April 18, 2012
The Economic Collapse
The middle class in America is being systematically wiped out, and most people don’t even realize what is happening. Every single year, millions more Americans fall out of the middle class and become dependent on the government. The United States once had the largest and most vibrant middle class in the history of the world, but now the middle class is rapidly shrinking and government dependence is at an all-time high. So why is this happening? Well, America is becoming a poorer nation at the same time that wealth is becoming extremely concentrated at the very top. At this point, our economic system is designed to funnel as much money and power to the federal government and to the big corporations as possible. Individuals and small businesses have a really hard time thriving in this environment. To most big corporations these days, workers are viewed as financial liabilities. Most corporations want to reduce their payrolls as much as possible. You see, the truth is that most corporations want to be just like Apple. If you can believe it, Apple makes $400,000 in profit per employee. Big corporations don’t care that you need to pay the mortgage and provide for your family. Their goal is to make as much money as possible. And most of the control freaks that run our bloated federal government don’t care much about middle class families either. To many politicians and federal bureaucrats, middle class families are “useless eaters” that are constantly damaging the environment with their “excessive” lifestyles. In this day and age, neither the federal government nor the big corporations really have much use for middle class Americans, and that is really, really bad news for the the future of the middle class family in America.
There are three key factors that are constantly chipping away at the middle class….
Labor has become a global commodity, and American workers are often 10 to 20 times as expensive as workers on the other side of the world are. Middle class jobs (such as manufacturing, etc.) have been leaving this country at an astounding pace. Competition for the jobs that remain has become extremely fierce, and this has driven wages down. The following is from a recent article in the New York Times….
April 17, 2012
By Activist Post
“Even John Stewart is now commenting on the out of control Federal Reserve.” –KTRN
April 17, 2012
By Carl Herman
The first 41 minutes of the video below from Claremont Colleges’ Center for Process Studies’ conference, “Money-Creation in a Finite World,” is Ellen Brown’s presentation to explain how credit and monetary reform causes trillions of dollars in annual benefits for Americans (remainder of the video is panel and audience discussion).
The 99% must achieve factual command of the basic facts how money and credit are created, or else continue their debt-damned existence under an oligarchic and Robber Baron-era structure.
Monetary and credit reform can be understood with three simple areas of facts that are taught in basic economics and easily verified:
The US does not have a money supply; we have its Orwellian opposite as a debt supply. This is because the US leading banks won legal right through passage of the 1913 Federal Reserve Act to have private banks and the Fed create debt for what we use as money, and then charge the 99% for its use.
The policy choice of a debt supply compounded with interest causes ever-increasing aggregate debt that can never be repaid. It can’t be repaid because this is what we use for money. The US national debt now pushing $16 trillion has a gross annual interest payment over $400 billion a year; $4,000 per US family of $50,000 annual income (if your household earns $100,000, then your gross annual interest payment is approx. $8,000 every year).
Monetary reform creates debt-free money that extinguishes the debt (details here), and allows government to become employer of last resort for infrastructure investment (hard and soft). This creates full-employment, optimal infrastructure, and because infrastructure historically creates more value to the economy than cost, falling overall prices. Credit reform allows for public loans (interest directly pays for public goods/services) as another monetary tool for stable money supply.
April 16, 2012
By Tyler Durden
Three years ago, when virtually nobody had yet heard of High Frequency Trading, Zero Hedge wrote “The Incredibly Shrinking Market Liquidity, Or The Upcoming Black Swan Of Black Swans” in which we asked “what happens in a world where the very core of the capital markets system is gradually deleveraging to a point where maintaining a liquid and orderly market becomes impossible: large swings on low volume, massive bid-offer spreads, huge trading costs, inability to clear and numerous failed trades?” Subsequent to this, our observation was proved right on both an acute (the May 6, 2010 Flash Crash), and chronic (the nearly 50% collapse in average daily volumes since the 2008 top) secular basis. And while we are not happy to have been proven correct in this particular forecast, as it ultimately means the days of equity capital markets in their current configuration are numbered, we now note that none other than Morgan Stanley’s Quantitative and Derivative Strategies released a note which, with a three year delay, effectively predicts the end of capital markets in a world where every declining retail participation (another topic we have been hammering for the past 3 years as it is only the most natural response to a world in which not only equities are openly manipulated by central banks, but in which perpetrators for massive market disturabances are neither identified nor prosecuted) is replaced by artificial high frequency trading churn, which never was and never will be a true liquidity provider on a long-term basis.
To wit from Morgan Stanley: “In our mind, many of the approaches to algorithmic execution were developed in an environment that is substantially, structurally different from today’s environment. In particular, the early part of the last decade saw households as significant natural liquidity providers as they sold their single stock positions over time to exchange them for institutionally managed products… While the time horizon over which liquidity is provided can range from microseconds to months, it is particularly shorter-term liquidity provisioning that has become more common.” Translation: as retail investors retrench more and more, which they will due to previously discussed secular themes as well as demographics, and HFT becomes and ever more dominant force, which it has no choice but to, liquidity and investment horizons will get ever shorter and shorter and shorter, until eventually by simple limit expansion, they hit zero, or some investing singularity, for those who are thought experiment inclined. That is when the currently unsustainable course of market de-evolution will, to use a symbolic 100 year anniversary allegory, finally hit the iceberg head one one final time.
How does Morgan Stanley frame their analysis? First, MS notes the ever increasing ownership of the stock market by big institutions, as retail investors took a back seat to investment allocation decisions, a secular theme until 2008, which however has subsequently plateaued:
April 13, 2012
By Tyler Durden
We guessed it wouldn’t be too long before the next rumor was dropped and Gold is surging – now over $1670 – on this latest chatter… Don’t tell Gartman, but gold is now of 5% higher in math terms from the minute the “world renowned” gold swing trader sold everything 7 days ago.
Incidentally, for all those lamenting the alleged endless manipulation by this bank or that, here is the math: one could have bought much more gold at the manipulated lower price of $1610 from a week ago, than today. Always pays, literally, to keep things in perspective.
April 12, 2012
By Brandon Smith
Americans have been listening to the mainstream financial media’s song and dance for around four years now. Every year, the song tells a comforting tale of good ol’ fashioned down home economic recovery with biscuits and gravy. And, every year, more people are left to wonder where this fantastic smorgasbord turnaround is taking place? Two blocks down? The next city over? Or perhaps only the neighborhoods surrounding the offices of CNN, MSNBC, and FOX? Certainly, it’s not spreading like wildfire in our own neck of the woods…
Many in the general public are at the very least asking “where is the root of the recovery?” However, what they should really be asking is “where is the trigger for collapse?” Since 2007/2008, I and many other independent economic analysts have outlined numerous possible fiscal weaknesses and warning signs that could bring disaster if allowed to fully develop. What we find to our dismay here in 2012, however, is not one or two of these triggers coming to fruition, but nearly EVERY SINGLE conceivable Achilles’ heel within the foundation of our system raw and ready to snap at a moment’s notice. We are trapped on a river rapid leading to multiple economic disasters, and the only thing left for any sincere analyst to do is to carefully anticipate where the first hits will come from.
Four years seems like a long time for global banks and government entities to subdue or postpone a financial breakdown, and an overly optimistic person might suggest that there may never be a sharp downturn in the markets. Couldn’t we simply roll with the tide forever, buoyed by intermittent fiat injections, treasury swaps, and policy shifts?
The answer……is no.
April 10, 2012
Gold has been holding steady in the $1,600-$1,800 band since early October. This could be attributed to consolidation after last summer’s historic run up to $1,895, but I think this wait-and-see attitude reflects current market sentiment toward the US dollar.
In fact, the first few days of April have seen a sharp dollar rally and decline in gold. This is rooted in deflated expectations of a third round of Quantitative Easing (QE3) after the most recent Fed Open Market Committee (FOMC) meeting. Once again, the markets are responding to the headlines while losing sight of the fundamentals.
This is especially peculiar because the Fed did not explicitly take QE3 off the table. In fact, according to the minutes, if the recovery falters or if inflation is too low, the Fed is already prepared to launch QE3. While there is not much chance of low inflation, I’ll explain below why the recovery is not only going to falter – it’s going to evaporate like the mirage that it is!
The Obama Administration is touting recent job growth, and while this is a pleasant story to hear in an era of massive unemployment, it disintegrates when put in context. The 227,000 jobs gained – which merely kept the unemployment rate steady at 8.3% – were counterbalanced by a much worse trade deficit tally: $52.4 billion, the highest level since just before ’08 crash.
The trade deficit is a real measure of whether our jobs are producing enough wealth to pay for our consumption. If we were adding productive jobs, I would expect the deficit to be shrinking. A look at the data shows that employment increased by only 16% in the primary and secondary sectors, where we need them the most. The majority of new jobs are still inflated sectors like healthcare (26%), temp work (20%), hospitality (19%), and consulting (16%), which will disappear as fast as they appeared when the bubble collapses. This is what we saw in finance and real estate when the housing bubble burst in ’08.
Imagine the trade deficit is like a corporate balance sheet. You hire a bunch of new employees for your company, but instead of making bigger profits, you find yourself losing even more money than when you started. Are you going to hold on to those people?
April 10, 2012
By Greg Hunter
People ask me on a consistent basis if I think the government will confiscate their gold and silver coins if times get rough. I feel there is little chance of this happening, and here’s why. Gold and silver coins are predominantly held by the wealthy (especially gold). The wealthy are not going to allow the government they support with campaign money to take their gold. It is just not going to happen. Think about it, poor and moderate income people (and that is at least half the population) do not have a significant holding of gold or silver. Most of the rest of the population have the bulk of their wealth tied up in 401-K’s or IRA’s. This may come as a surprise, but most rich people do not have 401-K’s or IRA’s. They have stocks and bonds, but the rich also have the money and smarts to diversify their portfolios.
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April 6, 2012
By Millie Munshi
Gold in London rose for a second straight day after U.S. employers added fewer than jobs than forecast, boosting prospects for the Federal Reserve to use additional stimulus measures to spur growth.
Payrolls climbed by 120,000 in March, the Labor Department said today. Economists forecast a gain of 205,000, the median of 80 projections in a Bloomberg News survey. Minutes from a Fed policy meeting released this week indicated that the central bank will hold off on increasing monetary accommodation unless economic expansion falters.
“There’s going to be this feeling that the Fed’s minutes that said easing was off the table is not going to pan out,” Michael Gayed, the chief investment strategist who helps oversee $150 million at New York-based Pension Partners LLC, said in a telephone interview. “We’re getting the consistent message that stimulus is good for gold.”
Bullion for immediate delivery gained 0.4 percent to $1,638.25 an ounce by 10:52 a.m. New York time. Trading on the Comex in New York is closed today for Good Friday.