Please! Spare Me, Enough Already!

Recently, I overheard a discussion from a pair of Bernie Sanders fans about how horrible capitalism is because America allowed child labor in the 19^th century, during our Industrial Revolution. These people complained that the “Robber Barons” only achieved their great fortunes because they exploited workers, created monopolies and jacked up prices on goods. Thank God, the government intervened in the market and set things right!

Where do we begin? There was so much bovine scatology flying around, one had to make sure their tetanus shots were up to date. First and foremost, when someone uses the term “Robber Baron” they are telegraphing to the recipient that they have a prejudice against someone having more wealth than they do. Those early entrepreneurs didn’t steal anything from anyone and America doesn’t have “barons” for there is no aristocracy. Evidently, someone lost at Monopoly too many times. The record shows that the prices of goods produced during the latter 19^th century were actually decreasing at a steady pace, the same time wages were increasing, I might add. Nowhere does the actual history record show a monopolistic increase in prices. Nowhere. The era from the 1870s to about the early 1920s was the greatest increase of wealth this country had ever experienced. Standards of living rose to unimaginable levels in two generations.

Changing Economy… So What?

During the state of the union address a week ago, president Obama suggested that the economy of the United States is changing. He gave a forecast for economic “growth” as well as claimed job creation and claimed that the democrats pulled the economy out of the recession. Hillary Clinton did not leave any of this behind as she claimed that she was part of the administration that ended the great recession. They are either purposefully disingenuous or completely clueless. It reminds me of a Mark Twain quote, “Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it.”

As I wrote earlier this month, the Stock Markets open is the worst in the history of the stock market. As we watch the markets drop our way into the new year, the IMF just released a new forecast where they had to cut global economic forecasts. The earnings in manufacturing is  now reporting that it is the worst earning season since 2009, as we watch the USD appreciate against commodities as well as foreign exchange. This shows that the entire rate hike of only .25%. Mainstream analysts are suggesting that we can maintain a profit recession outside the entire economy. Why would anyone invest in anything if there is a profit recession?

Well, there’s no doubt that we are in a changing economy, we are always in a changing economy. This is because people’s wants, valuations, as well as life goals constantly change. The question is how are we going to combat the downturn in the economy? Obama is assuming that he single-handedly fixed the recession caused by bush, all he did was prolong it. Today, the Chinese GDP report was released and it is the slowest growth in 25 years. Manufacturing is dropping in China, as the people’s bank decides over which stimulus to inject. The Chinese markets reacted to expected stimulus in the future. Yet at the end of the month the Fed will release their quarterly projections, and if it is negative that means the fed will have to admit we are in recession. Chinese exports are dropping  so there is really no point in the Chinese to devalue their currency. When the quarterly is released and the United States starts a stimulus on their currency, the Chinese might appreciate their currency which can lift the downward pressure on consumers in the emerging Asian markets, and re-adjust the Chinese manufacturing to domestic concerns at the expense of the dollar. Also, the Chinese will no longer buy US debt, so the trillions of dollars being soaked up by Chinese government will no longer occur; which suggests that the US economy will have a massive currency bubble pop, and if the Chinese appreciate their currency it will cause a restructure on the foreign markets. The inflationary pressure of the US combated with the appreciated Yuan will cause the Chinese long asked for Basked of currencies. This is a very likely future in the global economy. As Obama said, we are in a changing economy. Meaning, we are no longer the economic power house we used to be, and whether thats a good or bad thing, Obama’s economy definitely helped cause it

The Euro is a Failure

Too Little Too Late?

As the year of 2015 dwindled down to a slow close the markets sought the increased interest rate as a measure that insured financial stability as well as an economic recovery. This increase, with the promise to slowly increase rates over 2016, was a long-time waiting. Finally as financial traders and political economists released a sigh of relief as the doom days of endless QE come to a close, right?

Logically one must admit that the FED sure waited a while before being able to actually raise interest rates a historic .25% increase. Historic!? After years and years of printing money and propping up the stock market with artificial asset swaps and purchases, an increase of a .25% interest rate from a 0.25% interest rate is still lower then the Greenspan years, will help slow down the possible inflationary trends?

So while major financial analysts are now taking the position that 2016 is a year of recession, the question is what are the indicators? Well for start we see the Chicago PMI closing q4 at a horrible 42.9%, and layoffs have already started. Dow Jones is down near 500 points on the year, and retail is having a horrible ending quarter as shares dump.

All of this screams recessionary trends, yet the FED raises interest rates? This is due to the fact that the FED wanted to act like the economy is not as weak as it actually is. Currently, we see levels of dollar devaluation getting to extreme levels, and the FED is pretending to use the tools necessary to combat the inflationary trends of the currency printing. So while Janet Yellen raised the interest rates, the question of motive is still in play. Why now? Simple, because the recession is already here and in a few months from now when the FED finally accepts that we are in a recession, Yellen can reverse the interest rates and simply say that the rising of the rates were premature. Again, to escape blame from the endless QE policies.

This recession will not be an easy one, and the question then remains; what can we do to reverse the recession in the most allocative manner to stabilize the economy? Raise rates even more! Feel the blow, take the hit, power through a hard recession and liquidate all the bad assets that had been propped up by the horrid fiscal and monetary policies. We need to pop the bubble. However, what can we do in the meantime to protect our financial assets? Invest in foreign equities and hard metals like Gold. This is because Gold and Silver tend to do well in recessionary trends as well as historically during times of QE. If you look at the NASDAQ 10 yr chart you can see gold prices spike up in times of instigated recessionary tools like QE, during the great recession years, and drop when times of market confidence. This recession is going to hit like a storm, and it might be a good move to re-adjust financial assets now because this year will be a bad year for the global economy.

The real speculation everyone should be asking is if the political motives can continue to prop up wall street speculation. Yellen does not want the recession to fall at the end of Obama’s presidency; its much easier for propaganda reasons allow recessions to hit when a new president enters office. Will the FED be able to prop up Obama’s false legacy of fixing the economy? One thing is for sure, 2016 will be an astonishing year.