No, I mean, seriously: WHAT IS HAPPENING?
✔️ Jamie Dimon walking back his prediction of an economic hurricane... Why? What has actually changed to create a sense of optimism?
✔️ The Wall Street bankers like to show up hat in hand and ask for a bailout. But what about that time when the government showed up to the bankers and asked for a bailout?
✔️ A lot of cash can fly out the door quickly. Is it all taxpayer money? How is all this currency even in existence?
✔️ The CEOs at Davos aren't feeling excited but apparently, somehow, you should be. Also you should still think that The Great Resignation is going strong and people can job hop across the market for pay raises forever. 😣
✔️ These boom/bust and inflation/recession cycles happen and happen. So have bank failures and bank runs. Yet each time we have a downturn, people act like they simply can't believe it's happening.
Links I mention:
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Welcome to the Causey Consulting Podcast. You can find us online anytime at CauseyConsultingLLC.com. And now, here's your host, Sara Causey.
Hello, Hello, and thanks for tuning in. I wanted to record this episode to ask the question, what is really going on? Maybe it's just me, but I feel like there are other people surely who are asking themselves the same questions. Looking at the headlines trying to make sense of all this jumbled up, tangled up mess and wondering what I feel like the great poets poison when they ask the question, What's right, what's wrong? What's left? What the hell is going on? Little did we know that unscary Bob would be quite so present. Last summer, Jamie Dimon told us to prepare for an economic hurricane. Over on CNBC the headline was Jamie Dimon says brace yourself for an economic hurricane caused by the Fed and the Ukraine war. In the key points we find there are two main factors that has diamond worried so called quantitative tightening or QT is scheduled to begin this month and will ramp up to a $95 billion a month in reduced bond holdings. The other factor worrying diamond is the Ukraine War and its impact on commodities, including food and fuel oil could hit 150 or 175 a barrel. He said You'd better brace yourself. Diamond told the roomful of analysts and investors. JP Morgan is bracing ourselves and we're going to be very conservative with our balance sheet. You know I've said many times before, what the fat cats the Wall Street bankers, the billionaires, these people what they say out in public to those of us that they consider to be the ignorant unwashed masses, I don't find that to be important. What they say behind closed doors, what they say to each other, and the things that they say to their investors, the Board of Directors, the people that they feel actually matter. Now that is worth setting up and paying attention to also last summer from Business Insider and an article from August 15. JP Morgan CEO Jamie diamond told wealthy clients there's a chance the US is heading into something worse than a recession. The key points there tell us CEO Jamie Dimon talked to some of JP Morgan's wealthy clients on a call Tuesday, Yahoo reported he was said to have put the chances of a harder recession and have something worse at 20 to 30%. But yet, here we are with nothing that I can ascertain. To give people a sense of optimism to clearly mark a U turn in the road. And now he's walking it back. And I want to know why. On January 10 fortune.com reported that Jamie Dimon rattled the markets last year by calling for a hurricane. Now he says it's just some storm clouds. But yet, we're not told, okay. Why did you privately tell the investors that they should prepare for a hard recession or maybe even something worse? But then now, six months later, you're telling the unwashed masses. You know what sorry about it. I overreacted I should never have used the word hurricane. It's just some storm clouds. We're going to have that slow session or that mild recession. This is going to be a little bump in the road and then we'll all be fine. What has changed, because I'm not seeing any evidence of some magical Hail Mary pass that has saved the day. If someone else knows what that is, I would be happy to listen, but I'm not finding any evidence of it. Meanwhile, on Monday, the 16th the web kicked off at Davos and we learned PwC survey finds bleak CEO outlook for 2023. CEOs may be less cheery than usual as they sip crisp Davos spring water and eat pricey sustainably raised fish at this year's World Economic Forum PwC global CEO survey which polled more than 4000 CEOs and 105 countries and territories found that 73% of CEOs believed global economic growth will decline over the next 12 months, the survey was released as the WEF kicks off. The bleak CEO outlook is the most pessimistic CEOs have been regarding global economic growth since we began asking this question 12 years ago, and is a significant departure from the optimistic outlooks of 2021 and 2022, when more than two thirds thought economic growth would improve PwC stated in a press release, inflation, macro economic volatility and geopolitical conflict, ranked as the top threats to businesses. nearly 40% of the CEOs surveyed didn't believe their organizations will be economically viable in 10 years if they do not transform and quote. So again, I'm going to ask the question, on what basis on what data should we think it's just storm clouds. It's just going to be a little garden variety rain shower, but not a hurricane. In another moment of what the hell is going on. We read you need to get a raise. It's a workers market as job numbers show the great resignation is still going strong amid recession fears. And this was published on Sunday, January 15. We read, it's been more than a year since the American workplace turned upside down with employees putting on mass in search of more fulfilling jobs and flexible work arrangements. But with inflation, barely cooling, and fears of a recession in the new year. stragglers have found yet another reason to jump ship. It's a workers market says Andrew flowers labor economist at job advertisement firm app cast. And this bargaining power it means that with high inflation, this is the time to either ask for a raise or to potentially find a better offer elsewhere. Really, Andrew? Really. The latest US Bureau of Labor Statistics Report shows another 4.2 million Americans quit their jobs in November, which is up slightly from October, and still among the highest levels in decades. The number of job openings edged up slightly to 10 point 3 million in November compared to 10 point 3 million in October. Just literally the same number inched up slightly to 10 point 3 million in November compared to 10 point 3 million in October. The same number with the rising cost of food, gas and everything else giving all Americans a pay cut workers who haven't yet made a move have every reason and every opportunity to act soon. And quote. Yeah, I almost don't even know how to respond to that, you know, the last little infographic that we saw on CNBC made it very clear that these jobs are in leisure and hospitality and they're in healthcare. So all of these people who are supposedly hippity hopping across the market, is it somebody quitting a fast food job to go to another fast food job? Is it somebody quitting a leisure and hospitality job because they finished college and they want to get into corporate America and get that first post college job? I mean, who? I feel like Seinfeld, who are these people? I'm so sorry. But I don't buy any of this, not any of it. I'm just really curious as to why we're being told. It's not really going to be a hurricane. We also saw that headline recently, we're Bank of America is calling for a mild recession, but they're still going to go ahead and plan for something worse. Why are we as the peons and the plebs being told that we should still be job hopping? We might go into a slow session, we'll have a soft landing like what is actually going on here? long pause so that you can start to ruminate on that question for yourself. But seriously.
Why are we being told such conflicting, weird information? Now behind the scenes, these hedge funds and investment firms and these corporate raiders, they're going to tell the investors and the board of directors and the other people on the executive team that all hell is about to break loose and it's looking really freakin bad. And they better be prepared for something that might not have ever even happened before in terms of the severity of it, but then the unwashed masses are supposed to be He kept calm and pacified the whole time. Why do you think that is? I've already talked in the broadcasts that I've done thus far, comparing what we have brewing up now, to what occurred during the Great Recession, and how we were told then, by fat cats and politicians, nothing to see here, people move along, move along. Phil Gramm, telling people, it's a mental recession. You're a nation of whiners, and you're in a mental recession. Not long ago, Charlie Munger said the same thing. We're in a nation of whiners, you don't have anywhere near as bad as folks during the Great Depression. So you need to hush your mouth. It would be comical if it wasn't so sad. But when you look at the number of boom bust cycles and recessions that have occurred in America over the years, it's staggering. We just go to Wikipedia and look at list of recessions in the US, we find there have been as many as 48 recessions in the United States dating back to the Articles of Confederation, although some of them have been disputed. Was it a recession? Was it not? At least 48 or as many as 48. Either way, you slice it, these boom bust cycles, inflation, recession, growth, contraction, these cycles happen, and then they happen, and then they happen. But it is insane to me. How quickly it seems that the public forgets, we get moved on down the road. Very few. If anybody winds up being prosecuted for their misdeeds, and the fact that they just rape and pillage it will financially. People forget. And then the next time around, it's like, well, golly, gosh, gee whiz, gee willikers. Guys, Jeepers, I just can't believe that we might have a recession again. And it's like, what part of this seems unclear to you? I mean, it happens and it happens and it happens and it happens and it happens. And when these crises happen, who benefits from them? Something else that's come out of this Davos meeting so far is the richest 1% of people amassed almost two thirds of new wealth created in the last two years. Oxfam says, in the TLDR points we find since 2020, the richest 1% of people have accumulated close to two thirds of all new wealth created around the world. A new report from Oxfam says taxes must be increased for the ultra rich as a strategic precondition to reducing inequality and resuscitating democracy. Gabriela Bucher, Executive Director of Oxfam International set, right because these elites are not going to figure out a way to have tax loopholes, and where to put their money into tax havens and safe havens, right, sure, that's gonna really work. A billionaire gained roughly $1.7 million for every $1 of New Global Wealth earned by a person in the bottom 90%. The report released as the web kicks off in Davos, Switzerland, reads, we also find it suggests that the pace at which wealth is being created has sped up as the world's richest 1% amassed around half of all new wealth created over the past 10 years. Hello, Ding Dong, knock knock. Who do you think benefits when we have these crises when we have Omni bubbles that pop and when we have multiple fires, which have to be put out and global conflict and war over here? Does it not seem to be a very logical and clear conclusion that these top 1% fat cats that just keep getting wealthier and wealthier and wealthier does it not seem to be reasonable to conclude that they are the ones that profiteer off of all of this? Back in 2021, we learned on CNBC, the top 1% of Americans have about 16 times more wealth than the bottom 50% The wealthiest 1% of Americans controlled about $41.5 trillion in the first quarter, according to federal reserve data released Monday, yet the bottom 50% of Americans only controlled about $2.6 trillion, collectively, which is roughly 16 times less than those in the top 1% and quote, and that's only talking about Americans, and it sounds as though the top 1% has labored since then to make sure that they widen that gap even more. So We look at Q one of the wealthiest 1% of Americans, we see that they controlled 41 and a half trillion dollars. Again, that's not even speaking to, well, how much? Well, if we look at the top 1% globally, how much money do they possess? How much money do they control? Then you look at the US national debt. And it's what like 31 trillion, something like that. Let me see if I can find an accurate statistic. Okay, so if we zoom over to US debt clock.org, we find that yes, it is more than $31 trillion, which breaks down to about 94k per citizen. In case you're wondering, but where is she going with this? Okay, so in q1 of 2021, the wealthiest 1% of Americans controlled about 41 and a half trillion dollars, then we go over to the US debt clock, and we see that the US national debt is 31 trillion. So by that yardstick, the wealthiest 1% of Americans, again, not even talking about the wealthiest 1% globally, but the wealthiest 1% of Americans control about 41 and a half trillion, which is more money than the US national debt. Hmm. I'm gonna stroke my long imaginary devil beard thoughtfully here and just kind of wonder out loud. So whenever fat cats, bankers, huge conglomerates too big to fail, whenever they show up with their hat in their hand, and they want money, is the only money that they're getting actually taxpayer money. Maybe, maybe not. When a leader from a foreign nation shows up, and says, Hey, I really appreciate all the money that you've given me so far, but more is needed. Are they leaving only with taxpayer money? Or is there other money that goes into that pot? I mean, things that make you go hmm. When we think about the disparity, how much the average American pays in taxes? I mean, could they come up with the amount of money, the absolute billions and trillions of dollars that fly out? Seemingly no pun intended on a dime? Where is this money coming from? Because is it all taxpayer money? Or is it maybe money that's coming from some other source other than just the taxpayer? In so many ways, it's hard for us to even fathom what this kind of wealth looks like. Especially now when so often money is not even currency that you hold in your hand anymore. It's digits on a screen. And we hear these absurdly high amounts so often, that I think we've become desensitized. Well, we're loaning a billion dollars over here, and we're gonna send 5 billion in foreign aid over there, it's, it's almost like it doesn't even have meaning. For us. There was an article published in 1897. In a Texas newspaper, if I can find a digitized copy of it somewhere, I will drop a link to it. And it was reported at 97 that John D. Rockefeller was making about $50,000 every 24 hours. Now, that would be a hell of a lot of money to date. You wouldn't even be able to contain my excitement if I was making $50,000 in a 24 hour period. When we go to the inflation calculator, we find that 50k in 1897 is equivalent in purchasing power to about $1.7 million
today. Can you imagine that? Can you imagine waking up on Friday morning, going about your day going to sleep waking up on Saturday morning at the same time, and you had made $1.7 million in that span of time? It's almost unbelievable. So there's one sort of idea of a traditional robber baron fat cat that just gets wealthier and wealthier and wealthier. Running down that same line as the Rockefeller fortune. Let's also go back in time to the panic of 1893 because that was not a time when the fat cats and the people on Wall Street showed up to the government with their hat in their hand and said can we have some taxpayer money or wherever in the hell this money actually really comes from in total? We'll get Can we can we have some girl in our bowl sir? It was the other way around. I'll drop a link you can you can read this for yourself. I'm not making any of this up. During the panic of 1893 JP Morgan use $60 million in bonds to bail out the United States government. History daily.org I'll drop a link. In the early months of 1895. Things were getting desperate for US President Grover Cleveland. The country's economy was collapsing because of falling prices and rising unemployment that began with the panic of 18 9318 months later, millions were unemployed, and the Treasury's reserves were dropping too. Normally, the Treasury held gold reserves above the statutory floor of $100 million. But by January 24 1895, the Treasury had only 68 million. scarcely a week later, it was down 45 million nervous investors started to demand gold for their dollars. Because see, back at that time, you could still do that. Paper money was actually backed by something I'll continue to read. A run on the Treasury was inevitable and the plan to subsidize the gold reserves was silver only made creditors more anxious. President Cleveland tried to avert the disaster. With Treasury Secretary John Carlyle, the President had proposed a plan to sell government bonds to the public to raise $60 million. But the Rapid Run on the Treasury made the process unworkable. The concern at the White House grew even more when Carlyle confidentially advised the President that the Treasury had $9 million in gold reserves, and that a single investor held a draft worth 10 million insolvency of the government was inevitable unless a source of funding could be found. Indeed, a bailout of the US government was the only hope in or Wall Street financial Baron John Pierpont Morgan, suffering from a face marked by chronic rosacea. Morgan avoided the public attention, which only added to his reputation as a secretive voracious gobbler of railroads and other businesses. JP Morgan was the original Wall Street shark, swooping in to grab an unsuspecting company and then retreating into the murky waters of finance, leaving only the remnants of His presence. Using his financial prowess to extract concessions from major US companies. He in insinuated himself onto scores of managing boards by exchanging payment of debt for seats. He used the knowledge derived therefrom to grow his steel trust into America's first billion dollar business. Morgan was aware of the government's plight and saw both danger and opportunity. His financial empire founded on commercial railroad service needed a stable and growing economy and imploding. Government is not good for his business and Morgan understood that what was good for the US Treasury was also good for business his business. President Grover Cleveland new Morgan's reputation and avoided his offers of help as long as he could, finding no alternative. Cleveland reluctantly agreed to see him only when reports of Morgan's trip to Washington ease the run on the Treasury. Yet again, media manipulation even back then, Cleveland thought he could use the bankers prestige but avoid using his money to save the country. No such luck to Morgan the issues were the same how to save a failing business and avoid disaster for the investors. Sitting before an anxious president. His treasury secretary and Attorney General Richard Olney. Morgan was once again presiding over a meeting of another board of directors. The President insisted that a private bailout wasn't really necessary and that he expected an upturn in the economy would make things better. Morgan replied, If that $10 million draft is presented, you can't meet it, it will all be over before three o'clock, shocked that someone other than the President's inner circle knew the truth. Cleveland reluctantly listened. Now why in the hell would he be shocked? I understand that back then, information did not travel with the same rapidity that it does today. There was no Internet back then. People were not sitting around Google searching and talking on on the interwebs about this. But this tells you so freakin much. Even back then. These fat cats and robber barons knew what was going on in the inner workings. So much so that it shocked the president Morgan proposed the private sale of government bonds be sold immediately to Morgan and his syndicate. In return, Morgan would give the Treasury the goal that needed $100 million to meet its current and anticipated obligations. The President asked if everything was legal. The President is asking a robber baron and Morgan replied It was by virtue of a civil war statute 4000 And something only checked and it was all quietly legal but politically dangerous for the President. The public was not fond of Wall Street personalities and Morgan was the biggest personality of them all. Morgan assured the President that gold would not be shipped abroad until the goal of the plan was reached. Trying to save some dignity from the situation. President Cleveland said they don't need 100 million 60 million would be fine. Morgan was as good as his word and the bonds were sold and gold filled the Treasury. The run stopped and the economy stabilized. Morgan had co signed please pay attention. Morgan had co signed for the US debt and economy took off. Morgan now stood to make millions more than he paid. The political price Cleveland anticipated had to be paid. Many on the left contended the president sold the government to Wall Street, quelle surprise. When Morgan refused to reveal his profits on the deal, the party grew more enraged. at the Democratic convention, the party rally to William Jennings Bryan, who delivered the famous line that mankind was being crucified on a cross of gold, he would lose the next three elections. Morgan would go on to bail out both the New York City Stock Exchange and the city of New York in the coming decades, but neither would win him public approval. What was that kind of money and power? Do you need public approval? Indeed, President Teddy Roosevelt centered his trust busting campaign on the insidious network of interlocking boards of directors that created the monopolies which Morgan epitomized still there is no denying that Morgan saved the nation when no one else stepped forward. Whether he did so out of patriotism, profit or some combination is debatable. But the fact that he did is not in quote. I feel like just that one article gives us so much insight into the kind of shady backroom deals and the greasing of poems that can occur between the state and corporate America between wealthy industrialists and these tycoons who's in the power position today in the next month, that might be somebody different. You might be tempted to think well, okay, but you're talking about something that happened in the late 1800s. Surely society is so much more sophisticated now. Surely, there's so much more openness and transparency and these kinds of backroom deals with the power brokers, I'm sure they don't steal happen now. I mean, the stakes are so much higher. The government is so much larger than it was then. And we're talking about billions or even trillions of dollars. I mean, surely these conglomerates couldn't come up with that kind of money. Are these wealthy industrialists and financiers? I mean, surely not. Meanwhile, I just read to you from CNBC, the amount of money that the top 1% Just in America was controlling in q1 of 2021. Then you juxtapose that with the national debt, and it's like, yeah, but I mean, who's really controlling who here? Or who has the power to control who? I know it's tempting to be naive about it. But I don't think that's the right approach. You may remember that scene in The Godfather Part Two where Hyman Roth says just one small step, looking for a man who wants to be president of the United States and having the cash to make it possible. Michael were bigger than us steel. Think about that. This is the mafia we're not even talking about some tycoon who openly owns railroads or who owns and steel conglomerates. We're talking about the mafia saying just one small step. Look for a man that wants to be the president. We can buy them off. We're bigger than us steel. Oh, but that's fiction. Sarah, you're talking about a movie huh? Well, you know Mario Puzo based his characters upon real people. Hyman Roth was based on Meyer Lansky, who was nicknamed the mobs accountant.
I think in some of these movies, you may find there's a bit more fact than there is fiction. You know, it's also been said that when Johnny Fontaine shows up at Connie's wedding, and he's money grubbing around, that same scenario was based on Frank Sinatra, the movie that he wanted, was from here to eternity, which he got, by the way. The bandleader whose contract he wanted out of was Tommy Dorsey and the movie producer that Jack Woltz was based on was actually Harry Cohn from Columbia. So, in my mind, if Hyman Roth is sitting there saying Michael, we're bigger than us steel, there probably was a point in time where the mafia had enough money maybe they still do, I don't know. Where they had enough money that they were bigger than us steel at that point in time. In my mind, it is very naive, very naive. To get the idea of well, that's the past. Okay, maybe in the 1950s and 60s, that kind of stuff went on, maybe back in the 1800s that went on. But I mean, surely not now. So when we think about it in that context isn't really that surprising. When you have talking heads that all seem to be pushing the same general narrative, or when you have one of the power brokers saying, Oh, I think we could be in for one hell of a bad hurricane. And then six months later, with no apparent reason why that statement gets walked back. Is it really that surprising? I just want to ask you that question. I don't tell you what to think. I don't tell you what to do. I just try to put out this information for your entertainment only and provoke some thought. Stay safe, stay sane. And I will see you in the next episode.
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