The Fed And Congress Blew It
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2019-08-07 09:16 by Karl Denninger
in Editorial , 276 references Ignore this thread
The Fed And Congress Blew It
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It's coming folks.

I know, I know, have a happy face.  There are even those who think we should be "nice" to China, and more than a few who think that Russia wanted China to dump treasuries in 2008 and blow us up.  Incidentally, if they had done it, it wouldn't have blown us up - it would have blown THEM up.  How many Treasuries did The Fed buy during that time to drive down rates on purpose through QE?  Another trillion would have done nothing.  The threat was always toothless; if you're scared of a shark with no teeth, well, that's on you.  However, had they done it their own debt-stoked bubble would have suffered a crippling dislocation and odds are it would have taken down all of their banks.

The truth is that we should have enforced anti-IP theft and similar laws (yes, stealing is a crime) decades ago.  We should have never granted sovereign immunity to OPEC and similar after the 1970s, but we did, and we also should have revoked that during the 80s and 90s when the mistake recognized, but we did not.  As a result we have a cartel acting in manners flatly illegal in the United States, and yet neither side of the aisle will introduce and pass the legislation to revoke that stupidity and then criminally charge all members of OPEC.  We could do that tomorrow, and damn well should.  Not doing it has enabled a monstrous bubble in the oil patch with fracking and similar, and as it has several times through the previous decades this one will burst too, and when it does it will result in a monstrous problem right here at home, including the bankruptcy of many firms and huge state budget problems centered around oil-producing states.

We have a company, Spamazon, that has been caught repeatedly doing things that are blatantly felonious.  They subsidize losing businesses with profitable ones, which is a felony and has been for more than 100 years.  They actually force sellers to price-fix or punish them, which is a felony and, again, has been for more than 100 years.  These are not civil matters, they're facially criminal ones under 15 USC Chapter 1, and yet not one criminal charge has been laid against any of these firms nor their officers.  Beelzebezos, in my opinion, should be trying to "enjoy" his billions from behind the bars of a federal prison cell where he is serving a 5,000 year sentence since each instance is a separate and distinct offense.  It is my belief that he has created more misery and offshored more jobs, killing people indirectly in the process, than anyone else outside of genocidal wars.  Instead of filing charges, however, our states "compete" for their new headquarters, effectively rewarding this outrageous behavior even as the firms that are currently there are literally starved to death.

You can't really blame Bezos for doing this, however -- he has plenty of patterning to work from and every reason to believe he'll get away with it.  The medical industry is the poster child for this; they collude and price-fix every single day.  We keep arguing over small-ball nonsense games instead of locking up a few executives, which would solve the problem instantly, crash the price of medical care by 80% and...... oops, also toss several million people who have jobs only due to the price fixing as they're actively involved in it out on the street where they'd have to find a way to make a living that doesn't involve screwing people up the poop chute.

Both of the above, plus many other examples, of course, have made the stock market go up.  Everyone loves that but they shouldn't -- in fact, if they were logical the general public would be in a wild-eyed homicidal rage aimed at every single member of Congress, every State Legislature and all of these firms.  You see, you can't possibly outrun the destruction of your standard of living by "investing" unless you're in the top 0.1% of the population; it's simple mathematics, since your surplus that you can invest is not large enough to outrun the cost structures, and what's worse is that unlike the executive who can and does cash out from the bubble you can't -- if you do, you stop the evasion and yet their surplus is so large that cashing out 10% of it is enough to insure they'll never be poor and when the inevitable crash comes the rest goes "poof" but doesn't impact their lifestyle.  If you cash out you still go broke and if you don't when the inevitable crash comes it goes "poof" and you do starve.

Those who argue otherwise are arguing against the manifest body of evidence -- the destroyed small towns, the shuttered factories, the tens of thousands who drug themselves to death via opioids every year, the hundreds of thousands more who drink or eat themselves to death and the tens of thousands who overtly commit suicide.  Rather than take any of this on we scream about 30 people being shot to death by a couple of raving maniacs while the same sort of shooting toll takes place in Chicago every hot, summer weekend without a peep from anyone.  The thundering silence on the latter is racist but nobody cares; "those people" are nearly all black or Hispanic.

China of course contributes mightily to this and while we can act on it we don't.  Trump's "tariffs" are in fact a pinprick.  The $50 pair of shoes has a $10 cost in China, so the actual tariff at 10% is a buck.  You let people at CNBC run nonsense claiming that the tariff will increase the price to $59 which is a knowing, intentional lie.  Not one person challenged them on the air and yet anyone who is doing anything more than reading a teleprompter, programmed by some jackass who has a political agenda to pound or even worse, who might be on the Chinese Communist Party's payroll, would instantly challenge such an assertion.  I have not heard one such challenge in the mainslime "media" which leads me to believe they're all either working for Nike or worse, the Chinese Communist Party.  Pick one; either is equally bad when it comes to the impact on your wallet.

We should embargo China or, even better, declare their trillion and change in Treasuries to be liquidated damages in part for all the IP theft and burn them.  Indeed, the value of said theft and forced transfer is likely in the tens of trillions, much more than any Treasury holdings.  The correct way to deal with trans-national theft like this, assuming you're not willing to have a war over it (which, I remind you, would be nuclear in nature) is to total it up and then seize it from assets you can reach.  In this case that would mean all their Treasuries, anything any of their nationals or their government owns here and a 100% confiscation of all FedWire transactions, taking any and all dollars they attempt to pass or clear anywhere, until it is paid in full.  If they don't like it **** 'em.  What are they going to do about it?  Shoot at us?  They're not that stupid and we know it.  Were we to take actual effective action for all the theft committed their economy would collapse in a week.  Good; it's about damn time the check got served on these jackasses.  We'd survive that; their economy and political system would not.  Said trillions would go a long way toward restoring our debt:GDP balance.  If the WTO doesn't like it **** them too; what are they going to do about it?  Those who wish to engage in fair trade without such shenanigans we should encourage.  Everyone else can go to screw a goat.

Never mind that we must address the economic problem of what do you have on offer as productive employment for those on the left side of the bell curve?  It cannot be "nothing."  This in turn means we must stop deficit spending, stop offshoring by making it uneconomic to do it and eject all illegal invaders, right now.  "Learn to code" sounds good but it's bull**** and everyone knows it; anyone on the left side of the curve, which is half the population, can't.  Further, suppressed interest rates eventually lead to economic stagnation and collapse since it is savings and positive return on same that is the reservoir of capital that forms new businesses and investments.  We've spent two decades destroying that and we had better stop it right damn now because the bill for this comes due by 2024 when our federal deficit will spiral out of control due to health monopolies; we have just a few short years to weather the disruption from doing so or the result is likely to be either economic and fiscal collapse or worse, an internal dirty civil war.  If you think El Paso and Dayton were horrific (they were) how would you like one of those an hour -- because you're taking the risk that this is exactly what you're going to see within the next five years if this crap is not stopped.

Trump, for his part, is cheering on even more capital destruction by our central bank instead of slamming the door on the fingers of any and all central banks and currencies that run rates below federal deficits.  This includes Japan, China, and the EU for openers.  There is utterly no reason for us to tolerate this and following suit as policy is suicidal.

Consider this folks -- Joe Biden (the actual front-runner right now for the DNC nomination) has now sworn to attempt to send police officers to confiscate guns if he wins.  If he wins he will by doing so paint a target on every police officer's back.  Any rational person who believes in the 2nd Amendment and sees such an officer has every reason to believe that said officer is coming to kill him or her should said person actually believe in our Constitution as written.  What is the logical thing you do if you know someone intends to kill you and has the means to do it right here and now in their possession?  In addition Biden is repeating the "fine people" hoax -- a knowing lie -- and accusing Trump of inciting a literal race war.  You know damn well what's coming under such a promise and Biden regime -- if you think a market crash is bad how would you like to live through that mess?  There's a decent chance you're about to find out in roughly 18 months.

How long do you have before we go over the cliff with any or all of this?  The common chestnut has for decades been that we're leaving this mess for our children and grandchildren.  Sorry people, time's up -- that was perhaps an accurate statement in the 1990s, or at 2000, or maybe, even, in 2008.  It no longer is; we're now staring at the reality of what our insanity has brought to us in the present tense; we either act on this as a body politic now or within the next five years, and perhaps, if any of the external factors go sideways on us, that timeline may be greatly accelerated and impact us right here and now.

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User Info The Fed And Congress Blew It in forum [Market-Ticker]
Jal
Posts: 718
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You are describing how to become rich and powerful in the USA
Helluvaengineer
Posts: 94
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Atlanta
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I did a bit of an unwarranted rant about the H1-B visa program yesterday. I'm now getting 20-30 calls & emails a day trying to sell me cheap labor (development, graphics, marketing) from India. A lot of these companies have what amount to fronts in NY, TX, and CA and don't tell you who is doing the work unless you ask.

At first I thought they were simply front-running this horrible legislation that will remove the caps on immigration from India, but then I realized it's more likely that they are losing business right and left. India is probably following China.

Regardless, I think it's criminal that we'll be going into a bad recession and senior developers will be fired right and left and replaced with H1-B labor. I can tell you from experience, once they get to the management level of these big American companies, they hire 95% Indian and take over the entire department.
Aztrader
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Scottsdale, AZ
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Trump is showing how truly stupid he is with his Fed rants. The fed is destroying small business by allowing wall street to over pay for commercial properties and forcing the businesses leasing those properties to pay much higher rent. The end result is that the businesses either leave or close. The same is happening with apartments and that is why we have a homeless problem.
Everything is about money and those that control it. The little people (bottom 90%) don't matter a bit. That is why they are determined to disarm us. It seems more and more that the shootings are all orchestrated by our own government to justify confiscating our guns. Too bad there are a lot of people that feel the same way and have no intention of falling into line.
Tickerguy
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A True American Patriot!
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El Paso shooter allegedly triggered by dem debate promises to give free health Care to illegal invaders...

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Niti
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@Aztrader,

Barneys luxury department store is filing for bankruptcy. The rent on the NYC store doubled to $30 million. You got to sell a good bit to cover that. And they can't.
Aquapura
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The Ticker should be required reading for all those representatives in DC but even if they do read it I doubt they'd lift a finger to do anything differently. It's just status quo for them as the rot & decline happens all around. I'm quite curious what will happen as we lead into 2024. I firmly believe something will happen before then. Unfortunately I think we have all been cursed to live in these interesting times.
Tickerguy
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Notice the very low reference count nobody is reposting this...

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Ocdawg
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WI- Home of undoing good....
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Helluvaengineer- "Regardless, I think it's criminal that we'll be going into a bad recession and senior developers will be fired right and left and replaced with H1-B labor. I can tell you from experience, once they get to the management level of these big American companies, they hire 95% Indian and take over the entire department."

+1 to this... I left DXC Technologies after only 5 months, completely being destroyed by Indians being hired into management, consulting, HD, etc. $25B company formerly HPE, now in shambles (thx Mike Lawrie). Massive layoffs now occurring with people NOT getting final paychecks or expenses paid.... complete cluster**** and direct result of hiring Indian management and Indians with non-existent skill sets or customer support. Worst company I've ever seen or worked for in 27 years in IT.

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Living just north of where gun control works... BAWHAHAHAHA
Emg
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Canada
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The Indian takeover of US IT has to be one of the biggest national security threats to the country (and much of the rest of the world, for that matter). It's quite insane that the government are letting Indians wreck the very technology the economy relies on.
Gable
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Quote:
$25B company formerly HPE, now in shambles


So sad. I went to work with HP in 1986 and retired from there in 2012. In 1986 HP was a great company to work for. Great pay and benefits. As time passed it slowly spun off each division with layoffs.

When I retired my job went to India and the guy that took over my job was paid 1/10th what I was paid.I knew him well since he worked on our team so I had no problem asking him about pay.

Now multiply that by hundreds of thousands across American IT companies...just like old well-paying factory jobs. Not good for younger folks.

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In all of history, no government became more honest, less corrupt, or respected its citizens' rights more as it grew in size. E.L. 2016
Stee_man
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How long before sites like this have trouble finding hosting or DNS providers? Our freedom to speak out is being taken away by media monopolies. I say again, these are our public enemy number one.

When people become despondent and can't even speak out, watch them lash out in all directions.
Stee_man
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"Now multiply that by hundreds of thousands across American IT companies...just like old well-paying factory jobs. Not good for younger folks."

Gable, I've been saying this for decades too. Young people need to learn to code (if they can) and save/invest very aggressively. Act as if your livelihood could end at any time. 5 billion poor people want your job and american companies want to replace you with cheaper labor.

I've seen people hired after reading library books then taking cert exams. If college is unaffordable to you, you can go that route. For those on the left side of the bell curve, apprentice as an electrician or learn to fix cars. Hard to outsource those.
Ckaminski
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Quote:
or expenses paid


There is no way I'm ever travelling on my own dime. I know this is the standard these days, but it's a no go for me. Guess that's why I'm not a travelling employee.

Edit: just another way for the company to float money on your back. :-/

Helluvaengineer
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Atlanta
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Gable, it's evolved. Now they are bringing many of them here to work in the offices. Apparently they bring not only their immediate family but parents, in-laws too. If you drive around in the northern burbs of Atlanta in the middle of the day you'll see the parents walking down the street with nothing to do. They are all over.

The visa holders work for about 40% less than domestic labor from what I can tell, but the issue is I've never heard a story of it working well for management. They see the cost savings, but many of them sit in groups, accomplishing little to nothing, and covering up for it. One of the huge local box retailers I worked for hired 3 of them at consulting rates (prob $150/hr) and let them go after they realized they had accomplished nothing in the first 6 months of employment. This appears to be endemic in their culture. They have a long history of cheating on exams, etc.

Stee_man, for the reasons I mentioned here I can't even advise that people "learn to code". I'm actually looking for a side business that is consumer oriented and non-tech, because at least the immigrants will use my services.

To your point though I just started a course on udemy for MS Azure dev cert and the cost was $10. College isn't worth the cost.
Zappafan
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Atlanta
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Quote:
the economic problem of what do you have on offer as productive employment for those on the left side of the bell curve


Maybe I am getting soft in my old age, but I think the problem is even bigger than that. There are I suspect lots of bright folks who, for personality or other reasons don't want to sit in front of a computer screen all day or be "knowledge workers."


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"Americans like to talk about (or be told about) Democracy but, when put to the test, usually find it to be an inconvenience. We have opted instead for an authoritarian system disguised as a Democracy. We pay through the nose for an enormous gvrnment, let it push us around, and then wonder how all those .. got there"
Helluvaengineer
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At present I'm sitting here milling...er, stuff. I would much rather design and build things with my hands but that pretty much died 40 years ago. Hard to bank roll any kind of biz where you're buying tooling and hope you sell enough product to cover your capex and make a decent living before they change the rules & regs. Just not a lot of money in anything anymore outside of finance - correct me if I'm being defeatist here.
1crzydmnd
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@Zappa - I'm one of those guys who would love to get out of IT. Pay is good, but if I didn't have kids I'd be gone.

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BFYTW
Tickerguy
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"Learn to code" doesn't work when your competitors are Indian H1bs - or worse, IN India making $5/hr!

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Helluvaengineer
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Atlanta
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The market rate I get quoted all the time is $15-20, so yes I'm sure several layers take a cut and you're probably right. The thing is I can't find any evidence of teams of them doing much more than setting up a WordPress or Shopify site. Maybe that's all the world needs.
Tickerguy
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Btw thats half OR LESS the going rate in the very early 90s!

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1crzydmnd
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LOL...and the quality is primo! /sarc

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BFYTW
Captainkidd
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Houston, Texas
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Quote:
Btw thats half OR LESS the going rate in the very early 90s!


It's the same in many industries.
I'm a Manufacturing Engineer, and trades have not advanced in income either.
Machinists and Mechanics that were making $16-$25 / hour in the 90's are lucky to get $14-$15 these days.
Welders are still doing OK, but even that's been flatlined the last 4 or 5 years.

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A lawyer with a briefcase can steal more than a thousand men with guns. --Mario Puzo

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. -- Henry Ford
Lobo
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If you are a big customer, you might get their A team to write your code. If you are a small customer, you are going to be paying their second string to learn to code and half the stuff you get will be from free_code_and_kludges.com. (Back doors into your systems for no extra charge!)

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Village Idiot
Maynard
Posts: 1308
Incept: 2007-11-27

gig harbor wa
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Thats insane. I charge $35/hr for fence building and general welding/fabrication and thats the friends price. Generally they are jumping at my quotes that are half of what they got prior.
Programming is not the way to go now (not to offend I know there are a ton here). Learn a trade and to build/fix stuff.
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