On March 1, the U.S. House of Representatives passed a $1.9 trillion bailout package, the focus shifted to the Senate, and on March 14, the previous round of pandemic stimulus will expire, millions of people will lose supplementary unemployment benefits, and the deadline left for Congress is already tight, and the $1.9 trillion bailout package includes $1,400 checks, enhanced unemployment benefits, and the minimum wage measures in the plan are not expected to be passed by the Senate.
Although the latest major economic data released by the United States is slowly recovering, the number of initial jobless claims remains at around 800,000, still well above the pre-crisis level. Fed Chairman Jerome Powell continued to reiterate at a Feb. 25 House hearing that the recovery is a long way off and warned that some commercial real estate markets are under intense pressure.
What's clear is that in early February, Moody's predicted that about 23 million U.S. households might stop paying their mortgages or delay paying rent, and one study concluded that 42 percent of jobs were lost during the spread of covid-19 in the United States and would be permanent, more than half of business closures were permanent, and the grid conditions in Texas were much worse than anyone thought, which could lead to more job losses and more expensive prices.
You know, Texas has great wealth and energy resources, but now it is called a "failed America" by the US media, if even a few days of cold weather can not cope with, then when the country's economic situation begins to really become chaotic, what will happen to the rest of the United States?
Even, the US media reported three weeks ago that dr. Henry Kissinger, former US Secretary of State, made a worrying statement to the US media that "if the United States falls, no one can think better", which shows that the current US economy is in a dilemma caused by the continuous spread of the new coronavirus mutation. Because, the economic crisis tsunami triggered by the US housing subprime mortgage crisis tells us that when tens of millions of Americans are unemployed, it will take more than a decade to get the job market back to normal.
As widely media reports acknowledge, now that the U.S. economy is full of credit cards, homes, cars, and unemployed people and reputable entrepreneurs, no one could have imagined that the U.S. economy would get so bad so soon.
Henry kissinger
For example, Rogers, a wall-sighted financial giant who is known as a visionary, advised investors to prepare for the worst market conditions in an interview with the Singapore media earlier, pointing out that there has not been a very serious financial market crisis since 2008, which requires us to be vigilant, which is unusual, because the United States has a serious financial problem every 4-8 years. The United States has printed and borrowed more than $140 trillion, making the bubble represented by U.S. stocks and real estate continue to grow for more than a decade, but now the risk has multiplied, and there are many problems such as inflationary pressures in the United States.
A week ago, the US treasury secretary also said in an interview with the US media that "investors need to be very cautious about the US stock market at present", and this risk has begun to show signs - the NASDAQ fell 4.92% last week, the S&P 500 fell 2.45%, and the US Treasury was sold off in large quantities.
According to data cited by Bloomberg before February 26, the US Treasury has suffered its biggest sell-off since January, with long-term US Treasury yields soaring (the US 10-year Treasury yield rose above 1.6% at one point, a sharp rise of 70B points from the beginning of the year, and the US Treasury yield began to be higher than the S&P dividend yield), which means that the sharp decline in us Treasury bonds is forcing more fund managers to reduce their exposure.
For example, the auction of a $62 billion 7-year Treasury note held by the U.S. Treasury on Feb. 25 was as disappointing as another 5-year Treasury note the previous day, the worst in history, including the worst percentage of indirect purchasers from foreign central banks since 2014, further illustrating that we have been reminding investors that global central bank buyers who are the cornerstone of U.S. treasuries are moving away from the U.S. Treasury market.
For example, institutions including BlackRock are also withdrawing their bullish stance on U.S. Treasuries, a $14 billion U.S. Treasury ETF has suffered heavy losses, and a $61 billion 5-year Treasury auction has been in slow demand and very sluggish, with bid multiples being the second lowest in the past decade, and several ARK funds of Catherine D. Wood, known as the "queen of the bull market" in U.S. stocks, have fallen by 11% to 15% last week, almost erasing all gains since 2021.
In this regard, David Stockman, known as the "father of Reagan economics", warned about the US fiscal deficit situation and the Federal Reserve's unlimited monetary policy, the Fed's bankruptcy monetary policy is affecting the long-term stability of the US economy, the consequence of this is that the us dollar-based financial market system is in danger, Wall Street is suffering from high risk moments, so that the asset price bubble represented by the US stock market and real estate has continued to grow for more than a decade. But the problem now is that this risk has multiplied under the current catalytic pressure of the new crown virus, and at the same time, there are many problems such as uncertain monetary policy, inflationary pressures, and pension debt, which are becoming more clear in the context of the new coronavirus still spreading in Europe and the United States.
In this regard, the US financial website ZeroHedge reported last week that in recent months, there have been large-scale migrations of rich people in cities in the United States due to public health crises, various debt burdens and high taxes, and the real performance of Egypt.
According to new internal immigration data released by the IRS in January, Illinois people left the state in record numbers, and in the two years to December last year, the state lost more people and taxable income than any year reported by the IRS, more than 6,000 rich people fled Illinois, which is currently the largest outflow of rich people in all U.S. cities, and in the past 6 years, more than 100,000 people have left, and these fleeing rich people have basically flocked to Florida. Arizona and other states.
The reason these wealthy people are fleeing is simple, considering that the state's pension gap is already the highest in the nation, and the outflow of funds is particularly worrying, and the risk of bankruptcy in the state continues to rise as the state's population and tax base continue to shrink. In fact, many large cities in the United States are facing the same pension financial difficulties, and this phenomenon of the rich fleeing is also evident in other high-tax states.
We note that, according to a Bloomberg study released on January 27, the poverty rate increased by 2.4 percent in the second half of last year following the spread of covid-19 across the United States, meaning that another 8 million Americans are considered new poor, nearly double the highest increase in poverty in more than half a century.
In fact, if you take a moment to understand these phenomena, it will be a terrible problem for the U.S. economy and the dollar. The problem is that the U.S. debt deficit has more than doubled from 1989 when Reagan delivered his departure speech, and in recent years, the debt has continued to balloon to nearly $28 trillion, and Goldman Sachs predicts that the budget deficit in fiscal 2021 alone will exceed the 5 trillion mark.
In response, former Republican presidential candidate Ron Paul once again warned the market in a guest appearance on CNBC: a painful market correction has arrived, the situation may become ugly in a year or two at the earliest, I see trouble in the future, it comes from too much debt and spending, Ron Paul believes that the dollar market seems to be getting closer to collapse.
According to the Austrian school of economics' business cycle theory, Ron Paul believes that the Fed is not only unable to effectively stop inflation, but it is itself the driving force behind inflation and debt, and he believes that it is the Fed's indiscriminate printing of money that leads to the hollowing out of the value of personal savings, and finally leads to the escape of rich people in some heavily indebted areas.
Ron Paul
He bluntly pointed out that the Fed's manipulation was the main cause of inflation and even economic depression and recession, and at this time the Fed seemed to have nothing to do but continue to print money. A few weeks ago, Wall Street financial magnate George Soros warned that with the risk of the secondary spread of the new coronavirus in the United States, at least $26 trillion (about 168 trillion yuan in total) will be withdrawn from the US capital markets and shifted to higher-yield markets. For example, according to the latest U.S. Treasury Department's February 18 international capital flows report, global central banks have seen 28 months of significant net sell-offs of $1 trillion in the past 33 months, and the market that occurred last week's massive dumping in the U.S. Treasury market is reflecting this view, and these things that are also reflecting Kissinger's warnings and concerns may already be emerging. (End)