Jim’s Mailbox

Posted at 4:48 AM (CST) by & filed under Jim's Mailbox.

Jim,

You said the dollar’s days were numbered and this past year proves you correct.

Dave

Top 5 Countries Opting To Ditch US Dollar & The Reasons Behind Their Move
January 2, 2019

The past year was full of events that inevitably split the global geopolitical space into two camps: those who still support using US currency as a universal financial tool, and those who are turning their back on the greenback.

Global tensions caused by economic sanctions and trade conflicts triggered by Washington have forced targeted countries to take a fresh look at alternative payment systems currently dominated by the US dollar.

RT has taken a deeper look into the recent phenomena of de-dollarization, summing up which countries have taken steps towards eliminating their reliance on the greenback, and the reasons behind their decision.

China

The ongoing trade conflict between the United States and China, as well as sanctions against Beijing’s biggest trading partners have forced China to take steps towards relieving the dollar dependence of the world’s second-largest economy.

More…

 

Wonder how much debt is supported by the bad forecast?

Regards,

Tom

Don’t have the answer to this Tom but I am sure we will find out via bankruptcies!

Best,

Bill

Fracking’s Secret Problem—Oil Wells Aren’t Producing as Much as Forecast
January 2, 2019

Thousands of shale wells drilled in the last five years are pumping less oil and gas than their owners forecast to investors, raising questions about the strength and profitability of the fracking boom that turned the U.S. into an oil superpower.

The Wall Street Journal compared the well-productivity estimates that top shale-oil companies gave investors to projections from third parties about how much oil and gas the wells are now on track to pump over their lives, based on public data of how they have performed to date…

More…

 

Our pal Kevin with some very startling numbers…for those still sleeping!

Bill

US Household Sector: Net Worth

According to Credit Suisse Global Wealth Data book 2018 for Q2, Global Net Worth totaled $317T up $14T from Q2 2017. It is interesting that in Q2 2018, US Household Net Worth accounted for $98.1T or 30.9% of Global Net Worth while US GDP of $20.4T makes up only about 24% of world GDP. When “the fat lady sings” more fat will be trimmed from the bloated US Net Worth than the Rest Of The World. Further inspection reveals that US Real Non-Financial “Hard” Assets made up only 31.9% of Total Net Worth meaning over 2/3rd of US Household Assets, some 68.1%, are in “virtual & paper” Financial Assets. The US has too much financial “skin” in the game compared to the Chinese Household Sector too where only 37.1% of its Chinese Household Net Worth is in Financial Assets but nearly 2/3rd are in  Real Non-Financial “Hard” Assets. It is not hard to forecast what a financial and monetary collapse will do to the US Household Sector relative to its Chinese counterparts. Think Liposuction on a grand scale.

https://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=777FDF0E-E060-F608-52DAF97E062CC35B – see page 106 for 2018 data

https://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=B4A3FC6E-942D-C103-3D14B98BA7FD0BCC – see page 40 for 2018 data

 

China Household Sector: Net WorthAccording to Credit Suisse Global Wealth Data book 2018 for Q2, Chinese Household sector grew from $49.6T to $51.9T. It is interesting that in Q2 2018, Chinese Household Net Worth accounted for 16.4% of Global Net Worth while Chinese GDP of $13.1T also made up exactly 16.4% of world GDP. Further inspection reveals that Chinese Real Non-Financial “Hard” Assets made up 62.9% of Total Net Worth meaning the bulk of Chinese Household Assets are in not “virtual & paper” assets like the US.

https://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=777FDF0E-E060-F608-52DAF97E062CC35B – see page 103 for 2018 data

https://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=B4A3FC6E-942D-C103-3D14B98BA7FD0BCC – see page 41 for 2018 data

Stay tuned as gold price discovery and reset rewards the gold saving Chinese Households at the expense of US and other Western Households that have for more than 40 years over-consumed and under-saved with little to no gold set aside for rainy days. With Chinese Households accumulating some 17,000 MT or 530 million ounces of physical gold since restrictions were lifted in 2008, $10,000/oz gold will quickly added some $5T to their household net wealth. India will see over $6.25T in added wealth to their post-2008 8,000MT of gold accumulation & 12,000MT pre-2008. The West will greatly experience a large transfer of wealth as financial assets decline and gold rises as it is reintroduced into the world’s monetary system.

 

US Household Sector: Financial Assets/Total Assets – Non-financial assets in Q3 2018 officially made up 71.8% of all assets at record levels exceeding Q3 2017 71.4% and previous peaks at Q4 2007 64.7% & Q4 1999 71.4%. Notice the decline in US Household Financial Assets relative to Total Assets at the bear market lows of 2002 and 2009 where financial assets suffered much worse than “hard tangible assets”.

Q3 2018 –  71.8%

Q3 2017- 71.4%

Q1 2009- 62.4% (Financial Assets fell 19% from ’07 peak; Tangible Assets Fell 10.7% from ’07 peak)

Q4 2007- 64.7%

Q4 2002- 61.7%  (Financial Assets fell 17% from ’99 peak; Tangible Assets rose 23% from ’99 peak)

Q4 1999- 71.4%

 

US Household Sector: Corporate Equities, Mutual Funds, ETF shares/ Financial Assets – Corporate Equities held directly and indirectly in Q3 2018 officially made up 35.0% of all financial assets nearly exceeding Q4 2007 37.1% but below Q4 1999 50.1%. Equities are ripe for a big decline in prices relative to all financial assets. Stay tuned as gold price discovery and reset rewards the gold saving Chinese Households at the expense of US and other Western Households that have for more than 40 years over-consumed and under-saved with little to no gold set aside for rainy days.

Q3 2018 – 35.0%

Q3 2017- 33.9%

Q1 2009- 27.9%

Q4 2007- 41.5%

Q4 2002- 35.3%

Q4  1999- 50.1%

 

US Household Sector: Corporate Equities, Mutual Funds, ETF shares/ Total Assets –  Corporate Equities held directly and indirectly in Q3 2018 officially made up 25.15% of all assets nearly matching Q4 2007 26.9% but below Q4 1999 35.2%. Notice the decline in Equities, Mutual Funds & ETF shares at the bear market lows of 2002 and 2009 indicating stocks suffered much worse than Total Assets.  Equities are ripe for a big decline in prices relative to all assets. Stay tuned as gold price discovery and reset rewards the gold saving Chinese Households at the expense of US and other Western Households that have for more than 40 years over-consumed and under-saved with little to no gold set aside for rainy days.

Q3 2018 – 25.15%

Q3 2017- 24.19%

Q1 2009- 17.4%

Q4 2007- 26.9%

Q4 2002- 21.5%

Q4 1999- 35.2%

 

US Household Sector: Net Worth/Disposable Personal Income (DPI) – Net Worth in Q3 2018 officially made up 700% of DPI blowing away Q4 2007 615% and Q4 1999 632%. Looking at peak U.S. Equities in Q3 2018 that were valued at about $31T or 200% of DPI, this was also a record. By the end of Q4 2018 equities fell by about $5T from the peak yet are still ripe for a big fall. Real estate will tank too because forced liquidations will ensue as DPI is insufficient for servicing mortgage debt as interest rates continue to rise regardless of equities and employment declining simultaneously.

Q4 2018 – 681%

 Q3 2018 – 700%

Q3 2017- 673%

Q1 2009- 467%

Q4 2007- 615%

Q4 2002- 499%

Q4 1999- 632%

 

Current data:

https://www.federalreserve.gov/releases/z1/20181206/html/b101e.htm

https://www.federalreserve.gov/releases/z1/20181206/html/b101.htm

 https://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=777FDF0E-E060-F608-52DAF97E062CC35B

 

Historical data:

https://www.federalreserve.gov/Releases/z1/default.htm#content

https://www.federalreserve.gov/releases/z1/20090611/accessible/b100e.htm

https://www.federalreserve.gov/releases/z1/20080306/accessible/b100e.htm

https://www.federalreserve.gov/releases/z1/20090611/accessible/b100.htm

https://www.federalreserve.gov/releases/z1/20080306/annuals/a1995-2004.pdf