Rickards: FED Has Major Conundrum

West Shore Funds Chief Global Strategist Jim Rickards discusses the strong dollar and emerging market fallout with Alix Steel on “Street Smart.” (Source: Bloomberg)
 

 

Debt Goes BALLISTIC in Final Days Before the New Monetary System Emerges!

Sources:
“Greenspan: Stocks not too hot, despite bubble talk”
http://www.cnbc.com/id/102483369#.
“Exclusive: China’s international payments system ready, could launch by end-2015 – sources | Reuters”
http://www.reuters.com/article/2015/0…
“Chinese yuan now top 5 major intl payment currency — RT Business”
http://rt.com/business/227031-yuan-to…
“?Ditching US dollar: China, Russia launch financial tools in local currencies — RT Business”
http://rt.com/business/218315-china-r…
“Too big to save? ‘Vulnerable & exposed’ City unprepared for future banking crisis – MPs — RT UK”
http://rt.com/uk/239057-treasury-unpr…
“UK banks ‘too weak’ to survive another recession — RT UK”
http://rt.com/uk/218491-uk-bank-engla…
“Big Banks Struggle to Pass Fed’s ‘Stress Tests’ – WSJ”
http://www.wsj.com/articles/federal-r…
“CBO: Obamacare Premiums Set to Spike – Tea Party News”
http://www.teaparty.org/cbo-obamacare…

Retail Sales Plummet For 3rd Month In A Row, But All Is Well On Wall Street

Retail Sales Plummet For 3rd Month In A Row, But All Is Well On Wall Street
I thought all those Obama jobs, the millions of Obamacare enrollees getting “free” health insurance, and the plunge in gas prices would lead to billions of excess disposable income being spent on stuff. Considering consumer spending accounts for 68% of GDP, this juggernaut of jobs would propel the US economy to new heights. Keynesianism at its finest. But something went awry on the road to prosperity. The American people have stopped spending money they don’t have on shit they don’t need. The blathering boobs on the tube will use the tried and true weather excuse, except last winter was the winter of the polar vortex. The very same morons who reported that this past winter was the 15th warmest in recorded history, will use cold and snow during winter time as the reason the American sheeple didn’t shop. How could they possibly get to the mall in their leased four wheel drive SUVs, pickups, and minivans?

Retail sales have fallen three months in a row. The last time this happened was at the beginning of the 2008 financial collapse. Do retail sales fall three months in a row when the economy is booming, or does it do that when we are in a recession? And these haven’t been miniscule drops: December -0.9%, January -0.8%, February -0.6%. If we dig into the numbers we can assess the truth of our current situation:

• Retail sales have only grown by 1.7% versus last year. This is far lower than the real level of inflation.
• If you back out the subprime loan juiced auto sales, retail sales have grown by a pathetic 0.8% in the last year.
• The rapidly rising level of auto loan defaults and repossessions is leading to a decline in auto sales, as they fell 2.6% in February versus January.
• All the discretionary retailers – furniture, electronics, building materials – have seen sales fall over the last three months. How could this happen if we are having that strong housing recovery I’ve read about?
• In a positive development, the gas price plunge reversed, and you spent $500 million more for gas in February.
• Department store sales fell again and were $350 million lower than last year. The JC Penney, Sears death march slogs on.
• Things have gotten so bad, people are even drinking and eating out less. Makes you wonder how we can keep adding those Obama jobs – waitresses, bartenders, fry cooks.
• On-line retailing, which used to grow at 10% to 20% rates, has grown by 3.9% YTD. Maybe Amazon isn’t really worth $370 per share. It couldn’t happen to have anything to do with the government sucking the life out of the business by implementing sales taxes.

http://www.theburningplatform.com/2015/03/12/retail-sales-plummet-for-3rd-month-in-a-row-but-all-is-well-on-wall-street/

How’s That Deflation Working Out For You?

The BLS put out their monthly CPI lie last week. They issued the proclamation that inflation is dead. Did you know your costs are 0.1% lower than they were one year ago. They then used these deflation numbers to proclaim your real wages soared last month. It’s all good. The American consumer is so flush with cash, they decided to spend less money for the second month in a row. The Wall Street shysters are so happy with declining consumer spending, declining corporate profits, and a global recession, they pushed the NASDAQ up to 5,000 for the first time in 15 years. Hey!!! That was the year 2000. Things really got better after that milestone.

So we know gasoline prices have plummeted in the last year (but are up 20% in the last month), but I’m trying to think of other things I use in my everyday life that have declined in price. Maybe going through the BLS detailed list will jog my memory. Here is the link to their data:

http://www.bls.gov/cpi/cpid1501.pdf
Let’s see how much deflation we’ve experienced in the last year for things we need to live our everyday lives.
Beef and veal  +22.5%
Ground beef  +21.0%
Steaks  +14.9%
Pork  +7.4%
Ham  +11.5%
Whole Chicken  +6.1%
Fresh Fish  +3.5%
Eggs  +8.2%
Cheese  +7.8%
http://www.theburningplatform.com/2015/03/02/hows-that-deflation-working-out-for-you/

US riled as Britain seeks to join China-backed Asian bank

BEIJING: Unfazed by US protest, Britain has decided to join the proposed China-backed Asian Infrastructure Investment Bank (AIIB), becoming the first Western country to seek membership of the bank in which India and 26 other nations are founding members.

While US officials reportedly complained over the British move saying it has taken a unilateral decision, Chinese Foreign Ministry spokesman Hong Lei welcomed UK's move saying China will follow principles of openness and transparency. ..


Read more http://economictimes.indiatimes.com/articleshow/46555383.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst …

Et tu, Britain? United Kingdom to join China in the anti-dollar alliance

March 13, 2015
Willemstad, Curacao
In another awkward blow to the rapidly waning US-dollar hegemony, America and Britain just had their “It’s not you, it’s me” moment.

Late yesterday, the government of the United Kingdom announced that they would be applying to join the Chinese-led Asian Infrastructure Investment Bank… as a founding member.
This is huge.
Right now, the United States dominates the global financial system.
But after years of endless wars, spying, debt, money printing, bailouts, and insane regulations, the rest of the world has had enough. And they’re looking for an alternative.
China is coming up with an answer.
The soon-to-be-live Chinese International Payment System (CIPS) will provide a way for banks to transfer funds to one another without having to use the US banking system… or the US dollar.
China is also the ringleader behind both the BRICS development bank (called the New Development Bank, or NDB) as well as the Asia Infrastructure Investment Bank (AIIB).
Both of these are multilateral development banks that aim to end the dominance of the western-controlled World Bank and IMF.
NDB includes all the BRICS nations– Brazil, Russia, India, China, and South Africa.
Founding members of the AIIB include China, India, Indonesia, Kazakhstan, Mongolia, etc. They’re typically all rapidly growing and/or resource-rich developing nations.
New Zealand was the first western nation to join AIIB back in October. And yesterday afternoon, Britain announced its intention to become the second.
(Of course in the UK’s eyes they’re the first since New Zealand still belongs to the Queen!)
This is a massive, embarrassing blow to the United States, and to the future of the US dollar.
It’s pretty obvious when you look at the dozens of signatories to the NDB and AIIB charter documents: the rest of the world is sick and tired of the United States dominating the global financial system.
And by putting these new development banks and alternative payment systems together, they’re actually doing something about it.
Even America’s own allies have supported this anti-dollar movement.
Last summer the French Finance Minister explained to reporters how completely unnecessary it was for a European aircraft manufacturer to sell jets to European airlines in US dollars (instead of euros).
He also slammed the US government for arrogantly fining French bank BNP a whopping $9 billion for doing business with countries that the US doesn’t like.
(Side note: one of the ‘evil’ countries BNP did business with was Cuba, and they were heavily punished for this, even though BNP broke no law in France. But now all of a sudden the US and Cuba are buddy-buddy again. Is BNP going to get a refund?)
His conclusion? It’s time for a ‘rebalancing’ of the global financial system away from the US dollar. Other political allies of the United States have echoed similar sentiment.
But now we can see words are turning into action.
Britain might be too polite to tell the US straight up– “Look, you have $18.1 trillion in official debt, you have $42 trillion in unfunded liabilities, and you’re kind of a dick. I’m dumping you.”
So instead they’re going with the “it’s not you, it’s me” approach.
But to anyone paying attention, it’s pretty obvious where this trend is going.
It won’t be long before other western nations jump on the anti-dollar bandwagon with action and not just words.
Bottom line: this isn’t theory or conjecture anymore. Every shred of objective evidence suggests that the dollar’s dominance is coming to an end.
It’s happening. Time to plan for it.

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Germany says Greece may face exit from eurozone

German Finance Minister Wolfgang Schaeuble waits before the start of a meeting of eurozone finance ministers at EU headquarters in Brussels, March 9, 2015. © AFP

Germany’s finance minister says Greece may leave the 19-member eurozone if the administration in Athens fails to clinch a final agreement with its international creditors.
Speaking in an exclusive interview with German-language Austrian public broadcaster, ORF, on Friday, Wolfgang Schaeuble said the possibility of Greece’s departure from the European Union’s monetary bloc cannot be excluded.
“To the extent that Greece is solely responsible and decides what is to happen, and we don’t know exactly what Greek leaders are doing, we can’t exclude it,” he said in reference to an exit from the eurozone by the Greek government.
“Europe is ready to help Greece, but Greece must let itself be helped,” Schaeuble stated.
Meanwhile, the president of the European Commission has said he is not satisfied with the progress in talks over Greece’s bailout loans, but he rejects the possibility that Athens might be forced to exit the eurozone.

“I am not satisfied by the developments in the recent weeks. I don’t think we have made sufficient progress, but we will try to push in the direction of a successful conclusion of the issues we have to deal with,” Jean-Claude Juncker said ahead of talks with Greek Prime Minister Alexis Tsipras in the Belgian capital, Brussels, on Friday.
“I am totally excluding a failure, I don’t want a failure. I would like Europeans to go together. This is not the time for division, this is the time for coming together,” he added.

Eurozone finance ministers agreed on February 24 to give Greece a four-month extension of its international bailout to avert the possibility of the country’s exit from the currency area.
But Athens will not get any of the cash until eurozone partners approve a list of reform measures proposed by Greece.
The Tsipras administration has tried to revise the terms of the country’s €240-billion (USD 270 billion) bailout it received from the troika of international lenders - the European Central Bank, the International Monetary Fund and the European Union - following the 2009 economic crisis.

Last month, Greek Finance Minister Yanis Varoufakis warned that his country’s exit from eurozone would trigger a collapse in the “house of cards.”
“Greece’s exit from the euro is not something that is part of our plans, simply because we believe it is like building a house of cards. If you take out the Greek card, the others will collapse,” Varoufakis told Italy’s national public broadcaster RAI.
MP/HSN/SS

Latest Mystery: Why Consumers Aren't Spending

American Mystery Story: Consumers Aren't Spending Even In a Booming Job Market ... It's an American mystery story: More people have jobs and extra pocket money from lower gas prices, but they aren't buying as much as economists expected. – Bloomberg dominant Social Theme: Happy days are here again. People don't understand it yet.
Free-Market Analysis: Is it really a mystery why people aren't spending? The numbers that the mainstream media uses are "cooked" and thus the conclusions that can be drawn from those numbers are faulty as well.For Bloomberg editorialists the idea that their data is faulty never seems to occur. On the other hand, the head of Gallup recently stated that the employment numbers in the US were far worse than what the government was stating. Perhaps that article didn't get passed around at Bloomberg's editorial desk.So here we go again. This is yet another article that takes government statistics at face value and treats the larger economy in a simplistic fashion. Data in ... results out. The writers are mystified that the data isn't generating the right results.More:The government's count of how much people shelled out at retailers fell in February for a third consecutive month. Payrolls are up 863,000 over the same period.The chart below shows retail sales and payrolls generally move in the same direction, until now. The divergence could portend lower levels of economic growth if Americans' usually reliable penchant to spend is less than what it once was."The expenditures that add up to gross domestic product are coming in a lot softer than employment," said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC. "Why would retailers be hiring if sales are falling? Why would they be boosting hours if sales are falling and why would they be paying more?"Why would retailers be hiring and boosting hours if sales are falling? Perhaps because they are not? Or at least, perhaps because the government figures give an impression of the economy that is rosier than reality?There are excuses, of course. Ben Herzon, a senior economist at Macroeconomic Advisers LLC, believes that the cold weather in February may have depressed consumer spending. He believes that people stayed inside and purchased things online – leading to an upward blip in online buying generally.Herzon also believes that lower gas prices have depressed government statistics regarding sales. In other words, economic activity is GREATER than what's been reported. If this is the case, March should be better than February. Weather is better and gas prices have risen a bit.But mainly, Herzon and others believe the employment figures. The article quotes him as saying, "Payroll employment has been great, and it is generating a lot of labor income that you think would be spent ... Our story would be wrong if it doesn't happen."But who can trust these numbers? Last year, John Crudele at the New York Post published a long expose of US Labor Department manipulations, entitled, "Labor Dept. acts to hide older data in job surveys."The thrust of the article was that the data being collected by government workers was sloppy and inaccurate. Workers wouldn't actually conduct household interviews but fill in their reports with older figures or possibly even make them up.He writes:This whole controversy began when a Philadelphia Census worker, Julius Buckmon, was caught falsifying surveys and — most important — his wrongdoing was covered up.Worse, Buckmon alleged that supervisors told him to cheat.Other Census sources have also told me that data is falsified all the time. And since Census polls for lots of different government agencies, including the Justice Department, the problem could be bigger than anyone can imagine.ZeroHedge posted an article in mid-2014 quoting the Post article but also adding in information from ShadowStats, the research firm that attempts to adjust for US government numbers by using various proprietary formulas.Here:The Federal Reserve would have us believe that the unemployment rate in the U.S. has fallen from a peak of 10.0 percent during the recession all the way down to 6.3 percent now.But according to shadowstats.com, the broadest measure of unemployment is well over 20 percent and has kept rising since the end of the last recession. And according to the Federal Reserve's own numbers, the percentage of working age Americans with a job has barely increased over the past four years...Of course, that was last year. This year, perhaps, things have improved. Or perhaps government numbers have become more trustworthy. (Not likely.)Another possibility – granted that employment numbers are up – is that consumer behavior is simply different after a six-year Great Recession. People are well aware of their precarious financial situations and don't want to spend. They want to save.In any event, we don't find any of this mysterious. The economy probably isn't nearly as good as government numbers claim it is. And consumers generally remain wary of an expansion that could lapse again as it has before.Conclusion:Who can blame 'em? At the very least US government numbers ought to be treated according to that old adage, "Trust but verify."