Category Archives: Economy and Meltdown

Quantitative Brainwashing

Authored by Jeff Thomas via,

We’re all familiar with the term, “quantitative easing.” It’s described as meaning, “A monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply.”

Well, that sounds reasonable… even beneficial. But, unfortunately, that’s not really the whole story.

When QE was implemented, the purchasing power was weak and both government and personal debt had become so great that further borrowing would not solve the problem; it would only postpone it and, in the end, exacerbate it. Effectively, QE is not a solution to an economic problem, it’s a bonus of epic proportions, given to banks by governments, at the expense of the taxpayer.

But, of course, we shouldn’t be surprised that governments have passed off a massive redistribution of wealth from the taxpayer to their pals in the banking sector with such clever terms. Governments of today have become extremely adept at creating euphemisms for their misdeeds in order to pull the wool over the eyes of the populace.

At this point, we cannot turn on the daily news without being fed a full meal of carefully- worded mumbo jumbo, designed to further overwhelm whatever small voices of truth may be out there.

Let’s put this in perspective for a moment.

For millennia, political leaders have been in the practice of altering, confusing and even obliterating the truth, when possible. And it’s probably safe to say that, for as long as there have been media, there have been political leaders doing their best to control them.

During times of war, political leaders have serially restricted the media from simply telling the truth. During the American civil war, President Lincoln shut down some 300 newspapers and arrested some 14,000 journalists who had the audacity to contradict his statements to the public.

As extreme as that may sound, this practice has been more the rule in history than the exception.

In most countries, in most eras, some publications go against the official story line and may very well pay a price for doing so. But, other publications go along with the official story line to a greater or lesser degree and are often rewarded for doing so.

It should come as no surprise, then, that media outlets often come to report the news in a less than accurate manner.

Mark Twain is claimed to have said, “If you don’t read the newspaper, you’re uninformed. If you do read the newspaper, you’re misinformed.” Quite so.

Still, only fifty years ago, much of the then “Free World” enjoyed a relatively objective Press. Even on television, reporters such as Walter Cronkite, Huntley and Brinkley, etc. presented the news in a bland manner. It wasn’t very exciting, but at least it was relatively balanced and, to this day, most people who were around then still have no idea as to whether reporters like Walter Cronkite were liberal or conservative. Although he was a committed Democrat, he never allowed that to significantly colour his reporting.

But today, we have a very different corporate structure as regards the media. The same six corporations hold the controlling interest of over 80% of the media. And those same corporations also own a controlling interest in the military industrial complex, Wall Street, the major banks, Big Pharma, etc.

What we’re witnessing today is media having been transformed into something more akin to a three-ring circus than journalism of old. This is no accident.

The present travesty that is the 21st century media, is journalism in name only.

So, why should this be so?

Well, as it happens, people tend not to like governments dominating their lives – simple as that.

And yet, the primary objective of any government is to increase its size and power as rapidly as the populace will tolerate it. The only reason that they rarely do this quickly, is that they can’t get away with it. Like boiling a frog, it takes time to lull the populace into submission, bit by bit.

Once having had enough time to do so, there comes a point at which the government becomes woefully top-heavy, as well as unworkably autocratic. At such times, all that’s necessary to make people rebel is an economic crisis.

Such is the case in much of the world today – the EU, the US, Canada, etc.. Even in their arrogance, the powers that be have to be aware that they’re right at the tipping point. An economic crisis would almost certainly push the situation over the edge.

When truth threatens to undermine machinations for self-aggrandizement, individuals tend to obfuscate in order to delay the inevitable fallout. Governments are no different.

So it was that, in 1999, the largest banks entered into a massive lending scam that would most certainly collapse within a decade. However, before putting the scam in place, they arranged for a “bailout” by the government, which would effectively pass the bill to the taxpayer, while the banks themselves simply increased their own wealth massively.

Of course, QE, as massive as it was, was a mere Band-Aid solution. All those involved (big business and the government) understood that it would hang like a sword of Damocles over the economy until it inevitably came crashing down – a fate far worse than if QE had never been implemented.

And so, for those entities to have invested into the domination of the media was, in fact, essential. Had they not done so, it’s entirely likely that, with a free press, the man on the street would, by now, have figured out that he’d been hoodwinked.

Thus do we see the journalistic equivalent of Quantitative Brainwashing, in which the inevitable realization is delayed for as long as possible.

And, in order to make sure that the public do not figure out what’s been done to them, the news reporting becomes Orwellian in its endless repetition of a false narrative.

It is, however, true that, “You can’t fool all of the people all of the time.” Eventually, the Band-Aid peels back to reveal an infection that’s far beyond what had been generally perceived. It then falls away in layers, as increasing numbers of people become aware that they’ve been scammed – that the media is entirely corrupt and that the media’s owners – big business – have, with the enthusiastic compliance of the government, robbed them on a wholesale basis.

Historically, that’s when the jig is up. What happens then is a matter of historic record.

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Clearly, there are many strange things afoot in the world. Distortions of markets, distortions of culture. It’s wise to wonder what’s going to happen, and to take advantage of growth while also being prepared for crisis. How will you protect yourself in the next crisis? See our PDF guide that will show you exactly how. Click here to download it now.

Goldman Warns Of Hit To Economy As Rich Cut Spending Once They See Their Brokerage Statements

In a world of record wealth inequality, many believe that one of the fringe benefits of the rich getting richer and the poor staying, well, poor is that consumption has become less sensitive to moves in stock prices because of the lower spending propensity of wealthy households, in other words, the “wealth effect” has become increasingly muted (after all remember, “The Rich Hold Assets, The Poor Have Debt“).

The claim, proposed for example by the NBER in 2013, is that declines in equity prices now translate into smaller declines in consumer spending than in the past, because wealthy households now bear a larger share of the losses and have lower propensities to spend. In other words, if the wealth effect has indeed fallen, it would be one reason to expect only a modest drag on consumer spending from the recent sell-off.

If this is correct, it would imply that the recent stock market sell-off is likely to weigh only modestly on consumption.

However, in a new report from Goldman’s economists, the bank disagrees with cheerful take and believes that once America’s rich see their latest, and sharply reduced brokerage statements, they too will cut back on spending, adversely impacting the broader economy, for two reasons:

First, while the share of equities owned by the wealthiest households has risen over the last three decades, equity holdings have more than tripled as a share of disposable income at the aggregate level and have also risen substantially for middle and upper-middle wealth groups. Therefore, a 1% move in stock prices now has a much larger impact on wealth levels for most groups.

To be sure there is no arguing that the rich have gotten richer, or as Goldman puts it, “stock ownership has become more concentrated.” Indeed, the wealthiest 0.1% and 1% of households now own about 17% and 50% of total household equities respectively, up significantly from 13% and 39% in the late 80s.

Furthermore, as the left panel of the next chart shows, household equity holdings have more than tripled as a share of disposable income at the aggregate level since the late 80s. Combining these aggregate holdings with the group-level ownership shares from the chart above, it emerges that equity holdings as a share of income have risen substantially for not only the upper-middle and upper wealth groups, but also the “middle”.

Therefore, according to Goldman, “the hit to the wealth level from a 1% decline in stock prices is now about 3 times larger than in the late 80s for the top-10% of households and a third larger for those in the 50-90th percentiles.” The hit is even greater if one includes household holdings through pension funds and life insurances, which now stand at 30% and 10% of disposable income respectively.

The Second reason why Goldman is concerned about the impact of sliding stock on the propensity to spend is that equity price moves also have a meaningful effect on the spending of wealthy households. Goldman finds evidence for this claim in that spending on luxury goods largely purchased by wealthy households is highly sensitive to stock prices.

As evidence, Goldman presents the next chart which shows that equity price moves do have a meaningful effect on the spending of wealthy households: the PCE share spent on jewelry and watches is highly correlated with moves in the stock market (left panel). Using regressions of spending growth on stock price changes, Goldman confirms this strong relationship more formally for jewelry and watches, pleasure boats and pleasure aircrafts (right panel). Intuitively, it does make sense that even the top 0.01% will spend less on “pleasure boats and pleasure aircrafts” if they are watching the market go down in flames. Curiously, this correlation has only increased in the past two decades when the market sprinted higher because when focusing on a sample since 1995, the bank found large effects of the stock market on luxury spending while the effects are actually weaker in earlier decades.

In other words, Goldman’s analysis suggests that the wealth effect from the stock market is unlikely to have fallen substantially over the past 30 years despite the rise in wealth inequality because i) equity holdings have risen sharply, and especially for the richest Americans, and ii) because equity price moves still have a meaningful effect on the spending of wealthy households.

As a result, Goldman summarizes that “a 1% move in stock prices now has a much larger impact on wealth levels for most groups” and finds that the since the wealth effect is alive and well – much to the delight of former Fed Chair Ben Bernanke who in an WaPo op-ed explicitly advocated artificially boosting the stock market to stimulate the “wealth effect” – and by implication, there is now a substantial negative wealth effect on real PCE, which Goldman expects to slow to 2¼-2½% this year, despite healthy labor income growth, an elevated saving rate, and cheaper oil.

As a result of this analysis, Goldman concludes that stock market wealth effects, i.e. a continued drop in equities, could subtract about 0.5% off real GDP growth this year, a number which will only grow as stocks continue to slide, and is – some could argue – the most salient reason why the Fed’s put was triggered at around 2,300 because any further drops would have had a significantly adverse impact on the economy.

“All-Time Historic Blunder” – Marketing Prof Blasts Gillette ‘Toxic Masculinity’ Ad

Authored by Eduardo Neret via Campus Reform,

A Villanova University marketing professor blasted Gillette for the razor company’s “The Best Men Can Be” ad, which referenced “toxic masculinity.”

The professor, Charles Taylor, criticized Gillette’s new “The Best Men Can Be” ad campaign, in an op-ed for Forbes. A spin-off of the company’s old “The Best a Man Can Get” campaign, “The Best Men Can Be” was launched with a now-viral commercial that highlights behaviors in boys and men such as bullying, sexual harassment, and sexism.

In the ad, Gillette calls out “toxic masculinity” and attributes this concept to men as a whole with a YouTube description reading “bullying. Harassment. Is this the best a man can get?”

“The use of the term ‘toxic masculinity’ in the ad was a flat-out mistake,” Taylor noted in his op-ed.

“While only mentioned quickly and briefly, the use of this term, which many men associate with a one-sided critique and stereotype of an entire gender [sic].”

Taylor went on to add that corporations should never alienate a substantial portion of their consumer base, which Gillette’s campaign “unnecessarily” did. Taylor also warned that without modification or apology, Gillette’s campaign would go down in history as an “all-time marketing blunder.”

“The shame of all of this is that Gillette surely could have devised a campaign focusing on positive encouragement of good behaviors without making sweeping generalizations about men and what it is to be masculine,” Taylor continued. At the time of publication of this article, the ad had over twelve million views on Gillette’s official YouTube page and nearly three times as many “thumbs down” as “thumbs up.”

While Taylor told Campus Reform that he hasn’t witnessed similar unnecessary and divisive political rhetoric on Villanova’s campus, he reiterated that companies “generally should stay away from controversial hot button issues as it really does not make sense to alienate the target market.” 

“Ads built around non-controversial topics framed in a positive way absolutely can work.  Budweiser’s depiction of its hurricane relief efforts or Toyota’s support of Special Olympians from last year’s Super Bowl are good examples of this. The moment the company appears to take a side, however, they are taking a big risk,” the professor told Campus Reform.

“It absolutely is not the case that any publicity is good publicity – press that contributes to alienating and losing consumers is not a good thing.”

Gillette’s ad also redirects viewers to a statement on its website that further explains the reasoning behind the campaign. The company states that it is now a “new era of masculinity,” and it “is clear that changes are needed.”

Despite criticisms claiming that the company itself stereotypically depicted men in the ad, Gillette pledged “to actively challenge the stereotypes and expectations” of what it means to be a man. The company will also donate $1 million per year for the next three years to nonprofits that “inspire, educate and help men of all ages achieve their personal ‘best’ and become role models for the next generation.”

Taylor speculated that one possible motive for the ad was an attempt by Gillette to resonate with millennials. However, he told Campus Reform that the problem with this is that “not all millennials share the same political view.” 

Gillette isn’t the only razor company to take on the issue of masculinity, though. In 2017, Harry’s tweeted on International Men’s Day, lamenting that it was even “a thing.” 

“Now more than ever, being a man demands introspection, humility, and optimism. To get to a better tomorrow, we need to take a look at today, and at the misguided stereotypes that got us here in the first place,” the tweet read. The now-deleted ad also crossed out phrases such as “be tough,” “be a rock,” “be a man,” and “be the breadwinner,” according to National Review.

Harry’s deleted the year-old tweet following the Gillette backlash.

Trump “Disinvited” From Making State Of The Union Address By Top Democrat

Update 2: Citing Homeland Security Secretary Kirstjen Nielsen’s revelation that the Department of Homeland Security is fully prepared to secure the SOTU, Minority whip Steve Scalise pointed out on twitter that Pelosi’s decision to “disinvite” President Trump from the speech was never about security…it was about politics.

#ShutdownNancy’s decision to shut down the State of the Union was never about security. It was about the obstruction of @realDonaldTrump. Plain and simple.

— Steve Scalise (@SteveScalise) January 16, 2019

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Update: Speaking with CNN, House Majority Leader Rep. Steny Hoyer said that President Trump has been “disinvited” from making the state of the union address. 

CNN’s @KateBolduan asks the House Majority Leader; “The letter sounds like she’s asking, but isn’t she just telling him?”
Rep. Hoyer: “The speaker is the one who invites the president…”
Kate: “So, the State of the Union is off?”
Hoyer: “The State of the Union is off.”

— Brody Levesque (@BrodyLevesque) January 16, 2019

A formal invitation is traditionally made by the Speaker of the House to the President several weeks before each State of the Union Address. 

I’m on @MSNBC from 10-11 am today talking with @HallieJackson about Speaker Pelosi disinviting President Trump from delivering the State of the Union, the impacts of the shutdown, and where things go from here. Tune in!

— Yamiche Alcindor (@Yamiche) January 16, 2019

He can give the SOTU from the WH. Hoyer can watch on TV.

— Arthur Schwartz (@ArthurSchwartz) January 16, 2019


House Speaker Nancy Pelosi on Wednesday asked Donald Trump to delay his State of the Union address – or deliver it in writing – while the government is partially shut down. 

Pointing to security concerns, Pelosi said that the partial shutdown has crippled both the US Secret Service and the Department of Homeland Security, which may compromise security measures that precede the primetime address, according to Politico

“Sadly, given the security concerns and unless government re-opens this week, I suggest that we work together to determine another suitable date after government has re-opened for this address or for you to consider delivering your State of the Union address in writing to the Congress on January 29th,” Pelosi wrote in a letter to Trump. 

Publicly, Democrats plan to argue that the parties need to focus on addressing the shutdown, now the longest in U.S. history. But privately, they also don’t want to give Trump a major platform to blame them for the shutdown when Trump’s demand for billions in wall funding has been the main driver, according to a Democratic lawmaker close to leadership.

Staff have been discussing the idea of postponing the State of the Union for months, with some expressing concern about scheduling travel plans for lawmakers and guests as well. –Politico

So… The State of the Union is off… That’s what @LeaderHoyer just said on @CNN

Plus this…

— Eric W. Shatraw (@eric_w_shatraw) January 16, 2019

Pelosi’s announcement comes before a bipartisan group of lawmakers in the Problem Solvers Caucus is set to meet with Trump on Wednesday to discuss the shutdown and border security. Democrats are trying to cobble together a solid base as the White House attempts to pick off members known for cutting deals.

Shortly before Pelosi’s announcement, she and Minority Leader Chuck Schumer attended a closed-door caucus meeting with House Democrats, where Schumer told them to remain unified in their opposition to funding Trump’s long-promised border wall. 

California Braces For The Next Big Storm 

Get ready for round two of crazy weather in California

Another Pacific storm is expected to strike California on Wednesday afternoon, bringing a threat of mudslides to the area of the most destructive wildfire in state history and a blizzard warning in the Sierra Nevada.

The Butte County Sheriff’s Office issued a flood evacuation warning Tuesday for Pulga, a small town northeast of Paradise. The notice read: “if you are in this area, you should evacuate to higher ground.”

Most of Butte County area was included in a flood watch by the National Weather Service (NWS), which warns of 3 inches of rain in the valley and up to 6 inches in the foothills between Wednesday and Thursday.

Unlike the storm from earlier this week, this new round of rain is slow and steady, forecasters said, which could trigger mudslides.

“If flooding occurs, this can quickly become a dangerous and life-threatening situation,” the Butte County Sheriff’s Office warned.

A series of storm systems will bring very heavy rain to lower elevations of California and some surrounding states. Areal flooding and flash flooding, including burn scar mud and debris flow, will be possible through Thursday.

— NWS (@NWS) January 16, 2019

This could be the strongest storm of the year with torrential downpours triggering flash floods in the San Francisco Bay Area. 

Flood and high wind watches were posted for the Sacramento area, with NWS warning of widespread power outages, downed trees, and difficult driving conditions.

The storm is expected to bring blizzard conditions to the higher elevations of the Sierra Nevada through Thursday, with meteorologists predicting as much of five feet of snow in higher elevations and wind gusts of up to 100 mph on ridgetops.

Intense snow is also expected for the mountains in Northern California and north into the Cascades.

A week of storms has left officials worried about the potential danger for thousands of people living in foothill and canyon areas devastated by last year’s wildfires.

Rainfall records could be broken in areas such as San Jose and Riverside, where 1.42 inches and 1.37 inches of rain are expected, respectively, according to NWS.

The rain should subside by Thursday afternoon, said Bonnie Bartling, a weather specialist with the NWS in Oxnard.

“This one is going to be a little bit different,” Bartling said.

“We’re going to tap into subtropical moisture, which means we’re going to have some decent rainfall and gusty winds off and on.”

The same storm system is expected to hit the Midwest, Mid-Atlantic, and the North East later this week into the weekend, fueled by arctic air from a polar vortex.

“A strong storm has impacted California over the past few days, leading to nearly 2 inches of rainfall in Los Angeles and feet of snow across the Sierra Nevada.

This same system will traverse the United States through the weekend, bringing impactful along the I-80 and I-70 corridors Friday across the Mid-Continent, then deliver a major winter storm to portions of the Northeast. While specifics are still to be determined, the signal for a large, impactful storm along the East Coast is quite strong,” said Vallee Weather Consulting meteorologist Ed Valle.

People who live in the Mid-Atlantic and or the North East now is the time to prepare for the second round of winter weather that could rear its ugly head this weekend.