Patriots Heart Network Media #phnm

"...what have we got—a Republic or a Monarchy?” “A Republic, if you can keep it

Me Here....... from a friend of mine, Mr. Fulton Sheen.  He is worth reading.  I am trying to get him to join.  Until then I will repost his e-mails to me here.

A Slowing Economy & Rising Interest Rates (February 2014 Update) Fulton Sheen - fsheen@gmail.com

 

With the ending of 2013, as we move forward into 2014, the only thing that is certain is uncertainty.  In the first few days of January the “experts” were saying the worst was over, gold and silver would fall and the US economy was going strong.  A month later, things went in the opposite direction of a majority of predictions.  On January 10, the U.S. Labor Department said payrolls rose by a measly 74,000 in December, far below the 197,000 median forecast of 90 economists surveyed by Bloomberg.  The Federal Reserve met Jan 28th and decided to taper the Quantitative Easing (QE) over the last month by $20B, reducing the monthly printing of currency from $85B to $65B. The following week the non-farm purchases (NFP), construction, manufacturing, auto sales and many other numbers all came in under estimates.  The NFP, the equally bad Durable Goods Report and the QE reduction caused the stock and bond markets to drop and the world wide emerging markets to lose billions of dollars. The Dow was at 16,577 on Dec 31, 2013, but as of Feb 5, 2014 it has dropped 1,187 points to 15,390.

 

Goldman to Fidelity Call for Calm After Global Stock Wipeout (2-4-14) By Weiyi Lim

http://www.bloomberg.com/news/2014-02-04/goldman-to-fidelity-call-f...

US Stocks Slump Most Since June Amid Weak Factory Data (2-3-14) By Lu Wang http://www.bloomberg.com/news/2014-02-03/u-s-stock-index-futures-dr...

US Dec Durable Goods Orders -4.3% Vs +1.8% Expected (1-28-14) Adam Button

http://www.forexlive.com/blog/2014/01/28/highlights-of-the-december...

The Fed’s Taper (1-30-14) By Jeff Kearns http://www.bloomberg.com/quicktake/federal-reserve-quantitative-eas...

December Jobs Report Is Awful, Very Bad, Ugly (1-10 -14) MSNBC http://www.youtube.com/watch?v=CnsD3VqLtJA&feature=youtu.be

Fox New Jobs Report Bad News and More Bad (1-10-14) Fox News http://www.youtube.com/watch?v=Ar4Gyazi-Yo&feature=youtu.be

December Jobs Report "A Big Miss" And "A Big Disappointment  (1-10-14) CNN http://www.youtube.com/watch?v=l-Y1VpzDBZs

 

The Feds plan to reduce their money printing is now in jeopardy, as the economy is retracting, not expanding, and rising interest rates are creating even greater problems.   The Fed refinanced all the US debt and made it all short term 90 Days T-bills to one year T-notes, so as to pay the lowest rate.  This is great as long as interest rates remain low, but if they were to rise too rapidly, they would not be able to pay the debt service and could potentially default.   At the end of May 2013, the average interest rate the Fed was paying on the $17T they owe the rest of the world was 1.15%.  As we approached the end of 2013 the average rate was 2.56% which is a 140% increase in just seven months.  If the economy continues to perform poorly and interest rates continue to rise, the Feds will have no other choice but to increase the QE printing.  The LA Times wrote, “The Fed's bond-buying binge could put the central bank's finances at risk if interest rates were to rise sharply.”

Fed Anxiety Rises as QE Increases Risk of Loss With Costs (11-8-13) By Caroline Salas Gage

http://www.bloomberg.com/news/2013-11-08/fed-anxiety-rises-as-qe-ra...

As Stimulus Tab Rises For Fed Worries Grow It May Require A Bailout (10-29-13) By Jim Puzzanghera  |  http://www.latimes.com/business/la-fi-fed-assets-20131029,0,5018539...

 

The Fed can’t keep printing money forever, and the rest of the financial world knows it and many have begun to position themselves for when that time comes.  In January, the Chinese made one of the largest purchases of gold ever; approximately 280 metric tons.   This makes sense as they hold more US securities than any other nation aside from the US itself and they need to cover themselves if our dollar continues to devalue and our indebtedness continues to increase.  The problems with the US dollar and the EU Euro and their markets have caused gold and silver to have their best month since July of 2013.  Another indication of nations wanting to have control of physical gold is Germany’s request to withdraw all of its gold held in the Federal Reserve.  Germany requested to have it immediately, however, the US said it would  have to pay them back over the next six years.

 

Gold Mint Runs Overtime in Race to Meet World Coin Demand (1-24-14) By Roy Debarati  http://www.bloomberg.com/news/2014-01-25/gold-mint-runs-overtime-in...

Bundesbank to Recall 30 to 50 Tons of Gold From NY in 2014 (1-20-14) By Alessandro Speciale

http://www.bloomberg.com/news/2014-01-20/bundesbank-to-recall-30-50...

Gold Trades Near 5-Wk High as Platinum Climbs on Stoppages (1-20-14) By Nicholas Larkin

http://www.bloomberg.com/news/2014-01-20/gold-rises-to-six-week-hig...

 

The US isn’t the only nation having spending, printing and sovereign debt problems.  Japan is still printing 200B yen per month and the yen has devalued considerably since they began last spring. They have also begun seizing dormant bank accounts.  The EU failed in their attempt to put together a joined banking plan to help deal with bank insolvency in EU nations.  The only thing they have in place is Bail-In fund which a troubled nation can access if they agree to confiscate a percentage of their citizens’ bank accounts like Cyprus did last April.  Like the US, the EU has some improvements in in their GDPs,  but  Chancellor Merkel warns the Euro crisis risk  still remains.  The EU is talking about capital controls and enacting wealth taxes, as well as other forms of taxation, but the non-euro nations are refusing to follow suit.

 

Trouble for EU Bank Plan (1-17-14) By Leonid Bershidsky

 http://www.bloomberg.com/news/2014-01-17/bershidsky-on-europe-troub...

Merkel Warns of ‘Deceptive Calm’ as Euro Crisis Risk Remains (1-29-14) By Tony Czuczka http://www.bloomberg.com/news/2014-01-29/merkel-cautions-against-de...

France Needs an Economic Revolution (1-19-14) Bloomberg Editors

http://www.bloomberg.com/news/2014-01-19/france-needs-an-economic-r...

Euro Near 11-Week Low Before ECB; Aussie Rises on Trade Surplus (1-6-14) By Masaki Kondo http://www.bloomberg.com/news/2014-02-05/euro-near-11-week-low-agai...

 

Europe has a banking crisis but the US has a far greater one.  In 1985, there were  over 18,000 banks in the United States.  Today, there are only 6,891 left.  The too big to fail banks are now bigger than they were in 2008.  In mid-November of 2013, Moodys cut the ratings on four of the largest US banks and many others had their ratings cut in 2013 as well.  As banks are downgraded the cost of credit rises with the increased risk and consumers experience higher interest rates.  Most large banks have less than 2% capital and over 98% leverage or debt, that means if 2% or more of the debt was called in they would be insolvent.  Remember, Lehman Brothers had a 3.77% (interest rate? Capital?) when they went down in 2008, and today our largest banks are in worse shape.  Capital controls are being put in place to limit how much you can withdrawal from your accounts and these controls will increase as banking problems intensify.  You should ask your bank if they have any limits on what you can withdrawal from your account.  If you are in one of the larger banks you may want to consider moving to a credit union or a smaller bank. 

 

Why Moodys Cut the Ratings on Four U.S. Banks (11-15-13) Bloomberg Video (1.2 mins)

http://www.bloomberg.com/video/why-moody-s-cut-the-ratings-on-four-...

Too Big To Fail Banks Taking Over As Number Of US Banks Falls To Record Low (12-4-13)  by Tyler Durden  |  http://www.zerohedge.com/news/2013-12-04/too-big-fail-banks-are-tak...

This What Banks Do When They Go Broke (1-27-14) Santiago, Chile

http://www.sovereignman.com/finance/this-is-what-banks-do-when-they...

Think Dollar is a Ponzi Scheme, Here’s a Unique Solution (11-18-13) Hong Kong Sov Man

http://www.sovereignman.com/finance/think-the-dollar-is-a-ponzi-sch...

 

In his state of the union address, the President told us a number of things that should cause US citizens concern.  The greatest concern is that he plans to bypass congressional rule with his pen through executive orders. He already has issued more executive orders than any other president. He also took the first step toward government control of IRA funds or assets (better term for average person?) by creating the government IRA program, MyRA.  He said IRAs were safe, guaranteed and people couldn’t lose their money, because it would be invested in US Treasuries.  Treasuries unfortunately make next nothing in returns and do not even outpace inflation.  There is $13T in retirement dollars in the US which could fund a whole year of government operation. This has been the first step toward government control of IRAs; keep watch for the next.   Below are a few articles and videos from international investment managers that discuss the stock market bubble, the slowing US economy, ramifications of our eroding job market and growing income disparities that can create unrest. 

 

Fed Is Causing U.S. Stock Market Bubble: Sri-Kumar (1-17-14)

http://www.businessweek.com/videos/2014-01-16/fed-is-causing-u-dot-...

Faber Sees Gigantic Asset Bubble, Slowing Growth (1-14-14) Bloomberg Video

http://www.bloomberg.com/video/faber-sees-gigantic-asset-bubble-slo...

Income Disparity Biggest Global Risk, WEF Says (1-16-14)

http://www.businessweek.com/videos/2014-01-16/income-disparity-bigg...

 

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Comment by Chalice on February 9, 2014 at 11:08am

I totally agree with this statement!

The greatest concern is that he plans to bypass congressional rule with his pen through executive orders.

I also am concerned about his motives.  I do not believe traditional pundit analysis of his late term potential for impact (harm) really understand his motives.

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