Money and Economic News

Economic news, money woes and woahs, and tons of other information about the current conditions of economies and markets of the world.

[jbrenneman]

All ten volumes, five updates, and a few interviews with Milton Friedman.

[jbrenneman]

Funny Money Feeds False Highs

Zero Hedge generally does an excellent job pointing out how the "ever-improving" Dow Jones is being fed by the Fed's massive money printing. This time, ZH's gone and done it so well that even dummies can understand.

A few charts point to the fact that despite new record highs on the Dow, purchasing power has been obliterated, household debt-loads are up, and points out that companies aren't so quickly using their money to hire people, but to buy back stock and invest in other capital expenditures. Rising equities (in this case) don't mean a better economy, they merely paint over the primary problems of the economy. And the only way out of the mess we're in, looks to be massive and generational debt.

[jbrenneman]

$9,534 For Every Man, Woman, and Child In the U.S.

Federal government tax revenues are at an all-time high - over $3 trillion. And spending is too (although, the country is still spending money it doesn't have - the deficit is over $750 trillion). The government is collecting $59,346 from each household in the U.S., but the median income is only $51,017.

[jbrenneman]

You Are Here

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Some quality Wednesday Wisdom on caring for the customer: “It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.” —Henry Ford

[jbrenneman]

U.S. Attorneys say massive SAC Capital scandal has "no equal"

U.S. Attorneys has brought a spate of charges, hinging on accusations of insider trading at SAC Capital, and the SEC leveled allegations at the fund's chief (Steven Cohen) of "...failing to supervise his employees." Eight former employees have been indicted, and six have already pled guilty. The six are expected to testify against SAC Capital. Spokesmen for the company deny a culture of promoting insider trading, and the business continued operations Thursday with Cohen at the helm. Nervous investors have withdrawn nearly one third of the firm's $15 billion in investments. Since the government would face a nearly impossible task if it chose to trace every penny of SAC's if they chose to fully prosecute the crimes, it's more likely that attorneys will follow as many transactions as possible that are linked to indicted personnel.

[jbrenneman]

Mortgage rates jump 0.75% in a single day on job numbers. Nevermind the seasonal timing of jobs wasn't really considered here, or were the jobs determined to be full-time jobs. So, as the stock market continues to grow based on printing outputs, and job numbers that are nudged at best, and plainly made up at worst, affect other things, the U.S. economy continues to lazily move adrift, afloat a sea of make believe.

[jbrenneman]

Highwaymen? In This Day and Age?

An Italian security van was robbed in Italy by armed gunmen. Approximately €10 million in loot was stolen, including a number of gold ingots. The gunman fired a number of shots from their arms, Kalashnikov rifles, but no one was hit. The robbers escaped by car, and the van was later found in Switzerland.

[jbrenneman]

Cypriot Bank Head Complains He Was Left In The Dark

Andreas Artemis says his resignation from the Bank of Cyprus was due primarily to the fact he was left out of negotiations regarding his bank. He says he was at the mercy of the Troika, who acted to penalize both banks and banks' depositors. The reaction of the Bank of Cyprus to Artemis's resignation, was to give him time to think, saying they would only accept the resignation if Artemis did not withdraw it within a week.

For their part, Fitch has already cut the country's credit rating, and to add further injury, cut the bank's rating as well. Other European officials are now criticizing one another -- Benoît Coeuré called Jeroen Dijsselbloem, "wrong" for suggesting the Cypriot model may be applied elsewhere in the EU. So, while leaders and administrators in the EU argue and criticize one another, the rest of the PIIGS continue to trudge on toward their unknown resolutions.

[jbrenneman]

Paid To Display?

A store in Australia seems to have gotten ticked about people who window shop in their store. So, they have decided the consumer ought to pay them -- even if they do not but anything! The store wants $5 just to allow the shoppers to view what the store is selling. If the shopper decides to purchase anything, the money will be refunded. If the shopper decides they do not want to buy anything, the $5 fee is forfeited.

[jbrenneman]

The Dow Rises, While Economic Info Continues to Stumble

The Dow closes in on new all-time highs this week, as the United States's productivity and employment/welfare numbers continue to remain slow to improve. While workers with retirement accounts may celebrate, the masses of already retired folks continue to shudder as interest rates force them into stocks and other riskier investments.

The Fed will, at a future point, sell all the assets that they have purchased to bolster the faltering economy. Even Warren Buffett has mentioned that investors are sitting on the edge of their seats, waiting for a change in Federal Reserve policy. Potential Fed selling may lead to a domino-like mass of other sellers, forcing the Dow to drop precipitously.

[jbrenneman]

Income Is Down; It Is the 4th Consecutive Year Income Has Fallen

The U.S. Census Bureau has released income numbers for the year 2011, which show median income fell another 1.5% from the previous year. As if that weren't bad enough, as income falls, costs of living continue to rise for American families. The article continues with some very sobering statistics as well - things like:

32% of families self-identifying as "lower class", up from 25% from 2008.

Electrical bills rising faster than the rates of inflation, for the 5th consecutive year

The number of Americans now dependent on government hand-outs is at an all-time record, and still growing.

The unemployment rate (if using the same methods as when Obama took office) would stand at 11.2%

While pointing fingers does nothing, it should still be important to place blame where it is due. In the first two years of the Obama administration, the democrats held both houses of Congress and the White House. They rammed through a huge takeover of medical care that a majority of Americans still don't want. The democrats are also responsible for things like the Dodd-Frank Act, which saw banks attempting to raise fees on their customers to make up lost profits from the D-F Act. Republicans for their parts seem ineffective at best, and silent, uncommunicative whipping boys at worst. They seem muddled on their message, and the leadership wavers on nearly every issue they are faced with. It's almost as if the American people are faced with a government collusion for purposeful failure.

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These people voted for Obama, they need to be made aware of the cost of big government. Higher Taxes, those who will get hit the worst are those who are most vulnerable. So you know what they voted for Obama, time to let them know elections have consequences. You had the opportunity to elect...

[jbrenneman]

Argentinian Bond Debt Looks Bleak

Ratings house Fitch, has cut Argentina's bond rating by five notches, leaving the country looking precariously close to a new default (Argentina also defaulted in 2002). As investors take heed of the ratings cuts, expect financing to become harder for Argentina, and funds to continue to tighten. A judge in the U.S. has already ordered the government to create a $1.3 billion fund for holders of Argentine bonds.

For their parts, Argentine politicians decried the judge's order. Fitch based their cuts on the ongoing global recession, and a massive slowing of the Argentine economy this year. Argentina has Latin America's third-largest economy.

[jbrenneman]

Marc Faber lays out the his dire prediction of how the world's financial markets will have to correct the massive debt and bubbles that exist. "We'll be lucky if we still have 50% of the asset values we have today." The entire global financial system needs reset...

[jbrenneman]

France Follows U.S.'s Footsteps, Loses AAA Credit Rating

France lost their prized AAA credit rating from Moody's this week, leaving the country with one top rating, from their domestic company, Fitch. The rating agency cited: a lackluster labor market and France's possible reaction in the face of continuing European financial and credit distresses. France had been on "negative-outlook" for nine months previously.

The current French government blames former government leadership for the downgrade. Despite plans of Francois Hollande to force changes designed to rebuild the French economy and labor market, past attempts have had mediocre effects at best.

[jbrenneman]

Greece Sounds A Lot Like the United States These Days...

Writer Nikos Konstandaras writes a great piece ("Delusions in the face of danger")about the fragile state of the Greek economy and the government's ongoing political strife. He writes about the inability of the people to face reality and recognize the dire situation that they now face. While politicians promise an easy solution, or even flagrantly lie about the situation, the people still seem to have faith in the politicians that created the mess.

The United States, with its ongoing, piecemeal debt-ceiling raises, and partisan bickering, draws a great parallel. While the European Union seems to also be unable to come up with a viable solution, the government of Greece falls further into ruin. The U.S. government, continuously stressing how tax hikes are the only solution (or that massive spending cuts are the only solution), mirror the Greeks' folly.

The saying goes, "Time is money", and time is quickly running out for both countries to fix their problems.