[Most Recent Quotes from www.kitco.com]

"Economics with Attitude"

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.

GE may ship US$10 billion in work overseas as US trade bank languishes

General Electric Co is taking steps to shift some U.S. manufacturing work overseas now that the U.S. Export-Import Bank will be shuttered at least until September, the industrial giant's global operations boss told Reuters on Thursday.

GE Vice Chairman John Rice said the conglomerate is bidding on over US$10 billion worth of projects that require support from an export credit agency (ECA) like Ex-Im.

With Ex-Im unable to extend new loans or guarantees thanks to an effort by congressional Republicans to shut it down, GE is arranging with ECAs in other countries to finance the deals involved, with much of the production going to GE plants in those foreign locations. The prospective government partners include Canada, the United Kingdom, France, Germany, China and Hungary, he said.

"We're submitting the tenders now. So we are identifying where we'll bid this and the ECA support that comes with it, and it's not in the United States," Rice told Reuters in a telephone interview from Atlanta.

The U.S. Economy's Top Speed Has Probably Been Overestimated for Years

Revisions to the U.S. gross domestic product since 2011 reinforce the shift to a slower era of economic growth and underscore the difficulties the Federal Reserve faces in gauging just when to inch interest rates away from the zero-lower bound.

According to the Bureau of Economic Analysis, real GDP from 2011 to 2014 increased at an annual rate of 2 percent, a downgrade from the prior estimate of 2.3 percent.

The Fed's July statement, meanwhile, indicated the central bank will raise rates when it has seen "some further improvement in the labor market" and is "reasonably confident" that inflation will trend toward 2 percent.

During the press conference following the Fed's June statement, Janet Yellen made a reference to the role that the output gap—the cumulative difference between estimates of how much the economy can grow and how much it has actually grown—plays in the formation of monetary policy.

"I think we need to see additional strength in the labor market and the economy moving somewhat closer to capacity—the output gap shrinking—in order to have confidence that inflation will move back up to 2 percent," she said.

Oil companies slash spending, jobs as prices slide for second time

The stark reality of a much-feared second dip in crude prices is prompting global oil majors and nimble U.S. shale companies alike to ax spending once again a year after the first price crash started.

Just days into the second-quarter earnings season, Chevron Corp (CVX.N) and Royal Dutch Shell Plc (RDSa.L) said they would slash a combined 8,000 thousand jobs around the world.

In North Dakota, Whiting Petroleum Corp (WLL.N), the top producer in the No. 2 U.S. oil patch, cut its capital expenditure budget days after optimistically raising it 15 percent on bets the renewed downturn in prices would be a temporary blip.

ConocoPhillips (COP.N), the largest U.S. independent, trimmed its 2015 budget for the third time on Thursday, by $500 million to $11 billion.

More ominously, Linn Energy LLC (LINE.O), a small exploration and production company, suspended its quarterly distribution to investors on Thursday to conserve precious cash that has largely evaporated on the price drop. Its shares fell 26 percent.

FAA issues 500 permits for commercial drone usage

CFPB fines Residential Credit Solutions $1.5 million for illegal mortgage servicing

The Consumer Financial Protection Bureau is taking action against another mortgage servicer, fining Residential Credit Solutions $1.5 million for illegal mortgage servicing practices.

According to a release from the CFPB, Residential Credit Solutions failed to honor modifications for loans transferred from other servicers, treated consumers as if they were in default when they weren’t, sent consumers escrow statements falsely claiming they were due a refund, and forced consumers to waive their rights in order to get a repayment plan.

Residential Credit Solutions, a Ft. Worth, Texas-based mortgage servicing company, specializes in servicing delinquent or default loans and so-called “credit-sensitive” residential mortgage loans, where the borrower is at high risk for default.

According to the CFPB, Residential Credit Solutions has about $95 million in total assets.

How America’s truck, the Ford F-150, became a plaything for the rich

Ford's first F-Series trucks were no-frills workhorses built for no-frills workers, promoted as if they were carved out of stone for the blue-collar, meat-eating, all-American man. In 1969, the pickups came in three editions — the Contractor Special, the Heavy Duty Special and the Farm & Ranch Special — and with few upgrades, except more space for toolboxes.

But now the once-spartan F-150, America's best-selling pickup for 38 years straight, is looking more dolled-up, and less middle-class, than ever. Its new Limited model, Ford's most "luxurious truck ever," comes with "genuine fiddleback eucalyptus" trim, heated-and-cooled massaging Mojave leather seats and "unique scuff plates with ice blue backlighting." Starting price: About $60,000, an F-150 all-time high.

The truck's turn from rugged backroads to glitz and luxury has driven its price twice as high as the average car or truck sold in the U.S. this year, pricier even than upscale SUVs from Porsche and Mercedes-Benz. But it has also highlighted the growing distance between American trucks' classic market of middle-income buyers, and its newer, more moneyed clientele.

Deutsche Bank’s profit increase overshadowed

Deutsche Bank warned that its new performance targets were at risk from heavy legal charges as it set aside 1.2 billion euros ($1.31 billion) for fines and settlements and reported quarterly earnings largely in line with expectations.

Germany's largest bank by market value said it might not reach its 2020 performance targets, which include a return on tangible equity of over 10 percent compared to 5.7 percent now, should fines and settlements continue to batter the bank's bottom line.

The results are Deutsche Bank's first under new boss John Cryan who has taken over after the early resignation of its co-chief executives Anshu Jain and Juergen Fitschen.

Investors expect Cryan to push for tougher reforms and deeper cost cuts at the bank, which has been hit by a string of scandals and fines.

Cheap oil prompts Shell to cut 6,500 jobs

Royal Dutch Shell (RDS.A) said Thursday it will cut about 6,500 jobs and capital investment this year as it restructures and dumps some businesses to prepare for a "prolonged downturn" in oil prices

The Netherlands-based energy company's cutbacks reflect tough times in the exploration and production end of the oil business, the so-called "upstream" side as opposed to refining and retailing. Big Oil, as it's called when consumers are angry about high gas prices, is facing some big challenges.

Shell also said its second-quarter net income fell 25% to $3.99 billion. Brent crude averaged about $62 a barrel during the period, down from $110 in the second quarter of 2014, The Associated Press reported.

Operating costs will be cut by $4 billion and capital investment plans will be lowered by $7 billion this year, the company said.

"Today's oil price downturn could last for several years, and Shell's planning assumptions reflect today's market realities," Royal Dutch Shell CEO Ben van Beurde said.

The Euro Isn't Dead - Peter Schiff

While the world can count dozens of important currencies, when it comes to top line financial and investment discussions, the currency marketplace really comes down to a one-on-one cage match between the two top contenders: the U.S. Dollar and the Euro.

In recent years the contest has become a blowout, with the Dollar pummeling the Euro into apparent submission. Based on the turmoil created by the European Debt Crisis and the continuing problems in Greece and other overly indebted southern tier European economies, many investors may have come to assume that Euro boosters will be forced to ultimately throw in the towel and call off the entire experiment, thereby leaving the Dollar completely unchallenged as the champion currency, now and for the foreseeable future. This is a stunning turnaround for a currency that was seen just a few years ago as a credible threat to supplant the dollar as the world's reserve.

Putting aside the fact that there are many important currency relationships besides the euro/dollar axis, economists, journalists, and investors have forgotten the 16-year history of the Euro and how the currency has survived and prospered after many had assumed it might be consigned to the dustbin of history.

The Euro was created in 1992 by the Maastricht Treaty (which created the European Union) but did not come into being as an accounting unit (not a physical currency) until January of 1999. In the lead up to its launch, many had argued that the Euro would become the heir to the rock solid Deutsche Mark, the German currency that had risen to preeminence on the back of Germany's post war resurgence, high savings rate, enviable trade balance, and post-Soviet unification.

Another coal giant may be about to go under

Another coal company may be bust.

According to a Bloomberg report on Thursday, Alpha Natural Resources is planning to file for bankruptcy as soon as Monday.

Bloomberg reports, citing sources familiar with the matter, that the company's senior lenders including Citigroup may give it another loan to see it through the bankruptcy.

Earlier this month, the Wall Street Journal reported that Alpha Natural was planning to file for bankruptcy. On the same day, Walter Energy filed for Chapter 11 bankruptcy so that it can resturcture its debt with lenders.

These are just two of several coal companies that have recently filed for bankruptcy. The price of mettalurgical coal crashed to the lowest in a decade last month; there's slowing demand for coal as more people turn to natural gas instead.

Can anything save Puerto Rico from default?

While the ongoing economic drama in Greece is still dominating the financial news headlines, some analysts say Americans should be paying closer attention to a crisis that's unfolding in their own backyard, in Puerto Rico.

The U.S. territory and self-governing commonwealth once had one of the most dynamic economies in the Caribbean, fueled in part by manufacturing investment from the American mainland and federal tax breaks.

But the end of those tax breaks nearly a decade ago, along with fallout from the Great Recession, have crippled Puerto Rico's economy over the ensuing years.

Puerto Rico is scheduled to make nearly $200 million in bond payments on August 1, with over $5 billion more due over the next 12 months.

But now, with the island's governor saying its $72 billion in public debt is "not payable," and the Obama Administration saying it won't bail out the commonwealth, Puerto Rico is in danger of defaulting.

More paying Obamacare fines as subsidies go to people who don’t exist

The IRS fined more than 7.5 million Americans who didn’t have health insurance in 2014, even as Obamacare subsidies flowed to people who didn’t even exist.

The Treasury Department reported last week the number of Americans who faced fines because of the Affordable Care Act’s individual mandate was significantly higher than the Obama administration expected. For 2014, the IRS projected that roughly 6 million would face fines, but the final total was 1.5 million higher.

It was the first year in which buying health insurance was made mandatory under the ACA, with penalties of $95 or 1 percent of total income – whichever was higher – for people who did not comply.

The average penalty collected for the 2014 tax year was about $200, the IRS reported.

“Although we have not yet completed our post-filing analysis, we are committed to conducting additional outreach to taxpayers, including letters to these specific taxpayers who did not have to report or make a payment. These letters will inform them about available exemptions and note that they may benefit from amending their return,” said IRS Commissioner John Koskinen.

What could speed up U.S. economic growth?

Get ready to relive the 2008 crisis: Albert Edwards

Central banks in the Western world have set the scene for an "even bigger version" of the 2007-2008 global financial crisis, Societe Generale's bearish strategist Albert Edwards has claimed.

In a research note on Thursday, Edwards said that China's intervention to stabilize its volatile stock market was part of a larger global story, in which "rock bottom" interest rates and large fiscal deficits in the western world were pushing the global economy towards a fall.

"QE (quantitative easing) will be stepped up to such a pace that you will hear the roar of the printing presses from Mars," Edwards said.

"I have not one scintilla of doubt that the western central banks have set us up for an even bigger version of the 2008 Great Financial Crisis."

QE has been a mainstay for several major central banks in the wake of the crisis, with money created to buy assets like government bonds, helping to inject liquidity into markets with the aim of stimulating the broader economy.

What’s Left of the American Dream Withers at Record Pace

The current housing boom has Dallas solidly in its grip. As in many cities around the US, prices are soaring, buyers are going nuts, sellers run the show, realtors are laughing all the way to the bank, and the media are having a field day. Nationwide, the median price of existing homes, at $236,400, as the National Association of Realtors sees it, is now 2.7% higher than it was even in July 2006, the insane peak of the crazy housing bubble that blew up with such spectacular results.

Housing Bubble 2 has bloomed into full magnificence: In many cities, the median price today is far higher, not just a little higher, than it was during the prior housing bubble, and excitement is once again palpable. Buy now, or miss out forever! A buying panic has set in.

And so the July edition of D Magazine – “Making Dallas Even Better,” is its motto – had this enticing cover, sent to me by David in Texas, titled, “The Great Dallas Land Rush”:

“Dallas Real Estate 2015: The Hottest Market Ever,” the subtitle says. That’s true for many cities, including San Francisco. The “Boom Town,” as it’s now called, is where the housing market has gone completely out of whack, with a median condo price at $1.13 million and the median house price at $1.35 million. This entails some consequences.

Don't Give Up on Gold Just Yet

The elation the gold bugs felt in the bull market spanning from 2002 through 2011 is long gone. Since the "U.S. credit rating downgrade peak," holding gold in an investment portfolio has been as pleasant as sleeping on hot coals. As an asset class, gold has fallen largely out of favor and after last week's precipitous plunge below obvious support levels, it feels like even the die-hard bulls are throwing in the towel. Nevertheless, that is exactly what is so intriguing about this market!

Large speculators are holding the smallest net short (bearish) position we've seen in well over a decade. Some look at this as a potential bearish development, but in light of the fact that this group of well-funded speculators have almost always been long gold, we look at it as a positive. After all, with most of their money sidelined, large speculators will have plenty of buying power to employ once prices finally turn the corner -- and we believe they will.

On the last occasion in which the "smart money" had such a meager net long gold position (2001), prices eventually rallied from $300 per ounce to $1,900. Obviously, the latter part of the move was done under extenuating circumstances (financial crisis), but the initial rally spanned several years and several hundred dollars per ounce on its own merit.

Paul Craig Roberts-Economic House of Cards, Demand for Gold and Silver Very Very High

U.S. economy didn’t grow as fast as we were told from 2012 to 2014

The U.S. economy grew somewhat more slowly from 2012 to 2014 than previously estimated, according to a new government approach to gross domestic product that addresses flaws in how the report is produced.

The U.S. expanded at average 2% rate each year from 2012 to 2014 instead of 2.3% as reported under the old method of calculating GDP, the Bureau of Economic Analysis said. GDP reflects the value of all goods and services produced by the U.S. and is viewed as the best general measure of a nation’s economic health.

In short, the slowest U.S. recovery since the end of World War II is even weaker than everyone thought.

The BEA on Thursday unveiled a new-look GDP that’s supposed to correct flaws in how military outlays and spending on consumer services such as health care are treated, among other things. The new report also incorporates changes in how certain taxes and social benefits are categorized.

7 Out Of 10 Americans Believe That Debt ‘Is A Necessity In Their Lives’

Could you live without debt? Most Americans say that they cannot. According to a brand new Pew survey, approximately 7 out of every 10 Americans believe that “debt is a necessity in their lives”, and approximately 8 out of every 10 Americans actually have debt right now. Most of us like to think that “someday” we will get out of the hole and quit being debt slaves, but very few of us ever actually accomplish this. That is because the entire system is designed to trap us in debt before we even get out into the “real world” and keep us in debt until we die. Sadly, most Americans don’t even realize what is being done to them.

In America today, debt is considered to be just part of normal life. We go into debt to go to college, we go into debt to buy a vehicle, we go into debt to buy a home, and we are constantly using our credit cards to buy the things that we think we need.

Marc Faber: Gold is a Hedge Against a U.S. Economic Collapse

The U.S. could be on the verge of an economic collapse and investors should start moving their portfolios into hard assets like gold and silver. At least, that’s according to renowned investor Marc Faber.

n a presentation at the CFA Analyst Seminar in Chicago, the popular market commentator argued asset markets are broadly overvalued and investors should be accumulating cash. To survive the looming financial crisis and economic collapse, the author of the Gloom, Doom, and Boom Report recommended investors keep a quarter of their portfolio in gold.

“Gold is insurance if the banking system fails,” he said to attendees. “As an investor I’d like to own something outside the banking system, and that includes real estate, art and gold.”

For just a tiny glimpse of the role that gold will play in the event of a market collapse, look no further than China. The yellow metal rallied somewhat on Monday and Tuesday, with investors rushing at a safe haven asset as China’s crisis continues. This rush would turn into a stampede if such a crisis hits U.S. stock markets, as Faber predicts could very well happen.

Here’s The Bad News That Nobody Is Telling You About The Record Lows In Initial Unemployment Claims

The headline, fictional, seasonally adjusted (SA) number of initial unemployment claims for last week came in at 267,000. The Wall Street economist crowd consensus guess close to the mark this week, at 272,000.

We focus on the trend of the actual data Instead of the seasonally manipulated headline number expectations game. Facts tend to be more useful than the economic establishment’s favored fictitious numbers. Actual claims based on state by state filings were 230,430, which is another record low for this calendar week. It continues a nearly uninterrupted string of record lows that began in September 2013.

The Department of Labor (DoL) reports the unmanipulated numbers that state unemployment offices actually count and report each week. This week it said, “The advance number of actual initial claims under state programs, unadjusted, totaled 230,430 in the week ending July 25, a decrease of 32,519 (or -12.4 percent) from the previous week. The seasonal factors had expected a decrease of 43,528 (or -16.6 percent) from the previous week. There were 257,625 initial claims in the comparable week in 2014. ”

Solutions to World Economy Part I

Big Banks Are Turning On Customers: How to Protect Yourself

You’re a responsible credit card user. You don’t rack up insurmountable balances, you pay everything off at the end of the month, and you’re even taking advantage of rewards programs to earn yourself some significant airline miles, or cash back bonuses. All told, you’re living proof that credit cards don’t necessarily need to be used strictly as a life raft, or as a ticket to the poor house.

But the banks have become privy to your wise credit card strategies, and are countering with some fancy footwork of their own.

Case in point, CitiBank — part of the CitiGroup Inc. empire — was recently caught using illegal practices to manipulate credit card customers, which cost them a hefty $700 million in fines from the U.S. Consumer Financial Protection Bureau. On top of that, Citi is on the hook for civil penalties totaling $35 million to be paid to both the CFPB and the Office of the Comptroller of the Currency.

The fines are the result of illegal credit card practices, related to add-on products and services that the CFPB says “harmed” consumers. “Roughly 7 million consumer accounts were affected by Citibank’s deceptive marketing, billing, and administration of debt protection and credit monitoring add-on products,” the CFPB said in a statement. “A Citibank subsidiary also deceptively charged expedited payment fees to nearly 1.8 million consumer accounts during collection calls.”

Friday 07.31.2015

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.