36.   When Dementia Replaces Meritocracy –  Disclosure or Confirmation?

Most of the comments about Biden’s recent speech were objections to the two Marines in the background. A few felt the combination of red and black was reminiscent of Hitler speeches.  My perspective was that it mirrored the picture I saw of a self-described Satanic Temple high priest who claimed a religious exemption for the members of his temple from the Supreme Court ruling on abortion.  I remember wondering if their rituals include child sacrifice.  But my memory is that the red and black setting with the speaker’s face highlighted in white was very similar to the Biden set.  Was that full disclosure on the part of the Biden?  Confirmation?

While the commodity and financial markets are so full of distortions it is difficult to get an accurate read, here are some facts gleaned from conversations with real estate market participants over the last week:

1. With 10-year Treasuries around 3.3%, mortgage rates should be less than 5%. I am now hearing rates quoted around 6%.  Mortgage lenders are afraid of rapid increases in interest rates, so they are padding to protect themselves.
2. With mortgage rates now around 6% for 30-year fixed rate mortgage loans, the combination of higher mortgage rates with home prices that are 40% higher than several years ago, homebuilders are reporting decreases in traffic and 25% – 35% declines in sales.
3. A participant in the distribution center development market confirmed that:
   1. Hedge funds are the major source of capital in the industrial development market, not banks;
   2. In August hedge funds repriced their development loans (due to their loses in the commodity markets?).

Another confirmation of the loss of $30 Trillion in the commodity markets in June and July occurred this week when in the energy market there were margin calls of $1.5 Trillion.  In other global economic news, China’s economy continues to implode with rolling lockdowns perhaps being the Chinese Communists Party’s efforts to control unhappy citizens.  The Euro is now below a $1.00 and headed lower because Europe’s economy is also in decline as they face a cold, dark, hungry winter.  Perhaps 18 of the largest 20 economies in the world are in recession.

Some potential bright spots:

1. In the UK, the new prime minister has stated that Great Britain needs to forget Green Energy and start fracking for oil.
2. Israel has found a huge natural gas field in the Mediterranean. It touches Israel and Turkey who have pledged to work together to keep it secure.  

Here in the Untied States, Pax Americana is dying due to the Biden Administration.  Putin, Xi, and their contemporaries know Biden is senile and his staff is inept.  With the absence of a sheriff, the global bad actors are making their move to expand their empires and obtain more power.  China and Russia have formed their own currency exchange avoiding use of the Dollar.  Biden, perhaps compromised by his Chinese “investments” is bleeding our military of weapons to send to Ukraine making us weaker, so China wants to use its massive military for expansion.

The Democrats hate for Trump is so intense that they apparently define success as destroying him.  It seems likely that they will find a way to indict him for something to prevent him from running for President.  They know in an honest contest, they would lose.  Their efforts demonstrate the level of corruption in our bureaucracy and government, sorry for the redundancy.  Pray for divine intervention because we are headed into a crisis that could easily destroy our Constitution.

I remain intrigued that the financial market participants I hear interviewed all believe that inflation will decline by early 2023, the Fed will pause the Federal Funds Rate at 4%, and then interest rates decline. One of us is seriously wrong.

Here is what I consider to be the highest probability for our economy through 2023:

1. If there is a way to short ESG and the World Economic Forum, this would be a good time to do so because failure is about to occur, massively.  But “Education is always expensive” and the USA is about to pay the cost.
2. “Green Energy” will be shown to be an expensive hobby not a serious source of electricity. ESG investors in wind and solar are buying the equivalent of an Edsel.
3. Because the Democrats in Congress keep spending unfunded money which fuels inflation, The Fed will have to keep raising interest rates past 4% perhaps reaching 10%.
4. This recession is global. With Biden and the Democrats in control, it could easily become a Depression. 
5. By winter, petroleum prices will hit historic highs and gasoline will pass $5 per gallon.  The USA will wish it had its Strategic Petroleum Reserve used by Biden to buy votes in November 2022.  If wishes were horses, beggars would ride.
6. All the folks that have just re-entered the labor market because their cash from the pandemic has been spent will now get laid off.  Watch for unemployment to soar past 6% and possibly go to 10%.
7. Home prices have already started to soften.  Higher mortgage rates will result in a severe recession in which home prices (and commercial real estate values) will decline.
8. The Fed will not stop raising interest rates until something breaks.  What will break is in the hedge fund arena.  The ripple effects will compound the severity of the recession.
9. Economic recovery will require replacing the current administration and Congress with meritocracy guided adults so it will be after 2025 before an economic recovery occurs.
10. Globalization is dead.  Capitalizing the next step, Re-Shoring, will pressure interest rates to stay higher to allocate the capital that will be available.
11. Long term, the middle class will have better jobs, but the speed of the recovery will be constrained by an enormous demand for capital to fund the requisite facilities, equipment, and raw materials.
12. There will be a dramatic increase in demand for energy. Green Energy will be a joke. Fossil and nuclear will be the winners. 
13. The cost of finished goods will be higher, but the supply chains will be shorter, more secure.
14. The wise use of land will determine the future success of the USA.

The best summary of the land market is – short term pain but long-term gain.  Hopefully Americans will successfully thwart the intentional destruction of the most amazing country in the history of the world by mentally ill heathens and pagans.  Fortunately, God is in control.

Please pray:

1. That God exercises his control over our government at all levels.
2. For the “Forgotten 599” surviving Americans being held as political prisoners by Biden and the Demented Marxists in hell hole conditions in the DC Gulag. 
3. For honest elections because without them we are not free.
4. For the valiant Ukrainians.

Let’s Go Brandon!

“Now faith is the assurance of things hoped for, the conviction of things not seen.”

(Hebrews 11:1)   New Revised Standard Version, Oxford University Press)

Stay healthy,

Ned 

September 7, 2022        

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