Wednesday, April 6, 2016

Trillion in Shorts Teachers in REITs.

I came across an odd ad, encouraging teachers to invest their pension money into REITs.   While teacher's pensions are a formidable liability among the unfunded amounts out there, individual teachers have no say into what allocation their monthly contributions end up, although REITs may be one of them.  It's usually fairly well rated stuff, meaning it has gone underfunded too.

But REITs?  If there is a crash, the Real Estate in those Investment Trusts, especially the commercial kind which crashes far further than home kind, will get wiped out.  A REIT bets real estate prices cannot fall.  Well, if you bet that, then you bet there can be no recovery, because no real estate price crash no recovery.

Who is spending money telling teachers REITs are a good idea, or at least planting that in their heads?

Next the news is there is a trillion in short action out there, that is people betting the market crashes.  The hegemon don't like that....  people betting the damage will stop at some point.  If the short sellers are right, they clean up, if wrong, they get wiped out.
It started in August, when bearish investors sent bets against U.S. stocks above 4 percent of available shares for the first time in six years. They haven’t backed off since. By the end of February, the ratio climbed to 4.4 percent, the highest since 2008, according to exchange data compiled by Bloomberg. As of March 15, that level was 4.3 percent, equivalent to a short position just under $1 trillion.
There is something called a short squeeze, where prices get run up and the shorts get wiped out.  At a high level, this can be engineered.  We may see that, and if so, and awful lot of "market valuation" gets wiped out.  People ask "where did all the money go?"  It was never money, just credit.    The stock that was appraised at $100 in credit is now just appraised at $40 in credit.  Those who extended "lost" $60 in credit simple have $60 less in credit to call on access to goods and services.  That is a difference between marking to market in money (gold and silver) and credit (whimsical thoughts.)

Now, back to the teachers.  Wiping out the credit of certain groups as opposed to others can be done with financial engineering.  Load up the teachers' pensions with REITs, and then crash the REITs.  The obligations of those who made essentially promises to the teachers in the form of REITs are now gone. The teachers get nothing, those who owed them are no longer obligated.  The stock market spoke.  (And they call capitalism the free market!)

If you are unemployed, it is a depression going on.  If you are over 21 working at Starbucks, there is a depression going on.  Starbucks is the 21st century fast food joint, and when I was a kid people began in fast food at 15 but were in real jobs after a fast food job paid their way through college, on to a real job.  Hegemon credit destroyed all that.

This depression is engineered, and it seems to me those people I am reading who say this mess will be long term, drawn out make sense, especially since they can move the pieces around and pick off groups to eliminate the unfunded liability, the debt that ultimately is assigned to the hegemon.  The hegemon still has a long way to go on raising taxes, even though we now pay more in taxes than on food, clothing and housing combined.

Pick off the teachers, to whom will they complain?  Wall Street Hillary?  Wall Street Cruz?  To be sure if they do not do something about Trump, he might improve things, but no ONE can fix out economic mess.  Even if all 435 congressmen and 100 senators and a president a supreme court were on the same page on a program, there is no way so few people could come up with a program that addressed the complexity of the problems, and should they ever come up with a "program" they all agreed on, well, in that case, the USA people are no different than the German people.  Heil Hillary!

It ain't Trump or anyone else who will matter.  What will matter is that you stand aside, like the Amish have done for most of this country's history, and let the greedy and the aggrieved slaughter each other while they go about plying their trades.

Ply a trade.  Learn to fix things.  Anecdotally, in dire circumstances 2/5 retailers are in 2nd hand goods...  or make 40% of your retail inventory used, alongside the new.  I see more and more Goodwill shops opening up in swanky neighborhoods, and they are packed.  They know something.  (Trouble ahead: as charities they compete with for-profit businesses without the tax burden, unfair.)

Get a business, any business going.  The anabaptists were inner-city tradesmen before they migrated out and turned to farming.  Now that farming is getting harder to turn a profit (for land prices, again!) they are returning to manufacturing.

Importing is a means of manufacturing start-up without having to invest in the means of production, you begin with excess production capacity overseas.  Do that, in fact I also teach it, see on the upper left of this web page.

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