“The situation is tough for young people. They were hit hard by the
Great Recession, and their labour market situation has improved only
little since,” Angel Gurría, Secretary-General of the OECD, told the Guardian.
The report highlights several key trends. Central among these is
that prosperity has plummeted for young adults in the rich world.
This is largely a result of the real wage losses seen in Western
countries, with the exception of Australia. For people in their early
twenties, this equates to average disposable incomes some 20% lower than
national averages.
Conversely, the disposable income available to pensioners has
risen, most dramatically in the UK. In the US, under-30s are now less
well off than retired people.
Why is this?
Rising house prices, unemployment and debt have all combined to hit millennials and their earnings.
The impact of these factors varies across countries. For example,
in the UK and Australia, house prices are forcing young people out of
the housing market. In the US, debt is holding millennials back – total
student debt hit $1.2 trillion at the end of 2015.
The financial crisis in Europe has damaged job opportunities
across the continent, with many young people forced to continue to live
with their parents into their thirties. This will have a knock-on
effect on birth rates and demographics.
ECB chair Mario Draghi delivered big-time this morning by announcing
lower interest rates and a new round of debt monetization. Historically,
this kind of thing has sent the financial markets into Pavlovian
ecstasy, with stocks soaring and the local currency falling.
Sound money people have for years been warning that such New Age
monetary policies are poison and that the markets would eventually wise
up and react accordingly. Today, finally, that’s what they did. European
stocks popped on the news — then dropped.
The euro did the opposite, dropping then popping:
And the US dollar, which in a rational Keynesian world should soar as its main competitor is inflated away, fell hard:
US stocks, as this is written at 1 pm EST on Thursday, are down and
gold is up big, which implies that markets now view negative interest
rates and central banks buying corporate bonds and equities as signs of
profound failure rather than innovative genius.
It is now clear that the only reason a government would resort to
such things is that its previous policies haven’t worked. In which case
there’s no reason to think the next batch will do any better. Which in
turn implies that financial assets are a dangerous place to be while
chastened monetary authorities sort out their misconceptions and rework
their models.
Drivers may be more eager than usual to fill up this summer.
The latest weekly decline in U.S. gasoline supplies wasn’t a
surprise, but the strength in demand for the fuel at this time of the
year is a shocker.
That means that even if pump prices nose
higher by Memorial Day as some predict, stronger-than-usual driving
demand could help sop up some of the excess domestic crude supplies.
“The
last few weeks with impressive gasoline demand could be a harbinger of
what’s to come for the summer-driving season,” said Patrick DeHaan,
senior petroleum analyst at GasBuddy.com.
‘The last few weeks with impressive gasoline demand
could be a harbinger of what’s to come for the summer-driving season.’
“Perhaps we’re
underestimating consumption,” he said. “I expected this summer to be
robust, but wow, this latest data makes me pause.”
On Wednesday, data showed that U.S. gasoline supplies dropped by 4.5 million barrels for the week ended March 4, according to the Energy Information Administration. It was the fuel’s third weekly decline in a row.
Supply
drops are expected this time of year because it’s refinery maintenance
season, a slower demand period in which refiners perform upkeep and
change equipment to ready for more environmentally stringent summer
gasoline grades. It typically peaks in April.
But the EIA report
also showed that over the last four weeks, a key measure of demand known
as motor gasoline product supplied was up by 7% year over year at more
than 9.3 million barrels a day.
“The data shows strong gasoline
demand that’s outpacing the 2007 and 2008 rates for this time of year,
with 2007 the current record high in annual U.S. gasoline demand,” said
Brian Milne, energy editor and product manager at Schneider Electric.
Usually,
gasoline demand is weakest in January and February and increases as the
weather warms once past maintenance season, he said.
These
months are “the shoulder periods between peak heating demand during the
winter and peak driving demand during the summer,” said Milne. “That
hasn’t changed.”
What’s different this time around is that drivers are taking advantage of lower prices for gasoline.
“Affordability,
and people … aware they’re spending much less to fill their tanks than
they did a couple of years ago, [are] breeding an optimistic outlook
that has propelled driving activity,” said Milne.
U.S. gasoline prices at the pump averaged at about $1.867 a gallon Thursday afternoon, according to GasBuddy.com. That’s down more than 58 cents from the year-ago average.
But
the low prices might not last for long. Here are the areas where
GasBuddy.com on Thursday was seeing “significantly” higher gas prices
compared to prior reports:
GasBuddy.com
Milne said prices are now “on course” to move above $2 a gallon before Memorial Day.
“Gasoline
demand appears to be among the heaviest, seasonally, that I’ve ever
witnessed,” DeHaan said. “Couple [the] warmer-than-average temperatures
in much of the country with relatively cheap gasoline and it’s a recipe
to drive, apparently.”
And when gasoline
RBJ6, +1.58%
is in demand, so is the crude oil
CLJ6, +2.33%
that’s used to make it.
That’s part of the reason why crude-oil prices rallied this week to their highest levels of the year.
“Strong gasoline demand would definitely help shrink the oil-supply surplus,” said Milne.
But
it would only help to a certain point. The market “would still need
lower crude production, and it will take time as well to find a closer
supply-demand balance,” he said.
Largely muted reactions amid doubts of eurozone growth
Asian stocks were choppy Friday as investors brushed off a bigger than expected stimulus package from the European Central Bank.
Japan’s Nikkei Stock Average
NIK, +0.51%
was down 0.9%, Australia’s ASX/S&P 200
XJO, +0.32%
was up about 0.2%, and Korea’s Kospi
SEU, +0.11%
was up 0.1%.
In China, the Shanghai Composite Index
SHCOMP, +0.20%
was down 0.5%. Hong Kong’s Hang Seng Index
HSI, +0.85%
was up 0.4%.
The
reaction in Asia was largely muted on rising doubts that the ECB has
enough policy tools to bolster growth and inflation in the eurozone.
“Further
ECB action looks unlikely until at least the second half of the year,”
said Colin Graham, chief investment officer of multi-asset solutions for
BNP Paribas Investment Partners. “We believe fresh steps will depend on
incoming data and might well reflect lessons learned from the market
reaction to the latest measures.”
The ECB on Thursday unveiled
stimulus measures that were more aggressive than economists expected.
The package included expanding the scope and size of the ECB’s bond
purchases each month and slashing three key interest rates.
Stocks
initially rallied in Europe and the U.S. on Thursday, but retreated
after ECB President Mario Draghi signaled that no further rate cuts were
coming in the near future due to concerns about their impact on banks.
In
other Asian markets Friday, the Korean won and Malaysian ringgit were
slightly weaker against the U.S. dollar, highlighting investors’ risk
aversion across the region. Chinese authorities also guided the yuan to
its strongest value against the U.S. dollar this year, which triggered
selling of the greenback Friday morning.
Korean shares were
extending gains after the benchmark index on Thursday pushed into
positive territory for the first time this year. The Kospi is up 0.5%
since the start of January.
FRANKFURT,
Germany — European Central Bank launched an unexpectedly broad array
of stimulus measures Thursday aimed at boosting a modest economic
recovery in the 19 countries that use the euro and nudging up
dangerously low inflation.
The
steps, which ranged from interest rate cuts to cheap loans to banks,
included several measures many analysts hadn't anticipated, such as
expanding its monthly bond-buying stimulus program to include corporate
bonds.
The
ECB, the monetary authority for the euro countries, is struggling to
raise inflation from a worryingly low annual rate of minus 0.2 percent
toward its goal of just under 2 percent, considered healthiest for the
economy.
ECB
President Mario Draghi said the bank's decisions at the meeting of its
25-member governing council were the best answer to recent questions
about whether central banks were reaching the limits of what they can
do.
"We
don't give up in our fight to bring inflation back to our objective,"
Draghi said. He added that the steps to increase bank lending would
"reinforce the momentum of the euro area's economic recovery and
accelerate the return of inflation to levels below, but close to, 2
percent."
The
market's reaction was volatile. The Stoxx Europe 50 blue chip index
ended 1.8 percent lower after spiking higher earlier. The euro rose 1.5
percent to around $1.11 — though it usually falls in response to more
stimulus.
Laith
Khalaf, senior analyst at stockbrokers Hargreaves Lansdown, said the
use of ever more unusual stimulus measures was hard to see as positive.
He
said the fact the ECB is "still pursuing such extreme monetary policy
paints a depressing picture of the European economy." Investors, he
adds, "are beginning to question what central banks have left in the
locker if the global economy slips back towards recession."
More
economic malaise in Europe is the last thing the global economy needs.
The region is a key market for major companies, from automakers Ford and
General Motors to technology companies Apple and Samsung. Trouble in
Europe would compound woes from slowing growth in many parts of the
world, particularly China.
The ECB's stimulus efforts over the past year seemed a long way away for Portuguese pensioner Dolores Tavares.
"I
haven't noticed any difference in my life," Tavares said as she and her
husband put the shopping in their car trunk outside a Lisbon vegetable
market. "I don't expect the benefits to reach me anyway. All that will
be for the big financial people, not people like us."
In Spain, Enrique Quero took a more upbeat view.
"These
measures have more of an overall global effect and, yes, are positive
in general for society and for markets, although they don*t affect
people directly," said Quero, 42, who works in an employee recruitment
agency in Madrid. "In Spain, they have a good influence on investments
and helping getting money moving because they liven up markets."
The
breadth of Thursday's measures suggests the ECB was determined to
impress markets, which had been underwhelmed by the bank's last package
of stimulus in December.
— It cut its main benchmark rate to zero from 0.05 percent
—
Lowered the rate on deposits from commercial banks at the central bank
to minus 0.40 percent from minus 0.30 percent, an unconventional move
aimed at pushing banks to lend rather than hoard cash
—
Boosted its monthly bond purchases to 80 billion euros ($88 billion)
from 60 billion euros, pushing more newly printed money into the economy
— Added corporate bonds to the assets it can buy, expanding the potential scope of the stimulus program
— And announced long-term loans at zero or negative interest of up to four years to help support banks.
The
negative rate on deposits is an unusual step aimed at pushing banks to
lend rather than leave money at the central bank. More lending would in
theory promote growth and push up inflation.
Alasdair
Cavalla at the Centre for Economics and Business Research in London
suggested that the latest ECB steps were comparable to the last stage of
U.S. Federal Reserve's stimulus efforts that promised open-ended
stimulus until unemployment fell. The Fed has ended its stimulus efforts
and has made a first interest rate increase, as the U.S. economy has
strengthened.
"The
ECB has been far more cautious than the Fed throughout the Great
Recession, and may at last be realizing that this may have at least
something to do with the divergence in economic performance since then,"
Cavalla wrote in an email.
Yet
the ECB's cut of the deposit rate below zero — also deployed by central
banks in Japan, Denmark, Switzerland and elsewhere — has raised fears
of side effects, in particular that it could dent bank profits. The
cheap loans appear aimed at removing that concern.
Having
healthy banks is crucial because they provide most business financing
in Europe — a contrast with the United States, where most business
credit comes from financial markets. Also, weak banks don't lend.
Despite
unconventional measures such as negative rates, central banks in
Europe, Japan, the United States and elsewhere have had little luck
recently in pushing up inflation. The Bank for International
Settlements, an international organization of central banks, said in a
report Sunday that central bank policies were reaching their limit.
Many
economists say that the key to boosting global growth must come from
governments spending more and tackling the obstacles to growth in their
own economies. That would include clearing away regulation that makes it
hard to start a business and excessive employee protections that make
companies reluctant to hire in the first place.
Chancellor George Osborne’s post-2015 spending cuts are
an ethically bankrupt assault on the public interest that serves the
agenda of the one percent, leading UK economists have said.
Criticism of Osborne’s austerity plans surfaced on Wednesday in
response to analysis conducted by academics from Sheffield Hallam
University’s Centre for Regional Economic and Social Research.
The study revealed large families will be the worst affected by the
chancellor’s plans to slash £13 billion (US$18.5 billion) off the
government’s welfare bill, with Asian communities expected to be at the
forefront of the firing line.
The report expands on an Austerity Audit conducted for the Financial
Times in 2013, and is the first academic study to scrutinize the impact
of Osborne’s latest round of cuts.
‘Austerity isn’t working’
The report predicted over 80 percent of the £10.7 billion due to be
slashed from the government’s welfare bill between now and 2021 will
impact upon families with dependent children.
Eight out of 10 of the worst hit regions across the UK will have a
high proportion of households with three or more children, while half
will have an Asian population of more than 10 percent, the study found.
A growing income gap between homeowners and those who rent social
housing was also apparent. While the report predicted social renters
will lose almost £1,700 per year on average, home owners of working age
were predicted to lose £290.
The study also revealed 50 percent (£6.2 billion) of the annual
welfare cuts planned post-2015 will fall on working-age households.
Lecturer in economics at Bristol Business School Jo Michell said that
Osborne’s latest round of cuts counter the public interest. “The story about deficit reduction is a smokescreen to cover what
is an ideologically motivated attack on the weakest in society,” he told RT. “The effects will be increasingly felt more widely, particularly among working families.”
Michell stressed that austerity is a deeply flawed economic doctrine. “The recent mini-boom, partly driven by the housing market, is coming to an end,” he said. “Austerity will increasingly be a drag on economic activity, leading to falling employment and weakening wage growth.”
Those who insist Austerity is required, never suffer it themselves & nor do their family or friends.
It’s always other – poorer – people
— Tom London (@TomLondon6) March 6, 2016
The British economist said that Osborne’s first round of austerity targeted the sick, the disabled and the unemployed. “There is no scope for further cuts among these groups so the
government is now targeting working families, particularly those who
receive benefits and tax relief connected to children numbers,” he said.
Michell predicted further spending cuts will disproportionately
affect Britain’s most vulnerable and impoverished, and negative effects
to health, well-being and mortality rates will be apparent.
‘Economic policies for the 1%’
Michell’s views were echoed by Director of Policy Research in
Macroeconomics at Prime Economics Ann Pettifor, who told RT there are “zero economic grounds” for further austerity in Britain at present.
Pettifor said Osborne’s policies are counter-intuitive because his
objective of further shrinking the deficit undercuts his pledge to
protect Britain’s elderly from spending cuts. “This explains why in effect, he has little alternative, but to target families with children,” she said. “Unprotected mainstream government programs have taken a hit, and
so welfare programs for the non-elderly are in effect the residual to
try to achieve his economically unwise target for a significant overall
budget surplus.”
Osborne can do U-turns but only when it comes to rich!! ..Meanwhile Austerity & BedroomTax are preferred choices!https://t.co/DbEQxuaDkK
— Angus B MacNeil MP (@AngusMacNeilSNP) March 5, 2016
Pettifor argued a combination of weak demand at home and abroad and
current levels of inflation negate the need for further spending cuts. “For the last two quarters nominal GDP has almost ground to a halt – almost unheard of in post-WWII history,” she said. “Further public spending reductions will reinforce the negative multiplier, and paradoxically increase public debt.”
‘Class warfare’
Left-leaning economist Michael Burke said Osborne’s spending cuts
will push the burden of austerity onto Britain’s poorest people. “The effects will be extremely negative for large families, who are often already among the poorest. It is entirely foolish,” he told RT. “The entire austerity policy hits those on middle incomes and the
poor. Large families will struggle even more. And the Women’s Budget
group shows that women bear 74 percent of the burden of all cuts.
Osborne’s policy will increase these negative effects.”
Burke argued Osborne’s long-term economic plan has failed. “If his austerity program worked in the way he claims, the deficit would have been eliminated long before now,” he said.
Burke said Osborne’s austerity policies undermine the public
interest, yet have attracted the backing of big business. He predicted
the chancellor will continue to “act in the interests of the one percent.”
Geographical location and household composition were crucial factors
in determining the impacts of the government’s next round of austerity.
Older industrial areas, seaside towns and certain London boroughs will
shoulder the brunt, while wealthy areas of South East England will
remain almost untouched.
The Sheffield Hallam University study predicted Blackpool and
Blackburn will each lose £560 per working-age adult as a result of the
post-2015 cuts, Guildford in Surrey will lose £150, Richmond will lose
£140, and the Hart district will lose £130.
This piece was reprinted by RINF Alternative News with permission or license. Keep up to date with the news you're not supposed to know via RINF on Facebook, on Twitter and subscribe to our YouTube Channel for our videos.
Earlier this week hedge fund manager Marin Katusa explained that up
until the recent stock market hit all the easy money flowing into the
energy sector was being exuberantly spent on hookers, blow and fancy toys.
Now, as oil prices hover under $40 per barrel, Katusa said more pain is
likely coming and oil, along with other asset classes, are going to go
“lower for longer.”
In a recent interview with Future Money Trends,
trend forecaster Gerald Celente echos Katusa’s concerns. Having
accurately predicted the Crash of 2008 nine months ahead of the bottom
falling out on a global scale, Celente says another panic is coming this
year.
But if you thought 2008 was bad, says Celente, this crash will be so severe it’ll be one for the history books:
…51% of the people in the United States that are employed
are earning under $30,000 a year… Less than half the population is
considered middle-class in America… the gap between the rich and the
poor is as bad as it was at the worst times of the Gilded Age going back
over a hundred years.
So, what happens when the Panic of 2016 happens?
The Panic of ’08 helped wipe out the middle class… this is
going to eliminate it to a large degree, because they’re deep in debt…
Watch Gerald Celente discuss his trend forecasts for everything
from politics and the economy to wealth preservation strategies and
entrepreneurship in times of crisis:
Now, what this is going to do… it’s going to knock out
the top… and the top survived the other crash because the top are the
ones that are totally leveraged out… there’s no more savings anymore…
there’s no more savings anymore… it’s only markets because of zero
interest rate policy.
The markets have been artificially juiced up… so when this thing
comes down it takes the top down… the last time it pulled out the
bottom… so this is going to be a top-down crash.
And there’s not going to be anything to pump it back up because they’ve blown all their ammunition…
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