Mortgage Defaults Increase

Are mortgage lenders holding back on reporting defaults? In the US, a report by Moody's suggests the real rate of mortgage defaults, deferrals, and distress events is much higher than publicly disclosed. 

Zombie Companies - Chickens Coming Home To Roost

Is this the trigger that will bring down Wall Street?

22% of the Russell 2000 are zombie companies, that is, their operating cash flows do not cover the interest on loans about to be rolled over, coming off their record low base rates. Executives have been boosting their bonuses through share buybacks, instead of doing the prudent thing - paying down debt.

The (Real) Big Short

Steve Eisman tells the story of the GFC and how he made a lot of money out of it.

Is Our Money Safe?

The greatest risk of AI is its ability to hack our finances. One day, we may wake up to find our money has disappeared. 

AI is a useful tool, but it is often wrong, and not in shape to be fully trusted.

Bank Losses in the US: Bad Loans

The inevitable is happening again, and the losses are beginning to mount. These financial crises will only end when there is some accountability and an end to the idea that some are too big to fail.

BRICS New Central Bank

Lena Petrova analyses the current moves by countries to move away from the US Dollar.

Predictions for 2024

What will transpire in 2024? 

 

We are right on the cliff edge and anything could go down. World war, global financial collapse, lockdowns, AI takeover, CBDC's, rigged elections again, the end of personal liberty as we've known it in the past. 

When it comes to CBDC's (the cashless economy - central bank digital currencies), the reason I think governments are walking back from this, is not because of anything to do with cash being more efficient (which it is), but because law enforcement are pushing back against the central banks, saying that people sitting on sacks of cash without a ready explanation as to how that came about, helps build a case of a criminal conspiracy. Police are not equipped to troll through financial records and on the scene, without cash they'd find it difficult to build a prima facie case for search and seizure. 

World war is highly likely as the Middle East unravels. The Red Sea and Persian Gulf could both be closed down. That places the western world into recession. Russia is close to winning in Ukraine and that will make NATO look weak. Thus, other powers may chance their arm; think Venezuela on Guyana etc. It is hard to predict what, but if the west cannot keep the source of so much oil open for trade, things could unravel very quickly. 

 

And of course, New Zealand sits isolated, no oil refinery, anaemic manufacturing and a vague hope that it will be able to keep supply when the rest of the world says 'me first'. NZ will find itself at the back of the queue.

I don't like to sit on the fence, and I do make firm predictions at the risk of being completely wrong. Here is what I think:

• World war, I think we've gone past the tipping point and it seems inevitable now. China won't try to take Taiwan as that's too hard. Instead, they'll supply their allies and push against anyone who pushes against their borders. Potential allies for supply, include Russia, North Korea and Iran. The war will be between Russia and its proxies supported by China, against NATO and its proxies.
• Inflation will come under control but at the expense of national boundaries. An example: in the US a huge infrastructure spend is causing wage/price inflation. The answer to this is to allow uncontrolled migration, thus binging down wages. The western world will increasingly see this as a solution to inflation and are likely to promote (or look the other way) at the high level of economic migrants. Note, I'm not saying this is a wise approach, it's just where I see migration headed and the underlying reason for governments allowing it to happen.
• More rigged elections, including the Presidential election in 2024.
• Cyber attacks, takedowns of the grid etc., all done by governments themselves to control the people who are likely to be opposed to war.
• If cyber attacks and other scaremongering doesn't work, then the government will create another scamdemic and lock everyone down again. Back in 2020, they did this to rig the elections and to control the flow of information. The media played along then, and they'll do so again. The jab was a money grab, profiteering, murder. There may be reluctance to jab again as people have seen the effects and are now much wiser. Governments will be careful not to go too far as revolution can result. Britain and France in 2020 and 2021 are examples of coming close to revolution. Governments will want to avoid that.
• We could see firm steps taken toward creating a United States of Africa; Uganda, Kenya, Rwanda, Burundi and Tanzania have already agreed to consider it, with South Sudan and even the Democratic Republic of Congo being interested. This wouldn't be completed in 2024, but firm talks could start. The central African states would see this move as necessary, so they cannot be picked off by either side in the world war. The west would support this move as central Africa contains oil and gas reserves to substitute Persian Gulf resources with.
• Coal output continues to increase and climate alarmists are made to look even more insane.
• The market for EV's collapses as the cars spontaneously combust and the grid cannot cope with even a modestly sized fleet.

What do you think? Let me know your thoughts.

Banking Crisis 2023

Is the current financial crisis an act of intentional sabotage?

 

Vaccine Mandates and Saving the Economy

Are countries rolling out the vaccines and making them compulsory in order to introduce a financial reset?

I'd call this is a universal haircut of all financial resources, including real property. This would be accompanied by a digital currency, access to which would depend on vaccination status. This is plausible, many have posited the idea, see the link below for one argument I read recently. 

Governments would be mad to go through with it, getting rid of cash would be a monumental act of self-harm. Cash is king. There is no better substitute. The medical experimentation alone could also result in extinction of humans. That's because we cannot reliably know how things will evolve.

Another factor to consider is the reaction of the middle classes. In the past they've risen up and chopped off the heads of the aristocracy when it looked like they were being robbed. 

Link: https://pastebin.com/cVCTLTbG

Financial Reset Imminent

Interesting watch this, why are governments coming after our children for the Covid jab? That's because the new financial system governments have devised, requires everyone. The jab feeds into the vax passport which is really a digital ID. Then comes your social credit score and ultimately complete control of your money. 

For businesses this is a very bad thing. If you own a business you may think you have to obey these laws. But if you do, you will end up out of business. Take vax certificates to gain entry as an example. They expire after 6 months, what if a sizeable proportion of the population do not get their booster. Then what? Well, you'll have no customers, you'll lose your business. And if the government want to ruin you, they'll just switch you off, or make all digital ID's in your area go red overnight. You'll never be free.

(Note that this video didn't stay on YouTube all that long; are they over the target?)

Cryptocurrency Idea

I see that Dogecoin is trending, and apart from the obvious reason of Elon Musk promoting it, and that it is considered 'cool' for some reason, it could be useful due to liquidity. The number of coins in circulation isn't capped, so many are issued each year which keeps the price in check.

How about this idea for a cryptocurrency. Make it capped at a quadrillion coins. That's a thousand trillion. But make these coins hard to mine, not like gold or silver, or even platinum or palladium. How about equating this new coin to pink diamonds or natural sea pearls. The scarcity lies in the quest rather than coins being relatively easy to find but ultimately running out of puff. Along with this quest, once a coin is found then it becomes easier for a miner to find more near it. That's similar to real mining where you may find a rich vein. Just an idea.

Big Silver Squeeze

Following on from the GameStop buys intended to hurt short-sellers of that stock and a few others such as Blackberry and AMC, activists are now buying silver in the physical form or buying silver futures predicting a rise in the price of silver. This is intended to hurt those making bets that silver will fall in price. The big factor here is that there is no limit to the price of a physical commodity like silver. As hard metals markets open on Monday, watch this take off. Central banks are going to come under pressure. This is what happens when a group of relatively affluent investors get really pissed off. 

Update: the Wall Street Bets reddit claim that this silver squeeze is masterminded by the hedge funds to try and divert investor attention to something they want to happen, a rise in the price of silver. They urge investors to stay put and hold GameStop stock and to continue buying. 

Baker Tilly Staples Rodway Election Poll

Baker Tilly Staples Rodway (chartered accountants) election poll, key findings:

Top concerns:

Infrastructure top priority (45% of those polled had this 1st or 2nd)

Technology/Innovation

Healthcare/Medical research

Skills/Apprenticeships

What used to be important in these polls? Housing, now no longer dominant. 

Nearly 40% think things getting worse

Only 8.5% think election will have positive impact

56% of businesses have seen revenues decline

This is catastrophic.

What about Tax?

53% in favour of tax cuts

44% in favour of Labour's adjusting top tax rate

72% oppose Greens wealth tax

75% don't want extra sick days and holidays

Message: don't tax assets, income - may be prepared to pay a bit more.

Take this on board you politicians.

Things Will Get Worse

I've been a prophet of doom the last few years, but finally my prediction is coming true. Don't go buying stocks right now as things will get worse before they get better. The latest stocks to avoid are the financials; banks in other words. With people out of work, they're going to want to access their money yet they don't have income to replace those savings with. This is going to be challenging for banks and I predict a few failures. The big ones will be bailed out, but small institutions will disappear or be gobbled up.

This hysteria over COVID-19 is massive theft of Millennial and Gen-Z inheritance. The epidemic could have been handled better that's for sure. Watch out, this is going to be a bumpy ride.

Adrian Orr is worth it

Adrian Orr is the CEO of the New Zealand Super Fund. It is colloquially referred to as the Cullen Fund, so named after the Minister of Finance Michael Cullen who established it. The fund was set up to help offset the escalating cost of retirement faced by the New Zealand government. The baby boomers are starting to retire in increasingly large numbers and everyone in NZ is entitled to an income from the age of 65. The entitlement is not means tested. Baby boomers are generally considered those born after the Second World War, up to about 1966. They comprise a bubble or boom in population and all of them qualify for this universal superannuation.

The story behind the fund is that it has been remarkably well managed. Adrian Orr is the latest Chief Executive Officer and he has performed outstandingly. Through GFC's and various global meltdowns that have wiped out some economies and seen large financial institutions destroyed, the 'Cullen Fund' has returned 9.67% growth.

Its performance is one of the better out there and Adrian Orr is to be commended. But instead what we see is the Cullen Fund and Orr becoming a political football. Criticism has been vocal from the the current and likely temporary Prime Minister, Bill English, who is notable for having done nothing apart from be a professional politician and faux Southlander. The criticism is backed by the State Services Commission who oversee state sector salaries. They're a bunch of time-serving bureaucrats who struggle to balance their own cheque books, let alone juggle the complexities of the likes of the Cullen Fund.

Their complaint is that Adrian Orr earns too much and that the board that supports him agrees with what he is paid. Shock, horror, a CEO that does his job superbly and a board that knows he does. The critics know nothing about money and so should, to put it bluntly, shut up and let them get on with it.

But wait there's more; the Prime Minister and his lackeys have threatened to not re-appoint the board. I presume this is intended to bring the board into line and reduce or throttle Mr Orr's salary. And why would anyone want that? Oh wait, would it be jealousy, he's good at what he does, and proves it year in year out.

The downside is Orr takes off to deliver his skills to some other country or corporate, and NZ sits there and the Cullen Fund loses money. People like Mr Orr don't come cheap. If they do then they're no good. You pay handsomely to get the job done right.  Orr is probably worth twice what he's getting, shh, don't tell him, he seems to like living in NZ.

Don't vote for National this election. NZ has to get rid of this Bill English fool, he's going to break the country. That means NZ is going to end up broke with him at the helm. Yes I know he was Minister of Finance but he had John Key looking over his shoulder, his stupidity was reined in then.

I got the idea to comment on this matter yesterday. I had two brake pads on the rear of the Subaru replaced by a man who comes to your house or workplace to do the job in twenty minutes. He has a successful business and he's run off his feet doing brake jobs all over town. He's had two brake businesses previously and both have done well, but for the mobile service he got the idea from Australia when he was there. Talking to this chap about things (such as would you trust your car to one of the franchise car mechanic outfits from Australia (never) and what were the most reliable cars - Subaru, they are actually made in Japan), I was able to work out what he made on his own with his one van. About $200,000 a year. Not bad eh, 10 to 12 hour days but few overheads. Are you seeing where I'm going with this?

That's right, my brake repair chap makes money and do I begrudge him that? Hell no, he's not the most expensive, nor is he the cheapest, he just has the very pleasing habit of doing the job right. So why does the Prime Minister complain about someone competent like Adrian Orr doing the job right and making money doing it? Hasn't Orr, like my brake repairer, earned the rewards? Well yes he has, now Bill English, grow up and remove yourself from meddling in things you don't understand. There's a job of work to be done by people who know what they're doing.