The Pin to Pop This Mother of All Bubbles?

Global macro economic data has been weak for many years, but there's now a very real chance of a world-wide recession happening in 2017.

Why? A dramatic and worsening shortfall in new credit creation.

The world's major central banks have, again, done the world an enormous disservice. Instead of admitting that maybe/perhaps/possibly the practice of issuing debt at more than twice the rate of underlying economic growth was a very bad idea over the past several decades, they instead doubled down and created an even larger debt monster to be dealt with.

The resulting global asset price bubble -- or, more accurately, set of nested and incestuously intertwined bubbles -- can collectively be called the Mother Of All Bubbles (MOAB). None has ever been larger in history.

As with all prior bubbles, it shares the collective delusion that there's such a thing as a free lunch. History has seen many attempts to eat this elusive meal, with each generation convinced that they were the chosen ones who could finally crack that nut.

So, dutifully, our central bankers have tried, and tried again, to deliver that free lunch -- i.e. to print up prosperity.

But, alas, prosperity cannot be printed out of thin air. All that can be accomplished by central bank slight of hand is a transfer of wealth. Central banks steal from the many to give to the few. They are the reverse Robin Hoods of our day.

They also encourage everyone to steal from the future, which is what excessive borrowing really represents. It's future consumption taken today at the expense of tomorrow.

The most charitable thing that can be said about the central banks is that perhaps they actually believed their own BS, but I seriously doubt it. Even the most dense of observers has noticed by now that we are 9 years into the 'emergency measures' and nothing even remotely close to healthy economic growth has emerged.

One year of emergency measures is already a bit too long. 3 years is embarrassing. 9 years tells you that the Fed isn't in this for the reasons they state. Instead, they are orchestrating the largest wealth transfer in all of history, from the many to the few.

Once you realize this is their goal, then they've succeeded amazingly. Mission accomplished!

We have the widest wealth and income gaps in all of history. The big banks have complete control of the political and financial machinery of every country of the world. And the corporate controlled media simply cheerleads the whole thing, convincing most people it's all been for their own good.

Honestly, from a planning and execution standpoint, I have to give the central banking cartel very high marks for pulling off such a magnificent heist almost completely undetected by the average person.

Of course, they needed lots of assistance from a complaint media.

Economic Propaganda

Propaganda noun - information, especially of a biased, emotionally charged or misleading nature, used to promote a political cause or point of view.

Let's turn now to exploring the ways that the media serves to deliver propaganda instead of providing useful context and essential information.

People are anxious these days. One explanation for this is that their personal lives are getting harder and more difficult on multiple fronts. Wages are flat (to down) and expenses are skyrocketing. There's no sense of safety, and everybody can sense the massive injustice of the reverse Robin Hood policies of the central banks and governments.

Injustice, of course, makes us very unhappy. That's true of all social creatures, ranging from primates to dogs. Fairness matter -- a lot. And when systems or individuals operate unfairly, then the other participants tend to withdraw and/or give up. If things become bad enough, however, the victims get angry and will eventually retaliate.

To keep this unfairness from boiling over, a couple of tricks of the government's trade are to first get the afflicted parties blaming the wrong people -- preferably each other, as opposed to the actual perpetrators of the unfairness. This works great; we see it in police pitted against protesters, even though they both are being unfairly treated in similar ways by the system. Ditto for the left vs. right protests that have been erupting all over the world.

A second trick is to simply confuse everyone, to try and convince them that nothing unfair has actually happened in the first place. This is achieved through lies, either by omission or commission, and this is now daily fare in the leading mainstream news outlets. And I use the term 'news' very, very loosely.

What results when we are told (and/or believe) one thing but our experiences indicate another, is cognitive dissonance.

Cognitive Dissonance -- noun - the state of having inconsistent thoughts, beliefs, or attitudes, especially as relating to behavioral decisions and attitude change.

The creation of 'inconsistent thoughts or beliefs' is now an entrenched industry with hundreds of billions of advertising dollars at its disposal. It's now so thoroughly part of the societal fabric that many of its most advanced practitioners have no idea that they are even carrying out a sophisticated program of deception with savant-like precision.

Born, bred and raised within the system of delusion, they're unaware of their own role, or why they're playing it.

Let's pull an example I found, easily enough, in this morning's news cycle (6-16-17).

Today's propaganda headline from Bloomberg is a classic:


This U.S. expansion may be moving like a tortoise, but it's on its way to win the race.
Widely disdained for its relatively weak growth and pay gains, the expansion is about to complete its eighth year -- and it's headed to become the longest on record, according to a Bloomberg survey of economists. Respondents put a 60 percent probability, based on the median estimate, on the growth streak running through at least July 2019 and thereby reaching 121 months, topping the 10 years of gains during the 1990s.
The U.S. economy looks pretty healthy right now when you think in terms of sectors that could blow up," said Stephen Stanley, chief economist at New York-based Amherst Pierpont Securities LLC. Having avoided any “violent bounceback" during the recovery, “most sectors seem to have room to run," signaling continued moderate growth, he said.
A strong job market, subdued inflation, low borrowing costs and healthier finances will be a tailwind for consumer spending while business investment, a laggard so far, is expected to join the drivers of growth. Even trade may become less of a drag.
(Source)

This Bloomberg article is a really strong effort by the media to spin things as being much rosier than they are. Many people's direct experiences will be completely counter to the happy-talk put forth in this article, which basically readsl like the intro to Garrison Keillor's Lake Woebegone radio program, which told of a magical place where all the women are strong, all the men are good looking, and all the children are above average."

In other words, a fantasy land where the supporting data provided cannot possibly be correct.

So let's review the amazing list of data, shall we?

  • Economists agree, this expansion will become the longest on record
  • The US economy looks pretty healthy right now
  • Most sectors have room to run
  • There's a strong job market
  • Inflation is subdued
  • There's also something called 'healthier finances'

Given all that, you'd be a total loser to think anything other than "Everything is awesome!"

But is that true?

Well, once you take a closer look at each of these authoritative claims, they are anything but clear-cut and certain. If you question any of them, or even just dig slightly into them, questions swirl up like flies from a knocked-over garbage pail.

To begin, if we choose to question the “strong jobs market", we quickly come across charts such as this one:

(Source)

In this less-than-"amazing" chart we see that the “strong job market" is actually the most horrifically weak one in the entire data series. The illusion of “strength" has been manufactured by the hocus-pocus of excluding people off of the unemployment rolls, so they simply aren't counted in the “strong" number.

It's an old trick. If you're counting the unemployed, then the best way to have a rosier number is to not count people who don't have a job as 'unemployed.' You call them something else ("out of the labor force") and revise them away.

If you don't count them, they don't exist, right? That then allows the media to trumpet the Fed's victory in creating today's “strong job market."

If this wasn't so patently, ridiculously Orwellian, and didn't create so much human misery, it would be funny.

How anyone can, with a straight face, claim that this is a “strong job market" is beyond me. It's not. And the record number of homeless people showing up in every major and minor city in the US validates the data in the chart above.

So that's cognitive dissonance area #1: Being told we have a strong job market while your own eyes see homeless people everywhere, and people looking for jobs report extreme difficulty landing anything beyond a part-time, minimum wage gig.

Next we turn to the idea that “inflation is subdued." While we've shredded this idea mercilessly in such areas as our Crash Course chapters on Fuzzy Numbers and Inflation, as well as in our podcast with Ed Butowski, the creator of the Chapwood Index, you can just as easily use your own personal observations and a few pieces of data to destroy this farce of 'subdued inflation.'

Let's start with car prices. According to the BLS, new cars have not gone up in price at all over the past ten years. In fact, according to their calculations, a new car costs exactly the same today as it did back in 1997, a full twenty years ago:

But your own eyes and personal experience may have noticed something different. If you've made a car purchase over the past 20 years, you've probably observed that actual out-of-pocket costs to purchase a new vehicle have steadliy risen from just over $19,000 in 1997 to over $33,000 today:

(Source)

Where the US government is convinced that cars costs exactly as much as they did 20 years ago, your personal experience might be that they are not terribly far away from costing 100% more.

The explanation for the difference is that the BLS has decided that today's automobile is vastly improved compared to that of 20 years ago. It believes that your dollar buys you nearly 100% more "car" than it did before, so the whole thing is a wash.

This is the magic of “hedonic improvements" which I am not entirely unsympathetic to. If things improve and we pay the same amount for them, then that's a gain in living standards, of a sort.

But the idea that “inflation is too low" is anchored in the idea that we are paying the same for things today as we were yesterday. The very essence of cognitive dissonance is being told that things cost twice as much but they haven't gone up in price.

That the issue at play here. While the Fed frets about inflation being too low -- you struggle to afford rising new car costs, as well as the skyrocketing associated fees like maintenance and insurance.

Another prime area for "fuzzy numbers" is in living expenses related to housing. According to the government ,housing costs have been modestly rising by an average of less than 3% per year for a decade:

However, these charts from Charles Hughes Smith show that the experience of homebuyers in many major metropolitan areas is anything but subdued:

(Source)

Add all this up and what do you get?

A very different impression of the state of 'the economy' than Bloomberg is working hard to present.

And even more egregious than the misinformation is the complete inappropriateness for the media to praise economic 'strength' while ignoring the role of debt in bringing about the growth being celebrated. If the 'prosperity' is simply due to a drunken debt-binge, it should be criticized, not lauded.

The Pin To Pop This Mother Of All Bubbles?

Which brings us to a very important risk factor to the over-leveraged global economy: declining credit impulse.

Unfamiliar with the term? You won't be for long.

Defined as net new credit to GDP, credit impulse is one of the best statistical predictors of recession. As of today, credit impulse has gone negative across the world for the first time since the start of the Great Recession.

In Part 2: Everything You Need To Know About The Credit Impulse, we lay out the evidence for why there's a credit impulse-driven recession on the way. It will come whether or not the underlying economy is recovering or not.

Why? Because the amount of debt creation was absolutely massive across the globe, particularly in China. The excessive debt service will simply overwhelm the economy -- it won't even be a close fight.

Click here to read the report (free executive summary, enrollment required for full access)

The Senate Judiciary Committee was set to vote on subpoenas to compel Twitter CEO Jack Dorsey and Facebook CEO Mark Zuckerberg to testify on alleged censorship and bias across their platforms. But that all changed when Republican committee members "expressed reservation about the maneuver," Politico reports.

Sen. Ted Cruz (R-Texas), who chairs Judiciary's Subcommittee on the Constitution, was definitely not one of the committee members with cold feet. On the radio program Tuesday, he told Glenn Beck that he's fighting "vociferously" to ensure Dorsey and others testify before the November 3rd election.

"Jack Dorsey and Mark Zuckerberg are both going to testify. They're are going to testify in person. They're going to testify before Election Day. That's what I think should happen," Cruz said. "That's what I'm fighting vociferously to happen. Right now, the companies are negotiating with the chairman's office to discuss terms to come voluntarily. I don't give a damn whether they come voluntarily or under subpoena. They need to testify in person and answer questions for the American people about why they are trying to steal this election, to suppress the free speech, and to censor the press."

The subpoenas would require Big Tech leaders to testify on the alleged "suppression and/or censorship" of two consecutive blockbuster stories from the New York Post. The first story was about emails that allegedly came from Hunter Biden's computer which are currently being investigated by the FBI, and the second was based on additional emails that allegedly showed communist China directly offering millions of dollars to then-Vice President Joe Biden.

"Big Tech stepped in, and they've done something they've never done before," Cruz explained. "We know that Big Tech has been censoring individual conservatives, trying to suppress conservative speech. But the step they took here is, they blocked if any individual user tried to share either of the New York Post stories, [they] were blocked ... Sharing a news story, from a major media outlet is part of democracy, part of free speech. And not only that, they blocked the New York Post itself. Right now, today, the New York Post is not being allowed to post its own damn stories on corruption. This is ridiculous. It's a threshold that's never been crossed before, of Silicon Valley oligarchs declaring the authority to determine what the press is allowed to report, and who is allowed to see it."

Watch the video below to catch more of the conversation:

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If we learned nothing from the media over the past 4 years it's that colluding with a foreign entity to either win an election or for personal gain is absolutely grotesque. Well, that depends on whether you have a (D) or (R) before your name anyway. President Trump was impeached on rumor and innuendo yet Joe Biden has all but skated on his corruption up to this point.

Below is a timeline that shows the level of corruption and the lengths the Biden's went to in order to build that family's wealth and influence internationally.

2009

In 2009, Joe Biden was the brand-new Vice President and John Kerry was a U.S. Senator. Just five months after Joe was sworn in, his son Hunter, and Kerry's stepson, Christopher Heinz, formed an international private equity firm called Rosemont Capital. It had several different branches, including one called Rosemont Seneca Partners.

2010

Just nine months after Rosemont Seneca opened its doors, Hunter Biden went to China for meetings with executives from China's biggest banks, and its sovereign wealth and social security funds. That's unheard-of access for a brand-new firm. Was it just coincidence that at the same time Hunter was meeting these Chinese bigwigs, his dad was meeting with China's then-president Hu Jintao in Washington DC at a nuclear security summit?

2011

In May 2011, Joe Biden met with Chinese officials for the U.S.-China Strategic & Economic Dialogue conference in Washington. Just two weeks later, Hunter Biden went to Taiwan for meetings with the same Chinese financial giants he'd met in China in 2010, plus some new ones.

2013

By December 2013, Joe Biden was enjoying his second term as VP, and John Kerry was now Secretary of State. That's when Joe traveled to Beijing on an extended official trip and Hunter traveled with him on Air Force Two.

During their stay, Vice President Biden met with President Xi and Hunter was mostly out of sight. We don't know exactly what he was up to, but the deal finalized between Rosemont Seneca and the Bank of China just ten days after the Bidens' trip pretty much gives it away. The most powerful financial institution in China formed a joint venture with tiny Rosemont Seneca to create a giant new investment firm called Bohai Harvest RST – the "RS" stands for Rosemont Seneca.

The firm is often called "BHR" for short.

Hunter Biden was a member of the Board. Remember, the Bank of China is government-owned, which means its business is completely intertwined with the goals of the Chinese Communist Party. BHR also got the freedom to operate in the newly created Shanghai Free-Trade Zone where, over the next six years, it would use $2.5 billion of Chinese government money to invest in China, as well as in other countries, including the U.S.

During their Beijing trip, Hunter also introduced Jonathan Li to his dad. Li is Hunter's business partner – he's CEO and Director of BHR.

Hunter arranged for Joe to meet Li in the lobby of the hotel where they stayed during their Beijing trip.

2014

In 2014, one of BHR's first major investments was in the China General Nuclear Power Corporation.

CGN is a Chinese government-owned nuclear power company that sold off a stake of the company to outside investors. Problem is, CGN was under FBI investigation for paying informants in the U.S. to steal nuclear secrets.

In 2016, the FBI arrested the ringleader of this nuclear espionage, a man named Allen Ho.

When they arrested Ho, he was using a random code generator to access funds being provided to him from – where else? – the Bank of China.

Yet while this FBI probe was going on, the son of the Vice President owned a stake in the company being investigated. And even after arrests were made, Rosemont Seneca did not alter its relationship with BHR, nor did it divest from CGN, even though it was stealing U.S. nuclear secrets.

2015

In 2015, BHR partnered with the Aviation Industry Corporation of China (AVIC) to buy an American company called Henniges for $600 million.

AVIC is a gigantic military contractor in China – think Lockheed Martin – that makes fighter jets, bombers and drones. BHR bought 49% of Henniges and AVIC bought 51%.

Henniges is a precision parts manufacturer specializing in anti-vibration technology. The stuff they make is known as "dual use" by the U.S. State Department, which means the technology can also have a military application.

Because of that, the deal had to be approved by the Committee on Foreign Investment in the U.S. (CFIUS) since it could have national security implications. The thing is, the American side of BHR – meaning Hunter Biden and his pals – had to know there were serious national security implications with AVIC.

The year before they formed a partnership with AVIC, the Wall Street Journal reported how AVIC stole technology related to the U.S. Air Force's F-35 stealth fighter and used it in its own stealth fighter for the Chinese.

How the Committee on Foreign Investment approved that deal remains a mystery. CFIUS does not publicly disclose any information regarding its decisions. Their findings are not publicly announced.

Interesting that China accounted for the largest share – with 74 transactions – approved by CFIUS during Obama's second term (2013-2015).

Under the umbrella of Rosemont Capital was a real estate company called Rosemont Realty. In 2015, a Chinese company called Gemini Investments bought a 75% stake in Rosemont Realty. The company was renamed Gemini Rosemont

Gemini brought $3 billion to the partnership with Rosemont, with the aim of buying "Class A institutional-quality commercial office properties in U.S. markets."

Red flag (literally) – Gemini Investments is a subsidiary of the China Ocean Shipping Company, a.k.a., "COSCO."

COSCO is a Chinese government-owned company. Its headquarters in Beijing is actually next to the headquarters of the Bank of China. COSCO is well-known for its close military ties. It's essentially a branch of the Chinese Navy.

2017

In 2017, BHR invested in Face++. That's the facial recognition phone app built by a Chinese company that is incorporated in a separate app built by the Chinese government. Police in the Xinjiang [Sin-jong] region of China use that app to keep tabs on citizens, and track and detain Uiguhr [Wee-ger] Muslims.

The app allows police easy access to data about Chinese Muslims including things like religious activity, blood type, and even the amount of electricity they use.

2018

In March 2018, a spokesman (Chris Bastardi) for Christopher Heinz (John Kerry's stepson) emailed The Hill to say that Heinz had "no operating role" in Rosemont Seneca, and that he was not involved in any of Rosemont's deals in China (which contradicts Schweizer's report in his book Secret Empires).

Chris Heinz was involved in Rosemont Capital. Rosemont Seneca was established under the same GP as Rosemont Capital, but Chris Heinz had no operating role in it. Chris and his family have no financial interest or investment in Bohai Harvest RST, he has never traveled to China, and he has never met with the firm's Chinese management team or investors.

2019

In October 2019, Hunter Biden's lawyer, George Mesires, said Hunter did not conduct any business on that 2013 trip to Beijing with his Dad.

Mesires said the timing of BHR's business license getting approved was purely coincidental because the paperwork had been submitted months before the Bidens' China trip.

According to Hunter's lawyer, the approval " was not related in any way, shape or form to Hunter's visit."

Hunter Biden finally stepped down from the BHR board last October (2019), but he DID NOT give up his 10% stake in the company.

When Bevan Cooney — the former "junior" business partner to Hunter Biden and Devon Archer — went to jail in 2019, investigative reporter and New York Times bestselling author Peter Schweizer thought he'd never gain access to the damning emails Cooney had promised. That all changed three weeks ago when Schweizer was given complete access to Cooney's gmail account.

Schweizer joined Glenn Beck on the radio program Tuesday to describe just some of the business deals revealed within these emails — like Hunter working with an alleged Russian criminal and with Chinese communists to secure their assets, or to secure one-on-one time with his dad, then-Vice President Joe Biden. And all of this new information is completely separate from the emails allegedly discovered on Hunter Biden's laptop recently reported by the New York Post.

"So, I want to make this clear. This [Cooney's emails] has nothing to do with what's on the laptop … It didn't come from [Rudy] Giuliani. It didn't come from anybody else, right?" Glenn asked Schweizer.

"That's absolutely correct," Schweizer confirmed.

He briefly explained how Cooney, a former Los Angeles nightclub owner, is currently serving a prison sentence for his involvement in a fraudulent business bond scheme with Biden and Archer. From prison, Cooney gave Schweizer written permission to access his Gmail account.

"This is really important," he noted. "We're not looking at printouts. Not looking at PDFs. We're actually in his Gmail accounts themselves, sifting through these emails. And there's a shocking amount of information about deals involving China, involving Russia, involving all sorts of things they were trying to pull off."

Watch the video below to catch more of the conversation:

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The king of "No Spin" and bestselling author of "Killing Crazy Horse," Bill O'Reilly joined Glenn Beck on this week's podcast to talk about the latest developments in Joe Biden's Ukraine and China corruption scandal. Now that some of the details are finally coming out in the open, does the average Democrat care? Maybe, but the Left doesn't seem to.

O'Reilly argued there's more hatred for President Donald Trump now than in 2016, and that some people hate President Trump so much that they'd rather vote for the "senile, corrupt" Joe Biden.

"Hunter got tens of millions of dollars from Ukraine, from Russia, from China because his father was vice president. I have no doubt in my mind," O'Reilly said. "But the hatred for Donald Trump overrides that in the minds of millions of viewers. They're saying, 'You know, we'd rather have the senile corrupt guy than Trump.'"

Asked by Glenn if any other Republican running for president would be met with the same level of vitriol, O'Reilly answered, "The Left is the Left. They don't like America. The want to redo the Constitution. They want to take some of our freedoms, like the Second Amendment and the First Amendment, and change them. And they want to destroy capitalism and replace it with a big centralized government in Washington that controls the economy … but I'm talking about the folks. I have liberal friends and I say to them, 'Do you not understand that when you vote for Biden, you're voting against your own self interest?'"

Watch the video clip from the full podcast below, or find the full episode HERE:

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