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Post by jeffolie on Nov 13, 2013 7:09:09 GMT -6
7 More Years Of Low Rates.. And Then War? 11/12/2013 While chart analogs provide optically pleasing (and often far too shockingly correct) indications of the human herd tendencies towards fear and greed, a glance through the headlines and reporting of prior periods can provide just as much of a concerning 'analog' as any chart. In this case, while these 3 pictures can paint a thousand words; a thousand words may also paint the biggest picture of all. It seems, socially and empirically, it is never different this time as these 1936 Wall Street Journal archives read only too well... from devaluations lifting stocks to inflationary side-effects of money flow and from short-covering, money-on-the-sidelines, Jobs, Europe, low-volume ramps, BTFD, and profit-taking, to brokers advising stocks for the long-run before a 40% decline. Stocks look eerily similar... Income inequality has ramped back to the same levels... and Rates look awfully similar.... (h/t @not_Jim_Cramer) www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/11/20131112_roaring30s2_0.pngand that didn't end well... (War!)But when we look at the headlines in the Wall Street Journal from mid 1936 to mid 1937 as the market topped out, dipped, was bought back (orange oval), then collapsed 40% in 3 months, nothing ever changes... Government Bailouts Repaid - Bullish Implications... N.Y. Central Has Repaid All Government Loans The Wall Street Journal, 978 words Dec 1, 1936 WASHINGTON Numerous railroad developments here yesterday were climaxed by the announcement of RFC Chairman Jesse H. Jones that New York Central had repaid all of its government loans, totaling $16,858,950, most of which was not due until 1941. The Buying Is Not Speculation - Cash On The Sidelines... It's Cash Bull Market With Little Inflation, Says Exchange Bulletin The Wall Street Journal, 169 words Dec 16, 1936 "This is eminently a cash market, and as such is relatively devoid of that major characteristic of speculative inflation, the use of borrowed money." says the December Bulletin of the N.Y. Stock Exchange. Inflationary Side-Effects - Buy It All It's Going Up... Wheat Prices Soar To 7-Year Highs On Heavy Buying Stimulated by Broad Advances in Foreign Pits The Wall Street Journal, 1497 words Dec 19, 1936 CHICAGO An avalanche of buying, encouraged by buoyancy in foreign markets, particularly in Winnipeg, swept wheat prices to the highest levels since December, 1929, Friday. But... 3 days before... The Wall Street Journal, 1027 words Dec 16, 1936 As commodity prices continued to advance yesterday to the accompaniment of increasing public speculation in futures markets, signs of a feeling of caution appeared from widely separated centers. As Goes The US So Goes The Rest Of The World... London Trade Stimulated By Wall Street Strength; Averages at New Highs The Wall Street Journal, 859 words Nov 6, 1936 LONDON Overnight strength in Wall Street considerably stimulated the stock market yesterday. Dealers again arrived earlier than usual in anticipation of activity in international issues and found large buying orders in these stocks awaiting execution. Global Economy To Lift Stocks... London, New York Stock Transactions Largest in Months - British Brokers Stand in Queues to Fill Orders Activity Ascribed to World Efforts to Revive Trade The Wall Street Journal, 956 words Oct 8, 1936 Growing realization that the determined international effort now being made to sweep away trade barriers will be followed by improved business conditions throughout the world brought a rush of business to the security markets in New York and London yesterday such as not been seen for months. Devaluation Always A Winner... (Market Prices Prove Economy Likes It) Wall Street Weighs Devaluation Effects On U.S. Markets; Sees Little Likelihood of Dumping The Wall Street Journal, 1759 words Sep 28, 1936 Rising security and commodity markets Saturday gave ample indication of the financial district's "bullish" interpretation of the U.S. Anglo-French monetary agreement. Markets Cheerful Over Devaluation; Morgenthau Not Afraid of Dumping Selective Buying Here and Abroad Motors and Other Shares Held To Benefit From Improved World Trade Are Strong Commodities Less Responsive International Markets The Wall Street Journal, 1726 words Sep 29, 1936 A note of cautious optimism was sounded by leading stock exchanges of the world which were open for business yesterday. Equity Valuations Irrelevant... Earnings Yield of 15 Stocks 4.8%, Compared with 9.4% Ten Years Ago The Wall Street Journal, 1280 words Aug 7, 1936 Industrial earning power is valued nearly twice as highly in the current stock market as it was ten years ago. Europe Ever The Optimist Even In The Face Of Dismal Reality... France Optimistic Despite Continuing European Tension - Growing Franco-English Cooperation Inspires Confidence The Wall Street Journal, 652 words Dec 5, 1936 Despite the unabated international tension and sudden menace of a constitutional crisis in Great Britain, the continuance of quarrels between Right and Left wings of the Popular Front, and the persistent antagonism between employers and labor, the general feeling in France is rather optimistic than pessimistic. Short Covering As Ever... Active Short Covering Sweeps Grain Prices To New High Levels - Chases Bears The Wall Street Journal, 1345 words Dec 2, 1936 New highs for the season were recorded in wheat, corn, rye and oats Tuesday. Spot red winter wheat advanced to the highest level since February, 1929. The sharp upturn, which boosted December corn almost 5 cents, and December wheat about 3 cents, was due principally to short covering by those made uneasy over the sale of an unusually large quantity of spot wheat out of local store, and by generous snowfall over the grain belt. Early in the session the market ruled easy on reports of rain and snow, and predictions for continued unsettled weather. Government Spending Cuts Cause Concern... Sabotaging Federal Economy The Wall Street Journal, 412 words Dec 5, 1936 Even the modest beginning which is attempted by WPA officials to reduce cost of government by cutting down the relief roles is encountering strong opposition. It is perhaps only natural that the workers themselves should object, although their methods of protesting through "sitdown" strikes, not to mention the violence which has manifested itself, may be open to question. But much more ... States And Taxes... Sales Tax Repeal May Unbalance Kentucky Finances The Wall Street Journal, 1002 words Jan 14, 1936 LOUISVILLE, Ky.--Repeal of Kentucky's 3% sales tax, effective the moment Governor Albert B. Chandler signs it, probably Wednesday will deprive the state of $3,500,000 of revenue budgeted to the expiration of the biennium ending June 30, 1936 and the counties of $1,750,000. The Foreign Money Will Save Us... Financial Centers Expect Greater Foreign Interest in Our Securities As Congress Delays Alien Tax Boost - Foreign Interest Here The Wall Street Journal, 765 words Aug 6, 1937 Some resumption of foreign interest... Money On The Sidelines... The Wall Street Journal, 590 words Jul 1, 1937 While the Street remains in a cautious frame of mind, there are undoubtedly more possible buyers than sellers around, and it would not take a lot of encouragement to get these gentlemen aboard. Feeling in brokerage circles is that stocks are more likely to advance on any break in the unpleasant headlines these days than to decline far on a continuation of current uncertainties. Jobs And Europe never far from fear... The Wall Street Journal, 683 words Jun 29, 1937 Certainly the market was more active on the downside, which surprised a lot of traders who had expected otherwise. The labor and foreign situations remain the main factors in the picture, and brokers feel that these have not changed one whit for the better thus far. Buy The F##king Dip... The Wall Street Journal, 508 words Aug 24, 1937 A rather depressed feeling is extant in Wall Street as small volume and lower prices continue. Yet there are not many bears in the Street so far as the long pull is concerned. Traders still are stubborn in their theory that stocks are reactionary at the moment from lack of interest rather than any important liquidation. This is the period of the year when business takes a final breathing spell before the more active Fall and some think the stock market is doing likewise and that better days are ahead. Rallies had Real Volume Then - No Low Volume Ramps... The Wall Street Journal, 564 words Aug 16, 1937 If Saturday's volume was any indication, revived interest in the stock market is here in the opinion of the Street. Furthermore the scope of trading Friday and Saturday indicated a broadening interest which included medium priced as well as low priced issues on contrast to the extended period wherein so-called "quality" stocks held sway in a limited market with small volume. And At The Top... Brokers Suggest Stocks For The Long-Run (based on 'expectations') The Wall Street Journal, 665 words Aug 7, 1937 Profit taking for the week-end brought prices down in yesterday's market, but the undertone remained steady and brokers said there was nothing important in the character of the selling. Many houses were advising the purchase of favored issues on any further reactions. Metal shares ended the day with advances in many cases. There was impressive buying reported in the copper issues largely for long pull purposes. The Wall Street Journal, 649 words Aug 10, 1937 While volume left much to be desired, the expectation of stronger and more active markets continued to pervade Wall Street. Moreover, the general business picture is regarded as more pleasing than at any time since the so-called Summer "lull" came into force. Incidentally, the seasonal letdown thus far has not proved to be as extensive as many predicted and expected. Brokers say that many clients are away and that there are others who will be replacing their sold-out long positions in coming weeks. See - it really is never different this time. It merely appears so since - as Kyle Bass so eloquently noted, the brevity of financial memory is about two years... www.zerohedge.com/news/2013-11-12/7-more-years-low-rates-and-then-war
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Post by jeffolie on Nov 13, 2013 6:59:41 GMT -6
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Post by jeffolie on Nov 13, 2013 6:10:30 GMT -6
Potential Disaster ... POLITICS MATTERS: Obama's thriving rich Type 1 consumers suffer hyperinflation for fine art while the most common American suffers a ' regular depression ' characterized by declining real household income for the last 14 years.
Potential Disaster: any downturn in stocks and housing prices will crash the Type 1 rich consumers Trickle Down economics accounting for 40% of Retail Sales resulting in a Greater Depression
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Post by jeffolie on Nov 13, 2013 6:05:01 GMT -6
11/06/2013 Janet Yellen's Fed Has The Makings Of A Potential Disaster Janet Yellen - Caricature (Photo credit: DonkeyHotey) By Keith Weiner President Obama has nominated Janet Yellen to be the next Federal Reserve Chairman. We need to know what she stands for if we want to predict what the central bank will do to us next. Clearly, Yellen will continue Bernanke’s Quantitative Easing, but her papers and speeches show that she is quite different from her predecessor. We All Know Who Janet Yellen Is, And That's Terrifying ... Capital Flows Let’s start by looking at Bernanke as a reference. Bernanke pays homage to the economist Milton Friedman, who is widely known for wanting basically free markets with a passive Fed. Less well known is Friedman’s advocacy of money pumping in a crisis. This explains the Bernanke we keep seeing on TV. A crisis erupted a few years after he took office (his arrival and the eventual crisis not unrelated), and so he has been madly pumping ever since. If the crisis somehow abated, he would stop. Bernanke is part central planner and part free marketer. By contrast, Yellen is all central planner. She gets her ideas, not from Friedman, but from John Maynard Keynes. Keynes did not trust markets, preferring government intervention. His prescribed solution to recession and unemployment is for the government to increase spending and the central bank to reduce interest. Today, we call this form of governance “cronyism,’ but it once had another name. “Fascist economics” is how Italian dictator Mussolini approvingly characterized Keynes’ work. Yellen is even more radical than Keynes, and believes intervention isn’t just for downturns. We see this belief in the theory of labor she presents in a key 1990 paper, and then the practical policy she proposes in a recent speech. In the paper, Yellen and her coauthor discuss the cause of unemployment and how to eliminate it. Here is their tenuous chain of logic: 1. Disgruntled employees don’t work hard, and may even sabotage machinery. 2. So companies must overpay to keep them from slacking. 3. Higher pay per worker means fewer workers, because companies have a finite budget. Yellen concludes—you guessed it: 4. inflation provides corporations with more money to hire more people. This theory is a frivolous rationalization for money printing, but Yellen has pragmatic reasons for it. If the Fed must print, then someone has to have their hand on the print button. Whoever controls money and credit wields enormous power, especially if printing is discretionary. Turning to Yellen’s 2012 speech in New York, she proposes real policy. She is now president of the San Francisco Fed, and no mere academician as she was in 1990. She is open about her two long-run goals: zero interest rate, and two percent inflation. She couldn’t tell us any more clearly what she will do when she is in charge. These two policies in combination will hit like a one-two punch. Think about a pension fund, which invests money to earn a yield to pay retirees. Obviously the yield has to be significantly above inflation. If not, the fund will have to pay out its principal and it won’t be viable for long. To generate a good return on assets in Yellen’s zero-interest world, funds will have to take big risks. That’s not likely to end well for pension funds or the retirees who depend on them. Another disaster is coming, caused by zero interest and two percent inflation. Pensions, annuities, and insurers are going to default. Yellen speaks often about preventing crises with more “supervision.” She can certainly take control of funds’ investment decisions, and she can force them not to take risks. What she cannot do is get them a sufficient rate of interest. How will market participants react to this new wave of bankruptcies? How will pensioners react? Yellen anticipates that they will demand further Fed intervention, to “cushion” the economy. The whole basis of her theory is that people cannot be trusted to make their own decisions, that the market shouldn’t be free. Of course, every Fed intrusion is good for some people and bad for others. Billions of dollars are riding on the smallest of them. Every special interest group will try to pressure Yellen to rule in their favor. A more interventionist Fed is by its nature a more politicized Fed. Look for these predictions to come true over 2014-2015: Interest rates will fall further as will economic freedom. Prices will not rise, but not for Yellen’s lack of trying. On the other hand, significant bankruptcies, Fed control of financial institutions, and the price of real estate in Washington will all be on the rise. Keith Weiner is president of the Gold Standard Institute USA (www.goldstandardinstitute.us) in Phoenix, Arizona, and CEO of precious metals fund manager Monetary Metals. He created DiamondWare, a technology company which he sold to Nortel Networks in 2008. He writes about money, credit and gold. www.forbes.com/sites/realspin/2013/11/06/janet-yellens-fed-has-the-makings-of-a-potential-disaster/
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Post by jeffolie on Nov 13, 2013 5:42:03 GMT -6
Hyperinflation exists for the Type 1 thriving rich consumers ... it is not Kosher: Bacon at $142M
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Post by jeffolie on Nov 13, 2013 5:29:09 GMT -6
$142.4M Bacon painting, Type 1 inflation, Obama's rich thrive " ... Christie's said the Tuesday sale brought in over $691.5 million, which it said is the highest total for any single auction in history. 'Follow the money'... the high rate of inflation exists among the rich Type 1 consumers thanks to Obama's corporatist tax rate policies for capital gains. While inflation remains low among the Type 2, 80% of consumers suffering a 'regular depression' of declining median real household income since 1999 ... over 14 years. my jeffolie view: Type 1 inflation soars, Obama's rich thrive ... While inflation remains low among the Type 2 80% of consumers suffering a 'regular depression' of declining median real household income since 1999 ... over 14 years ... ignorance of the facts in part belongs to the Main Stream Media and the POLITICS MATTERS of the political parties focusing on different issues such as ObamaCare. =============================== Francis Bacon painting sells for record $142.4M at auction November 13, 2013 NEW YORK – A 1969 painting by Francis Bacon set a world record for the most expensive artwork ever sold at auction and a sculpture by Jeff Koons broke a world auction record for a living artist at a Manhattan sale on Tuesday. "Three Studies of Lucian Freud" was purchased for $142.4 million at Christie's postwar and contemporary art sale Tuesday evening. The triptych depicts Bacon's artist friend. The work sold after "6 minutes of fierce bidding in the room and on the phone" to Acquavella Galleries in Manhattan, Christie's said in a statement. The price included the buyer's premium. The price tag surpassed the nearly $120 million paid for Edvard Munch's "The Scream," which set a world record when it was sold at Sotheby's in a 2012 sale. The previous record for Bacon's artwork sold at auction was the British artist's 1976 "Triptych." That sold for $86 million in 2008. Also up for sale at Christie's evening auction was Koons' whimsical "Balloon Dog (Orange)," a 10-foot-tall stainless steel sculpture resembling a twisted child's party balloon. It sold for $58.4 million, a world auction record for the artist and a world auction record for a living artist, said Christie's. The auction house did not reveal the buyer. It is one of five balloon dogs Koons has created in different colors. All are in private hands. It was sold by newsprint magnate Peter Brant to benefit his Brant Foundation Art Study in Greenwich, Conn. A 1977 painting by Willem De Kooning, "Untitled VIII," sold for over $32 million, a world auction record for the artist. In 2006, De Kooning's "Untitled XXV," sold for $27.1 million. Other highlights at Christie's included an iconic Andy Warhol, "Coca-Cola (3)," which fetched $57. 2 million. It was estimated to sell for $40 million to $60 million. The Warhol auction record is $71.7 million for "Green Car Crash (Green Burning Car I)," sold in 2007. Also on sale was a bright orange-yellow and white oil painting by Mark Rothko. Reminiscent of a radiating sunset, the 1957 large-scale "Untitled (No. 11)" garnered over $46 million. In May 2012, Christie's sold Rothko's "Orange, Red, Yellow" for $86.8 million, a record for any contemporary artwork at auction. The auction also featured a masterpiece by German painter Gerhard Richter from the collection of Eric Clapton. Painted in gold and orange hues, the 1994 "Abstract Painting" sold for $20.8 million. Richter's photo-based "Cathedral Square, Milan" brought $37 million at Sotheby's in May, setting a then record for any living artist at auction. Roy Lichtenstein's "Seductive Girl" was purchased for $31.5 million. The artist's auction record is $56 million for "Woman With Flowered Hat," sold at Christie's in May. Christie's said the Tuesday sale brought in over $691.5 million, which it said is the highest total for any single auction in history. www.foxnews.com/leisure/2013/11/13/francis-bacon-painting-sells-for-record-1424m-at-auction/
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Post by jeffolie on Nov 12, 2013 20:06:22 GMT -6
Nov. 12, 2013, 8:50 p.m. EST Hong Kong stocks drop on reform uncertainty LOS ANGELES (MarketWatch) -- Stocks in Hong Kong started on weak footing early Wednesday, with some analysts saying the market had expected more details from top government officials about their plans for major reforms over the next decade. The Hang Seng Index HK:HSI -1.30% slumped 1.3% to 22,605.30, and the Hang Seng China Enterprises Index fell 1.7%. The mainland's Shanghai Composite Index CN:SHCOMP -0.92% gave up 0.8%. The government did issue a broad statement saying it wants to ensure that financial markets have a "decisive" role in the world's second-largest economy. Financial issues were hit in Hong Kong, with Industrial & Commercial Bank of China Ltd.HK:1398 -2.62% IDCBF -4.23% CN:601398 -0.26% down by 2.1% and China Construction Bank Corp.HK:939 -2.18% CICHF -1.75%CN:601939 -0.69% off by 1.8%. Property and insurance shares were also dragged lower, including a 2.1% decline for Ping An Insurance Group Co. HK:2318 -2.25% PNGAY -0.50% CN:601318 -1.50% and a 0.8% fall for Sun Hung Kai Properties Ltd. HK:16 -0.79% SUHJY -0.91% . In other action, shares of Tencent Holdings Ltd. HK:700 -3.86% TCTZF -0.94% slid 4.1% ahead of the release of third-quarter results from the Internet company after trading closes. Before the results, Chairman Pony Ma Huateng called the company's current market value "too high and too scary," according to a Wednesday report in The Standard newspaper in Hong Kong. www.marketwatch.com/story/hong-kong-stocks-drop-on-reform-uncertainty-2013-11-12
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Post by jeffolie on Nov 12, 2013 19:55:22 GMT -6
Beijing wants to have cake and eat it too november 13, 2013 When the Chinese Communist Party released its master plan for reform last night at the third plenum of the Eighteen Party Congress, commentators and analysts struggled to find bold reform messages to cheer for. Strong backing for the state sector is hard to square with the desire to give markets a much greater role. Mark Williams, chief Asia economist of Capital Economics. Though the party has promised to grant the invisible hand of the market a “decisive” role in resource allocation and to deepen reform, the plan remains largely vague and inevitably falls short of the heightened expectation. The reform of the privileged state-owned sector, which sucks up disproportionate amount of resources, is widely regarded as an important litmus test of Beijing’s resolve to break the reform impasse. On this front, the party communiqué is a disappointment. It has re-affirmed the importance of the state-owned enterprises in China’s political economy. It used the phrase “unshakably developing and consolidating the state sector", while at the same time promoting the developing the private sector, which is the most dynamic part of the economy that employs more than 60 per cent of the population. Guan Yuqing, a noted economist and deputy head of Minsheng Securities said in a late night conference that the basic position of the state sector remained unchallenged and the reform of the state sector would likely to stay at corporate level rather than structural level. “It is likely to have a negative impact on the markets,” he said. Just a day before the release of the communiqué, the State-owned Assets Supervision and Administration Commission, the body overseeing a hundred odd of the largest state champions, moved swiftly to shut down a China Daily report about allowing private capital buying up to 15 per cent of shares in state-owned companies. “Strong backing for the state sector is hard to square with the desire to give markets a much greater role. The party leadership may believe it can achieve both, but as long as state-owned enterprises (SOEs) retain their privileged position, markets will remain skewed,’' said Mark Williams, chief Asia economist of Capital Economics. However, a senior Chinese financial services executive, who is currently visiting Australia, said he was upbeat about the prospect of reform and the government would soon grant banking licenses to private sector players. A significant move when and if it happens. As people scramble for hints of bold reform measures, one of the most promising concrete steps is the formation of a leading group at the highest level of the party apparatus to deepen reform. A leading group is a small team of high ranking party officials overseeing an important policy area such as economy and foreign affairs. Many commentators regard this as a positive sign that reform is taken more seriously this time around. When Deng Xiaoping unleased the ground-breaking reforms in the 1970s and 80s, there was a structural reform commission charged with the task to reform the country’s economic system. The body was widely lauded for its pioneering work. It is still early days to see whether the new group will be able to fill the big shoes of its predecessor. The communiqué also touched upon an important area of land reform in China, a vexing issue that is driving much of rural social unrest as corrupted officials grab farmers’ land without fair compensation. The party plan stated Beijing’s desire to establish a unified market for rural and urban construction land, which means long suffering Chinese farmers more proprietary rights over their lands, something their city cousins long enjoy. Amid all flying accusations of American espionage and escalating cyber war, China has formed a State Security Committee, similar to the National Security Council of the United States. The new body will oversee both domestic and foreign national security issues. In general, there are not much new details in this new “master plan for reform”, some encouraging language but short of specifics as you would expect in a broad party policy statement. It is still early days as the world waits for more details from the Chinese leadership. www.theage.com.au/business/comment-and-analysis/beijing-wants-to-have-cake-and-eat-it-too-20131113-2xf9o.html
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Post by jeffolie on Nov 12, 2013 17:24:57 GMT -6
Political policies create inflation economic events by impacting the currency and the goods/services available ... POLITICS MATTERS No better real life example exists than the current, today hyperinflation caused by POLITICS MATTERS " ... Hyperinflation a Political Event
Please note that hyperinflation is a political event, not a monetary one. In the case of Venezuela, a series of incredibly stupid political errors is behind the collapse of the currency.
Political error is the root cause of every hyperinflation. my jeffolie view: remains that America currently features low inflation which depends on the political decisions such as the current appointment of Janet Yellen as the new FED head plus the current tiny austerity in the Federal budget process which barely reduces the federal expenditures and does reduce money being placed into the most common Americans' hands ... our low US inflation is caused by POLITICS MATTERS ================================================ November 12, 2013 Venezuela’s Hyperinflation Anatomy; Army Storms Caracas Electronics Stores; Total Economic Collapse Underway; Could This Happen in US? A total economic collapse in Venezuela is now underway. In a futile battle against high prices, President Nicolás Maduro ordered the military to enforce an order that the Daka electronics chain reduce its prices to October levels. The store did not comply and the result was chaos. Bloomberg reports Army Storms Caracas Electronics Stores, Shoppers Follow The government-ordered military occupation of a Venezuelan electronics chain has brought out a reserve force in its wake: a line of shoppers that stretched for three blocks from a store in eastern Caracas today. “You have to take advantage of the government regulations because it was too expensive to buy before,” said Maryorie Cacique, 33, as she stood in the line with her three children in hopes of getting a 90 percent discount on an air conditioner in the army-occupied Daka store. Black Market “There are no economic reasons for the shortages and price increases we are seeing,” Maduro said late yesterday in a national address in which he read the Koran, Bible and Torah. “This is not because of a lack of dollars. It’s political.” Chief price regulator Eduardo Saman said Nov. 9 on state television that it’s illegal for stores to raise prices on existing inventory. The government has set prices for everything from medical services to flour. Venezuela Sinks Deeper Into Hyperinflation The Financial Times reports Venezuela Sinks Deeper Into Hyperinflation Prices rose 5.1 per cent in October, the second highest monthly increase in over three years, according to the the Central Bank of Venezuela (BCV). The price jump brings accumulated inflation for the first 10 months of 2013 to 54.3 per cent – well into hyperinflation territory, which analysts at Goldman Sachs define as seasonally adjusted annualised rates of more than 40 per cent. At the root of Venezuela’s economic woes is a tangled web of price and currency controls which, together with problems in the oil industry that supplies 96 per cent of export revenues, have generated a shortage of foreign currency, on which the import-dependent economy relies. Path to Hyperinflation 1. In May of 2009 Chávez Seized Assets of Oil Contractors after which Chavez stated "our people will never again be anyone’s slave". 2. In June of 2010 Venezuela Nationalize U.S. Firm's Oil Rigs. "A former soldier inspired by Cuba's Fidel Castro, Chavez has made energy nationalization the linchpin in his 'revolution'. He has also taken over assets in telecommunications, power, steel and banking." In May of 2012, USA Today reported Venezuela's PDVSA oil company is bloated, 'falling apart'. Beatriz Rodriguez sits in a long line under a sweltering sun, waiting for state oil company Petróleos de Venezuela to deliver cylinders of natural gas she uses to cook her family's meals. "I complained, and they told me I should use firewood," Rodriguez, a mother of three, fumes. "Firewood, they told me. And we're supposedly an oil power." Venezuelan President Hugo Chávez points to the state takeover of his country's oil industry as one of his revolution's great successes. He boasts that his renegotiation of oil agreements made by his predecessors has improved oil production and allowed Venezuelans to guide the direction of its major export. Reliance on oil revenue has led to the abandonment of other economic sectors. Much tillable farmland remains idle amid attempts by Chávez to increase food output, and Venezuela continues to import two-thirds of its food. Chávez uses oil revenue to subsidize the cost of the imported food, but shortages of basic goods are not unusual. Chávez has also used the oil wealth to underwrite artificially low domestic gasoline prices of 11 cents a gallon, which is among the cheapest in the world. PDVSA's payroll has more than doubled to 115,000 employees since Chávez took office in 1999, and debt has risen 10-fold since 2006 to $34 billion. Those increases have seemingly accomplished little: Venezuela's oil production has dropped more than 25% since 1998 to its current 2.4 million barrels a day, according to OPEC. 3. As with all government takeovers, output plunges and costs soar. 4. In March 2013, Venezuela devalued the Venezuelan bolivar by 46.5% and created a new currency exchange control regime. 5. On November 5, 2013 Venezuela tightens control of foreign exchange President Nicolas Maduro is tightening control of Venezuela's foreign exchange system and intensifying the pursuit of currency speculators that the government accuses of waging an "economic war" against his rule. As mounting shortages and galloping inflation undermine Maduro's leadership, the president took to the airwaves Wednesday to announce a slew of measures he said are designed to protect Venezuelans from "parasitic bourgeoisie" speculators. "Get your papers in order, get your shop in order," Maduro said in a rambling three-hour speech, during which he also attacked popular eBay-like retailer MercadoLibre.com for setting prices artificially high. "If you're looting the people it doesn't matter what your name is, the law will find you." Maduro's speech was widely anticipated after Venezuela's currency plunged to a record low 58 bolivars per dollar on the black market this week — nine times the official rate of 6.3 per dollar. The president said Tuesday that he and his advisers worked past midnight to prepare the economic package. 6. Army seizes goods, imports dry up, merchandise unavailable at any price. Currency collapses additional 90% on black market. Total Economic Collapse Underway The army can raid stores precisely once, after which imported goods will not be available at any price. Oil export revenues have plunged, while costs soared following the nationalization of the oil industry. Amusingly, Chavez billed the takeover as his greatest success. For now, meat and produce availability will depend on whatever the government can confiscate from local growers. However, agricultural products will not last long because fertilizer and feed will vanish at government set prices. A total economic collapse is at hand. Hyperinflation a Political Event
Please note that hyperinflation is a political event, not a monetary one. In the case of Venezuela, a series of incredibly stupid political errors is behind the collapse of the currency.
Political error is the root cause of every hyperinflation. [/b] For an historical country-by-country analysis of hyperinflation events please see Reader Questions On Hyperinflation; Would Printing $50 Trillion Tomorrow Do Anything?. For further discussion of hyperinflation theory vs. practice, including an analysis of absurd calls for US hyperinflation, please see Hyperinflation Nonsense in Multiple Places. US Hyperinflation calls have been, and remain nonsensical. Mike "Mish" Shedlock globaleconomicanalysis.blogspot.com/
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Post by jeffolie on Nov 12, 2013 13:47:19 GMT -6
November 11, 2013 Japanese Households With Zero Savings Hits 31%, Most Since 1963; Sexless Youth; Currency Crisis Awaits Japanese citizens are starting to complain Abenomics is not helping them. Here are a few reasons: 1.Prices in Japan are rising, but wages aren't. 2.Taxes have risen massively and Prime Minister Shinzo Abe wants even more tax hikes. 3.Interest on savings accounts does not keep up with price increases As a direct result of Abenomics, Japanese Households Without Savings Climb to Most Since ’63 The share of Japanese households with no financial assets rose to a record as falling incomes forced people to dig into their savings, highlighting the potential for widening disparities under Abenomics. The proportion reached 31 percent, according to a Bank of Japan survey released in Tokyo yesterday, up from 26 percent a year earlier and the highest since the poll began in 1963. Already facing declines in wages, households will be hit in April by a consumption-tax increase intended to shore up Japan’s finances. “It’s critical that Abe succeed in convincing corporates to raise wages,” said Izumi Devalier, a Hong Kong-based economist at HSBC Holdings Plc. “Lower-income households may come to feel they’re getting the short end of the stick from Abenomics.” Japan’s salaries extended the longest slide since 2010 in September, with regular wages excluding overtime and bonuses falling 0.3 percent from a year earlier, a 16th straight drop. Tax Hike Deal On August 31, I wrote Japan Seeks to Hike Taxes then Waste Money on Stimulus to Make Up for Decline in Spending; Currency Crisis Awaits When Japan last hiked the sales tax from 3 percent to 5 percent in 1997, consumer spending tumbled by 13 percent in the quarter after the higher tax went into effect. That was followed by a recession. In October, Abe got his tax hike. It's the first tax increase since 1997. Sales taxes will rise from 5% to 8%, a tax rate increase of 60%. To ease the blow of the tax hikes, Abe will announce a fiscal stimulus package in December. The deal is not a good one for the average Japanese citizen: Tax rates will go up 3 percentage points, but Abe will announce a spending package in December to waste some of the increased collection on useless projects. Consumers would have been far better off with no tax hike, falling prices, and stable (-0.3%) wages. Japan's Sexless Youth In case you missed it, please consider my October 22, 2013 report on Japan's Sexless Youth Here are some stats according to the Japan Family Planning Association (JFPA) •45% of women aged 16-24 "were not interested in or despised sexual contact". More than a quarter of men felt the same way. •Population of 126 million has been shrinking for the past decade •Population projected to plunge additional one-third by 2060 •Survey in 2011 found that 61% of unmarried men and 49% of women aged 18-34 were not in any kind of romantic relationship •Fewer babies were born in 2012 than any year on record. •Of the estimated 13 million unmarried people in Japan who currently live with their parents, around three million are over the age of 35. •Married working women are sometimes demonised as oniyome, or "devil wives". •Japan's Institute of Population and Social Security reports an astonishing 90% of young women believe that staying single is "preferable to what they imagine marriage to be like". This is what I wrote in response ... Fighting Demographics Those wondering why prime minister Abe is having such a hard time stimulating inflation can now stop wondering. Until Japanese attitudes towards child-bearing, jobs, and relationships change, Abe will continue to struggle. Abe seeks to stimulate inflation, but that is likely to encourage more saving, not more spending. With the bulk of Japanese pensions tied up in bonds yielding next to nothing, higher taxes and higher cost of goods and services will decrease demand from aging retirees. Record Service in Interest on National Debt On August 27, I pondered Japan Finance Minister Seeks Record Debt Servicing on Interest on National Debt; What's Next? Abe Tells Companies to Ignore Customers Inquiring minds may also wish to consider my July 19 article Japan Tells Firms "Stop Sitting on Cash", Ignore the Lack of Customers That headline is correct. Abe wants companies to spend money whether or not they have customers. I asked a very simple question in response "What happens to prices when more products are produced in the face of falling or static demand?" The Abenomics story goes on and on. "Virtuous Circle" of Inflation In November, Abe was promoting the "virtuous circle" of inflation while simultaneously whining that wages did not keep up. Japan's prime minister Shinzo Abe managed to get prices to rise. He did that with his policy to destroy the Yen even though Japan is heavily dependent on foreign oil and food imports. Interestingly, Abe is not quite pleased with the results. Abe now complains that wages are not keeping up with prices. He wants a wage-price spiral on top of it all. For more details, please see Prime Minister Abe Calls for Wage-Price Spiral to Create "Virtuous Circle"; Shame Shame Things Can Only Get Worse Wages declining .3% annually is hardly a problem if prices are falling as much. Instead, enter Abenomics. Abe wants 2% inflation, more fiscal stimulus, higher taxes, rising wages. He also wants the impossible: Inflation to bail out the government and savers alike, while interest rates remain near 0%. Crisis Awaits Expect the percentage of households with no savings to soar. Hiking taxes is about the silliest thing a country hoping to escape deflation can possibly do. Telling businesses to produce goods that no one wants to buy is perhaps even sillier. Economic illiterates sing the praises of Abenomics because the stock market and prices are rising. But attitudes, "sexless youth", increasing households with zero percent savings, rising debt levels, and falling real wages tell a far different story. Without a doubt, a currency crisis awaits Japan. Mike "Mish" Shedlock globaleconomicanalysis.blogspot.com/2013/11/japanese-households-with-zero-savings.html
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Post by jeffolie on Nov 12, 2013 13:01:36 GMT -6
my jeffolie view:
The optimism or more recently trending pessimism of small business mirror the impact of their clients which are the consumers ... consumer and small business optimist/pessimism move the same way, together
The peak is in the trend is changing negatively ... beware the status quo is doomed.
These shifts reflected Obamacare, the POLITICS MATTERS goes to the bottom line for higher expenses to live hurting businesses as consumers have less to spend on discretionary items sold by small businesses... high health insurance premium and the chaos scared consumers ... rightfully so ... the economy is doomed over the coming years as this hits the pocketbook
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Post by jeffolie on Nov 12, 2013 12:46:25 GMT -6
Small Business Sentiment Drops: "Fall Arrived Literally Last Month" By Doug Short 11/12/2013 The latest issue of the NFIB Small Business Economic Trends is out today (available here). The November update for October came in at 91.6, down 2.3 points from the previous month's 93.9. Today's overall number is at the 13.1 percentile in this series — down in the lowest quintile in its history. Since its initial recovery following its Great Recession trough, this index has been stuck in an extremely volatile range for the past three years. Since January of 2011, it has repeatedly bumped a ceiling around the 94 level and then retreated. Here is an excerpt from the opening summary of the report: Fall arrived literally this month, as small business optimism dropped from 93.9 to 91.6, largely due to a precipitous decline in hiring plans and expectations for future smal -business conditions. Of the ten Index components, seven turned negative, falling a total of 27 percentage points. The stalemate in early October over funding the government as well as the failed "launch" of the Obamacare website left 68% of owners feeling that the current period is a bad time to expand; 37% of those owners identified the political climate in Washington as the culprit—a record high level.The first chart below highlights the 1986 baseline level of 100 and includes some labels to help us visualize that dramatic change in small-business sentiment that accompanied the Great Financial Crisis. Compare, for example the relative resilience of the index during the 2000-2003 collapse of the Tech Bubble with the far weaker readings of the past four years. The NBER declared June 2009 as the official end of the last recession. nfib small business The average monthly change in this indicator is 1.29 points. To smooth out the noise of volatility, here is a 3-month moving average of the Optimism Index along with the monthly values, shown as dots. small business moving average Inventories And Sales The findings on small business inventories and sales continue to underscore the general pessimism of the survey. The excerpts below are from the latest monthly report (PDF format). The net percent of all owners (seasonally adjusted) reporting higher nominal sales in the past 3 months compared to the prior three months deteriorated 2 points to a negative 8 percent. Seventeen percent still cite weak sales as their top business problem. The net percent of owners expecting higher real sales volumes fell 6 points to 2 percent of all owners (seasonally adjusted). Not much help for hiring or inventory investment in those numbers.
Credit Markets Has the Fed's zero interest rate policy and quantitative easing had a positive impact on Small Businesses? Six percent of the owners reported that all their credit needs were not met, unchanged from September. Twenty-eight percent reported all credit needs met, and 53 percent explicitly said they did not want a loan. Only 2 percent reported that financing was their top business problem. Twenty-eight percent of all owners reported borrowing on a regular basis, down 2 points and a record low. A net 6 percent reported loans "harder to get" compared to their last attempt (asked of regular borrowers only), up 1 point from September. The net percent of owners expecting credit conditions to ease in the coming months was a seasonally adjusted negative 8 percent, 1 point worse than September. A surprising result in an economy with the most aggressive monetary policy in history.
NFIB Commentary This month's "Commentary" section concludes with the following observations: The Optimism Index gave up 2.3 points, falling to the average reading in the recovery of about 91.0. No progress. The outlook for business conditions continued to deteriorate, giving up 15 percentage points over the past two months. Plans to hire, expand, make capital outlays, and order more inventory were all weak. Consumers are pessimistic, with sentiment measures falling and fewer than 1 in 10 characterizing government policy as “good”. The misstatements, exaggerations and distortions being pitched to the public are stunning, but after all, these are politicians. Business Optimism and Consumer Confidence The next chart is an overlay of the Business Optimism Index and the Conference Board Consumer Confidence Index. The consumer measure is the more volatile of the two, so I've plotted it on a separate axis to give a better comparison of the volatility from the common baseline of 100. nfib conference board These two measures of mood have been highly correlated since the early days of the Great Recession, although we see a bit of contrast in the latest readings of the two. Consumer Confidence has generally been trending higher since its post-recession trough in 2011, but Small Business keeps bumping a ceiling just above its current level. www.financialsense.com/contributors/doug-short/small-business-sentiment
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Post by jeffolie on Nov 12, 2013 11:52:43 GMT -6
Small Business Optimism Plunges Most Since Superstorm Sandy 11/12/2013 In yet another miracle of modern-day macroeconomics, despite the soaring stock market and better-than-expected government-provided data (soft surveys mostly), the small-business (supposedly the core driver of jobs and growth in the US economy) saw optimism collapse at the fastest rate since Sandy (supposedly due to the government shutdown). This is the fifth month in a row that NFIB optimism has missed expectations (the worst - absent Sandy - since March 2012). 7 of the 10 sub-components were negative with the biggest plunge coming from those who expect the economy to improve. Seems like another good reason to BTFATH... Chart: Bloomberg www.zerohedge.com/news/2013-11-12/small-business-optimism-plunges-most-superstorm-sandy
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Post by jeffolie on Nov 12, 2013 6:03:55 GMT -6
ISDA Proposes To "Suspend" Default Reality When Big Banks Fail 11/11/2013 With global financial company stock prices soaring, analysts proclaiming holding bank shares is a win-win on rates, NIM, growth, and "fortress balance sheets", and a European stress-test forthcoming that will 'prove' how great banks really are; the question one is forced to ask, given the ruling below, is "Why is ISDA so worried about derivatives-based systemic risk?" As DailyLead reports, ...regulators from the U.S., U.K., Germany and Switzerland have asked ISDA to include a short-term suspension of early-termination rights in its master agreement when it comes to bank resolutions. Many derivatives market participants oppose the move. The regulators say the suspension, preferably no more than 48 hours, gives resolution officials time to switch derivatives contracts to a third party or bridging entity, when necessary. We are sure that creditors will be 'fine' with this.. and that banks will not use this loophole to hive off all their 'assets' into a derivative vehicle protected 'temporarily' from the effects of a bankruptcy... So the question is - what are they so worried about? ISDA Statement on Letter from Major Resolution Authorities NEW YORK, November 6, 2013 – The International Swaps and Derivatives Association, Inc. (ISDA) today issued the following statement: “ISDA supports efforts to create a more robust financial system and reduce systemic risk. Toward that end, we have, over the course of 2013, discussed with policymakers and OTC derivatives market participants issues related to the early termination of OTC derivatives contracts following the commencement of an insolvency or resolution action. We have developed and shared papers that explore several alternatives for achieving a suspension of early termination rights in such situations. "One of those alternatives, which is supported by a number of key global policymakers and regulatory authorities, would be to amend ISDA derivatives documentation to include a standard provision in which counterparties agree to a short-term suspension. Developing such a provision that could be used by counterparties will continue to be a primary focus of our efforts in this important area of regulatory reform. We are committed to working with supervisors and regulators around the world to achieve an appropriate solution that will contribute to safe, efficient markets.” www.zerohedge.com/news/2013-11-11/isda-proposes-suspend-default-reality-when-big-banks-fail
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Post by jeffolie on Nov 12, 2013 5:52:18 GMT -6
Obama is an elitist, Plutocratophilic, faux-populist. At least some of his cult-like followers are beginning to see through his lies, deceptions, & distortions. In 2007 when I predicted Obama would beat Hilary, become President, be re elected ... I also pointed directly to his primary motivations as greed and power lust, not seeking to help the most common American
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Post by jeffolie on Nov 12, 2013 5:47:44 GMT -6
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Post by jeffolie on Nov 12, 2013 5:42:47 GMT -6
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Post by jeffolie on Nov 12, 2013 5:22:43 GMT -6
jeffolie predicts…2013 Predictions January 1st Make your predictions for 2013. Here are mine: jeffolie predicts…2010 food crisis that I made in 2008 will continue in 2013 for selective commodities such as grains with special attention to the seasonal trends for midyear tops from continuing weather issues. jeffolie predicts...stock market gains to mid year which is the traditional seasonal high hence the long standing cliche of 'sell in May and go away' after the debt limit issue resolves and after the tax filing and tax returns procedures have been finalized by the IRS tweaking the seasonality to possibly coming as early as March. jeffolie predicts…SCREWFLATION: everything the ‘average American family’ buys goes up in price and everything they own goes down in value. Taxes, fees, charges, special assessment districts from State, Local, etc governments will rise while services from them will decrease. Energy expenses for homes, cars, electricity will rise compounded by additional taxes and fees. Food prices will rise. Health care/insurance expenses will rise; College Tuition will rise; Mortgage/house payments will rise because interest rates will rise seasonally; Rents will rise. Food Stamp use will make new records. I prefer screwflation over stagflation because of the regressive impact on middle and lower class families' standard of living and that they have no investments that rise with inflation or money printing and in fact usually have their wealth tied up in declining or negative home equity while the upper 20% of earners usually have investments that will rise in 2013 outside of their home equity. jeffolie predicts… EUROPEAN CRISIS: the financial crisis will increase as the year progresses. Average European families will have their version of screwflation as govt’s increase taxes and cut support. The euro will survive and weaken during 2013. Jeffolie predicts…US GDP and inflation will decline in 2013 from 2012 using govt. numbers. jeffolie predicts…US STATES, CITIES, LOCAL AGENCIES CRISIS: major layoffs by the end of 2013, bills will not be paid, some bonds will default.the above prediction coming true: Moody's Warns of Scranton Bankruptcy; Fitch Downgrades Chicago ================================================= November 12, 2013 Moody's Warns of Scranton Bankruptcy; Fitch Downgrades Chicago Citing Pension Problems; Liberal Fantasyland It is truly pathetic watching politicians flop like fish out of water trying to prevent something that was clearly inevitable long ago. Please consider Moody’s warns of bankruptcy in Scranton as city faces $20 million budget gap. Moody’s warned investors that Scranton could be facing the threat of default or bankruptcy thanks to a $20 million budget gap for the fiscal year that begins Jan. 1. Scranton has more than $195 million in outstanding debt, according to Moody’s. A similar crisis hit the city in July 2012, which lead to Mayor Chris Doherty cutting all city workers’ pay to minimum wage for several weeks, a move that made national headlines. “A second liquidity crisis could have more severe effects, including additional defaults,” Moody’s warned. To generate revenue necessary to address its debt, Scranton has considered taxing commuters and alcoholic drinks, though neither has been approved by the city council. The Pennsylvania Economy League, which is overseeing Scranton’s Act 47 recovery plan, warned last month the city would have to raise taxes to avoid a default at the beginning of the 2014 fiscal year. Scranton also faces more than $100 million in unfunded pension debt, on top of the $195 million in other debt owed. Adding to Scranton’s financial woes is the need to borrow another $28 million to pay a court-mandated settlement with the city’s police and firefighter unions. Tax Hike is Pure Idiocy The numbers say everything that needs to be said. It is absolutely impossible for Scranton to did out of this hole, I do not care how much taxes are raised. All tax hikes can do is harm more working class citizens for the benefit of undeserving public union workers. Liberal Fantasyland Whatever judge awarded the police and fire workers $28 million is an idiot or a genius, depending on his or her intent. If the intent of the ruling was to make it clear to everyone on the planet that the only solution for Scranton was bankruptcy, then the judge succeeded. If as I suspect, the judge actually thought police and fire fighters would receive $28 million, then the judge is living in liberal fantasyland. Fitch Downgrades Chicago Citing Pension Problems Yahoo!Finance reports Fitch downgrades Chicago bond ratings Fitch dropped the rating from AA- to A- on $8 billion in general obligation bonds, backed by property taxes. It also dropped the rating on $497 million in sales tax bonds — paid for by both the city's local sales tax and its share of the state sales tax. And the rating was downgraded on $200 million in commercial paper notes, financed by a general obligation pledge from any available city fund. Friday's downgrade stems from "the lack of meaningful solutions" to the city's pension situation. City and fire pension programs have no more than 30 percent of the money needed to cover obligations. Scranton is several steps deeper in the hole than Chicago, but the problems are quite similar. Neither city can possibly pay pension promises. Mike "Mish" Shedlock globaleconomicanalysis.blogspot.com/
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Post by jeffolie on Nov 12, 2013 5:17:58 GMT -6
November 12, 2013 Moody's Warns of Scranton Bankruptcy; Fitch Downgrades Chicago Citing Pension Problems; Liberal Fantasyland It is truly pathetic watching politicians flop like fish out of water trying to prevent something that was clearly inevitable long ago. Please consider Moody’s warns of bankruptcy in Scranton as city faces $20 million budget gap. Moody’s warned investors that Scranton could be facing the threat of default or bankruptcy thanks to a $20 million budget gap for the fiscal year that begins Jan. 1. Scranton has more than $195 million in outstanding debt, according to Moody’s. A similar crisis hit the city in July 2012, which lead to Mayor Chris Doherty cutting all city workers’ pay to minimum wage for several weeks, a move that made national headlines. “A second liquidity crisis could have more severe effects, including additional defaults,” Moody’s warned. To generate revenue necessary to address its debt, Scranton has considered taxing commuters and alcoholic drinks, though neither has been approved by the city council. The Pennsylvania Economy League, which is overseeing Scranton’s Act 47 recovery plan, warned last month the city would have to raise taxes to avoid a default at the beginning of the 2014 fiscal year. Scranton also faces more than $100 million in unfunded pension debt, on top of the $195 million in other debt owed. Adding to Scranton’s financial woes is the need to borrow another $28 million to pay a court-mandated settlement with the city’s police and firefighter unions. Tax Hike is Pure Idiocy The numbers say everything that needs to be said. It is absolutely impossible for Scranton to did out of this hole, I do not care how much taxes are raised. All tax hikes can do is harm more working class citizens for the benefit of undeserving public union workers. Liberal Fantasyland Whatever judge awarded the police and fire workers $28 million is an idiot or a genius, depending on his or her intent. If the intent of the ruling was to make it clear to everyone on the planet that the only solution for Scranton was bankruptcy, then the judge succeeded. If as I suspect, the judge actually thought police and fire fighters would receive $28 million, then the judge is living in liberal fantasyland. Fitch Downgrades Chicago Citing Pension Problems Yahoo!Finance reports Fitch downgrades Chicago bond ratings Fitch dropped the rating from AA- to A- on $8 billion in general obligation bonds, backed by property taxes. It also dropped the rating on $497 million in sales tax bonds — paid for by both the city's local sales tax and its share of the state sales tax. And the rating was downgraded on $200 million in commercial paper notes, financed by a general obligation pledge from any available city fund. Friday's downgrade stems from "the lack of meaningful solutions" to the city's pension situation. City and fire pension programs have no more than 30 percent of the money needed to cover obligations. Scranton is several steps deeper in the hole than Chicago, but the problems are quite similar. Neither city can possibly pay pension promises. Mike "Mish" Shedlock globaleconomicanalysis.blogspot.com/
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Post by jeffolie on Nov 11, 2013 12:24:52 GMT -6
I served 1970-72 which interrupted Law School, drafted into the Army ... SP5 ... honorable discharge
Got free oil change, meals which I took home for the family.
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Post by jeffolie on Nov 10, 2013 17:44:34 GMT -6
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Post by jeffolie on Nov 10, 2013 15:47:59 GMT -6
November 10, 2013 www.cbsnews.com/8301-3460_162-57611664/netanyahu-failed-nuke-talks-with-iran-were-leading-to-a-very-bad-deal/Netanyahu: Failed nuke talks with Iran were leading to "a very bad deal" Israeli Prime Minister Benjamin Netanyahu is continuing to pour cold water over the prospects of a deal to curb Iran's nuclear program even after talks between the Middle Eastern nation and six world powers collapsed early Sunday morning. Engaging in direct talks with Iran for the first time in more than three decades, the U.S. and its allies sought to limit Iran's ability to make a nuclear weapon in exchange for some sanctions relief. The talks were far enough along last week that Secretary Kerry flew to Geneva to participate, but ultimately failed after French Foreign Minister Laurent Fabius implied the deal did not go far enough in constraining Iran's ability to enrich uranium or to complete a reactor that will be able to produce plutonium. "Iran gives practically nothing and it gets a hell of a lot," Netanyahu said Sunday on CBS' "Face the Nation." "That's not a good deal. I hope -- I can only express my wish -- that the P5+1 use the time to get a good deal that takes away Iran's nuclear military capability," he said. The P5+1 is the group of six world powers negotiating with Iran, including the five permanent members of the U.N. Security council and Germany. "I'm expressing, as I said, not only the concerns of Israel but the concerns of many in the region. Some of them say it aloud, some say it behind closed doors, but I'll tell you this is the broad feeling here, broad feeling, that Iran might hit the jackpot here. And it's not good. It's not good for us, it's not good for America, it's not good for the Middle East, it's not good for Europe either," Netanyahu said. The Israeli prime minister has repeatedly spoken out about his concerns over the U.S. negotiating with Iran. He argued that Iran got too much from the deal, as described to him by American sources, because it did not require them to dismantle a single centrifuge, and would set off a scramble among the international community to ease sanctions on the country. "Not a good idea, not a good deal. A very bad deal," he said. Former Defense Sec. Leon Panetta, also on "Face the Nation," said it was appropriate for the U.S. to be wary of Iran's intentions. "We've got to be very skeptical," Panetta said. "Iran is a country that has promoted terrorism. They've had a hidden enrichment facility that we had to find out about. So we've got to be skeptical and make sure that, even with some kind of interim agreement, that we know what the next steps are going to be in order to ensure that they really do stand by their word." "You better operate from a position of strength if you want to deal with the Iranians," he added. Any deal must question what will happen to enriched fuel that Iran already has, the country's centrifuges, and heavy water reactors, Panetta said, and must address ensure that the country does not have any other hidden enrichment sites. "The president and I share the goal of making sure that Iran doesn't have nuclear weapons," Netanyahu said of President Obama. "I think where we might have a difference of opinion is on how to prevent it." www.cbsnews.com/8301-3460_162-57611664/netanyahu-failed-nuke-talks-with-iran-were-leading-to-a-very-bad-deal/
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Post by jeffolie on Nov 10, 2013 15:43:23 GMT -6
November 10, 2013 www.cbsnews.com/8301-3460_162-57611664/netanyahu-failed-nuke-talks-with-iran-were-leading-to-a-very-bad-deal/Netanyahu: Failed nuke talks with Iran were leading to "a very bad deal" Israeli Prime Minister Benjamin Netanyahu is continuing to pour cold water over the prospects of a deal to curb Iran's nuclear program even after talks between the Middle Eastern nation and six world powers collapsed early Sunday morning. Engaging in direct talks with Iran for the first time in more than three decades, the U.S. and its allies sought to limit Iran's ability to make a nuclear weapon in exchange for some sanctions relief. The talks were far enough along last week that Secretary Kerry flew to Geneva to participate, but ultimately failed after French Foreign Minister Laurent Fabius implied the deal did not go far enough in constraining Iran's ability to enrich uranium or to complete a reactor that will be able to produce plutonium. "Iran gives practically nothing and it gets a hell of a lot," Netanyahu said Sunday on CBS' "Face the Nation." "That's not a good deal. I hope -- I can only express my wish -- that the P5+1 use the time to get a good deal that takes away Iran's nuclear military capability," he said. The P5+1 is the group of six world powers negotiating with Iran, including the five permanent members of the U.N. Security council and Germany. "I'm expressing, as I said, not only the concerns of Israel but the concerns of many in the region. Some of them say it aloud, some say it behind closed doors, but I'll tell you this is the broad feeling here, broad feeling, that Iran might hit the jackpot here. And it's not good. It's not good for us, it's not good for America, it's not good for the Middle East, it's not good for Europe either," Netanyahu said. The Israeli prime minister has repeatedly spoken out about his concerns over the U.S. negotiating with Iran. He argued that Iran got too much from the deal, as described to him by American sources, because it did not require them to dismantle a single centrifuge, and would set off a scramble among the international community to ease sanctions on the country. "Not a good idea, not a good deal. A very bad deal," he said. Former Defense Sec. Leon Panetta, also on "Face the Nation," said it was appropriate for the U.S. to be wary of Iran's intentions. "We've got to be very skeptical," Panetta said. "Iran is a country that has promoted terrorism. They've had a hidden enrichment facility that we had to find out about. So we've got to be skeptical and make sure that, even with some kind of interim agreement, that we know what the next steps are going to be in order to ensure that they really do stand by their word." "You better operate from a position of strength if you want to deal with the Iranians," he added. Any deal must question what will happen to enriched fuel that Iran already has, the country's centrifuges, and heavy water reactors, Panetta said, and must address ensure that the country does not have any other hidden enrichment sites. "The president and I share the goal of making sure that Iran doesn't have nuclear weapons," Netanyahu said of President Obama. "I think where we might have a difference of opinion is on how to prevent it." www.cbsnews.com/8301-3460_162-57611664/netanyahu-failed-nuke-talks-with-iran-were-leading-to-a-very-bad-deal/
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Post by jeffolie on Nov 10, 2013 9:23:10 GMT -6
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Post by jeffolie on Nov 10, 2013 8:44:02 GMT -6
The above charting summary adequately pictures the simple view of the relatively short term time period.
my jeffolie view broadens the time period to the last 14 years forming a Megaphone formation.
Picking a top remains a SWAG. The above summary does not predict much and does picture the different majorly mentioned indexes. The DJIA last week was the strongest while the Russell 2000 was the weakest.
In the last 14 years the picture of relative indexes is different as to the strongest and weakest.
my jeffolie view: retains the concept that a megaphone formation has begun the topping area which can take months and up to 1 year to complete the topping area before the horrible bear market, while I favor a short period of 1 to 6 months to finish the topping area and create a decline of 20% leading to the more dramatic crash phase after the more gradual 1st 20% declining phase which most likely will be completed in 1 to 6 months in my view.
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Post by jeffolie on Nov 10, 2013 8:28:27 GMT -6
Market Summary for November 4 November 8 Commentary Tickers in this Article DIA, SPY, IWM, QQQ The U.S. markets ended the week on a positive note, after a better-than-expected jobs report helped offset losses earlier in the week. According to the Department of Labor, the U.S. added approximately 204,000 jobs in October, despite the government shutdown. The growth isn't necessarily welcome news for the equity markets, however, as the 2.8% GDP growth seen in the third quarter could lead the Federal Reserve to taper earlier than expected. International markets were also relatively mixed this week. Japan's Nikkei 225 fell 0.1%, Germany's DAX 30 rose 0.78%, and Britain's FTSE fell 0.39%. In the eurozone, Standard and Poor's downgrade of France spelled out just how little the country was doing to combat persistent unemployment and high public spending. And in Asia, all eyes are on China's leaders, who will meet over the weekend and into early next week to discuss potential reforms. S&P 500 SPDR ETF Trust (ARCA:SPY ) Consumer Staples Select Sector SPDR(ARCA:XLP) Consumer Staples is a more conservative sector, so during pullbacks the sector should outperform. After failing to make upward progress since May, the end of October witnessed a sharp move higher. Short-term support is now at $42 to $41.75, representing a buying region with a tight stop. If the price falls much below $41.50 the ETF will be back in its old range and a move down toward $40 is likely. The upside target is conservative, at $43 to $43.50, as this has not been a strong sector overall this year. Dow Jones Industrial Average SPDR ETF (ARCA:DIA) The Dow Jones Industrial Average SPDR ETF (ARCA:DIA) jumped 0.55% so far this week, as of mid-day trading on Friday afternoon. After rebounding lower from upper trend line resistance at around 158.00, the index has stabilized between its pivot point at 152.99 and its R1 resistance at 159.17. Traders should watch for a breakout from the upper trend line or a move lower to test the pivot point. Looking at technical indicators, RSI remains relatively neutral with a reading of 61.62, but the MACD appears ready for a bearish crossover over the near-term. PowerShares QQQ Trust ETF (NASDAQ:QQQ) chart The PowerShares QQQ Trust ETF (NASDAQ:QQQ) fell 0.45% so far this week, as of mid-day trading on Friday afternoon. After rebounding lower from its upper trend line resistance at around 84.00, the index extended its move towards the center of its price channel. Traders should watch for a breakdown to the lower trend line at around 80.00 or a rebound from the pivot point to re-test the upper trend line. Looking at technical indicators, the RSI appears relatively neutral with a reading of 58.65, but the MACD has experienced a bearish crossover suggesting downside. iShares Russell 2000 Index ETF (ARCA:IWM) The iShares Russell 2000 Index ETF (ARCA:IWM) jumped 0.63% so far this week, as of mid-day trading on Friday afternoon. After rebounding from its lower trend line support and 50-day moving average at around 107.00, the index has moved higher to re-test its upper trend line and R2 resistance at around 112.87. Traders should watch for a break of either of these levels over the coming week. Looking at technical indicators, the RSI appears neutral with a 52.96 reading, but the MACD's bearish crossover could suggest further downside ahead. The Bottom Line The major U.S. indices moved higher this week, with the exception of the PowerShares QQQ Trust ETF, although many of them remain in a bearish downtrend judging by their MACD indicators. Next week, traders will be watching a number of key economic reports for insights, including jobless claims on the 14th and industrial production on the 15th. Additionally, traders will be carefully watching economic growth figures for clues as to Federal Reserve actions. Charts courtesy of StockCharts.com. from chartadvisor.com
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Post by jeffolie on Nov 10, 2013 8:16:17 GMT -6
One must include the 3 featured Dangers among those potential danger among mine in the jeffolie Danger Zone lasting up to June 20th ... a SWAG
In summary, the above features: 1. Australia's real estate bubble and more in Australia 2. Japan's bond market bubble plus a stagnating Japanese stock market 3. India's instable inflation plus more Indian risks
my jeffolie view: retains the jeffolie Danger Zone lasting up to June 20th including a laundry list of dangers constantly expanding and now featuring the above 3 dangers of India, Japan, Australia
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Post by jeffolie on Nov 10, 2013 7:53:47 GMT -6
Asia: 3 Warning Signs Of A Potential Bloodbath Ahead Nov 10 2013 The title is deliberately provocative to relay the extent of my concerns with recent market action. Regular readers will know of my bearish long-term outlook for stocks based on the view that we remain in a secular bear market which began in 2000 and extraordinary central bank policies have only delayed an eventual bottom. But the recent activity in stocks and other asset markets is sending a clear signal that dangerous bubbles are building everywhere thanks to printed money and low interest rates. And central banks are unwilling to intervene as economic recovery remains as elusive as ever. The likely endgames are obvious enough: either recovery happens and central banks move too late to quell inflation or recovery doesn't happen at all. Those forecasting a happier outcome either don't know of the long history of consistent central banking failure or, more likely, are beneficiaries of the current policies. Many commentators have rightly pointed out the froth building in the U.S. stock market with Twitter (TWTR) jumping 73% on debut, margin debt at record highs and extreme bullishness among institutional and retail investors. But the bubbles developing in Asia, arguably much larger in size not just in stocks but across all asset markets, have been largely ignored. Today's post will focus on three red flags: 1.The Indian stock market reached record highs over the past week despite all of the country's problems and a currency recently in free fall. 2. Australians have been increasingly using their superannuation funds as collateral to buy residential property, helping reflate one of the world's biggest housing bubbles. 3.The Japanese bond market has effectively died with the government becoming the dominant player in the market due to its massive bond buying program. This isn't just a Japanese phenomenon with central banks now owning a third of the world's bond markets. Free markets, these ain't. I'll also explore why the excesses are developing. And a key underlying reason, little acknowledged, is that the fiat money system - paper money without an anchor to something of solid value - is becoming stretched and perhaps reaching breaking point as central bankers print endless money without constraints. Some may see this as an extreme point of view but that ignores the relatively short history of the system and subsequent sharp increase in asset price volatility. Asia Confidential isn't so arrogant as to predict an imminent downturn in asset prices. No-one knows exactly how this will play out. But increasing asset price volatility would seem relatively assured. Given this, it would make sense to keep your assets diversified, resist taking on too much debt (asset price risk outweighs attractive rates) and, most importantly, avoid areas that investors are salivating over (such as hyped IPOs). Red flags everywhereIf alarm bells aren't going off for investors, they should be. And it's not just the IPO of a certain social messaging company which is valued at close to $24 billion despite never earning a dime. I saw one portfolio manager describe the IPO as a great thing and the best of capitalism in action. I'm not sure who's more stupid: this investor, the Twitter founders who under-estimated public demand and left money on the table, the investment bankers who under-priced it, or the retail investors who are holding onto the shares, which will probably go the way of RIM / BlackBerry (BBRY) in a few years time. The largest signs of excess instead lay in Asia. I've mentioned the Indian stock market reaching record highs. It was only in July that the country was in turmoil with a currency in free fall. Since then, stocks have surged, out-performing all other major markets in Asia. Below is India's Sensex index. For the record, I advocated accumulating Indian stocks during the turmoil, but the market has run extraordinarily hard since then, making it prudent to take some money off the table. The country's problems haven't gone away. The economy is still growing at decade-lows. The current account deficit remains one of the largest in emerging markets. And politics remain uncertain ahead of a general election next year. Now some will argue that the stock market is just forecasting a better economy ahead. Maybe. But your starting point is a market at record highs, on a not-so-cheap 16x trailing earnings, arguably distorted by low interest expenses given low rates. More prominent warnings signs are outside of stock markets though. Everyone knows that residential property prices remain elevated in the likes of China, Hong Kong, Singapore and Australia. The latter has taken it to a whole new level, however. The latest trend is Australians using their superannuation as collateral to buy residential property, as well as other forms of property. Residential real estate now accounts for 14% of so-called self managed super funds. That's helped drive an 8% year-on-year increase in house prices in September. Now I'm not sure if the practice of using superannuation or pensions as collateral to purchase property is used in any other country but the dangers are pretty obvious. Particularly when many developed countries, including Spain, are raiding pension funds to finance their QE programs. Australia has added risks given the extent of its housing bubble. Demographia says the Australian housing market is the most expensive in the developed world, with property prices at 5.6x annual income, with 3x or below considered affordable. Meanwhile, The Economist magazine suggests Australia is the world's fourth most expensive housing market, with prices 44% overvalued versus rents and 24% versus wages (which are undoubtedly grossly inflated).
The risks to Australia from the inflated housing market are systemic also. Housing assets of A$4.9 trillion are 3.3x larger than Australia's GDP. Moreover, residential property represents more than 60% of the big four Australian banks total loan books. Given these banks have an average leverage of 20x (equity/assets), it would take less than a 10% fall in residential property prices for equity in these banks to be wiped out. One word comes to mind: bail-outs! Lastly, there's been unsurprising news over the past week that the Japanese bond market has become dysfunctional. I've previously talked about how the massive bond buying program of the Japanese central bank, equivalent to 70% of new bond issuance, would crowd out private investors and thereby significantly increase volatility. Now one of Japan's larger brokers, Mizuho, has come out to declare that the sovereign bond market is effectively dead. The firm's chief bond strategist Tetsuya Miura told Bloomberg: "The JGB [Japanese government bond] market is dead with only the BoJ [Bank of Japan] driving bond prices. These low yields are responsible for the lack of fiscal reform in the face of Japan's worsening finances. Policymakers think they can keep borrowing without problems." Recall that Japan is attempting U.S.-style stimulus on steroids to lift the country out of 20 years of deflation. It hopes to increase inflation without a rise in bond yields and interest rates. Rising rates would kill Japan given that interest rates of just 2.8% would mean interest expenses on government debt equaling all of current government revenues. An unsustainable situation. Japanese government bond yields have behaved so far, though there was a huge spike in volatility earlier this year. Given the central bank has now effectively swallowed the bond market, you can expect to see increased volatility hitting headlines again very soon. Below is a chart of 10-year Japanese government bond yields. By the way, this isn't just a Japanese issue. Central banks now own a third of the world's bond markets. That number could substantially rise given plans for further QE. And it makes an eventual bond market revolt more likely at some stage. The system reaching breaking point? It would be easy to blame the above excesses simply on money printing and low interest rates. But that would ignore some of the key underlying causes. A few weeks ago, I highlighted how the significant trade imbalances between the U.S. and China played a major role in the financial crisis and subsequent policy. But reading through the former publisher of highly-regarded Bank Credit Analyst Tony Boeckh's book, The Great Reflation, has reminded me of a larger issue at play. Namely, the central role of the paper money system in increasing asset price volatility: "The Great Reflation now underway should be seen as another chapter extending the long-running saga of inflation - excess money and credit expansion - that began in 1914. A hundred years of financial background may seem a little esoteric to some, but it is important to understand that we have been living for a very long time in a monetary world that is without an anchor. When there is no anchor, the monetary system has no discipline. And it is this lack of discipline that is fundamental to where we are now and where we may be going. The Age of Inflation is deep-rooted and enduring but it is not sustainable forever. Anything that is not sustainable has an end point. When that time comes, it will not be pretty." Boeckh goes onto explain the traditional anchor to prevent excesses was gold, and to a less extent, silver. In other words, central banks couldn't print money without additional metallic reserves, prior to 1914. The big change came in 1913 with the formation of the U.S. central bank, the Federal Reserve. The anchor with gold was gradually wound back until the seminal event in 1971 when the U.S. broke the link to gold and floated the dollar. This allowed central banks to print money without any constraints. What that's meant is that at the sign of any downturn, central banks have opted for the easy, most painless, solution: inflation. Which has resulted in increasing asset price volatility: "The Great Reflation experiment now underway, while critical in avoiding a 1930s debt deflation spiral, ensures that we are a long way from writing the last chapter on the post-1914 Age of Inflation. The managed paper money system has been a huge failure, and lies at the root of the persistent tendency to inflation, instability, and debt upheavals. There are obvious political advantages to inflation in the short run, and a paper system with no brakes is a great temptation to politicians with one eye always on the next election." It's important to understand that Boeckh doesn't necessarily predict inflation ahead. He views, as I do, inflation and deflation being two sides of the same coin as inflation always begets deflation and vice versa. Right now, you're seeming asset inflation, but disinflation (declining inflation) in the price of goods (reflected in CPI numbers). Whether we get asset deflation or inflation flowing through to CPI remains to be seen. And it's imperative to realise that inflation doesn't aid economic growth. This is contrary to the views of just about every economist on the planet. But the fact is that the U.S., for instance, experienced superior economic growth in the 19th century when there was practically zero inflation. And during that time, there were fewer economic downturns than has occurred over the past century. The warped belief that economies need inflation for growth was aptly on display in a recent New York Times article entitled "In Fed and Out, Many Now Think Inflation Helps". A more silly and misinformed article you won't find readily, but it certainly furthers the agenda of the new Fed chief to keep on printing money in the hope of reviving the economy. Getting back to Beockh and what he does suggest, and I totally agree with, is that the current paper money system is being stretched to breaking point. Consequently, you should expect heightened volatility in future: "The fragile state of the economy and financial system will continue to require inflation of money and credit, heavy government intrusion into the private sector, and frequent resorting to subsidies and support programs. This will continue to distort relative prices of labor, goods, services, and assets. It will sustain the economy in an artificial state and will compound instability and make it impossible to understand what is real and what is not." If this is right, the question then becomes how best to protect your assets in what is likely to be a treacherous environment going forward. Let's turn to some specific recommendations. How best to preserve your capital Given no-one, including your author, knows exactly how events will unfold, diversification of your assets should be a key priority. A traditional stock and bond portfolio is fraught with danger given the significant distortions in these markets. Real estate, cash and precious metals should all be considered. Under different scenarios, you want to protect your capital. If excessive inflation occurs, as happened in the 1970s, then stocks and bonds will get slaughtered. Real estate and gold are better inflation hedges. If there's mild inflation, stocks will do well, as might gold, while bonds and cash should under-perform. If there's mild or extreme deflation, bonds and cash should outperform. Gold could also do ok if faith is lost in the paper money system. For stock exposure, the U.S. looks pricey, while parts of Asia and Europe offer opportunities. In my neighbourhood of Asia, banks in Singapore and Thailand offer reasonable value, beaten down energy and gold socks are worth a look, and inepensive gaming stocks such as Genting Berhad (KLSE:(GENT)) and Crown Ltd (ASX:CWN) should prove resilient. For bonds, try to avoid sovereign bonds, barring perhaps prudently run countries such as Singapore. Corporate bonds are worth considering, but remember that these bonds have quasi-equity type qualities. Which means if stocks tank, corporate bonds will suffer too. For property exposure, residential property in many countries looks elevated. That's particularly the case in Asia. Office real estate offers better value but is at risk if economies don't recover. Meanwhile retail property is largely unattractive given the continuing loss of retail market share to the internet. Industrial real estate is probably the most defensive property exposure. Historically this sub-segment has proven less cyclical as significant oversupply is rare given the quick time that it takes to build industrial versus office and retail. Cash is the world's most hated asset right now and that's part of the reason why you should have some in reserve. Central banks want you out of cash and into risk assets, so having some cash is akin to flipping the bird at the Fed. More seriously, you'll need cash in reserve to take advantage of any opportunities should there be a major shake-out in markets. Which currencies to own? Ah, that's the difficult part. The Singapore dollar remains a stand-out. Other than that, there's not a lot else to like. A basket of Canadian loonie, Thai baht, Malaysian ringgit, U.S. dollar (at least in the short-term), New Zealand dollar and Norwegian krone should be considered. Now to precious metals. You own gold if you believe there's even a small chance of a breakdown in the current financial system. It's disaster insurance. It's why China is buying as much gold as it can get its hands on. Not because it wants to become the world's leading currency, as many suggest, but because it doesn't trust the U.S. dollar or current paper money system (more on that topic at a later date). It foresees the possibility of a new monetary system with the partial or full backing of gold. You might be wise to follow the Chinese when it comes to gold. seekingalpha.com/article/1826772-asia-3-warning-signs-of-a-potential-bloodbath-ahead?source=email_the_daily_dispatch&ifp=0
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Post by jeffolie on Nov 9, 2013 16:52:00 GMT -6
Obama Approval Rating Drops On Economy, Immigration 11/08/2013 President Barack Obama's approval rating has continued to drop during his second term, according to a Pew Research survey released Friday. The poll found Obama's approval rating to be just 41 percent, down 11 points since January. The decline in the president's rating this year has been more gradual than abrupt. Obama's numbers have declined across a variety of issues. His rating on immigration dropped significantly in the past six months, falling from 43 percent in June to 32 percent today. His approval rating on the economy, which had hovered in the low 40s for most of this year, is now at 31 percent -- the lowest received by Obama or any of his three presidential predecessors, according to Pew. His approval on health care is at a record low of 37 percent, slightly below where it stood during the 2010 battle over passing the Affordable Care Act. His rating on foreign policy, a winning issue for him until this year, is now at just 34 percent, little changed from September. A bare majority still approves of the way Obama has handled the threat of terrorism, the poll found -- the only issue tested for which he did not earn a negative rating. Obama Approval on Economy: 31%, Health Care: 37% The downward trend in presidential approval ratings is not without precedent. "Obama’s second-term job ratings have followed a similar downward trajectory as those of his predecessor, George W. Bush. A year after his reelection, 36 percent approved of Bush’s job performance, down from 48 percent in December 2004," according to the Pew Research report. "In contrast, the two prior presidents who won reelection -- Bill Clinton and Ronald Reagan -- enjoyed positive ratings over the course of the next year." The results align with other recent polling. An NBC/Wall Street Journal survey released in late October put Obama's approval at an "all-time low." Pew Research surveyed 2,003 adults between Oct. 30 and Nov. 6, using live phone interviews. www.huffingtonpost.com/2013/11/08/obama-approval-rating_n_4241588.html
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Post by jeffolie on Nov 9, 2013 16:22:26 GMT -6
Google must be performing a 'street view' mapping ... photos later with tin hats
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