Tag Archives: Inflation

Learn Why It’s Time To Prepare For The Clinton Hyper Inflationary Collapse (video)

“There’s Going To Be A Massive Run On Firearms… Bigger Than Anything We’ve Ever Seen Before If A Hillary Win Becomes Imminent”

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“It’s Pure Chaos Now; There Is No Way Back” – Venezuela Morgues Are Overflowing (video)

When we previewed Venezuela’s upcoming hyperinflation, which in January was predicted to be 720% and as of this moment is likely far higher…


… we said “This Is What The Death Of A Nation Looks Like” and said “there is no good news in any of the above for the long-suffering citizens of this “socialist paradise” which any minute now will be downgraded to its fair value of “socialist hell.

Subsequent news that Venezuela was now openly liquidating its gold reserves while its president, in an amusing twist, announced last week, that henceforth every Friday will be a holiday, (the term there was a slightly different meaning) to cut down on electricity usage (while blaming El Nino for its electricity rationing) merely confirmed that the end if nigh for this once flourishing Latin American nation.

Sadly, while we have been warning for years about Venezuela’s inevitable, economic devastation, we said it was only a matter of time before the chaos spreads to broader society and leads to total collapse.

That may have arrived because as even the FT now admits, after visiting the main Caracas morgue, Venezuela risks a descent into chaos.

But back to the morgue of central Caracas, where FT correspondent Andres Schipani writes that the stench forces everyone to cover their nostrils. “Now things are worse than ever,” says Yuli Sánchez. “They kill people and no one is punished while families have to keep their pain to themselves.

Ms Sánchez’s 14-year-old nephew, Oliver, was shot five times by malandros, or thugs, while riding on the back of a friend’s motorcycle. His uncle, Luis Mejía, remarked that in a fortnight three members of their family had been shot, including two youths who were shot by police.

Sounds a little like Chicago on a Friday… only in Venezuela things are even worse: “an economic, social and political crisis facing Nicolás Maduro, Venezuela’s unpopular president, is being aggravated by a rise in violence which is prompting fears that this oil-rich country risks becoming a failed state.”

Even the morgue employees are asking if they should give up.

“What can we do?” Mr Mejía asks. “Give up.” The morgue employee in charge of handling the corpses notes that a decade ago he received seven or eight bodies every weekend. These days, he says, that number has risen to between 40 and 50: “This is now wilder than the wild west.

Critics say that the Venezuelan government is increasingly unable to provide citizens with water, electricity, health or a functioning economy which can supply basic food staples or indispensable medicines, let alone personal safety.

In other words, total socioeconomic collapse. This is what it looks like:

Last month alone, Venezuelans learned of the summary execution of at least 17 gold miners supposedly by a mining Mafia, the killing of two police officers allegedly by a group of students who drove a bus into a barricade, and a hostage drama inside a prison at the hands of a grenade-wielding criminal gang. On Wednesday, three policemen were killed when an armed gang busted a member out of a lock-up in the capital.

At least 10 were killed in a Caracas shanty town after a confrontation between local thugs armed with assault rifles, while a local mayor was gunned down outside his home in Trujillo state last month. There are widespread reports of lynchings.

All this is creating a broad unease that Mr Maduro is unable to maintain order… There is a lack of basic goods. Analysts warn that the economic crisis risks turning in to a humanitarian one.

Some refuse to acknowledge that a state erected on so much oil wealth can be a failed state:

“Failed state is a nebulous concept often used too lightly. That’s not the case with today’s Venezuela,” says Moisés Naím a Venezuelan distinguished fellow at the Carnegie Endowment for International Peace. “The evidence of state failure is very concrete in the country that sits on top of the world’s largest oil reserves.”

Alas, a failed state is precisely what Venezuela has become: Venezuela is already one of the world’s deadliest countries. The Venezuelan Observatory of Violence, a local think-tank, says the murder rate rose last year to 92 killings per 100,000 residents. The attorney-general cites a lower figure of 58 homicides per 100,000. This is up from 19 per 100,000 in 1998, before Maduro’s predecessor Hugo Chavez took power.

It gets worse, because in addition to a soaring murder rate, the government itself is implicated.

“Venezuelans are facing one of the highest murder rates in the hemisphere and urgently need effective protection from violent crime,” said José Miguel Vivanco HRW’s Americas director. “But in multiple raids throughout the country, the security forces themselves have allegedly committed serious abuses.”

Their findings show that police and military raids in low-income and immigrant communities in Venezuela have led to widespread allegations of abuse, including extrajudicial killings, mass arbitrary detentions, maltreatment of detainees, forced evictions, the destruction of homes, and arbitrary deportations.

And like all other failed governments, Maduro’s administration is quick to deflect blame, instead accusing violence within its borders on Colombian rightwing paramilitaries “engaged in a war against its revolution.” But as David Smilde and Hugo Pérez Hernáiz of the Washington Office on Latin America, a think-tank, recently wrote: “Attributing violence in Venezuela to paramilitary activity has been a common rhetorical move used by the government over the past year, effectively making a citizen security problem into a national security problem.”

For many Venezuelans it no longer matters who is to blame. “It is a state policy of letting anarchy sink in,” says a former policeman outside the gates of a compound in Caracas.

The FT adds that the former police station now houses the Frente 5 de Marzo, one of the political groups that consider themselves the keepers of socialism’s sacred flame. The gates bear the colours of the Venezuelan flag and are marked with bullet holes. The man believes there is something akin to a civil war going on.

Venezuela is pure chaos now. It seems to me there is no way back,” the former policeman says.  He is right.

* * *

And since words can not fully do a failed state justice, here is a video clip from Jeff Berwick showing the reality on the ground in the country where “socialism’s sacred flame” is about to go out for good … WATCH what’s really going on in Caracas !

Bernie Sanders Praising Bread Lines and Food Rationing

source: ZeroHedge

Venezuela: the land of 500% inflation

Something Rotten Is Piling Up In This Economy

Total US business inventories balloon to Lehman-Moment levels

https://farm4.staticflickr.com/3912/15252459662_c459d49944_h.jpgby Wolf Richter

“We do have more work to do in the US,” admitted John Bryant, CEO of Kellogg’s which makes Pringles, Pop Tarts, Kashi Cereal, and a million other things that consumers are increasingly reluctant or unable to buy. He was trying to explain the crummy quarterly results and the big-fat operating loss of $422 million, along with a lousy outlook that sent its stock careening down 4.5% during the rest of the day.

Then in the evening, ConAgra, with brands like Healthy Choice for consumers and something yummy they call “commercial food” for restaurants, cut its fiscal 2015 earnings guidance, citing a laundry list of problems, including the “strengthening dollar” and “a higher-than-planned mark-to-market loss from certain commodity index hedges.” But it blamed two operating issues “for the majority of the EPS cut: “a highly competitive bidding environment” and “execution shortfalls.”

After which confession time still wasn’t over: it would be “evaluating the need” for additional write-offs. What had gone well? Cost cutting – “strong SG&A efficiencies,” the statement called it. But the pandemic cost-cutting by corporate America represents wages and other companies’ sales.

It’s tough out there for companies that have to deal with the over-indebted, under-employed, strung-out American consumers with fickle loyalties and finicky tastes, who have been subjected to this corporate cost-cutting for years.

And so retail sales, according to the Commerce Department, dropped a seasonally adjusted 0.8% in January. That’s on top of a 0.9% decline in December. The hitherto inconceivable is happening: folks are saving money on gas, but not everyone is immediately spending all that money! It’s so inconceivable that I warned about it and other effects of the oil price crash two months ago: “Wall Street promises a big boost to US GDP,” I wrote. “What have these folks been smoking?”

But even excluding gasoline sales, retail sales were flat last month after edging down 0.2% in December. And sure, some of the savings from gasoline will be spent eventually, but there are plenty of Americans with enough money left over every month to where their spending patterns aren’t influenced by the price of gas.

But this report, an advance estimate that is subject to potentially large revisions, covers only spending at retailers and restaurants, a portion of total consumer spending, which includes healthcare and anything else that consumers pay out of their noses for. And year-over-year, retail sales actually rose 3.3%, with food services sales up 11.3%, auto sales up 10.7% thanks to prodigious subprime financing, while sales at gas stations sagged 23.5%.

So from just the retail sales report, the consumer situation remains murky.

But there is another gauge that is moving deeper and deeper into the red. It has been deteriorating consistently since last summer. A couple of days ago, I reported that wholesale inventories were ballooning in relationship to sales, a red flag in our era when just-in-time delivery and lean inventories have been honed into an art to minimize how much working capital and physical space gets tied up. The crucial inventories-to-sales ratio for wholesalers had reached the highest level since the financial crisis.

Now the Commerce Department released total business sales and inventories for December, which include sales and inventories at retailers, wholesalers, and manufactures – the entire channel. And it’s even worse.

Combined sales by retailers, wholesalers, and manufacturers, adjusted seasonally but not for price changes, dropped 0.9% from November, and was up only 0.9% from December 2013 – not even beating inflation.

Retailers were able to keep their inventories stable in relationship to sales, which inched up 2.6% year-over-year. So the inventories-to-sales ratio remained at 1.43.

Further up the channel, wholesalers saw sales rise only 1.43%, but their inventories stacked up, and the inventories-to-sales ratio hit 1.22, up from 1.16 a year earlier.

And manufactures? That great “manufacturing renaissance” in the US? Year over year, sales declined 0.9%, but inventories rose 2.7%, and their inventories-to-sales ratio jumped to 1.34 from 1.29 a year earlier.

For all three combined, the inventories-to-sales ratio rose to 1.33 in December, after climbing methodically since summer. The last time it was rising to this level was in September 2008 – the Lehman Moment – when sales up the entire channel were beginning to grind to a near halt, a terrible condition that morphed into the Great Recession. That propitious September, the inventories-to-sales reached 1.32, still a smidgen below where it is today:

US-Business-inventories-sales-ratio-2005_2014-Dec

Optimistic merchants and manufacturers expect sales to rise. They plan for it and order accordingly. If sales boom and draw down inventories, the inventories-to-sales ratio remains lean. That’s the rosy scenario. But that hasn’t been happening recently.

In our less rosy reality, sales are not keeping up with expectations, and inventories are piling up. The increase in inventories adds to GDP, and so from that point of view, they beautify the numbers. But from the business point of view, growing inventories caused by lagging sales can turn into a nightmare. And unless sales can somehow be cranked up for all businesses across the entire country to bring down these inventories, orders to suppliers will be trimmed – and that ricochets nastily around the economy with all kinds of unpleasant secondary fireworks.

This Chart Makes It Look Like It’s All Over In Venezuela

Supporter of Venezuela’s late President Hugo Chavez holds a doll of him as she stands outside a military academy where the funeral ceremony for Chavez is held, in Caracas March 8, 2013.  Article source: Business Insider

Collapsing oil prices have a turned a difficult economic situation into a dire one. Oil exports brought in 60% of the country’s revenue.

And now, according the UBS, Venezuela has an 82% chance of collapsing within a year. The country will no longer be able to make payments to foreign investors without oil revenue as it was.

Economist Rafael del Fuente wrote in a recent note:

By the government’s own recognition, the economy contracted by 4% in the first three quarters of 2014;
inflation is running at close to 65%; the fiscal deficit has shot up above 15% of GDP by most estimates; and the black market exchange rate is trading at VEF180 to the dollar, almost 30 times higher than the official Cencoex rate.

Wall Street is watching and waiting, which is why the spread on Venezuela’s 5 year credit default swap — basically debt insurance — has spiked. You just don’t see charts like this everyday people.

Meanwhile, as foreign investors wait for the day Venezuela calls them and says, ‘sorry, we don’t have the cash’, ordinary Venezuelans suffer. The government cut them loose a while ago, doing nothing to curb rampant inflation (at 60%) and shortages of goods and food. People wait in line for days to enter grocery stores with empty shelves.

venezuelan cds skitch

On hearing this, the Venezuelan Minister of Food said — “I’ve been in tons of lines. I went to my favorite sports team’s game this weekend, and…I went to go buy an arepa [Venezuelan sandwich] … and I had to wait in line there, too.”

Russian Inflation Watch – Hookers Hike Rates Up To 100% Amid Crashing Currency

https://i2.wp.com/www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/12/20141210_russhook.jpgby Tyler Durden

On the (high) heels of sanctions and oil-price-collapses, the plunge in the Russian Ruble is even impacting the oldest profession in the world as brothels begin pegging transaction fees to the dollar. As LiveLeak so eloquently reports, the cost of getting laid in Russia just became more expensive – thanks Obama!! An escort agency in the northern port of Murmansk has raised rates 30-40% (a friend told us) from the $130-per-two-hours “spending time with an employee” but it is workers in The Urals that are really suffering where sex workers have raised rates between 50 and 100%. It appears someone has crossed a red line…

Getting laid in Russia just became more expensive.

The crime of buying sexual services is becoming more expensive in Russia as prostitutes increase their rates to offset the free-falling ruble, regional media reported.

An escort agency in the northern port of Murmansk has raised prices by 30 to 40 percent, news website Flashnord.com reported.

The pre-crisis price was 3,000 to 7,000 rubles ($55 to $130 at Thursday’s rate) per two hours of “spending time with an agency employee,” Flashnord said Tuesday.

The price will likely be pegged to the dollar in the future, the website said. Though prostitution is illegal in Russia, the report gave the name of the alleged brothel, Madlen.

A representative of another “escort salon” named World of Sex in Murmansk was cited as saying that the enterprise “is trying to keep prices as they were, but life’s getting more expensive, and girls can’t work at a loss.”

In the Urals, sex workers have raised prices by between 50 and 100 percent, Uralpolit.ru said Wednesday, citing unnamed clients of prostitutes.

In addition to the falling ruble, the sex tariff inflation may have been boosted by an influx of sex workers fleeing war-torn Ukraine, the website said. The new competition is forcing local sex workers to hike their rates in order to pay their bills, the report said.

The ruble has lost almost 40 percent of its value against the dollar since the start of the year due to an economic downturn.

Sex workers make up about 1 million of Russia’s 142 million population, Deputy Interior Minister Igor Zubov said last year.

Prostitution is punishable with a fine of up to 2,000 rubles ($37) in Russia. Pimps face up to a decade behind bars.