Alfred Woody's Kewl Blog [ 椼森 ]: Mar 31, 2016

Thursday, March 31, 2016

Fed Admits it is the World’s Central Bank – not just the USA Central Bank

Janet Yellen signaled that the Fed is grappling with the problem I have been warning about; the dollar has become the de facto only real currency and the Fed is indeed becoming the world’s central bank. Yellen has admitted that the Fed is being lobbied by everyone to surrender its domestic policy objectives to international. This is precisely what took place in 1927. Yellen stated that the Fed should worry less about inflation domestically than about global growth risks. While pointing to the slowdown in China and depressed commodity prices, Europe is a real basket case. She used the words that the Fed must consider “caution is especially warranted” when it comes to raising interest rates. This has put most Fed watchers off to expecting any possible rate hike into retirement as they expect nothing before September. The BREXIT will most likely be rigged because it is exactly opposite of what they are telling the Brits that they will be isolated and the economy will collapse if the exit the EU. Nobody says Britain did fine before it joined only in 1973 or that it is the other-way-around; with BREXIT, Europe will fail. This heated issue in Britain is most likely the final nail in the coffin. Britain will collapse with the Euro and should have just handed its sovereignty to Brussels. Europe will never reform so it will be all go down together. The political risk in Europe is tremendous and Yellen cannot prevent that with simply interest rates.

It is ironic that it is also the same conditions setting up today as was the case in 1927. The Fed back then lowered US rates to try to deflect the capital inflows to help bailout Europe. The markets eventually backfired and capital shifted pouring into the USA doubling the US share market despite doubling interest rates to try to prevent the crisis they helped to create. This all led to the 1931 Sovereign Debt Crisis and those economic declines resulted in political chaos. In 1933 FDR came to power. But so did Hitler and Mao. That was all made possible because of the collapse in government debt. We are in the very same position today and the Fed is surrendering domestic policy objective for international concerns.

What is astonishing is just how brainwashed society has become. They cheer lower interest rates as if this will eventually work to stimulate the economy and markets. Interest rates decline with economic declines and rise with economic booms. The analysis on TV is just ass-backwards. When a stock is doing well, the price rises because there is a bidding war. Mr. Larry Summers, the father of negative interest rates, admits he cannot forecast anything. Yet he advocates manipulation without any understanding the consequence of his theories in pure stupidity and remains clueless as to history or how markets even move. We can see that the Fed raised rates from 3.5% in 1927 up to 6% in 1929 and the stock market doubled on capital inflows. The Fed cannot lower US rates to prevent a crisis in Europe or to reverse the Chinese economy no less bring a bid back to commodities when the economy is not expanding. As the stock market rises, Congress will criticize the Fed for making the rich richer, and the Fed will then be forced to return to domestic policy objectives raising rate to try to stop the rally. Yet the rally will begin to take off when the public at large begins to realize government is in trouble. This is part of the 4 elections coming with the Year from Political Hell.
The risks and the reality that the Fed has lost any real ability to manage the economy have become so real, it is slapping people in the face and still they cannot see it. The Fed has little conventional monetary policy ammunition to counteract a downturn at this time. Larry Summers’ negative interest rates are destroying the fabric of the global economy. Far too many pension funds are unfunded and many countries in Europe by law require they be managed conservatively and invest EXCLUSIVELY in government bonds. The risks of total meltdown beginning in 2017 are on the horizon.
Yellen has inherited a complete nightmare. This decision to delay the long-awaited liftoff from a zero interest rate illustrates that the world economy is totally screwed. There is a lot of speculation about why the Fed seems so reluctant to “normalize monetary policy”. However, besides the normal issues such as low inflation, weak wage gains, and strong job growth, the real issue nobody seems to look has been the fact that government are now crack addicts on life-support with negative rates. A hike will increase the Federal deficits of all countries globally. The smart institutional clients coming to our World Economic Conferences have shifted their portfolios selling government debt and moving to blue-chip corporate. Corporate debt is the only alternative to government debt in crisis and emerging market debt other bought thinking they have no risk since it is dollar denominated. When government debt goes bust, you get absolutely nothing and they can change the law at any given moment. They can re-denominate your debt holdings as well as extend the maturity and there is absolutely nothing any bondholder can possible do.

World’s central bank? The word ‘global’ pops up 11 times in Fed Chair Yellen’s speech… US monetary base expansion & S&P500…quite a tight correlation..

World's central bank? The word 'global' pops up 11 times in #Fed Chair Yellen's speech. http://www.federalreserve.gov/newsevents/speech/yellen20160329a.htm …

12:26 AM - 30 Mar 2016

Ronnie Stoeferle,CMT ‎@RonStoeferle

US monetary base expansion & S&P500...quite a tight correlation.. @SoberLook, h/t Jake

4:40 PM - 29 Mar 2016

It’s time for people to stop looking to central banks to solve all the world’s problems, Mervyn King thinks
http://blogs.wsj.com/moneybeat/2016/03/25/fixing-the-global-economy-an-interview-with-mervyn-king-podcast/

Fed Credibility Dwindles, Pension Funding Crisis Looms

By Clint Stiegner
Fed officials jawbone the markets and spread disinformation. They figure it’s part of their job as central planners. It’s not enough to pull the levers and twist the knobs on interest rates, the money supply, and asset prices. They also use propaganda to manage investor psychology. It’s all smoke and mirrors.
Frustrated metals investors wonder just how long officials will maintain their hold over markets when so much of what they say turns out to be garbage and so much of what they do ends in failure.
The answer is perhaps not much longer. There are real cracks emerging in the credibility of Fed banksters. It has taken years, but investors and pundits are finally questioning whether the Fed knows what it’s doing. They have progressed from the blind worship of Alan Greenspan, who engineered first the Dot.com bubble and then the housing bubble that made people feel so wealthy, to wondering if they can believe a word Janet Yellen says.
Following the most recent FOMC meeting, CNBC’s Steve Liesman, heretofore one of the Fed’s biggest apologists, asked Janet Yellen this difficult question; “Does the Fed have a credibility problem in the sense that it says it will do one thing under certain conditions, but doesn’t end up doing it?”
Yellen responded with typical “Fedspeak” and did nothing to shore up confidence:

Well, let me start — let me start with the question of the Fed’s credibility. And you used the word “promises” in connection with that. And as I tried to emphasize in my opening statement, the paths that the participants project for the Federal Funds rate and how it will evolve are not a pre-set plan or commitment or promise of the committee.
Indeed, they are not even — the median should not be interpreted as a committee-endorsed forecast. And there’s a lot of uncertainty around each participant’s projection. And they will evolve. Those assessments of appropriate policy are completely contingent on each participant’s forecasts of the economy and how economic events will unfold. And they are, of course, uncertain. And you should fully expect that forecasts for the appropriate path of policy on the part of all participants will evolve over time as shocks, positive or negative, hit the economy that alter those forecasts. So, you have seen a shift this time in most participants’ assessments of the appropriate path for policy. And as I tried to indicate, I think that largely reflects a somewhat slower projected path for global growth — for growth in the global economy outside the United States, and for some tightening in credit conditions in the form of an increase in spreads. And those changes in financial conditions and in the path of the global economy have induced changes in the assessment of individual participants in what path is appropriate to achieve our objectives.

Translation: Yellen and the rest of the FOMC find the economy totally unpredictable and no one should rely on what they say.
Evidence shows that investors are losing faith as they realize just how artificial and micro-managed the markets are. Steve St. Angelo from SRSRoccoReport.com reports on the collapse of trading volume in Dow Jones stocks, even as stock prices move higher. Fewer and fewer retail investors care to play, while a handful of major investors – almost certainly including the Fed and its primary dealer banks – busily “paint the tape” with a picture of growth.

Confidence may erode slowly, but at some point markets can collapse suddenly. Fed officials and their misguided policy is vulnerable now to some trigger event that destroys whatever faith people still have.
The chickens are coming home to roost. For example, last week the city of Chicago lost the battle to curb public employee pensions. The Illinois Supreme Court upheld the state’s constitution which protects public pensions from being “diminished or impaired.” Now Chicago will struggle to avoid bankruptcy as it must find billions of dollars to shore up its massively underfunded pension obligations.
Much of the blame for the debacle in Chicago and for huge pension shortfalls across the country should be laid at the feet of the Fed and its Zero Interest Rate Policy. These retirement funds planned for much higher interest yields than the Fed has permitted in the last several years.
Now pensions are woefully short of what is needed to meet their obligations and some very hard choices must soon be made. Elected officials will need to decide whether to impose major tax hikes to cover the generous benefits that were promised, make big cuts (where allowed), or default.
Retirees have long been frustrated that banks pay nothing in interest on savings, and yet they are getting crushed by a rising cost of living. (This problem has been discussed frequently by our friend Larry Parks of the Foundation for the Advancement of Monetary Education).
So far, the above concerns have not held much sway at Fed policy meetings. Perhaps the burgeoning pension crisis will be the final straw.
Top Image Source
Clint Siegner is a Director at Money Metals Exchange, the national precious metals company named 2015 “Dealer of the Year” in the United States by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals‘ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

UK plans to track all internet connections could cost £1bn, campaigners warn

Home Office is told its plans in the snooper’s charter to retain web browsing history of all British citizens for 12 months would cost in excess of £1bn

Person pressing delete button on laptop — The £1bn price tag far exceeds the official Home Office estimate of £174m over 10 years. Photograph: Dominic Lipinski/PA

States’ New Push: Food Stamp Recipients Must Work or Volunteer

(WASHINGTON) More and more states are moving to require able-bodied adults to work in exchange for food stamps.
During the last recession, President Obama allowed states to suspend a requirement that able-bodied adults without children work at least 20 hours per week or participate in a training program to receive benefits for more than three months.
Despite a large decrease in the unemployment rate since then, more than 40 states still do not require welfare recipients to work.
That seems to be changing, however, as a new policy went into effect in Mississippi today, requiring residents to work or volunteer 20 hours a week to qualify for food stamps.
Other states are considering similar legislation.
Judge Alex Ferrer explained on “Fox and Friends” that this is an effective way of preventing people from gaming the system and simply avoiding work on the government’s dime.
He explained that it removes the excuse of not being able to find a job, because food stamp recipients can also volunteer and provide community service.

Make $250K/year? Palo Alto wants to help pay your rent

In an incredible move, Palo Alto is considering subsidizing housing for the almost 1%-ers – those making between $150,000 and $250,000 a year. This is how much influence the tech industry has on the city, and this is how out of whack their economy has become as a result. The Resident discusses. Follow The Resident at http://www.twitter.com/TheResident

Revealed: DEA's $86 million plane bought to fly missions in Afghanistan is still grounded seven years later... and the agency has since ceased aviation operations there

The plane was bought to fly surveillance and counter-narcotics missions
High-tech spy plane was supposed to be completed in December 2012
Project was plagued by missteps and cost four times initial estimated cost
Unlikely to ever fly in Afghanistan as DEA has ceased aviation ops there
It is now estimated to be completed in June and DEA intends to fly the plane in the Caribbean, Central America and South America

By Associated Press

A specialized plane bought by the Drug Enforcement Administration to fly missions in Afghanistan - costing taxpayers $86 million - has remained grounded for seven years, a report revealed.

The drug agency bought the plane seven years ago to fly surveillance and counter-narcotics missions is still grounded in Delaware and will likely will never fly in Asia, according to a scathing audit released on Wednesday.

The review by the Justice Department's inspector general, which was spurred by a July 2014 whistleblower's report, found that the Global Discovery program to modify the ATR 42-500 aircraft to provide the DEA with advanced surveillance capabilities was supposed to be completed in December 2012.

But the project, part of an agreement with the Defense Department, has been plagued by missteps costing the agencies four times the initial estimated cost.

A specialized plane at the DEA to fly missions in Afghanistan that has cost taxpayers $86 million has remained grounded for seven years. Above, a photo taken in April 2015 shows the DEA's ATR 42-500 at the Defense Department's subcontractor's facility

The report said it was unlikely the plane will ever fly in Afghanistan because the DEA has since ceased aviation operations there.

'Our findings raise serious questions as to whether the DEA was able to meet the operational needs for which its presence was requested in Afghanistan,' the review said.

In a statement, the DEA said that it agreed it 'can and should provide better oversight of its operational funding' and was reviewing its policies and procedures.

The drug agency spent $8.5 million on parts for the plane - including $5 million in spare engines - 'the majority of which cannot be used utilized on any other aircraft in its fleet.'

The Defense Department built a $2 million hangar in Afghanistan for the plane that was never used and likely never will be, the report said.

The audit also found that the DEA didn't fully comply with federal procedures when it purchased the aircraft, spending nearly $3 million more than it had previously estimated for the $8.6 million aircraft.

The DEA also charged about $2.5 million in improper expenditures billed under the agreement with the Defense Department, including for costs associated with aircrafts and personnel who were entirely unrelated to the agency's Afghanistan operations.

That included $8,122 in unallowable travel related to missions in Haiti, the Bahamas, Peru and Florida.

The review also found the DEA's Aviation Division lacked adequate policies and procedures for receiving, reviewing and paying contractors with no requirement that any documentation be approved before personnel were paid.

When modifications were improperly done on the plane, the Defense Department poured more money into the effort.

The plane, which has missed every scheduled delivery date, is now estimated to be completed in June - nearly one year after the DEA pulled out of Afghanistan.

The report said the DEA intends to fly the plane in the Caribbean, Central America and South America.

The report made 13 recommendations to improve oversight of its aviation operations agreements and the problematic program.

The drug agency has already acted on two recommendations, according to the inspector general's office.

That includes ensuring foreign offices are now required to provide supporting documentation to be paid for work. The agency said it's also now established an electronic method for pilots to submit mission reports to make sure program data is accurate.

In its formal reply to the audit, the DEA said that based on previous positive experiences using Defense Department contractors to modify its aircraft it 'had no indication that the Global Discovery modification would encounter the significant delays and problems that ultimately occurred.'

Attention President Obama: One Third Of U.S. Households Can No Longer Afford Food, Rent And Transportation

While the Fed has long been focusing on the revenue part of the household income statement (which unfortunately has not been rising nearly fast enough to stimulate benign inflation in the form of nominal wages rising at the Fed's preferred clip of 3.5% or higher), one largely ignored aspect of said balance sheet has been the expense side: after all, for any money to be left over and saved, income has to surpass expenses. However, according to a striking new Pew study while household spending has returned to pre-recession levels (the average household spent $36,800 in 2014) incomes have not.
Specifically, while the median income had fallen by 13% from 2004 levels over the next decade, expenditures had increased by nearly 14%. But nobody was more impacted than the one-third of households which the study defines as "low-income." Pew finds that while all households had less slack in their budgets in 2014 than in 2004, lower-income households went into the red by over $2,300.
In other words, approximately one third of American households were no longer able to cover the core necessities - food, housing and transportation - with average income.
According to Pew, households spent more in 2014 than they did in 1996, after adjusting for inflation; this holds whether the figures are based on averages (means) or medians. The typical household saw its expenditures grow by more than 25 percent, from $29,400 in 1996 to $36,800 in 2014. Mean expenditures grew 27 percent since 1996, rising from $43,200 to $54,800.

The problem is that incomes have not kept up: from 2004 to 2008, median household income grew by only 1.5 percent, while median expenditures increased by about 11 percent. During that period, the expenditure-to-income ratio (the percentage of a household’s budget used for spending) jumped by 9 percent. As the recovery began, median household expenditures returned to pre-crisis levels, but median household income continued to contract. By 2014, median income had fallen by 13 percent from 2004 levels, while expenditures had increased by nearly 14 percent. This change in the expenditure-to-income ratio in the years following the financial crisis is a clear indication of why and how households feel financially strained.

Worse, as the chart below shows, in 2004, typical households at the bottom had $1,500 of income left over after expenses. By 2014, this figure had decreased by $3,800, putting them $2,300 in the red. As Pew notes, "the lack of financial flexibility threatens low-income households’ financial security in the short term and their economic mobility in the long term", and as we would add, this makes them effective wards of the state to be manipulated by demagogue politicians with promises of free handouts.
But perhaps worst of all is that typical U.S. households in the center of the income distribution range, aka America's true middle class, have seen their income after meeting all expenses (aka leftover savings) plunge from $17,000 in real terms a decade ago to a paltry $6,000 as of 2014, a plunge of 65%!

What was the reason for this big drop in residual income and jump in expenses? According to Erin Currier, project director at Pew Charitable Trusts, "over time, [lower-income groups] consistently spend more on transportation and considerably more on housing."
However, the biggest culprit by far, are soaring rental costs: "Lower income renters are spending nearly half their income on rent, while upper-income groups spend about 15% on rent. The disparity really shows that lower income families don’t have much slack in their budgets for mobility-enhancing investments like savings and wealth building."

What is particularly notable is the substantial jump in median expenditures in just 2014. This was mostly due to an odd spike in rents:
For a typical family of four (two earners and two children), while median household income increased by about $10,000 between 1996 and 2014, annual expenditures also increased by about the same amount, driven largely by higher spending for core needs: housing, food, and transportation. Although the absolute change in income and expenditures was similar, this family had less slack in its budget in 2014 than in 1996, as its expenditure-to-income ratio grew from 71 percent to 75 percent.

The reason for record high asking rents has been extensively covered here before; here is Pew's take:

Since the start of the housing crisis in 2007, homeownership rates have declined among households in the middle- and upper-income tiers. These decreases have affected the rental market, as former owners became renters, leading to rental vacancy rates at historical lows below 7 percent. The diminished supply of rental properties increased the cost of rental housing dramatically; in 2014, renters at each rung of the income ladder spent a higher share of their income on housing than they had in any year since 2004. Although both renters and homeowners spent more for housing in 2014, notable differences in the proportion of household resources going to shelter were evident across income groups, with lower-income renter households spending close to half of their pretax income on rent.

This, together with our previous report that increasingly more US households are unable to afford to purchase a home, should put to rest any speculation whether those who point out the chronic deterioration of the economy for everyone, not just the 1% who truly are doing better than ever, are "peddling fiction."
Pew's conclusion confirms just that.

The amount of slack that families had in their budgets declined for all income groups between 2004 and 2014. This means households had less income to devote to wealth-building investments, such as short- and long-term savings, education, and life insurance. In 2004, the typical household in the lower third had a little less than $1,500 left over after accounting for annual outlays. Just 10 years later, this amount had fallen to negative $2,300, a $3,800 decline. These households may have had to use savings, get help from family and friends, or use credit to meet regular annual household expenditures. The typical household in the middle third saw its slack drop from $17,000 in 2004 to $6,000 in 2014. Of note, because income is measured before taxes, some families will have had even less slack in their budgets than this figure implies.

One final note: in the paragraph above replace "slack" with "savings" for an accurate description of what is going on.
Source: Pew Trusts

Are Buybacks The Only Thing Holding Up Markets Anymore?

by: otterwood

According to Bank of America Merrill Lynch 93% of US net buying year to date can be attributed to corporate buybacks. Corporate buybacks have accounted for $12.5 billion of the $13.4 billion of the net buying activity this year.

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The Economy Is Exponentially Riskier Than 2008, The Crash Will Be Something We Never Seen Before

War on Cash, Negative Interest Rates…Bitcoin Can Protect You – Trace Mayer Interview

TOPICS IN THIS INTERVIEW:
02:50 Current Bitcoin Market Prices
03:50 Businesses Soon to Pay Out in Bitcoins
05:00 Bitcoin Price Floors
08:40 Now Compared to $1,000 Price in Late 2013, More Transaction Demand
12:20 Limitations of Current Fiat System
13:50 Blocksize Debate Coming to an Agreement?
18:10 Miners Agreement to Increase Transaction Capacity of Blockchain
19:30 Block Reward Halving to Increase Price
23:10 Is Bitcoin Price Manipulation Possible?
28:00 Are Central Banks Desperate to Maintain Status Quo?
32:00 Banning Cash & Negative Interest Rates in Future
33:30 Trace’s Advice for the Future, War on Cash, Price Controls

The Next Stage of “Moral Hazard?” First Ocean Freight Rates Collapse to “Zero,” China Freight Index Plunges to Record Low, Bailouts Loom

Wolf Richter wolfstreet.com, www.amazon.com/author/wolfrichter

The amount it costs to ship containers from China to ports around the world has plunged to historic lows. As container carriers are sinking deeper into trouble, whipped by lackluster global demand and rampant oversupply of container ships, they’re escalating a brutal price war with absurd consequences.

Maritime research and advisory firm Drewry (emphasis mine):

Recent news stories, backed up by anecdotal stories told to Drewry, report that carriers have quoted zero dollar freight rates to some forwarders on certain lanes out of Asia. Whether these are merely isolated cases or something more widespread is difficult to judge at the present time, but whatever the exact quantum, there is no denying the container rates are now close to the historic lows as seen in 2009.

The World Container Index, an average of spot freight rates on 11 global East-West routes connecting Asia, Europe, and the US, plunged last week to a record low of $666 per 40-foot equivalent unit container (FEU), down 73% from mid-2012!
The China Containerized Freight Index (CCFI) tells a similar story. It tracks contractual and spot-market rates for shipping containers from major ports in China to 14 regions around the world. On Friday, the index dropped 1.6% to 659.19, its lowest level ever!
It has plunged 39% from February last year and 34% since its inception in 1998 when it was set at 1,000:
China-Containerized-Freight-Index-2016-03-25

China-Containerized-Freight-Index-2016-03-25

Shippers and their customers are rejoicing for the moment. But the collapse in shipping rates – to “zero” in some cases, as Drewry reported – is taking its toll on the industry.
The risk of carrier bankruptcies – with the awkward side effect of stranded cargo – increases, according to Drewry, “the longer rates remain non-remunerative, while carriers will likely intensify practices such as void sailings in order to minimize the chance of that eventuality.”
In 2009, when shipping nearly came to a halt, carriers relied on other people’s money to keep going:

[C]arriers have a history of shaking off the threat of bankruptcy. In 2009 when the situation was even more precarious than it is now, carriers found ways to survive, calling upon shareholders, governments, and new investors for financial support. Terms with banks, shipyards, and charter owners were renegotiated to limit the immediate cash drain and many needed to sell off assets such as ships, terminals, and some non-core units to repair their balance sheets.

But that was the Financial Crisis. It was followed by a V-shaped recovery of shipping volume and freight rates that soon hit new highs. This time, there is no official Financial Crisis. The Fed isn’t engineering any bailouts. The world economy hasn’t come to a standstill, and there won’t be a V-shaped recovery. This will be a long, drawn-out process.
But the first national bailouts are already underway:

While the industry at large has not (yet) reach the same precipice [as in 2009], individual carriers are careering to that point much quicker than others. The most obvious case is South Korean line Hyundai Merchant Marine (HMM).
On 17 March bondholders rejected HMM’s debt rescheduling proposal and as of yet there has been no agreement from shipowners to reduce their charter rates in return for equity. The next day HMM Chairwoman Hyun Jeong-Eun resigned her position and a takeover invitation to Hyundai Motors, run by Chung Mong-Koo, who had previously fought for control of HMM, has been rejected, which suggests that government support might be its only hope.

The Korean government is already setting up a $1.2-billion fund to bail out carriers HMM and Hanjin (one of the ten largest by capacity in the world). State-owned Korea Development Bank will also chip in: it agreed, effective March 29, to give HMM a three-month extension of the principal and interest on its debt.
“The most important thing is each company’s possibility of revival,” Oceans and Fisheries Minister Kim Young-suk explained in an interview with The Korean Economic Daily on March 20.
But both would preferably survive as independent companies, he said. “If the companies get merged, file for court receivership, or are sold to a third party, they will be completely dropped out from their global alliances… it would be a huge loss for the Korean shipping industry if we lose one of them that has maintained its hard-won membership.”
So they will be bailed out. Korean taxpayers and some creditors get to eat the losses. Because in the end, there is no “free” ocean freight. And governments around the world are getting ready to shanghai their taxpayers into bailing out their carriers.
Carriers have idled about 1 million TEU (20-foot equivalent unit containers). But they have also put new ships into service, including the new mega-ships with around 19,000 TEU capacity each. And overall industry capacity continues to rise.
But taking a ship out of service for longer periods and then returning it to service is costly, according to Drewry: “In one example, the total bill for a 10,000 TEU ship in six-month cold lay-up (including shutting down most of the ship’s operating systems, repatriating most of the crew and dry-docking) came to just under $1 million.”
A big bet that higher freight rates down the road will make up for these costs. But given the current status of the industry and the global economy, those bets look risky. So far, all of them have backfired. Which leaves Drewry to conclude:

Offering zero freight rates implies a lack of self-regard for their services and an arrogance that they will be bailed out if the worst was to happen.

And this would be the next stage of “moral hazard” that was created with such fanfare, beginning in the US and then around the world, via the bailouts during the Financial Crisis.
But this wasn’t part of the rosy scenario. Read… World Trade Collapses in Dollars, Languishes in Volume

Video: World Economic Situation: Serious Difficulties Call For Bold Measures

Dr. Yilmaz Akyuz, Chief Economist of the intergovernmental organization South Centre, says that the 2008 financial crisis may be moving in a third wave that …

Via Youtube

How Many Tech Startups Are Empty Shells?

How many startups are empty shells filled with glitzy PR designed to appeal to VC newbies?
It's widely accepted that most tech startups will fail. Perhaps the core business proposition didn't pan out, or the execution was flawed, or the initial success foundered on poor management, or another startup scaled up fast enough to suck up all the oxygen in the room--there are many reasons a startup with a fair chance at success can fail.
But what if many if not most of the current batch of startups have zero chance of succeeding because they're nothing but empty shells of gaseous public relations? Coder Daniel C. recently shared his experiences interviewing at numerous tech firms, both established firms and startups.
Here are Daniel's observations:
When I first got into the high-tech field, I thought it was the only place that was safe, in other words, I really thought everyone was innovative and cutting edge. But now I am seeing something you probably have already seen being in the S.F. Bay Area, which is that a lot of companies in the high-tech sector are clueless and full of it.
I have recently been on several job interviews with high tech startups and they are the wierdest interviews. They give me a bunch of blather about their company, but they don't ask me any substantial questions about my technical expertise. Then they tell me within 24 hours that I just don't have enough experience as they would like.
Many of these companies reach out to me like I am their buddy, no formal introduction, "hey, dude, can we talk?" Some of them like to use the F word in their outreach, which totally turns me off. I think they have innovative confused with lack of professionalism.
Of the ten-plus job interviews I have been to in the high-tech field, only two actually gave me a coding challenge to prove my skills. I actually have a lot of esteem for those two companies (one of them is in London) because at least they assessed my hard skills via practical application. The rest I have no clue how they are coming to their conclusions based on a unfocused ten-minute talk about nothing.
In fact, I am noticing most of these companies are not even reviewing my portfolio, which is leading me to develop questions for them such as "Which one of my apps did you enjoy most?"
Anyway, I shared this with you because if you have any knowledge of anything similar, I would love to see an article on it. I have a hunch a lot of these companies lack direction and are probably not really drumming up a lot of business. A lot of good public relations, but not necessarily a steady stream of clients.
Thank you, Daniel, for sharing your experiences and for raising a number of key points.
The key metric for startups now is not revenues or paying clients--it's their valuations--as in Unicorn valuations of $1 billion or more.
The number of 'unicorns' in tech is booming (Business Insider, Oct. 2015)

But valuations that aren't based on revenues, paying clients and profits are notoriously prone to collapse. It is far easier to convince a venture-capital wannabe with millions of investor dollars to fund a PR-heavy startup than it is to actually build a business with paying clients, rising revenues and profits.
No wonder we're seeing accounts like this:
Top Silicon Valley VC Laments: Startups Being Funded Are "Mostly Crap & Largely Worthless"
Bubbles always seem permanent to those living within them. How many startups are empty shells filled with glitzy PR designed to appeal to VC newbies anxious to find the next Facebook? Perhaps far more than the financial media cares to admit.

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Boeing Quietly Prepares To Cut 8000 Jobs

(Dominick Gates) Since Boeing Commercial Airplanes CEO Ray Conner announced a drive to cut the workforce six weeks ago, his team has taken steps expected to eliminate 4,000 jobs by June — and that may be only halfway towards the total cuts this year.
An internal Boeing document obtained by the Seattle Times reveals that at least one company unit is targeting a 10 percent workforce reduction overall.
And people with knowledge of what’s planned say that’s roughly the percentage of jobs expected to be cut statewide. That would translate to as many as 8,000 jobs being eliminated.
Asked about the plans, Boeing said Tuesday the initial jobs eliminated include “hundreds of executives and managers” and that the 4,000 figure will be achieved through normal attrition and a voluntary buyout package for about 1,600 employees.
The workforce reduction is part of a major cost-saving push that also involves squeezing supplier costs, increasing productivity, shrinking inventory and cutting travel, overtime, services and contractor expenses — an effort that Boeing said “involves taking out billions of dollars in cost by the end of 2016.”
If enough savings cannot be found elsewhere and more job cuts are required, layoffs would come later in the year, Boeing said.
Boeing Commercial Airplanes (BCA) vice president of communications Sean McCormacksaid Tuesday that “our targets are dollar-based.”
“The more we reduce non-labor costs, the less impact there will be to jobs,” he said.
One Boeing unit in the Puget Sound area — the Test & Evaluation division that conducts flight, ground and lab tests — recently outlined very precise job-cut targets in an internal guidance document telling managers what to expect.
The workforce reduction is part of a major cost-saving push that also involves squeezing supplier costs, increasing productivity, shrinking inventory and cutting travel, overtime, services and contractor expenses — an effort that Boeing said “involves taking out billions of dollars in cost by the end of 2016.”
If enough savings cannot be found elsewhere and more job cuts are required, layoffs would come later in the year, Boeing said.
Boeing Commercial Airplanes (BCA) vice president of communications Sean McCormacksaid Tuesday that “our targets are dollar-based.”
“The more we reduce non-labor costs, the less impact there will be to jobs,” he said.
One Boeing unit in the Puget Sound area — the Test & Evaluation division that conducts flight, ground and lab tests — recently outlined very precise job-cut targets in an internal guidance document telling managers what to expect.
It begins: “We anticipate the need to reduce staffing levels about 10 percent before the end of the year.”
BCA chief executive Ray Conner first announced that job cuts were coming last month in an internal webcast to all Commercial Airplanes employees, a precise account of which has not previously been made public.
According to a Boeing transcript of that webcast, Conner said the company needed to drastically reduce costs — and thus airplane pricing — because of fierce sales competition from Airbus.
“Their biggest weapon that they’re using in the competitions today is price,” Conner told employees. “They are attacking us with price in every single campaign. And as a result of that, you know, we’re being pushed to the wall.”
Danger for Boeing
Adam Pilarksi, senior vice president with Chantilly, Va.-based aviation consultancy Avitas, said saving billions of dollars through cutting supplier costs and increasing productivity can only be a long-term goal.
“In a few years, yes, things can change. By the end of the year, are you kidding me?” he said. “The only way you quickly can reduce costs is by laying people off. There’s no magic about it.”
But Pilarski said there is a danger for Boeing in cutting too many jobs, especially as it plans to match Airbus by revving up 737 production to 57 jets per month and 787 Dreamliner production to 14 jets per month.
“I cannot see how you cut employment 10 percent and keep production levels increasing,” Pilarski said. “The two don’t go together. Something has to give.”
Many older, highly experienced blue-collar workers will be leaving the company as part of the cuts.
A person familiar with the figures said more than 1,000 Machinists applied for the buyout when it was offered this month, though Boeing may reject some of those because they have skills that cannot be let go.
The severance package, designed to appeal to those already intending to retire soon, advances full pension eligibility and also offers a week of pay for every year of service up to a maximum of 26 weeks.
Jon Holden, District 751 president of the International Association of Machinists (IAM) union, expressed surprise when informed of the potential scale of the job cuts.
“We have not been notified of these types of reduction numbers,” Holden said.

San Francisco renter pays $400 a month to live in box built inside a living room

(SAN FRANCISCO) Amid the Bay Area’s red-hot real estate market, a newcomer to San Francisco is living in a small wooden box at his friend’s home.
Illustrator Peter Berkowitz recently moved into the box, which he described as a “pod.” The box is tucked away in a corner of the living room at his friend’s apartment, located a few blocks from the ocean.
On his blog, Berkowitz said the pod is the “coziest bedroom” he has ever had. Along with a bed, the box has a fold down desk, a cushioned backboard and LED lights for reading.
Berkowitz posted a video tour of his living space on YouTube.
The pod, which measures 8 feet long, 3.5 feet wide and 4 feet tall, cost $1,300 to build.
Berkowitz also has access to the rest of his friend’s apartment.

“I built it largely myself, with the help of some friends who kind of knew what they were doing,” Berkowitz said in an interview on Live 105’s “Kevin Klein Live” Tuesday morning.
Berkowitz told Klein that living in the pod is not without its challenges. “Putting on pants requires a bit of yoga,” he said, “but no potential injuries,” he said.
When asked what he would do if he were to build a pod again, Berkowitz said he would make it taller.
Berkowitz said he is paying $400 a month in rent, far lower than the $3,000 average rent for a one-bedroom San Francisco apartment.
“Yes, living in a pod is silly. But the silliness is endemic to San Francisco’s absurdly high housing prices – the pod is just a solution

that works for me,” Berkowitz said on his blog.
High real estate prices and rents have led to some creative ways to lower living costs. Last year, an employee

at Google lived rent-free in a truck parked at the company’s headquarters in Mountain View. The employee slept in the truck, while he ate at the company cafeteria and showered at the company gym.

It’s Spreading – The Final Wave Of Quantitative Easing

Total trojan horse in disguise! With a majority of the world impoverished by the elite, this will be incredibly well received.

Remember, this prediction came from Chris Martenson in November 2015 and I started to see it manifest in December of 2015. It’s now spreading further and faster than I had originally thought.
Watch my original video here – https://www.youtube.com/watch?v=CXlaa…