Lusting Rich Guys and Looming Global Meltdown

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As if a millionaire Congress and millionaire President weren’t enough to feed the Wall Street-Washington oligarchy, now a handful of billionaires lusting for more power, excited by Donald Trump, want to experience the glory of controlling the political process.

Wonder what their plans are for curing the global economic meltdown which looms on the horizon, as the world’s central banks’ central bank, the Bank of International Settlements (BIS), and others warn. Probably buy up assets cheap, though the rich guys might not say that publicly.

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Politico has reported that billionaire Mark Cuban is considering running for the White House. Carl Icahn has accepted Trump’s offer to serve as Secretary of the Treasury should the Haircare Ego win. And Ernie Boch, Jr. has decided to throw some money into Trump’s frenzied cause.

Cuban’s the high-tech maven who owns — among other things — the Dallas Mavericks pro basketball team. Icahn’s the business financier who loves to take over companies. Boch’s the heir to an auto dealership fortune. Politico quoted Cuban, noting:

I love the fact that he [Trump] has changed the game. … The idea of imperfect candidates with forceful ideas opens the door for a lot of people that would not have previously run,’ said Cuban, cautioning that if he were to follow Trump’s example, ‘My positions would be far different.

Whatever his positions, and whoever he might decide to crown as his treasury secretary, Cuban and his fellow rich guys will fair better financially than us creative arts types as the repeat of 2008, or worse, hits later this year or next year. Signs point to another depression, though analysts don’t like to use the D word.

Today at the Belgium Financial Forum, Claudio Borio — the BIS’s Monetary and Economic Department head — warned of mounting problems in a talk titled “Challenges for the Global Economy: A Narrowing Road?” He asked the question, “Why almost a decade since the Great Financial Crisis (GFC) the global economy seems unable to return to sustainable and balanced growth?”

Long story short, he cited these “symptoms of unsustainable and unbalanced global expansion: Debt; risk-taking; persistent ultra-low [interest] rates; productivity; policy room for manoeuvre.” He noted that, globally, debt in relation to gross domestic product (GDP) has not adjusted following the 2008 world economic meltdown. That means debt, both public and private, has continued to rise while global profit from production of goods and services really hasn’t. He also noted that decline of productivity growth began before the crisis, and has “intensified thereafter”.

This rise in debt and decline in productivity means that, sooner or later, something has to give way, just as in 2008. If you want to look at Borio’s slide presentation to the forum, it’s here.The BIS’s quarterly review, also released today, likewise points to problems, but more in depth. That report is here.

Financial Times reported on Sunday a looming bubble in U.S. stocks, saying,

A growing number of investors believe that stocks are overvalued, creating the risk of a significant bear market, according to research by Yale University’s Nobel laureate Robert Schiller.

FT’s report went on to cite BIS info, saying:

Recent sell-offs that have rocked equity markets reflect the ‘release of pressure’ accumulated along ‘major faultlines’, the Bank of International Settlements said, as it warned that investors should not expect central banks to ride to the rescue and solve such deep-rooted problems.

Also on Sunday, zerohedge.com, a financial-reporting website known for not mincing words, published a story with the headline: “A Major Bank Just Made Global Financial ‘Meltdown’ Its Base Case: ‘The Worst The World Has Ever Seen'”. It confides:

One bank that is now less than optimistic that China can escape a total economic meltdown is the Daiwa Institute of Research, a think tank owned by Daiwa Securities Group, the second largest brokerage in Japan after Nomura.

If you want to read the article, and the Daiwa report contained within it, you can read that here. Eat something before you read it. You may not feel hungry after. Because if China’s economy — the world’s second largest — melts down, guess what?

If that happens, I wonder if Cuban and his rich cronies will be thinking about the rest of us? Time, and their “forceful ideas,” will tell.