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NEWS to Disturb the Comfortable...

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Minutes Show Fed Leaders Delayed Rate Hike Over Global Risks

Federal Reserve officials put off an interest-rate increase in September because of growing risks to their outlook for economic growth and inflation, mainly from China, even as they continued to say they were on track to raise the target later this year.

Policy makers “agreed that developments over the inter-meeting period had not materially altered the committee’s economic outlook,” according to minutes of the Sept. 16-17 session of the Federal Open Market Committee, released Thursday in Washington. Nonetheless, ’’the committee decided that it was prudent to wait for additional information confirming that the economic outlook had not deteriorated.’’

The FOMC noted that domestic economic conditions, including data on consumer spending and housing, had continued to improve, and the labor market had reached or was close to the committee’s long-run estimates for unemployment.

Still, concerns over China and its potential spillover to other economies “were likely to depress U.S. net exports” and cause further strengthening of the dollar, which could damp inflation in the U.S.

Chevron is laying off energy traders

Chevron Corp is cutting staff on its global energy trading desks this week, sources said on Thursday, making it the latest division to face reductions as part of a $3 billion cost-saving plan brought on by low crude oil prices.

The Supply and Trading group, based in Houston, but with offices in Singapore, London and San Ramon, California, may be reduced by as much as 10 percent as part of a company-wide job reduction plan, according to two people familiar with the measures. Six other sources said they were aware of the cuts but could not say how deep they might be.

While staff cutbacks are now commonplace across the energy industry as companies adjust to oil prices of $50 a barrel, half what they were a year ago, Chevron's moves this week appeared to be some of the largest to affect trading operations. Some companies have sought to protect the trading desks to help navigate choppy markets.

The company declined to comment on the scale of the cuts or who was affected but said it was "taking action to reduce internal costs in multiple operating units and the corporate center" because of market conditions. It said in July that it would lay off 1,500 employees globally, about 2 percent of its workforce, with about two-thirds of those in Texas.

What it was like to head the Fed during the 2008 meltdown

While We Sleep, Corporate Execs Strip-Mine America

Nothing shows how America’s reins are held than our out-of-control corporations, enriching their executives at the cost of the future of their businesses — and ours. Here’s another status report on this sad but fixable story.

The Q2 Buybacks Report by FactSet is, as usual, sobering reading. During the 12 months ending in June, companies in the S&P 500 spent $555.5 billion repurchasing their shares. For the first time since October 2009, buybacks exceeded free cash flow (cash flow after capex); they’re borrowing to buy back shares.

For the past two years buybacks have run at the fantastic rate of about $120 billion per quarter — the same rate as in 2006-2007, with tech companies the leaders. In 2014 they spent 95% of their profits on buybacks and dividends (building the future is somebody else’s problem in corporate America).

Investors applaud this as a boost to share prices. Surprising to the naive, a decade of buybacks has reduced the S&P 500’s share count by only 2%. Share buybacks are one part of the triangle trade that transfers vast fortunes from shareholders to senior executives using stock options...

No room for mistakes by central banks amid 'new mediocre'

Central banks have little room for error in a low-growth world in which over-leveraged and commodity-dependent emerging economies and a slowing China are major risks, top international financiers told the International Monetary Fund's meeting.

Despite $7 trillion in quantitative easing from banks in industrial nations since the global financial crisis, the world is stuck in a "new mediocre" growth pattern, IMF chief Christine Lagarde said on Thursday.

The IMF meeting comes as the Bank of Japan looks poised to extend its money printing program, so-called quantitative easing, as it stares down the barrel of a fifth year of recession.

The European Central Bank is also expected to extend quantitative easing, while the two major central banks closest to raising rates, the U.S. Federal Reserve and the Bank of England, are holding fire.

US health-care spending is high. Results are...not so good

No other advanced country even comes close to the United States in annual spending on health care, but plenty of those other countries see much better outcomes in their citizens' actual health overall.

A new Commonwealth Fund report released Thursday underscored that point — yet again — with an analysis that ranks 13 high-income nations on their overall health spending, use of medical services, prices and health outcomes.

The study data, which is from 2013, predates the full implementation of Obamacare, which took place in 2014. Obamacare is designed to increase health coverage for Americans and stem the rise in health-care costs.

The findings indicate that despite spending well in excess of the rate of any other of those countries in 2013, the United States achieved worse outcomes when it comes to rates of chronic conditions, obesity and infant mortality.

The Dollar: War Games and Ben Bernanke Boasts

Geopolitical risk heats up, while Ben Bernanke gives himself too much credit.

The foreign exchange market, which is driven by macroeconomic data, developments, and forecasts, is well attuned to global affairs. Thus, it's arguably the market that best reflects geopolitical risk.

There little question in my mind that geopolitical risk has increased in the last twenty-four risk due to two developments:

First, Russia has taken its action in Syria to a new level by firing long-range cruise missiles from the Caspian Sea at rebel positions. Add that to incursions by Russian jets into Turkish airspace, and Mr. Putin is most definitely raising eyebrows among Western powers.

FIFA shows Blatter red, Congress tears into VW

Is ObamaCare Good For The Middle Class?

Apparently not. For every person who has obtained insurance in the (ObamaCare) exchanges, there are two other eligible people who have not enrolled. We now have a good idea why that is.

When people who were previously insured in the individual market obtain insurance in the exchanges, on the average they are worse off. And here is a surprise. When the previously uninsured obtain insurance in the exchanges, they are also worse off!

For the previously uninsured, out of pocket costs for medical care go up — even after the federal subsidies. On the plus side, they do consume more medical care once they are insured. And there is some value in the risk reduction insurance provides. But these advantages are not enough to offset the financial loss for almost everyone above 250 percent of the federal poverty level. Even the ObamaCare mandate’s threatened penalties are not enough to make ObamaCare insurance attractive to the vast majority of the uninsured middle class.

Latin America rolls out red carpet for once-scorned IMF

The last time the IMF held its annual meetings in Latin America, Ernesto "Che" Guevara was trying to spread Cuba's revolution throughout the hemisphere and much of the region was under the thumb of repressive dictatorships.

But as policy makers from around the world began arriving in Peru's capital Thursday, the ideological battles of the past appear to be fading.

In the five decades since their last annual meeting in the region, in Rio de Janeiro in 1967, the IMF and World Bank have loosened up on policy prescriptions that forced austerity on much of the hemisphere. And many governments, even some leftist ones like Bolivia and Ecuador that are hostile in rhetoric to the so-called Washington consensus, are pursuing relatively conventional economic policies that have dramatically improved the lives of the region's people.

"It's not the old Latin America; it's not the old IMF either," Christine Lagarde, the fund's managing director, told journalists Thursday. "The relationship is one of cooperation and partnership."

Gold Will Get Going Once Faltering Economy Pushes Fed to Act Again

Feds Spend $224,767 on Anti-Smoking Video Game for Fifth Graders

The National Institutes of Health (NIH) is spending over $200,000 on an anti-tobacco video game for fifth graders, where they will navigate through “cancer rooms” to find hidden objects to beat cigarettes with.

Described as an “innovative STEM game,” the project is based off of a 1980s anti-smoking cartoon, which was also financed by the NIH.

“The proposed game is a ‘Hidden Object’ type of application,” a grant for the project states. “As character [sic throughout] move around he will progress through puzzle rooms named after the problems associated with tobacco use e.g. Cancer Room, Heart Disease Room, and Lung Disease Room, Nicotine Addiction Room, Oral Cancer Room, Gum Disease Room, and so on.”

“Challenges and puzzles consist of hidden objects, word searches, matching activities, and other challenges,” it said. “When a puzzle or challenge is completed, characters will receive something that will help him [sic] fight the ever-present cigarettes, cigars, and chewing tobacco containers.”

Why This Feels Like A Depression For Most People

“And the little screaming fact that sounds through all history: repression works only to strengthen and knit the repressed.” – John Steinbeck, The Grapes of Wrath

Everyone has seen the pictures of the unemployed waiting in soup lines during the Great Depression. When you try to tell a propaganda believing, willfully ignorant, mainstream media watching, math challenged consumer we are in the midst of a Greater Depression, they act as if you’ve lost your mind. They will immediately bluster about the 5.1% unemployment rate, record corporate profits, and stock market near all-time highs. The cognitive dissonance of these people is only exceeded by their inability to understand basic mathematical concepts.

The reason you don’t see huge lines of people waiting in soup lines during this Greater Depression is because the government has figured out how to disguise suffering through modern technology. During the height of the Great Depression in 1933, there were 12.8 million Americans unemployed. These were the men pictured in the soup lines. Today, there are 46 million Americans in an electronic soup kitchen line, as their food is distributed through EBT cards (with that angel of mercy JP Morgan reaping billions in profits by processing the transactions).

These 46 million people represent 14% of the U.S. population. There are 23 million households on food stamps in a nation of 123 million households. Therefore, 19% of all households in the U.S. are so poor, they require food assistance to survive. In 1933 there were approximately 126 million Americans living in 30 million households. The government didn’t keep official unemployment records until 1940, but the Department of Labor estimated 12.8 million people were unemployed during the worst year of the Great Depression or 24.9% of the labor force. By 1937 it had fallen to 14.3% or approximately 8 million people.

Ways the Trans-Pacific Partnership Will Affect Your Wallet

Trade deals are boring. They’re complex, riddled with economic terms, and often the most interesting part is seeing how many favorites Donald Trump can get on his tweet saying that he hates the deal, and President Obama is incompetent. (It’s more than 4,700 and counting, by the way.)

But no matter how little you know about the Trans-Pacific Partnership that was minted October 5, the reality is that it will likely affect your life in some way or another if Congress chooses to ratify it. It has a long, uphill, Everest-like climb to reach that point since both Republicans and Democrats have their issues with the trade agreement, but it’s worth knowing how it could affect your bottom line.

Here’s some of the basics: the agreement was made between 12 countries, including the United States, Mexico, Canada, Japan, Vietnam, and Australia. (All of them are located on the Pacific Rim.) The deal would eliminate more than 18,000 taxes (tariffs) the other countries place on exported goods from the U.S., which The White House argues would make American-made products more affordable for people in member countries.

Though trade agreements all begin with tariffs and open trade, this one also addresses issues of property rights, child labor laws, environmental standards, and access to the Internet. Its advocates say these regulations will be enforced with greater strength than in previous agreements, allowing American businesses to compete on a larger scale. But opponents of the agreement say it will harm our economy and hurt working families.

The Elites’ Private Warning

Be careful as you examine the following chart. It’s easy to draw the wrong lessons.

And don’t be misled by the front-page story in today’s Wall Street Journal: “Central banks around the world are selling U.S. government bonds at the fastest pace on record, the most dramatic shift in the $12.8 trillion Treasury market since the financial crisis.”

It’s tempting to think, Yes! Finally, the Chinese and the Russians are dumping Treasuries! Nobody wants them anymore! Soon Treasury prices will crash and interest rates will soar and those spendthrifts in the White House and Congress will finally get what’s coming to them! The deficit will spin out of control and Uncle Sam will be broke! No more welfare, no more crony capitalism, no more stupid foreign wars! Yes, things’ll get ugly for a while, but we can finally get a fresh start! We’ll be a free country again!

Sorry, it doesn’t work that way...

Blackstone Fined $39M Over Fee Practices

Private equity giant Blackstone Group has agreed to pay nearly $39 million to settle charges it failed to fully inform investors about fees it charged fund-owned companies and a legal services arrangement with its primary law firm.

The settlement with the U.S. Securities and Exchange Commission is the second stemming from the agency’s increased authority over the private equity industry. In June, KKR agreed to pay $30 million to resolve charges that it improperly allocated more than $17 million in expenses.

Of the Blackstone settlement, nearly $29 million will be distributed to affected fund investors, the SEC said in an administrative order announced Wednesday.

“Full transparency of fees and conflicts of interest is critical in the private equity industry and we will continue taking action against advisers that do not adequately disclose their fees and expenses, as Blackstone did here,” Andrew J. Ceresney, director of the SEC’s Division of Enforcement, said in a news release.

President Obama, We Need a $15 Minimum Wage

Terrence Wise lives in Kansas City and is a member of the National Organizing Committee of the Fight for $15 movement. The fast-food employee who introduced the president at the Summit on Worker Voice explains why he’s fighting for workers’ rights

Almost every day, I go to work at a McDonald’s or a Burger King to serve food and keep our customers happy. I am paid $8 per hour.

I’m raising three daughters, and I work hard for them. Like a lot of people across the country, I try to build up my community. I want my family and my city to end up better off than I am.

But like a growing number of ordinary people around the U.S., I worry about whether my kids will get a fair shot at a decent life. We worry that major corporations like the one I work for can manipulate the rules in their favor. We see how CEOs demand that their employees work more and accept less, which has knocked the entire country off balance.

UBS on why US rates will rise this year

U.S. consumers spent nearly all savings from cheaper gas prices

United States consumers already spent nearly all of the extra dough they saved from lower gas prices. It seems motorists took on the Keynesian, statist economic lesson: spend, spend, spend.

According to the JPMorgan Chase Institution, 80 percent of the savings from lower gas prices has been spent. As gas prices hit a low of $2.03 a gallon earlier this week, and hitting $2.25 this week, Americans decided to use that money at the store instead of setting it aside in a savings account or putting it in investments.

The think-tank organization of the financial institution reported that the savings rate started a four-month increase at the end of 2014. This led many economists and financial experts to conclude that consumers were taking advantage of lower gas prices by putting into piggy banks and emergency funds. Unfortunately, it was spent elsewhere.

Global Financial Meltdown Coming? Clear Signs That The Great Derivatives Crisis Has Now Begun

Warren Buffett once referred to derivatives as “financial weapons of mass destruction“, and it was inevitable that they would begin to wreak havoc on our financial system at some point. While things may seem somewhat calm on Wall Street at the moment, the truth is that a great deal of trouble is bubbling just under the surface. As you will see below, something happened in mid-September that required an unprecedented 405 billion dollar surge of Treasury collateral into the repo market. I know – that sounds very complicated, so I will try to break it down more simply for you. It appears that some very large institutions have started to get into a significant amount of trouble because of all the reckless betting that they have been doing. This is something that I have warned would happen over and over again. In fact, I have written about it so much that my regular readers are probably sick of hearing about it. But this is what is going to cause the meltdown of our financial system.

Many out there get upset when I compare derivatives trading to gambling, and perhaps it would be more accurate to describe most derivatives as a form of insurance. The big financial institutions assure us that they have passed off most of the risk on these contracts to others and so there is no reason to worry according to them.

Taxpayers fund $2.2 million for walking app, studies about UV exposure

Taxpayers shelled out more than $2.2 million since last year for a Golden, Colorado company to study the dangers of sun exposure at work, to use social media to convince mothers about dangers tanning beds pose to their daughters and to create a smartphone app to help “Latinas” find nearby walking partners, National Institutes of Health grants show.

The three grants were provided between 2014 and this year to research firm Klein Buendel, but Independence Institute president Jon Caldara said the tax money is being wasted.

“Think of how lives could be changed with that money,” said Caldara, who heads the free-market institute in Denver, after Watchdog.org read him the grants. “It’s ridiculous and deserves to be lampooned.”

The most expensive study, costing taxpayers nearly $1.4 million over two years, will research the effectiveness of the Sun Safe Workplaces program, which encourages public works staff, parks workers and cops to avoid sun exposure.

Friday 10.09.2015

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.