Headline News Archives

Thursday 06.23.2016

Donald Trump says the whole economy is 'rigged'

Donald Trump says the U.S. economy is rigged. If that line sounds familiar, it should. Bernie Sanders uses it constantly in his campaign. Sanders even devotes a section of his website to explaining the rigged economy.

As Trump bashed rival Hillary Clinton in a speech Wednesday for being a "world-class liar," he also sought to win over Sanders' supporters and the working class. "It's not just the political system that's rigged, it's the whole economy," Trump said, to much applause.

The middle class can't get ahead, Trump argued, because the system is controlled by big donors, big businesses and big bureaucrats who all want to keep wages down while enriching themselves. Trump vows he's the only one who can overhaul the system.

"Hillary Clinton's message is old and tired. Her message is that things can't change. My message is that things have to change," Trump said. "We're asking Bernie Sanders supporters to join our movement." Few economists would go as far as Trump and Sanders (and Democratic Senator Elizabeth Warren) in saying the entire system is "rigged," but it's hard to deny some key facts about the U.S. economy: America's middle class is shrinking -A typical family is earning the same today as in 1996 -The majority of Americans believe their children will be worse off than them financially -Men, especially white men, have fallen out of the job market

IMF says U.S. should raise minimum wage, offer paid maternity leave and overhaul taxes

The International Monetary Fund downgraded its forecast for the U.S. economy this year and said America should raise the minimum wage to help the poor, offer paid maternity leave to encourage more women to work and overhaul the corporate tax system to boost productivity.

In its annual checkup of the U.S. economy, the IMF on Wednesday predicted 2.2 percent U.S. growth this year, down from 2.4 percent in 2015. In April, the international lending agency had forecast 2.4 percent growth for 2016.

Still, IMF managing director Christine Lagarde, citing a healthy job market, says “the U.S. economy is in good shape.” U.S. unemployment fell last month to an eight-year low 4.7 percent. Employers have added a solid 200,000 jobs a month over the past year.

The U.S. is growing faster than most other advanced economies. The IMF foresees 1.5 percent growth this year for the 19 countries that use the euro currency, and 0.5 percent growth for Japan.

High school graduates are way worse off today than 40 years ago

Several decades ago, regular American guys could get by with a decent job with a decent wage on just a high school diploma. But things are very different today.

In a hefty report on the long-term decline in prime-age male labor-force participation, the White House's Council of Economic Advisers shared a chart showing the ratio of high school graduate wages to college graduate wages from 1975 to 2014.

Rather than making almost as much as their college-educated peers as they did 40 years ago, workers with only a high school diploma today make only about half as much on average. As you can see below, the ratio dipped significantly since the 1970s. The relative wages of full-time, year-round workers with only a high school diploma fell from nearly 85% of the amount earned by those with at least a college degree to slightly above 55%.

There's also been a huge dip in prime-age male labor force participation in the same time frame. The fraction of men aged 25-65 who are working or actively seeking work has steadily dropped over the years.

Goldman Sachs Notifies Regulators of 98 New York Job Cuts

Goldman Sachs Group Inc. has told 98 employees in New York that their jobs are being eliminated, bringing the number of dismissals disclosed to state officials this year to at least 353.

The reductions are part of a third round of layoffs at the firm, the bank said in a notice with the state Labor Department dated June 21. An earlier document in April cited 146 cuts, and a March filing detailed 109 dismissals.

The employees, who worked across a variety of businesses, were notified in April, May and the first week of June, according to a person briefed on the cuts.

They will drop off the payroll from July to October, said the person, who asked not to be identified discussing personnel decisions. The bank had 36,500 total staff as of March 31, according to a financial filing. Goldman Sachs has been reducing staff as it seeks to weather a slump in trading and deal making.

What housing recovery? Appraisal volumes barely moved this month

More housing experts are challenging the notion this nation is in a sustained housing recovery. And, the latest appraisal numbers back those challenges.

The appraisal volume rose slightly from last week, but as we enter the summer season, the market is holding still and steady, according to the latest National Appraisal Volume Index from a la mode.

a la mode is an appraisal forms software company that provides its findings exclusively to HousingWire each week. The NAVI rose slightly at 0.3% from last week, a slight increase after last week’s jump of 16%. The four-week average growth remained flat at 0.0%.

As the summer begins, the market is unable to move because of inconsistent economic news, said Kevin Golden, a la mode director of analytics. While, in the last few years, the housing market improved, lack of inventory, high home prices and a shortage of inventory continue to plague homebuyers. In fact, as far as inventory goes, there is still room for two more years of expansion, said Managing Director Robert Curran in a webcast for Fitch Ratings, a financial information services company.

Gold Prices: A Summer Retreat Regardless of Brexit Outcome - CPM Group

Feds charge $900 million in fake medical bills, kickbacks and other health care fraud

The Justice Department announced Wednesday it had charged a record 301 people with schemes that defrauded government health programs by submitting $900 million in fraudulent health claims.

The announcement of the charges, called the largest takedown for Medicare and Medicaid fraud in history, was the result of a nationwide sweep that exposed alleged kickbacks, embezzlement and fake claims to the government programs that provide health care for the elderly and the poor. The allegations involved various kinds of fraud in diverse areas of health care, ranging from prescription drugs to home health care to physical therapy.

"They submitted dishonest claims, they charged excessive fees and they prescribed unnecessary drugs," Attorney General Loretta Lynch said at a news conference. "As this takedown should make clear, health-care fraud is not an abstract violation. It’s not a benign offense. It’s a serious crime."

The Justice Department called the sweep "unprecedented" in a press release. Last year, 243 people were charged with $712 million in false claims.

Yellen agrees it is too soon to take her ‘foot off the pedal’ to help labor market

Federal Reserve Chairman Janet Yellen on Wednesday said she agreed with the “basic thrust” of a congressman’s comments who told her it was too soon to take her “foot off the pedal” of stimulus designed to help improve the labor market.

During her testimony to the House Financial Services panel, Rep. Denny Heck, a Democrat from Washington, told the Fed chief: “I cannot shake the feeling it is way too premature to put out the mission accomplished banner on the aircraft carrier,” even though car and homes sales are strong, and the unemployment rate has fallen to 4.7%. The mission-accomplished banner is a reference to President George W. Bush’s infamous 2003 speech declaring victory in Iraq.

Heck said he thought his sense of unease was due to the slow 2.5% growth in wages in the expansion. This rate “is fairly de minimis” compared with the 4% growth in wages seen in the last recovery, Heck said.

“At the end of the day, most Americans, and even everybody on this [House Financial Services] panel, Democrats and Republicans, would like America get a pay raise,” Heck said.

IRS Admits To Illegally Seizing Bank Accounts; Agrees To Give The Money Back

It's the stuff of libertarian dreams. The IRS admits that it wrongfully took money from innocent citizens, and it gives the money back. This is actually happening to victims of a little-known form of civil asset forfeiture carried out by the IRS on the premise of "structuring" violations. In case you didn't know, depositing or withdrawing just under $10,000 from your bank account multiple times is viewed as suspicious and possibly criminal activity.

In a victory for lawmakers working to make it harder for the government to take property from innocent Americans, the Internal Revenue Service plans to give people who have had money seized over the last six years the chance to petition to get their money back, The Daily Signal has learned. According to a GOP source, the IRS told the House Ways and Means Oversight Subcommittee that it will send letters to everyone the agency seized money from for alleged structuring violations, which involves making consistent cash transactions of just under $10,000 to avoid reporting requirements, starting in October 2009.

One petition has already been granted, and others are likely to follow. The IRS has seized entire bank accounts with no notice or due process, alleging the owners sought to avoid federal bank reporting requirements. The aforementioned pattern of banking is described as "intentionally structuring cash transactions," and they call it a crime.

This nefarious provision of the Bank Secrecy Act is purportedly targeted at drug traffickers, money launderers and terrorists, but it has swept up hundreds of innocent people—including small business owners who lost everything because they deal wholly or partly in cash. Carole Hinders, owner of a Mexican restaurant in Iowa that only accepted cash, had her entire bank account of $33,000 seized even though she did nothing wrong. The IRS seized $63,000 from Randy Sowers, a dairy farmer in Maryland, because he was depositing under $10,000 into his bank account.

New Minimum Wage Laws Kill Opportunities for Low-income Youth

California, New York and now Washington D.C. are passing laws requiring small businesses to pay a minimum wage of $15 per hour. These laws are an attempt to provide an increased wage to workers, but at what cost? Some evidence suggests that these changes will mean disaster for the very people such they are trying to help: the young working poor. Meanwhile our economy is burdened with $19 trillion in federal debt, an incomprehensible tax code, unsustainable trade agreements and 80,000 pages of business regulation, all of which result in economic stagnation and slow growth of wages.

Today, 24 million small business are operating in America. They account for almost half of our country’s GNP. These businesses created 64% of our new jobs over the last 15 years, and are responsible for over half of our patents. They pay a remarkable one-third of all local, state, and federal taxes. In every corner of society, entrepreneurs are creating opportunity for American workers.

More than the astounding statistical punch of America’s small businesses, they are the soul of the towns and cities that criss-cross our country; the brave and dedicated entrepreneurs who risk everything for these businesses, the driving force of many local economies. Despite that fact, most startups—several million—go out of business every year. One main reason so many businesses fail is that the market will not support a good or service that does not benefit the consumer. That is simple fact and, many would claim, the inherent justice of the market economy.

But another reason for failure exists—and that is the systemic burden many countries impose on entrepreneurs in the form of regulations. From the onerous 79,000 pages of tax code and the massive regulations a business owner must navigate, this system often steals a business’ first breath before most consumers even know it exists. Today, more regulations are hitting the entrepreneur than ever before, including higher minimum wage laws passing around the country.

Middle Class Jobs That Will Be Gone Soon

Unemployment may have returned to pre-recession levels, but the middle class jobs Americans used to rely on to get by are nowhere to be found. A significant number of new jobs added since the 2008 economic meltdown are in low-paying industries like food service and home health care, a recent Wall Street Journal analysis found. At the same time, many traditional middle-class jobs, like those in construction and manufacturing, have vanished.

The news isn’t all bad. The U.S. economy has also added well-paying jobs in information services, management and consulting, and software development, the WSJ’s research found. But there’s no doubt that many of the jobs that once provided a secure middle-class income to millions of Americans no longer exist.

Some – especially government jobs – have vanished due to budget cuts, while others have been shifted offshore or eliminated when technology made workers obsolete. And the worst isn’t over yet, at least in some industries.

Though the job market is expected to grow by about 7% between 2014 and 2024, according to data from the Bureau of Labor Statistics (BLS), the growth won’t be shared equally across all industries. While certain fields, such as nursing and accounting, are looking at double-digit job growth, others are expected to shrink dramatically. The endangered jobs include many that pay enough to push someone into the middle class. (A family of four needed a household income of at least $48,000 to qualify as middle income in 2014, according to the Pew Research Center.)

Sanders supporters may vote for Trump over Clinton

11 million Americans dedicating half of income to pay the rent

Thanks to the Federal Reserve and Janet Yellen, housing affordability is gradually becoming a major problem for millions of Americans all over the country. Due to the skyrocketing costs of renting, millions of renters spend at least half of their income toward housing.

According to a new annual State of the Nation’s Housing Report from the Joint Center for Housing Studies of Harvard University, 11 million people dedicated at least half of their earnings to pay the rent. This incredible figure is now a record high. It doesn’t end there.

Researchers note that 21.3 million people are spending one-third or more of their paycheck to pay the rent, which is also a record high. As renting costs grow faster than wages – the average renter earns about $35,000 per year – it’s becoming harder to pay the rent.

Here is one excerpt from the report: “Cost burdens are nearly universal among the nation’s lowest-income households. Federal assistance reaches only a quarter of those who qualify, leaving nearly 14 million households to find housing in the private market where low-cost units are increasingly scarce. Low -income households with cost burdens face higher rates of housing instability, more often settle for poor-quality housing, and have to sacrifice other needs—including basic nutrition, and safety—to pay for their housing. These conditions have serious long -term consequences, particularly for children’s future achievement. ‘And compounding these challenges,’ added Daniel McCue, a senior research associate at the Joint Center, ‘residential segregation by income has increased. Between 2000 and 2014, the number of people living in neighborhoods of concentrated poverty more than doubled to 13.7 million.'”

Ex-Deutsche Bank Trader Admits to Rigging Libor in U.S.

A former Deutsche Bank AG trader secretly pleaded guilty in New York to conspiring to manipulate a benchmark interest rate tied to trillions of dollars in securities and loans and prosecutors said he agreed to help U.S. investigators in their probe.

Timothy Parietti, who served as a managing director of the bank’s money markets derivatives trading desk in Manhattan from January 2005 to December 2012, admitted on May 26 that he conspired to rig the London interbank offered rate for two years, according to a transcript unsealed Wednesday. The plea was reported earlier by Reuters.

“From early 2006 through approximately 2008, while in Manhattan, I was involved in a process of asking the Deutsche Bank employees who submitted the bank’s Libor submissions, to take my trading positions into account in making their Libor submissions, so that my trades might be more profitable,” Parietti told U.S. District Judge Paul Engelmayer, according to a transcript.

“I knew that this practice was dishonest,” Parietti said. “I participated in this dishonest practice and I accept responsibility for my role. I’m sorry for my conduct.” Parietti, who started at Deutsche Bank in 2000 and said he has an MBA degree from the Wharton School of the University of Pennsylvania, is cooperating with the government in a relationship that may last several years, Richard Powers a Justice Department lawyer, told the judge. Parietti isn’t to be sentenced until it’s over.

Are Buybacks Overly Driving Stocks?

Investors love dividends and buybacks. Now it seems that there is a larger focus on share buybacks than there is on dividends. In fact, Standard & Poor’s reported that S&P 500 companies with buybacks in the first calendar quarter of 2016 was up a sharp 12% from a year earlier — to a whopping $161.4 billion.

This $161 billion for the first quarter alone may sound impressive, and that is because it is the second largest buyback spending on record (versus $172 billion in the third quarter of 2007).

Another standout note is that for the 12-months ending March 31, there was a whopping $589.4 billion spent in stock buybacks – and that is a new record. For a quarter-over-quarter comparison, the first quarter’s $161.4 billion spent on share repurchases was up 10.6% from the $145.9 billion versus the fourth quarter 2015.

While S&P said that companies make good on their first quarter promise to support stocks, the earnings per share impact has continued to rise and that reached 28.2% of S&P 500 issues participating. As far as which buybacks are leading the charge, they are in tech and IT, health care, and others. Still, they are not all unilaterally raising buybacks. Energy stock buybacks were minor at $2.1 billion, down 20% sequentially and down almost 63% from a year earlier.

Sanders Staying in Race Could Cost Taxpayers Over $1 Million for Secret Service Protection

300,000 Muslims Have Registered to Vote Since 2012

There are an estimated 300,000 Muslims who have registered to vote since the 2012 presidential elections, according to the Council on American-Islamic Relations (CAIR).

This represents a 60 percent growth in Muslim registered voters, said CAIR, which is the nation's largest Muslim civil rights and advocacy organization.

Presumptive Republican nominee Donald Trump's calls for banning Muslims from entering the country and increasing surveillance at mosques following last year's terrorist attack by a Muslim couple in San Bernardino, Calif. has galvanized the community to become more politically active, The Washington Post reports.

Tensions skyrocketed again following similar Trump comments in reaction to the Orlando massacre earlier this month that was carried out by an American Muslim who declared his allegiance to the Islamic State.

Nurses Say "No" to Staffing by Robot: 5,000 Strike in Minnesota

Sometimes solidarity comes shaped like a popsicle. That's what one nursing assistant, on her way in for the evening shift at United Hospital in St. Paul, delivered to nurses picketing in blazing 95-degree heat.

Five thousand members of the Minnesota Nurses (MNA) walked out June 19, kicking off a weeklong strike at five Allina hospitals in the Twin Cities. The immediate sticking point is health insurance, but this is also a showdown over nurses' power on the job, as Allina pushes to hand over staffing decisions to a robot.

The company's unwillingness to budge an inch "leads me to believe they really are trying to get rid of the union," said 30-year nurse Gail Olson, a bargaining team member. "For patient safety sometimes we slow things down. They don't want to tolerate it anymore."

"If we don't stare Allina down, all these things we have right now will be gone," said post-anesthesia nurse Theresa Swehla. "If we give in on insurance, they have no incentive to bargain with us on any other issue." It's the biggest of four late-June strikes by National Nurses United affiliates, totaling nearly 10,000 nurses. Nurses are walking out at Kaiser's Los Angeles Medical Center, Brigham and Women's Hospital in Boston, and Watsonville Community Hospital in California.

IMF cuts US growth outlook

Inflation To Reach 720% In Venezuela As Melt Down Unfolds

The late president of Venezuela’s daughter, ambassador to the U.N., Gabriella Chavez is reported to have $4.2 billion in American and European banks. Alejandro Andrade, Venezuela’s treasury minister from 2007 to 2010 and a close associate of Chavez, has $11.2 billion sitting in an HSBC account in Switzerland. According to Business Insider quoting a report from the New York Times, 87% of Venezuelan’s don’t have enough money to buy food.

According to the same report, 72% of the average wage is set aside just for food; if you can get it, because most stores just don’t have any. A good few people have begun to smuggle food across the border from Colombia, but that has incensed Mr. Maduro, currently the Venezuelan president and Chavez protégé.

Over the last two weeks, the meltdown has picked up pace with food riots, protests and lootings country wide. There have been reports of attacks on Chinese owned businesses because the country is so deeply indebted to that country. As Ken Rapoza in a Forbes article states, “not even $50 oil can save Venezuela from itself.”

Inflation, according to the IMF, will reach 720% in 2016 and the GDP will contract by 8%. So the question is this, why hasn’t parliament, which is now controlled by the opposition party, impeached him? Well, believe it or not the judicial system backs him up and his constant ranting about the U.S. being at the bottom of all of their troubles. The rhetoric hits home with a lot on the left, effectively splitting the country. So can this situation continue?

Royal Bank of Scotland 'plans further 900 job cuts in UK

Royal Bank of Scotland plans to cut 900 jobs in the UK, taking the total number of staff losses to 2,700 over the past four months, according to Reuters.

The roles would be lost in IT and back-office positions across the bank’s operations as the bailed-out bank attempts to cut costs in its bid to return to the private sector.

At the start of the year, RBS had 64,000 UK staff in the UK but since then jobs have been cut across most of its operations in retail, commercial and investment banking, as well as its IT functions.

Ross McEwan, the chief executive of the 73% taxpayer-owned bank, set a target to save £800m in 2016. While he acknowledged this could result in job cuts, he didn’t specify how many roles would be lost.

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