Did you know that the number of Americans on welfare is higher than the number of Americans that have full-time jobs? Did you know that 1.2 million public school students in the U.S. are currently homeless? Anyone that uses the term "economic recovery" to describe what is happening in the United States today is being deeply insulting to the nearly 150 million Americans that are considered to be either "poor" or "low income" at this point. Yes, things are great in New York City, Washington D.C. and San Francisco, but almost everywhere else economic conditions continue to steadily get worse. The gap between the wealthy and the poor is at a level that America has never seen before, and this is beginning to create a "Robin Hood mentality" that could cause a tremendous amount of social chaos in the years ahead. Despite unprecedented borrowing by the federal government in recent years, and despite unprecedented money printing by the Federal Reserve, poverty in the United States keeps getting worse with each passing year. The following are 29 incredible facts which prove that poverty in America is absolutely exploding
One year later and due mainly to the fact the Japanese stock market has risen an astounding 70% year-over-year, talking-heads, politicians, and central bankers proclaim Abe's trip into the monetary policy black hole as a success (it would seem on that basis that the head of Venezuela's central bank deserves a Nobel prize). Abe has managed to devalue his nation's currency by 25.5% against the USD in that time and the price of Japanese government bonds (despite some early teething trouble with the government's repressive activity) is practically unchanged up 0.75% on the year. But away from the 'market', inflation is rising (but thanks to import prices) and wages languish down 0.9% as the trade balance is collapsing. One thing is for sure - dueling QEs between Japan and the USA make for highly correlated FX and equity market co-movements...
Gone are the days where people looked towards next year when building their portfolios, or five years down the road as they approach retirement. Now from a combination of apprehensiveness and shear paranoia in our unstable markets, investors are looking only as far as they can throw for their personal investment decisions. In more than 30 years of money management, Lance Roberts has never seen such a rapid change in the way people make financial plans. Instead of saving for the future, many are opting for fast gains - yet at the same time they want low risk. Others are playing it completely safe. In fact, in a quarterly poll, 83% of respondents said they were holding on to their cash versus investing in the stock market.
In these climax years of industrial technocratic society, two opposing forces shape the destiny of government: the desperate effort to control everything versus the decline of the ability to carry out that effort. The result will be the loss of legitimacy and the collapse of government from the highest levels, moving downward until the real power to make anything work re-sets at a feasible and appropriate level — probably very local. This dynamic is seen very clearly in three spectacles du jour: the “national security” (spying) mess, government-sponsored accounting fraud in finance, and the ObamaCare rollout.
One of the prevailing themes in recent weeks has been that Spain has transformed out of Europe's economic basket case into a success story. This was further exemplified today by the following quotes by DieselBOOM:SPANISH RECOVERY IS ON TRACK;SPAIN COULD BE FRONT RUNNER OF EURO-AREA RECOVERY. It could, if one listens to bureaucrats peddling snake oily hope, but certainly not based on actual dynamics in its housing market, where mortgage apps have tumbled 90% from all time highs... and certainly not based on loan to companies or households, which continue to be the worst in the Eurogroup.
The status quo is as intellectually bankrupt as it is financially bankrupt. Our leadership cannot conceive of any course of action other than central bank credit creation and expanding state control of the economy and social benefits, paid for with money borrowed from future generations.
Almost exactly one year after Superstorm Sandy crushed the eastern seaboard of the USA, and 26 years after the last devastating storm to hit the south of England, the so-called St.Jude's Day storm - among the worst in recent memory - is battering the UK (and some of Europe) with winds up to 99 mph. So far there are 2 reported deaths, 220,000 homes without power, all SouthWest trains halted, and over 130 flights cancelled at Heathrow airport. Two nuclear plants have been shutdown and hundreds of trees have fallen blocking roads and rail links across as the storm begins to shift into mainland Europe...
- Budget deficit priorities people: U.S. NSA spied on 60 million Spanish phone calls in a month (Reuters)
- Stuck in countless scandals, Obama does what he does best: speak. Obama To Speak At Installation Of FBI Director James Comey (TPM)
- Five killed as car ploughs into crowd in Beijing's Tiananmen Square (Reuters)
- U.K. Storm Brings Power Cuts, Snarls Transport in South (BBG)
- China Signals ‘Unprecedented’ Policy Changes on Agenda at Plenum (BBG)
- Sandy's Legacy: Higher Home Prices (WSJ)
- Merkel Enters Concrete SPD Talks as Finance Post Looms (BBG)
- Keep arming those Syrian al-qaeda rebels: Car bombs kill scores in Baghdad, in sign of crisis in Iraq (WaPo)
- J.P. Morgan's Mortgage Troubles Ran Deep (WSJ)
- Detroit’s public library contains story of city’s decline (FT)
- Argentina elections: President loses in Buenos Aires province (BBC)
- Phone-hacking: trial of Andy Coulson and Rebekah Brooks to begin (Guardian)
Just as it is easy being a weatherman in San Diego ("the weather will be... nice. Back to you"), so the same inductive analysis can be applied to another week of stocks in Bernanke's centrally planned market: "stocks will be... up." Sure enough, as we enter October's last week where the key events will be the conclusion of the S&P earnings season and the October FOMC announcement (not much prop bets on a surprise tapering announcement this time), overnight futures have experienced the latest off the gates, JPY momentum ignition driven melt up.
If you’re anything like us, you may have reached the conclusions that:
- Our elected officials are charting a course to a fiscal disaster.
- The Fed is repeating past mistakes by setting us up for another bust.
After the drama of the debt ceiling debate and the Fed’s non-tapering surprise, we see no reason to doubt these views. But the latest developments got us thinking, and we have an unusual proposal.
As Citi's Matt King recent showed, when it comes to stepwise, quantum leap repricings of widely held credits, the revelation is usually a very painful, sudden and very dramatic one. This can be seen nowhere better than in the default of Lehman brothers, where while the firm's equity was slow to admit defeat it was nothing in comparison to the abject case study in denial that the Lehman bonds put in. However, as can be seen in the chart below, when it finally came, and when bondholders realized they are screwed the morning of Monday, Septembr 15 when the Lehman bankruptcy filing was fact, the move from 80 cents on the dollar to under 10 cents took place in a heartbeat.It is the same kind of violent and anguished repricing that all unsecrued creditors in the coming wave of heretofore "denialed" municipal bankruptcy filings will have to undergo. Starting with Detroit, where as Reuters reports, the recovery to pensioners, retirees and all other unsecured creditors will be.... 16 cents on the dollar!... or less than what Greek bondholders got in the country's latest (and certainly not final) bankruptcy.
Once the economy's capital structure is distorted beyond a certain threshold, it won't matter anymore how much more monetary pumping the central bank engages in – instead of creating a temporary illusion of prosperity, the negative effects of the policy will begin to predominate almost immediately. Given that we have evidence that the distortion is already at quite a 'ripe' stage, it should be expected that the economy will perform far worse in the near to medium term than was hitherto widely believed. This also means that monetary pumping will likely continue at full blast, as central bankers continue to erroneously assume that the policy is 'helping' the economy to recover.
Of course, the "relentless" rise hasn't been for two months this time.......it's been for nearly five years. And I can tell you, reporting directly from the heart of the Silicon Valley, the zeitgeist around here is 1999 and 2007 compressed together and supercharged.
This artificial prosperity plan for Wall Street has the added benefit of allowing the captured politicians in Washington D.C. to continue their $1 trillion per year deficit spending with no consequences for their squandering of future generations’ wealth. Bernanke and Yellen will never taper, because they can’t. The Fed balance sheet will continue to grow by at least $1 trillion per year until they crash the financial system again. Except this time, there will be no money printing solution. We are all trapped like rats in this monetary experiment being conducted by evil mad scientists. No one will get out alive. Welcome to the new normal. Now eat your cheese.
As part of Mike Maloney's recent documentary, Ron Paul was interviewed to discuss the monetary system that he proposes. He begins... "Just get the government out-of-the-way, you know, and let the markets decide and apply the rules of ’no counterfeiting’ to the people and to the government..." as he goes on to discuss everything from The Founding Fathers to how a gold standard could work...