40 Volcanoes Are Erupting Right Now As The Crust Of The Earth Becomes Increasingly Unstable

Have you noticed that our planet has begun to shake, rattle and roll? Over the past few days we have seen major volcanic eruptions in Costa Rica and Indonesia, and according to Volcano Discovery 40 volcanoes around the planet are erupting right now as you read this article. Meanwhile, earthquakes continue to shake the globe with alarming regularity. Just last week, Ecuador was hit by a magnitude 6.7 earthquake and a magnitude 6.8 earthquake in rapid succession. Overall, there have been more than 3,000 earthquakes of magnitude 1.5 or greater within the past month globally. So yes, I write constantly about the rapidly accelerating deterioration of our financial system, but the coming ‘collapse’ is not just about money. I am convinced that we are entering a ‘perfect storm’ in which a confluence of factors will absolutely cripple society and bring about changes that most of us would not even dare to imagine right now.
Let’s talk about the volcanic eruptions that we have seen in recent days. The eruption down in Costa Rica took authorities completely by surprise, and a thick layer of dust and ash is coating vehicles and buildings 30 miles away in the capital city of San Jose…

This post was published at The Economic Collapse Blog on May 22nd, 2016.

We’re in the Eye of a Global Financial Hurricane

The only “growth” we’re experiencing are the financial cancers of systemic risk and financialization’s soaring wealth/income inequality.
The Keynesian gods have failed, and as a result we’re in the eye of a global financial hurricane.
The Keynesian god of growth has failed.
The Keynesian god of borrowing from the future to fund today’s consumption has failed.
The Keynesian god of monetary stimulus / financialization has failed.
Every major central bank and state worships these Keynesian idols:
1. Growth. (Never mind the cost or what kind of growth–all growth is good, even the financial equivalent of aggressive cancer).

This post was published at Charles Hugh Smith on SUNDAY, MAY 22, 2016.

No One on Wall Street Has the Guts to Say This

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
Markets moved lower for the fourth straight week after the Fed kept open the possibility that it will raise rates again in June.
My money is still on a single rate hike later in the year and not next month, but the 12-headed Hydra known as the Federal Open Market Committee (aka The Committee to Destroy the World) said just enough to keep markets worried last week, thus the Dow Jones Industrial Average and S&P 500 are both up a mere 0.4% on the year.
But, considering that these indexes are trading at nearly 20 times GAAP earnings, (and that GAAP earnings are complete bull because they are inflated by billions of dollars of bogus non-GAAP adjustments (see Valeant Pharmaceuticals Int’l Inc. [NYSE: VRX,] andSunedison Inc. [OTC: SUNEQ]), this is better than investors deserve.

This post was published at Wall Street Examiner by Michael E. Lewitt ‘ May 22, 2016.

Hedge Funds Are Betting Record Amounts on Meltdown of Australian Banks and Housing Bubble

Best way to short Australian real estate, or ‘widow maker trade?’
It has been called the ‘widow maker trade,’ based on how short sellers have been dealt with over the past few years.
The fundamentals have been inviting: Australia has been in a fully blooming housing bubble. Households are the most indebted in the world, based on debt to disposable income. To maintain the housing bubble, the central bank slashed interest rates to record lows (1.75%). The government wants to keep the bubble going for as long as possible. So regulators close their eyes, according to media reports, to questionable or even illegal lending practices. Home prices, after soaring for years, are clearly unsustainable.
But just because it’s a bubble doesn’t mean it has to implode on schedule. It will implode, as all bubbles do, but on its own time. If short sellers get the timing wrong, they’ll get run over by market euphoria. Hence, ‘widow maker trade’ for betting against the housing bubble by shorting the banks.

This post was published at Wolf Street by Wolf Richter ‘ May 23, 2016.

“Everything Is Plunging” – China Commodity Carnage Continues

Hot on the heels of Trumpian-size tariffs imposed by The Obama administration on a desperately glutted and mal-invested steel industry, the entire panic-buying “well the market is always right”, “China is recovering” narrative based rally in Chinese commodities has crashed back down to earth with an incredible thud. As one veteran trader in the China commodity markets put it “everything is plunging… except cotton,” with Iron Ore, and Rebar down 7% today…
At least one industry executive “got it” – Baosteel’s Zhang: “The price rebound is not beneficial to the overcapacity situation…. It will delay the shutdown of (inefficient) capacity.”
How right he was…
Dalian Iron Ore has collapsed 30% in a month, down 7% today…

This post was published at Zero Hedge on 05/22/2016 –.

Austrian Elections Today

The people who count the votes claim the election is a dead-heat in Austria today. Norbert Hofer of the Freedom Party and Alexander Van der Bellen are each on 50%, according to the estimate, which includes postal votes not yet counted. The pools really put Hofer ahead, so there may be some voting counting issued, Stalin fashion. Nevertheless, what this is demonstrating is that 50% of the people are fed up with the EU. Instead to addressing the crisis, those in Brussels refuse to ever change course.

This post was published at Armstrong Economics on May 22, 2016.

Business Debt Delinquencies Are Now Higher Than When Lehman Brothers Collapsed In 2008

You are about to see more very clear evidence that a new economic crisis has already begun. During economic recoveries, business debt delinquencies generally fall, and during times of economic recession business debt delinquencies generally rise. In fact, you will see below that business debt delinquencies shot up dramatically just prior to the last two recessions, and the exact same thing is happening again right now. In 2008, business debt delinquencies increased at a very frightening pace just before Lehman Brothers collapsed, and this was a very clear sign that big trouble was ahead. Unfortunately for us, in 2016 business debt delinquencies have already shot up above the level they were sitting at just before the collapse of Lehman Brothers, and every time debt delinquencies have ever gotten this high the U. S. economy has always fallen into recession.
In article after article, I have shown that key indicators for the U. S. economy started falling in either late 2014 or at some point during 2015. Well, business debt delinquencies are another example of this phenomenon. According to Wolf Richter, business debt delinquencies have shot up an astounding 137 percent since the fourth quarter of 2014…
Delinquencies of commercial and industrial loans at all banks, after hitting a low point in Q4 2014 of $11.7 billion, have begun to balloon (they’re delinquent when they’re 30 days or more past due). Initially, this was due to the oil & gas fiasco, but increasingly it’s due to trouble in many other sectors, including retail.
Between Q4 2014 and Q1 2016, delinquencies spiked 137% to $27.8 billion.

This post was published at The Economic Collapse Blog on May 22nd, 2016.

Increasing Treasury Supply, Decreasing Demand, A Recipe for Trouble, But…

Treasury supply will now be a negative factor for the markets through early June. This is unlike the late April, early May period where the Treasury was paying down debt thanks to the cash flows from April tax collections. Those debt paydowns put cash back into the accounts of the erstwhile holders of the paper that was paid off. Those holders include dealers, banks, foreign central banks (FCBs) and other investors. Those investors, particularly the dealers redeploy some of that cash into other short term paper, bonds, or even stocks as a short term parking place. Hence the seasonal lift we often see in stock prices in April and early May.
The paydowns have come to an end and the Treasury is once again raising cash through debt offerings. That increase in supply will be a negative for the markets most of the time between now and year end. The only exceptions will be the quarterly estimated tax collection windows in mid June and mid September, when the Treasury also pays down debt. These paydowns are smaller and don’t last as long as the April-May period, and therefore they have less of an effect. For the most part, Treasury supply will put pressure on the markets.
This will be magnified if Primary Dealers, FCBs, and banks don’t take a significant share of the new supply. So far, the evidence is that the trends are going the other way, with demand for Treasuries gradually falling. This does not bode well for the long term trend of stock and bond prices.

This post was published at Wall Street Examiner by Lee Adler ‘ May 22, 2016.

22/5/16: House Prices & Household Consumption: From One Bust to the Other

In their often-cited 2013 paper, titled ‘Household Balance Sheets, Consumption, and the Economic Slump’ (The Quarterly Journal of Economics, 128, 1687 – 1726, 2013), Mian, Rao, and Sufi used geographic variation in changes house prices over the period 2006-2009 and household balance sheets in 2006, to estimate the elasticity of consumption expenditures to changes in the housing share of household net worth. In other words, the authors tried to determine how responsive is consumption to changes in house prices and housing wealth. The study estimated that 1 percent drop in housing share of household net worth was associated with 0.6-0.8 percent decline in total consumer expenditure, including durable and non-durable consumption.
The problem with Mian, Rao and Sufi (2013) estimates is that they were derived from a proprietary data. And their analysis used proxy data for total expenditure.
Still, the paper is extremely influential because it documents a significant channel for shock transmission from property prices to household consumption, and thus aggregate demand. And the estimated elasticities are shockingly large. This correlates strongly with the actual experience in the U. S. during the Great Recession, when the drop in household consumption expenditures was much sharper, significantly broader and much more persistent than in other recessions. As referenced in Kaplan, Mitman and Violante (2016) paper (see full reference below), ‘… unlike in past recessions, virtually all components of consumption expenditures, not just durables, dropped substantially. The leading explanation for these atypical aggregate consumption dynamics is the simultaneous extraordinary destruction of housing net worth: most aggregate house price indexes show a decline of around 30 percent over this period, and only a partial recovery towards trend since.’

This post was published at True Economics on May 22, 2016.

Rapper Threatens To Kill Donald Trump If His “Momma’s Food Stamps” Are Taken Away

Threats by prominent members of the black community against Donald Trump, either directly or indirectly, are nothing new.
Just under two months ago we reported about the latest social fallout incident from Trump’s rising popularity, when prominent Black Lives Matter activist and rapper Tef Poe tweeted a message for “white people’: if Donald Trump wins the presidency, “niggas” will ‘incite riots everywhere.’
‘Dear white people if Trump wins young niggas such as myself are fully hell bent on inciting riots everywhere we go. Just so you know,’ Poe tweeted. A screenshot of his since deleted tweet was captured below by the Daily Media.

This post was published at Zero Hedge on 05/22/2016.

Putting it on plastic again – Record number of credit cards issued in 2015 surging 90 percent from 2009. 60 million credit cards issued last year alone.

We love credit cards as much as we hate paying bills. As a nation we have an addiction to instant gratification. In the not so distant past, Americans actually had to save money before making a purchase. Seeing that many Americans have nothing in their pockets except lint and cell phones with hefty monthly payments, this isn’t a surprised. You fire up your phone and open up Facebook. You see all of your friends posting great photos of eating out at fancy restaurants and pay day is a few days away. What to do? Just go out and load it up on the credit card! Let us not forget that the financial meltdown came about because of economies which are made up of people spending way beyond their means. After the crisis, the number of credit cards issued collapsed. Today we are at a peak with 60 million credit cards being issued in 2015 alone. Happy credit days are here again!
Put it on plastic
The credit card industry makes money on interest. This industry of course is tied to the Wall Street financialization of America. There is a new rentier class. Collecting money on rents from single family homes bought by big investors, collecting interest on credit cards, taking interest on auto loans, and mega interest on student loans. Given the low rate environment, the spread between what banks can borrow and current interest rates offered to consumers, the profit is large.

This post was published at MyBudget360 on May 22, 2016.

British Lord Proposes “Fix” To Pension Crisis: Work Until 70 To Get More Money

In a world of increasingly more negative interest rates, one group is impacted more than most: pensioners who had relied on fixed income to fund their retirement years who are slowly discovering that as pension funds are unable to meet their annual 6-7% return target, that the pensions promised to them will never materialize, or worse be haircut by 50%, 60% or more.
One such example is that of the Central States Pension Fund whose fate we have been following over the past month, and which as we reported yesterday could see the pension benefits for about 407,000 people be reduced to ‘virtually nothing.”
In a last-ditch effort, the Central States Pension Plan sought government approval to partially reduce the pensions of 115,000 retirees and the future benefits for 155,000 current workers. The proposed cuts were steep, as much as 60% for some, but it wasn’t enough. Earlier this month, the Treasury Department rejected the plan because it found that it would not actually head off insolvency. In this increasingly gloomy world for retirees everywhere, one person has come up with a modest proposal: the UK’s Lord Jonathan Adair Turner, Baron Turner of Ecchinswell, who based on his title hardly has to worried about his own personal retirement. Turner also happens to be the former chairman of the UK Pensions Commission, and as such his opinion will be closely followed.

This post was published at Zero Hedge on 05/22/2016.

China Has Quietly Bailed Out Over $220 Billion In Bad Debt In The Past 2 Months

Two months ago we were amazed to read that according to the latest “deus ex machina” proposed by the PBOC, China would “sweep away” trillions in bad loans by equitizing them in the form of debt-for-equity exchanges. This is how we tried to explain this unprecedented move on March 10 when Reuters first hinted it was coming:
This proposal entails nothing short of a nationalization on a grand scale, one which gives China’s impaired commercial banks – all of which are implicitly state controlled – the “equity keys” to the companies to which they have given secured loans, loans which are no longer performing because the underlying assets are clearly impaired, and where the cash flow generated can’t even cover the interest payments. In effect, the PBOC is proposing the biggest debt-for-equity swap ever seen. What it also means is that since the secured lender, which is at the top of the capital structure will drop all the way down, it wipes out the existing equity and unsecured debt, and make the banks the new equity owners, and as such China’s commercial banks will no longer be entitled to interest payments or security collateral on their now-equity investment. Finally, while this move does free up loss reserves, it essentially strips banks of their security and asset protection which they enjoyed as secured lenders.

This post was published at Zero Hedge on 05/22/2016.

Guess What Occupation Is Most Frequently Cited In The Panama Papers?

With all the anti-one-percenter rhetoric and tax-evading-evil-doer narratives spewing forth from the mainstream media mouthpieces of the establishment since The Panama Papers were exposed for all to see, it may come as a surprise to some to find out which cohort of the elites are the most populous among the tax-haven-creating documents…
The Politicians!!

This post was published at Zero Hedge on 05/22/2016.

Another Unicorn Bites The Dust

Another unicorn bites the dust: community in uproar after disastrous merger, Upwork expense cuts fail to turn around negative operating cash flow, more than doubles fees as equity value plummets ten percent per month in Q1 2016.
More bad news for the unicorns after Theranos, uBeam and Lending Club scandals with thelatest T. Rowe Price quarterly slashing the value of equity in Upwork, a player in the online staffing platform space. The initial investment of $15.8 million in 2012 – 4 is now worth a mere $7.3 million, and is now in free fall as third CEO in two years more than doubles the fees charged by the troubled staffing platform.

This post was published at Zero Hedge on 05/22/2016.

05.22 Austrian Presidential Elections Results: Shift to the Right or More Globalism?

For the average American the question is ‘why should I care?’
If you’re an investor and think that the globalist model is sufficient regardless of the destruction of national sovereignty and personal liberty then you will favor the election of the Green Party (leftist) candidate in Austria, Alexander Van der Bellen. However, if borders and national economic integrity are your concerns then the election of Norbert Hofer may well be the political and economic earthquake you’re looking for.
Van der Bellen is essentially a further left version of the Socialist political elites controlling most of Europe at this time. The Green Party has transformed into a mainstream party in European affairs much like the Republicans successfully destroyed and transformed the Tea Party into a subsidiary within the United States system. If Van der Bellen wins, the Austrian economy will probably deteriorate further and as the bank failures accelerate he would lead the nation into becoming a voluntary ward of the IMF and European Central Bank (ECB).
Hofer is the one last hope to prevent Austria from becoming a vassal state to Brussels with Islamism becoming a substantial force to transform their society. Hofer clearly does not want Vienna to look like Stockholm so as the results are updated I shall post them here.

This post was published at John Galt Fla on May 22, 2016.

Gold Fund Inflows Surge To Highest Of The Year

With high-yield bond funds suffering the largest redemptions in their history, this week saw gold fund flows soar to their highest in 2016 as buyers took advantage of the lower prices following the same path as George Soros, Stan Druckenmiller, Jana Partners, and Canada’s financial giant CI Financial.
Junk bonds saw the single-biggest daily redemptions in history this last week…

This post was published at Zero Hedge on 05/22/2016.

VENEZUELA DESCENDS INTO CHAOS… EUROPE AND US NEXT

It has been less than two months since I visited Caracas, Venezuela. While things were already very bad when I was there, they are now worse.
Power shortages have deepened (and this in an oil rich country!); food is becoming scarce (some people have resorted to eating dogs and cats); people lie on concrete slabs in hospitals without medicine (if you thought medical care was bad, just wait until it’s free!); and riots and looting are growing worse.
I went to see the end stages of socialism, complete with hyperinflation. I wanted to see where Europe and the US are headed.
In hindsight, it was shocking to see how few people in Venezuela understood what was going on. You’d think in this day and age, they’d just watch a few Youtube videos (like some of ours) and realize the reality: Almost all their problems are a direct result of government and central banking.
Yet, hardly anyone understood. Your average person was miserable, that was for sure. But they didn’t know what was causing their misery.
I didn’t find much interest in gold and silver, let alone much buying, even though it was obviously a good idea. And, forget bitcoin. No one knew what it was… except for the government that predictably has banned it.
Bizarrely, large parts of Caracas still hang pictures of Hugo Chavez and still consider him to be a hero!
I met a few people who were open to rational discussions. They were making about about $20 a month and could barely survive.
‘Why don’t you go somewhere else?’ I asked them. ‘Colombia is close. And Trinidad & Tobago, Aruba, Argentina or Chile. All with economies that are functioning and sometimes doing very well.’
The general response was, ‘I don’t know anyone there.’
Very strange. Why choose to live in squalor and desperation just because the environment is familiar to you?

This post was published at Dollar Vigilante on MAY 22, 2016.

Central Bankers Put Ponzi And Madoff To Shame

Charles Ponzi must be turning in his grave! His pyramid scheme in 1920 guaranteed returns of 50% in 50 days and 100% in 100 days. And initial investors clearly achieved these returns but most of them were too greedy to cash in. His total scheme ‘only’ lost $20 million ($225 million in today’s money) for the investors. In comparison, Madoff cost his investors $18 billion. At least Ponzi became famous for his achievement. So far Madoff has not achieved fame.
But both Ponzi and Madoff were small time crooks compared to governments and central banks today. Because whether we take, Japan, China, the EU or the USA, they have all created Ponzi schemes which are exponentially bigger than what Ponzi did. Admittedly no government is promising the 50% return that Ponzi did or Madoff’s 10-12%. Instead they are giving investors of their ‘Ponzi’ bonds the illusion that they will receive the capital back. To paraphrase Mark Twain, investors are neither going to get the return ON their money nor the return OF their money, at least not in real terms.
A country cannot survive on nail bars, pizza delivery and Facebook
How could any major nation ever repay their debt? Take the US, they have increased their debt every single year since 1960. And at that time it was only $280 billion and today it is $19 trillion. Anyone under the illusion that their investment in US treasuries will be reimbursed in real money needs a reality check. So there goes $19 trillion down the drain. The US used to be a major manufacturing nation. In the mid-1940s manufacturing wages were almost 40% of GDP. Today it is below 10%. A major economy cannot survive on nail bars, pizza deliveries or Facebook, especially since average real wages for the majority of US workers has not increased since the early 1970s. Even worse, profit (EBITDA) growth has turned down since 2010 and is now negative.

This post was published at GoldSwitzerland on May 16th, 2016.