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Sunday, June 1, 2014

Economic Stories of Relevance in Today's World -- June 1, 2014

U.S. Gasoline Consumption Plummets By Nearly 75% - Bullion Bulls Canada - Jeff Nielson - May 25, 2014 - Regular readers are familiar with my narratives on the U.S. Greater Depression, and (in particular) some of the government’s own charts which depict this economic meltdown most vividly. The collapse in the “civilian participation rate” (the number of people working in the economy) and the “velocity of money” (the heartbeat of the economy) indicate an economy which is not merely in decline, but rather is being sucked downward in a terminal (and accelerating) death-spiral.                        However, even that previously published data, and the grim analyses which accompanied it could not prepare me for the horror story contained in data passed along by an alert reader. U.S. “gasoline consumption” – as measured by the U.S. Energy Information Administration (EIA) itself – has plummeted by nearly 75%, from its all-time peak in July of 1998. A near-75% collapse in U.S. gasoline consumption has occurred in little more than 15 years.                      Before getting into an analysis of the repercussions of this data, however, it’s necessary to properly qualify the data. Obviously, even in the most-nightmarish economic Armageddon, a (relatively short-term) 75% collapse in gasoline consumption is simply not possible. Unless we were dealing with a nation whose economy had been suddenly ripped apart by civil war, or some small nation devastated by a massive earthquake or tsunami; it’s simply not possible for any economy to just disintegrate that rapidly, without there being some ultra-powerful exogenous force also at work.                         So how can this raw data, produced by the government itself, be explained? To begin with; the government chooses to measure U.S. gasoline consumption in a very odd manner: by measuring the amount of gasoline entering the domestic supply-chain rather than by measuring actual consumption at the other end of the supply-chain – i.e. “at the pump”...

Hound's Note : Check out the chart below from the article above, which goes to the point of what Mr. Nielson is trying to convey. It relates to the Velocity of Money Circulation in the United States and shows that we are in a full on Depression. Followers of this site will know that is what I have been calling it for years. We had a first leg down in 2008. The economy peaked in the middle of 2006 and began to turn down in 2007 until it fell off the cliff in 2008. Stimulus was put into the economy with the arrival of the Obama administration. You can see a slight uptick in the economy in the second quarter of 2009 that lasted until the fourth quarter of 2010. Since 2011 we have been down every quarter (to historic lows) in the measure of the velocity of money, which is the circulation of U.S. dollars... 

(Wikipedia) is the frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period.[3] In other words, it is the number of times one dollar is spent to buy goods and services per unit of time.[3] If the velocity of money is increasing, then more transactions are occurring between individuals in an economy.[3] Although once thought to be constant,[citation needed] it is now understood that the velocity of money changes over time and is influenced by a variety of factors.[4]                        When the period is understood, the velocity may be presented as a pure number; otherwise it should be given as a pure number divided by time.[citation needed]

Analysts predict most employer-provided insurance will disappear as ObamaCare takes hold - Fox News - Jim Angle - May 31, 2014 - Across the political spectrum, analysts now say that 80 to 90 percent of employer-provided insurance, the mainstay of American health coverage for decades, will disappear as ObamaCare takes hold.                 The research firm S&P IQ predicts less than 10 percent of those who get insurance at work will still get it there ten years from now....                  
Former Congressional Budget Office Director Doug Holtz-Eakin said,"you could give them more, so after taxes they end up with the same and the math says you still come out ahead. And so employers have been doing this math ever since the law passed. I expect for them to get to the exits pretty quickly."                         Employers would also get rid of the headache and uncertainty of providing insurance, he noted. "Most people are not in the health insurance business they are manufacturers, exporters, they are service providers. And they would rather stick to that than worry about health insurance."                         So employers can offer more pay to workers, pay the fine and still come out ahead, while workers would still get health care.                  The only losers in all this would be the federal deficit and taxpayers, since many workers going into ObamaCare would qualify for subsidies, driving up the cost.

The Middle Class Will Die Within 30 Years Leaving "A Wealthy Elite & Sprawling Proletariat" - Zero Hedge - Tyler Durden - May 28, 2014 - If we continue down this path of ignorance, we will be left with a "tiny elite and a huge sprawling proletariat" who have no chance of "clawing their way out of a hand-to-mouth existence," is the loud and clear message from UK government advisor David Boyle. As The Telegraph reports, Boyle cautions, "we won't own our own homes, we won't be able to afford it," adding that "we cheerled the rise of property prices not realising that it would destroy, if not our own lives, but the lives of our children." His conclusion, "the middle classes have to wake up to prevent it happening and to create a political movement that will do it."
Authored by Sarah Knapton via The Telegraph,
The middle classes will die out within 30 years because of rising property prices, which will rob today's children of their dreams, an economist has warned.                  David Boyle, a government advisor and fellow of the New Economics Foundation think-tank, said that youngsters can no longer expect the same level of affluence as their parents.                      Speaking at the Hay Festival he warned that Britain will be left with a ‘tiny elite and a huge sprawling proletariat’ who have no chance of ‘clawing their way out of a hand-to-mouth existence.’                    He predicted that the average house price will reach £1.2 million by 2045, putting a home beyond the range of most people as wages fail to keep up with huge increases.                     Boyle said that the traditional middle classes will need three or four jobs just to be able to pay soaring rents. People will no longer have the space or time to pursue cultural interested.                      And he blamed bankers bonuses for artificially inflating the property market.

Few workers confident of easy retirement - USA Today - Nanci Hellmich - May 30, 2014 - ... Only 28% of U.S. workers are "very" or "extremely" confident that they'll one day fully retire with a comfortable lifestyle; a third are "somewhat" confident.             And 19% of workers globally have high confidence levels that they'll have a comfy retirement, with the greatest percentage of people feeling that way in China (41%) and the lowest rates in France (6%) and Poland (4%), according to the survey of 16,000 workers and retirees in 15 countries in Europe, North America, South America and Asia. The survey was commissioned by the non-profit Transamerica Center for Retirement Studies and the Dutch insurance company Aegon.                 "Retirement systems vary by country, yet we all have in common an aging population and a need for people to take on more personal responsibility for long-term financial security," says Transamerica Center President Catherine Collinson. "Workers around the world face the increasing need to save, plan and self-fund a greater portion of their own retirement."...

GDP Report Is Far Worse Than It Looks | John Rubino

John Rubino says that no US GDP report is complete without an explanation from the Consumer Metrics Institute of how Washington is fooling us. The latest one is even scarier than usual:
There are a number of disturbing items in this report:

-- Even at first glance this is not a good report. Although the headline number itself says "stagnation," in the context of earlier reports it shows an economy in dynamic transition from lackluster growth towards outright contraction. The overall headline number is down 2.5% from the prior quarter and down 4% from the next earlier quarter. These are significant changes, with the prior quarter's trend extended and the downward slope intensifying.

-- Private commercial investment dropped substantially, led by reduced outlays for residential construction, transportation equipment and IT infrastructure.

-- The year-long 2013 cycle of inventory building has come to an end. Over an extended time period inventories are mostly a cyclical zero-sum game, with excessive growth or contraction over any period being corrected (i.e., reversed) during a subsequent period. Moving forward we should expect that inventories will continue their cyclical contraction, with negative consequences to the headline number.

This video was originally published on May 5, 2014 and re-posted with permission from

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