A Recession Is Coming… And the Fed Can’t Stop It

A Recession Is Coming... And the Fed Can't Stop It

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Is the Fed ready for the next recession?

The answer is no.

Extensive research shows that it takes between 300 and 500 basis points of interest rate cuts by the Fed to pull the U.S. economy out of a recession. (One basis point is 1/100th of 1 percentage point, so 500 basis points of rate reduction means the Fed would have to cut rates 5 percentage points.)

Right now the Fed’s target rate for fed funds, the so-called “policy rate,” is 1.75%. How do you cut rates 3–5% when you’re starting at 1.75%? You can’t. Continue reading

Deutsche Bank Profit Plunges 98% And The Worst Is Yet To Come

The latest confirmation that Germany’s troubled banking giant Deutsche Bank is unable to navigate the troubled waters of NIRP came on Wednesday when the bank announced that its second-quarter net income fell 98% from a year earlier, hurt by weaker performances in trading, investment banking and other core areas. The lender said net income tumbled to €20 million ($22 million) from €818 million a year earlier, modestly better than the €22mm loss expected, while net revenue dropped 20% to €7.4 billion.

After rebounding modestly on the beat, the bank’s shares fell tumbled 5% on Wednesday morning, their lower level in 2 weeks; today’s decline has dragged DB stock 45% lower in 2016, making it one of Europe’s worst performers YTD (the Stoxx 600 is down 27% in 2016). Continue reading

Deutsche Bank’s Lehman Behavior Signals a Looming Stock Market Crash

Yesterday, Deutsche Bank AG‘s (NYSE: DB) co-CEO John Cryan released a surprise memo saying its balance sheet “remains absolutely rock-solid.” His assertion comes amid fears that the investment bank is unstable (an understatement) – which could be emblematic of a broader European bank fueled stock market crash.

Releasing a forced statement to the worrying public is something Lehman Brothers did just before it collapsed in 2008. The now-defunct corporate banking giant assured investors that it had enough liquidity to weather the financial crisis in 2008.

Continue reading

Insider Alan Greenspan Warns of Explosive Inflation: “Tinderbox Looking For a Spark”

 

Last month it was revealed that former federal reserve Chairman Alan Greenspan, the architect of U.S. monetary policy under four Presidents, is anticipating a significant market event as a result of the trillions of dollars that have been pumped into the system over the last several years. According to Greenspan, something big is coming.

His comments were shared by well known resource analyst Brien Lundin, who joined Greenspan for private discussions at last year’s New Orleans Investment Conference. In his latest interview Lundin further clarifies Greenspan’s private thoughts on current economic and monetary policy and sheds light on the former Fed Chairman’s suggestion that ‘something big is coming.Continue reading

Yes, It’s Possible For A Gold-Backed Renminbi To Dethrone The US Dollar

“Mutually assured destruction” was a doctrine that rose to prominence during the Cold War, when the US and the USSR faced each other with nuclear arsenals so populous that they ensured that any nuclear exchange between the two great military powers would quickly lead to mutual overkill in the most literal sense.Notwithstanding the newly dismal relations between the US and Russia, “mutually assured destruction” now best describes the uneasy stand-off between an increasingly indebted US government and an increasingly monetarily frustrated China, with several trillion dollars’ worth of foreign exchange reserves looking, it would now appear, for a more productive home than US Treasury bonds of questionable inherent value.

Until now, the Chinese have had little choice where to park their trillions, because only markets like the US Treasury market (and to a certain extent, gold) have been deep and liquid enough to accommodate their reserves. Continue reading

Cardinal George Pell finds hundreds of millions of euros ‘tucked away’ in Vatican accounts

One has to wonder how millions of hidden Euros can just appear out of thin air and pretend it’s a surprise as if the lottery was won, then watch a story come out and spin the corrupted situation as if it’s some sort of blessing they just discovered.

 

The Vatican’s economy minister has said hundreds of millions of euros were found “tucked away” in accounts of various Holy See departments without having appeared in the city-state’s balance sheets.

In an article for Britain’s Catholic Herald Magazine to be published on Friday, Australian Cardinal George Pell wrote that the discovery meant overall Vatican finances were in better shape than previously believed. Continue reading

Forget the Shutdown, Our Next Problem is the Dollar

The chatter against the dollar as global reserve currency has ramped up in recent days. The risks are huge and largely ignored. Even allies are questioning how long the dollar can sustain its status in light of our enormous debt and deficit. Now, with the government shutdown in place and a political battle over the debt ceiling, our enemies are looking at the possibility of an attack on our currency during the confusion.

Sadly, too many believe that our dollar will remain permanently strong. Of course, these are in many cases the same people who would argue that deficits don’t matter and that the Treasury could mint $1 trillion platinum coins, essentially making up money out of thin air, and no one would complain. They are living in a fantasy world, emboldened by doctored government statistics that attempt to show there is no inflation in the system. Continue reading

Central banks are stuck on a money printing treadmill

Wednesday night’s panic in Tokyo, where the Nikkei dropped a stomach churning 7pc, kicking off a global chain-reaction that saw the FTSE fall 143.48 points, demonstrates just how difficult it is going to be for the world’s central banks to exit their loose money policies.

It’s not even as if Ben Bernanke, chairman of the Fed, said he was planning to exit; in fact, initially he said the reverse, in testimony to Congress. It was only in the Q&A, and in minutes to the last meeting of the Fed’s Open Markets Committee, that a clear bias emerged to slow the pace of asset purchases “in the next few meetings”, so long as the economic data were strong enough. Continue reading

America Is Looking a Lot Like Ancient Rome — or Is It Modern Greece?

In 1935, one U.S. dollar would buy you 1/20th of an ounce of gold. By 1968, it was down to 1/35th of an ounce of gold. Today, one dollar will buy you only 1/1,750th of an ounce. The same thing happened against silver. In 1968, one dollar would buy an ounce of the silver metal. Today it will only buy you a mere 1/32 of an ounce.

Talk about debasement.

And the dollar hasn’t plunged just against precious metals. Against copper, nickel and zinc—the metals found in pennies and nickels—it is in free fall too. In fact, the dollar has plummeted against orange juice, whiskey, beans, bullets, pork bellies, single family houses, automobiles, coal, oil, good suits, healthcare, tuition, labor costs—and virtually every measurable commodity. If you can name it, it probably cost more today than it did 30, 10, or five years ago—probably more than it cost last year.

The mint reports that if it replaced the copper-coated zinc penny (it took the copper out of the penny in 1982 because it was too expensive) with a steel one, it would still not be profitable. What’s cheaper than steel? Tin? Nope a penny’s weight of tin would cost more than a nickel. A penny’s weight of aluminum would cost 2 cents. Lead is little cheaper. See the problem?

How about plastic? Anyone for a plastic penny? Clay? Asbestos?

Calls to just get rid of the penny altogether are growing louder. But that will only hide the danger to the dollar for a little longer.

And don’t be fooled. The dollar is in grave danger.

Full article: America Is Looking a Lot Like Ancient Rome — or Is It Modern Greece? (The Trumpet)