Showing posts with label Economic Crisis. Show all posts
Showing posts with label Economic Crisis. Show all posts
“Like The Great Depression”: Hundreds Line Up In Freezing Cold For Federal Aid To Pay Heating Bills
The Shrinking Middle Class: Why America is becoming a Two-Class Society
Despite the freezing temperatures, hundreds fought for a place in line in Marietta to apply for federal aid to help pay their heat and power bills this winter.
Some needed even more help just to deal with the cold. Ambulances were cold in and took at least two people to the hospital because of the freezing temperatures .
“I never thought I would be in the line,” applicant Deandre Marshall said. “It’s almost like being in a soup line during the great depression.”
Full article here
Despite the freezing temperatures, hundreds fought for a place in line in Marietta to apply for federal aid to help pay their heat and power bills this winter.
Some needed even more help just to deal with the cold. Ambulances were cold in and took at least two people to the hospital because of the freezing temperatures .
“I never thought I would be in the line,” applicant Deandre Marshall said. “It’s almost like being in a soup line during the great depression.”
Full article here
Signs Hyperinflation Is Arriving
Back in late August, I argued that hyperinflation would be triggered by a run on Treasury bonds. I described how such a run might happen, and argued that if Treasuries were no longer considered safe, then commodities would become the store of value.
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Such a run on commodities, I further argued, would inevitably lead to price increases and a rise in the Consumer Price Index, which would initially be interpreted by the Federal Reserve, the Federal government, as well as the commentariat, as a good thing: A sign that “the economy is recovering”, a sign that “normalcy” was returning.
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FORTUNE: Is this finally the economic collapse?
Despite the many differences between Japan and the US, there is one similarity that continues to matter most in the risk management model my colleagues and I use at Hedgeye, our research firm -- debt as a percentage of GDP. Now that the US can't cut interest rates any lower, the only option left on the table is what the Fed just announced it would start doing -- buying Treasury debt. And that could lead the country to the brink of collapse: According to economists Carmen Reinhart & Ken Rogoff, whose views we share, crossing the 90% debt/GDP threshold is the equivalent of crossing the proverbial Rubicon of economic growth. It's a point from which it's almost impossible to return.
On July 2nd, we cut both our third quarter 2010 and full year 2011 GDP estimates for the US to 1.7%. At the time, the consensus around US economic growth estimates was about 3%. Now we're starting to see both big brokerage analysts and the Federal Reserve gradually cut their GDP estimates, but not by enough. Even our estimate for 2011 is still too high.
Slowing growth, both domestically and in China, is core to our bearish views on both the strength of the US dollar and US equities. There will be a downward bias to our US growth estimates as long as debt-financed-deficit-spending continues to be the solution politicians and central bankers turn to as a fix to our financial crisis.
Markets trade on expectations. Yesterday's zig-zag in the S&P 500 was unlike most sleepy August trading days in America. That's because the 'government is good' crowd leaked word that this second round of "quantitative easing," known as QE2, was coming, and that Ben Bernanke was going to respond to our buy-and-hope begging. (The first round of quantitative easing was the Fed's unprecedented purchase of agency debt to prop up the housing market, along with credit facilities for big banks, which began in 2008 and ended earlier this year.)
To think that we have institutionalized market expectations to this degree is downright frightening. It seems impossible but true that all rallies start and end with rumors about what Fed Chairman Ben Bernanke, a humble looking man of government, had to say at 2:15 PM EST yesterday afternoon, or any other day he makes a statement.
So now what?
The Shrinking Middle Class
With 40.8 million Americans on food stamps (record high) and 45% of the unemployed having been seeking employment for 27 weeks or more (record high), what's left if (or when) QE2 doesn't kick start GDP growth? Should we start begging for QE3? Should we cancel the bomb of the National Association of Realtors' existing home sales report, scheduled for public release on August 24th? Or should we bite the bullet and accept that current economic policy dictates 0% returns-on-savings, even as Washington continues to lever-up our future to the point of economic collapse?
Before the Fiat Fools -- Hedgeye's name for political actors and bankers who have placed their hopes of economic recovery in printing endless supplies of new cash -- run out campaigning for QE3, maybe they should analyze some real time market results to yesterday's announcement of QE2:
1)The US dollar is battling for resuscitation after 9 consecutive down weeks -- down 9% since June.
2) US Treasury yields are making record lows on the short end of the curve, with 2-year yields striking 0.49%.
3) The yield spread (in this case the difference in return between 10-year and 2-year Treasury bills, which shows a long-term confidence when high) continues to collapse, down another 4 basis point day-over-day to 223 basis points.
4) The S&P 500 is down below its 200-day moving average (a common signpost for the health of a market or stock) of 1115.
5) US Volatility (VIX) is spiking from its recent stability.
6) In Japan, long time quantitative easing specialists found their markets closing down overnight by 2.7%, which makes them down 11.9% for the year to date.
Lest our doom and gloom seem built entirely on technical measurements, what they boil down to is actually quite simple -- an idea about our country which dates back to 1835. Alexis De Tocqueville, author of Democracy in America, which was published that year, seemed to warn of this day when he wrote: "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money."
Reagan insider: 'GOP destroyed U.S. economy'
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Economists Herald New Great Depression
Robin Griffiths, a technical strategist at Cazenove Capital, told CNBC Monday that he sees the stock market bottoming out in October as the world has entered significant financial depression.
"Equities are for losers and bond markets for winners. Equities are simply for people who like losing money," Griffiths said.
"A double-dip is inevitable and imminent, as Keynesian stimulus measures have never worked anywhere. We are in the equivalent of a Great Depression following 3 years of credit crisis," he added.
Griffiths also says he has charted a 20-year secular downturn in the West, which we are currently halfway through.
Griffiths’ comments echo those of other notable economists and experts who have concluded that zero growth, mass unemployment, and devastating monetary tightening spells depression on a 1932 level.
With real measures of unemployment having been at around 20% and rising for some time, other analysts have pointed out that the numbers are in the same ballpark as the Great Depression.
The Shrinking Middle Class: Why America is becoming a Two-Class Society
The number of Americans relying on food stamps is at a record level of over 40.8 million, that is one out of every eight, with the figure projected to rise to 43.3 million next year. At the height of the Great Depression, the rate was just one out of thirty-five Americans.
Furthermore, the M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the all the stimulus activity.
July’s dismal jobs report and forecasts of even weaker job growth ahead, along with signs of food inflation, also signals an era of stagflation is upon us, a phenomenon not seen during even the Great Depression.
Having A Supply Of Healthy Foods That Last Just Makes Sense
Other economists are beginning to pin the blame for the continuing spiral into depression at the feet of the central bankers:
"The major problem is that quantitative easing has been counter-productive." Brendan Brown, head of research at Mitsubishi UFJ Securities tells CNBC.
"The central banks have stopped prices from falling. When prices fall, people buy but by shoring up asset prices the central bankers have stood in the way of recovery," he added.
"The big risk is that the Fed reacts to its own depression. The Fed could over-react and would be better off going on holiday rather than announcing yet more QE," Brown said on the eve of a Fed meeting to discuss more QE.
Thousands May Lose Rental Vouchers
The federal government gave the housing authority less money for the voucher program, known as Section 8, than the authority expected. But the authority made matters worse by continuing to issue new vouchers until December, eight months after the government warned it to stop doing so because the program was likely to run a deficit.
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Michael P. Kelly, the authority’s general manager, said that terminating vouchers would be a last resort. The authority has not decided who might lose their vouchers, but if the deficit is not closed, the cuts could begin this summer.
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U.S. Employers Shed Jobs
The U.S. economy shed more jobs than expected in July while the unemployment rate held steady at 9.5%, a further sign the economic recovery may be losing momentum.
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Nonfarm payrolls fell by 131,000 last month as the rise in private-sector employment was not enough to make up for the government jobs lost, the U.S. Labor Department said Friday. Only 71,000 private-sector jobs were added last month while 143,000 temporary workers on the 2010 census were let go.
Economists polled by Dow Jones Newswires were expecting total nonfarm payrolls to drop by a smaller 60,000 in July.
Full story here.
Obama's Top Economist Quits, One Night Before Having To Spin One More Lousy Jobs Report
Romer, an economics professor at the University of California (Berkeley) before taking the key admin post, did not respond to repeated calls to her office.
"She has been frustrated," a source with insight into the WH economics team said. "She doesn't feel that she has a direct line to the president. She would be giving different advice than Larry Summers [director of the National Economic Council], who does have a direct line to the president."
"She is ostensibly the chief economic adviser, but she doesn't seem to be playing that role," the source said. The WH has been pounded for its faulty forecast that unemployment would not top 8% after its economic stimulus proposal passed.
Instead, the jobless rate is 9.5%, after exceeding 10% last year. It was "a horribly inaccurate forecast," said Bert Ely, a banking consultant. "You have to wonder why Summers isn't the one that should be taking the fall. But Larry is a pretty good bureaucratic infighter."
The Suburbs
'Gold price to cross $4,000/oz'
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Poll: Faith in Social Security system tanking
WASHINGTON — Battered by high unemployment and record home foreclosures, most Americans seem to have lost faith in another fundamental part of their personal finances: Social Security.
A USA TODAY/Gallup Poll finds that a majority of retirees say they expect their current benefits to be cut, a dramatic increase in the number who hold that view. And a record six of 10 non-retirees predict Social Security won’t be able to pay them benefits when they stop working.Skepticism is highest among the youngest workers: Three-fourths of those 18 to 34 don’t expect to get a Social Security check when they retire.
Recovery
The public’s views are more dire than the calculations of Social Security’s trustees. Last year, they projected the system would begin running in the red in 2016, as the Baby Boom generation retired, and the trust fund would be exhausted in 2037.
Full article here
U.S. Shopping Center Vacancies Approach Record High
The vacancy rate at shopping centers rose to 10.9 percent from 10 percent a year earlier and 10.8 percent in the first quarter, the New York-based real estate research firm said in a report today. It was the highest since 1991’s 11 percent. The record for shopping center vacancies since Reis began tracking the data 30 years ago was 11.1 percent in 1990.
“There are really very few reasons to believe that performance deterioration won’t continue for another 18 to 24 months for retail properties, although there are some signs that the pace of decline is moderating,” Victor Calanog, director of research, said in the report.
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With the US trapped in depression, this really is starting to feel like 1932
“Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing,” he said.
California is tightening faster than Greece. State workers have seen a 14pc fall in earnings this year due to forced furloughs. Governor Arnold Schwarzenegger is cutting pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn) deficit.
Can Illinois be far behind? The state has a deficit of $12bn and is $5bn in arrears to schools, nursing homes, child care centres, and prisons. “It is getting worse every single day,” said state comptroller Daniel Hynes. “We are not paying bills for absolutely essential services. That is obscene.”
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Is America Destined to Starve?
Since September 11, 2001 this country has faced numerous disasters both man-made and natural. It is evident after these disasters the majority of the population is unable to fend for themselves without government assistance. In only a matter of days, people run out of food and water, no longer able to take care of their families. They then expect some level of government to open up centers which will provide the necessary sustenance to support their families during these emergencies. Basic needs cannot be met without outside assistance. In less than 60 years Americans have lost the knowledge and will to be self-sufficient. How did this happen?
The federal government, in conjunction with large food suppliers, has seduced the citizens into servitude. The greater part of the population no longer maintains more than seven days of food supply in their homes (paycheck to paycheck). Some may argue this is untrue but it is imperative to be able convert raw foodstuffs into an edible product. If you have basic ingredients but no water, heat source, or electricity those raw foodstuffs might as well be located on another planet. American citizens have succumbed to the lie that everything will be available to them at all times in all circumstances. Americans now spend their money on frivolous goods and services which will not protect them against a possible disaster. If one had the ability to inspect any citizen’s food supply they would be minimal and nutritionally harmful. Food products purchased today are processed to the point of having the actual nutrients degraded in the attempt at extending shelf life. Even Americans themselves seem to have a shelf life after death. A lifetime ingesting foods packed with preservatives and the residuals have significantly altered the very essence of what makes our bodies tick. Americans have fallen into the trap of a never-ending supply of food stuffs from the local grocery store. The just in time inventory system we mimicked from the Japanese has certainly increased efficiency but it has greatly increased risks in food supply if interruptions occur. No one ever questions what happens if that supply suddenly stops or their income ceases to exist.
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A Golden Response to Economic Decline
Remember what J P Morgan himself said: ”Gold is money, period.” And soon it will be the only money that has any value, period. Gold, silver and their related shares are the only place to be. Stay clear of paper gold and silver and buy physical only and take possession. These paper gold and silver Ponzi schemes, like GLD, SLV, OTC derivatives and mint certificates are going to be exposed soon. The Sprott Gold Bullion Fund is a viable possibility if you want to buy some paper gold, otherwise go physical only. Very shortly, JP Morgan will be sued in class actions by big players that have been criminally screwed in the silver markets, and this could be the catalyst that finally blows the whole precious metals fraud wide open. So load up! Don’t forget as well, for those who want inherent leverage, do not forget the gold and silver shares that is where the most money is made with moderate risk.
Let’s start with your annual letter from the commissioner of Social Security. It recaps your work record and projects your future retirement benefits. It also warns that benefit payments will exceed employment tax collections by 2016. Worse, it says the Social Security Trust Fund will be exhausted by 2037. When that happens, employment taxes will cover only 76 percent of promised benefits.
As it turns out, the letter is optimistic.
Benefit payments already exceed employment tax collections. According to the Congressional Budget Office, a crush of retirees and fewer workers has turned the expected surplus of employment taxes over benefit payments into a shortfall.
Fortunately, it’s estimated at only $29 billion this year, piffle in government finance. The piffle, however, is expected to continue. There will be a need to find cash, and we will be talking about it in 2012.
Some readers will say, “Gee, isn’t that what our Social Security Trust Fund is for?’’ It’s a reasonable, if naive, idea. While it is true that anyone who worked between 1983 and today has shoveled some extra money into the trust fund, it’s not sitting there like dollar bills in Scrooge McDuck’s vault. The trust is just a collection of IOUs from the Treasury.
In 1983, when Alan Greenspan led a commission that reformed Social Security, federal debt was only $1.4 trillion. Our reformed Social Security was supposed to be solvent for a full 75 years. Its accumulating surplus, held in trust, would cover the hefty cost of the baby boomers when they retired.
But the commission missed the mark. Today the unfunded liabilities of Social Security alone are $5.3 trillion. And the surplus is no more. Worse, Treasury debt is now $12.4 trillion which includes $2.3 trillion of IOUs held by the trust fund. So when Social Security goes to redeem its IOUs and cover that $29 billion shortfall, it will go to the Treasury. Sadly, the Treasury is empty except for its tax revenue and whatever it can borrow.
And what does that mean?
You can get an inkling by reading a recent report from the Senate Committee on Aging. It provides an extensive menu of steps to address the problem. Here are two extremes on the list:
■ “Increase worker and employer contributions by 1.1 percent.’’ Since worker and employer now pay 12.40 percent of payroll in employment taxes, the 2.2 percentage point increase in the tax would be a 17.7 percent increase on all workers, including those working short shifts at McDonald’s.
■ “Reduce benefits by 5 percent for new beneficiaries in 2010 and later.’’ That’s a hefty cut, but hardly enough. It would cover only 30 percent of the projected 75-year shortfall.
Between those two extremes, the Senate committee lays out a list of tools and calls it “modernization.’’ The bottom line is that more will be going in and less will be coming out at least to the people who paid it in.
BP and the Obama administration have reached a preliminary agreement that the oil company will place $20 billion in an escrow account to be administered by Kenneth Feinberg, a White House official said. Feinberg also oversaw payments to families of victims of the Sept. 11, 2001, terrorist attacks.
Credit investors are pricing in a more than 39 percent chance BP Plc will default within five years as it tangles with the Obama administration over cleanup costs and claims for the biggest oil spill in U.S. history.
The risk implied by credit-default swaps is up from 7 percent a month ago, according to CMA DataVision. BP swaps climbed 112 basis points today to a record 618. Investors are demanding 800 basis points more in yield to own BP debt due next year rather than Treasuries.
The Baltic Dry Index, a measure of commodity-shipping costs that’s tumbled 28 percent during its longest losing streak this year, may decline further, according to technical analysis by Barclays Capital.
The gauge fell to 3,020 points yesterday, extending a 13- day fall on speculation weaker Chinese construction may curb raw material demand. That may include iron ore, more of which is hauled at sea than any other dry-bulk commodity. The attached chart shows the index’s 200-day moving average of 3,164. It fell as low as 2,911 points in April, 3.6 percent less than now.
Fitch lowered BP’s credit rating 6 notches from AA- to BBB-, one notch above junk. Pensioners and other UK investors are about to get crushed, as if the black nobility run by the Queen and the Rothschild’s cared. It is obvious BP is destined for failure. Wait until the public finds out the oil fiasco was a false flag operation to pass Cap & trade and carbon taxes among other things. BP is junk and everyone knows it in spite of the attempted payoffs to Fitch. It won’t be long before the rating is junk and institutions are forced to sell the bonds for virtually nothing. It is even money BP will bite the dust. The bad news on the oil blowout gets worse every day as Obama tries to
hide what is really going on so they can get carbon taxes.
The Illuminists blew it. They didn’t know they were drilling into an oil volcano. There will be no way to plug the hole. The deluge will flow for years.
Between the real estate fiasco and now the oil mega disaster the banking system is closing in on collapse. Unemployment is definitely headed higher as millions of additional jobs are lost. Now the US economy is beset with the worst environment disaster in history that will cost hundreds of thousands of jobs. The banking system is beset with trillions of dollars in toxic assets to accompany financial entities with two sets of books. When have you ever heard of banks being given a trillion dollars to stay in business rather than go bankrupt and the taxpayer is allowed to pay for it. The main culprit in this fiasco, the Fed, is about to be rewarded with new monopoly power to financially subject the American populace. What kind of a system is that? In the meantime the public is thrown a bone. There is no end to the toxic assets and the monetization. Is it any wonder gold and silver are climbing higher?
Government-sponsored mortgage purchasers Fannie Mae and Freddie Mac plan to delist their shares from the New York Stock Exchange.
The companies’ regulator, the Federal Housing Finance Agency, said Wednesday that it expects Fannie Mae and Freddie Mac shares to trade on the Over-the-Counter Bulletin Board, an electronic quotation service.
Wynn Resorts Ltd. on Tuesday laid off 220 hourly and 41 salaried workers from its two Las Vegas hotel-casinos, CEO Steve Wynn said.
Wynn told The Associated Press the cuts were made after some workers expressed support for layoffs instead of wage and hour reductions. The company cut wages and hours 18 months ago, and were meant to be temporary, he said.
“It became a morale issue,” Wynn said.
Wynn says 2,300 hourly workers who want to work full time but were reduced to 32 hours per week will have their hours restored. Wynn said 1,400 workers earning less than $200,000 per year who took 15 percent pay cuts will have their salaries restored.
Wynn said the moves will add $7.7 million to the company’s payroll. Without the layoffs, restoring the hours and salaries would have cost nearly $10 million.
Total housing starts were at 593 thousand (SAAR) in May, down 10% from the revised April rate of 659,000 (revised down from 672 thousand), and up 24% from the all time record low in April 2009 of 477 thousand (the lowest level since the Census Bureau began tracking housing starts in 1959). Single-family starts collapsed 17.2% to 468,000 in May. This is 30% above the record low in January 2009 (360 thousand).
The second graph shows total and single unit starts since 1968. This shows the huge collapse following the housing bubble, and that housing starts have mostly been moving sideways for over a year. .
Housing Starts:
Privately-owned housing starts in May were at a seasonally adjusted annual rate of 593,000. This is 10.0 percent (±10.3%)* below the revised April estimate of 659,000, but is 7.8 percent (±9.7%)* above the May 2009 rate of 550,000.
Single-family housing starts in May were at a rate of 468,000; this is 17.2 percent (±7.9%) below the revised April figure of 565,000.
Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 574,000. This is 5.9 percent (±2.2%) below the revised April rate of 610,000, but is 4.4 percent (±2.6%) above the May 2009 estimate of 550,000.
Single-family authorizations in May were at a rate of 438,000; this is 9.9 percent (±2.1%) below the revised April figure of 486,000. Authorizations of units in buildings with five units or more were at a rate of 117,000 in May.
Note that permits fell sharply, suggesting another significant decline in housing starts next month. This is way below expectations (I took the under!), and is good news for the housing market longer term (there are too many housing units already), but bad news for the economy and employment short term.
George Osborne, the UK’s Chancellor of the Exchequer, a role equivalent to that of Tim Geithner in the US, at least in public office, not sure about tax “avoidance”, has just announced the abolition of the FSA – the English just as worthless equivalent to the SEC. It is time Mary Shapiro’s corrupt organization share the same fate. “George Osborne moved to redress what he described as the spectacular regulatory failure of the City, announcing the abolition of the Financial Services Authority and a sweeping increase in the Bank of England’s powers.” And in other news, UK’s Bernanke-equivalent will now double up as uber regulator and Viceroy of the West Indies, due to amazing new powers given to him by the Osbourne super mushroom: “Mervyn King, the Bank’s governor, will become one of the most powerful central bankers in the world, with a new remit to prevent the build-up of risk in the financial system in addition to his monetary policy role.” In other words, one big step forward, and an infinite number of steps back. After all why bother with petty theft, when the Central Banks will soon be funneling trillions away from what’s left of the global middle class, perfectly legally, in broad daylight, and at record 2s10s. [This is a move towards consolidation of power and a monopoly of everything to do with things financial in England, the same as we are seeing under financial legislation in the US. Financial tyranny is about to hit England as well as the US. Next will come exchange control.]
The former chairman of a large mortgage lending company has been charged in a $1.9 billion fraud scheme that contributed to the failure of Colonial Bank, one of the nation’s 50 largest banks before it was seized by regulators last year, the Justice Department said yesterday.
Lee Bentley Farkas, who led Florida-based Taylor, Bean & Whitaker, was arrested Tuesday in Ocala, Fla., after being indicted by a federal grand jury in Alexandria, Va., on bank fraud and other charges.
Taylor, Bean was one of the nation’s largest privately held mortgage lending companies before it filed for bankruptcy protection last year, and officials said the fraud scheme precipitated its collapse as well.
Court documents said Farkas and coconspirators at both companies misappropriated more than $400 million from Colonial and about $1.5 billion from a Taylor, Bean-owned firm to cover the firm’s operating losses.
Farkas, 57, is also charged with trying to defraud the government out of $553 million in Troubled Asset Relief Program bank bailout funds as the losses mounted. If convicted, Farkas faces a likely sentence of life in prison.
The state’s foreclosure crisis continued in May as the number of homeowners who lost their properties more than doubled compared with the same month a year ago, according to data released yesterday.
Warren Group, a Boston firm that tracks local real estate, reported that 1,283 residents lost their homes in May, a 119.7 percent increase from the 584 foreclosures reported in May 2009. There were 6,107 completed foreclosures reported from January to May, a 48.4 percent hike from the same time last year. But fewer homeowners are now on the precipice of foreclosure, which means the problem may eventually begin to ebb. Foreclosure petitions, the first step in the process, fell to 2,110 in May, a 9.4 percent drop compared with the same time last year, Warren Group said. Petitions also were down 13.2 percent from April.
The fact the HFT, which is nothing more than front-running customer orders, is still allowed is the strongest evidence possible that regulators and solons are grossly inept and/or abjectly corrupt.
One reason that solons allow, even encourage, HFT and other computer trading is because it is useful in manipulating stocks higher – by both the whims of traders and under direction by the elites.
Solons and regulators know that trader games and manipulations are usually to the upside, so they allow the pillaging of customers because it is a useful tool of market manipulation. Traders and wise guys know that upside manipulation is allowed and encouraged, so they eagerly manipulate stocks, futures and options to the upside. This is why there is a triple digit rally for expiration week for something like 10 of 12 expirations each year. After the 1987 Crash, program trading and OEX/SPU trading came under great scrutiny. So the Street colluded to prevent large downside expirations. This is not a guess or conjecture; we received the calls.
If there was a large imbalance of stock to sell on expiration, NYSE brokers called traders to buy up the shares in order to prevent the expiration from showing a large decline. The Street did this to keep Congress and regulators from shutting down the very profitable derivative schemes and trading.
Delaware Senator Ted Kaufman told CNBC’s Jim Cramer that aberrant trading recently in Diebold Inc. and the Washington Post Co. isn’t good for the market.
“Markets must be credible, or they’re no good,” he said. Such extreme advances and declines in stocks for no apparent reason is “death by a thousand cuts,” he said.
Note” Diebold plunged 30% in six seconds on June 2. Volume exploded to 11 times normal activity.
Senate Democrats suffered a blow Wednesday in an attempt to conclude debate on a sweeping bill that would extend a range of popular tax credits, renew several expired federal programs and provide financial aid to states.
In a defeat that saw Democrats abandoned by moderate lawmakers on both sides of the aisle concerned over the cost of the $140 billion measure, Senate leaders will now be forced to go back to the drawing board to devise a way to get a pared down bill through the Senate.
For almost a year, we have noted each expiration week that Ben Bernanke pours liquidity into the system to juice stocks. Even though the Fed’s MBS monetization scheme officially ended in March, Bennie Mae has been monetizing MBS for each expiration week since the official termination date.
Bennie Mae again monetized MBS for the current expiration week. The $13.922B of MBS monetized this week increased the Fed’s balance sheet by $12.778B.
Last week Ben told a Congressional inquirer that the Fed does not intervene in the stock market. This is another Bernanke deception. The Fed does not directly intervene, i.e. buy stocks or SPUs. But the Fed indirectly intervenes incessantly in the stock market by injecting juice into the system and by sending surrogates into the market. Think Al Capone ordering subordinates to do dastardly deed.
Consumer prices recorded their biggest decline in nearly 1-1/2 years in May as energy costs dropped, according to a government report on Thursday that pointed to tame inflation pressures and low interest rates.
The Labor Department said its seasonally adjusted Consumer Price Index fell 0.2 percent last month, the largest decline since December 2008, after dipping 0.1 percent in April.
The number of U.S. workers filing new applications for unemployment insurance unexpectedly rose last week as the manufacturing, construction and education sectors shed employees, adding to worries that the economic recovery is slowing.
Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 472,000 in the week ended June 12, the Labor Department said on Thursday.
The four-week moving average of new claims, considered a better measure of underlying labor market trends, slipped 500 to 463,500.
In the first week of June, the number of people still receiving benefits after an initial week of aid rose 88,000 to 4.57 million, the Labor Department said.
The insured unemployment rate, which measures the percentage of the insured labor force that is jobless, edged up to 3.6 percent from 3.5 percent.
The U.S. current account deficit widened in the first quarter to $109.0 billion, or 3 percent of U.S. gross domestic product, from a sharply smaller estimate for the fourth quarter of 2009, a Commerce Department report said on Thursday.
It was the third consecutive quarterly increase from a low of $84.4 billion in the second quarter of 2009, when world trade fell sharply because of a global recession.
The Commerce Department lowered its estimate of the fourth quarter current account deficit to $100.9 billion, or 2.8 percent of GDP, from a previously reported $115.6 billion. Wall Street analysts had expected the first quarter deficit to widen to about $120.7 billion.
The Conference Board, an industry research group, said on Thursday its gauge of leading indicators rose to a new peak, suggesting the U.S. economic recovery will continue. The leading index, which tries to predict future levels of economic activity, rose 0.4 percent to a record 109.9, after stagnating in April. Analysts polled by Reuters had been looking for a slightly firmer 0.5 percent gain.
The Conference Board found the average length of unemployment had risen to 34.4 weeks in May from around 30 at the start of the year.
Factory activity growth plummeted in the U.S. Mid-Atlantic region in June, a survey showed on Thursday, adding to worries that the short and tepid U.S. economic recovery is now fizzling.
The Philadelphia Federal Reserve Bank said its business activity index dropped to 8.0 in June from May’s 21.4. Economists had expected a reading of 20.9, based on the results of a Reuters poll, which ranged from 10.0 to 24.0.
More than 90 U.S. banks and thrifts missed making a May 17 payment to the U.S. government under its main bank bailout program, signalling a rising number of lenders are struggling to meet their obligations.
The statistics, compiled by SNL Financial from U.S. Treasury data, showed 91 banks and thrifts skipped the May dividend payment under the Troubled Asset Relief Program, or TARP. It was the first missed payment for 23 of the banks; for the others, it was at least their second miss.
The number of banks missing their TARP payments rose for the third straight quarter. In February, 74 banks deferred their payments; 55 deferred last November.
SNL Financial’s analysis found 20 banks have missed four or more payments since the program began in 2008, while eight banks have missed five payments.
Under the TARP program, the U.S. Treasury invested in preferred shares issued banks looking for funds. The banks were to make regular dividend payments to the Treasury, and have the right to repurchase the shares at some point in the future.
New claims for jobless benefits rise sharply
Initial claims for jobless benefits rose by 12,000 to a seasonally adjusted 472,000, the Labor Department said Thursday. It was the highest level in a month and overshadowed a report that showed consumer prices remain essentially flat.
A rise in first-time jobless claims, combined with this week's report that said new home construction plunged in May after government incentives expired, highlighted fears about the strength of the economic rebound.
If layoffs persist, there's a concern that the June employment numbers may show a decline in private-sector jobs after five straight months of gains, said Jennifer Lee, an economist with BMO Capital Markets.
"We've definitely seen the economic recovery hit a wall," Lee said.
First-time jobless claims have hovered near 450,000 since the beginning of the year after falling steadily in the second half of 2009. That has raised concerns that hiring is lackluster and could slow the recovery.
The four-week average for unemployment claims, which smooths volatility, dipped slightly to 463,500. That's down by 3,750 from the start of January.
Kevin Logan, an economist with HSBC Securities, said many economists have been expecting claims to fall below 450,000 for several weeks now.
"The wait is getting longer and longer," said Logan. "As each week goes by, doubts about the underlying strength of the economic expansion grow."
A separate Labor report said consumer prices fell for the second straight month. The 0.2 decline in the Consumer Price Index was pulled down by falling energy prices -- most notably a 5.2 percent drop in gasoline prices.
But core consumer prices, which strip out volatile energy and food, edged up 0.1 percent in May, after being flat in April. Core prices are up only 0.9 percent over the past year -- below the Fed's inflation target.
Additionally, the Commerce Department said Thursday that the broadest measure of U.S. trade rose during the first quarter to the highest point in more than a year. Much of the widening deficit was due to higher prices on imported oil during the first three months of the year. Those prices have since come down.
And a private research group said its gauge of future economic activity rose 0.4 percent in May, signaling slow growth in the U.S. economy through the fall. Turmoil in stock markets and a troubled housing market weighed on the Conference Board's leading economic index, while measures related to interest rates and an increasing amount of money in the economy tugged it higher. The index is designed to forecast activity in the next three to six months.
Still, layoffs remain one of the biggest concerns for the recovery. Just this week, casino owner Wynn Resorts laid off more than 260 workers in its two Las Vegas casino hotels in a move expected to save nearly $8 million.
Economists have said they don't expect to see sustained job creation until first-time jobless claims drop below 425,000 per week.
But Julia Coronado, senior U.S. economist with BNP Paribas in New York, said she expects they will actually stabilize at around 450,000. That's because weaker segments of the economy are shedding jobs while stronger sectors are hiring.
The number of people continuing to claim benefits rose by 88,000 to 4.57 million. That doesn't include about 5.2 million people who receive extended benefits paid for by the federal government.
Congress has added 73 weeks of extra benefits on top of the 26 weeks typically provided by states. All told, about 9.7 million people received unemployment insurance in the week ending May 29, the most recent data available.
The extended benefit program expired this month. The House has approved an extension of the benefits through November. The Senate has yet to act.
On Wednesday, Senate Republicans and a dozen Democratic defectors rejected a catchall measure combining jobless aid for the long-term unemployed, aid to cash-strapped state governments and the renewal of dozens of popular tax breaks. Despite the loss, Democratic leaders predicted that a scaled-back version of the measure could pass, possibly later this week.
Adding to worries about the job market, the Labor Department said earlier this month that the economy generated only 41,000 private-sector jobs in May. That was down from 218,000 in April.
Temporary hiring by the Census Bureau added another 411,000 jobs. The unemployment rate fell to 9.7 percent from 9.9 percent.
20 More Signs Of A Full-On Economic Collapse
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More Than 1 In 5 American Children Are Now Living Below The Poverty Line
Part of the reason is because an increasing number of parents can’t find work. According to a U.S. Labor Department report, the average duration of unemployment in the United States hit 34.4 weeks in May, which was a big increase from 33 weeks during April. To give you some perspective how incredibly bad that is, the average duration of unemployment was only 16.5 weeks in December 2007.
The truth is that when U.S. workers lose their jobs they are finding it exceedingly difficult to find new ones.
In fact, 45.9% of those currently unemployed in America have been out of work longer than six months. That is the highest percentage since the Labor Department began keeping track of this statistic back in 1948.
So is there much hope that things will turn around soon?
No, not really.
In fact, Federal Reserve Chairman Ben Bernanke says that unemployment is likely to remain “high for a while”.
That means a lot of children are going to continue to suffer.
According to one shocking new study, 21 percent of all children in the United States are living below the poverty line in 2010.
That means that more than 1 in 5 American children are now living in poverty.
That is a national disgrace.
Not only that, but the same report estimates that up to 500,000 children may currently be homeless in the United States.
Perhaps we should all think about that while we are enjoying our nice dinners tonight.
But most of us don’t think that it is our job to do anything about it. Most of us have been trained that it is the job of the government to fix people’s problems.
We have created a monolithic welfare state and record numbers of Americans are now dependent on it.
In fact, for the first time ever, more than 40 million Americans are on food stamps.
40.2 million Americans received food stamps in March, which was a whopping 21 percent increase from a year earlier.
But it is bad enough that 1 out of every 8 Americans is on food stamps. What is far more tragic is that one out of every four U.S. children is now on food stamps. In fact, as mentioned previously, experts tell us that half of all U.S. children will be on food stamps at some point before they turn 18.
So is anyone still not convinced that the U.S. economic system is broken?
So who is doing well these days?
The wealthy.
In 2009, the number of millionaires in the United States rose 16 percent to 7.8 million.
Wall Street bonuses for 2009 were up 17 percent when compared with 2008.
The rich are getting richer as the poor are getting poorer. According to the United Nations, the United States has the highest level of income inequality of all of the highly industrialized nations.
The poor are left with an increasingly smaller slice of the pie to divide among themselves. In fact, those in the bottom 40 percent now collectively own less than 1 percent of the nation’s wealth.
But the truth is that as the U.S. economy continues to fall apart, we are all going to experience some very difficult times.
In particular, when the U.S. economy finally completely implodes, it is those who are almost entirely dependent on the “system” that will suffer the most pain. The vast majority of Americans live month to month, don’t grow any of their own food and could only last a couple of weeks on the food that they currently have in their homes. So what will happen to those people when the system fails?
And in case you think that this kind of talk is fearmongering, perhaps you should start listening to what some of the top financial analysts around the world are saying.
For example, Anthony Fry, the senior managing director at Evercore Partners, recently told CNBC that things are getting so bad out there that he is “considering investing in barbed wire and guns”.
Yes, things are really getting that bad.
Years ago the old timers would warn us that someday we would see Americans standing in bread lines.
Well, today food stamps are the new bread lines, and 40 million Americans a month find themselves dependent on the U.S. government for the food that they need to survive.
If that doesn’t send a chill down your spine perhaps you should check your pulse.
When a government has to feed 40 million people a month that means that the system is badly broken.
How many tens of millions of people have to be on food stamps before we can all agree that we are in a complete and total economic nightmare?
If you know of family or friends that are hurting, please consider helping them out. The truth is that in the end we are all in this together. The government is not going to save us. The collapsing U.S. economy is not going to save us. But if we all roll up our sleeves and work together perhaps we can make it through the difficult years that are coming.
Say goodbye to full-time jobs with benefits
Many of the jobs employers are adding are temporary or contract positions, rather than traditional full-time jobs with benefits. With unemployment remaining near 10%, employers have their pick of workers willing to accept less secure positions.
In 2005, the government estimated that 31% of U.S. workers were already so-called contingent workers. Experts say that number could increase to 40% or more in the next 10 years.
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