VOODOO ECONOMICS: ‘The Covid-19 Dominoes Fall’, The World Is Insolvent

Of Two Minds

– By Charles Hugh Smith

The Smoking Man / 1 day ago

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Source – oftwominds.com

– “…Everyone expecting the financial markets to magically return to January 2020 levels once the pandemic dies down is delusional. All the dominoes of crashing market valuations, crashing incomes, crashing profits and soaring defaults will take down all the fantasy-based valuations of bubblicious assets: stocks, bonds, real estate, bat guano, you name it….The global financial system has already lost $100 trillion in market value, and therefore it’s already insolvent”

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Subtract their immense debts and they have negative net worth, and therefore the market value of their stock is zero.

To understand why the financial dominoes toppled by the Covid-19 pandemic lead to global insolvency, let’s start with a household example. The point of this exercise is to distinguish between the market value of assets and net worth, which is what’s left after debts are subtracted from the market value of assets.

Let’s say the household has done very well for itself and owns assets worth $1 million: a home, a family business, 401K retirement accounts and a portfolio of stocks and other investments.

The household also has $500,000 in debts: home mortgage, auto loans, student loans and credit card balances.

The household net worth is thus $1,000,000 minus $500,000 = $500,000.

Let’s say a typical financial crisis and recession occur, and the household’s assets fall 30%. 30% of $1 million is $300,000, so the the market value of the household’s assets falls to $700,000.

Deduct the $500,000 in debts and the household’s net worth has fallen to $200,000. The point here is debts remain regardless of what happens to the market value of assets owned by the household.

Trump to Declare a State of Emergency? Goodbye America!

 

By Marti Oakley

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What does this mean to us?

State of emergency

Legal declaration by a government allowing assumption of extraordinary powers

A state of emergency (also known as a state of calamity in the Philippines) is a situation in which a government is empowered to perform actions that it would normally not be permitted. A government can declare such state during a disaster, civil unrest, or armed conflict. Such declaration alerts citizens to change their normal behavior and orders government agencies to implement emergency plans. Justitium is its equivalent in Roman law—a concept in which the senate could put forward a final decree (senatus consultum ultimum) that was not subject to dispute.

States of emergency can also be used as a rationale or pretext for suspending rights and freedoms guaranteed under a country’s constitution or basic law.
Wikipedia

At the edge of the proverbial cliff

Here we are facing the final stage of the destruction of our country as a sovereign nation.  We, as a supposedly free people, are about to face a national Armaghedon.  Under an emergency declaration, our constitution, or what is left of our rights and protections, are cast aside to make way for the reorganizing of the worlds economies and the subjugation of all populations.  All of this achieved by the hyping up of a virus that does not meet any standard for being declared an epidemic or pandemic.

Just to make sure you reach the proper level of fear, university’s, college’s and public schools are closed in numerous locations across the country.  The common connection in each of these instances is their tie to federal funding.  Want to keep your funding?  CLOSE YOUR DOORS!  That will scare them!

Fed’s Latest Plan for Bailing Out Wall Street Banks: Let Them Overdraft their Accounts at the Fed

By Pam Martens and Russ Martens: October 31, 2019 ~

Victoria Guida, Reporter for Politico, Was First Reporter to Question Fed Chair Powell on Repo and Liquidity Problems on Wall Street During Fed’s October 30, 2019 Press Conference

Yesterday, following the announcement of another 1/4 point interest rate cut by the Federal Reserve’s Open Market Committee, Fed Chairman Jerome Powell held a press conference at 2:30 p.m. It proved to be an embarrassing and shameful example of New York City-centric business journalism.

Seven business journalists from leading business news outlets that cover Wall Street asked questions in the first 23 minutes of the press conference. Not one of these reporters asked about the liquidity crisis on Wall Street that has resulted in the Fed offering $690 billion a week to 23 Wall Street securities firms and one foreign bank as well as a newly launched “don’t call it QE4” operation by the Fed to buy up $60 billion a month in Treasury bills from Wall Street dealers.

The Fed began its repo loan interventions on September 17 of this year for the first time since the financial crisis. That crisis grew into the worst economic collapse in the U.S. since the Great Depression. What the Fed is now doing has all the same earmarks as the actions it took in the early days of the last crisis. (See our ongoing series of articles on the Fed’s actions and the liquidity stresses on Wall Street.) And yet, despite these frightening similarities, not one of the following reporters (in this order of asking questions within the first 23 minutes of the press conference) could summon the nerve to broach the subject: Michael McKee, Bloomberg TV; Heather Long, Washington Post; Jeanna Smialek, New York Times; Steve Liesman, CNBC; Nick Timiraos, Wall Street Journal; Edward Lawrence, Fox Business; and Brendan Greeley, Financial Times.

It was not until the eighth reporter was handed the microphone that we heard a question on the most critical financial topic of the day.