Demand for Stuff and Positive Interest Rates
Watched Hugh Henry and he brought up certain things in regard to demand and China. Theoretically if we could globally push up wage rates for labor and overall labor force participation rates for a time, some suppressed demand would come back to drive the stagnation and perhaps push growth a bit. The problem is debt constraints globally will not allow asset price adjustment for the economy to clear. Liquidation in the words of Mellon
“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate… It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people “
is what we need. Housing and overpriced capital asset equipment today simply does not clear the market, because banks would lose money if they were auctioned off. There is no urgency to reclaim capital since interest rates allow gradual amortization of unused property or sale at prices higher than it would otherwise claim.
Getting back to the wage rates and stimulation via pushing these up for the wage inflation spiral to take some sort of push to unwind that “suppressed” demand. Nobody wants to loose purchasing power, not the banks, not the public at large, not the government that gets to redistribute it. The only way this could occur is if a large enough ‘gulp’ of stagnation was on the horizon and fear of loosing control forced the issue at hand. Ergo essentially budget supported push to employ slack laborforce people, while similarly providing incentive for asset clearance at a faster rate from bank balance sheets.
Thus far the only thing I see is the increase of the Fed Funds rate to 1% or more. Simply to push through that inefficiently deployed capital will either clear at lower levels or be destroyed. Banks will have their margins pressed down or they liquidate and re-deploy capital into more productive assets. Whichever, they prefer while external capital is invited to participate in the process to magnify the pressure while smoothing over the system. I sense the biggest asset lenders which were the car wholesaling creditors are in the similar situation.
It is interesting that “guaranteed income schemes” from Switzerland to Finland are coming forward, yet how they would ever be funded? constant debasement of currency from those whom have to those whom have not? I don’t think that would work on a global scale. My sense it is far more likely for debts to essentially be ‘nullified’ both government and otherwise and budgets having work or financing works that keeps people busy while re-distributes more income into the system. Thus giving it some multiplier effect by pushing it through the system. Wondering how the nullification of said debt would work on a global scale.
Theoretically if the Eurozone breaks up a forced conversion of Euro denominated bonds could be a trigger for something like this. Imagine Italy going back to the lira, while issuing a law that demands all lira debt is 1-to-1 converted to the Euro, otherwise it is unenforceable under Italian law and within Italy. Similar things for France, Spain, Portugal, Greece, etc. All of these countries would instantly de-value most of their debt and currency at same time. Productive capacity would give their purchasing power more weight while the debt burden declines.
An even more interesting idea would be if the Eurozone breaks with every participant leaving. In the end the Euro would be a currency backed by nothing and the reverse could occur every country would translate depositors in their countries to the new currency 1 for 1 but the debt would remain in Euros that would eventually be manipulated into worthlessness. This is more ambitious but kind of interesting.
Be well dear reader and have good thoughts.
A glut of inventory.
A glut of assets that are really liabilities, in the form of deposits, real estate, and cars.
A glut of ideology that no longer works for most countries or people at hand.
A glut of thoughts that are thinking about same things.
A glut of migrating people seeking a glut of dreams
A glut of wars and proxy wars with unresolved issues
A glut of political ambition that provides no resolution to a glut of problems
A glut of choices and a glut of emptiness along with a glut of illusions and discontent
Strange everyone wants everything and yet all this everything is preventing something from fixing the stagnation all around us. It sort of seems a bits surrealistic like you’re in a painting where figures are painted upon one another until the painting juts out from the thickness of paint. All jumbled up into a carcass of thickness without any space for reflection or introspection.
Instant gratification syndrome a la concentrated tunnel vision for the mobs of seekers, everyone rushing forward like a lemming, yet no results or beneficial outcomes to resolve the restless idiocy that keeps building upward from all venues of society. Everyone wants to do something that yields nothing to feel better about their decisions. This drive that is directed at driving somewhere, somehow, with everyone else.
In some ephemeral sense the lack of resources or ideas, seems to be the fertile ground from which something can spring up to solve a problem. Here everyone can do their individual part to create a greater whole. But the whole coalescing of problems is no longer built from the ground up, but from a top down. You are presented with a complete painting of what someone somewhere pretended into being and are kaleidascoped into choice as part of a festive crowd that needs ACTION! and so you all choose to run around like little hamsters in a wheel, never attempting to stop one-self and think.
So for today just stop yourself and reflect. What would you want? Take nine seconds it is an awful long time if you stop the world for just that short period, if only in your own head.
Be well dear reader.
Sticky prices, negative interest rates, and a pyramid of fools
Strange how the most leveraged borrowers, banks that have leverage 10-30+ times are pushing for negative interest rates from which they could loan money at positive rates to non-leveraged borrowers the public and productive businesses.
Fascinating that destruction of savings for the sake of providing funding to banks in the form of permanent transfer of purchasing power at an ever-increasing rate is actually being promoted globally. The logical conclusion of negative rates is dissolution of monetary system completely. Stimulating demand by having people buy things they don’t need to escape destruction of their savings may work but the dis-intermediation it would cause would be one of the effects nobody may have considered.
All these struggles to prevent assets that are worthless from clearing at their natural prices that are lower than today. Curious if the public is forced to fund the financial system via negative rates what kind of shift would constitute wealth in the future? Everyone is ignoring the overarching costs of having overpriced assets with those whom have lower utility for their use.
The most dire consequences will be the most unforeseen. Why save if it is punished? Why keep deposits in a jurisdiction that taxes them by negative rates? What medium of exchange would become more desirable if the war on cash goes on? What sort of battles would we see in the war on cash? If people begin to choose inventory say boxes of wine they like that they could hypothetically barter exiting the financial system completely what would happen to money? If financing is predicated on deposits when those run at what point would those countries and banks start confiscating them to convert into equity? Precious metals and jewelry seem useful but utility of something is very subjective and perhaps the most obvious answer is usually wrong.
If we in the U.S. raise rates to 1% while, Europe and Japan go to -1% wouldn’t their marginal capital flow here and their financial systems implode? What is also completely ignored is the amount of inefficiency in having negative rates and the amount of systemic trash both in assets and how the money flows through the system clogs up how things are rationalized in the real economy. If everything is predicated on financing those things that can be financed are not just artificially bid up by having a ready currency bid for it but are set up to have the trend to do so via the underlying systemic preference in their favor. All that overhead to re-distribute capital into assets that are pushing into negative present value creates negative marginal returns in having underlying system when the velocity of its’ use drops. Returns on things that you can’t finance or can’t finance anymore becomes much harder and structural shifts in the economy become extremely painful.
Banks want to be both the credit and capital of the new system yet if history is any guide all that capital will be destroyed just like credit that was poured into things that went bust. Having the infinite ability to finance something does not imply you stopping when future returns are negative because all of these actors are guided by the present instead of the total return decades outward. Nobody pushing the negative interest rate mantra is thinking that once cash is pushed out, black and grey markets cease to exist. Demand for those markets will make certain to create an exchange medium one that is thoroughly outside the system. The problem will occur when the system is so weakened by restrictions and regulation it sets upon itself that there would be a partial switch into those exchange mediums by the real economy due to not being able to operate efficiently in the cashless society promoted.
Wage Hack for the Unemployed!
Are you in search of a good paying job? Perhaps as an engineer? Maybe in finance? Could you be looking to work in technology or software services? Maybe a government job? Well I am sorry to tell you but unless you can “Wage Hack” you are $h*t out of luck. What is “Wage Hacking” you ask. Simple!!!
“Given a 16-hour deadline, unlimited energy drinks and of course, lots of munchies, Broadcom invited the current class of northern California-based engineering interns”
And when that round of interns drops dead you can go on to the next HAHAHAHA #wagehack
You start a company just like Broadcom, Intel, Google, Goldman Sachs, or anything else and apply for your share of the H1-B, H-2B, L-1, or something similar.
Once you get your quota of visas after you “campaign contribute” *wink* *wink* you can proceed
“Negotiate” a contract with a company, a federal agency, a municipality, a state, or some other entity for a ‘staffing’ or ‘technology’ or ‘service’ contract where you need specialized skills. Perhaps you need a water specialist like those cities that are poisoning their populations with lead and other impurities due to skipping doing any actual work.
Once you got the contract in hand and received your deposit, you are SET! All you need now is wage slaves, I mean interns, or better yet, “foreign technology specialists”. F#ck yeah! Just ship a container full of workers, pay them in skittles while they live twelve to a room that you book as a ‘pay package’ for each one. Once you have the cows I mean “specialists” making you money, you too may buy yourself a mansion, heck buy two and an airplane.
“A federal government study concluded that 20% of the H-1B applications are fraudulent in some respect. An entire cottage industry of firms that obtain H-1B workers and then “loan” them to another employer has cropped up. One such firm has been convicted of repeated violations of the program, was fined and excluded for a year.”
CONGRATULATIONS AMERICA ‘Wage Hack’ COMPLETED!!!
You may think I am kidding…
But the problem is not the H-1B model but that it essentially got copied, and spread to regular economy.
Now you get staffed by a local company at $15 an hour while it gets $50 an hour for you, and the whole model is simply onshore filters of siphoning money from the labor force. Congratulations on reaching indentured servitude just like in the old days just with shorter time frames and easier application.
Ah good ole government:
“On January 20, 2016, the U.S. Department of Labor’s Wage and Hour Division issued Administrator’s Interpretation 2016-1: Joint Employment under the Fair Labor Standards Act and Migrant and Seasonal Agricultural Worker Protection Act, which identifies common scenarios in which two or more employers jointly employ an employee and are thus jointly liable for compliance.”
(Notice the scenario is a Staffing Co. and a Hotel so the applicability is not for Agricultural workers but probably all workers)
Thank you GOOGLE, BROADCOM, etc., ALL Cities, States, AND Federal government agencies that use 3rd party companies to staff yourselves silly, so that you and your “Friends” could get the difference, bless you each and every one, now we know what to do! [sarcasm with a heavy dose of satirical enthusiasm is contiguously present]
Cool video on fake hiring ads.
gov’t contracting out government functions video
Best of luck dear reader and enjoy the show.
follow on @lushfun
Cited links are below:
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Belief and Popular Fantasy
Has anyone noticed how popular fantasy is shaping our view here, there, and everywhere. Slow seepage of ruthlessness and segmentation of some being “chosen” with special magical powers or selective prowess of some kind being naturally above the common folk. Every person begins to fantasize about the phantasmagorical view of the world and how it interlays with our current reality. Slowly but surely we gain a little solidarity with others whom see those shows, read those books, have those exaggerated fantasy perspectives. Alas, it all creates a sense of relativity of a bubble mentality in a social setting where you are disassociated from realistic perceptions of social reality.
What have we seen lately, just to list a few things that are normalized in book, film, cultural perception, regulations, normative treatment in schools, etc.
1) The change of traditional roles but anchoring of traditional responsibilities.
2) Indulgence of might of collective belief in respect to private rights of what is fair
3) Fairness is individualized based on your social standing
4) Weakness is trampled and degraded as a natural aspect of society
5) Power is above all else, with all responsibility tied to it, erased
From the “game of thrones”, “supernatural”, “house of cards”, “Versailles”, “shades of grey”, mutants of various kind, and so on and so forth.
Sometimes the characters and whatnot say the words that make pretense of virtue as it was, but act with exception. Thus they are always exceptional and only the common folk or the rest of us have to cope with reality by implication. But we all are made to be the ‘viewer’ the ‘chosen’ the ‘exceptional’ through the backward induction of seeing things from above we feel power where we have none, if only for an instant just to get a glimpse of what is taken from our grasp by the simple and resolute social reality of today. It seems kind of funny if one simply thinks about it. You are given a narrative with powerful imagery and a sense of awe and control, but in the end all of this was simply a commercial to get back into the malaise of everyday. Someday, someday soon you too will be a super hero, in your head first but then everything will happen *sarcasm*. Yet, this is simply a conditional response to the bells and whistles, now you can get back in line and not feel so small nor work against it in normal fashion. You don’t have to work hard to improve your knowledge or abilities, you don’t have to hustle to establish social networks that can payoff someday in the future, you don’t have to strain yourself through sports or some other way to establish that sense of strenuous accomplishment, no longer just wait and watch a movie, read a book, indulge your senses and slowly sink in the ocean of social disassociation and a bubble of redress that doesn’t quiet fix things.
Bend reality with your mind, push it with your deeds, there is only this world, for today you are HUMAN!!!
be well and take care