Zero Percent Mortgages Debut Setting Up The Next Stage For This Stock Market Bull

By Sol Palha – Re-Blogged From

Economists stated that main trigger for the financial crisis of 2008 was the issuance of mortgages that did not require down payments.  The ease at which one could get mortgages in the past is what drove housing prices to unsustainable levels. Post-crisis all banks vowed to end the practice forever, or that is what they wanted everyone to believe.   When the credit markets froze, we openly stated that the 1st sign that banks were getting ready to lower the bar again would come in the form of Zero percent balance transfer offers that had all but vanished after 2008.  A few years after 2008, banks started to mail these offers out. Consequently now, everywhere you look you can find 0 % balance transfer offers ranging from 12 months to 18 months.  The next step after that would be for banks to lower the 20% down payment required to something much lower. Currently, Bank of America and a few other banks are offering 3% down mortgages.

Now Barclays Bank has become the first British bank to turn back the hands of time; it has started to issue 0% down Mortgages under a program called “family springboard”.  There is, however, one small difference. In this instance, a parent would put 10% of the down payment into an account. If payments are made in a timely fashion, this amount is returned in three years with interest.

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Romania Did This…And Now It’s Among The Fastest Growers In Europe

By Frank Holmes – Re-Blogged From

In 1974 the American economist Arthur Laffer, then a professor at the University of Chicago, was having dinner with his friend Jude Wanniski, an associate editor of the Wall Street Journal. They were joined by Donald Rumsfeld and Dick Cheney, both of whom worked at the time in the Gerald Ford administration. The topic at hand was President Ford’s Whip Inflation Now, or WIN, initiative, which included proposed tax increases.

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The Fed’s Loud Talk Policy

By Peter Schiff – Re-Blogged From Euro Pacific Capital

Theodore Roosevelt’s famous mantra “speak softly and carry a big stick” suggested that the United States should seek to avoid creating controversies and expectations through loose or rash pronouncements, but be prepared to act decisively with the most powerful weaponry, when the time came. More than a century later, the Federal Reserve has stood Teddy’s maxim on its head. As far as Janet Yellen and her colleagues at the Fed are concerned, the Fed should speak as loudly, frequently, and as circularly as possible to conceal that they are holding no stick whatsoever.

Roosevelt’s “stick” was America’s military might, which in his day largely boiled down to the US Navy, which he had enlarged and modernized. To demonstrate to a potential adversary that he was prepared to use these weapons, Roosevelt sent the fleet around the world in a massive show of force. However, he took care to couch the expedition in soothing rhetoric. He even ordered the battleships to be painted white to create the impression that they were angels of mercy rather than instruments of power. The combination proved effective. America’s global influence increased dramatically during his presidency even though few shots were fired.

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Don’t Buy The SPX Hope Rally!

By Chris Vermeulen – Re-Blogged From

All bubbles burst; the question is when? Quantitate Easing (QE) is much like an addiction. One needs more and more to get the initial effect. However, this becomes an “asymptotic” result…whereas eventually one needs an infinite amount that will no longer give a positive effect! So, now that QE has failed, I believe there will now be the introduction of “Helicopter Money.”

Global Central Bankers constantly continue to spend their way out of their “contracting economies” which are now resulting in large ‘budget deficits’. The deficits that these policies have produced are “unsustainable” and have now created a new “fiscal crisis” within their countries. A second response has been to expand the Central Banks’ balance sheet as a way of providing liquidity to the private sector. These policies have also sent interest rates into “unprecedented” historical lows.

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Japan’s “Helicopter Money” Play: Road To Hyperinflation Or Cure For Debt Deflation?

[I DO NOT agree with the Helicopter Money thesis. Governments’ expansions of their money supplies unrestrictedly were the cause of every Hyperinflation the world has known, as for example in Wiemar Germany and more recently in Zimbabwe. –Bob]

By Ellen Brown – Re-Blogged From

Fifteen years after embarking on its largely ineffective quantitative easing program, Japan appears poised to try the form recommended by Ben Bernanke in his notorious “helicopter money” speech in 2002. The Japanese test case could finally resolve a longstanding dispute between monetarists and money reformers over the economic effects of government-issued money.

When then-Fed Governor Ben Bernanke gave his famous helicopter money speech to the Japanese in 2002, he was talking about something quite different from the quantitative easing they actually got and other central banks later mimicked. Quoting Milton Friedman, he said the government could reverse a deflation simply by printing money and dropping it from helicopters. A gift of free money with no strings attached, it would find its way into the real economy and trigger the demand needed to power productivity and employment.

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Destroying Crude Oil Price Rally – Something Dark Emerges from the Tar Pits and Oil Sands

By David Haggith – Re-Blogged From Great Recession Blog

The crude oil price rally has been completely destroyed, though I’ll admit I was wrong when I predicted crude oil prices would plummet in March or April as the perfect storm developed against oil prices. Instead, they rallied. In spite of that, I continued to believe my error was in timing and not in fact — not in the fact that another harsh fall in oil prices was beating a path to our doors.

Crude oil prices beaten down by a storm still building

So, I continued to write articles about the forces building against oil prices, even in the face of a strong rally, which many believed would set a new position for oil for the remainder of 2016. That storm has, as of today, completely clawed back the post-March rally by taking crude oil prices back to a three month low and to where they stood at the start of the year as well. West Texas Intermediate just struck $42/barrel today.

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Electrical Power Consumption & Stock Markets

By Mark Lundeen – Re-Blogged From

…. I haven’t covered electrical power consumption (EP) for a few months, making this a good time for an update.  Electrical power consumption is just that, the power required to drive the economy from one day to the next.  EP is an excellent metric for measuring economic growth (or its contraction), as it’s measured in the kilowatt (KW); an engineering unit that cannot be manipulated by Washington’s statisticians at the Labor Department.  The reason for this is simple; calculating EP comes down to a simple law of nature: Ohm’s Law or E=I*R.  Where E is voltage, I is the amperage demanded by the electrical grid, and R is the electrical grid’s resistance to the flow of the amperage.

A simple example of EP is as follows:  E(120 volts) = I(2 amps) * R(60 ohms).  If the demand for electrical power were to double, we would see 120V = 4 amps * 30 ohms.  You see, to maintain 120 volts, the utility would have to double the amps as resistance to the flow would be halved by the utility’s customer base demanding more amps at 120V.  Engineers and electricians understand what most people don’t about electricity; voltage is cheap.  However, to drive current (amperage) down the line you have to burn coal or fuel oil and build infrastructure, and that cost money.

From the stand point of Ohm’s Law, the electrical utility is obligated to maintain the electrical grid’s rated voltage.  The grid’s “load” is 100% determined by the utility’s customers.  Whenever someone turns on a light bulb, or starts a 500HP electrical motor to drive an assembly line, the utility must send additional amperes down the line if it’s to maintain the grid’s rated voltage.  So, it’s easy to understand that when the economy is growing, its demand for EP grows too.  When the economy is contracting, its demand for EP contracts like wise.

Barron’s has published weekly EP consumption statistics since August 1929.  In the chart below the blue plot is the actual weekly data points, the red plot is its 52Wk MA.  Before the 1970s, seasonal factors for heating and air conditioning were minimal.  After 1970 these seasonal factors became significant as residential and commercial air conditioning became a fact of life for most Americans, and to electrical utilities in all fifty states.

From 1929 to the 1960s, weekly variances in EP were insignificant, as EP was primarily used for industrial and commercial purposes.  However after 1970, to filter out the growing seasonal factors in EP, a 52Wk MA is needed to measure actual economic demand; not perfect, but good enough.

Looking at the chart’s red plot (52Wk MA), we see EP’s last all-time high in demand for power occurred eight years ago in August 2008.  Also, peak demand for electrical power was ten years ago in August 2006.  The summer of 2006 must have been a hot one!  Looking at the economy by its demand for electrical power, there has been no economic growth during the entire Obama Presidency.

Below is a Bear’s Eye View of the 52Wk MA for US EP demand (Red Plot above).  Let’s take a look at its upper portion for a historical review.  During the Great Depression demand for EP contracted by brutal 17.32%.  The 1930s also saw a smaller, yet still painful 6.58% economic contraction in 1938.

The next contraction in EP occurred in 1946.  But this 8.21% contraction was a result of shutting down American’s production lines to retool factories for peace time production, as tanks were out and automobiles were back in.  Interestingly, this second largest decline in EP didn’t come from a post war recession, or so said the editors of Barron’s at the time who were a bit amazed at this.

From 1946 to 1980, except on rare occasions, demand for electrical power saw new all-time highs on a weekly basis.  Then a significant contraction in EP occurred during the early years of the Reagan Administration.  In the early 1980s as interest rates soared to double digits, EP contracted by 4.12%.  It may not look like much, but that 4% reduction in EP caught everyone’s attention!

The popping of the high-tech bubble resulted in a 2.45% contraction in EP in 2002, but then things became weird.   Up to this point, all economic contractions in EP formed V shaped declines in the BEV plot.  A last all-time high in EP occurred, economic demand for EP then contracts as the recession develops, which ultimately reached a bottom, where demand for EP once again increased to new all-time highs as the economy recovered.

As you can see below, all that changed in August 2008.  I believe the major cause for this has been the Federal Reserve’s Zero Interest Rate Policy, which began in December 2008, and the three doses of QE the FOMC had injected into the economy.

Had the “policy makers” allowed Mr Bear to take out the trash from the sub-prime mortgage debacle, I suspect we’d have seen an economic contraction in EP of over 10%.  As you see that didn’t happen.  However, since 2008 there hasn’t been a real economic recovery either.

Before Mr Bear and his cleanup crew finally pack up and leave, expect a contraction in the demand for EP to go straight down through Mr. Obama’s photo in the chart below.

The question these charts beg to be asked is; how can Washington’s statisticians report record levels of economic growth?  That’s simple, “economic growth”, as measured by the Labor Department, is measured in dollars, not kilowatts.   And as is painfully evident in the chart below, since August 1971 when the dollar was decoupled from the Bretton Woods $35 gold peg, there has been no shortage of “economic growth” (Red Plot) for Washington’s statisticians to measure.  Though the growth in the economic demand for EP (Blue & Green Plots), has fallen far behind.

As EP has seasonal factors for heating and air conditioning, its data of summer peaks provides us with impartial observations to confirm or refute claims of “global warming.”  In the charts below I’ve plotted the weekly EP data to its 52Wk M/A.  There are two seasonal peaks for EP demand.  The smaller winter peaks occur near the vertical-grid lines (January), while the summer peaks are found between them.  Take a moment to study these charts.  As far as the demand for EP to satisfy summer cooling requirements, the data makes a better case for global cooling than warming.

This season’s peak demand for the summer has yet to pass.  This should happen sometime before mid-September.  Hopefully, the northern hemisphere sees its thermal peak soon, as “scientists” investigating the effects of “global warming” on the Arctic Ocean have gotten stuck in the ice not far north of Murmansk, Russia.

“An expedition to the North Pole intended to measure the effects of global warming ground to a halt this month when the scientist’s ship got blocked by the ice packs near Murmansk, Russia, reports reveal.” – Breitbart / Big Government 21 July 2016

This is embarrassing!  And not the first time “scientists” investigating “global warming” have been exposed as gullible dolts.  These people only do this because some governmental bureaucracy is funding their research with tax money, but only if the “scientists” objective is to find data to confirm dubious allegations of global warming.  Global warming skeptics need not apply for the funds.