Looking Backwards …
LB #1
I was reading an article during the debate and a headline flashed up that said Biden stumbles and I thought he fell during the debate. He didn’t fall literally, but it sounds like it couldn’t have gone much worse. On Thursday night we got to see why popularity contests are such a poor way of governing. The people’s champs of their respective parties met under the bright lights of a closed set and almost 50 million people tuned in to see one old man tell fish stories and another old man forget where he was, his train of thought, and what Medicare was. It wasn’t great for anyone really, but as we have been describing here at the C Thomas Printer Cooperative Ben and Jerry Joe is just not sharp enough to have lunch at an old folk’s home by himself let alone be the leader of a free country.
Sometimes hope avails itself due to strange circumstances though. I think it might be so bad that it could bring about real change. Owen Tucker-Smith, Andrew Restuccia, and Aaron Zitner write for the Wall Street Journal,” Voters with an outsize say in deciding elections are feeling a mix of frustration and concern after the first presidential debate of the 2024 election, with some concluding that President Biden’s unsteady performance raised serious questions about whether he is capable of serving another term.”
That is an understatement. It could also have a silver lining. I have never believed that we would see Biden versus Trump in November. I thought Biden was too fragile and/or Trump would be in jail and that is to be decided. I think the Democrats know that they can’t rollout Joe Biden again and the New York Times editorial board called for him to step down and not run again. That is a pretty big opposite of endorsement. It is stating the obvious. I also believe that if Trump can’t hang the economy on Biden, I am not sure how Trump thinks he is going to win. After all, he lost to lying Joe Biden. If the Democrats try to run someone else, I think they have a much better chance because I believe like in 2020 America simply wants to vote against Trump at least an large portion, but they aren’t going to vote for an decrepit old man that is lost on stage.
LB#2
One of the things we talked about when the Russia Ukraine conflict began was the impact it could have on third world countries. There is so much of the exportable food grown in the breadbasket that it the Ukraine. This supply allows for cheap exports to other countries that don’t have the same agricultural success due to their geography. While I haven’t heard stories of hunger and starvation hitting any economies because of that there are unintended consequences of other sorts. The world is fragile right now as rich entitled countries like yours truly are contending with inflation, but people from all over the world are still trying to cross our border because it is better than their alternative.
This week in Bolivia there was a failed coup d’état. That’s right in 2024, an army general tried to seize power by storming the presidential palace. This from ZeroHedge, “It appears the short-lived coup attempt is over, with reports of the following: The President of Bolivia, Luis Arce has just stated during a Press Conference that the Leader of the Coup d’état in the Capital of La Paz, General Juan José Zúñiga has been arrested by his own Troops after they realized he was conducting a Coup against the Government; with all remaining Troops currently Returning to their Bases.” Video shows that the insurgents are ramming a door and trying to enter. The coup was quickly put down, but it shows the utter fragility in this modern world.
LB #3
Another example is across the globe in Kenya where the people are rioting against the new tax being implemented. This from ZeroHedge, “The Kenyan capital of Nairobi has descended into violence and mayhem as large street protests by Kenyans outraged at new tax policies and a harsh ‘Eco-Austerity’ program imposed by the government have resulted in the parliament building being set on fire.
Legislators are evacuating after the anti-tax protesters initially breached parliament. They quickly overwhelmed police soon after the lawmakers voted to pass a bill which introduces new nationwide taxes, including an eco-levy which raises the price of basic goods such as diapers, as part of efforts to curb waste management and be more environmentally friendly.”
In the article there is a tweet from CTPC fave economist Steve Hanke, “Flash: The Kenyan parliament has just erupted in flames as protests against the $2.7 billion tax hike turn violent. The hikes were spurred by Kenya’s latest IMF deal. As Harvard Prof. Robert Barro puts it, “The IMF doesn’t put out fires, it starts them.” Folks, we discussed the election results in Europe last week and now we are seeing the push back here is Kenya. The people are sick of the government, and that makes me hopeful. Truly hopeful, because as I have said until I am blue in the face, the government overreach is the problem. This new tax is required by the IMF because Kenya has had to take out a loan from the IMF and these are their requirements. Well, the Kenya government printed too damn much money. They spent before they saved, and now here the people are. They are being taxed on everything from diapers to calculators. The people are already very poor and you want to give them austerity packages like this? I would agree that they are needed to fix the economy because if you can’t run your economy without needing loans then you need to fix that problem first, but there is a real threat of revolt. As a citizen of a country that did the exact same thing about 250 years ago, I hope that Kenya finds its way. The people are suffering, governments are to blame, and the people might just decide to remove them by force or by violence. My preferred method is by using the ballot box, but sometimes violence is necessary to overthrow tyrants.
Looking Forwards…
LF#1
Fragility isn’t just showing its face in political institutions but also in computer infrastructure. Listen to this highly underreported story from ZeroHedge, “The company supplying software for managing sales and services to thousands of auto dealerships across the US reported yet another cyber disruption on Thursday, disrupting sales of new and used vehicles.
X user Car Dealership Guyreports that CDK Global sent an email to auto dealers informing them of “an additional cyber incident late in the evening on June 19th.” In short, CDK is the “computer system” that dealerships use to buy/sell/pay off notes of cars etc. It was hacked and for days the entire auto industry couldn’t sell cars at over 50% of the dealerships in North America. What?
I always say that technology is awfully nice when it works. When it doesn’t, it looks like this could be catastrophic. Hi, I am C Thomas and I’d like to buy a car. We can’t sell you a car our system is down. I don’t want to buy a system, I want to buy that pickup truck right out there. We can’t sell it to you. You can’t sell me that without your computer? That’s right, ok have a nice life. The article notes that the auto industry accounts for about 2.5% of GDP, now cancel half of that for a week.
LF#2
The fragility in financial markets continues quietly as if no one wants to talk about it. Douglas French writes for Mises.org that the commercial real estate market continues to slowly thaw and hopefully no one notices what a colossal train wreck this is turning into. “Price discovery in commercial real estate, which had been frozen while sellers insisted on prices from the good ol’ ZIRP days, is starting to thaw. Real Estate giant Related Companies has unloaded the property at 321 W. 44th St., New York, New York for less than $50 million, reports Bloomberg.
Not only is that a 67% discount from the nearly $153 million that Related Fund Management paid for it in 2018, but the lenders including Canadian Imperial Bank of Commerce agreed to a “short sale.” For those who have forgotten 2008 or were too young, a “short sale” is when the lender agrees to a property sale for less than the outstanding amount on the mortgage. Owner loses everything, lender takes a large loss. In this case the lenders were more than cut in half as the property’s mortgage exceeded $100 million.” Whoa Nellie, a little KJ flashback to confuse you youngsters, the losses that have been unrealized on commercial real estate are now turning to realized losses. IF you remember the great financial crisis, the market tanked in 2007-8, but the inventory and prices continued down for 5 years as it takes awhile for the big slow real estate market to turn mostly due to banks reluctance to post losses in a timely manner.
LF#3
Last month we discussed how AAA bondholders lost money on the 1740 Broadway building in NewYork City when its loan sold for a large discount. We also said that everyone below AAA was wiped out. This was reminiscent of the GFC. Well, lookey what we got here….
This from ZeroHedge, “According to Bank of America, investors in the AAA tranche of a loan backed by UK shopping malls are facing losses, in what may be the first such impairment since the global financial crisis. In a Wednesday note by Mark Nichol (available to pro subscribers in the usual place) he estimates that Class A noteholders of commercial mortgage-backed security Elizabeth Finance 2018 could suffer a partial principal loss based on the amount that is expected to be recouped from the disposal sale of the underlying properties.
As BofA explains, Mount Street, the special servicer of the UK loan called Elizabeth Finance 2018 which has been in default since 2020, announced it has decided to accept a cash bid of £35.0mn for the Maroon properties, which was the highest of the portfolio bids received. Mount Street estimates net proceeds of around £31.5mn, which is less than the £33.6mn principal balance of the class A notes. And based on Mount Street’s estimate, BofA projects that the class A notes will suffer a 6% principal loss.”
The common folks in this country are telling you the economy sucks and yet economists, pundits, and politicians are telling you that the economy is great, but we are seeing entire tranches of bondholders get wiped out and AAA levels losing money! This isn’t supposed to happen, ever, almost ever at least. It is happening now, and it will happen over and over and over as this toxic overpriced buildings and projects hit the sales block. It is financialized fiction. These banks are holding trillions of this crap and 50 million Americans are tuning in to see two doddering old idiots arguing over their golf games. Would someone please ask them why during the last 7 years while they have been president the majority of our banks have become insolvent? Trump threw a tantrum when Powell wouldn’t take America’s interest rate to negative territory and threatens to have him fired if he is elected while Biden is trying to forgive student loan debt in opposition to the Supreme Court’s rulings. I don’t want to end this on a negative note about or last two presidents though, I have to say I like them both much more than I like Congress, those jackals that don’t have term limits and control the fiscal purse of America.
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading …at 39,118.
The 10-year Treasury bond is at …at 4.392%
The price of Brent Crude is … at $85.00 per barrel.
The price of gold is … at $2,336/oz.
The price of silver is … at a $29.43 /oz.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.