Darkening Picture

SÃO PAULO – We arrived on Sunday morning. São Paulo can have terrible traffic. It is a sprawling place of 12 million people. But it was early when we pulled into town; the traffic moved swiftly. We decided to go to mass at the old São Paulo (Saint Paul’s) Cathedral downtown.


São Paulo, similar to Mexico City, reminds on a bit of the universe, or at least of one of the universe’s main characteristics: it has seemingly no boundary.

Photo credit: Journeying Jeff


The area is a bit rundown. Derelict. Bums and half-wits congregated in the park in front of the church, and inside the church, too. More on that story in a minute. First, we check in on the world of mammon.

U.S. stocks saw several days of losses recently as the economic picture darkens [not to worry, they’re already on the way back up, ed.]. Houses are selling again. But there’s a big problem: The average house buyer is less able than ever before to buy the average house.

His income, compared to the cost of buying a house, is the lowest on record. Thus housing takes up a disproportionate share of his wages, leaving less for other spending.


Yet another aspect of Bernanke’s echo bubble – car loan securitization soars and the share of sub-prime lending has become greater and greater as the bubble expanded, as fewer and fewer creditworthy borrowers are left. Wait for it… – click to enlarge.


It’s part of the reason why retail sales are so weak and why middle America’s mall stalwarts J.C. Penney, Sears, Macy’s, and Kmart are all closing outlets. Not only is spending shifting online, but also their customers don’t have any money. As many as 3,500 major retail stores are due to lock up.

Defaults on auto loans are also rising – worse than 2009. The middle classes don’t earn enough money to support housing, retail, autos, and their debt – at current levels.


GM car loan delinquencies – the chart of this minor flesh which everybody is hereby advised to ignore (Deep State directive 0659/11/xg3/2017) comes courtesy of the curmudgeons at Zerohedge, who somehow keep failing to see how awesome everything is now that $5 trillion in additional GDP have been purchased by a mere $12 trillion in debt expansion (and by tweaking a few statistical definitions, nudge-nudge, wink-wink) – click to enlarge.


Deep State in Charge

The Main Street economy is a win-win-deal economy. But over the last 30 years or so, the balance has shifted from win-win to win-lose. It’s left working people worse off. And now the feds control too much of our time and resources – by way of legislation, regulation, or the fake-money system. All of them are win-lose deals.

The Fed has announced plans to back off. It says it will pursue “normalization” – gradually raising interest rates. You’ve heard our prediction: It won’t happen. The Fed will never voluntarily return to normal market-set interest rates. It will only raise rates so long as it doesn’t matter – that is, as long as the “natural” rate is higher.

The Establishment – Wall Street, Big Business, the feds, the Deep State — depends on money borrowed at preferential interest rates. They aren’t going to give it up. And now we offer a companion forecast for Congress: It will never voluntarily cut spending.

The swamp critters need funding. Part of it they get from the Fed. They get another big part from Congress. They won’t give that up, either. There will be no intentional turnaround. Not under Donald J. Trump. Nor anyone else. The Deep State is in charge. And the Deep State wants more of your money.


Don’t be fooled by the recent small dip – it’s already in the process of being reversed. The denizens of the swamp are hungry and won’t be denied – click to enlarge.


Meanwhile, back at São Paulo Cathedral…


Liberation Theology

The church edifice is a bit like Notre-Dame in Paris – with side walls supported by flying buttresses and a roof held up by large columns. It is impressive stonework, but not particularly attractive. The grey-brown granite is a little dull. And the ceiling, painted white, lacks the decorative excitement of many European cathedrals.


São Paulo Cathedral. It may lack comparable decorative excitement, you have to admit though, the European ones come without palm trees…

Photo credit: Petr Daubner


The music had an antique quality; the whole ceremony seemed a bit out of date, recalling the ancient Hebrew laments from which it is derived. We settled into a pew at the rear of the church and followed the service as best we could. We don’t speak Portuguese. But the liturgy and the Bible readings were familiar.

Most important, we know how the story turns out. We couldn’t follow the sermon very well, but we heard several telltale words: “social justice,” “community,” “solidarity.” We couldn’t be certain. But it appeared the bishop had fallen for the “liberation theology” that was so popular in Latin America in the 1960s and 1970s.

The idea was that the church should encourage people to become engaged politically and push for more activism on the part of government to cure whatever ailments they saw afflicting society.


Take this here Marxist symbol, oh Papa…  Pope Francis receives an oddly shaped cross from Bolivia’s socialist president Evo Morales. It seems a good bet that liberation theology is still popular in many parts of Latin America (we would guess that in Venezuela its popularity has slumped a bit lately).

Photo credit: AP / L’Osservatore Romano


Get Thee Behind Me

Religious people – Christian and Muslim – are always tempted to back their faith with the brute force of the state.   The first amendment to the U.S. Constitution specifically forbids it:


“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.”


But churches in America are often adorned with U.S. flags and state flags as well as the flags of the church. Jesus warned against trying to “serve two masters.” But many churchgoers seem to want to give it a try.

Even in our little church in Maryland, we say prayers for “our men and women serving in the armed forces” as if they were doing God’s work.

Over and over, Jesus emphasized the responsibility of the individual – the Good Samaritan, for example – to do the right thing. As for government, he seemed to despise it… or at least keep his distance (“Render unto Caesar that which is Caesar’s,” he said, tossing a small coin).

And at one point, Jesus was invited to join the Deep State insiders. Political power –  the power to force win-lose deals on others –  was offered to him:


And the Devil taking him up into a high mountain showed unto him all the kingdoms of the world in a moment of time… And the Devil said unto him, “All this power will I give thee, and the glory of them; for that is delivered unto me: and to whomsoever I will give it. If thou wilt worship me, all shall be thine.”

And Jesus answered and said unto him, “Get thee behind me, Satan.”


The disappointment of Satan (Ary Sheffer, 1854). He talked a good game, Satan did. He gave it his best shot, but honestly, was there ever a chance he would convince the son of the chief? Who, it should be pointed out, was on a major mission at the time to boot? (i.e., saving mankind). We don’t think so… but that was probably not the point anyway. Setting an example for the rest of us was.


Jesus had no truck with the feds.


Charts by St. Louis Federal Reserve Research, Zero Hedge, TradingEconomics


Chart and image captions by PT


The above article originally appeared at the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.




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One Response to “Jesus Was No Deep Stater”

  • wmbean:

    Jesus was the deep state, the guy who effectively owned the world. I am amused by the various bible versions of Satan trying to sell Jesus the Brooklyn Bridge which Jesus already owned. The point of the story was that Satan was a con artist and nothing more. “No one comes to the Father but by me.” How more deep state can one get? Jesus was not giving you a choice but telling you what the rewards were. Do it my way and you get into heaven. don’t do it my way and you become an outsider. That is what the deep state offers, in case you haven’t analyzed the offer. Essentially Jesus was saying, “Yeah, you can have all the free will you want but you better do it my way or your free will is worthless.” Bill, get it right.

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