Biden Press Secretary KARINE JEAN-PIERRE: “The American people are beginning to feel Bidenomics”
Prices are up 16.6% and real wages are down 3% since Biden took office.
Well, at least Jean-Pierre didn’t claim like her boss Joe Biden claimed that he “ended cancer as we know it.”
But getting back to Jean-Pierre’s claim that “The American people are beginning to feel Bidenomics.” She is right (for once). Americans are REALLY feeling Bidenomics. And it hurts SO BAD!!!
What hurts so bad? Food (CRB Foodstuffs) are up 56% under Bidenomics. Real weekly wage growth is down -90% since Biden assumed office. Regular gas prices are up 52%. And the 30Y mortgage rate is up a staggering 153%. Yes, Karine, this hurts so bad!
While real wages are down -3% under Biden and the real average weekly wage growth is down -90%. That REALLY hurts so good.
Starwood Capital Group’s Barry Sternlicht recently told Bloomberg’s David Rubenstein about the ongoing crisis in the commercial real estate sector, equating it to a severe “Category 5 hurricane“. He cautioned, “It’s sort of a blackout hovering over the entire industry until we get some relief or some understanding of what the Fed’s going to do over the longer term.”
Currently, the biggest problem in the CRE space is sliding office and retail demand in downtown areas. Couple that with high-interest rates, and there’s a disaster lurking for building owners. According to Morgan Stanley, the elephant in the room is a massive debt maturity wall of CRE loans that totals $500 billion in 2024 and $2.5 trillion over the next five years.
Senior markets editor for Bloomberg, Michael Regan, chatted with John Fish, who is head of the construction firm Suffolk, chair of the Real Estate Roundtable think tank and former chairman of the board of the Federal Reserve Bank of Boston, in the What Goes Up podcast to discuss the biggest problems in the CRE market.
Fish warned that “capital markets nationally have frozen” and “nobody understands value.” He said, “We can’t evaluate price discovery because very few assets have traded during this period of time. Nobody understands where the bottom is.”
For a sense of recent price discovery trends, we were the first to point out to readers of a wicked firesale of office towers in the downtown area of Baltimore City:
As for the overall CRE industry, Goldman Sachs chief credit strategist Lotfi Karoui recently told clients, “The most accurate portrayal of current market conditions with Green Street indicating a 25% year-over-year drop in office property values.”
Sooooo, Powell and The Fed will likely raise rates this week. And maybe a few more times over the next few months. And The Fed remains defiant about taking away the Covid monetary stimulus.
Joe Biden loves to tout “Bidenomics” which is a top-down command economy model with massive Federal spending directed primarily at green energy. But remember that a pillar of Bidenomics is support for labor unions. But “Union Joe” will be remembered as “Inflation Joe” as inflation remains hot. But now the labor unions are threatening to stall the recent rise in real weekly earnings (finally above 0%!).
So why is 2023 shaping up to be one of the biggest years of strikes in the US since the 1970s? Well, it didn’t happen overnight. Two years of negative real wage growth has crushed the working poor as they drained their savings and maxed out credit cards to make ends meet.
Unionized workers have taken advantage of upcoming contract expirations with companies to bargain for better wages and benefits. Many unions say companies can boost wages because profits have been off the charts.
This summer might go down in history as the “Summer of Strikes” because 650,000 American workers are threatening to walk off the job imminently (some have already hit the picket lines):
Unions for United Parcel Service Inc. and Detroit’s Big Three automakers are poised to join them in coming weeks if contract negotiations fall through.
A Bank of America analyst warned a United Auto Workers strike is at 90% odds of happening as union contracts with automakers Ford, General Motors, and Stellantis expire in September. Some logistics experts believe Teamsters will reach a deal with UPS, but that deadline (July 31) is quickly approaching.
Labor historian Nelson Lichtenstein, who leads the University of California, Santa Barbara’s Center for the Study of Work, Labor, and Democracy, said this summer could “be the biggest moment of striking, really, since the 1970s.”
What’s shaping up to be a summer of strikes comes as inflation spiked to levels not seen since the 1970s. The good news is that it has cooled in recent quarters.
Still, two years of negative real wage growth crushed the working poor — many are in rough financial shape.
So far, strikes have not had a broad economic impact, but that could change overnight. Increasing labor actions are happening across the Western world, also in Europe, for the same reason in the US, due to a cost-of-living crisis sparked by high inflation.
Under O’Biden (the combined reign of economic errors of Presidents Obama and Biden), we won’t see any strike breaking for the good of the economy. Rather, the Biden Administration will be missing in action (or sending in Kamala Harris or Transportation Secretary Pete Buttigieg to do … nothing.
I have never seen anything like this. The US Treasury 10Y-2Y yield curve is deep in inversion and has had a negative slope for 265 straight days. Bidenomics is born under a bad sign!
On the commodities front, heating oil is up almost 2% this morning and nickel (an important element in Biden’s green energy mandates) is up 1.78%.
On the crypto front, Bitcoin is up 0.47% and Dogecoin is up 5.58%.
You can always buy Kamala’s Own Word Salad Dressing!
When I see the faces of Alan Greenspan, Ben Bernanke, Janet Yellen and Jerome Powell, all I think of is …. the Minsky Moment brigade!
From Zero debt in 1776 to $21 trillion in 1997 and just in the last 4 years, debt has gone up by that same $21 trillion. This graph shows the debt explosion, a 63x increase.
And then we have Congress promising >$192 trillion in entitlements (wealth transfers) that will likley be added to the already >$32 trillion in Federal debt.
The Federal Reserve, an organization that even George Orwell would find outrageous, is a Minsky Moment Machine!
A Minsky Moment refers to the onset of a market collapse brought on by the reckless speculative activity that defines an unsustainable bullish period. Minsky Moment crises generally occur because investors, engaging in excessively aggressive speculation, take on additional credit risk during bull markets.
And since Covid and the Great Monetary Expansion to fight it helped creates massive inflation and helps the 1% get wealthier and wealthier. BUT as M2 Money growth slows, the 1% are losing their position as top dogs in the economy. Not by much (see pink circle), but a little.
And The Federal Reserve helps create the monetary expansion through low rate policies, fueling credit and asset bubble expansion. Greenspan, Bernanke and Yellen were the masters at creating a Minsky Moment (named after Hymen Minsky, the late Washington University of St Louis economist).
Then we have the latest bit of bad news. US Industrial Production year-over-year of -0.43% as M2 Money growth evaporates.
After The Fed’s insertion of massive monetary in 2008, continued stimulus until the second massive stimulus burst in 2020, unfunded liabilities of pension funds have worsened. Another possible Minsky Moment created by the Kafkaesque Fed. Kafedesque??
The Fed’s Powell: Let’s play a game … and make the 1% even wealthier!!!
The Fed. The beauty of failure. When the economy starts failing, The Fed goes wild.
Yes, one of the cornerstones of Bidenomics is the massive expansion of (impractical) electric vehicles (or EVs). You know, those mondo expensive cars that run out of power after a couple of hundred miles requiring a lengthy recharge (kind of makes long distance trips the domain of Internal Combustion Engine (ICE) cars.
But as Biden/Congress spent trillions on green energy (massive subsidies for anything green), we noticed that 1) inflation hit 40 year highs and 2) The Fed intervened to raise rates. So, now we see that 60-month auto loan rates are now around 7.36%, up 74.4% under “Middle Class Joe.”
And we see used EV prices collapsing like a week-old soufflé.
Speaking of green energy fraud, here is the leader of the green energy fraud movement, John F’ing Kerry. Aka, Heinz Planes Grifter.
What screams may come! Actually, the aftermath of excessive monetary policies under Bernanke, Yellen and Powell are coming home to bit the big banks.
Interest expenses at big US banks are rising much more quickly than interest income. Across the six largest US banks, interest expenses are set to climb to roughly $78.7 billion from $15.5 billion in the same period last year.
There is still $8.3 Trillion in monetary stimulus sloshing around the monetary system.
As M2 Money growth has stalled, we are seeing inflation cool a bit. Core inflation YoY is now down to 4.8% (still >2x Fed target).
The good news? REAL average hourly earnings YoY is finally positive for the second time under Bidenomics. It is now 1.2% YoY. Too bad rent CPI, typically the largest expense for Americans, is still up 8% YoY.
The Taylor Rule, given 4.8% core inflation, gives us a Fed Funds Target rate of 10.42%. So, yes, it looks like Powell and the Gang have more work to do.
Confounded Interest - Anthony B. Sanders 
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