BOOM as at 24th May 2020

ECONOMIC RECOVERY

Up to 650,000 deaths occur annually (EVERY YEAR) around the globe from outbreaks of common influenza, according to estimates by the United States Center for Disease Control and Prevention (US-CDC), the World Health Organization and global health partners.

The global death toll from Covid-19 so far is 340,000 so the epidemic appears to be having much the same impact as an annual influenza event. 80% of those deaths occur in fragile nursing home patients above the age of 80. But, for some unknown reason, we have seen a massive over-reaction from the so-called “expert advisers” and the world’s governments leading to a major collapse of employment and economic activity.

One major hospital in San Francisco has already reported suicide numbers over the last month greater than the expected annual figure. If this rate of suicide were to continue and occur nation-wide, the US alone could see up to 500,000 deaths from self harm in 12 months.

The hospital’s senior trauma doctor said — “We’ve never seen numbers like this, in such a short period of time”…..”I mean we’ve seen a year’s worth of suicide attempts in the last four weeks.”

BOOM is seeing some elements of recovery in global financial markets and in some economies but it is very early days indeed. There has been grave damage done to the real economies in almost all nations where goods and services are (usually) traded to the value of $ 80 Trillion per year. And those real economies are now being asked to “get going”, “get back to work”, “start spending” by the people who have severely damaged them.

The politicians and their technocrat advisers are all sitting safe and warm counting their good fortune from their guaranteed income streams. They have felt almost no economic pain from their engineered over-reaction to their crisis. They even claim to have “saved” us all by “making us safe”.  Their new catch-all phrase is “Stay Safe” while we wait for the second wave (whatever that means).

But billions of transactions between willing consumers of goods and services cannot be switched back on instantly. Destruction of economies is easy. Construction is another matter altogether.

Millions of people who worked in the service industries are now unemployed. Their principal employers were their fellow citizens who had taken on risk and established small to medium sized businesses. These businesses have been devastated by the panic-demic. And many of those entrepreneurs and risk takers (employers) are now thinking — why bother?

Where are the incentives for the entrepreneurs to employ people if the government can just declare (again) almost overnight that such businesses must shut down? Who will take that risk and why? Trust has been badly damaged along with the economy.

INVESTOR RECOVERY

Investors are thinking exactly the same thing. They have seen their investment capital destroyed by almost 30 % in just one month by the politicians’ panic. If they have any cash to employ in further investments, they must be asking themselves whether the risk is worth taking. Borrowing to invest is certainly on the back burner.

A COLOSSAL MUDDLE

So — we have consumers in trouble with a huge hit to their incomes and with serious uncertainty of employment. We have employers damaged severely and maybe facing bankruptcy if they were carrying large amounts of debt finance. And we have investors reluctant to take risk.

All that is being offered by the well paid technocrat advisers, the bureaucrats and the politicians is the admonition to “get back to normal”, “get back to work”.  They seem to rely on magical thinking.

The politicians have taken extremely poor advice and reacted with no real consideration of the long term consequences. They have relied too much on catastrophic models of excessive deaths from computer wielding non-clinicians while not taking a broad range of carefully considered advice from doctors who work daily at the coal face of disease management. They have not quarantined the sick (as is normal practice in an epidemic). They have quarantined the healthy. And they have expressed forceful opinions on health matters about which they have no knowledge (or experience). Now they say that a vaccine will come (somehow and soon) when no vaccine has ever been developed for any form of Coronavirus in history. And when most vaccines take up to 15 years of careful development. More magical thinking.

Their excuse is this — “we took the advice of our experts”. In Nuremberg, the Nazis on trial all had the same explanation. “We were only following orders”. Some of them were executed for that but our “leaders” will just move on to the next crisis of their making. When can we expect an apology?

RETAIL REAL ESTATE RECOVERY

BOOM is watching the severely damaged general retail sector for signs of economic recovery. The consumer returning to the shops will be a very positive sign. But how are investors reacting? A good place to look is the Dow Jones US Retail REITs Index. It fell 50% in March and has not shown any signs of recovery yet, trading sideways in a tight trading range. A REIT is a real estate investment trust.

When we see that index turn and trend upwards in a sustained fashion, we will be able to become more optimistic about the future. Our politicians, technocrats, bureaucrats and journalists wouldn’t even know where to look to find such an index.

They will be looking for their next opportunity to show how much they care.

THE PANDEMIC COMIC BOOK

A comic book published by the European Commission in 2012 predicted the pandemic rather clearly. For those who don’t know, the European Commission is the un-elected (appointed) ultimate decision making body at the very top of the European Union structure of institutions. The democratically elected European Parliament is way below them in the EU power structure.

The comic was called “Infected” and is a propaganda laced presentation of an epidemic where un-elected globalist bureaucrats save the planet.  It describes events at a Chinese P4 biosafety level lab and would you believe that the story features the transmission of a novel virus from animals to humans in a crowded Asian wet market?

They operate in plain view.   Read all about it here:-

https://summit.news/2020/05/15/bizarre-eu-funded-comic-book-predicted-pandemic-with-globalists-as-saviours/

PROPAGANDA FOR CHILDREN

But that is not the end of the story. The European Union produces many such comic books for children in schools. All are essentially propaganda, aimed at promoting the EU. Don’t believe it? Apparently, the European Union spends a total of over $ 1 Billion annually on self promotion. BOOM asks — why? Can you guess?

Read this published 12 months ago: https://www.express.co.uk/news/uk/1126219/eu-news-brexit-european-elections-commission-budget-propaganda-comic-book-ukip-spt

VEHICLE TO GRID

Last week, Tesla seems to have changed their position on Vehicle to the Grid. It’s called V to G or V2G. This is where an electric car, stationary in a home garage overnight, can provide power to either the Grid or (possibly) to the house. Thus, the car’s battery becomes a power source for devices outside the garage or for the whole Grid to use. Nissan has similar technology and is applying to the authorities in Australia to allow it to operate its Nissan Leaf electric car in this manner. This is an innovation that transforms the electric car. Electric cars were invented and used extensively over 140 years ago. They are old hat. But using them as V to G electricity providers is certainly something new and revolutionary.

https://thedriven.io/2020/05/20/teslas-switch-on-vehicle-to-grid-technology-is-big-news-for-clean-energy-shift/

LETTER FROM A WISE BOOM FAN

BOOM received this letter from a reader last week. See BOOM’s REPLY which follows.

QUOTE :  “What have we done to deserve this?”   Reflecting on my puritan forbears, my answer is — we have become addicted to pleasure.

Definition of pleasure — “consumption of scarce resources in order to feel good”.
As a died-in-the wool puritan it seems to me that there is relatively little that is essential compared to our community and personal expenditures over a lifetime. The essentials can be simply listed :- water, food, shelter, health, fairness.  If we are careless (or caring) enough to have children this increases the spending, but not the applicable needs (just the quantum).

Education is not a necessity, but it is a bonus that may help in acquiring necessities and avoiding waste on non-essentials. After that education is useless unless it contributes to the betterment of others.

What have we done to deserve such bad outcomes?  Answer :-  we have allowed a distorted and unfair distribution of the world’s available resources.

Most forms of pleasure are not essential and not even necessary for motivation. We don’t need cars, planes, gambling, horse racing, armies, drugs, alcohol, professional sport, luxury cruises, etc. Some of these might be reasonable if the world were a better and fairer place first, but not before.

Why are we hysterical about this pandemic when other health measures have been neglected?

Why are we apathetic about greater causes of death as outlined by BOOM such as tuberculosis, heart disease and starvation? When will the world begin to steer a middle course between apathy about some things and hysteria about others?

If the ignorant are currently leading the blind … when in history has it been different, and what agency of change is recommended?   UNQUOTE

BOOM’S REPLY

The current pandemic (panic-demic) crisis has devolved into a giant virtue signalling opportunity for our sociopathic leaders, their technocratic advisers, mainstream journalists and other commentators — all of whom use magical thinking to excess.

They all declare in unison “Take note. See how much we care”……… while, at the same time,  they build nuclear weapons systems, armies, navies, air-forces, cyber weapons, global spying systems. Then they trade threats, insults and tariffs with other nations. Do they really “care”? Or are they addicted to power?

Virtue signalling and magical thinking by comfortable Westerners is the ultimate luxury. All “care” and no responsibility.

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.


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EMAIL: gerry {at} boomfinanceandeconomics.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

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HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS

BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.

https://www.youtube.com/watch?v=EC0G7pY4wREhttp://

How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”

The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.
“…… the vast bulk of broad money consists of bank deposits”
“Money can be created …….. when financial intermediaries make loans
“In the first instance, the process of money creation requires a willing borrower.”
“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
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MOLS Denmark

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