Andy Sutton's Extemporania

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Categories: Economics

Fitch’s US Outlook Turns Negative – Rating Maintained

Published on: 11/29/2011

Categories: Economics, Financial Markets

Tags: 2008 financial crisis, banking collapse, credit ratings, credit watch, debt ratings, financial crisis, fitch ratings, money

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Editor’s Note: The national debt has increased by 7% since the debt ceiling ‘deal’ was passed back in August. The ‘super congress h’as accomplished nothing. And we’re still maintaining the top rating? Yet at the same time these firms are busier than a one-armed paper hanger when it comes time to cut European sovereign ratings. Unreal..

Fitch Ratings kept its pristine AAA rating on the U.S. on Monday, but the credit-ratings company downgraded its outlook to “negative” in the wake of the Supercommittee’s failure to find $1.2 trillion in spending cuts.

The development, which had been hinted at last week, could have been worse for the U.S. as McGraw-Hill’s (MHP: 41.46, +0.26, +0.64%) Standard & Poor’s slashed its credit rating for the first time ever in August.

However, the negative outlook indicates a “slightly greater” than 50% chance that Fitch downgrades the U.S. over the next two years.

“Failure to reach agreement in 2013 on a credible deficit reduction plan and a worsening of the economic and fiscal outlook would likely result in a downgrade of the U.S. sovereign rating,” David Riley, a managing director at Fitch, said in the report.

Fitch warned that its revised fiscal projections call for federal debt held by the public to exceed 90% of gross domestic product and debt interest payments making up more than 20% of total tax revenues by the end of the decade.

“In Fitch’s opinion, such a level of government indebtedness would no longer be consistent with the U.S. retaining its ‘AAA’ status despite its underlying strengths,” Riley said.

Despite the U.S. national debt level surpassing the $15 trillion mark this month, the Supercommittee announced last week it failed to reach a bipartisan deal, triggering automatic cuts of $1 trillion split between defense and non-defense discretionary spending.

However, Fitch warned that further deficit reduction efforts “will not be credible” if they solely rely on cutting discretionary spending. Economists have said Congress needs to quickly move to slash entitlement spending on programs such as Social Security, Medicare and Medicaid.

The failure of the Supercommittee to reach a compromise “underlines the challenge of securing broad-based consensus on how to reduce the outsized federal budget deficit,” Riley said.

The Fitch news didn’t trigger an immediate reaction in the financial markets as S&P 500 futures were recently flat after soaring nearly 3% during Monday’s session.

To be sure, Fitch did recognize the positive characteristics that have allowed the U.S. to become the world’s largest economy, highlighted by the global benchmark role of the dollar and Treasuries that create deep markets and minimize risk.

“What we have to do is recognize that Washington is out of touch and out of control; that it’s been taken over by the extremes on the left and the right,” David Walker, former U.S. Comptroller General, told FOX Business.

Fitch also expressed concern about the U.S. economy, which it expects to “regain momentum” in the second half of 2012 and into 2013 but is subject to “considerable uncertainty.”

“The longer productive capacity remains idle and unemployment high, the greater the likelihood that the loss of output (and tax receipts) is greater than currently estimated, with negative implications for the medium to long-term fiscal outlook,” Riley said.

Socializing Losses – The Trilateral Takeover of Europe? – Adrian Salbuchi

by TwoCentsEditor

Published on: 11/15/2011

Categories: Current Events, Economics

Tags: adrian salbuchi, Economics, eueozone, geopolitics, gerald celente, how do the banks take over the world, who is destroying the global economy

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Editor’s Note: This article dovetails with my piece last week entitled ‘The Coup Continues’ regarding the banking coup going on in much of the first world right now.

The sovereign debt crisis tightening its grip on Europe has claimed the scalps of two prime ministers – those of Greece and Italy. Looking at the men poised to replace them, one cannot but ask – is this another turn of the screw for ordinary people?

Greece and Italy hold huge swathes of public debt they are unable to service unless they get massive European Central Bank and International Monetary Fund support, as a prelude to refinancing by international banks.

Greece has replaced its prime minister after he dared to say he would put a further round of harsh austerity measures to a referendum vote. The country’s new PM is Lucas Papademos, former vice president of the ECB and of Greece’s own Central Bank, and a member of David Rockefeller’s (JPMorgan Chase/Exxon) powerful Trilateral Commission.

As for Italy, instead of Silvio Berlusconi they got the former European Commissioner Mario Monti, who happens to be European chairman of the Trilateral Commission.

Whenever we hear of “sovereign debt crises” – whether in Mexico 1997, Brazil 1999, in my native Argentina in 2001/2, or today in Greece, Italy, Spain, Portugal, Ireland and (soon to come) the UK, France, or the US – what it really means is that governments cannot collect enough tax revenues from their people to pay interest and capital on debt that is mostly in the hands of private banking institutions.

Cutting through the Orwellian Newspeak* of the media, this means that the people of Greece, Italy, and Argentina must pay for the mistakes of bankers and corrupt governments, suffering higher taxes, unemployment, lower wages and pensions, and a deterioration in public healthcare, education, and infrastructure.

So, whenever there is a public debt crisis, “We the People” must pay for it.

Adrian Salbuchi is a political analyst, author, speaker and radio/TV commentator in Argentina

However, when in September 2008a private debt crisis exploded due to the derivatives swindle which buried Lehman Brothers, Merrill Lynch, AIG and many other private institutions, the US and other governments came to the rescue of the bankers, providing bailouts for banks “too big to fail” (Newspeak for too powerful to fail). They saved the likes of CitiCorp, Bank of America, JPMorgan Chase, Goldman Sachs with…. taxpayers money (TARP), and by having the FED (hyper)inflate the US dollar (know in Newspeak as “Quantitative Easing I, II and III”), which means passing a huge chunk of the cost of those bailouts on to the Rest of the World using the US dollar as global currency.

So again, irrespective of whether debt collapses are public or private, it is always “We the People” who pay because, under the current system, all profits are privatized and all losses are socialized.

But let us go back to Messrs Monti and Papademos. They sit on the Trilateral Commission together with hundreds of corporate chairmen and CEOs such as Ana Botin (Bank Banesto/Santander, Spain), Peter Sutherland (Goldman Sachs/BP, UK), Michel David-Weill (Lazard Bank, France), Jurgen Fitschen (Deutsche Bank, Germany), Stephen Green (HSBC, UK), Nigel Higgins (Rothschild Group, UK), Lord Guthrie (N M Rothschild, UK), Klaus-Peter Müller (Commerzbank, Germany), Dieter Rampl (UniCredito, Italy), Otto Ruding (CitiCorp Europe), Lord Simon of Highbury (Morgan Stanley, UK), Emilio Ybarra (BBVA, Spain), Robert Kelly (Bank of NY Mellon) Lord Brittan (UBS, UK), Robert Zoellick (World Bank), plus Timothy Geithner, Henry Kissinger and many, many others…

In fact, the Trilateral Commission articulates with the powerful Council on Foreign Relations (New York), Chatham House (London) and many other think-tanks forming an intricate web of private global power-brokers bringing together key players in finance, industry, media, government, academia, intelligence and the military, who run today’s global system focusing on their interests, and clearly not on those of “We the People.”

No doubt Messrs Papademos and Monti will do everything necessary to ensure Italy and Greece do not default on their debts – but rather that their peoples endure all the hardship, undergo all the pain, and make all the sacrifices so that major bankers sitting on the Trilateral can all get their money back. Those who should never have made loans to Greece and Italy (and Argentina and Portugal…) the way they did.

UK Banks Write Off Record Amount of Corporate Debt

by TwoCentsEditor

Published on: 11/15/2011

Categories: Current Events, Economics, Financial Markets

Tags: andy sutton & associates, debt, eurozone debt, uk bank debt, what does debt do to an economy, why is there so much debt

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In the three months to June, “write-offs of loans to non-financial corporations” almost tripled to £2.94bn, according to the Bank of England.

The only time the level of losses had ever come close was in the fourth quarter of 2009, as Britain was emerging from recession, when write-offs were £2.5bn.

The sudden increase in loan losses was at odds with what was then a period of relatively benign economic conditions.

However, it coincided with a regulatory crackdown on “forbearance” – whereby banks vary the terms of a loan to allow struggling borrowers to limp on and avoid booking losses.

The Bank, the Financial Services Authority and the International Monetary Fund all raised concerns about the misuse of forbearance at that time, with a particular focus on commercial property.

In June, the Bank’s Financial Policy Committee said: “If provisioning is inadequate, banks’ reported profits and levels of capital may provide a misleading picture of their financial health.”

The Bank has repeatedly warned about the scale of bad commercial property loans on the banks’ books.

The sharp rise in corporate write-offs in the second quarter, the most recent data available, lifted total UK loan losses – including credit cards and mortgages – to their second highest level on record.

For the three months to June, total sterling write-offs were £5.1bn, up from £3.2bn in the first quarter.

The largest quarterly hit came in the final three months of 2009, totalling £5.8bn. Write-downs on personal loans edged up to £2.1bn, but remained far off the peak in the same period the previous year of £3.5bn.

The write-offs are contributing to a decline in household debt. Total household debt has dropped by £8bn to £1.45 trillion in the past year, roughly in line with the amount of personal debt lenders have cancelled.

The rate of mortgage losses may be about to rise. Last week, Lloyds Banking Group revealed a four-fold increase in mortgage loan impairments for the nine months to September of £416m and that £38bn of loans are to borrowers who are in negative equity.

Taking write-offs cleanses bank balance sheets but reduces the amount of capital against which they can lend.

Once the capital is replaced, however, it can be used to support growing businesses rather than tied up in companies that can only service the debt.

China Threatens US with Another Downgrade

by TwoCentsEditor

Published on: 11/14/2011

Categories: Current Events, Economics

Tags: credit rating, credit watch, unfunded liabilities, us government credit rating, why is america broke, why is the US broke

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The head of China’s biggest ratings agency, Dagong Global Credit Rating, is warning that it may downgrade the US’s sovereign debt rating again because of Washington’s failure to tackle the federal budget deficit.

The remarks by Dagong’s chairman, Guan Jianzhong, to be broadcast in an interview with al-Jazeera on Saturday morning, come at the end of another week of deep turmoil for the world economy.

Dagong, which has maintained a pessimistic outlook on US fiscal policy, has been leading the charge to downgrade US debt over the last 12 months, lowering the US rating from AA to A+ a year ago.

In August it downgraded US debt again, to A. Days later, Standard & Poor’s followed in its wake, becoming the first western agency to downgrade US debt after the threat of a default was narrowly avoided following weeks of political squabbling in Washington over whether President Obama should be allowed to raise the US debt ceiling.

Guan’s intervention comes as another embarrassing political standoff over budget policy looms in Washington. The cross-party “supercommittee” given the job of finding ways to cut the budget deficit is reportedly deadlocked, with Republicans refusing to countenance the tax rises being suggested by Democrats. The committee is due to report by 23 November, but there are fears they could fail to reach agreement, prompting a new crisis.

Founded in 1994 by the Chinese government and the People’s Bank of China, Dagong is the only credit ratings agency in China that grades foreign sovereign debt and bonds.

In an interview with Talk to Al-Jazeera, Guan agrees that it is almost inevitable that his agency will cut America’s debt rating once again, arguing that the only solution open to the US economy is further quantitative easing.

“The measures available to them [the US] cannot be effective so they have another way out which is to depreciate the US dollar, to print more money,” he says. “And that will also make it a lot worse, this has affected their credit and it is negatively affecting their credit prospects – so that their overall ability to pay back their debt will continue to go down.

Asked directly if he believed another ratings cut was inevitable, Guan replies: “I think so.”

He goes on to say: “We are continuing to monitor this closely. First of all we need to look at this year’s economic growth and then predict next year’s trends. If in the year 2012 the overall projections are not very good, meaning that the sources of payment – and liabilities – are bad and cannot be changed, or change for the worse, then we will lower the rating once again.

Any further downgrading of the US credit rating, while making more US borrowing more expensive, would also be a matter of concern to Beijing.

China is the largest foreign buyer of US government debt – accounting for around third of all foreign-held US securities – despite the fact it has gradually reduced its holdings since the S&P downgrade and has also lost heavily on its large holdings of US currency.

Since the summer – and the debt-ceiling crisis – China has become ever more vocal about what it describes as the US “addiction” to debt, warning in August that more “devastating credit rating cuts” and global economic turmoil were around the corner unless Washington learned to live within its means.

The Xinhua news agency issued a commentary that cautioned: “The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone.”

The Coup Continues – Andy Sutton

by TwoCentsEditor

Published on: 11/11/2011

Categories: Current Events, Economics, My Two Cents

Tags: economic crash, eocnomics, gold, great depression, money, stock market, thomas jefferson, what caused the great depression, who are the banking elite, who is destroying the US, who runs the federal reserve

Comments: 1 Comment

Early last December, I wrote a piece entitled ‘Crisis or Coup?’ in which the anatomy of the 2008 financial crisis was analyzed in further detail and some conclusions drawn. These conclusions were drawn based on facts and actions, not opinions. It was obvious at the time that the USFed and our own government were acting not in the best interests of the people, but rather in the best interests of banks and large corporations. Crony capitalism, as it has often been called – where profits are kept and losses are written off or passed on to the ‘Plebeians’ of a particular society – ramped into high gear in the US. Remember the fact that the absurd financial structure that is in place was the ‘solution’ to a crisis, which had the fingerprints of the solution providers all over it.

Fast forward one year and the same mechanism is firmly in place again and working very well – this time in Europe. Again, the abuse of debt has been the main villain. Couple that to greed, avarice, and unlimited access to power and you’re going to have problems. EU2010 is no different than USA2008 on a fundamental level. The only difference is the consumer-driven side of the Eurozone didn’t cause problems first – the sovereign issues roared to the forefront.

And what is happening to those leaders in the countries that are balking what are essentially multiple coup d’ etats? They’re summarily dismissed. George Papandreou in Greece has been replaced by Lucas Papdemos, a rabid central banker (ECB). Silvio Berlusconi in Italy is out, replaced (likely) by Mario Monti, a guy who has all sorts of insidious connections to the Rockefeller/Rothschild global banking syndicate. Aka, the same syndicate that is gutting America through its creature from Jekyll Island, the federal reserve system itself.

So two countries’ leaders toppled, and what of Portugal? Interestingly enough, Portuguese President Anibal Cavaco Silva has evidently learned how he is supposed to behave from the demise of Berlusconi and Papandreou. He is now a card-carrying water carrier for the syndicate. Check out his quote made on 11/10/11:

“The European Central Bank has to go beyond a narrow interpretation of its mission and should be prepared for foreseeable intervention in the secondary market, not as the central bank has done up to now,” Cavaco Silva said yesterday in an interview at Bloomberg headquarters in New York. He said government leaders are unlikely to move fast enough to find solutions.

“It has to be able to be a lender of last resort,” said Cavaco Silva, 72, who as Portugal’s prime minister presided over the 1992 signing of the Maastricht Treaty, which cleared the way for the euro common currency. “It has to be a foreseeable, unlimited intervention.”

The coup in Portugal has been effectively completed. Some people may question why I use the term coup d’ etat. The term essentially means takeover of a formerly sovereign nation in the context we most often see it in. Oftentimes, coups are military in nature with a rebel force conducting a coup to remove an existing government. Well, a financial coup is along the same lines where the control of a country’s financial system and/or its economy is taken from the people of that nation by a banking cartel or syndicate. The very creation of the EU itself was a mini-coup since those countries that entered gave up a large portion of their sovereignty and put their destiny in the hands of a regional government and central bank. These countries could no longer issue their own debt and when things got bad, then couldn’t maneuver, and are now at the whimsy of international banksters.

Don’t forget what Silva is really saying above, either. By making the ECB the lender of last resort, what he is advocating is that the ECB becomes owner of the failing countries within the Eurozone. This is precisely what is happening in America now: that the federal reserve is openly monetizing USGovt debt. Few take the next step and make the admission that in doing this, the federal reserve is becoming an owner of this country – and it is getting a larger share with every bond it buys. And all this happens with the blessing of the US Congress and various Parliaments in Europe. The dominoes are falling one by one into the complete financial and economic control of international bankers. These are men without a country, but men who seek to dominate all countries.

One thing forgotten in all this is that the USA is indeed headed for the second stage of its continuing financial crisis, this time in the form of a sovereign debt nightmare that will make 2008 look like a game of Monopoly. No doubt there will be calls for the federal reserve to again be the lender of last resort and another chunk of America will fall to the syndicate. These nasty cycles will continue until it is all gone. Sounds pretty gloomy doesn’t it? Just look at what has happened so far and then ask yourself if we’ve turned in another direction or are just headed for more of the same.

At the end of the day, hopefully we will all come to realize that we can gripe all we want about what has taken place thus far and what is to come, but sooner or later we are going to have to own up to the fact that we allowed it. Bankers couldn’t have packaged hundreds of billions of dollars of junk mortgage bonds and leveraged it up 40:1 if people who had no business buying a house hadn’t done so. Sure the system enabled it all, but I have not heard a single case of an American citizen having a gun put to their head and being forced to buy a house or participate in some other sort of largesse.

We have allowed our elected officials to cede our national sovereignty to bankers while we argue about steroids in baseball, American Idol, and the fate of various Hollywood lawbreakers. We were so busy swiping our credit cards that nobody paid attention to the fact that our government was doing the exact same thing – on a grandiose scale, its ego writing checks that the people of this country can never pay.

We did it all voluntarily. So have the Europeans. Nobody was complaining when the welfare state was in full swing and sloth and laziness were incentivized on a regional scale. Nary a word was said when exceptions were made so that Greece could enter the EU in the first place. Nobody paid any attention when it became obvious several years ago that the numbers weren’t adding up. The whole EU was too busy partying.

I’d like to leave you with a quote from a wise man in American history – Thomas Jefferson:

“The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks
discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.”

Startling isn’t it? Look around you; his worst nightmare is becoming our reality – on a global scale.

Italy: Too Big to Fail or Too Big to Save?

by TwoCentsEditor

Published on: 11/08/2011

Categories: Current Events, Economics

Tags: Bible prophecy, gold, Itality, money, piigs, When will the dollars stop being the world's reserve currency, who are the PIIGS, why don't the Euro bailouts work

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Italy’s economic problems took center stage Monday as its government, led by increasingly threatened Prime Minister Silvio Berlusconi, faced yet another key vote.

The health of the euro zone’s third-largest economy has come into focus despite Berlusconi accepting IMF monitoring and surviving several confidence votes in recent months.

Italy’s size makes the potential consequences if it were to fail more wide-ranging than the much smaller Greece.

“Italy has much more systemic implications,” Thanos Vamvakidis, Head of European G10 FX Strategy, BofA Merrill Lynch Global Research, told CNBC Monday.

“It’s too big to fail, too big to save.”

The problems facing Italy include the euro zone’s second-highest debt-to-GDP ratio, and the lack of a credible alternative to Berlusconi’s government.

Italian MPs will vote Tuesday on the country’s public finances, with a number of rebel MPs from Berlusconi’s party threatening to vote against the government in protest at the way it has managed the country’s finances.

Yields on Italian 10-year bonds surged last week, and are now dangerously close to the unsustainable 7 percent level. Other euro zone countries such as Portugal and Ireland had to seek bailouts after their yields rose to over 7 percent.

“The markets don’t believe Berlusconi,” said Vamvakadis.

“When other countries were faced with pressure, they introduced more reforms. In Italy, you don’t have a clear structural reform agenda.”

Yields on short-term 2-year Italian bonds have also been surging.

“When yields on short-term debt start increasing at a faster pace than long-term debt you have a problem on your hands because it signals that investors have no faith that you can pay back the money you owe,” Kathleen Brooks, research director UK EMEA at Forex.com, wrote in a research note. “It looks like Italy has gone for the bailout-lite option, but will it need to go the whole hog? The bond markets certainly think so, and it could happen sooner than we think.”

There were also signals that the European Central Bank (ECB) will not continue its bond-buying program, which has helped keep bond yields at sustainable levels since the summer. Yves Mersch, a member of the central bank’s Governing Council, warned in an interview with Italian newspaper La Stampa on Sunday that it could stop buying Italian bonds if Italy fails to take appropriate action over its debt.

“They are trying to put maximum pressure on the Italian government to deliver,” said Vamvakidis.

“It’s a risky move but I think it’s the right decision at this point.”

“It is probably only the ECB’s SMP (Securities Markets Program) program that has prevented Italian bond yields from climbing to even more punitive levels,” analysts at Deutsche Bank wrote in a research note. “So it will be a test of ECB firepower and will to keep Italian bond yields under control while the Greek story boils over.”

Christine Lagarde, Managing Director of the International Monetary Fund (IMF), issued a strong warning to the Italian government over the weekend.

“We will go quarterly [to Italy],” she told reporters.

“We will check that what Italy has promised Italy is delivering. And if it is not delivering I will say so.”

Extreme Poverty at Record Levels

by TwoCentsEditor

Published on: 11/06/2011

Categories: Current Events, Economics

Tags: class warfare, jobs, labor, labor market, poverty, Wall Street, what caused the great depression, what caused the housing bubble to burst, who put obama in office

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According to the U.S. Census Bureau, a higher percentage of Americans is living in extreme poverty than they have ever measured before. In 2010, we were told that the economy was recovering, but the truth is that the number of the “very poor” soared to heights never seen previously. Back in 1993 and back in 2009, the rate of extreme poverty was just over 6 percent, and that represented the worst numbers on record. But in 2010, the rate of extreme poverty hit a whopping 6.7 percent. That means that one out of every 15 Americans is now considered to be “very poor”. For many people, this is all very confusing because their guts are telling them that things are getting worse and yet the mainstream media keeps telling them that everything is just fine. Hopefully this article will help people realize that the plight of the poorest of the poor continues to deteriorate all across the United States. In addition, hopefully this article will inspire many of you to lend a hand to those that are truly in need.

Tonight, there are more than 20 million Americans that are living in extreme poverty. This number increases a little bit more every single day. The following statistics that were mentioned in an article in The Daily Mail should be very sobering for all of us….

About 20.5 million Americans, or 6.7 percent of the U.S. population, make up the poorest poor, defined as those at 50 per cent or less of the official poverty level.

Those living in deep poverty represent nearly half of the 46.2 million people scraping by below the poverty line. In 2010, the poorest poor meant an income of $5,570 or less for an individual and $11,157 for a family of four.

That 6.7 percent share is the highest in the 35 years that the Census Bureau has maintained such records, surpassing previous highs in 2009 and 1993 of just over 6 percent.

Sadly, the wealthy and the poor are being increasingly segregated all over the nation. In some areas of the U.S. you would never even know that the economy was having trouble, and other areas resemble third world hellholes. In most U.S. cities today, there are the “good neighborhoods” and there are the “bad neighborhoods”.

According to a recent Bloomberg article, the “very poor” are increasingly being pushed into these “bad neighborhoods”….

At least 2.2 million more Americans, a 33 percent jump since 2000, live in neighborhoods where the poverty rate is 40 percent or higher, according to a study released today by the Washington-based Brookings Institution.

Of course they don’t have much of a choice. They can’t afford to live where most of the rest of us do.

Today, there are many Americans that openly look down on the poor, but that should never be the case. We should love the poor and want to see them lifted up to a better place. The truth is that with a few bad breaks any of us could end up in the ranks of the poor. Compassion is a virtue that all of us should seek to develop.

Not only that, but the less poor people and the less unemployed people we have, the better it is for our economy. When as many people as possible in a nation are working and doing something economically productive, that maximizes the level of true wealth that a nation is creating.

But today we are losing out on a massive amount of wealth. We have tens of millions of people that are sitting at home on their couches. Instead of creating something of economic value, the rest of us have to support them financially. That is not what any of us should want.

It is absolutely imperative that we get as many Americans back to work as possible. The more people that are doing something economically productive, the more wealth there will be for all of us.

That is why it is so alarming that the ranks of the “very poor” are increasing so dramatically. When the number of poor people goes up, the entire society suffers.

So just how bad are things right now?

The following are 19 statistics about the poor that will absolutely astound you….

#1 According to the U.S. Census Bureau, the percentage of “very poor” rose in 300 out of the 360 largest metropolitan areas during 2010.

#2 Last year, 2.6 million more Americans descended into poverty. That was the largest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.

#3 It isn’t just the ranks of the “very poor” that are rising. The number of those just considered to be “poor” is rapidly increasing as well. Back in the year 2000, 11.3% of all Americans were living in poverty. Today, 15.1% of all Americans are living in poverty.

#4 The poverty rate for children living in the United States increased to 22% in 2010.

#5 There are 314 counties in the United States where at least 30% of the children are facing food insecurity.

#6 In Washington D.C., the “child food insecurity rate” is 32.3%.

#7 More than 20 million U.S. children rely on school meal programs to keep from going hungry.

#8 One out of every six elderly Americans now lives below the federal poverty line.

#9 Today, there are over 45 million Americans on food stamps.

#10 According to the Wall Street Journal, nearly 15 percent of all Americans are now on food stamps.

#11 In 2010, 42 percent of all single mothers in the United States were on food stamps.

#12 The number of Americans on food stamps has increased 74% since 2007.

#13 We are told that the economy is recovering, but the number of Americans on food stamps has grown by another 8 percent over the past year.

#14 Right now, one out of every four American children is on food stamps.

#15 It is being projected that approximately 50 percent of all U.S. children will be on food stamps at some point in their lives before they reach the age of 18.

#16 More than 50 million Americans are now on Medicaid. Back in 1965, only one out of every 50 Americans was on Medicaid. Today, approximately one out of every 6 Americans is on Medicaid.

#17 One out of every six Americans is now enrolled in at least one government anti-poverty program.

#18 The number of Americans that are going to food pantries and soup kitchens has increased by 46% since 2006.

#19 It is estimated that up to half a million children may currently be homeless in the United States.

Sadly, we don’t hear much about this on the nightly news, do we?

This is because the mainstream media is very tightly controlled.

I came across a beautiful illustration of this recently. If you do not believe that the news in America is scripted, just watch this video starting at the 1:15 mark. Conan O’Brien does a beautiful job of demonstrating how news anchors all over the United States are often repeating the exact same words.

So don’t rely on the mainstream media to tell you everything.

In this day and age, it is absolutely imperative that we all think for ourselves.

It is also absolutely imperative that we have compassion on our brothers and sisters.

Winter is coming up, and if you see someone that does not have a coat, don’t be afraid to offer to give them one.

All over the United States (and all around the world), there are orphans that are desperately hurting. As you celebrate the good things that you have during this time of the year, don’t forget to remember them.

We should not expect that “the government” will take care of everyone that is hurting.

The reality is that millions of people fall through the “safety net”.

Being generous and being compassionate are qualities that all of us should have.

Yes, times are going to get harder and an economic collapse is coming.

That just means that we should be more generous and more compassionate than we have ever been before.

Told Ya So! – GDP ‘grows’ at 2.5% SAAR

by TwoCentsEditor

Published on: 10/27/2011

Categories: Current Events, Economics

Tags: how is gdp calculated, jobless claims, labor market, why are jobless claims still high, why does government spending count in GDP

Comments: No Comments

Editor’s Note: We told you this would happen when the debt deal was passed in early August. Q3 and perhaps 4 would show a nice pop from the added borrowing and this would be parlayed into some type of real economic strength, which of course doesn’t really exist in any substantial manner. The games are so obvious.

US economic growth increased at its fastest in a year in the third quarter as consumers and businesses set aside fears about the recovery and stepped up spending, creating momentum that could carry into the final three months of the year.

At the same time, slightly fewer people sought unemployment benefits last week, though level remains elevated above 400,000.

Though part of the increase came from the reversal of temporary factors that had restrained growth, the expansion was a welcome relief for an economy that looked on the brink of recession just weeks ago.

U.S. gross domestic product expanded at a 2.5 percent annual rate in the third quarter, the Commerce Department said in its first estimate on Thursday. That was a big acceleration from the 1.3 percent pace in the April-June quarter and matched economists’ expectations.

“The probability of a double-dip has diminished quite a bit,” said Sung Won Sohn, an economics professor at California State University in the Channel Islands. He made the comments before the release of the report.

Consumer spending in the last quarter was the strongest since the fourth quarter of 2010, while business investment spending was the fastest in more than a year. Even though consumer spending was stronger, businesses were slow in stocking up their warehouses.

The peppier spending and a slower pace of inventory accumulation by businesses will lay a base for a solid fourth quarter, but a slowdown in Europe and the exhaustion of pent-up U.S. demand could leave a weak spot early in 2012.

And the recovery’s pace is still too weak to lower a jobless rate that has been stuck above 9 percent for five straight months.

Fearless Spending

A jump in gasoline prices had weighed on consumer spending earlier in the year, and supply disruptions from Japan’s earthquake had curbed auto production. Motor vehicle output has surged as those supply constraints have eased.

In addition, car sales, which were held back by the lack of popular models, have also shown renewed strength.

As a result, consumer spending, which accounts for about 70 percent of U.S. economic activity, grew at a 2.4 percent rate after slowing to a 0.7 percent pace in the second quarter.

The relative vigor comes even though consumer confidence has hit levels last seen during the worst of the 2007-09 recession.

Similarly, while some business surveys have pointed to a contraction in factory output, there is little sign corporate America is cutting back spending. Indeed, recent data has suggested business spending is picking up. Business spending rose at a 16.3 percent pace as companies splurged on equipment and software, and invested in nonresidential structures.

Inventories rose only $5.4 billion in the third quarter, the smallest gain since the fourth quarter of 2009, after increasing $39.1 billion in the second quarter. Inventories subtracted 1.08 percentage points from GDP growth. Excluding the drag from inventories, the economy grew at a 3.6 percent pace – pointing to underlying strength in domestic demand — after expanding 1.6 percent in the April-June period.

Apart from consumer and business spending, growth in the third quarter was also supported by a smaller U.S. trade deficit, and the careful management of business inventories bodes well for fourth-quarter production.

Spending on residential construction rose at a modest 2.4 percent pace after growing at a 4.2 percent rate in the second quarter. Government spending was flat, reflecting continued budget cuts by state and local governments. However, the pace of decline in state and local government spending is moderating.

The GDP report also showed a moderation in inflation pressures, with the personal consumption price index (PCE) rising at a 2.4 percent rate in the third quarter, slowing from the April-June quarter’s 3.3 percent pace. Core PCE, which excludes food and energy, rose at a 2.1 percent rate after increasing 2.3 percent in the second quarter.

Jobless Claims Still High

The number of people seeking unemployment benefits dipped slightly last week, though not by enough to suggest that hiring is picking up.

The Labor Department says weekly applications for unemployment benefits declined 2,000 to a seasonally adjusted 402,000. That’s the fourth drop in six weeks.

Still, the four-week average, a less volatile measure, rose to 405,500. The average had fallen to a six-month low two weeks ago.

Despite the recent declines, applications are stuck above 400,000, where they have been for all but two weeks since March.

Applications need to fall consistently below 375,000 to signal sustainable job growth. They haven’t been below that level since February.

Meanwhile, the number of laid-off workers receiving benefits dropped to 3.65 million, the lowest level in three years.

EuroBank Failures to Crash Wall St. – Paul Farrell

by TwoCentsEditor

Published on: 10/24/2011

Categories: Current Events, Economics, Financial Markets

Tags: occupy wall street, paul farrell, tea party, wall street bailouts, What does occupy wall street stand for?

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SAN LUIS OBISPO, Calif. (MarketWatch) — Worst-case scenario’s closing fast: Occupy Wall Street growing. But no political power or allies yet. Feared yes, attacked by GOP proxy tea party. Soon the Occupation will explode into a new American Revolution.

When? A string of European bank collapses is dead ahead. And like the Arab Spring, they will trigger an economic disaster for American banks.
Click to Play
The big picture for global banks

Andrew Milligan, head of Global Strategy at Standard Life Investments, discusses the implications for banks as European officials try to hammer out a solution to the sovereign debt crisis.

Yes, coming soon says Martin Weiss in his “7 Major Advance Warnings,” which is “bound to have a life-changing impact on nearly all investors in the U.S. and around the globe.” His new Weiss Ratings warnings are the “most important” in a 40-year career. The stress on Wall Street banks will force them back to Congress for more bailouts.

Warning eight: No new bailouts. That will push the economy into a deep recession.

Then what? New Glass-Steagall? Not enough. Tax the rich? Not enough. Perp walks? Not enough. Presidential commission? Useless promises. Occupy Wall Street will fail without a fundamental constitutional change. No compromise. Or Wall Street wins, again. We go back to the same free market, deregulated, too-greedy to-fail, conservative Reaganomics policies that have been destroying democracy for a generation.

All this was so obvious, so predictable. America is at a crossroads. Occupy Wall Street buildup has emerged as America’s last great hope to restore democracy. Last week when USA Today called the Occupiers a “ragtag assortment of college kids, labor unionists, conspiracy theorists and others” hinting they’re a flash-in-the-pan “devoid of remedies,” I smiled, reminded of that famous painting of George Washington crossing the Delaware on Christmas 1776, leading what historians also called a “ragtag” Continental Army, surprising the British, and winning the Battle of Trenton.
America’s collective conscience wants true democracy restored

Yes, USA Today sees a “ragtag” army: No mission, no goals, no organization, no agenda, no leaders, and no staying power. Wrong. Look deeper: The Occupiers are the voice of America’s collective conscience demanding a return to our 1776 roots, to a “government of the people, by the people, for the people.”

Our collective inner voice knows America’s moral compass is broken. We’ve become a government “of, by and for” special interests, the wealthiest 1%, Wall Street insiders, CEOs and Forbes-400 billionaires. It happened fast: In one generation the Super Rich grabbed “absolute power,” killing the middle class American dream.

Wall Street banks are already dismissing the Occupiers … planning bigger bonuses this year… lifting limits on their license to gamble Main Street deposits in the $600 trillion global derivatives casino … they already spend hundreds of millions lobbying every year … they’re convinced they can defeat the Occupiers with campaign donations in the back rooms of Congress … writing off the fight as another business expense … ultimately expecting the Occupiers will vanish into the cold winter months.
One citizen. One dollar. One vote. Anything less is failure

Warning: Don’t be fooled. Occupy Wall Street knows exactly want it wants. The tea party, GOP’s proxy, isn’t fooled. They feel threatened, counter-attacking, worried their role will be lost in the 2012 elections, fearful they’ll lose sway over Republicans, so they’ve got a smear campaign against Occupy Wall Street. Won’t work:

Amid all the noise surrounding Occupy Wall Street we hear their “one simple demand.” Missed by most outsiders, that demand echoes down through American history, first heard in 1776 in the Declaration of Independence. Earlier the Occupiers voiced their one simple demand:

“We demand that integrity be restored to our elections. One citizen. One dollar. One vote. Only citizens should make campaign contributions. Campaign contributions by citizens should not exceed $1 to any political candidate or party. Help us reclaim democracy.”

Yes, one simple demand: “Stop the monied corruption at the heart of our democracy.” That one simple demand echoed over and over. And no compromise when dealing with so fundamental a principle of democracy. Compromises the last generation surrendered America to Wall Street and the Super Rich. Compromise this principle again, and we all lose, destroy America. No compromise. Period.
Phase 2: EU bank collapse gives Occupiers new political power

The Occupiers Revolution enters a new phase soon: First Arab Spring rippled into American Fall. Next, EU bank collapses will ripple through Wall Street. For a long time we’ve been warning the 2008 meltdown never ran its course, foiled by mega-bailouts … bankers never shared the sacrifice … fought all reforms … are back to business-as-usual … learned no lessons … now even more delusional, expecting bigger bonuses … trapped in denial for three years … cannot see what’s ahead … a perfect setup for a bigger crash.

That’s why my eye locked on Martin Weiss’ “7 Major Advance Warnings.” Weiss has been a champion of the little guy for 40 years, author of “The Ultimate Money Guide for Bubbles, Busts, Recession and Depression.” Weiss Ratings of domestic and foreign debt markets downgraded U.S. debt before the S&P.

Both of us were warning well in advance of the 2008 crash. It was so predictable: Weiss warned of “failure of Bear Stearns Lehman, Washington Mutual, near-failure of Citigroup and the demise of Fannie Mae years before it collapsed.”

Read More: http://www.marketwatch.com/story/eu-bank-failures-will-crash-wall-street-again-2011-10-18

Derivatives – A $600T Time Bomb

by TwoCentsEditor

Published on: 10/24/2011

Categories: Current Events, Economics, Financial Markets

Tags: how big is the derivatives market, notional value of all derivatives, what are derivatives, what is leverage, what will cause the next stock market crash

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Do you want to know the real reason banks aren’t lending and the PIIGS have control of the barnyard in Europe?

It’s because risk in the $600 trillion derivatives market isn’t evening out. To the contrary, it’s growing increasingly concentrated among a select few banks, especially here in the United States.

In 2009, five banks held 80% of derivatives in America. Now, just four banks hold a staggering 95.9% of U.S. derivatives, according to a recent report from the Office of the Currency Comptroller.

The four banks in question are JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS).

Derivatives played a crucial role in bringing down the global economy, so you would think that the world’s top policymakers would have reined these things in by now — but they haven’t.

Instead of attacking the problem, regulators have let it spiral out of control, and the result is a $600 trillion time bomb called the derivatives market.

Think I’m exaggerating?

The notional value of the world’s derivatives is actually estimated at over $600 trillion. Notional value, of course, is the total value of a leveraged position’s assets. This distinction is necessary because, when you’re talking about leveraged assets like options and derivatives, a little bit of money can control a disproportionately large position that may be as much as 5, 10, 30 or, in extreme cases, 100 times greater than investments that could only be funded in cash instruments.

The world’s gross domestic product (GDP) is only about $65 trillion, or roughly 10.83% of the worldwide value of the global derivatives market, according to The Economist. So there is literally not enough money on the planet to backstop the banks trading these things if they run into trouble.

Compounding the problem is the fact that nobody even knows if the $600 trillion figure is accurate, because specialized derivatives vehicles like the credit default swaps that are now roiling Europe remain largely unregulated and unaccounted for.
Tick…Tick…Tick

To be fair, the Bank for International Settlements (BIS) estimated the net notional value of uncollateralized derivatives risks is between $2 trillion and $8 trillion, which is still a staggering amount of money and well beyond the billions being talked about in Europe.

Imagine the fallout from a $600 trillion explosion if several banks went down at once. It would eclipse the collapse of Lehman Brothers in no uncertain terms.

Read More: http://www.investorplace.com/2011/10/derivatives-the-600-trillion-time-bomb-set-to-explode/

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