Implode-Explode Heavy Industries news feed

Hussman - The Federal Reserve's Two-Legged Stool

Wed, 23 Apr 2014 13:37:22 GMT

Why have market returns been able to average even 3.5% over the past 14 years? Simple. Valuations have been pushed, once again, to some of the highest levels in history. Instead of terminating this 14-year period anywhere near historical norms, the ratio of market capitalization to GDP presently stands at 1.25, which is double its historical norm.
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In her first public speech on monetary policy, Janet Yellen made it clear that the Fed intends to pursue a more rules-based, less discretionary policy. This is good news. The bad news, however, is that Yellen focused only on employment and inflation. In that same speech, not a single word was said about attending to speculative risks or financial instability (which are inherent in Fed-induced, yield-seeking speculation). Without attending to that third leg, the Fed is resting the fate of the U.S. economy on a two-legged stool.

The American Middle Class Is No Longer the World's Richest

Wed, 23 Apr 2014 13:30:34 GMT

The numbers, based on surveys conducted over the past 35 years, offer some of the most detailed publicly available comparisons for different income groups in different countries over time. They suggest that most American families are paying a steep price for high and rising income inequality.
Although economic growth in the United States continues to be as strong as in many other countries, or stronger, a small percentage of American households is fully benefiting from it. Median income in Canada pulled into a tie with median United States income in 2010 and has most likely surpassed it since then

Barclays joins retreat from commodities as new rules bite

Wed, 23 Apr 2014 13:19:17 GMT

``Barclays said it would exit most of its base metals, energy and agricultural trading but will continue in precious metals, some oil and gas derivatives products and index products. The smaller business will be based on electronic execution, it said... Barclays Chief Executive Antony Jenkins plans to unveil a wider reduction in the size of his investment bank on May 8 as he attempts to cut costs and improve profitability by axing areas that have been hit hardest hit by tougher regulation. It could see thousands of jobs go.''

Presenting The Massive Tech Bubble In One Astounding Chart

Wed, 23 Apr 2014 13:17:10 GMT

Click through to see chart, "Share of IPOs with negative earnings".

Retail Store Closures Soar In 2014: At Highest Pace Since Lehman Collapse

Wed, 23 Apr 2014 13:11:34 GMT

``What a better way to celebrate the rigged markets that are telegraphing a "durable" recovery, than with a Credit Suisse report showing, beyond a reasonable doubt, that when it comes to traditional bricks and mortar retailers, who have now closed more stores, or over 2,400 units, so far in 2014 and well double the total amount of storefront closures in 2013, this year has been the worst year for conventional discretionary spending since the start of the great financial crisis!''

U.S. home sales slip to a 20-month low

Wed, 23 Apr 2014 03:19:53 GMT

``big price increases in the past year, along with higher mortgage rates, have made it harder for many Americans to afford a home. Pay increases haven't kept up with the higher buying costs... Sales fell last month in the West and South, where prices have risen the most in the past year. Price increases were smaller in the Northeast and Midwest.''

Moving in with parents becomes more common for the middle-aged

Wed, 23 Apr 2014 00:48:19 GMT

The number of Californians 50 to 64 who live in their parents' homes has surged in recent years, reflecting the grim economic aftermath of the Great Recession.
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The jump is almost exclusively the result of financial hardship caused by the recession rather than for other reasons, such as the need to care for aging parents, said Steven P. Wallace, a UCLA professor of public health who crunched the data.

Many more young adults live with their parents than those in their 50s and early 60s live with theirs. Among 18- to 29-year-olds, 1.6 million Californians have taken up residence in their childhood bedrooms, according to the data.

Though that's a 33% jump from 2006, the pace is half that of the 50 to 64 age group.

The surge in middle-aged people moving in with parents reflects the grim economic reality that has taken hold in the aftermath of the Great Recession.
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Long-term unemployment is especially acute for older people. The number of Americans 55 and older who have been out of work for a year or more was 617,000 at the end of December, a fivefold jump from the end of 2007 when the recession hit, according to the Bureau of Labor Statistics.
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"I said 'Mom, I'm so sorry but I don't know what to do,'" she said. "I dreaded it. If it wasn't for my boys I wouldn't have done it. I would have lived in my car."

Piketty's Gold? - The New York Sun

Tue, 22 Apr 2014 18:38:15 GMT

What could have marked 1971 as the year the picture began to change in respect of inequality in America? It turns out that was the year America defaulted on its obligation under Bretton Woods to redeem in gold dollars held by foreign governments and the era of fiat money began.
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It doesn't take a Ph.D. from MIT or Princeton to imagine that in an age of fiat money, the top decile would have an easier time making hay than would the denizens of the other nine deciles, who aren't trained in the art of swaps and derivatives.

McDonald's profit falls, U.S diners not lovin' the inflation

Tue, 22 Apr 2014 18:31:13 GMT

McDonald's prices were up 3 percent during the quarter and traffic fell, suggesting push-back from diners... This year promises to remain challenging for McDonald's as it grapples with record-high beef prices, labor cost increases, image-denting protests from its minimum-wage workers and aggressive competition from rivals that include Burger King Worldwide Inc, Wendy's Co and Yum Brands' Taco Bell as well as privately held chains such as In-N-Out Burger and Five Guys Burgers and Fries.
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The lackluster results from McDonald's landed a few days after Chipotle Mexican Grill Inc, the popular burrito chain it spun off in 2006, said its first-quarter same-restaurant sales jumped 13.4 percent. Chipotle caters to a wealthier consumer than McDonald's and it serves on-trend food, including dishes made with organic produce and antibiotic-free meats. It is It is planning to begin raising prices at the end of this quarter to offset higher costs.

Russia, U.S. Trade Blame as Ukraine Accord Nears Collapse

Tue, 22 Apr 2014 13:24:46 GMT

``The agreement signed in Geneva by Ukraine, the European Union, the U.S. and Russia on April 17 calls for all illegal groups to give up their arms and return seized buildings. Pro-Russian forces held their ground in several eastern cities, as their leaders denied they were bound by the accord. The government in Kiev has said Russia is behind the unrest, exploiting the situation to prepare a potential invasion.''

Eight EU states in deflation as calls grow for QE in Sweden

Tue, 22 Apr 2014 13:21:25 GMT

``Lars Svensson, the Riksbank's former deputy governor, said the slide into deflation had been caused by a "very dramatic tightening of monetary policy" over the past four years. He called for rates to be slashed from 0.75pc to -0.25pc to drive down the krona, and advised the bank to prepare for quantitative easing on a "large scale".''

Why Jesus Was REALLY Killed: Challenging the Money Changers

Tue, 22 Apr 2014 00:47:51 GMT

Jesus did not go to the temple to cleanse. He came to the temple to announce the destruction of a whole way of life. Those who operated the temple had no power to silence Jesus and put him to death. Those powers were held by the Roman retainers.

JPY Drops, Nikkei Pops As Japanese Trade Balance Nears Record Deficit (36th In A Row)

Mon, 21 Apr 2014 13:19:01 GMT

``Perhaps I can shed some light on Japanese Prime Minister Abe's missing J-curve; i.e., why Japan's trade deficit seems to be increasing rather than decreasing after massive monetary intervention to reduce the purchasing power of the yen. Monetary debasement does NOT result in an economic recovery, because no nation can force another to pay for its recovery.''

Matt Taibbi: The SuperRich in America Have Become 'Untouchables' Who Don't Go to Prison

Mon, 21 Apr 2014 13:15:47 GMT

``over and over again, I would cover these very complex and often very socially destructive capers committed by white-collar criminals. And the punchline to all of the stories were basically the same: Nobody would get indicted; nobody went to jail. And after a while, I started to become interested specifically in that phenomenon. Why was there no enforcement of any of this? ''

Prelude to Economic Disaster: Billionaires Liquidating Real Estate in China; Stocks in US

Sat, 19 Apr 2014 02:22:41 GMT

``As these in-the-know elites unload their positions, average investors depending on their financial advisers to tell them the truth are slamming money into these stocks and paying, in some cases, 500 times earnings. Real estate investors are, likewise, overpaying for homes based on the idea that markets are "hotter" than they've been in years. ''

Food Prices Rise Sharply

Fri, 18 Apr 2014 14:08:09 GMT

``What's happening is that wholesalers have raised the prices they charge grocers, and grocers in turn have passed along the increases to their customers, USA Today reports... The bad news may not be over. California's drought will probably push prices upward this year for fruits and vegetables, including avocados, lettuce and berries, Timothy Richards, a professor at Arizona State University's business school, told the paper.''

Rents Soar Out of Affordability Range for Middle Class

Fri, 18 Apr 2014 14:06:15 GMT

``A rule of thumb is that households shouldn't pay more than 30 percent of their income on rent and utilities. But now half of U.S. renters devote more than 30 percent of their income to housing, up from 38 percent in 2000, revealed a report from Harvard University.''

Russia and China announce decoupling trade from Dollar

Fri, 18 Apr 2014 13:50:47 GMT

``Russia has just dropped another bombshell, announcing not only the de-coupling of its trade from the dollar, but also that its hydrocarbon trade will in the future be carried out in rubles and local currencies of its trading partners - no longer in dollars''

Ukraine Talks Reach Initial Deal as Putin Keeps Force as Option

Thu, 17 Apr 2014 19:02:13 GMT

``... the deal came after six hours of negotiations in Geneva between Russian Foreign Minister Sergei Lavrov and and acting Ukrainian Foreign Minister Andrii Deshchytsia, as well as U.S. Secretary of State John Kerry and European Union foreign policy chief, Catherine Ashton. "All sides must refrain from any violence, intimidation or provocative actions," they said in a joint statement, which also called for international monitors to oversee implementation of the deal.''''

AIB trial: Pat Whelan and Willie McAteer found guilty

Thu, 17 Apr 2014 19:00:46 GMT

``Two former Anglo Irish bank chiefs have been found guilty of making loans designed to illegally prop up the bank's share price.''