The Great Economic Reset

[Fox3WheresMyBanana]

The West hasn’t grasped the scale of the disaster facing China

https://www.telegraph.co.uk/business/20 ... um=for_you

[Fox3WheresMyBanana]

Remember Event 201?
October 2019, a big exercise simulating a worldwide pandemic.
I downloaded and watched it immediately. Two months later.....

Well, the EU has just run a big Food Shortages exercise.
https://finance.yahoo.com/news/europe-w ... ccounter=1
The scenario has it starting in 2024 and getting much worse in 2025.

“We’ve been living in crisis for the last three years,” said Hegadorn, adjunct professor of global food politics at Sciences Po in Paris. “There's a lot more to be done on every level. Crises are only going to come faster and harder.”

Note the last sentence, which I have been banging on about for a while, and is bound to happen with idiots in charge.

Needless to say, after the total horlicks of the Pandemic, there's no public videos this time.

Event 201 details here
https://centerforhealthsecurity.org/our ... e#scenario

[Fox3WheresMyBanana]

Government statistics: "It's like asking Bernie Madoff how your investments are doing".

WHEEL3-2341328721.jpg (99.38 KiB) Viewed 528 times

[Fox3WheresMyBanana]

Despite all the data fixing, inflation is officially back
Governments and their pet poodles are all busy saying "unexpectedly".

There's a long article linked to below, here's an extract.

Regardless, based on official announcements of our rosy present, there is no case for a Fed rate cut now. The main motivation is more likely political: anything to help President Joe Biden win in November, because he is a proxy for the administrative corporate state that fears another populist revolt to take away their power. That’s why they want a rate cut.

There is no reason to doubt that the Fed is working against a Trump win. The central bank is part of the deep state, integral to the establishment in the United States and the world. It will use all its powers to game the election in a way that is institutionally protective of its interests. That means a big cut long before the election.

But in order to justify one, inflation does need at least to have the appearance of getting under control. They can claim it is happening all day, and they have done this for months and years. But it also helps when the data is there to back up such claims.

That is not happening. The consumer price index (CPI) data, even as manipulated as it is, is simply not cooperating with the very idea of rate cuts. As a result, the Fed keeps being put in the situation of suggesting that it is waiting to do so. But truly, it is getting rather late in the season for a rate cut to have any real impact on second- and third-quarter output numbers.

Wall Street recognizes this, which is why financial markets took a hard hit on the CPI data this week. It suggests that they are not going to get their fix of cheap money anytime soon. If that doesn’t happen, the stock market could come back to earth. Meanwhile, commodity prices are headed in the other direction, exactly as we might expect under inflationary conditions.

https://www.theepochtimes.com/opinion/i ... =ZeroHedge

Here is your calendar image for 2024

Shit-Fan-289x300.jpg (21.96 KiB) Viewed 466 times

[Fox3WheresMyBanana]

How screwed is your Government?

Annual budgets are the way to tell, but not the headline numbers.
Here's an analysis of what the Canadian government is up to with its budget
https://nationalpost.com/news/politics/ ... ng-deficit

Here's my summary.

Freeland has just promised around C$15 bn in new direct spending, and C$16 bn in new indirect spending,
but also promised the expected deficit won't exceed the previously forecast $40 bn, and won't increase middle class taxes.

Firstly, it ignores the basic problem of deficit spending, especially in an era of high interest rates, and that the government (just like the UK, US, etc) is further in time from the promised break-even year than when they took office.
Secondly, why bother promising the deficit won't increase? The government doesn't care about broken promises, but all the new money floating around is now directly affecting inflation.

So how does C$31 bn not get added to the existing C$40 bn deficit?
Last year, Freeland asked government departments to find C$15 bn in savings...they found C$2.25 bn.
We won't even go into the shenanigans of how those savings "appeared", nor why so little was found (or why so much was asked for).
So, the C$15 bn in new spending actually turns out to be under C$ 3 bn in spending this financial year. The money is being spent over 5 years, with much of it delayed.
The schedule of delays isn't known. It won't be revealed until the actual budget is presented in Parliament, which is why Freeland has broken with tradition and started telling the media what the budget will contain (well, all the 'good' bits) before she tells Parliament. You can guess how much reporting there will be on a boring thing like spending schedules. Especially from a mainstream media where the government is now paying one third of reporters' wages.

And doubtless the schedules won't have much more spending next year, as that's an election year. In short, Jam Tomorrow.

And the C$16 bn for housing and childcare is to be in the form of loans, for which the government is ultimately responsible, but thanks to the wonders of accounting do not count towards the deficit.
UK readers will know how Gordon Brown's similar PFI schemes to keep stuff off the deficit books worked out.

..and furthermore, much of the housing spending is not actually going to be putting a single house up. All of the housing money recently announced near me is to speed up the process of Permitting only.
Yes, the major costs and delays are due to government which is spending more taxpayer money rather than fixing the problems within itself.

..and the childcare loans are a complete failure in several Provinces already. Nobody wants the money. Private daycares, often a mom or two using their own property or a small building, can't wade through all the paperwork and regulations required to access the loans. Indeed, some are even shutting down after the attempts, thus increasing the waiting lists rather than reducing them. Childcare is now cheap...and unavailable.

..and inflation continues at higher rates than wage increases, which reduces everyone's wealth but doesn't count as taxes.
And the poor can't be taxed any more. Indeed, the government is now throwing (new) money at them in the form of rebates and allowances just to keep them afloat.
So the only way the government can increase taxes is to tax the rich and corporations.
Well, the rich can move their money, and the corporations will continue their current practices of increasing costs to the consumer to mitigate the taxes.
In short, the government will increase taxes on the middle class, in two different ways, neither of which counts as 'taxes'.

[Dushan]

It the budget will balance itself, nest pas?

[Dushan]

Maybe Jagmeet or his minions by themselves, will finally stop supporting this clown show and bring them down by voting against this “budget”.

[Fox3WheresMyBanana]

Well, you have been the one saying Jagmeet will drag it out till the end to secure his pension - any change in your opinion?

[Dushan]

He, personally, I think want to drag it out, but I think there is turmoil in NDP and they may just tell him to go away and vote how is good for their constituents rather than party line. Lots of rural NDP voters are not happy.

We shall see, but I almost have a feeling that this may be the end of sock boy (Inshallah)!

[Fox3WheresMyBanana]

vote how is good for their constituents

???????????????????????????????????
and break over a thousand years of tradition of politicians in "representative" democracies?

[Dushan]

I know it sounds funny, but there is strong gathering of pitchforks and torches (the real ones with oily rags) in rural Canada that is not being unnoticed. Also, given that the LIEberals have now surpassed the Dippers in the race to the left, the Dippers think they may be able to snatch a few seats from them.

[Fox3WheresMyBanana]

No gathering of pitchforks around here, but that may just be because they aren't on discount at Princess Auto yet
People are struggling, lots of small businesses are closing down, and the job situation is deeply affected by the government sponsoring the wages of immigrants.
Accommodation at a reasonable price is non-existent. There are quite a number of people living in travel trailers on a friend's property, which have appeared in the last year.
I can count at least 7 who having been doing so through the winter along my usual 10 km rural drive to the local shop. Just as well it was a mild one.

I think there's at least another year left of people putting up with it, however.
Governments are throwing grants and other money around to keep the poor afloat.
There's also still opportunities to save money - lots of veggie plots and chickens appearing, which is of course a rural option.

[Fox3WheresMyBanana]

US Retail Sales (not seasonally adjusted), corrected against CPI

Source:Bloomberg

In simple terms, and assuming a similar distribution of purchases, people are buying less items.
This is probably indicative of less real disposable income.

The problem with all the government data being distorted beyond the point of validity is that only governments have the means to assemble national data.
Everything I and anyone else comes up with is either going to be highly localised, or anecdotal.

But anecdotal is all we have now.
Best I can tell from my locality, people are cutting out restaurant visits (especially at the cheap end - several have closed), not buying new furniture, and working more shifts and/or jobs to keep paying for everything else.
Pre-pandemic, flyer sales starting Thursday morning would usually have most items available till Saturday early morning, now everything worth having is gone by 11am on Thursday.
Home repairs are not being done by professionals as they are too expensive. Handymen who do a reasonable job for cash are in high demand. Many are being paid in instalments because people don't have ready cash available
(personal experience here).
Kids above school leaving age are stuck living at home with very little work available (because the more experienced adults are doing extra shifts, and the number of job hours available doesn't match the increase in population, because real sales are down).

Things continue in the wrong direction; for how long, I don't know. It's going to be a very hard winter of 2024/5 for many.

[Fox3WheresMyBanana]

Gold vs 10YR US Bond Rate (inverted)

Normally, when Bond interest rates rise, Gold drops in value, and v.v.
So, the inverted Bond rate tracks the Gold price.
Note that the current divergence is much less than during the Great Financial Crisis

The divergence equates to a real interest rate for Bonds that is 4% lower than they are currently trading at, i.e. -2% instead of +2%.

Possible reasons include:
The CPI is a lie, and inflation is 4% higher than the Governments say it is.
Bonds and/or Gold are not free markets, and groups are trying to artificially fix the price of one or the other, or both.
Those buying one think they know something is coming that those buying the other don't.

The relatively steady divergence would indicate the first reason is the most likely.

The other two big divergences in the last 100 years were the Great Depression and the 1970s Depression.

[Dushan]

Off Topic

The CPI is a lie, and inflation is 4% higher than the Governments say it is

Nooooooooooo! Say it isn't so!

On a related topic...

Toronto airport gold heist loot was melted in a forge in local jewelry store's basement

There is a mini strip mall about 2km from Pearson that has dozens of gold shops. The basement mentioned in the story is on one of those.

[G-CPTN]

The Brinks Mat heist haul needed 'diluting' (reducing in purity) and samples were found with whole copper pennies included (like fruit cake).

[Fox3WheresMyBanana]

That'll be the 21 degree difference in melting temperature, then!

[Fox3WheresMyBanana]

Today's US GDP data was not only lower than the consensus, but lower than any of the estimates.
Today's US Core inflation data was not only higher than the consensus, but higher than any of the estimates.

For at least 9 months, the central banks and governments have been saying they are data-dependent, which in simple terms means they don't know what's going on.
Now the markets don't know what's going on either.

So, why are they all clueless/wrong?
These people are not stupid.
Nor are any of the parameters, like indebtedness or inflation, higher than they've ever been. Things have been much worse in the past, especially after World Wars, or during the Great Depression.

The simple explanation is that the data is wrong.
Garbage In, Garbage Out, as all modellers/programmers know.

One of the biggest problems is population. Most western governments have no idea how many people are actually in the country, due to illegal immigration.
Nor do they know how many are working. They should, but they don't. The big corporations, and many of the smaller ones, have a vested interest in both employing illegals and keeping that from government.
A second problem is accommodation. Governments have no idea where these people are staying, or how much they are paying. Everyone involved, including government, has a vested interest in not finding out.
A third problem is the shadow economy. This covers everything from criminal activity, to people working off the books, to people doing undeclared but not illegal work.
Governments have no idea how big this is, nor do they have a means of finding out, and government red tape not only enlarges the shadow economy but prevents it being reabsorbed into the main economy.
Both anecdotally, and looking at the factors involved, all three of these problems are getting bigger.

Those problems, added up, are probably a way bigger factor than the 'unexplained' changes in the macroeconomic data. Which means they could all cancel out next month, or vary even more wildly from estimates.

None of the above involves government departments actually lying (although there's ample evidence they do that too). They just don't know what's going on.
The politicians are of course deliberately not trying to find out, because they either can't or don't wish to fix the situation that would be revealed.

The follow on problem is that, if governments don't know what's going on, and are duty-bound to take corrective measures based on data which isn't right, then they don't know if those measures will fix things or make them worse.

..and nor do I, or you.