Every Day I'm Hustlin'

Roughly one year ago on CNBC:

The U.S. has been “extremely trigger-happy” with stinging economic measures, and central banks may decide to diversify their portfolio of foreign reserves instead of relying heavily on the U.S. dollar, according to the co-director of the Institute for the Analysis of Global Security.

“Central banks are beginning to ask questions,” said Gal Luft of the Washington-based think tank, adding that they are wondering if reliance on the dollar and “putting all their eggs in one basket” is a smart idea.

“The United States has extended itself, has been extremely trigger-happy when it comes to the use of sanctions and other economic punishments,” he said.

The White House did not respond to a CNBC request for comment.

And what happens if the world continues to move away from the dollar and the currency weakens in foreign countries?  It is hard to say since the dollar has been the world's reserve currency since the end of WWII but a few have predicted that:

1) Imports to the U.S. will become much more expensive.

2) The U.S. government will lose its ability to borrow at its current levels and it will be forced to raise taxes or print money to cover its shortfalls.

3) or, the U.S. government will lose its ability to borrow at super cheap levels and it will be forced to pay higher yields to buyers of its debt and it will be forced to cut services while simultaneously raising taxes to cover its shortfalls (the equivalent of a much needed and long overdue "national financial enema" if you will).  This is my own personal favorite and what I hope for as I tend to run my life on the lean side and I enjoy collecting compounding interest when lending money to others.

4) Inflation will be at higher levels than we have ever seen in the past as the cost of all imported goods climbs higher and higher.

5) Lastly, the key question is "cui bono" or "who benefits"?  I'm not sure but my guesses are:

a) manufacturers of durable items made in the U.S. that are sold overseas.

b) short term financiers

c) agricultural giants that export food items

d) large scale farming operations

e) weapons manufacturers

f) probably evil genius George Soros who probably has some sort of hustle going to crash the dollar just like he did with the Bank of England way back in the day.  Every day, that fucker looks more and more like Darth Sidious.

How Do You Afford Your Rock-n-Roll Lifestyle?

70% Of Americans Are Financially Stressed, 58% Live Paycheck-To-Paycheck

Singer kind of reminds me of Lou Reed

Don't Look Now But Here Comes the Iron Sheik!

 

So, just as oil markets are settling down, the Arabs cut production and explore the settlement of accounts in a currency other than the dollar.

And, just as the strategic reserve in the U.S. is at a low point - what a coinky-dink.  Everyone who shorted Big Oil is sucking wind this morning.  The fun never stops in Clown World.

Everything Everywhere All At Once Bubble

 

I find myself going through real estate advertisements, used automobile advertisements, used motorcycle advertisements, new home offerings, etc. from time to time and I thank my lucky stars that I am no longer in banking.  Making the decision to lend or not to lend in this environment would suck.  Valuations on collateral are nearly worthless.  Credit scoring models are skewed and somewhat unreliable.  Sorting out credit worthy candidates from posers and wannabes is murky.  

Collecting is going to be tough, especially if the long overdue Bankruptcy Code overhaul gains any traction in the House and Senate.  Liz Warren (Senator Pocahontas) is pushing a revision to the Code that would allow underwater and overindebted "Great Americans" to include student loan balances in their new "Chapter 10" Bankruptcy petitions.  This is overdue.  I am in agreement with the allowance of student loans as unsecured debt - it never should have been excluded in the first place but thanks to the likes of then Senator Joe Biden of Delaware (banking hub), student loans were expressly excluded from being capable of discharge in Bankruptcy.

Anyway, this bubble was brewing prior to all of the Covid 19 nonsense from the Federal Reserve.  But, once people in power at the Fed got their way and shoved TRILLIONS of newly printed dollars into an already warm economy, the Everything Everywhere All At Once Bubble was off to the races.  A lot of banks, credit unions and other lenders are going to find themselves holding a lot of shitty paper and hoping to God Almighty that their debtor finds a way to keep squeezing out the monthly payments.  Many of them will not.  The Siren Song of Bankruptcy is too hard to resist.  A lot of them will throw in the towel and go visit with Moustache Pete (our 1990's office name for then famous St. Louis Bankruptcy attorney T. J. Mullen).

Moustache Pete