[Most Recent Quotes from www.kitco.com]

"Economics with Attitude"

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.

Economists React to the June Jobs Report: ‘Certainly Disappointing’
U.S. employers added 223,000 jobs in June and the unemployment rate fell to 5.3%. U.S. employment has now increased for 57 consecutive months and the unemployment rate is the lowest since April 2008. But labor-force participation has slipped to its lowest level since October 1977 and wages appear stagnant, offering a mixed picture for Federal Reserve officials as they contemplate raising interest rates for the first time since 2006. Here’s what economists had to say about Thursday’s report: “This isn’t a terrible report by any means but it’s certainly disappointing. The lack of wage growth continues for another month while the labor market’s improvement certainly stalled. In terms of the Federal Reserve, one report never really changes the general narrative and this one certainly does not. We still think the Fed is on track to raise rates later this year but broadly speaking, the data is not coincident with a more rapid pace of tightening than is currently envisioned.” –Dan Greenhaus, “The jobs report was solid, but still a bit of a disappointment...

Eurozone leader says no more talks with Greece before Sunday vote
The Eurozone has had enough of talks with Greece -- for the rest of the week, anyway. Eurogroup President Jeroen Dijsselbloem told reporters late Wednesday that his group is not interested in continuing discussions with Athens at any time before Greece's Sunday referendum -- in which voters will decide whether to accept creditors' financial terms in exchange for bailout funds. "There will be no talks in the coming days," he said. "We will simply await now the outcome of the referendum on Sunday." The Eurogroup is a meeting of the finance ministers of the euro-using nations of the European Union. Tuesday, Greece became the first developed nation in history to default on a loan from the International Monetary Fund -- which previously loaned Athens more than $7 billion to help manage the Greek government's debt. The country has a public debt of $361 billion from previous loans keeping the country afloat for the past five years. The last nation to default on an IMF loan was Zimbabwe in 2001.

Our Spoiled-Brat Economy
By insuring spoiled brats/vested interests never face the consequences of their actions and choices, we guarantee failure of the entire system. Spoiled brats do not take kindly to being called out as spoiled brats. Since economies are aggregates of individuals, we can anticipate howls of outraged denial at our economy being identified as spoiled rotten. The two essential characteristics of spoiled brats are 1) a complete disregard for the burdens of those paying the bills and 2) a childishly self-absorbed sense of overweening entitlement. Spoiled brats have no sense of fiscal discipline. Indeed, it is their defining characteristic. They want what they want, and they want it now, regardless of the cost to others or the system as a whole. In America's Spoiled Brat Economy, no vested interest is ever allowed to fail. Lost billions gambling with borrowed money? Just throw a K Street temper tantrum and threaten to close all the ATMs when you go broke, and voila, Mommy and Daddy (the federal government...

The 75 Trillion Dollar Shadow Banking System Is In Danger Of Collapsing
Keep an eye on the shadow banking system – it is about to be shaken to the core. According to the Financial Stability Board, the size of the global shadow banking system has reached an astounding 75 trillion dollars. It has approximately tripled in size since 2002. In the U.S. alone, the size of the shadow banking system is approximately 24 trillion dollars. At this point, shadow banking assets in the United States are even greater than those of conventional banks. These shadow banks are largely unregulated, but governments around the world have been extremely hesitant to crack down on them because these nonbank lenders have helped fuel economic growth. But in the end, we will all likely pay a very great price for allowing these exceedingly reckless financial institutions to run wild. If you are not familiar with the “shadow banking system”, the following is a pretty good definition from investing answers.com…The shadow banking system (or shadow financial system)...

John Williams- Panic Decline and Selling of the US Dollar Will Take it to Historic Lows and More!

Why isn’t the middle class earning $156,000 a year?
Everyone knows the Top 1% have been killing it in recent decades, while most Americans have seen their incomes stagnate. But what if the middle class were doing as well as the richest Americans? What would their annual income be? CNNMoney asked the Economic Policy Institute, a left-leaning research group, to crunch the numbers. The answer: $156,318. Instead, the average household income of the middle class is less than half that: $72,036. That’s up only 17% from 1979, when it was $61,542. (EPI defines the middle class as those in the nation’s 20% to 80% income range, and used data through 2011. It uses Congressional Budget Office data, which includes gains from investments, as well as certain public assistance and employer health insurance.) The fortunes of the Top 1% and everyone else began to diverge in the late 1970s, when the richest Americans were earning $613,313. They have since seen their average household income skyrocket by nearly 150% to more than $1.5 million.

CEOs of government-backed mortgage giants Fannie Mae, Freddie Mac get raises to $4M in salary
The CEOs of government-backed mortgage giants Fannie Mae and Freddie Mac are getting large raises, to about $4 million a year, as the government relaxes rules that were imposed on the companies after they suffered big losses and were bailed out. In forms filed with the Securities and Exchange Commission on Wednesday, the companies disclosed that Fannie Mae CEO Timothy Mayopoulous and Freddie Mac CEO Donald Layton will get annual base salaries of $750,000 each, $2.1 million in fixed deferred compensation and $1.2 million in at-risk deferred salary. It does not include bonuses. Their pay had been capped at $600,000 a year. The Federal Housing Finance Agency, which oversees the companies, said the new plans take CEO performance into account and defer compensation so the executives stay with the companies. It said Mayopoulos and Layton will be paid less than most CEOs at similar companies. The compensation limits were imposed in 2012, shortly before the two men became CEOs of their respective companies.

Employer headaches over labor quality point to stronger U.S. wages
America's employers say they are finding it harder to find high-quality workers, which could soon fuel a boost in wage growth and help convince the Federal Reserve to hike interest rates. The Labor Department's monthly jobs report due on Thursday will likely show June was another month of lackluster pay increases, a trend going back to the 2007-09 recession. However, separate data shows a fast rising share of small business owners say their biggest problem is the quality of labor, suggesting companies could soon raise wages more aggressively to attract talent. Headaches over worker quality are already leading Garry Floeter's construction firm in Cookeville, Tennessee to offer more money to workers trained to install mechanical systems at hospitals and other commercial buildings. "I am desperately looking for new people," said Floeter, president of CHC Mechanical Contractors. He recently had to turn down work at an anesthesiology school because of understaffing and is now recruiting workers...

Americans Don't Know Why We Celebrate 4th of July!

The Black Swan Circling Puerto Rico——Its Bond Insurers Are Stuffed With Toxic Derivatives
I really had not been paying much attention to the Puerto Rico debt situation. After all, $72 billion in debt that might go bad – big deal. The Fed can print up $72 billion in credit lines with the push of a button. But a friend of mine happened to mention to me today (Monday) that MBIA’s stock was down over 23% and Assured Guaranty’s stock was down over 13%. That woke me up. MBI guarantees $4.5 billion in par amount of Puerto Rico muni paper. As of it’s latest 10-Q (March 31, 2015), MBI showed a book value of $3.9 billion. Puerto Rico alone could more than wipe out MBI’s net worth. But that’s only a portion of the story. The bigger part of the story is buried off-balance sheet in the footnotes in opaque financial structures called Variable Interest Entities (VIE’s). Remember those from 2008? I remember them vividly. The VIEs are the off-balance sheet vehicles that triggered the massive chain of counterparty defaults which de facto collapsed the U.S. financial system in 2008.

JPMorgan found a $30 billion 'unexpected bonus' in the remains of Washington Mutual
In September 2008, JPMorgan Chase & Co executives sifted through the rubble of Washington Mutual, the failed home-loan bank that they had just won in a US government auction. They found something unexpectedly good: about $30 billion of mortgages on apartment buildings, which earned strong returns whether the economy was performing well or not. "It was an unexpected bonus," JPMorgan chief executive Jamie Dimon told Reuters in an interview, adding that the apartment-lending business is the single most valuable asset that JPMorgan acquired in the auction. Washington Mutual's apartment-lending business was the biggest of its kind in the US and Dimon has made it even bigger. JPMorgan now holds some 20% of the US bank loans on apartment buildings. Before the crisis, the bank ranked closer to 20th. JPMorgan now has $52 billion of these loans outstanding, giving it a stronghold in a market that is increasingly important in the US after the housing crisis brought down the homeownership rate.

Survey: One-Third of Americans Open to Idea of Leaving Country
On Saturday we celebrate our independence day, and judging by a poll from TransferWise, a U.K. peer-to-peer money transfer service, many of us would be happy to declare independence from our own country. A total of 35 percent of respondents would consider leaving the United States to live elsewhere and 14 percent said they would consider a move within the next five years. A total of 65 percent of Americans said that given the right reasons, they would consider a move. And what are the right reasons? A 36 percent total cited a better quality of life, 33 percent cited a lower cost of living and 31 percent cited the appeal of new experiences. A whopping 84 percent of respondents say the United States should make itself more appealing. But how? A 58 percent majority mentioned more affordable healthcare, 51 percent pointed to lower taxes and 48 percent mentioned education improvements. One danger confronting investors of every country now is the volatility of global financial markets.

America's Destiny in the Balance
In 1856 Harper’s Magazine published a quote first attributed to Jose Correia de Serra, a Portuguese Abbot, scientist and close friend of Thomas Jefferson: “It has been said that a ‘special Providence watches over children, drunkards and the United States’.” The presidency of Barack Obama is the latest example of the accuracy of this observation, since the American people have been granted a last chance, before it is too late, to reverse course as a window has been forced open for the citizenry to view what future will bring if the nation remains on its present course. Beginning in the 1930’s, under the aegis of Franklin Roosevelt, the nation began a drift to the left as a reaction to the Great Depression. However, those truly committed to socialist/Marxist philosophy and tactics remained in the shadows until the 1960’s. The Viet Nam war protests unleashed far more than just a demand for an end to the war. Those that blamed America for all manner of alleged sins in the past...

Donald Trump’s Hotels Have Reportedly Been Hacked
Business mogul and quixotic Republican presidential candidate Donald Trump's luxury hotels have fallen victim to a sweeping credit-card hack, according to a prominent cybersecurity blog. Several banks concluded that properties belonging to the Trump Hotel Collection have been breached after investigating a pattern of fraudulent credit-card activity, journalist Brian Krebs reported Wednesday. "Sources in the financial industry say they have little doubt that Trump properties in several U.S. locations—including Chicago, Honolulu, Las Vegas, Los Angeles, Miami, and New York—are dealing with a card breach that appears to extend back to at least February 2015," Krebs wrote. (Krebs, a former Washington Post writer with a dedicated following in the cybersecurity community, first broke news of the massive Target data breach on 2013.) Trump, who officially declared his White House bid earlier this month, has had a difficult week. NBC severed ties with the reality TV star...

Iran Repatriates 13 Tons of Gold Under Sanctions Relief
Iranian officials said Monday that the Islamic Republic’s Central Bank has successfully repatriated 13 tons of gold as part of a package of sanctions relief provided to Iran by U.S. and Western powers. The gold was transferred to Iran by the government of South Africa, which had been holding onto the assets due to harsh sanctions meant to pressure Tehran to rein in its rogue nuclear program. The gold appears to have been released as part of a sanctions relief package that will have awarded Iran nearly $12 billion in unfrozen cash assets by the time negotiations wrap up next week. Iran received $4.2 billion in unfrozen assets under the 2013 interim agreement with the United States and was then given another $2.8 billion by the Obama administration last year in a bid to keep Tehran committed to the talks. The State Department calculates that Iran will have received a total of $11.9 billion in cash assets.

US planned layoffs totaled 44,842 in June
The number of layoffs announced by U.S.-based companies ticked up nearly 10 percent in June from the previous month, contributing to the highest level of job cuts by midyear since 2010. Employers announced 44,842 job reductions last month, according to global outplacement firm Challenger, Gray & Christmas. In May, Challenger reported 41,034 planned layoffs. In the first half of the year, job cuts surged 17 percent from the same period in 2014, driven by downsizing in the energy industry as commodity prices remained under pressure after a roughly 60 percent collapse through January. U.S. headquartered businesses said they would hand out 287,762 pink slips in the first six months of 2015. Energy companies announced 60,500 layoffs through June. But the impact of low crude prices was not limited to the oil patch. All told, oil's decline led to 69,582 job losses, according to Challenger, second only to restructuring, which claimed 89,978 positions.

Germany will not 'pour money' into Greek black hole, warns Angela Merkel ally
Greece will not get any more cash from Europe until it takes steps to settle its arrears with the International Monetary Fund and presents a credible package of reforms, according to a senior German politician. Michael Fuchs, a close ally of German Chancellor Angela Merkel and deputy chairman of the ruling CDU/CSU coalition, rejected Greece’s latest bail-out plea and said Germany would not "pour money" into a country that refused to change. Mr Fuchs said the tone of negotations had been soured by the Greek government's shock call for a referendum on creditor demands for a deal, branding it a "stupid" idea that had strained relations between the parties. He said Syriza's decision to campaign for "No" was "crazy" and showed the party was not "pro-Europe". He said its decision meant Athens was now cut off from the European Financial Stability Facility (EFSF), Europe's rescue fund. He said it was crucial that the IMF played a role in any further rescue package.

Chicago Fires 1400 Teachers To Fund Extravagant Pensions
About 1,400 Chicago public school teachers and staff are expected to lose their jobs in order to finance a pension debt of $634 million, the city announced Wednesday. The layoffs are part of an aggressive $200 million budget cut to help finance the pension payment, which is required of Chicago Public Schools by Illinois law. The rest of the pension payment is coming from heavy borrowing, as the district already has a massive $1.1 billion budget deficit. In announcing the layoffs, Mayor Rahm Emanuel blamed the rest of the state for not picking up the slack, saying the rest of Illinois doesn’t pay its fair share for pensions. “You negotiate with your teachers in Aurora… Then we get to pay for it,” Emanuel said at a press conference. He said the state should change its funding formula so “You… come to the table and start paying your share for what you negotiated.” But lawmakers in Springfield failed to act, leaving “unconscionable” cuts as the only option, he said.

7-Eleven Testing Delivery Service
Sometimes the Slurpee machine is just… too… far… away. Am I right? Sure, because otherwise why would 7-Eleven be testing a delivery service? Yes, that is a thing that is happening, as we have become a people who can’t even be bothered to microwave our own burritos. The company announced the news today in a press release, saying the new service is a partnership with Postmates, a technology business out of San Francisco that also teamed up with Chipotle recently to offer delivery in some cities. Select stores in San Francisco and Oakland, CA will have the on-demand delivery service starting now through Postmate’s app for iOS devices or online, with a variety of 7-Eleven products available. From the sound of it, that could include Slurpees and burritos (though it’s unclear), as an assortment of items “from hot foods and snacks to cold beverages and other convenience items” are on the table.

Should the U.S. be restoring ties with Cuba?

CEO gives $1.5M in shares to employees
Talk about an employee bonus. Robert A. “Bobby” Frist Jr., CEO of health IT vendor HealthStream and a scion of Nashville, Tenn., business royalty, is contributing $150,000 worth of personally owned shares in the company to nonexecutive employees. More than 600 employees are eligible to receive shares because they have been with HealthStream for at least a year, do not hold executive or vice-presidential positions and have not previously been granted equity by management, the company said. That group, representing about 60 percent of HealthStream’s total workforce, will receive their shares in late August. “I am excited to make this contribution to allow many of our employees who have not previously participated in our equity programs to experience a feeling of shared equity in the company and become financial stakeholders in the future success of HealthStream,” Frist said in a company statement. “I am humbled by our employees’ visionary drive and hard work over the years...

JP Morgan private banker: “We can’t make money anymore…
Yesterday over coffee, a friend of mine leaked the news that JP Morgan’s private banking division here in Singapore is going to start charging negative interest rates. I almost fell out of my chair. He’s a successful hedge fund manager and one of their best customers. So when he received the notice, he rang up his private banker and demanded to know why. Between ridiculously low interest rates (banks are closing loans here for 0.9% or lower) and the increasing costs of compliance, “we can’t make money anymore…” was the response. It certainly paints a clear picture of how screwed up the entire financial system is. Compliance is a major component in this. Bankers around the world are buried up to their eyeballs in paperwork and regulations now. They can’t make a move or approve a single transaction without first doing anti-money laundering, terrorist financing, and tax evasion due diligence. Imagine it like this: your banker rings you up tomorrow and says, “The government of China...

Number of US temporary jobs reaches all-time high in May
The number of jobs in the US temporary help services industry reached an all-time high in May, signalling a recovering labour market and potential future boost in employment. Temporary jobs increased to 2.9 million, accounting for 2.4 percent of all private-sector jobs in the country, according to a Commerce Department report released on Wednesday (Jul 1). Because of their flexibility, temporary jobs are considered a leading indicator for employment, the report said, with data showing these jobs consistently see losses and gains pre- and post-recession that are later mirrored in total non-farm employment numbers. "When the downturn is over and demand for goods and services returns, hiring temporary workers is a good solution to quickly fill labour needs," the report said. "Firms might be reluctant to bring on permanent employees until the recovery is well-established or it might take time for firms to find the right match in a prospective employee."

Bankruptcy and More Layoffs Could Threaten Oil and Gas Industry Even After Downturn
Just a few short years ago, the oil and gas industry was wringing its collective hands in angst over the profound shortage of workers needed to usher in the shale revolution. New college grads had all but abandoned the oil patch in favor of high tech; middle managers hadn’t returned to the profession after they were burned by the last downturn; and top tier executives were retiring out of the industry and onto the golf course. Universities responded. Large companies implemented worksite “universities,” and senior managers moved up the ranks. In fact, times got so good in the heady days of $100-plus oil that the workforce became in some ways bloated. And in the cyclical industry that is the oil and gas business, prices eventually tanked and companies began to go under – and thousands of workers took home a pink slip. The specter of bankruptcy was claiming more victims than corporations and oil production.

Greece defaults on IMF

Feds Spend $676,417 on Anti-Tanning Bed Social Media Campaign for Moms
The National Institutes of Health (NIH) is spending more than a half a million dollars to create a social media campaign that persuades mothers to tell their daughters not to go to the tanning salon. The project, “Likes, Pins, and Views: Engaging Moms on Teen Indoor Tanning Thru [sic] Social Media,” will target moms on Facebook, Twitter, YouTube, Pinterest, and Instagram for two school years. The study will also “analyze” the “political ideology” of mothers to see whether it has an impact on their engagement. “Secondary aims are to analyze potential moderators (e.g., mother/daughter characteristics; mothers’ political ideology) and mediation of campaign effectiveness by theoretical concepts and campaign engagement,” the grant said. Klein Buendel, Inc. was awarded $676,417 for the study. The company previously received $791,846 from the Department of Justice (DOJ) to develop a computer game to “limit the aggression” of middle school boys.

Consumers to receive $6.86M in relief
Two companies accused of charging for credit card add-on benefits that weren't provided have agreed to pay nearly $6.86 million in consumer relief, a federal regulator said Wednesday. Affinion Group Holdings and its affiliates, based in Connecticut and Tennessee, between July 2010 and August 2012 enrolled thousands of customers in add-on products that claimed to provide credit monitoring, credit report retrieval, or both, the Consumer Financial Protection Bureau said. From 2009 through early 2013, Virginia-based Intersections marketed and sold add-on offerings that it said would give consumers access to their credit reports and a credit score, provide alerts if new credit accounts were opened and offer access to a phone representative for questions, the CFPB said. Consumers generally paid between $6.95 and $15.99 monthly for the Affinion offerings, and between $8 and $13 each month for the Intersections products. The costs typically were billed to customers' credit cards.

Aging Truck Driver Work Force - A Major Issue in Filling Demand & Empty Seats
With a combination of retirements and people exiting the industry, carriers need to recruit in roughly 100,000 drivers per year over the next decade to simply keep pace with projected United States freight needs. The American Transportation Research Institute (ATRI) released a fascinating white paper analyzing the age demographics of truck drivers. I highly recommend the entire paper, but want to comment on some of the key findings. All of the charts in this post are from the ATRI white paper. The bottom line is that the U.S. truck driver population is aging and there are not enough young drivers in the labor force to fill the empty seats that will be opened by the upcoming retirement of drivers. As I think about how to attack the driver shortage problem, I believe the answer is more than higher pay. In fact, I do not think there is one simple answer but believe there are numerous actions than can have an impact.

Thursday 07.02.2015

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.