Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Central Bank

Candidates Silent as Government Spending Jumps, Deficit Increases

This article appeared online at TheNewAmerican.com on Monday, October 17, 2016:  

On Friday, the Treasury Department published the final revenue and spending numbers for the federal government for Fiscal Year 2016, which ended on September 30. According to Treasury’s report, spending increased significantly (by nearly five percent) over the previous year, to more than $3.8 trillion, while revenues remained essentially flat from the year before, at $3.25 trillion. That left a shortfall of approximately $600 billion, forcing the government to borrow 15 cents of every dollar it spent last year. And the two presidential candidates have remained disturbingly silent about the issue.

Said Robert Bixby, the executive director of the Concord Coalition, a non-partisan group that favors reducing the deficit,

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Hanjin Bankruptcy: a Harbinger for the Global Economy?

This article appeared online at TheNewAmerican.com on Thursday, September 8, 2016:  

English: A Delmas operated Container ship NICO...

South Korea’s Hanjin Shipping was the world’s seventh-largest container shipping company, moving (until last week) 100 million tons of cargo on its 200 cargo ships from manufacturers to retailers across the globe. Last week, following years of losses as the global economy has slowed, Hanjin declared bankruptcy. That move stranded 90 of those ships as off-loading companies refused to unload them over concerns that they wouldn’t be paid.

Even an offer of $90 million from what’s left of Hanjin (including $36 million from the personal assets of its chairman) fell far short of the necessary $543 million estimated to unload all of its ships that are now circling ports around the world.

Concerns are mounting that

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Michel Temer, Brazil’s New President, Faces Massive Challenges

This article appeared online at TheNewAmerican.com on Thursday, September 1, 2016:  

English: The newly elected president of the Ch...

Brazil’s new president, Michel Temer

Just after being sworn in as Brazil’s new president, and just before jetting off to the G-20 meeting in China to hobnob with the global elites, Michel Temer took time on Wednesday to make a promise to Brazilians: “From today on, the expectations are much higher for the [new] government. I hope that in these two years and four months [when his term ends in 2018], we do what we have declared: put Brazil back on track.”

That’s an expression more of hope than reality: Little is likely to change except the name of Brazil’s president. Temer faces challenges that would stagger Godzilla:

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Brazil’s Interim President Says “Trust Me,” Installs Corrupt Bureaucrats

This article appeared online at TheNewAmerican.com on Monday, May 16, 2016:  

Upon taking over Brazil’s presidency from disgraced former President Dilma Rousseff on Thursday, interim president Michel Temer asked his skeptical citizenry to “trust” him, saying that his new administration would be Brazil’s “salvation”:

Trust me. Trust the values of our people and our ability to recuperate the economy…. It is essential to rebuild the credibility of the country abroad to attract new investments and get the economy growing again…. It is urgent to restore peace and unite Brazil. We must form a government that will save the nation…. It’s urgent to seek the unity of Brazil. We urgently need a government of national salivation.

Even if he truly intended to do any of that, the challenges he faces almost defy description.

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Brazil’s Senate Votes to Try President Rousseff on Corruption Charges

This article appeared online at TheNewAmerican.com on Thursday, May 12, 2016:  

Following a marathon 20-hour session that ended early Thursday morning, Brazil’s Senate voted 55-22 to try President Dilma Rousseff on charges that she manipulated the government’s books to make its debts appear more manageable and to help her get reelected in 2014.

Some are calling the vote a temper tantrum, reflecting the deep anger and frustration by Brazilians, expressed by recent riots that were suppressed with excessive force by the government. The economy is in the worst economic shape since the 1930s, with little hope for improvement. The Petrobras oil scandal, dubbed Operation Carwash, continues to expose layer after layer of corruption, reaching all the way to the top of Rousseff’s administration, including her vice president, Michel Temer.

Temer finds himself in a unique position.

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Nothing is Likely to Change in Brazil

This article was published by The McAlvany Intelligence Advisor on Wednesday, April 20, 2016: 

One of Warren Buffett’s favorite expressions is “when the tide goes out, everyone will see who’s been swimming naked.”  In Brazil the tide went out at the start of the Great Recession and now the whole world can see who was swimming naked.

When President Lula was elected in 2002 the commodity boom was underway, and Brazil was enjoying the ride. Its major exports are soybeans, sugar, and iron ore, and under Lula Brazil’s GDP was running 10 percent a year. Lula implemented major expansions of the welfare state, including putting in place such generous pension plans that state workers could retire at age 54 for men and at age 52 for women at 90 percent of their final pay. The average Brazilian’s household income rose, and statists worldwide pointed to Brazil’s success story, naming it as one of the BRIC countries that would soon overtake the developed nations of the world, and doing it while expanding government spending.

But when Dilma Rousseff took over in 2011 the Great Recession was revealing the true nature of spending far beyond the ability of the economy to sustain it. In 2014 the government’s finances were in such dreadful shape that

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Credit Rating Agencies Finally Reacting to China’s Economic Implosion

This article was published by The McAlvany Intelligence Advisor on Friday, April 12, 2016:  

English: World countries by Standard & Poor's ...

English: World countries by Standard & Poor’s Foreign Rating. Legend: Green – AAA Turquoise – AA Lighter blue – A Darker blue – BBB Purple – BB Red – B : Grey – not rated, (Photo credit: Wikipedia)

First it was Fitch. Late last year it downgraded China’s sovereign debt by two notches, from AAA to A, which, according to its own definition, signals debt that is “more vulnerable to adverse business or economic conditions than is the case for [the two] higher ratings.”

In early March, Moody’s Investors Service got on board, knocking China’s debt rating down by one notch, followed by Standard and Poor’s on Thursday, which kept China’s rating at AA but with a negative outlook.

Translation: something’s coming.

Said S&P:

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Standard & Poor’s Downgrades Chinese Sovereign Debt

This article appeared online at TheNewAmerican.com on Thursday, March 31, 2016: 

Cover of "Coming Collapse of China"

The last of the three credit rating agencies to recognize China’s ongoing economic implosion, Standard & Poor’s, downgraded its rating on Chinese debt modestly on Thursday. The agency maintained its AA rating (one notch below its highest) but changed its outlook to “negative,” meaning another downgrade is possible within the next 12 months. It said:

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Another Keynesian Failure: Brazil

This article was published by The McAlvany Intelligence Advisor on Monday, March 28, 2016:  

John Maynard Keynes Русский: Джон Мейнард Кейн...

John Maynard Keynes

Boiled down to its most crude elements, Keynesianism, according to Antony Mueller at the Mises Institute, is “the economic policy doctrine of growth by spending.” Since 2003, when the current political party in Brazil, first headed up by Lula and now by Dilma Rousseff, came to power, it installed it in spades. For a while it seemed to work: demand for Brazil’s raw materials: oil, iron ore, and agricultural products grew as China (also pursuing the “growth by spending” mantra) also grew.

But the boom, which at one point included Brazil as one of the BRIC (Russia, India, and China) nations that would soon overtake the developed world, went bust.

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It’s a Short-Covering Rally in Oil and Oil Stocks

This article was published by The McAlvany Intelligence Advisor on Wednesday, March 9, 2016:  

With crude oil up more than 30 percent over the last week, and companies like SeaDrill and Chesapeake Energy up 125 percent and 250 percent, respectively, over the last five days, short covering has persuaded some that the bottom is in. Investors, especially short sellers, in the oil patch need lots of risk capital, a high risk tolerance, and a short memory.

Goldman Sachs called it a

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China’s Economy Continues to Unravel as Gov’t Lays Off 5M Workers

This article appeared online at TheNewAmerican.com on Friday, March 4, 2016:  

Cover of "Coming Collapse of China"

Reuters reported Thursday in an exclusive report that China’s government is planning to lay off between five and six million workers in its basic industries over the next couple of years. Wrote Reuters, “China aims to cut capacity gluts in as many as seven sectors, including cement, glassmaking … and shipbuilding.” It will begin layoffs in its coal and steel-making industries.

These are the industries that fueled China’s rise from a third-world nation to first-world status. And those industries were fueled with digital money that built empty cities, factories, and airports, all under the now-provably false assumption that with enough of that money China could vault itself into the first tier of advanced industrial nations.

For a while it appeared that the assumption was valid.

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Venezuelan President Maduro Raises Gas Prices 6,000 percent, Devalues Bolivar

This article appeared online at TheNewAmerican.com on Thursday, February 18, 2016:  

During a five-hour TV speech on Wednesday that turned into a harangue against capitalism and President Obama, Venezuelan President Nicolas Maduro exercised the powers granted to him in January to deal with the country’s economic crisis. He did what most socialists do when their policies don’t work:

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Is the U.S. Heading Into Another Recession?

This article appeared online at TheNewAmerican.com on Monday, February 15, 2016:  

Buried in Federal Reserve Chairman Janet Yellen’s comments to senators last Thursday were three revealing statements.

First: “There is always some chance of recession in any year. But the evidence [at the moment] suggests that expansions don’t die of old age.” Translation: Recessions result from inherent weaknesses in the system.

Second, she admitted that

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Venezuela Could See Hyperinflation, Economic Collapse

This article appeared online at TheNewAmerican.com on Thursday, February 4, 2016:  

In December 2014 citizens of Venezuela paid 2,632 bolivars for a pound of meat. A year later they paid 14,138 bolivars, a 537-percent increase. They paid 3,066 bolivars for a supply of fruits and vegetables a year ago; last month they paid 12,118 bolivars, a 395-percent increase. For milk and cheese, prices increased 371 percent, from 2,084 bolivars to 7,735.

For fish they paid 1,408 bolivars a year ago; a year later the price of fish jumped to 5,940, an increase of 422 percent. Fats and oils: 335 bolivars to 1,340, an increase of 400 percent. Non-alcoholic beverages were 409 bolivars a year ago; today, 1,123 bolivars, a 275-percent increase.

A year from now, Venezuelans will look back fondly

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Congress Votes to Raid Fed’s Slush Fund to Pay for Highways

This article appeared online at TheNewAmerican.com on Monday, November 23, 2015:  

In its never-ending quest to spend money it doesn’t have, but not wanting to raise taxes, especially during the current election cycle, on Thursday, November 5 Congress passed a $325-billion, six-year transportation bill that is to be financed by selling off some of the country’s strategic petroleum reserves and raiding the Federal Reserve.

In its editorial complaint about the bill, the Washington Post said

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Fourth Republican Debate: Feisty, Hilarious, Little Change in Polls

This article appeared online at TheNewAmerican.com on Wednesday, November 11, 2015:  

A more orderly and respectful atmosphere surrounded the fourth Republican debate on Tuesday night, a sharp contrast to last month’s debate where the moderators became the issue. That didn’t mean there were no fireworks, or disagreements, just that the tone was more serious, as the candidates tried to shore up their positions and their poll numbers as they approached the final debate in December.

The topics included questions on

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Will Glencore’s Financial Troubles Trigger an International Collapse?

This article appeared online at TheNewAmerican.com on Wednesday, September 30, 2015:  

Investors in the stock of Glencore, the giant commodities mining and trading company founded by Marc Rich (disgraced friend of Bill Clinton), lost almost a third of their portfolios’ value on Monday, only to see the company’s stock price rebound strongly the next two days. The company’s statement seemed reassuring to those unwilling to dig deeper:

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Brazil Teetering on the Edge of Recession, or Worse

This article appeared online at TheNewAmerican.com on Monday, September 28, 2015: 

English: Official photo of President Rousseff,...

President Dilma Rousseff

Brazilians are facing a bleak future. The combination of last week’s downgrade of the country’s government debt to junk, along with downgrades on the debt of many of its major industries, and the unfolding “Operation Car Wash” scandal at Petrobras (the massive government-owned oil company), all spell trouble for an economy already in decline.

Brazil’s currency, the real, was once pegged to the dollar, but

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Interest-rate Increase Could Trigger Global Recession

This article appeared online at TheNewAmerican.com on Tuesday, September 15, 2015:  

Series 1934 $5,000 Federal Reserve Note, Obverse

Series 1934 $5,000 Federal Reserve Note, Obverse

With every eye focused on the Board of Governors’ meeting of the Federal Reserve System on Thursday, expecting the earth-shaking announcement that it will, or won’t, raise interest rates for the first time since January of 2008, few are considering the global implications if it does.

Expectations in the very short run are modest. The debate centers on whether rates should be increased by a tenth of a percent, or a quarter of a percent. In the real world it isn’t likely to matter: New car loans will be adjusted upward by a couple of dollars a month and new home loans will increase by perhaps as much as $50 a month, probably less. This is likely to galvanize some fence-sitters into action, drawing future purchases into the present.

The real impact in the long run, however, is several-fold:

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The Biggest BRIC is Falling

This article was published by The McAlvany Intelligence Advisor on Monday, September 14, 2015:  

Collection of Chinese renminbi yuan banknotes....

Collection of Chinese renminbi yuan banknotes.

In his 2001 paper “Building Better Global Economic BRICs,” chairman of Goldman Sachs Asset Management Jim O’Neill developed the acronym for Brazil, Russia, India and China. He made the case that the BRICs symbolized the shift of global economic power away from developed nations, estimating that they might overtake the G7 nations – Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States – as early as 2027.

Modifications were necessary to dampen O’Neill’s enthusiasm, with GS recalculating that it wouldn’t happen before 2050. By December 2012 the Council on Foreign Relations, in itsForeign Affairs publication, was forced to refute even that modest projection:

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.