Economy

The Italian Job: How Borrowing And Printing Lead To An Economic Dead End

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– The Italian Job: How Borrowing And Printing Lead To An Economic Dead End (David Stockman’s Contra Corner, Aug 21, 2014):

Earlier this week Bloomberg published a devastating chart showing real hourly wage growth for the first 60 months of every cycle going back to 1949.  The 11 cycle average gain was 9% and the largest was 19% a half century back.

Fast forward to the 60 months of ZIRP and QE since the Great Recession officially ended in June 2009, however, and you get a drastically different picture: Real hourly wages have risen by just 0.5%, and in the great scheme of things that’s a rounding error.

wage growth bbg

Surely the above chart is also flat-out proof that massive money printing doesn’t work. After all, reflating wages, jobs and incomes is what the monetary politburo claims it’s all about. Indeed, the Fed has insouciantly cast a blind eye to the massive bubbles building everywhere in the financial system, and has kept money market rates relentlessly at zero for six years running on the grounds that it is not yet done “stimulating” the labor market.

So why does this abysmally failed and dangerous experiment continue unabated—as Yellen will undoubtedly confirm at Jackson Hole?  Self-evidently, it is irresistibly convenient to both Wall Street and Washington. The former gorges on a massive diet of carry trade gambling windfalls thanks to ZIRP and the Greenspan/Bernanke/Yellen “put”; and the latter gets a fiscal get-out-of-jail-free card owing to the Fed’s massive repression of interest rates. Indeed, with the public debt now topping $17.7 trillion, the implicit (and fraudulent) debt service relief from current ultra-low interest rates amounts to upwards of $500 billion per year.

Read moreThe Italian Job: How Borrowing And Printing Lead To An Economic Dead End

49,5% Of Americans Live With Someone Dependent On Government Benefits

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– Half Of All Americans Live With Someone Dependent On Government Benefits (ZeroHedge, Aug 20, 2014):

More Americans than ever before are tapping government benefits. As WSJ reports,nearly half of Americans, 49.5%, lived in a household where at least one person was receiving some type of government benefit. Over the last few years, the number has mostly risen from more people turning to programs designed to help the poor, such as food stamps, Medicaid (the health-insurance program for the poor and disabled) and the Temporary Assistance for Needy Families program, commonly known as welfare. Welcome to Cloward-Piven’s socialist America… or as some might say “Mission Accomplished.”

Half Of All Americans Live With Someone Dependent On Government Benefits

Source: WSJ

As we discussed previously, this may not be entirely by accident…

Read more49,5% Of Americans Live With Someone Dependent On Government Benefits

Big Banks “Bought” Congress … So Credit Derivatives Are Bigger than Ever

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– Big Banks “Bought” Congress … So Credit Derivatives Are Bigger than Ever (Washington’s Blog, Aug 21, 2014):

The Causes of the 2008 Crisis Have Never Been Addressed

We’ve noted for years that Washington never reined in the risky derivatives which helped cause the 2008 crash … and so the big banks hold more derivatives than ever.

We’ve also noted that the financial services industry has bought and sold Congress.

Indeed, Washington never fixed the causes of the 2008 financial crisis.

Yesterday, Janet Tavakoli gave a good overview of the problem to CBC:

Read moreBig Banks “Bought” Congress … So Credit Derivatives Are Bigger than Ever

Car Repos Soar 70% As Auto Subprime Bubble Pops; “It’s Contained” Promises Fed

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– Car Repos Soar 70% As Auto Subprime Bubble Pops; “It’s Contained” Promises Fed (ZeroHedge, Aug 20, 2014):

The auto loan subprime bubble may be the latest to burst (after student loans) as the rate of car repossessions jumped 70.2 percent in the second quarter, with much of that increase coming from finance companies not run by automakers, banks or credit unions. “The number of delinquencies and repossessions rising is what we would expect as the auto industry sells more vehicles,” “But this slight uptick is one to keep an eye on.” The surge in delinquencies and repossessions is being driven primarily by borrowers with subprime and deep subprime credit scores.

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Four Moscow McDonalds shut by Russian consumer watchdog

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– Four Moscow McDonalds shut by Russian consumer watchdog (RT, Aug 20, 2014):

Russia’s consumer watchdog has shut down four McDonald’s restaurants in central Moscow – including the first-ever outlet in the country – over “administrative violations.” More of the company 430 Russian franchises are under investigation.

“Multiple violations of sanitary norms were detected in the sourcing of food and waste disposal in McDonald’s restaurants during inspections carried out between the 18th and 20th of August,” said an official statement from the watchdog, Rospotrebnadzor.

Read moreFour Moscow McDonalds shut by Russian consumer watchdog

Bank of America agrees to $17 BILLION fine over mortgage fraud

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– Bank of America agrees to $17bn fine over mortgage fraud – report (RT, Aug 20, 2014):

America’s second largest lender has reached a $17 billion settlement with US federal authorities over selling bad mortgages, according to sources close to the negotiations.

The bank will pay out $10 billion in cash and $7 billion for consumer relief – such as modified home loans and refinanced mortgages, AP reports, citing officials close to the negotiations. The final verdict is due on Thursday.

The fine will be the largest single compensation settlement, beating out JPMorgan Chase & Co’s $13 billion penalty paid in November 2013. Citigroup, another major US bank, had to pay $7 billion in July.

Read moreBank of America agrees to $17 BILLION fine over mortgage fraud

EU farmers complain €125 million compensation is just drop in the ocean

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– EU farmers complain €125mn compensation is just drop in the ocean (RT, Aug 20,  2014):

The €125 million in emergency EU support to its food producers may not be enough to cover the damage, as some estimates have it more than a hundred times higher.

On Monday, the European Commission announced €125 million in emergency funding for European farmers hit by the Russian trade ban.

Read moreEU farmers complain €125 million compensation is just drop in the ocean

Switzerland to EU: We don’t want to sidestep Russian food ban

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– Switzerland to EU: We don’t want to sidestep Russian food ban (RT, Aug 20,  2014):

Switzerland has said it will not re-export European agricultural products to Russia that now can’t get access to the country’s market.

“We have had requests from European countries, including the producers of fruits, vegetables, dairy products and meat, but we didn’t give permission to have their products imported to Switzerland and then exported to Russia,” as ITAR-TASS quotes Jurg Jordi, a spokesman at the Swiss Federal Office for Agriculture.

Read moreSwitzerland to EU: We don’t want to sidestep Russian food ban

Trampling on Coal Country families

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– Trampling on Coal Country families (Ice Age Now, Aug 20, 2014):

“Obama and EPA are determined to destroy US coal, people’s lives and welfare be damned,” says Paul Driessen.

As President Obama and his Environmental Protection Agency continue waging war on coal, oil and gas – it is families in Coal Country, USA that are being hammered hardest.

“States that mine coal or use it to generate affordable electricity for homes, hospitals and factories are losing jobs, facing widespread power plant closures, and seeing their electricity prices climb higher and higher. The effects on people’s health and welfare grow steadily worse, but are ignored by EPA, which is fixated on “preventing dangerous manmade climate change,” at any cost.

Read moreTrampling on Coal Country families

Oakland activists block Israeli ship for third day

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– Oakland activists block Israeli ship for third day (Al Jazeera, Aug 18, 2014):

They are considering making the action a weekly event, to coincide with the arrival of new vessels

Pro-Palestinian protesters on Monday continued a campaign to block an Israeli commercial vessel from docking in Oakland, California, for a third day.

About 20 protesters arrived at the port at 5 a.m. local time to block the container ship, owned by Zim Shipping Services Ltd., one of the world’s largest container shipping companies, from entering the Port of Oakland and unloading cargo. Two demonstrators were detained and cited, according to the Oakland Police Department.

Read moreOakland activists block Israeli ship for third day

Evelyn de Rothschild Interview On China (Bloomberg Video)

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H/t reader squodgy:

“Several years ago, when I first got interested in who owns what, I saw this video which shows where the man himself was worming his way in.

Not only is he now selling weather guarantees (no connection with chemtrails & HAARP there then?!?!….erm), he is advocating the one world currency and the supervisor of the Chinese Central Bank is his ‘friend’.

Again, what we are seeing is all window dressing to keep us confused. Whatever Vlad does with China, it has Rothschild’s nod of approval because they’re already in there.

Think about it, the USA and EU are bust, the BDI is bottomed so world trade is grinding to a halt. China has just admitted it has been borrowing trillions to build twenty cities……….who other than the people who own 90% of world assets would stump up that much? It was their perfect leverage to gain control of the Chinese financial sector.

In my humble opinion, the Chinese Credit Card is one of Rothschild’s moves, and if Vlad locks in to it, it will please Evelyn.”

June 7 (Bloomberg) — Evelyn de Rothschild, chairman of E.L. Rothschild Ltd., talks about China’s economic development and outlook for the country’s financial services industry. De Rothschild speaks from Beijing with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)

Absolute Bubble Insanity: For Nearly Half A BILLION Dollars, Here Is The World’s Most Expensive Penthouse

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–  Absolute Bubble Insanity: For Nearly Half A Billion Dollars, Here Is The World’s Most Expensive Penthouse (ZeroHedge, Aug 19, 2014):

Forget Hong Kong, London and New York: when it comes to the pinnacle in absolute real estate insanity – perhaps in all of history – look no further than James Bond’s favorite gambling mecca, Monaco. It is in this tiny Riviera principality where we find the Tour Odeon, a double-skyscraper being built by Groupe Marzocco SAM near Monaco’s Mediterranean seafront, which will contain a 3,300 square-meter (35,500 square-foot) penthouse with a water slide connecting a dance floor to a circular open-air swimming pool. The description is nice, but it is the bottom line that is mindblowing: Bloomberg reports that the apartment may sell for more than 300 million euros ($400 million) when it goes on the market next year, French magazine Challenges reported. That would make it the world’s most expensive penthouse, according to broker Knight Frank LLP.

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Wall Street banks ‘may desert UK for Ireland’ if Britain leaves EU

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– Wall Street banks ‘may desert UK for Ireland’ if Britain leaves EU (RT, Aug 19, 2014):

Wall Street banks could abandon Britain for the Republic of Ireland if the UK decides to leave the EU, senior figures in the industry have reportedly said. This is despite a Forbes report that names London the world’s ‘most influential city’.

Changes to EU banking rules could see London stripped of its financial preeminence. Some major institutions including Bank of America, Citigroup and Morgan Stanley are believed to be drawing up plans to desert the City amid concerns the UK is drifting further from the EU.

This is despite a Forbes list of “The World’s Most Influential Cities 2014” which ranked London as the most influential city in the world, because it attracts more than double the amount of foreign direct investment deals than New York, which came in second.

Read moreWall Street banks ‘may desert UK for Ireland’ if Britain leaves EU

Putin Considers Banning Jack Daniel’s

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– Putin Considers Banning Jack Daniel’s (ZeroHedge, Aug 19, 2014):

We knew the blowback from western sanctions against Russia would get serious – and Europe is already finding that out the hard way – but Vladmimir Putin appears to have gone ‘cruel-and-unusual’ in his latest step. As ITAR-TASS reports, Russian consumer-protection agency Rospotrebnadzor will decide in next few days whether to seize Jack Daniel’s Tennessee Whiskey and Honey Liqueur after ‘reportedly’ finding “suspicious” chemicals in batch of flavored whiskey on sale in Sverdlovsk stores. Luckily Jack Lew has told us this will not impact the US economy (unless of course, you are Jack Daniels).

Read morePutin Considers Banning Jack Daniel’s

36% Of Americans Haven’t Saved Anything For Retirement

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– 36% Of Americans Haven’t Saved Anything For Retirement (CBS, Aug 18, 2014):

Over a third of all Americans (36%) have not saved any money for retirement, according to a new Bankrate.com (NYSE: RATE) report. Sixty-nine percent of 18-29 year-olds haven’t saved anything, along with 33% of 30-49 year-olds, 26% of 50-64 year-olds and 14% of people 65 and older.

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Europe unveils €125 MILLION in ‘exceptional support’ to food producers – EU farmers could lose up to $16 BILLION

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– Europe unveils €125mn in ‘exceptional support’ to food producers (RT, Aug 18, 2014):

The European Commission said it will provide up to €125 million from Monday till the end of November to compensate food producers coping with Moscow’s food ban.

“The exceptional measures announced today will include market withdrawals especially for free distribution, compensation for non-harvesting and green harvesting. The financial assistance will cover all producers whether they are organized in producers organizations or not,” the European Commission said in the statement.

Read moreEurope unveils €125 MILLION in ‘exceptional support’ to food producers – EU farmers could lose up to $16 BILLION

Russia Launches China UnionPay Credit Card

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– Russia launches China UnionPay credit card (RT, Aug 15, Edited Aug 18, 2014):

Forget Visa and MasterCard. After the two American credit system payment companies froze accounts without notice in March, Russia has been looking for an alternative in China UnionPay.

China UnionPay plans to have 2 million cards in Russia in the next three years.

Instead of seeing the small Visa and MasterCard logo on credits cards, ATMs, and retail outlets, Russians will start to see the three words “China. Union. Pay.”

Read moreRussia Launches China UnionPay Credit Card

Obama’s Secret TPP Deal Would Be Disastrous For America

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– Obama’s Secret TPP Deal Would Be Disastrous For America (Economy in Crisis, Aug 15, 2014):

Recent reports continue to show that our economy is still struggling. Instead of solving the problem, President Obama continues to push for more secret “free trade” agreements, modeled after the North American Free Trade Agreement. Especially disturbing, in the President’s grand push for a 12-nation trade pact dubbed the Trans-Pacific Partnership(TPP), is that Congress has been left out of negotiations. “We want transparency. We want to see what’s going on there,” House Minority Leader Nancy Pelosi (D-Calif.) told reporters. “We have a problem with that.”

Instead of Granting Congress more transparency, the president has asked for Congress to grant him Trade Promotion Authority or Fast Track as it is also called. This would mean the president could sign the deal before Congress approves it and then ram it through Congress with limited debate and no opportunity of filibuster.

Read moreObama’s Secret TPP Deal Would Be Disastrous For America

“Anti-Putin” Alliance Fraying: Germany, Slovakia, Greece, Czech Republic Urge End To Russian Sanctions

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– “Anti-Putin” Alliance Fraying: Germany, Slovakia, Greece, Czech Republic Urge End To Russian Sanctions (ZeroHedge, Aug 16, 2014):

Last week Germany reported that in the second quarter, its GDP declined by 0.2%, worse than Wall Street consensus. This happened a few shorts days after Italy reported a second consecutive decline in its own GDP, becoming the first Europen country to enter a triple-dip recession. What’s worse, Europe’s slowdown took place before the brunt of Russian sanctions hit. Surely in the third quarter the GDP of Germany, a nation whose exports accounts for 41% of GDP, will be even worse, with whisper numbers of -1% being thrown casually around, but one thing is certain: Europe is about to enter its third recession since the Lehman collapse just as we forecast at the end of 2013, a “triple-dip” which may become an outright depression unless Draghi injects a few trillion in credit money (which will do nothing but delay the inevitable and make it that much worse once the can can no longer be kicked), and unless normal trade ties with Russia are restored.

Read more“Anti-Putin” Alliance Fraying: Germany, Slovakia, Greece, Czech Republic Urge End To Russian Sanctions

Washington Post: Europe Is Stuck In a “Greater Depression”

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–  Washington Post: Europe Is Stuck In a “Greater Depression” (Washington’s Blog, Aug 15, 2014):

“It’s a Little Misleading to JUST Call This a Depression. It’s WORSE than That”

The Washington Post’s Wonkblog reports:

Europe hasn’t recovered, because it hasn’t let itself. Too much fiscal austerity and too little monetary stimulus have, instead, put it more than halfway to a lost decade that’s already worse than the 1930s.

It’s a greater depression.

Read moreWashington Post: Europe Is Stuck In a “Greater Depression”

Japan’s Keynesian Demise: A Cautionary Tale For Our Times

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– Japan’s Keynesian Demise: A Cautionary Tale For Our Times (David Stockman’s Contra Corner, Aug 15, 2014):

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The ragged Keynesian excuse that all will be well in Japan once the jump in the consumption tax from 5% to 8% is fully digested is false. Here’s the problem: this is just the beginning of an endless march upwards of Japan’s tax burden to close the yawning fiscal gap left after the current round of tax increases, and to finance its growing retirement colony. There is no possibility that Abenomics will result in “escape velocity” Japan style and that Japan can grow its way out of it enormous fiscal trap. Instead, nominal and real growth will remain pinned to the flatline owing to peak debt, soaring retirements, a shrinking tax base and a tax burden which will rise as far as the eye can see. Call that a Keynesian dystopia. It is a cautionary tale for our times. And Japan, unfortunately, is just patient zero.

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NAFTA Is 20 Years Old – Here Are 20 Facts That Show How It Is Destroying The Economy

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– NAFTA Is 20 Years Old – Here Are 20 Facts That Show How It Is Destroying The Economy (Economic Collapse, Aug 14, 2014):

Back in the early 1990s, the North American Free Trade Agreement was one of the hottest political issues in the country.  When he was running for president in 1992, Bill Clinton promised that NAFTA would result in an increase in the number of high quality jobs for Americans that it would reduce illegal immigration.  Ross Perot warned that just the opposite would happen.  He warned that if NAFTA was implemented there would be a “giant sucking sound” as thousands of businesses and millions of jobs left this country.  Most Americans chose to believe Bill Clinton.  Well, it is 20 years later and it turns out that Perot was right and Clinton was dead wrong.  But now history is repeating itself, and most Americans don’t even realize that it is happening.  As you will read about at the end of this article, Barack Obama has been negotiating a secret trade treaty that is being called “NAFTA on steroids”, and if Congress adopts it we could lose millions more good paying jobs.

Read moreNAFTA Is 20 Years Old – Here Are 20 Facts That Show How It Is Destroying The Economy