Jim’s Mailbox

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Courtesy of GG


Opinion: Bitcoin, Because Of Massive Borrowing, Could Crash The Financial Markets
December 23, 2017

Bitcoin mania is starting to look like a religion.

I say that because both bitcoin BTCUSD, -9.08%  and religion involve faith in the unknowable. Some bitcoin investors believe the cryptocurrency, along with the underlying blockchain technology, will be a vital part of a new, decentralized, post-government society.

I can’t prove that won’t happen — nor can bitcoin evangelists prove it will. Like life after death, they can only say it’s out there beyond the horizon.

The very same capital that backs up stock index, Treasury bond and foreign currency futures also stands behind bitcoin futures.

If you believe in bitcoin paradise, fine. It’s your business … until your faith puts everyone else at risk. As of this month, bitcoin is doing it.

Lenders and leverage

Is bitcoin in a price bubble? I think so.

Asset bubbles usually only hurt the buyers who overpay, but that changes when you add leverage to the equation.



Courtesy of JB


President Trump, Here’s Why The Postal Service Is Charging Amazon ‘So Little’
December 29, 2017

In a Twitter blast this morning, President Trump said, “Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!”

There may well be a political angle to this. Amazon is owned by Jeff Bezos, who also owns the Washington Post. Trump has been highly critical of the media, and singled out the Post for its coverage of his presidency. Almost immediately following the tweet, Amazon’s stock price began to drop.

But for a logistics guy, this is also a teaching moment. First of all, Amazon uses all the major parcel carriers as well as a network of regional carriers. But what Trump appears to be referencing is the increased use of the U.S. Postal Service for zone skipping, also known as direct injection.

In zone skipping, a shipper consolidates many individual packages into a much larger shipment, often full truckload shipments. These packages are then sent en masse from one zone to another. For example, Atlanta is in Zone 2 and Los Angeles is in Zone 8. Shipping directly from Zone 2 to a Zone 8 parcel carrier’s sorting facility can lead to substantial savings for a shipper. But the ability to consolidate for zone skipping depends on whether a shipper has both enough time and enough volume, something most companies lack. Amazon certainly has the volume.

But in an ecommerce world, the lack of time is particularly worth noting. When retailers offer many of the same items at similar prices, the speed of delivery can be the deciding factor. The need for speed is leading to shorter and shorter delivery promises. Amazon Prime members get their packages in two days “free.” If customers want to pay more they can get them even quicker.

Amazon can hit aggressive service expectations because it has its own air cargo network. The company flies goods in bulk on leased Boeing 767s to an air hub in Wilmington, and then deconsolidates the incoming load and reconsolidates a load with packages headed for a particular zone. It can then deliver in bulk, in truckload sized trailers – Amazon has purchased thousands of 53 foot trailers to a USPS sorting facility in that zone.





Jim, while You’re not posting will you converse?


I’d like to have discourse with you for the coming


Year of reformation.



Rgds & Merry Christmas/HNY,too.





Post what?

1/ Manipulated markets.

2/False economic numbers.

3/ Lies about everything.

4/ Corruption greater than a banana republics.

5/ Bullet proof prior politicians colluding to neutralize all of the presidents actions.

6/ The continuing swamp.

  1. The DOJ and FBI as arms of politicians.

8.The swamp everywhere.

  1. All news swamp controlled.

My readers know it all. Why repeat it ad nausea? I have chosen just to post present time real news knowing all is lost, knowing there is no cure to this cancer of society.




Courtesy of JB




Liquidity is good. It is also bad.

Just a water (liquidity) rehydrates the body, an excess of it drowns you!

That is what’s happening, not only on our markets, but globally.

We are drowning in debt (liquidity).

There is so much money floating all around us that there is a developing lack of supply of investments to go around.   We see the crypto markets evolving to absorb the liquidity, we see the “Kitty cryptos” as well.  Can you say Tulip Mania?

It’s all about cash seeking returns in markets that have overpriced themselves.

“…..an eye-wide-shut orgy of recklessness that truly has no parallel, not even the mania of 1927-1929.”

And the cherry on top of this “sundae” is …… the impending removal of the U.S. Dollar as the world’s reserve currency, thanks to China and Russia’s prescient recognition of the underlying cancer surrounding the West’s fiscal irresponsibility and game playing.

Al Jolson had it right…….

The Greatest Bubble Ever: Why You Better Believe It – Part 1
December 29, 2017

Authored by David Stockman via Contra Corner blog,

During the 40 months after Alan Greenspan’s infamous “irrational exuberance” speech in December 1996, the NASDAQ 100 index rose from 830 to 4585 or by 450%. But the perma-bulls said not to worry: This time is different—-it’s a new age of technology miracles that will change the laws of finance forever.

It wasn’t. The market cracked in April 2000 and did not stop plunging until the NASDAQ 100 index hit 815 in early October 2002. During those heart-stopping 30 months of free-fall, all the gains of the tech boom were wiped out in an 84% collapse of the index. Overall, the market value of household equities sank from $10.0 trillion to $4.8 trillion—-a wipeout from which millions of baby boom households have never recovered.

Likewise, the second Greenspan housing and credit boom generated a similar round trip of bubble inflation and collapse. During the 57 months after the October 2002 bottom, the Russell 2000 (RUT) climbed the proverbial wall-of-worry—-rising from 340 to 850 or by 2.5X.

And this time was also held to be different because, purportedly, the art of central banking had been perfected in what Bernanke was pleased to call the “Great Moderation”. Taking the cue, Wall Street dubbed it the Goldilocks Economy—-meaning a macroeconomic environment so stable, productive and balanced that it would never again be vulnerable to a recessionary contraction and the resulting plunge in corporate profits and stock prices.

Wrong again!

During the 20 months from the July 2007 peak to the March 2009 bottom, the RUT gave it all back. And we mean every bit of it—-as the index bottomed 60% lower at 340. This time the value of household equities plunged by $6 trillion, and still millions more baby-boomers were carried out of the casino on their shields never to return.


Spot on, but first flash crashes that in time do not make full recovery. Then the Hon. Ron Paul is correct. Equities will stumble many time before the end of equity days. Courtesy of JB.


Ron Paul Warns America’s “On The Verge Of Something Like 1989’s Soviet System Collapse”
December 29, 2017

on Paul does not believe the U.S. will break into separate countries, like the Soviet Union did, but expects changes in the U.S. monetary policy, as well as the crumbling of the country’s “overseas empire.”

The godfather of the Tea Party movement and perhaps the most prominent right-leaning libertarian in America, Ron Paul, believes the economic boom the United States experienced under President Trump could be a “bit of an illusion.”

Mr. Paul sees inequality, inflation, and debt as real threats that could potentially cause a turmoil.

“the country’s feeling a lot better, but it’s all on borrowed money” and that “the whole system’s an illusion” built on corporate, personal, and governmental debt.

“It’s a bubble economy in many many different ways and it’s going to come unglued,”

In a recent interview with the Washington Examiner, Paul said,

“We’re on the verge of something like what happened in ’89 when the Soviet system just collapsed. I’m just hoping our system comes apart as gracefully as the Soviet system.

We have ownership of these countries, but it’s not quite like the Soviets did. I think our stature in the world and our empire will end, and that’s when, hopefully, the doors will be open.”

The crumbling of America’s “overseas empire,” as Mr. Paul calls it, could be a chance for the libertarian movement to captivate the country’s imagination by 2020.



Courtesy of GG


As The Yield Curve Crashes To 10 Year Lows, Trader Shows “How To Put On A Steepener”
December 28, 2017

Yesterday saw the US Treasury yield curve collapse to a fresh cycle low – the flattest curve since Oct 2007 – erasing the hoped-for trend change shift from last week…

And this is occurring as net positioning in the long-end has never been more bullish.

Between that and the effect of Trump’s tax reform plan, The Macro Tourist’s Kevin Muir  lays out his thesis for getting long a steepening trade into the new year and details how to do it…




We used to call it point counterpoint, but this is tag team stuff…




Here’s an interesting thought regarding the misconceptions of supply in the gold and crypto markets:

If God said to me,

Wolfgang, as of tomorrow morning, I’ll bless you.

You can choose to be the sole owner of all the existing gold in the world

or all the existing crypto currencies in the world.

Which do you want?”

Think about this for a moment.

Additional cryptos can be immediately created, whereas gold can’t.  It can only be slowly mined.

And for that matter, what central bank would back fiat currency with crypto currency?  They don’t do it now.

Whereas gold is still the foundation of central banks.

I’d choose gold, obviously.

CIGA Wolfgang Rech