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Sunday, June 8, 2014

Economic Stories of Relevance in Today's World -- June 8, 2014

Hound Notes: This week we see more contrived numbers from the government saying that the economy is turning up this quarter, "Unemployment is going down dammit. Why don't you believe us. Why don't you trust us." Because you have proven youselves to be idiots and we can see that the emperor wears no clothes. The government has been manipulating everything to maintain control/power. There is no discipline with these people. They are out of control.

The below the surface numbers don't lie.  The seasonal numbers factor in unemployment is totally ambiguous and unrealistic. This is where the manipulation is taking place. The types of jobs being created do not create economic growth.  Retail sales continue to show negativity going forward. The middle class is tapped out with very little upside credit capacity. Without access to money, good and services will not be consumed and there is your reason for the lack of Economic growth.


More Phantom Jobs Created–All In The Wrong Places - Paul Craig Roberts - June 6, 2014 -
Last April I saw a report that 83% of May’s college graduates did not have a job. I remarked that in my day most of us had 2 or 3 job or graduate school offers before we graduated. The latest payroll jobs report issued on June 6 proves that the April report was true.                         My opinion, schooled in part by John Williams’ very precise reports on Shadowstats.com, is that on average about half of the new jobs each month are phantom jobs created by the birth-death model and inappropriate seasonal adjustments. So, I figured that the 217,000 jobs claimed for May are more like 108,000. Then I read John Williams’ report on the May jobs number: “Monthly payroll gains overstated by 200,000 plus jobs”                          In other words, there were zero new jobs in May.                        Just as the US government can turn an inconsequential Iraq, Afghanistan, Libya, and Syria into dangerous threats against “the world’s only superpower,” the US government can turn zero jobs growth into 217,000 jobs. It is easy when you have a prostitute media and a gullible public, both of which Washington most certainly has.                        But let’s take the government data at face value.
First, consider the news report that finally as of May 2014 as many Americans had jobs
as had jobs in January 2008. That might seem like good news until you take into account that since January 2008 the US has experienced 6.5 years of population growth. Economists seem to have settled on population growth adding 129,000 people to the work force each month. That comes to 10,000,000 people. Where are their jobs? The “jobs recovery” doesn’t provide for the 10 millions who have come of working age since January 2008.                    We can conclude from this that the official 6.3 percent unemployment rate is nonsense. The unemployment rate is in the neighborhood of 23 percent as John Williams has established.


US Workers In The Prime 25-54 Age Group Are Still 2.6 Million Short Of Recovering Post-Crisis Job Losses - Zero Hedge - Tyler Durden- June 7, 2014 - Pundits may be trying to spin this Friday's jobs report as indicative of an ongoing recovery, emphasizing that as of May, all the jobs that were lost since December 2007 have now been recovered, or this chart...


However the same pundits fail to mention is that while it took the Fed some $2.7 trillion in incremental liquidity to regain all the lost jobs (and concurrently push the S&P to absolutely ridiculous record numbers), at the same time the US population, which grew by 14.8 million since December 2007, has lost a record 12.8 million people form the labor force, which remains at an all time high 92 million!                            Further digging into the data, here are two other things you won't hear from the permabulls: while the May job gain of 217K was respectable, breaking down the jobs by age group as shown by the household survey, shows that not only did the majority of the jobs go to the lowest paying wages for yet another month, but for Americans in their prime working years, those aged 25-54, May was a month in which some 110K workers either lost their jobs, or were moved into the oldest, 55-69 age group.                           Furthermore, while the total number of jobs may have recovered its post December 2007 losses, for Americans aged 25-54, there is still a long, long time to go, with the prime US age group still over 2.6 million jobs short of recovering all of its post December-2007 losses.


Wal-Mart faces big hurdles - Associated Press - ANNE D'INNOCENZI - June 5, 2014 - The world's largest retailer faces new challenges at a time when low prices and one-stop shopping can be a few clicks away on a tablet computer or mobile phone.                 Wal-Mart Stores Inc. built its reputation on everyday low prices and convenient supercenters that allow customers to do all their shopping in one place.                But revenue at established Wal-Mart stores in the U.S., which account for 60 percent of the company's total sales, has declined for five consecutive quarters. Meanwhile, the number of customers has fallen six quarters in a row.                 Like many other retail chains that cater to working-class Americans, Wal-Mart is a victim of an uneven economic recovery that has benefited well-heeled shoppers more than those in the lower-income rungs. Moreover, shoppers are no longer willing to spend hours in big supercenters. They're turning to online competitors like Amazon.com, dollar stores and pharmacies.                   Wal-Mart's annual shareholders' meeting on Friday could offer clues as to how Doug McMillon, who became Wal-Mart's CEO in February, plans to deal with the biggest issues Wal-Mart faces:                CASH-STRAPPED SHOPPERS In an interview with The Associated Press, Bill Simon, CEO and president of Wal-Mart's U.S. stores division, says the top concerns among its shoppers are lack of jobs and gas prices.                     Wal-Mart's customers also still are struggling with a 2 percentage point increase in the Social Security payroll tax since Jan. 1, 2013. Additionally, they're facing reductions in government food stamp benefits.                    As a result, Wal-Mart's customers have changed their shopping habits. They're switching to chicken from beef, and choosing lower-price brands or store labels on staples like detergent. But they do splurge for special holidays.                        "It's been very choppy as to how they choose to spend," Simon says.                      To combat this, Wal-Mart stocks up on small packages at the end of the month when money is tight for customers. It's also counting on a new money transfer service it says will cut fees for its low-income customers by up to 50 percent compared with similar services elsewhere.                            But America's Research Group's C. Britt Beemer asks: "How do you get more money from shoppers whose disposable income is less?"                  PRICE PRESSURE   Since the economic recovery, more stores are offering low prices, which has always been a centerpiece of Wal-Mart's success. As a result, Wal-Mart has had to focus more on cutting its prices.                        The move seems to be working. According to a Kantar Retail pricing survey conducted last October in the southern New Hampshire and northern Massachusetts area, Dollar General's basket of 21 categories across staples was 12 cents cheaper at $28.70 than at Wal-Mart. In the previous year, Dollar General was 18 percent cheaper.                      And in a separate study conducted a year ago, Amazon's prices on a basket of 59 items was actually 7 percent more expensive than Walmart.com and 16 percent pricier than at its supercenters.                       Analysts also praise Wal-Mart's Savings Catcher, an online tool that allows customers to compare Wal-Mart's prices on thousands of products with those of some competitors. If a lower price is found elsewhere, Wal-Mart refunds the difference in the form of a store credit. Wal-Mart plans to expand the tool nationwide after having tested it in seven markets since March.                      Still, low prices hurt sales and margins. For the latest quarter that ended on May 2, for instance, sales at Wal-Mart's U.S. stores that were open at least a year fell 0.1 percent...




Economist: U.S. Banks Preparing to Charge Customers For Deposits - Negative interest rates coming to USA - Infowars - Paul Joseph Watson -June 6, 2014 - In the week that the European Central Bank cut its deposit rate for banks from zero to -0.1%, economist Martin Armstrong warns that negative interest rates are coming to the United States, meaning that Americans will be forced to pay just to keep their money in the bank.                            In a move described as unprecedented, the ECB became the first central bank in history to cut any main interest rate to negative yesterday, part of a package of measures designed to encourage banks to provide more loans to businesses and households. Many view the policy as a desperate sign of Europe’s faltering economic recovery.
Critics claim that the action will do little to spur growth while threatening to cause inflation and unemployment. While banks in the EU have not indicated whether or not the costs will be passed on to consumers, the New York Times’ Neil Irwin asserts that this is inevitable.                          “Banks will most likely pass these negative interest rates on to consumers, or at least try to. They may try to do so not by explicitly charging a negative interest rate, but by paying no interest and charging a fee for account maintenance,” he writes.                      What about Americans? Will they also soon be charged by the bank simply for depositing their own money? Yes, according to economist Martin Armstrong.                        Armstrong, who is noted for calling the 1987 economic crash to the very day, warns that U.S. banks are preparing a raft of new account fees that will serve as a de facto negative interest rate.                           “In the USA, we are more-likely-than-not going to get the negative rates directly passed to consumers by the banks who will claim it is the Fed who will do so at the requests of the banks. Larry Summers has set the stage. This is just how it works. He flew the balloon to get everyone ready. This is likely to be bullish for the stock market,” writes Armstrong, noting that, “The talk behind the curtain is to impose negative interest rates on the consumer.”

 GLOBAL MELTDOWN TO BE WORSE THAN 2008, GOLD & MUCH MORE - David Stockman:  - King World News - June 6, 2014 - Former Dir. of the US Office of Management and Budget, Economic Policy Maker, Politician, Financier & Acclaimed Author - After leaving the White House, Stockman had a 20-year career on Wall Street where he joined Salomon Bros. He later became one of the original partners at New York-based private equity firm, The Blackstone Group and in 1999 started his own private equity fund based in Greenwich, Connecticut. Defying right- and left-wing boxes, his latest book a New York Times best-seller, The Great Deformation: The Corruption of Capitalism in America (2013), Stockman lays out how the U.S. has devolved from a free market economy into one fatally deformed by Washington’s endless fiscal largesse, K-street lobbies and Fed sponsored bailouts and printing press money. 
(Link to the Audio of the Interview from King World News)



Spent: Looking For Change (Documentary)

 Turning to pawn shops, check cashing services, and using payday loans to meet basic financial needs can be costly for many of us, with $89 billion a year going to fees and interest* for using these types of alternative financial services.                     It's time for change. New technology, new ideas and encouraging dialogue around this issue can help make managing money simple and more affordable.                 American Express is presenting this documentary to help improve financial inclusion in the United States. Academy Award®-winning filmmaker Davis Guggenheim is the executive producer of the documentary which is narrated by Tyler Perry and directed by Derek Doneen.

*Source: CFSI, November 2013 Market Sizing Report
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