The Tens Of Millions Of Forgotten Americans That The U.S. Economy Has Left Behind

The evidence that the middle class in America is dying continues to mount. As you will see below, nearly half the country would be unable ‘to cover an unexpected $400 expense’, and about two-thirds of the population lives paycheck to paycheck at least part of the time. Of course the economy has not been doing that well overall in recent years. Barack Obama was the only president in all of U. S. history not to have a single year when the economy grew by at least 3 percent, and U. S. GDP growth during the first quarter of 2017 was an anemic 0.7 percent. During the Obama era, it is true that wealthy enclaves in New York, northern California and Washington D. C. did thrive, but meanwhile most of the rest of the country has been left behind.
Today, there are approximately 205 million working age Americans, and close to half of them have no financial cushion whatsoever. In fact, a new survey conducted by the Federal Reserve has found that 44 percent of Americans do not even have enough money ‘to cover an unexpected $400 expense’…

This post was published at The Economic Collapse Blog on May 21st, 2017.

‘Reverse Yankee’ Bonds Big Winners for US Companies. But Who Are the Losers?

The ECB-designed game of absurdity hits its target.
Apple is doing it, everyone is doing it: US companies are issuing record amounts of bonds denominated in euros. On Thursday, Apple announced in an SEC filing that it would issue 2.5 billion in euro bonds, the proceeds of which will be used to fund share buybacks and dividends to be paid in dollars. These bonds will come in two tranches: 1.25 billion of 8-year notes and 1.25 billion of 12-year notes, with coupon payments of 0.875% and 1.375% respectively.
Yields are not yet established since the bonds have not been priced yet. But they will likely not be far off from the coupon. And they won’t even compensate investors for the loss of purchasing power based on the current rates of inflation: 2.2% in the US and 1.9% in the Eurozone.
Yet, demand is hefty in yield-starved euro land, where the ECB has imposed its negative interest rate policy (NIRP) on investors and is buying 60 billion a month in all kinds of paper assets: Underwriters have received over $5 billion in orders for those Apple notes.

This post was published at Wolf Street by Wolf Richter ‘ May 21, 2017.

Shocking Admission From NY Bankruptcy Judge: “Chapter 11, 15 Filings Have Exploded”

A stunning soundbite was captured by a Bloomberg reporter during last week’s event at the American Bankruptcy Institute. According to judges speaking at an ABI conference Thursday in Manhattan, the U. S. Bankruptcy Court for the Southern District of New York is seeing a sharp rise in cases this year, with Chapter 11 and Chapter 15 filings outpacing national averages.
“Chapter 11s and Chapter 15s have exploded” said U. S. Bankruptcy Judge Shelley Chapman, speaking at American Bankruptcy Institute event, cited by Bloomberg reporter Tiffany Kary.
The numbers for the bankruptcy court which serves Manhattan are, frankly, horrifying: Chapter 11s have tripled in the first quarter of the year, while Chapter 15s for companies seeking U. S. aid for a reorganization in a foreign court have increased sevenfold, Chapman added.
What makes New York data so dramatic is that the region’s bankruptcy filings contrast with national data, that show Chapter 11 filings are down slightly, Judge Carla Craig from Eastern District of New York said.

This post was published at Zero Hedge on May 21, 2017.

Conclusion to Part 2: Redemption. Introduction to Part 3: Covenantal Reform.

Christian Economics: Student’s Edition
Conclusion to Part 2: RedemptionPart 1 introduced you to the five points of the biblical covenant as it applied to economics prior to the fall of man. These points were applications of what I have called the dominion covenant. The dominion covenant encompasses all of life and all of creation, while economics relates to the issues of resource allocation.
Part 2 introduced you to the five points of the biblical covenant as it applies to economics after the fall of man. The fundamental economic categories did not change, but their applications did. This was the result of Adam’s sin and God’s negative sanctions on Adam’s body and the ground. The earth is now under a curse.
Part of the requirements associated with the dominion covenant is to reduce the impact of God’s curses on the ground and his curses on Adam’s body. This has to do with medical science. It has to do with agronomy. It has to do with chemistry. But it obviously has to do with economics. As we work out the implications of the economic aspects of the dominion covenant, we should expect relief from the curses.
Let me give an obvious example. One of the curses on Adam was sweat. Residents in the economically developed world now live in temperature-controlled comfort because of air conditioning. Air conditioning was an invention of the early 20th century. It was first used commercially to cool large movie theaters. It is now in most homes. This has made our leisure time more comfortable in summer, but it has also made us more productive in the heat of the day. In other words, air conditioning should be regarded as a consumer good, but it should also be regarded as a producer good. It is a blessing of God, but it is also a tool of production. I think it is representative of all of God’s economic blessings. It is also easy to understand.
You have now read those sections of this book that deal with Christian economic theory. In Part 3, I deal with applications of the theory. But this is only the beginning. I intend to follow this book with three supplemental books, much longer and much more detailed. This book is designed to get you started.
I have not covered the bulk of the topics that you find in any college-level economics textbook. I have not dealt with monetary theory and monetary policy. I have not dealt with the issue of cartels. What about pollution? What about labor policy? What about the stock market? All of these topics are institutional applications of market pricing and government policy. They all can be explained in terms of a handful–actually, two handfuls–of fundamental principles of economic analysis. They began with the dominion covenant (one hand), as revised by God after the fall of man (another hand).

This post was published at Gary North on May 20, 2017.

The debt spending binge: Household debt has surpassed record levels reached during 2008 Great Recession.

Debt spending is once again keeping the economy afloat. People are leveraging future income on buying items today on the basis that the economy is not going to have a hiccup. On some reports you see pundits mentioning that delinquencies remain low. Well things were fine too before the Great Recession hit. Once again we are teetering on the brink of a solvency crisis should the economy have a slight turn. People are living beyond their means and banks are gaming the system once again. A recent report by the New York Fed shows that household debt has now reached a new record. What is more problematic is much of the debt increase is coming from student loans, auto debt, and credit cards.
Going to brink of debt
Household debt has now crossed another line in the sand breaking the previous record reached during the 2008 financial crisis. People are taking on mountains of debt and the debt being taken on this time is even more problematic.
First let us look at this new record:

This post was published at MyBudget360 on MAY 21, 2017.

HBO’s Bill Maher Bets 100 Rubles That Trump “Will Be Out By Christmas”

HBO ‘Real Time’ host Bill Maher believes the Trump Presidency will be over before 2017 is.
During Friday night’s episode, he even goaded a guest – conservative political commentator and former Trump campaign official Boris Epshteyn – into making a ‘gentleman’s bet’ of 100 rubles, a little less than $2, that the president “will be out by Christmas.’
‘It looks like he’s trying to get impeached,’ Maher argued.

This post was published at Zero Hedge on May 21, 2017.

Markets Face A Brutal “Margin Call” If Trump Loses Any More Credibility, Deutsche Warns

It took the Fed several long years to discover just how reflexive and circular the relationship it had established with the stock market had become. The Fed’s Catch-22 was first observed back in September 2013, when as the Fed was still debating whether to taper or not caught in a vicious cycle where any hint it would ultimately end QE would be met with a prompt selloff, Deutsche Bank explained how it had found itself in such a reflexive mess:

This post was published at Zero Hedge on May 21, 2017.

Speculators Have Never Been This Short VIX (As Volatility Hits Record Low)

This is not how it’s supposed to work…
“Buy low, Sell high” they say. But in the new normal of risk-parity strategies, momentum igniters, and trend-following CTA flows, its “Buy high, buy more higher… and never sell until you’re forced to liquidate”
Amid the longest period of low volatility complacency in US stock market history, which saw realized volatility and VIX (expectations for future volatility) collapse to near-record lows…

This post was published at Zero Hedge on May 21, 2017.

19/5/17: U.S. Household Debt: Things are Much Worse Than Headlines Suggest

Those of you who follow this blog know that I am a severe/extreme contrarian when it comes to median investor perceptions of the severity of leverage risks. That is to say, mildly, that I do not like extremely high levels of debt exposures at the macroeconomic level (aggregate real economic debt, which includes non-financial corporations debt, household debt and government debt), at the financial system levels (banking debt), at the microeconomic (firm) level, and at the level of individual investors own exposure to leverage.
With this in mind, let me bring to you the latest fact about debt, the fact that rings multiple bells for me. According to the data from the U. S. Federal Reserve, household debt in the U. S. has, as of the end of 1Q 2017, exceeded pre-2008 peak levels and hit an all-time high by the end of March.
Let’s crunch some numbers.

This post was published at True Economics on May 19, 2017.

Bill Introduced Allowing Cancellation Of Over $1 Trillion In Student Debt Through Bankruptcy

Courtesy of Sov Man’s Simon Black, here are several of the most bizarre legal anecdotes to take place in the US and around the globe over the past week, staring with a bill currently making its way through Congress, which is seeking to wipe out over $1 trillion in student loans.
* * *
A Convenient Way to Cancel a Trillion Dollars of Debt
What happened:
Bankruptcy is like the ultimate get out of jail free card. You just get to wipe the slate clean, and even though your credit score and ability to borrow might suffer, you are free from all your previous obligations. But student loans have long been exempted from being erased by bankruptcy.
If this bill passes Congress however, hundreds of billions of currently delinquent student loans, potentially as much as $1.4 trillion worth of student loan debt…

This post was published at Zero Hedge on May 21, 2017.

The Pillage of Pemex Turns Bloody

Gasoline theft is now the second most profitable activity for Mexico’s criminal gangs.
Mexico’s state-owned oil giant, Petrleos de Mexico, AKA Pemex, has spent the last few decades being pillaged and plundered from the inside-out. The state-owned giant has been financially bled to the verge of collapse by its swollen ranks of senior managers and administrators, corrupt politicians, shady contractors, and the untouchable, unsackable leaders of the oil workers’ union.
Now, Pemex is being bled dry from the outside-in. Those doing the plundering this time include armies of amateur opportunists who live close to the major pipelines that crisscross the country as well as some of Mexico’s most ruthless and organized drug gangs. Thanks to these groups’ immunity, bought with bribes and death threats, Pemex is estimated to be losing 20,000 barrels of gasoline daily, with a market value of around $4 million. That’s about $1.4 billion a year.
That’s enough to put Mexico among the top in the world for fuel theft. In 2015, over 5,574 illegal pipeline taps were found. Pemex’s response to the problem has only made matters worse. The company has tried to stop running ready-to-use fuels through its pipelines. Instead, it now carries raw products from refineries to storage terminals where they are processed and shipped out in tanker trucks. But instead of eradicating or reducing fuel theft, it has merely made it easier as stolen fuel is taken straight from Pemex’s storage facilities, where thieves siphon fuel by the truckload and simply drive away.

This post was published at Wolf Street on May 21, 2017.

We Now Know “Who Hit The Brakes” As Loan Creation Crashes To Six Year Low

The wheels are falling off the US bank loan market.
After we first showed in early March the steep drop in bank loan creation for both Commercial and Industrial, auto and total loans – all traditionally leading indicators to economic contraction and recession as business and consumers halt spending, even with borrowed money – numerous other analysts and pundits have attempted to explain, and justify why one should not be particularly concerned about this tumbling indicator. Most notable among them Goldman, who in late March “explained” that there was nothing ominous about the crash in loan creation, and instead it was just a function of a base effect, and a shift from loan to corporate bond issuance.
Two months later we can confirm that not only was Goldman wrong, but so are all the Pollyannas who assert there is nothing troubling about the ongoing collapse in loan creation.
According to the latest Fed data, the all-important C&I loan growth contraction has not only continued, but over the past two months, another 50% has been chopped off, and what in early March was a 4.0% annual growth is now barely positive, down to just 2.0%, and set to turn negative in just a few weeks. This was the lowest growth rate since May 2011, right around the time the Fed was about to launch QE2.
At the same time, total loan growth has likewise continued to decline, and as of the second week of May was down to 3.8%, the weakest overall loan creation in three years.

This post was published at Zero Hedge on May 21, 2017.

CNN Reports Comey’s 86-Year-Old Dad Thinks Trump’s A Nut Job Too, So There

Not satisfied with sourcing anonymous people familiar with the matter of Comey’s feelings about Trump’s “influence” over investigations, CNN is now asking fired former FBI Director Comey’s 86-year-old dad how he feels…
In a phone interview with CNN on Saturday, J. Brien Comey claims that President Trump was “scared to death” of Comey, and that is what led to his firing…

This post was published at Zero Hedge on May 21, 2017.

The Market Is Overvalued And Manipulated To Keep The People From The Truth – Episode 1285a

The following video was published by X22Report on May 21, 2017
Many Americans have never recovered from the great recession, many don’t have the ability to meet a $400 emergency expense. Many people said they would have to go further into debt to meet the emergency. Farmers are being hit hard, delinquencies have increased by 225%. S&P 500 is overvalued and manipulated to make the people believe that we are in a recovery. The entire system is on the edge of a collapse. The bankers are trying to crash it and Trump is trying to crash it but change the system when it comes back up.

The Perfect Storm Hits Used-Car Values – The Foundation Of The Auto Industry Is Faltering

The Perfect Storm
The following topics all have their part in fueling the storm to come:
1) Trade Cycles and How They Affect New Vehicle Sales Velocity
Used car values determine in large the velocity of new car sales. Most new car transactions involve a trade. The level of equity in the trade oftentimes determines whether a new vehicle transaction will be successful or not. Inclining used car values lead to faster trade cycles while declining used car values lead to slower trade cycles. Dismal new car sales volume during our last recession created a shortage of used cars. This created a large supply and demand imbalance that made used car values soar from 2009 till 2014 as seen on this chart.

This time period was extremely favorable for new car sales because consumers found themselves in an equitable position on their vehicles in a very short period of time. To illustrate this, consider this chart of a 60-month loan.

This post was published at Zero Hedge on May 21, 2017.

What’s The Worst That Could Happen?

A recent article out this past week by Russ Koesterich via BlackRock noted that bond yields had not melted-up as ‘everyone expected.’
Sorry, Rick.
It’s not everyone, just you guys on Wall Street.
Since 2013, I have been laying out the case, repeatedly, as to why interest rates will not rise. Here are a few of the most recent links for your review:
April 20, 2017 – Why Bonds Aren’t Overvalued March 23, 2017 – The Long View – Rates, GDP & Challenges October 24, 2016 – End Of The Bond Bull, Better Hope Not August 30, 2016 – Why Interest Rates Are Going To Zero August 27, 2016 – Let’s Be Like Japan As I said, I have been fighting this battle for a long-time while ‘everyone else’ has remained focused on the wrong reasons for higher interest rates. As I stated in ‘Let’s Be Like Japan:’

This post was published at Zero Hedge on May 21, 2017.

Episode #186 – SUNDAY WIRE: ‘AV8: The Winds of Change’ with Olsi Jazexhi, Dr. Graham Downing plus special guests

Episode #186 of SUNDAY WIRE SHOW resumes this May 21st, 2017 as guest host Patrick Henningsen brings you this week’s LIVE broadcast on the Alternate Current Radio Network…
5pm-8pm UK Time | 12pm-3pm ET (US) | 9am-12am PT (US)

This week we deliver another LIVE broadcast this week from Horwood House in Milton Keynes, UK, with host Patrick Henningsen, alongside some brilliant guests at the AV8 Alternative View Conference 2017, including Albanian journalist and academic, Olsi Jazexhi, and British researcher Dr. Graham Downing, and special guest – all discussing breaking technological, geopolitical and spiritual issues facing the world today – unraveling the globalist agenda.

Strap yourselves in and lower the blast shield – this is your brave new world…

This post was published at 21st Century Wire on MAY 21, 2017.

“The S&P 500 Is Now Overvalued On 18 Of 20 Valuation Metrics”

After last week’s brief FBI “memogate” inspired volatility spike, some have asked if the resulting market decline (down a “whopping” -0.4% on the week) has made stocks more attractive. Here is the quick answer according to Bank of America: based on the 20 most widely used valuation metrics, the S&P remains significantly overvalued on 18 of 20 valuation metrics, the only exceptions being free cash flow, helped by depressed capex), and relative to bonds, whole yields are depressed thanks to $18 trillion in global central bank purchases.
And a bonus chart: why is the market so overvalued? Because 2017 has continued the trend seen in 2016, when the market “shrugged off one event after another.”

This post was published at Zero Hedge on May 21, 2017.

How Long Can The Great Global Reflation Continue?

Every now and again, it’s good to take stock of the Great Global Reflation that has been marching higher (with a few stumbles and scares) since early 2009, over eight years ago.
Is this Great Reflation running out of steam, or is it poised for yet another leg higher? Which is more likely?
Keynesianism Vs The Real World Let’s start by reviewing the systemic contexts of the economy.
This Great Reflation is embedded in two basic contexts:
The dominant socio-economic structures since around 1500 AD are profit-maximizing capital (‘the market’) and nation-states (‘the government’). The dominant economic theory for the past 80 years is Keynesianism, i.e. the notion that the state and central bank must aggressively manage private-sector consumption (demand) and lending via centrally planned and funded fiscal and monetary stimulus during downturns (recessions/depressions). Simply put, the conventional view holds that there are two (and only two) solutions for whatever ails the economy: the market (profit-maximizing capital) or the government (nation-states and their central banks). Proponents of each blame all economic and social ills on the other one.

This post was published at PeakProsperity on Friday, May 19, 2017.