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"Economics with Attitude"

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AOL co-founder to Trump supporters: The jobs we lost aren't coming back

The jobs lost to technology won't be brought back by putting up walls — so we need to embrace the future, Steve Case, co-founder of AOL, told CNBC's "Power Lunch" on Wednesday.

"I do understand some of the Trump support — a lot of people are angry, frustrated, feel like they've been left behind by globalization, digitization. They're fearful of the future," Case said. "But I don't think you can move backwards. I don't think you can just put up walls. I don't think the jobs that we have lost are going to come back."

Case publicly backed Democratic presidential nominee Hillary Clinton in the Washington Post late last month, citing her more extensive agenda on technology and economic issues.

Republican presidential nominee Donald Trump has suggested reviving manufacturing jobs in the U.S. by renegotiating trade deals and tariffs with areas that are commonly associated with outsourcing, and building a wall on the Mexican border. Meanwhile, Trump has previously called for "immigration moderation," including raising wages to limit H-1B visas, a strategy he said would improve the representation of black, Hispanic and female workers in Silicon Valley.

Fed Beige Book Shows ‘Mostly Positive’ Outlook for U.S. Economy

The U.S. economy maintained a steady growth pace between late August and early October, as a tight labor market with nascent wage pressures contributed to a “mostly positive” outlook, a report from the 12 Federal Reserve districts showed.

“Most districts indicated a modest or moderate pace of expansion,” according to the Fed’s latest Beige Book, an economic survey by reserve banks. “Outlooks were mostly positive, with growth expected to continue at a slight to moderate pace in several districts.”

The job market “remained tight” with modest employment and wage growth, according to the report released Wednesday in Washington. In the San Francisco district, some small business owners said they needed to bring back health-care benefits to attract applicants.

“Wage growth held fairly steady at modest levels, although some districts reported rising pressure for certain sectors,” the report stated. Three districts -- Dallas, Richmond and San Francisco -- noted a shortage of construction workers, which in some cases constrained building activity.

Greg Mannarino-Clinton Belongs to Wall Street

120 to lose jobs as Boeing announces closure of Macon plant

Boeing has announced it is closing its Macon plant by the end of the year, a move that will leave about 120 employees out of work.

News outlets report that the company's Monday announcement came about a year after Boeing had announced it was planning create about 200 more jobs by converting the existing military facility to a commercial airplane manufacturing plant .

Boeing now says the plant will be shutting down in mid-December after about 35 years, citing a reduced demand for large cargo freighters.

Macon Mayor Robert Reicher called the news "unfortunate and regrettable."

The Public Pension Time Bomb Is Starting to Explode

Earlier this year, a bombshell was dropped when it was reported that California's Public Employees' Retirement System (Calpers)—the largest public pension fund in the U.S.—earned only 0.6% on its investments last fiscal year.

Why is this such a big deal, you ask? Well, because, in order to meet their long-term obligations in the form of pension benefits promised to millions of state employees depending on those checks coming in every month during retirement, Calpers needs to be returning over twelve times that amount.

"This is a significant policy issue for us," said Calpers' Chief Investment Officer Ted Eliopoulos since, Bloomberg writes, "the system must average at least 7.5 percent a year to match its assumed rate of return or turn to taxpayers to make up the difference."

And that's likely what's going to happen since the problem is only getting bigger and bigger. Given the importance of this issue, we recently spoke with Lawrence McQuillan, author of California Dreaming: Lessons on How to Resolve America's Public Pension Crisis, who explains why this is a ticking time bomb with real consequences for millions of Americans.

Silver Eagle Demand Returns With A Vengeance As Political & Economic Turmoil Increases

U.S. Mint Silver Eagle sales surged in the first half of October due to increased turmoil in the political system and economic markets. Silver Eagle sales were strong in the first five months of the year, but weakened in the summer due to several factors.

One factor was the fall-off in demand by the Authorized Dealers (wholesalers) who had continued to purchase record Silver Eagles in the first part of 2016, even though retail investor demand had softened.. The other factor was a weakening of investor demand as the contagion from the U.K exit of the European Union subsided in the summer.

Regardless, U.S. Mint Silver Eagle sales came back with a vengeance in the first half of October, reaching 2,925,000 according to their most recent update today (Oct 18th). If we look at the chart below, we can see how much demand has increased compared the previous three months:

Silver Eagle sales as of October 18th are 75% higher than total sales for September of 1,675,000. Furthermore, they have already surpassed June’s sales of 2,837,000. If Silver Eagle sales continue to remain strong for the remainder of the month, I estimate that at least 4,000,000 will be sold.

In U.K. - Skilled workers 'may be exempt from immigration controls'

The chancellor has indicated that highly skilled workers may be exempt from the Government's planned immigration controls. Philip Hammond said he could not see why firms should be restricted from recruiting "high level" workers.

The public was not concerned about controls on "computer programmers, brain surgeons, bankers", he said. The chancellor said voters wanted restrictions on those migrants competing for "entry level jobs".

"I cannot conceive of any circumstances in which we would be using those migration controls to prevent banks, companies moving highly qualified, highly skilled people between different parts of their businesses," he said.

Giving evidence to MPs on the Treasury Select Committee, Mr Hammond did not dispel suggestions that he supported students being taken out of the target for reducing net migration. Mr Hammond's comments will fuel growing speculation that the government wants to introduce a work visa scheme aimed at low-skilled migrants.

US Freight Volume Drops to Lowest Level since 2009, “Industrial Recession” Hits Full Stride, Overcapacity Crushes Rates

The Cass Freight Index, tracking US shipment volumes by all modes of transportation, fell 3.1% in September from a year ago, the 19th month in a row of year-over-year declines, and the worst September since 2009.

Donald Broughton, Chief Market Strategist at Avondale Partners, wrote in the report: After offering a glimmer of “less bad” hope in August [the index was down “only” 1.1% year-over-year], the Cass Freight Index shipments data in September disappointed, providing hindsight that August only gave us “false hope.” September data is once again signaling that overall shipment volumes (and pricing) continued to be weak in most modes, with increased levels of volatility, as all levels of the supply chain (manufacturing, wholesale, retail) continue to try and work down inventory levels.

There were some areas of growth for shipments. Ecommerce has been reliably booming, as brick-and-mortar retailers lose their footing, a structural shift in the retail industry that will continue to play out over the years. Shipments for the auto and housing/construction industries also grew in September, but at a lower rate.

Alas, shipping for the auto sector will be getting hit further: sales declined in September year-over-year, inventories have reached worrisome levels – 95 days’ supply for F-series trucks, when 60 days is more than enough – and production cuts and layoffs are already being announced.

Report: Wells Fargo faces Calif. criminal probe

Wells Fargo (WFC) is being probed over allegations of criminal identity theft by the California Department of Justice, according to a report from the Los Angeles Times.

The bank was served with a search warrant on Oct. 5 from the office of California Atty. Gen. Kamala Harris, The Los Angeles Times reports. This adds California's Department of Justice to the pile-on of state regulators investigating the bank. Harris is running for the U.S. Senate as the Democratic candidate to replace Sen. Barbara Boxer (D-Calif) in the 2016 election.

Harris' department is seeking information associated with the upwards of two million accounts that were allegedly opened by Wells Fargo employees without consumers' consent or knowledge. California's Department of Justice is pursuing two violations, that of impersonation and other of improperly using personal information, the Los Angeles Times says. Both can be charged as felonies, the Los Angeles Times says.

"We are cooperating in providing the requested information," says Mark Folks, spokesman for Wells Fargo.

Did Alan Greenspan Help Cause the 2008 Financial Crisis? The Answer Isn't So Simple

The Government Just Spent $168 Billion More Than the Year Before

New numbers on federal spending are in from the Congressional Budget Office, and they’re not pretty. The federal government spent $3.9 trillion in fiscal 2016, which ended Sept. 30, or $168 billion more than in fiscal 2015. The federal government ran a deficit of $588 billion, an increase of $149 billion. That’s a one-third increase in the deficit since last year.

These preliminary numbers are included in the CBO’s monthly budget review for September. The agency will release actual numbers in January in its annual budget and economic update. Despite a $19 billion increase in revenues, the deficit continues to rise, adding to the nation’s out-of-control debt. Higher taxes chase higher spending.

The government does not have a revenue problem, it has a spending problem. More specifically, the nation faces a crisis in entitlement spending. The government spent more than $1.8 trillion in fiscal 2016 on three entitlement programs on autopilot: Medicare, Medicaid, and Social Security. Outlays for these programs grew by $77 billion since fiscal 2015.

To put this into perspective, military spending totaled $564 billion, or less than one-third of what entitlements swallow. Spending on Medicare, Medicaid, and Social Security will continue to grow as the baby boomers age and retire, putting even more of a strain on taxpayers. The CBO’s budget review reaffirms what we already knew: Federal government spending is out of control. Only 16 percent of likely voters favor more federal spending, according to a Rasmussen Reports poll, yet spending continues growing year after year.

Yellen may be giving the sign to buy hard assets

In a speech in Boston, Fed Chair Janet Yellen talked about to using monetary policy to run the economy hot. She seems to be willing to tolerate a higher level of inflation than the current Fed objective. Higher inflation is inevitable if the economy is run hot with monetary policy tools. On the surface, it would seem that buying hard assets is the way to go to profit from higher inflation, but under the present economic conditions, investors will want to be highly discriminating.

We will explore gold, silver, oil, copper, nickel, zinc, iron ore, timber and real estate later in this column. First, let us understand Yellen's plan in her own words.

"If we assume that hysteresis is in fact present to some degree after deep recessions, the natural next question is to ask whether it might be possible to reverse these adverse supply-side effects by temporarily running a "high-pressure economy," with robust aggregate demand and a tight labor market. One can certainly identify plausible ways in which this might occur. Increased business sales would almost certainly raise the productive capacity of the economy by encouraging additional capital spending, especially if accompanied by reduced uncertainty about future prospects.

In addition, a tight labor market might draw in potential workers who would otherwise sit on the sidelines and encourage job-to-job transitions that could also lead to more-efficient--and, hence, more-productive--job matches.7 Finally, albeit more speculatively, strong demand could potentially yield significant productivity gains by, among other things, prompting higher levels of research and development spending and increasing the incentives to start new, innovative businesses."

US Home Construction Fell 9 Percent in September

Homebuilders pulled back on construction for a second straight month in September, with a plunge in apartments offsetting gains in single-family homes. Building activity was weak in all parts of the country except the Midwest.

Construction tumbled 9 percent in September to a seasonally adjusted annual rate of 1.05 million units, the Commerce Department reported Wednesday. It was the slowest pace in 18 months. Construction had fallen 5.6 percent in August.

The weakness last month reflected a 38 percent drop in construction of apartments, which overshadowed an 8.1 percent rise in single-family construction. Despite the two months of declines, home construction has been one of the bright spots in the economy this year. Builders have been scrambling to keep up with rising demand amid continued strong job gains and low mortgage rates.

The September performance was weaker than expected. Analysts had been forecasting a rebound. But they noted that the smaller apartment segment of construction is often volatile from month to month.

'Obamacare' in Arizona: 2 remaining insurers hike rates by 50-75 percent

After months of health insurer exits from the Affordable Care Act marketplace in Arizona, state regulators have approved plans from two companies that will be the only marketplace insurance providers next year.

Blue Cross Blue Shield of Arizona will sell marketplace plans in every county except Maricopa County in 2017. The Phoenix-based insurer's average rates will increase 51 percent, Arizona Department of Insurance filings show.

Maricopa County residents only option will be Centene Corp., which said it will sell its "Ambetter" plans. State regulators approved a 74.5 percent increase for Centene/Ambetter plans.

The amount people pay will vary depending on factors such as age, coverage levels and income that determine whether an individual qualifies for subsidies that help offset the cost of monthly premiums. Nearly 7 in 10 Arizonans with a marketplace plan get subsidized coverage.

Morgan Stanley profits soar like it’s the ‘80s all over again

Wall Street’s having flashbacks. Morgan Stanley’s revenue surged in the third quarter after a rough start to the year, the latest major bank to see a comeback based on nuts-and-bolts bond trading that had fallen out of fashion in tough global markets.

James Gorman’s bank reported $1.6 billion in profit on Wednesday for the three months ending Sept. 30, a 57 percent increase from the same period a year ago. About $1.5 billion of that came from trading bonds, according to the report.

Morgan Stanley follows Goldman Sachs, Citigroup and Bank of America as major powerhouse traders got a boost from buying and selling debt, recalling the go-go days of the 1980s, when banks like Salomon Brothers and Lehman Brothers did little else to make huge profits.

Credit markets were “benign” during the last quarter, thanks to the European Central Bank buying bonds after the Brexit vote, the bank’s CFO, Jonathan Pruzan, said during the analyst call. Gorman’s employees were compensated well — pay rose 19 percent during the quarter — though the CEO said during the Wednesday morning call there are about 25 percent fewer employees than there were a year ago.

Illegals seeking asylum up 900%, get Social Security, welfare, school loans

The number of illegals seeking asylum to gain easy access to the United States has jumped 900 percent in less than 10 years, greatly expanding the Immigration population receiving Social Security, school loans, green cards, welfare and other taxpayer funded services, according to figures from the U.S. Citizenship and Immigration Services.

While about 8,000 mostly Latin Americans in 2009 sought asylum, the number is expected to reach 80,000 or more this year, according to a projection from the Center for Immigration Studie

The report said 80 percent come from just three countries that have already flooded the border with youths and young families, El Salvador, Guatemala and Honduras. Most claim a fear of torture, abuse, or retaliation, fulfilling the U.S. requirement that they must voice some credible fear of returning home.

The surge was sparked by a freeing up by President Obama of the restrictions to those requesting asylum. Now they are let into the United States while they pursue their asylum request.

The Fed Has Made Another Massive Policy Error

I would argue that the Great Recession was a result of a massive monetary policy error. The Fed kept rates too low for too long, which—when coupled with lax or no regulation in the mortgage markets—resulted in a housing bubble and a crash. This then bled over to global markets. I believe we are again suffering the effects of a massive monetary policy error. The error has already been committed, but we have just begun to endure the consequences. We are still living in a dream, but we’re nervous, much like we were in 2006.

The Federal Reserve has repeated the mistakes of the last cycle. They have kept rates too low for too long. But this time, they’ve outdone themselves by clinging to the zero bound. In doing so, they have financialized the economy and made it hypersensitive to interest rate moves.

Ben Bernanke made a big mistake by opting for QE 3. Arguably, if he had begun to normalize rates rather than create a “third mandate” for the Federal Reserve to support stock market prices during and after QE 3, we would not be in the situation we are in today. A situation where the very hint of normalizing rates sends the markets into a frenzy.

Bernanke should have looked the stock market straight in the eye during the Taper Tantrum, summoned his inner Paul Volcker, and told the market, “I am not responsible for stock market prices.” The markets probably would have suffered a rather quick, sharp correction and moved on

Robert Wolf: Taxing the wealthy is okay

China's real estate frenzy

Real estate is taking off like a rocket in China. Worse, debt is its main booster.

Ten major cities in China saw home prices jump 20 percent from a year ago, up from six cities a few months ago. Along with that increase, long-term household loans surged from 20 percent of all new loans in China at the start of the year to 40 percent in August. "A study by China’s Haitong Securities Co. shows that total home loans are expected to make up 30 percent of China’s GDP this year, up from less than 20 percent three years ago," the Wall Street Journal reported.

It's part of a larger game of debt musical chairs China has been playing. The country's overall amount of debt soared from 150 percent of GDP 10 years ago to 260 percent today — a little over half of which is corporate debt, at 145 percent of GDP. Around 40 percent of new loans are taken out to pay interest on existing loans. Then the money began flowing out of corporate debt and into housing earlier this year, as China relaxed rules and eased credit to soak up the unsold housing supply. The resulting binge on housing debt has clearly taken Chinese authorities by surprise.

Obviously, in a post-2008 world, rapidly rising housing debt chasing rapidly rising housing prices conjure up some scary memories. But the question of whether China is headed towards its own housing crisis and Great Recession is complicated.

Feds Use Search Warrant To Make Everyone In Building Unlock Their Phones

If the cops show up with a search warrant, well, you expect they can search the premises. But showing up with a warrant that says every single person on a certain property has to unlock their fingerprint-reading phones and present them for search, too? That’s… pretty surprising. And yet, it turns out, earlier this year, that’s what happened in California.

What happened, Forbes spotted, is this: the Justice Department wanted a warrant to search a property in California. So far, so good.

But that warrant included language authorizing investigators to “depress the fingerprints and thumbprints of every person who is located at the SUBJECT PREMISES during the execution of the search and who is reasonably believed by law enforcement to be the user of a fingerprint sensor-enabled device that is located at the SUBJECT PREMISES and falls within the scope of the warrant.”

In other words: with that warrant, cops can walk a house or apartment building and demand literally everyone inside immediately use their fingerprints to unlock their phones for inspection. To search the entire contents every single device, whether it belongs to an identified suspect or not, that may exist at the search location.

Wells Fargo loses Better Business Bureau accreditation

Well, it’s a day that ends in “y,” and right now that means that there’s more trouble for Wells Fargo. In the last few weeks, the megabank lost its CEO, and lost business from the state of Ohio, the city of Chicago, the state of California, the state of Oregon and maybe the city of San Francisco too – all as fallout from the bank’s fake account scandal.

And there’s something else that Wells Fargo apparently lost recently, its accreditation from the Better Business Bureau. According to a report from Deon Roberts of the Charlotte Observer, the Better Business Bureau moved its rating of Wells Fargo below the “B” rating required to be maintain accreditation in the wake of the $185 million fine levied against Wells Fargo for more than 5,000 of the bank’s former employees opening more than 2 million fake accounts in order to get sales bonuses.

From Roberts’ report:

Tom Bartholomy, president of the Better Business Bureau of the Southern Piedmont, called the loss of Wells Fargo’s accreditation “quite remarkable.” Wells is the biggest company Bartholomy said he’s seen receive a revocation during his 34 years with the BBB.

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.