Posts Categorized: Jim’s Mailbox

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Jim/Bill,

The percentages are huge…should have affected the debt markets heavily already.

JB

JB,

As I wrote in a subscription article this week, “Only 90 days late?”

Bill

Americans Skip Millions of Loan Payments as Coronavirus Takes Economic Toll
June 18, 2020

Americans have skipped payments on more than 100 million student loans, auto loans and other forms of debt since the coronavirus hit the U.S., the latest sign of the toll the pandemic is taking on people’s finances.

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Jim,

As you said it was a banking crisis all along. The public just got taken for a ride again.

Dave

The Fed Just Pulled Off Another Backdoor Bailout of Wall Street
June 10, 2020

The Federal Reserve has authorized 11 financial bailout programs thus far. Despite Fed Chairman Jerome Powell’s reassurances at his press conferences that these programs are to help American families, a full 10 of these programs are actually bailouts of Wall Street banks or their trading units.

The latest Wall Street bank bailout to come out of hiding is the Fed’s Secondary Market Corporate Credit Facility (SMCCF). This program was supposed to buy up corporate bonds in the secondary market in order to help corporate bond markets regain liquidity. Thus far, the only thing the SMCCF has bought up are Exchange Traded Funds (ETFs) holding investment grade and junk-rated bonds.

The SMCCF program began operations on May 12. By May 18 the Fed had spent $1.58 billion buying up ETFs. The ultimate goal of the facility, at this point, is to spend $250 billion on ETFs and secondary market corporate bonds. The U.S. Treasury Department was supposed to hand over $25 billion of taxpayer money to eat losses on the SMCCF program. Instead, without explanation, the latest data from the Fed shows that the Treasury deposited $37.5 billion into the SMCCF, suggesting the program is expecting losses of greater than $25 billion.

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Posted by & filed under Jim's Mailbox.

Jim/Bill,

I would say this is an avalanche…But the powers that be have pushed the market to all time highs.

Dave

…and it has only started David. As we keep stressing, “the masses are not even hungry yet”. Chapter two will include hunger, the current violence will be massively ramped up at that point.

Bill

Broadest Economic Collapse Since 1870: World Bank
June 9, 2020

The coronavirus pandemic inflicted a “swift and massive shock” that has caused the broadest collapse of the global economy since 1870 despite unprecedented government support, the World Bank said Monday.

The world economy is expected to contract by 5.2% this year – the worst recession in 80 years – but the sheer number of countries suffering economic losses means the scale of the downturn is worse than any recession in 150 years, the World Bank said in its latest Global Economic Prospects report.

“This is a deeply sobering outlook, with the crisis likely to leave long-lasting scars and pose major global challenges,” said World Bank Group Vice President for Equitable Growth, Finance and Institutions Ceyla Pazarbasioglu.

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Posted by & filed under Jim's Mailbox.

Black holes? This is where credit, derivatives, and thus capital, go to DIE!

Courtesy of CIGA Larry.

Bill

Billions, Trillions, Some Perspective
May 30, 2020

Over the course of my lifetime, we have seen the global money supply and global debt continue to expand endlessly. In the days of old during my youth, people worried that some day the total US debt might reach as high as a Trillion dollars. As you can see from this historical chart, total US debt edged up over time from around 250 Billion starting in the year 1950 to a little over 500 Billion by the year 1975. By this time people my age were about 20 years old and the idea of Billions in total debt seemed normal. As we can see from the chart, total US debt did not hit the Trillion dollar mark until 1982 when people around my age were approaching 30 years old. This seemed like a big deal at that time as we moved in “the Trillions” for the first time.

Of course now we look book back at a one Trillion dollar total debt as mere peanuts. Trillions have become quite acceptable in the public mind and no longer concern most people as we move well over the 20 Trillion mark in total US debt. Trillions for people today seem like Billions did to people when I was growing up. Clearly, the total US debt is headed much higher in coming years and these days no one seems very concerned about that. Every now and then a politician or financial analyst will act concerned about it; but we all know nothing will actually be done to stem the rising tide of debt unless there is no other option available to keep extending the debt. These days, it is even fashionable to promote the idea that debts don’t matter at all and that all that matters is that we can pay the interest and roll over the debt.

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From our friend Werner. Classic hyperinflation in Venezuela. Stocks to the moon in local currency but flushed down the toilet in terms of gold…

Bill

Bill,

The purchasing power of the currency is plunging, collapsing

From the end of August 2018 until now, the Bursatil Stock index has appreciated by 89,638% (this is 89 thousands 638%, not 89.6%) in Bolivar soberano terms.

But in US dollar terms, stocks lost 71% of their value.

image0

During the same period, Gold has appreciated by 444,377% (444 thousands 377%) in Bolivar terms. AMAZING!

CIGA Werne

Posted by & filed under Jim's Mailbox.

Jim/Bill,

An avalanche will take out even the strongest trees. When it gets going, nothing can stand in its way.

Dave

America’s Largest Mall On Verge Of Default After Missing Two Loan Payments
May 21, 2020

Even before the coronavirus pandemic, US malls were in a crisis, with vacancies in January hitting a record high.

shopping vacancy

However, in the post-corona world, commercial real estate has emerged as one of the most adversely impacted sectors (perhaps because the Fed has so far refused to bail it out), with the number of new delinquencies soaring to a record high in recent weeks.

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Jim/Bill,

File under avalanche theory….

Dave

Here Comes The Wave: Loan Defaults Hit 6 Years High
May 22, 2020

Two weeks ago, when looking at the recent flurry of chapter 11 filings and a striking correlation between the unemployment rate and loan delinquencies, we said that a “biblical” wave of bankruptcies is about to flood the US economy.

shopping vacancy

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CIGA Lon checks in with a topic soon to be extremely relevant.  Those who have protected themselves will still be standing yet see most everything fallen down around them.  When the time comes, even though you have been thought and spoken of as an idiot, be charitable!

Bill

Jim & Bill,

There is no need to respond; I know you are both very busy and doing a great job in trying to bring people to a better understanding of what is going to happen and how it is unfolding now.

I heard something in the message from last Saturday that was sent to me yesterday… First, thank you for sending it. It said near the end that the goal is to make it to the ‘other side of the crises’ with assets that can then be deployed to make life very comfortable for the individual. I fully agree with the intent…but I think something is also important. Someone said to finish first one must first finish.

When I was the CFO of a company called Charlotte Russe and doing very well personally and financially; I got the news that my legally separated mother and father were dying and so was my younger unmarried sister. They lived in three very widely separate parts of the country. My wife and I have always worked and lived on less than what we made and our only daughter was very fortunate to have an athletic scholarship to the university she was attending. God has been good to us.

I gave Charlotte Russe a few of months’ notice of my intent to leave and take care of my family. That was not exactly what I wanted to do as my wife and I tried to get ready for a hoped comfortable retirement. I fully enjoyed my job, chosen field of endeavor and continued to consult for several years based on when I could fit it in which meant a reduced income (I’m not a very good salesman….including selling myself).

The point of this is that a lot of people, for a myriad of reasons, are not ready or prepared for this financial crisis. My wife and I don’t donate to organizations but as individuals we help others with funds anonymously and personally over rough spots in life. Though we are careful to give a hand-up and not a handout.

I don’t want any response to this letter, but I do believe that those that have the knowledge and/or, assets should have a goal of helping others during this crises to get through it…..Just as you two are, and have been doing with your financial knowledge and experiences in opening the eyes and ears of those willing to listen and learn. I truly believe there are a lot of people who will need what can be spared by others to get through this mess. That too is a reasonable use of assets and part of the Judeo-Christian ethics of our country.

Lon Gilbert