Category: Gradually Then Suddenly

Bailouts In A Flood

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In addition to bailing out the Treasury, it’s likely that the Fed lowered interest rates in order to stem the losses on its own bond portfolio as well. Whichever aspect you focus on, none of it is good news.

The “higher for longer” policy only lasted eighteen months.

The U.S. budget deficit reached $1.897 trillion in the first eleven months of the 2024 fiscal year, and annual interest costs on the public debt topped $1 trillion for the first time….Furthermore, in its own projections, the Treasury expected an increase of $16 trillion in government debt between 2024 and 2034. The Congress Budget Office estimates that the implementation of the Harris economic plan will result in a further $2.25 trillion increase in debt.

Sign Of A Strong Economy

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Blacklock’s- Thievery Out Of Hand: Telus

Telus said three provinces – British Columbia, Alberta and Québec – have seen a 35 percent increase in copper theft over the past year. “When this occurs service is disrupted, putting the safety of Canadians at risk,” wrote Telus.

“In 2023 alone Calgary saw a 400 percent increase in major copper thefts and vandalism leaving thousands of customers without landline, internet and cable services,” said the petition. “In Québec, when thieves damaged fibre cables thinking they were copper, the North Shore region lost connectivity impacting internet and mobile service, government agencies and small business customers. In B.C., Surrey and Mission are regular targets.”

Is The Spending Spree Over?

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If the decline in Fedex’s earnings is not an indication that the marginal consumer is tapped out, I don’t know what is.

…Fedex stock tumbled as much as 11% after hours when it cut the top end of its full-year profit outlook and reported quarterly earnings below expectations on softer demand for package deliveries.

The company said that Q1 results were negatively affected by a mix shift, which reduced demand for priority services, increased demand for deferred services, and constrained yield growth. In addition, higher operating expenses and one fewer operating day negatively affected the quarter’s results.

Hat tip: Neil

The End of An Era

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If the end of Tupperware is upon us, the marginal consumer must be really, really tapped out.

Tupperware Brands (TUP.N) is preparing to file for bankruptcy as soon as this week, Bloomberg News reported on Monday, citing people with knowledge of the plans.

The bankruptcy preparations follow protracted negotiations between Tupperware and its lenders over how to manage more than $700 million in debt, according to the report.

Fly The Expensive Skies

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If you think air fares are already high in Canada’s centrally planned airline market, just wait.

The airline has offered to increase the aviators’ pay by 4% annually over three years, plus an upfront 26% pay boost as well as other benefits, according to a source who asked not to be named to discuss confidential details of the agreement.

The 42% compensation increase over the four-year contract is expected to cost the carrier C$1.9 billion.

 

That Sinking Feeling

Gradually Then Suddenly It's Probably Nothing There Goes The Narrative Ukraine 12 Comments

Even the mainstream media is belatedly acknowledging what many SDA readers have known for a long time: the Ukraine is running out of soldiers who are willing and able to fight.

As a battalion commander, Dima was in charge of around 800 men who fought in some of the fiercest, bloodiest battles of the war – most recently near Pokrovsk, the strategic eastern town that is now on the brink of falling to Russia.

But with most of his troops now dead or severely injured, Dima decided he’d had enough. He quit and took another job with the military – in an office in Kyiv.

CNN spoke to six commanders and officers who are or were until recently fighting or supervising units in the area. All six said desertion and insubordination are becoming a widespread problem, especially among newly recruited soldiers.

Made-up Numbers

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It’s not unreasonable to assume that government statisticians routinely “massage” unemployment numbers in order to allow their political bosses to claim that the economy is in better shape than it actually is. Economist Ryan McMaken delves into the mechanics of this smoke and mirrors game.

The establishment survey report shows that total jobs—a total that includes both part-time and full-time jobs—increased, month over month, in August by 142,000. The establishment survey measures only total jobs, however, and does not measure the number of employed persons. That means that even when job growth comes mostly from people working multiple part-time jobs, the establishment survey shows increases while the total number of employed persons does not. In fact, total employed persons can fall while total jobs increases. For instance, the total number of employed persons has fallen by 66,000 since August of 2023. This is in contrast to a gain of 2.3 million “jobs” in the establishment survey over the same period.

Jobs? What Jobs?

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One possible reason why the marginal consumer is tapped out and reluctant to spend is because he’s no longer employed.

Canada’s unemployment rate jumped to 6.6 per cent in August, Statistics Canada said on Friday, more than economists expected as the labour market added a net 22,100 jobs largely in part-time work.

The unemployment rate is now at its the highest level since May 2017, outside of the COVID-19 pandemic, as job growth has failed to keep up with a surge in Canada’s population.

But not to worry. The Bank of Canada will just slash interest rates and fix everything.

Traders in overnight index swaps boosted bets that the Bank of Canada would need to cut by 50 basis points at its next meeting in October, according to Bloomberg data.

Economic Headwinds

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So much for “normalizing” interest rates. When even the mainstream financial media is picking up on the idea that interest rates are not only going to fall, but fall quickly, you just know that a recession is baked in the cake.

Billionaire John Paulson said the Federal Reserve has waited too long to cut interest rates and expects the central bank to lower them in the months ahead.

By the end of next year, “my best guesstimate would be around 3%, perhaps 2.5%” for the federal funds rate, Paulson, 68, said in an interview on Bloomberg Television.

The Titanic Economy

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It seems that Doctor Copper is feeling ill these days.

Goldman Sachs Group Inc. exited a long-term bullish position on copper and slashed its price forecast for 2025 by almost $5,000, citing shrinking demand in China.

Copper surged to fresh highs above $11,000 a ton in May as funds piled in. At the time, Currie — who joined Carlyle Group Inc. last year as chief strategy officer — described the metal as the best trade he’d ever seen. But prices have since slumped by about 18%, with ballooning inventories and a rare surge in exports from China sending alarms about consumption in the world’s top consumer.

 

The New Economy

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As is typical, the leftist corporate media is dancing around the real reason why automakers are looking to close plants: tapped out car buyers cannot afford to fund ruinously expensive EV mandates.

Volkswagen is weighing whether to close factories in Germany for the first time in its 87-year history as it moves to deepen cost cuts amid rising competition from China’s electric vehicle makers.

“The European automotive industry is in a very demanding and serious situation,” said Volkswagen Group CEO Oliver Blume. “The economic environment became even tougher, and new competitors are entering the European market. Germany in particular as a manufacturing location is falling further behind in terms of competitiveness.

Broken Landing Gear

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Economist Frank Shostak offers these insights as to how an economy comes to be saddled with massive malinvestments (EV plants come to mind) which must eventually be liquidated in a painful recession.

Whenever a central bank tampers with financial markets and manipulates the market interest rates this falsifies individuals’ “instructions” to businesses. As a result, businesses invest in the wrong infrastructure (i.e., not in line with individuals’ priorities). This ultimately undermines the process of wealth generation.

For instance, the central bank lowers the market interest rates while individuals have not lowered their time preferences. This means that people have not increased the supply of real savings. Businesses, however, attempt to increase investments in response to the central bank artificially lowering the interest rates. This will fail since there are not enough real savings to fund the buildup of the capital structure at that time.

History Rhymes

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Economist Daniel Lacalle sees some parallels between Kamala and another not so great 20th century leader.

These are the essential pillars of “21st century socialism” and the radical left Peronism that obliterated Argentina. These are also the main elements of the economic plan presented by Kamala Harris and the Democratic Party. Undoubtedly, this is the most radical socialist economic plan ever announced by the Democrats.

An economy that generates an annual deficit of 6 percent of GDP to achieve a mere 2 percent annual growth is already on a dangerous path, and Harris’ plan would make it even worse.

Kamala Harris promises to cut inflation by spending and printing more money, reducing competition, and attacking businesses. It has never worked and never will because it is upside-down economics. Welcome to the U.S. “Peronism.”.

Housing Bust?

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In an economy beset by exponentially rising debt, rising interest rates are a ticking time bomb. Higher rates force the marginal borrower to forgo purchases, while the marginal entrepreneur is forced into insolvency. This is particularly true for the Canadian real estate market, and it’s noteworthy that even the leftist media is starting to pick up on this.

Take a look at this housing development in Kitchener Ontario.…The project got city approval in 2020 and the first tower was supposed to be moving ready by 2024 but that didn’t happen. Instead only one of the four towers was started and it wasn’t finished. This project is one of more than 200 housing developments that went insolvent just in the last year alone that rate of insolvency is nearly 50% higher than the 10-year average.

Skip The Expense

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If the economy were as prosperous as we commonly hear, why is the marginal consumer acting like he or she is tapped out?

About 800 Canadian employees are being laid off by SkipTheDishes and its parent company.

Roughly 100 Canada-based workers will depart SkipTheDishes, the food delivery service’s chief executive Paul Burns revealed on LinkedIn on Tuesday.

Meanwhile, some 700 staff members who work for its owner Just Eat Takeaway.com will also lose their jobs, he added.

 

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