Archive for the ‘Economy’ Category
By Michael
The Economic Collapse
Why are some of the biggest names in the corporate world unloading stock like there is no tomorrow, and why are some of the most prominent investors on Wall Street loudly warning about the possibility of a market crash? Should we be alarmed that the big dogs on Wall Street are starting to get very nervous? In a previous article, I got very excited about a report that indicated that corporate insiders were selling nine times more of their own shares than they were buying. Well, according to a brand new Bloomberg article, insider sales of stock have outnumbered insider purchases of stock by a ratio of twelve to one over the past three months. That is highly unusual. And right now some of the most respected investors in the financial world are ringing the alarm bells. Dennis Gartman says that it is time to "rush to the sidelines", Seth Klarman is warning about "the un-abating risks of collapse", and Doug Kass is proclaiming that "we're headed for a sharp fall". So does all of this mean that a market crash is definitely on the way? No, but when you combine all of this with the weak economic data constantly coming out of the U.S. and Europe, it certainly does not paint a pretty picture.
According to Bloomberg, it has been two years since we have seen insider sales of stock at this level. And when insider sales of stock are this high, that usually means that the market is about to decline...
Corporate executives are taking advantage of near-record U.S. stock prices by selling shares in their companies at the fastest pace in two years.
There were about 12 stock-sale announcements over the past three months for every purchase by insiders at Standard & Poor’s 500 Index (SPX) companies, the highest ratio since January 2011, according to data compiled by Bloomberg and Pavilion Global Markets. Whenever the ratio exceeded 11 in the past, the benchmark index declined 5.9 percent on average in the next six months, according to Pavilion, a Montreal-based trading firm.
But it isn't just the number of stock sales that is alarming. Some of these insider transactions are absolutely huge. Just check out these numbers...
Among the biggest transactions last week were a $65.2 million sale by Google Inc.’s 39-year-old Chief Executive Officer Larry Page, a $40.1 million disposal by News Corp.’s 81- year-old Chairman and CEO Rupert Murdoch and a $34.2 million sale from American Express Co. chief Kenneth Chenault, who is 61. Nolan Archibald, the 69-year-old chairman of Stanley Black & Decker Inc. who plans to leave his post next month, unloaded $29.7 million in shares last week and Amphenol Corp. Chairman Martin Hans Loeffler, 68, sold $27.5 million, according to data compiled by Bloomberg.
Google Chairman Eric Schmidt, 57, announced plans to sell as many as 3.2 million shares in the operator of the world’s most-popular search engine. The planned share sales, worth about $2.5 billion, represent about 42 percent of Schmidt’s holdings.
So why are all of these very prominent executives cashing out all of a sudden?
That is a very good question.
Meanwhile, some of the most respected names on Wall Street are warning that it is time to get out of the market.
For example, investor Dennis Gartman recently wrote that the game is "changing" and that it is time to "rush to the sidelines"...
"When tectonic plates in the earth’s crust shift earthquakes happen and when the tectonic plants shift beneath our feet in the capital markets margin calls take place. The tectonic plates have shifted and attention... very careful and very substantive attention... must be paid.
"Simply put, the game has changed and where we were playing a 'game' fueled by the monetary authorities and fueled by the urge on the part of participants to see and believe in rising 'animal spirits' as Lord Keynes referred to them we played bullishly of equities and of the EUR and of 'risk assets'. Now, with the game changing, our tools have to change and so too our perspective.
"Where we were buyers of equities previously we must disdain them henceforth. Where we were sellers of Yen and US dollars we must buy them now. Where we had been long of gold in Yen terms, we must shift that and turn bullish of gold in EUR terms. Where we might have been 'technically' bullish of the EUR we must now be technically and fundamentally bearish of it. The game board has been flipped over; the game has changed... change with it or perish. We cannot be more blunt than that."
That is a very ominous warning, but he is far from alone. Just the other day, I wrote about how legendary investor Seth Klarman is warning that the collapse of the financial markets could happen at literally any time...
"Investing today may well be harder than it has been at any time in our three decades of existence," writes Seth Klarman in his year-end letter. The Fed's "relentless interventions and manipulations" have left few purchase targets for Baupost, he laments. "(The) underpinnings of our economy and financial system are so precarious that the un-abating risks of collapse dwarf all other factors."
Other big hitters on Wall Street are ringing the alarm bells as well. For example, Seabreeze Partners portfolio manager Doug Kass recently told CNBC that what he is seeing right now reminds him of the period just before the crash of 1987...
"I'm getting the 'summer of 1987 feeling' in the U.S. equity market," Kass told CNBC, "which means we're headed for a sharp fall."
And of course the "perma-bears" continue to warn that the months ahead are going to be very difficult. For instance, "Dr. Doom" Marc Faber recently said that he "loves the high odds of a ‘big-time’ market crash".
Another "perma-bear", Nomura's Bob Janjuah, is convinced that the stock market will experience one more huge spike before collapsing by up to 50%...
I continue to believe that the S&P500 can trade up towards the 1575/1550 area, where we have, so far, a grand double ...
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February 12, 2012 | Economy
I would like to thank Michael at The Economic Collapse for the fine work, and for allowing me the privilege of posting his articles. I would normally post in the forum, but I think this one needs to be on the front page.
Please take the time to go over to The Economic Collapse as there are many fine, and informative articles.
On Friday, the entire financial world celebrated when it was announced that the unemployment rate in the United States had fallen to 8.3 percent. That is the lowest it has been since February 2009, and it came as an unexpected surprise for financial markets that are hungry for some good news. According to the Bureau of Labor Statistics, nonfarm payrolls jumped by 243,000 during the month of January. You can read the full employment report right here. Based on this news, pundits all over the world were declaring that the U.S. economy is back. Stocks continued to rise on Friday and the Dow is hovering near a 4 year high. So does this mean that our economic problems are over? Of course not. A closer look at the numbers reveals just how fraudulent these employment statistics really are. Between December 2011 and January 2012, the number of Americans "not in the labor force" increased by a whopping 1.2 million. That was the largest increase ever in that category for a single month. That is how the federal government is getting the unemployment rate to go down. The government is simply pretending that huge numbers of unemployed Americans don't want to be part of the labor force anymore. As you will see below, the employment situation in America is not improving. Yet everyone in the mainstream media is dancing around as if the economic crisis has been cancelled. I can't take it anymore! It is beyond ridiculous that so many intelligent people continue to buy in to such fraudulent numbers.
The truth is that the labor force participation rate declined dramatically in January. For those unfamiliar with this statistic, the labor force participation rate is the percentage of working age Americans that are either employed or that are unemployed and considered to be looking for a job.
As you can see from the chart posted below, the labor force participation rate rose steadily between 1970 and 2000. That happened because large numbers of women were entering the labor force for the first time.
The labor force participation rate peaked at a little more then 67 percent in the late 90s. Between 2000 and the start of the recent recession, it declined slightly to about 66 percent.
Since then, it has been dropping like a rock. The chart below does not even include the latest data. In January, the labor force participation rate was only 63.7 percent. That is the lowest that is has been since May 1983. So keep that in mind as you view the chart.
In reality, the percentage of men and women in the United States that would like to have jobs is almost certainly about the same as it was back in 2007 or 2008. There has been no major social change that would cause large numbers of men or women to want to give up their careers. So there is something very, very fishy with this chart....
The federal government has been pretending that millions of unemployed Americans have decided that they simply do not want jobs anymore.
This does not make sense at all.
The truth is that unemployment is not really declining at all. The percentage of Americans that are working is not increasing. The civilian employment-population ratio dropped like a rock during 2008 and 2009 and it has held very steady since that time.
In January, the civilian employment-population ratio once again held steady at 58.5 percent. This is about where it has been for most of the last two years....
Does that chart look like an "economic recovery" to you?
Of course not.
If the percentage of people that are employed is about the same as it was two years ago, does that represent an improvement?
Of course not.
If the employment situation in America was getting better, the civilian employment-population ratio would be bouncing back.
We should be thankful that our economy is not free falling like it was during 2008 and 2009, but we also need to understand why things have stabilized.
The federal government is spending money like there is no tomorrow. During 2011, the Obama administration stole an average of about 150 million dollars an hour from our children and our grandchildren and pumped it into the economy. Even though the Obama administration spent that money on a lot of frivolous things, it still got into the pockets of average Americans who in turn went out and spent it on food, gas, clothes and other things.
Without all of this reckless government spending, we would not be able to continue to live way above our means and our economic problems would be a lot worse.
But even with the federal government borrowing and spending unprecedented amount of money, and even with interest rates at record lows, our economy is still deeply struggling. Just consider the following facts....
-New home sales in the United States hit a brand new all-time record low during 2011.
-The average duration of unemployment in America is close to an all-time record high.
-The percentage of Americans living in "extreme poverty" is at an all-time high.
-The number of Americans on food stamps recently hit a new all-time high.
-According to the Census Bureau, an all-time record 49 percent of all Americans live in a home that gets direct monetary benefits from the federal government. Back in 1983, less than a third of all Americans lived in a home that received direct monetary benefits from the federal government.
So let's not get too excited about the economy.
Yes, things have somewhat stabilized. The percentage of Americans that have jobs is about the same as it was two years ago. Considering how rapidly jobs are being shipped out of the United States, that is a good thing.
Enjoy this false ...
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The U.S. economy is dying and most American voters have no idea why it is happening. Unfortunately, the mainstream media and most of our politicians are not telling the truth about the collapse of the economy. This generation was handed the keys to the greatest economic machine that the world has ever seen, and we have completely wrecked it. Decades of incredibly foolish decisions have left us drowning in an ocean of corruption, greed and bad debt. Thousands of businesses and millions of jobs have left the country and poverty is exploding from coast to coast. We are literally becoming a joke to the rest of the world. It is absolutely imperative that we educate America about what is happening. Until the American people truly understand the problems that we are facing, they will not be willing to implement the solutions that are necessary.
The following are the top 100 statistics about the collapse of the economy that every American voter should know....
#100 A staggering 48.5% of all Americans live in a household that receives some form of government benefits. Back in 1983, that number was below 30 percent.
#99 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.
#98 Since Barack Obama was sworn in, the share of the national debt per household has increased by $35,835.
#97 The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.
#96 It is being projected that the U.S. national debt will hit 344% of GDP by the year 2050 if we continue on our current course.
#95 The Congressional Budget Office is projecting that U.S. government debt held by the public will reach a staggering 716 percent of GDP by the year 2080.
#94 In 2010, the U.S. government paid $413 billion in interest on the national debt. That is projected to at least double over the next decade.
#93 According to one new survey, one out of every three Americans would not be able to make a mortgage or rent payment next month if they suddenly lost their current job.
#92 State and local government debt has reached an all-time high of 22 percent of U.S. GDP.
#91 In 1980, government transfer payments accounted for just 11.7% of all income. Today, government transfer payments account for 18.4% of all income.
#90 U.S. households are now receiving more income from the U.S. government than they are paying to the government in taxes.
#89 According to a new study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent.
#88 If you can believe it, one out of every seven Americans has at least 10 credit cards.
#87 According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980. Today they account for approximately 16.3%.
#86 The cost of a health insurance policy for the average American family rose by a whopping 9 percent last year, and according to a report put out by the Kaiser Family Foundation and the Health Research and Educational Trust, the average family health insurance policy now costs over $15,000 a year.
#85 One study found that approximately 41 percent of working age Americans either have medical bill problems or are currently paying off medical debt.
#84 An all-time record 49.9 million Americans do not have any health insurance at all at this point, and the percentage of Americans covered by employer-based health plans has fallen for 11 years in a row.
#83 According to a report published in The American Journal of Medicine, medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States. Of those bankruptcies that were caused by medical bills, approximately 75 percent of them involved individuals that actually did have health insurance.
#82 Average yearly tuition at U.S. private universities is now up to $27,293.
#81 The cost of college tuition in the United States has gone up by over 900 percent since 1978.
#80 In America today, approximately two-thirds of all college students graduate with student loans.
#79 In 2010, the average college graduate had accumulated approximately $25,000 in student loan debt by graduation day.
#78 The total amount of student loan debt in the United States now exceeds the total amount of credit card debt in the United States.
#77 One-third of all college graduates end up taking jobs that don't even require college degrees.
#76 In the United States today, there are more than 100,000 janitors that have college degrees.
#75 In the United States today, 317,000 waiters and waitresses have college degrees.
#74 In the United States today, approximately 365,000 cashiers have college degrees.
#73 It is being projected that for the first time ever, the OPEC nations are going to bring in over a trillion dollars from exporting oil this year. Their biggest customer is the United States.
#72 U.S. oil companies will bring in about $200 billion in pre-tax profits this year. They will also receive about $4.4 billion in specialized tax breaks from the U.S. government.
#71 The United States has had a negative trade balance every single year since 1976, and since that time the United States has run a total trade deficit of more than 7.5 trillion dollars with the rest of the world.
#70 The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.
#69 The U.S. trade deficit with China is now 27 times larger than it was back in 1990.
#68 Today, the United States spends more than 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.
#67 China has surpassed the United States and is now the largest PC market in the entire world.
#66 In 2002, the United States had a trade deficit in "advanced technology products" of $16 billion with ...
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He is back! And so are we.
RTR is proud to back the man Dr. Ron Paul this coming election. Come on America! Restore The Republic. Vote for Ron Paul 2012.
[youtube=http://www.youtube.com/watch?v=UUNIeOB0whI=320&h=240]
[youtube=http://www.youtube.com/watch?v=WMxca8hhGhs=320&h=240]
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The Economic Collapse
http://theeconomiccollapseblog.com/archives/25-questions-to-ask-anyone-who-is-delusional-enough-to-believe-that-this-economic-recovery-is-real
If you listen to the mainstream media long enough, you just might be tempted to believe that the United States has emerged from the recession and is now in the middle of a full-fledged economic recovery. In fact, according to Obama administration officials, the great American economic machine has roared back to life, stronger and more vibrant than ever before. But is that really the case? Of course not. You would have to be delusional to believe that. What did happen was that all of the stimulus packages and government spending and new debt that Obama and the U.S. Congress pumped into the economy bought us a little bit of time. But they have also made our long-term economic problems far worse. The reality is that the U.S. cannot keep supporting an economy on an ocean of red ink forever. At some point the charade is going to come crashing down.
And GDP is not a really good measure of the economic health of a nation. For example, if you would have looked at the growth of GDP in the Weimar republic in the early 1930s, you may have been tempted to think that the German economy was really thriving. German citizens were spending increasingly massive amounts of money. But of course that money was becoming increasingly worthless at the same time as hyperinflation spiralled out of control.
Well, today the purchasing power of our dollar is rapidly eroding as the price of food and other necessities continues to increase. So just because Americans are spending a little bit more money than before really doesn't mean much of anything. As you will see below, there are a whole bunch of other signs that the U.S. economy is in very, very serious trouble.
Any "recovery" that the U.S. economy is experiencing is illusory and will be quite temporary. The entire financial system of the United States is falling apart, and the powers that be can try to patch it up and prop it up for a while, but in the end this thing is going to come crashing down.
But as obvious as that may seem to most of us, there are still quite a few people out there that are absolutely convinced that the U.S. economy will fully recover and will soon be stronger than ever.
So the following are 25 questions to ask anyone who is delusional enough to believe that this economic recovery is real....
#1) In what universe is an economy with 39.68 million Americans on food stamps considered to be a healthy, recovering economy? In fact, the U.S. Department of Agriculture forecasts that enrollment in the food stamp program will exceed 43 million Americans in 2011. Is a rapidly increasing number of Americans on food stamps a good sign or a bad sign for the economy?
#2) According to RealtyTrac, foreclosure filings were reported on 367,056 properties in the month of March. This was an increase of almost 19 percent from February, and it was the highest monthly total since RealtyTrac began issuing its report back in January 2005. So can you please explain again how the U.S. real estate market is getting better?
#3) The Mortgage Bankers Association just announced that more than 10 percent of U.S. homeowners with a mortgage had missed at least one payment in the January-March period. That was a record high and up from 9.1 percent a year ago. Do you think that is an indication that the U.S. housing market is recovering?
#4) How can the U.S. real estate market be considered healthy when, for the first time in modern history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together?
#5) With the U.S. Congress planning to quadruple oil taxes, what do you think that is going to do to the price of gasoline in the United States and how do you think that will affect the U.S. economy?
#6) Do you think that it is a good sign that Arnold Schwarzenegger, the governor of the state of California, says that "terrible cuts" are urgently needed in order to avoid a complete financial disaster in his state?
#7) But it just isn't California that is in trouble. Dozens of U.S. states are in such bad financial shape that they are getting ready for their biggest budget cuts in decades. What do you think all of those budget cuts will do to the economy?
#8) In March, the U.S. trade deficit widened to its highest level since December 2008. Month after month after month we buy much more from the rest of the world than they buy from us. Wealth is draining out of the United States at an unprecedented rate. So is the fact that the gigantic U.S. trade deficit is actually getting bigger a good sign or a bad sign for the U.S. economy?
#9) Considering the fact that the U.S. government is projected to have a 1.6 trillion dollar deficit in 2010, and considering the fact that if you went out and spent one dollar every single second it would take you more than 31,000 years to spend a trillion dollars, how can anyone in their right mind claim that the U.S. economy is getting healthier when we are getting into so much debt?
#10) The U.S. Treasury Department recently announced that the U.S. government suffered a wider-than-expected budget deficit of 82.69 billion dollars in April. So is the fact that the red ink of the U.S. government is actually worse than projected a good sign or a bad sign?
#11) According to one new report, the U.S. national debt will reach 100 percent of GDP by the year 2015. So is that a sign of economic recovery or of economic disaster?
#12) Monstrous amounts of oil continue to gush freely into the Gulf of Mexico, and analysts are already projecting that the seafood and tourism industries along the Gulf coast will be devastated for decades by this unprecedented environmental disaster. In light of those facts, how in the world can anyone project that the U.S. economy will soon be stronger than ever?
#13) The FDIC's list of problem banks recently hit a 17-year high. Do you think that an increasing number of small banks failing is a good sign or a bad sign for the U.S. economy?
#14) The FDIC is ...
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