http://www.zerohedge.com/fullrss2.xml en Martin Armstrong: "At What Point Does Revolution Take Place?" http://www.zerohedge.com/news/2014-10-31/martin-armstrong-what-point-does-revolution-take-place <p>Submitted by <a href="http://armstrongeconomics.com/2014/10/31/24665/">Martin Armstrong via Armstrong Economics</a>,</p> <p><a href="http://i0.wp.com/armstrongeconomics.com/wp-content/uploads/2014/05/confused.jpg"><img alt="confused" class="aligncenter size-full wp-image-21377" height="200" src="http://i0.wp.com/armstrongeconomics.com/wp-content/uploads/2014/05/confused.jpg?resize=301%2C200" width="301" /></a></p> <p><u><strong>Reuters has published the result of what is being touted as the <a href="http://blogs.reuters.com/data-dive/2014/10/30/how-americans-fare-on-the-index-of-ignorance/">Ignorance Index</a>.</strong></u> The one question as an example: <strong><em>&ldquo;Guess how many U.S. girls aged 15-19 give birth each year. Go ahead, guess. If you calculated the number at 3 percent you&rsquo;re correct; if you guessed 24 percent, you&rsquo;re American.&rdquo;</em></strong></p> <p>I rarely watch TV. If I do, it tends to be national news &ndash; never local that think a burning house is news or some guy shot his wife in a domestic dispute. I was at dinner and the TV was on. I could not believe the TV advertisements for the elections. They are all <strong>NEGATIVE</strong> calling the other a liar or misrepresenting the facts on everything. One said the candidate cut the number of police, made the streets more dangerous and then shows a picture of ISIS and then said she raise taxes. Then the very next advertisement flips and calls the other a liar for something or another. There was <strong>ZERO</strong> advertisement about anything other than vote for me because I lie less that the other liar.</p> <p>It seems that the Ignorant Index may be more tied to the bias and lack of integrity of the media. They focus on sensationalism to gain readership and in the process focus of one thing and create false images in the minds of the average person.</p> <p>A classic issue is immigration and Muslims. Americans, according to the Ignorant Index, <em><strong>&ldquo;significantly miss the mark on the proportion of the population that is comprised of immigrants, guessing 32 percent against the true number of 13 percent. Americans also overestimate the number of Muslims in the population, 15 percent versus only 1 percent in reality, and underestimate the number of Christians, 56 percent to 78 percent.&nbsp;&rdquo;</strong></em></p> <p><a href="http://i0.wp.com/armstrongeconomics.com/wp-content/uploads/2014/10/Pulitzer-Joseph.jpg"><img alt="Pulitzer Joseph" class="aligncenter size-full wp-image-24666" height="399" src="http://i0.wp.com/armstrongeconomics.com/wp-content/uploads/2014/10/Pulitzer-Joseph.jpg?resize=285%2C399" width="285" /></a></p> <p><u><strong>It seems as if the problem is not that Americans are ignorant, they are being fed nonsense by the media to sell newspaper and TV advertising.</strong></u> We have fallen into a cycle of <strong>Yellow Journalism</strong> that was begun by Pulitzer. It was Pulitzer for created the Spanish-American War by making up shit to sell newspapers. The famous Pulitzer Prize given by Columbia University is named after the father of <strong>Yellow Journalism</strong> &ndash; go figure!</p> <p>One good place to start is <strong>OUTLAW</strong> negative advertising. <strong>COMPEL</strong> political candidates to state what they stand for rather than calling their opponent a liar. Then if they do not vote for what they profess and knuckle under to party rule, that should be FRAUD and time for a vacation in the <em><strong>&ldquo;Big House&rdquo;</strong></em> (Penitentiary named after a place you were supposed to be silent and do penance).. We seem to elect people for no reason and then wonder why nothing changes. Obama&rsquo;s <em><strong>vote for me for real change</strong></em> has been a joke &ndash; he kept the same people Bush had in place. This is why polls place politicians at 7% trust factors. The days of Jimmy Carter, Ronald Reagan, and Maggie Thatcher who at least stood for what they believed in regardless of what people thought, are over. They were at least ethical.</p> <p><u><strong>At what point does revolution take place? </strong></u>It does not appear to be a percentage in our review of history, but the economic trend. In other words, turn the economy down and the percent of discontent rises exponentially. So beware &ndash; not ghosts and goblins, but politicians 2015.75-2020. <u><strong>So perhaps Americans will wise up only when the economy turns down and the Internet provides a greater proportion of real news compared to mainstream media.</strong></u> Indeed, the younger generation under 40 rely on the internet and those who subscribe to newspapers or watch the TV news are diminishing rapidly. This in itself will be a dynamic shift that restores freedom of the press and only then perhaps we will see Americans rise in the Ignorance Index.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="230" height="176" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20141031_arm.jpg?1414759949" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-31/martin-armstrong-what-point-does-revolution-take-place#comments Martin Armstrong Newspaper Reality Reuters Fri, 31 Oct 2014 16:36:46 +0000 Tyler Durden 496633 at http://www.zerohedge.com Let me get this straight… http://www.zerohedge.com/news/2014-10-31/let-me-get-straight%E2%80%A6 <p>Let me get this straight…FOMC stops buying securities in the open market and the world falls apart, right? WOW. &nbsp;Are you folk’s economists, traders, or just a bit naive? I get the notion of negative sentiment, large fed balance sheets, “potential” global economic slowdown, and blending the nuances into an applicable portfolio model.&nbsp;</p> <p>&nbsp;</p> <p>Do you folks really believe that its core, the fed and its respective governors, analysts, modelers, connections to Wall Street, are focused on anything other than returning the US economy back to a something resembling a sustainable growth rate? Seriously.</p> <p>&nbsp;</p> <p>Has anyone calculated the amount of sheer economic academic years or experience, business know-how, and capital markets exposure that is currently in the fed at this moment? &nbsp;Janet Yellen, by herself, knows more about the economy than most market participants. &nbsp;Spending the majority of your adult life studying and being exposed to economic history and esoteric conditions eventually, even minimally by osmosis, will result in studied analysis and opinions.</p> <p>&nbsp;</p> <p>For the people about to comment and inquire if I work for the FOMC, any government entity, FBI or the CIA, none of the above. &nbsp;Just want to make sure I get that out into the open.</p> <p>&nbsp;</p> <p>Macroeconomic perspective: We just spent the last 6 years averting the most significant economic event of in most our lifetimes. &nbsp;If memory serves me right, after Lehman Brothers fell, the economy physically stopped for about 3 days. &nbsp; There was a complete void of activity from the US, to Europe, to China. Banks at that moment would not issue letters of credit for international trade, firms were having difficulty establishing short term debt such as commercial paper, and lending stopped all together. &nbsp;There was no flow of capital, period. &nbsp;In basic economic terms, an economy (global or local) relies on the flow of capital to sustain activity.&nbsp;</p> <p>&nbsp;</p> <p>Moreover, if TARP, QE’s, FNMA/FRMC conservatorships, forced buyouts did not occur, the economic, financial, and capital markets landscape would be changed to an indescribable reality. &nbsp; Whether we like it or not the actions by our governments and by the governments of other countries shifted the burden away from the financial markets.&nbsp;</p> <p>&nbsp;</p> <p>The perception of risk changed. &nbsp;Perhaps for the foreseeable future. &nbsp;Whether you believe in Laissez Fair or Keynesian economics, the reality is that central bankers have a serious monitor plugged into to the global economy. &nbsp;No central banker would like to go back to the months of the 2008 crisis.&nbsp;</p> <p>&nbsp;</p> <p>This includes the fed, ECB, BOJ, BOE, any other acronym in the lexicon of the financial markets. &nbsp;Remember, the main risk is to go back to crisis mode, deflation not inflation, and the loss of flow of capital.&nbsp;</p> <p>&nbsp;</p> <p>This market may be infused and powered by the fed but what was the alternative.&nbsp;</p> <p>&nbsp;</p> <p>The reality is that most of these readers are probably short the market and expecting a bit of a payday on their respective positions. &nbsp;Not that there is nothing wrong with being short. &nbsp;Have you been short for the last 5 ½ years in one of the most bullish trends in recent memory? &nbsp;</p> <p>&nbsp;</p> <p>Realize this: You actually serve as a bullish indicator for the rest of us. &nbsp;The more short you get, the greater and more intense the spikes are in the aggregate. &nbsp;Think short squeeze. &nbsp;Classic.&nbsp;</p> <p>&nbsp;</p> <p>So you will excuse the positive tone of this statement. &nbsp;No, the world will not end tomorrow morning, no matter how volatile the /es futures are in the Pre-market. &nbsp;VIX being up at 31 for a part of one day in the last several months does not constitute a massive market sell-off. &nbsp;Get a grip.</p> <p>&nbsp;</p> <p>Judging by the intelligence level of the readers and contributors of this web portal, I shudder to think that this is nothing more than just pure ethos talking. &nbsp;Could Ebola destroy us all? No doubt. &nbsp;Could Germany relapse into the 1930’s economic woes? Absolutely. &nbsp;I am starting to pander a bit, sorry.</p> <p>&nbsp;</p> <p>No I don’t have my head in the sand. &nbsp;Quite the opposite. A finger on the pulse of the economy. &nbsp;An ear to ground to news and data. &nbsp;And one finger on the “sell my entire portfolio” button. &nbsp;I may be optimistic, not stupid.&nbsp;</p> <p style="font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 13px; line-height: 17.3333320617676px;"><span style="font-size: 1em; line-height: 1.3em;"><a href="http://www.financialjuice.com/zerohedge"><img src="http://www.zerohedge.com/sites/default/files/images/user22400/imageroot/2013/08/ZH.png" style="max-width: 100%; height: auto;" /></a></span></p> <form id="fivestar-form-node-496253" class="fivestar-widget" style="margin: 0px; padding: 0px; clear: both; font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 13px; line-height: 17.3333320617676px;" action="http://www.zerohedge.com/news/2014-10-27/maybe-volatility-isn%E2%80%99t-norm" accept-charset="UTF-8" method="post"> <div class="fivestar-form-vote-496253 clear-block"> <div class="fivestar-form-item fivestar-combo-text fivestar-average-stars fivestar-labels-hover fivestar-processed"> <div id="edit-vote-wrapper" class="form-item" style="margin: 0px;"><label style="display: block; font-weight: bold;" for="edit-vote"><br /></label></div> </div> </div> </form> http://www.zerohedge.com/news/2014-10-31/let-me-get-straight%E2%80%A6#comments BOE Capital Markets China Commercial Paper FBI Germany Global Economy Janet Yellen Keynesian economics Lehman Lehman Brothers None Reality TARP Fri, 31 Oct 2014 16:24:57 +0000 Pivotfarm 496629 at http://www.zerohedge.com Starting Off Strong: Goldman Slashes Q4 GDP Estimate From 3.0% To 2.2% http://www.zerohedge.com/news/2014-10-31/starting-strong-goldman-slashes-q4-gdp-estimate-30-22 <p>Between today's record high Italian unemployment, and the just announced Goldman slashing of its Q4 GDP forecast from a 3.0% standing estimate to a 2.2% tracking forecast, one can easily see why the S&amp;P is going to hit 2050 early next week..</p> <p><em>From Goldman Jan Hatzius:</em></p> <p><strong>BOTTOM LINE: </strong>Personal spending grew less than expected in September, and personal income also grew a bit less than expected.&nbsp; The core PCE price index rose at a subdued rate, in line with expectations.&nbsp; Separately, the employment cost index rose more than expected in Q3, pointing to slightly faster growth in compensation expenses.&nbsp; We began our Q4 GDP tracking estimate at +2.2%.</p> <p>Personal income grew 0.2% (vs. consensus +0.3%) in September.&nbsp; Personal spending fell 0.2% (vs. consensus +0.1%), <strong>in part as a result of a decline in motor vehicle and parts sales (-5.3%).&nbsp; </strong>As a result of income growing more quickly than spending, the saving rate moved up two-tenths to 5.6%.</p> <p><strong>We start our Q4 GDP tracking estimate at +2.2%, eight-tenths below our prior standing forecast</strong>.&nbsp; <strong>The lower tracking estimate mainly reflects the larger-than-expected +0.7 percentage point contribution from defense spending to Q3 growth </strong>(which introduces risks for payback in Q4), <span style="text-decoration: underline;"><strong>the weaker-than-expected trajectory for consumer spending heading into the quarter apparent in today’s personal income and outlays report for September, and a slightly weaker assumption on net exports in light of the large net trade contribution in Q3, our global teams’ recent downgrades to rest-of-world growth forecasts and the recent appreciation of the US dollar.</strong></span></p> http://www.zerohedge.com/news/2014-10-31/starting-strong-goldman-slashes-q4-gdp-estimate-30-22#comments Jan Hatzius Personal Income Unemployment Fri, 31 Oct 2014 16:20:43 +0000 Tyler Durden 496628 at http://www.zerohedge.com Small Caps Surge Green Year-To-Date; VIX Decoupling http://www.zerohedge.com/news/2014-10-31/small-caps-surge-green-year-date-vix-decoupling <p>Mission Accomplished...?</p> <p>Russell 2000 makes it back into the green... Trannies soar</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10-overflow/20141031_YTD.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10-overflow/20141031_YTD_0.jpg" width="600" height="392" /></a></p> <p>&nbsp;</p> <p>But not everyone's buying it</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10-overflow/20141031_YTD1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10-overflow/20141031_YTD1_0.jpg" width="600" height="694" /></a></p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>Sustainable rally? Then why is everyone hedging?</strong></span></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="806" height="932" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20141031_YTD1.jpg?1414770954" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-31/small-caps-surge-green-year-date-vix-decoupling#comments Russell 2000 Fri, 31 Oct 2014 15:57:31 +0000 Tyler Durden 496627 at http://www.zerohedge.com Hot Off The Press, Here Is Gartman's Nikkei "Target" In "Violently Plunging Yen" Terms http://www.zerohedge.com/news/2014-10-31/hot-press-here-gartmans-nikkei-target-violently-plunging-yen-terms <p>You asked for it, and here it is: Dennis Gartman's take on the Great Nikkei "price target"</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>THE YEN HAS VIOLENTLY PLUNGED… VERY VIOLENTLY... </strong>and the Nikkei has soared, and they should given the “double barrel” announcements from the Bank of Japan and from the Japanese Government Pension Investment Fund with the former pledging to expand its balance sheet materially and with the latter finally give fuller guidance as to the expansion of investment in equities it shall allow for the nation’s pension funds. </p> <p>&nbsp;</p> <p>... The Bank notes the better economic environs but it is far more concerned about the prospects of deflation and/or of dis-inflation and has moved aggressively to countermand those forces. Caution has been thrown to the winds in Japan <strong>and we shall applaud the Bank for taking this action.</strong></p> <p>&nbsp;</p> <p>It is not our duty to tell the monetary authorities what they should be doing for that is not our portfolio. Rather, <strong>our portfolio here is to be a mercantilist warrior on the battle field of investments, joining the fight on the side of the “team” that is winning and whose “weaponry” is both the best, the largest and the most prone to being used. </strong>Our portfolio is to be agnostic; to watch for changes and to act accordingly to those changes. Hence if the monetary authorities intend to act expansively, it is folly on our part to take the other side of their trade for their “margin accounts” are far, far larger than is ours. <strong>If the Bank of Japan is going to expand its reserves and if the guardians of the pension funds there are doing to toss caution to the wind then so too should we.</strong></p> <p>&nbsp;</p> <p>* * * </p> <p>&nbsp;</p> <p>THE NIKKEI: BLAST OFF!: <strong>It shall be very, very hard to do, but the Nikkei is only now just breaking out to the upside and so we should buy it while selling the Yen at the same time. </strong>The “hard trade” is always the best trade and it is going to be very hard to buy this market <strong>but we have to with 24-25 thousand as a target.</strong></p> </blockquote> <p>Of course, Gartman had a typo: he meant the "<em>herd trade.</em>"</p> <p>And speaking of Gartman, here is a quick stroll down memory lane courtesy of <a href="https://twitter.com/TMFHousel/status/527043921021763584">@TMFHousel</a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10-overflow/20141030_confess.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10-overflow/20141030_confess_0.jpg" width="600" height="340" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="251" height="206" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Gartman%20Oct%2015_11.jpg?1414768166" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-31/hot-press-here-gartmans-nikkei-target-violently-plunging-yen-terms#comments Bank of Japan Japan Nikkei Yen Fri, 31 Oct 2014 15:51:23 +0000 Tyler Durden 496626 at http://www.zerohedge.com Fed Launches First Currency War Salvo, Tells ECB Not To Push Too Far http://www.zerohedge.com/news/2014-10-31/fed-launches-first-currency-war-salvo-tells-ecb-not-push-too-far <p>Now that The Fed is (however briefly) out of the money-printing business, it appears to have turned its attention to the rest of the world's "despicable monetary policy" actions and fired what seems to be the first warning shot of 'currency wars 2.0', as MarketNews reports:</p> <ul> <li><strong>ECB SOURCE SAY EUR3 BILLION BALANCE SHEET TARGET NOT IN THE CARDS: MNI<br /></strong></li> <li><strong>ECB SOURCE <span style="text-decoration: underline;">FED HAS NOTICED EUR SLIDE AND ECB MUST NOT PUSH TOO FAR: MNI<br /></span></strong></li> </ul> <p>One wonders how long before Jack Lew also proclaims Japan a 'currency manipulator' (and, gasp, the Eurozone) especially after Germany's Wolfgang Schaeuble reminded the world this morning that "<strong>growth can't be helped by printing money."</strong> You don't say...</p> <p><strong>The EUR reacted...</strong></p> <p><strong><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10-overflow/20141031_eur_0.jpg" width="600" height="323" /></strong></p> <p><strong>&nbsp;</strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="937" height="505" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20141031_eur.jpg?1414769392" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-31/fed-launches-first-currency-war-salvo-tells-ecb-not-push-too-far#comments Eurozone Japan Monetary Policy Fri, 31 Oct 2014 15:33:04 +0000 Tyler Durden 496625 at http://www.zerohedge.com Obama Speaks On The Economy - Live Feed http://www.zerohedge.com/news/2014-10-31/obama-speaks-economy-live-feed <p>The S&amp;P hits a record high thank to a few hundred billion in more money printing by a central bank, and guess who pops up to take credit for the market, pardon, the economy? </p> <p>This guy.</p> <p><iframe width="560" height="315" src="//www.youtube.com/embed/nLvmJJk_6oU" frameborder="0" allowfullscreen></iframe></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="800" height="522" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Obama%20c_0.jpg?1414769188" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-31/obama-speaks-economy-live-feed#comments Fri, 31 Oct 2014 15:26:05 +0000 Tyler Durden 496624 at http://www.zerohedge.com Only A Few More QEs To Go Until Argentina http://www.zerohedge.com/news/2014-10-31/only-few-more-qes-go-until-argentina <p>Because nothing says economic strength like <a href="http://www.zerohedge.com/news/2013-02-01/kyle-bass-tells-nominal-stock-market-cheerleaders-remember-zimbabwe"><strong>nominal equity market gains</strong></a>...</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10-overflow/YTD%20Stock%20Performance.jpg"><img height="478" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10-overflow/YTD%20Stock%20Performance_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/news/2013-02-01/kyle-bass-tells-nominal-stock-market-cheerleaders-remember-zimbabwe"><em>A gentle reminder from the past...</em></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Amid the euphoria... Kyle Bass provided a few minutes of sanity this morning in an interview with CNBC&#39;s Gary Kaminsky. Bass starts by reflecting on the ongoing (and escalating) money-printing (<a href="http://www.zerohedge.com/news/2013-01-31/consolidated-currency-wars-chart">or balance sheet expansion as we noted here</a>) as the driver of stock movements currently and would not be surprised to see them move higher still (given the ongoing printing expected).</p> <p>&nbsp;</p> <p><object classid="clsid:D27CDB6E-AE6D-11cf-96B8-444553540000" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=9,0,0,0" height="380" id="cnbcplayer" width="400"><param name="type" value="application/x-shockwave-flash" /><param name="allowfullscreen" value="true" /><param name="allowscriptaccess" value="always" /><param name="quality" value="best" /><param name="scale" value="noscale" /><param name="wmode" value="transparent" /><param name="bgcolor" value="#000000" /><param name="salign" value="lt" /><param name="movie" value="http://plus.cnbc.com/rssvideosearch/action/player/id/3000143907/code/cnbcplayershare" /><embed allowfullscreen="true" allowscriptaccess="always" bgcolor="#000000" height="380" name="cnbcplayer" pluginspage="http://www.macromedia.com/go/getflashplayer" quality="best" salign="lt" scale="noscale" src="http://plus.cnbc.com/rssvideosearch/action/player/id/3000143907/code/cnbcplayershare" type="application/x-shockwave-flash" width="400" wmode="transparent"></embed></object></p> <p>&nbsp;</p> <p>However, he caveats that nominally bullish statement with a critical point, <strong>&quot;Zimbabwe&#39;s stock market was the best performer this decade - but your entire portfolio now buys you 3 eggs&quot;</strong> as purchasing power is crushed. Investors, he says, are &quot;too focused on nominal prices&quot; as the rate of growth of the monetary base is destroying true wealth. Bass is convinced that cost-push inflation is coming (as the velocity of money will move once psychology shifts) and <strong>investors must not take their eye off the insidious nature of underlying inflation</strong> - no matter what we are told by the government (as they will always lie when its critical). Own &#39;productive assets&#39;, finance them at low fixed rates (thank you Ben)...</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>Just ask the Venezuelans...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10-overflow/20141030_BOJWTF8.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10-overflow/20141030_BOJWTF8_0.jpg" style="width: 600px; height: 319px;" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="818" height="651" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/YTD%20Stock%20Performance.jpg?1414767051" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-31/only-few-more-qes-go-until-argentina#comments fixed Kyle Bass Kyle Bass Monetary Base Purchasing Power Fri, 31 Oct 2014 15:04:35 +0000 Tyler Durden 496623 at http://www.zerohedge.com How Long Can The Top 10% Households Prop Up The "Recovery"? http://www.zerohedge.com/news/2014-10-31/how-long-can-top-10-households-prop-recovery <p><em>Submitted by <a href="http://charleshughsmith.blogspot.com/2014/10/how-long-can-top-10-households-prop-up.html">Charles Hugh-Smith of OfTwoMinds blog</a>,</em></p> <p><span><i>The question of &quot;recovery&quot; really boils down to this: how much longer can the top 10% prop up the expansion?</i></span></p> <div><span><b>A flurry of recent media stories have addressed housing unaffordability</b>, for example&nbsp;<a href="http://www.theatlantic.com/business/archive/2014/10/why-are-liberal-cities-so-unaffordable/382045/" target="resource">Why Middle-Class Americans Can&#39;t Afford to Live in Liberal Cities</a>.</span><br />&nbsp;</div> <div><span>The topic of housing unaffordability crosses party lines:&nbsp;<a href="http://www.census.gov/housing/hvs/files/qtr314/q314press.pdf" target="resource">Housing Ownership Back to 1995 Levels</a>&nbsp;(U.S. Census Bureau).</span><br />&nbsp;</div> <div><span><b>Other stories reflect an enduring interest in the questions,&nbsp;<i>what is a living wage?</i>and&nbsp;<i>what is a middle-class income?</i></b>&nbsp;These questions express the anxiety that naturally arises from the sense that we&#39;re sliding downhill in terms of our purchasing power--a reality that is confirmed by this chart:</span><br />&nbsp;</div> <div><span><img align="middle" border="0" src="http://www.oftwominds.com/photos2014/income-declines2012.gif" /></span></div> <div><span>Here&#39;s a recent story that delves into the question of &quot;getting by&quot; versus &quot;middle class&quot;:&nbsp;<a href="http://wallstcheatsheet.com/personal-finance/how-do-you-know-when-youre-making-good-money.html" target="resource">How Much Money Does the Middle Class Need to Get By?</a></span> <div><span><b>&quot;Just getting by&quot; in costly coastal cities requires an income in the top 20%:</b>&nbsp;around $60,000 for individuals and $100,000 for households.</span><br />&nbsp;</div> <div><span>The article references MIT&#39;s&nbsp;<a href="http://livingwage.mit.edu/" target="resource">Living Wage Calculator</a>, which I found to be unrealistic in terms of the high-cost cities I know well (Honolulu and the San Francisco Bay Area). It appears the calculator data does not represent actual rents or food prices; the general estimates it uses woefully under-represent on-the-ground reality.</span><br />&nbsp;</div> <div><span>Current market rents in the S.F. Bay Area far exceed the estimated housing costs in this calculator, and that one line item pushes the&nbsp;<i>living wage</i>&nbsp;from $36,000 for two adults closer to $45,000 in my estimate--roughly the average wage in the U.S. (not the median wage, which is $28,000).</span><br />&nbsp;</div> <div><span>If you want to know where you stand income-wise, here is a handy calculator:&nbsp;<a href="http://politicalcalculations.blogspot.com/2013/09/what-is-your-us-income-percentile.html" target="resource">What Is Your U.S. Income Percentile Ranking?</a></span><br />&nbsp;</div> <div><span>Here are the data sources:</span><br />&nbsp;</div> <div><span><a href="http://www.ssa.gov/cgi-bin/netcomp.cgi?year=2013" target="resource">Wage Statistics for 2013</a>&nbsp;(Social Security Administration)</span><br />&nbsp;</div> <div><span><a href="http://www.census.gov/hhes/www/cpstables/032014/hhinc/toc.htm" target="resource">2013 Household Income Data Tables</a>&nbsp;(U.S. Census Bureau)</span><br />&nbsp;</div> <div><span><b>There are many complexities in these questions.</b>&nbsp;For example, Social Security data does not include food stamps, housing and healthcare subsidies provided by the government, etc., so lower-income households&#39; real (equivalent) income is much higher than the published data.</span><br />&nbsp;</div> <div><span>Then there are the regional differences, which are considerable; $50,000 in a Left or Right Coast city is &quot;just getting by&quot; but it buys much more in other less pricey regions.</span><br />&nbsp;</div> <div><span><b>As for what household income qualifies as &quot;middle class&quot;</b>--it depends on your definition of middle class. In my view, the definition has been watered down to the point that &quot;middle class&quot; today is actually working class, if we list attributes of the &quot;middle class&quot; that were taken for granted in the postwar era of widespread prosperity circa the 1960s.</span><br />&nbsp;</div> <div><span>In&nbsp;<a href="http://www.oftwominds.com/blogdec13/middle-class12-13.html" target="resource">What Does It Take To Be Middle Class?</a>&nbsp;(December 5, 2013), I listed 10 basic &quot;threshold&quot; attributes and two higher qualifications for membership in the middle class. Please have a look if you&#39;re interested.</span><br />&nbsp;</div> <div><span>I came up with an annual income of $106,000 for two self-employed wage earners and the mid-$90,000 range for two employed wage earners, the difference being the self-employed couple have to pay 100% of their healthcare insurance, as there is no employer to cover that staggering expense.</span><br />&nbsp;</div> <div><span>$90,000 puts a household in the top 25%, and $101,000 places the household in the top 20%. $150,000 a year qualifies as a top 10% household income.</span><br />&nbsp;</div> <div><b><span>If we set aside income and consider net worth, net worth (i.e. ownership of assets and wealth) of most households is modest:</span></b><br />&nbsp;</div> <div><span><img align="middle" border="0" src="http://www.oftwominds.com/photos2012/median-net-worth5-12.png" /></span></div> <div><span>This shows the decline in household wealth since 2003:</span><br />&nbsp;</div> <div><span><img align="middle" border="0" src="http://www.oftwominds.com/photos2014/wealth-table7-14.png" /></span></div> <div><span><b>Can an economy in which the majority of households are &quot;just getting by&quot; experience robust growth, i.e. &quot;recovery&quot;?</b>&nbsp;If we discount the millions of households who are paying for today&#39;s consumption with tomorrow&#39;s earnings, i.e. credit cards, auto loans, student loans, etc., I think it&#39;s self-evident that only the top 20% (and perhaps really only the top 10%) have the income and net worth to expand a $16 trillion economy.</span><br />&nbsp;</div> <div><span><b>By definition, the top 10% cannot be &quot;middle class.&quot;</b>&nbsp;Yet it seems that these top 12 million households are propping up the &quot;recovery&quot;--dining out at pricey bistros, paying $200 a night for hotels, buying homes that cost $500,000 and up, paying slip fees for their boats, funding their children&#39;s college education with cash rather than loans, etc.</span><br />&nbsp;</div> <p><span>The question of &quot;recovery&quot; really boils down to this: how much longer can the increasing debt of the bottom 90% and the wealth of the top 10% prop up the expansion?</span></p></div> <p>&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="405" height="342" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20141031_CHS.jpg?1414757409" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-31/how-long-can-top-10-households-prop-recovery#comments Census Bureau ETC Purchasing Power Reality recovery Student Loans Fri, 31 Oct 2014 14:47:26 +0000 Tyler Durden 496622 at http://www.zerohedge.com Fed's Kocherlakota Explains Why He Wants Moar http://www.zerohedge.com/news/2014-10-31/feds-kocherlakota-explains-why-he-wants-moar <p>The lone dissenting dove at this week's 'end-of-QE' FOMC meeting has taken digital pen to pixelated paper to explain why moar is better and the Fed should not stop printing...<em>"Of course, there are <strong>costs and benefits to every monetary policy action and inaction</strong>, and assessing those costs and benefits is by no means straightforward. On this occasion, my assessment differed from that of my colleagues,"</em> as he believes the <strong>inflation outlook has worsened</strong>.</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10-overflow/20141031_kock.jpg" width="424" height="396" /></p> <p>As a reminder, <a href="http://www.zerohedge.com/news/2013-11-21/how-fed-dove-crushes-any-hawkish-opposition-feds-true-religion">Kocherlakota was the 'gentleman' who <strong>fired dissenting economists at the Minneapolis Fed for disgreeing with his Neo-Keynesian philosophy</strong></a>.</p> <p>*&nbsp; *&nbsp; *</p> <p><span style="text-decoration: underline;"><strong>Statement on Dissenting Vote at October 29, 2014, Meeting of the Federal Open Market Committee</strong></span></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Earlier this week, I dissented from the Federal Open Market Committee (FOMC) decision.<strong> I felt that the FOMC needed to reduce possible downside risk to the credibility of its 2 percent inflation target by taking more purposeful steps to move inflation back up to 2 percent.</strong> In this statement, I will elaborate on the thinking behind my decision.</p> <p>&nbsp;</p> <p>At the launch of the reduction in asset purchases in December 2013, the FOMC statement said that the Committee would be “monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term.” <span style="text-decoration: underline;"><strong>At this stage, I see no such evidence.</strong></span> In my assessment, <strong>the medium-term outlook for inflation has shown no overall improvement since last December and, indeed, is arguably worse</strong>. Failing to act in response to this subdued inflation outlook increases the downside risk to the credibility of our 2 percent inflation target. Market-based measures of longer-term inflation expectations have fallen recently to unusually low levels, a decline that I believe reflects that kind of increased downside risk.</p> <p>&nbsp;</p> <p><strong>As we have seen in Japan and may now be seeing in Europe, the credibility of central bank inflation targets cannot be taken for granted. </strong>Rather, central banks need to take actions on an ongoing basis to ensure that inflation stays at target. In light of the evolution of the data over the past few months, I believe we needed to take such actions on Wednesday.</p> <p>&nbsp;</p> <p><strong>There are a number of possible actions that I would have seen as responsive to the evolution of the data. Let me describe two in particular.</strong> First, the Committee could have continued to buy $15 billion of longer-term assets per month. Second, it could have committed to keeping the target range for the federal funds rate at its current level at least until the one- to two-year-ahead inflation outlook has risen back to 2 percent, as long as risks to financial stability remain well-contained. These actions would have put upward pressure on the demand for goods and services and on prices. Just as importantly, these actions would have communicated that the Committee is determined to do what it takes to push inflation back to 2 percent as rapidly as is possible.</p> <p>&nbsp;</p> <p><strong>Of course, there are costs and benefits to every monetary policy action and inaction, and assessing those costs and benefits is by no means straightforward. On this occasion, my assessment differed from that of my colleagues.</strong> Such occasional differences in perspectives are, I think, hardly surprising given the complicated nature of the decision problem that we face. But those differences should not obscure the collective commitment that my FOMC colleagues and I all share to the dual mandate objectives of price stability and maximum employment that Congress has established for the Committee. I look forward to working with my colleagues in future meetings, under Chair Yellen’s leadership, to achieve those objectives.</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="424" height="396" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20141031_kock.jpg?1414765370" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-31/feds-kocherlakota-explains-why-he-wants-moar#comments Central Banks Japan Monetary Policy Neo-Keynesian Fri, 31 Oct 2014 14:23:04 +0000 Tyler Durden 496621 at http://www.zerohedge.com