Finance

The Markets, Currency, the Transfer of Wealth and anything else that affects your wallet.

Guess Who Makes More Than Bankers: Their Regulators

0

 

Source: http://www.againstcronycapitalism.org

By

Guess Who Makes More Than Bankers: Their Regulators

 

comptroller-cc-565x276

 

Government work is pretty good for the most part. (There’s the whole selling your soul aspect, but that aside. — I kid. I kid.) The pay is far above average. Union protections mean you basically can never be fired. The pension comes early, is forever, and is backed by the US taxpayer. Civil servants have it pretty darn good. Government employees on average earn over $120,000 in total compensation. Banking regulators make on average far more than this.

 

The truth is the government civil service sector constitutes a crony class. It controls DC. Politicians come and politicians go, but the bureaucracy always stays. It always gets bigger. It always gets more complex. And it always takes more from the taxpayer.

When the average limo driver at the FDIC makes almost twice that of a private sector banker on average it’s pretty clear that something is amiss.

(From The Wall Street Journal)
 
You might think high-paying jobs at these agencies require special skills. Not so. At the OCC, secretaries make on average $79,182 per annum. Motor vehicle operators (the agency’s limo drivers) at the FDIC earn $82,130. Human resources management trainees at the CFPB make $110,759 a year.
 
Averages tell only part of the story. In 2012, 68% of FDIC and CFPB staff—and 66% at the OCC—earned above $100,000 a year. Nearly 19% of the CFPB and OCC staff earn more than $180,000 a year. At the OCC, 10.5% of workers earn above $200,000 a year, at the FDIC 9.3%.

Click here for the article.


Nick Sorrentino
About Nick Sorrentino

Nick Sorrentino is the co-founder and editor of AgainstCronyCapitalism.org. A political and communications consultant with clients across the political spectrum, he lives just outside of Washington DC where he can keep an eye on Leviathan.

Image credit: http://www.againstcronycapitalism.org

 

Exactly Like 7 Years Ago? 2014 Is Turning Out To Be Eerily Similar To 2007

0

 

Source: http://theeconomiccollapseblog.com

By Michael Snyder

Exactly Like 7 Years Ago? 2014 Is Turning Out To Be Eerily Similar To 2007

 

Bubble-Photo-by-Jeff-Kubina-300x300The similarities between 2007 and 2014 continue to pile up.  As you are about to see, U.S. home sales fell dramatically throughout 2007 even as the mainstream media, our politicians and Federal Reserve Chairman Ben Bernanke promised us that everything was going to be just fine and that we definitely were not going to experience a recession.  Of course we remember precisely what followed.  It was the worst economic crisis since the days of the Great Depression.  And you know what they say – if we do not learn from history we are doomed to repeat it.  Just like seven years ago, the stock market has soared to all-time high after all-time high.  Just like seven years ago, the authorities are telling us that there is nothing to worry about.  Unfortunately, just like seven years ago, a housing bubble is imploding and another great economic crisis is rapidly approaching.

Posted below is a chart of existing home sales in the United States during 2007.  As you can see, existing home sales declined precipitously throughout the year…

Existing-Home-Sales-2007-425x282

Now look at this chart which shows what has happened to existing home sales in the United States in recent months.  If you compare the two charts, you will see that the numbers are eerily similar…

Existing-Home-Sales-Today-425x282

New home sales are also following a similar pattern.  In fact, we just learned that new home sales have collapsed to an 8 month low

Sales of new single-family homes dropped sharply last month as severe winter weather and higher mortgage rates continued to slow the housing recovery.
 
New home sales fell 14.5% to a seasonally adjusted annual rate of 385,000, down from February’s revised pace of 449,000, the Census Bureau said.

Once again, this is so similar to what we witnessed back in 2007.  The following is a chart that shows how new home sales declined dramatically throughout that year…

New-Home-Sales-2007-425x282

And this chart shows what has happened to new homes sales during the past several months.  Sadly, we have never even gotten close to returning to the level that we were at back in 2007.  But even the modest “recovery” that we have experienced is now quickly unraveling…

New-Home-Sales-Today-425x282

If history does repeat, then what we are witnessing right now is a very troubling sign for the months to come.  As you can see from this chart, new home sales usually start going down before a recession begins.

And don’t expect these housing numbers to rebound any time soon.  The demand for mortgages has dropped through the floor.  Just check out the following excerpt from a recent article by Michael Lombardi

One of the key indicators I follow in respect to the state of the housing market is mortgage originations. This data gives me an idea about demand for homes, as rising demand for mortgages means more people are buying homes. And as demand increases, prices should be increasing.
 
But the opposite is happening…
 
In the first quarter of 2014, mortgage originations at Citigroup Inc. (NYSE/C) declined 71% from the same period a year ago. The bank issued $5.2 billion in mortgages in the first quarter of 2014, compared to $8.3 billion in the previous quarter and $18.0 billion in the first quarter of 2013. (Source: Citigroup Inc. web site, last accessed April 14, 2014.)
 
Total mortgage origination volume at JPMorgan Chase & Co. (NYSE/JPM) declined by 68% in the first quarter of 2014 from the same period a year ago. At JPMorgan, in the first quarter of 2014, $17.0 billion worth of mortgages were issued, compared to $52.7 billion in the same period a year ago. (Source: JPMorgan Chase & Co. web site, last accessed April 14, 2014.)

It is almost as if we are watching a replay of 2007 all over again, and yet nobody is talking about this.

Everyone wants to believe that this time will be different.

The human capacity for self-delusion is absolutely amazing.

There are a lot of other similarities between 2007 and today as well.

Just the other day, I noted that retail stores are closing in the United States at the fastest pace that we have seen since the collapse of Lehman Brothers.

Back in 2007, we saw margin debt on Wall Street spike dramatically and help fuel a remarkable run in the stock market.  Just check out the chart in this article.  But that spike in margin debt also made the eventual stock market collapse much worse than it had to be.

And just like 2007, consumer credit is totally out of control.  As I noted in one recent article, during the fourth quarter of 2013 we witnessed the biggest increase in consumer debt in the U.S. that we have seen since 2007.  Total consumer credit in the U.S. has risen by 22 percent over the past three years, and 56 percent of all Americans have “subprime credit” at this point.

Are you starting to get the picture?  It is only 7 years later, and the same things that happened just prior to the last great financial crisis are happening again.  Only this time we are in much worse shape to handle an economic meltdown.  The following is a brief excerpt from my recent article entitled “We Are In FAR Worse Shape Than We Were Just Prior To The Last Great Financial Crisis“…

None of the problems that caused the last financial crisis have been fixed.  In fact, they have all gotten worse.  The total amount of debt in the world has grown by more than 40 percent since 2007, the too big to fail banks have gotten 37 percent larger, and the colossal derivatives bubble has spiraled so far out of control that the only thing left to do is to watch the spectacular crash landing that is inevitably coming.

You can read the rest of that article right here.

For a long time, I have been convinced that this two year time period is going to represent a major “turning point” for America.

Right now, 2014 is turning out to be eerily similar to 2007.

Will 2015 turn out to be a repeat of 2008?

This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

3dnew3-240x300


Image credit: http://theeconomiccollapseblog.com

 

 

The Sad State of the Economics Profession

0

 

Source: https://mises.org

By

The Sad State of the Economics Profession

 

6726It is not an exaggeration to say the current reputation of economists is probably just below that of a used car salesman. The recent failures of economic policies to boost growth or employment have tarnished this image even more. This, however, is in sharp contrast to the past when economists were seen as the intellectual roadblock to popular misconceptions, bad ideas, or more importantly, government policies sold to the public on false assumptions. Popular slogans such as “protecting American jobs” play on nationalism, but in reality only serve special interests. The economist of the past would never have hesitated to highlight the fallacies in such reasoning.

Most economists today, however, have sold themselves to the enemy. They work for government agencies such as the IMF, OECD, World Bank, central banks, or academic institutions where their research is heavily subsidized by government agencies. To succeed they have to “toe the line.” You don’t bite the hand that feeds you.

Today, these economists and bought-and-paid-for journalists inform us of the dangers of deflation and the risks of “ low-flation,” and how the printing press will protect us from this catastrophe. Yet there is no theoretical or empirical justification for this fear. On the contrary, a stable money supply would allow prices to better serve the critical function of allocating resources to where they are most needed. The growth resulting from stable money would normally be associated with rapidly falling prices as was the case during most of the nineteenth century.

When President Obama first talked about raising the minimum wage, Paul Krugman, a Nobel Laureate in economics, quickly published an article supporting such an increase. Yet, even a first-year student in economics knows price controls distort the resource allocation function of prices, thus benefiting one group or special interests at the expense of the rest of society. Although some will receive a higher minimum wage, many others will simply be thrown under the bus. A political pundit should not be masquerading as an economist.

Economists also have “physics envy” and are enamored with empiricism and mathematical models. To work in a central bank you have to be familiar with, if not a quasi-expert on, DSGE models. The problem with these models, or any economic model, is that the parameters are not constant, most of the variables are interrelated with constantly changing interrelationships and omitted variables, like expectations, some of which being immeasurable, are conveniently assumed away as unimportant. That is like taking a road map of shipping lanes and omitting the islands.

Economics is a social science and techniques borrowed from the physical sciences are simply inappropriate. Since we do not have a laboratory to conduct economic experiments, it is difficult to distinguish between association and causation or correctly determining the direction of causation. Economic activity is based on human actions, with very little empirical regularity. It may be a sunny day, and you have skied for three days. This does not mean you will go skiing on the fourth day. Your actions simply cannot be modeled like the reactions of lab rats in a biology experiment. Unlike the reaction to noise from the zombies in the walking dead, humans do not react necessarily to the same events in the same way. Economists at the Fed must be scratching their heads as to why businesses did not react to lower interest rates as it did after the dot-com bubble. It’s the old adage of “fool me once, shame on you; fool me twice, shame on me.”

When one attains a Ph.D. in physics or medicine, he does not spend time understanding theories from 200 years ago. The profession is always moving forward, right? In economics, we wrongly take the same attitude. Macroeconomics as a profession has not advanced but has regressed. We had a better understanding of macroeconomics 80 years ago. Politicians put Keynes on a pedestal because he gave them the theoretical foundation to justify policies that had been justifiably ridiculed in the past by the classical economists.

These economists such as Smith, Say, Ricardo, and Mill fought hard to dispel the popular misconception that the problem was overproduction and a lack of money. Today, the leading economists are telling us everything will be fine if we can boost demand (hence, too much production) or have more money through quantitative easing. These are the same popular misconceptions promulgated by mercantilists 250 years ago. The difference, today, is that economists are the mercantilists’s ally instead of their enemies.

The role of the economist should be to explain not only the direct effects, but also the indirect effects of economic policies. The economists should not only tell us what is seen, but what is not seen, and more importantly what should be foreseen. Economists in unison should have informed the public that the massive government spending after the crash of 2008 would have created more growth and employment if the money had been left in private hands. To fund “cash for clunkers,” the government borrowed money that would normally have been used to build plants and equipment or capital goods, the real source of growth in an economy. As Murray Rothbard eloquently said, this is a transfer of “resources from the productive [private sector] to the parasitic, counterproductive public sector.”

We live on a planet with a constraint called gravity. We can adapt to the law of gravity by creating innovations such as airplanes, but we cannot defy the law of gravity by jumping off a building without a parachute. The same is true in economics and of the law of scarcity. We falsely believe that somehow if government legally counterfeits intrinsically worthless paper or spends someone else’s money we will be able to upend the law of scarcity.

J.B. Say once said that economists should be “passive spectators” who do not give advice. He could have added, “and do not sleep with the enemy.”


About the Author

Frank Hollenbeck

Frank Hollenbeck teaches finance and economics at the International University of Geneva. He has previously held positions as a Senior Economist at the State Department, Chief Economist at Caterpillar Overseas, and as an Associate Director of a Swiss private bank. 

 

Image credit: https://mises.org

 

Advanced Cell Technology (ACT), a privately funded biotech corporation, has reported a successful cloning of male human cells from samples from a 35 year old and 75 year old; and now have used DNA from infants to drive home the point that humans can be easily cloned . – See more at: http://www.occupycorporatism.com/home/clone-clone-scientists-create-human-stem-cells/#sthash.FGYriRkK.dpuf
Robert Lanza, lead author and senior chief scientist at the ACT said: “There are many diseases, whether it’s diabetes, Alzheimer’s or Parkinson’s disease, that usually increase with age.” – See more at: http://www.occupycorporatism.com/home/clone-clone-scientists-create-human-stem-cells/#sthash.FGYriRkK.dpuf

Are You Ready For The Price Of Food To More Than Double By The End Of This Decade?

0

 

Source: http://theeconomiccollapseblog.com

By Michael Snyder

Are You Ready For The Price Of Food To More Than Double By The End Of This Decade?

 

Supermarket-Photo-by-Abrahami-300x300Do you think that the price of food is high now?  Just wait.  If current trends continue, many of the most common food items that Americans buy will cost more than twice as much by the end of this decade.  Global demand for food continues to rise steadily as crippling droughts ravage key agricultural regions all over the planet.  You see, it isn’t just the multi-year California drought that is affecting food prices.  Down in Brazil (one of the leading exporters of food in the world), the drought has gotten so bad that 142 cities were rationing water at one point earlier this year.  And outbreaks of disease are also having a significant impact on our food supply.  A devastating pig virus that has never been seen in the U.S. before has already killed up to 6 million pigs.  Even if nothing else bad happens (and that is a very questionable assumption to make), our food prices are going to be moving aggressively upward for the foreseeable future.  But what if something does happen?  In recent years, global food reserves have dipped to extremely low levels, and a single major global event (war, pandemic, terror attack, planetary natural disaster, etc.) could create an unprecedented global food crisis very rapidly.

A professor at the W. P. Carey School of Business at Arizona State University named Timothy Richards has calculated what the drought in California is going to do to produce prices at our supermarkets in the near future.  His projections are quite sobering

  • Avocados likely to go up 17  to 35 cents to as much as $1.60 each.
  • Berries likely to rise 21 to 43 cents to as much as $3.46 per clamshell container.
  • Broccoli likely to go up 20 to 40 cents to a possible $2.18 per pound.
  • Grapes likely to rise 26 to 50 cents to a possible $2.93 per pound.
  • Lettuce likely to rise 31 to 62 cents to as much as $2.44 per head.
  • Packaged salad likely to go up 17 to 34 cents to a possible $3.03 per bag.
  • Peppers likely to go up 18 to 35 cents to a possible $2.48 per pound.
  • Tomatoes likely to rise 22 to 45 cents to a possible $2.84 per pound.

So what happens if the drought does not end any time soon?

Scientist Lynn Ingram, who has studied the climate history of the state of California extensively, told CBS News that we could potentially be facing “a century-long megadrought” in California.  If that does indeed turn out to be the case, we could be facing huge price increases for produce year after year.

And it isn’t just crops that are grown in the United States that we need to be concerned about.  As NBC News recently reported, the price of cocoa is absolutely soaring and that is going to mean much higher prices for chocolate…

As cocoa prices surge to near-record highs on demand for emerging markets, chocoholics brace for a hike in price – and maybe even a different taste, as chocolate makers hunt out cheaper ingredients.
 
Cocoa futures are up 10 percent so far this year, hitting almost £1,900 on ($3,195) a ton in March. Last year prices rose 20 percent.

In fact, experts are now warning that chocolate may soon become a “high-end luxury item” because it is becoming so expensive.

Meat prices are also starting to spiral out of control.

A virus known as porcine epidemic diarrhea has pushed pork prices up to new all-time record highs.  It has already spread to 27 states, and as I mentioned above, it has already killed up to 6 million pigs.  It is being projected that U.S. pork production will decline by about 7 percent this year as a result, and Americans could end up paying up to 20 percent more for pork by the end of the year.

The price of beef has also soared to a brand new all-time record high.  Due to the drought that never seems to let up in the western half of the country, the total size of the U.S. cattle herd has been declining for seven years in a row, and it is now the smallest that is has been since 1951.

If the overall price of food in this country increases by just an average of a little more than 12 percent a year, it will double by the end of this decade.

What would you do if you suddenly walked into the grocery store and everything was twice as much?

That is a frightening thing to think about.

Meanwhile, all of our other bills just keep going up as well.  For example, we just learned that the price of electricity hit a brand new all-time record high for the month of March.

If our incomes were keeping up with all of these price increases, that would be one thing.  Unfortunately, that is not the case.  As I wrote about earlier this week, the quality of our jobs continues to go down and more Americans fall out of the middle class every single day.

According to CNBC, there are hundreds of thousands of Americans with college degrees that are working for minimum wage right now…

While a college degree might help get a job, it doesn’t necessarily mean a good salary. According to a report released last month by the Bureau of Labor Statistics, some 260,000 workers with bachelor’s degrees and 200,000 workers with associate’s degrees are making the minimum wage.
 
The federal minimum wage is $7.25 an hour, and the minimum wage for tipped workers is $2.13 an hour. Some cities and states have recently raised their minimum wage, but the BLS report defines only those making $7.25 an hour or less as “minimum wage workers.”

And according to the U.S. Census Bureau, median household income in the United States has dropped for five years in a row.

This is why so many families are financially stressed these days.  The cost of living is going up at a steady pace, but for the most part our paychecks are not keeping up.  Average Americans are having to stretch their money farther than ever, and many families have reached the breaking point.

This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

 

3dnew3-240x300


Image credit: http://theeconomiccollapseblog.com

 

Two More Victims Of The Retail Apocalypse: Family Dollar And Coldwater Creek

0

 

Source: http://theeconomiccollapseblog.com

By Michael Snyder

Two More Victims Of The Retail Apocalypse: Family Dollar And Coldwater Creek

 

Family-Dollar-300x300Did you know that Family Dollar is closing 370 stores? When I learned of this, I was quite stunned. I knew that retailers that serve the middle class were really struggling right now, but I had no idea that things had gotten so bad for low end stores like Family Dollar. In the post-2008 era, dollar stores had generally been one of the few bright spots in the retail industry. As millions of Americans fell out of the middle class, they were looking to stretch their family budgets as far as possible, and dollar stores helped them do that. It would be great if we could say that the reason why Family Dollar is doing so poorly is because average Americans have more money now and have resumed shopping at retailers that target the middle class, but that is not happening. Rather, as you will see later in this article, things just continue to get even worse for Americans at the low end of the income scale.

I was also surprised to learn that Coldwater Creek is closing all of their stores

Women’s clothing retailer Coldwater Creek Inc. on Friday filed for Chapter 11 bankruptcy after failing to find a buyer said it plans to close its stores by early summer.
 
Coldwater Creek joins other retailers to seek protection from creditors in recent months as consumers keep a lid on spending.
 
The company said it plans to wind down its operations over the coming months and begin going-out-of-business sales in early May, before the traditionally busy Mother’s Day weekend.
 
Coldwater Creek, which has 365 stores and employs about 6,000 people, has five stores in Maryland.

I remember browsing through a Coldwater Creek with my wife and mother-in-law just last year. At the time, my mother-in-law was excited about getting one of their catalogs. But now Coldwater Creek is going out of business, and all that will be left of that store is a big, ugly, empty space.

Of course the fact that a couple of major retailers are closing stores is nothing new. This kind of thing happens year after year.

But what we are witnessing right now is really quite startling. So many retailers are closing so many stores that it is being called a “retail apocalypse”. In a previous article entitled “This Is What Employment In America Really Looks Like…“, I detailed how major U.S. retailers have already announced the closing of thousands of stores so far this year.  If the economy really was “getting better”, this should not be happening.

So why are so many stores closing?

Well, the truth is that it is because the middle class is dying. With each passing day, more Americans lose their place in the middle class and fall into poverty. The following is an excerpt from the story of one man that this has happened to. His recent piece in the Huffington Post was entitled “Next Friday, I’ll Be Living In My Car“…

For the past 13 years, I’ve mostly been doing facility management in several locations across the state. After the position turned into more of a sales role, they laid me off. Since then, I’ve been looking to find any type of work. I’ve applied for food stamps, and I’m waiting for that. I’m mostly eating soup from a food pantry.
 
I’ve been on several interviews — second, third, fourth interviews — and just haven’t been able to land a job for whatever reason. I definitely have the qualifications and the experience. Last week, I had a job offer that I thought was secure, and we were talking my work schedule. They decided to call me back and go with an assistant rather than a manager.
 
For a number of applications, I’ve dumbed down my resume. I don’t even go with a resume sometimes, just because I don’t want them to know that I’m educated and have a master’s degree. It shoots me in the foot. They don’t want me because they don’t think I’m going to stay. I don’t blame them. I was making six figures at $60-70 an hour. Now, I’m looking for a $10 an hour job.

There are millions upon millions of Americans that can identify with what that man is going through.

Once upon a time, they were living comfortable middle class lifestyles, but now they will take any jobs that they can get.

Just today I came across a statistic that shows the massive shift that is happening in this country. A decade ago, the number of women working outnumbered the number of women on food stamps by more than a 2 to 1 margin. But now the number of women on food stamps actually exceeds the number of women that have jobs.

Wow.

How could things have changed so rapidly over the course of just one decade?

And sadly, things continue to go downhill. Every day in America, more good jobs are being sent out of the country or are being replaced by technology. I really like how James Altucher described this trend the other day…

Technology, outsourcing, a growing temp staffing industry, productivity efficiencies, have all replaced the middle class.
 
The working class. Most jobs that existed 20 years ago aren’t needed now. Maybe they never were needed. The entire first decade of this century was spent with CEOs in their Park Avenue clubs crying through their cigars, “how are we going to fire all this dead weight?”. 2008 finally gave them the chance. “It was the economy!” they said. The country has been out of a recession since 2009. Four years now. But the jobs have not come back. I asked many of these CEOs: did you just use that as an excuse to fire people, and they would wink and say, “let’s just leave it at that.”
 
I’m on the board of directors of a temp staffing company with one billion dollars in revenues. I can see it happening across every sector of the economy. Everyone is getting fired. Everyone is toilet paper now.
 
Flush.

There is so little loyalty in corporate America these days. If you work for a major corporation, you could literally lose your job at any moment. And you can be sure that there is someone above you that is trying to figure out a way to accomplish the tasks that you currently perform much more cheaply and much more efficiently.

Most big corporations don’t care if you are personally successful or if you are able to take care of your family. What they want is to get as much out of you as possible for as little money as possible.

This is a big reason why 62 percent of all Americans make $20 or less an hour at this point.

The quality of our jobs is going down, but the cost of living just keeps going up. Just look at what is happening to food prices. For a detailed examination of this, please see my previous article entitled “Why Meat Prices Are Going To Continue Soaring For The Foreseeable Future“.

As the middle class slowly dies, less people are able to afford to buy homes. Mortgage originations at major U.S. banks have fallen to a record low, and the percentage of Americans that live in “high-poverty neighborhoods” is rising rapidly

An estimated 12.4 million Americans live in economically devastated neighborhoods, according to American Community Survey data collected from 2008 to 2012. That’s an 11 percent jump from the previous survey, conducted from 2007 to 2011. Even more startling, it’s a 72 percent increase in the population of high-poverty neighborhoods since the 2000 Census.

If nothing is done about the long-term trends that are slowly strangling the middle class to death, all of this will just be the beginning.

We will see millions more Americans lose their jobs, millions more Americans lose their homes and millions more Americans living in poverty.

The United States is being fundamentally transformed, and very few people are doing much of anything to stand in the way of this transformation. Decades of incredibly foolish decisions are starting to catch up with us, and unless something dramatic is done right away, all of these problems will soon get much, much worse.

This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

 

3dnew3-240x300


Image credit: http://theeconomiccollapseblog.com

 

Prelude to Economic Disaster: Billionaire Liquidates All Real Estate Ahead of Crash

0

 

Source: http://www.shtfplan.com

By Mac Slavo

SHTFplan.com

Prelude to Economic Disaster: Billionaire Liquidates All Real Estate Ahead of Crash

 

economy-rip

If you were to contact a real estate agent in any major market today they’d likely advise you the market is so “hot” that if you intend on purchasing property you’d better be prepared to act fast. They’ll adamantly point out, contrary to reality, that the housing market has recovered, available inventory is dropping, prices are rising, and they can only go higher from here.

But if you’re paying attention to what’s happening around us, and not just with our own economy here in the United States, then you’d likely have noticed that while many Americans are flying high on hopes of change and recovery, there is an economic disaster of unprecedented scale in the making.

First, we know that the third largest economy in the world, China, is going through a massive credit crunch as bad loans there have soared to near all time highs, meaning that loans are quickly becoming non-existent and credit markets are now frozen. This means that no one is going to be building ghost cities and empty malls in the Peoples’ Republic again any time soon. Moreover, it means no more easy cash. We know what happened in the United States and the rest of the world when the last credit crunch hit.

Second, as Sovereign Man points out, the richest man in Asia Li Ka-Shing (their version of Warren Buffet or Bill Gates with a reported net worth of $30 billion) has rapidly liquidated his real estate holdings and is existing the market as quickly as possible.

Here’s a guy you want to bet on– Li Ka-Shing.
 
Li is reportedly the richest person in Asia with a net worth well in excess of $30 billion, much of which he made being a shrewd property investor.
 
Li Ka-Shing was investing in mainland China back in the early 90s, way back before it became the trendy thing to do. Now, Li wants out of China. All of it.
 
Since August of last year, he’s dumped billions of dollars worth of his Chinese holdings. The latest is the $928 million sale of the Pacific Place shopping center in Beijing– this deal was inked just days ago.
 
Once the deal concludes, Li will no longer have any major property investments in mainland China.
 
This isn’t a person who became wealthy by being flippant and scared. So what does he see that nobody else seems to be paying much attention to?
 
Simple. China’s credit crunch.

But Li Ka-Shing isn’t the only one bailing. Luxury real estate investors are unloading their real estate assets as well in an effort to raise cash and not be the last one holding a dead asset. For all intents and purposes, the music in China has stopped:

Cash-strapped Chinese are scrambling to sell their luxury homes in Hong Kong, and some are knocking up to a fifth off the price for a quick sale, as a liquidity crunch looms on the mainland.

On the domestic front we’ve seen stock markets drop a fairly significant level in recent weeks. So much so that company’s hoping to launch new IPO initiatives have chosen to just sit this one out as they are worried that investors are running out of money to help fund their operations.

You wouldn’t know that, of course, because mainstream media pundits like Dennis Kneale continue to sell Americans on the notion that we’re in a robust recovery:

Yet the economy, both locally and globally, is in vastly better shape than it was when we took that terrible tumble, down to Dow 6,800 in March 2009.
 
Americans have cut back on debt, and so have companies.

Karl Denninger of the Market Ticker calls this one what it is – a complete lie – and points out that we are nowhere near cutting back on our debt.

I Despise Liars
 
US debt to present
 
“Cut back”?  Really?  Worse, ex mortgages this is not true at any level; there is $3,733.5 billion in non-mortgage consumer debt outstanding.  That is an all-time high; in Q4/2006 (just before the crash, remember?) that stood at $3,047.2 billion or nearly $700 billion less.
 
An awful lot of that increase since 2007, incidentally, is student loans — exactly where it cannot be for sustainable economic progress since the younger generation has to eventually take the reins from us older folks.  This is nothing more than an economic Ponzi scheme with its cheering section led by people like Dennis who refuse to look at and argue from facts.
 
As for corporate debt it never decreased at all.

Something is amiss, and the fact that no one in the mainstream, which is where tens of millions of Americans get their “facts,” is really talking about it should be a blaring alarm.

There are, however, some Americans paying attention. As in China, it’s the billionaires and elite who have direct access to the puppeteers pulling the strings, and like Li Ka-shing, they have been quietly and rapidly dumping millions of shares of stock:

Despite the 6.5% stock market rally over the last three months, a handful ofbillionaires are quietly dumping their American stocks . . . and fast.
 

 
In the latest filing for Buffett’s holding company Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.
 

 
Fellow billionaire John Paulson, who made a fortune betting on the subprime mortgage meltdown, is clearing out of U.S. stocks too. During the second quarter of the year, Paulson’s hedge fund, Paulson & Co., dumped 14 million shares of JPMorgan Chase. The fund also dumped its entire position in discount retailer Family Dollar and consumer-goods maker Sara Lee.
 
Finally, billionaire George Soros recently sold nearly all of his bank stocks, including shares of JPMorgan Chase, Citigroup, and Goldman Sachs. Between the three banks, Soros sold more than a million shares.

The big money, often referred to as the smart money, is getting out of the game and they are dumping these assets on unsuspecting investors.

They know, for example, that earnings growth has now plunged to its lowest levels since 2012.

As these in-the-know elites unload their positions, average investors depending on their financial advisers to tell them the truth are slamming money into these stocks and paying, in some cases, 500 times earnings. Real estate investors are, likewise, overpaying for homes based on the idea that markets are “hotter” than they’ve been in years.

It’s a recipe for disaster and it won’t end well – at least for 99% of people who blindly believe the opinions of their favorite “experts.”

Image credit: http://www.shtfplan.com
 

18 Stats That Prove That Government Dependence Has Reached Epidemic Levels

0

 

Source: http://endoftheamericandream.com

By Michael Snyder

18 Stats That Prove That Government Dependence Has Reached Epidemic Levels

 

Did you know that the number of Americans getting benefits from the federal government each month exceeds the number of full-time workers in the private sector by more than 60 million?  In other words, the number of people that are taking money out of the system is far greater than the number of people that are putting money into the system.  And did you know that nearly 70 percent of all of the money that the federal government spends goes toward entitlement and welfare programs?  When it comes to the transfer of wealth, nobody does it on a grander scale than the U.S. government.  Most of what the government does involves taking money from some people and giving it to other people.  In fact, at this point that is the primary function of the federal government.

Just check out the chart below.  It comes from the Heritage Foundation, and it shows that 69 percent of all federal money is spent either on entitlements or on welfare programs…

Heritage-Foundation-460x343

So when people tell you that the main reason why we are being taxed into oblivion is so that we can “build roads” and provide “public services”, they are lying to you.  The main reason why the government taxes you so much is so that they can take your money and give it to someone else.

We have become a nation that is completely and totally addicted to government money.  The following are 18 stats that prove that government dependence has reached epidemic levels…

#1 According to an analysis of U.S. government numbers conducted by Terrence P. Jeffrey, there are 86 million full-time private sector workers in the United States paying taxes to support the government, and nearly 148 million Americans that are receiving benefits from the government each month.  How long can such a lopsided system possibly continue?

#2 Ten years ago, the number of women in the U.S. that had jobs outnumbered the number of women in the U.S. on food stamps by more than a 2 to 1 margin.  But now the number of women in the U.S. on food stamps actually exceeds the number of women that have jobs.

#3 The U.S. government has spent an astounding 3.7 trillion dollars on welfare programs over the past five years.

#4 Today, the federal government runs about 80 different “means-tested welfare programs”, and almost all of those programs have experienced substantial growth in recent years.

#5 Back in 1960, the ratio of social welfare benefits to salaries and wages was approximately 10 percent.  In the year 2000, the ratio of social welfare benefits to salaries and wages was approximately 21 percent.  Today, the ratio of social welfare benefits to salaries and wages is approximately 35 percent.

#6 While Barack Obama has been in the White House, the total number of Americans on food stamps has gone from 32 million to nearly 47 million.

#7 Back in the 1970s, about one out of every 50 Americans was on food stamps.  Today, about one out of every 6.5 Americans is on food stamps.

#8 It sounds crazy, but the number of Americans on food stamps now exceeds the entire population of the nation of Spain.

#9 According to one calculation, the number of Americans on food stamps is now greater than the combined populations of “Alaska, Arkansas, Connecticut, Delaware, District of Columbia, Hawaii, Idaho, Iowa, Kansas, Maine, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Utah, Vermont, West Virginia, and Wyoming.”

#10 According to a report from the Center for Immigration Studies, 43 percent of all immigrants that have been in the United States for at least 20 years are still on welfare.

#11 Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, more than 70 million Americans are on Medicaid, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

#12 The number of Americans on Medicare is projected to grow from a little bit more than 50 million today to 73.2 million in 2025.

#13 Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.  That comes to approximately $328,404 for each and every household in the United States.

#14 If the number of Americans enrolled in the Social Security disability program were gathered into a single state, it would be the 8th largest state in the entire country.

#15 In 1968, there were 51 full-time workers for every American on disability.  Today, there are just 13 full-time workers for every American on disability.

#16 It is being projected that the number of Americans on Social Security will rise from about 62 million today to more than 100 million in 25 years.

#17 Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.

#18 According to the most recent numbers from the U.S. Census Bureau, an all-time record 49.2 percent of all Americans are receiving benefits from at least one government program each month.  Back in 1983, less than a third of all Americans lived in a home that received direct monetary benefits from the federal government.

Many will read this and will assume that I am against helping the poor.  That is completely and totally not true.  There will always be people that are impoverished, and this happens for many reasons.  In many cases, people simply lack the capacity to take care of themselves.  It is a good thing to take care of such people, whether the money comes from public or private sources.  In every society, those that are the most vulnerable need to be looked after.

But it is a very troubling sign that the number of people on government assistance is now far, far greater than the number of people with full-time jobs.  This is not a sustainable situation.  The federal government is already drowning in debt, and yet more people become dependent on the government with each passing day.

The long-term solution is to get more Americans working or starting their own businesses, but the federal government continues to pursue policies that are absolutely killing the creation of jobs and the creation of small businesses in this country.  So our epidemic of government dependence is going to continue to get worse.

And many of these programs are absolutely riddled with fraud and corruption.  Just check out the following excerpt from a recent Natural News article

To understand the extent of this fraudulent waste, go no further than Dr. Salomon Melgen, a Florida ophthalmologist who raked in $20.8 million from Medicare in 2012 alone. Dr. Melgen isn’t the only one bathing in the fraud of this crony government program. Medicare dished out over $1 million to almost 4,000 doctors in 2012, according to the new data release analyzed by The Washington Post.
 
Jonathan Blum, principal deputy administrator for the Centers for Medicare and Medicaid Services, is calling on the public for help in identifying fraud. He says, “The program is funded by and large by taxpayer dollars. The public has a right to know what it is paying for. We know there is fraud in the system. We are asking for the public’s help to check, to find waste, and to find potential fraud.”

Instead of fixing their own problems, they want us to help them do it.

Just great.

And of course they always want more of our money to help fund these programs.  In fact, according to Americans for Tax Reform, Barack Obama has proposed 442 tax increases since entering the White House…

-79 tax increases for FY 2010
-52 tax increases for FY 2011
-47 tax increases for FY 2012
-34 tax increases for FY 2013
-137 tax increases for FY 2014
-93 tax increases for FY 2015
 
Perhaps not coincidentally, the Obama budget with the lowest number of proposed tax increases was released during an election year: In February 2012, Obama released his FY 2013 budget, with “only” 34 proposed tax increases. Once safely re-elected, Obama came back with a vengeance, proposing 137 tax increases, a personal record high for the 44th President.

The more we feed the monster, the larger and larger it grows.

And yet poverty is not decreasing.  In fact, the poverty rate has been at 15 percent or greater for three years in a row.  That is the first time that has happened in decades.

Barack Obama promised to “transform” America, and yet poverty and government dependence have just continued to grow during his presidency.

Not that anyone really believes anything that he has to say at this point.  In fact, one recent survey found that only 15 percent of Americans believe that Barack Obama always tells the truth and 37 percent believe that he lies “most of the time”…

A Fox News poll released Wednesday shows that six out of every ten Americans believes that President Barack Obama lies to the American people, at least some of the time. A plurality – 37% – say that he lies “most of the time,” while another 24% say he lies “some of the time.” Another 20% say he lies once in awhile, while only 15% say that he never lies.

So what do you think?

This article first appeared here at the The American Dream.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

 

3dnew3-240x300

Do you know where your 2014 taxes will go?

0

 

Source: http://www.againstcronycapitalism.org

By

Do you know where your 2014 taxes will go?

Well, here’s an amazing infographic which breaks it out beautifully*

 

This graphic comes out every year and I still find it fascinating. (And depressing.)

 

Click on the graphic for a much larger version.

* A very important note on this graphic – It doesn’t break out Social Security (the largest federal outlay, paid through payroll taxes) Medicaid, or Medicare which are all much larger than anything listed here. Still the detail on the discretionary budget is valuable.

 

death-and-taxes-infographic-cc-565x377

This Chart Shows Us How Bad The Economy Really Is: “Flashing Red Warning”

0

 

Source: http://www.shtfplan.com

By Mac Slavo

This Chart Shows Us How Bad The Economy Really Is: “Flashing Red Warning”

 

fuse-lit

 

Recent weeks have led to a fairly significant drop in stock valuations, with many expert analysts struggling to figure out exactly why it’s happening. You’ll hear them cite the weather, or market overreaction, or any number of reasons for why stocks have seen their share prices reduced and why they’ll be rebounding in the near-term.

What they won’t show you on mainstream financial channels is what’s really happening behind the scenes.

Forget about all the minute-by-minute noise for a moment and take a look at the following chart. It gives a very simple overview of earnings growth trends for stocks listed on the S&P 500 on a quarterly basis.

Last year saw what analysts would call fairly robust growth, and they had no problem citing these numbers for evidence of economic recovery.

We’re curious what they’d call it now, considering this chart shows a massive collapse in earnings per share growth across the board.

Pay close attention to that yellow line, which indicates growth (or lack there of) for the first quarter of 2014. According to Zero Hedge this is a Flashing Red Warning as earnings growth plunges to its lowest levels since 2012:

While the so-called “experts” were adamant in repeating that one must ignore all Q1 economic data (because of harsh weather you know), one thing the same “experts” pounded the table on was the earnings growth in 2014 which confirmed that the Fed was correct in tapering and that the corporate sector was well on its way to achieving “escape velocity” and a stable recovery. And then this happened…

EPS-Growth
(Chart via @Not_Jim_Cramer)

Most people, when you ask them how the economy is doing, will point to the Dow Jones, NASDAQ and S&P 500 as evidence of a healthy recovery.

What the majority of those people fail to look at is the underlying valuations for the stocks within those indexes.

If you are an investor and hold stocks, or are thinking about jumping in because this latest “correction” is about to take a turn for the better, we direct your attention to this absolutely critical piece of information regarding price-per-earnings from Karl Denninger of Market Ticker.

A bit of perspective is in order here.  The number of stocks that have been trading on nothing more than QE-addled leverage, with nosebleed territory P/Es including Facebook (96), Amazon (537!), Netflix (180), LinkedIn (762), Salesforce (Negative P/E) and Twitter (ditto; -$3.41 EPS.)
 
Yeah, but the market is “cheap”, right?  Sure it is with all these big-cap techs trading at prices like this…
 

 
There is only one reason to buy such a stock — you’re convinced that some other sucker will pay you an even greater multiple to sales (say much less earnings) than you paid.
 
That the air will eventually come out of such a market is inevitable.

The P/E ratio of a stock is basically the price of the stock compared to the earnings of said share. In the case of Amazon trading at 537 times earnings, this is an INCREDIBLE number considering most conservative financial advisers recommend dividend earning stocks in the 10 – 12 P/E range for investment purposes. In essence, the easiest way to interpret Amazon today is that an investor is willing to pay $537 for $1 in current earnings. So, investors who bought Amazon stock at its current price should see a return on that investment… in about 537 years (give or take)  at current earnings.

Yes, that’s how crazy the stock market is right now, and Amazon is certainly not alone insofar as over-valuation is concerned.

Couple that with the earning growth chart above and you can clearly see that we are in very dangerous territory here.

And this doesn’t even take into account the economic warfare playing out between East and West, where Russia has now announced it will be actively pursuing a strategy to decouple its resource trade from the US dollar, meaning it will now trade in local currencies as opposed to the world’s traditional reserve currency.

As this new form of warfare plays out by the worlds super powers, all monetary systems will be affected. So how is this going to affect you? These effects will cause a continued degradation of the U.S. dollar with the real possibility that China and Russia will stop funding our debt. If and when this happens, the-you-know-what will inevitably hit the fan. 

As Paul Craig Roberts noted recently, there is a reckoning coming and all evidence points to economic failure in 2014.

Or, we can all just go along with the prevailing narrative and pretend like happy days are here again.

The following song was released shortly after the 1929 stock market crash before anyone had realized its implications. It reassured Americans that “Your cares and troubles are gone… there’ll be no more from now on.”

We know how that ended up…

YouTube Preview Image

Image credit: http://www.shtfplan.com
 

Another Phony Budget Debate

0

 

Source: http://www.ronpaulinstitute.org

By Ron Paul

 

ronpaul-tst

Another Phony Budget Debate

 

Anyone watching last week’s debate over the Republican budget resolution would have experienced déjà vu, as the debate bore a depressing similarity to those of previous years. Once again, the Republicans claimed their budget would cut spending in a responsible manner, while Democratic opponents claimed the plan’s spending cuts would shred the safety net and leave vital programs unfunded. Of course, neither claim is true.

The budget does not cut spending at all, and in fact actually increases spending by $1.5 trillion over ten years. The Republicans are using the old DC trick of spending less than originally planned and calling that reduced spending increase a $5.1 trillion cut in spending. Only in DC could a budget that increases spending by 3.5 percent per year instead of by 5.2 percent per year be attacked as a “slash-and-burn” plan.

The budget also relies on “dynamic scoring.” This trick is where the budget numbers account for increased government revenue generated by economic growth the budget will supposedly unleash. The claims are dubious at best. Of course, reducing government spending will lead to economic growth. But real growth requires real cuts, not this budget’s phony cuts.

As important as reducing spending and balancing the budget is, focusing solely on budget numbers ignores the root of the problem. The real problem is that too many in Washington — and the nation as a whole — refuse to consider any serious reductions in the welfare-warfare state.

I have always maintained that the logical place to start reducing spending is the trillions wasted on our interventionist foreign policy. Unfortunately, there are still too many in Congress who claim to be fiscal hawks when it comes to welfare spending, but turn into Keynesian “doves” when it comes to spending on the military-industrial complex.

These members cling to the mistaken belief that the government can balance it budget, keep taxes low, and even have a growing economy, while spending trillions of dollars policing the world, and propping up some governments and changing others overtly or covertly. Thus, President Obama is attacked as soft on defense because he only wants to spend $5.9 trillion over ten years on the military. In contrast, the Republican budget spends $6.2 trillion over the next decade. That is almost a trillion more than the budget’s total so-called spending cuts.

If there are too many fiscal conservatives who refuse to abandon the warfare state, there are too many liberals who act as if any reduction in welfare or entitlement spending leaves children starving. I agree it is unrealistic to simply end programs that people are currently dependent on. However, isn’t it inhumane to not take steps to unwind the welfare system before government overspending causes a bigger financial crisis and drags millions more into poverty?

Far from abandoning those in need of help, returning the responsibility for caring for the needy to private charities, churches, and local communities will improve the welfare system. At the very least,  young people should have the freedom to choose to pay a lower tax rate in exchange for promising to never participate in a government welfare or entitlement program.

Last week’s budget debate showed how little difference there lies between the parties when it comes to preserving the warfare-welfare state. One side may prefer more warfare while the other prefers more welfare, but neither side actually wants to significantly reduce the size and scope of government. Until Congress stops trying to run the world, run the economy, and run our lives, there will never be a real debate about cutting spending and limiting government.

Go to Top