Why I keep warning you about the stock market bubble

Traders work on the floor of the New York Stock Exchange. Getty Images

By now, everyone should understand why I’ve been warning readers about the stock market bubble.

And I didn’t warn you just once. I’ve been doing it repeatedly.

The Dow Jones industrial average was down nearly 5,000 points from its peak before a sharp rally in stocks Wednesday made the performance just a little less dreadful.

Even with Wednesday’s 1,000-point-plus gain, the Dow is still down just below 4,000 points.

As of Monday — Christmas Eve — the stock market’s December performance alone was the worst since 1931. I think we all know what was going on back then.

And despite the repeated efforts to coax the stock market higher — “manipulate” is actually the right word — Wall Street’s disaster of the past few months continued unabated until Wednesday’s miraculous intervention by the people who want stock prices up.

You are going to hear a lot of nonsense about the stock market from all the people who didn’t caution you about the Wall Street bubble. Ignore them.

I’m not only going to tell you again what caused the recent slow-motion crash in stocks but also what problems lie ahead. What I won’t tell you — because nobody can — is when the overall stock market will be safe again.

As I’ve said in many recent columns, Wall Street was up against a lot of challenges, any of which could have caused prices to sink. Here are some of them.

First and foremost is the fact that the Federal Reserve has been undoing a decade of easy money. By that I’m referring to not only extremely low interest rates but also the scourge of quantitative easing, which created trillions in extra money that was used to keep borrowing costs the lowest they’ve ever been.

That extra money, as we can now see, didn’t do what it was supposed to do. It didn’t cause the economy to expand briskly.

The added liquidity instead went into boosting asset prices. It created the stock and bond market bubbles; the nutty run-up in the cost of artwork, antiques and collectible cards; and extreme prices in real estate. It also helped to launch the biggest fraud in human history: cryptocurrencies.

Bubbles everywhere.

And even though most people don’t understand, the Fed is concerned that the inflation of asset values will soon cause much higher prices in goods and services.

If people have too much money to spend, they bid up prices. That’s the Fed’s dilemma.

see also

Dow surges over 1,000 points, biggest single-day gain in history

That’s why the Fed felt the need to raise interest rates despite the fact that the economy isn’t growing rapidly and the inflation in goods and services seems under control for now.

And whether Wall Street or President Trump jumps up and down in protest, the Fed can’t back off its fight against inflation. That’s the Fed’s job.

Fire Fed boss Jerome Powell? That’s about the worst thing anyone, especially Trump, could even discuss, much less do. Faith in the entire US financial system would be called into question if that ever came under serious consideration.

So, what other vexing problems is the stock market facing?

Well, the US budget deficit is going to the moon. And while the US Treasury may be collecting record revenues, the annual US deficit is now approaching an unheard-of $1 trillion.

So, if/when the economy slows, the deficit will become even worse.

Add to our own economic problems those that are occurring in places like China, Japan and Europe, and you could have the perfect tsunami of bad vibrations for Wall Street to deal with for a long time.

There’s also a problem, as you may have heard, with the US trade deficit.

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Trump may throw Mnuchin under the bus over stock market

Trump is correctly trying to address that problem. And that’s not easy to do, especially when it comes to China. US companies sell much less in China than the Chinese sell in the US.

But negotiating with the Chinese is difficult when Beijing owns more than $1 trillion in US securities that it can use as leverage in the talks.

With the possibility of trade tensions continuing, Wall Street is rightfully concerned that economic expansion — which already isn’t expected to be stellar next year — and corporate profit growth will weaken. Some people are already anticipating a recession in 2020, an election year, but those predictions are coming mostly from people who want the Fed to back off rate hikes and for Trump to fail.

Was Wednesday’s Wall Street rally the end of a troubling period? Probably not. This is the end of the year and professional money managers need to improve their horrible performance. So Wall Street always tries to push stock higher in late December.

Will Fed boss Powell change his mind about rate hikes to help the stock market? As I mentioned above, Powell’s job is to fight future inflation, and while I won’t say he is happy about the stock market’s recent decline, I will say he is not likely to do anything to re-inflate the bubble.

That’s just the way things are. And if you didn’t believe me before, maybe your poorer self will now.

Oh, yeah. And have a Happy New Year despite all this.

Anca Pop’s final Instagram post shows same river where she died

Anca Pop Instagram

Anca Pop’s haunting final photo reveals the same river where she met her untimely end.

On Nov. 15, the Canadian-Romanian pop singer uploaded a photo on Instagram in which she is seen sitting on the banks of the Danube River in Romania. The 34-year-old, who had her back turned to the camera, added the simple caption: “Dunare.”

Dunărea is the name of the Danube in Romanian.

Pop died after her car plunged into the Danube. Emergency responders identified Pop’s body after divers found her car late Monday. Police said Tuesday they were investigating her death.

Her sister alerted police after she failed to arrive at the family home Sunday evening. She is survived by her parents and sister.

In 1987, Pop escaped communist Romania with her family, crossing the Danube into what was then Yugoslavia, where they became political refugees. Months later, they emigrated to Canada.

After communism ended, Pop returned to Romania.Earlier this year, Pop sparked headlines by revealing she was in a same-sex relationship, in a society that tends to be intolerant of homosexuality.

Billboard described Pop’s style of music as a fusion of Balkan and mainstream pop, which is widely celebrated in Japan. She collaborated with Bosnian musician Goran Bregovic on his 2012 album “Champagne for Gypsies.”

Following the news of her death, hundreds of fans took to social media to say goodbye to the artist.

“Rest in peace,” many wrote.

How arrest of Chinese ‘princess’ exposes regime’s world domination plot

Getty Images; Shutterstock

Huawei executive Meng Wanzhou’s arrest in Vancouver on Dec. 6 led to immediate blowback.

Furious Chinese Communists have begun arresting innocent Canadians in retaliation. So far, three of these “revenge hostages” have been taken and are being held in secret jails on vague charges. Beijing hints that the hostage count may grow if Meng is not freed and fast.

Even for a thuggish regime like China’s, this kind of action is almost unprecedented.

So who is Meng Wanzhou?

Currently under house arrest and awaiting extradition to the US, she will face charges that her company violated US sanctions by doing business with Iran and committed bank fraud by disguising the payments it received in return.

But to say that she is the CFO of Huawei doesn’t begin to explain her importance — or China’s reaction.

It turns out that “Princess” Meng, as she is called, is Communist royalty. Her grandfather was a close comrade of Chairman Mao during the Chinese Civil War, who went on to become vice governor of China’s largest province.

She is also the daughter of Huawei’s founder and chairman, Ren Zhengfei. Daddy is grooming her to succeed him when he retires.

In other words, Meng is the heiress apparent of China’s largest and most advanced high-tech company, one which plays a key role in China’s grand strategy of global domination.

Huawei is a leader in 5G technology and, earlier this year, surpassed Apple to become the second-largest smartphone maker in the world behind Samsung.

But Huawei is much more than an innocent manufacturer of smartphones.

It is a spy agency of the Chinese Communist Party.

How do we know?

Because the party has repeatedly said so.

First in 2015 and then again in June 2017, the party declared that all Chinese companies must collaborate in gathering intelligence.

“All organizations and citizens,” reads Article 7 of China’s National Intelligence Law, “must support, assist with, and collaborate in national intelligence work, and guard the national intelligence work secrets they are privy to.”

All Chinese companies, whether they are private or owned by the state, are now part and parcel of the party’s massive overseas espionage campaign.

Huawei is a key part of this aggressive effort to spy on the rest of the world. The company’s smartphones, according to FBI Director Christopher Wray, can be used to “maliciously modify or steal information,” as well as “conduct undetected espionage.” Earlier this year the Pentagon banned the devices from all US military bases worldwide.

But Huawei, which has been specially designated as a “national champion,” has an even more important assignment from the Communist Party than simply listening in on phone conversations.

As a global leader in 5G technology, it has been tasked with installing 5G “fiber to the phone” networks in countries around the world.

In fact, “Made in China 2025” — the party’s aggressive plan to dominate the cutting-edge technologies of the 21st century — singles out Huawei as the key to achieving global 5G dominance.

Any network system installed by a company working hand-in-glove with China’s intelligence services raises the danger of not only cyber espionage, but also cyber-enabled technology theft.

And the danger doesn’t stop there.

The new superfast 5G networks, which are 100 times faster than 4G, will literally run the world of the future. Everything from smartphones to smart cities, from self-driving vehicles to, yes, even weapons systems, will be under their control.

In other words, whoever controls the 5G networks will control the world — or at least large parts of it.

Huawei has reportedly secured more than 25 commercial contracts for 5G, but has been locked out of an increasing number of countries around the world because of spying concerns.

The “Five Eyes” — Great Britain, Canada, New Zealand, Australia and the US — over the past year have waged a concerted campaign to block the Chinese tech giant from dominating next-generation wireless networks around the world. Not only have they largely kept Huawei out of their own countries, they have convinced other countries like Japan, India and Germany to go along, too.

Whoever controls the 5G networks will control the world — or at least large parts of it.

Yet Huawei is far from finished. The company has grown into a global brand over the past two decades because, as a “national champion,” it is constantly being fed and nourished by the party and the military with low-interest-rate loans, privileged access to a protected domestic market, and other preferential treatment.

These various state subsidies continue, giving Huawei a huge and unfair advantage over its free-market competitors.

Huawei stands in the same relationship to the Chinese Communist Party as German steelmaker Alfried Krupp did to Germany’s National Socialists in the days leading up to World War II.

Just as Germany’s leading supplier of armaments basically became an arm of the Nazi machine after war broke out, so is China’s leading high-tech company an essential element of the party’s cold war plan to dominate the world of the future.

As far as “Princess” Meng is concerned, I expect that she will be found guilty of committing bank fraud, ordered to pay a fine, and then released. Even a billion-dollar fine would be chump change for a $75 billion corporation like Huawei.

The real payoff of her arrest lies elsewhere. It has exposed the massive campaign of espionage that Huawei is carrying out around the world at the behest of the party. It has revealed how that party dreams of a new world order in which China, not America, is dominant.

The two Chinese characters that make up Huawei’s name literally mean, “To Serve China.” That’s clear enough, isn’t it?

Steven W. Mosher is president of the Population Research Institute and author of “Bully of Asia: Why China’s Dream Is the New Threat to World Order.”