Is There a New Dotcom Bubble?

#692
The Eurozone economic outlook is worsening, and consumer spending is expected to collapse this year (we are not there yet... but the economy will suffer this year).

German economy shrinks as soaring energy costs pinch demand | Financial Times (ft.com)

"Destatis said private consumer spending was a key driver of the contraction, suggesting that the fall in real household incomes due to the energy crisis is now starting to bite. Energy costs for German consumers rose by 34.7 per cent over the course of 2022."

Sweden is also doing pretty bad:

"Sweden's economy shrank 0.6 per cent in the last quarter of 2022, separate figures published on Monday showed."
 
#696
The FED is saying the marginal rates are going to be higher than expected, higher interest rates for a longer time.
 
#697
Meta climbs +20% in the after market. Today it will open with a big gap, despite the awful earnings and data reported.
 
#698
Juan said:
And the crypto scam goes on. For "believers" there's already religion, it was invented a few thousand years ago. "Believers" do not need the NASDAQ or crypto haha.
Click to expand...
You're still calling crypto technology a scam? It remains the fastest-growing sector and is something everyone should be paying attention to. The articles you have posted throughout this thread are from the same single source, the Financial Times. Not much has changed around here, lol.

The FTX debacle had nothing to do with crypto as a technology. It was just an outright scam and they had Gary Gensler of the SEC in their pocket protecting them. We still haven't scratched the surface of what happened, but we know that SBF was siphoning significant amounts of money to people in power, especially the democrat party. This explains why so many puff pieces were written about him (in the press) in the immediate aftermath.

I noticed that nobody mentioned the Credit Suisse situation, though. A collapse of that magnitude would be another Lehman Brothers moment and it would affect everyone rather than just the degenerate gamblers who were in FTX.
Juan said:
The Fed is saying the marginal rates are going to be higher than expected, higher interest rates for a longer time.
Click to expand...
The Fed went above 3% on the Federal Funds rate which I said would be a problem, and it is. The US is now on the verge of bankruptcy again and a default should be imminent, but as predicted, this is what Jay Powell had to say:

"There is only one way forward here and that is for Congress to raise the debt ceiling so that the United States Government can pay all of its obligations."

This is the current state of affairs regarding American debt:

61302175-FB80-434D-9BE2-3513D82CCCDE.png


The image above is old (the total is now higher). At 4.5%, the debt is dangerously unsustainable, but what's even more concerning is that it is rising at a parabolic rate. Powell also warned that the Fed would not be able to shield the economy from a debt default.

The Fed and other countries pumped far too much liquidity into the markets which has broken the traditional system. I can't see how they can recover from this short of continuing to print money whilst raising the debt ceiling until they no longer can. There will have to be a new paradigm at some point because the current one is in ruins.

This tweet sums the situation up perfectly, and this was when the rate was at 3.75%.

2CC8713D-5794-4FEC-8CE4-CA7F514F8BA3.jpeg
 
#699
Ed209 said:
"There is only one way forward here and that is for Congress to raise the debt ceiling so that the United States Government can pay all of its obligations."
Click to expand...
That's what the US does routinely every single year. It's nothing new under the sun.

Inflation is way higher than official data, and central banks still have interest rates at very low levels. I remember mortgages at 16% interest in the 80s.
 
#700
Juan said:
That's what the US does routinely every single year. It's nothing new under the sun.

Inflation is way higher than official data, and central banks still have interest rates at very low levels. I remember mortgages at 16% interest in the 80s.
Click to expand...
Yep, they raised it two or three times in 2021 alone. What's different now is the rate it's going up by. Just look at the difference between the years 1970 - 2005 ish and now (post QE). That is one hell of an upwards trajectory and is potentially far more damaging than the devaluating of the dollar (which has lost about 90% of its value since 1980).

A systemic collapse would be beyond brutal and would have a much more devastating impact than inflation alone.

The 16 - 20% rate of the early 80's is not comparable to today. If mortgage rates hit 18% now it would be game over. Today's economies are drowning in debt and they wouldn't cope with such a number.

We are heading into chaotic times.
 
#701
Ed209 said:
Yep, they raised it two or three times in 2021 alone. What's different now is the rate it's going up by. Just look at the difference between the years 1970 - 2005 ish and now (post QE). That is one hell of an upwards trajectory and is potentially far more damaging than the devaluating of the dollar (which has lost about 90% of its value since 1980).

A systemic collapse would be beyond brutal and would have a much more devastating impact than inflation alone.

The 16 - 20% rate of the early 80's is not comparable to today. If mortgage rates hit 18% now it would be game over. Today's economies are drowning in debt and they wouldn't cope with such a number.

We are heading into chaotic times.
Click to expand...
Today taxpayers and consumers are subsidising the rich by providing them with ever-ending free money for their bankrupt companies.

This is no longer capitalism. It's a different game where the 0,01% (billionaires) always win no matter if their companies are doing well or not... and everyone else always loses in relative terms.
 
#702
NASDAQ shares are climbing without any tangible basis. Pathetic earnings, an economic crisis on the background, rising interest rates.
 
#708
The press says Norway, Germany and China are withdrawing or reducing any public subsidy to buy an electric car. Apparently in Norway most cars are already electric so there's no need to subsidy purchases anymore.
 
#709
Amidos that longing debate, Bank of America CEO Brian Moynihan says the company is preparing for a possible US debt default. Speaking to CNN, Moynihan stated that the debt action is a very real possibility that corporate America cannot disregard.

"We have to be prepared for that, not only in this country but in other countries around the world," Moynihan told CNN. Additionally stating, "You hope it doesn't happen, but hope is nota. strategy- so you prepare for it."

There is some expectation that President Joe Biden could address the debt ceiling debate during Tuesday's State of the Union Address. Conversely, US Treasury Secretary Janet Yellen has already expressed a warning over the nation's debt crisis. Noting the possible default as soon as June, if the ceiling is not raised.

Bank of America CEO Says the Company is Preparing for Potential US Debt Default

This is all over the news today. This article is just one example. They will raise the debt ceiling again, in my opinion, but as I stated all last year, the US can't indefinitely survive a debt default with the Federal Fund rate above 3%. They will not only have to raise the debt ceiling but they will have to raise it exponentially as the debt piles up and the deficit gets larger. It is unsustainable.

They will have to make a critical decision whether to let the dollar slowly die or to save their economy. Jay Powell became more dovish at the last FOMC, so they will likely start printing again in the not-too-distant future.

I think we can all agree that they have created one hell of an unholy mess.
 
#712
Baidu introduced its AI called "Ernie Bot" and shares climbed 15% at the Hong Kong stock market.
 
#717
SmallRonnie said:
Markets are forward looking though and the US stocks do tank whenever jobs data comes in hot.
Click to expand...
There's full employment in the US, so I don't know how the job market could be any better... And what my relatives there tell me, there are big salary increases, so clearly Powell's FED is NOT doing its job to cool inflation, and there's second round inflation due to salary rises.
 
#718
German inflation at 9,2%. Interest rates in the Eurozone should be already higher than 10%

No European trusts the ECB anymore, as Lagarde has shown consistently she does NOT know how to do her job.
 
#719
Juan said:
There's full employment in the US, so I don't know how the job market could be any better... And what my relatives there tell me, there are big salary increases, so clearly Powell's FED is NOT doing its job to cool inflation, and there's second round inflation due to salary rises.
Click to expand...
But you still aren't addressing the elephant in the room, namely the US's enormous 133% debt-to-GDP. There is currently too much money chasing too few goods, and this was caused by a combination of all the printing and supply chain issues (which started during the pandemic).

The Fed needs to kill the demand by raising the interest rates, we all know this, but how can they do this with the enormous debt that they are holding? Each time the rate goes up well so do their debt repayments, and if they keep raising the ceiling whilst the debt rises into a parabolic curve, well then their global creditworthiness will go down and nobody will want to lend them money anymore. If that were to happen then there would be no way to raise the debt ceiling anymore and they would be forced to pay (meaning they'd have to default).

There is now a very fine line between killing demand and a total systemic collapse. It's as precarious as a house of cards. It also doesn't help that most people living in America are too indebted because there's been easy access to free credit for too long. The US need to concentrate on creating real economic growth that is derived from actual value being traded, and they need to get rid of their budget deficit ASAP. They need to get back to being a productive country that creates a yearly budget surplus so no borrowing is required. This will initially require budget cuts and a reduction in everyone's living standards, but it's the only way. The problem, as I've previously stated, is that nobody would vote for such actions.
 
#720
Ed209 said:
But you still aren't addressing the elephant in the room, namely the US's enormous 133% debt-to-GDP. There is currently too much money chasing too few goods, and this was caused by a combination of all the printing and supply chain issues (which started during the pandemic).

The Fed needs to kill the demand by raising the interest rates, we all know this, but how can they do this with the enormous debt that they are holding? Each time the rate goes up well so do their debt repayments, and if they keep raising the ceiling whilst the debt rises into a parabolic curve, well then their global creditworthiness will go down and nobody will want to lend them money anymore. If that were to happen then there would be no way to raise the debt ceiling anymore and they would be forced to pay (meaning they'd have to default).

There is now a very fine line between killing demand and a total systemic collapse. It's as precarious as a house of cards. It also doesn't help that most people living in America are too indebted because there's been easy access to free credit for too long. The US need to concentrate on creating real economic growth that is derived from actual value being traded, and they need to get rid of their budget deficit ASAP. They need to get back to being a productive country that creates a yearly budget surplus so no borrowing is required. This will initially require budget cuts and a reduction in everyone's living standards, but it's the only way. The problem, as I've previously stated, is that nobody would vote for such actions.
Click to expand...
This can also be done by politicians at the taxation level, first of all chasing tax avoidance and targeting tax evasion more efficiently, and secondly by raising taxes and by erasing any deductions by companies.

Biden talked years ago about a "global corporate tax at a minimum rate of 15%" and we never heard about it again. Now he is still peddling the same lies about a possible "billionaire's tax" that of course will never be approved.

The taxation system is deeply unfair when workers can pay 50% of their gross income in income tax and social security (public healthcare) and people like Jeff Bezos or Elon Musk basically pay no tax at all, and their companies hide their money in tax havens and pay nothing...

...and this can be easily fixed by an "access-to-market tax". If those tech companies want to operate, let's say in the UK market, then they have to pay a lump sum to access the market, just to be there. If they do not want to pay, they will not be able to carry out business in the country.

The issue can also be targeted by making pressure on tax havens. Why are Ireland, the Netherlands or Luxembourg allowed to steal the tax money that belongs to all the other countries in the EU, countries like Germany, Spain, France, Italy...???
 

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