrial Average DJIA, -1.62%  lost 292.60 points, or 1.6% to 17,718.54, and turned negative for the year. All but two of its 30 components closed lower.

--Long quote but it brings out some key points such as Nasdaq: -2.37% loss, S&P500: 1.46% loss, and investors cashing out of stocks that have recently skyrockted. The market valuation for these companies is incredibly high and most P/E ratios are far greater than the safe "15-20" numbers.

This is nothing like the 2000 dot-com bubble

Should we be worried about another dot-com crash?

After all, the Nasdaq Composite is back up to 5,000 — the giddy level last seen during the peak of the big tech bubble back in 2000.

There are frothy signs everywhere — booming real estate in San Francisco, overnight millionaires with messenger bags, and everyone doing deals.

Everyone’s got “the next Uber,” “the next AirBnB.” Kids with peach fuzz on their cheeks say they’re going to reinvent the world — and investors with billions believe them.

Heavens, even Mark Cuban is calling it madness — and saying it’s worse than last time.
FAA Grants Approval to Outdated Amazon Drones
(3:05)

Is the FAA too slow or is drone technology developing too fast? WSJ’s Jack Nicas reports on Amazon’s next steps in getting its drones approved by the FAA. Photo: DPA/Zuma Press.

Maybe he’s right. Cuban’s a smart guy. And maybe this is all going to end very, very nastily, as it did last time.

But if this is a similar mania, it’s hard to see it in the numbers. Here are three reasons why is this is not the same as it was then.

One: This Nasdaq 5,000 is not that Nasdaq 5,000.
...
 But by the numbers we do not seem to be back up to those wild, crazy days. Yet.

--The author actually attempts to provide evidence that we are not in another dot com bubble and even though he has some points such as the nasdaq being 5000 now isn't the same USD worth of 5000 in year 2000. However, his entire first paragraph talking about all the mania and crazy high valuations just helps to show how wrong he really is. And of course his argument ends very similar to Goldman Sachs response that we are not in a bubble "yet", so that post-crash they can say "hey we knew it was coming, but we weren't in it when we wrote the article"

[lyth0s]

News 3/26/15



China stocks may be in serious bubble]China stocks may be in serious bubble

On Wednesday, combined trading on the Shanghai and Shenzhen markets hit 1.24 trillion yuan ($198 billion), the seventh straight session in which turnover surpassed the 1 trillion yuan mark. By comparison, the New York Stock Exchange typically saw $40 billion-$50 billion a day in trading during the first two months of this year.

... “even the cleaning lady” has opened an account to play the market.

In a note this week entitled “The Worrying Sense of Calm in China,” analysts at Bank of America Merrill Lynch got right to the point: “Risk-Love (equity sentiment) in China’s equity market is in euphoria territory. It is time to book some profits.”

“China’s real interest rates remain too high, the currency is too expensive, fiscal policy is tight, and debt deflation is taking hold,” the analysts said.

--At least BofA isn't playing the "its not in a bubble....yet" card. China is an extremely fragile economy right now and if they don't have an influx of businesses (very risky due to government corruption) to fill their ghost towns that they have built as a large part of the GDP, the whole thing can come crashing down.

[lyth0s]

News 3/27/15

How the Fed is 'screwed,' and what happens next

"There will never be a good time to raise rates off zero when you've been there for six years," Peter Boockvar, chief market analyst at The Lindsey Group, told CNBC. "The Fed's screwed, essentially."

"Zero ... is just an unnatural rate six years into a recovery." Boockvar said. "But the problem is that GDP growth hasn't averaged more than 2.5 percent (during the recovery), so they're stuck in this lackluster, mediocre-type growth rate."

--"When CNBC has a Zerohedge article, that's how you know things are fucked up." --Reddit
Investors fly away from U.S. stock funds at a rate last seen in 2009

U.S. stock funds have seen $44 billion in outflows in the year-to-date for their worst start to a year since 2009, said Bank of America Merrill Lynch strategists in a note Thursday. Meanwhile, European equity funds have enjoyed $46.6 billion in inflows so far in 2015, as the table below shows.

The driving forces behind the move away from U.S. stocks include investors having been positioned too bullishly, weaker-than-expected economic data and the dollar’s rally, according to the BAML strategists.

Ramshackle San Francisco home sells for $1.2 million



--Housing bubble anyone?

[lyth0s]

Forgot to add this:


Tax on bank deposits in federal budget (Australia)

The federal government is planning a tax on bank deposits at the May budget in a move that will raise about $500 million a year but which bankers warn could be passed on to customers.

The bank tax, as proposed by Labor ahead of the 2013 election, where it lost government, would be a 0.05 per cent levy on every deposit of up to $250,000. It was scheduled to start on January 1, 2016, and budgeted to raise $733 million in its first 18 months of operation.

-- This law hasn't passed yet and the banks of Australia are currently fighting it...but if it passes not only would you have an income tax, but when you deposit that money into the bank they get to hit you with another tax....LOL. Next there will be a tax for every withdrawal, transfer and purchase. tax tax tax tax tax tax it all! If you even look at money you're going to be taxed


Better start getting some bitcoins sooner rather than later!