Friday, June 17, 2016

This popular career advice may leave you poor and regretful

Unless you’re independently wealthy, “following your passion” can be costly

“Just because you’re passionate about something doesn’t mean you won’t suck at it,” says Mike Rowe, host of the TV show "Dirty Jobs."

When orchestra conductor Daniel Hege addressed the Bethel College graduates in Kansas this May, his message was simple: “You owe it to yourself and to others to follow your passion — and by doing so, you will give others around you, and the world, something significant.”
A similar message was given to Stanford University grads in June, when Katharine Jefferts Schori, the former heard of the Episcopal Church, told them that “our own willingness to invest our full selves in a passionate dream … is perhaps the most worthy use of one’s life.”
This kind of advice — to “follow your passion” at almost all costs, in both your career and life — was given to graduates throughout the country. And the term “follow your passion” is now appearing in in more books, particularly those focused on careers, and Google searches on the topic are higher than ever before.
But some experts, as well as people who have themselves tried to follow their passion for a job, say that doing this can be tricky when it comes to your career — and lead many people astray. Here are three reasons why:
A passion for the topic doesn’t mean you’ll like working in that field
After a snorkeling trip to Hawaii during high school, San Diego resident Deborah Fox became fascinated with marine biology, which she subsequently majored in. So when she landed a job at a fish farm upon graduation, she was thrilled — but not for long.
“I was throwing fish chow into the tanks and the fish were going crazy, splashing around and soaking me. Here I am a social person and I’m alone all day with these fish who just splash me with water. What am I doing?” she asked herself. “I found out that having a passion for a certain type of study or interest does not necessarily translate into finding passion for the day-to-day work in that area,” she says.
Career coaches say the same. “You may be passionate about the idea of a career, not the career itself,” says Cheryl Palmer, the founder and a career coach at Call To Career. And, like Fox did, you may find that your personality traits — in her case, a love of people — don’t fit in with the traits needed to do your job.
That’s one reason that Darrell Gurney, the founder of career site, says that, before you pursue a certain line of work you think you’re passionate about, you should ask people who have worked in the field a long time about what the job is like, and its pros and cons. Palmer recommends shadowing someone who does the job you want so you “have some real life experience to base your decision on.”
You may not be good at what you are passionate about
Many an out-of-tune “American Idol” contestant has learned this message the hard way: “Just because you’re passionate about something doesn’t mean you won’t suck at it,” says Mike Rowe, the host of the Discovery Channel show “Dirty Jobs,” which covers some of the strangest jobs that people hold.
Indeed, there is often a gap between our passions and our skills, experts say. “You may love art and dream about being an artist, but if you’re not good at it, that passion won’t translate into a career for you,” says Palmer.
Or you may be good at certain parts of the job you’re passionate about, but not others — a fact that Southern California resident Jasmine Powers found out the hard way. Fed up with her administrative job, nine years ago Powers struck out on her own to pursue her passion of becoming a freelance events specialist.
But she soon realized that, while she was great at the events side of her business, she struggled with how to sell her services to clients. “I love working with other small businesses doing consulting and event marketing, but with a crowded marketplace of digital marketing experts and savvy founders, I struggled to prove my value and turn significant profits,” she says.
Palmer advises that those looking to pursue a passion career “do a reality check and be honest with yourself about your abilities before moving forward.”
You may not be able to support yourself on your passion
Many people are passionate about career paths that simply won’t pay their bills, experts say. For example, while tens of thousands of Americans are passionate about crafting, it’s hard to make a living doing it. Indeed, there are few jobs — just over 50,000, about half of which are self-employed people — in the crafting and fine arts arena, and median pay isn’t great at just over $21 per hour, according to the Bureau of Labor Statistics. “You might enjoy making hats, but a little research will show you that milliners do not have a bright future in the U.S.,” says Palmer.
What’s more, “you may be passionate about a dying field,” says Palmer. And that means that while it may pay the bills now, there may not be a future in it for you.
So, unless you’re independently wealthy or have a pile of savings, you likely need to consider whether your passion can pay. Palmer stresses the importance of researching what the demand is for the field you want to enter (the Bureau of Labor Statistics has data on this). And Gurney says that some people may have to pursue their passion as a secondary career, while they do something else to pay the bills.
Of course, there are a many reasons to follow your passion for your career — among them personal fulfillment, happiness and peace of mind, experts say. But it’s important to remember that it may not work out, and that even if it does, it may not be as lucrative or as fulfilling as you’d hope. As business consultant Thom Fox puts it: “It’s a mixed bag.”

Why there’s a new kind of housing crisis

Nearly one-third of survey respondents said they’d had to scramble to cover a mortgage or rent payment in the past few years
It’s about more than just shelter, one group says.

America has a housing crisis, and most Americans want policy action to address it.
That’s the conclusion of an annual survey released Thursday by the MacArthur Foundation.
The “crisis” is no longer defined by the layers of distress left behind after the subprime bubble burst, but about access to stable, affordable housing.
A vast majority of respondents – 81% - said housing affordability is a problem, and one-third said they or someone they know has been evicted, foreclosed on, or lost their housing in the past five years.
Over half the respondents, 53%, said they’d had to make sacrifices over the past three years to be able to pay their mortgage or rent.
Also read: Rent rose at the fastest pace in nine years in May
Yet most respondents believe the housing problem is solvable, and want policymakers to address it. Nearly two-thirds of survey respondents from both parties say housing hasn’t received enough attention in the 2016 campaign.
Most people supported a range of proposed policies to support affordable housing, both rentals and purchase.
Policy step Support
Revise the tax code to help those earning $40,000-70,000 buy a home 81%
Expand housing support for low-income families with children 80%
Let developers build more units if they include some targeted to lower-income families 79%
Require communities to ensure 20% of housing is affordable to those earning less than $50,000 74%
Ensure programs like the Earned Income Tax Credit provide income assistance to cover housing costs 74%
Expand rental housing assistance 73%
Give renters a federal tax break similar to the mortgage interest deduction 70%
But people increasingly believe that owning a home is a “an excellent long-term investment.” Some 60% agreed with that statement, up from 56% a year ago and 50% in 2014.
Also read : Housing crisis has led to breakdown of the social order, author says
Access to stable, affordable housing - whether to rent or buy - is “about more than shelter,” the MacArthur Foundation noted in a release. “It is at the core of strong, vibrant, and healthy families and communities.”

Smith & Wesson Sales Hit All Time High, Up 200% Since Obama Election

smith and wesson
(ZERO HEDGE)  Moments ago, America’s legendary gun company reported Q4 earnings which, not surprisingly, beat estimate on the top and bottom line, reporting EPS of $0.66, far above the $0.54 expected, on revenue of $221.1 million, $7 million higher than consensus had expected. The stock, while not at its all time high which it hit earlier this year, is surging on the results, however, it was the tremendous topline growth in revenue that has to be seen to be believed.
See if you can spot the catalyst that unleashed SWHC’s unprecedented growth burst.

Yes, you are reading that chart correctly: Smith and Wessons sales are up 200% since Obama was elected.

As for the future, SWHC forecast 2017 sales of $740-$760 million, which smashed expectations of $732 million, and which we are confident will be very easily beat, especially thanks to the latest attempt by the president to implement yet another set of gun control executive orders.
And this of course: the number of FBI background checks, a direct proxy for gun sale in any given monthm which just hit an all time high for the month of May.

Once again, we wonder if secretly Obama isn’t merely a very deeply
planted agent for the NRA and gun lobby – if it wasn’t for him gun sales
in the US would be order of magnitude lower.

Bankers Threaten Brexit “Chaos, Fear and Emergency Measures” But Threat of Collapse Already Exists

It is quite unfortunate in the fallout of the 2008 economic crisis the degree to which the financial markets of each country were so intertwined, centralized at the top with a handful elite banks, and would together (rather than diffused) throughout all of society, and every major industry and institution in an astonishingly huge global footprint.
Derivatives represent a toxic multiplier that caused banks not only to fail, but to spread contagion rapidly.
The chaotic ball of string between corporate investors in Europe, major industrial holdings in China, pension funds for American retirees, zombie mortgages, wacky leveraged debt swaps and more put us all on a house of cards structure decades ago.
It can all come crashing down again, and it will. Everyone can feel it.
For a while now, the economic starvation and piling debt has already brought the world to the brink several times over. Jobs, currencies, loans have governments and individual households alike struggling to stay afloat.
And the bankers have already said that the next big crash is imminent. The banking crisis and the sovereign debt crisis in Europe were the first two hits according to Goldman Sachs, who warn that the Third Wave is upon us.
The eerie warnings and signs of danger have been absolutely piling up.
So, it is no surprise that major banking interests and global titans are pulling strings to block a successful Brexit vote, and using their media outlets to stir fear about the imminent collapse that can/will take place if it happens. Veiled thought it is, it is a clear threat from the banksters that economic penalties will result from the attempt to undermine elite control over Europe.
James Corbett makes a good case for this:
First it was the surprise ORB poll last Friday showing those in favor of Britain’s departure from the EU a whopping 10 points in the lead… Now even serious journalists like The Telegraphs’s Ambrose Evans-Pritchard are encouraging Britons to vote for separation from the EU in next week’s referendum:
“[The referendum] comes down to an elemental choice: whether to restore the full self-government of this nation, or to continue living under a higher supranational regime, ruled by a European Council that we do not elect… and that the British people can never remove, even when it persists in error.
So of course the banksters are doing what they always do when things are not going their way: threatening, intimidating and generally trying to scare the living daylights out of the public.
[…]  And so we get a series of catastrophic headlines:
And the point is that the elite bankers, many of whom attend Bilderberg and other global steering conferences, are capable of pulling out financial backing and putting a ‘hurt’ on Britain or any other country that would continue
You break it, you buy it.
They count on it. The ride goes up and then back down again. That’s how a cabal at the top have managed to buy up all the assets, profiting from collapse, and profiting from those who labor to rise again under their management and liens.
As Corbett wryly notes, the bastards toying with our lives and hanging us over the edge are, deep down, little kids throwing a temper tantrum:
The banksters want Britain in the EU and they’re not afraid to hold a gun to the head of the global economy in order to get their way.
[I]sn’t it instructive that the only response the banksters really have is to take their ball and go home when things don’t go their way? I mean, sure, the “ball” is the global debt-based finance capital economy they’ve constructed in their image and that keeps the wheels of commerce as we know it today greased (and thus is more or less directly responsible for the gainful employment of almost everyone), but still…all they can do is try to take that away from us.
It wouldn’t exactly be a shocker if Brexit was pushed back and its apparent success evaporated at the polls.
Not long ago, the banks threatens to leave Scotland if it voted ‘yes’ on a referendum to leave the UK. Abusive husbands don’t like it when their battered wives threaten to leave either, because then they lose control.
The exact same tactic is being used today.
Read more:
Goldman Sachs: The Third Wave of the Financial Crisis Is Upon Us
Expert Warns That Unparalleled Financial Destruction Is “Just Six Months Away”
Pay Attention To The Economy Right Now, Because A Disturbing Series Of Events Seems To Be In Motion
Exposure to Toxic Derivatives Threatens to Unleash “Financial Weapons of Mass Destruction“
Click here to subscribe: Join over one million monthly readers and receive breaking news, strategies, ideas and commentary.

Washington Post: Insider trading enriches and informs us, and could prevent scandals. Legalize it.

Steve Cohen is a tough guy to feel sorry for. The founder and manager of SAC Capital Advisors, Cohen is estimated to be worth $9.3 billion, making him the 117th richest man in the world and the 41st richest in the United States. He just bought a $60 million house and blows a lot of his money on really expensive art, including that stupid Damien Hirst shark corpse.
And so a fair degree of schadenfreude ensued when federal prosecutors charged SAC Capital with wire fraud and four counts of securities fraud yesterday. As my colleague Jia Lynn Yang explains, the indictment, “paints a picture of a hedge fund where a constant pressure to gain an edge in trading led to the widespread use of inside information, resulting in hundreds of millions of dollars of illegal profits.”
Here’s the thing though — those profits shouldn’t be illegal. As unsympathetic a figure as Cohen is, and as sleazy as insider trading sounds, there really isn’t much of a reason to ban it.
The first question when evaluating any criminal law ought to be, “Who does the practice this bans hurt?” After all, if the thing you’re doing doesn’t hurt anybody, the case for throwing you in prison — even “minimum security” prison — and subjecting you to all the horrors that entails is pretty weak. So who does insider trading hurt?
The obvious answer is uninformed investors. Let’s say that I’m walking around the newsroom and hear that The Post is about to post really big losses for the previous quarter. I rush to my computer, log onto Scottrade and sell a bunch of my Post shares (full disclosure: I don’t actually own any Post shares; hear that, Mr. SEC man?). When the stock drops following the public release of the loss figures, the poor schmuck I sold the shares to is out a bunch of money. He’s the victim; I shouldn’t have shafted him like that.
But wait a second — what was that guy doing buying and selling individual shares of The Post in the first place? Doesn’t he know that your odds of beating the market as an individual investor are ridiculously low? He should just throw his money in an index fund like everybody else (and so should Dylan-for-the-purposes-of-this-thought-experiment, for that matter).

Banks reeling as bubble-era HELOC delinquencies double in one year

In the heat of financial distress during the depths of the recession, many people asked their banks for unilateral loan term modifications in favor of the borrower. Ordinarily, banks would never consider such a request, but since so many borrowers were distressed, and since foreclosure would result in a loss of original capital, many lenders offered these distressed borrowers deals to keep them paying.
Borrowers thought they were getting a deal. Many enjoyed reduced payments, and since fees, charges, fines, and other garbage was clandestinely added to the loan balance, borrowers only saw the benefit and ignored the costs. So even when lenders appeared to capitulate to their borrowers, they still came out on top, as they always do.
As a rule, bankers don’t want to modify loans. Why would they? They made a loan in good faith to a borrower who promised to repay the loan in accordance with the terms of the promissory note. If the lender thought the borrower would not repay on the schedule established at origination, the lender would not have funded the loan.

Ordinarily, if a borrower is unable or unwilling to pay in accordance with the original terms, the lender would simply foreclose, get their loan money back, and loan that money to someone who will pay in accordance with the promissory note. Unfortunately, with so many borrowers underwater, lenders can’t foreclose and get their money back, so instead they modify loans to buy time until the resale value is higher than the outstanding loan balance.
Lenders recognize losses only when the loan is closed out at the sale of a property, either by short sale or auction. For lenders losing billions during the recession, the solution became obvious: deny short sales and stop foreclosing. By removing distressed inventory, lenders benefited two ways. First, they stopped recognizing losses, and second, the removal of distressed inventory from the market created a shortage of for-sale real estate causing house prices to go back up. Higher home prices restored collateral backing to the non-performing loans, so when lenders did allow a sale, they lost less money.
The remaining problem for lenders was how to get some revenue from their non-performing loans while they waited to reflate the housing bubble. Their solution was to aggressively modify loan terms to squeeze the last few drops of blood from their hapless victims.
Lenders succeeded wildly with loan modifications to troubled borrowers. The policy was so effective that loan modifications are now standard operating practice for loss mitigation at major lenders. Whenever and wherever a loan has collateral backing worth less than the outstanding balance, the borrower will be offered a loan modification — at least until the value of the collateral is worth more than the outstanding loan balance. At that point, the lender will return to their old practices of speedy foreclosure.

Venezuela: Hundreds arrested over mass lootings sparked by food shortages

More than 400 people have been arrested during disturbances in Venezuela following a outbreak of lootings and food riots in the crisis-hit country.
Security forces have stepped up their presence and are patrolling the streets after at least 20 businesses in capital Caracas were violently looted on Tuesday.
Witnesses say the protests are a result of ongoing food shortages in the beleaguered oil state.

A 17-year-old man, who was shot during disturbances in the small town of Merida and later died in hospital, is the fourth victim since the beginning of the unrest, although government officials have insisted the incidents are not linked.
Luis Acuna, a regional governor from the ruling Socialist Party, told a local TV station: “There were only 400 people arrested and the deaths were not linked to the looting.”
He also claimed right-wing politicians had encouraged the disturbances, saying: “I have no doubt they paid them, this was planned.”
The Venezuelan Observatory of Violence says there are at least 10 incidents of looting every day, and many are dispersed by police using tear gas and riot batons.

The Trajectory of Venezuelan Hyperinflation Looks Frighteningly Familiar...

Extreme shortages of food and power continue to ravage the country of Venezuela, and ordinary people have been paying the price.
With triple-digit inflation, that “price” is expected to continue to soar even higher. The International Monetary Fund (IMF), in its most recent set April forecasts, expects inflation in Venezuela to hit 481% by the end of 2016.
Even scarier is the estimated pace of acceleration – by 2017, the IMF expects Venezuelan hyperinflation to climb to a whopping 1,642%.
Our brains have trouble computing numbers of this magnitude, so we created today’s infographic to put things in perspective. We look at it from two angles, including a historical comparison as well as a more tangible example.

Courtesy of The Money Project - an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.

This Pattern Looks Familiar…

If the chart for the Venezuelan bolivar looks eerily familiar, it may be because its trajectory thus far is almost identical to that of the Papiermark during hyperinflation in the Weimar Republic from 1918-1923.
Although the Papiermark would eventually peak at an inflation rate of 3.5 billion percent in 1923, the pace of inflation started relatively modestly. It started in the double-digits after the war in 1918.
This is similar to today’s bolivar. In 2013 and 2014, the pace of inflation in Venezuela was increasing, but still confined to double-digits. Now things are accelerating fast, and if the IMF is correct with its predictions, there could be huge consequences.
Could Venezuelan hyperinflation ever hit the peak levels associated with Weimar Germany? It’s hard to say, but it’s not impossible.

A More Tangible Example

To put things from a more tangible perspective, let’s do the math based on IMF projections to see what may be in store for ordinary Venezuelans.
  • In 2012, one U.S. dollar could buy approximately four bolivars.
  • At the end of 2015, one U.S. dollar could buy 900 bolivars at the black market rate.
  • Based on IMF projected inflation rates, by the end of 2017, one U.S. dollar should be able to buy 90,000 bolivars.
Where things go after that is anybody’s guess.

What Is Behind The Record Sale Of $75 Billion In US Treasuries By "Foreign" Holders

Lost in the noise surrounding today's dramatic Fed rate decision and Yellen press conference, was the latest TIC data which earlier today revealed something unexpected: during the month of April, when stocks were soaring, foreign official and private entities sold out of virtually all asset classes, including sales of $2.8 billion in stocks (following a $16.5 billion sale the month prior) and $20.9 billion in corporate bonds, offset by $29.5 billion in agency purchases.

But it was happened with Treasury transactions that was the most notable: dumping $74.6 billion, foreigners sold the most on record in the month of April according to Treasury Internatioanl Capital, or TIC, data.

Or rather "foreigners."  Because as SMRA adds, based on the transactions data, the major seller of Treasuries in April by far was the Cayman Islands, with net sales of notes and bonds of $47.1 billion. When we add bills, investors in the Caymans were sellers of $51.5 billion of Treasuries in April.

And here's the twist:Cayman Islands is basically how TIC data defines hedge funds, most of which have an offshore domicile for tax purpose at this location.
As Stone McCarthy adds, over the last few years, a big gap has emerged between the change in Treasury holdings by investors in the Caymans and activity implied by the transactions data.

The holdings data for April showed a relatively small decline in Treasury holdings by investors in the Caymans of $6.5 billion. The holdings data show investors in the Caymans increasing their Treasury holdings by a cumulative $136.1 billion since December of 2011, when Treasury began reporting foreign holdings of securities on a monthly basis.  Meanwhile, the transactions data imply a cumulative reduction in holdings of $139.9 billion over the same time period, a $276.0 billion discrepancy.
According to economists at the Federal Reserve, the divergence between the transactions and holdings data for the Cayman Islands may reflect increasing short sales of Treasuries by entities located there, which may in turn be related to growing securities lending demands. Short sales would be reflected in the TIC transactions data, but the TIC holdings data don't reflect short positions or borrowed securities.
In other words, in April - just as yields were rising again on hopes of another inflationary spike - hedge funds were rushing to short Treasurys. Alas, with the 10Y tumbling to 2016 - and soon record - lows, expect all these tens of billions in "discrepant" positions to be promptly unwound as numerous entities are forced to cover their shorts, in the process sending yields even lower across the cruve, perhaps to new all time lows.

The Federal Reserve has brought back “taxation without representation”

(SIMON BLACK)  In February 1768, a revolutionary article entitled “No taxation without representation” was published London Magazine.
The article was a re-print of an impassioned speech made by Lord Camden arguing in parliament against Britain’s oppressive tax policies in the American colonies.
Britain had been milking the colonists like medieval serfs. And the idea of ‘no taxation without representation’ was revolutionary, of course, because it became a rallying cry for the American Revolution.
The idea was simple: colonists had no elected officials representing their interests in the British government, therefore they were being taxed without their consent.
To the colonists, this was tantamount to robbery.
Thomas Jefferson even included “imposing taxes without our consent” on the long list of grievances claimed against Great Britain in the Declaration of Independence.
It was enough of a reason to go to war.
These days we’re taught in our government-controlled schools that taxation without representation is a thing of the past, because, of course, we can vote for (or against) the politicians who create tax policy.
But this is a complete charade. Here’s an example:
Just yesterday, the Federal Reserve announced that it would keep interest rates at 0.25%.
Now, this is all part of a ridiculous monetary system in which unelected Fed officials raise and lower rates to induce people to adjust their spending habits.
If they want us little people to spend more money, they cut rates. If they want us to spend less, they raise rates.
It’s incredibly offensive when you think about it– the entire financial system is underpinned by a belief that a committee of bureaucrats knows better than us about what we should be doing with our own money.
So this time around the grand committee decided to keep interest rates steady at 0.25%.
Depending on where you sit, this has tremendous implications.
If you’re in debt up to your eyeballs (like the US government), low interest rates are great.
It means the government can continue to borrow even more money and go even deeper into debt.
Low interest rates are also good for banks, because they can borrow for nothing from the Fed, then earn a handsome profit on that free money.
But if you’re a responsible saver, low interest rates are debilitating.
Banks only pay their depositors about 0.1% interest. Yet according to the US Labor Department, inflation is at least 1.1%, and has averaged 2.23% since 2000.
This means that when adjusted for inflation, anyone who bothers saving money is losing at least 1% every single year.
That might not sound like much. But compounded over a longer period, it can lead to a substantial difference in your standard of living.
Maybe that’s why the government’s own numbers show that wages, when adjusted for inflation, are far lower than they were even 15 years ago.
Or why wealth inequality is now at a level not seen since the Great Depression.
Or why alarming data from Pew Research last year show that the middle class is now no longer the dominant socioeconomic stratum in the United States.

Back during his days as a presidential candidate, Ron Paul used to frequently remark that inflation is an invisible tax on the middle class.
And he’s right.
The combination of inflation and low interest rates benefits certain people, while it causes middle class people’s savings to lose purchasing power.
This constitutes a transfer of wealth from savers to debtors.
In other words, it’s a tax.
Yet unlike a normal tax which is passed by Congress, this inflation/interest rate tax is created by the central bank.
You and I don’t get to vote for the twelve members of the Federal Reserve Open Market Committee (FOMC) who dictate interest policy.
In fact, based on the way the Federal Reserve works, the majority of the committee members are actually appointed by commercial banks.
Here’s the quick version: there are twelve Federal Reserve banks in the US banking system.
They’re located in major cities like New York, San Francisco, St. Louis, Dallas, etc. And each Federal Reserve bank has its own separate Board of Directors.
Yet two-thirds of the board members for each Federal Reserve bank are appointed by big Wall Street banks like JP Morgan and Goldman Sachs.
And oh, hey, what a surprise, the last three major appointments to the Federal Reserve were all former high-level Goldman Sachs employees.
These guys aren’t even trying to hide the fact that Wall Street banks control the Fed.
So, Wall Street banks control the boards of directors at the Fed banks. The Fed bank boards of directors appoint the committee members who set monetary policy.
And the monetary policy they set ends up being a gigantic tax… a transfer of wealth from the middle class to a tiny group of beneficiaries, including the US government and the banks themselves.
This is an unbelievable scam… and it truly is taxation without representation.
Unelected bureaucrats impose their will over the entire financial system in a way that benefits a handful of people at the expense of everyone else.
And we have absolutely no say in the matter.
Well, actually we do.
Even though we can’t vote for the boards of directors at the various Federal Reserve banks like Citigroup and Goldman Sachs can do, we are able to vote with our dollars.
Think about it: every single dollar that you keep in this poor excuse for a financial system is a tacit vote in favor of the corruption.
Every dollar you take out of the system is a vote against it.
And as we’ve explored before, there are substantial options for your savings– precious metals, cryptocurrencies, productive real estate, safe P2P arrangements with strong yields, and well-capitalized banks abroad that actually pay sufficient interest to keep up with inflation.

European Peripheral Bond Risk Explodes: Forget Brexit, "Now It's Italy's Turn"

If there was any doubt that Brexit was "relevant" then the surges in European peripheral bond risk, despite massive bond-buying by The ECB, should send shivers up and down the status quo huggers that are shrugging the referendum decision off because "central banks will provide liquidity." However, it's not just The UK that EU officials need to worry about, as The Globalist notes, Germany will have to change its policies if it wants to avoid exit of other countries from the eurozone.
Portugal, Italy, and Spain are all seeing bond risk explode in recent weeks...

“Please don’t go” pleads the German newsweekly Der Spiegel on its cover this week, asking the British to vote against Brexit on June 23rd. Indeed, especially from the point of view of Germany, Brexit would be a disaster.
We Germans would be left without a pro-market partner among the larger EU economies. After a British exit, the EU would be dominated by countries believing in the power of the state and the virtues of redistribution. The European Union would lose a pivotal voice of economic common sense without the UK as a member.
On more than 20 pages of coverage, Der Spiegel brings up many arguments in favor of a “remain” vote. Reading it all, one is left with the distinct impression that the supporters of Brexit have nostalgic memories of Britain’s glorious past and are more emotional than rational in their views.

Increasing economic tensions

Astonishingly, the major economic problems of Europe and the eurozone are left unaddressed. Wolfgang Schäuble, the German finance minister, can even claim in an interview that Spain, Portugal and Ireland “have overcome the crisis” and that “much also has happened in Greece.” Well, as we all know:
  • Greece is bankrupt, even as eurozone politicians continue their game of “pretend and postpone” when it comes to managing Greece’s debt mountain.
  • Spain is unable to stabilize its debt-to-GDP ratio even in the most optimistic scenarios and under the stewardship (until now) of the conservative party.
  • Portugal has a total debt load above the level of Japan (about 400% of GDP), paired with a shrinking population, lack of education and innovation and clearly bankrupt.
  • Ireland was and is competitive, but will never be in a position to pay off its huge private and public debt burden in an orderly way.
Only thanks to the ECB’s policy of quantitative easing and negative interest rates, has the eurozone not imploded until today.
Only thanks to the ECB, do countries with higher debts and poorer demographics pay lower interest rates on their debt than does the United States of America.
Unfortunately, the ECB can only buy time. It cannot fix the underlying problems of too much debt and diverging competitiveness.
Only the politicians could handle this problem, but they shy away from tackling it for fear of their electorates. Meanwhile, debt levels grow and imbalances remain as ever before.

Germany benefits from the weak euro

Germany, for its part, celebrates an ever-growing trade surplus, which is expected to reach 9% of GDP in 2016. This strength of the German economy is also an important aspect of the ongoing Brexit discussion. Only rarely is it stated as explicitly as in this comment in The Telegraph. The argument goes as follows:
The key to German success is this: it participates in a weak currency (whose value would collapse without it) enabling its exports to sell far more cheaply than had it retained the Deutschmark. Therefore, it continues to grow in economic strength relative to its partners – including us – but especially those in the Eurozone, notably France and Italy, who would benefit greatly from restoring the Franc and the Lira
Any net exporter in the EU also benefits hugely from the vast and incomprehensible welter of EU regulations on products and employment law, which keep external competitors at arm’s length and pile costs on them if they wish access to the single market.
“Germany is so rich, and getting richer at the expense not least of its partners,” states The Telegraph and comes to the conclusion that, “German domination of the EU means it has conquered without war, and signing up to the EU is signing up to the Fourth Reich.”
Leaving aside the overblown rhetoric, according to this view, a combination of currency dumping and unfair competition lies at the heart of Germany’s success. The solution can only be a limitation of Germanys export strength.
The problem with this argument is, like with all populist arguments, that it has a grain of truth in it. Germany has indeed benefitted from the weak euro in past years. Germans have focused on producing cheaper, not smarter, since the introduction of the euro, as per capita productivity gains have stalled.

Political tensions inevitable

JP Morgan already showed on 2012 that a divergence of economic performance led to tensions — and even war — in Europe over the past 150 years. For the purpose of illustration, I have added the analysis for today’s development:
Of course, there are many more factors leading to war. In contrast to British Prime Minister David Cameron, I do not fear another war in Europe should Britain vote to leave or the whole EU fall apart.
In addition, the divergence today is not as big as in past times. Still, we should take this indicator seriously. Clearly more seriously as German politicians are taking it now.
Given the overall development, it is no wonder that the public of Europe turns more and more Euroskeptic.
Only this spring did eurozone output manage to reach pre-crisis levels. Italy and Spain are still not there yet, while France is stuck in a never ending recession, or so it seems.
Where this turns potentially toxic is that the publics of other countries would like to have a vote on remaining in Europe, just like the British.
55% of the French and nearly 60% of the Italians would like to vote. 40% of the French and nearly 50% of the Italians would vote for an exit.
Of course, it remains to be seen whether such a separation, if it were to happen, actually led to an improvement in the national economic situation in the respective countries.
Many factors are domestic, but at the same time it can’t be denied that Germany’s failed euro policy is a mighty contributor to the worsening sentiments.


Germany’s export based model increases tensions

A key precondition for a recovery of Europe from the crisis is a rebalancing of trade flows. There was some progress in the past years, but the adjustment mainly took place via lower imports. Only Spain and, to a certain extent, Italy managed to increase their exports.
Meanwhile, the German trade surplus with the other eurozone members shrank, while it grew significantly with the rest of the world.
Of course, this is not only due to the weak euro but also the industrial structure of Germany, which benefits over proportionately from globalization and industrialization.
This one-sided focus on export-based growth has led to intensified criticism in Europe and the world, including from the U.S. Secretary of the Treasury, Jacob Lew.
German trade surpluses distract demand from foreign countries and amplify their problems. “Stealing” demand in a world suffering from underutilization of capacities naturally causes frictions.
Therefore, it would be in Germany’s own interests to lower the export surplus. Especially as every trade surplus is linked with a similar export of savings into the world. Most of the surplus of nearly 9% of GDP will be provided as credit to customers abroad, which are already highly indebted.
In a world suffering from too much debt, it is a dubious, if not stupid strategy, to export savings and risk not getting the money back.
It would be much wiser for Germans to spend that money at home to fix the crippled infrastructure and to improve our education system.

Failure of Germany’s eurozone policy

The refusal of German politicians to acknowledge the need for a debt restructuring, which by definition needs German participation as the main creditor of the eurozone, worsens the financial, economical and political damage of the failed euro project.
It is impossible to escape bankruptcy with austerity and reforms. The German policy try to rescue the euro is a complete failure. The vote on Brexit and the increased anti-Euro-feelings of the European public prove the point.

Change of course necessary

If the Germans really want to avoid a Brexit or the exit of other countries from the Eurozone, they will have to change their policies.
Unfortunately, German politicians and economists prefer to criticize the other countries instead of doing their homework.
They oppose spending more money at home, they oppose a debt restructuring, they oppose debt monetization by the ECB, they oppose exits from the eurozone. In doing so, they increase the pressure in the system as Europe remains locked in recession.
Irrespective of how the British vote next week, the problems of Europe keep on growing. It is only a question of when, not if, a euroskeptic party gets into power in one of the largest EU economies, promising to solve all problems by exiting the Euro and the EU.
I continue to see Italy as the prime candidate for such a move. The country suffers under a recession which has by now lasted longer than the recession of the 1930s. It still has not managed to get back to 2008 GDP levels.
Unemployment is high, government debt is out of control. Closing the competitive gap to Germany by lowering wages by 30% is a ridiculous idea and an impossible task.
The alternative is to leave the eurozone. Italy could then devalue the new lira and regain competitiveness overnight. An Italian uscita (exit) – or “Uscitaly” in the latest clever term of art – is the true risk for the eurozone.
And it would be too late when Der Spiegel comes up with a new cover: “Mon dio, Italia. Si prega di non uscire!”

And Germany has other problems too...

First Treasuries, Now China Is Also Liquidating US Stocks

One year ago, this website was the first to observe that when combined with its offshore Belgium-held holdings, China was first slowly then fast liquidating its Treasury holdings, an observation which led us to correctly predict that China would proceed to devalue its currency, which it did shortly after. Sure enough, shortly thereafter it became common knowledge that the PBOC, owner of the world’s biggest foreign-exchange reserves and largest offshore holder of US Treasuries, had burnt through 20% of its inventory since 2014, dumping about $250 billion of U.S. government debt and using the funds to support the yuan and stem capital outflows.
As it turns out, China wasn't selling only Treasuries. According to a Bloomberg analysis when peeking deeper at the TIC data, while China’s sales of Treasuries have slowed, its holdings of U.S. equities are now showing steep declines as Beijing proceeds to liquidate a substantial portion of its US equities.
This means that in addition to oil exporting nations such as Saudi Arabia, whose liquidation of US stocks we also predicted back in 2014 when we commented on the death of the Petrodollar, the "other" big seller of US equities has been found: China's stash of American stocks sank about $126 billion, or 38%, from the end of July through March, to $201 billion. "That far outpaces selling by investors globally in that span - total foreign ownership fell just 9 percent. Meanwhile, China’s U.S. government-bond stockpile was relatively stable, dropping roughly $26 billion, or just 2%."

While it will come as no surprise that China is desperate to procure US dollars to keep its currency balanced as it intervenes now on a daily basis from prevent the USDCNY from soaring above 6.60 and "punish" those who are selling the Yuan, the observations confirms that China’s central bank remains under pressure to raise dollars and smooth the yuan’s depreciation. Only instead of selling Treasurys it has decided to sell stocks. "The equities reduction reminds investors that while China’s $1.4 trillion trove of Treasuries dwarfs its other foreign assets, it has accumulated enough U.S. stocks to influence global markets."
“Selling some of its equities is a reasonable way of raising the cash needed to finance the big drawdown in reserves,” said Brad Setser, a former deputy assistant secretary for international economic analysis at the Treasury.
There is just one problem: what happens if the capital outflows persist and China runs out of US reserves to sell? Because judging by Vancouver real estate prices, and of course the relentless surge in bitcoin, China's capital outflow is only just beginning... not to mention China's $30 trillion in deposits, which dwarf any potential PBOC firewall.
Bloomberg also notes, that while the amount China unloaded is a sliver of the $23 trillion U.S. equity market, it’s significant when compared with holdings of other big investors. The largest American mutual fund, the Vanguard Total Stock Market Index Fund, oversees about $373 billion.
The Treasury doesn’t break down its data into private and official holdings. Yet China’s capital controls limit the candidates capable of amassing such a hoard of U.S. equities. Also, private Chinese ownership of foreign stocks remained stable in 2015, signaling that the selling originated from an official source, SAFE data on international investments indicate.

Given that China’s private holdings of equities abroad are smaller than the nation’s U.S. holdings as reflected in the Treasury tally, “one can reasonably infer that SAFE, whose reserve assets are not included separately in the net international investment position, holds many of the equities," Setser said.
Why did China switch from selling bonds to stocks? There are various explanations: one is that the IMF warned China to preserve a substantial liquidity buffer above $1 trillion in holdings ahead of what may be even more volatile times. Another is that Jack Lew told China in no uncertain terms to stop selling US paper during the Shanghai Accord. Also, according to Bloomberg, "wwitching to selling stocks allows the PBOC to retain safer, more liquid assets such as Treasuries that it can unload easily in times of turmoil. Two rounds of declines in the yuan in the last 10 months spurred market volatility worldwide and led investors to monitor China’s reserves as a measure of how much of its war chest the country was burning through to combat capital flight."
Dumping equities may prove to be a savvy move, considering that the S&P 500 Index has gone 13 months without a new high on a closing basis. China, which more than doubled its holdings of U.S. stocks during the bull market that began in 2009, wouldn’t be alone among government-affiliated sellers of investments abroad. Sovereign funds from Qatar to the United Arab Emirates and Russia have been liquidating assets since crude began tumbling in 2014.
But a bigger question is what is the message that China is sending to the world by now liquidating stocks over bonds.
"The Chinese, or other people for that matter, are taking the view that sitting in U.S. equities is presumably quite risky, and I’m not surprised they’re shifting," said Fredrik Nerbrand, global head of asset allocation at HSBC Bank Plc in London. “This seems like more of a generation of cash more than anything else, and probably a de-risking of their portfolio.”
The problem for the Fed is what will happen if and when everyone else decided to tag alone with China in continuing the Great Unrotation from stocks to bonds, as the last attempt by the Fed to herd investors out of bonds and into stocks fails.
What will Yellen do then?

Beyonce, Justin Timberlake and other celebs paid MILLIONS to endorse cancer-causing junk foods

(NaturalNews) Once you become a celebrity, especially in the entertainment and sports industries, it's difficult not to make money. That's because companies fall all over themselves to ink deals endorsement deals with you; the younger and hotter and more popular you are – a great demographic for many products – the more these companies will want to sign you up and use your celebrity to help them sell products.

Imagine, for instance, signing a $50 million to promote Pepsi products? Or $6 million just to utter three words on behalf of McDonald's, "I'm lovin' it"? Beyonce managed the first deal; Justin Timberlake the second.

In fact, a recent study published in the journal Pediatrics described lucrative endorsement deals of 65 music celebrities, most of them hawking some of junkiest of junk foods and unhealthiest of sugary drinks.

Stars like Maroon 5, Britney Spears, Timberlake and others promoted 57 different food and beverage brands that ranged from Pop-Tarts to Pepsi, energy drinks to pizza.

"We found the vast majority of food and beverage products were unhealthy," said researcher Marie Bragg of New York University, as reported by NPR.

'Television advertising influences children'

The study did not examine what impact celebrity endorsements had on product consumption rates. However, she pointed to one anecdote that may help define the potential influence of well-known stars, involving rapper Pittbull's endorsement of Dr. Pepper.

"When Dr. Pepper asked Pitbull to endorse, they got 4.6 million advertising impressions, and sales went up 1.7 percent [among Latinos] — despite declining sales in the overall soft drink category," Bragg told NPR.

The public broadcaster states further:

As we've reported, musicians can influence the thinking — and perhaps the habits — of their young fans. A study published last year found that teens and young adults who reported enjoying hit songs that referenced brands of alcohol (think Kesha and her bottle of Jack) were more likely to drink compared with those who didn't like these songs.

Also, NPR noted, in reference to food and non-alcoholic drink choices, TV is very influential and that has been well-documented. The Institute of Medicine concluded nearly a decade ago that "television advertising influences children to prefer and request high-calorie and low-nutrient foods and beverages."

That said, many in the food industry have promised to scale back marketing aimed at kids aged 12 and younger. More than a dozen of the biggest food companies including Coca-Cola. Kellogg's and McDonald's have joined the Children's Food and Beverage Advertising Initiative, which seeks to limit kids' exposure to unhealthy products.

Now, however, pressure has mounted for companies to curb marketing of many products to teenagers who are in very critical stages of health development. Experts say that the rising incidence of obesity is clear reason to push for these changes since rates among teens are rising exponentially. Bad eating habits early on only leads to bad habits – and premature health issues – later in life, experts say.

"Given that we have a childhood and teen obesity problem in the country, [these endorsements of unhealthy foods] are sending the wrong message to young people, and likely contributing to poor dietary habits," Bragg told NPR.

Of course using famous people works to sell products – or ideas

TV, film and music stars are part of that equation, given their endorsements.

While Bragg's study did not assess any link to dietary habits, she nevertheless said that "we do know that exposure to food ads leads young people to overeat products they see."

Naturally the food industry is pushing back, saying there is a dearth of evidence to suggest that what they're doing – hiring celebrities to hawk their products – is swaying teens one way or the other. But claiming that negates any logical reason to pay millions to celebrities for their endorsement; if the celebrity isn't going to help them sell their product, why pay them?

The Partnership for a Healthier America knows that celebrities sell, which is why they are using them to help push a fruit-and-vegetables campaign. The group has endorsements from NFL quarterback Cam Newton, Jessica Alba, Kristen Bell and others.

"We are absolutely taking a play from a playbook that works," Drew Nannis, chief marketing officer of the partnership, told NPR. He added that it is well-known that celebrities help sell – ideas or products.


Thousands of Greeks ask premier to resign

Thousands of Greeks gather in front of the Greek parliament in Athens on June 15, 2016. (Photo by AFP)
Thousands of Greeks gather in front of the Greek parliament in Athens on June 15, 2016. (Photo by AFP)
Thousands of dissatisfied Greeks have staged a protest rally in Athens and another major city to ask the government to resign over continued austerity.
At least 10,000 Greeks gathered outside the parliament in Athens on Wednesday, demanding the resignation of the leftist government of Prime Minister Alexis Tsipras.
The protesters were supporters of the “Resign” movement, which perceives Tsipras's policies a failure, driving the country into more poverty.
They addressed the premier in their slogans, chanting “Resign!” and “People don’t want you, take your junta and leave!”
A similar demonstration was held at Thessaloniki, the second largest city in the country and the capital of Greek Macedonia in northern Greece.
A protester holds a picture depicting Greek Prime Minister Alexis Tsipras behind bars of a prison cell during a demonstration in Athens on June 15, 2016. (Photo by AFP)
The Resign movement was organized through Facebook and other social media a few weeks ago.
It is a bid to allow protesters to vent their anger and discontent against strict austerity measures adopted by the ruling Syriza political party and to force the government to quit.
The movement’s representative Eleni Kritsidima had earlier said that the rally would be a peaceful one and the protests Wednesday went by peacefully.
The protest, however, has sparked fierce reactions from the leftist government which says the movement is instigated by opposition parties, New Democracy and PASOK.
“The ‘Resign’ movement is a cause that does not address the needs of Greek society and which is hostile towards the country at this time,” said government spokeswoman Olga Gerovasili on state TV on Tuesday.
“The organizers are trying to hide by saying that no [politicians] are involved and this is all a spontaneous thing,” she said.
People hold a banner reading “Go home Tsipras” in front of the Greek parliament in Athens on June 15, 2016. (Photo by AFP)
For years, Greece has been rocked by riots and industrial action in protest at the government's austerity policies which are dictated by the European Commission, the European Central Bank, and the International Monetary Fund. 
Austerity measures are intended to reduce government debt and bring stability to the nation's economy but they have failed to improve Greece's financial situation.
The austerity program has instead compounded Greece's problems because spending cuts have worsened the crisis of lower aggregate demand.

Last July, Greece signed a deal with the three big lenders to receive an EUR 86-billion bailout in exchange for fresh austerity reforms.
The agreement, however, triggered outrage and numerous protests against Tsipras who came to power on an anti-austerity platform.
Greece has already received two bailouts in 2010 and 2012, worth a total of EUR 240 billion from its creditors following the economic crisis which began in 2009.

BREXIT and U.S. Sovereign Default

FOMC Statement For June 2016 – ‘Job Gains Have Diminished’ – Spectacle of Vulgarities

by Jesse
After eight long years, there is still no self-sustainable economic recovery.
And now we know the other reason that the price of gold had been hit so hard at the end of May, in addition to the big option expiration for the June futures contract.
The money masters fear a breakout in the price of gold, and a run higher sparking further interest, at a most inconvenient time when the free float of gold bullion in the world, and particularly in London, is so heavily strained by years of the systematic mispricing of risks across a range of financial assets.
The unsustainable will not be sustained. It ends in flamboyantly thin deceits, and a spectacle of vulgarities.
Release Date: June 15, 2016
Information received since the Federal Open Market Committee met in April indicates that the pace of improvement in the labor market has slowed while growth in economic activity appears to have picked up. Although the unemployment rate has declined, job gains have diminished. Growth in household spending has strengthened. Since the beginning of the year, the housing sector has continued to improve and the drag from net exports appears to have lessened, but business fixed investment has been soft.
Inflation has continued to run below the Committee’s 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation declined; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will strengthen.
Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. The Committee continues to closely monitor inflation indicators and global economic and financial developments.
Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.
In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.
In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects thateconomic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Esther L. George; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo.

Walmart Announces Job Cuts At About 500 Stores

Photo Credit Mike Mozart
Photo Credit Mike Mozart
Wal-Mart Stores Inc. said Wednesday it is cutting jobs in accounting and other back-office positions at about 500 locations in the Western region of the U.S.
The move will affect two or three people per store, totaling as many as 1,500 workers, Wal-Mart spokesman Kory Lundberg said. But those employees are expected to be offered positions that will involve direct contact with shoppers, such as working in the online pickup department or as pharmacy technicians.
The goal is to get workers out of the backrooms and onto the selling floor where they can interact more closely with customers, Lundberg said.
As part of the strategy, the world’s largest retailer and the nation’s largest private employer is centralizing the invoice department for that region, and it’s also using “cash recycler” machines that will automatically count money.
Wal-Mart tested the program in 50 stores in the Western region and found that just 1 percent of the affected workers left the company, Lundberg said.
“What we are doing is taking the complexities out of old cumbersome jobs and simplifying things in the store,” Lundberg said. “How can we get the focus less on the backroom jobs?”

The US Joins Europe And Begins Austerity, Welcome To The Collapse

The Disaster of De-industrialization – Once a nation no longer produce essential goods and services, it becomes vulnerable to collapse.

by Charles Hugh-Smith 
By now, we all know what’s happening in Venezuela: hyperinflation, empty stores, a regime in denial. The Trajectory of Venezuelan Hyperinflation Looks Frighteningly Familiar… (Zero Hedge)

My contacts in Venezuela tell me that merely posting the black market exchange rate of bolivars to USD can get you arrested. So yes, Venezuela’s regime has gone full Orwell-1984: whatever is true is outlawed.
Venezuela is imploding not because of hyper-inflation, but as a result of policies that led to hyper-inflation: policies that generate perverse incentives, disincentives to produce goods and services and incentives to depend on government subsidies.

But one of my correspondents nailed a key cause that is rarely discussed: Venezuela has been effectively de-industrialized. Capital that should have been invested in the electrical grid and the oil industry has been diverted to other pet projects (and the pockets of regime insiders).
There’s no food in the markets because government-set prices don’t make it worthwhile to grow anything. Farmers take their produce to neighboring countries if they can, where they can actually get paid for producing food.
But de-industrialization is the result of more than perverse policies. De-industrialization results when a citizenry is denied access to the tools and capital needed to produce goods, and when government subsidies sap the will to take the risks that are part and parcel of making real stuff.
De-industrialization is also the result of currency exchange and trade policy.When it becomes cheaper to import goods and services from other nations, the domestic populace loses the will and the skills needed to produce goods and services.
But a funny thing happens when a nation loses its capacity to produce real goods in the real world: when the currency and trade policies that made importing everything financially sensible blow up, there’s nobody left to actually make essential goods, grow food or maintain critical infrastructure.
De-industrialization is a gradual process. The loss of key industries is gradual; the loss of supply chains is gradual; the loss of local suppliers and jobbers is gradual; the loss of skilled workers is gradual; the decline of local capital is gradual; the loss of the willingness to get out there and take risks to make real goods in the real world is gradual.
This is a chart of industrial production in the United Kingdom. many nations share the same basic trajectory: given a strong currency and restrictive policies, it no longer makes sense to produce goods, food, transport, etc. Financialization and free-spending governments borrowing billions create the illusion that a nation that was once a nation of makers can become a nation of takers with no downside.

Once a nation no longer produces essential goods and services, and depends on financial games or commodities to pay for industrial goods and food produced elsewhere, it becomes vulnerable to a collapse in the financial games and the commodity markets that made it all too easy to succumb to de-industrialization.

Co-operative bank gives away $2 million to its customers

Flava radio show hosts Pua Magasiva and Sela Alo helped celebrate the day. Photo / Supplied
Flava radio show hosts Pua Magasiva and Sela Alo helped celebrate the day. Photo / Supplied
Kiwis banking with the Co-operative bank could expect extra money in their back pockets today, as it gives away more than $2 million to its customers.
Calling it "Happy Rebate Day", NZME's Flava radio show hosts Pua Magasiva and Sela Alo helped celebrate the day, hitting the streets of Auckland this week to "put-pocket" unsuspecting Kiwis with cash.
The experience was filmed as the pair walked around the streets putting cash into people's back pockets, bags - even giving away money to drivers waiting in traffic.
The Flava hosts also stuffed cash into a neatly folded blanket under a bench for a homeless person.
The passersby were initially caught off-guard, but later smiled and thanked the pair.

The pranksters had creative ideas to give away money - attaching cash to a fishing rod and moving it around in front of a man, and putting money in a hood of a woman's coat.
Magasiva, a Shortland Street star, even tried his luck camouflaging himself in a leaf costume, but eventually ran after passersby to slip the cash into their back pockets.
The Co-Operative bank, owned fully by its customers, will give $2.1 million to more than 130,000 of its customers today, after making a 16 per cent increase in profits ahead of the previous financial year.
Customers can expect between $10 to $600 back, based on the level of investments, and the balance of deposits in their accounts.

Gold Tops $1300

Well, the other thing that went a different direction that I would have guessed was gold.
It popped after the Fed non-decision and has now spiked over $1300 in the aftermarket.

We’ll see if this holds, but an awful lot of big money types are coming around the idea of gold as protection is a central banker crazy world.
Gundlach above is one of them, and he’s recommending both gold and miners.
Or, as Grant Williams might say, the west is finally beginning to care.

2016 Currency Crisis: Fed Will Sacrifice Dollar on the Altar of the Stock Market (Video)…”Do you guys remember the financial crisis of 2008? Did you think that was bad? This is going to be worse.”

Peter Schiff appeared on CNBC this week with a dire warning on America’s economic future – “It’s gonna be awful!”
Do you guys remember the financial crisis of 2008? Did you think that was bad? This is going to be worse.”
Peter said this time around, we’re not looking at a financial crisis. We’re staring down the barrel of a currency crisis. Ultimately, the central bankers and government policy makers will sacrifice the dollar on the altar of the stock market. Their main goal is to make sure the stock market doesn’t crash again. Peter said they might succeed, but only at the expense of the dollar.
So we’re going into a currency crisis, and this crisis is going to be much bigger than a financial crisis. The impact it’s going to have on the average American, on his standard of living, on his way of life is going to be much more profound. And sure, people won’t lose as much money in their stock portfolio, but if they try to sell their stocks and spend the money, the purchasing power that they lose is going to be much greater then what was lost in ’08.”
Peter went on to defend his position, arguing that the only reason the dollar is so strong right now is because people actually believed Federal Reserve policy is working. What are people going to do when they finally figure out that it was a failure and we’ve been in a phony recovery?
Dear Janet, “No Surprises!” – China Devalues Yuan To Weakest Since Jan 2011
Just in case The Fed had any ideas of surprising markets with a “confidence-inspiring” rate-hike tomorrow, The PBOC just sent a message loud and clear to Janet as they devalued the Yuan fix by over 2 handles, above 6.60 for the first time since January 2011.
This is the 3rd major devaluation step in the last 10 months (remember when China said August was a “one off”?)
Global Debt Reset: A potential Extinction Level Event coming!

One of the biggest threats to our economic outlook.
These Debt Slaves are the Government’s Largest Asset Class, and it will Haunt the Economy for Years
Endless discussions of how important inflation is to the US economy, and how there hasn’t been enough of it in recent years, and how more inflation would be a godsend, has become the standard. The threat of lethal deflation is being brandished to rationalize all kinds of absurd monetary policies. And we know why: inflation is good only for debtors, in an over-indebted country.
But that’s not true either. Because a lot of debtors, particularly those who funded their education with loans, are being strangled by … inflation.
“College Tuition and Fees constitute one of the biggest threats to our economic outlook,” writes Jill Mislinski at Advisor Perspectives, which runs an excellent series of analyses and updates on the topic.
The chart below (by Advisor Perspectives) shows the Consumer Price Index sub-component for college tuition and fees (red line) going back to 1978. It also shows the price increases of autos (blue line) and medical care (purple line), “both of which pale in comparison”: