From Struggling Economics to Government Insolvency
The largest department store in the U.S., Macy's, is planning to eliminate 10,000 jobs and close 100 stores. This is, of course, as a response to a disappointing holiday season, which failed to meet their expectations. From added pressures of online retailers and an ongoing sluggish economy, the LARGEST department store in the country is being forced to make some tough choices.
The retailer had announced in August that it would close 100 stores. On Wednesday, the locations of those stores were made public. Straight from the Associated Press:
"Of the 68, three were closed by the middle of 2016, 63 will close in the spring and two will be closed by the middle of 2017.”
Even Kohl's reported disappointing holiday sales this last week. Whenever I read stuff like this, it's a reminder that the economic environment is changing, and so are the ways in which we, as businesses and people, make money. And by the way, corporations are people, and if you don't fully understand that, start one and you will see…
All signs of a crumbling economic future are fully intact. One of the metrics that are signaling this is the end of the 35-year bond bull market. All good things must come to an end, and the turnaround in bonds could certainly trigger a massive pop in the $230 trillion global debt bubble.
Of course, rising interest rates will cause bond prices to fall, and to a certain extent, we are seeing that. This could have huge implications with the $1.4 quadrillion in global derivatives, which could be an absolute firestorm when pressure from the bubble is released.
The Trump effect has caused a surge in the equities and a massive selloff in bonds, which has caused interest rates to rise. This, of course, has implications across the board from auto sales and real estate to the ability of consumers to continue financing their way of life.
Now, I actually thought the government was going to surpass $20 trillion in official debt in 2016, but as it turns out, they were short by just a hair, at $19.98 trillion.
Fiscal year-end 2016, the total debt increase turned out to be $1.4 trillion, which was the third largest in history. But isn't the deficit only $500 billion, you ask? That is where the lies persist… Even the Soviet Union — months before its collapse in 1991 — was announcing 3% growth, which in hindsight turned out to be absolute fraud.
And for those getting excited about the 10 million jobs that were added to the economy over the past 8 years, consider the fact that 95% of them were temporary, contractual, or part-time.
The diminishing returns of each dollar of debt incurred cannot be overstated, with the U.S. at a 106% debt-to-GDP ratio. The U.S. dollar is only as good as the country's ability to borrow and tax, and when those options are lost, there goes the conventional game plan.
Do what you need to do to be ahead of the curve and in control of your financial future. I love this quote that Yogi Berra shared on planning, which was simply, “If you don't know where you are going, you'll end up someplace else.”
Be prepared by paying down debt, enhancing your marketability in the workforce, protecting your wealth, and be open for ways to profit from inevitable trends.