Gold is the spectre haunting our monetary system
In 1933, US President Franklin Roosevelt issued an executive order making ownership of gold a crime. FDR relied on the Trading with the Enemy Act of 1917 as statutory authority for this edict. Since the US was not at war in 1933, the enemy was presumably the American people.
In 1971, US President Richard Nixon ended convertibility of US dollars into gold by trading partners of the US. Closing the gold window was said by Nixon to be temporary. Forty-five years later the window is still closed.
In 1973, the G7 nations, and the IMF demonetised gold. IMF members were no longer required to hold gold reserves. Gold was now just another commodity. The view of the monetary elites was that gold was dead.
Yet, like Banquo’s ghost, gold insists on its seat at the monetary table. The US holds 8,133 tonnes of gold. The members of the eurozone and ECB hold 10,788 tonnes. China reports holdings of 1,788 tonnes, but actual holdings are closer to 4,000 tonnes, based on reliable data from Hong Kong exports and Chinese mining.
Sport Chalet to shut down entire chain of stores
Launched in La Cañada Flintridge as a ski and tennis shop in the late 1950s, Sport Chalet announced Saturday it is closing all stores and has stopped selling goods online.
“While our online store is no longer available, all Sport Chalet stores will remain open for several weeks, offering customers the opportunity to use their remaining rewards and gift cards, and to take advantage of great sales,” the sporting goods chain announced Saturday on its website. “Thank you for your loyalty over the years. We hope to see you at our store closing sales.”
What began as one specialty sporting goods location expanded into a string of about 50 full-service sporting goods stores across the Southland, Northern California, Arizona and Nevada and Utah. The company went public in 1992.
Connecticut-based Vestis Retail Group acquired Sport Chalet in 2014 for about $17 million. Sport Chalet had about $52.5 million in debt at the time and hadn’t turned a profit in years. The company operates 13 stores in Los Angeles County, seven stores in Orange County, four in San Diego County, three in Riverside County, three in San Bernardino County and three in Ventura County.
Real Economic Earthquake Is In Our Future, Not Our Past
Obama Has Collected $18,764,164,000,000 in Taxes--$124,003 Per U.S. Job
Over the course of the 86 full months that President Barack Obama has completed serving in the White House—from February 2009 through March 2016--the U.S. Treasury has collected approximately $18,764,164,000,000 in tax revenues (in non-inflation-adjusted dollars), according to the Monthly Treasury Statements issued during that period. (President Obama was inaugurated on Jan. 20, 2009.)
That equals approximately $124,003 for each of the 151,320,000 persons who, according to the Bureau of Labor Statistics, had either a full- or part-time job during March 2016.
During the same 86-month stretch of the Obama presidency, the total debt of the federal government increased from $10,632,005,246,736.97 to $19,264,938,619,643.07, according to the Treasury. That is an increase in the debt of $8,632,933,372,906.10—or approximately $57,051 for each of the 151,320,000 people with jobs as of March.
If the Treasury succeeds in collecting the full $3,335,502,000,000 in reveneus that the White House Office of Management and Budget estimates it will collect in fiscal 2016 (which will end on Sept. 30), Obama will become the first American president whose Treasury collected more than $20,000,000,000,000 in taxes (in non-inflation adjusted dollars) during his time in office.
Embrace the gig economy, don't fight it: Case
If you've ever requested an Uber or rented a room on Airbnb, then you are among the millions of Americans participating in the "gig" economy.
These digital marketplaces provide customers with convenience and workers with the freedom to create their own schedule. Yet that freedom comes at a cost. Many of these jobs don't offer benefits such as sick leave or reimbursements, allowing companies to save on employee expenses.
"We've seen this for more than a decade in sort of the white collar jobs. People who are teachers might tutor, [and] lawyers who become moms maybe can do legal work on the side," AOL co-founder Steve Case told CNBC's "On the Money." "We're just now seeing that broaden and giving that same opportunity to people in other fields."
More people are entering the gig economy workforce, more than 50 million in 2015, an increase of 700,000 from 2014, according to figures from the Freelancer's Union, calling into question how the new economy should be regulated. While the vast majority of workers in this economy have other sources of income, about 15 million Americans say working these gigs makes up more than 40 percent of their pay.
The Fed is Lying About the Recovery... and Inflation
The Fed has backed itself into a corner.
For seven years now we’ve been told the US is in a recovery. However, if this were the case, the Fed would have started raising rates years ago (likely in 2012). No other recovery on record saw the Fed maintaining ZIRP for so long.
There is simply no factually credible argument for why rates should be ZIRP if the economy is expanding. You cannot have claims of a “recovery” or expansion while ZIRP is in place. ZIRP is meant to be an emergency policy meant to pull the economy out of a severe recession, NOT a long-term program.
In pictoral form, the red line in the chart below negates the blue line. There is simply NO WAY that GDP expansion is even close to accurate if rates have to be kept at zero for six years after the recession “ended.”
Indeed, even the CPI data suggest the Fed is deceptive. Core CPI is well above the Fed’s “target” rate of 2%. Even a child could look at this chart and see the breakout occurring. The Fed claims to be “data dependent” but all of the data has hit levels at which the Fed claimed it would raise rates again!
Why low oil hasn’t helped the economy
Many analysts had anticipated that a dramatic drop in oil prices such as we’ve seen since the summer of 2014 could provide a big stimulus to the economy of a net oil importer like the United States. That doesn’t seem to be what we’ve observed in the data.
There is no question that lower oil prices have been a big windfall for consumers. Americans today are spending $180 B less each year on energy goods and services than we were in July of 2014, which corresponds to about 1 percent of GDP. A year and a half ago, energy expenses constituted 5.4 percent of total consumer spending. Today that share is down to 3.7 percent.
Consumer purchases of energy goods and services as a percentage of total consumption spending, monthly 1959:M1 to 2016:M2. Blue horizontal line corresponds to an energy expenditure share of 6 percent.
But we’re not seeing much evidence that consumers are spending those gains on other goods or services. I’ve often used a summary of the historical response of overall consumption spending to energy prices that was developed by Paul Edelstein and Lutz Kilian. I re-estimated their equations using data from 1970:M7 through 2014:M7 and used the model to describe consumption spending since then. The black line in the graph below shows the actual level of real consumption spending for the period September 2013 through February of 2016, plotted as a percent of 2014:M7 values. The blue line shows the forecast of their model if we assumed no change in energy prices since then, while the green line indicates the prediction of the model conditional on the big drop in energy prices that we now know began in July of 2014.
Brazilian congress votes to impeach president Dilma Rousseff
Brazilian president Dilma Rousseff suffered a crushing defeat on Sunday as a hostile and corruption-tainted congress voted to impeach her.
In a rowdy session of the lower house presided over by the president’s nemesis, house speaker Eduardo Cunha, and with 314 of the 513 deputies having backed impeachment, the government conceded it would not win enough votes to secure Rousseff’s position.
As the outcome became clear, Jose Guimarães, the leader of the Workers party in the lower house, conceded defeat with more than 80 votes still to be counted. “The fight is now in the courts, the street and the senate,” he said.
Watched by tens of millions at home and in the streets, the vote – which was announced deputy by deputy – saw the conservative opposition comfortably secure the two-thirds majority needed to advance the impeachment to the upper house. Just 110 voted against the removal of the elected head of state less than halfway through her mandate.
Are You Ready for $5 Gas?
In a version of "hit 'em while they're down,' the Obama administration has unleashed a slew of new regulations targeting U.S. oil and gas production. These include costly methane emission rules on all new and existing wells, reversals of promised offshore acreage leasing, a de facto freeze of leasing on federal lands, and burdensome EPA restrictions of fracking. Then there is Obama's recent budget proposal of a $10-per-barrel surtax on top of the high taxes and royalties already paid by oil companies. Just as low oil prices are driving hundreds of oil companies out of business, Obama is piling on in an apparent effort to drive even more into bankruptcy.
Restrictions on drilling don't hurt consumers so much when the world is awash in oil, as it has been since 2014. The problem is that prices don't remain low for long. Low prices result in reduced investment, which results in less production. And less production results in higher prices. As every economist knows, commodities are cyclical businesses. A wise national energy policy would anticipate volatility by promoting lower production costs in both good times and bad, thereby reducing future price shocks. Obama's energy policy has pursued the opposite path.
Oil prices appear to be at an inflection point, and the administration hasn't a clue as to how to respond. With cuts in non-OPEC production of 730,000 barrels per day in 2016, according to an OPEC report issued Wednesday, global surplus production is expected to end within two months.
After that, stockpiles may begin to decline, unless global demand continues to lag, as it has of late. On the demand side, the OPEC report simply states that "there is great uncertainty." Obama's response to this uncertainty – as to the clear evidence of declining production outside OPEC – is politics as usual. When production is high, he attacks fossil fuels. When production is low, he continues to attack them.
Keiser Report: Spy vs. spy
Buy A House In Detroit For $1,000
The Detroit Land Authority continues to auction $1,000 houses, as the city has an estimated 40,000 houses which need to be torn down. The results of the program has been depressing. The Authority’s Build Detroit Initiative, the face of the auction project is a tiny boat against a massive tide.
The buildingdetroit.org sites has a large number of homes up for auction within the next few weeks, with a base price of $1,000. Most are small, at 1,000 square feet or under. Many are in terrible shape. Buying one of these houses comes with a number of restrictions, which makes the process relatively difficult:
Winning bidders are required to fix up the homes promptly. The following requirements will have to be met:
Within 72 hours of auction, you must pay 10% of the bid price. If you are not seeking lender financing for the sale or rehabilitation of the property, you will need to close on the sale within 30 days of the winning bid. If you are seeking lender financing for the sale or rehabilitation of the property, you must close on the sale within 60 days of winning the bid. Within 30 days of closing, you must provide Land Bank with an executed construction contract for rehabbing the property (if you are rehabbing the property yourself, you must provide receipts for purchased rehab materials and applications for necessary permits). Within 6 months of closing (9 months for properties in designated historic districts), you must submit a copy of a certificate of occupancy or certificate of acceptance and have an occupant living in the home.
Americans are more likely than the rest of the world to believe hard works pays off
Big cars, high-volume sports, immense portion sizes. The US is different from other countries in many ways. Here’s another: Americans are more likely than most people to believe that hard work pays off.
In a 2014 Pew Research Center survey of 44 countries, 73% of Americans deemed hard work “very important” to getting ahead in life. Only 60% of Brits, and 49% of Germans, shared the sentiment, with the global median hovering at around 50%.
The same survey found that 57% of Americans polled disagreed with the notion that success in life is determined by forces outside one’s control, versus the global median of around 38%.
The nation’s religious fervor also sets it apart from other wealthy, developed countries, with over half of Americans claiming that religion is “very important in their lives,” according to Pew. (In comparison, fewer than 20% of Brits felt the same.)
IMF, World Bank focus on economic risks of Brexit, tax evasion
Trump, Cruz predict stock market crash
The two leading Republican candidates for president warn the U.S. stock market is trading at an alarming level. On Friday, Ted Cruz predicted a stock market crash "will be coming."
Donald Trump calls it a "terrible time" to invest. "We're in a bubble right now," Trump says. It's a high degree of fear from a party that is normally viewed as pro-business and pro Wall Street.
Trump recently told The Washington Post that America is on track for a "very massive recession." Blame the Fed?
Cruz and Trump blast America's central bank, the Federal Reserve, for pumping up the stock market to unrealistic levels. "The problem with using monetary policy to juice the system is that it creates bubbles," Cruz said Friday on CNBC's Squawk Box. Trump has similar concerns. In October he told The Hill that he thought Americans were "being forced into an inflated stock market and at some point they'll get wiped out."
The Revolt of the Debt Slaves Has Started
Ah yes, the Millennials.
If we could just get consumers to borrow more so that they spend money they don’t have on things they don’t need in order to boost GDP and corporate profits, all would be fine. That’s the current meme among economists.
Since 68.5% of US GDP is related to personal consumption expenditures, boosting consumer spending is seen as crucial. Since wages at the lower 75% are crummy and have not been rising enough to keep up with inflation, the only other way to prod consumers into spending more is to bamboozle them into borrowing more and blowing this moolah instantly.
Cutting interest rates to zero was supposed to have helped that noble process (though consumers see those zero-rates inexplicably only on their savings and not on their debts). So that process of growing GDP by loading up consumers with debt, which worked for decades, has stalled.
College Student Spends $2500 of Financial Aid on Trip To Thailand with Girlfriend
Classic Recession Signals Are Flashing Red
Those that were hoping for an “economic renaissance” in the United States got some more bad news this week. It turns out that the U.S. economy is in significantly worse shape than the experts were projecting. Retail sales unexpectedly declined in March, total business sales have fallen again, and the inventory to sales ratio has hit the highest level since the last financial crisis. When you add these three classic recession signals to the 19 troubling numbers about the U.S. economy that I wrote about last week, it paints a very disturbing picture. Virtually all of the signs that we would expect to pop up during the early chapters of a major economic crisis have now appeared, and yet most Americans still appear to be clueless about what is happening.
Even I was surprised when the government reported that retail sales had actually fallen in March. Consumer spending is a very large part of our economy, and so if consumer spending is slowing down already that certainly does not bode well for the rest of 2016. The following comes from highly respected author Jim Quinn…
"The Ivy League educated “expert” economists expected March retail sales to increase by 0.1%. They only missed by $6 billion, as retail sales FELL by 0.3%. They have fallen for three straight months. At least gasoline sales were strong, as prices have risen 22% since mid-February. "
"hat should do wonders for the finances of American households. If you exclude gasoline sales, retail sales fell by 0.4%. As the chart below reveals, the year over year change in retail sales has been at or near recessionary levels for most of 2015, and into 2016."
200M Barrels Of Oil Sit In Idle Tankers Waiting To Unload At Chinese Ports
There is a new drama on the oil front: those who have it in excess can’t get it to those who want it—at least not quickly enough for everyone to be happy.
A recent Reuters story reveals that tankers carrying around 200 million barrels of crude are waiting to leave or dock at ports around the world, creating “the world’s biggest traffic jam.”
One would think that producers and consumers of the world’s most abundant commodity would have had time enough to adjust their port capacities, but apparently this is not the case. Middle East ports are choking on the oil waiting to be loaded onto tankers and shipped to Asia, and Asian ports are forcing tankers to wait for weeks before unloading because their infrastructure can’t cope with these amounts of oil.
Of course, there’s also floating storage, but the oil there has been on the decline since March. Let’s pause for a second. Why would there be a traffic jam if demand is lagging behind supply? Producer ports may well be stuffed with oil, but why other ones? The answer is: China’s teapot refineries, which are gobbling up as much oil as they can get their hands on.
Finally happened: Commercial logos on players' jerseys
A new look is coming for the NBA. Beginning next year, the NBA will become the first of the four major professional sports leagues to start selling advertising space on players' jerseys.
Spectators got a sneak peek at what the sponsorships will look like when Kia Motors bought ad space on this year's all-star game jerseys.
The ads will only measure a little more than six square inches on the uniforms. But they could have a long-lasting impact on how fans see the game. "It's advertising creep," says Mike McCarthy, a writer for "Sporting News" and "The New York Times." "It's the creeping commercialization of every nook and cranny of our lives," McCarthy said. "But you know, we've held out for a long time."
In Europe, this has gone on for years and teams are often named for their corporate sponsors. "This is a new revenue stream," said McCarthy. "People aren't watching commercials like they used to. ... It's all about money."