Europe's Shadow Economy: As Big As Germany

On an unweighted average basis, European shadow economies are 22.1% of total economic activity or around $3.55 trillion (as large as Germany's whole economy). A report by Tax Research, suggests that Austria and Luxemburg have the smallest shadow economies in the euro area at 9.7% of GDP, while Bulgaria at 35.3% and Romania at 32.6% top the list. Of the major economies, Germany clocks in at 16%, France at 15%, Italy at 27% and Spain 22.5%. Stunningly, in terms of tax revenues lost, the shadow economy translates into an estimated €864bn or just over 7% of euro area GDP and, in context, accounts for 105.8% of the enture healthcare spending of the EU. It appears that more and more Europeans have no choice but to shift to a shadow economy (as taxes rise among other things), and this is the biggest threat to the entire economy. This is likely one reason the 'austerity' actions have not been successful since far less taxes are being paid via the conventional channels.

The average shadow economy is 22.1% of the nation's economy...


Which equates to some dramatic absolute numbers...

and the corresponding losses of taxes are huge...


16 EU member states have a situation where the tax lost as a consequence of the existence of the shadow economy as a proportion of the annual deficit exceeds 100% - suggesting that tackling tax evasion could, in theory, entirely clear the annual deficit. Though of course, the politicians will not see the unintended consequence of that 'evasion' tackling that merely drives the economy more underground.

29 Shocking Facts That Prove That College Education In America Is A Giant Money Making Scam

Michael Snyder
Activist Post

College education in the United States has become a cruel joke.  We endlessly push our high school kids to invest tens of thousands of dollars and at least four years of their lives to get a college education because they won’t have any sort of a “future” without it.  So they sign up for decades of debt slavery and spend years listening to pompous windbags fill their heads with utter nonsense.  The sad truth is that most college courses are a total joke and they do very little to actually prepare those students for the real world.

I know – I attended public universities in the United States for eight years.  Most college courses are so easy that the family dog could pass them.  When they finally graduate, our young people discover that they were lied to all along.  The promised “good jobs” are not there for most of them, but the huge debts that they committed themselves to will follow them around permanently.  When you are just starting out and you are not making a lot of money, having to make payments on tens of thousands of dollars of student loan debt can be absolutely crippling.  This is why I say that college education in America is a giant money making scam.

Our young people are seduced by the idea of college being a five year party that will provide an automatic ticket into the middle class, but the reality is that the only guarantee is that it is a ticket to serfdom unless you have wealthy parents that are willing to foot the bill for you.  And bankruptcy laws have been changed to make it incredibly difficult to get rid of student loan debt, so once you have signed up for student loan debt slavery you are basically faced with two choices: either you are going to pay it or you are going to die with it.

Yes, college graduates do make more money and they do have a lower unemployment rate.  But most of them are also burdened by absolutely suffocating levels of student loan debt that will haunt them for decades.

So who is really better off?

If you can get someone to pay for your college education that is great.  Because otherwise you are probably getting a rotten deal.  The following are 29 shocking facts that prove that college education in America is a giant money making scam…

#1 In 1993, the average student loan debt burden at graduation was $9,320.  Today it is $28,720.

#2 In 1989, only 9 percent of all U.S. households were paying off student loan debt.  Today, 19 percent of all U.S. households are.

#3 Young households are being hit particularly hard by student loan debt.  In America today, 40 percent of all households that are led by someone under the age of 35 are paying off student loan debt.  Back in 1989, that figure was below 20 percent.

#4 According to the Consumer Finance Protection Bureau, Americans owe more than a trillion dollars on their student loans.

#5 According to the Federal Reserve, the total amount of student loan debt has increased by a whopping 275 percent since 2003.

#6 Approximately 65 percent of all student loan debt is owed by those under the age of 40.

#7 The delinquency rate on student loans is currently 14 percent and it is steadily rising.

#8 The delinquency rate on student loans for students that attended a “for profit” college is an astounding 23 percent.

#9 Today, 34.9 percent of all student loan borrowers under the age of 30 are at least 90 days behind on their student loan payments.

#10 Since 1986, the cost of college tuition has risen by 498 percent.

#11 The cost of college textbooks has tripled over the past decade.

#12 The average cost of a four-year college education is projected to soar to $120,000 by the year 2015.

#13 Back in 1952, a full year of tuition at Harvard was only $600.  Today, it is over $35,000.

#14 According to the Federal Reserve Bank of New York, approximately 167,000 Americans currently have more than $200,000 of student loan debt.

#15 At most U.S. colleges and universities, the quality of the education that you will receive is very poor.  Just check out some numbers about the quality of college education in the United States from an article that appeared in USA Today….

- After two years in college, 45% of students showed no significant gains in learning; after four years, 36% showed little change.
- Students also spent 50% less time studying compared with students a few decades ago.
- 35% of students report spending five or fewer hours per week studying alone.
- 50% said they never took a class in a typical semester where they wrote more than 20 pages
- 32% never took a course in a typical semester where they read more than 40 pages per week.

#16 One survey found that U.S. college students spend 24% of their time sleeping, 51% of their time socializing and 7% of their time studying.

#17 Federal statistics reveal that only 36 percent of the full-time students who began college in 2001 received a bachelor’s degree within four years.

#18 27 percent of those with student loan debt said that they moved back in with their parents after college.

#19 14 percent of those with student loan debt said that they delayed marriage because of their student loans.

#20 Real earnings for young college graduates have fallen by 15 percent since the year 2000.

#21 If you think that you will be able to “beat the odds” and land the job of your dreams once you graduate from college, perhaps you should consider these numbers….

-In the United States today, approximately 365,000 cashiers have college degrees.
-In the United States today, 317,000 waiters and waitresses have college degrees.
-In the United States today, there are more than 100,000 janitors that have college degrees.

#22 The federal government has begun docking the Social Security payments of elderly Americans that are behind on their student loan payments…

According to government data, compiled by the Treasury Department at the request of SmartMoney.com, the federal government is withholding money from a rapidly growing number of Social Security recipients who have fallen behind on federal student loans. From January through August 6, the government reduced the size of roughly 115,000 retirees’ Social Security checks on those grounds. That’s nearly double the pace of the department’s enforcement in 2011; it’s up from around 60,000 cases in all of 2007 and just 6 cases in 2000.

#23 According to a survey of 4,900 recent college graduates, more than half of them regretted choosing their major or their school.

#24 One poll found that 70% of all college graduates wish that they had spent more time preparing for the “real world” while they were still in school.

#25 48 percent of all recent college graduates have not been able to find a job in their chosen field.

#26 During 2011, 53 percent of all Americans with a bachelor’s degree under the age of 25 were either unemployed or underemployed.

#27 According to the ABA, only 56 percent of all law school graduates in 2012 were able to find a full-time job that requires a law degree.

#28 The median student loan burden for medical school students that graduated in 2012 was $170,000.

#29 Close to half of all recent college graduates are working in jobs that do not even require a college degree.

When you are overwhelmed by nightmarish student loan debt that you can never get away from, it can literally take over your life.  A recent Businessweek article shared some real life examples of this…

If student loans are good debt, how do you account for the reaction of Christina Mills, 30, of Minneapolis, when she found out her payment on college and law school loans would be $1,400 a month? “I just went into the car and started sobbing,” says Mills, who works for a nonprofit. “It was more than my paycheck at the time.” Medical student Thomas Smith, 25, of Hamilton, N.J., is $310,000 in debt and is struggling to make ends meet even before beginning to repay his loans. “I don’t even know what I eat,” he says. “I just go to the supermarket and buy the cheapest thing I can and buy as much of it as I can.” Then there’s Michael DiPietro, 25, of Brooklyn, who accumulated about $100,000 in debt while getting a bachelor’s degree in fashion, sculpture, and performance, and spent the next two years waiting tables. He has since landed a fundraising job in the arts but still has no idea how he will pay back all that money. “I’ve come to the conclusion that it’s an obsolete idea that a college education is like your golden ticket,” DiPietro says.

What about you?

Do you have student loan debt or do you know someone who does?

If you would like to share a student loan debt story, please post it below…

There Are No More Corporate Criminals

Image via Shutterstock

By Thomas Hedges
This report first appeared on Policy Shop.

Panelists at the annual Corporate Crime Reporter Conference in Washington, D.C. Friday said they were concerned that the Justice Department is abandoning full criminal prosecutions of financial industries in favor of Deferred and Non Prosecution Agreements (DPAs and NPAs), which usually involve a fine and a set of conditions that must be followed. The company in exchange does not get prosecuted for criminal activity.

DPAs and NPAs exploded in the 2000s and have redefined the legal system in which financial corporations operate. Twenty years ago, the Justice Department had two choices, which it calls ‘up or down decisions’: it could prosecute a company or not. 

Now, agreements fill the space in between these two options and allow the Justice Department more flexibility in how it grapples with illegal activity in the financial sector.

Denis McInerney, a deputy assistant general for the Criminal Division and panelist at last week’s conference, is a defender of these agreements. The ‘up or down decisions,’ he says, do not involve compromise and reduce the Justice Department’s actions to two extremes. 

“You either indict or ignore companies,” he says. “There’s no middle ground.” DPAs and NPAs, he says, allows the Department to monitor and influence a company’s future actions. 

But these agreements, says David Uhlmann, another panelist and former chief of the Justice Department’s Environmental Crimes Section who is now a law professor at the University of Michigan, are now weak and act like a membership fee companies can pay to continue fraudulent behavior.

“If the Justice Department believes that a criminal prosecution is warranted,” he says, “it should bring charges. I’m not suggesting that there is no punishment [with DPAs and NPAs]. What I’m saying is that there is less deterrence, less punishment.”

Uhlmann points out that these settlements are unique to the Criminal Division. The divisions of Environment and Natural Resources, Tax and Antitrust, for example, issued fewer than 20 DPAs and NPAs between 1992 and 2013, according to figures that were compiled at the University of Virginia School of Law. The Criminal Division, on the other hand, entered into about 100. 

Many, Uhlmann says, are unwarranted. The USBC scandal from December of 2012 is the most recent illustration of how serious offenses, which were repeated many times over a period of five years in this case, are largely ignored. Media extolled the record fine of $1.9 billion that USBC had to pay as a part of its settlement. 

But that won’t bankrupt HSBC, a company that dealt directly with Mexican drug cartels in an effort to launder money it received from Iran. In fact, it doesn’t change much of anything in the company—HSBC’s chief executive Stuart Gulliver received a £2 million bonus in March. 

The exceptional treatment of crime on Wall Street, Uhlmann says, distorts what he calls the “expressive value” of law enforcement. 

“We send a very strong and important message when we label conduct as criminal,” he says. DPAs and NPAs offer “no guilty plea. There is no sentence. We take something essential away” from the justice system.

The agreements are fueled by the Securities and Exchange Commission’s Consent Decree, which allows financial corporations to “neither admit nor deny” wrongdoing in the settling of a case. The SEC, using its own discretion, can choose not to prosecute if it finds that the costs of litigation are too high and not worth its time. 

It’s a useful tool for minor offenses. But these decrees are now regularly used and shield financial companies from admitting to any alleged crimes. Many judges argue that if there is evidence pointing to illegal activity the SEC ought to be required to litigate. 

“Parties settle for a variety of reasons,” Judge Marrero said at a hearing in New York last month when he was asked to approve a $600 million settlement between the SEC and CR Intrinsic Investors, a unit of the hedge fund SAC Capital Advisors. “Among them to avoid undue expense, undue business exposure, to save the cost of approving culpability. A government agency may deem it appropriate to agree that the defendants not admit or deny allegations in the complaint.”

“But that too needs to be put into context,” he continued. “A defendant charged with, for example, wrongful conduct amounting to $10 may be prepared to settle for $3 if not allowed to admit or deny the allegations. At the same time, the agency may deem it appropriate to settle if it would cost $5 to litigate and there is a risk of losing. But there is something counterintuitive in a party agreeing to settle a case for $600 million that it might cost it let’s say $1 million to defend and litigate if it truly did nothing wrong.”

In other words it is suspicious that a company would settle for hundreds of millions of dollars when the purpose of the consent decree is to avoid prosecutions that are minor and not worth pursuing. A huge settlement like CR Intrinsic Investors means that there probably was wrongdoing, but in the end there is no formal charge and little media attention — a company “neither admitting nor denying” something is not very exciting. 

In the end, says panelist and president of Public Citizen Robert Weissman, “the approach is failing. Almost all of the pharmaceutical cases involve repeat players,” he says about companies that violated laws, paid fines and then violated the laws again without really changing the way they do business. “HSBC was a repeat player. Barclays was a repeat player. Not only is there no broad deterrent effect [with DPAs and NPAs], evidenced by massive corporate wrongdoing, but there’s not a specific deterrent effect because the same companies engage in the same kinds of misconduct.”

Debt-Repair Firm Charged in First CFPB Criminal Referral

A debt-settlement company was accused by the U.S. of defrauding more than 1,200 people struggling with credit-card debt, in the first criminal referral from the Consumer Financial Protection Bureau.
Manhattan U.S. Attorney Preet Bharara’s office today announced the unsealing of an indictment against Mission Settlement Agency, its manager, Michael Levitis, and three employees. Prosecutors said the defendants “systematically exploited and defrauded” people across the country.

Enlarge image

Manhattan U.S. Attorney Preet Bharara’s office today announced the unsealing of an indictment against Mission Settlement Agency, its manager, Michael Levitis, and three employees. Photographer: Peter Foley/Bloomberg

“Preying upon the financial desperation of individuals struggling to pay their credit card debts, the defendants falsely and fraudulently tricked over a thousand such individuals into becoming Mission’s customer with significant -- but false -- assurances about Mission’s ability to help,” according to the indictment.
The case against Mission is the first criminal referral from the CFPB, according to the U.S. attorney’s office. In December, a Florida debt-relief company, Payday Loan Debt Solution Inc., was ordered to pay as much as $100,000 in refunds to customers under the first joint enforcement action between the agency and states.

No Work

Mission and its employees lied about its fees, taking thousands of dollars from funds that its customers had set aside because they believed the money would be used to pay creditors, according to the indictment. For the majority of customers, Mission did little or no work and failed to reduce debt, prosecutors said.
Levitis spent money from Mission on the expenses of a nightclub he controlled, lease payments for two Mercedes-Benz cars and credit-card bills for his mother, according to the indictment.
A woman who answered the phone at the number listed on Mission’s website declined to comment on the charges. The company operated out of offices in Manhattan and Brooklyn, according to the indictment.
The case is U.S. v. Mission Settlement Agency, U.S. District Court, Southern District of New York (Manhattan).

5 Reasons to IGNORE Collection Agencies

If you are one of the many who have fallen into the hands of the enforcement division of the banking cartel, there is good news: they are not the true Mafia. There is not much they can do to you or your family that their boss the credit card companies haven’t already done. The best suggestion is to ignore them until you plan a proper strategy to defend yourself. ~ John Galt
I wrote an article a while back titled 5 Reasons NOT to Pay Your Credit Cards. Understandably, many e-mails came in asking, “But what happens if I don’t pay?”
Just as the Mafia has their collections department, so do the banks. A Mafia enforcer might employ a pipe to the knee, threats to your family, or other nefarious means of collecting debts for the boss. Much the same, collections agencies use guilt, the credit rating system, threats of legal action, and many tools of harassment and deceit from their bag of tricks.
Here are 5 reasons to ignore collection agencies:
1. Realize that you are not defined by your credit rating: Americans have become accustomed to revealing their credit rating practically by way of introduction. Realize that this is a number, and not your identity: the higher the number the more virtuous, honorable, hard-working, and moral you are supposed to be. Rather, it is has produced a type of caste system where a bad credit score can render one untouchable by potential employers. This system encourages class distinction based on economic viability and should not be encouraged by submitting to it.
2. Their bankster bosses manufactured the economic collapse: Never forget who created this problem to begin with. And they haven’t suffered a bit — thanks to we the taxpayers. Big banks already have seen the return of pre-credit-crisis profits. But they are still not happy; now they want more, even from those who have paid on time. While small and mid-size banks struggle, or are eliminated, the large banks that benefitted most from the taxpayer bailouts continue to consolidate wealth with record profits, as the rest of the nation suffers.
3. Understand that unsecured debts carry no obligation: This gets into the realm of rather complex contractual law, so one should do their own research and receive legal advice where necessary. In the most basic sense, collection efforts are regulated under the Fair Debt Collections Practices Act. Under this Act, the collection agency must obtain the consent of the debtor to accept the obligation to pay this third party that has provided no services or products. Essentially, the moment your debts are turned over to collections, your true obligation to pay the original debts has been released. This is probably why this zombie debt is sold to collection agencies for as low as three cents on the dollar. But you are expected to pay back the full amount, of course.
4. These agencies often use fear and harassment: We all desire a way to feed our families, but the collection agency business truly is a racket, and anyone making their living this way is supportive of a criminal endeavor on many levels. Their tactics only reinforce the criminal element, as they have been documented to utilize unethical, unprofessional, and even illegal means to force cooperation. By law, they are not supposed to contact family members, friends, or employers, but this practice has become almost routine. Many reports have been issued about the verbal abuse that often ensues, including profanity. They have been known to lie, citing their “right” to seize your property for non-payment. The last resort is the threat of legal action. These people have no power other than their words. You shouldn’t even be on the phone long enough to hear their threats and abuse.
5. You might not be free even if you pay them: There are countless forums describing countless collection agency horror stories. One forum I found addresses one of the more notorious agencies, NCB. I was able to obtain the company’s Pennsylvania office phone number, which led to a more specific thread documenting first-hand experiences. This company is known to be one of the worst, and even has allegedly been tied to identity theft. Additionally, a fair amount of people have reported that they still were hounded for payment even after paying their debt. Because of the increased competition in debt collections — and so many new agencies coming and going — there are many abuses of the FDCP. Please read the thread and judge for yourself.
Learn your lesson well: First, accept responsibility for believing that money grows on trees. Yes, the system used every weapon in its arsenal to sidestep common sense and logic, but realize this creature for what it is: debt slavery. Make a commitment never to send yourself willingly to the clutches of the racket known as unsecured credit. Forget the 67″ plasma 3-D TV if you don’t have the cash for it (and plenty to spare); and forget any purchase that does more for them than it does for you. Resolve yourself to understand this system and to teach your children what they invariably will not learn in school. The textbook is The Creature From Jekyll Island; the movie, The Money Masters.
Above all, realize that there is not much that they can do to you and your family if you ignore them. There have been reports of successful court judgments using an end-around civil contempt of court charge (leading to a limited return of debtors’ prisons), but the economy has fallen too far, too fast. They can’t lock up the 1 in 3 Americans who have serious financial problems. They only can prey upon your pride, your honor, your ignorance, and your fear.
Please share your own stories in the comments section to help others learn as much as possible about this system, and what we can do to protect ourselves from these henchmen and the bosses they serve.

Don't Be A Victim Of The Current Economic Crisis. Turn The Tables On The Banksters, Collection Agencies, And Other Crooks!

So, if you are....

• Facing foreclosure....
• Drowning in credit debt....
• Being harassed by debt collectors....
• Having difficulty obtaining credit....
• Having a hard time making ends meet....

You have come to the right place!
We understand the stress everyone is going through these days with the downturn in the economy, the uncertainty and instability of the job market. But even more, we understand the abuses that are happening all across the country by banks and debt collectors. Not only do we show you how to profit from these abuses our system allows you to stop debt collectors dead in their tracks with a nearly 100% success rate.

Stop collectors dead in their tracks
with a nearly 100% success rate.
Want to see how?
Take the video tour below! 

Armed With The Proper Information You Can Fight Back And Put The Lenders On The Run...

Fraud involving mortgage loans, and/or foreclosure proceedings are increasingly less tolerated by courts. In addition, some mistakes and fraud actually violate laws and your rights as a homeowner and consumer under the TILA, RESPA, and by State and Federal Acts. We have even seen cases where the mortgage did not match the note. That fact alone can stop the foreclosure dead in its tracks. In other cases, the transfer of rights in the property was not properly executed in the mortgage which leaves the bank with an unsecured credit line. There are many factors which makes almost all foreclosures illegal. If you are not aware of these factors you are walking away and losing your home for no good reason.
With our proven, easy to follow system, you will be able to stay in your home and keep your cash.
So join now and get on the path to saving your home.

 

The Mathematical Reality Is We’re Losing Over 600,000 Jobs a Month That Have Been Hidden From View

Mac Slavo
May 7th, 2013
SHTFplan.com

The Dow Jones is soaring. The unemployment rate is stable. People are shopping. America is in recovery.
Or is it?
Despite all of the positive spin being put on the global and domestic economic recovery, the truth is that nothing of the sort is actually happening.
Any observant analyst can deduce that 15,000+ stock market values are a result of easy money being pumped into investment banks, who then slam that money straight into markets. The Fed itself is reportedly providing direct liquidity to the system. They can do this forever, so long as our creditors let them. And, until they’re stopped, they’ll continue to convince most Americans that financial markets and the economy have been stabilized.
Underneath all the hoop-la, however, is the reality of the situation.
The latest employment report from the Bureau of Labor and Statistics is a prime example of the shenanigans being played by government statisticians and their media cohorts behind the scenes.
While the official story is that non farm payrolls rose by 165,000 people last month leaving the unemployment rate at 7.5%, the truth is that the devil is in the details:

Now for the bad news.

The average workweek for all employees on private nonfarm payrolls decreased by 0.2 hour in April to 34.4 hours. Within manufacturing, the workweek decreased by 0.1 hour to 40.7 hours, and overtime declined by 0.1 hour to 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls decreased by 0.1 hour to 33.7 hours. (See tables B-2 and B-7.)

This is a problem.  If we look at the “employed” figure of 143,724,000 people a drop of 0.2 hours is a full-time-equivalent decrease of 1/2%.  Applied to the employed population this amounts to an imputed economic decrease of 718,620 jobs!

That is, the loss of work-week hours of just 0.2 is the same economic impact as firing 700,000 people!
There is a huge problem coming this year and into next in this regard as the trend of cutting hours back to get under Obamacare limits is picking up steam and will continue.
Do not underestimate the economic impact of those hours-worked changes — you’d have to post up a +700k jobs figure to offset just this one month’s change in hourly workweek!
You’ll be told this is a “good report” and it is, on the surface.  But I bet not one of the talking heads on CNBC runs the math on what the workweek means in terms of economic impact.
You heard it here first, and later this summer and into the fall when the jobs report continues to post up mid-100k numbers but consumer spending collapses into the toilet at a rate that is roughly identical to when we’re losing 600-700,000 jobs a month and people are scratching their heads  trying to figure out why it’s happening as the stock market crashes, you will be one of the few who understands what has happened and why.
Via Karl Denninger’s Market Ticker

We may be creating jobs in America. But not only are we not creating enough jobs to offset the amount of people entering the workforce, those who have jobs are being forced to work fewer hours. Couple that with rising prices for essentials like food and energy being fueled by the Federal Reserve and US Treasury, and you’ve got quite a predicament.
They can show us their charts, make forward looking statements, cite rising stock markets, and try to play with the statistics to give us a perception of growth and improvement, but they cannot rewrite the basic laws of arithmetic.
This is going to end horribly for tens of millions of Americans and none of them see it coming.

BREAKING INEQUALITY – Why You Will Always Be Poor

http://www.GS2013.org | SIGN | SHARE | CHANGE AMERICA! Share this video and then sign the petition to help end inequality and change our country forever!
This is one of the most important issues our country faces right now and it demands everyone’s attention or else the consequences could be catastrophic.
Breaking Inequality is a documentary film about the corruption between Washington and Wall Street that has resulted in the largest inequality gap in the history of America.
It is a film that exposes the truth behind the single event that occurred back in the early 70′s that set us off on this perilous journey that we are currently on.
The inequality gap is presently the worst that it has ever been and there is no solution in place to repair this crippling problem.
No country in the history of the world has ever remained a super power without a middle class and the road we are currently traveling doesn’t include this all-important segment of the population. The old saying “As goes the middle class… so goes the nation” holds true even more today than ever.
We live in a world where governments can create as much money as they want in order to fund all kinds of wasteful projects, wars, handouts, and banker bailouts. The current system by design has transferred the wealth from average everyday Americans to an elite few who care not about the majority.
Breaking Inequality exposes the truth behind the root of the problem and it provides a solution to help end it.
Our goal is to make enough Americans aware of the current system that is robbing them of their future, so that we can change the system all together.
We have to change our destiny or the middle class will cease to exist in the United States of America.
The time is now and the Breaking Inequality documentary will help lead this charge!

The Price Of Copper And 11 Other Recession Indicators That Are Flashing Red

Michael Snyder
Activist Post

There are a dozen significant economic indicators that are warning that the U.S. economy is heading into a recession.  The Dow may have soared past the 15,000 mark, but the economic fundamentals are telling an entirely different story.  If historical patterns hold up, the economy is heading for a very rocky stretch.

For example, the price of copper is called "Dr. Copper" by many economists because it so accurately forecasts the future direction of the U.S. economy.  And so far this year the price of copper is way down.  But that is not the only indicator that is worrying economists.

Home renovation spending has fallen dramatically, retail spending is crashing in a way not seen since the last recession, manufacturing activity and consumer confidence are both declining, and troubling economic data continues to come pouring out of Asia and Europe.  So why do U.S. stocks continue to skyrocket?  Will U.S. financial markets be able to continue to be divorced from reality?

Unfortunately, as we have seen so many times in the past, when stocks do catch up with reality they tend to do so very rapidly.  So you better put on your seatbelts because a crash is coming at some point.

But most average Americans are not that concerned with the performance of the stock market.  They just want to be able to go to work, pay the bills and provide for their families.  During the last recession, millions of Americans lost their jobs and millions of Americans lost their homes.  If we have another major recession, that will happen again.  Sadly, it appears that another major recession is quickly approaching.

The following are 12 recession indicators that are flashing red...

#1 The price of copper has traditionally been one of the very best indicators of the future performance of the U.S. economy.  The fact that it is down nearly 20 percent so far this year has many analysts extremely concerned...

Copper's downward trend foreshadows a stock market collapse, according to Societe Generale's famously bearish strategist Albert Edwards, who said equity markets will riot "Japan-style."

"Copper is acting exactly as it did when I wrote about the impotence of liquidity in the face of the (then imminent) 2007 recession. Once again it is giving us an early warning that liquidity will not save risk assets: time to get out of equities," Edwards wrote in his latest research note, on Thursday.

#2 Home renovation spending has fallen back to depressingly-low 2010 levels.

#3 As Zero Hedge recently pointed out, U.S. retail spending is repeating a pattern that we have not seen since the last recession...

Retail sales of clothing is growing at the slowest pace since 2010; but while major store sales are about to drop negative YoY for the first time in over 3 years, the utter collapse in general merchandise sales is worse that at the peak of the last recession at -5%. It seems tough to see how a nation with an economy built on 70% consumption is not in a recessionary environment. And while this alone is a dismal signal for the discretionary upside of the US economy/consumer; as Gluskin Sheff's David Rosenberg points out real personal income net of transfer receipts plunged at a stunning 5.8% annual rate in Q1. The other seven times we have seen such a collapse, the economy was either in recession of just coming out of one.

#4 Manufacturing activity all over the country is showing signs of slowing down.  In fact, Chicago PMI has dipped below 50 (indicating contraction) for the first time since the last recession.

#5 In April, consumer confidence unexpectedly fell to a nine-month low...

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment declined to 72.3 in April from 78.6 a month earlier. This month’s reading was lower than all 69 estimates in a Bloomberg survey that called for no change from the March number.

#6 NYSE margin debt peaked right before the recession that began in 2002, it peaked right before the financial crisis of 2008, and it is peaking again.

#7 The S&P 500 usually mirrors the performance of Chinese stocks very closely.  That is why it is so alarming that Chinese stocks peaked months ago.  Will the S&P 500 soon follow?

#8 The economic data coming out of the Chinese economy lately has been mostly terrible...

For starters, China’s recent economic data, as massaged as it is to the upside, is downright awful. China’s PMI numbers were the worst in two years. Staffing levels in the Chinese service sector decreased for the first time since January 2009 (remember that year).

China’s LEI also shows no sign of recovery. If anything, it indicates China is heading towards an economic slowdown on par with that of 2008. And if you account for the rampant debt fueling China’s economy you could easily argue that China is posting 0% GDP growth today.

#9 Things just continue to get even worse over in Europe.  Unemployment in both Greece and Spain is now about 27 percent, and the unemployment rate in the eurozone as a whole has just set a brand new all-time record high.

#10 Crude inventories have soared to a record high as demand for energy continues to decline.  As I have written about previously, this is a clear sign that economic activity is slowing down.

#11 Casino spending is usually a strong indicator of the overall health of the U.S. economy.  That is why it is so noteworthy that casino spending is now back to levels that we have not seen since the last recession.

#12 The impact of the sequester cuts is starting to kick in.  According to the Congressional Budget Office, the sequester cuts will cost the U.S. economy about 750,000 jobs this year.

Do you have any other recession indicators that you would add to this list?

I invite you to share your thoughts by posting a comment below...

This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

CHARLES HUGH-SMITH: THE FED HAS DIRECTLY CREATED A NEOFEUDAL RENTIER ECONOMY AND SOCIETY

by Charles Hugh-Smith

Bernanke’s Neofeudal Rentier Economy   (May 7, 2013)
The Fed has directly created a neofeudal rentier economy and society.
Federal Reserve Chairman Bernanke is a Reverse Robin Hood, robbing from the lower 95% and giving to the financier class. The Real Reverse Robin Hood: Ben Bernanke and his Merry Band of Thieves (August 31, 2012).

It’s worth understanding the mechanisms of this wealth transfer: in essence, the Fed extends low-cost credit (i.e. “free money”) to the financier class which then uses this free money to buy rentier assets, that is, assets that generate economic rents for the owners, who add no value and create no wealth.
This is of course the neofeudal model:the financial aristocracy in the manor house own the rentier assets and the debt-serfs toil away to pay the rents and taxes. The financier class (i.e. those that benefit from the financialization of the economy) are as unproductive as feudal lords; they skim the profits generated by the debt-serfs while adding no productive value to the economy.
Financialization and Crony Capitalism Have Gutted the Middle Class (July 13, 2012)
The E.U., Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012)
Why Krugman and the Keynesians Are Lackeys for the Neofeudal Debtocracy (April 24, 2013)
(I separate the bottom 95% from the top 4.5% and the .5% financier class for several reasons: 1) most of the stocks and bonds are owned by the top 5%; 2) the top 4.5% is shedding debt while the bottom 95% are adding debt; 3) the income of the top 4.5% is rising while household income of the bottom 95% is declining, and 4)the top 4.5% have access to lower-cost credit than the bottom 95%, but they do not have access to billions of dollars in nearly-free credit from the Fed or the shadow banking system like the financier class.)


Let’s take rental housing as an example of this Fed-driven rentier economy. The financiers borrow $1 billion in nearly-free money and use these funds to buy thousands of houses for cash. Since they can offer cash, they beat out households with approved mortgage applications.
This is the story one hears anecdotally: potential home buyers have a mortgage application approved, all they need is to have their offer for a house accepted. But the house is sold to an investor with cash.
So while the Federal housing agencies are offering low-interest, low-down payment mortgages to marginally qualified (or flat-out unqualified) buyers, the Fed is enabling the financier class to outbid conventional homebuyers.
Here’s the key dynamic: cash earns no return, thanks to the Fed’s zero-interest rate policy (ZIRP). This means the interest rate paid by the financier class is also near-zero. So the trick is to take all those billions of nearly-free dollars and use them to buy assets returning 3+% annually.
These include rental housing, stocks that pay hefty dividends (for example utility companies), municipal bonds, long-term Treasuries, dividends based on patents and royalties, and everyone’s favorite low-risk investment, state-sanctioned monopolies and cartels. (no wonder Big Pharma stocks have skyrocketed.)
Zero interest rates rob from the bottom 95% who do not have equal access to low-cost credit and transfer that wealth to the rentier-financier class. The bottom 95% provide the capital (pension funds, 401K accounts, checking and savings accounts, etc.) for zero return, but their access to near-zero cost credit is restricted.
The financier class then borrows money from the Fed (or the “shadow banking” non-bank credit system that is ultimately backstopped by the Fed) at near-zero rates, which it then uses to buy rentier assets that yield 3+%. The financier class then skims the rents from the debt-serfs, who have been effectively robbed of trillions of dollars in lost interest by the Federal Reserve.
The Fed has directly created a neofeudal rentier economy and society. Giving the financier class unlimited access to free credit with which to buy rentier assets serves two purposes: 1) it drives the valuations of rentier assets ever higher, creating the useful (in terms of propaganda and perception management) illusion of economic vitality, and 2) it greatly enriches the financier class at the expense of the bottom 95%.
Goebbels would approve of the Fed’s masterful propaganda campaign: rob the bottom 95% to benefit the financier class, all the while piously proclaiming that its policies were aimed at increasing employment for the bottom 95%.
In terms of propagandistic chutzpah, it doesn’t get any better than this. Congratulations, Bernanke, Yellen, et al.

JEFFERIES’ ZERVOS: QE UNPRECEDENTED, EXIT WILL BE A ‘MESSY PROCESS’

David Zervos, head of global fixed income at Jefferies, told Bloomberg TV’s Erik Schatzker and Sara Eisen on “Market Makers” today that the Federal Reserve’s QE program is “the greatest monetary policy experiment of our lifetime and I do not think that anyone is smart enough, me, any central banker up there” to figure out how to properly exit.

Zervos said, “I am not criticizing them, I just do not think that we know how to handle this when we need to handle it. We have never done it before and it will be a messy process.”

@BLOOMBERG TELEVISION

Zervos on whether investors should still be running with the bulls and whether there’s a point where that approach will run out:

“Yes, there is always an end game and there is always doing too much. We should always be cognizant of the fact that this monetary stimulus…The costs are really the inflationary consequences that come in the future from having printed too much money and not being able to pull that monetary base out of the economy fast enough as people decide they want to start lending again.”

On whether investors will lose confidence in the ability of central banks to manage liquidity and drive risk taking:

“It could. It could if people’s inflation expectations become unglued. if you believe that ultimately we are putting too much in and we will not be able to get it out and it will create a big drag for businesses because they will have to manage inflation risks as well as all of their other business risks and that has a negative impact on real growth. But i think we are very far away from that. Look at the data in the last three months on inflation. Everywhere around the globe is that it is coming down, not going up. These guys have bullets and they can fire them. The greatest mistake that people make is talking about QE and all these monetary policies as if people are pushing on a string. We are not. This is powerful stuff.”

On whether we’re going to shift to where the cyclicals come out on top because the economy improves:

“I think you have got to get the consumer back for that. the one balance sheet that still is hindering a recovery is the consumer’s balance sheet. The consumer is still funding a large portion of its debt at very high rates. They have not been able to refinance. Maybe our new man Mel Watt who is going to come in and give everyone principal forgiveness–he might be the savior in that case. But my point is that businesses for four years have ranked problems through the NFIB survey and one of the consistently greatest problems is sales. Poor sales. If businesses just saw people coming back and spending I think we would be in much better shape. We have to get house prices up or figure out a way to get people lower funding costs. Those are the big issues. Those are what will drive business sentiment and I think we are still a ways away from that.”

On whether investors should tune out macro noise as Warren Buffett said he does over the weekend:

“I think the world did a lot of that before 2008. A lot of people said I did not need macro. They said I don’t need to look at whether GDP is at 4%, 2%, I don’t need to think about the fed or their balance sheets. And I think a lot of people got hurt very badly by not focusing on the macro. Now, Warren has an unbelievable way of doing business that he finds himself quite liquid when other people are not liquid. He has set himself up very well to be — I think he mentioned it in his talk, a lender of last resort type figure in the market, which is a wonderful way to do business. He has been rewarded handsomely for it, but I do not think that he set himself up that way without thinking about some of the macroeconomic costs that could come through. He has seen history repeat itself. We get ahead, we go too far, we get too excited about tech stocks or emerging markets, Mexico. He watches it all go up and says I will be there when it comes crashing down.”

On why Lloyd Blankfein is talking about 1994:

“A lot of people have made that comparison and there are a lot of valid comparisons that when the Fed pulls the liquidity away and the economy takes off, it will not be good for bonds. It’s going to be ok for equities. Equities didn’t have a great 1994, but they didn’t sell off a lot. 1995 was an amazing year once the economy got traction. Look, people take carry when you give it to them. They took a lot of carry in 1990-1993. They’ve taken a lot of carry now. People who are over levered in interest rates base are going to suffer when the Fed or the rest of the central banks pull back. But we’re a ways away from that.”

On whether he has confidence that the Fed will engineer a fairly orderly exit and we won’t see a snap in interest rates:

“Absolutely not. We have said it before on this show and have written about it for years now. This is the greatest monetary policy experiment of our lifetime and I do not think that anyone is smart enough, me, any central banker up there, I do not claim to be smart enough. I am not criticizing them, I just do not think that we know how to handle this when we need to handle it. We have never done it before and it will be a messy process.”

On emerging markets:

“I am in the process of writing something about emerging markets and it is the parallels between 1995 to 1998, when the bank of japan saw dollar yen go down to 80 and drove and engineered a very aggressive monetary policy response and took the yen back to 140. Between ’94 and ’98, the Japanese kind of went nuts and it saved them from really rolling over when they already had from the initial crash, but there was a wake of destruction in the process in emerging markets. When the big developed markets central banks decide to play the competitive devaluation game, the emerging markets start flashing red. We’re early days, but emerging markets have not been great performers in the last few quarters and I worry that those who have decided they can pay back a lot of dollars, yen, or euros are going to find themselves with an inability to do so as we see these economies in the developed world take growth back through competitive devaluation from the emerging world.”

Your Retirement for a Bottle of Champagne: How Wall Street Fraudsters Ripped You Off, Again

The LIBOR price-fixing scam has cost at least $110 million -- in the state of Oregon alone!

Photo Credit: Shutterstock.com

May 6, 2013  |  

 

Just as you’re struggling to finance a summer vacation, or simply to pay the freaking rent, how would you like to open your wallet and hand over a wad of cash to a gang of international con artists who commit fraud as casually as they order a five-course dinner?
Really? That’s how you feel about it? Well, tell it to the U.S. Department of Justice, because that’s just what’s going down as a result of the LIBOR scandal.
To recap: Bank hustlers manipulated the world’s most important set of benchmark interest rates and thereby impacted the prices of upward of $500 trillion worth of financial instruments. The LIBOR scam devastated state and municipal budgets, squeezed pension yields and ripped off bank shareholders. In a case of jaw-dropping fraud, greedy traders rigged up the benchmark so that they could cash in on bets on derivatives, while banks submitted fake numbers to make themselves look financially healthier. One Barclays official was fond of fudging numbers in exchange for champagne. “Dude…I owe you big time!” gushed a trader in an email to Barclays’ Mr. Fix-It. “Come over one day after work and I'm opening a bottle of Bollinger."
That’s right. A bottle of bubbly for a scam that screwed your grandma on her retirement savings.  Retail bank certificates of deposit, you see, are very popular with senior citizens, and they are priced based on LIBOR benchmarks. As Alexander Arapoglou and Jerri-Lynn Scofield have explained on AlterNet, that alone could cause Grandma’s income to drop by as much as 2 percent. It ain’t like she didn’t need the money! That's not even counting what happened to her pension -- or yours.
LIBOR was, in the opinion of many, the con of the century. But is it a crime without punishment?
About a month ago, the Wall Street Journal reported that a federal court judge had let several banks off the hook, dismissing claims that 16 banks targeted by lawsuits had broken federal antitrust laws by rigging LIBOR. As Matt Taibbi explained in his must-read article on the banking scandal, the federal judge bought the banks’ ridiculous blame-the-victim story that if cities and towns and other investors lost money over LIBOR rigging, it was their own fault. Why would they think the banks were competing, rather than, um, “collaborating”? A collaborative cheer sounded in bank boardrooms around the world, because unless the plaintiffs can win on appeal, the ruling significantly reduces what banks would potentially have to pay for wrongdoing.
Some people in the state of Oregon are feeling just a bit riled by this state of affairs.
New research shows that the state of Oregon alone lost at least $110 million as a result of the LIBOR scam. The research on Oregon is based on an analysis of monthly investment data provided by State Street Bank, the custodian bank for the State of Oregon. On Friday, the Oregon Working Families Party joined a coalition of labor and community leaders to call on Governor John Kitzhaber to sue the Wall Street banks responsible for the costly fraud. According to a statement from the WFP, Oregon has not filed a single lawsuit in connected to LIBOR. The governor remains mute on the issue.
“Wall Street just robbed us again. When are our leaders going to stand up for Oregonians to bring some of our money back home?” said Steve Hughes, state director of the Oregon Working Families Party. “This ain’t chump change either—with $110 million Oregon could literally double its contribution to the Oregon Opportunity Grant to help more Oregon students get a college education.”
Joe Dinkin of WFP told me in an email that despite the recent federal ruling, "other legal avenues for recovery remain open under both federal Securities Act and state law." He adds that "nearly all of Oregon's losses were in securities investments, so fraud claims pursuant to the federal Securities Act could allow state to recover losses."
Oregon is hardly alone in its troubles with LIBOR. Last year, political economist Thomas Ferguson traced out how cities and states around the country had lost billions over the years on swaps, many of which also are tied to LIBOR in one way or another.
According to Bloomberg, U.S. prosecutors are pursuing guilty pleas, criminal convictions and fines from banks in a global investigation of the fraud. That might be reassuring, if it weren’t for that small matter of Attorney General Eric Holder recently telling Congress that the size of financial institutions has had “an inhibiting impact” on prosecutions against them. In other words, too-big-to-fail is too-big-to-jail. In a recent article, Pam Martens asked a burning question: Is the DOJ deliberately stalling on bringing charges against U.S. banks connected to LIBOR, namely JPMorgan Chase and Citigroup?
Meanwhile, the riggers continue to rig, and the regulators sit around scratching their heads. And as for you and me? That part is easy: We get fleeced.
Perhaps you’d like to ask officials in your own state what they are doing about LIBOR. But also ask how many banks and financial companies contributed to their most recent election campaigns, and how much they accepted from national party oriented groups that help raise money from banks and their executives for state officials’ campaigns, like the Democratic Governors Association, the Democratic Attorneys General Association, and their Republican counterparts.
Interestingly, Oregon Governor John Kitzhaber received large contributions from the DGA when he ran in 2010. Perhaps that has something to do with his silence on LIBOR.

Lynn Parramore is an AlterNet senior editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of 'Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture.' She received her Ph.d in English and Cultural Theory from NYU, where she has taught essay writing and semiotics. She is the Director of AlterNet's New Economic Dialogue Project. Follow her on Twitter @LynnParramore.

China threatens to end the military rule of the U.S. in Asia

In mid-April, the Chinese government said the increased U.S. military presence in the Asia-Pacific region causes a lot of tension, and they plan to send more military forces and strengthen their partnerships with neighboring countries. A recent study found that China increasingly threatens to end the military supremacy of the USA.

China has the largest army in the world ...

In mid-April, the Chinese government said the increased U.S. military presence in the Asia-Pacific region causes a lot of tension, and they plan to send more military forces and strengthen their partnerships with neighboring countries.

A recent study found that China's growing industrial power increasingly threatens to end the military supremacy of the United States (U.S.) in Asia-Pacific waters, making it difficult for Washington to be able to maintain their "status quo" in the region, achieved through its alliances with Japan and South Korea.

The Carnegie Endowment for International Peace published a study of nine U.S. researchers, who claim that "in the next two decades, China will reach the U.S. in its military capabilities, including the ability to build aircraft carriers and stealth type fighter aircraft."

"Will the United States maintain its leadership of the last 60 years in the area? Our own country says yes, but it is still not very clear whether it is really so," said one of the report's authors, Michael D. Swaine, an expert on China's defense policy.

According to experts, due to the economic interdependence between the two countries, "Beijing will probably prevent the use of military force and not cause an armed conflict in order to try to expel Washington from the  region."

The document also states that the change in the strategic balance in the region most strongly affects Japan, an economic power whose security has depended for a long time on its alliance with the U.S. government.

Experts also believe that Japan could respond to the growing power of China, further tightening its ties with Washington, as it did recently during the escalation of tension that arose from the islands whose sovereignty is disputed between the two nations.

The report concluded that the most likely outcome of this "arms race" will be a "delicate balance" across the region, causing U.S. hegemony to gradually weaken with increasing Chinese military capabilities.

In mid-April, the Chinese government said the increased U.S. military presence in the Asia-Pacific region causes a lot of tension, therefore, they intend to send more military forces and strengthen their partnerships with neighboring countries.

China's armed forces have always been a staunch force upholding world peace and regional stability, according to a white paper on national defense released on Tuesday.

"China's security and development are closely connected with the peace and prosperity of the world as a whole," the white paper says.

According to the document, the country's armed forces are now mainly engaged in maintaining world peace and regional stability by participating in UN peacekeeping operations, international disaster relief and humanitarian aid, safeguarding the security of international sea lines of communication (SLOCs), and joint exercises and training with foreign armed forces.

Wang Xinjun, a research fellow on war theory and strategy with the Academy of Military Sciences of the Chinese People's Liberation Army (PLA), said, "Taking on the obligations of a major power is an important feature marking China's entering into the world stage."


teleSUR-RT-IRIB-HispanTV/MARL


Translated from the Spanish version by:

Lisa Karpova
Pravda.Ru

EVER WONDER WHAT THE MONEY-JUNKIES DO WITH ALL THAT CASH THEY LOOT FROM YOU?

This painting was sold for $86,882,500 at Christies Auction (people shoudn't breed)

It's called "Orange, Red, Yellow" and was painted by Mark Rothko



I don't want to live

Morning News: Nikkei Surges, U.S. Home Prices Climb, Eurozone Crisis Deepens, Policy Battle Rages In China As Slowdown Feeds ‘Sense of Crisis’

Asian markets were mostly higher in overnight trading with the Nikkei surging 3.6% to over 14,000 for the first time since June 2008.  Europe is rallying and U.S. futures are modestly higher. Global shares are near five-year highs.
German factory orders rose 2.2% month-over-month in March. This beat expectations for a 0.5% drop, giving some hope to Europe. Meanwhile, check out Jim O’Neill’s view of the world from now through 2030 >
Australia’s central bank cut rates to a record low of 2.75% as the currency hovers nears a 30-year high. In a statement, the central bank said that it was unusual that the exchange rate was at a historically high level, “given the decline in export prices and interest rates during that time.” Nomura’s Charles St. Arnaud said this could incite those talking about currency wars.
http://www.businessinsider.com/opening-bell-may-7-2013-5
U.S. home prices climb 1.9% in March: CoreLogic
http://www.marketwatch.com/story/us-home-prices-climb-19-in-march-corelogic-2013-05-07?link=MW_home_latest_news
No Recovery Here Either: Home Renovation Spending Plummets To 2010 Levels
http://www.zerohedge.com/news/2013-05-07/no-recovery-here-either-home-renovation-spending-plummets-2010-levels
Senate Passes Internet Tax Bill, Siding With Traditional Retailers 
The Senate aimed to help traditional retailers and financially strapped state and local governments Monday by passing a bill that would widely subject online shopping — for many a largely tax-free frontier — to state sales taxes.
http://www.moneynews.com/Economy/Senate-Internet-Tax-Bill/2013/05/06/id/502976
Eurozone crisis deepens as German ‘sado-monetarists’ refuse to back QE
http://www.telegraph.co.uk/finance/financialcrisis/10039165/Eurozone-crisis-deepens-as-German-sado-monetarists-refuse-to-back-QE.html
German service sector contraction sounds alert for recovery in eurozone

Germany’s services industry contracted in April for the first time in five months and a broader measure of the service industry in the 17-member eurozone remained in negative territory.

The German PMI Services index, which is compiled by surveying about 1,000 German business leaders, shrank to 49.6 in April from 50.9 points in March, according to data from financial information company Markit.

http://www.telegraph.co.uk/finance/economics/10040420/German-service-sector-contraction-sounds-alert-for-recovery-in-eurozone.html
French Industrial Production Confirms Hollande’s Triple-Dip Fears
French industrial production came in considerably lower than expected overnight. France’s output fell 2.5% YoY against an expectation of a mere 1.4% drop and manufacturing production dropped 4.9% YoY – almost its worst since the crisis. This data confirms what we have discussed in detail (here and here) that France is heading for a depression. After the briefest of renaissances in Q3 2012, the Gallic nation now looks set for a triple-dip recession, further stretching the core of an already tense European Union. The last few days have seen 10Y French debt yields increase a little (+17bps off the lows) but they remain (much as the rest of Europe) near record lows.



Charts: Bloomberg
http://www.zerohedge.com/news/2013-05-07/french-industrial-production-confirms-hollandes-triple-dip-fears

Taiwanese Exports Unexpectedly Sputter Out
http://www.businessinsider.com/more-signs-of-global-slowdown-taiwanese-exports-unexpectedly-sputter-out-2013-5#ixzz2SbmfYoDG
Gold Just Tumbled
Here’s the NY spot price.

KITCO

http://www.businessinsider.com/gold-just-dived-2013-5
Policy battle rages in China as slowdown feeds ‘sense of crisis’

China’s Caixin Magazine reports that there is a growing “sense of crisis” not felt since the depths of the global banking crash in 2008-2009.

The State-owned Assets Supervision and Administration Commission (SASAC) has assembled a team to “protect economic growth” and pressure state companies to boost jobs at all costs.

SASAC is the bastion of vested interests and controller of 115 state behemoths with assets above $6 trillion and lock on much of the economy.

The move comes amid further signs that growth is faltering across all fronts. HSBC’s gauge of Chinese services fell three points to 51.1 in April, the lowest in almost two years.

The broader composite index also dropped sharply to a six-month low of 51.1 and is now barely above the contraction line, with new orders trailing badly. The economy grew 7.7pc in the first quarter, slower than expected.
http://www.telegraph.co.uk/finance/china-business/10039976/Policy-battle-rages-in-China-as-slowdown-feeds-sense-of-crisis.html

Founder of the euro calls for a break up of the ‘catastrophic’ currency

American Thinker – by Rick Moran
The can kicking Europeans are being warned again that the current course they are on is leading to disaster.
The founder of the euro currency, Oskar Lafontaine, thinks that its time to break up the EU:  

Mr Lafontaine said he backed EMU but no longer believes it is sustainable. “Hopes that the creation of the euro would force rational economic behaviour on all sides were in vain,” he said, adding that the policy of forcing Spain, Portugal, and Greece to carry out internal devaluations was a “catastrophe”.
Mr Lafontaine was labelled “Europe’s Most Dangerous Man” by The Sun after he called for a “united Europe” and the “end of the nation state” in 1998. The euro was launched on January 1 1999, with bank notes following three years later. He later left the Social Democrats to found the Left Party.

As if to confirm Lafontaine’s dire warnings, France announced the “end of austerity”:

His prediction appeared confirmed as French finance minister Pierre Moscovici yesterday proclaimed the end of austerity and a triumph of French policy, risking further damage to the tattered relations between Paris and Berlin.
It is unclear whether the EU retreat from austerity goes much beyond rhetoric. Mr Moscovici conceded last week that the budget delay merely avoids extra austerity cuts to close the shortfall in tax revenues caused by the recession.

“Austerity is finished. This is a decisive turn in the history of the EU project since the euro,” he told French TV. “We’re seeing the end of austerity dogma. It’s a victory of the French point of view.”
Mr Moscovici’s comments follow a deal with Brussels to give France and Spain two extra years to meet a deficit target of 3pc of GDP. The triumphalist tone may enrage hard-liners in Berlin and confirm fears that concessions will lead to a slippery slope towards fiscal chaos.
German Vice-Chancellor Philipp Rösler lashed out at the European Commission over the weekend, calling it “irresponsible” for undermining the belt-tightening agenda.
The Franco-German alliance that has driven EU politics for half a century is in ruins after France’s Socialist Party hit out at the “selfish intransigence” of Mrs Merkel, accusing her thinking only of the “German savers, her trade balance, and her electoral future”.

Something is going to have to give. The German taxpayer is tired of supporting the rest of the continent in their profligate ways and will probably take their anger out on Chancellor Merkel. This may lead to a German leadership less willing to play ball with the rest of the EU and more willing to strike out on a more independent course that would leave several member states – Greece, Portugal, Spain, and perhaps even France – holding the bag when default becomes certain.
Germany won’t exit the euro. The euro will likely die a slow, painful death as nation after nation finds it impossible to repay their debts using the common currency.
But don’t worry. There are plenty of Europeans who think like Mr. Lafontaine so that in another decade or so, they willl try to unite Europe once again in a common currency.

Australia's central bank cuts key interest rate to record low

 

 There have been fears that Australia's resource boom may be hurt by slowing global demand

Australia's central bank has cut its benchmark interest rate to a record low, in an attempt to counter slowing growth in the country's mining sector.

The Reserve Bank of Australia (RBA) cut its key rate to 2.75% from 3%.
The bank said it expected investment in the resources sector, one of its biggest drivers of growth in recent times, to peak this year.
It added that a rate cut would provide a boost to other areas of the economy and help sustain long-term growth.
"There has been a strengthening in consumption and a modest firming in dwelling investment, and prospects are for some increase in business investment outside the resources sector over the next year," the central bank said in a statement.
"These developments, some of which have been assisted by the reductions in interest rates that began 18 months ago, will all be helpful in sustaining growth."
'More confidence' Australia's economic growth in recent years has been fuelled by the growing demand for its commodities, such as iron ore.
That resulted in a resources boom in Australia and helped it sustain growth through the global financial crisis.
However, as demand from key markets such as China has eased, there have been concerns that Australia's mining sector may see its growth slow.
Continue reading the main story

US Dollar v Australian Dollar

Last Updated at 08 May 2013, 05:40 GMT

$1 buys	change	%
0.9820	0.00	+0.02

At the same time, many analysts have pointed out that other areas of the country's economy have not done so well, resulting in what many have termed a two-speed economy.

To make matters worse, the Australian currency has strengthened - making its exports more expensive, as well as affecting sectors such as manufacturing and tourism.
It rose nearly 9% against the US dollar between June 2012 and April 2013.
Amid all these concerns, there have been calls for policymakers to take steps to help boost growth, especially in the non-mining sectors, to ensure that the economy continues to grow.
Analysts said the cut in interest rates, which will help bring down borrowing costs for businesses and consumers, will help to provide some relief to those sectors and allay fears of an economic slowdown.
"Commodity prices have fallen and inflation has come in less than expected, and of course the Australian dollar through all of that has remained surprisingly strong," said Shane Oliver, chief economist with AMP Capital Investors.
"I think it was appropriate for the Reserve to provide a bit more confidence [so that] when the mining investment boom starts to wane the rest of the economy will fill the gap."
The Australian dollar weakened slightly, dipping 0.7% against the US dollar, after the rate cut was announced.
It was trading close to A$0.9808 against the US dollar in Asian trade.