Central Banks Hit the Panic Button
Buried in the hyperventilating about Janet Yellen’s “will she or won’t she” speech last Friday was a far more important development… It happened at the same Federal Reserve conference Yellen spoke at in Jackson Hole, Wyoming. But it received almost zero attention. And the monetary criminals pulling levers at global central banks want to keep it that way. You see, the conference was titled “Designing Resilient Monetary Policy Frameworks for the Future”…But the influential central bankers in attendance veered from that script to issue a desperate plea for help that few in the mainstream media picked up on…
Look, there’s no other way to cut it: Central banks are screwed. They’re out of bullets. They know it. And they also know the rest of the world will catch on soon enough… They’ve cut interest rates 667 times since Lehman Brothers collapsed in 2008. They’ve also purchased $25 trillion of financial assets. That’s larger than the gross national product of the U.S. and Japan, the first and third largest economies in the world, respectively.
And through their sadistic negative interest-rate schemes, there’s now $8 trillion of negative-yielding sovereign debt. That’s 54% of all sovereign debt. And $13 trillion in negative yielding global bonds. That’s 28% of all bonds. The markets have been flooded with historic torrents of liquidity to supposedly spur economic growth. But none of these experiments have prevented the world’s developed economies from flatlining…
Look at the numbers: U.S. GDP in June was just revised down to an anemic 1.1%. That’s down from 1.6% the previous quarter. The eurozone economy expanded just 0.3% last quarter, down from 0.6% the previous quarter. And Japan showed no growth in June, down from 0.5% the previous quarter. The developed economies are failing. And even China’s world-beating economy is now sucking fumes. Chinese economic growth fell below 7% in 2015. That’s the first time below that mark since the Great Recession in 2009. So what can central bankers do to “stimulate” the global economy into more bubbles now that it’s tapped out? The answer is nothing. And that has elites in a state of panicky fear…
Ford Offers 72 Month 0% Financing as Car Loan Defaults Surge
Ford Motor Co. (NYSE: F) offers a 0% annual percentage rate (APR) for six years (72 months) across its entire model line, presumably to clear out 2016 models. The deals come at a time when car finance defaults, blamed to some extent on long loan repayment programs, have skyrocketed. Ford has taken on at least some degree of trouble because of the trends.
The “Ford Freedom” sales event requires buyers to use Ford Credit APR financing. Ford Credit is part of Ford. That means it takes on either the benefit or problems with the loans. To put the loans in perspective, they will be paid through 2022. According to Carfax:
Don’t be fooled into thinking depreciation slows much after the first year. The fact is, new cars continue to lose value for four more years, averaging a decline of 15-25 percent per year. On average, a new car will lose 60 percent of its total value over the first five years of its life.
For some buyers, the final year or two of six years financing are ones when the sale of the car likely will not cover the balance of the car loan. While not a perfect comparison, the problem is not unlike an underwater mortgage.
Nearly 10,000 Workers Sue Chipotle For Unpaid Wages
Current and former Chipotle (CMG) employees claim that the company made them work extra hours "off the clock" without paying them. It's a practice known as wage theft, and Chipotle is allegedly doing it all over the United States.
"Chipotle routinely requires hourly-paid restaurant employees to punch out, and then continue working until they are given permission to leave," according to the class action lawsuit known as Turner v. Chipotle. It's named after a former Chipotle manager in Colorado, Leah Turner, who claims she had to work without pay and was told to make workers under her do the same in order to meet budget goals.
Chipotle denies any wrongdoing and says the case has no merit. The company says it has paid all wages it owes employees. Briana Alexander is one of the nearly 10,000 workers who have joined the lawsuit. She worked at a Chipotle in Miami, Florida for about a year, starting in the fall of 2013. "Behind the scenes, [Chipotle] is not always what it seems," Alexander told CNNMoney. "I can say I have worked off the clock."
Alexander says she was forced to stay late numerous times at her store. If the workers weren't done by midnight or 12:30am, they were clocked out but told to keep working until the job was finished, even though they were no longer getting paid. Alexander also claims she worked 12-hour shifts on some days, but was clocked out after her shift time ended even though she actually continued to work on busy days.
U.S. economy near the danger zone?
Are Central Bankers Coming to a Bitter End?
Central bankers these days are seriously trapped. They cannot now reverse their policies for that means they have to admit that they have failed. This is why the Yellen is not so eager to move to negative rates and has continued to take the view that rates must be normalized (raised). That is far more serious than you might imagine. To even entertain backing down from negative interest rates means they have to admit that Keynesian/Marxist economics has completely failed and therein socialism, which is based upon the very principle that government CAN and is CAPABLE of managing the economy. This is the real question presented in the American presidential elections, yet nobody will articulate it in this manner. Hillary still preaches the same failed socialist agenda as if government can even do anything other than attack people who earn more money as did Emperor Maximinus of Rome, but pretend to give it to those who produce less.
Just before Paul Volcker became Federal Reserve Chairman (August 6, 1979 – August 11, 1987), he delivered his Rediscovery of the Business Cycle in 1978 (published on May 3, 1979 hardback). If you Google this book, you will see our site comes up first. You can find used copies around $500. Why is this book so rare? Because before Volcker became Fed Chairman, he told the truth.
“The Rediscovery of the Business Cycle – is a sign of the times. Not much more than a decade ago, in what now seems a more innocent age, the ‘New Economics’ had become orthodoxy. Its basic tenet, repeated in similar words in speech after speech, in article after article, was described by one of its leaders as ‘the conviction that business cycles were not inevitable, that government policy could and should keep the economy close to a path of steady real growth at a constant target rate of unemployment.”
This “New Economics” was all about empowering government to manipulate and control the economy. Even Larry Summers, who is the father of Negative Interest Rates, has publicly admitted that government cannot forecast economic declines. Implicitly, he too is conceding that the “New Economics” has failed and his negative interest rates is now bankrupting pensions and has underwritten government debt like never before.
Federal Student Loan Mess Is Worse That Government Pretends
Government-backed student debt is big business: About one in six U.S. adults has a student loan owned or guaranteed by taxpayers, and the feds pay their contracted loan servicers and debt collectors close to $2 billion annually to counsel borrowers on their repayment options and collect monthly payments on nearly $1.3 trillion of federal student debt.
The U.S. Department of Education updates the public every three months on how borrowers are faring with their federal student loans. Bloomberg crunched the numbers on where the federal student loan portfolio stood as of June 30. Here’s what we found.
Late payments, when measured by loan balances in arrears, have fallen significantly in recent years. In 2013, a quarter of student loans were at least 31 days late. Delinquency rates have steadily dropped since then, falling to about 19 percent as of June 30.
The figure likely reflects the Obama administration’s expansion of generous repayment plans that let borrowers make monthly payments based on how much they earn, rather than how much they borrowed, and improved service by federal loan contractors.
Millennials hate 'dealing with people,' and that's a major threat to fast-food workers
Many millennials hate interacting with people, according to a new survey. Nearly a third of people 18 to 24 prefer ordering from the drive-thru at restaurants because "they don't feel like dealing with people," according to a study by Ohio-based Frisch's Restaurants, which owns and franchises 120 Big Boy Restaurants.
That's bad news for fast-food employees. It gives restaurant chains an added incentive to invest in automation technology, such as digital tablets that allow customers to buy food without human interaction.
Many restaurant chains, such as McDonald's and Panera Bread, are already heavily invested in automation. Both have rolled out digital tablets at restaurants nationwide. The technology has been praised for helping to improve customer service speed and accuracy. But it also threatens to eventually replace human workers — especially as labor costs rise, according to analysts and labor activists.
Now with the millennial generation aging, restaurants will face added pressure to automate the ordering process. Andy Puzder, CEO of Hardee's and Carl's Jr., told Business Insider in March that he's observed millennials' distaste for social interaction in his restaurants.
'Fiscal crisis' warning as deficits rise, debt set to hit $20T next year
While the staggering national debt has virtually disappeared as a 2016 campaign issue amid White House assurances the problem has faded, D.C.’s budget scorekeepers have issued a stark warning that the red ink is growing once again – increasing the likelihood of a full-blown “fiscal crisis.”
A fresh estimate from the Congressional Budget Office projects this year’s deficit – the annual budget shortfall – will spike to $590 billion. That’s higher than a previous estimate, and up 35 percent over last year. Further, the CBO’s numbers show the total national debt hitting $20 trillion next year.
The debt would then soar over the next decade and beyond, leading to “serious negative consequences,” the report warns, including ever-higher interest payments that would crowd out other areas of the budget.
“The likelihood of a fiscal crisis in the United States would increase,” the CBO report, issued last week, said. “There would be a greater risk that investors would become unwilling to finance the government’s borrowing needs unless they were compensated with very high interest rates.” In the near-term, the report said the 2016 shortfall grew because of lower-than-expected revenue and some early payments that will have to be made this year.
Germany Sells Out Of Safes As Savers "Lose Faith In Banks"
It is no secret that one of the most admirable qualities of the German public - in addition to its striking propensity for thrift in the aftermath of Weimar - is its stoic patience and pragmatism when dealing with adversity. However, over the past month, we grew increasingly confident that said patience would be tested, if only when it comes to matters of monetary trust vis-a-vis the local, neighborhood bank. First it was the news that Raiffeisen Gmund am Tegernsee, a German cooperative savings bank in the Bavarian village of Gmund am Tegernsee, with a population 5,767, finally gave in to the ECB's monetary repression, and announced it’ll start charging retail customers to hold their cash. Then, just last week, Deutsche Bank's CEO came about as close to shouting fire in a crowded negative rate theater, when, in a Handelsblatt Op-Ed, he warned of "fatal consequences" for savers in Germany and Europe - to be sure, being the CEO of the world's most systemically risky bank did not help his cause.
That was the last straw, and having been patient long enough, the German public has started to move. According to the WSJ, German savers are leaving the "security of savings banks" for what many now consider an even safer place to park their cash: home safes.
Indeed, as even the WSJ now admits, for years, "Germans kept socking money away in savings accounts despite plunging interest rates. Savers deemed the accounts secure, and they still offered easy cash access. But recently, many have lost faith." We wondered how many "fatal" warnings from the CEO of DB it would take, before this shift would finally take place. As it turns out, one was enough.
To be sure, the Germans are merely catching up to where the Japanese were over half a year ago. As we wrote in February, "look no further than Japan’s hardware stores for a worrying new sign that consumers are hoarding cash--the opposite of what the Bank of Japan had hoped when it recently introduced negative interest rates. Signs are emerging of higher demand for safes—a place where the interest rate on cash is always zero, no matter what the central bank does.
America The Debt Pig: We Are A ‘Buy Now, Pay Later’ Society – And ‘Pay Later’ Is Rapidly Approaching
If you really wanted to live like a millionaire, you could start doing it right now. All you have to do is to apply for as many credit cards as possible and then begin running up credit card balances like there is no tomorrow. At this point, I know what most of you are probably thinking. You are probably thinking that such a lifestyle would not last for long and that a day of reckoning would eventually come, and you would be exactly right. In fact, anyone that has ever had a tremendous amount of credit card debt knows how painful that day of reckoning can be. To mindlessly run up credit card debt is exceedingly reckless, but unfortunately that is precisely what we have been doing as a nation as a whole. We are a “buy now, pay later” society, and our national day of reckoning is approaching very, very quickly.
Often we like to focus on our exploding national debt, but household debt is out of control too. In fact, the total amount of household debt in the United States is now up to a whopping 12.3 trillion dolllars…
In the second quarter, total household debt increased by $35 billion to $12.3 trillion, according to the New York Fed’s latest quarterly report on household debt. That increase was driven by two categories: auto loans and credit cards.
We throw around words like “trillion” so often these days that they often start to lose their meaning. But the truth is that 12.3 trillion dollars is an astounding amount of money. It breaks down to about $38,557 for every man, woman and child in the entire country. So if you have a family of four, your share comes to a grand total of $154,231, and that doesn’t even include corporate debt, local government debt, state government debt or the gigantic debt of the federal government. That number is only for household debt, and there aren’t too many Americans that could cough up their share right at this moment.
US Will Meet Target Of 10,000 Syrian Refugees
The United States will meet President Barack Obama's goal of admitting 10,000 Syrian refugees into the country, the White House announced on Monday. Obama sought a sixfold increase in the number of Syrian refugees provided safe haven in the United States. After a slow start, the administration was able to hit the goal about a month early and just a few weeks before Obama convenes a summit on refugees during the 71st session of the United Nations General Assembly.
Obama would have been hard-pressed to make the case for other countries to do more with the U.S. failing to reach a goal that amounts to only about 2 percent of the 480,000 Syrian refugees in need of resettlement. Millions more Syrians have fled to neighboring states such as Jordan, Turkey, Lebanon, and to countries in Europe since the civil war broke out in 2011.
"On behalf of the president and his administration, I extend the warmest of welcomes to each and every one of our Syrian arrivals, as well as the many other refugees resettled this year from all over the world," National Security Adviser Susan Rice said in a statement.
Rice said the summit in New York City will highlight the contributions the U.S. and other nations have made to help refugees. She said the U.S. has committed to working with the international community to increase funding for humanitarian assistance and double the number of refugees afforded the opportunity to resettle.
The Fed has bungled its messaging
Ridiculous Headlines Say Surging Consumer Spending To Drive US Economic Growth
The BEA reported that Personal Income rose and Consumer spending rose in July. The headline numbers were +0.4% and +0.3% respectively. These are seasonally adjusted month to month % gains. The numbers were also revised up for May and June. Let’s party! The Wall Street Journal headlined: U.S. Consumer Spending Rose in July
WSJ reporters Anna Louie Sussman and Ben Leubsdorf clownishly regurgitated the Establishment line. Consumer spending rose for the fourth straight month in July, a sign that domestic consumption could continue to drive U.S. economic growth over the second half of the year. Four consecutive months of solid spending pointed to continued confidence on the part of the consumer, supported by steady job gains and low interest rates and gasoline prices.
The BEA estimates the data on the basis of throwing seasonally adjusted component data into a stewpot, where it mixes and cooks the numbers. The resulting stew is impossible to analyze on a not seasonally adjusted basis, as I like to do.
For most economic data, the actual, not seasonally adjusted data trend is easily visible with a few simple techniques of technical analysis. These include trendlines connecting the highs and the lows of the monthly data. These techniques enable us to easily see trend changes as they happen. We can also use the year to year rate of change as a basis for showing whether the trend is stable, accelerating, or decelerating.
Gold Is Doing Something It's Only Done Twice In The Past Decade
Gold may be worth more than what traders have decided is the spot price.
There's a correlation between gold price changes and the rate at which central banks bought assets to expand their balance sheets, according to Deutsche Bank's Michael Hsueh and Grant Sporre.
And the pace of balance-sheet expansion — by 300% since 2005, according to the analysts — indicates that gold could be worth more.
They wrote in a note on Friday: "Let us be clear; we are not saying that gold will trade up to USD1,700/oz in the near term, but when viewed against the aggregated balance sheet of the 'big four' global central banks (the Fed, ECB, BoJ and PBoC) the argument can be made if we view gold as a currency, the metal is worth closer to USD1,700/oz, versus the spot price of USD1,326/oz."
Why ObamaCare failed
ObamaCare enthusiasts have long been in denial that their beloved law is unworkable in anything resembling its current form. But with the recent news that the insurance giant Aetna is joining the stampede of companies leaving ObamaCare's exchanges, reality may finally be sinking in.
It may be too little, too late. Worse, ObamaCare has become such a quagmire that the proposed "fixes" may create an even bigger mess.
Aetna is bailing out of the individual exchange market in 11 of 15 states because, like its peers, it was sustaining losses to the tune of $300 million annually and sees no prospects of improvement. Aetna's exit will leave a good chunk of its million or so customers scrambling for new coverage when enrollment begins in a few months. This wouldn't have been such a big deal if there were other good options. But that's not the case given that other big insurers, including UnitedHealthCare and Humana, have also quit in many states, and for identical reasons. Worse, 70 percent of ObamaCare's co-ops — non-profit plans that were given government loans on sweet terms to compete with private companies — have also collapsed. In huge swaths of states such as the Carolinas, only one monopoly insurer is left. And in Pinal County, Arizona, there are none!
But even in states that have more options, many of them involve plans that cut their teeth in the Medicaid business. This means that their business model involves giving people all the lavish benefits required by the law on paper. However, in practice, patients don't receive them because the authorized network of providers and hospitals is exceedingly narrow.
Fannie Mae: Strong Labor Market Decreases Foreclosures
A new study from Fannie Mae shows that the jobs market correlates closely to the number of homes in foreclosures, according to an article by Susanna Kim for The Home Story. Foreclosure starts decreased in July to the lowest level since May 2005, according to ATTOM Data Solutions, the new parent company of RealtyTrac.
Banks started on the public foreclosure process on 36,863 residential properties nationwide in July, a decrease of 5% from last month and 19% from last year. While the drop in foreclosures can be tied to many different economic factors, the main reason is the jobs market, Fannie Mae Economist Orawin Velz said, according to the article.
From the article: Velz says one of the most common reasons people fall behind on mortgage payments is unemployment. “If you lose your job, it doesn’t take much to stop paying your mortgage,” she says.
The jobs market improved over the past several months, posting higher-than-expected gains each month. Total non-farm payroll employment increased by 255,000 in July, far above what experts predicted, and by 287,000 in June, according to a report from Bureau of Labor Statistics.
Bill Clinton talking like Trump on immigration
Justice Dept.: Firing migrant workers with expired papers is discrimination
The Justice Department released a video this week encouraging companies not to terminate immigrants after their employment authorization expires, and indicated that doing so is a form of discrimination.
The video is shot in a dimly lit office, where two actors discuss whether their fictional company should let go of some Salvadoran employees who have failed to provide updated paperwork on their immigration status.
After a discussion about whether retaining the workers would violate the law, a woman says, "I think this is an exception to that rule," and recommends that they contact the the Office of Special Counsel for Immigration Related Unfair Employment Practices before making any decisions. "We want to follow the rules but we don't want to lose these workers or discriminate against them," she concludes. "They are too valuable."
The video then tells viewers that the federal government has extended employment authorization by six months for people from El Salvador with Temporary Protected Status, a benefit designed to help foreign nationals who are considered unable to safely return to their home. The Justice Department claims requesting additional work-authorization documents from these workers may violate a provision in the Immigration and Nationality Act (INA) designed to protect individuals from excessive employer demands based on their nationality.
Facebook Fires Humans, Hires Robots To Tell You What’s Hot Today
If you’ve ever looked at the Trending Topics in the top right of your Facebook newsfeed, just to see chatter about some video game character right next to news about a massive natural disaster, you’ve probably thought, “who on earth is deciding what shows up here?” Well, now it’s what, not a who, and it… might still need some refining.
As Quartz reports, Facebook suddenly ousted its human Trending team on Friday and replaced them with an algorithm. The robots will decide what is trending, and they will tell you.
As recently as last week, the Trending module was helped out by a Trending Team of about 15-20 people. Here’s how it worked, according to Facebook:
An algorithm determined what was popular enough to bubble up to the top, and then real people looked at the topics the system churned up in order to determine if it was actually a thing tied to a real event (as opposed to something that will always trend, like “lunch”). Those people would write up a quick and snappy summary, categorize the news (“sports” vs “entertainment”), mark it as high priority if the ten biggest major media outlets were covering it, and then move on.
How High Will Silver’s Value Increase Compared To Gold During The Next Crash?
Many investors believe the value of silver will surge much higher in percentage terms than gold during the next financial and economic crash. I happen to belong to that group of savvy silver investors, and for good reason. If we look at the charts below, the data proves that silver is certainly the undervalued asset. Thus, it will likely make silver one of the best investment strategies of a lifetime.
While some readers may say that this is just more hype, the fundamentals provide us a pretty clear picture. That is, if we are able to understand the entire system and how things are likely to unfold.
I want to say a few words about several emails I have received from my readers over the past week. After I wrote the article, UNLOCKING GOLD’S TRUE VALUE: The Economic Code – Finally Revealed, some readers finally understood that ENERGY is the critical factor in providing value to most goods and services in the world.
When they find out that ENERGY is everything, the LIGHT-BULBS go off and they finally get the vital importance. It took me years of research before it made sense to me. Still, the majority of my readers likely just skip over it and continue to see energy as just a part of the economy. Even mainstream analysts separate the Energy Sector from the Health Care Sector or from the Manufacturing Sector or even from the Service Industry… so on and so forth. They look at energy as just a mere segment of the market. For some strange reason, they believe the Health Care, Manufacturing and Service sectors are run by Fairies or Elves. I can assure you, all sectors of the market are run by energy. Take energy away, and Apple’s products and stock price would get flushed down the toilet.