Headline News Archives

Tuesday 02.21.2017

President Trump Will Be Able to Recast the Fed by Filling Vacancies

President Donald Trump will be able to recast the Federal Reserve by filling three or more vacancies on its seven-member board of governors, and is leaning toward candidates with banking and financial world experience rather than academic economists.

After his campaign criticism of the central bank's low-interest-rate policies, many observers speculated he would seek more "hawkish" candidates who would favor higher borrowing costs. But his choices may be driven less by these issues and more by their practical experience, judging from his early picks for other top economic policy posts in the administration -- drawn from investment banking, private equity and business -- and the pool of early contenders for the Fed jobs.

So far, his team is prioritizing the search for candidates to fill the role of vice chairman for supervision and a seat for someone with a community banking background, as required by law. His team has interviewed several candidates, including financial executives with experience in government, according to people familiar with the matter.

David Nason, an executive at General Electric Co.'s financing arm and former Treasury Department official during the 2008 financial crisis, has emerged as a leading candidate to be the vice chairman for supervision, the people said. The position was created by the 2010 Dodd-Frank law, but the Obama administration never named anyone to fill it.

'Day Without Immigrants' Transitions into 'Life Without a Job' for Protesters

The “Day Without Immigrants” protest demanding amnesty, lax immigration enforcement, and cheap labor practices fizzled in most U.S. cities, and now many demonstrators have lost their jobs for skipping work.

Migrants who advocated for the wage-suppressing, cheap labor policies allowing them to work in the U.S. found themselves rapidly replaced by new workers. One business, the I Don’t Care Bar and Grill in Catoosa, Oklahoma, fired several workers by text message: “You and your family are fired. I hope you enjoyed your day off, and you can enjoy many more. Love you.” The next day, the restaurant posted an announcement looking for new workers on Facebook.

The migrant workers say they felt their firings were unfair, but the owner had a long-standing “no call/no show” policy. Another 18 employees working at Bradley Coatings in Tennessee told their bosses they were skipping work to protest in a “Day Without Immigrants” demonstration. The business promptly fired them for missing work.

“I would tell him he was unfair, after working for them for so many years, giving him our best,” one migrant worker told KTNV. “They could not understand that it was just one day. We were going to make up that day on a Sunday, but they didn’t understand that, and it was not the best way. They didn’t give us an opportunity and just told us we were fired.”

Mark Cuban: Robots Will 'Cause Unemployment, We Need to Prepare for It'

Increased automation will cause people to lose their jobs, "and we need to prepare for it," according to businessman Mark Cuban. "I'm willing to bet that these companies building new plants ... this will lead to fewer people being employed," Cuban told CNBC Friday, also saying, "people aren't going to have jobs."

Cuban echoes fellow billionaire Elon Musk, the CEO of Tesla and SpaceX, who at the World Government Summit in Dubai last week said that self-driving cars will likely displace workers sooner than people realize.

"The most near term impact from a technology standpoint is autonomous cars … That is going to happen much faster than people realize and it's going to be a great convenience," he said, according to CNBC.

"But there are many people whose jobs are to drive. In fact I think it might be the single largest employer of people ... Driving in various forms. So we need to figure out new roles for what do those people do, but it will be very disruptive and very quick."

Gold Investing Under President Trump ‘For Dummies’

Why Stanley Druckenmiller Changed His Mind About Gold

After the election, hedge fund manager Stanley Druckenmiller made headlines by announcing that he had sold all of his gold on November 8.

He said that the way he foresaw the economy going in the future, he wouldn’t need it anymore, and that other investments would be sounder. However, it seems now that he’s reversed his position and is again buying gold. This is further proof that, no matter what happens in the short term, gold is always the wisest long term investment strategy.

Selling all of his gold may actually have been a smart decision for Druckenmiller—but only in the short term. After the election, it was all over the news that the stock market had plummeted that night. Indeed, the Dow went down by 870 points in just a few hours as the results came in. What didn’t get as much coverage, though, is how, as stocks were falling, the spot price of gold soared by nearly $70 an ounce, topping out at $1,336.70.

Still, Druckenmiller’s plan wasn’t just to make a quick profit off of the panic. Rather, he believed that the Dow would be bullish for the foreseeable future. Tax reform and other policies of the new administration would lead to overall economic growth, but that gold, bonds, and other traditional “safe haven” investments would drop.

Study: $15 Minimum Wage Would Force McDonald’s to Increase Prices 38 Percent

James Sherk, a Hillsdale graduate and now the Bradley Fellow at the Heritage Foundation, found that if a $15 minimum wage is enforced across the country, fast food prices will jump far more than initially thought. A 10-piece Chicken McNuggets, currently priced at $4.49, would jump to $6.20. A Starbucks Grande Mocha Frappuccino would increase from $4.56 to $6.29, while a 6-inch turkey sub at Subway would cost $5.87, up from $4.25. A Whopper Meal from Burger King would jump to $8.96 from $6.49.

A CrunchWrap Supreme, Crunchy Taco and large drink from Taco Bell would cost $8.27, up from $5.99; a Wendy’s Son of Baconator Combo, currently $6.69 would cost $9.23; a Chick-fil-A Chicken Sandwich Combo, priced at $5.95, would cost $8.21; and a Pizza Hut Medium Hand-Tossed Cheese Pizza, on today’ menu at $11.95, would jump to $16.55.

That’s a 38-percent increase, far higher than many old-school economists have concluded, and it puts the lie to union claims that raising the minimum wage to $15 an hour would result in a transfer of wealth from rich business owners to low-paid workers. Sherk’s analysis concludes that there would be a transfer, but it wouldn’t be from the business owners: It would be from their customers.

First, those owners with a McDonald’s franchise aren’t rich and they're not likely to become rich. Ed Rensi, who worked for McDonald’s for 30 years, ending up as the company’s CEO in 1991 and retiring in 2007, told Forbes: In truth, nearly 90% of McDonald’s locations are independently-owned by franchisees who aren’t making “millions” in profit. Rather, they keep roughly six cents of each sales dollar after paying for food, staff costs, rent and other expenses. Let’s do the math: a typical franchisee sells about $2.6 million worth of burgers, fries, shakes and Happy Meals each year, leaving them with $156,000 in profit. If that franchisee has 15 part-time employees on staff earning minimum wage, a $15 hourly pay requirement eats up three quarters of [the owner’s] profitability … for some locations a $15 minimum wage wipes out their entire profit.

Sanctuary restaurants vow to protect undocumented workers

The Trump administration's crackdown on immigration has rattled the restaurant industry and the millions of foreign-born workers it relies on. But it's the industry's undocumented workforce that is feeling particularly vulnerable.

Many of these workers live in fear of getting deported and are too afraid to speak out or report workplace violations of things like wage or labor laws, said Penny Bradshaw, an immigration attorney at Costangy, Brooks, Smith & Prophete, LLP in North Carolina.

Second only to construction when it comes to its reliance on undocumented workers, the restaurant industry employed some 1.1 million undocumented workers in 2014, according to a Pew Research study.

To help protect these workers, Restaurant Opportunities Centers United (also known as ROC United), a national advocacy group for restaurant workers, has teamed up with restaurant owners across the U.S. to form the sanctuary restaurant movement.

H-1B visas by the numbers

Biggest Gasoline Glut In 27 Years Could Crash Oil Markets

Oil prices are stuck in a holding pattern, waiting for more definitive data on what comes next. OPEC compliance is helping keep prices afloat, but rising U.S. oil production is acting as a counterweight.

A new problem that has suddenly emerged is the record levels of gasoline sitting in storage. The market has already had to digest the fact that U.S. crude oil stocks were rising, and investors have done their best to explain away the trend. But now gasoline inventories are climbing to unexpected heights.

It would be one thing if crude stocks were rising, perhaps because refiners were going offline for maintenance. But if that were the case, then gasoline stocks would draw down on lower refining runs. But if both crude and refined product inventories are going up at the same time, then there should be some reasons for worry.

In fact, the glut of gasoline is now the worst in 27 years. At 259 million barrels, U.S. gasoline storage levels are now at their highest level since the EIA began tracking the data back in 1990.

Greece, lenders agree to work out new reforms to unblock aid

Greece and its international lenders agreed on Monday to let teams of experts work out new reforms to Greek pensions, income tax and labor market that would allow Athens to eventually qualify for more cheap loans, euro zone officials said.

Greece needs a new tranche of financial aid under its 86 billion euro bailout by the third quarter of the year to meet debt repayments, but the last mission to Athens broke down in acrimony late last year.

A Greek government official said extra reforms were to be fiscally neutral and take effect from the start of 2019, after the latest bailout ends in 2018.

Experts from the European Commission, the European Central Bank, the euro zone bailout fund ESM and the International Monetary Fund are to travel to Athens very soon, the head of euro zone finance ministers Jeroen Dijsselbloem said. "There will be a change in the policy mix, moving away from austerity and putting more emphasis on deep reforms which is also a key element for the IMF," he said.

How much longer can the Trump rally last?

Higher Minimum Wages Hamper On-the-Job Learning

Getting a job requires experience; getting experience requires a job. This is one reason the trap of poverty can be so difficult to escape. But what is the root of this trap? Solutions exist, but they are too often blocked by misguided policies such as the well-intentioned minimum wage. By eliminating the opportunity to work, the minimum wage also eliminates the opportunity to learn.

The hourly minimum wage has risen to $15 in Seattle, and is scheduled to rise to $15 in California by 2023 and New York City by 2019. Fight for Fifteen, a union-funded advocacy group, wants to raise the federal minimum wage to $15. The initiative is championed by popular politicians like Senator Bernie Sanders, who said “The current federal minimum wage of $7.25 an hour is a starvation wage and must be raised to a living wage.”

But sadly, a universal living wage cannot be achieved by policy mandate. A higher minimum wage would eliminate many $7.25 jobs, leaving people with a true starvation wage of $0. Worse, it would eliminate the opportunity for many job seekers to learn and improve their wage.

Almost nobody comes into the world productive. The prevailing wage for toddlers is negative. But as they grow, people acquire knowledge and skills that better allow them to create value for others in a market. As the great economist Alfred Marshall said, “The most valuable of all capital is that invested in human beings.” Economists refer to these acquisitions as human capital, which can include everything from neurosurgical skills to basic knowledge of professional etiquette.

Globalist Cabal Strikes Back with Push for Cashless Society

Their agenda may be on the rocks in the United States at the moment, but that doesn’t mean that the globalists are giving up. In fact, a major push toward a cashless society is being made in the European Union right now where the Globalists are in firm control. Last May we learned that the 500 euro note is being completely eliminated, and just a few weeks ago the European Commission released a new “Action Plan” which instructs member states to explore “potential upper limits to cash payments”. In the name of “fighting terrorism”, this “Action Plan” discusses the benefits of “prohibitions for cash payments above a specific threshold” and it says that those prohibitions should include “virtual currencies (such as BitCoin) and prepaid instruments (such as pre-paid credit cards) when they are used anonymously.”

This new document does not mention what an appropriate threshold would be for member states, but we do know that Spain already bans certain cash transactions above 2,500 euros, and Italy and France already ban cash transactions above 1,000 euros.

This is a perfect way to transition to a cashless society without creating too much of an uproar. By setting a maximum legal level for cash transactions and slowly lowering it, in effect you can slowly but surely phase cash out without people understanding what is happening.

And there are many places in Europe where it is very difficult to even use cash at this point. In Sweden, many banks no longer take or give out cash, and approximately 95 percent of all retail transactions are entirely cashless. So even though Sweden has not officially banned cash, using cash is no longer practical in most situations. In fact, many tourists are shocked to find out that they cannot even pay bus fare with cash.

Retail Under Fire: Toys "R" Us Has Laid Off Up To 15% Of HQ Employees

For decades, Toys "R" Us has stood as one of the most reliable and iconic sources of childhood glee. Now, that tradition is on shaky ground. This Friday, the company announced they had laid off between 10-15% of their home office employees out of Wayne, New Jersey -- approximately 250 jobs were eliminated.

Amy Von Walter, Toys "R" Us EVP of Global Communication and PR, stated that, "The recent changes are not just about cost-containment—our growth plans require us to have the right structure, talent and determination to transform our business and achieve the financial objectives we’ve set for the company."

Toys "R" Us, or TRU, has been struggling financially for some time. In 2005, investors led by KKR & Co., Bain Capital, and Vornando Realty Trust bought out the company for $6.6 billion. In 2016, the business refinanced its remaining $850 million debt load, allowing investors holding bonds maturing in 2017 and 2018 to swap their holdings for those maturing in 2021.

Multiple factors are contributing to Toys "R" Us’ problems. Like other retailers, TRU has struggled to find new ways of operating as consumers shift to more online buying. People simply aren’t trekking to the malls that previously helped the toy chain dominate. Plus, savvy competitors like Walmart and Target have tripled their toy aisles & seasonal offerings during holiday season, allowing customers to cross TRU off the store list.

ISIS, Immigration and Oil

Canadian border mayor ‘scared’ about number of refugees moving from US to Canada

The Royal Canadian Mounted Police apprehended 22 refugees over the weekend as they tried to illegally cross the border into Canada from the U.S.

The nearly two dozen individuals were apprehended late Saturday near Emerson, Manitoba, which borders North Dakota and Minnesota. But while the tiny town of 671 has traditionally accepted refugees with open arms, residents are growing more uneasy with the recent uptick in illegal border crossings across Canada, more broadly.

So far in 2017, 99 refugees were caught while trying to cross into Emerson from the U.S., according to Global News. The Canadian government said it doesn’t have numbers for how many refugees entered the country in and around Emerson last year, specifically.

But Ralph Goodale, Canada’s public safety and emergency preparedness minister, insisted the recent reports are just hype. “The Canada Border Service Agency is experienced in managing changing volumes, and the current increase along the southern border is below previous fluctuations,” Goodale told Global News.

Report: Current border wall breached more than 9,000 times between 2010 and 2015

While President Donald Trump and government officials develop plans for a “wall” between the U.S. and Mexico, the agency responsible for securing the border is uncertain how successful the current fence has been.

The 654 miles of fence already lining the border have been breached more than 9,200 times between roughly 2010 and 2015, according to a report released Thursday, February 16th by the Government Accountability Office (GAO), citing records from the U.S. Customs and Border Protection (CBP).

The GAO report does not conclude fencing has proved ineffective — rather, it states CBP has not implemented a way to measure the effectiveness of the current fence on slowing down illegal entries.

CBP officials say efforts to measure the effectiveness of fencing were stopped in 2013 due to “funding shortfalls,” according to the report. Border Patrol officials interviewed by the GAO said fencing helps divert illegal border-crossings away from urban areas and into rural areas where agents can more readily respond. But officials also said smugglers and others can breach border fences by simply cutting through or finding ways over or under them.

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