Is Everything Out of Whack? Wolf Richter on the Keiser Report

Bloodletting among retailers, the Snap IPO that turns stockholders into zombies, China’s credit bubble that makes the whole world jittery (video).

“Fake prices” and “fake price discovery” in the financial markets, derivatives that have “metastasized” and are far larger than the underlying economy, creating a false paradigm that governments use for their policies…. Stacy Herbert and Max Keiser have at it in the first section of the Keiser Report.

My part starts 12:40 minutes into the video. We discuss the bloodletting among retailers and the misbegotten IPO of Snap whose shares — they plunged 33% in 9 trading days — turn shareholders into zombies. I call for a rebellion by institutional investors, which is exactly what happens. And I vivisect the credit bubble in China. It’s so huge even the New York Fed gets jittery. When will it implode and how will it impact the rest of the world?

The Fed is way behind the curve. Its target for the fed funds rate is still low despite three mini-rate hikes since December 2015. It’s still highly stimulative. And it has been outpaced by inflation. But at least it now has acknowledged seeing the curve. Read… Inflation Hits Consumers, Mortgage Rates Take Off, “Financial Repression” for Bondholders and Savers

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  57 comments for “Is Everything Out of Whack? Wolf Richter on the Keiser Report

  1. Bruce Adlam says:

    This has been going on for so long it’s just a joke and the no voting right snap IPO is a non democratic sham .I have no dealt it will implode in the end

    • cdr says:

      My pessimism tells me that the globalists are only being temporarily inconvenienced. Trump will try to change the world and all his efforts will be undermined and his successes will be reversed.

      Rates are rising, which is good. Much higher rates back to something more historically normal are key to changing the world for the better. They will give power back to the middle class. Globalists need negative rates, which, among other things, will force anyone with earned savings to subsidize the globalist agenda financially via the forced taxation negative rates create.

      Trump is only slowing them down. The Globalists control the media and most politicians. 50% of the people appear to be stupid enough to think Hollywood liberals are talking truth to power.

      The Globalist agendas … the upper 1% want wealth and unlimited power. The others want a utopia that takes what the middle class earns so the underclass can live better. Printed money, negative rates, and open borders accomplish both agendas. Unlimited sovereign debt is an expansion tool. How China handles it’s coming debt crisis will be the blueprint for the world as each central bank group reaches its limits. The problem … How to make the debt go away while containing civil unrest with little or no incident.

      The middle class is supposed to sing ‘hi ho hi ho it’s off to support the underclass we go’. And support wars based on fictional enemies and/or enemies of our own creation.

      Perhaps this is just a normal and predictable decline of Empire. No force can stop it and a form of dark age is coming in a few decades.

      • Wsg says:

        You are right on the money. The wise are preparing.

      • David, by the lake says:

        It will likely unfold over many decades to a century or two, but you are not wrong. As Hari Seldon would observe, “The Fall cannot be stopped.”. Industrial civilization will pass, just as Classical civilization did, and there will be a “dark age” of some centuries, no doubt. What we *can* do, however, is work to preserve that which might become the seeds for the Renaissance which will follow in due time. How can we best accomplish this?

        • kitten lopez says:

          this used to be something i’d only hear black elders tell us young ones, but as an artist i’m heartened (although profoundly sad) that this line of thinking is coming more to the fore.

          because with all the rot and destruction, some of us under the rocks come alive in the cracks.

          as my baby girl apprentice wrote to me, “we are the roses growing out of the cracks in the concrete.” (she is a baby seed i’m watering well for the future as i meet her weekly to teach her all i know about whatever she and her boyfriend ask me about)

        • kitten lopez says:

          “… there will be a “dark age” of some centuries, no doubt. What we *can* do, however, is work to preserve that which might become the seeds for the Renaissance which will follow in due time. How can we best accomplish this?”

          i think anything extra and kind that you give show or do for someone for FREE is paramount in this day where even kitty cats and dogs are made into whores. everyone’s selling some kind of love touch semen or compliments and anything given freely is mind blowing to others.

      • Mike says:

        The “underclass” is not the problem with the US or any economy. At any rate, Trump supporters will find to their horror that the programs that will be cut are those benefiting them and their families, directly or indirectly. Trump is right about China, but his cabinet choices make it hard to argue that he is either fighting against globalists or the “deep state” or bank misconduct.

        The top 5% have amassed so much wealth that neither the middle class nor the “underclass” have any significant influence in our country. Now, they will get more tax cuts, benefits, and effective subsidies. We are supporting/ subsidizing the top 5% more than the “underclass” by giving corrupt financiers direct (e.g., TARP) and indirect loans (via the Fed) at interest rates that are way below what an informed lender would charge to financial institutions and essentially forgiving taxes. What florist or real estate agent would not love to be able to defer paying taxes for many years, like Apple as to taxes on its massive foreign income from its products made in China, or get a .5% loan (while legally insolvent) like the banks (or quasi-banks like Goldman Sachs, which became a “bank” when it was bankrupt so it could share in the loot)?
        The top 5% are practicing the Roman strategy: divide and conquer the bottom 95%. The middle and lower classes have seen their pensions financially raped, social security so watered down that no one could rely on it to retire, jobs exported to maximize profits for the top 5%, paid for U.S. arms used to take over oil fields in Iraq, whose products were then sold to China, et al., and can expect hyperinflation when the banks finally release the hundreds of billions created by the Fed’s QE programs.

        I think that given the numerous US and EU problems, not to mention what may happen in China, we will later see another QE: “to infinity and beyond!” When the dollar is used less and less in transactions by foreign countries, even if it does not formally lose its reserve currency status, and when the U.S. stock market collapses, because PE ratios become too insane, we will all see the results.

        Trump will not be to blame for all of the problems. Sadly, the last three presidents before him can all get a good chunk of the blame. The top 5% have gained control of both parties. However, Trump’s proposed tax cuts to millionaire kids like his own, so that the 5% can create a subsidized, tax-avoiding “aristocracy” that can rule our country for their sole benefit forever, with the same skill as they have been driving it into the ground for the last two decades, does not help matters.

        • Mike says:

          One more thing, imagine that you knew how the economy would change. Imagine that you had inside information about Fed hikes or related company transactions. Why, if you wanted influence, you could make sure that the “blind” trusts of politicians were incredibly profitable. Of course, you could increase your own wealth exponentially. Of course, you might instead choose to increase the wealth of your children, other family, or friends, just for the sake of appearances. With enough insider knowledge, you would easily become one of the 5% or be elected as a politician. I urge you to consider that many, many of the top 5% could have gotten their information to make trades not from psychic powers or financial genius but from networks of relatives and friends.

          Of course, we could only discover evidence to prove the use of such information trading by massive wiretaps, email surveillance of Fed officials, politicians, government officials, corporate officers, and a thorough investigation, more than just an audit, of the Fed. Will it ever happen? Maybe, when pigs fly.

    • mean chicken says:

      It’s going to $30, first.

  2. NotSoSure says:

    The end game is that the Fed will print out enough dollars to bail out everyone: China, Europe, muppets. Everyone.


    • Bruce Adlam says:

      Maybe the Fed will want to bring China back into line. There getting to big for there boots

      • NoEasyDay says:

        REPAIR: Maybe the Fed will want to bring China back in-line. They’re getting too big for their boots.

      • TJ Martin says:

        How does the Fed or any other US entity bring China ” back into line ” when they own a large portion of our debt , an overwhelming amount of our real estate ( both commercial & residential ) with US retail and manufacturing across the board [ including FCA GM Ford H-D etc ] all entirely dependent on China ?

        Sorry Mr Adam & NoEasyDay but bringing China back in line is a ‘ Trump(ed) ‘ up pipe dream that has nothing to do with reality . China has us by the ( censored ) The irony being .. from the consumer to the manufacture right on up to the billionaire investors we did it to ourselves .

        • 1) China can’t dump their US treasury holdings, since those FX reserves are basically the only thing supporting their own currency. No one trusts the Chinese government, especially given their huge credit bubble.

          2) The bit about “huge real estate holdings” was a popular refrain in the late 1980s — about Japan — who top-ticked the U.S. markets during their own credit bubble. I’d be happy to see China forced to dump their US real estate holdings at fire-sale prices. Wouldn’t you? We don’t want the U.S. to turn into Vancouver or London, with prime high-end real-estate treated as piggy banks rather than put to actual use.

          3) Manufacturing dependence cuts both ways. China cannot afford the job and income losses from a drop in US purchases… who else would buy from them? The U.S. can afford to rebuild our own manufacturing base, and we should do so in any case, although it will take time.

    • Jack says:

      Yes, MuppetsLivesMatter too.

  3. Guido says:

    I am beginning to think that the implosion will never happen. There are a few assumptions we are all making here and as the guy explains in the Big Short, we need to stop expecting the system to play by the rules.

    For one, pretty much most numbers are massaged so that they never look outright bad. If your kid is making up a report card where he converts all Fs to As, you will need an independent agent (such as the school) to tell you that the kid is not heading to the next grade.

    Do we have such an independent agent left in this system? I highly doubt that. Pretty much everybody seems to have been bought out. The Fed’s cousins in China, EU, Japan etc. all seem to be coordinating their actions. The press will make some noise but they are mainly about dotting the ts. So everybody is in on the game.

    What if, by some chance, somebody manages to yell fire in this closed theater? Well, all the market players are then too big to fail. After all, they all played the game in good faith until now. So they will all need to be rescued. So the Fed will probably do some more QE and fund some of the infrastructure kind of projects that Trump keeps making noise about. Every insider will make money while the salaried middle class fellow will continue to accept his fate. Sure, his savings will be diluted but his assets will appreciate. So, you can expect another class of investors to jump in and pump up stocks, homes, etc.

    If this sounds whacky, consider this. Before the election, Dow was stuck at 19K. Now, it is close to 21K. Barrons et al are already talking about 30K and everybody seems to be jumping both feet first into the market.

    The point is that in the absence of independent agents that keep the system in check, the system can run away. So, it could very well be that you have people who will continue to siphon off others life savings.

    I think we are all now reduced to reading zerohedge and hoping that equilibrium, as we knew it, will be restored. The ponzi scheme has a few more decades to run. We might all very well be dead of old age by the time the system corrects.

    • Bruce Adlam says:

      The problem is the Fed is not democratic they effect our lives in a massive way and if you don’t like it there is no way to vote them out. We are being screwed weather we like it or not

      • Michael says:

        The ‘Federal’ reserve is no more Federal or democratic than Burger King. It is a bankster cartel over which the US government supposedly has some power to appoint some, not all, of its leaders. However, as Simon Johnson, formerly at IMF, said (paraphrased) financiers have captured the US government. Thus, the ‘Fed’ leaders are really selected by the banksters that defrauded depositors, investors, and taxpayers. No, they are not democratic, of course. I do not think they care about the bottom 90% of Americans: they just want to ensure continuing bail outs by ultra low interest rate ‘Fed’ loans to financiers, while those financiers take risks with their depositors money that would make Las Vegas casinos fear bankruptcy. If the financiers’ banks become insolvent, they can be sure the ‘Fed’ will give those ludicrously low rate loans to them or manipulate the US economy to force a gov. bailout. As in 2000~2008, the Fed does not regulate it’s bankster banks; it protects them from regulation and enables their schemes. People ignore the fact that what matters is the control group at banks and other corporations: banks’s institutional investors and most shareholders are dragged around into fraud schemes by the few controlling share holders and their puppets, the corporate officers that carry out the frauds and are there to shield and if necessary sacrifice (like Mozilla). Thereby, those controlling bankster shareholders are totally free from risk. Taxpayers bear all banksters’ risks and the control groups of banks and other corporations get all profits: that is why banksters and even legitimate companies like IBM take huge risks.

        • Michael says:

          Correction: I meant Mozillo but this program word corrected it. The reason why banks and US companies take huge, potentially bankrupting risks is simple: through them control groups make more money, from manipulated stock prices, stock buybacks, frauds, excessive dividends, false ‘adjusted’ earnings to boost stock prices, etc. The control groups do not care what happens to the majority of shareholders (whose voting proxies they manage to get due to our crazy laws, and corruption in institutional investors), the banks/companies, economy, or USA. The idea that the Fed bankster toadies’ care about the economy is mistaken. The Fed governors want to avoid removal from office by their bankster lords, prosecution, public realization of their misconduct, and the resulting curtailment of the banksters frauds– in that order. They do not have to care about the future of our country: they only think about all the money and privileges that the banksters have given them and will give them and their children later. Corporate officers have similar concerns, to help their company control group, not the companies nor the majority of shareholders. That is why US companies have engaged in the risky, dangerous behavior discussed in this website: from working at corrupt companies I can confirm: when the control group says jump, most corporate officers jump.

    • NotSoSure says:

      Don’t worry there’s still Erdogan. If Europe pisses him enough, he can still release the horde and that probably should propel LePen to victory.

      But you are right. Everyone in the Western world including the Muppets are morally and intellectually bankrupt. You need to rely on refugees, etc to make things right again.

    • John M says:


      There was a time in the 1960’s where we had the London. gold pool. That unraveled and gold got to $850/oz. When interest rates reflect the true inflation rate then the current Ponzi will start to unravel too.

      • andy says:

        Agreed. CBs don’t set interest rates. Markets/investors do. And CBs can be the only buyer in town for only so long. As soon as markets work out return does not equal risk (there is no greater fool), capital will run a mile and interest rates will skyrocket. It’ll happen soon enough/is already happening with ECB and BOJ QE also propping the US markets.

    • no implosion says:

      Guido……good post. I think the same thing….there will be no implosion.

      Will toxic assests be bought up by central banks to protect the 0.1%

      Something is not right when 10 or so people control half the worlds wealth. Or when the top 5% in the U.S. own 50% of the wealth. Why even tax the other 95%?

      • The Housing Bubble says:

        Debtors characterize it as ‘implosion’. Those armed with facts characterize it as a recovery.

        Remember….. The definition of a “recovery” is falling prices to dramatically lower and more affordable levels.

  4. Rageon says:

    Just a few comments. Regarding retail, I would have thought that certain elements would be immune to online sales, particularly clothing and shoes, since I don’t know about you, but I like to try things on to see if they fit. However, I suppose if you know your Levi’s size, it’s easy enough to be confident to order online. I wonder how much of Amazon’s dominance is due to it’s mining the data of all those companies to which it provides services, giving it a competitive edge…
    The lack of shareholder rights has been around for a while, see how the Bombardier family maintains its control…
    Is real estate ever a productive investment?…it definitely spurs consumption though, of everything from all the building materials, furniture and appliances required.
    Ohh, and I think Wolf is actually Willem Dafoe.

    • Wolf Richter says:

      Now you’ve outed me!!

      • Meme Imfurst says:

        Wolf…Is it not interesting that this kind of program is on Russian TV. Am I the only one who noticed this?
        I would expect to see it on REAL, but never on main street media and ESPECIALLY on CNBC ( if they are still around, don’t know).

        • Dan Romig says:

          You are not the only one who noticed this.

          In the last Minneapolis mayoral election, the Libertarian candidate was collecting signatures to be listed on the ballot, when a Park Police officer cuffed him and stuffed him into a squad car (street lingo: ‘cuffed and stuffed’).

          One local station KMSP 9, had a small notice of the event, while none of the others mentioned it. But RT gave candidate Chris Holbrook a few minutes on their news program and an interview to tell viewers what was done to him.

          CNN, MSNBC and CNBC are happy to report what TPTB wish to have the masses hear. RT has a few shows that tell it straight, including ‘Boom Bust’.

      • kitten lopez says:

        yeah, i know– but i forgot to also say willem’s a bit more extreme in his features with the mick jagger lips. but yeah, you two could be cousins. (maybe there’s someone in the woodpile between you.)

    • robt says:

      For some reason I thought he would be a bear with a beard.
      Like the radio guys, you have an image of someone, and it’s usually wrong!
      But he does speak in paragraphs, which is unusual these days …

    • Dan Romig says:

      For clothing:
      They sort of turned the game plan around by starting as an online shop, and adding retail stores. There are now two stores in the Twin Cities.

    • Ace says:

      As far as shoes go, my wife buys from Zappos. They offer free shipping both ways, so if the size is off she can ship back for free and have the right size sent back to her.

  5. Tom kauser says:

    The fed needed to pump cash in the international money markets again?
    It seems that the derivatives were written to never have rates going north or deals going South and now the system is running on blunt force trauma to pay paul?
    How can you read entails prior to the third day?

  6. mean chicken says:

    GDP is smoking hot. definitely behind the curve? It’s silly to think raising rates is in anticipation of lowering them in the next (coming) recession, no?

    So everyone has a well paying job, enough to support even higher prices?

    SNAP – So everyone’s bearish here, eh? Hmm……

    • Wolf Richter says:

      Inflation as measured by CPI rose at an annual rate of 2.7%, heading toward 3%, and higher, and the federal funds rate is below 1% – that’s what it means to be “behind the curve.”

      • Paulo says:

        Thanks Wolf for this interview and your daily offered wisdom, in general. Most appreciated!!!

        I am concerned, like many on this forum. I try and be a critical thinker and make up my own mind about economics, based on the way I was taught to live by my parents. My folks, were products of The Great Depression, were both ww2 vets, and worked their way/surfed their way on the rising tide of wealth and optimisim that started in the ’50s. Their attitudes and lifestyle were sound. It was all based on a few fundamentals such as; do your best, work hard, live both for today but also for the future, don’t be afraid of debt but don’t take on debt unless absolutely necessary, and stick with what you know as you invest.

        Alas, none of this applies, anymore. None of it. This July I am slated to do a renovation on my daughter’s house. It was built in the late ’50s, with some flaws to be corrected, but posesses an enduring quality that new homes do not have. And just like a drive through a modern housing subdivision, our economy is simply appearance; driveway bling with financed cars in the garage. And just like a current home of today, the price tag and debt levels are beyond belief.

        Obviously we are due for some kind of correction. But our economic house has lost its’ enduring quality. There is little foundation, the materials are shoddy, the workmanship has been completed by hucksters. There will be little worth fixing. I am beyond concerned.

        I just don’t see many, if any current world Govt. up to the task of an FDR invervention when the time for adjustment strikes. Plus, are there even tools and resources left to expend in order to help citizens who might be on the cusp of losing everything? This is not a political site so I will leave it there. However, in my opinion individuals need make their own economic and physical preparations and not expect Govt to do much of anything beyond looking after the insiders and connected when this bubble blows up.


        • TJ Martin says:

          That is a beautiful verging on poetic analogy . My kudos to you good sir for expressing so eloquently that which is vulgar , veiled and horrific .

        • The Housing Bubble says:

          You’re best off to dump that depreciating shack for whatever it might fetch(If you can find a buyer) and rent one for half the monthly cost.

      • mean chicken says:

        Usually the crowd is wrong, and the FED never gets it right.

    • Tom Kauser says:

      How can you be bullish while the fed holds 4 trillion of assets yours truly is on the hook to buy back ….I got a chit of a dude with a powdered wig on … a days wage!
      4 oz. Can of beans $1.15?

  7. Cyrus says:

    This video on Yahoo

    Says that 3.2 million people quit their jobs in January. Admittedly, I’m so isolated from the general population that I don’t have access to average Joe to judge where this number is true or not. I find it hard to believe that 3.2 million people would quit their jobs in one month.

    What do you guys think? Do you believe this number?

    • TJ Martin says:

      Though the number seems high to me : in light of the many Federal employees across the agencies either quitting or taking early retirement [ out of moral concerns over Trump’s agendas as well as the tenuousness of their positions ] – a fair number of folks leaving the US for foreign lands – many immigrants legal and illegal as well as LPR’s returning to their homelands – present as well as potential H1B’s turning down jobs or quitting them due to the chaos – many seasonal workers from across the globe refusing to return to the States for their summer jobs … etc – et al – ad nauseam …

      Perhaps the number isn’t as exaggerated as it appears . Exaggerated or not though suffice it to say Captain Chaos is making America anything but ” great again “

    • Tom Kauser says:

      A junior member of my crew last night ask the ASM how many of the eight new guys starting today will make it a week!

  8. Meme Imfurst says:

    One Quantum computer is running every trade, just ask Cidital they invested in it.

    • TJ Martin says:

      I have heard that the average share today is owned for 15 seconds or less before being sold or traded for another

      • This isn’t quite right. Every share that is issued in an IPO or secondary offering ALWAYS has an owner, until it’s retired via share buyback, bankruptcy or some other corporation-changing event.

        Certain high-speed funds may choose to maintain their own ownership of the shares for only a short amount of time, especially if they are flipping them for micropennies of profit while front-running someone else’s anticipated purchase, but that’s not the same thing as saying that the shares are only owned for a short time.

        Read Hussman for an explanation of why this concept is important. Shares and cash aren’t created or destroyed when people trade stocks. “Cash on the sidelines” is a Wall Street-sponsored media fallacy; whenever a share changes ownership, the seller gets the buyer’s cash and there’s still just as much “cash on the sidelines” afterwards.

        As far as I can tell, the only time credit is created or destroyed is when banks, the Fed or the government decide to make loans (creating credit) or print money; or when borrowers default (destroying credit). Banks demand collateral so that when the defaults happen and credit gets destroyed, the banks are made whole — at the borrower’s expense of course.

        Creation and destruction of real wealth… is a separate issue.

        • Tom Kauser says:

          The main chart Dr. H uses show expected returns out twelve years and has two marked increases from continuously doing QE and hides a possible outcome over next decade of far less than zero returns?
          Its different this time , far different! They raise rates to give more to banks out of desperation?

          Derivatives are weapons of MASS destruction!

    • Tom Kauser says:

      Battelle is running everything !

  9. K says:

    You should watch Steve Keen’s videos on economic models and how neoclassical economic theory is wrong. He teaches economics in England and his economic models include debt that the Central Banks leave out in their models. He shows how their models are outdated and not based on reality. I took both Macro and Micro and could see that the neoclassical theory is bullsh$t. I was a political science major so I research global politics and SEC reports before I invest.

  10. Tom Kauser says:

    After eight straight years of daily fearmongering over higher interest rates those pulling forward demand using FOMO, the economy and the fed needs you to buy stuff especially financial stuff …..rates are moving up…..oops!

  11. Jerry Bear says:

    Ah Mr. Richter! At least we see you in all your glory. You are indeed a slim, intense, wolfish guy! It fits your image and identity very well. Much thanks for letting us see you!

    P.S. When you are on camera, try not to blink so much.

    • kitten lopez says:

      oh yeah!.. i remember that “don’t blink so much in front of the camera” from acting/film classes—the blinking thing. makes you look shifty and nervous. the teacher was talking about how gene hackman had where he blinked down perfect (like he’d look down or do it at the end of a sentence or something like that) for the editor to cut away at.

      so then you had all these people doing bug-eyed performances because that’s all they’d remember and then their eyes would dry up and they’d look all wide dried eyed and panicked…

      good luck, Wolf. not nervous now, are you?


  12. Paul says:

    Great interview Wolf. Very insighful.

  13. chris Hauser says:

    the trend is obvious, and i’m optimistic.

    as to gloom, it should be a passing phase, not a worldview.

    i guess i’m just a lucky guy.

    on the other hand, it’s not time yet for something really f’ed up to happen. patience.

    • The Housing Bubble says:

      Falling prices is always optimistic.

      Gloomers just don’t understand the fact there is nothing that accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels.

      Cheer up my gloomer friends…. Cheer up.

  14. R Davis says:

    It’s nice to see Wolf Richter & Max Keiser in chat mode .. interesting stuff.

    Maybe the Mall’s could embrace a new image .. the thing that Mall’s have going for them is PARKING SPACE .. who does not understand what a pain it is to visit the doctor / the eye clinic / the podiatrist / day surgery facilities / the dietitian at a location with limited parking.
    Diversity is the name of the game ..
    Could the Mall owners donate space for Community functions / educational classes / a drama group / a soup kitchen / a revival meet .. get Jesse Duplantis to come visit & claim tax deductions ?

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