Google Groups
Join To Get Blog Update Notices
Visit the Hickory Hound Group

Monday, September 15, 2014

Economic Stories of Relevance in Today's World -- September 14, 2014

Paul Craig Roberts - King World News Interview - August 2, 2014 - From early 1981 to January 1982 he served as Assistant Secretary of the Treasury for Economic Policy. President Ronald Reagan and Treasury Secretary Donald Regan credited him with a major role in the Economic Recovery Tax Act of 1981, and he was awarded the Treasury Department's Meritorious Service Award for "outstanding contributions to the formulation of United States economic policy."

The Federal Reserve has decided that Banks can not use Municipal Bonds as High Quality Collateral, while allowing the Banks to hold less secure collateral. The Financial Industry has taken over the government and is setting it up so that Cities with Municipal Bonds will have an untenable situation, because when those Municipal bonds get dumped on the market, it will have a negative effect on the price of the bonds and attitude of the investors towards the bonds. When the Cities can no longer afford that debt, then the Banks can step in and take over Municipal assets, including the municipality's pension funds. 'The Banks are looting mechanisms... Capitalism can't perform by increasing GDP and real wages and has become a looting mechanism. It is discrediting itself just like Soviet Central Planning discredited itself.'

New sanctions against Russia don't make sense. They fall on Russian Oil companies and their Defense Industry. The sanctions are meant to keep the Russians from borrowing in the European Capital markets. There is no reason for them to do that in the first place. What is the purpose of these sanctions? Seems to be a Washington propaganda position. Makes Europeans more vulnerable to Washington control -- away from European independent foreign policy. Dangerous step towards provoking war.

Notice sanctions are against Russian Oil companies and not Gas companies. Europe is dependent on the Russian Gas. Without it they will collapse.Cutting off the Europeans could bring them quickly to heel.

Gold and Silver price has been taken down on a sustained level in the futures market. The Fed is worried about the dollar. Russians (and Chinese) are moving away from the Dollar payment system. Hasn't been going on long enough to effect the dollar. Don't know what the Dollar pressure is. How can something this visible and illegal be permitted to continue. Directors of COMEX (Futures market) are the Bullion Banks and players are the Hedge Funds. Heads of the COMEX see precisely the positions of the Hedge Funds. Appears that when the Hedge Funds are most vulnerable that COMEX is providing an extreme form of insider trading. Been going on for years. Nothing is being done to stop it. Naked Shorting based on Inside Information. Law is not allowed to interfere with the Looting Mechanism. No political capability to hold people accountable for these actions.

No Economy For Americans - Paul Craig Roberts - Deptember 8, 2014 - The Dow Jones stock average closed Friday at 17,137, despite the fact that the payroll jobs report was a measly 125,000 new jobs for August, an insufficient amount to keep up with the growth in the working age population.                    The low 125,000 jobs figure is also inconsistent with the Bureau of Economic Analysis’ second estimate of second quarter 2014 US GDP growth of 4.2 percent–a figure beyond the capability of the present-day US economy.                     Clearly, the economic numbers are out of sync with one another. They are also out of sync with reality.                     One of the reasons the stock market average is high is the massive liquidity the Federal Reserve has pumped into the banking system since 2008. Instead of going into consumer inflation, the money went into stock and bond price inflation.                         Another reason for the artificial high stock market is the multi-trillion dollar buy-back of their own stock by US corporations. Many of these corporations have even borrowed from the banks in order to drive up their share prices with heavy purchases, thus maximizing executive bonuses and the values of stock options for board members. In effect, they are looting their own firms by loading the companies with debt in order to drive up executive and board incomes.                 The stock market’s rise is not because consumer incomes and real retail sales are growing. Real family median incomes have been falling, and real retail sales, at best, are flat.
Let’s look at the composition of the pathetic 125,000 new jobs, and then we will examine whether these jobs are real or make-believe. (Keep in mind that payroll jobs include part-time jobs and that the number of payroll jobs is not the number of people employed, because many Americans make ends meet by working two and even three jobs.)                         As I have reported for many years, the US economy no longer is capable of creating goods producing jobs. The Bureau of Labor Statistics August payroll jobs report shows zero manufacturing jobs. I read the other day that the US now has four or five times more people on food stamps than in manufacturing jobs.
The jobs of the New Economy are in lowly paid, nontradable domestic services–the jobs that characterize a Third World Economy.               Perhaps reflecting the collapse of retail sales, retail trade lost 8,400 jobs in August... (The rest at

The U.S. National Debt Has Grown By More Than A Trillion Dollars In The Last 12 Months
- The Economic Collapse Blog - Michael Snyder - September 14th, 2014 - The idea that the Obama administration has the budget deficit under control is a complete and total lie.  According to the U.S. Treasury, the federal government has officially run a deficit of 589 billion dollars for the first 11 months of fiscal year 2014.  But this number is just for public consumption and it relies on accounting tricks which massively understate how much debt is actually being accumulated.  If you want to know what the real budget deficit is, all you have to do is go to a U.S. Treasury website which calculates the U.S. national debt to the penny.  On September 30th, 2013 the U.S. national debt was sitting at $16,738,183,526,697.32.  As I write this, the U.S. national debt is sitting at $17,742,108,970,073.37.  That means that the U.S. national debt has actually grown by more than a trillion dollars in less than 12 months.  We continue to wildly run up debt as if there is no tomorrow, and by doing so we are destroying the future of this nation.                      The chart that I have posted below shows the exponential growth of the U.S. national debt over the past several decades.  Anyone that would characterize this as "under control" is lying to you...

As the chart posted below shows, our total debt bubble is now more than 25 times larger than it was just 40 years ago...

Debt Rattle Sep 12 2014: The Fed Has A Big Surprise Waiting For You - The Automatic Earth - Raúl Ilargi Meijer - September 12, 2014 - The topic of potential interest rate hikes by central banks is no longer ever far from any serious mind interested in finance. Still, the consensus remains that it will take a while longer, it will take place in a very gradual fashion, and it will all be telegraphed through forward guidance to anyone who feels they have a need or a right to know. Sounds like complacency, doesn’t it?                           Now, it seems obvious that the Bank of Japan and the ECB are not about to hike rates tomorrow morning. In Europe, dozens of national politicians wouldn’t accept it, and in Japan, it would mean an early end to many things including Shinzo Abe.                         But the Bank of England and the Fed are another story. Though if the Yes side wins in Scotland next week, the narrative may change a lot of Mark Carney and the City. That leaves the Fed. And it’s important to realize and remember that, certainly after Greenspan entered the scene, speaking in tongues, the Fed has become a piece of theater. The Fed is about perception. About trying to make people believe something, and make them act a certain way that they choose for them.                           That’s why after the Oracle left they pushed first a bearded gnome and then a grandma forward as the public face. The kind of people nobody would perceive as a threat. Putting a guy who looks like second hand car salesman in charge of the Fed wouldn’t work.                          Not when a big financial crisis looms, and then continues on for a decade and counting. That makes keeping up appearances the no. 1 priority. That’s when you want a grandma, or you’d lose your credibility real fast. You need grandma for your theater, for the next play you’re going to stage.                       That market volatility today is at record lows is part of a big play, or a big scene in a play if you will. And the goal is not to make markets look good, as many people think. Making markets look good, making the economy look good, is just an intermediate step designed to lure everyone in.                          You make people believe you got their back. All the big investors. Because they make tons of money, while they thought maybe the crisis could have really hurt them. Even the public at large feels you got their back. Because they don’t understand what the sleight of hand is.                 The big investors understand, but you got them believing you will play that hand forever, or let them know well ahead of time when you intend to fold. The big investors think you will skim the public, but not them. They think you’re all on the same side. And the public thinks you’re healing the economy, and saving their jobs and homes and pensions.                    When rate hikes are discussed, like I did two weeks ago in This Is Why The Fed Will Raise Interest Rates, most people have similar initial reactions. ‘They can’t do that, it would kill the economy, or at least the recovery’.                             But the truth is, there is no recovery. It’s just a scene in a play. And the economy is completely shot, it only appears to be left standing because the Fed poured oodles of money into it. Or rather, into a part of the economy that it can control, that it can get the money out of again easily: Wall Street banks. And Wall Street equals the Fed.                     Charles Hugh Smith, in What If the Easy Money Is Now on the Bear Side?, notices that there are hardly any bears left in the market, and that shorts are disappearing as a source of revenue for bulls. Interesting, but he doesn’t yet connect all the dots. CHS thinks big money managers can make ‘the play’, that they can fool the rest of the market and unleash a tsunami that will bury the bulls. (The rest at

America's Poor Have Never Been Deeper In Debt - Zero Hedge - Tyler Durden - September 13,2014 - Ever since the Lehman bankruptcy, one of the main reasons given by the perpetual apologists about why i) the so-called "recovery" has been the worst in US history and ii) the Fed has been "forced" to conduct 6 years of wealth transferring policies, boosting the stock market to all time highs and creating a record wealth split in US society between the super rich and everyone else (one that surpasses even that seen during the roaring 20s) is that the US consumer, scarred by the economic crash, has been rushing to deleverage and dump as much debt as possible.
There are two problems with that story:
  • First, as we first pointed out in 2012, US households are not deleveraging, they are defaulting, a huge difference which goes to motive and intent, and shows that instead of actively paying down debt households are instead loading up on as much debt as they can, which at some point they simply stop servicing (for a detailed analysis of this disturbing trend, read our series on the student loan bubble).
  • Second, when it comes to the poorest quartile of US society, some 14 million people, it is dead wrong. In fact, as the Fed's triennial Survey of Consumer Finances, released last week showed, America's poorest have never been more in debt!
As usual, the full story is one of nuances. As Bloomberg reports, as a result of the first point - mass defaults - US household debt has indeed declined on an average basis. Indeed, average debt burden for all families stood at about 105% of pretax income in 2013, down from about 125% in 2010 and the lowest level since the 2001 survey...

No comments: