DOWN THE RABBIT HOLE:
So, last week The Secretary of the US Treasury quietly announces that 2018 US Borrowing will be up just a bit. From 500 Billion borrowed in 2017, the sum for 2018 would be 1 Trillion Dollars and again in 2019 – two trillion US dollars – up 100%.
Now consider – that if you and I were a family and we borrow more than we make on Credit Cards ( money we owe our bond holders who buy our treasury bills as debt obligations ) and we knew as a family our borrowing was going to increase 100% for a couple years – would you and I borrow at near ZERO INTEREST rates in 2016 and 2017 to GET OUT FRONT OF THE cost – or would we wait until and keep in mind we get to KNOW IN ADVANCE – interest rates would rise 300% to 500% and then at those astronomical new higher levels of interest payments we would then borrow?
Also I want you to think that trillions of this is debt we tax payers took to pay the banks so they would not go bankrupt for the bad side bets they made in what was a short time ago criminal speculations but was no legal theft. As the banks lost your grandmothers deposits in these side bets, banks like Wells Fargo just committed garden variety FRAUD to get money, making phony accounts and so much more, now caught in the public FED little hand slapping they are receiving. Only clients like CEO SPACE and others are running on Wells Fargo and pulling billions and billions out of an immoral unethical criminal banking institution. We the people are not doing business with criminals who steal from us. They don’t report the run on Wells Fargo but mark my words your going to hear about it.
IF YOU HAVE MONEY IN Wells Fargo BANK – I’d Move and quick folks – this is real and Digital and its happening. CEO SPACE Is moving all our corporate accounts after 30 plus years. Why? They are crooks. And there is a real RUN ON THE BANK. We reported all this first here.
So the market is running on what?
Well the market is not amused with the 1 trillion dollar news from the US Treasury or the strategy to proceed to borrow that 100% more in ONE SINGLE YEAR while there is no US Budget or higher borrowing ceiling. You can see the problem for the holders of dollars?
While Congress fiddles the Secretary of the Treasury is on fire and burning. The markets:
- May not buy the debt at all – what then?
- Be slow to buy the debt what then?
- Require even higher premiums than 200% interest to buy the debt what then?
- The banks who profit from the higher interest – where we paid them trillions to avoid bankruptcy and now they rob us to finance the debt we paid to them in the first place – what then? They are selling stock to buy the 1 trillion at higher fixed rates. The profit off sets the risk.
- What then for the markets.
Plus it is all digital. No humans are selling. So if you think it is anything outside 10,000 super money pools you are so financially naive.
What is going on OUT THERE?
We told you the time of stability had evaporated.
Now hyper volatility is coming – Hyper Volatility. As time goes by we will see volatility that used to spook us to our core as a new normal. Look ma it is all digital. A first time ever AI market space with software controlling buying and selling by the trillions. All new. Never tried before.
As an investment banker economist who has been through the recessions of the 1960’s – the oil embargo years of the 1970s – the 1987 crash – the 2001 dot.bomb crash – 9/11 – and 2007 – and all the in betweens I suggest the present sell off is NOISE.
When you have a year of profits in a market in the month of January you can expect some profit taking. When you have two years of market profit up tic’s breaking all records in 90 days you can expect some profit taking.
WHAT GOES UP ALWAYS COMES DOWN.
Buffet who defies gravity is a) old and in his own last rodeo and b) wrong what goes UP does not go up and up and up. It comes down.
Buy LOW AND SELL HIGH unlike what Buffet did with IBM buy high and sell low just before it went back up.
BUY LOW and sell HIGH. Don’t buy at the peak in bitcoin or stocks.
We’ll everyone does. I find with economics everyone has a memory of the last game hand and never do folks remember the cards the house has in the main stack. If professionals fail to keep in mind what the house ( the overall economic history ) looks like – you lose the picture and you make emotional investing versus economic investments.
So today we have NOISE.
I suspect the sell off will continue to Weds. The issue will be do we have an uptick this week. If we get “buy in the dip” from this new software frontier the market will roar back to record DOW LEVELS in 2018.
If we do not – my prediction of a major correction this Spring made in 2015 originally and repeated since then often – was off 30 days.
I think this is noise we will see a bounce back as the TRUMP TRAIN derails this Spring and we have a serious correction this market is just getting ready for.
The biggest factor is the US NATIONAL DEBT and the failure of Congress to DO ITS CONSTITUTIONAL JOB. The impeachment should not be for Russian anything. The impeachment should be the entire Congress for CRIMINAL BREACH OF DUTY IN OFFICE to protect our national security, fund our military, and pass a forward budget and protect our vital CREDIT RATING. It is beyond party or politics it is economics 101.
So – Congress has in mind shutting down the US again.
Only now the budget is toast and each shut down cost more to restart.
Further the markets and world begin to lose TRUST in America. Who wouldn’t.
As all this unfolds, the USA with mis fires from congress could usher in a SUPER CRASH and DEPRESSION and WORLD WAR not a recession. the rubber band is pulled so tight now in the sling shot of congress pinky fingers any mistake can sink the market support which is beyond congress to fix when it snaps. WILL CONGRESS SNAP THE RUBBER BAND right when the market is reacting to 1 trillion in US Debt last week? I think they for the first time in US history could actually end the American way of life as we know it if they fail to get this right given the digital landscape. No third party could remove confidence in the US dollar and the strength of our potentials – but the Congress can and is and has – and there is no end in sight how Congress is destroying the American possibility and hope. This is not governing this is criminal Mal practice in public office in my rule book – I would make the mid year election punishment and vote republicans in just so the nation can move forward no matter what your politics – give us six years to pass laws and end the tie and political high school political theater with a vote – be madd as hell and make a strategy choice versus an emotional choice for all our wallets and prosperity – which is not political its economics. Congress is risking US folks US.
Congress there is a consequence to your fiddling while market – THE US TREASURY MARKET burns. Munch-kin can not sing the song FOLLOW THE YELLOW BRICK ROAD – WE ARE OFF TO SEE THE WIZARD THE WONDERFUL WIZARD OF OZ – when the entire world has pulled the curtain back and we see puppy TOTO peeing on the phony Wizards legs.
Berny Dohrmannn – the Good Wizard of the East in Florida— February 5, 2018