The student debt bubble
begins its inevitable decline from unparalleled heights. This week too
big to fail bank JP Morgan issued a memorandum that it is exiting the
student loan business. What is interesting in this move is that it is
eerily similar to banking moves made back in 2007 as some banks started
to back away from the subprime mortgage market. At that point, it was
too late and the most toxic of the toxic loans were already collapsing
ushering an era of over 5,000,000 foreclosures with another 2,000,000
likely to happen in the next few years. Student debt has surpassed the
$1 trillion mark and delinquencies in student debt are now the highest
of any debt class. With the announcement by JP Morgan, we are now
getting a taste of what is to come. The day of reckoning for student debt has arrived.
How a $1 trillion market pops
Student debt is now the biggest non-housing debt class in the United States:
Back in 2004, total outstanding student debt was at $260 billion.
Today it is well over $1 trillion which is an incredible rate of
increase in less than one decade. This is clearly an unsustainable path
and the market is now facing some serious challenges.
The news by JP Morgan Chase is a very familiar song:
“(CNBC)
“We just don’t see this as a market that we can significantly grow,”
Thasunda Duckett tells Reuters. Duckett is the chief executive for auto
and student loans at Chase, which means she’s basically delivering the
news that a large part of her business is getting closed down.”
The move is eerily reminiscent of the subprime shutdown that happened
in 2007. Each time a bank shuttered its subprime unit, the news was
presented in much the same way that JPMorgan is spinning the end of its
student lending.”
This is an interesting development. Wall Street has been gorging at the trough for years here. In fact, many of the for-profits which amount to the subprime of the colleges are owned by Wall Street:
The exploits of the for-profits has been well documented for years
and has now reached epic proportions. While for-profits enroll about 13
percent of students they make up nearly 50 percent of all student loan
defaults. These schools fully rely on easy government student loans:
This portion of the market is bursting in spectacular fashion. The
student loan sharks go after these students with the vigor of a middle
ages land owner chasing struggling peasants off their land. The
government (that is, the American public) essentially guarantees this
debt so it has been a safe bet for Wall Street for many years. The way
student debt compounds with fees and debts can turn a $20,000 debt into
something like $40,000 or more over a lifetime since this debt cannot be discharged like a tax debt for example.
The problem with the high cost of college is that wages for college graduates simply have not kept up with tuition inflation:
So students are paying more to essentially earn less in this low wage system for the young.
You have this odd case where people need skills for the jobs that are
out there yet wages are stagnant and the cost to acquire those skills
continues to go up. This is why young Americans are having such a tough
time getting ahead. A recent study found that those 25 to 34 have a
median of zero dollars saved for retirement. In other words, most have
nothing to their name when it comes to their future economic well
being. This is the same group shouldering a large burden of the $1
trillion in student debt.
So the fact that a big name is exiting the private student debt
market is no surprise. It is incredibly similar to the trend of banks
exiting the subprime trade in 2007 but then again, we are destined to
repeat another bubble burst as Wall Street has turned everything into a
pump and dump scheme.
Here’s what’s in your Prime Interest today:
Bernanke’s patting himself on the back right now — at least with
respect to Consumer Price Inflation, which came in at precisely the two
percent official Fed target. For those of us who don’t eat food or drive
a car, the number was a bit smaller: one point seven percent.
Previously, Bernanke touted himself in front of the Senate as having one
of the best inflation record of any Fed Chairman in the modern era.
Unfortunately, some other economic data was released — specifically
regarding manufacturing — that has sent the stock market tumbling. Two
Fed surveys — one by the New York Fed, the other in Philadelphia —
disappointed greatly. Seems, producers of “stuff” are shipping less of
it, orders are going unfulfilled, and inventories are being drawn down —
meaning less “stuff” production. In other words, the markets are not
going to like a September tapering by the Fed.
And, yesterday marked a new development in the debit card interchage
fee fight. Remember free checking? Well, that’s a perk most banks can’t
afford since the Fed capped retail swipe fees. But two weeks ago a
federal judge threw out the rule saying they’re still too high. Now the
courts are saying not only do they have to lower the debit fees further,
but banks may also have to reimburse merchants for the difference. So
you can expect further unintended consequences to your checking
accounts.
And circling the economic news wagon, it turns out China and Japan
aren’t “liking” Uncle Sam’s debt. That’s right, according to the US
Treasury itself, its two largest creditor nations just dumped $42
billion of US debt — the most in years. Thank goodness for the Fed QE
backstop — unless we take the tapering comments to heart. Don’t worry,
Bernanke is bluffing.
Youth unemployment is above 16 percent in the US. And recent
graduates are clamoring to get work experience– even if it means working
for free. However, this trend of unpaid internships may have some
unintended consequences for income inequality. Justine presents the case
of unpaid interns. Then Bob talks with Ellen Brown, author of “Web of
Debt” and more recently “The Public Bank Solution”. Finally Bob duels
Thom Hartmann of the Big Picture on the current financial crisis.
Originally posted on RT http://rt.com/shows/prime-interest/us…
By Michael Snyder
Can the U.S. really afford to greatly anger the rest of the world
when they are the ones that are paying our bills? What is going to
happen if China, Russia and many other large nations stop buying our
debt and start rapidly dumping U.S. debt that they already own? If the
United States is not very careful, it is going to pay a tremendous
economic price for taking military action in Syria. At this point,
survey after survey has shown that the American people are
overwhelmingly against an attack on Syria, people around the globe are
overwhelmingly against an attack on Syria, and it looks like the U.S.
Congress is even going to reject it. But Barack Obama is not backing down. In fact, ABC News is reporting that plans are now being made for a “significantly larger” strike on Syria than most experts had expected.
If Obama insists on going forward with this, it will be the greatest foreign policy disaster in modern American history.
Right now, both Russia and China are strongly warning Obama not to
attack Syria. And Russia is not just warning Obama with words.
According to Bloomberg, Russia has sent quite a collection of warships into the region…
Russia is sending three more ships to the eastern
Mediterranean to bolster its fleet there as a U.S. Senate panel will
consider President Barack Obama’s request for authority to conduct a
military strike on Syria.
Russia is sending two destroyers, including the Nastoichivy, the
flagship of the Baltic Fleet, and the Moskva missile cruiser to the
region, Interfax reported today, citing an unidentified Navy official.
That follows last week’s dispatch of a reconnaissance ship to the
eastern Mediterranean, four days after the deployment of an
anti-submarine ship and a missile cruiser to the area, which were
reported by Interfax. Syria hosts Russia’s only military facility
outside the former Soviet Union, at the port of Tartus.
China is also letting it be known that they absolutely do not want Obama to hit Syria. On Friday, China issued a warning about what military conflict in the Middle East could do to “the global economy”…
“Military action would have a negative impact on the
global economy, especially on the oil price – it will cause a hike in
the oil price.”
And according to Debka, China has also deployed “a number of warships” to the region…
Western naval sources reported Friday that a Chinese
landing craft, the Jinggangshan, with a 1,000-strong marine battalion
had reached the Red Sea en route for the Mediterranean off Syria.
According to DEBKAfile, Beijing has already deployed a number of
warships opposite Syria in secret. If the latest report is confirmed,
this will be the largest Chinese deployment in the Middle East in its
naval history.
If the U.S. attacks Syria, Russia and China probably will not take immediate military action against us.
But they could choose to hit us where it really hurts.
According to the U.S. Treasury, foreigners now hold approximately 5.6 trillion dollars of
our debt. Over the past couple of decades, the proportion of our debt
owned by foreigners has grown tremendously, and today we very heavily
depend on nations such as China to buy our debt.
At this point, China owns approximately 1.275 trillion dollars of our debt, and Russia owns approximately 138 billion dollars of our debt.
So what would happen if China, Russia and other foreign buyers of our
debt all of a sudden quit purchasing our debt and instead started
dumping the debt that they already own back on to the market?
In a word, it would be disastrous.
As I have written about previously, the U.S. government will borrowabout 4 trillion dollars this year.
Close to a trillion of that is new borrowing, and about three trillion of that is rolling over existing debt.
If China and other big foreign lenders quit buying our debt and
started dumping what they already hold, that would send yields on U.S.
Treasuries absolutely soaring.
And we have already seen bond yields rise dramatically in recent
weeks. In fact, on Thursday the yield on 10 year U.S. Treasuries
briefly broke the 3 percent barrier.
So what is going to happen if the yield on 10 year U.S. Treasuries
continues to go up? The following are a few consequences of rising bond
yields that I have discussed in previous articles…
-It will cost the federal government more to borrow money.
-It will cost state and local governments more to borrow money.
-As bond yields go up, bond values go down. In the end, rising bond
yields could end up costing bond investors trillions of dollars.
-Rising bond yields will cause mortgage rates to skyrocket. In fact,
we are already starting to see this happen. This week the average rate
on a 30 year mortgage hit 4.57 percent.
-Higher interest rates will mean a slowdown in economic activity at a time when we definitely cannot afford it.
-As economic activity slows down, that will be very bad for stocks.
When the next great stock market crash happens (and it is coming),
equity investors could end up losing trillions of dollars of wealth.
-Of course the biggest threat of all is the 441 trillion dollar interest rate derivatives time bomb that
is sitting out there. Rapidly rising interest rates could potentially
bring down several of our “too big to fail” banks in rapid succession
and throw us into the greatest financial crisis the nation has ever
seen.
Are you starting to get the picture?
And the 3 percent mark is just the beginning. Brent Schutte, a market strategist for BMO Private Bank, told CNBC that he expects the yield on 10 year U.S. Treasuries to eventually go up to 6 or 7 percent…
“4 percent (on 10-year Treasurys) somewhere around the
end of the year to early next year would be a good intermediate-term
level. And if you look over the longer term, I don’t think that 6 or 7
percent is out of the question.”
If that happens, we will experience a full blown financial meltdown.
Of course it would greatly help if Obama would back down and not attack Syria. As Vladimir Putin noted
at the G20 summit, large nations such as India, Brazil, South Africa
and Indonesia are all strongly against the U.S. taking military action…
In reply to the question what other country in the world
may theoretically be subjected to aggression similar to that Syria is
facing, Putin said, “I do not want to think that any other country will be subjected to any external aggression.” A military action against Syria will have a highly deplorable impact on international security at large, Putin emphasized.
He said he was surprised to see that ever more participants
in the summit, including the leader of India, Brazil, the South African
Republic, and Indonesia were speaking vehemently against a possible
military operation in Syria. Putin cited the words of the South African President, Jacob
Zuma, who said many countries were feeling unprotected against such
actions undertaken by stronger countries.
“Given the conditions as they, how would you convince the North
Koreans, for example, to give up their nuclear program,” he said. “Just tell them to put everything into storage today and they’ll be pulled to bits tomorrow.”
He underlined the presence of only one method for maintaining
stability – “an unconditional observance of international law norms.”
Can we really afford to have most of the international community turn on us and quit buying our debt?
Of course not.
Sadly, as I noted the other day, Obama appears to be locked into doing the bidding of Arab countries such as Saudi Arabia and Qatar.
In fact, as the Washington Post reported
the other day, Secretary of State John Kerry has even admitted that
they are even willing to pay all of the costs of a U.S. military
campaign that would overthrow Assad…
Secretary of State John Kerry said at Wednesday’s hearing
that Arab counties have offered to pay for the entirety of unseating
President Bashar al-Assad if the United States took the lead militarily.
“With respect to Arab countries offering to bear costs and to assess,
the answer is profoundly yes,” Kerry said. “They have. That offer is on
the table.”
Asked by Rep. Ileana Ros-Lehtinen (R-Fla.) about how much those
countries would contribute, Kerry said they have offered to pay for all
of a full invasion.
“In fact, some of them have said that if the United States is
prepared to go do the whole thing the way we’ve done it previously in
other places, they’ll carry that cost,” Kerry said. “That’s how
dedicated they are at this. That’s not in the cards, and nobody’s
talking about it, but they’re talking in serious ways about getting this
done.”
Why aren’t we hearing more about this in the news?
Fortunately, despite the relentless propaganda coming from the
mainstream media, a lot of members of Congress are choosing to take a
stand against this war. For example, U.S. Representative Tom Marino
recently shared the following about why he is voting against military action in Syria…
Secretary Hagel could not tell lawmakers who the U.S.
could trust among the Syrian opposition, stating “that’s not my business
to trust.” Like many Americans, I believe it is our duty as decision
makers to be informed and confident when making choices – especially in
those choices that could result in sending U.S. troops or money abroad.
It is no wonder Secretary Hagel isn’t in the business to trust when
more players are added daily to the growing list of ‘Syrian
opposition’—many of them jihadist, terrorists, known Al Qaeda
affiliates, members of the Muslim Brotherhood and enemies of the U.S.
and our allies. To simplify, the Secretary of Defense was unable to
tell us, after nearly three years of the Syrian Civil War, who the good
guys are or if there are any at all.
And Marino is very right. There are no “good guys” in Syria. The
“rebels” are murderous jihadist psychotics that would be even worse than
Assad if they took power.
For much more on what the mainstream media is not telling you about
the war in Syria, check out a stunning video report from investigative
reporter Ben Swann that you can find right here.
The picture above comes from the official Facebook page of one of the “rebel groups” in Syria.
I am sure that you do not need me to point out that the White House is burning in the background of the picture.
These are the people that Obama wants to help?
According to NBC News, the rebels are also displaying images of the black flag of al-Qaeda on Facebook too…
The image is one of eight photos posted on the official Facebook page of the “Al-Aqsa Islamic Brigades,” a
small armed Sunni rebel faction fighting with the Free Syrian Army, the
main umbrella military organization of the opposition forces. Two other
photos posted on the group’s page feature the widely recognized black
flag of the al Qaeda in Iraq terrorist group, which operates freely in
Syria.
Let’s assume for a moment that Obama is successful in Syria and that Assad is overthrown.
That would hand Syria over to al-Qaeda.
Once in power, the “rebels” would slaughter or force the conversion
of millions of Christians, Jews and non-Sunni Muslims that have been
living peacefully in Syria for centuries.
To those that would support this war, I would ask you this question…
Is that what you want?
Do you want the blood of millions of Christians, Jews and non-Sunni Muslims on your hands?
If you are a Christian that is supporting Obama on this, I would ask you to consider an excerpt from a letter from Christian nuns in Azeir, Syria that I have posted below…
We look at the people around us, our day workers who are
all here as if suspended, stunned: “They’ve decided to attack us.” Today
we went to Tartous…we felt the anger, the helplessness, the inability
to formulate a sense to all this: the people trying their best to work
and to live normally. You see the farmers watering their land, parents
buying notebooks for the schools that are about to begin, unknowing
children asking for a toy or an ice cream…you see the poor, so many of
them, trying to scrape together a few coins. The streets are full of the
“inner” refugees of Syria, who have come from all over to the only area
left that is still relatively liveable…. You see the beauty of these
hills, the smile on people’s faces, the good-natured gaze of a boy who
is about to join the army and gives us the two or three peanuts he has
in his pocket as a token of “togetherness”…. And then you
remember that they have decided to bomb us tomorrow. … Just like that.
Because “it’s time to do something,” as it is worded in the statements
of the important men, who will be sipping their tea tomorrow as they
watch TV to see how effective their humanitarian intervention will be….
You can read the rest of that letter right here.
Also consider the following shocking video of Senator John McCain being confronted by a very emotional woman that says that her 18-year-old cousin in Syria was just killed by rebels loyal to al-Qaeda…
Any American that supports this war is aiding al-Qaeda.
Any American that supports this war is choosing to ally themselves withradical jihadist Christian killers that want to conquer the entire Middle East in the name of Sunni Islam.
If Congress votes to approve this war, then we should do what one site has suggested and send those that vote yes to Syria.
They don’t even have to fight. We’ll just drop them off in the
middle of the “rebel forces” and entrust them into the gentle hands of
the al-Nusra Front.
But of course they would never go. The ones that will be endangered will be the precious sons and daughters of other Americans.
This is not a war that has a good outcome for America. Conservative voices and liberal voices all over the country are joining together to speak out against this war.
Hopefully Barack Obama will listen and cooler heads will prevail. If not, things could spin wildly out of control very rapidly.
(CNSNews.com) - The number of Americans who are 16 years or older
and who have decided not to participate in the nation's labor force
has pushed past 90,000,000 for the first time, according to data
released today by the Bureau of Labor Statistics.
The BLS counts a person as participating in the labor force if
they are 16 years or older and either have a job or have actively
sought a job in the last four weeks. A person is not participating in
the labor force if they are 16 or older and have not sought a job in
the last four weeks.
In July, according to BLS, 89,957,000 Americans did not
participate in the labor force. In August, that climbed to
90,473,000--a one month increase of 516,000.
In January 2009, when President Barack Obama took office, there
were 80,507,000 Americans not in the labor force. Thus, the number of
Americans not in the labor force has increased by 9,966,000 during
Obama's presidency.
Part of the increase in the number Americans not participating in
the labor force can be explained by Baby Boomers reaching retirement
age and deciding to stop working--and not be replaced by an equal
number of younger people reaching age 16 and thus becoming part of
the BLS labor force population.
However, it is also true that the overall percentage of the
non-institutionalized population over the age of 16 that is working
or seeking to work in the United States--which BLS calls the
employment-population ratio--has declined significantly in recent
years.
From July to August, it dropped from 58.7 percent to 58.6 percent.
In January 2009, when President Barack Obama took office, it was 60.6
percent. It reached an historical peak in April 2000, when it was
64.7 percent.
CNSNews.com is not funded
by the government like NPR. CNSNews.com is not funded
by the government like PBS.
CNSNews.com relies on individuals like
you to help us report the news the liberal media distort and ignore.
Please make a tax-deductible gift to CNSNews.com today. Your
continued support will ensure that CNSNews.com is here reporting THE
TRUTH, for a long time to come. It's fast, easy and
secure.
Study: œBeginning of the longest period of economic decline in American history”
Economists will often argue that booms and busts are cyclical. Every
depression or recession we™ve ever experienced in America has, usually
within just a few years, been followed by booming periods of growth.
But, as the best and brightest of the financial world like to say, past performance is not a guarantee of future results.
According to a demographic study from economists at Cornell
University and the Congressional Joint Committee on Taxation, the
recovery that many Americans believe is taking hold right now may not
actually be happening. In fact, it could take another 30 years or more…
Keep in mind that the study takes into account only the demographic
factors over the next several decades and does not include additional
government taxation, currency devaluation, and overall global economic
supply & demand factors.
The next few decades could be uncharacteristically bleak, according to a new study.
…
Demographic factors – which have largely aided the U.S. economy in
the past – could end up pushing incomes down for the next 30 years or
more.If other factors don™t force incomes up, we may be at the beginning
of the longest period of economic decline in American history.
…
These trends alone could reduce the median income by 0.43 percentage
points per year between now and 2020, 0.52 points per year between 2020
and 2030, and 0.2 points per year between 2030 and 2040.
Those numbers might sound small, but over time they would add up to a
significant loss of purchasing power for the typical American and a
long era of decline for the nation as a whole.
A typical worker earning $50,000 today would earn only about $48,400
by 2020 if his or her income fell by the amounts projected in the study.
The worker™s income would fall to about $45,900 in 2030, $45,000 in
2040 and to less than $44,000 in 2050. In a society built upon consumer
power and the idea that succeeding generations leap ahead of preceding
ones-rather than fall behind them-four decades of falling incomes could
be catastrophic.
The study only makes income projections relating to demographic changes.
Other changes could either offset those income declines, or
exacerbate them. Future tax hikes or cutbacks in Social Security-some
combination of which seems likely, to deal with mounting government
debt-would reduce income even more, for instance.
It™s no secret that the middle class is dying a slow and horrible
death, which will ultimately lead to impoverishment of the majority of
our population. As of right now 100 million Americans are already living
at or near poverty – and this is supposed to be an economic recovery!
The study notes that if you™re making $50,000 today, you™d be making
$45,000 by 2040. And again, this analysis is based strictly on
demographic changes.
Now take into account the continued and inevitable destruction of the
US dollar. Over the last hundred years, since the establishment of the
Federal Reserve, the US dollar has lost over 95% of its value. In
another 30 years we can expect a further devaluation, if not an all out
collapse. That reduces your purchasing power another 30% or so. In the
future, you™ll be paying $10 for a gallon of gas or milk, but making
less money.
And that purchasing power decrease doesn™t even take into account the
increased demand on global resources for economies like China, India,
Russia, and Brazil, which are adding more strain on supplies of oil and
food commodities. Supply and demand alone will drive prices higher.
Finally, as the government (local, state, and federal) goes deeper
into the hole, we can fully expect a number of austerity measures that
will include increased taxation on individuals (think Obamacare, which
has been officially labeled a tax by the US Supreme Court), cuts in
benefits like social security & disability, and increased regulatory
fees and burdensome mandates on businesses.
Everything that is being done right now is working against us, on almost every level.
While there may be positive swings in economic growth, wages or real
estate prices throughout the next thirty years, the reality is that
Americans will continue to get poorer, until there is no middle class
left.
We often look to the third-world for an idea of what real poverty looks like, but we don™t have to do that anymore.
This trend is now taking shape in the United States, and we™ll soon
see slums like those in Detroit springing up all over the country to
house the tens of millions of people who will be affected by this
collapse over coming years.
AHT/DT
America quickly shifting to a war economy, anybody surprised?
PPT TO THE RESCUE: 24 .5 handle sell off and a over 20 handle back up to the opening range
http://www.zerohedge.com/news/2013-09-06/and-bounce Investopedia explains ‘Plunge Protection Team – PPT’ “Plunge Protection Team” was the nickname given to the Working Group byTheWashington Post in
1997. The team was initially perceived by some to have been created
solely to shore up the markets or even manipulate them. The team was
created in response to the 1987 market crash. http://www.investopedia.com/terms/p/plunge-protection-team.asp How Many Treasurys Do Russia And China Own?
Between the two of them, this much: $1,414 billion, or 25% of all foreign held US Treasury paper.
Now the question is – if the military escalation begins, would one or
both dump without regard for price, crush the carefully manicured
rate-driven recovery, and punch the ultimate decision-maker behind the
Syrian war, the Federal Reserve and the banker uberclass, where it
really hurts?
Jim Rogers, the guru of commodity
investing, usually avoids talking about geopolitical conflicts but in
his recent interview he lambasted the US foreign policy and talked about
the “unintended consequences” of a military operation in Syria.
The
pioneer of commodity investing told Reuters that he expects oil and
gold prices to rise in the context of a regional war in Syria. Moreover,
he stressed that the military intervention is likely to diverge from
its original plan: “the problem with war, and I'm not the first to know
this, no matter how well the plans are made, strange things happen in
war and who knows what unintended consequences will come.” In order to
protect his wealth, Rogers invested money in oil, gold and agricultural
commodities. His rationale is based on historical precedents: “I do know
that throughout history whenever you had war, things like food prices
have gone up a lot, energy prices have gone up a lot, copper price, lead
prices: you know, all of these things go up a lot whenever there's been
a war in the past.”
Jim
Rogers believes that “America is desperate to have a war”. He predicted
that because of the war the global stock markets will go down, while
commodities will go up in price. The upcoming war in Syria is not his
only concern. He believes that, sooner or later, the US Federal Reserve
will have to stop pumping free money into the world’s financial system.
This “sudden stop” will be a disaster for countries with big current
account deficits. Jim Rogers expects turmoil in the US and European
stock markets. “When this artificial sea of liquidity ends we're going
to see panic in a lot of markets, including in the US, including in
Western developed markets”, he told Reuters. In this scenario, everyone
who depends on the existence of an “artificial sea of free money” will
suffer.
Jim
Rogers’ view on the future can be summed in five predictions: the
Syrian war will have unintended consequences, oil prices are going up,
gold prices are going up, we will see the end of “free money” provided
by the US Federal Reserve and there will be panic in the global stock
markets.
Every downturn in America’s economic history has been followed by a
recovery. & since the 1930s, those recoveries have only taken a
couple of years to materialize, the next few decades could be
uncharacteristically bleak, according to a new study Santelli – Where are all the good jobs?
Former chief economist at the U.S. International Trade Commission – and now Kyocera copier salesman – Peter Morici argues that failure to attack Syria will destroy the American economy:
President Obama’s vacillation on Syria—first delaying
military action and then booting the decision to Congress—poses grave
threats to U.S. prosperity.
Imminent military action, especially in the Middle East, instigates
fears of shortages and panic in oil markets. Two years ago, oil prices
jumped to more than $110 in anticipation of the U.S. action in Libya but
then subsided when the worst did not happen to oil supplies.
***
A prolonged debate in Congress could push gasoline above $4.00. That
would dent Detroit’s resurgent auto sales, shelve investment decisions
across manufacturing, and weigh on already flagging new home sales.
***
The president exacerbated near term fears by first vacillating after
Syrian President Assad crossed his red line, and then asking Congress to
vote the week of September 9.
***
The president faces formidable opposition among Congressional
liberals and the Tea Party, who don’t grasp what is at stake for U.S.
security and economic interests.
Since Roosevelt, the United States has carefully promoted a system of
international law that prohibits aggression, protects human rights, and
promotes freer markets for international trade and investment.
***
The liberals and Tea Party, who are very reluctant to support
military force unless U.S. security is directly threatened, should
consider the longer-term consequences of U.S. inaction on the economy
and jobs.
***
If the liberals and Tea Party block U.S. military action, that vote
will mark the end of the United States of America as a prosperous nation
with the resolve to lead.
Outside of the fantasy world of the warmongers, things are a little different.
In reality, it is the threat of yet another unnecessary, counterproductive war in the Middle East – and not any delay in approving such a boondoggle – which is destabilizing the economy.
Moreover, far better-known and more impressive economists than Morici
have shown that – contrary to long-standing myths – war is horrible for the economy.
Finally, a strong rule of law is the main driver of economic growth. On the other hand, institutional lying and corruption is one of the main factors hurting our economy.
Attacking Syria would be a much more serious war crime than even a chemical weapons attack. (And history shows that the U.S. is guilty of more serious chemical weapons attacks than anyone in Syria has committed).
Polls show that the American public – and the entire world - believes that the American government is lying about its case for war … just as it did in Iraq.
As such, attacking Syria would further undermine the rule of law,
further erode trust in the government … and therefore further damage our
economy.
Bernanke’s patting himself on the back right now — at
least with respect to Consumer Price Inflation, which came in at
precisely the two percent official Fed target. For those of us who don’t
eat food or drive a car, the number was a bit smaller: one point seven
percent. Previously, Bernanke touted himself in front of the Senate as
having one of the best inflation record of any Fed Chairman in the
modern era.
Unfortunately, some other economic data was released —
specifically regarding manufacturing — that has sent the stock market
tumbling. Two Fed surveys — one by the New York Fed, the other in
Philadelphia — disappointed greatly. Seems, producers of “stuff” are
shipping less of it, orders are going unfulfilled, and inventories are
being drawn down — meaning less “stuff” production. In other words, the
markets are not going to like a September tapering by the Fed.
And, yesterday marked a new development in the debit
card interchage fee fight. Remember free checking? Well, that’s a perk
most banks can’t afford since the Fed capped retail swipe fees. But two
weeks ago a federal judge threw out the rule saying they’re still too
high. Now the courts are saying not only do they have to lower the debit
fees further, but banks may also have to reimburse merchants for the
difference. So you can expect further unintended consequences to your
checking accounts.
And circling the economic news wagon, it turns out
China and Japan aren’t “liking” Uncle Sam’s debt. That’s right,
according to the US Treasury itself, its two largest creditor nations
just dumped $42 billion of US debt — the most in years. Thank goodness
for the Fed QE backstop — unless we take the tapering comments to heart.
Don’t worry, Bernanke is bluffing.
Youth unemployment is above 16 percent in the US. And
recent graduates are clamoring to get work experience– even if it means
working for free. However, this trend of unpaid internships may have
some unintended consequences for income inequality. Justine presents the
case of unpaid interns. Then Bob talks with Ellen Brown, author of “Web
of Debt” and more recently “The Public Bank Solution”. Finally Bob
duels Thom Hartmann of the Big Picture on the current financial crisis.
President Obama’s vacillation on Syria—first delaying military action
and then booting the decision to Congress—poses grave threats to U.S.
prosperity. Imminent
military action, especially in the Middle East, instigates fears of
shortages and panic in oil markets. Two years ago, oil prices jumped to
more than $110 in anticipation of the U.S. action in Libya but then
subsided when the worst did not happen to oil supplies.
With mounting evidence that Syria used chemical weapons, oil prices
again jumped, and a prolonged debate in Congress could push gasoline
above $4.00. That would dent Detroit’s resurgent auto sales, shelve
investment decisions across manufacturing, and weigh on already flagging
new home sales.
Should the Congress approve military force, Iran could attack Israel
or cut back on oil production, permanently pushing up prices. However,
once U.S. strikes begin, if those consequences don’t materialize, oil
prices should fall back. Extended uncertainty
The president exacerbated near term fears by first vacillating after
Syrian President Assad crossed his red line, and then asking Congress to
vote the week of September 9.
Had Obama acted quickly on his own authority, or at least called
Congress back into session immediately, the period of uncertainty would
have been cut from at least a month to one week.
Extended uncertainty can wreck havoc on investment and consumer spending, and potentially tank the economy.
The president faces formidable opposition among Congressional
liberals and the Tea Party, who don’t grasp what is at stake for U.S.
security and economic interests.
Since Roosevelt, the United States has carefully promoted a system of
international law that prohibits aggression, protects human rights, and
promotes freer markets for international trade and investment.
The Chemical Weapons Convention, which 188 nations have signed,
clearly prohibits Assad’s egregious conduct. Sadly, the British
Parliament has abdicated its responsibilities by voting against UK
military action, and the Germans and Japanese are hardly supportive.
Russia and China, who abide only by international rules that suit
their convenience, have blocked action at the Security Council. U.S. stands alone
Among nations with significant military power, or at least the
financial resources to back it, America, France and perhaps a few others
stand alone.
The liberals and Tea Party, who are very reluctant to support
military force unless U.S. security is directly threatened, should
consider the longer-term consequences of U.S. inaction on the economy
and jobs.
With the United States, China, Japan and Germany account for about
half the global economy and the latter already view the United States as
a weak and fading power. By history and design, none has much use for
the rules of commerce established by the WTO and similar institutions,
and have acted with considerable impunity.
For example, Japanese Prime Minister Shinzo Abe’s economic recovery
program hinges on purposefully undervaluing the yen to pump up exports
and steal jobs in the U.S. automotive sector and elsewhere in U.S.
manufacturing.
Chinese and German commercial policies victimize smaller
nations—consider what Angela Merkel’s austerity policies are doing to
Greece and Portugal to keep Germany’s export machine going—and destroy
American jobs—China’s undervalued yuan and naked protectionism stole the
solar panel industry from U.S. manufacturers.
They behave so badly, despite U.S. protestations, because from Obama
is viewed as weak and naïve. By leading from behind internationally and
failing to act forcefully against protectionism that harms American
workers, he has emboldened those nations’ to give lip service to
international rules and then do whatever they please.
Meanwhile, the U.S. recovery drags along at a paltry 2 percent, while China grows at 7.5 percent, and Japan and Germany recover.
If the liberals and Tea Party block U.S. military action, that vote
will mark the end of the United States of America as a prosperous nation
with the resolve to lead. Peter Morici is an economist and professor at the Smith School
of Business, University of Maryland, and a widely published columnist.
In a time in this great country when 1 in 6 families are unsure where
their next meal is coming from, the Department of Homeland Security goes
whole hog in the trough of the public coffers.
And I mean whole hog.
In their latest solicitation to separate the American people from their
money, the headquarters for the Transportation Security Administration
(or as some think of them, “Thousands Sexually Assaulted”) believes they
need explosives magazines, starting with six different locations around
the nation, but can and will include sites outside of the United
States. They intend to set the contract for magazines to be purchased
over the next five years.
Those locations include: Atlantic City, NJ, Houston, TX, Orange County,
CA, Portland, OR, Fort Meyers, FL, and Tampa, FL
The solicitation expects a quick response, by 11 September 2013.
From the Blanket Purchase Agreement (BPA) document:
The maximum ceiling amount of all task orders placed against this
BPA shall be $950,000,000. The Government is under no obligation to the
BPA holder to purchase any specified quantity or dollar value of
services. Preparation costs associated with calls proposals shall not be
passed to the Government.
What exactly are they buying?
Specially
designed boxes known as storage magazines to store large volume of
small amounts of explosives, and ammunition, such as the the 3,454,000
rounds of the 357 Sig Ammunition that they have requested.
The magazines being requested come in different shapes, but the
technical specifics are all the same.
The sizes being requested are:
6ft L x 5 ft W x7 ft H Magazine
14ft Lx7 ft W x7 ft H Duplex Magazine
7ft L x 7ft W x7 ft H Magazine
We can barely feed our poor. We barely have a functioning economy, and
the government wastes even more money than what our great-grandchildren
can ever produce in their lifetimes.
When will this all end?
This article first appeared at Prepper Podcast Radio Network.
The facts are now becoming abundantly clear, that the forecast we’ve
maintained for well over two years has been validated: the US is in a
DE-pression and both Washington and the Federal Reserve have wasted
trillions of Dollars.
The reality is that what’s happening in the US today is not a cyclical recession, but a one in 100 year, secular economic shift.
See for yourself. Here’s duration of unemployment. Official
recessions are marked with gray columns. Bear in mind that the Feds
measure unemployment based on people looking for work, so if you stop looking, you no longer count as unemployed and this number will fall.
Even with this accounting gimmick, the average duration is still at 35 weeks.
Here’s the labor participation rate with recessions again market by gray columns:
Another way to look at this chart is to say that since the Tech
Crash, a smaller and smaller percentage of the US population has been
working. Today, the same percentage of the US population are working as in 1978.
Here’s industrial production. I want to point out that during EVERY
recovery since 1919 industrial production has quickly topped its former
peak. Not this time. We’ve spent literally trillions of US
Dollars on Stimulus and bailouts and production is well below the
pre-Crisis highs.
Here’s a close up of the last 10 years.
Again, what’s happening in the US is NOT a garden-variety cyclical recession. It is a STRUCTURAL SECULAR DEPRESSION.
And those who claim we’ve turned a corner are going by “adjusted” AKA
“massaged” data. The actual data (which is provided by the Federal
Reserve and Federal Government by the way) does not support these claims
at all. In fact, if anything they prove we’ve wasted money by not
permitted the proper debt restructuring/ cleaning of house needed in the
financial system.
Which is why smart investors are already preparing for a market meltdown.
For more market insights and commentary, visit us at: www.gainspainscapital.com
Best Regards
Graham Summers
The European Union’s top court has thrown out sanctions imposed
against eight Iranian banks and companies for their alleged ties to
Iran™s nuclear energy program.
On Friday, the European Court of Justice in Luxembourg ruled that
there was not sufficient evidence to justify the unilateral sanctions
imposed by the bloc on the Iranian entities, AP reported.
The court, however, said the sanctions will stay in place for at least two months pending any appeal.
The United States, Israel and some of their allies have repeatedly
accused Iran of pursuing non-civilian objectives in its nuclear energy
program, with the US and European Union using the claim as an excuse to
impose illegal sanctions against Tehran.
Iran has categorically rejected the allegation, stressing that as a
committed member of the International Atomic Energy Agency (IAEA) and a
signatory to the Non-Proliferation Treaty, it is entitled to develop
nuclear technology for peaceful purposes.
In addition, the IAEA has conducted numerous inspections of Iran’s
nuclear facilities, but has never found any evidence showing that Iran’s
civilian nuclear program has been diverted toward military objectives.
AR/SS …read more
While we already have the quantiative components of today's jobs
number (horrendous), here is the qualitative breakdown. For the time
constrained readers we will jump to the conclusion: absolutely abysmal, to a degree perhaps not seen in years.
Of the 169K jobs added, the vast majority, some 144K or 85% of the
entire August gain, consisted of the lowest paying jobs possible:
+44K jobs added in Retail Trade
+43K added in Education and Health
+27K added in Leisure and Hospitality
+17K added in Government (looks like sequester effect has finally "tapered")
+13K added in Temp Help services
But at least they are full-time "lowest paying jobs" possible. If
there was one silver lining in today's jobs report it is that Full Time
jobs added finally surpassed the Part-Time jobs, which actually
declined.
Elsewhere, for those still confused by the Beige Book's idiotic
proclamation that there are construction worker shortages, don't tell
the BLS: the number of jobs added in the Construction secotr: 0.
Narrowing it down to just construction jobs of residential buildings,
the number was down 3.9K. So much for that lie.
As for the two highest paying job categories: Financial Services and Information? -5,000 and -18,000 respectively.
Some recovery.
While the Establishment survey data was ugly due to both the miss and
the prior downward revisions in the NFP print, the real action was in
the Household survey, where we find that the number of people not in the labor force rose by a whopping 516,000 in one month, which in turn increased the total number of people outside the labor force to a record 90.5 million Americans.
And what is even worse, the Labor Force Participation Rate declined
from 63.4% to 63.2%: the is the lowest print since August 1978!
Whether or not this means the Fed will continue QE at this point is
largely irrelevant: what is more relevant is that the Fed so far has
failed miserably at its core mandate: to boost real employment.
The jobs number number is out and it is weak. There were just 169K new jobs created in August.
What’s worse. Last month was revised SHARPLY down from 162 to 104K. That is quite ominous.
The unemployment rate did, however, drop to 7.3%, but that’s basically just due to continued exodus from the workforce.
The participation rate fell from 63.2% from 63.4%.
Read more: http://www.businessinsider.com/the-august-jobs-report-2013-9#ixzz2e7HtVAnz Payrolls in the U.S. climbed
less than projected in August after smaller gains the prior two months,
indicating companies are being deliberate in their hiring as they wait
for a pickup in demand. The unemployment rate unexpectedly fell as more
people left the labor force. http://www.bloomberg.com/news/2013-09-06/payrolls-in-u-s-rose-less-than-forecast-jobless-rate-at-7-3-.html
The gain of 169,000 workers last month followed a revised 104,000 rise in July that was smaller than initially estimated, Labor Department figures showed today in Washington. http://www.bloomberg.com/news/2013-09-06/payrolls-in-u-s-rose-less-than-forecast-jobless-rate-at-7-3-.html
And the DOW is looking higher!!
WHY? Because the jobs report sucked and the Fed is holding off on Tapering
What a sick sick Country we live in. http://finance.yahoo.com/news/faster-u-job-gains-expected-053055579.html August Jobs Rise 169K, Less Than Expected, Unemployment Rate 7.3%, Huge Downward Revision To July Print
A messy report out of the gate with the number of jobs added in
August at 169K, or as predicted by ADP, worse than the 180K expected,
however this was offset by the Unemployment Rate dropping from 7.4% to
7.3%, on expectations of an unchanged print.However what has shocked the market is the revision to the July jobs number from 162K to only 104K, resulting
in a net drop of 74K jobs, and breaking the average 2013 jobs gain of
200K which previously was said by the Fed to be the key threshold level
for tapering. The question now is: is this print bad enough to delay the taper? http://www.zerohedge.com/news/2013-09-06/august-jobs-rise-169k-less-expected-unemployment-rate-73 Record 90.5 Million Out Of Labor Force As Half A Million Drop
Out In One Month; Labor Force Participation Rate Plunges To 1978 Levels
And what is even worse, the Labor Force Participation Rate declined
from 63.4% to 63.2%: the is the lowest print since August 1978!
Whether or not this means the Fed will continue QE at this point is
largely irrelevant: what is more relevant is that the Fed so far has
failed miserably at its core mandate: to boost real employment. http://www.zerohedge.com/news/2013-09-06/record-905-million-out-labor-force-half-million-drop-out-one-month-labor-force-parti
Most New Jobs Were Part-Time Jobs http://www.businessinsider.com/most-new-jobs-were-part-time-jobs-2013-9 Santelli Blasts Bad-Jobs Bullish Market Response: “What Are We A Banana Republic?”
Bond yields snapped lower, equity prices surged higher, gold and
silver prices ripped higher, and the USD snapped dramatically lower (as
JPY surged) on the worse-than-expected payrolls print (and terrible
downward revision). The sad reflection of bad-news-is-good-news reaction
of US capital markets to this ‘most important number in the world’ is
summed up perfectly by CNBC’s Rick Santelli as he exclaims how sad this reaction is and asks “what are we a banana republic?” Well, yes, Rick, it appears we are… http://www.zerohedge.com/news/2013-09-06/santelli-blasts-bad-jobs-bullish-market-response-what-are-we-banana-republi
Real Unemployment Rate Rises To 11.4%, Difference Between Reported And Real Data Rises To Record
As frequent readers know, for the past three years we have compiled
data looking at the US unemployment rate assuming a realistic labor
force participation rate, which is the trendline average of the past
three decades, or in the mid-65% area. Using such an approach allows us
to estimate what the true unemployment (U3, not U6 underemployment) rate
is. We can report that as a result of the latest monthly collapse in
the labor force whose only purpose was to lower the unemployment rate
from 7.4% to 7.3%, the actual implied unemployment rate just rose from 11.2% to 11.4%.
This can be seen on the chart below. Also can be seen that the spread
between the reported manipulated unemployment rate and the real rate
accounting for a realistic labor force participation, just hit a record
high 4.1%. In other words, unemployment data manipulation by the BLS was
never been greater in the history of the US than in the past month. http://www.zerohedge.com/news/2013-09-06/real-unemployment-rate-rises-114-difference-between-reported-and-real-data-rises-rec
by GoldCore
Today’s AM fix was USD 1,368.25, EUR 1,042.24 and GBP 877.87 per ounce.
Yesterday’s AM fix was USD 1,391.75, EUR 1,054.60 and GBP 891.06 per ounce.
Gold fell $25.20 or 1.81% yesterday, closing at $1,368.70/oz. Silver slid $0.32 or 1.36%, closing at $23.21.
Gold traded near its two week low in London, on track for its first
consecutive weekly drop since July, as investors await the U.S.
employment data (12:30GMT) that will foreshadow the U.S. Fed’s imminent
decision on tapering. Yesterday, The Bank of England and European
Central Bank kept their policies unchanged. Last night, the Bank of
Japan did the same in line with expectations. The G-20 meeting in St.
Petersburg of political and finance ministers began yesterday and has
already created clashes amongst superpowers regarding the U.S. military
strikes planned against Syria. Silver Prices Dow Despite Lack of ETF Selling – (Bloomberg)
U.S. Mint gold and silver eagles sales fell sharply in August but it
is important to note that demand for the entire year is set to be close
to or at a new record and the fall comes after the huge record demand
seen in recent months.
The U.S. Mint’s sales of silver coins are heading for a record again
this year, with sales of 33 million ounces (1,026 tonnes) to late August
already matching the level of the whole of 2012.
Many other mints including the Perth Mint,
the Royal Canadian Mint and the Austrian Mint have also seen a fall in
sales recently but are set for record or near record sales again this
year.
The Royal Canadian Mint has just this week reported a surge in
revenue and profitability for the second quarter of 2013. Revenue
increased by 93.8% to $1.05 billion, while profit increased 93.0% to
$11.0 million. This represented the first time in the Mint’s history
that quarterly revenue exceeded $1 billion. The strong results were
driven by a sharp increase in bullion demand.
“This unprecedented result was due to the soaring demand for the
Mint’s world-renowned gold and silver maple leaf bullion coins and
sustained popularity of our expertly handcrafted numismatic products,”
said mint president and CEO, Ian E. Bennett.
There was a 144% jump in gold maple leaf sales over the same period
last year and a 60% surge in the the sale of Silver Maple Leaf coins to
6.4 million ounces from 4.0 million.
Silver Maple sales look like they may reach 24 million oz in 2013
which will beat the sales of 18.1 million in 2012 and possibly the 23.1
million record seen in 2011.
If one combines, Silver Maple and Silver Eagle sales, they look like they may be more than 68 million oz in 2013.
This demand from retail and high net worth store of wealth buyers,
from just two mints, represents more than 10% of total world silver
production of 787 million ounces in 2012.
Adding the sales of commemorative silver coins as well as sales from
the other official mints, total figures for 2013 will more than likely
top 2011′s total of 118.2 million oz (2013 World Silver Survey).
Import restrictions and the war on gold in India, once the largest
buyer of gold soon to be surpassed by China, has led to a surge in
Indian silver imports which have doubled.
Thomson Reuters GFMS analyst Sudheesh Nambiath, estimates that
India’s total silver imports have more than doubled from last year,
reaching nearly 3,000 tonnes in the first half of 2013 compared with
1,900 tonnes in the whole of 2012, according to the Financial Times.
EU trade data show silver exports to India from the UK –
traditionally the country’s top supplier – were 1,415 tonnes in the
quarter to June, more than triple the previous year’s level and the
highest quarterly total since 2008.
“Because of the restrictions on gold, traders shifted towards
silver,” Mr Nambiath told the Financial Times, adding that demand for
silver jewellery was likely to rise 20% year-on-year and that
manufacturers already had full order books through to December.
There are also some positive signs from increasingly important China.
Chinese investors demand for silver helped push prices to 31-year highs
in 2011.
Inventories of silver on the Shanghai Futures Exchange have fallen
sharply, down 60% since mid-February. And silver trading volumes on the
Shanghai Gold Exchange (SGE) in the first half of the year were 36%
higher even than the first half of 2011.
Another important bullish factor is investment demand in the western
world which has remained robust. Silver ETF holdings have risen 6% since
late 2012 from 0.608 billion ounces to 0.644 billion ounces today.
Silver ETF holdings have held up extremely well relative to gold
ETFs, as investors have increased purchases for the past two years. As
silver plummeted in value, certain silver investors continued to
accumulate on the dip .
This is in marked contrast to the gold ETFs which have seen significant liquidations this year.
SPDR Gold Holdings fell 0.2% to 919.23 metric tons yesterday meaning
that holdings have dropped 32% this year according to the SPDR data.
Overall gold ETFs have seen a 25% fall in holdings or a liquidation of
some 680 tonnes – much of which has been gobbled up in Asia.
“The smart money is getting in,” one trading house executive told
the Financial Times. “I think lower prices are really starting to have
an effect on demand.
Silver Shorts Cover En Masses As Price Rebounds – (Bloomberg)
Silver prices are down 21% in the same period, year to date despite robust demand for silver coins, bars and ETFs.
Silver has recently begun to recover from very oversold levels and
has already risen 30% from the low of $18.23/oz seen on June 28th.
Departing from his prepared remarks, Putin avoided explicitly
referring to risks arising from U.S. monetary policy. But the message
from the BRICS caucus of emerging markets, which met earlier, was
unmistakably aimed at Washington.
China and Russia said vulnerable countries, including G20 member
India, will need to take steps to rebalance their economies, ruling out
bailouts for countries that have hit trouble.
China, often reticent on the international stage, urged Washington to
be "mindful of the spillover effects and work to contribute to the
stability of the global financial markets and the steady recovery of the
global economy"
