19 Reasons Why You Can Laugh When Anyone Tells You That The Economy Is In Good Shape by MICHAEL SNYDER | AMERICAN DREAM | JUNE 11, 2014
Have you heard the one about the “economic recovery” in the United States? It’s quite funny, but it is not actually true. Every day, the establishment media points to the fact that global stock markets have soared to unprecedented heights as evidence that the economy is improving. But just because a bunch of wealthy people have gotten temporarily even richer on paper does not mean that the real economy is in good shape. In fact, as you will see below, things just continue to get even tougher for the poor and the middle class. Retail stores are closing at the fastest pace since the fall of Lehman Brothers, the rate of homeownership in this country is the lowest that it has been in 19 years, one out of every five families do not have a single member that is employed, and one out of every five children is living in poverty. We are working harder, earning less and going into more debt. With each passing day, the middle class gets a little bit smaller and the ranks of the poor get a little bit larger. But at least the stock market is doing great, eh? If the U.S. economy really was doing well, government dependence would not be at epidemic levels. If the U.S. economy really was doing well, we wouldn’t have more than a million public school children that are homeless. If the U.S. economy really was doing well, the percentage of Americans that have a job would not be lower than it was when the last recession supposedly “ended”. Nobody that takes an honest look at the numbers can honestly say that the U.S. economy has recovered. The following are 19 reasons why you can laugh when anyone tells you that the economy is in good shape… #1 RadioShack just announced that it is going to close an additional 200 stores on top of what it was already planning to close. #2 During the first quarter of this year, reported earnings by major U.S. retailers missed estimates by
the largest margin in 13 years. #3 One out of every three grocery store workers in the state of California is on some form of public assistance. #4 The percentage of Americans that believe that it is a “good time to buy a home” is the lowest that it has been in four years. #5 According to one recent survey, 52 percent of Americans cannot even afford the house that they are living in right now. #6 Sadly, only 36 percent of American adults under the age of 35 currently own a home. That is the lowest level that has ever been recorded. #7 According to one new study, half of all college graduates are still relying on their parents financially when they are two years out of school. #8 The number of planned job cuts by U.S. employers is on the rise again… Job cuts climbed to the highest level in more than a year, as U.S.-based employers announced plans to reduce payrolls by 52,961 in May, according to a report from Challenger, Gray & Christmas. #9 Right now, one out of every six men in their prime working years (25 to 54) do not have a job. #10 The percentage of Americans not in the labor force is still at a 36 year high. #11 53 percent of wage earners in the United States make less than $30,000 a year. #12 The average age of vehicles on America’s roads has hit an all-time high of 11.4 years. Are we making them better or is it just that people simply cannot afford to buy new vehicles anymore? #13 According to Pulitzer prize-winning reporter David Cay Johnston, the economic recovery following the depths of the Great Depression was far superior to what we are experiencing today… The most eye-opening measure of how poorly the vast majority are faring these days comes from comparing the periods after the Great Recession and the Great Depression. The 90 percent, the vast majority, saw their income decline in 2012 compared with 2009, the year the Great Recession officially ended. Average annual income was down $556, or almost 2 percent, adjusted for inflation, to $30,997. But in 1936, three years after the Great Depression ended, the vast majority enjoyed 31 percent more income than in 1933. The average increase, in today’s dollars, was $2,146 per household. #14 The U.S. economy did not experience any economic growth during the first quarter of 2014. In fact, it actually contracted. #15 The growth of furniture spending has just gone negative for the first time in about two years. #16 More than 20 percent of all children in the U.S. are living in poverty, and 49 million Americans are dealing with food insecurity. #17 As I have written about previously, approximately 20 percent of all American families do not have a single member that is employed at this point. #18 According to a recent Gallup survey, “Unemployment/Jobs” represents the number one concern for
U.S. voters. #19 After adjusting for inflation, median household income in the U.S. is now about 7 percent lower than it was in the year 2000.
Russia Is Doing It – Russia Is Actually Abandoning The Dollar by MICHAEL SNYDER | ECONOMIC COLLAPSE | JUNE 11, 2014 The Russians are actually making a move against the petrodollar. It appears that they are quite serious about their de-dollarization strategy. The largest natural gas producer on the planet, Gazprom, has signed agreements with some of their biggest customers to switch payments for natural gas from U.S. dollars to euros. And Gazprom would have never done this without the full approval of the Russian government, because the Russian government holds a majority stake in Gazprom. There hasn’t been a word about this from the big mainstream news networks in the United States, but this ishuge. When you are talking about Gazprom, you are talking about a company that is absolutely massive. It is one of the largest companies in the entire world and it makes up 8 percent of Russian GDP all by itself. It holds 18 percent of the natural gas reserves of the entire planet, and it is also a very large oil producer. So for Gazprom to make a move like this is extremely significant. When Barack Obama decided to slap some meaningless economic sanctions on Russia a while back, he probably figured that the world would forget about them after a few news cycles. But the Russians do not forget, and they certainly do not forgive. At this point the Russians are turning their back on the United States, and that includes the U.S. dollar. What you are about to read is absolutely stunning, and yet you have not heard about it from any major U.S. news source. But what Gazprom is now doing has the potential to really shake up the global financial landscape. The following is an excerpt from a news report by the ITAR-TASS news agency… Gazprom Neft had signed additional agreements with consumers on a possible switch from dollars to euros for payments under contracts, the oil company’s head Alexander Dyukov told a press conference. “Additional agreements of Gazprom Neft on the possibility to switch contracts from dollars to euros are signed. With Belarus, payments in roubles are agreed on,” he said. Dyukov said nine of ten consumers had agreed to switch to euros. And Gazprom is not the only big company in Russia that is moving away from the U.S. dollar.
According to RT, other large Russian corporations are moving to other currencies as well… Russia will start settling more contracts in Asian currencies, especially the yuan, in order to lessen its dependence on the dollar market, and because of Western-led sanctions that could freeze funds at any moment. “Over the last few weeks there has been a significant interest in the market from large Russian corporations to start using various products in renminbi and other Asian currencies, and to set up accounts in Asian locations,” Pavel Teplukhin, head of Deutsche Bank in Russia, told the Financial Times, which was published in an article on Sunday. Diversifying trade accounts from dollars to the Chinese yuan and other Asian currencies such as the Hong Kong dollar and Singapore dollar has been a part of Russia’s pivot towards Asian as tension with Europe and the US remain strained over Russia’s action in Ukraine. And according to Zero Hedge, “expanding the use of non-dollar currencies” is one of the main things that major Russian banks are working on right now… Andrei Kostin, chief executive of state bank VTB, said that expanding the use of non-dollar currencies was one of the bank’s “main tasks”. “Given the extent of our bilateral trade with China, developing the use of settlements in roubles and yuan [renminbi] is a priority on the agenda, and so we are working on it now,” he told Russia’s President Vladimir Putin during a briefing. “Since May, we have been carrying out this work.” “There is nothing wrong with Russia trying to reduce its dependency on the dollar, actually it is an entirely reasonable thing to do,” said the Russia head of another large European bank. He added that Russia’s large exposure to the dollar subjects it to more market volatility in times of crisis. “There is no reason why you have to settle trade you do with Japan in dollars,” he said. The entire country is undergoing a major financial conversion. This is just staggering. Meanwhile, Russians have been pulling money out of U.S. banks at an unprecedented pace… So in March, without waiting for the sanction spiral to kick in, Russians yanked their moolah out of US banks. Deposits by Russians in US banks suddenly plunged from $21.6 billion to $8.4 billion. They yanked out 61% of their deposits in just one month! They’d learned their lesson in Cyprus the hard way: get your money out while you still can before it gets confiscated.
For those that don’t think that all of this could hurt the U.S. economy or the U.S. financial system, you really need to go back and read my previous article entitled “De-Dollarization: Russia Is On The Verge Of Dealing A Massive Blow To The Petrodollar“. The truth is that the U.S. economic system is extremely dependent on the financial behavior of the rest of the globe. Because nearly everyone else around the rest of the planet uses our currency to trade with one another, that keeps the value of the U.S. dollar artificially high and it keeps our borrowing costs artificially low. As Russia abandons the U.S. dollar that will hurt, but if other nations start following suit that could eventually cause a financial avalanche. What we are witnessing right now is just a turning point. The effects won’t be felt right away. So don’t expect this to cause financial disaster next week or next month. But this is definitely another element in the “perfect storm” that is starting to brew for the U.S. economy. Yes, we have been living in a temporary bubble of false stability for a few years. However, the longterm outlook has not gotten any better. In fact, the long-term trends that are destroying our economic and financial foundations just continue to get even worse. So enjoy the “good times” while you still can. They certainly will not last too much longer.
The Stock Market Is Like A Fish Tank by CHARLES HUGH-SMITH | INVESTMENT WATCH | JUNE 10, 2014
This pattern can be repeated until one runs out of pellets Now that the majority is tightly packed into a market devoid of yield/alpha, this concentration sets up the inevitable collapse of valuations perfectly. I recently had the pleasure of visiting a state fish hatchery. Those of you who fish know that the
hatcheries are responsible for raising sports fishing species such as trout and salmon and then releasing them in lakes and rivers to bolster native stocks. The fish are kept in large concrete tanks where the water temperature and feeding are carefully monitored and controlled. In this particular hatchery, the public is invited to buy a small handful of food pellets (25 cents) to feed the fish when they reach a certain stage of maturity. (Proceeds go to maintaining native fisheries.) The fish are milling about semi-randomly, seeking whatever food might appear. In the stock market, investors and punters are also milling about semi-randomly, seeking yield and above-average returns (alpha). When a few food pellets are randomly tossed into the tank, the first fish in the vicinity to respond to the splash get the pellets. In the stock market, the pellets are yield and alpha. The fish milling around in the tank are highly attuned to the actions of their mates, and those nearest the first fish quickly follow them to the source of the food. This makes good sense, as the food (yield/alpha) might be plentiful and the second wave of fish would be well-rewarded for being second. These fish attract the attention of virtually every other fish in the area, and within a few seconds the water where the few pellets landed is boiling with fish seeking pellets (yield/alpha). This pattern can be repeated until one runs out of pellets: toss a few food pellets in a sparsely populated area of the tank, and watch how quickly the majority of the fish rush to the spot where the food has already been consumed. The few fish wandering around the edges who did not join the majority speeding to the place where the food (yield/alpha) has been exhausted are the likeliest to be closest to the next semi-randomly tossed pellets. In effect, those who join the majority thrashing around the spot where the food has been consumed are guaranteed to go hungry. I submit that the stock market is like a fish tank, and the majority are thrashing around precisely where the yield/alpha has been consumed and the risk of starving (losing money) is greatest. The same can be said of the residential rental market, and every other asset class where the majority of participants and betting capital that the food pellets are limitless, when the reality is the yield/alpha in the market has already been consumed by those who got there first and second–those who responded first when no other participants noticed the splash of opportunity. Now that the majority is tightly packed into a market devoid of yield/alpha, this concentration sets up the inevitable collapse of valuations perfectly.
The Fed-Induced Demise Of The American Dream (In 1 Simple Chart) by TYLER DURDEN | ZEROHEDGE | JUNE 10, 2014 The trickle-down is not working... the middle-class is tapped out Thanks to free and abundant credit to those at the front of the line, home prices have soared in the last few years as “smart” hedge fund managers have bought homes-to-rent in a yield-grab with both hands and feet. This – as we have noted numerous times – priced out the ‘real’ buyer; who this time, instead of being driven by a “fear of missing out”, would rather not play (only to be left holding the bag). Another unintended consequence courtesy of The Fed’s “main-street-helping” actions that has destroyed the American Dream for a declining middle class. Fewer Americans think it’s a good time to buy a home than at any time in the last 4 years… “recovery”!
The trickle-down is not working… the middle-class is tapped out (and releveraging just to get by)… and the Fed’s key transmission mechanism to the masses (housing) has now been broken… let’s hope the market doesn’t drop ever again (or the economy).
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