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Monday 04.17.2017

Among Large, Trouble Retailers, 1 Million Jobs At Stake

Among America’s eight most troubled large retailers, nearly one million jobs are at stake as the industry continues to collapse in on itself damaged by sales which have continued to dive, largest due to e-commerce. Not all of these jobs will be lost. However, as more and more companies in the industry go bankrupt and others slash tens of thousands of jobs, many of these positions are at extreme risk

According to the Retail 100, the 20 largest retailers, excluding fast food, include eight walking wounded which are chains which have already shown loses, closed stores and laid off employees, or are already, in the case of Sears Holdings (NASDAQ: SHLD), potential Chapter 11 candidates. These are Target (NYSE: TGT) with 300,000 employees, Macy’s (NYSE: M) with 125,000, Sears with 120,000, J.C. Penney (NYSE: JCP) with 80,000, Kohl’s (NYSE: KSS) with 25,000, Gap (NYSE: GPS) 115,000, Best Buy (NYSE: BBY) with 125,000, and Nordstrom (NYSE: JWN) with 80,000. Together, they have 970,000 employees.

These do not include jobs at retailers which are doing moderately well, for now. This includes Wal-Mart (NYSE: WMT) and Costco (NASDAQ: COST), both of which face the headwinds their weaker rivals do.

Granted, a large number of people at these companies do not work at stores or in warehouse or logistical operations which serve these stores directly. Headquarters and administrative staff, do, however, rely almost completely on their store performance for ongoing employment. The extent to which any of these jobs are at risk depends on how deep the problems becomes, and some experts believe it will become extremely deep.

Americans are swamped in $1 trillion of credit card debt

Rising credit card interest rates are pushing Americans deeper into a long-term debt trap. Americans now owe $1 trillion in credit card debt, with an average monthly balance of about $9,600 for borrowers who don’t pay their cards in full each month.

A year ago, a credit card holder making only minimum payments shelled out about $1,185 in annual interest, on average, said Ben Woolsey of CreditCards.com. After three quarter-point hikes by the Federal Reserve — a cost that banks pass on almost immediately to card holders — credit card borrowers are now forking over $1,254, or $69 more a year, in interest, on average.

Two more rate hikes are on the table for 2017, which would bring the total to $1,301, or $116 a year in interest. One hundred and sixteen dollars — the cost of a dozen roses on Valentine’s Day, or about 20 Cronuts — may not sound like much. But when consumers only make minimum payments, credit card balances balloon. And recent interest rate hikes come as ordinary Americans are already struggling with surging prices for essentials.

Income gains aren’t large enough to keep pace. Wages for an ordinary working person — for example, a nurse — have risen 21 percent in the past decade to about $2,412 a month, according to Bureau of Labor Statistics data.

Clothing brand Rue21 closing 400 locations across US

Clothing chain rue21 is shuttering nearly 400 stores across the country. The Warrendale, Pennsylvania-based company has been struggling to pay its bills, according to Debtwire earlier this month. "It’s true – we are closing some stores," the brand posted on Facebook Saturday. "It was a difficult but necessary decision. We still have hundreds of locations across the country, and our website rue21.com, open for business."

In 2002, rue21 filed for Chapter 11 bankruptcy protection under its former name, Pennsylvania Fashions, Inc. At the time, annual sales were estimated to be between $180 to $200 million. There are nearly 1,200 rue21 stores in 48 US states.

The brand currently doesn't have a list of all of its store closures, but you can find its locations here and check if a specific store is shutting down. 2017 hasn't been a great year for retailers. Eighty percent of Americans are now shopping online, leaving brick-and-mortar stores struggling to keep up. Last year, online retailer Amazon reported $136 billion in revenue, making it the eighth-largest US retailer based on annual sales.

JC Penney last month released a list of the 138 stores it planned to shutter as part of a campaign to reduce corporate costs and boost sales at a smaller number of locations. The closings have been delayed after a surge in sales.

DHS wants to make it easier to hire border guards

Delta Offering Travelers 20,000 Miles Or $200 To Atone For Days Of Delays

It might not be $11,000, but Delta Air Lines is trying to make up for massive delays and cancellations stemming from serious storms last week by offering some displaced passengers 20,000 miles or $200 vouchers.

The Atlanta Journal Constitution reports that Delta passengers who were “significantly affected” by the airline’s weather issues can expect to receive a bit of redress for the travel woes they experienced last week.

For those unaware of Delta’s recent issues, powerful storms led the airline to cancel around 3,000 flights beginning last week and into the weekend. In an update on Saturday, the airline apologized for the “disruption and continued difficulty reaccommodating those whose travel had been affected by the lingering impact of this week’s storms.”

In a letter to passengers, CEO Ed Bastian apologized for the days-long “major disruption,” adding that the airline’s “response was out of character.” “I have heard from many of you who feel like we let you down,” he said, adding that the company will review the disruption and “develop a plan to avoid a similar situation in the future.”

Almost anyone can get a car loan now — and that's not a good thing for the country

In late 2012, Kathleen Boluch needed a new car — a drunk driver had left hers totaled — but she knew it wouldn't be easy to get.

Boluch, who lives in Massachusetts, was freelancing and wasn't making much money. She didn't have much in savings. On top of that, she had a credit score below 500, which is considered very risky.

It took visits to numerous dealerships in the Boston area before she found one that would let her finance a car. "I remember they were on the phones and computers trying to find a bank to approve a loan for me," she told Business Insider of the people at the dealership. The salesman asked Boluch how much she made. "I was honest and told him that I am a freelance advertising copywriter and didn't make much," she said. "One guy shouted, 'Let's try Santander, they'll do it,'" she said.

To make it easier to get approved, the salesman told her that the dealership could hire her to do some of its advertising and that it would include that income on the loan application. "I was naive and got tricked by these jocular car salesmen," she said. The dealer was right — Santander Bank approved Boluch for the loan in October 2012. She drove home in a 2010 Chevrolet that cost $18,000. But she soon couldn't keep up with her monthly payments, and the dealership did not keep its promise of giving her work, she said. When she read a story in The New York Times about subprime auto loans and fraud, Boluch sent the clipping to the office of Massachusetts Attorney General Maura Healey. In late March, Healey's office announced it would receive $22 million from a settlement with Santander Bank over its subprime-auto-loan securitization.

Keep the change: Travelers left behind nearly $1 million in coins, currency in airports last year

In the rush to get through airport security checkpoints, it is not uncommon for distracted travelers to leave laptops, cellphones, jewelry and other valuable items in the plastic bins needed to scan their belongings.

As it happens, they also leave behind lots of accumulated cash. For its fiscal year 2016, the Transportation Security Administration reported that passengers left behind more than $867, 812.39 in coins and currency in the plastic bowls and bins at various U.S. airport checkpoints. That's about $102,000 more than the amount left behind in 2015, and the more than $484,000 left behind in 2008.

Over the years, the amount of change left behind by travelers at airports has been steadily climbing—jumping from about $489,000 in 2011 to almost $675,000 in 2014, and hitting $766,000 in 2015.

"There is no real way for TSA to know why this happens," spokeswoman Lisa Farbstein told CNBC. "It makes sense to point to an increase in the number of travelers as one likely reason, but other than that, we have no theories."

Delta OKs offers of up to $9,950 to flyers who give up seats

Delta is letting employees offer customers nearly $10,000 in compensation to give up seats on overbooked flights, hoping to avoid an uproar like the one that erupted at United after a passenger was dragged off a jet.

United is taking steps too. It will require employees seeking a seat on a plane to book it at least an hour before departure, a policy that might have prevented last Sunday's confrontation.

Those and other changes show airlines are scrambling to respond to a public-relations nightmare — the video showing airport officers violently yanking and dragging 69-year-old David Dao from his seat on a sold-out United Express flight.

Dao and three others were ordered off the plane after four airline employees showed up at the last minute and demanded seats so they could be in place to operate a flight the next day in Louisville, Kentucky. On Friday, a United spokeswoman said the airline changed its policy to require traveling employees to book a flight at least 60 minutes before departure. Had the rule been in place last Sunday, United Express Flight 3411 still would have been overbooked by four seats, but United employees could have dealt with the situation in the gate area instead of on the plane.

“Can We Avoid Another Financial Crisis?”

The short answer is 'no'. Economic theory is like a layer cake: Explanations within one layer make sense, but once you move to another layer, they no longer apply. Economist Steve Keen‘s new book “Can We Avoid Another Financial Crisis?” is an illustrative example.

The good news is that Keen accurately describes the current economic system; the bad news is that the answer to the question in the title is “no.” (And, despite what I believe is his accurate overall assessment, he misses, or skips over, a few key, hidden elements of economic theory.)

Keen defines his question within the layer of a corrupt banking system, the system we have now. He explains how it is that banks create money in the form of debt, and how this leads to financial instability. In the book he quotes the Bank of England’s own economists:

“In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans. Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.”

Uber's revenue hits $6.5 billion in 2016, still has large loss

Ride-hailing service Uber Technologies Inc [UBER.UL] generated $6.5 billion in revenue last year and its gross bookings doubled to $20 billion, the company said on Friday. Its adjusted net loss was $2.8 billion, excluding the operation in China it sold last year, Uber said.

As a private company, now worth $68 billion, Uber does not report its financial results publicly. It confirmed the figures in an emailed statement after Bloomberg reported the results. Uber did not provide first quarter figures, but a spokeswoman said they "seem to be in line with expectations."

For the final quarter of 2016, gross bookings increased 28 percent from the previous quarter, to $6.9 billion. But Uber's losses grew to $991 million in the period, as revenues grew 74 percent to $2.9 billion from the third quarter.

In a separate emailed statement, Rachel Holt, Uber's regional general manager for the United States and Canada, said: "We’re fortunate to have a healthy and growing business, giving us the room to make the changes we know are needed on management and accountability, our culture and organization, and our relationship with drivers.”

Fake News From the Fed

What you see in the media is mostly “fake news.” Reuters had this story recently: "Most Federal Reserve policymakers think the central bank should take steps to begin trimming its $4.5 trillion balance sheet later this year as long as the economic data holds up, minutes from their last meeting showed… Provided that the economy continued to perform about as expected, most participants anticipated that gradual increases in the federal funds rate would continue and judged that a change to the Committee’s reinvestment policy would likely be appropriate later this year,” the Fed said in its minutes.

This is the public spectacle – where tiny and often trivial bits of real news are conflated with vast myths and illusions. The Fed fiddles with short-term interest rates… President Trump tweets a threat to the Freedom Caucus… the GOP proposes a new health-care plan… You can’t know what any of these “facts” mean without reference to a huge body of non-facts – beliefs, ideas, and prejudices, many of them absurd.

Remember, a “myth” is not necessarily untrue; it just can’t be tested or disproven. And since reality is infinitely complex, and a myth can only reflect a small trace of it… no matter how attractive or “true” it is, the myth always leaves out more truth than it describes.

We make no pretense of ever knowing the “truth.” That would be impossible. All we can do is try to identify the most ridiculous myths… and find the most useful one, the one we can believe without getting kicked in the pants.

UC Davis votes to make American flag optional at meetings

Peter Schiff: Economy, Dollar 'Headed for a Major Crisis' Under Trump

Peter Schiff, CEO of Euro Pacific Capital, warns savvy investors they should start protecting their assets for a worst-case scenario because there is little hope of economic improvement as President Donald Trump near completion of his first 100 days in office.

“Donald Trump should already be disappointing a lot of people who thought we were going to get change, we were going to make America great again,” Investment Watch quoted Schiff as saying. “We didn’t repeal Obamacare, that’s here to stay. Major tax reform is dead. We’re dropping bombs,” IW quoted Schiff as telling Future Money Trends.

“I mean it’s the same old same old right? Big government… bigger deficits… more cheap money… keep the air in the bubble. We’re headed for a major major crisis,” Schiff said. Schiff also investors to keep an eye on the U.S. dollar, which Trump himself last week said was too strong.

“The dollar is living on borrowed time, literally. And so we just don’t know. It’s like a bomb with a fuse, but we just don’t really know how long the fuse is,” Schiff said.

Reforming Dodd-Frank to Unify the U.S. Economy

“For seven years now, the Dodd-Frank Act has stifled the American Dream—for half of the country,” said U.S. Representative David Kustoff (R-TN) in an opinion piece on CNBC. According to Kustoff, Dodd-Frank requires rolling back, and it has caused plenty of harm since then. Though it saved plenty of big banks during the recession, its regulation has stifled many smaller banks.

“Our smaller communities and hopeful entrepreneurs have been shut out, said Kustoff. “Those who are seeking to start or grow their small business are incapable of accessing the capital necessary to merely plant both feet on the ground.”

“For seven years now, the Dodd-Frank Act has stifled the American Dream—for half of the country,” said U.S. Representative David Kustoff (R-TN) in an opinion piece on CNBC. According to Kustoff, Dodd-Frank requires rolling back, and it has caused plenty of harm since then. Though it saved plenty of big banks during the recession, its regulation has stifled many smaller banks. “Our smaller communities and hopeful entrepreneurs have been shut out, said Kustoff. “Those who are seeking to start or grow their small business are incapable of accessing the capital necessary to merely plant both feet on the ground.” The long-term effect of Dodd-Frank has been the negative impact on community banks, regional banks, credit unions and other lenders. “These smaller financial institutions have their hands tied with onerous regulations and high compliance costs, and their ability to loan money is constrained,” said Kustoff.

Kustoff recommends rolling back some of the regulations in order to ease that strain on small banks. He is currently working with Financial Services Committee Chairman Jeb Hensarling to make that happen, and change the current system. “[Federal Reserve] Chair Yellen said that our nation is at full employment and that, while there is still room for improvement, wages are rising,” said Kustoff. “Chair Yellen should take a drive through West Tennessee. She would see how that may be true for the half of America that benefitted from Dodd-Frank. Unfortunately, Chair Yellen's evaluation was not considering a dynamic economy—an economy that encourages new businesses, new job creation and new salaries.”

Puerto Rico Union Sues Governor, Board Over Pension Cuts

The governor of Puerto Rico and the Financial Oversight Management Board were hit with a lawsuit by union members seeking to block proposed pension cuts for government employees.

Servidores Unidos Públicos, a local government union representing more than 10,000 affected government employees and 2,300 retirees, filed the lawsuit April 12 in the U.S. District Court for the District of Puerto Rico. The union members seek a court declaration that the recently adopted fiscal plan to manage the territory’s finances and budget, which proposes a 10 percent cut to government pensions, is illegal.

The members allege that the board violated the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA)—a rescue law adopted by Congress in 2016 to address the territory’s financial situation—by adopting a fiscal plan that doesn’t provide adequate pension funding as required by the federal statute.

This is the first lawsuit filed against the oversight board and government officials over pension cuts proposed in the territory’s fiscal plan. The members lost their first battle April 12, when Judge Francisco A. Besosa denied their request for a temporary restraining order to prevent the officials from implementing the pension cuts because the accompanying exhibits were filed in Spanish. The members filed a new petition April 13.

Keiser Report: Horrible Advice for Generation X

Los Angeles struggles to retain workers due to high housing costs

Los Angeles may have year-round sunshine and great beaches, but according to an article in the Los Angeles Times by Tracey Lien, it’s not enough to entice workers to accept jobs there. The article referenced the results of a new survey by the University of Southern California that found the region’s affordability crisis is deterring workers from putting down roots.

From the piece: “Though we have yet to see a critical mass of businesses priced out of the region, this is an area of concern,” Raphael Bostic, a professor of public policy at USC who led the research, said in a statement. According to Bostic, high housing costs are leading to employers’ having to develop special hiring packages, subsidize employee transportation or offer relocation costs, which puts a strain on companies’ bottom lines and makes it harder to compete with markets where housing costs aren’t as high.

The affordability problems aren’t unique to only Los Angeles though, as the whole state faces ever-rising home prices. The latest report from PropertyRadar stated that San Francisco Bay Area home sales in February plummeted to the lowest of any month since February 2008 as average home prices soared into the millions.

In order to fix the problem, Madeline Schnapp, director of economic research for PropertyRadar, said, “Local, state and federal housing regulations have made it all but impossible for builders to meet housing demand in California’s growing economy.”

Consumer prices drop, signaling possibly weaker economy

The consumer price index fell in March, the Labor Department reported Friday, signaling low inflation and a potentially softer economic environment for many businesses as demand for products dropped.

Economists said the one-month drop of 0.3 percent in the consumer price index -- the first such decrease in a year -- was not enough to signal a clear downward trend or cause worry. The drop could reverse itself in next month's figures, they noted.

Bloomberg reported the CPI drop was mainly due to cheaper apparel, technology and motor vehicles. While things being less expensive can help those with lower incomes save money, it also signals a global and domestic drop in demand that can hurt businesses and signal a weakening economy.

The CPI drop came as the Federal Reserve moved to increase a key interest rate, meaning the central bank saw enough stability in the economy to strengthen the dollar, risking higher inflation. Continued downward pressure on the CPI would likely force the Fed to at least re-evaluate plans for future rate hikes, if not scrap them entirely until prices for many common consumer goods stabilize.

The U.S. Economy May Already Be Too Weak to Endure an Economic Slowdown in 2017

An economic slowdown is coming in 2017. In fact, it’s already happening. The allegedly favorable job growth numbers many had been expecting as part of a “Trump Bounce” have not happened. Rising job numbers over the first two months of the Donald Trump presidency led many to believe Trump’s “Make America Great Again” agenda would work.

But many pundits made a simple mistake. Trump settled into his new job as President on January 20. Thus, he cannot technically be given credit for the job growth. His predecessor, Barack Obama, can. Instead, those pundits might want to revise their favorable U.S. economic outlook 2017 expectations also as part of a global economic slowdown in general.

President Trump must come to terms with the fact that he’s not the CEO of America. In other words, whereas in the context of his businesses, he can take executive decisions, managing the United States requires much more compromise. The compromise takes place with other politicians, the citizens they represent, and the circumstances beyond his control.

The March job creation numbers have taught Trump a lesson about overconfidence. The economy added only 98,000 jobs last month. That’s less than half the numbers seen for the previous two months. (Source: “Job Growth Loses Steam as U.S. Adds 98,000 in March,” The New York Times, April 7, 2017.)

NEWS to Disturb the Comfortable...

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