Here are four things that seem to be dominating the weekend discussions.
While the U.S. student loan debt “crisis” might be the primary concern associated with the youth population here, this morning's dreadful European data confirms that 15-24 year olds around the world are struggling with a more widespread and pressing issue: high unemployment. In 2012, the youth unemployment rate was 12.4%, projected to grow to 12.6% in 2013 – nearly 3 times the rate of adult unemployment, which stood at 4.5% in 2012. Developed economies, along with the Middle East and North Africa, have some of the worst youth unemployment rates in the world: the US’s unemployment rate for 15-24 year olds in 2012 was 15.4%, according to the Current Population Survey, more than 3 percentage points above the world average. ConvergEx's Nick Colas notes there is one exception to the U.S.’s high rates, though: for all the talk about how student loan debt has crippled young adults in the U.S., we actually have one of the lower unemployment rates for young adults with a tertiary (college) education – better, even, than many countries with free or low-cost universities (though the 'type' of jobs may be questionable).
There are countless examples of rampant criminality and corruption as well as blatant evidence of a two-tier system of justice in America today. Too many to note or write about, but in this case we want to focus on this concept of “money laundering” in light of the recent shutdown of Liberty Reserve. The crackdown on Liberty Reserve has nothing to do with “money laundering.” It’s about a cartel of “too big to jail” banks and the fraud financial system they operate eliminating any players that try to encroach on their turf. That isn’t capitalism, or socialism and it certainly isn’t anything close to freedom. It is a parasitic, oligarch created feudalistic structure that must be done away with. We often hear people say “we never learn from our mistakes.” Incorrect. People learn from their mistakes when there are consequences to their actions. Of course criminals don’t learn from their mistakes when there are no serious consequences to their crimes.
When you step back and look at the long-term trends, it is undeniable what is happening to us. We are in the midst of a horrifying economic decline that is the result of decades of very bad decisions. 30 years ago, the U.S. national debt was about one trillion dollars. Today, it is almost 17 trillion dollars. 40 years ago, the total amount of debt in the United States was about 2 trillion dollars. Today, it is more than 56 trillion dollars. At the same time that we have been running up all of this debt, our economic infrastructure and our ability to produce wealth has been absolutely gutted. Since 2001, the United States has lost more than 56,000 manufacturing facilities and millions of good jobs have been shipped overseas. Our share of global GDP declined from 31.8 percent in 2001 to 21.6 percent in 2011. The percentage of Americans that are self-employed is at a record low, and the percentage of Americans that are dependent on the government is at a record high. The U.S. economy is a complete and total mess, and it is time that we faced the truth.
It looks like the International Monetary Fund has been jinxed. It’s fated. It’s doomed! The next managing director should start wearing garlic around their neck already or at least burn sage in their office to ward off evil spirits.
While some, we are sure, will view this brief clip as partisan showmanship by Representative Steve Pearce, the questions he asks Treasury Secretary should surely be responded to in some manner that is anything but the typical perfunctory shrug these matters normally garner. From Lew's apparent disbelief that the IRS Audits debacle was in any way 'political' to Lew's "waiting for the investigation' on Jon Corzine's misappropriation of funds, and finally to the "War on the Poor" that Pearce describes the current administration's policies (for the benefit of Wall Street); these few minutes are well worth some time as we 'remember' this weekend.
The Nikkei dropped by 7.3% at the end of the day and Hong Kong’s Hang Seng dipped by 2.5%. Shanghai maintained a moderate fall at just 1.2% (if you believe that data now!). The Asian markets are down.
Inflation is hot property today, hyperinflation is even hotter! We think we are modern, contemporary, smart and ready to deal with anything. We’ve got that seen-it-all-before, been-there-done-it attitude. But, we are not a patch on what some countries have been through in the worst cases of hyperinflation in history.
- Apple Bonds Stick Buyers With $280.6 Million Loss as Rates Climb (BBG)
- Iceland Freezes EU Plans as New Government Shuns Euro Crisis (BBG)
- "Transparent Fed" - Ben Bernanke meets privately with Darrell Issa (Politico)
- Bank of Japan vows market steps to curb bond turbulence (Reuters) holds policy (FT)
- Stockholm riots spread in third night of unrest (FT)
- Dudley Says Decision on Taper Will Require 3-4 Months (BBG)
- Senate panel passes immigration bill; Obama praises move (Reuters)
- Italy to outline youth jobs plan as government struggles (Reuters)
- Apple CEO Tim Cook, Lawmakers Square Off Over Taxes (WSJ)
- Google Joins Apple Avoiding Taxes With Stateless Income (BBG)
- Sony Board Discussing Loeb’s Entertainment IPO Proposal (BBG)
- Vote Strengthens Dimon's Grip (WSJ), Dimon performance well choreographed (FT)
- IMF Tells Central Europe to Spend More (WSJ)
- Tornadoes Blast Oklahoma (WSJ)
- Frenetic search for survivors as 91 feared dead in tornado-hit Oklahoma (Reuters)
- JPMorgan investors on edge over vote on Dimon; what if they win? (Reuters)
- Wealthy bank depositors to suffer losses in EU law (Reuters)
- Yen Slips as Amari Backtracks (BBG)
- Japan Ready for More Yen Weakness Despite Recent Comments (WSJ)
- IRS officials back on Capitol Hill hot seat over targeting (Reuters)
- Li Keqiang pledges China boost to India trade (FT)
- Europe's Recession Sparks Grass-Roots Political Push (WSJ)
- Obama and Xi to meet in effort to calm growing US-China rivalry (FT)
- Berlin plans to streamline EU but avoid wholesale treaty change (FT)
- France must reform or face punitive measures - EU's Oettinger (Reuters)
In the absence of major data releases, the focal point of the week for markets becomes the release of the minutes of the May FOMC meeting. The most notable change in the statement was the inclusion of the new language: “the Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.” In the May meeting minutes, the market will be looking for any clarification of the motivation behind this change as well as any evidence that the committee members may be becoming less comfortable with the unemployment rate threshold or more specific about tapering timelines and dates.
- Mine union threatens to bring South Africa to 'standstill' (Reuters)
- Russia Raises Stakes in Syria (WSJ) - as reported here yesterday
- Japan buys into US shale gas boom (FT)
- Bill Gates Retakes World’s Richest Title From Carlos Slim (BBG) - so he can afford a Tesla now?
- China Wages Rose Sharply in 2012 (WSJ)
- Regulators Target Exchanges As They Ready Record Fine (WSJ)
- Citi Takes Some Traders Off Bloomberg Chat Tool (WSJ)
- After Google, Amazon to be grilled on UK tax presence (Reuters)
- Apple CEO Cook to Propose Tax Reform for Offshore Cash (BBG)
- French, German politicians to pressure Google on tax (Reuters)
- Gold Bears Revived as Rout Resumes After Coin Rush (BBG)
- A stretched Samsung chases rival Apple's suppliers (Reuters)
- As scandals mount, White House springs into damage control (Reuters)
- Glencore Xstrata chairman ousted in surprise coup (Reuters), former BP CEO Tony Hayward appointed as interim chairman (WSJ)
- JPMorgan Chase asks Bloomberg for data records (Telegraph)
- Platts Retains Energy Trader Confidence Amid Price-Fix Probe (BBG)
- Syrian Internet service comes back online (PCWorld)
- Japan Q1 growth hits 3.5% on Abe impact although fall in business investment clouds optimism for recovery (FT)
- Soros Joins Gold-Stake Cuts Before Bear Market Drop (BBG)
- Factory Ceiling Collapses in Cambodia (WSJ)
- Sony’s $100 Billion Lost Decade Supports Loeb Breakup (BBG)
- Snags await favourite for Federal Reserve job (FT)
- James Bond’s Pinewood Turned Down on $300 Million Plan (BBG)
The great American manufacturing renaissance? Maybe not. But China is losing the low-wage edge.