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Monday 05.30.2016

"Economics with Attitude"

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.

Ronald Reagan Memorial Day Remarks at Arlington National Cemetery 1986

This Is Bad! Obamacare's 2017 Insurer Rate Requests Are Mostly for Double-Digit Hikes

The Patient Protection and Affordable Care Act (as it's officially known), or Obamacare (as it's more commonly known), has had quite the tumultuous ride since being signed into law in March 2010. Based on near-monthly data from the Kaiser Family Foundation's Tracking Poll, the vast majority of Americans don't like Obamacare. Despite this general apathy toward the health law of the land, it still managed to enroll 12.7 million people through its marketplace exchanges for the 2016 enrollment period -- and this doesn't count the millions of other individuals and families who've gained coverage in 31 states through the expansion of Medicaid coverage. According to both Gallup's first-quarter survey and the latest data from the Centers for Disease Control and Prevention (which also includes Medicare enrollees), uninsured rates are at their lowest levels on record as of Q1 2016.

But one problem has plagued Obamacare since day one: cost. Although Obamacare's regulations opened the door for many low-income individuals and families to get health insurance, many middle-class families are struggling with rising premium and deductible costs. And since the individual mandate requires everyone to purchase health insurance or pay a shared responsibility payment come tax time, it's leaving millions of Americans with a tough, seemingly no-win choice of struggling to meet their health insurance payments or paying a penalty.

Yet it's not just the consumer that's struggling. Many insurers who've been around for decades and fully understand how to turn a profit underwriting healthcare plans can't seem to make money under Obamacare. UnitedHealth Group (NYSE:UNH), the nation's largest insurer, is a prime example.

It's slated to lose around $500 million in 2016 alone from its Obamacare plans in 34 states (after losing $475 million in 2015), and it announced recently that it would be paring back its coverage to all but a handful of states in 2017. We also witnessed more than half of Obamacare's 23 approved healthcare cooperatives close up shop in 2016 due to excessive losses which have been blamed on enrollees who tend to be sicker and use their insurance more often.

Trump: Those in US illegally treated better than veterans

Donald Trump told a Rolling Thunder motorcycle rally on Sunday that the government often takes better care of people in the U.S. illegally than the nation's military veterans.

"We're not going to allow that to happen any longer," Trump told supporters gathered at the Lincoln Memorial Reflecting Pool. Trump did not back up his assertion. Congress and many states have written an assortment of laws and policies designed to restrict government services to people in the country illegally.

Nonetheless, the Rolling Thunder crowd, dedicated to remembering prisoners of war and those missing in action, cheered. It wa a sign, perhaps, that some veterans groups are stepping past their anger over Trump's comments last year in which he said he likes "people who weren't captured" in wars. That had been a dig at Arizona Sen. John McCain, who had been captured and held for more than five years during the Vietnam War. Trump claimed that McCain was a "war hero because he was captured." Trump has refused to apologize to McCain.

Many veterans groups were furious, but since then Trump has worked to try to repair the damage. He frequently honors veterans at his rallies and he has come out with a plan to overhaul the Department of Veterans Affairs. He also held a fundraiser for veterans' causes in place of an Iowa debate that he skipped. Still, Trump, who avoided the draft through a series of deferments, drew scrutiny for not immediately distributing the $6 million he'd claimed to raise, including $1 million he'd pledged himself.

Why The Next Black Swan Will Turn Into A Flock

I was on the phone the other day with a friend, who is also my accountant. We’ve been friends going on 30 years. Once in a while our discussions will veer off into what is commonly known as “shop talk” where we find we’ve suddenly gone from “just gabbing” to a multi-hour intense conversation about markets, the economy, and more. This past one was a little more of “the exception” rather than just the average swing into the generic.

What I discerned from many of his responses was just how inadequately prepared, justifiably frightened, as well as, an overwhelming sense of foreboding was lying right below the surface of those many might deem from the outside looking in as people of wealth, industry leaders, or people who are just assumed to be “well off.”

What was just as illuminating was how many he explained “are just rolling the dice, thinking nothing could be as bad as 2008.” The additional problem? They think (or believe) if it happens again all they’ll have to do is the same as they did last time e.g. Hunker down, wait for the storm to blow over. Rinse, repeat.

The problem (in my opinion) with that thinking is this: What you think you can do this time, has already been severely handicapped or, removed all together. And most have no clue. This is where the real issue lies for not only the Fed. per se, but rather, the entire political as it is currently known. For if a “black swan” does indeed hit once again in the very near future? Once people realize just how systematically they’ve been cut off from those “assumed” resources, especially during a crisis? All hell is going to break loose in ways the academic class, as well as, the political never envisioned. For when the time comes (and there is no more important “time” than that during a crisis of confidence) where words truly matter, and everyone no longer believes? Everything changes. And I do mean: everything.

EU referendum: Brexit 'an enormous economic problem'

Former prime minister Tony Blair has said leaving the EU would create "an enormous economic problem" following any Brexit vote on 23 June. And an online survey of economists for The Observer showed 88% of those who responded believed that EU withdrawal would be damaging for the UK economy.

There was a 17% response rate to the survey, from 639 economists. The Vote Leave campaign said economists had been wrong in the past about whether the UK should join the euro.

"There was a cosy consensus among economists supporting Britain scrapping the pound 15 years ago... they were wrong then and they are wrong now," Matthew Elliott, chief executive of Vote Leave, said in a statement.

Speaking on the BBC One Marr Show, former Labour leader Mr Blair, a Remain supporter, said "if we vote to leave we will suffer an immediate shock to our economy" and "years of uncertainty". He said this was not a hypothetical risk but "something you will see directly in people's jobs and living standards" and in the confidence of business to trade.

44% of Americans Over 50 Plan to Take Social Security before Retirement Age

Taking Social Security benefits early comes with a price, yet more than 4 in 10 Americans who are 50 and over say they'll dip into the program before reaching full retirement age. An Associated Press-NORC Center for Public Affairs Research poll (pdf) released Thursday found that 44 percent report Social Security will be their biggest source of income during their retirement years.

Full benefits begin at 65 or 66 for those born between 1943 and 1954. Americans can begin collecting as early as age 62, but with benefits reduced by up to 30 percent, according to the Social Security Administration. "One thing we know for certain is that claiming early can have long-term repercussions on your fiscal security as you age," said Gary Koenig, vice president of financial security at the AARP Public Policy Institute.

Koenig said benefits increase significantly for those who wait, rising around 8 percent more for each additional year past age 66 and up to 70, when benefits max out. "So we encourage people to delay as long as possible," he said. But waiting is a luxury many Americans don't have.

Ken Chrzastek of Chicago began drawing Social Security benefits at age 62 and pulled $50,000 out of an IRA after losing a retail job two years ago. He has been unable to find even part-time work. "Hiring a 62-year-old is a liability for a company," he said. The poll found that Americans 50 and over have multiple sources of income for retirement but that Social Security is the most common by far. Eighty-six percent say they have or will have Social Security income. More than half had a retirement account such as a 401(k), 403(b), or an IRA. Slightly less had other savings. About 43 percent had a traditional pension. The average age at which people expect to start or have started collecting Social Security benefits is 64. Just 9 percent said they would wait until after they turned 70.

Gregory Mannarino-It’s All Going to Collapse at the Same Time

Last Time this Happened, the Housing Market Collapsed

The most expensive home listed for sale globally is in Bel Air, a neighborhood in Los Angeles. Its main house is a 74,000-square-foot monstrosity. Among the special attributes: a 30-car garage. The compound, being erected by speculative builder Nile Niami, has an asking price of $500 million.

Seven of the world’s 10 most expensive listings are in the US. Four of them are in Los Angeles, including lesser abodes, such as a 38,000-square-foot mansion with a 5,300-square-foot master suite, several guesthouses, and staff housing, for $150 million.

Other countries have cool stuff for sale too, such as Pierre Cardin’s 13,000-square-foot “Le Palais Bulles” (“the Bubble Palace”) on the French Riviera, listed for about $450 million.

More supply of speculative super-homes is coming, including this gem, according to the New York Times: “Real estate agents and developers say a home under construction in Bel Air is likely to have more than 50,000 square feet of living space” and “the world’s largest safe.” It will be listed for “around $300 million.” For the first time ever, there are now officially 27 residences listed for sale globally with price tags above $100 million, according to Christie’s International Real Estate. That’s up 42% from last year, and up 125% from 2014!

Outrage as Dutch authorities give up to €10k to refugees to ‘go shopping’

Some Dutch residents are outraged after finding out that a few cities have been offering as much as €10,000 to refugees to buy furniture and other necessities, local media reported. Asylum seekers who get allocated to certain towns in the Netherlands may get as much as €10,000 to buy furniture for their homes, according to research carried out by the daily Brabants Dagblad (BD).

Talking to the local authorities, Brabants Dagblad found the sum of money varies in different municipalities. While Oisterwijk, South Netherlands offers as much as €10,602 for a family with two children, in other cities, such as Bernheze, Schijndel Veghel and Sint-Michielsgestel the same family may receive around €3,500. Boekel offers the smallest amount of €2,200.

BD also said that some cities require refugees to pay the sum back, while others, such as the most generous Oisterwijk consider the money “a gift."

Leader of the right-wing populist Party for Freedom (PVV), Geert Wilders said the whole situation is “discrimination” against Dutch residents, urging Dutch Deputy Prime Minister Lodewijk Asscher and the public prosecutor to address the issue. “Hey Asscher and Public Prosecutor, why don’t you address this discrimination? For a ‘refugee’ but not for the Dutch?” he tweeted.

Government Can’t Help; It Can Only Hurt - Ron Paul

Three recent stories regarding three government agencies — the IRS, the Transportation Security Administration (TSA), and the Department of Veterans Affairs (VA) — show why we should oppose big government for practical, as well as philosophical, reasons.

In recent months, many Americans have missed their flights because of longer-than-usual TSA security lines. In typical DC fashion, the TSA claims the delays are because of budget cuts, even though Congress regularly increases the TSA’s funding!

The TSA is also blaming the delays on the fact that few Americans have signed up for its “PreCheck” program. Under PreCheck, the TSA considers excusing some Americans from some of the screening process. Those who wish to be considered must first submit personal information to the TSA and pay a fee. Only a bureaucrat would think Americans would be eager to give the TSA more information and money on the chance that they may be approved for PreCheck.

The TSA is much better at harassing airline passengers than at providing security. TSA agents regularly fail to catch weapons hidden by federal agents testing the screening process. Sadly, Congress will likely reward the TSA's failures with continued funding increases. Rewarding the TSA’s incompetence shouldn’t surprise us since the TSA owes its existence to the failure of government to protect airline passengers on 9/11.

Whole Foods’ 365: Where Kiosks Replace Workers

Whole Foods may still be seen by shoppers as an alternative to corporate grocery chains, but the highly-profitable corporation just opened its first “365 by Whole Foods” in Los Angeles in an effort to use kiosks and robots to cut 60 percent of staffing costs and maximize profitability.

Promoted as a “chain for millennials,” the new “365” stores use about one-third less square footage than the company’s traditional 41,000-square-foot Whole Foods stores, but they also slash almost two-thirds of workers with robots and computerized kiosks.

It should not be surprising that the first “automated” WF store is being located in Los Angeles, where state and local governments have passed minimum wage laws that will push wages up by 50 percent in a series of steps to $15 an hour in 2022.

David Livingston of Wisconsin-based Retail Wire, which follows the grocery industry, told National Public Radio, “Most grocery stores can’t afford to pay people $15 an hour.” He believes the industry is driven by thin margins and high-volume turnover. Asked his opinion about government imposing high wage rates, he responded, “It doesn’t work.”

6 Giant Corporations Control The Media, And Americans Consume 10 Hours Of ‘Programming’ A Day

If you allow someone to pump hours of “programming” into your mind every single day, it is inevitable that it is eventually going to have a major impact on how you view the world. In America today, the average person consumes approximately 10 hours of information, news and entertainment a day, and there are 6 giant media corporations that overwhelmingly dominate that market. In fact, it has been estimated that somewhere around 90 percent of the “programming” that we constantly feed our minds comes from them, and of course they are ultimately controlled by the elite of the world. So is there any hope for our country as long as the vast majority of the population is continually plugging themselves into this enormous “propaganda matrix”?

Just think about your own behavior. Even as you are reading this article the television might be playing in the background or you may have some music on. Many of us have gotten to the point where we are literally addicted to media. In fact, there are people out there that become physically uncomfortable if everything is turned off and they have to deal with complete silence.

It has been said that if you put garbage in, you are going to get garbage out. It is the things that we do consistently that define who we are, and so if you are feeding your mind with hours of “programming” from the big media corporations each day, that is going to have a dramatic affect on who you eventually become.

These monolithic corporations really do set the agenda for what society focuses on. For example, when you engage in conversation with your family, friends or co-workers, what do you talk about? If you are like most people, you might talk about something currently in the news, a television show that you watched last night or some major sporting event that is taking place. Virtually all of that news and entertainment is controlled by the elite by virtue of their ownership of these giant media corporations.

American flag sales bask in new glory

In the flag business, summertime is like Christmas. After Memorial Day weekend, there’s Flag Day (June 14) and the Fourth of July, which all give sales a healthy boost. Eder Flag Manufacturing Co. in Oak Creek says it’s having a banner year. Sales are up 15% from a year ago, partly from 2016 being a national election year and political events needing flags.

An improved construction industry has helped, too, as new buildings often get new flags. “Most importantly, we feel there’s a rise in patriotism,” said Jodi Goglio, chief operating officer at Eder, a company that has been making flags for more than a century and dates to 1887 when the Eder family started a business making pillows, felt pennants, rag dolls and hunting jackets.

For many flag companies, sales soared following the Sept. 11, 2001, terrorist attacks. Eder made the flag that firefighters grabbed from a yacht and raised at New York’s ground zero on Sept. 11, a scene immortalized in a now iconic photo.

In the week following the attacks, Eder sold more than 3 million flag-related items — mostly flags but also things like flag lapel buttons. People stood in line for hours to buy a flag, and the company worked day and night to meet the demand.

CEO Launches Program to Pay for Employees' Weddings

Chieh Huang of Edison, New Jersey is the CEO of Boxed Wholesale, a company started in 2013 that offers free delivery of groceries and household products. The 34-year-old announced earlier this month that the company will pay for employee’s weddings—even though they are getting double the minimum wage, Huang told Epoch Times.

However, Huang has always been gracious to his employees. Last year, Huang announced that he would start paying for the college tuition for the children of his employees out of his own pocket.

So, why is the CEO of Boxed so nice to his employees? When Huang first start started his company, he had the idea that he wanted to “treat his employees right”—when employees were going through hardships in their personal lives, he wanted his company to be able step in and help as much as possible.

“Most companies are not as responsive,” Huang added. When employees are going through something, they just get a “good luck.” Huang’s kind offer—personally paying for his employees’ kids tuition—was because he and his older sister grew up poor. “Education broke that poverty cycle for my family,” he said. “If children don’t have access to education, it will be a perpetual cycle.” So far, Huang has paid for two separate students—”Four semesters are already paid for,” he said.

Here's Why All Pension Funds Are Doomed, Doomed, Doomed

There are limits on what the Fed can do when this bubble bursts, as it inevitably will, as surely as night follows day. It's no secret that virtually every pension fund is a dead man walking, doomed by central banks' imposition of low yields on safe investments, i.e. Zero Interest Rate Policy (ZIRP).

Given that both The Economist and The Wall Street Journal have covered the impossibility of pension funds achieving their expected returns, this reality cannot be a surprise to anyone in a leadership role.

Here's problem #1 in a nutshell: the average public pension fund still expects to earn an average annual return of 7.69%, year after year, decade after decade.

This is roughly triple the nominal (not adjusted for inflation) yield on a 30-year Treasury bond (about 2.65%). The only way any fund manager can earn 7.7% or more in a low-yield environment is to make extremely high-risk bets that consistently pay off. This is like playing one hand after another in a casino and never losing. Sorry, but high-risk gambling doesn't work that way: the higher the risk, the bigger the gains; but equally important, the bigger the losses when the hot hand turns cold.

Right Price for Surrender

America’s ‘recovery’ is baloney — we’re actually broke

The Federal Reserve last week confirmed what most Americans already know. We’re broke! In its latest report on the state of the US economy, the central bank said 46 percent of Americans would “struggle to meet emergency expenses of $400.”

“The new survey findings shed important light on the economic and financial security of American families seven years into the recovery,” said Federal Reserve Board Governor Lael Brainard. And that light is a flashing red beacon of warning.

While I love the direct nature of this survey question, I wonder what it would have been like if the number were $500. Would that have put the percentage of Americans over 50 percent? While this is — in today’s economy — a lot of money to practically half the country, it is not a vast sum.

In addition, 22 percent of those currently employed are working two or more jobs. So almost a quarter of those who are lucky enough to be working have to work two jobs to make ends meet before a $400 fender-bender forces them to go begging to their neighbor or borrow from a family member. Even this sad story of the “recovery” gets worse.

Students seeking sugar daddies for tuition, rent

Candice Kashani graduated from law school debt-free this spring, thanks to a modern twist on an age-old arrangement.

During her first year, she faced tuition and expenses that ran nearly $50,000, even after a scholarship. So she decided to check out a dating website that connected women looking for financial help with men willing to provide it, in exchange for companionship and sex — a "sugar daddy" relationship as they are known.

Now, almost three years and several sugar daddies later, Kashani is set to graduate from Villanova University free and clear, while some of her peers are burdened with six-digit debts. As the cost of tuition and rent rises, so does the apparent popularity of such sites among students. But are they really providing financial relief, or signing women up for something more exploitative and dangerous than debt?

Kashani believes such sites are a "great resource" for young women, but others say these arrangements smack of prostitution and take advantage of women in a vulnerable situation. Lynn Comella, an associate professor of gender and sexuality studies at University of Nevada Las Vegas, said that it is not unusual for students to turn to sex work such as stripping, prostitution or webcam work to pay for school. But the sugar daddy sites are relatively new, and she says not entirely upfront about what they are really about.

Monday 05.30.2016

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.