Lewis Wickes Hine Berry pickers shack, Anne Arundel County, Maryland 1909
Hey, say what you will, but I’m not one to dodge the more difficult questions. And in the case of this one, I have no idea what the answer would be either. I think calling what we’ve seen to date a recovery is far too much of a semantic stretch in the first place, but even then, even if we assume a hypothetical economic recovery has occurred in America, it’s just about literally in a world of trouble.
US home sales, mortgage originations, GDP growth, labor participation rate, there’s a long litany of horrendous numbers, especially when you realize this is not supposed to be a “normal” phase in the economy, but a recovery, which according to historical precedents should show better than normal numbers, not worse. Either that or it’s not a recovery. If you can only ‘create’ 280,000 new jobs when almost a million Americans leave the labor force in just one month(!), you have issues; you might want to get a few therapy sessions in.
That the Fed under Yellen came with happy recovery tidings and more taper on the same day we learned that there are now 102 million working age Americans who don’t have a job carries an under- and overtone of irony that’s hard to beat. America looks good on the surface because those parties that have access to your – future – income and wealth make money on the crap table. But as soon as the risk of losing on that table increases, which is just a matter of time (because big players know volatility when they see it), they’re pulling out with their gains, markets go down, interest rates go up, and you’ll be left with the bill to make up for the difference. Baked into the cake. You’re already, today, much poorer than your bank statement says. That statement simply ignores the debts the country has entered into in your name.
If nothing else, it should be very evident to everyone who follows the markets, and the economy at large, be it professionally or out of “simple” curiosity, that there is a inherent volatility in today’s global financial events that is probably unique in history. That volatility may seem to be shrouded in the world’s central banks’ very determined action of unleashing an entire year’s worth of global GDP into those same markets, but what many don’t understand is that this only increases volatility. And that it must and will, of necessity, backfire later, at a date to be determined in the future. Know what tomorrow is? That’s right, tomorrow, too, is the future.
There are plenty of voices who claim the recovering US economy will lift China and perhaps even Japan out of their slump, but I think you can guess by now what I think about that idea. When your GDP grows at a 0.1% clip, you don’t even look likely to save yourselves, let alone others. 47% less new homes sold over the May 1-3 holiday in China, it’s just another number, but it doesn’t look good, does it? China, like the US, puts on a brave face, but I get this overwhelming impression that neither of the two will be able to help the other recover their recovery. China is still the country that sells trinkets and electronics to Americans and Europeans, and neither of them have the sort of economy that says they’ll start buying more of either anytime soon, probably never again.
Japan is a basket case, we’ll see a whole bunch of very “disappointing” data come from the rising sun this year. Japan has bet the house on exports, and those exports are not going anywhere despite the 20% plunge in value of the yen. Toyota’s doing fine and raking in riches, but Sony is getting clobbered for the exact same reason Toyota is not: the dramatic failure of Abenomics.
How about Europe? ECB head Mario Draghi needs to crash down the euro into the beggar thy neighbor game well underway, but his options are not nice to him. Pushing down interest rates from 0.25% is a very limited game, while pushing them into negative territory for real rates is a game so risky he’ll be reluctant to try. The only other option seems to be to launch QE, but there’s oodles of reluctance there as well, and moreover it’s unlikely any bold steps will be taken so close to the EU elections May 22-25, after which it can take a while before the new power relations are established.
Europe should have let go of the PIIGS years ago, in fact they should never have entered the eurozone, it would have been much better for everyone except the banks and the Brussels cabal, and there is still no way Greece is ever going to be Germany. WHich, in essence, is all you need to know about Europe. I still hope one country, one is all it takes, has the audacity to leave the euro, lest all of them are dragged down into the same debt ridden swamp. The Greeks, Spanish, Italians and Portuguese deserve much better than to be some power-hungry clique’s whipping boys, but they need to be master in their own homes to do it.
So. Who’s left? Emerging markets? You got to be kidding. If Yellen’s taper means one thing, it’s rich world capital coming home to New York, Frankfurt and London. Oh wait, London. Can Britain save the global, or the American, recovery? A country where real wages have dropped 8% over the past few years? You see, economies don’t work that way. A recovery is when everyone, or at least the broad population, starts to become better off. There’s no sign of that, obviously, in Britain. In fact, it sort of like exemplifies where the entire world has gone formidably off track: a government that hands over it’s citizens capital to investors, which temporarily lifts asset markets, combined with a red carpet for foreign investors who owe their money to other governments’ handing over their own citizens capital, and who drive up local property prices beyond the ceiling, combined with a scheme to entice enough actual Britons into buying homes at those artificially elevated prices. What that exemplifies is the Ponzi scheme the entire global economic system, if you can still call it that, has become. And every Ponzi scheme has a best before date.
To summarize, no-one and nothing is going to help the recovery recover. What we see in the financial press has turned into a propaganda war, but there is no trust left, and no confidence, there’s only central banks and governments with their fingers in your children’s pockets. But nobody has any idea what your children will generate in wealth or income. What if the economy collapses?
The only thing we’re sure of is volatility. And that tells us that the entire “system” could crumble just as easily tomorrow as the day after. But crumble, and implode, explode, collapse, it will. Ponzi schemes always do.
Propaganda is the name of every game these days.
The bond market, the dollar and gold are all saying that US growth prospects are worsening as QE winds down. The rise in commodities and emerging markets would seem to indicate that investors believe those markets can grow even as the US falters. I think that probably depends on the depth of any US slowdown but that appears to be the early line. As for Europe the most likely explanation is that those who rode the American QE bull believe they’ll be able to do the same in Europe. That assumes that Draghi succumbs to the lure of QE, something about which I’m far from convinced. He has accomplished more than the Fed by merely threatening to do something and I suspect he’ll keep doing that as long as it works.
Markets often give contradictory signals at turning points as investors probe markets and try to find the next asset to produce returns. Some of these nascent trends will prove durable and others will prove to be nothing more than noise. Can commodity markets continue to rally if US growth sags and the dollar falls? Will the Euro keep rallying despite Draghi’s desires to the contrary? Will the ECB finally do something other than talk? Will emerging markets be able to grow if the US economy is weak? Can China overcome its problems without US and European growth accelerating? Which market is right? US large cap stocks or long term Treasuries? We’ll find the answers to these questions in the coming months and I suspect investors in US stocks may not like the answers. Given a choice of trusting the Fed’s economic forecasting skills or the markets, I’ll take the markets every time.
Now that’s a bubble …
Investors had gone on a feeding frenzy and poured money into mutual funds that specialize in “leveraged loans” whose “high yield,” if you ignored the risks, made them relatively attractive in the zero-interest-rate environment that the Fed and other central banks inflicted on the land. These mutual funds, endowed with conservative-sounding names and glossy charts, were marketed to retail investors. And retail investors poured money into them, and fund managers went out to blow it on leveraged loans. Why? Because it was their job.
The buying binge pushed down yields on even the crappiest loans to the level that one-year FDIC-insured CDs paid in saner times before the financial crisis – before the Fed’s machinations converted the credit market into an absurd game in which “high-yield” has become a misnomer. This feeding frenzy by investors who don’t know what they’re getting encouraged companies to issue a record $355 billion in new leveraged loans last year in the US, according to Bloomberg. This year started out just as hot, with $113.7 billion so far. Leveraged-loan mutual funds saw 95 weeks in a row of inflows, and there was no indication that it would ever stop because the whole Fed-designed machinery itself created insatiable demand.
Private equity firms – the ultimate smart money – have profited from this insatiable demand via an ingenious trick that the infamous dumb-money investors in leveraged-loan mutual funds were never meant to see. PE firms make their already overleveraged, junk-rated portfolio companies borrow even more money, but not to invest in productive projects. Instead, PE firms suck this money out of their portfolio companies via special dividends. A form of immensely profitable financial strip-mining.
When the portfolio company topples under the weight of this debt, those who hold the debt – for instance, the conservative-sounding leveraged-loan mutual fund in your portfolio – have a good chance of losing it all, while the PE firm, loaded with this cash, can be found reminiscing gleefully about the banner year they’d had. But something happened in mid-April, and investors in leveraged-loan mutual funds ran scared and started pulling their money out. After 95 weeks in a row of money inflows, these funds suddenly saw outflows for the second week in a row, modest still, of $320 million and $160 million respectively. That reversal of the money flow left skid marks: at least three companies pulled their leveraged loans in April, Bloomberg reported; that “insatiable” demand had suddenly evaporated.
And why not?
The Affordable Care Act could save some of America’s largest corporations hundreds of billions of dollars over the next decade, according to a market analyst group. According to a report by S&P Capital IQ released Thursday, S&P 500 companies will likely move their employees from employer-provided health insurance plans to the healthcare exchanges under the Affordable Care Act, saving employers nearly $700 billion through the year 2025. If current healthcare inflation stays constant, those savings could be greater than $800 billion, researchers found.
Corporations are expected to start out by dropping low-wage and part-time workers from their employer insurance plans since they are able to reap the benefits of government tax subsidies under ObamaCare, leading them to pick up new plans under the healthcare law. Eventually, the burden of healthcare coverage will shift from employers to employees. “Neither lawmakers nor the White House originally anticipated the idea that the ACA could provide corporations with an enormous subsidy to earnings,” say authors of the report. “However, once a few notable companies start to depart from their traditional approach to health care benefits, it’s likely that a substantial number of firms could quickly follow suit.”
Even after a 47% drop from its late-December high of $74, Twitter looks overpriced. User growth is slowing, and the company still trades at a big premium to other Internet stocks based on its price/sales ratio, or enterprise value (market capitalization less net cash) divided by revenue. Twitter appears to be a long way from profitability, based on conservative accounting that properly treats as an expense its massive stock-based compensation to employees. Shares of the micro-blogging company, which finished Friday at $39.02, could drop toward $30, which still would leave it trading at a premium to Facebook on a price/sales ratio.
Before Twitter’s initial public offering last November, Barron’s wrote that the deal looked appealing at the then-current pricing expectation of around $20, but we warned investors not to pay more than $30. Twitter made us look foolish when it surged after the IPO. Barron’s wrote negative follow-ups (“Twitter: Priciest Stock Since the Dot-Com Bubble?” Dec. 30, 2013) when the stock traded in the $60s and another (“Why Twitter Shares Could Fall Further,” Feb. 10) when it was about $54. First-quarter results last week disappointed Wall Street. While an increase in monthly average users—up 25% to 255 million from the year-earlier period—met expectations, it marked a continued slowdown in growth. U.S. users at 57 million appear to be plateauing, despite efforts to make Twitter more appealing to casual users. Twitter’s quirky format may make it tough for it to become a mass-market medium like the more user-friendly Facebook.
The avalanche keeps rolling down the mountain.
New home sales fell 47% over the holidays to the lowest level in four years in 54 cities, Centaline Group said in a report dated yesterday. “Property prices will correct this year in China,” Gao Jian, an analyst at Northeast Securities Co., said by phone from Shanghai. “Sales volume is retreating. I don’t see a suitable entry point for property stocks for now.” Chalco, as Aluminum Corp. of China is known, slid 2.2% to 3.06 yuan. Jiangxi Copper Co., the biggest producer of the metal, lost 0.6% to 12.05 yuan.
China’s manufacturing contracted for a fourth month, according to the HSBC survey. April’s final number of 48.1 compared with 48 the previous month and a 48.4 median estimate from analysts surveyed by Bloomberg News. Numbers below 50 indicate contractions. The data show the challenge for Communist Party leaders trying to set a floor under growth while rolling out changes such as an increased role in the economy for private investment.
No relief. And none in sight.
China’s manufacturing contracted for a fourth month in April, according to a private survey that missed estimates and sent stocks in the region lower on concern the economy’s slowdown is deepening. A purchasing managers’ index was at 48.1, HSBC Holdings Plc and Markit Economics said in a statement today. That compared with a 48.4 median estimate from analysts surveyed by Bloomberg News, a preliminary reading of 48.3 and March’s 48. Numbers below 50 indicate contraction. Hong Kong stocks extended declines on the report, which suggests Communist Party leaders have to do more to set a floor under economic growth after property construction plunged last quarter and expansion cooled.
Gross domestic product is projected to increase 7.3% this year as the government reins in credit, according to a Bloomberg survey, compared with an official target of about 7.5%. “There is no substantial improvement in terms of momentum,” said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong. The property-market slowdown is having “certainly some impact” on manufacturing, said Ding, who previously worked at the People’s Bank of China and International Monetary Fund. The Hang Seng Index fell 1.3% at the close and the Hang Seng China Enterprises Index (HSCEI) of mainland shares, also known as the H-share index, slid 0.6%.
The State Council has outlined a package of spending on railways and housing and tax relief to support growth and pledged extra efforts to aid exporters. The central bank has also lowered the reserve-requirement ratio for some rural banks by as much as 2 percentage points. The country last lowered the reserve ratio for large banks in May 2012, to 20%. The ratio is “relatively high” and remains a major tool of the nation’s monetary policy, PBOC officials Sheng Songcheng and Zhang Xuan wrote in an article dated May 4 in China Finance, a central bank publication.
Dong Tao, chief regional economist at Credit Suisse Group AG, talks about China’s economy and local government debt. He speaks with Zeb Eckert on Bloomberg Television’s “First Up.”
This is systemic, it’s not some incident, the entire Chinese economy was built in this fashion.
Smaller Chinese banks have ramped up their shadow lending activity, adding to the financial risks that threaten to trip up the world’s second-biggest economy. The 2013 results of unlisted banks, published over the past week, reveal that city-based lenders have been among the most aggressive in China in using complex credit structures to evade regulatory controls and issue higher-yielding loans. These shadow loans have been profitable for banks so long as growth has been strong. But as the economy weakens, they are more vulnerable to problems than ordinary loans because they connect banks to riskier borrowers, while giving them minimal capital cushions. Chinese officials insist the financial system is safe, but economy-wide debt levels have surged over the past five years, fueled by shadow lending, and a series of small defaults in recent months have underlined the mounting strains.
A Financial Times analysis of the balance sheets of 10 unlisted banks – institutions that are leading lenders in their home cities but have limited national reach – found that their exposure to shadow credit assets soared last year. For the 10 banks, which operate in large cities from Shijiazhuang in the north to Fuzhou in the south, investments in trust plans and holdings of other non-standard credit products climbed to 23.3% of their total assets last year, up from 14.3% in 2012. This exposure dwarfs that of China’s leading banks. For Chinese banks listed in Hong Kong – the biggest and best-managed of the country’s lenders – non-standard credit products accounted for just 1.7% of their total assets at the end of last year, according to Deutsche Bank analysts.
A billionaire Ukraine bank owner who puts a price on the heads of fellow Ukrainians. What’s next?
Ukraine’s largest bank has temporarily closed branches in separatist-held Donetsk and Luhansk, saying it could no longer carry out cash transactions in regions riddled with crime that could “threaten the lives” of its workers. Pro-Russian separatists have targeted Privatbank, after its co-owner, billionaire Igor Kolomoisky, was appointed by the new government head of the nearby Dnipropetrovsk region and swiftly announced a $10,000 bounty on the heads of Russian “saboteurs”. Rebels, who say they want independence from Kiev, set fire to a branch in the town of Mariupol in the Donetsk region late on Saturday and raided a security truck last week in Horlivka, south of the region’s main rebel stronghold.
“In the current circumstances we cannot and do not have the right to make people go to work in the Donetsk and Luhansk regions, where armed people break into bank branches and seize security vans in the towns,” Privatbank said in a statement. It said its clients could access their accounts via the Internet and mobile devices, use their cards in shops and make cashless transactions at self-service terminals. “Over the last 10 days, 38 ATMs, 24 branches of Privatbank and 11 cash collection vans have suffered arson, assault and wanton destruction in the cities of Donetsk and Luhansk,” it said, adding that the bank processes more than 400,000 pensions and other social benefits for 220,000 people in both regions.
Kolomoisky, Ukraine’s fourth richest man, according to Forbes magazine, has become a hate figure for the pro-Russian separatists after he said he would give $10,000 to Ukrainian troops for every “saboteur” handed over. The leader of the regional militia in Dnipropetrovsk, which borders Donetsk, also said $1,000 would be paid for a rifle, $1,500 for a machinegun and $2,000 for a grenade-launcher.
Pay your bills already.
Russia, Ukraine, and the European Union failed to reach an agreement on gas supply issues during three-party talks in Warsaw on Friday. Kiev vowed to fulfill its gas transit obligations, but did not say when it plans to repay debt to Russia’s Gazprom. According to EU energy commissioner Guenther Oettinger, the sides have agreed to hold two more rounds of consultations, in two and four weeks. During their next meeting in mid-May, the sides will focus on gas prices for Ukraine, Oettinger told journalists on Friday. Moscow, Kiev, and Brussels gathered in Warsaw to search for a solution to the “crisis situation” around Ukraine’s payments for Russian gas, the Russian Energy Ministry said earlier.
Ukraine’s debt to Russian energy giant Gazprom has already reached US$3.5 billion, but the sides have so far failed to come to a compromise over the price that Ukraine should pay for the natural gas supplies. “Our Ukrainian colleagues did not say anything about when they would pay for the gas they already received and they will receive later,” Russian energy minister Aleksandr Novak told journalists after the Warsaw talks. “Today, we took a decision that Gazprom will not demand advance payment in April,” he said, as quoted by Itar-Tass. “May 16 is the date when a bill for gas supplies in June will be issued. They will have a time span until May 31 to pay it. If the bill is not paid by that date, Gazprom will have a possibility to limit gas supplies or to supply as much gas as is paid for until May 31.”
That is painful, if only since Europe is celebrating the end of WWII.
The Jewish community of Odessa is prepared for mass evacuation, should violence re-erupt in the Ukrainian city and threaten to spill over them. Anti-Semitism is a painful issue in Ukraine, with radical nationalism on the rise. Odessa witnessed several instances of clashes between anti-government and pro-government activists in the past weeks. They culminated in the deaths on Friday of dozens of opponents of the new authorities, most of whom burned to death in a building, besieged by armed radicals, who used Molotov cocktails and firearms in a crackdown on the protester’s camp.
The standoff so far hasn’t touched the Jewish community directly, Odessa Jewish leaders told the Israeli newspaper Jerusalem Post, but they are concerned that this may change. So they have contingency plans for evacuation, possibly out of the country. “When there is shooting in the streets, the first plan is to take [the children] out of the center of the city,” said Rabbi Refael Kruskal, the head of the Tikva organization. “If it gets worse, then we’ll take them out of the city. We have plans to take them both out of the city and even to a different country if necessary, plans which we prefer not to talk about which we have in place.”
He said he was considering renting a holiday camp to house 600 Jews away from Odessa for the next weekend, considering that Friday marks the anniversary of the defeat of Nazi Germany. The date polarized society: some people cherish the legacy of Ukrainian nationalists, who collaborated with the Nazis against Russia, while others see it as a symbol of victory over Nazism and by extension the modern-day nationalists. There are fears of more clashes will come on that date in Ukraine. “The next weekend is going to be very violent,” Kruskal believes.
Well, that’s a surprise …
Dozens of specialists from the US Central Intelligence Agency and Federal Bureau of Investigation are advising the Ukrainian government, a German newspaper reported Sunday. Citing unnamed German security sources, Bild am Sonntag said the CIA and FBI agents were helping Kiev end the rebellion in the east of Ukraine and set up a functioning security structure. It said the agents were not directly involved in fighting with pro-Russian militants. “Their activity is limited to the capital Kiev,” the paper said. The FBI agents are also helping the Kiev government fight organised crime, it added.
A group specialised in financial matters is to help trace the wealth of former Ukrainian president Viktor Yanukovych, according to the report. The interim Kiev government took charge in late February after months of street protests forced the ouster of Kremlin-friendly Yanukovych. Fierce battles between Ukrainian soldiers and pro-Russian separatists in the country’s east have left more than 50 people dead in recent days. Last month the White House confirmed that CIA director John Brennan had visited Kiev as part of a routine trip to Europe, in a move condemned by Moscow.
Don’t do anything, let it happen. It will anyway. Just make sure the most vulnerable are protected as best we can.
The Eurozone is already in the clasp of powerful deflationary forces. In the Periphery, the debt-deflationary cycle remains in full swing. If GDP seems to be stabilising (e.g. Greece), or even recovering slightly (e.g. Spain), this is due to the statisticians (correctly) anticipating price deflation. These deflationary expectations mean that a further reduction in nominal GDP ‘translates’ into an anticipated… increase in real GDP (or GDP at constant prices) as long as prices fall faster than nominal GDP. This is why the statisticians are predicting ‘recovery’: Recovery in real GDP terms which, in reality, is a drop in nominal GDP that appears like recovery due to…deflation.
Turning to core, surplus Eurozone countries, ‘low-flation’ is produced endogenously, rather than being imported. To see that this is so, just decompose the GDP of the Netherlands, Finland and Germany. One look at the decomposed data confirms that these economies are suffering from weak internal aggregate demand, which is then reinforced by the reduction in the prices of their goods and services both in the European Periphery and beyond.
Faced with this ominous situation, Europe’s authorities are, once more, interested in one thing only: how to hide the problem under the carpet. For example, the European Banking Authority just announced that the forthcoming stress tests (to be conducted by the European Central Bank) will be based on a number of adverse scenaria not including, however, the threat of deflation. Reuters quoted an analyst suggesting that including a deflationary scenario would be bad for morale because of the devastating impact it would have on public and private sector balance sheets. So, in its infinite wisdom, Europe is adopting the ostrich strategy, burying its head in the sand (assuming that deflation will just go away) and offering inane excuses about the deflationary forces observed as we speak.
EU elections this month. Perfect time for protests.
The people of Europe are finally pushing back against the European Super State, if recent polls are anything to go by. Having grown weary of being treated as lab rats in an increasingly dysfunctional economic and political experiment, a large minority of Europeans seem intent on voting for euroskeptic parties in the upcoming European elections. The prospect is causing jitters not only among the big wigs in Brussels but also among many of Europe’s mainstream political parties, whose oligopoly on political power faces a serious threat for the first time in decades. Calculations by the Open Europe think tank suggest that hardline sceptics could take as many as 218 of the 751 seats available in the European Parliament.
In the UK, poll research shows that the most pro-European Westminster grouping – the Liberal Democrats – is about to have its European Parliamentary representation completely decimated. Indeed, so threatened do the three establishment parties in the UK feel by Nigel Farage’s UK Independence Party (UKip) that they hit back this week with a cross-party campaign to condemn it as “Euracist”, an ingenious combination of the two words “Europe” and “Racist”. The episode serves as a timely reminder of just how dumbed down the inhabitants of Westminster have become.
For not only does their latest sound bite imply that Europeans are now a common, unified race – anthropology clearly not being the UK political caste’s strong point – but it also suggests that Farage’s party is actually “racist” towards all members of this new race, including, one would assume, Britons themselves. Put simply, the act reeks of ruthless desperation. And nowhere is the stench stronger than in Ten Downing Street whose incumbent, David Cameron, has even suggested he would resign if he failed to deliver on his pledge to hold a referendum on Britain’s membership after the next general election. He accepted voters might be “skeptical” about his promise but insisted: “I would not continue as Prime Minister unless it can be absolutely guaranteed this referendum will go ahead on an in-out basis.”
Over 40% of working age Americans doesn’t have a job, and the unemployment rate just dropped to 6.3%. Isn’t that a bit stark?
Did you know that there are nearly 102 million working age Americans that do not have a job right now? And 20% of all families in the United States do not have a single member that is employed. So how in the world can the government claim that the unemployment rate has “dropped” to “6.3%”? Well, it all comes down to how you define who is “unemployed”. For example, last month the government moved another 988,000 Americans into the “not in the labor force” category. According to the government, at this moment there are 9.75 million Americans that are “unemployed” and there are 92.02 million Americans that are “not in the labor force” for a grand total of 101.77 million working age Americans that do not have a job.
Back in April 2000, only 5.48 million Americans were unemployed and only 69.27 million Americans were “not in the labor force” for a grand total of 74.75 million Americans without a job. That means that the number of working age Americans without a job has risen by 27 million since the year 2000. Any way that you want to slice that, it is bad news. Well, what about as a percentage of the population? Has the percentage of working age Americans that have a job been increasing or decreasing? [..] the percentage of working age Americans with a job has been in a long-term downward trend. As the year 2000 began, we were sitting at 64.6%. By the time the great financial crisis of 2008 struck, we were hovering around 63%. During the last recession, we fell dramatically to under 59% and we have stayed there ever since..
Nothing new. Just restating in case it’s still not clear.
The financial media are gaga over the alleged great jobs numbers from last week. We’ve been over this saga many times. The methodology for calculating jobs gains is not even close to accurate. The unemployment rate is now a marketing gimmick rather than an accurate economic metric. Indeed, here are some staggering statistics that indicate just how messed up the US economy is right now.
- The labor participation rate is the lowest since 1978.
- There are over 90 million Americans without a job right now.
- An incredible 20% of all American families do not have a single member who is employed.
- There are over 47 million Americans on food stamps.
There is simply no way to spin these numbers. The US Federal Reserve has spent over $3.2 trillion and generated virtually no real job growth (accounting for population growth). When you account for how the potential labor pool has grown, the number of employed Americans has gone almost nowhere but down since the 2008 recession “ended.” At the end of the day, spending money doesn’t create real job growth. An employer only hires someone if they believe that the person’s output will have a net benefit for the firm (meaning the money the person’s output brings in is larger than the money the firm pays them for their work). That’s what creates a sustainable job. Spending money just toIn simple terms, the great attempt to prop up the US economy through spending and printing money is at an end. The world takes a long time to catch on to these changes, but the shift has already begun. It’s now just a matter of time before stocks figure it out.
Hm? I thought Oz was doing so great?!
Australians need to share the burden of reducing the country’s debt in a budget due May 13, Prime Minister Tony Abbott said, after an opinion poll found most voters think he’s broken a promise on tax. “A strong budget is the foundation for a strong country” and Australians need to “chip away” at public debt, Abbott said yesterday. A temporary levy increasing the top rate of income tax would be a broken promise, said 72% of people in a Galaxy poll for the Sunday Telegraph newspaper yesterday.
Australia, with the second-lowest public debt levels among developed countries, is looking at raising its pension age, charging for doctor visits, and abolishing government bodies to cut A$123 billion ($114 billion) of deficits forecast for the four years through June 2017. Fiscal austerity comes at the same time that mining companies are cutting back on projects, threatening to damp a recovery in domestic demand and pressuring the central bank to maintain low borrowing costs. Abbott hasn’t confirmed or denied whether the government would impose a debt levy that the Adelaide Advertiser reported April 29 would be levied at 1% on income of more than A$80,000 a year, without saying where it got the information. I am not going to deny for a second that there will be people who will be disappointed,” Abbott told Channel 9 television today. “No one likes difficult decisions.”
It makes no difference; as long as it threatens to cost money, we’ll throw it out.
Climate change has moved from distant threat to present-day danger and no American will be left unscathed, according to a landmark report due to be unveiled on Tuesday. The National Climate Assessment, a 1,300-page report compiled by 300 leading scientists and experts, is meant to be the definitive account of the effects of climate change on the US. It will be formally released at a White House event and is expected to drive the remaining two years of Barack Obama’s environmental agenda. The findings are expected to guide Obama as he rolls out the next and most ambitious phase of his climate change plan in June – a proposal to cut emissions from the current generation of power plants, America’s largest single source of carbon pollution.
The White House is believed to be organising a number of events over the coming week to give the report greater exposure. “Climate change, once considered an issue for a distant future, has moved firmly into the present,” a draft version of the report says. The evidence is visible everywhere from the top of the atmosphere to the bottom of the ocean, it goes on. “Americans are noticing changes all around them. Summers are longer and hotter, and periods of extreme heat last longer than any living American has ever experienced. Winters are generally shorter and warmer. Rain comes in heavier downpours, though in many regions there are longer dry spells in between.”
“Climate change, once considered an issue for a distant future, has moved firmly into the present,” a draft version of the report says. The evidence is visible everywhere from the top of the atmosphere to the bottom of the ocean, it goes on. “Americans are noticing changes all around them. Summers are longer and hotter, and periods of extreme heat last longer than any living American has ever experienced. Winters are generally shorter and warmer. Rain comes in heavier downpours, though in many regions there are longer dry spells in between.”
We still keep our economies alive by trashing other people’s lives and lands. Nothing changed there.
Two months ago, soldiers abducted day laborer Titus, hit him with the butts of their rifles, whipped him and then wiped off the blood. It was only later that he found out the reason for his torture. A sign had been placed in his village, Bungku, stating, “This is our land.” Bangku is located at the center of Indonesia’s Sumatra island. It’s a city full of people that have been pushed off their property and has been a flash point for years in one of the country’s bloodiest land conflicts. Palm oil is at the center of the dispute. Almost every second product available in today’s supermarkets contains the cheap natural resource, which is often generically labeled as “vegetable oil”. Palm oil can be found in shampoos, but also in margarine, frozen pizzas, ice cream and lipstick.
There are hundreds of conflicts over land with palm oil companies in Indonesia, but Bungku is considered to be one of the worst. The area’s forest, which once provided nourishment to those who lived there, fell victim to the giant palm oil plantations of the firm Asiatic Persada in the mid-1980s. In the following years, the company’s bulldozers illegally claimed a further 20,000 hectares (49,000 acres) of rain forest – an area about half the size of Berlin. Included were areas for which indigenous people’s held guaranteed land rights. But they were of little use against the palm oil industry.
This makes me smile. It’ll take a while for us to see what kind of a giant has lived among us.
With the Hollywood blockbuster Transcendence playing in cinemas, with Johnny Depp and Morgan Freeman showcasing clashing visions for the future of humanity, it’s tempting to dismiss the notion of highly intelligent machines as mere science fiction. But this would be a mistake, and potentially our worst mistake in history. Artificial-intelligence (AI) research is now progressing rapidly. Recent landmarks such as self-driving cars, a computer winning at Jeopardy! and the digital personal assistants Siri, Google Now and Cortana are merely symptoms of an IT arms race fuelled by unprecedented investments and building on an increasingly mature theoretical foundation. Such achievements will probably pale against what the coming decades will bring.
The potential benefits are huge; everything that civilisation has to offer is a product of human intelligence; we cannot predict what we might achieve when this intelligence is magnified by the tools that AI may provide, but the eradication of war, disease, and poverty would be high on anyone’s list. Success in creating AI would be the biggest event in human history. Unfortunately, it might also be the last, unless we learn how to avoid the risks. In the near term, world militaries are considering autonomous-weapon systems that can choose and eliminate targets; the UN and Human Rights Watch have advocated a treaty banning such weapons. In the medium term, as emphasised by Erik Brynjolfsson and Andrew McAfee in The Second Machine Age, AI may transform our economy to bring both great wealth and great dislocation.
Looking further ahead, there are no fundamental limits to what can be achieved: there is no physical law precluding particles from being organised in ways that perform even more advanced computations than the arrangements of particles in human brains. An explosive transition is possible, although it might play out differently from in the movie: as Irving Good realised in 1965, machines with superhuman intelligence could repeatedly improve their design even further, triggering what Vernor Vinge called a “singularity” and Johnny Depp’s movie character calls “transcendence”. One can imagine such technology outsmarting financial markets, out-inventing human researchers, out-manipulating human leaders, and developing weapons we cannot even understand. Whereas the short-term impact of AI depends on who controls it, the long-term impact depends on whether it can be controlled at all.