When history judges this moment, it will not be kind. Central banks, oblivious to the real reasons for low wage inflation — namely, globalization and advances in technology — have created a monster bubble and the markets, rather than being frightened by this, have celebrated it.
That all being said, the takeaway from this article is a new look at why bitcoin is ramping higher this year. Cryptocurrencies are like tech stocks in the 1990s; there is a lot of speculation, but not a visible plan nor monetized business to demonstrate how the technology will be utilized by the mainstream. If part of the reason behind the rally is the easy monetary conditions that provides a rampant environment for speculation, then the central bank quantitative tightening in 2018 and 2019 could be a negative catalyst that forces speculation in cryptocurrencies to subside, with it making fundamental analysis more important than technicals, much like ultimately occurred during the tech bubble of the late 1990s.
As we’ll see below, there isn’t too much of the “clear and indisputable” stuff. And this of course is the same James Clapper who made an admittedly false statement to Congress in March 2013, when he responded, “No, sir” and “not wittingly” to a question about whether the National Security Agency was collecting “any type of data at all” on millions of Americans. Lies don’t usually come in any size larger than that.
“Despite many who are suggesting this has been a ‘rational rise’ due to strong earnings growth, that is simply not the case as shown below. (I only use ‘reported earnings’ which includes all the ‘bad stuff.’ Any analysis using “operating earnings” is misleading.)…..Since 2014, the stock market has risen (capital appreciation only) by 35% while reported earnings growth has risen by a whopping 2%. A 2% growth in earnings over the last 3-years hardly justifies a 33% premium over earnings.
Now, in just the latest bit of evidence that the Justice department has been politically compromised, we learn from John Solomon of The Hill that the DOJ didn’t even bother to interview a key FBI informant before filing criminal charges in the Uranium One scandal back in 2014.
Mortgage fraud like the pair’s flouting of rules designed to protect banks is rampant in China’s roaring property market, according to interviews with buyers, sellers and dozens of property market insiders including real estate agents, lawyers, bankers, valuers and loan middlemen from three of China’s major cities and four smaller cities. Many of these people declined to be identified because they were familiar with or involved in “re-packaged” loan applications, the industry euphemism for these frauds.
Before all that, however, let’s remember the basic laws of arithmetic. Unless taxes are increased, a progressive legislative agenda is just idle blather. Population aging requires an increase in taxes of about 3 percentage points of GDP simply to sustain current commitments under Social Security, Medicare, and other age-related programs. Even now, these programs are not particularly generous and are inadequately funded for the long run. Without added revenues, benefit cuts are inescapable. If Democrats don’t have the guts to make the case for higher taxes and the brains and skill to persuade voters to support them, anything else in their program that costs money is window dressing.
The Democratic People’s Republic of Korea offers a similar threat, only far weaker. The DPRK is no superpower. Its economy is minuscule, population is small, and security situation is bleak. The North is essentially friendless, down to little more than Cuba. Pyongyang’s former allies, Moscow and Beijing, aren’t likely to risk war to save it. Facing the North is far wealthier and advanced South Korea backed by the American global military colossus. Absent suicidal intent—and so far, Kim Jong-un has followed his father and grandfather in desiring his virgins in this world, not the next—North Korea isn’t likely to attack America.
Unfortunately, that doesn’t appear to be happening according to any data. Despite it being a Trump campaign promise, there just isn’t any indication that the loss of manufacturing capacity is anything other than permanent. Then again, we don’t really know for sure because there just isn’t any growth in the demand of US consumers regardless of where the goods are produced.
GE Power has a problem: Electricity consumption in the US peaked in 2007 and has declined since, despite population growth of about 24 million people over the 10 years and despite economic growth. The chart below, based on data from the Department of Energy’s EIA, shows annual electricity generation from 2001 through 2016. Note the growth in generation through 2007, the plunge during the Financial Crisis, the recovery, and the uneven decline since.