Most Americans Agree Their Children Will Be Worse Off

(Quentin Fottrell)  The next generation of Americans will be healthier, their parents say, all except for their finances.
Barely more than one in 10 (13%) American adults believe their children will be better off financially than they were when their career reached its peak and just over half (52%) believe their children will have less disposable income than they did in the future, according to a survey of more than 1,100 American adults released Wednesday by life insurer Haven Life and research firm YouGov. What’s more, just 20% of Americans believe their children will have a better quality of life when they reach their age.
“For the baby boomer generation, pocket money from mom and dad was only part of their early childhood,” says Yaron Ben-Zvi, co-founder and chief executive of Haven Life. “Today’s parents are increasingly prepared to worry about and provide for their children’s financial well-being well far into their adulthoods.” (In fact, 40% of millennials say they get some kind of financial help from their parents, according to an April 2015 Bank of America/USA Today survey of 1,000 kids and 1,000 parents.)
Why do parents believe that their children are faced with bigger financial challenges? They are saddled with more student loan debt than previous generations. The number of borrowers who default (those who are at least nine months past due) rose to 1.2 million annually in 2012 from around 500,000 per year a decade ago, according to the Federal Reserve Bank of New York. And many young people — especially those living in big cities — are still priced out of the housing market.
Studies also show that the better start children have in life in terms of financial support and education, the more likely they are to surpass their parents’ earnings. Children raised in low-income American families are more likely to have very low incomes as adults, while children raised in high-income families can anticipate a much bigger jump in income, according to a report — “Economic Mobility in the United States” — released last month by researchers at Stanford University.
Their future is brighter in one way, parents say. Two thirds (66%) believe their kids will be as healthy or have a healthier lifestyle and, as such, will have a higher quality of life, the Haven Life/YouGov survey also found. Some 81% of millennials exercise regularly versus 61% of baby boomers, and millennials take more fitness classes, according to research group Nielsen. Unlike many of their parents, they’re also growing up in a country where smoking is banned by 36 states in workplaces, restaurants and bars.
Despite their parents’ concerns, millennials —those born between 1981 and 1996 — appear to be more optimistic about their own future. Relative to every other age group, they’re most likely to say their situation has improved relative to a year ago, according to a recent study by personal finance site Bankrate.com. In all components of the site’s financial security index — savings, debt, net worth, overall finances, and job security — millennials were the most likely of all age groups to note improved conditions versus a year ago.

It’s Not All Over In Greece Yet — And Won’t Be Until They Finally Shed The Euro And Return To The Drachma.

No, it’s not all over in Greece yet — and won’t be until they finally shed the Euro and return to the Drachma.
Prime Minister Tsipras is having trouble cobbling together a majority of the Greek Parliament to vote for the latest 86 billion Euro bailout deal which would keep Greece in the EU and forever dependent on its sagging Euro.
Left Platform Leader Pana-gio-tis Laf-az-anis opposes the European deal:
“Democracy is finished. The system of government in the country is the dictatorship of the euro.”
Tsipris has asked for party unity in order to approve the bailout. He says that otherwise he will have to resort to another referendum with the question:
“euro or drachma?”
So what’s wrong with that?
The President of the Greek Parliament,
Zo-e Kon-stan-top-ou-lou, also opposes the deal:
“It is the historic duty of the Left to protect the people and democracy … to protect the right to dream … to build a new, viable world.”
Greek officials were hoping to have the bailout deal signed by August 18 to avoid more bridging loans.
This timetable is now generally thought to be optimistic as new economic data shows that the Greek depression is deepening. New figures show the economy may contract by 7% this year.
This morning, the Greek stock market opened after a 5 week closure. It is plunging – down 20%.

Bullion Direct Files Bankruptcy, Never Purchased Customer’s Gold

Largest Coal Company files for bankruptcy on the same day Obama releases his Clean Power Plan.

Obama has destroyed the coal industry just like he promised he would do. All the coal plants are filing for bankruptcy, as the struggle to survive has overcome them.
This means all plants powered by coal will have to switch to natural gas or die. This is a costly process.
from yahoo:

The bankruptcy filing by Alpha Natural Resources comes on the same day that the Obama administration released its Clean Power Plan, which calls for more reliance on renewable energy sources.

One of America’s largest coal companies filed for bankruptcy Monday, striking the latest blow to an industry that, by its own admission, is struggling to adapt to the ongoing global conversion to clean energy.

Alpha Natural Resources (ANR), based in Bristol, Va., is the country’s biggest miner of coal used in steelmaking. In a bankruptcy filing, Kevin Crutchfield, the company’s chairman and CEO, described “unprecedented changes” for the coal industry.

“The US coal industry as currently structured is unsustainable,” he said. “Multiple major producers … have been, and will continue to be, driven to the brink of insolvency.”

IMF Work Progresses on 2015 SDR Basket Review

IMF Survey

August 4, 2015

• SDR review takes place every five years
• Staff paper lays out initial considerations; formal Board meeting late 2015
• Focus on Chinese renminbi for meeting inclusion criteria

The IMF Executive Board will formally review the composition and valuation of the Special Drawing Rights (SDR) basket toward the end of the year.

As part of this process, the IMF’s Executive Directors recently held an informal meeting to have a first discussion on the review of the valuation of the SDR, an international reserve asset created by the IMF in 1969 to supplement its member countries’ official reserves.
The SDR’s value is currently based on a basket composed of the U.S. dollar, the euro, the pound sterling and the Japanese yen. The IMF reviews the SDR basket valuation method every five years to ensure that it reflects the relative importance of major currencies in the world’s trading and financial systems, with the aim of enhancing the attractiveness of the SDR as a reserve asset.
In an interview, Siddharth Tiwari, Director of the IMF’s Strategy, Policy, and Review Department, discusses the details of the SDR review process.
IMF Survey: The IMF’s Executive Directors just held an informal meeting on the review of the SDR basket. What was the purpose of the meeting?
Tiwari: Every five years, the IMF reviews the status of currencies within the SDR and opens up a window for inclusion of additional currencies. 2015 is a review year. As a first step, the Executive Directors discussed informally a staff paper that laid out initial considerations for the review. The paper provided a status report on the progress made so far and clarified a number of technical issues, such as the applicable legal framework for the review, the scope of the review, operational implications and next steps.
The Executive Board will formally discuss the review toward the end of the year.
IMF Survey: What are the criteria for including a currency in the SDR basket?
Tiwari: The criteria, last updated in 2000, establish that the SDR basket comprises the four currencies that are issued by members or currency unions whose exports of goods and services had the largest value over a five-year period, and have been determined by the Fund to be "freely usable."
The export criterion aims to ensure that currencies that qualify for the basket are those issued by members/currency unions that play a central role in the global economy. The requirement for currencies in the SDR basket to be also freely usable was incorporated in 2000 to reflect the importance of financial transactions in valuing the SDR basket.
The Articles of Agreement define a “freely usable” currency as that which is widely used to make payments for international transactions and is widely traded in the principal exchange markets.
The concept of a freely usable currency concerns the actual international use and trading of currencies, and it is distinct from whether a currency is either freely floating or fully convertible. In other words, a currency can be widely used and widely traded even if it is subject to some capital account restrictions. On the other hand, a currency that is fully convertible may not be necessarily widely used and widely traded (due to the size and relative importance of that economy in international transactions).
IMF Survey: What will be the main focus of the review?
Tiwari: The Chinese renminbi (RMB) is the only currency not currently in the SDR basket that meets the export criterion. Therefore, a key focus of the current review will be whether the RMB also meets the freely usable criterion in order to be included in the SDR basket.
The staff paper that was discussed by the Executive Directors provides some building blocks to help inform a future decision by the Board. In addition to these issues, the review will also cover the methodology used to determine the currency weights in the SDR basket and a review of the instruments in the SDR interest rate basket.
IMF Survey: Why is staff proposing an extension of the current SDR basket?
Tiwari: To put this in context, the current SDR basket expires at the end of this year. We are proposing extending the current SDR basket by nine months until September 30, 2016. This is in response to feedback from SDR users on the desirability of avoiding changes in the basket at the end of the calendar year and facilitating continued smooth functioning of SDR-related operations. An extension of nine months would also allow users to adjust to a potential changed basket composition should the Executive Board decide to include the RMB.
The proposed extension, which will be decided by the Executive Board later this month, would not in any way prejudge the timing of conclusion or outcome of the review.
IMF Survey: What voting majority is required to include a currency into the basket?
Tiwari: As a general rule, changes to the method of valuation of the SDR basket require a 70 percent majority, while certain types of changes respecting the “principle” of the SDR’s valuation require an 85 percent majority of the total voting power. Historically, decisions that have changed the valuation method have been taken with a 70 percent majority.
IMF Survey: What are the next steps in this review process?
Tiwari: The review is well underway. Further work still needs to be undertaken in a number of areas to help inform the Executive Board’s decision. Staff continues its technical work, including on addressing data gaps and operational issues, while liaising closely with the Chinese authorities and other members ahead of the formal Board meeting expected later in 2015.

Kyrgyzstan will become full member of Eurasian Economic Union tomorrow — EEC

Kazakhstan on Wednesday ratified the agreement on Kyrgyzstan’s accession to the Eurasian Economic Union

© Yekaterina Shtukina/Russian government's press service/TASS

MOSCOW, August 5. /TASS/. Kyrgyzstan becomes a full member of the Eurasian Economic Union (EAEU) from August 6, the Eurasian Economic Commission (EEC) said in statement on Wednesday.
"On August the 6th the agreement on Kyrgyzstan’s entering the EAEU comes into force. Kyrgyzstan becomes the fifth full member of the Eurasian Economic Union alongside with Armenia, Belarus, Kazakhstan and Russia," runs the statement.

Read also

Customs borders of Kyrgyzstan, Eurasian Economic Union to open n 1 or 2 days — government

Last member ratifies agreement on Kyrgyzstan's accession to Eurasian Economic Union

Kazakhstan on Wednesday ratified the agreement on Kyrgyzstan’s accession to the Eurasian Economic Union (EAEU). Kazakhstan was the last country to have ratified the agreement.
The agreement on Kyrgyzstan’s accession to EAEU was signed in December 2014 at a session of the Supreme Eurasian Economic Council in Moscow. On May 8, the leaders of EAEU member countries signed protocols to the agreement.
Kyrgyzstan will become the fifth Eurasian Union member-country. Russia, Belarus and Kazakhstan signed a treaty on the EAEU in Astana on May 29, 2014, which came into force on January 1, 2015. Armenia joined the union last December. The EAEU membership involves free movement of goods, capital and labor between its member-countries as well as the provision of services.

Infographics The Eurasian Economic Union starts its work

The Treaty on the establishment of the Eurasian Economic Union comes into effect on January 1. Infographics by TASS

Pfff…The Post-2009 Commodity Gains Are Gone

The last time we dedicated a Chart Of The Day and Tumblr post to the Reuters/Jefferies Commodity Research Bureau Index (CRB) was October 30, 2014. In a post titled It’s Make Or Break Time For Commodities, we noted that the CRB was “at a potential make or break point for those investors looking for a resumption of the commodity bull market.” The rationale was that the index was testing some key levels on its chart around the 265 area, most notably A) the 61.8% Fibonacci Retracement of the 2009-2011 rally, B) the June 2012 lows and C) the top side of the post-2008 down trendline, broken earlier in the year. Here is the chart from that post.

image: http://40.media.tumblr.com/7d99deaa740fd4c0d1355f5f6894dada/tumblr_inline_nsiu39131I1sq14jh_500.jpg

That 265 level proved to be up to the task…for a month. On November 28, the CRB Index gapped down below the 265 level by 3% and has not looked back since. Verdict: Break.
Why do we bring it up today? Well, we ended that October post with this:

“…should this key level fail to provide support for the CRB, it opens the index up to further (perhaps significant) weakness. It would also cast a doubt on the likelihood of resuming the commodity bull market any time soon.”

Significant weakness did indeed follow and today the CRB reached a dubious distinction. It closed below it’s lows from 2009.

image: http://41.media.tumblr.com/a48c3aac3061f2ba2ec937df88342af0/tumblr_inline_nsizexpbhC1sq14jh_500.jpg

With the CRB, and many of its components, hitting or violating their 2008-2009 lows, we can pretty much stick a fork in the post-2009 commodity cyclical bull market. But what of the commodity secular “supercycle” that began around the turn of the century? Believe it or not, it may be premature to pronounce that over as well. No, the lower highs and lower lows now evident on the chart do not bode well. However, if the CRB can avoid too much more damage, it may be able to keep the possibility open the the secular bull remains intact, though bloodied.
One level, in particular to watch is the 194 level, which represents the 78.6% Fibonacci Retracement of the 1999-2008 rally. If the index can hold there, and bounce back above the 200 area, it could reasonably be considered a double-bottom/re-test/hold of the 2009 lows. That does not give the CRB room to go much lower, however.
The secular cycle’s fate will likely be determined by the energy and metals complexes which account for roughly 36% of the index. For, as badly as they have been beaten down, the other commodities, namely the grains and softs, have fared even worse. With the recent downside acceleration in energy and metals, it certainly doesn’t “look” good there. However, a case can definitely be made for a bottom there sometime soon. Sentiment and price action are about as washed out as they can be at the moment. And while the current downside move could certainly cascade further in the near-term, it could possibly be a capitulatory/exhaustive type move.
Perhaps then, commodity bulls can begin to finally reap some gains again. But for now, the gains from the 2009 low, like Keyser Soze, are gone.