Human progress has been three steps forward, two steps back. That a non-fringe candidate of a major political party in the United States can call himself a socialist constitutes a leap backward. That it can happen after a century of socialistic horrors: impoverishment, ruination, tyranny, war, and tens of millions dead, bespeaks not just deadly ignorance and delusion, but depravity.
So what do you do? Play the short-term chase the market game or the longer-term wealth devastation game. The choice is yours to make, the consequences will be for all to share. “I will tell you my secret: I never buy at the bottom and I always sell too soon.” – Baron Nathan Rothschild
"Banking is the least understood, and possibly most lethal, of all the myriad issues at stake in this election."
It turns out that ordinary people are not as excited about the US economy as those who are cheerleading minimum wage job creation and market levels being close to all time highs, and certainly not as excited as that group of people called each month by either the Conference Board or UMich, the two far more closely tracked confidence indicators."Americans are confronted with presidential candidates using the economy as one of their talking points, mixed signals from national economic reports, volatility in the stock market and an apparent end of sub-$2 gas prices nationally -- all of which may be affecting their economic assessments."
The Winter of 2015-2016, which came to an end a few weeks ago, has been officially designated as the mildest in the U.S. in 121 years according to NOAA. While this fact will certainly add a major talking point in the global warming debate, it should also be front and center in the current economic discussion. The fact that it isn’t is testament to the blatantly self-serving manner in which economic cheerleaders blame the weather when it’s convenient, but ignore it when it’s not.
In 1977, the total indebtedness of U.S. government, corporate and household borrowers was $323 billion. By 1985, that figure had grown to $7 trillion. Volcker left the Fed in August of 1987 after handing the reins over to Alan Greenspan. By year’s end 2015, U.S. indebtedness had swelled to $45.2 trillion. Tack on financials, which few do, and it’s $64.5 trillion and unabashedly growing. We are a nation transformed. What has today’s vast store of debt purchased? Certainly not freedom.
What is clear is that the Federal Reserve has gained control of asset markets by gaining control over investor behavior. “Are you afraid of a market crash? Yes. Are you doing anything about it? No.” Again, it’s back to fundamentals versus expectations. Someone is going to be very wrong.
- Global shares reach four-month high, forex hit by Singapore sting (Reuters)
- Dollar Rally Hits Commodities as Europe Halts Global Stock Gains (BBG)
- Currencies Across Asia Fall Sharply Against U.S. Dollar (WSJ)
- IEA expects limited impact from oil output freeze at Doha (Reuters)
- IEA Sees Oil Oversupply Almost Gone in Second Half on Shale Drop (BBG)
- BofA Profit Declines 13% on Trading Slump, Energy Reserves (BBG)
In an oddly-timed-release, just a day after her 'unusual' meeting with President Obama (and sandwiched between two "emergency Fed meetings"), Janet Yellen's seemingly legacy-protecting narrative-confirming interview with TIME magazine proclaiming once again that "we are focused on Main Street, on supporting economic conditions - plentiful jobs and stable prices - that help all Americans." So now you know - it's all for you America - the bank bailouts, the deflationary-glut-creating ZIRP, the money-printing, and the "confusing and confounding" messaging. Now stop your complaining and Vote Hillary!
Prices are actually falling faster than the official CPI number indicates, and have not picked up as oil has stabilized. In fact, the US has been in deflation for the past five months. So it’s no surprise that people who are actually buying the stuff that’s falling in price would register this fact and answer surveys with deflationary sentiments. It’s also no surprise that central banks, which presumably see the same data, would be looking for ways to ease even further (Japan and Europe) or walk back their previous threats to tighten (the US Fed) - apparently in the hope that increasing the dose will cure the credit addiction.
NFIB Chief Economist Bill Dunkelberg cautioned that the small business sector is currently “underperforming, doing little more than operating in maintenance mode.” Although there has been “slow economic growth,” he warned that “there is no exuberance, no optimism and not much hope, the numbers make it clear.”
The summary: modest to moderate growth, increasing consumer spending, stronger labor market conditions, improving labor market conditions, and most importantly, rising wages almost across the board. And virtually no mention of "global" conditions (and certainly no mention of China). So what excuse will the Fed use not to hike in April again?
We were not surprised to read this morning that federal regulators announced that five out of eight of the biggest U.S. banks do not have credible plans for winding down operations during a crisis without the help of public money. Which is precisely the point: now that the precedent has been set and banks know they can rely on the generosity of taxpayers (with the blessing of legislators) why should they even bother planning; they know very well that if just one bank fails, all would face collapse, and the only recourse would be trillions more in taxpayer aid.
Joining the ranks of "broke lawyers" who can cancel their student debt, "Americans with disabilities have a right to student loan relief,” now according to Ted Mitchell, the undersecretary of education, said in a statement. Almost 400,000 student loan borrowers will now have an easier path to a debt bailout as Obama primes the populist voting pump just in time for the elections.