Occupy Congress, Forget Wall Street

October 18, 2011 · Posted in General Economics · Comment

Very intelligent and prescient observations from John Mauldin:

Tags: john mauldin, occupy wall street

US Poverty Rate Rises to 15.1 Percent

September 14, 2011 · Posted in General Economics · Comment

The US Census has published its report Income, Poverty, and Health Insurance Coverage in the United States: 2010.

Here is the historical chart:

Interesting highlights from the report:

The official poverty rate in 2010 was 15.1 percent—up from 14.3 percent in 2009. This was the third consecutive annual increase in the poverty rate. Since 2007, the poverty rate has increased by 2.6 percentage points, from 12.5 percent
to 15.1 percent

In 2010, 46.2 million people were in poverty, up from 43.6 million in 2009—the fourth consecutive annual increase in the number of people in poverty.

The poverty rate in 2010 (15.1 percent) was the highest poverty rate since 1993 but was 7.3 percentage points lower than the poverty rate in 1959, the first year for which poverty estimates are available.

I also found it interesting that by age group the poverty rate is lowest (9%) for people 65 years and older, the only age range for whom the poverty rate has fallen almost consistently since 1959:

For more historical and economical context see US Poverty Rate – How the Great Society Programs Reversed its Decline

Tags: poverty, poverty rate, us poverty rate

Eurozone Breakup Inevitable?

September 10, 2011 · Posted in General Economics · Comment

Mish writes in Europe Out of Time; Differences Impossible to Untangle; Merkel’s Mind is Fried; Eurozone Breakup Inevitable; “Let the Euro Die”:

Is the Euro Worth Saving?

Regardless of what you or I may think, that question is where European voters come in. From that standpoint it does not look pretty.

German Chancellor Merkel, Spanish Prime Minister Zapatero, Italian Prime Minister Berlusconi, and Greek President George Papandreou will all be gone after the next set of elections.

French President Nicholas Sarkozy may bite the dust as well, and if he does it may be to a vehemently anti-Euro candidate.

All it takes is one government to say “to hell with this” and the whole mess unravels.

The current set of politicians all want to “save the Euro”. But what did the Euro buy Greece, Ireland, Spain, or Portugal except misery?

Even German and Finland voters wonder what it bought them.

Eurozone Breakup Inevitable

Merkel’s half-baked proposal raises more questions than answers. The market (and voters) will not possibly wait for details of her proposal to get hashed out. If this is the best Merkel can come up with, a Eurozone breakup is inevitable.

I think that a complete political breakdown of the European Union would be the best thing that could happen to Europeans. Ditch all European political institutions, but maintain the free mobility of persons, capital, and goods across countries, really the only positive aspect of the Eurozone project. Oh, and you want one unified currency that actually works? I know I’ve been saying this over and over again, but … how about a gold standard? Anyone?

Tags: euro breakup, europe, european union, eurozone

Double Dipping – US Back in Recession

August 31, 2011 · Posted in General Economics · Comment

Sings, signs, everywhere a sign. The evidence is now in that even by official standards the US has slipped back into recession. NBER is usually 6 months to a year late when it comes to calling recessions, so don’t hold your breath for their announcement anytime soon.

Doug Short writes in Will the “Real” GDP Please Stand Up?

[This chart] adjusts nominal GDP with the BLS (Bureau of Labor Statistics) Consumer Price Index for Urban Consumers (CPI-U, or as I prefer, just CPI):

… two quarters in the red, that’s a recession right there!

Futhermore, Wells Fargo reports that 12 states are in contraction, one is already likely to be in recession:

A report from Wells Fargo says Alabama’s economy has likely fallen into a recession, but two economic experts in Alabama have a different outlook.

The report from the San Francisco-based bank said Alabama was one of 12 states experiencing an economic contraction in July and “likely slipped into a recession.”

The report, written by senior economist Mark Vitner and economist Michael A Brown, said more states “are likely to fall into negative territory within the next six months” because of a persistent decline in manufacturing jobs.

Consumer confidence has plummeted to the lowest level since April 2009, in its biggest drop since October 2008:

Confidence among U.S. consumers plunged to the lowest level in more than two years as Americans’ outlooks for employment and incomes soured.

The Conference Board’s index slumped to 44.5, the weakest since April 2009, from a revised 59.2 reading in July, figures from the New York-based research group showed today. It was the biggest point drop since October 2008. A separate report showed home prices declined for a ninth month.

A few more quarters and NBER will likely back-date this fresh new recession to Q2 or Q3 of 2011.

Some more I wrote about the inevitability of a double dip recession:

Money Supply – November 2009

The Great Depression 2.0

Gross Domestic Product Q4 2009 Updates; True GDP & Consumption as Percentage of GDP

Tags: double dip recession, recession, us recession

Less Than 1 in 5 Americans Believe that the Federal Government has the Consent of the Governed

August 24, 2011 · Posted in General Economics · Comment

A staggering Rassmussen poll confirms what’s been boiling under the surface – New Low: 17% Say U.S. Government Has Consent of the Governed:

Fewer voters than ever feel the federal government has the consent of the governed.

A new Rasmussen Reports national telephone survey finds that just 17% of Likely U.S. Voters think the federal government today has the consent of the governed. Sixty-nine percent (69%) believe the government does not have that consent. Fourteen percent (14%) are undecided. (To see survey question wording, click here.)

The number of voters who feel the government has the consent of the governed – a foundational principle, contained in the Declaration of Independence – is down from 23% in early May and has fallen to its lowest level measured yet.

This is excellent news. When a the supposedly moral foundation of a system erodes, and people begin to see that they’ve been lied to … that’s when true change is on the horizon.

In red see the part where Thomas Jefferson went wrong in 1776:

That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government,…

Government is aggression. Nothing good can come out of aggression. The evidence is in, once again. Let’s not make the same mistake. We do not need to “alter” this government, and we don’t need a “new”, shinier government.

We need to get this cancer of statism out of the minds of the people around us, once and for all. Then, and only then, will there be true change.

This may be a good time to recall what one of the great contemporary philosophers already said almost 3 years ago:

There are no stronger societal forces than moral attitudes in public opinion. This ball has gotten rolling and it’s not going to stop until the beast of statism has been buried once and for all.

Tags: federal government, Government, public opinion

Thoughts on Treasury Yields and What They Portend

August 9, 2011 · Posted in General Economics · Comment

On Friday I wrote:

It is certainly possible that global flight to safety will counterbalance an institutional selloff in Treasurys. However, it is also possible that this recent move will mark an end to the 30 year long bullish trend. Just intuitively, I see a 60/40 likelihood for both scenarios, respectively.

So far my intuition has proven correct. What does the stubborn reaction in Treasurys, coupled with soaring gold tell us? It is, in my opinion, crystal clear: That the global economy is in deep deep deep shit, that cash is king, that flight to safety is the mantra of the hour, and that the deflation trade is once again alive and well.

Tags: deflation trade, treasury yields

Global Warming Fear Mongering Continues

July 4, 2011 · Posted in General Economics · Comment

Tags: global warming, global warming hoax, global warming scares

Bonds Don’t Lie; Thoughts on Sovereign Debt Investments; And Who’s To Blame for the Financial Crisis

June 10, 2011 · Posted in General Economics · Comment

A refreshingly interesting and open conversation on CNBC.

I happen to agree that bond markets are the best predictor of where markets in general are headed. As I noted before, treasuries have been rallying pretty much since February of this year, portending a slowdown that may be the second leg down for the double dip recession that is to come. It’s likely that gold, the Dollar, and Treasurys will to continue to do well …

Tags: bond market, debt, public debt, slowdown, sovereign debt, treasury rally

Mish on Deflation, Gold, Oil, Hyperinflation and more …

June 2, 2011 · Posted in General Economics · 1 Comment

Mish is always a good read/listen for economic insight.

Tags: deflation, michael shedlock, mish

Gold, Treasury Notes, Dollar – May 2011

May 14, 2011 · Posted in General Economics · Comment

The long term trend for gold, Treasury Notes, and the US Dollar seems to be holding up.

There has been some noticeable action in Treasury Notes most recently, in particular since February 2011 investor’s appetite has been growing again and thus rates have declined and remained within the range that has been developing since 2008:

Gold’s trend has been holding up steady as always:

As you can see in the chart there has always been room for dips in gold, and that is not different now. It may very well drop somewhere between 1,300 or 1,400, however, so far it has always done so only to bounce back even stronger after that. In particular when the next credit crunch happens it is possible that gold will see some dips alongside all other commodities, but then come roaring back up while other commodities continue to crash. This is at least what happened in 2008 and it may well happen again.

… and the seemingly most hated currency in the world has also remained within it’s long term trading range, and it may be possible that once again it will show some significant strength for the months to come:

The deflation trade has been dormant for a while indeed, but its expected trends have held up so far, and its benefits are most noticeable when everything else snaps back into the general trend of the Great Depression 2.0.

Tags: dollar rally, gold, treasury, us dollar

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