Leading up to Sam Bankman-Fried’s spectacular implosion – in which his firm FTX evaporated billions in wealth after the now-bankrupt cryptocurrency exchange allegedly commingled client assets with his trading firm into a liquidity crunch – he became the sixth-largest donor in this year’s midterm election cycle, giving some $40 million to mostly Democratic candidates and causes.

According to Forbes, Bankman-Fried was second only to George Soros among billionaire donors to Democratic groups during the 2022 midterm election cycle.

FTX allegedly loaned Alameda Research – a trading firm founded by Bankman-Fried – roughly $10 billion in client assets, which has landed him under federal investigation by the SEC, CTFC, and the Justice Department – the latter of which already had been working on a months-long investigation, according to the Wall Street Journal. The CTFC, meanwhile, is tasked with regulating certain elements of the crypto markets – including digital assets that are as commodities, and crypto exchanges and clearinghouses.

In late September, Bankman-Fried admitted that his political donations were mostly to Democrats, and Republican recipients were ‘targeted’.

Spot the rare journalism by host Chuck Todd;

But it goes much deeper than that

Bankman-Fried ‘heavily courted’ the CFTC, “and funded several key lawmakers charged with overseeing the agency, pouring cash into their campaign coffers,” as the Daily Caller notes.

The CFTC is charged with regulating certain elements of the crypto marketplace, including digital assets that are commodities as well as crypto exchanges and clearinghouses. The agency is overseen by the Senate and House Agriculture Committees, with the former tasked with approving CFTC commissioners nominated by the president.

The former FTX CEO personally donated to the Senate committee’s chairwoman, Democratic Michigan Sen. Debbie Stabenow, contributing over $20,000 to the Stabenow Victory Fund and $5,800 to her campaign for Senate. Bankman-Fried donated roughly $6,000 to the committee’s ranking member, Republican Arkansas Sen. John Boozman, as well, and $5,800 to the ranking member of the Subcommittee on Commodities, Risk Management and Trade, Republican Montana Sen. John Hoeven. -Daily Caller

Others have connected dots and concluded that FTX may have been a money laundering operation.

https://t.co/rFHsbYk41U

— Gordo Stevens 🇺🇸 (@GordoCDA) November 12, 2022

What’s more, a PAC founded by FTX executive Ryan Salme, American Dream Federal Action, spent over $1 million on Boozman during the 2022 election cycle, as well as more than $1 million on House Agriculture Committee member and Republican Minnesota Rep. Brad Finstad.

Bankman-Fried also donated $27 million to the Protect Our Future PAC, which primarily works to elect Democrats. It spent over $1 million towards Rep. Shontel Brown (D-OH), a member of the House Agriculture Committee.

Another donation linked to members of the House Ag committee includes $200,000 to the Democratic Congressional Campaign Committee (DCCC), headed by Chair Sean Patrick Maloney, and nearly $6,000 to Maloney himsself. He also gave $20,000 to the campaign and victory fund of Sen. Kirsten Gillibrand (D-NY), whose father worked for the NXIVM sex cult in the early 2000s, where he made $25,000 per month.

In addition to his campaign contributions to the lawmakers tasked with CFTC oversight, Bankman-Fried sought closer relations with the agency itself.

Bankman-Fried personally lobbied for legislation in the Senate Agriculture Committee that would grant the CFTC greater regulatory oversight over the crypto industry, according to Coindesk, and spent hundreds of thousands of dollars lobbying the CFTC, SEC and members of Congress on the legislation.

The bill, known as the Digital Commodities Consumer Protection Act, which would grant the CFTC “jurisdiction to oversee the spot digital commodity market,” was introduced by Stabenow, Boozman, Booker and Republican North Dakota Sen. John Thune, three of whom are beneficiaries of Bankman-Fried’s donations.

For its lobbying team, FTX hired former Republican Rep. Mike Conaway, longtime chair of the House Agriculture Committee, and committee staffer Scott Graves to lobby lawmakers on crypto-related issues. -Daily Caller

As a thought experiment, imagine what Bankman-Fried’s financial ‘goodwill’ would have bought the firm if FTX hadn’t divided by zero and imploded.

Authored by Jonathan Turley,

This week, we saw another incident of protesters shutting down an event to prevent others from hearing opposing views. At an event with commentator and author Ann Coulter, one protester yelled “Your words are violence.” It is the latest example of how some on the left are treating free speech as harm on college campuses. Unlike many other incidents, however, Cornell has stood by the right of the student group, Network of Enlightened Women, to hold the event and pledged to hold students accountable for the cancellation of the speech.

Students and faculty previously pressured Cornell to cancel Coulter as someone who engages in “hate speech” and declared her speaking on campus as harmful. Cornell stood with free speech. However, the event lasted only 30 minutes until protesters succeeded in shouting down Coulter. 

One man is shown screaming “we don’t want you to be here, your words are violence… They are threats, you cannot be speaking here. We don’t want your ideas here! Leave! Leave! Your words are violence! Your words are violence!”Two students chanted “no KKK no fascist USA” as they are escorted out by security. Others blared circus music and blew whistles.

The Cornell Review reported a common tactic: protesters “seemed to be employing a chain tactic, beginning just as soon as the last heckler was removed, so as to continuously speak over Coulter.”

Joel Malina, vice president for University Relations at Cornell, told Campus Reform.“Eight college-age individuals were removed from the auditorium following Cornell protocols. All Cornell students among the disrupters will be referred for conduct violations.” He also apologized to Coulter.

Cornell is to be commended for its stance, particularly if it proceeds with appropriate sanctions for these students. The incident also shows the value of limiting these events to faculty and students of Cornell, who are subject to rules protecting free speech and open discourse on campus.

We have previously discussed the worrisome signs of a rising generation of censors in the country as leaders and writers embrace censorship and blacklisting. The latest chilling poll was released by 2021 College Free Speech Rankings after questioning a huge body of 37,000 students at 159 top-ranked U.S. colleges and universities. It found that sixty-six percent of college students think shouting down a speaker to stop them from speaking is a legitimate form of free speech.  Another 23 percent believe violence can be used to cancel a speech. That is roughly one out of four supporting violence.

Faculty and editors are now actively supporting modern versions of book-burning with blacklists and bans for those with opposing political views. Others are supporting actual book burning. Columbia Journalism School Dean Steve Coll has denounced the “weaponization” of free speech, which appears to be the use of free speech by those on the right.

We discussed this issue with regard to a lawsuit against SUNY. It is also discussed in my recent law review article, Jonathan Turley, Harm and Hegemony: The Decline of Free Speech in the United States, Harvard Journal of Law and Public Policy. We have seen how in universities (including state schools) this can turn into a type of “heckler’s veto” where speeches are cancelled in advance or terminated suddenly due to the disruption of protesters.

This has been an issue of contention with some academics who believe that free speech includes the right to silence others.  Berkeley has been the focus of much concern over the use of a heckler’s veto on our campuses as violent protesters have succeeded in silencing speakers, including a speaker from the ACLU discussing free speech.  Both students and some faculty have maintained the position that they have a right to silence those with whom they disagree and even student newspapers have declared opposing speech to be outside of the protections of free speech.  At another University of California campus, professors actually rallied around a professor who physically assaulted pro-life advocates and tore down their display.

In the meantime, academics and deans have said that there is no free speech protection for offensive or “disingenuous” speech.  CUNY Law Dean Mary Lu Bilek showed how far this trend has gone. When conservative law professor Josh Blackman was stopped from speaking about “the importance of free speech,”  Bilek insisted that disrupting the speech on free speech was free speech. (Bilek later cancelled herself and resigned after she made a single analogy to acting like a “slaveholder” as a self-criticism for failing to achieve equity and reparations for black faculty and students).

A few years ago, I debated NYU Professor Jeremy Waldron who is a leading voice for speech codes. Waldron insisted that shutting down speakers through heckling is a form of free speech. I disagree. It is the antithesis of free speech and the failure of schools to protect the exercise of free speech is the antithesis of higher education. In most schools, people are not allowed to disrupt events. They are escorted out of such events and told that they can protest outside of the events since others have a right to listen to opposing views. These disruptions however are often planned to continually interrupt speakers until the school authorities step in to cancel the event.

Recently, we have seen convocations and other important events disrupted by such protesters. Universities will have to take a stand or lose control over their campuses. Students who disrupt classes or events must be held accountable if we are to maintain open and free discourse on our campuses.

Authored by Lia Onely via The Epoch Times (emphasis ours),

An Israeli study found that antibody levels after a fourth dose of the Pfizer BioNTech COVID-19 vaccine returned to similar levels as after the 3rd dose after about four months.

The study, conducted among health care workers at the Sheba Medical Center, the largest hospital in Israel, found that the immunological protection of the 4th dose “was much smaller and had waned completely by 13 weeks after vaccination.”

It found “no substantial additional effectiveness over a third dose at 15 to 26 weeks after vaccination.”

The authors concluded that these findings suggest the 4th dose and possible future boosters “should be timed wisely to coincide with disease waves or to be available seasonally, similar to the influenza vaccine.”

The six-month follow-up study was published in The New England Journal of Medicine on Nov. 9.

The study led by Dr. Michal Canetti and Dr. Gili Regev-Yochay, the head of the Infection Prevention and Control unit at Sheba, followed employees who did not fall ill before the study, beginning Dec. 27, 2021, to July 10, 2022, when the Omicron virus variant was dominant in Israel.

The researchers tested the immune response of 6,113 employees and performed a monthly follow-up of the antibody levels in their blood. In addition, they performed a vaccine effectiveness analysis of 11,176 employees after the 2nd, 3rd, and 4th doses.

The weekly levels of antibodies throughout the period after the receipt of the 3rd and 4th doses were found to be similar and the study said were higher than after receiving the 2nd dose.

Effectiveness of the fourth dose against infection started at just 52 percent during the first five weeks after administration and dropped to negative 2 percent at 15 to 26 weeks. A growing number of studies have detected negative effectiveness, which means the vaccinated are more likely to get infected.

Pfizer did not respond to a request for comment.

Read more here…

Police in the Jersey, the largest of the Channel Islands, have been ordered to apologize to Roman Abramovich after admitting they conducted unlawful searches at properties linked to the Russian billionaire.

The former Chelsea FC owner was sanctioned in connection with Russia’s February invasion of Ukraine, during which a court ordered £6bn of his assets to be frozen.

Then in April, warrants were granted to search properties linked to Abramovich, during which documents and devices were seized by Jersey’s Economic Crime and Confiscation Unit (ECCU), the Daily Mail reports.

Following the searches, Abramovich challenged their legality, ultimately leading to Jersey police acknowledging on Friday that “the search warrants were obtained unlawfully,” and “that the search warrants should be quashed.”

It was said that the force failed to reach the sufficient level of evidence to warrant a search of any premises.

The police also agreed to pay damages and costs, confirmed that all copies of documents seized in the searches had been destroyed and that the police would apologise to Abramovich, according to legal documents. -Daily Mail

“Mr Abramovich has always acted in accordance with the law, we are pleased that the Jersey Police have conceded in relation to these unlawful and unfounded searches,” said Abramovich’s spokesman.

Abramovich earned his billions during the break-up of the Soviet Union through oil company Sibneft, along with Rusal aluminum and the airline Aeroflot. After owning Chelsea FC for nearly two decades, he sold to an American-led group in May of this year for a reported £4.25bn.

He also governed the remote Arctic region of Chukotka in Russia’s Far East, and has been involved in attempts to negotiate a settlement to the Ukraine war to no avail.

Abramovich’s frozen assets are a combination of company shares and cash held in bank accounts, and do not include physical assets such as real estate, or those held in Crown Dependencies, such as Jersey and Guernsey, according to the Mail.

So far over 1,200 individuals have been sanctioned by the UK, including high-profile businessmen and politicians, as well as over 120 entities in Russia.

By Themis Karalis of Container-News.com

Sea Intelligence, with the help of the Blank Sailings Tracker, looked at how carriers are reacting to the collapse of demand, particularly for imports to North America and Europe, in terms of blanking sailings.

The following figure shows a snapshot of the additional blank sailings that were announced (or unannounced ones that were captured by Sea-Intelligence) for the week 42-52 period.

The number of void sailings has been ramped up drastically on the Transpacific, but not so much on Asia-Europe, according to Sea-Intelligence’s report.

There have been 34 additional blank sailings on Asia-North America West Coast, and 16 on Asia-North America East Coast. For the former, carriers have announced an extra 7-11 void sailings in all but five weeks of the analysed period.

However, for weeks 51 and 52, carriers have scheduled no blank sailings on Asia-North America West Coast.

“This is a reflection of the carriers’ indecision as to how to approach the potential pre-Chinese New Year rush. It appears more to be a wait-and-see approach, in terms of whether there will be a seasonal demand spike,” commented Alab Murphy, CEO of Sea-Intelligence.

On the other hand, on Asia-Europe, there is not a similar trend, with Asia-North Europe only seeing an additional six void sailings, and Asia-Mediterranean seeing an additional four blank sailings.

The rise of automation could be set to enter hyperdrive speed at Amazon warehouses nationwide in response to Covid lockdowns, unionization, and the drive to improve margins via reducing labor costs. Human order pickers could be replaced within this decade by a new robotic arm that relies entirely on artificial intelligence and suction cups to identify and fulfill customer orders. 

Amazon unveiled the “Sparrow” robot on Thursday,” which can detect, select, and handle millions of items in a warehouse to complete a customer order, rendering a human picker obsolete.

“Leveraging computer vision and artificial intelligence (AI), Sparrow can recognize and handle millions of items. Last year, with the support of Amazon technologies, our employees around the world picked, stowed, or packed approximately 5 billion packages—or over 13 million packages per day,” the company wrote in a press release.

“It’s a major leap in technology challenge, and technology development,” Joe Quinlivan, a vice president of robotics and fulfillment technologies at the company, said during a press event unveiling the device. He said robots would replace the most repetitive-motion jobs in the future. 

Suppose Sparrow is widely deployed at fulfillment centers nationwide. In that case, this could mean hundreds of thousands of warehouse workers will be jobless in the coming years, if not by the end of the decade, as the company aims to automate warehouses fully. 

Automation aims to prevent shutdowns of warehouses in another health crisis. It also drives down mounting labor costs as workers fight to unionize. 

Amazon’s increased focus on robots indicates its master plan to reduce reliance on its human workforce. Meanwhile, for those workers trying to escape the warehouse hell of long hours and learning to code, well, the tidal wave of tech layoffs is even more bad news. 

Authored by Katabella Roberts via The Epoch Times (emphasis ours),

Texas has now sent around 300 buses of immigrants to predominantly Democrat-run areas of the country in an effort to deal with an influx of illegal aliens at the southern border.

Gov. Greg Abbott announced the latest transportation of illegal immigrants to so-called “sanctuary” cities on Twitter on Nov. 11.

“The 300th Texas bus of migrants just left for Chicago,” the Republican governor wrote. “As [President Joe] Biden does nothing, Texas will continue taking unprecedented action to relieve our overwhelmed border communities & secure the border.”

A statement from Abbott’s office on Nov. 4 said that Texas has bused almost 8,300 illegal immigrants to Washington, D.C. since April, over 3,500 to New York City since Aug. 5, and more than 1,100 to Chicago since Aug. 31 as part of its effort to secure the border.

The governor’s office says the busing mission is “providing much-needed relief to our overwhelmed border communities.”

Abbott and other Republicans have criticized Biden’s open border policies for creating a crisis that has seen record-breaking numbers of illegal immigrants attempting to enter the United States.

Record Number of Arrests at Border

Roughly 4.9 million people have illegally crossed into the United States from Mexico since Biden took office in January 2021, according to a report released in August.

Meanwhile, more than 2.3 million illegal immigrants were arrested at the southern border during fiscal year 2022, according to data from U.S. Customs and Border Protection published in September (pdf), the highest number ever recorded.

The uptick in illegal immigrants has also seen cartels bringing the deadly drug fentanyl across the border in record amounts.

However Democratic lawmakers have taken aim at Abbott’s busing program, and have accused Republicans of “human trafficking” the immigrants.

District of Columbia Attorney General Karl Racine has launched an investigation into whether Abbott and other GOP governors are misleading illegal immigrants into transporting them to places like Washington, Chicago, and New York.

According to a report by ProPublica and The Texas Tribune, Racine said that his investigators interviewed immigrants who “talked persuasively about being misled, with talk about promised services” by trip organizers before boarding buses to other states. Racine did not provide further information about the probe.

Read more here…

A shocking new report via the Food and Agriculture Organization of the United Nations (FAO) revealed the world food import bill jumped to nearly $2 trillion in 2022 amid soaring inflation due to several factors, including currencies depreciating against the US dollar, the war in Ukraine, and La Nina-related climate change. 

FAO’s Food Outlook expects the tab for imports of wheat, rice, maize, vegetable oils, and all other farm goods will jump to an all-time high and about 10% increase over the record level of 2021, although the agency expects demand destruction in response to elevated food prices and depreciating currencies against the US dollar. 

Food-import bills are skyrocketing for developing countries, with most already in insurmountable debt. Many of these countries are quickly burning through dollar stockpiles at the fastest pace in two decades to defend their currencies against a rallying dollar. 

Falling emerging market currencies means the purchasing power of importing has declined. 

It comes as global food prices remain at lofty levels. 

“These are alarming signs from a food security perspective, indicating importers are finding it difficult to finance rising international costs, potentially heralding an end of their resilience to higher international prices,” FAO’s Markets and Trade Division warned in the report. 

Sri Lanka is a prime example of when a country ran out of reserves this year, defaulted on its overseas bonds, and couldn’t afford to import essential items such as food and fuel, which sparked social unrest. 

FAO also pointed out that wealthier nations will continue importing all sorts of foods while developing countries stick with staples. It also said fertilizers imports would soar to $424 billion in 2022, up 48% from the prior year and as much as 112% from 2020.

“Higher costs for imported energy and fertilizer are behind the foreseen increase. Both are particularly relevant in import bills, posing strains for the current accounts of low-income and lower middle-income countries,” the report said, adding that “As a result, some countries may be forced to reduce input applications, almost inevitably resulting in lower agricultural productivity and lower domestic food availability.”

FAO warned: “Negative repercussions for global agricultural output and food security” will likely extend into next year. 

All signs point to a troubling 2023: There are several signs the global food crisis could intensify next year. Several countries could be on the brink of unrest. 

Authored by MN Gordon via EconomicPrism.com,

On Thursday, the Bureau of Labor Statistics reported that consumer prices, as measured by the consumer price index (CPI), inflated at an annual rate of 7.7 percent in October.  Investors went bananas on this apparent pullback in the headline CPI.

The stock market responded with one of its biggest single day rallies in history.  The S&P 500 jumped over 5.5 percent.  The NASDAQ jumped over 7.3 percent.  Of greater note, the yield on the 10-Year Treasury note dropped to just 3.81 percent – its lowest yield in over a month.

So, is raging consumer price inflation no longer a concern?  Has the ugly storm come and gone?  Can Powell now pivot?

Probably not.  More than likely, consumer price inflation will rage throughout the decade.  Regardless, now’s not the time to go all in on stocks.  We’ll explain why in just a moment.  But first several words on consumer price inflation.

Consumer price inflation, remember, is an effect of money supply inflation.  The Federal Reserve inflated its balance sheet with upwards of $5 trillion in digital monetary units – created out of thin air – between September 2019 and April 2022.

Since then, the Fed has contracted its balance sheet by about $300 billion – or by about 6 percent of the preceding inflation.  Clearly, there’s still plenty more inflation to be reckoned with.

And while the Fed, in concert with the Treasury and Congress, was busy spewing reams of printing press money into the economy between fall-2019 and spring-2022, other mistakes were also being made.

Supply chains, for example, were being broken by despotic lockdowns.  Many of these supply chains remain in disrepair.  On top of that, foolish energy policies, dictated by executive order, constrained the production of oil and gas.

Raging consumer price inflation is the effect of too much money facing too few goods.  Central planners, both at the Fed and in Washington, are responsible for the mass money printing and the decline in economic productivity that have resulted in today’s sky-high costs.

To bring prices back to earth, an ultra-mega economic depression is needed.  For this reason, the Fed’s intervening in the debt market to trigger debt deflation and demand destruction in the hopes of preventing consumer prices from raging higher.

The Fed, as you well know, has been steadily hiking interest rates since March.  To be clear, the Fed’s rate hikes are to the federal funds rate.  However, they do, in fact, influence longer-term rates.

This year, for example, the Fed has hiked the federal funds rate from a target range of 0 to 0.25 percent to a target range of 3.75 to 4.00 percent.  As a result, the 10-year Treasury rate has jumped from around 1.63 percent at the start of the year to over 3.81 percent today.

The effects of these rate hikes are becoming more and more evident…

Scrapping the Playbook

For many Americans, the residential real estate market is where the relationship between asset prices and interest rates is most readily understood.  Rising interest rates make the cost of financing a house more expensive.  Thus, housing prices must fall to adjust for increased borrowing costs.

This same dynamic also occurs in debt markets.  As interest rates rise, the price of debt derived financial assets – like bonds – fall.  Consequently, both borrowers and bond investors are having a rough time in 2022.

Consider the hospital chain Community Health Systems Inc.  According to its website, “CHS is committed to helping people get well and live healthier.”

That’s a cause that just about anyone can support.  Nonetheless, one should think twice before lending CHS financial support.  The company’s bonds have dropped about 35 percent since September to 42 cents on the dollar.

Meanwhile, CHS is struggling to get well and live healthier.  Yet its financial condition could be terminal.  The company’s attempting to reduce its $12 billion debt load.  In fact, it recently bought back $267 million of bonds.  Alas, earnings are falling faster than it can pay back its debt.

Last month, on the company’s earnings call, Chief Financial Officer Kevin Hammons clarified the situation: “Elevated contract labor and wage inflation continue to affect our…performance.”

If interest rates were falling, as they mostly had for the last 40 years, CHS could simply refinance its debt and secure a lower monthly payment.  This has been the number one play in the book for businesses and homeowners alike since the early 1980s.

This play has been scrapped by rising interest rates.  Many businesses, homeowners, and debt investors are now discovering the world is not as soft and forgiving as they thought it was…

Instances of Disorder

The greatest asset bubble in human history – a bubble in stocks, bonds, real estate, cryptocurrencies, digital token art, bad ideas, and everything else – that was inflated by the Fed’s seemingly endless supply of cheap credit, is now deflating.  What this means, exactly, is hard to tell.

So far, financial markets are generally adjusting in an orderly fashion.  But there’s still a long way to go.  And, already, there have been several notable instances of disorder.

Last month the United Kingdom (UK) gilt market’s long maturities collapsed.  This required the Bank of England (BOE) to purchase tens of billions of pounds of long gilts to stem a Lehman moment.  The gilt market may have relaxed, temporarily.  Yet has the problem actually gone away?

There was also the recent near liquidity crisis at Credit Suisse.  If you recall, several weeks ago the second largest Swiss Bank suffered a bank run as fearful depositors pulled their money.  Credit Suisse even admitted that one or more of its units breached its liquidity requirements.

Should remaining depositors be worried?  Even with Thursday’s monster rally, the bank’s share price is down over 56 percent year-to-date.

Then, this week, there was the ultra-mega crypto crash.  Thirty-year old crypto visionary, and FTX co-founder, Sam Bankman-Fried (simplified to SBF), surfed his $16 billion wealth illusion wave into a 94 percent wipeout.

Collateral damage includes Softbank Vision Fund, Singapore wealth fund Temasek, Tom Brady (#tommy), and many others.  Of particular note, is the Ontario Teachers’ Pension Plan, which gambled $400 million into the Bahamian cryptocurrency exchange at a $32 billion valuation in January.  Where was the due diligence?

With these exceptions, financial markets have not had a major freak out – yet!  There have been no front-page reports of bankers swan diving from high-rises.  No CFOs have stepped in front of trains.

There hasn’t been a major gut-wrenching panic.  The Fed is still executing Operation Break Stuff.

So, when will the major panic occur?  And where will the major breakages take place?

Death to Zombies

It takes time for the financial pressures to manifest in a world overloaded with debt.  Beneath the surface the pressures of rising interest rates spread out via cracks and fissures.  They traverse the subterranean far and wide, undetected by the unassuming eye, as they seek out places of weakness.

These are the places where breakages occur.

This week the Wall Street Journal reported several findings from a recent investigation.  A critical place of weakness, they discovered, is American businesses:

“North American companies will have to come up with at least $200 billion in 2022 and 2023 to cover rising interest expenses, according to a Wall Street Journal analysis of data from Fitch Ratings of the companies it rates.  Borrowing costs could remain elevated for years if high inflation persists, splitting American corporations into two camps: those that can cut debt and survive on their own earnings, and those that can’t.”

Rising interest rates, no doubt, bring death to zombies.  By zombies, we’re referring to those companies in the second camp that would have died long ago, if not for the sustenance of artificially suppressed cheap credit.

These zombies – like Washington Mutual, Ringling Bros, Toys R Us, and many other past zombies that did not survive the last down cycle – will soon vanish from the face of the earth forever.  Here’s why, again from the WSJ:

“Funding of investment vehicles called collateralized loan obligations plummeted 97 percent from last year’s levels to $1.3 billion […].  CLOs are the biggest buyers of junk-rated corporate loans that private-equity firms use to buy target companies, and the flow of those loans declined by about 70 percent this October to $54 billion.

“The pain on Wall Street reverberates on Main Street.  Private-equity firms did about $1 trillion of deals last year, penetrating even niche industries, such as car washes, and the cost of the loans those companies borrow rises in lockstep with interest rates.  When private-equity funds turn less profitable, that hits U.S. pension funds, which increasingly rely on the asset class and are facing big losses in public stock and bond markets.”

In short, business credit for zombie companies has evaporated.  At this point, even if the Fed could pivot (which it can’t) it would be too late.  The damage has been done.

As night follows day.  And day follows night.  Big time defaults are coming.  Moreover, the bear market’s not over…not by a long shot.

You can take that to the bank.

*  *  *

We’re on the precipice of an ugly fall into the abyss.  This perilous condition has been in the making for many decades.  But you must not be a victim.  For this reason, after nearly two decades of research, I damn near killed myself putting together the Financial First Aid Kit.  Inside, you’ll find everything you need to know to protect your wealth and privacy as the global economy slips into a worldwide depression.

The latest Bloomberg Trade Tracker reveals an ominous outlook for world trade due to soaring interest rates, the war in Ukraine, a slowdown in the US economy, and zero Covid in China. A shortage of containers has entirely reversed into a glut as crashing shipping rates and canceled sails gain momentum during what is supposed to be the busiest shipping period of the year. 

“The world’s two biggest economies are feeling glum about the export outlook, with both the US and China gauges in contraction in October and the American one in “below-normal” range on the Tracker,” according to Bloomberg. 

Earlier this week, we explained that economic storm clouds are gathering worldwide as some of the largest shipping companies warn about decelerating global trade. US shipper FedEx and Danish shipping giant A.P. Moller-Maersk A/S have been vocal about emerging signs of a global slowdown.

“Global trade is moving backwards this year,” Maersk’s chief executive officer Soren Skou told Bloomberg Television at the start of November. 

FedEx CFO Michael Lenz told an audience Tuesday at the Robert W Baird Global Industrial Conference earlier this week that his company parked planes cut costs in response to weak demand for package delivery. 

The Covid boom for goods has evaporated. Consumers have switched from buying computers and television to spending whatever money they have left on experiences. 

We predict in May that an inventory glut, i.e., the reverse bullwhip effect, would cool the booming freight market. It’s now peak shipping season — retailers have already canceled overseas orders as freight companies reduce shipping capacity ahead of Black Friday and Christmas. 

Trans-Pacific shipping rates are cratering. 

Slumping global demand and faltering world trade has led to another problem: a massive container glut at ports. 

“There is just not enough depot space to accommodate all the containers. With the further release of container inventory into the market (e.g., from the disposal of leasing fleets), there will be added pressure on depots in the coming months. 

“This will be a key challenge for some and a competitive advantage for others in the business, especially in China because of the empty container repositioning there,” Christian Roeloffs, cofounder and CEO of Container xChange, said in an industry update this week. 

Italian container depot owner Sogese chief executive Andrea Monti told Container xChange:

“Whatever was coming in and out of, for instance, our Milan depot is quite stuck. And the container volume at the depots is increasing to an extent that we are returning some requests for depot service agreements. We are in a situation where we are not able to accept new clients for some locations.”

Monti told Container xChange that peak shipping season “technically did not happen this year” because of the global slowdown, as many retailers are left holding high inventory levels. 

Johannes Schlingmeier, cofounder and CEO of Container xChange, said:

“There is enough inventory with retailers. Once these inventories exhaust in North America and Europe, companies will order again, and demand for shipping capacity will pop back up. This won’t go back to max pandemic levels but certainly be back to the long-term average upward trend. What has happened now is that the cargo is “on time” again and hence you’ll see a slowdown in new ordering as companies adjust to this more efficient turnaround times in ocean freight delivery.

“For container owners, this could potentially mean a rise in container storage fee by depots as more containers pile up to disincentivize longer staying containers at the depots.”

The rise in canceled sailings was reported by maritime research company Drewry, indicated between late November and early December, 14% of sailings have been canceled on the world’s top shipping lanes. 

Container prices on the Los Angeles to Shanghai line and JP Morgan’s consolidated global manufacturing PMIs have declined since late 2021. 

This year’s monetary tightenings by global central banks take about 9-12 months to filter through the real economy, which means world trade will slow even more in the quarters ahead. The latest evidence of trouble ahead if a glut of containers at ports.