A stock market crash is coming, and the Democrats and the mainstream media are going to blame Donald Trump for it even though it won’t be his fault. The truth is that we were headed for a major financial crisis no matter who won the election. The Dow Jones Industrial Average is up a staggering 230 percent since the lows of 2009, and no stock market rally in our history has ever reached the 10 year mark without at least a 20 percent downturn. At this point stocks are about as overvalued as they have ever been, and every other time we have seen a bubble of this magnitude a historic stock market crash has always followed. Those that are hoping that this time will somehow be different are simply being delusional.
Since November 7th, the Dow is up by about 3,000 points. That is an extremely impressive rally, and President Trump has been taking a great deal of credit for it.
But perhaps he should not have been so eager to take credit, because what goes up must come down. The following is an excerpt from a recent Vanity Fair article…
According to Douglas Ramsay, chief investment officer of the Leuthold Group, Trump administration officials will come to regret gloating about the market’s performance. That’s because Trump enters the White House during one of the most richly valued stock markets in U.S. history. The last president to come in at such valuations was George W. Bush, and the dot-com bubble burst soon afterward. Bill Clinton began his second term in a more overvalued stock market in 1997, and exited unscathed. But if his timing were different by just a year, he would have been blamed for the early-aughts market crash.
This stock market bubble was not primarily created by Barack Obama, Donald Trump or any other politician. Rather, the Federal Reserve was primarily responsible for creating it by pushing interest rates all the way to the floor during the Obama era and by flooding the financial system with hot money during several stages of quantitative easing.
But now the economy is slowing down. Economic growth on an annual basis was just 0.7 percent during the first quarter, and yet the Federal Reserve is talking about raising interest rates anyway.
The Federal Reserve also raised interest rates in a slowing economy in the late 1930s, and that had the effect of significantly extending the economic problems during that decade.
As I noted in my article entitled “The Federal Reserve Must Go”, there have been 18 recessions or depressions since the Federal Reserve was created in 1913, and now we stand on the precipice of another one.
“There are some dire predictions that say in the next year, or 18 months, we have something arriving worse than 2008 and 2009, the downturn is much worse,” Paul said in a recent interview with liberty-minded anti-globalist radio host Alex Jones. “They’ll say, ah, it’s all Trump’s fault. No. It wasn’t. 08 and 09 wasn’t Obama’s fault. It was the fault of the Federal Reserve, it was the fault of the Keynesian economic model, the spending too much, the deficit. So, unfortunately, there’s nothing he can do — Trump can’t do it.”
Paul, a medical doctor who took a keen interest in economics throughout his celebrated career as a constitutionalist in Congress, said Trump could “help” the situation by pursuing good policies. “But you can’t avoid the correction, the correction is locked in place, because the deficits are there, the malinvestment, everybody agrees interest rates have been too low too long,” he said in the late January interview. “The only thing he can do is allow the recession to come, get it over with, liquidate the debt. Politically, nobody wants that, so you’re going to see runaway inflation before you see this country wake up.”
Over the past decade, the U.S. economy has grown at an average rate of just 1.33 percent, and there is no possible way to put a positive spin on that.
There’s been a sudden slowdown in new credit extended to businesses over the last year, one that strategists at UBS are calling “drastic” and “highly uncommon outside of economic downturns.”
And since that time, lending has tightened up even more. The following comes from Zero Hedge…
According to the latest Fed data, the all-important C&I loan growth contraction has not only continued, but over the past two months, another 50% has been chopped off, and what in early March was a 4.0% annual growth is now barely positive, down to just 2.0%, and set to turn negative in just a few weeks. This was the lowest growth rate since May 2011, right around the time the Fed was about to launch QE2.
At the same time, total loan growth has likewise continued to decline, and as of the second week of May was down to 3.8%, the weakest overall loan creation in three years.
This is exactly what we would expect to see if we were entering a new recession. Neil Howe, one of the authors of The Fourth Turning, recently warned that “winter is coming” and I have to admit that I agree with him.
So when the stock market finally crashes, how bad could it be?
Well, one analyst that spoke to CNBC said that other historic market crashes have averaged “about 42 percent”…
“If you look at the market historically, we have had, on average, a crash about every eight to 10 years, and essentially the average loss is about 42 percent,” said Kendrick Wakeman, CEO of financial technology and investment analytics firm FinMason.
And as I have explained many times in the past, stocks would have to fall about 40 to 50 percent from current levels just for the stock market to get back to “normal” again. The valuations that we are seeing today are absolutely insane, and there is no possible way that they are sustainable.
When the crash happens, many people will be pointing their fingers at Trump, but it won’t be his fault.
Instead, it will be the Federal Reserve that will be at fault, and hopefully this coming crisis will convince the American people that it is time to end this insidious debt-based central bank for good.
Next month, citizens of Puerto Rico are going to vote on statehood, and the absolutely devastating economic collapse that is gripping the island could be enough to push pro-statehood forces over the edge to victory. Of course Congress has the final say on whether Puerto Rico becomes a state or not, but it is going to be very difficult to deny Puerto Rico’s 3.4 million residents statehood if they strongly insist that they want it. Needless to say, if Puerto Rico becomes the 51st U.S. state that would greatly benefit the Democrats, because the population of Puerto Rico is very liberal.
Puerto Rico does not get to vote in presidential elections, but they do help select the nominees for both parties. In 2016, 58,764 votes were cast in the Democratic caucuses held in Puerto Rico, and only 36,660 votes were cast in the Republican primary. As a state, it is doubtful whether Puerto Rico would send any Republican lawmakers to Washington for decades to come.
So if Puerto Rico becomes a state, the Democrats would add two new senators and probably four or five representatives.
Puerto Rico would be the 30th largest state in the entire country, and so it would instantly have more political power than 21 other U.S. states.
This upcoming vote on June 11th is going to be extremely important, and pro-statehood forces are working very hard to get a positive result. The following info about the referendum in June comes from Wikipedia…
The fifth referendum will be held on June 11, 2017 and will offer two options: “Statehood” and “Independence/Free Association.” It will be the first referendum not to offer the choice of “Commonwealth.” Newly-elected Governor Ricardo Rosselló is strongly in favor of statehood for Puerto Rico to help develop the economy and help to “solve our 500-year-old colonial dilemma … Colonialism is not an option …. It’s a civil rights issue … 3.5 million citizens seeking an absolute democracy,” he told the news media. Benefits of statehood include an additional $10 billion per year in federal funds, the right to vote in presidential elections, higher Social Security and Medicare benefits, and a right for its government agencies and municipalities to file for bankruptcy. The latter is currently prohibited.
At approximately the same time as the referendum, Puerto Rico’s legislators are also expected to vote on a bill that would allow the Governor to draft a state constitution and hold elections to choose senators and representatives to the federal Congress.
Over the past decade, Puerto Rico has been suffering through a nightmarish economic recession that never seems to end. The island was recently forced to declare the equivalent of bankruptcy because it is facing $123 billion in debt and pension obligations. At this moment 46 percent of the residents of Puerto Rico are living below the poverty line, the unemployment rate is 11 percent, and authorities just announced that another 179 public schools will be closing down.
It has been argued that the Obama administration could have done much more to alleviate the economic problems in Puerto Rico but that it purposely chose not to do so.
Well, the worse economic conditions get in Puerto Rico, the better it is for pro-statehood forces. Puerto Ricans are being told that becoming a state is the key to Puerto Rico’s long-term economic future, and at this point many are willing to do just about anything to get the economic suffering to end. The following is a short excerpt from a New York Times article entitled “Amid Puerto Rico’s Fiscal Ruins, a New Push for Statehood“…
A vigorous push for statehood was a central campaign promise of Gov. Ricardo Rosselló, 38, who was inaugurated in January. Next month, he will ask residents to vote, in a nonbinding referendum, for statehood as part of a long-term fix for a commonwealth facing a period of severe austerity that is likely to include shuttered public schools, frozen salaries, slashed pensions and crimped investments in public health. The island remains in the grip of a recession that has lingered for much of the past decade.
Could it be possible that this is what liberals have wanted all along?
Could it be possible that Obama and his minions saw Puerto Rico as a chess piece that could be used to permanently shift the balance of power in Congress?
Of course if Puerto Rico becomes a state that would have implications for presidential elections as well.
In the end, it will be Congress that decides what the fate of Puerto Rico will be, but if the people of Puerto Rico truly want to become the 51st U.S. state it is going to be really hard to deny them that opportunity indefinitely.
Last year at their national conventions, the Democrats and the Republicans both took the position that the citizens of Puerto Rico should be able to make this decision for themselves. But once faced with a final decision, it is inevitable that many Republican members of Congress would be opposed to statehood.
Personally, I believe that either independence or “free association” would be much better for Puerto Rico, and let us hope that the people of Puerto Rico choose that direction.
But when people are really hurting, they will often grasp any sort of olive branch that is being offered to them, and right now the progressives are really pushing statehood.
Of course for strategists on the left, the goal is not to help the suffering people of Puerto Rico.
Rather, the endgame is complete domination of the U.S. political system by any means necessary.
The recklessness of the “too big to fail” banks almost doomed them the last time around, but apparently they still haven’t learned from their past mistakes. Today, the top 25 U.S. banks have 222 trillion dollars of exposure to derivatives. In other words, the exposure that these banks have to derivatives contracts is approximately equivalent to the gross domestic product of the United States times twelve. As long as stock prices continue to rise and the U.S. economy stays fairly stable, these extremely risky financial weapons of mass destruction will probably not take down our entire financial system. But someday another major crisis will inevitably happen, and when that day arrives the devastation that these financial instruments will cause will be absolutely unprecedented.
During the great financial crisis of 2008, derivatives played a starring role, and U.S. taxpayers were forced to step in and bail out companies such as AIG that were on the verge of collapse because the risks that they took were just too great.
But now it is happening again, and nobody is really talking very much about it. In a desperate search for higher profits, all of the “too big to fail” banks are gambling like crazy, and at some point a lot of these bets are going to go really bad. The following numbers regarding exposure to derivatives contracts come directly from the OCC’s most recent quarterly report (see Table 2), and as you can see the level of recklessness that we are currently witnessing is more than just a little bit alarming…
Total Assets: $1,792,077,000,000 (slightly less than 1.8 trillion dollars)
Total Exposure To Derivatives: $47,092,584,000,000 (more than 47 trillion dollars)
Total Assets: $2,490,972,000,000 (just under 2.5 trillion dollars)
Total Exposure To Derivatives: $46,992,293,000,000 (nearly 47 trillion dollars)
Total Assets: $860,185,000,000 (less than a trillion dollars)
Total Exposure To Derivatives: $41,227,878,000,000 (more than 41 trillion dollars)
Bank Of America
Total Assets: $2,189,266,000,000 (a little bit more than 2.1 trillion dollars)
Total Exposure To Derivatives: $33,132,582,000,000 (more than 33 trillion dollars)
Total Assets: $814,949,000,000 (less than a trillion dollars)
Total Exposure To Derivatives: $28,569,553,000,000 (more than 28 trillion dollars)
Total Assets: $1,930,115,000,000 (more than 1.9 trillion dollars)
Total Exposure To Derivatives: $7,098,952,000,000 (more than 7 trillion dollars)
Collectively, the top 25 banks have a total of 222 trillion dollars of exposure to derivatives.
If you are new to all of this, you might be wondering what a “derivative” actually is.
When you buy a stock you are purchasing an ownership interest in a company, and when you buy a bond you are purchasing the debt of a company. But when you buy a derivative, you are not actually getting anything tangible. Instead, you are simply making a side bet about whether something will or will not happen in the future. These side bets can be extraordinarily complex, but at their core they are basically just wagers. The following is a pretty good definition of derivatives that comes from Investopedia…
A derivative is a security with a price that is dependent upon or derived from one or more underlying assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.
Those that trade derivatives are essentially engaged in a form of legalized gambling, and some of the brightest names in the financial world have been warning about the potentially destructive nature of these financial instruments for a very long time.
In a letter that he wrote to shareholders of Berkshire Hathaway in 2003, Warren Buffett actually referred to derivatives as “financial weapons of mass destruction”…
The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.
Warren Buffett was right on the money when he made that statement, and of course the derivatives bubble is far larger today than it was back then.
In fact, the total notional value of derivatives contracts globally is in excess of 500 trillion dollars.
This is a disaster that is just waiting to happen, and investors such as Buffett are quietly positioning themselves to take advantage of the giant crash that is inevitably coming.
According to financial expert Jim Rickards, Buffett’s Berkshire Hathaway Inc. is hoarding 86 billion dollars in cash because he is likely anticipating a major stock market downturn…
Far from a bullish sign, Buffett’s cash hoard could mean he’s preparing for a market crash. When the crash comes, Buffett can walk through the wreckage with his checkbook open and buy great companies for a fraction of their current value.
That’s the real Buffett style, but you won’t hear that from your broker or wealth manager. If Buffett has a huge cash allocation, shouldn’t you?
He knows what’s coming. Now you do too.
Warren Buffett didn’t become one of the wealthiest men in the entire world by being stupid. He knows that stocks are ridiculously overvalued at this point, and he is poised to make his move after the pendulum swings in the other direction.
Despite high levels of economic confidence expressed by business owners and consumers, one key indicator shows that it has not translated into much action yet.
Loan issuance declined in the first quarter from the previous three-month period, the first time that has happened in four years, according to an SNL Financial analysis of bank earnings reports filed for the period. The total of recorded loans and leases fell to $9.297 trillion from $9.305 trillion in the fourth quarter of 2016.
This is precisely what we would expect to see if a new economic downturn was beginning. Our economy is very highly dependent on the flow of credit, and when that flow begins to diminish that is a very bad sign.
For the moment, financial markets continue to remain completely disconnected from the hard economic data, but as we saw in 2008 the markets can plunge very rapidly once they start catching up with the real economy.
Warren Buffett is clearly getting prepared for the crisis that is ahead.
If you want to permanently fix America’s economy, there really is no other choice. Even before Ron Paul’s rallying cry of “End The Fed” shook America during the peak of the Tea Party movement, I was a huge advocate of shutting down the Federal Reserve. Because no matter how hard we try to patch it up otherwise, the truth is that our debt-based financial system has been fundamentally flawed from the very beginning, and the Federal Reserve is the very heart of that system. The following is a free preview of an upcoming book that I am working on about how to turn this country is a more positive direction…
As the publisher of The Economic Collapse Blog, there have been times when I have been criticized for focusing too much on our economic problems and not enough on the solutions. But I believe that in order to be willing to accept the solutions that are necessary, people need to have a full understanding of the true severity of our problems. It isn’t by accident that we ended up 20 trillion dollars in debt. In 1913, a bill was rushed through Congress right before Christmas that was based on a plan that had been secretly developed by very powerful Wall Street bankers. G. Edward Griffin did an amazing job of documenting the development of this plan in his groundbreaking book “The Creature from Jekyll Island: A Second Look at the Federal Reserve”. At that time, most Americans had no idea what a central bank does or what one would mean for the U.S. economy. Sadly, even though more than a century has passed since that time, most Americans still do not understand the Federal Reserve.
The Federal Reserve was designed to create debt, and of course the Wall Street bankers were very excited about such a system because it would make them even wealthier. Since the Fed was created in 1913, the U.S. national debt has gotten more than 5000 times larger and the value of the U.S. dollar has declined by about 98 percent. So the Federal Reserve is doing what it was originally designed to do. In fact, it has probably worked better than the original designers ever dreamed possible.
There is often a lot of confusion about the Federal Reserve, because a lot of people think that it is simply an agency of the federal government. But of course that is not true at all. In fact, as Ron Paul likes to say, the Federal Reserve is about as “federal” as Federal Express is.
The Fed is an independent central bank that has even argued in court that it is not an agency of the federal government. Yes, the president appoints the leadership of the Fed, but the Fed and other central banks around the world have always fiercely guarded their “independence”. On the official Fed website, it is admitted that the 12 regional Federal Reserve banks are organized “much like private corporations”, and they very much operate like private entities. They even issue shares of stock to the private banks that own them.
In case you were wondering, the federal government has zero shares.
The American people are constantly being told that Fed decisions must be “above politics” because they are “too important” to be politicized. So even though everything else in our society is up for political debate, somehow we have become convinced that the Federal Reserve should be off limits.
Today, the Federal Reserve has more power over the performance of the U.S. economy than anyone else does, and that includes the president. The Fed has become known as “the fourth branch of government”, and a single statement from the chairman of the Fed can send global financial markets soaring or tumbling.
So even though presidents tend to get most of the credit or most of the blame for how the U.S. economy is doing, the truth is that the Fed is actually the one pulling most of the strings. In conjunction with Congress, presidents can monkey around with regulations and tax rates, but at the end of the day their influence over the economy pales in comparison to what the Fed is able to do.
For those that have never encountered this material before, this can be difficult to grasp at first, so let’s start with something very simple.
Go to your wallet or purse and pull out a dollar bill.
At the very top, you will notice that it says “Federal Reserve Note” in big, bold letters.
If you ask 99 percent of the people in the United States where money comes from, they will not be able to tell you. Our money is actually created and issued by the Federal Reserve, but that is not what our founders intended. According to Article I, Section 8 of the U.S. Constitution, Congress was expressly given the authority to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”.
So why is the Federal Reserve doing it?
Many Americans are still operating under the assumption that the federal government has a “printing press” and that if we ever get into too much debt trouble the government could simply create and spend lots more money into circulation.
But that is not the way that our system currently operates.
Instead, it is the Federal Reserve that creates all new money. Once that new money is created, the federal government then borrows it and spends it into circulation.
Previously, I have written about how this works…
When the U.S. government decides that it wants to spend another billion dollars that it does not have, it does not print up a billion dollars.
Rather, the U.S. government creates a bunch of U.S. Treasury bonds (debt) and takes them over to the Federal Reserve.
The Federal Reserve creates a billion dollars out of thin air and exchanges them for the U.S. Treasury bonds.
Why does the U.S. government have to borrow money that the Federal Reserve creates? Why can’t they just create the money themselves?
This is the big secret that nobody is supposed to know about.
Theoretically, the federal government doesn’t have to borrow a penny. Instead of borrowing money the Federal Reserve creates, it could just create money directly and spend it into circulation.
But then we wouldn’t be 20 trillion dollars in debt.
Once the Federal Reserve has received U.S. Treasury bonds in exchange for the “Federal Reserve Notes” that the federal government has requested, the Fed auctions off those bonds to the highest bidder. But as I have noted so many times before, this process always creates more debt than it does money…
The U.S. Treasury bonds that the Federal Reserve receives in exchange for the money it has created out of nothing are auctioned off through the Federal Reserve system.
There is a problem.
Because the U.S. government must pay interest on the Treasury bonds, the amount of debt that has been created by this transaction is greater than the amount of money that has been created.
So where will the U.S. government get the money to pay that debt?
Well, the theory is that we can get money to circulate through the economy really, really fast and tax it at a high enough rate that the government will be able to collect enough taxes to pay the debt.
But that never actually happens, does it?
And the creators of the Federal Reserve understood this as well. They understood that the U.S. government would not have enough money to both run the government and service the national debt. They knew that the U.S. government would have to keep borrowing even more money in an attempt to keep up with the game.
Beginning in 1913, this process has created an endless debt spiral that has resulted in the U.S. being 20 trillion dollars in debt. It is the biggest mountain of debt in the history of the world, and it didn’t have to happen.
In fact, if we had been using debt-free money all this time we could theoretically be completely out of debt.
All of this debt threatens to destroy the bright future that our children and our grandchildren were supposed to have. It is absolutely immoral to pass such a large debt on to future generations, but we are doing it anyway.
Of course the United States is far from alone in this regard. Today, more than 99.9% of the population of the world lives in a country that has a central bank.
There is literally nothing else that the entire planet agrees upon almost unanimously, and yet somehow virtually the whole globe has chosen to adopt debt-based central banking.
Do you think that this is just a coincidence?
A handful of extremely small nations such as the Federated States of Micronesia still do not have a central bank, but the only large country not to have one is North Korea.
I don’t understand why more people are not talking about this. If we really want to reform how things are done economically, it should start with central banking.
Such a system would be unimaginable to many people today, but it is entirely possible.
Instead of a central bank creating debt-based currency for us, the federal government could create debt-free money directly.
And instead of socialist central planners setting our interest rates for us, we could allow the free market to set our interest rates.
We are supposed to be a free market nation with a free market economy, and so we don’t need Fed bureaucrats to run it for us.
The free market will always do a better job in the long run then bureaucrats will. As I noted earlier, the greatest period of economic growth in U.S. history was right before the Federal Reserve was created in 1913, but since that time there have been 18 distinct recessions or depressions: 1918, 1920, 1923, 1926, 1929, 1937, 1945, 1949, 1953, 1958, 1960, 1969, 1973, 1980, 1981, 1990, 2001, 2008.
Now we stand poised on the brink of another major downturn, and people still aren’t getting it.
As long as the Federal Reserve exists, there will be “booms” and “busts” like this.
It is time for a change.
During the good times, criticism of the Fed tends to subside. And without a doubt, the bubble following the end of the last recession lasted much longer than a lot of people initially would have thought, but all Fed-created bubbles eventually end.
We desperately need to get free from this system, and a huge step in that direction would be a rejection of debt-based currency.
If you don’t think that this can happen, you should consider what happened in 1963. President John F. Kennedy signed Executive Order 11110 which authorized the U.S. Treasury to issue debt-free “United States Notes” which were directly created by the federal government.
Unfortunately, he was assassinated shortly after that executive order was signed.
You can still find debt-free “United States Notes” in circulation today, and they are often for sale on auction sites such as eBay because people like to collect them.
At any time, the White House could do something similar today.
All it takes is the willingness to do so.
The borrower is the servant of the lender, and the debt-based Federal Reserve system has turned all of us into debt slaves.
If we do not want future generations of Americans to be enslaved to debt, we need to shut down the Federal Reserve and start using debt-free currency. Any essential functions that the Fed is currently performing can ultimately be taken over by the U.S. Treasury, and of course we can make the transition gradual so that we don’t completely panic global financial markets.
The global elite are using central banking and debt-based currencies to dominate the planet. Today, the total amount of debt in the world has shot past 150 trillion dollars, and it will only continue to grow until humanity wakes up and realizes the insanity of using a debt-based financial system.
Here in the United States, we need people in government that understand these things and that are willing to do something about it.
The Federal Reserve must go, and I will never make any apologies for saying that.
The market is pricing itself for perfection for all of eternity. This is crazy. . . . I think the market could easily drop to 1,600 or 1,300. It could drop by 40% or even more once the fantasy ends. When the government shows its true colors, that it’s headed for a fiscal blood bath when this crazy notion that there is going to be some Trump fiscal stimulus is put to rest once and for all. I mean it’s not going to happen. They can’t pass a tax cut that big without a budget resolution that incorporated $10 trillion or $15 trillion in debt over the next decade. It’s just not going to pass Congress. . . . I think this is the greatest sucker’s rally we have ever seen.”
But even more alarming is what Stockman had to say about the potential timing of such a financial crash. According to Stockman, if he were to pick a time for the next major stock market plunge he would “target sometime between August and November”…
The S&P 500 is going to drop by hundreds and hundreds of points sometime over the next few months as we drift into this unexpected crisis. . . . I would target sometime between August and November because that’s when the rubber is going to meet the road on a debt ceiling increase when they are out of cash. Washington is going to end up in vicious political conflict over what to do about the debt ceiling. . . . It is going to be one giant fiscal bloodbath the likes of which we have never seen.
That really got my attention, because those are the exact months during which the events that I portrayed in The Beginning Of The End play out.
Without a doubt, the U.S. financial system is living on borrowed time, and we cannot keep going into so much debt indefinitely. In 2017, interest on the national debt will be more than half a trillion dollars for the first time ever, and it will be even higher next year because we are likely to add at least another trillion dollars to the debt during this fiscal year.
Meanwhile, the financial markets just keep becoming more absurd with each passing day.
Just look at Tesla. This is a company that somehow managed to lose 620 million dollars during the first quarter of 2017, and it has been consistently losing hundreds of millions of dollars quarter after quarter.
It is almost as if we are living in an “opposite world” where the more money you lose the more valuable investors think that you are. Companies like Tesla, Netflix and Twitter are burning through gigantic mountains of investor cash without ever making a profit, and nobody seems to care.
The percentage of commercial mortgage-backed security (MBS) loans in special servicing hit 6.6% to close April, Commercial Mortgage Alert reported, citing Trepp data. The five basis point move higher from March came as the past-due rate on Fitch-rated commercial mortgage-backed securities (CMBS) climbed by nine basis points to end April at to 3.5%.
Both MBS and CMBS rates hit their highest levels since 2015.
During the crisis of 2008, regular mortgage-backed securities played a major role, and this time around it looks like securities that are backed by commercial mortgages could cause quite a bit of havoc.
One of the reasons for this is because mall owners are having such tremendous difficulties. The number of retail store closings in 2017 is on pace to shatter the all-time record by more than 20 percent, and Bloomberg is projecting that about a billion square feet of retail space will eventually close or be used for another purpose.
So needless to say this is putting an enormous amount of strain on those that are trying to rent space to retailers, and a lot of their debts are starting to go bad.
In 2007 and early 2008, a lot of the analysts that were loudly warning about mortgage-backed securities, a major stock market crash and an imminent recession were being mocked. People kept asking them when “the crisis” was finally going to arrive, and leaders such as Federal Reserve Chairman Ben Bernanke confidently assured the public that the U.S. economy was not going to experience a recession.
But of course then we got to the fall of 2008 and all hell broke loose. Investors suddenly lost trillions of dollars, millions of jobs were lost, and the U.S. economy plunged into the worst recession since the Great Depression of the 1930s.
Now we stand poised on the brink of an even worse disaster. The U.S. national debt has almost doubled since the last crisis, corporate debt has more than doubled, and all of our long-term economic fundamentals have continued to deteriorate.
The only thing that has saved us is our ability to go into enormous amounts of debt, and once that debt bubble finally bursts it will be the biggest standard of living adjustment that Americans have ever seen.
So I don’t know if Stockman’s timing will be 100% accurate or not, but that is not what is important.
What is important is that decades of exceedingly foolish decisions have made the greatest economic crisis in American history inevitable, and when it fully erupts the pain is going to be absolutely off the charts.
On Thursday, the U.S. House of Representatives finally approved a bill that would repeal and replace significant portions of the law that created Obamacare. But it was a very close vote. On Donald Trump’s 105th day in the White House, 217 members of the House voted in favor of the bill, and 213 members of the House voted against the bill. Of course “Trumpcare” is far from perfect, and it actually does very little to fix our rapidly failing healthcare system, but the reason why this is the best thing that Trump has done so far is because this bill would greatly reduce federal funding for Planned Parenthood. But first this bill must get through the Senate before it can become law, and that is looking extremely doubtful at this point. In fact, The Hill is reporting that one Republican Senator has said that this bill has less than a 20 percent chance of succeeding in the Senate…
A senior GOP senator said the chances of getting 51 votes for legislation based on the House healthcare bill are less than 1 in 5.
The senator also put the chances that the House bill will meet Senate budgetary rules preventing a filibuster at less than 1 in 5, meaning portions of the legislation would have to be removed.
Lawmakers are keeping quiet about their concerns because they want to help Speaker Paul Ryan (R-Wis.), whose job they fear may be in jeopardy if the House fails again to approve an ObamaCare repeal bill.
Yes, I know that Trump and the Republicans in the House were greatly celebrating on Thursday, but there really isn’t anything to celebrate yet.
The Senate is probably going to come up with an entirely different version of this legislation, and it is likely to look far different from the bill that just passed the House.
If a bill of some sort can actually get through the Senate, and that is a huge “if”, then an attempt would be made to reconcile the differences between the two bills, and then the final version would be submitted to both the House and the Senate for an up or down vote.
The problem is that the Senate is not going to pass anything like the version that the House just came up with, and conservatives in the House are likely to balk at anything that the Senate comes up with.
So please don’t think that an Obamacare repeal is a done deal.
The truth is that it probably is not going to happen any time soon.
But for the moment, I am going to applaud President Trump and House Republicans for doing something right. I have been very tough on them in recent weeks, and rightly so, but when they do something good I am certainly going to give them the praise that they are due.
The bill that the House just passed would greatly reduce federal funding for Planned Parenthood, and that fact alone more than makes up for all of the other flaws in it. The following comes from CNS News…
The American Health Care Act—the Obamacare repeal-and-replace bill that the House of Representatives passed by a 217-to-213 vote this afternoon–will temporarily and significantly reduce, but not eliminate, federal funding for Planned Parenthood.
The bill will prevent Planned Parenthood from receiving funding through “mandatory” federal funding streams—primarily Medicaid—for exactly one calendar year after the president signs it.
But it does not prevent Planned Parenthood from getting “discretionary” funding through the Title X family planning program.
The pro-life bill would eliminate more than $390 million (over 86%) of over $450 million in annual federal funding to Planned Parenthood, from all mandatory spending programs. The measure also redirects funding to community health centers which outnumber Planned Parenthood facilities 20 to 1 and offer a wider array of health care services, but not abortion.
Of course this is one of the provisions in the bill that some Republicans in the Senate want to eliminate.
It is extremely unlikely that any bill that even defunds Planned Parenthood in part will ever get through the Senate, but Trump should make an all-out effort to get this accomplished anyway.
And if Republican leadership can somehow get a bill through the Senate and signed into law that at least significantly reduces federal funding for Planned Parenthood, I will officially take back all of the negative things that I have said about the Republicans so far this year.
The order, signed during a ceremony in the White House Rose Garden, directs the Internal Revenue Service to exercise “maximum enforcement discretion” over the so-called Johnson amendment, which prevents churches and other tax-exempt religious organizations from endorsing or opposing political candidates. The order also provides “regulatory relief” for organizations that object on religious grounds to a provision in Obamacare that mandates employers provide certain health services, including coverage for contraception.
All Americans, including Christians, should be free to express their political beliefs without fearing repercussions from the federal government. The Johnson Amendment was probably always unconstitutional, and that is one of the reasons why it has never really been enforced. Congress should go even farther and completely repeal it, and hopefully that will happen someday.
So once again I want to take this opportunity to applaud Trump for doing something right. This is a good executive order, although it doesn’t quite go far enough. A major war against people of faith is being waged by very powerful forces in this country, and I am thankful for a president that is at least trying to keep some of the heat off of our backs.
I tend to get criticized by both the pro-Trump and anti-Trump camps because I try to be objective.
When our politicians do things that are wrong, I am going to say that they are wrong.
And when our politicians do things that are right, I am going to say that they are right.
We lose credibility when we act as cheerleaders for politicians that are “on our side” no matter what they say or do.
In our society today, there is a desperate need for people that are willing to think critically and that are willing to cling objectively to the truth.
Because once we let go of the truth we are all in trouble…
Puerto Rico has collapsed financially and has “filed for the equivalent of bankruptcy protection”. When this was announced on Wednesday, it quickly made front page news all over the planet. For decades, Puerto Rico has been considered to be the territory most likely to become “the 51st U.S. state”, and there have even been rumblings that we could soon see a renewed push for statehood. But that is on the back burner for now, because at the moment Puerto Rico is dealing with a nightmarish financial crisis that is the result of an accelerating economic collapse. Unfortunately, many Americans still don’t believe that what has happened to Puerto Rico could happen to us, even though signs of major economic trouble are emerging all around us.
Saddled by mountainous debts and undermined by rapid population loss, Puerto Rico filed for the equivalent of bankruptcy protection Wednesday in a historic move that will trigger a fierce legal battle, with the fate of the island’s citizens, creditors and workers at stake.
The oversight board appointed to lead the U.S. territory back to fiscal sustainability declared in a court filing that it is “unable to provide its citizens effective services,” crushed by $74 billion in debts and $49 billion in pension liabilities.
Like Greece, Zimbabwe, Venezuela and so many others, what has happened in Puerto Rico shows us that it is simply not possible to live way above your means indefinitely. If your debt grows much faster than your economy, eventually you reach a point where financial disaster is inevitable. This is a lesson that our leaders in Washington D.C. desperately need to learn before it is too late for the United States.
Since 2007, the population of Puerto Rico has declined by 10 percent and the number of jobs in that nation has declined by 20 percent. It is a long-term economic collapse that just continues to get even worse with each passing month.
At this point, U.S. firms stand poised to lose billions of dollars as their investments become worthless, and many of these firms were totally blindsided because they were assured that this could not happen…
The financial collapse promises to impose deep losses on bondholders who for years snapped up Puerto Rico’s securities, which are tax-free throughout the U.S. U.S. states can’t file for bankruptcy, and investors bought the bonds assured that it wasn’t a legal option for Puerto Rico either.
The scale of the restructuring is far larger than Detroit’s record-setting $18 billion bankruptcy, and it’s unclear how long a court proceeding would last or how deep would be the cuts that are imposed on bondholders.
So how far will the financial collapse of Puerto Rico ultimately ripple through our financial system?
It is hard to say, but without a doubt this is a major concern.
Meanwhile, corporate insiders are selling stocks at the fastest pace that we have seen in seven years. The following comes from Business Insider…
As the investing public has continued to devour stocks, sending all three major indexes to record highs in the last few months, corporate insiders have been offloading shares to an extent not seen in seven years. Selling totaled $10 billion in March, according to data compiled by Trim Tabs.
It’s a troubling trend facing an equity market that’s already grappling with its loftiest valuations since the 2000 tech bubble. If the people with the deepest knowledge of a company are cashing out, why should investors keep buying at current prices?
What do those corporate insiders know that the rest of us do not?
You make money in the stock market by selling at the right time. Those that sold their Pets.com stock at the peak of the dotcom bubble got quite wealthy, but those that held on all the way through the stock market crash got completely wiped out.
There have been some analysts that have suggested that one way to make money in the stock market is to simply do what the insiders are doing. If they are buying, then that is supposedly a time to buy, and if they are selling that is supposedly a time to sell.
Personally, I would rather use my limited resources to get prepared for the horrific crisis that is inevitably coming, but not everyone agrees with that outlook.
The crisis in Puerto Rico developed over an extended period of time, and there were plenty of warning signs.
So anyone that is still holding Puerto Rican bonds at this point is quite foolish.
Similarly, the warning signs here in the U.S. have been mounting for quite a while. Just yesterday, we got more exceedingly bad news for the U.S. auto industry, and we are on pace to absolutely smash the all-time record for most retail store closings in a single year.
Just because a crisis does not arrive on the exact month or year that you were anticipating does not mean that it has been canceled.
I warned about a looming financial cataclysm in Puerto Rico nearly two years ago, but they somehow managed to hang on until now. And even though the U.S. financial system is still afloat for the moment, everyone should be able to see that we are definitely living on borrowed time.
So don’t look down on Puerto Rico, because what is happening to them is eventually coming here too.
How will you handle all of the people that will show up at your door when a major crisis strikes because they haven’t been making any preparations of their own? Earlier today somebody asked me about this on Facebook, and I thought that it was a very good question, because thousands of my readers will be faced with this precise dilemma at some point. When America’s day of disaster arrives, it is inevitable that most of us that are prepping will have family, friends and neighbors showing up at our door asking for help. When that happens, what will you do?
There are some people out there that are very honest about the fact that they do not plan to share what they have stored up with anyone, and that even close family members will be greeted with a shotgun if they show up unannounced.
Personally, I could never do that. My wife and I have always had the philosophy that we need to work extra hard to prepare because there will be people that need to depend on us when times get really hard. And turning away those that are in desperate need would go against everything that we stand for. After all, I am even writing a book that is all about the true meaning of love, and so it would be quite hypocritical of me to turn away those that I care about when they need me the most.
And even if I wanted to be cold-hearted, my wife would never let me get away with it. She has such a soft heart that she literally can’t bear to even see a bug die. We often have spiders invade our place, and when she sees one she gently captures it and sets it free outside. I tell her that they will just breed and come back in even bigger numbers, but that doesn’t seem to matter to her. So needless to say we are going to have to find a non-violent way to deal with our spider problem.
But I certainly understand the frustrations of those that have been trying to warn family and friends about what is coming for years and they never seem to listen.
And it is true that resources are limited. For the vast majority of us, there is only so much money and energy that we can put into prepping, and so why should those that have refused to listen to the warnings and prepare in advance be able to benefit from all of our hard work?
Unfortunately, life is not always fair. And we also need to realize that there is a tremendous amount of deception going on out there these days. Some of the deceptions that are currently circulating are very strong, and it can be very easy to be sucked into them. So we need to have compassion for those that have been led into confusion.
Look, there are literally thousands of watchmen all across this country that have never wavered from warning America about what is coming even for a moment. That is because they are standing on the truth and not on wishful thinking that is the product of overactive imaginations.
The ingredients for the “perfect storm” that so many watchmen have been warning about for ages are starting to come together right before our eyes. We are closer to World War III than we have been in decades, our politicians are openly admitting that our relations with Russia are at “an all-time low”, the federal government is 20 trillion dollars in debt, our nation is on the verge of being torn apart by strife and civil unrest, the financial markets are primed for a crash of epic proportions, there are mass die-offs of animals all over the globe, and natural disasters are happening with frightening regularity as the crust of our planet rattles and shakes.
But we are somehow supposed to believe that “everything is going to be wonderful” even though we continue to kill babies on an industrial scale, just about every form of sexual immorality that you can possibly imagine is exploding all around us, our “entertainment” industry is an open sewer, and we lead the world in both legal and illegal drug use.
I’ve got dozens more facts that I could quote regarding our moral decay, but I think that you get the point.
If we actually changed our behavior, I could understand why it would make sense for America to be blessed.
But we haven’t changed our behavior, and there are no signs that this is going to happen any time soon.
As humans, we have the freedom to choose, but those choices inevitably have consequences.
The same thing is true for our nation as a whole. We have made a whole bunch of exceedingly bad choices, and those choices are going to result in some incredibly painful consequences.
So you can do whatever you want, but my wife and I are going to continue to get prepared. America is headed for a date with disaster, and those that are suggesting otherwise are not being honest with you.
When Donald Trump originally announced that he was going to run for president, he said that his ideal choice for a running mate was Oprah Winfrey, but now he may be actually running against her in the 2020 election. A recent episode of The David Rubenstein Show that featured an interview with Oprah Winfrey is creating a tremendous amount of buzz that Oprah Winfrey may throw her hat into the ring during the next election cycle. This particular episode was taped back on December 12th, but it didn’t actually get aired on Bloomberg TV until last Tuesday. You can see the portion of the interview in which Oprah is asked about her presidential aspirations on YouTube right here, and as you can see, she definitely sounds like someone that is very seriously thinking about running…
Prior to this last election, Oprah says that she never even considered the possibility of running, but Donald Trump’s victory in November made her realize that maybe she could do it too. The following summary of the most important moments from the interview comes from Charisma News…
“I actually never thought—never considered the question, even the possibility,” she said while smiling coyly. “I just thought, ‘Oh. Oh.'”
“Because it’s clear you don’t need government experience to be elected president of the United States,” Rubenstein interjected.
“That’s what I thought,” she replied. “I thought, Oh gee, I don’t have the experience, I don’t know enough. Now I’m thinking, Oh. Oh.”
When Oprah made these statements, she had to know that they would create a firestorm.
In a tweet sent Wednesday morning, the reclusive journalist who broke the Clinton-Monica Lewinsky scandal said such a race would be one for the ages.
“Trump vs Oprah would be the most epic race in American history. MAKE THIS HAPPEN…” Drudge tweeted to his nearly half a million followers.
And this is certainly not the first time that it has been suggested that Oprah should run for president. Just one week after the election, political activist Michael Moore mentioned her as a potential candidate…
“Democrats would be better off if they ran Oprah or Tom Hanks … why don’t we run beloved people?” Moore told CNN’s Jake Tapper on “State of the Union.”
“We have so many of them,” he said. “The Republicans do this — they run Reagan and the Terminator and other people.” It was a reference to former California Gov. Arnold Schwarzenegger, as well as former President Ronald Reagan.
“Why don’t we run somebody that the American people love and are really drawn to, and that are smart and have good politics and all that?” Moore said.
Needless to say, Oprah would make a horrible president. Her political views are ultra-liberal, and she has no practical political experience whatsoever.
However, if she did run she would definitely be the front-runner for the Democratic nomination. At the moment, Joe Biden and Elizabeth Warren are considered to be the most likely opponents for Trump, and Oprah would almost certainly trounce either of them.
“I was in the audience that day and it was clearly a joke when she was playing with David because they have such a great rapport,” said Winfrey’s close pal and CBS This Morning co-host Gayle King early Thursday of a recent interview Oprah gave suggesting she was finally thinking of running for President. “But I also heard on the Oprah Winfrey show over the years you always have the right to change your mind but I would bet my first, second born and any unborn children to come, that ain’t never happening,” King emphatically added.
And hopefully it will not happen.
But the ironic thing is that the very first person that Donald Trump suggested as a potential running mate when he announced his candidacy in 2015 was Oprah Winfrey. The following comes from the New York Post…
Real estate mogul-turned-celebrity TV star Donald Trump already had an “Aha!” moment about his 2016 running mate.
After declaring his run for the White House Tuesday, Trump appeared on ABC and said Oprah Winfrey would complete his presidential dream ticket.
“I think Oprah would be great. I’d love to have Oprah,” Trump said. “I think we’d win easily, actually.”
I’ll bet you don’t remember that, do you?
And in his new book entitled “The Making of the President 2016“, Roger Stone reminds everyone that Trump actually floated the idea of Oprah as his running mate all the way back in 1999 during an interview with Larry King. The following is an excerpt from Roger Stone’s new book that was posted on Infowars…
Early in the interview, Trump dropped Bombshell Number One: “So I am going to form a presidential exploratory committee, I might as well announce that on your show, everyone else does, but I’ll be forming that and effective, I believe, tomorrow,” Trump told the crusty interviewer. “And we’ll see. I mean, we’re going to take a very good, strong look at it.”
And just minutes later, Larry went for it and asked him if he had a vice presidential candidate in mind. Trump hesitated briefly as if to ponder his answer and then stunned everyone including King – and no doubt Oprah herself. “Oprah. I love Oprah,” Trump said. “Oprah would always be my first choice. She’s a terrific woman. She is somebody that is very special. If she’d do it, she’d be fantastic. I mean, she’s popular, she’s brilliant, she’s a wonderful woman.” The following day the newspapers and TV news were filled with talk of Trump and Oprah.
I honestly don’t know what Trump was thinking, because Oprah Winfrey definitely does not belong in politics.
Even if Oprah does not run for president, Trump’s victory has a lot of other celebrities thinking that they could do the same thing that he did. Other big names that have been floated as potential candidates in 2020 include Mark Zuckerberg, Kanye West, Mark Cuban and Dwayne “The Rock” Johnson.
As you can see, we have entered a strange new era in American politics, and there is no telling what craziness we may see during the next election cycle.