Friday, 11 November 2016

The 666th post. The demise of the negative!

Wow, that is a stimulating synchronicity regarding the subject matter I plan to discuss.

In books sometimes, fiction books, and fiction in general; there are sudden revolutions or political changes that happen quickly and often violently. This might be a character that has planned to overtake a senate of some sort for personal power, the fictional rise of Anubis in StarGate SG1 who destroyed the negative heirarchy and took all their resources in one episode, or even some ongoing slower changes of power with violent overtones.

But real life is thankfully, not quite as violent. That exciting aspect of the change in power where power suddenly changes hands and it feels like things are changing, is something that tends to happen at elections recently, consider, as I recently talked about, the EU referendum, that finished off David Cameron, whom seemed to be an invincible political force, about 24 hours after the result.

From the overall ideological battle, that is relevant to twitter, progressive agendas in advertising, astrology forums and many other companies:

Zerohedge: The Real Lesson For America As Grubhub Stock Plunges After CEO Tells Trump Supporters To Resign

To a rebellion inside the Democrat party at a woman that annoyingly tried to offset evidence of her criminal behaviour by playing the race card:

Zerohedge: Mutinous DNC Staffers Rage At Donna Brazile: "You Are Part Of The Problem... You Let This Happen"

For good reason, the Democrat party is now full of very elderly hangers on who don't want to give up power:

Daily Mail: Clinton leaves leaderless, rudderless and talentless Democratic Party in crisis - with only pensioners Elizabeth Warren and Bernie Sanders to turn to

To cocky and arrogant members of the British establishment elite who now are left with the fact that when they could've shown professionalism they were nasty and peti and now in that gap where diplomacy should have been there is... nothing!: 

I wonder if it has occured to any of the leftist idiots that signed petitions on 'Ban Donald Trump from the UK' how unhelpful that kind of things is.

But also, something very worrying is stirring. It is summarised here but I will also explain it in simple terms:

Zerohedge: Surging Bond Yields Signalling Pain Not Growth Ahead For US Economy

I suspect my audience has gotten more educated since I closed down my twitter and moved to Gab, the kind of audience that understands this reality anyway. However, for clarity and in case I am wrong about that audience, I will work through this logically.

When someone takes a loan, and has a debt, they pay interest. Lets say in this example the interest is 2%. So Joe Bloggs gets a wants a mortgage and he has to pay 2% interest. 

The person i.e. bank who issues that debt, starts off the mortgage, does not want to keep this and recieve the 2% additional fare personally. They want to sell it off and not bother with it. They then sell this as a bond, and the 2% that Joe Bloggs pays on his house goes from his pocket to the pocket of the person who now has the bond. This is called yield. The bond has a yield of 2% in this case. Which encourages people to buy that bond.

Fair enough.

When there is a lot of debt and government intervention, in order to keep interest rates low and keep the facade of a working economy, the bank can make sure that interest rates are at roughly 0%, especially for corporate loans. This is very important and is the only thing keeping the stock market afloat.

This is only one side of the coin though. Debt is linked to bonds and what is happening with bonds during all this?  0% yield is not very attractive to a buyer of bonds clearly. If the bonds are being brought in large amounts by the central bank, there is no need to increase the yield on the bonds because people are still going to buy them.

If for some reason people are not buying bonds or are actively dumping them. This means that the bond yield has to go higher, to entice people to buy it... This means, in turn that in order for the issuer of the debt/ bond to not have to hold onto it as a liability they will have to INCREASE THE INTEREST RATE.

Now why would this be bad? Because if they are increasing the interest rate they are increasing the debt and one of the only reasons the stock market is still afloat is because companies are taking advantage of the falsely created zero percent interest rate environment in order to buy back stocks of their own companies to keep it from plummeting.

Another small reason is that bonds are seen as more stable and less risky assets than stocks/ equities, so if the yield of the bond goes up enough, people may flood out of stocks and buy bonds which may also crash the market.

Bonds are selling off in the US and Europe and may continue to do so:

(Maybe ;))

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