Tag: economy

BIDENOMICS: $517 Billion in Unrealized Losses Cripple US Banking System, 63 Lenders Teeter on the Brink of Insolvency, FDIC Reports

A ticking time bomb.

In another stark example of the economic mismanagement under the Biden regime, a new report from the Federal Deposit Insurance Corporation (FDIC) reveals a staggering $517 billion in unrealized losses within the US banking system, The Daily Hodl first reported.

This alarming figure, largely due to exposure to the residential real estate market, is a clear indication of the damaging effects of Biden’s failed policies.

The FDIC’s Quarterly Banking Profile report paints a grim picture of the current state of our nation’s financial institutions. Banks are now burdened with more than half a trillion dollars in paper losses on their balance sheets.

Although banks can hold securities until they mature without marking them to market on their balance sheets, these unrealized losses can become an extreme liability when banks need liquidity, per the Daily Hodl.

According to Investopedia, an unrealized loss is a “paper” loss that results from holding an asset that has decreased in price, but not yet selling it and realizing the loss. These losses become “realized” only when the asset is sold at a price lower than its original purchase price.

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Think Inflation Is Done? Think Again!

In this article I focus on two reasons why inflation will rise leading to higher, not lower, interest rates and bond yields. The first is the destruction of credit’s value through its non-productive expansion, mainly by governments running budget deficits. The second has had almost no attention but is at least as serious: the consequences of the repatriation of supply chains being accelerated by trade tariffs and sanctions. I shall briefly comment on the first before turning my attention to the second.

Budget deficits always debase the currency

Margret Thatcher said something on the lines that socialism fails when it runs out of other peoples’ money. We appear to have reached that point. Rapacious tax policies are now reducing their yield. We are now sliding down the after-end of the Laffer curve. The economic force which drives any economy is being strangled by the burden of government.Leopold, LesBest Price: $17.09Buy New $17.80(as of 11:37 UTC – Details)

Consequently, with mandated welfare and other expenses increasing, hopes that economic growth will reduce budget deficits are misplaced. Estimates for budget deficits in nearly all high-tax jurisdictions will turn out to be overly optimistic. This has important implications for inflation which are currently being ignored by everyone from governments, central banks, and down to investors.

Take the situation in the USA. As recently as February, the Congressional Budget Office forecast a budget deficit of $1,507 billion for the current fiscal year. Yet in the first six months, the deficit was already $1,100 billion, according to the US Treasury’s own figures. But this fails to explain the pace of borrowing. According to the US Debt Clock, US national debt is $34.77 trillion today, an increase of $1,600 billion this fiscal year so far. At this rate it will be $2.4 trillion by end-September, nearly a trillion over the CBO deficit estimate. It represents 9% of GDP, raw unproductive credit driving GDP higher and creating an illusion of a strong economy.

I suspect the budget deficit could turn out to be even worse, partly because it is a presidential election year, partly because the debt ceiling is not in place until January 2025, and partly because the productive economy is already in recession. This last assumption is based on simple arithmetic. If, according to the Bureau of Labor Statistics GDP grew by 4.5% in the year to last March, allowing for a budget deficit injection of 9% means the private sector actually contracted by 4.5%.

A rough and ready calculation perhaps, but it is important to understand that not only is the expansion of non-productive government debt concealing the true economic situation, but it is also debasing the currency. And currency debasement becomes reflected in higher prices. In other words, the inflation of CPI prices is not over.

The rest of this article examines how and why government attempts to protect domestic production and employment through trade tariffs and sanctions end up accelerating price inflation even more. The world saw the economically destructive consequences of anti-trade policies in the wake of the Smoot-Hawley Act of 1930, which are still relevant today.

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Israel’s 2025 budget in the hole as Gaza war cost to reach $70bn

The chief of Israel’s central bank said on 30 May that the cost of the ongoing war in the Gaza Strip will amount to nearly $70 billion of the Israeli budget for 2025.

“The costs of the war, by 2025, will reach NIS 250 billion (approximately $67.4 billion),” said central bank head Amir Yaron at an economic conference on Thursday.

“There is no doubt that more expenses will be needed, since the economy needs security and security needs the economy. However, it is important to emphasize – you cannot give an open check on the issue of security spending, you must find the right balance between things,” Yaron added. 

“The defense and civilian costs amount to hundreds of billions of shekels – it is a heavy burden … The country’s risk premium increased while the excess devaluation of the shekel continued, with devaluation of course leading to price increases.” 

The significant boost in defense spending has played a major role in the mounting costs. 

Manuel Trajtenberg, a professor from Tel Aviv University’s economics department, warned that Israel “may slide back into another lost decade” if it does not lower its defense-spending-to-GDP ratio, referring to a period of economic decline following the 1973 Arab–Israeli war after which Israel spent years trying to balance between its defense and development spending as a result of the costs of that war on its economy. 

The central bank chief’s comments came a day after Tzachi Hanegbi, head of Israel’s National Security Council, said that another seven months of fighting is expected to take place in the Gaza Strip, where Tel Aviv has yet to achieve its stated goal of eradicating Hamas and returning its captive prisoners. 

Israel’s economy has taken significant losses as a result of the war. 

Its gross domestic product (GDP) plummeted nearly 20 percent in the final months of 2023, according to statistical data released in February. 

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Biden’s Tariffs Are Another Nail in the Dollar’s Coffin

President Biden recently raised taxes on American consumers and businesses and may have hastened the end of the dollar’s world reserve currency status. President Biden did this by increasing tariffs on Chinese imports.

Specifically, President Biden raised tariffs on products including Chinese-produced steel and aluminum and many components imported from China for use in manufacturing electric vehicle batteries. Tariffs on Chinese-made semiconductors are rising from 25 to 50 percent while tariffs on Chinese-made electronic vehicles are rising from 25 percent to an astounding 100 percent.

Of course, the costs of these tariffs will be borne by Americans wishing to purchase electric cars and American electric car manufacturers that use material imported from China. These new tariffs thus undercut Biden’s goal of getting more Americans to drive electric cars.

The tariffs on Chinese goods give China even greater Inventive to challenge the dollar’s world reserve currency status. The same week Biden imposed these tariffs, China President Xi Jinping and Russian President Vladimir Putin announced they were strengthening their alliance in order to better challenge US military and economic hegemony. This is a reaction to US foreign policy of the post-Cold War era which has reversed the Richard Nixon-Henry Kissinger strategy of pursuing good relations with China.

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Almost 50% of Small Businesses Say They’re Not Going to Survive a Second Biden Term

A new RedBalloonand PublicSquarereport reveals that nearly half of small businesses in the United States believe they “definitely” or “probably” don’t stand a chance to survive another four years of Joe Biden presidency.

The survey, which polled 80,000 small businesses, found that 22.4 percent of respondents think they definitely don’t stand a chance to survive another four years under the Biden administration, while 26.2 percent say they’re probably not going survive another Biden term. 

“There is nothing I can afford to do in addition to what I’m already doing. If things don’t change, I’ll be finished,” one business owner said in the report.

Moreover, the findings reveal the precarious state of many small businesses, with 40 percent delaying bill payments and 70 percent putting staffing plans on hold to conserve cash flow.

“It’s been a difficult three years for America’s small businesses,” said PublicSquare CEO Michael Seifert. “While many inside the Beltway may feel like things are good, that isn’t translating to Main Street America – the frontlines of our small business economy.”

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Biden’s Economic Policies, Not Corporate Profits, Are Driving Inflation

Bread line, image courtesy of Antonio Graceffo

In the first year of the Biden administration, inflation hit a 40-year high and has continued to climb steadily since then. However, he blames the problem on “evil corporations,” not his own misguided economic policies.

“Too many corporations raise prices to pad their profits, charging more and more for less and less,” said President Biden in his most recent State of the Union Address. His administration has driven the deficit, expanded the debt to historic levels, printed money, increased the money supply, and given away trillions of dollars to people who do not work and to foreign countries, but he blames corporations for inflation. And to “protect” the public from the evil capitalist system where everyone is free to buy, sell, trade, and earn as they wish, he has vowed to crack down on “price gouging.” Ostensibly, the White House will decide what the “correct” prices should be and which prices are being gouged, and the government will use its vast power to force corporations to return those prices to a federally determined level.

The Federal Reserve Bank of Kansas City blames inflation on corporate profits. Some reports claim that corporate profits accounted for as much as 53% of inflation. The reality, however, is that inflation is a monetary phenomenon caused by the reckless fiscal and monetary policies of the Biden administration.

Inflation, by definition, is the expansion of credit and the money supply. This causes the buying power of the dollar to decrease, which means you need more dollars to buy things. Most consumers see and are alarmed by rising prices, but this is not inflation; it is only the result of inflation. The real culprit is massive debt creation, deficit spending, loan forgiveness, foreign aid, and transfer payments made by the Biden administration.

Evidence used by the White House and other liberal pundits regarding inflation reference the fact that corporate profits are up, identifying this as a cause of inflation. However, corporate profits are up in nominal terms because the dollar is worth less and prices are rising. Corporations took in more dollars, but those dollars buy fewer raw materials and pay for less labor than they did before Biden took office. The same administration that blames corporations for rising prices is also demanding that the minimum wage be doubled. Labor accounts for between 20% and 40% of cost for most retail and fast food businesses. Forcing a doubling of the minimum wage will drive prices up.

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US Congressman Says Revealing UFO Technology Is a Threat to Energy Sector: It Can Disrupt World Economy

A thought-provoking interview has recently been conducted between Project Unity host Jay Anderson and the U.S. Congressman Andy Ogles. The discussion focused on the implications of complete UAP (Unidentified Aerial Phenomena) disclosure. Anderson asked serious questions to Rep. Ogles about UFOs, revealing that the release of extraterrestrial technology could potentially disrupt the world economy and energy sector.

Rep. Andy Ogles spoke about the difficulty in gathering information due to the compartmentalization of special access projects, emphasizing the need for a methodical and persistent approach to uncover the truth. In the interview, he expressed his concern about UAPs operating in both military and commercial airspace, raising questions about the potential national security threats. He said, “I’m not going to assume I know what it may or may not be. What I do know is there’s a national security issue here.”

He considers various possibilities, including the involvement of experimental aircraft, joint ventures, or foreign adversaries. He emphasizes the importance of avoiding predetermined conclusions and encourages an open-minded investigation to determine the true nature of the UAP phenomenon.

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Chief Economic Adviser Refuses To Admit Biden Is LYING About Inflation

Joe Biden’s chief economic advisor refused to admit Thursday that the president keeps telling a huge lie by claiming that inflation was at 9 percent when he took office when it was really at 1.4 percent and shot up to 9 percent under Biden himself.

During an interview on Fox Business, host Neil Cavuto grilled Jared Bernstein, and told him directly “you’re lying,” and “just as bad” as Biden when he tried to dodge the matter.

After Biden took office inflation surged to rates unseen since the early 1980s, peaking at an annual rate of 9.1 percent in June 2022, a full 17 months after he became president.

Yet, he keeps claiming it was ALREADY at 9 percent and that he inherited a weakened economy from Trump.

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Biden REPEATS Whopping LIE About Inflation Being 9% When He Took Office

They say that if you repeat a lie, no matter how big, loud and often then people will eventually believe it, and it seems Joe Biden is doing just that.

On Tuesday Biden repeated the outright lie that inflation was at 9 percent when he took office in January 2021.

Biden was already raked over the coals for this claim last week. There’s no way that he or his handlers don’t know it’s false.

In reality, after Biden took office inflation surged to rates unseen since the early 1980s, peaking at an annual rate of 9.1 percent in June 2022, a full 17 months after he became president.

Yet, he is claiming it was ALREADY at 9 percent.

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Gavin Newsom Blames Climate Change “Weather Events” for California’s Massive Financial Deficit

At a press conference, California Governor Gavin Newsom blamed climate change “weather events” for the significant shortfall in the state’s public finances.

A reporter asked Newsom the following question: “Can we explain to Californians how we moved from $100 billion surplus to such a significant deficit in just a few years?”

After blaming volatility and saying the shortfall was anticipated, Newsom then spoke about unanticipated “rain bombs” that prevented the collection of taxes on time.

“Therein lied [sic] this blackout period that beguiled all of us,” Newsom explained, clearly struggling for words.

“If there was any indication that climate change has impacts well beyond those that are often promoted, I would consider our financial delays as just another example of why we need to tackle them.”

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