(CNN)Beloved internet meme Pepe the Frog has gone through various incarnations over the years, most of them innocuous and amusing.
(CNN)Beloved internet meme Pepe the Frog has gone through various incarnations over the years, most of them innocuous and amusing.
A note from Paul Solman: Making Sen$e’s old friend Terry Burnham is back with another grim counter to the conventional wisdom. The Chicken Little of high finance, you might call him, Terry is a former Goldman Sachs trader, money manager, biotech entrepreneur and author who has taught both economics and evolutionary biology at Harvard and is now a professor at Chapman University.
He still thinks the Dow will hit 5,000 before it hits 20,000 (yes, you read that right: 5,000), which he first predicted when it was 15,000. Stubbornly, if not implausibly, he’s still making that claim now that the Dow has grown by more than 10 percent, so his prediction is looking pretty poor, as he himself admits in a post last month.
But he still thinks the current recovery is a function of smoke and mirrors, not real-life economics. Today Terry returns to the page with a bleak appraisal of the Fed and the unintended consequences, in his view, of its low-interest-rate policy.
Financial markets live in terror of the day the Federal Reserve raises interest rates. However, we should fear exactly the opposite: a persistent nightmare of low interest rates. Chronically low interest rates signal trouble, and they inflict financial pain. Ominously, a recent economic poll (interpreted correctly) suggests that interest rates are going to fall, not rise. But we’ll get to that later.
Economics 101 argues that low rates cause economic growth because consumers take advantage of them to finance home purchases; businesses, to build factories and hire workers. Consequently, the economy should grow faster: low rates stimulate the economy.
The recent U.S. stock market surge has accompanied signals that the Federal Reserve will keep interest rates low for a long time. After Federal reserve chair Janet Yellen spoke at the Jackson Hole conference last Friday, a Business Week headline blared: “Yellen: Rates will stay low even after QE ends this fall.”
The conventional wisdom: low interest rates are good for both economic growth and the stock market.
Unfortunately for the conventional, the “wisdom” of low-rates-stimulate-growth omits three features.
First, the primary effect of low interest rates on wealth is exactly nothing. For every borrower who pays $1 less in interest, there is a saver who receives $1 less in interest income. Any economic growth is second-order; lower rates transfer wealth from savers to borrowers.
Second, the conventional wisdom misses the time element associated with low rates. We have already received most of the benefits that we are going to receive from low rates, but the costs of low rates will extend for decades.
A joke illustrates the point. An elephant and a mouse meet in the jungle. They fall in love and have a passionate night of romance. The mouse wakes nestled in the elephant’s trunk, only to find its lover is dead. As the mouse begins the process of digging a huge grave, it says, “Such is life, a few moments of passion, followed by a lifetime of work.”
Similarly, the benefits of low interest rates come immediately, while the pain lasts for decades.
Consider the recent experience of an investor in German 10-year bonds. Over the last year, the interest rate on 10-year German bonds has fallen from roughly 2 percent to under 1 percent. An owner of German bonds received a tremendous return of over 11 percent in the past year because the bonds rose in value as the interest rate dropped — 2-percent bonds are worth more in a 1-percent world. But the same investor now faces a total return of under 9 percent in the next nine years: a mere 1 percent a year. More than half the return on this German bond came in the first year when the interest rate fell. Investors who own these German bonds now will earn very low future returns. And if interest rates rise, today’s bonds will be worth less.
Similarly, most benefits of low U.S. rates have already occurred. People who owned U.S. Treasuries and other bonds in 2011, 2012, and so far in 2014, reaped huge benefits as interest rates fell and bond prices rose. While falling interest rates produce a great one-time benefit, the future for bond investors is bleak.
The reality of investing in a low-interest-rate world has not sunk in for most investors. Here is an exercise that you can perform to understand your future. Take your financial assets and multiply by 2.4 percent, the current yield on a U.S. 10-year Treasury bond. If you have $100,000 saved, you have $200 per month to live on before taxes and inflation. Can you live off your savings?
Most people cannot survive earning 2.4 percent. Only the top 1 percent can live off their savings. Many people are poorer than we realize because we overestimate what we can earn on our savings. When we comprehend how poor the Federal Reserve has made us, we will start consuming less, which will be tough on us, and bad for an economy dependent on consumer spending.
Americans everywhere are struggling with the realities of low returns on our savings. On a recent visit to Disneyland, an elderly employee, who looked about 75 years old, searched our family backpack at the entrance to “the happiest place on earth.” He asked how I was doing, and I said, “Great,” then asked how he was doing. Knowing that he could be fired for what he was about to say, the senior citizen employee whispered with disgust, “NG — not good. Working hard for very little.”
Lower interest rates are not only a problem for bondholders; they also hurt Americans’ pensions. Most corporate and public pension plans are “underfunded” in that they do not have enough money to cover future payouts to retirees. Amazingly, these plans are underfunded under the assumption that they can earn more than 7 percent a year on the money they have invested.
How can a pension fund believe it will earn 7 percent in a world where Treasury bonds pay only 2.4 percent? The answer is by taking huge risks.
Pensions increase their risk by buying emerging market debt, risky stocks, and investing in riskier areas via hedge funds. For example, San Diego’s pension plan aims for high returns by using derivatives and leverage. Watch this Making Sen$e video to see the problem even in conservatively managed Rhode Island.
The fact is, pension funds are unlikely to earn 7 percent. They might not earn anything at all if the stock market declines. And in the event that pension plans return less than their assumed 7 percent, everyone pays. The public pension plans will ask taxpayers for support. Even private plan failures will impose costs on others as they raise product prices and lower dividends. Some private plans will fail and seek government assistance from the Pension Benefit Guarantee Corporation.
Conventional wisdom that low interest rates are good overlooks the facts. First, low interest rates primarily take from savers and give to borrowers with no net gain. Second, the benefits of low rates have already occurred, while the pain will persist for decades. And third, low rates contribute to the underfunding of pension plans, which will impose costs on both retirees and non-retirees.
Japan is the poster child for the failure of low interest rate policy. In the 1980s, Japan led the world in many economic areas; now it is near the top in debt and stagnation.
Japanese interest rates are far lower than U.S. rates, and Japanese rates have been low for much longer. A hundred thousand dollars invested in 10-year Japanese government bonds yields just $40 per month in income before inflation and taxes. Consider that even $1,000,000 invested at the Japanese rate produces just $400 a month in pre-tax income. It is no wonder that Japan is struggling. Low rates have not helped the Japanese, and they won’t help Americans either.
And the bad news is that U.S. interest rates are likely headed lower. This spring, 100 percent of surveyed economists predicted rising rates. And if 100 percent of economists believe anything, they are almost surely wrong.
The unanimity that U.S. interest rates are going higher is as good a sign as possible that we should prepare ourselves for a depressed and depressing world of persistent low interest rates.
Instead of fearing a Federal Reserve interest rate rise, we should be on the lookout for an interest rate collapse. You can monitor the situation by watching the 10-year Treasury interest rate. (See the bottom right of the Google finance page.)
The worst news for most people, and particularly for savers, would be an announcement this fall or early next year that the Federal Reserve will not raise interest rates in 2015. In this scenario, the 10-year Treasury rate could drop below 2 percent and could even approach 1 percent. Wall Street might cheer a delayed Fed rate increase, but for Main Street, and certainly for savers, such a delay would be nothing but bad news. (Link to Article)
Frankfurt (AFP) – Violent clashes between anti-capitalist protesters and German police left dozens injured and a trail of destruction in Germany’s financial capital as the European Central Bank opened its new headquarters Wednesday.
In fierce street battles that began in the early hours in the well-heeled western city of Frankfurt, 14 police and 21 anti-capitalist protesters were wounded, police and rally organizers said.
Firefighters also came under attack during several of the 47 times they were called out to douse the flames of burning automobiles and barricades made from toppled garbage bins…
Titanium dioxide is used to make the powdered sugar appear brighter. It is also used in sunscreen and paints. The group As You Sow argues titanium dioxide that can cause DNA and chromosomal damage when consumed. The decision by Dunkin’ Donuts (More) was recently disclosed by the advocacy group.” This is a groundbreaking decision,” said Danielle Fugere, president and chief counsel of the group. “Dunkin’ has demonstrated strong industry leadership by removing this potentially harmful ingredient from its donuts.”…
Despite spending almost £1 million ($1.5 million), their efforts are likely to be in vain. Government advisers have recommended a nearby town that’s already a railway junction get the new hub instead—leaving Stoke emblematic of the struggle by many parts of the U.K. to attract much-needed jobs and investment despite a rebound in growth.
February figures confirmed Britain’s economy expanded 2.6% in 2014, one the fastest growth rates among large Western economies. But much of the recovery has been concentrated in and around London, which pulled out of recession faster than the rest of the country…more
We’ve all heard the Obama Administration and our corporate media strongly implying, if not out-and-out declaring, that Russian separatists in eastern Ukraine shot down Malaysian Airlines Flight MH 17 with a surface-to-air missile last month, therefore, Vladimir Putin and Mother Russia itself are responsible. Now, according to a story from a newspaper that is, to be generous, heavily influenced by the Malaysian government, that premise is being challenged by Malaysia itself.
According to those damned good investigative journalists at the World Socialist Web Site, the article in the New Straits Times of Malaysia claims that expert analysis of photographs of the wreckage shows a pattern of the airliner being hit by an air-to-air missile first, and then finished off by machine gun and cannon rounds fired from the air, and even aimed at the cockpit. Please read the whole story, which is well-written and not very long.
If there really is a neutral party to all of this that just wants to get to the truth, it’s probably the Malaysians. It was their plane, after all, and they really have no vital interests tied up in either Russia or Ukraine. I’m far more inclined to give them the benefit of the doubt over the claims of the Obama Administration, the Kiev regime, or Vladimir Putin, for that matter. Speaking of the latter, though, according to the article the Russian military DID say that there were two Ukrainian fighter jets trailing the airliner just before it went down, although of course that was pooh-poohed by the Western corporate media. READ
Amid picturesque fields of sunflowers, just one mile from the Russian border in the eastern Ukrainian region of Luhansk, villagers gathered to take triumphant selfies earlier today while standing on top of the still-smoldering wreck of a Ukrainian plane. Photos taken, they then carried away souvenirs of twisted metal from the crash site. According to Ukraine’s Defense Minister Valeriy Heletey, the An-26 aircraft, which was carrying food and water supplies to troops fighting in the country’s restive east, was shot down by “a powerful missile weapon that probably was used from the territory of the Russian Federation.” Government officials claimed that the shoulder-fired surface-to-air missiles used by the pro-Russia rebels operating in the area would not have been able to hit the plane at the altitude it was flying. READ
Around the town of Chatillon, Belgium, the end of World War II left a few creepy hallmarks of the armistice in the form of long lines of cars left abandoned by the hundreds in the woods. MORE
Originally posted at NotQuant.com,
As most Fed watchers know, last week was interesting because Janet Yellen, speaking at IMF came out and said something quite surprising. In a nutshell, she said “It’s not the Fed’s job to pop bubbles”. While many market participants immediately took this to mean, “To the moon, Alice!” and started buying equities hand over fist, there’s another possible explanation for Mrs. Yellen’s proclamation of unwillingness: The Fed could be preparing to do exactly what it said it wouldn’t.
Here’s a quick re-cap of events: In the recently released Annual Report of the BIS: Bank for International Settlements (commonly thought of as the “central bank’s central bank”) the BIS made a rather ominous recommendation to it’s member banks: Pop this bubble now. Their specific language wasn’t quite so direct, but the message was just as clear.
The risk of normalising too late and too gradually should not be underestimated… The trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on .
Few are ready to curb financial booms that make everyone feel illusively richer. Or to hold back on quick fixes for output slowdowns, even if such measures threaten to add fuel to unsustainable financial booms,” …
“The road ahead may be a long one. All the more reason, then, to start the journey sooner rather than later.”
Back in May, we learned that Martha Stewart owns a drone. Now we have photographic evidence—America’s favorite outlaw recipe, home, and living guru just posted a bunch of pictures taken with her drone.
More specifically, one of her body guards, Dominic Arena, took the photos, we think. Martha also has some seemingly strong feelings about the drone vs. unmanned aerial vehicle debate—she’s only willing to call her DJI Phantom a “drone-like” aircraft. She also solicited some comments about the “various ways [drone-like, radio controlled aircraft] can be used in the future!” Branding, people. Anyway, if you were ever wondering what Martha Stewart’s Bedford, New York farm (including various flower gardens, a tenant house, a horse paddock, a donkey paddock, a winter house, and perfectly-manicured lawns) looks like from the air, here you go:
Former Navy SEAL and Blackwater founder Erik Prince has a new security venture. This time he is helping Chinese firms to “take the drama out of Africa” by consulting on how the businesses should establish themselves and operate throughout the continent. Africa has become a major target for Chinese investment to secure access to the continent’s vast natural resources.
Prince’s new firm, Frontier Services Group (FSG), provides “logistics, aviation and risk management services to firms that want to set up in Africa.” Prince sold his stake in Blackwater in 2010 which is now known as Academi.
FSG is headquartered in Hong Kong and works closely with one of Communist China’s state-owned enterprises, CITIC Group. CITIC Group is a state-owned investment group worth approximately $12 billion with 44 subsidiaries and owns banks in Hong Kong, New Zealand, Australia, Canada, and the United States. At one time CITIC was in talks to acquire Morgan Stanley.
While the dictum “high risk, high return” applies to the continent, Prince said his customers – who are looking for bauxite, steel, energy, copper, tin or gold – should focus on another slogan: “happy locals, happy project”.
Walter Pincus argues that, in addition to being unaccountable, private military contractors are much more expensive than professional soldiers:
According to data provided to the House panel, the average per-day pay to personnel Blackwater hired was $600. According to the schedule of rates, supplies and services attached to the contract, Blackwater charged Regency $1,075 a day for senior managers, $945 a day for middle managers and $815 a day for operators.
An unmarried sergeant given Iraq pay and relief from U.S. taxes makes about $83 to $85 a day, given time in service. A married sergeant with children makes about double that, $170 a day.
WASHINGTON — Just weeks before Blackwater guards fatally shot 17 civilians at Baghdad’s Nisour Square in 2007, the State Department began investigating the security contractor’s operations in Iraq. But the inquiry was abandoned after Blackwater’s top manager there issued a threat: “that he could kill” the government’s chief investigator and “no one could or would do anything about it as we were in Iraq,” according to department reports.
American Embassy officials in Baghdad sided with Blackwater rather than the State Department investigators as a dispute over the probe escalated in August 2007, the previously undisclosed documents show. The officials told the investigators that they had disrupted the embassy’s relationship with the security contractor and ordered them to leave the country, according to the reports.
After returning to Washington, the chief investigator wrote a scathing report to State Department officials documenting misconduct by Blackwater employees and warning that lax oversight of the company, which had a contract worth more than $1 billion to protect American diplomats, had created “an environment full of liability and negligence.” READ
NEW YORK – In recent weeks, both General David Petraeus and House Minority Leader Nancy Pelosi, D-Calif., have woven into public speeches the theme of combining the United States, Canada and Mexico into a single, North American Union.
“After America, there is North America,” explained Petraeus, the former U.S. military commander and former head of the CIA, to a panel entitled “After America, What?” held at the Margaret Thatcher Conference on Liberty on June 18, 2014, hosted by the Center for Policy Studies in Great Britain.
In his presentation to the conference, Petraeus proclaimed the coming of the “North American decade,” a vision he explained was founded on the idea of putting together the economies of the United States, Canada and Mexico, some 20 years after the creation of North American Free Trade Agreement, or NAFTA.
“In each of these economies there are four revolutions going on,” Petraeus continued, naming the following: an energy revolution, in which the United States is leading the world in the production of natural gas and shale oil, combined with Canada’s enormous resources in the Alberta tar sands and Mexico opening up the state-owned Pemex to international oil companies; an information and technology revolution led by Silicon Valley; a manufacturing revolution; and a life sciences revolution. READ
Virtual Economy’s Phantom Job Gains Are Based on Statistical Fraud
And More Fraud Is in the Works
Paul Craig Roberts
Washington can’t stop lying. Don’t be convinced by last Thursday’s job report that it is your fault if you don’t have a job. Those 288,000 jobs and 6.1% unemployment rate are more fiction than reality.
In his analysis of the June Labor Data from the Bureau of Labor Statistics, John Williams (www.ShadowStats.com) wrote that the 288,000 June jobs and 6.1% unemployment rate are “far removed from common experience and underlying reality.” Payrolls were overstated by “massive, hidden shifts in seasonal adjustments,” and the Birth-Death model added the usual phantom jobs.
Williams reports that “the seasonal factors are changed each and every month as part of the concurrent seasonal-adjustment process, which is tantamount to a fraud,” as the changes in the seasonal factors can inflate the jobs number. While the headline numbers always are on a new basis, the prior reporting is not revised so as to be consistent.
The monthly unemployment rates are not comparable, so one doesn’t know whether the official U.3 rate (the headline rate that the financial press reports) went up or down. Moreover, the rate does not count discouraged workers who, unable to find a job, cease looking. To be counted among the U.3 unemployed, the person must have actively looked for work during the four weeks prior to the survey. The U.3 rate automatically declines as people who have been unable to find jobs cease trying to find one and thereby cease to be counted as unemployed.
There is a second official measure of unemployment that includes people who have been discouraged for less than one year. That rate, known as U.6, is seldom reported and is double the 6.1% rate.
Since 1994 there has been no official measure than includes discouraged people who have not looked for a job for more than a year. Including all discouraged workers produces an unemployment rate that currently stands at 23.1%, almost four times the rate that the financial press reports.
What you can take away from this is the opposite of what the presstitute media would have you believe. The measured rate of unemployment can decline simply because large numbers of the unemployed become discouraged workers, cease looking for work, and cease to be counted in the U.3 and U.6 measures of the unemployment rate.
The decline in the employment-population ratio from 63% prior to the 2008 downturn to 59% today reflects the growth in discouraged workers. Indeed, the ratio has not recovered its previous level during the alleged recovery, an indication that the recovery is an illusion created by the understated measure of inflation that is used to deflate nominal GDP growth.
Another indication that there has been no recovery is that Sentier Research’s index of real median household income continued to decline for two years after the alleged recovery began in June 2009. There has been a slight upturn in real median household income since June 2011, but income remains far below the pre-recession level.
The Birth-Death model adds an average of 62,000 jobs to the reported payroll jobs numbers each month. This arbitrary boost to the payroll jobs numbers is in addition to the Bureau of Labor Statistics’ underlying assumption that unreported jobs lost to business failures are matched by unreported new jobs from new business startups, an assumption that does not well fit an economy that fell into recession and is unable to recover.
John Williams concludes that in current BLS reporting, “the aggregate average overstatement of employment change easily exceeds 200,000 jobs per month.”
In other words, the economy did not gain 288,000 new jobs last month. But let’s assume the economy did gain 288,000 jobs and exam where the claimed jobs are reported to be.
Of the alleged 288,000 new jobs, 16,000, or 5.5 percent are in manufacturing, which is not very promising for engineers and blue collar workers. Growth in goods producing jobs has almost disappeared from the US economy. As explained below, to alter this problem the government is going to change definitions in order to artificially inflate manufacturing jobs.
In June private services account for 82 percent of the supposed new jobs. The jobs are found mainly in non-tradable domestic services that pay little and cannot be exported to help to close the large US trade deficit.
Wholesale and retail trade account for 55,300 jobs. Do you believe sales are this strong when retailers are closing stores and when shopping malls are closing?
Insurance (most likely the paperwork of Obamacare) contributed 8,500 jobs.
As so few can purchase homes, “real estate rental and leasing” contributed 8,500 jobs.
Professional and business services contributed 67,000 jobs, but 57% of these jobs were in employment services, temporary help services, and services to buildings and dwellings.
That old standby, education and health services, accounted for 33,700 jobs consisting mainly of ambulatory health care services jobs and social assistance jobs of which three-quarters are in child day care services.
The other old standby, waitresses and bartenders, gave us 32,800 jobs, and amusements, gambling, and recreation gave us 3,500 jobs.
Local government, principally education, gave us 22,000 jobs.
So, where are the jobs for university graduates? They are practically non-existent. Think of all the MBAs, but June had only 2,300 jobs for management of companies and enterprises.
Think of the struggle to get into law and medical schools. There’s no job payoff. June had jobs for 1,200 in legal services, which includes receptionists and para-legals. Where are all the law school graduates finding jobs?
Offices of physicians (mainly people who fill out the mandated paperwork and comply with all the regulations, which have multiplied under ObamaCare) hired 4,000 people. Outpatient care centers hired 700 people. Nursing care facilities hired 2,400 people. So where are the jobs for the medical school graduates?
Aside from all the exaggerations in the jobs numbers of which ShadowStats.com has informed us, just taking the jobs as reported, what kind of economy do these jobs indicate: a superpower whose pretensions are to exercise hegemony over the world or an economy in which opportunities are disappearing and incomes are falling?
Do you think that this jobs picture would be the same if the government in Washington cared about you instead of the mega-rich?
Some interesting numbers can be calculated from table A.9 in the BLS press release. John Williams advises that the BLS is inconsistent in the methods it uses to tabulate the data in table A.9 and that the data is also afflicted by seasonal adjustment problems. However, as the unemployment rate and payroll jobs are reported regardless of their problems, we can also report the BLS finding that in June 523,000 full-time jobs disappeared and 800,000 part time jobs appeared.
Here, perhaps, we have yet another downside of the misnamed Obama “Affordable Care Act.” Employers are terminating full-time employment and replacing the jobs with part-time employment in order to come in under the 50-person full time employment that makes employers responsible for fringe benefits such as health care.
Americans are already experiencing difficulties making ends meet, despite the alleged “recovery.” If yet another half million Americans have been forced onto part-time pay with consequent loss of health care and other benefits, consumer demand is further compressed, with the consequence, unless hidden by statistical trickery, of a 2nd quarter negative GDP and thus officially the reappearance of recession.
What will the government do if a recession cannot be hidden? If years of unprecedented money printing and Keynesian fiscal deficits have not brought recovery, what will bring recovery? How far down will US living standards fall for the 99% in order that the 1% can become ever more mega-rich while Washington wastes our diminishing substance exercising hegemony over the world?
Just as Washington lied to you about Saddam Hussein’s weapons of mass destruction, Assad’s use of chemical weapons, Russian invasion of Ukraine, Waco, and any number of false flag or nonexistent attacks such as Tonkin Gulf, Washington lies to you about jobs and economic recovery. Don’t believe the spin that you are unemployed because you are shiftless and prefer government handouts to work. The government does not want you to know that you are unemployed because the corporations offshored American jobs to foreigners and because economic policy only serves the oversized banks and the one percent.
Just as the jobs and inflation numbers are rigged and the financial markets are rigged, the corrupt Obama regime is now planning to rig US manufacturing and trade statistics in order to bury all evidence of offshoring’s adverse impact on our economy.
The federal governments Economic Classification Policy Committee has come up with a proposal to redefine fact as fantasy in order to hide offshoring’s contribution to the US trade deficit, artificially inflate the number of US manufacturing jobs, and redefine foreign-made manufactured products as US manufactured products. For example, Apple iPhones made in China and sold in Europe would be reported as a US export of manufactured goods. Read Ben Beachy’s important report on this blatant statistical fraud in CounterPunch’s July 4th weekend edition: http://www.counterpunch.org/2014/07/04/we-didnt-offshore-manufacturing/
China will not agree that the Apple brand name means that the phones are not Chinese production. If the Obama regime succeeds with this fraud, the iPhones would be counted twice, once by China and once by the US, and the double-counting would exaggerate world GDP.
For years I have exposed the absurd claim that offshoring is merely the operation of free trade, and I have exposed the incompetent studies by such as Michael Porter at Harvard and Matthew Slaughter at Dartmouth that claimed to prove that the US was benefitting from offshoring its manufacturing. My book published in 2012 in Germany and in 2013 in the US, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West, proves that offshoring has dismantled the ladders of upward mobility that made the US an opportunity society and is responsible for the decline in US economic growth. The lost jobs and decline in the middle class has contributed to the rise in income inequality, the destruction of tax base for cities and states, and loss of population in America’s once great manufacturing centers.
For the most part economists have turned a blind eye. Economists serve the globalists. It pays them well.
The corruption in present-day America is total. Psychologists and anthropologists serve war and torture. Economists serve globalism and US financial hegemony. Physicists and chemists serve the war industries. Physicists and computer geeks serve NSA. The media serves the government and the corporations. The political parties serve the six powerful private interest groups that rule the country.
No one serves truth and liberty.
I predict that within ten years truth and liberty will be forbidden words uttered only by “domestic extremists” who are a threat that must be exterminated without due process of law.
America has left us. We now have the tyranny of the Orwellian state that rules, not by the ballot box and Constitution, but by force and propaganda.
By Dan Taylor
In March of 2013 – several months prior to the Syrian gas attacks that helped spark the current mid-east unrest – Intelligence Chief James Clapper testified to Congress that Al-Qaeda was no longer a major threat to the United States. Clapper told Congress that Al-Qaeda was unlikely to carry out “complex, large-scale attacks in the West” because the terrorist group was severely weakened.
Now, Al-Qaeda has again emerged as a bogey man, due mostly to western influence. According to CIA director John Brennan, Syria and surrounding regions have become a training ground for terrorists. “We are concerned about the use of Syrian territory by the Al Qaeda organization to recruit individuals and develop the capability to be able not just to carry out attacks inside of Syria, but also to use Syria as a launching pad” Brennan told the House Permanent Select Committee on Intelligence….READ
The battle for favoritism among the ‘apparent’ leaders in Iraq continues. Russia just delivered the second batch of Sukhoi fighter jets (which will be flown by Iraqi pilots and “are ready to provide air support to the armed forces”), and the US unloaded 4,000 additional Hellfire missiles to support Iraq’s fight against the Islamist insurgents. While this morning the intelligentsia of mainstream media proclaimed “the situation in Iraq is calming down” predicated on the fact that oil prices were lower and stocks at record highs, we suspect the additional war material to Iraq will do nothing but increase the determination of the “Islamic State” to increase its Caliphate…READ
(Reuters) – Ukrainian forces struck at pro-Russian separatist bases in eastern regions with air and artillery strikes on Tuesday after President Petro Poroshenko announced he would not renew a ceasefire but go on the offensive to rid Ukraine of “parasites”.
His decision quickly drew fire from Russian President Vladimir Putin who said Poroshenko had disregarded the advice of himself and German and French leaders. Putin said Poroshenko would now have to bear full responsibility for veering off the road to peace…READ
In 1905, a team of construction workers in the small village of Shoreham, New York labored to erect a truly extraordinary structure. Over a period of several years the men had managed to assemble the framework and wiring for the 187-foot-tall Wardenclyffe Tower, in spite of severe budget shortfalls and a few engineering snags. The project was overseen by its designer, the eccentric-yet-ingenious inventor Nikola Tesla (10 July 1856 – 7 January 1943). Atop his tower was perched a fifty-five ton dome of conductive metals, and beneath it stretched an iron root system that penetrated more than 300 feet into the Earth’s crust. “In this system that I have invented, it is necessary for the machine to get a grip of the earth,” he explained, “otherwise it cannot shake the earth. It has to have a grip… so that the whole of this globe can quiver.”…READ
CARACAS (Reuters) – A blackout cut power to much of Venezuela on Friday, snarling traffic in the capital Caracas and other major cities as authorities scrambled to restore electricity after the outage, which twice interrupted a presidential broadcast.
Pedestrians streamed into the streets of Caracas as the blackout shuttered the underground metro trains and left frustrated drivers honking in the chaos without stoplights.
Government ministers in the late afternoon said they expected power would be restored shortly. It was the second nationwide major electricity outage in less than a year.
“How am I going to get to my house? By the grace of God,” said Pedro Mayora, 58, an accountant who was waiting outside the Metro to see how he would reach his home on the poor west end of the city…READ
The International Christian Concern (ICC) reported that Kerolos Shawky, a Christian man living in southern Egypt, was initially accused of violating the Islamic blasphemy laws in article 98 of the Egyptian penal code, which prohibits “ridiculing or insulting heavenly religions or inciting sectarian strife”, but as the ICC notes, the law is almost always used to go after religious minorities...READ
(CNSNews.com) – A new analysis by the Employment Policy Institute (EPI) shows that unemployment among teens without a high school diploma is more than 50 percent in two of the largest U.S. cities.Using U.S. Census Bureau data from May 2013 to April 2014, the analysis reveals that in Riverside-San Bernardino area of Southern California, the unemployment rate for teens ages 16 to 19 years old who don’t have a high school diploma is 54.2 percent. In the Portland-Vancouver-Beaverton, Ore., metropolitan area, the unemployment rate from that population is 53.8 percent. “These numbers are staggering,” Michael Saltsman, director of research at EPI told CNSNews.com. “Teens across the country this summer are missing out on valuable work experience as they continue to suffer through an extended period of high unemployment and difficult job prospects.” Three other California metropolitan areas round out the Top 5 cities with the highest unemployment for the least skilled young people – Los Angeles-Long Beach-Santa Ana (39 percent), San Diego-Carlsbad-San Marcos (37.5 percent) and San Francisco-Oakland-Freemont (35.2 percent). READ
Bright Food Group Co, the Chinese owner of British cereal maker Weetabix Ltd, said it is seeking acquisitions and has the ability to pay as much as 10 billion yuan ($1.6 billion) for a target.
Bright Food is open to buying domestic and overseas companies and it isn’t interested in deals that are “too small” and prefers to work on one acquisition at a time, Chairman Lyu Yongjie said in an interview on June 18, without providing further details. The company is also preparing an initial public offering for its Australian unit Manassen Foods, he said.
Bright Food has joined Chinese companies including WH Group Ltd, Fosun International Ltd and Alibaba Group Holding Ltd in pursuing assets overseas. The Shanghai-based company, which has interests that span food and beverages, farming and retailing, bought Israel’s Tnuva Food Industries Ltd last month following Weetabix, as rising incomes in China spur demand for consumer goods.
“Chinese food firms seek overseas deals to acquire product research capabilities and better resources,” said Todd Yang, Shenzhen-based analyst at Guosen Securities Co. “Imported foods are also growing in popularity in China and they may also be seeking foreign food brands to address the trend.”...Read
An indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. A PMI of more than 50 represents expansion of the manufacturing sector, compared to the previous month. A reading under 50 represents a contraction, while a reading at 50 indicates no change. Prior to September 1, 2001, the acronym (PMI) stood for Purchasing Managers’ Index. The Institute of Supply Management (ISM) now uses only the acronym, PMI. Although the ISM publishes several indexes, the PMI is the most widely followed and is sometimes referred to as the ISM index. Read
Kevin O’Connor, Neil Zimmer honored at ADL banquet
David Perry — Furniture Today, June 20, 2014
NEW YORK — The National Home Furnishings Industry’s chapter of the Anti-Defamation League raised more than $700,000 at a dinner here that honored home furnishings veterans Kevin O’Connor and Neil Zimmer…more
The Department of Veterans Affairs on Monday shed light on the depth of the VA scheduling scandal and substantiated claims that rank-and-file employees were directed to manipulate records.
The agency said more than 57,000 new patients have waited at least 90 days for their first appointments and that about 13 percent of VA schedulers indicated they were told to falsify appointment-request dates to give the impression that wait times were shorter than they really were.
The information comes from the agency’s internal audit of 731 VA medical centers, which the VA released Monday…more
Bavaguthu Raghuram Shetty, an Indian-born entrepreneur, and entities linked to Saeed Bin Butti Al Qubaisi’s Abu Dhabi-based Centurion Investments will buy London-based Apax’s stake in the chain of retail currency exchanges, the London-based buyout firm said in an e-mailed statement today. The price wasn’t disclosed
Lloyd Dorfman, who founded Travelex 38 years ago, will remain a shareholder and the company’s president. Apax, which had been poised to take Travelex public in an initial public offering, bought control of the chain in 2005 in a deal that valued the company at about 1.1 billion pounds ($1.85 billion). Read
The battles usually give investors a choice between pocketing the money on offer or gambling on a firm’s prospects. As the deadline for Pfizer to table a formal bid for AstraZeneca nears, we look at how investors have fared over the years in companies that successfully saw off unwelcome approaches. Is there any company with more deals that never were than the London Stock Exchange? In May 2000 the LSE announced plans to merge with Germany’s Deutsche Börse to create iX. The deal collapsed under its own weight after igniting a storm of controversy, but the end of the affair triggered a decade in which the LSE batted away bid after bid. The Nordic exchange operator OM Gruppen, the Australian bank Macquarie, the Paris-based Euronext and Deutsche Börse (again) all made formal or informal approaches…here
In President Obama’s speeches this year, a steady theme has been creating jobs and economic opportunity for Americans. In his State of the Union address in January he said that “what I believe unites the people of this nation . . . is the simple, profound belief in opportunity for all—the notion that if you work hard and take responsibility, you can get ahead.” And in his weekly address on Saturday, he repeated his strong appeal to young people: “As long as I hold this office, I’ll keep fighting to give more young people the chance to earn their own piece of the American Dream.”
Yet during the more than five years Mr. Obama has been in office, young people have been especially hard-hit by the slow and virtually jobless recovery. Given the destructive effect this has on individual initiative and the prospects of a productive and rewarding working life, the continuing struggle of young Americans to find jobs, start building families and contribute to society is no longer simply a matter of politics or policy. On a deeply human level, it’s profoundly sad.
Consider these grim employment numbers:
• In February the Bureau of Labor Statistics (BLS) recorded the lowest percentage of 16- to 19-year-olds working or actively looking for work (32.9%) since the bureau started tracking the data in 1948. The BLS recorded the second-lowest labor-participation rate for this group in April (33.2%) and the third-lowest in January (33.3%). May’s rate was the sixth lowest (33.8%).
- • Over the past two years, the BLS has recorded some of the worst labor participation rates for 20- to 24-year-olds since 1973, when the Vietnam War was beginning to wind down. In August 2012, the 69.7% rate was the lowest since ’73. The second-lowest (70%) came in March last year. This year, the third-lowest rate came in April (70.2%). May’s rate was a still-miserable 71%
- • Looking at the seasonally unadjusted data—which is what the BLS makes publicly available—for 25- to 29-year-olds, the April 2014 labor-participation rate was the lowest the BLS has recorded since it started tracking the data in 1982 (79.8%). May’s rate was the second-lowest (79.9%). January, February and March tied with the fourth-lowest (80.3%).
These disturbing numbers raise a simple question: Where are the entry-level jobs?Five years of 2% average yearly GDP growth simply doesn’t produce enough jobs to absorb the natural increase in the labor force, and over the past eight quarters GDP growth has averaged only 1.7%. Between May 2008 and May 2014, BLS data show that the employable population increased by 14,217,000 while the number of people employed actually decreased by 94,000 and the number of people unemployed increased by 1,404,000. It remains a bad time for young people to be looking for jobs.
Nonetheless, various states and municipalities have increased their minimum wage, thereby increasing the cost of employing inexperienced workers. Minimum-wage jobs have always been a gateway to better opportunities. In making hiring decisions, businesses must weigh the quality and value of work that entry-level employees produce against the cost of employing them. For many businesses in high-minimum-wage states or municipalities—Seattle leads the list, having approved a move to a $15 minimum wage—that trade-off is no longer working…..Read Here
The U.S. “war on terror” has increased terrorism. Here are the number of terror attacks in Iraq between 1979 and 2011 courtesy of the National Consortium for the Study of Terrorism and Responses to Terrorism Global Terrorism Database (part of a joint government-university program on terrorism, is hosted at the University of Maryland) :::
Al Qaeda wasn’t even in Iraq until the U.S. invaded that country. And U.S. policy in Libya is partly responsibl for sending an influx of Al Qaeda terrorists – and heavy weapons – into Iraq. And now things are getting a whole lot worse …You may not have heard, but Al Qaeda allies took over the Iraqi city of Fallujah 6 months ago. And today, Al Qaeda-linked extremists in Iraq captured Iraq’s second-biggest city, the major oil center of Mosul. (The jihadis call themselves “The Islamic State of Iraq and Syria”. The fact that the U.S. is backing Al Qaeda in Syria is probably a continuing factor). To make matters worse, the army fled, so the militants seized huge caches of U.S. supplied weapons, including humvees:
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? Read more
(Reuters) – The German government is extremely concerned about Israeli plans to build more settlements in occupied territory in response to the inauguration of a Palestinian unity government backed by Hamas Islamists opposed to the Jewish state’s existence. “The German government is very worried about this report because this step poses the threat of making efforts to continue peace negotiations between Israel and the Palestines even harder,” German government spokeswoman Christiane Wirtz said. She called on both sides to avoid provocative steps and said the German government urged the Israeli government to refrain from inviting bids to construct homes…more
The numbers are in at the Department of Veteran Affairs (VA), revealing just how many veterans have endured long waits to get medical care.
Those waiting more than three months for a doctor’s appointment: 57,000. Those left off waiting lists, leaving them completely out of the loop: 64,000.
A VA audit (pdf) exposed the startling figures that have turned the agency into a political punching bag, with Democrats and Republicans excoriating its leadership.
With the resignation of secretary Eric Shinseki, the acting man in charge, Sloan Gibson, has promised to take immediate action to help reduce the backlog and get more veterans in to see physicians...more
Earlier this year, a select group of Wall Street Insiders were surveyed, and the results were ominous. These financial experts and fund managers predicted a 98% chance a stock market crash will happen in the next six months.
Gary Shilling, one of Wall Street’s top economists, says the S&P Index could drop as low as 800, a 42% decline.
Jeffrey Gundlach, one of the world’s biggest bond fund managers and CEO of DoubleLine Capital, says the real damage is yet to come and an “ominous third phase” will “far exceed the damage of 2008.”
And Euro Pacific Capital CEO Peter Schiff, author of “The Real Crash: American’s Coming Bankruptcy,” warns, “I am 100% confident the crisis that we’re going to have will be much worse than the one we had in 2008.”…more
There is a cruel economic hoax being played on millions of American workers, a hoax that unfortunately is being promoted by too many Democrats. The hoax is this: that workers who lose their jobs to so-called “free trade” can simply be retrained to do something else that will be a good substitute for what they have lost. This is a lie.
Right now, there is a bill moving through Congress to expand the so-called Trade Adjustment Assistant program (TAA), a program that I have found distasteful from its inception. Basically, the concept is this: if you lose your job because of trade, the government will spend money to retrain you. Rep. Charles Rangel is pushing a bill (approved last week by the House Ways and Means Committee) that would expand TAA to cover workers in services industries and allow the government to certify entire industries as eligible for TAA money (right now, the certification is done company by company); Sen. Max Baucus is working on a companion Senate version of Rangel’s proposal.
There is a cruel economic hoax being played on millions of American workers, a hoax that unfortunately is being promoted by too many Democrats. The hoax is this: that workers who lose their jobs to so-called “free trade” can simply be retrained to do something else that will be a good substitute for what they have lost. This is a lie. Right now, there is a bill moving through Congress to expand the so-called Trade Adjustment Assistant program (TAA), a program that I have found distasteful from its inception. Basically, the concept is this: if you lose your job because of trade, the government will spend money to retrain you. Rep. Charles Rangel is pushing a bill (approved last week by the House Ways and Means Committee) that would expand TAA to cover workers in services industries and allow the government to certify entire industries as eligible for TAA money (right now, the certification is done company by company); Sen. Max Baucus is working on a companion Senate version of Rangel’s proposal.
In our unstable economic times, there are few employees who feel absolutely sure their job will still be here tomorrow. But it’s not productive to be distracted by needless worry every day. So how do we know when to relax and when to worry (and start polishing up that resume?) Pay attention to true warning signals, but don’t get too caught up in office gossip. It can lead to low morale. Just keep your eyes open for these signs that your job may be on its way to the downsize dump…more
Vice Media, the digital group which has mounted an aggressive assault on traditional news providers, is in talks to sell a major stake in itself to Time Warner.
Sky News has learnt that the two companies have been holding detailed negotiations about a deal.
One potential structure under discussion would see Time Warner injecting HLN, a news platform owned by its Cable operations, into Vice in return for roughly half the enlarged company.
A deal is expected to value Vice at roughly $2.2bn, about 50% more than last year’s sale of a stake in the mini-conglomerate.
Sources said on Monday that talks between Time Warner and Vice were at an advanced stage but that some final details had yet to be agreed.
A deal could still fall apart, however, or assume a radically different structure, they added.
Founded in 1994 as a “punk zine” for music enthusiasts in Montreal, Vice has attracted huge attention from the global media industry with its provocative mix of content and rapid diversification: it now houses an advertising agency, a record label and a television show…more
The arrival of a Liberian-flagged freighter with Ukrainian, Arab and Filipino sailors spells one thing for Elena — dollars. And greenbacks are king in Venezuela, the 32-year-old prostitute says.
Within hours of hearing of the ship’s imminent arrival, she has packed her bags and is heading to the crumbling city of Puerto Cabello. It is a 450-kilometer (280-mile) journey from her home in the Western state of Zulia that Elena finds herself doing more often now as Venezuela’s economy contracts, the bolivar slumps and prices soar….more
My friend Murray Rothbard was a great economist. He did not do it for money. He did his greatest work when he was a teacher at a school that did not pay him well, and which offered no economics major: Brooklyn Polytechnic. It put food on his table. He created a movement in his spare time. His disciples were not paying students.
The same was true of Rothbard’s mentor, Ludwig von Mises. He was an unpaid “visiting” professor at New York University. Donors raised all of his salary. Mises was not in it for the money. He taught Rothbard, who was not a paying student. Rothbard sat in Mises’ graduate seminar as an auditor. Mises had taught a generation of disciples this way, in the 1920′s, in an unpaid seminar in Vienna. He did it in his spare time.
For things that matter most, a large salary is rarely the motivating factor. The sense of accomplishment is.
There is your job. It puts food on your table. Then there is your calling: the most important thing you can do in which you would be most difficult to replace. Your calling is more important than your job. I hope you have identified it. I hope you are working on it daily.
Here is a TED lecture by Dan Pink on motivation. It shows that bonuses don’t work. The management guru W. Edwards Deming had discovered this a generation earlier, but Pink does not mention this.
When companies find ways to fuse a person’s job and calling, they become highly profitable. It’s not based on bonuses.
Creativity is unpredictable. This was Mises’ insight on entrepreneurship. Better to pay a salary for predictable work, and offer a share of ownership for breakthroughs. Pay with salary; reward with equity. The lecturer ignored this two-part strategy. But it’s still a good lecture. Here: http://teapartyeconomist.com/2014/06/09/capture-creativity-reward-equity/#FJGITMZYqZcZxkUm.99
In a bid to counter weak growth and prevent deflation, European Central Bank chief Mario Draghi has lowered main interest rates. Specifically, the ECB cut the deposit rate to -0.1%, from 0.0%, effective June 11. This is a historic development, as it’s the first time a major central bank has cut any main interest rate to negative in a bid to spur lending and spending. The idea is that if banks aren’t being rewarded with a good deposit rate by parking their reserves at the central bank, then they will be more likely to lend it to households and businesses. READ
The European Central Bank has become the first of the world’s monetary superpowers to cut its deposit rate below zero, taking a leap into the unknown as it tries to drive down the euro and head off deflation.
The bank opened the door to direct purchases of private assets or quantitative easing, and announced a €400bn blast of long-term lending at cheap rates for banks.
The benchmark interest rate was cut to a record low of 0.15pc, tantamount to zero. The revolutionary move was to lower the deposit rate to -0.1pc, forcing banks to pay a charge if they continue to park money for safe-keeping in Frankfurt.
“Are we finished? The answer is no,” said Mario Draghi, the ECB’s president. “If required, we will act swiftly with further monetary policy easing. The Governing Council is unanimous in its commitment to using unconventional instruments within its mandate should it become necessary to further address risks of prolonged low inflation.”….more
DENVER — Five months after Colorado became the first state to allow recreational marijuana sales, the battle over legalization is still raging.
Law enforcement officers in Colorado and neighboring states, emergency room doctors and legalization opponents increasingly are highlighting a series of recent problems as cautionary lessons for other states flirting with loosening marijuana laws.
There is the Denver man who, hours after buying a package of marijuana-infused Karma Kandy from one of Colorado’s new recreational marijuana shops, began raving about the end of the world and then pulled a handgun from the family safe and killed his wife, the authorities say. Some hospital officials say they are treating growing numbers of children and adults sickened by potent doses of edible marijuana. Sheriffs in neighboring states complain about stoned drivers streaming out of Colorado and through their towns. Read Here