investmentwatchblog--2020-04-25--Small Business Firings to Start

Small Business Firings to Start

The following was written by Bruce Wilds , who runs the Advancing Time blog .
Bruce is a small business owner in the Midwest .
I get lots of articles sent to me , but hardly ever publish any ( sorry I can ’ t send everyone a reply ) because they ’ re not what I think this site should be .
But with this article it ’ s different .
I think what Bruce describes is interesting , important even .
The US has been losing small businesses for a long time , and the virus response is @ @ @ @ @ @ @ The huge stimulus plans will bypass most small businesses , because they are too small for governments to know what to do with .
The article was written before the latest round of handouts , but there ’ s very little reason to believe it will change much of anything .
It ’ s not so much a grand plan or conspiracy , it just that the system has come to recognize only that bigger is better .
America doesn ’ t like small .
This is as true for banks as it @ @ @ @ @ @ @ But small businnesses have not only built the country , and are crucial for the faces of Main Streets and small towns , they also employ enormous amounts of Americans .
Bruce Wilds : The Paycheck Protection Program or PPP was funded with $ 350 billion in the last stimulus bill , this money is now gone .
Of the thirty million small businesses in America , only 1.7 million received money from the 2.3 trillion dollar aid package passed to help sustain America during this difficult time .
If the government blew @ @ @ @ @ @ @ able to help only around 5 % of small businesses .
it is difficult to think another 250 billion dollars will set things straight .
Clearly , because when the government made promises it delayed the wave of firing while companies waited for help .
The government has failed to keep its promise so now we should expect unemployment to soar as reality sets in .
One of the largest problems facing small companies is they are often underfunded and have difficulty getting financing at reasonable rates .
Banks find larger companies much @ @ @ @ @ @ @ economy most damaged by the covid-19 shutdown is small business .
When this is over America will find many small businesses have been decimated and are not able to reopen .
Others will never recover and be forced to close within months .
Since small businesses employ over 54 million people in America and their importance in the economy should not be underestimated .
• Small businesses contribute 44 percent of all sales in the country .
• Small businesses employ 54.4 million people , about 57.3 percent of the private workforce .
@ @ @ @ @ @ @ still continue to get paid but small business , the most productive part of the economy has a knife to its throat .
As a landlord and small business owner , I can tell you the program was structured in a way that will be of little help to most small businesses .
The government slammed expensive legislation through with no idea of the damage they were doing and how it will cause hundreds of thousands of businesses to close their doors forever .
Washington has become so attuned to dealing with lobbyists @ @ @ @ @ @ @ the fact small is small , and when this comes to business , this means usually under twenty employees , not hundreds .
The government ’ s answer to keeping people employed was to promise small businesses an easy to get , rapid maximum loan amount of two and a half times a company ’ s average monthly payroll expense over the past 12 months .
This loan would turn into a grant and be forgiven if a company did not fire its employees .
Sadly , legislators failed to take into consideration @ @ @ @ @ @ @ or payroll intense .
Some businesses with large or expensive showrooms are getting hammered by rent , others by inventory , or things like taxes , utilities , or even by having to toss products due to spoilage .
The PPP also failed to address the issue of what these employees are going to do while the company has no customers and business barely trickling .
In the past , these employees were expected to pursue activities that earned revenue and garnered profits for the business but with no costumers , this is @ @ @ @ @ @ @ ignored the fact that by keeping these employees on the payroll a generous employer is left open to the harsh mandates laid out in the government ’ s previous bill .
The hastily drawn up 110-page federal covid-19 economic rescue package , which Trump fully supported dealt a hard blow to small business .
For a small business this is a disaster , the bill requires ; • Employers with fewer than 500 employees and government employers offer two weeks of paid sick leave through 2020 .
• Those same employers must now @ @ @ @ @ @ @ family and medical leave for people forced to quarantine due to the virus or care for family because of the outbreak As expected , this measure , named “ Families First Coronavirus Response Act.
” resulted in millions of workers suddenly losing their jobs .
Ironically , it was held before the voters as proof lawmakers could work together during a crisis .
By framing the poorly crafted pork-packed bill this way promoters positioned themselves to demonize those unwilling to support it .
Remember , this bill is was in addition to the @ @ @ @ @ @ @ approved to curb the spread of covid-19 .
As government has grown larger it seems to have become totally oblivious to the fragility of many small businesses and how much it can cost a community when they close .
By framing these pork-packed bills as bipartisan their promoters imply they are fair and balanced .
This is not true , small business is the big loser and hundreds of thousands will soon have to close .
With so many tenants looking at foregoing rent small landlords that don ’ t have deep pockets @ @ @ @ @ @ @ our heads in the sand if we think companies that exist on events where people gather will overnight regain their luster .
It is not like someone can simply flick a switch and things will return to normal .
Reality undercuts the idea of the “ V-shaped recovery ” theory and the idea after the economy has come to a dead stop it can quickly reboot and be back at full speed in a few months .
The government has presented us with an extension of crony capitalism structured to throw just enough @ @ @ @ @ @ @ but in the coming weeks , we will see it failed .
Large businesses with access to cheap capital are the winners and the big losers are the middle-class , small businesses , and social mobility .
All those people that want a higher minimum wage can forget that ever happening if we don ’ t have jobs .
As for just how much small business owners make , according to figures from 2015 from the Small Business Administration the median income for self-employed individuals at an incorporated business was $ 49,804 and @ @ @ @ @ @ @ to PayScale ’ s 2017 data , the average small business owner ’ s income is $ 73,000 per year .
But , total earnings can range from $ 30,000 – $ 182,000 per year .
This means it varies greatly depending on where and just how big the business is .
However , it is important to remember these people have “ skin in the game ” and most risk losing everything if their business fails .
It is important to recognize that starting your own business has always been about the @ @ @ @ @ @ @ future .
It is a symbol of freedom not a guarantee of wealth .
Many people choose this path proudly , not to make more money but as a way to express their individuality .
For these competent and talented people , a job in government or at a large company often offers more security and benefits but far less freedom .
Do not underestimate the value of small business and what it contributes to our society .
Companies such as Amazon are the anti-thesis of small business making their workers a cog @ @ @ @ @ @ @ .
Based on the government ’ s promise to small businesses a great many held off on letting employees go but with each passing day in order to survive they are now in the process of letting hundreds of thousands of employees go .
This is a ticking time-bomb .
By telling these businesses to close and then through its failure to carry out its promise of helping them the government has created a situation with massive negative economic ramifications .
To make matters worse , people going on unemployment look to get @ @ @ @ @ @ @ work .
Why will anyone want to work , especially government workers when they can get paid to stay home ?
This is not about wanting more money for small business , it is about the reality that the firings are just beginning .

by Raúl Ilargi Meijer
Saul Leiter Man in straw hat 1955
The following was written by Bruce Wilds, who runs the Advancing Time blog. Bruce is a small business owner in the Midwest.
I get lots of articles sent to me, but hardly ever publish any (sorry I can’t send everyone a reply) because they’re not what I think this site should be. But with this article it’s different. I think what Bruce describes is interesting, important even. The US has been losing small businesses for a long time, and the virus response is set to greatly accelerate the process. The huge stimulus plans will bypass most small businesses, because they are too small for governments to know what to do with.
The article was written before the latest round of handouts, but there’s very little reason to believe it will change much of anything. It’s not so much a grand plan or conspiracy, it just that the system has come to recognize only that bigger is better. America doesn’t like small. This is as true for banks as it is for various levels of government. But small businnesses have not only built the country, and are crucial for the faces of Main Streets and small towns, they also employ enormous amounts of Americans.
Bruce Wilds: The Paycheck Protection Program or PPP was funded with $350 billion in the last stimulus bill, this money is now gone. Of the thirty million small businesses in America, only 1.7 million received money from the 2.3 trillion dollar aid package passed to help sustain America during this difficult time. If the government blew through this money and was only was able to help only around 5% of small businesses. it is difficult to think another 250 billion dollars will set things straight. Clearly, because when the government made promises it delayed the wave of firing while companies waited for help.
The government has failed to keep its promise so now we should expect unemployment to soar as reality sets in. One of the largest problems facing small companies is they are often underfunded and have difficulty getting financing at reasonable rates. Banks find larger companies much more profitable. The sector of the economy most damaged by the covid-19 shutdown is small business. When this is over America will find many small businesses have been decimated and are not able to reopen. Others will never recover and be forced to close within months. Since small businesses employ over 54 million people in America and their importance in the economy should not be underestimated.
• Small businesses contribute 44 percent of all sales in the country.
• Small businesses employ 54.4 million people, about 57.3 percent of the private workforce.
Rest assured government employees and bureaucrats will still continue to get paid but small business, the most productive part of the economy has a knife to its throat. As a landlord and small business owner, I can tell you the program was structured in a way that will be of little help to most small businesses. The government slammed expensive legislation through with no idea of the damage they were doing and how it will cause hundreds of thousands of businesses to close their doors forever. Washington has become so attuned to dealing with lobbyists from mega-companies it has lost sight of the fact small is small, and when this comes to business, this means usually under twenty employees, not hundreds.
The government’s answer to keeping people employed was to promise small businesses an easy to get, rapid maximum loan amount of two and a half times a company’s average monthly payroll expense over the past 12 months. This loan would turn into a grant and be forgiven if a company did not fire its employees. Sadly, legislators failed to take into consideration that not all small businesses are labor or payroll intense. Some businesses with large or expensive showrooms are getting hammered by rent, others by inventory, or things like taxes, utilities, or even by having to toss products due to spoilage.
We are primarily funded by readers. Please subscribe and donate to support us!
The PPP also failed to address the issue of what these employees are going to do while the company has no customers and business barely trickling. In the past, these employees were expected to pursue activities that earned revenue and garnered profits for the business but with no costumers, this is difficult to do. The PPP also ignored the fact that by keeping these employees on the payroll a generous employer is left open to the harsh mandates laid out in the government’s previous bill. The hastily drawn up 110-page federal covid-19 economic rescue package, which Trump fully supported dealt a hard blow to small business. For a small business this is a disaster, the bill requires;
• Employers with fewer than 500 employees and government employers offer two weeks of paid sick leave through 2020.
• Those same employers must now provide up to 3 months of paid family and medical leave for people forced to quarantine due to the virus or care for family because of the outbreak
As expected, this measure, named “Families First Coronavirus Response Act.” resulted in millions of workers suddenly losing their jobs. Ironically, it was held before the voters as proof lawmakers could work together during a crisis. By framing the poorly crafted pork-packed bill this way promoters positioned themselves to demonize those unwilling to support it. Remember, this bill is was in addition to the $8.3 billion emergency spending bill first approved to curb the spread of covid-19.
As government has grown larger it seems to have become totally oblivious to the fragility of many small businesses and how much it can cost a community when they close. By framing these pork-packed bills as bipartisan their promoters imply they are fair and balanced. This is not true, small business is the big loser and hundreds of thousands will soon have to close. With so many tenants looking at foregoing rent small landlords that don’t have deep pockets also face huge problems. We have our heads in the sand if we think companies that exist on events where people gather will overnight regain their luster. It is not like someone can simply flick a switch and things will return to normal.
Reality undercuts the idea of the “V-shaped recovery” theory and the idea after the economy has come to a dead stop it can quickly reboot and be back at full speed in a few months. The government has presented us with an extension of crony capitalism structured to throw just enough to the masses to silence their outrage but in the coming weeks, we will see it failed. Large businesses with access to cheap capital are the winners and the big losers are the middle-class, small businesses, and social mobility. All those people that want a higher minimum wage can forget that ever happening if we don’t have jobs.
As for just how much small business owners make, according to figures from 2015 from the Small Business Administration the median income for self-employed individuals at an incorporated business was $49,804 and $22,424 for unincorporated firms. According to PayScale’s 2017 data, the average small business owner’s income is $73,000 per year. But, total earnings can range from $30,000 – $182,000 per year. This means it varies greatly depending on where and just how big the business is. However, it is important to remember these people have “skin in the game” and most risk losing everything if their business fails.
It is important to recognize that starting your own business has always been about the opportunity to design and build your own future. It is a symbol of freedom not a guarantee of wealth. Many people choose this path proudly, not to make more money but as a way to express their individuality. For these competent and talented people, a job in government or at a large company often offers more security and benefits but far less freedom. Do not underestimate the value of small business and what it contributes to our society. Companies such as Amazon are the anti-thesis of small business making their workers a cog in a machine and stealing their soul.
Based on the government’s promise to small businesses a great many held off on letting employees go but with each passing day in order to survive they are now in the process of letting hundreds of thousands of employees go. This is a ticking time-bomb. By telling these businesses to close and then through its failure to carry out its promise of helping them the government has created a situation with massive negative economic ramifications. To make matters worse, people going on unemployment look to get almost as much as those that do work. Why will anyone want to work, especially government workers when they can get paid to stay home? This is not about wanting more money for small business, it is about the reality that the firings are just beginning.


investmentwatchblog--2020-04-25--Coronavirus response: Ban alcohol, free speech, and homeschooling

For this week ’ s round-up of articles , we ’ re taking a look at some of the things the government thinks should be banned in response to coronavirus .
WHO urges governments to ban alcohol during lockdown Last week we talked about how the World Health Organization was coming for your sick family members .
This week , they want your booze .
WHO says that alcohol compromises the immune system .
And since we are fighting a virus , they think that prohibition is necessary .
In fact , alcohol restrictions can be justified by governments for @ @ @ @ @ @ @ .
WHO notes that even in good times , alcohol is the cause of major health issues , addiction , and death .
Alcohol accounts for 3 million deaths per year worldwide– far more than the coronavirus .
So it almost seems like WHO ’ s argument for banning alcohol has little to do with the coronavirus .
If it ’ s all about good health and saving lives , why not mandate a WHO-approved diet and exercise regimen for the masses as well ?
Why not ban sugar while they ’ re @ @ @ @ @ @ @ stop ?
Click here to read the full story .
Not that you can disagree with the WHO anyhow… Speaking of which , it ’ s difficult to even disagree with the WHO anymore ; YouTube ’ s CEO indicated yesterday that her video platform would delete any content that goes against official WHO guidance .
Specifically she told CNN : “ Anything that goes against WHO recommendations would be a violation of our policy .
.
.
” Bear in mind that the WHO was totally incompetent , especially in the early @ @ @ @ @ @ @ s a quick review : December 31 : China first notifies WHO of the outbreak January 5 : WHO “ does not recommend any specific measures for travellers ” and “ advises against the application of any travel or trade restrictions on China ” January 23 : Even as China begins its lockdown of Wuhan and the virus spreads across Asia , WHO still insists “ it is still too early to declare a PHEIC ” [ Public Health Emergency of International Concern ] .
January 30 : WHO still “ does not @ @ @ @ @ @ @ and praises the Chinese government ’ s “ commitment to transparency.
” February 27 : After many countries began introducing travel restrictions , WHO lamented that these restrictions would lead to “ unnecessary interference with international traffic , including negative repercussions on the tourism sector.
” March 11 : After more than 100,000 cases in dozens of countries worldwide , WHO finally declares this a global pandemic .
Oh I almost forgot : the WHO is the same organization that made a brutal murderer– former Zimbabwean dictator Robert Mugabe– one of its GOODWILL @ @ @ @ @ @ @ this stuff up .
And now YouTube wants to ban content that disagrees with an organization that is corrupt and incompetent .
Click here to read the full story .
Amyiah Cohoon is a high school sophomore who went on a band trip to Disney World in March .
When she came back home she developed a fever and dry cough and doctors “ concluded that her symptoms matched those of COVID-19.
” Amyiah posted a picture from the Disney trip on Instagram with a caption telling her friends she had Covid-19 and @ @ @ @ @ @ @ for a while while she quarantined herself .
After a short stay in the hospital , Amyiah posted a picture from her stay , again with a caption that she was recovering from Covid-19 .
The next day , a Sheriff ’ s Deputy knocked on the family ’ s door .
He demanded that Amyiah delete the Instagram posts , or else he would cite the family for disorderly conduct and “ start taking people to jail.
” The family offered to show the Deputy the documents from the hospital proving that @ @ @ @ @ @ @ Deputy was not interested .
He said the Sheriff told him to make sure the posts were deleted , because the county officially had no confirmed cases of Covid-19 .
Intimidated , and threatened with jail , Amyiah compiled and deleted the posts .
Turns out it was the school superintendent who contacted the Sheriff about the Instagram post who claimed it was Amyiah ’ s “ foolish means to get attention.
” Click here to read the lawsuit .
Harvard professor : parents can ’ t be trusted with their kids With @ @ @ @ @ @ @ new normal for many families .
This trend was already increasing , and will probably be accelerated by fears of the continuing spread of coronavirus .
But a Harvard professor Elizabeth Bartholet , the faculty director of the Child Advocacy Program at the law school , is calling for a ban on homeschooling .
She says that homeschooling , “ not only violates children ’ s right to a meaningful education and their right to be protected from potential child abuse , but may keep them from contributing positively to a democratic society.
@ @ @ @ @ @ @ of homeschool families are driven by conservative Christian beliefs , which she seems to think constitutes child abuse .
.
.
Professor Bartholet says that some parents are deliberately trying to keep their kids from the mainstream culture taught in schools which includes “ democratic values , ideas about nondiscrimination and tolerance of other people ’ s viewpoints.
” Yep .
She ’ s all about tolerance of other people ’ s viewpoints .
As long as those viewpoints conform with her own .
Otherwise she ’ s not tolerant .
It is @ @ @ @ @ @ @ real person , and not a caricature villain created by Ayn Rand .
Click here to read the full story .

by Simon Black
For this week’s round-up of articles, we’re taking a look at some of the things the government thinks should be banned in response to coronavirus.
WHO urges governments to ban alcohol during lockdown
Last week we talked about how the World Health Organization was coming for your sick family members.
This week, they want your booze.
WHO says that alcohol compromises the immune system. And since we are fighting a virus, they think that prohibition is necessary.
In fact, alcohol restrictions can be justified by governments for the same reason coronavirus lockdowns are needed.
WHO notes that even in good times, alcohol is the cause of major health issues, addiction, and death. Alcohol accounts for 3 million deaths per year worldwide– far more than the coronavirus.
So it almost seems like WHO’s argument for banning alcohol has little to do with the coronavirus.
If it’s all about good health and saving lives, why not mandate a WHO-approved diet and exercise regimen for the masses as well? Why not ban sugar while they’re at it?
Where does the madness stop?
Click here to read the full story.
Not that you can disagree with the WHO anyhow…
Speaking of which, it’s difficult to even disagree with the WHO anymore; YouTube’s CEO indicated yesterday that her video platform would delete any content that goes against official WHO guidance.
Specifically she told CNN: “Anything that goes against WHO recommendations would be a violation of our policy. . .”
Bear in mind that the WHO was totally incompetent, especially in the early days of this pandemic. Here’s a quick review:
December 31: China first notifies WHO of the outbreak
January 5: WHO “does not recommend any specific measures for travellers” and “advises against the application of any travel or trade restrictions on China”
January 23: Even as China begins its lockdown of Wuhan and the virus spreads across Asia, WHO still insists “it is still too early to declare a PHEIC” [Public Health Emergency of International Concern].
January 30: WHO still “does not recommend any travel or trade restriction” and praises the Chinese government’s “commitment to transparency.”
February 27: After many countries began introducing travel restrictions, WHO lamented that these restrictions would lead to “unnecessary interference with international traffic, including negative repercussions on the tourism sector.”
March 11: After more than 100,000 cases in dozens of countries worldwide, WHO finally declares this a global pandemic.
Oh I almost forgot: the WHO is the same organization that made a brutal murderer– former Zimbabwean dictator Robert Mugabe– one of its GOODWILL ambassadors! You can’t make this stuff up.
We are primarily funded by readers. Please subscribe and donate to support us!
And now YouTube wants to ban content that disagrees with an organization that is corrupt and incompetent.
Click here to read the full story.
Police threaten arrest for Instagram post about coronavirus
Amyiah Cohoon is a high school sophomore who went on a band trip to Disney World in March.
When she came back home she developed a fever and dry cough and doctors “concluded that her symptoms matched those of COVID-19.”
Amyiah posted a picture from the Disney trip on Instagram with a caption telling her friends she had Covid-19 and would not be able to see anyone for a while while she quarantined herself.
After a short stay in the hospital, Amyiah posted a picture from her stay, again with a caption that she was recovering from Covid-19.
The next day, a Sheriff’s Deputy knocked on the family’s door. He demanded that Amyiah delete the Instagram posts, or else he would cite the family for disorderly conduct and “start taking people to jail.”
The family offered to show the Deputy the documents from the hospital proving that doctors believed Amyiah had Covid-19. The Deputy was not interested.
He said the Sheriff told him to make sure the posts were deleted, because the county officially had no confirmed cases of Covid-19.
Intimidated, and threatened with jail, Amyiah compiled and deleted the posts.
Turns out it was the school superintendent who contacted the Sheriff about the Instagram post who claimed it was Amyiah’s “foolish means to get attention.”
Click here to read the lawsuit.
Harvard professor: parents can’t be trusted with their kids
With American schools closed, homeschooling is the new normal for many families. This trend was already increasing, and will probably be accelerated by fears of the continuing spread of coronavirus.
But a Harvard professor Elizabeth Bartholet, the faculty director of the Child Advocacy Program at the law school, is calling for a ban on homeschooling.
She says that homeschooling, “not only violates children’s right to a meaningful education and their right to be protected from potential child abuse, but may keep them from contributing positively to a democratic society.”
She adds that a large percentage of homeschool families are driven by conservative Christian beliefs, which she seems to think constitutes child abuse. . .
Professor Bartholet says that some parents are deliberately trying to keep their kids from the mainstream culture taught in schools which includes “democratic values, ideas about nondiscrimination and tolerance of other people’s viewpoints.”
Yep. She’s all about tolerance of other people’s viewpoints. As long as those viewpoints conform with her own. Otherwise she’s not tolerant.
It is hard to imagine that this is a real person, and not a caricature villain created by Ayn Rand.
Click here to read the full story.


investmentwatchblog--2020-04-25--The World Is Going Back To The Inflation-Proof Safe Haven: Gold

by Chris Powell of the Gold Anti-Trust Action Committee ( GATA ) Jan Nieuwenhuijs , formerly known under the nom-de-plume Koos Jansen , is a precious metals analyst from the Netherlands who , among other things , has been intensively involved with the Chinese gold market .
He used to be known for his regular contributions to his BullionStar blog .
Now he publishes articles on precious metals topics on the website of Voima Gold Ltd. , a company headquartered in Helsinki , Finland , that deals with the acquisition , distribution , and storage of gold .
Jan , @ @ @ @ @ @ @ coronavirus we will end up in a deep global depression .
Why ?
Yes , because of the lockdowns in many countries large parts of the economy have ceased to operate , causing aggregate demand to collapse , which starts a domino effect of unemployment and bankruptcies all over the world .
Obviously this is causing a depression .
Since we have huge levels of debt in the world , is it of interest in this regard that gold has no counterparty risk ?
It ’ s very important that gold has no @ @ @ @ @ @ @ gross domestic product around the world are extremely high and unsustainable .
The only way to lower the debt burden at this point is to default or generate inflation .
Elevated inflation causes nominal debt to be cheaper to repay .
Governments and central banks have spurred inflation many times before to get out of debt .
Because gold doesn ’ t have any counterparty risk and can ’ t be printed , it ’ s a safe haven for investors and savers who don ’ t want to hold bonds that can @ @ @ @ @ @ @ an asset that is inflation-proof .
Since every other financial asset is subject to counterparty risk and gold is not , isn ’ t that in this age a top condition that will make gold , to paraphrase George Soros , the “ ultimate bubble ” ?
I wouldn ’ t label gold as a bubble yet .
In the short term the gold price can be volatile because initially there will be deflationary forces in this crisis .
The gold price can react by going down .
However , central banks will @ @ @ @ @ @ @ overall debt burden , so they will print whatever is necessary to create inflation .
When the gold price starts rising substantially , which I think will happen , it could happen that at some point it reaches “ bubble territory.
” After all , markets always overshoot .
However , this would be based on what we know happened in normal recessions in the previous decades .
The current crisis , though , will likely result in a change of the international monetary system .
I think it ’ s quite likely @ @ @ @ @ @ @ .
That doesn ’ t mean the classical gold standard we had at the end of the 19th century , or the Bretton Woods system from 1944 until 1973 .
There are many ways to incorporate gold in the financial system .
So we will see if gold enters bubble territory or of it will rise in price and establish a new role in the financial system .
Is the gold market at a crossroads ?
I think so .
Since 1971 , when President Nixon “ temporarily ” suspended convertibility of dollars @ @ @ @ @ @ @ permanent ) , we have witnessed the biggest monetary experiment on a global scale .
Loose monetary policy , endless bailouts , financial deregulation , and financialization have created a perverse system that is now reaching its end .
Historically , a system based on gold — although not perfect , since no system is — at least ensured some discipline .
I would be very surprised if we would start over with exactly the same system that got us in this mess in the first place .
Do you think Western central @ @ @ @ @ @ @ than in the past ?
Definitely .
I think that Europe has been preparing for a new gold standard since the late 1990s .
I will write an article on this soon because I have proof for it .
Things accelerated after the crisis of 2008 .
European central banks started repatriating gold .
The German , Swedish , and French central bank ( that we know of ) have upgraded all their gold reserves to wholesale market standards , so all their metal is liquid .
European central banks started communicating differently @ @ @ @ @ @ @ bedrock of stability for the international monetary system ” and “ the ultimate store of value.
” The Dutch central bank has stated on its website since 2019 , “ If the system collapses , the gold stock can serve as a basis to build it up again.
” Other countries , in Asia but also in eastern Europe , have bought gold , and to an extent repatriated it .
Do you foresee a currency crisis both in the United States and in Euroland ?
In the eurozone there will be a @ @ @ @ @ @ @ the South , due to much higher debt levels in Italy , Spain , and France than in the Netherlands and Germany .
Southern countries want to share their debt burden with the Netherlands and Germany , but I don ’ t know if the electorate in northern Europe is willing to cooperate .
It remains to be seen if the euro will survive this crisis .
If the euro survives , the debt of southern states will have to be restructured or inflated away , and the same applies for the United @ @ @ @ @ @ @ world was willing to buy U.S. government bonds but that seems to have ended , which leaves the Federal Reserve as the buyer of last resort .
The deficit being run by the U.S. government is breathtaking , and the Fed is already buying unprecedented amounts of government bonds and soon junk bonds as well .
I have no idea how the Fed can ever unwind these positions in a controlled manner .
Neither do I think these assets will ever start to perform .
What the Fed can do is revalue gold @ @ @ @ @ @ @ the losses on its balance sheet .
So , in short , yes , I ’ m expecting a currency crisis in the U.S. and Euroland .
With respect to European bailouts , where did the money sent to Greece really go ?
Who was actually rescued ?
Most of the money went to Greece ’ s creditors , mainly German and French banks that were holding Greek government bonds .
Additionally , a large share went to Greek banks through the Hellenic Financial Stability Fund .
Only 5 percent of in total @ @ @ @ @ @ @ fiscal budget .
Basically , the whole operation was meant to bail out the banks and transfer Greek debt from the private sector to public sector—institutions like the European Stability Mechanism .
The bailouts have been a colossal failure .
In 10 years Greece ’ s GDP has contracted by 22 percent , from E238 billion in 2009 to E185 billion in 2018 .
In early 2009 Greece ’ s debt-to-GDP ratio was 109 percent .
Now it ’ s 181 percent .
The E244 billion Greece still owes to its European partners @ @ @ @ @ @ @ skeptical that the International Monetary Fund ’ s Special Drawing Rights can replace the dollar as world reserve currency .
Please explain .
It ’ s because the SDR is not a currency and there is no free market for SDRs to be exchanged in .
Many people think the SDR comprises a basket of currencies but this is not true .
The SDR is a potential claim on “ freely usable currencies ” such as euros and dollars .
The SDR is not backed by anything , nor is it a claim @ @ @ @ @ @ @ be held only by central banks and can ’ t be used to buy anything , SDRs are not a medium of exchange .
So creating more SDRs doesn ’ t create liquidity .
Furthermore , SDRs can be exchanged for usable currencies only at the IMF ’ s SDR department , and only if there is another central bank willing to buy SDRs .
Trading at the SDR department is very illiquid .
In 2009 the IMF created another 182.7 billion SDRs .
But in the following 12 months only 3.2 billion @ @ @ @ @ @ @ That is very little .
I don ’ t think that creating more SDRs in the current crisis will solve anything .
The IMF will try , though .
When it comes to the question of acceptance of SDRs , would it help to back them with gold ?
The IMF is officially a large holder of gold , isn ’ t it ?
If gold would be added to the basket of currencies used to calculate the SDR daily value , that still wouldn ’ t mean anyone can exchange SDRs for @ @ @ @ @ @ @ t backed by anything .
Of course the IMF can change what an SDR is , as it has done many times , but that only underlines its weaknesses .
Think about it : What monetary authority would want to hold substantial value in an asset that can be changed every five years and is highly illiquid ?
The IMF can add gold to the basket , but it would merely change the SDR ’ s daily valuation .
Why did you start writing about gold ?
And why is this important now @ @ @ @ @ @ @ in 2013 I discovered that the Chinese were buying three times more physical gold than what was widely assumed in the West .
I started a blog to write about these developments and inform the world .
A year later journalists recognized I was right .
At first no one believed me .
Then I was offered a job as a gold analyst at a bullion dealer .
Former Bank of England Governor Mervyn King wrote a book in 2017 — after he resigned , of course , since no central banker can @ @ @ @ @ @ @ “ The End Of Alchemy.
” He wrote that every participant in the economy should always be aware of “ radical uncertainty.
” Life in general , doing business , and investing involve risk .
Politicians can control only so much , although to get your vote they like to tell you they have the solution for everything .
Anyway , in my opinion in some periods there is more risk than in other periods , but in the current crisis “ radical uncertainty ” is at a peak .
Gold has the @ @ @ @ @ @ @ preserving purchasing power , so I see it as an essential part of everyone ’ s savings or investment portfolio .
Thank you for your time , Jan. Lars Schall is a financial journalist based in Germany .
* * * Wine carrying the label of the Gold Anti-Trust Action Committee , cases of which were awarded to three lucky donors in GATA ’ s recent fundraising campaign , are now available for purchase by the case from Fay J Winery LLC in Texarkana , Texas .
Each case has 12 bottles and @ @ @ @ @ @ @ includes shipping via Federal Express .
Here ’ s what the bottles look like : Buyers can compose their case by choosing as many as four varietals from the list here : GATA will receive a commission on each case of GATA-label wine sold .
So if you like wine and buy it anyway , why not buy it in a way that supports our work to achieve free and transparent markets in the monetary metals ?
To order a case of GATA-label wine , please e-mail Fay J Winery at bagman1236 @ @ @ @ @ @ @ @ concise explanation of government ’ s currency market rigging policy and extensively credits GATA ’ s work exposing it .
Ten percent of sales proceeds are contributed to GATA .
Buy a copy for $ 14.99 through Amazon — — or for an additional $ 3 and a penny buy an autographed copy from Englert himself by contacting him at srenglert @ comcast.net .
Help keep GATA going : GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code .
Its e-mail @ @ @ @ @ @ @ subscribe at : To contribute to GATA , please visit :

by Chris Powell of the Gold Anti-Trust Action Committee (GATA)
By Lars Schall
Thursday, April 23, 2020
Jan Nieuwenhuijs, formerly known under the nom-de-plume Koos Jansen, is a precious metals analyst from the Netherlands who, among other things, has been intensively involved with the Chinese gold market. He used to be known for his regular contributions to his BullionStar blog. Now he publishes articles on precious metals topics on the website of Voima Gold Ltd., a company headquartered in Helsinki, Finland, that deals with the acquisition, distribution, and storage of gold.
* * *
Jan, you think that because of the new coronavirus we will end up in a deep global depression. Why?
Yes, because of the lockdowns in many countries large parts of the economy have ceased to operate, causing aggregate demand to collapse, which starts a domino effect of unemployment and bankruptcies all over the world. Obviously this is causing a depression.
Since we have huge levels of debt in the world, is it of interest in this regard that gold has no counterparty risk?
It’s very important that gold has no counterparty risk. Debt levels relative to gross domestic product around the world are extremely high and unsustainable. The only way to lower the debt burden at this point is to default or generate inflation. Elevated inflation causes nominal debt to be cheaper to repay. Governments and central banks have spurred inflation many times before to get out of debt.
Because gold doesn’t have any counterparty risk and can’t be printed, it’s a safe haven for investors and savers who don’t want to hold bonds that can default, and instead want to hold an asset that is inflation-proof.
Since every other financial asset is subject to counterparty risk and gold is not, isn’t that in this age a top condition that will make gold, to paraphrase George Soros, the “ultimate bubble”?
I wouldn’t label gold as a bubble yet. In the short term the gold price can be volatile because initially there will be deflationary forces in this crisis. The gold price can react by going down. However, central banks will not tolerate deflation because it increases the overall debt burden, so they will print whatever is necessary to create inflation. When the gold price starts rising substantially, which I think will happen, it could happen that at some point it reaches “bubble territory.” After all, markets always overshoot.
However, this would be based on what we know happened in normal recessions in the previous decades. The current crisis, though, will likely result in a change of the international monetary system. I think it’s quite likely we will adopt a new gold standard. That doesn’t mean the classical gold standard we had at the end of the 19th century, or the Bretton Woods system from 1944 until 1973. There are many ways to incorporate gold in the financial system. So we will see if gold enters bubble territory or of it will rise in price and establish a new role in the financial system.
Is the gold market at a crossroads?
I think so. Since 1971, when President Nixon “temporarily” suspended convertibility of dollars into gold (which of course became permanent), we have witnessed the biggest monetary experiment on a global scale. Loose monetary policy, endless bailouts, financial deregulation, and financialization have created a perverse system that is now reaching its end. Historically, a system based on gold — although not perfect, since no system is — at least ensured some discipline. I would be very surprised if we would start over with exactly the same system that got us in this mess in the first place.
Do you think Western central bank policy will be friendlier toward gold than in the past?
Definitely. I think that Europe has been preparing for a new gold standard since the late 1990s. I will write an article on this soon because I have proof for it. Things accelerated after the crisis of 2008. European central banks started repatriating gold. The German, Swedish, and French central bank (that we know of) have upgraded all their gold reserves to wholesale market standards, so all their metal is liquid. European central banks started communicating differently about gold, calling it “the bedrock of stability for the international monetary system” and “the ultimate store of value.” The Dutch central bank has stated on its website since 2019, “If the system collapses, the gold stock can serve as a basis to build it up again.” Other countries, in Asia but also in eastern Europe, have bought gold, and to an extent repatriated it.
Do you foresee a currency crisis both in the United States and in Euroland?
In the eurozone there will be a lot of tension between the North and the South, due to much higher debt levels in Italy, Spain, and France than in the Netherlands and Germany. Southern countries want to share their debt burden with the Netherlands and Germany, but I don’t know if the electorate in northern Europe is willing to cooperate. It remains to be seen if the euro will survive this crisis.
If the euro survives, the debt of southern states will have to be restructured or inflated away, and the same applies for the United States. For many decades the whole world was willing to buy U.S. government bonds but that seems to have ended, which leaves the Federal Reserve as the buyer of last resort. The deficit being run by the U.S. government is breathtaking, and the Fed is already buying unprecedented amounts of government bonds and soon junk bonds as well. I have no idea how the Fed can ever unwind these positions in a controlled manner. Neither do I think these assets will ever start to perform. What the Fed can do is revalue gold, so that would make up for the losses on its balance sheet.
So, in short, yes, I’m expecting a currency crisis in the U.S. and Euroland.
With respect to European bailouts, where did the money sent to Greece really go? Who was actually rescued?
Most of the money went to Greece’s creditors, mainly German and French banks that were holding Greek government bonds. Additionally, a large share went to Greek banks through the Hellenic Financial Stability Fund. Only 5 percent of in total E284 billion was used for the Greek fiscal budget.
Basically, the whole operation was meant to bail out the banks and transfer Greek debt from the private sector to public sector—institutions like the European Stability Mechanism. The bailouts have been a colossal failure. In 10 years Greece’s GDP has contracted by 22 percent, from E238 billion in 2009 to E185 billion in 2018. In early 2009 Greece’s debt-to-GDP ratio was 109 percent. Now it’s 181 percent. The E244 billion Greece still owes to its European partners will never be repaid.
You are skeptical that the International Monetary Fund’s Special Drawing Rights can replace the dollar as world reserve currency. Please explain.
It’s because the SDR is not a currency and there is no free market for SDRs to be exchanged in. Many people think the SDR comprises a basket of currencies but this is not true. The SDR is a potential claim on “freely usable currencies” such as euros and dollars. The SDR is not backed by anything, nor is it a claim on the IMF.
Because SDRs can be held only by central banks and can’t be used to buy anything, SDRs are not a medium of exchange. So creating more SDRs doesn’t create liquidity. Furthermore, SDRs can be exchanged for usable currencies only at the IMF’s SDR department, and only if there is another central bank willing to buy SDRs. Trading at the SDR department is very illiquid.
In 2009 the IMF created another 182.7 billion SDRs. But in the following 12 months only 3.2 billion SDRs were exchanged for usable currency. That is very little. I don’t think that creating more SDRs in the current crisis will solve anything. The IMF will try, though.
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When it comes to the question of acceptance of SDRs, would it help to back them with gold? The IMF is officially a large holder of gold, isn’t it?
If gold would be added to the basket of currencies used to calculate the SDR daily value, that still wouldn’t mean anyone can exchange SDRs for gold. Again, SDRs aren’t backed by anything. Of course the IMF can change what an SDR is, as it has done many times, but that only underlines its weaknesses. Think about it: What monetary authority would want to hold substantial value in an asset that can be changed every five years and is highly illiquid? The IMF can add gold to the basket, but it would merely change the SDR’s daily valuation.
Why did you start writing about gold? And why is this important now?
I started writing about gold because in 2013 I discovered that the Chinese were buying three times more physical gold than what was widely assumed in the West. I started a blog to write about these developments and inform the world. A year later journalists recognized I was right. At first no one believed me. Then I was offered a job as a gold analyst at a bullion dealer.
Former Bank of England Governor Mervyn King wrote a book in 2017 — after he resigned, of course, since no central banker can be honest when in office — titled “The End Of Alchemy.” He wrote that every participant in the economy should always be aware of “radical uncertainty.” Life in general, doing business, and investing involve risk. Politicians can control only so much, although to get your vote they like to tell you they have the solution for everything. Anyway, in my opinion in some periods there is more risk than in other periods, but in the current crisis “radical uncertainty” is at a peak. Gold has the longest track record of all currencies for preserving purchasing power, so I see it as an essential part of everyone’s savings or investment portfolio.
Thank you for your time, Jan.
—–
Lars Schall is a financial journalist based in Germany.
* * *
Toast to a free gold market
with great GATA-label wine
Wine carrying the label of the Gold Anti-Trust Action Committee, cases of which were awarded to three lucky donors in GATA’s recent fundraising campaign, are now available for purchase by the case from Fay J Winery LLC in Texarkana, Texas. Each case has 12 bottles and the cost is $240, which includes shipping via Federal Express.
Here’s what the bottles look like:
www.gata.org/files/GATA-4-wine-bottles.jpg
Buyers can compose their case by choosing as many as four varietals from the list here:
www.gata.org/files/FayJWineryVarietals.jpg
GATA will receive a commission on each case of GATA-label wine sold. So if you like wine and buy it anyway, why not buy it in a way that supports our work to achieve free and transparent markets in the monetary metals?
To order a case of GATA-label wine, please e-mail Fay J Winery at bagman1236@aol.com.
* * *
Support GATA by purchasing
Stuart Englert’s “Rigged”
“Rigged” is a concise explanation of government’s currency market rigging policy and extensively credits GATA’s work exposing it. Ten percent of sales proceeds are contributed to GATA. Buy a copy for $14.99 through Amazon —
www.amazon.com/Rigged-Exposing-Largest-Financial-History/dp/1651…
— or for an additional $3 and a penny buy an autographed copy from Englert himself by contacting him at srenglert@comcast.net.
* * *
Help keep GATA going:
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:
www.gata.org
To contribute to GATA, please visit:
www.gata.org/node/16


investmentwatchblog--2020-04-25--Ex-World Bank economist pushes $100B plan to test everyone in US every 2 weeks for coronavirus

So this is the plan : Everyone in the US getting tested every 2 weeks is being pitched as the @ @ @ @ @ folks back to work .
Paul Romer , the former chief economist of the World @ @ @ @ @ , released a plan Thursday advocating the government spend $ 100 billion dollars annually to @ @ @ @ @ the coronavirus in an effort to reopen the economy .
“ Until a vaccine is @ @ @ @ @ simplest and safest path to this outcome is a national testing strategy that marshals our @ @ @ @ @ in the U.S. once every two weeks and isolates all those who test positive , @ @ @ @ @ reads .

So this is the plan:
Everyone in the US getting tested every 2 weeks is being pitched as the “solution” to getting folks back to work.
Paul Romer, the former chief economist of the World Bank and a Nobel laureate, released a plan Thursday advocating the government spend $100 billion dollars annually to test every person biweekly for the coronavirus in an effort to reopen the economy.
“Until a vaccine is developed and deployed, the simplest and safest path to this outcome is a national testing strategy that marshals our existing resources to test everyone in the U.S. once every two weeks and isolates all those who test positive,” Romer’s plan reads.


investmentwatchblog--2020-04-25--No one has ever seen a mess like this before.

The used-vehicle wholesale market is normally very liquid .
Millions of vehicles a year are run through these auction houses around the US and establish day-to-day pricing .
The sellers are leasing companies , rental car companies , lenders with repossessed vehicles , and the like .
These auctions are where dealers buy part of their used-vehicle retail inventory .
The wholesale market is a crucial component in the vast and complex apparatus of the US auto industry that sells 17 million new vehicles and 40 million used vehicles in a good year .
But sales at these auctions have @ @ @ @ @ @ @ auction houses have now switched all auctions to simulcast , where buyers and sellers participate online .
So now , after everyone got used to dealing with simulcast auctions , transactions have begun to tick up from catastrophically low levels to near-catastrophically low levels .
It sounded like this , from J.D .
Power Valuation Services today : “ Wholesale auction sales reached nearly 28,000 units the week ending April 19 , a 19 % lift over the prior week ’ s 23,500 units.
” In the good times through the week ended @ @ @ @ @ @ @ the range from 109,000 to 114,000 vehicles a week .
But then volume collapsed by 84 % to 18,000 vehicles by the week ending April 5 .
It is from this catastrophically low level of 18,000 units that sales via simulcast have started to rise to the still catastrophically low 28,000 units in the week ended April 19 .
Auction volume from mid-March through April 19 has plunged by 72 % to just 160,000 units , down from 579,000 units in the same period last year .
In the chart from the report @ @ @ @ @ @ @ the light blue is actual sales ; the dark blue is actual sales through February and then the old projections – now obviated by events – for the rest of the year : Wholesale prices of vehicles up to eight years old dropped 17 % from the week ended March 15 through the week ended April 19 , according to JD Power , and so far , there have only been relentless downticks – without upticks in sight ( chart by J.D .
Power Valuation Services ) : Looking at this from the @ @ @ @ @ @ @ , Manheim , the largest auto auction house in the US and a unit of Cox Automotive , reported that price declines “ accelerated over the last four weeks , with the first two weeks of April seeing a decline of 4.8 % in the Three-Year-Old Index.
” And it added : “ Rental risk ” vehicles have seen steeper price declines at auctions , Manheim reported .
These are vehicles that rental car companies bought from automakers and that they have to sell later at whatever price the market might bear – @ @ @ @ @ @ @ with repurchase guarantees from the automaker , where the automaker takes the risk associated with the resale value .
The average price for rental risk units sold at auction in the first 15 days of April plunged 17.1 % year-over-year , and 18.5 % from March .
The broad Manheim Used Vehicle Value Index ( which is mix- , mileage- , and seasonally adjusted ) , has so far in April dropped 9.6 % compared to April a year ago .
If it stays there for the rest of April , it will @ @ @ @ @ @ @ data , far outpacing the prior year-over-year plunge-record of 5.5 % set in November 2008 : This collapse in volume of the wholesale market – lack of demand from dealers – and the resulting price declines that are still getting worse , pose a large risk to : • Leasing companies , from the smallest outfit to Ford Credit and big banks • To rental-car companies for their rental risk units • To automakers on their program rental units where they agreed to provide repurchase guarantees .
There are millions of vehicles per @ @ @ @ @ @ @ And they all are collateral .
Those inventories have been funded with debt .
The whole math of leases with a low monthly payment is pegged on a high resale value of the vehicle .
A leasing company buys the vehicle and owns it .
It then leases it to the customer .
At lease-end , the customer turns the vehicle in , and the leasing company has to sell it .
When proceeds from the sale are below the residual value figured into the lease , the leasing company loses money .
@ @ @ @ @ @ @ happens on a few units .
But it ’ s a huge deal if there are double-digit losses across the fleet that persist month after month as the constant flow of these units has to go through auction .
Rental car companies have a similar issue with their “ rental risk ” units : large potential losses built into their inventory that become apparent when they sell that inventory .
This comes in addition to the swoon in revenues .
Rental car companies have not been included in the bailout mania .
For @ @ @ @ @ @ @ have plummeted to $ 3.71 at the moment , from over $ 60 in 2016 .
Its bonds have collapsed .
This eight-year 6 % note , issued in November 2019 at around 100 cents on the dollar , and that traded at 104.5 cents on the dollar on February 21 , closed today at 21 cents on the dollar ( chart via Finra-Morningstar ) : Hertz has hired restructuring and bankruptcy advisors , as have its lenders , the Wall Street Journal reported this afternoon .
Automakers like Ford , get hit @ @ @ @ @ @ @ the big money maker at Ford in recent years .
But the resale value issues of its units that will be coming off lease – in addition to the credit problems associated with tens of millions of people suddenly losing their jobs – are going to put the hurt on it .
Ford is also exposed through its rental program units that it will have to buy back from the rental-car companies at a price that will be higher than what Ford will be able to obtain at auction .
This impacts all @ @ @ @ @ @ @ sell program cars to rental companies .
Then there is the volume issue : Auto sales are a constant flow .
It starts with new vehicles that cycle through the system as they get older .
The sales of new vehicles to leasing companies and rental-car companies by automakers in prior years become an onslaught of used-vehicle supply that no one can stop .
These vehicles are coming down the pike whether anyone wants them or not .
And they must be sold , ultimately to a retail customer .
But if retail @ @ @ @ @ @ @ which is about what preliminary numbers indicate – then the whole flow gets backed up .
Pricing solves those kinds of problems .
Once prices drop far enough on the retail side , retail customers will gradually come out of the woodwork and poke around for deals .
This mechanism works .
But it ’ s this precise mechanism of lower prices to get the flow going that causes havoc among leasing companies and rental-car companies and their lenders , bond holders , and stockholders .
[ Ah yes , I was just @ @ @ @ @ @ @ after hours that it will buy a million used vehicles at the auction and park them in its Special Purpose Vehicles ( SPVs ) to push up prices so that Americans will have to pay more for their used cars in order to bail out those stockholders , bondholders , and banks… I ’ m just kidding , I hope ] .

The used-vehicle wholesale market is normally very liquid. Millions of vehicles a year are run through these auction houses around the US and establish day-to-day pricing. The sellers are leasing companies, rental car companies, lenders with repossessed vehicles, and the like. These auctions are where dealers buy part of their used-vehicle retail inventory. The wholesale market is a crucial component in the vast and complex apparatus of the US auto industry that sells 17 million new vehicles and 40 million used vehicles in a good year. But sales at these auctions have collapsed.
In response to Covid-19, auction houses have now switched all auctions to simulcast, where buyers and sellers participate online. So now, after everyone got used to dealing with simulcast auctions, transactions have begun to tick up from catastrophically low levels to near-catastrophically low levels.
It sounded like this, from J.D. Power Valuation Services today: “Wholesale auction sales reached nearly 28,000 units the week ending April 19, a 19% lift over the prior week’s 23,500 units.”
In the good times through the week ended March 15, auction volume ran in the range from 109,000 to 114,000 vehicles a week. But then volume collapsed by 84% to 18,000 vehicles by the week ending April 5.
It is from this catastrophically low level of 18,000 units that sales via simulcast have started to rise to the still catastrophically low 28,000 units in the week ended April 19. Auction volume from mid-March through April 19 has plunged by 72% to just 160,000 units, down from 579,000 units in the same period last year.
In the chart from the report by J.D. Power Valuation Services, the light blue is actual sales; the dark blue is actual sales through February and then the old projections – now obviated by events – for the rest of the year:
Wholesale prices of vehicles up to eight years old dropped 17% from the week ended March 15 through the week ended April 19, according to JD Power, and so far, there have only been relentless downticks – without upticks in sight (chart by J.D. Power Valuation Services):
Looking at this from the auction house’s point of view, Manheim, the largest auto auction house in the US and a unit of Cox Automotive, reported that price declines “accelerated over the last four weeks, with the first two weeks of April seeing a decline of 4.8% in the Three-Year-Old Index.” And it added:
It should be noted that, given the unprecedented downturn in sales and market disruption that the industry is experiencing because of the COVID-19 pandemic, the decline we have observed thus far in MMR [Manheim Market Report] values at the vehicle level and at all aggregation levels does not fully reflect the declines occurring in the relatively limited number of sales transactions taking place. Adjusting MMR for retention, which is the average difference in price relative to current MMR, results in a decline of 11.9% for 3-year-old since the end of March.
“Rental risk” vehicles have seen steeper price declines at auctions, Manheim reported. These are vehicles that rental car companies bought from automakers and that they have to sell later at whatever price the market might bear – as opposed to vehicles that they buy with repurchase guarantees from the automaker, where the automaker takes the risk associated with the resale value.
The average price for rental risk units sold at auction in the first 15 days of April plunged 17.1% year-over-year, and 18.5% from March.
The broad Manheim Used Vehicle Value Index (which is mix-, mileage-, and seasonally adjusted), has so far in April dropped 9.6% compared to April a year ago. If it stays there for the rest of April, it will be the steepest drop ever in the data, far outpacing the prior year-over-year plunge-record of 5.5% set in November 2008:
This collapse in volume of the wholesale market – lack of demand from dealers – and the resulting price declines that are still getting worse, pose a large risk to:
We are primarily funded by readers. Please subscribe and donate to support us!
Leasing companies, from the smallest outfit to Ford Credit and big banks
To rental-car companies for their rental risk units
To automakers on their program rental units where they agreed to provide repurchase guarantees.
There are millions of vehicles per year that fall into these categories. And they all are collateral. Those inventories have been funded with debt.
The whole math of leases with a low monthly payment is pegged on a high resale value of the vehicle. A leasing company buys the vehicle and owns it. It then leases it to the customer. At lease-end, the customer turns the vehicle in, and the leasing company has to sell it. When proceeds from the sale are below the residual value figured into the lease, the leasing company loses money. This is no big deal if it happens on a few units. But it’s a huge deal if there are double-digit losses across the fleet that persist month after month as the constant flow of these units has to go through auction.
Rental car companies have a similar issue with their “rental risk” units: large potential losses built into their inventory that become apparent when they sell that inventory. This comes in addition to the swoon in revenues. Rental car companies have not been included in the bailout mania.
For example, Hertz shares [HTZ] have plummeted to $3.71 at the moment, from over $60 in 2016. Its bonds have collapsed. This eight-year 6% note, issued in November 2019 at around 100 cents on the dollar, and that traded at 104.5 cents on the dollar on February 21, closed today at 21 cents on the dollar (chart via Finra-Morningstar):
Hertz has hired restructuring and bankruptcy advisors, as have its lenders, the Wall Street Journal reported this afternoon.
Automakers like Ford, get hit from several sides. Ford Credit was the big money maker at Ford in recent years. But the resale value issues of its units that will be coming off lease – in addition to the credit problems associated with tens of millions of people suddenly losing their jobs – are going to put the hurt on it. Ford is also exposed through its rental program units that it will have to buy back from the rental-car companies at a price that will be higher than what Ford will be able to obtain at auction.
This impacts all automakers with captive leasing companies and that sell program cars to rental companies.
Then there is the volume issue: Auto sales are a constant flow. It starts with new vehicles that cycle through the system as they get older. The sales of new vehicles to leasing companies and rental-car companies by automakers in prior years become an onslaught of used-vehicle supply that no one can stop. These vehicles are coming down the pike whether anyone wants them or not.
And they must be sold, ultimately to a retail customer. But if retail demand has collapsed by 50% – which is about what preliminary numbers indicate – then the whole flow gets backed up.
Pricing solves those kinds of problems. Once prices drop far enough on the retail side, retail customers will gradually come out of the woodwork and poke around for deals. This mechanism works. But it’s this precise mechanism of lower prices to get the flow going that causes havoc among leasing companies and rental-car companies and their lenders, bond holders, and stockholders.
[Ah yes, I was just going to say that the Fed announced after hours that it will buy a million used vehicles at the auction and park them in its Special Purpose Vehicles (SPVs) to push up prices so that Americans will have to pay more for their used cars in order to bail out those stockholders, bondholders, and banks… I’m just kidding, I hope].


investmentwatchblog--2020-04-25--I lost 25% of my savings this week. Here is what I learned.

After a long time of very responsibly trading blue chip stocks for modest gains single digit gains , last week I started contriving a plan to get into oil and “ hit it big ” .
I spent at least 40 hours considering all my possible options .
Then on Monday afternoon , it became clear to me – it was time to strike .
I put 50 % of my money in .
• Don ’ t ever buy something you don ’ t FULLY understand .
On Monday , I bought into USO as oil prices bottomed , @ @ @ @ @ @ @ that was purchasing up all of the May Futures contracts .
I thought USO was rolling out of April and into May , and they were conveniently buying up all the world ’ s WTI at bottom of the barrel pricing .
I saw the warnings all over the place that people didn ’ t understand that USO was based on futures , not spot prices .
I KNEW USO was buying futures , not spot .
I thought that meant I understood the warnings .
I didn ’ t know that the @ @ @ @ @ @ @ t know which months I was buying into .
The funny truth is that they weren ’ t even making most of their moves on Monday .
I was WAY off .
• Don ’ t trust third party sources on the details – not even your bank .
Both Yahoo Finance , and my bank – RBC Direct Investing – have incorrect information on USO and most major ETFs .
For as long as I have been looking ( 2 weeks ) , they ’ ve said USO is holding April WTI @ @ @ @ @ @ @ : i.imgur.com/bOm0JEQ.png I thought this meant that USO had to sell all those contracts and move into May contracts on Monday .
I thought USO was being paid to take a bunch of oil that they would then have all month to get rid of .
But that ’ s not how this works .
• The word “ ETF ” is used extremely loosely .
An ETF like SPY or ZQQ.to , is absolutely nothing like all the ETFs out there that are “ attempting to track daily movements of _______ ” @ @ @ @ @ @ @ a fund .
Don ’ t buy into ETFs that you do not FULLY understand .
Read the actual prospectus .
• Do not underestimate the number of stupid investors out there .
As I watched WTI plummet in real time , I immediately saw USO skyrocketing , I thought for sure that meant that smart institutional money was piling into USO .
I thought there was no way that retail investors could move a $ 2.5B fund that fast , but they were .
That was not smart money causing the pump @ @ @ @ @ @ @ me .
• Don ’ t fuck around with leveraged ETFs .
In addition to USO , I purchased into a 2X leveraged WTI tracking ETF “ HOU.to ” at the very end of the day on Monday .
I thought for sure on Tuesday morning the oil prices would bounce back up from negative , and give me a big bump .
I figured , even if it didn ’ t work out , I could hold onto it forever until oil comes back .
Wrong .
You can not hold onto @ @ @ @ @ @ @ 0 mathematically .
If you can ’ t make gains in your first couple of days or weeks , you are probably stuck with taking a loss .
You shouldn ’ t even hold these things more than a single trading day .
ESPECIALLY in this crazy market .
• Despite your Father ’ s advice , you can ’ t just be patient and hold on to everything .
HOU.to – which I purchased into – is beyond toast .
The company has all but told investors it ’ s time to @ @ @ @ @ @ @ 40 % of it ’ s value on Tuesday , they froze it , and then released an official press release that the ETF was worth about 1/6th of its already obliterated market price .
They then said pretty clearly that they no longer expected to be able to achieve the funds objectives .
After a few cuss words , I basically kissed my money goodbye .
Then much to my pleasant surprise , on Wednesday morning , I saw it was back up for trade .
Somehow it was rising .
( @ @ @ @ @ @ @ power of stupid money . )
I cashed out immediately , and was very pleased to get 2 /3 of my money back .
Everyone around me was telling me to be patient and not take a loss .
The fund has done nothing but post double digit losses since then , yet millions of people are continuing to trade it , when they should instead be cutting their losses .
While June futures are up 70 % since Tuesday , this 2x ETF is down like 50 % – yet people still @ @ @ @ @ @ @ in these oil ETF ’ s is that NOTHING is certain in this crazy ass market .
A TON of the pain that I felt this week was caused by USO and other funds like them restructuring .
USO has been rolling front month futures on a predictable calendar for 12 years .
On Tuesday morning they absolutely fucked my investment in USO , and probably contributed to the obliteration of HOU.to by surprising us all with a restructuring announcement .
I never in my life thought that USO was going to restructure @ @ @ @ @ @ @ it was that they were legally obligated to follow a certain predictable futures trading pattern – and that certainty gave people a mechanism to buy and sell .
NOPE .
They can legally just do whatever the hell they want , costing retail investors like me an arm and a leg , while their fund managers continue to make 7 figure salaries .
• Last but certainly not least , this week should be a lesson to us all that there are mammoth sized financial incongruities hidden in every corner of the global @ @ @ @ @ @ @ has taken place in the oil industry this week should be a warning bell to us all .
The 2008 crisis was caused by bad assets in a SINGLE industry .
Considering the demand for everything is down by at least 30 % , and the governments have propped the world up with free cash equivalent to over 10 % of global GDP – it ’ s quite certain that there are “ sub prime mortgage backed security ” equivalent death traps forming in every single industry .
It ’ s only a @ @ @ @ @ @ @ pop up .
They could appear on Monday .
They could appear in August .
But anyone who is paying attention is fairly certain they are out there .

by Troflecopter
After a long time of very responsibly trading blue chip stocks for modest gains single digit gains, last week I started contriving a plan to get into oil and “hit it big”.
I spent at least 40 hours considering all my possible options. Then on Monday afternoon, it became clear to me – it was time to strike. I put 50% of my money in.
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Tuesday morning was not fun.
Here’s what I learned:
Don’t ever buy something you don’t FULLY understand. On Monday, I bought into USO as oil prices bottomed, thinking I was buying into a fund that was purchasing up all of the May Futures contracts. I thought USO was rolling out of April and into May, and they were conveniently buying up all the world’s WTI at bottom of the barrel pricing. I saw the warnings all over the place that people didn’t understand that USO was based on futures, not spot prices. I KNEW USO was buying futures, not spot. I thought that meant I understood the warnings. I didn’t know that the real risk was that I didn’t know which months I was buying into. The funny truth is that they weren’t even making most of their moves on Monday. I was WAY off.
On Monday, I bought into USO as oil prices bottomed, thinking I was buying into a fund that was purchasing up all of the May Futures contracts. I thought USO was rolling out of April and into May, and they were conveniently buying up all the world’s WTI at bottom of the barrel pricing. I saw the warnings all over the place that people didn’t understand that USO was based on futures, not spot prices. I KNEW USO was buying futures, not spot. I thought that meant I understood the warnings. I didn’t know that the real risk was that I didn’t know which months I was buying into. The funny truth is that they weren’t even making most of their moves on Monday. I was WAY off. Don’t trust third party sources on the details – not even your bank. Both Yahoo Finance, and my bank – RBC Direct Investing – have incorrect information on USO and most major ETFs. For as long as I have been looking (2 weeks), they’ve said USO is holding April WTI Futures. This is 100% false: i.imgur.com/bOm0JEQ.png I thought this meant that USO had to sell all those contracts and move into May contracts on Monday. I thought USO was being paid to take a bunch of oil that they would then have all month to get rid of. But that’s not how this works.
Both Yahoo Finance, and my bank – RBC Direct Investing – have incorrect information on USO and most major ETFs. For as long as I have been looking (2 weeks), they’ve said USO is holding April WTI Futures. This is 100% false: i.imgur.com/bOm0JEQ.png I thought this meant that USO had to sell all those contracts and move into May contracts on Monday. I thought USO was being paid to take a bunch of oil that they would then have all month to get rid of. But that’s not how this works. The word “ETF” is used extremely loosely. An ETF like SPY or ZQQ.to, is absolutely nothing like all the ETFs out there that are “attempting to track daily movements of _______”. An “ETF” is just a fund. Don’t buy into ETFs that you do not FULLY understand. Read the actual prospectus.
An ETF like SPY or ZQQ.to, is absolutely nothing like all the ETFs out there that are “attempting to track daily movements of _______”. An “ETF” is just a fund. Don’t buy into ETFs that you do not FULLY understand. Read the actual prospectus. Do not underestimate the number of stupid investors out there. As I watched WTI plummet in real time, I immediately saw USO skyrocketing, I thought for sure that meant that smart institutional money was piling into USO. I thought there was no way that retail investors could move a $2.5B fund that fast, but they were. That was not smart money causing the pump. It was a million idiots like me.
As I watched WTI plummet in real time, I immediately saw USO skyrocketing, I thought for sure that meant that smart institutional money was piling into USO. I thought there was no way that retail investors could move a $2.5B fund that fast, but they were. That was not smart money causing the pump. It was a million idiots like me. Don’t fuck around with leveraged ETFs. In addition to USO, I purchased into a 2X leveraged WTI tracking ETF “HOU.to” at the very end of the day on Monday. I thought for sure on Tuesday morning the oil prices would bounce back up from negative, and give me a big bump. I figured, even if it didn’t work out, I could hold onto it forever until oil comes back. Wrong. You cannot hold onto these things forever. They trend towards 0 mathematically. If you can’t make gains in your first couple of days or weeks, you are probably stuck with taking a loss. You shouldn’t even hold these things more than a single trading day. ESPECIALLY in this crazy market.
In addition to USO, I purchased into a 2X leveraged WTI tracking ETF “HOU.to” at the very end of the day on Monday. I thought for sure on Tuesday morning the oil prices would bounce back up from negative, and give me a big bump. I figured, even if it didn’t work out, I could hold onto it forever until oil comes back. Wrong. You cannot hold onto these things forever. They trend towards 0 mathematically. If you can’t make gains in your first couple of days or weeks, you are probably stuck with taking a loss. You shouldn’t even hold these things more than a single trading day. ESPECIALLY in this crazy market. Despite your Father’s advice, you can’t just be patient and hold on to everything. HOU.to – which I purchased into – is beyond toast. The company has all but told investors it’s time to cash out. After the fund lost 40% of it’s value on Tuesday, they froze it, and then released an official press release that the ETF was worth about 1/6th of its already obliterated market price. They then said pretty clearly that they no longer expected to be able to achieve the funds objectives. After a few cuss words, I basically kissed my money goodbye. Then much to my pleasant surprise, on Wednesday morning, I saw it was back up for trade. Somehow it was rising. (This goes back to not underestimating the power of stupid money.) I cashed out immediately, and was very pleased to get 2 /3 of my money back. Everyone around me was telling me to be patient and not take a loss. The fund has done nothing but post double digit losses since then, yet millions of people are continuing to trade it, when they should instead be cutting their losses. While June futures are up 70% since Tuesday, this 2x ETF is down like 50% – yet people still cling on.
HOU.to – which I purchased into – is beyond toast. The company has all but told investors it’s time to cash out. After the fund lost 40% of it’s value on Tuesday, they froze it, and then released an official press release that the ETF was worth about 1/6th of its already obliterated market price. They then said pretty clearly that they no longer expected to be able to achieve the funds objectives. After a few cuss words, I basically kissed my money goodbye. Then much to my pleasant surprise, on Wednesday morning, I saw it was back up for trade. Somehow it was rising. (This goes back to not underestimating the power of stupid money.) I cashed out immediately, and was very pleased to get 2 /3 of my money back. Everyone around me was telling me to be patient and not take a loss. The fund has done nothing but post double digit losses since then, yet millions of people are continuing to trade it, when they should instead be cutting their losses. While June futures are up 70% since Tuesday, this 2x ETF is down like 50% – yet people still cling on. The biggest lesson in these oil ETF’s is that NOTHING is certain in this crazy ass market. A TON of the pain that I felt this week was caused by USO and other funds like them restructuring. USO has been rolling front month futures on a predictable calendar for 12 years. On Tuesday morning they absolutely fucked my investment in USO, and probably contributed to the obliteration of HOU.to by surprising us all with a restructuring announcement. I never in my life thought that USO was going to restructure. I thought the whole point of it was that they were legally obligated to follow a certain predictable futures trading pattern – and that certainty gave people a mechanism to buy and sell. NOPE. They can legally just do whatever the hell they want, costing retail investors like me an arm and a leg, while their fund managers continue to make 7 figure salaries.
A TON of the pain that I felt this week was caused by USO and other funds like them restructuring. USO has been rolling front month futures on a predictable calendar for 12 years. On Tuesday morning they absolutely fucked my investment in USO, and probably contributed to the obliteration of HOU.to by surprising us all with a restructuring announcement. I never in my life thought that USO was going to restructure. I thought the whole point of it was that they were legally obligated to follow a certain predictable futures trading pattern – and that certainty gave people a mechanism to buy and sell. NOPE. They can legally just do whatever the hell they want, costing retail investors like me an arm and a leg, while their fund managers continue to make 7 figure salaries. Last but certainly not least, this week should be a lesson to us all that there are mammoth sized financial incongruities hidden in every corner of the global economy right now. The insanity that has taken place in the oil industry this week should be a warning bell to us all. The 2008 crisis was caused by bad assets in a SINGLE industry. Considering the demand for everything is down by at least 30%, and the governments have propped the world up with free cash equivalent to over 10% of global GDP – it’s quite certain that there are “sub prime mortgage backed security” equivalent death traps forming in every single industry. It’s only a matter of time before more of them pop up. They could appear on Monday. They could appear in August. But anyone who is paying attention is fairly certain they are out there.
The insanity that has taken place in the oil industry this week should be a warning bell to us all. The 2008 crisis was caused by bad assets in a SINGLE industry. Considering the demand for everything is down by at least 30%, and the governments have propped the world up with free cash equivalent to over 10% of global GDP – it’s quite certain that there are “sub prime mortgage backed security” equivalent death traps forming in every single industry. It’s only a matter of time before more of them pop up. They could appear on Monday. They could appear in August. But anyone who is paying attention is fairly certain they are out there. Be careful.


investmentwatchblog--2020-04-25--IV Percentile & IV Rank: The Vega story not many know

First of all , what is Implied Volatility and Historical Volatility ?
Implied Volatility ( IV ) is how volatile the market expects a stock to be in the future over a year .
IV is forward looking !
For example , a stock price of $ 100 with an IV of 25 % means the stock price could move $ 25 in either direction over the next year .
IV indicates the annualized expected one standard deviation range for a stock price .
This means there is a 68.2 % chance ( one standard deviation ) the stock will @ @ @ @ @ @ @ IV is important because it represents the likelihood of an option pricing swinging in-the-money .
The higher the IV , the higher the chance the stock can swing to in-the-money .
Now what is Historical Volatility ?
Historical Volatility is what the volatility actually was when looking back in time .
Why would we care about historical volatility ?
Because it tells us if the market ’ s predictions about volatility ( IV ) was correct .
Take a look at this chart of SPY , where implied volatility and historical volatility are @ @ @ @ @ @ @ majority of the time , implied volatility is higher than historical volatility .
This means the market thought volatility was going to be higher than what it really was .
IV Percentile represents the percentage of days that implied volatility has traded below the current level over the past year .
For example , if IV Percentile is 5 % in XYZ , that would mean that implied volatility only traded below current levels 5 % of the time over the course of the previous 12 months .
On the other hand , @ @ @ @ @ @ @ % , that would mean that implied volatility had traded below current levels 80 % of the time over the previous 12 months .
IV Rank tells us whether implied volatility is high or low in a specific underlying relative to the past year of implied volatility data .
For example , imagine that implied volatility has ranged between 30 and 60 for underlying XYZ over the past year .
If implied volatility is currently trading at 45 , then the IV Rank for XYZ would be 50 % – exactly in the @ @ @ @ @ @ @ How do I take advantage of this ?
You can use this to your advantage when selling options .
You want to sell options when IV Percentile and/or IV Rank is really high ( > 75 % ) .
The reason we do this is because the current IV is historically much higher than what has been seen in the past , and is VERY likely to start going down in the future .
What if I ’ m long on an option but IV is starting to fall ?
To my thinkorswim @ @ @ @ @ @ @ to see IV Percentile by going to Trade > All Products > Today ’ s Option Statistics .
In order to view IV Rank on thinkorswim , you have to add your own custom study .
To do that , visit this tutorial that tells you how .
I ’ m not really sure why thinkorswim doesn ’ t display IV Rank .
To my tastyworks bros out there , I ’ m pretty sure it displays both IV Percentile and IV Rank .
I hope some of you guys found this useful @ @ @ @ @ @ @ tips .
🙂 TL ; DR Buy when IV Percentile and/or IV Rank is low and sell when IV Percentile and/or IV Rank is high .
Disclaimer : This information is only for educational purposes .
Do not make any investment decisions based on the information in this article .
Do you own due diligence .

by leecharles_
First of all, what is Implied Volatility and Historical Volatility?
Implied Volatility (IV) is how volatile the market expects a stock to be in the future over a year. IV is forward looking! For example, a stock price of $100 with an IV of 25% means the stock price could move $25 in either direction over the next year. IV indicates the annualized expected one standard deviation range for a stock price. This means there is a 68.2% chance (one standard deviation) the stock will move $25 up or down. IV is important because it represents the likelihood of an option pricing swinging in-the-money. The higher the IV, the higher the chance the stock can swing to in-the-money. Now what is Historical Volatility? Historical Volatility is what the volatility actually was when looking back in time. Why would we care about historical volatility? Because it tells us if the market’s predictions about volatility (IV) was correct. Take a look at this chart of SPY, where implied volatility and historical volatility are graphed. You can see that the majority of the time, implied volatility is higher than historical volatility. This means the market thought volatility was going to be higher than what it really was.
What is Implied Volatility Percentile?
IV Percentile represents the percentage of days that implied volatility has traded below the current level over the past year. For example, if IV Percentile is 5% in XYZ, that would mean that implied volatility only traded below current levels 5% of the time over the course of the previous 12 months. On the other hand, if IV Percentile in XYZ is 80%, that would mean that implied volatility had traded below current levels 80% of the time over the previous 12 months.
What is Implied Volatility Rank?
IV Rank tells us whether implied volatility is high or low in a specific underlying relative to the past year of implied volatility data. For example, imagine that implied volatility has ranged between 30 and 60 for underlying XYZ over the past year. If implied volatility is currently trading at 45, then the IV Rank for XYZ would be 50% – exactly in the middle of its one-year historical range.
How do I take advantage of this?
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You can use this to your advantage when selling options. You want to sell options when IV Percentile and/or IV Rank is really high (>75%). The reason we do this is because the current IV is historically much higher than what has been seen in the past, and is VERY likely to start going down in the future.
What if I’m long on an option but IV is starting to fall?
You can always hedge your position by going long on SVXY (inverse VIX) or by shorting VXX (Vix Near-Term Futures contracts. Here are some other volatility tickers that you can use to your advantage: Long VIX VXX – 1x leveraged short-term futures (1 month) VIXY – short-term futures (1 month) TVIX – 2x short-term futures UVXY – 1.5x leveraged front and second month futures Short VIX SVXY – 0.5x leverage inverse short-term futures ZIV – 1x leverage inverse mid-term futures
To my thinkorswim bros out there, you are able to see IV Percentile by going to Trade > All Products > Today’s Option Statistics. In order to view IV Rank on thinkorswim, you have to add your own custom study. To do that, visit this tutorial that tells you how. I’m not really sure why thinkorswim doesn’t display IV Rank. To my tastyworks bros out there, I’m pretty sure it displays both IV Percentile and IV Rank.
I hope some of you guys found this useful! Feel free to leave your criticisms/useful tips. 🙂
TL;DR Buy when IV Percentile and/or IV Rank is low and sell when IV Percentile and/or IV Rank is high.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.