Category U. S. Neocons

Aug 11 2022

Inflation Moderates in July with Drop in Energy Prices, But Look Closely Food Prices are About to Skyrocket


Posted originally on the conservative tree house on August 10, 2022 | sundance 

The Bureau of Labor Statistics (BLS) has released the July inflation figures known as the Consumer Price Index (CPI) [DATA HERE]. I’m not going to spend much time on the review because the big picture results are exactly what we expected, the appearance of a false inflation plateau, drop and/or moderation of inflation.

The July energy prices dropped significantly driven by a reduction in consumer demand for gasoline and fuel oil, which lowered prices.   We can expect a very similar outcome in August (report in Sept).

Most financial and economic media are reporting an “unexpected” drop in inflation, ex:

“Prices that consumers pay for a variety of goods and services rose 8.5% in July from a year ago, a slowing pace from the previous month due largely to a drop in gasoline prices. On a monthly basis, prices were flat as energy prices broadly declined 4.6% and gasoline fell 7.7%. That offset a 1.1% monthly gain in food prices and a 0.5% increase in shelter costs. {link}

Most econ people will look at the price drop sectors and accept that consumer spending on durable goods and non-essentials has become a downward price point on key categories like vehicles etc.

This is the ‘stag’ part of the ‘stagflation’ (economy), or the new lingo; the ‘dis’ part of the ‘disinflation’ (consumer spending).

For the middle-class or working class, especially those families with young children, I would shake all those data points away, clear the table and look more closely at [BLS Table-2] to see where our eyeballs should be focused.

Look closely at all food group products that originate as “ROW CROPS” and/or “GRAIN”.   Just by looking at the current rate of price increase, you can easily see that all grain and row crop outcomes are going to explode in price in around 60 to 90 days.

The wholesale food supply chain is starting to price-in the future cost at market for products that have yet to be harvested.  Remember, ‘row-crops’ and ‘grains’ are the most energy intensive farming and carry the highest rate of energy use in the process, including fertilizer and diesel prices.  Row crops also carry the highest labor rate to harvest.

When you look at row crops and grains in the Table-2 breakdown of food prices the input price cost is easy to spot.

Annualizing the price outcomes, we see:

Flour at +60% in June and +38% in July.

Bread overall at +19% in June, and +34% in July.

Crackers at 12% in June, and +40% in July.

All grain-based categories are in this +35% to +50% annualized rate.  This is a good rough estimator for what is going to happen in the third wave of food prices we have been discussing.  These are energy cost increases we have to look forward to within current grain harvests.  Additionally, a global shortage of grain will only make this worse.

Eggs are also in this +50% range, and Coffee around +42%.

The same is true for row crops with potato prices in July up +40% (annualized).

SUMMARY:  Energy prices in July, Aug, Sept, moderate yet stay high – giving the false impression of inflation slowing as the overall economy continues shrinking.  However, by the time we get to Sept, Oct, Nov, all of those high farming costs are going to transfer from the field to our forks.  Food inflation in the last quarter of this year is going to be the urgent family conversation that takes the place of gas prices.

Aug 10 2022

North Korea Asks to Join the War


Armstrong Economics Blog/War Re-Posted Aug 10, 2022 by Martin Armstrong

The proxy war with Russia has strengthened the West’s enemies. North Korea is offering to send 100,000 soldiers – all volunteers – to fight alongside Russia. Despite being a small nation, North Korea boasts the fourth largest military in the world, with over 1.3 million active troops and 600,000 reservists.

North Korea is attempting to align closely with Russia and has even offered to help repair the Donbas region after the war. A spokesperson for the hermit kingdom announced full support for Russia in April. “We are sending our full support and showing solidarity to the justified struggle of the Russian people to protect the autonomy and security of the country and to defend national interests,” they stated.

In May, Russia blocked attempts by the UN and US to pass further sanctions on North Korea. In July, North Korea stated that they officially recognized the People’s Republic of Donetsk and the People’s Republic of Luhansk as Russian territories. Russia has responded favorably to North Korea’s vocal support.

“Highly qualified, hardworking, and ready to work in the most difficult conditions, [North] Korean builders will be an asset in the serious task of restoring social, infrastructure and industrial facilities [in the Donbas] destroyed by the retreating Ukrainian forces,” Russia’s ambassador to North Korea, Alexander Matsegora, said.

North Korea is a nuclear power with a military state. The tyrannical government indoctrinates children from a young age to hate the West. Kim Jong-Un can send cheap laborers to Russia at a moment’s notice, and he is certainly desperate for allies. This may entice China to step up its efforts as they have a monopoly on trade with their neighboring country and are increasingly growing frustrated with America after Pelosi’s visit to Taiwan. As the cycle of war turns up, new players are joining the fight.

Aug 10 2022

Details of FBI Raid on Trump Home Surfacing, Including Agents Rummaging Through Melania Trump Clothes and Delicates


Posted originally on the conservative tree house on August 9, 2022 | Sundance

Details are starting to come out about the ridiculous FBI raid on the home of Donald and Melania Trump in Mar-a-Lago.  According to information provided to Miranda Devine of the New York Post, FBI agents from Washington DC raided the home despite cooperation from Trump attorneys.

The raid was executed focused solely on presidential records and evidence of classified information being stored there. A dubious pretext considering that Trump attorneys and records administrators had previously look through 15 boxes of personal documents that were part of the Trump administration.

The FBI did not leave a copy of the search warrant and left no list of items they confiscated.  The documents were of a general nature including letters and mementos from Trump’s presidency, reportedly including letters from Barack Obama and Kim Jong Un, and other correspondence with world leaders.

(Via New York Post) FBI agents scoured Melania Trump’s wardrobe and spent several hours combing through Donald Trump’s private office, breaking open his safe and rifling through drawers when they raided the former First Family’s Mar-a-Lago home in Florida Monday morning.

The Post has learned that the search warrant used by the FBI to enter the palatial Palm Beach property focused solely on presidential records and evidence of classified information being stored there.

A source close to the former president expressed concern that FBI agents or DOJ lawyers conducting the search could have “planted stuff” because they would not allow Trump’s attorneys inside the 128-room building to observe the operation, which lasted more than nine hours.

The raid by over 30 plain clothes agents from the Southern District of Florida and the FBI’s Washington Field Office extended through the Trump family’s entire 3,000-square-foot private quarters, as well as to a separate office and safe, and a locked basement storage room in which 15 cardboard boxes of material from the White House were stored.

Feds arrived at 9 a.m. and didn’t leave until 6:30 p.m.

An eyewitness to the raid said all of the boxes were confiscated by federal agents Monday, but it is unknown if anything else was taken as no itemized list of items was provided by the FBI. (read more)

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Aug 10 2022

Was Judge Who Signed-Off on Sketchy FBI Search Warrant Raid of Trump Home, a Client Name in Ghislane Maxwells Little Black Book?


Posted originally on the conservative tree house on August 9, 2022 | Sundance 

There’s an interesting angle given the revelation that Judge Bruce Reinhart signed-off on the sketchy FBI search warrant for the residence of President Trump in Florida.

Judge Bruce Reinhart was the former U.S. attorney in West Palm Beach who spent 12 years as a federal prosecutor, before leaving his position in order to defend a network of employees who operated the Jeffrey Epstein sex trafficking operation.  First the background:

(NY Post) […] Reinhart was elevated to magistrate judge in March 2018 after 10 years in private practice. That November, the Miami Herald reported that he had represented several of Epstein’s employees — including, by Reinhart’s own admission to the outlet, Epstein’s pilots; his scheduler, Sarah Kellen; and Nadia Marcinkova, who Epstein once reportedly described as his “Yugoslavian sex slave.”

Kellen and Marcinkova were among Epstein’s lieutenants who were granted immunity as part of a controversial 2007 deal with federal prosecutors that allowed the pervert to plead guilty to state charges rather than federal crimes. Epstein wound up serving just 13 months in county jail and was granted work release.

[…] Reinhart was later named in a civil lawsuit by two of Epstein’s victims that accused him of violating Justice Department policies by switching sides in the middle of the Epstein investigation, suggesting he had spilled inside information about the probe to build favor with the notorious defendant, the Herald reported in 2018.

In a 2011 affidavit, Reinhart denied he had done anything improper and insisted that since he was not involved in the federal investigation of Epstein, he was not privy to inside information about the case.

However, in a 2013 court filing, Reinhart’s former colleagues contradicted him, saying that he had “learned confidential, non-public information about the Epstein matter” while employed by the US Attorney’s Office. Reinhart noted to the Herald in response that a complaint filed against him by a lawyer for Epstein’s victims had been dismissed by the Justice Department.  (read more)

Considering the FBI predicate for the raid on Trump’s home, as currently identified, is exceptionally weak; and considering the profile of the raid would have landed upon an ordinarily reluctant judicial desk; what if the FBI had leverage over Bruce Reinhart as an outcome of the case against Epstein’s enabler, Ghislane Maxwell.

The prosecutor in the New York case against Maxwell was former FBI Director James Comey’s daughter.

The client files of Epstein and Maxwell would be currently in the hands of the FBI.  If Bruce Reinhart was a client of Epstein it would explain: (a) his original motives to take up a defensive position on behalf of Epstein; and (b) current leverage for the FBI to use in order to get Judge Reinhart to sign a sketchy and dubious search warrant.

Was Magistrate Judge Bruce Reinhart a client of Epstein and Maxwell’s sex services?

It would be worth asking the question directly to see the response from current FBI Director Chris Wray.

Aug 10 2022

Farage, After Trump Raid People in U.K. Now Understand There Really is a Deep State


Posted originally on the conservative tree house on August 9, 2022 | Sundance

Nigel Farage gives a great interview on Steve Bannon’s War Room with his opinion of the FBI raid on the home of President Donald Trump.  Within the interview Mr. Farage outlines the shock that also shook the people in the U.K who see, many for the first time, that U.S. justice institutions really are politicalized.

One of the key takeaways from Europe is the realization that a Deep State really does exist in the United States of America. {Direct Rumble Link} WATCH:

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Aug 10 2022

Midterm Primary Election Night, Wisconsin, Connecticut, Minnesota and Vermont – Results and Open Discussion


Posted originally on the conservative tree house on August 9, 2022 | Sundance 

Tonight, the midterm elections are held in Wisconsin, Connecticut, Minnesota and Vermont.

In ¹Wisconsin a lot of people will be interested in the GOP primary race for governor.

The republican candidates include Trump-endorsed MAGA candidate Tim Michels -vs- Pence-endorsed Lt. Gov. Rebecca Kleefisch for the republican challenge to current Wisconsin governor Tony Evers.  Wisconsin has a strong establishment GOP club, and the MAGA team is at a structural disadvantage.

New York Times – Election Results Here

CNN Election Results Here

¹NOTE – As part of the club rules, Wisconsin does not have a statewide system for reporting unofficial results on Election Night, and there is not a central official website where results will be reported.  Results are transmitted from municipal clerks to Wisconsin’s 72 county clerks, who are required by law to post unofficial results to their websites. Click here for a list of all 72 county websites.

Aug 10 2022

Second Quarter Productivity Drops Again, Companies Paying Workers More to Produce Less


Posted originally on the conservative tree house on August 9, 2022 | Sundance 

The previous first quarter productivity drop of 7.4% was the largest quarterly drop in 74 years.  Today the Bureau of Labor Statistics (BLS) reports the second quarter productivity dropped another 4.6% [Data Here].

For July, companies are paying 5.7% higher wages and getting a 4.6% drop in output, resulting in a total unit labor cost increase of 10.8%.  That increase in final output cost will either result in higher prices or lower profits.

With weak consumer purchasing (low demand) already creating an inventory surplus, hence lower outputs, lower profit leads to cutbacks.  The largest company expenses are generally labor and energy costs. The more variable and controllable of those two expenses is labor.  You know what comes next.

(WSJ) – […] Rising productivity is the key to improving living standards; it allows companies to raise wages without raising prices and fueling inflation. Instead, businesses appear to be paying workers more to produce less. The higher unit labor costs suggest companies will either endure lower profits or pass on higher costs to consumers.

“The trend in productivity growth has worsened compared to prior to the pandemic, and the surge in unit labor costs makes the Fed’s challenge of getting inflation back down to its 2% target all the more challenging,” Wells Fargo economist Sarah House said in a research note.

The central bank has increased rates four times this year from near zero in March in an effort to raise borrowing costs, slow economic growth and bring inflation down.

The consecutive negative productivity readings are a reversal from earlier in the pandemic, when the economy was expanding rapidly and businesses appeared to be adopting new technology to cope with worker shortages and limits to face-to-face contact. (read more)

Meanwhile, “U.S. manufacturing output in June was down by 0.4% compared with March though it was still up by 3.6% compared with the same month a year earlier, estimates prepared by the Federal Reserve Board found. Three-month output growth was the weakest since early 2021, and confirms slackening momentum evident in other data on output, orders and jobs.” (Reuters)

This month’s inflation report (reflecting changes in July) will show a large decline in overall inflation. This will provide the White House with a false narrative of confidence that inflation has peaked.  However, food inflation (farm prices not yet realized) will combine with wage inflation (as noted above) sometime around October, and then we enter another round of rising prices.

The prices for durable goods have likely peaked.  If you are in the market for an expense item (appliance, furniture, etc) look for significant incentives to trigger in Sept/October; right around the same time when the layoffs start.  So, sit tight for a few more weeks.

However, the prices for highly consumable products will present a false plateau (Aug/Sept) until they go bananas again just before the Thanksgiving holiday season.

Prepare and time your affairs accordingly.

Aug 10 2022

Senator Tim Scott on FBI Raid of Trump Home, ‘We Need to Let This Play Out’


Posted originally on the conservative tree house on August 9, 2022 | Sundance 

It’s not very often that you get to watch a DeceptiCon evolve in real time.  Usually, with history as a guide, DeceptiCon extremists hibernate in the evolutionary process for years, only leaving a minuscule trail from which to find them until they detonate like stealth terror cells.   However, Tim Scott has prematurely detonated himself.

Appearing on CBS news to kickstart his 2024 presidential ambitions, and react/respond to the FBI raid on President Trump’s home in Mar-a-Lago, Senator Tim Scott advances the DeceptiCon narrative, “we need to let this play out” etc.  WATCH, prompted:

https://youtube.com/watch?v=Qbal-cNl8HY%3Ffeature%3Doembed

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Tim Scott will eat the bugs while funding support for the pensions and benefits in Ukraine.

We are in a time of great consequence, the greatest in several generations.  This is a political street fight to save the nation.  Those who demand we “wait for referees” while team USA gets beaten senseless are, quite frankly, worse than useless.  They are on the other side.

Aug 8 2022

Civil Unrest in Panama Continues


Armstrong Economics Blog/Central America Re-Posted Aug 8, 2022 by Martin Armstrong

The people of Panama have been protesting the obscene cost of living for weeks. President Laurentino Cortizo has promised to lower the cost of basic necessities such as food and energy, but the people are not satisfied. Teachers began protesting in July and went on an initial three-day strike. This act of defiance inspired other groups who also took to the streets to call for price reductions.

Inflation in Panama sits at 4.2% as of May, while the unemployment rate hovered around 10%. Fuel costs have soared nearly 50% since January of this year. The issue here is that despite the country’s economy growing, the benefits have not been passed on to the people in any way. Many highly-skilled professionals, such as doctors, left the country long ago for countries where they’re paid competitively and access to medical care has become increasingly difficult.

Protestors blocked the Pan-American highway, which is the main route for most of Panama’s food. Even the Catholic Church stepped in during June to mediate the battle between the people and government. The first round of discussions mediated by the Catholic Church resulted in the government freezing the cost of 72 products. Additionally, the government will now allocate 6% of GDP to education by 2024. The Inter-American Highway, connecting Panama to the rest of Central America, was cleared but the supply constraints and resulted in significant losses.

Panama’s economy grew 17.8% in 2021, and 13.6% in Q1 of 2022. There is no reason for Panamanians’ quality of life to decrease when their economy is in a surplus. The protests will continue as the people have realized that their corrupt government does in fact work for them

Aug 8 2022

American Household Debt Surpasses $16 Trillion


Armstrong Economics Blog/USA Current Events Re-Posted Aug 8, 2022 by Martin Armstrong

American household has reached a new high, according to a report by the Federal Reserve Bank of New York. Total household debt has surpassed $16 trillion for the first time in American history. Americans have taken on $2 trillion in additional debt since the pandemic. Aggregate household debt balances rose by $312 billion in Q2 2022 alone, marking a 2% increase from Q1.

Mortgages were the largest contributing factor to the post-pandemic uptick after rising by $207 billion to $11.39 trillion. Americans have been relying more on credit to make purchases amid inflation, and credit card balances have spiked by $46 billion last quarter. Non-housing balances saw the largest uptick since 2016 after increasing by $103 billion. Auto loans saw a $33 billion rise as the cost of autos remained at a high.

Delinquency on debt “increased modestly” in all categories. Around 95,000 people faced bankruptcy in Q2 2022, which is still near historic lows. Of the $758 billion in new mortgage debt accumulated in the last quarter, 65% is held by people with credit scores over 760. Outstanding student loan debt reached $1.59 trillion last quarter, 5% of which was delinquent.

People may be able to pay off their debt now, but as inflation and interest rates rise, that will become increasingly difficult. While mortgage debt is no cause for concern, the over-reliance on credit purchases will not help Americans lower debt. Inflation must come down for the people to maintain their quality of life.