World War Z

 

WSJ June 5, 2023. The real fun will commence in 2024.

No Place to Hide

 

Every where you bother to look in banking news you will find a common theme.  Loan delinquencies are creeping higher.  Foreclosure activity is increasing.  Eviction numbers are up.  Homeless people are no longer found as individuals but in small to large "encampments".  

The number of "Great Americans" who live by the mantra "fake it until you make it" are seeing the results of going into debt up to their eyeballs and then having interest rates slowly but surely increase over the past year.

Higher interest rates combined with higher property taxes and higher homeowner insurance premiums are slow roasting them in a debtor's hell.  Add onto that a little extra heat from overdue home owner's association dues and you have a perfect debtor bar-b-que recipe.

The student loan / Covid 19 forbearance fiasco comes to an end in September unless there is some sort of intervention performed by the Supreme Court.  My opinion is that "Joe Biden and Company" are not the law of the land and should not be allowed to dictate an end to contract law.  People borrowed the money - cough it up and repay it.

The World and The Ratings Agencies Now Question the Reserve Status of the Clown World Fun Bucks

It was described as "the exorbitant privilege" by the French when describing the Dollar being recognized as the world's reserve currency.

The fat lady is now singing.

The path toward the Dollar's dethroning started when Obama was in office.  One ratings agency, S&P, dared to downgrade US debt in 2011.  Obama was not pleased and S&P retracted its criticisms.

Was S&P wrong then?  I don't think so.  I think they were early.  And, importantly, S&P's voice was alone.  S&P's concerns were valid in 2011 but they folded under intense political pressure.

The king had no clothing back then and it still parades around naked but it has been able to browbeat people into silence.  Until now.

If you take off the rose colored glasses and take a hard look at what this country, its leadership and the electorate in total looks like (think "Great American Voters"), do you see a nation that should have its currency serve as the world's reserve currency?  Don't get me wrong.  I see a lot of very good people who work hard, have their shit together, keep up their lawns and mind their own business.  Unfortunately, I also see a whole lot of complete idiots, ass-hats, bullshit artists, deadbeats, etc. that are "a waste of skin" to use one of my neighbor's phrases.

The Wheels Are Starting to Come Off

When an economy is 70% consumer spending and a large part of that consumer "spending" is driven by the use of credit, you get a very fragile situation.

Rising rates will slow some spending.  Higher standards and tighter underwriting when generating new loans will slow a lot of spending.  That is where we are today.  Nothing sobers the mind of greedy bankers more than losses and failure.  Poorly supervised banks are feeling the sting.

It's hard to "spend" what you don't have and for many "Great Americans", they can "spend" only that which they are able to borrow.

I'm enjoying the compounding interest.  Tomorrow, I will renew a certificate into a new certificate that has a higher rate than what I received last year.  It's a good time to have some money that can "climb the ladder" of increasing interest rates.

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.