Survey: Americans' pessimism on economy has grown - AP through CNBC - August 28, 2014 -
Americans are more anxious about the economy now than they were right after the Great Recession ended despite stock market gains, falling unemployment, and growth moving closer to full health.
Seventy-one percent of Americans say they think the recession exerted a permanent drag on the economy, according to a survey being released Thursday by Rutgers University. By contrast, in November 2009, five months after the recession officially ended, the Rutgers researchers found that only 49 percent thought the downturn would have lasting damage... The slow pace of improvement during most of the recovery, now in its sixth year, has eroded confidence and slowed a return to the pay levels that many enjoyed before the economy suffered its worst collapse since the 1930s. About 42 percent of those surveyed say they have less pay and savings than before the recession began in late 2007. Just 7 percent say they're significantly better off...
Is There Capitalism After Cronyism? - Of Two Minds.com - Charles Hugh Smith - August 30, 2014 - The more the Status Quo pursues the same old Keynesian Cargo Cult script of central planning and free money for financiers, the more self-liquidating the system becomes.
Judging by the mainstream media, the most pressing problems facing capitalism are:
1) income inequality, the basis of Thomas Piketty’s bestseller Capital in the Twenty-First Century, and
2) the failure of laissez-faire markets to regulate their excesses, a common critique encapsulated by Paul Craig Roberts’
These critiques (and many similar diagnoses) reach a widely shared conclusion: capitalism must be reformed to save it from itself.
The proposed reforms align with each analyst’s basic ideological bent. Piketty’s solution to rising wealth inequality is the ultimate in statist centralization: a global wealth tax.
Roberts and others recommend reforming capitalism to embody social purpose and recognize environmental limits. Exactly how this economic reformation should be implemented is a question that sparks debates across the ideological spectrum, but the idea that capitalism can be reformed is generally accepted by left, right and libertarian alike.
Socio-economist Immanuel Wallerstein asks a larger question: can the current iteration of global capitalism be reformed, or is it poised to be replaced by some other arrangement?
recent book The Failure of Laissez Faire Capitalism...
"Widespread Slowdown In Home Price Gains": Case-Shiller Misses, Rises By Slowest Since 2012 - Zero Hedge - Tyler Durden - August 26, 2014 - The fourth (or is it fifth?) dead cat bounce in the US housing market is rapidly fading, as we just confirmed by the latest Case-Shiller Home Price Index data for the month of June, which saw a Y/Y increase in home prices of just 8.07%, below the 8.3% expected, and the slowest increase since December 2012. As the report noted, "for the first time since February 2008, all cities showed lower annual rates than the previous month." On a monthly basis, the NSA index, Case-Shiller's preferred, rose by 1.0% for the 10 and 20-City composite, with the Seasonally Adjusted composite declining for the second consecutive month: the last time there were two consecutive monthly declines during a price declining phase was in late 2010.
Market at highs belies economic reality: Peter Schiff - Yahoo Finance - Jeff Macke - August 29, 2014 - In the attached clip Euro Pacific Capital CEO Peter Schiff offers a rebuttal. On the economy:
The data is garbage. “You’ve got to put 2nd quarter GDP into its proper context,” he argues. The 4.2% print was a simple offset of the Q1-2.9% weather disaster. “We’ve got a 1% economy. People are going to have to figure that out.” Even at that it’s overstated in Schiff’s eyes. He views the economic reality as being a current decline.
On the apparent success of Quantitative Easing:
“We’re going to overdose on it. The real crisis is not going to be because the Fed stops QE but because it continues it to the point that we have a dollar crisis. That’s going to force a big increase in rates ultimately and this whole bubble economy that the Fed has worked so hard to inflate is going to implode in a big way.”
David Stockman Interview on King World News - August 31, 2014 - David A. Stockman is Former Director of the US Office of Management and Budget (USOMB), 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), (Audio of Interview)
(Synopsis) - Perilous state of the economy... Greatest suckers rally in history; laboring heavily in its final days. Yawning gap between the terrible condition of the real economy on Main Street and this fantastic bubble that we have had on Wall Street... Bumping along at 2% (GDP)... P/E ratios of 20:1 for broad market. Russell 2000 is trading P/E's of 80:1. Yield on sovereign debt (10 year treasury bond) at 2.35% not realistic. Results from the heavy hand of Central Banks buying sovereign debt. Not sustainable. More of the same the rest of the year. Game is almost up. Rising level of anxiety and apprehension... End game will be a massive repricing in the entire market - DEFLATION!!! Asset prices are overvalued. Real Estate and Equities.
For millions of cord cutters, cable TV fades to black - USA Today - The Cincinnati Enquirer - Amber Hunt - August 24, 2014 - "I feel like cable is the one company that punishes loyalty," said Holt, 33, of Pleasant Ridge. "With every cable company, my bill continues to go up the longer I am a customer. Anywhere else, be it Kroger or at hotels or with airlines, I'm rewarded the longer I stay a customer." So when Holt and his wife, Genevieve, moved into a new house two years ago, they didn't bring DirecTV and its $100 monthly bill with them. Instead, they joined the estimated 7.6 million U.S. households that have left pay television behind. The number of pay-TV defectors is steadily rising: About 6.5 percent of households nationwide have cut the cord, up slightly from 4.5 percent in 2010, according to research by Experian Marketing Services. (Yes, the label is a slight misnomer, as most "cord cutters" do still deal with some actual cords.) Nearly one-fifth of Americans who have working Netflix or Hulu Plus accounts don't subscribe to a cable or satellite TV service. Michael Greeson, co-founder and director of research for the Diffusion Group, has been tracking cord-cutting trends since 2007. For the past several years, his surveys have consistently shown that about 15 percent of adult broadband users who subscribe to a pay-TV service are considering ditching it within the next six months. That more people aren't jumping ship is likely thanks to cable operators' aggressively working to keep subscribers when they call to cancel. They're offering quiet deals that their websites don't advertise in hopes of at least converting a would-be cord cutter into what's called a "cord shaver" — someone who scales down his or her service but doesn't bail on cable entirely. "If it were not for operators' jumping on this and the economy coming back, those numbers could be a lot larger now," Greeson said. "With cord cutting, we're not headed toward a mass exodus."
Dosher Hospital (Southport, NC) trustees vote to offer early retirement to help ease hospital's financial struggles - WECT TV (Wilmington, NC) - Emily Devoe - August 25, 2014 - The Dosher Memorial Hospital Board of Trustees voted unanimously to offer employees early retirement to try and alleviate the hospital's financial struggles. During the open session portion of Wednesday's meeting, Chief Financial Officer Dan Porter told board members that in order for Dosher to continue to operate and cope with inflation and higher industry costs, changes must be made. Porter said Dosher has a higher number of full-time employees per bed than the North Carolina median for critical access hospitals. In a presentation, Porter said, on average, it takes 82 days before Dosher receives patient payments as compared to 52 days for the average North Carolina hospital. The board considered two options: early retirement or layoffs. In order for staff members to receive early retirement, they would have to be 60 years old with at least five years of service. If the board opted for layoffs, employees would have received one week of severance care for ever year of service up to 12 weeks. Employees would have also received three months of health care...
Hound Note: Dosher is a Public Critical Access Hospital in Southport. This has been going on for a while. New Administration was brought in to run the hospital. This hospital has been a staple in Southport forever. Administration wants to make a profit. I am sure big bonuses factor into all of this. This is going to effect employees and service. Obamacare is closing the box around these facilities. This is a harbinger of the future, especially for Public Hospitals. Everyone wants to maintain the status quo, but it is impossible in this economic environment. As individuals, the only chance you have is Preventative Care. The future of medicine is a holistic approach that embraces a healthy lifestyle. Those who lead unhealthy lifestyles are going to die quicker, because you won't be able to afford to mask the unhealthiness as people have been doing. Popping pharmaceuticals isn't the solution.
Fred's to close 60 stores, accelerate pharmacy acquisitions - Memphis Business Journal - August 28, 2014 - Fred's Inc. today reported plans to close 60 stores without pharmacies by the end of the year, freeing up capital for an acceleration of its pharmacy acquisitions. Memphis-based Fred's (NASDAQ: FRED) said it would close the stores, more than 8.5 percent of its total of 704, as it reported a net loss in the second quarter of $16.4 million. Excluding the impact of reserves for the closures and inventory clearance, the net loss was $7.1 million, the company said.
For the entire year, Fred's will close 70 stores – or about 10 percent of its selling space, said Jerry Shore, Fred's executive vice president and CFO, in the company's earnings call Thursday afternoon.
Shore, reached by phone before the call, declined to disclose which stores would be closed and whether any are in Memphis. He also couldn't immediately provide an estimate of the number of employees that would be affected.
Hound Note: We have had Fred's in our area. You can tell the economy is hurting when these lower economic retailers are closing stores, consolidating, and/or refocusing. You have already been reading stories about Family Dollar's and Dollar General's struggles.