Tuesday, February 16, 2016

Is This Debt’s Last Rattle?


Crowd outside Wall Street Stock Exchange on BlackThursday Oct 24 1929
What we see happening today is why we called our news overview the “Debt Rattle” 8 years ago. The last gasps of a broken system ravished by the very much cancer-like progress of debt. Yes, it took longer than it should have, and than we thought. But that’s pretty much irrelevant, unless you were trying to get rich off of the downfall of your own world. Always a noble goal.
There’s one reason for the delay only: central bank hubris. And now the entire shebang is falling to bits. That this would proceed in chaotic ways was always a given. People don’t know where to look first or last, neither central bankers nor investors nor anyone else.
It’s starting to feel like we have functioning markets again. Starting. Central bankers still seek to meddle where and when they can, but their role is largely done. It’s hard to pinpoint what exactly started it, but certainly after Kuroda’s negative rate ‘surprise’ fell as flat on its face as it did, and then fell straight through the floor and subsequently shot up through the midnight skies, a whole lot more ‘omnipotence credibility’ has disappeared.
Kuroda achieved the very opposite of what he wanted, the yen soared up instead of down -big!-, and that will reflect on Yellen, Draghi et al, because they all use the same playbook. And the latter so far still got a little bit of what they were shooting for, not the opposite. Still, one could also make a good case that it was Yellen’s rate hike that was the culprit. Or even Draghi’s ‘whatever it takes’. It doesn’t matter much anymore.
Though what should remain clear is that it was in their interference in markets to begin with, as extremely expensive as it has been extremely useless and dumb, that the real guilt resides. Or we could take it even a step further back and point to the credit bubbles blown in the west before 2008. Central banks could have let that one go, and allow it to run its natural course. Instead, they decided they should inflate their own balance sheets. What could go wrong?
Then again, these inane policies concocted by a bunch of bankers and bookworm academics who don’t even understand how their own field works, as Steve Keen once again explained recently, would have blown up in their faces long before if not for China’s decision to join in and then some. Some $35 trillion, that is.
Money, debt, spent on ghost cities and on what now turn out to be ghost factories. Ghost jobs, ghost prosperity,a ghost future. Makes us wonder all the time what people thought when they saw China used as much cement in 2011-2013 as the US did in the entire 20th century. Did anyone think that would continue for decades, even grow perhaps? Have we lost all sense of perspective?
How much cement or steel can one country need, even if it’s that large? How much coal and oil can it burn, let alone store? Blinded as we were, apart from the financial shenanigans, much of what the ‘developed nations’ engaged in since 2008 was overleveraged overinvestment, facilitated by ultra-low rates, in industries that would feed China’s hunger for ever more forever. Blind? Blinded?
And now we’re done. If Elon Musk doesn’t come back soon with a zillion little green Martians to pick up China’s slack, we’re all going to be forced to face just how distorted our media-fed visions of our economic futures have become, and how much pain it will take to un-distort them.
Which is what we’re watching crash down to mother earth now. And the central bankers’ loss of ‘omnipotence credibility’ is not something to be underestimated. It encourages people like Kyle Bass to dare the PBoC to show what it’s got left, even if, as Bass said, he’s got maybe a billion to go up against the multi-trillion Chinese state windmills of Beijing. It shouldn’t matter, but it does. Because the windmills are crumbling.
Bass won’t be alone in challenging global central banks. And that’s probably good. Without people like him, we would never see proper checks and balances on what the formerly omnipotent are up to. Kuroda has next to nothing left -or even less that that. Draghi and Yellen only have negative territory left to plow into, and at the very least that means putting positive spins on any economic numbers becomes exceedingly hard to do -and be believed.
Granted, they can still all go for helicopter money -and some will. But that will be the definite last step, and they know it. Dropping free money into a festering cesspool of debt is as useless and deadly as all previous QEs put together.
As we watch the world crash down to earth in epic fashion -and it ain’t even the 1st inning- people are already looking for a bottom to all of this (a waste of time). But if there’s one law in economics, it’s that when a bubble pops it always ends up below where it started. So look at where levels were before the bubble was blown, and then look out below.
Want to argue that this is not a bubble? Good luck. This is the mother of ’em all.
The Lunar New Year, and the breather it brings for Beijing -though we’re sure there’s not a lot of family time off for PBoC personnel- seems like a good moment to take stock of the multiple crises that simultaneously and in concert accelerated head first into the new year. And boy, the rest of the world decided not to wait for China, did it now? For those who’ve seen this coming and/or have no skin in the game, it’s an amusing game of whack-a-mole. For others perhaps not so much.
To take a few steps back, if you ever believed there was a recovery after 2008, or even that it was theoretically possible for that matter, you’re going to have a much harder time understanding what is happening now. If you’ve long since grasped that all that happened over the past 8 years of QE infinity-and-beyond, was nothing but “debt passed off as growth”, it’ll be much easier.
It’s stunning to see for everyone at first blush that the “book value” of global proven oil reserves is down by $120 trillion or so since summer 2014. And it certainly is a big number; the S&P has lost ‘only’ $2 trillion in 2016. But what counts is the speed with which that number sinks in, and that speed depends on one’s reference frame. In the same vein, what’s perhaps most important about all the seemingly separate crises developing before your eyes is how they feed on each other.
Or, rather, how they all turn out to be the same crisis, kind of like in the perfect whack-a-mole game, where there’s only one mole and you still can’t catch it. So try and whack these. Or better still, try and imagine central bankers doing it, or finance ministers, spin doctors. They’re all so out of their leagues it would be funny if they didn’t have the power to make you pay for their incompetence.

NZ growth slows despite migration boom

A farmer monitors operations as dairy cows are milked. Weak dairy prices have been blamed for recent poor economic performance. Photo / Getty Images
A farmer monitors operations as dairy cows are milked. Weak dairy prices have been blamed for recent poor economic performance. Photo / Getty Images
New Zealand's economy has ground to a halt with weak dairy prices and a construction slow-down.
ASB economists said forecasts indicate economic growth would continue to slow to a 2.2 per cent and population growth was accounting for much of New Zealand's economic growth.
"On a per-capita basis, there has essentially been no growth over the past year," ASB chief economist Nick Tuffley said.
Tuffley said growth was expected to stabilise, then recover later in the year with support from lower interest rates, and through 2017.
"Declines in interest rates and the NZD over the past year will help support growth - and further rate cuts later this year should provide an extra boost, ensuring inflation lifts more firmly back into the RBNZ's target," Tuffley said.
Falling dairy incomes remain the main headwind for the economy, while tourism is the notable bright note, according to ASB.
The Reserve Bank Governor Graeme Wheeler left the official cash rate at 2.5 per cent, saying further reductions to the rate might be needed with inflation set to take longer to return to the bank's target range of 1-3 per cent.
The Reserve Bank said the inflation rate was expected to move inside the target range from early next year, as earlier petrol price declines will drop out of the annual calculation, and the lower New Zealand dollar will be reflected in higher tradables prices.

Quantitative Failure: Growth Remains Anemic, & Worries Are Escalating That The U.S. & The Rest Of The World Are On The Brink Of A Recession, Despite Bargain-basement Interest Rates & Trillions In Liquidity.

Growth remains anemic, & worries are escalating that the U.S. & the rest of the world are on the brink of a recession, despite bargain-basement interest rates & trillions in liquidity.

“Whether the recent tipping point was the Fed hike, negative rates in Europe and Japan, or simply the growing market disclocations and macro misallocation of resources and wealth, the deflationary theme of ‘Quantitative Failure’ is stalking the financial markets,” Hartnett said in a note to clients. “A multiyear period of major policy intervention and ‘financial repression’ is ending with weak economic growth and investors rebelling against QE.”
Harnett offered a thumbnail of just how prolific global central bank intervention has been:
  • 637: Rate cuts since Bear Stearns imploded in March 2008.
  • $12.3 trillion: Asset purchases through global QE programs.
  • $8.3 trillion: Global debt yielding zero percent or less.
  • 489 million: Population of countries with official policy rates of less than zero.
  • -0.93 percent: Yield on the two-year Swiss bond, the lowest-yielding government debt in the world.

The results of those numbers:
  • Expected gross domestic product growth of 1.75 percent in 2016 for the U.S., according to BofAML economist Ethan Harris.
  • Inflation expectations for the U.S. and Europe now falling below financial crisis 2008 levels.
  • “One of the most deflationary recoveries of all time,” according to Hartnett, with nominal GDP of advanced economies growing just 11 percent over the past 26 quarters.
  • A bear market in stocks.
  • A bear market in commodities.
  • Loss of $686 billion in market cap for global banks since Dec. 15, the day before the Fed raised rates, leading to tightening liquidity conditions and lending standards.
  • “Most conspicuously” a bear market in bank stocks and tumbling bond yields, “suggesting that six years of QE has failed to arrest deflation,” Hartnett said.
http://www.cnbc.com/2016/02/12/123-trillion-of-qe-has-added-up-tothis.html

Dr. Jim Willie: Deutsche Bank Is Keeper Of The Derivative Keys And It Is Going Down In Ugly Flames As The Economic Collapse Accelerating

 
Dr. Jim WIllie: www.GoldenJackass.com
Paul Sandhu: www.WakeUpandLive.com
Closing Track: https://youtu.be/DV9FuDU_7Pc
Topics:
1) Deutsche Bank collapse and possible contagion
– Credit Default Swap soaring from 90 in Dec to 120 in Jan to 260 in Feb
– near total collapse of DBank stock mimics the Lehman Brothers path
– in deal talks with Venezuela on gold swap (signal of Saudi demand in repatriated gold)
– told in 2013 of likely breakup of DBank into 7 entities (NEVER HAPPEN)
– DBank acquired Bankers Trust in 1998 from Wall Street site, as derivative shop
– could serve as the major bank sector fuse
2) Stock market freefall & Bond Market black hole
– decline in stocks benefits bonds
– USTBond rally sucks global capital, highly destructive phenomenon
– negative rates at big banks will accelerate movement of funds into USTBonds
– wrecked USFed balance sheet with toxic paper will motivate the bond rally black hole
– protected fortress of derivatives will motivate the bond rally black hole
3) King Dollar Isolation & Demise
– global Dollar margin call amidst Dollar shortage (MASSIVE SHORT SQUEEZE)
– credit drying up around world, sure to force huge Emerging Market debt defaults
– Russia accepts RMB as payment in China oil sales
– soon comes Saudi decision to accept RMB in China oil sales also
4) Iran invited to become third leg in Eurasian Trade Zone (Economic Union)
– Iran to recover $100 billion in frozen European banks from sanctions end
– Iran very low cost oil producer but Saudis and UAE slightly lower, Russia too
– Iran demands Euro currency in oil sales and past oil obligations (see India)
– Chinese President Xi Jinping and his Iranian counterpart Hassan Rouhani signed almost 17 agreements on economic and technological cooperation. Furthermore, the leaders announced they will cooperate on the China-led One Belt One Road initiative with projects toward infra-structure and industrial production facilities
– Russia leading oil price mechanism changes, invitation to Gulf Emirates and OPEC
5) Oil Price Impact in devastating display
– pressure in Venezuela, Nigeria, Azerbaijan, entire Gulf region
– entire Gulf Emirates plugging deficits with reserves
– Alberta Economy being crushed, seen in property market
– series of Standard & Poors debt downgrades in US energy sector
– oil hedges expiring, no support for energy firms and even drillers
– effect on big US banks, as Texas region suspends accounting rules
6) Portugal and Italy in race to light PIIGS fuse
– spike in Portugal Bond yield, suddenly 3.6% spread above German Bund
– Italy in bust as 24% decline in Italian Stock Market
– leading candidate banks are Deutsche Bank, Societe General (Fr), Barclays (Eng)
7) Turkey and Saudi Arabia likely for regimes to fall
– NATO splinter in progress, as Europe will not enter war with Russia
– big question remains on Turkish depot lines for narcotics trade
– Saudis own $3 to $5 trillion in USTreasury Bonds
– Saudi ready to devalue Riyal currency
– USGovt appears to have abandoned both Turkey and Saudis, tossed under bus
8) Normalization of relations with Russia
– Angela Merkel unpopular in Germany
– Merkel wants United Nations cushy post
– France wants to normalize relations with Russia
– Bavarian leader Seehofer visited Putin in Kremlin
• DEUTSCHE BANK IS KEEPER OF THE DERIVATIVE KEYS / it is going down in ugly flames
• Turkey Fires On Syrian Army, Kurds, Says “Massive Escalation” In Syria Imminent As Saudis Ready Airstrikes
• “We Are In A New Cold War”: Russia PM Delivers Stark Warning To NATO
• What Energy Bankers Are Really Saying: “We Are Looking To Save Ourselves Now”
• 10,000 Greek Farmers Stage Massive Revolt In Athens, Destroy Police Cars / Caught On Tape: 800 Angry Farmers Storm Greek Ministry, Beat Cops With Shepherd’s Sticks
• In Venezuela, “Savage Suffering” Takes Hold Amid Frightening “Food Emergency”
• Gold is beginning to glitter again, as is silver

Hillary Clinton Claims To Oppose Breaking Up The Banks Because Racism

 In a statement reminiscent of her claim that she took money from Wall Street because of the 9/11 attacks, former Secretary of State Hillary Clinton told a crowd, “If we broke up the big banks tomorrow, would that end racism? Would that end sexism?”
The non sequitur is a not-so-subtle attempt to distract from Clinton’s extensive ties to Wall Street, which have become the focus of critics in recent months and likely played a role in her landslide defeat in the New Hampshire primary. The Clinton campaign clearly wants to change the subject.
But it might be more prudent to ask, “If we elected Hillary Clinton as president, would that end racism? Would that end sexism?”
It is not surprising that numerous black intellectuals are less-than-sanguine about Clinton becoming president, given her warnings about “super predators” from urban areas (read: scary young black men) to push tougher drug laws; her championing of expanding the prison system; and her vocal and resolute support for cutting welfare benefits, which led to millions of children living in poverty–particularly children of color.
Recently, Hillary Clinton’s most prominent surrogate, former President Bill Clinton, told a rally of her supporters that he still considered himself to be the first black president, and that the human genome showed “We are all mix-raced people,” seemingly downplaying how race and racism is experienced in American society. That attitude is not likely to end racism.
Hillary Clinton’s record on fighting sexism is also decidedly mixed. Not only did she support screwing over poor women and children with welfare reform, but her campaign continues to make a mockery of feminism and female solidarity.
As Maureen Dowd details in The New York Times, Clinton’s campaign has taken on a decidedly-entitled tone, where her personal ambitions are distorted as a cause for all women. Clinton supporters, like former Secretary of State Madeline Albright and 60s feminist icon Gloria Steinem, have belittled women who support Sanders as boy-crazy traitors.
Dowd also notes that it was the Clintons, along with Albright and Steinem, who undermined feminism in the 1990s by helping to smear intern Monica Lewinsky on behalf of the most powerful man in the world:
The same feminists who were outraged at the portrayal of [Anita] Hill by David Brock — then a Clinton foe but now bizarrely head of one of her “super PACs” — as “a little bit nutty and a little bit slutty,” hypocritically went along when Hillary and other defenders of Bill used that same aspersion against Lewinsky.
So much for the sisterhood.
Hillary Clinton may be trying to play identity politics to change the conversation, but given her record, it remains to be seen whether she can even win that debate.

YELLEN TALKS NEGATIVE INTEREST RATES – Yellen Grilled About Negative Interest Rates By Congress

 
YELLEN TALKS NEGATIVE INTEREST RATES – Yellen Grilled About Negative Interest Rates By Congress
Federal Reserve Chairwoman Janet Yellen faced what may have seemed like an absurd line of questioning on Capitol Hill this week: Has the Fed considered negative interest rates? The basic logic of lowering interest rates when economic conditions turn south is to spur spending. If savings accounts aren’t accruing much interest, companies and savers are incentivized to spend the cash or invest elsewhere, stimulating the economy. Major economies around the world are desperate to spur inflation; one way to do that is to cut interest rates, which typically would make their currencies less attractive. Lower currencies raise the prices of imported goods and boost the fortunes of exporters. Stock markets around the world continue to collapse as this new global financial crisis picks up more steam. BullionByPost, Britain’s biggest online gold dealer, said it has already taken record-day sales of £5.6m as traders pile into gold following fears the world is on the brink of another financial crisis.
Economic activity is slowing down all over the planet, and a whole host of signs are indicating that we are essentially exactly where we were just prior to the great stock market crash of 2008. Yesterday, I explained that the economies of Japan, Brazil, Canada and Russia are all in recession. Today, I am mainly going to focus on the United States. We are seeing so many things happen right now that we have not seen since 2008 and 2009. In so many ways, it is almost as if we are watching an eerie replay of what happened the last time around, and yet most of the “experts” still appear to be oblivious to what is going on. If you were to make up a checklist of all of the things that you would expect to see just before a major stock market crash, virtually all of them are happening right now. The following are 11 critical indicators that are absolutely screaming that the global economic crisis is getting deeper…
#1 On Tuesday, the price of oil closed below 40 dollars a barrel. Back in 2008, the price of oil crashed below 40 dollars a barrel just before the stock market collapsed, and now it has happened again.
#4 Corporate debt defaults have risen to the highest level that we have seen since the last recession. This is a huge problem because corporate debt in the U.S. has approximately doubled since just before the last financial crisis.
#5 The Bloomberg U.S. economic surprise index is more negative right now than it was at any point during the last recession. #6 Credit card data that was just released shows that holiday sales have gone negative for the first time since the last recession. slaves corporate rich poor gap “Peter Schiff” u.s. usa america “united states” imports exports trade economy “stock market” “savings account” savings “bank account” banking debt credit “credit card” money wealth jobs job employment “job agency” poverty poor christmas sale manufacturing “made in usa” 2015 2016 interest “interest rate” mortgage “real estate” gold silver “silver eagle coin” “silver coin” news media entertainment “elite nwo agenda” “binary options” data jim rogers marc faber lindsey williams alex jones infowars coast to coast am louis farrakhan rawdogletard
#7 As I mentioned yesterday, U.S. manufacturing is contracting at the fastest pace that we have seen since the last recession. #8 The velocity of money in the United States has dropped to the lowest level ever recorded. Not even during the depths of the last recession was it ever this low.
#9 In 2008, commodity prices crashed just before the stock market did, and late last month the Bloomberg Commodity Index hit a 16 year low. #10 In the past, stocks have tended to crash about 12-18 months after a peak in corporate profit margins. At this point, we are 15 months after the most recent peak. #11 If you look back at 2008, you will see that junk bonds crashed horribly. Why this is important is because junk bonds started crashing before stocks did, and right now they have dropped to the lowest point that they have been since the last financial crisis.
And I am not the only one saying this. Robert Kiyosaki: ‘Biggest’ Market Crash Likely in 2016 Author Robert Kiyosaki: ‘Biggest’ Market Crash Likely in 2016 Important: Can you afford to Retire? Robert Kiyosaki, best-selling author of “Rich Dad, Poor Dad,” warns that stock market manipulation may result in a crash bigger than in 2007. Gold and silver have crashed. Junk bonds have crashed. Chinese stocks have crashed. The Global Economy Is Officially Melting Down

The War On Paper Currency Begins: ECB Votes To "Scrap" 500 Euro Bill

Update: in case there was any doubt about the ECB's true intentions, we just got the official "denial":
  • DRAGHI: ANY ECB ACTION ON EU500 NOTE IS NOT ABOUT REDUCING CASH
Translation: the ECB action is only about reducing physical cash, some 30% of it to be specific.
* * *
The first shot in the global war on cash was just fired, by none other than the ECB, which moments ago Handelsblatt reported...


... and Bloomberg confirmed - ECB COUNCIL VOTES TO SCRAP EU500 NOTE: HANDELSBLATT - has voted to scrap the second highest denominated European bank note in circulation:



... after the CHF 1000 note.


So what, big deal, eliminate it. The people will still have 5, 10, 20, 50, 100 and 200 euro bills right.
As we wrote just one week ago, the answer is not that simple at all. Recall that the €500 note is the second highest currency denomination in G10, after the CHF1,000 note. More importantly, the total value of €500 notes in circulation amounts to €306.8bn and has been rising as shown in this BofA chart:


Furthermore, as a share of the value of total euros in circulation, the €500 note is the second-highest, after the €50 note.


This is what we said last Thursday:
In other words, if overnight the €307 billion worth of €500 bills were eliminated, the notional value of the entire amount of European physical currency in circulation would decline by 30% to €700 billion!

And there you have it: while it may not be banning all European cash outright, we are confident the ECB would be delighted if one third of it was to start, while pretending to be fighting financial crime, terrorism, corruption and drug dealers. 

Of course, what Europe would be truly doing is setting the scene for ever more aggressive NIRP, and by removing the highest denomination bank notes, it would make evading negative that much more difficult and costly (albeit would certainly favor gold).
That's not all: as Bank of America pointed out, abolishing the €500 note may even end up even weakening the European currency:
... we would expect that abolishing a note that represents almost 30% of the total Euros in circulation would be negative for the currency, keeping everything else constant. The share of the €500 note in the total value of Euros in circulation has been falling since 2009 and this has coincided with a weakening Euro in real effective terms. This is not evidence of causality, but we should not ignore it.

If we are right, the Euro will weaken, primarily against the USD and the CHF. The USD is the most liquid currency and we would expect it to capture a large share of the drop in the demand for the Euro as a store of value. However, the CHF could also benefit, having the largest note denomination in G10 economies. Indeed, the CHF1000 note is already very popular, representing more than 60% of the CHF  notes in circulation, unless the SNB follows the example of the ECB and also abolishes the CHF1000 note.
BofA is right, unless of course, in this global race to the bottom where every central bank tit has other central bank tats as a direct response, first the SNB "scraps" the CHF1000 bill, and then the Federal Reserve follows suit and listens to Harvard "scholar" and former Standard Chartered CEO Peter Sands who just last week said the US should ban the $100 note as it would "deter tax evasion, financial crime, terrorism and corruption."


Go ahead and cut, then: after all who really needs the Benjamins, right? Well, here's the thing:
Chart of value of currency in circulation, excluding denominations larger than the $100 note. Details are in the Data table above.
As the Treasury chart above shows, $100 bills account for for $1.08 trillion of the $1.38 trillion total in circulation. So should the Fed react to the ECB's "scrapping" of the €500 bill, which accounts for 30% of the value of currency in circulation, then the Fed would respond in kind, by eliminating 78% of all paper currency in circulation by value.
Not a bad way to launch a global ban on paper currency ahead of a global NIRP regime, and all, of course, in the name of fighting "tax evasion, financial crime, terrorism and corruption."

John Kasich and the Clintons Collaborated on Law That Helped Double Extreme Poverty

Republican presidential candidate John Kasich has promoted himself both as a friend of the working poor and as a foe of Hillary Clinton, but as House Budget Committee chairman in the 1990s, he worked with the Clintons to roll back welfare programs, helping double extreme poverty in America.
In 1996, the Clinton administration and congressional Republicans worked hand in hand to pass what they called the Personal Responsibility and Work Opportunity Reconciliation Act, colloquially known as “welfare reform.”
The legislation famously “ended welfare as we know it,” replacing Aid to Families with Dependent Children (AFDC) with Temporary Assistance for Needy Families (TANF). The newly created TANF placed a time limit on how long the federal government would extend financial assistance to poor families.
Kasich was one of the legislation’s prime movers. After clashes between Clinton and the Republicans over earlier versions of the bill, Kasich introduced what went on to become the final legislation in June 1996. By late July, the administration and the Republicans had solved their disagreements, and a conference bill coasted to passage by a 328-101 vote (Bernie Sanders, another presidential contender, opposed it).
“It was pretty amazing today to watch the president of the United States come on television and say that he was going to, in fact, sign this welfare bill,” Kasich boasted on the House floor on July 31, 1996.
He invoked the civil rights era to tout the cutbacks in funding to the poor, saying:
We marched 30, 40 years ago because we thought people were not being treated fairly, and we march today for the very same reason. What I would say, and maybe let me take it back and say many of my friends marched. I was too young, but I watched, and I respect it. What I would suggest at the end of the day, however, is that we all are going to have to stand up for those who get neglected in reform, but frankly this system is going to provide far more benefits, far more hope, restore the confidence in the American people that we have a system that will help those that cannot help themselves and at the same time demand something from able-bodied people who can. It will benefit their children, it will help the children of those who go to work.
One of the leading dissenters in the House was Rep. John Lewis, D-Ga. “The bill we are considering today is a bad bill. I will vote against it and I urge all people of conscience to vote against it. It is a bad bill because it penalizes children for the actions of their parents,” he thundered. “This bill, Mr. Speaker, will put 1 million more children into poverty. How, how can any person of faith, of conscience vote for a bill that puts a million more kids into poverty? … What does it profit a great nation to conquer the world, only to lose its soul? Mr. Speaker, this bill is an abdication of our responsibility and an abandonment of our morality. It is wrong, just plain wrong.”
Kasich’s response to opponents of the bill was terse: “People are not entitled to anything but opportunity. You can’t be on welfare for generations.”
Kasich explained: “America has been crying for this bill now for a generation. They’re sick of generational dependency and, frankly, they wanted a fundamental change. I’m glad the president’s going to sign the bill, and I want to compliment him for that.” He concluded: “And this is one of those successes that when we get old and we’re all in our rocking chairs, we’re going to look back and say, ‘Thank God we were able to make America a little bit better.’”
Bill and Hillary Clinton both advocated strongly for the changes.
President Clinton used the story of a black mother named Lillie Harden he had met in Arkansas during a panel on welfare reform. He touted her story of going from being on AFDC for two years to getting a job at a supermarket. He cited her response to a question about what she liked best about being off of welfare: “When my boy goes to school and they say what does your mama do for a living, he can give an answer.”
Clinton invited Harden to the signing ceremony of the bill, and also cited her during his debate later that year with Bob Dole. “I want to make more people like that woman, Lillie Harden. So I’ve got a plan to do it. And it’s just the beginning,” he said.
Hillary Clinton was involved with publicly advocating for passage and implementation of welfare reform in her role as first lady. In a Newsweek cover story in 1993, she weighed in on the upcoming welfare reform debate.
“How do we as a society address the 15-year-old mother on welfare? What do we owe her? Can we demand a set of behavioral standards from her?” asked the interviewer. “Sure, I’ve been talking about that since 1973,” replied the first lady. “You know, I am one of the first people who wrote about how rights and responsibilities had to go hand in hand.”
“When you talk about moving someone to work from welfare in two years, what happens to people who don’t want to work? Would you impose sanctions?” followed up the interviewer. “Oh, I think you have to. What happened in Arkansas is that people who refused for whatever reason to participate had their benefits cut,” she replied.
Hillary Clinton continued to defend the welfare cutback over the years. “Too many of those on welfare had known nothing but dependency all their lives, and many would have found it difficult to make the transition to work on their own,” she wrote in a 1999 op-ed. In a 2002 interview she said the policy has resulted in recipients “no longer” being “deadbeats — they’re actually out there being productive.”
Hillary Clinton’s advocacy for welfare reform strained her relationship with her mentor and former boss, Marian Wright Edelman, the head of the Children’s Defense Fund. After the signing of the bill, Edelman wrote that “President Clinton’s signature on this pernicious bill makes a mockery of his pledge not to hurt children.”
During an interview on Democracy Now in 2007, Edelman described her changed relationship with the Clintons, saying, “Hillary Clinton is an old friend, but they are not friends in politics.”
During her 2008 campaign for the presidency, Clinton defended the policy, saying, “Welfare should have been a temporary way station for people who needed immediate assistance. It should not be considered an anti-poverty program. It simply did not work.”
Journalist Jason DeParle followed up with Lillie Harden nine years after she had briefly been part of the national discourse. He discovered that she had a stroke in 2002. She was unable to get on Medicaid because she was no longer on welfare, and she couldn’t afford her $450 monthly bill for prescription drugs. “It didn’t pay off in the end,” she said of her work. Harden died in March 2014, at the age of just 59.
The misery Harden experienced was similar to that of millions of other Americans who lost access to a crucial government lifeline. This past fall, a pair of researchers published a book looking at extreme poverty in America, defined as living on less than $2 a day. They found that 1.5 million American households — including 3 million children — are now living at or under this threshold.
While no one policy alone explains this shocking number of Americans in extreme poverty, the authors do note that the number has doubled since 1996, the year that welfare reform was signed into law.
“By 1996, welfare was putting a sizable dent in the number of families living below the $2-a-day threshold,” wrote authors Kathryn J. Edin, a sociology professor at Johns Hopkins University, and H. Luke Shaefer, a professor of social work at the University of Michigan. “As of early 1996, the program was lifting more than a million households with children out of $2-a-day poverty every month. Whatever else could be said for or against welfare, it provided a safety net for the poorest of the poor. In the late 1990s, as welfare reform was gradually implemented across the states, its impact in reducing $2-a-day poverty began to decline precipitously. By mid-2011, TANF was lifting only about 300,000 households with children above the $2-a-day mark.”
Zooming in on one state, Mississippi, the researchers wrote that the TANF rolls there “have seen an astonishing decline, more so than in most other places. As of 1965, the program was serving 83,000 residents, and that number grew to nearly 180,000 at its peak. By 2002, however the rolls had plummeted to only 40,000 and by the fall of 2014 that figure had fallen even further, to only about 17,000 statewide, around 0.6 percent of the state’s population.”
Neither Kasich nor the Clintons have indicated they would be willing to revisit the decision to “end welfare as we know it.” There appears to be agreement that the 1996 law was the right step forward for America — proof that despite laments about a lack of bipartisanship, there is an issue elites in both parties can agree on: cutting back a lifeline to the poor.
Top photo: The Seashore Mission in Biloxi, Mississippi, which serves homeless and indigent people.

China Exports Crash Most In 6 Months Despite "Devalued" Yuan

Despite the weakening of the Yuan, China exports collapses 6.6% YoY in January (massively missing the 3.6% increase expected). Imports continued their 15 month series of collapses with a 14.4% plunge (again drastically worse than the 1.8% increase expected). This pushed the trade balance to a record surplus CNY406bn.
In Yuan terms it's ugly... Both imports and exporets were worse than the lowest forecast of all professional economists...


But in USD terms it's a disaster...


Of course, between Japan's disastrous GDP and China's trade collapse, this is great news for those demanding moar as excuses for extreme monetary policy are just piling up in the ashes of previous failed policies.


Of course what everyone is really waiting for is the Hong Kong trade data to see just how much capital "leaked"...