Yesterday millions of "shoppers" living on the government dole left their shopping carts in droves in checkout counters, exited countless foodstamp-accepting stores, and made Wal-Marts and other general merchandise stores into veritable ghost towns, after a power outage at Xerox Corp, made EBT usage in 17 states for most of Saturday impossible, and left tens of millions of poverty-level Americans unable to engage in one of their favorite pastimes: shop with other people's money. In short: the Walfare States of America were probably closer to a state of outright revolution than at any time before in history. And had the EBT stoppage continues into today, things would have certainly spilled out from the shopping aisle to main streets where the people's anger may have culminated in an violent expression of disgust at a state which gives with one hand and a xerox company that takes with the other.
Hopefully Great Britain doesn't get the idea of finally reclaiming its rebellious colonies lost over two hundred years ago, because the US certainly is making it easy. As part of the numerous non-essential services shut down in the current government funding crisis, Foreign Policy reports that the Air Force's Air Combat Command (ACC) - home to the service's fighter jets, B-1 bombers and most of its drones and spyplanes -- has grounded squadrons that are not set to deploy abroad after January. "...Only fighters based at Mountain Home flying this fall are the F-15SGs of the Singaporean air force that are permanently stationed there. Interestingly, German and Canadian air force jets are also flying out of the Idaho base on training deployments of their own.
Here are six things to ponder this weekend:
1. Inflation Debate Continues
2. The Obamacare Nightmare
3. The Disconnect Between "Main Street" and "Wall Street"
4. Payroll Number Become Even More Manipulated
5. Congress Living The High Life At The Taxpayers Expense
6. What If The "Fear Trade" Bubbles Up?
"In every city and state I have visited, the jails have become the de facto mental institutions," warns the president of the American Jail Association as the WSJ notes, America's lockups have become its new asylums. After scores of state mental institutions were closed beginning in the 1970s, few alternatives materialized. Many of the afflicted wound up on the streets, where, untreated, they became more vulnerable to joblessness, drug abuse and crime. Stunningly, the number of mentally ill prisoners the country's three biggest jail systems - Cook County, IL; Los Angeles County; and New York City - handle daily is equal to 28% of all beds in the nation's 213 state psychiatric hospitals. "We're finding sicker and sicker people all the time" who have to be treated for their mental illnesses. Prisons "can't say no to the mentally ill. They have to solve the problem."
Yesterday we highlighted the plight of Tom Palome and his cohorts as they face a need to work well into once-thought-retirement age. However, there are hundreds of formerly prosperous communities all over America that are being steadily transformed into rotting, decaying hellholes. The good paying middle class jobs that once supported those communities are long gone, and they have been replaced with low paying service jobs if they have been replaced at all. When you visit those communities, it is almost as if all of the hope has been sucked right out of the air. The following are 20 quotes from ordinary Americans about the economic despair that is rapidly growing around them.
"When it comes to market events, there have been no impactful black swans - the so-called unexpected 'tail events," Mark Spitznagel notes in his excellent new book, The Dao Of Capital: Austrian Investing in a Distorted World, explaining that, "what were unseen by most, were indeed highly foreseeable" by others. The Fed planted the seeds for the last financial crisis and "when you prevent the natural balancing act, you get growth that shouldn't be happening."
The financial crisis of 2008 could have been the wake-up tall that, like the Yellowstone fires of 1988, alerted so-called managers to the dangers of trying to override the natural governors of the system. Instead, the Federal Reserve, with its head "ranger," Ben Bernanke, has deluded itself into thinldng ft has tamped down every little smolder from becoming a destructive blaze, but instead all it has done is poured the unnatural fertilizer of liquidity onto a morass of overgrown malinvestment making a even more highly flammable. One day - likely sooner than later, it will burn, and when that happens, the Fed will be sorely lackng in buckets and shovels and must succumb to the flames.
In an inconvenient truth moment for the anti-gun lobby, Harvard's Don Kates and Gary Mauser expose the facts behind gun control and violent crime. While not the first time we have discussed this awkward reality, the depth of the academics' datasets and the findings are unquestionable that there is in fact a "negative correlation" between violence and gun ownership. As they state, "where firearms are most dense violent crime rates are lowest, and where guns are least dense violent crime rates are highest," concluding that "The burden of proof rests on the proponents of the more guns equal more death and fewer guns equal less death mantra, especially since they argue public policy ought to be based on that mantra... But those correlations are not observed when a large number of nations are compared across the world."
The latest default bull argument supporting higher levels of growth in China than I believe possible is the urbanization argument. Beijing is planning another major urbanization push, and according to this argument China can resolve the problem of wasted investment by investing in the urbanization process, that is it can engage in a massive investment program related to the need to build infrastructure for all the newly urbanized. Like so many of the earlier bull arguments, however, this new belief that urbanization is the answer to China’s growth slowdown is based on at least one fallacy and probably more - urbanization accommodates, it doesn‘t cause, growth. It is not the act of building all this stuff that creates wealth or real, long-term growth. It is only if building the stuff caused overall productivity to rise by more than the cost of capital and labor employed in building it that a society gets richer.
Over two years after Zero Hedge first accused Goldman and JPMorgan of becoming monopolists in the commodity warehousing business (see "Goldman, JP Morgan Have Now Become A Commodity Cartel"), and two weeks after the NYT's reminder the world of just this leading to the latest Kangaroo Court congressional hearing on the matter, which may or may not have resulted in JPMorgan announcing it would exit the physical commodities business, the long overdue legal fight began this Friday when lead plaintiff Superior Extrusion sued Goldman and London Metal Exchange owner HKEx for engaging in "anticompetitive and monopolistic behaviour in the warehousing market in connection with aluminium prices" and accusing the firms of violating the Sherman anti-trust act. Precisely what Zero Hedge said, some 26 months ago.
In a nutshell:
- Relatively low unemployment rates for the “Western Leaders” aren’t just an artifact of recent strength in, say, energy production and commodities. These states have consistently outperformed the rest of the country.
- Abysmally high unemployment rates for the “Eastern Super-laggards” have also persisted for over two decades, exceeding all other parts of the country.
- The “Northern Coastal and Great Lakes Laggards” and “Western Laggards and Southeast” fall somewhere between the other two regions, but always favoring the southern states over the northern states.
Not surprisingly, California, Nevada and Florida are more volatile than the other regions, cycling well above and then back toward the Western Leaders in each of the past two decades. Also, the unemployment problems in California and Nevada have been consistently worse than Florida’s unemployment. These trends may or may not persist in coming years. But if your goal is to anticipate the next Stockton, San Bernardino or Detroit, watch the unemployment data closely and pay particular attention to the cities listed here.
Good news appaears (for now) to not be bad news for stocks but it is bad news for bonds as they sell-off modestly on the best beat in initial claims in 3 months and the lowest absolute (pre-revision next week) level since January 2008. The highest insured unemployment rates in the week ending July 20 were in Puerto Rico (4.9), New Jersey (3.6), Connecticut (3.5), Alaska (3.4), California (3.4), Pennsylvania (3.4), New Mexico (3.2), Nevada (2.9), Virgin Islands (2.9), Illinois (2.8), New York (2.8), Oregon (2.8), and Rhode Island (2.8). So these are pre-recessionary levels of jobless claims and extended claims continue to slide (and Challenger this morning was positive) - but how does this exuberant job situation fit with the dismal economic data? Perhaps this?
Obama wants to give middle-class Americans a ‘grand bargain’. Roll up! Roll up! You won’t believe your eyes.
There are certain potential catastrophes that can be so threatening we must take steps to insure ourselves even though the probability of one actually occurring is slim. It’s like keeping a small fire extinguisher under your kitchen sink and hoping you never have to use it. We cannot put our life savings and our family at risk by trivializing dangers potentially on the horizon. While CNBC may want to pooh-pooh the probability of something similar happening in our country, we all know that creating massive amounts of currency out of thin air always results in the currency collapsing, or at the very least being revalued in a way that most of us will suffer from. A prudent investor (particularly one on either side of the cusp of retirement) would do well to take out some insurance. That is generally done by investing in metal, farm land, and other forms of hard assets.
Today, the wealth redistributor par excellence came to us live from an Amazon warehouse in Chattanooga, TN where with dramatically rolled-up sleeves, Obama praised a vision of a full-time middle class to a fulfillment center gathering of racially diverse, part-time workers, thereby concluding "America's Transformation To A Part-Time Worker Society" first observed here in 2010.
If you want to frighten Baby Boomers, just show them the list of statistics in this article. The United States is headed for a retirement crisis of unprecedented magnitude, and people are woefully unprepared for it. At this point, more than 10,000 Baby Boomers are reaching the age of 65 every single day, and this will continue to happen for almost the next 20 years. The number of senior citizens in America is projected to more than double during the first half of this century, and some absolutely enormous financial promises have been made to them. So will we be able to keep those promises to the hordes of American workers that are rapidly approaching retirement? Of course not. The pension nightmare that is at the heart of the horrific financial crisis in Detroit is just the tip of the iceberg of the coming retirement crisis that will shake America to the core.