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Deflation Of The Citizenry’s Hard Assets Will Be A Huge Buying Opportunity For Insider Power Elites

Deflation Of The Citizenry’s Hard Assets Will Be A Huge Buying Opportunity For Insider Power Elites

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Deflation Of The Citizenry's Hard Assets Will Be A Huge Buying Opportunity For Insider Power Elites Tyler Durden Mon, 08/31/2020 - 18:25

Authored by Charles Hugh Smith via OfTwoMinds blog,

The gravy train will have to stop at some point, but right now the global elites have pushed their chips on to the U.S. dollar and stocks.

Editor's note: This is a guest post by my friend and colleague Zeus Yiamouyiannis, Ph.D., who has contributed essays to Of Two Minds since 2009.

This is part 2 of a 5 part series entitled When the World Market Itself Is Fake, Economic "Value" Loses Any Real Meaning.

Read Part 1 here...

I believe there will be a massive contraction/deflation in the near term in certain sectors of the U.S. and world economy as demand flees from commercial real estate, as jobs do not come back full force, small businesses close down, and/or people migrate to home offices. Demand for residential real estate will also likely contract in the short term as people are forced to go into living with family or shared housing. Even with the money-pump operating at full speed, flooding the market with cash (which should cause inflation), there will be an opposite effect for the ordinary person.

Why? There are tons of people with no actual money to buy up, lease, or rent real estate assets. Cash and borrowing collateral is tilted so much to super-wealthy, that the vast majority of people will not have access to cash to invest in real estate and other durable goods. Far fewer ACTUAL PEOPLE can pursue certain goods even if the SYSTEM is flooded with cash. It's not in their pockets!

Now this might be partially corrected by some form of Universal Basic Income (UBI), but this will take time, and people will initially use it to shore up their survival. I look at what happened in real estate after 2006, where it crashed and was successfully hyperinflated again. Ordinary people lost their homes, and private equity firms bought them up with cash and re-inflated the real estate bubble. Look at what has happened to gold, which should be $4,000 to $5,000/ounce right now, but manipulation of gold paper (and selling gold "assignments" over actual gold) has kept a kibosh on its meteoric rise.

One should not underestimate how much the global elite has tied the welfare of a fearful global populace into their own program and benefit. They are using an intensely immoral extortion (and should be illegal, but it is in fact rewarded) that says, "We get ours first, and you might get some scraps... We don't get ours first (and most) and you get NOTHING! Yes, it is a bullying tactic that would create revolution if they ever acted upon, or we ever called them on it (and I hope we do) but current retirees are also very powerful and they firmly toe the line with the status quo. They have enough of the loot to want to protect it and keep a broken system going.

Witness Joe Biden's nomination to see how people are ideologically and politically drawn to symbols of their own self-interest. Biden did not lift a finger to gain the nomination (he had a few campaign offices, never really campaigned, raised little significant money, and drew pitiful crowds). Biden set a record that I doubt will ever be beaten in winning the nomination after placing fourth in the first nominating state, Iowa, and FIFTH in New Hampshire. He would have been toast in any fair contest, except for older suburbanites who still feel they can ride the system of graft, aligned with the Power Elite, into retirement and eventually a comfortable grave.

People under 50 were 70% for Bernie Sanders, and people over 50 were 70% for Joe Biden. No more stark a contrast and commitment to completely different regimes can you see. The first is geared toward riding the system and resisting change, the second is in transforming and doing away with system as a threat to a future survival that those who support the current system will never see (unless you believe in reincarnation).

Is this sustainable? No way. Can it be pursued for another ten to twenty years in defiance of reality while the beneficiaries die off? We shall see. Young people have NOT been exercising their political power, not even voting in decent numbers, but rather adapting to and tolerating whatever is thrown their way. That may change, especially as conditions get both worse and more globally distributed.

There are some signs as very young progressive Democratic candidates (Cori Bush, Jamaal Bowman, etc.) are actually winning races against heavily-favored and funded incumbents. De-growth and distribution of productivity gains will emerge as new war cries, both to save the environment and to make a living possible, as harsh and unequal realities deepen.

That may be the future, but there are no current sufficiently strong political, social, or economic barriers to this rank abuse of fiduciary trust and dignity. The government will be forced to subsidize underwater mom and pop America with a UBI type infusion, but that won't be enough even to survive amid deflated relative wages and inflated assets, not to mention a continuing Covid-19 shutdown that sees no end in sight until at least January 2021 because of a completely absent federal coordinated response.

This ennui and anxiety, this rudderless and leaderless and morality-free ship cannot simply drift hither and thither, or have some brigand seize the wheel and drive it towards his own private beach, forever. But it will happen in the short term, as it is now.

This year, dividends have NEVER been lower in the history of the stock market, yet the S&P 500 hit a new high? Billionaires are making tens of billions of dollars more!

The tsunami has not hit yet, and it will come falling on Joe Biden's head if he gets elected, and no corporate apparatchik will have a solution.

The solutions Charles Smith has mentioned in his books and essays will be the only real solutions-- radical community reliance, localization, and decentralization, because these are the only things that can put food in your mouth and these are the only things you will be able to rely upon.

Multinational corporations seek only to leverage rent, not to fix the proverbial toilets. U.S. currency already has a built in defense-- it is the reserve currency of the world's economic elite. It will not be allowed to fail easily, no matter how irresponsibly domestic policies are conducted-- including endless money printing and using the Fed to buy up equities.

The global elite are all invested in U.S. currency and stocks, and they know if the world's largest consumer economy goes down, THEY go down (including Putin, by the way--what would happen to his petro industry if U.S. demand and dollar collapsed?). Not so with just about anything else. Zero to negative interest rates will continue to "benefit" them and their interests, because it will artificially goad stock prices higher and create a dominance for the U.S. dollar.

These guys WANT inflation, because inflated markets (especially in oil, real estate, and equities) means increasing value on the money they already invested in these assets. These global elites are by far the biggest borrowers, buyers, AND debtors. What better way to solve that problem then to make interest rates zero or negative!

The gravy train will have to stop at some point, but right now the global elites have pushed their chips on to the U.S. dollar and stocks. We should use that breathing room to make our choice away from this rigged game.

copyright 2020 Zeus Yiamouyiannis

Part 3 of this series will explore where we are right now and what to look for in the tough times ahead.

Parts 4 and 5 will discuss healthy, pro-democratic, creative alternatives to the current rigged system.

*  *  *

My recent books:

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

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Key shipping company files for Chapter 11 bankruptcy

The Illinois-based general freight trucking company filed for Chapter 11 bankruptcy to reorganize.

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The U.S. trucking industry has had a difficult beginning of the year for 2024 with several logistics companies filing for bankruptcy to seek either a Chapter 7 liquidation or Chapter 11 reorganization.

The Covid-19 pandemic caused a lot of supply chain issues for logistics companies and also created a shortage of truck drivers as many left the business for other occupations. Shipping companies, in the meantime, have had extreme difficulty recruiting new drivers for thousands of unfilled jobs.

Related: Tesla rival’s filing reveals Chapter 11 bankruptcy is possible

Freight forwarder company Boateng Logistics joined a growing list of shipping companies that permanently shuttered their businesses as the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate.

The Carlsbad, Calif., logistics company filed its petition in the U.S. Bankruptcy Court for the Southern District of California listing assets up to $50,000 and and $1 million to $10 million in liabilities. Court papers said it owed millions of dollars in liabilities to trucking, logistics and factoring companies. The company filed bankruptcy before any creditors could take legal action.

Lawsuits force companies to liquidate in bankruptcy

Lawsuits, however, can force companies to file bankruptcy, which was the case for J.J. & Sons Logistics of Clint, Texas, which on Jan. 22 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of Texas. The company filed bankruptcy four days before the scheduled start of a trial for a wrongful death lawsuit filed by the family of a former company truck driver who had died from drowning in 2016.

California-based logistics company Wise Choice Trans Corp. shut down operations and filed for Chapter 7 liquidation on Jan. 4 in the U.S. Bankruptcy Court for the Northern District of California, listing $1 million to $10 million in assets and liabilities.

The Hayward, Calif., third-party logistics company, founded in 2009, provided final mile, less-than-truckload and full truckload services, as well as warehouse and fulfillment services in the San Francisco Bay Area.

The Chapter 7 filing also implemented an automatic stay against all legal proceedings, as the company listed its involvement in four legal actions that were ongoing or concluded. Court papers reportedly did not list amounts for damages.

In some cases, debtors don't have to take a drastic action, such as a liquidation, and can instead file a Chapter 11 reorganization.

Truck shipping products.

Shutterstock

Nationwide Cargo seeks to reorganize its business

Nationwide Cargo Inc., a general freight trucking company that also hauls fresh produce and meat, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Illinois with plans to reorganize its business.

The East Dundee, Ill., shipping company listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in its petition and said funds will not be available to pay unsecured creditors. The company operates with 183 trucks and 171 drivers, FreightWaves reported.

Nationwide Cargo's three largest secured creditors in the petition were Equify Financial LLC (owed about $3.5 million,) Commercial Credit Group (owed about $1.8 million) and Continental Bank NA (owed about $676,000.)

The shipping company reported gross revenue of about $34 million in 2022 and about $40 million in 2023.  From Jan. 1 until its petition date, the company generated $9.3 million in gross revenue.

Related: Veteran fund manager picks favorite stocks for 2024

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Key shipping company files Chapter 11 bankruptcy

The Illinois-based general freight trucking company filed for Chapter 11 bankruptcy to reorganize.

Published

on

The U.S. trucking industry has had a difficult beginning of the year for 2024 with several logistics companies filing for bankruptcy to seek either a Chapter 7 liquidation or Chapter 11 reorganization.

The Covid-19 pandemic caused a lot of supply chain issues for logistics companies and also created a shortage of truck drivers as many left the business for other occupations. Shipping companies, in the meantime, have had extreme difficulty recruiting new drivers for thousands of unfilled jobs.

Related: Tesla rival’s filing reveals Chapter 11 bankruptcy is possible

Freight forwarder company Boateng Logistics joined a growing list of shipping companies that permanently shuttered their businesses as the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate.

The Carlsbad, Calif., logistics company filed its petition in the U.S. Bankruptcy Court for the Southern District of California listing assets up to $50,000 and and $1 million to $10 million in liabilities. Court papers said it owed millions of dollars in liabilities to trucking, logistics and factoring companies. The company filed bankruptcy before any creditors could take legal action.

Lawsuits force companies to liquidate in bankruptcy

Lawsuits, however, can force companies to file bankruptcy, which was the case for J.J. & Sons Logistics of Clint, Texas, which on Jan. 22 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of Texas. The company filed bankruptcy four days before the scheduled start of a trial for a wrongful death lawsuit filed by the family of a former company truck driver who had died from drowning in 2016.

California-based logistics company Wise Choice Trans Corp. shut down operations and filed for Chapter 7 liquidation on Jan. 4 in the U.S. Bankruptcy Court for the Northern District of California, listing $1 million to $10 million in assets and liabilities.

The Hayward, Calif., third-party logistics company, founded in 2009, provided final mile, less-than-truckload and full truckload services, as well as warehouse and fulfillment services in the San Francisco Bay Area.

The Chapter 7 filing also implemented an automatic stay against all legal proceedings, as the company listed its involvement in four legal actions that were ongoing or concluded. Court papers reportedly did not list amounts for damages.

In some cases, debtors don't have to take a drastic action, such as a liquidation, and can instead file a Chapter 11 reorganization.

Truck shipping products.

Shutterstock

Nationwide Cargo seeks to reorganize its business

Nationwide Cargo Inc., a general freight trucking company that also hauls fresh produce and meat, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Illinois with plans to reorganize its business.

The East Dundee, Ill., shipping company listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in its petition and said funds will not be available to pay unsecured creditors. The company operates with 183 trucks and 171 drivers, FreightWaves reported.

Nationwide Cargo's three largest secured creditors in the petition were Equify Financial LLC (owed about $3.5 million,) Commercial Credit Group (owed about $1.8 million) and Continental Bank NA (owed about $676,000.)

The shipping company reported gross revenue of about $34 million in 2022 and about $40 million in 2023.  From Jan. 1 until its petition date, the company generated $9.3 million in gross revenue.

Related: Veteran fund manager picks favorite stocks for 2024

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Tight inventory and frustrated buyers challenge agents in Virginia

With inventory a little more than half of what it was pre-pandemic, agents are struggling to find homes for clients in Virginia.

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No matter where you are in the state, real estate agents in Virginia are facing low inventory conditions that are creating frustrating scenarios for their buyers.

“I think people are getting used to the interest rates where they are now, but there is just a huge lack of inventory,” said Chelsea Newcomb, a RE/MAX Realty Specialists agent based in Charlottesville. “I have buyers that are looking, but to find a house that you love enough to pay a high price for — and to be at over a 6.5% interest rate — it’s just a little bit harder to find something.”

Newcomb said that interest rates and higher prices, which have risen by more than $100,000 since March 2020, according to data from Altos Research, have caused her clients to be pickier when selecting a home.

“When rates and prices were lower, people were more willing to compromise,” Newcomb said.

Out in Wise, Virginia, near the westernmost tip of the state, RE/MAX Cavaliers agent Brett Tiller and his clients are also struggling to find suitable properties.

“The thing that really stands out, especially compared to two years ago, is the lack of quality listings,” Tiller said. “The slightly more upscale single-family listings for move-up buyers with children looking for their forever home just aren’t coming on the market right now, and demand is still very high.”

Statewide, Virginia had a 90-day average of 8,068 active single-family listings as of March 8, 2024, down from 14,471 single-family listings in early March 2020 at the onset of the COVID-19 pandemic, according to Altos Research. That represents a decrease of 44%.

Virginia-Inventory-Line-Chart-Virginia-90-day-Single-Family

In Newcomb’s base metro area of Charlottesville, there were an average of only 277 active single-family listings during the same recent 90-day period, compared to 892 at the onset of the pandemic. In Wise County, there were only 56 listings.

Due to the demand from move-up buyers in Tiller’s area, the average days on market for homes with a median price of roughly $190,000 was just 17 days as of early March 2024.

“For the right home, which is rare to find right now, we are still seeing multiple offers,” Tiller said. “The demand is the same right now as it was during the heart of the pandemic.”

According to Tiller, the tight inventory has caused homebuyers to spend up to six months searching for their new property, roughly double the time it took prior to the pandemic.

For Matt Salway in the Virginia Beach metro area, the tight inventory conditions are creating a rather hot market.

“Depending on where you are in the area, your listing could have 15 offers in two days,” the agent for Iron Valley Real Estate Hampton Roads | Virginia Beach said. “It has been crazy competition for most of Virginia Beach, and Norfolk is pretty hot too, especially for anything under $400,000.”

According to Altos Research, the Virginia Beach-Norfolk-Newport News housing market had a seven-day average Market Action Index score of 52.44 as of March 14, making it the seventh hottest housing market in the country. Altos considers any Market Action Index score above 30 to be indicative of a seller’s market.

Virginia-Beach-Metro-Area-Market-Action-Index-Line-Chart-Virginia-Beach-Norfolk-Newport-News-VA-NC-90-day-Single-Family

Further up the coastline on the vacation destination of Chincoteague Island, Long & Foster agent Meghan O. Clarkson is also seeing a decent amount of competition despite higher prices and interest rates.

“People are taking their time to actually come see things now instead of buying site unseen, and occasionally we see some seller concessions, but the traffic and the demand is still there; you might just work a little longer with people because we don’t have anything for sale,” Clarkson said.

“I’m busy and constantly have appointments, but the underlying frenzy from the height of the pandemic has gone away, but I think it is because we have just gotten used to it.”

While much of the demand that Clarkson’s market faces is for vacation homes and from retirees looking for a scenic spot to retire, a large portion of the demand in Salway’s market comes from military personnel and civilians working under government contracts.

“We have over a dozen military bases here, plus a bunch of shipyards, so the closer you get to all of those bases, the easier it is to sell a home and the faster the sale happens,” Salway said.

Due to this, Salway said that existing-home inventory typically does not come on the market unless an employment contract ends or the owner is reassigned to a different base, which is currently contributing to the tight inventory situation in his market.

Things are a bit different for Tiller and Newcomb, who are seeing a decent number of buyers from other, more expensive parts of the state.

“One of the crazy things about Louisa and Goochland, which are kind of like suburbs on the western side of Richmond, is that they are growing like crazy,” Newcomb said. “A lot of people are coming in from Northern Virginia because they can work remotely now.”

With a Market Action Index score of 50, it is easy to see why people are leaving the Washington-Arlington-Alexandria market for the Charlottesville market, which has an index score of 41.

In addition, the 90-day average median list price in Charlottesville is $585,000 compared to $729,900 in the D.C. area, which Newcomb said is also luring many Virginia homebuyers to move further south.

Median-Price-D.C.-vs.-Charlottesville-Line-Chart-90-day-Single-Family

“They are very accustomed to higher prices, so they are super impressed with the prices we offer here in the central Virginia area,” Newcomb said.

For local buyers, Newcomb said this means they are frequently being outbid or outpriced.

“A couple who is local to the area and has been here their whole life, they are just now starting to get their mind wrapped around the fact that you can’t get a house for $200,000 anymore,” Newcomb said.

As the year heads closer to spring, triggering the start of the prime homebuying season, agents in Virginia feel optimistic about the market.

“We are seeing seasonal trends like we did up through 2019,” Clarkson said. “The market kind of soft launched around President’s Day and it is still building, but I expect it to pick right back up and be in full swing by Easter like it always used to.”

But while they are confident in demand, questions still remain about whether there will be enough inventory to support even more homebuyers entering the market.

“I have a lot of buyers starting to come off the sidelines, but in my office, I also have a lot of people who are going to list their house in the next two to three weeks now that the weather is starting to break,” Newcomb said. “I think we are going to have a good spring and summer.”

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