Headline News Archives

Monday 02.13.2017

Where have America’s working men gone?

As of September 2016, some 11.4% of American men of “prime working age” (25-54) were defined as outside the labor force. That’s seven million men who are either unemployed or not seeking a job. The proportion has been growing steadily for decades, from around 3% in the mid-1960s, but the trend has accelerated markedly over the past 20 years.

Of all the economies in the OECD, a club of developed countries, only Israel and Italy have more men outside the labour market. Strikingly, a smaller percentage of US men are working now than in 1940, near the end of the Great Depression. Against a backdrop of steady economic recovery from the financial crisis, the case of the country’s “missing men” is a “quiet catastrophe”, reckons economist Nicholas Eberstadt. The collapse of work for men is a “grave ill”.

A range of sociological explanations have been proposed. A few more men are in full-time education. A very few more are stay-at-home dads. Some are former prisoners who find it hard to get a job after release from prison. By some estimates, 12% of adult US men have been convicted of a felony, not including current prisoners; some 34% of non-participating men have criminal records.

Others posit that the opportunity cost of not working has fallen. It is easier to get disability benefits; more men remain unmarried and don’t have families to support; and technological advances (the internet, video gaming) have arguably made unemployment less lonely and socially debilitating. No doubt all of these explanations play some part in the trend. But the underlying cause is economic.

Death of the Dollar: A New World Money

Since the creation of the international monetary system, the divide over financial and monetary policy has always been present. With the evolutionary rise in power of a new world money, everything has changed. Understanding the history, construction and evolution of this new world money system will allow you to better position yourself for the future.

The U.S dollar has been the world’s reserve currency for decades since World War II. The dollar has been synonymous with strength, stability and general confidence in the United States Government. That is all in question now.

Studying the real history of the special drawing rights (SDR), what some have coined as new world money, will allow you to understand exactly why the evolution of the international currency matters even more today.

Following the conclusion of World War II, the United States held an estimated 60% of all of the world’s gold reserves officially on record. As one of the few regions that was geographically isolated from being a physical battleground, war-inflicted countries had high demand for U.S goods and services that were continuing to produce at high levels without major disruption. The massive flow of capital both in and out of the United States in the 1940s left considerable fear of dollar shortages in order to account for demand.

IMF chief Lagarde 'optimistic' about US economy

International Monetary Fund chief Christine Lagarde on Sunday (Feb 12) voiced optimism for US economic growth under President Donald Trump but warned it could herald trouble for the rest of the world.

"From the little we know, and I will insist on the little we know, because this is really work in progress ... but from the little we hear, we have reasons to be optimistic about economic growth in the United States," Lagarde said at the annual World Government Summit in Dubai.

Lagarde predicted tax reform and more investment in infrastructure were both likely under Trump, whose Thursday teaser of fresh tax cut proposals pushed Wall Street stocks to new records.

The Dow, Nasdaq and S&P 500 all closed up 0.6 per cent on Thursday after the new US president promised a "phenomenal" tax cut plan would be unveiled within two or three weeks. Yet the IMF chief did not mince words in raising concern over the global repercussions of a boon in the US economy. "Now that's the good news," said Lagarde. "The more worrying news, if you will, is that it will have consequences on the rest of the world, and we are seeing it."

Crisis Coming and Trump Will Be Blamed

Did The Fed Just Experience A “Margin Call” Moment?

For those not familiar, the reference is attributed to a scene from the movie “Margin Call” where John Tuld (Jeremy Irons) makes the sanguinary argument for dumping its portfolio of toxic holdings immediately against contradictory arguments that it’ll be seen as panicking by others with the line, “It’s not panicking if you’re first.”

That one line in fiction contains volumes as to the reality about how Wall Street, bankers, and more view the world. Which is precisely why when I read the news that Federal Reserve member, and “Regulatory Point Man” Daniel Tarullo resigned unexpectedly I just sat back in my chair thinking, “Of course he did” as that afore-mentioned scene came to mind.

The reason why this sudden departure (remembering his term expires in 2022 some 5 years away) inspired thoughts as the above that will surely be met with retorts such as “tinfoil wearing, conspiracy type” nonsense was not just the timing. But his resignation letter. To wit:

“After more than eight years as a member of the Board of Governors of the Federal Reserve System, I intend to resign my position on or around April 5, 2017. It has been a great privilege to work with former Chairman Bernanke and Chair Yellen during such a challenging period for the nation’s economy and financial system.”

Amazon warns that trade protectionism could hurt business Inc (AMZN.O) warned on Friday that government actions to bolster domestic companies against foreign competition could hurt its business, in a possible reference to U.S. President Donald Trump's "America First" agenda.

In a routine description of regulatory risks in its 2016 annual filing, the world's largest online retailer said "trade and protectionist measures" might hinder its ability to grow.

That language has not appeared in Amazon's warning about government regulation in at least the past five annual filings with the U.S. Securities and Exchange Commission. However, the Seattle-based company has cited trade protection in those filings as a risk to its international sales and operations specifically.

The new Republican president has made job creation a cornerstone of his policies, threatening to impose tariffs on imports so companies produce and hire within the United States. Republicans in Congress also have a plan to target imports while excluding export revenue from U.S. corporate income tax, known as a border adjustment tax.

Patriotic pushback: Trump fans to hold 'Spirit of America Rallies'

While anti-Trump protests have dominated media coverage of the president’s early weeks in office, his supporters are pushing back with a series of Spirit of America Rallies.

Scheduled for Feb. 27 and March 4, the rallies “are inclusive, non-partisan, and open to anyone supporting President Trump in his efforts to bring back manufacturing jobs to America, put the security of our nation ahead of political correctness, improve our infrastructure, revitalize the inner cities and secure our nation’s borders,” according to rally organizer Debbie Dooley, a national co-founder of the tea-party movement.

Dooley told Breitbart News that the anti-Trump Women’s March the day after Trump’s inauguration prompted many calls to her from Trump supporters, including many women.

The callers urging her to organize a show of force among the “silent majority” nationwide, Breitbart reported. She explained the events are not tea-party rallies and expressed hope that Democrats who voted for Trump, known as the “Trumpocrats,” will step up to support the president as well.

$1,084,840,000,000: Taxes Set Record Through January; $7,133 Per Worker

The U.S. Treasury hauled in a record of approximately $1,084,840,000,000 in tax revenues in the first four months of fiscal 2017 (Oct. 1, 2016 through Jan. 31, 2017), according to the Monthly Treasury Statement released Friday.

That is up about $5,616,000,000 in constant 2016 dollars from the approximately $1,079,224,000,000 in constant 2016 dollars that the Treasury collected in the first four months of fiscal 2016.

Tax revenues from previous years, as reported in the Monthly Treasury Statement for January of each year, were adjusted to 2016 dollars using the Bureau of Labor Statistics Inflation Calculator.

Despite collecting a record $1,084,840,000,000 in tax revenues in the first four months of this fiscal year, the federal government turned around and spent $1,241,780,000,000 in those same four months—and ended up running a deficit of $156,939,000,000.

Trump Taking On Corruption & Lawlessness

Greek Debt And European Disorder

Fresh concerns about Greece’s debts have prompted new worries across Europe. But another compromise looks likely—European leaders can ill afford a full-blown Greek crisis amid so much regional political uncertainty.

Yields on Greek debt surged this week as the International Monetary Fund (IMF) released a scathing review of the third Greek bailout agreed in the summer of 2015 (Display). In that deal, Greece’s European Union (EU) partners and the IMF realized that there was no way to reconcile their differences on debt sustainability and the associated need for debt relief. Instead, they agreed to “kick the can down the road” (again) in order to avoid Greece exiting the euro.

The result is that the IMF still helps monitor the program to satisfy countries like Germany and the Netherlands. Yet it refuses to commit new funding until debt sustainability has been assured, via far deeper debt relief than the EU is willing to consider—particularly during a crucial electoral period.

But this fudge creates a recurring problem. Greek debt sustainability—and, ultimately, its place in the euro—comes into sharper focus every time we approach a program review, which normally precedes the release of fresh funding. That’s exactly what happened in the first review last spring and it’s happening again now during the second review.

Disney hikes some U.S. park ticket prices up to 4.9 percent

Walt Disney Co (DIS.N) is raising the admission price for its U.S. theme parks by as much as $5 for some single-day tickets.

One-day prices at Walt Disney World in Orlando, Florida, will stay flat or rise up to 4.9 percent, the company said. A single-day, adult pass to the Magic Kingdom will cost between $107 to $124 depending on the time of year. Disney last year started using a three-tier structure that charges visitors more during peak periods to help spread out crowds.

The $124 price for peak season, which is over major holiday periods, spring break and parts of the summer, is unchanged. At Disneyland Resort in Anaheim, California, the new single-day prices range from $97 to $124.

Price increases are an annual tradition for Disney parks. The company offers discounts through annual passes and multi-day tickets, which also will change and in some cases decrease. A two-day ticket at Walt Disney World will decline by $3 to $199, for example.

Yellen Urged to Nix Stress Tests as GOP Pursues Banks' Wish List

Republican lawmakers are increasingly going after a target that’s long triggered compliance headaches for Wall Street: the Federal Reserve’s annual assessments of whether banks can survive financial meltdowns.

Senator Pat Toomey urged Fed Chair Janet Yellen to abolish the stress tests, arguing they’re hampering lending, burdening banks with unnecessary costs and hurting economic growth. House Financial Services Committee Chairman Jeb Hensarling also wants the tests dialed back, and is considering proposing legislation that would subject banks to exams every other year, rather than annually.

“Some institutions are spending hundreds of millions of dollars for annual compliance,” Toomey, a Pennsylvania Republican, wrote in a letter to Yellen. “The Federal Reserve should terminate” its exams, he added.

Toomey also said Yellen should consider halting all rulemaking. He wants her to hold off until the Treasury Department completes a review of financial regulations requested last week by President Donald Trump and until the new administration can fill vacancies at the Fed.

Myth-Busters: Those Who Depend on The Fed

Sears, Kmart Drop 31 Trump Home Items From Their Online Shops

Major U.S. retailers Sears and Kmart this week removed 31 Trump Home items from their online product offerings to focus on more profitable items, a spokesman said on Saturday.

The decision follows retailer Nordstrom Inc's announcement this week it had decided to stop carrying Ivanka Trump's apparel because of declining sales, prompting President Donald Trump to take to Twitter to defend his daughter. White House spokesman Sean Spicer characterized the Nordstrom move as a "direct attack" on the president's policies.

Neither Sears nor Kmart carried the Trump Home products in their retail stores, a Sears Holdings Corp spokesman said. Kmart is a wholly owned subsidiary of Sears Holdings.

"As part of the company's initiative to optimize its online product assortment, we constantly refine that assortment to focus on our most profitable items," spokesman Brian Hanover said in a statement.

Mexico Blames Removal of Convicted Felon on ‘New Reality’ in U.S.

Mexican authorities are using the deportation of a woman in Arizona as a platform to promote their consular services pointing to a “new reality” with “severe applications of migration control.”

U.S. Immigration and Customs Enforcement arrested and deported Guadalupe Garcia de Rayos, an illegal immigrant from Mexico, who had a standing deportation order. The woman was arrested late last week when she went to the ICE office for her yearly check-in.

In their statement, Mexico’s Foreign Relations Ministry did not mention that Garcia de Rayos, while non-violent, had been convicted in 2009 on the felony charge of impersonation for having used someone else’s identifying information to work illegally in the country. According to various news articles, the woman was originally arrested in 2008 during a workplace raid. In 2013, federal authorities issued a removal order and the woman was granted supervised release until authorities were able to deport her.

While everyday Mexico receives hundreds of deported individuals and the case of Garcia Rayos is considered common, the Mexican government issued a statement on Garcia Rayos’ case claiming that the case showed a “new reality” in the United States.

Pacific Gas and Electric Co. Is Using H-1B Visas to Send IT Jobs Overseas

Pacific Gas and Electric Co. is cutting some 70 IT jobs and sending them to a contractor based in India. This kind of outsourcing has become commonplace in the IT industry. It has been criticized for years, and there is a lot of talk in Washington, D.C., these days about how to slow it down.

PG&E is sending the jobs overseas as part of a larger restructuring plan to cut costs. The San Francisco Business Times first reported on how the offshoring of jobs to India fits into the plan.

“The focus is really on doing the right thing for our customers and the right thing for the business over the long term. That’s what this is about, and it’s what drove the decision,” PG&E spokesman Brian Hertzog said.

PG&E workers are training their replacements, some of whom are here in the U.S. on H-1B work visas. Hertzog says the jobs are related to older IT applications that PG&E wants to phase out. The H-1B workers are going to learn the ropes for the IT jobs and then send those tasks to workers in India who are far cheaper. “It’s knowledge transfer,” said Paul Almeida, president of the AFL-CIO’s Department for Professional Employees, and a critic of the practice. “They’re just transferring the knowledge of the business to these foreign countries through these outsourcing firms.”

The Great Recession is still with us, top forecaster says

It’s been 10 years now since the credit bubble began to unravel, and we’re still struggling to recover from the Great Recession that resulted from that collapse. John Silvia, chief economist at Wells Fargo Economics and the winner of MarketWatch’s Forecaster of the Month contest for January, says that in important ways we’ll never really recover.

The Great Recession permanently altered the economy of the United States, Silvia and his colleagues argue in a new research paper: We are much poorer than we would be if the recession hadn’t happened. How much poorer? By one estimate, U.S. real gross domestic product has been nearly 10% lower, on average, for each of the past nine years, Silvia says, which means that (by my calculations) we’ve lost about $13.6 trillion in output.

Real disposable incomes are about $11 trillion lower over those nine years, amounting to a loss of more than $35,000 per person. That’s the equivalent of everyone in America getting laid off for 11 months.

It also means we’ve lost tens of millions of jobs, and hundreds of billions of dollars of investment. It’s permanently altered the character of the labor market. “Three generations were affected, each in a different way,” Silvia said in a phone interview. The older generation took a huge hit to their wealth, which was mostly in housing, but also in their retirement portfolios. Many of these older workers have had to delay retirement.

Neoliberalism Strikes Back

Shoppers weigh boycott calls as buying gets more political

Stormy Patterson makes a distinction between opinion and action as she surveys each new call to boycott Company A or support Brand B.

It's "silly" to penalize Under Armour over its CEO's praise of President Donald Trump, she says. Far more important is how a company behaves toward its customers or employees, especially if it has an impact on their rights.

"Hobby Lobby, I won't patronize them. I won't touch them. And I actually used to go there like once a week," said Patterson, who opposes the chain's refusal to pay for some kinds of birth control for its employees.

Long before Trump slammed Nordstrom for dropping his daughter's clothing and accessories line — spurring the president's supporters to call for a boycott of the department store — politically active consumers have used their purchasing power strategically. They could punish brands with which they disagreed, and reward those whose views aligned with theirs.

Consumer Spending "Pothole" Ahead: IRS Refunds Tumble As New Law Delays Payments

A period of consumer spending, retail sales and housing weakness may be imminent, after federal tax refunds tumbled by 78% in the early part of February compared to 2016, the result of a new law which requires the IRS to delay the printing of checks to households claiming specific tax credits. The reason for the slowdown is that in late 2015 Congress passed a law forcing the IRS to hold back refund checks related to the earned-income tax credit and the child tax credit until at least Feb. 15. The delay would reportedly give the IRS more time to match tax returns with income data on W-2s filed by employers. Allegedly, such payments had become a tempting target for identity thieves and unscrupulous tax preparers, who falsify tax returns to get thousands of dollars.

The IRS has told affected taxpayers that they shouldn’t expect to receive their refunds until Feb. 27 because of weekends, holidays and bank delays.

While the Joint Committee on Taxation projected the law would increase federal revenue by $779 million over a decade, it may result in a period of stagnant spending until the calendar effects are wrinkled out and US households get the money they are owed. According to a WSJ analysis, refunds paid through Feb. 3 were only $13.2 billion, down almost 80% from $58.6 billion through Feb. 5, 2016. Additionally, the average refund also declined, to $1,994 from $3,385.

While perfect comps are impossible as the 2016 data includes four more processing days, the number of returns is down just 24%, far less than the drop in refunds.

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