In this presentation we discuss:
- What happened in 2007-2008?
- What’s happening today that is setting the stage for a repeat?
- How will “non-performing loans” effect China, the EU, Japan, the US and global markets?
- Why would a banking crisis today, be far more difficult than in 2008?
- How does this effect you and what can you do about it?
The purpose of the video presentation above is to aid you in identifying signs of economic instability and to help you come up with a personalized plan of action to protect yourself and your family.
Every Tuesday night at 7:00 P.M. EST, I will be providing a weekly update on international economics, global markets and political events. Times are changing and events are unfolding in unprecedented ways that have experts scratching their heads at how it will all play out.
My hope is that this show will provide insight, discernment and greater understanding into the political and economic landscape, so we can be men and women who understand the times and know what to do. I ask that you please pray for this effort and invite you to listen to the broadcast.
Here is the link to the next broadcast: https://www.youtube.com/watch?v=OhevvLYJoK4
Sept. 3rd Episode: https://www.youtube.com/watch?v=OhevvLYJoK4&feature=em-lbrm
Political Upheaval & New Economics Create Uncertainty
- World markets are established far more on perception than they are on reality
- New economics and unprecedented events are creating uncertainty
- The War Between Globalism & Nationalism is dividing the EU and other nations
- Elections are weakening the control of mainstream parties and global elites
- Central banks have switched from raising rates in 2018 to lowering them in 2019
- World Markets can’t be sure of anything, but they continue to rise along with their debt levels.
Are you prepared for what’s ahead? Get into position every Tuesday!
7:00 PM EST – 6:00 PM CST – 5:00 PM MST – 4:00 PM PST
Much has happened in the last several weeks. The IMF downgraded world growth for the second time this year. Boris Johnson replaced Theresa May as the UK Prime Minister and in his first speech said, “There are no ifs ands or buts, the UK will exit the European Union with or without an agreement by Oct 31, 2019.” He also said he would not meet with EU officials unless they give him a better deal than they gave former PM May. The G-7 Nations are meeting and all eyes and ears are on President Trump to see what he will do next in the trade wars. The EU economy is on shaky ground with a nearly zero growth rate, and they fear they will be the next trade war victims, if they don’t get rid of their trade barriers and open their markets to US trade. Gold has gone up almost $300 an ounce for the first time in five years and crossed the $1500 threshold, which is a 25% increase for 2019. Central banks are lowering interest rates, while political unrest continues to rise.
Europe’s Shaky Union Faces Trump’s G-7 Stress Test (8.20.19) Bloomberg
IMF Downgrades World Growth, Warns of Precarious 2020 (7.23.19) Yahoo News
Currency & Crypto-Currency
JP Morgan wrote, “China, the economies of Southeast Asia, including India, have strong secular tailwinds driven by younger demographics and proliferating technological know-how. Specifically, the Asian economic zone—from the Arabian Peninsula and Turkey in the West to Japan and New Zealand in the East and from Russia in the North and Australia in the South—now represents 50% of global GDP and two-thirds of global economic growth. Of the estimated $30 trillion in middle-class consumption growth between 2015 and 2030, only $1 trillion is expected to come from today’s Western economies. As this region grows, the share of non-USD transactions will inevitably increase which will likely erode the dollar’s “reserveness”, even if the dollar isn’t replaced as the dominant international currency. In other words, in the coming decades we think the world economy will transition from U.S. and USD dominance toward a system where Asia wields greater power. In currency space, this means the USD will likely lose value compared to a basket of other currencies, including precious commodities like gold.
New Zealand passed legislation allowing for payments to be made with crypto-currency. Many nations have expressed both concern and outright disagreement with Facebook’s plan to release its own crypto called Libra, including the Fed Chairman Jerome Powell. Bloomberg reported: “The People’s Bank of China is “close” to issuing its own cryptocurrency, according to a senior official. Mu repeated the PBOC’s intention that the digital currency would replace cash in circulation, rather than M2, which would generate credit and impact monetary policy. The digital currency would also support the yuan’s circulation and internationalization, he said. (China’s PBOC Considers Plan to Replace Cash and Sideline Bitcoin). The remarks signal the PBOC is inching toward formally introducing a digital currency of its own after five years of research. Facebook Inc.’s push to create cryptocurrency Libra has caused concerns among global central banks, including the PBOC, which said the digital asset must be put under central bank oversight to prevent potential foreign exchange risks and protect the authority of monetary policy.” The Swedes, on the other hand, are getting chips in their hands which allow them to buy and sell without cash credit cards or crypto- currency.
China’s PBOC Says Its Own Cryptocurrency Is Close to Release (8.11.19) Bloomberg
New Zealand Officially Legalizes Paying Employees With Crypto-Currency (Aug 2019)
Swedes are Getting Implants in Their Hands to Replace Cash, Credit Cards (7.14.19) https://nypost.com/2019/07/14/swedish-people-are-getting-chip-implants-to-replace-cash-credit-cards/
Powell Says Libra Cannot go Forward without Addressing Serious Concerns (7.10.19) Yahoo Finance https://finance.yahoo.com/news/powell-libra-cannot-go-forward-without-addressing-serious-concerns-212100567.html
Is the Dollar’s Exorbitant Privilege Coming to an End (7.10.19)
The Gold Rush is On
Generally, if gold is going up, a company whose business is directly or indirectly related to gold also goes up. However, if that company is not wisely managed, makes mistakes in its business operations and/or one of its managers or employees commits an illegality, it could go down in a rising gold market. Many experts believe there is far more paper gold than there is physical gold, and in a crisis, if people want to exchange their paper gold for real gold, they will come up short. When the stock market begins to falter, physical gold, gold company stocks and mutual funds with gold and precious metals are likely to go up. However, if the gold and precious metals mutual fund has a big exposure to 401k plans, they could drop right along with the stock market, because, when people panic, they don’t carefully scrutinizing their investment holdings, they tend to bail out of everything they have, driving down the value of every company in their mutual fund. This does not happen with physical gold in a crisis, it usually goes up when the stock market goes down. Bullion Star wrote, “The ECB, Swiss National Bank, and Swedish Riksbank have all issued coordinated press releases dated 26th July, confirming that there will not be a fifth central bank gold agreement when the current agreement expires in September 2019.” This indicates that central banks are about to start buying gold.
By Not Renewing the CBGA, Central Banks in Europe Look Ready to Buy Gold (7.26.19) https://www.bullionstar.com/blogs/ronan-manly/by-not-renewing-the-cbga-central-banks-in-europe-look-ready-to-buy-gold/
Debt & Recession
The debt of most nations is rising, but there are some that have refused the addictive spend now, deal with the consequences later attitude of most nations and central banks. The WSJ wrote: “The [U.S.] $22 trillion of debt is the most owed by any country on Earth. However, when compared with the size of the U.S. economy—also the world’s largest—the public debt doesn’t rank in the top 25, according to the Central Intelligence Agency’s World Factbook. Japan and Greece have the highest debt-to-GDP ratios, at 236% and 182%, respectively. The U.S. debt-to-GDP ratio is currently 104%. The US economy is doing well, but the national debt is also rising at an alarming rate. “Borrowing by the federal government is set to top $1 trillion for the second year in a row as higher spending outpaces revenue growth and concern about budget deficits wanes in Washington and on Wall Street” – WSJ.
Home Depot has joined many other companies in lowering their growth expectations, and the number of RV purchases has dropped which many say is a precursor to recession. According to the 2019 Annual Report of The Board of Trustees of The Federal Old-Age & Survivors Insurance & Federal Disability Insurance Trust Funds, Social Security & Medicare trust funds will be fully depleted in 15 years. The report estimates, Social Security and Medicare combined are underfunded by over $100 Trillion. If things don’t change and corrective actions are not taken, the US dollar will eventually devalue and the US government will go bankrupt. Congress passed a deal to defuse the debt-limit issue for two years and push the debate past the 2020 presidential election. That said, the Trump Administration will do everything they can to keep the US economy afloat until after the 2020 election. If re-elected, Trump will likely begin to deal with these problems and do the very unpopular things, like raise the age of Social Security from 62 & 65 to 67 & 70, cut all kinds of government programs and prepare the country for what’s coming.
The National Debt, Explained (8.11.19) https://www.bloomberg.com/news/videos/2019-08-11/the-national-debt-explained-video
The U.S. National Debt, Visualized (8.3.19) WSJ https://www.wsj.com/articles/the-national-debt-visualized-11564830209
Federal Borrowing Soars as Deficit Fear Fades (7.29.19) WSJ
White House & Congress Reach Deal on Spending, Debt Ceiling (7.22.19) WSJ https://www.wsj.com/articles/white-house-and-congress-near-agreement-on-spending-debt-ceiling-11563799484?mod=hp_lead_pos2
Switzerland Has a Budget Surplus. Here’s How, and What the US Could Learn (7.8.19) https://www.dailysignal.com/2019/07/08/switzerland-has-a-budget-surplus-heres-how-and-what-the-us-could-learn/
Ex-RBI Chief Flags Risks for India’s Overseas Borrowing Plan (7.13.19) Bloomberg https://www.bloomberg.com/news/articles/2019-07-13/ex-rbi-chief-rajan-flags-risks-for-india-s-overseas-debt-plan
The 2019 Annual Report of The Board of Trustees of The Federal Old-Age & Survivors Insurance & Federal Disability Insurance Trust Funds, Social Security & Medicare https://www.ssa.gov/OACT/TR/2019/tr2019.pdf
The US, Mexico, Thailand and other nations are lowering interest rates. The EU is preparing a new expansive stimulus program which means more money printing, bond buying and lower interest rates, to be released in its September meeting. Unlike the rest of the nations that raised their interest rates in 2017 and 2018, the EU has not raised interest rates since the 2008 crisis, and to make matters worse they are already at -.4% and are reportedly headed to -.6%. Negative interest rates are a fiscal fantasy that shouldn’t exist. They only serve to provide the EU with false legitimacy and solvency, when, in reality, they are insolvent and bankrupt.
ECB Primes Big Bazooka for September (8.15.19) WSJ
By Not Renewing the CBGA, Central Banks in Europe Look Ready to Buy Gold (7.26.19) https://www.bullionstar.com/blogs/ronan-manly/by-not-renewing-the-cbga-central-banks-in-europe-look-ready-to-buy-gold/
World Economy & Global Markets
German and EU economies are on the brink of recession, but other economies like the US, Australia and Switzerland are doing well. Australia is set to triple its exports of grain-fed beef to China by 2030 to satisfy the nation’s growing appetite for the highly marbled meat, according to Rabobank Group. CNN reported that “China’s economic growth has slumped to its lowest level in nearly three decades as the world’s second largest economy feels the effects of a prolonged trade war with the United States.” The trade wars continue, as President Trump continues to attempt to deal with the trade deficit and open other countries to US markets. The US is also investigating the Big Tech companies to see if they have acted unfairly, broken anti-trust laws and inhibited competition.
China’s Appetite for Australia’s Marbled Beef Is Growing (8.20.19)
States to Launch Antitrust Probe of Big Tech Firms (8.19.19) WSJ
China’s Economic Growth Slumps to Lowest in 27 Years as the Trade War Hits (7.15.19) CNN https://www.cnn.com/2019/07/15/economy/china-gdp-growth/index.html
Hong Kong protests continue; everyone is watching to see what China will do and President Trump is warning China to handle things wisely. Italy’s Prime Minister will be resigning, ending the coalition government. The EU bureaucrats may be rejoicing, but they could end up with an even more anti-EU replacement if they are not careful. Tensions between India & Pakistan continue to rise and these two nuclear powers are being urged by world leaders to act with restraint. Many believe that one of Russia’s nuclear missile depots exploded, as four monitoring stations went silent after the blast; as with most things that happen internally in Russia, all questions are met with no response. China’s Huawei has been found to not only be spying on governments and countries which use it, but also to be helping Africa and other nations spy on one another. It looks as if Canadian Prime Minister Trudeau may have damaged his re-election chances, having broken Canadian conflict of interest laws. Both India and China are taking away freedoms and bearing down on their Islamic populations, with China literally placing entire Islamic town and village populations in internment facilities.
Italian Prime Minister to Resign, Declaring End of Coalition (8.20.19) WSJ
Italian Politics Meet European Rigidity (8.21.19) Bloomberg
Italy Stumbles Into Its Next Absurd Crisis (8.21.19) Bloomberg
Trump Urges Restraint by India and Pakistan in Kashmir Conflict (8.19.19) WSJ
Pakistan Extends Powerful Army Chief’s Term (8.19.19) WSJ https://www.wsj.com/articles/pakistan-extends-powerful-army-chiefs-term-11566239708
More Russian Nuclear Monitoring Stations Went Silent Days After Blast, Official Says (8.19.19) WSJ | https://www.wsj.com/articles/more-russian-nuclear-monitoring-stations-went-silent-days-after-blast-test-ban-officials-says-11566232680
Canada’s Trudeau Found to Have Broken Conflict-of-Interest Law (8.15.19) WSJ
Huawei Technicians Helped African Governments Spy (8.14.19) WSJ
India’s Modi Defends Decision to Clamp Down on Kashmir (8.8.19)
After Detentions, China Razes Muslim Communities to Build Loyal City (3.20.19) WSJ
The US economy and stock markets continue to perform well, unemployment is at record lows and wages are rising. That is not the case for the EU, whose economy and stock market are low and falling and whose unemployment is rising. The UK’s economy is preforming far better than the EU as a whole, but is hoping for some positive changes and a more decisive leader as Prime Minister May exits and Brexit architect Boris Johnston, her likely successor, takes the helm. The G-20 nations met and, for the first time, discussed global risk of aging populations and also took another step to towards enacting the first global tax.
U.S. Adds 224,000 Jobs in June, Exceeding Expectations (7.5.19) WSJ https://www.wsj.com/livecoverage/june-2019-jobs-report-analysis
U.K.’s Boris Johnson Strengthens Lead in Conservative Party Race (6.18.19) WSJ
G20 Digital Tax Takes Step Closer (5.31.19) https://phys.org/news/2019-05-g20-digital-tax-closer.html
In Historic First, G20 Weighs Ageing as Global Risk (6.9.19) https://www.france24.com/en/20190609-historic-first-g20-weighs-ageing-global-risk
Japan Has More People Over the Age of 80 Than Under the Age of 10 (6.20.19) SMC https://www.sovereignman.com/trends/yikes-japan-has-more-people-over-the-age-of-80-than-under-the-age-of-10-25304/?utm_medium=email&utm_source=sm_notes&utm_campaign=notes&utm_content=20190620_people_over_80
Central Banks & Crypto Currency
There is much action going on in the central banks of the world, with interest rates going up and down, chairmen being replaced and governments intervening and attempting to control them. Turkey’s President Erdogan just replaced his chairman for going against his wishes. Longtime Japanese Chairman Kuroda, once the rock star, is now being criticized and falling out of favor. Longtime ECB Chairman Mario Draghi will be retiring in fall and it looks like the current Director of the IMF, Christine Lagarde, will replace him. Last month, Mr. Draghi indicated a possible rate cut from the already negative interest rate of -.41 while most of the rest of the central banks of the world at -.1 have raised interest rates in 2017 and 2018 (save Japan). The US Federal Reserve has reversed course from their December meeting in 2018, and are now discussing lowering rates in the second half of 2019, under pressure from the Trump Administration. Many central banks in the Asia-Pacific region, including New Zealand and Australia, have already reduced interest rates over the last month.
Erdogan Dismisses Governor of Turkey’s Central Bank (7.6.19) WSJ
IMF’s Christine Lagarde Wins Backing to Run European Central Bank (7.2.19) WSJ
Fed Holds Rates Steady, Hints at a Possible Cut (6.19.19) WSJ
How Japan Turned Against Its Bazooka Wielding Central Bank Chief (6.17.19) https://www.reuters.com/investigates/special-report/boj-kuroda-economy/
ECB Signals Possible Rate Cut Prompting Trump Tweets (6.18.19) WSJ
How to Make Negative Interest Rates Work (2.6.19)
Banks & Crypto-Currency
In the second quarter, crypto-currencies both gained and lost ground. Bitcoin fluctuated, but despite volatility, central banks, commercial banks and governments/government organizations are moving toward digital currency. Deutsche Bank, the EU’s largest bank, has been struggling; its stock has been falling and it has had a difficult time securing financing to keep going. If Deutsche Bank were to default, it would severely cripple the EU banking system and create problems around the world. In his June 2019 article “Rejoice the End of Banking is Nigh,” Simon Black predicts the conventional banking system that has dominated the world for hundreds of years is drawing to a close as digital currencies gain prominence.
The IMF and World Bank are working together to establish a private blockchain network to create a Distributed Ledger Technology (DLT refers to the technological infrastructure and protocols that allows simultaneous access, validation and record updating in an immutable manner across a network spread across multiple entities or locations. – Investor Encyclopedia). Russia is looking to create its own crypto-currency and back it by gold to facilitate international settlements. Elvira Nabiullina, governor of the Bank of Russia, said that her institution is set to review a proposal for the development of the cryptocurrency. Fox News reported that, “Bank of America CEO Brian Moynihan spoke this week about embracing digital payment transactions while moving toward a cashless society. He said Bank of America “will continue to move” toward digital banking transactions. “We want a cashless society…” It also appears Facebook will be dipping its hands in another pot, as they announced they will be coming out with their own crypto called “Libra.” US Rep Maxine Waters fired back that Facebook should not be competing with the US dollar.
Bank of America CEO Says Company Wants a Cashless Society (6.28.19) Fox News
Rep. Maxine Waters Says US Can’t Let Facebook’s Libra Compete With the Dollar (6.19.19) https://www.coindesk.com/rep-maxine-waters-says-us-cant-let-facebooks-libra-compete-with-the-dollar
Rejoice the End of Banking is Nigh (6.19.19) SMC https://www.sovereignman.com/trends/rejoice-the-end-of-banking-is-nigh-25300/?utm_medium=email&utm_source=sm_notes&utm_campaign=notes&utm_content=20190619_crypto
Why Everyone Should Be Following Deutsche Bank (6.17.19)
Facebook’s New Cryptocurrency, Libra, Gets Big Backers (6.13.19) WSJ
The World Bank & IMF Floats a Joint Private Blockchain Network & Cryptocurrency (4.16.19) https://blockonomi.com/world-bank-imf-private-blockchain-network-cryptocurrency/
Russian Central Bank to Consider Gold-Backed Cryptocurrency (5.23.19)
World Economy, Debt, Recession
Many mainstream economists and commentators are starting to concede that a recession is likely in the next year or two, but most of them downplay its likely severity. The Zero Hedge view is, however, that “virtually everyone is underestimating the tremendous economic risks that have built up globally during the past decade of extremely stimulative monetary policies.” They believe everything is lining up much like 2008, but worse.
A CNBC broadcast reported that, “DoubleLine CEO Jeffrey Gundlach is betting on gold. ‘I am certainly long gold,’ Gundlach said in an investor webcast Thursday. He added his trade is based on the expectation that the dollar will finish the year lower. When the dollar weakens, gold tends to appreciate as it becomes cheaper for investors holding other currencies. Gold prices hit a three-month high this month as investors flee to the safe-haven bullion amid escalated trade tensions. Meanwhile the dollar fell to a 11-week low on Wednesday as the market increasingly bet on a rate cut in the coming months.”
Bond King Jeffrey Gundlach Bets on Gold, Sees Rising Recession Chances, Dollar Decline (6.14.19) CNBC https://www.cnbc.com/2019/06/13/bond-king-jeffrey-gundlach-i-am-certainly-long-gold.html
Why You Should Not Underestimate the Severity of the Coming Recession (6.9.19) Zero Hedge
The intensity of ideological conflict is on the rise globally. The battle between socialism and capitalism, globalism and nationalism and liberalism and conservativism is being fought in many nations, especially the US. Simon Black wrote, “the Bolsheviks are already here.” The battle between the globalists and nationalists seems to be expanding and show no signs of waning. The WSJ reported: “New parties are finding success by addressing the concerns of voters who feel neglected and disdained by liberal elites. Mr. Salvini, the de facto head of Europe’s growing national populist family. “Marine Le Pen is the biggest party in France. Nigel Farage has the biggest party in Great Britain. It is a sign of a Europe that has changed.” Many people simply want more of a say over the decisions that affect their nations and their daily lives. A second key current is destruction: widespread fears that national identities, cultures and ways of life are slipping away. When eight in 10 Trump voters support building a wall on the southern border, or three in four Brexit voters, worried about how immigration is changing Britain, voted to “take back control,” they knew what they were supporting.”
It is doubtful that anything is going to calm down on the social-political front anytime in the near future. Iran declared they are breaking the agreement they made with the rest of the World on enriched uranium, which came as no surprise to those who had the foresight to oppose the deal from the beginning, but the sanctions are taking a toll on Iran’s economy. Greece just replaced their socialist Prime Minister and majority party, with a Conservative one, and the UK is about to vote on a new Prime Minister to replace Theresa May. The WSJ reported, “In the battle for influence within Europe, Angela Merkel is ceding ground to France’s Emmanuel Macron, who has emerged as an increasingly potent rival to the German chancellor. Ms. Merkel bowed to Mr. Macron this week after marathon talks to carve up the European Union’s top leadership positions in the clearest display to date of the German chancellor’s fading clout.”
The EU continues to fight with its own and is deciding whether it will take disciplinary action against Italy for not meeting the budget targets Brussel’s set for them. Continued chastisement from the EU may drive more member nations to follow the UK’s lead to exit the EU. There were also many demonstrations in Hong Kong to retain their freedom from Beijing. The US continued the trade war in its fight against the Chinese telecommunications company Huawei, a company many believe to be a spying tool of the Chinese government.
China is also being condemned by the rest of the world because of their crackdown on Islam and other religious groups. In a Fox News interview, Lt. Col Maginnis warned of the plans by China to dominate the world militarily and economically by the middle of this century, not to mention Russian intentions. President Trump and President Lopez of Mexico also struck a deal to stop the flow of illegal immigrants into the US.
Conservatives Regain Control in Greece (7.7.19) WSJ
Iran Plans New Breach of Limits of Nuclear Agreement (7.7.19) WSJ
Iranians Say Their Bones Breaking Under US Sanctions (6.24.19) AP https://www.apnews.com/9390faa746294f628b93beea57ba1e07?__source=newsletter%7Cmorningsquawk
EU Compromise Exposes Merkel’s Waning Influence (7.4.19) WSJ
EU Drills Into Italy’s 2020 Deficit Before Decision on Sanctions (6.25.19) Bloomberg
The Bolsheviks Aren’t Coming, They’re Already Here (7.1.19) SMC https://www.sovereignman.com/trends/the-bolsheviks-arent-coming-theyre-already-here-25335/?utm_medium=email&utm_source=sm_notes&utm_campaign=notes&utm_content=20190701_socialism
Europe’s Populists Are Here to Stay (6.15.19) WSJ https://www.wsj.com/articles/europes-populists-are-here-to-stay-11560524237
Putin Stands By China, Criticizes U.S., In Trade, Huawei Disputes (6.7.19) Reuters
Hong Kong Upheaval Puts Beijing in a Bind (6.16.19) WSJ
Lt. Col. Maginnis Warns of Xi’s China Dream of World Dominance by Mid Century (6.12.19) Fox News https://www.foxnews.com/world/lt-col-maginnis-xi-jinping-china-world-dominance
Crowds Turn Out to Cheer Mexico’s President & the Deal He Struck With Trump (6.919) WSJ
Former Goldman CEO Lloyd Blankfein Trump’s Tariffs Aren’t a Bad Idea (6.20.19) CNBC
As Trump Demands Major Concessions, Beijing Wants the World to Think That the US Will Blink First (6.14.19) CNBC https://www.cnbc.com/2019/06/14/us-china-trade-beijing-wants-world-to-think-washington-will-back-down.html
Large European Routing Leak Sends Traffic Through China Telecom (6.6.19) https://blogs.oracle.com/internetintelligence/large-european-routing-leak-sends-traffic-through-china-telecom
Pentagon working to reduce US reliance on Chinese rare earth minerals after trade war threat (5.29.19) CNBC https://www.cnbc.com/2019/05/29/pentagon-working-to-reduce-us-reliance-on-chinese-rare-earth-minerals-after-trade-war-threat.html?__source=newsletter%257Cmorningsquawk
Costco is looking at alternative sourcing and price hikes as tariffs loom (5.31.19) CNBC https://www.cnbc.com/2019/05/31/costco-is-looking-at-alternative-sourcing-and-price-hikes-as-tariffs-loom.html?__source=newsletter%257Cmorningsquawk