The 2017 Year-End Report

The 2017 Year End Report is going to really be important as we enter the beginning phase of the Monetary Crisis Cycle in 2018 combined with the Pension Crisis, which is the next domino to start the process of the Sovereign Debt Defaults to come. Keep in mind that a system collapses from from the core, but from the peripheral economies inward.

This post was published at Armstrong Economics on Sep 30, 2017.

Real Estate Company Is Replacing Agents With Robots

With robots slowly but surely taking over every semi-skilled occupation including in a bizarre development, the production of cocaine which may well unleash the era of cocaine deflation upon Wall Street (a welcome development in light of ever-shrinking bonuses), a new – and familiar – industry has emerged as the robots’ next target. According to Newsday, a California real estate technology company that aims to lower the cost of home-selling by using robots and ‘big data’ instead of commission-based real estate agents has recently opened a Long Island office.
The latest potential source of tech-inspired deflation, REX Real Estate Exchange, which charges a selling commission of only 2% instead of the usual 5 to 6%, launched its Long Island operation this summer. The Los Angeles-based company expects to start listing New York-area homes on its website, in the near-term.

This post was published at Zero Hedge on Sep 29, 2017.

Look Who Kalanick Just Appointed To The Uber Board Without Consulting Anyone

It looks like Travis Kalanick is preparing for all-out war in the Uber boardroom.
The Uber co-founder and former chief executive officer – who retains control over three board seats, including his own – has finally filled his long-vacant seats. And guess whom he picked to fill them? Former Xerox Corp. Chairwoman and CEO Ursula Burns…and former Merrill Lynch Chairman and CEO John Thain, “ratcheting up a Machiavellian battle for control of the world’s most valuable startup” as Bloomberg put it. Uber immediately challenged the appointments, calling them “a complete surprise.”
‘I am appointing these seats now in light of a recent board proposal to dramatically restructure the board and significantly alter the company’s voting rights,’ Kalanick said in a statement emailed to Bloomberg. ‘It is therefore essential that the full board be in place for proper deliberation to occur, especially with such experienced board members as Ursula and John.’
As many may remember, Thain was the last CEO and chairman of Merrill Lynch before it was absorbed by Bank of American during the financial crisis. The last leader of an independent Merrill Lynch was roundly criticized for the same venal behavior as other too-big-to-fail CEOs – BOA paid a $16.7 billion fine in 2014, at the time the largest single settlement in US history, partly for Merrill’s witholding of crucial information (namely, that the products were stuffed with garbage subprime loans while being marketed as AAA) to buyers of its MBS and CDO products. There was, of course, also the whole $35,000 “commode on legs” incident as part of Thain’s $1.2 million office redecoration (which also included $17,100 traveling toilet boxes and a $15,000 dog umbrella stand).

This post was published at Zero Hedge on Sep 30, 2017.

30/9/17: Technological Revolution is Fizzling Out, as Ideas Get Harder to Find

Nicholas Bloom, Charles Jones, John Van Reenen, and Michael Webb’s latest paper has just landed in my mailbox and it is an interesting one. Titled ‘Are Ideas Getting Harder to Find?’ (September 2017, NBER Working Paper No. w23782. the paper asks a hugely important question related to the supply side of the secular stagnation thesis that I have been writing about for some years now (see explainer here: and you can search my blog for key words ‘secular stagnation’ to see a large number of papers and data points on the matter). Specifically, the new paper addresses the question of whether technological innovations are becoming more efficient – or put differently, if there is any evidence of productivity growth in innovation.
The reason this topic is important is two-fold. Firstly, as authors note: ‘In many growth models, economic growth arises from people creating ideas, and the long-run growth rate is the product of two terms: the effective number of researchers and their research productivity.’ But, secondly, the issue is important because we have been talking in recent years about self-perpetuating virtuous cycles of innovation:
Clusters of innovation engendering more innovation; Growth in ‘knowledge capital’ or ‘knowledge economies’ becoming self-sustaining; and Expansion of AI and other ‘learning’ fields leading to exponential growth in knowledge (remember, even the Big Data was supposed to trigger this).

This post was published at True Economics by Constantin Gurdgiev.

Surprise! The Rules Will Change (But Not to Your Benefit)

These expedient fixes end up crippling the mechanisms that are needed to actually solve the systemic sources of the crisis.
We can add a third certainty to the two standard ones (death and taxes): The rules will suddenly change when a financial crisis strikes.</em
Why is this a certainty? The answer is complex, as it draws on human nature, politics and the structure of societies/economies ruled by centralized states (governments).
The Core Imperative of the State: Expand Control
As I explain in my book, Resistance, Revolution, Liberation, the core (i.e. ontological) imperative of every central state is to expand its reach and control. This isn’t just the result of individuals within the state seeking more power; every centralized state views whatever is outside its control as a threat. The way to reduce or neutralize a threat is to take control of the mechanisms that generated it.
Once the state has gained control of these mechanisms, it is loath to relinquish them; to relinquish control is to invite chaos.
There is of course an intensely self-serving dynamic to extending state control: those being paid to enforce this state control have an immense vested interest in the state retaining (or even extending) this control, as their livelihoods now depend on the state doing so.
The higher-ups in the state also have a vested interest in retaining these new controls, as more control means more wealth and power accrue to those at the top of the centralized power pyramid: this extension of state control means private enterprise must now lobby the state for favors, and it gives the higher-ups more perquisites and favors to dispense – for a price, of course.
This vested interest arises throughout the power pyramid, from the bottom functionary with newfound power over common citizens to the managers of the departmental bureaucracy tasked with enforcing the new control to the apex of state authority.
This hierarchy of state power creates another threat to the central state; the corralling of state power by fiefdoms within the state itself. In other words, fiefdoms can become semi-autonomous agencies that are only nominally under the control of central authority. The answer is of course additional layers of oversight, compliance, investigation and enforcement within the state itself.

This post was published at Charles Hugh Smith by Charles Hugh Smith.

Credit, Crypto, & Kuroda’s “Bat-Shit-Crazy Monetary Expansion”

Authored by Kevin Muir via The Macro Tourist,
Today’s post will be about Japanese yen vol, but I am sure to bore some readers with that topic, so I am starting with something a little more interesting.
As many of you know, I am a little bit of a bitcoin skeptic. At the end of the day, I have trouble investing in the ledger in the sky.
Call me old-fashioned, call me a troglodyte, call me a bitter gold bug, call me whatever you want, I just can’t bring myself to get long bits in the cloud. And before you send me messages how I don’t understand it, don’t forget I was mining bitcoin before most of Wall Street had ever heard of it. So I am much more than just some trade-a-saurus that refuses to get with the times, I am the knob who passed on bitcoin at $5.
Yet I have the privilege of counting Tony Greer from TG Macro as one of my pals, and his enthusiasm about using crypto currencies for micro-payments has piqued my interest. From Tony’s great letter the other day:
For selfish reasons, this is the article that gets me most excited about bitcoin and the blockchain. The streamlining of media distribution is going to kick the door open for individuals to compete with publishing powerhouses and main stream periodicals.
Publishing content on Amazon, iTunes, even YouTube is extremely costly for the author/artist. Youtubers can’t earn money until they get 10,000 views. Apple and Amazon take between 30% and 75% for the right to their distribution networks. Since media consumption has gone digital, it’s been difficult to charge on a PER ARTICLE basis because of high transaction costs making it prohibitively expensive. All that’s about to change. The blockchain is going to allow thousands of transactions to be processed at low to no cost, it will preserve a record of all those transactions along with all the content, it provides transparency for the artist/author and consumer, and one day, it will make the Morning Navigator available to every single reader in the world for $1 per copy.
Take a moment to read the article Tony linked to. Yeah, I know. You would never expect me to be linking to an article in BitCoin Magazine, but life’s funny.

This post was published at Zero Hedge on Sep 29, 2017.

Global Retirement Reality

Today we’ll continue to size up the bull market in governmental promises. As we do so, keep an old trader’s slogan in mind: ‘That which cannot go on forever, won’t.’ Or we could say it differently: An unsustainable trend must eventually stop.

Lately I have focused on the trend in US public pension funds, many of which are woefully underfunded and will never be able to pay workers the promised benefits, at least without dumping a huge and unwelcome bill on taxpayers. And since taxpayers are generally voters, it’s not at all clear they will pay that bill.
Readers outside the US might have felt smug and safe reading those stories. There go those Americans again, spending wildly beyond their means. You are correct that, generally speaking, we are not exactly the thriftiest people on Earth. However, if you live outside the US, your country may be more like ours than you think. Today we’ll look at some data that will show you what I mean. This week the spotlight will be on Europe.
First, let me suggest that you read my last letter, ‘Build Your Economic Storm Shelter Now,’ if you missed it. It has some important background for today’s discussiion, as well as a special invitation to attend my Strategic Investment Conference next March 6 – 9 in San Diego. With so much change occurring so quickly now, next year’s conference is an event you shouldn’t miss.

This post was published at Mauldin Economics on SEPTEMBER 30, 2017.

Gold Matches S&P 500 Performance In First 3 Quarters; Up 12% 2017 YTD

Editor Mark O’Byrne
– Gold climbs over 12% in YTD, matching S&P500 performance
– Palladium best performing market, surges 36% 2017 YTD
– Gold outperforms Nikkei 225, Euro Stoxx 50, FTSE and ISEQ
– Geo-political concerns including Trump and North Korea supporting gold
– Safe haven demand should push gold higher in Q4
– Owning physical gold not dependent on third party websites and technology remains essential
In the year-to-date the gold price performance has matched the S&P 500, climbing over 12%.
Gold’s matching of the S&P 500 is particularly impressive when you consider the record-breaking performance of the benchmark stock market index in the last year. Yesterday it advanced 0.1% to 2510.06, a new all time record high price.
It is also impressive considering sentiment towards stocks is shall we say ‘irrationally exuberant’, while sentiment towards gold remains muted despite gold eking out gains in 2016 and now again in 2017.

This post was published at Gold Core on September 29, 2017.

Exposing The Slimy Business Of ‘Russia-Gate’ (What The Mainstream Media Doesn’t Want You To Know)

As the U. S. government doles out tens of millions of dollars to ‘combat Russian propaganda’, one result is a slew of new ‘studies’ by ‘scholars’ and ‘researchers’ auditioning for the loot…
The ‘Field of Dreams’ slogan for America’s NGOs should be: ‘If you pay for it, we will come.’
And right now, tens of millions of dollars are flowing to non-governmental organizations if they will buttress the thesis of Russian ‘meddling’ in the U. S. democratic process no matter how sloppy the ‘research’ or how absurd the ‘findings.’

This post was published at Zero Hedge on Sep 29, 2017.

Monitor Releases Simulation Of What Nuclear Explosion Near North Korea Would Look Like

A scientist tasked with monitoring the proliferation of nuclear weapons has published what he described as a ‘rough simulation’ of what would happen if North Korea follows through with threats to test a hydrogen bomb over the Pacific Ocean.
The upshot of the simulation – which was published by Lassina Zerbo, the head of the Comprehensive Nuclear Test Ban Treaty Organization – is that such an ‘atmospheric burst’ could spread a ‘radio-isotope cloud’ of radiation across the planet, potentially leading to the catastrophic loss of life.
In response to inquiries: Rough simulation (Sept15-29) of #radio-isotope cloud from hypothetical atmospheric burst over Pacific: #CTBT #IMS
— Lassina Zerbo (@SinaZerbo) September 28, 2017

This post was published at Zero Hedge on Sep 29, 2017.

Debt-Slave Industry Frets over Impact of Mass Credit Freezes

Their doom-and-gloom scenario: Consumers suddenly becoming prudent. ‘Let’s face it, 143 million frauds won’t be perpetrated right away; it will take some time to filter through,’ Steve Bowman, chief credit and risk officer at GM Financial, the auto-lending subsidiary of General Motors, told Reuters.
He was talking about the consequences of the Equifax hack during which the most crucial personal data, including Social Security numbers, of 143 million American consumers along with equivalent data of Canadian and British consumers, had been stolen. These consumers have all at once become very vulnerable to all kinds of fraud, including identity theft – where a fraudster borrows money in their name.
The day Equifax disclosed the hack, I urged affected consumers to put a credit freeze on their credit data at the three major credit bureaus – Equifax, TransUnion, and Experian – to protect themselves against these frauds. Soon, the largest media outlets and state attorneys general urged consumers to do the same thing. Financial advisors are recommending it. Even Wells Fargo jumped on the credit freeze bandwagon.
As a result, consumers have flooded the websites of the three credit bureaus to request credit freezes in such numbers that the sites slowed down, timed out, or went down entirely for periods of time. This credit freeze frenzy is scaring the credit industry – not just the credit bureaus, but also lenders and companies that rely on easy credit to sell their wares, such as automakers and department stores with instant credit cards.

This post was published at Wolf Street on Sep 30, 2017.

Kevin Warsh May Be The Next Fed Head – Let’s See What He Really Thinks

As reported earlier this morning by the Wall Street Journal, President Trump and Treasury Secretary Mnuchin met with Kevin Warsh yesterday to discuss the potential vacancy at the Fed next February.
Warsh already has central banking experience, having sat on the Federal Open Market Committee (FOMC) from February 2006 until March 2011.
Two and a half years after he resigned from the Fed, he emerged as a vocal critic of FOMC policies, including those policies he helped craft. He published an op-ed in the WSJ on November 12, 2013, and it was quite the editorial. As that happened to be the first week of hunting season, we suggested that Warsh had declared open season on his ex-colleagues, and we came up a gimmicky picture to go along with our reporting:

This post was published at Zero Hedge on Sep 29, 2017.

Weekend Reading: Tax Cut Wish List

Authored by Lance Roberts via,
On Wednesday, the President announced his plan to cut taxes for Americans, return jobs to America and return the country to economic prosperity.
It’s a tall order to fill, and the proposed tax reform is a ‘Christmas Wish List’ that will have to checked twice to determine which parts are ‘naughty’ and ‘nice.’
As I pointed out yesterday, ‘The belief that tax cuts will eventually become revenue neutral due to expanded economic growth is a fallacy. As the CRFB noted:
‘Given today’s record-high levels of national debt, the country cannot afford a deficit-financed tax cut. Tax reform that adds to the debt is likely to slow, rather than improve, long-term economic growth.’
The problem with the claims that tax cuts reduce the deficit is that there is NO evidence to support the claim. The increases in deficit spending to supplant weaker economic growth has been apparent with larger deficits leading to further weakness in economic growth. In fact, ever since Reagan first lowered taxes in the ’80’s both GDP growth and the deficit have only headed in one direction – lower.’

This post was published at Zero Hedge on Sep 29, 2017.

ECB Wants to Weed Out Smaller Banks to Cut Competition

The biggest financial problem in Europe these days is that it is ‘over-banked,’ according to Daniele Nouy, Chair of the ECB’s Supervisory Board, and thus in charge of the Single Supervisory Mechanism, which regulates the largest 130 European banks.
In a speech bizarrely titled ‘Too Much of a Good Thing: The Need for Consolidation in the European Banking Sector,’ Nouy blamed fierce competition for squeezing profits for many of Europe’s banks while steadfastly ignoring the much larger role in the profit squeeze played by the ECB’s negative-interest-rate policy. ECB President Mario Draghi agrees.
The profits of the largest 10 European banks rose by only 5% in the first half of 2017, compared to 19% for the US banks, which benefited from higher interest rates, stronger capital markets, better capitalization, and larger market shares, according to a new report by Ernst and Young.
In its latest annual health check of European banks, Bain Capital found that 31 institutions, or 28% of the 111 financial institutions they assessed, are in the ‘high-risk’ quadrant. Location seemed to be a far more important factor than size.

This post was published at Wolf Street by Don Quijones ‘ Sep 29, 2017.