'Hindenburg Omen' hovering over Wall Street again

ittery Wall Street traders are looking up in the sky and seeing Hindenburgs.
That can be a bad thing for markets, which have suffered in the past when the tripwires associated with the "Hindenburg Omen" get activated.
Market veteran Art Cashin said Monday that the market phenomenon is looming again.
"There have been multiple occurrences of the Hindenburg Omen in the last several weeks," Cashin, the director of floor operations at UBS, said in his morning note.

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Cashin: 'Folklore on the floor' has investors waiting

CNBC's Bob Pisani and Art Cashin of UBS discuss why investors are reluctant to jump into the market at this point, as stocks toggle in and out of positive territory.

(Read more: The stock market's line in the sand—S&P 1,700)
To demonstrate, he cited research from SentimenTrader's Jason Goepfert, who has been warning about Hindenburg dangers all summer.
From his most recent findings:

Sometimes a topic in the market takes hold and it's hard to shake it off. One of those is the technical "market crash" signal called the Hindenburg Omen.
It has its boosters and its detractors, and we're not going to get caught up in debating its merits. We've discussed it for 12 years, always with the same arguments.
On June 10th, we outlined the market's historical performance after suffering at least 5 signals from the Hindenburg Omen within a two-week period. Stocks were consistently weak afterward, and proved to be so again, at least for a while.
With the latest market rally, the Omens are flaring up again.There have been 5 Omens triggered out of the past 8 trading sessions (your data may vary—we're using the same sources we've always used for historical data). That's actually the closest-grouped cluster since early November 2007.
It's extremely rare to see as many Omens occurring together as we've seen over the past 50 days. The last time was prior to the bear market in 2007.
The time before that was prior to the bear market in 2000.

The most commonly cited Hindenburg factor is when an unusually high number of stocks on the New York Stock Exchange hit 52-week highs and lows.
Others include when the NYSE index is higher than it was 50 days ago; when market breadth is negative, and when new highs are less than new lows. Traditional thinking is that all the indicators must occur on the same day, though interpretations vary.
(Read more: Why a 4 to 6 percent pullback may happen soon: Pros)
To be sure, the Hindenburg signals don't always work.
The most recent spate of Hindenburg chatter came May 31, and the S&P 500 is up nearly 4 percent since.
(Read more: The 'Hindenburg Omen': Bear signal scares market)
Yet the recurrence of signs still has trading floors buzzing.
"Two precedents don't make a pattern," Cashin said, "but that sure makes that 'check engine' light glow much, much brighter."

—By CNBC's Jeff Cox.

U.S., Japan Conclude First Round Of TPP Talks

Source: Law 360

The U.S. and Japan on Friday completed an initial round of talks over a proposed free trade zone in the Asia-Pacific region but were reportedly unable to reach an agreement on automobiles, insurance and non-tariff measures, which are the biggest obstacles in the negotiations.

Acting United States Trade Representative Wendy Cutler on Friday completed three days of bilateral negotiations with her Japanese counterparts. The talks centered around the proposed Trans-Pacific Partnership, a pact to reduce tariffs and other trade barriers between the U.S. and 11 other... 

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One of the root causes of today’s financial disaster is the deregulation of derivatives trading that Larry Summers campaigned for.

by Stephen Lendman

When his Fed chairmanship term ends in January, Bernanke’s expected to step down. Wall Street wants Summers replacing him. It usually gets what it wants. More on that below.

Money power runs America. The Federal Reserve isn’t federal. It’s privately owned and controlled. Wall Street decides who runs it.
Bankers choose chairmen and governors. It’s always been this way. It’s more than ever so now. Presidents have no say. They announce pre-selected choices. They pretend otherwise.

America’s founders knew the dangers. Letting bankers control money assures trouble.
James Madison called them “Money Changers,” saying:

“History records that the Money Changers have used every form of abuse, intrigue, deceit and violent means possible to maintain their control over governments by controlling money and its issuance.”

Thomas Jefferson said:

“I sincerely believe that banking institutions are more dangerous to our liberties than standing armies.”

“Already they have raised up a money aristocracy that has set the government at defiance.”

“The issuing power should be taken from the banks and restored to the people to whom it properly belongs.”

According to Lincoln:

“The money powers prey upon the nation in times of peace and conspire against it in times of adversity.”

“It is more despotic than a monarch, more insolent than autocracy and more selfish than a bureaucracy.”

“It denounces, as public enemies, all who question its methods or throw light upon its crimes.”

“I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at the rear is my greatest foe.”

Andrew Jackson called the Bank of the United States (the Fed’s equivalent then) a “hydra-headed monster.” He called bankers “a den of vipers and thieves.”
They were tame compared to now. Privatized money power is humanity’s greatest threat. Bankers control it for personal gain. They use it to accumulate more. Political complicity permits it.
Alan Greenspan wrecked the economy. William Greider called him “among the most duplicitous figures to serve in modern American government.”
He used “his exalted status as economic wizard (to) regularly corrupt the political dialogue by sowing outrageously false impressions among gullible members of Congress and adoring financial reporters.”
When he stepped down, he left a colossal mess. Bernanke accelerated a failed process. He’s run amuck. He’s responsible for the most reckless money printing madness in history.
It continues. He’s debasing the dollar irresponsibly. A slow-motion train wreck looms. Nothing’s being done to prevent it. Ordinary people will be harmed most.
Bail-ins will confiscate their savings. Bankers will benefit most. They control the Fed. Except for coins, they create money, credit and debt.
In 1927, Bank of England president Josiah Stamp said:

“The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented.”

“Banking was conceived in inequity and born in sin.” (They) own the earth.”

“Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again.”

“Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in.”

“But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.”

Privatized money facilitates financial war on humanity. It assures poverty, unemployment, inflation, out-of-control debt, human misery and economic slavery.
Today’s system far exceeds the worst of past eras. Among names floated for next Fed chairman, Summers is the worst possible choice. He’s ideologically over-the-top.
He’s a walking conflict of interest. He sold out America. He did so for personal gain. He’s in bed with Wall Street. His rap sheet exposes him.
As Clinton’s Treasury Secretary, he pushed banking deregulation to the extreme. He ignored industry fraud.
He supported industry consolidation. He promoted anything goes. He spearheaded Glass-Steagall repeal.
He successfully thwarted Clinton’s Commodity Futures Trading Commission head Brooksley Born’s efforts to regulate financial derivatives.
He campaigned for passing the Commodity Futures Modernization Act. It deregulated derivatives trading. It legitimized swap agreements and other hybrid instruments.
It’s one of the root causes of today’s financial disaster. It ended derivatives and leveraging regulatory oversight. Doing so unleashed a tsunami of trouble. It rages out-of-control. It more than ever turned Wall Street into a casino.
It facilitates fraud. It does so on an unprecedented scale. It wrecked the economy. It scams millions of investors. It hangs ordinary people out to dry. It spreads human misery. It does so on a global scale.
As Obama’s National Economic Council director (2009 – 2010), Summers pushed destructive economic policies. He did so for personal gain.
He peddled influence. He earned millions of dollars doing so. He got millions more in Wall Street sponsored speaking fees. Bailed out banks rewarded him for services rendered.
William Greider said stop him “before he messes up again.” Mendacity is his most notable attribute.
He’s “noxious.” He’s a “clumsy public liar.” He collaborates with Wall Street insiders. He helped engineer financial collapse. Appointing him Fed chairman “will be a sick joke.”
Say it isn’t so. He represents same old, same old. He’s a disaster waiting to happen.
Greider urged “no more second chances for Larry Summers.” Once bitten is enough.
As World Bank chief economist (1991 – 1993), he supported structural adjustment harshness. He drafted an infamous secret memo. He called Africa under-polluted.
He proposed a “free market in toxics.” He said the World Bank should encourage “migration of dirty industries to the LDSs (less developed countries).”
“Health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages,” he added.
He stoked further controversy saying:

“There are no…limits to the carrying capacity of the earth that are likely to bind any time in the foreseeable future.”

“There isn’t a risk of an apocalypse due to global warming or anything else.”

“The idea that we should put limits on growth because of some natural limit, is a profound error and one that, were it ever to prove influential, would have staggering social costs.”

Critics demanded his resignation. Brazil’s environmental secretary, Jose Lutzenberger, wrote him. He called his ideas “totally insane.”
They reflect the “social ruthlessness and arrogant ignorance of many conventional economists concerning the nature of the world we live in.”
“If the World Bank keeps you as (chief economist), it will lose all credibility.”
As Harvard president, he pushed a right wing neocon agenda. He supported reestablishing ROTC.
Vietnam War era campus protests downgraded it to an extracurricular activity. Harvard let students participate at MIT.
Summer’s proposal failed. In March 2011, President Drew Faust returned Naval ROTC. She did so disgracefully.
Summers accused African-American Studies Professor Cornel West of spending too much time on political activism. West left for Princeton.
He called Black professors unfit scholars. He was fired for making derogatory remarks about women. Faculty and staff demanded he go.
He supports Israeli occupation harshness. In 2002, he campaigned against Harvard and other universities divesting from companies doing business with Israel. He called doing so “anti-Semitic.”
In September 2010, Nomi Prins headlined “Bye Larry Summers – Thanks for the Hangover,” saying:

“The departure of Larry Summers from President Obama’s Economic Advisory Free-market Squad, is similar to that of the high-school degenerate who left the keg party after the last barrel was emptied and the place was demolished.”

“Only it was the reckless financial deregulation he promoted through Glass Steagall repeal as Treasury Secretary in 1999 that brought about the Great Bailout Party of 2008 where Wall Street drank the federal subsidy barrel dry and left the general economy trashed.”

“It’s good he’s finally leaving, but it should have happened long ago.”

Imagine a second act. Imagine the unimaginable. Summers as Fed chairman assures the equivalent of financial nuclear winter for humanity.
On July 31, AP headlined ”Obama speaks up for Larry Summers as liberal Democrats question consideration for Fed post,” saying:

“Speaking up for a contentious former aide, President Barack Obama pushed back Wednesday against liberal Democrats who are urging the president not to pick Lawrence Summers to run the Federal Reserve.”

“In a closed-door session with House Democrats, Obama offered what participants in the meeting described as a keen defense of Summers.”

It “continued at the White House, where press secretary Jay Carney said Summers had ‘stood shoulder to shoulder’ with Obama during an economic crisis.”
“He made decisions and put forth the policies that helped reverse the tragic economic decline that this country faced in the beginning of 2009.”
False! He helped turn disaster into catastrophe. He did so for growing millions. Protracted Main Street Depression continues out-of-control.
Wrongheaded policies deepen it. Obama bears full responsibility. So does Summers. His tenure as White House point man was disastrous.
It bears repeating. He’s in bed with Wall Street. He operates for personal gain. He’s a walking conflict of interest. He assures greater disaster than already.
On August 2, Francis Boyle headlined “The Cowardice of Harvard’s Larry Summers,” saying:
He wanted to debate Summers publicly. At issue is calling Harvard alumni involved in urging Israeli divestment anti-Semitic.
He “did not have the courage, the integrity, or the principles to back up his scurrilous charges,” said Boyle.
Harvard fired him for “attempt(ing) to impose his Neo-Conservative agenda and in particular (claiming) women are dumber than men when it comes to math and science.”
He’s an unconscionable Fed chairman choice. Appointing him defends the indefensible. He assures deepening hard times for millions.
Robert Weissman’s an economic expert. He’s written extensively on financial and corporate accountability. He heads Public Citizen.
“Forget Larry,” he says. A petition calls him “the wrong person to lead the Federal Reserve.”
“Summers has continuously advocated for deregulation and other policies that favor Wall Street and corporate interests. He should not head the nation’s central bank.”




“Sign our petition urging President Obama to nominate someone better suited than Larry Summers to be Federal Reserve Board Chair.”
“After you sign the petition, Public Citizen will keep you updated on other ways to stand up to giant corporations and their cronies like Larry Summers.”

Congress should be ashamed about jobs

US Representative Marlin Stutzman said, “Most people will agree that if you are an able bodied adult without any kids you should find your way off food stamps.” That depends on whether those ways can be found. If Stutzman and other members of Congress believe it’s that easy to find a job with a living wage, they’re either ignorant of middle-class life or victims of free-market delusion. In either case, Congress, with its shameful response to the people who elected them, has not only made the job search more difficult for average Americans, but has also impeded the process.
Senate Republicans killed a proposed $447 billion jobs bill in 2011 that would have added about two million jobs to the economy. They filibustered Nancy Pelosi’s “Prevention of Outsourcing Act,” and temporarily blocked the “Small Business Jobs Act.” Most recently, only one member of Congress bothered to show up for a hearing on unemployment.
Congress’ unwavering support of big business donors shows a callous disregard for the needs of the millions of Americans they’re supposed to be representing. Here are five of the paralyzing consequences:
1. They’ve stifled the growth of millions of young adults
In the US, more than half of college graduates were jobless or underemployed in 2011. Over the last 12 years, according to a New York Times report, the United States has gone from having the highest share of employed 25- to 34-year-olds among large, wealthy economies to having among the lowest. The Wall Street Journal recently noted that nearly 300,000 people with at least a bachelor’s degree were making the minimum wage in 2012, double the number in 2007. Not since the 1960s have so many young adults been living with their parents.

2. They’ve mocked the concept of a “living wage”
At the very least, one would think, workers should be able to sustain their lifestyles over the years, to keep from falling backwards in earnings. But they’ve lost 30% of their purchasing power since 1968. This happened during a time of steady American productivity. It has been estimated that a minimum wage tied to productivity should now be $16.54 per hour, but the current $7.25 is less than half of that, and below poverty-level. It’s been getting worse in the last five years. While 21 percent of post-recession job losses were considered low-wage positions, 58 percent of jobs added during the recovery were considered low-wage. Congress fiddles while more and more American families lose their earning power.
3. They’ve allowed nearly half of America to go into debt
Our young adults are not only underemployed, but the college graduates among them are dealing with an average of $26,600 in debt, which translates, according to Demos, into $100,000 of lifetime wealth loss. Total student debt has quadrupled in just ten years.
It goes beyond students to the population at large, many of whom survived the boom years by borrowing heavily on homes and credit cards. In 1983 the poorest 47% of America owned an average of $15,000 per family, 2.5 percent of the nation’s wealth. By 2009 the poorest 47% of America, as a group, owned ZERO PERCENT of the nation’s wealth. Their debt exceeds their assets. Yet Congress caters to “too big to fail” financial institutions while “too little to matter” American homeowners don’t earn enough to stay out of debt.
4. They’ve persisted with the trickle-down “job creator” myth
The “low tax = job creation” argument is absurd. Congress need only look at four of its pet projects: Bank of America, Citigroup, Pfizer, and Apple. Each one of the first three made much of their revenue in the US over the last two years, but claimed billions of dollars of US losses (big foreign gains, though). Yet with almost zero US taxes among them, all three companies are among the top ten job cutters.
Apple is a special case. Rand Paul fumed, “What we need to do is apologize to Apple and compliment them for the job creation they’re doing.” But Apple only has 50,000 US employees, and despite earning about $400,000 per employee, they were the biggest US tax avoider in 2012.
As America waits in vain for corporate job growth, Congress might look in its own back yard for the very worst job cutter, the federal government itself, which has begun to slice up a long-time model of public service, the Post Office.
5. They’ve aligned against the one area that would ensure jobs and a safer future
A study at the University of Massachusetts concluded that at least 1.7 million jobs could be generated by a commitment to clean energy, about three times as many as in the fossil fuel industry. Half of them would be labor-intensive jobs requiring at most a high school education. And all these new employees would help to reduce their own home heating costs. A recent report by a Kansas energy group, which analyzed data from 19 wind projects, concluded that wind energy generation “is equivalent to, or in some cases significantly cheaper than, new natural gas peaking generation.”
If Congress were really concerned about job creation, and about the cost and environmental impact of energy choices, and about the implications of falling behind China and Germany in clean technologies, they would see that a transition to wind and solar power is necessary. But oil, gas, and coal received over twice the level of subsidies provided for renewable fuels from 2002 to 2008.
Globally it’s six times more, with US post-tax fossil fuel subsidies of $502 billion leading the world. Even with their subsidy advantage, right-wing groups, funded by Koch Industries, are seeking to repeal renewable energy initiatives in individual states. Their deceitfully-named “Electricity Freedom Act” will keep the money flowing to dirty energy. But not the jobs.
Shame, Shame
How can the job-defeating behavior of Congressional Republicans be explained? It was suggested earlier that they’re either ignorant of middle-class life or victims of free-market delusion. Perhaps it’s more insidious. Thom Hartmann reports on a dinner meeting the night of January 20, 2009, when “Republican conspirators vowed to bring Congress to a standstill, regardless of how badly Congressional inaction would hurt the already hurting American economy and people.” In short, they don’t want Obama to look good. If that’s true, it goes beyond shame. To disgrace.
AHT/AGB
…read more
Republished from: Press TV

‘Greece to need more bailout loans’

A report has revealed a document showing Germany’s central bank predicts that the recession-hit Greece will need more rescue loans from its international creditors by the start of the next year.

According to the report published by prominent German magazine Der Spiegel earlier this week, the document from the Bundesbank indicated that the cash-strapped Mediterranean country will need more bailout loans from the so-called troika of international lenders — the European Union (EU), the European Central Bank (ECB), and the International Monetary Fund (IMF) by the start of 2014.
The German magazine dubbed the document a Bundesbank report prepared for the IMF and German finance ministry.
Greece has been dependent on bailout funds from international rescue loans approved by the troika of international creditors since May 2010.
The Greek economy is in its sixth year of recession due to fiscal mismanagement resulting in tax rises and spending cuts.

This is while Greece™s jobless rate reached 27.6 percent in May 2013, up from 27.0 percent in April, according to a report released on August 8 by Greece™s statistic service LSTAT.
The agency added that the youth aged between 15 and 24 were hit the hardest with a 64.9 unemployment rate in May.
The country™s unemployment rate stands at more than double the eurozone’s average reading of 12.1 percent, reflecting a deepening recession after years of austerity being imposed under the EU bailout plan.
Europe plunged into financial crisis in early 2008. The worsening debt crisis has forced the EU governments to adopt harsh austerity measures and tough economic reforms, which have triggered incidents of social unrest and massive protests in many European countries.
MAM/AS

…read more
Republished from: Press TV

They Are Systematically Destroying Our Independence And Making Us All Serfs Of The State

by Michael Snyder 

The percentage of Americans that are economically independent has dropped to a stunningly low level.  In order to be economically independent, you have got to be able to take care of yourself without any assistance from anyone else.  Unless you are independently wealthy, that means that you either have your own business or you have a full-time job.  Unfortunately, as you will see below, the percentage of Americans that are self-employed is at an all-time record low and the percentage of Americans with a full-time job has declined to a level not seen in about 30 years.  As a result, more Americans than ever find themselves forced to turn to the government for assistance.  When you add it all up, about half of all Americans get money from the government each month these days.  And yes, there will always be poor people that cannot take care of themselves that need help, but when you have more than half of the population dependent on the government that is a major problem.  You see, the truth is that our independence is systematically being taken away from us and we are steadily being made serfs of the state.  And once you become a serf of the state, it is very hard to resist anything the government is doing in a meaningful way.  After all, the money that you are getting from the government is enabling you to survive.  In essence, your allegiance has been at least partially purchased and you may not even realize it.
Of course this is not how the United States was supposed to operate.  We were never intended to be a collectivist nation.  Rather, we were intended to be a country where liberty and freedom thrived and where most people would be able to independently take care of themselves.
Unfortunately, it is becoming increasingly difficult to be economically independent in America today.  One reason for this is that the environment for small businesses in this country is the most toxic that it has ever been before.  The federal government, our state governments and even our local governments are constantly coming up with new ways to oppress small business.
And just this week we learned that the IRS is specifically targeting small business owners and sending them threatening letters.
Yes, you read that correctly.  Despite all of the trouble that the IRS is currently in, they are still choosing to specifically go after small businesses with both barrels.  As a recent Forbes article explained, the IRS plans to send threatening letters to 20,000 small businesses all over the country…

The tax agency is doing some targeting of its own, fingering at least 20,000 small businesses. And that number will grow. The scrutiny on this group and in this way is a little frightening. Small business people across America are receiving IRS notices. More will be coming. The IRS gathers data from many third parties—including credit card companies—to see if you picked up every nickel of income.

This is absolutely disgusting, but it is just another example of how small business is being eradicated in the United States.  As I mentioned in aprevious article, the percentage of Americans that are self-employed has dropped to a record low…

Well, at least we can achieve economic independence by getting a full-time job, right?
Sadly, that is becoming increasingly difficult to do as well.
The chart below was created by Chartist Friend from Pittsburgh, and it shows that the percentage of working age Americans with a full-time job dropped sharply to 47 percent during the last recession and it has stayed about that level ever since.  The yellow line is the line in the chart which demonstrates this…

As you can see, we briefly touched that level in the 1970s and again briefly in the 1980s, but it is important to remember that the percentage of women that chose to seek employment was much lower back then.  When you take that into account, the current level of full-time employment in this country looks even worse.
The quality of jobs in this country has been steadily falling for quite some time, and we are rapidly transitioning to an economy where part-time employment will be much more prominent.
But you can’t support a family or be economically independent on a part-time income.  In fact, most of those that try to make it on a part-time income find that they must turn to the government for help.
And right now, a higher percentage of Americans are economically dependent on the government than ever before.  The following is from a recent article by Charles Hugh-Smith…

Why? Because half of us are getting a direct check, benefit or payment from the state. Over 61 million people get a check from Social Security, over 50 million draw Medicare benefits, another 50 million get Medicaid benefits, 47 million receive SNAP food stamp benefits, 22 million people work directly for the state on all levels, millions more work for government contractors that are effectively proxies of the state, millions more receive Federally funded extended unemployment, retirement checks, Section 8 housing benefits, and so on.
Orwell underestimated the power of complicity. Once a citizen receives a direct payment from the state, the state has purchased their complicity, for no matter how much that citizen may complain privately about the state, he or she will never risk the payment/benefit by resisting the state in a politically meaningful way.
Once you get a check from the state, you begin loving your servitude. The collusion of the state and its central bank is truly a thing of authoritarian beauty: the central bank (the Federal Reserve) creates money out of thin air and buys government bonds with the new money. The state can thus borrow unlimited sums at low rates of interest, and continue to send tens of millions of individual payments out to buy the passivity and complicity of its citizens.

So what is the solution?
Of course the solution would be for our economy to produce more small businesses and more full-time jobs so that more people could achieve economic independence.
Sadly, right now our system is steadily killing full-time jobs and small businesses, and there does not appear to be any hope for a major turnaround any time soon.
At this point, the number of Americans that are financially dependent on the government is absolutely staggering, and it gets worse with each passing year.  Just consider the following statistics which come from one of my previous articles entitled “21 Facts About Rising Government Dependence In America That Will Blow Your Mind“…


1. Back in 1960, the ratio of social welfare benefits to salaries and wages was approximately 10 percent.  In the year 2000, the ratio of social welfare benefits to salaries and wages was approximately 21 percent.  Today, the ratio of social welfare benefits to salaries and wages is approximately 35 percent.
2. According to the U.S. Census Bureau, 49 percent of all Americans live in a home that gets direct monetary benefits from the federal government.  Back in 1983, less than a third of all Americans lived in a home that received direct monetary benefits from the federal government.
3. Overall, more than 70 percent of all federal spending goes to “dependence-creating programs”.
4. According to the Survey of Income and Program Participation conducted by the U.S. Census, well over 100 million Americans are enrolled in at least one welfare program run by the federal government.  Sadly, that figure does not even include Social Security or Medicare.
5. Today, the federal government runs about 80 different “means-tested welfare programs”, and almost all of those programs have experienced substantial growth in recent years.
6. The number of Americans on Social Security disability now exceeds the entire population of the state of Virginia.
7. If the number of Americans on Social Security disability were gathered into a separate state, it would be the 8th largest state in the country.
8. In 1968, there were 51 full-time workers for every American on disability.  Today, there are just 13 full-time workers for every American on disability.
9. Right now, there are approximately 56 million Americans collecting Social Security benefits.  By 2035, that number is projected to soar to an astounding 91 million.
10. Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.
11. The number of Americans on food stamps has grown from 17 million in the year 2000 to more than 47 million today.
12. Back in the 1970s, about one out of every 50 Americans was on food stamps.  Today, about one out of every 6.5 Americans is on food stamps.
13. Today, the number of Americans on food stamps exceeds the entire population of the nation of Spain.
14. According to one calculation, the number of Americans on food stamps now exceeds the combined populations of “Alaska, Arkansas, Connecticut, Delaware, District of Columbia, Hawaii, Idaho, Iowa, Kansas, Maine, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Utah, Vermont, West Virginia, and Wyoming.”
15. According to a report from the Center for Immigration Studies, 43 percent of all immigrants that have been in the United States for at least 20 years are still on welfare.
16. Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, one out of every 6 Americans is on Medicaid, and things are about to get a whole lot worse.  It is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.
17. As I wrote about recently, it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.
18. At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.  That comes to approximately$328,404 for every single household in the United States.
19. Back in 1990, the federal government accounted for just 32 percentof all health care spending in America.  It is being projected that the federal government will account for more than 50 percent of all health care spending in the United States very soon.
20. The amount of money that the federal government gives directly to the American people has increased by 32 percent since Barack Obama entered the White House.
21. When you total it all up, American households are now receiving more money directly from the federal government than they are paying to the government in taxes.
Once again, there is certainly nothing wrong with helping the poor, and there will always be people that need a helping hand.
But what we have in America today is far beyond that.  What we have in America today is a situation where economic independence is being systematically eradicated and the government is increasingly being expected to provide our daily bread and to take care of all of us from the cradle to the grave.
And once you are dependent on the system, at least part of you is going to become resistant to anyone or anything that threatens to bring meaningful change to the system because your survival depends on the system.
Or could I be wrong about this?
What do you think?

Insurers Flee: Health rates to ‘soar’ in Ohio and Florida, Insurance ratings dropped from CA website, OR delays full access to exchange

Insurers Flee 
(CNSNews.com) – Major health insurance companies–Blue Cross, Aetna, United, Humana–have decided not to participate in various states in the Obamacare health-insurance exchanges that will be the only place Americans will be able to buy a health insurance plan using the federal subsidies authorized under the Obamacare law.
Under the Patient Protection and Affordable Care Act (AKA Obamacare), every American must buy a health insurance plan that meets minimum government specifications. If a person does not get health insurance through their employer, and is not on Medicaid, they can buy insurance through their home state’s insurance exchange (which, depending on the state, will be run by either the state or federal government).
- See more at: http://cnsnews.com/news/article/blue-cross-aetna-united-humana-flee-obamacare-exchanges#sthash.R0A5mYkZ.dpuf
http://cnsnews.com/news/article/blue-cross-aetna-united-humana-flee-obamacare-exchanges
Health rates to ‘soar’ in Ohio and Florida

 
At a White House press conference Friday afternoon, President Obama said that health insurance plans offered under Obamacare will be “significantly cheaper” than plans currently on the market, but a string of recent reports say that isn’t true.

Designer Shocked To Find Her Pendant Reborn As Forever 21 Necklace

Haven’t I seen you somewhere before?

Just last week we were tut-tutting Anthropologie for accidentally swiping an artist’s design and selling it — and lo and behold, it’s not a unique situation by any means. Although we’re not even sure it was an accident: Consumerist reader Annette said she noticed another designer having the same problem, but the retailer in question this time is Forever 21.
Annette pointed us to the web site of artist Katherine Kane, whose homepage shows off various examples of her original monogrammed jewelry she’s designed. The most prominent image is that of a piece with the initials “LA” inside a necklace pendant.
Clicking over to Forever21.com, there’s what appears to be an exact copy, advertised as a “Cursive LA Necklace,” which appears to stand for Los Angeles and not an example of one kind of monogram available.
Was this another accident to be blamed on an errant vendor, or a blatant knock-off? We’re not sure — we reached out to Forever 21 last week as well as Katherine Kane, the artist, and so far have heard nothing back from Forever 21.
For her part, Kane is upset that the retailer apparently swiped her design. The item hasn’t been pulled from the site (as of this writing) since it was first brought to our attention in the middle of last week.
Kane tells Consumerist of the apparent copy:

“When I was first alerted to the knock-off, I felt an acute wave of sickness. It was such an exact (albeit poor quality) replica of my LA Signature Pendant, which I designed by hand with a calligraphy pen, that it was almost like discovering my signature had been forged on something without my consent. I have worked hard for the past few years to get my jewelry designs out to a larger audience. It was disheartening to see a bigger company that has that bigger audience swoop in and present my design as their own, particularly in light of the fact that the knock-off is really in opposition to everything my brand is about: quality, hand-rendered design, and US-based manufacturing.”

We’ll let you know if Forever 21 ever responds to our request for comment. In the meantime, tsk tsk. TSK. TSK.

During The Best Period Of Economic Growth In U.S. History There Was No Income Tax And No Federal Reserve

How would America ever survive without the central planners in the Obama administration and at the Federal Reserve?  What in the world would we do if there was no income tax and no IRS?  Could the U.S. economy possibly keep from collapsing under such circumstances?  The mainstream media would have us believe that unless we have someone “to pull the levers” our economy would descend into utter chaos, but the truth is that the best period of economic growth in U.S. history occurred during a time when there was no income tax and no Federal Reserve. 

From The Economic Collapse Blog:
Between the Civil War and 1913, the U.S. economy experienced absolutely explosive growth.  The free market system thrived and the rest of the world looked at us with envy.  The federal government was very limited in size, there was no income tax for most of that time and there was no central bank.  To many Americans, it would be absolutely unthinkable to have such a society today, but it actually worked very, very well.  Without the inventions and innovations that came out of that period, the world would be a far different place today.
It is amazing what can happen when the government just gets out of the way.  Check out all of the wonderful things that Wikipedia says happened for the U.S. economy during those years…

The rapid economic development following the Civil War laid the groundwork for the modern U.S. industrial economy. By 1890, the USA leaped ahead of Britain for first place in manufacturing output.
An explosion of new discoveries and inventions took place, a process called the “Second Industrial Revolution.” Railroads greatly expanded the mileage and built stronger tracks and bridges that handled heavier cars and locomotives, carrying far more goods and people at lower rates. Refrigeration railroad cars came into use. The telephone, phonograph, typewriter and electric light were invented. By the dawn of the 20th century, cars had begun to replace horse-drawn carriages.
Parallel to these achievements was the development of the nation’s industrial infrastructure. Coal was found in abundance in the Appalachian Mountains from Pennsylvania south to Kentucky. Oil was discovered in western Pennsylvania; it was mainly used for lubricants and for kerosene for lamps. Large iron ore mines opened in the Lake Superior region of the upper Midwest. Steel mills thrived in places where these coal and iron ore could be brought together to produce steel. Large copper and silver mines opened, followed by lead mines and cement factories.
In 1913 Henry Ford introduced the assembly line, a step in the process that became known as mass-production.

When hard working, industrious people are given freedom to pursue their dreams, great things tend to happen.  The truth is that we were all designed to create, to invent, to build, and to trade with one another.  We all have something that we can contribute to society, and when families are strong and the invisible hand of the free market is allowed to work, societies tend to prosper.
It is not a coincidence that the greatest period of economic growth in U.S. history was between the Civil War and 1913.  The following information comes from Wikipedia…

The Gilded Age saw the greatest period of economic growth in American history. After the short-lived panic of 1873, the economy recovered with the advent of hard money policies and industrialization. From 1869 to 1879, the US economy grew at a rate of 6.8% for real GDP and 4.5% for real GDP per capita, despite the panic of 1873.  The economy repeated this period of growth in the 1880s, in which the wealth of the nation grew at an annual rate of 3.8%, while the GDP was also doubled.

Wouldn’t you like U.S. GDP to double over the course of a decade now?
So why don’t we go back to a system like that?
In 1913, the Federal Reserve and a permanent national income tax were introduced.  Today, the unelected central planners at the Federal Reserve totally run our financial system and the U.S. tax code is about 13 miles long.  The value of our currency has declined by more than 96 percent since 1913, and the size of our national debt has gotten more than 5000 times larger.
Meanwhile, control freak bureaucrats seemingly run everything.  Almost every business decision is heavily influenced either by taxes or by the millions of laws, rules and regulations that are sucking the life out of our economic system.
My favorite example of how suffocating red tape in America has become is the magician out in Missouri that was forced by the Obama administration to submit a 32 page “disaster plan” for the rabbit that he uses during his magic shows for kids.
It is no wonder why we don’t have any economic growth.  The central planners in the federal government are killing our economy.
And the central planners over at the Federal Reserve are killing our financial system.  In school we are taught that the Fed was created to bring stability to our financial system, but the truth is that they have been responsible for financial bubble after financial bubble, and now Federal Reserve Chairman Ben Bernanke has created the largest bond bubble in the history of the world.  When that thing bursts, and it will, we are going to see financial carnage on an unprecedented scale.
Unfortunately, the truth is that the Federal Reserve never has been looking out for the interests of the American people.  It was created by the big banks and it has always worked very hard to benefit the big banks.  During the Fed era, the big banks have become the most powerful economic entities on the entire planet.  Our entire economy is now based on debt, and the big banks are at the very center of this debt spiral.  The following is an excerpt from a recent article by Paul B. Farrell…

Today’s world includes four Wall Street banks each with assets over $1 trillion, each more than Goldman. Plus eight other big global banks each have over $2 trillion total assets, including, among the 100 largest, Barclays, HSBC, Deutsche, ICB-China and Japan’s Mitsubishi.

Yes, this new world is changing fast. Back in 2008 the world’s financial banks were in ruins. Wall Street sunk into virtually bankruptcy. Goldman and its Wall Street too-big-to-fail co-conspirators had trashed the global economy, triggered a virtual depression, and Wall Street’s casinos lost over $10 trillion of Main Street retirement funds.

And as we saw back in 2008, the Federal Reserve is going to do whatever is necessary to prop up Wall Street.  Most Americans never even heard about this, but during the last financial crisis the Fed secretly loaned 16 trillion dollars to the big banks.  Those loans were nearly interest-free and those banks knew that they could get basically as much nearly interest-free money as they wanted from the Fed.
So how much nearly interest-free money did the Fed loan to normal Americans?
Not a single penny.
That would be bad enough, but it is also important to remember that since 2008 the Fed has actually been paying banks NOT to lend money to the rest of us.
What is it going to take for the American people to start demanding that the Fed be abolished?  They are absolutely destroying our financial system.
Meanwhile, the central planners in the Obama administration have been doing their part as well.  During the second quarter of this year, the number of Americans working between 30 and 34 hours per week fell by 146,500.  During that same time period, the number of Americans working between 25 and 29 hours rose by 119,000.
Why is this happening?
Well, the Obamacare employer mandate will apply to workers that work at least 30 hours each week, so employers are starting to cut back on the hours their employees are getting in order to comply with the law.
But this is just one example out of thousands, and most Americans already know that the U.S. economy has been crumbling for many years.
In fact, things have gotten so bad that even 53 percent of all Democrats believe that the American Dream is dead even though Barack Obama is residing in the White House.
But this is just the beginning.  Things are going to get much, much worse.  We are going down the same path that Greece has gone, and the unemployment rate in Greece has just hit a new all-time record high of 27.6 percent.
That is where the U.S. is headed eventually.  Decades of very foolish decisions are catching up with us.
The primary reason why all of this is happening is debt.  As a society, we simply have way, way, way too much debt.
The biggest offender, of course, is the federal government.  Since 1970, federal spending has grown nearly 12 times as rapidly as median household income has, and since the year 2000 the size of the U.S. national debt has grown by more than 11 trillion dollars.
When government debt gets too large, it has a profoundly negative effect on an economy.  The following is an excerpt from an outstanding article by Lacy H. Hunt, a Ph.D. economist…
*****
Here are the studies, starting with the one with the broadest implications:

1. “Government Size and Growth: A Survey and Interpretation of the Evidence,” from Journal of Economic Surveys. Published in April 2011, Swedish economists Andreas Bergh and Magnus Henrekson (both of the Research Institute of Industrial Economics at Lund University) found a “significant negative correlation” between size of government and economic growth. Specifically, “an increase in government size by 10 percentage points is associated with a 0.5% to 1% lower annual growth rate.”
2. “The Impact of High and Growing Government Debt on Economic Growth: An Empirical Investigation for the Euro Area,” in European Central Bank working paper, Number 1237, August 2010. Cristina Checherita and Philipp Rother found that a government-debt-to-GDP ratio above the threshold of 90-100% has a “deleterious” impact on long-term growth. Additionally, the impact of debt on growth is nonlinear – as the government debt rises to higher and higher levels, the adverse growth consequences accelerate.
3. The Real Effects of Debt, published by the Bank for International Settlements (BIS) in Basel, Switzerland in August 2011. Stephen G. Cecchetti, M. S.Mohanty, and Fabrizio Zampolli determined that “beyond a certain level, debt is bad for growth. For government debt, the number is about 85% of GDP.”
4. “Public Debt Overhangs: Advanced-Economy Episodes Since 1800,”by Carmen M. Reinhart, Vincent R. Reinhart, Kenneth S. Rogoff, Journal of Economic Perspectives, Volume 26, Number 3, Summer 2012, pages 69-86. The authors identified 26 cases of “debt overhangs,” which they define as public-debt-to-GDP levels exceeding 90% for at least five years. In spite of the many idiosyncratic differences in these situations, economic growth fell in all but three of the 26 cases. All of the instances, which lasted an average of 23 years, are included in the paper. They found that average annual growth is 1.2% lower for countries with a debt overhang than for countries without. The long duration of such episodes means that cumulative shortfall from the debt excess—i.e., several years in a row of subpar economic growth—is potentially massive.

*****
But it isn’t just federal government debt that is the problem.  The rest of us have way too much debt as well.
If you can believe it, the ratio of private debt to GDP was 273.3% for the twelve months ending in the first quarter of 2013.
That is an astounding figure.
And as Hunt explained, having too much private debt is also very bad for an economy…

In Too Much Finance, published by the United Nations Conference on Trade and Development (UNCTAD) in March 2011, Jean Louis Arcand, Enrico Berkes, and Ugo Panizza found a negative effect on output growth when credit to the private sector reaches 104-110% of GDP. The strongest adverse effects are for credit over 160% of GDP.
The second is the 2011 BIS study authored by Cecchetti, Mohanty, and Zampolli. They found that private debt levels become “cancerous” (in BIS economic advisor Cecchetti’s own words) at 175% (90% for corporations and 85% for households)—just slightly more than the UNCTAD study.

When you add our private debt to GDP ratio of 273 percent to our federal debt to GDP ratio of 101 percent, you get a grand total of 384 percent.
This is how we have funded the false prosperity of the past couple of decades.  Essentially, we have been putting our good times on a credit card.
And as anyone that has ever tried to live on credit knows, the good times eventually run out.
But this is what the Federal Reserve was designed to do.  It was designed to get the U.S. government trapped in a debt spiral from which there would never be any escape.
It is not an accident that our national debt has gotten more than 5000 times larger than it was when the Fed was originally created.  This is what the bankers wanted the system to do.
They wanted a system that would extract wealth from all of us through taxes, transfer it to the government, and then transfer it to them through interest payments.
We never needed a central bank, we never needed the IRS and we never needed an income tax.  America would be doing just fine without any of them.
But instead, America chose to go down the path of collectivization and central planning, and now we are heading toward the biggest economic disaster in the history of mankind.

EU banks close 5,500 branches in 2012

Europe plunged into financial crisis in early 2008.

The European Union has closed some 5,500 bank branches across the continental bloc last year, leaving fewer outlets than it had before the financial crisis in 2008, a report shows.
Banks across the EU cut 2.5 percent of their total branches in 2012, leaving the financial industry with 20,000 fewer offices than it had before the start of the financial crisis, according to data recently analyzed by Reuters from European Central Bank statistics.
Greece witnessed one of the biggest contractions in 2012, dropping 5.7 percent of its outlets as bank mergers led to 219 closures. Experts predict the trend will continue in 2013 with Piraeus Bank closing some of its 312 branches.
Spain™s bank network lost approximately 4.9 percent, or 1,963, of its branches in 2012.

Ireland™s banking sector contracted by 3.3 percent and is expected to decline again in 2013, while Italy’s network shrunk by 3.1 percent at the end of the year.
The massive shutdowns come after 7,200 branch closures across the EU in 2011, bringing the total number of closures to 8 percent from 2009 to 2012.
Experts said banks across Europe closed branches in a bid to trim operating costs and improve earnings.
Europe plunged into financial crisis in early 2008. The worsening debt crisis has forced the EU governments to adopt harsh austerity measures and tough economic reforms, which have triggered incidents of social unrest and massive protests in many European countries.
GMA/SS

…read more
Republished from: Press TV

Is the Gold Market Manipulated?

By Jeff Thomas
“Is the gold market manipulated?” This is one of those extremely dodgy questions that has left both investors and economists very divided.
Doug Casey has offered an answer to the question, by saying,
“Many gold bugs (but not all, because I too am a gold bug) seem to think that a coterie of malefactors of great wealth sit around a huge boardroom table, perhaps chaired by Dr. Evil cradling his white cat, and send forth their minions, ‘Da Boyz,’ to ‘smack down’ the depressed and struggling gold and silver markets. A large number of gold bugs are also conspiracy bugs.”
I heartily agree with Doug in the way that he presents his point of view. Many gold bugs do imagine that a formal conspiracy exists to control the price of gold. Here is a conversation I had with an American associate not long ago, regarding this belief:
JT: How do you see the manipulation of gold?  What do you think is happening?
KR: It’s pretty obvious to me that you couldn’t have such wild downward fluctuations if the market weren’t manipulated. No one seller has the power to make such fluctuations. Collusion has to exist.
JT: Who do you see as being the culprits?
KR: The banks… and the government.
JT: Do you mean the banks as a whole? All the banks?
KR: Well, no, I mean the big banks.
JT: So, the central bank—the Federal Reserve? And would you include the bullion banks? J. P. Morgan and so on?
KR: Sure.
JT: And you mention “government” singular. Is it just the US government?
KR: Well, no, obviously the EU, the IMF, and the big banks of Europe.
JT: How do you see them all getting together to arrange these fluctuations? Do they meet on a regular basis? It would seem that there would be quite a lot of people to get together.
KR: Oh, no. I don’t see them having conferences or whatever, but they obviously work together in some way, or none of this could happen.
The view expressed above is fairly typical. It reflects several points that are common assumptions by many investors.

1) Major fluctuations could not take place without some form of collusion, involving both banks and governments.
2) The collusion is not limited to any one country but seems to exist primarily within the US and the EU.
3) There is no “board of directors” who meet regularly to decide the fate of gold, but there is some form of informal communication between interested parties.

Asking the Right Question

So, who is correct—my associate above, or Doug Casey? Is there manipulation or isn’t there? This is the question that we hear repeated time and again in recent times. Yet, is it the right question?
In actual fact, it is safe to assume that, wherever parties have the opportunity to mutually benefit each other, it is not unlikely that they will do just that. This is true in any field of endeavour. A football team will agree on tactics before going out on the soccer pitch to play. Two or more oil companies will agree to raise their prices on the same day to assure that one will not be singled out for blame for the price rise. Two or more bankers will agree to work in concert on a given plan, in order that the benefit to each is more assured.
In each case, each player is interested in his own success, but recognises that, by agreeing on tactics with one or more others (even if they are his competitors), his chance of success is increased through collusion.
So, is it likely that any banker, any government, or even any investor, would resort to manipulation, if the result were likely to benefit him? Of course. And, in fact, Doug Casey has this to say about that:
“About conspiracies with gold or anything else, people constantly conspire… Whenever a couple of people of the same trade get together, they always try to conspire for their interests and against the interests of the public.”

Two Questions

Given the above information, it would seem logical that, rather than argue over whether there is manipulation of the gold market, perhaps our questions should be:

1) To what degree is gold manipulation attempted by those with a vested interest?
2) To what degree are they likely to be able to be effective in their efforts?

In considering these two questions, it might be a good idea to consider the cartoon above (taken from the Wall Street Journal). As investors, we tend to focus on the desire by others to conspire. But, at the other end of this reasoning is the ability to conspire.
In looking at the cartoon, we are reminded that, no matter how evil we think a given government may be, no matter how greedy we think a given banker may be, both the world’s governments and the worlds banks have proven time and time again to be guilty of overreach; that is, they assume that their position of power will assure that, if they attempt to control a market, they will succeed.
However, history shows that both governments and banks have a patchwork quilt as a record for effectiveness in this regard. Both exhibit a history of misinterpretation of market drivers, inadequate planning and inadequate execution, to say nothing of a penchant for betraying one another. (The admission by Barclays Bank that they manipulated LIBOR is a good example.)
As such, the concept of a finely-tuned conspiracy of bankers and governments in which all the players (including the egotistical heads of countries) all agree on every facet of a “Grand Plan” is unlikely in the extreme. On the other hand, it is highly likely that an endless series of deals between any two or more parties will crop up along the way. They will succeed or fail to varying degrees. (And we should not overlook the likelihood that, whatever one group should attempt, another group may, inadvertently or not, spoil that attempt through their own plan, which may well be a different one.)
By arguing whether or not gold manipulation exists, we may find that we are wasting our brain cells on the question. A better question, and one that we might choose to monitor on a regular basis, might be, “To what degree is successful manipulation taking place?” We might then use the on-going answer as a guide, to inform our reasoning going forward, as to what impact any perceived manipulation is likely to have with regard to our precious metals investment.

Suppressing wages and increasing corporate profits: The tough math behind the current economic recovery.

It should come as no surprise that the stock market is a very poor barometer on the financial health of Americans.  We think of the stock market as a temperature gauge on how well Americans are doing.  If that is the case, the record breaking highs in the stock market should reflect a very happy and well off economy.  That unfortunately is not the case.  There has been a deep structural shift in the last decade which only accelerated since the recession engulfed the nation.  Corporations have increased profits largely by chopping wages and other compensation to employees.  This is part of a global low wage trend that is now fully rolling over the United States.  New data reflects this deeper morphing of our economy and also explains why many working and middle class Americans are finding it harder to keep up with the changing winds of the economy.  Suppressed wages, higher corporate profits, and less compensation.  What you would like to see is profits trickling down into the pocket books of Americans yet that is not the case.

Suppressed wages
Household income continues to have difficulties bouncing back from the current trough:

What is important beyond the depression in wages is the number of workers marginally attached to the labor force, unemployed, or simply working part-time for economic reasons.  This remains elevated above 14 percent.  Compare this to 7 percent back in 2000 (an increase of 100 percent for this transient part of our labor force).  So of course, if you can eliminate the higher expenses that come from hiring full-time workers corporate profits are going to increase dramatically.  It also helps to explain some of the recent rise in the stock market.  Yet many Americans own very little stock and also, many of the largest corporations have been expanding and adding jobs overseas while the corporate profits flow to a small group that continues to expand their wealth.  Not a problem if this was a level playing field but you have the Fed conducting shadow bailouts to a very select group of people while forcing austerity down the throats of most Americans least able to afford it.  This is the nature of the new global marketplace.  It is hard to see this turning around since we are caught in a Catch-22.  Many Americans now out of necessity need cheap goods (47 million of our countrymen and women are on food stamps).  So we are left with the current system where a smaller upper-class is developing, a booming lower class is forming, and the middle class is shrinking like a grape in the sun.
It is important to understand that corporate profits are up as a percent of GDP:

Correlation is not causation of course but it is hard to dispute the above information when measured with other pieces of data we are seeing.  Americans for the most part are strained.  Yet people act and buy items out of their own interest.  There is no formal movement to change any of this.  Even during the Great Depression, Americans were rather silent with economic issues compared to other parts of the world.  There is still a deep belief in the overall nature of the system.  However, a large part of the financial excess is going into the banking sector where little is actually done to benefit the economy.  No need to completely revamp the economy but we definitely need a revamping of US banking.  Large financial institutions have become glorified casinos.  There was a time when finance and the real economy were intertwined for real results.  A bank would lend to a local business to build a new location for growing demand.  This is the point of finance, as a lubricant of the real economy.  Yet today we have derivatives and side bets that not only destabilize the real economy, but are useless except in extracting money from the actual economy into a small portion of our population lingering behind Bloomberg terminals.
The first chart showing the suppression of wages should give you a clear understanding of what has happened in the last decade.  Household incomes are down and a larger portion of our workforce is unemployed or working part-time for economic reasons.  Yet we have this massive young population saddled with back breaking levels of student debt.  We have some serious challenges ahead of ourselves but the momentum is very clear at least when it comes to the middle class.  This is a shrinking part of our population unless we figure out a way to have a financial system that is willing to invest in its workers instead of using the middle class as a pawn for massive casino like speculation.

WSJ: More Expats Balk at Tax Law, Renounce Their U.S. Citizenship

By Paul Caron

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Following up on Saturday's post, Number of Taxpayers Who Renounced U.S. Citizenship Hits Record High:  Wall Street Journal, U.S. Expats Balk at Tax Law: American Citizen Renunciations Are Soaring:

The U.S.'s crackdown on global tax evaders is leading to a record number of people renouncing their citizenship, and its effects are being felt keenly in Asia—now the world's wealthiest region by household assets. 

A growing number of wealthy Americans in Asia—and others with green cards—are exploring whether to renounce their U.S. citizenship or give up their green cards to avoid onerous tax obligations.

Globally, more U.S. citizens have renounced their citizenship in the first and second quarters than all of 2012 combined, and 2013 is already on track to becoming a record year for renunciations. ...

In Hong Kong, where the individual tax rate is capped at 15%, becoming a citizen is an attractive prospect. But some U.S. citizens say they are exasperated by a growing raft of paperwork that forces U.S. citizens living abroad to declare the minutiae their financial holdings and other assets. "My decision was less about the actual amount of taxes I had to pay, and more about the system," said one investment banker, who renounced his U.S. citizenship and is now a Hong Kong citizen. "I'm not an ultrawealthy dude. It was the hassle with all the paperwork"

How The $1.2 Trillion College Debt Crisis Is Crippling Students, Parents And The Economy

Total Student Loan Debt: $1 Trillion                    

Two-thirds, that’s right, two-thirds of students graduating from American colleges and universities are graduating with some level of debt.  How much?  According to The Institute for College Access and Success (TICAS) Project on Student Debt, the average borrower will graduate $26,600 in the red.  While we’ve all heard the screaming headlines of graduates with crippling debt of $100,000 or more, this is the case for only about 1% of graduates.  That said, one in 10 graduates accumulate more than $40,000.  

It’s a negative sum game for both student-borrowers and the economy. According to theConsumer Financial Protection Bureau, student loan debt has reached a new milestone, crossing the $1.2 trillion mark — $1 trillion of that in federal student loan debt.

This pushes student loan debts to dizzying new heights, as they now account for the second highest form of consumer debt behind mortgages.  With the federal debt at $16.7 trillion, student loan debts measure at 6% of the overall national debt.  This is no small figure, and national debt carries many consequences including slowing economic growth (translating into fewer jobs being created) and rising interest rates.  Capital will not be as easy to access.

The majority of student loans are backed by the U.S. government through banks like Sallie Mae, or since 2010, by the Department of Education.  Translation: the creditor in this scenario is the U.S. tax payer, who if students default on these loans will be subject to carry the burden of these loans.

Federal Loans are Safer than Private

Lauren Asher, president of TICAS, a nonpartisan policy group, says that government loans are the safest type of loans to take while financing education. “Federal student loans are the best way to borrow if you have to in order to get through.” She identifies a lack of information as a major problem in the debt game as she identifies growing private loan debt as a major problem. “Half of those taking out private loans have not maxed out on federal loans.”

Why the preference for federal loans with federal debt being such a hot topic? “Federal loans are subject to income based payback, fixed interest rates, and take nine months to default on, making them a much safer loan for students to take,” Asher explains.  Conversely, private loans have done away with late fees, and in the fine print have redefined the right to claim default on the loan after missing a single payment.  Default is a one way ticket to bad credit.  “Any ding in credit rating can affect [a borrower] more now than ever, even employment,” says Asher.

Asher argues, however, that higher education “is still the best investment in your future.” The college degree is getting more and more weight as political leaders are calling for upwards of 60% national higher education attainment by 2025.  And the demand for higher education is increasing.  “When the economy is down, more people turn to higher education to get an edge in the job market, but have less money to finance it,” explains Asher.

Debt and Community Colleges

If you are under the impression that only four-year schools are subject to debt, think again.  Of those students completing an associate’s degree from a community college in 2008, 38% graduated with debt.  In the for-profit sector of two-year degrees, over 90% have debt.  The average debt load at a public two-year institution is $7,000.

One community college, Henry Ford Community College in Dearborn, Mich., is offering a one-time student debt amnesty program that will allow students who owed a balance prior to or including the winter 2012 semester to afford to return to the college. The program “offers the opportunity for students to pay 50% of what is owed on their account to settle their debt with the College.”  Will this become a norm within the two-year degree space as more and more debt is accumulated?

The Cost of Debt

Of this $1.2 trillion in student debt, about $1 trillion is in federal student loans.  This figure does not tell the full story, however, as the $1.2 trillion does not include funds students must divert away from retirement savings, parent borrowing, or credit card debt.  President Obama is expected to sign the bipartisan Senate bill to tie federal student loan interest rates to the market this week.  On one side, this will reverse the interest rate hike that went into effect on July 1, lowering the current rates for undergraduate students from 6.8 to 3.8%. As the market climbs, however, these rates will climb until they reach a cap of 8.25%.  By TICAS calculation, this may cost families $715 million more over the next 10 years.

What does 3.8% interest translate to for students?  If we go back to that average figure of $26,600, compounding for interest year over year using the 10-year-payback plan that is the standard, the total cost of your $26,600 loan is about $38,600.  Break that down by monthly payments and you are looking at about $320 per month going toward student loan payments.  “Debt costs you time in savings, pushes back when and whether you can buy a home, start a family, open a small business or access capital,” says Asher.  Not to mention the opportunity cost of the education itself at almost $40,000.

Dealing with the Problem

What can we do?  With more and more emphasis being placed on college education for all, raising costs of an already expensive degree, andunderemployment of college graduates running rampant, student loan debt is a problem that will cripple economic possibilities and success to come. In its recent report, Aligning the Means and the Ends: How to Improve Federal Student Aid and Increase College Access and Succes, TICAS is calling for simplification and better access to information regarding student loan debt, including information on consolidating debt, and increasing students’ information to both school’s default and graduation rates. 

While many have been calling for debt forgiveness to help settle this score, others have a problem with burdening the taxpayer with the responsibility to pay back loans that they are neither responsible for, nor benefit directly from.  While a more educated populous has positive externalities, debt forgiveness sets a bad precedent for the financial world.  Ohio University developmental economist Julia Paxton says:

One of the problems of debt forgiveness is that it sets a precedent that similar loans in the future will also be forgiven. Although the loans are allocated toward education, money is fungible and will have the net impact of increasing the spending ability of students in other areas of their lives. As the expectation of repayment obligation falls, borrowers may enter into a situation where they take on higher levels of debt and take more risks. This will lead to a weakened ability to repay, creating a vicious cycle that hurts the financial sector and the credit ratings of the borrowers.

 Source