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NEWS to Disturb the Comfortable...

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U.S. job growth slows, rose less than expected

U.S. job growth rose less than expected in August, which could dim prospects of a Federal Reserve interest rate hike later this month, even as the unemployment rate dropped to a near 7-1/2- year low of 5.1 percent and wages accelerated.

Nonfarm payrolls increased 173,000 last month as the manufacturing sector lost the most jobs since July 2013, after an upwardly revised 245,000 rise in July, the Labor Department said on Friday. It was the smallest gain in employment in five months.

The report, however, may have been tarnished by a statistical fluke that in recent years has frequently led to sharp upward revisions to payroll figures for August after initial weak readings.

Gas Prices Headed Below $2 a Gallon

A gallon of regular gasoline costs $2.44 on average in the United States on Thursday, nearly a full dollar less than a year ago, and it is the lowest gas price going into the Labor Day holiday weekend since 2004. August gas prices averaged $2.60 a gallon, the lowest August average since 2005, and about 15 cents a gallon below the July 2015 price.

Once the summer driving season ends, U.S. drivers could be in for an even bigger treat: an average gas price below $2 a gallon. AAA spokesman Avery Ash said:

Gas prices in many parts of the country could fall below $2 per gallon by Christmas if the cost of crude oil remains low. There is good reason to believe that cheaper oil costs, a seasonal decline in driving and the switchover to less costly winter-blend gasoline will continue to push down prices through the end of the year.

The US is forgiving $40 million in student debt taken on by thousands of students

The US Department of Education said Wednesday that it has forgiven $40 million in debt issued to more than 3,000 former students of the now defunct for-profit Corinthian College Inc.

The development comes after the department said in June that it would provide automatic debt relief to people who attended Corinthian College after June 2014.

The department also said it would accept claims under a so-called defense to repayment on an individual basis.

Under the law, a borrower defense to repayment provides loan forgiveness to students if their school committed fraud or broke laws.

The Fed May Have to Save Emerging Markets With QE4

A funny thing happened on the way to permanently expanding global markets: unintended consequences. Borrowing cheap, abundant U.S. dollars seemed like a good idea when the dollar was declining, and few voiced any concern when $9 trillion was borrowed in USD-denominated debt around the world in the years since 2009.

Few saw the possibility of the USD rising, or that if it did appreciate against other currencies, that the blowback would destabilize the global economy.

It turns out a strengthening USD has triggered capital flight as other currencies devalue. Anyone propping up their currency to stem the flood tide faces another unintended consequence–a faltering export sector: China: Doomed If You Do, Doomed If You Don’t (September 1, 2015).

Why are tech stocks under pressure?

The Impact Of Immigration On The Global Economy: Goldman Sachs

Immigration has become a hot-button topic all across the globe over the last few years, and is not limited to the United States. Throughout the course of human history, hungry or otherwise desperate people have left their homes to immigrate to other areas where they could make a new and better life for themselves. Unfortunately, in the 21st century, there is often nowhere for desperate people to go as large numbers of immigrants are not welcome in most countries.

The immigration issue has been simmering for decades along the southern border of the United States, and immigration has led to controversy or even violence in in India, Europe and across the Middle East. The ongoing violence in Libya, Syria and Iraq has led to a more pressing immigration crisis in Southern Europe today, as the continent is trying to deal with hundreds of thousands of refugees fleeing the violence in these areas.

The September 2nd edition of Goldman Sachs Group Inc (NYSE:GS) Fortnightly Thoughts explores the issue of immigration, focusing on recent trends and highlighting possible impacts on macroeconomics and investments.

US sanctions against Chinese firms could be next week

The United States is preparing to sanction Chinese companies connected to the cyber theft of U.S. intellectual property as early as next week, the Financial Times reported on Thursday.

The FT cited three U.S. officials as saying the sanctions probably would come next week in advance of Chinese President Xi Jinping's visit later in the month.

Suspicions that Chinese hackers were behind a series of data breaches in the United States have been an irritant in relations between the United States and China.

The United States is also considering sanctions against Russian individuals and companies for cyber attacks, U.S. officials have told Reuters.

U.S. Banking Industry earned record $43 billion in the Second Quarter

U.S. banks’ earnings soared 7.3 per cent in the April-June period from a year earlier as revenues increased. Nearly 60 per cent of banks reported an increase in profit from a year earlier. Only 5.6 per cent of banks were unprofitable.

FDIC said in its quarterly report on the industry’s health that U.S banks earned record $43 billion in the second quarter. A $3.6 billion rise in net operating revenue including a 2.3 percent increase in net interest income and a 1.9 percent increase in noninterest income drove the earnings increase.

“The banking industry had another positive quarter as recent trends have continued,” FDIC Chairman Martin Gruenberg said at a news conference. Still, he noted, low interest rates continued to crimp banks’ profit margins on loans during the April-June period.

Oil crash cut my pay and killed over 86,000 jobs

Last year the father of four young children was diagnosed with brain cancer. As he recovers from surgery, Butt has seen many of his friends and family members lose their jobs in an energy industry ravaged by cheap oil.

Roughly one-fifth of Butt's colleagues have lost their jobs at the Billings, Montana-based Pioneer Oil Company. The remaining workers, including Butt, have been forced to take a 10% pay cut.

"It's made life a little bit tougher, especially with being a father of four kids," Butt, 34, told CNNMoney. "It's been pretty stressful wondering whether we will be able to survive through this tough time."

American companies have disclosed at least 86,405 job cuts directly attributed to falling oil prices since June 2014, according to outplacement firm Challenger, Gray & Christmas. Oil sells for $47 a barrel, down dramatically from north of $100 as recently as July 2014.

War Drums Beating - Real Or Imagined?

Over $572 Million in Excess Obamacare Tax Credits Paid Out

The Internal Revenue Service paid out over $572 million in excess Obamacare tax credits and sent incorrect forms to over half a million individuals due to a computer programming error, according a new government report.

The report released by the Treasury Inspector General for Tax Administration on Tuesday inspected the interim results of the IRS’s verification of Obamacare’s Premium Tax Credits, which were created to assist low or medium-income individuals and families to purchase health insurance in the marketplace

Those who are eligible to receive tax credits under Obamacare can choose to have their credits paid either directly to their health insurance provider as a partial payment towards their monthly premiums—known as the Advance Premium Tax Credit—or can receive the tax credits as one lump sum on their annual income tax return.

It’s 2008 All Over Again: This Federal Agency Doesn’t Get It

You might have thought it was a good idea when the government started taking all the profits of the Federal National Mortgage Association (FNMA, or Fannie Mae) and the Federal Home Loan Mortgage Corporation (FHLMC, or Freddie Mac).

After all, the two quasi-private mortgage insurance giants had sucked a lot of profit out of the markets over the decades, and then required over $180 billion in bailout money from taxpayers. Why not get a little of the bailout cash back, right?

Well, we did. As I’ve written lately, the U.S. government has recouped all of the bailout money and then some, to the tune of an additional $40 billion. So far, so good. But now the government, through the Federal Housing Finance Agency (FHFA), which oversees the twin behemoths, has another plan.

As usual with a government plan, this one has a few holes.

The danger of eliminating cash

In the early days of central banking, one primary objective of the new system was to take ownership of the public's gold, so that in a crisis the public would be unable to withdraw it.

Gold was to be replaced by fiat cash which could be issued by the central bank at will. This removed from the public the power to bring a bank down by withdrawing their property. A primary, if unspoken, objective of modern central banking is to do the same with fiat cash itself.

There are of course other reasons for this course of action. Governments insist that they need to be able to trace all private sector transactions to ensure that criminals do not pursue illegal activities outside the banking system, and that tax is not evaded. For the government, knowledge of everything individuals do is necessary control. However, in the monetary sense, anti-money laundering and tax evasion are not the principal concern. Central banks are fully aware that the financial system is fragile and could face a new crisis at any time. That's why cash in their view must be phased out.

Keiser Report: ‘Crack now, pay later’

Many Millennials See Themselves as Self-Absorbed, Wasteful

Even millennials don't think much of their generation, according to a new poll Thursday.

A Pew Research Center study showed that millennials — generally defined as those ages 18-34 — had far more negative views of their generation compared to Generation Xers, baby boomers or other age groups. More than half of millennials, 59 percent, described their generation as "self-absorbed," while almost half — or 49 percent — said they were "wasteful," and 43 percent said they were "greedy."

Around 30 percent of Generation Xers — those ages 35-50 — said their own generation was self-absorbed and wasteful, and 20 percent of the baby boomers said the same about their age cohort.

Millennials "stand out in their willingness to ascribe negative stereotypes to their own generation," the study said.

Age of the Unicorn: How the Fed Tried to Fix the Recession, and Created the Tech Bubble

In Class, his rude and amusing 1983 guide to the American social hierarchy, the literary historian Paul Fussell noted the strange prominence of the unicorn in working-class culture. Stumped for an explanation, he surmised that it might have something to do with a “low Anglophilic snobbery,” a “pseudo-reference” to the royal coat of arms. Times have changed. Three decades later, the unicorn has jumped several rungs up the class ladder, to where it’s now the principal lust object of the tech and financial elite: a young company that has attracted enough financing to make it worth a billion or more.

“Unicorn” in this usage was coined by Aileen Lee, a veteran venture capitalist (VC) who’d just started her own firm, Cowboy Ventures. (Lee rarely gets credit for the coinage, which, given its ubiquity in a certain subculture, seems unfair. You have to wonder if it has something to do with her gender—women VCs are barely more plentiful than unicorns.) Lee and her colleagues had just completed a study of what makes start-ups successful, and wanted a catchy label for the winners. She thought “unicorn” fit the bill: “Yes we know the term ‘unicorn’ is not perfect—unicorns apparently don’t exist, and these companies do—but we like the term because to us, it means something extremely rare, and magical.”

Gold fever hits Poland with possible discovery of Nazi train

The placid woodlands around this medieval castle town have suddenly become the hottest spot in Poland — as treasure hunters descend on the area in search of a mystery Nazi train said to be laden with gold.

Government reports that two men may have located the legendary World War II treasure, purportedly buried in a secret tunnel in the bowels of the earth, have set off a frenzy of excitement among fortune-hunters from across Poland and beyond.

"It's a true gold rush," said Andrzej Nowak, a 60-year-old retired teacher who lives near the spot.

Polish authorities recently said that two unidentified men used radar to locate an armored train deep under the woodlands around Walbrzych, and believe it could be the so-called Nazi "gold train." Rumors have swirled for decades about the train, also said to be filled with weapons, though there is absolutely no evidence that it ever existed.

Nothing but Black Swans Ahead

Russia Is Going To Pass A Law Formally Dumping The U.S. Dollar

Russian President Vladimir Putin has introduced legislation that would deal a tremendous blow to the U.S. dollar. If Putin gets his way, and he almost certainly will, the U.S. dollar will be eliminated from trade between nations that belong to the Commonwealth of Independent States. In addition to Russia, that list of countries includes Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan and Uzbekistan. Obviously this would not mean “the death of the dollar”, but it would be a very significant step toward the end of the era of the absolute dominance of the U.S. dollar. Most people don’t realize this, but more U.S. dollars are actually used outside of the United States than are used inside this country. If the rest of the planet decides to stop accumulating dollars, using them to trade with one another, and loaning them back to us at ultra-low interest rates, we are going to be in for a world of hurt. Unfortunately for us, it is only a matter of time until that happens.

The Sports Stadium Shakedown Of America’s Taxpayers

What’s America to do about its stadium problem?

Over the past 15 years, more than $12 billion in public money has been spent on privately owned stadiums. Between 1991 and 2010, 101 new stadiums were opened across the country; nearly all those projects were funded by taxpayers. The loans most often used to pay for stadium construction—a variety of tax-exempt municipal bonds—will cost the federal government at least $4 billion in taxpayer subsidies to bondholders. Stadiums are built with money borrowed today, against public money spent tomorrow, at the expense of taxes that will never be collected. Economists almost universally agree that publicly financed stadiums are bad investments, yet cities and states still race to the chance to unload the cash. What gives?

To understand this stadium trend, and why it’s so hard for opponents to thwart public funding, look to Wisconsin. Last month, Governor Scott Walker signed a bill to spend $250 million on a new basketball arena for the Milwaukee Bucks. (The true cost of the project, including interest payments, will be more than $400 million.) Milwaukee Common Council, the city’s lawmaking body, will weigh the arena proposal on September 22, after a series of public hearings.

Biggest drop in pay hitting America’s lowest paid workers

While another big jobs report looms tomorrow, one area of crucial importance that economists will be watching is the Bureau of Labor Statistics data on wage gains. Over the past year, and since the end of the last recession, wage improvements have been elusive. And now a new report from advocacy group the National Employment Law Project finds that effective take-home pay for many workers has actually fallen since the recovery began in 2009, especially for the lowest-paid workers.

The left-leaning group reports income for the lowest paid workers, defined as the lowest-paid fifth of all workers, has actually fallen 5.7% since 2009. The types of jobs seeing the greatest drops in income were for cooks and food prep workers, personal care and home health aides, and janitors and cleaners.

"This report quantifies something I think we know in a general way for a while,” Yahoo Finance's Rick Newman says in the attached video. “This is real incomes - which means relative to inflation - and I think what's going on is people aren’t getting pay cuts in these lower paying jobs, I think they're just not getting raises.” The traditional 3% or even 5% standard of living raises are a thing of the past, as employers don’t have a need to give them.

Friday 09.04.2015

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.